TCREUR_Public/140213.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

          Thursday, February 13, 2014, Vol. 15, No. 31

                            Headlines


C Z E C H   R E P U B L I C

CE ENERGY: Fitch Assigns 'B+' LT Issuer Default Rating
CE ENERGY: Moody's Assigns 'B1' Rating on EUR500MM Senior Notes


F R A N C E

GROUPAMA S.A.: Fitch Raises Issuer Default Rating From 'BB+'


G E R M A N Y

FRESENIUS US: Moody's Rates US$300MM Senior Unsecured Notes 'Ba1'
QUEEN STREET II: S&P Lowers Rating on US$100MM Notes to 'CC'
QUEEN STREET III: S&P Lowers Rating on US$150MM Notes to 'CC'


I C E L A N D

LANDSBANKI BANK: Thames Valley Police Recoups GBP4.8MM


I R E L A N D

EIRCOM HOLDINGS: Moody's Hikes Corp. Family Rating to 'B3'
MALLINCKRODT PLC: Moody's Reviews Ba2 CFR for Possible Downgrade
* IRELAND: Corporate Insolvencies Down 26% in January 2014


I T A L Y

FIAT SPA: Moody's Lowers CFR to B1, Revises Outlook to Stable
TAURUS CMBS NO. 2: S&P Lowers Rating on Class F Notes to 'B'
VELA HOME 4: Moody's Confirms Ba1 Rating on EUR23.65MM C Notes


K A Z A K H S T A N

ALLIANCE BANK: S&P Revises Counterparty Ratings to 'D/D'


L A T V I A

BALTIC INT'L: Moody's Withdraws 'E+' BFSR, 'B3' Deposit Rating


N E T H E R L A N D S

LEVERAGED FINANCE: Moody's Cuts Rating on 2 Note Classes to Caa3
NORTH WESTERLY I: Moody's Cuts Ratings on 2 Note Classes to 'Ca'
* NETHERLANDS: Corporate Bankruptcies Down Almost 20% in January


P O L A N D

COGNOR INT'L: Moody's Assigns (P)Caa2 Rating to EUR100.4MM Notes


P O R T U G A L

PORTUGAL TELECOM: Moody's Comments on Oi's Capital Subscription


R U S S I A

RUSSIAN GRIDS: Moody's Affirms 'Ba1' Corporate Family Rating


S P A I N

CODERE SA: Defaults on EUR127.1MM Loan, Insolvency Looms
CODERE SA: Comisiones Obreras to Support UGT Suit v. Hedge Funds


T U R K E Y

* TURKEY: S&P Affirms 'BB+' Ratings on 6 Financial Institutions


U K R A I N E

CREATIV GROUP: S&P Lowers Corporate Credit Rating to 'CCC+'
MHP SA: S&P Lowers Corp. Credit Ratings to 'CCC+'; Outlook Neg.
MRIYA AGRO: S&P Cuts Corp. Credit Rating to 'CCC+'; Outlook Neg.
UKRAINIAN AGRARIAN: S&P Lowers CCR to 'CCC+'; Outlook Negative
UKRLANDFARMING PLC: S&P Lowers Corporate Credit Rating to 'CCC+'


U N I T E D   K I N G D O M

ANGLIAN WATER: Moody's Affirms Ba3 Rating on Senior Secured Notes
CLWYD LEISURE: To Close Three Centers; Hundreds of Jobs at Risk
CO-OP BANK: Regulator Disputes Directors' Reasons for Departure
HASTINGS INSURANCE: Fitch Assigns 'B+' IDR; Outlook Stable
ICESAVE: Prime Minister Criticizes Lawsuit Over 2008 Collapse

INEOS GROUP: Moody's Raises CFR to B1, Revises Outlook to Stable
INNOVIA GROUP: Moody's Assigns B2 CFR; Outlook Stable
INNOVIA GROUP: S&P Assigns 'B' CCR & Rates EUR340MM Sr. Notes 'B'
KEMBLE FINANCE: Moody's Affirms B1 Rating on Senior Secured Notes
PUNCH TAVERNS: Withdraws Debt Restructuring Plan


X X X X X X X X

* European Union Backs Cross-Border Insolvency Proposals


                            *********


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C Z E C H   R E P U B L I C
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CE ENERGY: Fitch Assigns 'B+' LT Issuer Default Rating
------------------------------------------------------
Fitch Ratings has assigned Czech Republic-based CE Energy a.s.
(CEE) a Long-term Issuer Default Rating (IDR) of 'B+' with Stable
Outlook, and its EUR500 million 7% senior secured notes due in
2021 final 'B+'/'RR4' ratings.

The rating actions reflect the final terms of the notes
conforming with the documentation already received and follows
the assignment of expected ratings on Jan. 29, 2014.

CEE is a newly established holding company, which owns 100% of
the shares of EP Energy, a.s. and whose sole activity is related
to additional borrowing through loans and notes.  CEE's ratings
reflect its reliance upon dividends from EPE as a single source
of income and debt service, and CEE's bondholders' subordination
to creditors of EPE.

The refinancing and notes issue proceeds are largely being used
for distributions to CEE's shareholders (repayment of a
subordinated shareholder loan).  The notes' terms include debt
incurrence and restricted payments covenants, which may limit
future distributions to CEE's parent.  However, the tests are not
forward looking and do not include cash sweeps or minimum
liquidity provisions and as such do not provide material rating
support.

KEY RATING DRIVERS

Rating Constrained by Subordination

CEE's bondholders have recourse to CEE and a share pledge over
50% less one share of CEE's shares in EPE, whereas EPE's secured
creditors have a pledge over the remaining shares, a pledge over
certain EPE assets, and benefit from operating company
guarantees. CEE's bondholders are therefore subordinated to EPE's
creditors. Additionally, EPE's covenanted financial structure
could limit the dividends it upstreams to CEE if its net
debt/EBITDA ratio reaches 3.0x.  This structural subordination,
providing for ring-fencing protection around EPE, is reflected in
the lower rating for CEE's debt.

Sole Cash Flow Source

CEE represents a simple holding company structure for EPE, solely
reliant on a single cash flow stream of dividends.  Its own debt
service and payments to the parent company Energeticky a
prumyslovy holding, a.s (EPH) are the two main uses for its cash.
No withholding or income taxes are expected to be incurred.
CEE's rating is also constrained by the lack of diversification
in revenue source, no covenanted liquidity, and the leverage
covenant at EPE, which could constrain dividend payments.

High Consolidated Leverage

Fitch forecasts consolidated FFO adjusted net leverage for CEE to
peak at 4.9x at YE15 (assuming deconsolidating Stredoslovenska
energetika, a.s. (SSE) and including only the dividend thereof in
line with Fitch's rating approach for EPE) and dividend cover
ratio (dividend income from EPE/interest expense) to remain over
3.5x.  Fitch views the expected leverage, together with the
subordination and a single income stream of CEE as the key rating
constraints.

Average Recovery Expectations

Fitch estimates the recovery prospects for the bond to be average
(31%-50%).  This is reflected by the notes' rating being in line
with CEE's IDR.  The provided security is a pledge over 50% less
one share of EPE and over 100% shares of CEE.  This compares with
EPE's creditors having a pledge over 50% plus one share of EPE
and over other key subsidiaries and certain assets of EPE, as
well as the benefit of opco guarantees.

Equity-like Shareholder Loan

Fitch views CEE's liability under its subordinated shareholder
loan as equity-like because it does not increase its probability
of payment default or reduce expected recoveries for its
creditors.  The loan is due after the notes' maturity, does not
carry any interest and cannot be accelerated or enforced before
its final maturity.  Optional redemptions of the loans are
possible subject to the restricted payments test in CEE's notes'
terms (net consolidated leverage below 4.0x).

DEBT STRUCTURE AND LIQUIDITY

The key debt instruments at EPE are the secured 2018 EUR600
million and 2019 EUR500 million notes (both rated 'BBB-'), a
EUR231 million acquisition loan (connected to SSE) and subsidiary
borrowings of EUR63 million (out of which EUR35 million represent
49% of loans of SSE).  CEE is replacing a bank loan, which was
used to repay shareholder loans of EPH, with the EUR500 million
notes, the proceeds of are being used to repay the term loan and
the remainder upstreamed to EPH.

Although CEE intends to maintain a six-month liquidity reserve
and to build up a further cash balance from 2015 onwards from
retained cash flows, these are not covenanted provisions or ring-
fenced for the creditors. As such, we consider liquidity limited.

RATING SENSITIVITIES

Positive: Future developments that could lead to positive rating
actions include:

   -- A reduction of Fitch's expected consolidated FFO adjusted
      net leverage of CEE (including EPE, but deconsolidating
      SSE) to below 4.75x on a sustained basis combined with
      sustainable dividend cover of CEE in excess of 3.5x.

Negative: Future developments that could lead to negative rating
action include:

   -- A sustained drop in dividend cover to below 2.5x and an
      increase in the consolidated FFO adjusted net leverage to
      over 5.5x.

   -- Available liquidity falling below six months' debt service.


CE ENERGY: Moody's Assigns 'B1' Rating on EUR500MM Senior Notes
---------------------------------------------------------------
Moody's Investors Service has assigned a definitive B1 rating to
the EUR500 million of senior notes due 2021 issued by CE Energy,
a.s. The corporate family rating (CFR) of CE Energy at Ba2 and
the probability of default rating (PDR) at Ba2-PD remain
unchanged. The outlook on the ratings is stable.

Ratings Rationale

The assigned CFR of Ba2 with stable outlook is supported by (i)
the low business risk profile and stable cash flow generation of
the CE Energy group's German lignite coal mining activities that
are supported by long-term off-take contracts, (ii) the low
business risk profile and stable cash flow generation of the
fully regulated monopoly heating activities, (iii) the moderate
risk profile of power generation activities, considering that the
existing plants are well positioned in the merit order, (iv) the
low business risk profile of regulated electricity distribution
activities, which extend CE Energy's value chain and diversify
its business mix, (v) relatively low capex requirements enabled
by well invested and efficient mining assets and the good
technical shape of the heating distribution infrastructure and
(vi) management's current intention to refrain from further major
acquisitions.

The rating is, however, constrained by (i) CE Energy group's
relatively small size compared to the wider group of European
peers, (ii) the nature of the group's vertical integration with
high exposure to lignite as a single dominant fuel, (iii) a short
track record of financial consolidation, following the past
aggressive acquisition strategy, (iv) a lack of history of stable
and predictable performance of the group in its current form
given it has been created through acquisitions in the relatively
recent past, (v) a history of re-leveraging activities and
dividend distributions to shareholders.

The CFR is an opinion of the CE Energy group's ability to honour
its financial obligations and is assigned to CE Energy as if it
had a single class of debt and a single consolidated legal
structure. The B1 / LGD-6 rating of the CE Energy notes reflects
the structural subordination of the notes in the CE Energy group
structure. More particularly, CE Energy is the holding company
for a group of companies owned by EP Energy, a.s., (EPE), which
is financed by a mixture of notes and bank debt.

CE Energy has a solid position in its respective business
segments. It is the largest heating supplier and the second-
largest electricity generator in the Czech Republic, the third-
largest lignite producer in Germany, and the second largest
electricity distributor in the Slovak Republic. However, any
potential growth in the heating segment is technically and
geographically limited due to specifics of the central heating
sector. Moreover, CE Energy is relatively small compared to the
wider group of European utilities. Furthermore, the company has
limited price-setting ability, as (i) coal production sales are
based on long-term contracts, (ii) heating sales in the CR and
electricity distribution and retail supply in Slovakia are fully
regulated and (iii) electricity production is predominantly sold
on an energy exchange.

Management's aim to reduce financial leverage over the next few
years, including the Net Debt / EBITDA target of 2.5x for EPE and
3.5x for CE Energy on a consolidated basis, is credit positive,
but lacks a track-record. Moreover, CE Energy's dividend payout
targets suggest a bias towards shareholders. The future
development of CE Energy's financial profile is also exposed to
the credit quality of the wider group that owns CE Energy (EP
Holding), and its appetite for extracting dividends from CE
Energy -- while still maintaining compliance with existing
financial covenants -- could finally constrain financial ratios
of CE Energy.

Following the raising of the bond and recapitalization of the CE
Energy group, CE Energy's standalone liquidity profile is
considered to be adequate. It will be based on (i) the expected
retention of only modest cash balances on an ongoing basis given
the expected payment of dividends to EP Holding and, (ii) cash
flow generation driven solely by periodic dividends up-streamed
from EPE, which are themselves dependent on EPE's ability to make
payments in accordance with its financial documentation. The EPE
debt documentation contains restrictions on payment of dividends
if certain financial ratios are not met. This will leave the debt
service prospects of the CE Energy bond largely dependent on the
availability and timely payment of dividends to CE Energy,
although there is expected to be sufficient covenant headroom at
the EPE level.

Rationale For Stable Outlook

The stable rating outlook reflects Moody's expectation that CE
Energy's operating business is robust and resilient against
unfavorable market conditions, in particular thanks to the
existence of long-term supply contracts for lignite produced. The
outlook also reflects expected stable regulatory environments for
heat activities in the Czech Republic and electricity
distribution in the Slovak Republic.

What Could Change The Rating Up/Down

Material deleveraging of the CE Energy group in the context of a
track record of meeting longer term leverage targets, in
circumstances where the wider EP Holding group was not a
constraint on the CE Energy ratings, could move the rating up.
Material deleveraging could arise from positive developments in
commodity prices (especially the recovery in hard coal and power
prices).

A reduction in FFO Interest Cover of below around 4 times and /
or a reduction in FFO / Net Debt of less than 20% could result in
a downgrade in the rating. This could arise from (i) negative
developments in commodity prices or (ii) further debt financed
acquisitions or change of debt leverage policy. In addition, any
material reduction in the credit quality of the wider EP Holding
group could result in downwards rating pressure on CE Energy.
Furthermore, there could be negative rating pressure on the CE
Energy bond rating if there was an increased likelihood that
dividends due from EPE were likely to be reduced to levels that
would question the viability of CE Energy to service and repay
the CE Energy bond.

Principal Methodology

The methodologies used in this rating were Unregulated Utilities
and Power Companies published in August 2009, and Loss Given
Default for Speculative-Grade Non-Financial Companies in the
U.S., Canada and EMEA published in June 2009.

Headquartered in Prague, Czech Republic, CE Energy owns 100% of
the shares in EPE, a utility company, which is active in lignite
mining in Germany (via its 100% subsidiary MIBRAG), production of
heat and power (predominantly in the Czech Republic but also
Germany), distribution and supply (predominantly via SSE in the
Slovak Republic) and renewable power generation. CE Energy is
100% owned by Energeticky a prumyslovy holding, a.s. (EP
Holding), a private equity owned group.



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GROUPAMA S.A.: Fitch Raises Issuer Default Rating From 'BB+'
------------------------------------------------------------
Fitch Ratings has upgraded Groupama S.A.'s and its core
subsidiaries' Insurer Financial Strength (IFS) ratings to 'BBB'
from 'BBB-'.  Groupama S.A.'s Issuer Default Rating (IDR) has
also been upgraded to 'BBB-' from 'BB+'.  The Outlooks on the IDR
and IFS ratings have also been revised to Positive from Stable.

The subordinated debt instruments issued by Groupama S.A. have
been upgraded to 'BB' from 'BB-'.

KEY RATING DRIVERS

The upgrades reflect the group's return to profit in its 1H13 to
EUR187 million, compared with a EUR87 million loss in 1H12,
mostly due to the absence of exceptional charges.  Profit
recovery was also due to a stronger contribution from the French
business, while international insurance operations and banking
activities generated stable positive net income.

The ratings also reflect an improvement in Groupama's combined
ratio to 100.9% (103.2% at 1H12) as well as management's
conservative decision to strengthen the life fund for future
appropriation by EUR250 million.

In addition, Groupama's solvency was solid at 1H13 (Solvency 1
ratio of 170%) and financial leverage improved to 32% from 34%.
Both metrics are strong compared with Fitch medians for insurance
groups rated in the 'BBB' category.

The change in Outlook to Positive reflects Fitch's expectation
that the recovery in profitability is likely to be sustained for
FY13 and into 2014.

RATING SENSITIVITIES

Key rating triggers that could result in a rating upgrade include
a sustained improvement in profitability, with annual net income
above EUR200m on average over the cycle, together with no
material deterioration in solvency or financial leverage from
current levels.

The ratings actions are as follows:

Groupama S.A.

   -- IFS rating upgraded to 'BBB' from 'BBB-'; Outlook revised
      to Positive from Stable

   -- Long-term IDR upgraded to 'BBB-' from 'BB+'; Outlook
      revised to Positive from Stable

   -- Dated subordinated debt (ISIN FR0010815464) upgraded to
      'BB' from 'BB-'

   -- Undated subordinated debt (ISIN FR0010208751) upgraded to
      'BB' from 'BB-'

   -- Undated deeply subordinated debt (ISIN FR0010533414)
      upgraded to 'BB' from 'BB-'

Groupama GAN Vie

   -- IFS rating upgraded to 'BBB' from 'BBB-'; Outlook revised
      to Positive from Stable

GAN Assurances

   -- IFS rating upgraded to 'BBB' from 'BBB-'; Outlook revised
      to Positive from Stable



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FRESENIUS US: Moody's Rates US$300MM Senior Unsecured Notes 'Ba1'
-----------------------------------------------------------------
Moody's Investors Service has assigned a Ba1 rating to US$300
million of senior unsecured guaranteed notes with a 7 year tenor
to be issued by Fresenius US Finance II, Inc. Fresenius SE & Co.
KGaA's (FSE) Ba1 Corporate Family Rating (CFR), Ba1-PD
Probability of Default (PDR), Senior Secured (Baa3) and Senior
Unsecured (Ba1) ratings of its subsidiaries remain unchanged. The
outlook on the ratings is negative.

Ratings Rationale

The Ba1 rating (LGD 4, 61%) assigned to US$300 million of senior
unsecured guaranteed notes reflects the instrument's ranking in
the group's capital structure. The new notes will be guaranteed
on a senior basis by FSE and key intermediary holding companies
(same as available to other unsecured creditors) and will rank
pari passu with all existing and future unsecured obligations of
Fresenius.

The new notes will be used to take out around EUR225 million from
the initially EUR1.8 billion bridge financing facility put in
place to finance the acquisition of the Rhoen Klinikum hospitals.
It follows the issuance of in total EUR1,050 million senior
unsecured guaranteeed notes during the last couple of weeks and
will further de-risk the financing package put in place at the
time of the announcement of the transaction by extending the
overall debt maturity structure.

Fresenius' Ba1 Corporate Family Rating reflects (1) the group's
sizeable and increasing scale as a global provider of healthcare
services and medical products as well as the recurring nature of
a large part of its revenue and cash flow base; (2) its segmental
diversification within the healthcare market, supported by strong
positions in its four segments; (3) its track record of accessing
both equity and debt markets to support its acquisition growth
and refinancing needs, and of successfully deleveraging following
large acquisition peaks; and (4) the attractive valuation of
FSE's 31% stake in its dialysis subsidiary Fresenius Medical Care
AG & Co. KGaA (FME; Ba1 stable).

The rating is constrained by (i) FSE's leverage (around 3.5x on a
consolidated basis) as of September 2013 and increasing to 4.0x
proforma for the acquisition of 40 hospitals from Rhoen Klinikum,
which positions FSE weakly in the Ba1 rating category; (ii) the
group's exposure to regulatory changes, reimbursement and pricing
pressure from governments and healthcare organizations worldwide;
(iii) moderate structural liquidity profile driven by the need to
continuously refinance its debt, though the newly issued bonds
extend the debt maturity profile further; and (iv) a track record
of aggressive debt-financed external growth as most recently
highlighted by the Rhoen transaction.

Given the elevated leverage, the current rating assumes that FSE
will reduce its external growth activities going forward, in
order to support deleveraging to levels back to ratios which are
in line with FSE's own targets, as well as within the triggers
set to maintain the current rating.

Assignments:

Issuer: Fresenius US Finance II, Inc.

US$300 million Senior Unsecured Guaranteed Notes, Assigned Ba1,
LGD4, 61%

Rating Outlook

The negative outlook reflects Moody's expectation that FSE's
credit metrics may remain weaker than the credit metrics expected
for the Ba1 rating for an extended period of time.

What Could Change the Rating - UP

As current metrics position FSE weakly in its rating category,
prospects for an upgrade are remote. However, Moody's would
consider upgrading the ratings if FSE were to (1) reduce its
leverage on a sustainable basis towards 3.0x; (2) achieve further
improvements in its liquidity and debt maturity profiles, helping
to reduce its reliance on capital market refinancing; and (3)
limit debt-funded acquisition activity.

What Could Change the Rating - DOWN

The ratings could be subject to downward pressure if FSE's
leverage metrics would not improve to levels to or below
consolidated adjusted debt/EBITDA 4.0x and/or consolidated EBITDA
margins decline below 20%. Large debt-financed acquisitions or
negative free cash flows, materially reducing the prospect of
deleveraging or worsening liquidity profile, could also be
drivers of a downward rating migration.

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

Fresenius SE & Co. KGaA is a global healthcare group providing
products and services for dialysis, the hospital and the medical
care of patients at home. It is a holding company whose major
assets are investments in group companies and inter-company
financing arrangements. Around 55-60% of group sales and EBIT are
generated by Fresenius Medical Care AG & Co. KGaA (Ba1 Corporate
Family Rating, stable Outlook), which is fully consolidated into
the FSE group, although only 31% owned, based on managerial
control and a particular ownership legal structure. Fresenius'
other operations, which are majority or fully-owned, are
Fresenius Kabi (infusion therapy, intravenously administered
generic drugs and clinical nutrition), Fresenius Helios
(operating private hospitals in Germany) and Fresenius Vamed (77%
owned, hospital and other healthcare facilities projects and
services). Based on the trailing 12 months figures as per
September 30, 2013, the group reported revenues of EUR20.2
billion. Fresenius is owned 27% by Else-Kroner Foundation.

On September 13, 2013, FSE announced that it has agreed to
acquire 43 hospitals and other related assets from Rhoen-Klinikum
AG, in a transaction valued at around EUR3.1 billion. The
transaction is expected to contribute some EUR2.0 billion of
sales and EUR250 million of EBITDA, increasing the FSE's leverage
by around 0.4x proforma for this transaction on a consolidated
basis. On January 27, 2014 FSE announced that they will only
acquire 40 hospitals to comply with the conditions set by the
German antitrust authority for the acquisition of Rhoen-Klinikum
AG.


QUEEN STREET II: S&P Lowers Rating on US$100MM Notes to 'CC'
------------------------------------------------------------
Standard & Poor's Ratings Services lowered to 'CC(sf)' from
'BB-(sf)' its rating on the US$100 million principal-at-risk
variable-rate notes issued by Queen Street II Capital Ltd.  At
the same time, S&P removed the rating from CreditWatch, where it
placed it with negative implications on Nov. 1, 2013.

The notes were issued under an insurance-linked securitization
sponsored by Munich Reinsurance Co. Queen Street II Capital
covers losses related to North Atlantic hurricane risk in
selected states within the U.S., and major European windstorms
between March 2011 and March 2014.

RATIONALE

The rating actions reflect S&P's view that there is a heightened
risk that noteholders will not receive back 100% of the
outstanding principal amount on the notes' April 2014 redemption
date.

On Nov. 1, 2013, S&P placed its 'BB- (sf)' rating on the notes on
CreditWatch negative.  This followed the issuance on Oct. 22,
2013, of a notice of default from the indenture trustee, after
the loss of principal of US$20,242.13 from the liquidation of the
MEAG Queen Street II fund due to an investment eligibility event.

Since S&P received the notice of default, it has monitored the
performance of the Federated U.S. Treasury Cash Reserves in which
the proceeds have been reinvested, and S&P considers that it is
unlikely that the fund will regain the US$100 million original
net asset value on the redemption date.

Moreover, the transaction structure does not ensure that
noteholders will receive back 100% of the outstanding principal
amount when the notes redeem.

On the redemption date, S&P expects a shortfall of $20,242.13 on
the proceeds.  S&P expects to lower the rating to 'D (sf)'
(default) from 'CC (sf)' on April 9, 2014, when it anticipates
redemption of $99,979,757 of the proceeds.

Initially, the proceeds from the sale of the notes were invested
in a U.S. Treasury money market fund, which was in turn invested
in treasury bills set up specifically for the MEAG Queen Street
II transaction.  The subsidiary of the asset management arm of
Munich Re, MEAG MUNICH ERGO Kapitalanlagegesellschaft mbH,
managed the fund.


QUEEN STREET III: S&P Lowers Rating on US$150MM Notes to 'CC'
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered to 'CC(sf)' from
'B+(sf)' its rating on the US$150 million principal-at-risk
variable-rate notes issued by Queen Street III Capital Ltd.  At
the same time, S&P removed the rating from CreditWatch, where it
placed it with negative implications on Oct. 30, 2013.

The notes were issued under an insurance-linked securitization
sponsored by Munich Reinsurance Co. (Munich Re).  Queen Street
III Capital Ltd. covers losses related to a major European
windstorm between July 2011 and July 2014.

Rationale

The rating actions reflect S&P's view that there is a heightened
risk that noteholders will not receive back 100% of the
outstanding principal amount on the notes' July 28, 2014,
redemption date.

On Oct. 30, 2013, S&P placed its 'B+ (sf)' rating on the notes on
CreditWatch negative.  This followed the issuance of a notice of
default from the indenture trustee after the loss of principal of
US$30,433.53 from the liquidation of the MEAG Queen Street III
fund due to an investment eligibility event.

Since S&P received the notice of default, it has monitored the
performance of the Federated U.S. Treasury Cash Reserves in which
the proceeds have been reinvested, and S&P considers that it is
unlikely that the fund will regain the US$150 million original
net asset value on the redemption date.

Moreover, the transaction structure does not ensure that
noteholders will receive back 100% of the outstanding principal
amount when the notes redeem.

On the redemption date, S&P expects a shortfall of US$30,433.53
on the proceeds.  S&P expects to lower the rating to 'D (sf)'
(Default) from 'CC (sf)' on July 28, 2014, when it anticipates
redemption of US$149,969,566 of the proceeds.

Initially, the proceeds from the sale of the notes were invested
in a U.S. Treasury money market fund, which was in turn invested
in treasury bills set up specifically for the MEAG Queen Street
III transaction.  The subsidiary of the asset management arm of
Munich Re, MEAG MUNICH ERGO Kapitalanlagegesellschaft mbH,
managed the fund.



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LANDSBANKI BANK: Thames Valley Police Recoups GBP4.8MM
-------------------------------------------------------
Oxford Mail reports that most of the money invested in a failed
Icelandic bank by Thames Valley Police has been recouped.

According to the report, Police and Crime Commissioner Anthony
Stansfeld said GBP4.8 million of GBP5 million had been returned.

Icelandic banks collapsed in 2008 and local authorities and other
public bodies which invested in them have been trying to get
their money back ever since, the report notes.

The force has now sold its claim against the insolvent estate of
the Icelandic bank, Landsbanki Islands, Oxford Mail reports.

                     About Landsbanki Islands

Landsbanki Islands hf, also commonly known as Landsbankinn in
Iceland, is an Icelandic bank.  The bank offered online savings
accounts under the "Icesave" brand.  On October 7, 2008, the
Icelandic Financial Supervisory Authority took control of
Landsbanki and two other major banks.

Landsbanki filed for Chapter 15 protection on Dec. 9, 2008
(Bankr. S.D. N.Y. Case No.: 08-14921).  Gary S. Lee, Esq., at
Morrison & Foerster LLP, represents the Debtor.  When it filed
for protection from its creditors, it listed assets and debts of
more than US$1 billion each.



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EIRCOM HOLDINGS: Moody's Hikes Corp. Family Rating to 'B3'
----------------------------------------------------------
Moody's Investors Service has upgraded the CFR of eircom Holdings
(Ireland) Limited to B3 from Caa1 and its probability of default
rating (PDR) to B3-PD from Caa1-PD. Concurrently, Moody's has
also upgraded to B3 the ratings on the EUR2.3 billion senior
secured credit facility raised by eircom Finco S.a.r.l. and on
the EUR350 million senior secured notes due 2020 issued by eircom
Finance Limited. Moody's has also assigned a provisional (P)B3
rating to Term Loan B2, a new tranche of the existing term loan
facility. 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 company's new term
loan B2. The definitive rating may differ from the provisional
rating.

Ratings Rationale

"The rating upgrade to B3 reflects our expectation that eircom's
operating conditions will improve, primarily as a result of
better macroeconomic and competitive environments. In addition,
the investments made by the company in its 4G and fibre networks,
as well as the cost cutting efforts should strengthen eircom's
business model, making it more sustainable over the long run,"
says Iv n Palacios, a Moody's Vice President -- Senior Credit
Officer and lead analyst for eircom.

"While adjusted leverage remains high, the expected improvement
in business conditions and the reduced refinancing risk resulting
from the planned maturity extension of the senior facility, place
eircom comfortably in the B3 rating category" adds Mr. Palacios.

Moody's expects that operating conditions in Ireland will
improve, partly driven by a more benign macroeconomic
environment, as reflected by Moody's upgrade of Ireland's
sovereign rating to Baa3 (positive) from Ba1 on 17 January 2014.
The reduction in the unemployment rate, the strong expansion of
exports, early signs of revival in domestic demand and strong
foreign direct investment are all expected to contribute to
improved GDP growth prospects, which should benefit eircom's top
line in light of the strong correlation between GDP and telecom
revenues.

While competition remains intense, Moody's believes that the
announced consolidation in the Irish mobile market should
accelerate market repair. The takeover of O2 Ireland by
Hutchison, which was agreed in June 2013 but is still pending
regulatory approval, would combine two of the four mobile
networks in Ireland. However, it is uncertain at this stage how
this merger could potentially affect eircom's network sharing
agreement with O2 Ireland.

eircom has made good progress in executing its business plan
since the initial rating assignment in June 2012, and therefore
execution risk, which was one of Moody's main concerns at that
time, has diminished. The group's operating performance has been
in line with its business plan, particularly with regard to
EBITDA generation, which is stabilising at around EUR120 million
per quarter. In addition, eircom will complete by December 2014
its announced headcount reduction plan affecting 2,000 full-time
employees, which will generate EUR100 million in cost savings per
year and mitigates the higher-than-initially-anticipated pressure
on revenues.

eircom is also progressing well with its investment in next-
generation fibre and the roll-out of the 4G mobile network, which
together with the launch of quad-play offers, have enabled the
group to strengthen its competitive positioning. The company is
close to completing the cycle of heavy catch-up investments and
next year, with reduced capex levels and no further voluntary
leaver costs, it is expected to generate positive free cash
flows.

One of Moody's concerns captured in eircom's previous Caa1 rating
was the company's negative equity cushion, resulting from an
enterprise value that was lower than its debt and that could
potentially lead to a debt restructuring in the future. However,
valuation multiples across the European telecoms sectors have
increased over the past year and Moody's believes that eircom has
built up some equity cushion, albeit small.

A negative consideration is that eircom's leverage remains high,
with debt/EBITDA (Moody's-adjusted, including adjustments for
operating leases and pension deficits) of around 6.0x-6.5x
expected for FY June 2014. However, the high adjusted leverage is
partly driven by the large and volatile pension deficit, which
has increased over the past few years as a result of the
historical low discount rates. The high debt load leads to large
interest payments, which slows the company's capacity to
internally generate funds to reduce debt.

In addition, Moody's notes that revenue growth may prove elusive
and therefore, eircom will have to rely on its continued ability
to control costs to show EBITDA growth.

The upgrade to B3 rating also reflects eircom's adequate
liquidity profile, supported by a cash balance of EUR246 million,
the expected positive free cash flow generation next year,
adequate headroom under covenants and an extended debt maturity
profile subject to the successful completion of the amend and
extend process by which the existing term loan facility will be
extended to 2019 from 2017. This amend and extend process will
give eircom more time to reduce debt and more flexibility to
accommodate potential changes in the ownership structure of the
company.

The B3 CFR reflects (1) eircom's high leverage and slow
deleveraging profile; (2) the challenging operating environment
where eircom operates, which has weakened the company's operating
performance over the past few years; (3) the company's past
history of default and restructuring; and (4) eircom's improving,
but still small, equity cushion.

More positively, the rating also reflects (1) eircom's strong
position in the fixed-line market as Ireland's incumbent
operator, with a 52% market share, and its position as the third-
largest operator in the mobile segment, with a market share of
21% as of September 2013, both as reported by Comreg; (2) the
potential for its competitive position to be strengthened over
time as a result of its accelerated investment plan; (3) Moody's
expectation of positive free cash flow generation once eircom
completes the current investment cycle; and (4) its adequate
liquidity profile.

Rationale For Stable Outlook

The stable outlook on the ratings reflects Moody's expectation
that eircom will perform according to its business plan. It also
incorporates the rating agency's expectation that eircom's
leverage will remain in the 6.5x-5.5x range in the medium term.

What Could Change The Rating Up/Down

Upward pressure on the rating would be supported by adjusted
debt/EBITDA trending towards 5.5x on a sustained basis and
positive free cash flow generation. Upward rating pressure would
also require the group to maintain a sound liquidity profile,
with comfortable headroom under financial covenants.

Downward pressure on the rating could materialize if the group
fails to execute its business plan, leading to weaker-than-
expected credit metrics, including adjusted debt/EBITDA trending
sustainably above 6.5x, and persistently negative free cash flow
generation. Given the size and volatility of eircom's pension
deficit, the B3 rating with a stable outlook incorporates the
potential for moderate deviations from these ranges on a
temporary basis.

Moody's  would also be concerned if eircom's liquidity came under
stress as a result of a weaker-than-expected operating
performance or larger cash outflows for capex in the absence of
alternative external sources, such as a revolving credit facility
or vendor financing.

Principal Methodology

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

eircom Holdings (Ireland) Limited is the holding company of the
eircom group, the principal provider of fixed-line
telecommunications services in Ireland, with a revenue share of
the fixed-line market of approximately 52% (according to ComReg).
The group is also the third-largest mobile operator in Ireland,
with a subscriber market share of approximately 21% (excluding
mobile broadband and Machine to Machine, according to ComReg).
eircom reported revenue of EUR1.4 billion and adjusted EBITDA of
EUR488 million in the financial year ending 30 June 2013, and
revenue of EUR657 million and adjusted EBITDA of EUR233 million
for the six months ending 31 December 2013.


MALLINCKRODT PLC: Moody's Reviews Ba2 CFR for Possible Downgrade
----------------------------------------------------------------
Moody's Investors Service placed the ratings of Mallinckrodt plc.
under review for possible downgrade. The ratings include
Mallinckrodt's Ba2 Corporate Family Rating, Ba2-PD Probability of
Default Rating, and the Ba2 rating on the senior unsecured notes
issued by Mallinckrodt International Finance SA, guaranteed by
Mallinckrodt.

The rating action follows Mallinckrodt's announcement that it has
entered into a definitive agreement to acquire publicly traded
Cadence Pharmaceuticals Inc. (unrated) for US$14 per share or
approximately US$1.3 billion. The rating review is prompted by
Moody's expectation that Mallinckrodt's debt/EBITDA will
substantially exceed the level of 3.0 times that the rating
agency had incorporated in the Ba2 rating. The rating review of
the senior unsecured notes is further prompted by the concern
that the addition of secured debt to Mallinckrodt's capital
structure will result in existing bondholders being effectively
subordinated.

Ratings placed under review for possible downgrade:

Mallinckrodt plc:

Ba2 Corporate Family Rating

Ba2-PD Probability of Default Rating

Mallinckrodt International Finance SA:

Ba2 (LGD4, 59%) senior unsecured notes

The rating review will focus on: (1) Mallinckrodt's leverage
profile following the transaction including any near-term
deleveraging opportunities; (2) structural considerations
resulting in subordination of senior unsecured notes to any
secured debt added to the structure; (3) the earnings
contribution from Cadence, anticipated cost synergies, and
diversification benefits; (4) drivers affecting Mallinckrodt's
core businesses including slow diagnostic imaging sales, nuclear
supply constraints, and growth from new products in the branded
pharmaceutical business.

Moody's is affirming Mallinckrodt's SGL-1 Speculative Grade
Liquidity Rating but this may be adjusted as the detailed terms
of Mallinckrodt's financing become available.

Ratings Rationale

Mallinckrodt's Ba2 rating reflects good balance between its two
business segments (Specialty Pharmaceuticals and Global Medical
Imaging) but is constrained by its overall modest scale with a
US$2 billion revenue base. Within pharmaceuticals, Mallinckrodt
has good balance between generic controlled substance products,
branded products, and active pharmaceutical ingredients, yet its
pharmaceutical products are highly concentrated in the opioid
pain category. These products face high regulatory scrutiny and
the possible transition by prescribing physicians to abuse
deterrent products. This could negatively affect Mallinckrodt's
non-abuse deterrent products, but Mallinckrodt's branded drug
business could significantly benefit from this trend based on
opportunities in its pipeline and the pending regulatory approval
of Xartemis XR. Mallinckrodt's nuclear segment (roughly 20% of
sales) -- which produces nuclear imaging agents for diagnostic
procedures -- faces high risk of supply disruption due to a
limited number of nuclear plants producing molybdenum-99 and
frequent shutdowns of these plants.

Headquartered in Dublin, Ireland, Mallinckrodt plc is a specialty
pharmaceutical and medical imaging company. Revenues for the
twelve months ended December 27, 2013 were approximately US$2.2
billion.

The principal methodology used in this rating was the Global
Pharmaceutical Industry published in December 2012. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.


* IRELAND: Corporate Insolvencies Down 26% in January 2014
----------------------------------------------------------
Charlie Taylor at The Irish Times reports that company
insolvencies declined by 26 per cent in January compared to the
same month a year earlier, according to new figures from Vision-
net.

A total of 74 businesses were declared insolvent during January
2014. Of these, 39 were liquidated, 34 entered receivership and
an Examiner was appointed to one company, The Irish Times
relates.

The report notes that the most vulnerable industry currently is
the property sector, which accounted for just over 16% of all
insolvencies recorded in January. There was also a high number of
insolvencies in both the construction and hospitality sectors.

Moreover, over two-thirds of companies in the hospitality sector
were deemed at high risk of collapse while, in construction, 61
per cent of firms were seen to be experiencing difficulties, the
report relays.

The Irish Times notes that a county-by-county breakdown of the
figures for this month reveals that 49 per cent of insolvencies
took place in Dublin, an increase of 13.6 per cent over January,
2013. Galway had the second highest level of insolvencies on 8
per cent, followed by Wexford at 7 per cent. In Cork, the number
of insolvent companies fell by 11.6 per cent to 5.4 per cent.

In all, 46 companies held meetings of creditors this month, a 48
per cent drop on the same period a year ago. These companies owed
creditors short-term debts of more than EUR9 million, down from
EUR38.6 million in January 2013. However, 34 Receivers were
appointed to companies this month.



=========
I T A L Y
=========


FIAT SPA: Moody's Lowers CFR to B1, Revises Outlook to Stable
--------------------------------------------------------------
Moody's Investors Service has downgraded the corporate family
rating (CFR) and the probability of default rating (PDR) of Fiat
S.p.A. to B1 from Ba3 and to B1-PD from Ba3-PD, respectively.
Concurrently, Moody's has downgraded to B2 from B1 the debt
issued by Fiat's rated subsidiaries, Fiat Finance and Trade Ltd.
S.A. and Fiat Finance North America Inc., as well as Fiat Finance
Canada Ltd.'s (P)B2 rating. Additionally, all (P)NP ratings have
been confirmed. The outlook on all ratings has been changed to
stable from negative.

This rating action concludes the review for downgrade initiated
on January 7, 2014.

"Moody's have downgraded Fiat's ratings following its weaker-
than-expected performance in fiscal year 2013 and our view that
the company faces significant challenges in terms of achieving
its outlook guidance for the current fiscal year," says
Falk Frey, a Moody's Senior Vice President and lead analyst for
Fiat. "Moody's are also concerned that Fiat may not be able to
offset any further profitability deterioration in its Latin
American operation through anticipated improvements in other
regions and in its Luxury and Performance division," Mr. Frey
added. The action also considers the EUR1.27 billion cash outflow
in connection with the company's 100% ownership of Chrysler Group
LLC (B1 stable).

Ratings rationale

-- Downgrade of CFR and PDR to B1 and B1-pd, respectively --

The ratings action reflects Fiat's weaker-than-expected financial
performance in 2013 fiscal year. The company reported net
revenues of EUR86.8 billion and a trading profit of EUR3.4
billion for fiscal year 2013, which fell slightly short of its
guidance range of EUR3.5-3.8 billion and compares unfavorably
with revenues and trading profit in fiscal year 2012 of EUR84.0
billion and EUR3.5 billion, respectively. Excluding Chrysler,
Fiat generated revenues of EUR35.6 billion in fiscal year 2013,
which is on a par with its fiscal 2012 results, and a trading
profit of EUR246 million, which represents a significant drop
compared with EUR338 million in the previous fiscal year.

While the Fiat Group's consolidated cash flow from operating
activities net of capital expenditure (capex) was slightly
positive (EUR79 million) in fiscal year 2013, the reported cash
flow from operating activities net of capex for Fiat (excluding
Chrysler) was a negative EUR1.6 billion compared with a negative
EUR2.8 billion in fiscal year 2012 partly driven by a positive
working capital inflow of EUR1.1 billion in fiscal year 2013
compared with an outflow of EUR0.6 billion in fiscal year 2012.
Fiat's (ex Chrysler) net industrial debt increased to nearly
EUR6.9 billion at 31 December 2013 from EUR5.0 billion in the
previous fiscal year.

Fiat's guidance for fiscal year-end 2014 is for consolidated net
industrial debt in the range of EUR9.8-10.3 billion. This
includes an amount of EUR2.7 billion in relation to the Q1 2014
acquisition of the remaining Chrysler stake as well as a EUR0.3
billion IFRS 11 adjustment. Consequently, the Fiat Group expects
negative operational cash flow of between EUR0.1-0.6 billion for
fiscal 2014. Moody's understands that, on a standalone basis,
Chrysler is anticipating positive free cash flow (FCF) from
operating activities for fiscal year 2014 in the USD0.5-1.0
billion range. This will result in anticipated cash consumption
for Fiat (excluding Chrysler) of up to EUR1.0 billion. Moody's
believes that it will be challenging for Fiat to meet its targets
for fiscal year 2014, given the profitability deterioration in
Latin America, the weakening local currencies and rising
competitive pressure in the Brazilian car market.

Given that Fiat bondholders will be unable to fully access
Chrysler's on balance sheet cash and the cash flow it generates,
Moody's intends to maintain separate CFRs for Chrysler and Fiat
for the time being. However, it is likely that these would merge
over time to the extent that the financing arrangements of the
two entities converge.

Fiat's B1 rating negatively reflects (1) constraints on the
company's access to the cash and cash flows of Chrysler and
Moody's expectation that this situation is unlikely to change in
the short term (e.g., within the existing covenant limits in the
bond and loan documentation of Chrysler, dividend payouts are
limited to 50% of the net income basket, while intercompany
lending to Fiat is feasible with the only limitation that it has
to be done on an arm's length basis); (2) the weak standalone
credit metrics of Fiat as evidenced by an estimated Moody's-
adjusted debt/EBITDA of around 10.3x and reported negative free
cash flow of EUR1.5 billion for fiscal year 2013 with limited
improvement likely in fiscal year 2014; (3) Fiat's (excluding
Chrysler) high reliance on the European passenger car market,
particularly in its Italian home market, which represents
approximately half of Fiat's European car registrations; (4)
rising price pressures and rebates in Europe; (5) rapidly eroding
profitability in Latin America (mainly Brazil) driven by
increasing competition, additional capacities, high price
pressure and the weakness of the Latin American exchange rates
against the euro; (6) the group's significant overcapacities in
Italy with no immediate plan for further capacity adjustment,
with Fiat planning to utilize EMEA production base to develop its
global brands (Alfa Romeo, Maserati, Jeep and the Fiat 500
"family"); and (7) the risk that the delay in model renewals and
the absence of any major new volume model launch in 2014 might
further derail Fiat's competitive position in Europe.

On the positive side, Fiat's rating also takes into account (1)
the inclusion of Chrysler, which has helped to improve Fiat's
previously very limited geographic diversification and potential
cost savings from increasing operational integration between Fiat
and Chrysler (e.g., common architecture, modules and technologies
as well as purchasing and world class manufacturing); (2) a
strong and growing profit contribution from Fiat's Luxury and
Performance division (namely, Maserati and Ferrari), which is
driven by a widening product offering; (3) its leading market
position in Brazil (with an approximate market share of 21.5% in
2013), which has been the group's major source of profits and
cash flows in recent years; and (4) a dominant domestic Italian
market presence, with a market share of approximately 29%.
However, sovereign austerity programs and the debt crisis'
adverse impact on the Italian economy could continue to
negatively affect car demand in the group's key market.

Rationale For Stable Outlook

The stable outlook reflects Moody's expectations that (1) Fiat
(excluding Chrysler) would be able to limit negative operating
FCF to below EUR1.5 billion in fiscal year 2014; (2) Fiat's
losses in Europe, the Middle East and Africa from its mass market
brands can be further reduced in the current year towards
breakeven levels anticipated to be achieved in mid-decade; (3)
Maserati's model expansion program will further increase profits
from the Luxury and Performance division; (4) consolidated
negative FCF will be limited to around EUR1.0 billion.
Furthermore, the stable outlook anticipates that profitability
deterioration in Fiat's Latin American operations can be offset
by improving performance from other regions and in its Luxury and
Performance division. A weakening performance at Chrysler could
also put pressure on Fiat's ratings.

Liquidity

As of December 31, 2013, Fiat's liquidity profile on a standalone
basis was deemed adequate, after the approximately EUR1.27
billion cash outflow for the acquisition of the remaining
membership interests in Chrysler in the first quarter of 2014. As
of 31 December 2013, the Fiat Group (excluding Chrysler) reported
EUR9.8 billion in cash and marketable securities in the
industrial business, as well as an undrawn EUR2.1 billion
revolving credit facility maturing in July 2016, which contains
conditionality language in the form of financial covenants with
significant headroom. These funding sources should cover Fiat's
anticipated cash requirements over the next 12-18 months, which
comprise capex, debt maturities, cash for day-to-day needs and
minority dividends.

Structural Considerations

The senior unsecured notes issued by Fiat's treasuries -- Fiat
Finance &Trade, Fiat Finance North America and Fiat Finance
Canada, with the latter not currently having any notes
outstanding -- are structurally subordinated to a significant
portion of liabilities located at Fiat's operating subsidiaries
(mainly trade payables), with a preferred claim on the cash flows
at these entities. Consequently, the ratings of Fiat's
outstanding bonds are currently one notch below the group's CFR,
according to Moody's Loss Given Default Methodology.

What Could Change The Ratings Down/Up

Moody's could downgrade Fiat's ratings if the company failed to
limit its standalone negative net industrial free cash flow to
EUR1.5 billion in fiscal year 2014, with no indication of a
material improvement in fiscal year 2015. The rating could also
come under downward pressure if (1) Fiat was to lose significant
market share in Europe; and/or (2) the company's earnings and
cash flow contribution from its Brazilian operations, a major
source of cash flow, were to decline to an extent that it cannot
be offset by anticipated improvements in its other regions and
its Luxury and Performance division. Negative pressure could also
develop if the Chrysler product renewal program was to stall as
evidenced by the group's inability to generate a trading profit
of around EUR3.0 billion on a consolidated basis.

Upward pressure on Fiat's rating could come if Fiat standalone
would be able to achieve positive FCF exceeding EUR1.0 billion
that will be used to reduce debt and, on a consolidated basis,
could generate significantly more than EUR4.0 billion in trading
profit in fiscal year 2014, with visibility of further
improvements in 2015 and beyond.

Principal Methodologies

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

Headquartered in Torino, Italy, Fiat S.p.A. is one of Italy's
leading industrial groups and one of Europe's largest automotive
manufacturers by unit sales. Fiat S.p.A. who owns 100% of
Chrysler (B1 stable), generated consolidated group net revenues
of EUR86.8 billion and reported a trading profit of EUR3.4
billion in the fiscal year 2013.


TAURUS CMBS NO. 2: S&P Lowers Rating on Class F Notes to 'B'
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its credit ratings on
Taurus CMBS No. 2 S.r.l.'s class D, E, and F notes.  At the same
time, S&P has affirmed its ratings on the class B, C, and G
notes.

The rating actions follow S&P's review of the transaction's
performance.

The transaction was originally backed by four loans secured on 82
properties in Italy.  Three loans have repaid since closing in
December 2005.  The transaction is now secured by only one loan,
the Atl2 Berenice loan.

S&P's ratings in this transaction address the timely payment of
interest, payable quarterly in arrears, and the payment of
principal no later than the July 2019 legal final maturity date.

CREDIT ANALYSIS

The securitized Atl2 Berenice loan comprises one-third of a
syndicated loan facility, which totalled EUR450 million at
closing, with a EUR40 million capital expenditure facility.  The
securitized loan has decreased to EUR70 million from
EUR150 million at closing, which included a Capex facility at
closing of EUR13.3 million.  There remains EUR9.46 million
undrawn within this facility.

The loan was originally secured by 54 properties.  Following some
asset sales, 29 properties currently back the sole outstanding
loan.

In January 2014, Capita Asset Services (Ireland) Ltd. (the
servicer) reported that the vacancy rate of the properties
backing the loan had remained stable, at 26% in Q4 2013.  It also
reported a stable annual rental income of EUR24.5 million.  The
last valuation (June 2013) indicated that the entire property
portfolio's total market value was EUR390.44 million.  Following
the updated valuation, the loan-to-value (LTV) ratio -- including
the drawn capital expenditure facility -- is 46.5%, down from
52.0% at closing, and against a covenant level of 70.0%.

S&P do not expect principal losses on this loan in its base case
scenario.  S&P also considers the notes' available credit
enhancement to be adequate to mitigate the risk of principal
losses from the underlying loan in higher stress scenarios.

COUNTERPARTY RISK

Under S&P's current counterparty criteria, its ratings on the
class B and C notes are capped at its long-term issuer credit
rating (ICR) on Barclays Bank PLC, the guaranteed investment
contract (GIC) provider.  S&P has therefore affirmed its 'A (sf)'
ratings on the class B and C notes.

CASH FLOW ANALYSIS

With an outstanding securitized note balance of EUR70 million,
Taurus CMBS No. 2 has amortized from EUR150 million since
closing. As a result, the weighted-average margin on the notes is
now greater than the weighted-average margin on the Atl2 Berenice
loan.  Combined with senior expenses payable, this has decreased
the amounts available to pay interest on the class G notes.

There is an available funds cap (AFC) in place for the class G
notes.  As such, the class G notes are only entitled to receive
interest up to an amount available from loan interest -- provided
that the shortfall is solely attributable to prepayments.

As all classes of notes continue to pay down, the weighted-
average note margins are rising, increasing the risk that the
class D, E, and F notes could experience interest shortfalls.
Gradual repayment of the outstanding loan balance would create a
greater margin mismatch between the loan and the notes (except
for the class G notes, which is protected by an AFC), in S&P's
opinion.  As such, S&P do not believe that the class D, E, and F
notes can sustain their current rating levels.  S&P has therefore
lowered its ratings on these classes of notes to reflect their
increased exposure to cash flow disruptions, as a result of the
loan prepayments.  Due to the presence of the AFC and the stable
performance of the underlying real estate collateral, S&P has
affirmed its 'BB (sf)' rating on the class G notes.

Taurus CMBS No. 2 is an Italian commercial mortgage-backed
securities (CMBS) transaction that closed in December 2005, with
a legal final maturity date in July 2019.

RATINGS LIST

Class     Rating        Rating
          To            From

Taurus CMBS No. 2 S.r.l.
EUR403.9 Million Commercial Mortgage-Backed Floating-Rate Notes

Ratings Lowered

D         A- (sf)       A (sf)
E         BB+ (sf)      A (sf)
F         B (sf)        BB (sf)

Ratings Affirmed

B         A (sf)
C         A (sf)
G         BB (sf)


VELA HOME 4: Moody's Confirms Ba1 Rating on EUR23.65MM C Notes
--------------------------------------------------------------
Moody's Investors Service has confirmed the ratings of six notes
in Vela ABS S.r.l, Vela Home S.r.l. - Series 2, Vela Home
S.r.l. - Series 3 and Vela Home S.r.l. - Series 4. Sufficient
protection of the notes against swap counterparty exposure has
prompted the action. At the same time, Moody's affirmed the
ratings of all tranches from these four transactions which were
not on review for possible downgrade.

Ratings Rationale

The rating action reflects the impact on all four transactions of
their exposure to their swap counterparty and the swap guarantee
provider which are Banca Nazionale Del Lavoro S.P.A. (Baa2/P-2)
and BNP Paribas (A2/P-1) respectively, following the introduction
of the rating agency's updated approach to assessing swap
counterparty linkage in structured finance cash flow transactions
("Approach to Assessing Linkage to Swap Counterparties in
Structured Finance Cash Flow Transactions" published on the 12
November 2013). The credit enhancement available for all notes
sufficiently protects the notes against the risk of suffering a
loss in the event of the interest rate risk becoming unhedged
following a swap counterparty default.

As part of its review, Moody's has incorporated the risk of
additional losses on the notes in the event of them becoming
unhedged following a swap counterparty default and loss of swap
guarantee. The four transactions include swap agreements with
their respective swap counterparties to hedge the risk arising
from the mismatch of the interest received on the underlying
assets (which includes floating rate loans with different tenors
as well as loans paying fixed interest) and the interest due on
the outstanding notes which is based on 3month EURIBOR (Euro
Interbank Offered Rate). Net swap payments in recent periods were
in favor of the swap counterparty in the four transactions, given
the current interest rate environment. However, net swap payments
could be in favor of the issuer in future.

Moody's has also reassessed the collateral performance and
portfolio characteristics based on available information of the
four transactions. As a result Moody's expected loss (EL)
assumption for Vela Home S.r.l. - Series 2 has been increased
from 2.03% to 2.30% in terms of lifetime cumulative loss as per
the original balance, while its MILAN CE assumption has increased
from 8.50% to 8.94%. The 90+ delinquencies for Vela Home S.r.l. -
Series 2 increased to 1.99% in October 2013 from 0.42% in April
2013 while the cumulative defaults as a proportion of the
original balance rose to 3.78% from 3.67% in the same period. The
EL and MILAN CE assumptions for Vela ABS S.r.l, Vela Home
S.r.l. - Series 3 and Vela Home S.r.l. - Series 4 have been in
line with the current performance.

Factors That Would Lead To An Upgrade Or Downgrade Of The Ratings

Factors or circumstances that could lead to a downgrade of the
ratings affected by the action would be the worse-than-expected
performance of the underlying collateral, deterioration in the
credit quality of the counterparties and an increase in sovereign
risk.

Factors or circumstances that could lead to an upgrade of the
ratings affected by the action would be the better-than-expected
performance of the underlying assets, and a decline in both
counterparty and sovereign risk.

The principal methodology used in these ratings was "Moody's
Approach to Rating RMBS Using the MILAN Framework" published in
November 2013.

List of Affected Securities

Issuer: Vela ABS S.r.l

  EUR640.9M A Notes, Affirmed A2 (sf); previously on Aug 2, 2012
  Downgraded to A2 (sf)

  EUR21.9M B Notes, Confirmed at A3 (sf); previously on Nov 14,
  2013 A3 (sf) Placed Under Review for Possible Downgrade

  EUR11.8M C Notes, Confirmed at Baa3 (sf); previously on Nov 14,
  2013 Baa3 (sf) Placed Under Review for Possible Downgrade

Issuer: VELA HOME S.r.l. - Series 2

  EUR706.8M A2 Notes, Affirmed A2 (sf); previously on Aug 2, 2012
  Downgraded to A2 (sf)

  EUR15.85M B Notes, Affirmed A2 (sf); previously on Aug 2, 2012
  Downgraded to A2 (sf)

  EUR31.7M C Notes, Confirmed at Baa1 (sf); previously on Nov 14,
  2013 Baa1 (sf) Placed Under Review for Possible Downgrade

Issuer: VELA HOME S.r.l. - Series 3

  EUR1751.2M A Notes, Affirmed A2 (sf); previously on Aug 2, 2012
  Downgraded to A2 (sf)

  EUR53.8M B Notes, Affirmed Baa1 (sf); previously on Jul 8, 2013
  Downgraded to Baa1 (sf)

  EUR18.2M C Notes, Confirmed at Ba1 (sf); previously on Nov 14,
  2013 Ba1 (sf) Placed Under Review for Possible Downgrade

Issuer: VELA HOME S.r.l. - Series 4

  EUR1581.65M A1 Notes, Affirmed A2 (sf); previously on Aug 2,
  2012 Downgraded to A2 (sf)

  EUR677.85M A2 Notes, Affirmed A2 (sf); previously on Jul 8,
  2013 Confirmed at A2 (sf)

  EUR82.8M B Notes, Confirmed at Baa2 (sf); previously on Nov 14,
  2013 Baa2 (sf) Placed Under Review for Possible Downgrade

  EUR23.65M C Notes, Confirmed at Ba1 (sf); previously on Nov 14,
  2013 Ba1 (sf) Placed Under Review for Possible Downgrade



===================
K A Z A K H S T A N
===================


ALLIANCE BANK: S&P Revises Counterparty Ratings to 'D/D'
--------------------------------------------------------
Standard & Poor's Ratings Services said it had revised its long-
and short-term counterparty credit ratings on Kazakhstan-based
Alliance Bank JSC to 'D/D' from 'CCC/C'.

At the same time, S&P lowered its Kazakhstan national scale
rating on the bank to 'D' from 'kzCCC+'.

S&P also lowered its ratings on the bank's senior unsecured debt
to 'CC' from 'CCC' and the ratings on the subordinated debt to
'C' from 'CCC'.

S&P understands that Alliance Bank failed to pay holders of its
"recovery notes," due on Dec. 26, 2013.  According to S&P's
definition, this means the bank is in default, leading to a
rating that is 'D' (default) or 'SD' (selective default).
Additionally, due to this nonpayment, the bank breached
regulatory liquidity requirements, which appears to constitute a
covenant breach under Condition 11 (l) of the documentation for
the par notes and discount notes, two further classes of senior
unsecured debt.

The next coupon payment date is March 25, 2014, for the bank's
discount Kazakhstani tenge (KZT) and U.S. dollar notes, due in
2017; the senior par KZT and U.S. dollar notes, due 2020; and the
subordinated KZT notes, due in 2030.  However, on Jan. 31, 2014,
the bank announced the Board of Directors' decision to start
restructuring the bank.  In S&P's view, a restructuring would
likely result in the noteholders taking substantial haircuts
against the principal and accrued coupon amounts.

S&P therefore considers that the nonpayment will be a general
default and that Alliance Bank will fail to pay all, or
substantially all, of its obligations as they come due.  S&P has
therefore lowered the ratings to 'D'.

In accordance with S&P's criteria, it also lowered its ratings on
the notes to reflect its expectation that nonpayment is a virtual
certainty.  In the case of the subordinated notes, S&P also
considers their lower relative seniority and its expectation of
lower ultimate recovery.  If Alliance Bank fails to pay the
coupons due on March 25, S&P would lower the ratings on these
instruments to 'D', unless the noteholders have accepted a
purchase offer at below par and S&P has already lowered the
ratings to 'D'.

Even if, contrary to management's currently stated intent, the
bank paid the March coupons, S&P would likely regard the planned
bond restructuring as "distressed" and tantamount to a default.
This is based on S&P's understanding that the investors would
receive less value than the original promise and because, in
S&P's view, there is a realistic possibility of a conventional
default, absent the restructuring.

In December 2013, Kazakh businessman Bulat Utemuratov reached a
binding agreement with Samruk-Kazyna to purchase 16% of Alliance
Bank's preferred and common shares.  After the transaction,
Samruk-Kazyna would retain its majority stake of 51% in the bank.
The restructuring follows the bank's announcement of an expected
capital shortfall of KZT152.7 billion at year-end 2013, due to
significant additional provisions late last year and the de-
recognition of a deferred tax asset.  The bank is planning to
complete restructuring negotiations by June 30, 2014.  This
restructuring comes five years after the first debt restructuring
and recapitalization plan that Alliance agreed with its creditors
at the request of the central bank.

S&P has revised its assessment of Alliance Bank's stand-alone
credit profile (SACP) to 'cc' from 'ccc', reflecting its
expectation that default is a virtual certainty.  Within the
assessment, S&P has revised its evaluation of the bank's:

   -- Business position to "weak" from "moderate," due to the
      likelihood of franchise damage arising from the default and
      the associated business instability; and

   -- Liquidity to "very weak" from "adequate," reflecting S&P's
      view that the planned restructuring will have weakened the
      confidence of investors, leading to the bank having
      noticeably weaker liquidity than other Kazakh banks.  That
      said, S&P understands that the bank is currently honoring
      its obligations to depositors.

The other factors within S&P's SACP assessment remain unchanged.
After the bond restructuring S&P would review the ratings on the
bank based on its new capital structure and business and
financial profiles.



===========
L A T V I A
===========


BALTIC INT'L: Moody's Withdraws 'E+' BFSR, 'B3' Deposit Rating
-------------------------------------------------------------
Moody's Investors Service has withdrawn Baltic International
Bank's standalone bank financial strength rating (BFSR) of E+,
equivalent to a b3 baseline credit assessment (BCA), and the
long- and short-term deposit ratings of B3/NP.

Ratings Rationale

Moody's has withdrawn the rating for its own business reasons.

Based in Riga, Latvia, Baltic International Bank reported total
assets of LVL189.9 million (EUR266.41 million) at end-September
2013.



=====================
N E T H E R L A N D S
=====================


LEVERAGED FINANCE: Moody's Cuts Rating on 2 Note Classes to Caa3
----------------------------------------------------------------
Moody's Investors Service has taken rating action on the rating
of the following notes issued Leveraged Finance Europe Capital I
B.V.:

EUR64.5M Class II Senior Floating Rate Notes due 2017, Upgraded
to A1 (sf); previously on Nov 14, 2013 A3 (sf) Placed Under
Review for Possible Upgrade

EUR15M (current outstanding balance of EUR11,457,658) Class IV-A
Mezzanine Fixed Rate Notes due 2017, Downgraded to Caa3 (sf);
previously on Oct 19, 2011 Upgraded to Caa1 (sf)

EUR4M (current outstanding balance of EUR2,922,249) Class IV-B
Mezzanine Floating Rate Notes due 2017, Downgraded to Caa3 (sf);
previously on Oct 19, 2011 Upgraded to Caa1 (sf)

Moody's also affirmed the ratings of the following notes issued
by Leveraged Finance Europe Capital I B.V.:

EUR177M (current outstanding balance of EUR 51,639,309) Class I
Senior Floating Rate Notes due 2017, Affirmed Aaa (sf);
previously on Nov 16, 2001 Definitive Rating Assigned Aaa (sf)

EUR14M Class III-A Mezzanine Fixed Rate Notes due 2017, Affirmed
Ba2 (sf); previously on Oct 19, 2011 Upgraded to Ba2 (sf)

EUR4M Class III-B Mezzanine Floating Rate Notes due 2017,
Affirmed Ba2 (sf); previously on Oct 19, 2011 Upgraded to Ba2
(sf)

Leveraged Finance Europe Capital I B.V., issued in November 2001,
is a Collateralised Loan Obligation ("CLO") backed by a portfolio
of mostly high yield European loans. The portfolio assets are
predominantly senior secured loans. The portfolio is managed by
BNP Paribas. The transaction passed its reinvestment period in
November 2009.

Ratings Rationale

The upgrade of the rating of the Class II notes is primarily a
result of the improvement of its over-collateralization (OC)
ratio. Moody's had previously on 14 November 2013 placed the
rating of Class II under review for possible upgrade due to
significant loan prepayments. The action concludes the rating
review of the transaction. The downgrade of Class IV is due to
the worsening of its OC ratio.

The Class I notes have been redeemed by EUR31.6 million since the
May 2013 payment date, reducing the outstanding balance from
EUR93.2 million to EUR51.6 million. As a result of the
deleveraging, the OC ratio of the Senior Classes (Classes I and
II) has improved. According to the trustee report as of
December 2013, the OC ratio of the Senior Classes is 124%
compared to 118% in June 2013. The OC ratio of Class III has
remained stable while that of Class IV has worsened in the same
period. The defaulted amount has increased slightly from EUR25
million to EUR28.4 million.

The key model inputs Moody's uses in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. In its base
case, Moody's analyzed the underlying collateral pool as having a
performing par and principal proceeds balance of EUR128.0
million, defaulted par of EUR28.4 million, a weighted average
default probability of 20.56% (consistent with a WARF of 3830), a
weighted average recovery rate upon default of 48.35% for a Aaa
liability target rating, a diversity score of 24 and a weighted
average spread of 3.92%.

The default probability derives from the credit quality of the
collateral pool and Moody's expectation of the remaining life of
the collateral pool. The estimated average recovery rate on
future defaults is based primarily on the seniority of the assets
in the collateral pool. For a Aaa liability target rating,
Moody's assumed that a recovery of 50% of the 95.29% of the
portfolio exposed to first-lien senior secured corporate assets
upon default and of 4.71% of the remaining non-first-lien loan
corporate assets upon default. In each case, historical and
market performance and a collateral manager's latitude to trade
collateral are also relevant factors. Moody's incorporates these
default and recovery characteristics of the collateral pool into
its cash flow model analysis, subjecting them to stresses as a
function of the target rating of each CLO liability it is
analyzing.

Methodology Underlying the Rating Action:

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

Factors that would Lead to an Upgrade or Downgrade of the Rating:

In addition to the base case analysis described above, Moody's
also performed sensitivity analysis on key parameters for the
rated notes, which includes deteriorating credit quality of
portfolio to address the refinancing risk. Approximately 22.25%
of the portfolio is European corporate rated B3 and below and
maturing between 2014 and 2015, which may create challenges for
issuers to refinance. Moody's considered a model runs where the
base case WARF was increased to 4037 and 4268 by forcing ratings
on 25% and then 50%, respectively of refinancing exposures to Ca.
These runs generated model outputs that were consistent with the
base-case results.

This transaction is subject to a high level of macroeconomic
uncertainty, which could negatively affect the ratings on the
note, in light of 1) uncertainty about credit conditions in the
general economy 2) the large concentration of lowly- rated debt
maturing between 2014 and 2015, which may create challenges for
issuers to refinance. CLO notes' performance may also be impacted
either positively or negatively by 1) the manager's investment
strategy and behavior and 2) divergence in the legal
interpretation of CDO documentation by different transactional
parties due to because of embedded ambiguities.

Additional uncertainty about performance is due to the following:

1) Portfolio amortization: The main source of uncertainty in this
transaction is the pace of amortization of the underlying
portfolio, which can vary significantly depending on market
conditions and have a significant impact on the notes' ratings.
Amortization could accelerate as a consequence of high loan
prepayment levels or collateral sales by the collateral manager
or be delayed by an increase in loan amend-and-extend
restructurings. Fast amortization would usually benefit the
ratings of the notes beginning with the notes having the highest
prepayment priority.

2) Around 55% of the collateral pool consists of debt obligations
whose credit quality Moody's has assessed by using credit
estimates.

3) Recovery of defaulted assets: Market value fluctuations in
trustee-reported defaulted assets and those Moody's assumes have
defaulted can result in volatility in the deal's over-
collateralization levels. Further, the timing of recoveries and
the manager's decision whether to work out or sell defaulted
assets can also result in additional uncertainty. Moody's
analyzed defaulted recoveries assuming the lower of the market
price or the recovery rate to account for potential volatility in
market prices. Recoveries higher than Moody's expectations would
have a positive impact on the notes' ratings.

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


NORTH WESTERLY I: Moody's Cuts Ratings on 2 Note Classes to 'Ca'
----------------------------------------------------------------
Moody's Investors Service has taken a variety of rating actions
on the following notes issued by North Westerly CLO I B.V.:

EUR7M (current outstanding balance of EUR214,185) Class I-A
Senior Fixed Rate Notes due 2016, Affirmed Aaa (sf); previously
on Feb 20, 2013 Affirmed Aaa (sf)

EUR252M (current outstanding balance of EUR7.7M) Class I-B Senior
Floating Rate Notes due 2016, Affirmed Aaa (sf); previously on
Feb 20, 2013 Affirmed Aaa (sf)

EUR32M Class II Deferrable Interest Floating Rate Notes due 2016,
Upgraded to A3 (sf); previously on Nov 14, 2013 Baa2 (sf) Placed
Under Review for Possible Upgrade

EUR7.5M Class III-A Deferrable Interest Fixed Rate Notes due
2016, Downgraded to Caa3 (sf); previously on Feb 20, 2013
Downgraded to B3 (sf)

EUR3M Class III-B Deferrable Interest Floating Rate Notes due
2016, Downgraded to Caa3 (sf); previously on Feb 20, 2013
Downgraded to B3 (sf)

USD5.27M Class III-C Deferrable Interest Floating Rate Notes due
2016, Downgraded to Caa3 (sf); previously on Feb 20, 2013
Downgraded to B3 (sf)

EUR6M (current outstanding balance of EUR4.8M) Class IV-A
Deferrable Interest Fixed Rate Notes due 2016, Downgraded to Ca
(sf); previously on Feb 20, 2013 Affirmed Caa3 (sf)

EUR12M (current outstanding balance of EUR9.4M) Class IV-B
Deferrable Interest Floating Rate Notes due 2016, Downgraded to
Ca (sf); previously on Feb 20, 2013 Affirmed Caa3 (sf)

EUR5M (current rated balance outstanding of EUR1.2M) Class Q
Combination Notes due 2016, Affirmed Ba2 (sf); previously on Feb
20, 2013 Downgraded to Ba2 (sf)

North Westerly CLO I B.V., issued in June 2003, is a
Collateralised Loan Obligation ("CLO") backed by a portfolio of
mostly high yield European loans. The portfolio is managed by
NIBC Bank N.V. This transaction has passed the reinvestment
period in June 2008. It is predominantly composed of senior
secured loans.

Ratings Rationale

The actions on the Class II notes are primarily a result of
deleveraging of the senior notes and subsequent improvement of
over-collateralization ratios since the rating action in February
2013. Moody's had previously placed the Baa2 (sf) rating of Class
II under review for possible upgrade on 14 November 2013 due to
significant loan prepayments. The actions conclude the rating
review of the transaction.

The Class I-A and I-B have paid down by approximately EUR42M
(15.84%) in the last 12 months and by EUR251M (96.94%) since
closing. As a result of the deleveraging, over-collateralization
has increased. As of the trustee's December 2013 report, the
Class I had an over-collateralization ratio of 762.08%, compared
with 205.14% 12 months ago, and the Class II, an over-
collateralization ratio of 151.27%, compared with 125.12%.

The downgrades of the ratings on the Class III-A, III-B, III-C,
IV-A and IV-B notes are due to the deterioration of some key
metrics of the underlying collateral pool in the past twelve
months. The reported diversity score has reduced to 11 from 18 in
December 2012. Current reported OC ratios of Class III and IV are
111.84% and 88.44%, respectively. The Moody's calculated Caa
bucket completely covers the Class III tranche and Class IV is
substantially under collateralized. In addition, Moody's analysis
incorporates current defaults totalling EUR12.1 million compared
to reported defaults of EUR4.2 million.

The rating on the combination notes addresses the repayment of
the rated balance on or before the legal final maturity. For the
Class Q notes, the "rated balance" at any time is equal to the
principal amount of the combination note on the issue date minus
the sum of all payments made from the issue date to such date, of
either interest or principal. The rated balance will not
necessarily correspond to the outstanding notional amount
reported by the trustee.

The key model inputs Moody's uses in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. In its base
case, Moody's analyzed the underlying collateral pool as having a
performing par and principal proceeds balance of EUR55 million,
defaulted par of EUR12 million, a weighted average default
probability of 28.14% (consistent with a WARF of 5398 with a
weighted average life of 2.27 years), a weighted average recovery
rate upon default of 49.36% for a Aaa liability target rating, a
diversity score of 11 and a weighted average spread of 3.65%.

The default probability derives from the credit quality of the
collateral pool and Moody's expectation of the remaining life of
the collateral pool. The estimated average recovery rate on
future defaults is based primarily on the seniority of the assets
in the collateral pool. For a Aaa liability target rating,
Moody's assumed that a recovery of 50% of the 98.16% of the
portfolio exposed to first-lien senior secured corporate assets
upon default and of 15% of the remaining non-first-lien loan
corporate assets upon default. In each case, historical and
market performance and a collateral manager's latitude to trade
collateral are also relevant factors. Moody's incorporates these
default and recovery characteristics of the collateral pool into
its cash flow model analysis, subjecting them to stresses as a
function of the target rating of each CLO liability it is
analyzing.

Methodology Underlying the Rating Action:

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

Factors that would lead to an upgrade or downgrade of the rating:

In addition to the base-case analysis, Moody's conducted
sensitivity analyses on the key parameters for the rated notes,
for which it assumed lower credit quality in the portfolio to
address refinancing risk. Loans to European corporates rated B3
or lower and maturing between 2014 and 2015 make up approximately
35.5% of the portfolio, which could make refinancing difficult.
Moody's ran a model in which it raised the base case WARF to 6159
by forcing ratings on 50% of the refinancing exposures to Ca; the
model generated outputs that were within one notch of the base-
case results.

This transaction is subject to a high level of macroeconomic
uncertainty, which could negatively affect the ratings on the
note, in light of 1) uncertainty about credit conditions in the
general economy and 2) the large concentration of lowly- rated
debt maturing between 2014 and 2015, which may create challenges
for issuers to refinance. CLO notes' performance may also be
impacted either positively or negatively by 1) the manager's
investment strategy and behavior and 2) divergence in the legal
interpretation of CDO documentation by different transactional
parties due to because of embedded ambiguities.

Additional uncertainty about performance is due to the following:

1) Portfolio amortization: The main source of uncertainty in this
transaction is the pace of amortization of the underlying
portfolio, which can vary significantly depending on market
conditions and have a significant impact on the notes' ratings.
Amortization could accelerate as a consequence of high loan
prepayment levels or collateral sales by the liquidation agent /
the collateral manager or be delayed by an increase in loan
amend-and-extend restructurings. Fast amortization would usually
benefit the ratings of the notes beginning with the notes having
the highest prepayment priority.

2) Around 75% of the collateral pool consists of debt obligations
whose credit quality Moody's has assessed by using credit
estimates.

3) Recovery of defaulted assets: Market value fluctuations in
trustee-reported defaulted assets and those Moody's assumes have
defaulted can result in volatility in the deal's over-
collateralization levels. Further, the timing of recoveries and
the manager's decision whether to work out or sell defaulted
assets can also result in additional uncertainty. Moody's
analyzed defaulted recoveries assuming the lower of the market
price or the recovery rate to account for potential volatility in
market prices. Recoveries higher than Moody's expectations would
have a positive impact on the notes' ratings.

Long-dated assets: The presence of assets that mature beyond the
CLO's legal maturity date exposes the deal to liquidation risk on
those assets. Moody's assumes that, at transaction maturity, the
liquidation value of such an asset will depend on the nature of
the asset as well as the extent to which the asset's maturity
lags that of the liabilities. Liquidation values higher than
Moody's expectations would have a positive impact on the notes'
ratings.

4) Lack of portfolio granularity: The performance of the
portfolio depends to a large extent on the credit conditions of a
few large obligors with Caa1 or lower/non-investment-grade
ratings, especially when they default. Because of the deal's low
diversity score and lack of granularity, Moody's supplemented its
typical Binomial Expansion Technique analysis with a simulated
default distribution using Moody's CDOROMTM software and an
individual scenario analysis.

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


* NETHERLANDS: Corporate Bankruptcies Down Almost 20% in January
----------------------------------------------------------------
DutchNews.nl, citing bankruptcy registration website
faillissementsdossier.nl, reports that the number of companies
going bust in the Netherlands in January was down almost 20% on a
year ago.

According to DutchNews.nl, the website said that in January, 964
companies and institutions went bankrupt, compared with 1,162 in
the year earlier period.

There were a record number of bankruptcies last year but the
month on month figures have been declining since July,
DutchNews.nl notes.

The transport sector recorded the highest improvement and there
was also improvement in construction, DutchNews.nl relates.



===========
P O L A N D
===========


COGNOR INT'L: Moody's Assigns (P)Caa2 Rating to EUR100.4MM Notes
----------------------------------------------------------------
Moody's Investors Service assigned a (P)Caa2 rating to Cognor
International Finance proposed EUR100.4 million of senior secured
notes due February 2020. At the same time Moody's upgraded Cognor
S.A.'s PDR to Caa2-PD from Ca-PD/LD following the completion of
its capital restructuring. Cognor's corporate family (CFR) is
affirmed at Caa2. The outlook has been changed to stable from
negative.

Moody's issues provisional ratings in advance of the final
documentation being executed and these ratings reflect Moody'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

Cognor's Caa2 CFR reflects: 1) the still challenging European and
specifically Polish steel industry conditions, including weak
underlying demand for scrap and semi finished products such as
billets and low prices; 2) the weak profitability and cash flow
generation of the Group; 3) the weak liquidity profile; and 4)
the high foreign exchange risk given the denomination of its
indebtedness in Euros.

However, the ratings positively reflects: 1) the recent
stabilization of Cognor's profitability following the tool-
treatment agreement entered into in February 2013; 2) the
correlation between scrap prices and selling prices that somewhat
insulates Cognor from lower selling prices should market
conditions further weaken; and 3) the reduced capex.

Cognor's CFR primarily derives from the company's weak operating
and financial performance over the last two years stemming from
weak demand for steel semi finished products (billets) and a
decline in selling prices. Nevertheless, since Q2 2013 Cognor
reported improved product mix which led to a substantial growth
in its finished product shipment that is expected to result is a
stable EBITDA versus the previous year. Moody's expects that
Cognor will be able to pursue its product mix offering
improvement thanks to the strengthening of the exclusive tool
treatment agreement signed with a local rolling mill during Q1
2013 as well as benefit from some expected improvement of the
market conditions in Poland and neighboring countries.

The upgrade of PDR to Caa2-PD reflects the completion of the
capital restructuring, resulting in reduced pressure on cash flow
for debt service and improved capital structure.

After Moody's standard adjustments, total leverage at closing
remains high amounting to 9.5x. Considering that the senior notes
do not amortize and that the possible payment of interest in PIK
could increase the size of the principal amount of the notes, no
material deleveraging of the company is expected unless driven by
EBITDA growth. Moody's expects the company's EBITDA margin (after
standard adjustments) to show a low growth rate and moves towards
5% in the coming year, supported by the improved mix offering and
expected growth in demand from the construction and automotive
markets. Furthermore, Moody's expects the company to become free
cash flow positive over the next two years, benefitting from a
lower amount of senior secured debt interest and the option to
PIK those interests.

Structural Considerations

On February 4, 2014, Cognor completed the restructuring of the
senior secured notes issued in 2007 via an exchange offer
governed by a scheme of arrangement that resulted in the company
issuing new senior secured notes in an amount of c. EUR100.4
million due in February 2020, and exchangeable notes of an amount
of c.EUR25 million due in 2021. Based on the new capital
structure, the new senior secured notes are rated (P)Caa2, at the
same level than the CFR.

Moody's notes that the new senior secured notes will benefit from
a PIK Toggle feature that will give the company the option to
defer an interest payment by agreeing to pay an increased PIK
coupon. The PIK toggle feature for the senior secured notes will
apply for the first three years. During that period, Cognor, as
its own discretion, will pay either cash interest or PIK, or a
combination of the two.

Moody's also notes that the interest on the exchangeable notes
can be paid in cash if certain conditions under the Senior Notes
Indenture are met.

The new senior secured notes are secured obligations of the
company and will benefit from first ranking security interests
and guarantee from the material group of companies. Pursuant to
the Subordination Deed, the obligations of Cognor under the
exchangeable notes are subordinated to the senior notes. While
the exchangeable notes are unsecured, Moody's notes that they are
guaranteed by Cognor.

LIQUIDITY

Post restructuring, Cognor's liquidity, although not particularly
strong, should suffice to cover near-term operational
requirements (including capex) and debt service, with no
amortization, no debt maturity before 2020 and the option to PIK
the otherwise cash interests on the senior notes. However, the
liquidity profile of the company will remain stretched with
limited cash generation and limited external sources of finance
(including no significant committed revolver facilities). Cognor
remains reliant on the willingness of its local bank to extend
maturing credit lines.

Outlook

The outlook has been changed to stable from negative. Moody's
believes that the market for steel in Poland will see some signs
of improvement during the year, benefitting from the anticipated
GDP growth and general improvement in the domestic demand..
Pricing should remain however under pressure with limited scope
for increase in the current overcapacity environment, which will
continue to pressure profitability and cash flow metrics.

What Could Change The Rating UP

A positive action on the ratings or the outlook could be
considered if 1) the company liquidity profile improves post
restructuring with the company becoming free cash flow positive
on a sustainable basis; 2) the regional steel market conditions
improve, leading to higher margins; and 3) leverage is clearly on
a reducing path.

What Could Change The Rating DOWN

Negative pressure might develop if (1) market conditions
deteriorate affecting the cash generation and liquidity of the
company; (2) the company is not able to pay its senior secured
notes interest in cash evidencing liquidity pressure or (3) if
the company is not able to reduce its gross leverage over time.

The principal methodology used in these ratings was the Global
Steel Industry published in October 2012. Other methodologies
used include Loss Given Default for Speculative-Grade Non-
Financial Companies in the U.S., Canada and EMEA published in
June 2009.

Headquartered in Poraj, Poland, Cognor S.A. is the largest trade
of steel scrap and among the leading producers and distributors
of high grade long steel products in its domestic market. Founded
in 1990 as a pure scrap trader, the company has transformed
itself into a fully integrated producer of steel products through
a range of acquisitions mainly in the long steel production and
distribution business. Cognor S.A. is listed on the Warsaw Stock
Exchange; 65.98% of the company's shares are held by its founder
Mr. Przemyslaw Sztuczkowski.



===============
P O R T U G A L
===============


PORTUGAL TELECOM: Moody's Comments on Oi's Capital Subscription
---------------------------------------------------------------
Moody's Investors Service said that the announced commitment from
a syndicate of Brazilian and international banks to subscribe to
BRL6.0 billion of the capital increase proposed as part of the
steps of the Oi S.A. and Portugal Telecom SGPS, S.A. ("PT",
Ba2/on review for possible upgrade) merger reduces the overall
uncertainty surrounding the closing of the merger transaction
announced on October 2nd, 2013. This announcement comes in
addition to the BRL2.0 billion that was announced in October,
2013 and has already been committed by Oi's current controlling
shareholders and an investment vehicle managed and administered
through Banco BTG Pactual S.A. (D+/Baa3/sta), thus guaranteeing
the upper amount of the 7.0 to 8.0 billion range, of the initial
capital increase amount expectation by Oi.

"Oi recently received approval for the merger with PT from the
Brazilian anti-trust authority, "CADE", further reducing the
steps left for the successful completion of the merger with PT,
which at this point are mainly: (1) the successful completion of
the capital increase by Oi of between BRL7.0 to 8.0 billion
(approx. USD2.90 to USD3.32 billion); (2) shareholder and
regulatory approvals in Portugal, Brazil (Anatel) and the United
States (S.E.C.); as well as (3) the PT bondholders consent
approval. Moody's does not expect the merger to be completed
before April 2014," explained Moody's VP - Senior Credit Officer,
Soummo Mukherjee.

Headquartered in Rio de Janeiro, Brazil, Oi is Brazil's largest
incumbent local exchange carrier with a total of 18.3 million
residential revenue generating units at the end of September,
2013 (12 million fixed lines in service , 5.3 million fixed
broadband and 909 thousand Pay TV subscribers) plus 47,3 million
mobile customers and 8.5 million B2B customers. At the end of 30
September 2013, Oi had revenues of BRL28.6 billion (US$11,9
billion) and adjusted EBITDA of approximately BRL9.7 billion
(US$.4.0 billion ).



===========
R U S S I A
===========


RUSSIAN GRIDS: Moody's Affirms 'Ba1' Corporate Family Rating
------------------------------------------------------------
Moody's Interfax Rating Agency has affirmed the Aa1.ru national
scale rating (NSR) of Russian Grids, JSC; the Aaa.ru NSR of FGC
UES, JSC, Russian Grids' subsidiary, which operates the Russian
national transmission grid; and the Aa2.ru NSR of five Russian
Grids' subsidiaries, which operate distribution grids: IDGC of
Center and Volga Region, JSC, IDGC of Urals, JSC, IDGC of Volga,
JSC, Lenenergo, JSC and MOESK, OJSC. Moody's Interfax is
majority-owned by Moody's Investors Service (MIS).


Ratings Rationale

The affirmation of Russian Grids' and their six subsidiaries'
NSRs follows the affirmation of their global scale ratings by
MIS: the Ba1 corporate family rating (CFR) of Russian Grids, the
Baa3 senior unsecured ratings of FGC UES, and the Ba2 CFRs of
IDGC of Center and Volga Region, IDGC of Urals, IDGC of Volga,
Lenenergo, and MOESK.

Principal Methodologies

The methodologies used in rating Russian Grids, JSC and FGC UES,
JSC were Regulated Electric and Gas Networks published in August
2009, and the Government-Related Issuers: Methodology Update
published in July 2010.

The principal methodology used in rating IDGC of Center and Volga
Region, JSC, IDGC of Urals, JSC, IDGC of Volga, JSC, Lenenergo,
JSC and MOESK, OJSC was Regulated Electric and Gas Networks
published in August 2009.

Headquartered in the city of Moscow, Russian Grids is the holding
company for FGC UES and 14 interregional and regional
distribution grid subsidiaries. The Russian government owns a
85.31% stake in Russian Grids. Russian Grids' operating grid
subsidiaries are regulated natural monopolies, whose electricity
transportation revenues accounted for around 80.8% of the group's
6M 2013 consolidated revenue of RUB348.8 billion (US$11.4
billion), with FGC UES assumed to be consolidated from the
beginning of 2013.

Headquartered in Moscow, Russia, FGC UES is the monopoly
electricity transmission system operator in the Russian
Federation. The company's revenues amounted to RUB140.3 billion
(around US$4.5 billion) in 2012 (other operating income of RUB3.5
billion, primarily from non-core activities, is not included).
FGC is 80.6% owned by Russian Grids.

Headquartered in the city of Nizhniy Novgorod, Russia, IDGC of
Center and Volga Region is an interregional electricity
distribution grid business, focused on nine regions in the
European part of Russia. IDGC of Center and Volga Region's 2012
total revenues were RUB58.4 billion (around US$1.9 billion).
Russian Grids holds 50.4% of the company's voting shares.

Headquartered in the city of Yekaterinburg, Russia, IDGC of Urals
is an interregional electricity distribution grid business,
focused on three regions in the Urals: Yekaterinburg, Chelyabinsk
and Perm regions. The company's 2012 total revenues were RUB59.4
billion (US$1.9 billion). Russian Grids holds 51.52% of the
company's voting shares.

Headquartered in the city of Saratov, Russia, IDGC of Volga is an
interregional electricity distribution company, focused on seven
regions in the European part of Russia. IDGC of Volga's 2012
total revenues were RUB45.9 billion (US$1.5 billion). Russian
Grids holds 67.63% of the company's voting shares.

Headquartered in the city of St. Petersburg, Lenenergo is one of
Russia's major regional electricity distribution grid companies,
focused on the St. Petersburg region. Lenenergo's 2012 total
revenues were RUB38.1 billion (before normal technological
losses), or US$1.2 billion. The largest shareholder of Lenenergo
is Russian Grids, which directly and indirectly holds 60.56% of
Lenenergo's voting shares. A blocking stake of 26.57% of voting
shares is owned by the government of the city of St. Petersburg
(Baa1 stable).

Headquartered in the city of Moscow, MOESK is Russia's largest
regional power distribution grid company servicing the Moscow
region. MOESK's 2012 total revenues amounted to RUB125.3 billion
(US$4.0 billion). The largest shareholders of MOESK are the
state-controlled Russian Grids (50.9%); other major shareholders
are entities associated with OJSC Gazprom (Baa1 stable); and the
Moscow city government (Baa1 stable).

Moody's Interfax Rating Agency's National Scale Ratings (NSRs)
are intended as relative measures of creditworthiness among debt
issues and issuers within a country, enabling market participants
to better differentiate relative risks. NSRs differ from Moody's
global scale ratings in that they are not globally comparable
with the full universe of Moody's rated entities, but only with
NSRs for other rated debt issues and issuers within the same
country. NSRs are designated by a ".nn" country modifier
signifying the relevant country, as in ".ru" for Russia. For
further information on Moody's approach to national scale
ratings, please refer to Moody's Rating Methodology published in
October 2012 entitled "Mapping Moody's National Scale Ratings to
Global Scale Ratings.

About Moody's And Moody's Interfax

Moody's Interfax Rating Agency (MIRA) specializes in credit risk
analysis in Russia. MIRA is a joint-venture between Moody's
Investors Service, a leading provider of credit ratings, research
and analysis covering debt instruments and securities in the
global capital markets, and the Interfax Information Services
Group. Moody's Investors Service is a subsidiary of Moody's
Corporation (NYSE: MCO).



=========
S P A I N
=========


CODERE SA: Defaults on EUR127.1MM Loan, Insolvency Looms
--------------------------------------------------------
Carlos Lopez Perea at The Wall Street Journal reports that Codere
SA said it has defaulted on a EUR127.1 million (US$172.19
million) loan after it failed to reach an agreement with
bondholders, a move that leaves the Spanish gambling company a
step closer to insolvency.

According to the Journal, the Madrid-based company said in a
regulatory filing on Feb. 6 that it was unable to service the
loan with Canyon Capital Finance Sarl and funds managed by GSO
Capital Partners LP, and, lacking approval of at least half the
bondholders, failed to get an extension of the payment deadline.

The Journal notes that Codere piled up debt to expand in Latin
America during the Spanish economic boom of the previous decade.
Regulatory setbacks in Mexico and Argentina and a recession in
its home market forced the company to scramble to restructure
much of its debt, the report says.

According to the Journal, the company originally had until Jan. 5
to service the loan with the U.S. funds, and later agreed with
its creditors on a one-month delay. A person close to the
situation said annual interest on the loan was more than 40%,
including fees, the report relays.

The Journal relates that a person close to the creditors'
syndicate, which holds about EUR1 billion worth of Codere's debt,
said this week that the syndicate was proposing a EUR400 million
injection of fresh funds and a EUR350 million debt haircut in
exchange for an 80% stake in the company. The creditors are also
proposing that Codere's current management remains in place, the
person said.

Last month, the Journal recalls, Codere sought preliminary
creditor protection in a Madrid court, the latest of several
attempts by the loss-making bingo and slot machine operator to
find a way to reduce its EUR1.2 billion debt.

According to the report, Codere said February 6 it will continue
on negotiating with bondholders to secure a debt restructuring
deal by May 2.

In the absence of a deal by that date, Spanish law would require
the company to file for bankruptcy protection. However, a Codere
spokesman said that bondholders may force the company into
bankruptcy earlier, on the basis of the loan default, the Journal
notes.


CODERE SA: Comisiones Obreras to Support UGT Suit v. Hedge Funds
-----------------------------------------------------------------
Katie Linsell at Bloomberg News, citing Cinco Dias, reports that
Spain's Comisiones Obreras labor union in the coming days will
file a statement of support for complaint filed by UGT union
against hedge funds that bought Codere SA debt.

As reported by the Troubled Company Reporter-Europe on
February 10, 2014, Reuters related Codere is struggling to keep
up with debt payments because of higher tax bills and other costs
and is one of many Spanish companies grappling with high debt
levels even as the country emerges from recession.  The company,
with debts of EUR1.3 billion at end-September, warned in January
it would be unable to repay the EUR127 million loan, due on
Jan. 5, if it did not first reach an agreement with lenders,
Reuters disclosed.

Codere SA is a Madrid-based gaming company.  It operates betting
shops and race tracks from Italy to Argentina.



===========
T U R K E Y
===========


* TURKEY: S&P Affirms 'BB+' Ratings on 6 Financial Institutions
---------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook to
negative from stable on the following Turkish financial
institutions:

   -- Turkiye Is Bankasi A.S. (Isbank);
   -- Turkiye Garanti Bankasi A.S. (Garanti);
   -- Garanti Finansal Kiralama A.S. (Garanti Leasing);
   -- Yapi ve Kredi Bankasi A.S. (YapiKredi);
   -- HSBC Bank A.S.; and
   -- Turkiye Vakiflar Bankasi TAO (VakifBank).

At the same time, S&P affirmed the 'BB+' long-term counterparty
credit ratings on all six banks and the 'B' short-term ratings on
Isbank, Garanti Leasing, YapiKredi, HSBC Bank A.S., and
VakifBank. S&P also affirmed the 'trAA+'/trA-1' long- and short-
term Turkey national scale ratings on Isbank, VakifBank,
YapiKredi, and HSBC Bank A.S.

"The outlook revision follows a similar action on the Republic of
Turkey (foreign currency BB+/Negative/B; local currency
BBB/Negative/A-2; Turkey national scale trAAA/trA-1; unsolicited
ratings).  We believe that risks to Turkey's economic performance
and banking sector profitability could potentially lead to an
unexpected deterioration in public finances beyond our base-line
forecasts published on Nov. 22, 2013.  We have lowered our
projection of average 2014-2015 GDP to 2.2% from 3.4%, and
consider that unfavorable exchange and interest rate dynamics
would pose further downside risks to these forecasts.  Weaker
growth would almost certainly lead to poorer fiscal performance
(as it did in 2009), and could also put pressure on asset quality
in Turkey's financial sector.  In light of our criteria, the
effect of these revisions has prompted us to reevaluate risks to
Turkey's sovereign creditworthiness," S&P said.

"In our view, the weakened economic growth prospects could
negatively affect Turkish banks' asset quality, earnings, and
capitalization.  We also factor into our assessment the credit
boom observed in the recent years together with the current
forecast of an increase in unemployment, the devaluation of the
Turkish lira in recent months, and the hikes in interest rates.
The latter could damage the repayment ability of borrowers, in
our opinion, particularly in consumer finance and credit cards.
Furthermore, credit growth has been partly financed by short-term
external funding, resulting in the increased reliance on foreign
financing, due to the country's low structural savings rate.
This exposes the banking sector to an erosion of investor
confidence, particularly with increased political uncertainty and
the potential repercussions of tapering of the U.S. Federal
Reserve's quantitative easing," S&P added.

However, S&P believes that the Turkish banking sector's sound
asset quality, earnings, and capitalization should provide an
adequate buffer to absorb the elevated risks over the next 12
months, without dramatically damaging the banks' financial
profile.

The negative outlooks reflect that on Turkey.  In S&P's opinion,
Turkish banks' financial profile and performance will remain
highly correlated with sovereign creditworthiness, owing to their
significant holdings of government securities and exposure to the
domestic environment.  Therefore, bank-specific factors that
might lead S&P to revise its ratings are limited, and its rating
actions on Turkish banks will largely be contingent on S&P's
rating actions on Turkey.

A negative rating action on the foreign currency ratings on the
sovereign, all other things being equal, would trigger a negative
rating action on the six financial institutions.  Furthermore,
S&P would likely revise the outlooks on these banks to stable if
it took the same action on the sovereign.



=============
U K R A I N E
=============


CREATIV GROUP: S&P Lowers Corporate Credit Rating to 'CCC+'
-----------------------------------------------------------
Standard & Poor's Ratings Services said that it has lowered its
long-term foreign currency corporate credit rating on Ukraine-
based agribusiness group Creativ Group OJSC to 'CCC+' from 'B-'.

Simultaneously, S&P affirmed its 'B-' long-term local currency
corporate credit rating on Creativ.

The outlook on both ratings is negative.

The downgrade follows S&P's downgrade of Ukraine and its downward
revision of its transfer and convertibility (T&C) assessment on
Ukraine to 'CCC+', taking into account that Creativ's core assets
are concentrated in Ukraine.  The revised T&C assessment
constrains the foreign currency rating on Creativ because of the
likelihood of increased restrictions on repatriation (changing
funds held abroad into the local currency) and, more generally,
negative sovereign interaction.

S&P believes that the deteriorated creditworthiness of the
country increases the risk of laws instructing export companies
to convert their hard currencies, which could affect the group's
dollar-denominated debt service.  Equally importantly, the
financial turmoil affecting Ukraine could in turn affect local
banks and therefore constrain the financing of the group's
working capital.

The rating reflects S&P's assessment of Creativ's "vulnerable"
business risk profile and "aggressive" financial risk profile, as
S&P's criteria define these terms.

The negative outlook on Creativ takes into account S&P's negative
outlook on Ukraine and reflects the possibility of a further
downgrade in the next 12 months.  This could happen if there were
tighter currency controls, more restrictions on transfer of
funds, rising political or fiscal pressures, or if Creativ's
liquidity deteriorated because local banks came under pressure,
thereby calling into question the group's ability to roll over
its short-term debt.

S&P could lower the rating on Creativ if it lowered its ratings
on Ukraine further and revised the T&C assessment downward.
However, this would not automatically result in a downgrade of
Creativ if the company were able to show resilience to country-
specific factors, including the risk of stricter currency
restrictions. Significant operating setbacks due to margin
squeeze in the group's crushing activities could also lead to a
downgrade if they were to trigger a liquidity issue.

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 refinancing risks.  Any
rating upside is closely linked to a positive rating action on
the sovereign.  An upgrade of Ukraine would trigger a similar
action on Creativ.


MHP SA: S&P Lowers Corp. Credit Ratings to 'CCC+'; Outlook Neg.
---------------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its long-term
foreign currency corporate credit ratings on Ukraine-based
agribusiness company MHP S.A. to 'CCC+' from 'B-'.
Simultaneously, S&P affirmed its 'B-' long-term local currency
rating on the company.  The outlook on both ratings is negative.

S&P also lowered its issue rating on the company's senior
unsecured debt to 'CCC+' from 'B-'.  S&P's '3' recovery rating on
this debt remains unchanged.

The downgrade of MHP follows the same action on Ukraine and S&P's
downward revision of the country's transfer and convertibility
(T&C) assessment to 'CCC+' from 'B-', and takes into account that
MHP's core operating assets are in Ukraine.  The revised T&C
assessment constrains the foreign currency rating on MHP because
of the likelihood of increased restrictions on foreign exchange
repatriation (changing funds held abroad into local currency)
and, more generally, negative sovereign interaction.

S&P believes that Ukraine's deteriorated creditworthiness
increases the risk of the introduction of laws instructing export
companies to convert their hard currencies, which could affect
MHP's dollar-denominated debt service.

S&P also believes that weakening sovereign credit quality and
political instability in Ukraine could constrain access to
financial markets for Ukrainian issuers.  Increasing taxes or
delays in refunds of taxes can lead to working capital outlays
and additional debt.  MHP has a bond maturing in the first half
of 2015 and therefore depends on access to capital markets.

S&P regards MHP's country risk exposure to Ukraine as a key risk
factor.  MHP derives over two-thirds of total sales in its
domestic market.

MHP has an ambitious expansion strategy, in S&P's view, with
related execution risks, and is exposed to the volatile
agribusiness industry.  The company has indicated it is
increasing its poultry production capacity to 600,000 tons and
investing in land bank expansion.  However, investments are lower
than historical levels, and S&P understands the company is
considering postponing the start of some of its new construction
projects.

S&P derives its long-term rating on MHP through its 'b+' anchor,
reflecting its assessments of the company's business risk profile
as "vulnerable" and its financial risk profile as "intermediate,"
according to its criteria.  S&P assess MHP's stand-alone credit
profile (SACP) at 'b', one notch lower than the anchor, to factor
in financial policy risks linked to MHP's expansion.

S&P's assessment of MHP's business risk incorporates its views of
risk in the global agribusiness and commodity food industry as
"intermediate" and country risk in Ukraine as "very high."  MHP's
business risk profile is supported, however, by its leading
position in poultry production in Ukraine, and its track record
of profitable growth.  The poultry segment, including sunflower
oil production, accounts for more than 70% of sales and earnings.
Grain growing and meat processing make up the remainder.  MHP
generally maintains high EBITDA margins of 25%-35% through
economies of scale, a vertically integrated business model, and
fairly low raw material, labor, and land lease costs.

S&P thinks MHP's EBITDA will decline in 2013 due to the weak
pricing environment for poultry and grain.  S&P then expects
recovery in 2014, owing to a larger land bank, higher volumes
after the completion of MHP's new green-field facility, and
increasing capacity utilization.  S&P forecasts that MHP's EBITDA
margins will contract moderately by more than 300 basis points in
2013, and then stabilize further out.

"We based our assessment of MHP's financial risk profile as
"intermediate" on our expectation that the company's leverage
(debt to EBITDA) will be at about 3.0x, with its EBITDA interest
coverage exceeding 6x.  At the same time, MHP is characterized by
inherently volatile free operating cash flow (FOCF), given the
company's growth-oriented strategy.  MHP's debt is fully
denominated in foreign currencies, including U.S. dollars and
euros.  The company has significant debt maturities over the next
few years, and we consider liquidity to be "less than adequate."
Nevertheless, MHP's prudent approach to refinancing upcoming debt
maturities underpins the ratings, in our view, "S&P said.

"We forecast that FOCF will turn modestly positive in 2013-2014,
following negative FOCF over the past five years, owing to
substantial investments in capital spending, significant working-
capital requirements, and business growth.  MHP is now easing its
capital expenditures (capex) after the completion of the first
phase of its new green-field facility, while cash flow from
operations continues to increase.  In our forecast, we also
factor in potential acquisitions of up to US$400 million after
2014, as well as potential dividend payments of up to 50% of net
income.  We think that key credit metrics will deteriorate as a
result of a weaker operating performance in 2013, with a debt-to-
EBITDA ratio, adjusted for operating leases and noncash items, at
about 3.0x in 2013-2014 versus 2.8x in 2012," S&P added.

The negative outlook on MHP takes into account S&P's negative
outlook on Ukraine and reflects the possibility of a further
downgrade of the company in the next 12 months.  This could
happen if S&P saw tighter currency controls, more restrictions on
transfer of funds, or rising political or fiscal pressures that
could weigh on MHP's foreign currency denominated debt service.

S&P would not automatically lower its ratings on MHP if it
lowered its ratings on Ukraine and revised down its T&C
assessment.  Before considering a downgrade, S&P would evaluate
the company's ability to show resilience to country-specific
factors, including the risk of stricter currency restrictions,
through stress tests of its liquidity in the event of sovereign
default.  S&P notes that MHP benefits from recurrent streams of
foreign currency inflows stemming from exports that somewhat
mitigate local T&C issues.

S&P would revise the outlook to stable if conditions in Ukraine
stabilized and S&P saw lower risk related to currency controls
and repatriation requirements.  Any rating upside is closely
linked to a positive rating action on the sovereign.  However,
upside could also occur if MHP demonstrated its ability to
continue servicing its foreign currency debt despite the
liquidity constraints stemming from the sovereign debt.


MRIYA AGRO: S&P Cuts Corp. Credit Rating to 'CCC+'; Outlook Neg.
----------------------------------------------------------------
Standard & Poor's Ratings Services said that it has lowered its
long-term foreign currency corporate credit rating on Ukraine-
based farming group Mriya Agro Holding PLC to 'CCC+' from 'B-'.

Simultaneously, S&P affirmed its 'B-' long-term local currency
corporate credit rating on Mriya.

The outlook on both ratings is negative.

Recovery ratings on the company's debt issues are unaffected by
this rating change.

The downgrade follows S&P's downgrade of Ukraine and the downward
revision of its transfer and convertibility (T&C) assessment on
Ukraine to 'CCC+' from 'B-', taking into account that Mriya's
core assets -- its land-bank, silos, and machinery -- are
concentrated in Ukraine.  The revised T&C assessment constrains
the foreign currency rating on Mriya because of the likelihood of
increased restrictions on repatriation (changing funds held
abroad into the local currency) and, more generally, negative
sovereign interaction.

S&P believes that the deteriorated creditworthiness of the
country increases the risk of laws instructing export companies
to convert their hard currencies, which could affect the group's
dollar-denominated debt service.

The rating on Mriya reflects S&P's assessment of the company's
business risk profile as "vulnerable" and its financial risk
profile as "significant."

The negative outlook on Mriya takes into account S&P's negative
outlook on Ukraine and reflects the possibility of a further
downgrade in the next 12 months.

S&P could lower the rating if there were tighter currency
controls, more restrictions on the transfer of funds, rising
political or fiscal pressures, or if Mriya's liquidity
deteriorated because local banks came under pressure, thereby
calling into question the group's ability to roll over its short-
term debt.

However, if S&P lowered its ratings on Ukraine and revised its
T&C assessment downward, this would not automatically result in a
downgrade of Mriya if the company showed resilience to country-
specific factors, including the risk of stricter currency
restrictions.  S&P notes that Mriya benefits from recurrent
foreign currency inflows stemming from exports.  This, combined
with offshore cash accounts, mitigates local T&C issues.

S&P would revise the outlook to stable if conditions in Ukraine
stabilized and S&P saw lower risk related to currency controls
and repatriation requirements.  Any rating upside is closely
linked to positive rating actions on the sovereign.  However, it
could also occur should Mriya demonstrate its ability to continue
servicing its foreign currency debt despite the liquidity
constraints stemming from the sovereign.


UKRAINIAN AGRARIAN: S&P Lowers CCR to 'CCC+'; Outlook Negative
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term foreign
currency corporate credit rating on Ukraine-based farming group
Ukrainian Agrarian Investments S.A. (UAI) to 'CCC+' from 'B-'.
Simultaneously, S&P affirmed the 'B-' long-term local currency
rating on UAI.  The outlook on both ratings is negative.

The negative rating action on UAI follows S&P's downgrade of
Ukraine and its downward revision of the country's transfer and
convertibility (T&C) assessment to 'CCC+', taking into account
that UAI's core assets -- its land bank, silos, and machinery --
are concentrated in Ukraine.  The revised T&C assessment
constrains the foreign currency rating on UAI because of the
likelihood of increased restrictions on repatriation (changing
funds held abroad into the local currency) and, more generally,
negative sovereign interaction.

S&P believes that the deteriorated creditworthiness of the
country increases the risk of laws instructing export companies
to convert their hard currencies, which could affect the group's
dollar-denominated debt service.

The rating on UAI reflects S&P's assessment of the group's
business risk as "vulnerable" and its financial risk profile as
"significant."

S&P thinks that UAI is exposed to several risks due to weakening
sovereign credit quality.  These risks include potential
restrictions on transfer of funds from Ukraine and more stringent
currency controls.  More generally, S&P also sees the risk of
increased fiscal pressure and obstructed access to financial
markets for Ukrainian corporations.  Although UAI exports a
significant percentage of its production, we think that it is not
sheltered from these risks.

"Still, we note that UAI's operations are solid and provide
sizable amounts of U.S. dollar-denominated export revenues.
Moreover, we think UAI is only very marginally exposed to value-
added tax refunds.  Additionally, during the year, UAI piles up
material amounts of cash in foreign currencies outside Ukraine,
which could be used to service its debt.  We note, however, that
these cash accounts are currently at a seasonal low point and
will only peak in summer after the harvest.  We do not believe
that the group's exports are at risk, as these provide
substantial amounts of foreign currency to the country.  The
Ukrainian government already has currency controls in place: It
requires exporters to sell 50% of all foreign currency revenues
in the domestic foreign currency market.  The National Bank of
Ukraine recently decided to extend this regulation, regardless of
the source of such proceeds. A more restrictive foreign currency
policy could negatively affect UAI, in our view," S&P said.

"We view UAI's business risk profile as "vulnerable," reflecting
the group's operation in a volatile agricultural industry and the
high risk associated with doing business in Ukraine.  Its lack of
market share in the global agribusiness industry and limited
brand recognition are the key credit factors for its "weak"
competitive position.  Still, we believe that UAI benefits from
its lease rights to high-quality farmland, low production costs,
the currently favorable trading environment for its crops in
terms of pricing and demand, and a natural hedge against weather
risk thanks to its 64 farms located across different regions in
Ukraine," S&P added.

S&P's assessment of UAI's business risk profile also incorporates
its view of the global agribusiness and commodity food as an
"intermediate risk" industry and S&P's opinion of "very high"
country risk in Ukraine.  UAI has 100% of its asset base in
Ukraine, although a significant amount of its revenues are export
driven.  This substantial amount of revenue denominated in U.S.
dollars ensures debt service and naturally hedges against foreign
exchange risk.

S&P assess UAI's financial risk profile as "significant."  S&P
expects its debt to EBITDA to be between 2.4x and 2.6x over the
next two years.  Its EBITDA interest cover constrains the
financial risk profile to S&P's "significant" category,
reflecting the group's reliance on short-term debt and its
assertive expansion program.

S&P expects UAI will report positive cash flow generation for
2013 and a slight improvement of the group's financial metrics.
Cash flow generation is highly contingent on the group's decision
to sell its crop by the end of the fiscal year (ending Dec. 31)
or to wait until the beginning of the next calendar year,
depending on expected pricing.

S&P's base case assumes:

   -- Better yields and higher volumes than in 2012; and
   -- A reduced price for corn in 2013 and a moderate rebound in
      2014.

Based on these assumptions, S&P arrives at the following credit
measures:

   -- EBITDA of about US$45 million in 2013 -- a slight decrease
      compared with 2012; and
   -- Net debt to EBITDA exceeding 3x at year-end 2013.

S&P currently views UAI's liquidity as "less than adequate" under
its criteria, primarily due to the high amount of short-term debt
in the group's capital structure.  This is in line with local
agribusiness practice to finance working capital with short-term
facilities.  Although S&P forecasts a ratio of cash sources to
cash uses of about 1x in 2014, it is possible that UAI's
inability to renew its short-term debt in 2014 or after could
result in a drop to less than 1x of sources to uses.  In
addition, S&P notes UAI's history of technical defaults under
some of its debt agreements.

UAI also had about US$88 million of biological assets (i.e.
growing plants) and US$51 million of inventories on its balance
sheet at year-end 2012.  S&P expects inventory levels to have
increased at year-end 2013 because the corn price is currently
quite low and UAI opportunistically expects better pricing in the
first quarter of 2014.  Biological assets (primarily winter
wheat) and inventory are a strong element of liquidity.  The
group successfully negotiated new short-term lines in 2013, which
suggests relatively good credit standing with local banks.

The negative outlook on UAI mirrors the outlook on Ukraine and
reflects the possibility of a further downgrade in the next 12
months.  This could happen if there were tighter currency
controls, more restrictions on transfer of funds, rising
political or fiscal pressures, or if UAI's liquidity deteriorated
because local banks came under pressure, thereby calling into
question the group's ability to roll over its short-term debt.

However, if S&P lowered its ratings on Ukraine and revised its
T&C assessment downward, this would not automatically result in a
downgrade of UAI if the group showed resilience to country-
specific factors, including the risk of stricter currency
restrictions.  S&P notes that UAI benefits from recurrent inflows
of foreign currency from exports.  This, combined with offshore
cash accounts, mitigates local T&C issues.

S&P would revise the outlook to stable if the situation in
Ukraine stabilized and S&P saw lower risk related to currency
controls and repatriation requirements.  Any rating upside is
closely linked to positive rating actions on the sovereign.
However, it could also occur should UAI demonstrate its ability
to continue servicing its foreign currency debt despite the
liquidity constraints stemming from the sovereign.


UKRLANDFARMING PLC: S&P Lowers Corporate Credit Rating to 'CCC+'
----------------------------------------------------------------
Standard & Poor's Ratings Services said it had lowered its long-
term foreign currency corporate credit ratings on Ukraine-based
agribusiness company UkrlandFarming PLC to 'CCC+' from 'B-' and
affirmed the 'B-' long-term local currency rating.  The outlook
is negative.

S&P also lowered its issue rating on the company's senior
unsecured notes to 'CCC+' from 'B-'.  The recovery rating on
these notes remains at '4', indicating S&P's expectation of
average (30%-50%) recovery in the event of a payment default.

The downgrade follows S&P's downgrade of Ukraine and its downward
revision of the country's transfer and convertibility (T&C)
assessment to 'CCC+', taking into account that UkrlandFarming's
core assets are concentrated in Ukraine.  The revised T&C
assessment constrains the foreign currency rating on
UkrlandFarming because of the likelihood of increased
restrictions on repatriation (changing funds held abroad into the
local currency) and, more generally, negative sovereign
interaction.

S&P believes that Ukraine's deteriorated creditworthiness
increases the likelihood that the government will enact laws
mandating export companies to convert their hard currencies,
which could affect the group's dollar-denominated debt service.

S&P also believes that weakening sovereign credit quality and
political instability in Ukraine could constrain access to
financial markets for Ukrainian issuers.  Increasing taxes or
delays in tax refunds can lead to working capital outlays and
additional debt.

The rating reflects S&P's assessments of UkrLandFarming's
business risk profile as "vulnerable" and its financial risk
profile as "intermediate."

"We base our view of UkrLandFarming's weak business risk on the
company's exposure to supply and demand of commodity-type
products within the volatile agribusiness industry.  In addition,
the company generates its revenues and earnings within Ukraine,
where all its operating assets are located.  We consider the
company's exposure to Ukraine as a key risk factor.  We view
UkrLandFarming's corporate governance as "weak," owing to the
dominance of its owner and CEO, Oleh Bakhmatuk, the lack of
independence of the board of directors, and material related-
party transactions.  There is also limited information as to the
credit quality of the private financial institutions and other
assets owned by Mr. Bakhmatyuk," S&P said.

UkrLandFarming's solid market positions in its key business
segments and its overall position as a large agribusiness player
in Ukraine underpin its business risk profile.  The company has
built a track record of profitable growth since its inception in
2008.  UkrLandFarming maintains a high EBITDA margin at about
40%, through economies of scale and relatively low costs.

In S&P's financial risk profile assessment, it integrates its
view that the company will continue to maintain an aggressive
financial policy with substantial negative free operating cash
flow (FOCF), given its growth-oriented strategy and acquisitive
nature.  Total sales stood at EUR995 million by June 30, 2013,
versus $60 million in 2009, following a series of acquisitions.
UkrLandFarming is also increasing the scale of its investments to
generate organic growth, which could, in S&P's view, be difficult
to sustain.  S&P factors in its view of the company's liquidity,
which it considers to be less than adequate, based on S&P's
estimate of the ratio of expected liquidity sources to uses over
the next year at close to 1x.  UkrLandFarming has meaningful debt
maturities over the next several years.

"We expect UkrLandFarming's revenues in key business segments --
crops and eggs at subsidiary AvangardCo -- to continue increasing
over time.  We forecast sales exceeding US$2 billion in 2013.  We
believe the company will generate further sales growth through
higher volumes, notably through rising export volumes in the
crops segments and at AvangardCo, and a relatively favorable
pricing environment for UkrLandFarming's key agricultural
products, such as corn.  The likely increase in UkrLandFarming's
export volumes will, in our opinion, broaden the geographic
diversity of its operating income," S&P noted.

"We forecast that UkrLandFarming's EBITDA margins will remain
generally healthy over the next few years, with a stable EBITDA
margin in 2013 and a moderate contraction in 2014-2015.  This
slight decline will likely occur because of rising input costs,
stemming from rising inflation, and a negative shift in the
product mix as the company expands some of its lower-margin
businesses, including its distribution segment.  We assume
selling and administrative costs will increase in line with sales
growth over time.  In our base case, we don't anticipate
substantial Ukrainian government intervention or more restrictive
trade policies with key partner exporting countries, although we
continue to consider these factors as main risks," S&P added.

S&P believes FOCF will have remained negative in 2013, given the
company's still-high capital spending of more than US$700 million
that year by S&P's estimates, and following negative FOCF since
the company was founded in 2008.  S&P believes in 2014 FOCF might
become positive because the company plans to gradually reduce its
growth investments down to about US$400 million, while its cash
flows continue to grow.

UkrLandFarming's credit protection measures are generally solid.
S&P forecasts that credit metrics will remain relatively stable,
including in particular total debt to EBITDA of about 2x in 2013-
2014.

The negative outlook on UkrlandFarming takes into account S&P's
negative outlook on Ukraine and reflects the possibility of a
further downgrade over the next 12 months.  This could happen if
there were tighter currency controls, more restrictions on
transfer of funds, or rising political or fiscal pressure.



===========================
U N I T E D   K I N G D O M
===========================


ANGLIAN WATER: Moody's Affirms Ba3 Rating on Senior Secured Notes
-----------------------------------------------------------------
Moody's Investors Service has changed to negative from stable the
outlook on the senior secured notes issued by Anglian Water
(Osprey) Financing plc (Osprey Financing). Concurrently, Moody's
has affirmed the Ba3 rating of the senior secured notes issued by
Osprey Financing.

The negative outlook reflects the risk that the ongoing price
review for the UK water industry, which will set tariffs for the
five-year period commencing April 1, 2015 (AMP6), will result in
reduced financial flexibility and capacity to meet debt service
obligations.

Ratings Rationale

Osprey Financing is a financing subsidiary of Osprey Acquisitions
Limited (Osprey), a holding company for Anglian Water Services
Ltd. (Anglian Water, Baa1 stable corporate family rating).
Guidance issued by Ofwat on January 27, 2014, suggests that
allowed returns for the UK water industry and, therefore, Anglian
Water, will likely fall from the current 5.1% to 3.85% (vanilla
real) from the start of the next five year regulatory period in
April 2015. The outlook change reflects the increased likelihood
that cash flow generation at Anglian Water will be curtailed by a
challenging regulatory price review, which Moody's expects to
significantly reduce the amount of dividends being upstreamed to
the Osprey holding company level.

Whilst Moody's expects Osprey Financing to remain in a position
to meet its debt service payments, recognizing also previous
commitment from shareholders to support the business, the
assigned negative outlook reflects the increased risk exposure to
cash flow shortages should Anglian Water be faced with additional
pressures, such as low inflation, operational underperformance or
cost overruns in their capex program.

Moody's rating of the Osprey Financing notes is a function of (1)
the credit quality of the Osprey group; (2) the priority position
in relation to operating cash flows as well as recovery proceeds
in a default scenario pertaining to creditors at the operating
company, Anglian Water, resulting in the deeply subordinated
position of the Osprey Financing notes; and (3) the terms of the
Osprey Financing Programme. Moody's considers the consolidated
credit quality of the Osprey group to be consistent with a rating
at the bottom of the Baa range.

The Ba3 rating assigned to Osprey Financing's GBP350 million 7%
senior secured notes due January 2018 (the Osprey Financing
notes) reflects, as positives, (1) the low business risk profile
of its regulated subsidiary, Anglian Water; and (2) certain
creditor protections incorporated into the terms of the Osprey
Financing notes. The rating is, however, constrained by (1) the
high level of debt, up to 85% of Regulatory Capital Value (RCV)
at the operating company level and up to 93% on a consolidated
basis (before a dividend lock-up event is triggered); (2)
structural features included in Anglian Water's highly-leveraged
financing arrangements, which limit the activities of the
operating company but may also deprive Osprey of dividend income
that would ordinarily be used to service debt; and (3) an
expectation of high loss-given default, in light of the
subordinated position of the Osprey Financing notes and security
granted to Anglian Water's lenders.

The current ratings and negative outlook factor in the additional
pressure from the ongoing price review for the UK water industry,
which will set tariffs for the five-year period commencing 1
April 2015 (AMP6). Although the proposed reduction in the allowed
return is a credit negative, Moody's believes that Anglian Water
will be able to absorb the challenges of a tough price review
within their current ratings. However, equity returns will fall
and the companies' future financial flexibility to offset
additional cash flow stresses will be limited.

Reduced dividend flows will result in declining cash inflows for
Osprey, and could ultimately lead to debt service shortfalls.
Whilst Moody's believe that this risk may only materialize in a
downside scenario, the additional risk of reduced financial
headroom to withstand additional shocks at the operating company
level and the resulting impact on distributions to Osprey is
reflected in a negative outlook. Moody's expects further clarity
on the ongoing price review, with companies updating certain
aspects of their business plans and the regulator finalizing
incentive packages over the coming months. The rating agency
believes that the final regulatory package will provide
sufficient certainty on the potential financial flexibility at
the operating company level and the resulting headroom for
distributions to the Osprey holding company. At that point,
Moody's will also assess shareholder's strategy on future
dividend requirements or other potential measures to maintain
credit quality at Osprey.

What Could Change The Rating Up/Down

Given the current negative outlook, there is no upgrade
potential. The outlook could be stabilized, if it becomes clear,
by the time of the final price determination in December 2014,
that Anglian Water is unlikely to be materially constrained in
its ability to upstream sufficient dividend payments to cover
Osprey's debt service requirements.

Negative pressure on the Ospey Notes could follow a material
deterioration in the group's financial metrics such that dividend
lock-ups at the Anglian Water level are more likely to be
breached (under the terms of the Anglian Water Programme, there
is a distribution lock-up at the operating company if (1) Class A
RCV gearing or Senior (Class A and Class B) RCV gearing exceeds
75% or 85% respectively; or (2) Class A Adjusted Interest Cover
Ratio or Senior Adjusted Interest Cover Ratio falls below 1.30x
or 1.10x, respectively). Such deterioration could be the result
of serious underperformance in operating or capital expenditure
at Anglian Water, or adverse macro-economic developments,
including deflation. Negative funding conditions, particularly in
the light of the refinancing of the Osprey Notes towards the end
of AMP6, or adverse changes in the regulatory framework or
structure of the water sector in England and Wales may also cause
downward rating pressure at Osprey.

Principal Methodology

The principal methodology used in this rating was Global
Regulated Water Utilities published in December 2009.

Anglian Water (Osprey) Financing plc is the financing subsidiary
of Osprey Acquisitions Limited, an intermediate holding company
in the Anglian Water Group. The principal operating subsidiary in
the group is Anglian Water Services Ltd., a regulated water and
sewerage company operating in the east and north-east of England.
Osprey Acquisition Limited is indirectly owned by a consortium
comprising Canada Pension Plan Investment Board, Colonial First
State Global Asset Management (the asset management division of
Commonwealth Bank of Australia), Industry Funds Management (IFM)
Investors and 3i Group.


CLWYD LEISURE: To Close Three Centers; Hundreds of Jobs at Risk
---------------------------------------------------------------
itv.com reports that talks to save hundreds of jobs at three
leisure centres in Denbighshire have failed.

According to the report, Clwyd Leisure announced that Rhyl's Sun
Centre and Prestatyn's Nova and Indoor Bowls Centre will be
closed with immediate effect.

They said negotiations with Denbighshire County Council over
transferring staff had finished with no way the jobs could be
saved, the report relates.

They added that an insolvency practitioner to co-ordinate the
closure of the Company, according to the report.

"It is with great regret that the Directors have had to make this
decision and they thank all their dedicated staff for their
efforts and all our loyal customers who have supported us
through-out these difficult past months," Clwyd Leisure, as cited
by itv.com, said.


CO-OP BANK: Regulator Disputes Directors' Reasons for Departure
---------------------------------------------------------------
James Quinn at The Telegraph reports that the UK's lead banking
regulator has disputed claims from two senior directors that they
resigned from the Co-op Bank because of their opposition to the
mutual's plan to buy 631 TSB branches.

Andrew Bailey, deputy Governor of the Bank of England and chief
executive of the Prudential Regulation Authority, used notes from
meetings with the two former Co-op Bank deputy chairmen to
counter their earlier claims, The Telegraph relates.

According to The Telegraph, at an earlier hearing of the Treasury
Select Committee in late January, Rodney Baker-Bates and
David Davis separately claimed that they had resigned from the
board of the troubled bank because they were uneasy with its
attempts to buy the branches, being sold by Lloyds Banking Group
under the code name "Project Verde."

The role of the two men is central as they were specifically
appointed to the board to make up for the lack of Paul Flowers'
financial knowledge, and as deputy chairmen, should have sounded
the alarm if they were unhappy with such a major transaction, The
Telegraph notes.

But Mr. Bailey used supervisory notes from Financial Services
Authority "exit" interviews with the two men and regulators to
demonstrate that they had not shared such concerns with
regulators, The Telegraph discloses.

He made the claims in a wide-ranging evidence session surrounding
the collapse of the Co-op/Verde deal in April 2013, and the
reasons behind the subsequent GBP1.5 billion capital shortfall at
the mutual bank, The Telegraph relays.

Although he acknowledged that they had voted against the original
Co-op/Verde deal, which collapsed due to a GBP16.5 billion
funding gap, he said that in conversations about the revised deal
they appeared somewhat less opposed, The Telegraph relates.

                     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.

                           *     *     *

The Troubled Company Reporter-Europe on Nov. 14 and 18, 2013 has
reported that Moody's Investors Service has affirmed The
Co-operative Bank's Caa1 senior unsecured debt and deposit
ratings, and changed the outlook on the rating to negative from
developing, and Fitch Ratings has downgraded the company's Issuer
Default Rating to 'B' from 'BB-' and placed it on Rating Watch
Negative.


HASTINGS INSURANCE: Fitch Assigns 'B+' IDR; Outlook Stable
----------------------------------------------------------
Fitch Ratings has assigned UK-based Hastings Insurance Group
(Finance) plc a final Long-term foreign currency Issuer Default
Rating (IDR) of 'B+' with a Stable Outlook.

Fitch has also assigned Hastings Insurance Group (Finance) plc's
GBP150 million senior secured floating rate notes due 2019 and
its 8% GBP266.5 million senior secured fixed rate notes maturing
July 2020 a final rating of 'BB-'/'RR3'.  The notes were used to
refinance existing debt facilities and to fund the equity
consideration of purchase price of Hastings Insurance Group (HIG)
by Goldman Sachs

KEY RATING DRIVERS

Hastings Insurance Services Ltd (HISL), the retail broking arm of
Hastings Insurance Group operates a traditional insurer panel
model on which both Advantage Insurance Company Limited (AICL)
and third party insurers sit.  This provides HISL with greater
ability to channel customers between AICL and third-party panel
insurers, thus adjusting volumes to current pricing conditions in
accordance with AICL's risk appetite.  Price comparison websites
are the company's main distribution channel (90% of policies),
followed by 'direct to website' and call centers (10%).

Improved Underwriting Profitability in a Challenging Environment
Advantage Insurance Company Limited, the underwriting arm, has
achieved a notable improvement in its loss ratio in recent years
despite a competitive environment in the UK motor market.  This
was achieved by discontinuing unprofitable policies and improved
fraud prevention measures.  As a result, the underwriting
business has achieved sub-100% combined ratios over the past two
years.

On-going Competitive Pressures

Hastings faces significant competition in its core market.
Leaders in the UK private car market are well recognized names
such as the Direct Line Group (15% market share), the Admiral
Group (9%), AA (8%), Aviva (8%) and LV=(7%). Hastings' exposure
is heavily concentrated in the UK motor market.  This segment of
the market is subject to significant volatility and competition,
which could cause pricing pressures.  The group's main
distribution channel of aggregator websites also tend to be
characterized by high price sensitivity.  Competitive pressure is
further increased by the sale and distribution of products
through web-based aggregators and broker panels, where customers
are more price-sensitive.

Climate

The long-dated maturity profile of the notes, combined with
forecasted deleveraging through funds from operations (FFO)
generation (5.0x in 2014 to 3.85x in 2017) provides Hastings with
considerable financial flexibility at present.  However, the
business could be subject to significant volatility, given its
target market and customer acquisition techniques.  Hastings
needs to achieve significant EBITDA growth over the next several
years to achieve sufficient deleveraging.  If growth does not
take place as envisaged by the business plan, in an environment
of softening prices, credits metrics are likely to come under
pressure and cause a reduction in financial flexibility.

Management Execution of Business Plan

To a significant extent, the success of Hastings' largely new
senior management team is key to determining the outcome of the
business plan.

Rating Sensitivities

Positive: Future developments that could lead to positive rating
action include:

   -- FFO gross leverage below 3.5x on a sustained basis
   -- FFO interest cover above 3.0x on a sustained basis
   -- Sustained increase in margin to 26%, indicating an improved
      competitive positions across divisions

Negative: Future developments that could lead to negative rating
action include:

   -- FFO gross leverage above 5.0x on a sustained basis
   -- FFO interest cover below 2.5x on a sustained basis


ICESAVE: Prime Minister Criticizes Lawsuit Over 2008 Collapse
-------------------------------------------------------------
Richard Milne at The Financial Times reports that Iceland's prime
minister has criticized the UK and Dutch authorities for filing a
ISK1,000 billion (GBP5.6 billion) lawsuit over the 2008 collapse
of online lender Icesave, saying they should "forget" the affair
as they were unlikely to win the case.

Sigmundur David Gunnlaugsson, prime minister since May, told the
FT the Icesave lawsuit -- in which the UK and Netherlands
authorities are seeking a sum equivalent to nearly two-thirds of
the island's annual GDP -- recalled his country's previous legal
battle against the two countries, which ended in court victory
for Iceland last year.

The lawsuit is the latest installment in the long dispute
stemming from money lost by more than 300,000 British and Dutch
depositors in high-yielding Icesave accounts marketed by
Landsbanki, one of three big Icelandic banks that collapsed in
2008, the FT notes.

A European court ruled last year that the Icelandic government
was not liable for repaying the UK and Dutch governments, which
had opted to reimburse the depositors after Iceland refused to do
so, the FT recounts.

Now the UK's Financial Services Compensation Scheme (FSCS) and
the Dutch central bank (DNB) have changed tack and are suing
Iceland's guarantee fund, the Depositors' and Investors'
Guarantee Fund (TIF), which disclosed the ISK556 billion lawsuit
on Monday, the FT relates.  The TIF estimated that additional
interest and costs took the claim to ISK1 trillion, the FT
states.

Iceland's TIF, as cited by the FT, said it had allocated just
ISK18 billion to meet the claim -- less than 2% of the sum
sought.

Mr. Gunnlaugsson underlined that there was no state backing for
Iceland's guarantee scheme, "so the country is in the clear", the
FT relays.

                         About Icesave

Icesave was an online savings account brand owned and operated by
Landsbanki from 2006-2008 that offered savings accounts.  It
operated in two countries -- the United Kingdom (since October
2006) and the Netherlands (since May 2008).


INEOS GROUP: Moody's Raises CFR to B1, Revises Outlook to Stable
----------------------------------------------------------------
Moody's Investors Service has upgraded Ineos Group Holdings
S.A.'s corporate family rating (CFR) to B1 from B2 and
probability of default rating (PDR) to B1-PD from B2-PD.
Concurrently, Moody's has upgraded the ratings on Ineos' and its
subsidiaries' debt instruments that remain outstanding by one
notch and has assigned a provisional (P)B3 rating to the proposed
EUR1.03 billion unsecured notes, issued by Ineos Group Holdings
S.A., maturing in 2019. The outlook on all ratings is revised to
stable from positive.

Moody's expects that Ineos will use the proceeds of the proposed
new unsecured notes to redeem the outstanding senior notes
maturing in 2016 (now rated B3). The company has already issued
conditional redemption notices with respect to all or part of
these notes and it expects to redeem them on or about
February 19, 2014. The company also intends to reprice its
existing EUR and $ denominated term loan tranches due 2018,
totalling approximately EUR2.8 billion. Moody's expects these
will reduce the company's interest expense going forward.

Moody's issues provisional ratings in advance of the final sale
of debt instruments 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 debt. A definitive
rating may differ from a provisional rating.

Ratings Rationale

"The upgrade reflects Ineos' resilient performance in 2013 and
Moody's expectations that continued strong operating performance
in its North American operations, as well as higher utilization
at its European operations in 2014, will lead to improving credit
metrics, and continued strong liquidity evidenced, in part, by
the lack of sizeable near term debt maturities until 2018," said
Moody's analyst Douglas Crawford. "Moody's expects the North
American business will continue to operate at top of the cycle
margins and that utilization in Europe will benefit from the
restarting of the cracker at Lavera, in January 2014, and the
disposal of the UK business, which was suffering from dwindling
feedstock supplies."

Ineos' B1 CFR primarily reflects the group's (1) highly leveraged
capital structure, which limits its financial flexibility and
ability to incur additional indebtedness if needed; (2) inherent
cyclicality and exposure to volatile raw material prices, which
have historically led to volatile earnings over the cycle; (3)
substantial exposure to the weakening of European olefin margins,
and (4) shareholder friendly policy and the group's complex
structure. However, the company's rating benefits from the
group's (1) strong liquidity and reinforced capital structure;
(2) position as one of the world's largest and most diversified
chemical groups, enjoying leading market positions across a
number of key commodity chemicals; (3) vertically integrated
business model, which ensures Ineos can capture margins across
the value chain, whilst benefitting from certainty of supply and
economies of scale; (4) well-invested production facilities, with
the majority ranking in the first or second quartiles on the
regional industry cost curve; and (5) track record of generating
positive, albeit modest, cash flows over the past five years.

Although the company did not deleverage in 2013, reported EBITDA
of EUR1.51 billion was in line with our expectations, despite the
partial closure of the cracker in Lavera. Based on Moody's
assumptions of higher volumes at the group wide level in 2014,
the rating agency expects improved capacity utilization in Europe
from a fully operational Lavera and without the negative impact
of Grangemouth, to lead to retained cash flow / debt of around
10%, net debt / EBITDA around 4.5x and free cash flow to debt in
the low single digit percentage. The rating agency notes the
company's comments regarding an improved trading environment at
the start of 2014 and signs of improving demand in the Phenol and
Nitriles businesses, with North America remaining strong. Moody's
also expects EBITDA / interest expense above 2.75x as Ineos
benefits from a full year of lower interest rates post the
refinancing in 2013, as well as potentially lower interest rates
from the proposed EUR1.03 billion note refinancing and repricing
of EUR2.8 billion in secured term loans maturing in 2018. All of
these credit metrics are in line with our triggers for what could
change the rating up to B1.

Stable Outlook

The stable outlook incorporates Moody's expectations that the
company will improve its credit metrics including leverage and
retained cash flow and that its underlying chemical markets do
not deteriorate. It also assumes that Ineos will maintain
adequate liquidity.

What Could Change The Rating Up/Down

Considering the recent rating action, Moody's does not expect any
positive rating pressure in the near term. However, positive
pressure could come from Ineos generating retained cash flow /
debt consistently around 15%, with net leverage sustained below
4.0x. Any upgrade would also require Ineos to display sustained
materially positive free cash flow.

Conversely, negative rating pressure, could develop in the event
of the group failing to meet the requirements for a stable
outlook, or a lack of improvement in credit metrics.

The following debt instrument ratings were assigned, outlook
stable:

Ineos Group Holdings S.A.:

GTD SENIOR GLOBAL NOTES (USD) due 2019, (P)B3

GTD SENIOR GLOBAL NOTES (EUR) due 2019, (P)B3

The following debt instrument ratings were upgraded one notch,
outlook stable:

Ineos Group Holdings S.A.:

GTD SENIOR GLOBAL NOTES (USD) due 2018, B3

GTD SENIOR GLOBAL NOTES (EUR) due 2018, B3

GTD SENIOR GLOBAL NOTES (EUR) due 2016, B3

Ineos US Finance LLC:

SENIOR SECURED TERM LOAN B (USD) due 2015, Ba3

SENIOR SECURED TERM LOAN B (USD) due 2018, Ba3

Ineos Finance plc:

SENIOR SECURED TERM LOAN B (EUR) due 2018, Ba3

GTD SENIOR SECURED GLOBAL NOTES (EUR, FLOATING RATE) due 2019,
Ba3

GTD SENIOR SECURED GLOBAL NOTES (USD) due 2019, Ba3

GTD SENIOR SECURED GLOBAL NOTES (USD) due 2020, Ba3

Principal Methodology

The principal methodology used in these ratings was the Global
Chemical Industry Rating Methodology published in December 2013.
Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.

Ineos Group Holdings S.A. was established in 1998 via a
management buy-out of the former BP petrochemicals asset in
Antwerp, which was led by Mr. Ratcliffe, chairman of Ineos Group
Holdings S.A. The group has subsequently grown through a series
of acquisitions and at the end of 2005 acquired Innovene Inc., a
100% subsidiary of BP, in a $9 billion buy-out, transforming
Ineos into one of the world's largest chemical companies
(measured by turnover). In FYE 2012, Ineos reported a turnover of
EUR18.2 billion and Moody's-adjusted EBITDA (excluding the
discontinued refining division) of EUR1.6 billion.


INNOVIA GROUP: Moody's Assigns 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 Innovia Group (Holding 3) Ltd (Innovia). Concurrently, Moody's
has also assigned a (P)B2 to Innovia Group (Finance) plc's
proposed EUR340 million senior secured floating rate notes (FRNs)
due 2020. The outlook on all ratings is stable.

The company will use the proceeds of the EUR340 million FRNs to
refinance existing debt, including EUR85 million of outstanding
shareholder loans.

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

Ratings Rationale

Innovia's B2 CFR incorporates the company's significant leverage
following the refinancing. It also reflects the company's
exposure to volatile raw material costs which has negatively
affected margins in the past, and its need for investments to
support growth which will weigh on free cash flow generation over
at least 2014-15. Innovia also has a concentrated customer base,
particularly given the consolidated nature of key end markets
including labels and tobacco, and limited scale in terms of
revenues. However, the rating is supported by Innovia's solid
position in its niche markets for BOPP packaging and polymer
substrate used for bank notes, and its more profitable security
division that supports margins and provides for some
diversification. The concentration among the company's customers
is also mitigated, to an extent, by the company's long track
record and relationships with key customers.

Moody's estimates that as of December 2013, Innovia's Moody's-
adjusted gross debt/EBITDA will be close to 5x while
EBITDA/interest expense will be close to 3x. These credit metrics
would comfortably position Innovia within the B2 rating category,
however the company's vulnerability to volatile raw material
prices can weigh on its margins and cash flows as seen in 2011
when prices for dissolving pulp and polypropylene rose sharply.
In addition, planned project-related capex necessary to increase
production capacity together with anticipated EUR25 million of
investments until 2016 related to the anticipated Bank of England
contract to supply polymer substrate for the new GBP5 and GBP10
notes will constrain free cash flow generation in the next two
years.

Although Moody's expects that Innovia's free cash flow generation
will be constrained in the next two years due to these planned
project-related capex to increase production capacity, the agency
views Innovia's liquidity sources as adequate to cover the
company's cash needs. At closing of the refinancing, Moody's
expects that Innovia will have access to EUR30 million of cash on
balance sheet and an undrawn EUR60 million revolving credit
facility due 2019. The revolver carries one financial maintenance
covenant that will only be tested if drawn by at least EUR 3
million. The next larger maturity will be the revolver in 2019.

Structural Considerations

The issuer of the FRNs is Innovia Group (Finance) plc, a finance
company that lends the funds to Innovia via a proceeds loan. The
EUR340 million senior secured FRNs are rated (P)B2, at the same
level as the CFR, but weakly positioned given the sizeable super
senior revolver and thus remain sensitive to any future changes
to the capital structure. The FRNs and revolver will be secured
and guaranteed by at least 80% of assets and EBITDA, but the
revolver including the associated AUD100 million letters of
credit facility will benefit from a priority claim in an
enforcement scenario.

The FRNs also have a portability feature that allows for a change
of control within the next 6 months, provided the leverage ratio
as defined in the agreements does not exceed 4x. Moody's also
notes that the documentation, including the intercreditor
agreement, provide some provisions related to additional holdco
debt including a carve-out for interest payments to new Holdco
Senior Notes in the restricted payment covenant of the FRNs.

Stable Outlook

The stable outlook reflects Moody's expectations that Innovia
will gradually improve its operating margins thanks to continued
growth of its more profitable security division, while also
maintaining a solid liquidity position.

What Could Change The Rating Up/Down

Negative pressure on the ratings could occur if Innovia's
debt/EBITDA ratio (as adjusted by Moody's) increases materially
above 5.5x or if its free cash flow turns negative for an
extended period of time. Concerns over liquidity could also exert
negative pressure on the ratings. Conversely, positive pressure
on the ratings could develop if Innovia's debt/EBITDA ratio falls
comfortably below 4.5x and if its FCF/debt ratio well above 5%.

The principal methodology used in these ratings was the Global
Packaged Goods published in June 2013. Other methodologies used
include Loss Given Default for Speculative-Grade Non-Financial
Companies in the U.S., Canada and EMEA published in June 2009.

Innovia group is a UK-based manufacturer of biaxially oriented
polypropylene and cellulose films for labels, cigarette pack
overwrap and food packaging. It also produces polymer substrates
for banknotes. In the twelve months to October 2013, Innovia
reported sales of approximately EUR530 million and company-
adjusted EBITDA of around EUR86 million.


INNOVIA GROUP: S&P Assigns 'B' CCR & Rates EUR340MM Sr. Notes 'B'
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned its 'B'
long-term corporate credit rating to Innovia Group (Holding 3)
Ltd., the U.K.-based polymer film and banknote substrate
manufacturer.

At the same time, S&P assigned its issue rating of 'B' to the
proposed EUR340 million senior secured notes, due in 2020, issued
by finance subsidiary Innovia Group (Finance) plc.  The recovery
rating on the proposed 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 ratings on Innovia reflect S&P's assessment of the group's
"fair" business risk profile and "highly leveraged" financial
risk profile, as S&P's criteria define these terms.

"Our assessment of Innovia's business risk profile as "fair"
reflects the group's relatively low and volatile profitability in
film packaging and relatively limited size compared with its
rated peers, with revenues of about EUR500 million.  These
weaknesses are partly mitigated by Innovia's strong competitive
positions in niche, fragmented markets, and relatively stable end
markets.  A high proportion of the group's contracts with its end
users include clauses that enable it to pass through any increase
in the cost of raw materials, providing it with some protection
from volatile input costs.  We also recognize Innovia's
relatively strong product and geographic diversity, since the
group sells into over 100 countries," S&P said.

The polymer film industry is commoditized and competitive.  The
fluctuations in raw material and energy prices increase pressure
on manufacturers to pass on costs to customers.  S&P sees the
"Security" polymer banknote substrate business as adding to
Innovia's end-market diversity, with stronger margins,
longstanding customer relationships, and low customer churn
rates. These characteristics more than offset the disadvantage of
greater customer concentration and lumpier orders.  S&P
anticipates that Innovia will derive an increasing share of its
earnings from its Security division in future.

S&P assess Innovia's financial risk profile as "highly
leveraged," due to its high absolute debt burden and private
equity ownership. This assessment incorporates S&P's
consolidation into Innovia's Standard & Poor's-adjusted debt of
approximately EUR18 million of net shareholder loans at the
Innovia Group (Holding 2) level. Although these loans lack a cash
interest component, which supports the rating, and the loans are
outside the restricted group, S&P consolidates them into
Innovia's adjusted debt as per its criteria.

In S&P's view, Innovia's credit metrics will remain commensurate
with a "highly leveraged" financial risk profile in the near
term. This includes the treatment of net shareholder loans and
any future debt instruments outside the restricted group as debt-
like in Innovia's adjusted credit metrics.  S&P's base case
assumes that Innovia's EBITDA margins will be broadly stable on a
pro forma basis (including the full consolidation of the Security
division) in 2014.

Upside scenario

Sustained deleveraging, improvements in EBITDA, and cash flow
generation, together with stronger credit metrics than S&P
currently anticipates, could trigger an upgrade.  Specifically,
S&P could raise the rating if it sees Innovia sustain improved
credit metrics in the "aggressive" financial risk profile
category.  S&P views ratings upside in the short term as limited
because of Innovia's private equity ownership, and the potential
for releveraging should the group be sold to another private
equity firm.

Downside scenario

S&P considers a downgrade as less likely, but such action could
follow significant debt-financed acquisitions or the
establishment of significant new debt-like shareholder
instruments above the restricted group, resulting in
significantly weaker adjusted leverage or interest coverage.  A
downgrade could also arise should Innovia experience margin
pressure or weaker cash flow, leading to substantially weaker
credit metrics or liquidity.


KEMBLE FINANCE: Moody's Affirms B1 Rating on Senior Secured Notes
-----------------------------------------------------------------
Moody's Investors Service has changed to negative from stable the
outlook on the senior secured notes issued by Thames Water
(Kemble) Finance PLC (Kemble Finance). Concurrently, Moody's has
affirmed the B1 rating of the senior secured notes issued by
Kemble Finance.

The negative outlook reflects the risk that the ongoing price
review for the UK water industry, which will set tariffs for the
five-year period commencing 1 April 2015 (AMP6), will result in
reduced financial flexibility and capacity to meet debt service
obligations.

Ratings Rationale

Kemble Finance is a financing subsidiary of Kemble Water Finance
Limited (Kemble), a holding companies for Thames Water Utilities
Ltd. (Thames Water, Baa1 stable corporate family rating).
Guidance issued by Ofwat on 27 January 2014 suggests that allowed
returns for the UK water sector and, therefore, Thames Water will
likely fall from the current 5.1% to 3.85% (vanilla real) from
the start of the next five year regulatory period in April 2015.
The outlook change reflects the increased likelihood that cash
flow generation at Thames Water will be curtailed by a
challenging regulatory price review, which Moody's expects to
significantly reduce the amount of dividends being upstreamed to
the Kemble holding company level.

Whilst Moody's expects Kemble Finance to remain in a position to
meet its debt service payments , the assigned negative outlook
reflects the increased risk exposure to cash flow shortages
should Thames Water be faced with additional pressures, such as
low inflation, operational underperformance or cost overruns in
their capex programme.

Moody's rating of the Kemble Finance notes is a function of (1)
the credit quality of the Kemble group; (2) the priority position
in relation to operating cash flows as well as recovery proceeds
in a default scenario pertaining to creditors at the operating
company, Thames Water, resulting in the deeply subordinated
position of the Kemble Finance Notes; and (3) the terms of the
Kemble Finance Programme.

Moody's considers the consolidated credit quality of the Kemble
group to be consistent with a rating at the bottom of the Baa
range.

The B1 rating assigned to Kemble Finance's GBP400 million 7.75%
senior secured notes due January 2019 (the Kemble Finance notes)
reflects (1) the low business risk profile of Thames Water, as
the monopoly provider of water and wastewater services in its
area; (2) the stable and transparent regulatory framework for the
water sector in England and Wales; (3) the high level of gearing
at Thames Water and other debt in the group including the Kemble
Finance notes (debt can increase up to 92.5% of Thames Water's
RCV before a distribution lock-up comes into effect); (4) the
terms of the ring-fenced, highly-leveraged, financing structure
previously executed by Thames Water (the Thames Water Programme);
(5) the large capital investment program planned by Thames Water
for the current regulatory period; and (6) the terms of the
Kemble Finance Programme including a cash trapping provision.

The current ratings and negative outlook factor in the additional
pressure from the ongoing price review for the UK water industry,
which will set tariffs for the five-year period commencing 1
April 2015 (AMP6). Although the proposed reduction in the allowed
return is a credit negative, Moody's believes that Thames Water
will be able to absorb the challenges of a tough price review
within their current ratings. However, equity returns will fall
and the companies' future financial flexibility to offset
additional cash flow stresses will be limited.

Reduced dividend flows will result in declining cash inflows for
Kemble, and could ultimately lead to debt service shortfalls.
Whilst Moody's believe that this risk may only materialize in a
downside scenario, the additional risk of reduced financial
headroom to withstand additional shocks at the operating company
level and the resulting impact on distributions to Kemble is
reflected in a negative outlook. Moody's expects further clarity
on the ongoing price review, with companies updating certain
aspects of their business plans and the regulator finalizing
incentive packages over the coming months. The rating agency
believes that the final regulatory package will provide
sufficient certainty on the potential financial flexibility at
the operating company level and the resulting headroom for
distributions to the Kemble holding company. At that point,
Moody's will also assess shareholder's strategy on future
dividend requirements or other potential measures to maintain
credit quality at Kemble.

What Could Change The Rating Up/Down

Given the current negative outlook, there is no upgrade
potential. The outlook could be stabilized, if it becomes clear,
by the time of the final price determination in December 2014,
that Thames Water is unlikely to be materially constrained in its
ability to upstream sufficient dividend payments to cover Kemble
Finance's debt service requirements.

Negative pressure on the Kemble Finance notes could follow a
material deterioration in the group's financial metrics such that
dividend lock-ups at the Thames Water level are more likely to be
breached (under the terms of the Thames Water Programme, there is
a distribution lock-up at the operating company if (1) Class A
RCV gearing or Senior (Class A and Class B) RCV gearing exceeds
75% or 85% respectively; or (2) Class A Adjusted Interest Cover
Ratio or Senior Adjusted Interest Cover Ratio falls below 1.30x
or 1.10x, respectively). Such deterioration could be the result
of serious underperformance in operating or capital expenditure
at Thames Water, or adverse macro-economic developments,
including deflation. Negative funding conditions, particularly in
the light of the refinancing of the Kemble Finance notes towards
the end of AMP6, or adverse changes in the regulatory framework
or structure of the water sector in England and Wales may also
cause downward rating pressure at Kemble Finance. Finally,
Moody's notes that it would likely strain the credit profile of
Thames Water (and hence Kemble) if Thames Water were required to
deliver the main construction works associated with the Thames
Tideway Tunnel (estimated construction cost GBP4.1 billion). The
rating agency believes that this scenario is unlikely due to the
UK government's ongoing consultation for appointing a specified
infrastructure provider, but an incremental risk related to
Thames Water's involvement with the Thames Tideway Tunnel project
may remain.

Principal Methodology

The principal methodology used in this rating was Global
Regulated Water Utilities published in December 2009.

Thames Water (Kemble) Finance PLC is the financing subsidiary of
Kemble Water Finance Limited, an intermediate holding company in
the Thames Water Group. The principal operating subsidiary in the
group is Thames Water Utilities Ltd., a regulated WaSC operating
in London and the Thames Valley area. Thames Water is the largest
of the ten WaSCs in England and Wales by both RCV and the number
of customers served. Thames Water provides drinking water to
around 8.8 million customers and sewage treatment for a
residential population of around 14 million in London and the
Thames Valley. Kemble Water Finance Limited is ultimately owned
by a consortium led by Macquarie's European Infrastructure Funds.


PUNCH TAVERNS: Withdraws Debt Restructuring Plan
------------------------------------------------
The Scotsman reports that Punch Taverns has torn up plans for a
restructuring of its GBP2.3 billion debt pile after bondholders
described the blueprint as "unsignable".

According to The Scotsman, the shake-up was due to be put to a
vote among bondholders on Friday, but Punch said yesterday that
it has decided to withdraw the resolutions "to facilitate a
period of further engagement with stakeholders".

The group's executive chairman, Stephen Billingham, reiterated
his warning that the firm risks defaulting on its bonds unless it
can agree a restructuring of the debts, but said the board
believed a deal could be reached within two months, The Scotsman
relates.

                      About Punch Taverns

Punch Taverns plc is a United Kingdom-based pub company.  The
Company is engaged in the operation of public houses under either
the leased model or as directly managed by the Company.  The
Company operates in two business segments: punch partnerships, a
leased estate and punch pub company, a managed estate.

As reported in the Troubled Company Reporter-Europe on Feb. 10,
2014, Nathalie Thomas at The Telegraph said that lenders to
Punch Taverns are working on a rival plan to restructure the pub
group's GBP2.3 billion debt pile.  According to The Telegraph, it
is understood that advisers to several groups of creditors are
putting together an alternative solution to the company's debt
woes ahead of a crunch vote.



===============
X X X X X X X X
===============


* European Union Backs Cross-Border Insolvency Proposals
--------------------------------------------------------
Rachael Singh at AccountancyAge reports that the European Union
has backed proposals to change cross-border insolvency rules, in
a vote on February 5.

Part of the proposals, which were put forward in December 2012,
include the introduction of a web-based insolvency register for
all insolvent businesses and negating the need to open several
insolvency cases in each country for the same business, according
to AccountancyAge.

The report relates that member states in the council now need to
reach an agreement on the draft law, between themselves and the
European Parliament, before it can be entered into the EU statute
book.

"Europe needs modern rules on cross-border insolvency to help
service our economic engine. The first option for viable
businesses should be to stay afloat rather than liquidating. I am
glad to see that the European Parliament agrees," the report
quotes vice-president Viviane Reding, the EU's justice
commissioner, as saying.

"I will continue working closely with the European parliament and
ministers in the council so that the modernised insolvency rules
are adopted swiftly. Businesses are waiting and we have no time
to lose."

The Council is still in the process of discussing the draft law.
It is expected that ministers will be able to reach a general
agreement at their meeting in June, the report notes.

Nearly 600 businesses enter insolvency every day across Europe,
with about a quarter having a cross-border element, the report
relays.

It is hoped that the proposals will bring greater legal
clarification where a debtor owes money to several creditors
throughout Europe. Courts handling different proceedings in
various member states will work closer together and decisions
will be published to ensure ease of understanding across the
continent, AccountancyAge reports.


                            *********

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
conferences@bankrupt.com

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 Amazon.com.  Go to
http://www.bankrupt.com/booksto 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, and Peter A. Chapman,
Editors.

Copyright 2014.  All rights reserved.  ISSN 1529-2754.

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

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

The TCR Europe subscription rate is US$775 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each.  For subscription information,
contact Peter Chapman at 215-945-7000 or Nina Novak at
202-241-8200.


                 * * * End of Transmission * * *