TCREUR_Public/131004.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, October 4, 2013, Vol. 14, No. 197



AGEASINLUX SA: Moody's Affirms 'Ba3' Jr. Subordinated Debt Rating


OBERTHUR TECHNOLOGIES: Fitch to Rate Senior Notes at 'CCC+'
OBERTHUR TECHNOLOGIES: Moody's Assigns B2 CFR; Rates Sec. Debt B1
OBERTHUR TECHNOLOGIES: S&P Rates EUR440 Million Facility 'B-'
PHOTONIS TECHNOLOGIES: Moody's Assigns Definitive 'B2' CFR


FALCON GERMANY: S&P Assigns 'B' CCR; Outlook Stable
QUIRINUS EUROPEAN: Fitch Lowers Rating on Class F Notes to 'D'


CARL SCARPA: In Examinership Following Financial Woes


ALITALIA SPA: Air France-KLM Chief Doesn't Rule Out Aid
CARTESIO SRL: S&P Raises Ratings on Five Note Classes to 'BB-'


ALFA BANK: Fitch Assigns 'B+' Long-Term Local Currency Rating
ALLIANCE BANK: Moody's Cuts Long-Term Deposit Ratings to Caa2
BANK CENTERCREDIT: Moody's Cuts Sr. Unsecured Debt Rating to B3
KAZKOMMERTSBANK: Moody's Alters Ratings Outlook to Stable


LECTA SA: S&P Revises Outlook to Neg. & Affirms 'B+' CCR


CAIXA ECONOMICA MONTEPIO: Moody's Reviews Mortgage-Covered Bonds
CAIXA ECONOMICA MONTEPIO: Moody's Review Ratings for Downgrade
PORTUGAL TELECOM: Moody's Retains Ba3 Rating Despite Oi SA Merger


HOME CREDIT: Fitch Assigns 'BB-(EXP)' Subordinated Debt Rating
SBERBANK EUROPE: Fitch Assigns 'b+' Viability Rating

U N I T E D   K I N G D O M

ALBEMARLE & BOND: May Breach Covenant After Failed Rights Issue
EASTERN ELECTRICS: Set To Be Placed In Voluntary Liquidation
NGS PRINT: Enters Voluntary Liquidation
RUSHWORTH'S FURNITURE: Goes Into Voluntary Liquidation
THOMAS WINSTANLEY: Constractor Goes Into Liquidation

UNITED BISCUITS: S&P Assigns 'B+' CCR; Outlook Stable


* Moody's Notes Stable Outlook in European Autoparts Sector
* BOOK REVIEW: The Phoenix Effect



AGEASINLUX SA: Moody's Affirms 'Ba3' Jr. Subordinated Debt Rating
Moody's Investors Service affirmed AG Insurance's A2 insurance
financial strength rating (IFSR) and changed the outlook of this
rating to stable from negative. At the same time, Moody's
affirmed the Baa3 issuer rating of Ageas SA/NV and the ratings on
guaranteed securities issued by Ageas Finance N.V., Ageas Hybrid
Financing and Ageasfinlux S.A., and maintained a negative outlook
on these ratings.

Ratings Rationale


Moody's says that the affirmation of AG Insurance's A2 IFSR and
the change of outlook to stable from negative reflect (1) the
company's ability to maintain a leading market position in
Belgium as well as a good level of capitalization, (2) the de-
risking of its investment portfolio since 2010 and (3) the
improvement in its profitability.

Moody's says that following tariff increases and portfolio
pruning measures, AG Insurance managed to improve the
profitability of its non-life operations. In the first half of
2013, the company reported a combined ratio of 97.5%, versus
99.8% one year before and an average of 101.7% between 2009 and
2012. In the life segment, Moody's expects AG Insurance to be
able to cope with the low interest rate environment thanks to (1)
discipline in providing guarantees, as evidenced by the decrease
in guarantees on the group life insurance segment in January
2013, (2) reduced returns to policyholders on policies including
profit-sharing mechanisms and (3) improved asset liability
management, with notably a low duration gap (0.7 year as of 30
June 2013) limiting the reinvestment risk.

Commenting on asset quality, Moody's mentions that asset risk has
been reduced significantly in recent years. Nonetheless, Moody's
will monitor any potential deterioration that could arise from
the company's stated willingness to increase its exposure to
equities and loans.

Moody's also mentions that despite a potential increase in AG
Insurance's leverage, it expects the company's financial leverage
and earnings coverage metrics to remain consistent with AG
Insurance's rating level in the medium term. Moody's adds that
although the financial flexibility of the Ageas Group may be
influenced by the litigation risk that the holding company is
facing, AG Insurance's recent issuance of external hybrid debt
demonstrates that the operating company maintains an adequate
access to capital markets.


Ageas SA/NV is the holding company of the Ageas Group, whose main
assets are (i) 75% of AG Insurance, (ii) Ageas UK, a British non-
life insurer, (iii) insurance activities in Continental Europe,
among which most notably 51% of Millennium BCP Ageas in Portugal,
and (iv) insurance activities in Asia, which are non-controlled
and jointly operated with local banking operators, except for
Ageas Insurance Company Asia in Hong Kong which is 100% owned.

Moody's says that the affirmed Baa3 long-term issuer rating of
Ageas SA/NV continues to reflect the combined financial strength
and dividend capacity of the Group's operating insurance
companies, the subordination of the holding company creditors,
and the currently sound financial situation of the holding
company, with a cash position of around EUR2.2 billion as of June
2013, covering EUR0.1 billion of outstanding senior debt. The
investment grade rating reflects Moody's expectation that the
Group will be able to meet all its senior financial obligations
in the near term.

However, despite strong progress towards the resolution of many
legacy issues inherited from the break-up of the previous Fortis
Group, the rating also reflects continuing uncertainty over the
resolution of various legal risks which might have a material
financial impact and, in adverse scenarios, deplete the holding
company's resources.

Several legal actions have been initiated by shareholders in
Belgium and the Netherlands claiming for monetary damages after
the dismantling of the Fortis Group. Although the Group has not
yet quantified the potential financial impact of these claims,
this impact could be potentially very high if the claims lead to
a court judgment in favor of the shareholders. Moody's says that
the negative outlook on Ageas SA/NV rating continues to reflect
the risk linked to these legal disputes.

Moody's notes that in 2012 the Utrecht Court decided in the first
instance on the proceedings initiated by certain Fortis
shareholders, namely that Fortis published misleading information
during the period between 22 May and 26 June 2008. Nonetheless,
the Court has ruled that it must be decided in separate
proceedings whether the shareholders concerned did actually
suffer a loss as a consequence of Fortis' actions and, if so, the
amount of any claim.

Moody's does not expect to resolve this outlook before having
more clarity on the probable financial impact of the legal
proceedings. As legal proceedings initiated against the Ageas
Group may take a long time to conclude, Moody's may maintain the
negative outlook on the ratings for a longer period than the
typical twelve to eighteen months.

Financing Vehicles

Moody's said that the affirmations of Ageas Finance N.V., Ageas
Hybrid Financing and Ageasfinlux S.A. ratings fully reflect the
guarantees received by these financing vehicles from the Group's
holding company and therefore follows the rating action on Ageas

Ageas Finance N.V. is a funding vehicle guaranteed by Ageas
SA/NV. As of end of September 2013, EUR0.1 billion of debt issued
by this entity was outstanding.

The hybrid debt issued by Ageas Hybrid Financing, Hybrone, has
been on-lent to AG Insurance, and is therefore economically
matched by a loan to this operating entity. The debt is also
backed by Ageas SA/NV.

The FRESH securities, perpetual and mandatory convertible debt,
were issued by Ageasfinlux with Ageas SA/NV acting as co-obligor.

For more information on the ratings of these hybrid securities,
please refer to Moody's previous rating actions.

What Could Change The Ratings Up/Down

Commenting on what could change AG Insurance's rating down,
Moody's mentioned (i) a deterioration in profitability with a
normalized return on capital of below 4%; (ii) a significant
deterioration in capitalization; or (iii) deterioration in
financial leverage metrics beyond Moody's expectations for A-
rated insurers.

Conversely, positive pressure could be exerted on the rating in
the event of an improvement in profitability, with a normalized
return on capital above 8%, and a significant improvement in

Moody's says that in the event of an adverse outcome to the legal
disputes with a significant impact on the holding's financial
resources, the ratings of Ageas SA/NV and of its financing
vehicles might be downgraded by several notches. Positive
pressure on these ratings would arise if Moody's expected that
the legal disputes would not have any significant financial
impact the Ageas Group.

List of Ratings

The following rating has been affirmed with a stable outlook:

  AG Insurance -- insurance financial strength rating at A2.

The following ratings have been affirmed with a negative outlook:

  Ageas SA/NV -- long term issuer rating at Baa3;

  Ageas Finance N.V. -- backed senior unsecured debt rating at

  Ageas Hybrid Financing -- backed junior subordinated debt
  at Ba2 (hyb);

  Ageasfinlux S.A. -- backed junior subordinated debt rating at
  Ba3 (hyb).

Principal Methodologies

The methodologies used in rating Ageas Finance NV, Ageas SA/NV
and AG Insurance were Moody's Global Rating Methodology for
Property and Casualty Insurers Published in May 2010, and Moody's
Global Rating Methodology for Life Insurers published in May
2010. Please see the Credit Policy page on for a
copy of these methodologies.

The principal methodology used in rating Ageasfinlux S.A. and
Ageas Hybrid Financing was Moody's Guidelines for Rating
Insurance Hybrid Securities and Subordinated Debt Published in
January 2010. Please see the Credit Policy page on
for a copy of this methodology.

Headquartered in Brussels, Belgium, Ageas Group had total assets
of EUR95.9 billion and reported shareholders' equity (including
minority interest) of EUR9.7 billion as of 30 June 2013.


OBERTHUR TECHNOLOGIES: Fitch to Rate Senior Notes at 'CCC+'
Fitch Ratings expects to rate Oberthur Technologies Holding S.A.S
and its associated debt instruments as follows, upon completion
of the pending refinancing:

Oberthur Technologies Holding S.A.S

  Long-term Issuer Default Rating: 'B', Stable Outlook, is

Oberthur Technologies S.A. (OTSA), Oberthur Technologies of
America Corp

  Senior Secured Term Loan B Rating: 'BB-(EXP)'/'R2(EXP)'

Oberthur Technologies Finance SAS, Oberthur Technologies S.A.
(OTSA) and Oberthur Technologies of America Corp

  Senior secured RCF: 'BB-(EXP)'/'R2(EXP)'

Oberthur Technologies Holding S.A.S

  Senior notes: 'CCC+(EXP)'/'R6(EXP)'

The ratings relate to the pending refinancing of Oberthur's
current first lien debt (EUR530m) and second lien debt (EUR100
million) from the proceeds of a proposed senior secured Term Loan
B for an amount of EUR440 million and senior notes issue for an
amount of EUR200 million.

Fitch has assigned an expected rating of 'BB-(EXP)'/'R2(EXP)' to
the EUR440 million senior secured Term Loan B and a
'CCC+(EXP)'/'R6(EXP)' to the EUR200 million senior notes. In its
recovery analysis, Fitch adopted the going concern value of the
company, as the resultant enterprise value is higher than the
liquidation enterprise value. Under the going concern approach,
Fitch believes that an EBITDA discount of 25% on December 2012
EBITDA and a 5x EV multiple are deemed fair in a distressed case.

Final instrument ratings would be contingent upon the receipt of
final documentation conforming materially to information already
received. Failure to conduct the refinancing according to plan
would result in the withdrawal of the above instrument ratings.

Fitch has not classified as debt the EUR267.5 million (at end of
December 2012) shareholder loan issued at Oberthur Technologies
Holding S.A.S and has therefore excluded it from leverage and
coverage ratios. The proposed features of this instrument match
Fitch's perception of an-equity like instrument (see "Treatment
of Junior Corporate Debt in Europe", dated April 8, 2011 at

Key Rating Drivers

Solid Existing Market Position:

Oberthur is the global number two player in Telecoms (SIM cards &
Telecom solutions) with a 12% market share in 2012 (Gemalto is
number 1 with a 29% market share) and the number three global
player in Payment and Transport (payment smart cards, magnetic
smart cards, payment solutions etc.) with a 16% market share in
2012 (Gemalto number 1 with 33% market share). The global smart
cards market is highly concentrated with the four leading
producers representing almost 70% of the market.

Defensive Business Model:

Oberthur benefits from recurring revenues; automatic card
renewals drive approximately one third of issued cards
contributing to the solid visibility of Oberthur revenues.
Moreover, the critical nature of Oberthur's solutions and
services and its highly integrated and specialized offerings
increase the loyalty of the client base and represent a
significant barrier to entry.

Growing Market:

Oberthur is operating in a growing market. The Telecom market
(telecom cards unit shipments) is expected to grow at a 4% CAGR
through 2012-2016 driven by increasing penetration rates, high
churn levels and the arrival of new technologies: LTE (long-term
evolution), Near Field Communications (NFC) and machine-to-
machine (M2M). The payment market (payment cards unit shipments)
is expected to grow at a 17% CAGR through 2012- 2016. Demand in
payment is expected to be supported by growth in banking
penetration especially in emerging markets, conversion from
magnetic stripe cards to chip cards with EMV (Europay, Mastercard
and Visa) standards and the emergence of contactless payments
driving migration of banks to dual interface cards. In the
Identity market research firm, ABI expects the e-document unit
shipments to grow by 22% CAGR between 2012 and 2016.

Significant Technology Risk:

Mobile money and banking offer significant growth potential to
operators, handset manufacturers and technology providers,
however determining the winners in a fast evolving industry is
far from clear. NFC is still in its early phases but is expected
to grow rapidly. Oberthur's main competitor Gemalto seems better
positioned in NFC. How effectively Oberthur's key alternative
such as Embedded Secure Element (eSE) will compete is unclear to
us at present. These technology shifts have the potential to
significantly disrupt the cash flow generation of Oberthur in
future years.

Attrition on Commoditised Revenues:

Oberthur's existing position of strength in basic SIM cards and
Smart cards is becoming commoditized with price attrition
continuing to dilute revenues in these core divisions in the
years ahead. Albeit operating performance has been consistent,
Oberthur will have to improve its process technology and/or its
production efficiencies to a degree sufficient to maintain its

Cash Flow Volatility and High Leverage Position:

The group is not forecast to generate free cash flow (FCF) in
2013. Cash flow is exposed to volatility and a degree of
execution risk and in order for the company to slowly deleverage
from its current high funds from operations (FFO) leverage
metrics of 5.7x in 2013 following the refinancing. Based on its
projections, Fitch expects FFO adjusted net leverage to decrease
from 5.7x in 2013 to 4.8x in 2016. FFO fixed charge coverage is
expected to increase from 2x in 2013 to 2.25x in 2016.

Rating Sensitivities

Positive: The ratings could be positively affected by FFO net
adjusted leverage below 4.5x and FFO fixed charge cover above
2.5x on a permanent basis along with an expectation of consistent
positive FCF generation.

Negative: The ratings could be negatively affected by FFO net
adjusted leverage above 6.5x and FFO fixed charge cover below 2x
on a permanent basis and any material loss in market share in the
Payment or Telecom divisions.

OBERTHUR TECHNOLOGIES: Moody's Assigns B2 CFR; Rates Sec. Debt B1
Moody's Investors Service has assigned a B2 Corporate Family
Rating (CFR), and a B2-PD Probability of Default Rating (PDR) to
Oberthur Technologies Holding S.A.S. (Oberthur or the Group).
Concurrently, Moody's has assigned (P)B1 ratings to the EUR88
million Revolving Credit Facility (RCF), and the EUR440 million
equivalent Senior Secured Term Loans B (together with the RCF the
loans) split into a EUR165 million Tranche B-1 issued by Oberthur
Technologies S.A. (OTSA) and a USD372 million Tranche B-2 issued
by Oberthur Technologies of America Corp., one of OTSA's
subsidiaries. Moody's has also assigned a (P)Caa1 rating to the
EUR200 million Senior Notes (the Notes) to be issued by Oberthur
Technologies Holding S.A.S. The outlook on the ratings is stable.

The proceeds from the loans and notes alongside EUR29 million of
Oberthur's cash will be used primarily to refinance Oberthur's
existing debt of EUR633 million.

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

Ratings Rationale

"The B2 CFR reflects the group's number two position in the
global smart cards industry and the positive growth dynamics of
these markets including the projected Near Field Communication
(NFC) take-off, 4G deployment and migration towards chip and pin
payment cards (EMV). This is counterbalanced by a high leverage
at closing with only slow de-leveraging prospects, with no free
cash flow generation expected in either 2013 or 2014 due to
significant restructuring costs and pricing pressure on
Oberthur's classic products", says Sebastien Cieniewski, Moody's
lead analyst for Oberthur.

Oberthur is weakly positioned in the B2 rating category due to
its high opening leverage above 6.0x (based on Moody's
adjustments) and weak free cash flow generation with no
significant improvement expected over the rating horizon. The
rating is also constrained by (i) the increasing pressure on
prices of classic and more commoditized telecom and payment
products, in particular due to the intense competition from Asian
SIM cards manufacturers, (ii) uncertainty regarding the timing of
large scale NFC deployment, and (iii) the company's relatively
weaker position in the fast growing e-Identity business.

However Moody's recognizes that Oberthur benefits from (i) its
number two global position in the manufacturing of smart cards
with 16% market share in Payment smart cards and 12% in Telecom
SIM cards, behind Gemalto, (ii) a diversified portfolio of long-
standing blue-chip customers including over 1,000 multinational
financial institutions, over 400 mobile operators and over 100
government entities, with no unique client representing more than
5% of total revenues, and (iii) positive dynamics for the group's
underlying markets in both Payment and Telecom, including
technological upgrades such as EMV migration in the US and
increased penetration of LTE (4G) and NFC, which should support
the shift of the product mix towards higher margin products.

In 2012, the Identity business experienced a revenue decrease of
22% compared to the prior year due to the ending of certain major
contracts, while Telecom revenues (down 4.6%) were negatively
impacted by price pressure and sluggish NFC take-off. This
resulted in a decrease of group revenues of 2% to EUR870 million
in 2012, despite positive performance in the Payment business
(revenues up 8%). Correspondingly, EBITDA (as reported by the
group) of EUR129 million in 2012 was slightly weaker compared to
the prior year (EUR131 million). However, H1 2013 results showed
an increase in revenues of 12% compared to the previous year (as
reported by the company), primarily due to a major exclusive
embedded secure element (eSE) contract for the new Samsung Galaxy
S4 and increased penetration in Asia for the Payment division,
despite declining revenues in the Identity business. The lower
margin Samsung contract negatively impacted the EBITDA margin in
H1 2013 which decreased to 13.0% from 13.8% in the first half of

As of H1 2013 and pro forma for the refinancing, we expect
Oberthur's adjusted leverage to be slightly above 6.0x. We
consider the company's liquidity position to be adequate over the
rating horizon, incorporating its pro-forma EUR49 million cash
balance and EUR88 million undrawn RCF. The minimal scheduled
amortization of the covenant-lite Term Loan B with only a
springing covenant on the RCF provide the company additional
financial flexibility.

The stable outlook reflects Moody's view that Oberthur's
principal segment, Card Systems, should demonstrate relative
stability offsetting volatility in the Identity segment. The
outlook also reflects our expectation that the company should be
able to deleverage to below 6.0x over the next year, and maintain
an adequate liquidity position.

While unlikely in the short-term, positive pressure on the CFR
could develop if Oberthur reduces its adjusted Debt-to-EBITDA
sustainably below 5.0x, and achieves FCF/Debt of around 5% with
EBITA-to-Interest above 2.0x. Negative ratings pressure could
arise if the company is unable to de-leverage below 6.0x, or
experiences sustained negative FCF, potentially impairing its
liquidity position.

Structural Considerations

Oberthur's PDR (B2-PD) is aligned with the CFR, reflecting our
assumption of a 50% family recovery rate as is customary for
capital structures including both secured bank loans and bonds.
The Term Loan B and the RCF are rated at (P)B1, one notch above
the CFR, due to the cushion provided by the relatively large
amount of the first loss absorbing Notes rated (P)Caa1 and
ranking below.

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

Headquartered in Colombes, France, Oberthur Technologies Holding
S.A.S. is an international group with strong market positions in
secure technologies generating the bulk of its revenues through
its Payment (payment cards) and Telecom business units (SIM
cards). The group is majority owned by private equity fund Advent
International, and reported revenue in 2012 of EUR870 million.

OBERTHUR TECHNOLOGIES: S&P Rates EUR440 Million Facility 'B-'
Standard & Poor's Ratings Services said it assigned its 'B-'
issue rating to the proposed EUR440 million term loan facility
(including euro and U.S. dollar tranches) due 2019 and proposed
EUR88 million revolving credit facility (RCF) due 2018 to be
issued by various entities in the France-based smart card
provider Oberthur Technologies group.  S&P also assigned its
'CCC' issue rating to the proposed EUR200 million senior
unsecured notes due 2020 to be issued by Oberthur Technologies
Holding SAS.  The recovery rating on the senior secured debt is
'3', reflecting S&P's expectation of meaningful (50%-70%)
recovery prospects in the event of a payment default.  S&P's
recovery rating on the senior unsecured notes is '6', reflecting
its expectation of negligible (0-10%) recovery prospects in the
event of a payment default.

At the same time, S&P affirmed its 'B-' long-term corporate
credit rating on Oberthur Technologies SAS.  The outlook remains

S&P also affirmed its 'B-' recovery rating on Oberthur
Technologies' existing senior secured debt.  S&P expects to
withdraw this rating once the company has repaid this debt.

S&P assess Oberthur Technologies' business risk profile as
"fair," factoring in its view of its management and governance as
"fair". S&P regards its financial risk profile as "highly
leveraged," according to its criteria.

S&P's business risk profile assessment is constrained by Oberthur
Technologies' moderate profitability, severe competition (mainly
from world leader Gemalto), medium-term risks associated with
technology changes, more volatile operating performance than S&P
had expected, and turnover of senior management over the past two
years.  These weaknesses are partly offset by its global No. 2
position, with a global market share of 16%-18% in the payment
segment and 12% in the telecom segment; global scale with a
diversified customer base including 2000 financial institutions,
400 mobile operators, and government-related entities in 70
countries; resilient business model with growth opportunities;
and significant barriers to entry.

S&P's financial risk profile assessment is constrained by the
group's high Standard & Poor's adjusted gross debt to EBITDA,
weak free operating cash flow (FOCF) generation, and its
aggressive financial policy reflected by the private-equity
ownership.  The group's adequate liquidity, in S&P's view, and
its solid cash interest coverage partly offset these weakness.

S&P expects revenues to increase by 8% in 2013, after a 2%
decline in 2012, followed by a low-single-digit annual rise in
2014.  S&P bases its growth assumption on the payment segment,
and expect flat revenues in other segments.  Despite S&P's
anticipation of a stable reported EBITDA margin in the mid-teens,
it expects the Standard & Poor's adjusted EBITDA margin, where it
deducts capitalized development and restructuring costs, to
remain in the 10%-11% range in the next 12 months (compared with
10.5% in 2012).

S&P sees the cash conversion of Oberthur Technologies' EBITDA
into FOCF remaining low because of significant interest expense,
capital expenditures, and restructuring costs.  S&P expects the
group's ratio of funds from operations (FFO) to debt to be less
than 5% and FOCF at about breakeven in 2013 and 2014.  Based on
S&P's assumption of a blended average interest cost of 8.2% for
the proposed debt, it sees solid cash interest coverage by EBITDA
of about 2.5x in 2013-2014.

S&P expects a high adjusted leverage ratio (debt to EBITDA) of
about 14x-15x, and a senior leverage ratio of 6x in 2013-2014
(excluding S&P's adjustments, notably for shareholder loans).
S&P thinks any material deleveraging will be difficult to achieve
over the next two years.

The negative outlook reflects the possibility of a one-notch
downgrade over the next 12 months if Oberthur Technologies
breaches the covenants on its debt or appeared likely to do so.

S&P expects to revise the outlook to stable if the refinancing
closes in line with the proposed terms, as this would likely lead
S&P to revise up its liquidity assessment upward to "adequate."

PHOTONIS TECHNOLOGIES: Moody's Assigns Definitive 'B2' CFR
Moody's Investors Service has assigned a definitive B2 corporate
family rating (CFR) and, in addition, has assigned a B2-PD
probability of default rating (PDR) to Photonis Technologies SAS,
a manufacturer of electro-optic components used in military night
vision and industry & science applications. Concurrently, Moody's
has also assigned a definitive B2 rating to the EUR250 million
equivalent senior secured first-lien term loan due 2019 and a
definitive Ba2 rating to the EUR30 million equivalent super
senior revolving credit facility due 2018. The outlook on all
ratings is stable.

The definitive ratings are in line with the provisional ratings
assigned July 29, 2013 and reflect the successful execution of
the refinancing and Moody's view that the final terms and
conditions of the facilities are in line with expectations.

Ratings Rationale

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

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


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

What Can Change The Rating Up/Down

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

The principal methodology used in this rating was the Global
Aerospace and Defense published in June 2010. Other methodologies
used include Loss Given Default for Speculative-Grade Non-
Financial Companies in the U.S., Canada and EMEA published in
June 2009. Please see the Credit Policy page on
for a copy of these methodologies.

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


FALCON GERMANY: S&P Assigns 'B' CCR; Outlook Stable
Standard & Poor's Ratings Services said it has assigned its 'B'
long-term corporate credit rating to Falcon (BC) Germany Holding
3 GmbH, the holding company of German auto parts manufacturer
FTE. The outlook is stable.

At the same time, S&P assigned its 'B' issue rating to the
EUR240 million seven-year senior secured notes and its 'BB-'
rating to the super senior revolving credit facility (RCF).  The
recovery rating of '3' on the notes indicates S&P's expectation
of meaningful (50%-70%) recovery for the bondholders in the event
of a payment default.  The recovery rating of '1' on the RCF
indicates S&P's expectation of very high (90%-100%) recovery for
the bondholders in the event of a payment default.

The ratings are at the same level as the preliminary ratings S&P
assigned on July 2, 2013, reflecting its view of Falcon (BC)
Germany Holding 3's unchanged financial risk profile under its
final capital structure.

The ratings are primarily constrained by S&P's view of FTE's
"highly leveraged" financial risk profile and "aggressive"
financial policy, reflecting that the company was acquired
through a leveraged buyout.

In July this year, Falcon issued a EUR240 million senior secured
seven-year bond, a EUR42.5 million six-year super senior
revolving credit facility, and a shareholder payment-in-kind
securities (PIK) loan sitting at the Falcon Germany Holding 1
GmbH ("Holdco") level, i.e. above the restricted group, amounting
to EUR69 million, which S&P adds to total adjusted debt in its
ratios.  This will translate into a Standard & Poor's-adjusted
debt-to-EBITDA ratio of about 5.5x in 2013 and 2014, about 4.5x
if S&P excludes the shareholder loan, and funds from operations
(FFO) to debt close to 10%, or close to 12% excluding the
shareholder loan, which is in line with S&P's assessment of a
"highly leveraged"" financial risk profile.

S&P anticipates that free operating cash flow (FOCF) generation
will be positive in 2013 and 2014, but continue to be
insufficient to ensure significant deleveraging over that period,
despite S&P's anticipation of a continuously solid operating
performance.  S&P expects FTE's EBITDA cash conversion to be
hampered by cash interest payments of about EUR22 million per
year that weigh on FFO generation.  Nonetheless, S&P notes that
the cash interest cover that it expects to be about 3x at the end
of 2013, is strong for this rating level.

In addition, the capital-intensive nature of the company's
business--S&P expects capital expenditures (capex) to represent
about 6% of revenues every year--to further weigh on FOCF

The outlook is stable, based on S&P's anticipation that FTE will
maintain its solid market shares and operating margins while
gradually expanding its business in emerging markets and
developing its dual clutch technology business.

S&P might consider raising the ratings in the medium term if FTE
were to report an extended, sustainable strengthening of its
operating performance, and stronger credit measures, such as
adjusted debt to EBITDA of below 5x, including shareholder loans.

S&P might consider lowering the ratings if FTE reported weaker
revenues and profitability than it currently achieves.

QUIRINUS EUROPEAN: Fitch Lowers Rating on Class F Notes to 'D'
Fitch Ratings has downgraded all note classes of Quirinus
(European Loan Conduit No. 23) Plc as follows:

EUR74.9m Class A (XS0259561925) downgraded to 'BBsf' from 'A+sf';
Outlook Negative

EUR4.8m Class B (XS0259562576) downgraded to 'BB-sf' from 'Asf';
Outlook Negative

EUR5.8m Class C (XS0259562907) downgraded to 'Bsf' from 'Asf';
Outlook Negative

EUR7.8m Class D (XS0259563202) downgraded to 'CCCsf' from
'BBBsf'; Recovery Estimate (RE) 40%

EUR8.9m Class E (XS0259563624) downgraded to 'CCsf' from 'CCCsf';
RE 25%

EUR6.6m Class F (XS0259564192 downgraded to 'Dsf' from 'CCsf'; RE

Key Rating Drivers

The downgrades reflect a very weak outlook for German secondary
quality retail warehouses and discount supermarkets, as indicated
by available market evidence, including from a loss incurred on a
loan in this pool (which accounts for the 'Dsf' rating on the
class F notes). In combination with this, the note principal pay-
down structure is highly aggressive, and in spite of the loss, a
switch to fully sequential may not occur until there is only one
loan left in the pool.

Fitch has highlighted that the remaining two loans in the
transaction will struggle to redeem at their respective maturity
dates due to their high leverage and collateral type. While the
underlying retail warehouses are well-tenanted - mainly by high
quality German discount retailers - there are on average
approximately only three years left until expiry, leaving
considerable uncertainty about future income beyond loan maturity
as reflected in the Negative Outlooks.

Some properties may not meet the standard requirements for re-
letting, raising the specter of obsolescence within the
portfolio, particularly for aged or outmoded stock. In Fitch's
expectations, over coming years vacancy will markedly rise from
current levels as a result of obsolescence and voids.

Reflecting these risks, market evidence is growing that German
retail warehouse portfolios on short lease terms are trading at
very high yields, revealing severe market value declines (MVDs)
since the time when these loans were originated (Fitch has not
been provided with new valuations since closing in 2005). Since
the last rating action (LRA), the portfolio backing the EUR8
million Fairacre loan was finally sold, fetching EUR7.6 million,
over 35% below the 2005 value. As indicated at Fitch's LRA, the
rating agency views this loan as a bellwether for the forthcoming
maturities of the larger H&B and Eurocastle loans and similar
MVDs have been applied in Fitch's base case analysis.

The EUR24.3 million H&B loan failed to repay at its maturity in
November 2012 and the special servicer is now working with the
borrower and sales agent, Knight Frank, to market the assets for
sale. A full cash sweep is in place, which has helped to reduce
the reported LTV to 73.9%, from 88% at closing. However, Fitch
estimates LTV in the region of 117%. Recoveries are expected to
flow on a modified pro rata basis down to the class E notes,
boosting its Recovery Estimate (at the expense of the class D's
RE as well as the ratings of senior-ranking notes).

While the EUR84.6 million Eurocastle loan is performing with a
reported interest coverage ratio (ICR) of 1.67x, Fitch does not
expect the loan to repay at maturity in 2016, by which time
existing leases will be running off. Fitch estimates an LTV of
140%. Principal allocation should switch to sequential at loan
maturity, which should allow for repayment of the class A notes
out of recoveries. However, Fitch no longer views this senior
tranche as investment-grade given the degree of uncertainty
surrounding demand for properties of this type and quality.

Rating Sensitivities

Evidence of weaker trading may result in further negative rating
action, as could a material increase in interest rates in the
next over years.


CARL SCARPA: In Examinership Following Financial Woes
Irish Examiner reports that Carl Scarpa has gone into

In appointing Tom Kavanagh as examiner, Mr. Justice Gerard Hogan
said the stores had established a very strong brand and sold
shoes designed for fashion conscious individuals, Irish Examiner
relates.  He described Carl Scarpa's difficulties, which arose
from the downturn and high rents, as sadly all too familiar in
the Irish retail sector, Irish Examiner notes.

However, the judge, as cited by Irish Examiner, said he is
absolutely satisfied that Carl Scarpa can survive and he believes
it is potentially a very strong retail company.

At the moment, however, the business cannot pay its debts
including around EUR200,000 in tax arrears to the Revenue, Irish
Examiner discloses.

The court was told there is investment interest, and while there
are loss-making stores, it is hoped there will not be closures,
Irish Examiner recounts.

Carl Scarpa is a fashion retail chain.  The chain, which sells
shoes and accessories, employs more than 80 people in 21 outlets.


ALITALIA SPA: Air France-KLM Chief Doesn't Rule Out Aid
Nicola Clark at The New York Times reports that Alexandre de
Juniac, the chief executive of Air France-KLM, said on Wednesday
that he had not ruled out the possibility of participating in a
fresh bailout of the struggling Italian flagship carrier as it
scrambles to produce a plan to shore up its dwindling cash

According to The New York Times, Mr. de Juniac said but given the
weak financial position of the French-Dutch group, which owns 25%
of Alitalia, any assistance would be subject to strict

Mr. de Juniac did not elaborate on those conditions, but his
remarks came as Alitalia's top management met for a second day
with its bankers, shareholders and senior Italian government
ministers to discuss a plan to inject fresh capital into the
debt-laden airline, which continues to post losses five years
after Air France-KLM and a consortium of Italian companies
rescued it from bankruptcy, The New York Times discloses.

Those discussions have taken on a sense of urgency in recent
days, The New York Times notes.

Alitalia last week reported that its net loss had widened to
EUR294 million, or US$398 million, in the six months that ended
June 30, compared with EUR201 million in the same period a year
earlier, The New York Times recounts.  Its net debt stood at
EUR946 million, up from EUR862 million a year ago, while its
available cash flow was down to a precarious EUR128 million from
EUR159 million at the end of March.

Alitalia's management is seeking an injection of at least EUR100
million from existing shareholders in exchange for new shares, as
well as a syndicated shareholder loan of EUR55 million that would
be convertible into shares, The New York Times says.

According to The New York Times, two people with knowledge of the
discussions said that Alitalia is also negotiating with a
consortium of banks, including Intesa Sanpaolo and UniCredit, for
a fresh 300 million euro line of credit to help fund current

But Air France-KLM, which holds four seats on Alitalia's 19-
member board, has not acquiesced to that plan, which is subject
to a board vote on Oct. 14, according to The New York Times.  The
New York Times notes that the people said Air France-KLM is
seeking more aggressive efforts by the Italian carrier to reduce
its debt because the talks were still under way.

                           About Alitalia

Alitalia - Compagnia Aerea Italiana has navigated its way through
a successful restructuring.  After filing for bankruptcy
protection in 2008, Alitalia found additional investors, acquired
rival airline Air One, and re-emerged as Italy's leading airline
in early 2009.  Operating a fleet of about 150 aircraft, the
airline now serves more than 75 national and international
destinations from hubs in Fiumicino (Rome), Milan, Turin, Venice,
Naples, and Catania.  Alitalia extends its network as a member of
the SkyTeam code-sharing and marketing alliance, which also
includes Air France, Delta Air Lines, and KLM.  An Italian
investor group owns a majority of the company, while Air France-
KLM owns 25%.

CARTESIO SRL: S&P Raises Ratings on Five Note Classes to 'BB-'
Standard & Poor's Ratings Services raised to 'BB- (sf)' from
'B+ (sf)' and removed from CreditWatch negative its credit
ratings on Cartesio S.r.l.'s class 1, 2, 3, 4, and 5 notes.

On July 18, 2013, S&P placed on CreditWatch negative its ratings
on the class 1, 2, 3, 4, and 5 notes following a corresponding
rating action on one of the transaction's swap counterparties,
Dexia Crediop SpA.

The rating actions follow S&P's Sept. 23, 2013 rating actions on
Dexia Crediop.

The swap documentation provided by Dexia Crediop is not in line
with S&P's current counterparty criteria.  Under S&P's criteria,
if a swap agreement does not reflect a replacement framework that
complies with any of S&P's previous counterparty criteria, the
counterparty can support note ratings no higher than S&P's long-
term issuer credit rating (ICR) on the counterparty.  Therefore,
any change to S&P's long-term ICR on Dexia Crediop would result
in an equivalent change to our ratings on all of Cartesio series
2003-1's classes of notes, all else being equal.  S&P has
therefore today raised to 'BB- (sf)' from 'B+ (sf)' and removed
from CreditWatch negative its ratings on all classes of notes in
Cartesio's series 2003-1 to be in line with its long-term ICR on
Dexia Crediop.

Cartesio's series 2003-1 is a medium-term note program, with
receivables represented by payments under lease contracts between
the originator, SAN.IM (a company owned by Region of Lazio), and
certain healthcare entities as collateral.


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

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



Class            Rating
         To              From

Cartesio S.r.l.
EUR541 Million, GBP200 Million, US$450 Million Asset-Backed
Medium-Term Note Program Series 2003-1

Ratings Raised And Removed From CreditWatch Negative

1        BB- (sf)        B+ (sf)/Watch Neg
2        BB- (sf)        B+ (sf)/Watch Neg
3        BB- (sf)        B+ (sf)/Watch Neg
4        BB- (sf)        B+ (sf)/Watch Neg
5        BB- (sf)        B+ (sf)/Watch Neg


ALFA BANK: Fitch Assigns 'B+' Long-Term Local Currency Rating
Fitch Ratings has assigned JSC SB Alfa Bank Kazakhstan's (ABK)
KZT4.5 billion Series 2 senior unsecured bonds a final Long-term
local currency rating of 'B+' and National Long-term rating of
'BBB(kaz)'. The Recovery Rating is 'RR4'.

The bonds carry a fixed semi-annual coupon of 7% and have a
maturity date five years from the issuance date. No put option is
envisaged. The bank would seek to obtain a local exchange listing
for the issued bonds.

For key rating drivers and rating sensitivities, see "Fitch
Assigns JSC SB Alfa Bank Kazakhstan Forthcoming Series 2 Bonds
'B+(EXP)' Expected Rating", dated Aug. 1, 2013, at

The issuer's other ratings are unaffected:

  Long-term foreign-currency Issuer Default Rating (IDR): 'B+';
  Outlook Stable
  Short-term foreign-currency IDR: 'B'
  Long-term local-currency IDR: 'B+'; Outlook Stable
  National long-term rating: 'BBB(kaz)'; Outlook Stable
  Viability Rating (VR): 'b+'
  Support Rating (SR): '4'

ALLIANCE BANK: Moody's Cuts Long-Term Deposit Ratings to Caa2
Moody's Investors Service has downgraded the following ratings of
Alliance Bank: long-term local and foreign-currency deposit
ratings to Caa2 from B3; local and foreign-currency senior
unsecured debt rating to Ca from Caa2; and local-currency
subordinated debt rating to C from Caa3. Concurrently, Moody's
affirmed the bank's E standalone bank financial strength rating
(BFSR) and lowered the corresponding baseline credit assessment
(BCA) to ca from caa2. The rating agency also affirmed the bank's
Not Prime short-term foreign-currency deposit rating.

The outlook on the deposit and senior unsecured debt ratings was
changed to developing from negative, while BFSR and subordinated
debt ratings carry a stable outlook.



The downgrade of Alliance Bank's ratings was driven by
deterioration of the bank's credit profile, in particular its
loss absorption capacity and liquidity, which is reflected in the
following aspects:

1) Marginal capital adequacy with an equity-to-assets ratio of
1.54% as of end-H1 2013, slightly down from 1.89% at year-end
2012, according to the bank's IFRS report. Alliance Bank reported
a total regulatory capital adequacy ratio of 13.2% at end-H1
2013, and is therefore in compliance with Kazakhstan's statutory
requirements for capital adequacy. According to the bank, the
difference between the capital levels under IFRS and regulatory
reporting was mainly due to a different accounting treatment for
the bank's preference shares and loan loss reserves. The rating
agency believes that, given the bank's very low core capital and
weak internal capital generation, Alliance Bank's ability to
absorb heavier loan losses is questionable. Consequently, Moody's
believes that Alliance Bank will need immediate recapitalization
to ensure its solvency.

2) Weak profitability with marginally positive net interest
income and a low, albeit rising, level of fee income that barely
covers Alliance Bank's operating costs. As a result, the bank
reported a net income of only $752,000 that was equivalent to a
small annualized return on assets (ROA) of 0.04% at end-H1 2013.

3) Highly impaired loan portfolio, with problem loans (defined as
90+ days overdue loans and impaired corporate loans) of around
49% of gross loans at end-H1 2013. The bank may have to further
increase its loan loss reserves (41% at end-H1 2013) in order to
cover all expected credit loss, thus further undermining its

4) The bank's financial strength and its franchise perspectives
are further challenged by its weak liquidity profile as reflected
in its reliance on short-term funding and a low cushion of liquid
assets (excluding pledged assets) that accounted for only 9.1% of
its total assets as of end-H1 2013, down from 15.7% as of end-H1

Moody's Support Assumptions

Moody's incorporates a moderate systemic support assumption into
Alliance Bank's deposit ratings due to the bank's government
ownership and the support that has been provided to the bank by
the government and state-controlled entities. As a result,
Alliance Bank's Caa2 deposit ratings receive two-notches of
uplift from its ca BCA.

Developing Outlook

Moody's understands that Alliance Bank may be privatized (current
target is year-end 2013), as instructed by Kazakhstan's President
Nazarbayev in early February 2013. The developing outlook on the
bank's deposit and senior unsecured debt ratings, which indicates
that these rating could either be downgraded or upgraded over the
next 12 to 18 months, reflect the high degree of uncertainty
about the bank's ability to meet its obligations to depositors
and bondholders. This uncertainty derives from (1) the bank's
weakening credit profile; (2) the lack of visible progress in the
proposed privatization, which could result in the bank's
recapitalization and a liquidity injection; and (3) the likely
removal of the rating agency's systemic support assumption from
the ratings if the bank is privatized.

What Could Move The Ratings Up/Down

Alliance Bank's ratings could be upgraded if the bank is
recapitalized by its current shareholders or following a
privatization. Evidence of a substantially stronger liquidity
profile could also have upward rating implications.

Alliance Bank's ratings could be further downgraded in the event
of a default on its obligations.

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

Headquartered in Almaty, Kazakhstan, Alliance Bank reported total
assets of US$3.99 billion, shareholders' equity of US$61.5
million and net income of US$752,000, as of end-H1 2013,
according to the bank's IFRS financial statements.

BANK CENTERCREDIT: Moody's Cuts Sr. Unsecured Debt Rating to B3
Moody's Investors Service has downgraded the following ratings of
Bank CenterCredit: long-term local and foreign-currency deposit
ratings to B2 from B1; foreign-currency senior unsecured debt
rating to B3 from B2; foreign-currency junior subordinated debt
rating to Caa2 (hyb) from Caa1 (hyb); and local-currency national
scale rating to from The outlook on the deposit and
debt ratings was changed to stable from negative, whilst the BFSR
continues to carry a stable outlook.

Concurrently, Moody's affirmed Bank CenterCredit's E+ standalone
bank financial strength rating (BFSR) and lowered the
corresponding baseline credit assessment (BCA) to b3 from b2. The
bank's Not Prime short-term local- and foreign-currency deposit
ratings were affirmed.


Rationale For The Downgrade and Outlook Change

The downgrade of Bank CenterCredit's ratings reflects
deterioration of the bank's credit profile, in particular its
loss absorption capacity, which incorporates the following

1) Continued negative pressure on the bank's capital, with an
equity-to-assets ratio of 8% as of end-H1 2013, down from 8.2% at
year-end 2012, according to the bank's IFRS report;

2) Weak asset quality, with problem loans (overdue over 90 days
and restructured loans) accounting for 23% of gross loans at end-
H1 2013, according to the bank's data, which require higher loan
loss reserves than the 15.9% of gross loans created as of the
same date. Whilst the rating agency does not expect any material
increase in the volume of problem loans over the next 12 to 18
months, the high level of loan loss provisions will constrain the
bank's profitability and capital adequacy.

3) Despite Bank CenterCredit's increasing focus on SME and retail
lending, borrower concentration remains high, with the top 20
borrowers accounting for over 300% of the bank's Tier 1 capital.
As many of the large loans are problematic and work-out will
require several years, Moody's does not expect any substantial
improvement in borrower concentration levels over the next 12 to
18 months.

At the same time, Bank CenterCredit's ratings reflect the bank's
modest, albeit stabilizing, revenue generation. The bank's modest
loss of US$3.9 million as of end-H1 2013 was largely driven by
rising loan loss charges, whereas revenues grew significantly
with net interest margin rising to 3% at end-H1 2013 from 1.7% at
year-end 2012. The bank's stable outlook is also supported by its
adequate liquidity profile with a moderate funding concentration
and liquid assets accounting for nearly a quarter of the bank's
total assets.

Moody's Support Assumptions

Bank CenterCredit's ratings also reflect its relative importance
to the banking system as the fourth-largest bank in Kazakhstan by
total assets, according to the National Bank of Kazakhstan.
Therefore, Moody's incorporates a low probability of systemic
support in the bank's B2 deposit ratings, which provides one
notch of uplift from its b3 BCA. However, Moody's does not assume
any systemic support in Bank CenterCredit's debt ratings, which
reflects the Kazakh government's track record of not providing
support to debt holders of systemically important banks in rescue

Moody's does not incorporate parental support from one of Bank
CenterCredit's largest shareholders -- South Korean Kookmin Bank
(A1 stable, C-/baa1 stable), which holds 41.9% of the bank's
capital through common and preference shares. This support
assumption is due to Kookmin Bank's lack of control over the bank
and the limited strategic fit of the two financial institutions.

What Could Move The Ratings Up/Down

Positive pressure could develop on Bank CenterCredit's ratings as
a result of improved asset quality and capital adequacy, coupled
with a stable liquidity profile. An increased stake in the bank
by Kookmin Bank may also benefit Bank CenterCredit's ratings.

A deterioration in Bank CenterCredit's asset quality and
profitability, leading to a further weakening of the bank's
capital adequacy, could result in a downgrade of its ratings.

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

Headquartered in Almaty, Kazakhstan, Bank CenterCredit reported
total assets of US$7.26 billion, shareholders' equity of $568
million, and net loss of US$3.9 million, as of end-H1 2013,
according to the bank's IFRS financial statements.

KAZKOMMERTSBANK: Moody's Alters Ratings Outlook to Stable
Moody's Investors Service has changed the outlook on
Kazkommertsbank's deposit and debt ratings to stable from
negative and affirmed its following ratings, reflecting the
gradual stabilization in the bank's credit profile, albeit at a
weak level:

Long-term local and foreign-currency deposit ratings of B2;

Not Prime short-term local and foreign-currency deposit ratings;

Foreign-currency senior unsecured debt rating of Caa1;

Foreign-currency subordinated debt rating to Caa2; and

Foreign-currency junior subordinated debt rating of Caa3 (hyb).

Standalone bank financial strength rating (BFSR) of E,
equivalent to a baseline credit assessment (BCA) of caa1.


Rationale For The Change In Outlook And Affirmation

Today's action reflects Moody's assessment of the substantial
reduction of the downside risks to Kazkommertsbank's ratings, as
incorporated the following aspects:

1) The bank's profitability has been stabilizing, supported by
modestly rising operating income and reduced loan loss provisions
compared with those of previous years -- in H1 2013
Kazkommertsbank reported a return on average assets (RoAA) of
1.2%, compared to -5.2% in 2012 (driven primarily by large loan
loss provisions) and 0.9% in 2011.

2) The coverage of the problem loans with loan loss reserves rose
to 67% at end-H1 2013 from 55% at end-H1 2012 (Moody's estimates
problem loans at around 50% of gross loans as of end-H1 2013).
The rating agency does not expect a substantial increase in the
level of problem loans over the next 12 to 18 months; however, it
believes that Kazkommertsbank will have to materially increase
its loan loss reserves in order to cover all expected credit

3) The liquidity cushion has improved considerably in the six
months to end-June 2013 aided by an increased volume of customer
deposits and accounts -- the bank's liquid assets grew to 18.5%
of total assets at end-H1 2013 from 12.1% at year-end 2012.

4) Kazkommertsbank's total capital adequacy ratio of 16.2% at
year-end 2012 is significantly above the required minimum of 10%.
Whilst the bank's capitalisation ratio could experience pressure
in the next 12 to 18 months as the bank continues to set aside
reserves to cover all expected credit losses, the rating agency
believes that Kazkommertsbank's total capital adequacy ratio will
remain above the regulatory minimum level.

Moody's Support Assumptions

Kazkommertsbank's ratings also reflect its status as the
country's largest bank. Moody's incorporates moderate systemic
support probability in the bank's B2 deposit ratings, which
provides two notches of uplift from its caa1 BCA. However, the
rating agency does not assume any systemic support in
Kazkommertsbank's debt ratings, which reflects the Kazakh
government's track record of not providing support to debt
holders of systemically important banks in rescue programs.

What Could Move The Ratings Up/Down

Upward pressure could be exerted on Kazkommertsbank's ratings as
a result of any significant improvement in its asset quality and
profitability, which would eliminate the negative pressure on its
capital adequacy.

Kazkommertsbank's rating may be downgraded if its liquidity
profile and capital adequacy deteriorate considerably from the
current levels.

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

Headquartered in Almaty, Kazakhstan, Kazkommertsbank reported
total assets of US$17.48 billion, shareholders' equity of $2.13
billion, and net income of US$102 million as of end-H1 2013,
according to the bank's IFRS financial statements.


LECTA SA: S&P Revises Outlook to Neg. & Affirms 'B+' CCR
Standard & Poor's Ratings Services revised its outlook on
Luxembourg-registered forest products group Lecta S.A. to
negative from stable.  At the same time, S&P affirmed its 'B+'
long-term corporate credit rating on the group.

S&P has also assigned a 'B+' issue rating on the EUR200 million
senior secured fixed-rate notes, due 2019, and on the
EUR390 million senior secured floating-rate notes, due 2018,
issued by Lecta.  The recovery rating on these notes is '4',
reflecting S&P's expectations of average (30%-50%) recovery
prospects for senior secured noteholders in an event of default.

The outlook revision reflects S&P's view that Lecta's results for
the first half of the financial year ending Dec. 31, 2013
(financial 2013) were weaker than S&P originally forecasts, due
to challenging trading conditions in Southern Europe.  S&P
expects market conditions to remain difficult for at least the
remainder of this financial year, and as a result have revised
downward its expectations for the group's credit metrics for
financial years 2013 and 2014.  S&P continues to assess Lecta's
business risk profile as "fair" and financial risk profile as
"aggressive," under its criteria.

Lecta's operating performance in the first half of 2013 was
negatively affected by rising pulp prices and weak pricing
conditions, the latter due to falling demand that, in turn, has
led to persistent overcapacity in the European market.  According
to Euro-Graph, an industry trade association, demand for coated
wood-free paper was down 8% in the year to August 2013 compared
with the same time last year.  Although Lecta has reduced
capacity at its Condat mill and has implemented efficiency
measures across other mills, S&P believes that overcapacity will
remain a challenge for the European market and that price
increases will be difficult to implement in the short to medium
term.  As a result, S&P sees a risk that Lecta's profitability
may not return to previous levels in the next six to 12 months.

"We forecast that Lecta's revenues will be about EUR1.6 billion
at Dec. 31, 2013, or remain broadly flat on the previous fiscal
year. At the same time, we anticipate that the group's Standard &
Poor's-adjusted EBITDA will be between EUR90 million and
EUR100 million, resulting in a margin of slightly less than 6%.
We anticipate that the group's adjusted debt to EBITDA will
weaken to more than 5x and that adjusted funds from operations
(FFO) to debt will weaken to under 12% momentarily.  However, we
consider it likely that management's cost cutting and
restructuring measures could bring the credit metrics back under
5x and 12%, respectively, in financial year 2014, remaining
commensurate with an "aggressive" financial risk profile and a
'B+' rating.  While credit metrics are currently weaker than our
previous expectations, we view Lecta's long-dated debt maturity
schedule and "strong" liquidity profile as supporting factors for
the "aggressive" financial risk profile," S&P said.

Lecta's "fair" business risk profile is constrained by its large
exposure to the European publication paper markets, where demand
is in structural decline and pricing power among producers is
very weak.  It is further constrained by relatively limited pulp
integration, and sales being concentrated in Southern European
markets where economic conditions are weak.  These weaknesses are
partly offset by a good cost position and close proximity to end-

Another relative strength is the group's well-invested asset
base, which will contain capital expenditure needs in the short
to medium term.  Lecta is slowly diversifying and increasing its
capacity in the production of more-profitable specialty paper,
but as this is a medium-term strategy we expect that any imminent
margin preservation or uplift will result from restructuring and
cost-cutting exercises in the short term.

The negative outlook reflects S&P's view that it could lower the
rating by one notch within the next three to nine months if the
European paper markets remain challenging, preventing an
improvement in the group's forecast profitability and cash

S&P could downgrade Lecta if it was to revise downward the
group's business risk profile to "weak," from its current "fair"
assessment.  This would likely result from lower expectations of
profitability and cash flow generation.  S&P could also lower the
ratings if the group's FFO to debt were fall to less than 12% or
adjusted debt to EBITDA were to rise to more than 5.0x and remain
there, with few indications of a swift reversal.

S&P could revise the outlook to stable if Lecta generates FFO to
debt of above 15% or adjusted debt to EBITDA of less than 4.5x,
provided that short- to medium-term macroeconomic and industry
conditions support S&P's view that Lecta could sustain such
improved levels.


CAIXA ECONOMICA MONTEPIO: Moody's Reviews Mortgage-Covered Bonds
Moody's Investors Service has today placed on review for
downgrade the Baa3 ratings of the mortgage covered bonds issued
by Caixa Economica Montepio Geral (Montepio; deposits Ba3 on
review for downgrade; standalone bank financial strength rating
(BFSR) D-/baseline credit assessment (BCA) ba3, on review for

This review placement follows Moody's decision to place on review
for further downgrade Montepio's Ba3 issuer rating.

Ratings Rationale

The rating action is prompted by review for downgrade of the
issuer ratings on October 2.

"In our review, we will incorporate all available information,
including the recent ECOFIN proposal and until such analysis is
completed we intend to leave on review any covered bond ratings
potentially affected by downgrades of bank senior unsecured
ratings," says Moody's.

The Credit Ratings of the covered bonds from Montepio mortgage
programme were assigned in line with Moody's existing Credit
Rating Methodology entitled "Moody's Approach to Rating Covered
Bonds", dated July 2012. Moody's notes that on September 19, 2013
it published a Request for Comment (RFC). In the RFC, the rating
agency proposes an adjustment to the anchor point it uses in its
covered bond analysis. If the revised Credit Rating Methodology
is implemented as proposed, the Credit Ratings of the covered
bonds from Montepio mortgage program may be positively impacted
relative to application of the existing Credit Rating
Methodology. Please refer to Moody's Request for Comment, titled
"Approach to Determining the Issuer Anchor Point for Covered
Bonds" for further details regarding the implications of the
proposed Credit Rating Methodology changes on Moody's Credit

The timely payment indictor (TPI) assigned to this transaction
remains unchanged at "Very Improbable". Moody's TPI framework
does constrain the rating.

The rating that Moody's has assigned addresses the expected loss
posed to investors. Moody's ratings address only the credit risks
associated with the transaction. Moody's did not address other
non-credit risks, but these may have a significant effect on
yield to investors.

Key Rating Assumptions/Factors

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

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

The cover pool losses for this program are 39.7%. This is an
estimate of the losses Moody's currently models if Montepio
defaults. Moody's splits cover pool losses between market risk of
33% and collateral risk of 6.7%. Market risk measures losses
stemming from refinancing risk and risks related to interest-rate
and currency mismatches (these losses may also include certain
legal risks). Collateral risk measures losses resulting directly
from cover pool assets' credit quality. Moody's derives
collateral risk from the collateral score, which for this program
is currently 10%.

The over-collateralization (OC) in the cover pool is 37.2%, of
which Montepio provides 13% on a "committed" basis. Once the
rating review concludes, Moody's will reassess the minimum level
of OC required to meet the maximum rating achievable. The minimum
OC level consistent with the Baa3 rating target is 12%. These
numbers show that Moody's is not relying on "uncommitted" OC in
its expected loss analysis.

For further details on cover pool losses, collateral risk, market
risk, collateral score and TPI Leeway across covered bond
programs rated by Moody's please refer to "Moody's EMEA Covered
Bonds Monitoring Overview", published quarterly. All numbers in
this section are based on the most recent Performance Overview
(based on data, as of 30/06/2013).

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

Sensitivity Analysis

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

The TPI assigned to Montepio's covered bonds remains Very
Improbable. The TPI Leeway for this program is zero notches, and
thus any downgrade of the issuer ratings may lead to a downgrade
of the covered bonds.

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

Rating Methodology

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

CAIXA ECONOMICA MONTEPIO: Moody's Review Ratings for Downgrade
Moody's Investors Service has placed on review for downgrade the
(P)Ba3/Ba3 long term debt and deposit ratings of Caixa Economica
Montepio Geral. The bank's short term debt and deposit ratings
remain unchanged at Not Prime.

Moody's concurrent review for downgrade of its D- standalone Bank
Financial Strength Rating (BFSR, mapping to a ba3 Baseline Credit
Assessment) prompted the action on the bank's debt and deposit

The review for downgrade has been triggered by Moody's concern
over the rising pressure on Montepio's standalone credit profile,
as evidenced by a significant rise in non-performing loans and
weakened earnings. Moody's believes that the continuing weakness
of the Portuguese economy is likely to exert further pressure on
the bank' asset quality and profitability.

In concluding the rating review, Moody's will assess Montepio's
(1) ability to generate sufficient earnings to offset any
increase in provisioning requirements and thus ensure a
sufficiently resilient capital base; and (2) its ability to raise
capital from private resources without requiring to resort to
public-sector support.

At the same time, the review for downgrade of Montepio's
standalone ratings also triggered the review for downgrade of its
dated subordinated debt and junior subordinated debt ratings.

Ratings Rationale

-- Review of the Standalone Credit Assessment

The review of the bank's standalone ratings reflects the
weakening credit profile of Montepio namely in terms of asset
quality and profitability. At end-June 2013, Montepio recorded a
net loss of EUR69.7 million compared to a net profit of EUR4.8
million a year earlier, driven by the sharp 34% decline in the
net interest income and substantial provisioning efforts. The
non-performing loan (NPL) ratio (credit at risk ratio as defined
by Bank of Portugal) rose to 12.1% from 8.3% over the same time
horizon, which compares negatively to the weighted average for
rated Portuguese banks of 10.3% at end-June 2013; until last
year, the asset performance metrics of Montepio had shown
stronger resilience in relation to the average of rated
Portuguese banks.

The rating review also reflects the rating agency's concern that
operating conditions in the Portuguese market will remain
challenging for the remainder of 2013 and 2014, despite recent
signs of economic stabilization, albeit at very weak levels.
While Moody's believes the Portuguese economy will begin to show
a very modest recovery in 2014 (i.e. 0.7% GDP growth in 2014
after a 2% economic contraction in 2013), the upturn is unlikely
to be strong enough to offset the bank's negative credit trends.
Moody's says that the weak growth prospects will continue to
constrain business volumes, revenue generation and asset quality
across all major asset classes.

Furthermore, Moody's is cautious about Montepio's ability to
strengthen its earnings, which may remain very weak, undermining
its capacity to absorb a further increase in credit impairments.
Since 2012, pre-provision income levels have contracted
significantly for the bank, affected by the low interest rates,
the growing amount of non-interest earning assets, the bank's
deleveraging strategy as well as Portugal's recessionary economy.

Moody's acknowledges that throughout the crisis Montepio has
benefitted from the supportive stance of its parent company
(Montepio Geral--Associacao Mutualista (unrated), a mutual
organization providing insurance and protection plans), which has
approved and subscribed several capital increases (the last one
having taken place on 30 September 2013, for a total amount of
EUR100 million) that have allowed the bank to comply with minimum
regulatory capital thresholds without having to request public-
sector support as many of its domestic peers have done. In
concluding the review, Moody's will take into account Montepio's
capacity to preserve a sufficiently resilient capital base
despite the expected negative trends in asset quality and

-- Review of the Senior Debt and Deposit Ratings

The review for downgrade of the senior debt and deposit ratings
was triggered by the concurrent review for downgrade of
Montepio's standalone BCA. According to Moody's methodology, the
senior debt and deposit ratings of a bank results from the
combination of its BCA and Moody's assessment about any external
support it may likely benefit from. Accordingly, any downgrade of
a bank's BCA could trigger a downgrade of its senior debt and
deposit ratings.

-- Subordinated Debt and Hybrid Ratings

Moody's review for downgrade of Montepio's (P)B1/B1 senior
subordinated debt ratings and (P)B2 junior subordinated debt
ratings is in line with the review for downgrade of the bank's
standalone rating.

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

PORTUGAL TELECOM: Moody's Retains Ba3 Rating Despite Oi SA Merger
Moody's Investors Service has affirmed the Baa3/ senior
unsecured ratings of Oi S.A. and maintained its negative outlook,
following the announcement that Oi has reached an agreement with
Portugal Telecom, SGPS, S.A. ("PT", Ba2/neg) to merge the two
entities. Concurrently, Moody's has affirmed Telemar
Participa‡oes' Ba1 rating and negative outlook, but expects to
withdraw its ratings once the transaction is completed.

The new combined entity will benefit from a minimum BRL7.0
billion cash capital increase that could reach up to BRL 8.0
billion, of which BRL 2.5-3.5 billion will be injected into Oi
while the remaining BRL 4.5 billion will be used to repay the
debt at Oi's holding company, Telemar Participacoes, and its
ultimate holding companies: LF Tel S.A. and AG Telecom.
Additionally, the combination is expected to result in mainly
tax-related and procurement-related synergies, as well as an
improved organizational structure and corporate governance

"We have affirmed Oi's existing Baa3 rating due to the expected
benefits of size and scale in an equity financed transaction and
some benefits of synergies but more importantly, sharing of best
practices to help Oi's future revenue growth path," says
Soummo Mukherjee, a Moody's Vice President -- Senior Credit
Officer and lead analyst for Oi. "The combined entity would
benefit from an expected cash capital increase of BRL7-8 billion
plus an additional BRL7 billion from the combined group's cash
balance that is expected to be used towards debt reduction."

On a pro-forma basis based on Oi's LTM figures ended 06/30/2013
and PT's 2012 year-end numbers, the combination would have
resulted in Total Debt to EBITDA of around 4.1 times, which we
still consider high for the Baa3 rating category and is the main
reason why we still maintain our negative outlook on Oi's rating.

The proposed transaction is subject to shareholder and regulatory
approval in Brazil, U.S. and Portugal and expected to close by
the end of Q2 2014.

Ratings Rationale

The rating action reflects Moody's view that if successfully
completed, the combination with Portugal Telecom will benefit Oi
as it will become part of a larger group with improved size and
scale. Moreover, the combined entity would benefit from an
expected capital increase of approximately BRL7-8 billion
(US$3.2-3.6 billion) and total synergies of around BRL5.5 billion
(US$2.5 billion), and Moody's expects that it will start
generating positive free cash flow by the end of 2015.

The combined entity will have 2012 pro-forma revenues of BRL37.5
billion (US$17 billion), making it the largest Brazilian telecom
operator in terms of revenues, with more than 100 million
customers in three different regions of the world (Brazil,
Portugal and Angola). We also believe that the merger will allow
Oi to better leverage Portugal Telecom's experience with fiber
and 4G deployment, convergence and innovation, while Portugal
Telecom will benefit from Brazil's better growth opportunities
and stronger balance sheet.

The deal, however, will leave the company with about 22% revenue
and 28.5% EBITDA exposure to Portugal (Ba3/neg), which has been
struggling economically. Portugal Telecom faces considerable
challenges because of regulatory and competitive pressures in
Europe and subdued consumer spending in its domestic market.
Consolidated operating revenues fell by double-digit percent in
the first half of 2013, reflecting the impact of the depreciation
of the Brazilian real against the euro (Oi's revenues and EBITDA
comprise approximately 42%-46% of the enlarged consolidated
group) and a 4.8% year-on-year decline in domestic revenues in
the second quarter. These challenges continue to put pressure on
PT's revenues and we expect further deterioration this year,
albeit at a slower pace as mobile termination rates cuts have
ended and new pricing initiatives gain traction. We also expect
further price erosion to weaken its domestic EBITDA margin. At
the same time, competition with America Movil (A2 on review for
downgrade) and its subsidiaries: Embratel (Baa2 positive) and Net
Servicos (Baa3 positive), as well as with Telefonica Brasil (Baa1
stable) and other cable and Pay-TV operators will remain fierce
in the Brazilian market.

As part of the transaction, Oi's and Portugal Telecom's current
complex organization and legal structure will be greatly
simplified as all of the main operating assets are combined into
one with one holding company that will be listed in a single
class of shares in the Novo Mercado in BMF Bovespa in Brazil and
NYSE Euronext (New York and Lisbon). As a result the current debt
of approximately BRL4.5 billion ($2.05) at Oi's current holding
company, Telemar Participacoes, and its holdings AG Telecom and
LF Tel, will be fully repaid. Oi will then adhere to the highest
standards of corporate governance with the planned creation of an
audit committee with fully independent members, as defined by
Sarbanes Oxley standards.

What Could Change The Ratings Up/Down

A stabilization of Oi's ratings would require the company's
leverage, as measured by Total Debt to EBITDA, moving toward 3.5
times while evidencing that the combined company's revenue growth
and EBITDA margin improvement are not derailed due to competition
or weaker than expected operating performance in any of its

Conversely, Moody's could downgrade Oi's rating due to overall
negative revenue growth or a decline in the company's market
share and margins due to a stronger competitive market, as well
as due to weaker than expected operating performance in Portugal
and/or Africa, post closing of the transaction. Specifically,
Oi's rating could come under downward pressure if: adjusted Total
Debt to EBITDA ratio goes above 4.2 times for an extended period
of time and/or if the company's free cash flow remains negative
beyond the end of 2015.

The principal methodology used in this rating was the Global
Telecommunications Industry Methodology published in December
2010. Please see the Credit Policy page on for a
copy of this methodology.

Headquartered in the city of Rio de Janeiro, Oi is the largest
telecom operator in Brazil in terms of fixed-line access. At the
end of 30 June 2013, it had revenues of BRL28.5 billion ($13
billion) and EBITDA of approximately BRL10 billion ($.4.5


HOME CREDIT: Fitch Assigns 'BB-(EXP)' Subordinated Debt Rating
Fitch Ratings has assigned Home Credit and Finance Bank's (HCFB;
BB/Stable/bb) "new style" subordinated debt issue with write-off
features an expected Long-term rating of 'BB-(EXP)'.

The final rating is contingent upon the receipt of final
documents conforming to information already received.

Key Rating Drivers

HCFB's "new style" Tier 2 subordinated debt is rated one notch
lower than the bank's Viability Rating (VR) of 'bb'. This
includes (i) zero notches for non-performance risk relative to
the VR, as Fitch believes these instruments should only absorb
losses once a bank reaches, or is very close to, the point of
non-viability; and (ii) one notch for loss severity. Fitch has
applied a single-notch differential, rather than two, as these
issues will not be deeply subordinated, and will actually rank
pari passu with "old style" subordinated debt in case of a

The issue will have coupon/principal write-down features, which
in accordance with recently adopted Russian legislation, will be
triggered if: (i) the bank's core Tier 1 capital adequacy ratio
decreases below 2%; or (ii) bankruptcy prevention measures are
introduced in respect to the bank by the Deposit Insurance
Agency. The latter is possible as soon as a bank breaches any of
its mandatory capital ratios or is in breach of certain other
liquidity and capital requirements.

For more details on Fitch's approach on rating subordinated debt
issues of Russian banks see "Implementation of New Capital Rules
in Russia: Moderately Positive, Unlikely to Lead to Rating
Changes" dated 19 April 2013 at

Rating Sensitivities

As the issue's rating is linked to the bank's VR it would
therefore likely be upgraded or downgraded following similar
action on the VR.

The Stable Outlook on HCFB's rating reflects Fitch's view that
strength derived from its healthy financial metrics reasonably
offsets heightened risks from rapid growth, increasing loss rates
and greater regulatory scrutiny on the sector. As a result, a
change in VR and hence the issue's rating in the near term is not
expected by Fitch.

However, HCFB's VR could come under downward pressure if there is
a marked downturn in the Russian economy or further sustained
rapid growth of retail lending, resulting in markedly higher
consumer indebtedness, weaker credit underwriting and, therefore,
markedly higher impairment charges at HCFB.

Conversely, an extended track record of more balanced growth,
sound performance and successful franchise protection and
development could result in moderate VR upside over the medium

SBERBANK EUROPE: Fitch Assigns 'b+' Viability Rating
Fitch Ratings has assigned Vienna-based Sberbank Europe AG (SBEU)
a Long-term Issuer Default Rating (IDR) of 'BBB-' with a Stable
Outlook and a Viability Rating (VR) of 'b+'.

Key Rating Drivers - IDRs, Support Rating

SBEU's Long-term IDRs are underpinned by potential support from
its shareholder, the state-controlled Sberbank of Russia (SBRF;
BBB/Stable/bbb), reflecting Fitch's view of the high probability
of SBRF providing support to SBEU if needed.

Fitch classifies SBEU as a 'strategically important' subsidiary
of SBRF. This is based on i) SBRF's 100% ownership and the
parent's focus on developing its international business; ii) the
track record of providing capital and funding since SBEU's
acquisition; iii) high reputational risks for SBRF from any
default of SBEU; iv) SBEU's currently moderate operational
independence and v) its small size relative to the parent, which
limits the cost of any potential support.

The one-notch difference between the ratings of SBRF and SBEU is
driven by the cross-border nature of the parent-subsidiary
relationship, the short track record of performance under the new
owner and the currently small (albeit rising) share of SBEU's
business with the parent's core clients.

Key Rating Drivers - VR

SBEU's 'b+' VR reflects the bank's weak asset quality, which was
inherited from the previous owner and average (albeit in line
with the market) level of reserves, in light of which
capitalization is moderate, in Fitch's view. The rating also
reflects SBEU's weak performance, which is pressured by operating
in a low interest rate environment, sluggish economic growth in
CEE countries, effects from banking taxes and integration costs
to set up the management functions previously absent in the bank.
At the same time, the rating considers SBEU's reasonable funding
base, sound liquidity and improved capital position after recent
equity injections by the parent.

SBEU was formerly known as Volksbank International and was
acquired by SBRF in February 2012 for a total consideration of
EUR505 million. The deal also required SBRF to replace EUR2.1
billion of funding from SBEU's previous shareholders. SBEU
operates through subsidiaries in eight CEE and SEE countries
(Czech Republic, Slovakia, Hungary, Slovenia, Serbia, Croatia,
Bosnia and Herzegovina, and Ukraine) and has been recently
granted a banking license for operations in Austria.
Historically, the group has had a strong focus on retail and SME
clients (which comprised 42% and 26% of the end-H113 consolidated
loan portfolio) but is now expanding to servicing larger
corporates in cooperation with the parent. At the same time, SBEU
is likely to retain a significant focus on retail and SME
business in the local markets where it operates, utilizing the
parent's platforms and expertise.

During 2012, SBEU had to create additional reserves upon the
application of the parent's more conservative risk assessment
methodologies, which together with integration costs and, to a
lesser extent, banking taxes in Hungary, Slovakia and Austria,
resulted in a significant loss for the period (-2.8% ROAA). In
H113, SBEU showed improvement to ROAA of -0.6% as impairment
charges reduced while pre-impairment profit was 0.5% of average
assets on the back of higher revenues (favorable refinancing
conditions allowed the net interest margin to climb to 3.0% in
H113 from 2.8% in 2012, and fee income grew slightly as SBEU set
up its trade finance business). At the same time, SBEU is
building up the parent bank in Austria and continues to invest in
infrastructure, which is putting additional pressure on profits.
Management targets break even by the end of 2013, although its
longer term goal of double-digit returns on equity may prove
difficult to achieve on the back of currently low demand for
credit in the countries of operation and low interest rates.

The quality of SBEU's loan portfolio suffers from legacy problem
exposures, which are responsible for the high proportion of non-
performing loans (NPLs, loans overdue by 90 days and more) of
10.8% at end-Q113. At the same time, asset quality is gradually
improving as reflected in the stabilization of the NPL ratio in
H113. However, reserve coverage of NPLs remains moderate at 63%,
particularly given the 7% share of restructured exposures, and
reflects the bank's high reliance on collateral. SBEU's exposure
to the vulnerable real estate and construction sector is reducing
but remains a high 185% of end-H113 Fitch core capital (FCC).
Analysis of the largest loans shows the generally good quality of
recently acquired clients, which are mainly represented by energy
utilities and oil & gas companies.

SBEU is mostly funded by deposits, which accounted for 68% of the
bank's liabilities at end-H113. SBEU's deposit collection
capacity benefited from its rebranding in 2012 (it now shares the
same brand as the parent) with customer funding growing by 27% in
2012 and a further 10% in H113. Funding from the parent decreased
to 14% of end-H113 liabilities at the consolidated level and is
likely to remain at this level or slightly above it due to the
funding needs of the growing Austrian bank. SBEU's sound
liquidity (at end-H113, liquid assets covered 25% of total
customer funding) is underpinned by large holdings of securities
eligible for repo. Fitch also understands that SBRF is ready to
provide emergency liquidity support in case of need.

The bank's capital position notably improved in H113 following
the equity injection by the parent, with the FCC ratio up to 9%
from 6.9% at end-2012. However, it remains only moderate in light
of the somewhat high level of unreserved NPLs and restructured
loans, as the bank could additionally reserve only 5% of end-H113
gross loans, Fitch estimates. Despite significant capital
contributions from the parent (both as equity and subordinated
debt) to date, further capital may be required given the bank's
growth plans and current inability to generate capital on its

Rating Sensitivities - IDRs, VR, Support Rating

Any action on SBRF's IDRs would likely be matched by a similar
action on SBEU's IDRs. In addition, SBEU's Long-Term IDR could be
upgraded to the level of SBRF if it extends its track record of
operating as a highly integrated subsidiary of SBRF, with
business primarily focused on servicing SBRF's core clients.

An upgrade of SBEU's VR would require a track record of
profitable performance and significant improvement of asset
quality and/or a further recapitalization of the bank. Continued
losses and/or further asset quality deterioration could result in
a downgrade of the VR.

The rating actions are:

  -- Long-term IDR assigned at 'BBB-'; Outlook Stable
  -- Short-term IDR assigned at 'F3'
  -- Viability Rating assigned at 'b+'
  -- Support Rating assigned at '2'

U N I T E D   K I N G D O M

ALBEMARLE & BOND: May Breach Covenant After Failed Rights Issue
Duncan Robinson and Adam Jones at The Financial Times report that
Albemarle & Bond is in danger of breaching its banking covenants
after investors declined to pump more cash into the ailing
pawnbroker, which has been hit by a combination of the declining
price of gold, increased competition and strains from

The FT relates that shares in the group fell 60% after the
company said EZCORP, the US pawnbroker and Albemarle & Bond's
largest shareholder, had declined to underwrite the GBP35 million
rights issue required by the group to avoid breaching its banking

Albemarle & Bond had a profit warning this year before it
announced its need of a GBP35 million emergency cash injection on
Monday, the FT recounts.

According to the FT, the company has not abandoned hope of a
rights issue, but said it was focusing "on constructive
discussions with the banks to explore all possible options".

In exchange for a month-long deferral of Albemarle & Bond's
covenant test, the banks have slashed the group's debt facility
from GBP65 million to GBP53.5 million, leaving the company with
GBP2.5 million of headway for its GBP51 million net debt for the
next month, the FT discloses.

The company also said it would appoint a chief restructuring
officer to its board by October 10, the FT notes.

Albemarle & Bond Holdings PLC provides pawnbrokering services.
The Company, through its subsidiaries, provide pawnbroking, check
cashing services, retail jewelry sales and unsecured lending.
Albemarle operates in the United Kingdom.

EASTERN ELECTRICS: Set To Be Placed In Voluntary Liquidation
Resident Advisor reports that major UK promoters Eastern
Electrics are set to be placed in voluntary liquidation.

A letter, seen by RA, has been sent to the creditors of Electric
Productions, the trading company that oversees Eastern Electrics.
RA relates that the company has now entered into a process that
could see it fall into administration. Though full details are
yet to emerge, the focus will inevitably be thrown onto this
year's Eastern Electrics festival, which took place over three
days at Knebworth Park from August 2 to 4, the report says.

NGS PRINT: Enters Voluntary Liquidation
Hannah Jordan at PrinkWeek reports that NGS Print Finishing,
which merged with Purfect Binding Company (PBC) in July, has been
placed into creditors' voluntary liquidation.

It follows a members' meeting, which took on September 19, where
it was agreed to place NGS into creditors' voluntary liquidation,
the report says.

Carl James Bowles and John Anthony Dickinson of accountancy firm
Carter Backer Winter were appointed as joint liquidators,
PrintWeek discloses.

In July, NGS Print Finishing closed the doors of its Perivale,
West London site and moved into the Wembley facility of Purfect
Binding Company, taking all NGS staff with it, the report

According to the report, NGS managing director Neil Sharp was
appointed managing director of the new entity, while PBC's co-
directors Reginald Walwyk and Yat Ng positions were terminated on
the same day, according to Companies House.

RUSHWORTH'S FURNITURE: Goes Into Voluntary Liquidation
The Shropshire Star reports that Rushworth's Furniture, a
Shrewsbury furniture company, has gone into voluntary liquidation
after more than 30 years of trading, with the loss of five jobs.

Coventry-based Cranfield Business Recovery Limited has been
appointed as liquidators, the report says.

According to the report, Paul Rushworth, who ran Rushworth's
Furniture in Ennerdale Road, Harlescott, alongside his father
Geoff, blamed the decision on high rents and the recent VAT rise.

Official liquidators have now been appointed to oversee the
voluntary winding up of the firm, Shropshire Star says.

"It was a very hard decision to make to apply to be voluntarily
wound up.  We have met all our orders and redundancy has been
paid to the cabinet makers.  We found it difficult to carry on
what with high rents and VAT.  The Conservatives said they would
help small businesses but then they raised VAT to 20 per cent
which was a big blow," the report quotes Mr. Rushworth as saying.

"It has been a very sad decision to shut the business down after
all we have done. We wanted to be able to walk around Shrewsbury
with our heads high - this was not our doing."

A general meeting of creditors was held in Telford on September
11 and it was agreed the company would cease trading due to its
being unable, 'by reason of its liabilities [to] continue its
business,' the report adds.

Rushworth's Furniture, which opened in Shrewsbury in 1981,
produced handcrafted, individually designed pieces of furniture

THOMAS WINSTANLEY: Constractor Goes Into Liquidation
Andrew Bardsley at This Is Lancashire reports that work on
Fairfield Hospital's new accident and emergency department has
been delayed after the contractor went into liquidation.

The report relates that the GBP2.25 million development started
in November last year, but was temporarily halted in June when
contractors Thomas Winstanley & Son stopped trading after getting
into financial trouble.

The finishing date for the new development, originally set to be
this November, has been put back to April next year, the report

According to the report, hospital bosses said work is set to
restart in October when a new contractor has been appointed.

"Just before the summer we received notification from Thomas
Winstanley & Son Ltd, the building construction contractor
appointed to develop and expand our accident and emergency (A&E)
depart-ment at Fairfield Hospital, that they had been forced to
cease trading," the report quotes Graham Lord, Head of Estate
Development at Pennine Acute Hospitals NHS Trust, which runs
Fairfield, as saying.  "This was very disappointing given the
development was progressing well.

"Obviously the company going into liquidation meant that the
building work on site at Fairfield was forced to stop until we
had re-tendered the works and appointed a new contractor," Mr.
Lord, as cited by This Is Lancashire, said.

UNITED BISCUITS: S&P Assigns 'B+' CCR; Outlook Stable
Standard & Poor's Ratings Services said it has assigned its 'B+'
long-term corporate credit rating to U.K.-based biscuit
manufacturer United Biscuits Holdco Ltd.  The outlook is stable.

At the same time, S&P assigned its 'B+' issue rating to United
Biscuits' senior secured bank facilities.  S&P also assigned a
recovery rating of '3' to these facilities, reflecting its
expectation of meaningful (50%-70%) recovery prospects for the
lenders in the event of a payment default.

The rating assignment follows United Biscuits' successful closing
of its debt refinancing. On July 24, 2013, United Biscuits signed
a final agreement for a seven-year bank loan (consisting of a
GBP500 million tranche B1 and a EUR116 million tranche B2), and
for a five-year GBP75 million revolving credit facility (RCF).
The proceeds were used to repay the group's existing debt
facilities.  Following this move, United Biscuits now has a long-
term capital structure, which supports our assessment of the
group's "adequate" liquidity position.

The rating on United Biscuits reflects S&P's view that the group
will continue to maintain a resilient operating performance.
This is despite its focus on Western European markets (primarily
the U.K.), where economic conditions remain tough and budget-
stretched consumers can only absorb limited price increases.  S&P
also factors in its anticipation that the group's balance sheet
will remain highly leveraged, based on its opinion of the
aggressive financial policy of its owners, primarily two
financial sponsors.

Under S&P's base-case scenario, it projects that adjusted debt to
EBITDA (including the payment-in-kind [PIK] shareholder loans)
will remain at about 8.5x, but that EBITDA to interest (excluding
PIK interest) will remain at approximately 4x, which S&P views as
a strong rating factor.

The stable outlook reflects S&P's view that United Biscuits will
continue to perform resiliently, posting positive revenue growth
and maintaining a Standard & Poor's-adjusted EBITDA margin of
close to 16%.  S&P forecasts that United Biscuits will maintain a
ratio of adjusted EBITDA to interest (excluding PIK interest on
the shareholder loans) in excess of 3x over the coming years.

S&P could take a negative rating action if adjusted EBITDA to
interest (excluding PIK interest on the shareholder loans)
slipped below 3x on a sustainable basis.  In S&P's opinion, this
would most likely come from releveraging of the group's balance
sheet, which could result from the group's sale to new financial
sponsors, leading to a third leveraged buyout of United Biscuits.

An upgrade appears remote, in S&P's view, owing to the company's
financial sponsor ownership.


* Moody's Notes Stable Outlook in European Autoparts Sector
Signs of recovery in European light vehicle sales has resulted in
a change of its outlook for the European automotive parts
industry to stable from negative, says Moody's Investors Service
in an update on the sector published today. The outlook, which
had been negative since February 2012, reflects Moody's view of
the fundamental business conditions for the industry over the
next 12-18 months.

Moody's Industry Outlook update, entitled "European Automotive
Parts Suppliers: Light at the End of the Tunnel as European Car
Sales Touch Bottom", is available on

"Despite a 4% decline in light vehicle production volume in
western Europe during H1 2013, European automotive parts
suppliers generated 2% average organic sales growth thanks to
gains in international growth markets and more technologically
advanced equipment per car," says Oliver Giani, a Vice-President
-- Senior Analyst in Moody's Corporate Finance Group and author
of the Industry Outlook update. "This ensuing recovery should
offset downside risks related to protracted euro area economic
weakness and the pressure on free cash flow created by auto parts
suppliers' efforts to boost international sales."

Despite a potential rebound in demand in 2014, Moody's sees the
European market as entering a period of stabilization, rather
than an extended period of sustained growth back to its former

Moody's also notes that growth in international demand, led by
China, is accelerating modestly and that global light vehicle
sales will grow 5% in 2014, up from 3.2% in 2013.

* BOOK REVIEW: The Phoenix Effect
Authors: Carter Pate and Harlann Platt
Publisher: John Wiley & Sons, Inc.
Softcover: 244 Pages
List Price: $27.95
Review by Gail Owens Hoelscher
Buy a copy for yourself and one for a colleague on-line at

Think of all the managers of faltering companies who dream of
watching those companies rise from the ashes all around them!
With a record number of companies failing in 2001, and another
record-setting year expected for 2002, there are a lot of ashes
from which to rise these days.

Carter Pate and Harlan Platt highly value strong leadership able
to sharpen a company's focus and show the way to the future.
They believe that all too often, appropriate actions required to
improve organizations are overlooked because upper management
either isn't aware of the seriousness of the issues they face or
they don't know where to turn for accurate information to best
address their concerns. In the Phoenix Effect, the authors
present their ideas to "confront, comprehend, and conquer a
company's ills, big and small."

These ideas are grouped into nine steps: (i) Find out whether
the company needs a tune-up, a turnaround, or crisis management.
Locate the source of "the pain." (ii) Analyze the true scope of
the company's operations. Decide whether to stay in the same
businesses, withdraw from existing businesses, or enter new
ones. (iii) Hold the company to its mission statement. If it
strives to be "the most environmentally friendly." Figure out
how. (iv) Manage scale. Should the company grow, stay the same
size, or shrink? (v) Determine debt obligations and work toward
debt relief. (vi) Get the most from the company's assets.
Eliminate superfluous assets and evaluate underused assets.
(vii) Get the most from the company's employees. Increase output
and lower workforce costs. (viii) Get the most from the
company's products. Turn out products that are developed and
marketed to fill actual, current customer needs. (ix) Produce
the product. Search for alternate ways to create the product:
owning or leasing facilities, outsourcing, etc.

The authors believe that "how you're doing is where you're
going." They assert that the "one fundamental source of life in
companies, as in people,.is the capacity for self-renewal, the
ability to excite your team for game after game. to go for broke
season after season." This ability can come from "(g)enetics,
charisma, sheer luck, stock options - all crucial, yes, but the
best renewal insurance is a leader who always knows exactly how
his or her company is doing."

There are a lot of books written on this topic. Pate and Platt
successfully bridge the gap between overgeneralization and too
detail. They are equally adept at advising on how to go about
determining a business's scope and arguing for Monday rather
than Friday for implementing layoffs. They don't dwell on sappy
motivational techniques. They don't condescend to the reader or
depend too much on folksy vernacular and clich,. Their message
is clear: your company's phoenix, too, can rise from its ashes.

* Carter Pate is a well known turnaround expert at
PricewaterhouseCoopers with more than 20 years experience
providing strategic consulting and implementation strategies.

* Harlan Platt is a professor of finance at Northeastern
University and author of the book Principles of Corporate


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

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

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

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


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

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

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

This material is copyrighted and any commercial use, resale or
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Information contained herein is obtained from sources believed to
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