TCREUR_Public/140305.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

           Wednesday, March 5, 2014, Vol. 15, No. 45

                            Headlines

A U S T R I A

HYPO ALPE-ADRIA: Fitch Says Future Won't Affect Gov't Debt Rating


D E N M A R K

DANSKE BANK A/S: S&P Assigns 'BB+' Rating to Proposed Notes


G E R M A N Y

CENTROSOLAR GROUP: Creditors Okay US-Focused Restructuring Plan
COREALCREDIT BANK: Fitch Keeps BB- Sub. Debt Rating on Watch Pos.
DEUTSCHE PFANDBRIEFBANK: Fitch Affirms 'BB-' Sub. Debt Rating
DUESSELDORFER HYPOTHEKENBANK: Fitch Hikes Viability Rating to ccc


I R E L A N D

AXIUS EUROPEAN: Moody's Ups Rating on EUR15MM Cl. E Notes to 'B1'
EIRCOM HOLDINGS: Fitch Revises Outlook to Stable & Affirms B- IDR
SMURFIT KAPPA: S&P Raises CCR to 'BB+'; Outlook Stable
ULSTER BANK: RBS Mulls Merger with Rivals
* Number of Insolvent Firms Falls Down in February


I T A L Y

BANCA POPOLARE: Fitch Takes Rating Actions on Berica Tranches
IMSER SECURITISATION: S&P Cuts Ratings on 5 Note Classes to BB+
ROME: Italy Approves New Decree to Avert Default


K A Z A K H S T A N

KAZKOMMERTSBANK: Moody's Affirms 'Caa3' Jr. Sub. Debt Rating


L A T V I A

LIEPAJAS METALURGS: Still Awaits Citadele, SEB OK to Sales Plan


L U X E M B O U R G

OXO CHEMICALS: S&P Raises Long-Term CCR to 'BB-'; Outlook Stable


P O R T U G A L

METROPOLITANO DE LISBOA: S&P Raises ICR to 'BB'; Outlook Negative


R O M A N I A

HIDROELECTRICA SA: Back To Insolvency After Traders' Appeal Win


R U S S I A

GAZPROMBANK: Fitch Rates CHF350MM Subordinated Notes 'BB-'
GAZPROMBANK: Fitch Retains Ratings Over Upcoming Series 16 Notes
PROMSVYABANK: Fitch Rates Upcoming Subordinated Notes 'B+(EXP)'
SAKHA REPUBLIC: S&P Affirms 'BB+' Long-Term ICR; Outlook Negative
SVERDLOVSK OBLAST: S&P Revises Outlook to Neg. & Affirms BB+ ICR


S P A I N

GRIFOLS SA: S&P Affirms 'BB' CCR & Rates Proposed Sr. Debt 'BB'
MBS BANCAJA: Fitch Affirms 'CCsf' Ratings on Three Tranches
PARQUES REUNIDOS: S&P Revises Outlook to Stable, Affirms 'B-' CCR


T U R K E Y

YASAR HOLDING: Fitch Affirms 'B' IDR; Outlook Stable


U K R A I N E

BROKBUSINESSBANK: Declared Insolvent by NBU
FERREXPO PLC: S&P Lowers CCRs to 'CCC+/C'; Outlook Negative
REAL BANK: Declared Insolvent by NBU
LEMTRANS: S&P Lowers Corp. Credit Rating to 'CCC'; Outlook Neg.
UKRAINIAN RAILWAYS: S&P Lowers CCR to 'CCC'; Outlook Negative

UKRAINE: Fitch Affirms 'CCC' Foreign Curr. Issuer Default Rating
* Russia and Ukraine Tensions Hit Global Companies


U N I T E D   K I N G D O M

CO-OPERATIVE BANK: Parent Mulls Sale of Farm Biz, Pharmacy Chain
DAILY MAIL: S&P Raises Corp. Credit Rating From 'BB+'
INTERNACIONALE: In Administration; 1,000 Jobs at Risk
LOWELL FINANCE: Moody's Rates GBP100MM Senior Sec. Bond '(P)B1'
LOWELL GROUP: S&P Revises Outlook to Neg. & Affirms 'BB-' Rating

MALL FUNDING: S&P Raises Rating on Class A Notes to 'BB+'
MARLEY BEVERAGE: Creditors Have Until April 1 to Submit Claims
MATRIX SOLUTIONS: In Administration, Cuts 30 Jobs
MEDSPAN EUROPEAN: Enters Liquidation; Owes More Than GBP100,000
MUSTANG MARINE: In Administration; 66 Jobs Affected

NATIONWIDE BUILDING: Fitch Rates Potential Notes Issue BB+(EXP)
NATIONWIDE BUILDING: S&P Assigns 'BB+' Rating to Tier 1 Secs.
RANGERS FOOTBALL: Rejects Administration Rumors
ROYAL BANK: Fitch Says Costs Still Challenging Despite CleanUp
SOUTHERN CROSS: Hundreds of Homes Put Up for Sale

TINETTY'S TOYS: Goes Into Administration, Cuts 4 Jobs
TITAN EUROPE 2007-3: S&P Lowers Rating on Class A2 Notes to 'D'
VIVA BEVERAGES: Creditors Have Until April 1 to Submit Claims

* Insolvency Service Welcomes Decision in Game Station Case
* UK: Recent Rent Ruling to Impact Collapsed Retailers


X X X X X X X X

* Fitch Continues to See Negative Prospects for European Banks
* Fitch Examines Losses from Workout & Liquidation Costs of EMEA


                            *********


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A U S T R I A
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HYPO ALPE-ADRIA: Fitch Says Future Won't Affect Gov't Debt Rating
-----------------------------------------------------------------
Uncertainty over the future of Hypo Alpe-Adria Bank International
AG does not affect the 'AAA' rating of its government guaranteed
subordinated debt, Fitch Ratings says. A change in the Austrian
sovereign rating is the main rating sensitivity of the notes
guaranteed by the Republic of Austria.  Fitch expects Hypo Alpe's
eventual fate to have limited implications for other, rated
Austrian banks.

Fitch said, "We believe the creditworthiness of the EUR1 billion
government-guaranteed Tier 2 subordinated notes (ISIN:
XS0863484035) would not be affected by attempts to bail in Hypo
Alpe's other debt classes, such as its legacy bonds guaranteed by
the province of Carinthia (not rated). The rated notes would also
not be affected by resolution measures potentially imposed by the
European Commission because the Austrian government's guarantee
explicitly states that it would ensure continued and punctual
payment in such an event. The guarantee, which is provided under
German law, and the notes' rating would also not be affected by
an issuer substitution, which we think is a possibility given the
various options currently under discussion for Hypo Alpe."

The rating of Hypo Alpe's guaranteed notes is solely based on
Fitch's expectation that the Republic of Austria, affirmed at
'AAA'/Stable on February 21, 2014, will honor its unconditional
and irrevocable guarantee to the subordinated note holders. Fitch
does not rate Hypo Alpe itself and the creditworthiness of the
bank is irrelevant for the rating of the notes.

A downgrade of Austria's rating would lead to a downgrade of the
subordinated notes. Changes to the terms of the notes or the
guarantee could also lead to a negative rating action, if we
perceived them as being detrimental to the interests of
bondholders.

Access to and costs of funding for other, rated Austrian banks
may change depending on Hypo Alpe's future or if uncertainty
continues. But barring a worst-case outcome -- Hypo Alpe's
insolvency, which Fitch does not expect -- Hypo Alpe's wind-down
should have no immediate impact on these banks' ratings.

The three rated large Austrian banking groups (Erste Group Bank,
Unicredit Bank Austria and Raiffeisenbank International) have
well-established and diversified international funding
franchises. RBI's recent successful equity and subordinated debt
issuances, for instance, signal that primary market investor
confidence remains thus far unshaken by Hypo Alpe's situation.

Persistent and erratic newsflow on Hypo Alpe might more severely
affect debt investors' confidence in rated banks that are
partially or fully owned by the Republic of Austria and reliant
on its support (Osterreichische Volksbanken AG, Kommunalkredit
and KA Finanz). We believe the government's bail-in threat is
specific to Hypo Alpe, due to the still-unresolved burden sharing
relating to its bailout. If so, this would also limit a crisis of
confidence at these banks.

The Austrian government is currently envisaging various options
for winding down Hypo Alpe, a medium-sized regional bank
nationalized in 2009. Discussions are wide ranging, including
potentially imposing insolvency on the bank or losses on its
bondholders.  Fitch believes that given the repercussions and
considerable contagion risk, the possibility of Hypo Alpe's
insolvency remains remote.



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D E N M A R K
=============


DANSKE BANK A/S: S&P Assigns 'BB+' Rating to Proposed Notes
-----------------------------------------------------------
Standard & Poor's Ratings Services said that it had assigned its
'BB+' long-term issue rating to the proposed perpetual additional
Tier 1 capital notes to be issued by Danske Bank A/S (A-/Stable/
A-2).  The rating is subject to S&P's review of the notes' final
documentation.

This will be the first issue by Danske Bank A/S, or by any Nordic
bank, of an additional Tier 1 security (AT1), which S&P
understands will be compliant with the European Commission's
Capital Requirements Directive (CRD IV), which implements Basel
III in the EU.  S&P understands that the notes will rank senior
to ordinary shareholders, absent a trigger event, and subordinate
to any senior creditors, including Tier 2 creditors of Danske
Bank A/S.

In accordance with S&P's criteria for hybrid capital instruments,
the 'BB+' rating reflects its analysis of the proposed
instruments, and its assessment of Danske Bank A/S' stand-alone
credit profile (SACP) at 'bbb+'.

The 'BB+' issue rating stands three notches below the bank's
SACP, incorporating:

   -- The deduction of two notches, which is the minimum downward
      notching from the SACP under our criteria for bank hybrid
      capital instruments; and

   -- S&P's consideration that the notes have a going-concern
      loss-absorption feature in the form of nonpayment of
      coupons at the issuer's discretion, resulting in an
      additional notch.

"We expect the evolution of the regulatory ratio specified in the
notes over each of the reporting dates over the next 18-24 months
will not likely drop from the current level of 14.7%, which
should provide a buffer of more than 401 basis points over the
trigger level.  Consequently, we do not deduct any further
notches with reference to the high trigger mandatory write-down
feature.  It would be activated if Danske Bank A/S' estimated
consolidated common equity Tier 1 ratio under CRD IV is less than
7.0% on any quarterly financial period end date or extraordinary
calculation date," S&P said.

"We could cap the ratings on the proposed instrument at 'BB' or
lower if we believe that the distance from the trigger of a
mandatory suspension of coupons would not exceed 300 basis
points, in the case of Danske Bank A/S with its SACP of 'bbb+'.
Although the full details are subject to change, we understand
that the Danish authorities, as part of the capital conservation
plan, may limit Danske Bank A/S' making payments on Tier 1
instruments, paying out bonuses, and distributing dividends,
should the bank's capital ratio fall below a certain level.
However, we expect that Danske Bank A/S, with a total capital
ratio of 21.4% at year-end 2013, will remain in the range of 301-
400 basis points or more above the level of such potential
mandatory suspension of coupons in the next 18-24 months," S&P
added.

S&P will assign "intermediate" equity content to the notes when
they get formal regulatory approval for inclusion into regulatory
Tier 1 capital.  The instruments meet the conditions for
"intermediate" equity content under S&P's criteria because:

   -- They are perpetual;
   -- They do not contain a step-up clause; and
   -- They have loss-absorption features on a going-concern
      basis, given the bank's flexibility to suspend the coupon
      at any time.



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G E R M A N Y
=============


CENTROSOLAR GROUP: Creditors Okay US-Focused Restructuring Plan
---------------------------------------------------------------
Ian Clover at pv-magazine.com reports that a committee of
creditors tasked with overseeing the financial restructuring of
Centrosolar Group AG on Feb. 27 voted in favor of board proposals
to focus solely on the U.S. market.

Should the proposals be passed, Centrosolar Group AG will
continue to trade through Centrosolar America Inc., turning its
full attentions to the U.S. solar sector -- a market that has
comprised more than two-thirds of the company's revenue in the
past 12 months, the report says.

In doing so, the only other two areas of the business that are
not insolvent -- Renusol GmbH and Centrosolar
Grundstuecksverwaltungs GmbH -- will be sold, relates pv-
magazine.com. Centrosolar AG and Centrosolar Sonnenstromfabrik,
both currently insolvent participants in the company, are to be
restructured ouside of the insolvency plan and will no longer be
part of Centrosolar Group AG, according to pv-magazine.com.

According to the report, Centrosolar Group AG said in a statement
that previous shareholders in the company will lose their status
of owners and will not be eligible to compensation. The
subordinated loan will also lapse, the report relays.

pv-magazine.com says non-subordinated creditors will be in line
for compensation. Recompense is being planned in two ways: either
proceeds from the sale of Renusol and Centrosolar
Grundstuecksverwaltungs will be distributed among the non-
subordinated creditors, or they will receive the company's shares
through transfer, with the company's creditors waiving their
unsettled claims in return.

These creditors will receive one share per an amount claimed of
EUR132.67, which for bond creditors translates to eight shares
per each bond of a nominal value of EUR1,000, pv-magazine.com
relays.

In order to strengthen liquidity, a capital increase for cash
will also be effected, and will initially be offered for
subscription to the previous non-subordinated creditors as new
shareholders, the report notes.

pv-magazine.com says the implementation of these proposals are
dependent on various economic and legal conditions being met,
such as the failure to secure buyers for the proposed sale of the
two solvent subsidiaries. In this scenario, the Management Board
and creditor's committee may allow these participants to continue
to operate as part of Centrosolar Group AG.

According to pv-magazine.com, the first meeting of the bond
creditors is scheduled for March 18, who represent the largest
group of creditors affected. Once the vote has been passed by
them, a creditors' meeting under insolvency law will be called,
probably before the end of April. If the insolvency plan is
approved, changes can then be implemented from the end of May,
pv-magazine.com adds.

As reported in the Troubled Company Reporter-Europe on
Oct. 21, 2013, SolarServer said Centrosolar Group AG (Munich),
Centrosolar AG and Centrosolar Sonnenstromfabrik GmbH have
applied for "protective shield" creditor protection at a court in
Hamburg, Germany, which the company says will allow for faster
implementation of its restructuring plans.

Centrosolar is a German PV company.


COREALCREDIT BANK: Fitch Keeps BB- Sub. Debt Rating on Watch Pos.
-----------------------------------------------------------------
Fitch Ratings has affirmed Germany-based Aareal Bank AG's
Long-term Issuer Default Rating (IDR) at 'A-' and Viability
Rating (VR) at 'bbb'. Fitch has also maintained COREALCREDIT BANK
AG's (COREALCREDIT) Long-term IDRs of 'BBB-' on Rating Watch
Positive (RWP) and affirmed its VR at 'bb'.

The rating actions are part of Fitch's peer review of five German
commercial real estate lenders.

KEY RATING DRIVERS - AAREAL'S IDRs, SUPPORT RATING, SUPPORT
RATING FLOOR AND SENIOR DEBT

The affirmations of Aareal's Long-term IDR with a Stable Outlook,
Support Rating, Support Rating Floor and senior debt ratings
reflect Fitch's view that its status as one of Germany's largest,
independent active Pfandbrief issuers results in a very high
probability that state support would be forthcoming if necessary.
State support, in Fitch's view, is even more certain in the short
term and so Aareal's 'F1' Short-term IDR is at the higher of two
potential Short-term ratings mapping to its 'A-' Long-term IDR.
The Stable Outlook is based on Fitch's view that support will
continue to be forthcoming, although this is sensitive to
evolving developments around resolution and support for EU banks.

KEY RATING DRIVERS - COREALCREDIT'S IDRs, SUPPORT RATING, SUPPORT
RATING FLOOR AND SENIOR DEBT

The RWP on COREALCREDIT's IDRs and senior debt reflects Fitch's
expectation that Aareal's planned acquisition of COREALCREDIT,
which was announced in December 2013, will close successfully in
1H14, and that the acquisition will have a positive impact on the
likelihood of external support for COREALCREDIT. The future
rating will factor in a very strong propensity for Aareal to
support COREALCREDIT, underpinned by a profit and loss sharing
agreement between the two financial institutions. The ratings
will also factor in Aareal's ability to provide support either
from its own resources or via state support to COREALCREDIT
through Aareal.

COREALCREDIT's support-driven ratings are currently based on
Fitch's view on the likelihood of sovereign support from Germany
(AAA/Stable) but our analysis will be based on the likelihood of
institutional support from Aareal once COREALCREDIT's acquisition
is complete.

RATING SENSITIVITIES - AAREAL's IDRs, SUPPORT RATING, SUPPORT
RATING FLOOR AND SENIOR DEBT

Aareal's IDRs, Support Rating, Support Rating Floor and senior
debt ratings are sensitive to any change in Fitch's assumptions
about the on-going availability of extraordinary sovereign
support for the bank. In Fitch's view, there is a clear intention
ultimately to reduce implicit state support for financial
institutions in the EU, as demonstrated by a series of
legislative, regulatory and policy initiatives, most recently
agreement between the European Council and Commission on the Bank
Recovery and Resolution Directive. In September 2013, Fitch
commented on its approach to incorporating support in its bank
ratings in light of evolving support dynamics for banks
worldwide.

Aareal's Support Rating Floor would be revised down and its
Support Rating, IDRs and senior debt ratings downgraded if Fitch
concludes that potential sovereign support has weakened relative
to its previous assessment. Given Aareal's 'bbb' VR, any support-
driven downgrade of the bank's Long-term IDR and senior debt
ratings would be limited to two notches.

RATING SENSITIVITIES - COREALCREDIT's IDRs, SUPPORT RATING,
SUPPORT RATING FLOOR AND SENIOR DEBT

Fitch expects to resolve the RWP once COREALCREDIT's takeover by
Aareal is successfully closed. Fitch's considerations on support
for EU banks will affect the rating action. If support
considerations are excluded, COREALCREDIT's Long-term IDR would
be equalized with Aareal's VR upon transaction closing. This
would mean a one-notch upgrade for COREALCREDIT's Long-term IDR
and senior debt ratings and either an affirmation or one-notch
upgrade of its Short-term IDR.

COREALCREDIT's Support Rating and Support Rating Floor are
sensitive to similar support considerations as those for Aareal.
In addition, if the acquisition by Aareal fails to go ahead - an
unlikely scenario at this stage of the transaction, in Fitch's
view - COREALCREDIT's IDRs and senior debt ratings will be
sensitive to changes to Fitch's view about state support.

KEY RATING DRIVERS AND SENSITIVITIES - VRs

Aareal's 'bbb' VR is the highest of its peers and reflects
Fitch's expectation that the bank's recurring earnings and
capitalisation could benefit slightly from the acquisition of the
much smaller, Germany-focused COREALCREDIT, which is being
purchased at a material discount to the net fair value of its
assets and liabilities. The rating also takes into account
execution risk on the acquisition. Taxation and legal risks are
by nature difficult to quantify with certainty and the
acquisition will absorb considerable management capacity at least
in the short term. Fitch expects that Aareal will not release
profit from this transaction through dividend payments in the
early years before the full economic impact of the transaction
materialises. Therefore, the affirmation of Aareal's VR is based
on assumptions that potential legacy risks at COREALCREDIT are
sufficiently ring-fenced and that cash collateral is trapped at
the financial institution in an escrow account.

On balance, Fitch believes that Aareal's management team is
experienced in structuring complex financial transactions and
expects that Aareal will extract some net profit from the
transaction, including the substantial negative goodwill it will
book upfront.

Aareal's non-performing loan (NPL) ratio will deteriorate once it
consolidates COREALCREDIT. COREALCREDIT has a large, albeit
rapidly shrinking, NPL portfolio which combined with its weak
profitability, is one of the main reasons for its 'bb' VR.

However, COREALCREDIT has fairly high NPL coverage with loan loss
reserves compared with its German peers, and the terms of the
acquisition include further cash collateral against unexpected
deterioration of collateral value. Fitch understands that Aareal
has conducted extensive due diligence on COREALCREDIT's loan
portfolio, covering most commercial real estate loans. If
Aareal's assessment proves to be inadequate -- which is not
Fitch's base case -- it could be negative for COREALCREDIT's VR.

Aareal has also negotiated protection in the form of cash
collateral and fair value adjustments for potential taxation and
legal risks. If Aareal's assessment has not been sufficiently
conservative, the upside for Aareal's profitability and capital
generating capacity through this acquisition would be reduced. In
addition, if Aareal's calculation of the net gain of the
acquisition has been too optimistic, this would be neutral to
negative for the VR. Should risks emerge subsequently that were
not identified by Aareal in its due diligence, this would be
negative for the VR.

COREALCREDIT's capital, funding and liquidity will be managed at
a consolidated level -- meaning COREALCREDIT's liquidity will
benefit from Aareal's good funding access -- and the profit and
loss sharing agreement will mutualize the two banks' earnings.
Consequently, Fitch will most likely withdraw COREALCREDIT's VR
once the acquisition is successfully closed and the integration
process is well underway.

The affirmation of COREALCREDIT's VR reflects Fitch's view that
its financial position will not be negatively affected by the
transaction. Once the acquisition is approved by the authorities,
Fitch expects that the bank's capitalization will improve before
potential capital transfers to Aareal. COREALCREDIT's
profitability for the purpose of consolidation into Aareal's
accounts, once the transaction is complete, will depend
substantially on the pull-to-par fair value of assets and
liabilities and the ability of Aareal's management to deliver
synergies according to plan.

KEY RATING DRIVERS AND SENSITIVITIES - SUBORDINATED DEBT AND
OTHER HYBRID SECURITIES

Aareal's and COREALCREDIT's Lower Tier 2 subordinated securities
are rated one notch below the banks' respective VRs to reflect
higher loss severity compared with senior unsecured debt
instruments in line with Fitch's criteria.

Aareal's hybrid securities, issued by Capital Funding GmbH and
Aareal Capital Funding LLC (Delaware), are rated 'BB-'. The
instruments' distributable profit trigger or an annual profit
trigger combined with a regulatory capital ratio trigger are
reflected in the notes being rated four notches below Aareal's
VRs, two notches each for high loss severity and high non-
performance risks.

Subordinated debt ratings and hybrid ratings are sensitive to the
potential changes of the banks' respective VRs. When the
acquisition is closed, the anchor VR for COREALCREDIT's
subordinated debt is likely to be Aareal's, rather than
COREALCREDIT's.

RATING ACTIONS

Aareal Bank AG:

Long-term IDR: affirmed at 'A-', Outlook Stable
Short-term IDR: affirmed at 'F1'
Viability Rating: affirmed at 'bbb'
Support Rating: affirmed at '1'
Support Rating Floor: affirmed at 'A-'
Debt Issuance Programme: affirmed at 'A-'/'F1'
Senior unsecured notes: affirmed at 'A-'
Subordinated debt: affirmed at 'BBB-'
Capital Funding GmbH (DE0007070088): affirmed at 'BB-'
Aareal Capital Funding LLC (Delaware) (XS0138973010): affirmed
  at 'BB-'

COREALCREDIT BANK AG:

Long-term IDR: 'BBB-' maintained on RWP
Short-term IDR: 'F3' maintained on RWP
Viability Rating: affirmed at 'bb'
Support Rating: affirmed at '2'
Support Rating Floor: affirmed at 'BBB-'
Senior unsecured notes: 'BBB-' maintained on RWP
Subordinated debt: 'BB-' maintained on RWP


DEUTSCHE PFANDBRIEFBANK: Fitch Affirms 'BB-' Sub. Debt Rating
-------------------------------------------------------------
Fitch Ratings has affirmed Hypo Real Estate Holding AG (HRE
Holding) and its subsidiary Deutsche Pfandbriefbank AG's (PBB)
Long-term Issuer Default Ratings (IDR) at 'A-'. The Outlooks are
Stable. At the same time, the agency affirmed the banks'
Viability Ratings (VR) and senior debt ratings.

The rating actions are part of Fitch's peer review of five German
commercial real estate lenders.

The affirmation of PBB and HRE Holding's IDRs and Stable Outlooks
are driven by Fitch's view of continued sovereign institutional
support. The affirmation of PBB's VR reflects Fitch's expectation
that the bank will mildly improve its business profile in 2014,
building on the progress made in 2013, but the successful return
to a sustainable standalone profile remains uncertain.

KEY RATING DRIVERS AND SENSITIVITIES - IDRs, SUPPORT RATINGS,
SUPPORT RATING FLOORS AND SENIOR DEBT

PBB's Long-term IDR with a Stable Outlook, Short-term IDRs,
Support Ratings, Support Rating Floors (SRF) and senior debt
ratings reflect Fitch's continued view that its status as an
active Pfandbrief issuer results in a very high (indicated by a
SRF of 'A-') probability of state support. For PBB (and HRE
Holding where its ratings are aligned with PBB), the already
provided sovereign support results also in the higher of two
possible Short-term IDRs at the SRF of 'A-'.

PBB's IDRs, Support Rating, SRF and senior debt ratings are
sensitive to any change in Fitch's assumptions about the on-going
availability of extraordinary sovereign support for the bank. In
Fitch's view, there is a clear intention ultimately to reduce
implicit state support for financial institutions in the EU, as
demonstrated by a series of legislative, regulatory and policy
initiatives, most recently agreement between the European Council
and Commission on the Bank Recovery and Resolution Directive. In
September 2013, Fitch commented on its approach to incorporating
support in its bank ratings in light of evolving support dynamics
for banks worldwide (see 'Fitch Outlines Approach for Addressing
Support in Bank Ratings', 'Bank Support: Likely Rating Paths',
and 'The Evolving Dynamics of Support for Banks' available at
www.fitchratings.com) and followed this with an update in
December (see ''Sovereign Support for Banks Update on Position
Outlined In 3Q13').

PBB's SRF would be revised down and its Support Rating, IDRs and
senior debt ratings downgraded if Fitch concludes that potential
sovereign support has weakened relative to its previous
assessment. Given PBB's VR is 'bb', any support-driven downgrade
of the bank's Long-term IDR and senior debt ratings could be a
multi-notch downgrade.

HRE Holding is a strategic and financial holding company that
does not have any banking operations. Through HRE Holding, SoFFin
(Financial Market Stabilisation Fund) controls its two main
subsidiaries, PBB and Depfa Bank plc (BBB-/Negative).

KEY RATING DRIVERS AND SENSITIVITIES - VRs

PBB's 'bb' VR is mainly driven by the bank's challenges in re-
establishing a viable business, which outweigh its currently
strong asset quality, improving funding and adequate
capitalization.

PBB's business plan foresees strong new business growth,
predominantly in its Real Estate Finance segment and partly in
its Public Investment Finance segment. This asset growth, which
is ultimately needed to achieve a sufficient level of
profitability, will depend on senior unsecured funding at
competitive prices, which Fitch believes is still uncertain after
a potential privatization. Fitch believes that it will be
especially difficult for PBB's public sector business to be
profitable after a potential privatization without taking undue
risks, for example liquidity risks or concentrations risks.

However, PBB has successfully issued unsecured benchmarks in 2013
with maturities beyond its sale date, which is planned by latest
end-2015, although in Fitch's view, this is unrealistic.

Following the transfer of non-performing and non-strategic assets
to FMS Wertmanagement AoeR in 2010 PBB's asset quality is sound,
but its sector and single asset concentration are characteristics
it shares with its peers. In Fitch's view, the currently low
levels of non-performing loans and loan impairment charges (LICs)
are unsustainable considering PBB's substantial exposure to
cyclical European property markets. Fitch expects normalized LICs
to have the potential to significantly dent PBB's earnings as it
is unable to quickly improve the return on assets.

Fitch expects that PBB's capitalization will improve in 2013 and
its pro-forma fully phased in Basel III Common Equity Tier 1
(CET1) ratio was 9.8% (simulation based on end-1H13 data). PBB's
pro-forma simulation of its Basel III leverage ratio, liquidity
coverage ratio and net stable funding ratio were above the
required minimum level at HY13.

In Fitch's view, uncertainty about the viability of PBB's
business model constrains the VR to the 'bb' category. PBB's 'bb'
VR could be downgraded if Fitch believes the bank is unable to
establish a track record and fails to implement its current
business plan.

KEY RATING DRIVERS - SUBORDINATED DEBT AND OTHER HYBRID
SECURITIES

PBB's hybrid Tier 1 securities, issued through Hypo Real Estate
International Trust I, are rated 'C' and reflect the uncertain
timing of these securities being serviced again. The European
Commission agreement does not permit distribution on profit-
related capital instruments (excluding SoFFin-related ones) prior
to PBB's re-privatization and the redemption of its outstanding
EUR999 million SoFFin silent participation.

RATING SENSITIVITIES - SUBORDINATED DEBT AND OTHER HYBRID
SECURITIES

Subordinated debt ratings and hybrid ratings are sensitive to
potential changes to the banks' respective VRs and changes in
Fitch's criteria.

The rating actions are as follows:

Deutsche Pfandbriefbank AG:

Long-term IDR: affirmed at 'A-', Outlook Stable
Short-term IDR: affirmed at 'F1'
Viability Rating: affirmed at 'bb'
Support Rating: affirmed at '1'
Support Rating Floor: affirmed at 'A-'
Commercial paper: affirmed at 'F1'
Debt Issuance Programme: affirmed at 'A-'/'F1'
Senior unsecured notes: affirmed at 'A-'
Short-term debt: affirmed at 'F1'
Subordinated debt: affirmed at 'BB-'

Hypo Real Estate International Trust I (XS0303478118):
affirmed at 'C'

Hypo Real Estate Holding AG:

Long-term IDR: affirmed at 'A-', Outlook Stable
Short-term IDR: affirmed at 'F1'
Support Rating: affirmed at '1'
Support Rating Floor: affirmed at 'A-'


DUESSELDORFER HYPOTHEKENBANK: Fitch Hikes Viability Rating to ccc
-----------------------------------------------------------------
Fitch Ratings has affirmed Duesseldorfer Hypothekenbank AG's
(DHB) Long-term Issuer Default Rating (IDR) at 'BBB-'. The
Outlook is Stable. At the same time, the agency has upgraded the
bank's Viability Rating (VR) to 'ccc' from 'c'.

The rating actions are part of Fitch's peer review of five German
commercial real estate lenders.

The upgrade of the VR reflects Fitch's belief that DHB's
fundamentals have mildly improved, reflected particularly by the
bank's repayment of a large SoFFin bond in December 2013 and
improved regulatory capital ratios. However, DHB's VR still
reflects substantial fundamental credit risk and considerable
challenges over its ability to develop a sustainable business
model. This is particularly in light of the bank's reliance on
coverage from the deposit protection scheme to attract unsecured
funding, as well as the fact that the bank still needs to return
to sufficient recurring profitability and, thus, sustainable
internal capital generation.

KEY RATING DRIVERS AND RATING SENSITIVITIES -IDR, SUPPORT
RATINGS, SUPPORT RATING FLOORS

The affirmation of DHB's Long-term IDR with a Stable Outlook,
Short-term IDR, Support Rating (SR) and Support Rating Floor
(SRF) is driven by Fitch's view of the availability of continued
sovereign support from Germany (AAA/Stable). DHB's status as a
Pfandbrief issuer continues to result in a high (indicated by the
SRF of 'BBB-') probability that state support would be
forthcoming if necessary.

Fitch understands that there is broad political will in Germany,
supported by all major parties, to move towards reducing the
implicit state support of systemically important banks in the
country at some point. In addition, the European Union discussion
on the Bank Recovery and Resolution Directive and the Single
Resolution Mechanism aspect of Banking Union are drawing to a
close, with European Parliament votes scheduled for 1Q14 and
representing important steps to curb systemic risks posed by the
banking industry. This follows Germany's implementation of a
Restructuring Act in 2011. Although Fitch does not expect to
immediately remove support incorporated into some EU bank
ratings, these developments highlight potential risks for DHB's
support-driven ratings.

DHB's SRF would be revised down and its SR and IDRs downgraded if
Fitch concludes that potential sovereign support has weakened
relative to its previous assessment. Given DHB's VR is 'ccc', any
support-driven downgrade could lead to a multi-notch downgrade of
DHB's IDR.

KEY RATING DRIVERS AND SENSITIVITIES - VR

DHB's 'ccc' VR reflects that the bank has reduced its failure
risk. DHB was able to repay its SoFFin bonds in December 2013 and
Fitch understands that the risk of DHB breaching minimum
regulatory capital ratios has been somewhat reduced. In addition,
DHB has written new business and reduced some risks in its legacy
portfolio. However, Fitch has concerns that DHB will not be able
to establish itself as a niche commercial real estate lender
because it lacks internal capital generation capacity and access
to long-term unsecured funding, which is not insured by the
German Deposit Protection Fund. Fitch understands that DHB still
needs external capital injections in the long term to assure its
viability.

Any further upgrade of DHB's VR would require additional risk
reduction and a sustainable return to robust profitability.
However, at this stage of DHB's restructuring, profitability is
of moderate importance. Failure to strengthen DHB's
capitalization in the medium term or a deterioration of DHB's
access to insured deposits would trigger a downgrade of the
bank's VR.

RATING ACTIONS

Long-term IDR: affirmed at 'BBB-', Outlook Stable
Short-term IDR: affirmed at 'F3'
Viability Rating: upgraded to 'ccc' from 'c'
Support Rating: affirmed at '2'
Support Rating Floor: affirmed at 'BBB-'
Debt Issuance Programme: affirmed at 'BBB-'/'F3'



=============
I R E L A N D
=============


AXIUS EUROPEAN: Moody's Ups Rating on EUR15MM Cl. E Notes to 'B1'
-----------------------------------------------------------------
Moody's Investors Service has upgraded the ratings of the
following notes issued by Axius European CLO S.A.:

EUR250M (Current Outstanding Balance: EUR242.9M) Class A Senior
Secured Floating Rate Notes due 2023, Upgraded to Aaa (sf);
previously on Jul 19, 2011 Upgraded to Aa1 (sf)

EUR10M Class B1 Senior Secured Deferrable Floating Rate Notes
due 2023, Upgraded to Aa3 (sf); previously on Jul 19, 2011
Upgraded to A2 (sf)

EUR9M Class B2 Senior Secured Deferrable Fixed Rate Notes due
2023, Upgraded to Aa3 (sf); previously on Jul 19, 2011 Upgraded
to A2 (sf)

EUR16.5M Class C Senior Secured Deferrable Floating Rate Notes
due 2023, Upgraded to A3 (sf); previously on Jul 19, 2011
Upgraded to Baa3 (sf)

EUR16M Class D Senior Secured Deferrable Floating Rate Notes due
2023, Upgraded to Ba1 (sf); previously on Jul 19, 2011 Upgraded
to Ba3 (sf)

EUR15M (Current Outstanding Balance: EUR10.8M) Class E Senior
Secured Deferrable Floating Rate Notes due 2023, Upgraded to B1
(sf); previously on Jul 19, 2011 Upgraded to B2 (sf)

Axius European CLO S.A. issued in October 2007, is a
Collateralised Loan Obligation ("CLO") backed by a portfolio of
mostly high yield senior secured European leveraged loans. The
portfolio is managed by 3i Group plc. The transaction's
reinvestment period ended in November 2013.

Ratings Rationale

The rating actions on the notes are result of the improvement of
the credit quality of the underlying collateral pool and increase
in overcollateralization ("OC") ratios since the payment date in
May 2013 and expiry of the transaction's reinvestment period in
November 2013.

The credit quality has improved as reflected in the improvement
in the average credit rating of the portfolio (measured by the
weighted average rating factor, or WARF), increase in spread
levels and improvement in diversity score. As of the trustee's
December 2013 report, the WARF was 2,632 compared with 2,674 as
of the May 2013 report. Over the same period the weighted average
spread increased to 4.18% from 3.98% and reported diversity score
increased to 47.8 from 45.6.

In consideration of the reinvestment restrictions applicable
during the amortization period, and therefore the limited ability
to effect significant changes to the current collateral pool,
Moody's analyzed the deal assuming a higher likelihood that the
collateral pool characteristics will continue to maintain a
positive buffer relative to certain covenant requirements. In
particular, the deal is assumed to benefit from a shorter
amortization profile and higher spread levels compared to the
levels assumed before the end of the reinvestment period in
November 2013. Moody's modeled a WAS of 4.18% compared to 3.01%
at the time of the last rating action in 2011.

The OC ratios of the rated notes have also improved. As of the
trustee's December 2013 report, the Class A, Class B, Class C,
Class D and Class E OC ratios are 132.1%, 122.5%, 115.2% and
108.9% and 105.1% compared with 130.6%, 121.1%, 113.9%, 107.7%
and 103.9%, respectively, as of the trustee's May 2013 report.

The key model inputs Moody's uses, 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 EUR318.1M, defaulted par of
EUR7.2M, a weighted average default probability of 22.10%
(consistent with a WARF of 2,764), a weighted average recovery
rate upon default of 47.37% for a Aaa liability target rating, a
diversity score of 43 and a weighted average spread of 4.18%.

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 a recovery of 50% of the 90.68% of the portfolio
exposed to first-lien senior secured corporate assets upon
default and of 15% of the 5.21% 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
February 2014.

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 2.06% 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 run where the
base case WARF was increased to 2,817 by forcing ratings on 50%
of refinancing exposures to Ca. This run 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 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 embedded ambiguities.

Additional uncertainty about performance is due to the following:

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.

Around 21.37% of the collateral pool consists of debt obligations
whose credit quality Moody's has assessed by using credit
estimates.

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.


EIRCOM HOLDINGS: Fitch Revises Outlook to Stable & Affirms B- IDR
-----------------------------------------------------------------
Fitch Ratings has revised the Outlook on eircom Holdings
(Ireland) Limited's Issuer Default Rating (IDR) to Stable from
Negative and affirmed the IDR at 'B-'. At the same time, the
agency has affirmed the instrument ratings of the company's
secured bank debt and the senior secured notes issued by eircom
Finance Limited at 'B'/'RR3'.

The revision of the Outlook reflects Fitch's view that eircom has
made progress in delivering the operational transformation set
out by management 18 months ago. Nonetheless, significant
challenges remain and the company's leveraged financial profile
is inconsistent with the wider European incumbent telecom sector
where significant revenue pressures continue. Progress in terms
of the company's fibre build, the launch of LTE mobile services,
and its TV and quad-play product launch, put the company in a
stronger position to compete in Ireland's crowded telecoms
market, while the financial performance is in line with
management's expectations.

An improved operating profile and progress in meeting cost
reduction targets provide greater assurance of eircom's ability
to generate positive free cash flow (FCF) in fiscal 2015. Fitch's
rating case envisages net debt to EBITDA leverage will
peak/stabilize at around 4.7x in FY14, before more meaningful FCF
generation should start to delever the business from 2016. This
profile is consistent with a Stable Outlook in the context of a
'B-' rating given the company's operational profile.

KEY RATING DRIVERS

Rating Case Improving
Year-on-year revenue trends remain weak, although this partly
reflects the base effects of the accelerated declines reported in
2013. Revenue and market share trends have begun to ease, while
the scale of network improvements and wider product offering,
position the company more competitively. Fitch's rating case,
while still envisaging revenue declines over the next two years,
also expects the company to generate positive FCF in fiscal 2015
(by June 2015) with peak leverage lower than previously forecast.

Operational Transformation on-Track
In Fitch's view, operational performance has been healthy against
the objectives set for the company over the past 18 months.
eircom's fibre build has so far passed 700,000 homes and is now
broadly comparable in reach to UPC's (bi-directional) cable
network. While operating metrics remain under pressure, this is
common among European incumbents and they are within the targets
previously set by management. In addition, cost savings are being
delivered and EBITDA is stabilizing. eircom has acquired 4G
spectrum and rolled out LTE services quickly, while planned
improvements in the postpaid mix are supporting margin recovery
in mobile.

Fibre Investment and Quad Play
Roll-out efficiencies have enabled management to increase its
targeted fibre build to 1.4 million premises and 70% of the
population to be delivered by June 2016, without adding to the
capex budget. The fibre network enables eircom to offer iPTV
services which were launched in October 2013making eircom the
only quad- play offer currently in the market. It will now be
important for the company to position its TV and quad-play offers
in a way that appeals to the consumer without prompting
aggressive competitor actions in an increasingly crowded fixed
line market.

Operating Environment Evolving
Both fixed line and mobile markets are evolving, with competition
in the fixed line market intensifying in 2013 following the
launch of triple-play (TV, broadband and voice) services by Sky
at the start of the year. Ireland is a highly penetrated pay-TV
market with 70% of TV homes taking some form of pay TV. With both
cable operator UPC and Sky pushing triple-play, the launch of the
incumbent's iPTV product is important. Fitch believes the
potential consolidation of the mobile market to three network-
based operators, if Hutchison Whampoa's acquisition of O2 Ireland
gains regulatory clearance (outcome expected in April), could
benefit the wider market in the near term given the integration
challenges faced by a newly merged, albeit larger, competitor.

Revenue Pressure Remains
An important part of the recovery plan was the target of reducing
headcount and materially improving efficiency. From a base of
approximately 5,100 full-time employees at FY12, headcount
management is on track to reach a planned 3,500 by December 2014.
Fitch considers management is broadly on-track to meet opex
savings of EUR100 million by 2015. Revenue pressures nonetheless
remain, with management's expectations of return to growth in
2015, which in Fitch's view, is a challenging target given an
economy that remains constrained by austerity, high unemployment
and weakened private consumption. Western European incumbent
businesses in materially stronger economies remain challenged to
grow top-line revenues.

RATING SENSITIVITIES

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

  FFO net leverage trending towards 5.0x -- roughly equivalent to
  4.5x net debt to EBITDA leverage, combined with a solid high
  single digit FCF margin.

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

  A 2015 FFO net adjusted metric that was trending towards 6.5x
  would likely lead to a downgrade.

Fitch would likely assign a Negative Outlook if unadjusted
leverage was trending above 5.0x (FFO net leverage of c. 5.5x),
given that revenue and cash flow trends would not be stabilizing
as envisaged by our rating case.

Generation of positive FCF in FY15 is an important milestone, the
absence of which would increase downward rating pressure.


SMURFIT KAPPA: S&P Raises CCR to 'BB+'; Outlook Stable
------------------------------------------------------
Standard and Poor's Rating Services said that it raised its
long-term corporate credit rating on Ireland-headquartered paper
and packaging producer Smurfit Kappa Group PLC and related
entities Smurfit Kappa Acquisitions, Smurfit Kappa Funding PLC,
and Smurfit Kappa Packaging Ltd. to 'BB+' from 'BB'.  The outlook
on all entities is stable.

In addition, S&P raised its issue rating on Smurfit Kappa's
senior debt to 'BB+' from 'BB'.  The recovery rating on the
senior unsecured debt is unchanged at '3', indicating S&P's
expectation of meaningful (50%-70%) recovery in the event of a
payment default.

The upgrade primarily reflects the improvements to the group's
credit metrics in 2013, which S&P forecasts to be sustained in
2014 and beyond.  S&P believes that Smurfit Kappa's operating
performance will remain robust, fueling substantial positive free
cash flows.

In addition to deleveraging, the Smurfit Kappa group has recently
refinanced the majority of its external debt, extending its debt
maturity profile and substantially reducing its interest costs.
Consequently, S&P believes that Smurfit Kappa's Standard &
Poor's-adjusted funds from operations (FFO) to debt will reach
around 25%, with adjusted debt to EBITDA remaining around 3.0x,
over the next 12-18 months.

The 'BB+' rating on Smurfit Kappa reflects our view of the
group's "satisfactory" business risk profile and "significant"
financial risk profile, as S&P's criteria define the terms.
S&P's business risk profile assessment is based on Smurfit
Kappa's position as the largest paper-based packager in Europe
and Latin America. Furthermore, the group is highly vertically
integrated, with strong diversification both geographically and
by customer. However, the group's industry is cyclical,
fragmented, and competitive, and to an extent the group is
exposed to volatile raw material prices and foreign currencies.

"Our assessment of Smurfit Kappa's financial risk profile is
supported by the group's strong free operating cash flow
generation and our forecast that its FFO-to-debt ratio should
remain at 20%-30% -- the range that we associate with a
"significant" financial risk profile.  Smurfit Kappa's "strong"
liquidity position and long-dated debt maturity profile further
support the rating," S&P said.

S&P's base-case forecasts assume:

   -- Mid-single-digit organic revenue growth supported by volume
      growth and rebounding prices in corrugated packaging.  S&P
      expects prices to recover following a dip in the last
      quarter of 2013;

   -- Slight improvements to adjusted EBITDA margins that S&P
      expects to be about 14%-15%, with continued cost-saving
      initiatives offsetting input cost inflation;

   -- Increased capital expenditure and acquisitions; and

   -- Moderately increasing dividend payouts over S&P's forecast
      period, reflecting improved profitability.

Based on these assumptions, S&P arrives at the following fully
adjusted credit measures for 2014:

   -- FFO to debt growing to around 24%;
   -- Debt to EBITDA at or slightly below 3.0x; and
   -- Free operating cash flow (after investments) to debt of
      above 10%.

The stable outlook reflects S&P's view that Smurfit Kappa's
credit metrics will remain commensurate with a "significant"
financial risk profile, specifically FFO to debt of 20%-30% and
adjusted debt to EBITDA of 3.0x-3.5x.  The stable outlook is
underpinned by S&P's expectation of slight improvements in
profitability in 2014, owing to cost-saving measures and modest
price increases, as well as S&P's understanding that Smurfit
Kappa will pursue a financial policy that targets growth from
internally generated cash flow while maintaining stable leverage.

S&P could consider lowering the ratings following large debt-
funded acquisitions or unexpectedly large shareholder
distributions, leading to credit metrics significantly below
S&P's base-case scenario.  S&P could also lower the ratings if
Smurfit Kappa faces greater margin pressure than it anticipates
in Europe, or significant losses related to its Latin American
operations.

S&P believes that the likelihood of an upgrade is more limited in
the near term because of Smurfit Kappa's focus on growth and its
anticipation of higher shareholder returns.  S&P expects that
these factors are likely to limit any significant improvement in
credit metrics.  However, S&P could raise the ratings if Smurfit
Kappa continues to focus on deleveraging and if S&P believes that
the group's financial policy could support credit metrics
commensurate within an "intermediate" financial risk profile.


ULSTER BANK: RBS Mulls Merger with Rivals
-----------------------------------------
Reuters, citing the Sunday Times newspaper, reports that
part-nationalized Royal Bank of Scotland is working on a plan to
salvage its troubled Irish business, Ulster Bank, by merging it
with a number of rivals.

According to Reuters, the newspaper reported that attempts to
find a buyer for the business have failed and a team inside RBS
is looking at tie-ups between Ulster and other lenders, such as
Permanent TSB or the Irish units of Danske Bank or KBC.

Bolting the institutions together could allow the new Ulster Bank
to strip out costs and mount a credible challenge to Ireland's
top players, Reuters says.

Ulster Bank has racked up losses of GBP2.5 billion over the past
two years, Reuters discloses.  It accounts for less than 4% of
RBS's assets but was responsible for 20% of its bad debt charges
last year, Reuters notes.

RBS Chief Executive Ross McEwan said on Friday that he wanted to
develop Ulster as a challenger to Ireland's biggest two lenders,
relates.  Mr. McEwan was speaking after RBS reported a 2013 loss
of GBP8.2 billion, Reuters relays.

Ulster is the biggest bank in Northern Ireland and the third
biggest in the Republic of Ireland.


* Number of Insolvent Firms Falls Down in February
--------------------------------------------------
The Irish Examiner, citing figures released by Vision-net,
reports that the number of companies being declared insolvent
dropped by almost a third last month.

The business and credit risk analysts say that nearly 40% of
companies declared insolvent were in Dublin, The Irish Examiner
relates.

The Irish Examiner says Cork had just over 15% and Galway at
6.5%.

According to The Irish Examiner, the number of insolvencies in
the construction sector fell by 7.5%, when compared with the same
period last year.  However, the wholesale and retail sector
accounted for almost a fifth of insolvencies, the report notes.



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


BANCA POPOLARE: Fitch Takes Rating Actions on Berica Tranches
-------------------------------------------------------------
Fitch Ratings has downgraded four tranches of the Berica series
and affirmed 10.  The series comprises six Italian prime RMBS
transactions originated by the Banca Popolare di Vicenza group
(BB+/Negative/B).

KEY RATING DRIVERS

Different Asset Performance

Berica 8, 9 and ABS 2 and to a lesser extent, Berica 1, have
shown stable asset performance over the past 12 months.  Gross
cumulative defaults, defined as mortgages in arrears for more
than 12 months, are reported between 0.13% (Berica ABS 2) and
4.2% (Berica 1) of the initial pools, while late-stage arrears
are between 1% (Berica 9) and 6% (Berica 1) of the current pool.
Although Berica 1's late-stage arrears are higher, they have
ranged between 5% and 6% for the last 3.5 years.

In contrast, Berica 5 and 6 have shown weak performance compared
with the other deals in the series. Both transactions have
reported an increased volume of gross cumulative defaults,
currently between 6.5% (Berica 5) and 10.4% (Berica 6) of the
initial pools.  In addition, the pipeline of late-stage arrears
is between 2.85% (Berica 6) and 8.8% (Berica 5) of the current
pools.

Fitch notes that most of the underperformance has been driven by
foreign borrowers in the pools.  Berica 5 and 6 comprise a higher
portion of these borrowers, between 13.1% (Berica 6) and 17.1%
(Berica 5) of the current pools, compared with the other
transactions, where it ranges between 0% (Berica ABS 2) and 8.3%
(Berica 8).  Furthermore, the weighted average original loan-to-
value ratios (LTVs) of the Berica 5 and 6 pools are around 72%,
higher than the Italian RMBS market average (between 60% and
65%). Taking into account these factors, Fitch expects Berica 5
and 6 to report further deterioration of the underlying assets.
These concerns are reflected in the downgrade of the mezzanine
tranche of Berica 5 to 'A-sf' and Berica 6's notes.

Sufficient Credit Enhancement for Most Recent Deals

To date Berica 1, 8, 9 and ABS 2 have reported high average
annual collateral repayment rates, between 9.6% (Berica 9) and
13.6% (Berica 1), and fully funded reserve funds.  These features
have contributed to the build-up in credit enhancement and are
reflected in the affirmation of these deals.

Reserve Fund Draws in Berica 5 and 6

In the past the originator provided support to Berica 6 by buying
back defaults and using the proceeds to replenish the reserve to
nearly three times the current target level.  Nonetheless, the
considerable period defaults have led to continuous draws to the
point that the reserve is now at 127% of its target level.  In
addition, the cash reserve of Berica 5 has been drawn and is now
at 60.5% of its target.  Given the current pipeline of late-stage
arrears, Fitch expects further depletion of both cash reserves.
Pro-Rata Amortisation in Berica 6

Berica 6 notes are amortizing pro-rata, which has been more
detrimental to the class A2 and B notes.  Combined with reserve
fund draws, the credit enhancement available to the rated notes
has been reduced.  Fitch's analysis showed that the current
levels are no longer sufficient to withstand the rating stresses
and has downgraded the notes.

In the absence of any further originator support, Fitch expects
that Berica 6's notes will switch to sequential amortization in
the next 12-18 months as the reserve fund is expected to drop
below target level.  This feature will restore the seniority of
the class A2 notes and will have a detrimental effect for the
junior tranche by delaying its repayment, which is reflected into
the downgrade to 'BBsf'.

Sufficient Liquidity to Mitigate Payment Interruption

All the transactions feature reserve funds, and Berica 1 and 5
also have a supplementary liquidity facility. In addition,
Credito Valtellinese (BB+/Negative/B) is the back-up servicer for
the six transactions. Fitch's analysis showed that these
facilities adequately mitigate any risk stemming from servicing
disruption.

Permitted Variations and Payment Holidays

The exposure to payment holidays, historically high in Berica 1,
5 and 6, has decreased due to the expiry of the main schemes and
is reported at between 1.8% (Berica 1) and 3% (Berica 8 and 9).
Due to lack of data about mortgages with an extended maturity,
Fitch assumed an amount between 10% and 15%, in line with the
permitted limits defined in the transaction documents.  In its
analysis, Fitch applied more conservative assumptions to these
mortgages and concluded that the transactions are resilient to
these specific stresses.

RATING SENSITIVITIES

Continued deterioration of Italy's economic fundamentals or a
slower than expected economic recovery could lead to negative
rating actions on the sovereign, which could result in a revision
of the highest achievable rating for the 'AA+sf' rated tranches.
Continued performance deterioration of Berica 5 and 6 involving
further reserve fund draws beyond Fitch's expectations could lead
to negative rating actions.

A more volatile asset performance for Berica 1 stemming from the
top 20 mortgages (3% of the current pool) combined with the
reserve falling below the target level could trigger negative
rating actions, starting from the most junior rated tranche.
A sharp increase in interest rates would negatively affect the
affordability of borrowers in the Berica 9 and Berica ABS2
portfolios as the majority of the mortgages were originated under
a low interest rate environment.  An increase in arrears and
defaults beyond Fitch's stresses would cause the agency to review
the ratings on these transactions.

A copy of the spreadsheet of the ratings is available at the
Fitch website: http://is.gd/P2vSnM


IMSER SECURITISATION: S&P Cuts Ratings on 5 Note Classes to BB+
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered to 'BB+ (sf)' from
'BBB- (sf)' its credit ratings on Imser Securitisation 2 S.r.l.'s
class B1, B2, B3, B4, and B5 notes.  At the same time, S&P has
affirmed its 'A+ (sf)' ratings on the class A2a, A2b, A3a, and
A3b notes.

The rating actions follow S&P's review of Imser Securitisation
2's performance, taking into account its downgrade of Telecom
Italia SpA and the application of S&P's nonsovereign ratings
criteria and its European commercial mortgage-backed securities
(CMBS) criteria.

Imser Securitisation 2 is an Italian CMBS transaction that closed
in June 2006.  It is currently backed by a loan secured on 169
(down from 227 at closing) Italian first-ranking mortgages on
properties fully leased to Telecom Italia.  The loan is
structured to fully amortize by its maturity date in 2021.  The
current reported valuation of the remaining properties is
EUR1.81 billion.

In light of the significant exposure to a single tenant, S&P's
analysis considers a scenario where the tenant defaults and there
could be a loss of income from the leases, capital expenditure to
convert the properties into lettable condition, and a significant
vacancy period.

S&P considers that the transaction is moderately exposed to
sovereign risk from the Republic of Italy, due to the properties'
location and exposure to the telecoms industry.  Therefore,
taking into account S&P's nonsovereign ratings criteria, it has
constrained its ratings on the notes in this transaction at 'A+
(sf)'.  S&P has therefore affirmed its 'A+ (sf)' ratings on the
class A2a, A2b, A3a, and A3b notes.

"Our ratings on the class B notes rely to some extent on our
long-term rating on Telecom Italia.  We expect the notes to fully
amortize by September 2021 and, in our analysis, we give full
credit to the scheduled amortization at rating levels equal to
and below our 'BB+' long-term rating on Telecom Italia.  However,
in accordance with our European CMBS criteria, we only give
partial credit at rating levels above our long-term rating on
Telecom Italia.  Following our downgrade of Telecom Italia to
'BB+', and consequent reduction in the level of credit we give
the scheduled amortization, there is no longer sufficient
amortization credit at the 'BBB-' level for the class B notes to
maintain their current ratings.  We have therefore lowered to
'BB+ (sf)' from 'BBB- (sf)' our ratings on the class B1, B2, B3,
B4, and B5 notes," S&P noted.

RATINGS LIST

Class               Ratings
            To                From

Imser Securitisation 2 S.r.l.
EUR1.036 Billion Commercial Mortgage-Backed Fixed- And Floating-
Rate Notes

Ratings Affirmed

A2a         A+ (sf)
A2b         A+ (sf)
A3a         A+ (sf)
A3b         A+ (sf)

Ratings Lowered

B1          BB+ (sf)          BBB- (sf)
B2          BB+ (sf)          BBB- (sf)
B3          BB+ (sf)          BBB- (sf)
B4          BB+ (sf)          BBB- (sf)
B5          BB+ (sf)          BBB- (sf)


ROME: Italy Approves New Decree to Avert Default
------------------------------------------------
Christopher Emsden at The Wall Street Journal reports that
Italy's new government approved a new decree Friday aimed at
staving off a default by the city of Rome while insisting that
the capital must still seek ways to curb its perennial deficit.

According to the Journal, the new decree, which must be approved
by parliament, offers EUR575 million (US$788.32 million) in cash,
which will cover more than half the capital's 2013 shortfall.

The city has a budget hole of more than EUR800 million in its
2013 accounts, the Journal discloses.  Part of that reflects cuts
to transfers from the central government under the previous
administration's austerity drive, the Journal notes.

The Journal relates that Cabinet Undersecretary Graziano Delrio
said under the new measure, the fund will be an advance rather
than an outright transfer, giving the city more time to devise a
strategy to trim its chronic overspending.

The new decree effectively squelches the risk of a default, but
requires Rome Mayor Ignazio Marino to tighten the municipal belt
by cutting spending, raising taxes or selling off assets, the
Journal states.



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


KAZKOMMERTSBANK: Moody's Affirms 'Caa3' Jr. Sub. Debt Rating
------------------------------------------------------------
Moody's Investors Service has affirmed the following ratings of
Kazkommertsbank:

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

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

Foreign-currency senior unsecured debt rating of Caa1;

Foreign-currency subordinated debt rating to Caa2;

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

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

Ratings Rationale

The action reflects Moody's assessment of the impact of
Kazkommertsbank's pending acquisition of shares in BTA Bank
(deposits B3 positive, BFSR E stable/BCA caa2). The rating agency
considers that, on balance, the transaction will have a neutral
effect on Kazkommertsbank's credit profile.

On February 21, 2014, Kazkommertsbank's shareholders approved the
acquisition of a stake in BTA Bank following the preliminary
agreement signed in December 2013 between Kazakhstan's national
welfare fund JSC "Samruk-Kazyna" (i.e., BTA Bank's controlling
shareholder) and a consortium of investors -- consisting of
Kazkommertsbank and Kazakh businessman Mr. Kenes Rakishev.

According to the final terms of the agreement, Kazkommertsbank
and Mr. Rakishev are acquiring equal stakes of 46.5% in the
capital of BTA, while Samruk-Kazyna retains a minority 4.26%
stake in the lender, which will be transferred to Kazkommertsbank
under a trust agreement. As a result, Kazkommertsbank will take
control over BTA Bank, with further plans to merge the two banks.
The acquisition of BTA Bank's shares still requires regulatory
and anti-monopoly approvals.

The affirmation of Kazkommertsbank's ratings with a stable
outlook is driven by the following considerations:

1) Kazkommertsbank's own capital adequacy is modest and may
experience downside pressure from ongoing loan loss charges and
weak earnings, driven by shrinking margins and low business
volumes. However, Moody's expects that the consolidation of BTA
Bank will be supportive for Kazkommertsbank's capital adequacy --
as of end-Q3 2013, BTA Bank reported an equity-to-assets ratio of
18.2% vs. Kazkommertsbank's 12.6%.

2) Kazkommertsbank's profitability is also modest and is
constrained by limited lending growth and still considerable loan
loss provisions. In light of BTA Bank's weaker revenue-generating
capacity and likely rising operating costs caused by the
integration of the two banks, the rating agency expects that the
consolidation of BTA Bank will have a negative effect on
Kazkommertsbank's profitability at least in the next 12 to 18
months. However, in the longer term Kazkommertsbank will likely
benefit from the cost optimisation when the two banks'
integration is successfully completed.

3) Moody's estimates that Kazkommertsbank's total problem loans
(non-performing and restructured loans) accounted for about 50%
the bank's gross loans at end-H1 2013. Loan loss reserves
amounted to 33.1% of the gross loans at the same date. According
to the bank's IFRS report 48% of Kazkommertsbank's loans were
denominated in foreign currency as of year-end 2012. The
devaluation of Kazakh tenge in February 2014 will weaken the
debt-servicing capacity of many of the borrowers and result in a
rise in problem loans. Consequently, Moody's believes that
Kazkommertsbank will need to significantly increase its loan loss
reserves as it assesses the negative impact of the devaluation.
BTA Bank's consolidation will also lead to a rise in
Kazkommertsbank's problem loans ratio. However, BTA Bank's high
level of problem loans (87% of gross loans based Moody's
estimate) is adequately covered by loan loss reserves (74.8% of
gross loans) as of end-Q3 2013. Therefore, the acquisition of BTA
Bank is unlikely to materially increase Kazkommertsbank's loan
loss provisions.

4) Kazkommertsbank's liquid assets accounted for 19.6% of its
total assets at end-Q3 2013. The rating agency notes that neither
Kazkommertsbank nor BTA Bank have large short-term market debt
repayments. Given Kazkommertsbank's high funding concentration
(top 10 customers accounted for 50% of the total customer funds
at end-Q3 2013) the current level of liquidity cushion may need
further enhancement to cope with potential deposits outflows.

Moody's Support Assumptions

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

What Could Move The Ratings Up/Down

Upward pressure could be exerted on Kazkommertsbank's ratings as
a result of any significant improvement in its asset quality and
profitability.

Kazkommertsbank's rating may be downgraded if its asset quality
deterioration has a material adverse effect on its profitability
and capital adequacy. Any material weakening in the liquidity
profile could also have negative rating implications.

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

Headquartered in Almaty, Kazakhstan, Kazkommertsbank reported
total assets of US$17.15 billion, shareholders' equity of US$2.15
billion, and net income of US$151 million as of end-Q3 2013,
according to the bank's unaudited IFRS financial statements.



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


LIEPAJAS METALURGS: Still Awaits Citadele, SEB OK to Sales Plan
---------------------------------------------------------------
The Baltic Course reports that two of the creditors of the
insolvent Latvian metallurgical company Liepajas
metalurgs -- joint-stock Citadele banka and joint-stock SEB
banka, have yet to give the green light for the company's sales
plan, the company's insolvency administrator Haralds Velmers told
the business information portal Nozare.lv.

In order to begin implementing the company's sales plan, the
administrator must get the green light from all three of the
company's main creditors -- the State Treasury, Citadele banka
and SEB banka, the report relates. Only the State Treasury has
agreed to the sales plan at the moment.

"The creditors were sent the sales plan on January 20, and we
first need their approval before we can move forward. We also
need their approval so that we could attempt to sell the company
without auction, which is the best way to find a suitable
investor," the report quotes Mr. Velmers as saying.

The Baltic Course notes that the government earlier this month
supported the sales strategy of Liepajas metalurgs.

According to the strategy, the company's casting and forging
facilities, technological equipment, real estate and movable
property necessary for the company's operations will be offered
to qualified buyers internationally so to raise as much money as
possible from the deal, The Baltic Course relays.

Selling the property of the company that has not been pledged as
security may raise EUR3.5 million without the need to organize an
auction, plus another EUR1 million that will be raised by selling
assets at auction. Selling the other assets, which the company
has set up as security for various loans, is hoped to raise
EUR112.3 million, The Baltic Course reports.

Liepajas Metalurgs is a Latvian metallurgical company.

Liepaja Court commenced Liepajas metalurgs' insolvency process on
Nov. 12 last year.  Haralds Velmers was appointed insolvency
administrator.  Over 1,500 Liepajas metalurgs workers have been
laid off so far.  Liepajas metalurgs halted production last
spring.



===================
L U X E M B O U R G
===================


OXO CHEMICALS: S&P Raises Long-Term CCR to 'BB-'; Outlook Stable
----------------------------------------------------------------
Standard & Poor's Ratings Services said that it raised its long-
term corporate credit rating on Luxembourg-headquartered
chemicals intermediates and derivatives manufacturer Oxea
S.a.r.l. to 'BB-' from 'B'.  S&P removed the rating from
CreditWatch, where it placed it with positive implications on
Oct. 17, 2013.  The outlook is stable.

At the same time, S&P raised its long-term issue ratings on
Oxea's senior secured debt to 'BB-' from 'B' and on its senior
unsecured debt to 'B' from 'CCC+', and removed the ratings from
CreditWatch, where they were placed with positive implications on
Oct. 17, 2013.

The upgrade reflects S&P's view that Oxea will now focus on
deleveraging, in line with the conservative financial policies of
its new shareholder, state-owned Oman Oil Co., and S&P's view
that Oxea is a "moderately strategic" subsidiary of its new
parent, reflecting S&P's assessment of its important role in the
Duqm petrochemical project.

S&P's 'BB-' corporate credit rating on Oxea incorporates one
notch of uplift to the 'b+' stand-alone credit profile (SACP) for
potential parental support, based on S&P's assessment of Oxea's
importance to Oman Oil.  S&P do not rate Oman Oil, but it assess
Oman Oil's credit quality to be higher than that of Oxea, even
before factoring in any government support to Oman Oil.  Based on
the information S&P currently has, it do not view Oxea as a
government-related entity and do not expect it to enjoy any
government support.

"Our assessment of Oxea's importance to its new shareholder is
supported by our view of the company's strategic role in the
downstream development of an oxo chemicals plant as part of the
petrochemical project in Duqm, Oman.  Following the completion of
the Duqm refinery in a joint venture between Oman Oil and Abu
Dhabi's investment arm the International Petroleum Investment
Company, due for completion in 2018/2019, we understand that Oman
Oil plans to build an oxo-derivatives plant in Oman, making use
of Oxea's technological expertise, and integrate it with the Duqm
refinery.  A petrochemical complex, which will include a mixed
feedstock cracker, polypropylene plant, and other facilities,
will be integrated with the refinery.  In our view, this is
evidence of Oman Oil's long-term plan for Oxea and the
implementation of its state-mandated goals to diversify revenue
streams and develop into the downstream industry.  We believe
that Oxea's strategic importance to Oman Oil will grow once its
oxo-derivatives plant is built and integrated with the refinery,"
S&P said.

"We have revised upward our assessment of Oxea's SACP to 'b+',
reflecting our upward revision of its financial risk profile to
"aggressive" from "highly leveraged," as our criteria define
these terms. Our view of its business risk profile is unchanged
at "fair."  From these two assessments, we derive Oxea's 'bb-'
anchor--the starting point in assigning an issuer credit rating.
The SACP is one notch lower than the anchor because of a negative
adjustment to reflect Oxea's currently high leverage," S&P added.

S&P's upward revision of Oxea's financial risk profile assessment
is based on its projection that Oxea will gradually reduce
leverage to below 5x over the next 12-18 months from currently
high levels (S&P calculates adjusted debt to EBITDA at about 5.8x
at year-end 2013), with a healthy EBITDA interest coverage ratio
of above 3x.

"Under our base-case scenario, we anticipate Oxea to report
EBITDA of about EUR170 million in 2013, lower than our forecast
from July 2013, when we anticipated EBTIDA of EUR210 million for
the year. However, in 2014, we anticipate Oxea to report EBITDA
of about EUR200 million, owing to the improved economic outlook
in Europe and contribution from growth projects, notably the
carboxylic acid and specialty ester plants that were completed in
2013.  In 2014, we believe Oxea will continue investing into
several ongoing strategic projects, with capital expenditure
(capex) of about EUR80 million and limited positive free
operating cash flow. However, we understand that some of the
capex is discretionary, maintenance amounting to EUR25 million.
Furthermore, we understand from Oman Oil that Oxea's growth
strategy will be adequately balanced with prudent financial
policies and the company's commitment to deleveraging," S&P said.

S&P estimates Oxea's adjusted debt as EUR1.2 billion as of
Dec. 31, 2013, including about EUR70 million of operating lease
liabilities, EUR37 million of pension liabilities, and S&P's
assumption of EUR63 million utilized under Oxea's receivables
program.  S&P deducts from Oxea's debt about EUR90 million of
surplus cash, assuming cash balances of about EUR110 million-
EUR120 million at 2013 year-end, and EUR25 million tied to
operations.

"Our business risk assessment of Oxea is unchanged at "fair."
This ncorporates our view of its leading position as a European
and U.S. merchant producer of oxo base and intermediate
chemicals, its stable profitability, and diverse end markets.
Oxea also enjoys a fairly balanced geographic revenue split, with
48% of 2012 sales from Europe, 32% from North America, and 14%
from Asia. We also view positively Oxea's strategy of adding
capacity and gradually shifting its product mix toward higher-
margin derivative products.  These strengths are partly offset by
Oxea's exposure to the cyclicality of its end markets, the
company's reliance on third-party suppliers for its key propylene
feedstocks, and its overall niche scope," S&P noted.

The stable outlook reflects S&P's view that Oxea's financial
metrics will gradually improve in line with its guidance for an
"aggressive" financial risk profile, with FFO to debt above 12%.
This could occur if Oxea demonstrates a resilient operating
performance in 2014, supported by the improved economic outlook
for Europe, capacity additions, and changes to its product mix in
favor of higher-margin derivatives.  Furthermore, S&P anticipates
that Oxea's growth initiatives will be prudently financed and
consistent with Oman Oil's commitment to deleveraging and
conservative financial policies.

S&P could consider raising the rating if Oxea deleveraged faster
than it currently anticipates.  This could be the case if Oxea's
EBITDA considerably increased, for example as a result of
contributions from growth projects.  In the longer term, an
upgrade could also stem from Oxea's increasing importance for the
group and for the state of Oman.

S&P views a downgrade as a relatively remote possibility,
assuming that Oxea's operating performance remains stable and its
investments are managed prudently.



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


METROPOLITANO DE LISBOA: S&P Raises ICR to 'BB'; Outlook Negative
-----------------------------------------------------------------
Standard & Poor's Ratings Services raised its long-term issuer
credit rating on Portuguese subway company Metropolitano de
Lisboa E.P. (Metro) to 'BB' from 'B'.  The outlook is negative.

The rating action reflects S&P's revision of Metro's likelihood
of receiving timely and sufficient extraordinary government
support, if needed, to "almost certain" from "extremely high."
S&P views Metro as a government-related entity (GRE), and assess
its likelihood of extraordinary government support in accordance
with its GRE criteria.

S&P bases its rating approach on its view of Metro's "critical"
role and "integral" link with Portugal, the company's 100% owner.

"We have revised our assessment of Metro's role to Portugal to
"critical" from "very important."  In our view, Metro plays a key
role in implementing the government's policy of fostering urban
mobility in the capital.  For this purpose, Metro borrowed
massively from capital markets during the last decade to build up
Lisbon's subway network. Most of the debt was government-
guaranteed and contained cross default clauses regarding all of
the company's financial obligations," S&P added.

In the first half of 2011, however, the company lost almost all
access to private funding that it needed to refinance upcoming
debt maturities.  Moreover, the government did not provide
ongoing support to Metro to prevent the sharp deterioration in
its stand-alone credit profile (SACP) at the time.  S&P
considered that Metro's weakening SACP mirrored its weakening
role to the government.

However, since June 2011, the central government has enabled
timely payment of Metro's financial obligations through what S&P
sees as sufficient, continuing, and well-coordinated
extraordinary support.  Since then, the central government has
also set up a legal framework and secured sufficient budgetary
allocations to facilitate the provision of this support on a
timely basis.  This track record of active government support has
gradually led S&P to believe that a default by Metro would have a
critical impact on the government, and it points to a
strengthening of Metro's role to the government.

S&P thinks that Metro has an "integral" link to the government.
S&P continues to see Metro as an extension of Portugal's central
government, which fully owns Metro.  The central government
decides Metro's strategy, makes its main budgetary decisions, and
exercises very tight control over the company.  The central
government also guarantees most of the company's debt, provides
budget loans so Metro can service its debt on time, and directly
manages Metro's derivatives.

Metro builds and operates under a strategy defined and monitored
by the government.  As an "entidade publica empresarial" (EP;
public enterprise entity), Metro enjoys a stronger legal status
than "sociedades anonimas" (public limited companies).  Even
though EPs are generally subject to private law (in order to gain
flexibility and efficiency), they are not subject to the
bankruptcy laws applicable to sociedades anonimas.  Only the
central government can liquidate an EP.

Metro cannot be privatized unless its legal status is changed.
S&P sees this as highly unlikely, in view of its very weak
financial performance and need for substantial government support
to remain viable.  S&P understands, however, that Metro's
operations could eventually be subject to concession.  S&P's view
of the likelihood of support does not factor in any potential
change in Metro's current responsibilities, as S&P currently has
no visibility on the details of its potential implementation,
which could alter S&P's view of the company's creditworthiness.

"We assess Metro's SACP at 'cc' in accordance with our criteria
for mass transit, combined with our criteria for assigning
'CCC+', 'CCC', 'CCC-', and 'CC' ratings," S&P said.

"We assign a 'cc' SACP to an issuer when we expect default to be
a virtual certainty, unless it receives extraordinary support
from a parent or government.  In the case of Metro, we categorize
government support to the company as extraordinary because there
is no stable financial framework for the provision of ongoing
support, and timely payment of debt service relies on ad hoc
government loans," S&P said.

The 'cc' SACP stems from S&P's assessments of Metro's "adequate"
enterprise risk profile and "highly vulnerable" financial risk
profile.  However, S&P notes that Metro's vulnerability to
default in the absence of extraordinary government support is an
overriding factor in our assessment.

S&P's assessment of an "adequate" enterprise risk profile is
based on:

   -- Its view of the low risk of the mass transit industry.
      This is further supported by S&P's opinion that the
      government has little incentive to set an insufficient
      operating subsidy framework and impose an aggressive
      investment policy.  In S&P's view, this would generate
      deficits at Metro and could potentially conflict with
      Portugal's fiscal consolidation program.

   -- According to European statistical rules (ESA2000), Metro
      consolidates within the fiscal program.

   -- S&P's view that Metro's economic fundamentals are weak.
      This stems from high unemployment and depopulation in the
      capital city of Lisbon and the Greater Lisbon area, related
      to Portugal's recession.  These weaknesses, however, are
      mitigated by Lisbon's strong, above-average GDP per capita
      in a national context.

   -- S&P's view of Metro's "adequate" market position.  S&P
      factors in Metro's monopoly position and declining
      ridership during the past five years, which S&P believes is
      due to Portugal's recession.

   -- S&P's view that the government allowed a deterioration of
      Metro's financial risk profile to "highly vulnerable" and
      its negative impact on S&P's initial assessment of Metro's
      management and governance as "fair."

   -- Consequently, S&P currently views Metro's management and
      governance as "very weak" in accordance with its criteria,
      on the back of insufficient capital subsidies after a
      period of aggressive investments, leading to snowballing
      debt in the past.

S&P's view of Metro's "highly vulnerable" financial risk profile
is based on:

   -- Its assessment of Metro's "fair" financial policies, with
      satisfactory transparency and disclosure policies, and fair
      reserve and liquidity policies.  But S&P believes it is
      negatively affected by what it sees as weak debt management
      and long-term planning policies.  In S&P's view, the
      government has yet to address the issue of long-term
      sustainability for Metro, and only provides ad hoc
      solutions by means of extraordinary support to enable the
      timely honoring of Metro's financial obligations.

   -- S&P's assessment of Metro's "very weak" debt service
      coverage.  Metro has streamlined costs by reducing staff-
      related expenses, renegotiating service contracts, and
      increasing tariffs.  This has led to positive cash flow
      from operating activities of roughly EUR20 million-EUR25
      million, which S&P believes the company can sustain.
      Compared with this figure, however, Metro's debt service
      annual outflows are extremely high (more than EUR200
      million in the coming years).

   -- S&P's assessment of Metro's "very weak" liquidity.  Monthly
      cash holdings generally hover within 30-89 days of
      operating spending.  As such, liquidity pressures will not
      hinder the maintenance of smooth operating activities.  But
      given Metro's very large debt service, S&P's cash-to-debt
      service ratio is extremely low.  Metro does not have access
      to private debt, so refinancing is not possible on a stand-
      alone basis.  In fact, Metro cannot legally borrow and
      fully depends on cash injections from the central
      government, which are ad hoc, in S&P's view, and not
      embedded in a formal financial framework.

   -- S&P's assessment of Metro's "very weak" financial
      flexibility.  Metro boasts very good farebox recovery
      ratios (coverage of operating spending with farebox
      revenues is well above 55%), partly thanks to sustained
      efforts to increase revenues.  Nevertheless, Metro's very
      large annual debt service limits its overall flexibility,
      as reflected by a disproportionately high debt service
      carrying charge ratio.  S&P do not believe Metro can
      massively increase revenues and reduce spending, in order
      to cover a substantial part of its debt service with
      additional cash flow from operating activities.

   -- S&P's assessment of Metro's "very high" debt burden, which
      stood at EUR3 billion at year-end 2013.  S&P's estimate of
      cash flows from operating activities is EUR22 million over
      2014.

Metro signed a contract with the central government giving the
treasury the mandate to manage the company's derivatives.  The
treasury ultimately meets the swap payments.  S&P understands
that in 2013 the treasury agreed with swap counterparties to
cancel some contracts.  S&P understands that the government
intends to renegotiate the remaining swaps.  S&P currently sees
these agreements and renegotiations as opportunistic and
considers that they have no impact on Metro's rating.

The negative outlook on Metro reflects that on Portugal.  S&P
could lower the rating on Metro if it downgraded Portugal.

S&P could revise the outlook on Metro to stable if it revised its
outlook on Portugal to stable.



=============
R O M A N I A
=============


HIDROELECTRICA SA: Back To Insolvency After Traders' Appeal Win
---------------------------------------------------------------
The Diplomat reports that Hidroelectrica SA has re-entered
insolvency after several energy traders have won the appeal at
the Bucharest Appeal Court against the decision of former trustee
company of not recognizing their receivables worth RON1.3
billion.

According to The Diplomat, Mediafax newswire reported that Remus
Borza, manager of Euro Insol and former administrator at
Hidroelectrica, said late last month that 11 traders, two
syndicates and Termoelectrica are scheduled to have their appeals
judged within a week.

The Diplomat notes that Hidroelectrica has managed to exit
insolvency in June last year and, at one year since it declares
incapacity of payments, the company has laid off 700 employees,
annulled direct contracts through which it had lost over
EUR1 billion and recorded a turnover of RON399 million in the
first five months of this year, compared to losses of RON190
million in the same period of last year. At the end of 2013, the
company representatives said that by 2014, Hidroelectrica planned
to sell 88 small hydropower plants, representing 1 percent of the
overall installed power, due to significant operational and
maintenance costs.

Hidroelectrica shareholders are the Romanian state with 80.05
percent of shares and Fondul Proprietatea, with 19.95 percent,
The Diplomat discloses.

Hidroelectrica entered the insolvency process on June 20, 2012,
in order to be re-organized.  Euro INSOL was appointed the
judicial administrator.  On March 31, 2013, Hidroelectrica had
some 4,900 employees, down from over 5,200 recorded when the
company entered the insolvency process.



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


GAZPROMBANK: Fitch Rates CHF350MM Subordinated Notes 'BB-'
----------------------------------------------------------
Fitch Ratings has assigned Gazprombank's (GPB) CHF350m 'new-
style' subordinated loan participation notes (LPN) a final Long-
term rating of 'BB-'.

KEY RATING DRIVERS AND RATING SENSITIVITIES

The LPNs carry a fixed coupon at the rate of 5.125% and have a
put option date on May 13, 2019 and the final maturity date on
May 13, 2024. The issue has coupon/principal write-down features,
which will be triggered if: (i) the bank's core Tier 1 capital
adequacy ratio decreases below 2%; or (ii) the Deposit Insurance
Agency acquires a controlling stake in the bank or provides
financial assistance to it as part of an approved bankruptcy
prevention plan. The latter is possible if a bank breaches any of
its mandatory capital ratios or is in breach of certain other
liquidity and capital requirements.

Gazprombank's ratings are unaffected and as follows:

Long-term foreign currency IDR: 'BBB-'; Outlook Stable
Long-term local currency IDR: 'BBB-'; Outlook Stable
Short-term foreign currency IDR: 'F3'
National long-term rating: 'AA+(rus)'; Outlook Stable
Viability Rating: 'bb'
Support Rating: '2'
Support Rating Floor: 'BBB-'
Senior unsecured debt long-term local-currency rating: 'BBB-'
National long-term debt rating: 'AA+(rus)'

GPB Eurobond Finance plc's debt ratings are unaffected and as
follows:

Senior unsecured debt long-term foreign-currency rating: 'BBB-'
Senior unsecured debt long-term local-currency rating: 'BBB-'
'Old-style' subordinated debt rating: 'BB+'
'New-style' subordinated debt rating: 'BB-'


GAZPROMBANK: Fitch Retains Ratings Over Upcoming Series 16 Notes
----------------------------------------------------------------
Fitch Ratings has assigned Gazprombank's (GPB) forthcoming Series
16 senior unsecured loan participation notes (LPN) an expected
Long-term foreign currency rating of 'BBB-(EXP)'. The final
rating is contingent upon the receipt of final documents
conforming to information already received.

Key Rating Drivers

The senior unsecured debt ratings are aligned with GPB's 'BBB-'
Long-term IDRs, which reflect Fitch's view of a high probability
of the bank receiving support, if needed, from the Russian
Federation (BBB/Stable) or state-controlled entities, most
notably OAO Gazprom (BBB/Stable), the bank's founder and minority
shareholder.

The Series 16 LPNs would be issued by an Ireland-based special
purpose entity GPB Eurobond Finance plc which would on-lend the
proceeds to GPB. Obligations under this loan would rank pari
passu with the bank's other senior unsecured obligations which
are subordinated to all retail deposits according to Russian
banking law.

The expected issue amount is USD750 million. The LPNs would carry
a fixed coupon of 4.96% payable semi-annually and mature in
September 2019.

Rating Sensitivities

The issue's ratings and GPB's IDRs could be downgraded in case of
a significant reduction in the bank's quasi-sovereign ownership,
and/or weakening of the close links between the bank and the
Russian authorities.

Any negative action on the Russian sovereign rating would likely
also be matched by a negative action on the bank's ratings and
the issue's rating.

Gazprombank's ratings are unaffected and as follows:

Long-term foreign currency IDR: 'BBB-'; Outlook Stable
Long-term local currency IDR: 'BBB-'; Outlook Stable
Short-term foreign currency IDR: 'F3'
National long-term rating: 'AA+(rus)'; Outlook Stable
Viability Rating: 'bb'
Support Rating: '2'
Support Rating Floor: 'BBB-'
Senior unsecured debt long-term local-currency rating: 'BBB-'
National long-term debt rating: 'AA+(rus)'

GPB Eurobond Finance plc's debt ratings are unaffected and as
follows:

Senior unsecured debt long-term foreign-currency rating: 'BBB-'
Senior unsecured debt long-term local-currency rating: 'BBB-'
'Old-style' subordinated debt rating: 'BB+'
'New-style' subordinated debt rating: 'BB-'


PROMSVYABANK: Fitch Rates Upcoming Subordinated Notes 'B+(EXP)'
---------------------------------------------------------------
Fitch Ratings has assigned Russia-based Promsvyabank's (PSB)
upcoming subordinated loan participation notes (LPNs) with write-
off features an expected Long-term rating of 'B+(EXP)'.
The final rating is contingent upon the receipt of final
documents conforming to information already received.

Key Rating Drivers

Fitch expects to rate PSB's "New-Style" Tier 2 subordinated debt
issue one notch lower than the bank's 'bb-' Viability Rating
(VR). This includes (i) zero notches for additional non-
performance risk relative to the VR, as Fitch believes these
instruments should only absorb losses once a bank reaches, or is
very close to, the point of non-viability; (ii) one notch for
loss severity (one notch, rather than two, as these issues would
not be deeply subordinated).

The expected LPNs have principal and coupon write-down feature
(pro rata with other, similar loss absorbing instruments)
triggered in case (i) the bank's core Tier 1 capital adequacy
ratio decreases below 2%; or (ii) the Deposit Insurance Agency
directly or indirectly acquires a controlling stake in the bank
or provides financial assistance to it as part of an approved
bankruptcy prevention plan. The latter is possible if a bank
breaches any of its mandatory capital ratios, or is in breach of
certain other liquidity and capital requirements.

The potential upcoming "New-Style" subordinated LPNs would be
issued under PSB's USD3 billion LPN program by a Luxembourg-based
special purpose vehicle, PSB Finance S.A., which would on-lend
the issue's proceeds to PSB under a subordinated loan agreement.

The issue amount and coupon rate are yet to be determined. The
bank expects the tenor of the LPNs to match the Russian bank
regulator's requirement for the 'New-Style' Tier 2 capital
instruments (minimum five years).

Rating Sensitivities

As the issue's rating is linked to the bank's VR, it would be
sensitive to any changes in that rating.

Promsvyazbank's ratings are unaffected and as follows:

Longterm foreign currency IDR: 'BB-'; Outlook Stable
Shortterm foreign currency IDR: 'B'
Longterm local currency IDR: 'BB-'; Outlook Stable
Shortterm local currency IDR: 'B'
VR: 'bb-'
Support Rating: '4'
Support Rating Floor: 'B'

PSB Finance S.A.'s debt ratings are unaffected and as follows:

Senior debt rating: 'BB-'
Subordinated debt ratings: 'B+'


SAKHA REPUBLIC: S&P Affirms 'BB+' Long-Term ICR; Outlook Negative
-----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB+' long-term
issuer credit rating and the 'ruAA+' Russia national scale rating
on the Republic of Sakha, a region in Russia's Far Eastern
federal district.  The outlook is negative.

RATIONALE

The ratings on Sakha are constrained by S&P's view of Russia's
"developing and unbalanced" institutional framework and the
region's low budgetary flexibility under existing legislation.
Heavy economic concentration on extraction of natural resources,
which is exacerbated by high dependence on a single taxpayer,
further limits the predictability of Sakha's financials.  S&P
also views Sakha's management as "negative" in an international
context, mostly owing to a lack of reliable long-term financial
planning, a situation which is common for most Russian peers.
Moderate budgetary performance is neutral for Sakha's
creditworthiness, in S&P's view.  The region's vast territory,
remote location, and severe subarctic climate increase costs and
translate into moderately high contingent liabilities.

The ratings are supported by S&P's view of Sakha's low debt and
positive liquidity.

"Under Russia's "developing and unbalanced" institutional
framework, Sakha's budgetary performance depends heavily on the
federal government's decisions regarding revenue sources and
expenditure responsibilities.  Federal regulation of the main tax
rates and the distribution and allocation of transfers leaves
very little revenue flexibility for the region.  We estimate
federal transfers and state taxes will equal more than 95% of
Sakha's total revenues in the next three years, and the share of
federal transfers in budget revenues will remain higher than the
average for Russian regions.  Sakha's expenditure flexibility is
also limited, and its budgetary performance remains under
pressure from spending mandates that the central government
imposed on regions without providing relevant compensation," S&P
said.

Sakha is relatively wealthy in terms of gross regional product
per capita, which exceeded US$19,000 in 2013 and was above the
average for Russian regions.  At the same time, Sakha's economy
is heavily concentrated on mining, and its budget revenues are
exposed to the volatility of world commodity markets and the
performance of a few large taxpayers.  Almost 30% of Sakha's tax
revenues come from the world's largest diamond producer Alrosa
OJSC (BB-/Watch Neg/B) and its subsidiaries.  S&P estimates that
the region's second-largest industry -- oil production and
transportation -- and the second- and third-largest taxpayers,
pipeline operator OAO AK Transneft (foreign currency
BBB/Stable/--; local currency BBB+/Stable/--) and oil producer
OJSC Surgutneftegas (not rated), provide up to 20% of tax
revenues.

"We expect Sakha's budgetary performance will remain moderate on
average in 2014-2016.  In 2013, Sakha suffered from a drop in
corporate profit tax and overall tax revenues that was caused by
the one-off effect of changes to national tax legislation.  We
expect the largest taxpayers to gradually recover payments in the
next three years.  At the same time, Sakha will continue to raise
public sector salaries and other social spending following the
federal mandates.  Our base case assumes the average operating
balance will remain marginally positive in 2014-2016, although it
will be weaker than the average of 8% of operating revenues
achieved in 2010-2012," S&P added.

The deficit after capital accounts should stay at a modest 3% of
total revenues in 2014-2016, only slightly larger than the
average of 1% in 2010-2012.  This is because Sakha will likely
decrease capital expenditures in its budget and will cofinance
infrastructure development from off-budget sources in the next
three years. In 2013, Sakha sold a 7% share in Alrosa for almost
Russian ruble (RUB) 18 billion (US$550 million).  The sale was
performed through a specially created entity, JSC RIC Plus, which
Sakha fully owns, and S&P understands that the majority of these
funds will be spent on construction of housing and social and
communal infrastructure in the region.

Consequently, S&P thinks that Sakha's direct debt will likely
increase only gradually, and tax-supported debt will remain low,
at less than 30% of consolidated operating revenues until the end
of 2016.  S&P includes the guaranteed and nonguaranteed debt of
Sakha's numerous government-related entities that provide
transport, utilities, and other public services, and supply goods
and fuel across its large territory in tax-supported debt.
Hence, S&P views the outstanding contingent liabilities as
moderate.

S&P views Sakha's financial management as "negative" for its
creditworthiness in an international context, as S&P do for most
Russian local and regional governments.  In S&P's view, it is
relatively sophisticated, exceeding the Russian average, in terms
of debt, revenue, and expenditure management.  However, it lacks
reliable long-term financial planning and doesn't have sufficient
mechanisms to protect the region's financials from the volatility
that stems from external risks related to its concentrated
economy.

Liquidity

S&P views Sakha's liquidity position as "positive" as defined in
its criteria, because it expects net free average cash to exceed
debt service falling due in the next 12 months.  At the same
time, S&P views Sakha's access to external liquidity as
"limited," given the weaknesses of the domestic capital market.

In 2013, Sakha's average cash stood at about RUB5.7 billion
(about US$160 million), which, combined with the deficit after
capital accounts that S&P forecasts in its base-case scenario,
will exceed zhe low debt service throughout 2014.  Debt service
will likely equal about 3% of operating revenues and mainly
consists of the repayment of maturing portions of amortizing
bonds.

S&P thinks that Sakha will maintain debt service at a low 3% of
operating revenues in 2015 as well, because S&P expects it to
continue to rely on medium-term borrowing in the next two years.
In 2014 it plans to issue a RUB2.5 billion seven-year amortizing
bond and to finance the rest of the deficit with a RUB720 million
budget loan and with three-year bank loans.

Outlook

The negative outlook reflects S&P's view that Sakha's sluggish
revenue growth and continued need to increase social expenditures
will result in moderate budgetary performance and might lead to
faster direct debt accumulation and gradual cash depletion, which
could in turn undermine Sakha's liquidity, which S&P currently
views as "positive" as S&P defines this term in its criteria.

S&P could take a negative rating action within the next 12 months
if, in line with its downside scenario, the debt service coverage
ratio falls below 100% due to a combination of a decrease in net
average cash because of more rapid spending growth, and higher
short-term borrowing.  This would lead S&P to revise its view of
Sakha's liquidity to "neutral" as defined in S&P's criteria.
Higher borrowing would also likely push tax-supported debt above
30% of consolidated operating revenues.

S&P could revise the outlook to stable within the next 12 months
if continued federal support and Sakha management's ability to
curb expenditures resulted in moderate budgetary performance and
consistently "positive" liquidity, thanks to a gradual repayment
schedule and sufficient net average cash reserves.

In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable.  At the onset of the committee, the chair
confirmed that the information provided to the Rating Committee
by the primary analyst had been distributed in a timely manner
and was sufficient for Committee members to make an informed
decision.

After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.  The chair
ensured every voting member was given the opportunity to
articulate his/her opinion.  The chair or designee reviewed the
draft report to ensure consistency with the Committee decision.
The views and the decision of the rating committee are summarized
in the above rationale and outlook.

RATINGS LIST

Ratings Affirmed

Sakha (Republic of)
Issuer Credit Rating                   BB+/Negative/--
Russia National Scale                  ruAA+/--/--
Senior Unsecured                       BB+
Senior Unsecured                       ruAA+


SVERDLOVSK OBLAST: S&P Revises Outlook to Neg. & Affirms BB+ ICR
----------------------------------------------------------------
Standard & Poor's Ratings Services revised the outlook on the
Russian region Sverdlovsk Oblast to negative from stable.  At the
same time, S&P affirmed its 'BB+' long-term issuer credit rating
on Sverdlovsk Oblast.

Rationale

The outlook revision reflects Sverdlovsk Oblast's weakening
budgetary performance, which has been worse than S&P expected.
If this does not improve in 2014, it could undermine the oblast's
liquidity position and result in higher debt.

The ratings on Sverdlovsk, which is located in the Urals Federal
District, are constrained by its developing and unbalanced
system, relatively poor and concentrated economy by international
standards, and what S&P regards as below-average management
quality.  The oblast also has limited budget predictability and
flexibility and a weak budgetary performance, in S&P's view.

On the other hand, Sverdlovsk's economic growth rates are above
those of Russia as a whole, and the oblast has a low debt burden,
currently strong liquidity, and moderate contingent liabilities.

Like many other Russian regions, the oblast's financial policy
lacks predictability and stability due to what S&P regards as a
developing and unbalanced institutional framework.  In addition,
the oblast's budget revenues are volatile because of its
relatively poor economy, which depends on metallurgy and pipe
production for about 25% of tax revenues.  This industry
fluctuates according to global commodity markets and economic
cycles.  S&P factored these risks in our previous base-case
scenario, and they materialized in 2013 when weak metal markets
and changes in the federal tax legislation resulted in a 16.5%
year-on-year drop in corporate income tax revenues.

The downturn in revenues was coupled with material operating
spending pressures related to a federally-mandated increase in
public salaries.  This led to an operating budgetary deficit of
1.6% of operating revenues, compared with an average surplus of
7.5% in 2011-2012; a worse performance than S&P had forecast.  We
anticipate that Sverdlovsk will be able to stabilize its
operating performance, thanks to its demonstrated ability to
contain costs, higher revenue in 2014-2015 due to economic growth
(traditionally above-average for Russia), and the effects of
inflation.  However, S&P forecasts that the operating balance
will likely be structurally lower (at 3% of operating revenues in
2014-2016) than in past years.

Sverdlovsk Oblast has recently come under some pressure to
increase capital expenditure, as its capital city of
Yekaterinburg was named as one of the hosts for the 2018 FIFA
World Cup.  FIFA requirements mean that the oblast will have to
make material investments into transport, utilities, and sports
facilities.  The precise budget for the World Cup preparation is
not clear, but according to the oblast's initial estimates it
could amount to as much as Russian ruble (RUB) 100 billion.
Following the announcements of the federal authorities, S&P
assumes that at least half of the required spending will be
co-financed from the federal budget.  Under this scenario, and
given S&P's expectation of Sverdlovsk's cautious approach to its
capital program, deficits after capital accounts are likely to
stay within 5% of operating revenues on average in 2014-2016,
despite deteriorating to 15% in 2013.  These deficits averaged 3%
in 2011-2012.

The weaker budgetary performance in 2013 has increased borrowings
and inflated Sverdlovsk's tax-supported debt (including direct
debt, guarantees, and debt of non-self-supporting government-
related entities [GREs]) to 25% of consolidated operating
revenues -- though S&P still considers this low.  Management's
efforts to contain deficits after capital accounts should help to
maintain tax-supported debt within the 30% threshold through to
2016, according to S&P's base-case scenario.

Sverdlovsk's contingent liabilities are moderate and mostly
consist of the accumulated payables of the GREs, in particular
the gas distribution company.  Although Sverdlovsk is not
directly responsible for these entities, it might provide
financial aid in case of need.

S&P views the oblast's financial management as a negative factor
for its creditworthiness, as S&P do for most Russian local and
regional governments (LRGs).  This mainly reflects S&P's view of
Sverdlovsk's long-term financial planning as weak and its ability
to manage external risks -- such as a potential sharp correction
on the world commodity and metals markets -- as limited.  At the
same time, S&P thinks the oblast compares well with its peers in
terms of debt management as well as transparency and disclosure.

S&P regards Sverdlovsk Oblast's liquidity position as positive,
according to its criteria, although it is weakening.

Despite the deterioration of the oblast's cash position owing to
the material deficits after capital accounts in 2013, S&P's base-
case scenario assumes that the region's free cash, combined with
the projected deficits after capital accounts, will likely cover
over 100% of its debt service falling due within the next 12
months.  However, if the oblast maintains budget deficits in 2014
on par with 2013 and further depletes its cash reserves,
liquidity could fall below 100% of debt service coverage.

Based on Sverdlovsk's established track record, S&P's base-case
scenario factors in a smooth debt repayment profile over the next
few years, with average debt service at a modest 5%-6% of
operating revenues.  The oblast's debt burden will mostly consist
of direct obligations, including medium-term bonds and bank
loans.

S&P's liquidity assessment incorporates its view of access to
external liquidity as "limited" owing to the volatility of the
Russian capital market.  S&P makes the same adjustment for all
Russian LRGs.  The weaknesses of the domestic banking sector are
reflected in S&P's Banking Industry and Country Risk Assessment
(BICRA) score of '7', with '1' being the lowest risk and '10'
being the highest.

Outlook

The negative outlook on Sverdlovsk reflects S&P's view of the
increasing risks from weaker liquidity and higher debt.

S&P could consider lowering the ratings in the next 12 months if
the oblast's liquidity position deteriorated.  This could happen
if the oblast were unable to improve its budgetary performance
after the drop in 2013, and/or if it switched to shorter-term
maturities, pushing up debt service needs.  Higher deficits after
capital accounts could lead to tax-supported debt approaching 40%
of operating revenues by 2016.

S&P might revise the outlook back to stable if, as it currently
expects, the oblast manages to restore its budgetary performance
by returning to operating surpluses and reducing deficits after
capital accounts to below 5% of revenues on average in 2014-2016.
This would remove the pressure on its liquidity position and
contain the growth of tax-supported debt.

In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable.  At the onset of the committee, the chair
confirmed that the information provided to the Rating Committee
by the primary analyst had been distributed in a timely manner
and was sufficient for Committee members to make an informed
decision.

After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.  The chair
ensured every voting member was given the opportunity to
articulate his/her opinion.  The chair or designee reviewed the
draft report to ensure consistency with the Committee decision.
The views and the decision of the rating committee are summarized
in the above rationale and outlook.

RATINGS LIST

Ratings Affirmed; CreditWatch/Outlook Action

                                  To              From
Sverdlovsk Oblast
Issuer Credit Rating         BB+/Negative/--    BB+/Stable/--



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


GRIFOLS SA: S&P Affirms 'BB' CCR & Rates Proposed Sr. Debt 'BB'
---------------------------------------------------------------
Standard & Poor's Ratings Services said it affirmed its 'BB'
long-term corporate credit rating on Spain-based global specialty
biopharmaceutical company Grifols S.A.  The outlook is stable.

At the same time, S&P assigned its 'BB' issue rating to Grifols'
proposed senior secured bank debt.  The recovery rating on this
debt is '3', indicating S&P's expectation of meaningful (50%-70%)
recovery in the event of a payment default.

S&P also assigned its 'B+' issue rating to the company's proposed
senior unsecured notes.  The recovery rating on these notes is
'6', indicating S&P's expectation of negligible (0%-10%) recovery
in the event of a payment default.

The 'BB+' issue rating and '2' recovery rating on Grifols'
existing senior secured bank debt remain unchanged, as do the
'B+' issue rating and '6' recovery rating on the existing senior
unsecured notes.  S&P expects to withdraw these issue and
recovery ratings on completion of the pending refinancing.

The affirmation reflects S&P's view that Grifols' pending
refinancing will only have a limited impact on our assessment of
its financial risk profile.  In particular, S&P projects that
Grifols' credit metrics will remain commensurate with its current
view of its financial risk profile as "significant."  S&P
calculates five-year (2012-2016) weighted average ratios of
Standard & Poor's-adjusted debt to EBITDA of 3x-4x and adjusted
EBITDA to interest coverage of 3x-6x for Grifols.

At the same time, S&P continues to view Grifols' business risk
profile at the low end of its "satisfactory" category,
underpinned by solid and consistent operating performance.  S&P's
assessment further reflects Grifols' No. 3 position in the
growing blood plasma-derived biopharmaceutical market and its
well-diversified geographic footprint with a strong presence in
North America.  However, S&P also factors in its view of the
inherent industry risk of product contamination.

In S&P's base case, it assumes:

   -- About 5%-7% organic growth for Grifols in the coming years.
      This reflects S&P's improving economic forecasts, limiting
      further austerity measures in mature markets, and S&P's
      favorable outlook for the plasma derivative industry.  S&P
      bases its view of the sector on the increased access to
      medical care, heightened need for treatment as the
      population ages, and new product applications.  S&P's
      forecast also integrates the recently acquired Novartis'
      blood transfusion diagnostic unit.

   -- Fairly stable adjusted EBITDA margins at about 33.5%,
      reflecting its view that Grifols has now fully unlocked its
      synergies with Talecris (acquired in 2011).  Any further
      improvement would most likely be modest.

   -- Capital expenditures of about EUR200 million in 2014 and
      gradually decreasing to EUR150 million thereafter to
      account for Grifols' additional capacity investments.

   -- Debt-financed, bolt-on acquisitions of about EUR150 million
      annually, after accounting for the US$1.7 billion
      acquisition of Novartis' blood transfusion diagnostic unit
      earlier this year.

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

   -- Debt to EBITDA of about 3x-4x.
   -- Funds from operations (FFO) to debt in the high teens.
   -- EBITDA to interest coverage in excess of 4x, within S&P's
      range of 3x-6x for a "significant" financial risk profile.

The stable outlook reflects S&P's opinion that Grifols will
maintain its strong performance and an adjusted debt-to-EBITDA
ratio of less than 4x, despite its appetite for acquisitions.
This is due to Grifols' solid growth prospects, robust cash
generation, and limited shareholder returns.  S&P do not factor
in any significant change of its sovereign rating on Spain (BBB-
/Stable/A-3) over its 2014-2015 outlook horizon.  Despite S&P's
view of Grifols' limited exposure to Spain, it would review its
rating on Grifols if we observed any material change in the
economic and political conditions in Spain or in the sovereign
rating on Spain, where Grifols is headquartered.

S&P could lower the rating if Grifols' adjusted debt to EBITDA
increased to more than 4x.  S&P believes this would most likely
occur due to additional unexpected sizable debt-financed
acquisitions or share buybacks.  In addition, S&P could lower the
rating if Grifols' performance and cash generation deteriorated
because of a product recall that impaired the company's ability
to reduce its leverage.  However, S&P considers this unlikely at
this stage, given that the company has not faced any product
contamination in the past.

An upgrade could occur if Grifols continued on a deleveraging
trajectory while committing to a tighter financial policy than in
the past.  This could prompt S&P to revise upward its financial
policy modifier to "neutral" from "negative."  Owing to the
company's appetite for acquisitions and track record of debt-
financed acquisitions, however, S&P currently views a change in
company financial policy as unlikely.


MBS BANCAJA: Fitch Affirms 'CCsf' Ratings on Three Tranches
-----------------------------------------------------------
Fitch has affirmed 17 and upgraded two tranches of six MBS
Bancaja, FTA transactions, a series of Spanish prime RMBS
comprising loans originated and serviced by Bankia, S.A. (BBB-
/Negative/F3).  Four tranches have been placed on Rating Watch
Negative (RWN), and the Outlooks on seven tranches have been
revised to Stable from Negative.

Key Rating Drivers

Improved Asset Performance

A combination of sufficient credit enhancement levels and
improving asset performance has contributed to the upgrades of
the class C and D notes in MBS Bancaja 2, the revision of the
Outlooks on seven tranches to Stable from Negative, and improved
Recovery Estimates for the uncollateralized notes in MBS Bancaja
2, 3 and 4.  The improved asset performance is reflected in the
reduced pace of new arrears.  Fitch estimates that on average the
one-month plus arrears decreased by over two percentage points
over the past 12 months due to a more stable macroeconomic
environment in Spain.

Provisioning Mechanism Continues to Provide Protection

While the annualized constant default rate has increased by two
percentage points, on average across all transactions, the
transactions' structures allow for the full provisioning of
defaulted loans for loans in arrears, which are defined as loans
in arrears by more than 18 months.  At present, gross excess
spread, averaging 1.2% per annum of the respective outstanding
portfolios, remains adequate to fully provision for defaulted
loans and ensure that the reserve funds remain fully funded in
MBS Bancaja 7 and 8.  Meanwhile, gross excess spread (0.46%) and
recoveries on defaulted loans in the more seasoned transactions
(MBS Bancaja 1, 2, 3 and 4) have been insufficient to fully cover
period defaults and consequently there have been reserve fund
draws.  The reserve funds levels were 93%, 89%, 84% and 41% in
MBS Bancaja 1, 2, 3 and 4 respectively.  Fitch expects further
draws on the reserve funds due to a combination of the migration
of the late stage arrears into the defaults and low recoveries
caused by the overhang in the Spanish residential property
market.

Payment Interruption Risk

The classes A2 and B notes in MBS Bancaja 3 and A2 and A3 notes
in MBS Bancaja 4 have been placed on RWN due to exposure to
payment interruption, which would arise upon the default of the
servicer. In its analysis, the agency assessed the liquidity
available in the transactions to fully cover senior fees, net
swap payments and note interest in case the servicer were to
default.  As the transactions are presently drawing on their
reserves and are expected to continue doing so, the cash reserves
cannot be relied upon to meet these liquidity needs.  Therefore,
Fitch believes that the transactions are not adequately equipped
to mitigate a disruption to collections.  The swap payments by
the issuer to the swap counterparty could be deferred for one
interest payment date in both transactions.  For this reason, if
the payment interruption risk is not properly mitigated, we will
apply a rating cap of 'Asf'.  Fitch expects to resolve the RWN in
the next six months.

Account Bank Exposure in MBS Bancaja 7 and 8

In accordance with Fitch's counterparty criteria, the ratings of
both MBS Bancaja 7 and 8 are capped at 'A+sf', as the account
banks in the two transactions are provided by Banco Santander,
S.A. ('BBB+'/Stable/'F2').  The criteria specify that direct
support counterparties such as account banks with ratings of
'BBB+'/'F2'can support note ratings only up to 'A+sf'.

Rating Sensitivities

Deterioration in asset performance may result from economic
factors, in particular the increasing effects of unemployment.
An increase in new defaults and associated pressure on excess
spread levels and reserve funds beyond Fitch's expectations could
result in negative rating actions.

The rating actions are as follows:

MBS Bancaja 1, FTA
   -- Class A (ES0312343017) affirmed at 'AA-sf'; Outlook Stable
   -- Class B (ES0312343025) affirmed at 'AA-sf'; Outlook Stable
   -- Class C (ES0312343033) affirmed to 'AA-sf'; Outlook Stable
   -- Class D (ES0312343033) affirmed to 'A-sf'; Outlook revised
      to Stable from Negative

MBS Bancaja 2, FTA

   -- Class A (ES0312343017) affirmed at 'AA-sf'; Outlook Stable
   -- Class B (ES0312343025) affirmed at 'AA-sf'; Outlook Stable
   -- Class C (ES0312343033) upgraded to 'AA-sf'; Outlook revised
      to Stable from Negative
   -- Class D (ES0312343033) upgraded to 'A-sf'; Outlook revised
      to Stable from Negative
   -- Class E (ES0312343033) affirmed at 'BB+sf'; Outlook
      Negative
   -- Class F (ES0312343033) affirmed at 'CCsf'; Recovery
      estimate 90%

MBS Bancaja 3, FTA

   -- Class A2 (ES0312343025) 'AA-sf'; Placed on RWN
   -- Class B (ES0312343033) 'AA-sf'; Placed on RWN
   -- Class C (ES0312343033) affirmed at 'Asf'; Outlook revised
      to Stable from Negative
   -- Class D (ES0312343033) affirmed at 'BB+sf'; Outlook
      Negative
   -- Class E (ES0312343033) affirmed at 'CCsf'; Recovery
      estimate 85%

MBS Bancaja 4, FTA

   -- Class A2 (ES0312343025 'A+sf'; Placed on RWN
   -- Class A3 (ES0312343033) 'A+sf'; Placed on RWN
   -- Class B (ES0312343033) affirmed at 'BBB+sf'; Outlook
      revised to Stable from Negative
   -- Class C (ES0312343033) affirmed at 'BBB-sf'; Outlook
      revised to Stable from Negative
   -- Class D (ES0312343033) affirmed at 'Bsf'; Outlook Negative
   -- Class E (ES0312343033) affirmed at 'CCsf'; Recovery
      estimate 40%

MBS Bancaja 7, FTA

   -- Class A (ES0312344015) affirmed at 'A+sf'; Outlook revised
      to Stable from Negative

MBS Bancaja 8, FTA

   -- Class A (ES0312285002) affirmed at 'A+sf'; Outlook revised
      to Stable from Negative


PARQUES REUNIDOS: S&P Revises Outlook to Stable, Affirms 'B-' CCR
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Spain-
based global leisure park operator Parques Reunidos Servicios
Centrales S.A.U. to stable from negative.  At the same time, S&P
affirmed its 'B-' long-term corporate credit rating on the
company and its 'B-' issue rating on its senior unsecured notes.

The outlook revision reflects S&P's view that Parques Reunidos'
operating performance in Europe is stabilizing, based on the
company's 2013 reported results (financial year ended Sept. 30).
The company reported a flat EBITDA versus 2012's, despite the
increase in value-added tax in Spain to 21% in financial 2013
from 8% in financial 2012, which represents about 35% of the
company's EBITDA in Europe.  Additionally, S&P believes that the
ratings are supported by the recent conversion of the
approximately EUR480 million of shareholder loans into equity,
which alleviates Standard & Poor's-adjusted debt metrics for
Parques Reunidos.  Lastly, the expected EUR20 million equity
injection from current shareholders to further boost growth in
Europe provides additional support to the ratings.

Overall, Parques Reunidos' revenues for financial 2013 decreased
by about 2.7%, mainly due to a roughly 5.4% fall in its visitor
base -- principally in the U.S. as a result of one of the
rainiest summers in the East Coast since 2004.  About 75% of
Parques Reunidos' parks are located in that region of the U.S.
Still, S&P notes that, despite the drop in attendance levels,
Parques Reunidos increased its revenue per capita by
approximately 10% in the U.S.  The company's unadjusted
consolidated EBITDA decreased by 3.0%, a repercussion of the bad
weather conditions, and despite a EUR10 million cost saving plan
that management implemented at group level.  Going forward, S&P
believes that the company's European operations will likely
continue to stabilize with slight improvements in financial 2014,
driven by the recovery S&P expects in the eurozone, under its
base case.  This, together with normalized weather patterns in
the U.S., should help improve Parques Reunidos' operating
performance, in S&P's view.

Parques Reunidos is an international leisure park operator based
in Madrid, Spain.  The group operates over 70 parks across almost
a dozen countries.  S&P's ratings on Parques Reunidos reflect its
assessments of its "highly leveraged" financial risk profile and
"weak" business risk profile.  S&P views industry risk as
"intermediate" and country risk as "low" for the company.

"Our assessment of Parques Reunidos' financial risk profile
reflects the company's high adjusted leverage metrics, with debt
to EBITDA near 7.0x, even after converting the shareholder loans
into equity.  In addition, we factor in the company's very
limited headroom under financial covenants at its European
operations, which underpins our "less than adequate" liquidity
assessment, and our anticipation that the company will generate
minimal to slightly negative free operating cash flow
generation," S&P said.

Parques Reunidos' business risk profile reflects its very high
seasonal operations (about 95% of EBITDA generated over the
summer months) and meaningful exposure to event risks (primarily
weather and epidemic related) given that most of its parks are
outdoors. Positively, S&P takes into account its diversified
portfolio, with about 70 parks across 11 countries, strong market
position, and relatively high barriers to entry.

Under S&P's base case, it assumes:

   -- 1%-3% organic revenue growth for financial 2014, supported
      by a slight uptick in attendance in Europe and normalized
      (for weather) attendance figures in U.S., and net revenue
      per capita growing in line with inflation;

   -- Flat adjusted EBITDA margin in 2014, remaining near 32%,
      which compares well with margins at other leisure park
      operators S&P rates; and

   -- Capital expenditures of about EUR75 million, with about
      EUR55 million destined for maintenance and the remaining
      EUR20 million for expansion (including the new water park
      at the Warner Park in Madrid, Spain).

Based on these assumptions, S&P arrives at the following credit
measures for financial 2014:

   -- An adjusted debt-to-EBITDA ratio of about 6.7x;
   -- Adjusted EBITDA interest coverage slightly above 2.5x; and
   -- Funds from operations to debt below 10%.

The stable outlook on Parques Reunidos reflects S&P's expectation
for modest EBITDA growth, resulting in EBITDA interest coverage
remaining above 2.5x and adjusted debt to EBITDA below 7.0x
through financial year-end 2014.

At this stage, a positive rating action would hinge on S&P's
reassessment of Parques Reunidos' liquidity to "adequate," which
would entail consistent headroom under financial covenants of
more than 15%.  Additionally, adjusted leverage falling below
6.0x would also contribute to a positive rating action.
Nevertheless, S&P currently views this scenario as remote.

S&P could lower the ratings if it foresees underperformance that
pushes Parques Reunidos to inject equity to avoid a potential
covenant breach.  This could occur, for example, if revenue
growth stagnates more than S&P currently anticipates and the
company cannot continue to adequately manage its cost structure.
S&P could also take a negative rating action if adjusted EBITDA
interest coverage falls below 2.0x.



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


YASAR HOLDING: Fitch Affirms 'B' IDR; Outlook Stable
----------------------------------------------------
Fitch Ratings has affirmed Yasar Holding A.S.'s Long-term foreign
and local currency Issuer Default Ratings (IDR) at 'B' and
downgraded its National Long-term rating to 'BBB(tur)' from
'BBB+(tur)'.  The Outlooks on the IDRs and National Long-term
rating are Stable.

Fitch has also affirmed the USD250m senior unsecured notes issued
by Willow No.2 (Ireland) PLC (Willow) due 2015 at 'B' with
Recovery Rating 'RR4'.

The affirmation reflects Fitch's expectation that improvements in
operating performance and credit metrics for 2013 (not yet
announced) are likely to be followed in 2014 by adverse effects
on pricing power, costs and the mostly euro and US dollar-
denominated debt from the devaluation of the Turkish lira and a
weakening consumer and business environment.  The expected
weakness in 2014 is reflected in the downgrade of the National
Long-term rating. Mitigating these concerns, Yasar has a track
record of dealing effectively with Turkey's volatile economy and
remains an important player in the structurally growing Turkish
food and beverages and coatings markets. This should restrict
adverse external effects on its credit metrics in the short term.

KEY RATING DRIVERS

Robust 2013, Uncertain 2014

Yasar had a strong 1H13 both at its food & beverage and at its
coatings business (+26% EBITDA overall), which supports our
expectation of profit growth for 2013, with a particularly robust
contribution from the coatings business.  The latter benefited
from cost rationalizations achieved in the past as well as price
increases.  However, Fitch is concerned that by the beginning of
2014 Yasar's input costs in coatings are likely to have increased
as a result of the Turkish lira devaluation since 2H13, and that
in a deteriorating economic environment, price pass-through will
become more difficult in 2014.

Business Diversification

The ratings reflect Yasar's diverse range of products in its core
segments of food, beverages and coatings, and strong market
shares within particular product categories. This is partially
offset by the challenges of managing a widely diversified holding
company, given the lack of synergies between some of the segments
and the recurring outlay of resources to enable growth and remain
competitive.

Limited FCF

Free cash flow (FCF) deteriorated to negative TRY70 million in
2011 and remained negative in 2012.  Although Yasar enjoys a
healthy level of funds from operations (FFO), which improved in
2013, increasing revenues absorb high levels of working capital
and capex (on aggregate an average TRY115 million in FY11-FY12).
The dividend leakage to minorities in the listed subsidiaries
further depresses cash flow by TRY20 million-TRY30 million a
year.  In FY14-FY15, although a number of investment projects
identified by management could lead to a step up in capex, Fitch
believes Yasar retains flexibility to postpone these in order to
protect its credit metrics.

High Foreign Currency Risk

Fitch estimates that over 70% of Yasar's debt at end-December
2013 was foreign currency-denominated, while most of its revenue
is generated in Turkish lira.  Fitch acknowledges that the
interest portion of Yasar's foreign currency exposure is largely
hedged by swap contracts.  Some operating costs, especially in
coatings, are foreign currency-denominated.  Exports provide some
relief in terms of foreign currency generation, but remain
limited, at under 10% of group sales.

Leverage Could Grow

The strong 2013 performance should enable net lease-adjusted
debt/EBITDAR to drop from 2012's high of 4.4x.  However, Fitch is
concerned that if the further devaluation of the Turkish lira
since end-2013 does not reverse, a combination of higher debt in
Turkish lira and potentially weakening FCF could push Yasar's net
lease-adjusted debt/EBITDAR beyond 4.5x, which is the upper limit
for the current 'B' rating.

Rating Sensitivities

Negative: Future developments that may, individually or
collectively, lead to negative rating action include:

   -- A downgrade could be triggered by an operating shortfall
      that further constrains cash flow and/or liquidity.

   -- Adjusted net debt/EBITDAR above 4.5x or FFO adjusted gross
      leverage above 5.0x on a sustained basis.

   -- FFO fixed charge coverage below 2.0x on a sustained basis.

   -- EBITDA margin falling below 8% for more than two financial
      years.

   -- A downgrade could also be triggered by another major
      currency/economic downturn in Turkey affecting Yasar's
      operations.

Positive: Future developments that may, individually or
collectively, lead to positive rating action include:

   -- Adjusted net debt/EBITDAR consistently below 3.5x or
      adjusted net debt/FFO consistently below 4.0x.

   -- FFO fixed charge above 2.5x.

   -- EBITDA margin remaining at or above 10%.

   -- Negative FCF by no more than 1% of sales and maintenance of
      longer-dated debt profile.



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


BROKBUSINESSBANK: Declared Insolvent by NBU
-------------------------------------------
Interfax-Ukraine, citing a posting on the Web site of the
National Bank of Ukraine, reports that Brokbusinessbank has been
declared insolvent due to the decline in its capital and delays
with payments.

Temporary administration was introduced at the bank from March 3
to June 2, 2014, Interfax-Ukraine discloses.

According to Interfax-Ukraine, individual depositors of the bank
can receive its funds under deposit agreements, the term of which
has expired, and under bank account agreements.

Payments will be settled for sums up to UAH200,000, Interfax-
Ukraine notes.

Kyiv-based Brokbusinessbank was founded in 1991.  It ranked 16th
with UAH28.914 billion among the country's 180 operating banks as
of January 1, 2014, in terms of overall assets.


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

S&P also lowered to 'CCC+' from 'B-' its issue rating on the
US$500 million senior unsecured notes issued by Ferrexpo Finance
PLC.  The recovery rating on the notes is unchanged at '3',
indicating S&P's expectation of meaningful (50%-70%) recovery in
the event of a payment default.

The rating action follows S&P's downgrade of Ukraine and the
lowering of its transfer and convertibility (T&C) assessment to
'CCC' from 'CCC+', given that Ferrexpo's core assets are
concentrated in Ukraine.  S&P takes into account the increasing
risks in Ukraine due to the current political turmoil.
Furthermore, the company's liquidity could weaken if Ukraine's
T&C restrictions increase, or if Ferrexpo's pre-export finance
lending banks weaken their commitment.

At the same time, S&P continues to rate Ferrexpo one notch above
its foreign currency long-term sovereign rating and T&C
assessment of Ukraine, because S&P believes Ferrexpo could
withstand a sovereign foreign currency default.  This is because
Ferrexpo holds meaningful offshore cash balances that cover its
debt maturing over the next 12 months.  S&P also takes into
account that the bulk of Ferrexpo's cash flows are derived from
profitable iron ore exports, which have not been affected to
date, as confirmed by Ferrexpo's management.  Finally, the
company has a prudent financial policy and at the moment
continues to have access to secured bank commitments outside of
Ukraine.

The negative outlook on Ferrexpo reflects S&P's negative outlook
on Ukraine.

S&P may lower the rating if there is a threat to the continuity
of Ferrexpo's business stemming from unrest in Ukraine or a
significant weakening in liquidity, for example due to a further
tightening of T&C restrictions, a material increase in VAT
receivables, declining offshore cash balances, or weakened
commitment from lenders.

Any rating upside would largely depend on stabilization of
Ukraine's business environment and more certainty regarding the
country's T&C rules.  Furthermore, S&P would only consider a
positive rating action if Ferrexpo's liquidity does not weaken.


REAL BANK: Declared Insolvent by NBU
------------------------------------
Interfax-Ukraine, citing a posting on the Web site of the
National Bank of Ukraine, reports that Real Bank has been
declared insolvent due to the decline in its capital and delays
with payments.

Temporary administration was introduced at the bank from March 3
to June 2, 2014, Interfax-Ukraine discloses.

According to Interfax-Ukraine, individual depositors of the bank
can receive its funds under deposit agreements, the term of which
has expired, and under bank account agreements.

Payments will be settled for sums up to UAH200,000, Interfax-
Ukraine notes.

Kharkiv-based Real Bank was founded in 1990.  It ranked 47th with
UAH4.469 billion among the country's 180 operating banks as of
January 1, 2014, in terms of overall assets.


LEMTRANS: S&P Lowers Corp. Credit Rating to 'CCC'; Outlook Neg.
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered to 'CCC' from 'CCC+'
its long-term corporate credit ratings on Ukrainian freight rail
operator Lemtrans LLC and its holding company Lemtrans Ltd.
(together Lemtrans).  The outlook is negative.

The downgrade follows S&P's downgrade of Ukraine and its downward
revision of the transfer and convertibility (T&C) assessment on
Ukraine to 'CCC'.

The long-term ratings on Lemtrans are constrained by S&P's long-
term foreign currency sovereign rating on Ukraine and its
assessment of Ukraine's T&C.  In S&P's view, the company does not
meet the criteria under which it would rate it higher than
Ukraine, given that it is predominately exposed to its domestic
market.  In S&P's view, the escalating economic risks in Ukraine
will likely make it increasingly difficult for Lemtrans to honor
its foreign currency obligations under potential restrictions to
accessing foreign currency.  S&P considers that these risks will
also curtail Lemtrans' ability to generate enough local currency
resources to honor all of its financial obligations under a
hypothetical sovereign default scenario, as defined by S&P's
criteria.

The negative outlook on Lemtrans primarily reflects S&P's outlook
on Ukraine.  S&P considers that sovereign-related risks will
remain the largest risks for the company's financial risk
profile, especially its liquidity, if Ukraine's political
landscape remains unstable and economic prospects deteriorate
further.

If S&P lowers the foreign currency long-term rating on Ukraine,
it would reassess the risk of imminent default, as per S&P's
criteria.  S&P would take into account the company's liquidity
position, and the effect of any hypothetical debt restructuring
on the Ukrainian economy and the company's operations and
liquidity.

All else being equal, S&P could revise the outlook on Lemtrans to
stable if it was to revise the outlook on Ukraine to stable.


UKRAINIAN RAILWAYS: S&P Lowers CCR to 'CCC'; Outlook Negative
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term
corporate credit and issue ratings on Ukrainian railway company
The State Administration of Railways Transport of Ukraine
(Ukrainian Railways) to 'CCC' from 'CCC+'.  The outlook is
negative.

The downgrade of Ukrainian Railways follows a similar rating
action on Ukraine on Feb. 21, 2014.

Under S&P's criteria for government-related entities (GREs), it
caps its long-term corporate credit rating on Ukrainian Railways
at the level of its long-term foreign currency sovereign credit
rating on Ukraine.

S&P only rates a GRE higher than the foreign currency sovereign
credit rating if it considers that the GRE meets certain
conditions.  There are two reasons why S&P do not believe that
Ukrainian Railways meets these conditions.  First, S&P do not
assess it as benefitting from at least an "extremely high"
likelihood of sovereign support.  In S&P's view, the likelihood
of support is currently "very high".

Second, although its stand-alone credit profile (SACP) of 'b-' is
above the foreign currency sovereign credit rating on Ukraine,
S&P believes that Ukrainian Railways would not pass a foreign
currency stress test.  This is because S&P assess its liquidity
as "weak."

The negative outlook on Ukrainian Railways mirrors the negative
outlook on Ukraine.  The negative outlook on Ukraine reflects
S&P's view that there is at least a one-in-three chance that it
could lower its long-term foreign currency sovereign credit
rating on Ukraine over the next 12 months if S&P was to view a
sovereign default as becoming almost inevitable within six
months.

Any lowering of the long-term foreign currency sovereign credit
rating or S&P's transfer and convertibility assessment on Ukraine
is likely to prompt it to lower its foreign currency corporate
credit rating on Ukrainian Railways.  This is because a downgrade
of Ukraine could imply additional challenges in Ukrainian
Railways' operating environment and further restrict its access
to liquidity.

S&P could also lower the rating on Ukrainian Railways if pressure
on its stand-alone liquidity intensifies, for example due to a
breach in financial covenants.

S&P could revise the outlook on Ukrainian Railways to stable if
it revises the outlook on Ukraine to stable, and if the situation
in Ukraine stabilizes and external liquidity pressure on
Ukrainian Railways eases.


UKRAINE: Fitch Affirms 'CCC' Foreign Curr. Issuer Default Rating
----------------------------------------------------------------
Fitch Ratings has affirmed Ukraine's Long-term foreign currency
Issuer Default Rating (IDR) at 'CCC', and Long-term local
currency IDR at 'B-'. The Outlook on the local currency IDR is
Negative. The issue ratings on Ukraine's senior unsecured foreign
and local currency bonds have also been affirmed at 'CCC' and 'B-
' respectively. The Country Ceiling is affirmed at 'CCC' and the
Short-term foreign currency rating at 'C'.

Key Rating Drivers

Political risk remains high and the transition of power has a
range of potential outcomes, complicating any firm judgments.
Ukraine's ability to obtain external financing will largely
depend on how quickly it can form a government that has broad
popular acceptance and set out a coherent economic policy
program. Leaders of the interim government have pledged to tackle
the economic crisis as a priority and seek IMF and EU funding.
However, politicians may struggle to regain confidence and meet
policy conditions attached to IMF lending, such as rises in
natural gas prices or fiscal tightening. As yet, there are no
details on the size or timing of any crisis lending.

Viktor Yanukovych effectively abandoned the presidency on 21
February. Former opposition MPs formed a new parliamentary
majority together with some of the MPs belonging to the Party of
the Regions, who disowned the former president. The parliamentary
majority designated a new speaker, Oleksandyr Turchynov, as
interim president, called presidential elections for 25 May, and
has formed a new government headed by prime minister Arseniy
Yatsenyuk. It also replaced the chairman of the National Bank of
Ukraine (NBU) and reverted to the 2004 constitution.

Relations with Russia, Ukraine's largest neighbor and trade
partner, have cooled. Russia does not recognize the new
government and has suspended disbursements of a USD15 billion
loan upon which Ukraine was relying to refinance a heavy
sovereign debt repayment schedule. Ukraine is scheduled to make
sovereign external debt repayments of USD6 billion (including
guarantees) in the remainder of 2014. However, debt repayments
are relatively light in March-May, before a USD1 billion Eurobond
matures in June.

Political uncertainty has contributed to a weakening in
confidence in the Ukrainian hryvnia and exchange rate policy. The
NBU's imposition of partial capital controls on February 7
stabilized the currency but this has been short-lived. In recent
days, the exchange rate has depreciated towards UAH11:USD, with
the NBU announcing a shift to a flexible currency regime. The NBU
confirmed that reserves stood at USD15 billion on February 25,
down from USD17.8 billion at the end of January as a result of
external debt repayments, capital flight, household demand for
foreign exchange and official currency intervention.

Currency depreciation will help external adjustment, but exchange
rate overshoot risks financial instability, especially if
external financing is not secured in a timely manner. Bank
deposits fell 7% in February, with further falls limited by
restrictions on transactions. Exchange rate depreciation will
hurt asset quality on the one-third of loans in foreign currency
and could accelerate deposit withdrawals.

Ukraine's 'CCC' foreign currency IDR also reflects the following
key rating drivers:

-- A weak business environment and poor governance indicators,
    even relative to the 'B' median.

-- GDP and inflation volatility are high, reflecting overheating
    before the global financial crisis and a deep recession in
    2008-2009, followed by a slowdown and recession in 2012 and
    2013, respectively.

-- The financial system remains fragile, burdened by non-
    performing loans (NPLs) of 30%, and represents a contingent
    liability to the sovereign, even after solvency support since
    2008 worth 10% of GDP.

-- As a result of a weak monetary policy regime and fragile
    confidence in the hryvnia, dollarization is high.

-- Income per head is high (at purchasing power parity), and
    private sector estimates suggest that up to half of GDP is
    unrecorded. Human development indicators exceed 'B' median
    levels.

Rating Sensitivities

The main factors that individually, or collectively, could
trigger a downgrade:

-- Intensification of political and economic stress so that
    default on government debt becomes probable.

The main factors that individually, or collectively, could
trigger an upgrade:

-- A return to political stability.
-- Sovereign access to external financing, leading to reduced
    pressure on reserves.
-- A return to sustainable growth and a moderation in fiscal and
    external imbalances.

Key Assumptions

Fitch assumes that the political scene remains uncertain but that
Ukraine's territorial integrity is maintained.


* Russia and Ukraine Tensions Hit Global Companies
--------------------------------------------------
Selina Williams, Inti Landauro and Mike Esterl, writing for The
Wall Street Journal, reported that rising tensions in Ukraine
shook global corporate giants -- from auto makers and energy
producers to beverage and dairy companies -- as the standoff
threatened sanctions and clouded sales forecasts for companies
exposed to Russia's vast market.

According to the report, Black Sea ports were operating normally,
and agriculture and mining companies active in Ukraine said their
operations had been unaffected. Costas Paris, writing for the
Journal, however, said leading maritime insurer Skuld asked
shipowners to keep crews aboard ship during calls to some Ukraine
ports as Russian security forces tighten their grip in the
region.  Norway-based Skuld is one of the 13 principal
underwriters of the International Group of P&I Clubs, which
insurers around 90% of all vessels world-wide.

Jacob Bunge, writing for the Journal, said Archer Daniels Midland
Co. and Bunge Ltd. said that their Black Sea grain-trading
operations haven't been affected so far by the escalating turmoil
in Ukraine, though the commodities companies are closely watching
the situation.  Ongoing uncertainty over the future of Ukraine,
one of the world's biggest producers and exporters of corn and
wheat, deepened over the weekend after Russia shifted military
forces into the Crimean peninsula following months of political
unrest in the country, sparking an international outcry.
Mr. Bunger related that ADM, one of the world's largest traders
and processors of grain and oilseeds, runs an inland grain-
elevator system, ports and an oilseed processing plant in
Ukraine, while Bunge runs grain elevators as well as a port in
Nikolaev and a crushing plant in Dnipropetrovsk, as well as an
office in Kiev.

The Journal said despite cutting off natural-gas supplies twice
before to Ukraine in recent years, Russia has so far kept the gas
flowing.  But as Russian President Vladimir Putin showed no sign
of softening his position, the prospect of a long-term standoff
sent shares of many Western companies operating there falling
sharply, the report said. So far, the U.S. and the European Union
haven't proposed any specific economic countermeasures. Still,
Western capitals are likely to ratchet up scrutiny of Russian
investment and deal making if the conflict drags out.

Many companies selling goods into Russia are also facing the
prospect of a suddenly weaker economy there, the report added.
The country's central bank jacked up interest rates early March 3
in an effort to defend its currency, the ruble. Higher rates
could squeeze spending, while the falling currency could eat into
ruble-denominated sales inside Russia.

PepsiCo Inc. has billions of dollars at stake in Russia, its
second-largest market by revenue after the U.S., the report
noted.  The Purchase, N.Y.-based snack and beverage giant would
have a difficult time picking up and leaving: It had US$7.89
billion in "long-lived'' assets including property, plants and
equipment in Russia alone last year, or 15% of its global assets,
according to a regulatory filing by the company.

The shares of Renault SA were hit hard on March 3, exposing
concerns about the potential fallout on the Russian economy from
escalating tensions between Ukraine and Russia, Inti Landauro and
Noemie Bisserbe, writing for the Journal, separately reported.
Renault and its alliance partner, Nissan, are deeply exposed to
Russia.  The car makers are set to control 74.5% of AvtoVAZ,
Russia's biggest auto maker and maker of the Lada brand cars, by
mid-2014.



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


CO-OPERATIVE BANK: Parent Mulls Sale of Farm Biz, Pharmacy Chain
----------------------------------------------------------------
Martin Flanagan at The Scotsman reports that the Co-operative
Bank on Feb. 26 revealed it is to sell its farming business and
will look at offers for its pharmacy chain as part of a planned
shake-up that is likely to impact on thousands of jobs.

It is part of a revamp of the group which is expected to post
record annual losses of GBP2 billion this month and has been
rocked by a number of scandals, The Scotsman notes.

These include the discovery of a GBP1.5 billion hole in its
banking arm's balance sheet and a drugs scandal involving former
chairman, Methodist minister Paul Flowers, The Scotsman
discloses.

If both businesses are sold, it would leave the mutual with 30%
of the Co-op Bank that was bailed out by bondholders in a
dramatic rescue, its food business, 800 funeral care outlets and
its general insurance and legal services divisions, The Scotsman
states.

                     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.


DAILY MAIL: S&P Raises Corp. Credit Rating From 'BB+'
-----------------------------------------------------
Standard & Poor's Ratings Services said it had raised its long-
and short-term corporate credit ratings on U.K.-based media group
Daily Mail & General Trust PLC (DMGT) to 'BBB-/A-3' from 'BB+/B'.
The outlook is stable.

At the same time, S&P raised its issue ratings on DMGT's senior
unsecured notes to 'BBB-' from 'BB'.  S&P withdrew its '5'
recovery rating on DMGT's unsecured notes, since it do not assign
its recovery ratings to investment-grade debt.

The upgrade reflects S&P's view that DMGT's credit metrics will
likely remain commensurate with a 'BBB-' rating over the next few
years, thanks to steady growth in its resilient business-to-
business (B2B) operations and conservative stance toward
acquisitions and shareholder remuneration.  S&P has therefore
revised its assessment of the group's financial risk profile to
"intermediate" from "significant" previously.

DMGT's Standard & Poor's-adjusted debt to EBITDA decreased to
2.6x in 2013 from 2.9x at year-end 2012, thanks to steady
earnings from its B2B business, which delivered 6% growth in
operating profits in 2013.  Under S&P's base-case assumptions of
mid-single-digit-percentage revenue growth and a stable EBITDA
margin, it forecasts that adjusted debt to EBITDA will remain at
about 2.5x over the next three years if the group does not pursue
large debt-funded merger and acquisition activity or increase
shareholder remunerations.

"We understand that the group intends to continue to expand its
B2B operations both organically and through small to midsize
bolt-on acquisitions.  Under our base-case scenario, we assume an
average outflow for acquisitions of GBP80 million per annum over
the next three years.  S&P also believes that more sizable
acquisitions, if they occurred, would be funded through proceeds
from disposals without jeopardizing the 2.0x unadjusted net debt-
to-EBITDA leverage target, which corresponds to Standard &
Poor's-adjusted net debt to EBITDA of about 3.0x.

S&P continues to assess DMGT's business risk profile as
"satisfactory."

The stable outlook reflects S&P's view that DMGT's credit metrics
will likely remain in line with a 'BBB-' rating over the next
three years, owing to stable growth in the group's B2B operations
and a moderate financial policy that balance shareholder
remuneration and acquisitions in order for the group to maintain
its targeted 2.0x unadjusted net debt to EBITDA.


INTERNACIONALE: In Administration; 1,000 Jobs at Risk
-----------------------------------------------------
Gareth Mackie at The Scotsman reports that Internacionale has
fallen into administration for the second time in less than a
year, raising fears over the future of its 1,000 staff, including
almost 200 in Scotland.

Internacionale, which has 89 stores across the UK, called in
administrators from PwC on Friday after falling victim to poor
trading and "increasing creditor pressure" from landlords, The
Scotsman relates.  The chain was bought out of administration in
July in a pre-pack deal involving former chief executive Raj
Sehgal, managing director Naresh Abrol and finance director
William Milton, The Scotsman recounts.

FC Fund Managers, a corporate restructuring specialist, is
believed to have taken control of Internacionale last month after
buying GBP35 million of debt, The Scotsman discloses.  In an
effort to cut costs, 90 people were made redundant, mainly at its
Glasgow head office, The Scotsman relays.

However, joint administrator Bruce Cartwright, as cited by The
Scotsman, said the retailer's owners decided they could no longer
support the business and opted to wind it down.

Headcount at Internacionale has fallen from 1,500 in July to
about 1,000 as the firm tried to stem its losses, The Scotsman
says.  The chain employs 194 people in Scotland and has 16 stores
north of the Border, along with its Glasgow head office and
warehouse operation, The Scotsman states.

The business will continue to trade, but Cartwright said further
job losses and store closures were inevitable unless a buyer can
be found, The Scotsman notes.

Internacionale is a Glasgow-based fashion retailer.


LOWELL FINANCE: Moody's Rates GBP100MM Senior Sec. Bond '(P)B1'
---------------------------------------------------------------
Moody's Investors Service has affirmed the B1 corporate family
rating (CFR) of Lowell Finance Holdings Limited (Lowell). Moody's
has also assigned a provisional (P)B1 rating with a stable
outlook to the proposed GBP100 million long term, senior secured
bond to be issued by Lowell Group Financing plc, a subsidiary of
Lowell. Moody's has previously rated the GBP275 million senior
secured bond issued by the same entity. The outlook on all
ratings is stable.

Moody's issues provisional ratings in advance of the final sale
of securities and these ratings reflect Moody's preliminary
credit opinion regarding the transaction only. Upon a conclusive
review of the final versions of all the documents and legal
opinions, Moody's will endeavor to assign a definitive senior
secured rating. A definitive rating may differ from a provisional
rating. The provisional rating and the stable outlook assigned to
the proposed bond issuance by Lowell assume a successful
refinancing of the company's current financing package, as well
as the confirmation that the final set of documentation does not
differ from the draft documentation.

The rating is contingent upon Lowell's successful completion of
the proposed GBP100 million senior secured notes offering,
whereby it will use the proceeds from the bond issuance to repay
the existing drawings from its revolving credit facility (RCF)
and for future portfolio purchases. Moody's will continue to
monitor Lowell's usage of its RCF as the extent of such usage
could change the structural subordination for the senior secured
notes.

Ratings Rationale

The (P)B1 rating reflects Lowell's strong market positioning,
stable operating cash flow and satisfactory level of debt service
capability and tangible common equity. However, these factors are
partly constrained by the firm's monoline business model,
concentrated debt maturity profile, supplier (i.e. debt
originators) concentration and model risk in terms of valuation
and pricing of its purchased debt portfolio (i.e. the risk of the
models over-estimating projected cash flow generation of a
portfolio of purchased debt). The rating also reflects the
projected increase in gross leverage as a result of the bond
issuance which will limit Lowell's financial flexibility. As a
result, Moody's will closely monitor any further increase in
gross and net leverage and consider whether it is of a magnitude
to exert negative pressure on the ratings.

Following the completion of the bond issuance, Moody's expects
Lowell to have an increased level of leverage which is still
consistent with the B1 rating levels. However, gross leverage
will be at the higher end of the rating's range and Moody's has
also noted the further concentration in terms of the laddering of
debt maturities, which could result in refinancing risk in 2019
when Lowell's bonds mature.

Lowell has displayed a good level of growth in its gross
collections over the past five years and its cash conversion rate
has been above peers. While operating cash flow, prior to
portfolio acquisitions, has remained strong and relatively stable
over the past few years, Moody's noted that the performance at
the net income level (both before and after tax) has been less
stable, mainly due to goodwill amortization expenses. This factor
however, may be somewhat mitigated by the improvements in
profitability projected for financial years 2014-2016 onwards,
with projected growth in gross collections and lower goodwill
amortization expenses. Although the interest coverage is expected
to decline as an immediate result of rising interest expenses
with the proposed bond issuance, Moody's noted that adjusted
EBITDA-to-interest expense is expected to remain at a
satisfactory level, in line with the B1 ratings. The rating
reflects Moody's expectation that Lowell's strong performance in
collections will continue (with interest coverage increasing) in
the medium term once cash proceeds from the new issuance are
invested in new assets.

At the same time Moody's has affirmed the B1 rating with a stable
outlook on Lowell's existing bond noting that the proposed bond
issuance is expected to increase Lowell's asset encumbrance --
i.e. the proportion of tangible assets funded with secured
debt -- to the highest amongst rated peers.

What Could Change The Rating Up / Down

Upward rating pressure could arise from a sustained improvement
in the leverage metrics (debt-to-adjusted EBITDA) to under 2.0x,
while maintaining other financial metrics and ratios at current
levels.

The rating could come under downward pressure due to (i)
significant deterioration in income from operations (after
interest expense) and cash flow from operations, stemming from
factors such as underperforming collections productivity,
underperforming portfolio acquisitions and lower than forecast
collections; or (ii) an increase in leverage or sustained decline
in operating performance, leading to a debt ratio which is higher
than 4.0 times adjusted EBITDA or a tangible common equity-to-
tangible managed assets ratio which is below 8%; or (iii)
significant decline in interest coverage, with an adjusted
EBITDA-to-interest expense ratio below 3.5x to 1.0x.

The principal methodology used in these ratings was Finance
Company Global Rating Methodology published in March 2012.


LOWELL GROUP: S&P Revises Outlook to Neg. & Affirms 'BB-' Rating
----------------------------------------------------------------
Standard & Poor's Ratings Services said that it revised to
negative from stable its outlook on U.K.-based finance company
Lowell Group Ltd.  At the same time, S&P affirmed the 'BB-' long-
term counterparty credit rating on Lowell.

S&P also affirmed the 'BB' issue rating on the GBP275 million
senior secured term notes issued by Lowell's wholly owned
subsidiary, Lowell Group Financing PLC.  The recovery rating is
unchanged at '2'.

In addition, S&P assigned a 'BB' issue rating and '2' recovery
rating to Lowell's new GBP100 million senior secured notes.

The negative outlook reflects the impact of the new GBP100
million bond issuance, which delays the reduction in Lowell's
leverage that S&P had previously expected.  S&P believes that
there is now at least a one-in-three chance that Lowell will fail
to improve its debt-servicing capacity to the level that S&P
considers commensurate with its 'BB-' long-term counterparty
rating within the next 12 months.  S&P do, however, note that all
the debt proceeds will be invested in the business, with no
distribution to shareholders.  In addition, S&P notes the
company's lengthening track record of sound operating performance
and pricing capability and its good medium-term growth prospects
in the U.K. distressed consumer debt purchase market.

On March 3, 2014, Lowell announced that its subsidiary, Lowell
Group Financing PLC, will issue a new GBP100 million senior
secured note due 2019.  S&P understands that most of the proceeds
of the issue will be initially kept as cash to fund expected
growth in portfolio purchases, with a smaller part used to repay
the drawn portion of its super senior secured revolving credit
facility.

S&P expects Lowell's leverage to increase moderately in the near
term following this issue.  S&P now forecasts the ratio of gross
debt to adjusted EBITDA (defined as EBITDA plus portfolio
amortization; a proxy for cash generation) to rise to around 2.6x
by Sept. 30, 2014; previously S&P had expected about 2x.

In S&P's view, the debt issuance will also affect the company's
debt-servicing capacity, measured by its adjusted EBITDA coverage
of cash interest expense.  S&P now expects this ratio to decrease
to around 4x for the financial year ending September 2014,
improving thereafter; previously S&P factored in a continued
improvement to above 5x.

The ratings on Lowell reflect Standard & Poor's view of the
company's concentration in the U.K. distressed debt purchase
market and the operational (and regulatory) risks inherent in its
activities.  S&P views as positive factors Lowell's leading
market position, its continued investments in proprietary data
mining capabilities, increasing sector diversification, and in-
house collection capabilities

S&P's recovery rating of '2' on Lowell's senior secured debt is
based on an implied recovery at the bottom end of the 70%-90%
range for both the GBP275 million and GBP100 million notes, after
repayment of the revolving credit facility.

The negative outlook indicates that S&P may lower the ratings on
Lowell if it considers that it will fail to improve its debt-
servicing capacity, for example, by building and sustaining an
adjusted EBITDA coverage of gross cash interest closer to 5x in
12 months.

S&P could lower the ratings on Lowell in the next 12 months if it
changes its expectation that Lowell's financial profile will
improve sustainably, or if S&P sees signs that Lowell could
further increase its leverage.  S&P could also lower the ratings
in the event of a failure in Lowell's control framework, adverse
changes in the regulatory environment, or a marked worsening in
collections, against management's expectations.

S&P could revise the outlook back to stable if it observes a
sustainable improvement in debt-servicing metrics and S&P
perceives that Lowell's financial policies demonstrably favor a
sustained reduction in leverage.


MALL FUNDING: S&P Raises Rating on Class A Notes to 'BB+'
---------------------------------------------------------
Standard & Poor's Ratings Services raised to 'BB+ (sf)' from 'BB
(sf)' its credit rating on The Mall Funding PLC's class A notes.

The rating action follows S&P's review of The Mall Funding under
its European commercial mortgage-backed securities (CMBS)
criteria.

The Mall Funding is a single-borrower secured loan transaction
backed by a portfolio of U.K. shopping centers.  S&P initially
assigned ratings to this transaction when it closed in April 2005
with a securitized balance of GBP1.06 billion.  A tap issuance
occurred in September 2006, increasing the number of assets to 23
and the note balance to GBP1.435 billion.  Since the tap
issuance, the issuer has sold 17 of the properties.  There are
currently six shopping centers remaining, with an aggregate
senior loan balance of GBP379 million.

In July 2010, the noteholders agreed to the proposal for a
restructuring of the transaction, which resulted in a loan
extension to April 22, 2015 (from April 22, 2012) while keeping
the tail period unchanged at two years.  Amortization targets and
loan-to-value (LTV) ratio covenants were introduced from 2012 and
as of the October 2013 investor report, both of these have been
met through a number of sales -- most recently the Sutton
Coldfield and Uxbridge assets.

Following the sale of these assets, the class A notes' balance
has reduced to GBP379 million from GBP547 million.  Based on the
most recent report from October 2013, this reflects an LTV ratio
of 57%.

S&P do not expect losses on this loan in its base-case scenario.

In S&P's analysis, it also considered the risk of a payment
default on the legal maturity date if the loan fails to repay on
its extended loan maturity date in April 2015 and the issuer is
required to enforce the securities.

S&P's ratings in this transaction address the timely payment of
interest and principal no later than the legal final maturity
date in April 2017.

Although the available credit enhancement for the class A notes
has improved, S&P believes that the class A notes may become
vulnerable to payment default, absent of further property sales,
given the approaching legal maturity date.

In light of these factors, S&P has raised to 'BB+ (sf)' from
'BB (sf)' its rating on the class A notes.


MARLEY BEVERAGE: Creditors Have Until April 1 to Submit Claims
--------------------------------------------------------------
Creditors of Marley Beverage Company UK Limited are required on
or before April 1, 2014 to send their names and addresses and the
particulars of their debts or claims, and the names and addresses
of their solicitors, if any to, Peter Whalley and Sandra Mundy of
James Cowper LLP, 1 Fetter Lane, London, EC4A 1BR, the joint
liquidators of the company, and, if so required by notice in
writing from the liquidator, or by his solicitors, to come in and
prove their debts or claims at such time and place as shall be
specified in such notice, or in default thereof they will be
excluded from the benefit of any distribution made before such
debts are proved.

Any queries in relation to this notice should be directed to
Ian Robinson of James Cowper LLP on 02380 221 222.


MATRIX SOLUTIONS: In Administration, Cuts 30 Jobs
-------------------------------------------------
The Bristol Post reports that Matrix Solutions UK has gone into
administration putting 30 jobs at risk.

Matrix Solutions UK called in accountants Grant Thornton as
administrators.

"Despite the obvious evidence that an economic recovery is in
place, there remains much fragility among smaller companies which
in many cases are unlikely to be able to compete as recovery
accelerates, because they do not have the necessary capital
infrastructure or working capital facilities," the report quoted
Nigel Morrison, joint administrator with colleague David Bennett,
as saying.

"Matrix Solutions UK Ltd is in a high turnover, low margin
sector, and is strongly associated with construction and retail,
both industries which have suffered in the current recession.  We
are making enquiries about a potential sale of the business, but
unfortunately there will be numerous redundancies whatever the
outcome of these discussions," Mr. Nigel said, the report notes.

As well as the 30 people employed at its Bradley Stoke head
office and smaller sites in Taunton, London and Leeds, the firm
provided work for about 50 sub-contractors.

Matrix Solutions UK is a property refurbishment and maintenance
business near Bristol


MEDSPAN EUROPEAN: Enters Liquidation; Owes More Than GBP100,000
---------------------------------------------------------------
Ashleigh Wight at Commercialmotor.com reports that Medspan
European Logistics has entered liquidation, owing creditors more
than GBP100,000.

Liquidators Martin Buttriss and Richard Simms of FA Simms &
Partners were appointed by members and creditors on Feb. 24,
Commercialmotor.com relates.

According to Commercialmotor.com, the company's statement of
affairs document published at Companies House revealed that
Medspan owed creditors GBP107,769 when it entered liquidation.
Of this, GBP5,279 was owed to HMRC, Commercialmotor.com notes.

The liquidators expect a deficiency of GBP91,668 in regard to
meeting the sum owed to creditors, Commercialmotor.com says.

Milton Keynes-based Medspan European Logistics specialized in
transport between wholesalers in the UK and on the Continent, and
provided groupage to and from Spain, Portugal and France.


MUSTANG MARINE: In Administration; 66 Jobs Affected
---------------------------------------------------
Richard Frost at Insider Media reports that the Port of Milford
Haven said it was working with administrators to re-establish
Mustang Marine as a viable business as it emerged that the
shipbuilding company had collapsed with the loss of 66 jobs.

The port, which operates Pembroke Dock and Milford Dock, owns 50%
of the shipbuilder and boat repair business, Insider Media
discloses.

Last week, Mustang Marine's interim managing director Stewart
Graves said the company would discover in the next few days
whether or not it would have to enter administration because of a
significant cash shortage caused by the withdrawal of an external
third party's offer of funding, Insider Media relates.

Now it has been confirmed that Mustang Marine has entered
administration with Grant Thornton appointed, Insider Media
discloses.  Although 48 employees have been retained and work on
some projects will continue, a further 66 members of staff were
made redundant, Insider Media notes.

Alistair Wardell, head of Grant Thornton's Wales office, will
lead the administration, Insider Media states.

"We have received a lot of interest in all parts of the business
already and negotiations with those interested parties will
continue over the next couple of weeks with the aim of securing a
buyer and new owner as quickly as possible," Mr. Wardell, as
cited by Insider Media, said.

Mustang Marine recorded pre-tax losses of GBP516,618 on revenues
of GBP6 million for the year ending August 31, 2012, Insider
Media says, citing the company's most recent set of accounts.


NATIONWIDE BUILDING: Fitch Rates Potential Notes Issue BB+(EXP)
---------------------------------------------------------------
Fitch Ratings has assigned Nationwide Building Society's
(A/Stable/F1/a) potential issue of perpetual subordinated
contingent convertible securities (the notes) an expected rating
of 'BB+ (EXP)'.

The final rating is contingent on receipt of final documentation
conforming to information already received.

Key Rating Drivers

The notes are additional Tier 1 (AT1) instruments with fully
discretionary interest payments and are subject to conversion
into Nationwide Core Capital Deferred Shares (CCDS) on breach of
a 7% CRD IV common equity Tier 1 (CET1) ratio (either
consolidated or solo), which is calculated on a 'fully loaded'
basis.

The securities are rated five notches below Nationwide's 'a'
Viability Rating (VR), in accordance with Fitch's criteria for
"Assessing and Rating Bank Subordinated and Hybrid Securities"
(dated January 31, 2014). The notes are notched twice for loss
severity to reflect the conversion into CCDS on breach of the
trigger, and three times for non-performance risk.

The notching for non-performance risk reflects the instruments'
fully discretionary interest payment, which Fitch considers the
most easily activated form of loss absorption. The issuer will
not make an interest payment if it has insufficient distributable
items or if it is insolvent. The issuer will also be subject to
restrictions on interest payments if it fails to meet the
combined buffer capital requirements that will partly be phased
in from 2016.

Nationwide's fully loaded Basel III CET1 consolidated ratio at 31
December 2013 (9M14) was 13.1% (12.8% calculated on a solo
basis), including GBP550 million CCDS it issued in December 2013.
This provides it with a buffer of around GBP2.5 billion for the
7% CET1 ratio trigger. However, non-performance in the form of
non-payment of interest could be triggered before reaching the 7%
CET1 ratio trigger, either by breaching the combined buffer
requirement (or possibly though a breach of a minimum leverage
ratio). These additional regulatory requirements considerably
reduce the buffer.

The combined buffer requirements will partly be phased in at 25%
per annum from January 1, 2016 Given our understanding that
building societies will likely have to meet similar buffer
requirements as ring-fenced banks, the minimum combined buffer
requirement applicable from January 1, 2019 for Nationwide will
be at least 5.5%. The UK regulator has also clarified that 56% of
Pillar 2 requirements should be covered by CET1 capital rather
than by total regulatory capital. We estimate therefore that
Nationwide will have to maintain a CET1 ratio of at least 10.5%-
11.5% by 2019. Under this scenario, the headroom over its buffer
reduces to around GBP1.1 billion-GBP0.7 billion, using estimated
end-December 2013 figures.

Nationwide plans and Fitch expects the society's CET1 ratio to
strengthen over time to 2019, increasing the headroom it will
have over 10.5%-11.5%. While we expect that Nationwide will meet
its regulatory capital expectations, additional non-performance
risk is introduced by the possibility that the combined buffer
requirements for Nationwide could change over time, and
additional buffers, for instance in the form of countercyclical
buffers, and time adjusted leverage ratio could be phased in
earlier than 2016, at the discretion of the UK government.

Fitch has assigned 100% equity credit to the securities. This
reflects their full coupon flexibility, the ability to be
converted into CCDS, which Fitch considers core capital well
before the bank would become non-viable, the permanent nature and
the subordination to all senior creditors.

Rating Sensitivities

As the securities are notched from Nationwide's VR, their rating
is mostly sensitive to any change in this rating. The securities'
ratings are also sensitive to any change in their notching, which
could arise if Fitch changed its assessment of the probability of
their non-performance relative to the risk captured in
Nationwide's VR. This could reflect a change in capital
management or flexibility or an unexpected shift in regulatory
buffers, for example.


NATIONWIDE BUILDING: S&P Assigns 'BB+' Rating to Tier 1 Secs.
------------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned its
'BB+' issue rating to the proposed perpetual contingent
convertible additional Tier 1 capital securities (the proposed
securities) to be issued by U.K. building society Nationwide
Building Society (A/Negative/A-1).  The issue rating is subject
to S&P's review of the securities' final documentation.

This will be the first such issue by Nationwide, and only the
second U.K. financial institution to issue additional Tier 1
contingent convertible securities.  S&P understands that the
proposed securities will comply with the Capital Requirements
Directive IV (CRD IV), which implements Basel III in the EU.

Under the terms of the proposed securities, a capital adequacy
trigger event would occur if Nationwide's estimated fully loaded
common equity Tier 1 (CET1) ratio under CRD IV is less than 7.0%
on any financial period end date or extraordinary calculation
date.  The CET1 ratio is calculated on either an individual
consolidated basis (as referred to in Article 9 of the Capital
Requirements Regulation) or a consolidated basis.  In the event
that either CET1 ratio falls below 7.0%, we understand that the
securities will be automatically converted into core capital
deferred shares (CCDS) of Nationwide, which are akin to common
equity for a building society.  S&P understands that, absent a
trigger event, the proposed securities will rank senior to the
CCDS and subordinate to Nationwide's senior creditors, including
Tier 2 creditors.

"When assigning a rating to a hybrid capital instrument with a
"going-concern" capital adequacy trigger, we typically apply a
rating cap that reflects the bank's stand-alone credit profile
(SACP) and our view of the CET1 ratio's distance from the
trigger.  The SACP on Nationwide is 'bbb+'. Nationwide reported
that its consolidated CET1 ratio was 13.1% on Dec. 31, 2013,
which S&P understands is relatively high compared with the ratios
of many of Nationwide's U.K. peers.  Nationwide also reported
that its CET1 ratio on an individual consolidated basis was 12.8%
on this date. S&P takes into account the December 2013 reported
CET1 ratios and our forecasts for the low point of these ratios
on each reporting date over the next 18-24 months.  As a result,
S&P applies a distance from the 7.0% trigger of greater than or
equal to 401 basis points for Nationwide's CET1 ratios.

S&P is unlikely to raise the issue rating on the proposed
securities, but it could do so if it revised Nationwide's SACP
upward.  Conversely, S&P could lower the issue rating if
Nationwide's CET1 ratios decline materially, or if S&P revises
its SACP downward.

S&P has assigned "intermediate" equity content to the proposed
securities because they are perpetual, do not contain a step-up
clause, and can absorb losses while the issuer is a going
concern.


RANGERS FOOTBALL: Rejects Administration Rumors
-----------------------------------------------
Craig Forbes at The Scotsman reports that the Rangers Football
Club rejected internet rumors that the club will enter
administration for a second time on Wednesday, but faced demands
from supporters to answer claims that former chief executive
Charles Green still has influence within the club.

"There is absolutely no truth in these claims [about the club
facing administration], which appear to come from agenda-driven
bloggers who are out to damage the club.  There is no chance of
administration while there is no board meeting [Monday].  This is
all completely false," the Scotsman quotes a spokesman for the
club as saying on Saturday.

However, The Union of Fans -- a coalition group representing six
supporter bodies -- released a statement seeking clarity about
what happened to the Yorkshire businessman's 7.68% stake in the
club after he ended his second stint with the club as a paid
consultant last August, The Scotsman relays.  It comes after
former director Dave King spoke out at the weekend about his
fears that it was "quite possible that Charles Green is still de
facto controlling the club", The Scotsman notes.

                 About Rangers Football Club

Rangers Football Club PLC -- http://www.rangers.premiumtv.co.uk/
-- is a United Kingdom-based company engaged in the operation of
a professional football club.  The Company has launched its own
Internet television station, RANGERSTV.tv.  The station combines
the use of Internet television programming alongside traditional
Web-based services.  Services offered include the streaming of
home matches and on-demand streaming of domestic and European
games, which include dedicated pre-match, half-time and post-
match commentary.  The Company will produce dedicated news
magazine and feature programs, while the fans can also access a
library of classic European, Old Firm and Scottish Premier League
(SPL) action.  Its own dedicated television studio at Ibrox
provides onsite production, editing and encoding facilities to
produce content for distribution on all media platforms.


ROYAL BANK: Fitch Says Costs Still Challenging Despite CleanUp
--------------------------------------------------------------
Fitch Ratings says that The Royal Bank of Scotland Group plc's
(RBSG; Viability Rating 'bbb') GBP8.2 billion pre-tax loss
reported for 2013 mostly reflects a clean-up of the business
stemming from the creation of the "bad bank", RBS Capital
Resolution (RCR) and provisions against "conduct" risk.  However,
the new strategic plan announced with its results highlights the
continued earnings pressure the group faces from restructuring
costs, operational and IT inefficiencies as well as fragmented
processes. Additional legal costs, fines, penalties and customer
redress costs are also likely.

Nonetheless, the results showed a continued de-risking of the
balance sheet, with risk-weighted assets reducing by 16% (GBP75
billion) during 2013 and the funded balance sheet by 15% (GBP130
billion). The group's funding profile has continued to improve
and Fitch considers its sound liquidity to have remained a rating
strength. While we believe that the task of downsizing the RCR
remains challenging, it will likely be aided by an increasingly
benign economic environment and will be undertaken by a highly
experienced team within RBSG.

The large impairment charges of GBP8.4 billion bring forward the
brunt of the impairment charges the group expected over the next
three years and not yet recognized in its stock of provisions. As
a result, their impact on the group's fully loaded Basel III
(FLB3) CET1 ratio was minimal in 4Q13, as they resulted in lower
regulatory deductions. The same applies to the write-off of
deferred tax assets; and of goodwill and other intangibles
(altogether adding GBP1.9 billion to group losses for the
period). The main impact on capital in FY13 can be attributed to
conduct and legal expenses, including GBP0.5 billion core
business redress and litigation costs, GBP0.6 billion provisions
against interest rate hedge redress, GBP0.9 billion against PPI,
and GBP2.4 billion against other various regulatory and legal
actions, primarily relating to mortgage-backed and other
securities litigation.

The group reported a FLB3 ratio of 8.6% at year-end, compared
with 9.1% at end-3Q13 but up from just 7.7% at end-2012, which is
one of the lowest amongst the UK major banks. The group continues
to target an end-2015 ratio of approximately 11% and more than
12% by end-2016, to be achieved mostly by way of continued
deleveraging (assets sales and reductions, including the sale of
Citizens in the US and of the Williams and Glynn branches in the
UK). The group's Core Capital Ratio ratio reported under current
rules was 10.9%.

The deleveraging is also likely to result in lower revenues. In
2013 they were negatively impacted by the scaling back of Markets
activity as well as of the International Banking operations,
lower revenues from UK Corporates and from US Retail and
Commercial. Given the group's much reduced scale in the medium
term, revenues will continue to fall in absolute terms and become
less diversified but also less volatile.

The net interest margin (NIM) was managed effectively during the
year thanks to a managed reduction in funding costs. Overall,
given its focus on lower risk business, particularly on UK
residential mortgages, the NIM is likely to improve slightly but
to remain subdued until interest rates rise.

Restructuring costs will remain high in the medium term as the
group re-sizes and reduces businesses it no longer deems
strategic. Consequently, together with conduct, regulatory and
redress costs, restructuring costs and investments will continue
to have a negative impact on earnings (and, dependent on timing
issues, potentially on reported capital measures) in the short to
medium term.

Against this background, non-performing loans (NPLs) have
decreased in absolute terms, although given the overall reduction
in assets they rose to account for 9.4% of total loans (end-2012:
9.1%) in 2013. They were 64% covered with impairment reserves,
substantially more than in 2012, thus reducing the ratio of NPLs
net of impairment allowances to FLB3 capital to 39% year-end
(end-2012: 52%). Problematic exposures in Ireland are likely to
remain an issue in the medium term and we see Ulster Bank
remaining a drag on profitability until it is more extensively
restructured.

RBSG's funding profile has also continued to improve. The
proportion of stable customer deposits to customer loans has
risen and reliance on wholesale funds, particularly short-term
has reduced (liquid assets covered short-term wholesale funds by
4.6x). Liquidity has also remained sound, with both the net
stable funding ratio and liquidity coverage ratio reported to be
over 100%.


SOUTHERN CROSS: Hundreds of Homes Put Up for Sale
-------------------------------------------------
Gill Plimmer at The Financial Times reports that hundreds of
former Southern Cross care homes are to be sold to new owners
within weeks, two years after Britain's biggest residential care
provider collapsed sparking a national debate about care for the
elderly.

According to the FT, the financial backers of HC-One, which was
formed as a management company to run about a third of the estate
managed by Southern Cross, has shortlisted five bidders to buy
the 241-home portfolio, with a deal in excess of GBP500 million
expected by the end of March.

Potential buyers include Patron Capital, Duke Street, Four
Seasons, Formation Healthcare, Fondia Investment Management,
according to sources close to the FT.  Deutsche Bank is running
the sales process, the FT notes.

HC-One is a subsidiary of debt-laden NHP, which owns the
freeholds and leaseholds of the properties and is saddled with
GBP1.35 billion debt, which its creditors are keen to recoup, the
FT discloses.

Until its demise, Southern Cross was the country's largest care
home operator, looking after 31,000 residents in 750 homes, the
FT states.  The company, which had undergone rapid expansion
funded by selling its leases before the credit crunch of 2008,
was driven to the wall in 2011 when it was faced by an increase
to its annual rent bill and a cut in fees paid to care homes by
local authorities, the FT relays.


TINETTY'S TOYS: Goes Into Administration, Cuts 4 Jobs
-----------------------------------------------------
Duncan Brodie at EADT24 reports that Tinetty's Toys Ltd, in Gaol
Lane, Sudbury, has now started a closing down sale which is
expected to run for two weeks before the shop closes for good,
with the loss of four jobs.

The shop has been trading for more than 20 years and has been
owned by directors Lynette Harvey and Kristina Read since 2007
when they acquired the business from TM Kingdom, which had itself
fallen into administration the previous year, according to
EADT24.

The report relates that Tinetty's remained part of Toymaster, the
national association of independent toy shops, of which TM
Kingdom was also a member.

However, the report notes that Chris McKay and Chris Williams
from East Anglian insolvency practice McTear Williams & Wood, who
were appointed at administrators on February 13, said the Sudbury
store's sales had been severely affected in recent times by a
combination of the economic downturn and a number of local
factors.

Mrs. Harvey, the report relates, said these had included a loss
of footfall for a three-month period last year when access to
Gaol Lane from Market Hill was partly obscured by scaffolding and
plastic sheeting erected as part of renovation work on the town
hall.

Last December, the report recalls that Mrs. Harvey also voiced
disappointment that the town council's Christmas lighting scheme
had not extended into Gaol Lane -- a decision the council said
was due to a combination of funding constraints and technical
issues.

"A number of factors have led to the administration, including
the lack of lighting in Gaol Lane.  It is a sad loss for the town
that another independent trader will have to close its doors.  My
co-director and I would like to thank our dedicated staff for
their hard work and wish them well for the future," the report
quoted Mrs. Harvey as saying.

The report relates that joint administrator Chris McKay added:
"We are sorry to see a long established business in the centre of
a busy market town having to close, but such closures are
happening throughout the UK on an almost daily basis.  The
company will be holding a closing down sale over the next two
weeks."

Traditional independent toy shops around the country have
suffered in recent years as a result of the recession, combined
with intense competition from multiples and online retailers and
the move towards electronic games, the report says.

Last September, the owners of Simpsons Toy Shop in Bury Street,
Stowmarket, announced that they were closing due to a lack of
trade, ending a history for the business stretching back more
than 100 years, the report discloses.


TITAN EUROPE 2007-3: S&P Lowers Rating on Class A2 Notes to 'D'
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered to 'D (sf)' from
'CCC- (sf)' its credit rating on Titan Europe 2007-3 Ltd.'s class
A2 notes.  At the same, S&P has affirmed its ratings on the class
A1, B, C, D, E, F, and G notes.

The rating actions follow S&P's review of Titan Europe 2007-3
under its European commercial mortgage-backed securities (CMBS)
criteria.

REGULATOR (51% OF THE POOL)

The securitized loan (GBP176.0 million) represents the senior
portion of a whole loan.  The loan failed to repay on the loan
maturity date in October 2013 and is now in special servicing.

The whole loan is backed by an office property in Canary Wharf,
London.  The property is fully let to the Financial Conduct
Authority.  The current lease ends in four years and eight
months.

The servicer has received an updated valuation, dated July 2013,
which gives a market value of GBP160.0 million.  The updated
valuation reflects a securitized loan-to-value (LTV) ratio of
110%.

At closing, the borrower granted Credit Suisse International, the
hedge provider, an extension option (the swaption) for a further
interest rate swap transaction (from Oct. 18, 2013 to July 18,
2018 on the same terms as the original swap).  The hedge provider
exercised the option at the loan maturity date.  As a result, the
borrower owes to the hedge provider an amount equal to the
termination payment that would have been due had a physical
interest rate swap been entered into under the same terms.  The
hedge provider determined the settlement amount to be
GBP32.3 million. Payments due under the swaption rank pari passu
with interest and principal due on the whole loan.

Furthermore, the borrower entered into a retail prices index
(RPI) swap with the hedge provider, under which the borrower
swapped variable amounts linked to RPI for fixed quarterly
amounts.  The hedge provider notified the servicer that the loan
maturity nonpayment and the swaption nonpayment constituted
events of default under the RPI swap.  As a consequence, the
hedge provider terminated the RPI swap ahead of its scheduled
maturity.  The hedge provider has notified the servicer that as a
result of the designation of the early termination date, the
borrower owes GBP5.4 million to the hedge provider.  Payments due
under the RPI swap rank senior to interest and principal due on
the whole loan.

S&P has assumed losses on the loan in its base-case scenario.

                   QUADRANT HOUSE (17% OF THE POOL)

The loan (GBP58.9 million) was secured on an office property in
Sutton.  The loan failed to repay on the loan maturity date in
October 2013 and is now in special servicing.

The special servicer agreed to sell the property for
GBP45.3 million on Jan. 27, 2014.  The issuer received net
recovery proceeds of approximately GBP44.4 million and will use
the proceeds toward the note payments on the April 2014 note
payment date.  The final recovery determination has not yet been
made, pending final payment of all costs and receipt of any
remaining funds from the borrower.

S&P has assumed losses on the loan in its base-case scenario.

                   NORWICH UNION (12% OF THE POOL)

The loan (GBP40.9 million) was fully securitized at closing.  It
is backed by an office property in Sheffield.  The property is
fully let to an Aviva PLC affiliate, with a reported remaining
lease term of three years and 11 months.

The loan failed to repay on the loan maturity date in October
2013.  As a result, the servicer transferred the loan to special
servicing.

In January 2014, the servicer reported a 1.92x interest coverage
ratio (ICR) and a 150% LTV ratio, based on a May 2013 valuation.

S&P has assumed losses on the loan in our base-case scenario.

                     BACCHUS (8% OF THE POOL)

The securitized loan (GBP28.8 million) represents the senior
portion of a whole loan.

The loan failed to repay on the loan maturity date in October
2011 and is now in special servicing.

The whole loan is backed by a commercial property last valued at
GBP50,000 in November 2009.

S&P has assumed losses on the loan in its base-case scenario.

                    MIDDLETON (7% OF THE POOL)

The loan (GBP24.2 million) was fully securitized at closing.  It
is backed by a warehouse near Manchester.  The property is fully
let to Tesco Stores, with a reported remaining lease term of nine
years and 11 months.

The loan failed to repay on the loan maturity date in July 2013
and is now in special servicing.

In January 2014, the servicer reported a 2.22x ICR and a 142% LTV
ratio, based on a February 2013 valuation.

S&P has assumed losses on the loan in its base-case scenario.

                      KOITO (3% OF THE POOL)

The loan (GBP11.9 million) was fully securitized at closing.  It
is backed by an industrial property near Birmingham.  The
property has a single tenant, with a reported remaining lease
term of four years and 11 months.

The loan failed to repay on the loan maturity date in January
2012 and is now in special servicing.

In January 2014, the servicer reported a 2.04x ICR and a 153% LTV
ratio, based on an October 2011 valuation.

S&P has assumed losses on the loan in its base case scenario.

                      KENNET (1% OF THE POOL)

The property securing the loan has been sold and the sale
proceeds applied to the notes on the January 2014 note payment
date.

The servicer reported in January 2014 that, following the sale,
GBP3.0 million remains outstanding.  The final recovery
determination has not yet been made, pending final payment of all
costs and receipt of any remaining funds from the borrower.

S&P has assumed that the issuer will write off the remaining loan
balance in its base-case scenario.

                        CASH FLOW ANALYSIS

The January 2014 cash manager's report shows that the class A2,
B, C, D, E, F, and G notes are experiencing interest shortfalls.

The transaction has been progressively deferring unpaid interest
since October 2008.  In this transaction, the excess spread is
not available to mitigate cash flow disruptions on the notes (but
is instead distributed to the class X notes), which arise from
partial interest collections on the underlying pool of loans or
from the payment of certain prior-ranking expenses.  The issuer
relies on servicer advances to address the timely payment of
interest on the notes.  However, the transaction documents
indicate that the back-up advancer is not allowed to make
servicing advances to pay interest shortfalls on the notes, if
such shortfalls have resulted from:

   -- Extraordinary expenses payable to the transaction parties
      (e.g., special servicing fees or special servicing
      expenses); or

   -- The reduction of servicing advances, if required to meet
      interest shortfalls under any of the loans, following the
      determination of an appraisal-reduction amount (the
      appraisal-reduction mechanism was structured to prevent
      drawings on the portion of the securitized loans that
      represents more than 90% of the securitized loan).

In S&P's opinion, the issuer's ability to service the notes is
impaired by the performance of the remaining loans and the
transaction's cash flow mechanisms.  In light of these factors,
S&P considers that the class A1 notes continue to be somewhat
vulnerable to cash flow disruptions.

RATING ACTIONS

S&P's ratings in this transaction address the timely payment of
interest and principal no later than the legal final maturity
date in October 2016.

Although S&P considers the available credit enhancement for the
class A1 notes to be sufficient to mitigate the risk of losses
from the underlying loans in higher rating stress scenarios than
the currently assigned rating, S&P considers that they are
vulnerable to cash flow disruptions.  S&P has therefore affirmed
its 'BB (sf)' rating on the class A1 notes.

The class A2 notes experienced an interest shortfall on the
January 2014 note payment date.  The class A2 notes are
vulnerable to principal losses, in S&P's view.  S&P has therefore
lowered to 'D (sf)' from 'CCC- (sf)' its rating on the class A2
notes.

S&P has affirmed its 'D (sf)' ratings on the class B to G notes
because they are vulnerable to principal losses, in S&P's view,
and are continuing to experience interest shortfalls.

Titan Europe 2007-3 is a U.K. CMBS transaction that closed in
August 2007.  It is currently secured on nine U.K. commercial
real estate loans.  The notes' legal maturity date is in October
2016.

RATINGS LIST

Class               Ratings
            To                From

Titan Europe 2007-3 Ltd.
GBP778.822 Million Commercial Mortgage-Backed Floating-Rate Notes

Rating Lowered

A2          D (sf)            CCC- (sf)

Ratings Affirmed

A1          BB (sf)
B           D (sf)
C           D (sf)
D           D (sf)
E           D (sf)
F           D (sf)
G           D (sf)


VIVA BEVERAGES: Creditors Have Until April 1 to Submit Claims
-------------------------------------------------------------
Creditors of Viva Beverages UK Limited are required on or before
April 1, 2014 to send their names and addresses and the
particulars of their debts or claims, and the names and addresses
of their solicitors, if any to, Peter Whalley and Sandra Mundy of
James Cowper LLP, 1 Fetter Lane, London, EC4A 1BR, the joint
liquidators of the company, and, if so required by notice in
writing from the liquidator, or by his solicitors, to come in and
prove their debts or claims at such time and place as shall be
specified in such notice, or in default thereof they will be
excluded from the benefit of any distribution made before such
debts are proved.

Any queries in relation to this notice should be directed to
Jan Robinson of James Cowper LLP on 02380 221 222.


* Insolvency Service Welcomes Decision in Game Station Case
-----------------------------------------------------------
The Court of Appeal has handed down its judgment in the case of
Pillar Denton Ltd and others v Jervis and others (commonly known
as the 'Game' or 'Game Station') case.

The case related to the treatment of rent in administration and
whether -- and to what extent -- it should be treated as an
expense or as a debt. This is relevant to insolvency stakeholders
as insolvency expenses must be paid in full before returns can be
made to creditors, including preferential or floating charge
creditors.

Previous case law had established that the matter was determined
with reference to the date the rent fell due and to the date that
the company entered into administration. The Court of Appeal has
overruled these earlier cases and found that an insolvency
office-holder must make rent payments for the period in which he
or she retains possession of the property in question, with such
payments treated as expenses.

Anne Willcocks, Director of External Affairs at the Insolvency
Service said: "We welcome this judgment as it brings clarity to a
very important part of business rescue. We will consider the
implications of the ruling carefully and will be liaising with
stakeholders over the coming weeks."


* UK: Recent Rent Ruling to Impact Collapsed Retailers
------------------------------------------------------
Scott Reid at The Scotsman reports that staff and suppliers of
collapsed retailers will be in the firing line after a key court
ruling handed more power to big high street landlords.

Legal experts believe that the closing of a loophole which had
allowed failed store chains to avoid paying rent for three months
could lead to administrations becoming "more kill than cure", The
Scotsman says.

The recent Court of Appeal ruling saw some of the UK's biggest
landlords win a two-year battle to overturn the law on payment of
rent during periods of administration, The Scotsman notes.

Companies that could have avoided making payments for three
months if administrators were appointed shortly after the
quarterly rent day will now have to stump up rent on a "pay as
you use" basis, The Scotsman says.

The previous savings, often running into millions of pounds,
provided a buffer for the rest of the business while
restructuring took place, The Scotsman discloses.

According to The Scotsman, lawyers said the case, which involved
computer entertainment retailer Game and a consortium of property
heavyweights including British Land and Land Securities, would
have a major impact on how landlords deal with insolvent
retailers across the UK, as the ruling will be followed north of
the Border.



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


* Fitch Continues to See Negative Prospects for European Banks
--------------------------------------------------------------
Fitch Ratings says European bank rating prospects continue to
remain more negative than those for banks in other parts of the
world.  Globally, negative Outlooks and Watches on bank ratings
in developed markets still outweigh those in emerging markets,
with 18.3% of developed market banks on Negative Outlook/Watch
compared with 14.8% of emerging markets though the gap narrowed
in 4Q13.

Just over a quarter of Issuer Default Ratings (IDRs) assigned to
banks operating in developed European countries were on Negative
Outlook/Watch at end-2013, compared with just over a fifth of
banks operating in emerging European countries.  During 4Q13,
European banks accounted for 83% of bank IDR downgrades globally
and 88% of Viability Rating (VRs) downgrades.

Globally, there were 34 actions on banks' IDRs in 4Q13, 18
downgrades and 16 upgrades.  Of these, 14 were triggered by
sovereign rating actions, all in emerging markets.  The downgrade
of Ukraine's sovereign rating affected nine bank ratings.  Only
eight IDR actions occurred in developed markets, in Italy,
Netherlands, the UK and the US. VR upgrades outweighed downgrades
during 4Q13.  Of the 42 VR actions in the quarter, there were 25
upgrades and 17 downgrades.  Over 70% of VR rating actions
occurred in Europe, where there was an equal number of downgrade
and upgrades (15.)

Globally, about 80% of bank IDRs are on Stable Outlook. Banks in
Asia/Australasia and Middle East/Africa continue to have the
highest levels of Stable Outlooks.  Bank IDRs continue to cluster
at the 'BBB' level, with 32% of global bank ratings in this
category, split roughly equally between developed and emerging
markets.

Globally, support-driven ratings make up 39% of IDRs assigned to
banks by Fitch.  The proportion of support-driven ratings is
higher in emerging markets (46%) and less prominent in developed
markets (31%).  Fitch expects the changing dynamics of state
support for banks globally to affect some support-driven ratings,
notably in the developed markets where resolution legislation is
most advanced.  Fitch expects to communicate likely paths for its
Support Rating Floors in 1Q14.


* Fitch Examines Losses from Workout & Liquidation Costs of EMEA
----------------------------------------------------------------
Fitch Ratings says that weak EMEA CMBS transaction documentation
governing workout costs and liquidation fees can lead to note
shortfalls, even where no securitized loans suffer a loss.  This
comment is the second in Fitch's series on the evolution in EMEA
CMBS structures, highlighting areas to be considered when
analyzing new CMBS issuance.

Generally, whether loan workout costs are incurred by the
borrower or by the CMBS issuer depends on the transaction
documents. In some cases misalignment of loan- and issuer-level
documentation can leave blind spots regarding the bearer of fees.

Charging the borrower for workout costs (as is envisaged in
standard loan agreements) ensures that equity fully bears the
brunt of loan default before noteholders are affected.  Only in
the event of equity depletion would the CMBS issuer assume some
of the costs.  The lack of issuer reserve funds in a typical
legacy EMEA CMBS makes this a serious concern for noteholders.

In many cases, excess spread is -- at least in nominal terms --
sufficient to absorb a variety of issuer costs.  However, with a
notional measure of excess spread typically earned by class X
notes senior in the waterfall (calculated as the strip rate),
whether investors in this profit-extraction class or others end
up bearing costs will depend on the definition of costs netted
off from the strip rate.  Where this is exclusive of
extraordinary or non-recurrent fees, any loans in special
servicing impose interest losses for junior investors.

Where the issuer has to meet extraordinary or non-recurrent
costs, ensuring that the full variety are accounted for in
profit-extraction mechanisms is necessary if fee-related
shortfalls are not to surprise bondholders.  This is most simply
achieved by subordinating profit-extraction as traditional excess
spread.  For example, in Gallerie 2013 S.r.l., a special
servicing event would trigger the subordination of class X notes
to rated bondholders.

Where a borrower does not have to meet workout costs, a similar
undermining of intended subordination can result from tranched
loan structures.  Senior lenders may face a loss if third-party
fees are not picked up by the junior lender.  One example is the
Prime loan in Talisman-1 Finance plc, where a pro rata sharing of
expenses (including workout-related costs) between senior
securitized lender and the junior non-securitized lender eroded
CMBS recoveries by EUR1.7m.

Even the method of asset sales can determine the bearer of costs.
In Windermere XIV Limited, liquidation and workout fees arising
from mortgage enforcement are payable by the borrower, whereas
the same costs from a consensual sale are paid by the issuer.
While this could be viewed as a financial incentive offered by
the issuer to a distressed borrower for its cooperation in a
sell-down, it does this by blurring the idea of subordination
even further.

Looking ahead towards new transactions, Fitch expects investors
scarred by past misfortune will look to contingency arrangements
being in place for spikes in costs, so that priority over
collateral proceeds is preserved.  Recognizing the weaknesses in
legacy deals is necessary in order to find a suitable standard
that works across transaction types and which is not scuppered by
small print or inconsistency between documents.

The clearest solution would be for the issuer to be entitled to
charge back reasonable costs to the borrower.  An alternative is
for the issuer to apply penalty interest earned on defaulted
loans against costs incurred, thus mitigating the risk of
shortfalls - provided penalty interest is not paid out as profit
even higher in the priority of payments.

For costs that cannot be reasonably charged back to or recovered
from borrowers, excess spread is the natural first line of
defense for investors.  Looking more broadly at the question of
costs, simply holding back an amount of excess spread until the
notes have repaid in full would provide the issuer with a buffer
to absorb any unexpected costs, many of which are back-dated.
After all, a common objective for any mortgage securitization
structure ought to be to ensure principal deficiencies at the
note level do not exceed credit losses actually realised on the
loans.


                            *********

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 * * *