TCREUR_Public/131108.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, November 8, 2013, Vol. 14, No. 222



CROATIA: May Seek IMF Aid as Debt Level Becomes Very Risky


FINTEST TRADING: S&P Lowers Corporate Credit Rating to 'CCC+'


LINDALIINI AS: Applies for Restructuring; Owes EUR1.2MM in Taxes


FINLAND: Moody's Maintains Negative Outlook on Banking System
TALVIVAARA MINING: Finland Draws Up Debt Restructuring Plan


FINANCIERE DAUNOU: S&P Assigns Prelim. 'B' Corp. Credit Rating
FRANCE: Local Gov't Fund Only Partly Helps "Toxic Loan" Woes
GROUPAMA SA: Fitch Hikes Subordinated Debt Rating to 'BB-'


K+S AG: Moody's Assigns 'Ba1' Corporate Family Rating
QUEEN STREET: S&P Puts B+ Rating on US$150MM Notes on Watch Neg.
SMP DEUTSCHLAND: Fitch Affirms 'B-' Long-term Issuer Ratings
WOLBERN INVEST: Property Fund Manager Files For Insolvency


IRELAND: HW Says Decline in Corp. Insolvencies "Fools Paradise"
ULSTER BANK: Moody's Confirms Ba1 Rating on Sub. Debt Instrument


FLYNONSTOP AS: Halts Operations; Files for Bankruptcy


PROBUSINESSBANK: Moody's Cuts Currency Deposit Ratings to 'B3'
TINKOFF.CREDIT SYSTEMS: Moody's Affirms B2 Debt & Deposit Ratings


LA SEDA BARCELONA: Gets Court Approval to Sell Artenius Plants
PYMES SANTANDER 7: Moody's Rates Serie C Notes '(P)Ca(sf)'


NUANCE GROUP: Moody's Assigns First-Time 'B2' CFR; Outlook Stable


FERREXPO PLC: S&P Lowers CCR to 'B-'; Outlook Negative

U N I T E D   K I N G D O M

CO-OPERATIVE BANK: Finance Director on Temporary Contract
ENTRY FUNDING: Fitch Cuts Rating on Outstanding Notes to 'Dsf'
PHOENIX PUB: Calls in Administrators, Removes Stocks
PUNCH TAVERNS: Fitch Maintains 'CCC' Ratings on 3 Note Classes
PUNCH TAVERNS: Fitch Cuts Ratings on Two Note Classes to 'BB+'

ROYAL BANK: Fitch Says Restructuring Partly Reduces Tails Risks
TURBO FINANCE 4: Moody's Rates GBP11.3MM Class C Notes '(P)Ba1'
ULTRALASE LIMITED: AOP Issues Advice After Administration
WR REFRIGERATION: Cuts 232 Jobs Amid Administration


EUROPE: EU Union Nations Remain Split Over Bank-Failure Plan
* Fitch: Commodities, Autos, Telecoms Most Exposed to EM Slowdown
* BOOK REVIEW: A Legal History of Money in the United States



CROATIA: May Seek IMF Aid as Debt Level Becomes Very Risky
Jasmina Kuzmanovic at Bloomberg News reports that Finance
Minister Slavko Linic said in an interview with Globus magazine
Croatia may seek assistance from the International Monetary Fund
as next year's borrowing needs become "enormous and very risky."

According to Bloomberg, Mr. Linic said in an interview with the
Zagreb-based weekly that the European Union's newest member needs
to borrow HRK44 billion (US$7.7 billion) next year to refinance
debt and service a 2014 budget gap of HRK16 billion.

"At a high interest rate of 5 to 7 percent, depending on whether
we will borrow at home or abroad, for us this is an enormous and
very risky level of debt," Mr. Linic told Globus.  "In
cooperation with the IMF, borrowing conditions would be much more
favorable.  And we will need any help we can get."  Bloomberg
notes that Mr. Linic said the IMF aid was a "possibility that we
cannot dismiss."

Croatia, whose US$63 billion economy hasn't grown since 2008, has
been hobbled by rising interest payments, debt held by state
companies, a bloated public sector and unemployment approaching
20%, Bloomberg discloses.


FINTEST TRADING: S&P Lowers Corporate Credit Rating to 'CCC+'
Standard & Poor's Ratings Services said it had lowered its long-
term corporate credit rating on Cyprus-registered Fintest Trading
Co. Ltd., the holding company for Ukraine-based Donetsk Steel
Group, to 'CCC+' from 'B-'.  The outlook is now negative.

The downgrade reflects S&P's perception of increasing country,
economic, and foreign exchange transfer and convertibility (T&C)
risks in Ukraine, as shown by S&P's downgrade of the sovereign
and downward revision of the T&C assessment.

It also reflects S&P's view that access to financing for
Ukrainian issuers will likely be more challenging, which
increases the liquidity risk for Fintest, as it has to refinance
about US$100 million in the second half of 2014 and US$265
million in 2015. S&P currently considers Fintest's liquidity to
be "less than adequate" according to its criteria, but S&P sees
the risk that it will become "weak" over the course of 2014,
owing to upcoming debt maturities and limited cash and committed
lines, most of which are from local banks.

S&P also revised its assessment of Fintest's business risk
profile downward to "vulnerable" because of its view of the
heightened risks of operating in Ukraine and currently weak
coking coal industry conditions.

S&P notes the following key risks of operating in Ukraine:

   -- Restrictions that could be imposed on the transfer of funds
      outside Ukraine, as shown by its current T&C assessment for
      Ukraine of 'B-'.

   -- Weakening sovereign credit quality and political
      instability in Ukraine, which could constrain access to
      financial markets for Ukrainian issuers.

   -- The weak macroeconomic situation in Ukraine may lead to
      unexpected working capital outlays, such as the one at the
      end of 2011.

   -- Increasing cost inflation.

Fintest's business risk profile also reflects the company's
substantial exposure to Ukraine, the cyclical and capital-
intensive nature of the coking-coal mining and steel industries,
the currently weak coking-coal market environment, and dependence
on one underground mine for the bulk of its profits.  Partly
mitigating these negatives are the mine's good cost profile,
favorable position in the coking-coal-deficient Ukrainian market,
and good reserve life of about 25 years, based on proven and
probable reserves.

S&P continues to assess the company's financial risk profile as
"highly leveraged," factoring in future refinancing risks related
to debt maturities in the second half of 2014 and in 2015, and a
historically aggressive financial policy.  The financial policy
led to defaults in March 2009 and payment delays (compared with
the original schedule) in January 2012, although the banks
subsequently waived them.  S&P's assessment also factors in its
forecast of fairly high debt, with a debt-to-EBITDA ratio of
3.5x-4.0x.  At the same time S&P foresees limited negative free
operating cash flow under its base-case scenario in 2013-2014.
This is based on EBITDA of US$250 million-US$300 million per

Finally, S&P notes that a legal action was filed in 2011 by a
third party claiming ownership of 50% of Fintest Trading's
shares, which S&P don't expect to materially influence the rating
in the next six to 18 months, however.

The negative outlook reflects that S&P may lower the rating
further if Fintest is unable to extend or refinance, in advance,
its more sizable debt falling due from the second half of 2014.
In addition, the negative outlook reflects the uncertainty
reflected by the negative outlook on Ukraine.  That said, a
further downgrade of the sovereign or lower T&C assessment will
not automatically impact the rating on Fintest, if the company is
able to show resilience to country-specific factors, including
the risk of stricter T&C restrictions.

Any upward rating movement would require a stronger liquidity
position, including progress on refinancing debt maturities in
2014-2015 and a stabilization of the situation in Ukraine.


LINDALIINI AS: Applies for Restructuring; Owes EUR1.2MM in Taxes
Toomas Hobemagi at Baltic Business News reports that Lindaliini
AS has applied for restructuring.

The company owes EUR1.2 million in taxes which makes it one of
the biggest tax debtors, BBN discloses.  According to BBN,
Lindaliini CEO Enn Rohula emphasized that Lindaliini was not in
immediate danger of bankruptcy and said that this season was

The company ended the financial year with EUR36,753 in profit and
at revenue of EUR12.4 million, but is suffering from almost half
a million euros in losses incurred from earlier years, BBN

Lindaliini AS is fast ferry operator between Tallinn and


FINLAND: Moody's Maintains Negative Outlook on Banking System
The outlook for the Finnish banking system remains negative, says
Moody's Investors Service in a new report published. The main
drivers of the outlook, which has remained negative since 2009,
are Moody's expectations of asset quality erosion against the
background of the continued weak -- albeit slowly improving --
operating environment, and the related challenging conditions,
particularly in the SME sector. The intensely competitive market
comprising two dominant players -- OP-Pohjola Group and Nordea
Bank Finland -- will continue to place pressure on profitability.

Finland's economic performance continues to lag behind the rest
of the Nordic region. Although Moody's expects relative
performance to improve over the 12-18 month outlook period, the
rating agency believes that Finland's growth will remain limited
given the tentative recovery in Europe generally. Moody's expects
a 0.1% contraction in GDP for 2013, followed by a more
positive -- albeit still modest -- return to growth of 1.6% in
2014. However, Moody's expects the operating environment for
Finnish banks to remain depressed by the cumulative impact of
several years of weak economic growth. This is supported by the
high unemployment rate, low consumer confidence and continued
problems in key Finnish export sectors, such as paper and pulp,
and consumer electronics.

Moody's forecasts that bank asset quality is likely to
deteriorate slightly over the 12-18 month outlook period. This
erosion will be driven by the Finnish SME sector, which will be
adversely affected by weak consumer demand, rising borrowing
costs and increased problems associated with a lack of payment
discipline by corporates. However, Moody's believes that lending
to the retail sector and larger corporates will perform more
robustly, although the weak economy will continue to negatively
affect all sectors.

Finnish banks' profitability is also expected to be adversely
affected by higher problem loan volumes (albeit low compared to
most European peers), persistently low margins and weak credit
demand. The rating agency also anticipates a slowdown in the
level of gains generated from bank cost-cutting programs. Moody's
observes that, as in recent years, the main sources of
profitability will be derived from revenues from other operations
such as insurance and market-to-market returns on investments,
thus highlighting the importance of diversification and the
additional strain on smaller, less diversified banks.

TALVIVAARA MINING: Finland Draws Up Debt Restructuring Plan
Kati Pohjanpalo at Bloomberg News, citing newspaper Helsingin
Sanomat, reports that the Finnish Economy Ministry is putting
together a plan to restructure Talvivaara Mining Co.'s debt.

According to Bloomberg, Talvivaara's debt yields rose after the
company said Oct. 10 it's assessing all options for additional

Talvivaara Mining Co. Ltd. is a Finnish nickel producer.


FINANCIERE DAUNOU: S&P Assigns Prelim. 'B' Corp. Credit Rating
Standard & Poor's Ratings Services assigned its preliminary 'B'
long-term corporate credit rating to Financiere Daunou 5
S.a.r.l., France-based plastic closures manufacturer Global
Closure Systems' Luxembourg-registered holding company.

At the same time, S&P assigned its preliminary 'B' long-term
corporate credit rating to GCS Holdco Finance I S.A., which is to
issue the proposed senior secured notes.

In addition, S&P assigned its preliminary issue rating of 'B' to
the proposed EUR335 million senior secured notes due in 2018.
The recovery rating on the senior secured notes is '4',
indicating S&P's expectation of average (30%-50%) recovery
prospects for lenders in the event of a payment default.

The preliminary ratings are subject to S&P's review of the final
documentation and capital structure.

The preliminary ratings on Financiere Daunou 5 S.a.r.l. (Global
Closure Systems; GCS) and GCS Holdco Finance I S.A. reflect S&P's
assessment of the group's "fair" business risk profile and
"highly leveraged" financial risk profile, under its criteria.

S&P's assessment of GCS' business risk profile as "fair" reflects
the group's strong competitive positions in the niche and
fragmented plastic closures markets.  The group has a high
concentration in Western Europe where the macroeconomic outlook
remains weak.  That said, demand remains relatively robust given
the essential nature of most of the group's end markets, such as
food, beverages, and pharmaceuticals.  The group has resin cost
pass-through clauses in approximately 80% of its contracts, which
provide strong protection from volatile resin costs.  However, as
with other packaging peers the group is exposed to high energy

The group has fairly low product diversity and is also exposed to
high customer concentration, although this is in line with other
packaging peers, and largely mitigated by long-standing customer
relationships and low customer churn rates.  Combined research
and development efforts and patent protection further increase
customer switching costs.

S&P assess the company's management and governance as "fair"
reflecting its experienced management team.

"Our assessment of GCS' financial risk profile as "highly
leveraged" reflects our view of the group's "aggressive"
financial policy, as a result of its private equity ownership.
Such policy has led to a high absolute debt burden and weak
credit metrics.  In addition to the new financing, the group has
about EUR138 million in total of convertible bonds, an interest-
free shareholder loan, preferred equity certificates (PECs), and
an income participating loan.  These will all remain in GCS'
capital structure and we treat them as debt under our criteria.
We understand that there are no other shareholder loans or
similar instruments at any level in the entire group structure,"
S&P said.

"In our base-case scenario, we expect revenues to grow by a
low-single-digit percentage over the next two years.  We
anticipate that revenues will be supported by a robust operating
performance. We further anticipate that EBITDA margins will
remain relatively flat--at about 13%--with continuous
cost-cutting initiatives and price increases offsetting raw
material and labor cost inflation. We forecast that our
Standard & Poor's-adjusted ratio of debt-to-EBITDA will likely
remain at about 8.5x (about 5.2x excluding non-cash pay debt) as
of Dec. 31, 2014.  We anticipate negative free operating cash
flow (FOCF) for the full year 2014 and very weak FOCF in 2015 and
beyond.  Nevertheless, we forecast EBITDA cash interest coverage
of above 2x over the next two years," S&P added.

The issue rating on the proposed senior secured notes to be
issued by GCS Holdco Finance I S.A., a 100% subsidiary of parent,
Financiere Daunou 1 S.A. is 'B', in line with the corporate
credit rating.  The recovery rating on the notes is '4',
indicating S&P's expectation of average (30%-50%) recovery in the
event of a payment default.

The issue and recovery ratings are supported by a fair security
and guarantee package, the company's relatively high asset
intensity and S&P's going concern valuation.  That said, S&P's
recovery ratings are constrained by material prior ranking
liabilities, which include a super senior RCF and pension
liabilities; some important debt baskets under the notes
documentation; and S&P's consideration of France, which S&P
considers as relatively less creditor friendly, as the center of
main interest.  The stable outlook reflects S&P's view that GCS'
credit metrics will remain in line with levels commensurate with
a "highly leveraged" financial risk profile.

S&P's base case assumes top line growth in the low single digits.
It also envisages that the group's EBITDA margins will be broadly
stable over the next 12 months, thanks to strong management of
volatile raw material costs, and ongoing cost-cutting initiatives
that we expect to offset labor and energy inflation.

S&P could take a negative rating action on GCS if its liquidity
position deteriorates or if pressure on its margins mounts, as a
result of higher-than-anticipated cost inflation that cannot be
passed onto customers.  This would likely lead to weaker credit
metrics than S&P currently anticipates.  Additionally, if GCS
takes on any material debt-financed acquisitions, and/or makes
significant shareholder distributions, its credit metrics may
weaken.  Specifically, if EBITDA cash interest coverage falls
significantly and sustainably below 2x, S&P could take a negative
rating action.

S&P sees an upgrade as relatively remote for the time being.
Sustained deleveraging, improvements in EBITDA and cash flow
generation, and stronger credit metrics than S&P currently
anticipates could prompt it to raise the ratings.

FRANCE: Local Gov't Fund Only Partly Helps "Toxic Loan" Woes
The proposal to increase the French bank tax and create a fund to
support local and regional governments (LRGs) with exposure to
risky structured loans only partly deals with the problem, Fitch
Ratings says. The funds are likely to be insufficient compared
with the size of the risky structured loans held by French LRGs,
so some of the costs will have to be absorbed within municipal
budgets. Nevertheless, none of the Fitch-rated LRGs have so far
suffered seriously from these products.

The fund should help LRGs reduce their exposure to risky and
costly structured loans linked to foreign interest rates or
currencies provided by French banks before the 2008 financial
crisis. Refinancing these loans and replacing them with plain
vanilla products would remove fluctuations in market risks for
local and regional budgets, such as substantially higher
repayment rates.

However, Fitch believes the funds are unlikely to be sufficient
to neutralize the risks for the sector. The scheme is envisaged
to have available EUR100 million per year for a maximum of 15
years, with the additional tax raising EUR50 million from the
banks and the remainder coming from the state. In comparison,
structured loans held by LRGs were around EUR17 billion, or 10%
of total outstanding debt at end-2012. Out of the total amount of
structured loans, the most risky structured products were
estimated to be EUR3.5 billion at mid-2013.

The additional tax would not be material for the French banks,
which already pay other higher levies. But the banks that
provided risky structured loans to local authorities may see
higher litigation and settlement costs from around 300 lawsuits
triggered to date.

The major share of structured products provided to LRGs was from
Dexia Credit Local, although French banks Credit Agricole and
Natixis were also involved. Fitch expects the costs associated
with providing these loans to be moderate compared with bank
products subject to litigation in other countries, considering
the size of the risky structured debt at stake.  For the French
LRGs Fitch rates, the rating agency believes they can manage
their budgets to absorb the risks from risky structured loans,
even though LRGs face tighter financial constraints mainly due to
sluggish revenue. The LRGs Fitch rates have provided detailed
data on their debt structure and have, overall, low exposure to
such products. Fitch believes these assets are concentrated in a
limited group of LRGs, not rated by Fitch.

The Societe de Financement Local, a state-owned institution set
up in January to provide funding to the French local public
sector, aims to gradually restructure and refinance the
EUR9.4 billion of risky structured loans made by Dexia Credit
Local to the French local public sector. A specialized unit is
dedicated to negotiating new loan terms to reduce the interest
rate and FX sensitivity of these assets, lowering risks for LRGs.

In its 2014 Finance Act (PLF), the French government envisages
imposing an additional levy on the systemic tax introduced in
2011 and paid by the banks operating in France for a public
sector fund.

GROUPAMA SA: Fitch Hikes Subordinated Debt Rating to 'BB-'
Fitch Ratings has upgraded France-based Groupama S.A.'s undated
deeply subordinated debt (ISIN FR0010533414) to 'BB-' from 'B-'.
The rating is removed from Rating Watch positive (RWP) where it
was placed on 6 March 2013. Groupama's other ratings are
unaffected by the rating action. A full list of ratings can be
found at the end of this commentary.

Key Rating Drivers:

The upgrade of the undated deeply subordinated debt follows
coupon payment resumption that took place on 22 October 2013.

Rating Sensitivities:

Fitch will likely upgrade the undated deeply subordinated debt if
Groupama S.A.'s Issuer Default Rating (IDR) and Insurer Financial
Strength (IFS) rating are upgraded.

Conversely, the undated deeply subordinated debt would likely be
downgraded if Groupama S.A.'s IDR and IFS rating are downgraded
or in the event of non-payment of a subsequent coupon.

Full list of ratings:

Groupama S.A.

IFS rating at 'BBB-'; Outlook Stable
Long-term IDR at 'BB+'; Outlook Stable
Dated subordinated debt (ISIN FR0010815464) at 'BB-'
Undated subordinated debt (ISIN FR0010208751) at 'BB-'
Undated deeply subordinated debt (ISIN FR0010533414) upgraded to
  'BB-' from 'B-'

Groupama GAN Vie

IFS rating at 'BBB-'; Outlook Stable

GAN Assurances

IFS rating at 'BBB-'; Outlook Stable


K+S AG: Moody's Assigns 'Ba1' Corporate Family Rating
Moody's Investors Service has downgraded K+S AG ratings to Ba1
from Baa2. Concurrently, Moody's has assigned a Ba1 corporate
family rating (CFR) and Ba1-PD probability of default rating
(PDR) to the company and lowered the ratings assigned to the
senior unsecured 2014 and 2022 notes issued by K+S AG to Ba1 from

"We have downgraded K+S's rating to Ba1 as given the current
price uncertainty in the global potash market, the company's
plans to invest in its large-scale potash mine in Canada could
require K+S to raise additional debt, resulting in a sustained
material deterioration in its financial profile," says Elena
Nadtotchi, a Moody's Senior Credit Officer - Vice President and
lead analyst for K+S.

As part of rating action, Moody's has converted K+S AG's issuer
rating into a Ba1 corporate family rating (CFR), in line with the
rating agency's policy for non-investment-grade ratings. The
outlook on all ratings is stable. This rating action concludes
the review for downgrade of K+S AG's ratings initiated by Moody's
on August 7, 2013.

Ratings Rationale:

Downgrade of Issuer Rating to Ba1 From Baa2:

Rating action reflects K+S's decision to proceed with investment
in its large-scale greenfield potash mine, Legacy, in
Saskatchewan, Canada, at the time when the global potash market
faces significant price uncertainty. In Moody's view, K+S will
likely need to raise additional debt to fund this project, as a
result of which the company's financial profile will be subject
to sustained material deterioration. In addition, K+S will
effectively need to suspend its existing financial policy
guidance until 2017, when the company expects the Canadian
project to start contributing to its cash flows.

The downgrade of the rating to Ba1 reflects Moody's forward-
looking assessment of K+S's developing credit profile and
incorporates several key assumptions.

Moody's expects that K+S and other potash producers will face
significant price uncertainty in the medium term. The rating
assumes a lower level of potash prices, at around US$350/tonne,
with some downside risk to pricing levels in 2014. As a result,
K+S's potash operations will experience reduced levels of cash
flow generation in the medium term. This, combined with the
material size of the Legacy project and its funding requirement,
will drive K+S's leverage significantly above the levels outlined
by the company in its financial policy and previously expected by
Moody's. Pending a material improvement in the potash market,
Moody's now expects K+S's leverage metrics to deteriorate
progressively in the next three years. Specifically, the rating
agency expects the company's debt/EBITDA ratio to approach 4.0x-
4.5x (as calculated by Moody's) and its retained cash flow
(RCF)/debt ratio to fall to the mid-teens in percentage terms.

However, the rating agency anticipates that K+S will act to
maximise utilization rates at its mines and will continue to
operate all of them at the US$350/tonne price level. This is
because even at below this price level, the cash contribution of
the mines to K+S's earnings would remain positive, while the
alternative of closing the mines would entail high costs. The
rating also factors strong expected future contributions of K+S's
salt business to the group's earnings and funds from operations
(FFO) generation.

Moody's notes that K+S faces a major capital expenditure (capex)
cycle in 2014-16. The rating takes into account K+S's view that
executing its strategic expansion is necessary and supportive for
the company's business profile over the long term. This view also
reflects the sustained attractiveness of the potash market in the
longer term and the requirements of K+S's maturing mining
operations in Germany. Failure to execute the strategic project
successfully would be detrimental to the credit assessment of

However, the rating also reflects that the Legacy greenfield
project entails significant execution risks and has a lengthy
investment timeline. Although Moody's believes that K+S has
strong mining expertise and that it retains control over
execution risks, this timeline is sensitive to further price
declines and construction and administrative delays.

Finally, the Ba1 rating anticipates that K+S will take measures
to reduce financing risks and will proactively fully fund the
project by raising additional debt. The rating further takes into
account that K+S has maintained sufficient headroom in its
recently increased investment budget of CAD4.1 billion and
assumes no further project cost inflation in the next three

Sufficient Liquidity:

K+S has sufficient liquidity for the next few quarters but will
have to raise new funds to finance its project in Canada. At the
end of Q2 2013, the company reported approximately EUR1.3 billion
in cash and near-cash assets, including approximately EUR400
million of liquid marketable securities and cash deposits. In
addition, the group maintains full availability under its
EUR1 billion 2018 revolving credit facility, renewed in
July 2013. The facility has no financial covenants. However, K+S
will need to raise additional bonds to meet project investment
requirement, while it also faces a EUR750 million bond maturity
in September 2014.

Downgrade of Senior Unsecured 2014 and 2022 Notes To Ba1 from

The downgrade of the senior unsecured notes issued by K+S AG
reflects the downgrade of the issuer rating.

Rationale For Stable Outlook:

The stable outlook on the ratings reflects Moody's expectation
that K+S will successfully pre-fund its Legacy project
investment, reducing the financing risks of the project. The
strong liquidity position also supports the rating and the stable
outlook in the near term.

What Could Change The Rating Up/Down:

Taking into account the substantial scale of K+S's expansion in
Canada and the significant investment commitments associated with
the execution of this critically important project, Moody's does
not anticipate positive pressure being exerted on the ratings.

Over time, after or nearing the completion of the project,
Moody's could upgrade the ratings if (1) K+S executes Phase I of
its investment plan in a timely manner; and (2) its financial
profile improves, as a result of stronger operating cash flow
generation and/or a reduction in debt, with total debt/EBITDA
sustainably declining to below 3.0x and RCF/debt being sustained
at above 25 percent.

The Ba1 rating could come under negative pressure if, as a result
of increased project costs or a sustained further decline in
potash markets, K+S's financial profile deteriorates further such
that (1) debt/EBITDA increases above 4.5x on a sustained basis;
and (2) RCF/debt declines to below 10%.

Headquartered in Kassel, Germany, K+S AG is one of the world's
leading potash fertilizer producers and the world's largest salt
producer. The company is vertically integrated and operates six
potash mines in Germany, as well as numerous salt mines in
Europe, North and South America. Following the acquisition of
Potash One in 2011, K+S AG is in the process of developing the
Legacy potash operation in Saskatchewan, Canada, which is an
important strategic investment as its future 2 million tonnes
(Phase 1) capacity is expected to be of lower cost than the
existing mines and will replace depleting potash assets in
Germany over time.

QUEEN STREET: S&P Puts B+ Rating on US$150MM Notes on Watch Neg.
Standard & Poor's Ratings Services said that it placed its
'B+(sf)' rating on the US$150 million principal-at-risk variable-
rate notes issued by Queen Street III Capital Ltd. on CreditWatch
with negative implications.

The notes were issued under an insurance-linked securitization
sponsored by Munich Reinsurance Co. Queen Street III Capital
covers losses due to a major European windstorm between July 2011
and July 2014.  Queen Street III Capital is an Irish special-
purpose private limited company.

The CreditWatch placement follows the issue of a notice of
default, on Oct. 22, 2013, by indenture trustee the Bank of New
York Mellon.  The notice follows the loss in principal of
US$30,433.53 from the liquidation of the MEAG Queen Street III
fund due to an investment eligibility event.  The CreditWatch
placement reflects S&P's view of heightened risk that the holders
of Queen Street III Capital's notes will not receive 100% of the
outstanding principal on the notes' redemption date in July 2014.

The investment eligibility event related to a drop in the per
unit value of the MEAG Queen Street III fund below US$100.00.
The indenture trustee requested the liquidation of MEAG Queen
Street III fund's investments and subsequently reinvested the
proceeds into Federated U.S. Treasury Cash Reserves.  The cash
proceeds from the liquidation were US$149,969,566.47, resulting
in a loss of US$30,433.53 (two basis points) in principal.

When the notes were originally issued in July 2011, the proceeds
were invested in MEAG Queen Street III fund, which Standard &
Poor's rates at 'AAAm'.  The fund is a U.S. Treasury money market
fund, invested in Treasury-bills, set up specifically for this
transaction.  The subsidiary of the asset management arm of
Munich Re, MEAG MUNICH ERGO Kapitalanlagegesellschaft mbH,
managed the fund.  On Oct. 11, 2013, uncertainties surrounding
the U.S. debt ceiling led to a decline in the per-unit marked-to-
market value. While this deviation was within the range we
consider commensurate with a 'AAAm' rated fund (of up to 0.25%)
the fund's investment guidelines do not allow the per-unit value
of the fund to fall below US$100.00.  Consequently, the indenture
trustee decided to liquidate the fund and the loss was realized.

S&P expects to resolve the CreditWatch placement within the next
three months.  During this period, S&P will observe the extent to
which it believes the original net asset value of US$150 million
can be restored.

The CreditWatch placement indicates that there is a one-in-two
chance of a downgrade to 'CC (sf)' within the next three months
if S&P considers there is a high probability that the noteholders
will not receive 100% of the US$150 million principal.
Alternatively, S&P could affirm the rating at 'B+ (sf)' if it
believes that the probability of a loss of principal by the
maturity date is low.

SMP DEUTSCHLAND: Fitch Affirms 'B-' Long-term Issuer Ratings
Fitch Ratings has affirmed SMP Deutschland GmbH's Long-term
Issuer Default Ratings (IDR) at 'B-' and its Short-term IDR at
'B'. The Outlook is Negative. The agency has simultaneously
withdrawn all the ratings.

The ratings have been withdrawn as they are no longer considered
by Fitch to be relevant to the agency's coverage. Fitch will no
longer provide rating or analytical coverage of this issuer.

WOLBERN INVEST: Property Fund Manager Files For Insolvency
---------------------------------------------------------- reports that Hamburg-based property fund manager
Wolbern Invest has filed for insolvency after last month's arrest
of founder and head Heinrich Maria Schulte on suspicion of
embezzlement.  Its fund management unit filed for insolvency last
week, the report says.


IRELAND: HW Says Decline in Corp. Insolvencies "Fools Paradise"
Rachael Singh at Accountancy Age reports that a HW Fisher
practitioner said corporate insolvencies continue its downward
spiral but this is just lulling companies into a "fools

The Insolvency Service figures show liquidations, including
compulsory and voluntary, were down 2.5% for the third quarter of
the year compared to the previous quarter and 2% down when
compared to the same quarter a year ago, Accountancy Age

According to Accountancy Age, HW Fisher & Company insolvency
partner Brian Johnson said the fall is just a false sense of
security and any company that doesn't realize this is living in a
"fools paradise".  "Business confidence might be galloping ahead,
but many companies -- not just the fabled zombies -- continue to
live in a fool's paradise of low interest rates and bank
forbearance . . . Such complacency about the levels of corporate
insolvency would be premature at best and naive at worst . . .
The modest overall fall in company insolvencies should not be
confused with a sustainable recovery.

"That unique combination of factors will not, and cannot, last.
When the banks inevitably call time on their problem loans, many
businesses will find they have sleepwalked off the cliff."

However, PwC's insolvency partner Mike Jervis disagrees and
believes the tide has turned as lenders have now changed
direction and are supporting struggling businesses, Accountancy
Age notes.

"The insolvency statistics show that larger corporate failures
are now back to the levels we last saw around 2004, when the
economy was growing at a faster rate than today.  There is more
optimism amongst parties who either run or are looking to invest
in distressed companies and avoiding formal insolvency is the new
norm," Accountancy Age quotes Mr. Jervis as saying.  "There are
significant examples of forbearance in the lender market as banks
continue to support businesses through turnaround techniques."

Collectively, administrations, receiverships and company
voluntary arrangements have also fallen 3.8% compared to the same
period a year ago, Accountancy Age relays.

ULSTER BANK: Moody's Confirms Ba1 Rating on Sub. Debt Instrument
Moody's Investors Service has confirmed with a Negative outlook
Ulster Bank Limited's (UBL) and Ulster Bank Ireland Limited's
(UBIL) Baa2 long-term debt and deposit ratings, and the Ba1
rating on UBIL's subordinated debt instrument. The Prime-2 short-
term ratings were also confirmed. UBL's and UBIL's D- standalone
bank financial strength ratings (BFSR; equivalent to a ba3
baseline credit assessment or BCA) are not affected.

The action follows Moody's decision to confirm the ratings of
UBL's and UBIL's ultimate parent, Royal Bank of Scotland plc

Ratings Rationale:

Moody's rating action follows the conclusion of the review
announced by the UK government on 1 November 2013 and the
subsequent announcement that RBS, Ulster Bank's parent, will not
be legally separated into a good bank and bad bank, which may
have also affected Ulster Bank. Instead, RBS will continue to run
down its non-core assets portfolio, albeit with a somewhat
different composition and within a shorter timeframe.

The setting up of the internal bad bank within RBS, which will
see some Ulster Bank assets which so far had not been classified
as 'Non-Core' moved into the internal bad bank (IBB), will not
immediately impact the credit risk within Ulster Bank. These
assets will remain on Ulster Bank's balance sheet but will be
under the management of the IBB. However, the strategy to
accelerate the run-down of the IBB assets will likely result in
accelerated impairments for the Irish operations in contrast to
the declining trend experienced of late. Nevertheless, Moody's
expects that Ulster Bank will continue to be funded by its
parent, remain adequately capitalized and in a position to meet
it liabilities as they come due with ongoing support by its
parent if needed.

In the next six months RBS will conduct a comprehensive review to
determine a viable and sustainable business model for Ulster
Bank. Moody's will monitor the progress and outcome of the review
to assess any changes in strategic importance of and support
likelihood for Ulster Bank from the parent and whether this may
have any impact on the risk for the bank's creditors.

What Could Move The Ratings Down/Up:

The standalone credit assessments of UBL and UBIL carry a
Negative outlook indicating the significant uncertainty about the
speed and magnitude of further deterioration of Ulster Bank's
assets and capital position. Further negative pressure on Ulster
Bank's debt ratings could come (1) from an indication, coming
from RBS's comprehensive review of Ulster Bank, of weakening ties
between Ulster Bank and RBS, which may result in lower parental
support assumptions, (2) from unexpected losses beyond those
presently estimated to result from the workout of Ulster Bank's
assets in the internal bad bank resulting in a deterioration of
the capital position, or (3) in the potential scenario that
Moody's would expect the UK government's willingness to support
RBS's senior creditors to weaken it would also impact Moody's
view of RBS's ability to continue to provide capital and
liquidity support to Ulster Bank.

Given the challenges in the Irish economy and Ulster Bank's own
balance sheet, there is currently no upward ratings momentum.
However, the ratings could be supported if non-performing assets
significantly decrease without posing additional risks to
existing creditors.


FLYNONSTOP AS: Halts Operations; Files for Bankruptcy
Victoria Moores at Air Transport World reports that Flynonstop
has ceased operations and filed for bankruptcy, just six months
after its launch.

"We regret to announce that of [Oct. 29, 2013], we have sent a
petition for bankruptcy of Flynonstop AS.  This means that all
our flights as of Tuesday, 10/29/2013 at 06:00 have been
canceled," ATW quotes a statement on the company's Web site as
saying on Tuesday.

"Unfortunately, we at Flynonstop could no longer meet the
company's obligations.  We therefore realize that we had to close
down the operation."

Kristiansand-based Flynonstop launched operations on April 25,
serving a range of European destinations including London City,
Barcelona, Berlin, Nice, Palma, Paris and Parma.  It operated an
Embraer E-190 on lease from CIT Aerospace using the air
operator's certificate of Dutch carrier Denim Air, according to

Flynonstop is a Norwegian carrier.


PROBUSINESSBANK: Moody's Cuts Currency Deposit Ratings to 'B3'
Moody's Investors Service has downgraded Probusinessbank's long-
term local- and foreign-currency deposit ratings to B3 from B2,
provisional senior unsecured local- and foreign-currency debt
ratings to (P)B3 from (P)B2, and provisional subordinated local-
and foreign-currency debt ratings to (P)Caa1 from (P)B3.
Concurrently, Moody's affirmed Probusinessbank's standalone E+
bank financial strength rating (BFSR), which is now equivalent to
a baseline credit assessment (BCA) of b3 (formerly b2), the
bank's Not Prime short-term local- and foreign-currency deposit
ratings, and provisional short-term local-and foreign-currency
debt ratings of (P) Not Prime. The outlook on the long-term
deposit and debt ratings is stable.

The downgrade of Probusinessbank's debt and deposit ratings
reflect the bank's very weak capital base, providing limited loss
absorption cushion amid increasing risks in consumer finance
sector, as well as its still material exposure to real estate
development projects and high appetite for market risk.

Ratings Rationale:

The negative rating action on Probusinessbank's reflect (1) the
bank's very weak capital adequacy, which confers limited loss
absorption buffer to potential losses; (2) increasing credit
risks in unsecured consumer lending that worsen asset quality;
and (3) significant investments in real estate and market risk
exposure that puts additional pressure on earnings and

Moody's considers Probusinessbank's low capital adequacy metrics
to be the major rating constraint against the background of
rising credit risks in the consumer finance sector. During the
first half of 2013, the Tier 1 ratio (Basel I) under unaudited
consolidated IFRS amounted to 7.7% (year-end 2012: 7.8%), and the
total capital adequacy ratio (CAR) amounted to 10.2% (year-end
2012: 10.3%), thus providing limited loss absorption buffer.
Probusinessbank's regulatory CAR (unconsolidated) stood at very
low 10.2% as of October 1, 2013, barely above the regulatory
minimum capital requirements of 10%.

Moody's notes the risks associated with the further deterioration
in Probusinessbank's capital base, as its internal capital
generation capacity has decreased and there is some uncertainty
about the bank's ability to attract additional Tier 2 capital.
The bank's earnings generation is undermined by rising credit
costs related to accelerated risks in the consumer finance
sector, as well as volatile trading results. The bank's weak
capital base further constrains its business growth; therefore,
it will likely adopt a strategy of deleveraging in order to be
compliant with regulatory capital adequacy requirements.

Probusinessbank faces worsening asset quality related to its
primarily focus on retail lending, which accounted for 64% of
total loan book as of 1 July 2013. Total loans overdue more than
90 days increased to 10.1% of the loan book as of July 1, 2013
(year-end 2011: 7.8%) according to the bank's management data.
Loan loss reserve coverage comprised a modest 87.2% of problem
loans. Credit costs for total loan book increased within the
first half of 2013 to 5.9% from 4% at year-end 2012, and the
rating agency expects further growth in these costs given rising
risks in the consumer finance sector.

Probusinessbank's market risk appetite remains high, as the bank
has material investments in real estate development projects and
securities, which are vulnerable to adverse market conditions.
Investments in real estate developments, represented mainly by
residential property in the Moscow region, accounted for a
material RUB8.2 billion (US$256 million) or 56.4% of Tier 1
capital as of July 1, 2013. These investments bear revaluation
and execution risks, which puts additional pressure on

Probusinessbank has decreased its exposure to equities to RUB4.4
billion (30% of Tier 1 capital) as of July 1, 2013 (year-end
2011: RUB12 billion or 115% of Tier 1 capital). However, Moody's
still considers the bank's market risk appetite to be fairly
high, rendering profitability volatile, and thus weighing down
its capitalization.

The stable outlook on the long-term deposit and debt ratings
reflects Probusinessbank's still profitable financial results and
sound net interest margin, comparing it more favorably to lower-
rated peers. The outlook also takes into account the bank's
diversified business model, which reduces its exposure to risks
in the consumer finance sector -- when compared to the level of
risk faced by specialised consumer lenders.

What Could Change The Ratings Up/Down:

Probusinessbank's ratings have weak upward potential in over the
next 12 to 18 months. Any positive rating actions would require
the bank to demonstrate improved capitalization and asset
quality, as well as reduction in market risk appetite.

Negative pressure could be exerted on Probusinessbank's ratings
if profitability turned negative, thus placing significant
pressure on capitalization, and resulting in a material drop in
capitalization below the regulatory required level.

Probusinessbank is the core bank and the holding entity of
Financial Group "Life". With RUB187 billion of consolidated total
assets and RUB16.2 billion of shareholder equity as of 1 July
2013, Probusinessbank (Financial Group "Life") ranks among the
top 50 Russian banking groups.

TINKOFF.CREDIT SYSTEMS: Moody's Affirms B2 Debt & Deposit Ratings
Moody's Investors Service has affirmed the following ratings of
Tinkoff.Credit Systems: the B2 long-term local- and foreign-
currency debt and deposit ratings; the Not Prime short-term
local- and foreign-currency deposit ratings; the B3 foreign-
currency subordinate rating and the standalone bank financial
strength rating (BFSR) of E+, equivalent to a baseline credit
assessment (BCA) of b2. The outlook on all of the bank's long-
term ratings remains stable.

The affirmation of Tinkoff.Credit Systems' ratings follows the
credit card lender's recent IPO and captures the risks associated
with the bank's rapid expansion in the Russian consumer finance

Moody's assessment of the issuer's ratings is largely based on
Tinkoff.Credit Systems' audited financial statements for 2012,
its unaudited financial statements for H1 2013, prepared under
IFRS as well as information received from the bank.

Ratings Rationale:

Tinkoff.Credit Systems is a monoline credit card lender that has
increased its loan book by 53% (annualized) in H1 2013, and the
bank expects its rapid growth to continue in 2014. Moody's
believes that such rapid growth amid the deteriorating operating
environment for this sector poses high risk of asset quality
erosion. The bank's credit costs (loan loss provisions as a
percentage of average gross loans) increased to 14.5% in H1 2013
(2012:10.6%) as the bank was rapidly growing in an environment of
increasing borrower's indebtedness. Moody's expects annualized
loan growth for this sector to exceed 20% in the next 12 to 18
months, which is considerably above the population's nominal
income growth; therefore, Tinkoff.Credit Systems will continue
its rapid expansion amid the increasing indebtedness and growing
defaults in the sector.

Downward pressure has been exerted on Tinkoff.Credit Systems'
ratings as a result of the risks associated with increasing asset
quality erosion; however, the bank's attraction of new capital
reinforces its ability to absorb losses in the next 12 to 18
months and provides some alleviation of the above-mentioned
risks. Tinkoff.Credit Systems has attracted US$175 million
(before transaction costs) of new capital during the IPO held in
October 2013. Moody's believes that the new capital should
materially reinforce the bank's capital position (the bank's
equity as at end-June 2013 -- totaled US$356 million). As of H1
2013, the bank reported strong Tier 1 and total capital adequacy
ratios of 15.0% and 22.0%, respectively, under Basel III, and the
rating agency believes that these ratios should further improve
following the IPO.

At the same time, Moody's expects the trend of rapid loan growth
will dilute these capital ratios in the next 12 to 18 months as
Tinkoff.Credit Systems' profitability -- albeit remaining
robust -- is normalizing at lower levels. In H1 2013, the bank
reported a still robust (but declining) return on average assets
of 6.9% (year-end 2012: 8.3%; year-end 2011: 10.8%), and return
on equity of 48.5% (year-end 2012: 59.5%; year-end 2011: 87.2%).
Moody's expects the bank's profitability to normalize at a level
lower than the bank's targeted loan growth, because of the
growing credit risks in the sector and the increasing
competition; therefore, the rating agency expects the currently
high capital ratios to revert to lower levels.

Moody's also notes Tinkoff.Credit Systems' high share of
wholesale funding and internet deposits that render the bank
vulnerable to potential periods of liquidity squeeze. Although
the bank has successfully diversified and lengthened its funding
base over the past two years, thereby enhancing the
sustainability of its resource base, the share of wholesale
funding remains high at around 50% of total non-equity funding at
H1 2013. Another major source of funding -- internet deposits --
has not yet been tested by liquidity shocks; therefore its
potential volatility remains highly unpredictable.

What Could Move The Ratings Up/Down:

The upgrade potential of Tinkoff.Credit Systems' ratings is
limited in the next 12 to 18 months given the bank's rapid growth
strategy amid the deteriorating operating environment. The bank's
ratings might be adversely affected if the bank's strategy of
rapid growth leads to deterioration of its financial

Headquartered in Moscow, Russia, Tinkoff.Credit Systems reported
total (unaudited IFRS) assets of US$2.4 billion and shareholder
equity of US$356 million at June 30, 2013. For the first six
months of 2013, the bank earned a net income of US$79 million.


LA SEDA BARCELONA: Gets Court Approval to Sell Artenius Plants
Richard Higgs at reports that La Seda de
Barcelona has been given the green light by the Spanish
commercial court hearing its insolvency case to put up for sale
two of its plants in Spain.

According to the report, the Barcelona-based group had applied to
dispose of its 170,000 tpa Artenius Espana PET operation at
El Prat de Llobregat near Barcelona and the chemicals plant of
Industrias Quimicas Asociadas LSB (IQA) in Tarragona. relates that LSB and its Madrid-based
insolvency administrator Forest Partners Estrada y Asociados,
SLP, can now initiate the sale process by inviting bidders to
acquire the operations. But their actual sale will still be
subject to the court's approval and a favourable report from the
administrator, according to an LSB statement.

LSB, on October 28, also won the commercial court's consent to
begin the process of selling off another non-core asset, its
share of Artenius TurkPET of Adana in Turkey which operates a
130,000 tpa PET plant, relays. recalls that LSB announced that its
Italian subsidiary, Artenius Italia SpA requested the opening of
secondary insolvency proceedings under Italian law, a move agreed
by both LSB and the group's Spanish Madrid-based insolvency
administrator Forest Partners Estrada y Asociados SLP.

As reported in the Troubled Company Reporter-Europe on July 19,
2013, Plasteurope said the commercial court in Barcelona
overseeing the bankruptcy proceedings of La Seda and its 12
subsidiaries has appointed auditing and consulting firm Mazars
Financial Advisory as insolvency administrator.

The company filed a voluntary insolvency petition on June 17
after its restructuring and refinancing plans failed to reach
approval of 75% of shareholders, Plasteurope related.

La Seda de Barcelona is a Spanish plastics bottle maker.  The
Catalonia-based company makes bottles in Europe, Turkey and North

PYMES SANTANDER 7: Moody's Rates Serie C Notes '(P)Ca(sf)'
Moody's Investors Service has assigned the following provisional
ratings to the debts to be issued by Fondo de Titulizacion de
Activos PYMES Santander 7 (the Fondo):

EUR1360M Serie A Notes, Assigned (P)A3 (sf)

EUR340M Serie B Notes, Assigned (P)Ba1 (sf)

EUR340M Serie C Notes, Assigned (P)Ca (sf)

Fta Pymes Santander 7 is a securitization of standard loans and
credit lines granted by Banco Santander S.A. (Spain) (Baa2/P-2;
Negative Outlook) to small and medium-sized enterprises (SMEs)
and self-employed individuals.

At closing, the Fondo -- a newly formed limited-liability entity
incorporated under the laws of Spain -- will issue three series
of rated notes. Banco Santander S.A. (Spain) will act as servicer
of the loans and credit lines for the Fondo, while Santander de
Titulizacion, S.G.F.T., S.A. will be the management company
(Gestora) of the Fondo.

Ratings Rationale:

As of October 2013, the audited provisional asset pool of
underlying assets was composed of a portfolio of 25,958 contracts
granted to SMEs and self-employed individuals located in Spain.
In terms of outstanding amounts, around 45.4% corresponds to
standard loans and 54.6% to credit lines. The assets were
originated mainly between 2011 and 2013 and have a weighted
average seasoning of 2.8 years and a weighted average remaining
term of 2.3 years. Around 2.8% of the portfolio is secured by
first-lien mortgage guarantees. Geographically, the pool is
concentrated mostly in Catalonia (22.3%), Madrid (19.9%) and
Andalusia (11.3%). At closing, any loans in arrears and exceeded
credit lines will be excluded from the final pool.

In Moody's view, the strong credit positive features of this deal
include, among others: (i) a relatively short weighted average
life of around 1.5 years; (ii) a granular pool (the effective
number of obligors over 600); and (iii) a geographically well-
diversified portfolio. However, the transaction has several
challenging features: (i) a strong linkage to Banco Santander
S.A. (Spain) related to its originator, servicer, accounts holder
and liquidity line provider roles; (ii) no interest rate hedge
mechanism in place; and (iii) a complex mechanism that allows the
Fondo to compensate (daily) the increase on the disposed amount
of certain credit lines with the decrease of the disposed amount
from other lines, and/or the amortization of the standard loans.
These characteristics were reflected in Moody's analysis and
provisional ratings, where several simulations tested the
available credit enhancement and 20% reserve fund to cover
potential shortfalls in interest or principal envisioned in the
transaction structure.

The ratings are primarily based on the credit quality of the
portfolio, its diversity, the structural features of the
transaction and its legal integrity.

In its quantitative assessment, Moody's assumed a mean default
rate of 9.1%, with a coefficient of variation of 70% and a
recovery rate of 35.0%. Moody's also tested other set of
assumptions under its Parameter Sensitivities analysis. For
instance, if the assumed default probability of 9.1% used in
determining the initial rating was changed to 11.83% and the
recovery rate of 35% was changed to 25%, the model-indicated
rating for Serie A, Serie B and Serie C of A3(sf), Ba1(sf) and
Ca(sf) would be Baa2(sf), Ba3(sf) and Ca(sf) respectively. For
more details, please refer to the full Parameter Sensitivity
analysis to be included in the New Issue Report of this

The global V Score for this transaction is Medium/High, which is
in line with the score assigned for the Spanish SME sector and
representative of the volatility and uncertainty in the Spanish
SME sector. V-Scores are a relative assessment of the quality of
available credit information and of the degree of dependence on
various assumptions used in determining the rating. The main
source of uncertainty in the analysis relate to the Transaction
Complexity. This element has been assigned a Medium/High V-Score,
as opposed to Medium assignment for the sector V-Score. For more
information, the V-Score has been assigned accordingly to the
report "V Scores and Parameter Sensitivities in the EMEA Small-
to-Medium Enterprise ABS Sector" published in June 2009.

In rating this transaction, Moody's used ABSROM to model the cash
flows and determine the loss for each tranche. The cash flow
model evaluates all default scenarios that are then weighted
considering the probabilities of the Inverse Normal distribution
assumed for the portfolio default rate. On the recovery side
Moody's assumes a stochastic (normal) recovery distribution which
is correlated to the default distribution. In each default
scenario, the corresponding loss for each class of notes is
calculated given the incoming cash flows from the assets and the
outgoing payments to third parties and noteholders. Therefore,
the expected loss or EL for each tranche is the sum product of
(i) the probability of occurrence of each default scenario; and
(ii) the loss derived from the cash flow model in each default
scenario for each tranche.

Therefore, Moody's analysis encompasses the assessment of stress


NUANCE GROUP: Moody's Assigns First-Time 'B2' CFR; Outlook Stable
Moody's Investors Service has assigned a first-time B2 corporate
family rating (CFR) and B2-PD Probability of Default Rating (PDR)
to the Nuance Group AG.

"The assigned B2 corporate family rating balances Moody's
assessment of the company's high adjusted leverage and exposure
to spending in the unpredictable travel global industry, with the
company's strong position within the airport duty free shopping
segment, and strong track record of renewing existing and winning
new concession contracts from airport authorities," says Richard
Morawetz, a Moody's Vice President - Senior Credit Officer and
lead analyst for Nuance.

At the same time, Moody's has assigned a provisional (P)B2 rating
with loss given default (LGD) 4 to the upcoming senior secured
EUR200 million notes due 2019 to be issued at Stampos B.V, a
wholly-owned subsidiary of the Nuance Group.

The outlook on all ratings is stable.

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

Ratings Rationale:

  -- Corporate Family Rating And Probability Of Default Rating:

In Moody's view, the key constraints to Nuance's B2 CFR are its
high leverage, adjusted for its high level of concession fees,
and Moody's expectation that the company's ongoing growth
strategy to win new concessions will likely impede any real
reduction in leverage in coming years. Moody's considers the
concession fees paid to airport authorities as a proxy for rental
costs, and in 2012 these amounted to around 36.8% of the group's
total revenues and 72.5% of selling expenses, as reported by the

Moody's notes that concession fees are largely variable, and as
such help to mitigate the effect of a decline in passenger
numbers or spending. At the same time, most concession contracts
are subject to minimum annual guarantees (MAG), which are payable
if revenues or passenger numbers fall below a certain agreed
level. The company states that this only occurs in rare
instances, and is currently the case in Australia, a market which
the company is re-evaluating. Nevertheless, as a result of the
Australian operations, and the loss of two significant contracts
in Hong Kong, the company's reported EBITDA declined in the first
half of 2013 (CHF28.8 million versus CHF44.1 million year-on-
year), and Moody's expects that full-year profits will likely be
lower than in 2012 as well.

The B2 CFR is supported by Moody's view that over the longer
term, the international travel industry offers decent growth
prospects, mostly in emerging markets, which are strategic growth
markets for the company. The industry is vulnerable to
disruptions in international air travel, although these tend to
be temporary and often regional. In this regard, the company
benefits to some degree from its geographic scope, with 2012
revenues largely generated in EMEA and Asia/Pacific, with a small
exposure to the Americas. Moody's also believes that the company
has demonstrated a strong track record of both renewing existing
concession contracts or winning new ones, with the company
reporting having renewed 20 out of 27 of the contracts for which
it submitted an offer during the two and a half years ended 31
May 2013, while winning 24 out of 50 of new concessions for which
it submitted an offer. Moody's believes that some of these
benefits stem from being an incumbent, as in certain cases the
renewal is won without a tender process taking place.

  -- Provisional (P)B2 Rating Of Senior Secured Notes

The B2 CFR and B2-PD probability of default rating (PDR) are
assigned at the Nuance Group AG, which is also the borrower of
the revolving credit facility (RCF) and the guarantee facility.
The EUR200 senior secured notes are borrowed at Stampos B.V., a
wholly owned subsidiary of the Nuance Group. The (P) B2 rating
(LGD4) assigned to the notes, at the same level as the CFR,
reflects their positioning within the debt capital structure, but
also the relatively weak guarantee structure for the notes. Under
the terms of an inter-creditor agreement, the notes (EUR200
million, or CHF247 million) and the RCF (CHF90 million) are
expected to rank pari passu with each other, and be senior to the
existing shareholder loan (CHF111 million as of June 2013) within
the debt capital structure. The notes and the RCF will be secured
on pledges of the share capital and bank accounts of the issuer
and certain subsidiaries of the group. The notes also will be
guaranteed, on a pari passu basis, by guarantors which are
expected to make up 46% of revenues, 59% of assets, and 12% of
EBITDA of the group excluding Australia, which Moody's believes
is a low proportion of guarantors. The comparatively low
percentage of EBITDA reflects the high level of EBITDA
contribution from the Turkish operations, which will not be
guarantors. As such, both the notes and the RCF will be
subordinated to debt and non-debt liabilities at the Turkish
subsidiaries, although the proceeds from the notes issuance are
expected to be used to redeem all outstanding group debt. The
notes and RCF will have a pledge on the shares of New Swiss
Holdco, a holding company which will own the shares of the
Turkish operations. Under the terms of an inter-creditor
agreement, the Notes and Credit Facilities will rank equally in
the application of proceeds in the event of an enforcement of

In terms of the capital structure, Moody's notes that the credit
facilities agreement will also include a separate commitment of
CHF330 million to be used as bank guarantees to airport
authorities when the company enters into a concession contract.
These drawings are not included within the company's reported
debt, but retain equal priority in terms of ranking with the
general purpose RCF. The guarantees would be callable by the
airport in case of a failure by Nuance to pay a concession fee,
although Moody's understands that this has never occurred.

The notes will be used to repay existing debt of approximately
CHF238 million and certain transaction costs, while the cash
balance will be augmented. On this basis, following this
transaction and based on results to June 30, 2013, the company's
pro forma gross adjusted leverage is estimated at approximately
5.7x. Moody's notes that this metric mainly reflects the
company's significant concession fees (CHF725 million in 2012),
which Moody's views as a proxy for rental expenses. Moody's has
used a 6x multiple to capitalise concession fees as opposed to
the standard 8x used in the retail sector as the rating agency
understands that the fees cover certain operating expenses that
are not strictly related to space.

Moody's expects that the company's liquidity will be adequate.
Upon closing of the transaction, the company will retain
approximately CHF112 million in cash, and an undrawn RCF in the
amount of CHF90 million maturing in 2019 for general corporate
purposes. Moody's assessment of liquidity assumes that the
company will retain access to the RCF, and strong headroom under
applicable covenants. On the basis that the notes (and the
longer-dated shareholder loans) will represent the company's only
outstanding debt liabilities, the company is not expected to hold
any short-term debt immediately post transaction. The company's
capital spending is limited by the fact that all its store space
is paid for with concession fees. The company has usually
generated positive free cash flow in recent years, although this
can fluctuate depending on the level of new concessions that are

Rationale For The Stable Outlook:

The stable outlook reflects Moody's expectation that the company
will maintain metrics close to the current level, notably gross
adjusted leverage at around 5.7x, which also assumes an eventual
turnaround to profitability in Australia or an exit from that
country, as per the current management strategy. Given the
significance of concession fees in Moody's metrics, Moody's
believes that the stability of metrics will also depend on the
flexibility of concession fees to adapt to spending patterns.
Moody's stable outlook also assumes a strong liquidity profile
and continued access to the RCF.

What Could Change The Rating Up/Down:

In light of the current positioning and the weakening in earnings
in the first half of 2013, upward pressure on the rating is
unlikely, at least over the coming year. Moody's would consider
upward pressure on the rating if Nuance were to reduce its gross
adjusted leverage towards 5x. Conversely, downward rating
pressure could arise if the leverage metric were to increase
beyond 6.0x, which Moody's believes could occur either as a
result of lower travel spending or less favorable terms for
concession contracts.

The Nuance Group AG, based in Glattbrugg, Switzerland, is a
leading travel retailer with over 300 stores across 64 locations
in 18 countries. In FY2012 to December, the company reported
revenues and EBITDA of about CHF2 billion and CHF116 million,
respectively, with sales generated in the EMEA (39%), Asia (30%),
Australia (21%) and North America (7%).


FERREXPO PLC: S&P Lowers CCR to 'B-'; Outlook Negative
Standard & Poor's Ratings Services said it had lowered its long-
term foreign currency corporate credit rating on Ukraine-based
iron ore pellet producer Ferrexpo PLC to 'B-' from 'B'.  At the
same time, S&P affirmed the long-term local currency corporate
credit rating at 'B'.  The outlook on both ratings is negative.

S&P has also affirmed its 'B' short-term corporate credit ratings
on Ferrexpo.

In line with the downgrade, S&P lowered its ratings on Ferrexpo's
senior unsecured notes to 'B-'.  The recovery rating on the notes
is unchanged at '3', indicating S&P's expectation of meaningful
(50%-70%) recovery in the event of a payment default.

The downgrade follows that of Ukraine and our downward revision
of the country's T&C assessment to 'B-,' taking into account that
Ferrexpo's core assets are concentrated in Ukraine.  The revised
T&C assessment constrains the foreign currency rating on Ferrexpo
because of the likelihood of increased repatriation restrictions
and, more generally, negative sovereign interaction.  This may
include further delays in Ferrexpo's receipt of value-added tax
(VAT) refunds.  The affirmation of the local currency ratings
reflect Ferrexpo's stand-alone credit quality, excluding T&C-
related risks.

The ratings continue to reflect S&P's assessment of Ferrexpo's
"weak" business risk profile and "aggressive" financial risk
profile, as S&P's our criteria define these terms.

On the one hand, S&P thinks that weakening sovereign credit
quality could expose Ferrexpo to several risks that include
potential restrictions on transfer of funds outside Ukraine, more
stringent currency controls, and more delays on VAT refunds.
More generally, S&P also sees the risk of increased fiscal
pressure and lower access to financial markets for Ukrainian
corporations. Although Ferrexpo exports virtually all iron-ore
production, S&P thinks that it is not sheltered from these risks,
as shown by the accumulation of US$0.3 billion in overdue VAT

On the other hand, S&P notes that Ferrexpo does not have a
material amount of debt maturing in the next 12 months besides
the amortization payments under the US$420 million PXF from
September 2014, which S&P expects the company to address with
timely refinancing.  S&P also notes that as of Sept. 30, 2013,
Ferrexpo had more than US$200 million in cash held outside of
Ukraine at Western banks, and the equivalent of about US$130
million in Ukraine, mostly denominated in U.S. dollars.  S&P
thinks that large cash balances outside of Ukraine and prudent
financial discipline favorably distinguish Ferrexpo from many
other Ukrainian companies we rate.

"Under our base case, we expect Ferrexpo to show satisfactory
operating performance in 2013, and forecast its EBITDA at about
US$460 million, after the US$240 million achieved in the first
half of the year.  The company is on track for increasing pellet
production to 12 million tons by 2014 after the Yeristovo mine
ramps up.  We think that cash cost inflation in 2014 will be
partly offset by better fixed- and freight-cost absorption on
higher production volumes. We therefore anticipate EBITDA of
US$350 million-US$400 million in 2014, assuming however a lower
benchmark iron ore price of US$110 per tonne (compared with an
average US$135 per tonne so far this year)," S&P said.

S&P expects the ratio of adjusted net debt to EBITDA to remain
close to 2.0x in 2013-2014 and factor in prudent financial
management.  Consequently, S&P expects the company to adjust its
capital expenditure (capex) to market conditions and the
availability of adequate funding, thereby limiting the amount of
negative free operating cash flow in 2013 and 2014.

The negative outlook takes into account S&P's negative outlook on
Ukraine and reflects the possibility of a further downgrade in
the next 12 months should there be tighter currency controls,
more restrictions on transfer of funds, rising political or
fiscal pressures, a risk of a further increase in VAT
receivables, or liquidity becoming less than adequate.

However, if S&P lowered its ratings on Ukraine further and
revised the T&C assessment downward, this would not automatically
result in a downgrade of Ferrexpo if the company were able to
show resilience to country-specific factors, including the risk
of stricter currency restrictions.

S&P would revise the outlook to stable if the situation in
Ukraine stabilized and S&P saw lower risk related to currency
controls, repatriation requirements, and VAT refunds.  Any rating
upside is closely related to positive rating actions on the

U N I T E D   K I N G D O M

CO-OPERATIVE BANK: Finance Director on Temporary Contract
Harry Wilson at The Telegraph reports that John Baines, finance
director of the Co-op Bank, is still employed on a temporary
contract through his own consulting firm six months after joining
the troubled lender.

The Co-op has yet to find a permanent finance director for its
troubled banking arm as it attempts to complete a GBP1.5 billion
capital raising, The Telegraph discloses.

According to The Telegraph, John Baines, the interim finance
director of the Co-op Bank, had his temporary six-month contract
renewed until April last month.

The bank has no active plans to replace Mr. Baines, but is
expected to consider appointing a permanent finance director when
his contract comes up for renewal, The Telegraph notes.

The need to find a permanent successor is likely to be among the
Co-op Bank's first tasks when it completes its capital raising
that will leave the Co-op with a 30pc holding in the business,
The Telegraph says.

The Co-op has said it will list the bank on the stock market next
year and it would be extremely unlikely this could happen without
a permanent finance director, The Telegraph relates.

Bondholders, including several US hedge funds, are set to take
control of the Co-op Bank as its converts GBP1.06 billion of debt
into an equity stake in the lender, as well as providing a
further GBP125 million through a rights issue, The Telegraph

According to The Telegraph, the Co-op Bank has not ruled out
asking its investors for more money and Niall Booker, the
lender's chief executive, said on Monday that the hedge funds had
"deep pockets".

"Were we to need more capital to grow in the future, you could
argue the funds are a better source than the Co-op Group," The
Telegraph quotes Mr. Booker as saying.

                     About Co-operative Bank

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

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

                           *     *     *

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

ENTRY FUNDING: Fitch Cuts Rating on Outstanding Notes to 'Dsf'
Fitch Ratings has published the November edition of its SME CLO
Compare. The report is updated on a monthly basis.

On October 14, 2013, Fitch reviewed the ratings of two
transactions, Entry Funding No.1 Plc and BBVA Empresas 5, F.T.A.

Fitch downgraded all of Entry Funding No.1 Plc's outstanding
notes to 'Dsf' and subsequently withdrew the ratings. The
downgrade resulted from the fact that the notes were not fully
repaid by their legal maturity on 29 September 2013. The notes
were rated 'Csf' prior to the review.

Fitch affirmed BBVA Empresas 5, F.T.A.'s class A and Class B
notes. The affirmation of the class A and class B reflected the
increase in credit enhancement due to deleveraging of the
underlying portfolio. Class A notes' CE has increased to 93.5%
from 70.1% as of the previous annual review. The class B rating
is limited by the transaction's exposure to Banco Bilbao Vizcaya
Argentaria (BBVA; 'BBB+'/Negative/'F2') as the available CE is
provided by the cash reserve deposited at BBVA.

On October 21, GAT FTGENCAT 2005 was called and all the notes
were paid in full.

On October 15, Fitch released a report titled "European SME CLO
Performance Tracker" where we said that the SME CLOs continued to
see deteriorating asset performance since June 2012. Arrear
levels remain elevated in the periphery. In Italy, they have
increased significantly since 2011 and continued to rise. The
migration trend of performing loans based on Italian banks'
internal rating system is showing a significant migration to
lower rating categories.

The report also highlighted that despite the placement of two SME
CLO transactions this year most banks in Spain and Italy find it
more beneficial to retain SME CLOs and use them for repo funding
with the ECB. In addition funding support from UK and French
central banks has removed the incentive to structure SME CLO
securitisations for ECB repo financing. In Germany, Commerzbank
AG issued the first European covered bond backed entirely by
SMEs. The bond is a direct obligation of Commerzbank and the
first bond was issued with a fixed coupon of 1.5% per annum.

As part of the "SME Market Review" series, on 4 October, Fitch
published German small and medium enterprises (SMEs) market
review in a report titled "SME Market Review - Germany". German
banks, like their European peers, reduced lending to SMEs in 2009
and almost 50% of SMEs reported restricted access to credit.
However, the percentage soon dropped to pre-crisis levels in 2010
and has stayed low since. Post crisis, SMEs took advantage of low
interest rates, continuing to deleverage and improve equity

Fitch published another report as part of the "SME Market Review"
series on October 24, 2014, "SME Funding Across Europe" where we
compared SME funding in Italy, Spain, Germany and the UK. We
noted that post the credit crisis, with the exception of Germany
all the other countries mentioned underwent credit contraction.
Additionally the loan interest margins for SMEs in Spain and
Italy have increased gradually over the past two years due to
increased funding costs of banks on the periphery while on the
other hand German SMEs now have the lowest loan interest rates
over the past decade. Alternative funding sources remain limited
and SMEs continue to rely on bank loans as the mains source of
external financing.

PHOENIX PUB: Calls in Administrators, Removes Stocks
Southport Visiter reports that The Phoenix pub in Southport
closed as it suddenly went into administration.

The pub on Coronation Walk had been due to host a Halloween party
but administrators arrived on October 31 and began removing
stock, according to Southport Visiter.

Peter Saville -- ; Kevin Coates -- ; and Anne O'Keefe -- , partners at advisory and restructuring
specialists Zolfo Cooper, were appointed joint administrators
over Bramwell Pubs and Bars Limited.

The group operates 185 pubs and bars across the UK and employs
approximately 3,300 staff across all sites.

The report notes that the administrators were called in as a
result of the group experiencing cash flow problems due to the
current challenging economic environment.

Following the appointment, the joint administrators will continue
to trade the majority of the estate while exploring a range of
options including the sale of parts of the business as a going
concern, the report relates.

The report notes that Peter Saville, Partner at Zolfo Cooper
said: "We will continue to trade the business while exploring all
possible options for its future including a sale of the business
. . . .  We'd like to thank the staff for their continued support
and professionalism during this process."

PUNCH TAVERNS: Fitch Maintains 'CCC' Ratings on 3 Note Classes
Fitch Ratings has maintained Punch Taverns Finance B Ltd's notes
on Rating Watch Negative (RWN) pending further announcements
regarding the potential debt restructuring.

Key Rating Drivers:

The maintained RWN reflects the continuing decline in performance
of Punch B's estate in line with Fitch's base case (despite an
apparent slowdown in deterioration) as well as limited scope for
operational changes. All notes have been on RWN since February
2013 in light of the potential debt restructuring. The timing of
the process remains unclear. However, Punch Taverns plc (Plc)
believes that a restructuring could be launched in Q413 with
further details expected in the first week of December. The
company announcement on 4 November indicated conflicting views
among stakeholder meaning that a consensual restructuring appears

FY13 EBITDA (for the year ending on August 17, 2013, and
excluding Plc's financial support) has continued to fall year-on-
year in line with Fitch's base case by 6.9% to GBP84.4 million,
whilst EBITDA margin's erosion has halted, even improving
slightly to 47.5% (but remains far from its level four years ago
of 54.6%). As anticipated, this decline in EBITDA is mainly due
to continuing like-for-like decline in net income (with the
better performing core estate representing c. 66% of Punch B
total estate still falling at a rate of 2.4% despite improving
trends) and the disposal of mainly weaker pubs (the annual
average number being down by 8.9%).

Under Fitch's base case, FY14 EBITDA (without Plc financial
support) is expected to further decline by around 6% to just
below GBP80 million, with 2013-2035 EBITDA CAGR being 0.2%. This
decline is driven mainly by the annualized effect of the pubs'
disposals, lower beer and rental income (as their readjustments
continue, albeit at a lower scale) and increased operating costs.
The agency does not view Plc's financial support as being
sustainable given its high net cost, which amounted to GBP23
million in FY13 (up by c. 10%) for both Punch A and B
securitizations, leaving only GBP58 million of cash at Plc level
(and GBP55 million of excess cash at Punch B level). Overall, in
FY13 Punch B has benefited from GBP43.4 million of financial
support from Plc (up by 6.1%), of which GBP13 million was not
recouped by Plc. This gross support represents 34.0% of the
GBP127.8 million reported EBITDA, and, without it, both the RPC
and the EBITDA DSCR default covenant of 1.25x would have been
breached since Q1FY11.

Fitch's updated base case free cash flow (FCF) DSCRs (minimum of
both Fitch's base case average and median DSCR to legal final
maturity of the notes) have broadly stabilized with the class B
and C notes remaining at around 0.8x whereas the class A notes'
FCF DSCR has increased due to technical reasons by 0.2x to 1.4x.
The apparent improvement of the class A notes' DSCR is due to the
nature of its amortization profile, which is front loaded from
now until 2022, reducing significantly thereafter with a long
tail period of 12 years. However, given the weak nature of
Punch's operations and the significant amount of debt service to
which the class A notes is exposed between now and August 2022
(with Fitch's base case FCF DSCR fluctuating around 0.9x), the
class A notes remain highly speculative (in the 'B' category

Despite the current debt amortization, the combined effect of
both the declining EBITDA and abandoning the notes' prepayments
in favor of increased capex (up by c. 30% to GBP21.2 million),
has resulted in an increase in net leverage to levels viewed as
substantially too high, in particular for the class B and C
notes. Net EBITDA leverage now stands at 6.4x (up by 0.1x) for
the class A notes, and at 8.3x (up by 0.2x) and 9.8x (0.3x) for
the class B and C notes, respectively.

Rating Sensitivities:

The transaction's ratings are currently on RWN due to the
upcoming restructuring. The outcome of this debt restructuring
could have an impact on the ratings. The ratings could also be
adversely affected if Punch B's estate performance falls
materially short of Fitch's base case or if there was an early
reduction/discontinuation of the parent support leading to an
event of default under the issuer borrower loan agreement.

Summary of Credit:

Punch B is a whole business securitization of 1,715 leased and
tenanted pubs located across the UK and owned by Punch Taverns

The rating actions are as follows:

  Class A3 GBP166.8m fixed-rate notes due 2022: 'B+'; maintained
  on RWN

  Class A6 GBP220.0m fixed-rate notes due 2024: 'B+'; maintained
  on RWN

  Class A7 GBP165.1m fixed-rate notes due 2033: 'B+'; maintained
  on RWN

  Class A8 GBP46.3m floating-rate notes due 2033: 'B+';
  maintained on RWN

  Class B1 GBP61.5m fixed-rate notes due 2025: 'CCC'; maintained
  on RWN

  Class B2 GBP99.4m fixed-rate notes due 2028: 'CCC'; maintained
  on RWN

  Class C1 GBP125.0m floating-rate notes due 2035: 'CCC';
  maintained on RWN

PUNCH TAVERNS: Fitch Cuts Ratings on Two Note Classes to 'BB+'
Fitch Ratings has downgraded Punch Taverns Finance Plc's class A
notes. All notes remain on Rating Watch Negative (RWN) pending
further announcements regarding the potential debt restructuring.

Key Rating Drivers:

The rating actions are driven by further declines in business
performance (despite some signs of a slowing rate of decline) as
well as limited scope for operational change.

All tranches have been on RWN since February 2013 in light of the
potential debt restructuring. The timing of the process remains
unclear. However, Punch Taverns believes that a restructuring
could be launched in Q413 with further details expected in the
first week of December. The company announcement on 4 November
indicated conflicting views among stakeholders meaning that a
consensual restructuring appears challenging.

The transaction's performance has continued to deteriorate, as
evidenced by the decline in operating profit and resulting
coverage (rolling two quarter EBITDA DSCR down to 1.36x
(unsupported 1.04x compared with a financial covenant of 1.25x)).
Performance has not yet leveled out, as indicated by like-for-
like net income from Punch Taverns Plc's (Plc) core estate, which
is a good proxy for Punch A's core estate, dropping by 2.4% (vs.
3.7% decline in FY12). This is mainly driven by pubs not held on
substantive agreements (5% of Plc's core and 47% of Plc's non-
core estate). However, in Q4FY13 Punch registered the first like-
for-like net income increase (0.4% quarter-on-quarter) in its
core estate since 2008 (although this was aided by good weather
during the July/August period).

EBITDA per pub has improved by 2.3% over the past four quarters
(compared with the flat performance on this metric last year).
This was heavily influenced by the borrower's disposal program,
which focuses on selling poorly performing pubs from Punch's non-
core estate. Consequently, the estate's total EBITDA has declined
by 6.9%. The agency expects that continued pressure, on both
revenues with notably the on-going declines in beer volume and
rebasing of the rent charged to the tenants as well as costs,
should continue to curtail EBITDA on a like-for-like basis.

Fitch's free cash flow (FCF) forecasts only give credit to
unsupported operating cash flows. The agency forecasts DSCRs will
be strained by further declining EBITDA/FCF as well as increasing
debt service after 2015. The agency's base case FCF DSCR (minimum
of both the average and median DSCRs to the notes' legal final
maturity) for the class A, M, B, C and D notes is c. 1.3x, 1.1x,
0.85x, 0.8x and 0.8x, respectively. The agency forecasts that
FY14 EBITDA could drop by another c. 6.5%. The EBITDA decline is
mainly driven by the annualized effect of the pub disposals,
lower rental and machine income and increased operating costs.
FCF is forecast to decline slightly more than EBITDA as tenants
are expected to struggle to fully contribute to capex and
potentially more tenants moving to shorter tenancy agreements,
which involve Punch carrying out the majority of repairs to the

Further asset disposals, potential debt prepayments or re-
profiling could have a material impact on the assumptions and
DSCRs. Additionally, with regards to the forecast of FCF (after-
tax), Fitch understands that the interest expense incurred due to
the subordinated loan funding (GBP1,146 million) is fully tax-
deductible and is therefore functioning as an efficient tax

Following the sale of 248 pubs, mainly from the borrower's non-
core estate, the net debt-to-EBITDA multiples including swap
mark-to-market (4.1x/7.8x/10x/10.6x/11.3x for classes A/M/B/C/D,
respectively) deteriorated despite further cash accumulation
within Punch A. Apart from accumulating cash within the
securitization, disposal proceeds were invested in capex,
predominantly in the core estate.

Rating Sensitivities:

The transaction's ratings are currently on RWN due to the
upcoming restructuring. The outcome of this debt restructuring
could have an impact on the ratings. The ratings could also be
adversely affected if Punch A's performance falls materially
short of Fitch's base case or if there was an early
reduction/discontinuation of the parent support leading to an
event of default under the issuer borrower loan agreement.

Summary of Credit:

Punch A is a whole business securitization of 2,356 leased and
tenanted pubs across the UK owned by Punch Taverns Group.

The rating actions are as follows:

  GBP270.0m class A1(R) fixed-rate notes due 2022: downgraded to
  'BB+' from 'BBB-'; on RWN

  GBP210.9m class A2(R) fixed-rate notes due 2020: downgraded to
  'BB+' from 'BBB-'; on RWN

  GBP103.3m class M1 fixed-rate notes due 2026: 'B'; maintained
  on RWN

  GBP398.7m class M2(N) floating-rate notes due 2029: 'B';
  maintained on RWN

  GBP79.5m class B1 fixed-rate notes due 2026: 'CCC'; maintained
  on RWN

  GBP83.7m class B2 fixed-rate notes due 2029: : 'CCC';
  maintained on RWN

  GBP134m class B3 floating-rate notes due 2031: 'CCC';
  maintained on RWN

  GBP85.1m class C(R) fixed-rate notes due 2033: 'CCC';
  maintained on RWN

  GBP83.8m class D1 floating-rate notes 2032: 'CCC'; maintained
  on RWN

ROYAL BANK: Fitch Says Restructuring Partly Reduces Tails Risks
The plan to reshape Royal Bank of Scotland's non-core division
into an internal bad bank and embark on another, much accelerated
restructuring, will crystallise substantial loan impairment
charges in Q413, but will reduce some of the tail risks for the
bank, Fitch Ratings says. This could ultimately be positive for
RBS's Viability Rating. Nonetheless, tail risks still exist for
litigation and conduct costs relating to legacy businesses.

The creation of an internal bad bank does not entail any
immediate changes to group-level exposures. The size of the
internal bad bank will also be the same as the current non-core
division in net terms (around GBP38 billion net of GBP12 billion
of impairment reserves when the unit is created in January 2014).
However, the assets will change in composition and risk-weighted
assets will be higher than now at around GBP116 billion compared
to the risk-weighted assets in the non-core division of around
GBP41 billion at end-Q313.

Retail and SME assets and low-yielding but low capital intensive
businesses, will be returned to the core division. Structured
products, additional non-performing corporate and commercial real
estate loans will be moved to the internal bad bank. The assets
being transferred to the bad bank are more capital intensive than
the assets now in the non-core division, so the reshaped unit
will account for around 5% of the group's loans but 20% of its

There will now be a more aggressive run-down strategy that
reduces the internal bad bank's assets by 55%-75% in the first
two years and by 85%-100% by end-2016. The reduction of assets
with high risk-weights should lower capital buffers required by
the regulator as a result of stress tests. Overall the group's
'fully-loaded' Basel III common equity Tier 1 (FLBIII CET1) ratio
will not materially change as a result of the creation of the
internal bad bank. It is expected to fall only by around 10bp,
despite an additional GBP4.0 billion-GBP4.5 billion of impairment
charges to be taken in Q413 for reshaping this division. RBS
reported a FLBIII CET1 ratio of 9.1% for end-Q313 and now targets
a ratio of around 11% by end-2015 and over 12% by end-2016.

As previously announced, the bank is further shrinking its
markets business. It has also announced that it is divesting all
of its US Citizens operations, which no longer fits its new
focus. Although these will strengthen capital in the short to
medium term, they will also reduce the group's geographical and
business diversification.

The completion of the government's bad bank review reduces
political risks that have been elevated since the summer, but
does not entirely remove them. Also, the potential for
substantial litigation and conduct costs remains; for example,
they could arise from the mis-selling of US mortgage securities,
UK interest rate swaps and possibly a probe into foreign-exchange
trading. Any particularly disruptive, expensive and extended
reputational case or litigation could create negative ratings

There is also execution risk. But with five years of
restructuring already completed, during which time non-core
assets were reduced from GBP258 billion at end-2008 to GBP37
billion at end-Q313, Fitch believes the senior management team
has sufficient expertise to further derisk the group.
Nevertheless, shrinking the Irish commercial real estate book is
likely to be difficult until economic conditions improve.

The new chief executive has launched another strategic review, so
another round of restructuring cannot be ruled out.

TURBO FINANCE 4: Moody's Rates GBP11.3MM Class C Notes '(P)Ba1'
Moody's Investors Service has assigned the following provisional
ratings to notes to be issued by Turbo Finance 4 plc:

  -- (P)Aaa (sf) to GBP328.9m Class A Floating Rate Asset Backed
     Notes due 2020

  -- (P)A1 (sf) to GBP33.6m Class B Floating Rate Asset Backed
     Notes due 2020

  -- (P)Ba1 (sf) to GBP11.3m Class C Fixed Rate Asset Backed
     Notes due 2020

Moody's has not assigned ratings to the subordinated GBP 4.9
million Class D Notes. The proceeds of the Class D Notes are
applied to fund the reserve fund in the transaction.

Ratings Rationale:

The transaction is a revolving cash securitization of hire
purchase agreements extended to obligors in the United Kingdom by
MotoNovo Finance, a division of FirstRand Bank Limited ("FRB":
Baa1/P-2) acting through its London Branch ("FRB London"). This
is the fourth public securitization transaction in the United
Kingdom sponsored by FRB London. The originator will also act as
the servicer of the portfolio during the life of the transaction.

The portfolio of underlying assets consists of hire purchase
agreements granted to individuals and companies resident in the
United Kingdom collateralized by new and used vehicles. The
portfolio comprises receivables whereby the underlying obligor is
required to pay a monthly installment during the term of the
underlying contract. Certain hire purchase agreements in the
portfolio are also exposed to mandatory balloon payments,
although these make up a limited portion of the portfolio and are
limited to a maximum 4% by the eligibility criteria. As of 30
September 2013, the provisional portfolio consists of
approximately 55,000 hire purchase contracts. The leases were
originated after 2007, with a weighted average seasoning of 6
months and a weighted average remaining term of 45 months.

According to Moody's, the transaction benefits from credit
strengths such as a granular portfolio, relatively simple
waterfall and a 1.30% reserve fund which is fully funded at
closing and can amortize to a floor of 0.5% of the initial pool
balance. It is available to cover any liquidity shortfalls on
Classes A and B throughout the life of the transaction and credit
enhancement following repayment of the Class A and B notes. In
addition, the transaction benefits from an initial portfolio
yield of approx. 14% (minimum 13% during the revolving period)
and thus an estimated approximate 11% of excess spread at
closing. Available excess spread can be trapped to cover losses
through the waterfall mechanism present in the structure.

However, Moody's notes some credit weaknesses. As with all auto
hire purchase agreement transactions in the UK, the portfolio is
exposed to the risk of voluntary termination ("VT") by the
obligor if the obligor has made payments equal to at least one
half of the total amount which would have been payable under the
contract and returns the vehicle to the originator. Moody's did
not receive gross VT default data from the originator, but only
net VT default data (i.e. with recoveries included). In addition,
Moody's did not receive static recovery but only dynamic recovery
data for the entire portfolio. These aspects were factored in
Moody's overall analysis.

Furthermore, the Class C notes do not benefit from the cash
reserve until Classes A and B are repaid, and are subordinated to
principal payments due on Classes A and B due to their
subordinated position in the waterfall. Hence, this increases the
likelihood of interest deferral on the Class C notes. Moody's
treated this in its quantitative analysis.

Moody's analysis focused, among other factors, on (i) an
evaluation of the underlying portfolio; (ii) historical
performance information; (iii) the credit enhancement provided by
subordination, by the excess spread and the reserve fund; (v) the
liquidity support available in the transaction, by way of
principal to pay interest and the reserve fund; (vi) the back-up
servicing arrangement of the transaction; (viii) the independent
cash manager and (viii) the legal and structural integrity of the

Moody's assumed a gross loss rate of 4.0% for the entire pool,
which takes into account both defaults arising from normal
defaults by the obligors and losses arising from the exercise of
the obligor voluntary termination right. A coefficient of
variation of 50% is used as the other main input for Moody's cash
flow model ABSROM. Whilst the historical default rate for older
vintages showed default rates higher than the assumed gross loss
level, Moody's has given benefit to the lower default rate
observed in more recent vintages as a result of updated
underwriting methods used by the originator. Commingling risk and
set-off risk is assessed to be commensurate with the ratings
assigned on the Notes.

The V-score analysis for the transaction is Low/Medium. One
aspect of note is the assessment on the quality of historical
data received from the transaction parties. In addition, Moody's
has observed significant variability in the performance of
different origination vintages and assigned the Originator's
performance variability score Medium, above that of the sector
score for this asset class. For more information, the V-Score has
been assigned according to the report "V Scores and Parameter
Sensitivities in the Non-U.S. Vehicles ABS Sector", published in
January 2009.

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

Parameter sensitivities for this transaction have been calculated
in the following manner: Moody's tested 9 scenarios derived from
the combination of mean default: 4.0% (base case), 4.5% (base
case +0.5%), 5.0% (base case + 1%) and recovery rate: 40% (base
case), 35% (base case - 5%), 30% (base case - 10%). The 4.0% /
40% scenario would represent the base case assumptions used in
the initial rating process. At the time the rating was assigned,
the model output indicated that Class A would have achieved Aa1
even if mean default was as high as 5.0% with a recovery as low
as 30% (all other factors unchanged). Under the same assumptions,
the Class B would have achieved Baa1 and the Class C would have
achieved B1. Parameter sensitivities provide a quantitative,
model-indicated calculation of the number of notches that a
Moody's-rated structured finance security may vary if certain
input parameters used in the initial rating process differed. The
analysis assumes that the deal has not aged. It is not intended
to measure how the rating of the security might migrate over
time, but rather, how the initial rating of the tranches might
differ as certain key parameters vary. Therefore, Moody's
analysis encompasses the assessment of stress scenarios.

Moody's issues provisional ratings in advance of the final sale
of securities, but these ratings only represent Moody's
preliminary credit opinion. Upon a conclusive review of the
transaction and associated documentation, Moody's will endeavor
to assign definitive ratings to the Notes. A definitive rating
may differ from a provisional rating. Moody's will disseminate
the assignment of any definitive ratings through its Client
Service Desk.

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

ULTRALASE LIMITED: AOP Issues Advice After Administration
--------------------------------------------------------- reports that the AOP has been made aware that
laser eye surgery company Ultralase Limited has gone into

Responding promptly to calls from concerned members, the AOP is
reviewing the situation and has issued advice for members
affected by the closure, according to

The report relates that the advice includes a factsheet and
guidance on next steps, a copy of which is available at:


Ultralase operates 17 laser eye clinics across the UK.

WR REFRIGERATION: Cuts 232 Jobs Amid Administration
Western Daily Press reports that seventeen jobs have been lost in
Weston-super-Mare as a fridge repair firm has gone into
administration, making 232 posts redundant across the country.

Leicester-based WR Refrigeration was served with a winding-up
petition by Her Majesty's Revenue and Customs last month,
according to Western Daily Pre.

The report notes that administrators PricewaterhouseCoopers said
it was keeping 119 staff as it tries to sell off bits of the
business.  Most job losses came at Leicester, with others in
Ipswich, Dartford, Leeds and Cardiff. , Swansea, Belfast and East
Kilbride in Scotland.

The report notes that Eddie Williams, joint administrator, said:
"Unfortunately, the level of interest and support for the
remaining business means that we have no alternative than to
begin the wind down of the company . . . .  We have retained 119
employees to assist us and we will continue to explore options to
support the transfer of people to other service providers . . . .
I would like to thank all the employees for their cooperation
since our appointment and we will look to support them at this
difficult time."

Leicester-based WR Refrigeration is a fridge repair and servicing


EUROPE: EU Union Nations Remain Split Over Bank-Failure Plan
Jim Brunsden at Bloomberg News report that European Union nations
remain split over whether a planned euro-area system for handling
failing lenders should cover all banks in the currency bloc and
whether it should be backed by a central fund, with less than two
months until their deadline for reaching a common position.

Governments are also divided over whether the European
Commission, the bloc's executive and regulatory arm, should play
a decisive role in the Single Resolution Mechanism, Bloomberg
says, citing a draft document prepared by Lithuania, which holds
the EU's rotating presidency.

"A number of delegations consider that a potential conflict of
interest is inherent in the commission if it is granted
discretionary powers in the SRM context, as now foreseen,"
according to the note, prepared for a Nov. 7 meeting of national
ambassadors and obtained by Bloomberg News.  "Further political
guidance is necessary on the key open issues."

The bank-failure plan is part of a euro-area effort to break the
financial links between sovereigns and banks by centralizing
oversight and crisis management of failing lenders, Bloomberg
discloses.  The blueprint, presented in July by Michel Barnier,
the EU's financial-services chief, has met with a barrage of
complaints from governments, with Germany among those to have
expressed the strongest concerns, Bloomberg notes.

                     Parliamentary Election

Still, EU leaders reaffirmed last month that nations should agree
on a common stance on the plans by year-end, Bloomberg recounts.
The SRM, Bloomberg says, is designed to complement the European
Central Bank's supervision of euro-area lenders, which begins in
full in one year.  Policy makers are racing to reach a deal
before European Parliament elections in May, Bloomberg states.
The assembly's approval is needed for the bill to become law,
according to Bloomberg.

European finance ministers will discuss Mr. Barnier's proposal in
two days of talks in Brussels starting Nov. 14, Bloomberg

Bloomberg notes that while Mr. Barnier proposed that the SRM
should cover all euro-area banks, as well as those in other
nations that voluntarily sign up, he said in September that the
remit could be restricted to lenders with cross-border

                        Alternative Plan

Some nations are pushing to narrow the scope of the SRM,
Bloomberg says, citing the Lithuanian document.

According to Bloomberg, under an alternative blueprint, which has
only minority support, the SRM would cover banks that must be
overseen directly by the ECB under the oversight law already on
the books.  Bloomberg notes that the document said this would
limit the scope to "less than 150 banks, as currently estimated".

Also, while Mr. Barnier's proposal includes a central fund
equivalent to 1% of government-insured deposits held by euro-area
banks, a minority of countries want this be scrapped in favor of
a network of national funds that would join forces to deal with
failed cross-border banks, Bloomberg says.

* Fitch: Commodities, Autos, Telecoms Most Exposed to EM Slowdown
The EMEA commodities, autos and telecommunications sectors are
among the most exposed to weakening emerging-market (EM) growth,
according to the latest research from Fitch Ratings. Holcim,
Lafarge, Lanxess and Telecom Italia are a few of the major
European companies that are most vulnerable -- relative to their
peer groups -- to either slowing growth or rapid currency
devaluation in these markets.

Fitch believes the changes that EMEA corporates face in their
end-markets and their access to funding are evolutionary in
nature, rather than revolutionary, but there are significant
differences in the likely impact between sectors. For example,
natural resources companies may face a bigger impact because of
the importance of Chinese demand in setting prices across global
markets, although the effects are likely to be gradual.

The auto sector has benefited significantly from EM growth --
particularly in China, Latin America and Russia -- which has
compensated for falling demand in their home markets. A drop in
EM demand would hurt the sector in the short term, but long-term
growth prospects would remain bright due to the number of cars
per inhabitant -- which is still low. Similarly, EM divisions
have been a source of strong growth for EMEA telecom companies,
as their home markets have become increasingly competitive and
hit by recession. But EM markets are also starting to mature and
face rising competition, which could exacerbate the impact of
slower economic growth.

EM corporates that are exposed solely to emerging markets clearly
face greater risks than western European companies, especially
given the rise in funding costs and devaluation of many EM
currencies. They may therefore take steps to conserve cash as
market conditions weaken, for example through postponing
expansionary capex. EM companies with under-hedged positions may
be exposed to significant foreign-exchange risk. This is most
common among Turkish corporates, which also rely heavily on
short-term bank facilities for their funding.

A few of the companies highlighted as more vulnerable than their
direct peers include cement producers Holcim and Lafarge, due to
their exposure to the Indian and Middle East markets,
respectively. A downturn in the synthetic rubber market has
pushed up leverage at Lanxess, and there is little visibility as
to when demand and prices might recover in the Asian tyre sector.
Both Telecom Italia and Portugal Telecom are also more vulnerable
than Telefonica and Deutsche Telekom, due in part to their
exposure to the Brazilian market.

* BOOK REVIEW: A Legal History of Money in the United States
Author: James Willard Hurst
Publisher: Beard Books
Paperback: US$34.95
Review by Gail Owens Hoelscher
Order your personal copy today and one for a colleague at

This book chronicles the legal elements of the history of the
system of money in the United States from 1774 to 1970. It
originated as a series of lectures given by James Hurst at the
University of Nebraska in 1973. Mr. Hurst is quick to say that
he , as a historian of the law, took care in this book not to
make his own judgments on matters outside the law. Rather, he
conducted an exhaustive literature review of economics, economic
history, and banking to recount the development of law over the
operations of money. He attempted to "borrow the opinions of
qualified specialists outside the law in order to provide a
meaningful context in which to appraise what the law has done or
failed to do."

Mr. Hurst define money, for the purposes of this books, as "a
distinct institutional instrument employed primarily in
allocating scarce economic resources, mainly through government
and market processes," and not shorthand for economic, social,
or political power held through command of economic assets."
From the beginning, public and legal policy in the U.S. centered
on the definition of legitimate uses of both law affecting
money, and allocation of power over money among official
agencies, both federal and state. The foundations of monetary
policy were laid between 1774 and 1788. Initially, individual
state legislatures and the Continental Congress issued paper
currency in the form of bills of credit. The Constitutional
Convention later determined that ultimate control of the money
supply should be at the federal level. Other issues were not
clearly defined and were left to be determined by events.

The author describes how law was used to create and maintain a
system of money capable of servicing the flow of resource
allocations in an economy of broadly dispersed public and
private decision making. Law defined standard money units and
made those units acceptable for use in conducting transactions.
Over time, adjustment of the money supply was recognized as a
legitimate concern of law. Private banks were delegated
expansive monetary action powers throughout the 1900s and
private markets for gold and silver were allowed to affect the
money supply until 1933-34. Although the Federal Reserve Act
was not aimed clearly at managing money for goals of major
economic adjustment, it set precedents by devaluing the dollar
and restricting the use of gold.

Mr. Hurst devotes a large part of his book to key issues of
monetary policy involving the distribution of power over money
between the nation and the states, between legal and market
processes, and among major agencies of the government. Until
about 1860, all major branches of government shared in making
monetary policy, with states playing a large role. Between 1908
and 1970, monetary policy became firmly centralized at the
national level, and separation or powers questions arose between
the Federal Reserve Board, the White House (The Council of
Economic Advisors), and the Treasury.

The book was an enormous undertaking and its research
exhaustive. It includes 18 pages of sources cited and 90 pages
of footnotes. Each era of American legal history is treated
comprehensively. The book makes fascinating reading for those
interested in the cause and effect relationship between legal
processes and economic processes and t hose concerned with
public administration and the separation of powers.
James Willard Hurst (1910-1997) is widely regarded as the
grandfather of American legal history. He graduated from
Harvard Law School in 1935 and taught at the University of
Wisconsin-Madison for 44 years.


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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re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

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

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

                 * * * End of Transmission * * *