TCREUR_Public/140515.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

            Thursday, May 15, 2014, Vol. 15, No. 95



NOKIA CORP: Fitch Ups Issuer Default Rating to BB, Off Watch Pos.


GEORGIAN OIL: S&P Affirms 'B/B' Ratings; Outlook Positive


DEPFA BANK: German Gov't Halts EUR20-Mil. Sale to Leucadia
RENA GMBH: Taps Jan von Schuckmann as Restructuring Expert


* Fitch Affirms 'B-' LT Issuer Default Ratings on 4 Greek Banks


ALLIED IRISH: European Commission Approves Restructuring Plan
IRISH BANK: Liquidators Plan to Reopen Sale of NAMA Junior Bonds


CR FIRENZE: Moody's Withdraws 'D+' Bank Financial Strength Rating
FGA CAPITAL: S&P Affirms 'BB+' Counterparty Rating; Outlook Neg.
* Fitch Affirms Ratings on Five Large Italian Banks


EURASIAN NATURAL: S&P Affirms 'B' CCR After Buyout; Outlook Neg.


JUBILEE CDO VI: Moody's Hikes Rating on EUR21MM Notes to 'Ba2'
SYBIL INVESTMENTS: S&P Assigns 'B+' CCR; Outlook Stable
TDR BIKES: Faces Bankruptcy Following Production Problems


CYFROWY POLSAT: Moody's Lowers CFR to 'Ba3'; Outlook Stable
EILEME 2 AB: Moody's Assigns 'Ba3' CFR; Outlook Stable


* Moody's Hikes Ratings of Portuguese Regional/Local Governments
* Moody's Takes Actions on 3 Portuguese Infrastructure Companies


MAGNITOGORSK IRON: Fitch Affirms 'BB+' IDR; Outlook Negative
MIRATORG LLC: Fitch Affirms 'B' IDR; Outlook Positive
RSG INTERNATIONAL: S&P Affirms 'B-' CCR; Outlook Stable
SEVERSTAL OAO: Fitch Raises Issuer Default Rating to 'BB+'


PESCANOVA SA: Damm, Luxempart Representatives Leave Board

U N I T E D   K I N G D O M

BRIGHTHOUSE GROUP: S&P Affirms 'B-' CCR; Outlook Positive
CFS FURNITURE: Directors Banned After Bankruptcy Rules Breach
CO-OPERATIVE GROUP: Vote on Radical Reform Vital, Chair Says
MISSOURI TOPCO: Moody's Affirms 'B3' Corporate Family Rating
MISSOURI TOPCO: S&P Affirms 'B-' CCR; Outlook Negative

MIZZEN BONDCO: Moody's Assigns B2 Rating to GBP200MM Senior Notes
MOORGATE FUNDING 2014-1: S&P Assigns BB Rating to Class E1 Notes
MORPHEUS PLC: Fitch Affirms 'CCCsf' Rating on Class E Notes
OVAKO GROUP: Moody's Assigns 'B3' Corp. Family Rating
PROMINENT CMBS 2: S&P Withdraws D Ratings on Six Note Classes

SAGA LIMITED: Moody's Places 'B1' CFR on Review for Upgrade
ULYSSES PLC: Moody's Affirms 'B2' Rating on Class X1 Notes
* UK: Yorkshire Manufacturing Sector Shows Strong Recovery



NOKIA CORP: Fitch Ups Issuer Default Rating to BB, Off Watch Pos.
Fitch Ratings has upgraded Nokia Corporation's Long term Issuer
Default Rating (IDR) and senior unsecured ratings to 'BB' from
'BB-' and removed them from Rating Watch Positive.  The Outlook
is Stable.

The rating actions follow the closing of the Devices & Services
(handsets) disposal and announcement of the company's plans for
disposal proceeds and ongoing capital structure.  Fitch believes
that Nokia's continuing operations reflect a more stable and
visible cash flow, given the considerable drag on earnings and
cash flow pressure exerted by handsets.  The balanced approach
taken in the use of disposal proceeds including extraordinary
shareholder distributions of EUR2.25 billion, along with the
reduction of EUR2.0 billion in debt, suggests a cautious approach
to capital structure, with Fitch's rating case projecting net
cash to be managed in excess of EUR5.0 billion, subject to
ongoing cash flow generation.

Fitch views the turn-around at Networks (the networks business,
which accounts for roughly 90% of group revenues) to be
impressive; achieved through a wholesale restructuring of the
cost base, a focus on profitable contracts and exit from
unprofitable relationships and countries.  With 2013 revenues
down 18%, the company expects to stabilize revenues in 2H14.
Sustaining financial metrics while stabilizing or improving
market share in a competitive industry, will be key to achieving
a higher rating over time.

The Stable Outlook reflects Fitch's view that although financial
metrics and capital structure are strong for a 'BB' rating, some
uncertainty exists about the sustainability of the current margin
and cash flow profile.  While the performance of Networks is well
established, its performance has been achieved in part due to
contracting revenues, where unprofitable business has been
proactively exited.  The Outlook therefore reflects caution over
how margins and in particular working capital cash flows will
perform in a market where Nokia's Networks division is expecting
to stabilize and potentially grow its revenues.


Well Defined, More Visible Business

Continuing operations have an established track record, with
Networks now accounting for approximately 90% of group revenues,
having turned profitable in early 2012 and posting strong results
over the past two years.  The patents licensing division,
Technologies, is a high margin business and is expected to grow
to an annual run-rate of EUR600 million in revenues following the
Microsoft transaction.  In Fitch's view, these businesses, along
with HERE, the group's strategically important mapping business,
will underpin the earnings profile of the group, with results
expected to be far less volatile than the recent past given the
disposal of the handsets business.

Networks Performance Key

Networks has performed well in a highly competitive market, with
the turnaround in earnings and cash flow impressive.  The
strategic exit from unprofitable relationships and geographic
markets, along with material cost cuts, has driven performance.
Revenues in 2013 were down 18% while the (non-IFRS) EBIT margin
of 9.7% was at the top of a guided target range of 5% - 10%.  The
key for Networks will be to sustain performance metrics now it is
looking to stabilize and grow revenues.  This will mean
maintaining or improving market share in a market where
competitors are prepared at times to sacrifice margins and incur
weakened cash flow performance to secure long-term customer

Competitive Infrastructure Market

Nokia has refocused Networks, targeting the profitable and more
visible mobile broadband networks market.  Fitch views this
market as polarizing around the top-three competitors, which in
addition to Nokia, include Ericsson and China's Huawei.  The
latter two exhibit far larger scale (albeit Huawei encompasses a
far larger scope of revenues), allowing them to invest
significantly more in R&D.  Fitch believes both have been
prepared to sacrifice margins in order to build market share.
However, margins across the top three players have shown some
stability, suggesting perhaps a more rational pricing
environment.  Nonetheless, Fitch believes competition will remain
high, which will at times lead to margin and cash flow

Conservative Financial Policies

Nokia announced its plans for the disposal proceeds and ongoing
capital structure along with its 1Q14 results.  Plans to return a
combined EUR2.25 billion in extraordinary shareholder
distributions (buybacks of EUR1.25 billion and a special dividend
of EUR1.0 billion) have been balanced with plans to reduce gross
debt by EUR2.0 billion over the next two years.  The
re-instatement of an ordinary dividend, cash payment on 2013
results of EUR400 million and a minimum payment of the same
amount for 2014, suggest a degree of confidence in the underlying
cash generation of the group.  Fitch's rating case envisages net
cash rising modestly from a base of around EUR5.25 billion,
providing a conservative financial structure and one that is a
strong support for the ratings considering the industry is prone
to macroeconomic and competitive shocks.


Subject to continued delivery of current performance, Nokia sits
strongly at the 'BB' rating.  Fitch rating case currently assumes
that margins perform at the high-end of management guidance.
However, performance below (or weaker than) our rating case could
support a higher, albeit still sub-investment grade rating,
subject to the stability/visibility of ongoing cash flows.

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

-- Non-IFRS EBIT margins at the group level consistently in the
    mid-single digit range or above, subject to good revenue and
    cash flow visibility.
-- Modest positive FCF (post dividend)
-- Sustained net cash in the multiple billion range
    (i.e. more than EUR3.0 billion).

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

-- Low single digit group (non IFRS) EBIT margin.
-- Consistently neutral pre-dividend FCF.
-- Declining net cash position - driven by negative cash flows.


GEORGIAN OIL: S&P Affirms 'B/B' Ratings; Outlook Positive
Standard & Poor's Ratings Services said that it had revised its
outlook on Georgian Oil and Gas Corporation JSC (GOGC) to
positive from stable and affirmed its 'B/B' long- and short-term
corporate credit ratings.

The outlook revision reflects S&P's expectation that GOGC will
maintain its sound operating and financial performance, stemming
from existing long-term gas-trading contracts, which ensure
favorable cash flows and relatively high operating margins.
Despite a change in the contract mix in 2012, which resulted in
higher gas-purchasing costs and a deterioration of margins, S&P
still considers GOGC's margins to be above the industry average.
S&P expects the company to report EBITDA margins of 30%-35% in
2013-2015, compared with 39% in 2012 and 48% in 2011.

S&P's ratings on GOGC reflect its assessment of GOGC's stand-
alone credit profile (SACP) at 'b-', as well as a one-notch
uplift, owing to S&P's view of a "very high" likelihood of
extraordinary government support for the company if needed.

S&P derives the SACP from our anchor of 'b-' for GOGC, based on
its assessments of the company's business risk profile as "weak"
and its financial risk profile as "highly leveraged."  Modifiers
had a neutral impact on the SACP.  GOGC's SACP is constrained by
the company's reliance on a single counterparty, SOCAR, for gas
supply via several long-term trading contracts, and the risk that
the impact on GOGC's earnings and cash flow generation will
likely be material if the contract terms were unexpectedly
amended during the contract period.  It is also constrained by
the company's lack of long-term strategic planning and a history
of unexpected changes in the government's strategic decisions for
GOGC.  For example, the company abandoned plans to construct the
Namakhvani hydropower plant in favor of the Gardabani gas-fired
combined cycle power station.  The company also issued a US$28.5
million loan to another state-controlled entity in 2012, which
was not repaid when due in 2013 and, as S&P understands, is being

S&P assumes that the company will generate significant negative
free operating cash flows (FOCF) in the coming two years, owing
to planned investments for the $220 million Gardabani project.
At the same time, S&P notes that GOGC secured financing for the
project via a Eurobond issue in 2012, and in S&P's base-case
scenario it don't envisage additional debt over the next two

Factors supporting the SACP include GOGC's strategic importance
to the government as the main gas supplier to the domestic
market, and the government's strong track record of providing
financial assistance to GOGC.  In addition, GOGC has take-or-pay
conditions in its contract with SOCAR, achieves higher
profitability than its peers, and owns two strategic pipelines,
which generate about 17% of total revenues and provide relatively
stable earnings and cash flows from regulated activities.

The long-term rating includes one notch of uplift to reflect
S&P's assessment that there is a "very high" likelihood of
extraordinary government support for GOGC if needed, based on
S&P's criteria for government-related entities (GREs).  This
assessment stems from S&P's view of GOGC's:

   -- "Very important" role for the Georgian government, given
      its mandate to ensure gas supply to the domestic market
      through ownership of strategic pipelines, its active role
      in strategic government development plans, and its status
      as a national oil company; and

   -- "Very strong" link with the government, which fully owns
      GOGC through the State Partnership Fund, and the risk to
      the sovereign's reputation if GOGC were to default.  S&P
      expects that the state will maintain majority ownership of
      GOGC over the medium term and its involvement in the
      company's strategic decision-making.  This view is
      supported by the government's previous strong financial
      support for the company in the form of grants, concessional
      loans, direct equity contributions, and tax benefits.

The positive outlook reflects the possibility of an upgrade
within the next 12 months if GOGC maintains strong operating cash
flows, earnings, and above-industry-average profitability,
assuming there are no adverse changes in its gas-trading
contracts or a deterioration of its liquidity position.

In addition, S&P assumes that GOGC's importance for the Georgian
government will not diminish and that the company will retain its
status as the national oil company and not be subject to
privatization in the medium term.  S&P also assumes that GOGC
will not provide any more loans to other GREs at the expense of
its own financial profile.

S&P could raise the ratings if the company continues to focus on
its core operations, building a track record of sound operating
and financial results with relatively high margins and strong
operating cash flows.

In addition, in accordance with S&P's criteria for GREs, GOGC's
SACP would need to improve to at least to 'bb-' for S&P to
consider an upgrade, provided that the sovereign rating remained
at 'BB-' and the likelihood of support "very high."

A positive rating action on the sovereign rating will likely lead
to a similar action on GOGC, all else being equal.

S&P could revise the outlook to stable if the company's liquidity
and maturity profiles deteriorated, the debt-to-EBITDA ratio
exceeded 4.0x, or the ratio offunds from operations to debt fell
below 20%.  This could result from increased investments, cash
outflows to support other GREs, or substantial negative changes
in GOGC's operational structure or contract scheme that led to
lower earnings and cash flow.  A one-notch downgrade would depend
on whether S&P revised its assessment of the likelihood of timely
and sufficient state support to "moderately high" or lower,
provided the SACP remained at 'b'.  Furthermore, a one-notch
downgrade of the sovereign will likely result in a similar rating
action on GOGC.


DEPFA BANK: German Gov't Halts EUR20-Mil. Sale to Leucadia
Alice Ross at The Financial Times reports that Germany has
intervened to prevent bailed-out bank Depfa from falling into US
hands just hours before a deal was about to be struck.

According to the FT, the government's financial market
stabilization fund, known as Soffin, said on Tuesday evening that
Depfa should be wound down by the German authorities rather than
sold for what would have been EUR320 million to US investor

Irish-based Depfa belongs to nationalized property lender Hypo
Real Estate, which became Germany's biggest banking failure of
the financial crisis when it had to be propped up with taxpayer-
backed guarantees of EUR142 billion, the FT discloses.  The wind
down of Depfa will now be managed by FMS Wertmanagement, which
was created in 2010 to wind up HRE, the FT says.

DEPFA Bank plc is a Dublin-based German-Irish bank.  It provides
financial services to the public sector and also provides
financing for larger infrastructure projects.  The name derivates
from Deutsche Pfandbriefbank.

RENA GMBH: Taps Jan von Schuckmann as Restructuring Expert
Evertiq reports that RENA GmbH has, after getting approval from
the preliminary committee of creditors and the preliminary
custodian, appointed restructuring expert Jan von Schuckmann to
the management.

Mr. Schuckmann takes over financial management of RENA GmbH.

"With Jan von Schuckmann we were able to gain a restructuring
expert, with extensive experience in the field of machine
building and solar due to his two year activity as Chief
Restructuring Officer of Centrotherm AG," the report quotes RENA
founder Jurgen Gutekunst as saying.

RENA is managed with immediate effect by Jurgen Gutekunst in
cooperation with Jan von Schuckmann and the authorized
representative for the self-administration, Thomas Oberle, under
the supervision of the preliminary custodian Dr. Jan Markus
Plathner, the report discloses.

As reported in the Troubled Company Reporter-Europe on March 28,
2014, PV-Tech said RENA has started insolvency proceedings under
self-administration as it attempts to restructure after failing
to gain a financing solution for debts encountered at a
subsidiary, SH+E. The company said the insolvency proceedings
only related to German operations of RENA GmbH, while other
domestic and foreign subsidiaries of the RENA Group would
continue operating as normal, PV-Tech relates.

RENA is a wet chemicals equipment processing specialist.


* Fitch Affirms 'B-' LT Issuer Default Ratings on 4 Greek Banks
Fitch Ratings has affirmed National Bank of Greece S.A. (NBG),
Piraeus Bank, S.A. (Piraeus), Alpha Bank AE (Alpha) and Eurobank
Ergasias S.A.'s (Eurobank) Long-term Issuer Default Ratings
(IDRs) at 'B-' with Stable Outlooks, Short-term IDRs at 'B', and
Viability Ratings (VRs) at 'b-'.  Fitch has also affirmed the
banks' Support Ratings (SR) at '5' and Support Rating Floors
(SRF) at 'No Floor'.

The agency has also upgraded the senior debt ratings of the banks
and their issuing vehicles to 'B-'/'RR4' from 'CCC'/'RR5' and
subordinated debt rating to 'CC'/'RR6' from 'C'/'RR6', primarily
reflecting lower balance-sheet encumbrance following
restructuring including capital increases.


The banks' Long-term IDRs are driven by their intrinsic credit
profiles, reflected in their VRs of 'b-'.  The VRs are influenced
by the challenging (albeit stabilizing) operating environment in
Greece (B-/Stable), which among other factors is characterized by
high unemployment and weak domestic demand, in turn affecting
negatively the banks' credit risk profiles.

After six years of recession, the banks' asset quality is weak.
At end-2013, Fitch calculates that the problem loan ratios, which
include all impaired loans and 90 days past due but not impaired
loans, had reached a high 45.6% for Alpha, 41.3% for Piraeus,
31.7% for Eurobank and 29.7% for NBG, while reserves held against
problem loans were below 50%, a proportion that Fitch views as
low in a stress scenario.  NBG's better asset quality ratios are
in part due to its majority-stake in Turkey's Finansbank A.S.
(BBB-/Stable), which has shown better asset quality performance.
While diversification at NBG is rating positive, it is
counterbalanced by potential constraints on capital and liquidity
fungibility. Eurobank's NPL ratios benefit from a relatively more
resilient mortgage portfolio.  In addition to NPLs, Fitch notes
that Piraeus has a portion of forborn loans that are not
classified as NPLs, which could pose add-on risks.

Fitch expects asset quality deterioration to continue for the
remainder of 2014 (albeit at a slower pace), mainly reflecting
the lag between NPL recognition and economic recovery.  Fitch
forecasts 0.5% real GDP growth in 2014.  Greek banks have
strengthened their internal arrears and restructuring units,
complying with the Bank of Greece's guidelines, which face the
challenging task of restraining further credit deterioration and
managing down their existing large NPL portfolios.

Following the identification of capital shortfalls by the Bank of
Greece in its March 2014 stress test, all four banks completed
capital increases by private means, most recently NBG in May 2014
with a EUR2.5 billion equity issue.  Piraeus and Alpha plan to
fully repay state preference shares.  Following capital
increases, Fitch calculates pro-forma Fitch core capital ratios
of 11% for Alpha, 10.9% for Piraeus, 9.3% for NBG and 8.2% for
Eurobank as of end-2013.  Including state preference shares still
held at NBG and Eurobank, the respective Fitch eligible capital
ratios improve to 11.8% and 10.7%.  However, Fitch still views
these capital levels as vulnerable to shocks, notably in view of
large stocks of unreserved NPLs.

In 2013, the bank remained loss-making at the operating level
(after provisions), albeit only moderately for NBG backed by its
more profitable Turkish operations and impairments which halved.
Fitch expects Greek banks' pre-impairment profitability to
improve in 2014 largely because of lower funding costs and
synergies; the latter being more relevant for Piraeus and Alpha
given their larger size post-integrations.  These factors will
provide further flexibility to make impairments, which will
remain elevated, constraining internal capital generation at
least for 2014.

The banks' VRs are supported by their improved funding and
liquidity profiles, largely due to the recapitalizations in the
form of EFSF bonds and cash, which resulted in larger stocks of
high-quality liquidity and subsequent access to funding through
interbank repos and the ECB.  Piraeus and NBG have also been able
to re-access the senior unsecured markets, although a track
record of sustained capital market access still needs to be
established. As a result, Greek banks' dependence on central bank
funding has reduced sharply, but in Fitch's view remains fairly
large at about 21% of the banks' assets, highlighting funding
constraints.  Loan contraction has continued, allowing the four
banks to reduce their loan/deposit ratios to more reasonable
levels, ranging from 107% for NBG to 123% for Alpha.  However,
Fitch considers that the banks' deposit franchises, while showing
initial signs of stabilizing, remain vulnerable in light of
Greece's economic conditions.

The Outlooks on the Long-term IDRs of all four banks are Stable,
mirroring that on the sovereign.  This also reflects Fitch's
belief that downside rating potential is currently relatively
limited in a stabilizing environment.

The upgrades of the senior debt ratings and recovery ratings
highlight a lower level of assets pledged, completion of capital
increases and a stabilizing operating environment, implying lower
collateral constraints and better recovery prospects.


The banks' IDRs and senior debt ratings are sensitive to changes
in their VRs.  A VR upgrade would most likely follow more
evidence of asset quality stabilization and tangible progress in
reducing their large problematic asset portfolios, whilst
sustaining capitalization.  A sovereign upgrade would not
automatically trigger an upgrade of Greek banks' IDRs, although
it could bring upward potential if it was associated with
improved macro-economic fundamentals.

The banks' VRs could be downgraded due to further stress in asset
quality, resulting in insufficient loss-absorption capacity and
inability to raise more capital internally.  The VRs could also
be adversely affected by any further liquidity shocks, although
in Fitch's view these are currently unlikely.


The banks' Support Ratings of '5' and SRFs of 'No Floor' reflect
Fitch's view that any additional support from the state, although
possible, cannot be relied upon in light of the scarce resources
at Greece's disposal, as evidenced by the receipt of an
international support package that included a EUR50 billion
facility for banks' recapitalizations via the Hellenic Financial
Stability Fund.  This is despite the banks' systemic importance,
with national deposit market shares of roughly 29% for Piraeus,
26% for NBG, 20% for Alpha and 19% for Eurobank.


Fitch considers there is little upside potential for the SRs and
SRFs of Greek banks given the limited ability of the Greek
authorities to provide support, but also given the clear intent
to reduce implicit state support for financial institutions in
the EU, as demonstrated by a series of legislative, regulatory
and policy initiatives, including the EU's Bank Recovery and
Resolution Directive and the Single Resolution Mechanism.  In
September 2013 and March 2014, Fitch commented on its approach to
incorporating support in ratings of banks worldwide in light of
evolving support dynamics.


The subordinated debt and other hybrid capital of NBG, Alpha and
Eurobank are all notched down from the banks' 'b-' VRs, in
accordance with Fitch's assessment of each instrument's
respective non-performance and relative loss severity risk
profiles, which vary considerably.  The upgrade of lower Tier 2
subordinated debt ratings reflects reduced non-performance risk.
These instruments are notched twice from the VR due to weak
recovery prospects, as reflected by the 'RR6' Recovery Rating.

The banks' hybrid capital, which is currently not performing, has
been affirmed at 'C'/'RR6' to reflect a high probability of non-
performance under Fitch's definitions.  Hybrid non-performance
can arise in a number of ways, including coupon deferral or
omission or if a tender or exchange offer is deemed to be a
distressed debt exchange.

The subordinated debt and hybrid capital ratings are broadly
sensitive to any change in the banks' VRs.  The Recovery Ratings
assigned to subordinated debt and other hybrid capital are
sensitive to various factors, most importantly valuation and
availability of free assets and the mix of unsecured and secured

Alpha's junior subordinated debt notes (ISIN XS0313221110) have
been affirmed and simultaneously withdrawn as these are no longer
considered analytically meaningful by Fitch given that there is
only a de minimis amount outstanding.

The rating actions are as follows:


Long-term IDR: affirmed at 'B-'; Stable Outlook
Short-term IDR: affirmed at 'B'
VR: affirmed at 'b-'
Support Rating: affirmed at '5'
SRF: affirmed at 'No Floor'
Senior notes: upgraded to 'B-'/'RR4' from 'CCC'/'RR5'
Short-term senior notes: affirmed at 'B'
Hybrid capital: affirmed at 'C'/'RR6'
State-guaranteed debt: affirmed at 'B-'

NBG Finance plc:

Long-term senior unsecured debt rating: upgraded to 'B-'/'RR4'
from 'CCC'/'RR5'
Short-term senior unsecured debt rating: affirmed at 'B'

Piraeus Bank:

Long-term IDR: affirmed at 'B-'; Stable Outlook
Short-term IDR: affirmed at 'B'
VR: affirmed at 'b-'
Support Rating: affirmed at '5'
SRF: affirmed at 'No Floor'
Long-term senior notes: upgraded to 'B-'/'RR4' from 'CCC'/'RR5'
Short-term senior notes: affirmed at 'B'
Commercial paper: affirmed at 'B'

Piraeus Group Finance PLC:

Long-term senior unsecured debt rating: upgraded to 'B-'/'RR4'
from 'CCC'/'RR5'

Alpha Bank:

Long-term IDR: affirmed at 'B-'; Stable Outlook
Short-term IDR: affirmed at 'B'
VR: affirmed at 'b-'
Support Rating: affirmed at '5'
SRF: affirmed at 'No Floor'
Senior notes: upgraded to 'B-'/'RR4' from 'CCC'/'RR5'
Short-term senior notes: affirmed at 'B'
Market-linked senior notes: upgraded to 'B-emr'/'RR4' from
Subordinated notes: upgraded to 'CC'/'RR6' from 'C'/'RR6'
Junior subordinated notes: affirmed at 'C'; withdrawn
Hybrid capital: affirmed at 'C'/'RR6'
State-guaranteed debt: affirmed at 'B-'
Short-term state-guaranteed debt: affirmed at 'B'.


Long-term IDR: affirmed at 'B-'; Stable Outlook
Short-term IDR: affirmed at 'B'
VR: affirmed at 'b-'
Support Rating: affirmed at '5'
SRF: affirmed at 'No Floor'
Senior notes: upgraded to 'B-'/'RR4' from 'CCC'/'RR5'
Short-term senior notes: affirmed at 'B'
Market-linked senior notes: upgraded to 'B-emr'/'RR4' from
Commercial paper: affirmed at 'B'
Subordinated notes: upgraded to 'CC'/'RR6' from 'C'/'RR6'
Hybrid capital: affirmed at 'C'/'RR6'
State-guaranteed debt: affirmed at 'B-'
Short-term state-guaranteed debt: affirmed at 'B'


ALLIED IRISH: European Commission Approves Restructuring Plan
AIB welcomes the decision by the European Commission that it has
given final approval under State Aid rules to AIB's Restructuring

In arriving at its final decision, the European Commission
acknowledged the significant number of restructuring measures
previously implemented by AIB comprising business divestments,
asset deleveraging, Liability Management Exercises and
significant cost reduction actions.  The restructuring plan
covers the period from 2014 to 2017 and a summary of the
principal commitments required to be given by AIB include:

   * Commitment not to make any material acquisitions until the
     end of the restructuring period.

   * Commitment in respect of non-payment of discretionary
     coupons on capital instruments issued prior to today's

   * Commitment in respect of cost reductions relative to income
     until Dec. 31, 2015.

   * A limitation on AIB's total holdings of Irish Sovereign
     bonds during the restructuring period, excluding those bonds
     issued by NAMA.

   * Restructuring of the loan portfolios of customers who are in
     financial difficulty, based on economic and commercial

   * Commitment in respect of repayment of State Aid prior to the
     end of the restructuring period subject to operating
     performance, regulatory capital requirements and regulatory

   * Commitments to operate certain competition measures for a
     period of three years.

These measures apply over various timeframes between now and
December 2017.

Chief Executive Officer David Duffy said, "AIB welcomes today's
announcement by the European Commission in relation to the Bank's
Restructuring Plan approval.  AIB has made significant progress
and has successfully implemented a number of restructuring
measures as the bank progresses with its aim of returning to
profitability this year.  The commitments as outlined are in line
with our existing operational plans.  The Bank remains focused on
delivering against its strategic objectives, while supporting the
ongoing recovery of the Irish economy."

                       About Allied Irish Banks

Allied Irish Banks, p.l.c. -- is a
major commercial bank based in Ireland.  It has an extensive
branch network across the country, a head office in Dublin and a
capital markets operation based in the International Financial
Services Centre in Dublin.  AIB also has retail and corporate
businesses in the UK, offices in Europe and a subsidiary company
in the Isle of Man and Jersey (Channel Islands).

Since the onset of the global and Irish financial crisis, AIB's
relationship with the Irish Government has changed significantly.

As at Dec. 31, 2010, the Government, through the National Pension
Reserve Fund Commission ("NPRFC"), held 49.9% of the ordinary
shares of the Company (the share of the voting rights at
shareholders' general meetings), 10,489,899,564 convertible non-
voting ("CNV") shares and 3.5 billion 2009 Preference Shares.  On
April 8, 2011, the NPRFC converted the total outstanding amount
of CNV shares into 10,489,899,564 ordinary shares of AIB, thereby
increasing its holding to 92.8% of the ordinary share capital.

In addition to its shareholders' interests, the Government's
relationship with AIB is reflected through formal and informal
oversight by the Minister and the Department of Finance and the
Central Bank of Ireland, representation on the Board of Directors
(three non-executive directors are Government nominees),
participation in NAMA, and otherwise.

AIB reported a loss of EUR1.59 billion in 2013, a loss of EUR3.55
billion in 2012 and a net loss of US$2.32 billion in 2011.  At
Dec. 31, 2013, the Company had EUR117.73 billion in total assets,
EUR107.24 billion in total liabilities and EUR10.49 billion in
total shareholders' equity.

Allied Irish Banks filed with the U.S. Securities and Exchange
Commission its annual report on Form 20-F disclosing a loss of
EUR1.59 billion on EUR1.34 billion of net interest income for the
year ended Dec. 31, 2013, as compared with a loss of EUR3.55
billion on EUR1.10 billion of net interest income in 2012.
Allied Irish incurred a net loss of US$2.32 billion in 2011.

IRISH BANK: Liquidators Plan to Reopen Sale of NAMA Junior Bonds
Joe Brennan at Bloomberg News reports that the liquidators of the
former Anglo Irish Bank Corp., now known as Irish Bank Resolution
Corp., plan to reopen a sale of EUR843 million (US$1.12 billion)
of securities linked to Ireland's state-owned bad bank.

According to Bloomberg, two of the three people with knowledge of
the matter said the liquidators, from KPMG in Dublin, were
seeking tenders from brokerages by 5:00 p.m. on May 14 in Dublin
to manage the sale of junior bonds from the National Asset
Management Agency.

Anglo was given the bonds in part payment for loans it sold in
2010 to the agency, known as NAMA, set up in 2009 to purge toxic
real estate assets from the Irish financial system, Bloomberg
relates.  The bank's liquidators abandoned a sale of the
securities in December as bids failed to meet a reserve price,
Bloomberg recounts.

                    About Irish Bank Resolution

Irish Bank Resolution Corp., the liquidation vehicle for what was
once one of Ireland's largest banks, filed a Chapter 15 petition
(Bankr. D. Del. Case No. 13-12159) on Aug. 26, 2013, to protect
U.S. assets of the former Anglo Irish Bank Corp. from being
seized by creditors.  Irish Bank Resolution sought assistance
from the U.S. court in liquidating Anglo Irish Bank Corp. and
Irish Nationwide Building Society.  The two banks failed and were
merged into IBRC in July 2011.  IBRC is tasked with winding them
down and liquidating their assets.  In February, when Irish
lawmakers adopted the Irish Bank Resolution Corp., IBRC was
placed into a special liquidation in the Irish High Court to
complete liquidation and distribution of the two banks' assets.

IBRC's principal asset as of June 2012 was a loan portfolio
valued at some EUR25 billion (US$33.5 billion). About 70 percent
of the loans were to Irish borrowers. Some 5 percent of the
portfolio was under U.S. law, according to a court filing.  Total
liabilities in June 2012 were about EUR50 billion, according
to a court filing.

Most assets in the U.S. have been sold already.  IBRC is involved
in lawsuits in the U.S.

IBRC was granted protection under Chapter 15 of the U.S.
Bankruptcy Code in December 2013.

Kieran Wallace and Eamonn Richardson of KPMG have been named the
special liquidators.


CR FIRENZE: Moody's Withdraws 'D+' Bank Financial Strength Rating
Moody's Investors Service has withdrawn the following ratings of
Banca CR Firenze S.p.A. (CR Firenze): D+ standalone bank
financial strength rating (BFSR), which is equivalent to a baa3
standalone baseline credit assessment, the Baa2 issuer rating,
and the Baa2/Prime-2 long- and short-term deposit ratings. At the
time of the withdrawal, all the ratings carried a stable outlook.

Ratings Rationale

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

Ratings Withdrawn

-- Bank Deposits: Baa2/Prime-2

-- Issuer Rating: Baa2

-- Bank Financial Strength Rating: D+

-- Baseline Credit Assessment: baa3

-- Adjusted Baseline Credit Assessment: baa3

Headquartered in central Italy, CR Firenze is a sub-holding of
Banca Intesa SpA (Intesa) and is fully integrated in Intesa's
commercial banking division. At June 2013, CR Firenze reported
total assets of EUR22.3 billion

FGA CAPITAL: S&P Affirms 'BB+' Counterparty Rating; Outlook Neg.
Standard & Poor's Ratings Services affirmed the long- and short-
term counterparty credit ratings on Italian FGA Capital SpA
(FGAC) at 'BB+/B'.  The outlook is negative.

The rating affirmation reflects S&P's view of FGAC's strong
capital position, which is further enhanced by increased earnings
retention in 2013.  It also reflects the ongoing funding support
FGAC receives from Credit Agricole through Credit Agricole
Consumer Finance (CACF).  At the same time, FGAC's mono-line
business continues to constrain the ratings, as do FGAC's
business and geographic diversification, which is weaker than
peers', and the still-modest prospects for FIAT car sales in

"In our view, FGAC continues to benefit from its strong capital
position, mainly driven by its ability to maintain resilient
profitability, contain the cost of risk, and moderate its
dividend pay-out.  We calculate that FGAC's risk-adjusted capital
(RAC) ratio has increased to 10.6% as of December 2013 up from
9.6% at the end of 2012 mainly as a result of higher-than-
expected earnings retention.  We now project that FGAC's RAC
ratio will range between 11.0% and 11.5% by the end of 2015
compared with our previous expectation of between 10.5% and 11.0%
at the end of 2014.  We expect profitability to remain broadly
stable in the next two years, with a pay-out ratio of 50% and
earnings retention of EUR70 million-EUR80 million per year.  In
our opinion, the enhanced capital position provides FGAC with a
larger cushion against potential further deterioration of the
economic and operating environment in Italy," S&P said.

"In our view, FGAC will still benefit significantly from the
material ongoing funding support from Credit Agricole through
CACF.  We understand that Credit Agricole remains strongly
committed to providing funding support to FGAC, through unsecured
and secured lines, in the context of the joint venture agreement
updated in September 2013.  In December 2013, Credit Agricole
provided about EUR5.0 billion of funding, amounting to about 34%
of FGAC's total funding base.  We note that FGAC's remaining
funding structure is well-diversified, comprising securitizations
(about 21% of its total funding), bond issues (about 15%) and
other banking lines (about 22.5%) at the end of December 2013,"
S&P added.  As a result, S&P continues to assess the bank's
funding as "average" and liquidity as "adequate."

S&P continues to consider FGAC's weak business position as the
main constraint for the rating, due to the company's mono-line
business, geographic diversification that is weaker than peers',
and the modest prospects for FIAT car sales.  In S&P's view,
FGAC's business and geographic diversification has declined since
the end of its partnership with U.K.-based Jaguar in February
2014.  Average outstanding Jaguar loans amounted to EUR2.9
billion at the end of 2013 and were mainly concentrated in the
U.K.  As a result, FGAC sold its Jaguar dealership business in
the U.K. and has put its Jaguar retail business in run-off.  In
S&P's view, FGAC will be able to offset the impact of the Jaguar
run-off by improving volumes in other markets and, to a lesser
extent, with its new partnership with Maserati.

S&P continues to incorporate one notch of uplift for group
support in the rating on FGAC.  This reflects S&P's view that
FGAC is a moderately strategic subsidiary of CASA and its
expectation that CASA would provide extraordinary financial
support if needed.  S&P believes car financing through joint
ventures with auto manufacturers is a key strategic focus for

The negative outlook on FGAC reflects the possibility that S&P
could lower the ratings if:

   -- S&P perceives that the CASA group's commitment to support
      FGAC diminishes, which, in S&P's view, could negatively
      affect FGAC's funding and business position, among other

   -- The economic and/or operating conditions to which FGAC is
      subject deteriorate further, particularly in Italy, and its
      capital position weakens.  This could occur on the back of
      higher economic risk and lower earnings retention than S&P

S&P could revise the outlook to stable if it anticipates an
easing in the downside risks to the Italian economic and
operating environment, and to S&P's assessment of the company's

* Fitch Affirms Ratings on Five Large Italian Banks
Fitch Ratings has affirmed the Long-term Issuer Default Ratings
(IDRs) of Banca Monte dei Paschi di Siena (MPS), Banca Nazionale
del Lavoro (BNL), Intesa Sanpaolo (IntesaSP), UBI Banca (UBI) and
UniCredit.  The Outlooks on BNL's and IntesaSP's Long-term IDRs
have been revised to Stable from Negative.  The Outlooks on the
Long-term IDRs of MPS, UBI and UniCredit are Negative.

The affirmations follow a periodic review of the five banking

MPS's Long-term IDR is at its Support Rating Floor (SRF) and is
currently based on Fitch's expectation that support would be
highly likely to be provided from the Italian authorities, should
it be required.  This is because of MPS's systemic importance
domestically and the amount of government hybrid capital received
to date.


MPS's IDRs are driven by the bank's SRF.  As a result, the
ratings are sensitive to a weakening of Fitch's assumptions
around the ability or propensity of Italy to provide timely
support to the bank.

The Negative Outlook reflects that a downward revision of the SRF
would result in downgrades of the IDRs and senior debt ratings to
the level of the bank's Viability Rating (VR), unless mitigating
factors arise in the meantime.  These could include an upgrade of
MPS's VR to the level of the bank's current SRF, the existence of
large buffers of junior debt or corporate actions.


MPS's 'ccc' VR reflects the bank's weak capitalization in the
absence of the government hybrid capital received.  It also
considers a possible full or partial nationalization of the bank,
despite this possibility having become more unlikely since the
last review of MPS's ratings in November 2013, given the recently
improved investor preference towards Italian banks, including
MPS. A number of international institutional shareholders
recently acquired sizeable minority stakes in the bank and Fitch
expects them to take part in MPS's imminent capital increase and
retain their stakes in the medium term.

MPS's VR also reflects its weak profitability and asset quality.
MPS reported a EUR1.4 billion net loss for 2013, which included
nearly EUR3.2 billion loan impairment charges and a net loss of
EUR174 million for 1Q14.  Asset quality is weak with a gross
impaired loans/total loans ratio equal to a high 21.5% at end-
2013.  MPS's end-2013 Fitch Core Capital (FCC) ratio, which
excludes government hybrid capital, was weak at around 5%.  Fitch
eligible capital (FEC), which includes the EUR4.1 billion
government hybrid capital received, was 10.4% at end-2013, which
Fitch considers low given the high volume of unreserved impaired

More positively, in 1Q14 MPS returned to the public institutional
market for the first time since September 2012 with a EUR1
billion senior unsecured issuance.


Fitch expects to review MPS's ratings after it achieves its
planned capital increase, currently expected to take place in
June 2014.  The capital increase could total EUR5 billion, if it
is agreed by its EGM in late May.  So far, the bank received
approval from its EGM (in late December 2013) to raise up to
EUR3 billion.  The bank has entered into a pre-underwriting
agreement to ensure the success of the capital increase.  The
resources raised through the transaction would allow the bank to
partly repay the government hybrid capital and maintain a cushion
to absorb any additional capital requirement that might result
from the European Central Bank (ECB) transparency exercise.  The
bank estimates its fully-loaded Basel 3 CET1 (FLB3) ratio based
on end-2013 numbers is 11.3%.

MPS's VR is primarily sensitive to the success of its announced
capital increase of EUR5 billion.  The successful completion of
the planned capital increase would make it possible for the
bank's VR to be upgraded.

Should the new capital not be raised, the government hybrid
capital would likely be converted into common shares, which would
mean that the Italian state would own a significant stake in MPS.
However, an unexpected need of additional government support to
avoid a failure would indicate the bank's non-viability and MPS's
VR would likely be downgraded to 'f'. Fitch considers this
scenario currently less likely given the recently improved
investor sentiment towards the bank.



IntesaSP's IDRs are based on its VR and reflect its sound
capitalization, solid funding in the current market context, and
its leading domestic franchise, which generated resilient
pre-impairment operating profits throughout the crisis.

According to Fitch's reclassifications, the bank posted a small
operating loss in 2013 driven by over EUR7 billion loan
impairment charges.  The significant charges reflect the bank's
effort to strengthen cash coverage against impaired exposures
ahead of the ECB's asset quality review this year and to be
prepared for any economic recovery.  However, IntesaSP's
operating profitability has been more resilient than many of its
domestic peers throughout the crisis, despite the difficulties
all Italian banks have in making their domestic commercial
activities sufficiently profitable.

IntesaSP's VR is underpinned by its sound capitalization with a
core Tier 1 ratio and a FLB3 ratio of 11.3% and 12.3%,
respectively, which compares well with international peers.
Liquidity has also remained sound, stable and conservatively
managed during 2013.

The bank's funding sources are adequately diversified. The bank
estimated a Basel III NSFR and LCR well above regulatory minimum
at end-2013.  IntesaSP's capability to issue securities in the
wholesale market has remained strong to date while central bank
funding utilization decreased over 2013 and by year-end was
entirely in the form of main refinancing operations.


IntesaSP's IDR is sensitive to movements in its VR.  The revision
of its Outlook to Stable from Negative reflects the rating action
on Italy's sovereign rating.

Fitch considers IntesaSP's credit profile to be closely linked to
the sovereign's and the operating environment in Italy, where the
bulk of the group's operations are located.  As a result IntesaSP
would be sensitive to a downgrade of the sovereign rating, which
would result in a downgrade of the bank's VR and Long-term IDR,
although given the Stable Outlook, this is currently unlikely.
Fitch expects the bank's profitability and asset quality to
stabilize throughout 2014.  Any material erosion of the bank's
capitalization, could lead to a downgrade of its VR.  Similarly,
any significant unexpected deterioration in liquidity could
result in a downgrade.


UBI's IDRs are based on its VR and reflect its sound
capitalization, stable funding and liquidity, impaired loans that
are lower than peers and sound franchise.  The ratings also
reflect continued pressure on operating profitability and asset
quality deterioration.

UBI's FCC ratio of 12.8% at end-2013 and its estimated FLB3 ratio
of above 10% indicate a comfortable capital position.

UBI's impaired loans have risen materially over the past four
years but remain better than the average in Italy, reflecting its
operations in wealthy northern Italy and its adequate
underwriting policies.  Gross impaired loans reached a high 11.6%
of gross loans at end-2013, largely originating from corporate
and SME exposures.  The relatively low coverage of impaired loans
reflects the group's lending composition, predominantly long-term
loans backed by collateral, low loan-to-value ratios and the
bank's more active write-off practices.  However, exposure to
material decreases in collateral values is a risk.

UBI's operating profitability remains under pressure, having
reported a weak operating ROAE of 1.25% in 2013.  Profitability
is dampened by low net interest income resulting from low
interest rates, weak lending volumes, and the bank's difficulties
in repricing its lending given the structure of its portfolio,
which is primarily long term.  UBI's efficiency has improved,
mainly due to headcount reductions.


UBI's Long-term IDR is based on its VR, and therefore a downgrade
of its VR would result in a downgrade of its Long-term IDR.  The
Outlook on its Long-term IDR is Negative as Fitch expects that
unless earnings and asset quality improve significantly, the
Long-term IDR could be downgraded.  The bank's ratings could also
come under pressure if capital was eroded by material losses or
acquisitions, events that are currently not factored into the

UBI's IDR is at the same level as the sovereign.  A downgrade of
the sovereign would likely result in a downgrade of UBI's VR and
IDRs as Fitch considers the bank's credit profile closely linked
to the sovereign's and to the operating environment in Italy.


UniCredit's IDRs are based on its VR and are underpinned by its
broad international franchise, diversified funding profile, still
acceptable capitalization even after the reported loss of nearly
EUR14bn for 2013 and plans to operate with an adequate 10% FLB3
ratio in the long term.

The VR takes into account UniCredit's underperforming Italian
franchise, exposure to developing countries where political risk
is relevant and volatility has recently increased, below-average
asset quality, particularly in Italy, as well as significantly
reduced underlying credit quality risks as the bank was more
rigorous than many peers in increasing provisions for its problem
exposures.  Strongly increased coverage ratios of impaired loans
have reduced the group's vulnerability to collateral values and
the bank is actively managing its impaired loans exposure.  The
VR also takes into account the challenges facing the bank's pan-
European business model in light of increasing regulatory
scrutiny of cross-border funding and capital flows.


The Negative Outlook on UniCredit's IDR reflects the challenges
the bank faces in improving its profitability, notably in its
Italian home market.  The bank's IDRs and VR are sensitive to a
change in Fitch's assumptions around the development of
UniCredit's profitability and asset quality, notably in Italy.
Fitch expects LICs to have peaked in 2013.

UniCredit's IDRs and VR are sensitive to Fitch's assumptions
regarding the risk profile and profitability of its significant
foreign operations, which to date have been supportive of the
ratings given the weak operating environment in Italy.  These
foreign subsidiaries have shown significant dividend payment
potential and sound internal capital generation.  However, for
some, the local operating environment has recently become more

Progress towards banking union in the eurozone, ensuring improved
capital and funding fungibility, is supportive of UniCredit's VR.
As a result of its international diversification, UniCredit's
risk profile is somewhat less correlated with the sovereign's
risk profile than its domestic peers.  Depending on the interplay
between domestic performance and benefits from its international
presence, UniCredit could potentially be rated one notch above
Italy's sovereign.  However, at the moment, the weakness of its
Italian operations and the heightened volatility at some of its
larger international operations, notably Russia and Turkey, means
that the Outlook on UniCredit's IDR remains Negative.  A return
to sustainable profitability for the group and for its Italian
operations, given their importance to UniCredit's business model,
would be necessary for the Outlook to be revised to Stable.
Conversely, should the risk profile and notably the profitability
of the bank's activities in Germany (UniCredit Bank AG, which
consolidated much of UniCredit's corporate and investment
banking, A+/Negative/a-), Austria and CEE (UniCredit Bank Austria
AG, which consolidates UniCredit's CEE activities except Poland;
A/Negative/bbb+) and Poland (Bank Pekao SA; A-/Stable/a-) worsen,
this could be negative for UniCredit's ratings.


The 'BBB' SRFs of IntesaSp, UniCredit, UBI Banca and MPS reflect
Fitch's opinion that the Italian authorities show a high
propensity to support the country's largest banks given their
domestic systemic importance.

The ratings are sensitive to a weakening in Fitch's assumptions
around either the ability or propensity of Italy to provide
timely support.

Of these, the greatest sensitivity is to a weakening of support
propensity in respect of further progress being made in
addressing both the legislative and the practical impediments to
effective bank resolution.  In the EU, where the extent of
existing legislative powers and the practical complexity of
applying resolution tools vary by country, this will mainly occur
through national implementation of the provisions of the Bank
Recovery and Resolution Directive.

In Banking Union countries, including Italy, the Single
Supervisory Mechanism will reduce national influence over
supervision and licensing decisions in favor of the ECB.  While
still involving multiple parties in resolution decisions, the SRM
will also result in a dilution of national influence over
resolution decisions.

Overall, Fitch's base case is that sufficient progress is likely
to have been made for large Italian banks' SRs to be downgraded
to '5' and SRFs to be revised downwards to 'No Floor' within the
next one to two years.  At this stage, this is likely to be later
in 2014 or in 1H15, but this could change.  The timing will be
influenced by Fitch's continuing analysis of progress made on
bank resolution and could also be influenced by idiosyncratic
The Italian state's ability to provide timely support to the
banks is dependent upon its creditworthiness, reflected in its
Long-term IDR of 'BBB+' with a Stable Outlook.  A downgrade of
Italy's sovereign rating would reflect a weakened ability of the
state to provide support and therefore likely result in the
downward revision of large Italian banks' SRFs.


BNL's IDRs and Support Rating (SR) reflect institutional support
from its parent, BNP Paribas (A+/Stable).  Fitch considers BNL as
core to BNP Paribas' strategy as Italy remains a home market for
the French group. BNL's IDRs and SR are also capped at one notch
above Italy's sovereign rating, in line with Fitch's criteria for
"Rating Financial Institutions Above the Sovereign".  This
reflects the agency's view that BNP Paribas' propensity and
ability to support BNL is linked to the operating environment in


BNL's IDRs and SR are sensitive to changes in BNP Paribas'
ability and propensity to provide support to its subsidiary, and
to changes in Italy's sovereign rating.  The revision of the
Outlook to Stable from Negative reflects the rating action on
Italy's sovereign rating.

BNP Paribas' ability to support BNL is indicated by its Long-term
IDRs. A downgrade of BNP Paribas' IDRs would only affect BNL's
IDRs and SR if the parent's Long-term IDR was downgraded by more
than two notches as BNL's Long-term IDR is currently constrained
by Italy's sovereign rating.  A reduction in BNL's strategic
importance for its parent, which Fitch currently does not expect,
would also place the IDRs and SR under pressure.  BNL's Short-
term IDR would come under pressure if there were signs of
weakening short-term liquidity support from its parent, which
Fitch currently does not expect.  Given the current notching
Fitch applies between BNL's IDR and Italy's sovereign rating,
BNL's IDRs and SR would also be sensitive to a downgrade of
Italy's rating.


BNL's 'bbb-' VR reflects BNL's only acceptable capitalization
with an FCC/RWA ratio of 8.3% at end-2013, in the context of a
high impaired loan ratio and weakened performance.  Despite the
sale of a significant stock of doubtful loans to the parent bank
in 1H13, BNL's gross impaired loan ratio remained high at nearly
14% at end-2013, and Fitch expects some further deterioration
throughout 2014.  BNL's liquidity, which benefits from ordinary
support from its parent, remains sound and market risk exposure
is low.


BNP Paribas has committed to keeping BNL well capitalized.
However, BNL's VR would come under pressure if losses at the bank
materially eroded capitalization and BNP Paribas' capitalization
targets were not met.

BNL's VR would also come under pressure if the increase in
impaired loans accelerates more than currently expected in the
coming quarters or if the bank does not maintain its adequate
loan impairment allowance coverage of impaired loans (doubtful
and watchlist loans), which stood at 53.8% at end-2013 and
compared well with peers.

Fitch considers an upgrade of BNL's VR unlikely in the near
future.  It would require an improvement in capitalization and
operating profitability, which would require a material
improvement in the bank's operating environment.


Subordinated debt and other hybrid capital issued by the banks
are all notched down from their VRs, or from the VR of their
parent if the issuer has no VR, in accordance with Fitch's
assessment of each instrument's respective non-performance and
relative loss severity risk profiles, which vary considerably.
Their ratings are primarily sensitive to any change in the VRs,
which drive the ratings.

The ratings of MPS's Upper Tier 2 and Tier 1 instruments and
preferred securities reflect Fitch's opinion that non-performance
risk in the form of non-payment of coupons is high.  The receipt
of state aid means that if it reports a net loss, MPS will be
obliged not to make coupon payments where the terms of the
instruments allow for non-payment.


IntesaSP's Italian subsidiaries' ratings, Banca IMI and Cassa di
Risparmio di Firenze, reflect Fitch's view of the core function
of these subsidiaries in the group.  As their ratings are based
on their parent's Long-term IDR, they are sensitive to changes in
IntesaSP's propensity to provide support, which Fitch does not
expect, and to changes in the parent's Long-term IDR.

UniCredit's and IntesaSP's foreign subsidiaries are not affected
by this rating action.

The rating actions are as follows:


Long-term IDR: affirmed at 'BBB'; Outlook Negative
Short-term IDR: affirmed at 'F3'
VR: affirmed at 'ccc'
SR: affirmed at '2'
SRF: affirmed at 'BBB'
Debt issuance programme (senior debt): affirmed at 'BBB'
Senior unsecured debt: affirmed at 'BBB'
State Guaranteed Notes (IT0004804362): affirmed at 'BBB+'
Lower Tier 2 subordinated debt: affirmed at 'CC'
Upper Tier 2 subordinated debt: affirmed at 'C'
Preferred stock and Tier 1 notes: affirmed at 'C'


Long-term IDR: affirmed at 'A-'; Outlook revised to Stable from
Short-term IDR: affirmed at 'F1'
VR: affirmed at 'bbb-'
SR: affirmed at '1'
Senior debt: affirmed at 'A-'


Long-term IDR: affirmed at 'BBB+'; Outlook revised to Stable
from Negative
Short-term IDR: affirmed at 'F2'
VR: affirmed at 'bbb+'
SR: affirmed at '2'
SRF: affirmed at 'BBB'
Senior debt (including debt issuance programmes and guaranteed
  notes): Long-term rating affirmed at 'BBB+'; Short-term rating
  affirmed at 'F2'
Commercial paper/certificate of deposit programmes: affirmed at
Senior market-linked notes: affirmed at 'BBB+emr'
Subordinated lower Tier II debt: affirmed at 'BBB'
Subordinated upper Tier II debt: affirmed at 'BB+'
Tier 1 instruments: affirmed at 'BB'

Cassa di Risparmio di Firenze:

Long-term IDR: affirmed at 'BBB+'; Outlook revised to Stable
  from Negative
Short-term IDR: affirmed at 'F2'
SR: affirmed at '2'
Senior debt (including programme ratings): affirmed at 'BBB+'

Banca IMI S.p.A.:

Long-term IDR: affirmed at 'BBB+'; Outlook revised to Stable
  from Negative
Short-term IDR: affirmed at 'F2'
SR: affirmed at '2'
Senior debt (including programme ratings): affirmed at 'BBB+'

Intesa Sanpaolo Bank Ireland plc (no issuer ratings assigned):

Commercial Paper/Short-term debt affirmed at 'F2'
Senior unsecured debt (guaranteed by Intesa Sanpaolo, including
  programme ratings): affirmed at 'BBB+'
Societe Europeenne de Banque SA (no issuer ratings assigned):
  Commercial Paper and Short-term debt (guaranteed by Intesa
  Sanpaolo): affirmed at 'F2'
Senior unsecured debt (guaranteed by Intesa Sanpaolo): affirmed
  at 'BBB+'

Intesa Funding LLC (no issuer ratings assigned):
US Commercial Paper Programme: affirmed at 'F2'


Long-term IDR: affirmed at 'BBB+'; Outlook Negative
Short-term IDR: affirmed at 'F2'
VR: affirmed at 'bbb+'
SR: affirmed at '2'
SRF: affirmed at 'BBB'
Senior debt (including programme ratings): affirmed at 'BBB+'
UBI Banca International S.A. (no issuer ratings assigned):
Commercial paper/certificate of deposit programmes: affirmed at

UniCredit S.p.A.:

Long Term IDR: affirmed at 'BBB+'; Outlook Negative
Short Term IDR: affirmed at 'F2'
VR: affirmed at 'bbb+'
SR: affirmed at '2'
SRF: affirmed at 'BBB'
Senior unsecured debt: affirmed at 'BBB+'
Guaranteed senior unsecured notes: affirmed at 'BBB+'
Market-linked notes: affirmed at 'BBB+emr'
Lower Tier 2 notes: affirmed at 'BBB'
Upper Tier 2 notes: affirmed at 'BB+'
Preferred stock: affirmed at 'BB'
Additional Tier 1 Capital Notes: affirmed at 'BB-'

UniCredit Bank (Ireland) p.l.c. (no issuer ratings assigned):
Senior unsecured notes: affirmed at 'BBB+'/F2
Guaranteed senior unsecured notes: affirmed at 'BBB+'

UniCredit International Bank (Luxembourg) S.A. (no issuer ratings
Guaranteed senior unsecured notes: affirmed at 'BBB+'


EURASIAN NATURAL: S&P Affirms 'B' CCR After Buyout; Outlook Neg.
Standard & Poor's Ratings Services affirmed its 'B' long-term and
'B' short-term corporate credit ratings on Kazakhstan-based
mining group Eurasian Natural Resources Corporation Ltd. (ENRC).
S&P removed the ratings from CreditWatch, where it originally
placed them with negative implications on April 30, 2013.  The
outlook is negative.

In the fourth quarter of 2013, ENRC completed its leveraged
buyout and delisted from the London Stock Exchange and Kazakh
Stock Exchange.  S&P understands from the management that, as a
result of this buyout, ENRC's adjusted total debt has increased
substantially to about US$8.0 billion as of Dec. 31, 2013.  This
compares with adjusted US$6.1 billion as of one year earlier.
The debt increase is largely related to a US$1.7 billion
acquisition financing that the company received from Russian
state-owned bank VTB.  VTB and Sberbank are the lenders of the
bulk of ENRC's debt.

"We continue to view ENRC's liquidity as "less than adequate,"
given the high debt maturities from the fourth quarter of 2015.
We also view ENRC's access to funding as constrained by risks
related to an ongoing Serious Fraud Office investigation.  We
understand from the management that the outcome of the
investigation is still unclear and that the investigation will
likely be protracted, but that it now largely focuses on past
acquisitions in Africa.  For this reason, as well as the limited
track record of the new management appointed in January this
year, we continue to assess ENRC's governance as "weak"," S&P

S&P's ratings reflect ENRC's stand-alone credit quality, although
it assess the company as a government-related entity.

The negative outlook reflects the probability of a downgrade over
the next six months if management is not able to address ENRC's
currently high leverage.  This will depend on new information S&P
expects to receive from management over the next three to six
months regarding ENRC's debt-reduction strategy.

Any perceived weakening of bank support from Sberbank or VTB
would also result in rating downside.  S&P might also lower the
rating if the final audited IFRS-based report for fiscal-year
2013 includes material credit-negative factors that are as yet
undisclosed.  S&P will also take into account developments
related to the Serious Fraud Office investigation.


JUBILEE CDO VI: Moody's Hikes Rating on EUR21MM Notes to 'Ba2'
Moody's Investors Service announced that it has taken the
following rating actions on the notes issued by Jubilee CDO VI

  EUR25M Class A1-b Senior Secured Floating Rate Notes due 2022,
  Upgraded to Aaa (sf); previously on Oct 31, 2012 Upgraded to
  Aa1 (sf)

  EUR12.5M Class A2-b Senior Secured Floating Rate Notes due
  2022, Upgraded to Aaa (sf); previously on Oct 31, 2012 Upgraded
  to Aa1 (sf)

  EUR32M Class B Senior Secured Floating Rate Notes due 2022,
  Upgraded to Aa2 (sf); previously on Oct 31, 2012 Upgraded to A1

  EUR27M Class C Senior Secured Deferrable Floating Rate Notes
  due 2022, Upgraded to Baa1 (sf); previously on Oct 31, 2012
  Upgraded to Baa3 (sf)

  EUR21M Class D Senior Secured Deferrable Floating Rate Notes
  due 2022, Upgraded to Ba2 (sf); previously on Oct 31, 2012
  Upgraded to Ba3 (sf)

  EUR3.15M Class Q Combination Notes due 2022, Upgraded to
  Baa3 (sf); previously on Oct 31, 2012 Upgraded to Ba1 (sf)

  EUR6M Class S Combination Notes due 2022, Upgraded to A2 (sf);
  previously on Oct 31, 2012 Upgraded to Baa1 (sf)

  EUR100M (current balance EUR61.1 M) Class A1-a Senior Secured
  Floating Rate Notes due 2022, Affirmed Aaa (sf); previously on
  Sep 1, 2006 Assigned Aaa (sf)

  EUR112.5M (current balance EUR73.6M) Class A2-a Senior Secured
  Floating Rate Notes due 2022, Affirmed Aaa (sf); previously on
  Sep 1, 2006 Assigned Aaa (sf)

  EUR13M (current balance EUR8.9M) Class A3 Senior Secured
  Floating Rate Notes due 2022, Affirmed Aaa (sf); previously on
  Oct 31, 2012 Upgraded to Aaa (sf)

  EUR17M Class E Senior Secured Deferrable Floating Rate Notes
  due 2022, Affirmed B3 (sf); previously on Oct 31, 2012 Upgraded
  to B3 (sf)

Jubilee CDO VI B.V., issued in August 2006, is a Collateralised
Loan Obligation ("CLO") backed by a portfolio of mostly high
yield European loans. The portfolio is managed by Alcentra
Limited and is predominantly composed of senior secured loans.
This transaction exited its reinvestment period on September 20,

Ratings Rationale

The rating actions taken on the notes result primarily of the
continued significant amount of deleveraging of the Class A notes
and subsequent increase in the overcollateralization ratios (or
"OC ratios"). The senior notes have been paid down by
approximately EUR57.59 million (31.16% of the original balance)
on the last 2 payment dates.

As a result, the OC ratios for all classes of notes have
increased in the last 12 months. As per the latest trustee report
dated April 2014, the Class A/B, Class C, Class D and Class E
overcollateralization ratios are reported at 138.26%, 122.71%,
112.84% and 105.94%, respectively, compared to 131.31%, 119.40%,
111.53% and 105.88% 12 months ago. Moody's based its analysis on
the March 2014 report but has since received the April 2014
report. Moody's has taken the EUR 25.0 million payment to Class A
notes from principal proceeds into account in the rating actions.

The ratings of the Combination Notes address the repayment of the
Rated Balance on or before the legal final maturity. For Class Q,
the 'Rated Balance' is equal at any time to the principal amount
of the Combination Note on the Issue Date minus the aggregate of
all payments made from the Issue Date to such date, either
through interest or principal payments. For Class S, the 'Rated
Balance' is equal at any time to the principal amount of the
Combination Note on the Issue Date increased by the Rated Coupon
of 0.25% per annum respectively, accrued on the Rated Balance on
the preceding payment date minus the aggregate of all payments
made from the Issue Date to such date, either through interest or
principal payments. The Rated Balance may not necessarily
correspond to the outstanding notional amount reported by the

The key model inputs Moody's uses in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. In its base
case, Moody's analyzed the underlying collateral pool as having a
performing par and principal proceeds balance of EUR289.2
million, defaulted par of EUR13.4 million, a weighted average
default probability of 23.51% (consistent with a WARF of 3453
over period of 3.92 years), a weighted average recovery rate upon
default of 44.96% for a Aaa liability target rating, a diversity
score of 26 and a weighted average spread of 4.16%.

In its base case, Moody's addresses the exposure to obligors
domiciled in countries with local currency country risk bond
ceilings (LCCs) of A1 or lower. Given that the portfolio has
exposures to 12.32% of obligors in Italy, Ireland and Spain,
whose LCC is A2, A2 and A1 respectively, Moody's ran the model
with different par amounts depending on the target rating of each
class of notes, in accordance with Section 4.2.11 and Appendix 14
of the methodology. The portfolio haircuts are a function of the
exposure to peripheral countries and the target ratings of the
rated notes, and amount to 0.93% for the Class A notes and 0.58%
for the Class B notes.

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 85.61% of the portfolio
exposed to first-lien senior secured corporate assets upon
default and of 15% of the remaining non-first-lien loan corporate
assets upon default. In each case, historical and market
performance and a collateral manager's latitude to trade
collateral are also relevant factors. Moody's incorporates these
default and recovery characteristics of the collateral pool into
its cash flow model analysis, subjecting them to stresses as a
function of the target rating of each CLO liability it is

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, Moody's conducted
sensitivity analyses on the key parameters for the rated notes,
for which it assumed lower credit quality in the portfolio to
address refinancing risk. Loans to European corporates rated B3
or lower and maturing between 2014 and 2015 make up approximately
1.73% of the portfolio, which could make refinancing difficult.
Moody's ran a model in which it raised the base case WARF to 3565
by forcing ratings on 25% of the refinancing exposures to Ca; the
model generated outputs that were within one notch of the base-
case results.

This transaction is subject to a high level of macroeconomic
uncertainty, which could negatively affect the ratings on the
note, in light of uncertainty about credit conditions in the
general economy. 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 because of 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 24.10% of the collateral pool consists of debt obligations
whose credit quality Moody's has assessed by using credit

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
analyszd 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.

SYBIL INVESTMENTS: S&P Assigns 'B+' CCR; Outlook Stable
Standard & Poor's Ratings Services assigned its 'B+' long-term
corporate credit rating to Netherlands-based investment holding
company Sybil Investments B.V. (Avast).  The outlook is stable.

At the same time, S&P assigned its 'B+' issue rating to the $420
million senior secured loan, due 2020, issued by Sybil Finance

The rating on Avast reflects S&P's assessment of its financial
risk profile as "aggressive" and its business risk profile as

S&P's assessment of Avast's business risk profile as "weak"
primarily reflects its very narrow product offering; the
company's premium PC antivirus product generates over 70% of
bookings. Despite Avast's solid niche market position as a
provider of PC security software to consumers and small and
midsize enterprises, S&P sees the substitution of wireless
devices for PCs as a key medium-term risk.  S&P's view takes into
account existing difficulties in monetizing security software for
wireless devices and the uncertain evolution of competition in
this segment. Avast's limited scale and operations in a highly
fragmented security software market where there is strong
competition from significantly bigger companies also contributes
to S&P's assessment of its business risk profile.  S&P's
assessment is further underpinned by the meaningful degree of
operating leverage in Avast's operations.  In addition, Avast's
significant presence in relatively highly price-sensitive
markets, primarily in Latin America, leads to comparably low
free-to-premium user conversion.

S&P sees Avast's "weak" business risk profile as only partly
offset by its solid operating efficiency, based on its online
sales model, and the company's highly automated detection
process, which translates into higher-than-average profitability.
Avast further benefits from a large user base of more than 200
million, and continued user growth, supporting potential
additional monetization opportunities.

S&P's business risk assessment incorporates its view of the
global software services industry's "intermediate" risk and "low"
country risk.  Avast generates over 50% of its revenues from
customers based in the U.S. and Western Europe.

Avast has recently raised $420 million of senior secured loans to
fund a recapitalization of security software firm Avast Software
B.V.  At the same time, private equity company CVC Capital
Partners completed its acquisition of a 41% stake in Avast.  CVC
Capital Partners' stake in Avast is the primary reason why S&P
assess Avast's financial risk profile as "aggressive."  In S&P's
view, Avast is likely to apply shareholder-friendly financial
policies in the medium term, which could prevent it from
sustainably deleveraging.  S&P's financial risk profile
assessment also indicates that it calculates that Avast had a
Standard & Poor's-adjusted debt-to-EBITDA ratio, including the
planned recapitalization of its balance sheet, of 4.2x at year-
end 2013. S&P forecasts that the company's adjusted debt-to-
EBITDA ratio will likely remain comfortably below 4.5x, in view
of meaningful organic deleveraging prospects through EBITDA
growth and free cash flow generation.  This could accommodate
moderate headroom for potential shareholder distributions from
internal cash flows, despite the presence of other meaningful
shareholders, aside from CVC, that have more limited leverage
tolerance than CVC.

Avast's financial risk profile is somewhat constrained by its
likely exposure to the potential for foreign-exchange volatility.
The company raised funding solely denominated in U.S. dollars,
but its sales are mainly a mixture of U.S. dollars and euros.

That said, S&P anticipates that Avast's free cash flow conversion
will remain high over the medium term -- helped by upfront
license payments as the company continues to expand its premium
subscriber base -- and very limited capital expenditure (capex)
requirements. S&P views its forecast ratio of free operating cash
flow to debt of over 20% as a key strength for the company's
financial risk profile, more than offsetting its currency

S&P's base-case operating scenario for Avast assumes:

   -- GDP growth of 0.9% in the eurozone and 2.75% in the U.S. in

   -- A continued shift in demand for smartphones and tablets
      away from PCs over 2014-2015, leading to declining PC user
      growth rates;

   -- Subscription revenue growth of about 20% in 2014.  S&P
      anticipates that this will decline to 8%-12% in 2015,
      reflecting the continued increase in the conversion of
      free-to-premium users, notably owing to automatic renewals
      in 2014, and modest growth in the average revenue per user
      rate, due to higher rates of renewals and the cross-selling
      of new products.

   -- Continued, if slower, growth from the platform division, as
      S&P assumes revenues from new products (notably
      advertising-based revenue shares) will be largely offset by
      declining revenues from Google Chrome.

   -- An increase in operating expenditure on account of
      investments in new products, leading to a decline in EBITDA
      margins to 62%-65%, from about 70% in 2013.

   -- A stable maintenance capex-to-sales ratio of 2%-3%.

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

   -- Funds from operations (FFO) to debt of 14.5% at year-end
      2013 including the recent issuance, increasing to about 17%
      in 2014 and 18%-22% in 2015;

   -- Debt to EBITDA of 4.2x at year-end 2013 including the
      recent issuance, declining to about 3.6x in 2014 and 3.0x-
      3.5x in 2015; and

   -- Adjusted EBITDA interest coverage of more than 5.0x in

   -- Adjusted free operating cash flow (FOCF) to debt of about
      24% in 2014.

The stable outlook reflects S&P's view that growth in antivirus
licenses and revenues from cross-selling products should support
continued near-term EBITDA growth, and enable Avast to maintain
leverage well below 4.5x.

S&P does not expect to raise the rating over the next 12 months.
This is based on S&P's view that Avast's business risk profile
will likely remain in the "weak" category, due to the company's
narrow product focus.  The prospect of an upgrade is also
constrained by the company's significant financial sponsor
ownership and potentially shareholder-friendly financial
policies, which will, in S&P's view, impede sustainable

S&P does not expect to lower the rating in the near term, given
its expectations of continued organic revenue growth and
relatively solid credit ratios for the rating, including adjusted
leverage of around 4x and FOCF to debt in excess of 20%.

Although unlikely at this stage, S&P could lower the rating if
operating underperformance leads to an increase in adjusted
leverage to more than 4.5x and causes FOCF to debt to decline to
less than 10%.

TDR BIKES: Faces Bankruptcy Following Production Problems
Jack Oortwijn at Bike Europe reports that the management of TDR
Bikes BV announced its bankruptcy on Monday.

"Plagued by first production run problems as well as quality
problems with components from suppliers, including electronics,
TDR could only start delivery at the end of 2012.  Because of the
bad spring weather the 2013 season really only commenced in June.
That meant that the sales numbers required for a good foundation
of the young company, could not be reached," Bike Europe quotes a
company press release as saying.

By the end of 2013, the bankruptcy of its major electronics
supplier Betronic Solutions BV in Amsterdam also created a major
problem for TDR Bikes BV, Bike Europe relates.

In the past nine months, market parties were approached to
investigate the possibility for cooperation and/or acquisition,
Bike Europe relays.  Despite a benevolent attitude of the ING
Bank, a limited number of creditors and the fact that the
Participation Agency East Netherlands (PPM) was ready to
participate for 50%, the other required 50% could not be raised
from the market at short notice, Bike Europe notes.

TDR Bikes BV is based in The Netherlands.


CYFROWY POLSAT: Moody's Lowers CFR to 'Ba3'; Outlook Stable
Moody's Investors Service has downgraded Cyfrowy Polsat S.A.'s
(Polsat) Corporate Family Rating (CFR) to Ba3 from Ba2 and
Probability of Default Rating (PDR) to Ba3-PD from Ba2-PD. The
outlook is stable.

This rating action concludes the review process that was
initiated on November 19, 2013 following the announcement that
Polsat had agreed to acquire Metelem Holding Company Limited, the
ultimate parent of Eileme 2 AB (publ) (Polkomtel Ba3 stable).

Ratings Rationale

Polsat's Ba3 reflects (i) the company's strong positions in both
its free to air and Pay TV segments; (ii) the company's good
liquidity with an extended maturity profile and positive free
cash flow generation (FCF/Debt of 11.4% in 2013 pro-forma the
combined group); (iii) the increased scale of the combined group.

The Ba3 rating also reflects (i) the substantial increase in
Polsat's leverage following the acquisition with Moody's adjusted
Debt/EBITDA expected to exceed 4.0x at the end of 2014; (ii) the
challenging competitive environment of the Polish telecom
industry; (iii) the combined group's exposure to foreign currency
fluctuations as part of its debt is held in foreign currency
while most of its revenues are generated in domestic currency;
(iv) the complexity of the combined group's capital structure
with Polkomtel remaining a separate ring-fenced entity from which
Polsat will be unable to derive cash flows before 2016 at the

As part of its acquisition of Polkomtel, Polsat has recently
refinanced its outstanding bank debt and high-yield notes through
new senior facilities comprising of term loans in the amount of
PLN2.5 billion maturing April 2019 and a new revolving credit
facility (RCF) of PLN500 million also maturing April 2019. Polsat
will use the increase in its standalone debt, together with some
of its own cash, to repay Polkomtel's PIK notes issued at Eileme
1 AB (publ).

Aside from the PIK notes, Moody's does not expect Polsat to seek
to refinance any other Polkomtel debt until 2016 as the non-call
periods of the mobile operator's notes make early refinancing
uneconomical . While Polsat's ratings will reflect the
consolidation of Polkomtel from Q2 2014, Moody's will also
continue to monitor the credit profile of the Polkomtel ring-
fenced group separately until the two companies are eventually
incorporated into the same financing structure. However, The
rating action reflects the anticipated integration of both
companies under one structure as will be reflected in the metrics
derived from the consolidated accounts which Polsat will produce
from Q2 2014 onward.

Through the acquisition of Polkomtel, Polsat will benefit from a
material increase in size, as well as potential ARPU growth
through an enlarged customer base, cross-selling and bundling.
The group should also benefit from cost synergies (IT,
procurement, customer service and back office) as well as some
financial synergies -- most of which coming from the PIK notes
refinancing and more to come once the capital structure is
simplified .

Polsat's liquidity is good, supported its long term maturity
profile, limited quarterly amortisation until 2019, and the
company's good free cash flow generation. Headroom under the
maintenance covenants for its new senior facilities is high at
around 45% at closing. Moody's assessment of Polsat's liquidity
also incorporates the expectation that the company will remain
prudent in its financial policy.

The stable outlook reflects the expectation that the combined
group's leverage will marginally decrease to below 4.0x in 2015
through scheduled amortization. The outlook also reflects our
expectation that the combined group will continue to have good
liquidity and be able to derive important synergies in the longer

What Could Change The Rating -- UP

Upward pressure on the rating is unlikely until the integration
of Polkomtel has been completed and both companies operate under
a unified debt pool. Upward pressure would require the group's
credit metrics to strengthen on a sustainable basis with adjusted
Debt / EBITDA below 3.5x and RCF/Debt above 20%.

What Could Change The Rating -- DOWN

Downward pressure on the rating could be exerted as a result of a
material weakening in the group's operating performance such that
Debt/EBITDA increases towards 4.5x. A weakening in the company's
liquidity profile (including a reduction in headroom under
financial covenants) could also exert downward pressure on the

The principal methodology used in this rating was the Global Pay
Television - Cable and Direct-to-Home Satellite Operators
published in April 2013 and Global Telecommunications Industry
published in December 2010. Other methodologies used include Loss
Given Default for Speculative-Grade Non-Financial Companies in
the U.S., Canada and EMEA published in June 2009.

EILEME 2 AB: Moody's Assigns 'Ba3' CFR; Outlook Stable
Moody's Investors Service assigned a Corporate Family Rating
(CFR) of Ba3 and a Probability of Default Rating (PDR) of Ba3-PD
to Eileme 2 AB (publ), an intermediate holding company that
indirectly owns 100% of Polkomtel Sp z o.o. (Polkomtel).
Concurrently, Moody's has withdrawn the B1 CFR and B1-PD PDR at
the Eileme 1 AB (publ) level.

Moody's has also upgraded to B2 from B3 the rating on the
EUR542.5 million and USD500 million senior subordinated notes due
in 2020 issued by Eileme 2 AB (publ), and to B3 from Caa1 the
rating on Eileme 1 AB (publ)'s USD201 million worth of payment-
in-kind (PIK) notes due in 2020. Moody's will withdraw the rating
on Eileme 1's PIK notes once they are repaid on May 30, 2014.

The outlook for all the ratings is stable.

This rating action concludes the review process that was
initiated on November 19, 2013 following the announcement that
Cyfrowy Polsat S.A. (Polsat) had agreed to acquire Metelem
Holding Company Limited, the ultimate parent of Polkomtel.

Moody's has reassigned the CFR within the group entities, from
Eileme 1 to Eileme 2, given that following the expected repayment
of the PIK notes, there will not be any rated debt at the Eileme
1 level. Eileme 2 will be the top company within the restricted
group that will report consolidated financial statements.

Ratings Rationale

"The Ba3 rating assigned to Eileme 2 is one notch above the B1
CFR that Moody's previously assigned to Eileme 1. The
differential primarily reflects the expectation that Polkomtel's
credit quality will be aligned with Polsat once Polkomtel's debt
is refinanced in 2016 within Polsat's financing structure", says
Iv n Palacios, a Moody's Vice President -- Senior Credit Officer.

"While Polkomtel's credit metrics will be initially weak for the
Ba3 rating category, Moody's give the company credit for (1) the
track record of debt reduction since the original rating
assignment in 2012; and (2) the potential business risk profile
benefits of its integration with Polsat", adds Mr. Palacios.

Over the past two years, Polkomtel has focused on free cash flow
generation and debt reduction. Polkomtel made a second PLN800
million voluntary prepayment of the senior facility in November
2013, after their first voluntary prepayment of PLN800 million in
December 2012. After these prepayments, Polkomtel's debt/EBITDA
(as adjusted by Moody's) for FY 2013 stood at 4.4x (from initial
leverage of 5.2x), while its RCF/debt ratio stood at 13%.

As part of the acquisition by Polsat, the group will be repaying
the PIK notes at the Eileme 1 level. However, this deleveraging
effect will not be visible at the Eileme 2 level, because the
intercompany PIK at Eileme 2 will not be repaid owing to
restrictions in the documentation and tax reasons.

The transaction has not affected any debt instruments of the
Polkomtel restricted group except for the PIK notes at Eileme 1
level. Aside from the PIK notes, Moody's assumes that Polsat will
not seek to refinance any other Polkomtel debt until 2016 as the
non-call periods of the mobile operator's notes make early
refinancing uneconomical. Therefore, Moody's will continue to
monitor the credit profile of the Polkomtel ring-fenced group
until the two companies are eventually incorporated into the same
financing structure.

The acquisition by Polsat has closed recently and the focus of
the combined group will be to achieve the expected synergies and
continue reducing debt. While the outcome of the 800MHz and
2.6GHz spectrum auction is unknown and could potentially lead to
a cash outflow for Polkomtel, Moody's derives comfort from the
company's current large cash balance (PLN1,448 million as of
December 2013).

Moody's also notes the potential benefits for Polkomtel's
business risk profile of its integration with Polsat. The
combined entity has exposure to two different business segments
(TV and mobile telephony), which are subject to different
dynamics. In addition, the combined entity will be able to market
its products to an enlarged customer base, and through cross-
selling and bundling, should benefit from ARPU growth and lower
churn. In addition, the group should benefit from cost synergies
(IT, procurement, customer service and back office) as well as
some financial synergies once the capital structure is

The Ba3 rating reflects (1) Polkomtel's mobile-centric business
model; (2) the challenging competitive environment in Poland; (3)
the group's exposure to foreign currency fluctuations, as around
one-third of its debt is denominated in foreign currency, while
most of its revenues are generated in the domestic currency; (4)
the complexity of the group's structure as a result of its
agreement with LTE Group to cooperate in the deployment of a
4G/LTE network; and (5) the uncertain outcome of the planned
800MHz and 2.6GHz spectrum auction in Poland.

However, more positively the Ba3 rating also reflects Polkomtel's
leading position in the Polish mobile market, its track record of
generating solid profitability and reducing debt, and the better
growth prospects of the Polish market within the broader European
context. In addition, the Ba3 rating reflects (1) the potential
benefits from its integration with Polsat; (2) its strong
liquidity profile, with higher-than-expected cash balances used
to prepay debt; and (3) its moderate leverage.

Rationale For Stable Outlook

The stable outlook factors in Polkomtel's credit metrics' initial
weak position for the rating category, although Moody's expects
that adjusted leverage will be below 4.2x and adjusted RCF/debt
above 15% by 2016.

The stable outlook reflects the fact that Polkomtel's credit
quality is converging with Polsat's.

What Could Change The Rating - Up

Upward pressure on the rating is unlikely until both Polkomtel
and Polsat operate under a unified debt pool. Upward pressure
would require Polkomtel's credit metrics to strengthen on a
sustainable basis with adjusted debt/EBITDA below 3.5x and
RCF/debt above 20%.

What Could Change The Rating - Down

Conversely, downward pressure could be exerted on the rating if
Polkomtel's operating performance weakens such that its adjusted
debt/EBITDA does not trend to below 4.2x and the group sustains
an RCF/adjusted debt ratio of below 15%. A weakening in the
company's liquidity profile (including a reduction in headroom
under financial covenants) could also exert downward pressure on
the rating.

Principal Methodology

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

Polkomtel Sp. z o.o., headquartered in Warsaw, is a Polish mobile
telecommunications operator. As of December 2013, the company was
the third mobile operator in terms of reported customers (after
Orange Polska S.A. and T-Mobile). In 2013, Polkomtel generated
PLN6.7 billion in revenues and PLN2.9 billion of EBITDA.


Standard & Poor's Ratings Services said it revised its outlook on
Portuguese subway operator Metropolitano de Lisboa E.P. (Metro)
to stable from negative and affirmed the 'BB' long-term issuer
credit rating on the company.

The rating action follows S&P's outlook revision on the Republic
of Portugal (unsolicited BB/Stable/B) on May 9, 2014.  S&P
equalizes its long-term rating on Metro with that on Portugal,
based on S&P's view of the "almost certain" likelihood that Metro
would receive timely and sufficient support from the Portuguese
government in the event of financial distress.

S&P regards Metro as a government-related entity (GRE) under its
criteria.  S&P bases its assessment of the likelihood of
government support on S&P's view of Metro's "critical" role and
"integral" link with Portugal, the company's 100% owner.

S&P believes Metro's role for Portugal is "critical."  In S&P's
opinion, 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 the capital markets during
the past 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.

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, at that time, the government did not
provide ongoing support to Metro to prevent the sharp
deterioration in its stand-alone credit profile (SACP).  S&P
considered that Metro's weakening SACP mirrored its weakening
role for the government.

However, since June 2011, the 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 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 consider that a default by Metro would have a critical impact
on the government, and it points to a strengthening of Metro's
role for the government.

S&P thinks that Metro has an "integral" link with the government.
S&P continues to see Metro as an extension of the Portuguese
government.  The government decides Metro's strategy, makes its
main budgetary decisions, and exercises very tight control over
the company.  The 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 poor financial
performance and its 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 any possible changes that could
alter our view of the company's creditworthiness.

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

S&P assign a 'cc' SACP to an issuer when it expects default to be
a virtual certainty, unless it receives extraordinary support
from a parent or government.  In Metro's case, S&P classifies
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.

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 S&P's assessment.

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 consider
that they have no impact on our rating on Metro.

S&P views Metro's liquidity as "very weak" based on the latest
information available to them.  In 2014, Metro must honor
approximately EUR245 million in debt service.  Its cash holdings
will likely near EUR13 million-EUR24 million monthly, by S&P's
estimate.  S&P expects positive nonfinancial cash flows of EUR10
million and government capital injections of roughly EUR241
million over 2014.

The stable outlook on Metro reflects that on Portugal.  S&P could
lower its long-term rating on Metro if it lowered its long-term
rating on Portugal.  Conversely, S&P could upgrade Metro if it
upgraded Portugal.

In addition, S&P could downgrade Metro if it revised downward its
view of the likelihood of extraordinary support from the
Portuguese government.  S&P currently views this as unlikely.

* Moody's Hikes Ratings of Portuguese Regional/Local Governments
Moody's Investors Service has upgraded by one notch the following
ratings of Portuguese regional and local governments: (1) the
City of Sintra upgraded to Ba2 from Ba3; (2) the Autonomous
Region of Azores upgraded to Ba3 from B1; and (3) the Autonomous
Region of Madeira upgraded to B2 from B3.

Concurrently, Moody's has placed these ratings on review for
further upgrade. In line with Moody's standard procedures, the
ratings review is expected to be concluded within 90 days, or as
soon as the review of the sovereign ratings is concluded.

Ratings Rationale

Rationale For Upgrades

The upgrades were prompted by Moody's one-notch upgrade of
Portugal's sovereign rating to Ba2 from Ba3 on 9 May 2014.

The upgrade of Portugal's government bond ratings has
implications for the ratings of regional and local governments
(RLGs) within the country given the close operational and
financial linkages between the central government and its RLGs.

City Of Sintra

Despite the city's sound operating margins and stable debt ratios
expected in 2014, the transfers Sintra receives from the central
government imply that its creditworthiness is constrained at the
Government of Portugal's rating level. As a result, Sintra's
rating has been upgraded by one notch in line with the upgrade of
the sovereign rating.

Autonomous Regions Of Azores And Madeira

The rating action on Azores and Madeira primarily reflects the
high support both regions continue to receive from the central
government, which ensures that their financial obligations are
met through loans from the Portuguese treasury if needed.

While both regions benefit from high levels of government
support, Moody's notes that the regions are ultimately
responsible for delivering fiscal consolidation. Combined with
their weak financial metrics, this fiscal autonomy is responsible
for the differential between the ratings of these regions and the
central government.

Azores's stronger fiscal position and its lower debt levels (net
direct and indirect debt of 237% of operating revenue at year-end
2013, versus Madeira's 409%, according to provisional figures)
justify a rating that exceeds Madeira's by two notches. Azores
did not require further government support since the EUR135
million state loan it contracted in August 2012, at the peak of
the euro area crisis. In contrast, the Portuguese Treasury (IGCP)
assumes Madeira's debt management and has provided the region
with EUR988.5 million in state loans over 2012-13. This is part
of a EUR1.5 billion loan agreement between Madeira and the
central government over the 2012-15 period, which includes a
fiscal adjustment program for the region. Madeira also contracted
a further EUR854.1 million in debt in 2013, with the central
government's guarantee, in order to repay commercial debt
accumulated in previous years.

Rationale For The Review For Upgrade

The placement on review for upgrade follows Moody's decision to
place Portugal's bond ratings on review for upgrade and reflects
the close linkages between RLGs and the central government. As a
result, if Moody's review of Portugal's sovereign ratings leads
to an upgrade, then this would likely have corresponding
implications for Portuguese RLGs. The review for upgrade is
expected to conclude with that initiated on the sovereign

What Could Change The Ratings Up/Down

An upgrade of the sovereign rating would put upward pressure on
Portuguese sub-sovereign ratings. In the case of the regions, an
easing in their financial pressures could also result in upward
pressure on the ratings.

In contrast, a downgrade of the sovereign rating, or any
indication of weakening government support in the case of the
regions, would likely lead to a downgrade in sub-sovereign
ratings. A relaxation in the regions' fiscal consolidation
efforts would put pressure on their ratings. In addition,
Sintra's rating could come under pressure if it departs from its
strategy of funding capex through its own-source income.

The sovereign action required the publication of this credit
rating action on a date that deviates from the previously
scheduled release date in the sovereign release calendar,
published on

Specific economic indicators as required by EU regulation are not
applicable for these entities.

On May 8, 2014, a rating committee was called to discuss the
rating of Madeira, Autonomous Region Of, Azores, Autonomous
Region Of and Sintra, City Of. The main points raised during the
discussion were: The systemic risk in which the issuers operate
has materially decreased.

* Moody's Takes Actions on 3 Portuguese Infrastructure Companies
Moody's Investors Service has announced that it has taken
multiple rating actions on the following infrastructure and
utility issuers domiciled in Portugal:

-- Brisa Concessao Rodoviaria S.A. (BCR): The Ba2 senior secured
    debt ratings and the (P)Ba2 rating on the EUR3 billion
    medium-term note (EMTN) programme of BCR were placed on
    review for upgrade.

-- Rede Ferroviaria Nacional - REFER, E.P.E. (REFER): The B1
    corporate family rating (CFR) and senior unsecured rating,
    the B1-PD probability of default rating (PDR) and the (P)B1
    EUR3 billion EMTN rating of REFER have been upgraded to Ba3,
    Ba3-PD and (P)Ba3, respectively. Concurrently, Moody's also
    upgraded from (P)Ba3 to (P)Ba2 the rating of REFER's EUR3
    billion EMTN program, which provides for the issuance of
    government-guaranteed notes, and from Ba3 to Ba2 the rating
    of government-guaranteed notes issued under the program. All
    ratings were placed under review for further upgrade.

-- Redes Energeticas Nacionais, SGPS, S.A. (REN): The Ba1 issuer
    and senior unsecured ratings of REN and its finance
    subsidiary REN Finance B.V. were placed on review for
    upgrade. Concurrently, Moody's also placed on review for
    upgrade the (P)Ba1 rating on their EUR5 billion EMTN program.

The actions follow Moody's recent decision to upgrade to Ba2 from
Ba3 the rating of the Republic of Portugal (RoP) and to leave the
rating on review for upgrade, as announced on 9 May 2014.

The Ba1 and (P)Ba1 ratings with negative outlook of Energias de
Portugal, S.A. (EDP), EDP Finance B.V. and Hidroelectrica del
Cantabrico, S.A. remain unchanged following the upgrade of the
sovereign rating.

Ratings Rationale

-- Brisa Concessao Rodoviaria S.A. (BRC)

Moody's decision to place BCR's ratings on review for upgrade was
triggered by the upgrade of the RoP's rating to Ba2 from Ba3,
coupled with the improvement in traffic trends on BCR's network,
which should support deleveraging of the company in the medium

Consistent with general macroeconomic trends, BCR reported an
increase in traffic on its network of 1.7% in the first quarter
of 2014, a significant improvement from a decline of 8.8%
recorded in the first quarter of the previous year. Organic
growth was stronger at 4.6%, although this was offset by the
negative effect of Easter falling in the second quarter of this
year versus the first quarter of 2013. These overall positive
traffic trends should help deleveraging as well as the
refinancing process of debt maturities in the medium term.

BCR's rating continues to reflect (1) the large size and
importance of its network for Portugal's transport system; (2)
the transparency of the concession and regulatory framework; (3)
the company's modest capital investment program, which should
support free cash flow generation; (4) the covenant package and
other creditor protections incorporated within BCR's debt
documentation; and (5) a policy of prudent financial management.
However, BCR's rating remains constrained by (1) the volatile
nature of traffic on BCR's network, which saw significant traffic
volume declines during the financial crisis; (2) high leverage;
(3) the risks of being based in Portugal.

The review for upgrade on BCR's rating will take into
consideration the improving business sentiment and the
strengthening financial profile of the company, in conjunction
with the assessment of its relative positioning versus the
sovereign rating.

  -- Rede Ferroviaria Nacional-refer, E.P.E. (refer)

The upgrade of REFER's ratings reflected the linkages between the
company and the RoP and the strengthened support that the
Portuguese government has provided to the company over the past
three years. REFER's standalone credit quality remains
exceptionally weak, but the government has continued to provide
loans or fresh capital to REFER in sufficient amounts to ensure
that the company can meet all of its debt obligations on a timely
basis. Such loans and capital injections are expected to continue
to be provided, thus enabling REFER to cover ongoing interest and
operating expenses as well as upcoming debt repayments.

Moody's continues to make a one-notch rating distinction between
REFER and the RoP, recognizing the residual risk, albeit small in
the rating agency's view, that the sovereign may not be able to
make payments in the future or that REFER's unguaranteed debt may
not be treated as part of government debt in any restructuring.
Absent such payments, REFER would likely have minimal value as a
standalone enterprise. REFER's guaranteed debt continues to be
rated at the same level of the RoP.

REFER's ratings were placed on review for upgrade. A further
upgrade of the rating of the RoP would likely result in an
upgrade of the ratings of REFER, with the one-notch differential
in respect of the company's CFR, PDR and unguaranteed debt
ratings expected to be maintained.

-- Redes Energeticas Nacionais, SGPS, S.A (REN)

Moody's placed the Ba1 and (P)Ba1 ratings of REN and its finance
subsidiary REN Finance on review for upgrade.

The rating review will take into account the (1) company's low
business risk profile associated with its electricity and gas
transmission activities, which generate virtually all earnings
under the relatively well established and transparent Portuguese
regulatory framework, and (2) benefits of its diversified
ownership (i.e., 25% owned by the State Grid Corporation of China
(Aa3 stable) and 15% by Oman Oil Company. This relationship has
facilitated the company's access to diversified funding sources
through various loans from Chinese banks. In addition, the
company has further improved its liquidity and extended its debt
maturity profile through recent bond issuances.

At the same time, the rating review will assess whether the
operating environment is likely to remain somewhat unpredictable
for REN, despite the improving macroeconomic environment, as
evidenced by the one-off charge levied on the company's assets as
part of a broader package of measures that affected the
electricity sector, under the state budget for 2014. This charge
will have a post-tax impact of EUR24.8 million in 2014. The
review will also factor in Moody's expectation that REN is likely
to remain fairly highly leveraged given its large investment
program. As of year-end 2013, the company achieved funds from
operations (FFO)/net debt of 10.9% and retained cash flow
(RCF)/net debt of 7.5%.

-- Energias de Portugal S.A. (EDP) and Subsidiaries

The Ba1 and (P)Ba1 ratings with negative outlook of EDP, EDP
Finance and Hidroelectrica del Cantabrico remain unchanged.

The current ratings take into account EDP's strategic position as
Portugal's largest utility, as well as the company's strong mix
of largely regulated businesses or generation under contract,
with limited exposure to volume or price risk and its geographic
diversification, with more than 50% of EBITDA emanating from
businesses outside of Portugal.

The negative outlook reflects the highly leveraged profile of the
company, given still high regulatory receivables of around EUR2.4
billion burdening debt, resulting in weak financial metrics of
FFO/net debt of 12.9% and RCF/net debt of 8.6% as of 2013,
against the current guidance for the Ba1 rating of trending
towards FFO/net debt in the mid-teens in percentage terms and
RCF/net debt in double digits.

EDP will shortly update its strategic plan for 2014-17 and
Moody's expects that the company will likely postpone its
original deleveraging target of net debt/EBITDA of 3.0x past the
original 2015 date, as initially signalled by the company in its
financial results presentation for 2013. Once the details of the
strategic plan are available, Moody's will weigh this possible
slower deleveraging against the potential benefits of (1) greater
visibility as to the company's medium-term plan; (2) an improved
macroeconomic environment as reflected in the recent sovereign
upgrade. The rating agency will consider whether this may lead to
greater visibility and a certain improvement in the operating
environment for EDP where it has suffered as a result of high
regulatory receivables and a series of cuts to earnings in both
Portugal (and Spain) due to government actions to reduce the
costs of the electricity sector; and (3) better market conditions
and lower financing costs for Portuguese issuers.


MAGNITOGORSK IRON: Fitch Affirms 'BB+' IDR; Outlook Negative
Fitch Ratings has affirmed Russia-based OJSC Magnitogorsk Iron &
Steel Works' (MMK) Long-term Issuer Default Rating (IDR) at
'BB+'. The Outlook is Negative.

The ratings reflect MMK's position as a leading supplier of steel
to the Russian market and as a producer of high value-added steel
products.  The Negative Outlook reflects the company's inability
to meet Fitch's leverage guidelines, despite efforts to reduce
debt in 2012.


Decreasing Leverage

MMK repaid USD535 million in 2012 and USD700 million in 2013 to
keep its elevated leverage under control.  Positive FCF also
contributed to a decline in funds from operations (FFO) adjusted
gross leverage to 3.2x at end-2013 from 3.5x at end-2011.  Fitch
expects MMK to continue generating positive FCF in 2014-2016, due
to a moderate capital spending program.  This will contribute to
a further decrease of FFO adjusted gross leverage to 2.7x by end-
2014 and to 2.1x by end-2015.

Reliance on Domestic Market

MMK has a 25%-100% market share in the Russia market for various
rolled steel products.  Up to 82% of the company's revenue and
84% of total sales volumes are generated in Russia and CIS,
resulting in concentration risk.

Although demand for steel products in Russia has been healthy,
driven by steel consumption in construction, pipe production and
automotive industries, it may weaken following deterioration in
the Russian economy over the last two quarters.  Nevertheless,
the lack of diversification is partly offset by the price premium
on domestic steel products (USD180/tonne on average in 2013).

Less Vertical Integration than Peers

MMK's lower vertical integration versus its peers has benefited
the company in the current weak market environment.  Falling
prices of major raw material, coking coal and iron ore mean raw
materials from suppliers become cheaper than the operating costs
of in-house suppliers (typically medium to high cash cost
producers).  MMK's slab cash costs have been declining over the
last two years, to USD356/tonne in 4Q13 from USD459/tonne in
4Q11, placing the company in the second quartile of the global
slab cost curve.

Major Investments Finalized

Following heavy investments over the past six years, the
company's capital expenditure declined to USD681 million in 2012
(from an average of USD1.7 billion per year in 2007-2011).  This
resulted in positive free cash flow (FCF) generation of USD224
million in 2013 for the first time since 2007.  Fitch expects MMK
to remain FCF positive (2014 forecast: USD435 million) over the
medium term.

Narrowed Losses in Turkey

MMK's Turkish division narrowed its operating losses to USD86
million in 2013, from USD190 million in 2012, following suspended
steel-making production.  It reported EBITDA of USD25 million in
2013 versus negative EBITDA of USD75 million in 2012.

Average Corporate Governance

Fitch assesses MMK's corporate governance as being in line with
other Russian corporates; the country's overall poor standards of
governance and lack of legal safeguards are constraints on the
ratings.  As a result Fitch has notched down MMK's ratings by two
notches, which is common for companies in Russia with similar
standalone profiles.


Acceptable Liquidity

The company's liquidity position is acceptable with USD154
million of cash on hand and USD1.7 billion of committed
unutilized bank loans at end-2013 compared with USD1 billion of
short-term borrowings.  Fitch also considers MMK's 5% stake in
Fortescue Metals Group Limited (BB+/Negative) as an additional
source of liquidity, if needed. Currently, MMK's stake is valued
at around USD840 million.


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

-- Evidence of deleveraging with FFO adjusted gross leverage
    falling towards 2.0x by end-2015, which would lead to the
    Outlook being revised to Stable.  FFO adjusted gross leverage
    below 1.5x would result in an upgrade
-- Positive FCF on a sustained basis
-- Sale of the FMG stake to reduce leverage
-- Continued improvement of corporate governance

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

-- Negative FCF on a sustained basis
-- FFO adjusted gross leverage sustainably above 2.5x

Full List of Rating Actions

Long-term foreign currency Issuer Default Rating: affirmed at
'BB+'; Outlook Negative

Long-term local currency Issuer Default Rating: affirmed at
'BB+'; Outlook Negative

Short-term foreign currency Issuer Default Rating: affirmed at

National Long-term Rating: affirmed at 'AA(rus)'

Senior unsecured foreign currency rating: affirmed at 'BB+'

MIRATORG LLC: Fitch Affirms 'B' IDR; Outlook Positive
Fitch Ratings has revised the Outlook on Russia-based
Agribusiness Holding Miratorg LLC's Long-Term Issuer Default
Rating (IDR) to Positive from Stable and affirmed the IDR at 'B'.
The National Long-term rating has been upgraded to 'BBB+(rus)'
from 'BBB(rus)'.

The revision of the Outlook to Positive reflects Fitch's
expectation that Miratorg's free cash flow (FCF) generation will
be positive and strong from 2015, leading to significant
deleveraging over the next three years.

The Positive Outlook also reflects Fitch's view of reduced cash
support from Miratorg for the unconsolidated poultry and beef
projects, as they become operational in 2014 and no longer
require substantial capex.  Fitch expects Miratorg will continue
to grow and achieve EBITDAR of around USD600 million by 2015
which, together with greater product diversity and improving
credit metrics, will be more commensurate with a higher rating.
In addition the Positive Outlook reflects Fitch's expectation
that the company will successfully refinance its short-term debt
maturing in 2014.


Weakening but Still Solid Profitability

Miratorg's Fitch-calculated EBITDA margin decreased to 30% in
2013 from 35% in 2012, as higher fodder prices and increased SG&A
(selling, general and administrative expenses), failed to be
passed on to customers due to falling prices in Russian meat
market.  Fitch expects Miratorg's gross margin to improve in 2014
due to stabilization of meat prices and cheaper input costs.
However, EBITDA margin may drop further to around 25% over
2014-2017, as the company starts to distribute beef and poultry
produced by related parties -- which are lower margin than
internally produced meat -- and incurs higher marketing,
advertising and transportation expenses for more value-added
products.  Nevertheless, Miratorg's EBITDAR profitability should
remain high relative to non-vertically integrated international

Vertically Integrated Business Model

Miratorg's business covers nearly the entire meat production
process -- from crop growing and fodder production to livestock
breeding, meat processing and product delivery.  This results in
lower business risks through control over the production cycle.
This advantage is, however, offset by limited diversification
outside of its core pork business.  However, Fitch positively
views Miratorg's ongoing diversification to high value-added
semi-finished goods in the longer term.

Lower Risks of Related-Party Projects

Although Miratorg has, over the last few years, made progress
towards simplifying its group structure, two other businesses --
poultry and beef -- are still outside of consolidation scope and
have been supported by Miratorg with cash and a guarantee on a
project finance basis (poultry only).  Contingent liabilities and
possible cash requirements of unconsolidated projects create
additional risks for Miratorg's operations.  However, these risks
are being reduced as these projects become operational in 2014
following heavy investments.

Lower Capex to Drive Deleveraging

Fitch expects Miratorg to cut capex substantially starting from
2015 as major investment projects are completed.  However,
working capital investments are likely to remain high in 2014 and
2015 to support new capacity additions.  Lower capex and reduced
cash support for off-balance-sheet projects would allow Miratorg
to generate FCF in at least the high-single digits from 2015
(including poultry).  Fitch therefore expects strong deleveraging
in 2015-2017, despite some shrinkage in the operating margin.

A positive rating action is predicated on Fitch's modelled FFO-
adjusted leverage falling to 1.5x by 2017 (2013: 5.3x).  However,
this calculation excludes the effect of debt and profits of
guaranteed but not consolidated projects.  Even after including
poultry, Fitch estimates FFO-adjusted leverage would only be 2.1x
by 2017.  These leverage metrics, if maintained, along with FFO
fixed charge cover likely to exceed 3.0x by 2017, would be
compatible with a higher rating which Fitch at present estimates
would not exceed by more than one notch.

Rollover of Major Short-term Maturities

At end-2013 Miratorg's cash, undrawn committed lines and expected
FCF were insufficient to cover RUB32.5bn short-term debt.
However, the major part of this debt is represented by maturing
working capital facilities, especially for its grain-growing
business, which are usually of one-year tenor.  Fitch expects
Miratorg to extend these facilities upon maturity due to its
strong and long-standing relationships with many state-owned
Russian banks.  Fitch notes that achieving and maintaining food
self-sufficiency remains a key objective of the Russian
government and Fitch expects that state support for agricultural
producers will be maintained.  Given the current weak bond market
environment, Fitch expects the RUB3bn bond maturing in July 2014
to be replaced with bank funding.


Positive: Future developments that could lead to an upgrade

-- Gross FFO adjusted leverage sustainably below 3.5x (excluding

-- FFO fixed charge cover above 3x

-- Evidence of positive FCF, diminishing cash support for off-
    balance-sheet projects and management's commitment to a
    conservative capital structure

-- Refinancing of short-term debt maturities at reasonable terms

Negative: Future developments that could lead to the Outlook
being revised to Stable include:

-- Lack of evidence of deleveraging in FY14 and higher-than-
    expected cash support for outstanding off-balance-sheet

Negative: Future developments that could lead to downgrade

-- Gross FFO adjusted leverage consistently toward 5x or worse
    (excluding poultry)

-- FFO fixed charge cover below 2x

-- FCF consistently negative driven by, for example, sustainable
    deterioration in EBITDA margin

-- Liquidity shortage caused by the limited availability of bank
    financing in relation to short-term maturities or refinancing
    at more onerous terms than expected

Full List of Rating Actions

Agri Business Holding Miratorg LLC

  Long-term foreign currency IDR: affirmed at 'B'; Outlook
  revised to Positive from Stable

  Long-term local currency IDR: affirmed at 'B'; Outlook revised
  to Positive from Stable

  National Long-term rating upgraded to 'BBB+(rus)' from
  'BBB(rus)'; Outlook revised to Positive from Stable

Miratorg Finance LLC

  Foreign currency senior unsecured rating: affirmed at 'B'/'RR4'

  Local currency senior unsecured debt: upgraded to 'BBB+(rus)'
  from 'BBB(rus)'

RSG INTERNATIONAL: S&P Affirms 'B-' CCR; Outlook Stable
Standard & Poor's Ratings Services affirmed its 'B-' long-term
corporate credit ratings and 'ruBBB' Russia national scale
ratings on Russia-based property developer RSG International Ltd.
(RSG; brand name Kortros) and its finance vehicle and 100%
subsidiary RSG Finance LLC.  The outlook on both companies is

At the same time, S&P assigned its 'B-' issue and '4' recovery
ratings to the Russian ruble (RUB) 3 billion senior unsecured
notes due in November 2016, issued by financing vehicle RSG
Finance LLC.

In addition, S&P affirmed its 'B-' long-term corporate credit
rating on Energy Generating Company OJSC, an engineering
subsidiary of RSG International Ltd.  S&P subsequently withdrew
the rating.

The outlook on Energy Generating Company at the time of the
withdrawal was stable and the company had no rated debt.

The rating affirmation reflects S&P's assessment of RSG's
financial risk profile as "highly leveraged" and its business
risk profile as "weak."  S&P is raising its anchor rating to 'b'
from 'b-' and applying a one-notch negative capital structure
modifier to the anchor.

"Our assessment of RSG's "highly leveraged" financial risk
profile is based on our projection of around US$170 million of
negative free cash flow generation for 2014.  This is due to the
low level of project completions expected to be delivered in 2014
and on a large working capital expansion with a rising level of
new projects in construction.  That said, we forecast a rebound
in free cash flow generation in 2015, as more projects are
completed. We note that over the past three years free cash flow
generation has been mostly negative, due to the company's
expansion into new residential development projects," S&P said.

"We understand that RSG's largest developments are currently on
time and within budget but we have factored very limited cash
inflow from pre-sales and higher borrowings costs into our
projections.  We anticipate stable debt levels at around US$400
million in 2014-2015, mostly from drawings under the project-
specific credit lines.  We think that management will maintain
the historical mix of debt and equity as it enters new
development projects, with larger projects (master plan
developments) likely to require a material new equity inflow into
the company in order for the funding to be feasible," S&P added.

"In our opinion, RSG's business risk profile is "weak."  This
reflects our view of the company's exposure to the "high" country
risk of operating in Russia and the "moderately high" industry
risk associated with property development.  We view high-rise
developers as highly cyclical companies with large and volatile
working capital requirements. Revenue growth prospects for new
economy-class apartments are supported by external factors such
as rising population in the largest cities like Moscow region and
Yekaterinburg, continued wage growth, and low unemployment
levels. However, competing residential projects in these markets
will significantly increase supply.  Also, given the slowdown in
the Russian economy and its impact on mortgage rates and consumer
confidence, we are now more cautious about the sustainability of
demand levels over the next quarters," S&P noted.

RSG's competitive position is "weak," under S&P's criteria.  This
reflects the company's relatively large size in Russia in the
residential property segment, although its unit sales volume and
EBITDA base remain average relative to rated international peers.
S&P views positively its high market share in large but secondary
cities, like Yekaterinburg; the increasing size and diversity of
projects; and the growing exposure to the large Moscow region.
RSG has a track record of delivering on time and budget large-
scale and complex projects like the two phases of Akademy City.
The fixed-price structure of the contracting agreements, allows
RSG to potentially put a stop to construction works quickly,
should demand drop and if buildings are less than 50% built.
Additional strengths include the current low level of land
purchase commitments and profitability metrics that remain in
line with industry averages.  That said, there is likely to be
some volatility year-on-year due to the timing of the different
project completions.

Negative factors include the still-high income concentration from
one very large project, Akademy City, which should account for
almost half of completions in 2014; and the high level of
competition and difficulty to secure planning permission in
Moscow and St Petersburg.  This affects the prices of new land
and the length of the development process.  Furthermore, the lack
of a track record in delivering profitable projects in the Moscow
region and the relatively narrow range of products offered
(mostly small to midsize economy-class apartments) present
challenges. However, these projects do tend to appeal to a large
segment of middle-income earners.  Finally, RSG's limited brand
recognition and modest sales network in Russia weigh on S&P's
assessment of the company's competitive position.

S&P's base-case scenario for RSG for 2014 assumes:

   -- Revenues from sales of properties of around US$500 million.

   -- An EBITDA margin of around 15%, lower than in 2013, due to
      a higher share of lower margin projects being delivered in
      2014 and increasing marketing and selling costs.

   -- An average cost of debt of around 12%-13%, rising through
      the year as S&P assumes higher incremental borrowing costs
      on new debt.

Based on these assumptions, S&P arrives at the following credit
metrics in 2014:

   -- EBITDA of around US$70 million-US$80 million.

   -- Negative free operating cash flow of around US$170 million.

   -- Total adjusted debt of around $400 million.

   -- EBITDA interest coverage of around 1.3x.

   -- Debt to EBITDA of slightly above 5x, calculated on a gross
      debt basis given RSG's "weak" business profile and the
      "high" country risk score for Russia.

S&P assess the company's capital structure as negative; the
average debt maturity profile has dropped to slightly less than
two years.  Given S&P's view that the funding conditions for
Russian property developers could be more difficult in the coming
quarters, especially for longer-dated debt, S&P believes that
refinancing risks have increased for RSG.

S&P assess RSG as a "nonstrategic" subsidiary of Renova Group,
mainly given that RSG accounts for less than 10% of total net
investment assets held by Renova Group.  S&P also believes that a
material expansion in property development is not a long-term
strategic goal of Renova Group.  Consequently, S&P continues to
rate RSG on a purely stand-alone basis.  S&P rates RSG Finance
LLC as one and the same with RSG, given that RSG Finance LLC acts
as its parent company's primary public debt issuance vehicle.

The stable outlook on RSG reflects S&P's opinion that despite its
projection of significant negative free cash flow in 2014 due to
rising investments in development projects, the company should
nevertheless be able to maintain a ratio of EBITDA to interest of
over 1.0x and a debt-to-capital ratio of below 60%, compatible
with the current rating.

"Our assumption for 2014 is of lower revenues owing to fewer
completions.  We consider that margins are we likely to trend
lower due to a change in the project mix, with a higher share of
lower-margin sales in the 2014 revenue mix.  We think that
working capital needs should increase this year due to larger
developments undertaken in the Moscow region.  We expect debt
levels to remain stable as the company will likely maintain
historical levels of debt and equity in its funding mix for new
projects," S&P said.

The stable outlook on subsidiary RSG Finance reflects the stable
outlook on RSG.  S&P expects the ratings on RSG Finance to change
in line with the ratings on RSG as long as support between the
parent and subsidiary companies remains unchanged.

S&P could lower the ratings if RSG does not manage its liquidity
position adequately to cover large working capital needs and debt
maturities due in the next 12 months.  This would likely stem
from a sharp fall in demand in RSG's major regions of operation,
leading to a sharp fall in apartment prices.  Such events would
likely force RSG to shelve projects and focus on releasing cash
from sales of completed properties to cover immediate liquidity
needs.  Such levels of near-term market volatility are not part
of our central scenario, though.

S&P also could lower the rating on RSG Finance LLC if it engages
in activity without sufficient collateral from RSG.

S&P could raise the ratings if it sees improving positive free
cash flow generation supported by a rising level of project
completions across RSG's portfolio.  S&P would also view
positively a higher share of projects delivered successfully in
profitable and large markets adjacent to Moscow and in St
Petersburg in the context of overall rising profitability within
RSG.  S&P would consider a ratio of EBITDA to interest in the
1.5x-2.0x range to be compatible with a higher credit rating for

SEVERSTAL OAO: Fitch Raises Issuer Default Rating to 'BB+'
Fitch Ratings has upgraded Russian steel company OAO Severstal's
Long-term Issuer Default Rating (IDR) to 'BB+' from 'BB'.  The
Outlook is Stable.

The upgrade reflects improvement of the company's profitability
following gains in production efficiencies and successful


Improvement in Profitability

Severstal has been successful in improving its production
efficiency, which boosted profitability in the final quarters of
2013 despite a weak market environment.  EBITDA margin increased
to 18% in 4Q13 and 17% in 3Q13, from 14% in 2Q13 and 13% in 1Q13.
Fitch believes the company has room for further efficiency
improvement and expects EBIDTA margin to improve to 16%-17% in
2014-2016, from 15.3% in 2013.

Most of the efficiency improvements came from the mining
business. In particular, at Vorkutaugol (Severstal's coal mining
asset) the company commissioned gas-reciprocating power plants
running on methane (a coal by- product), which substantially
improved the heat and energy efficiency of coal beneficiation

Further Deleveraging

Severstal reduced its total debt by approximately USD1 billion in
2013 and is committed to further deleveraging.  The company
remained free cash flow-positive in 2013 (USD157 million), which
Fitch expects to continue with a more conservative capital
spending program.  This should result in further deleveraging.
Funds from operations (FFO) adjusted gross leverage declined to
2.49x in 2013 from 2.87x at end-2012 and is expected to fall to
2.2x by end-2014.

Restructuring Benefits

Severstal has retained its only two profitable overseas plants in
the US (Dearborn and Columbus), following divestment of its loss-
making facilities (three in the US and one in Italy).  Both
plants have recently been modernized to satisfy the needs of its
vast customer base ranging from automotive, pipe and tube
producers, to construction, and to appliance and furniture
producers.  In 2013 Severstal's North America division generated
USD50 million of EBIT versus a small loss in 2010.

Solid Business Profile

Severstal is one of Russia's most vertically integrated companies
with a balanced product mix and strong geographical
diversification.  The company benefits from almost full self-
sufficiency in iron ore and is more than self-sufficient in
coking coal.  Its mining assets are located close to its main
steel production sites and are among the lowest cash cost
producers globally.  Severstal is one of the leading Russian
steel producers by its share of high value added products in
total sales (48%). This, along with vertical integration, allows
Severstal to enjoy above-average profitability (USD136 of
EBITDA/tonne in 2013 versus USD116/tonne for the industry).

Average Corporate Governance

Fitch assesses Severstal's corporate governance as average
compared with other Russian corporates; the country's overall
poor standards of governance and lack of legal safeguards are
constraints on the ratings.  As a result Fitch has notched down
the company's ratings by two levels.


Severstal's liquidity position is strong with USD1bn of cash in
hand and USD1.5 billion of undrawn committed bank facilities
compared with only USD0.6 billion of short-term borrowings at


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

- Improvement in the Russian business environment
- Positive FCF on a sustained basis
- FFO-adjusted gross leverage below 1.5x
- Corporate governance improvement

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

- EBITDAR margin below 16% on a sustained basis
- Failure to deleverage in line with Fitch's expectations
   resulting in FFO leverage above 2.5x.


OAO Severstal

Long-term foreign currency Issuer Default Rating: upgraded to
  'BB+' from 'BB'; Outlook Stable

Long-term local currency Issuer Default Rating: upgraded to
  'BB+' from 'BB'; Outlook Stable
Short-term foreign currency Issuer Default Rating: affirmed at
National Long-term rating: upgraded to 'AA(rus)' from 'AA-
  (rus)'; Outlook Stable

LPNs issued by Steel Capital SA

  Senior unsecured foreign currency rating: upgraded to 'BB+'
  from 'BB'


PESCANOVA SA: Damm, Luxempart Representatives Leave Board
Undercurrent News reports that the representatives of Damm and
Luxempart, Jose Carceller Arce and Francois Tesch, have resigned
from the board of Pescanova SA.

Their resignation was expected following creditor banks' support
for their own rescue plan for Pescanova, the report says.

The report relates that the resignation follows the failure of
Damm and Luxempart to win creditor support for their own rescue
plan for the Spanish multinational firm, which has been in
insolvency proceedings since March 1 last year, filing for
voluntary insolvency on April 5.

Instead, bank creditors chose to support a plan put forward by
themselves, effectively, the report notes.

Undercurrent News relates that although the plan gives control of
the company to the banks, the group will remain under the
administration of Deloitte until September.

Pescanova's bankruptcy administrator Deloitte announced Tesch's
and Carceller's departure on May 12, Undercurrent News says.

"The board expresses its appreciation and gratitude for
[Carceller's and Tesch'] effort, interest and dedication in
searching for solutions for the viability of Pescanova," said
Deloitte in its notice to the Spanish securities regulator CNMV,
according to Undercurrent News.

That plan from the banks is broadly similar to the plan put
forward by Damm and Luxempart, with the distinction that banks
will take control of the group, while leaving Damm and Luxempart
out, the report states.

Also, while Damm worked hard to keep Pescanova's aquaculture
business -- identified by Deloitte as key to Pescanova's
viability -- and did everything to prevent a sale of the
company's Chilean activities, the banks have sent a different
signal, the report says. None of the EUR125 million capital
injection will be spent on the farms, it said, with priority
instead to be given to the Spanish activities, according to the

Banks are deliberating whether to appoint an industrial partner
for Pescanova with Iberconsa, Fandicosta and Rianxeira rumored as
potential candidates in Spanish media or an external CEO, a
financial source told Undercurrent News on May 2.

Iberconsa -- a big player in shrimp and squid in Argentina -- was
recently named as a possible industrial partner for Pescanova,
while Deloitte's partner Senen Touza, was also roumored as
possible CEO, Undercurrent News discloses.

U N I T E D   K I N G D O M

BRIGHTHOUSE GROUP: S&P Affirms 'B-' CCR; Outlook Positive
Standard & Poor's Ratings Services revised its outlook on U.K.-
based rent-to-own retailer BrightHouse to positive from stable,
and affirmed its 'B-' long-term corporate credit rating on the

At the same time, S&P affirmed its 'B-' issue rating on
BrightHouse's GBP220 million senior secured notes.  The recovery
rating on these notes is '3', indicating S&P's expectation of
meaningful (50%-70%) recovery prospects in the event of a payment

The outlook revision reflects S&P's expectation that BrightHouse
should be able to maintain its solid operating performance,
improve its free cash flow generation profile, and enhance its
credit metrics.  S&P also factors in its assumption that the
company should be able to cope with regulatory pressure over the
next couple of years.

"Our assessment of BrightHouse's "highly leveraged" financial
risk profile is constrained by its sizable debt and limited free
operating cash flow (FOCF).  We calculate Standard & Poor's-
adjusted debt to EBITDA at 4.9x and EBITDA to interest at 2.3x at
March 31, 2014.  High capital expenditure (capex) is constraining
FOCF generation, which in our opinion reflects not only the
company's expansion strategy but also the capital intensity of
its business model.  BrightHouse invests in its store portfolio
and in rental assets, which absorb roughly one-half of its
revenues.  This feature is exacerbated by the fact that new
stores reach their full potential only after several years of
operations," S&P said.

Consequently, future improvements in credit metrics rely almost
exclusively on improvements in EBITDA.  S&P forecasts that
BrightHouse's adjusted debt to EBITDA should decline to
approximately 4.7x by March 31, 2015, with slightly negative FOCF
as the group's investment program will absorb the bulk of its
cash flow from operations.

"Our assessment of BrightHouse's business risk profile as "weak"
reflects our view that the company operates in a small and niche
market.  Traditional retailers could pose a threat, although
barriers to entry exist. BrightHouse's lack of geographic
diversity somewhat exacerbates these risks; the company only
operates in the U.K. On the positive side, the rent-to-own
industry benefits from growth drivers that partly protect it from
economic downturns.  This can be seen in BrightHouse positing
strong revenue growth, both on a reported and on a like-for-like
basis, despite the current difficult U.K. retail environment.
Profitability at BrightHouse has also been above average by
industry standards," S&P said.

Given that the company's primary focus is on rent-to-own
transactions geared toward customers lacking strong credit
histories, careful control of the loan portfolio (which displayed
a bad debt charge of approximately 8% last year), is also a key
risk to manage.  Also, while the industry is displaying
significant growth characteristics, so far, continuing growth has
required a supportive regulatory environment.  Any decision made
by the Financial Conduct Authority, which regulates the consumer
credit market, would therefore be crucial for the company.

S&P has revised upward its GDP projection for the U.K. on faster
growth momentum than we had previously anticipated.  S&P now
projects 2.7% GDP growth for this year (2.3% in S&P's December
forecast) and 2.4% for 2015 (previously 2.0%).  So far, consumer
demand, up by 2.4% last year, is essentially driving this

Against this macroeconomic backdrop, S&P's assumptions for
BrightHouse in the financial year-ending March 2015 include:

   -- Mid-single-digit revenue growth supported by stable like-
      for-like sales and new store openings.

   -- A constant EBITDA margin due to the company's focus on
      improving operating efficiency.

   -- A working capital outflow of about GBP25 million due to
      growth of rental assets and initial cash outflows related
      to selling insurance and service cover in one package.

   -- Capex of about GBP10 million.

Based on these assumptions, S&P arrives at the following credit
measures for financial 2015:

   -- Adjusted debt to EBITDA of about 4.7x;

   -- FFO to debt of about 13%; and

   -- Slightly negative FOCF.

CFS FURNITURE: Directors Banned After Bankruptcy Rules Breach
Martin Muldowney, and Roger John Hallas, directors of Oldham-
based CFS Furniture Ltd, which went into liquidation in January
2012, owing more than GBP1 million to creditors, have been
disqualified for a total of 16 years; Mr. Muldowney, for acting
as a director while an undischarged bankrupt and Mr. Hallas for
allowing him to do so.

The disqualifications follow an investigation by the Insolvency

The Secretary of State for Business, Innovation & Skills has
accepted undertakings from both men, banning them from acting as
a company director or from managing or in any way controlling a
company for the duration of their bans:

   * Mr. Muldowney, of Littleborogh, Oldham, for 11 years
     from April 24 until 2025, and.

   * Mr. Hallas, 63, from Disley, for five years from
     December 11, 2013

Commenting on the disqualifications, Robert Clarke, Head of
Insolvent Investigations North at the Insolvency Service, said:

"The bankruptcy restrictions provided for by legislation are
there to protect the public and ensure that trading partners can
deal confidently with the registered directors of a company.
Those who knowingly breach such provisions do so at significant
risk and will be rigorously pursued by the Insolvency Service.

"In this particular case, not only did the directors of CFS act
in a less than transparent manner, but their actions caused
considerable losses to be suffered by a trade partner who, after
already paying for orders, had to refund their customers for
purchases which were never delivered. Those losses, and the
losses of other parties, were then compounded by the unfair
distribution of the company's cash and other assets, favouring a
connected company in a manner entirely unacceptable.

"Mr. Muldowney and Mr. Hallas have paid the price for their
conduct, and cannot now carry on in business other than at their
own risk for lengthy periods of time."

Investigators found that Mr. Muldowney, 49, who formally resigned
as a director of CFS on Feb. 2, 2011, after being made bankrupt,
breached the restrictions placed on him by continuing to act as a
director of the company between May 2011 and January 2012.

In addition to breaching the terms of his bankruptcy,
Mr. Muldowney did not dispute that CFS received payments
totalling GBP162,752 to which it was not entitled from a 'daily
deals' website company and also transferred cash and assets
totalling more than GBP150,000 to a supplier company of which his
wife was the sole director when other creditors went unpaid.

CO-OPERATIVE GROUP: Vote on Radical Reform Vital, Chair Says
Andrew Bounds at The Financial Times reports that
Ursula Lidbetter, the chairman of the struggling Co-operative
Group, said she would be "very concerned" about the reaction of
its lenders if members reject reforms to its governance this

Ms. Lidbetter, as cited by the FT, said the mutual's bankers and
90,000 employees expected "radical change" quickly.  She told the
group's website that approving four broad principles of reform at
a meeting on Saturday was vital, the FT relates.

Around 100 elected members, along with more than a dozen
independent co-operatives, are to vote in Manchester on whether
to change the way the food-to-insurance group is governed, the FT

Lord Myners, the former City minister, published a scathing
review last week calling for the "dysfunctional" lay member board
to be replaced by one of about 10 professionals, overseen by an
elected membership council to set values and ethics, the FT

Lord Myners is stepping down on Saturday after just five months
because of opposition to his plans, the FT says.

Lord Myners blamed an unqualified and unwieldy 20-strong board
for running up losses of GBP2.5 billion in 2013 and debt of
GBP1.4 billion at the group, which spans food stores, funeral
parlors and insurance, the FT notes.

Co-operative Group is a mutually owned food-to-funerals
conglomerate.  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.

MISSOURI TOPCO: Moody's Affirms 'B3' Corporate Family Rating
Moody's Investors Service has affirmed the corporate family
rating (CFR) and probability of default rating (PDR) of Missouri
TopCo Limited (Matalan) at B3 and B3-PD respectively.
Concurrently, Moody's has assigned a (P)B2 rating to the GBP342
million Senior Secured Notes due 2019 and a (P)Caa2 rating to the
GBP150 million Second Lien Notes due 2020, both to be issued by
Matalan Finance plc. The outlook on all ratings remains stable.

Ratings Rationale

Matalan's B3 CFR primarily reflects the company's: (1) small
scale compared with some rated peers; (2) limited geographic
scope; and (3) weaker profitability and cash generation since
late 2010. "The company's operational performance has been
impacted by execution issues in an economic environment in which
cash-strapped consumers have sought to maximize both value for
money and quality, and have many choices available to them in the
UK's highly competitive apparel industry" said David Beadle, a
Moody's Vice President and lead analyst for Matalan.

Matalan's key financial metrics such as like-for-like sales,
markdown levels and margins have remained under pressure over the
past year, which resulted in downward revisions to their full
year profitability expectations. Furthermore, free cash flow
generation turned negative in FY14 as a result of significant
investments in its supply chain. These factors have contributed
to Matalan's credit metrics remaining weak with Moody's adjusted
leverage ratio of 6.5x at the 1st March 2014 year end and
Retained Cash Flow to Net Debt falling to 8.9% from 9.5% a year

More positively, the rating reflects: (1) Matalan's position as
one of the leading value clothing retailers in the UK, with a
diversified product range and sizeable active customer base; (2)
relatively stable revenues and profitability; and (3) ongoing
commercial and strategic initiatives designed to support
improvements in sales growth and in the supply chain. Moody's
believes that these initiatives have the potential to enhance the
company's profitability through lower mark downs and therefore
drive a gradual improvement in the company's earnings, leading to
a reduction in leverage.

With the major investment project in its supply chain nearing
completion, Matalan's capex will reduce somewhat this year from
GBP57 million in FY14, although it will likely remain markedly
higher than historical norms. Moody's expects free cash flow to
be positive in 2014.

The company began the financial year with a GBP72 million cash
balance. Matalan's liquidity is further supported by the
availability of a super senior RCF the size of which is,
contemporaneously with the bond refinancing, being increased from
GBP30 million to GBP50 million (and maturity extended to 2019).
Historic drawings have been for letters of credit and guarantees
totaling up to near GBP15 million. Going forward, this RCF will
include one financial covenant against which there is currently
material headroom; the financial covenant only applies if
utilization of the RCF exceeds 35%. The company also has no near-
term debt maturities or amortizing debt.

The (P)B2 rating on the Senior Secured Notes, one notch above the
CFR, reflects the uplift provided by the Second Lien Notes. These
in turn are rated at (P)Caa2, 2 notches below the CFR, reflecting
the considerable prior ranking debt.

The stable outlook on the ratings reflects Moody's expectation
that: (1) Matalan's operating performance will not weaken further
and that the company will be successful implementing its ongoing
commercial initiatives to improve the shopping experience and
reduce markdowns; and (2) the company will preserve some
liquidity cushion, as evidenced by a sizable cash balance and
headroom under its financial covenants.

Positive rating pressure could develop if there were a
sustainable improvement in Matalan's earnings trend and if its
debt/EBITDA ratio were to fall below 6.0x, combined with an
improved liquidity profile.

Negative pressure could be exerted on Matalan's ratings if: (1)
it were to report a weakening in profitability; (2) free cash
flow were to turn negative for a prolonged period of time; or (3)
its liquidity were to weaken, as a result for example, of the
company not retaining access to its RCF or a tightening of its
covenant headroom.

Principal Methodology

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

Corporate Profile

Headquartered in Skelmersdale, UK, Missouri TopCo Limited is the
ultimate holding company that owns Matalan Retail Limited -- the
principal operating subsidiary of the group -- a leading out-of-
town value clothing retailer with total revenue of GBP1.1 billion
in the financial year ending 1 March 2014.

MISSOURI TOPCO: S&P Affirms 'B-' CCR; Outlook Negative
Standard & Poor's Rating Services said that it affirmed its 'B-'
long-term corporate credit rating on U.K. apparel retailer
Missouri Topco Ltd. (Matalan).  The outlook is negative.

"In addition, we affirmed our 'B' issue rating on the GBP250
million senior secured notes and 'CCC' issue rating on the GBP225
million senior unsecured notes issued by Matalan Finance Ltd.
The recovery rating on the senior secured notes is unchanged at
'2', reflecting our expectation of substantial (70%-90%) recovery
prospects, and that on the unsecured notes is unchanged at '6',
reflecting our expectation of negligible (0%-10%) recovery
prospects in the event of a payment default." S&P said.

At the same time, S&P assigned its 'B-' issue rating to the
proposed GBP342 million senior secured notes to be issued by
Matalan Finance.  The recovery rating on these notes is '3',
reflecting S&P's expectation of meaningful (50%-70%) recovery for
senior secured noteholders in the event of a default.

Finally, S&P assigned its 'CCC' issue rating to the proposed
GBP150 million second-lien notes to be issued by Matalan Finance.
The recovery rating on these notes is '6, reflecting S&P's
expectation of negligible (0%-10%) recovery prospects in the
event of a default.

The affirmation reflects Matalan's proactive refinancing of its
revolving credit facility (RCF) and existing notes, which will
improve headroom under its RCF covenants, lower its interest
costs, and extend its debt maturity profile.  On completion of
the proposed refinancing, S&P is likely to revise the outlook to
stable and its assessment of Matalan's liquidity position upward
to "adequate" from "less than adequate."

The long-term rating on Matalan is based on S&P's 'b-' anchor,
which in turn reflects its assessment of the company's "weak"
business risk profile and "highly leveraged" financial risk
profile.  S&P do not apply any modifiers to the 'b-' anchor, so
the rating is at the same level.

"Our assessment of Matalan's business risk profile as "weak"
takes into account the company's position in the highly
competitive U.K. value clothing segment; a limited, but growing,
online presence; and exposure to the discretionary spending
habits of value-conscious U.K. consumers.  These constraints are
in our view partially mitigated by the size of Matalan's
established out-of-town store portfolio; the relatively low risk
that changing fashions pose for Matalan's clothing range; and
Matalan's ability to source the majority of its goods directly
from manufacturers, which enables it to maintain comparatively
low selling prices.  Our business risk assessment also takes into
account the "fair" volatility of Matalan's profitability,
measured by EBITDA margin. Nevertheless, in our view, Matalan's
profitability is still above-average relative to its retail
industry peers," S&P said.

"We anticipate that Matalan will be able to achieve low- to mid-
single-digit percentage revenue and EBITDA growth thanks to
strategic initiatives such as significant investment in its
supply chain and distribution capabilities, online sales growth,
and a moderate store expansion, incorporating new city center
formats and Sporting Pro stores.  In the financial year ending
Feb. 28, 2014 (financial 2014), Matalan's revenues were flat at
about GBP1.12 billion, and reported EBITDA before exceptional
items was down 5% on the previous year, at GBP95.4 million," S&P

"Our assessment of Matalan's financial risk profile as "highly
leveraged" reflects our forecast that in financial 2015,
Matalan's Standard & Poor's-adjusted debt to EBITDA will be about
6.5x, with funds from operations (FFO) to debt of about 8.0%.
Matalan's capital structure on completion of the proposed
issuance includes two non-amortizing high-yield bonds totaling
GBP492 million -- with GBP342 million maturing in 2019 and GBP150
million in 2020 -- and a GBP50 million RCF. We make an adjustment
to debt of GBP780 million for capitalized operating leases, and
do not provide any credit for surplus cash because of the
company's "weak" business risk profile and high seasonal working
capital requirements," S&P noted.

S&P's base-case operating scenario for Matalan assumes:

   -- A consumer-led recovery in the U.K., with GDP growth of
      2.7% in 2014 and 2.4% in 2015, driven by an increase in
      household consumption.

   -- Revenue growth of 3% in financial 2015, driven by an
      improving macroeconomic environment in the U.K., online
      sales growth, and new store openings.

   -- Capital expenditure (capex) of GBP40 million in financial

   -- A reported EBITDA margin of about 8.5%.

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

   -- Adjusted debt to EBITDA of about 6.5x.

   -- Adjusted interest coverage of more than 2.0x.

   -- FFO to debt of about 8.0%.

The negative outlook reflects S&P's current assessment of
Matalan's "less than adequate" liquidity owing to tight covenant
headroom on its existing GBP30 million RCF.  The tight covenant
headroom is largely the result of Matalan's inability to grow
EBITDA from depressed levels over recent years.

Upside scenario

S&P could revise the outlook to stable on completion of the
proposed refinancing and the establishment of a larger RCF with
reset maintenance covenants.

Downside scenario

S&P could lower the rating if Matalan is unable to complete its
refinancing or amend its covenants on its existing RCF in a
timely manner.  S&P could also lower the rating if Matalan's
operating performance deteriorates and it is unable to grow
revenues and EBITDA.  This could result from unseasonal weather;
rising input prices; increased discounting reducing gross
margins; or mismanagement of working capital.

MIZZEN BONDCO: Moody's Assigns B2 Rating to GBP200MM Senior Notes
Moody's Investors Service has assigned a B2 rating to the GBP200
million long-term senior notes issued by Mizzen Bondco Limited, a
wholly-owned subsidiary of Mizzen Midco Limited (operating under
the name of Premium Credit Limited (PCL)), a company providing
insurance premium finance and other premium finance loans in the
UK and Ireland. The outlook is stable.

Moody's rating on PCL confirms the provisional rating assigned on
April 29, 2014. The final terms and conditions of the senior
notes, which were fully placed as at May 8, 2014, are in line
with the draft documentation reviewed for the provisional (P)B2
rating assigned on April 29, 2014.

Ratings Rationale

PCL operates in the UK and Irish premium finance market as a
provider of insurance premium finance and other payment
facilitation services to companies and private individuals. The
company, through a diverse network of intermediaries, provides
loans to customers (companies and individuals) to pay insurance
premiums in monthly installments instead of an upfront lump sum.
It also provides direct debit management services (which finances
professional fees and memberships) and school fee plans (which
finances school tuition).

As outlined in the Moody's Press Release dated 29 April 2014, the
B2 rating positively reflects PCL's leading franchise positioning
in the UK and Irish premium finance markets, stable cash flows
and historical profitability, low levels of credit losses and low
concentration risk in terms of end-customers. At the same time
the rating is constrained by the monoline business model,
shareholders' aggressive financial policies, concentrated debt
maturity profile, concentration in intermediaries through whom
the company provides the loans and collateral available as
security for the senior notes. The rating also reflects the
projected increase in leverage and decrease in interest coverage
as a result of the transaction, although these are expected to
improve over time.

The senior notes' ratings reflect their position in the company's
funding structure as well as the notes' terms. PCL's refinancing
consists of the GBP200 million senior notes, which are guaranteed
on a senior basis by Mizzen Midco Limited and all material
subsidiaries. The senior notes are secured by a first ranking
security interest over the issued capital of Mizzen Bondco
Limited and Mizzen Mezzco2 Limited, a wholly-owned and immediate
subsidiary of Mizzen Bondco Limited.

What Could Change The Rating Up / Down

Upward rating pressure could arise from a significant improvement
in capital adequacy, both in terms of leverage metrics (debt-to-
adjusted EBITDA) to below 3.0x and tangible common equity-to-
tangible managed assets to above 4%, while maintaining other
financial metrics and ratios at current levels.

The rating could come under downward pressure due to 1)
significant deterioration in income and cash flow from
operations, stemming from decreasing margins or higher than
expected credit losses; or 2) no improvement in capital position
and leverage or sustained decline in operating performance,
leading to a debt ratio which is higher than 5.5x adjusted
EBITDA; or 3) significant decline in interest coverage, with an
adjusted EBITDA-to-interest expense ratio of below 1.0x.

The principal methodology used in this rating was Finance Company
Global Rating Methodology published in March 2012.

MOORGATE FUNDING 2014-1: S&P Assigns BB Rating to Class E1 Notes
Standard & Poor's Ratings Services assigned its credit ratings to
Moorgate Funding 2014-1 PLC's class A1, B1, C1, D1, and E1 notes.
At closing, Moorgate Funding 2014-1 also issued unrated principal
residual certificates and revenue residual certificates.

At closing, the issuer purchased the beneficial interest in a
portfolio of U.K. residential mortgages from the beneficial title
seller (Kilamanjaro AM Ltd.), using the proceeds from the
issuance of the rated notes and the unrated principal residual
certificates and revenue residual certificates.  The proceeds
also funded a principal reserve fund, a class A1 liquidity
reserve fund, and a class B1 liquidity reserve fund.

The GBP509 million pool (as of March 31, 2014) comprises first-
lien U.K. nonconforming residential mortgages owned by
Kilimanjaro AM.  The originators are Mortgages PLC (43.98%), Wave
Lending Ltd. (27.99%), Edeus Mortgage Creators Ltd. (22.67%),
Close Brothers Ltd. (3.85%), and Paragon Mortgages PLC (1.50%).

The first-lien U.K. nonconforming residential mortgage loans
include 8.04% of loans with previous county court judgment (CCJs)
and 56.44% of self-certified loans.  The portfolio's weighted-
average current loan-to-value (LTV) ratio is 87.54% (according to
S&P's methodology, which includes haircuts to valuations when the
valuation method was not a full surveyor valuation).

The class A1 to E1 notes' interest rate is equal to one-month
sterling LIBOR plus a class-specific margin.  As the notes'
interest rates are based on an index of one-month British pound
sterling LIBOR, there is an interest rate and basis risk
mismatch. This is because the underlying collateral contains
loans that are linked to the seller's standard variable rate, or
the Bank of England Base Rate (BBR) or three-month British pound
sterling LIBOR (that resets at a different reset date to the
notes).  As a result, S&P stresses the historical difference
between the index paid on the assets and the liabilities.  S&P's
analysis then takes the percentiles of the resulting distribution
according to table 20 of S&P's U.K. residential mortgage-backed
securities criteria. This transaction does not benefit from a
swap to hedge interest rate or basis risk.

The issuer pays interest according to the interest priority of
payments.  Under the transaction documentation, interest payments
on all classes of notes (excluding the senior class of notes),
can be deferred if the issuer has insufficient funds.
Consequently, any interest deferral would not constitute an event
of default. However, S&P's ratings address the timely payment of
interest and ultimate payment of principal on the notes.  While
all classes of notes are able to pass our cash flow stresses
under these assumptions, if a class of notes were to defer
interest, S&P would lower its rating on that class of notes to 'D

S&P's ratings reflect its assessment of the transaction's payment
structure, cash flow mechanics, and the results of its cash flow
analysis to assess whether the notes would be repaid under stress
test scenarios.  Subordination and the principal reserve fund
provide credit enhancement to the notes that are senior to the
unrated principal residual certificates.  Taking these factors
into account, we consider the available credit enhancement for
the rated notes to be commensurate with the ratings that S&P has


Moorgate Funding 2014-1 PLC
GBP510.02 Million Residential Mortgage-Backed Floating-Rate Notes
and Unrated Principal Residual Certificates

Class            Rating           Amount
                                (mil. GBP)

A1               AAA (sf)         338.15
B1               AA (sf)           56.10
C1               A (sf)            44.48
D1               BBB (sf)          18.36
E1               BB (sf)           27.03
PRC              NR                25.50

PRC-Principal residual certificates.
NR-Not rated.

MORPHEUS PLC: Fitch Affirms 'CCCsf' Rating on Class E Notes
Fitch Ratings has upgraded Morpheus (European Loan Conduit No.19)
plc's class B notes due 2029 and affirmed the class C, D and E
notes, as follows:

  GBP12.5m class B (XS0198458266) upgraded to 'AAAsf' from
  'AA+sf'; Outlook Stable

  GBP15.3m class C (XS0198459157) affirmed at 'A+sf'; Outlook

  GBP11.3m class D affirmed at 'BBB-sf'; Outlook Stable

  GBP7m class E affirmed at 'CCCsf'; Recovery Estimate 90%

Key Rating Drivers

The upgrade of the most senior tranche reflects the sequential
principal allocation and expected substantial scheduled
amortization.  The affirmations reflect the ongoing stable
performance of the portfolio of UK loans, the absence of event of
defaults and the high weighted average (WA) interest coverage.
At the February 2014 interest payment date, 60 loans with an
aggregate balance of GBP49.6 million remained, down from 419
loans/GBP581.9 million at closing in August 2008.  Approximately
77% by balance provides for some scheduled amortization, while
almost half of the pool matures by the end of 2015.  The majority
of loans has a remaining balance of less than GBP1 million and is
secured on a single asset.

The reported WA loan-to-value (LTV) ratio of 64% largely relies
on pre-crisis valuations, conducted between 1990 and 2005. Three
loans have a reported LTV of above 100%.  Given past performance,
modest LTV and further amortization, Fitch believes that most
borrowers will be able to repay their loans.

After closing, surplus interest has been used to repay GBP2.2
million of the class E notes, creating overcollateralization
(OC). Presently, GBP1.3 million of OC remains, after absorbing
GBP0.9 million of losses realised in the workout of defaulted
loans.  Fitch believes that in a 'Bsf' stress, the OC will
eventually be eroded and up to 10% of the class E notes may get
written down.  Although all loans continue to make debt service
payments, a few borrowers are supporting these payments from
equity as the collateral is vacant.  Other owner-occupied
collateral is expected to fare well, especially some financing
backed by residential assets located in London.
There is an interest shortfall occurring on the class D and E
notes, as the margin of the notes has almost tripled since
closing, given some of the highest margin loans repaid the senior
note classes.  Both affected note tranches are subject to an
available funds cap and therefore the ratings reflect only the
likelihood of a principal loss.


A loss allocation to the class E notes, once the OC has been
neutralized, would result in a downgrade of the tranche.  A
resulting reduction in subordination could trigger rating actions
to more senior notes, albeit in reverse sequential order.
Fitch estimated 'Bsf' recoveries are EUR45.4 million.

OVAKO GROUP: Moody's Assigns 'B3' Corp. Family Rating
Moody's Investors Service has assigned a corporate family rating
(CFR) of B3 and a probability of default rating (PDR) of B2-PD to
Ovako Group AB (Ovako).

Concurrently, Moody's has assigned a B3 rating to the EUR285
million Senior Secured Notes due 2019 to be issued by Ovako AB
(publ). The outlook is stable.

Together with cash on balance sheet, proceeds from the note
issuance will be used to refinance the existing debt facilities
and fund transaction expenses. The RCF will be used for working
capital needs and general corporate purposes, and is expected to
be undrawn at closing.

Ratings Rationale

The B3 CFR reflects Ovako's (1) exposure to competitive and
cyclical end markets, resulting in a highly volatile earnings
profile; (2) high opening leverage as a result of deteriorating
earnings over the past three years; (3) small size; and (4)
limited geographic diversification.

However, this is mitigated by (1) Ovako's leading local positions
in the European engineering steel market; (2) the company's focus
on specialty products; and (3) its pricing mechanism that allows
it to pass-through changes in raw material costs with a limited
time lag.

Whilst small scale relative to many of its competitors, Ovako is
a leading local player within its niche markets, focusing on
engineering steel for demanding applications. It holds a
significant market share in the Nordics and leading positions in
a number of segments in the European market, principally in
bearings. Local customers benefit from fairly low transportation
costs and flexible, low-volume production capabilities. The
majority of sales are concentrated in the Nordics (39% of group
sales, comprising Sweden and Finland) and Western Europe (44%),
the latter being predominantly Germany (29%).

Ovako is highly reliant on the automotive and truck industry,
which accounted for 40% of group sales in 2013 (mainly heavy
truck and yellow goods, with light vehicles accounting for
approximately 10% of group sales), followed by mechanical
engineering (30%) and mining, oil and gas markets (10%). The
cyclicality of these markets and Ovako's high correlation to GDP
has been reflected in a volatile earnings profile to date. For
example, in 2009, the trough of the market, Ovako's volumes
decreased by more than half and management's-adjusted EBITDA
became negative, down from over EUR200 million in 2008. Both
volumes and prices have been negatively affected by the recent
recession in Europe, resulting in deteriorating profitability
over the past three years, with volumes falling from 851,000
tonnes in 2011 to 675,000 tonnes in 2013. Sales and EBITDA
declined from EUR1,121 million and EUR134 million respectively in
2011 to EUR850 million and EUR47 million respectively in 2013.

As a result, Moody's considers the opening Moody's-adjusted 2013
leverage of 7.0x to be high. Moody's expects that leverage will
decrease steadily over the next couple of years as the market
recovers and EBITDA benefits from increased volumes on a
relatively fixed cost base. Revenues are expected to approach
EUR1.0 billion by 2016 with EBITDA margins of around 9%. With
capex of EUR28 million-EUR33 million each year, Moody's expects
FCF/debt to be close to 7% for each of the next three years. Q1
2014 performance is positive versus the previous year (albeit Q1
2013 was weak), as is the positive trend of order intake, giving
some comfort that leverage should fall to below 5.0x in 2014.

The European engineering steel market is competitive, with most
products having two to three principal suppliers. The Nordic
market has seen increased competition of late from European
producers as a result of the strong Swedish krona, thereby
eroding Ovako's lower transport cost advantage. Competition
within the euro area is more fragmented.

Moody's considers Ovako's markets to be less exposed to imports
from Asia than lower-grade steel given the smaller volume product
lines, faster delivery times and customer accreditation processes
often involved. However, imports from Russia and Eastern Europe
have grown significantly and are an increasing competitive
threat, particularly if the EU steel market recovers in line with
the rating agency's expectations.

The company has achieved stable contribution margins over the
past three years thanks to a large proportion of contracts
incorporating scrap/alloy cost pass-through. Pricing with
customers is usually set on the basis of an agreed base price
(negotiated for 3-12 months) plus scrap and alloy surcharge
resulting in only a short time lag for passing through
scrap/alloy price changes.

Moody's considers Ovako's near-term liquidity to be adequate
given the expectation of improved trading. Pro forma for the
transaction the company is expected to have EUR23 million cash on
balance sheet and access to the undrawn EUR40 million RCF, which
has a minimum EBITDA covenant only. Critically, following the
refinancing the company will not have any material debt
maturities for the next five years. Longer-term pressure on
liquidity could arise through increases in working capital, for
example, in the event that scrap prices increase considerably or
if the market returns to heightened levels of trading volatility.

The senior secured notes, RCF, pension insurance line (currently
SEK440 million, EUR49 million equivalent, but may be increased up
to the amount of the company's pension liability) and hedging
liabilities will all share the same security and guarantee
package, with guarantors representing around 90% of 2013 sales,
EBITDA and assets. However, the pension insurance line has first
priority in respect to enforcement proceeds, followed by the RCF
and hedging liabilities up to EUR10 million. Senior secured notes
are subordinated to these instruments in respect of enforcement
proceeds, although its instrument rating of B3 remains in line
with the CFR.

Rationale For The Stable Outlook

The stable outlook reflects Moody's expectation of steady
improvements in the underlying markets and that the company's
earnings continue to build from the 2013 trough. The outlook also
incorporates Moody's assumption that leverage will fall below
5.0x in 2014 and generate positive free cash flow and assumes
that Ovako will maintain an adequate liquidity profile.

What Could Change The Rating Up/Down

The rating could be upgraded if adjusted debt/EBITDA approaches
4.0x, EBIT margins are consistently above 5.0% and FCF/debt
approaches 10%.

The rating could be downgraded if (1) the company's liquidity
position deteriorates materially as a result of weak operating
performance and cash burn; (2) if EBIT margins do not evidence an
improving trend to at least 3.0%; or (3) if adjusted debt/EBITDA
is sustained above 6.0x.

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

Headquartered in Stockholm, Sweden, Ovako is a leading European
producer of engineering steel for customers in the bearing,
transportation and manufacturing industries. Its production is
based on recycled steel and includes steel in the form of bars,
tubes, rings and pre-components. It operates five main production
facilities in Europe and a number of service and sales offices in
Europe, the US and China. It employs close to 3,000 FTEs. Ovako,
wholly owned by Triako Holdco AB, was acquired by funds managed
by Triton in 2010.

For the year ending 31 December 2013, the company reported sales
of EUR850 million and EBITDA of EUR47 million.

PROMINENT CMBS 2: S&P Withdraws D Ratings on Six Note Classes
Standard & Poor's Ratings Services has withdrawn its 'D (sf)'
credit ratings on Prominent CMBS Conduit No. 2 Ltd.'s class A, B,
C, D, E, and F notes.

The withdrawals follow S&P's receipt of the April 2014 quarterly
investor report.  The last remaining reference obligation fully
repaid on the April 2014 interest payment date, with the proceeds
used to repay the outstanding class A notes' balance.  The cash
administrator previously applied a payment loss of GBP4.7 million
to the class A notes and a full payment loss to the class B to F

Prominent CMBS Conduit No. 2 was a U.K. commercial mortgage-
backed securities transaction in which the payments under the
notes were synthetically linked via credit default swaps to the
payments under five loans.  Office and retail assets in England
and Wales backed the loans.

SAGA LIMITED: Moody's Places 'B1' CFR on Review for Upgrade
Moody's placed all ratings of Saga Limited (Saga or the company)
and subsidiaries under review for upgrade, including the
corporate family rating (CFR) of B1, probability of default
rating (PDR) of B2-PD and Term Loans A and B and Revolving Credit
Facility (RCF) (together the senior bank facilities) of (P)B1.
The rating action follows the announcement of the IPO launched by
Saga Plc, the new holding company of the Saga Limited group of

Ratings Rationale

On May 8, 2014 Saga Plc announced the expected price and value
ranges for the proposed IPO of the company's shares on the London
Stock Exchange and published the IPO prospectus. The total size
of the IPO is expected to result in free float of between 25% and
50% of the issued share capital and raise net proceeds of GBP512
million. The proceeds from the offering, together with GBP38
million of cash from the company's balance sheet, will be used to
repay GBP125 million of the Term Loan A reducing it to GBP700
million and repay the Term Loan B in full (GBP425 million). This
will significantly decrease the company's adjusted leverage ratio
to 3.3x at the closing of the IPO (based on 2013/2014 EBITDA
including Moody's adjustments) compared to 5.6x prior to this

Moody's review will focus on the deleveraging impact of the IPO.
The review will also evaluate the company's new ownership
structure, financial policy (including dividend policy expected
at 40% to 50% of annual net income) and strategic objectives. At
this stage Moody's anticipates that the CFR would likely be
upgraded by two notches to Ba2.

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

Headquartered in Folkestone, UK, Saga provides a range of branded
products for the over-50s consumer segment in the UK. Saga's
products mainly span across financial services including motor
and home insurance, travel with a packaged and cruise holidays
offering, and healthcare which is specialized in private
domiciliary care services. In fiscal year ended January 2014,
Saga reported trading revenues and EBITDA of GBP1,258 million and
GBP234 million, respectively, and underlying revenues and
underlying pro-forma EBITDA (pro forma mainly for the Ruby ship
retirement in January 2014) of GBP1,209 million and GBP222
million, respectively. The company is currently owned by Acromas
BidCo Limited whose ultimate shareholders are Charterhouse
Capital partners (35.8% ownership), CVC Capital Partners (19.9%),
Permira Advisers (19.9%), employees (20.2%) and other coinvestors

ULYSSES PLC: Moody's Affirms 'B2' Rating on Class X1 Notes
Moody's Investors Service has affirmed the ratings of the Class A
and Class X1 Notes (the "Notes") issued by Ulysses (European Loan
Conduit No. 27) PLC (ELoC 27).

Moody's rating action is as follows:

GBP249M Class A Notes, Affirmed Baa3 (sf); previously on Sep 25,
2012 Downgraded to Baa3 (sf)

Class X1 Notes, Affirmed B2 (sf); previously on Aug 22, 2012
Downgraded to B2 (sf)

Ratings Rationale

The rating affirmation reflects the stabilization of the
operating performance of the underlying security as evidenced by
successful ongoing asset management initiatives, together with
the gradual decline of the swap liability. These positives are
offset by a continuing low interest coverage ratio (0.75x at the
most recent interest payment date) which has resulted in GBP20.9
million drawings under the servicer advance facility (SAF).

The sponsor's asset management strategy, which involves a leasing
plan to address the poor lease profile as well as a capital
expenditure program to maintain the asset's prime status
envisages a sale of the asset prior to legal final maturity in
July 2017. Moody's expects a significant decline in the swap
liabilities by that time. However, in addition to potential swap
liabilities, any outstanding servicer advances and potential
outstanding amounts under the capital expenditure facility will
be paid in priority to the Class A Note principal.

The rating on the Class X1 Notes is affirmed because there is no
change in Moody's risk assessment for this class. The Class X1
Notes reference the underlying loan pool. As such, the key rating
parameters that influence the expected loss on the referenced
loan pool also influences the ratings on the Class X1 Notes. The
rating of the Class X1 was based on the methodology described in
Moody's Approach to Rating Structured Finance Interest-Only
Securities published in February 2012.

Moody's affirmation reflects a base expected loss in the range of
20%-30% of the current balance, the same as at the last review.

Methodology Underlying the Rating Action:

The principal methodology used in this rating was Moody's
Approach to Rating EMEA CMBS Transactions published in December

Other factors used in this rating are described in European CMBS:
2013 Central Scenarios published in February 2013.

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

The main factors or circumstances that could lead to a downgrade
of the ratings are (i) a decline in the value of the underlying
property or (ii) a failure to initiate the sales process in time
to complete prior to legal final maturity in July 2017, which
would put at risk the repayment the Class A Notes by that date.

The main factors or circumstances that could lead to an upgrade
of the ratings are (i) concrete evidence of a sale of the asset
at a value significantly higher than Moody's assessment or (ii) a
change in the interest rate environment that would significantly
reduce the latent swap liabilities that would be payable in the
event of an asset sale.

Transaction Analysis

Ulysses (European Loan Conduit No. 27) PLC closed in July 2007
and represents the true-sale securitization of the GBP429 million
senior portion (Senior Loan) of a GBP535 million commercial real
estate loan (Whole Loan) secured by the 35-floor CityPoint
building in the City of London. The building is multi-let to 26
tenants with a weighted average of around six years to the
earlier of lease expiry or first break date. Current vacancy rate
is 4.4%.

Moody's estimate of the loan-to-value for the Whole Loan at the
time of the expected sale of the property is 146% considering
prior ranking swap breakage costs and amounts drawn under the SAF
and the capital expenditure facility. Moody's expects the sale
one year before note legal final maturity.

* UK: Yorkshire Manufacturing Sector Shows Strong Recovery
Clare Burnett at Bdaily reports that Yorkshire's manufacturing
sector is showing a stronger recovery than in any other region
according to insolvency trade body R3.

R3's figures for April 2014 report that only 20% of manufacturing
firms in Yorkshire have a higher than normal risk of insolvency,
the smallest proportion of any region in England and Wales,
Bdaily relates.

Bdaily says the North East also showed a strong performance (21%)
while the poorest performance in the sector was in London (30%)
and the South East (25%).

While all regions saw a slight increase in the rate of high risk
businesses in the sector since the previous month, levels have
remained fairly steady in Yorkshire over the last six months with
337 manufacturing firms identified as being at high risk in April
out of 10,693 active companies, according to the report.

"The manufacturing sector is continuing to perform well, with the
sector amongst the star performers in the latest GDP statistics.
It is encouraging that manufacturing recovery appears to be
sustained and is continuing to drive new job creation," the
report quotes William Ballmann, chair of insolvency trade body R3
in Yorkshire and partner at national law firm Gateley LLP, as

"In Yorkshire, 2014 has seen production and new orders increasing
and the feeling is that the region is performing slightly more
strongly than the rest of the UK although the sector is still a
long way from its peak before the recession."

Another sector which also showed a sustained recovery was
technology and IT with high risk businesses again falling last
month.  However, fortunes remain mixed with high risk businesses
in both the construction and property sectors growing month on
month, having fallen in most of the previous five months.

Mr Ballmann added: "It is particularly good news that high tech
businesses in the region are flourishing as Yorkshire is becoming
known as a hub for fast-growing digital technology companies and
for advanced manufacturing.

"However, while these figures are welcome, it's important that
SMEs do not take their eyes off the balance sheet and focus only
on growth.  With post-recession cash reserves depleted, it is
vital that they continue to carefully monitor cash flow and
profitability and avoid the temptation of over extending
themselves as the recovery gathers pace.

"This remains a risky time for businesses and we urge them to
seek professional advice at the first signs of financial


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.

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


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

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

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

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