/raid1/www/Hosts/bankrupt/TCREUR_Public/130802.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Friday, August 2, 2013, Vol. 14, No. 152
Headlines
F R A N C E
ALCATEL-LUCENT USA: Moody's Rates New Sr. Unsecured Notes '(P)B3'
ALCATEL LUCENT USA: S&P Rates New $500MM Sr. Unsec. Notes 'CCC+'
FRENCH POLYNESIA: S&P Affirms 'BB+' LT Issuer Credit Rating
MERCEDES-BENZ: Certification Dispute May Spur Outlets' Bankruptcy
G E R M A N Y
BLITZ 13-252: S&P Assigns 'CCC+' Rating to EUR640MM Facilities
IVG IMMOBILIEN: Mulls Court-Supervised Restructuring
KUKA AG: S&P Raises Corp. Credit Rating to 'BB-'; Outlook Stable
PRAKTIKER AG: More Than 10 Parties Express Interest in Stores
PRAKTIKER AG: Metro Takes EUR30-Mil. Hit From Insolvency
SEAVOSS SCHIFFAHRT: Vessels Stranded Following Insolvency
G R E E C E
ALPHA BANK: S&P Affirms 'CCC/C' Ratings; Outlook Negative
EUROBANK ERGASIAS: S&P Affirms 'CCC' Counterparty Credit Rating
NATIONAL BANK: S&P Affirms 'CCC/C' Ratings; Outlook Negative
PIRAEUS BANK: S&P Affirms 'CCC/C' Ratings; Outlook Negative
I R E L A N D
CLAVOS EURO: S&P Raises Rating on Class V Notes to 'BB-'
TREASURY HOLDINGS: Two Developers to Get Millions After NAMA Deal
WATERFORD UNITED: Avoids Liquidation After Deal with Ex-Manager
I T A L Y
BANCA POPOLARE: Moody's Confirms Caa2 Long-Term Deposit Rating
N E T H E R L A N D S
ABN AMRO: Moody's Lifts Ratings on GBP150MM Tier 2 Notes to Ba1
E-MAC NL 2004-II: S&P Affirms 'CCC' Ratings on Class E Notes
P O L A N D
METELEM HOLDING: S&P Raises Corp Credit Rating to 'BB-'
POLIMEX-MOSTOSTAL: DAAS Files Bankruptcy Motion in Warsaw Court
P O R T U G A L
BANCO SANTANDER: S&P Cuts Rating on Bonds to 'BB+'; Outlook Neg.
S P A I N
BANCO POPULAR: DBRS Cuts Rating on Preferred Shares to 'BB'
MAPFRE SA: Fitch Affirms BB- Rating on EUR700MM Subordinated Debt
S W E D E N
ARTIMPLANT AB: Ongoing Litigations Prompt Bankruptcy Filing
U N I T E D K I N G D O M
BRADFORD BULLS: Owner Denies Firm in the Brink of Administration
COVENTRY CITY FC: Faces Serious Liquidation Threat
HEARTS OF MIDLOTHIAN: Unsecured Creditors Likely to Get Nothing
MID STAFFORDSHIRE: Trust 'Should Be Dissolved'
MONEY PARTNERS: S&P Lowers Rating on Class B1 Notes to 'BB-'
RAILCARE: Goes Into Administration, 500 Jobs at Risk
SALUBRIOUS PLACE: Goes Into Receivership
* Sports Club and Facilities Insolvencies Fall 33% Post-Olympics
X X X X X X X X
* European Telcos Must Increase Network Investments for Stability
* Moody's Notes Large Outflows in Euro Money Market Funds in Q2
* BOOK REVIEW: Jacob Fugger the Rich
*********
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F R A N C E
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ALCATEL-LUCENT USA: Moody's Rates New Sr. Unsecured Notes '(P)B3'
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Moody's Investors Service assigned a provisional (P)B3 rating to
the proposed senior unsecured notes to be issued by Alcatel-
Lucent USA Inc., a subsidiary of Alcatel-Lucent. Concurrently,
Moody's has converted the provisional (P)Caa1 rating of the 4.25%
Oceane convertible notes due in 2018 raised by Alcatel-Lucent
into a definitive Caa1 rating. Moody's has also affirmed Alcatel-
Lucent's B3 corporate family rating (CFR) and B3-PD probability
of default rating (PDR). The outlook on all ratings remains
negative.
Moody's issues provisional ratings for debt instruments in
advance of the final sale of securities or conclusion of credit
agreements. Upon a conclusive review of the final documentation,
Moody's will endeavor to assign a definitive rating to the rated
capital instruments. A definitive rating may differ from a
provisional rating.
"Our rating assignments reflect the junior position of the senior
unsecured notes and convertible notes in Alcatel-Lucent's capital
structure," says Roberto Pozzi, a Moody's Vice President - Senior
Analyst and lead analyst for Alcatel-Lucent. "Our affirmation of
Alcatel-Lucent's B3 rating reflects the group's declining
revenues with a first sign of stabilization in Q2 2013 and
continued pressure on prices as well as negative cash flow
challenges balanced by the company's strong relations with its
customers, broad product offering and continued cost reduction
efforts."
"While there are benefits to the group's recently announced
refocus on IP Networking and Ultra Broadband, additional
restructuring efforts could delay Alcatel-Lucent's ability to
generate positive free cash flows by 2015" adds Mr. Pozzi.
Ratings Rationale:
Assignment of (P)B3 Rating to Senior Unsecured Notes
The assignment of a (P)B3 rating to the senior unsecured notes
issued by Alcatel-Lucent USA reflects (1) their unsecured nature
and hence their junior position in Alcatel-Lucent's capital
structure behind the senior secured debt raised by the same
entity; and (2) the senior unsecured guarantees from Alcatel-
Lucent and certain subsidiaries, which rank pari passu with the
other senior debt of the guarantors.
For the twelve months period ending on June 30, 2013, initial
guarantors and the issuer account for 54.4% of gross assets and
47.9% of group revenues. Moody's notes that the value of the
guarantees could be impaired given that in certain situations
(e.g. sale, liquidation, merger) a guarantor might be released
from its guarantee without the consent of the noteholders.
Moreover, the laws of certain jurisdictions may limit the
enforceability of certain guarantees and certain guarantees
contain limitations.
The issuance of the new senior unsecured notes is a positive for
Alcatel-Lucent as it improves its liquidity by extending its debt
maturities.
Conversion Of Provisional Into Definitive Caa1 Rating To
Convertible Notes:
The conversion of the provisional into a definitive Caa1 rating
of the convertible notes due 2018 issued by Alcatel-Lucent in
July 2013 reflects (1) their unsecured nature and hence their
junior position in the capital structure behind the senior
secured debt raised by Alcatel-Lucent USA; and (2) the fact that
they have similar features as the existing 5% convertible notes
due in 2015 issued by the same entity, which Moody's rates Caa1,
i.e., they rank pari passu with Alcatel-Lucent's existing
unsecured indebtedness but do not benefit from upstream
guarantees. The Caa1 rating is one notch below the group's CFR.
Affirmation of B3 CFR:
On June 19, 2013, Alcatel-Lucent announced a new strategic plan
that, in essence, will reposition the company's focus
predominantly on becoming an IP Networking and Ultra Broadband
specialist and to manage its Access activities for cash,
including Wireless Access, Fixed Access, Licensing and Managed
Services, in which Alcatel-Lucent will limit investments and
research and development spending for its legacy products with a
view to achieve positive cash flows by 2015. Given the high
research and development intensity of all of these businesses and
due to the limited availability of capital to support their
growth, this shift in the group's strategy makes sense. However,
these measures will lead to additional restructuring costs, and
an expectation that it will take even longer than previously
anticipated to achieve positive free cash flow generation. In
addition, ALU will continue to develop its Long Term Evolution
(LTE) business, which is the growth portion of its Wireless
division, and will reduce its efforts in the legacy 2G and 3G
networks. Therefore, Moody's believes that, despite the change in
strategy, profitability and cash flow generation ability will be
muted going forward, and that the rating remains adequately
positioned in the B3 category.
The negative outlook on Alcatel-Lucent's rating reflects the
company's ongoing cash burn relative to its substantial, but
finite, liquidity. Given continuing costs for its restructuring
program and the limited visibility of a recovery in 2013, Moody's
believes that it will be challenging for Alcatel-Lucent to halt
its cash consumption.
What Could Change The Rating Up/Down
Negative pressure on the B3 rating would increase if (1) the
company's operating margin, as adjusted by Alcatel-Lucent, fails
to trend towards the mid-single digits in percentage terms in
2013, with further tangible improvements thereafter; (2) Alcatel-
Lucent is unable to maintain its negative free cash flow below
EUR500 million on a last 12-months-basis throughout 2013, as
adjusted by Moody's; (3) the company's debt/EBITDA does not
improve towards 6.0x as adjusted by Moody's; or (4) the company
is unable to maintain adequate liquidity. Rating pressure could
ease and the outlook on the rating stabilize if all of these
conditions are met, with particular regard to an improvement in
free cash flow generation.
Although currently unlikely, upward rating pressure would require
Alcatel-Lucent to (1) generate significant positive free cash
flow on a last-12-months basis, as adjusted by Moody's; (2)
sustain sales growth; and (3) achieve an operating margin, as
adjusted by Alcatel-Lucent, in the mid-single digits in
percentage terms.
Principal Methodology
The principal methodology used in these ratings was the Global
Communications Equipment Industry published in June 2008. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.
Alcatel-Lucent is a leading developer and manufacturer of telecom
equipment with sales of approximately EUR14.4 billion in 2012. In
terms of revenues, the company ranks behind Cisco Systems, Inc.
(A1 stable), with $47.3 billion (EUR36.7 billion) of revenues in
the 12-month period to January 2013, Telefonaktiebolaget LM
Ericsson (A3 negative), with SEK228 billion (EUR26.2 billion) of
sales (2012), and Huawei, with CNY220 billion (EUR27.2 billion)
of sales in 2012, but before Nokia Siemens Networks B.V. (B2
positive), with sales of EUR13.4 billion in 2012. In spite of
this relative high concentration of global vendors, price
competition is very fierce in this industry.
ALCATEL LUCENT USA: S&P Rates New $500MM Sr. Unsec. Notes 'CCC+'
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Standard & Poor's Ratings Services said that it assigned its
'CCC+' issue rating to the proposed $500 million senior unsecured
notes to be issued by Alcatel Lucent USA Inc., the U.S.
subsidiary of French telecommunications equipment supplier
Alcatel-Lucent. The recovery rating on the proposed notes is '5',
indicating S&P's view of modest (10%-30%) recovery prospects in
the event of a payment default.
At the same time, S&P placed its 'CCC' issue ratings on the
existing senior unsecured notes issued by Alcatel-Lucent and
Alcatel Lucent USA on CreditWatch with positive implications.
The recovery rating on the existing notes is unchanged at '6',
indicating S&P's expectation of negligible (0%-10%) recovery
prospects in the event of a payment default.
The CreditWatch positive placement signals that on completion of
the proposed issuance, S&P expects to raise the issue rating on
the existing senior unsecured notes to 'CCC+' from 'CCC' and
revise upward the recovery rating on these notes to '5' from '6'.
This reflects S&P's understanding that Alcatel-Lucent will use
the entire proceeds from the proposed $500 million unsecured
notes to repay first-lien debt, which, in S&P's opinion, will
improve the recovery prospects for all the unsecured notes issued
by Alcatel Lucent and Alcatel Lucent USA.
RECOVERY ANALYSIS
Alcatel Lucent USA will issue the proposed notes on an unsecured
basis. S&P understands that the proposed notes will benefit from
a stronger guarantee package than the existing senior notes.
This is because the new notes will benefit from guarantees from
operating subsidiaries, as well as pari passu guarantees from the
parent Alcatel Lucent, whereas the existing notes at Alcatel
Lucent USA only benefit from subordinated guarantees. The notes
issued by Alcatel Lucent benefit from subordinated guarantees
from its U.S. subsidiary. As a result, S&P views the proposed
notes having either the same or better recovery prospects than
the notes issued at the parent Alcatel Lucent. However, S&P
expects the recovery prospects for the proposed notes to be in
the same 10%-30% range. In S&P's view, the majority of Alcatel
Lucent's value currently resides in its U.S. operations.
The documentation for the proposed notes will include several
restrictions to prevent the issuance of additional indebtedness
at the parent guarantor and its restricted subsidiaries. These
restrictions include a fixed-charge coverage covenant set at 2x.
However, the documentation allows for a maximum of EUR2.25
billion of first-lien debt, which allows for substantial
additional debt to be raised ahead of the senior notes.
Furthermore, the documentation allows for a sizable debt basket
of EUR1.5 billion at the parent guarantor and restricted
subsidiaries, and nonrecourse asset-backed securities.
Additionally, there will be restrictions on liens, asset sales,
mergers, and payments that S&P deems typical for issuance of this
kind.
To determine recoveries, S&P simulates a default scenario. In
this scenario, S&P assumes that the group uses its cash balances
to offset high operating losses in a continually weak operating
environment. Such weakness is reflected in the constrained
capital expenditure budgets of telecoms carriers and increased
competition among telecom network equipment providers. In
addition, S&P assumes that Alcatel-Lucent's research and
development costs remain significant, as it continues to develop
products to remain competitive. We also assumes that the group
will not make asset disposals or realize meaningful proceeds from
its patent portfolio to repay the senior secured facilities. S&P
believes that under these circumstances, the group could file for
bankruptcy in 2015, to facilitate restructuring while it still
has meaningful cash on its balance sheet.
"We estimate the group's stressed enterprise value at the
hypothetical point of default in 2015 at about EUR3.3 billion.
We deduct about EUR300 million of enforcement costs and about
EUR980 million of priority liabilities, predominately related to
discounted receivables of approximately EUR750 million. This
leaves a net value of about EUR2 billion for lenders. We
envisage EUR1.7 billion of senior secured debt outstanding at
default, including six months of prepetition interest. We do not
assume any additional repayments from asset disposals. We also
assume that about EUR2.9 billion of senior unsecured notes would
be outstanding at our hypothetical point of default," S&P noted.
Although S&P values Alcatel-Lucent as a going concern, it do not
see a meaningful difference in recovery prospects using a
discrete asset valuation.
RATINGS LIST
New Rating
Alcatel-Lucent USA Inc.
US$500 mil sr unsec nts due 2020 CCC+
Recovery Rating 5
CreditWatch Action
To From
Alcatel-Lucent USA Inc./Alcatel-Lucent
Senior Unsecured CCC/Watch Pos CCC
Recovery Rating 6 6
Ratings Affirmed
Alcatel-Lucent USA Inc.
Senior Secured B+
Recovery Rating 1
Preferred Stock CCC-
FRENCH POLYNESIA: S&P Affirms 'BB+' LT Issuer Credit Rating
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Standard & Poor's Ratings Services affirmed its 'BB+' long-term
issuer credit rating on France's Overseas Country of Polynesia.
The outlook is stable.
RATIONALE
The rating reflects S&P's view of French Polynesia's "negative"
liquidity as its criteria defines the term, very high level of
contingent liabilities, and the structural weaknesses of its
economy despite moderate GDP per capita by international
standards of EUR15,868. The rating is also still constrained by
S&P's view of French Polynesia's financial management as
"negative," even though S&P previously considered it to be "very
negative."
The rating is supported by S&P's expectation of a structural
improvement in French Polynesia's budgetary performance with a
balanced balance after capital accounts by 2015, its "evolving
but sound" institutional framework, and its moderate budgetary
flexibility thanks to its large modifiable tax revenues that
account for 80% of operating revenues.
In the last decade political instability, weak revenue and
expenditure management, and very unfavorable economic conditions
with a 3% average real GDP decline from 2008, have translated
into strong deterioration in French Polynesia's budgetary
performance and liquidity. The operating balance reached a very
low negative -5.1% in 2010 and grew slightly, by 1.3% in 2011,
and 2.5% in 2012. Moreover, French Polynesia's severe liquidity
tensions were only eased by the extraordinary support of the
state through a CFP franc (XPF)6 billion (EUR50.4 million)
exceptional grant in 2012. Ordinary and extraordinary state
support, through state advances or indirectly through Agence
Fran‡aise de Developpement (AFD) therefore constitutes a key
element of S&P's view of the institutional framework for French
Polynesia as "evolving but sound," and of its liquidity.
"We believe the April-May 2013 local elections should give French
Polynesia a stable and strong political majority. Moreover, in
our view, the tax reform and the supplementary budget passed in
July 2013 shows a willingness to restore public finances and
liquidity, especially through the creation of an Investment and
Debt Guarantee Fund (IDGF), to which will be allocated
XPF4 billion in dividends in 2013, several taxes from 2014 that
we forecast at XPF2.5 billion per year, and potential asset sales
for the next five years. These factors led us to revise up our
view of French Polynesia's financial management to "negative"
from "very negative." In our view, financial management remains
constrained by poor control over government-related entities,
inadequate-though-improving accounting practices, and sizable-
though-falling exposure to derivatives," S&P said.
"Despite our expectations of limited growth prospects for French
Polynesia under our base-case scenario, we therefore consider
that the full impact of tax reform from 2014 and the continued
adjustment of operating expenditure will allow French Polynesia
to structurally improve its budgetary performance with an
operating balance above 10% of operating revenues in 2015. We
believe operating expenditure adjustments will benefit from state
budgetary support, especially for the early staff retirement plan
and the funding of the social solidarity fund," S&P added.
Following the implementation of operating expenditure adjustment
measures we consider that French Polynesia's ability to cut
operating spending will be very limited. We take the same view
of capital expenditure (capex), which was drastically cut in
2011/2012. Given the importance of public investment for the
local economy, we expect an increase of capital expenditure to
XPF19 billion on average in 2013-2015 under our base-case
scenario. Nevertheless, thanks to the structural improvement of
its operating balance, French Polynesia should be able to
increase capital spending while gradually reducing its deficits
after capital accounts toward complete balance by 2015," S&P
said.
In S&P's view, this good budgetary performance should allow
French Polynesia to reduce its tax-supported debt to less than
90% of operating revenues in 2015, compared with 94% in 2012.
S&P includes in its calculation of tax-supported debt various
entities such as French Polynesia's airline Air Tahiti Nui and
the Polynesian housing office.
S&P considers that French Polynesia reports very high contingent
liabilities through its large spectrum of local public agencies
and semi-public companies, and large off-balance sheet
commitments related to its social security system. Nevertheless,
in the short term, we believe the July tax reform and the
possible state contribution to the social solidarity fund limit
the related risks.
Liquidity
"We view French Polynesia's liquidity as negative. Cash flows,
especially tax proceeds, are largely unpredictable. We consider
that the next 12 months average cash will continue to cover less
than 40% of debt service. However, despite this very weak
coverage ratio, we consider that the implementation of the IDGF
will ease liquidity pressures in the short-term. Moreover, we
expect French Polynesia's access to external liquidity to be
satisfactory" in 2013. We still consider that in case of
liquidity strains, French Polynesia could benefit from direct and
indirect state support through advances on general grants, cash
advances, or funding from AFD," S&P noted.
Outlook
The stable outlook reflects S&P's base-case expectation that
French Polynesia will strongly and structurally improve its
budgetary performance thanks to the July 2013 tax reform and the
continued implementation of operating spending adjustment
measures.
S&P's could consider a positive rating action if French Polynesia
was able to structurally improve its liquidity situation--with
available free cash covering over 40% of debt service thanks to
slightly better budgetary performance or a stronger increase of
the revenues allocated to the IDGF -- and reinforce its access to
external funding from commercial banks and financial markets.
S&P could lower the rating if, despite the implementation of the
IDGF, French Polynesia was to face new severe liquidity tensions,
and these were not were eased by extraordinary state support as
in 2012. S&P could also lower the rating if French Polynesia was
unable to structurally improve its budgetary performance.
However, both S&P's upside and downside scenarios are unlikely at
this stage.
In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable. At the onset of the committee, the chair
confirmed that the information provided to the Rating Committee
by the primary analyst had been distributed in a timely manner
and was sufficient for Committee members to make an informed
decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts. The chair
ensured every voting member was given the opportunity to
articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision.
The views and the decision of the rating committee are summarized
in the above rationale and outlook.
RATINGS LIST
Ratings Affirmed
Overseas Country of Polynesia
Issuer Credit Rating BB+/Stable/--
MERCEDES-BENZ: Certification Dispute May Spur Outlets' Bankruptcy
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Simon Warburton at just-auto reports that Mercedes-Benz
distributors in France say the current refusal by French
authorities to certify certain models is having a "disastrous
effect" on sales which could see some outlets file for
bankruptcy.
France and Germany are squaring up to each other in a war of
words that has led to Mercedes A, B and CLA vehicles being
uncertified as Paris views the German automaker's use of the
r134a refrigerant as harmful to the environment, just-auto
discloses.
According to just-auto, Mercedes says it is currently taking
legal steps to address the situation, but its distributors,
employing 11,000 staff in France, are warning the situation could
lead to partial redundancies of up to 1,500 as 5,000 vehicles
currently remain undelivered.
Mercedes-Benz is a multinational division of the German
manufacturer Daimler AG, and the brand is used for luxury
automobiles, buses, coaches, and trucks. Mercedes-Benz is
headquartered in Stuttgart, Baden-Wuerttemberg, Germany.
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G E R M A N Y
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BLITZ 13-252: S&P Assigns 'CCC+' Rating to EUR640MM Facilities
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Standard & Poor's Ratings Services said it assigned its 'CCC+'
issue rating to the proposed EUR640 million private high-yield
facilities due 2021 to be issued by Blitz 13-252 (which S&P
understands will be shortly renamed Springer SBM Two Gmbh). This
rating is two notches below the corporate credit rating on the
parent company Blitz 13-347 GmbH (which will be shortly renamed
Springer SBM One Gmbh), the guarantor of the proposed facilities
that is a new entity that will sit at the top of the new Springer
group after completion of the acquisition of all of Springer
Science+Business Media S.A's (SBBM) assets by funds advised by BC
Partners. The recovery rating on these facilities is '6',
reflecting S&P's expectation of negligible (0%-10%) recovery in
the event of a payment default.
The private facilities will benefit from subordinated guarantees
and will be secured by a second-ranking claim over the ownership
interests in the holding companies and over certain proceeds
loans.
The recovery and issue ratings on the proposed facilities reflect
their contractual and structural subordination to the slightly
increased EUR1,970 million senior secured facilities.
IVG IMMOBILIEN: Mulls Court-Supervised Restructuring
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Dalia Fahmy and Julie Miecamp at Bloomberg News report that IVG
Immobilien AG is examining whether it qualifies for a court-
supervised restructuring after the debt-laden German real estate
company's creditors failed to offer an alternative by Tuesday's
deadline.
According to Bloomberg, a person with knowledge of the matter
said that IVG hired a law firm that will determine whether the
company meets the criteria for a "Schutzschirmverfahren,"
Germany's equivalent of the U.S. Chapter 11 bankruptcy. IVG,
Bloomberg says, is seeking to renegotiate more than
EUR3 billion (US$4 billion) of debt.
The missed deadline means IVG shareholders won't vote on a
proposal at the Sept. 12 annual meeting and the company will
"examine whether the positive going concern forecast for IVG
Immobilien AG can be upheld," Bloomberg quotes IVG as saying in a
statement after the market closed on Tuesday. If the
restructuring begins, the company will have three months to reach
an agreement with creditors under the supervision of a court-
appointed administrator, Bloomberg notes.
Bloomberg relates that the person said IVG will hold further
talks with creditors about an out-of-court restructuring deal. A
consensual restructuring would ensure "the greatest possible
preservation of value for all the company's stakeholders," IVG,
as cited by Bloomberg, said in Tuesday's statement.
IVG Immobilien is a real estate company based in Bonn, Germany.
KUKA AG: S&P Raises Corp. Credit Rating to 'BB-'; Outlook Stable
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Standard & Poor's Rating Services said that it raised its long-
term corporate credit rating on Germany-based industrial
automation and robotics manufacturer KUKA AG to 'BB-' from 'B+'.
The outlook is stable. At the same time, S&P raised its issue
rating on the group's second-lien debt to 'B+' from 'B'.
The upgrade reflects KUKA's order intake and consistent earnings
growth in the past few quarters, which have increased its cash
generation and improved its credit measures. In S&P's view, the
solid order book and track record of successful working capital
management augurs well for stable earnings and cash generation.
S&P also believes the company will benefit from the expansion
plans of its main customers in growth markets such as North
America, Eastern Europe, and Asia-Pacific.
KUKA achieved record-high revenues of EUR1.8 billion in the 12
months ended March 31, 2013, which helped boost profitability to
a reported EBIT margin of 6.4%. S&P considers that KUKA has
improved its business mix, achieving higher penetration of the
general industry segment and introducing new higher-margin
products. In S&P's view, this should allow the company to offset
weakness in some of its end markets and meet the management
guidance for a reported EBIT margin of about 6.5% in 2013,
maintaining a similar level in 2014.
"We believe that KUKA will likely maintain revenues over the next
two years at about EUR1.8 billion-EUR1.9 billion, as we expect it
to benefit from planned investments in new auto production
facilities outside Western Europe. We also believe that KUKA
will be able to maintain a Standard & Poor's-adjusted EBITDA
margin of about 8%, benefiting from the lower operating leverage
the company achieved during its 2010-2011 restructuring and from
an improved business mix," S&P said.
Taking into account the EUR150 million convertible notes KUKA
issued in the course of 2013, which S&P views as debt under its
criteria, S&P anticipates that the adjusted net debt amount will
remain in the EUR150 million-EUR200 million range in near term.
This is because S&P believes that KUKA is unlikely to make large
acquisitions in the next 12 months, and will continue to generate
positive free operating cash flow (FOCF).
"We assess KUKA's financial risk profile as "significant" under
our criteria. Consistent with our base-case earnings forecast,
we anticipate that KUKA will be able to maintain net debt to
EBITDA of about 1x-1.5x and funds from operations (FFO) to debt
well above 20% on a fully-adjusted basis. At the same time, we
calculate that the EBITDA-to-interest cover ratio will be in the
3x-5x range in the next 24 months. We also anticipate that KUKA
will report neutral to positive FOCF. That said, we think it
likely that cash generation will be tempered until 2014, while
the company expands its production capacity to meet increased
demand. We also note the risks from KUKA's reliance on customer
advances in working capital financing, which could come under
pressure as sales growth and order intake decelerate. In our
view, this deceleration will be mainly due to the uncertain
economic climate in Western Europe causing a decline in auto
production and the slowing down of major automakers' capacity
expansion in emerging markets, which could limit demand for KUKA
products in medium term," S&P added.
KUKA's ratings continue to reflect S&P's view of its business
risk profile as "weak" under its criteria. In S&P's opinion, the
ratings are constrained by KUKA's high exposure to the cyclical
auto industry and its weak and volatile operating margins, albeit
somewhat improved over the past few quarters. Further
constraints include KUKA's difficult position as a supplier to
price-aggressive original equipment manufacturers (OEMs) and its
limited geographic, end-market, and customer diversity.
These constraints are partly offset by KUKA's strong and leading
market positions in its niche markets and longstanding
relationships with OEMs, which provides high barriers to entry
for competitors. KUKA also benefits from a small degree of end-
market diversity, and from the expansion of its main customer
OEMs outside traditional Western European markets.
The stable outlook reflects S&P's expectation that KUKA will be
able to sustain its recent improvement in operating performance
and credit measures over the medium term. S&P considers an
adjusted ratio of debt to EBITDA of less than 3x, FFO to debt of
more than 20%, and EBITDA to interest cover of at least 3x as
commensurate with the 'BB-' rating. Consistently moderate
financial policy, lacking aggressive shareholder distributions,
is also an important factor for the rating.
"We could lower the rating if KUKA's credit measures were to
weaken significantly or if the company were to report materially
negative FOCF for a prolonged period. This could happen if
earnings suffer from a sales decline caused by weak end markets,
combined with an EBITDA margin materially lower than the 8% we
forecast. The rating could also come under pressure if the
company's liquidity position deteriorates because of reduced
customer prepayments or because it is unable to refinance its
bank facilities due in 2014 in a timely way," S&P added.
A positive rating action is unlikely in the medium term because
of KUKA's dependence on the cyclical auto industry and reliance
on customer advances and progress payments to finance the working
capital. Likewise, S&P considers that KUKA is limited in its
ability to strengthen the ratio of EBITDA to interest coverage
beyond the level commensurate with the current rating.
PRAKTIKER AG: More Than 10 Parties Express Interest in Stores
-------------------------------------------------------------
Nicholas Brautlecht and Julie Cruz at Bloomberg News report that
Praktiker AG's administrator Christopher Seagon said more than 10
parties are "seriously" interested in parts or the whole company.
The company hasn't received any offer yet, Bloomberg notes.
The company's administrators Jens-Soeren Schroeder and Mr. Seagon
are liaising with Macquarie Capital to find investors.
As reported by the Troubled Company Reporter-Europe on August 1,
2013, Reuters related that the insolvency administrators of
Praktiker on July 30 said they have stepped up the search for an
investor by appointing Macquarie as advisor. The administrators
hope that by finding an investor they can secure as many jobs and
stores as possible at the group, which has around 20,000 full and
part-time employees, Reuters disclosed. They said they did not
expect any results from the search before the start of September,
but that all the 300 stores affected by the insolvency would
continue trading for now, Reuters related. Of the 300 stores in
the insolvency process, 168 are Praktiker stores, 78 are Max Bahr
stores and a further 54 are Praktiker-branded shops that have
recently been converted to the Max Bahr signage, Reuters noted.
Praktiker AG is a German home-improvement retailer.
PRAKTIKER AG: Metro Takes EUR30-Mil. Hit From Insolvency
--------------------------------------------------------
Victoria Bryan at Reuters reports that Metro said the insolvency
of former subsidiary Praktiker AG had hurt it to the tune of over
EUR30 million (US$39.84 million).
"That comes from our role as both a tenant and service provider,"
Reuters quotes Chief Executive Olaf Koch as saying on Thursday
after the group earlier reported second-quarter results.
Metro acts as the landlord for 40 Praktiker stores in Germany,
Reuters discloses.
As reported by the Troubled Company Reporter-Europe on July 15,
2013, Bloomberg News related that Praktiker filed for insolvency
after the sale of a division collapsed, and said it will focus on
restructuring the business. Praktiker said in a statement units
that own the Praktiker and Extra-Bau+Hobby stores and online
outlets applied at Hamburg's local court for protection from
creditors. Creditors wouldn't approve a debt reorganization
following the retailer's failure to sell a stake in a Luxembourg
unit, Bloomberg noted. Praktiker's first-quarter net loss
widened to EUR127.7 million from EUR76.4 million a year earlier
as sales dropped 10%, Bloomberg disclosed.
Praktiker AG is a German home-improvement retailer.
SEAVOSS SCHIFFAHRT: Vessels Stranded Following Insolvency
---------------------------------------------------------
Maritime Bulletin reports that coasters Ardesco and Short Sea are
stuck in Gibraltar since May this year, due to the insolvency of
the owner of the vessels, German company, Seavoss Schiffahrt GmbH
& Co.
According to Maritime Bulletin, seven crew of Short Sea and eight
crew of Ardesco are not paid since February. They ran out of
supplies, but recently were supplied by local agent Tarik
Shipping Agency and Bunkering, Maritime Bulletin says, citing
Gibraltar Chronicle.
A third vessel of Seavoss Company is stranded in Morocco, also
since May, it's Latvian-flagged Indannus, Maritime Bulletin
discloses. Fourth coaster Black Sea is stranded in Tunisia in
Sousse since June, Maritime Bulletin notes.
===========
G R E E C E
===========
ALPHA BANK: S&P Affirms 'CCC/C' Ratings; Outlook Negative
---------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'CCC/C' long- and
short-term counterparty credit ratings on Alpha Bank A.E. The
outlook on the long-term rating is negative.
The affirmation follows the completion of the restructuring and
recapitalization of the domestic banking sector in Greece, after
which S&P reviewed its ratings on Greek banks. It reflects S&P's
opinion that Alpha will continue to receive sufficient capital
support from the Hellenic Financial Stability Fund (HFSF) to
maintain adequate regulatory capital ratios. In addition, S&P
believes that Alpha will continue to have access to the liquidity
facilities provided by the European authorities.
In S&P's view, Alpha's capital and earnings remain very weak,
even after taking into account the EUR4.6 billion capital
increase completed in June. S&P estimates that its risk-adjusted
capital (RAC) ratio for Alpha will decrease to around 2.5%-2.7%
over the next 24 months compared with the 3% pro forma RAC ratio
(including the capital increase) reported at the end of 2012.
This is because of the very high credit losses S&P expects in
Greece and Greek banks' weakened earnings capacity due to the
mounting stock of nonperforming assets.
In S&P's view, Alpha's projected RAC ratio is unlikely to
comfortably exceed 3% over the next 18-24 months, unless it
receives enough capital support from the HFSF. S&P understands
that the HFSF would be able and willing to provide sufficient
additional capital support to Alpha. As a result, S&P continues
to incorporate its view of the high likelihood of support from
the HFSF by including one notch of short-term capital support
into the long-term ratings on Alpha.
In S&P's view, Alpha's liquidity position remains very weak, as
S&P believes that the bank would be unable to manage its
significant liquidity needs in the next 24 months without
materially relying on funding from the ECB. S&P continues to
incorporate one notch of uplift for extraordinary liquidity
support into the ratings on Alpha, reflecting S&P's belief that
the bank's liquidity position will continue to benefit from the
European authorities' commitment to continue providing sufficient
support to Greek banks.
In S&P's opinion, Alpha's business position remains adequate in
the context of very high industry risks we see in Greece. This
still reflects S&P's opinion that Alpha has sound market share in
most retail and commercial banking lines in Greece, and still
benefits from its sizable international presence despite some
recent acquisitions in Greece. However, S&P believes that
Alpha's revenue stability and business position in Greece are
increasingly exposed to the significant deterioration we see in
the domestic economy and banking market.
"The negative outlook reflects the possibility that we could
lower the ratings on Alpha if we considered that it would default
on its obligations, according to our criteria. We could lower
the ratings on Alpha if its access to the EU's extraordinary
liquidity support mechanisms, including the Emergency Lending
Assistance discount facility at the ECB, and to the ECB were
impaired for any reason. This support currently underpins the
bank's capacity to meet its financing requirements. In this
context, we believe the pressure on the bank's retail funding
base due to the ongoing recession may lead to further deposit
outflows despite a mild recovery in recent months. This could,
in our opinion, increase the bank's need for additional
extraordinary liquidity support from the European authorities,"
S&P said.
"We could also lower the ratings if we believed that the bank
would default on its obligations as a result of any developments
associated with an impairment in its solvency. This could happen
if Alpha was unable to access external capital support, or if we
considered such support insufficient to allow the bank to
continue to meet regulatory capital requirements or maintain a
projected RAC ratio above 3% over the next 18-24 months, mainly
as a result of the potential recognition of continued large loan
impairments," S&P added.
S&P could revise the outlook to stable if economic conditions in
Greece improved and pressure on the bank's fragile financial
profile eased, or if additional external support materialized.
EUROBANK ERGASIAS: S&P Affirms 'CCC' Counterparty Credit Rating
---------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'CCC/C' long- and
short-term counterparty credit ratings on Eurobank Ergasias S.A.
At the same time, S&P lowered the rating on Eurobank Series D
preferred securities (ISIN: XS0440371903) to 'C' from 'CC'. The
outlook on the long-term rating is negative.
The affirmation follows the completion of the restructuring and
recapitalization of the domestic banking sector in Greece, after
which S&P reviewed its ratings on Greek banks. It reflects S&P's
opinion that Eurobank will continue to receive sufficient capital
support from the Hellenic Financial Stability Fund (HFSF) to
maintain adequate regulatory capital ratios. In addition, S&P
believes that Eurobank will continue to have access to the
liquidity facilities provided by the European authorities. S&P's
downgrade of Eurobank Series D preference securities follows the
bank's announcement that it did not pay the noncumulative
preferred dividend on the due date of July 29, 2013.
"In our view, Eurobank's capital and earnings remain very weak,
even after incorporating the EUR5.9 billion capital increase
completed in May and taking into account the recently announced
acquisitions of New Hellenic Postbank and Proton. We estimate
our risk-adjusted-capital (RAC) ratio for Eurobank will remain
below 2% over the next 24 months, because of the very high credit
losses we expect in Greece and Greek banks' weakened earnings
capacity due to the mounting stock of nonperforming assets," S&P
said.
"In our view, Eurobank's projected RAC ratio is unlikely to
comfortably exceed 3% over the next 18-24 months, unless it
receives enough capital support from the HFSF. We understand
that the HFSF would be able and willing to provide sufficient
additional capital support to Eurobank. As a result, we continue
to incorporate our view of the high likelihood of support from
the HFSF by including one notch of short-term capital support
into the long-term ratings on Eurobank," S&P added.
In S&P's view, Eurobank's liquidity position remains very weak.
S&P believes the bank would be unable to manage its significant
liquidity needs in the upcoming 24 months without materially
relying on funding from the ECB. S&P continues to incorporate
one notch of extraordinary liquidity support into the ratings on
Eurobank, reflecting our belief that the bank's liquidity
position will continue to benefit from the European authorities'
commitment to keep providing sufficient support to the Greek
banks.
"In our opinion, Eurobank's business position remains adequate in
the context of the very high industry risks we see in Greece.
Our assessment continues to reflect our opinion that Eurobank has
sound market share in most retail and commercial banking lines in
Greece, and still benefits from its sizable international
presence, despite recent acquisitions in Greece. However, we
believe Eurobank's revenue stability and business position in
Greece are increasingly exposed to the significant deterioration
we see in the Greek economy and banking sector," S&P noted.
The negative outlook reflects the possibility that S&P could
lower the ratings on Eurobank if it considered that it would
default on its obligations, according to its criteria. S&P could
lower the ratings on Eurobank if its access to the EU's
extraordinary liquidity support mechanisms, including the
Emergency Lending Assistance discount facility at the ECB, and
access to the ECB were impaired for any reason. This support
currently underpins the bank's capacity to meet its financing
requirements. In this context, and despite a mild recovery in
recent months, S&P believes the pressure on the bank's retail
funding base due to the ongoing recession may lead to further
deposit outflows. This could, in S&P's opinion, increase the
bank's need for additional extraordinary liquidity support from
the European authorities.
S&P could also consider lowering the ratings if it believed the
bank would default on its obligations as a result of any
developments associated with an impairment in its solvency. This
could happen if Eurobank were unable to access external capital
support, or if S&P considered such support insufficient to allow
the bank to continue meeting regulatory capital requirements or
maintaining its projected RAC ratio above 3% over the next 18-24
months, mainly as a result of the potential recognition of
continued large loan impairments.
S&P could revise the outlook to stable if economic conditions in
Greece improved and pressure on the bank's fragile financial
profile eased, or if additional external support materialized.
NATIONAL BANK: S&P Affirms 'CCC/C' Ratings; Outlook Negative
------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'CCC/C' long- and
short-term counterparty credit ratings on National Bank of Greece
S.A. (NBG). The outlook is negative.
The affirmation follows the completion of the restructuring and
recapitalization of the domestic banking sector in Greece, after
which S&P reviewed its ratings on Greek banks. It reflects S&P's
opinion that NBG will continue to receive sufficient capital
support from the Hellenic Financial Stability Fund (HFSF) to
maintain adequate regulatory capital ratios. In addition, S&P
believes that NBG will continue to have access to the liquidity
facilities provided by the European authorities.
"In our view, NBG's capital and earnings remain very weak, even
after taking into account the EUR9.8 billion capital increase
that it completed in June. We estimate that our risk-adjusted
capital (RAC) ratio for NBG will remain below 2% over the next 24
months as a result of the very high credit losses we expect in
Greece and the banks' weakened earnings capacity due to the
mounting stock of nonperforming assets," S&P said.
"In our view, NBG's projected RAC ratio is unlikely to
comfortably exceed 3% over the next 18-24 months, unless it
receives enough capital support from the HFSF. We understand
that the HFSF would be able and willing to provide sufficient
additional capital support to NBG. As a result, we continue to
incorporate our view of the high likelihood of support from the
HFSF by including one notch of short-term capital support into
the long-term ratings on NBG," S&P added.
In S&P's view, NBG's liquidity position remains very weak, as it
believes the bank would be unable to manage its significant
liquidity needs in the next 24 months without materially relying
on funding from the ECB. S&P continues to incorporate one notch
of uplift for extraordinary liquidity support into the ratings on
NBG, reflecting S&P's belief that the bank's liquidity position
will continue to benefit from the European authorities'
commitment to continue providing sufficient support to the Greek
banks.
In S&P's opinion, NBG's business position remains adequate in the
context of very high industry risks we see in Greece. This still
reflects S&P's opinion that NBG holds sound market share in most
retail and commercial banking lines in Greece, and still benefits
from its sizable international presence. However, S&P believes
NBG's revenue stability and business position in Greece are
increasingly exposed to the significant deterioration S&P sees in
the domestic economy and banking market.
The negative outlook is based on the possibility that S&P could
lower the ratings on NBG if it considered that it would default
on its obligations, according to its criteria. S&P might lower
the ratings on NBG if its access to the EU's extraordinary
liquidity support mechanisms, including the Emergency Lending
Assistance discount facility at the ECB, and to the ECB were
impaired for any reason. This support currently underpins the
bank's capacity to meet its financing requirements. In this
context, S&P believes the pressure on the bank's retail funding
base due to the ongoing recession may lead to further deposit
outflows despite a mild recovery in recent months. This could,
in S&P's opinion, increase the bank's need for additional
extraordinary liquidity support from the European authorities.
S&P might also lower the ratings if it believed that the bank
would default on its obligations as a result of any developments
associated with an impairment in its solvency. This could happen
if NBG was unable to access external capital support, or if S&P
considered such support insufficient to allow the bank to
continue meeting regulatory capital requirements or maintain its
projected RAC ratio above 3% over the next 18-24 months, mainly
as a result of the potential recognition of continued large loan
impairments.
S&P could revise the outlook to stable if economic conditions in
Greece improved and pressure on the bank's fragile financial
profile eased, or if additional external support materialized.
PIRAEUS BANK: S&P Affirms 'CCC/C' Ratings; Outlook Negative
-----------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'CCC/C' long- and
short-term counterparty credit ratings on Piraeus Bank (Piraeus).
The outlook on the long-term rating is negative.
The affirmation follows the completion of the restructuring and
recapitalization of the domestic banking sector in Greece, after
which S&P reviewed its ratings on Greek banks. It reflects S&P's
opinion that Piraeus will continue to receive sufficient capital
support from the Hellenic Financial Stability Fund (HFSF) to
maintain adequate regulatory capital ratios. It also reflects
S&P's view that the bank will continue to have access to the
liquidity facilities provided by the European authorities.
In S&P's view, Piraeus' capital and earnings remain very weak,
even after incorporating the EUR8.4 billion capital increase
completed in June. S&P estimates its risk-adjusted-capital (RAC)
ratio for Piraeus will decrease to about 2.2%-2.4% over the next
24 months, compared to the 2.8% pro forma RAC ratio (including
the capital increase) at the end of 2012. This is because of the
very high credit losses we expect in Greece and the Greek banks'
weakened earnings capacity due to the mounting stock of
nonperforming assets.
In S&P's view, Piraeus' projected RAC ratio is unlikely to
comfortably exceed 3% over the next 18-24 months, unless it
receives enough capital support from the HFSF. S&P understands
that the HFSF would be able and willing to provide sufficient
additional capital support to Piraeus. As a result, S&P
continues to incorporate its view of the high likelihood of
support from the HFSF by including one notch of short-term
capital support into the long-term ratings on Piraeus.
In S&P's view, Piraeus' liquidity position remains very weak, as
it believes the bank would be unable to manage its significant
liquidity needs in the upcoming 24 months without relying
materially on funding from the ECB. S&P continues to incorporate
one notch of extraordinary liquidity support into the ratings on
Piraeus, reflecting its belief that the bank's liquidity position
will keep benefiting from the European authorities' commitment to
supporting the Greek banks.
"In our opinion, Piraeus' business position remains adequate in
the context of the very high industry risks we see in Greece.
Our assessment continues to reflect our opinion that Piraeus
holds sound market share in most retail and commercial banking
lines in Greece, and still benefits--although less so than peers
after recent acquisitions in Greece--from some international
presence. However, we believe Piraeus' revenue stability and
business position in Greece are increasingly exposed to the
significant deterioration we see in the Greek economy and banking
market," S&P said.
"The negative outlook reflects the possibility that we could
lower the ratings on Piraeus if we considered that it would
default on its obligations, according to our criteria. We could
lower the ratings on Piraeus if its access to the EU's
extraordinary liquidity support mechanisms, including the
Emergency Lending Assistance discount facility at the ECB, and
access to the ECB were impaired for any reason. This support
currently underpins the bank's capacity to meet its financing
requirements. In this context, and despite a mild recovery in
recent months, we believe the pressure on the bank's retail
funding base due to the ongoing recession may lead to further
deposit outflows. This could, in our opinion, increase the
bank's need for additional extraordinary liquidity support from
the European authorities," S&P said.
S&P could also lower the ratings if it believed the bank would
default on its obligations as a result of any developments
associated with its solvency becoming impaired. This could
happen if Piraeus were unable to access external capital support,
or if we considered such support insufficient to allow the bank
to continue meeting regulatory capital requirements, or to
maintaining S&P's projected RAC ratio above 3% over the next 18-
24 months, mainly as a result of the potential recognition of
continued large loan impairments.
S&P could revise the outlook to stable if economic conditions in
Greece improved and pressure on the bank's fragile financial
profile eased, or if additional external support materialized.
=============
I R E L A N D
=============
CLAVOS EURO: S&P Raises Rating on Class V Notes to 'BB-'
--------------------------------------------------------
Standard & Poor's Ratings Services raised its credit ratings on
CLAVOS Euro CDO Ltd.'s class I-A1, I-A2, I-B, II, III, and V
notes. At the same time, S&P has affirmed its rating on the
class IV notes.
The rating actions follow S&P's assessment of the transaction's
Performance -- using data from the June 2013 trustee report--and
the application of its relevant criteria.
Since S&P's previous review on Jan. 18, 2012, it has observed
that the portfolio's weighted-average spread has increased by 75
basis points to 4.32% from 3.57%. The weighted-average recovery
rates that S&P applied in its cash flow analysis have also
increased since S&P's previous review. This, among other
factors, has resulted in higher break-even default rates (BDRs)
at each rating level.
S&P has also observed that the proportion of assets that it
considers to be rated in the 'CCC' category ('CCC+', 'CCC', and
'CCC-') has fallen. In addition, the proportion of defaulted
assets (rated 'CC', 'SD' [selective default], and 'D') in the
pool has also decreased.
The transaction is currently amortizing, which has reduced the
class I-A1 and I-A2 notes' notional amount (the issuer will now
use scheduled principal proceeds to redeem the rated notes by
seniority, instead of reinvesting such collateral proceeds in new
assets). The class V notes also have a 'turbo feature' where
interest proceeds are used to redeem the notes if certain
documented tests are failing. This has increased the available
credit enhancement for all classes of notes.
S&P also tested the cash flows at the covenanted spread of 2.85%
for the class I-A1 and I-A2 notes. S&P performed this
sensitivity analysis to test the impact on the notes, if the
manager is not able to maintain the current level of spread
earned on the portfolio (due to deleveraging). S&P concluded
that the impact on these classes of notes was in line with its
expectations.
None of the ratings was constrained by the application of the
largest obligor default test, a supplemental stress test that S&P
introduced in its 2009 criteria update for corporate
collateralized debt obligations.
Citibank N.A (A/Stable/A-1) is the currency swap provider for
some non-euro-denominated currency assets. S&P has applied its
current counterparty criteria, and in its view, the swap
documents are not in line with its criteria. S&P considers that
the transaction's exposure to this counterparty is sufficiently
limited to not affect its ratings on the class I-A1, I-A2, and I-
B notes if the swap counterparty fails to perform. The bank
account and custodian rating requirements and downgrade
provisions in the transaction documents are in line with S&P's
current counterparty criteria.
S&P subjected the capital structure to a cash flow analysis to
determine the BDR. In S&P's analysis, it used the reported
portfolio balance that it considers to be performing, the
principal cash balance, the current weighted-average spread, and
the weighted-average recovery rates that S&P considered
appropriate. S&P incorporated various cash flow stress scenarios
using various default patterns, levels, and timings for each
liability rating category, in conjunction with different interest
rate stress scenarios.
Taking into account S&P's credit and cash flow analysis and the
application of its current counterparty criteria, S&P considers
the available credit enhancement for the class I-A1, I-A2, I-B,
II, III, and V notes to be commensurate with higher ratings than
previously assigned. S&P has therefore raised its ratings on the
class I-A1, I-A2, I-B, II, III, and V notes.
In S&P's opinion, the available credit enhancement for the class
IV notes is commensurate with the current rating. S&P has
therefore affirmed its 'B+ (sf)' rating on the class IV notes.
CLAVOS Euro CDO is a cash flow collateralized loan obligation
(CLO) transaction that securitizes loans to primarily
speculative-grade corporate firms.
STANDARD & POOR'S 17G-7 DISCLOSURE REPORT
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities. The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.
If applicable, the Standard & Poor's 17g-7 Disclosure Report
included in this credit rating report is available at:
http://standardandpoorsdisclosure-17g7.com
RATINGS LIST
Class Rating
To From
CLAVOS Euro CDO Ltd.
EUR409 Million Senior Secured Floating-Rate Notes
Ratings Raised
I-A1 AAA (sf) AA+ (sf)
I-A2 AAA (sf) AA+ (sf)
I-B AA+ (sf) AA- (sf)
II A+ (sf) A (sf)
III A- (sf) BBB (sf)
V BB- (sf) B+ (sf)
Rating Affirmed
IV BB+ (sf)
TREASURY HOLDINGS: Two Developers to Get Millions After NAMA Deal
-----------------------------------------------------------------
Tim Healy and Cormac McQuinn at Independent.ie report that
boom-time developers Johnny Ronan and Richard Barrett are to
receive multimillion-euro sums following a High Court settlement
with the National Asset Management Agency and other creditors.
Under a deal that will see the winding up of a large chunk of
their business, Mr. Ronan will get EUR3 million and his Treasury
Holdings co-founder Mr. Barrett is to receive EUR4 million,
Independent.ie discloses.
A High Court judge has approved the complex settlement of the
action brought by NAMA and others against the pair, who are among
the most high-profile developers of the Celtic Tiger era,
Independent.ie relates.
NAMA's action was brought over a controversial EUR20 million
transaction involving the alleged transfer of shares out of the
Treasury group at a significant undervalue, Independent.ie notes.
The settlement will realize a minimum EUR46 million, and perhaps
EUR47 million, for the liquidation and the unsecured creditors of
Treasury, Independent.ie discloses. The largest of these
creditors is NAMA -- which is owed EUR1 billion -- and KCB Bank,
Mr. Justice Peter Kelly noted in the High Court, Independent.ie
states.
According to Independent.ie, Mr. Barrett will benefit by about
EUR4 million net cash under the settlement, while Mr. Ronan will
benefit by about EUR3 million arising from a distribution to him
from the winding up of the Treasury Asian Investments Ltd. (TAIL)
shareholding under the settlement.
About Treasury Holdings
Treasury Holdings is an Irish property developer. The company
owns the Westin Hotel in Dublin and the Irish headquarters of
accounting firm PricewaterhouseCoopers.
On October 9, 2012, Mr. Justice Brian McGovern appointed Paul
McCann and Michael McAteer of Grant Thornton as joint liquidators
of Treasury Holdings and 16 related companies at the High Court,
Dublin, following a petition from KBC Bank.
WATERFORD UNITED: Avoids Liquidation After Deal with Ex-Manager
---------------------------------------------------------------
Raf Diallo at Newstalk.ie reports that Waterford United has been
saved from liquidation.
Newstalk.ie says the First Division club has reached an 11th hour
agreement with former manager Stephen Henderson over his
compensation claim. He was owed EUR37,600 by the club and sought
a winding-up order.
Mr. Henderson had rejected a previous settlement as he 'did not
trust' the club to pay him.
A new deal was arranged just prior to a High Court hearing
July 29, where the club was set to be issued with a winding-up
order.
According to the report, Waterford expressed their thanks to the
club's fans who "put their hands in their pockets over the last
couple of days and dug deep once again to help their club."
The Waterford supporters have agreed to contribute a further
EUR10,000 to the EUR50,000 compensation package that had already
been offered to Mr. Henderson, the report notes.
=========
I T A L Y
=========
BANCA POPOLARE: Moody's Confirms Caa2 Long-Term Deposit Rating
--------------------------------------------------------------
Moody's Investor Service confirmed Banca Popolare di Spoleto (BP
Spoleto)'s long-term deposit rating (LTDR) of Caa2 and
simultaneously affirmed the bank's stand alone bank financial
strength rating (BFSR) of E mapped to a standalone BCA of ca. The
outlook is negative, in line with the majority of Italian banks,
reflecting the pressures from a still deteriorating operating
environment. This rating action concludes the review with
direction uncertain which had been initiated on February 15,
2013.
At the same time, the rating agency said that it will withdraw
all the bank's ratings for business reasons. The bank has no
rated debt outstanding at the time of the withdrawal.
At the time of withdrawal, BP Spoleto's ratings are as follows:
- Long-term local and foreign currency deposit ratings of Caa2
with negative outlook;
- Short-term local and foreign currency ratings of Not-Prime;
- Standalone baseline credit assessment (BCA) of ca, which is
equivalent to a standalone bank financial strength rating
(BFSR) of E.
Ratings Rationale:
Moody's had placed the ratings of BP Spoleto on review with
direction uncertain on February 15, 2013, triggered by the Bank
of Italy intervention preventing BP Spoleto to raise capital
until the inspection was concluded. During the review process
Moody's wanted to assess the outcome of the bank's
administration, the likelihood of a capital injection, sale to
another bank or any other development which may have improved or
further deteriorated the credit profile of the Bank.
By closing the review and confirming BP Spoleto's LTDR at Caa2,
Moody's has taken into account the absence of any such
transforming events or new information that could have changed
the ratings down or up during the review period,. In this
context, Moody's nevertheless notes that the outcome of the
bank's administration is still uncertain.
In Moody's opinion, BP Spoleto's credit profile remains very weak
and the likelihood that it will need external support in the next
12 months remains very high, as reflected in the BCA of ca.
BP Spoleto was loss-making in 2011 and 2012, with net cumulated
losses adding up to Eur43.8 million compared to a tangible common
equity of Eur169 million (1). As of December 2012, the bank had a
total capital ratio of 7.63%, below the 8% threshold requested by
the regulator. BP Spoleto planned a capital increase of Eur30
million in 2012, which was stopped by Bank of Italy, pending the
results of its inspection and until the true extent of the
capital injection needed by the bank will be known .
In Moody's opinion, BP Spoleto will probably need to increase
capital by more than the planned Eur30 million considering: (i)
the significant pressure on profitability, given revenues
pressure, and the likelihood of high future loan loss provisions;
(ii) the weakening asset quality metrics, and Moody's expectation
that these ratios will further deteriorate once the
administrators will conclude their review; (iii) the excessive
overreliance on ECB funds, which were partly used to finance
lending growth.
The outlook is negative, in line with the majority of Italian
rated banks, reflecting macro-economic pressures highlighted in
Moody's GDP forecasts for the country as well as the ongoing
asset quality, profitability and capital challenges for the bank.
According to Moody's estimates, the latest forecasts on Italian
GDP are for a contraction of 1.8% in 2013 and a small growth of
just 0.2% in 2014.
(1) Unless otherwise noted, data in this report are sources from
company's reports of Moody's Banking Financial Metrics.
Moody's has withdrawn the ratings for its own business reasons.
The principal methodology used in this rating was Global Banks
published in May 2013.
=====================
N E T H E R L A N D S
=====================
ABN AMRO: Moody's Lifts Ratings on GBP150MM Tier 2 Notes to Ba1
---------------------------------------------------------------
Moody's Investors Service has upgraded ABN AMRO Bank N.V.'s (ABN
AMRO) remaining GBP150 million perpetual subordinated upper tier
2 notes (ISIN: XS0244754254) to Ba1 (hyb) from Ba2 (hyb).
Concurrently, Moody's affirmed the rating of the EUR1.000 billion
perpetual Tier 1 capital securities (ISIN: XS0246487457) at Ba2
(hyb). All other ratings on ABN AMRO were unaffected by the
rating action.
The outlook on both these instruments was changed to negative
from stable, in line with those on ABN AMRO's C- standalone Bank
Financial Strength Rating (BFSR) and on its long-term ratings.
Ratings Rationale:
Moody's said that the action follows the termination on March 11,
2013 of the ban on coupon payments imposed by the European
Commission on ABN AMRO's capital instruments. The ban was
motivated by the substantial state aid the bank received at the
height of the global financial crisis.
Although the coupons on the two aforementioned capital
instruments have been always paid -- triggered by the payment
and/or announcement of dividends on ABN AMRO's ordinary shares
each year since the ban was imposed -- the termination of the
European Commission's coupon payment restriction means that the
holders of these instruments no longer bear the additional risk
of potential coupon deferral.
For this reason, these two hybrid instruments are now notched-off
ABN AMRO's adjusted Baseline Credit Assessment (BCA) of baa2, in
accordance with Moody's Global Banks methodology, published on
May 31, 2013. The instruments carry negative outlook in line with
ABN AMRO's BFSR.
The perpetual subordinated upper tier 2 notes are now rated Ba1
(hyb), two notches below ABN AMRO's Adjusted BCA of baa2, in line
with Moody's standard notching for junior subordinated debt. The
perpetual Tier 1 capital securities are rated Ba2 (hyb), three
notches below ABN AMRO's adjusted BCA of baa2. These securities
are now rated in line with Moody's standard notching for non-
cumulative preferred stock to reflect the inclusion of a
cumulative coupon suspension mechanism, which becomes non-
cumulative if the bank breaches its minimum capital adequacy
ratio.
At the same time, Moody's has corrected its database and re-
labeled the EUR1.000 billion perpetual Tier 1 capital securities
(ISIN: XS0246487457) as "preferred stock". It was previously
mislabeled as a "junior subordinated" debt due to an internal
administrative error. The current rating and rating history of
these securities are not affected by this correction.
What Could Move The Ratings Up/Down
The ratings on ABN AMRO's hybrid instruments are now notched-off
the bank's adjusted BCA. As such, a lowering of the ABN AMRO's
adjusted BCA would automatically result in a downgrade of the
ratings on the bank's hybrid instruments.
Given the negative outlook, any upward ratings momentum is
currently unlikely.
The principal methodology used in this rating was Global Banks
published in May 2013.
E-MAC NL 2004-II: S&P Affirms 'CCC' Ratings on Class E Notes
------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its credit ratings on
all classes of notes in E-MAC NL 2004-I B.V., E-MAC NL 2004-II
B.V., and E-MAC NL 2005-III B.V.
The affirmations follow S&P's performance review of the
transactions. S&P conducted a credit and cash flow analysis
using information from the servicer (dated April 2013), and have
applied our Dutch residential mortgage-backed securities (RMBS)
criteria and S&P's current counterparty criteria.
A key factor in S&P's analysis is the decline in Dutch house
prices, which has been significant in the second half of 2012 and
in early 2013. S&P's calculations show that the weighted-average
indexed loan-to-value (LTV) ratio has increased for all three
transactions since S&P's previous credit and cash flow review in
September 2012. This has increased S&P's weighted-average
foreclosure frequency (WAFF) and weighted-average loss severity
(WALS) assumptions for all three transactions.
E-MAC NL 2004-I, 2004-II, and 2005-III are backed by Dutch
residential mortgages originated by GMAC RFC Nederland B.V.,
which stopped originating Dutch mortgage loans in 2008. CMIS
Nederland B.V. is the servicer of all E-MAC NL transactions.
E-MAC NL 2004-I
Since S&P's previous review, 90+ days arrears have decreased to
0.75% from 1.05%. Total arrears have decreased to 1.03% from
1.34%. The slight decrease in severe arrears has not been
sufficient to reduce S&P's credit coverage at each rating level
under S&P's Dutch RMBS criteria, due to the Dutch house price
declines observed in 2012 and early 2013. Nevertheless, the
available credit enhancement for the class A, B, C, and D notes
is commensurate with the assigned ratings. S&P has therefore
affirmed its ratings on E-MAC NL 2004-I's class A, B, C, and D
notes.
Rating WAFF (%) WALS (%)
AAA 15.20 26.82
AA 12.01 24.24
A 8.57 21.12
BBB 5.68 19.46
BB 4.07 17.14
S&P's ratings in this transaction are constrained by its long-
term issuer credit rating (ICR) on The Royal Bank of Scotland
(RBS; A/Stable/A-1) as the swap provider. This is because the
documentation does not comply with S&P's current counterparty
criteria. Therefore, S&P's current counterparty criteria cap at
'A+ (sf)' the maximum potential ratings in this transaction to
reflect S&P's 'A' long-term ICR on RBS, plus one notch.
E-MAC NL 2004-II
Total arrears have increased to 2.00% from 1.86% since S&P's
previous review. This increase, combined with the Dutch house
price declines, has resulted in an increase in S&P's credit
coverage at each rating level. However, the available credit
enhancement at each rating level is sufficient to mitigate S&P's
increased WAFF and WALS assumptions. S&P has therefore affirmed
its ratings on E-MAC NL 2004-II's class A, B, C, D, and E notes.
Rating WAFF (%) WALS (%)
AAA 16.22 22.21
AA 13.32 19.63
A 10.40 16.73
BBB 7.62 15.34
BB 6.17 13.32
S&P's ratings in this transaction are constrained by its long-
term ICR on RBS as the swap provider. This is because the
documentation does not comply with S&P's current counterparty
criteria. Therefore, S&P's current counterparty criteria caps at
'A+ (sf)' the maximum potential ratings in this transaction to
reflect S&P's 'A' long-term ICR on RBS, plus one notch.
E-MAC NL 2005-III
Delinquencies of more than 90 days have decreased to 1.16% from
1.26% since S&P's previous review. Total arrears have increased
to 1.79% from 1.42%, with the increase mostly seen in the 30-60
days delinquency bucket. However, the available credit
enhancement at each rating level is sufficient to mitigate S&P's
increased WAFF and WALS assumptions. S&P has therefore affirmed
its ratings on E-MAC NL 2005-III's class A, B, C, D, and E notes.
Rating WAFF (%) WALS (%)
AAA 13.46 18.11
AA 11.06 15.22
A 8.56 11.51
BBB 6.15 9.58
BB 4.94 6.78
S&P's ratings in this transaction are constrained by its long-
term ICR on RBS as the guaranteed investment contract (GIC) and
liquidity facility provider. The GIC and liquidity facility
documents are not in line with S&P's current counterparty
criteria. Therefore, S&P's current counterparty criteria caps at
'A (sf)' the maximum potential ratings in this transaction to
reflect S&P's 'A' long-term ICR on RBS.
STANDARD & POOR'S 17G-7 DISCLOSURE REPORT
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities. The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.
If applicable, the Standard & Poor's 17g-7 Disclosure Reports
included in this credit rating report are available at:
http://standardandpoorsdisclosure-17g7.com
RATINGS LIST
Class Rating
Ratings Affirmed
E-MAC NL 2004-I B.V.
EUR800 Million Mortgage-Backed Floating-Rate Notes
A A+ (sf)
B A+ (sf)
C A (sf)
D BBB (sf)
E-MAC NL 2004-II B.V.
EUR613.05 Million Mortgage-Backed Floating-Rate Notes
A A+ (sf)
B A+ (sf)
C A (sf)
D BBB (sf)
E CCC (sf)
E-MAC NL 2005-III B.V.
EUR856.238 Billion Mortgage-Backed Floating-Rate Notes
A A (sf)
B A (sf)
C A (sf)
D BBB (sf)
E CCC (sf)
===========
P O L A N D
===========
METELEM HOLDING: S&P Raises Corp Credit Rating to 'BB-'
-------------------------------------------------------
Standard & Poor's Ratings Services said that it raised to 'BB-'
from 'B+' its long-term corporate credit rating on Metelem
Holding Company Ltd. (Metelem), the parent of Polish
telecommunications company Polkomtel S.A. The outlook is stable.
At the same time, S&P raised its issue ratings on Metelem's
unsecured and payment-in-kind notes to 'B' from 'B-'.
The upgrades reflect an improvement in Metelem's credit metrics
and covenant headroom following the partial prepayment and
refinancing of its senior secured loans. As a result, S&P is
revising the group's financial risk profile upward to
"aggressive" from "highly leveraged." Moreover, S&P believes
that Metelem has further prospects for debt reduction over the
medium term, despite the likelihood of material cash outflows to
acquire new spectrum. S&P anticipates that debt reduction will
more than offset any potential weakness in operating performance
or foreign-exchange fluctuations over the next couple of years.
"We continue to assess Metelem's business risk profile as
"satisfactory," supported by the solid market position of the
group's operating subsidiary Polkomtel in the Polish contracted
wireless market. Further support derives from Polkomtel's
continued improvement in profitability, supported by its
successful cost-cutting initiatives and outperformance of local
peers in terms of annual revenues per user. We view Polkomtel's
high profitability compared with other rated peers as a key
support to our business risk assessment," S&P said.
In S&P's view, Metelem's operating performance should remain
steady, with potential operating challenges or foreign exchange
volatility offset by additional debt reduction from internal
liquidity sources.
Downward rating pressure could arise if operating pressures are
meaningfully greater than S&P forecasts, leading to a decline in
covenant headroom to less than 10%, or an increase in adjusted
leverage to more than 5x, with no short-term deleveraging
prospects. Rating downside is also possible if Metelem's free
operating cash flow (FOCF) generation deteriorates, with adjusted
FOCF to debt (excluding one-off spectrum acquisitions) declining
to significantly less than 5%.
Rating upside is limited over the next 12 months, in S&P's
opinion, given the likelihood of significant cash outflows on new
spectrum. Rating upside over the longer term is possible if
Metelem deleverages to less than 4x.
POLIMEX-MOSTOSTAL: DAAS Files Bankruptcy Motion in Warsaw Court
---------------------------------------------------------------
Maciej Martewicz at Bloomberg News reports that DAAS Sp. z o.o.
filed on July 23 a motion in Warsaw court asking for Polimex-
Mostostal's bankruptcy.
According to Bloomberg, the company is in talks with DAAS and
plans "legal steps" that would lead to withdrawing the motion.
Polimex-Mostostal is a Polish engineering and construction
company that has been on the market since 1945. The Company is
distinguished by a wide range of services provided on general
contractorship basis for the chemical as well as refinery and
petrochemical industries, power engineering, environmental
protection, industrial and general construction. The Company
also operates in the field of road and railway construction as
well as municipal infrastructure. Polimex-Mostostal is the
largest manufacturer and exporter of steel products, including
platform gratings, in Poland.
===============
P O R T U G A L
===============
BANCO SANTANDER: S&P Cuts Rating on Bonds to 'BB+'; Outlook Neg.
----------------------------------------------------------------
Standard & Poor's Ratings Services said it lowered to 'BB+' from
'BBB' its rating on mortgage-covered bonds (Obrigacoes
hipotecarias) issued by Portugal-based Banco Santander Totta S.A.
(BB/Negative/B). The outlook is negative.
On July 15, 2013, S&P placed the rating on Banco Santander
Totta's mortgage covered bond program on CreditWatch with
negative implications because S&P believed that the credit
enhancement in the program could be substantially reduced below
the level necessary to support the 'BBB' rating.
On July 26, 2013, the bank issued series 10 (EUR0.75 billion) out
of the program. As a result of the new issuance, the amount of
outstanding covered bonds increased by 12%. As the size of the
cover pool increased by only 1%, the available credit enhancement
in the program decreased to 18.62% from 31.37%.
Under S&P's criteria "Revised Methodology And Assumptions For
Assessing Asset-Liability Mismatch Risk In Covered Bonds"
published Dec. 16, 2009, the ratings on the program could be up
to four notches above the credit rating on the issuer (ICR).
Prior to the issuance of series 10, the available credit
enhancement in Banco Santander Totta's mortgage covered bond
program was lower than the target credit enhancement, and only
commensurate with three notches of uplift above the ICR. This
enabled the program to achieve a 'BBB' rating.
Following the issuance of series 10, the available credit
enhancement in the program is commensurate with only one notch
uplift above the ICR. S&P has therefore lowered the rating on
the program and related series to 'BB+'.
The negative outlook on the program reflects that on the issuer.
This means that, all else being equal, any future downgrade of
Banco Santander Totta would automatically lead to a downgrade of
the covered bond program and related series.
=========
S P A I N
=========
BANCO POPULAR: DBRS Cuts Rating on Preferred Shares to 'BB'
-----------------------------------------------------------
DBRS, Inc. (DBRS) has confirmed the ratings of Banco Popular
Espa¤ol, S.A. (Popular or the Group), including its Senior
Unsecured Long-Term Debt & Deposit rating at A (low) and its
Short-Term Debt & Deposit rating at R-1 (low). The long-term
ratings have a Negative trend and the short-term ratings have a
Stable trend. These ratings were previously lowered to A (low)
in August 2012 after DBRS's downgrade of the Kingdom of Spain to
A (low) with a Negative trend. Along with the confirmation,
Popular's intrinsic assessment (IA) has been lowered to
BBB (high) from A (low).
DBRS views Popular as a Systemically Important Bank (SIB) in
Spain. As Spain's sixth largest banking group, a major provider
of financial services to the business and financial sector and a
key participant in the financial markets, significant distress
for Popular, if not addressed promptly, could materially affect
Spain's financial system and the country's payment mechanisms.
DBRS maintains its SA-2 support assessment for Popular, which
indicates an expectation of timely systemic support in case of
need. DBRS views the ability of the government to provide
support as having been enhanced by the agreement with the
EU/EC/IMF that provides EUR100 billion of resources to
strengthen the capital base of Spanish banks, of which
approximately EUR40 billion has been used. DBRS notes that
Popular has not utilized any capital support from the State. The
SA-2 designation results in a one-notch uplift from Popular's IA
of BBB (high) to the final rating of A (low).
In lowering the IA by one notch to BBB (high), DBRS considers the
elevated level of provisions which are expected to continue going
forward given the continuing deterioration in credit quality due
to the ongoing weakness in the economy. In addition, the adverse
interest rate environment continues to weigh on underlying
earnings, as lower interest rates have reduced yields on assets
by more than funding costs despite maintaining higher margins
than peers. While Popular's franchise strength has helped it to
lessen the impact on its net interest margin (NIM), and its net
interest income is showing signs of stabilizing, the risk of
further deterioration remains significant, as the financial
markets remain unsettled. Given Popular's sizable amount of
nonperforming loans (NPLs) and acquired real estate assets,
elevated provisioning is likely to remain a burden that pressures
the intrinsic strength of the Group. While Popular has
utilized one-off capital gains to absorb these provisions and
strengthen capitalization, the resources that are available to
offset these provisions have become more limited. After the
successful sizable rights issue of EUR 2.5 billion in December
2012 that increased Popular's capital position, DBRS views the
Group as having a reduced capacity for further significant
capital increases, if needed, although it has other ways to
adjust to meet capital requirements.
Reflecting the lower IA, DBRS has also downgraded the rating of
Popular's Preferred Shares issued out of Popular Capital S.A. to
BB (low) from BB (high). The two notch downgrade reflects the
combination of the one notch reduction in Popular's IA and the
wider notching from the IA for banks in the "BBB" rating
category, which widens from to 5 notches from 4 notches for the
"A" rating Category, to reflect the greater expected probability
of nonpayment of preferred shares implied by an IA of BBB (high)
under current DBRS methodology.
The Negative trend on the long-term ratings reflects the
challenges posed by the weak economic conditions in Spain,
uncertainty in the outlook for the Eurozone, and evolving
regulatory requirements. This negative external environment is
expected to continue to pressure Popular's earnings generation
ability going forward, at a time when its contingency resources
are more scarce than at the beginning of this sustained crisis.
Significant weakening in earnings generation ability combined
with a more rapid deterioration in credit quality, particularly
in Popular's core business of lending to SMEs and corporates,
could put downward pressure on the rating. DBRS notes
that further negative action on the sovereign rating (Kingdom of
Spain current rating A (low), Negative trend) would likely impact
the A (low) rating of Popular, as such action would likely signal
further deterioration in the domestic environment.
DBRS views Popular as maintaining a strong franchise in Spain.
As the 6th largest domestic bank, the Group maintains solid
market positions throughout its domestic market, with more
sizable market positions in Madrid (7.1%), Galicia (20.0%),
Castilla Leon (9.0%) and Andalucia (8.3%). In segments where the
Group's business is more focused, such as lending to SMEs and
corporates, Popular has larger market shares. The acquisition of
Pastor, which was based in Galicia, helped Popular to increase
its scale, depth and presence, allowing it to better compete in
an increasingly consolidated and competitive market. DBRS
notes that Popular's acquisition of Pastor did not involve any
support from the State.
Popular's results continue to demonstrate the significant
headwinds still facing the Spanish banking sector. While
Popular's impairment costs remain elevated, the Group is having
some success in offsetting these costs by sustaining pre-
provision profit, or IBPT, which was EUR2.0 billion in 2012 up
from EUR1.6 billion in 2011, as Popular benefited from the Pastor
acquisition. Looking at the quarterly trajectory, Popular's IBPT
has been improving, reaching EUR568 million in 2Q13, up from
EUR405 million in 1Q13 and EUR377 million in 4Q12, indicating an
improving trend despite margin pressures and declining volumes.
The Group maintained a low cost/income ratio of 39.3% in 2Q13;
although higher than in the past, Popular's ratio remains well
below Spanish banking peers and helps support IBPT with a
greater share of revenues passing through to the bottom line.
Continued asset quality weakness is evident in Popular's elevated
NPL ratio of 10.8% at 2Q13, a significant jump from 7.0% a year
ago, but still below the sector average of 11.2% (or 12.8% when
including SAREB). With sizable NPLs of EUR15.4 billion, it's
important to note that net new entries to NPLs are showing a
declining trajectory, indicating improving credit trends. While
DBRS views further asset quality deterioration as likely, it
appears that the pace of credit deterioration is slowing. Also
contributing to asset quality weakness is the Group's sizable
exposure to foreclosed real estate assets of EUR6.0 billion, net,
or 3.7% of total assets, as of 2Q13. DBRS views positively the
Group's enhanced efforts to sell these assets, with an
increased pace of asset sales in 1H13. Importantly, with its
significant provisioning effort in 2012, Popular increased its
coverage of nonperforming assets (NPAs) to 57% at the end of 2Q13
from 45% at the end of 2011.
Popular's access to market funding has improved in recent
quarters, as market concerns about the liquidity and
capitalization of some Spanish financial institutions and the
position of the Spanish sovereign are receding. Demonstrating
its access, Popular issued EUR954 million in senior unsecured
bonds and EUR1.3 billion in covered bonds in 1H13. As a result
of its strategy to reduce its reliance on wholesale funding, the
Group's loan-to-deposit (LTD) ratio improved to 118% at
2Q13, as compared to 135% at the end of 2011. These actions have
contributed to Popular's ability to repay a sizable portion of
its LTRO funding (EUR5 billion in 2013 YTD) with EUR12.2 billion
remaining. With EUR13.4 billion of available, unencumbered
collateral and continued progress on its funding strategy, the
Group has significant excess liquidity coverage over its
unsecured debt maturities.
From a capital standpoint, Popular remains well positioned with a
core capital ratio based on EBA standards of 10.3% at 2Q13, up
from 7.4% at the end of 2011. The Group also calculates its
tangible equity capital (including mandatory convertible notes)
at 5.9% of tangible assets as of 2Q13, which DBRS views as
sizable. Popular successfully completed a EUR2.5 billion capital
raise in 4Q12 enabling it to meet the increased regulatory
requirements that were based on the more severe adverse scenario
of the Oliver Wyman stress test results. DBRS views positively
the Group's successful completion of its rights issue that was
accomplished without support from the State and allowed the
Group to grow its capital base even as it cleaned-up its balance
sheet.
MAPFRE SA: Fitch Affirms BB- Rating on EUR700MM Subordinated Debt
-----------------------------------------------------------------
Fitch Ratings has affirmed Mapfre SA's (Mapfre) Issuer Default
Rating (IDR) at 'BBB-' and its core operating subsidiaries'
Insurer Financial Strength (IFS) rating at 'BBB'. The Outlook on
the ratings is Stable.
Key Rating Drivers
The affirmation reflects Mapfre's strong underwriting performance
in H113 and its decreasing Fitch-calculated financial debt
leverage of 24% at end-2012, unchanged in H113, following the
repayment of Mapfre's bank facilities in 2012. The ratings also
reflect Mapfre's strong franchise and access to distribution in
Spain and Latin America.
Offsetting factors include Mapfre's exposure to the Spanish
sovereign rating ('BBB'/Negative), although partly matched by
Spanish technical liabilities, and the quality of its capital,
which is negatively affected by the amount of goodwill and
commercial real estate on its balance sheet.
Mapfre's credit fundamentals are underpinned by its solid capital
adequacy (261% at end-2012) and consolidated shareholders' funds
(EUR7.9 billion at end-H113); and strong underwriting performance
with a reported combined ratio of 95.1% in H113 (H112: 95.6%).
The Stable Outlook reflects Fitch's expectation that Mapfre will
continue to maintain a strong underwriting performance in the
next 12-18 months and an adequate life new business margin (2012:
5.3%).
Despite Mapfre's strong credit fundamentals, Fitch views Mapfre's
ratings as being constrained by Spain's Long-term IDR of 'BBB'
and the operating entities' IFS rating of 'BBB' is only one notch
above Mapfre SA's Long-term IDR (in the absence of a sovereign
constraint, it would be two notches according to standard
notching).
Rating Sensitivities
Key rating triggers that may cause Fitch to consider a downgrade
of Mapfre's ratings include:
-- A downgrade of the Spanish sovereign rating (currently
'BBB'/Negative), although Mapfre's IFS rating is not directly
linked to it
-- Exposure to the Spanish insurance market or sovereign debt
resulting in underwriting or investment losses beyond Fitch's
current expectations
Key rating triggers for an upgrade of Mapfre's ratings include:
-- Mapfre maintaining strong credit fundamentals with regulatory
solvency consistently above 200% (end-2012: 261%) and
financial leverage below 30% (end-2012: 24%)
-- The eurozone debt crisis stabilizing and Spain's rating being
Upgraded
-- Mapfre achieving further geographical diversification in
countries with higher credit profiles than Spain. This could
result in a reduction in Mapfre's exposure to Spanish debt as
a proportion of group investments to below 20% (currently
estimated at 42%)
The rating actions are:
Mapfre Familiar
Mapfre Global Risks Cia De Seguros Y Reaseguos
Mapfre Vida SA De Seguros Y Reaseguros
Mapfre Re Compania De Reaseguros S.A
IFS affirmed at 'BBB'; Outlook Stable
Mapfre SA
Long-term IDR affirmed at 'BBB-'; Outlook Stable
EUR1bn 5.125% senior unsecured debt due 2015 affirmed at 'BB+'
EUR700m 5.91% subordinated debt due 2037 with step-up in 2017
affirmed at 'BB-'
===========
S W E D E N
===========
ARTIMPLANT AB: Ongoing Litigations Prompt Bankruptcy Filing
-----------------------------------------------------------
The Board of Directors and the CEO of Artimplant AB have decided
to apply for its own bankruptcy.
The reasons behind the insolvency and the liquidity problems are
related to the ongoing litigations in the USA, where Artimplant
has been sued by approximately 50 patients who claims they have
been injured by the CMC Spacer, and the ongoing Arbitration in
Sweden, which has been initiated by Artimplant to determine which
insurance company or insurance broker are responsible for each
claim related to the litigations in the USA.
The ongoing disputes have had a negative impact on Artimplant's
sales and have also occupied the management's recourses which
have resulted negatively on the company's development.
Parallel to this there has been an intensive work to try to find
a new main shareholder, attract new capital to the company and to
find new improved distribution channels. The Board has been in
discussions with potential investors and other interested parties
but the ongoing disputes substantially reduced the interested to
invest in the company. The Board has also discussed a possible
new right issue of shares but during the current circumstances
decided this will not be possible to achieve.
Taking all this into consideration it has not been possible to
fulfill the earlier signed agreement with Tiller.
The Board and the CEO has therefore reached the conclusion to
apply for Artimplant's bankruptcy.
Artimplant AB -- http://www.artimplant.com-- is a Sweden-based
medical device company. It is active in the development,
production and marketing of degradable implants for the
regeneration of body functions. Its products are made from the
biomaterial called Artelon.
===========================
U N I T E D K I N G D O M
===========================
BRADFORD BULLS: Owner Denies Firm in the Brink of Administration
----------------------------------------------------------------
John Brazier at Insolvency News reports that rugby league side
Bradford Bulls are not on the brink of another administration,
according to owner Omar Khan.
Mr. Khan confirmed the club is experiencing a "temporary funding
issue" which will see players and staff goes unpaid until
August 8, according to Insolvency News. The report relates that
wages had been due to be paid on July 28.
The report notes that in a statement on the Bulls' website, Mr.
Khan said: "I would like to dispel all rumours and confirm that
the club is not going into administration . . . . I have always
taken the approach of open transparency. I will say that we are
at this time experiencing a temporary funding issue and as such
it transpires that we will not be able to pay the wages until
August 8 . . . . We have made every endeavour to minimise the
effect on all concerned and I would like to emphasise that this
is a temporary issue that does not affect the future of the club,
its players or its staff."
The report relays that Mr. Khan also said there would be "some
big announcements ready to make in the coming months that will
excite and encourage all of the Bulls supporters"
The report notes that Mr. Khan completed the acquisition of
Bradford Bulls in September 2012 after the club spent two months
in administration.
The report recalls that the Bradford Bulls entered administration
in June 2012, following an unpaid tax bill and a changed banking
lending arrangement left the club needing over œ1m to stay
solvent. Insolvency News adds that on July 25, 2013, Khan
announced a managerial re-structuring of the club, based on
"maximizing the financial potential at the club."
COVENTRY CITY FC: Faces Serious Liquidation Threat
--------------------------------------------------
James Riach at The Guardian reports that Coventry City Football
Club faces a serious risk of liquidation today, August 2, and a
severe points deduction, potentially plunging the club into
deeper crisis one day before the start of their League One
season.
The Guardian relates that the Sky Blues, who are in
administration, are due to have a final creditors meeting today
at which Arena Coventry Limited, the owner of the Ricoh Arena and
jointly made up of Coventry city council and the Higgs Trust,
would need to sign a company voluntary arrangement that would
secure payment to creditors, if the club are to exit
administration.
ACL on July 30 claimed it would consider signing the CVA if
specific amendments were made. One amendment ACL requested was
that the club sign a new 10-year rent deal at the Ricoh,
significantly reducing the annual rent on the stadium to
GBP150,000 a year, down from the previous GBP1.3 million
contract.
However, the Coventry City chief executive, Tim Fisher, said
ACL's amendments would not be made to the CVA and that a planned
groundshare with Northampton Town would go ahead, the report
relays.
"They've run us up against a cliff edge of liquidation and
they've moved to tip us over," the report quotes Mr. Fisher as
saying. "All I can say is that it is the biggest crying shame.
"How can a public body not accept a complete CVA where they will
get the money that they are owed, instead of a liquidation where
they will get a fraction of that, potentially one-sixtieth of
what they would have got?
As reported in the Troubled Company Reporter-Europe on March 26,
2013, Coventry Observer said Coventry City Football Club have
confirmed they have put their non-operating subsidiary of the
club into administration. The announcement comes on the eve of a
High Court hearing in London as the company that runs the club's
stadium, ACL, attempts to force the League One club into
administration over the GBP1 million they are owed, according to
Coventry Observer. The report relates that the Sky Blues could
still face a ten-point deduction which would all but end any
hopes of making the play-offs.
Coventry City is an English association football club based in
Coventry, central England.
HEARTS OF MIDLOTHIAN: Unsecured Creditors Likely to Get Nothing
---------------------------------------------------------------
BBC Sport reports that Hearts' unsecured creditors are likely to
receive nothing in the event of an exit from administration via a
company voluntary arrangement.
Total claims by club creditors amount to GBP28.4 million, the
bulk of which is owed to the collapsed Lithuanian companies of
former owner Vladimir Romanov, BBC Sport discloses.
Ukio Bankas, which is owed GBP15.5 million, holds Tynecastle
Stadium as security against its debt, BBC Sport notes. And the
value of the property is less than that amount, BBC Sport states.
The "book value" of the stadium from Hearts' statutory accounts
in 2012 is listed at more than GBP13 million, BBC Sport says.
The administrator has since commissioned a revaluation of
Tynecastle but has not released details "so as not to prejudice
the current sale" of the Edinburgh club, BBC Sport discloses.
BDO does say that a "nil value" has been placed on the leasehold
interest Hearts have on their training complex at Riccarton,
Herriot Watt University, BBC Sport notes.
According to BBC Sport, an initial creditors meeting will take
place on August 12, the day after the first Edinburgh derby of
the new season.
Shareholders Ukio Bankas and UBIG are owed around GBP24 million
of the debt, making an exit via a CVA dependent on the approval
of administrators acting on their behalf, BBC Sport discloses.
The administrator for Ukio Bankas has already dismissed the
ongoing bids for the club as unacceptable, BBC Sport recounts.
In the report distributed to all creditors, BDO states that
rescuing Hearts through a CVA is its first objective, BBC Sport
relates. According to BBC Sport, a second option is listed as "a
better result than liquidation", with winding up the club and
realizing property values the last resort.
Hearts' debt to HM Revenue & Customs now stands at close to
GBP1.9 million, with the Edinburgh Council owed more than
GBP90,000, Big Hearts Community Trust (GBP34,000) and the
Scottish Police Authority (GBP18,500), BBC Sport discloses. The
Scottish Football Association, which is owed GBP5,500, is almost
certain to insist that any new owner of the club inherits the
"football debt," BBC Sport states.
Administrator fees for the running of Hearts have topped
GBP227,000 in the first six weeks, with BDO saying they will not
take any payment until it is agreed with those representing Ukio
Bankas and UBIG, BBC Sport discloses.
Heart of Midlothian Football Club, more commonly known as Hearts,
is a Scottish professional football club based in Gorgie, in the
west of Edinburgh.
MID STAFFORDSHIRE: Trust 'Should Be Dissolved'
---------------------------------------------
BBC News reports that the trust that ran the scandal-hit Stafford
Hospital should be dissolved, administrators have recommended.
According to the report, the Mid Staffordshire NHS Trust went
into administration on April 16 after a report concluded it was
not "clinically or financially sustainable".
The report notes that critical care, maternity and paediatric
services should also be cut, the proposals unveiled by Trust
Special Administrators (TSA) say. The trust's two hospitals
would come under two other trusts, the report says.
The report relates that Stafford Hospital will be part of the
University Hospital of North Staffordshire in Stoke-on-Trent
while Cannock Hospital will become part of the Royal
Wolverhampton Trust.
The proposals include:
* Stafford Hospital losing its maternity unit but keeping its
accident and emergency department, which will continue to
open from 08:00 to 22:00, as it has since December 2011
* Downgrading Stafford's critical care unit and losing some
emergency surgery
* No longer admitting seriously ill children to Stafford. They
will instead go to Stoke-on-Trent
* Both Cannock and Stafford hospitals will gain some minor
operations and more patients will be sent to those hospitals
to recover from complicated surgery
* Introducing a "Frail Elderly Assessment service", which
would mean different sources providing information on older
people's needs when they are referred to hospital
The report notes that the proposals will now go to a public
consultation, which will end on 1 October.
Map showing the location of hospitals in Staffordshire
The report says that they will then go to health regulator
Monitor before being forwarded to the Health Secretary to make
the final decision by the end of the year. If approved, the
proposals will be implemented by 2018.
MONEY PARTNERS: S&P Lowers Rating on Class B1 Notes to 'BB-'
------------------------------------------------------------
Standard & Poor's Ratings Services took various credit rating
actions in Money Partners Securities 2 PLC, Money Partners
Securities 3 PLC, and Money Partners Securities 4 PLC.
Specifically, S&P:
-- Lowered to 'BB- (sf)' from 'BB (sf)' its rating on Money
Partners Securities 2's class B1 notes;
-- Affirmed its ratings on Money Partners Securities 2's class
A2a, A2c, M1a, M1b, M2a, and M2b notes;
-- Lowered to 'B+ (sf)' from 'BB- (sf)' its rating on Money
Partners Securities 4's class B1a and B1b notes;
-- Affirmed its ratings on Money Partners Securities 4's class
A1a, A1b, M1a, M1b, M2a, M2b, and B2 notes; and
-- Affirmed all of S&P's ratings in Money Partners Securities
3.
The rating actions follow S&P's credit and cash flow analysis of
the most recent information that it has received for these
transactions. S&P's analysis reflects the application of its
relevant criteria.
In February 2013, for all three transactions, the bank account
and liquidity facility agreements were amended in line with S&P's
current counterparty criteria. The currency and basis risk swap
agreements held with The Royal Bank of Scotland PLC (RBS), are
still not in line with S&P's current counterparty criteria. RBS
is posting collateral in line with the swap documentation. S&P's
current counterparty criteria therefore caps the maximum
achievable ratings in all three transactions at 'A+'--i.e., one
notch above S&P's long-term 'A' issuer credit rating (ICR) on
RBS.
All three transactions continues to pay principal sequentially
because reported severe delinquencies (of 90 days or more) have
breached the documented trigger of 22.5%. Reported severe
delinquencies, in all transactions, remain high compared with
S&P's U.K. nonconforming residential mortgage-backed securities
(RMBS) index, despite their decline since its previous reviews.
Reported severe delinquencies are 27.64%, 26.02% and 29.15% in
Money Partners Securities 2, Money Partners Securities 3, and
Money Partners Securities 4, respectively.
From the loan-level data for all three transactions, S&P notes
that arrears have previously been capitalized. Where this is the
case, S&P believes that the probability of default is higher than
for loans that are current (loans not in arrears). In S&P's
analysis, it considered 51.56%, 49.28%, and 49.01% of the loans
to be in arrears in Money Partners Securities 2, 3, and 4,
respectively. This increased S&P's weighted-average foreclosure
frequency (WAFF) assumptions compared with its previous reviews
of each transaction. S&P's weighted-average loss severity (WALS)
assumptions have slightly improved.
Money Partners Securities 2 PLC
The transaction's total reported arrears are 39.99%, while total
arrears including capitalized arrears are 51.56%.
WAFF And WALS Assumptions
Rating WAFF WALS
level (%) (%)
AAA 61.58 41.23
AA 56.59 37.15
A 49.68 29.59
BBB 44.02 25.39
BB 38.52 22.40
B 35.65 19.70
The transaction has deleveraged since February 2012, thereby
increasing the available credit enhancement for all classes of
notes. Nonetheless, the increase in available credit enhancement
for the class B1 notes is not sufficient to maintain the
currently assigned rating level. Therefore, S&P has lowered to
'BB- (sf)' from 'BB (sf)' its rating on the class B1 notes.
The rise in credit enhancement for the remaining classes of notes
has mitigated the increase in S&P's WAFF assumptions since its
May 2012 review. As a result, S&P has affirmed its ratings on
the class A2, M1, and M2 notes.
Money Partners Securities 3 PLC
The transaction's total reported arrears are 39.91%, total
arrears including capitalized arrears are 49.28%.
WAFF And WALS Assumptions
Rating WAFF WALS
level (%) (%)
AAA 61.23 41.56
AA 56.10 37.45
A 49.32 29.77
BBB 43.71 25.57
BB 38.24 22.63
B 35.46 19.93
The transaction has deleveraged since March 2012, thereby
increasing the available credit enhancement for all classes of
notes. The rise in credit enhancement has mitigated the increase
in S&P's WAFF assumptions since its May 2012 review. As a
result, S&P has affirmed all of its ratings in this transaction;
specifically, its ratings on the class A2a to B2b notes.
Money Partners Securities 4 PLC
The transaction's total reported arrears are 41.91%, total
arrears including capitalized arrears are 49.01%.
WAFF And WALS Assumptions
Rating WAFF WALS
level (%) (%)
AAA 63.63 44.36
AA 58.62 40.48
A 51.70 33.29
BBB 46.04 29.32
BB 40.71 26.47
B 37.99 23.90
The transaction has deleveraged since December 2011, thereby
increasing the available credit enhancement for all classes of
notes. Nonetheless, the increase in available credit enhancement
for the class B1a and B1b notes is not sufficient to maintain the
current assigned ratings. Therefore, S&P has lowered to 'B+
(sf)' from 'BB- (sf)' its rating on the class B1a and B1b notes.
The rise in credit enhancement for the remaining classes of notes
has mitigated the increase in S&P's WAFF assumptions since its
March 2012 review. As a result, S&P has affirmed its ratings on
the class A1a, A1b, M1a, M1b, M2a, M2b, and B2 notes.
S&P's credit stability analysis indicates that the maximum
projected deterioration for all three transactions that S&P would
expect at each rating level for time horizons of one year and
three years under moderate stress conditions is in line with
S&P's credit stability criteria.
Money Partners Securities 2, 3, and 4 are securitizations of U.K.
nonconforming residential mortgages. Money Partners Ltd. and
Money Partners Loans Ltd. originated the collateral.
STANDARD & POOR'S 17G-7 DISCLOSURE REPORT
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities. The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.
If applicable, the Standard & Poor's 17g-7 Disclosure Reports
included in this credit rating report are available at:
http://standardandpoorsdisclosure-17g7.com
RATINGS LIST
Class Rating
To From
Money Partners Securities 2 PLC
EUR191.2 Million, œ234.7 Million, $78 Million Mortgage-Backed
Floating-Rate
Notes
Ratings Affirmed
A2a A+ (sf)
A2c A+ (sf)
M1a A+ (sf)
M1b A+ (sf)
M2a A- (sf)
M2b A- (sf)
Rating Lowered
B1 BB- (sf) BB (sf)
Money Partners Securities 3 PLC
EUR298 Million, GBP382.95 Million, $50 Million Mortgage-Backed
Floating-Rate Notes
Ratings Affirmed
A2a A+ (sf)
A2b A+ (sf)
A2c A+ (sf)
M1a A+ (sf)
M1b A+ (sf)
M2a A- (sf)
M2b A- (sf)
B1a BBB- (sf)
B1b BBB- (sf)
B2a B- (sf)
B2b B- (sf)
Money Partners Securities 4 PLC
EUR388.95 Million, GBP351.75 Million Mortgage-Backed
Floating-Rate Notes
Ratings Affirmed
A1a A+ (sf)
A1b A+ (sf)
M1a A+ (sf)
M1b A+ (sf)
M2a BBB (sf)
M2b BBB (sf)
B2 B- (sf)
Ratings Lowered
B1a B+ (sf) BB- (sf)
B1b B+ (sf) BB- (sf)
RAILCARE: Goes Into Administration, 500 Jobs at Risk
----------------------------------------------------
Scott Kirk at MKWeb News reports that rail union RMT called for
urgent intervention by Business Secretary Vince Cable to save 500
skilled engineering jobs in Glasgow and Milton Keynes after it
was confirmed that rail fleet repairs and refurbishment company
Railcare has been placed in administration.
RMT understands that the Government has been approached by the
company for assistance in getting Railcare through a short-term
cash flow crisis but that they were turned down, according to
MKWeb news. The report relates that the union is pointing out
that for want of what is estimated to be not much more than a
million pounds in cash flow, the Government have turned their
backs, while at the same time wasting an estimated GBP100 million
on the aborted franchising timetable -- a shambles which looks
like it is the main cause of the crisis at Railcare.
The report notes that unions had been made aware earlier that
Railcare was in trouble after it failed to pay staff wages and
after a planned takeover by a German company collapsed. Crisis
talks with another potential buyer are thought to have collapsed
forcing the company into administration with BDO appointed as the
administrators, the report says.
The report discloses that RMT understands that although Railcare
has a full order book and plenty of work in the pipeline from the
train operators via the rail fleet leasing companies they ran
into a cash-flow problem which has forced the move into
administration threatening the jobs at the former British Rail
plants at Springburn near Glasgow and Wolverton near Milton
Keynes.
The report says that RMT also understands that the key delays
with moving the order book forwards have been caused by the
franchising chaos in the wake of the West Coast fiasco which has
held back fleet refurbishment plans while costing the taxpayer
GBP100 million.
SALUBRIOUS PLACE: Goes Into Receivership
----------------------------------------
Sion Barry at WalesOnline reports that property advisers Knight
Frank will actively manage the leisure and entertainment scheme
for Nationwide
A major leisure and entertainment development in Swansea has been
put into receivership, according to WalesOnline.
The report notes that Salubrious Place has tenants including TGI
Fridays, a 116-bedroom Premier Inn Hotel, Vue Cinema and car park
operator NCP. The report relates that Peter Welborn and Elaine
Tooke of international property consultancy Knight Frank have
been appointed joint LPA (Law of Property Act) receiver.
The report says that the scheme from Brunswick Mansford was put
into receivership by the Nationwide, which has financed its
development.
The report discloses that Salubrious Place is at the gateway to
the main leisure strip along Wind Street in the old town area of
Swansea.
The Knight Frank receivers will manage the development and deal
directly with tenants, the report relays.
"Salubrious Place is very much a going concern and remains fully
viable. We will be able to deliver the injection of investment,
energy and asset management expertise that it now needs to
thrive. . . . We will be investing heavily and will work closely
with the tenants to cement Salubrious Place's position as the
number one leisure destination in Swansea," the report quoted Ms.
Tooke of Knight Frank as saying.
Wales Online discloses that last year Aspers said the closure its
60,000 sq ft casino at the scheme which extends to 250.000 sq ft.
However, the report adds that there are active leases on
properties covering the whole scheme, which generates an annual
rental income of GBP2.5million.
* Sports Club and Facilities Insolvencies Fall 33% Post-Olympics
----------------------------------------------------------------
The number of sports clubs and facilities entering formal
insolvency procedures has fallen 33% in the year since the 2012
Olympic summer, from 123 in 2011-12 to 82 in 2012-13, according
to research by R3, the insolvency trade body.
The drop in the number of failing sporting companies coincides
with a remarkable year of sporting success for British athletes
and teams that included London hosting the Olympics from July 27,
2012.
By comparison, the total number of UK corporate insolvencies fell
just 12% over a similar period.
R3 president Liz Bingham says: "Regular British sporting success,
as well as the feel-good glow of the Olympics, may well have
encouraged both children and adults to try new sports, join local
teams, or keep on going with their gym membership. Extra interest
-- and income -- will always be a welcome boost for sports clubs
and facilities throughout the country."
"The 'legacy' of London 2012 has attracted a lot of attention. It
would certainly be a positive Olympic legacy if any burst of
grassroots interest in sport were to be sustained and translated
into financially healthier sports clubs and facilities."
The research, compiled by R3 using Bureau van Dijk's 'Fame'
database of company information, also shows that sports-related
insolvencies are now 42% lower than they were five years ago when
the UK entered recession.
R3 adds that despite the fall in sporting corporate failures,
many sports clubs and facilities are still financially hard-
pushed.
Liz Bingham explains: "Since the recession, many people will have
cut back on discretionary spending like club memberships or trips
to the gym. Sports facilities, gyms, and clubs are also
vulnerable to seasonal changes in weather or lengthy gaps between
playing seasons, which can make cash flow tricky to manage.
Expensive space requirements, high insurance costs, and finance
requirements for new equipment quickly add up too."
"On top of this, early periods of economic recovery, as we are
experiencing now, can be dangerous for businesses on the edge.
Corporate insolvencies have historically increased in this
situation. Businesses that cut back on investment to survive the
recession may find they are unable to cope with the stresses of
expansion and increased demand that economic recovery brings."
Liz Bingham adds: "In this context, any boost that clubs have
received from the Olympics is particularly welcome."
Corporate failures uncovered by the research include those of
multiple Football League and Premier League clubs, local football
clubs, golf clubs, snooker halls, local stables, motor-racing
clubs, tennis clubs, and gyms.
===============
X X X X X X X X
===============
* European Telcos Must Increase Network Investments for Stability
-----------------------------------------------------------------
While network sharing/joint investment deals will ease the
capital expenditure burden on European telecom service providers
in the short term, they will need to increase their network
investments to ensure long-term revenue stability, says Moody's
in a Special Comment report on the sector entitled "European
Telecom Service Providers: Network Deals Will Ease Short-Term
Capex Burden But Investment Still Needed for Long-Term Revenue
Stability."
The current tough regulatory and operating environment is
pressuring the revenues and ratings of Moody's-rated European
telecom service providers. If this continues, Moody's expects
these companies to suffer further declines in revenues of 1.5% in
2013, and for revenues to be flat in 2014. However, ongoing
intensive capital expenditure (capex) is needed to meet
consumers' growing demand for converged services.
"Alternative ways to acquire network capacity enhancements will
help to ease the capex burden for European telcos in the short
term. We expect a growing number of telcos will enter network-
sharing agreements or look at other ways to invest without
further compromising their already strained balance sheets," says
Carlos Winzer, a Senior Vice President in Moody's Corporate
Finance Group and author of the report.
While most of these alternatives are credit positive in the short
term because they are an efficient way to deploy limited cash
investment, Moody's believes they are only temporary measures
that will not provide the level of network investment needed for
these companies' long-term revenue stability.
"In the long term, we see more merit in telcos controlling their
own networks and making greater investment. We also expect
regulatory pressure to ease or at least support industry
consolidation and companies that are willing to invest in the
network through adequate returns on investment," adds Mr. Winzer.
Incumbents such as Deutsche Telekom (Baa1 stable) will benefit by
sharing the investment cost while limiting competition.
Challengers get to join an existing network without the large up-
front investment. However, network sharing agreements could push
smaller companies focused on just mobile or fixed-line services
out of these markets because these deals will probably be
restricted to a couple of companies.
Network spinoffs will release cash, but in the long term this
option is invariably credit negative because controlling the
access network gives the incumbent operator a significant
competitive advantage. Moody's does not expect telcos to take
this approach unless there are compelling reasons or regulatory
requirements to do so, as in the case of Telecom Italia SpA (Baa3
negative).
In-market consolidation will be credit positive because it will
reduce the fragmented nature of these markets and achieve scale,
integration and synergies. However, only those companies with
greater financial flexibility will be able to take this approach.
Moody's expects continued standalone investment from companies
which have enough headroom under their current financial ratios
to avoid pressure on their rating such as TeliaSonera AB (A3
stable), Telenor ASA (A3 stable) and Deutsche Telekom, and those
focused on their domestic market (Portugal Telecom, SGPS, SA (Ba2
negative), Belgacom Societe Anonyme de Droit Public (A1 stable),
and Swisscom AG (A2 stable)). Moody's does not expect many
challengers to undertake network investments on their own because
it is costly and takes time to develop.
* Moody's Notes Large Outflows in Euro Money Market Funds in Q2
---------------------------------------------------------------
Prime euro-denominated money market funds (MMFs) suffered a near
12% drop in assets under management (AUM) to EUR66.1 billion, as
investors keep searching for higher yields. US Prime and offshore
$ MMFs also recorded a decline in AUM of 3.2% to $640 billion and
2% to $237 billion, respectively, whereas sterling denominated
MMFs saw an increase in AUM by 3.2% to GBP118.5 billion during
the last quarter.
The majority of MMFs continued to increase their exposure to
European banks in Q2, reflecting subsiding concerns about
Europe's financial system. Sterling-denominated and offshore $
MMFs increased their exposure to European financial institutions
by GBP4.2 billion to 53.1% of total investments (GBP62.4
billion), and $5 billion to 35% of total investments ($91
billion), respectively.
Moody's analysis is based on the portfolios of all Moody's-rated
MMFs in Q2 2013. For the US dollar funds, the data covers 41 US
Prime MMFs and 29 European and offshore US dollar-denominated
MMFs. For the euro-denominated and sterling-denominated MMFs, the
data covers 22 funds domiciled in Europe for each (i.e., 44 in
total).
Overall, the credit profiles of euro-denominated funds
stabilized, while the profiles of US prime and sterling MMFs
continued to experience some deterioration during Q2 2013.
Portfolios' duration and diversification improved for euro- and
sterling-denominated funds.
- Euro-denominated MMFs: AUM drop nearly 12%; Exposure to French
financial institutions falls by 23%, while investments in
Swedish banks increase by 12%; Credit profiles stabilize
Given the low interest-rate environment and low yields across the
sector, Euro-denominated MMFs experienced significant outflows,
and the combined AUM decreased by 11.6% to EUR66.1 billion during
Q2.
The funds' aggregate exposure to European financial institutions
decreased by 5% to EUR28.2 billion at the end of June, from
EUR29.7 billion at the beginning of the quarter. However, due to
the AUM decrease, exposure increased in relative terms to 43% of
AUM from 40% over the period. Exposure to French financial
institutions recorded a sustained decline -- dropping by 23%
(EUR2.5 billion) to EUR8.3 billion. At the same time, investments
in highly rated Swedish banks increased by 12% to EUR6.3 billion.
Overall, the credit profiles of euro-denominated MMFs stabilized,
with "barbell" strategy allocations, reflected by the 25%
decrease in exposure to Aa1-rated securities, which was driven by
reduced investments in repurchase agreements, and an increase in
investments rated Aaa (+14%), Aa3 (+10%) and A1 (+22%).
Given the flatness of the short end of the yield curve, prime
funds have decreased their weighted-average maturity (WAM) by 2.4
days to the lowest level in 2013 at 41.2 days from 43.69 days on
average. The decrease in the WAM was driven by higher exposure to
securities maturing within one month (+9%) at the expense of
relatively longer-dated securities with maturities ranging
between one and three months (-15%).
The neutral changes in the credit profiles coupled with the WAM
decrease contributed to the stabilization of the funds'
sensitivity to market risk. Funds' stressed net asset value at
the end of Q2 was 0.9922 on average, virtually unchanged from the
beginning of the quarter.
- US-dollar Prime MMFs: Exposure to European securities
increases; modest credit deterioration; Overnight liquidity
remains high
Both US Prime MMFs and offshore $ MMFs have shown increased
exposures to European financial institutions, rising by $2
billion to around 27% of total investments ($174 billion) and by
$5 billion to 35% of total investments ($91), respectively.
US Prime Funds increased exposure to French banks ($43 billion
from $37 billion), and reduced exposure to Swedish banks ($37
billion from $46 billion) due to continuing tightening by the
Swedish central bank.
The credit profiles of $ denominated MMFs experienced a modest
deterioration in Q2 2013 due to fund managers' continued search
for higher yields and limited asset supply. Investments rated Aa3
and higher dropped by 4.3% in US domiciled funds and 6.3% in
European and offshore domiciled funds. Securities rated Aaa moved
down to approximately 19% and 16% of MMF investments, from
roughly 23% and 20% in March for US domiciled and offshore
domiciled funds, respectively.
MMFs sensitivity to market risk increased modestly in this
quarter due to the increased exposure to slightly longer dated
securities combined with the modest deterioration in the credit
profile. For US domiciled funds, stressed net asset value (NAV)
declined to an average 0.9917 at the end of June from 0.9923 at
the end of March. For European and offshore funds, stressed NAV
declined to an average of 0.9918 at the end of June from 0.9926
at the end of March.
At quarter-end, overnight liquidity remained at elevated levels
in US domiciled funds, reaching 33%, down from prior quarter
levels of approximately 39%. European and offshore funds have
remained in a tighter range at around 35%. Treasury and
repurchase agreements backed by Treasury securities continue to
be a large source of liquidity for US domiciled funds at 24% of
total investments at the end of Q2 2013.
- Sterling-denominated MMFs: Exposure to Swiss, Swedish and
French banks increases; Credit, market risk and maturity
profiles deteriorated
Exposure of prime sterling-denominated funds to European
financial institutions increased, both in absolute terms (+GBP4.2
billion at GBP62.4 billion) and relative terms at 53.1% of
combined funds' AUM from 50.6% at the beginning of the quarter.
The bulk of this increase is driven by higher investments in
Swiss banks (+GBP1.8 billion), Swedish banks (+GBP1.7 billion)
and French banks (+GBP1.2 billion).
Credit profiles experienced a negative shift in Q2. Whilst
exposure to A-rated securities increased to 46% of funds' assets
from 39%, investments in Aaa- and Aa-rated securities decreased
to 9% from 13% and to 45% from 48%, respectively.
Due to the low-yield environment, especially at the short end of
the curve, prime funds have increased their WAM by 1.5 days to 42
days -- the highest level over one year. The increase in WAM was
driven by fund managers' search for higher yield. After the peak
reached in April of average overnight liquidity above one-third
of funds' AUM, the liquidity level trended down to 28.3% of AUM,
in line with that of the previous quarter-end.
Given the increased exposure to relatively long-dated securities,
combined with the deterioration in funds' credit profiles, MMFs'
sensitivity to market risk increased. Their stressed net asset
value deteriorated to 0.9919 on average at the end of Q2 from
0.9921 at the beginning of the quarter.
Funds' diversification improved, as their top three obligor
concentration ratio dropped to 17.9% of AUM, the lowest level in
12 months.
* BOOK REVIEW: Jacob Fugger the Rich
------------------------------------
Author: Jacob Streider
Publisher: Beard Books
Hardcover: 227 pages
List Price: $34.95
Review by Gail Owens Hoelscher
Buy a copy for yourself and one for a colleague on-line at
http://is.gd/UAP0Zb
Quick, can you work out how much $75 million in sixteenth
century dollars would be worth today? Well, move over Croesus,
Gates, Rockefeller, and Getty, because that's what Jacob Fugger
was worth.
Jacob Fugger was the chief embodiment of early German
capitalistic enterprise and rose to a great position of power in
European economic life. Jacob Fugger the Rich is more than just
a fascinating biography of a powerful and successful
businessman, however. It is an economic history of a golden age
in German commercial history that began in the fifteenth
century. When the book was first published, in 1931, The Boston
Transcript said that the author "has not tried to make an
exhaustive biography of his subject but rather has aimed to let
the story of Jacob Fugger the Rich illustrate the early
sixteenth century development of economic history in which he
was a leader."
Jacob Fugger's family was one of the foremost family in Augsburg
when he was born in 1459. They got their start by importing raw
cotton, by mule, from Mediterranean ports. They later moved into
silk and herbs and, for a long while, controlled much of
Europe's pepper market.
Jacob Fugger diversified into copper mining in Hungary and
transported the product to English Channel and North Sea ports
in his own ships. A stroke of luck led to increased mining
opportunities. Fugger lent money to the Holy Roman Emperor
Maximilian I to help fund a war with France and Italy. Mining
concessions were put up as collateral. The war dragged on, the
Emperor defaulted, and Fugger found himself with a European
monopoly on copper.
Fugger used his extensive business network in service of the
Pope. His branches all over Europe collected payments due the
Vatican and issued letters of credit that were taken to Rome by
papal agents. Fugger is credited with creating the first
business newsletter. He collected news of evolving business
climate as well as current events from his agents all across
Europe and distributed them to all his branches.
Fugger's endeavors wee not universally applauded. The sin of
usury was still hotly debated, and Fugger committed it
wholesale. He was sued over his monopoly on copper. He was
involved in some messy bribes in bringing Charles V to the
throne. And, his lucrative role as banker in the sale of
indulgences, those chits that absolve the buyer of sin, raised
the ire of Martin Luther himself. Luther referred to Fugger
specifically in his Open Letter to the Christian Nobility of the
German nation Concerning the Reform of the Christian Estate just
before being excommunicated in 1521. Fugger went on, however, to
fund Charles V's war on Protestanism and became even richer.
Fugger built many churches and buildings in Augsburg. He was
generous to the poor and designed the world's first housing
project. These buildings and lovely gardens, called the
Fuggerei, are still in use today.
A New York Times reviewer said that Jacob Fugger the Rich, a
book "concerned with the most famous, most capable, and most
interesting of all [the members of the Fugger family] will be as
interesting for the general reader as for the special student of
business history." This observation is just as true today as in
1931, when first made.
Jacob Streider was a professor of economic history at the
University of Munich.
*********
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
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are not intended to reflect actual trades. Prices for actual
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related conferences are encouraged. Send announcements to
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Each Friday's edition of the TCR includes a review about a book
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*********
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-
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Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez,
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Copyright 2013. All rights reserved. ISSN 1529-2754.
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