TCREUR_Public/130619.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

            Wednesday, June 19, 2013, Vol. 14, No. 120

                            Headlines



A U S T R I A

EUROCONNECT ISSUER: Fitch Raises Rating on Class C Notes to 'B+'


B E L G I U M

ALFACAM GROUP: Euro Media Group to Buy Business


C Y P R U S

BANK OF CYPRUS: Ex-Board Member to Sue Over Restructuring


F R A N C E

VIRGIN MEGASTORE: Paris Court Orders Liquidation


G E R M A N Y

ASOLA SOLARPOWER: STGCON Acquires Firm Out of Insolvency
FRESENIUS SE: Fitch Affirms 'BB+' LT Issuer Default Ratings
HAUS-1998-1: S&P Lowers Rating on Class B-2 Notes to 'CCC'
TALISMAN-4 FINANCE: Fitch Cuts Ratings on 3 Note Classes to 'D'


G R E E C E

INTRALOT SA: Fitch  Assigns 'B+' IDR & Rates EUR300MM Bonds 'BB-'
INTRALOT SA: Moody's Assigns '(P)B1' Corp. Family Rating
INTRALOT SA: S&P Assigns 'B-' CCR & Rates EUR300MM Notes 'B+'
SEANERGY MARITIME: Swings to US$1.06-Mil. Profit in 1st Quarter


I R E L A N D

* Moody's Notes Worsening Performance of Irish RMBS in April


I T A L Y

BANCA MONTE: S&P Cuts Long-Term Counterparty Credit Rating to 'B'
CAPITAL MORTGAGE: Moody's Cuts Rating on EUR5.5MM E Notes to Caa1


N E T H E R L A N D S

AVOCA CLO II: Moody's Affirms 'Caa3' Rating on Class D Notes
CARLYLE GLOBAL: S&P Assigns BB Rating to Class E Notes
LEOPARD CLO II: Moody's Lowers Rating on Class C Notes to 'Caa2'


P O L A N D

MALMA: Lubella Acquires Assets


P O R T U G A L

CHAVES SME I: Moody's Confirms 'Ba2' Ratings on 2 Note Classes
PORTUCEL SA: Moody's Rates EUR350MM Senior Notes Issue 'Ba3'


R O M A N I A

BELROM GROUP: Court Okays Insolvency Request for Promenada Mall


R U S S I A

BASHNEFT CAPITAL: Moody's Assigns '(P)Ba2' Rating to USD LPNs
BASHNEFT CAPITAL: Fitch Assigns 'BB(EXP)' Rating to USD LPNs
ROSAGROLEASING JSC: Fitch Affirms 'BB+' LT Issuer Default Rating


S P A I N

LA SEDA: Begins Insolvency Proceedings After Creditor Talks Fail
SANTANDER HIPOTECARIO 9: Moody's Rates Series C Notes '(P)Caa3'


U N I T E D   K I N G D O M

AA BOND: S&P Assigns Preliminary BB Rating to Class B Notes
FAIRHOLD SECURITISATION: Fitch Affirms BB Rating on Class B Notes
HEARTS FC: To Go Into Administration, Approaches KPMG
HMV GROUP: To Return to its Oxford Street Flagship Store
IMPERIAL HOME: Partnership DC Pension Scheme

R&R ICE CREAM: S&P Cuts Corp. Credit Rating to B; Outlook Stable
VIRGIN MEDIA: Fitch Cuts Long-Term IDR to 'B+'; Outlook Stable


X X X X X X X X

* EUROPE: Moody's Says Outlook for Tobacco Industry Stable
* Rising Benchmark Interest Rates Threaten EM, EMEA Issuers


                            *********


=============
A U S T R I A
=============


EUROCONNECT ISSUER: Fitch Raises Rating on Class C Notes to 'B+'
----------------------------------------------------------------
Fitch Ratings has upgraded EuroConnect Issuer SME 2007 Ltd's
class B and class C notes, due 2030, as follows:

  EUR43.25m class B (XS0336040331): upgraded to 'BB+sf' from
  'BB-sf'; Positive Outlook

  EUR37.1m class C (XS0336040505): upgraded to 'B+sf' from
  'B-sf'; Stable Outlook

Key Rating Drivers

The upgrade reflects the stable pool performance and the
increased credit protection for the rated notes as a result of
pool amortization. The portfolio quality and composition have
remained largely unchanged since the last review in June 2012.

Fitch used its Portfolio Credit Model to estimate the portfolio
loss rates for different rating scenarios. Fitch reviewed
historical observed default rates provided by the originator
including values for 2012. Based on the data, Fitch updated the
PD mapping of the internal rating system using an annual average
originator default probability assumption of 2.6%.

No historical recovery rate data was available but the originator
provided the share of available collateral for each loan in the
portfolio. The portfolio's weighted average collateralization
rate is 52%. Fitch applied a base case recovery assumption of
40%.

Taking into account the transaction's stable performance, the
increased credit enhancement levels available to the class B and
C notes led to the upgrade of the notes' ratings. In addition,
synthetic excess spread is available as a loss threshold in an
amount of 24bps pa on the performing reference pool balance.

The transaction is amortizing with a current portfolio factor of
27% (as of the April 2013 investor report) compared with 41% at
the time of the last rating action in June 2012. Due to pool
amortization, the credit protection for the class B and C notes
has increased to 16.09% and 11.68%, respectively, from 11.2% and
8.3% at the last review.

Rating Sensitivities

In Fitch's view, the risk of portfolio concentration remains
limited due to the granularity of the asset pool. The 10 largest
obligor groups make up 13.35% of the pool compared with 10.55% at
the last review. The current credit enhancement for the class B
notes is sufficient to provide for a default of the 12 largest
obligor groups. The class C credit enhancement could cover the
eight largest obligor groups.

Defaulted assets in the portfolio currently amount to 0.7% of the
initial portfolio balance (EUR3.1bn), which is a marginal
increase from 0.6% at the last review. Delinquencies (31-90 days)
have remained virtually unchanged at 0.45% of the outstanding
balance.

Cumulative realised losses amount to EUR18.4m. However, EUR15.7m
of this was covered by synthetic excess spread. The remaining
losses were allocated to the unrated class D notes.

The transaction is a partially-funded synthetic CDO
securitization with exposures to small- and medium-sized
enterprises, primarily in Germany and Austria. Originators are
UniCredit Bank AG (A+/Stable/F1+) and UniCredit Bank Austria AG
(A/Stable/F1).



=============
B E L G I U M
=============


ALFACAM GROUP: Euro Media Group to Buy Business
-----------------------------------------------
Robert-Jan Bartunek at Reuters reports that Alfacam said on
Tuesday the company will be bought by France's Euro Media Group.

Euro Media did not disclose financial details but a report in
Belgian business daily De Tijd put the deal at EUR25 million
(US$33.4 million), Reuters discloses.

Alfacam was granted creditor protection in October and has been
seeking investors since then, Reuters recounts.  It announced an
agreement with Indian investment group Hinduja in December, but
the deal eventually fell through, Reuters notes.

Alfacam Group is a Belgium-based the provider of Europe's largest
fleet of outside broadcast vans.  The company also provides
broadcast services and TV studios.



===========
C Y P R U S
===========


BANK OF CYPRUS: Ex-Board Member to Sue Over Restructuring
---------------------------------------------------------
Elias Hazou at Cyprus Mail reports that a former Bank of Cyprus
board member is mounting a legal challenge against the decision
to place the island's largest lender under administration.

In an application filed with the Supreme Court earlier this
month, Irini Karamanou, formerly a non-executive member of the
bank's board, is also contesting the decision for the fire-sale
of the bank's Greek operations, as well as the transfer of all of
Laiki's emergency liquidity -- which are liabilities on the
balance sheet -- to BoC, Cyprus Mail relates.

Ms. Karamanou's application is directed against both the Central
Bank of Cyprus and the finance ministry, the two entities co-
responsible for restructuring the two Cypriot banks, Cyprus Mail
discloses.  She claims the appointment of an administrator for
BoC was illegal as the bank was neither bankrupt nor insolvent at
the time of the appointment, Cyprus Mail notes.  Therefore the
decisions subsequently taken to the detriment of the bank's
shareholders should likewise be considered illegal and void,
Cyprus Mail states.

Bank of Cyprus is a major Cypriot financial institution.  In
terms of market capitalization of 350 million in March 2013, it
is the country's biggest bank.  As of September 2012, the bank
held a 26.7% share of the Cypriot deposit market and a 22.5%
share of the Cypriot loan market, making it the largest bank in
Cyprus.  The Bank of Cyprus Group employs 11,326 staff worldwide.

                          *     *     *

As reported by the Troubled Company Reporter-Europe on April 16,
2013, Moody's Investors Service downgraded Bank of Cyprus Public
Company Limited's deposit ratings to Ca, negative outlook, from
Caa3 and senior unsecured debt ratings to C, from Caa3.  The
subordinated and junior subordinated debt ratings of BoC were
affirmed at C.



===========
F R A N C E
===========


VIRGIN MEGASTORE: Paris Court Orders Liquidation
------------------------------------------------
Marine Pennetier and Natalie Huet at Reuters report that a Paris
court ordered the liquidation of Virgin Megastore France on
Monday, sending hundreds more people to join France's record
jobless queues.

Virgin Megastore France, which employs 960 people in France,
filed for insolvency in January, blaming high property rental
costs and an industry-wide slump in CD and DVD sales as consumers
download more film and music online, Reuters recounts.

The court last week rejected two takeover offers by clothing
group Vivarte and specialist retailer Cultura, deeming neither
sufficient to safeguard Virgin's future, Reuters relates.

"It's not a surprise, but it's a very sad day for Virgin and its
employees," Virgin CEO Christine Mondollot told Reuters.  "We had
no other choice but to put the company under liquidation."

According to Reuters, union leaders will meet on June 24 to
discuss the conditions in which staff will be laid off and found
new jobs.  They have called on staff to occupy stores to heap
pressure on management, Reuters discloses.

Private equity firm Butler Capital Partners, Virgin Megastore's
main shareholder, said last month it would give EUR2 million
(US$2.7 million) to help staff find new jobs, Reuters recounts.
Media group Lagardere, which owns a 20% stake, offered to rehire
80 employees, Reuters notes.

Virgin Megastore is a French books, music and movies chain.



=============
G E R M A N Y
=============


ASOLA SOLARPOWER: STGCON Acquires Firm Out of Insolvency
--------------------------------------------------------
Edgar Meza at pv-magazine.com reports that Shanghai-based STGCON,
which has opened a new office near Munich, has acquired the
insolvent Asola Solarpower.

pv-magazine.com relates that the Erfurt-based company will
continue to manufacture and sell solar modules while focusing on
the development of prototypes and production of special and
non-standard module applications. The group will also revive its
automotive business, the report notes.

"For us it's a strategic investment, particularly for the
globalization of our electronic products in the automotive
business," the report quotes Helmut Teschner, CEO of STGCON
Germany, as saying.

"We found an ideal partner, who fits 100% with Asola," added
Asola insolvency administrator Jochen Grentzebach, pointing out
that STGCON was medium-sized, privately owned and solidly
financed company that has insured Asola's continuation, pv-
magazine.com reports.

STGCON's takeover of Asola is expected to be finalized in the
coming days, with the legal transfer of the company to its new
owner set for July 1, according to the report.

Asola Solarpower GmbH is a Germany-based solar company. The
company filed for insolvency in January in the face of high
restructuring costs, oversupply and a declining European market.
Former trustee, lawyer Jochen Grentzbach, has been appointed
insolvency administrator of the company.


FRESENIUS SE: Fitch Affirms 'BB+' LT Issuer Default Ratings
-----------------------------------------------------------
Fitch Ratings has affirmed Germany-based healthcare group
Fresenius SE & Co KGaA's (FSE) and Fresenius Medical Care AG &
Co. KGaA's (FMC) Long-term Issuer Default Ratings (IDR) at 'BB+'
and instrument ratings excluding the senior secured debt ratings,
which are downgraded to 'BBB-' from 'BBB', to align them with
Fitch's existing recovery ratings methodology. The Short-term
IDRs and commercial paper program have been affirmed at 'B'. The
Outlook is revised to Positive from Stable.

The revision of the Outlook to Positive from Stable follows a
sustained improvement in FSE's and FMC's consolidated (together
'Fresenius') business profile. Since Fitch upgraded Fresenius'
IDR to 'BB+' from 'BB' in August 2011, the group has integrated
Liberty Dialysis Group, Damp Group and Fenwal Holdings and
pursued a string of smaller bolt-on acquisitions which have
improved its business diversification and strengthened its
earnings profile. The Positive Outlook also follows a change in
Fresenius' acquisition policy towards smaller - mostly cash flow
funded - bolt-on acquisitions. Any potential acquisition of
Rhoen-Klinikum AG (Rhoen), is seen by Fitch as an event risk,
given the uncertainty about the possibility for Fresenius to be
able to acquire Rhoen. An upgrade will be considered once the
group has proven that it will continuously operate at the lower
end of its net leverage guidance range.

Fresenius' ratings reflect the group's diversified healthcare-
related businesses with its number one position in the global
dialysis industry, where it benefits from vertical integration.
They also reflect Fresenius' solid organic growth prospects and
geographical diversification which supports its stable and
predictable cash flow generation. In our view, Fresenius'
business profile shares characteristics with some investment
grade peers rated 'BBB-', but its financial metrics remain weaker
than for most other 'BBB-' healthcare peers.

Key Rating Drivers

Improved business profile:
FSE's business profile continues to improve through organic
growth and acquisitions in non-dialysis business areas (Kabi,
Helios, Vamed). As a result, Fresenius is less reliant on one
disease area, which should help its earnings profile and the
long-term stability of cash flow generation.

Commitment to Financial Targets and Reduced M&A Appetite:
Fresenius has track record of meeting guidance and financial
targets. One of Fresenius' financial goals is to maintain a net
debt to EBITDA at the lower end of 2.5x-3.0x - although that
range might be breached for about 18 months if a debt-funded
acquisition opportunity occurs. We believe that large debt funded
acquisitions are unlikely to make a significant part of
Fresenius' strategy in the medium term. Any potential acquisition
of Rhoen, is seen by Fitch as event risk, given the uncertainty
about the possibility for Fresenius to be able to acquire Rhoen.

Market leadership positions expected to continue:
Fresenius benefits from the leading market shares of FMC in the
dialysis business across most regions the group operates in as
well as from Kabi, the European leader in infusion and clinical
nutrition therapy and the US number two in generic intravenous
(IV) drugs, a non-cyclical business with solid growth prospects.
Helios has critical size in the German private hospitals market.

Relatively solid and predictable earnings / cash flow generation
to continue:

Fresenius has a solid cash flow generation, with Fresenius' free
cash flow margin amounting to 6%in FY12, while the adjusted funds
from operations (FFO) net leverage was 4.0x (FY11: 4.3x) and FFO
fixed charge cover stood at 3.2x (FY11: 3.1x).

FMC has predictable income streams, driven by the steadily
growing demand for dialysis services (6% p.a. on average) and
recurrence of treatment due to the life-threatening aspects of
the disease. FSE's businesses Kabi and Helios also operate in
non-cyclical segments and both benefit from stable growth
prospects.

Vertical integration helps to compensate for potential
reimbursement cuts:

Vertical integration provides cost advantages and bargaining
power to the group. Fresenius could theoretically build a
hospital and equip it with machinery (Vamed) and medicines
(Kabi), supply it with dialysis machines and run a dialysis
centre (FMC). As a majority of FMC's dialysis services sales are
generated by Medicare/Medicaid patients, the group is exposed to
increasing pricing pressure over the medium term. Other elements
of the US healthcare reform are likely to have a detrimental yet
manageable impact on FMC's performance such as the medical device
tax and the effect of public spending cuts. As the world's number
one market player in dialysis FMC is however able to benefit from
economies of scale and vertical integration. This provides a
competitive advantage compared to peers.

Rating Sensitivities

Positive: Future developments that could lead to positive rating
actions include: FFO lease adjusted net leverage of 4.0x or
below, FFO net fixed charge cover above 3.2x - both on a
continuing basis

Negative: Future developments that could lead to negative rating
action include: FFO lease adjusted net leverage above 4.5x, FFO
fixed charge cover below 2.5x - both on a continuing basis

The rating actions are:

FSE:

Long-term IDR: affirmed at 'BB+', Positive Outlook
Short-term IDR: affirmed at 'B'
Senior unsecured debt affirmed at 'BB+'
Senior secured debt downgraded to 'BBB-' from 'BBB'

Fresenius Finance B.V.:

Guaranteed senior notes affirmed at 'BB+'

Fresenius US Finance II. Inc.:

Guaranteed senior notes affirmed at 'BB+'

FMC:

Long-term IDR: affirmed at 'BB+', Positive Outlook
Short-term IDR: affirmed at 'B'
Senior unsecured debt affirmed at 'BB+'
Senior secured debt downgraded to 'BBB-' from 'BBB'


HAUS-1998-1: S&P Lowers Rating on Class B-2 Notes to 'CCC'
----------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered to
'B (sf)' from 'BBB (sf)' its credit rating on Haus-1998-1 Ltd.'s
class B-1 notes.  At the same time, S&P has lowered to 'CCC (sf)'
from 'B- (sf)' its rating on the class B-2 notes.

The rating actions follows S&P's review of the transaction, and
reflect its view that the rated classes of notes are exposed to
increased credit risk since its previous Oct. 1, 2012 review.

Cumulative net losses have increased to approximately
EUR5.9 million from approximately EUR4.6 million in October 2012.
On the May 14, 2013 payment date, S&P observed that about
EUR1.42 million of the transaction's balance underwent the
foreclosure process, leading to a loss allocation of about
EUR1.33 million.  This reduced the first-loss piece--the unrated
class B-3 notes--to EUR1.36 million from EUR2.69 million.  This
is the highest loss allocation on one interest payment date in
the transaction's life.  Recovery rates remained at what S&P
considers to be low to very low levels.

The diminishing of the first-loss piece led to decreasing credit
protection for the senior subordinated classes and to increased
credit risk for the rated classes of notes.  Terminated and
foreclosed loans currently total 8.2%.  Credit enhancement by
subordination to the class B-2 notes is 7.8%.  Severe
delinquencies of 90+ days remained what S&P considers to be very
low.

Considering realized losses, delinquencies, and fee allocation to
date--and taking into account historical recovery rates in this
particular portfolio-- S&P has assessed the likelihood of future
losses for the collateral pool's performing and nonperforming
parts.

Fixed fees rank senior to interest and principal payments in the
waterfall.  While the transaction amortizes, interest rate risk
to the rated classes B-1 and B-2 notes increases owing to fixed
fees. Since S&P's October 2012 review, the class B-3 notes have
experienced two more interest shortfalls.  S&P believes that a
main cause of these shortfalls is the relatively high fixed fees
unevenly applied throughout the year in the "miscellaneous fees"
bucket.

The transaction continues to amortize and, because of the
circumstances described above, S&P believes that tail risk--the
probability of high losses--to the rated classes of notes is
increasing further.  Therefore, S&P has lowered to 'B (sf)' from
'BBB (sf)' its rating on the class B-1 notes.  S&P has also
lowered to 'CCC (sf)' from 'B- (sf)' its rating on the class B-2
notes.

Haus-1998-1 is a true-sale German residential mortgage-backed
securities (RMBS) transaction.  The pool factor has reduced to
2.4%, from 2.9% on Oct. 1, 2012.

          STANDARD & POOR'S 17G-7 DISCLOSURE REPORT

SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an property-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

Haus-1998-1 Ltd.
EUR718.15 Million Mortgage-Backed Floating-Rate Notes

Ratings Lowered

B-1       B (sf)        BBB (sf)
B-2       CCC (sf)      B- (sf)


TALISMAN-4 FINANCE: Fitch Cuts Ratings on 3 Note Classes to 'D'
---------------------------------------------------------------
Fitch Ratings has downgraded Talisman-4 Finance Plc's notes due
2015 as follows:

EUR220.1m class A (XS0263096389) downgraded to 'BBsf' from
'BBBsf'; Outlook Negative

EUR39.4m class B (XS0263098161) downgraded to 'Bsf' from 'BBB-
sf'; Outlook Negative

EUR39.4m class C (XS0263098914) downgraded to 'CCsf' from 'BBsf';
Recovery Estimate (RE) RE50%

EUR25.6m class D (XS0263099722) downgraded to 'Csf' from 'Bsf';
RE0%

EUR17.3m class E (XS0263100835) downgraded to 'Dsf' from 'CCCsf';
RE0%

EUR0m class F (XS0263101304) downgraded to 'Dsf' from 'CCsf';
RE0%

EUR0m class G (XS0263101569) downgraded to 'Dsf' from 'CCsf';
RE0%

Key Rating Drivers

The downgrades reflect the loss allocation following the sale of
the collateral of the EUR52.2 million Dandelion DIV loan (class
E, F and G notes), the expected ultimate losses from the
Valentine and DT-12 loans (class C and D notes) and the overall
reduction in credit enhancement (class A and B notes). The short
remaining time until bond maturity (just over two years) has also
been incorporated.

In April 2013, the EUR15.9 million DC Properties loan repaid at
its maturity. The principal proceeds were allocated to the notes
sequentially. All three remaining loans are scheduled to mature
in July 2013 but are already in special servicing.

The EUR113.4 million Valentine loan defaulted in February 2011 as
the result of an uncured loan-to-value (LTV) covenant breach. A
further revaluation in November 2012 raised the LTV to 125.7%,
well above the 87% covenant. The vacancy rate across the
portfolio of 11 office properties located across Germany
(predominantly the east) increased to 26% in April 2013 from 17%
one year previously. The weighted average (WA) remaining lease
term is short at 4.3 years. Fitch expects a significant loss from
this loan.

The EUR168.6 million DT-12 loan defaulted together with the
Valentine loan as both facilities are cross-defaulted. However,
the loan would have defaulted in its own right in 2012 following
a revaluation of the 12 office properties located in western
Germany, which resulted in an LTV of 126.9% as of April 2013,
well above the 85% covenant. Like in Valentine, all debt service
continues to be paid. The collateral is fully let to Deutsche
Telekom (BBB+/Stable), on leases expiring in four years (on a WA
basis). However, as part of the space has either been vacated or
sub-let, a gradual renewal of all leases seems unlikely.

The servicer is trapping surplus cash from both portfolios. The
funds are used to cover third-party costs. In April 2013, EUR1
million of DT-12 and EUR0.4 million of Valentine surplus was held
by the special servicer.

The EUR113.4 million Barthonia was transferred into special
servicing in 2011 due to an uncured LTV covenant breach. In April
2013, the securitized leverage was reported at 96%. Surplus funds
are trapped and invested into capital expenditure. The collateral
is a mixed-use property located in Cologne. The occupancy has
been stable over the past year around 92%, despite the short
remaining lease term (2.4 years) and tenant churn. The capex
program (and positive effect on lease renewal/re-letting) will
likely improve the sales prospects, although the upcoming bond
maturity limits the duration of capex and marketing schemes.
Fitch expects a moderate loss from this loan.

Rating Sensitivities

Delays in the recovery process, even if aimed at maximizing
proceeds, or lower than expected recoveries would result in
further downgrades given the approaching legal final maturity in
July 2015.



===========
G R E E C E
===========


INTRALOT SA: Fitch  Assigns 'B+' IDR & Rates EUR300MM Bonds 'BB-'
-----------------------------------------------------------------
Fitch Ratings has assigned Intralot SA a Long-term Issuer Default
Rating (IDR) of 'B+'. The Outlook is Stable. Fitch has also
assigned Intralot's planned issue of EUR300 million bonds an
expected senior unsecured rating of 'BB-(EXP)'/'RR3'. The final
rating for the bonds is contingent upon receipt of final
documents conforming to information already received by Fitch.

The 'B+' IDR reflects the strength of Intralot's business
capabilities -- namely its established track record of winning
and retaining high profile gaming contracts -- good scope for
steady EBITDA growth from its Licensed Operations division, a
well-diversified contract portfolio, as well as its currently
moderate leverage. These positives are contrasted by the low
credit quality of some of the countries in which it operates, the
important role of minorities and the vulnerability associated
with an increasingly spread out business strategy that could
require further investments in future, thus compromising free
cash flow (FCF) generation capability.

The ratings are premised on the successful issuance of the
prospective notes, so that sufficient liquidity is available to
refinance the convertible bonds maturing in December 2013. Should
Intralot fail to raise at least EUR150 million of new funding,
Fitch would likely place the IDR on Rating Watch Negative to
reflect the refinancing risk.

The planned EUR300 million bond is expected to be raised by a
Luxembourg-based financial vehicle wholly owned by Intralot
through Intralot Global Securities B.V. and will rank as a senior
unsecured obligation pari passu with its bank debt. It will
benefit from guarantees from Intralot SA and by the main
operating subsidiaries of Intralot Global Securities B.V. The
aggregate of these guarantors will account in total for
approximately 70% of group assets and EBITDA. Intralot intends to
use the bond proceeds to repay the principal amount of EUR140
million outstanding of the convertible bond as of March 31, 2013
and maturing in December 2013 plus the applicable redemption
premium and to refinance other bank debt due in December 2014.

Fitch conducted a bespoke recovery analysis to derive the debt
instrument ratings, in line with its methodology 'Recovery
Ratings and Notching Criteria for Non-Financial Corporate
Issuers'. Fitch considers that expected recoveries upon default
would be maximized in a going-concern scenario rather than in a
liquidation scenario given the asset-light nature of Intralot's
business. Fitch has applied a discount of 40% to the FY12
consolidated EUR177 million EBITDA of Intralot to reflect
downside risks as well as the material minority interests in some
of its subsidiaries and a 4x distressed multiple to derive a
distressed enterprise value of EUR431 million. Taking into
account the pro-forma debt structure for the notes issuance and
including the EUR150 million RCF as being fully drawn, Fitch
estimates that the recovery rate for the senior notes would fall
within the 51%-70% range ('RR3'), leading to a one-notch uplift
from the IDR of 'B+'.

KEY RATING DRIVERS

Limited Linkage with Greece
Intralot generates only 5% of its revenues and 8% of its EBITDA
in Greece. While its management and a major proportion of its
software developers and machine designers are based in Greece,
overall Greece-based employees only account for 15% of the total.
Finally, Intralot is in the process of completing a
restructuring, whereby most operations (representing 88% of LTM
Q113 EBITDA) will be owned via Intralot Global Securities B.V. (a
Dutch sub-holding) while all debt will be issued under Luxembourg
or UK-based vehicles controlled by the same Dutch sub-holding. As
of YE12 less than 10% of group cash was lodged in Greece or
Cyprus.

Reputable Gaming Technology Supplier
Intralot has established itself in the international gaming
sector as a reputable provider of, among other products, systems
to manage lotteries through software platforms and hardware
terminals and in betting, a large sportsbook. This has enabled it
to win important contracts for the supply of technology and for
the management of lotteries in the US and Greece in the earlier
part of the past decade and for sportsbetting in Turkey and
Greece. We expect Intralot should be able to leverage on its
existing platform to win additional contracts.

Visible Core EBITDA
More contracts in several other jurisdictions were gained
following on from the ones in Greece, Turkey and the US.
Intralot's Technology and Management divisions benefit from the
oligopolistic structure of the gaming systems and equipment
industry. Mostly recurring revenues from contracts with EBITDA-
weighted average life of four to five years generate Intralot's
core EBITDA of EUR106m (60% of total). Due to the high switching
costs of changing supplier, many of these have good chances of
renewal although Fitch believes that under some circumstances,
Intralot may be required to disburse a renewal fee.

Geographic Diversification Positive on Balance
A supporting rating factor is Intralot's diversity by countries
of operation spanning from Europe to the Americas with only one
individual contract contributing more than 10% of group EBITDA.
While Fitch views the risks of adverse regulatory changes as
minimal, Intralot's diversification provides further comfort.
Nevertheless, a constraining factor to its rating is that
approximately one-third of Intralot's EBITDA is generated on
aggregate in countries rated 'B' or below, including Cyprus,
Greece, Argentina and Jamaica.

Increasing Exposure to Competition
As national gaming markets liberalize and governments exert
downward pressure on the profitability of their suppliers,
Intralot has been successfully expanding in new geographies and
increasingly becoming a licensee itself. Fitch views this line of
business as promising. However, new projects require investments
and increasingly move the company to a full scale operator in new
geographies. This may expose it to a variety of competitors that
provide games to consumers and innovate regularly. Some
mitigation to capital outlays comes from Intralot's model of
operating mostly through franchised points of sale and its
intention to restrain major disbursements to acquire licenses.

Scope for Growth
The gradual liberalization of gaming markets, governments'
keenness to find ways to raise tax proceeds and the increasing
supply of new games, should all provide increasing opportunities
for Intralot. The company should be able to leverage on its
experience and reputation and also benefit from the limited
number of reputable suppliers in the industry.

Low to Negative FCF
Over 2007-2012, Intralot's FCF has consistently been negative,
mostly due to expansionary capex (also including investments in
equipment initially booked as inventory) of EUR100 million to
EUR150 million per annum. Another factor of cash flow absorption
is linked to the significant proportion of EBITDA that does not
belong to Intralot (although fully consolidated), linked to joint
ventures. This results in approximately EUR20 million of annual
minority dividend distributions. A move of FCF into positive
territory in 2014 is premised on a reduction of capex and on
expected returns from the projects in which the company is
currently investing.

Moderate Leverage
After a peak of 4.3x in 2010, FFO-based net lease adjusted
leverage dropped to 3.1x in 2012. In 2013, Fitch expects a
rebound in leverage towards 3.5x, due to a likely contraction of
profits and capex disbursements, which are assumed to be only
mildly lower than 2012's EUR120m. Should management pursue a more
moderate pace of expansionary investment from 2014 onwards --
with annual capex in the region of EUR40 million to EUR60 million
-- FCF generation has scope to take leverage well below 3.0x
during 2015-2016.

Ratings Sensitivities

Positive pressure on the ratings would occur if Intralot met most
of the following rating factors on a sustained basis:

- Positive EBITDA growth derived from stronger return on capital
   on existing and future contracts with limited capex outlays.

- FFO-based net lease adjusted leverage reducing sustainably
   below 3.0x, with cash deposited predominantly in investment
   grade-rated counterparties.

- FFO fixed charge cover above 4.0x unaided by favorable
   interest carry.

- Evidence of sustained positive FCF generation.

Negative pressure on the ratings would occur if Intralot met most
of the following rating factors on a sustained basis:

- Evidence that new contracts or renewals are occurring at
   materially more onerous conditions for Intralot, such as
   lower margins, large upfront concession fees or capex outlays.

- FFO-based net lease adjusted leverage permanently above 3.5x.

- FFO fixed charge cover below 2.0x.


INTRALOT SA: Moody's Assigns '(P)B1' Corp. Family Rating
--------------------------------------------------------
Moody's has assigned a provisional (P)B1 Corporate Family Rating
to Intralot S.A. Upon confirmation of the capital structure and
assignment of definitive ratings, Moody's would expect to assign
a Probability of Default Rating of B1-PD. Concurrently, Moody's
assigned a provisional (P)B1 (LGD4, 50%) rating to the proposed
EUR300 million senior unsecured notes to be issued by Intralot
Finance Luxemburg S.A. The outlook on the ratings is stable. This
is the first time that Moody's has rated Intralot.

Moody's issues provisional ratings for debt instruments in
advance of the final sale of securities or conclusion of credit
agreements. Upon a conclusive review of the final documentation,
Moody's will endeavor to assign a definitive rating to the
different capital instruments. A definitive rating may differ
from a provisional rating.

Ratings Rationale:

The (P)B1 ratings primarily reflect (i) Intralot's leading market
position as a global supplier of integrated gaming systems and
services; (ii) Intralot's globally diversified activities with
presence in 36 countries, although with some dependency on some
individual countries; (iii) a good visibility and predictability
of future revenue generation given a large number of long-term
contracts; (iv) an experienced management team with a proven
track record of winning and retaining new contracts; (v) growth
potential from market liberalization especially in Asia as well
as (vi) a moderate financial leverage.

On the more negative side, the rating takes into account (vii)
Intralot's significant exposure to emerging market risk where it
generates a good share of group revenues and EBITDA (e.g. Greece,
Argentina, Jamaica, Morocco); (viii) Intralot's weak historic
free cash flow generation with negative free cash flows over the
period 2009-2012 with only a marginally positive free cash flow
in 2011; (ix) a significant erosion in profit margins from the
peak levels achieved in 2007, however still in line with its
major peers; (x) Intralot's high fluctuation in capital
expenditures resulting from business growth or new contract wins;
(xi) the regulatory risk regarding the gaming market and tax
regime in various jurisdictions in which Intralot operates as
well as (xii) some exposure to currency fluctuation due to the
fact that the majority of debt going forward is denominated in
EUR whilst a significant part of cash flows in currencies other
than the EUR with possibly some fluctuation in exchange rates
over time.

Furthermore, the rating considers that the consolidated reported
EBITDA has to be adjusted for minority stakes and needs to be
shared with partners which is not adequately reflected in the
calculation of leverage metrics based on consolidated results
(e.g Debt/EBITDA). This also applies to the reported cash balance
of around EUR 135 million, out of which a significant part is
located in subsidiaries with substantial minority interest or
trapped in individual countries.

Despite the fact that Intralot is based in Greece, the current
rating reflects (1) the group's modest reliance on its Greek
operations, which represent around 5.6% of group's revenues in
fiscal year 2012; (2) the fact that Intralot will raise all its
financing needs and service its debt outside of Greece (i.e., the
group generates most of its cash flows outside of Greece and will
use them to service the note interest and principal payments
before they are passed to the Greek parent company); and (3) the
bond and the bank facilities will be governed under New York and
English law. Therefore, the rating assigned is higher than the
country ceiling of Greece. However, the rating is also negatively
impacted by the high dependence of Intralot on other markets with
generally low sovereign ratings, such as Argentina (B3 negative);
Jamaica (Caa3 stable) or Morocco (Ba1 negative).

Rating Outlook

The stable outlook assumes a pro forma leverage of 3.2x for the
current fiscal year and a gradual de-leveraging over the coming
years driven predominantly by a steady increase in EBITDA with a
preservation of current EBITDA margins and positive free cash
flow generation from 2014 onwards applied to debt reduction. In
addition the stable outlook anticipates Intralot to sustain a
solid liquidity profile.

What Could Change The Ratings Down/Up

The B1 ratings could be downgraded in case of (i) Debt/EBITDA (as
adjusted by Moody's) exceeding 4.0x in any year going forward;
(ii) interest coverage measured as EBIT/ interest expense (as
adjusted by Moody's) falling below 2.0x; or the inability to
generate positive free cash flows (as adjusted by Moody's) from
2014 onwards. Also, a weakening of the company's short term
liquidity could result in a downgrade.

An upgrade over the next 12-18 months is rather unlikely, however
the ratings could be upgraded in case of (i) an improved business
profile with a higher exposure to more regulated markets; (ii)
Intralot being able to generate positive free cash flows on a
sustainable basis; as well as (iii) leverage ratio measured as
Debt/EBITDA (as adjusted by Moody's) falling well below 3.0x; and
(iv) interest coverage measured as EBIT/ interest expense (as
adjusted by Moody's) exceeding 3.5x. Also for an upgrade Moody's
would expect a higher cash balance available at subsidiaries that
are fully owned by Intralot.

Liquidity

Moody's deems Intralot's liquidity profile as adequate. Following
the assumed successful placement of the notes, cash and cash
equivalents available are anticipated to amount to EUR140 million
(although approximately half of that amount is deemed to be
trapped), together with the unused EUR125 million under the
revolving credit facility and cash flows from operations are
expected to be sufficient to cover the expected cash needs
resulting from working capital needs, capital expenditures,
dividend payout and debt maturities over the next 12-18 months.
Moody's also anticipates that Intralot will be able to maintain a
comfortable headroom under its financial covenants.

Structural Considerations

The (P)B1 rating on the proposed senior unsecured notes reflects
their position as unsecured obligations within Intralot's capital
structure. The notes benefit from unconditional and irrevocable
guarantees from Intralot S.A. and certain subsidiaries of
Intralot S.A. which represented approximately 68% of Intralot's
consolidated total assets and generated approximately 67% of
Intralot's consolidated EBITDA over the last twelve months period
ended March 31, 2013 . Moody's anticipates the guarantors assets
as well as EBITDA to exceed 70% of the group's consolidated
figures respectively going forward. In Moody's waterfall the
notes would rank on the same level of all of the issuer's
existing indebtedness including trade payables and pension
obligations.

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

Headquartered in Athens, Greece, Intralot is a leading vendor in
the gaming sector and at the same time a licensed gaming operator
through 28 individual licenses across 16 jurisdictions. Intralot
designs, develops, operates and supports custom-made gaming
solutions and provides innovative content, services and
technology to lottery and gaming organizations on a global scale
with presence across 55 jurisdictions in 36 countries worldwide.
In fiscal year 2012 Intralot generated revenues of approximately
EUR1.37 billion and reported an EBITDA of EUR178 million.


INTRALOT SA: S&P Assigns 'B-' CCR & Rates EUR300MM Notes 'B+'
-------------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned its 'B-'
long-term corporate credit rating to Greece-based gaming company
Intralot S.A.  At the same time, S&P placed the corporate credit
rating on Intralot on CreditWatch with positive implications.

In addition, S&P assigned its 'B+' issue rating to the
EUR300 million proposed senior unsecured notes to be issued by
Intralot's 100% subsidiary Intralot Finance Luxembourg S.A.

The ratings on Intralot reflect S&P's assessment of the company's
business risk profile as "fair" and financial risk profile as
"aggressive."  Intralot operates internationally and is one of
the leading players in the supply of integrated gaming systems
and services.  In addition, the company is a licensed gaming
operator and is active in game management on behalf of third
parties such as state operators.

"Our assessment of Intralot's business risk profile as "fair"
reflects Intralot's diversified geographic exposure and presence
in various gaming segments.  The company is one of the leading
players in the gaming technology industry, which is consolidated
and has high barriers to entry in terms of know-how and the need
for sizable investments.  After adjusting for industry-typical
accounting methods, such as reported revenues net of payouts and
taxes, we calculate that Intralot has a profitability margin of
more than 30%, at the high end of the gaming sector range of 15%-
35%.  The contract-based nature of Intralot's business provides
some medium-term visibility on its top line," S&P said.

"We assess Intralot's financial risk profile as "aggressive,"
mostly reflecting what we view as its fairly aggressive approach
to managing its debt maturity profile and free cash flow
generation so far," S&P added.

S&P aims to resolve the CreditWatch placement within the next 30-
90 days and following the completion of the EUR300 million notes
issuance and partial refinancing of Intralot's upcoming debt
maturities.  In resolving the CreditWatch, S&P will review the
size and documentation of Intralot's notes offering, along with
the company's use of the proceeds.

S&P will likely raise the rating on Intralot to 'B+' on the
successful completion of the notes issuance and partial
refinancing.  The upgrade would reflect that the company had
addressed its main near-term liquidity issues, specifically, its
2013-2014 debt maturities, with a refinancing that is neutral to
leverage and improves liquidity tangibly.

If management fails to implement the planned changes to the
company's capital structure, S&P would likely lower the rating on
Intralot to the 'CCC' category.


SEANERGY MARITIME: Swings to US$1.06-Mil. Profit in 1st Quarter
---------------------------------------------------------------
Seanergy Maritime Holdings Corp. reported net income of US$1.06
million on US$5.64 million of net vessel revenue for the three
months ended March 31, 2013, as compared with a net loss of
US$6.36 million on US$17.41 million of net vessel revenue for the
same period a year ago.

As of March 31, 2013, the Company had US$93.01 million in total
assets, US$193.56 million in total liabilities and a US$100.54
million total deficit.

"I am pleased to announce our first profitable financial quarter
since 2011, despite the challenging dry bulk market conditions.
Our net income was US$1.1 million compared to a net loss of
US$6.4 million for the same period last year.  During the first
quarter of 2013 charter rates continued to deteriorate and our
average daily Time Charter Equivalent ("TCE") rate decreased to
US$6,004 per vessel as compared to US$9,546 in the first quarter
of 2012.

"Regarding our financial restructuring, since the beginning of
2012 and as of the date of this press release, we managed to
reduce our indebtedness to US$176.9 million, from US$346.4
million, through finalized agreements with three out of our five
lenders.  In addition, we have entered into an agreement with our
fourth lender for the sale of three MCS's vessel owning
subsidiaries in exchange for a nominal cash consideration and
full satisfaction of the underlying loan of approximately US$38
million.  After giving effect to this transaction, we will have
reduced our indebtedness by approximately 61% to US$135 million.
We continue discussions with our remaining lender, aiming to
reach a solution that will enable Seanergy to complete the
restructuring of its outstanding debt."

A copy of the press release is available for free at:

                       http://is.gd/0gV4BH

                          About Seanergy

Athens, Greece-based Seanergy Maritime Holdings Corp. is an
international company providing worldwide seaborne transportation
of dry bulk commodities.  The Company owns and operates a fleet
of seven dry bulk vessels that consists of three Handysize, two
Supramax and two Panamax vessels.  Its fleet carries a variety of
dry bulk commodities, including coal, iron ore, and grains, as
well as bauxite, phosphate, fertilizer and steel products.

In its audit report on the consolidated financial statements for
the year ended Dec. 31, 2012, Ernst & Young (Hellas) Certified
Auditors Accountants S.A., in Athens, Greece, expressed
substantial doubt about Seanergy Maritime's ability to continue
as a going concern.  The independent auditors noted that the
Company has not complied with the principal and interest
repayment schedule and with certain covenants of its loan
agreements, which in turn gives the lenders the right to call the
debt.  "In addition, the Company has a working capital deficit,
recurring losses from operations, accumulated deficit and
inability to generate sufficient cash flow to meet its
obligations and sustain its operations."

The Company reported a net loss of US$193.8 million on US$55.6
million of net vessel revenue in 2012, compared with a net loss
of US$197.8 million on US$104.1 million of net vessel revenue in
2011.



=============
I R E L A N D
=============


* Moody's Notes Worsening Performance of Irish RMBS in April
------------------------------------------------------------
The performance of the Irish prime residential mortgage-backed
securities market continued to deteriorate during the three-month
period leading to April 2013, according to the latest indices
published by Moody's Investors Service.

From January to April 2013, the 90+ day delinquency trend and
360+ day delinquent loans (which are used as a proxy for
defaults) reached a new peak, rising steeply to 18.1% from 17.3%
and to 9.4% from 8.5%, respectively, of the outstanding
portfolios. However, 30+ day delinquencies are increasing at a
slower pace, which could lead to a similar decrease for later
stage arrears in the coming quarters. Moody's annualized total
redemption rate (TRR) trend was 2.7% in April 2013, down from
3.3% in April 2012.

Moody's outlook for Irish RMBS is negative. The steep decline in
house prices since 2007 has placed the majority of borrowers deep
into negative equity. Low house prices increased the severity of
losses on defaulted mortgages.

On March 13, Moody's placed on review for downgrade the ratings
of Phoenix Funding 4 Limited, as part of 60 classes of notes in
41 RMBS and 7 asset-backed securities (ABS) transactions in
Spain, Italy and Ireland, as a result of potentially insufficient
credit enhancement. The determination of the applicable credit
enhancement that drives 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.

As of April 2013, 18 Moody's-rated Irish prime RMBS transactions
had an outstanding pool balance of EUR43.18 billion. This
constitutes a year-on-year decrease of 13.8% compared with
EUR50.07 billion for the same period in the previous year.



=========
I T A L Y
=========


BANCA MONTE: S&P Cuts Long-Term Counterparty Credit Rating to 'B'
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its long-
term counterparty credit rating on Italy-based Banca Monte dei
Paschi di Siena SpA (MPS) to 'B' from 'BB', and affirmed the 'B'
short-term rating.

S&P also lowered its rating on MPS' Lower Tier 2 subordinated
notes to 'CCC-' from 'CCC+'.  S&P affirmed the ratings on MPS'
junior subordinated debt at 'CCC-' and on its preferred stock at
'C'.

At the same time, S&P removed the ratings from CreditWatch, where
it placed them with negative implications on Dec. 5, 2012.

S&P subsequently withdrew all ratings at MPS' request.

The downgrade reflects S&P's view of the reduction of about
EUR1 billion in MPS' total adjusted capital (TAC) for 2011
following MPS' restatement of its accounting of certain
transactions.  The downgrade also reflects S&P's view of MPS'
recently published results for fiscal-year 2012 and first-quarter
2013.

On March 28, 2013, MPS restated its treatment of the Alexandria,
Santorini, and Nota Italia structured transactions, as well as in
respect of some staff costs.  Overall, the restatement resulted
in a reduction of about EUR1 billion in MPS' total adjusted
capital (TAC) in December 2011.

Furthermore, MPS reported losses of EUR3.2 billion for fiscal
2012, higher than S&P expected.  In addition, MPS reported a
still-high EUR101 million net loss in first-quarter 2013.  These
higher losses mainly resulted from MPS' high loan loss provisions
due to increased nonperforming assets (NPAs).  In 2012, MPS' net
inflow of NPAs amounted to 4.2% of gross loans at year-end 2011,
and MPS posted an additional 1.2% inflow of NPAs for first-
quarter 2013.  As a result, MPS' cost of risk increased, by S&P's
calculation, to 187 basis points (bps) in 2012 and about 140 bps
(annualized) in the first quarter of 2013.

S&P expects that the economic environment in Italy will likely
continue to deteriorate in 2013, with GDP contracting by about
1.4% in 2013, having declined by 2.4% in 2012.  In S&P's opinion,
given Italy's deep and prolonged economic deterioration, MPS is
likely to face more difficulties in improving performance than
S&P previously anticipated.

"In particular, we expect that MPS' operating profitability will
continue to be squeezed in 2013 and 2014 by continued pressures
on revenues, notwithstanding its cost-cutting efforts.
Furthermore, we anticipate that MPS' NPAs will continue
accumulating in 2013 and 2014.  We anticipate continued
deterioration in construction and real estate sectors and small
and midsize enterprise segments, to which MPS is exposed and
which are particularly affected by the prolonged downturn.
Because of this deterioration, we consider that MPS' cost of risk
is likely to remain significantly higher than the average for the
Italian banking sector.  In our view, such high credit losses
will significantly affect MPS' ability to retain earnings to
sustain its capital position over the next 18-24 months," S&P
said.

"In addition, we have incorporated into our assessment of MPS'
capital the effect of MPS' restated accounting and the higher-
than-expected losses that MPS recorded in 2012 and first-quarter
2013.  As a consequence, it is unlikely in our view that MPS'
Standard & Poor's risk-adjusted capital (RAC) ratio, before
diversification adjustments, will be above 3% by the end of 2014.
Therefore, we have changed our assessment of MPS' capital and
earnings to "very weak" from "weak," as our criteria define such
terms," S&P added.

"We forecast a declining trend in 2013-2014 in MPS' TAC because
of our expectation of MPS' limited ability to retain earnings.
Therefore, an increasing part of the Nuovi Strumenti Finanziari
(NSF; the government instruments MPS issues) will not form part
of our TAC measure by year-end 2014.  This is because under our
criteria we limit capital credit assigned to hybrids with
intermediate equity content.  That said, we think that NSFs may
effectively cushion some of the bank's vulnerabilities in ways
not fully captured in our rating.  Our criteria, however, contain
the possibility to give an issuer's stand-alone credit profile
(SACP) a one-notch uplift to reflect certain credit positives
relative to peers not captured elsewhere in the rating.  In MPS'
case, therefore, we have incorporated such an uplift to reflect
the size of MPS' cushion compared with that of its peers that
have a similar SACP," S&P noted.

In early 2013, MPS increased its dependence on short-term sources
of funding, which S&P considers inherently less stable than long-
dated funding.  MPS' ratio of broad liquid assets to short-term
wholesale funding decreased to 1.4% at the end of March 2013 from
about 2% at the end of December 2012.  Moreover, MPS' loan-to-
deposit ratio has continued to increase to about 144% at the end
of March 2013 from about 130% at year-end 2011.  S&P's view of
MPS' worsened liquidity position has led it to revise its
liquidity assessment to "moderate" from "adequate."  Moreover,
S&P considers that MPS' increased dependence on short-term
funding sources will make it less likely that MPS will reach a
more balanced funding structure by the time its long-term
refinancing operations (LTROs) expire, in contrast with S&P's
previous expectation.  S&P previously incorporated one notch of
short-term support as it anticipated that MPS' ongoing access to
European Central Bank (ECB) funding facilities, particularly the
LTROs, should have created enough time for it to rebalance and
make more sustainable its funding profile.  As S&P now expects
that MPS will maintain a proportionally high reliance on short-
term ECB funding, even after 2014, it has removed the one notch
of short-term support.

As a result of S&P's lowering MPS' SACP, it also lowered its
ratings on its nondeferrable subordinated debt to 'CCC-' from
'CCC+' and affirmed its rating on its Upper Tier 2 debt at 'CCC-
'. Despite the usual "notching down from the SACP" treatment for
such instruments, S&P has not lowered the relevant ratings in
this case because, according to its criteria, it rates an
instrument 'CC' only when the relevant issuer has announced that
it will miss its next interest or principal payment.

S&P affirmed its ratings on MPS' Tier 1 hybrid instruments at
'C'. The rating reflects MPS' suspension of these instruments'
coupon payment.

At the time of the withdrawal, the outlook on MPS was negative,
reflecting the possibility that S&P could have lowered the
ratings if it had perceived that MPS' capitalization had
continued to deteriorate.  In particular, S&P could have lowered
the ratings if it anticipated that its forecast RAC ratio for the
end of 2014 would fall below 2%, deviating from its baseline
expectation.  This would most likely have occurred because of a
weaker earnings profile than S&P anticipated.  The negative
outlook also reflected S&P's view that it could have lowered the
ratings if it had anticipated that deteriorating economic and
banking industry conditions in Italy could have impaired MPS'
financial profile.


CAPITAL MORTGAGE: Moody's Cuts Rating on EUR5.5MM E Notes to Caa1
-----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of four
senior and five junior and mezzanine notes in four Italian
residential mortgage-backed securities (RMBS) transactions:
Capital Mortgage S.r.l. (BIPCA Cordusio RMBS), Capital Mortgage
S.r.l. (Capital Mortgages Series 2007-1), Eurohome (Italy)
Mortgages S.r.l. and Eurohome Mortgages 2007-1 plc..
Insufficiency of credit enhancement to address sovereign risk and
revision of key collateral assumptions have prompted the
downgrade.

The rating action concludes the review of two notes placed on
review on August 2, 2012, following Moody's downgrade of Italian
government bond ratings to Baa2 from A2 on July 13, 2012 and five
notes placed on review on November 27, 2012, following Moody's
revision of key collateral assumptions for the entire Italian
RMBS market. This rating action also concludes the review of
Class A notes in Eurohome (Italy) Mortgages S.r.l. and Eurohome
Mortgages 2007-1 plc, placed on review on 13 Mar 2013, due to the
insufficiency of credit enhancement to address sovereign risk
following the introduction of additional factors in Moody's
analysis to better measure the impact of sovereign risk on
structured finance transactions.

Ratings Rationale:

The rating action primarily reflects the insufficiency of credit
enhancement to address sovereign risk and revision of key
collateral assumptions.

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.

- Revision of Key Collateral Assumptions

Moody's has revised its lifetime loss expectation (EL) assumption
in Capital Mortgage S.r.l. (BIPCA Cordusio RMBS) to 4.89% from
3.93% and its MILAN CE assumption to 11% from 7.7%. Moody's has
maintained its MILAN CE assumption and its lifetime loss
expectation (EL) for Capital Mortgage S.r.l. (Capital Mortgages
Series 2007-1), Eurohome (Italy) Mortgages S.r.l. and Eurohome
Mortgages 2007-1 plc.

- Exposure to Counterparty Risk

Moody's rating review takes into consideration the exposure to
the relevant servicers acting as collection account bank and
Treasury Accounts for the four transactions. The sweeping
frequency to the treasury account is daily in all four
transactions. Moody's has assessed the probability and effect of
a default and the ability of the issuers to meet their
obligations under the transactions. The conclusion takes also
into consideration the fully funded liquidity facility in
Eurohome (Italy) Mortgages S.r.l. and Eurohome Mortgages 2007-1
plc. that is available to cover interest shortfalls. Moody's
concluded that the presence of the counterparties did not impact
the ratings.

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.

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 ABSROM/ ABSCORE to
model the cash flows and determine the loss for each tranche. The
cash flow model evaluates all default scenarios that are then
weighted considering the probabilities of the lognormal
distribution assumed for the portfolio default rate. In each
default scenario, the corresponding loss for each class of notes
is calculated given the incoming cash flows from the assets and
the outgoing payments to third parties and noteholders.
Therefore, the expected loss or EL for each tranche is the sum
product of (i) the probability of occurrence of each default
scenario; and (ii) the loss derived from the cash flow model in
each default scenario for each tranche.

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: Capital Mortgage S.r.l. (BIPCA Cordusio RMBS)

EUR61.8M B Notes, Downgraded to Baa2 (sf); previously on Aug 2,
2012 Downgraded to A2 (sf) and Placed Under Review for Possible
Downgrade

EUR14.3M C Notes, Downgraded to Ba1 (sf); previously on Aug 2,
2012 A2 (sf) Placed Under Review for Possible Downgrade

EUR18M D Notes, Downgraded to B1 (sf); previously on Nov 27, 2012
Downgraded to Baa3 (sf) and Remained On Review for Possible
Downgrade

EUR5.5M E Notes, Downgraded to Caa1 (sf); previously on Nov 27,
2012 Downgraded to B1 (sf) and Remained On Review for Possible
Downgrade

Issuer: Capital Mortgage S.r.l. (Capital Mortgages Series 2007-1)

EUR1736M A1 Notes, Downgraded to Baa1 (sf); previously on Nov 27,
2012 Downgraded to A3 (sf) and Remained On Review for Possible
Downgrade

EUR644M A2 Notes, Downgraded to Baa1 (sf); previously on Nov 27,
2012 Downgraded to A3 (sf) and Remained On Review for Possible
Downgrade

EUR74M B Notes, Downgraded to B1 (sf); previously on Nov 27, 2012
Downgraded to Ba1 (sf) and Remained On Review for Possible
Downgrade

Issuer: Eurohome (Italy) Mortgages S.r.l.

EUR211.95M A Notes, Downgraded to Ba2 (sf); previously on Mar 13,
2013 Baa1 (sf) Placed Under Review for Possible Downgrade

Issuer: Eurohome Mortgages 2007-1 plc

EUR262.5M ANotes, Downgraded to Ba3 (sf); previously on Mar 13,
2013 Ba1 (sf) Placed Under Review for Possible Downgrade



=====================
N E T H E R L A N D S
=====================


AVOCA CLO II: Moody's Affirms 'Caa3' Rating on Class D Notes
------------------------------------------------------------
Moody's Investors Service upgraded the ratings of the following
notes issued by Avoca CLO II B.V.:

EUR21M Class A-2 Senior Secured Floating Rate Notes due 2020,
Upgraded to Aa1 (sf); previously on Jul 17, 2012 Downgraded to
Aa3 (sf)

EUR27M Class B Senior Secured Deferrable Floating Rate Notes due
2020, Upgraded to Baa2 (sf); previously on Jul 17, 2012
Downgraded to Baa3 (sf)

Moody's also affirmed the ratings of the following notes issued
by Avoca CLO II B.V.:

EUR256M Class A-1 Senior Secured Floating Rate Notes due 2020,
Affirmed Aaa (sf); previously on Sep 2, 2011 Upgraded to Aaa (sf)

EUR15.7M Class C-1 Senior Secured Deferrable Floating Rate Notes
due 2020, Affirmed B1 (sf); previously on Jul 17, 2012 Downgraded
to B1 (sf)

EUR7.5M Class C-2 Senior Secured Deferrable Fixed Rate Notes due
2020, Affirmed B1 (sf); previously on Jul 17, 2012 Downgraded to
B1 (sf)

EUR5M Class D Senior Secured Deferrable Floating Rate Notes due
2020, Affirmed Caa3 (sf); previously on Jul 17, 2012 Downgraded
to Caa3 (sf)

Avoca CLO II B.V., issued in November 2004, is a Collateralized
Loan Obligation ("CLO") backed by a portfolio of mostly high
yield European and US loans. The portfolio is managed by Avoca
Capital Holdings Limited. The transaction exited its reinvestment
period in January 2010. The portfolio is comprised exclusively of
senior secured loans, and exposed to 91 obligors with a reported
diversity score of 19.88.

Ratings Rationale:

According to Moody's, the rating actions taken on the notes are
primarily a result of continued deleveraging of the senior notes
and subsequent increase in the senior overcollateralization
ratios since the last rating action in July 2012.

Moody's notes that the Class A notes have paid down by
approximately 60% or EUR152.8 million since closing and 16% or
EUR40.1 million since the rating action in July 2012. As a result
of deleveraging, the overcollateralization ratios for the senior
notes have increased since the last rating action in July 2012.
As of the latest trustee report dated April 30, 2013, the Class
A, B, C and D overcollateralization ratios are reported at
145.58%, 119.58%, 103.67%, 100.78%, respectively versus July 2012
levels of 134.08%, 115.16%, 102.70%, 100.36%, respectively.
Reported WARF has improved to 2812 from 2940 between July 2012
and April 2013. Additionally, defaulted securities total about
EUR6.4 million of the underlying portfolio compared to EUR6.7
million in July 2012. The current exposure of the deal to assets
rated Caa is 1.65% compared to 10.38% at the last rating action.

In its base case, Moody's analyzed the underlying collateral pool
to have a performing par and principal proceeds balance of
EUR181.21 million, defaulted par of EUR6.44 million, a weighted
average rating factor of 3585 (corresponding to a default
probability of 24.71%), a weighted average recovery rate upon
default of 50.0% compared to 46.92% previously for a Aaa
liability target rating, a diversity score of 19.48 and a
weighted average spread of 3.45% compared to 2.99% at last rating
action. The default probability is derived from the credit
quality of the collateral pool and Moody's expectation of the
remaining life of the collateral pool. The average recovery rate
to be realized on future defaults is based primarily on the
seniority of the assets in the collateral pool. For a Aaa
liability target rating, Moody's assumed that a portfolio exposed
solely to senior secured corporate assets would recover 50% upon
default. Historical and market performance trends and collateral
manager latitude for trading the collateral are also relevant
factors. These default and recovery properties of the collateral
pool are incorporated in cash flow model analysis where they are
subject to stresses as a function of the target rating of each
CLO liability being reviewed.

In addition to the base case analysis, Moody's also performed
sensitivity analyses on key parameters for the rated notes:
Deterioration of credit quality to address the refinancing and
sovereign risks -- Approximately 20.98% of the portfolio are
European corporate rated B3 and below and maturing between 2014
and 2016, which may create challenges for issuers to refinance.
Approximately 7.20% of the portfolio are exposed to obligors
located in Italy, Ireland and Spain. Moody's considered model
runs where the base case WARF was increased to 3933 and 4341 by
forcing ratings on 25% and 50% of such exposures to Ca. These
runs generated model outputs that were within one notch from the
base case results.

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

Sources of additional performance uncertainties:

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

2) Large Exposure to Credit Estimates: Moody's also notes that
around 51.23% of the collateral pool consists of debt obligations
whose credit quality has been assessed through Moody's credit
estimates. Large single exposures to obligors bearing a credit
estimate have been subject to a stress applicable to concentrated
pools as per the report titled "Updated Approach to the Usage of
Credit Estimates in Rated Transactions" published in October
2009.

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

4) Weighted average life: The notes' ratings are sensitive to the
weighted average life assumption of the portfolio, which may be
extended due to the manager's decision to reinvest into new issue
loans or other loans with longer maturities and/or participate in
amend-to-extend offerings. Extending the weighted average life of
the portfolio may positively or negatively impact the ratings of
the notes depending on their seniority within the transaction's
structure.

The principal methodology used in this rating was "Moody's Global
Approach to Rating Collateralized Loan Obligations" published in
May 2013.

Moody's modeled the transaction using the Binomial Expansion
Technique, as described in Section 2.3.2.1 of the "Moody's Global
Approach to Rating Collateralized Loan Obligations" rating
methodology published in May 2013.

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

The cash flow model used for this transaction is Moody's CDOEdge
model.

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

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

On March 12, 2013, Moody's released a report, which describes how
sovereign credit deterioration impacts structured finance
transactions and the rationale for introducing two new parameters
into its general analysis of such transactions. In the coming
months, Moody's will update its methodologies relating to multi-
country portfolios including the one for Collateralized Loan
Obligations (CLOs) as well as for other types of collateralized
debt obligations (CDO), asset-backed commercial paper (ABCP) and
commercial mortgage-backed securities (CMBS). Once those
methodologies are updated and implemented, the rating of the
notes affected by these rating actions may be negatively
affected.


CARLYLE GLOBAL: S&P Assigns BB Rating to Class E Notes
------------------------------------------------------
Standard & Poor's Ratings Services assigned its credit ratings to
Carlyle Global Market Strategies Euro CLO 2013-1 B.V.'s fixed-
and floating-rate class A, B-1, B-2, C-1, C-2, D-1, D-2, and E
notes. At closing, Carlyle Global Market Strategies Euro CLO
2013-1 also issued unrated class S-1 and S-2 notes.

S&P's ratings reflect its assessment of the collateral
portfolio's credit quality.  S&P considers that the portfolio as
of closing is diversified, primarily comprising broadly
syndicated speculative-grade senior secured term loans and senior
secured bonds.

S&P's ratings also reflect the credit enhancement available to
the rated notes through the subordination of cash flows payable
to the subordinated notes.  S&P subjected the capital structure
to a cash flow analysis to determine the break-even default rate
(BDR) for each rated class of notes.

To determine the BDR for each rated class, S&P used the target
par amount, the covenanted weighted-average spread, the
covenanted weighted-average coupon, and the covenanted weighted-
average recovery rates.  S&P applied various cash flow stress
scenarios, using four different default patterns, in conjunction
with different interest rate stress scenarios for each liability
rating
category.

S&P's ratings are commensurate with its assessment of available
credit enhancement following its credit and cash flow analysis.
S&P's analysis shows that the available credit enhancement for
each class of notes was sufficient to withstand the defaults that
it applied in its supplemental tests (not counting excess spread)
outlined in its corporate collateralized debt obligation (CDO)
criteria.

Following the application of S&P's nonsovereign ratings criteria,
it considers that the transaction's exposure to country risk is
sufficiently mitigated at the assigned rating levels.  This is
because the concentration of the pool comprising assets in
countries rated lower than 'A-' is limited to 10% of the
aggregate collateral balance.

The transaction's legal structure is bankruptcy-remote, in
accordance with S&P's European legal criteria.

Carlyle Global Market Strategies Euro CLO 2013-1 is a European
cash flow corporate loan collateralized loan obligation (CLO)
securitization of a revolving pool, comprising primarily euro-
denominated senior secured loans and bonds issued by European
borrowers. CELF Advisors LLP is the collateral manager.

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

        http://standardandpoorsdisclosure-17g7.com/1574.pdf

RATINGS LIST

Carlyle Global Market Strategies Euro CLO 2013-1 B.V.
EUR350 Million Fixed- And Floating-Rate Notes

Class                 Rating           Amount
                                     (mil. EUR)
A                     AAA (sf)         210.00
B-1                   AA (sf)           29.50
B-2                   AA (sf)            9.00
C-1                   A (sf)            10.00
C-2                   A (sf)            9.825
D-1                   BBB (sf)           7.00
D-2                   BBB (sf)          8.175
E                     BB (sf)           24.50
S-1                   NR                24.50
S-2                   NR                17.50

NR-Not rated.


LEOPARD CLO II: Moody's Lowers Rating on Class C Notes to 'Caa2'
----------------------------------------------------------------
Moody's Investors Service has taken the rating actions on the
following notes issued by Leopard CLO II B.V.

EUR45M Class A-2 Senior Secured Floating Rate Notes due 2019,
Upgraded to Aa1 (sf); previously on Jun 19, 2012 Upgraded to Aa3
(sf)

EUR15M Class C Senior Secured Deferrable Floating Rate Notes due
2019, Downgraded to Caa2 (sf); previously on Jun 19, 2012
Downgraded to B2 (sf)

EUR8.25M Class D Senior Secured Deferrable Floating Rate Notes
due 2019 (current balance EUR9.7M), Downgraded to Ca (sf);
previously on Jun 19, 2012 Downgraded to Caa3 (sf)

Moody's also affirmed the ratings of the following notes issued
by Leopard CLO II B.V.

EUR245.2M Class A-1 Senior Secured Floating Rate Notes due 2019
(current balance EUR28.2M), Affirmed Aaa (sf); previously on Apr
8, 2004 Assigned Aaa (sf)

EUR22M Class B Senior Secured Deferrable Floating Rate Notes due
2019, Affirmed Ba1 (sf); previously on Aug 24, 2011 Upgraded to
Ba1 (sf)

Leopard CLO II, issued in April 2004, is a Collateralized Loan
Obligation ("CLO") backed by a portfolio of mostly high yield
senior secured European loans. The portfolio is managed by M&G
Investment Management Limited. The transaction passed its
reinvestment period in April 2009.

Ratings Rationale:

According to Moody's, the upgrade of Class A-2 notes is primarily
a result of continued deleveraging of the Class A-1 notes and
subsequent increase in the Class A overcollateralization (the
"OC") ratio since the last rating action in June 2012. The
downgrades of the Class C and Class D notes are driven by the
decrease of their respective OC ratios and their increased
exposure to assets rated B3 and below.

Moody's notes that the Class A-1 notes have paid down by
approximately 12.7% of its original rated balance or EUR31.3
million since the last rating action in June 2012. As of the
latest trustee report dated May 2013, the Class A, Class B, Class
C and Class D OC ratios are 153.13%, 117.76%, 101.74% and 94.65%,
respectively versus May 2012 levels of 145.29%, 120.03%, 107.31%
and 101.40%, respectively. Class C and Class D OC tests are now
in breach. The Trustee reported WARF has decreased to 3,129 from
3,150 between May 2012 and May 2013, however during the same
period total amount of securities rated B3 and below have
increased to 59% from 54%.

In its base case, Moody's analyzed the underlying collateral pool
to have a performing par and principal proceeds balance of
EUR111.8 million, defaulted par of EUR9.8 million, a weighted
average default probability of 25.24% over 3.28 years (consistent
with a Weighted Average Rating Factor of 4,039), a weighted
average recovery rate upon default of 45.38% for a Aaa liability
target rating, a diversity score of 20 and a weighted average
spread of 3.52%. The default probability is derived from the
credit quality of the collateral pool and Moody's expectation of
the remaining life of the collateral pool. The average recovery
rate to be realized on future defaults is based primarily on the
seniority of the assets in the collateral pool. For a Aaa
liability target rating, Moody's assumed that 86.81% of the
portfolio exposed to senior secured corporate assets would
recover 50% upon default and 13.19% non first-lien loan corporate
assets would recover 15%. In each case, historical and market
performance trends and collateral manager latitude for trading
the collateral are also relevant factors. These default and
recovery properties of the collateral pool are incorporated in
cash flow model analysis where they are subject to stresses as a
function of the target rating of each CLO liability being
reviewed.

In addition to the base case analysis, Moody's also performed
sensitivity analyses on key parameters for the rated notes:
Deterioration of credit quality to address the refinancing and
sovereign risks -- Approximately 35.47% of the portfolio is rated
B3 and below with maturities between 2014 and 2016, which may
create challenges for issuers to refinance. The portfolio is also
exposed 7.08% to obligors located in Ireland and Spain. Moody's
considered the scenario where the WARF of the portfolio was
increased to 4,594 by forcing to Ca the credit quality of 25% of
such exposures subject to refinancing or sovereign risks. This
scenario generated model outputs that were up to one notch lower
than the base case results.

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

Sources of additional performance uncertainties:

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

2) Large Exposure to Credit Estimates: Moody's also notes that
around 61.68% of the collateral pool consists of debt obligations
whose credit quality has been assessed through Moody's credit
estimates. Large single exposures to obligors bearing a credit
estimate have been subject to a stress applicable to concentrated
pools as per the report titled "Updated Approach to the Usage of
Credit Estimates in Rated Transactions" published in October
2009.

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

The principal methodology used in this rating was "Moody's Global
Approach to Rating Collateralized Loan Obligations" published in
May 2013.

Moody's modeled the transaction using the Binomial Expansion
Technique, as described in Section 2.3.2.1 of the "Moody's Global
Approach to Rating Collateralized Loan Obligations" rating
methodology published in May 2013.

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

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

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

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

On March 11, 2013, Moody's released a special comment which
describes how sovereign credit deterioration impacts structured
finance transactions and the rationale for introducing two new
parameters into its general analysis of such transactions. In the
coming months, Moody's will update its methodologies relating to
multi-country portfolios including the one for CLOs as well as
for other types of Collateralized Debt Obligations (CDO), Asset-
Backed Commercial Paper (ABCP) and Commercial Mortgage-Backed
Securities (CMBS). Once updated methodologies are implemented,
the rating[s] of the notes affected by these actions may be
negatively impacted.



===========
P O L A N D
===========


MALMA: Lubella Acquires Assets
------------------------------
Warsaw Business Journal reports that pasta producer Lubella has
acquired the assets of Malma.

Lubella also announced plans to invest PLN50 million into
production and logistics involving the Malma brand, WBJ relates.
It will offer jobs to the former employees of the Malma factory
in Malbork, WBJ notes.

Malma was declared bankrupt in 2010 and stopped production at its
Malbork plant in 2011, WBJ recounts.  Its problems started when
in 2005 lender Bank Pekao demanded that the company pay back its
loans, WBJ discloses.

Malma is a Polish pasta maker.



===============
P O R T U G A L
===============


CHAVES SME I: Moody's Confirms 'Ba2' Ratings on 2 Note Classes
--------------------------------------------------------------
Moody's Investors Service confirmed the respective Ba2 (sf) and
Caa2 (sf) ratings of the Class B and Class C notes issued by
Chaves SME CLO No. 1 (Chaves SME). At the same time, the rating
agency affirmed the Baa3 (sf) rating of the Class A notes and the
respective Ca (sf) and C (sf) ratings of the Class D and Class E
notes. Adequate credit enhancement, which protects against
sovereign risk and weak performance, primarily drove the rating
action.

The rating action concludes the review for downgrade initiated by
Moody's on September 11, 2012. Chaves SME is a Portuguese asset-
backed securities (ABS) transaction backed by loans to small and
medium-sized enterprises (SME) originated by BPN - Banco
Portuguese de Negocios, S.A. (rating withdrawn following the
acquisition by Banco BIC Portuguese in May 2012).

Ratings Rationale:

The rating action primarily reflects 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 had no negative effect on the
ratings of all classes of notes in this transaction.

At present the current level of credit enhancement available
under the Class B notes (40.78% as of May 2013) is sufficient to
support the confirmation at Ba2 (sf).

- 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 Portuguese country ceiling is Baa3, which is the maximum
rating that Moody's will assign to a domestic Portuguese issuer
including structured finance transactions backed by Portuguese
receivables. 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 the volatility of the portfolio
distribution, 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 has reviewed its default probability (DP) and recovery
rate assumptions for Chaves SME's collateral portfolio taking
into account the performance deterioration and the borrower
concentration in the portfolio. As of May 2013, the 90-180 day
delinquencies were 6.2% of the current pool balance, the
cumulative defaults (the balance of loans that are more than 180
days in arrears) increased to 7.16% of the total original balance
of the portfolio plus the sum of replenishments, compared to
6.18% in May 2012. Furthermore, the principal deficiency ledger
(PDL) stood at EUR29.53 million, or 31.94% of the total
outstanding balance of the notes as of the latest reporting date
(May 2013).

As a result, Moody's has increased its cumulative mean default
assumption to 24.0% of the current portfolio balance,
corresponding to an average rating proxy of low B3 for the
portfolio, under the revised remaining weighted average life
assumption of 3.3 years. This assumption on future defaults
implies a revised cumulative mean default calculation for the
entire life of the transaction of 8.5%, which is expressed as a
percentage of the original portfolio balance and all
replenishments. Moody's updated the assumption for the fixed
recovery rate to 35%. Moody's also took into consideration the
fact that the borrower concentration in the portfolio has
increased significantly. The top 10 borrowers account for 27.79%
and the top single borrow now accounts for 3.85% of the pool in
May 2013. According to the updated methodology, Moody's has
increased the CoV to 78.0% from 58.0%, which, combined with the
revised mean DP and recovery rate, resulted in a portfolio credit
enhancement of 43.0%.

- Moody's Has Considered Exposure to Counterparty Risk

The conclusion of Moody's rating review also takes into
consideration the exposure to BPN (now known as Banco BIC), which
acts as servicer and collections account bank. The servicer
transfers collections of portfolio daily to the transitional
account at Citibank International plc -- Sucursal em Portugal
(Baa1/P-2). The transaction manager then transfers the cash
collections daily from the transitional account to the
transaction account at Citibank N.A. (London Branch) (A3/(P)P-2),
where the cash reserve are also held.

Moody's has incorporated into its analysis the additional
potential losses due to commingling risk arising from both Banco
BIC and Citibank and the set-off risk (around 8.5%) that
borrowers would set their deposits off against outstanding loans
following a potential servicer insolvency.

The rating agency also assesses the exposure to Royal Bank of
Scotland plc (A3/ P-2) as swap counterparty, which does not have
a negative effect on the rating levels at this time.

- 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 the Request for Comment, "Approach to Assessing Linkage to
Swap Counterparties in Structured Finance Cashflow Transactions:
Request for Comment", published in July 2012.

In reviewing this transaction, Moody's used ABSROM to model the
cash flows and determine the loss for each tranche. The cash flow
model evaluates all default scenarios that are then weighted
considering the probabilities of the inverse normal distribution
assumed for the portfolio default rate. 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 this rating were "Moody's Approach to
Rating EMEA SME Balance Sheet Securitizations", published in May
2013 and "The Temporary Use of Cash in Structured Finance
Transactions: Eligible Investment and Bank Guidelines", published
in March 2013.

List of Affected Ratings:

Issuer: Chaves SME CLO No. 1

EUR527.55M A Notes, Affirmed Baa3 (sf); previously on Sep 11,
2012 Downgraded to Baa3 (sf)

EUR21M B Notes, Confirmed at Ba2 (sf); previously on Sep 11, 2012
Ba2 (sf) Placed Under Review for Possible Downgrade

EUR38.05M C Notes, Confirmed at Caa2 (sf); previously on Sep 11,
2012 Caa2 (sf) Placed Under Review for Possible Downgrade

EUR4.9M D Notes, Affirmed Ca (sf); previously on Jul 9, 2009
Downgraded to Ca (sf)

EUR9.6M E Notes, Affirmed C (sf); previously on Jul 9, 2009
Downgraded to C (sf)


PORTUCEL SA: Moody's Rates EUR350MM Senior Notes Issue 'Ba3'
------------------------------------------------------------
Moody's assigned a definitive Ba3 (LGD 4, 50%) rating to the
EUR350 million senior unsecured notes issued by Portucel, S.A.
The company's Ba3 corporate family rating (CFR) and Ba3-PD
probability of default rating (PDR) as well as the stable outlook
remain unchanged.

Ratings Rationale:

Moody's definitive ratings are in line with the provisional
ratings assigned on May 7, 2013.

Portucel's Ba3 CFR continues to reflect the group's solid
business profile, healthy capital structure and strong free cash
generation ability on a standalone basis with significant debt
sitting at its majority shareholder Semapa, and the historical
and likely future significant dividends which may be used to
service Semapa's debt. In its analytical consideration, Moody's
has therefore included about EUR 900 million of net debt owed by
Semapa, reflected in a Corporate Family Rating that is below
Portucel's stand-alone credit profile. On this basis, Moody's
calculates a pro forma Moody's adjusted leverage of around 4.5x
Debt/EBITDA as of March 2013 (including debt at Semapa level),
which is fairly high for a Ba3 rating.

More fundamentally, the rating is supported by (i) Portucel's
well-invested, cost efficient and fully-integrated asset base;
(ii) its full integration into pulp and energy with good access
to domestic wood supporting (iii) a long-standing track record of
stable and comparatively high profitability with adjusted EBITDA
margins consistently in the mid to high 20% and low volatility,
also when compared to peers. On a more negative note, the rating
is constrained by (i) the inherent volatility of the paper and
pulp industry which has proven to be highly cyclical and closely
linked to overall macroeconomic conditions as well as the
declining paper markets in Europe, (ii) the fairly small scale
when compared to peers as well as limited geographic
diversification; and (iii) the highly focused product portfolio
with uncoated fine paper production generating about 80% of group
sales. Moody's also noted the event risk related to any
production issues given the limited number of mills within
Portugal. While Portucel's exposure to Portugal is low, Moody's
still considers it a risk factor as the group's entire production
base is located in the country, which bears the risk of contagion
from a weak sovereign risk profile.

The stable outlook reflects Moody's expectation that Portucel
will maintain solid credit protection measures for its rating as
indicated by Debt/EBITDA (as defined by Moody's) remaining below
3 times (1.9x per December 2012) excluding the debt sitting at
Semapa. It also takes into account the likelihood of worsening
leverage metrics in the next two to three years should Semapa
look to de-lever by increasing debt at Portucel (with
corresponding high dividend pay outs). It also expects Portucel
to proactively refinance debt maturities, considering its fairly
short debt maturity profile.

Portucel's short term liquidity is considered adequate given the
sizeable cash position pro forma for the refinancing. Other
internal sources of cash pertain to operating cash generation. In
addition, Moody's notes that Portucel has two EUR50 million
unused Commercial Paper programs and a EUR20 million undrawn
credit facility, but at relatively short tenor, at its disposal.
Cash uses largely pertain to capex and dividend payments as well
as seasonal working capital swings. There are no major maturities
before 2015 when bond loans of around EUR180 million and
commercial papers of around EUR125 million come due. Moody's
understands that Portucel's financing arrangements contain
various sets of financial covenants and that the group currently
is expected to retain ample headroom.

The Ba3 rating assigned to the EUR350 million senior unsecured
notes is in line with the group's CFR, considering that
Portucel's debt arrangements senior unsecured and will rank pari
passu with the proposed bond.

A higher rating would require Portucel to reduce leverage in
terms of Moody's adjusted Debt/EBITDA below 2 times (based on
Portucel standalone). In addition, Moody's would expect Portucel
to retain a track record of resilient EBITDA margins in the mid
to high 20% as well as healthy liquidity, including sufficient
headroom under financial covenants. However, as long as Semapa's
financial profile is weak and debt servicing reliant on
Portucel's cash generation ability, a higher rating is unlikely.

Rating pressure would build should Portucel not be able to retain
current levels of profitability and leverage, with Debt/EBITDA
increasing to above 3 times on a Moody's adjusted basis (based on
Portucel standalone) if at the same time, Semapa's debt is not
materially reduced. Evidence of Semapa having difficulties in
refinancing its debt or should Portucel start to upstream cash to
its shareholders by measures other than ordinary dividend
payments, this could also put pressure on the rating.

The principal methodology used in this rating was the Global
Paper and Forest Products Industry published in September 2009.
Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.

Portucel, based in Lisbon (Portugal), is a leading producer of
office paper, market pulp and energy with revenues generated in
the last twelve months ending March 2013 of EUR 1.5 billion and a
reported EBITDA of EUR 380 million (25% margin). Majority
shareholder Semapa is holding 81% of shares (excluding treasury
shares).



=============
R O M A N I A
=============


BELROM GROUP: Court Okays Insolvency Request for Promenada Mall
---------------------------------------------------------------
Balkans.com reports that Romania's Bucharest Court has approved
the request to enter insolvency filed by Belgian developer Belrom
through the Bel Rom Sapte company, for its Promenada Mall in
Focsani, eastern Romania.

Balkans.com relates that Bel Rom Sapte's own insolvency request
comes after several other companies have filed similar requests.
Moreover, this is the second company controlled by Belrom which
files for insolvency this year, the report says.  According to
Balkans.com, Belrom last month filed a similar request for the
Electroputere Parc Craiova shopping mall, which was developed by
K&S Electric Power Point, another company owned by Belrom.  This
time around, the Belgian developer opted for the insolvency
procedure in order to avoid a foreclosure request filed by NM
Construct, the project's general contractor.  Electroputere
Craiova was opened in 2011.

Promenada Mall Focsani was opened in September 2008 and has a
total built area of some 51,500 sqm.  It is anchored by Carrefour
and Bricostore.  Belrom was set up in 2004 and has since
developed 7 retail parks in Romania.



===========
R U S S I A
===========


BASHNEFT CAPITAL: Moody's Assigns '(P)Ba2' Rating to USD LPNs
-------------------------------------------------------------
Moody's Investors Service has assigned a provisional (P)Ba2
rating to the proposed US dollar-denominated loan participation
notes (LPN) of Bashneft Capital S.A., a public limited liability
company (societe anonyme) incorporated under the laws of the
Grand Duchy of Luxembourg (Aaa negative). The notes will be
issued for the sole purpose of financing a loan to Joint Stock
Oil Company Bashneft (Bashneft) under a loan facility agreement.
Bashneft will use the proceeds from the loan for general
corporate purposes. The rating outlook is stable.

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

Ratings Rationale:

The provisional ratings assigned to the proposed notes are
derived from Bashneft's Ba2 corporate family rating and Ba2-PD
probability of default rating. They reflect the relative strength
of the company's business profile, which benefits from strong
vertical integration and adequate leverage and cash flow metrics.
In addition, the ratings take into account the company's sizeable
capital expenditure (capex) requirements in the near term as a
result of it developing its new upstream assets as well as
investments in refineries. Moody's also acknowledges the fact
that Bashneft operates as part of the Sistema group of companies
and constitutes Sistema's fastest-growing asset and one that
could also potentially generate the highest levels of cash within
the group, which increases the possibility of meaningful
shareholder distributions. Moody's also notes that Bashneft
benefits from the strategic support of the parent.

As Bashneft operates in Russia (Baa1 stable), its ratings are
constrained by the country's weak institutional and economic
framework compared with those of more developed markets.

Structural Considerations

The assigned rating on the notes is the same as the corporate
family rating of Bashneft. Moody's ranks the proposed notes pari
passu with other unsecured debt of Bashneft. The trust deed
between Bashneft Capital S.A. and Deutsche Trustee Company
Limited relating to the issuance will provide for a mechanism of
note holders' recourse to the beneficiary of the notes, Bashneft,
in the event of Bashneft Capital S.A.'s default. The noteholders
will benefit from certain covenants made by Bashneft in the
underlying loan agreement, including a negative pledge and
restrictions on mergers and disposals.

Bashneft's ratings have a stable outlook which reflects Moody's
expectation that Bashneft will maintain (i) its conservative
financial policy with leverage, measured by total debt/EBITDA,
not exceeding 2.0x on a sustainable basis; and (ii) its RCF/net
debt ratio above 20%.

What Could Change The Rating Up/Down

To consider upgrading Bashneft's ratings, Moody's would require
evidence of continued strong operational and financial
performance, production and reserves growth. Successful execution
of its investment program and free cash flow generation would
exert positive pressure on the metrics.

Conversely, downward rating pressure could arise if there were to
be material adverse developments in the company's financial,
business and liquidity profile due to (i) unfavorable
macroeconomics and/or material bolt-on acquisitions, driving an
increase in leverage beyond 2.0x; and/or (ii) shareholder
distributions beyond Moody's current expectations.

The principal methodology used in this rating was the Global
Integrated Oil & Gas Industry Methodology published in November
2009. Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.

Bashneft is an integrated oil company operating primarily in the
Republic of Bashkortostan in the lower Volga region of Russia.
The company is 75.4% directly and indirectly owned by Sistema
Joint Stock Financial Corporation (Ba3 positive), 20.9% by
minority shareholders, and 3.7% are retained by Bashneft as
treasury and quasi-treasury shares. Bashneft's annual output of
oil and oil refining throughput in 2012 were 15.4 million tonnes
and 20.8 million tonnes, respectively. Bashneft's total proved
reserves exceeded 2.0 billion barrels of oil equivalent (boe)
under the Petroleum Resources Management System (PRMS)
classification as of December 31, 2012.


BASHNEFT CAPITAL: Fitch Assigns 'BB(EXP)' Rating to USD LPNs
------------------------------------------------------------
Fitch Ratings has assigned Bashneft Capital S.A.'s upcoming USD-
denominated loan participation notes (LPNs) issue an expected
senior unsecured rating of 'BB(EXP)'. The final rating is
contingent upon the receipt of final documentation conforming
materially to information already received and details regarding
the amount and tenor.

The sole purpose of issuing LPNs will be to finance a loan to
Joint Stock Oil Company Bashneft (Bashneft, 'BB'/Positive). The
gross proceeds of the loans will be used by Bashneft for general
corporate purposes. Noteholders will be relying solely on the
credit and financial standing of Bashneft in respect of the
financial servicing of the notes.

In May 2013, we affirmed Bashneft's Long-term Issuer Default
Rating (IDR) at 'BB' and revised the Outlook to Positive from
Stable. The full list of Bashneft's ratings is at the end of this
release. The revision of the Outlook reflects our expectation
that over the medium term the company will maintain stable
brownfield production levels and strong credit metrics for a 'BB'
rated company, i.e., funds from operations (FFO) gross leverage
below 2x and FFO interest coverage of above 8x. It also reflects
that its Trebs and Titov (T&T) greenfield project are on track to
produce its first oil later this year. Bashneft is a second-tier
Russian integrated oil company with 2012 upstream production of
308 thousand barrels per day (mbbl/d) and refinery throughput of
415mbbl/d.

Key Rating Drivers

Stable Brownfields Production:
In 2012, Bashneft's crude production was up 2% yoy to 308 mbbl/d,
which contrasts well with that of some other Russian oil
companies such as OAO LUKOIL ('BBB-'/Stable) that reported a 1%
decline in hydrocarbon production in 2012. Our expectation for
stable crude production was given initial confirmation over the
first five months of 2013, when the company's output averaged
311mbbl/d, up 1% yoy. We recognise Bashneft's efforts in
increasing its brownfield production but believe that the company
has limited headroom to further increase oil output in Bashkiria,
its historical stronghold.

T&T Improves Upstream Profile:
Bringing the T & T oilfields on-stream, in a joint venture (JV)
with LUKOIL, which has a 25% stake, is important for improving
Bashneft's upstream profile and bringing it up to match its
historically more sizable downstream operations. The company
expects the JV to produce its first oil in H213 and to achieve
peak production of as much as 95mbbl/d by 2018-2019. However, the
free cash flow generated by the JV may not be fully available to
service Bashneft's debt as Bashneft will have to coordinate the
JV's dividend and capex policy with LUKOIL.

Competitive Reserves and Costs:
Bashneft's proved oil reserves of 2,007 million barrels of oil at
end-2012 imply an 18-year reserve life, in line with that of
Russian peers. In 2012, its production costs were manageable at
USD6.6/bbl, below that of most international peers but above that
of the Russian majors, due to smaller, more mature oilfields
compared with those of OJSC OC Rosneft ('BBB'/Rating Watch
Negative) or LUKOIL. Fitch expects that Bashneft's operational
metrics will remain sound in the medium term.

Strong Downstream and Retail:
Bashneft is the fourth-largest refiner in Russia; its three
refineries have 480mbbl/d total primary capacity and Nelson index
of 8.55. In 2012, refining and marketing contributed around 30%
to the company's EBITDA (based on IFRS accounts). The company's
EBITDA to barrel of oil produced of USD28/bbl in 2012 is one of
the highest among Russian peers, partially due to downstream
being significantly higher than upstream in size - by 34% by
volume in 2012, unlike most other Russian majors. Planned further
upgrades of its refineries should improve Bashneft's refining
complexity, increase light product yield and help it maintain
solid refining margins.

Conservative Leverage to Remain:
At end-2012 Bashneft's FFO net adjusted leverage was 1.3x, up
from 1.0x in 2011, and its FFO coverage improved to 8.4x in 2012
from 6.4x in 2011. Based on the agency's Brent price deck of
USD100/bbl in 2013, USD92/bbl in 2014 and USD85/bbl in 2015, we
expect that Bashneft's gross leverage will remain below 2x in
2013-2016 and its coverage above 8.0x.

Standalone Uncapped Ratings:
Fitch rates Bashneft on a standalone basis, and assesses its
linkage with Sistema Joint Stock Financial Corp. (Sistema; 'BB-
'/Stable), its majority shareholder as moderate. We note that
Bashneft remains a key asset for Sistema along with OJSC Mobile
TeleSystems (MTS, 'BB+'/Stable). In 2012, Bashneft contributed
around 35% to Sistema's EBITDA, and Sistema's ability to service
its debt may depend on dividends it receives from Bashneft.

Bashneft has material related party transactions, e.g. during
2012 it made a number of deposits with a total amount of
RUB24.8bn of cash (or 7.5% of its net revenue) with the Sistema-
owned OJSC MTS Bank ('B+'/Stable). However, by the end of the
year most of these funds had been repaid, and Bashneft's debit
balance with the bank was RUB5.1 billion. While Fitch does not
currently constrain Bashneft's ratings (which can be the case if
related party transactions intensify and lead to material cash
outflow), Bashneft cannot be rated more than two notches higher
than Sistema under the agency's criteria.

Rating Sensitivities

Positive: Successful production launch and development at T&T in
2013-2015 coupled with solid operational and credit metrics,
e.g., stable brownfield production and refining volumes and FFO
gross adjusted leverage below 2.5x and FFO interest cover above
8x on a sustained basis, may lead to a positive rating action.

Negative: Bashneft's failure to maintain crude production or
sustained deterioration of its credit metrics, including FFO
gross adjusted leverage above 2.5x and FFO interest cover below
8x on a sustained basis owing to higher capex and dividends may
lead to a negative rating action.

Liquidity and Debt Structure

Acceptable Liquidity
At March 31, 2013 Bashneft had cash of RUB30.3 billion and RUB32
billion in committed credit facilities, which covered its short-
term debt of RUB33.1 billion. In February 2013, Bashneft issued
RUB30 billion 10-year bonds (with half having a put option in
2018 and the other half in 2020). Fitch believes that Bashneft
has access to the domestic capital markets and would refinance
its upcoming maturities if needed.

Balanced Debt Portfolio
At March 31, 2013 Bashneft's balance sheet debt of RUB125.2
billion was made up of bank loans (51%), domestic bonds (44%) and
pre-export finance facilities (5%). As most of its borrowings are
RUB-denominated, its effective interest rate remained relatively
high at 8.4%. Bashneft's announced USD600 million pre-export
finance deal attracted in May 2013, as well as the upcoming LPNs
should help to reduce the company's average borrowing rate.

LIST OF RATINGS

Joint Stock Oil Company Bashneft

Long-Term IDR: 'BB', Outlook Positive
Short-Term IDR: 'B'
Local currency Long-Term IDR: 'BB', Outlook Positive
Local currency Short-Term IDR: 'B'
National Long-Term Rating: 'AA-(rus)', Outlook Positive
Senior unsecured rating: 'BB'
National senior unsecured rating: 'AA-(rus)'

Bashneft Capital S.A.

Senior unsecured rating for upcoming LPNs: 'BB(EXP)'


ROSAGROLEASING JSC: Fitch Affirms 'BB+' LT Issuer Default Rating
----------------------------------------------------------------
Fitch Ratings has affirmed JSC Rosagroleasing's (RAL) Long-term
Issuer Default Rating (IDR) at 'BB+' with a Stable Outlook.

KEY RATING DRIVERS - IDRS, NATIONAL RATING, SUPPORT RATING and
SUPPORT RATING FLOOR

RAL's ratings are driven by potential state support. In assessing
potential support, Fitch views positively: (i) RAL's 100% state
ownership; (ii) the company's very low leverage, underpinned by
repeated government equity injections; and (iii) the company's
role (albeit somewhat limited) in the execution of state programs
to support the agriculture sector.

At the same time, the two-notch difference between the company's
Long-term IDR and those of the Russian sovereign (BBB/Stable)
reflect (i) limitations in RAL's policy role, given the small
size of its balance sheet and the potential for state-owned banks
(mainly Russian Agricultural Bank, RAB) to provide support to the
agricultural sector; (ii) a history of weak corporate governance;
and (iii) some uncertainty about the level of problematic leases
and required impairment charges, with the potential for these to
moderately increase the company's leverage.

RAL acts as an instrument of state support for the agriculture
sector by providing leases with a low interest rate of 2.5%. At
end-2012, this 'federal leasing' comprised roughly 90% of the
total lease book and was financed solely by equity capital. The
remaining 10% was 'commercial leasing' with rates closer to
market rates, and funded by local and foreign banks. This has
resulted in very low leverage: at end-2012, the debt-to-equity
ratio was equal to 8%.

Fitch notes that although legally the federal and commercial
parts of the leasing business are not separate, there is some
risk that proceeds from federal leasing operations would not
always be available for commercial debt service. However, the
track record of debt service to date, currently low leverage and
the fact that 64% of debt is sourced from RAB and is long-term
mitigate this risk.

Asset quality is very weak, mainly due to failings in governance
under previous management prior to 2009, but also because of the
volatile performance of the agriculture industry, which is
partially dependent on climate conditions. In its statutory
accounts, RAL reported 24% of the lease book as overdue at end-
2012, while restructured exposures made up a further 10%.
Additionally, about half of advances to suppliers at the same
date, dating from transactions completed under previous
management, were overdue.

The company's low leverage (0.7x equity/assets ratio in statutory
accounts at end-2012; which would probably be higher under IFRS),
means that it can comfortably absorb further significant losses.
Furthermore, Fitch believes credit underwriting has improved
significantly since 2010, although the newly created lease book
also remains exposed to the performance of the agricultural
sector.

RATING SENSITIVITIES - IDRS, NATIONAL RATING, SUPPORT RATING and
SUPPORT RATING FLOOR

The ratings could be downgraded if (i) Russia's sovereign ratings
were downgraded; (ii) there is a clear reduction in RAL's policy
role; (iii) there is a marked increase in the company's leverage;
or (iv) renewed failings in the company's governance.

There is very limited potential for an upgrade without a marked
strengthening of its policy role and the support framework for
the company. An upgrade of Russia's sovereign ratings would be
unlikely to result in an upgrade of RAL.

The rating actions are:

  Long-term foreign currency IDR: affirmed at 'BB+'; Outlook
  Stable

  Short-term foreign currency IDR affirmed at 'B'

  National Long-term Rating: affirmed at 'AA(rus)', Outlook
  Stable

  Support Rating: affirmed at '3'

  Support Rating Floor: affirmed at 'BB+'



=========
S P A I N
=========


LA SEDA: Begins Insolvency Proceedings After Creditor Talks Fail
----------------------------------------------------------------
Reuters reports that La Seda de Barcelona said on Monday it would
begin insolvency proceedings after failing to reach a deal with
creditors.

According to Reuters, LSB said it has been in talks with its
lenders since September last year after its business ran into
trouble because of high raw materials costs and excess supply of
the PET plastic containers that it makes.

LSB's insolvency filing gives it another chance to negotiate with
creditors, while a previous refinancing plan which fell through
would have wiped out a large part of shareholders' equity,
Reuters notes.

La Seda had a debt load of just EUR600 million (US$800 million)
at the end of 2012, including debt to providers, Reuters says,
citing company filings.

According to Reuters, a source familiar with the restructuring
talks said that U.S. hedge fund Anchorage is La Seda's single
biggest creditor, after it bought 37% of the company's syndicated
loans on the secondary market.  The group has EUR462 million in
syndicated loans from banks, according to Reuters loan market
news and analysis service RLPC.  Reuters notes that the source
close to the talks said of that, a EUR235 million portion needed
to be restructured.

Portuguese banks Caixa Geral and BCP are also big lenders, while
HSBC and Spain's nationalized Catalunya Banc also feature among
prominent creditors, Reuters discloses.

RLPC reported in late May that La Seda would face insolvency if
creditors failed to back a restructuring plan put forward by
Anchorage, which offered to inject EUR30 million in the business
in exchange for 82% of its equity, Reuters recounts.

La Seda de Barcelona said in a statement that a refinancing plan
had failed to get the backing it needed from 75% of creditors,
Reuters notes.

Catalonia-based La Seda de Barcelona makes plastic bottles in
Europe, Turkey and North Africa.


SANTANDER HIPOTECARIO 9: Moody's Rates Series C Notes '(P)Caa3'
---------------------------------------------------------------
Moody's Investors Service has assigned the following provisional
ratings to Spanish RMBS notes to be issued by Fondo de
Titulizacion de Activos, SANTANDER HIPOTECARIO 9:

EUR487.5M Serie A Notes, Assigned (P)A3 (sf)

EUR162.5M Serie B Notes, Assigned (P)Ba3 (sf)

EUR117M Serie C Notes, Assigned (P)Caa3 (sf)

Ratings Rationale:

FTA SANTANDER HIPOTECARIO 9 is a securitization of loans granted
by Banco Santander (Baa2 /P-2) to Spanish individuals. Banco
Santander is acting as Servicer of the loans while Santander de
Titulizacion S.G.F.T., S.A. is the Management Company
("Gestora").

As of May 2013, the provisional pool was composed of a portfolio
of 4,124 contracts granted to 4,117 obligors located in Spain.
The assets supporting the notes are prime High LTV ("HLTV")
mortgage loans secured on residential properties located in
Spain. 49% of the loans correspond to loans from Santander
Hipotecario 6. The Current Weighted average LTV is 87.92%. The
assets were originated between 1996 and 2013, with a weighted
average seasoning of 4 years and a weighted average remaining
term of 29.1 years. Geographically, the pool is located mostly in
Madrid (27.78%) and Andalucˇa (16.91%). 12.18% of the pool
corresponds to loans in principal grace periods. 4.83% of the
loans were granted to non Spanish nationals. 50% of the loans
have been in arrears less than 90 days at least once since the
loans was granted. The initial term of 17% of the loans has been
already modified since they were granted. In the majority of the
cases, a principal grace periods has been granted.

According to Moody's, the deal has the following credit
strengths: (i) a reserve fund fully funded upfront equal to 18%
of the A and B notes to cover potential shortfall in interest and
principal, and (ii) sequential amortization of the notes.

Moody's notes that the transaction features a number of credit
weaknesses, including: (i) the proportion of HLTV loans in the
pool (91.67% with current LTV > 80%); (ii) almost 21% of the
portfolio correspond to self employed debtors (iii) and the
performance of the Banco Santander's precedent transactions and
the performance of the Banco Santander's book.

Moody's analysis focused primarily on (i) an evaluation of the
underlying portfolio of loans; (ii) historical performance
information and other statistical information; (iii) the credit
enhancement provided via excess-spread, the cash reserve and the
subordination of the notes.

The resulting key assumptions of Moody's analysis for this
transaction are a MILAN Credit Enhancement of 34% and a Expected
Loss of 12%.

The V Score for this transaction is Medium, which is in line with
the V score assigned for the Spanish RMBS sector. Five sub
components underlying the V Score have been assessed higher than
the average for the Spanish RMBS sector.
Issuer/Sponsor/Originator's Historical Performance Variability is
Medium/High because HLTV pools have historically higher defaults
and arrears than traditional mortgages pools. Sector's Historical
Downgrade Rate is assessed as Medium due to the exposure of the
transaction to HLTV's which have suffered more downgrades than
traditional mortgages pools, Disclosure of Securitization
Collateral Pool Characteristics is assessed as Medium since
unemployment information and temporary workers were not provided
on a loan by loan basis, Disclosure of Securitization Performance
is assessed as Medium since no detailed information on recoveries
has been provided for previous Santander Hipotecario transactions
in the investor report and Transaction Complexity is assessed as
Medium since HLTV loans are more exposed to house price declines.

Moody's also ran sensitivities around key parameters for the
rated notes. For instance, if the assumed MILAN Aaa Credit
Enhancement of 34% used in determining the initial rating was
changed to 36% and the expected loss of 12% was changed to 14%,
the model-indicated rating for Series A and Series B of (P)A3
(sf) and (P)Ba3 (sf) would have changed to (P)Ba3 (sf) and (P)B1
(sf) respectively.

The methodologies used in this rating 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 note holders. 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.



===========================
U N I T E D   K I N G D O M
===========================


AA BOND: S&P Assigns Preliminary BB Rating to Class B Notes
-----------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary
credit ratings to the fixed-rate secured class A1, A2, and B
notes to be issued by AA Bond Co. Ltd.

The transaction is a corporate securitization of the Automobile
Association's (AA) operating business.  The AA Group operates a
roadside assistance service in the U.K. and Ireland and provides
complementary services such as insurance, driving services and
home emergency response.  The AA provides breakdown services
either to its own members or to customers of its corporate
clients, as part of a business service agreement.  Business
customers typically include fleet operators and motor
manufacturers.  The AA Group is also a large U.K. personal lines
insurance broker and distributes motor and home insurance.

The debt issued will refinance part of the present liabilities of
the Acromas Group; it entered into these in 2007, when the AA
Group merged with Saga under the parent company Acromas.  Acromas
is owned by private equity companies Permira, CVC, and
Charterhouse.

The two class A notes will have equal seniority with the
borrower's bank facilities, while the class B notes will be
contractually subordinated.  At closing, AA Bond Co. will onlend
proceeds from the issuance of the three classes to the borrower,
AA Senior Co Ltd., via intercompany loans that will feature an
expected maturity date designed to accelerate amortization upon
failure to refinance.

In S&P's opinion, AA Bond Co. will function as two separate
transactions.  The class A and class B notes will share the same
ultimate security, but will each be subject to separate terms and
conditions, governed by an intercreditor agreement.  The class A1
notes are expected to mature five years after closing, the class
A2 notes are expected to mature 12 years after closing, and the
class B notes are expected to mature six years after closing.  If
the class B loan defaults for any reason, including that the
business fails to repay the class B loan at expected maturity,
the topmost company (Topco) in the AA Group corporate structure
will be required to redeem the class B loan along with all
accrued interest, thus ensuring that the class B notes are
redeemed. Failure to do so will give the class B noteholders the
right to enforce the Topco share security.

In line with S&P's criteria "Methodology For Rating And
Surveilling European Corporate Securitizations," published on
Jan. 23, 2008, S&P has assessed the business risk profile,
evaluated the risks embedded in the transaction (including
structural and legal risks), and submitted the securitized
business to a set of cash flow stresses based on the
characteristics of the specific
industry/sector and business.

                      BUSINESS RISK PROFILE

S&P views the AA's business risk profile as satisfactory,
reflecting the following key business strengths:

   -- AA's clear market-leading position in the U.K., which has
      high barriers to entry;

   -- Mass membership model with excellent renewal rates and
      revenue visibility;

   -- High profitability, which is superior to that of closest
      competitor;

   -- Good revenue visibility because of the loyal individual
      membership base and contracts on corporate service deals
      lasting three to five years; and

   -- Good cash flow due to a) minimal working capital needs as a
      high percentage of members pay their annual membership fees
      up front, and b) low capital expenditure requirements, with
      strong cash flow conversion.

However, these strengths are tempered by:

   -- High dependence on a single country--almost all revenues
      are sourced in the U.K.;

   -- Some vulnerability to potential reputational damage and
      subsequent risk of litigation in the insurance and
      financial services businesses; and

   -- Some sensitivity to macroeconomic factors such as consumer
      confidence, driver habits, fuel prices, and weather
      patterns.

                    LEGAL AND STRUCTURAL FEATURES

The creditors are considered to hold a qualifying floating
charge; that is, under English law, they can stop the AA Group
from going into administration by appointing an administrative
receiver. However, because the AA Group's principal operating
subsidiary (TAAL) is incorporated in Jersey, the creditors are
unable to appoint an administrative receiver for TAAL.

TAAL will sign a legally binding agreement to sell its assets,
business, and undertakings to a U.K.-incorporated sister company,
AADL.  TAAL will continue to trade while the business transfer
takes place; this could take 18 months or more.  Therefore, to
eliminate any continuing credit dependency on TAAL while the
business transfer completes, the transaction documents state that
TAAL must also declare a trust over all of its assets in favor of
AADL before the notes may be issued.  In addition, TAAL will
execute a security power of attorney in favor of AADL.  This will
enable AADL, as attorney, to take action in TAAL's name against
any entity that failed to meet its obligations to TAAL, and to
complete the business transfer if TAAL did not do so.

The effect of the declaration of trust would be to transfer the
beneficial interest (but not the legal title) and the credit
exposure on all of the assets of TAAL to AADL.  Based on S&P's
legal analysis, it has established that the effect of the
declaration of trust and the power of attorney would be to enable
AADL to "step into the shoes of TAAL" for all the assets within
the trust, using the security power of attorney.  If an
administrative receiver were appointed for AADL, it would have
all the powers of the obligor security trustee to run TAAL and to
complete the business transfer.

Principal on the class A and B notes is not scheduled to amortize
before their expected maturity dates.  To reduce refinancing risk
at the various expected maturity dates, the structure includes a
feature to give the AA's management and the equity holders an
incentive to refinance the debt before expected maturity.  If the
business cannot refinance the intercompany loans associated with
the class A1 notes or bank debt in year 5, all the AA's excess
cash flow may be used to pay down the class A and class B notes
before the legal final maturity date.

However, the failure to refinance will also be considered an
event of default under the common terms agreement.  After such an
event, the creditors could choose to enforce their security and
accelerate the debt, i.e., make it immediately payable in full.
In S&P's view, the incentives of the bank lenders at this time
may not be aligned with the incentives of the noteholders.  The
transaction therefore gives the class A noteholders a veto over
the option to accelerate the debt.  Over 50% of the class A
noteholders would need to vote for acceleration.

None of the agreements for the swap counterparties, liquidity
facility provider, and obligor account providers in the
transaction provide a commitment to mitigate a potential
downgrade, in line with S&P's criteria.  On the closing date, S&P
do not consider this a limiting factor for the rating as all
counterparties are rated above the rating on the notes.  However,
if any of the counterparties are downgraded, this may trigger a
negative rating action on the notes.

The borrower, AA, is highly leveraged.  The securitization
structure encourages reduction of leverage by sweeping 50% of
excess free cash flow to pay down the bank debt while the bank
debt is outstanding.  In addition, the transaction documents
contain restrictions that limit payments to entities outside of
the securitization (for example, dividends to shareholders) while
the bank debt remains outstanding; this will come into effect at
closing.

If the AA cannot refinance the loan associated with the class B
notes by the expected maturity date, all payments to the class B
notes will be delayed.  The class B noteholders will not receive
interest payments while the class A notes are outstanding.  The
interest missed will be capitalized and must be repaid by the
legal final maturity date.  S&P has incorporated this transaction
feature in its modeling by verifying that all capitalized
interest is repaid by legal final maturity under a stress
scenario commensurate with its preliminary rating on the class B
notes.

S&P's cash flow stresses have been tested under the assumption
that the borrower is unable to refinance either the term
facilities or the bullet notes.  S&P has therefore incorporated
in its modeling all transaction features aimed at facilitating
the repayment of the issuer's and borrower's liabilities.  These
include mandatory cash sweeps, lock-up triggers, and liquidity
enhancements.  S&P's modeling validates that interest and
principal are repaid as promised under a stress scenario
commensurate with its preliminary ratings on the notes.

In S&P's view, this transaction incorporates some key features
such as the concept of expected and legal final maturity dates,
credit enhancement in the form of a liquidity facility, and
covenants that restrict payments outside of the securitization
group or facilitate reduction of leverage by sweeping excess cash
flow to pay down debt.  However, S&P believes the presence of a
material obligor incorporated outside the U.K. and the
possibility that the debt may be accelerated if the borrower
fails to refinance make this transaction more complex than
traditional whole-business securitizations.

Standard & Poor's has not carried out a complete review of the
entire transaction documentation and legal opinions.  The ratings
below are preliminary.  Subsequent information may result in the
assignment of final ratings that differ from the preliminary
ratings.

RATINGS LIST

Class        Prelim.          Prelim.
             rating            amount
                             (mil. GBP)
AA Bond Co. Ltd.
British Pound Sterling-Denominated Fixed-Rate Secured Notes

A1           BBB- (sf)            TBD
A2           BBB- (sf)            TBD
B            BB (sf)              TBD

TBD-To be determined.


FAIRHOLD SECURITISATION: Fitch Affirms BB Rating on Class B Notes
-----------------------------------------------------------------
Fitch Ratings has affirmed Fairhold Securitisation Limited's
class A and class B notes, as follows:

GBP413.7m class A due October 2017 (XS0298926360) affirmed at
'BBBsf'; Outlook Stable

GBP29.8m class B due October 2017 (XS0298927509) affirmed at
'BBsf'; Outlook Stable

Key Rating Drivers

The transaction is a single-borrower securitization of freehold
cash flows derived from a portfolio of sheltered housing located
in the UK and encumbered by long leasehold interests. The
affirmation is based on stable collateral performance despite
fluctuations of contingent liabilities, in the form of interest
rate and inflation swap exposures, which in effect increase the
transaction's leverage to 89%, up from 82% a year earlier.

The reported leverage, excluding these MtM costs, is 57%, only
marginally higher than last year following the latest collateral
re-valuation in February 2013.

Whilst the debt amount, high leverage and reliance on reserve
funds to meet interest payments all indicate that refinancing at
the extended loan maturity in 2015 may not be straightforward,
Fitch views an inflation-linked income stream derived from a
secure source of income such as ground rents as an attractive
investment opportunity.

However, the relative illiquidity of the collateral may result in
refinancing or sale proceeds reflecting some premium above the
risk free rate -- the metric generally used to discount the
income stream for ground rent portfolios. Fitch views the break-
even risk premium for the class A notes to be redeemed
commensurate with an investment grade rating. The class B notes
continue to rely on a more volatile source of income, such as
transfer fees and therefore remain rated 'BBsf'.

Rating Sensitivities

Although Fitch does not expect material changes to the
performance of the underlying collateral, future rating action is
possible closer to the loan's maturity in 2015 when the workout
strategy taken by the sponsor and noteholders becomes more
evident.


HEARTS FC: To Go Into Administration, Approaches KPMG
-----------------------------------------------------
Andy Newport at Press Association reports that Heart of
Midlothian Football Club, the financially-stricken Scottish
Premier League club, is in the process of lodging papers at the
Court of Session in Edinburgh and have approached accountancy
firm KPMG to act as their administrators.

The club was faced with a winding-up order last week after Her
Majesty's Revenue and Customs threatened action over an unpaid
GBP100,000 tax bill, although the majority of that sum has been
paid, according to Press Association.

The report relates that Hearts were also hit with an immediate
transfer embargo by the Scottish Premier League last June 14
after admitting they could not afford to pay their players.

The news came just 24 hours after the Gorgie board released a
statement saying they had entered a "critical" stage in their
battle to pay off debts of GBP25million as well as financing tax
and running costs, the report discloses.

The report relays that the entire Jambos squad was put up for
sale in a desperate bid to raise the reported GBP500,000 needed
to see the club through to the start of the new season.

The report notes that the situation at the two Lithuanian
companies which hold large stakes in the club has also raised
fears for the future of the Edinburgh club.

The report discloses that majority shareholder UBIG, which owns a
50 per cent stake in the club, and 29.9 per cent shareholder Ukio
Bankas were both once controlled by Vladimir Romanov but are now
in the midst of being declared insolvent by Kaunas-based
authorities.

The report relates that Ukio Bankas, which lost an appeal against
liquidation, is due GBP15million by Hearts, who also owe another
GBP10million to UBIG.

Politician Ian Murray is leading the Foundation of Hearts
supporters' group who hope to buy the club, with a formal bid
expected to be lodged by the end of the month, the report says.
There is also interest from a number of other parties, including
a Scandinavian consortium, the report adds.


HMV GROUP: To Return to its Oxford Street Flagship Store
--------------------------------------------------------
NME News reports HMV Group plc is reportedly looking to return to
its Oxford Street flagship store in London.

HMV Group plc, which is currently controlled by restructuring
specialists Hilco after it went into administration earlier this
year, is in negotiation to move back into the 20,000 sq ft store
at 363 Oxford Street, according to NME News.

The site is currently occupied by the US chain Footlocker.

NME News notes that the Evening Standard said HMV has exchanged
contracts on the shop's lease, subject to landlord approval.

The newspaper also reported that the retailer is also considering
leaving its 150 Oxford Street store, which is too big for its
current requirements, NME News relays.

The report discloses that a relaunch of the retailer, which went
into administration in January saddled with GBP176 million debt,
is expected later this year.

The report notes that while no exact details have been confirmed,
it is expected that a new HMV website will focus on a music and
film streaming service similar to The Vault, the digital
streaming platform offered by its sister company in Canada.  The
report recalls that previously, HMV UK lost money selling CDs and
DVDs from its website because of distribution and postage costs.

Hilco completed the acquisition of the chain in April, and now
operates 141 stores, the report adds.

                          About HMV Group

United Kingdom-based HMV Group plc is engaged in retailing of
pre-recorded music, video, electronic games and related
entertainment products under the HMV and Fopp brands, and the
retailing of books principally under the Waterstone's brand.  The
Company operates in four segments: HMV UK & Ireland, HMV
International, HMV Live, and Waterstone's.

On Jan. 14, HMV Group went into administration after suppliers
refused a request for a GBP300 million lifeline for the company.
Deloitte was appointed as administrator to the chain, which was
hit by growing competition from online rivals, supermarkets, and
illegal downloads.


IMPERIAL HOME: Partnership DC Pension Scheme
--------------------------------------------
MoneyMarketing reports that Partnership has bought out the
defined contribution section of the Imperial Home Decor pension
scheme, which will see almost 140 DC members benefit from
enhanced incomes.

The firm's GBP130 million pension scheme has been in wind-up
since October 2003 when the company was declared insolvent with a
GBP40 million pension deficit, the report discloses.

According to the report, Partnership said it has worked closely
with Bridge Trustees and Capita Employee Benefits to put together
the buy-out.

The deal sees the 140 qualifying DC members, who had been
receiving interim pensions, benefit from an enhanced annuity deal
worth approximately GBP5 million, the report relays.

Scheme members with defined benefit pensions will continue to be
paid by the Financial Assistance Scheme, according to the report.

"Given the history of the scheme and the unique nature of their
requirements, we were delighted to be chosen to work closely with
all parties," the report quotes David Harvey, Partnership head of
de-risking solutions, as saying.  "We feel that the innovative
solution we developed allowed the trustees to discharge their
liabilities whilst giving all members genuine choice over the
shape of their pension."

MoneyMarketing quotes Capita Employee Benefits' Kenneth Donaldson
says: "Having worked hard on this deal with Bridge Trustees and
Partnership for over a year, we feel that we have developed the
right de-risking vehicle for the problems that we faced.

"Not only will it allow the trustees to discharge their
obligations but also help to ensure that the scheme members
receive the type of pension provision they had saved for."


R&R ICE CREAM: S&P Cuts Corp. Credit Rating to B; Outlook Stable
----------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its long-
term corporate credit rating on U.K.-based ice cream manufacturer
R&R Ice Cream PLC (R&R Ice Cream) to 'B' from 'B+'.  At the same
time, S&P removed the corporate credit rating from CreditWatch,
where it placed it with negative implications on April 29, 2013.
The outlook is stable.

In addition, S&P lowered to 'B' from 'B+' its issue rating on R&R
Ice Cream's existing EUR350 million senior secured notes due
2017. The recovery rating on these notes remains unchanged at
'4', indicating S&P's expectation of average (30%-50%) recovery
for noteholders in the event of a payment default.

Furthermore, S&P assigned its 'B' long-term corporate credit
rating to R&R PIK PLC (R&R PIK), an entity that was recently
established to fund the acquisition of R&R Ice Cream.  R&R PIK is
ultimately controlled by funds under the management of PAI
Partners SAS.  S&P refers to R&R Ice Cream and R&R PIK together
as R&R or the group.

Finally, S&P assigned its issue rating of 'CCC+' to R&R PIK's
EUR253 million subordinated payment-in-kind (PIK) toggle notes
due 2018.  The recovery rating on these notes is '6', indicating
S&P's expectation of negligible (0%-10%) recovery in the event of
a payment default.

The downgrades follow R&R PIK's issuance of EUR253 million of
subordinated payment-in-kind (PIK) toggle notes due 2018 to fund
the acquisition of R&R Ice Cream from its previous owners,
Oaktree Capital Management LP.  The downgrades reflect S&P's view
that the additional debt in the group's capital structure has
increased its leverage and thereby weakened its credit quality.
In particular, S&P believes that the additional cash interest on
the PIK toggle notes will impair the group's EBITDA interest
coverage ratio.

Following the acquisition, S&P estimates that R&R's Standard &
Poor's-adjusted debt-to-EBITDA ratio has increased to about 10x
from about 8x, and that its EBITDA interest coverage has
deteriorated to about 1.9x from about 2.5x.  S&P views the
current ratios as commensurate with a 'B' corporate credit
rating.

The ratings on R&R are constrained by S&P's assessment of the
group's financial risk profile as "highly leveraged."  S&P's
assessment of R&R's business risk profile as "fair" partly
mitigates this.

In S&P's view, the group will likely maintain positive revenue
growth and stable margins over the next 12-18 months.  An EBITDA-
to-cash interest ratio of about 2x and "adequate" liquidity are
commensurate with the 'B' rating.

In S&P's opinion, a positive rating action on R&R is remote at
this stage, due to the group's increased leverage.

S&P believes that ratings downside could stem primarily from
increases in raw material costs that the group cannot recover
from price increases within a short timeframe, and from further
deterioration in the performance of the French business.

In addition, ratings downside could arise if EBITDA deteriorated
on account of unfavorable weather conditions in the peak summer
months, and/or higher costs for the integration of recent
acquisitions.  S&P could also take a negative rating action if
liquidity becomes materially weaker due to reduced profitability
and/or increased acquisition activity and restructuring costs,
and if cash interest coverage falls to less than 1.5x.


VIRGIN MEDIA: Fitch Cuts Long-Term IDR to 'B+'; Outlook Stable
--------------------------------------------------------------
Fitch Ratings has downgraded Virgin Media Inc.'s (Virgin Media)
Long-term Issuer Default Rating (IDR) to 'B+' from 'BB+'. The
ratings have been removed from Rating Watch Negative (RWN) and
the Outlook on the Long-term IDR is Stable.

The downgrade follows the acquisition of Virgin Media by Liberty
Global, Inc (LGI). Fitch expects LGI to run Virgin Media's
leverage towards the higher end of a 4.0-5.0x net debt/EBITDA
ratio, as it does with its other European cable subsidiaries.
Total debt at closing, especially senior secured debt, is higher
than Fitch initially expected, which has led to lower recovery
rates than previous anticipated when Fitch put Virgin Media's
ratings on RWN on Feb. 6, 2013.

Key Rating Drivers

Sharp Increase in Leverage
Gross debt to EBITDA (last 12 months) has increased to 5.2x post-
acquisition from 3.6x at the end of 2012 as a result of debt from
acquisition financing being pushed down to Virgin Media. Fitch
expects most of the US$1.5 billion of cash currently at Virgin
Media to be used to redeem the company's convertible debt and for
distribution to other LGI subsidiaries.

Good Recovery Prospects
Although the GBP7.2 billion of senior secured debt and finance
leases after closing was higher than we expected, recovery
prospects for Virgin Media senior secured debt holders are still
good, in Fitch's view, given the solid operational profile of the
business. We have downgraded the senior secured rating of this
debt to 'BB+'/RR1 from 'BBB-'. Recovery prospects for the senior
unsecured bonds have suffered as a result of the increased senior
secured debt. As a result, the senior unsecured rating has been
downgraded to 'B-'/RR6 from 'BB+'. Further increases in senior
secured debt are likely to result in lower recoveries, which
could lead to a downgrade of the senior secured rating.

Changes to Holding Structure
Following the closing of the transaction, Fitch anticipates that
Virgin Media's holding structure could change in the short term.
This might change the parent company Fitch assigns Virgin Media's
IDR to but is unlikely to impact the senior secured and unsecured
ratings.

Solid Operational Profile
Virgin Media's Q113 results show that the company's operating and
financial results are in line with Fitch's 2013 forecasts. Over
the medium term, we expect Virgin Media to deliver increasing
operating free cash flow, despite slowing customer and revenue
growth. This is underpinned by the company's key strength as a
"second-incumbent" in the UK, with its superior network
infrastructure and strong market share within its geographical
footprint.

Rating Sensitivities

Negative:

- A negative rating action could occur if the company's FFO
  adjusted net leverage increases above 5.5x, or FFO fixed
  charge cover falls below 2.5x.

Positive:

- A firm commitment by Virgin Media to adopt a more conservative
  financial policy (for example, FFO adjusted net leverage of
  4.5x) could lead to a positive rating action.

LIQUIDITY AND DEBT STRUCTURE

Virgin Media has an undrawn GBP660m revolving credit facility.
Excluding the convertible bond, the company's next bond maturity
is January 2018. The amount of cash Virgin Media will end up with
over the next month or so is unclear, and depends on the
proportion of convertible bondholders that exercise their change
of control rights and whether there are further cash
distributions to LGI.

FULL LIST OF RATING ACTIONS

  Long-term IDR: downgraded to 'B+' from 'BB+', RWN removed,
  Outlook Stable

  Short-term IDR: affirmed at B

Virgin Media Investment Holdings senior secured bank facilities:
downgraded to 'BB+' from 'BBB-', RWN removed, assigned 'RR1'

Virgin Media Secured Finance Plc 2018 and 2021 senior secured
bonds: downgraded to 'BB+' from 'BBB-', RWN removed, assigned
'RR1'

Virgin Media Finance Plc 2019, 2022 and 2023 senior notes:
downgraded to 'B-' from 'BB+', RWN removed, assigned 'RR6'



===============
X X X X X X X X
===============


* EUROPE: Moody's Says Outlook for Tobacco Industry Stable
----------------------------------------------------------
The outlook for the European tobacco industry is now stable, from
positive, as consumer spending is likely to remain pressured,
leading to lower-than-previously-expected profit growth for the
sector, says Moody's Investors Service in an outlook update on
the sector entitled "European Tobacco: Slowing Profit Growth
Turns European Tobacco Outlook Stable." The European tobacco
industry's outlook had been positive since July 2012, when
Moody's first published a separate outlook for Europe.

"Our outlook on the European tobacco industry has changed to
stable from positive as Moody's expects the sector's operating
profit growth to fall from 7% to between 4.5% and 5.5% over the
next 12-18 months," says Paolo Leschiutta, a Vice President -
Senior Credit Officer in Moody's Corporate Finance Group and
author of the outlook update. "Our revised expectations reflect
the likelihood that people will rein in their spending, leading
to lower cigarettes sales or a switch to cheaper products," adds
Mr. Leschiutta.

In addition, Moody's notes that regulatory pressure has
increased, pressuring consumption. Recent changes include a
smoking ban in Russia, plain packaging in Australia and a display
ban in the UK. While these changes have had minimal impact
individually, Moody's expects that, collectively, they will lead
to an accelerated rate of the decline in tobacco consumption in
the next 12-18 months, particularly in Russia. Moreover, Moody's
considers that the new but growing nascent e-cigarette industry
could represent an increasing competitive threat for European
tobacco manufacturers.

Moody's expects players to continue to raise prices above volume
declines, that developing market consumers will keep trading up
to premium brands and companies will continue to increase
efficiency.

Moody's would consider moving the outlook to positive if
operating profit growth rose to 6% or above and regulatory
pressures eased. The rating agency would move the outlook to
negative if operating profit contracted or there was a dramatic
regulatory change or litigation.


* Rising Benchmark Interest Rates Threaten EM, EMEA Issuers
-----------------------------------------------------------
Rising benchmark interest rates could pose a threat to the credit
quality of some weaker emerging-market and leveraged EMEA
issuers, Fitch Ratings says. However, most corporates are well
placed as they have not used cheap money for the kind of debt-
fuelled expansion that exposed them to changing market sentiment
in the past.

Investors' concern about the gradual withdrawal of the Federal
Reserve's quantitative easing (QE) program is pushing up long-
term benchmark yields, which QE seeks to lower. This will lead to
higher coupons on new bond issues. The Markit ITRAXX Crossover
CDS Index, for example, has widened 16% since the start of May.
Higher rates may also reduce risk appetite as investors earn
meaningful returns from less risky assets -- making it difficult
or impossible for weaker companies to issue economically.

Lower-rated emerging-market corporate bonds, of which there was
record issuance in EMEA in H112, have been among the worst hit in
the selloff. But the liquidity risk from potentially reduced
access to bond markets should not be overstated. Emerging
European issuers have steadily improved their liquidity profiles,
cutting reliance on one- to two-year maturity debt to 36% in 2012
from 48% in 2009.

A divergence is likely between borrowers who have taken advantage
of the recent window and those who have not. Capex investment
needs put emerging-market commodity and infrastructure companies
high on the list of those that need to issue fresh debt before
the end of 2014. Some of these have already used cheap rates and
foreign capital to upgrade plants and equipment, particularly in
Russia and the CIS. If such capital becomes scarcer we might see
a sharp difference in performance between companies that have
procured funding for highly accretive investments and others that
will struggle to compete due to outdated plant.

The impact on leveraged credits will be complex. There has been
significant growth in the European high-yield bond market, which
prices off benchmark, long-term bond yields, since 2011. In
contrast, rates in the previously dominant leveraged loan market
are linked to short-term interbank rates, which are directly
influenced by central bank policy rates.

"We expect an increase in policy rates -- especially European --
to lag behind a "tapering" of US QE by some time. Even though
leveraged loan borrowers are in theory more exposed to interest-
rate movements than fixed-rate bond issuers, in practice their
Libor and Euribor-based borrowing costs will remain subdued for
some time," Fitch says.

That is, unless they need to refinance. A more expensive or
selective high-yield bond market will remove an important
refinancing option for many borrowers. Although interbank rates
are likely to remain low, leveraged loan lenders may push for
higher spreads and tougher terms when loans are renegotiated.
This could pose a challenge to borrowers rated 'B-*' or below,
which account for over 40% of our leveraged finance credit
opinion portfolio, with about EUR70 billion of leveraged loans
and bonds maturing by 2018.


                            *********

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

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

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

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


                            *********


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

Troubled Company Reporter-Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez,
Joy A. Agravante, Ivy B. Magdadaro, Frauline S. Abangan and Peter
A. Chapman, Editors.

Copyright 2013.  All rights reserved.  ISSN 1529-2754.

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.

The TCR Europe subscription rate is US$775 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each.  For subscription information,
contact Peter Chapman at 215-945-7000 or Nina Novak at
202-241-8200.


                 * * * End of Transmission * * *