TCREUR_Public/130712.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

             Friday, July 12, 2013, Vol. 14, No. 137



AIR CARGO: Receives Interest From American Investor
PRAKTIKER AG: Mulls Insolvency After Financing Talks Fail
TRIONISTA TOPCO: S&P Assigns 'B+' Corp. Credit Rating


ADAGIO II: Moody's Raises Ratings on Two Note Classes to 'Ba1'
EUROMAX III MBS: S&P Lowers Rating on Class A-2 Notes to 'CCC'
POINT VILLAGE: DDDA Initiates Legal Action to Recover Debt
* IRELAND: Finance Minister to Tackle Exit Strategies with Troika


SEAT PAGINE: Put Under "Composition with Creditors" Procedure


LOWLAND MORTGAGE 2: Moody's Assigns Ba1 Rating to Class D Notes
LOWLAND MORTGAGE 2: Fitch Assigns 'BB' Rating to Class D Notes


CAIXA GERAL: Fitch Affirms 'B' Short-Term IDR; Outlook Negative
MILLENNIUMBCP AGEAS: S&P Revises Ratings Outlook to 'BB'
REN-REDES: S&P Revises Outlook to Negative & Affirms 'BB+' CCR


* ROMANIA: Insolvency Cases in Latvia Up 7% in June


OTKRITIE BANK: S&P Revises Ratings Outlook to Positive
* KHANTY-MANSIYSK: Moody's Affirms Ba3 Long-Term Deposit Ratings


CAJAS RURALES: Moody's Lowers Rating on Covered Bonds to 'Ba2'
PESCANOVA SA: Debts More Than Double What is Stated, KMPG Says
PROMOTORA DE INFORMACIONES: Mulls Bankruptcy in the U.S.


SEKERBANK TAS: Fitch Affirms 'BB-' LT Issuer Default Rating

U N I T E D   K I N G D O M

CO-OPERATIVE BANK: Removes Customer Service Guarantees
EXPRO HOLDINGS 3: Good Performance Cues Moody's to Lift CFR to B3
INTEROUTE TRANSPORT: Gregory Buys Firm Out of Administration
MF GLOBAL: High Court Sets July 19 Claims Bar Date
MID STAFFORDSHIRE: MP Hands Signature Petition to Save Hospital

NATIONAL BANK: Fitch Lowers Issuer Default Rating to 'B-'
VICARAGE FIELDS: Business Sold for GBP650,000++

* Retail Creditors Lose GBP1.86BB in High Profile Insolvencies
* UK: Number of Struggling Businesses' Hits New High in 2012
* UK: Moody's Revises Outlook on Banking System to Stable


* EM Corporates Dominate List of Expected EMEA Debt Raisers
* Fitch Sees Lackluster Near Term Outlook for Emerging Europe
* BOOK REVIEW: Creating Value through Corporate Restructuring



AIR CARGO: Receives Interest From American Investor
Kurt Hofmann at ATW reports that Air Cargo Germany, which
suspended operations April 18, has received interest from an
unidentified American investor, several German media outlets have

According to ATW, Air Cargo Germany CEO Michael Schaecher said in
an earlier statement that management and shareholders want to
restructure the company and restore operations.

ATW relates that two of its four grounded Boeing 747-400SFs have
been transferred from Frankfurt to Hahn Airport for maintenance
-- a possible sign it is renewing flights. The two aircraft,
leased from Iceland-based Avion Aircraft Trading, had been parked
at the deicing area close to runway West in Frankfurt. The other
two aircraft have been returned to owner Martinair.

It is unclear if negotiations with current single major
shareholder Air Bridge Cargo, a Volga-Dnepr Airlines subsidiary,
will be successful, the report adds.

Air Cargo Germany GmbH is a cargo airline based at Frankfurt-Hahn
Airport, Germany.  ACG is managed by the former LTU Manager
Thomas Homering and Michael Schaecher.

The carrier declared insolvency in April this year following the
suspension of its German operating certificate.

PRAKTIKER AG: Mulls Insolvency After Financing Talks Fail
Cornelius Rahn at Bloomberg News reports that Praktiker AG said
it's considering insolvency for itself and units after some of
its creditors didn't approve more financing.

According to Bloomberg, the company said in a statement
yesterday, July 10, that excessive debt and lack of liquidity are
reasons for declaring insolvency.

Bloomberg relates that Praktiker said alternative financing
became necessary after the company failed to sell a stake in
Luxembourg-based unit Batiself SA because the buyer's board
didn't approve a deal.  It said that proceeds from a sale had
been "firmly included" in the retailer's financing plan from last
year, Bloomberg notes.

Praktiker posted a net loss last year of EUR190 million (US$245
million) on revenue of EUR3 billion, according to data compiled
by Bloomberg.

Praktiker AG is a German home-improvement retailer.

TRIONISTA TOPCO: S&P Assigns 'B+' Corp. Credit Rating
Standard & Poor's Ratings Services said it assigned its 'B+'
long- and 'B' short-term corporate credit ratings to Trionista
TopCo GmbH, the intermediate holding company of energy sub-
metering group ista International GmbH.  The outlook is stable.
At the same time, S&P assigned its 'B+' issue rating and '3'
recovery rating on the senior secured credit facilities and
senior secured notes to be issued by Trionista HoldCo GmbH.  A
recovery rating of '3' indicates S&P's expectation of meaningful
(50%-70%) recovery in the event of a payment default.

S&P also assigned its 'B-' issue rating and '6' recovery rating
to the senior subordinated notes to be issued by Trionista TopCo
GmbH.  A recovery rating of '6' indicates S&P's expectation of
negligible (0%-10%) recovery prospects in an event of default.

The ratings reflect S&P's assessment of the company's "highly
leveraged" financial risk profile and "satisfactory" business
risk profile, as defined in S&P's criteria.

Ista's weak cash flow adequacy and credit measures constrain the
company's "highly leveraged" financial risk profile.  S&P's
assessment also takes into consideration what it views as
aggressive financial policies.  This is partly offset by
"adequate" liquidity and availability under the committed credit

Ista's new debt structure consists of senior secured debt of a
EUR1.3 billion term loan facility, EUR350 million of senior
secured notes, and EUR525 million of senior subordinated notes.
The capital structure also includes preferred equity certificates
(PECs) of EUR550 million.  Following S&P's criteria, it treats
the PECs as debt because it do not view them as a permanent
feature of the company's capital structure, given their maturity
in 2028.  S&P also adjusts the group's reported debt for
operating leases and pension liabilities, which were EUR44.8
million and EUR34.5 million, respectively, at the end of 2012,
and are not expected to change materially in the coming years.

In S&P's base-case scenario, it anticipates that ista's Standard
& Poor's-adjusted debt to EBITDA and funds from operations (FFO)
will be about 9.0x and 6%, respectively, at the end of 2013--
about 7.2x and 8% without the PECs.

S&P further expects EBITDA cash interest coverage to be about
2.3x.  S&P expects the company's cash flow generation to improve
gradually over the next few years as a result of price increases
within the German sub-metering market and a broadly favorable
regulatory environment across ista's other markets.  This will,
in S&P's view, support improvements in the company's credit

"We assess ista's business risk profile as "satisfactory," partly
because of the company's leading position in the global energy
sub-metering market, reflecting its long experience both on the
mature German market--55% of company revenues--and
internationally.  In addition, the essential and nondiscretionary
nature of water and heat sub-metering leads to high operating
margins and provides stable and predictable cash flows.  Partly
offsetting these strengths is the lack of product and service
diversification, coupled with limited growth prospects in the
core German market due to low growth in new housing construction
and limited possibilities for increasing market share," S&P said.

"The stable outlook reflects our view that operating margins will
remain robust and that the company's operations will continue to
deliver stable and predictable cash flows, allowing for gradual
deleveraging and improvements in credit metrics.  We expect ista
will maintain an adjusted EBITDA cash interest coverage of at
least 2x. We also assume that ista will maintain "adequate"
liquidity, as defined by our criteria," S&P added.

S&P could lower the rating if the company's revenues and
profitability were to weaken, such as stemming from unexpected
regulatory changes or increased competition.  Downside rating
pressure could also be triggered by lower-than-expected free cash
flow generation or liquidity pressures.

S&P considers that rating upside is limited at this stage because
of the company's high leverage and aggressive financial policies.
S&P could raise the rating on ista if the company reported
better-than-anticipated credit measures, but S&P currently view
this scenario as remote.


ADAGIO II: Moody's Raises Ratings on Two Note Classes to 'Ba1'
Moody's Investors Service has upgraded the following notes issued
by Adagio II CLO Plc.:

EUR8M Class A-2B Senior Floating Rate Notes due 2021, Upgraded to
Aaa (sf); previously on Oct 13, 2011 Upgraded to Aa1 (sf)

EUR35.875M Class B Senior Floating Rate Notes due 2021, Upgraded
to Aa3 (sf); previously on Oct 13, 2011 Upgraded to A2 (sf)

EUR14.59M Class C-1 Senior Subordinated Deferrable Floating Rate
Notes due 2021, Upgraded to Baa2 (sf); previously on Oct 13, 2011
Upgraded to Baa3 (sf)

EUR8.16M Class C-2 Senior Subordinated Deferrable Fixed Rate
Notes due 2021, Upgraded to Baa2 (sf); previously on Oct 13, 2011
Upgraded to Baa3 (sf)

EUR3.925M Class D-1 Senior Subordinated Deferrable Floating Rate
Notes due 2021, Upgraded to Ba1 (sf); previously on Oct 13, 2011
Upgraded to Ba2 (sf)

EUR9.2M Class D-2 Senior Subordinated Deferrable Fixed Rate Notes
due 2021, Upgraded to Ba1 (sf); previously on Oct 13, 2011
Upgraded to Ba2 (sf)

Moody's also affirmed the ratings of the following notes issued
by Adagio II CLO Plc.:

EUR158.25M Class A-1 Senior Floating Rate Notes due 2021,
Affirmed Aaa (sf); previously on Oct 13, 2011 Upgraded to Aaa

EUR70M Class A-2A Senior Floating Rate Notes due 2021, Affirmed
Aaa (sf); previously on Dec 15, 2005 Assigned Aaa (sf)

EUR10.5M Class E Senior Subordinated Deferrable Floating Rate
Notes due 2021, Affirmed B1 (sf); previously on Oct 13, 2011
Upgraded to B1 (sf)

Adagio II CLO Plc., issued in December 2005, is a multi-currency
Collateralized Loan Obligation ("CLO") backed by a portfolio of
mostly high yield senior secured European loans. The portfolio is
managed by AXA Investment Managers. This transaction entered
amortization phase on January 15, 2013.

Ratings Rationale:

According to Moody's, the rating actions taken on the notes is
primarily a result of the transaction entering into amortization
period in January 2013. In consideration of the reinvestment
restrictions applicable during the amortization period, and
therefore the limited ability to effect significant changes to
the current collateral pool, Moody's analyzed the deal assuming a
higher likelihood that the collateral pool characteristics will
continue to maintain a positive buffer relative to certain
covenant requirements. In particular, the deal is assumed to
benefit from a shorter amortization profile and higher spread
levels compared to the levels assumed at the last rating action
in October 2011.

As of the latest trustee report dated May 2013, the Class A/B,
Class C, Class D and Class E OC ratios are 125.19%, 115.53%,
110.61% and 106.93%, respectively versus August 2011 levels of
124.5%, 114.9%, 110.0% and 106.4%, respectively.

Following the partial repurchase by Adagio II CLO Plc. of EUR 28M
of its Class A-1 notes at the price below par on June 26, 2013,
Moody's calculated Class A/B, Class C, Class D and Class E OC
ratios have increased to 130.39%, 119.29%, 113.68% and 109.57%

The Trustee reported WARF has improved to 2,840 from 2,924
between August 2011 and May 2013, however during the same period
total amount of defaulted securities increased to EUR8.0M from

In its base case, Moody's analyzed the underlying collateral pool
to have a performing par and principal proceeds balance of EUR
316.0 million, defaulted par of EUR8.0 million, a weighted
average default probability of 21.8% over 3.96 years (consistent
with a Weighted Average Rating Factor of 3,216), a weighted
average recovery rate upon default of 48.45% for a Aaa liability
target rating, a diversity score of 31 and a weighted average
spread of 4.01%. The default probability is derived from the
credit quality of the collateral pool and Moody's expectation of
the remaining life of the collateral pool. The average recovery
rate to be realized on future defaults is based primarily on the
seniority of the assets in the collateral pool. For a Aaa
liability target rating, Moody's assumed that 95.56% of the
portfolio exposed to senior secured corporate assets would
recover 50% upon default and 4.44% non-first-lien loan corporate
assets would recover 15%. In each case, historical and market
performance trends and collateral manager latitude for trading
the collateral are also relevant factors. These default and
recovery properties of the collateral pool are incorporated in
cash flow model analysis where they are subject to stresses as a
function of the target rating of each CLO liability being

In addition to the base case analysis, Moody's also performed
sensitivity analyses on key parameters for the rated notes:
Deterioration of credit quality to address the refinancing and
sovereign risks -- Approximately 28.5% of the portfolio is rated
B3 and below with maturities between 2014 and 2016, which may
create challenges for issuers to refinance. The portfolio is also
exposed 9.61% to obligors located in Italy, Ireland and Spain.
Moody's considered the scenario where the WARF of the portfolio
was increased to 3,917 by forcing to Ca the credit quality of 25%
of such exposures subject to refinancing or sovereign risks. This
scenario generated model outputs that were up to two notches
lower than the base case results.

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

Sources of additional performance uncertainties:

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

2) Large Exposure to Credit Estimates: Moody's also notes that
around 41.61% of the collateral pool consists of debt obligations
whose credit quality has been assessed through Moody's credit
estimates. Large single exposures to obligors bearing a credit
estimate have been subject to a stress applicable to concentrated
pools as per the report titled "Updated Approach to the Usage of
Credit Estimates in Rated Transactions" published in October

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

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

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

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

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

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

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

EUROMAX III MBS: S&P Lowers Rating on Class A-2 Notes to 'CCC'
Standard & Poor's Ratings Services lowered its credit ratings on
EUROMAX III MBS Ltd.'s class A-1 and A-2 notes.  At the same
time, S&P has affirmed its rating on the class B notes.

The rating actions follows S&P's assessment of the transaction's
performance using data from the latest available trustee report,
dated May 10, 2013.

S&P subjected the 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
reported portfolio balance that it considers to be performing
(EUR73,820,245), the current weighted-average spread (1.09%), and
the weighted-average recovery rates that S&P calculated in
accordance with its 2012 criteria for rating collateralized debt
obligations (CDOs) of structured finance assets.

S&P applied various cash flow stress scenarios, using nine
different default patterns, in conjunction with different
interest rate stress scenarios for each liability rating

"From our analysis, we have observed that the aggregate
collateral balance has decreased by EUR4.59 million (to EUR73.82
million from EUR78.41 million) since our last review on June 7,
2012.  In our opinion, the reduced collateral balance is due to
the amortization of the class A-1 notes which, has increased the
credit enhancement for all classes of notes," S&P said.

S&P has also observed that the result of the
overcollateralization ratio test has worsened to 98.52% from
108.94%, since its last review, and has fallen below the required
trigger of 105.00%.

Since S&P's last review, it has noted a significant decrease, to
9.24% from 34.32%, in the proportion of assets that S&P considers
to be rated in a 'BBB' category ('BBB+', 'BBB', and 'BBB-') and
an increase to 21.5% from 17.82%, in the proportion of the assets
in a 'CCC' category ('CCC+', 'CCC', and 'CCC-').  Furthermore,
defaulted assets make up 15.53% of the entire asset pool.  In
S&P's view, the negative rating migration has worsened the
scenario default rates.

In S&P's opinion, taking into account the results of its credit
and cash flow analysis, the available credit enhancement for the
class B notes is commensurate with the currently assigned rating.
S&P has therefore affirmed its 'CCC- (sf)' rating on the class B

"Our credit and cash flow analysis of the class A-1 and A-2 notes
indicated that the available credit enhancement is commensurate
with lower ratings than previously assigned.  We have therefore
lowered to 'B- (sf)' from 'BB+ (sf)' our rating on the class A-1
notes and to 'CCC (sf)' from 'B (sf)' our rating on the class A-2
notes," S&P added.

EUROMAX III MBS is a cash flow mezzanine structured finance CDO
of a portfolio that comprises predominantly residential mortgage-
backed securities as well as commercial mortgage-backed
securities, and, to a lesser extent, CDOs of corporates and CDOs
of asset-backed securities.  The transaction closed in December
2002 and is managed by CIBC World Markets Inc.


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

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



Class       Rating            Rating
            To                From

EUR195.24 Million Asset-Backed Floating-Rate Notes

Ratings Lowered

A-1         B- (sf)           BB+ (sf)
A-2         CCC (sf)          B (sf)

Rating Affirmed

B           CCC- (sf)

POINT VILLAGE: DDDA Initiates Legal Action to Recover Debt
---------------------------------------------------------- reports that the Dublin Docklands Development
Authority (DDDA) has initiated legal action against prominent
developer Harry Crosbie and two Point Village companies that are
under NAMA-backed receivership.

The DDDA, which is to be wound up by the Government in the wake
of the controversial Irish Glass Bottle site purchase, has issued
High Court proceedings seeking summary judgment -- the first
legal step to recover a debt, relates.

According to, as well as Mr. Crosbie, two Point
village companies have been named: Point Village Company Limited
and the Point Village Development Limited.

It potentially puts the state agency at odds with NAMA, which is
also state-owned and effectively controls the two companies
through receivers, notes.

NAMA-appointed receivers Paul McCann and Stephen Tennent took
control of the Point Village, beside the O2 concert arena and the
Bord Gais Energy Theatre in Dublin's Docklands, in April,
effectively stripping the property developer and impresario of
two of his most high-profile interests over debts of about EUR450
million, recounts.

The EUR800 million Point Village comprises retail outlets,
apartments, the Odeon Cinema and the Gibson Hotel.

* IRELAND: Finance Minister to Tackle Exit Strategies with Troika
----------------------------------------------------------------- reports that Minister for Finance Michael Noonan
said he wants to "seriously engage" on exit strategies with the
Troika during their inspection. relates that Minister Noonan said Ireland was
ticking all the boxes and meeting all the targets set down for
it.  According to, he said he now wanted the
Troika to lay out a path for Ireland to get out of the bailout
for good.

"I would like to engage seriously with the Troika this time on
exit strategies, to ensure that when we go back into the markets
in a continuous way in the Autumn that we're back to stay -- and
we get money at low interest rates," quotes
Mr. Noonan as saying.

"I'll be asking what ideas they have on where they might assist
us with that."

A team from the EU and IMF was set to arrive in Dublin on July 9
to begin what should be one of the last inspections of Ireland's
bailout program, discloses.


SEAT PAGINE: Put Under "Composition with Creditors" Procedure
Francesca Landini at Reuters reports that Seat Pagine Gialle said
on Wednesday an Italian court had admitted the company to a
"composition with creditors" procedure, which is similar to
Chapter 11 bankruptcy.

According to Reuters, the company said in a statement that a
meeting of creditors to give their final green light to the
company's debt restructuring proposals is scheduled for Jan. 30,

The board of SPG approved at the end of June a debt restructuring
proposal intended to reduce its consolidated debt by about EUR1
billion (US$1.3 billion), Reuters relates.

At the end of December, Seat had a gross debt of about EUR1.5
billion, Reuters notes.  Its net loss in 2012 was EUR1.06
billion, due to impairment charges, while free operating cash
flow was EUR318 million, Reuters discloses.

                        About SEAT Pagine

SEAT Pagine Gialle SpA (PG IM) -- is an
Italy-based company that operates multimedia platform for
assisting in the development of business contacts between users
and advertisers.  It is active in the sector of multimedia
profiled advertising, offering print-voice-online directories,
products for the Internet and for satellite and ortophotometric
navigation, and communication services such as one-to-one
marketing.  Its products include EuroPages, PgineBianche,
Tuttocitta and EuroCompass, among others.  Its activity is
divided into four divisions: Directories Italia, operating
through, Seat Pagine Gialle; Directories UK, through TDL
Infomedia Ltd. and its subsidiary Thomson Directories Ltd.;
Directory Assistance, through Telegate AG, Telegate Italia Srl,
11881 Nueva Informacion Telefonica SAU, Telegate 118 000 Sarl,
Telegate Media AG and Prontoseat Srl, and Other Activitites
division, through Consodata SpA, Cipi SpA, Europages SA, Wer
liefert was GmbH and Katalog Yayin ve Tanitim Hizmetleri AS.

                          *     *     *

As reported by the Troubled Company Reporter-Europe on
Feb. 11, 2013, Moody's Investors Service downgraded the corporate
family rating of Seat Pagine Gialle SpA to Ca, and the
probability of default rating to Ca-PD/LD.  Concurrently, Moody's
downgraded Seat's EUR750 million senior secured bonds due 2017
and EUR65 million senior secured stub bonds due 2017 to Ca.
Moody's said the outlook on the ratings is negative.


LOWLAND MORTGAGE 2: Moody's Assigns Ba1 Rating to Class D Notes
Moody's Investors Service has assigned definitive credit ratings
to the following notes issued by Lowland Mortgage Backed
Securities 2 B.V.:

  EUR 379.0M Notes A1 Floating Rate Notes due 2042, Assigned
  Aaa (sf)

  EUR 1,326.9M Notes A2 Fixed Rate Notes due 2042, Assigned
  Aaa (sf)

  EUR 65.2M Class B Notes due 2042, Assigned Aa3 (sf)

  EUR 63.5M Class C Notes due 2042, Assigned A2 (sf)

  EUR 54.9 Class D Notes due 2042, Assigned Ba1 (sf)

Moody's has not rated the Class E Notes.

The transaction represents the securitization of Dutch prime
mortgage loans backed by residential properties located in the
Netherlands and originated by SNS Bank N.V. (Baa3, Possible
Downgrade/P-3, Possible Downgrade) and its subsidiary RegioBank
(not rated). The portfolio will be serviced by SNS Bank and
RegioBank. Credit enhancement in this transaction is provided
through subordination and totals 11% for the Class A notes.

Ratings Rationale:

The ratings are primarily based on the diversity and credit
quality of the portfolio and the legal and structural features of
the transaction. From the assessment of the credit quality of the
underlying mortgage loan pool, Moody's determined the portfolio
expected loss of 1.0% and MILAN Credit Enhancement (CE) of 7.0%.

Portfolio expected loss of 1.0%: This is above the Dutch sector
average and is based on Moody's assessment of the lifetime loss
expectation taking into account: (i) the collateral performance
of the seller's precedent transactions as well as the performance
of the seller's book compared with the sector as a whole; (ii)
historic recovery and NHG rescission rate data received from the
seller; and (iii) the current macroeconomic environment in the
Netherlands. The increase to 1.0% from 0.75% in Lowlands 1
reflects the higher proportion of self-employed and interest only
loans and lower levels of NHG loans in the pool.

MILAN CE of 7.0%: This is slightly lower than the Lowlands 1
MILAN CE of 8.0% but in line with other deals from Dutch lenders
and follows Moody's assessment of the loan-by-loan information
taking into account the historic collateral performance and the
following key drivers: (i) weighted average loan-to-foreclosure-
value (LTFV) of 75.7%; (ii) interest-only loan parts without
linked savings or investment products of 86.9%; (iii) the static
nature of the portfolio with the possibility of further advances
only if certain criteria are met and substitute loans only as
required to maintain the minimum margin; and (iv) the weighted
average seasoning of 8.2 years.

Approximately 7.2% of the portfolio is linked to life insurance
policies (life mortgage loans), which are exposed to set-off risk
in case an insurance company goes bankrupt. The seller has
provided loan by loan insurance company counterparty data.
Moody's considered the set-off risk in the cash flow analysis.

A key characteristic of this transaction is that there is no
interest rate swap in place. 19.8% of the portfolio is linked to
a floating interest rate. The weighted average interest rate on
the mortgage loans at closing is approximately 4.8%. The Class A1
notes carry a floating interest rate of one month Euribor plus
1.5% and the Class A2 notes carry a fixed interest rate of 3.5%.
The transaction documentation provides that the weighted average
interest rate of the mortgage pool remains at least at 3.75% and
the weighted average margin on the floating rate mortgage loans
remains at least at 1.5%. The principal on the A1 floating rate
notes will be paid from the floating rate mortgage loans while
the principal on the A2 fixed rate notes will be paid from the
fixed rate mortgage loans. Since there is no swap in this
transaction, the excess spread in the transaction can vary over
time, depending on the portfolio yield. In the cash flow analysis
Moody's applied a stressed assumption on the portfolio yield
taking into account the overall floor of 3.5% and the floating
floor of 1.5%.

Operational Risk Analysis: SNS Bank N.V. and group companies are
the seller and servicer. The issuer and security trustee act as a
back-up servicer facilitator, and there are triggers in place to
appoint a backup servicer on a best efforts basis should the
rating of SNS Bank N.V. fall below Baa3. To help ensure
continuity of payments the cashflows will be estimated from the
three most recent servicer reports should a current report be
unavailable. In addition there is a liquidity facility funded at
1.7% of the outstanding class A notes, subject to a floor of 0.6%
of the closing class A notes, covering nearly five months of note
interest payments. The transaction does not benefit from a
reserve fund.

The V-Score for this transaction is Low/Medium, which is in line
with the V Score assigned for the Dutch RMBS sector, mainly due
to the fact that it is a standard Dutch prime RMBS structure for
which Moody's had over 10 years of historical performance data on
precedent transactions. Five underlying V Score sub components
deviate from the Dutch RMBS sector average. The transaction
complexity, analytic complexity and market value sensitivity are
all assessed as Medium versus Low/Medium for the sector.
Additionally the originator historical performance variability
and back up servicer arrangements are both assessed as Low/
Medium versus Low for the sector. V-Scores are a relative
assessment of the quality of available credit information and of
the degree of dependence on various assumptions used in
determining the rating. 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: At the time the rating was
assigned, the model output indicated that the Class A notes would
still have achieved a Aaa rating if the expected loss increased
to 3.0% and all other factors including the MILAN CE of 7.0%
remained unchanged. The model also indicated an A1 for the Class
A notes if the MILAN CE increased to 11.2%, the expected loss
increased to 3.0% and all other factors remained unchanged.

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.

The Foreign Account Tax Compliance Act (FATCA), a US legislation,
may impact the transaction. The regulations implementing the Act
are still in draft form and Moody's is currently reviewing the
potential impact of FATCA. Should this transaction become subject
to US withholding tax under FATCA the rating of the Notes may be
negatively impacted.

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

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 principal
with respect of the notes by the legal final maturity. Moody's
ratings only address the credit risk associated with the
transaction. Other non-credit risks have not been addressed, but
may have a significant effect on yield to investors.

LOWLAND MORTGAGE 2: Fitch Assigns 'BB' Rating to Class D Notes
Fitch Ratings has assigned Lowland Mortgage Backed Securities 2
B.V.'s mortgage-backed notes final ratings, as follows:

EUR379,000,000 class A1 floating-rate notes: 'AAAsf'; Outlook

EUR1,326,900,000 class A2 fixed-rate notes: 'AAAsf'; Outlook

EUR65,200,000 class B fixed-rate notes: 'AAsf'; Outlook Stable

EUR63,500,000 class C fixed-rate notes: 'Asf'; Outlook Stable

EUR54,900,000 class D fixed-rate notes: 'BBsf'; Outlook Stable

EUR27,300,000 class E fixed-rate notes: 'NRsf'

Credit enhancement (CE) for the class A notes is 11.0% and is
provided by subordination of Class B, C, D & E notes. There is no
reserve fund in this transaction.


Unhedged Transaction:
There is no swap in place to hedge the interest rate differential
between the notes and the mortgage loans. Instead, the
proportions of fixed- and floating-rate notes issued are similar
to the proportions of fixed- and floating-rate loans in the pool,
thereby providing a natural hedging for basis risk. SNS has also
provided guarantees on the portfolio's minimum weighted average
(WA) margin and interest rate to protect against a decline in the
portfolio yield when loans reset.

Seasoned Portfolio:
This is a seasoned (99 months) non-revolving portfolio consisting
of prime residential mortgage loans with a weighted-average (WA)
original loan-to-market-value (OLTMV) of 75.5% and a debt-to-
income ratio (DTI) of 30.7%. The WA OLTMV is below the level
typically seen in Fitch-rated Dutch RMBS transactions, and
assumes that flexible borrowers will draw the full loan amount
available. The majority of the pool was sourced from the prior
Hermes XVII transaction.

CE Available:
The CE of 11.0% for the class A notes is achieved through
subordination provided by the class B notes (3.4%), class C notes
(3.3%), class D notes (2.9%) and class E notes (1.4%).

Exposure to SNS:
SNS Bank is the seller, servicer and foundation account provider
in this transaction. The nationalization of SNS Bank is not
expected to hinder the transaction's operational performance.
However since SNS is rated below Fitch's eligible counterparty
rating of 'A'/'F1', and acts as collection account provider the
commingling risk was mitigated by the posting of cash collateral,
equivalent to 1.5 months of mortgage payments in the transaction

Rating Sensitivities

Material increases in the frequency of defaults and loss severity
on defaulted receivables could produce loss levels higher than
Fitch's base case expectations, which in turn may result in
potential rating actions on the notes. Fitch's analysis revealed
that a 30% increase in the weighted average foreclosure frequency
along with a 30% decrease in the weighted average recovery rate
would result in a downgrade of the class A1 and A2 notes' rating
to 'AA-sf'.

Fitch used the results of the agreed-upon procedures reports
(AUP) associated with three recent SNS Bank transactions. The
AUPs contained a limited amount of material errors, although the
agency did apply a moderate haircut to the property market value
for 10% of the pool.

To analyze the CE levels, Fitch evaluated the collateral using
its default model, details of which can be found in the reports
entitled 'EMEA Residential Mortgage Loss Criteria', dated
June 2013, 'EMEA RMBS Criteria Addendum - Netherlands' and 'EMEA
RMBS Criteria Addendum - Netherlands - NHG-Backed', both dated
June 2013, at The agency assessed the
transaction cash flows using default and loss severity
assumptions under various structural stresses including
prepayment speeds and interest rate scenarios. The cash flow
tests showed that each class of notes could withstand loan losses
at a level corresponding to the related stress scenario without
incurring any principal loss or interest shortfall and can retire
principal by the legal final maturity.


CAIXA GERAL: Fitch Affirms 'B' Short-Term IDR; Outlook Negative
Fitch Ratings has affirmed Caixa Geral de Depositos' (CGD), Banco
Comercial Portugues' (Millennium bcp) and Banco BPI's support-
driven Long-term Issuer Default Ratings (IDRs) at 'BB+' and
Support Ratings at '3'. Fitch has also affirmed Santander Totta
SGPS's (Santander Totta) and Banco Santander Totta SA's (BST)
institutional support-driven Long-term IDRs at 'BBB-' and Support
Ratings at '2'. The Outlooks on the four banks' Long-term IDRs is

Fitch has also affirmed the Viability Ratings (VRs) of CGD, Banco
BPI, Santander Totta and BST at 'bb-' and Millennium bcp's VR at

The affirmations reflect the banks' improved capitalization, a
more balanced funding structure and available liquidity, which
places them in a comparatively better position than at the
beginning of the sovereign crisis to weather short periods of
volatility surrounding the sovereign and/or uncertainties about
the economic recovery. However, Fitch currently forecasts that
Portugal's GDP will decline by a further 2.6% in 2013 and only
just exit recession in 2014, with unemployment increasing to
18.5% by 2014. Fitch therefore expects continued asset quality
deterioration for 2013 and 2014 and weak profitability prospects
for most banks.

The banking system remains at risk of adverse macroeconomic and
sovereign developments, the latter given the high correlation
between sovereign and bank risks. This was illustrated last week
following renewed political risks after the resignation of
Portugal's finance minister and the tendered resignation of the
foreign minister, generating market volatility and uncertainty.
However, Fitch understands that the political uncertainty has
been stemmed somewhat for now and the agency's base case remains
that program implementation will stay on track.

Nonetheless, Fitch considers there could be downward pressure on
the banks' standalone rating profiles if i) the economic
recession is longer than anticipated, translating into asset
quality pressures above expectations; ii) concerns on the
sovereign re-emerge, which could renew market funding constraints
and/or raise substantially banks' funding costs and iii)
significant net losses materialize, compromising the maintenance
of adequate capital levels.



The Long-term IDRs of the three banks are at their Support Rating
Floors (SRF; 'BB+'), reflecting Fitch's view that sovereign and
international support for the Portuguese banking system will be
provided as and when required. Commitment for support has already
been set at a EUR12 billion capital backstop facility, of which
EUR6.4 billion remains available. In the case of CGD, the bank
would receive support from its 100% shareholder, the Portuguese
state. The assumed availability of this support to banks
justifies the equalization of the three banks' IDRs with those of
the sovereign (BB+/Negative).


Santander Totta and BST's IDRs are two notches below that of its
Spanish parent, Banco Santander S.A. (Santander; BBB+/Negative),
and one notch higher than the Portuguese sovereign. This reflects
Fitch's view that support from their ultimate parent bank will
very likely be made available, as reflected by a '2' Support
Rating, given Santander Totta's strategic importance for
Santander. Nevertheless, Santander's propensity and ultimate
ability to provide full and timely support to Santander Totta and
BST is likely to be linked to the banking sector and sovereign
risks in Portugal, which are closely correlated.

Santander Totta is a Portuguese holding company, wholly owned by
Santander. BST is its main operating subsidiary and Portugal's
fourth-largest bank. BST and Santander Totta's ratings are
equalised because the two share the same regulator and are viewed
as a consolidated entity. The bank is wholly-owned by the holding
company, common branding is applied to both entities and the
holding company has no outstanding debt.



The Negative Outlooks on the banks mirrors that on the sovereign,
indicating that their IDRs are sensitive to a further downgrade
of the sovereign rating and/or any reduction, in Fitch's
judgment, of available support.


The IDRs are sensitive to a further downgrade of the sovereign
rating and/or of Santander's IDRs, as reflected by their Negative



CGD's reported Bank of Portugal and EBA core capital ratios were
11.5% and 9.4%, respectively for Q113. The main difference
between the two ratios relate to EBA's temporary capital buffer
required for sovereign risks, which was calculated based on end-
September 2011 exposure. However, Fitch's main measure of
capital, Fitch core capital (FCC)/weighted risks ratio was lower
at 8.7% (end-2012 figure) as it does not include state support
received in the form of hybrid capital instruments. As the agency
considers these instruments to be a long-standing form of capital
with loss-absorbing features, it has assigned 100% equity credit
to these instruments, providing an additional EUR900 million of
capital buffer for CGD.

CGD reported an operating loss for 2012 and for Q113, affected by
the impairment of credit and problematic equity investments,
although bottom line figures were helped by gains from on debt
repurchasing operations, the sale of government securities and
regular trading activities. However, the bank should continue to
benefit from its leading retail franchise in the long term, which
supports its business activity and large deposit base.

Nonetheless, its Bank of Portugal-defined NPL ratio ("credit at
risk") deteriorated to 9.5% at CGD at end-Q113, just 58% covered
by reserves, which gives it a weaker credit profile than some of
its peers. This is explained by its comparatively larger exposure
to the construction and real estate sectors, at around 12% and a
weaker performing residential mortgage portfolio. Fitch therefore
expects loan impairment charges to remain high at the bank while
state aid costs will continue to apply pressure to margins.

CGD has a comfortable funding structure, with the bulk of its
loans funded by deposits. Its regulatory net loans/deposits ratio
was 113% at end-Q113.


Banco BPI's Bank of Portugal and EBA core capital levels were 15%
and 9.6% at end-Q113, whilst its FCC/weighted risks ratio was
just 7.1% at end-2012, held back by negative valuation
adjustments on available-for-sale securities (largely sovereign
exposures). Whilst the inclusion of hybrid government debt raises
its Fitch eligible capital (FEC) ratio to 12.4% at end-2012,
Fitch views positively the bank's early repayments of part of
these instruments (EUR300 million out of the total EUR1.3

In Fitch's view, Banco BPI is better positioned than its domestic
peers to manage asset quality and profitability pressures due to
its better credit risk profile and cost efficiency. At end-Q113,
it reported a relatively low Bank of Portugal-defined NPL ratio
of 4.7%, 72% covered by reserves. Fitch also views its capacity
for earnings generation as more resilient than its domestic
peers, helped by more contained loan impairment charges and
financial flexibility.

The bank should continue to benefit from its profitable Angolan
business, more contained loan impairment charges and lower cost
base. Like CGD, its funding structure is comfortable, with a
regulatory net loans/deposits ratio of 104% at end-Q113.


Santander Totta reported a Bank of Portugal core capital ratio of
13.1% at end-Q113 (it did not participate in the EBA stress test)
and an FCC/weighted risks ratio of 11% at end-2012. Santander
Totta is the only bank of the four that has not received state
aid and its FCC and FEC ratios are the same.

Like Banco BPI, Fitch views Santander Totta to be well positioned
to manage asset quality and profitability pressures and for its
earnings generation capacity to be more resilient than its
domestic peers. While its profitability is impacted by its high
share of low margin residential mortgage loan book, it benefits
from the cost efficiencies and synergies with the Santander
Group. Its Bank of Portugal-defined NPL ratio was 5.3% at end-
Q113 (69% covered), giving it a relatively healthy credit risk


Millennium bcp's reported Bank of Portugal and EBA core capital
ratios were 12.1% and 9.6%, respectively, at end-Q113. In Fitch's
view, Millennium bcp capital ratios are under greater pressure
than its peers because of its weaker credit risk profile and
performance prospects for 2013.

Millennium bcp's credit at risk ratio was 13.8% at end-Q113 with
a coverage ratio of 47%. The bank's worse asset quality indicates
its comparatively larger exposure to consumer lending (around 6%
of total loans at end-Q113) and to construction and real estate
(close to 12% of total loans at end-Q113). This is also reflected
in the level of foreclosed assets, which amounted EUR1.2 billion
at end-Q113 (net of reserves).

The bank has improved its structural funding profile, with a
regulatory net loans/deposits ratio at 121% at end-Q113. However,
it continues to be the most reliant on ECB funding (EUR10.2bn at
end-Q313), showing room for improvement.



Fitch sees more upward rating potential for Banco BPI and
Santander Totta in the medium term as they benefit from their
comparatively better overall financial and credit risk profiles.
A sustained stabilization of the political and economic operating
environment in Portugal would further support scope for rating
upside. The two-notch difference between Millennium bcp's VR and
that of the other three banks largely reflects Fitch's view that
Millennium bcp has a weaker standalone financial position, which
means it will likely find it more difficult to cope with the
challenges faced by its peers.

Fitch also views Millennium bcp's operating profitability outlook
more at risk. However, while loan impairment charges will remain
high in 2013, these should be comparatively lower than in 2012,
helped by the sale of its troubled Greek operations. In addition,
further material regulatory provisions are not expected after the
review of the bank's loan book by the Bank of Portugal in 2012
and 2011. While these factors should alleviate profitability
pressures, Fitch expects Millennium bcp to be loss making in


The ratings of the three banks' subordinated debt have been
affirmed in line with the affirmation of the banks' VRs and
remain sensitive to their VRs.

Fitch also affirmed CGD and Banco BPI's preference shares at
'CCC' and those at Millennium bcp at 'CC highlighting Fitch's
view of material non-performance risk associated with these
instruments in the event conversion triggers on government hybrid
capital instruments are hit. Fitch views higher risks of
conversion at Millennium bcp, which explains the one-notch
difference in its instrument rating. The ratings of these
instruments remain sensitive to the banks' VRs.


BST's preference shares have been affirmed at 'BB-' and remain
capped at the level assigned to equivalent securities issued by
the parent bank in line with Fitch's criteria on 'Rating Bank
Regulatory Capital and Similar Securities'. The rating of BST's
preference shares remains sensitive to a downgrade of Santander's
VR and/or BST's IDR.


The ratings of Banco Portugues de Investimento (BPI) and Caixa
Banco de Investimento (Caixa-BI) are equalised with those of
their respective 100%-shareholders (Banco BPI and CGD). Under
Portugal's corporate law, Banco BPI and CGD are liable for the
obligations of their wholly owned subsidiaries.

The equalisation is driven by their high integration into their
parent banks and the benefits of parent support. Fitch does not
assign VRs to the two institutions as the agency considers that
they cannot be viewed as independent entities. The ratings of BPI
and CaixaBI remain sensitive to any rating action on Banco BPI's
and CGD's IDRs.

The rating of CGD's commercial paper is equalised with CGD's
Short-Term IDR of ('B') and is sensitive to movements in this

BPI and Caixa BI are two of Portugal's leading investment banks.
Their activities are focused on investment banking, including
corporate finance and equities, and private banking.

The ratings actions are:


Long-term IDR affirmed at 'BB+'; Negative Outlook
Short-term IDR affirmed at 'B'
Viability Rating affirmed at 'bb-'
Support Rating affirmed at '3'
Support Rating Floor affirmed at 'BB+'
Senior unsecured debt long-term rating affirmed at 'BB+'
Senior unsecured debt short-term rating affirmed at 'B'
Senior unsecured certificate of deposit long-term rating
  affirmed at 'BB+'
Senior unsecured certificate of deposit short-term rating
  affirmed at 'B'
Commercial paper program affirmed at 'B'
Lower Tier 2 subordinated debt issues affirmed at 'B+'
Preference shares affirmed at 'CCC'

Caixa -Banco de Investimento:

Long-term IDR affirmed at 'BB+'; Negative Outlook
Short-term IDR affirmed at 'B'
Support Rating affirmed at '3'

CGD North America Finance LLC

Commercial Paper affirmed at 'B'

Millennium bcp:

Long-term IDR affirmed at 'BB+'; Negative Outlook
Short-term IDR affirmed at 'B'
Viability Rating affirmed at 'b'
Support Rating affirmed at '3'
Support Rating Floor affirmed at 'BB+'
Senior unsecured debt issues affirmed at 'BB+'
Lower Tier 2 subordinated debt issues affirmed 'B-'
Commercial paper program affirmed at 'B'
Preference shares affirmed at 'CC'

Banco BPI:

Long-term IDR affirmed at 'BB+'; Negative Outlook
Short-term IDR affirmed at 'B'
Viability Rating affirmed at 'bb-'
Support Rating affirmed at '3'
Support Rating Floor affirmed at 'BB+'
Senior unsecured debt issues affirmed at 'BB+'
Lower Tier 2 subordinated debt issues affirmed at 'B+'
Commercial paper program affirmed at 'B'
Preference shares affirmed at 'CCC'

Banco Portugues de Investimento:

Long-term IDR affirmed at 'BB+'; Negative Outlook
Short-term IDR affirmed at 'B'
Support Rating affirmed at '3'

Santander Totta:

Long-term IDR affirmed at 'BBB-'; Negative Outlook
Short-term IDR affirmed at 'F3'
Viability Rating affirmed at 'bb-'
Support Rating affirmed at '2'


Long-term IDR affirmed at 'BBB-'; Negative Outlook
Short-term IDR affirmed at 'F3'
Viability Rating affirmed at 'bb-'
Support Rating affirmed at '2'
Senior unsecured debt issues affirmed at 'BBB-'
Commercial paper affirmed at 'F3'
Preference shares affirmed at 'BB-'

MILLENNIUMBCP AGEAS: S&P Revises Ratings Outlook to 'BB'
Standard & Poor's Ratings Services said it revised its outlook on
the core entities of Portuguese insurer Millenniumbcp Ageas Grupo
Segurador S.G.P.S. (together MAGS) to negative from stable.  At
the same time, S&P affirmed its 'BB' insurer financial strength
and counterparty credit ratings on these entities.

"The rating action mirrors our similar action on Portugal.
According to our criteria, we generally cap the ratings on
domestic insurers at the local currency sovereign rating.  We
assess MAGS' exposure to Portugal as "high," given that virtually
all premiums and liabilities stem from Portugal, and 49% of
assets are invested domestically, including in Portuguese
sovereign debt and several Portuguese banks, the main one being
its banking shareholder, Millennium bcp (Banco Comercial
Portugues S.A.; B+/Negative/B).  This caps the rating at three
notches below our 'bbb' anchor, or baseline assessment, for
MAGS," S&P said.

S&P views MAGS as strategically important to the Belgium-based
Ageas group (core operating entities insurer financial strength
rating A-/Stable/--).  It provides substantial revenues, at about
9% of the group's gross premium written (GPW) as of Dec. 31,
2012. MAGS also provides Ageas with diversification benefits and
a valuable growth engine in continental Europe, one of Ageas' key
development markets.  Consequently, S&P would expect MAGS to be
able to draw on Ageas' financial support if needed.

The negative outlook reflects that on Portugal, reflecting MAGS'
meaningful exposure to Portuguese assets and insurance business,
and indicating that any rating action on the sovereign could lead
to a similar action on MAGS.

S&P might lower the ratings on MAGS if it was to lower its
ratings on Portugal, or if the economic environment further
deteriorated and materially hampered MAGS' business risk or
financial risk profiles.  S&P could also lower the ratings if a
key financial institution counterparty were to pose heightened
credit risks that materially weakened MAGS' financial risk

Conversely, S&P could revise the outlook to stable or raise the
ratings on MAGS following similar rating actions on Portugal.

REN-REDES: S&P Revises Outlook to Negative & Affirms 'BB+' CCR
Standard & Poor's Ratings Services said it revised its outlook on
Portuguese gas and electricity grid operator REN-Redes
Energeticas Nacionais SGPS S.A. (REN) to negative from stable.
At the same time, S&P affirmed its 'BB+/B' long- and short-term
corporate credit ratings on the utility.

S&P affirmed its 'BB+' issue rating on REN's senior unsecured
debt.  The '3' recovery rating on this debt remains unchanged,
reflecting S&P's expectation of meaningful (50%-70%) recovery in
the event of payment default.

"The rating action mirrors our action on Portugal (see "Outlook
On Portugal Revised To Negative On Growing Political
Uncertainties; 'BB/B' Ratings Affirmed," published July 5, 2013,
on RatingsDirect).  Under our rating criteria, sovereign risk is
a key factor that influences the credit strength of utilities.
We assess REN as having "high" exposure to Portuguese country
risk, based on the utility sector's "high" sensitivity to country
risk and REN's domestic focus.  REN is purely a domestic gas and
electricity grid operator so almost 100% of its revenues are
regulated and originated in Portugal," S&P said.

"Our ratings on these types of utilities are generally
constrained by the rating on the sovereign where they are
domiciled.  Exceptions are those, such as REN, that have
extraordinary credit strength or other characteristics that
mitigate domestic risk factors.  We believe there is a reasonable
likelihood REN would be able to withstand Portugal's default.  We
have stress tested REN's business and financial risk profile in a
hypothetical Portuguese default scenario.  We believe the
utility's ability to service and repay debt is superior to that
of the sovereign," S&P added.

"This is because REN's earnings are immune to macroeconomic
conditions and bear remote regulation risk, in our view.  The
utility is not vulnerable to local funding access owing to the
significant liquidity support it receives from majority
shareholder State Grid International Development Ltd. (SGID, not
rated), the international expansion arm of State Grid Corporation
of China, the world's largest power transmission grid.  This
gives REN zero refinancing risk by 2016, in our opinion.  The
'BB+' long-term rating on REN is therefore one notch higher than
our long-term sovereign credit rating on Portugal, which is the
maximum possible differential between the ratings on a non-
sovereign issuer and its related sovereign in the eurozone
(European Economic and Monetary Union) under our criteria," S&P

S&P believes REN's defensive business model and underlying
regulatory framework effectively shield it from the adverse
effects of Portugal's macroeconomic and sovereign crisis on its
earnings. REN's asset-based regulated remuneration is immune to
energy volume and price risks, and indexed to Portugal's credit
default swaps, thereby providing a hedge against sovereign-driven
interest rate moves.  In the longer term, lower energy demand
could be contracyclical as it implies lower infrastructure needs
and therefore lower capital expenditure (capex) which, all other
things being equal, is credit supportive.

In S&P's view, the main way the sovereign crisis could affect REN
is through regulation risk, but S&P don't see contagion as
likely. ERSE, the Portuguese energy regulator, has a strong track
record of resilience to sovereign, legal, and political
interference--as illustrated under Portugal's EU bailout.  This
underpins S&P's expectation of stability and consistency of
regulation across the reset cycle.  The absence of any specific
International Monetary Fund (IMF) prescription, the recent
privatization of a 40% government stake in REN at a significant
premium, and the fairly low level of remuneration of its assets
support S&P's view that an adverse overhaul of REN's regulatory
framework is highly unlikely in the next two to three years.

REN's high debt burden and sizable peak in maturities over 2013-
2014 made it highly vulnerable to the credit crunch resulting
from sovereign stresses in Portugal and in Europe's southern
periphery. REN has, however, fully mitigated refinancing risk,
through its proactive liquidity and funding management and the
support of its shareholder SGID, which S&P takes into account in
its assessment of the group's liquidity as "strong."  REN
contracted the first EUR800 million tranche of a EUR1 billion
credit facility provided by China Development Bank, as part of
its strategic agreement with SGID when it was privatized in May

The negative outlook on REN mirrors that on Portugal.  Under
S&P's criteria, the long-term rating on Portugal constrains the
ratings on REN, based on its view that REN bears "high" exposure
to country risk in Portugal.

A downgrade of Portugal to 'BB-' or lower would automatically
trigger a downgrade of REN by the same number of notches.

S&P could also lower its rating on REN if its international
expansion or an unexpected and far-reaching regulation overhaul
in Portugal significantly diluted the company's business risk
profile.  A downgrade would also likely result if S&P believed
that REN were struggling to achieve and maintain a ratio of
adjusted funds from operations to debt of 11%-13%.

Ratings upside is very limited at this stage and, all else
remaining equal, would depend on an upgrade of Portugal or an
upward assessment of the support REN receives from its majority
shareholder.  In particular, S&P might consider an upgrade if it
believed REN would receive exceptional support from its
shareholders or related banks if it faced liquidity stress--a
scenario S&P sees as highly unlikely by 2016 in light of REN's
current strong liquidity.


* ROMANIA: Insolvency Cases in Latvia Up 7% in June
According to The Baltic Course, LETA, citing the Insolvency
Register's data, reports that 198 insolvency cases were opened in
Latvia in June 2013, including 133 against private individuals
and 65 against legal entities.

Overall, 1,154 insolvency cases were launched in Latvia in the
first six months of 2013, a 7% increase on the same period in
2012, when 1,073 insolvency cases were opened, the report relays.

The largest number of insolvency cases was opened in April --
232, the smallest 154 -- in January, the report says.

The Baltic Course notes that 2,238 insolvency cases were opened
in Latvia in 2012, a 30 increase on 2011, when 1,724 insolvency
cases were launched.


OTKRITIE BANK: S&P Revises Ratings Outlook to Positive
Standard & Poor's Ratings Services said it revised its outlook on
Russia-based OTKRITIE Bank to positive from stable.  At the same
time, S&P affirmed its 'B/B' long- and short-term counterparty
credit ratings on the bank and raised its Russia national scale
rating to 'ruA' from 'ruA-'.  S&P also raised the SACP to 'b+'
from 'b'.

The outlook revision reflects S&P's expectation that OTKRITIE
Bank will continue to show capitalization commensurate with the
improved levels observed at the end of 2012, and successfully
overcome the operational risks that it is currently exposed to
through its ongoing integration process with Russia-based Nomos
Banking Group (Nomos).

Following lower-than-expected asset growth in 2012 and the
maintenance of good levels of profitability S&P has revised its
assessment of OTKRITIE Bank's SACP to 'b+', based on its capital
position being stronger than S&P had previously envisaged.  S&P
believes that OTKRITIE Bank's risk-adjusted capital (RAC) ratio
before adjustments for concentrations and diversification will
remain above 6.5% in the 12-18 months, a small drop from 7.3% on
Dec. 31, 2012.

"Our amended forecast is based on our assumption of 25% loan
growth and an increase in the net interest margin from 5.6% to a
range between 7%-8% on the back of retail portfolio growth
without capital injections or dividends.  We also expect the
amount of double leverage at the level of OTKRITIE Bank's
ultimate parent, OTKRITIE Financial Corporation (OFC, not rated),
to fall to acceptable levels after the completion of the
acquisition of Nomos.  We currently believe that OFC's double
leverage of around 150% at the end of 2012 is a constraint for
our capital assessment," S&P added.

"We understand that in early 2014, as a part of the process of
OFC's acquisition of Nomos and the consequent integration of
Nomos and OTKRITIE Bank's banking businesses, Nomos will
consolidate a controlling stake in OTKRITIE Bank.  After Nomos'
acquisition of OTKRITIE Bank is complete, OTKRITIE Bank will
continue to develop a retail and small business franchise within
the final banking group.  This will be achieved through a
transfer of assets, branches and personnel between Nomos and
OTKRITIE Bank," S&P noted.

"Within the rating of OTKRITIE Bank we now incorporate a one-
notch lowering to reflect uncertainties over operational risk for
the transition during the integration with Nomos.  The long-term
rating is therefore one notch lower than the SACP.  We consider
that the integration process exposes the bank to operational and
business risks, including the potential for client flight or
dilution of franchise, leading to underperformance and
competition in the longer term "S&P added.

The positive outlook reflects S&P's expectation that OTKRITIE
Bank will successfully integrate into Nomos Banking Group while
maintaining a capital position close, or marginally below, its
2012 level.

S&P might consider a positive rating action if it saw that the
exchange of businesses between OTKRITIE Bank and its would-be
parent Nomos Bank was successful and did not result in a loss of
clientele or dilution of the franchise.

S&P might consider revising the outlook to stable or downgrading
OTKRITIE Bank if it experienced an unexpected setback in the
integration process.  The maintenance of significantly high
double leverage at the level of the ultimate parent along with
impairment of the bank's asset quality could put pressure on the
capital position.  If such pressure lowered S&P's projected RAC
ratio to less than 5%, we might take a negative rating action.

* KHANTY-MANSIYSK: Moody's Affirms Ba3 Long-Term Deposit Ratings
Moody's Investors Service has affirmed the Ba3 long-term local-
and foreign-currency debt and deposit ratings of Bank of Khanty-
Mansiysk, as well as the standalone bank financial strength
rating (BFSR) of E+, equivalent to a baseline credit assessment
(BCA) of b1. The bank's Not Prime short-term local- and foreign-
currency deposit were also affirmed. The outlook on the bank's
BFSR and the long-term ratings is stable.

Ratings Rationale:

Moody's affirmation of Bank of Khanty-Mansiysk's ratings reflects
(1) the bank's strong capital buffer supported by healthy
recurring profitability; (2) still high risk appetite -- as
measured by high single-name and related-party concentrations --
as well as the rapid pace of growth of the retail book; and (3)
the bank's visible market position in its home region of Khanty-

At the same time, Bank of Khanty-Mansiysk Ba3 local- and foreign-
currency deposit ratings also benefit from a one-notch uplift
from the bank's standalone BCA of b1, incorporating Moody's
assessment of a high probability of parental support from Nomos
Bank (which owns a 51.3% stake and is rated Ba3/Not Prime).

Strong Capital Base Is Supported By Healthy Recurring

Moody's says that Bank of Khanty-Mansiysk's adequate loss
absorption capacity is one of the key factors for the rating
affirmation. Supported by healthy recurring revenues -- with
return on average assets of 2.15% and return on equity of 10% in
2012 -- Bank of Khanty-Mansiysk reported a Tier 1 capital ratio
and total capital adequacy ratio under Basel I of 11.3% and
16.6%, respectively.

In 2012, Bank of Khanty-Mansiysk's internal capital generation
benefitted from stable flow of net commission income, marginal
credit costs of 1.04%, and well-controlled operating expenses,
with the bank's cost-to-income ratio of 49% being below that of
its Russian peers.

In addition, Bank of Khanty-Mansiysk's capital adequacy was also
supported by issuance of $200 million subordinated Eurobonds in
June 2013, which contribute to the comfortable capital level.

Risk Appetite Is High, Albeit Diminishing

Moody's notes that Bank of Khanty-Mansiysk demonstrated high
appetite for credit risk as measured by high single-name and
related-party concentrations, as well as rapid retail loan
growth. The 20 largest credit exposures accounted for high 226%
of Tier 1 capital as at December 31, 2012, although being on a
declining trend from 240% in 2011 driven by the development of
regional retail franchise.

At the same time, Bank of Khanty-Mansiysk's related-party
exposures accounted for 31% of Tier 1 at year-end 2012 (on a par
with that reported in the prior year). Moody's considers that
exposure to related party lending will not reduce, given
consolidated risk management with Nomos Bank and limited
independent oversight over the bank's risk appetite, which
undermines the bank's capital absorption capacity.

In 2012, Bank of Khanty-Mansiysk's retail loan book grew by high
40% (close to the market average) and by 70% in 2011 (compared to
the market average of 29%). The bank does not anticipate further
rapid loan book growth in 2013, and reports adequate asset
quality metrics -- with the 90+ days overdue portfolio accounting
for 3% of the total loan book as at year-end 2012 -- on the back
of penetrating the less risky segment of employees of existing
corporate clients. However, Moody's notes the potential risks
associated with the bank's future asset quality against the
background of a seasoning loan book.

Visible Regional Franchise

Bank of Khanty-Mansiysk has a strong business position in the oil
rich region of Khanty-Mansiysk, consolidating around 21% of
regional retail deposits, and close to 60% of budget and
government-related social infrastructure programs). Sound
territorial coverage and regional expertise provide a good
platform for implementation of the bank's retail- and SME-
oriented strategy.

High Probability Of Parental Support

Moody's assessment of high probability of parental support is
underpinned by the fact that in addition to 51.3% direct
ownership, Nomos Bank possesses full operational and managerial
control over Bank of Khanty-Mansiysk, which is considered a
material subsidiary in the Nomos Bank group's consolidated (IFRS)
financial statements.

Domiciled in Khanty-Mansiysk, Russia, Bank of Khanty-Mansiysk
reported total assets of US$9.8 billion and net profit of US$177
million at year-end 2012 under IFRS (audited).

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


CAJAS RURALES: Moody's Lowers Rating on Covered Bonds to 'Ba2'
Moody's Investors Service downgraded by three notches to Ba2 from
Baa2 (on review for downgrade) the ratings of the mortgage and
public-sector covered bond issued by Cajas Rurales Unidas (CRU;
rating undisclosed). This rating action follows Moody's decision
to downgrade the rating of the issuer.

Ratings Rationale:

This rating action follows Moody's downgrade of CRU's senior
unsecured ratings (rating undisclosed).

The timely payment indicator assigned to both CRU's covered bond
programs is Improbable. This TPI constraints the maximum
achievable covered bond rating at Ba2.

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

For the two covered bond programs, cover pool losses are an
estimate of the losses Moody's currently models if the relevant
issuer defaults. Moody's splits cover pool losses 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.

(1) CRU's Mortgage Covered Bonds

The cover pool losses are 41.8%, with market risk of 23.4% and
collateral risk of 18.4%. The collateral score for this program
is currently 27.4%. The over-collateralization (OC) in this cover
pool is 200.2%, of which CRU provides 25% on a "committed" basis.
The minimum OC level that is consistent with the Ba2 rating
target is 15.5%. These numbers show that Moody's is not relying
on "uncommitted" OC in its expected loss analysis.

(2) CRU's Public-Sector Covered Bonds

The cover pool losses are 36.6%, with market risk of 20.4% and
collateral risk of 16.2%. The collateral score for this program
is currently 32.4%. The OC in this cover pool is 77.2%, of which
CRU provides 42.9% on a "committed" basis. The minimum OC level
that is consistent with the Ba2 rating target is 12%. 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.

The TPIs assigned to these programs are "Improbable".

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.

Based on the current TPI of "Improbable", the TPI Leeway for both
CRU's programs is limited. This implies that Moody's might
downgrade the covered bonds because of a TPI cap.

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 these ratings was "Moody's
Approach to Rating Covered Bonds" published in July 2012.

PESCANOVA SA: Debts More Than Double What is Stated, KMPG Says
Reuters reports that the debts of Pescanova were more than double
what it stated when it entered insolvency proceedings in April,
the company said July 10 citing a KPMG audit, making it one of
Spain's biggest ever bankruptcies.

According to Reuters, Pescanova said the company's debt was
EUR3.3 billion ($4.2 billion) at the end of December. This
compares with the EUR1.5 billion euro debt mentioned in the
company's insolvency filing.

The audit said the former management of Pescanova acted to
conceal the company's true debt position for many years, Reuters

"During the last few years, accounting practices were designed
and executed to present the group's financial debt as less than
the true position," the company said in a statement, quoting from
the audit, Reuters relays.

Reuters notes that Manuel Fernandez de Sousa, former chairman of
Pescanova, was removed in April from the helm of the company he
had run for more than three decades.

A court has charged him with falsifying information and insider
trading. He has denied any wrongdoing.

Pescanova is a Galicia-based fishing company.  The company
catches, processes, and packages fish on factory ships.  It is
one of the world's largest fishing groups.

Pescanova filed for insolvency on April 15, 2013, on at least
EUR1.5 billion (US$2 billion) of debt run up to fuel expansion
before economic crisis hit its earnings.  The Pontevedra
mercantile court in northwestern Galicia accepted Pescanova's
insolvency petition on April 25.  The court ordered the board of
directors to step down and proposed Deloitte as the firm's

PROMOTORA DE INFORMACIONES: Mulls Bankruptcy in the U.S.
The Wall Street Journal's Emily Glazer and Dow Jones Newswires'
Christopher Bjork report that Spanish media company Promotora de
Informaciones SA, owner of the influential El Pais newspaper, has
weighed filing for Chapter 11 bankruptcy protection in the U.S.,
according to several people familiar with the matter.  The
sources said the possible move by Prisa, as the company is known,
comes as it seeks to refinance about $3 billion of debt.

According to the report, the sources said the discussions of
different restructuring options are still fluid and nothing has
yet been decided.  It is unclear whether a Chapter 11 filing is
still under serious discussion or when a final decision will be
made. The company could also restructure in Spain -- in or out of

The report notes other people familiar with the refinancing talks
said investment firms holding chunks of Madrid-based Prisa's debt
have formed an ad hoc group to negotiate a restructuring in the
past several weeks.  The sources said those firms include Silver
Point Capital LP, Monarch Alternative Capital LP, Knighthead
Capital Management LLC and Davidson Kempner Capital Management

Prisa trades on the Bolsa de Madrid and the New York Stock
Exchange.  The report notes Prisa has engaged in a series of
restructuring talks with European banks holding its debt.  The
largest bank creditors include Banco Santander SA, HSBC Holdings
PLC, CaixaBank SA, and Natixis SA.

The report relates that some of the sources said Prisa has
considered splitting underperforming assets from its more stable

The report relates Prisa reported total revenue of EUR2.66
billion ($3.47 billion) in 2012, down from EUR2.72 billion in
2011. The company has lost money for three years in a row.

According to the report, Prisa is being advised by investment
bank Rothschild Group and law firm Linklaters LLP. The ad hoc
group is advised by investment bank Houlihan Lokey and law firm
Milbank, Tweed, Hadley & McCloy LLP, while the banks are working
with KPMG LLP and law firm Clifford Chance LLP, these people


SEKERBANK TAS: Fitch Affirms 'BB-' LT Issuer Default Rating
Fitch Ratings has affirmed Sekerbank T.A.S. (BB-/Stable/bb-),
Tekstil Bankasi A.S. (B+/Stable/b+) and BankPozitif Kredi ve
Kalkinma Bankasi A.S. (BBB-/Stable/b+). Alternatifbank A.S.'s
'BB' Long-term Issuer Default Rating (IDR) is maintained on
Rating Watch Positive (RWP), pending an imminent ownership
change, and the bank's 'bb' Viability Rating (VR) is affirmed.


The four banks' VRs reflect their generally satisfactory
financial metrics and reasonable management and governance, and
the still quite supportive operating environment. However, the
VRs also reflect the banks' limited franchises, some uncertainty
as to the long-term sustainability of their business models, and
the potential for some near-term deterioration in performance and
asset quality. New shareholders at Alternatifbank may prove to be
a driver for growth and franchise development but strategic plans
will need to be reviewed once these become known to Fitch.

Alternatifbank's and Sekerbank's higher VRs primarily reflect
their deeper franchises, longer track records and somewhat better
performance relative to Tekstilbank and BankPozitif.
Alternatifbank's, Sekerbank's and Tekstilbank's VRs drive their
current IDRs.

The four banks' performance improved in 2012, as margins
increased in a falling rate environment, and in Q113 operating
return on average assets ranged from a high 2.2% at Sekerbank to
a low of 1% at Tekstilbank. However, Fitch expects margins to
contract in 2013 as repricing continues and competition
increases, which will put pressure on the banks' profitability
given their limited scale efficiency.

Asset quality is acceptable, considering the banks' primary focus
on serving a mixture of small and medium-sized companies, with
impaired loan ratios in the 4.5% - 6% range. However, in Fitch's
view asset quality is likely to deteriorate moderately as loan
portfolios season following recent growth.

The four banks all rely, to some extent, on wholesale funding.
However, Alternatifbank, Sekerbank and Tekstilbank source about
two thirds of their liabilities from deposits, while BankPozitif
is entirely dependent on wholesale funding due to its non-deposit
taking investment bank status.

Fitch Core Capital/weighted risks ratios exceed a high 20% at
BankPozitif and 17% at Tekstilbank, but could be volatile given
the banks' small balance sheets and uneven growth. Sekerbank's
ratio is lower, at 13%, but remains adequate, while
Alternatifbank's Fitch Core Capital/weighted risks ratio is a
moderate 9% and represents a rating weakness relative to peers.

Sekerbank continues to develop its nationwide franchise. Improved
automation of its credit approval systems is helping to contain
impaired loan ratios. However, watchlist loans, overdue for
periods of less than 90 days, have increased significantly.
According to the bank, conservative classification criteria is
the reason for this rise but Fitch considers that asset quality
may show signs of deterioration as the loan book seasons.

In April 2013, Tekstilbank's majority shareholders appointed
advisors to assist with the disposal of their stake in the bank.
This naturally limits strategic development at the bank. In
addition, Fitch has some reservations that the bank will need to
fight to preserve market share and margins given intense
competition for the better clients.

BankPozitif is a niche bank, specialising in boutique corporate
lending to large as well as medium sized companies, and is also
active in the retail segment focusing on consumer lending since
November 2011. Key drivers underpinning its VR are its ample
capital and management's close focus on liquidity. These are
balanced by its dependence on wholesale funding and moderate

Alternatifbank's VR is supported by the relatively broad customer
base, aided by introductions made by current shareholders, the
Anadolu Group. Ample liquidity is preserved which helps offset a
higher dependency on wholesale funding (the loans/deposit ratio
reached 146% at end-Q113). Asset quality and reserve coverage are
in line with peer averages but capital ratios are significantly


Upgrades of the four banks' VRs are unlikely in the near term
given franchise limitations and the expected moderately negative
trends in certain financial metrics.

VRs could be downgraded in case of a greater than anticipated
deterioration in asset quality as loan books season.
Alternatifbank's VR could also be downgraded if capital ratios
remain markedly lower than peers under the new owners or the
bank's franchise weakens as a result of its weaker association
with the Anadolu Group.


Sekerbank's and Tekstilbank's IDRs are driven by their VRs and
the same sensitivities apply.


The RWP on Alternatifbank's IDRs, Long-term National Rating and
Support Rating reflects the expected acquisition of a 70.84%
stake in the bank by Commercial Bank of Qatar (CBQ A/Stable),
which has now been approved by the Turkish regulators. The RWP
will be resolved once transfer of ownership occurs.
Alternatifbank's Long-term foreign currency IDR is likely to be
upgraded to the Country Ceiling of 'BBB'.


BankPozitif's IDRs are driven by potential support from its
majority shareholder Bank Hapoalim B.M. (A-/Stable). In assessing
potential support, Fitch views positively the integration levels
which exist between Hapoalim and BankPozitif. However, the three
notch differential between parent and subsidiary ratings reflects
BankPozitif's limited importance for Hapoalim's balance sheet and
performance due to its small size.

BankPozitif's IDRs are sensitive to a change in Fitch's
assumptions on Bank Hapoalim's ability and propensity to provide
support, if required.

The rating actions are:


  Long-term foreign and local currency IDR: 'BB' rating watch
   Positive maintained

  Short-term foreign and local currency IDR: 'B' rating watch
   Positive maintained

  Viability Rating: affirmed at 'bb'

  Support Rating: '5' RWP rating watch Positive maintained

  Support Rating Floor affirmed at 'NF'

  National Long-term Rating: 'AA(tur)' RWP rating watch Positive


  Long-term foreign and local currency IDR affirmed at 'BB-';
   Stable Outlook

  Short-term foreign and local currency IDR affirmed at 'B'

  Viability Rating affirmed at 'bb-'

  Support Rating affirmed at '5'

  Support Rating Floor affirmed at 'NF'

  National Long-term Rating affirmed at 'A+(tur)' Stable Outlook

Tekstil Bankasi

  Long-term foreign and local currency IDR: affirmed at 'B+';
   Stable Outlook

  Short-term foreign and local currency IDR affirmed at 'B'

  Viability Rating affirmed at 'b+'

  Support Rating affirmed at '5'

  Support Rating Floor affirmed at 'NF'

  National Long-term Rating affirmed at 'A(tur)'; Stable Outlook


  Long-term foreign and local currency IDR: affirmed at 'BBB-';
   Stable Outlook

  Short-term foreign and local currency IDR affirmed at 'F3'

  Viability Rating affirmed at 'b+'

  Support Rating affirmed at '2'

  National Long-term Rating affirmed at 'AAA(tur)'; Stable

  Senior unsecured debt: affirmed at 'BBB-'

U N I T E D   K I N G D O M

CO-OPERATIVE BANK: Removes Customer Service Guarantees
Rosie Murray-West at The Telegraph reports that the struggling
Co-operative Bank is removing the customer service guarantees
that it used to differentiate itself from most other banks.

The bank, which is being forced to fill a GBP1.5 billion black
hole in its finances through a scheme that penalizes investors,
has written to customers to tell them that it is removing its
"Service Level Guarantees" as part of a package of changes taking
effect on September 16 this year, the Telegraph relates.

These guarantees meant that customers were paid GBP15 if the Co-
op failed to meet a set of self-imposed standards including
opening accounts within 48 hours and providing error-free
statements, the Telegraph notes.

According to the Telegraph, a spokesman confirmed yesterday
morning that the guarantees are being scrapped.

"In line with a review and update to our redress system, we have
recently removed our service level guarantee, this guaranteed
GBP15 compensation for customers who were dissatisfied with some
products or services," the Telegraph quotes the spokesman as

"This change brings us into line with the industry and no
customer will experience any detriment as a result of this

The spokesman, as cited by the Telegraph, said the change was
prompted by "a review and update of our redress system" rather
than because the bank needs to save money.

The Co-op is struggling to deal with financial difficulties
caused by its acquisition of rival building society Britannia in
January 2009, the Telegraph notes.

The Prudential Regulation Authority (PRA) the new financial
regulator, has forced the Co-op to agree a GBP1.5 billion rescue
deal which will see it partially floated on the stock market, the
Telegraph discloses.

Some pensioners who invested in the bank's Permanent Interest
Bearing Shares (PIBS) will face huge losses part of the deal, the
Telegraph states.

Co-op Bank -- part of the mutually owned food-to-funerals
conglomerate Co-operative Group -- traces its history back to
1872.  The bank gained prominence for specializing in ethical
investment.  It refuses to lend to companies that test their
products on animals, and its headquarters in Manchester is
powered by rapeseed oil grown on Co-operative Group farms.

Founded in 1863, the Co-op Group has more than six million
members, employs more than 100,000 people and has turnover of
more than GBP13 billion.

                           *     *     *

As reported by the Troubled Company Reporter-Europe on May 13,
2013, Moody's Investors Service downgraded the deposit and senior
debt ratings of Co-operative Bank plc to Ba3/Not Prime from
A3/Prime 2, following its lowering of the bank's baseline credit
assessment (BCA) to b1 from baa1.  The equivalent standalone bank
financial strength rating (BFSR) is now E+ from C- previously.

EXPRO HOLDINGS 3: Good Performance Cues Moody's to Lift CFR to B3
Moody's Investors Service upgraded Expro Holdings UK 3 Limited's
corporate family rating to B3 from Caa1 and probability of
default rating to B3-PD from Caa1-PD . It also upgraded the
rating of the senior secured $1.4 billion notes due 2016 issued
by Expro Finance Luxembourg S.C.A. to B1 from B3. The rating
outlook remains stable.

Ratings Rationale:

The upgrades reflect Expro's stronger performance in the year
ending March 2013, with EBITDA and free cash flow generation
better than Moody's expectations. Moody's now expects leverage
(as adjusted by Moody's) to end FY2014 slightly below 6.5x. It
also incorporates Moody's view that the company's near-term
market outlook is positive and that continued strong operating
performance is likely to help the company delivering on its
business plan above Moody's previous expectations. The two notch
upgrade of the senior secured notes also incorporates the
increased debt cushion provided by the mezzanine debt as it

The B3 CFR reflects the material weight that Moody's has given to
Expro's high level of indebtedness. Although performance in
FY2013 was better than Moody's expected, with adjusted EBITDA
rising 24%, leverage of 6.6x still remains at high levels. The
rating also reflects Expro's favorable market position and its
strengthening operational performance. However, these factors are
balanced with strong competition from significantly larger
players and Expro's vulnerability to the cyclicality of the oil &
gas industry.

The stable outlook reflects Moody's view that improved operating
performance in FY 2012/2013 and the $410 million debt repayment
after the sale of the C&M division in May 2012 have reduced near-
term liquidity risks, supported by the company's contract backlog
and a positive operating environment.

Positive rating pressure is possible if Expro manages to reduce
leverage towards 5.5x, with solid liquidity, free cash flow
generation and continuing supportive underlying market trends.
Negative ratings pressure could arise if the company fails to
deleverage to 6.5x by the end of FY 2014, or if any liquidity
concerns emerge.

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

Headquartered in the United Kingdom, Expro is a leading provider
of services and products to the upstream oil and gas industry.
About 25% of revenue is from onshore markets and about 75% from
offshore markets. In July 2008, the company was bought by a
private equity consortium led by Arle Capital Partners (formerly
named Candover Partners) and GS Capital Partners VI Fund, L.P.
For the year ending March 2013, the Expro group reported revenue
of about US$1.2 billion.

INTEROUTE TRANSPORT: Gregory Buys Firm Out of Administration
Insider Media News reports that Gregory Distribution has bought
the business and assets of Oxfordshire-based Interoute Transport
Services out of administration.

Devon-based Gregory paid an undisclosed sum to acquire the
distribution specialist, according to Insider Media News.

The report relates that a total of 27 employees have transferred
to Gregory and all key customers have been retained as part of
the deal.

Interoute, which went into administration on 17 May, is based at
a site in Thame with a 120,000 sq ft warehouse.

MF GLOBAL: High Court Sets July 19 Claims Bar Date
The Administrators of MF Global UK Limited (in special
administration) ("MFG UK") recently announced their intention to
make a second interim client money distribution.  The total funds
anticipated to be available for distribution as client money
amount to between $945 million - $951 million with $214 million
already having been distributed.  The High Court has set a bar
date of July 19, 2013 (the "Bar Date") by which claimants must
file their claims in order to be entitled to participate in
interim distributions to client money claimants and to unsecured
creditors.  In July the Court will also consider an application
to value the shortfall arising on client money claims.  The
outcome will be keenly anticipated by clients of MFG UK, whose
likely recoveries on client money claims have been uncertain.
The ruling will also be of significance for the wider body of MFG
UK's creditors, including those with unsecured claims against the
general estate.

Bar Date Set for Interim Distributions

Client Money Claims

A court order (the "Order") dated June 11, 2013, approved a
Client Money Distribution Procedure (the "Procedure") for the
Administrators to make a second interim distribution of client
money.  The Procedure is necessary because no provision for
distribution of client money is contained in the Investment Bank
Special Administration (England and Wales) Rules 2011 (the
"Rules") or the Client Asset Sourcebook Rules ("CASS rules").
The purpose of the Order is to enable practical effect to be
given to the client money trust.  It seeks to balance the
interests of established clients to a timely return of their
money and the interests of those with unresolved client money

The Administrators have, in accordance with the Procedure,
subsequently issued a notice (the "Notice") of their intention to
make a interim distribution of client money.  Clients who
consider they have a client money entitlement under CASS 7A.2.4R
are invited to submit a client money claim (using a client money
claim form or signed settlement agreement) by 5pm on July 19,
2013.  Clients who have already submitted a client money claim
and/or entered into a settlement agreement with MFG UK need take
no further action unless contacted by the Administrators.
Failure to submit a client money claim before the Bar Date is not
fatal to a claim.  The Notice indicates that the Administrators
will, to the extent there are funds available, pay a 'catch-up'
dividend to late claimants.  Additionally, the Order expressly
states that failure to submit a claim by the Bar Date does not
prejudice a client's entitlement to participate in a subsequent
distribution and/or otherwise pursue a client money claim,
meaning such clients could still participate in subsequent
dividends.  The Financial Conduct Authority has confirmed that it
is content with the Procedure provided that undecided client
money claims valued at $71.3 million are fully reserved for.  The
Procedure includes a formal claims proving mechanism, where the
Administrators assess claims from client money claimants and any
claimant who is dissatisfied with the assessment may apply to
court for the decision to be reversed or varied. The
Administrators intend to make payments in the two months
following the Bar Date.

Preferential and Unsecured Claims

For preferential and unsecured creditors the interim distribution
was first announced on November 28, 2011, and will also be made
within 2 months of the Bar Date.  The Administrators indicated in
their latest progress report that the dividends would be 40p in
the for unsecured claims.

As with the client money distribution, failure to submit a claim
prior to July 19, 2013, will mean the creditor is not entitled to
participate in the proposed interim distribution (although 'catch
up' dividends may be available) but will not prejudice their
right to participate in any subsequent distributions.  Again,
creditors who have already submitted a claim and/or signed a
settlement agreement need take no further action unless contacted
by the Administrators.

Value of shortfall for client money claimants
Background: the Hindsight Judgment

In February this year the Court determined that those with a
client money claim against the Client Money Pool ("CMP")
resulting from open trades with MFG UK would have their claim
valued at the notional mark-to-market value at the Primary
Pooling Event (the "PPE value") -- October 31, 2011 (the
appointment of the Administrators) -- rather than their value at
any actual subsequent closing out of the position (the
"liquidation value").  This position contrasts with the general
insolvency principle that an unsecured claim would be valued at
its liquidation value.

Purpose of the Shortfall Application

Broadly stated, in the event a client receives less from the CMP
than their claim's PPE value (i.e. where there are insufficient
funds to satisfy client money claims in full), the Administrators
are seeking clarification as to whether: (a) that client would
have the right to prove for the amount of the shortfall in
recovery as an unsecured creditor of the general estate (a
"parallel claim"); and (b) if so, whether the shortfall would be
calculated by reference to: (i) the PPE value; or (ii) the
liquidation value.
The Court will also consider the significance to the valuation of
a shortfall, if any, that an insufficiency of funds in the CMP is
a consequence of a breach by MFG UK of the CASS rules.

The impact of the decision for clients of MFG UK will largely
depend on how their shortfall claims are to be valued. Further,
the ruling has potentially wider consequences for unsecured
creditors of MFG UK.  A determination in favor of a parallel
claim for any shortfall suffered by CMP claimants will
necessarily reduce the value of the general estate ultimately
available for distribution to unsecured creditors.

Our dedicated Insolvency Team who have advised on many of the
detailed aspects of the MFG UK special administration are happy
to assist with any specific queries in relation to the interim
dividends and shortfall application or the special administration
process generally.

                         About MF Global

New York-based MF Global -- was one
of the world's leading brokers of commodities and listed
derivatives. MF Global provides access to more than 70 exchanges
around the world.  The firm also was one of 22 primary dealers
authorized to trade U.S. government securities with the Federal
Reserve Bank of New York.  MF Global's roots go back nearly 230
years to a sugar brokerage on the banks of the Thames River in

On Oct. 31, 2011, MF Global Holdings Ltd. and MF Global Finance
USA Inc. filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y.
Case Nos. 11-15059 and 11-5058), after a planned sale to
Interactive Brokers Group collapsed.  As of Sept. 30, 2011, MF
Global had $41,046,594,000 in total assets and $39,683,915,000 in
total liabilities.

On Nov. 7, 2011, the United States Trustee appointed the
statutory creditors' committee in the Debtors' cases.  At the
behest of the Statutory Creditor's Committee, the Court directed
the U.S. Trustee to appoint a chapter 11 trustee.  On Nov. 28,
2011, the Bankruptcy Court entered an order approving the
appointment of Louis J. Freeh, Esq., of Freeh Group International
Solutions, LLC, as Chapter 11 trustee.

On Dec. 19, 2011, MF Global Capital LLC, MF Global Market
Services LLC and MF Global FX Clear LLC filed voluntary Chapter
11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15808, 11-15809 and
11-15810).  On Dec. 27, the Court entered an order installing Mr.
Freeh as Chapter 11 Trustee of the New Debtors.

On March 2, 2012, MF Global Holdings USA Inc. filed a voluntary
Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-10863), and Mr.
Freeh also was installed as its Chapter 11 Trustee.

Judge Honorable Martin Glenn presides over the Chapter 11 case.
J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric
Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve
as bankruptcy counsel.  The Garden City Group, Inc., serves as
claims and noticing agent.  The petition was signed by Bradley I.
Abelow, Executive Vice President and Chief Executive Officer of
MF Global Finance USA Inc.

The Chapter 11 Trustee has tapped (i) Freeh Sporkin & Sullivan
LLP, as investigative counsel; (ii) FTI Consulting Inc., as
restructuring advisors; (iii) Morrison & Foerster LLP, as
bankruptcy counsel; and (iv) Pepper Hamilton as special counsel.

The Official Committee of Unsecured Creditors has retained
Capstone Advisory Group LLC as financial advisor, while lawyers
at Proskauer Rose LLP serve as counsel.

The Securities Investor Protection Corporation commenced
liquidation proceedings against MF Global Inc. to protect
customers.  James W. Giddens was appointed as trustee pursuant to
the Securities Investor Protection Act.  He is a partner at
Hughes Hubbard & Reed LLP in New York.

Jon Corzine, the former New Jersey governor and co-CEO of
Goldman Sachs Group Inc., stepped down as chairman and chief
executive officer of MF Global just days after the bankruptcy

In April 2013, the Bankruptcy Court approved MF Global Holdings'
plan to liquidate its assets.  Bloomberg News reported that the
court-approved disclosure statement initially told
creditors with $1.134 billion in unsecured claims against the
parent holding company why they could expect a recovery of 13.4%
to 39.1% from the plan.  As a consequence of a settlement with
JPMorgan, supplemental materials informed unsecured creditors
their recovery was reduced to the range of 11.4% to 34.4%.  Bank
lenders will have the same recovery on their $1.174 billion claim
against the holding company.  As a consequence of the settlement,
the predicted recovery became 18% to 41.5% for holders of $1.19
billion in unsecured claims against the finance subsidiary,
one of the companies under the umbrella of the holding company
trustee.  Previously, the predicted recovery was 14.7% to 34% on
bank lenders' claims against the finance subsidiary.

MID STAFFORDSHIRE: MP Hands Signature Petition to Save Hospital
BBC News reports that a Save Stafford Hospital petition
containing 50,000 signatures has been handed to the government.

Campaigners from Support Stafford Hospital have been gathering
support in a bid to keep it open despite the trust going into
administration in April, according to BBC News.

The report relates that conservative MP for Stafford Jeremy
Lefroy handed the petition to the Speaker of the House of Commons

An administrators' report into its services is expected by 31

The report notes that the Mid Staffordshire NHS Trust, which runs
Stafford Hospital, went into administration on 16 April.

The report relates that a Monitor report published in February
called for the closure of the hospital's acute services,
including the A&E department.

Health Minister Dan Poulter told the Commons that local MPs,
healthcare providers and clinical commissioning groups would be
consulted on any decisions affecting the hospital's future, the
report adds.

NATIONAL BANK: Fitch Lowers Issuer Default Rating to 'B-'
Fitch Ratings has downgraded National Bank of Egypt's (NBE), its
wholly-owned subsidiary, National Bank of Egypt (UK) Ltd's
(NBEUK), and Commercial International Bank's (CIB) Long-term
foreign currency Issuer Default Ratings (IDR) to 'B-' from 'B'.
The Outlooks are Negative. Credit Agricole Egypt's (CAE) Support
Rating has been affirmed at '4'.

The downgrade and Negative Outlook on NBE, NBEUK and CIB reflect
the rating action taken on the Arab Republic of Egypt's ratings
(see 'Fitch Downgrades Egypt to 'B-'; Outlook Negative' dated 5
July 2013 at The Support Ratings have been
downgraded to '5' to reflect the reduced ability of the Egyptian
authorities to provide support. The banks' Support Rating Floors
have been revised to 'B-'.

Fitch has also downgraded NBE and CIB's Viability Ratings (VRs)
based on the likely impact of the heightened political
uncertainty on the operating environment in Egypt and hence on
the banks' performance and asset quality.


NBE's Long-term and Short-term IDRs are in line with Egypt's
Long-term foreign currency IDRs and are driven by the limited
probability of support from the Egyptian authorities, if needed.
NBE is wholly owned by the Egyptian state. It is Egypt's largest
bank by assets, with a dominant domestic franchise, especially in
customer deposits.

NBEUK's IDRs are in line with its parent's IDRs and, in turn,
Egypt's Long-term foreign currency IDRs. They reflect Fitch's
view that there is a limited probability of support from the
Egyptian state via NBE.

CIB's Long-term IDR is driven by its VR but is constrained by
Egypt's Country Ceiling of 'B-' and, as a result, the Negative
Outlook on its Long-term IDR mirrors that on Egypt. CIB is the
leading private sector bank in Egypt.

Credit Agricole Egypt's (CAE) Support Rating reflects Fitch's
belief that Credit Agricole ('A+'/Negative) would be willing to
support its Egyptian subsidiary, although this support is to some
extent constrained by the Egyptian sovereign ratings. CAE is
about 60% owned by Credit Agricole and is part of Credit
Agricole's presence and strategy in the Middle East and North
Africa region.


The ratings are sensitive to the Egyptian sovereign ratings, and
any changes would reflect a change in the sovereign ratings.

CAE's Support Rating is also sensitive to any change in Credit
Agricole's propensity or ability to provide support.


NBE, CIB and CAE's National Ratings have been affirmed, as Fitch
considers that their relative creditworthiness has not changed
despite the sovereign downgrade.


The ratings are sensitive to any change in Fitch's view of the
relative ranking of the banks, which could arise as a result of
their being affected to differing degrees by the continuing
uncertainties in the market. The Outlooks on the National Ratings
are Stable, reflecting Fitch's expectation that the relative
ranking of the three banks will remain stable even if the
operating environment continues to deteriorate.


NBE's VR reflects the close ties between its creditworthiness and
that of the Egyptian sovereign, including through substantial
holding of government debt.

Given that virtually all of NBE UK's funding and its main
business are dependent on its connection to the Egyptian
sovereign, through NBE, and NBEUK's strategy increasingly
capitalises on NBE's franchise, Fitch has not assigned a VR to

CIB's VR reflects the strength of the bank's local franchise and
experienced management, its consistently strong profitability,
sound asset quality and liquidity. The VR remains above its
foreign currency IDR as Fitch considers that, despite the
worsening conditions in the domestic market, CIB's intrinsic
creditworthiness remains among the strongest in the sector.
Nevertheless, its VR is effectively capped by its high exposure
to the domestic economic environment and significant holdings of
Egyptian sovereign debt.


The banks' VRs are sensitive to any further deterioration of the
operating environment and its impact on performance, asset
quality, and capitalization.

The rating actions are:


  Long-term IDR downgraded to 'B-' from 'B'; Outlook Negative
  Short-term IDR affirmed at 'B'
  National Long-term Rating affirmed 'AA-(egy)'; Outlook Stable
  National Short-term Rating affirmed at 'F1+(egy)'
  Viability Rating downgraded to 'b-' from 'b'
  Support Rating downgraded to '5' from '4'
  Support Rating Floor revised to 'B-' from 'B'
  Senior unsecured debt downgraded to 'B-' from 'B'


  Long-term IDR downgraded to 'B-' from 'B'; Outlook Negative
  Short-term IDR affirmed at 'B'
  Support Rating downgraded to '5' from '4'


  Long-term IDR downgraded to 'B-' from 'B'; Outlook Negative
  Short-term IDR affirmed at 'B'
  National Long-term Rating affirmed at 'AA(egy)'; Outlook Stable
  National Short-term Rating affirmed at 'F1+(egy)'
  Viability Rating downgraded to 'b' from 'b+'
  Support Rating downgraded to '5' from '4'
  Support Rating Floor revised to 'B-' from 'B'


  National Long-term Rating affirmed at 'AA+(egy)'; Outlook
  National Short-term Rating affirmed at 'F1+(egy)'
  Support Rating affirmed at '4'

VICARAGE FIELDS: Business Sold for GBP650,000++
Insider Media reports that Vicarage Fields Caravan Park in
Cumbria has been sold for a sum in excess of the guide price of

The 4.3-acre site in Allonby near Maryport has 69 holiday static
pitches and a site license for a total of 80 holiday caravans,
according to Insider Media.

The report notes that it also includes a three-bedroom detached
home which can be used by the park owner or manager or as a
holiday letting.

The report relates that the business entered receivership in
February and was offered for sale by the parks division of real
estate advisers Colliers International on the instruction of Law
of Property Act receivers Leonard Curtis Business Solutions

The report says that the deal was completed with an unnamed,
private local purchaser who is a new entrant to the holiday park

"It was encouraging to see such a high level of interest in
Cumbria from so many willing and able buyers on this sale. . . .
The buyer is a new entrant into the caravan park sector which
shows that there is a wide range of interest heralding from a
multitude of backgrounds - all with strong appetite for
accurately priced businesses in good locations. . . . Cumbria in
general is an established holiday area which goes a long way to
underpinning values and interest in this asset class," the report
quoted Richard Moss, director Colliers' parks division, as

* Retail Creditors Lose GBP1.86BB in High Profile Insolvencies
John Brazier at InsolvencyNews reports that retail suppliers and
creditors are the biggest losers from retail insolvencies,
collectively missing out on GBP1.86 billion as a result of high-
profile retail insolvencies.

The research, carried out by former Wickes chief executive Bill
Grimsey in conjunction with Company Watch, covered 19 high-
profile retail failures since the start of 2012, the report

InsolvencyNews says the 19 chains, including HMV, Jessops,
Republic, Comet, and Blockbuster, all entered administration
between January 2012 and May 2013, collectively threatening 4,500
stores and putting 58,000 jobs at risk.

"What this demonstrates is that the structural changes happening
to retail are causing huge damage to our high streets and the
wider economy. This is the clearest possible proof that we need
to start looking at a new model for our high streets. The current
model is just not sustainable," the report quotes Mr. Grimsey as

According to the report, the research found that within most
cases unsecured creditors, such as small businesses, landlords
and HM Revenue & Customs, stand to receive no more than a small
fraction of a penny in the pound -- less than 1% of what was

Only GBP13.8 million will go to ordinary unsecured creditors, the
report adds.

Of the cases studied, banks and other secured lenders received
the most significant portion of net recoveries - at least GBP356
million.  GBP123 million was spent on administration fees,
including future fees, InsolvencyNews relays.

* UK: Number of Struggling Businesses' Hits New High in 2012
------------------------------------------------------------, citing the latest 'zombie business' tracker from
the insolvency trade body, R3, reports that 134,000 UK businesses
are struggling to pay their debts when they fall due, the highest
figure in the last 12 months.

An extra 24,000 businesses are in this position now compared to
12 months ago, the report relates. Failing to pay debts when they
fall due is a technical definition of insolvency,
notes. says that although the number of 'zombie
businesses' -- those that can only pay the interest on their
debts -- has fallen over the last year from 146,000 to 108,000,
the rise in businesses with acute cash flow problems indicates
that the outlook for struggling businesses is deteriorating.

In total, relates, over 200,000 businesses are
either struggling to pay debts when due or are negotiating
payment terms with creditors.

"Businesses struggling to pay debts when they fall due are in a
very perilous position. While they have yet to enter formal
insolvency procedures, businesses with such serious cash flow
problems may find that the day of reckoning is not too far off," quotes Liz Bingham, President of R3, as saying.

"There are fewer 'zombie businesses', but this is not necessarily
because businesses that have been in this position are showing
signs of improvement. Far bigger cash flow problems are occupying
the thoughts of these businesses' managers."

The number of businesses negotiating payment terms with their
creditors is also at a record high, up to 137,000 from 130,000
last year, the report adds.

* UK: Moody's Revises Outlook on Banking System to Stable
The outlook for the UK's banking system has been changed to
stable from negative, says Moody's Investors Service in a report
entitled "Banking System Outlook: United Kingdom."

The outlook change reflects: (1) the UK's increasingly stable
economic outlook despite its low growth prospects; (2) the
consequent improvement in the outlook for asset quality; (3)
continuing improvements in capital ratios driven in part by more
stringent capital requirements; (4) an expectation that
improvements in funding and liquidity metrics will be maintained
over the outlook period; and (5) improving profitability and
efficiency ratios due to lower impairments.

Although the UK continues to face the prospect of low medium-term
economic growth, Moody's does not expect a deterioration in the
operating environment. Moreover, unemployment has not increased
as much as in previous recessions, thereby contributing to a
stabilization in banks' asset quality.

Despite the downside risk posed by some banks' commercial real
estate (CRE) concentrations and exposure to peripheral European
economies, Moody's expects the aggregate level of impairments to
continue to decline and non-performing loans to stabilize at
around 5% for the system as a whole. Overall, Moody's believes
that UK banks are sufficiently well-capitalized to absorb
expected losses from both its central and adverse stress
scenarios. Once the large UK banks execute their capital plans to
address the additional capital buffer requirements recently
imposed by the Prudential Regulation Authority (PRA), Moody's
believes that UK banks will be well capitalized for the risks
they face and will compare favorably to their European peers.

Moody's expects profitability to recover from its very low
levels, reflecting the improvement in asset quality and already
high levels of provisions for conduct-related costs. However,
bank profitability will continue to be pressured by low interest
rates, the increasing costs of prudential regulation and a
heightened level of conduct-related scrutiny, which could lead to
additional one-off regulatory charges.

Regulatory changes will continue to create uncertainty for banks
as new rules are gradually enforced. However, in the long term,
Moody's expects UK systemic risk will be reduced by higher
capital requirements, including significant loss-absorbing and
counter-cyclical capital buffers.

Moody's notes that it expects liquidity and funding to remain at
strong levels, even with some reduction in the quantity and
quality of liquidity buffers, coupled with a continued reduction
in reliance on short-term wholesale funding.

The stable outlook for the system is compatible with the stable
outlook on the standalone credit assessments of most UK banks.
However, Moody's maintains a negative outlook on the long-term
debt and deposit ratings of the large UK banks, reflecting its
view that the UK authorities will continue to take steps to
reduce the level of systemic support over the medium term in
light of the UK and other EU governments' preferences for burden-
sharing with creditors to finance bank resolutions.


* EM Corporates Dominate List of Expected EMEA Debt Raisers
The ten EMEA corporates that will see the biggest increase in
gross debt from the end of 2012 to 2014 will mostly come from
emerging markets, Fitch Ratings says. This is a sharp change from
recent years, when the list was dominated by Western European

Fitch says: "In a report -- "Top 10 EMEA Corporate Debt Changes,
2012-14" -- published on July 10, we forecast that seven of the
top 10 debt raisers (those increasing gross debt under our
forecasts) over 2012-2014 will be emerging markets heavyweights,
including four from Russia. Rosneft tops the list, after being
the only emerging markets firm to appear among the biggest debt
raisers from 2009-2012. Other new entries include Saudi
Electricity, Russian Railways and South Africa's Transnet,
highlighting capex as the key driver for most of the debt being

"Our updated work on disintermediation in EMEA's corporate
funding markets, as noted July 9, already points towards
increased bond penetration by emerging market corporates. The
dominance of emerging markets on the list is nonetheless a risk,
given that these regions have historically represented no more
than one-third of EMEA corporate issuance, and that their access
to capital markets is vulnerable to the periodic stresses we
expect to continue in the next couple of years. This is partly
offset by a concentration in blue-chip names that retain access
to domestic and international bank lending in times of stress,
but underlines the anaemic state of investment levels in western
Europe, and the incentives for investors to transition to broader
portfolio guidelines.

"Our report also looks at the top and bottom 10 corporate issuers
that we expect to show improved or worsening EBITDA averaged over
2012-2014 compared with 2009-2011. We found no issuers in the
"red zone" -- featuring on both the biggest debt increases and
weakest EBITDA evolution -- or in the "blue zone" -- biggest debt
reductions and best EBITDA evolution. We did track four issuers
whose EBITDA weakness coincided with significant deleveraging,
and two issuers whose large debt increases also yielded a
forecast improvement in EBITDA amongst the Top 10 in the
portfolio over the period."

* Fitch Sees Lackluster Near Term Outlook for Emerging Europe
Fitch Ratings says that protracted recession in the eurozone,
coupled with a reversal in global risk appetite for emerging
market (EM) assets in Q213 following US Federal Reserve (US Fed)
comments on an exit from quantitative easing (QE), have taken the
edge off of economic recovery in Emerging Europe, including
Russia and Turkey. Even so, the majority of sovereign ratings in
the region remained on Stable Outlook at end-June, with two
(Poland and Latvia) on Positive and four (Croatia, Slovenia,
Serbia and Ukraine) on Negative. Positive rating actions in H113
were confined to Lithuania and Poland, while Slovenia and Ukraine
sustained negative actions.

With the eurozone set to register a further contraction of 0.6%
in 2013, growth in Emerging Europe is expected to slow for the
second year in succession to 2.3% in 2013 from 2.5% in 2012, with
some countries (Croatia and Slovenia) sustaining outright
contraction. In Slovenia's case, this has been overlaid by the
rising cost of recapitalizing the banks; Fitch downgraded
Slovenia to 'BBB+'/Negative from 'A-'/Negative in May.

The downturn in the eurozone has coincided with limited room for
domestic policy maneuver in Emerging Europe. Fiscal policy is set
to remain contractionary, weighing on growth. Poland and the
Czech Republic are still constrained by the EU's Excessive
Deficit Procedure (EDP), while Bulgaria, Hungary and Romania will
be anxious to preserve their EDP-free status. Russia's new fiscal
rule maps out a path of gradual fiscal tightening until 2015,
although ambitions to rebuild the Reserve Fund as a fiscal buffer
have recently been scaled back. Turkey looks to have more room
for fiscal stimulus, but Fitch expects heightened political
unrest and deteriorating market sentiment to constrain its room
for maneuver.

Ample global liquidity, shrinking current account deficits and
low inflation allowed a number of countries in Emerging Europe to
cut interest rates in H113. (Russia kept benchmark rates stable,
but there are widespread expectations of policy easing in H213.)
A surge in net capital inflows from H212, mostly portfolio
investment in Eurobonds and non-resident holdings of local
currency debt, not wholly related to fundamentals, had begun to
breed complacency in some cases. Thus, Hungary and Ukraine had
both taken a step back from concluding new deals with the IMF in
the belief that heavy repayment obligations to the Fund in 2013-
14 could be funded in the market.

An early casualty of the shift in market sentiment has been
Ukraine where Fitch revised the Outlooks on its 'B' ratings to
Negative from Stable on June 28, to reflect an increasingly
challenging external financing position. Hungary demonstrated a
remarkable ability to substitute domestic for external financing
in 2012; nonetheless, its fiscal financing requirement remains
large and the forint is vulnerable to shifts in market sentiment
in the absence of a fresh EU-IMF agreement. Romania, too, suffers
from large foreign exchange exposures at the sovereign, corporate
and household levels. However, it is making faster progress with
reforms and seems more amenable to a new IMF agreement.

Turkey presents more of a conundrum. Increased expectations of a
US Fed exit from QE coupled with widespread anti-government
protests since May have exposed the country's chief
vulnerability: a current account deficit equivalent to 6.8% of
GDP, over 90% of which is funded by portfolio investors. Turkish
asset prices have come under strong downward pressure,
precipitating a sharp fall in the exchange rate and declining
international reserves. Fitch elevated Turkey to investment grade
in November 2012 and considers that these strains remain within
the tolerance of its 'BBB-' rating. However, prolonged social
unrest, poorly handled, could deter tourism, exacerbate short-
term capital outflows, drive-up inflation and damage economic
growth, potentially putting Turkey's sovereign rating at risk.

Poland and Czech Republic appear much more secure,
notwithstanding less resilient growth in the former and
continuing recession and increased political instability in the
latter. Fiscal funding needs are well covered in both, while
Poland enjoys the additional comfort of an IMF Flexible Credit
Line. Russia, with its strong sovereign balance sheet, is also
relatively immune to shifts in market sentiment, although Russian
corporates and banks have been heavy issuers on the Eurobond
market. However, growth slowed to less than 2% year-on-year in
Q113 and it remains unclear how the economy will fare in the face
of flat oil prices and only cosmetic improvements at best in the
investment climate.

Fitch says that Emerging Europe has not been without its success
stories. Thus the Baltics (Estonia, Latvia and Lithuania)
continue to buck the broader austerity-bound economic outlook,
posting some of the highest growth rates in the region. Latvia
recently followed in the footsteps of Estonia, gaining the green
light to formal eurozone membership from 1st January 2014, with
Lithuania expected to follow suit in January 2015. Fitch upgraded
Latvia's sovereign ratings to 'BBB+'/Stable from 'BBB'/Positive
on 9 July in recognition of the culmination of this long sought
after policy goal.

The same cannot be said of Croatia and Serbia. A common theme
running through these countries has been a deteriorating
macroeconomic and fiscal outlook, coupled with a reluctance to
undertake structural reforms. Fiscal financing does not pose
immediate concerns, but public debt/GDP ratios continue to rise.
Croatia ('BBB-'/Negative) lacks a medium term fiscal
consolidation program and there is a risk that longstanding
structural shortcomings will overshadow its recent admission to
the EU. Serbia ('BB-'/Negative) suffers from twin fiscal and
current account deficits; the latter shows signs of rebalancing,
while the economy has emerged from recession, but the government
has been slow to address fiscal imbalances and public debt/GDP
could rise to 70% by 2015.

In sum, in most cases, Emerging Europe is expected to prove
resilient to renewed turbulence in world financial markets.
However, the region still bears the scars of the 2008-09 global
financial crisis which, together with some country specific
factors, are expected to temper governments' policy responses and
slow economic recovery.

* BOOK REVIEW: Creating Value through Corporate Restructuring
Author: Stuart C. Gilson
Publisher: Wiley
Hardcover: 516 pages
List Price: $79.95
Review by David M. Henderson

Most business books fall into two categories. The first is very
important. It is like that stuff you have to drink before you
have a colonoscopy. You keep telling yourself, this is very
good for me, while you would rather be at the beach reading
Liar's Poker or Barbarians at the Gate.

Stuart Gilson, of the Harvard Business School, has managed to
write a book important to everybody in the distressed market
that is also quite enjoyable. His prose is fluid and succinct
and a pleasure to read. But don't take my word for it. The
dust jacket endorsements come from Jay Alix, Martin Fridson,
Harvey Miller, Arthur Newman, and Sanford Sigoloff. At a
collective gazillion dollars a billing hour, that's a lot of

Be advised that this is designed as a text book. The case study
format might be off-putting to some. The effect can be jarring
as you read the narrative history of the case and suddenly
confront the financial statements without any further clue as to
what to do, but this must be what it is like for the turnaround
manager. Even after reading several of the cases, when I got to
the financials I had that sinking feeling of, what do I do now?
If you read carefully, clues to the solutions are in the

The book is divided into three "modules", bizspeek for sections:
Restructuring Creditors' Claims,. Restructuring Shareholders'
Claims, and Restructuring Employees' Claims. The text covers 13
corporate restructurings focusing on debt workouts, vulture
investing, equity spinoffs, tracking stock, assete divestitures,
employee layoffs, corporate downsizing, M & A, HLTs, wage
givebacks, employee stock buyouts, and the restructuring of
employee benefit plans. That's a pretty comprehensive survey,
wouldn't you say?

Dr. Gilson's chapter on "Investing in Distressed Situations" is
an excellent summary of the distressed market and a good
touchstone even for seasoned vultures.

Even in the two appendices on technical analysis, this book is
marvelously free of those charts and graphs that purport to show
some general ROI of distressed investing. Those are cute,
aren't they? As Judy Mencher has famously said, "You can buy
the paper at 50 thinking it's going to 70, but it can just as
easily go to 30 if you are not willing to act on it." Therein
lies the rub and the weakness, if inevitable, of this or any
book on corporate restructurings. As Dr. Gilson notes, no two
are alike, and the outcome is highly subjective, in our out of
Court, but especially in Chapter 11. Is the Judge enthralled by
Jack Butler as Debtor's Counsel or intimidated by Harvey Miller
as Debtor's Counsel? Are you holding "secured" paper only to
discover that when it was issued the bond counsel forgot to
notify the Indenture Trustee of the most Senior debt? Is
somebody holding Junior paper that you think is out of the money
only to have Hugh Ray read the fine print and discover that the
"Junior" paper is secured? This is the stuff of corporate
reorganizations that is virtually impossible to codify into a

That said, this is an especially valuable text for anybody
working in the distressed market. As a Duke grad, I tend to be
disdainful of all things Harvard, but having read Dr. Gilson's
book, I am enticed to encamp by the dirty waters of the Charles
long enough to take his course, appropriately entitled,
"Creating Value Through Corporate Restructuring.


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

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

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

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


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

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

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

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

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

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

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