TCREUR_Public/130711.mbx          T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

            Thursday, July 11, 2013, Vol. 14, No. 136

                            Headlines



F R A N C E

MOONSCOOP: Clarifies Administration Reports


G E R M A N Y

BLITZ 13-347 GMBH: S&P Assigns 'B' Corp. Credit Rating
* GERMANY: Corporate Insolvency Hike May Spur ABS Deal Defaults


I R E L A N D

BANK OF IRELAND: EU Commission Orders Sale of Parts of ICS
EUROCREDIT OPPORTUNITIES I: Asset Sale Deal No Impact on Ratings


I T A L Y

APULIA FINANCE: Moody's Cuts Rating on EUR19.1MM C Notes to Ba1
BANCO POPOLARE: Moody's Lowers Rating on Mortgage Covered Bonds


L I T H U A N I A

VILNIUS CITY: Is Insolvent, Lithuania's Prime Minister Says


L U X E M B O U R G

GLOBAL BLUE: Moody's Changes Outlook to Positive & Keeps B1 CFR
LION/GEM LUXEMBOURG: S&P Assigns Prelim. 'B-' Corp. Credit Rating
THESEUS EUROPEAN: S&P Raises Rating on Class E Notes to 'BB+'


N E T H E R L A N D S

NEPTUNO CLO II: S&P Affirms 'CCC-' Rating on Class E Notes
ORANGE LION 2013-10: Moody's Assigns Ba2 Rating to Class E Notes


P O L A N D

KOMPANIA WEGLOWA: Centrala Zaopatrzenia Files Bankruptcy Motion


P O R T U G A L

LUSITANO MORTGAGES 5: Moody's Cuts Rating on Cl. C Notes to Caa3
MAGELLAN MORTGAGES: Moody's Cuts Rating on Class C Notes to B3
PARPUBLICA: S&P Affirms B Issuer Credit Rating; Outlook Negative
* PORTUGAL: EU Commission Prepares Soft Rescue Bailout Package


R U S S I A

ALFA-BANK: Moody's Lowers Subordinated Debt Ratings to 'Ba3'
BANK ROSSIYSKY: Fitch Rates New RUB5-Billion Domestic Bond 'B+'
ROSGOSSTRAKH BANK: Moody's Affirms 'B2' Deposit Ratings


S E R B I A   &   M O N T E N E G R O

ATLAS BANK: Moody's Cuts Foreign-Currency Deposit Ratings to B2


S P A I N

AYT FONDO EOLICO: Moody's Cuts Ratings on 2 Note Classes to 'B2'
FERGO AISA: Put Under Creditor Protection by Barcelona Court
FTPYME TDA: Fitch Cuts Rating on EUR66MM Class B Notes to 'B'
RURAL HIPOTECARIO: Fitch Rates EUR52.9MM Class B Notes 'CCC(EXP)'


U K R A I N E

NAFTOGAZ NJSC: Fitch Says Gazprom Prepayment Halt Critical
UKREXIMBANK: Fitch Affirms 'B' LT Issuer Default Ratings
* ODESSA REGION: Fitch Affirms 'B' Currency Rating; Outlook Neg.


U N I T E D   K I N G D O M

DWELL RETAIL: Founder Buys Firm Out of Administration
FINDUS PLEDGECO: Moody's Rates GBP410MM Senior Notes '(P)B3'
FINDUS PLEDGECO: Fitch Assigns 'B-(EXP)' Issuer Default Rating
MODELZONE: Founder Could Buy Back Stores Following Administration
MONARCH PARK: Administrators Put Townhouse Properties for Sale

PIPEWORK SOLUTIONS: Goes Into Liquidation
SANDWELL COMMERCIAL: Fitch Affirms 'CC' Ratings on 3 Note Classes


X X X X X X X X

* EUROPE: EC to Create Agency to Salvage or Shut Failed Banks
* Q3 Off to Another Rocky Start for EMEA CMBS Maturities
* Upcoming Meetings, Conferences and Seminars


                            *********


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F R A N C E
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MOONSCOOP: Clarifies Administration Reports
-------------------------------------------
Kristin Brzoznowski at worldscreen.com reports that while the
French Moonscoop SA has entered into a Judicial Recovery
Procedure, the U.S.-based Moonscoop LLC and its subsidiary VOD
network Kabillion are not included within the reorganization.

Moonscoop France has entered into Administration to allow it to
reorganize the company and move forward with its business,
according to worldscreen.co.

"However, we want to state clearly and emphatically to ensure no
misconstruing of information that the U.S.-based Moonscoop LLC
and Kabillion are independent and stand-alone entities in our
production and corporate operations, financing and rights
ownership," stated Mike Young, Moonscoop LLC's chief executive
officer, and Liz Young, president, the report notes.

"Furthermore, while Moonscoop France has an equity interest in
our companies, we are a completely separate group and are both
operationally and financially sound.  We are busy with a robust
production slate as well as several exciting new projects.  Our
key intellectual properties include the international hit
animated preschool series Chloe's Closet, now in season two
production and licensed in over 100 territories worldwide, Dive
Olly Dive!, Hero:108, Growing Up Creepie, Pet Alien and Todd
World.  Our current new series production slate also includes
Sabrina Secrets of a Teenage Witch, an iconic franchise of Archie
Comics Publications.  We also produce Lalaloopsy, based on the
enormously popular MGA doll line and an instant ratings hit on
Nickelodeon since its debut in March," they added, the report
notes.



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G E R M A N Y
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BLITZ 13-347 GMBH: S&P Assigns 'B' Corp. Credit Rating
------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' long-term
corporate credit rating to Blitz 13-347 GmbH, the new entity that
will sit at the top of the new Springer group after completion of
the acquisition of all of Springer Science+Business Media S.A's
(SSBM) assets by funds advised by BC Partners.  The outlook is
stable.

"At the same time, we assigned our 'B' issue rating to the
proposed EUR1,770 million senior secured term loan facility
(including euro and U.S. dollar tranches) due 2020 and EUR150
million senior secured revolving credit facility (RCF) due 2019
to be borrowed by subsidiary Blitz 13-253 GmbH and entities of
the new Springer group.  This rating is in line with our
corporate credit rating on Blitz 13-347 GmbH, guarantor of the
proposed facilities.  The recovery rating on these instruments is
'3', reflecting our expectation of meaningful (50%-70%) recovery
in the event of a payment default," S&P said.

"The existing 'B' long-term corporate credit rating on SSBM is
unchanged.  Our issue ratings on SSBM's existing bank facilities
and mezzanine facilities also remain unchanged at 'B+' and 'CCC+'
respectively.  We expect to withdraw the ratings on the existing
debt upon completion of the refinancing," S&P added.

"Our long-term rating on Blitz 13-347 GmbH is based on our
assessment of the business and financial risk profiles of the
professional publisher, Springer group which essentially
comprises the operating assets of SSBM," S&P noted.

Private equity funds EQT and GIC, the current owners of SSBM have
agreed to sell a majority stake in the group to BC Partners for
about EUR3.3 billion.  The new debt proceeds will be used to
refinance the Springer group's existing debt.

The senior secured facilities issue and recovery ratings are
supported by S&P's valuation of the group as a going concern,
given Springer's world-leading market position, its satisfactory
business risk profile, and its valuable intellectual property
database and portfolio of assets.  The recovery prospects on the
senior secured debt reflect the strength of the security package
(shares and assets, including intellectual property), and the
broadly favorable insolvency regimes.  However, given the number
of distinct operations, any insolvency process that incorporates
multijurisdictional proceedings could hurt the timeliness and
cost of ultimate recovery.  In addition, the senior secured
facilities' recovery prospects are constrained by the higher
amount of senior secured debt in the proposed capital structure
and the potential for incremental senior secured debt to be
raised.

S&P's assessment of Springer's business risk profile as
satisfactory continues to reflect its strong position as the
world's largest publisher of STM books and second-largest
publisher of STM journals.  The group generates a high proportion
of stable and recurring subscription sales, and solid
profitability through its STM business.  Tempering these positive
factors is S&P's opinion that STM publishers are likely to remain
in a difficult pricing environment over the next few years owing
to budgetary constraints facing libraries and other institutional
customers.  S&P's assessment of Springer's financial risk profile
mainly reflects its very high debt burden under the proposed
financing, and S&P's expectation of steady gross debt
deleveraging, excluding shareholder loans, over the next few
years.  For further details, see "Outlook Revised To Stable On
Professional Publisher Springer On Significant Releveraging; 'B'
Rating Affirmed," published July 1, 2013, on RatingsDirect.

"The stable outlook reflects our view that Springer group's
credit metrics will likely remain commensurate with a 'B' long-
term rating over the next 12 months under the proposed capital
structure.  The outlook also reflects our expectation that
Springer group's steady operating performance and sound free
operating cash flow generation should enable the group to
steadily reduce adjusted leverage, excluding shareholder loans,
over the next 12 months and that the group's liquidity will
remain adequate during the period.  Furthermore, we believe that
if the proposed transaction doesn't complete over the next two
months, the current owners are likely to continue looking for a
monetization of their stake in the short term, which could also
result in a releveraging of the group.  We consider a ratio of
adjusted EBITDA interest coverage of over 1.3x -- equivalent to
2.0x excluding the shareholder loans accruing interest -- to be
commensurate with the current rating," S&P said.

S&P could lower the ratings if Springer's EBITDA contracted
substantially over the next 12 months, resulting in significant
weakening of liquidity, or if the group generated significant
negative free cash flow.  S&P could also consider a negative
rating action if the adjusted EBITDA interest coverage ratio fell
below 2.0x excluding the shareholder loans accruing interest, or
if the group made significant and credit-dilutive acquisitions.

S&P do not see any rating upside at this point, as the rating
already includes S&P's deleveraging expectations for Springer
group under the new proposed capital structure over the next 12
months.  However, S&P could consider raising the group's ratings
if it managed to achieve adjusted cash interest coverage of 2.5x,
excluding shareholder loans accruing interest, and continued
generating positive free cash flow, while approaching adjusted
leverage of 6x excluding shareholder loans.


* GERMANY: Corporate Insolvency Hike May Spur ABS Deal Defaults
---------------------------------------------------------------
The increase in German corporate insolvencies in H113 will lead
to a moderate increase in default rates in commercial leasing ABS
transactions, but Fitch Ratings do not anticipate any impact on
current ratings as a result, Fitch Ratings says. The H1 increase
is consistent with our deal-by-deal base case default assumptions
and observed default rates should remain below those assumed in
our higher rating stress scenarios.

Corporate insolvencies in Germany have increased to 15,430
companies in the first half of 2013 compared with 14,920
companies in the year-earlier period, according to Creditreform,
a German credit bureau. This 3.4% increase is the first in
Germany since the recessionary year of 2009 and is mostly due to
the slowing economic activity in Germany during the past months.
For all of 2013, Creditreform expects between 30,000 and 31,000
companies to become insolvent, an increase of between 4.5% and
7.9% compared with 2012.

"We expect the increasing trend in corporate insolvencies to
translate into moderately rising default rates in structured
finance transactions, where the securitized portfolios contain
contracts originated with corporate obligors. Most of the
insolvencies have been with small and medium enterprises (with a
turnover of up to EUR5 million). We expect this trend to
continue, as smaller companies are more sensitive to weaker
exports caused by the continuing recession in the Eurozone,"
Fitch says.

"As a result, we do not expect a significant performance change
in large balance sheet SME CLOs, where borrowers typically have
higher turnover levels. A more pronounced impact is likely on
default performance of commercial leasing ABS transactions, where
the lessees are usually smaller.

"We derive default rates in expected (base) case scenarios, as
well as in the higher rating scenarios, by analysing historical
default data provided by the originators for at least the
previous five years, covering all phases of at least one economic
cycle and including years of severe economic stress. An example
of a recessionary year was 2009, when 32,930 firms filed for
insolvency, which is higher than Creditreform's forecast for the
current year.

"We set our base case default rate to be in line with our
expectation of future economic development, while the default
rates in higher rating scenarios incorporate cushion against
unexpected economic deterioration. As a result, while we expect
default rates to increase following rising corporate
insolvencies, we project them to remain in line with our base
case assumptions and below our assumptions in higher rating
stress scenarios. Thus, an impact on the current ratings is not
expected."



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BANK OF IRELAND: EU Commission Orders Sale of Parts of ICS
----------------------------------------------------------
BreakingNews.ie reports that Bank of Ireland has been ordered by
the European Commission to sell off parts of a subsidiary in
compensation for its state aid.

According to BreakingNews.ie, the Commission says the bank will
have to sell off parts of the ICS Building Society mortgage
business.  This means some loans will be taken over by the new
owner, BreakingNews.ie notes.

Brussels says the measures are aimed at undoing the advantage
Bank of Ireland gained from receiving EUR4.7 billion from the
taxpayer during the financial crisis, BreakingNews.ie discloses.

The bank has also been ordered to sell off its British corporate
and business banking divisions, BreakingNews.ie says.

Bank of Ireland is the only one of the country's six largest
lenders to have moved on from state control, BreakingNews.ie
notes.

                          *     *     *

As reported by the Troubled Company Reporter-Europe on Dec. 18,
2012, Standard & Poor's Ratings Services expects to assign a 'B'
rating to Bank of Ireland's (BOI; BB+/Negative/B) proposed new
dated nondeferrable subordinated debt issue, subject to a review
of the final documentation. "At the same time, we have raised the
ratings on BOI's existing dated subordinated debt issues to 'B'
from 'CC'. In addition, we have raised the ratings on BOI's
existing junior subordinated debt and preference shares to 'B-'
from 'CC'," S&P said.


EUROCREDIT OPPORTUNITIES I: Asset Sale Deal No Impact on Ratings
----------------------------------------------------------------
Moody's Investors Service has determined that the proposed entry
by Eurocredit Opportunities Parallel Funding I PLC into a forward
sale agreement to sell its collateral assets will not in and of
itself and at this time cause the rating of any notes issued by
the Issuer to be reduced or withdrawn. Moody's opinion address
only the credit impact of the Proposal and Moody's is not
expressing any opinion as to whether the Proposal has, or could
have, other non-credit related effects that may have a
detrimental impact on the interests of noteholders.

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

Moody's Investors Service did not receive or take into account a
third-party due diligence report on the underlying asset or
financial instruments related to the monitoring of the
transaction in the past six months.

Moody's will continue monitoring the ratings of the notes issued
by the Issuer. Any change in the ratings will be publicly
disseminated by Moody's through appropriate media.

On May 15, 2012, Moody's upgraded the ratings of the following
notes issued by Eurocredit Opportunities:

  Class A EUR312,500,000 Senior Secured Floating Rate Notes due
  2019, Upgraded to Aaa (sf); previously on Jul 13, 2011
  Confirmed at Aa1 (sf)

  Class B EUR10,000,000 Senior Secured Deferrable Floating Rate
  Notes due 2019, Upgraded to Aa2 (sf); previously on Jul 13,
  2011 Upgraded to Aa3 (sf)

  Class C EUR8,000,000 Senior Secured Deferrable Floating Rate
  Notes due 2019, Upgraded to A1 (sf); previously on Jul 13, 2011
  Upgraded to A2 (sf)

  Class D EUR40,000,000 Senior Secured Deferrable Floating Rate
  Notes due 2019, Upgraded to Baa3 (sf); previously on Jul 13,
  2011 Upgraded to Ba1 (sf)



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APULIA FINANCE: Moody's Cuts Rating on EUR19.1MM C Notes to Ba1
---------------------------------------------------------------
Moody's Investors Service has downgraded the rating of four
classes of notes in three Italian RMBS transactions: Apulia
Mortgages Finance N. 3 S.r.l., Apulia Finance N. 4 S.r.l. and
Apulia Finance N. 4 S.r.l -- Series 2008-2. Moody' has also
confirmed the Class A notes in Apulia Finance N. 4 S.r.l --
Series 2. Insufficiency of credit enhancement to address
sovereign risk, counterparty risk and revision of key collateral
assumptions have prompted these downgrade actions.

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 A3 on July 13, 2012.

This rating action also concludes the review of two notes 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.

The action also concludes the review of Class A notes in Apulia
Finance N. 4 S.r.l. Series 2 placed on review on May 30, 2013 due
to potentially insufficient credit enhancement due to the
introduction of a specific approach for the analysis of "mixed-
pool" mortgage loan portfolios comprising RMBS and asset-backed
securities transactions backed by loans to small and medium-sized
enterprises (SME ABS).

Ratings Rationale:

The rating action primarily reflects the insufficiency of credit
enhancement to address sovereign risk, counterparty risk and
revision of key collateral assumptions. Moody's confirmed the
ratings of securities whose credit enhancement and structural
features provided enough protection against sovereign,
counterparty 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 the MILAN Credit Enhancement assumption to
24.4% in Apulia Finance N. 4 S.r.l -- Series 2 in consideration
to the high percentage of loan to small and medium-size
enterprises. Moody's has maintained the current MILAN CE
assumptions in the other transactions :13.5% in Apulia Mortgages
Finance N. 3 S.r.l., 14.3% in Apulia Finance N. 4 S.r.l. and
13.0% in Apulia Finance N. 4 S.r.l. -- Series 2008-2.

Moody's has also maintained the current expected loss assumptions
in Apulia Mortgages Finance N. 3 S.r.l. and has revised its
lifetime loss expectation assumption in Apulia Finance N. 4
S.r.l., Apulia Finance N. 4 S.r.l -- Series 2 and Apulia Finance
N. 4 S.r.l -- Series 2008-2 because of worse-than-expected
collateral performance. EL assumptions as a percentage of
original pool balance remain at 4.50% for Apulia Mortgages
Finance N. 3 S.r.l. Moody's increased expected loss from 3.60% to
4.60% for Apulia Finance N. 4 S.r.l., from 9.30% to 10% for
Apulia Finance N. 4 S.r.l -- Series 2 and from 5.80% to 6.50% for
Apulia Finance N. 4 S.r.l -- Series 2008-2.

Exposure to Counterparty Risk

The downgrade of Apulia Mortgages Finance N. 3 S.r.l., Apulia
Finance N. 4 S.r.l. -- Series 2008-2 and Class B notes in Apulia
Finance N. 4 S.r.l. reflects the commingling and set-off risks
due to exposure to BancApulia (NR) acting as originator and
servicer.

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 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,
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 or EL 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.

List of Affected Ratings

Issuer: Apulia Mortgages Finance N. 3 S.r.l.

  EUR12.7M C Notes, Downgraded to Baa3 (sf); previously on Aug 2,
  2012 Baa2 (sf) Placed Under Review for Possible Downgrade

Issuer: Apulia Finance N. 4 S.r.l.

  EUR11.3M B Notes, Downgraded to A3 (sf); previously on Mar 13,
  2013 A2 (sf) Placed Under Review for Possible Downgrade

  EUR19.1M C Notes, Downgraded to Ba1 (sf); previously on Aug 2,
  2012 A3 (sf) Placed Under Review for Possible Downgrade

Issuer: Apulia Finance N. 4 S.r.l. - Series 2

  EUR319.85M A Notes, Confirmed at A2 (sf); previously on May 30,
  2013 A2 (sf) Placed Under Review for Possible Downgrade

Issuer: Apulia Finance N. 4 S.r.l. - Series 2008-2

  EUR288.45M A Notes, Downgraded to A3 (sf); previously on Mar
  13, 2013 A2 (sf) Placed Under Review for Possible Downgrade


BANCO POPOLARE: Moody's Lowers Rating on Mortgage Covered Bonds
---------------------------------------------------------------
Moody's Investors Service has downgraded to Baa2 from A2 (on
review for downgrade) the residential covered bonds issued by
Banco Popolare Societa Cooperativa (BP) (deposits Ba3 negative,
bank financial strength rating E+/baseline credit assessment b3
negative outlook). This follows Moody's downgrade of the issuer's
ratings, on July 8, 2013 and this concludes the review initiated
on November 28, 2012. The covered bonds are governed by the
Italian legal framework.

Ratings Rationale:

The downgrade is prompted by the downgrade of the issuer's
ratings. The TPI assigned to this transaction remains unchanged
at "Improbable". Moody's TPI framework constrains the rating of
BP's residential mortgage covered bonds at its current level.

Key Rating Assumptions/Factors

Moody's determines covered bond ratings using a two-step process:
an expected loss analysis and a TPI framework analysis.

EXPECTED LOSS: Moody's uses its Covered Bond Model (COBOL) to
determine a rating based on the expected loss on the bond. COBOL
determines expected loss as (1) a function of the issuer's
probability of default (measured by the issuer's rating); and (2)
the stressed losses on the cover pool assets following issuer
default.

The cover pool losses are an estimate of the losses Moody's
currently models if the relevant issuer defaults. Moody's splits
cover pool between market risk and collateral risk. Market risk
measures losses stemming from refinancing risk and risks related
to interest-rate and currency mismatches (these losses may also
include certain legal risks). Collateral risk measures losses
resulting directly from the cover pool assets' credit quality.
Moody's derives collateral risk from the collateral score.

The cover pool losses for this program are 27.4%, with market
risk of 22.4% and collateral risk of 5%. The collateral score for
this program is currently 7.5%. The over-collateralization (OC)
in this cover pool is 47.7%, of which BP provides 19.5% on a
"committed" basis. The minimum OC level that is consistent with
the Baa2 rating target is 14% on top of OC being posted to cover
set-off and commingling risk in the ACT test. These numbers show
that Moody's is not relying on "uncommitted" OC in its expected
loss analysis.

TPI FRAMEWORK: Moody's assigns a "timely payment indicator"
(TPI), which indicates the likelihood that the issuer will make
timely payments to covered bondholders if the issuer defaults.
The TPI framework limits the covered bond rating to a certain
number of notches above the issuer's rating.

For BP's residential mortgage covered bonds, Moody's assigned TPI
of Improbable remains unchanged.

Sensitivity Analysis

The issuer's credit strength is the main determinant of a covered
bond rating's robustness. The TPI Leeway measures the number of
notches by which Moody's might downgrade the issuer's rating
before the rating agency downgrades the covered bonds because of
TPI framework constraints.

The TPI Moody's assigns to BP's residential covered bonds is
Improbable. The TPI Leeway for these programs is limited, and
thus any downgrade of the issuer ratings may lead to a downgrade
of the covered bonds.

A multiple-notch downgrade of the covered bonds might occur in
certain limited circumstances, such as (1) a sovereign downgrade
negatively affecting both the issuer's senior unsecured rating
and the TPI; (2) a multiple-notch downgrade of the issuer; or (3)
a material reduction of the value of the cover pool.

The principal methodology used in this rating was "Moody's
Approach to Rating Covered Bonds" published in July 2012.



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VILNIUS CITY: Is Insolvent, Lithuania's Prime Minister Says
-----------------------------------------------------------
The Baltic Course reports that Lithuania's Prime Minister
Algirdas Butkevicius said the municipality of Vilnius city is
insolvent.

"It needs to be said that the financial condition of the
municipality of Vilnius city is very bad. The financial
obligations as compared to the planned revenue seek 208% at the
moment, while the loans make up 118%. This confirms the fact that
the municipality of Vilnius city is insolvent," Mr. Butkevicius
said in a meeting with the leaders of the municipality of Vilnius
City.



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GLOBAL BLUE: Moody's Changes Outlook to Positive & Keeps B1 CFR
---------------------------------------------------------------
Moody's Investors Service has changed to positive from stable the
outlook on the ratings of Global Blue Finance S.ar.l. (Global
Blue), which is the indirect holding company of Global Blue
Acquisition B.V. Concurrently, Moody's has affirmed Global Blue's
B1 corporate family rating, B2-PD probability of default rating,
and the B1 senior secured instrument ratings borrowed at Global
Blue Acquisition B.V., a fully-owned and guaranteed subsidiary of
Global Blue. The outlook on all ratings is positive.

Ratings Rationale:

The change in outlook to positive reflects Global Blue's solid
earnings growth in fiscal year ending March 31, 2013 (FYE 2013),
during which it reported a 21% rise in adjusted EBITDA to EUR117
million from EUR97 million in 2012, and the fact that metrics are
now approaching Moody's guidance for positive rating pressure.
These data are before one-off items of EUR11.4 million in FY 2013
related to the acquisition of Global Blue by private equity in
July 2012. The earnings increase predominantly reflected higher
sales in the Tax Free Shopping business in FY2013 (TFS,
approximately 88% of gross turnover before rebates to retailers).
This in turn was on the back of some strong traffic growth for
the group, including total in-store sales for TFS (up 24% at
EUR12.2 billion), number of transactions (up 20% year-on-year),
and average transaction size (up 4% at EUR511 per transaction).
Geographically, the key drivers of growth in commissions by
origin were China and Russia, which continues the trend of
previous years, while the EU remains by far the main destination
for commissions collected by Global Blue. One of the company's
key strategic initiatives currently is to digitize its
infrastructure, enabling the traveler to pre-register prior to
travelling and obtain automatic electronic refunds.

Moody's estimates that as of March 2013, the company's gross
adjusted leverage metric was around 3.5x, which represents an
improvement from 4.4x at the time of the LBO transaction in July
2012 and based on FYE 2012 results. In addition to the increased
earnings, the reduction in gross leverage also reflects the
prepayment of some of the company's amortizing term loan A during
the year, with EUR32 million of its term loans repaid in total
(out of EUR398 million when first borrowed).

Moody's had previously indicated that adjusted leverage falling
below 3.5x could be positive for the rating. The rating agency
believes that Global Blue's leverage may achieve this target in
the current year given the recent trend in earnings. That being
said, this will also depend on the financial policies of Global
Blue and its private equity owners, Silver Lake Partners Group,
in terms of potential dividends and acquisitions. Moody's notes
that in March 2013, the company amended the terms of its bank
facilities to reduce margins, but also to enable the company to
assume additional facilities of up to EUR150 million if requested
by the company.

Global Blue's B1 CFR primarily reflects the company's relatively
small scale compared with other rated companies within business
services, fairly limited history of maintaining earnings at
recent levels, its exposure to the international travel sector
and its geographical concentration on certain regions and
countries for its commissions. Moody's believes that while
earnings growth in recent years has been very strong, any adverse
events in the company's key countries for commissions by origin
-- notably China and Russia -- could have a significant impact on
the company's earnings in a relatively short period of time. More
generally, Moody's believes that the travel industry has good
long-term growth prospects, but is nevertheless prone to
significant shifts in demand due to exogenous factors.

The ratings for Global Blue also reflect its leading global
position in VAT refund processing for international shoppers
(TFS), as well as its other smaller businesses. Moody's notes
Global Blue's very diverse client base in terms of merchant
outlets, albeit with a higher concentration of retail chains, as
well as the company's high retention rate amongst its key
clients. While Global Blue derives its revenue from travelers
from a fairly broad range of countries, the company is highly
reliant on the European Union countries as destination markets
for its travelers. In spite of risks inherent to the travel
industry, the company has posted solid double-digit earnings
growth over the past three years, benefiting in particular from
higher numbers of travelers from China and Russia, as well as
growth in transactions and transaction sizes. The company used
some free cash flows to repay debt in FY2013, reducing adjusted
leverage to around 3.5x, which is strong for the rating category
and hence underpins the current positive outlook.

Moody's considers Global Blue's liquidity to be satisfactory, but
subject to sizeable seasonal swings reflecting holiday patterns.
As of March 2013, the company reported a cash balance of EUR51
million, and an undrawn revolving credit facility (RCF) of EUR65
million except for EUR9 million in guarantees, and no short-term
financial debt. The term loans and RCF contain four financial
covenants for leverage, interest coverage, cash flow coverage and
capital expenditure (capex), which are first tested in June 2013
and for which Moody's expects headroom to be strong. Term loan A
amortizes as of September 2013, while Term loan B and the RCF are
due 2018. However, due to a prepayment, the company has already
paid the required amortization for FY 2014.

Rationale For Positive Outlook

The positive rating outlook reflects Moody's view that at this
time the rating is strongly positioned, and that continued
earnings growth as seen in the past financial year, with no
significant change in financial policy, could result in an
upgrade. Moody's ratings assume continued access to the RCF, and
strong headroom under applicable covenants.

What Could Change The Rating Up/Down

Upwards pressure on the rating could develop if the company was
to reduce its leverage, as measured by adjusted debt/EBITDA below
3.5x on a continued basis while maintaining a solid liquidity
profile. Conversely, negative pressure on the rating or outlook
would develop if gross leverage were to rise above 4.5x, although
this is not expected at this time.

Principal Methodology

The principal methodology used in these ratings was the Global
Business & Consumer Service Industry Rating Methodology published
in December 2010. Other methodologies used include Loss Given
Default for Speculative-Grade Non-Financial Companies in the
U.S., Canada and EMEA published in June 2009.

Domiciled in Luxembourg with headquarters in Switzerland, Global
Blue is a leading provider of VAT and Goods and Service Tax (GST)
refunds to travelers, as well as currency conversion services.
For FYE 2013, the company reported net revenues and EBITDA of
approximately EUR311 million and EUR116 million, respectively.


LION/GEM LUXEMBOURG: S&P Assigns Prelim. 'B-' Corp. Credit Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary 'B-'
long-term corporate credit rating to Lion/Gem Luxembourg 3
S.a.r.l.  S&P refers to Lion/Gem Luxembourg and Liongem Sweden
together as Findus or the group.

At the same time, S&P assigned its preliminary issue rating of
'B-' to the GBP410 million-equivalent senior secured notes to be
issued by Lion/Gem Luxembourg's subsidiary Findus Bondco S.A.
The recovery rating on these notes is '4', indicating S&P's
expectation of average (30%-50%) recovery in the event of a
payment default.

The preliminary rating assignment follows Findus' announcement
that it intends to revise its capital structure by issuing GBP410
million-equivalent senior secured notes to repay its existing
term loan. S&P understands that the new capital structure will
also include a GBP60 million super senior revolving credit
facility (RCF) and about GBP457.4 million of existing convertible
preferred equity certificates (CPECs).  These CPECs remain
subordinated within the structure.

The ratings on Findus are constrained by S&P's assessment of the
group's financial risk profile as "highly leveraged" and its
business risk profile as "weak."

S&P projects that Findus' Standard & Poor's-adjusted debt-to-
EBITDA ratio will remain at about 11.2x after the notes issuance,
or about 5.5x excluding the CPECs and a shareholder loan.
Following the issuance of the senior secured notes, S&P forecasts
that Findus' EBITDA cash interest coverage will be about 2.5x.
An EBITDA-to-cash interest ratio in excess of 2x and "adequate"
liquidity are commensurate with a 'B-' rating.

"We assume in our base-case credit scenario that Findus will be
able to maintain a stable EBITDA margin of about 8% in 2013.  We
do not foresee that Findus will face margin erosion thanks to a
considerable number of measures the group has undertaken.  These
measures include new product launches; cost cutting; DNA testing;
improvements to the traceability of its product ingredients; and
a reduction in the number of its meat suppliers.  We believe that
these initiatives and the capital restructuring should have a
positive effect on the group's profitability from 2014," S&P
added.

Findus' business risk profile is constrained by its low EBITDA
margin compared with that of its peers.  This is partly because
of Findus' exposure to private-label business, which represented
38% of sales in 2012, and which limits Findus' ability to
increase prices.  Furthermore, S&P perceives that the group's
lack of focus on brand development and innovation in 2012, along
with its transfer of increases in raw material prices to
customers, resulted in some volume declines and ultimately in
margin erosion in 2012.

In S&P's view, these weaknesses are partially offset by Findus'
market leadership position in the Nordic region, especially in
Sweden, Norway, Finland, and France.  In addition, Findus'
subsidiary Young's Seafood Company is a market leader in the fish
and seafood product category in the U.K.  Apart from supplying
its products under the Young's brand name, Young's Seafood
Company also supplies under private labels to almost all major
retailers in the U.K.  These include J Sainsbury PLC, Marks &
Spencer PLC, Tesco PLC, ASDA (part of Wal-Mart Stores Inc.),
Waitrose, WM Morrison Supermarkets PLC, and others.

"Furthermore, we view positively in our assessment of Findus'
business risk its degree of geographic diversity and reliance on
its main business of seafood.  Of the group's 2012 sales, 66% was
derived from seafood products.  Geographically, 50% was derived
from the U.K., 19% from Sweden, 13% from Norway, 10% from France,
and the remaining 8% from other European countries.  We also view
the group's product diversity as favorable--45% of sales in 2012
were from branded products, 38% from private labels, and the rest
from other product categories including food services," S&P said.

The preliminary issue rating on the proposed GBP410 million-
equivalent senior secured notes to be issued by Findus BondCo is
'B-'.  The recovery rating on these notes is '4', reflecting
S&P's opinion of average (30%-50%) recovery prospects in the
event of a default.

S&P's recovery rating on the proposed notes is supported by its
valuation of the group as a going concern and the relatively
comprehensive security package provided to senior secured
lenders, which includes pledges over the all of the group's
assets in the U.K.  However, in S&P's view, the recovery
prospects on the proposed notes are limited by the GBP60 million
RCF, which is provided on a super priority basis.

S&P understands that the documentation for the notes will contain
fairly typical restrictions, including on the amount of
additional indebtedness subject to incurrence covenants based on
fixed charges and senior secured leverage.  The documentation for
the notes also includes, among other things, restrictions on
payments, sales of assets, and change-of-control provisions.  S&P
understands that the super senior RCF will include a maintenance
covenant of minimum EBITDA only, set at about GBP52 million.

In order to calculate recoveries, S&P simulates a hypothetical
default scenario.  S&P believes that a default would most likely
be triggered by margin erosion due to higher raw material costs
that the group would be unable to pass on to customers.  In part,
this would be due to increased competition from private labels.
In addition, S&P believes that further product recalls leading to
reputational damage could compound margin erosion.  S&P
anticipates a default in 2016, by which point it envisages that
EBITDA would have fallen to GBP62 million.

S&P values Findus as a going concern given its significant market
positions, particularly in the Nordic region and the U.K. and the
strength of the Findus brand in the Nordic countries.  At S&P's
hypothetical point of default, it values the company at about
GBP310 million, equivalent to a 5x valuation multiple.

S&P envisages about GBP425 million of senior secured debt
outstanding at the point of default (including six months'
prepetition interest), equivalent to 30%-50% recovery prospects.

The stable outlook on Findus reflects S&P's view that the new
senior secured notes, if issued successfully, will improve the
maturity profile of the group and allow it to use funds for
investments within the business.

It also reflects S&P's view that the successful issuance would
aid the group in implementing its various initiatives.  In S&P's
view, these initiatives will help the group to maintain its
steady revenues and margins over the next 12-18 months.  An
EBITDA-to-cash interest ratio in excess of 2x and "adequate"
liquidity are commensurate with a 'B-' rating.

In S&P's opinion, a positive rating action over the next 12
months is unlikely.  However, S&P could take a positive rating
action over the medium term if it sees an improvement in the
group's business performance, translating into improved EBITDA
margins.

Increases in raw material costs that the group cannot recover
from price increases within a short time frame, and further
deterioration in the performance of the group's business could
lead to a negative rating action.

S&P could also lower the ratings if the group's liquidity becomes
materially weaker due to reduced profitability and/or
restructuring costs, and if cash interest coverage falls to less
than 1.5x.


THESEUS EUROPEAN: S&P Raises Rating on Class E Notes to 'BB+'
-------------------------------------------------------------
Standard & Poor's Ratings Services raised its credit ratings on
Theseus European CLO S.A.'s class A1, A2B, C, D, and E notes.  At
the same time, S&P has affirmed its ratings on the class A2A and
B notes.

The rating actions follow's S&P's assessment of the transaction's
performance since its previous review on Aug. 14, 2012.

In S&P's review, it considered recent transaction developments.
S&P included data from the May 2013 trustee report, along with
data from its ratings database and its cash flow analysis.  S&P
applied its current counterparty criteria and its 2009 corporate
cash flow collateralized debt obligation (CDO) criteria.

                          CREDIT ANALYSIS

Since S&P's last review, it has observed a positive rating
migration of the performing portfolio.  The assets rated in the
'CCC' category (assets rated 'CCC+', 'CCC', or 'CCC-') have
decreased to 7.83% from 15.14%.

This has led to a lower scenario default rate (SDR) for all
classes of notes compared with S&P's previous review, as provided
by its CDO Evaluator.

The transaction started its post-reinvestment period in August
2012.  Therefore, the structure has started to deleverage.  The
class A1 and A2A notes have amortized by about EUR41 million,
which has led to an increase in available credit enhancement for
all classes of notes.

                         CASH FLOW ANALYSIS

Following S&P's credit analysis, it subjected the transaction's
capital structure to a cash flow analysis, to determine the
break-even default rate for each rated class of notes at each
rating level.

In S&P's analysis, it used the portfolio balance that it
considered to be performing, the reported weighted-average spread
(which has increased to 3.70%, from 3.51% at S&P's last review),
and the weighted-average recovery rates in accordance with S&P's
2009 cash flow CDO criteria.  S&P incorporated various cash flow
stress scenarios using its standard default patterns in
conjunction with different interest rate and currency stress
scenarios.

Following S&P's credit and cash flow analysis, it considers the
available credit enhancement for the class A1, A2B, C, D, and E
notes to be commensurate with higher ratings.  S&P has therefore
raised its ratings on these classes of notes.

S&P considers the available credit enhancement for the class A2A
and B notes to be commensurate with the currently assigned
ratings.  S&P has therefore affirmed its ratings on these classes
of notes.

                     SUPPLEMENTAL STRESS TESTS

None of S&P's ratings in this transaction is constrained by the
application of the largest obligor default test, a supplemental
stress test that it introduced in its 2009 corporate cash flow
CDO criteria.

Theseus European CLO is a collateralized loan obligation (CLO)
transaction that securitizes loans to primarily European
speculative-grade corporate firms.  The transaction closed on
Aug. 3, 2006, and is managed by Invesco Senior Secured
Management, Inc.

           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            Rating
            To                From

Theseus European CLO S.A.
EUR331 Million Senior Secured And Deferrable Floating-Rate Notes

Ratings Raised

A1          AAA (sf)          AA+ (sf)
A2B         AAA (sf)          AA+ (sf)
C           A+ (sf)           A (sf)
D           BBB+ (sf)         BBB (sf)
E           BB+ (sf)          BB (sf)

Ratings Affirmed

A2A         AAA (sf)
B           AA (sf)



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


NEPTUNO CLO II: S&P Affirms 'CCC-' Rating on Class E Notes
----------------------------------------------------------
Standard & Poor's Ratings Services lowered to 'AA (sf)' from 'AA+
(sf)' its credit rating on Neptuno CLO II B.V.'s class A notes.
At the same time, S&P has affirmed its ratings on the class B, C,
D, and E notes.

The rating actions follow the application of S&P's non-sovereign
ratings criteria and its credit and cash flow analysis of the
transaction.

On Oct. 10, 2012, S&P lowered to 'BBB-' from 'BBB+' its long-term
sovereign rating on Spain.

S&P notes that 12% of the transaction's collateral is exposed to
country risk through Spain (BBB-/Negative/A-3), and 3% through
Portugal (BB/Stable/B).

                         CAPITAL STRUCTURE

                Notional               OC
        Current    as of Current    as of
       notional Jul.2012      OC Jul.2012
Class  (mil.EUR) (mil.EUR)  (%)      (%)    Interest  Def.
A        290.29   293.37    28.5     29.4   6mE+0.30%     No
B         28.00    28.00    21.4     22.2   6mE+1.30%     No
C         23.00    23.00    15.5     16.3   6mE+2.30%    Yes
D         23.00    23.00     9.7     10.5   6mE+4.00%    Yes
E         22.70    24.47     4.0      4.2   6mE+7.00%    Yes
F         25.17    22.87     0.0      0.0   6mE+8.50%    Yes
Sub.      31.50    31.50     0.0      0.0         N/A    N/A

OC - Overcollateralization = [aggregate performing assets
     notional + expected recovery on defaulted assets + principal
     cash amount - tranche notional (including notional of all
     senior tranches)]/aggregate performing assets notional.
Def. - Deferrable.
6mE - Six-month Euro Interbank Offered Rate (EURIBOR).
N/A - -Not applicable.

Under S&P's non-sovereign ratings criteria, it limits the credit
given to assets in countries with a sovereign rating of more than
six notches below the liabilities' rating to 10% of the total
collateral.  As the current exposure to assets in countries rated
below 'BBB+' is 15%, S&P applied a 5% haircut to the
transaction's collateral under its 'AA+' rating scenarios.  In
S&P's July 2012 review, no sovereign with a rating below 'BBB+'
exceeded 3%, and therefore it did not apply a haircut in its
'AA+' scenarios.

As a result of S&P's credit and cash flow analysis, it considers
that the available credit enhancement for the class A notes is no
longer commensurate with the currently assigned rating.  S&P has
therefore lowered to 'AA (sf)' from 'AA+ (sf)' its rating on the
class A notes.

S&P has affirmed its ratings on the class B, C, D, and E notes
because it considers the available credit enhancement to be
commensurate with the currently assigned ratings.

Neptuno CLO II is a cash flow collateralized loan obligation
(CLO) transaction that securitizes loans granted to primarily
European speculative-grade corporate firms, managed by Halcyon
Neptuno II Management LLC.  The issuer appointed Halcyon Neptuno
II Management LLC manager in November 2012 following Bankia
S.A.'s resignation.  The transaction closed in December 2007 and
entered its amortization period in January 2013.

          STANDARD & POOR'S 17G-7 DISCLOSURE REPORT

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

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

            http://standardandpoorsdisclosure-17g7.com

RATINGS LIST

Class            Rating
           To              From

Neptuno CLO II B.V.
EUR450 Million Senior Secured Floating-Rate Notes

Rating Lowered

A          AA (sf)         AA+ (sf)

Ratings Affirmed

B          A+ (sf)
C          BBB+ (sf)
D          BB (sf)
E          CCC- (sf)


ORANGE LION 2013-10: Moody's Assigns Ba2 Rating to Class E Notes
----------------------------------------------------------------
Moody's Investors Service has assigned definitive credit ratings
to the following classes of notes issued by Orange Lion RMBS
2013-10 B.V.:

EUR1,866.916M Class A Floating Rate Mortgage Backed Notes due
June 2045, Definitive Rating Assigned Aaa (sf)

EUR57.538M Class B Floating Rate Mortgage Backed Notes due June
2045, Definitive Rating Assigned Aa1 (sf)

EUR46.236M Class C Floating Rate Mortgage Backed Notes June 2045,
Definitive Rating Assigned Aa3 (sf)

EUR40.071M Class D Floating Rate Mortgage Backed Notes due June
2045, Definitive Rating Assigned Baa1 (sf)

EUR33.907M Class E Floating Rate Mortgage Backed Notes due June
2045, Definitive Rating Assigned Ba2 (sf)

Moody's has not assigned any rating to the EUR10.275M Class F
Mortgage Backed Notes.

The notes are backed by a pool of Dutch residential mortgage
loans originated by WestlandUtrecht Bank N.V. (Not rated) a fully
owned subsidiary of ING Bank N.V. (A2/P-1). The portfolio will be
serviced by ING Bank (A2/P-1) with WUB acting as sub-servicer.
There will be no back-up servicer facilitator, or back-up
servicer appointed at closing, however there is a rating trigger
for appointing a stand by servicer if the servicer rating falls
below Baa3. The cash manger is ING Bank (A2/P-1).

The structure provides for an excess spread feature to turbo down
the repayment of the rated notes in reverse order and a cash
reserve building up over time up to 1.85% of the notes' amount as
of closing, available to cover shortfall on the rated notes.
Funding of the reserve fund is through the revenue available
funds and ranks junior to the Class F coupon.

Ratings Rationale:

The expected portfolio loss of 1.0% of original balance of the
portfolio at closing and the MILAN required Credit Enhancement of
6.5% served as input parameters for Moody's cash flow model,
which is based on a probabilistic lognormal distribution as
described in the report "The Lognormal Method Applied to ABS
Analysis" published in July 2000.

The key drivers for the MILAN Credit Enhancement number, which is
in line with the average Dutch RMBS transaction, are: (i) Month
Current data which shows that 79.52% of the loans have never been
in arrears since they were disbursed which together with
relatively high seasoning (WA seasoning of 5.55 years) is
considered as particularly positive; (ii) around 24.87% of the
pool comprise NHG loans; while (iii) the relatively high weighted
average Loan-to-Foreclosure-Value (WALTFV) of 94.22% and that
44.27% of the pool has an LTFV above 100% and 27.21 % of the pool
has an LTFV above 110%; (iv) 17.72% of the borrowers being self-
employed; and (vi) the proportion of interest only loans (38.92%)
are considered as more negative features.

The key drivers for the expected loss which is higher than the
average Dutch RMBS transaction, are: (i) the steep increase in
60+ delinquencies, up to twice as high as the Dutch RMBS Index ;
(ii) nine years of default data on loans in the seller's book for
loans with characteristics similar to the securitized ones, split
by loans with or without an NHG guarantee; (iii) lower recovery
rates and lengthier recovery process since 2009; (iv) vintage
composition of the securitized pool; and (v) benchmarking with
comparable transactions in the Dutch market.

Approximately 4.43% of the portfolio is linked to life insurance
policies (including 0.36% of mortgage loans that can switch to
life insurance policies), which are exposed to set-off risk in
case an insurance company becomes insolvent. The originator (WUB)
has provided loan-by-loan insurance company counterparty data.
Moody's considered the set-off risk in the cash flow analysis.
The potential set-off risk stemming from premium deposits has
been mitigated through a mechanism by which the amount of premium
deposits has to be cash collateralized in case ING Bank's rating
falls below P-1. The amount of premium deposits is monitored in
the Investor Report.

The transaction benefits from a swap with ING Bank (A2/P-1) as
swap counterparty. The swap covers the rated notes coupons on the
outstanding balance of the same rated notes reduced by any unpaid
amounts on the Principal Deficiency Ledgers (PDLs), together with
senior fees and expenses and an excess spread of 0.70% per annum
of the pool amount at closing for the first five years, 50 bps
per annum on the then outstanding pool balance afterwards.

The V Score for this transaction is Low/Medium, which is in line
with the score assigned for the Dutch Prime RMBS sector. Two
components scored differently compared to the sector score: (i)
Issuer/Sponsor/Originator's Historical Performance Variability
which is assessed to be Low/Medium, higher than the Low sector's
average, because of the higher delinquencies on WUB's books and
the lower recovery rates; and (ii) Analytic Complexity which is
assessed to be Medium due to the fact that the capital structure
contains some unusual features. V Scores are a relative
assessment of the quality of available credit information and of
the degree of dependence on various assumptions used in
determining the rating. High variability in key assumptions could
expose a rating to more likelihood of rating changes. The V Score
has been assigned accordingly to the report "V Scores and
Parameter Sensitivities in the Major EMEA RMBS Sectors" published
in April 2009.

Moody's Parameter Sensitivities provide a quantitative/model-
indicated calculation of the number of rating notches that a
Moody's structured finance security may vary if certain input
parameters used in the initial rating process differed. The
analysis assumes that the deal has not aged and is not intended
to measure how the rating of the security might migrate over
time, but rather how the initial rating of the security might
have differed if key rating input parameters were varied.
Parameter Sensitivities for the typical EMEA RMBS transaction are
calculated by stressing key variable inputs in Moody's primary
rating model.

If the portfolio expected loss was increased to 3.0% from 1.0%,
and all other factors remained the same, the model output
indicated that the Class A Notes would still have achieved Aaa
(sf).

The ratings of the notes take into account the credit quality of
the underlying mortgage loan pool, the dynamic delinquency data,
the dynamic recovery data and the vintage data for defaults
received from the originator as well as the transaction structure
and legal considerations. Based on the different data-sources
Moody's has determined the MILAN Credit Enhancement and the
portfolio expected loss.

The principal methodology used in this rating was Moody's
Approach to Rating RMBS Using the MILAN Framework published in
May 2013.

In rating this transaction, Moody's used ABSROM to model the cash
flows and determine the loss for each tranche. The cash flow
model evaluates all default scenarios that are then weighted
considering the probabilities of the 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.

The ratings address the expected loss posed to investors by the
legal final maturity of the notes. In Moody's opinion, the
structure allows for timely payment of interest and ultimate
payment of principal with respect to the Class A Notes by legal
final maturity. Moody's ratings address only the credit risk
associated with the transaction. Other non-credit risks have not
been addressed, but may have significant effect on yield to
investors.



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


KOMPANIA WEGLOWA: Centrala Zaopatrzenia Files Bankruptcy Motion
---------------------------------------------------------------
Warsaw Business Journal reports that Centrala Zaopatrzenia
Gornictwa has filed a motion for the bankruptcy of Kompania
Weglowa.

According to WBJ, KW owes CZG PLN3 million for supplies.

WBJ relates Zbigniew Madej, KW's spokesperson, told Dziennik
Gazeta Prawna that his company is outraged over the motion.

"We cooperate with 9,000 companies," WBJ quotes Mr. Madej as
saying.  "The vast majority of them have shown understanding for
our proposal to postpone payments by 120 days."

Kompania Weglowa is in financial trouble as energy producers have
cut hard-coal purchases in favor of lignite, WBJ notes.  As a
result, KW has 6 million metric tons of unsold coal and has been
forced to export it at low prices, WBJ states.  After the first
five months of 2013, the company has a loss of about PLN130
million, WBJ discloses.

Kompania Weglowa is the EU's largest coal mining company.



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


LUSITANO MORTGAGES 5: Moody's Cuts Rating on Cl. C Notes to Caa3
----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of seven
mezzanine and junior notes in three Portuguese residential
mortgage-backed securities transactions: Lusitano Mortgages No. 4
plc., Lusitano Mortgages No. 5 plc. and Lusitano Mortgages No. 6
Limited, as well as the senior notes in Lusitano 5. Also, Moody's
Investors Service has confirmed the ratings of the senior notes
in Lusitano 4 and 6, as well as the junior notes in Lusitano 4.
Insufficiency of credit enhancement to address sovereign risk has
prompted these downgrade actions.

The rating action concludes the review of eight notes placed on
review on September 11, 2012, following Moody's decision to
adjust the Portuguese country ceiling to Baa3 from Baa1 on
September 5, 2012 and of three notes placed on review on
November 28, 2012, following Moody's revision of key collateral
assumptions for the entire Portuguese RMBS market.

Ratings Rationale:

The downgrade rating action primarily reflects the insufficiency
of credit enhancement to address sovereign risk. Moody's
confirmed the ratings of securities whose credit enhancement and
structural features provide enough protection against sovereign
and counterparty risk.

The determination of the applicable credit enhancement driving
these rating actions reflects the introduction of additional
factors in Moody's analysis to better measure the impact of
sovereign risk on structured finance transactions.

Additional Factors Better Reflect Increased Sovereign Risk

Moody's has supplemented its analysis to determine the loss
distribution of securitized portfolios with two additional
factors, the maximum achievable rating in a given country (the
local currency country risk ceiling) and the applicable portfolio
credit enhancement for this rating. With the introduction of
these additional factors, Moody's intends to better reflect
increased sovereign risk in its quantitative analysis, in
particular for mezzanine and junior tranches.

The Portuguese country ceiling, and therefore the maximum rating
that Moody's will assign to a domestic Portuguese issuer
including structured finance transactions backed by Portuguese
receivables, is Baa3. 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.

Moody's has not revised the key collateral assumptions for any of
the deals. Expected loss assumptions as a percentage of original
pool balance remain at 3.8% for Lusitano 4; 5.0% for Lusitano 5
and 6.3% for Lusitano 6. The MILAN CE assumptions remain at 20%
for Lusitano 4 and 5, and at 25% for Lusitano 6.

Exposure to Counterparty

Moody's rating analysis also took into consideration the
commingling and set-off risk arising from exposure to Banco
Espirito Santo, S.A. as collection account bank and originator,
respectively, in the three transactions. This exposure does not
drive the downgrade action.

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 "Approach to Assessing Linkage to Swap Counterparties in
Structured Finance Cashflow Transactions: Request for Comment"
published on July 2, 2012.

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 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,
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 or EL 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.

List of Affected Ratings

Issuer: Lusitano Mortgages No. 4 plc.

EUR1134M A Notes, Confirmed at Ba1 (sf); previously on Nov 28,
2012 Downgraded to Ba1 (sf) and Remained On Review for Possible
Downgrade

EUR22.8M B Notes, Downgraded to B3 (sf); previously on Sep 11,
2012 Ba3 (sf) Placed Under Review for Possible Downgrade

EUR19.2M C Notes, Downgraded to Caa1 (sf); previously on Sep 11,
2012 B2 (sf) Placed Under Review for Possible Downgrade

EUR24M D Notes, Confirmed at Caa3 (sf); previously on Sep 11,
2012 Caa3 (sf) Placed Under Review for Possible Downgrade

Issuer: Lusitano Mortgages No. 5 plc.

EUR1323M A Notes, Downgraded to Ba2 (sf); previously on Nov 28,
2012 Downgraded to Ba1 (sf) and Remained On Review for Possible
Downgrade

EUR26.6M B Notes, Downgraded to Caa1 (sf); previously on Sep 11,
2012 B1 (sf) Placed Under Review for Possible Downgrade

EUR22.4M C Notes, Downgraded to Caa3 (sf); previously on Sep 11,
2012 B3 (sf) Placed Under Review for Possible Downgrade

Issuer: Lusitano Mortgages No. 6 Limited

EUR943.25M A Notes, Confirmed at Ba1 (sf); previously on Nov 28,
2012 Downgraded to Ba1 (sf) and Remained On Review for Possible
Downgrade

EUR65.45M B Notes, Downgraded to Ba3 (sf); previously on Nov 28,
2012 Downgraded to Ba1 (sf) and Remained On Review for Possible
Downgrade

EUR41.8M C Notes, Downgraded to B3 (sf); previously on Sep 11,
2012 B1 (sf) Placed Under Review for Possible Downgrade

EUR17.6M D Notes, Downgraded to Caa2 (sf); previously on Sep 11,
2012 B3 (sf) Placed Under Review for Possible Downgrade


MAGELLAN MORTGAGES: Moody's Cuts Rating on Class C Notes to B3
--------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 6
mezzanine and junior notes in three Portuguese residential
mortgage-backed securities (RMBS) transactions: Magellan
Mortgages No 1 plc., Magellan Mortgages No 2 plc. and Magellan
Mortgages No 4 plc. . Also, Moody's Investors Service has
confirmed the ratings of all notes in Magellan Mortgages No. 3
and class A notes and class D notes in Magellan 4. Insufficiency
of credit enhancement to address sovereign risk, counterparty
risk and revision of collateral assumptions has prompted the
downgrade action.

The rating action concludes the review of 10 notes placed on
review on September 11, 2012, following Moody's decision to
adjust the Portuguese country ceiling to Baa3 from Baa1 on
September 5, 2012 and of 2 notes placed on review on November 28,
2012, following Moody's revision of key collateral assumptions
for the entire Portuguese RMBS market.

Ratings Rationale:

The downgrade rating action primarily reflects the insufficiency
of credit enhancement to address sovereign risk and, in the case
of Magellan 2, the revision of key collateral assumptions. The
downgrade of class B in Magellan 1 and class B in Magellan 2 is
also driven by counterparty exposure. Moody's confirmed the
ratings of securities whose credit enhancement and structural
features provide enough protection against sovereign risk,
counterparty risk and change in 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 Portuguese country ceiling, and therefore the maximum rating
that Moody's will assign to a domestic Portuguese issuer
including structured finance transactions backed by Portuguese
receivables, is Baa3. 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.

Moody's has revised Expected loss assumption for Magellan 2 from
1.6% to 2.15% as a percentage of original pool balance and for
Magellan 3 from 2.4% to 2.8%. Expected loss assumptions as a
percentage of original pool balance remain at 1.10% for Magellan
1 and 2% for Magellan 4. The MILAN CE assumptions remain at 12.5%
for Magellan 1 and 2 and 15% for Magellan 3 and 4.

Exposure to Counterparty

Moody's rating analysis also took into consideration the
commingling and set-off risk arising from exposure to Banco
Comercial Portugues (B1/NP) as collection account bank and
originator, respectively, in the four transactions. This exposure
is one of the drivers of the downgrade of tranche B in Magellan 1
and tranche B in Magellan 2.

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.

Moody's describes additional factors that may affect the ratings
in "Approach to Assessing Linkage to Swap Counterparties in
Structured Finance Cashflow Transactions: Request for Comment"
published on July 2, 2012.

In reviewing these transactions, Moody's used its cash flow
model, ABSROM, to determine the loss for each tranche. The cash
flow model evaluates all default scenarios that are then weighted
considering the probabilities of the lognormal distribution
assumed for the portfolio default rate. In each default scenario,
Moody's calculates the corresponding loss for each class of notes
given the incoming cash flows from the assets and the outgoing
payments to third parties and noteholders. Therefore, the
expected loss for each tranche is the sum product of (1) the
probability of occurrence of each default scenario and (2) the
loss derived from the cash flow model in each default scenario
for each tranche.

In the context of the rating review, the transactions have been
remodeled and some inputs have been adjusted to reflect the new
approach. In addition, the following have been corrected during
the review: swap modeling was corrected for Magellan 1 and 2 to
exclude the margin of the notes from swap counterparties'
payments and use of reserve fund to repay notes at maturity was
modeled in Magellan 1.

As such, Moody's analysis encompasses the assessment of stressed
scenarios.

List of Affected Ratings

Issuer: Magellan Mortgages No. 1 plc.

EUR37M B Notes, Downgraded to Ba2 (sf); previously on Sep 11,
2012 Downgraded to Baa3 (sf) and Placed Under Review for Possible
Downgrade

EUR20.5M C Notes, Downgraded to B2 (sf); previously on Sep 11,
2012 Ba2 (sf) Placed Under Review for Possible Downgrade

Issuer: Magellan Mortgages No. 2 plc.

EUR40M B Notes, Downgraded to Ba1 (sf); previously on Sep 11,
2012 Downgraded to Baa3 (sf) and Placed Under Review for Possible
Downgrade

EUR25M C Notes, Downgraded to B1 (sf); previously on Sep 11, 2012
Ba1 (sf) Placed Under Review for Possible Downgrade

Issuer: Magellan Mortgages No. 3 plc.

EUR1413.75M A Notes, Confirmed at Ba1 (sf); previously on Nov 28,
2012 Downgraded to Ba1 (sf) and Remained On Review for Possible
Downgrade

EUR33.75M B Notes, Confirmed at B1 (sf); previously on Sep 11,
2012 B1 (sf) Placed Under Review for Possible Downgrade

EUR15.75M C Notes, Confirmed at B3 (sf); previously on Sep 11,
2012 B3 (sf) Placed Under Review for Possible Downgrade

EUR36.75M D Notes, Confirmed at Caa1 (sf); previously on Sep 11,
2012 Caa1 (sf) Placed Under Review for Possible Downgrade

Issuer: Magellan Mortgages No. 4 plc.

EUR1413.75M A Notes, Confirmed at Ba1 (sf); previously on Nov 28,
2012 Downgraded to Ba1 (sf) and Remained On Review for Possible
Downgrade

EUR33.75M B Notes, Downgraded to B2 (sf); previously on Sep 11,
2012 Ba3 (sf) Placed Under Review for Possible Downgrade

EUR18.75M C Notes, Downgraded to B3 (sf); previously on Sep 11,
2012 B2 (sf) Placed Under Review for Possible Downgrade

EUR33.75M D Notes, Confirmed at Caa1 (sf); previously on Sep 11,
2012 Caa1 (sf) Placed Under Review for Possible Downgrade


PARPUBLICA: S&P Affirms B Issuer Credit Rating; Outlook Negative
----------------------------------------------------------------
Standard & Poor's Ratings Services revised the outlook on
Portugal-based Participacoes Publicas (SGPS) S.A. (PARPUBLICA) to
negative from stable.  At the same time, S&P affirmed its long-
term issuer credit rating on PARPUBLICA at 'B'.

The outlook revision reflects S&P's outlook revision on the
Republic of Portugal (BB/Negative/B) to negative from stable.

PARPUBLICA is a 100% sovereign-owned holding company, with
investments in operating subsidiaries and a portfolio of real
estate assets.  It has executed several successful
privatizations, and the majority of its privatization receipts
are usually used to allow the state to reduce its debt burden.

The rating on PARPUBLICA is supported by S&P's assessment of the
"very high" likelihood of the sovereign providing extraordinary
and timely government support.  This reflects S&P's view of
PARPUBLICA's "very strong" link with the government.

"Our assessment of PARPUBLICA's "very important" role--as
Portugal's entity for holding, managing, and privatizing key
participations on behalf of the government--remains unchanged.
The SACP is constrained by our view of PARPUBLICA's geographic
concentration of assets in Portugal, limited financial
flexibility, and weak liquidity position.  The company had around
EUR4.96 billion of debt at the holding level at the end of 2012,
down 3% from a year earlier.  This reduction was from repaying
the EUR1 billion to bondholders who had exercised the put option
on the EDP - Energias de Portugal exchangeable bonds in December
2012.  PARPUBLICA's portfolio of equity stakes in Portuguese
entities is adequately diversified in terms of sectors, but the
entity remains highly leveraged with a loan-to-value ratio of
above 55% at year-end 2012," S&P noted.

S&P assess the company's management and governance as "fair," as
its criteria define the term, partly owing to the lack of
independence from the state, as PARPUBLICA's funding decisions
and general strategy depend largely on the Portuguese government.

The negative outlook reflects the outlook on Portugal.  S&P could
lower the rating on PARPUBLICA if it downgrades Portugal.

The rating on PARPUBLICA could stabilize at the current level if
the sovereign ratings are revised to stable.  S&P do not expect
the company's financial profile to deteriorate further, nor do
S&P anticipates the government will weaken its stance on
potential extraordinary support to the company.


* PORTUGAL: EU Commission Prepares Soft Rescue Bailout Package
--------------------------------------------------------------
Guy Hedgecoe at The Irish Times reports that Brussels is
preparing a second bailout package for Portugal.

According to The Irish Times, an article from Spain's El Pais
newspaper said that the European Commission wants to have the
so-called "soft rescue" ready for when Portugal's current bailout
expires in the middle of next year.

The paper cites two unnamed "senior EU sources" as confirming
that Lisbon is already negotiating the details of a second credit
line, which would come from the European Stability Mechanism, The
Irish Times notes.

The Irish Times relates that the article said the new deal would
"work as a containment dyke, as a preventative measure to make
sure that the exit from the [initial] program, in May of 2014, is
not a heavy burden".

Portugal requested a EUR78 billion bailout in the spring of 2011
as it wrestled with a stagnating economy, soaring debt and a
ballooning deficit, the Irish Times recounts.  Since then the
country has pursued an aggressive program of reforms and
austerity recommended by its bailout troika of lenders, the Irish
Times states.  However the economy still looks vulnerable as it
heads for a third straight year of recession, the Irish Times
says.



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


ALFA-BANK: Moody's Lowers Subordinated Debt Ratings to 'Ba3'
------------------------------------------------------------
Moody's Investors Service has downgraded the subordinated debt
ratings of Alfa-Bank (to Ba3 from Ba2), Bank of Moscow (to B1
from Ba3) and Gazprombank (to Ba3 from Ba1). These rating actions
conclude the review for downgrade initiated on April 2, 2013, and
are mainly driven by Moody's reassessment of the level of
systemic support for subordinated instruments. The outlook on
these ratings is stable.

Moody's notes that the senior debt and deposit ratings and the
standalone ratings of Alfa-Bank, Bank of Moscow and Gazprombank
were not affected by these rating actions on subordinated debt
ratings.

Ratings Rationale:

The downgrade of the subordinated debt ratings of Alfa-Bank, Bank
of Moscow and Gazprombank is driven by Moody's view that the risk
profile of junior debt instruments has increased in Russia, given
the global trends of imposing losses on subordinated creditors as
part of bank bailouts orchestrated by governments.

For the privately-owned Alfa-Bank, Moody's has applied its
standard global rating approach for treatment of subordinated
debt and fully excluded systemic support from the bank's junior
debt. Alfa-Bank's subordinated debt ratings are now positioned at
Ba3, or one notch below the bank's ba2 baseline credit assessment
(BCA).

For Bank of Moscow and Gazprombank, the rating agency applied an
exception to its standard approach and retained some elements of
rating uplift for subordinated debt from the BCAs of these two
banks. This exception is driven primarily by indirect government
ownership of these two banks (95.5% at Bank of Moscow through
Bank VTB; and 46% at Gazprombank through Gazprom and
Vnesheconombank). To a lesser extent, the exception was also
driven by the government's supportive stance towards junior
creditors during previous bank failures, and a legislative
grandfathering clause that offers elements of protection to
"legacy" subordinated debt holders.

Despite the exception for Bank of Moscow and Gazprombank, Moody's
sees an elevated risk that these junior instruments could be
"bailed-in" alongside the new Basel III-compliant contractual
non-viability securities that are starting to emerge in Russia.
Basel III-compliant instruments can absorb losses outside of bank
liquidation through either conversion to common shares, or a
principal write-down; loss absorption is triggered when
predefined regulatory ratios are breached, or if the Central Bank
of Russia considers the bank as non-viable.

List of Affected Ratings

Alfa-Bank

- Long-term subordinated debt ratings downgraded to Ba3 from
   Ba2; stable outlook

Bank of Moscow

- Long-term subordinated debt ratings downgraded to B1 from Ba3;
   stable outlook

Kuznetski Capital S.A. (special-purpose vehicle of Bank of
Moscow)

- Long-term subordinated debt ratings downgraded to B1 from Ba3;
   stable outlook

Gazprombank

- Long-term subordinated debt rating downgraded to Ba3 from Ba1;
   stable outlook

The principal methodology used in these ratings was Global Banks
published in May 2013.


BANK ROSSIYSKY: Fitch Rates New RUB5-Billion Domestic Bond 'B+'
---------------------------------------------------------------
Fitch Ratings has assigned Bank Rossiysky Capital's (BRC)
upcoming RUB5 billion BO-01 Series domestic bond issue an
expected Long-term local currency rating of 'B+(EXP)' and a
National Long-term rating of 'A-(rus)(EXP)'. The bond's expected
Recovery Rating is 'RR4(EXP)'

The bonds have a maturity of three years, a semi-annual coupon
and a one-year put option.

BRC has a Long-term foreign currency Issuer Default Rating (IDR)
of 'B+' with Stable Outlook, a Short-term IDR of 'B', a Long-term
local currency IDR of 'B+' with Stable Outlook, a National Rating
of 'A-(rus)' with Stable Outlook, a Viability Rating of 'b-' and
a Support Rating of '4' .

Key Rating Drivers

The issue ratings correspond to BRC's Long-term local currency
IDR of 'B+' which reflects the limited probability of support
that BRC may receive if needed from the State Deposit Insurance
Agency (DIA), which directly owns a 99.9% stake in the bank,
and/or other government bodies. In Fitch's view, the DIA and/or
other government bodies would be likely to provide liquidity or
moderate capital support to BRC, if needed, as long as the bank
is state owned.

Rating Sensitivities

Any changes to BRC's Long-term local currency IDR would impact
the issue ratings. BRC's Long-term foreign and local currency IDR
and Support Rating could be downgraded if the bank sold to a weak
new owner, or if there is greater clarity about DIA's intention
to sell the bank in the near term. The ratings could also be
downgraded if required external support is not made available in
a timely manner. Upside potential for BRC's Long-term local
currency IDR is limited in the near term.


ROSGOSSTRAKH BANK: Moody's Affirms 'B2' Deposit Ratings
-------------------------------------------------------
Moody's Investors Service has affirmed the B2 long-term local-
and foreign-currency deposit ratings of Rosgosstrakh Bank
(Russia), as well as the standalone bank financial strength
rating of E+, equivalent to a baseline credit assessment (BCA) of
b2. The bank's Not Prime short-term local and foreign-currency
deposit ratings were also affirmed. The outlook on the bank's
BFSR and the long-term ratings is stable.

Ratings Rationale:

Moody's affirmation of Rosgosstrakh Bank's ratings reflects (1)
the bank's high level of reported capital adequacy; and (2) close
business integration into the leading Russian insurance company
Rosgosstrakh, which enables the bank to build up its business
footprint in the retail segment and continue to diversify its
operations into business segments with more sustainable revenue.
At the same time, Rosgosstrakh Bank's ratings are constrained by
weak operating performance and the bank's still excessive
exposure to the financial, real estate and construction sectors,
which, together with high single-name credit concentrations and
related-party lending, weakens the bank's capital profile. At the
same time, Moody's notes that these risks are partly mitigated by
the reasonably high level of loan loss reserves.

Rosgosstrakh Bank maintains its capital ratios at a high level.
The bank's Tier 1 and total capital adequacy ratios stood at
13.85% and 20.77%, respectively (as per Basel I approach),
according to Rosgosstrakh Bank's audited IFRS as year-end 2012.

Moody's also notes that Rosgosstrakh Bank has gradually increased
its operations in the more sustainable retail sector due to the
recent closer integration into one of the largest Russian
insurance companies -- Rosgosstrakh (not rated) -- and adoption
of the new strategy to diversify away from real estate and
investment loans into the retail segment. The proportion of loans
(mainly unsecured) provided to retail customers increased
throughout 2012, and as at year-end 2012 stood at 38% of total
gross loans (2011: 25%; 2010: 28.2%) while retail deposits as a
proportion of total customer funding also increased in 2012 to
51.9% (2011: 43.7%).

Moody's says that despite Rosgosstrakh Bank's relatively healthy
profitability, the performance of the bank's core operations
remains weak. According to the bank's audited IFRS report, net
income for 2012 was RUB2.4 billion, translating into strong
return on average assets of 2.5%. At the same time, out of RUB2.7
billion pre-tax income reported in 2012, RUB2.2 billion was
received as one-off gain from real estate operations. Excluding
the one-off gains, profitability of Rosgosstrakh Bank's
operations would have been breakeven.

Moody's notes Rosgosstrakh Bank's high exposure to the financial,
real estate and construction sectors -- albeit recently
declining. This exposure, together with an excessive level of
related-party lending and high single-name concentrations
undermines the quality of the bank's capital. As at year-end
2012, gross loans provided to companies from the financial, real
estate and construction sectors declined but still stood at a
relatively high 213% of the bank's Tier I capital (2011: 298%;
2010:332%) and predominantly included related-party loans that --
at year-end 2012 -- accounted for 102% of the bank's Tier 1
capital (2011: 142%; 2010: 218%). Single-name concentrations are
also high, as the 20 largest credit exposures accounted for
approximately 250% of the Rosgosstrakh Bank's Tier 1 capital. The
above-mentioned risks are partly mitigated by the reasonably high
level of loan loss reserves that stood at 15.2% of gross loans at
year-end 2012.

What Could Change The Ratings Up/Down

Negative pressure could be exerted on Rosgosstrakh Bank's ratings
if the ongoing rapid growth of retail lending negatively affects
its asset quality and capital. Further growth of single-party,
related-party or industry concentrations and/or an increase in
non-core assets could have negative rating implications.

Rosgosstrakh Bank's successful diversification into the retail
segment -- supported by strong operating performance of this
business segment and combined with a decline of related-party
exposures and single-name concentrations -- might lead to a
rating upgrade.

The principal methodology used in this rating was Global Banks
published in May 2013.

Domiciled in Moscow, Russia, Rosgosstrakh Bank reported total
assets of RUB99.1 billion at year-end 2012 under IFRS (audited),
up 8% compared to year-end 2011. The bank's net profit totaled
RUB2.4 billion in 2012, a 77% increase compared to 2011.



=====================================
S E R B I A   &   M O N T E N E G R O
=====================================


ATLAS BANK: Moody's Cuts Foreign-Currency Deposit Ratings to B2
---------------------------------------------------------------
Moody's Investors Service has downgraded the foreign-currency
deposit ratings of Atlas Bank AD Podgorica to B2/Not-Prime from
B1/Not-Prime and also lowered the baseline credit assessment
(BCA) to b3 from b2, which is equivalent to the E+ bank financial
strength rating. The outlooks on all ratings have been changed to
negative from stable.

This rating action reflects (1) Atlas Bank's asset-quality
deterioration and Moody's expectation of further deterioration in
light of challenging operating conditions; and (2) subsequent
pressure on the bank's earnings-generating capacity and capital
buffers, stemming primarily from high provisioning requirements.

Ratings Rationale:

- Asset Quality Deterioration Owing To The Weak Operating
   Environment

The main driver for the action is Atlas Bank's asset quality
deterioration and Moody's expectation that the challenging
operating environment will continue to weigh negatively on the
bank's asset quality metrics. More specifically, the rating
agency notes that Atlas Bank's impaired loans-to-gross loans
ratio grew to 8.5% as at March 2013, compared to 4.3% as at
December 2011; relevant ratios would be much higher when taking
into account the renegotiated loans, which are not classified as
impaired. At the same time, the coverage of the impaired loans by
loan loss reserves declined to 37.3% as at March 2013, compared
to 42.6% in December 2011, which Moody's views as likely
inadequate to cover losses, despite the collateral held against
such exposures.

The main source of Atlas Bank's asset quality deterioration is
the weak economic environment in Montenegro, with real GDP
growing by 0.5% in 2012, from 2.5% in 2011. Subdued economic
expansion has led to an increase in the unemployment rate, to
around 20% in December 2012, and has negatively affected the
performance of the bank's consumer portfolio, at 29% of total
loans at year-end 2012. The weak economic conditions have also
affected the performance of the corporate sector, with
delinquencies in the bank's corporate book also trending up in
recent quarters. Although Moody's expects that Montenegro's
economic performance will improve owing to a modest recovery in
metals production and continued tourism and hydro-electricity
growth, the rating agency believes that growth rates will remain
well below pre-2008 levels (around 6% GDP growth per year), which
will continue to affect the bank through subdued credit growth
and asset-quality pressures.

- Subsequent Pressure on The Bank's Profitability and Capital
   Buffers

Moody's also notes that the subdued economic environment
continues to impact Atlas Bank's profitability levels and capital
buffers. More specifically, the rating agency notes: (1) the weak
loan demand in the system which limits the ability to increase
revenues; and (2) the need to build provisioning coverage. During
2012 provisioning expenses absorbed 45% of the bank's pre-
provisioning income, with the bank reporting a net income of
EUR272,000. If additional loan loss provisions of EUR2.87 million
were recognized -- as per the auditors' opinion -- the bank would
have reported a net loss of EUR2.6 million in 2012. Moody's
expects that elevated provisioning charges and subdued lending
opportunities will continue to dampen the bank's profitability
going forward.

With regards to capitalization, although Atlas Bank's capital
adequacy ratio of 11.2% (as at December 2012) will increase
further following the capital increase which was completed in Q2-
2013, Moody's notes that the bank's capital buffers remain
inadequate to absorb additional losses, particularly when taking
into account low provisioning coverage.

Deposit Ratings Continue to Incorporate One Notch of Support

Atlas Bank's B2 deposit rating continues to incorporate one notch
of uplift, based on Moody's view of the likelihood of systemic
support, in case of need. The uplift reflects Moody's view of the
bank's increasing systemic importance as the fourth-largest
deposit-taking institution in Montenegro, with an 8% market share
in deposits as of December 2012, according to Central Bank of
Montenegro.

What Could Move The Ratings Down/Up

Downward pressure might develop on the ratings if Atlas Bank's
asset quality, capitalization and profitability levels were to
weaken beyond current expectations. As indicated by the negative
outlook on the ratings, upward pressure on the bank's ratings is
currently limited.

The principal methodology used in this rating was Global Banks
published in May 2013.

Headquartered in Podgorica, Montenegro, Atlas Bank reported total
assets of EUR204 million according to its audited 2012 financial
statements.



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


AYT FONDO EOLICO: Moody's Cuts Ratings on 2 Note Classes to 'B2'
----------------------------------------------------------------
Moody's Investors Service has downgraded to B2 from Ba3 the
ratings of the Series E1 and E2 notes issued under the AyT FONDO
EOLICO, FTA program (AyT Fondo Eolico). This action follows the
downgrade of the notes' guarantor, NCG Banco S.A. to B3 from B1
and concludes the review initiated on the July 9, 2012.

The affected ratings are:

  EUR7.7M E1 Notes, Downgraded to B2 ; previously on Jul 9, 2012
  Downgraded to Ba3 and Remained On Review for Possible Downgrade

  EUR7.6M E2 Notes, Downgraded to B2 ; previously on Jul 9, 2012
  Downgraded to Ba3 and Remained On Review for Possible Downgrade

Ratings Rationale:

The rating action follows Moody's downgrade to B3 from B1 of the
senior unsecured debt rating of NCG Banco S.A. on July 2, 2013.

As Moody's analysis of the likelihood of payments under the notes
primarily relies on a guarantee from NCG Banco S.A., the ratings
of the notes have been fully linked to those of the bank itself.
In 2008, however, the guarantor strengthened its collateral
guarantee in making cash deposits (for about a third of the
outstanding balance of each class of notes). The cash deposits
are currently held at the paying agent Barclays PLC, Sucursal en
Espana.

Moody's rating methodology takes into account the joint benefit
of the guarantee and of the cash deposits. The rating agency
assumes a default probability for the notes that is consistent
with the rating of the guarantor but currently includes in its
recovery assumption the benefit of the cash deposit, in addition
to a claim on the guaranteeing bank for the residual amount of
the principal. As a result, Moody's currently rates the notes one
notch above the rating of the guaranteeing bank.

The Transaction

AyT Fondo Eolico represents the securitization of loans granted
for the purpose of developing different Eolic projects in the
region of Galicia. These projects are established under the
Galician Eolic Plan, "Plan Eolico Estrategico", which has been
approved by the Galician government to promote the development of
Eolic parks within the region of Galicia.

The transaction features a guarantee from NCG Banco S.A. on any
principal payments due on the loans. NCG Banco S.A. also
guarantees the portion of interest that does not depend on the
turnover of the debtor. However, there is no guarantee that
bondholders will receive the variable amount (2.75% of turnover)
of interest they are entitled to.

Moody's ratings do not address the timely payment of this portion
of interest, but only the 1) timely payment of interest accrued
at the reference index plus 25 basis points (bps); and 2) payment
of principal at final legal maturity of the notes (in November
2014 and December 2016, respectively).

No cash flow analysis or stress scenarios have been conducted as
the rating was directly derived taking into account the joint
benefit of the guarantee and of the cash deposits.

- Other Developments May Negatively Affect the Notes

As the notes ratings are strongly linked to the rating of NCG
Banco S.A. acting as guarantor, any rating action on NCG Banco
S.A.'s rating would affect the ratings of the notes.

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.


FERGO AISA: Put Under Creditor Protection by Barcelona Court
------------------------------------------------------------
Charles Penty at Bloomberg News reports that the court in
Barcelona declared Fergo Aisa under creditor protection on
July 9.

Fergo Aisa is a Spanish real estate company.


FTPYME TDA: Fitch Cuts Rating on EUR66MM Class B Notes to 'B'
-------------------------------------------------------------
Fitch Ratings has downgraded FTPYME TDA CAM 4, FTA, as follows:

  EUR126.5m class A2 notes: downgraded to 'BBBsf' from 'Asf',
  Outlook Negative

  EUR102m class A3 notes: downgraded to 'BBBsf' from 'Asf',
  Outlook Negative

  EUR66m class B notes: downgraded to 'Bsf' from 'BBsf', Outlook
  Negative

  EUR38m class C notes: affirmed at 'CCCsf', revised RE to 0%
  from 30%

  EUR29m class D notes: affirmed at 'Csf', RE 0%

Key Rating Drivers

The downgrade reflects the transaction's deteriorating
performance since the last review in July 2012. Since then,
defaults included in the portfolio have increased to 18.18% from
8.08%, adding EUR25 million in current defaults. Over the same
period, the weighted average recovery rate has dropped to 37%
from 44%.

In addition, the reserve fund has been exhausted and a principal
deficiency ledger of EUR5.4 million accumulated. At the last
review, the reserve fund was already underfunded with a balance
of EUR10.6 million, compared with the required amount of EUR29.3
million. Consequently, there has been a reduction in credit
enhancement, in particular for the junior notes. For the class B
notes it has dropped to 10% from 12% and for the class C notes to
0% from 2.6%.

The Negative Outlook on the notes reflects concerns about further
performance deterioration, as well as the trend of increasing
delinquencies. Arrears over 90 days make up for 7.3% of the
outstanding balance and those over 180 days for 4.7%.

Rating Sensitivities

Fitch has introduced two stress tests to estimate the ratings
sensitivity to potential changes of assumptions. The first test
addressed an increase in default probability by 25% on the loans
and suggested that the current rating on the class A2 and A3(CA)
notes would remain unchanged. However, a rating action on the
class B notes would be possible. The second test simulated a
reduced recovery rate by 25% on the collateral and suggested that
a rating action on the class A2 and A3 (CA) notes could be
triggered.

So far, no remedial action has been taken to replace the
servicer, Banco de Sabadell (BB+/Stable/B) and therefore concerns
about payment interruption risk have led Fitch to implement a a
rating cap of 'Asf'.

Additionally, the class A3 (CA) notes are guaranteed by Spain
(BBB/Negative/F2). A downgrade of Spain would not automatically
trigger a downgrade of the class A3 (CA) notes. However, a
downgrade of Spain below 'BB' would introduce a rating cap for
all notes.


RURAL HIPOTECARIO: Fitch Rates EUR52.9MM Class B Notes 'CCC(EXP)'
-----------------------------------------------------------------
Fitch Ratings has assigned Rural Hipotecario XV F.T.A.'s
mortgage-backed floating-rate notes due May 2058 expected
ratings, as follows:

  EUR476,100,000 class A notes 'Asf(EXP)'; Outlook Negative

  EUR52,900,000 class B notes: 'CCCsf(EXP)'; Recovery Estimate of
  90%

This is a multi-originator securitization of a EUR529 million
static pool of Spanish residential mortgage loans, originated and
serviced by Caja Rural de Asturias, Caja Rural de Granada, and
Caja Rural de Albacete, Ciudad Real y Cuenca (the originators,
unrated). The expected ratings address timely payment of interest
and ultimate payment of principal on the class A notes, and
ultimate payment of interest and principal on the class B notes
by the legal final maturity date of the notes in May 2058.

Key Rating Drivers

In deriving the lifetime default rate of the securitized
portfolio under a base case scenario, Fitch has adjusted the
observed default rates upwards by a factor of 1.3x. This
adjustment captures our opinion that the actual roll rates into
default are unsustainable and cannot be relied on. Fitch received
historical cumulative arrears data covering 2004 to 2012 from the
originators based on their past RMBS securitizations.

Fitch believes the securitized portfolio has prime
characteristics with 100% first lien positions, all residential
mortgage loans with a moderate weighted average (WA) OLTV of
65.24%, and an indexed WA CLTV of 66.13% estimated by the agency
taking into consideration the almost six years of seasoning. The
pool is mainly concentrated in three regions Andalucia (31.5%),
Asturias (28.5%) and Castilla La Mancha (35%).

Fitch believes that servicer disruption risk, caused by the
default of one servicer, is adequately mitigated by the
incorporation of purpose specific liquidity reserves and the
appointment of a cold back-up servicer, Banco Cooperativo Espanol
S.A. (BCE, BBB/Negative/F3). BCE provides the Spanish Credit
Cooperative Group with a common range of services and uses the
same IT systems.

Fitch has incorporated into the cash flow analysis potential
losses derived from basis and reset risk, as the structure is
unhedged. The notes are referenced to three-month EURIBOR with
quarterly resets, while most loans are referenced to 12-month
EURIBOR with annual, bi-annual and quarterly resets.

In analysing recovery timing, as a consequence of the recently
approved Decree Law 6/2013 in Andalucia, Fitch has increased the
recovery timing in this region by up to a maximum of three years
for first homes. Additionally, Fitch believes that the structure
adequately mitigates the risk of recovery cash flows being
obtained after the legal maturity of the notes, as there is a
difference of 6.5 years between the final scheduled maturity date
of the loans and that of the notes.

Rating Sensitivities

Fitch believes the key risks that could introduce volatility for
the ratings are home price declines beyond expectations, as these
could limit recoveries, and a change of the current legal
framework materially, weakening the full recourse nature of the
Spanish mortgage market, as this scenario could change borrower
payment behavior. The Negative Outlook on the notes rated above
'CCCsf' reflects the uncertainty associated with changes to the
mortgage enforcement framework.

Fitch's expectation under a 'Bsf' stress scenario is linked to a
WA lifetime loss rate of 4.08%, which results from a WA
foreclosure frequency assumption of 7.57% and a WA recovery rate
expectation of 46.09%. The assumed WA loss rate in an 'A' rating
scenario is of 11.28%.



=============
U K R A I N E
=============


NAFTOGAZ NJSC: Fitch Says Gazprom Prepayment Halt Critical
----------------------------------------------------------
Gazprom's decision to halt prepayment of natural gas transit fees
to Naftogaz until at least 2015 creates the potential for modest
supply disruptions in South East Europe this winter due to low
levels of gas in Ukraine's storage facilities, Fitch Ratings
says. The move is a further blow to Naftogaz, which depends on
revenues from the transit of Russian gas to Europe.

Gazprom's prepayments are critical for Naftogaz, which continues
to rely on gas transit revenues and support from the Ukrainian
government to offset losses on domestic gas sales due to low
government-set tariffs. Since the beginning of 2012, Gazprom has
made US$3.5 billion of transit fee prepayments to Naftogaz, which
the Ukrainian company used to finance purchases of Russian gas,
including that for storage. But Gazprom said recently that the
latest US$1 billion payment will cover the period until the start
of 2015.

These payments have helped Naftogaz maintain stored reserves of
7.5 billion cubic meters (bcm). But Gazprom said that Naftogaz
needs to store a further 12bcm of gas to ensure Ukraine has
enough for the winter and that it won't need to use gas passing
through the pipeline to Europe. At the current prices to Ukraine
of about US$400 per 1 thousand cubic meters of gas this would
cost about US$4.8 billion, which Naftogaz cannot afford on its
own. Naftogaz's weak financial position and reliance on the state
are already reflected in the company's 'CCC' rating.

The volume required only represents around 2% of European annual
gas consumption and the dispute is therefore unlikely to have a
significant impact on the region as a whole. But it could still
result in some disruption in countries that are reliant on
Russian gas via Ukraine, including Bulgaria, Greece and Turkey.

"We view Gazprom's more aggressive stance on Naftogaz as a sign
that negotiations between Russia and Ukraine on gas prices and
the future of Ukraine's gas transit system are proving difficult.
Gazprom has publicly criticized Ukraine's re-purchases of Russian
gas from Europe. By buying Russian gas from European countries
such as Hungary or Slovakia, Naftogaz can achieve significant
savings on the price it pays Gazprom," Fitch says.

Ukraine is reducing purchases of Russian gas -- in Q113 it bought
only 7bcm of gas from Gazprom, a 17% drop yoy. At the same time,
the volume of gas in transit from Russia to Europe via Ukraine
also dropped 17% to 20.3bcm. Gazprom is building a 63bcm South
Steam pipeline to Eastern and Central Europe to essentially
bypass Ukraine.

"We believe that even though Gazprom is interested in negotiating
with Ukraine about participating in its gas transit system, a
high-level political decision is needed first. It appears that
neither side is willing to give concessions at this time," Fitch
states.


UKREXIMBANK: Fitch Affirms 'B' LT Issuer Default Ratings
--------------------------------------------------------
Fitch Ratings has affirmed Ukraine-based JSC The State Export-
Import Bank of Ukraine's (Ukreximbank) and JSC State Savings Bank
of Ukraine's (Oschadbank) Long-term Issuer Default Ratings (IDR)
at 'B' and revised their Outlooks to Negative from Stable.

KEY RATING DRIVERS - IDRS, NATIONAL RATINGS, SENIOR DEBT, SUPPORT
RATING AND SUPPORT RATING FLOOR

The rating actions follow the agency's revision of the Outlooks
on Ukraine's Long-term foreign and local currency IDRs to
Negative from Stable. The revision of the Outlooks on the Long-
term IDRs of Ukreximbank and Oschadbank reflect the increased
likelihood of a deterioration in the government's ability to
provide support in case of need, as reflected in the revision of
the Outlooks on the sovereign Long-term IDRs.

Ukreximbank's and Oschadbank's Long-term IDRs are underpinned by
potential support from the Ukrainian authorities, if needed. In
assessing the probability of support, Fitch views as positive
factors the banks' 100%-state ownership, their policy roles,
their high systemic importance, and the track record of capital
support for the banks under different governments. At the same
time, the ratings also take into consideration the moderate
ability of the Ukrainian authorities to provide support, as
indicated by the sovereign's 'B' Long-term IDR.

RATING SENSITIVITIES - IDRS, NATIONAL RATINGS, SENIOR DEBT,
SUPPORT RATING AND SUPPORT RATING FLOOR

Any improvement or deterioration in Ukraine's sovereign risk
profile would likely generate upward or downward pressure on
Ukreximbank's and Oschadbank's ratings.

KEY RATING DRIVERS - UKREXIMBANK'S VIABILITY RATING (VR)

The affirmation of Ukreximbank's 'b' VR reflects the bank's
sizeable capital buffer and good pre-impairment profitability
available to absorb losses, currently comfortable liquidity and
solid corporate franchise. At the same time, the VR also
considers the bank's significant loan impairment, high loan
concentrations, the large share of FX lending and weak
profitability, driven by loan impairment charges.

Loan growth has remained subdued, reflecting Ukreximbank's modest
risk appetite in the difficult operating environment in Ukraine.
Weaker economic growth and higher funding costs constrain
business expansion and profitability. Credit risks are high in
light of large borrower concentrations (the major 25
exposures/total loans ratio at 55% at end-Q113 or 138% of
equity), sizeable FX-lending (53% of net loans), although partly
mitigated by the FX revenues of the exporting borrowers, and
remaining exposure to the troubled real estate segment (38% of
Fitch core capital).

Public-sector corporates accounted for 21% of the bank's end-2012
loans. In Q113, the bank also made sizable investments in
sovereign debt, mostly in USD, as a result of which direct
government exposure rose to 1.1x equity, increasing the
correlation of Ukreximbank's standalone credit profile with that
of the sovereign.

NPLs (loans past due by 90 days) were still high at 14% of the
loan book at end-Q113, after write-offs equal to 7% of the
portfolio in 2012. NPLs were fully covered by reserves. However,
restructured exposures are also large at 31% of loans at end-
Q113, and recoveries on these will depend to a large degree on
the economic outlook and the performance of the UAH. Fitch
estimates that Ukreximbank could increase its loan loss reserves
to almost 51% of loans (from 20% under local GAAP at end-Q113)
before its regulatory capital adequacy ratio (of 30% at end-Q113)
would have fallen to the regulatory minimum of 10%.

Growth in client deposits since 2009 has underpinned
Ukreximbank's liquidity. The cushion of highly liquid assets
(both cash and Ukrainian state bonds) is large, in the absence of
loan growth. Refinancing requirements for external debt are
moderate in 2013-2014, but rise to a large 15% of end-Q113
liabilities in 2015.

RATING SENSITIVITIES - UKREXIMBANK'S VR

Ukreximbank's VR would likely be downgraded if the sovereign
ratings were downgraded, in light of the significant correlation
between the bank's and the sovereign's credit profiles. This
correlation is significant, in Fitch's view, notwithstanding the
sizable capital buffer, due to (i) the bank's sizable exposure to
sovereign debt and the public sector more generally, and some
risk that this exposure could grow in case of increased stress;
(ii) the high sensitivity of the bank's asset quality and capital
ratios to the performance of the economy and the UAH; and (iii)
the likelihood that refinancing challenges relating to the bank's
maturing external debt would increase in case of a sovereign
default.

Stabilization of the sovereign's credit profile and the country's
economic prospects would reduce downward pressure on the VR.

KEY RATING DRIVERS - OSCHADBANK'S VR

The affirmation of Oschadbank's 'b-' VR reflects its large
deposit-taking franchise, comfortable liquidity position and a
sizeable capital buffer. It also considers currently reasonable
pre-impairment performance, although this could become more
volatile given the high concentration of revenues. The VR also
takes into account the bank's highly concentrated loan book,
including large (albeit reducing) exposure to NJSC Naftogaz of
Ukraine (CCC), corporate governance concerns related to a history
of directed lending (albeit supported by directed funding and
capital) and relatively high risk in some of the bank's largest
non-Naftogaz exposures.

Oschadbank benefits from the state guarantee on the full amount
of its retail deposits and a large regional network, which have
helped it to build a solid deposit base. The liquidity buffer is
currently comfortable and near-term refinancing risk is low,
although the USD700m Eurobond maturing in March 2016 represents a
sizable 8% of end-Q113 liabilities.

Exposure to Naftogaz, restructured to mature in 2015, reduced
markedly to 33% of gross loans at end-2012 (27% on a net basis)
from a peak of 58% at end-2009, but is still very large. This
means the bank's future performance remains highly susceptible to
the standing of Naftogaz, which remains a weak credit. Non-
Naftogaz lending is also concentrated with the next largest 24
loans representing 81% of the non-Naftogaz corporate book at end-
2012. Lending in foreign currency is moderate at around 22% of
net loans at end-Q113.

The bank's loan exposure to the state sector was a high 47% at
end-2012, albeit down from a peak of 71% at end-2010. In
addition, government debt investments grew sharply in Q113 and
accounted for around 16% of assets at end-Q113.

Loans more than 90 days overdue (NPLs) were a moderate (by
Ukrainian market standards) 11% of non-Naftogaz gross loans at
end-2012, and fully covered by reserves. However, in Fitch's
view, at least one-third of Oschadbank's largest non-Naftogaz
loans which are not currently in arrears are relatively high
risk, representing long-term exposures with non-amortising
principal. Mitigating these risks, Fitch estimates that
Oschadbank could increase its loan loss reserves to almost 41% of
loans (from 18% under local GAAP at end-Q113) before its
regulatory capital adequacy ratio (of 32.8% at end-Q113) would
fall to the regulatory minimum of 10%.

RATING SENSITIVITIES - OSCHADBANK'S VIABILITY RATINGS

Oschadbank's VR could be downgraded if large loan losses caused a
sharp deterioration in the bank's capital position. Upside
potential for the VR is limited in the short to medium term given
the large exposure to Naftogaz, weaknesses in the bank's non-
Naftogaz exposures and poor prospects for the operating
environment.

KEY RATING DRIVERS AND SENSITIVITIES - UKREXIMBANK'S SUBORDINATED
DEBT

Ukreximbank's subordinated debt rating reflects incremental non-
performance risk resulting from the flexibility to defer coupons
in certain circumstances, for example if the bank reports
negative net income for a quarter. The two-notch differential
between the bank's 'b' VR and the subordinated debt rating of
'CCC' therefore reflects one notch for this incremental non-
performance risk and one notch for potentially weaker recoveries
due to the instrument's subordination.

The subordinated debt rating could be upgraded or downgraded if
the bank's VR was upgraded or downgraded.

The rating actions are:

Ukreximbank:

  -- Long-term IDR: affirmed at 'B'; Outlook revised to
     Negative from Stable

  -- Senior unsecured debt: affirmed at 'B'; Recovery Rating
     at 'RR4'

  -- Subordinated debt: affirmed at 'CCC'; Recovery Rating
     at 'RR5'

  -- Short-term IDR: affirmed at 'B'

  -- Support Rating: affirmed at '4'

  -- Support Rating Floor: affirmed at 'B'

  -- VR: affirmed at 'b'

  -- National Long-term rating: affirmed at 'AA-(ukr)';
     Outlook Stable

Oschadbank:

  -- Long-term foreign and local currency IDRs: affirmed at 'B';
     Outlook revised to Negative from Stable

  -- Short-term foreign currency IDR: affirmed at 'B'

  -- Senior unsecured debt: affirmed at 'B'; Recovery Rating
     at 'RR4'

  -- Support Rating: affirmed at '4'

  -- Support Rating Floor: affirmed at 'B'

  -- VR: affirmed at 'b-'

  -- National Long-term rating: affirmed at 'AA-(ukr)'; Outlook
     Stable


* ODESSA REGION: Fitch Affirms 'B' Currency Rating; Outlook Neg.
----------------------------------------------------------------
Fitch Ratings has revised the Outlooks on two Ukrainian
subnationals and State Administration of Railways Transport of
Ukraine's (Ukrzaliznytsia) to Negative from Stable and affirmed
their ratings.

KEY RATING DRIVERS

The rating actions follow the revision of the Outlook on the
Ukraine's Issuer Default Rating (IDR) to Negative from Stable.

The revision of the Outlooks reflects the application of Fitch's
'International Local and Regional Governments Rating Criteria
outside United States' whereby local and regional governments
cannot be rated above the sovereign. Ukrzaliznytsia's Outlook has
been revised to Negative because its ratings are credit linked to
those of its sponsor, the Ukraine.

RATING SENSITIVITIES

The main factors that individually, or collectively, could
trigger negative rating action:

-- Any further negative rating action on Ukraine.

-- Deterioration of the city's and the region's budgetary
    performance, leading to weak debt and debt coverage ratios.

-- Weaker links of Ukrzaliznitsia with the government reflected
    in changes in legal status or other factors that would lead
    to dilution of control or likelihood of support by the
    sovereign.

The main factors that individually, or collectively, could
trigger positive rating action:

-- Revised Outlook or an upgrade of Ukraine.

-- Consolidation of the city's and the region's sound budgetary
    performance, supporting satisfactory debt and debt coverage
    ratios.
-- Evidence of more formalised state support for Ukrzaliznitsia,
    including an explicit government guarantee of its financial
    debt

The rating actions are:

Odessa Region

Long-term foreign and local currency ratings affirmed at 'B';
   Outlook revised to Negative from Stable
National Long-term rating affirmed at 'AA(ukr)'; Outlook revised
   to Negative from Stable
Short-term foreign currency rating affirmed at 'B'

City of Kharkov

Long-term foreign and local currency ratings affirmed at 'B';
   Outlook revised to Negative from Stable
National Long-term rating affirmed at 'AA-(ukr)'; Outlook
   revised to Negative from Stable
Short-term foreign currency rating affirmed at 'B'.

The rating action affects outstanding UAH99.5m senior unsecured
domestic bonds, the ratings are affirmed at 'B'/ 'AA-(ukr)'.

State Administration of Railways Transport of Ukraine

Long-term foreign and local currency ratings affirmed at 'B-';
   Outlook revised to Negative from Stable
National Long-term rating affirmed at 'BBB+(ukr)'; Outlook
   revised to Negative from Stable
Short-term foreign currency rating affirmed at 'B'



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


DWELL RETAIL: Founder Buys Firm Out of Administration
-----------------------------------------------------
Insolvency News reports that Aamir Ahmad, founder of the Dwell
Retail Limited stores, has bought the company out of
administration.

The sale will see 150 jobs saved at the insolvent furniture
retailer, which entered administration last month, according to
Insolvency News.

"We have been able to conclude an agreement that results in not
only the continuation of the brand, but saves many of the
employees' roles as well as securing the best outcome for
suppliers. . . . The new management will now be in the position
to work with customers to try and identify the best solution for
everyone concerned," the report quoted John Whitfield, joint
administrator for Duff & Phelps, as saying.

The report relates that Ahmad founded Dwell with family and
friends in 2003 but stood down in November 2012.

Duff & Phelps secured the sale with Ahmad due to retake control
of the company, the report notes.

Several Dwell outlets will re-open on July 6, 2013, including
Tottenham Court Road, the two London Westfield sites, the
Lakeside site, and Barton Square in Manchester, the report
discloses.

Dwell was established in 2002 and losses for the three years to
January 2012 were GBP5.6 million, the report relays.

The report says that the company entered administration on June
25, putting 300 jobs and an estimated GBP1 million of customer
deposits at risk.

When Dwell entered administration, it warned that no further
deliveries will be made, the report relays.

Ahmad has reportedly promised to try to help customers who have
outstanding orders, the report adds.


FINDUS PLEDGECO: Moody's Rates GBP410MM Senior Notes '(P)B3'
------------------------------------------------------------
Moody's Investors Service has assigned a corporate family rating
of (P)B3 to Findus Pledgeco, the parent holding company of Findus
group.

Moody's has also assigned a (P)B3 rating to Findus's GBP410
million equivalent senior secured notes due 2018 to be issued by
Findus Bondco S.A. The outlook on all ratings is stable.

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

The proceeds from the proposed notes will be used to refinance
the existing bank debt facilities, which were put in place as
part of the financial restructuring in September 2012. The
ownership of the company was transferred to Lion Capital,
Highbridge Capital, JP Morgan and other investors. Lion Capital
retained a 33% stake in Findus Group.

Ratings Rationale:

The (P)B3 CFR reflects Findus' (i) weak track record of operating
performance, leading to a debt restructuring in September 2012;
(ii) recent association of Findus brand with the industry scandal
involving the contamination of meat-based ready meals; (iii)
reliance on the successful execution by the management team of
operational cost savings to resume growth in continued
challenging market conditions; and (iv) limited bargaining power
with retailers in the UK and increasingly in the Nordics.

The provisional indicator on the CFR incorporates the fact that,
should the bond transaction not be successful, the CFR will need
to be re-assessed to incorporate the company's significant near-
term debt maturities.

More positively, the rating also reflects (i) the defensive
nature of frozen foods business supported by the affordability
and convenience trends; (ii) Findus' established leading market
position in the Nordics and the UK in its key products; (iii) the
diversification between private label and branded products; and
(iv) some recent stability in financial performance.

Findus is one of the leading frozen food player in the Nordics as
well as in the fish and seafood industry (frozen and chilled) in
the UK. Its position is supported by its presence in private
label as well as its leading brands -- Findus and Young's. At the
same time the company does not enjoy the same degree of
bargaining power in each of its markets, reflected in different
profitability across the regions.

Although Findus is predominantly a fish and seafood producer
(accounting for approximately two-thirds of 2012 sales), the
company's Findus branded products were recently involved in the
scandal surrounding the contamination of meat-based ready meals.
In February 2013, as part of its investigation the company
withdrew some of its Findus branded products in France, the UK
and Sweden which had been found to contain horsemeat. The
proportion of sales contributed by these products is less than 1%
in relation to the total sales of the company and the adverse
media coverage seems to have subsided with limited impact on the
company's performance; although it remains too early to be
definitive about the broad impact on the brand.

The company's financial performance in the past few years was
negatively affected by the peak in raw material price inflation
(primarily fish) combined with lower volumes in the Nordics and
the UK. As a result company-adjusted EBITDA margin during
financial year ended December 2011 dropped by 3% to 8.2% from
11.2% the year before despite the achieved cost savings. While
cost inflation has come down in 2012 from its peak in 2011,
Findus continued to experience lack of volume growth combined
with cost increases due to intense competition and strengthening
of private label. The operating performance, however, has
appeared to have stabilized based on the six months unaudited
financial statements ended March 2013.

Moody's anticipates that Findus' adjusted total debt/EBITDA for
the financial year ended September 2013 should be marginally
below 6.0x.

The company's liquidity pro forma for the transaction, expected
to consist of GBP31.6 million cash on balance sheet and GBP60
million fully undrawn and available revolving credit facility
(RCF) is considered adequate. The liquidity is supported by the
absence of near-term debt maturities, ample headroom under a
single financial maintenance covenant of minimum EBITDA as well
as limited amount of interest expense under the new capital
structure. However, high exceptional charges, seasonality in
working capital and an increase in the assumed interest rate of
the new financing may make the liquidity vulnerable.

The proposed capital structure includes GBP410 million senior
secured notes and GBP60 million RCF, ranking senior to the notes
via the terms of the intercreditor agreement. The (P)B3 rating on
the notes reflects the limited amount of super-senior debt in the
capital structure.

The stable outlook reflects Moody's expectation that Findus will
be able to realize some operational cost savings which will help
to offset the effect of lack of volumes and pressure on margins.

What Could Change The Rating Up/Down

Moody's sees no near-term upward pressure on the ratings given
the weak positioning of the rating within the B3 category. Upward
pressure on the rating could materialize if debt/EBITDA falls,
and remains sustainably below 5.5x.

Downward pressure on the rating could arise if there were a
deterioration in the company's operating performance that results
in (i) debt/EBITDA rising above 6.0x, or (ii) a deteriorating
liquidity profile, potentially through continued negative free
cash flow or reduced covenant headroom.

The principal methodology used in this rating was the Global
Packaged Goods published in June 2013. 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 the UK, Findus Group is one of the largest
European seafood and fish processors. The company was formed from
the combination of the UK branded fish producer Young's (created
in 1805) and Findus, a Scandinavian food company (created in
1905). Findus Group is principally a producer of fish and seafood
with operations in the UK (frozen and chilled), France, Sweden
and Norway. Findus also produces and sells vegetables in the
Nordic region, France and Spain.


FINDUS PLEDGECO: Fitch Assigns 'B-(EXP)' Issuer Default Rating
--------------------------------------------------------------
Fitch Ratings has assigned Findus PledgeCo S.a r.l (Findus) a
Long-term foreign currency Issuer Default Rating (IDR) of 'B-
(EXP)' with a Stable Outlook. Fitch has also assigned expected
ratings of 'B+(EXP)'/'RR2' to the proposed 5.5-year non call-2.5
senior secured notes of a total equivalent of GBP410 million to
be issued in three tranches (GBP/EUR/SEK) by Findus Bondco S.A.,
a direct subsidiary of Findus, and guaranteed on a senior secured
basis by Findus and certain subsidiaries.

The expected IDR factors in the changed capital structure
following the planned issue of the notes and also incorporates
the creation of a new multi-currency of equivalent GBP60 million
super senior revolving credit facility (RCF) borrowed by Findus
Loanco that matures six months prior to the bond maturity. Fitch
would likely resolve and confirm the expected rating status in
line with the expected rating following a successful
implementation of the proposed capital structure. Moreover, the
notes' final rating is subject to a review of the final
documentation materially conforming to information already
received by Fitch. Findus' inability to procure long-term
refinancing prior to current debt maturities could result in
negative rating action.

Proceeds from the proposed notes will be used to refinance
existing legacy of various senior term debt tranches in an
aggregate amount of approximately GBP405 million, prior to the
original maturities between 2013 and 2016. The notes will benefit
from guarantees of Findus and major subsidiaries representing
approximately 100% of Findus' consolidated EBITDA and
approximately 90% of Findus' assets and will be secured on a
first ranking basis by a pledge over Findus and certain other
guarantors, including first-priority security interests in the
issuer's share capital and the guarantors (while enforcement
proceeds are first allocated to super senior ranking liabilities
inter alia). Fitch points out that the proposed notes allow for
up to 50% of cumulative net income being paid-out as dividends.

The super senior RCF in an amount of committed GBP60 million plus
the greater amount of GBP100 million and an amount equal to 110%
consolidated EBITDA of presently not committed super senior debt
ranks ahead of the notes and its utilization is subject to a
covenant test. The resulting total amount of prior ranking debt
is permanent, as the existing super senior RCF can be replaced
within the lifetime of the notes. Additionally, certain super
senior hedging liabilities rank ahead of the notes at the level
of the super senior RCF.

Moreover, the notes documentation includes financial covenants
that allow for Findus to re-leverage. The parent company may
assume further debt provided that a fixed-charge cover test of
2.0x is met. Secured debt ranking equal to the notes may be
incurred by the issuer of the notes if the consolidated senior
secured debt/EBITDA ratio is below 4.1x.

KEY RATING DRIVERS

Long-term Refinancing
The refinancing is aimed to replace and extend the group's
amortizing near-term loan maturities with a 5.5 year bullet
maturity. Funds from operations (FFO) adjusted leverage at year-
end 2013 and pro forma for the refinancing of above 7x remains
high while FFO/fixed charge cover is only at 1.6x but Fitch
expects leverage to improve gradually towards below 6x
respectively with FFO fixed charge cover of up to 2x by year-end
2016 in line with the assigned ratings. Fitch has not treated any
of the subordinated debt including Junior MidCo PEC, Senior Midco
notes, Tracker PEC and On-loan PEC instruments as debt due to
their equity alike characteristics, including either contractual
or structural subordination, the absence of security and/or
material independent enforcement rights, longer dated maturities,
PIK for life.

Resilient Food Consumption but Limited Growth
Consumption of fast moving consumer goods is relatively resilient
throughout the economic cycle albeit growth in mature, developed
markets is limited. Findus' product innovation and effective
marketing spend are key to ensure its product offering remains
relevant to consumers in the context of changing economic
conditions, consumer preferences, health concerns and
fluctuations in food prices. The horse-meat issue that emerged in
early 2013 and directly affected 0.9% of Findus product sales
appears to have had minimal impact on the Findus brand and the
group's overall financial performance so far.

Portfolio Diversity
Findus remains the market leader in its key markets of Norway,
Sweden, Finland and France with high market shares in branded
frozen food although we expect increasing private label
penetration and competition from chilled food to continue putting
pressure on Findus group's profit margins. In Southern Europe,
revenue support spend will drive pricing pass through albeit with
limited EBITDA upside until 2014. Findus' UK business remains low
margin. While opportunities exist for management to extract
further cost savings, intense competition in frozen and sector
overcapacity issues in chilled will hamper any meaningful
recovery in UK profitability. Cost savings, albeit limited, are
expected to remain the key driver of profit growth.

Volatility in Commodity Prices
Sudden commodity price inflation in conjunction with greater
sourcing volatility in food commodity markets will continue to
challenge Findus. New management will need to demonstrate how to
effectively compete against larger and more diversified branded
players during periods of rising input costs through e.g. price
increases as part of product reformulations. Findus needs to
demonstrate its commitment to achieving a lean cost structure
lending to greater profit stability and margin expansion bringing
it more in line with close peers.

Appropriate Liquidity
Findus' liquidity is deemed adequate with an estimated GBP32m of
cash and marketable securities on balance sheet post refinancing
and access to an initially undrawn GBP60m (increased from GBP50m)
super senior RCF. Moreover, the group's expected generation of
annual cash flow from operations (CFO) in between GBP20m to
GBP40m over the forecasted period should provide sufficient
funding for the group's operating needs including working capital
requirements and capex.

RATING SENSITIVITIES:

Future developments that could lead to positive rating actions
include:

-- Improvement in operating profitability and organic business
    growth evidenced by EBITDA margin improvement up to 9% and
    free cash flow margin of 3% or higher.

-- Further de-leveraging: FFO adjusted leverage to or below
    5.5x on a sustained basis.

-- FFO fixed charge cover at 2x or above on a sustained basis.

Future developments that could lead to negative rating action
include:

-- Negative organic revenue growth combined with continued and
    permanent reduction in operating profitability leading to
    EBITDA margin below 7%

-- Consecutive periods of negative cash flow leading to erosion
    in liquidity cushion

-- A sustained deterioration in FFO adjusted leverage to or
    above 7x


-- FFO fixed charge cover sustainably at 1.5x or below

-- Inability to procure long-term refinancing ahead of the
    existing debt maturities

Expected Recovery for Creditors upon Default
The senior secured notes' 'B+(EXP)'/'RR2' rating reflects Fitch's
expectation of superior recoveries in the range of 71%-90% in
case of default. The instrument rating is reflective of Findus'
elevated FFO adjusted leverage above 7x and takes into account a
GBP60m super senior RCF inter alia effectively ranking ahead of
the bond. Driving these recovery expectations is an estimated
post restructuring EBITDA at approximately GBP83m reflecting a
hypothetical adverse scenario of depressed sales and compressed
margins as a function of increased competition and commodity
price volatility. This in combination with an estimated going
concern multiple of 5x enterprise value/ EBITDA, results in a
more favorable valuation than the agency's alternative estimation
of a liquidation scenario.


MODELZONE: Founder Could Buy Back Stores Following Administration
-----------------------------------------------------------------
The Argus reports that Cuckfield Modelzone founder David Mordecai
has blamed venture capitalists for running his company into the
ground.

Mr. Mordecai launched Modelzone in 1988 in Brighton and during 25
years, built it into a 46-store national chain.  However, just a
year after the founder left the company, it slumped into
administration, The Argus relates.

The Argues relays that Mr. Mordecai, now chief executive of
Hawkins Bazaar owner Tobar, is considering buying back the
troubled retailer but fears that trust in the brand has been
frittered away.

"It's an indictment of the venture capitalists that have come in
without any understanding of the concept and run the company into
the ground . . . .  Modelzone was set up fundamentally for
enthusiasts, but the management changed all that.  They wanted to
dumb it down and become an up-market toyshop.  They failed to
understand who the consumer was," the report quoted Mr. Mordecai
as saying.

The report notes that Mr. Mordecai confirmed that he could buy
back the company in a private capacity.

The Argus discloses that this, coupled with the growth in online
competition, has resulted in Modelzone generating losses over the
last couple of years, which the board of directors has now
concluded is unsustainable and sought the appointment of
administrators.

The report notes that Richard Hawes of Deloitte said: "Modelzone
has historically been profitable, however in recent years, the
company entered into leases for new stores that proved to be
lossmaking . . . . This, coupled with the growth in online
competition, has resulted in Modelzone generating losses over the
last couple of years, which the board of directors has now
concluded is unsustainable and sought the appointment of
administrators."


MONARCH PARK: Administrators Put Townhouse Properties for Sale
--------------------------------------------------------------
Scott McCulloch at Business7 reports that four 'A' listed
townhouse properties in the west end of Glasgow are being sold by
the administrators of Monarch Park Homes Ltd.

Monarch was forced into administration last September by its
lender Dunfermline Building Society after defaulting on its loan
facilities, Business7 relates.

PwC were appointed administrators and property agent Rettie & Co
were engaged to manage ongoing rentals, Business7 discloses.

Rettie & Co., Business7 says, are now marketing four of the 'A'
listed townhouse properties for sale on behalf of the joint
administrators.

Monarch Park Homes Ltd. leased a mix of residential and
commercial premises spanning five properties, all on Claremont
Terrace in Glasgow.


PIPEWORK SOLUTIONS: Goes Into Liquidation
-----------------------------------------
Inside Media reports that Pipework Solutions & Installations Ltd
has gone into liquidation.  Tim Ball of Mazars has been appointed
as liquidator, the report says.

Insider Media notes that the company had a turnover of about
GBP3 million and was founded in 2001. It built and installed
process pipework systems mainly for the food processing industry.
The business had no more than 15 members of staff employed at any
one time, according to the liquidator.

"A major customer was Cadbury - now owned by Mondelez - and
Pipework Solutions & Installations Ltd helped the group establish
factories around the world, including in Eastern Europe and
Africa," the report quotes Mr. Ball as saying.

"The company hit problems due to reduced levels of work from
Cadbury after its takeover in 2010 by Kraft Foods, and losses
incurred on replacement work taken on for major construction
contractors.

"It has had to cease trading and all employees have been made
redundant."


SANDWELL COMMERCIAL: Fitch Affirms 'CC' Ratings on 3 Note Classes
-----------------------------------------------------------------
Fitch Ratings has downgraded Sandwell Commercial Finance No.1 plc
(Sandwell 1)'s class C notes and affirmed the remaining tranches
as well as Sandwell Commercial Finance No.2 plc (Sandwell 2)'s
mortgage-backed floating rate notes as follows:

Sandwell 1 FRN's due 2039:

GBP22.8m class A (XS0191369221) affirmed at 'Asf'; Outlook
   Stable
GBP17.5m class B (XS0191371391) affirmed at 'Asf'; Outlook
   Stable
GBP12.5m class C (XS0191372522) downgraded to 'BBsf' from
  'BBBsf'; Outlook Stable
GBP10m class D (XS0191373686) affirmed at 'CCCsf'; Recovery
  Estimate (RE) revised to 50% from 80%
GBP5m class E (XS0191373926) affirmed at 'CCsf'; RE0%

Sandwell 2 FRN's due 2037:

GBP86.0m class A (XS0229030126) affirmed at 'BBBsf'; Outlook
  Negative
GBP12.6m class B (XS0229030472) affirmed at 'BBsf'; Outlook
  Negative
GBP11.5m class C (XS0229030712) affirmed at 'Bsf'; Outlook
  Negative
GBP14.5m class D (XS0229031017) affirmed at 'CCsf'; RE20%
GBP9.4m class E (XS0229031280) affirmed at 'CCsf'; RE0%

KEY RATING DRIVERS

The downgrade of Sandwell 1's class C notes and the lower RE on
the class D notes reflect a revision in loss and recovery
expectations in light of an increase both in the number of
defaulted loans as well as in the magnitude of market value
declines evidenced by updated valuations. Low interest rates do
limit downside risk by supporting interest coverage and widening
the range of servicing options to include a strategy of hold-and-
amortize. With bond maturity over 20 years away for both deals,
the ability to de-risk the notes is reflected in the
affirmations.

Both deals are picking up the difficulty in secondary UK
property. As of the March/April 2013 reporting cycle, Sandwell 1
had 11 loans (40% by balance) in enforcement, while Sandwell 2
had 17 (31%). To date, loan level losses have totalled GBP3.7
million and GBP5.5 million, respectively, while losses pending
from sales and/or discounted pay-offs are set to further diminish
the reserve funds (currently GBP0.7 million in Sandwell 1 and
GBP1.8 million in Sandwell 2). Fitch expects note losses for both
transactions, as reflected in the distressed ratings of junior
tranches.

Overall, Sandwell 2 has weaker, albeit younger loans, suggesting
more defaults are in the pipeline than in Sandwell 1. This is
reflected in the lower ratings in the second transaction. In both
cases, the dominant workout strategy appears to be to hold
income-producing assets in order to benefit from the
exceptionally low cost of funding in place, thus maximizing
amortization prior to a sale. There is some evidence of likely
liquidations too, where the servicer expects to be able to cover
outstanding debt from proceeds in full.

Most properties have been revalued since closing (typically at
some point between 2009 and 2013), revealing a general increase
in leverage over time notwithstanding overall increases in
interest and debt service coverage ratios (which largely reflect
reduced interest rates on floating rate loans). Fitch has applied
market value declines to account for the rise in leverage in
determining ratings for the different classes of notes.

Rating Sensitivities

Evidence of recoveries or revaluations below Fitch's expectations
could result in downgrades. Moreover, with the exposure to
floating rates, an increase in short-term interest rates could
also apply downwards pressure to ratings by reducing servicer
flexibility and the scope of de-risking. As both deals are
expected to remain sequential pay, rating action is more likely
to affect lower ranking notes.



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


* EUROPE: EC to Create Agency to Salvage or Shut Failed Banks
-------------------------------------------------------------
John O'Donnell at Reuters reports that the European Commission
proposed on Wednesday creating an agency to salvage or shut
failed banks, but the absence of an immediate backstop fund to
pay for a clean-up means it may struggle to do its job.

Working in tandem with the European Central Bank as supervisor,
the new authority is supposed to wind down or revamp banks in
trouble, Reuters discloses.  It is the second pillar of a
"banking union" meant to galvanize the euro zone's response to
the crisis, Reuters says.

According to the blueprint, if agreed by European Union states,
the agency will be set up in 2015 and will eventually have the
means to impose losses on creditors of a stricken bank, Reuters
notes.

But the new authority will be handicapped by the fact that it
will have to wait years before it has a fund to pay for the costs
of any bank wind-up it orders, Reuters states.  In practice, this
means it could be very difficult to demand any such closure,
Reuters says.

According to Reuters, officials say the plan foresees tapping
banks to build a war chest of EUR55 billion to EUR70 billion
(GBP47 billion to GBP60 billion) but that is expected to take a
decade, leaving the agency largely dependent on national schemes
in the meantime.

Under the plan, the EU's executive will not call for an explicit
backstop role for the euro zone's rescue fund, the European
Stability Mechanism (ESM), Reuters discloses.

The lack of funds at the outset or recourse to the ESM undermines
a central goal of banking union -- to sever the "doom loop" that
forms as banks buy ever more government bonds from home states,
Reuters notes.

Furthermore, the "resolution board" that decides on bank wind-
downs will be forbidden from imposing decisions on countries,
such as demanding the closure of a bank, if that would result in
a bill for that nation's taxpayer, Reuters relates.

The reform is presented as a pillar of "banking union", a scheme
designed to underpin confidence in the euro zone and end the
previously chaotic handling of cross-border bank collapses such
as Dexia, Reuters states.


* Q3 Off to Another Rocky Start for EMEA CMBS Maturities
--------------------------------------------------------
While the number of EMEA CMBS loans coming due this quarter is
once again large, only a few are expected to repay, according to
the latest quarterly index report published by Fitch Ratings.
Loan-to-value (LTV) levels are increasing, in some cases quite
sharply. In parallel, many of the loans coming due are already in
poor shape.

'Ten loans maturing this quarter are already in default and
special servicing due to covenant breaches and payment defaults,'
says Mario Schmidt, Associate Director in Fitch's EMEA CMBS team.

As in the previous quarter, the first month is a potentially
volatile one, with 24 CMBS loans coming due before seeing a bit
of a reprieve for the remainder of the quarter (three loans
mature in August and September). If last quarter is any
indication, the success rate of maturing CMBS loans is not
encouraging. Of the 27 loans which came due last quarter, only
five have repaid in full, with standstill agreements in place for
most of the remaining loans.

While the Maturity Index has been on an upwards trajectory, and
increased to 52.8% last quarter from 46.9% in Q113, this is
partly because maturity dates for loans that are extended are
pushed back. And given the steady shift in maturing loans from
the UK to Germany -- where servicers are more cautious
accelerating loans -- Fitch expects many loans to be extended.

The EMEA Commercial Mortgage Market Index is part of Fitch's
quarterly structured finance index reports. The EMEA Commercial
Mortgage Market Index is available at 'www.fitchratings.com' or
by clicking on the above link.


* Upcoming Meetings, Conferences and Seminars
---------------------------------------------

July 11-13, 2013
   AMERICAN BANKRUPTCY INSTITUTE
      Northeast Bankruptcy Conference
         Hyatt Regency Newport, Newport, R.I.
            Contact:   1-703-739-0800; http://www.abiworld.org/

July 18-21, 2013
   AMERICAN BANKRUPTCY INSTITUTE
      Southeast Bankruptcy Workshop
         The Ritz-Carlton Amelia Island, Amelia Island, Fla.
            Contact:   1-703-739-0800; http://www.abiworld.org/

Aug. 8-10, 2013
   AMERICAN BANKRUPTCY INSTITUTE
      Mid-Atlantic Bankruptcy Workshop
         Hotel Hershey, Hershey, Pa.
            Contact:   1-703-739-0800; http://www.abiworld.org/

Aug. 22-24, 2013
   AMERICAN BANKRUPTCY INSTITUTE
      Southwest Bankruptcy Conference
         Hyatt Regency Lake Tahoe, Incline Village, Nev.
            Contact:   1-703-739-0800; http://www.abiworld.org/

Oct. 3-5, 2013
   TURNAROUND MANAGEMENT ASSOCIATION
      TMA Annual Convention
         Marriott Wardman Park, Washington, D.C.
            Contact: http://www.turnaround.org/

Nov. 1, 2013
   AMERICAN BANKRUPTCY INSTITUTE
      NCBJ/ABI Educational Program
         Atlanta Marriott Marquis, Atlanta, Ga.
            Contact:   1-703-739-0800; http://www.abiworld.org/

Dec. 2, 2013
   BEARD GROUP, INC.
      19th Annual Distressed Investing Conference
          The Helmsley Park Lane Hotel, New York, N.Y.
          Contact:   240-629-3300 or http://bankrupt.com/

Dec. 5-7, 2013
   AMERICAN BANKRUPTCY INSTITUTE
      Winter Leadership Conference
         Terranea Resort, Rancho Palos Verdes, Calif.
            Contact:   1-703-739-0800; http://www.abiworld.org/


                            *********

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

Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than US$3 per
share in public markets.  At first glance, this list may look
like the definitive compilation of stocks that are ideal to sell
short.  Don't be fooled.  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 * * *