TCREUR_Public/140625.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

            Wednesday, June 25, 2014, Vol. 15, No. 124

                            Headlines

B E L A R U S

BELARUS: Moody's Says B3 Gov't Bond Rating Supports GDP Growth


B U L G A R I A

CORPBANK: Bulgaria in Clash Over Russian Role in Rescue


F R A N C E

NOVAFIVES: S&P Assigns Preliminary 'BB-' CCR; Outlook Stable
NOVAFIVES SAS: Moody's Assigns 'Ba3' Corporate Family Rating
VALENCIENNES FC: Wins Temporary Reprieve From Insolvency


G E R M A N Y

MOX TELECOM: File For Insolvency Protection Process
PFLEIDERER GMBH: S&P Assigns Preliminary 'B-' CCR; Outlook Stable
PHOTON PUBLISHING: Enters Insolvency Proceedings in Aachen Court


I T A L Y

ALITALIA SPA: Montezemolo Supports Etihad's Rescue Bid
SUNRISE SERIES 1 2006: S&P Cuts Rating on Class C Notes to 'B+'
WIND ACQUISITION: S&P Assigns 'BB' Rating to EUR4.065BB Notes
WIND TELECOMUNICAZIONI: Moody's Affirms B2 Corp. Family Rating


N E T H E R L A N D S

CARLSON TRAVEL: Moody's Rates US$360MM PIK Toggle Notes '(P)Caa1'
* NETHERLANDS: Corporate Bankruptcies Down in May 2014


R U S S I A

LEXGARANT INSURANCE: S&P Lowers IFS Rating to 'B'; Outlook Stable


S P A I N

BANCO MARE: Fitch Affirms 'BB+' LT Issuer Default Ratings


U N I T E D   K I N G D O M

AVANTI COMMUNICATIONS: Moody's Affirms Caa1 Corp. Family Rating
BOPARAN FINANCE: Moody's Rates GBP800MM Sr. Unsec. Notes '(P)B1'
BOPARAN HOLDINGS: S&P Affirms 'B+' CCR; Outlook Stable
DEBENHAMS PLC: Moody's Assigns 'Ba3' Corporate Family Rating
DEBENHAMS PLC: S&P Assigns 'BB-' CCR; Outlook Negative

EUROSAIL PRIME-UK: S&P Withdraws 'D' Ratings on 4 Note Classes
EUROSAIL-UK 2007-A: Fitch Assigns 'Csf' Rating to Class C Notes
FAB UK 2004-1: S&P Affirms 'CCC-' Ratings on 3 Note Classes
HEART OF ENGLAND: Undergoes Liquidation; Blames Gov't for Woes
HEATHROW FINANCE: Fitch Affirms 'BB+' Rating on High-Yield Bonds


                            *********


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B E L A R U S
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BELARUS: Moody's Says B3 Gov't Bond Rating Supports GDP Growth
--------------------------------------------------------------
In its annual credit report on Belarus, Moody's Investors Service
says that its B3 government bond rating incorporates the impact
of policies that have exacerbated external imbalances through
their pursuit of credit-driven GDP growth. Belarus' consequently
weak external liquidity position has increased the largely state-
owned economy's reliance on Russia for external financing and
discounted energy imports.

The rating agency's report is an annual update to the markets and
does not constitute a rating action.

Moody's notes that Belarus' sovereign credit profile benefits
from the economy's diversity and high per-capita incomes compared
to regional and rating peers as well as the competitiveness
benefits resulting from a skilled workforce and relatively
developed infrastructure.

Nonetheless, Belarus has struggled to achieve sustainable growth
following a balance of payments crisis in 2010-11, which followed
a temporary cessation of Russian assistance. GDP growth over 2012
and 2013 averaged about 1.3%, which is much lower than the around
7% average GDP growth of the prior decade. Meanwhile, monetary
stimulus to revive growth has contributed to the current account
deficit widening to 10.1% of GDP in 2013 from 2.7% of GDP in
2012.

The credit risks associated with these developments underpin the
negative outlook on Belarus' rating, given that its financing
options are limited to Russian assistance, and that policies
focused on reviving growth could worsen the external balance
further. Agreements reached prior to the signing of the Eurasian
Economic Union (EEU) treaty this May suggest that the current
conflict between Russia and Ukraine is unlikely to disrupt
financial and energy flows to Belarus. However, the concurrent
economic slowdown in Russia will cloud the economic outlook for
Belarus as well, given strong economic links between the two
countries.

Moody's notes that the rating outlook could return to stable upon
evidence that Belarus's external position was being sustainably
strengthened, and that growth was becoming less reliant on
external financing. On the other hand, a downgrade could be
triggered by continued economic and external weakness,
uncertainty regarding the availability of financial support from
Russia or domestic political instability.



===============
B U L G A R I A
===============


CORPBANK: Bulgaria in Clash Over Russian Role in Rescue
-------------------------------------------------------
Kerin Hope and Theodor Troev at The Financial Times report that
Bulgaria's finance minister and central bank have clashed over a
state-controlled Russian bank's possible involvement in the
rescue of Corpbank, which was placed in receivership over the
weekend.

The dispute over the rescue of the politically connected Corpbank
is a reminder of Sofia's close Moscow ties, which are drawing
scrutiny from its EU partners, the FT notes.

Corpbank was plunged into turmoil after its biggest customer
accused its largest shareholder of a plot to assassinate him, the
FT recounts.  The country's central bank rushed to contain the
damage on Sunday, fearing that its collapse could touch off a
bank run in the EU's poorest member state, the FT relays.

The Bulgarian National Bank announced that shareholders' stakes
would be written off, opening the way for the bank to be
nationalized, the FT relates.  But on Monday, Dimitar Chobanov,
Bulgaria's finance minister, said shareholders would be asked to
participate in an emergency recapitalization of Corpbank, the FT
notes.

According to the FT, Mr. Chobanov told the Bulgarian newspaper
Trud "Only after the current shareholders have been given the
opportunity to provide the necessary resources would the state
intervene ....  The aim is to stabilize the banking group so that
depositors can get the full amount of their money back."

Russia's VTB Bank owns a 9.1% stake in Corpbank, while a fund
controlled by the Gulf state of Oman owns 10%, the FT discloses.

Atanas Bostandjiev, chief executive of VTB Capital, told the FT
the bank was "not involved in the management of [Corpbank]" and
"currently has no plans to commit additional capital or
liquidity".

The size of the capital injection for Corpbank, the country's
fourth-biggest lender, will be announced in 10 days' time,
Mr. Chobanov, as cited by the FT, said, following an assessment
of its balance sheet by central bank officials and an
international audit firm.

Corpbank is a Bulgarian lender.



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F R A N C E
===========


NOVAFIVES: S&P Assigns Preliminary 'BB-' CCR; Outlook Stable
------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary 'BB-'
long-term corporate credit rating to Novafives, the parent
company of Fives, a French industrial engineering group.  The
outlook is stable.

At the same time, S&P assigned its preliminary 'BB' issue rating
to Novafives' proposed EUR90 million super senior senior
revolving credit facility (RCF).  The recovery rating on this
facility is '2', indicating S&P's expectation of high (70%-90%)
recovery in the event of a payment default.  S&P also assigned
its preliminary 'BB-' issue rating to the EUR200 million of
senior secured floating-rate notes and EUR380 million of senior
secured fixed-rate notes.  The recovery rating on these
instruments is '4', indicating S&P's expectation of average (30%-
50%) recovery in the event of a payment default.

Final ratings will depend on S&P's receipt and satisfactory
review of all final transaction documentation.  Accordingly, the
preliminary ratings should not be construed as evidence of final
ratings.  If S&P do not receive final documentation within a
reasonable time frame, or if final documentation departs from
materials reviewed, it reserves the right to withdraw or revise
its ratings.  Potential changes include, but are not limited to,
utilization of loan proceeds, maturity, size, and conditions of
the term loan, financial and other covenants, security, and
ranking.

The preliminary ratings on Novafives are based on S&P's
assumption that, in the next few months, the group will complete
the following steps:

   -- Novafives will issue EUR200 million of six-year senior
      secured floating-rate notes and EUR380 million of
      seven-year senior secured fixed-rate notes.

   -- The group will negotiate a five-year EUR90 million super
      senior RCF.

   -- From the proceeds and EUR63 million of available cash, the
      group will repay EUR430 million of debt outstanding at FL
      Investco level and EUR199 million of debt at Novafives
      level.

S&P's preliminary 'BB-' long-term corporate credit rating on
Novafives reflects its assessments of the group's financial risk
profile as "aggressive" and business risk profile as "fair."

"Novafives' sizable adjusted debt constrains our assessment of
the financial risk profile.  We expect that the group will post
an adjusted debt-to-EBITDA ratio of about 4.5x, including hybrid
instruments, based on a weighted average of the current and the
next two years.  We expect that this ratio will be slightly below
5x at year-end 2014 and will decline gradually thanks to moderate
EBITDA growth and reported free operating cash flow (FOCF)
generation of about EUR60 million-EUR70 million.  After the
refinancing, Novafives should display a good EBITDA-to-cash
interest ratio of roughly 5x," S&P said.

"At year-end 2014, we estimate that adjusted debt will reach
approximately EUR800 million, comprising notably about EUR100
million of various debt at subsidiaries' level, EUR580 million of
proposed notes, approximately EUR150 million of surplus cash
(after applying a 20% haircut), and about EUR180 million of
hybrid instruments (convertible bonds and bonds redeemable in
shares).  We consider these instruments as debt because they are
held by the private equity fund Ardian, which we view as a
noncontrolling financial sponsor," S&P noted.

Novafives' diversification of business, end-market, and
geographies, as well as its flexible cost structure, offset
somewhat below-average profitability and the small contribution
of the aftermarket to total revenues.  Despite its small size,
the group has a wide product offering and operates in several
different niche markets, where it often ranks among the top three
players.  Furthermore, it has a significant presence in the U.S.
and China.  Novafives' asset-light business model is another
supportive factor.  By externalizing most of the manufacturing
process, it benefits from a relatively flexible cost structure
and limits its capital expenditures (capex).

Within the overall capital goods industry, Novafives is of
limited size and operates in segments that S&P would generally
view as relatively competitive and fragmented.  Novafives' asset-
light model also results in part of added-value on equipment
delivered being transferred to its suppliers.  Consequently, the
group displays adjusted EBITDA margin and return on capital of
about 9% each, which S&P considers to be below average for the
capital goods sector.  This is partly mitigated, however, by good
FOCF generation.  On the downside, S&P also notes that
aftermarket accounts for 15%-20% of total revenues, which it
considers to be generally low for the sector.

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

   -- Revenue growth of about 5% annually over the next two
      years, driven by most of the group's divisions except
      Metal, and the contribution of recent acquisitions, namely
      MAG Aerospace and OTO Mills.

   -- A small increase in adjusted EBITDA margin for 2014 toward
      9%, driven by the decline in exceptional expenses (S&P
      deducted acquisition costs from 2013 EBITDA), and
      stabilization thereafter.

   -- Capex of about 1.5% of revenues, in line with historical
      trends.

   -- No shareholder remuneration.

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

   -- A debt-to-EBITDA ratio slightly below 5.0x by year-end 2014
      (slightly above 3.5x excluding hybrid instruments) and
      improving to 4.5x in 2015 (below 3.5x excluding hybrids).

   -- Adjusted EBITDA of approximately EUR160 million in 2014 and
      EUR170 million in 2015.

   -- FOCF of about EUR60 million in 2014 and EUR70 million in
      2015.

The stable outlook reflects S&P's view that Novafives will
maintain its leading market shares in its niche markets and that
its end-market diversification will offset possible operating
downturns.  S&P also factors in its view that management will
remain a long-term shareholder and that its financial policy will
stay prudent, with no large acquisition or shareholder payment
and a clear objective of keeping reported net debt to EBITDA
below 3x. S&P expects the group to maintain an adjusted EBITDA
margin of about 9%-10% over the next 18 months and to generate
significantly positive FOCF so that core credit ratios firm up
within S&P's "aggressive" financial risk profile category.

S&P could lower the ratings on Novafives if adjusted debt to
EBITDA moved above 5x.  Such a scenario could unfold if, for
instance, an operating downturn led to a decline in earnings that
business diversity could not offset.  Negative rating pressure
could also arise if Novafives increased shareholder remuneration
or made a large debt-financed acquisition.  Finally, S&P might
also consider a downgrade if the group's FOCF declined
materially.

S&P could upgrade Novafives if it lowered its adjusted debt to
EBITDA below 4x on a sustainable basis.  Such an outcome appears
unlikely over the next 12 months, however.


NOVAFIVES SAS: Moody's Assigns 'Ba3' Corporate Family Rating
------------------------------------------------------------
Moody's Investors Service assigned a first-time Ba3 corporate
family rating (CFR) and a Ba3-PD probability of default rating
(PDR) to Novafives S.A.S. (Fives, the company).

Concurrently, Moody's has assigned provisional (P)B1 ratings to
the EUR 200 million Senior Secured Floating Rate Notes due 2020
and the EUR 380 million Senior Secured Fixed Rate Notes due 2021.
The outlook on all ratings is stable.

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

Ratings Rationale

The Ba3 CFR positively reflects the company's (1) leading global
positions in the selected niche markets which the company
supplies, such as the building materials, steel or automotive
sectors, which are underpinned by strong but inherently cyclical
market drivers, (2) entrenched relationships with customers which
enables Fives to develop operationally critical products, which
typically represent vital parts of their customer's production
processes, (3) resilient business model, supported by a wide
degree of diversification, (4) stable historic financial
performance and (5) asset light business model with fairly low
capex requirements that generates strong cash conversion.

The ratings are constrained by the (1) high initial Moody's
adjusted leverage for an issuer in the Ba3 rating category which
Moody's expect to reduce going forward, but only gradually.
Having said this, Moody's believe the company will be able to
grow significant cash balances over the foreseeable future which,
based on management's historic prudent approach to managing the
company's liquidity, Moody's expect to rapidly delever the
business on a net leverage basis, (2) competitive pressures which
may emerge particularly for new contracts, although Moody's
believe that in growing markets competition will remain limited,
and (3) exposure to cyclical end markets although this is less
evident in the faster growing emerging markets and more generally
offset by the wide range of diversification across end markets,
geographies and customers.

After standard adjustments, Moody's expects gross debt/EBITDA to
end FY 2014 at around 5.0x and that the company will only
gradually reduce its leverage over the coming years with
reductions being driven by increasing EBITDA in the absence of
any meaningful debt amortization until 2020. Given the initially
weak rating positioning, the rating does not incorporate any
meaningful debt-financed acquisitions or shareholder
distributions.

Liquidity

Fives rating is supported by the company's good liquidity profile
and long track record of prudent cash management. At closing
Moody's expect the company to maintain around EUR100 million of
cash which is more than sufficient to cover swings in working
capital. In addition, Fives' new capital structure will include
an undrawn EUR90 million revolving credit facility. Moody's note
that this facility will be subject to customary maintenance
covenants set with generous headrooms. Historically the company
has adopted a very prudent approach to managing its liquidity;
over the last 4 years the company has maintained year-end cash
balances of around EUR200 million. Post the transaction Moody's
expect Fives to continue to adopt a prudent approach to liquidity
management and build up its cash balance.

Cash flow generation is supported by Fives' relatively low level
of CAPEX requirement and Moody's expect the company to continue
to generate positive free cash flow. The company has a number of
small local loans held by operating subsidiaries with maturities
of less than 3 years, however, overall liquidity is supported by
a long dated maturity profile with no significant debt repayment
due until 2020. Fives' working capital is fairly stable although
cash flows can move by as much as EUR50 million from working
capital peaks to troughs due to timing differences between down
payments being received and work commencing on certain large
contracts in the construction end market.

Structural Considerations

Novafives is the top company in the restricted group and the
reporting entity for the consolidated group. The new EUR200
million senior secured floating rate notes and new EUR380 million
senior secured notes will be secured by share pledges .

The new EUR90 million super senior revolving credit facility
(RCF) will be borrowed by FL Investco a holding company ranking
structurally below Novafives. The RCF shall rank pari passu with
all existing and future senior secured debt and share the same
collateral package but will benefit from a priority of claim in
an enforcement scenario. The notes will not benefit from any
upstream guarantees. The B1 instrument rating on the senior notes
one notch below the CFR, reflects the fact that in an enforcement
scenario they would rank behind the RCF.

Outlook

The stable rating outlook reflects Fives' solid business profile
and Moody's expectation that the group will continue to generate
positive free cash flow whilst continuing to adopt a prudent
approach to cash management by maintaining a significant level of
cash on balance sheet.

What Could Change The Rating Up/Down

Upward pressure on the rating could develop if the company
continues to generate strong free cash flow such that FCF to debt
is maintained over 10% and leverage reduces so that adjusted
Debt/EBITDA falls below 4.0x on a sustained basis.

Moody's could downgrade the ratings if the company's adjusted
Debt/EBITDA does not fall towards 4.5x over the next 12 -- 18
months. In addition, negative rating pressure could result if the
company experiences a meaningful deterioration in either
profitability or short term liquidity, or it takes a more
aggressive approach with regard to shareholder distribution or
debt-financed growth.

Principal Methodologies

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

Corporate Profile

Fives was founded in 1812 in France and has grown into a global
industrial engineering group. The company designs machines,
process equipment and production lines for use in a number of
different industries including; automotive, logistics, steel,
aluminium, glass, energy, cement, mineral and aerospace sectors.
As of December 31, 2013 Fives employed approximately 8,000
people. For the year ended (FYE) December 31, 2013, the company
generated EUR1,626 million in sales and the company's Moody's-
adjusted EBITDA was EUR124 million. Fives is ultimately owned and
controlled by management who own a 53% shareholding, funds
managed and advised by private equity group Ardian own the
remaining 47%.


VALENCIENNES FC: Wins Temporary Reprieve From Insolvency
--------------------------------------------------------
Sportal reports that the Valenciennes Football Club has been
granted a postponement of insolvency proceedings.

Sportal relates that the French outfit was relegated from Ligue 1
at the end of last season, but face a desperate battle to survive
due to financial issues.  They however have now been granted a
temporary reprieve, with French football's financial watchdog
subsequently giving the club a further week to get their affairs
in order.

Sportal reports that an initial statement on the club's website
read: "President Legrand informs employees, partners and
supporters of Valenciennes that he has obtained a postponement of
the consideration by the Tribunal de Commerce of Valenciennes
relating to a request to open insolvency proceedings concerning
the club.

"Everything will be implemented to achieve the very difficult
challenge of saving VAFC."

An update followed later, which read: "After listening to the
solutions proposed by president Legrand, the DNCG (National
Directorate of Management Control) authorised VAFC to provide
documents on June 25, according to Sportal.

"No sanctions have been taken against the club today [June 18]."

Valenciennes Football Club is a French association football club
based in Valenciennes.



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G E R M A N Y
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MOX TELECOM: File For Insolvency Protection Process
---------------------------------------------------
Reuters reports that Mox Telecom AG's executive board requested
the opening of insolvency protection proceedings under new
bankruptcy law at Dusseldorf district court.

Reuters relates that the company intends to restructure
financially in self-administration.

According to the report, only Mox Telecom AG as holding company
is affected by the insolvency protection proceedings application.
Mox Deals AG and other operating subsidiaries are not yet
included in the proceedings, the report notes.

Reuters say the reason for this step was that banks unexpectedly
did not extend financing. Amount in question is about
EUR30 million, the report adds.


PFLEIDERER GMBH: S&P Assigns Preliminary 'B-' CCR; Outlook Stable
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that it had assigned a
preliminary 'B-' corporate credit rating to Germany-based wood-
based panel producer Pfleiderer GmbH.  The outlook is stable.

"At the same time, we assigned our preliminary 'CCC+' issue
rating to the proposed EUR320 million senior secured notes and
preliminary 'B+' issue rating to the proposed super senior
revolving credit facility (RCF) due 2019, to be issued by
Pfleiderer.  The preliminary recovery rating on the notes is '5',
indicating our expectation of average (10%-30%) recovery in the
event of a payment default.  The preliminary recovery rating on
the RCF is '1', indicating very high (90%-100%) recovery in the
event of payment default," S&P said.

The corporate credit rating on Pfleiderer reflects S&P's
assessment of the group's "highly leveraged" financial risk
profile and its "weak" business risk profile, as S&P's criteria
define these terms.

Pfleiderer plans to issue EUR320 million of senior secured notes
and to use the proceeds to pay down existing debt.  It also plans
to issue a RCF of EUR60 million, which S&P understands will be
undrawn post refinancing.  After the refinancing, the group's
capital structure will also include about EUR50 million of debt
in its Core East subsidiary based in Poland (of which Pfleiderer
owns 65% and fully consolidates).  In line with S&P's criteria
for ratios and adjustments, it includes in its calculation of
debt the financing relating to the sale of accounts receivables
(about EUR70 million), pension obligations (about EUR40 million),
and operating leases (EUR40 million).  In addition, S&P notes
that Pfleiderer, as part of its recent financial restructuring,
has pushed up debt to its owner, Atlantik S.A. (a Luxembourg-
based holding company set up to own shares in Pfleiderer).  This
debt amounted to about EUR609 million as of year-end 2013.
Although S&P understands that this debt is contractually and
structurally subordinated and not cash interest paying, it still
includes it in its financial analysis, since it ultimately needs
to be served by cash flows from Pfleiderer.  As a result, S&P's
adjusted debt for Pfleiderer amounts to about EUR1.1 billion.

The stable outlook takes into account a gradual improvement in
profitability driven by a gradual improvement in market
conditions and internal efficiency measures.  It further takes
into account S&P's expectation of the company maintaining an
"adequate" liquidity profile, i.e., that the forecast cash
outflows are covered by cash sources by at least 1.2x over the
next 12-24 months.

"We could lower the rating if the company's liquidity profile
were to weaken to such an extent we would think it likely there
could be a shortfall within the next two years.  This could be
the result of a significant drop in the demand and pricing of
Pfleiderer's main products, most likely triggered by a weakening
economic environment.  We could also lower the rating if the
company's main debt maturities fell due within two years, without
the company having a credible and realistic plan of refinancing,"
S&P noted.

Ratings upside is currently remote, in S&P's opinion, due to
excessive leverage and few possibilities to improve credit
metrics in the coming years, due to the accruing interest rate at
the holding company level.  S&P also sees improvements in the
business risk profile as remote, given the company's limited size
and scope and inherent exposure to volatility.


PHOTON PUBLISHING: Enters Insolvency Proceedings in Aachen Court
----------------------------------------------------------------
Ben Willis at PV-Tech reports that Photon Publishing has entered
insolvency proceedings in the court of Aachen, Germany.

Andreas Ringstmeier has been appointed temporary insolvency
lawyer for the proceedings, PV-Tech says, citing details of the
filing published by the court.

News of Photon Publishing's insolvency come only weeks after its
parent company, Photon Holding, also began temporary insolvency
proceedings due to what the company said was an unpaid tax bill,
PV-Tech relays.

The forebear to Photon Publishing, Photon Europe, was
restructured to form the current publishing company last year
after facing financial difficulties and also going into
insolvency, PV-Tech relates.

Photon Publishing produces the prominent solar industry
periodical, Photon International.



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I T A L Y
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ALITALIA SPA: Montezemolo Supports Etihad's Rescue Bid
------------------------------------------------------
Guy Dinmore at The Financial Times reports that Luca Cordero di
Montezemolo is now pulling his international strings to champion
a deal whereby Abu Dhabi's expanding Etihad airline will rescue
Alitalia from a second bankruptcy by acquiring 49% for a reported
EUR560 million.

"There is no alternative for Alitalia," Mr. Montezemolo, chairman
of Ferrari, told the FT at the carmaker's Maranello headquarters
in northern Italy.  "The past four years have been very, very bad
for Alitalia.  I don't care who the owner is.  What is crucial is
for Italians, tourists and entrepreneurs to have a competitive
airline that takes them anywhere."

Talks between Alitalia and Etihad are now at a critical stage,
with both sides hoping to seal a deal by mid-July, the FT
discloses.

Maurizio Lupi, transport minister, has said progress is being
made with two main banks and shareholders -- Intesa Sanpaolo and
UniCredit -- to agree to write off some debt and swap the rest
for equity, the FT relates.

But there is deadlock over redundancies demanded by Etihad, with
Italy's unions opposed to plans to lay off 2,250 staff, nearly a
fifth of Alitalia's workforce, the FT notes.  Strike action is
threatened, the FT says.

Mr. Montezemolo says Air France-KLM was never a good fit for
Alitalia with their competing interests and that the tie-up with
Etihad will be much more complementary, the FT relates.

Through his ties with James Hogan, chief executive of Etihad,
Mr. Montezemolo persuaded the Abu Dhabi airline to take a close
look at Alitalia and to put a financial proposal on the table
last month, the FT discloses.

According to the FT, seeing himself as a facilitator with good
relations with Matteo Renzi's new government, Mr. Montezemolo
insists he is not directly involved in negotiations and denies
making "secret trips" to Abu Dhabi to break an impasse earlier
this year.

                           About Alitalia

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


SUNRISE SERIES 1 2006: S&P Cuts Rating on Class C Notes to 'B+'
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered to 'B+ (sf)' from 'BBB
(sf)' its credit ratings on the class C notes in Sunrise S.r.l.'s
series 1 2006 and series 2 2007.  At the same time, S&P has
affirmed its ratings on the outstanding series 1 2006 class B
notes and the series 2 2007 class A and B notes.

The rating actions follow S&P's review of the transaction's
performance.  The percentage of 90+ days arrears has increased in
the securitized pool of both series (equal to 3.01%) since S&P's
June 2012 review, even though the absolute amount has decreased
over the last year.  This is a result of the pool's quick
amortization (the pool factor is 17%).

As a consequence of the deleveraging, the available credit
enhancement has substantially increased for the entire capital
structure since closing.  The available credit enhancement for
the class A notes has increased to 50.40% from 10.21% for the
series 2 2007.  At the same time, the available credit
enhancement for the class B notes has increased to 25.30% from
4.18% and to 8.83% from 1.45% for the class C notes of both
series (series 1 2006 and series 2 2007).

Cumulative gross defaults for the combined portfolio, which the
available excess spread has covered entirely, are EUR38.98
million during the amortization period, which represents 3.90% of
the collateral, at the end of the revolving period in May 2012.

According to the transaction documents, Sunrise series 1 2006 and
series 2 2007 both have a cumulative default trigger, which may
defer the payment of the class B and C notes' interest once the
net cumulative default ratio hits 7.66% and 4.40%, respectively.
On the May 2014 interest payment date (IPD), the transaction's
net default ratio increased to 3.13% from 2.81% as of the
February 2014 IPD.

S&P believes that the class C notes' cumulative default ratio is
more likely to potentially exceed the trigger over the next 18
months.  A breach of the trigger could result in the deferral of
interest due on the class C notes.  S&P has therefore lowered to
'B+ (sf)' from 'BBB (sf)' its ratings on the class C notes in
series 1 2006 and series 2 2007.

The transactions have a split waterfall for interest and
principal, but principal funds are available to pay the interest
shortfalls.  If the respective trigger level is breached, and
there is a lack of excess spread or new defaults are not covered,
the interest will be diverted to fully repay the principal on the
senior classes of notes.

As a result of S&P's analysis of the portfolio's performance and
the available credit enhancement for the class A and B notes, S&P
has affirmed its ratings on these classes of notes in both
series.

The portfolio comprises three revolving pools of performing
consumer loans (new vehicle loans, used vehicle loans, and
personal loans).  The series 2 2007 notes began amortizing in
August 2012, whereas the series 1 2006 notes began amortizing in
August 2011.

Agos-Ducato is the originator of Sunrise's series 1 2006 and
series 2 2007, which closed in May 2006 and May 2007,
respectively.

RATINGS LIST

Class       Rating          Rating
            To              From

Sunrise S.r.l.
EUR1.014 Billion Limited-Recourse Asset-Backed
Floating-Rate Notes Due 2030
Series 1 2006

Rating Affirmed

B           A (sf)

Rating Lowered

C           B+ (sf)         BBB (sf)

Sunrise S.r.l.
EUR507.25 Million Limited-Recourse Asset-Backed
Floating-Rate Notes Due 2030
Series 2 2007

Ratings Affirmed

A           AA (sf)
B           A (sf)

Rating Lowered

C           B+ (sf)         BBB (sf)


WIND ACQUISITION: S&P Assigns 'BB' Rating to EUR4.065BB Notes
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' issue
ratings to the proposed EUR4.065 billion equivalent senior
secured fixed- and floating-rate notes to be issued by Wind
Acquisition Finance S.A. (WAF), a subsidiary of Italy-based
telecommunications company Wind Telecomunicazioni SpA (Wind).
The issue rating is one notch above the corporate credit rating
on Wind.  At the same time, S&P assigned a recovery rating of '2'
to the notes, indicating its expectation of recovery prospects of
70%-90%, although at the low end of this range.

At the same time, S&P affirmed its 'BB' issue ratings on the
senior secured term loans borrowed by Wind and the existing
senior secured notes issued by WAF.  The recovery ratings on
these notes remain '2'.  S&P also affirmed its 'B' issue rating
on the unsecured notes issued by WAF.  The recovery rating on
these notes remains '6'.

S&P expects that WAF will onlend the proceeds of the proposed
notes to Wind for the repayment of about EUR575 million of senior
secured term loans and the existing senior secured notes due in
2018.  S&P's issue and recovery ratings are subject to its
satisfactory review of the final documentation.

In S&P's view, recovery prospects for senior secured lenders are
supported by the notes' secured position in the capital structure
and its expectation that Wind will reduce debt over the medium
term, potentially through proceeds from asset sales.  However,
the collateral provided to senior secured notes is fair, given
than it predominantly comprises pledges over shares in group
companies, receivables, and bank accounts.  Although the
collateral package is marginally weaker than that provided to the
senior secured loans, which benefit from a "privilegio speciale"
over intellectual property and moveable assets, S&P believes that
this is mitigated by the loss-sharing provisions under the
intercreditor agreement.

The documentation for the proposed notes includes some
protections against raising additional indebtedness in the form
of a 5x total leverage test, but also allows for senior credit
facilities of up to EUR2.955 billion.  While change of control
provisions are in place under the documentation for the proposed
notes, as with the recently issued senior notes, S&P understands
that these would only trigger if the purchaser had a smaller
market capitalization than Wind's parent company Vimpelcom, or if
total leverage was higher than 4.25x.

S&P values the business as a going concern, reflecting its view
of Wind's good market position in Italy, established network
assets, and valuable customer base.

S&P's simulated default scenario assumes that a default is
triggered by operating underperformance as a result of lower
revenue growth and margin erosion in the mobile segment, along
with significant capital investment.  S&P assumes that EBITDA
would have declined to about EUR1.45 billion by its hypothetical
point of default in 2018.

Assuming a valuation multiple of 5x leads to a stressed
enterprise value of EUR7.23 billion.  From this, S&P deducts
about EUR0.5 billion of enforcement costs, leaving a net
enterprise value of EUR6.72 billion.  Assuming EUR7.2 billion of
senior secured debt outstanding at default (including six months'
prepetition interest and assuming the EUR600 million revolving
credit facility is fully drawn), S&P sees recovery prospects of
70%-90%, although at the low end of this range.  S&P caps the
recovery rating on the secured debt at '2' to reflect the
company's exposure to the Italian insolvency regime, which S&P
views as relatively unfavorable for creditors.  After repayment
of the secured debt, there are no remaining recovery prospects
for the unsecured noteholders.


WIND TELECOMUNICAZIONI: Moody's Affirms B2 Corp. Family Rating
--------------------------------------------------------------
Moody's Investors Service affirmed the B2 corporate family rating
(CFR) and B2-PD probability of default ratings (PDR) of WIND
Telecomunicazioni S.p.A. (WIND) following the announcement that
its subsidiary Wind Acquisition Finance S.A. (WAF) is looking to
issue around EUR4,065 million of new financing through a new
senior secured EUR500 million 2020 floating rate note and a new
EUR 3,565 million (equivalent) 2020 senior secured note split in
EUR and USD.

Concurrently, Moody's has assigned a provisional rating of (P)Ba3
to the new notes and affirmed the Ba3 rating on WIND's senior
secured facilities, Caa1 rating on WAF's senior notes and WAF's
Ba3 rating on the senior secured notes (maturing 2019 and 2020).
The outlook for WAF and WIND is stable.

WAF plans to use the proceeds of the new Senior Secured Notes to
refinance its existing 2018 Senior Secured Notes and the proceeds
of the new Floating Rate Notes to be lent to WIND to refinance
the part of its Term Loans A and B which were not extended as
part of the amend and extend exercise concluded in April 2014.

Ratings Rationale

WIND's B2 corporate family rating (CFR) reflects (1) the
company's high leverage, expected at around 5.7x Moody's adjusted
debt/EBITDA at closing of the transaction (based on 2013 EBITDA);
(2) weak growth expectations in 2014 as the Italian macro-
economic outlook remains uncertain and the local
telecommunications sector recovers from last year's aggressive
summer promotions which had a pronounced negative effect on the
industry; (3) weak free cash flow generation relative to the
large debt burden of the company.

However, more positively, the rating also continues to reflect
WIND's (1) solid and growing share of the telecommunications
services market in Italy and its strong competitive positioning
vis-...-vis its main competitors, Telecom Italia S.p.A. (Ba1
negative) and Vodafone Group Plc (A3 rating under review); (2)
diversified business model, with the company being active in
mobile, fixed-line voice and broadband internet; (3) support from
its parent, VimpelCom Ltd (Ba3 stable) as evidenced by
Vimpelcom's EUR500 million cash injection earlier this year; and
(4) improved cash flow generation ability in the long term as the
current refinancing is expected to yield savings on cash interest
costs.

The current refinancing is expected to marginally increase WIND's
debt quantum through transaction costs and the call premium due
on the redemption of WAF's Senior Secured Notes. However, the
improvements in WIND's free cash flow ability as well as the
extended maturity profile of the company's debt -- with no
material payment due before 2019 -- outweigh any increase in
leverage. The B2 rating continues to reflect Moody's view that
WIND's leverage is likely to remain above 5.0x throughout 2014,
and this despite the planned tower disposal process (expected to
conclude end 2014) from which WIND expects to generate between
EUR300 and EUR 500 million in cash. As previously stated by
Moody's, the resulting leases from the sale and lease back
transaction of WIND's towers would be capitalized and included in
WIND's adjusted indebtedness as per Moody's standard adjustments.

WIND has adequate liquidity supported by a long and back-ended
maturity profile. As part of the current transaction, the company
has also sought commitments from its lenders to make use of the
EUR200 million accordion feature of its revolving credit
facility, hence increasing the size of its RCF to EUR600 million
although the company is not expected to make use of the
additional availability. WIND's cash flow generation will also
improve following the transaction as the company expects to be
able to refinance at lower cash interest rates. Moody's however
notes that WIND's free cash flow generation will remain low
relative to the carried quantum of debt and, in the medium term,
is unlikely to allow the company to meaningfully reduce its
leverage.

The provisional (P)Ba3 ratings on WAF's proposed new Senior
Secured Notes and Floating Rate Notes reflects their first
priority ranking security over certain WIND assets ahead of
around EUR4.0 billion of subordinated debt including EUR3.8
billion equivalent of Caa1 rated 2021 Senior Notes.

What Could Change the Rating DOWN:

Moody's could downgrade WIND's ratings if the company's leverage
were to increase towards 6.0x, or if WIND's free cash flow
generation were to materially deteriorate as a result of lower
than expected performance.

What Could Change the Rating UP:

WIND's ratings could be upgraded were the company's leverage to
decrease to 5.0x. A rating upgrade would also hinge on WIND's
ability to generate meaningful free cash flow so that the
company's RCF/Debt as adjusted by Moody's were to increase
towards 10%.


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.



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


CARLSON TRAVEL: Moody's Rates US$360MM PIK Toggle Notes '(P)Caa1'
-----------------------------------------------------------------
Moody's Investors Service assigned a (P)Caa1 rating with a stable
outlook to the proposed USD360 million PIK toggle notes due 2019
to be issued by Carlson Travel Holdings, Inc. (CTH). At the same
time, Moody's has placed Carlson Wagonlit B.V.'s (CWT) corporate
family rating (CFR) of B1 and probability of default rating (PDR)
of B1-PD under review for downgrade. Moody's has also put the
USD100 million revolving credit facility (RCF) of Ba1 -- made
available to Carlson Wagonlit UK Limited, CWT Beheermaatschappij
B.V., and Carlson Wagonlit Travel, Inc. -- under review for
downgrade.

In addition, Moody's has affirmed the existing B1-ratings on
CWT's senior secured notes due 2019. The affirmation reflects
Moody's view that negative pressure on ratings linked to a lower
CFR under the new structure would be offset, in the case of the
senior secured notes, by an uplift resulting from the addition of
the subordinated PIK Toggle Notes to the debt structure. The
affirmation of the rating is consistent with the fact that the
PIK notes are effectively ring-fenced from the senior secured
notes borrowing group.

"Upon the successful closing of the transaction Moody's expect to
move the CFR from Carlson Wagonlit B.V to Carlson Travel Holdings
reflecting Moody's view that all of CWT's group debt including
the new PIK Toggle Notes should be considered in the consolidated
metrics", said Knut Slatten, Moody's Assistant Vice President and
Lead Analyst for CWT. This will also lead to downwards pressure
on the company's financial metrics, such as leverage, interest
cover and cash flow generation. "As a result Moody's expect to
downgrade the CFR and PDR to B2 and B2-PD respectively, upon
transaction closing, with a stable outlook. Moody's also expect
to downgrade the RCF to Ba2", adds Mr.Slatten.

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

Ratings Rationale

On June 23, 2014, Carlson -- which currently owns 55% of CWT --
announced it will buy JP Morgan's 45% stake in CWT. The review
for downgrade of the CFR, PDR and RCF follows the launch of the
offering of USD360 million PIK Toggle Notes by CTH (expected to
close in early July), which is the entity through which Carlson
owns its 55% interest in CWT (and will own its 100% interest
following completion of the proposed transaction). The proceeds
from the PIK Notes will -- together with common equity from
Carlson -- be used to finance the proposed transaction. As part
of the transaction, CWT also announced it would launch a tender
offer for approximately USD50 million of its outstanding senior
secured notes. Upon closing of the transaction, Moody's expects
to assign the CFR to the level of CTH and, simultaneously,
withdraw the existing CFR at Carlson Wagonlit B.V.

Moody's expects there will be no changes to CWT's underlying
strategy following the buyout. Gross leverage (including the PIK
notes and pro-forma for the USD50 million tender offer) as
adjusted by Moody's is expected to be at 5.7x at the transaction
closing.

Carlson Travel Holdings is a holding company with no independent
business operations and will rely on cash up-streaming from its
subsidiaries to service interest on the PIK notes. The proposed
PIK Toggle Notes include a "pay if you can" mechanism of cash
interest payments, subject to availability of cash and the
maximum amount of permitted dividends, distributions or
restricted payments available for up-streaming.

The (P)Caa1 of the PIK Toggle Notes reflects their subordination
to all other debt within the group. The notes will be senior
unsecured and will not be guaranteed by any of CTH's subsidiaries
(including the current bond group).

CWT's operating performance was negatively impacted during 2013
by a combination of (1) challenging operating environment for
business travel in Europe during the first half of the year; (2)
steep pressure on revenues from CWT's business with the US
Government and military; and (3) a high level of restructuring
costs taken notably in the first half of the year. As a result,
the company's EBITDA declined by USD53 million to reach USD196
million (against USD249 million in FY2012). Supported by a more
favourable macro-economic environment, the environment for
business travel improved in the second half of 2013. "We believe
this trend is likely to continue in 2014, albeit slowly, and
forecast CWT to return to a modest revenue growth in EMEA", notes
Mr.Slatten.

Liquidity Profile

Moody's anticipates that the company's liquidity profile will
remain adequate following the transaction. Pro-forma for the
transaction, CWT will have cash-balances of around USD121 million
and an additional liquidity cushion supported by expectations of
free cash flow generation and access to a USD100 million super
senior RCF. Moody's expects, however, an ongoing cash leakage out
of the restricted group in order to serve interest payments on
the PIK toggle notes and this may have an influence on the
company's financial policies. Moody's also notes that the PIK
notes at some point may add an additional layer of event risk to
the structure should the PIK notes remain in place for a longer
period of time and there would be a need for refinancing.

Principal Methodologies

The principal methodology used in these ratings was the Global
Business & Consumer Service Industry published in October 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 the Netherlands, Carlson Wagonlit B.V. is a
global leader in travel management serving corporations of all
sizes and government institutions. The company reported net
revenues of USD1.7 billion and an EBITDA of USD196 million in
FY2013.


* NETHERLANDS: Corporate Bankruptcies Down in May 2014
------------------------------------------------------
Statistics Netherlands reports that in May this year, 551
businesses and institutions (excluding one-man businesses) were
declared bankrupt, i.e. 165 fewer than in April 2014.

The drop in the number of bankruptcies is partly due to the extra
day courts were in session in April, Statistics Netherlands
notes.

The number of bankruptcies in May 2014 was 31% below the level of
May 2013, when 800 business and institutions were declared
bankrupt, Statistics Netherlands discloses.

According to Statistics Netherlands, the number of bankruptcies
declined notably in the sectors trade and specialist services,
e.g. consultancy and research.  Nevertheless, these sectors
accounted for the highest number of bankruptcies (94 and 86
respectively), just as in the preceding month, Statistics
Netherlands states.



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


LEXGARANT INSURANCE: S&P Lowers IFS Rating to 'B'; Outlook Stable
-----------------------------------------------------------------
Standard & Poor's Rating Services said that it has lowered its
long-term insurer financial strength rating and counterparty
credit rating on Russia-based LEXGARANT Insurance Co. Ltd. to 'B'
from 'B+'.  The outlook is stable.

S&P also lowered the Russia national scale rating to 'ruA-' from
'ruA'.

"The downgrade reflects our view of the weakening of LEXGARANT's
competitive position, as demonstrated by a substantial decrease
in GPW in 2013 and loss of market share in the Russian aviation
sector.  Our anchor remains at 'bb-', derived from the combined
assessment of the company's vulnerable business risk profile and
weak financial risk profile.  Our view of weak management and
governance is also unchanged, which leads to a two-notch downward
adjustment from the anchor.  In light of the weakness of the
competitive position, however, we have removed the one-notch
upward adjustment that recognized LEXGARANT's established
position in the aviation insurance niche and material excess
capital, which makes it less exposed to large single losses than
peers of a similar size," S&P said.

LEXGARANT's less-than-adequate competitive position is weighed
down by a number of factors, such as difficulty retaining its
position in the local market, its small size to take on
international business, and the subdued  macroeconomic operating
environment.  The drop in premiums in 2013 followed two years
with no premium growth.

The stable outlook reflects S&P's view that LEXGARANT will be
able to at least sustain its current level of premiums, from
aviation and other segments, within the next 12 months.  In
particular, S&P assumes that, should aviation premiums decrease
further, the company would be able to compensate for them by
obtaining premiums from other segments.  In addition, the stable
outlook also reflects S&P's view that the company will preserve
capital and earnings at the lower adequate level.

S&P would consider a negative rating action if LEXGARANT's
competitive position weakened further, as shown by an additional
significant drop in premium volume in the aviation segment
without a pickup in premiums from other sectors.

In addition, a negative rating action could follow in case of
deterioration in the company's financial risk profile, notably
through increased volatility of the capital base.

S&P views a positive rating action as remote at this stage as it
would depend on a reversal of recent trends in LEXGARANT's
competitive position.



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


BANCO MARE: Fitch Affirms 'BB+' LT Issuer Default Ratings
---------------------------------------------------------
Fitch Ratings has affirmed Spain-based Banco Mare Nostrum S.A.'s
(BMN) and Liberbank, S.A.'s Long-term Issuer Default Ratings
(IDR) at 'BB+' in line with their Support Rating Floor (SRF).
Fitch has also upgraded BMN's Viability Rating (VR) to 'bb-' from
'b+' and Liberbank's VR to 'bb' from 'bb-'. The Outlooks on the
Long-term IDRs are Negative.

The agency has simultaneously affirmed Liberbank's bank
subsidiary Banco de Castilla-La Mancha, S.A. (Banco CLM). A full
list of rating actions is at the end of this rating action
commentary.

The upgrade of the banks' VRs mainly reflects their strengthened
capital, supported chiefly by balance-sheet deleveraging. In the
case of Liberbank, capital ratios have also improved following a
recently completed capital increase. The upgrades also consider
the improving operating environment in Spain, which should
potentially benefit asset quality and revenue prospects.

KEY RATING DRIVERS - IDRS, SENIOR DEBT, SUPPORT RATING AND SRFS
BMN's and Liberbank's IDRs, Support Ratings (SR), SRFs and senior
debt ratings are driven by Fitch's expectation of a moderate
probability of support from the Spanish state (BBB+/Stable), if
required. The Long-term IDRs are at their SRFs. The SRFs
currently reflect the two banks' regional systemic importance to
Spain.

The Negative Outlooks reflect Fitch's opinion that there is a
clear intent to reduce implicit state support for financial
institutions in the EU, as shown by a series of legislative,
regulatory and policy initiatives, including the EU's Bank
Recovery and Resolution Directive (BRRD) and the Single
Resolution Mechanism (SRM).

RATING SENSITIVITIES - IDRS, SENIOR DEBT, SUPPORT RATING AND SRF

BMN's and Liberbank's Long-term IDRs and senior debt ratings are
predominantly sensitive to the same factors that may drive a
change in their SR and SRF.

The SR and SRF are sensitive to a weakening of Fitch's
assumptions around the ability and willingness of the authorities
to support banks. Of these, the greatest sensitivity is to
progress made in the implementation of BRRD and SRM, which will
result in a revision of the SR and SRF to '5' and 'No Floor',
most likely in the remainder of 2014 or 1H15. Such a downward
revision of BMN's and Liberbank's SR and SRF will result in the
Long-term IDRs becoming driven by the VRs at that time.

KEY RATING DRIVERS - VRs

The upgrade of BMN's and Liberbank's VRs largely reflects capital
improvements. Both banks' capital ratios have continued to
improve thanks to further asset de-risking, in compliance with
restructuring plans approved by the European authorities; and
from lower deductions on capital for deferred tax assets,
especially BMN, as a result of the government's amendment to
corporate tax legislation in November 2013.

Liberbank's capital base has also been materially reinforced by
an equity issue of EUR575 million completed on June 17, 2014,
raising its Fitch core capital (FCC)/weighted risks ratio to an
estimated 10.5% at end-1Q14. This compares with an estimated
FCC/weighted risks ratio of 9.5% for BMN at that date. Fitch
expects capital to be further supported by earnings and
additional de-leveraging. Liberbank's Fitch eligible
capital/weighted risks ratio (12.7%) is higher as it includes
EUR0.2 billion of convertibles and EUR124 million of CoCos from
Spain's Fund for Orderly Bank Restructuring (FROB).

While Liberbank expects to repay state aid in full by late 2014,
BMN remains 65%-owned by the FROB. BMN will be challenged by its
privatization process, which it plans to start ahead of schedule
by no later than 2015.

Asset quality weakened further in 2013 at both banks. This
continued into 1Q14 at BMN, due to restructured loan
reclassifications. However, the pace of deterioration has slowed,
particularly at Liberbank. Fitch's base case is that this trend
will continue as the economy recovers.

At end-1Q14, BMN's non-performing loan (NPL) ratio was 13.8% and
Liberbank's was a below-average 10.7%. This reflects the
resilience of Liberbank's large residential mortgage book. While
coverage ratios appear relatively low under a stress scenario at
36% for BMN and 44% for Liberbank, the majority of NPLs have
mortgage collateral, providing additional risk protection.
Liberbank also has an asset protection scheme (APS) from the
Deposit Guarantee Fund over a legacy stock of gross loans
equivalent to 14%. The bulk of APS loans are linked to real
estate developers, virtually all of which are classified as NPLs,
heavily affecting asset quality. Fitch believes Liberbank's most
sizeable challenge will be to manage down the APS assets. BMN has
a larger restructured loan portfolio, which could carry add-on
credit risks.

The banks' profitability remained weak in 2013 due largely to
margin contraction and impairments. However, the restructurings
agreed with the European Commission are now virtually completed
and funding costs are trending downwards. In Fitch's view, these
factors should support underlying profitability, although
impairments will remain high for at least the rest of 2014,
reducing the banks' ability to boost capital through internal
generation.

BMN's and Liberbank's funding and liquidity compare favorably
with many peers, aided by asset transfers to SAREB (a "bad bank"
created by the Spanish government) and strong de-leveraging.
Furthermore, deposit franchises have remained resilient, despite
the banks' restructurings. Fitch calculates loan/deposit ratios
slightly below 100% for both banks and unencumbered liquid asset
pools are ample in relation to debt maturities. ECB borrowings,
at 10.5% of total assets for Liberbank and 12.4% for BMN, are
relatively large and used to support profitability, while funding
from the repo markets is limited.

RATING SENSITIVITIES - VRs

Liberbank's and BMN's VR are largely sensitive to developments in
asset quality and earnings. A further upgrade of Liberbank's VR
would most likely arise from progress made in the reduction of
the APS portfolios and further evidence of asset quality
stabilization. The latter also applies to BMN, whose VR would
also be upgraded if capital is reinforced.

Conversely, while the probability is currently limited, BMN's and
Liberbank's VRs would potentially be downgraded due to failure to
achieve improved profitability following recent restructurings
and/or if there is any unforeseen stress in asset quality.

SUBSIDIARY AND AFFILIATED COMPANY KEY RATING DRIVERS AND
SENSITIVITIES

Banco CLM, a 75%-owned bank subsidiary of Liberbank, is the spun-
off banking business of the failed Caja de Ahorros de Castilla-La
Mancha (CCM) and is fully consolidated into the group accounts.

Banco CLM's IDRs and senior debt ratings are aligned with
Liberbank's as Fitch views Banco CLM as an integral part of
Liberbank's core business. Banco CLM strengthens the bank's
franchise and expands geographical diversification. Banco CLM is
also highly-integrated into the group.

Banco CLM's IDRs are sensitive to those of Liberbank and/or to
any change in the level of relative importance of Banco CLM
within the group, which Fitch sees as very unlikely.

The rating actions are as follows:

BMN:

Long-term IDR: affirmed at 'BB+'; Outlook Negative
Short-term IDR: affirmed at 'B'
VR: upgraded to 'bb-' from 'b+'
Support Rating: affirmed at '3'
SRF: affirmed at 'BB+'
Commercial Paper Long-term rating: affirmed at 'BB+'
Commercial Paper Short-term rating: affirmed at 'B'
Senior unsecured debt Long-term rating: affirmed at 'BB+'
Senior unsecured debt Short-term rating: affirmed at 'B'
State-guaranteed debt: affirmed at 'BBB+'

Liberbank:

Long-term IDR: affirmed at 'BB+'; Outlook Negative
Short-term IDR: affirmed at 'B'
VR: upgraded to 'bb' from 'bb-'
Support Rating: affirmed at '3'
SRF: affirmed at 'BB+'

Banco CLM:

Long-term IDR: affirmed at 'BB+'; Outlook Negative
Short-term IDR: affirmed at 'B'
Support Rating: affirmed at '3'
Senior unsecured debt: affirmed at 'BB+'



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


AVANTI COMMUNICATIONS: Moody's Affirms Caa1 Corp. Family Rating
---------------------------------------------------------------
Moody's Investors Service affirmed the Caa1 corporate family
rating (CFR) and B3-PD probability of default rating (PDR) of
Avanti Communications Group plc (Avanti or the company). It also
affirms the Caa1 rating on the amended and increased Senior
Secured Notes, maturing 2019, issued by Avanti. The outlook on
the ratings is stable.

Ratings Rationale

The recently announced add-on funding will enable Avanti to
commence the construction of its new, HYLAS 4 satellite which is
expected to cost c.USD350 million. The company plans to launch
HYLAS 4 in Q2 2017, following the anticipated launch of HYLAS 3
in early 2016. The launch of HYLAS 4 would provide Avanti with
significantly increased Ka-band service capacity.

In addition to raising the add-on facility the company has
received lender consent to raise up to a maximum of USD125
million of further Senior Secured debt in the future, which will
only be available if USD100 million of further subordinated
capital is raised beforehand or concurrently. These additional
funds will be used to complete the build and launch of the HYLAS
4 satellite.

Moody's recognize the increase in collateral value of the
company's assets as a result of the construction of HYLAS 4.
Nevertheless, in Moody's view the increased amount of debt and
higher interest costs at this time will further constrain the
company's financial flexibility and significantly increase the
amount of leverage, which is already high compared to peers, at a
vulnerable point in the company's development.

The change in outlook from positive to stable reflects Moody's
expectation that the additional investment to fund HYLAS 4 will
weigh on free cash flow, increase debt levels and increase the
time frame for deleveraging. Based on the increased amount of
debt, Moody's now estimate that Moody's adjusted leverage as at
year end 2014 will be significantly above 10x - Moody's
expectation at closing of the transaction in October 2013.

The Caa1 ratings reflect the company's limited scale compared to
its larger peers, weak credit metrics and limited financial
flexibility, while also recognizing the company's young satellite
fleet with long residual lives and focus on faster growing target
markets.

Avanti's rating is constrained by its relatively small size with
a current fleet of only three satellites, which is reflected in
the company's projected revenues for the twelve months ended 30
June 2014 of c. USD65 million, which are very low relative to its
peers. The small scale leaves Avanti very exposed to the outcome
of a satellite anomaly or total loss. The company faces
competition from other satellite operators offering alternative
Ku and Ka-band services. The attractive Ka-band market dynamics
may encourage operators to continue developing and launch
competing satellites with Ka-band capacity. This could result in
increasing time taken to fill satellite capacities. Furthermore,
the rating is constrained by the company's highly leveraged
capital structure and weak credit metrics. Following the
currently proposed add-on financing, leverage is expected to
remain significantly above 10x for the duration of FY2014 and
FY2015 with interest coverage below 1.0x. Additionally, free cash
flow is not expected to turn positive until FY-2017. The weak
financial profile of the business constrains financial
flexibility in the short term. Although reducing, Avanti still
has significant customer concentration in terms of revenues. The
loss of, or a significant reduction in business with the
company's largest customers, including renewals on weaker
commercial terms could adversely affect its financial position.

Positively, the rating is supported by the company's three
satellites, of which two have recently entered operations and
have long expected remaining useful lives. Most recently they
acquired Artemis, a satellite launched in 2001, in December 2013
for no upfront consideration. Furthermore, the two newer
satellites incorporate the latest technology including steerable
beams, wide transponders and variable payloads. Beyond the
immediate 12 -- 18 months, Moody's expect that as satellite
utilization ramps-up, the stable cost base will lead to
significant drop through of revenue to the bottom line and
ultimately into strong cash conversion. The incremental growth in
EBITDA will drive solid deleveraging, while the low capex nature
will support positive free cash flow generation.

Moody's consider Avanti's liquidity profile as adequate. Moody's
estimate that the company's capex not relating to investment in
additional satellite capacity will be low at around USD3 million
per annum. Cash flow generation is expected to increase
significantly by FY2018 as a result of significant growth in
EBITDA following the launch of HYLAS 3.

Avanti has to pay a further USD53 million towards HYLAS 3, which
Moody's expect to be funded from internal cash generation and
cash balances. The proposed investment in HYLAS 4 will amount to
around USD350 million and require additional financing to be
raised, the absence of which would weigh negatively on cash flow
and liquidity.

There is no external RCF, although Moody's expect that the
business will be capable of funding itself over the next 12-18
month period. As the satellite capacity utilizations ramp-up,
Moody's anticipate increasing cash conversion due to the high
operational gearing.

The stable outlook reflects Moody's expectations that Avanti will
continue to execute its business plan, driving improved financial
metrics over the next 12 to 18 months.

What Could Change the Rating - UP

Given the small scale of Avanti's business, upward pressure on
the rating would be dependent upon a sustained reduction in
leverage driven by strong EBITDA growth and FCF turning positive.
Moody's would also expect to see continued growth in the backlog
and reducing customer concentration.

What Could Change the Rating - DOWN

Avanti's rating could experience downward pressure if the company
significantly deviates from its projected growth path.
Specifically, if FCF remains negative and leverage remains above
10x, the expected subordinated capital fails to materialize, or
the company experiences the total loss of a spacecraft.

These metrics incorporate Moody's usual adjustments.

Principal Methodology

The principal methodology used in this rating was the Global
Communications Infrastructure Rating Methodology published June
2011. Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the US, Canada and
EMEA published in June 2009.

Corporate Profile

Avanti Communications Group Plc, (Avanti, or the company) is a
fixed satellite service provider with licenses for four
geostationary orbital slots. The company sells satellite data
communications services to telecoms companies which use them to
supply enterprise, institutional and consumer users. Avanti's
first satellite, HYLAS 1, launched in November 2010 and was one
of the first Ka-band satellites launched In Europe. Avanti's
second satellite, HYLAS 2, was launched in August 2012 and
extends coverage to Africa, the Caucasus and the Middle East.
HYLAS 3 will also serve Africa following its expected launch in
2016.

Founded in 2002, the present group was formed when the company
floated on the Alternative Investment Market in 2007. The company
reported revenues and EBITDA of GBP20.6 million and GBP8.1
million for the last 12 months ended June 30, 2013.


BOPARAN FINANCE: Moody's Rates GBP800MM Sr. Unsec. Notes '(P)B1'
----------------------------------------------------------------
Moody's Investors Service has assigned (P)B1 ratings to Boparan
Finance plc's envisaged GBP800 million equivalent senior
unsecured notes. The new notes are expected to include a
combination of GBP and EUR denominated tranches maturing in 2019
and 2021. Net proceeds from the notes after fees and expenses
will be used to repay the senior notes due 2018 including the
call premium and for general corporate purposes.

Boparan Holdings Limited's corporate family rating (CFR) at B1
and probability of default rating (PDR) at B1-PD are unchanged.

Moody's issues provisional ratings in advance of the final sale
of securities. Upon closing of the transaction and a conclusive
review of the final documentation, Moody's will endeavor to
assign definitive ratings. A definitive rating may differ from a
provisional rating.

Ratings Rationale

Pro-forma the envisaged refinancing, the group's debt capital
structure will consist of GBP800 million equivalent of senior
unsecured notes due 2019 and 2021 issued by Boparan Finance plc,
which is a holding company subsidiary of Boparan Holdings
Limited. A GBP60 million unsecured revolving credit facility due
2019 has also been put in place at Boparan Holdings Limited.

The notes and the revolving credit facility are issued on a
senior unsecured, pari passu basis and guaranteed by operating
subsidiaries accounting in aggregate for 89.7% of LTM Apr-14
EBITDA. However, the revolving credit facility benefits from a
first priority ranking on enforcement pursuant to the
intercreditor agreement, and hence is effectively senior to all
the group's other debt including the notes.

The B1 corporate family rating (CFR) assigned to Boparan
incorporates the group's (1) high financial leverage with
Moody's-adjusted gross debt to EBITDA of 6.0x as of LTM Apr-14
and pro-forma the envisaged transaction; (2) challenging trading
environment, primarily in the Chilled segment; (3) exposure to
volatile raw material prices; and (4) the group's high geographic
and customer concentration.

However, more positively, the rating also reflects Moody's
positive view that Boparan (1) is a leading food manufacturer
with considerable scale and product diversification; (2) has
leading market positions across nearly all of its segments,
especially within its poultry and private-label offerings; (3)
long-standing relationships with key customers; and (4) has a
resilient business model, as demonstrated by the group's ability
to pass through raw material price changes and maintain a good
liquidity position despite a tough trading environment.

Moody's views Boparan's liquidity profile for the next 12 to 18
months as good. Moody's expects Boparan to cover working capital
swings and capital expenditures with internally generated cash
flow. Pro-forma the envisaged refinancing, the group will not
face any debt maturity before 2019. Additionally, the group will
have cash available of GBP159 million and access to an undrawn
GBP60 million revolving credit facility maturing in 2019.

The stable outlook reflects Moody's expectations that Boparan
will be able to improve its overall level of profitability
notably thanks to the effect of cost synergies, address the
challenges in its Chilled segment, and maintain a good liquidity
profile over the next 12 to 18 months. The stable outlook also
does not accommodate any material debt-funded acquisition
activity, or shareholder-friendly actions such as dividend
payments.

What Could Change the Rating - UP

Positive pressure could arise if Moody's-adjusted gross
debt/EBITDA ratio falls to 4.50x on a sustained basis, whilst
significantly improving margins and maintaining a solid liquidity
profile.

What Could Change the Rating - DOWN

The ratings could be lowered if earnings deteriorate, resulting
in the Moody's-adjusted gross debt/EBITDA ratio remaining
sustainably above 5.50x over the next 12 to 18 months, or if free
cash flow falls towards zero and/or liquidity concerns emerge,
including any potential pressure on the group's financial
covenants. Moody's could also consider downgrading the ratings in
event of any material acquisitions or change in financial policy.

Principal Methodology

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

Boparan is the parent holding company of 2 Sisters Food Group, a
manufacturer of diversified food products in the poultry, red
meat, chilled, bakery, and frozen categories.


BOPARAN HOLDINGS: S&P Affirms 'B+' CCR; Outlook Stable
------------------------------------------------------
Standard & Poor's Ratings Services said that it affirmed its 'B+'
long-term corporate credit rating on U.K.-based food
manufacturer, Boparan Holdings Ltd.  The outlook is stable.

At the same time, S&P assigned a 'B+' issue rating to the
proposed GBP800 million equivalent senior unsecured notes to be
issued by Boparan Finance PLC.  S&P assigned a recovery rating of
'4' to the proposed notes, indicating its expectation of average
(30%-50%) recovery in the event of a payment default.

The issue and recovery ratings on the proposed senior secured
notes are based on preliminary information and are subject to the
successful issuance of the notes and S&P's satisfactory review of
the final documentation.

The affirmation reflects S&P's view that the refinancing will not
weaken Boparan's debt protection metrics beyond the levels it
assumes under its base case, and are therefore neutral to its
assessment of Boparan's financial risk profile.

Boparan plans to refinance its existing debt of about GBP676
million with new proposed notes of about GBP800 million.  The new
notes would be multi tranche and would be due in 2019 and 2021.
Based on this, in S&P's view, Boparan's leverage ratio will
increase to about 7.4x for 2014 from 5.9x for the 12 months ended
July 31, 2013.  S&P considers the GBP130 million shareholder loan
at Boparan Holdco Ltd. as debt.

S&P projects under its base case that Boparan will maintain
Standard & Poor's-adjusted funds from operations (FFO) cash
interest cover of about 2.5x in 2014, improving thereafter.  This
reflects S&P's view that, despite the increase in reported debt,
S&P expects that the interest expense on the proposed notes will
be reduced by about GBP25 million from GBP73 million in 2013.

S&P derives its 'B+' long-term corporate credit rating on Boparan
from its anchor of 'b', which in turn is based on its assessments
of Boparan's business risk profile as "fair" and its financial
risk profile as "highly leveraged."

"We move the anchor upward by one notch based on our assessment
of comparable rating analysis.  The positive comparable rating
analysis reflects our view that Boparan's FFO cash interest cover
would be at 2.5x and would improve thereafter.  Our assessment
reflects our view that the company would have stable
discretionary cash flows at about GBP40 million, well-managed
working capital, and a track record of acquisitions funded by
internally generated cash flow," S&P said.

S&P's assessment of Boparan's business risk profile as "fair"
incorporates Boparan's market-leading positions in its core
categories and geographies and its good cash conversion into
positive free cash flow.  Boparan also has a good relationship
with key customers such as Tesco PLC, Marks & Spencer PLC, Asda,
Aldi, and J Sainsbury PLC.  Relatively good diversification in
terms of products and brands also supports S&P's assessment of a
"fair" business risk profile.

S&P believes that Boparan's competitive position is restricted by
its operations in the highly competitive food category, Boparan's
narrow geographic diversity, and its dependence on the U.K.
market, which accounts for about 85% of revenues (by
destination).

In addition, Boparan's focus on private label business gives the
company limited flexibility to improve its EBITDA margins.
Boparan's product range includes private-label products, which
S&P believes creates pricing pressure and inhibits Boparan's
ability to pass on price increases to customers when competing
with branded multinational players.

Boparan's exposure to volatile raw material prices could also
constrain the group's margins.  However, S&P notes that the
company now has a cost pass-through mechanism in place, which
would benefit the group in passing on raw material inflation.

S&P's assessment of Boparan's financial risk profile as "highly
leveraged" primarily reflects the high debt burden.  It further
reflects S&P's calculations that the group's adjusted debt-to-
EBITDA ratio will remain close to 7.4x including the shareholder
loan for 2014, and about 6.1x excluding the loan, despite modest
EBITDA growth and cash generation.

Boparan has a track record of stable cash generation relative to
its peers in the 'B' rating category and S&P expects to see at
least GBP35 million-GBP40 million in discretionary cash flow.
However, S&P takes a 100% haircut on surplus cash as it believes
that the company has a track record of using internally cash
generated funds to fund its acquisition rather than to repay
debt.

S&P's base case for Boparan assumes:

   -- Revenues reaching about GBP3.4 billion in 2014, which
      reflects impact from the Vion acquisition.

   -- Adjusted EBITDA margins remaining at about 4.5%-5.0% for
      the next two years.

   -- Capital expenditure of about GBP60 million-GBP70 million,
      equivalent to about 2% of sales.

   -- A 100% haircut applied to cash.

Based on these assumptions, S&P expects to arrive at the
following credit measures:

   -- Debt to EBITDA at about 7.4x for 2014 and about 7.6x for
      2015.

   -- Funds from operations to cash interest coverage of around
      2.5x for 2014 and about 2.9x for 2015.

S&P assess Boparan's liquidity position as "adequate" under its
criteria, based on its forecast that liquidity sources will be
sufficient to cover liquidity needs by more than 1.2x over the
next 12 months, under its base-case scenario.  Even if EBITDA
declines by 15%-20%, S&P believes that net sources will remain
positive.

Principal liquidity sources over the next 12 months include:

   -- Cash and cash equivalents of GBP115 million as of April
      2014;

   -- An undrawn revolving credit facility (RCF) of GBP60
      million; and

   -- FFO of above GBP50 million.

Principal liquidity uses over the next 12 months include:

   -- Capital expenditure of about GBP60 million-GBP70 million
      for the next two years.

   -- About GBP10 million for bolt-on acquisitions.

The stable outlook on Boparan reflects S&P's view that the group
will likely maintain positive revenue growth and stable margins
over the next 12 to 18 months.  S&P considers an adjusted FFO-to-
interest coverage ratio of about 2.5x and "adequate" liquidity to
be commensurate with the 'B+' rating.

In S&P's opinion, a positive rating action is remote at this
stage.  S&P bases its view on Boparan's most recent acquisition,
which has been credit dilutive and is expected to restrain the
company's profitability over the medium term.  However, S&P could
consider a positive rating action if the company is able to
reduce its debt to EBITDA to less than 5x on a fully adjusted
basis.

S&P could take a negative rating action if liquidity becomes
materially weaker due to reduced profitability and/or increased
acquisition activity and restructuring costs, and if FFO cash
interest coverage falls to less than 2.0x.


DEBENHAMS PLC: Moody's Assigns 'Ba3' Corporate Family Rating
------------------------------------------------------------
Moody's Investors Service has assigned a Ba3 corporate family
rating (CFR) and Ba3-PD probability of default rating (PDR) to
Debenhams plc. Concurrently, Moody's has assigned a provisional
(P)Ba3 rating, with a loss given default (LGD) assessment of
LGD4, to the proposed GBP200 million worth of senior unsecured
notes due 2021 to be issued by the company. The outlook on the
ratings is stable.

"The assigned Ba3 rating reflects Debenhams' established market
position and high visibility in the UK, its diversified product
ranges and its growing online and international sales," says Lola
Cavanilles, a Moody's Associate Vice President and lead analyst
for Debenhams. The rating is nevertheless constrained by
Debenhams' recent operating performance, where profitability has
been affected by the challenging UK retail environment,
competition from on-line sales, and the company's own heavy
promotional activity in the run-up to the 2013 Christmas season
which weakened reported earnings.

The proceeds from the proposed notes issuance will be used to
prepay some of the company's existing credit facilities, which
include a revolving credit facility and term loan. The proposed
transaction will extend Debenhams' debt maturity schedule and be
supportive of the company's overall liquidity profile.

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

Ratings Rationale

-- Ba3 CFR/Ba3-PD PDR --

The Ba3 CFR is supported by Debenhams' (1) solid market position
in the UK, backed by a portfolio of well-invested department
stores in prime locations; (2) diversified product ranges
including clothing and non-clothing products such as beauty and
home ware, and the successful 'Designers at Debenhams' concept;
and (3) growing online and international sales (mostly through
lower risk franchise stores). The rating also incorporates a
rather transparent financial policy, including a self-imposed
target of reported net debt/EBITDA moving towards 1.0x over the
medium term (it was 1.4x as of August 2013) and the termination
of the share buyback program in December 2013.

The rating nevertheless reflects Moody's view that Debenhams is
exposed to (1) a highly competitive and promotional environment
which is exerting pressure on UK department stores' sales growth
and profitability; and (2) fashion risk, albeit the company's
extensive use of the 'shop-in-shop' retail model, especially in
young fashion, alleviates these concerns and inventory risks.
Finally, whilst Moody's recognizes that Debenhams is taking steps
to recover more of its fulfillment and delivery costs, the
company's margins could erode as a result of increasing online
sales and, to a certain extent, more international franchise
store sales.

The company's profits in the first half of FY2014 (to 1 March
2014) weakened as a result of a heavy promotional activity in the
pre-Christmas period, as well as strong competition from other
retailers with more effective multi-channel operations. The
company's strategy is to improve its own online offering, while
reducing its promotional activity, in order to strengthen
reported results. Moody's also believes that Debenhams will need
to focus on strong inventory management, as the Christmas season
is crucial for the company's annual earnings and cash flow.
Absent progress in these areas, anticipated improvement in
operating performance might not materialize, and could leave the
rating weakly positioned.

Debenhams' liquidity profile is satisfactory overall, underpinned
by a cash balance of approximately GBP31 million as at 2 March
2014 and access to a new GBP450 million revolving credit facility
expiring in October 2018. Moody's expects that Debenhams will
maintain comfortable leeway under the facility's two maintenance
financial covenants. The rating agency nevertheless cautions that
(1) the business is highly seasonal, with a disproportionate
amount of earnings generated during the Christmas and New Year
period and sizeable fluctuations in working capital needs during
the year; and (2) the company's free cash flow will be limited
this year, on the basis of the company's higher capex.

-- (P)Ba3 RATING ON SENIOR UNSECURED NOTES --

The (P)Ba3 (LGD4) rating assigned to Debenhams' proposed senior
unsecured notes due 2021 is in line with the CFR. The company's
debt structure consists primarily of a GBP450 million revolving
credit facility and the proposed notes, which rank pari passu
among themselves. These senior unsecured obligations are
guaranteed by Debenhams' principal subsidiaries, which as of half
year 2014 represented 91%, 88% and 85% of the company's
consolidated turnover, EBITDA and total assets, respectively.

Rationale For The Stable Outlook

The stable outlook on the ratings reflects Moody's view that the
company will manage to at least stabilize its profitability in
the coming quarters. However, Moody's believes that the company's
current transformation plan -- implying still high capex in the
medium term -- will likely constrain any improvement in key
metrics in the next three years. Moody's expects the company to
retain a conservative financial policy with regards to share
repurchases and acquisitive growth in order to remain in the
current rating category. The rating anticipates that the company
will maintain its adjusted EBITA/interest expense coverage ratio
above 2.25x (2.5x as of March 2014). Any shortfall in performance
could adversely affect the rating.

What Could Change The Rating Up/Down

Upward pressure on the rating could result from a material
improvement in the company's profitability such that its coverage
ratio exceeds 3.0x on a sustainable basis.

Conversely, Moody's could downgrade the ratings if Debenhams'
performance weakens such that EBITA/interest expense declines
below 2.25x, or its free cash flow remains negative over a
prolonged period of time. Indications of constraints on the
company's liquidity could also trigger a rating downgrade.

Principal Methodology

The principal methodology used in these ratings was the Global
Retail Industry rating methodology, 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.

Debenhams plc is one of UK's leading department stores, with a
portfolio of 159 stores in the UK, 11 in the Republic of Ireland,
6 in Denmark and 67 franchise stores in 25 other countries. In
its financial year ended 31 August 2013, Debenhams generated
GBP2.3 billion in revenue and an EBITDA of GBP263 million.


DEBENHAMS PLC: S&P Assigns 'BB-' CCR; Outlook Negative
------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned its
'BB-' long-term corporate credit rating to U.K. department store
operator Debenhams PLC.  The outlook is negative.

S&P also assigned its 'BB-' long-term issue rating to Debenhams'
proposed GBP200 million senior unsecured notes.  The recovery
rating on the notes is '3', indicating S&P's expectation of
"meaningful" (50%-70%) recovery for creditors in the event of a
default.

The issue ratings are subject to the successful issuance of the
notes and S&P's review of the final documentation.  If Standard &
Poor's does not receive the final documentation within a
reasonable timeframe, or if the final documentation departs from
the materials S&P has already reviewed, it reserves the right to
withdraw or revise its ratings.

The rating reflects S&P's view of Debenhams' "satisfactory"
business risk profile and "aggressive" financial risk profile, as
S&P's criteria define the terms.  S&P combines these factors to
derive an anchor of 'bb'.  The rating incorporates a one-notch
downward adjustment to the anchor for our "comparable rating
analysis," whereby S&P reviews Debenhams' credit characteristics
in aggregate.  This primarily reflects S&P's view that Debenhams'
business risk profile is at the lower end of the "satisfactory"
category.

The business risk profile assessment reflects Debenhams' position
as a leading U.K. department store operator, with a strong
mid-market position, above-average adjusted profitability, and a
growing presence online and overseas.

"In our view, Debenhams will continue to face intensified
competition from larger retailers such as Marks & Spencer and
Next, and also from specialty apparel retailers such as New Look.
That said, Debenhams' business model benefits from its
multi-brand approach, with a combination of own-brands,
international brands, and concessions on a wide product
assortment. Debenhams' profitability, which we still regard as
"above average," is supported by its exclusive core and designer
brands, which comprise about one-half of its total sales, and the
above-average volume of products that it sources directly from
suppliers," S&P said.

These strengths are partially offset by Debenhams' exposure to
seasonality; shortened inventory cycles due to fast-changing
fashion trends, customer tastes, and spending patterns; and its
susceptibility to weak economic conditions.  These factors cause
us to position Debenhams' business risk profile at the lower end
of the "satisfactory" category.

"Our assessment of Debenhams' "aggressive" financial risk profile
reflects the company's high adjusted debt, after accounting for
substantial operating lease commitments.  Although the proposed
refinancing transaction will extend the debt maturity profile and
will have positive implications for liquidity, we believe that
this will not materially impact Debenhams' financial risk
profile. The bulk of Debenhams' adjusted debt (more than 85%)
relates to the capitalization of operating lease commitments.
Without factoring these in, Debenhams' adjusted debt to EBITDA
would be only around 1.6x.  Furthermore, in our view, Debenhams'
free operating and discretionary cash flow generation and its low
level of on-balance-sheet financial debt provide it with
considerable financial flexibility," S&P added.

"Notwithstanding the EBITDA margin decline, in our base-case
scenario we anticipate that Debenhams will be able to generate
Standard & Poor's-adjusted discretionary cash flow (DCF) of
around GBP70 million-GBP80 million, after factoring in capital
expenditure (capex) of about GBP135 million and dividend payments
of about GBP40 million," S&P added.

"We have revised our GDP projection for the U.K. substantially,
thanks to growth gaining momentum more quickly than we previously
anticipated.  We now project 2.7% GDP growth this year (versus
2.3% in our December 2013 forecast) and 2.4% in 2015 (2.0% in our
December forecast).  So far, consumer demand, up by 2.4% last
year, is essentially driving this revival.  Although we
anticipate that many U.K. retailers with strong brands and market
positions could benefit from the positive consumer sentiment,
competition remains intense and we believe promotional activity
will continue to be an enduring feature of the U.K. market, at
least during 2014," S&P noted.

Against this backdrop of intensely competitive trading and
somewhat positive macroeconomic conditions, S&P forecasts overall
group top-line growth in the low single digits.

In S&P's view, market conditions will remain highly competitive
and management will find it difficult to sustainably overcome
various operating challenges.  Debenhams' management is aiming to
build a more competitive multi-channel offering and improve the
overall operational effectiveness of the business.  However, S&P
considers that these measures, together with Debenhams' track
record of maintaining positive life-for-like (LFL) sales, may not
be wholly successful in reversing Debenhams' profitability
decline or improving the company's credit metrics meaningfully
over 2014 and 2015.

S&P's base case assumes:

   -- Positive overall LFL sales trends over 2014 and 2015.  S&P
      anticipates that online and international LFL sales growth
      will continue to offset contraction in U.K. stores.  New
      retail space growth will remain limited as the company
      focuses on internal operational improvements.

   -- A decline in gross margins of about 50-70 basis points
     (bps) over 2014.

   -- A drop in the adjusted EBITDA margin of up to 100 bps to
      18.8% in 2014, followed by marginal improvements owing to
      Debenhams' targeted focus on improving promotional
      strategy, inventory management, and employment of
      underutilized store space.

   -- An increase in capex to GBP135 million in the financial
      year ending Aug. 31, 2014, from GBP115 million.

   -- Stable dividends of about GBP40 million and no share
      buybacks in the near term.

   -- On the completion of refinancing, the revolving credit
      facilities drawn and part of the existing term loan will be
      refinanced by the senior notes.

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

   -- Adjusted debt to EBITDA increasing to around 6x and
      adjusted funds from operations (FFO) to debt declining to
      around 9% in 2014 and 2015.  Both of these core credit
      ratios will remain in the "highly leveraged" financial risk
      profile category.

   -- DCF to debt and EBITDA interest coverage should remain in
      the "aggressive" financial risk profile category.

   -- Adjusted free operating cash flow of around GBP120 million-
      GBP130 million in 2014 and 2015, with DCF remaining
      positive at about GBP80 million in 2014 and 2015.

The negative outlook reflects S&P's view that declining
profitability and challenging market conditions for U.K.
department stores could cause Debenhams' competitiveness to
deteriorate, and consequently weaken the company's credit metrics
beyond the levels S&P considers adequate for the current rating.

S&P could lower the rating if Debenhams' credit metrics continue
to weaken on the back of challenging trading conditions and lower
profitability.

"Specifically, we could consider a downgrade if Debenhams' DCF-
to-debt ratio falls below 2% and deteriorates to the "highly
leveraged" financial risk profile category.  In our view, this
could occur if free operating cash flow declines on the back of
lower profits, or if there are unexpected operating setbacks due
to a decline in sales, increased competition, a weakening market
share, or brand damage.  We could also lower the rating if
Debenhams adopts a more aggressive financial policy with respect
to growth, investments, or shareholder returns, causing DCF to
decline," S&P said.

"Finally, we could lower the rating if Debenhams' business risk
profile comes under strain due to a sustained weak trading
outlook in the U.K. retail market, accompanied by a significant
drop in sales, trading margins, or market share," S&P noted.

S&P could revise the outlook to stable if Debenhams succeeds in
reversing the currently negative operating trends and maintains a
resilient competitive position.  An outlook revision to stable
could also occur if, on the back of a sustained improvement in
trading and margins, Debenhams improves its free cash flow
generation, causing adjusted FFO to debt to improve to above 12%,
with debt to EBITDA remaining less than 5x on a consistent basis.
This is contingent on S&P's assessment that these ratios are
sustainable, with a financial policy commitment from management
to using DCF for debt reduction.


EUROSAIL PRIME-UK: S&P Withdraws 'D' Ratings on 4 Note Classes
--------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its credit ratings on
Eurosail PRIME-UK 2007-A PLC's pre-restructuring class M, B, C,
and D notes.  At the same time, S&P has raised to 'AAA (sf)' from
'B (sf)' and removed from CreditWatch positive its rating on the
class A1 notes (the class A notes before the transaction's
restructuring).  S&P has assigned its 'AA (sf)' rating to the
class A2 notes.  Eurosail PRIME-UK 2007-A also issued unrated
class M, B, C, and CR notes.

Eurosail PRIME-UK 2007-A previously issued class A, M, B, C, and
D notes when it closed on Feb. 4, 2008.  In February 2014, the
issuer redenominated the notes in British pound sterling and
recollateralized them by writing down the class M, B, C, and D
notes by 13.03% each.

As part of the restructure's second stage, the issuer
redesignated the original class A notes as class A1 notes,
canceled the pre-restructuring class M, B, C, and D notes, and
issued new class A2, M, B, C, and CR notes.

S&P's ratings reflect the transaction's payment structure and
cash flow mechanics, as well as the results of S&P's cash flow
analysis to determine whether the notes could be repaid under
stress test scenarios.  The transaction pays pro rata between
September 2015 and when the outstanding collateral balance
declines to 10% of the original collateral balance, unless 90+
days delinquencies reach 15%, or the reserve fund is drawn.  S&P
has reviewed the cash flow results in a pro rata repayment
scenario.

The transaction does not have a swap agreement to hedge against
interest rate mismatches.  It benefits from a fully funded
reserve fund of 0.9% of the outstanding balance.  It also has a
liquidity reserve that will trap principal until it reaches
GBP1.8 million, which may amortize to 1.5% of the outstanding
balance of the class A1 notes from September 2015.  Under the
transaction documents, the issuer can use the liquidity reserve
to cover shortfalls on the class A1 notes and to pay senior
expenses.  Furthermore, it can use principal receipts to cover
interest shortfalls on the class A1 and A2 notes (subject to
certain conditions), and to pay senior expenses.

Since the February 2014 restructuring, the transaction is no
longer exposed to foreign currency fluctuations, in S&P's view.
At the same time, as part of the new structure, the available
credit enhancement for the class A1 notes is sufficient to
withstand the stresses that S&P applies at a 'AAA' rating
scenario.  S&P has therefore raised to 'AAA (sf)' from 'B (sf)'
and removed from CreditWatch positive its rating on the class A1
notes.

S&P has assigned its 'AA (sf)' rating to the newly issued class
A2 notes because it considers the available credit enhancement,
the additional liquidity support provided by the liquidity
reserve, and the ability to use principal to cover interest
payments to be commensurate with this rating.

Eurosail PRIME-UK 2007-A is a U.K. residential mortgage-backed
securities transaction backed by mortgages that Alliance &
Leicester originated.

RATINGS LIST

Eurosail PRIME-UK 2007-A PLC
GBP165.571 Million Floating-Rate Notes (Including GBP0.50 Million
Reserve-Backed
Notes)

Class    Rating           Rating
         To               From

Ratings Withdrawn

B        NR               D (sf)
C        NR               D (sf)
D        NR               D (sf)
M        NR               D (sf)

Rating Raised and Removed From CreditWatch Positive

A1       AAA (sf)         B (sf)/Watch Pos

Ratings Assigned

A2       AA (sf)
M        NR
B        NR
C        NR
CR       NR

NR-Not rated.


EUROSAIL-UK 2007-A: Fitch Assigns 'Csf' Rating to Class C Notes
---------------------------------------------------------------
Fitch Ratings has upgraded Eurosail-UK Prime 2007-A's class A1
notes and assigned ratings to the class A2, M, B and C notes, as
follows:

  GBP117,477,000 Class A1: upgraded to 'AAAsf' from 'BB+sf';
  Outlook Stable

  GBP17,825,400 Class A2: assigned 'A+sf'; Outlook Stable

  GBP9,144,889 Class M: assigned 'Asf'; Outlook Stable

  GBP8,967,461 Class B: assigned 'BBBsf'; Outlook Stable

  GBP11,655,614 Class C: assigned 'Csf'; Recovery Estimate of 45%

  GBP500,000 Class CR: not rated

The rating actions reflect the second stage restructuring of the
transaction on June 23, 2014, following the first stage
restructuring that was executed on February 6, 2014.

KEY RATING DRIVERS

New Capital Structure
The second phase of the transaction restructure involves a
restatement of the outstanding class A note balance to GBP117.5
million from GBP135.3 million and a subsequent renaming of the
tranche to class A1. Simultaneously, the existing class M, B, C
and D tranches have been cancelled and new notes -- the class A2,
M, B, C and CR -- have been issued. The aggregate current balance
of the newly-restated class A1 and newly-issued class A2 equates
to the pre-restructured class A note balance. Similarly, the
aggregate balance of the newly-restructured class M, B, C and CR
is equivalent to that of the pre-restructured class M, B, C and D
notes.

As a result of the restructuring, the available credit
enhancement for the rated A1, A2, M, B and C notes presently
stands at 29.7%, 18.9%, 13.4%, 8.0% and 0.9%, respectively. The
credit support is contributed by a GBP1.5m reserve fund that is
permitted to amortize once it reaches 1.5% of the outstanding
note balance (currently 0.9%) to a floor amount of GBP0.5
million; provided amongst various conditions that the three-
months plus arrears (which have been redefined, as part of the
first stage restructure, to exclude delinquencies owing to
outstanding fees and charges) do not exceed the trigger threshold
of 15%.

Liquidity Enhancement
From the September 2014 payment date, principal receipts up to a
cumulative amount of GBP1.8 million will be diverted towards the
establishment of a liquidity reserve. This liquidity reserve is
available to cover class A1 interest shortfalls and will amortize
from September 2015 provided that it is fully funded in the prior
period and no drawing is required on the current payment date.

Following a full depletion of the liquidity reserve, the
transaction structure also now incorporates the ability for
principal to be diverted to cover interest shortfalls on the
class A1 in all instances and for the class A2 provided that the
principal deficiency does not exceed 75% of the class A2 note
balance.

Robust Asset Performance
The underlying portfolio includes a relatively large portion of
interest-only mortgages (85%) and loans that were originated at
the peak of the market in 2007 (88%). Additionally, buy-to-let
mortgages and self-certified borrowers make up 57% and 43% of the
portfolio, respectively. Despite these adverse characteristics,
the portfolio has continued to perform well, with three-months
plus arrears as of March 2014 at less than 0.7% of the
outstanding collateral balance. Additionally, the number of
properties taken into possession over the life of the transaction
has remained limited so that losses incurred to date currently
stand at 16bp of the original portfolio balance. Consequently, in
its analysis, Fitch has given credit to the asset's robust
performance by reducing the underwriting hit applied in the
derivation of the portfolio's overall default probability.
Nonetheless, the agency remains cautious about the potential
implications on affordability when interest rates rise (expected
before the end of 2015) considering the relatively low current
portfolio weighted-average interest rate of 2.6%.

RATING SENSITIVITIES

A modest rise in interest rates could lead to deterioration of
the asset portfolio performance. If losses exceed Fitch's
expectations, the relatively thin reserve fund could provide
insufficient support against depleting excess spread levels and
negative rating actions could be taken, particularly on the
junior tranches.

Additionally, the relatively weak triggers linked to pro-rata
note amortization, including the 15% threshold for three-months
plus in comparison with actual performance, could prevent future
upgrades on the mezzanine and junior tranches due to
concentration risks.


FAB UK 2004-1: S&P Affirms 'CCC-' Ratings on 3 Note Classes
-----------------------------------------------------------
Standard & Poor's Ratings Services affirmed its credit ratings on
FAB UK 2004-1 Ltd.'s class A-1E, A-1F, A-2E, A-3E, A-3F, BE, and
S1 notes.

The rating actions follow S&P's credit and cash flow analysis of
the transaction using data from the trustee report dated
April 30, 2014, and the application of its relevant criteria.

"We conducted our cash flow analysis to determine the break-even
default rate (BDR) for each rated class of notes.  The BDR
represents our estimate of the maximum level of gross defaults,
based on our stress assumptions, that a tranche can withstand and
still fully repay the noteholders.  We used the portfolio balance
that we consider to be performing, the reported weighted-average
spread, and the weighted-average recovery rates that we
considered to be appropriate.  We incorporated various cash flow
stress scenarios using our shortened and additional default
patterns and levels for each rating category assumed for each
class of notes, combined with different interest stress scenarios
as outlined in our criteria," S&P said.

S&P notes that defaulted assets currently account for over 10.54%
of the portfolio balance, which decreases the overall available
credit enhancement.

Both the class A and B notes' overcollateralization tests
continue to breach their required triggers, similar to what S&P
observed in its previous review.

The transaction's overall credit quality has remained stable
since S&P's previous review.  The portfolio's average rating
remains in the 'BB+' range.  With this, S&P's credit analysis
indicates that our scenario default rates (SDRs) -- the level of
defaults that S&P expects the transaction to incur at the
respective rating levels -- are relatively unchanged compared
with its 2012 review.  However, the portfolio has become more
concentrated since S&P's previous review, with the largest
obligor representing 6.24% of the performing portfolio's balance.

The transaction's reinvestment period ended in June 2009.  Since
S&P's previous review, the class A-1E and A-1F notes have on
aggregate amortized by approximately EUR17.69 million.  However,
over 53% of the class A-1 notes' original principal balance still
remains outstanding.  As a result of the senior notes
deleveraging, the available credit enhancement has marginally
increased for all classes of notes.

S&P's largest obligor test highlights that the maximum rating
that the class BE notes can achieve is 'CCC- (sf)'.  This test
measures the risk of several of the largest obligors within the
portfolio defaulting simultaneously.  S&P introduced this
supplemental stress test in its 2009 corporate CDO criteria.  S&P
has therefore affirmed its 'CCC- (sf)' rating on the class BE
notes.

S&P's credit and cash flow results indicate that the available
credit enhancement for all of the classes of notes is
commensurate with its currently assigned ratings.  S&P has
therefore affirmed its ratings on all classes of notes.

FAB UK 2004-1 is a cash flow mezzanine structured finance
collateralized debt obligation (CDO) transaction that closed in
April 2004.

RATINGS LIST

Class        Rating            Rating
             To                From

FAB UK 2004-1 Ltd.
GBP214.5 Million Fixed-, Floating-, and Zero-Coupon Notes

Ratings Affirmed

A-1E         BB+ (sf)
A-1F         BB+ (sf)
A-2E         B+ (sf)
A-3E         CCC- (sf)
A-3F         CCC- (sf)
BE           CCC- (sf)
S1           BB+ (sf)


HEART OF ENGLAND: Undergoes Liquidation; Blames Gov't for Woes
--------------------------------------------------------------
Olivia Midgley at Farmers Guardian reports that Heart of England
Fine Foods (HEFF) has gone into liquidation.

According to Farmers Guardian, the company blamed a combination
of factors for its fall into debt.  In a statement, the company
blamed the government for being "short sighted" for not accepting
its funding application through the UK Trade and Investment
Group, Farmers Guardian relates.

In a statement, the company, as cited by Farmers Guardian, said:
"This decision has not been an easy one to take and does not
reflect the hard work and commitment of the team of 15 staff but
as a board of directors we have no other choice."

Heart of England Fine Foods is based in Shropshire.


HEATHROW FINANCE: Fitch Affirms 'BB+' Rating on High-Yield Bonds
----------------------------------------------------------------
Fitch Ratings has affirmed Heathrow Funding Limited's (Heathrow
Funding) bonds issued under its debt issuance program and
Heathrow Finance Plc's (Heathrow Finance or the holdco) high-
yield bonds, as follows:

Heathrow Funding Limited
Class A bonds: affirmed at 'A-', Outlook Stable
Class B bonds: affirmed at 'BBB', Outlook Stable

Heathrow Finance plc
High-yield (HY) bonds: affirmed at 'BB+', Outlook Stable

The affirmations reflect Heathrow's (LHR) solid operational
performance to date and relatively more favorable and stable
economic conditions expected for the five years to come.

KEY RATING DRIVERS

Fitch's ratings are based on the following factors, among others:

Volume Risk - Stronger
LHR is a large hub/gateway airport serving a very strong origin
and destination market. It experienced strong traffic growth of
3.4% in 2013 (up from 0.9% in 2012), and has so far this year
shown signs of continued positive trend as traffic rose 2.2% in
the first five months of 2014.

From a long-term perspective, LHR benefits from resilient traffic
performance with a maximum peak-trough fall in traffic of just
4.4% through the recent economic crisis (which was one of the
strongest in the industry). This is due to a combination of
factors which Fitch views as stable over time, namely: the
attractiveness of London as a world business centre; the role of
LHR as a hub offering very strong yield for its resident
airlines; the location and connectivity of LHR with the well-off
western and central districts of the city; and the capacity
constraint at LHR (with only two runways) suggesting there exists
unsatisfied demand, which also helps absorbing shocks.

Price Risk - Midrange
LHR is subject to economic regulation, with a price cap
calculated under a single till methodology based on RPI+X, and is
currently set at RPI-1.5% for the new regulatory period from
April 2014 (down from RPI+6.5% in the previous Q5 period). The
cap is set for five years by an independent regulator, the CAA,
which, among its duties, ensures that airports' operations and
investments remain financeable.

The price cap is established to offset LHR's significant market
power and is highly sensitive to the assumptions made by the
regulator on several building blocks such as cost of capital,
traffic forecast and operational efficiency. The regulatory
process that leads to the cap determination is transparent but
creates material uncertainty every five years. Price cap
settlements can prove detrimental to the airport, as CAA's
assumptions can appear aggressive. For example, the traffic
forecast for Q5 was calculated before the 2007-2008 crisis and
proved overly optimistic. This was, however, partly offset by
higher-than planned inflation.

Infrastructure Development / Renewal - Stronger
LHR aims to implement a detailed capital investment plan, agreed
to by the regulator. The new plan for Q6 with around GBP3.5
billion of investment is more modest than Q5 (at over GBP5
billion) and Fitch does not expect any particular issues,
particularly in light of LHR's overall sound track record in
delivering projects on time and on budget. The regulated asset
base approach allows for the self-financing of the investments
through the tariff. After delivery of a brand new T2 in 2014, LHR
will mostly feature state-of-the art terminals. The building of a
third runway is currently being reviewed (among other options
from other airports) by the Airports Commission with final
recommendation due in summer 2015.

Debt Structure - Midrange (Class A) / Weaker (Class B and HY)
The class A debt benefits from its seniority and protective debt
structure (ring-fencing of all cash flows from LHR and a set of
covenants limiting leverage). It is exposed to some hedging and
refinancing risk, which is mitigated by strong market access, due
to an established multi-currency debt platform and the use of
diverse maturities. Class B and Heathrow Finance's debt have a
weaker debt structure due to their subordination.

Credit Metrics
Fitch's rating case resembles CAA's final decisions for Q6, in
particular with regard to traffic growth with a five-year CAGR of
0.5%. The notable differences are with regard to inflation with
the RPI over the forecast horizon lower by 100bps (at around 2.4%
on average in Q6, in line with current RPI), less efficiency
savings achieved (over GBP200 million higher opex in Q6) and new
debt cost higher by 200bps in years two and five (with senior
debt all-in-cost at 7.3%), reflecting adverse financing
conditions.

Under this scenario, EBITDA is expected to grow at a 5-year CAGR
of 3.3% (from GBP1,421 million in 2013) and LHR should be able to
maintain post-maintenance and tax interest cover ratios (PMICR)
for each class of debt at levels above Fitch's rating thresholds
of 1.5x-1.6x for an 'A-' rating, 1.2x-1.3x for a 'BBB' rating,
and 1.1x-1.15x for a 'BB+' rating. The average PMICR over Q6 for
the 'A-'-rated class A bonds is around 1.68x, for the 'BBB'-rated
class B bonds 1.36x and the 'BB+'-rated HY bonds 1.26x. The
Fitch-calculated net senior leverage ratio remains at around 7x
for the next five years, well within criteria guidance of 7x to
10x for strong hub airports.

RATING SENSITIVITIES
The Stable Outlook reflects the expectation that LHR will
continue to see stable performance, despite potentially
challenging economic prospects. A marked and sustained slowdown
of the British economy could derail LHR's record of resilience.
Evidence of recessionary prospects over a prolonged horizon (two
years) or failure to achieve operational efficiency gains could
prompt a revision of the Outlook to Negative. Net debt/EBITDA
above 8.5x and PMICR below 1.6x for class A could trigger a
downgrade.

On the contrary, a material and sustainable improvement in the
economic environment could support higher load factors and use of
larger aircrafts by airlines, in turn improving the passenger
throughput at LHR with a favorable impact on credit ratios. Net
debt/EBITDA consistently below 7x and average PMICR above 1.8x
for class A could trigger a rating upgrade.


                            *********

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 Amazon.com.  Go to
http://www.bankrupt.com/booksto order any title today.


                            *********


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

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

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

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Information contained herein is obtained from sources believed to
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