TCREUR_Public/130731.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

            Wednesday, July 31, 2013, Vol. 14, No. 150



DEXIA SA: GCS Capital's Bid to Acquire Asset Management Arm Fails


BANK OF CYPRUS: Depositors to Lose 47.5% of Savings


PEUGEOT CITROEN: EU Approves France's Financial Guarantee
PHOTONIS TECHNOLOGIES: Moody's Assigns (P)B2 Corp. Family Rating
PHOTONIS TECHNOLOGIES: S&P Assigns Prelim. B+ Corp. Credit Rating
ZEBRE 2006-1: S&P Affirms 'BB+' Rating on Class M2 Notes


LANDSVIRKJUN: S&P Revises Outlook to Negative & Affirms 'BB' CCR


QUINN INSURANCE: Administrators Sue PwC for EUR1BB Over Collapse
* IRELAND: Corporate Insolvencies Down 22% in First Seven Months


CORDUSIO RMBS: Fitch Affirms 'CCC' Rating on Class E RMBS
VELA LEASE: S&P Lowers 'BB' Rating on Class C Notes
* ITALY: Fitch Says RMBS Prepayments to Stay Near Record Lows


EURASIAN NATURAL: S&P Retains 'B' CCR on CreditWatch Negative


AGUILA 3: S&P Affirms 'B' Corp. Credit Rating; Outlook Stable


GETTY PETROLEUM: Bankruptcy Court Okays US$93MM Pact with Lukoil
LENSPETSSMU: S&P Raises Corp. Credit Rating to B+; Outlook Stable
VISMA: Kvasco Bottlers Files Bankr. Petition for Water Company


CODERE SA: S&P Raises Corp. Credit Rating to 'CC'; Outlook Neg.


SWISSPORT GROUP: Moody's Rates New $390 Million Senior Notes 'B2'

U N I T E D   K I N G D O M

CABOT FINANCIAL: S&P Revises Outlook to Neg.; Affirms 'BB-' CCR
E-SI: Goes Into Liquidation Following Lawsuit
HEARTS OF MIDLOTHIAN: Shareholder Says Bids are Unacceptable
HIBU PLC: Debt Restructuring Prompts Moody's to Cut CFR to C
MG ROVER: Deloitte Faces GBP20-Mil. Fine over Carmaker Sale

OPCO: Unsecured Creditors to Face More Than GBP5.6-Mil. Losses
* Moody's Says UK Non-Conforming Performance Stable in May 2013
* Moody's Says UK Prime RMBS Performance Stable at May 2013


* Moody's Outlook on European Tobacco Sector to Remain Stable
* Moody's Notes Stable Global Long-Term Bank Debt Issuance



DEXIA SA: GCS Capital's Bid to Acquire Asset Management Arm Fails
Hugh Carnegy and Paul J. Davies at The Financial Times report
that a EUR380 million deal for GCS Capital to buy the asset
management arm of Dexia collapsed on Tuesday when the failed
Franco-Belgian bank said the Hong Kong group had been unable to
pay for the acquisition.

The sale, the FT notes, was set to be an important landmark for
both sides -- as the last major disposal for Dexia as it is being
wound down after succumbing to the financial crisis and the first
significant acquisition of a European financial business for GCS.

According to the FT, Dexia, which had warned last week that it
had ceased negotiations on the deal, said in a statement that it
was formally ending a share purchase agreement for Dexia Asset
Management (DAM) struck with GCS late last year.

Dexia said it would resume discussions with other potential
buyers for DAM, which has some EUR80 billion under management,
the FT relates.

GCS had said it was planning to link up DAM with ICBC, China's
biggest bank, to sell European funds into China and give Dexia an
entry into managing Chinese assets, the FT discloses.  GCS's
failure to raise the funds to pay for the deal suggests that
ICBC, as the strategic partner in the deal, ultimately decided
against it, the FT states.

The sale of DAM was intended to be the last of a series of asset
disposals which, along with a restructuring of Dexia's municipal
lending business in France, would leave a rump of residual assets
planned to be wound down by 2020, the FT notes.  The bank, which
relied heavily on short-term funding, collapsed when it became
unable to finance its EUR650 billion balance sheet, including a
large exposure to US subprime property assets, the FT recounts.


As reported by the Troubled Company Reporter-Europe, the FT
related that Dexia was bailed out three times by Paris and
Brussels after it crashed in 2008, unable to fund its EUR650
billion balance sheet, which included a EUR125 billion exposure
to US subprime property assets, the FT recounts.  Dexia, which
posted a net loss of EUR2.9 billion last year, swallowed EUR6.5
billion in bailout funds from France, Belgium and Luxembourg in
2008, the FT recounted.  Paris and Brussels were forced to put up
a further EUR90 billion in state loan guarantees when it was hit
by the sovereign debt crisis in 2011 and a new EUR5.5 billion
capital injection last December, the FT disclosed.

Dexia SA is a Belgium-based banking group with activities
principally in Belgium, Luxembourg, France and Turkey in the
fields of retail and commercial banking, public and wholesale
banking, asset management and investor services.  In France,
Dexia Bank focuses on funding public sector bodies and providing
financial services to local government.  In Luxembourg, Dexia
operates in two main areas: commercial banking (for personal and
professional customers) and private banking (for international
investors).  In Turkey, Dexia is involved in retail and
commercial banking and offers services to ordinary account
holders, business and local public sector customers and
institutional clients. The Company operates through its
subsidiaries, such as Dexia Credit Local, DenizBank, Dexia
Credicop, Dexia Sabadell, Dexia Kommunalbank Deutschland, Dexia
Asset Management, among others.


BANK OF CYPRUS: Depositors to Lose 47.5% of Savings
The Associated Press reports that depositors at bailed-out Cyprus
said on Monday Bank of Cyprus will lose 47.5% of their savings
exceeding EUR100,000 (US$132,000).

The figure comes four months after Cyprus agreed on a EUR23
billion (US$30.5 billion) rescue package with its euro partners
and the International Monetary Fund, the AP notes.  According to
the AP, in exchange for a EUR10 billion loan, deposits worth more
than the insured limit of EUR100,000 at the Bank of Cyprus and
smaller lender Laiki were raided in a so-called bail-in to prop
up the country's teetering banking sector.

The savings raid prompted Cypriot authorities to impose
restrictions on money withdrawals and transfers for all banks to
head off a run, the AP discloses.

As part of the bail-in of Bank of Cyprus, depositors taking
losses -- estimated roughly at around EUR4 billion -- will get
shares in the bank, the AP says.  Those depositors hardest hit
are pension funds belonging to employees for state-run companies,
followed by private savers of which some of the biggest are
Russians, the AP states.

Depositors at Laiki, which is being wound down and folded into
Bank of Cyprus, saw most of their uninsured savings wiped out and
are unlikely to get any shares in Bank of Cyprus, the AP

The government insisted in negotiations with the Cyprus Central
Bank and officials from the country's international creditors --
currently conducting their first post-rescue deal assessment --
that the Bank of Cyprus could remain afloat with less money from
depositors, the AP relates.

Government spokesman Victoras Papadopoulos said the most
significant part of the Bank of Cyprus bail-in is that the lender
has turned a corner in its restructuring process, allowing
control of the lender to soon return to the hands of private
shareholders, the AP notes.

According to the AP, Bank of Cyprus officials say a meeting of
the lender's new shareholders will be convened in early
September.  The bank will complete its restructuring -- which
will see the departure of hundreds of employees either through
voluntary retirement packages or layoffs -- by the end of the
same month, the AP says.

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

                          *     *     *

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


PEUGEOT CITROEN: EU Approves France's Financial Guarantee
David Pearson, Sam Schechner and Frances Robinson at The Wall
Street Journal report that the European Union on Tuesday gave
approval to a financial guarantee from the French state for PSA
Peugeot Citroen's in-house banking unit, saying the aid is
essential to help the ailing auto maker return to health.

According to the Journal, apart from the loan guarantee, the move
gives Peugeot a vote of confidence for a restructuring plan made
necessary by the collapse of the European auto market.

Plunging sales have also forced Europe's second-largest car maker
by volume to cast around for new alliances and partnerships that
might yet become crucial for ensuring its survival, the Journal

But the EU's blessing also came with conditions that could limit
Peugeot's future actions, forcing asset sales and keeping the
auto maker under monitoring by the French government and an
independent expert approved by the EU, the Journal notes.

The decision by the European Commission, the EU's executive arm,
clears the way for the French state to move ahead with a loan
guarantee of as much as EUR7 billion, or US$9.28 billion, that it
promised last fall for Banque PSA Finance, the division that
provides financing to Peugeot's customers as well as the
company's dealer network, the Journal says.

A steady source of profit, Banque PSA became a cause for concern
last year, as credit-rating firms downgraded the creditworthiness
of its parent auto company, the Journal recounts.  That made the
bank, which finances itself largely on the wholesale credit
markets, unable to raise money at competitive rates, the Journal

"We have arrived at a formula which allows PSA to restructure in
accordance with clear limits, reducing to a minimum the damaging
effects for competitors who have not received support from public
funding," the Journal quotes EU Competition Commissioner Joaquin
Almunia as saying.  The commission, as cited by the Journal, said
its concerns "regarding the group's return to viability" have

To win EU approval, the French government and Peugeot have been
in close negotiations with the EU over the terms of the
guarantee, and also over Peugeot's broader restructuring plan, in
order to convince regulators that the auto maker wouldn't again
need state aid, the Journal relates.  The commission said that
among the conditions, Peugeot must set in place a "major" asset-
disposal plan to fund its restructuring, the Journal notes.

According to the Journal, despite the vote of confidence from the
EU, Peugeot still faces questions about how it can restructure
its European operations if a hoped-for rebound in European
automobile sales takes longer to arrive than expected.  The
French company's auto sales in Western Europe tumbled 14% in the
first six months of 2013, compared with a year earlier, according
to the European Automobile Manufacturers' Association, the
Journal discloses.

PSA Peugeot Citroen SA --
is a France-based manufacturer of passenger cars, light
commercial vehicles, motorcycles, bicycles and related spare
parts.  The Company manufactures products under the Peugeot and
Citroen brands. Peugeot SA distributes its products domestically
and in 160 countries worldwide.  In addition, PSA Peugeot Citroen
S.A. operates several divisions, including Banque PSA Finance,
which deals with the Company's finance and marketing; Faurecia,
which is the automotive equipment division; Gefco, which is the
transportation and logistics division; a division connected with
the activities of Peugeot Motocycles and Peugeot S.A.; as well as
other business divisions.  In July 2013, it opened the third
plant operated by Dongfeng Peugeot Citroen Automobiles (DPCA).

PHOTONIS TECHNOLOGIES: Moody's Assigns (P)B2 Corp. Family Rating
Moody's Investors Service has assigned a (P)B2 corporate family
rating to Photonis Technologies SAS, a manufacturer of electro-
optic components used in military night vision and industry &
science applications. Concurrently, Moody's has also assigned a
provisional (P)B1 instrument rating to Photonis's EUR200 million
($260 million equivalent) first lien secured term loan due in
2019 and EUR30 million equivalent revolving credit facility due
in 2018, as well as a provisional (P)Caa1 instrument rating to
the company's EUR50 million ($65 million equivalent) second lien
term loan due in 2020. All facilities will be borrowed by
Photonis Technologies SAS and its subsidiaries. The outlook on
all ratings is stable. This is the first time Moody's has
assigned ratings to Photonis.

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

Ratings Rationale:

The assigned (P)B2 CFR reflects in the first instance Photonis's
very focused product offering and end markets, comprising
electro-optic components that are primarily used for night vision
equipment in military applications and, to a lesser extent, for
industrial or scientific purposes. The modest scale of the
business in terms of revenues is reflective of this focused
product offering and end market. The rating also incorporates (1)
the company's high leverage following its refinancing; (2) a
degree of concentration in terms of its customer base; (3) some
growth challenges, for example in new regions given that the
company's technology is of a sensitive nature and therefore
requires government export approval; and (4) the challenges
Photonis is facing in its ongoing efforts to enter the world's
largest market for electro-optic components for image
intensification night vision equipment, the US, and the need to
innovate and compete with larger, more diversified and more
resourceful US competitors in some international markets.

However, the rating also reflects the company's process knowledge
and technological capabilities as the only European manufacturer
of electro-optic components for image intensification night
vision equipment. In addition, the company benefits from
significant barriers to market entry provided by the
manufacturing process and the sensitive nature of the technology.
This sensitivity is evidenced by a significant degree of
government oversight and regulation, also in the Netherlands and
France, where Photonis's key manufacturing operations are
located. Moreover, Photonis's exposure to defense end markets is
balanced by the low proportion of total government defense
budgets that night vision equipment represents and its crucial
importance, which Moody's would expect to limit the impact of
general spending cuts on the company although it ultimately
remains exposed to government spending decisions and the timing
of larger orders. Lastly, the rating reflects Moody's expectation
that the company will generate visible free cash flow despite its
continuous investment in research & development to develop next-
generation products.

The consolidated audited accounts are prepared by Photonis
International SAS, the direct holding company of Photonis
Technologies SAS, and Moody's adjusts the financials for the
stand-alone activities of the holding company. Moody's assumes
that Photonis International SAS 's activities will essentially be
limited to its function as a holding company for Photonis, which
is also supported by certain covenants in the facility
agreements, and that its claim on Photonis will remain limited to
its ownership of Photonis's common equity.


Moody's views Photonis's liquidity as good. Following the
refinancing, Photonis will have EUR11 million in cash on the
balance sheet and access to an undrawn EUR30 million revolving
credit facility due in 2019. The facility carries one financial
maintenance covenant, which will be triggered only if at least
25% of the revolver is drawn. Moody's expects that the company
will generate visible free cash flow with moderate seasonal
working capital movements and limited capital investments.

Structural Considerations

The (P)B1 rating on the EUR200 million ($260 million equivalent)
first lien secured term loan due in 2019 and the EUR30 million
equivalent revolving credit facility due in 2018 reflects the
priority ranking of these instruments over the provisional
(P)Caa1-rated EUR50 million (US$65 million equivalent) second
lien term loan due in 2020 (as outlined in the intercreditor

Rationale For Stable Outlook

The stable rating outlook reflects Moody's expectation that
Photonis will be able to maintain a steady operating performance,
including sufficient liquidity based on visible free cash flow
generation, despite the general pressure on national defense
budgets in Europe and the US.

What Could Change The Rating Up/Down

Negative rating pressure could result from debt/EBITDA increasing
above 5.0x and/or EBIT/interest falling below 2.0x, both as
adjusted by Moody's. A decline in demand for Photonis's night
vision equipment, measured as a visible reduction in order books,
could also exert negative pressure on the rating. In addition, a
deterioration in the company's liquidity profile could result in
negative rating pressure. Conversely, increasing diversification
in Photonis's product portfolio and/or end markets combined with
debt/EBITDA falling below 3.5x as adjusted by Moody's could lead
to positive rating pressure over time.

The principal methodology used in this rating was the Global
Aerospace and Defense published in June 2010. Other methodologies
used include Loss Given Default for Speculative-Grade Non-
Financial Companies in the U.S., Canada and EMEA published in
June 2009.

France-based Photonis Technologies SAS is a manufacturer of
electro-optic components used in military night vision and
industry & science applications. The company's products are key
components of military night vision equipment based on image
intensification technology and its Night Vision segment's
revenues represented 84% of total revenues in 2012. The Industry
& Science (11%) and Power Tubes (4%) segments leverage Photonis's
know-how in terms of alternative civil and military uses for the
technology, including for nuclear sensors or mass spectrometry.
As of December 2012, the company generated EUR171 million in
revenues and EUR57 million in company-adjusted EBITDA. Photonis
was acquired by Axa Private Equity in 2011.

PHOTONIS TECHNOLOGIES: S&P Assigns Prelim. B+ Corp. Credit Rating
Standard & Poor's Ratings Services said it has assigned its
preliminary 'B+' long-term corporate credit rating to Photonis
Technologies SAS, a France-headquartered electro-optic component
manufacturer.  The outlook is stable.

At the same time, S&P assigned its preliminary 'B+' issue rating
to Photonis' EUR200 million (about US$260 million) proposed six-
year first-lien loan and preliminary 'B-' issue rating to the
6.5-year second-lien loan.  The preliminary recovery rating of
'3' on the first-lien loan indicates S&P's expectation of
meaningful (50%-70%) recovery for the bondholders in the event of
a payment default.  The preliminary recovery rating of '6' on the
second-lien loan indicates S&P's expectation of negligible (0%-
10%) recovery.

The ratings are primarily constrained by S&P's view of Photonis'
"highly leveraged" financial risk profile and "aggressive"
financial policy, reflecting that the company was acquired
through a leveraged buyout.  S&P's assessment is based on its
expectation that the company's proposed refinancing transaction
will be completed as presented to S&P by Photonis and its
majority owner, AXA Private Equity.

"We assume that the current financial structure will be replaced
by a EUR200 million six-year first-lien loan, a EUR50 million
(about US$65 million) 6.5-year second-lien loan, and EUR30
million revolving credit facility (RCF).  We also assume the
existing non-cash interest-bearing convertible bond (EUR175
million at year-end 2012) provided by shareholders and preferred
shares (EUR25 million at year-end 2012) will remain in place.
When calculating fully adjusted debt, we treat both instruments
as debt like in nature. The company's Standard & Poor's-adjusted
debt-to-EBITDA ratio for 2013-2014 is slightly above 8x and funds
from operations (FFO) to debt about 8%," S&P added.

Excluding the non-cash interest-bearing debt, S&P forecasts debt
to EBITDA at 4.0x-4.5x and FFO to debt at slightly above 15%.
These metrics are for informative purposes only and are not to be
construed as an indication that S&P do not treat the non-cash
interest-bearing instruments as debt like.

S&P's assessment of Photonis' adjusted debt metrics and
aggressive financial policy are in line with a financial risk
profile in the "highly leveraged" category.  However, the
financial risk profile is supported by S&P's anticipation that
free operating cash flow (FOCF) generation will be significantly
positive in 2013 and 2014, in line with the company's recent
track record.

The ratings are supported by Photonis' business profile, which
S&P assess at the upper end of our "fair" category, under S&P's
criteria.  The company's business risk is restricted by its
modest size (EUR171 million turnover and reported EBITDA of EUR57
million in 2012) and very limited business diversity.

The outlook is stable, based on S&P's anticipation that Photonis
will maintain its solid market shares and operating margins in
the coming years.  In S&P's view, ratings-commensurate credit
measures include a cash interest cover ratio above 3x and
continuously positive discretionary cash flow.

On the other hand, S&P could lower the ratings if Photonis were
to report weaker revenues and profitability than it currently

S&P believes that an upgrade is unlikely in the next two years.

ZEBRE 2006-1: S&P Affirms 'BB+' Rating on Class M2 Notes
Standard & Poor's Ratings Services affirmed its credit ratings on
Zebre 2006-1's class P, M1, and M2 notes.

The affirmations follow S&P's credit and cash flow analysis of
Zebre 2006-1, where it applied its criteria for rating French
residential mortgage-backed securities (RMBS) transactions.

S&P considers the transaction's collateral performance to be
strong, with severe delinquencies remaining stable.  90-180 days
delinquencies stand at 0.89% and defaults, which are defined as
being more than 180 days past due, are at 1.81%.  Since S&P's
last review in June 2011, the transaction has benefited from
increased seasoning, where Zebre 2006-1's weighted-average
seasoning has risen to 91 months from 79 months.  Furthermore,
the unindexed weighted-average loan-to-value ratio has declined
to 75.77% from 80.97%.

Guarantees ("cautions"), rather than mortgages, secure
approximately 16% of Zebre 2006-1's portfolio.  These guarantees
offer an indemnity that covers unpaid installments and
outstanding principal on defaulted loans.  In S&P's analysis of
these guarantees, it has considered the scenario where the
guarantor would not fulfill its obligations if it were to become
insolvent. In such a case, the servicer, following the borrower's
default, would go through the foreclosure process and typically
take a security of the financed property (a judicial mortgage).
However, there is a risk that the servicer might not be able to
take a first lien mortgage if another creditor were to register
this mortgage first.  Consequently, to address the risk of not
having taken a mortgage at loan origination and therefore of
having another creditor being potentially quicker in registering
the property, we have stressed the loss severity on these loans.

Taking into account the aforementioned collateral
characteristics, S&P's weighted-average foreclosure frequency
(WAFF) and weighted-average loss severity (WALS) estimates,
including an arrears projection of 1.5%, for this transaction are
as follows:

Rating      WAFF     WALS       CE
level        (%)      (%)      (%)

AAA         14.20    35.16     4.99
AA          9.84     27.37     2.69
A           7.25     23.43     1.70
BBB         5.13     19.84     1.02
BB          2.94     17.36     0.51

CE--Target credit enhancement.

With 68% of the pool paying a floating rate of interest, and a
fixed -rate obligation on the class P note that currently
comprises 76% of the capital structure, there is a senior swap in
place to mitigate this mismatch.  There is also a mezzanine swap
in place for the floating-rate class M1 and M2 notes because the
index on the floating rate assets in the pool are different to
the index being paid on the notes.  However, the hedging
structure does not fully mitigate interest rate spikes, resulting
in the M1 and M2 notes being sensitive to interest rate upward
movements, which S&P has factored into its analysis

Credit enhancement for all classes of notes has increased
healthily since closing in November 2006 to 24.57%, 10.05% and
5.86% for the class P, M1 and M2 notes respectively.  This
increase, combined with a solid improvement in the transaction's
credit quality, have led S&P to affirm its ratings on Zebre 2006-
1's class P, M1, and M2 notes.

Zebre 2006-1 is a French RMBS transaction originated by Credit
Foncier de France.


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

Zebre 2006-1
EUR688.433 Million Mortgage Loan-Backed FCC Units

Ratings Affirmed

P               AAA (sf)
M1              A (sf)
M2              BB+ (sf)


LANDSVIRKJUN: S&P Revises Outlook to Negative & Affirms 'BB' CCR
Standard & Poor's Ratings Services said that it revised its
outlook on Iceland-based electricity generation and transmission
company Landsvirkjun to negative from stable.  At the same time,
S&P affirmed its 'BB' long-term and 'B' short-term corporate
credit ratings on Landsvirkjun.

The outlook revision follows S&P's similar action on the Republic
of Iceland.

"We base our ratings on Landsvirkjun on the company's stand-alone
credit profile (SACP), which we assess at 'b+', reflecting its
"fair" business risk profile and "highly leveraged" financial
risk profile (as our criteria define the terms).  The long-term
rating includes two notches of uplift based on our opinion that
there is a "very high" likelihood that the government of the
Republic of Iceland would provide timely and sufficient
extraordinary support to Landsvirkjun in the event of financial
distress," S&P said.

In accordance with S&P's criteria for government-related entities
(GREs), S&P's view that there is a "very high" likelihood of
extraordinary government support is based on its assessment of

   -- "Very important" role for the Icelandic government, given
      its dominant position as the incumbent power company and
      64.7% owner of the national transmission grid; strategic
      importance to the Icelandic economy; and central role in
      the promotion of power-intensive industries.

   -- "Very strong" link with the Icelandic state, given the
      state's 100% ownership and our expectation that the company
      will not be privatized in the medium term; and the risk to
      the sovereign's reputation if Landsvirkjun were to default.

"Our "highly leveraged" assessment of Landsvirkjun's financial
risk profile reflects the company's high debt leverage and weak
cash-flow coverage ratios, due to significant debt-funded capital
investments in recent years.  In addition, Landsvirkjun has
foreign-currency exposure because a significant share of its debt
is denominated in euros and most cash flows are generated in U.S.
dollars.  Landsvirkjun's "fair" business risk profile is
restricted by high customer concentration, the company's exposure
to the aluminum sector for revenue and cash flow generation, and
weak profitability.  Landsvirkjun's earnings and cash flows are
exposed to volatile commodity prices, as about 50% of power sales
are linked to aluminum prices through power supply contracts with
aluminum smelters.  These constraints are, however, mitigated by
Landsvirkjun being the dominant power producer in Iceland, and
its low-cost renewable generation asset base.  Its long-term pay-
or-take contracts with customers provide some predictability of
earnings, which mitigates the concentration risk and exposure to
aluminum prices," S&P added.

"In the near term, we assume broadly unchanged to slightly lower
EBITDA and margins compared with 2012, when EBITDA was
US$320 million and the EBITDA margins 79.7%, with pressure on
power prices from low aluminum prices mitigated by price hedges
and modest volume growth.  We further assume that funds from
operations (FFO) will be well in excess of capital expenditure
(capex) and dividends, leading to debt reduction, although only
by a modest amount relative to the overall high level of debt.
We expect Landsvirkjun's adjusted FFO to debt is likely to remain
at 8%-10% and adjusted debt to EBITDA at about 8.0x-8.5x in the
near term, in line with our expectations for the 'b+' SACP," S&P

The negative outlook reflects that on Iceland.  S&P would likely
lower the ratings on Landsvirkjun following a negative rating
action on Iceland, all else being equal.

However, S&P would not lower the ratings on Landsvirkjun even if
it revised its assessment of the company's SACP downward by up to
two notches, as long as the ratings on Iceland remain unchanged.

An outlook revision back to stable would depend on a similar
outlook change on Iceland.


QUINN INSURANCE: Administrators Sue PwC for EUR1BB Over Collapse
BBC News reports that the administrators of the former Quinn
Insurance are suing the accountancy firm PriceWaterhouseCoopers
for EUR1 billion (GBP864.5 million).

PWC were the auditors of Quinn Insurance before it collapsed and
the accusation is that the auditing firm was negligent, BBC
discloses.  PWC denies that the negligence charges, BBC notes.

According to BBC, the administrators say they will use any
damages they may win to repay some of Quinn's debts to the Irish

Quinn Insurance went into administration in 2010, BBC recounts.
Two administrators from the firm Grant Thornton were then
appointed, BBC relates.  They are arguing that the insurer would
have avoided significant losses had PwC highlighted problems in
company accounts, BBC discloses.

PwC said it stood by the quality of its audit work, BBC notes.

US general insurer Liberty Mutual bought 51% of Quinn two years
ago and rebranded it as Liberty Insurance, BBC recounts.  The
remaining 49% is owned by the Irish state, BBC states.

The case is being heard in the Commercial Court in Dublin, BBC

* IRELAND: Corporate Insolvencies Down 22% in First Seven Months
According to the latest set of insolvency statistics published by, total corporate insolvencies for the
first seven months of 2013 stand at 812.  This figure is a 22%
drop when compared to last years' total of 1,044, notes.  Total Company failures for July this
year stand at 106 compared with 157 in July 2012, a drop of 32%, says.

Receiverships are down 23% year on year, with 192 recorded from
January to July this year compared to 249 during same period in
2012, discloses.  Court Liquidations are
down 17% from a total of 41 recorded from January to July 2012
compared to 34 from January to July 2013,
says.  Creditor Voluntary Liquidations (CVL's) dropped by 22%
with a total of 738 from January to July 2012 to 575 from January
to July 2013, notes.  Examinerships dropped
by 3% with 16 recorded from January to July 2012 and 11 noted so
far this year, discloses.

During July there was 1 examinership with an additional 4
petitions to appoint an examiner, relates.

According to, some good news for the
construction sector, which has seen a 21% year on year drop in
corporate insolvencies with199 recorded so far this year compared
to 252 for the first seven months of 2012.

So far this year, there has been a total of 44 Company failures
in the manufacturing industry, a year on year drop of 46%, when
compared with the total of 82 for the same period last year, notes.

Retail corporate insolvencies so far this year stand at 123, a 9%
drop compared to the 135 recorded during the same period last
year, states.

Insolvencies in the hospitality sector saw a slight increase of
5% with a total of 102 so far this year compared to 97 for the
same period last year, discloses.


CORDUSIO RMBS: Fitch Affirms 'CCC' Rating on Class E RMBS
Fitch Ratings has taken rating actions on four Cordusio
transactions as follows:

Cordusio RMBS S.r.l (Cordusio 1):

Class A2 (ISIN IT0003844948): affirmed at 'AA+sf'; Outlook

Class B (ISIN IT0003844955): affirmed at 'AA+sf'; Outlook

Class C (ISIN IT0003844963): upgraded to 'BBB+sf'; Outlook

Cordusio RMBS 2 S.r.l (Cordusio 2):

Class A2 (ISIN IT0004087174): affirmed at 'AA+sf'; Outlook

Class B (ISIN IT0004087182): affirmed at 'AAsf'; Outlook Stable

Class C (ISIN IT0004087190): affirmed at 'BBB+sf'; Outlook

Cordusio RMBS 3 - UBCasa 1 S.r.l. (Cordusio 3)

Class A2 (ISIN IT0004144892): affirmed at 'AA+sf'; Outlook

Class B (ISIN IT0004144900): affirmed at 'AAsf'; Outlook Stable

Class C (ISIN IT0004144934): affirmed at 'A+sf'; Outlook Stable

Class D (ISIN IT0004144959): affirmed at 'BBB+sf'; Outlook

Cordusio RMBS Securitisation S.r.l. - Series 2007 (Cordusio 4):

Class A2 (IT0004231236): affirmed at 'AA+sf'; Outlook Negative

Class A3 (IT0004231244): affirmed at 'AA+sf'; Outlook Negative

Class B (IT0004231285): downgraded to 'AA-sf'; Outlook Negative

Class C (IT0004231293): affirmed at 'Asf'; Outlook Negative

Class D (IT0004231301): affirmed at 'BBsf'; Outlook Negative

Class E (IT0004231319): affirmed at 'CCCsf'; Recovery Estimate
  of 0%

Key Rating Drivers

Divergence in Performance
Loans in arrears by more than three months in the series show an
increasing trend, ranging from 1.2% to 2.1% of the current
outstanding balance. Cumulative gross defaults (defined as loans
in arrears by more than 12 months) ranged between 1.1% and 3.9%
of initial pool balance of each transaction.

Cordusio 3 and Cordusio 4 are performing worse than the two more
seasoned transactions, with higher levels of arrears and
cumulative default. Fitch believes that the weaker performance of
Cordusio 3 and 4 is partially due to the higher percentage of
non-Italian borrowers (21% for Cordusio 3 and 19% for Cordusio 4)
and broker-originated loans (88% for Cordusio 3 and 60% for
Cordusio 4) in the two portfolios.

In contrast, the better performance of Cordusio 1 and 2 is
partially due to the high seasoning of the underlying loans (134
months for Cordusio 1 and 115 months for Cordusio 2) with low
current loan-to-value ratio levels (28% for Cordusio 1 and 34%
for Cordusio 2).

Credit Enhancement Build-Up
The affirmations reflect the portfolios' ongoing deleveraging
(current pool balances range between 32% and 44% of initial pool
balance) and the sequential pay down of notes, which has
progressively increased the credit enhancement available to the
notes. As Fitch deems the level of credit support available to
Cordusio 1's class C notes sufficient to withstand 'BBB+sf'
stresses, the agency has upgraded the notes.

Limited Excess Spread in Cordusio 3 and 4
Excess spread generated by Cordusio 3 and Cordusio 4 was
insufficient to fully provision for defaults incurred, which led
to a reserve fund draw for Cordusio 3 (current reserve fund level
is EUR0.9 million short of target) and an outstanding principal
deficiency ledger (PDL) of EUR1.3 million for Cordusio 4 with the
reserve fund fully depleted. At present, the credit enhancement
for the rated notes of Cordusio 3 and 4 is sufficient to maintain
the current rating, with the exception of Cordusio 4's class B
notes, which have been downgraded to 'AA-sf'.

Fitch expects the level of defaults in the upcoming payment dates
to remain at similar levels as in the past few quarters, which is
likely to lead to further reserve fund draws for Cordusio 3 and
further unprovisioned defaults being allocated to the junior
notes' PDL for Cordusio 4. For this reason the Outlooks on
Cordusio 3's junior notes and Cordusio 4's notes remain Negative.

Rating Sensitivities

UniCredit Bank S.p.A. (UniCredit; BBB+/Negative/F2) is the
account bank and servicer in the transactions. If UniCredit was
downgraded below investment grade, the transactions will be
exposed to payment interruption risk, and thus remedial action
may be required to maintain the current ratings.

The rating actions take into account but were not driven by the
updated assumptions detailed in 'EMEA Residential Mortgage Loss
Criteria Addendum - Italy'.

VELA LEASE: S&P Lowers 'BB' Rating on Class C Notes
Standard & Poor's Ratings Services lowered its credit ratings on
the class B and C notes in Vela Lease S.r.l.'s series 2.  At the
same time, S&P has affirmed its rating on the class A notes.

The rating actions follow S&P's credit and cash flow analysis of
the transaction's outstanding collateral, using information as of
June 2013.

At closing, the pool comprised three sub-pools: Real estate,
auto, and equipment leases.  It now has a high concentration of
real estate leases (99.8%) due to the shorter maturities of the
other two sub-pools.  The pool's weighted-average remaining term
is about 70 months.

Delinquencies of more than 30 days have increased in relative
terms, peaking at 8.2% in September 2012, despite remaining
stable in absolute terms since S&P's Dec. 23, 2011, review of the
transaction.  As of the June 2013 payment date, these
delinquencies have decreased to 6.25% of the pool, but are still
above S&P's Italian asset-backed securities leasing index, at
4.06%.  This delinquency trend is due to the collateral's
amortization and Italy's worsening economy.

As a result of the deteriorating performance, defaults in the
portfolio have increased over the last payment dates, reaching an
all-time high of 3.5% of the average performing collateral in
June 2013.  As a result of this, the cash reserve was drawn and
is currently at 53% of its target level under the transaction

Taking into account the results of S&P's credit and cash flow
analysis, it has lowered its ratings on the class B and C notes
because it considers the available credit enhancement for the
class B and C notes to be commensurate with lower ratings.  S&P
has affirmed its 'AA (sf)' rating on the class A notes because it
considers the available credit enhancement to be commensurate
with the current rating.

Vela Lease series 2 is an Italian asset-backed securities (ABS)
transaction that closed in July 2005.


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

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



Class             Rating
               To                 From

Vela Lease S.r.l.
EUR1.018 Billion Asset Backed Floating-Rate Notes Series 2

Ratings Lowered

B              BBB+ (sf)        A (sf)
C              BB (sf)        BBB (sf)

Rating Affirmed

A              AA (sf)

* ITALY: Fitch Says RMBS Prepayments to Stay Near Record Lows
Prepayment rates in Italian RMBS have hit an all-time low, and
are unlikely to increase in the near future because of continued
tight credit conditions and low interest rates, Fitch Ratings
says. "We recently reduced our low prepayment assumptions in our
updated Italian RMBS criteria," Fitch says.

Tightening credit and the prevailing low interest rates reduce
borrowers' ability and incentive to refinance in the mortgage
market. The weighted average prepayment rate of the outstanding
Fitch-rated transactions hit an unprecedented low of 1.7% in the
fourth quarter of 2012, down from 3.8% in the same quarter of
2011. The minimum level of voluntary prepayments in Italian RMBS
deals has historically been around 4%. We expect prepayments to
remain near their current low levels during the remainder of 2013
and 2014.

Low prepayment rates can leave the underlying residential pools
exposed for longer to shocks, which could undermine their
performance. However, common features of Italian RMBS mean that
we do not expect a material impact from falling prepayments on
outstanding deals.

A slower-than-expected repayment profile of the underlying
portfolio is typically detrimental for the noteholders when the
cost of the notes is higher than the yield of the collateral,
increasing negative carry. This may happen in very seasoned deals
where only the most expensive tranches are left outstanding.
However such deals typically benefit from very strong credit
enhancement, which is able to absorb the negative carry costs.

Another example might be those Italian transactions publicly
placed in the market between November 2010 and April 2011, where
the note margins were very expensive and included step-up margins
later on in the lives of the deals. However, these deals were
rare and have now deleveraged.

Similarly, if relevant portions of the pools are unhedged,
especially where fixed-rate loans back floating-rate notes, a low
portfolio amortization speed may exacerbate the negative effects
of the lack of hedging if interest rates rise. However, the
proportion of loans in Italian RMBS portfolios affected by severe
interest-rate type mismatches is typically very low, and only
minor basis or reset risks are commonly left unhedged in the
transactions, which are thus less exposed to low prepayments.


EURASIAN NATURAL: S&P Retains 'B' CCR on CreditWatch Negative
Standard & Poor's Ratings Services said that its 'B' long-term
and 'B' short-term corporate credit ratings on Kazakhstan-based
mining group Eurasian Natural Resources Corp. PLC (ENRC) remain
on CreditWatch, where they were placed with negative implications
on April 30, 2013.

The ratings remain on CreditWatch negative pending the buyout of
the 46.1% of ENRC shares, held by independent shareholders, by a
consortium of ENRC's majority shareholders.  The consortium
comprises Alexander Machkevitch, Alijan Ibragimov, Patokh
Chodiev, and the State Property and Privatisation Committee of
the Ministry of Finance of the Republic of Kazakhstan.  S&P
expects the consortium to finance the acquisition with about
US$1.7 billion of debt to be provided by Russian banks Sberbank
and VTB, which may lead to a further increase in ENRC's leverage.

The CreditWatch status reflects the potential for a downgrade if
the envisaged transaction took place and led to higher debt
levels or a more aggressive financial policy at ENRC.

Under S&P's base-case scenario, before taking into account the
impact of the planned buyout, it forecasts ENRC's adjusted debt
increasing slightly from an already substantial US$6.1 billion as
of Dec. 31, 2012.  S&P therefore anticipates a ratio of funds
from operations (FFO) to debt of about 15%, compared with 20% in

ENRC's "highly leveraged" financial risk profile is further
constrained by the risks related to a serious fraud office
investigation and by S&P's assessment of management and
governance as "weak."

On the positive side, the company has improved its liquidity
through the extension to 2018 of a US$1 billion loan from VTB,
which was to mature in 2014, and an additional US$500 million
committed credit line from Sberbank.

The ratings continue to reflect S&P's assessment of ENRC's
business risk profile as "fair."  The volatility of commodity
prices and exchange rates, the capital intensity of ENRC's
business, and project risks related to ENRC's sizable investment
plan constrain the group's business risk profile.  Furthermore,
the group faces high country risks because most of its assets are
in Kazakhstan and, to a lesser extent, in the Democratic Republic
of Congo. ENRC's business risk profile is, however, supported by
the low cost position of its mining operations, especially in
ferrochrome, where S&P understands ENRC is the world's largest
producer by chrome content.  Additional supports include the
group's healthy and resilient profitability throughout the cycle
and substantial growth potential.

The ratings reflect the group's stand-alone credit quality.  S&P
currently sees a "low" likelihood that the government of
Kazakhstan would provide timely and sufficient support to ENRC in
the event of financial distress.

S&P intends to resolve the CreditWatch if the transaction is
closed, after meeting with ENRC's management and representatives
of the shareholders to discuss ENRC's strategy and financial
policy.  S&P will also reassess the company's corporate
governance and liquidity position.

S&P might affirm the ratings if the impact of the transaction on
ENRC's leverage, liquidity, and financial policy is broadly
neutral and no new corporate governance issues emerge.


AGUILA 3: S&P Affirms 'B' Corp. Credit Rating; Outlook Stable
Standard and Poor's Ratings Services said that it affirmed its
'B' long-term corporate credit rating on Luxembourg-based airport
services provider Aguila 3 S.A. (Swissport).  The outlook is

At the same time, S&P affirmed its 'B' issue rating on
Swissport's Swiss franc (CHF) 350 million and US$555 million
7.875% senior secured notes due 2018.  The recovery rating on
these notes is '4', indicating S&P's expectation of average (30%-
50%) recovery prospects in the event of a payment default.

In addition, S&P assigned its 'B' issue rating to Swissport's
proposed US$390 million senior secured notes due 2018.  The
recovery rating on the proposed notes is '4', indicating S&P's
expectation of average (30%-50%) recovery prospects for
noteholders in the event of a payment default.  The issue and
recovery ratings remain subject to S&P's receipt and review of
the final documentation.

The affirmation follows Swissport's announcement of its planned
acquisition of France-based Servisair S.A.S., a market-leading
airport services provider with a strong presence in the U.K.,
U.S., and Canada.  The affirmation reflects S&P's review of
Swissport's financial information and planned funding of the
acquisition.  Despite the fact that Swissport will fund the
acquisition mostly with debt, S&P forecasts that the company will
maintain its cash flow-protection and leverage ratios at levels
commensurate with its "highly leveraged" financial risk profile.
S&P also bases its affirmation on the prospect of integration
synergies improving cash flow and increasing EBITDA such that
Swissport has some capacity for deleveraging over the medium
term, absent any further large debt-funded acquisitions.

S&P views the acquisition of Servisair as having a slightly
positive effect on Swissport's business risk profile, but S&P
still assess it as "fair."  The addition of Servisair provides
further economies of scale and some geographic diversity, but the
combined entity's exposure to the cyclical and competitive
airline industry, and particularly to the highly volatile cargo
industry, remains an important consideration in S&P's assessment
of business risk.

"In our base case we assume that Swissport's cash flow generation
after the acquisition will enable it to maintain adjusted funds
from operations (FFO) to debt of more than 10%, which we consider
commensurate with the 'B' rating.  We also take into account our
forecast that Swissport will maintain an EBITDA margin of about
10%," S&P said.

"We might consider taking a negative rating action if Swissport's
credit metrics deteriorate--including FFO to debt falling to less
than 10%.  This could result from additional debt-financed
acquisitions or weaker EBITDA margins and cash generation than we
forecast, owing to increased pressure on airlines to cut costs,"
S&P added.

S&P might consider taking a positive rating action if Swissport
reduces debt and continues to improve its operating efficiency,
leading to stronger credit metrics, including adjusted FFO to
debt of more than 15% on a sustainable basis.


GETTY PETROLEUM: Bankruptcy Court Okays US$93MM Pact with Lukoil
Nick Brown, writing for Reuters, reported that a bankruptcy judge
signed off on a deal for Russian oil giant Lukoil to pay US$93
million to its former Getty Petroleum Marketing Inc. unit to
resolve a trial over Getty's collapse.

Judge Shelley Chapman approved the settlement at a hearing in
U.S. Bankruptcy Court in Manhattan, Abid Qureshi, a lawyer for
Lukoil, told Reuters.

According to the report, Getty, a gas station operator, declared
bankruptcy in December 2011, eventually appointing a trustee,
Alfred Giuliano, to liquidate its assets and pay back creditors.

A key piece of Giuliano's strategy was to sue Lukoil, saying the
company stripped Getty of its best gas stations and exacerbated
its insolvency, the report related.  The sides reached a
settlement earlier this month, halting a trial after 17 days of

Giuliano alleged that Lukoil moved Getty's most profitable
stations to another subsidiary in 2009 in exchange for US$120
million, far less than what Getty felt the assets were worth, the
report said.  Under the settlement, Lukoil will pay the Getty
estate an extra US$93 million, resolving both the trial and a
separate dispute between the parties over the allocation of tax
benefits, court documents show.

The lawsuit being settled is Getty Petroleum Marketing Inc.
v. Lukoil Americas Corp. (In re Getty Petroleum Corp.), 11-bk-
02941 and 11-bk-02942, U.S. Bankruptcy Court, Southern District
of New York (Manhattan).

                       About Getty Petroleum

A remnant of J. Paul Getty's oil empire, Getty Petroleum
Marketing markets gasoline, hydraulic fluids, and lubricating
oils through a network of gas stations owned and operated by
franchise holders.  A former subsidiary of Russian oil giant
LUKOIL, the company operates in the Mid-Atlantic and Northeastern
US states.  Getty Petroleum Marketing's primary asset is the more
than 800 gas stations in the Mid-Atlantic states which are
located on properties owned by Getty Realty.  After scaling back
the company's operations to cut debt, in 2011 LUKOIL sold Getty
Petroleum Marketing to investment firm Cambridge Petroleum
Holding for an undisclosed price.

Getty Petroleum and three affiliates filed for Chapter 11
bankruptcy (Bankr. S.D.N.Y. Case Nos. 11-15606 to 11-15609) on
Dec. 5, 2011.  Judge Shelley C. Chapman presides over the case.
Loring I. Fenton, Esq., John H. Bae, Esq., Kaitlin R. Walsh,
Esq., and Michael J. Schrader, Esq., at Greenberg Traurig, LLP,
in New York, N.Y., serve as the Debtors' counsel.  Ross,
Rosenthal & Company, LLP, serves as accountants for the Debtors.
Getty Petroleum Marketing, Inc., disclosed $46.6 million in
assets and $316.8 million in liabilities as of the Petition Date.
The petition was signed by Bjorn Q. Aaserod, chief executive
officer and chairman of the board.

The Official Committee of Unsecured Creditors is represented by
Wilmer Cutler Pickering Hale and Dorr LLP.  Alvarez & Marsal
North America, LLC, serves as the Committee's financial advisors.

LENSPETSSMU: S&P Raises Corp. Credit Rating to B+; Outlook Stable
Standard & Poor's Ratings Services said it raised its long-term
corporate credit rating on Russian residential real estate
developer CJSC SSMO LenSpetsSMU (LSS) to 'B+', from 'B', and its
Russia national scale rating to 'ruA+', from 'ruA'.  S&P also
affirmed the short-term rating at 'B'.  The outlook is stable.

At the same time, S&P raised its issue rating on the company's
unsecured notes to 'B+' from 'B'.  The recovery rating on these
instruments is unchanged at '4', indicating S&P's expectation of
average (30%-50%) recovery prospects in the event of a payment

The upgrade follows improvement in LSS' operating performance,
especially sales, which rose by 15.9% year on year as of June 30,
2013.  Prices in LSS' key St. Petersburg residential market are
rising as demand is improving and supplies remain low.  S&P
believes these factors have allowed LSS to maximize its strong
market position and good pricing strategy in the medium-class
housing segment.  As S&P anticipated, fairly low inventory and
rising revenue in 2011 and 2012 resulted in LSS improving its
free operating cash flow (FOCF) generation as of Dec. 31, 2012.
LSS uses the conservative completed contract revenue recognition
method, which counts revenue only when transactions are
completed, but S&P still remains cautious about 2013, as working
capital could rise because of the high number of projects coming
under construction, and because lower revenue could temporarily
offset the performance achieved during the previous year.

The upgrade is also supported by S&P's view that the company
significantly strengthened its capital structure through the
issue of a Russian ruble (RUB) 5 billion bond in December 2012.
This is because it has reduced the share of short-term debt in
its total debt structure, which S&P previously viewed as high.
In addition, the bond issue has allowed the company to diversify
its sources of funding--public debt now represents 53% of its
total debt--and decrease its exposure to foreign currencies to
34% of its total debt as of June 30, 2013, from 69% a year

S&P continues to assess LSS' business risk profile as "weak" and
its financial risk profile as "aggressive," as S&P's criteria
defines the terms.  S&P believes LSS' business profile remains
constrained by the inherent volatility and long operating cycle
of the property development industry, Russia's high country risk
due to the lack of administrative transparency and
predictability, and LSS' revenue concentration in a single region
of Russia

"The stable outlook on LSS reflects our opinion that its
operating performance over the next 12 months should benefit from
stable demand for apartments in St. Petersburg, and stable prices
in the broader residential property segment.  We assume that LSS'
management will continue its prudent financial policy of
tailoring cash outflows into ongoing construction to the cash
inflows from committed and partly prepaid sales and monitoring
working capital absorption, which could rise in 2013 and 2014.
We expect LSS' debt to EBITDA to not exceed the company's own
limit of 4x and EBITDA interest coverage to remain close to 2x,
in line with our definition of an "aggressive" financial risk
profile," S&P said.

S&P would take a negative view of LSS' abandoning its cautious
strategy on phasing in new developments.  Adverse developments in
Russia's macroeconomic environment that affected demand for LSS'
apartments more strongly than S&P currently anticipates could
also lead S&P to consider a downgrade.

Rating upside is contingent, in S&P's view, on LSS' ability to
maintain positive FOCF over a more prolonged period than it
currently anticipates.

VISMA: Kvasco Bottlers Files Bankr. Petition for Water Company
According to PRIME, RIA Novosti's agency for legal and court
information RAPSI reported on Tuesday that KvasCo Bottlers has
filed a claim with an Arbitration Court asking it to declare
Visma bankrupt.

KvasCo Bottlers signed an agreement with Visma for the supply of
goods under the Pershin trademark, but the company systematically
violated the payment terms and later stopped payments altogether,
PRIME relates.  KvasCo Bottlers sought to recover the overdue
debt via an Arbitration Court, PRIME discloses.

During the court hearings, the parties came to an amicable
agreement, according to which Visma was to pay RUR54.1 million
before March 30, 2013, but Visma failed to follow through with
the payment, PRIME recounts.

Visma is a Russian bottled water producer.  The company comprises
three plants located in a protected ecological resort area in the
North Caucasus.  It has the right to produce trademarked bottled
water, including under the Arkhyz brand, which accounts for 80%
of its sales, as well as the Essentuki, Smirnovskaya, and Vera


CODERE SA: S&P Raises Corp. Credit Rating to 'CC'; Outlook Neg.
Standard & Poor's Ratings Services raised to 'CC' from 'SD'
(selective default) its long-term corporate credit rating on
Spain-based gaming company Codere S.A.  The outlook is negative.

At the same time, S&P raised its issue rating on the
EUR760 million senior notes due 2015 issued by Codere Finance
(Luxembourg) S.A. to 'CC' from 'D' (default).  The recovery
rating on these notes remains unchanged at '4', reflecting S&P's
expectation of average (30%-50%) recovery prospects in the
event of a payment default.

In addition, S&P lowered its issue rating on the US$300 million
senior notes issued by Codere Finance (Luxembourg) to 'CC' from
'CCC-'.  The recovery rating on these notes remains unchanged at
'4', reflecting S&P's expectation of average (30%-50%) recovery
prospects in the event of a payment default.

The upgrade follows Codere's announcement that it has settled the
overdue interest payments on its euro-denominated notes within
the 30-day grace period allowed by the indenture.

It is S&P's understanding that Codere is now up to date with the
payments on its outstanding debt instruments, including the
US$300 million notes due 2019; the EUR760 million senior notes
due 2015; the credit facilities that it recently extended (by six
months); and its other obligations such as an Argentinian loan.
The next payment is not due until Aug. 15, 2013, when the
interest on the dollar-denominated notes comes due.  S&P
understands that, if such payment is made, under the terms and
conditions of the recently extended credit facility, the facility
must be prepaid in its entirety (almost EUR100 million, including

In May, 2013, Codere enlisted Perella Weinberg Partners to assist
in the negotiation of its upcoming debt maturities and advise on
its broader capital structure.  In S&P's view, the company is in
the process of restructuring its balance sheet, because its
capital structure has become unsustainable following the recent
negative operating trends.  In particular, this deterioration is
mostly due to the implementation of a smoking ban in Argentina
from October 2012, along with the temporary closure of gaming
halls in Mexico and higher taxes in Italy.

S&P will follow the progress of Codere's pending capital
restructuring over the coming months.  If and when Codere emerges
from any form of reorganization, S&P will reassess the ratings,
taking into account business prospects, the new capital
structure, and any gains the group achieves through the
reorganization process.

The issue ratings on the US$300 million senior notes and on the
EUR760 million senior notes due 2015 issued by Codere Finance
(Luxembourg) are 'CC', in line with the corporate credit rating.
The recovery rating on the dollar-denominated notes is '4',
indicating S&P's expectation of average (30%-50%) recovery
prospects for noteholders in the event of a payment default.

"Our issue and recovery ratings are supported by our valuation of
Codere as a going concern, underpinned by its leading market
positions and strong barriers to entry in the highly regulated
gaming sector.  On the other hand, the issue and recovery ratings
are limited by our view of the security package and noteholder
protection as weak.  The ratings are also constrained by the
subordination of the notes to the senior secured RCF.  In
addition, the ratings reflect uncertainties relating to Codere's
operations in Latin American jurisdictions, and the company's
exposure to the Spanish insolvency regime, which we view as
unfavorable for creditors," S&P said.

S&P has not changed its default scenario following the missed
interest payment on the euro-denominated notes that prompted S&P
to downgrade Codere on June 21, 2013, because its recovery
analysis already forecasts a payment default in June 2013,
corresponding to the RCF's maturity date.  S&P's going-concern
valuation leads to an enterprise value of EUR750 million, which
is based on an enterprise value to EBITDA multiple of 4.5x.

From the stressed enterprise value, S&P deducts priority
liabilities comprising enforcement costs and finance leases.  S&P
also deducts about EUR260 million of debt ranking ahead of the
euro- and dollar-denominated senior notes, including the debt of
Codere's various subsidiaries and the RCF that S&P assumes would
be fully drawn by the point of default.  On this basis, S&P sees
recovery in the 30%-50% range for the senior noteholders.

The negative outlook reflects S&P's view that if Codere were to
postpone its interest payment on the dollar-denominated notes
beyond the fifth business day following the scheduled due date,
S&P would lower its long-term corporate credit rating to 'SD'
(selective default).

The negative outlook also takes into account that credit momentum
is still biased toward the downside and reflects S&P's opinion
that Codere's capital structure is likely to remain
unsustainable, especially in light of the adverse trading enviro


SWISSPORT GROUP: Moody's Rates New $390 Million Senior Notes 'B2'
Moody's Investors Service has assigned a B2 rating to $390
million new senior secured notes due 2018 to be issued by Aguila
3 S.A., the parent company of Swissport group. Concurrently,
Moody's affirmed the corporate family rating (CFR) of B2 and
probability of default rating (PDR) of B2-PD, as well as the B2
rating on existing notes due 2018. The outlook on Swissport's
ratings remains negative.

The proceeds from the new notes, together with c. CHF50 million
funding from Swissport's owner, PAI partners SAS, and c. CHF15
million cash on Servisair's balance sheet, will be used primarily
to fund the acquisition of Servisair SAS. The acquisition is
subject to satisfaction of certain conditions, including
regulatory approvals. The proceeds of the notes will be placed
into an escrow account until the acquisition closes.

Ratings Rationale:

The additional notes will have the same terms as the existing
notes and, in their final form, will constitute a single class of
debt securities with the existing notes under the indenture. The
B2 rating assigned to the new senior secured notes is at the same
level as the company's CFR and existing senior secured notes,
reflecting their pari-passu status.

Swissport has demonstrated resilient financial performance since
its acquisition in January 2011 by PAI, despite challenging
conditions in the airline services sector. The company's sales in
2012 increased by 11% to CHF1.9 billion. Reported EBITDA (as
calculated by the management) of CHF191 million represented a 16%
increase from 2011, although CHF9 million of the increase is due
to a one-off income from Ferrovial as a result of the change in
ownership in 2011. The figures also include 4 months contribution
from Flightcare, the company with operations in Spain and Belgium
acquired by Swissport in September 2012 and financed with the
issuance of additional US$130 million senior secured notes. As a
result of the acquisition Moody's adjusted leverage was 6.0x at
the end of 2012; which on a pro forma basis for the acquisition
of Flightcare would have been about 5.6x.

Despite continued growth in sales during Q1 2013 (including the
recovery in the cargo division), the company's profitability
deteriorated due to price pressure in some contracts and start-up
costs of the new businesses. Despite the contribution from
Flightcare during the quarter EBITDA margin declined year-on-year
to 5.2% from 5.8% (excluding Ferrovial one-off income). Moody's
expects to see some improvement in performance during the second
half of the year, driven by the contribution from new businesses
won during 2012 and 2013, improvement in Flightcare performance
and further cost savings.

The acquisition of Servisair, Swissport's close competitor,
should have a positive impact on Swissport's business profile,
with an improvement in scale, market position and customer
diversification. Servisair, a company with EUR722 million in
sales and EUR81 million in EBITDA for the full year ended March
31, 2013, is the leader in the UK, Ireland and Canada with a
strong presence in the US in ground handling. The acquisition
will strengthen Swissport's position in those territories, and
also contribute high-margin revenue streams such as fuelling and
de-icing services in central de-icing facilities. The acquisition
will also reduce the reliance of Swissport on members of
Lufthansa Group (Swiss and Lufthansa) as its top customers to
about 13% of total revenue pro forma for Servisair acquisition
from the current 18%.

The transaction should also result in some synergies, such as
reduction of headcount and duplicate properties and equipment
rental costs in the overlapping airports. The company expects to
achieve about CHF17 million of such synergies per annum
facilitated by about CHF10 million one-off costs.

However the acquisition will result in the improvement in
Swissport's financial metrics being delayed into 2014. Following
the issuance of the new notes and before contribution from
Servisair, Moody's expects that Swissport's leverage (as adjusted
by Moody's) will rise to 7.0x as of the end of 2013, free cash
flow will be marginally positive and EBITDA-Capex / Interest will
stay below 1.5x.

The company's liquidity is solid, consisting of c. CHF100 million
unrestricted cash and CHF105 million undrawn revolving credit
facility (RCF) as of March 31, 2013. The liquidity is expected to
remain sufficient proforma for the transaction, supported by
adequate headroom under the leverage covenant governed by RCF

The negative outlook on the ratings reflects Moody's view that
Swissport's credit metrics remain weakly positioned for the B2
category, primarily due to its aggressive debt-funded acquisition
strategy. Financial metrics are expected to be below the triggers
for downgrade, but are expected to recover in 2014 with the full
year benefit of the acquisition of Servisair.

What Could Change The Rating Up/Down

Although unlikely in the near term given the negative outlook,
Moody's could upgrade the rating if Swissport's credit metrics
were to improve following stronger-than-expected operational
performance, reflected by a debt/EBITDA ratio of around 5.0x,
free cash flow/debt ratio of around 5% and a (EBITDA-
capex)/interest expense ratio above 2.0x.

Conversely, the ratings could be downgraded if in 2013 on a
stand-alone basis (before impact of Servisair transaction) the
company's debt/EBITDA ratio rises above 6.0x; (2) free cash flow
turns negative; or (3) the (EBITDA-capex)/interest expense ratio
falls below 1.5x. The ratings could also be downgraded if the
company entered into additional material debt-financed
acquisitions while Moody's credit metrics remain elevated,
notwithstanding any pro-forma effects.

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

U N I T E D   K I N G D O M

CABOT FINANCIAL: S&P Revises Outlook to Neg.; Affirms 'BB-' CCR
Standard & Poor's Ratings Services said that it revised the
outlook on U.K.-based finance company Cabot Financial Ltd.
(Cabot) to negative from stable.  At the same time, S&P affirmed
the 'BB-' long-term counterparty credit rating on Cabot.

S&P also affirmed the 'BB' issue rating and '2' recovery rating
on the GBP265 million senior secured term notes issued by Cabot's
wholly owned subsidiary, Cabot Financial (Luxembourg) S.A.  S&P
also assigned a 'BB' issue rating and '2' recovery rating to
Cabot's new GBP100 million senior secured term notes.

The negative outlook reflects S&P's view that the announced
additional debt issuance will lead to increased leverage and
reduced debt-servicing capacity at Cabot to levels that S&P
considers are still commensurate with a 'BB-' rating, but leaves
limited headroom at that level.  Furthermore, S&P believes the
transaction is indicative of a more aggressive financial policy
at Cabot following the change of ownership earlier this year.
However, S&P notes Cabot's good operating performance to date
compared with its original expectations, and its sound medium-
term growth prospects in the U.K. distressed debt purchase

On July 29, 2013, Cabot announced that its subsidiary, Cabot
Financial (Luxembourg) S.A. (CFL), will issue a new GBP100
million senior secured note due 2020.  The purpose of the issue
is for Cabot to repay the drawn portion of its super senior
secured revolving credit facility (RCF; GBP75 million) and a
portion of the shareholder loan notes (SLN; GBP25 million).  The
note ranks pari passu with the previously issued GBP265 million
note and share similar features, including collateral.

S&P expects Cabot's leverage to deteriorate in the near term
following this transaction.  S&P believes the ratio of gross debt
(excluding shareholder loan notes) to EBITDA plus portfolio
amortization (Standard & Poor's-adjusted EBITDA; portfolio
amortization is a noncash item), S&P's preferred measurement of
leverage, to rise to around 3x by year-end 2013.  This is a
higher level when compared with similarly rated peers, in S&P's
view.  S&P still expects leverage to gradually improve over the
next two years as the company retains earnings.  This also
assumes modest drawdown of the RCF in 2014 onward.  The ratio was
2.4x at end-December 2012.

S&P believes the transaction will also reduce the company's debt-
servicing capacity.  S&P expects the adjusted EBITDA coverage of
cash interest expense to weaken to around 4x in 2014.  This is a
material change compared with S&P's previous expectations, which
assumed a sustained improvement comfortably above that level.

S&P considers that the repayment of a small part of the SLN
indicates a more aggressive financial policy at Cabot following
the change in ownership.  Private equity firm J.C. Flowers & Co.
LLC (JCF) and U.S. distressed debt purchaser Encore Capital
Group, Inc. (Encore) acquired 75% of the voting stock of Cabot
Holdings, Cabot's owner, in the middle of 2013 through Janus
Holdings (Luxembourg) S. r.l. (Janus).  JCF controls 49.9% and
Encore 50.1% of the voting stock in Janus.  After the GBP25
million repayment, the remaining SLN amount will be GBP263.7

S&P's recovery rating of '2' is based on an implied recovery for
both the GBP265 million and GBP100 million notes at the bottom of
the 70%-90% range, after repayment of the RCF.

The negative outlook reflects the possibility that S&P could
lower the ratings on Cabot if, in S&P's view, it failed to
maintain stable debt-servicing capacity, for example, by
rebuilding a long-lasting buffer above 4x adjusted EBITDA to
gross cash interest.  S&P could also lower the ratings if it sees
signs of a sustainably more aggressive financial policy, which
could be demonstrated by further repayments of the SLN, for

S&P could also lower the ratings on Cabot if it sees evidence of
a failure in its control framework, adverse changes in the
regulatory environment, or material declines in total
collections, against management's expectations.

S&P could revise the outlook back to stable if it observes
ongoing, sustainable, and materially better leverage and debt-
servicing metrics, in addition to sustained growth in cash flow

E-SI: Goes Into Liquidation Following Lawsuit
This Is Guernsey reports that E-Si has gone into liquidation less
than a month after being sued for GBP70,000 by Deputy Arrun
Wilkie and his business partner.

Liquidator Grant Thornton confirmed it had been assigned to the
case but a spokesman said that as far as it was aware, the
recently lost court case was not the reason the company went to
the wall, This Is Guernsey relates.

"E-Si is insolvent so, yes, it's in liquidation," This Is
Guernsey quotes the spokesman as saying.  "We only picked up the
case on Friday.  The business will be examined but we are not
aware of any staff at this stage, other than the directors.  At
this stage we have no idea about the number of creditors or any
amounts owed.  Our job is to wrap it all up, see if there are any
assets left and pay out as much as possible."

Deputy Wilkie and David Barlow, formerly of the Aqua Technique
Partnership, had taken E-Si to court to retrieve thousands of
pounds from the company, This Is Guernsey recounts.  They claimed
E-Si had agreed, during a merger between the company and the
partnership in 2009, to pay off Aqua Technique's debts, This Is
Guernsey discloses.  The merger had gone through but no creditors
were paid, This Is Guernsey notes.  The court ruled in favor of
Deputy Wilkie and Mr. Barlow, ordering E-Si to pay the pair
almost GBP70,000 plus interest, This Is Guernsey recounts.

E-Si is a green energy firm.

HEARTS OF MIDLOTHIAN: Shareholder Says Bids are Unacceptable
EastkilbrideNews reports that the administrator in charge of Ukio
Bankas has told the BDO Group, as administrators of the Hearts of
Midlothian Football Club, that three bids lodged for the club are
unacceptable.  The Bank further warned that the club would be
liquidated unless the offers are improved, according to the

The Lithuanian bank is owed GBP15million by Hearts but its
administrator Gintaras Adomonis has issued the grave threat to
BDO, the trouble-shooters now running the Edinburgh club, after
they were also placed into administration, EastkilbrideNews

Mr. Adomonis, according to the news source, has told BDO to
continue negotiations with fans' group the Foundation of Hearts
and Five Stars Football Ltd, which lists controversial former
Livingston owner Angelo Massone among its directors.  A third
offer placed by HMFC Ltd has been rejected outright.  If the
negotiations fail, Ukio Bankas may initiate the process of
liquidating Hearts, the report points out.

The report relays that in a statement given to Press Association
Sport, Mr. Adomonis said: "I can repeat that we are doing
everything we can to save the club functioning.  However, I am
obliged to protect solely the interests of Ukio Bankas and its
creditors . . . .  If no feasible offer with terms and conditions
acceptable to Ukio Bankas creditors is achieved, Ukio Bankas will
remain with the only solution -- liquidation of Hearts of
Midlothian Plc and enforcement of the standard security over
Tynecastle stadium . . . .  I sincerely hope this is the way of
things we still can avoid."

Ukio Bankas has a 29.9% interest in Hearts and has a floating
charge on Tynecastle club as security against the money it is
owed.  Kaunas-based investment firm UBIG, who owns a 50% stake in
Hearts, is owed another GBP10million by the club.  Both companies
were once controlled by former Hearts owner Vladimir Romanov but
are now insolvent, the report cites.  Ukio Bankas is in the hands
of administrators while the process of appointing trouble-
shooters to oversee the liquidation of UBIG was launched, the
report adds.

HIBU PLC: Debt Restructuring Prompts Moody's to Cut CFR to C
Moody's Investors Service downgraded hibu Plc.'s probability of
default rating to D-PD, and its corporate family rating to C from
Ca. The outlook has been changed from negative to stable.

Ratings Rationale:

The change in PDR to D-PD follows the company's announcement on
July 25, 2013 that it has agreed terms with a coordinating
committee of lenders for a proposed debt restructuring. The
company is currently in payment default on its approximately GBP
2.3 billion of bank debt, which is the sole financial debt in the
capital structure.

The downgrade of the CFR to C reflects Moody's view that the
proposed restructuring will result in effective creditor losses
exceeding 70%.

Under the proposed restructuring, the company will exchange its
GBP 2.3 billion of debt for about GBP 1.5 billion of new debt,
including: (i) GBP 580 million five year senior secured debt with
a margin of 5%; and (ii) GBP 920 million ten year Payment in Kind
(PIK) debt, paying 1% interest. The balance GBP 800 million of
existing debt will be written off. The restructuring is expected
to close during Q4.

hibu's revenue fell by 16% in the year ending March 31, 2013,
driven by the continued challenges facing the business model as
well as the weak economic environment. Company-reported EBITDA
fell by 38% to GBP 283 million, with EBITDA margins falling to
21% from 29%; a pace accelerated from previous years due to the
company's relatively high fixed cost base.

Although the transaction will leave GBP 1.5 billion of debt
outstanding, in the context of the company's operating trends,
Moody's believes that the economic value of the PIK debt will be
very low, effectively functioning as quasi-equity. It also
remains to be seen whether the senior secured debt will initially
trade at par. In any case, Moody's believes that existing
creditors will suffer losses exceeding 70%.

Given the circumstances, Moody's does not anticipate any changes
in ratings until the debt restructuring is concluded.

The principal methodology used in this rating was the Global
Publishing Industry published in December 2011. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.

Hibu operates in the UK, US, Spain, Argentina, Chile, Peru and US
Hispanic markets. In the twelve months to March 31, 2013, hibu
had one million SME customers and total revenues of GBP1.3

MG ROVER: Deloitte Faces GBP20-Mil. Fine over Carmaker Sale
Harry Wilson at The Telegraph reports that Deloitte faces a fine
of up to GBP20 million and the suspension of one of its partners
after a tribunal ruled the accountants had shown a "deliberate
disregard" for professional ethics in its handling of the sale of
defunct carmaker MG Rover.

The Financial Reporting Council's tribunal dismissed an appeal by
Deloitte against an earlier ruling and said the firm had failed
to manage the conflicts of interest created by its role as the
advisers to MG Rover and the "Phoenix Four" directors that bought
the business out of administration, the Telegraph relates.

The tribunal has the power to impose an unlimited fine and the
FRC is pressing for Deloitte to face a GBP20 million penalty, as
well as the suspension of Maghsoud Einollahi, a partner at the
firm who was involved in the deal, the Telegraph discloses.

MG Rover collapsed in 2005 with the loss of 6,000 jobs after
wracking up debts of GBP1.4 billion, having been bought five
years earlier from BMW for GBP10 by businessmen Peter Beale, Nick
Stephenson, John Towers and John Edwards, the Telegraph recounts.

The so-called "Phoenix Four" were struck off as company directors
for a combined 19 years in 2011, having shared GBP42 million in
pay and pensions after buying the company in 2000, the Telegraph

Deloitte had acted as adviser to MG Rover on its administration,
but controversially also acted corporate advisers to the buyout
group, the Telegraph notes.

Deloitte said it disagreed with the verdict and was concerned at
the "potentially serious implications" of the judgment, the
Telegraph relates.

"Deloitte's advice, which itself was not criticized, helped to
generate over GBP650 million of value for the MG Rover Group,
keeping the company alive for five years longer than might have
been the case and securing 5,000 jobs in the West Midlands during
this period.  We take our client and public interest
responsibilities extremely seriously and are proud of the value
we helped create for the MG Rover Group," the Telegraph quotes
the firm as saying in a statement.  "Give the time this has
already taken, we would like to move on."

The tribunal is expected to set out the sanctions it will impose
on Deloitte and Mr. Einollahi in the next couple of weeks, as
well as the payment of costs, the Telegraph discloses.

Deloitte has been reported to have earned more than GBP9 million
in fees from its work on the MG Rover administration, as well as
advising the Phoenix Four, the Telegraph notes.

                      About MG Rover Group

Headquartered in Birmingham, United Kingdom, MG Rover Group
Limited -- produced automobiles
under the Rover and MG brands, together with engine maker
Powertrain Ltd.  Previously owned by Phoenix Venture Holdings,
the company faced huge losses in recent years, reaching GBP64.1
million in 2004, which were blamed on reduced sales.

MG Rover collapsed on April 8, 2005, after a tie-up with China's
largest carmaker, Shanghai Automotive Industry Corp., failed to
materialize.  Ian Powell, Tony Lomas and Rob Hunt, partners in
PricewaterhouseCoopers, were appointed as joint administrators.
The crisis left 6,000 people jobless, and caused a domino effect
on related businesses, particularly in the West Midlands.  Days
later, eight European subsidiaries -- MG Rover Deutschland GmbH;
MG Rover Nederland B.V.; MG. Rover Belux S.A./N.V.; MG Rover
Espana S.A.; MG Rover Italia S.p.A.; MG Rover Portugal-
Veiculos e Pecas LDA; Rover France S.A.S., and Rover Ireland
Limited -- were placed into administration.

OPCO: Unsecured Creditors to Face More Than GBP5.6-Mil. Losses
Kaleigh Watterson at Insider Media reports that unsecured
creditors of Opco are set to lose out on more than GBP5.6

A report from administrators at KPMG, seen by Insider, revealed
that a total of GBP7.6 million is owed to unsecured creditors
following the administration.

Preferential creditors, comprising of money owed to employees,
are estimated at GBP96,000, Insider discloses.

Preferential creditors are set to receive all the money owed to
them, but only GBP1.9 million is available to unsecured creditors
meaning sub-contractors and trade creditors are set to lose out
on GBP5.7 million, Insider says, citing the report.

The report has revealed that some of the company's assets include
land at Lamby Way in Cardiff and in Swansea, Insider notes.

Joff Pope and Jane Moriarty of KPMG were appointed joint
administrators of Opco Ltd on June 17, 2013, Insider recounts.
All Opco staff were made redundant following the appointment,
Insider relates.

Opco is a Cardiff construction business.

* Moody's Says UK Non-Conforming Performance Stable in May 2013
The performance of the UK non-conforming residential mortgage-
backed securities (RMBS) market remained stable over the three-
month period ending May 2013, according to the latest indices
published by Moody's Investors Service.

In May 2013, the 90+ day delinquency index for UK non-conforming
RMBS remained at 16.1% compared to February. Outstanding
repossessions decreased to 0.7% from 0.8% of the current
outstanding balance. Cumulative losses remained at 2.4% of the
original balance in May 2013.

Weighted-average loss severity (percentage of properties sold)
was 26.8%, although there was substantial volatility between
vintages and series. The average loss severity is currently below
its June 2010 peak of 33.4%. Low redemption rates, which were
5.1% in May 2013, are far below the pre-2009 levels of 20%-40%.
In Moody's view, these low redemption rates indicate that the
portfolios will remain outstanding for a significant time,
exacerbating future performance uncertainty.

Moody's outlook for the collateral performance of UK non-
conforming RMBS transactions in 2013 is stable. Additionally, in
June 2013, Moody's published a study highlighting significant
default drivers for UK non-conforming mortgages including high
LTV and County Court Judgments.

On May 30, 2013, Moody's downgraded from Ba1 (sf) to B2 (sf) the
ratings of the Class E notes issued by Mortgages No.7 plc
following a deterioration in the credit quality of the collateral
and the reserve fund amortization.

On May 24, 2013, Moody's upgraded the Class A3 notes issued by
RMAC 2004-NSP2 PLC. This upgrade reflects the elimination of
potential cross-currency exposure risk after the non-GBP
denominated notes in the transaction were fully repaid. It also
reflects the performance of the collateral to date and the
current level of credit enhancement.

The total current outstanding pool balance of all 81 Moody's-
rated transactions in the UK non-conforming RMBS market dropped
to GBP19.6 billion in May 2013, a year-over-year decrease of
6.6%. Moody's has not assigned new ratings to any UK non-
conforming RMBS transactions since January 2009.

* Moody's Says UK Prime RMBS Performance Stable at May 2013
The performance of the UK prime residential mortgage-backed
securities (RMBS) market continued its stable trend in the three-
month period ending May 2013, according to the latest indices
published by Moody's Investors Service.

From February to May 2013, the 90+ day delinquency trend
decreased to 1.9% from 2.0% of the outstanding portfolio.
Outstanding repossessions and cumulative losses remained stable
at 0.1% and 0.4%, respectively. Moody's annualized total
redemption rate (TRR) trend averaged 14.8% in the three-month
period up to May 2013.

Moody's outlook for the collateral performance of UK prime RMBS
in 2013 is stable.

Between April and July 2013, Moody's assigned ratings to five
transactions in the UK prime RMBS market:

-- Permanent Master Issuer PLC Series 2013-1, originated by Bank
    of Scotland plc (A2/Prime-1, Negative) under the 'Halifax'
    brand, issued GBP1.75 billion.

-- Kenrick No. 2 PLC, originated by West Bromwich Building
    Society (B2/Non Prime, Stable), issued GBP0.4 billion.

-- Holmes Master Issuer Series 2013-1, originated by Santander
    PLC (A2/Prime-1, Negative), issued GBP1.1 billion.

-- Lanark Master Issuer plc 2013-1, originated by Clydesdale
    plc (A2/Prime-1, Stable), issued GBP0.6 billion.

-- Albion No.2 PLC, originated by Leeds Building Society
    (A3/Prime-2, Stable), issued GBP0.3 billion.

As of May 2013, the 82 Moody's-rated UK prime RMBS transactions
had an outstanding pool balance of GBP186.2 billion, which
constitutes a year-on-year decrease of 29.0%. This is largely due
to the redemption of two Master Trusts (Mound Financing and
Lothian Mortgages). In addition, Langton Securities redeemed
three series.


* Moody's Outlook on European Tobacco Sector to Remain Stable
The outlook for the European tobacco industry will remain stable
over the next 12-18 months, reflecting an expected slowing of
operating profit growth to around 4.5%-5.5% versus the previous
expectation of 7% growth, says Moody's in its latest Industry
Outlook report on the sector entitled "European Tobacco Industry
Profit Growth to Slow as Volume Decline Accelerates." Moody's
changed the outlook for the European tobacco industry to stable
from positive in June 2013.

"We expect to see a further acceleration in declining cigarette
sales in the next 12-18 months in most European markets. Volume
declines may be larger in more profitable markets, which will
have a greater impact on overall industry profitability," says
Paolo Leschiutta, a Vice President - Senior Credit Officer in
Moody's Corporate Finance Group and author of the report.
"Overall, increased regulatory pressure will likely continue to
weigh on the operating profits of tobacco companies into 2015."

Within Europe, Moody's expects the decline in cigarette volumes
to be greater in southern European countries, where the rating
agency expects no, or very slow, economic growth in the period.
In addition, Moody's notes that regulatory pressure has increased
in the past year, including a smoking ban in Russia, which the
rating agency believes will have a significant short-term impact
on volumes.

Tobacco manufacturers will probably increase prices to offset
increasing pressure on volumes. Price inelasticity remains good,
but the current market conditions will constrain price increases.

Moody's expects that developing market growth will help offset
sluggish mature markets. Philip Morris International Inc. (PMI,
A2 stable) and British American Tobacco plc (BAT, A3 stable)
should benefit from their greater exposure to emerging markets
and from their earlier starts in investing in non-traditional
products. Imperial Tobacco Group plc (Baa3 positive) and Swedish
Match AB (Baa2 stable) are more exposed to mature markets but
both have diversified products or value brands, which will help
reduce the impact of sales declines in those markets.

The nascent e-cigarette market could add to competitive pressure
in the industry. However, in the next two to three years Moody's
expects these products to represent only 1%-2% of the global
cigarette market in terms of volumes, and an even smaller
proportion in value terms. Some issuers are moving into the
segment via acquisitions in the case of BAT, or product
investment (PMI).

Moody's notes that the industry remains exposed to a significant
degree of event risk due to the companies' appetite for
acquisitions and the industry's historical consolidation rate.
However, Moody's expects issuers to moderate their historically
aggressive shareholder policies if they make large acquisitions
or if operating performance declines. The risk of US litigation,
which the rating agency believes BAT remains partially exposed
to, remains acute in terms of the potential punitive damage

Moody's considers that the outlook has more upside potential than
downside. If issuers can offset the industry's short-term
challenges with growth in emerging markets, possible small
acquisitions and price increases, then profit growth might exceed
6% and Moody's could consider changing the outlook back to
positive. Moody's would change the outlook to negative if
operating profit contracted or there was a dramatic regulatory
change or litigation.

* Moody's Notes Stable Global Long-Term Bank Debt Issuance
Total long-term debt issuance by banks has leveled off over the
past year, as the continuing decline in European banks' issuance
is offset by North American issuance, says Moody's Investors
Service in its latest Global Bank Debt Report.

The report provides comprehensive information on unsecured bank
debt issued by Moody's-rated banks globally. Moody's-rated banks
issued approximately $1.14 trillion in unsecured debt for the 12
months ending June 30, 2013, roughly equal to that issued during
the prior 12 month period.

There are significant regional differences in the downward trend
in global long-term unsecured bank debt issuance that started in
2007. Since then, total issuance is down more than 50%, says
Moody's. While total issuance rose by just under 4% over the 12
months ending June 30, 2013, European banks' debt issuance
declined 10% over the period, while in North America, debt
issuance increased by 28%. In Asia, banks' debt issuance has
remained generally flat.

"The ongoing decline in global debt issuance continues to reflect
a reduced number of banks issuing debt in the euro area, but
North American banks are continuing to access the debt markets,"
said Robard Williams, a Moody's Vice President -- Senior Credit
Officer and co-author of the report.

At the same time, Moody's notes a strong increase in subordinated
debt issuance, which is up 124% over year-ago levels. Demand has
returned given the greater clarity on the risk-return profile of
these instruments, as well as their treatment for regulatory
capital purposes. Regulation is increasingly important as banks,
particularly in Europe, look to improve their regulatory capital
positions and meet market demands for larger loss-absorbing

The report provides in-depth graphs that illustrate trends in
aggregated long-term bank unsecured debt issuance and maturity
over various time periods for eight regional groups and 26
individual countries.


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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