TCREUR_Public/140709.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, July 9, 2014, Vol. 15, No. 134

                            Headlines

F R A N C E

SGD GROUP: S&P Assigns 'B' Corp. Credit Rating; Outlook Stable
THOM EUROPE: Moody's Assigns '(P)B2' Corporate Family Rating
THOM EUROPE: S&P Assigns Preliminary 'B' CCR; Outlook Stable
WENDEL: S&P Raises CCR From 'BB+/B' to 'BBB-/A-3'; Outlook Stable


G E R M A N Y

TUI AG: S&P Revises Outlook to Positive & Affirms 'B' CCR


I C E L A N D

ICELAND VLNCO: Moody's Assigns '(P)B1' Rating to Sr. Sec. Notes


I R E L A N D

MERCATOR CLO I: S&P Cuts Rating on Class B-2 Def Notes to 'CCC-'


I T A L Y

CMC DI RAVENNA: Moody's Assigns '(P)B2' Corporate Family Rating
CMC DI RAVENNA: S&P Assigns Prelim. 'B' CCR; Outlook Stable


N E T H E R L A N D S

ST. JAMES'S PARK: S&P Lowers Rating on Class D Notes to 'B+'


P O R T U G A L

BANCO COMERCIAL: S&P Puts 'B' Rating on CreditWatch Positive


R U S S I A

SAMARA OBLAST: S&P Rates RUB12-Bil. Senior Unsecured Bond 'BB+'


S P A I N

FONDO DE TITULIZACION: Moody's Rates Serie C Notes '(P)Ca'


S W E D E N

NORCELL 1B: S&P Raises CCR to 'BB-' on Completed IPO


S W I T Z E R L A N D

DUFRY AG: S&P Affirms 'BB+' CCR on Nuance Acquisition Plan


U N I T E D   K I N G D O M

CNG HOLDINGS: Moody's Lowers CFR & Sr. Secured Rating to 'Caa1'
TES GLOBAL: S&P Assigns 'B' Corp. Credit Rating; Outlook Stable
TSL EDUCATION: Moody's Assigns 'B2' Corporate Family Rating


                            *********


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


SGD GROUP: S&P Assigns 'B' Corp. Credit Rating; Outlook Stable
--------------------------------------------------------------
Standard & Poor's Ratings Services said that it has assigned its
'B' long-term corporate credit rating to SGD Group SAS, a France-
based manufacturer of glass packaging for the pharmaceutical and
perfume industries.

"At the same time, we assigned our 'B' issue rating to SGD's
EUR350 million senior secured notes issued by SGD Group SAS and
zur 'B+' issue rating to its EUR35 million revolving credit
facility (RCF) issued by SGD S.A. and SGD Kipfenberg GmbH.  The
recovery rating on the EUR350 million senior secured notes is '4',
indicating our expectation of average (30%-50%) recovery prospects
for lenders in the event of a payment default.  The recovery
rating on the EUR35 million RCF is '2', indicating our expectation
of substantial (70%-90%) recovery prospects for lenders in the
event of a payment default," S&P said.

The rating on SGD reflects S&P's assessment of its business risk
profile as "fair" and its financial risk profile as "highly
leveraged," as S&P's criteria define these terms.

SGD is in the process of demerging its perfume business and has
refinanced its existing debt by issuing EUR350 million in senior
secured notes.  The demerger is being made in two stages.  In the
first phase, completed in April 2014, SGD transferred all its
perfume activities, except those located at the Mers-les-Bains
plant in France, and issued the senior secured notes.  SGD plans
to complete the second phase by the end of 2015 when the French
perfume business will be completely demerged.  This will happen
when the construction of a new plant in France catering solely for
the pharmaceutical packaging business is finished.  On completion
of the demerger, only a small perfume packaging operation will
remain in its production facility in China.

S&P's business risk profile assessment reflects SGD's relatively
limited scale and scope compared with its rated peers, its sole
focus on glass packaging for the pharmaceutical industry, and its
somewhat concentrated geographic focus -- Western Europe accounted
for nearly 60% of its revenues in 2013.  S&P's assessment also
incorporates the inherent risks associated with the successful
completion of the demerger process.  Nevertheless, the group has a
leading position in the niche market of pharmaceutical glass
packaging, and above-average profitability in this fairly stable
and consolidated market.  SGD also has longstanding relationships
with blue-chip customers, aided by stringent regulatory
requirements and high initial setup costs that limit new entrants
to the industry.  In addition, packaging generally accounts for a
small portion of the final product's cost.

S&P assess SGD's financial risk profile as "highly leveraged,"
owing to its private equity ownership and high debt leverage,
including the presence of shareholder loans, which S&P views as
debt under its criteria.  In addition, S&P expects free cash flow
generation to be negative over the next two years because of high
capital expenditure (capex) for the construction of a new plant.

The stable outlook reflects S&P's view that SGD Group's credit
metrics will remain broadly unchanged in 2014 and 2015 and be
commensurate with our highly leveraged financial risk profile
assessment.  The stable outlook also takes into account the
assumption that the demerger process will be successfully
completed by the end of 2015.

S&P might take a positive rating action if SGD showed a higher-
than-expected improvement in profitability, leading to stronger
credit metrics, in line with levels S&P views as commensurate with
an "aggressive" financial risk profile over a sustained period.
Specifically, this would include a ratio of adjusted FFO to debt
of more than 12% and debt to EBITDA of less than 5x, including
shareholder loans.  This would need to be accompanied by S&P's
revised assessment of the group's financial policy, given its
private equity ownership.  However, S&P views this scenario as
unlikely in 2014 and 2015 when the company is likely to report
negative free cash flow.

S&P might consider lowering the rating if the group's
profitability became significantly weaker than S&P currently
anticipates, resulting in credit metrics significantly lower than
S&P's base-case scenario.  Specifically, FFO cash interest
coverage below 2x for a sustained period of time would put
pressure on the ratings.  Unexpected delays to the demerger
process or emerging risks from it could further affect the
ratings.  Downside rating pressure might also appear if the
company took a more aggressive stance on financial leverage or
undertook any significant debt-funded acquisitions or shareholder-
friendly actions.


THOM EUROPE: Moody's Assigns '(P)B2' Corporate Family Rating
------------------------------------------------------------
Moody's Investors Service has assigned a first-time provisional
(P)B2 corporate family rating (CFR) to THOM Europe S.A.S. (Thom
Europe), a holding company owning all of the shares of Histoire
d'Or S.A.S. (Histoire d'Or).

Concurrently, Moody's has assigned a provisional (P)B2 rating,
with a loss given default (LGD) assessment of LGD5 to the proposed
EUR345 million worth of senior secured notes due 2019 to be issued
by Thom Europe. The outlook on the ratings is stable. This is the
first time that Moody's has assigned ratings to Thom Europe.

The proceeds from the proposed issuance will be used to (1) repay
part of the existing convertible bonds previously issued by Thom
Europe to its direct and indirect shareholders which include a
private equity consortium; (2) repay existing senior debt and bank
overdraft, (3) fund a EUR14 million acquisition and (4) pay
transaction costs. The remaining convertible bonds issued by Thom
Europe will continue to be held directly and indirectly by the
private equity consortium and management.

"The (P)B2 rating reflects Thom Europe's small size and its
reliance on the French domestic market," says Yasmina Serghini-
Douvin, a Moody's Vice President - Senior Analyst and lead analyst
for Thom Europe. "Moreover, the rating accounts for its exposure
to the cyclical jewellery industry, its high dependence on the
Christmas season, as well as its high leverage and limited
deleveraging prospects," continues Ms. Serghini-Douvin.

Nevertheless, the rating also factors in Thom Europe's well-known
brand names, its position as a market leader in a moderately
competitive industry, albeit with a modest market share, its
national coverage and its large product range covering gold,
silver and costume jewellery as well as watches. Moreover, the
group has a moderate exposure to fashion risk, records higher
profitability compared to other rated specialty retailers and
generates good cash flows from its operations.

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

--(P)B2 CFR--

The (P)B2 CFR reflects (1) Thom Europe's modest scale within
Moody's rating universe, with in-store revenue and 'adjusted'
EBITDA (as defined by the company) of EUR345 million and
EUR63 million, respectively, in the financial year ended September
30, 2013; (2) the cyclicality of the business, though this is
partly mitigated by its positioning in the mid-to-low budget
segment and a fairly low average basket (EUR88 including VAT at
the Histoire d'Or banner in the first half of the financial year
ending September 30, 2014); (3) its reliance on its domestic
market, France, which accounted for more than 92.5% of the group's
in-store sales in the twelve months ended
March 31, 2014. In this respect, Moody's cautions that the low
organic growth of the jewellery industry in France largely limits
the future growth of Thom Europe's profit to store openings and
acquisitions, which creates risks on the group's profit and
deleveraging trajectory. Thom Europe is also very reliant on the
Christmas season -- 23% of in-store sales in the financial year
ended September 30, 2013 -- which is amplified at the EBITDA level
by the group's operating leverage.

In addition, Thom Europe will be highly leveraged after the
proposed transaction. Moody's estimates that the group's adjusted
leverage (gross debt/EBITDA) will be approximately 6.5x pro forma
following the transaction at June-end 2014. In addition, the
rating incorporates Thom Europe's modest deleveraging prospects in
the next 12 to 18 months. For its calculation, the rating agency
considers the group's remaining convertible bonds to meet the
criteria for full equity credit as set by its methodology
published in July 2013.

On a more positive note, the (P)B2 rating acknowledges Thom
Europe's well-established brand names and its extensive store
network in France with a presence in most large and medium-sized
catchment areas and shopping malls. Moreover, the group has a
leading position in the French jewellery market and faces a more
benign competitive environment than its peers operating in the
apparel or home furniture retail industries for example given that
its competitors are largely small independent players. This, as
well as a short and fairly flexible sourcing and supply chain and
limited markdowns support a solid profitability with an EBITDA
margin in the high 20's/low 30's as adjusted by Moody's. The
group's flexible approach to its product range and a close
cooperation with suppliers also limits the fashion risk and to
some extent its exposure to raw materials price variations such as
gold prices (partly hedged by the group).

Thom Europe's liquidity profile is adequate. The proposed
refinancing will leave the group with a limited amount of cash on
balance sheet pro forma for the transaction (EUR10 million at the
end of June 2014), especially as this transaction will take place
before the summer, a period of higher working capital needs for
Thom Europe. The peak drawing under the RCF tends to occur in
September-November, when the group's trade payables are at their
lowest.

However, Moody's assessment of Thom Europe's liquidity factors in
expected positive free cash flow in the next 12 to 18 months and
access to a covenanted EUR60 million revolving credit facility
(with a maturity of 4.5 years) with limited conditionality, which
Moody's believes will be very important given the high seasonality
inherent in the group's operations.

--(P)B2 Rating On Senior Secured Notes--

The (P)B2 rating (LGD5), in line with the CFR, assigned to the
group's proposed senior secured notes due 2019 reflects their
position behind trade payables, and a committed EUR60 million
super senior RCF. The proposed notes and the RCF will benefit from
a similar maintenance guarantor package including upstream
guarantees from Histoire d'Or representing approximately 91.5% of
Thom Europe's consolidated revenue and 98.6% of its adjusted
EBITDA as of 30 September 2013. Both instruments will also be
secured, on a first-priority basis, by certain share pledges,
intercompany receivables, bank accounts, intellectual property
rights held by Histoire d'Or and going concerns (fonds de
commerce) of Histoire d'Or. However, the notes will be
contractually subordinated to the RCF with respect to the
collateral enforcement proceeds.

Moreover, Moody's cautions that there are significant limitations
on the enforcement of the guarantees and collateral under French
law, even though a portion of the notes' proceeds (EUR39 million)
will be lent to Histoire d'Or to repay its outstanding senior
debt. Furthermore, the super-senior facility will have only one
maintenance covenant (minimum EBITDA of EUR42 million) which will
be tested at quarter-end and only when the RCF is more than 25%
drawn. In Moody's opinion, this is not a very restrictive
covenant.

Rationale for the Stable Outlook

The stable rating outlook reflects Moody's expectation that Thom
Europe will maintain its currently high operating margins and a
positive free cash flow generation supported by a gradually
improving macroeconomic conditions in France. Moody's considers
that, after the proposed transaction, Thom Europe will be somewhat
weakly positioned within its rating category. To maintain the
current ratings with a stable outlook, Moody's expects Thom
Europe's adjusted (gross) debt/EBITDA to progressively decline
below 6.25x.

In addition, the (P)B2 CFR factors in an adequate liquidity
profile.

What Could Change the Rating Up/Down

Moody's could downgrade the ratings if Thom Europe's free cash
flow generation was negative for a prolonged period of time as a
result of a weakened operating performance or higher-than-expected
capital expenditures. Quantitatively, an adjusted (gross)
debt/EBITDA ratio remaining close to 6.5x could trigger a
downgrade.

Conversely, Moody's could upgrade the ratings if Thom Europe (1)
continues to grow and record above-peer profitability on the back
of more favorable economic conditions and high quality execution
of its store network expansion; and (2) increases substantially
its free cash flow generation. Quantitatively, stronger credit
metrics such as adjusted (gross) debt/EBITDA trending sustainably
towards 5.0x could trigger an upgrade.

Principal Methodologies

The principal methodology used in this rating was the Global
Retail Industry published in June 2011. Other methodologies used
include Loss Given Default for Speculative-Grade Non-Financial
Companies in the U.S., Canada and EMEA published in June 2009.
Other Factors used in this rating are described in Debt and Equity
Treatment for Hybrid Instruments of Speculative-Grade Nonfinancial
Companies, published in July 2013.

Headquartered in France (Paris), Thom Europe is one of the leading
jewellery and watches retail chains in Europe with in-store
revenues of EUR345 million in the financial year ended  September
30, 2013. Thom Europe's business model is based on directly
operated stores mostly located in shopping malls, in particular in
large catchment areas. As of March 2014, the group directly
operated 539 stores of which 490 in France (473 in shopping
centers and 17 in city centers).


THOM EUROPE: S&P Assigns Preliminary 'B' CCR; Outlook Stable
------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary 'B'
long-term corporate credit rating to France-based affordable
jewelry retailer THOM Europe S.A.S.  The outlook is stable.

At the same time, S&P assigned its preliminary 'B' issue rating to
the EUR345 million proposed senior secured notes due 2019.  The
recovery rating on these notes is '4', indicating S&P's
expectation of average (30%-50%) recovery prospects.

S&P also assigned its preliminary 'B+' issue rating to the
proposed EUR60 million super senior revolving credit facility RCF)
due 2019.  The recovery rating is '2', reflecting S&P's
expectation of substantial (70%-90%) recovery prospects.

The preliminary ratings are subject to the successful issue of the
abovementioned instruments and S&P's satisfactory review of the
final documentation.  If Standard & Poor's does not receive the
final documentation within a reasonable time frame, or if final
documentation includes any changes to the amounts, terms, or
conditions of the instruments, S&P reserves the right to withdraw
or change its corporate credit or issue ratings on THOM Europe.

The preliminary rating reflects S&P's view of THOM Europe's
business risk profile as "fair" and its financial risk profile as
"highly leveraged," according to S&P's criteria.

In October 2010, financial sponsors Bridgepoint and Apax partnered
with the THOM Europe management team to acquire French jewelry
retailer Histoire d'Or and merge it with the Marc Orian/TresOr
jewelry chain.  Since then, Bridgepoint has been THOM Europe's
majority shareholder, with a 59.1% stake, followed by Apax holding
25.3%.  Following the combination of these two leading players in
French jewelry and watch retail, THOM Europe benefits from a
leading position in shopping center distribution channels and
covers both the generalist and everyday-low-price segments through
three banners, Histoire d'Or and Marc Orian as generalists and
TresOr offering lower-priced items.

"We understand that management considers the integration of
Histoire d'Or on one side and Marc Orian/TresOr as complete, and
THOM Europe is now moving toward a consolidation and development
phase.  As part of this expansion phase, the company has announced
plans to revise its capital structure by issuing EUR345 million of
senior secured notes it will likely use to refinance about EUR203
million of net debt, repay roughly EUR154 million of convertible
bonds owned by shareholders, finance the acquisition of 31 stores,
and pay for approximately EUR14 million of transaction fees.  We
further understand that THOM Europe intends to sign a EUR60
million super senior RCF," S&P said.

"We view THOM Europe's financial risk profile as "highly
leveraged," although we recognize that some of its credit ratios
deviate from this assessment.  In particular, we believe that some
lease-adjusted ratios tend to understate THOM Europe's leverage,
given its operating lease structure composed of lease contracts
that can be cancelled every three years.  This is the case, for
example, with the ratios of funds from operations (FFO) to debt
and debt to EBITDA.  We therefore complement our analysis with
other ratios, such as the EBITDAR interest coverage ratio (a ratio
that measures an issuer's lease-related obligations by capturing
actual rents instead of minimum contractual rents), which reflects
a more leveraged financial risk profile for THOM Europe.  However,
we acknowledge that this ratio may not capture the company's
operating flexibility to terminate rents on a three-year basis if
a particular store is underperforming.  We consequently expect
that THOM Europe's Standard & Poor's adjusted debt to EBITDA will
remain slightly below 5.0x (or about 6.0x as of September 2014,
including adjustments except for operating lease obligations) but
that its EBITDAR interest coverage --currently at less than 2.2x -
- will move toward 1.6x, which is more commensurate with our
"highly leveraged" category," S&P noted.

Despite S&P's use of different ratios, it mainly bases its view of
THOM Europe's financial risk as "highly leveraged" on S&P's "FS-6"
(financial sponsorship) assessment, reflecting the company's
private equity ownership.

"We view THOM Europe's business risk profile as "fair,"
incorporating its status as France's largest jewelry retailer, a
successful commercial and supply strategy, solid operating margins
and good FOCF generation.  THOM Europe operates in a highly
fragmented industry where independent jewelry stores continue
representing a substantial 69% or so of the industry.  We believe
that the company has shown good ability to secure stores in
strategic and high-traffic locations, facilitated by its early
positioning in the shopping center segment and its longstanding
relationship with lessors.  We also believe that the company
benefits from a merchandizing strategy focused on own-products
with relatively low fashion risk and a compelling multiconcept
retail proposition.  Supplier concentration exists, but is partly
mitigated by THOM Europe's efficient supply chain management and
bargaining power since the company is a key client for these
suppliers, placing orders weekly," S&P said.

At the same time, the company's business risk profile is
constrained by its modest size and scale, and its narrow
geographic diversification, with approximately 90% of revenues
generated in France.  S&P considers jewelry expenditures to be
particularly discretionary and easily substitutable, although S&P
acknowledges the company's good track record in capturing
recurring sales.  In addition, S&P's assessment factors in THOM
Europe's narrow footprint in city centers and only nascent e-
commerce platform and some supplier concentration.

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

   -- 2%-4% in-store revenue growth in 2014 and 6%-9% in-store
      revenue growth thereafter, following expected improvement
      in GDP growth and consumer spending in France, combined
      with THOM Europe's historical market outperformance.  S&P
      also factors in scheduled store openings and a ramp-up
      phase of its e-commerce platform as part of the company's
      development strategy;

   -- Relatively stable gross margin over the next two years, to
      improve by 25 basis points annually thereafter;

   -- A slightly improving adjusted EBITDA margin in 2014, then
      remaining globally stable in 2015, reflecting potential
      cost overruns linked to store openings in the pipeline and
      marketing efforts, with gradually improvement of 50 to 75
      basis points thereafter; and

   -- For the purpose of S&P's ratio calculations it do not
      consider the convertible bonds as debt.

Based on these assumptions, S&P forecasts the following credit
metrics:

   -- A Standard & Poor's adjusted debt-to-EBITDA ratio close to
      4.5x in 2014, or about 6.2x including adjustments except
      for operating lease obligations;

   -- Adjusted FFO to debt of about 17% over the next two years
      but close to 11% when offsetting the impact of S&P's
      operating-lease adjustment only; and

   -- EBITDAR interest coverage of approximately 1.6x over the
      next two years.

The stable outlook reflects S&P's anticipation that THOM Europe's
debt-to-EBITDA ratio will remain below 5.0x on a Standard & Poor's
adjusted basis (and close to 6.0x including adjustments except
operating lease obligations) and EBITDAR to interest and rent
ratio will be below 2.2x.  However, S&P considers that the company
will gradually improve its cash generation and steadily deleverage
based on its revenue growth and EBITDA improvement.  S&P also
factors in THOM Europe's likely ability to maintain EBITDA
interest coverage of above 3.0x and Standard & Poor's adjusted FFO
cash interest coverage of more than 4.0x (and above 2.0x for each
credit metric excluding S&P's operating lease adjustment only).

S&P could consider raising the rating if THOM Europe's EBITDAR
interest coverage were to significantly strengthen and comfortably
fall in S&P's "aggressive" category for financial risk, and if its
debt to EBITDA, based on adjusted metrics except for operating
lease obligations, improved to S&P's "aggressive" category from
the current level.  Provided this is the case, S&P could raise its
rating if EBITDAR interest coverage substantially increased above
2.2x, while the company maintained interest coverage metrics above
3.0x (or above 2.0x excluding our operating lease adjustment
only).

S&P could lower its rating if THOM Europe adopted a more
aggressive financial policy that weakened credit metrics.
Negative rating pressure could also arise if THOM Europe's revenue
and EBITDA generation declined, for example, because of slower
like-for-like growth and/or a deviation from planned store
openings, resulting in a deterioration of the company's cash
generation and interest coverage metrics.  Specifically, S&P could
lower ts rating if interest coverage metrics dropped to close to
or below 2.0x or if free operating cash flow weakened
significantly or turned negative because of underperforming
business or a more aggressive financial policy.


WENDEL: S&P Raises CCR From 'BB+/B' to 'BBB-/A-3'; Outlook Stable
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that it has raised its
long- and short-term corporate credit ratings on France-based
operating holding company Wendel to 'BBB-/A-3' from 'BB+/B'.  The
outlook is stable.

At the same time, S&P raised its issue ratings on Wendel's
unsecured bonds to 'BBB-' from 'BB+', and withdrew its '3'
recovery rating on these instruments.

The upgrade primarily reflects S&P's view of Wendel's improved
financial flexibility following the partial disposal of the
company's stake in France-based manufacturer and distributor of
construction materials Compagnie de Saint-Gobain (BBB/Stable/A-2).

On May 7, 2014, Wendel successfully divested a 4.3% stake in
Compagnie de Saint-Gobain, yielding EUR1 billion of net proceeds.
On the strength of a EUR1.5 billion cash pile, net debt further
reduced to approximately EUR2.4 billion, leading to a loan-to-
value (LTV) ratio of approximately 25% on May 23, 2014, versus 32%
on March 17, 2014.

"We have therefore reassessed Wendel's financial risk profile as
"intermediate" versus "significant," as we consider that
management's risk tolerance is now somewhat lower than previously
assessed.  We expect Wendel will maintain an LTV ratio sustainably
below 35%," S&P said.

The stable outlook reflects S&P's expectation that Wendel's LTV
ratio will remain below 35% over its forecast horizon for the next
12-18 months, despite reinvestment activity in the near term.

S&P would consider a positive rating action if Wendel's portfolio
characteristics were to improve, with special emphasis on asset
diversification.  As S&P thinks that portfolio evolution is
usually a medium- to long-term prospect, it sees the potential for
a positive rating action as limited during its forecast horizon.

An additional improvement in Wendel's financial risk profile could
also bolster credit quality, but S&P do not expect it in the near
term, given its investment plans.

S&P could take a negative rating action if Wendel failed to manage
the LTV ratio within its expectations for the current rating.  Any
deterioration of the portfolio liquidity and
quality -- for instance, stemming from a negative migration to
riskier or unlisted assets -- could also prompt S&P to take a
negative rating action.


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


TUI AG: S&P Revises Outlook to Positive & Affirms 'B' CCR
---------------------------------------------------------
Standard & Poor's Ratings Services said it revised its outlook on
German-British tour operator TUI AG to positive from stable.  At
the same time, S&P affirmed its 'B' long-term corporate credit
rating on the group.

S&P also affirmed its 'B' issue rating on TUI's senior unsecured
debt with a recovery rating of '3' as well as the issue rating of
'CCC+' with a recovery rating of '5' on the perpetual notes.

The outlook revision reflects TUI's June 27, 2014, announcement of
its intention to fully acquire the 45.5% of its main subsidiary
TUI Travel that it does not already own through an all-share deal.
TUI Travel shareholders would receive 0.399 new TUI shares for
each TUI Travel share.  This ratio values both companies at their
respective average share price over the past 30 days, adjusted for
to-be-paid dividends.  While TUI's single largest shareholder
Alexey Mordashov, who has a capital share of 25%-30%, is
supportive of the deal, S&P is not aware of a public response from
TUI Travel shareholders.  Management expects the transaction to
close in spring 2015.  S&P understands that a binding announcement
is likely to be made in September 2014.

Management has also indicated its intention to split TUI's lines
of business into core and non-core parts.  The core part will
comprise around 90% of current group EBITA, excluding central
costs, and will be strengthened in the future through additional
investments.  The non-core part will be run separately and could
be partially divested at some point.

S&P assess TUI's business risk profile as "weak" and its financial
risk as "aggressive" under its criteria.  This results in an
anchor of 'b+.'  S&P rates TUI one notch below the anchor through
the application of its negative comparable rating analysis (CRA)
modifier because TUI does not have full control over TUI Travel's
cash flows.  As discretionary cash flow at the TUI level is
negative, TUI is dependent on dividends from TUI Travel to fund
its operations and to service the debt at TUI level.

In case of a successful merger, TUI should have full control over
TUI Travel's cash flows.  Furthermore, the deal could have
positive implications for profits and cash flows, driven by
management's expectations of synergy generation above EUR45
million per year and improved use of tax-loss carryforwards.  On
the other hand, the company expects one-off integration costs to
reach EUR45 million and the synergies to be fully generated from
year three--2017-2018.  It is therefore unclear if those effects
would significantly change S&P's leverage ratios.

The separation of the business lines into "core" and "non-core"
and the associated strengthening of the core business might
further positively affect S&P's assessment of TUI.  This will
depend, however, on the specific details of the separation and the
financial consequences.

In light of the uncertainties surrounding the deal, especially
those related to shareholder acceptance, S&P's rating on TUI
remains based on the current organizational structure.

These weaknesses are partly offset by strong brand recognition of
the group itself and of its portfolio of brands.  Furthermore, the
large size of the group puts it in a favorable negotiating
position, and its good geographical diversification is also
beneficial to our assessment.  These factors should allow TUI to
redirect customers to alternative destinations in case of
regionally isolated events.

The positive outlook reflects the possibility that if this
transaction is successful, TUI should gain full control over TUI
Travel's cash flows, thereby significantly improving its financial
flexibility.

S&P currently rates TUI one notch lower than the 'b+' anchor
through the application of a "negative" CRA modifier, as TUI does
not have full control over TUI Travel's cash flows.  This lack of
control will no longer apply if the deal closes successfully,
hence S&P would likely remove this modifier.

In addition, this transaction could have positive effects on
leverage and S&P's business risk assessment resulting from the
synergies and the focus on the core business lines.  Irrespective
of synergies and one-off costs, S&P expects TUI to be able to
maintain adjusted debt to EBITDA of below 4.0x and adjusted EBITDA
interest cover of more than 3.0x.

S&P would likely revise the outlook to stable if TUI's management
was unable to successfully complete this transaction.

S&P could also lower the rating if unexpected operating setbacks
or a more aggressive financial policy led to adjusted debt to
EBITDA remaining above 4.0x and adjusted EBITDA interest cover
falling below 3.0x.  S&P could also consider lowering the rating
if in such case it anticipated that TUI's liquidity position would
deteriorate to "less than adequate."


=============
I C E L A N D
=============


ICELAND VLNCO: Moody's Assigns '(P)B1' Rating to Sr. Sec. Notes
---------------------------------------------------------------
Moody's Investors Service has assigned a provisional (P)B1 rating
to the senior secured notes to be issued by Stretford 79 plc, a
wholly owned subsidiary of Iceland VLNCo Limited (Iceland Foods or
the company), with a stable outlook.

At the same time, Moody's has placed all Iceland Midco Limited's
ratings under review for downgrade, including its corporate family
rating (CFR) of Ba3, B1-PD probability of default rating (PDR) and
the Ba3 rating on Iceland Acquico Limited's senior secured bank
debt.

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

The review for downgrade has been prompted by the announcement
that the company plans to raise GBP955 million through the
issuance of new senior secured notes at the level of Iceland VLNCo
Limited, the direct parent company of Iceland Midco Limited. The
proceeds from the new senior secured notes, together with GBP77
million of existing cash balances, will be used to refinance the
existing senior secured term loans and vendor loan note plus
accrued and unpaid interest, and to close out existing currency
and interest rate swaps, as well as to pay fees and expenses.

Should the final sale of the securities conclude as envisaged,
Moody's would expect to move the CFR from Iceland Midco Limited to
Iceland VLNCo Limited to reflect the level at which the new debt
is being raised. Moody's current expectation is also that the CFR
will be downgraded to B1 from Ba3, principally due to the
anticipated increased leverage of the business from 4.8x to 5.8x
on a Moody's-adjusted basis as at FYE March 28, 2014 pro forma for
the transaction.

The ratings additionally take into account Moody's view of the
challenging trading environment and price pressures in the UK
retail food market driven by both weak consumer spending and the
growth in market share of retail discounters. Moody's expects that
material de-leveraging in the next 12-18 months will be hampered
by continuing pressure on like for like sales coupled with the
need of the company to respond to these pressures by price
reductions and increased use of promotions.

More positively, the ratings are supported by the company's (1)
niche position in the food market with a solid share of frozen
food products and a strong brand identity; (2) relative defensive
positioning in the convenience and discount end of the market; (3)
ability to differentiate from other discounters through product
innovation and the provision of home delivery and on-line
services; and (4) a resilient business model, as demonstrated by
its positive cash flow generation and solid interest coverage.

Moody's also considers the company's liquidity position to be
good, underpinned by unrestricted cash balances estimated to be in
excess of GBP50 million as at FYE 28 March 2014 pro-forma for the
transaction. Its new committed GBP30 million revolving credit
facility (RCF) is expected to remain undrawn, and there is no
mandatory debt amortization prior to 2019. Moody's also assumes
that the company will maintain good headroom under its single
drawstop financial covenant only applicable to its RCF and only
tested when drawn above a certain threshold.

Principal Methodologies

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

Headquartered in Deeside, Flintshire, UK, Iceland VLNCo Limited is
the parent holding company of Iceland Foods Group. Iceland Foods
is a privately held UK retail grocer which specializes in frozen
and chilled foods, alongside groceries. Since its creation in
1970, Iceland Foods has expanded its reach in the UK to become a
national operator with 833 UK retail stores (as of 28 March 2014)
targeting the value conscious market segment. For fiscal year-end
March 28, 2014, Iceland Foods reported revenues of approximately
GBP2.7 billion.


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


MERCATOR CLO I: S&P Cuts Rating on Class B-2 Def Notes to 'CCC-'
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its credit ratings on
Mercator CLO I PLC's class A-1, A-2, A-3 Def, and B-1 Def notes.
At the same time, S&P has lowered to 'CCC- (sf)' from 'CCC+ (sf)'
its rating on the class B-2 Def 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 at each rating
level.  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
calculated in accordance with our 2009 criteria for corporate
collateralized debt obligations.  We applied various cash flow
stress scenarios using our standard default patterns and timings
for each rating category assumed for each class of notes, combined
with different interest stress scenarios as outlined in our 2009
corporate CDO criteria," S&P said.

The transaction's reinvestment period ended in July 2011.  The
class A-1 notes have amortized by about EUR149.5 million since
S&P's previous review on Nov. 5, 2012.  This has increased the
available credit enhancement for the class A notes.

At closing, Mercator CLO I entered into hedge agreements with
JPMorgan Chase Bank N.A. (A+/Stable/A-1) to mitigate currency
risks in the transaction.  However, the hedge agreements are not
line with S&P's current counterparty criteria.

In S&P's cash flow analysis, it assumes that there are no hedge
agreements in the transaction that support ratings higher than one
rating level above S&P's long-term 'A+ (sf)' rating on the
counterparty, i.e. at a 'AA-' rating level.  However, this does
not negatively affect S&P's ratings on the class A-1 and A-2
notes.  S&P has therefore raised to 'AAA (sf)' from 'AA+ (sf)' its
rating on the class A-1 notes and to 'AAA (sf) from 'AA- (sf) its
rating on the class A-2 notes.

That said, the lack of the abovementioned hedge agreements caps
S&P's ratings on the class A-3 notes at 'AA- (sf)'.  Furthermore,
the largest obligor default test constrains our rating on the
class A-3 Def notes at 'A+ (sf)'.  This test is a supplemental
stress test that S&P introduced in its 2009 corporate CDO
criteria.  S&P has therefore raised to 'A+ (sf)' from 'BBB+ (sf)'
its rating on the class A-3 Def notes.

The class A notes' high deleveraging has increased the available
credit enhancement for all of the other classes of notes.  The
overcollateralization (OC) tests are all passing, with higher
cushions than in S&P's previous review.  S&P considers the
available credit enhancement for the class B-1 Def notes to be
commensurate with a higher rating than that currently assigned.
S&P has therefore raised to 'BBB+ (sf)' from 'BB+ (sf)' its rating
on the class B-1 Def notes.

In addition, since S&P's previous review, the amount of defaulted
assets (those rated 'CC', 'SD' [selective default], or 'D') has
increased to 6.23% from 2.86%.  S&P has also observed a decrease
in the overall portfolio quality due to an increase of assets
rated 'CCC'.  As a result scenario default rates (SDRs) have
increased.  The SDR is the minimum level of portfolio defaults
that S&P expects each CDO tranche to be able to support the
specific rating level using CDO Evaluator.

S&P's cash flow analysis indicates that the class B-2 Def notes
are unable to maintain their currently assigned rating level.
Therefore, S&P has lowered to 'CCC-(sf)' from 'CCC+ (sf)' its
rating on the class B-2 Def notes.

Mercator CLO I is a cash flow collateralized loan obligation (CLO)
transaction that securitizes loans granted to primarily
speculative-grade corporate firms.

RATINGS LIST

Class        Rating             Rating
             To                 From

Mercator CLO I PLC
EUR413 Million Floating-Rate Notes

Ratings Raised

A-1          AAA (sf)           AA+ (sf)
A-2          AAA (sf)           AA- (sf)
A-3 Def      A+ (sf)            BBB+ (sf)
B-1 Def      BBB+ (sf)          BB+ (sf)

Rating Lowered

B-2 Def      CCC- (sf)          CCC+ (sf)


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


CMC DI RAVENNA: Moody's Assigns '(P)B2' Corporate Family Rating
---------------------------------------------------------------
Moody's Investors Service has assigned a first-time (P)B2
Corporate Family Rating (CFR) to Cooperativa Muratori &
Cementisti-C.M.C. di Ravenna Societa Cooperativa per Azioni
("CMC"), a cooperative construction company with consolidated
revenues of approximately EUR1 billion in 2013. Upon confirmation
of the capital structure and assignment of definitive ratings,
Moody's would expect to assign a Probability of Default Rating of
B2-PD. Concurrently, Moody's assigned a provisional (P)B2 (LGD4,
50%) rating to the proposed EUR300 million senior unsecured notes.
The outlook on the rating is stable.

Moody's issues provisional ratings for debt instruments in advance
of the final sale of securities or conclusion of credit
agreements. Upon a conclusive review of the final documentation,
Moody's will endeavor to assign a definitive rating to the
financial instruments. A definitive rating may differ from a
provisional rating.

Ratings Rationale

The (P)B2 CFR reflects the company's high leverage of over 5.5x on
a Moody's adjusted basis and weak free cash flow available to de-
leverage the balance sheet. The rating also reflects current
significant earnings concentration which is expected to reduce
over the next 18 months, the company's small size relative to the
international market and its significant reliance on the weak
Italian economy.

However, the (P)B2 rating reflects Moody's expectation that
adjusted debt/EBITDA will improve from current levels over the
next year and that free cash flow will turn positive and EBITA
coverage of interest (including Moody's standard adjustments) will
approach 2 times by year end 2014 and be sustained going forward.
The expected improvement from current levels, albeit modest,
hinges on stable revenue and improving operating income growth
over the next 12-18 months.

The company has recently signed a 3 year revolving credit facility
of EUR100 million. Under the envisaged transaction, CMC would
raise EUR300 million via a bond issue, whose proceeds would be
entirely used to repay existing short term debt and maturing term
loans. Additional funding needs would be paid out of operating
cash flow and available cash, whilst leaving the new revolving
facility undrawn. A successful refinancing would be the condition
to assign definitive ratings, which might differ from the
provisional ratings assigned.

Assuming the successful placement of the envisaged notes, Moody's
expect the group to have liquidity of approximately EUR154
million, including cash and cash equivalents of EUR54 million held
at fully controlled and consolidated subsidiaries as well as the
undrawn revolving credit facility of EUR100 million. Always
assuming successful completion of the planned refinancing,
available liquidity would exceed EUR30 million of debt
amortization in the next 15 months and approximately EUR60 million
of short term debt. The revolving credit facility is subject to
financial covenants under which the company will have significant
headroom based on Moody's expectations of the company's future
performance in the next 12-18 months.

The stable outlook reflects Moody's expectation that CMC's credit
metrics will likely improve in 2014 and 2015, supported by stable
revenues, improving profit margins and positive free cash flow
generation. Moody's project (Moody's adjusted) debt/EBITDA between
5.0-5.5x, EBITA/Interest of around 1.5-2.0x and increasingly
positive free flow over the next 12-18 months. The stable outlook
is also predicated on improved liquidity and the successful
placement of the envisaged notes and RCF and the maintenance of a
buffer under the covenant of the RCF and the remaining loans.

CMC's ratings could be downgraded if its debt metrics failed to
improve from current levels over the next 12-18 months as
evidenced by gross adjusted leverage (debt/EBITDA) and interest
coverage (EBITA/Interest expense) failing to improve towards 5.0x
and 2.0x, respectively, or if free cash flow remained negative or
if the company's liquidity cushion deteriorated with decreasing
headroom under financial covenants. Negative rating pressure could
also develop if the company's orders backlog deteriorated or if it
was unable to reduce its reliance on a few key construction
projects.

CMC's ratings could be upgraded if its debt metrics improved
beyond expectations, as evidenced by adjusted leverage
(debt/EBITDA) sustained around 4.0x and an interest cover
(EBITA/Interest expense) sustained above 2.0x. An improved
liquidity buffer including a more substantial headroom under the
covenants of the RCF and other loans would also be expected for an
upgrade.

Principal Methodologies

The principal methodology used in this rating was the Global
Construction Methodology published in November 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.

CMC, headquartered in Ravenna, Italy, is a cooperative
construction company with consolidated revenues of approximately
EUR1 billion in 2013. Projects include highways, railways, water
dams, tunnels, subways, ports, commercial as well as mining and
industrial facilities. CMC is the fourth largest construction
company in Italy by revenue and has long developed an
international presence. In 2013, its EUR3.0 billion order backlog
was split 55% in Italy and 45% abroad. Established in 1901, CMC is
a mutually-owned entity with around 470 current members.


CMC DI RAVENNA: S&P Assigns Prelim. 'B' CCR; Outlook Stable
-----------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned its
preliminary 'B' long-term corporate credit rating to Italy-based
engineering and construction (E&C) company CMC di Ravenna (CMC).
The outlook is stable.

S&P also a assigned a preliminary 'B' issue rating to the proposed
EUR300 million senior unsecured notes.  The preliminary recovery
rating is '4', indicating S&P's expectation of average (30%-50%)
recovery for creditors in the event of a payment default.

The preliminary ratings are subject to successful issuance of the
proposed notes and S&P's satisfactory review of final
documentation.  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 Standard & Poor's does not receive
final documentation within a reasonable time frame, or if final
documentation departs from materials reviewed, S&P reserves the
right to withdraw or revise its ratings.  Potential changes
include, but are not limited to, utilization of bond proceeds,
maturity, size and conditions of the bonds, financial and other
covenants, security and ranking.

The preliminary 'B' corporate credit rating on CMC reflects S&P's
assessment of the company's "weak" business risk profile and
"aggressive" financial risk profile.

CMC plans to issue a EUR300 million senior unsecured seven-year
bond to refinance its capital structure. Bond proceeds will be
used to redeem existing outstanding bank debt, including
approximately EUR60 million of recourse factoring lines, and
generally extend the group's maturity profile, which leaves
approximately EUR6 million of cash for general corporate purposes.
As part of its refinancing plan, CMC will also benefit from a new
EUR100 million three-year committed and undrawn revolving credit
facility (RCF).

S&P's assessment of CMC's business risk profile is constrained by
the cyclical, fragmented, and competitive nature of the E&C sector
and underlying project, contract, and execution risks.  In
addition, the company generates limited profitability in its home
market and is becoming more dependent on international contracts,
notably in Southern Africa, which leads to country risks.  CMC is
a small company in a global context and its diversity is currently
limited by the concentration of its profits in only a few
projects.  Supportive factors include CMC's expertise in
transportation and infrastructure projects, often funded by
governments or multilateral institutions; good track record in
project execution; and the visibility on revenues offered by a
contract backlog of EUR3.3 billion as of Dec. 31, 2013.

S&P's base-case operating scenario assumes that CMC will continue
to execute its backlog of existing contracts, and win new business
domestically and internationally.  S&P envisages revenue growth of
about 10% in 2014 and around 5% in 2015.  S&P anticipates a
relatively stable reported EBITDA margin of 9%-10%, similar to
2013.

S&P's assessment of CMC's financial risk profile is constrained by
its forecast leverage metrics during 2014 and 2015.  For that
period, S&P forecasts a ratio of funds from operations (FFO) to
adjusted debt of around 15% and adjusted debt to EBITDA of
4.0x-4.5x.  S&P makes a number of analytical adjustments in its
debt calculations; in particular, it excludes reported cash and in
addition treat as debt trade receivables factoring (approximately
EUR50 million as of March 31, 2014, on a pro forma basis).  For
2014 and 2015, S&P anticipates FFO of around
EUR70 million-EUR90 million and broadly neutral free operating
cash flow, assuming stable levels of capital expenditures (capex)
of around EUR60 million per year.  On a pro forma basis
incorporating the bond issue, adjusted debt is about EUR540
million as of March 31, 2014.

The preliminary rating also incorporates a one-notch downward
adjustment from the 'b+' anchor for S&P's "negative" comparable
ratings analysis, whereby it reviews an issuer's credit
characteristics in aggregate.  This reflects S&P's view that CMC's
business risk profile is at the weaker end of the range due to
CMC's small scale and profit concentration.

The stable outlook reflects S&P's expectation that CMC will
continue to profitably grow its business, with new contracts
supporting the existing backlog, and S&P expects stable profit
margins in 2014 and 2015.  S&P regards credit ratios including
adjusted debt to EBITDA of 4x-5x and adjusted FFO to debt of 15%-
20% as being consistent with the rating.

S&P considers the potential for a positive rating action to be
limited in the near term, but this could occur over time if CMC
sustainably improves its operating performance and shows stronger
credit measures, such as adjusted debt to EBITDA of below 4x and
FFO to debt of above 20%. Greater business scale and diversity, in
addition, could be positive for the ratings.

S&P do not envisage lowering the ratings in the near term, but it
could do so if it expected CMC to report a sustained weakening of
revenues and profitability, such that S&P anticipates adjusted
debt to EBITDA to rise above 5x and adjusted FFO to debt to fall
below 12%.  S&P could also lower the ratings if CMC's liquidity
position deteriorates; for example, this could happen if remaining
short-term bank lines are not rolled over as S&P expects, or if
working capital needs are higher than it anticipates.


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


ST. JAMES'S PARK: S&P Lowers Rating on Class D Notes to 'B+'
------------------------------------------------------------
Standard & Poor's Ratings Services took various credit rating
actions in St. James's Park CDO B.V.

Specifically, S&P has:

   -- Raised its ratings on the class B and C notes;
   -- Lowered its ratings on the class D and E notes;
   -- Affirmed its rating on the class A2 notes; and
   -- Withdrawn its ratings on the class A1 and RLF notes.

The rating actions follow S&P's analysis of the transaction using
data from the May 2, 2014 trustee report, the note valuation
report following the May interest payment date (IPD), and the
application of S&P's relevant criteria.

S&P conducted its cash flow analysis to determine the break-even
default rate (BDR) for each rated class of notes at each rating
level.  The BDR represents S&P's estimate of the maximum level of
gross defaults, based on its stress assumptions, that a tranche
can withstand and still fully repay principal and interest the
noteholders.  S&P used the portfolio balance that it considers to
be performing, the reported weighted-average spread, and the
weighted-average recovery rates calculated in line with S&P's 2009
criteria.  S&P applied various cash flow stresses using its
standard default patterns and timings for each rating category
assumed for each class of notes, combined with different interest
stresses as outlined in S&P's 2009 corporate CDO criteria.

The class A1 and RLF notes, which S&P rates based on the timely
payment of interest and ultimate repayment of principal (and which
rank pari passu), have fully amortized since S&P's May 21, 2012
review.  S&P has therefore withdrawn its 'AAA (sf)' ratings on the
class A1 and RLF notes.  The transaction started amortizing in
November 2010.

The full amortization of the class A1 and RLF notes has resulted
in higher available credit enhancement for all classes of notes
since S&P's May 2012 review.  The transaction's weighted-average
life has decreased, and all coverage tests have improved.

However, S&P has also observed a negative migration in the
portfolio's credit quality, a slight decrease of the weighted-
average spread, and a significant increase in obligor
concentration.  The weighted-average recovery rates have remained
at approximately the same levels.

Despite the application of S&P's nonsovereign ratings criteria and
the stresses that it applies by not giving credit to foreign
exchange options, S&P's analysis indicates that the class A2 notes
can sustain defaults at the same rating level as currently
assigned, whilst the available credit enhancement for class B and
C notes is now consistent with higher rating levels.  S&P has
therefore affirmed its 'AAA (sf)' rating on the class A2 notes,
which have now almost fully amortized, and raised its ratings on
the class B and C notes.

The available credit enhancement for the class D notes is
commensurate with the currently assigned 'BB+ (sf)' rating.
However, the largest obligor test constrains S&P's rating on this
class of notes at 'B+ (sf)'.  S&P has therefore lowered to 'B+
(sf)' from 'BB+ (sf)' its rating on the class D notes.  The
largest obligor test measures the effect of several of the largest
obligors within the portfolio defaulting simultaneously.  S&P
introduced this supplemental stress test in its 2009 criteria
update for CDOs.

The class E notes' can no longer withstand S&P's expected default
rate at a 'B+ (sf)' level.  In addition, following the repayment
of the non-euro-denominated liabilities (the class RLF notes), the
junior tranches are more exposed to the depreciation of the U.S.
dollar- and British pound sterling-denominated assets left in the
portfolio.  S&P has therefore lowered to 'CCC (sf)' from 'B+ (sf)'
its rating on the class E notes.

St. James's Park CDO is a cash flow collateralized loan obligation
(CLO) transaction that securitizes loans to primarily speculative-
grade corporate firms.  The transaction closed in December 2007
and Blackstone Debt Advisors L.P. manages it.

RATINGS LIST

St. James's Park CDO B.V.
EUR400 mil floating rate notes

                     Rating     Rating
Class   Identifier   To         From
A1      790113AA2    NR         AAA (sf)
RLF                  NR         AAA (sf)
A2      790113AB0    AAA (sf)   AAA (sf)
B       790113AC8    AAA (sf)   AA+ (sf)
C       790113AD6    AA+ (sf)   A (sf)
D       790113AE4    B+ (sf)    BB+ (sf)
E       790113AF1    CCC (sf)   B+ (sf)

NR -- Not Rated.


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


BANCO COMERCIAL: S&P Puts 'B' Rating on CreditWatch Positive
------------------------------------------------------------
Standard & Poor's Ratings Services said that it placed its 'B'
long-term counterparty credit rating on Portugal-based Banco
Comercial Portugues S.A. (Millennium bcp) on CreditWatch with
positive implications.  At the same time, S&P affirmed its 'B'
short-term rating on the bank.

In a related action, S&P also placed on CreditWatch positive the
'B' issue rating on Millennium bcp's senior unsecured debt and the
'CCC-' issue rating on the bank's nondeferrable dated subordinated
debt.

S&P also placed on CreditWatch positive its 'B' issue rating on
the secured guaranteed exchangeable bonds due 2015, issued by
Controlinveste International Finance (not rated), which is
guaranteed by Millennium bcp.

The CreditWatch placement follows the announcement by Millennium
bcp's Board of Directors on June 24, 2014 of its decision to
undertake a sizable rights issue of approximately EUR2.25 billion,
which is expected to close by the end of July.  S&P understands
that the bank will use part of the proceeds to repay, ahead of
schedule, EUR1.85 billion of contingent convertible capital
instruments subscribed by the Portuguese state in mid-2012.  The
bank has stated that it expects to pay down the remaining EUR750
million of state aid in early 2016.

The capital increase is reported to be fully underwritten by a
group of international banks, subject to certain conditions.

"If successfully executed, we believe that the proposed rights
issue could significantly strengthen the bank's capitalization, as
measured by our risk-adjusted capital (RAC) ratio.  Despite our
expectation of low profitability both this year and next, we
forecast that, after the capital increase, the bank's RAC ratio
could reach 4% at the end of 2015 -- a level that we would still
consider "weak," under our criteria, but no longer "very weak" as
we do currently.  We estimated the bank's RAC ratio to be a low
2.1% at end-2013.  The repayment of the contingent convertible
capital instruments subscribed by the state is neutral for our RAC
calculations as we did not consider them to be high-quality
capital instruments and thus were not part of our capital
measures," S&P said.

A stronger assessment of the bank's capital position would result
in a one-notch improvement of the bank's stand-alone credit
profile to 'b' from 'b-'.

"We expect to resolve the CreditWatch upon completion of the
capital increase.  All other things being equal, we would likely
raise the long-term rating by one notch if the bank successfully
completes the rights issue and we believe that, over time, it will
be able to sustain higher capitalization.  Conversely, if the bank
does not manage to strengthen its capital sufficiently to warrant
an improvement in our assessment of its solvency or if we
anticipate that the capital strengthening will only be temporary,
we could affirm the long-term rating at 'B'," S&P added.

If S&P was to raise the long-term rating on the bank, it would
likely assign a negative outlook.  This would reflect the
possibility that, by the end of 2015 -- ahead of the
implementation of the newly approved EU Directive on Bank Recovery
and Resolution -- S&P would remove the one notch of uplift for
government support that it currently incorporates into the long-
term rating on the bank.  This could happen if S&P concludes that
potential extraordinary government support, under the new
framework, is less predictable.


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


SAMARA OBLAST: S&P Rates RUB12-Bil. Senior Unsecured Bond 'BB+'
---------------------------------------------------------------
Standard & Poor's Ratings Services said that it had assigned its
'BB+' long-term global scale rating and 'ruAA+' Russia national
scale rating to the Russian ruble (RUB) 12 billion (about US$355
million) seven-year amortizing senior unsecured bond to be issued
by Russia's Samara Oblast (BB+/Negative/--; ruAA+/--/--) on
July 10, 2014.

The bond will have 28 fixed-rate coupons and an amortizing
repayment schedule.  According to the redemption schedule, 10% of
the bond is to be repaid in 2015, 20% in 2016, 20% in 2017, 20% in
2018, 15% in 2019, 10% in 2020, and the remaining 5% in 2021.

The ratings on Samara Oblast reflect S&P's view of Russia's
"developing and unbalanced" institutional framework, which limits
the oblast's budgetary flexibility, as well as S&P's view of the
oblast's low economic wealth and "negative" financial management
in an international comparison.  An only modest budgetary
performance and "neutral" liquidity are neutral for the oblast's
creditworthiness.  The ratings are supported by S&P's view of the
oblast's modest debt and low contingent liabilities.

S&P's negative outlook on Samara Oblast reflects its view that
there is at least a one-in-three chance that it might become
increasingly difficult for Samara Oblast to maintain a modest
budgetary performance and remain committed to its financial
targets, given weaker revenue growth prospects and a continued
need to increase social-related expenditures.


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


FONDO DE TITULIZACION: Moody's Rates Serie C Notes '(P)Ca'
----------------------------------------------------------
Moody's Investors Service has assigned provisional ratings to
three classes of notes to be issued by Fondo de Titulizacion de
Activos, RMBS Santander 2:

Issuer: FTA RMBS Santander 2

EUR2,520M Serie A Notes, Assigned (P)A3 (sf)

EUR480M Serie B Notes, Assigned (P)B2 (sf)

EUR450M Serie C Notes, Assigned (P)Ca (sf)

The transaction is a securitization of Spanish prime mortgage
loans originated by Banco Santander S.A. (Spain) (Baa1 / P-2) to
obligors located in Spain. The portfolio consists of high Loan To
Value ("LTV") mortgage loans secured by residential properties
including a high percentage of renegotiated loans (21%).

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

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

Ratings Rationale

FTA RMBS Santander 2 is a securitization of loans granted by Banco
Santander S.A. (Spain) (Banco Santander, Baa1 / P-2) to Spanish
individuals. Banco Santander is acting as Servicer of the loans
while Santander de Titulizacion S.G.F.T., S.A. is the Management
Company ("Gestora").

The ratings of the notes take into account the credit quality of
the underlying mortgage loan pool, from which Moody's determined
the MILAN Credit Enhancement and the portfolio expected loss.

The key drivers for the portfolio expected loss of 12% are (i)
benchmarking with comparable transactions in the Spanish market
via analysis of book data provided by the seller, (ii) the very
high proportion of renegotiated loans in the pool (21%), and (iii)
Moody's outlook on Spanish RMBS in combination with historic
recovery data of foreclosures received from the seller.

The key drivers for the 32% MILAN Credit Enhancement number, which
is higher than other Spanish HLTV RMBS transactions, are (i)
renegotiated loans represent 21% of the portfolio and 15% of the
pool corresponds to loans in principal grace periods; (ii) the
proportion of HLTV loans in the pool (18.7% with current LTV > 80%
based on original valuations) with Current Weighted Average LTV of
97.7% (based on revaluations as of 2013); (iii) approximately 10%
of the portfolio correspond to self employed debtors; (iv) 51% of
the loans have been in arrears less than 90 days at least once
since the loans was granted (v) weighted average seasoning of 6.8
years and (vi) the geographical concentration in Madrid (21.7%)
and Andalusia (17.3%).

According to Moody's, the deal has the following credit strengths:
(i) sequential amortization of the notes (ii) a reserve fund fully
funded upfront equal to 15% of the Serie A and B notes to cover
potential shortfall in interest and principal. The reserve fund
may amortize if certain conditions are met.

The portfolio mainly contains floating-rate loans linked to 12-
month EURIBOR, and most of them reset annually; whereas the notes
are linked to three-month EURIBOR and reset quarterly. There is no
interest rate swap in place to cover this interest rate risk.
Moody's takes into account the potential interest rate exposure as
part of its cash flow analysis when determining the ratings of the
notes.

Moody's Parameter Sensitivities provide a quantitative/model-
indicated calculation of the number of rating notches that a
Moody's structured finance security may vary if certain input
parameters used in the initial rating process differed.

The analysis assumes that the deal has not aged and is not
intended to measure how the rating of the security might migrate
over time, but rather how the initial rating of the security might
have differed if key rating input parameters were varied.
Parameter Sensitivities for the typical EMEA RMBS transaction are
calculated by stressing key variable inputs in Moody's primary
rating model.

At the time the rating was assigned, the model output indicated
that the Serie A notes would have achieved an A3 even if the
expected loss was as high as 14% and the MILAN CE was 32% and all
other factors were constant.

The principal methodology used in this rating was "Moody's
Approach to Rating RMBS Using the MILAN Framework" published in
March 2014.

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

Factors that may lead to an upgrade of the rating include a
significantly better than expected performance of the pool,
together with an increase in credit enhancement for the notes.

Factors that may cause a downgrade of the ratings include
significantly different loss assumptions compared with Moody's
expectations at close due to either a change in economic
conditions from Moody's  central scenario forecast or
idiosyncratic performance factors would lead to rating actions.
Finally, a change in Spain's sovereign risk may also result in
subsequent upgrade or downgrade of the notes.


===========
S W E D E N
===========


NORCELL 1B: S&P Raises CCR to 'BB-' on Completed IPO
----------------------------------------------------
Standard & Poor's Ratings Services said that it had raised its
long-term corporate credit rating on Swedish cable operator
NorCell 1B AB (publ) (Com Hem) to 'BB-' from 'B'.  The outlook is
stable.

S&P has also raised its issue ratings on the group's debt by two
notches.  S&P removed all the ratings from CreditWatch, where they
were placed with positive implications on May 28, 2014, on the IPO
announcement.

At the same time, S&P assigned 'BB-' issue ratings to Com Hem's
senior bank loans.  The recovery rating is '3', reflecting S&P's
expectation of meaningful (50%-70%) recovery in the event of a
payment default.

The upgrade reflects S&P's view that Com Hem's financial risk
profile has improved following the IPO, debt reduction, and
refinancing of its credit facilities at a lower interest rate.  In
addition, in S&P's view, the group has adopted a more conservative
financial policy.  These factors have led S&P to revise its
assessment of the financial risk profile to "aggressive" from
"highly leveraged."

"We expect our adjusted leverage ratio (debt to EBITDA) for Com
Hem to decline to below 5x in 2014, compared with 8.4x at
year-end 2013 (including an adjustment relating to a debt-like
instrument that we no longer apply).  We estimate the company's
reported net leverage ratio at about 4x after the Swedish krona
(SEK) 4.5 billion (about EUR0.5 billion) reduction in debt from
the IPO proceeds.  Because financial sponsors still own 50% of Com
Hem, we do not adjust the reported debt figure for surplus cash,
in accordance with our methodology.  Furthermore, we no longer
include debt-like instruments in our debt adjustments because we
understand that the holding company's equity consists of common
equity. However, we still add about SEK1.4 billion of operating
leases to debt," S&P said.

"We understand the company has a new financial policy targeting a
reported leverage ratio of 3.5x-4x, which we think will translate
into Standard & Poor's-adjusted leverage of 4.2x-4.7x.  Therefore,
we expect adjusted debt to EBITDA to remain below 5x.  Moreover,
because we think the risk of this ratio increasing beyond 5x is
low, we now assess the financial risk profile as aggressive.
Furthermore, Com Hem has refinanced its credit facilities at a
lower average interest rate, which will be positive for its FOCF
generation and credit ratios; notably, we forecast EBITDA cash
interest cover at 3.8x in 2015 compared with below 2x in 2013,"
S&P added.

"Our assessment of Com Hem's business risk profile as
"satisfactory" remains supported by the company's established
position in Sweden, with connections to 1.83 million households in
a country with a population of 4.6 million.  Moreover, Com Hem has
a stable and diverse customer base of landlords for its basic
cable-TV access business, with a low turnover rate and high
barriers to entry associated with the landlord model.  There are
also growth opportunities, thanks to increasing penetration in its
coverage area of digital TV, supported by Com Hem's TiVo platform
and recent expansion into the corporate segment, notably with the
acquisition in April 2014 of Phonera," S&P noted.

These strengths are partly offset by intense competition from
various technology platforms in multi-dwelling areas.  Com Hem
competes with much larger operators TeliaSonera AB and Telenor
ASA, which use several alternative technologies, including digital
subscriber lines and fiber networks.

S&P applies a one-notch negative adjustment, based on its
comparable rating analysis.  This is because S&P views Com Hem's
business risk profile as being at the lower end of its
"satisfactory" category, given the current pressure on revenues
from stiff competition, which results in low cash flow conversion.

The stable outlook reflects S&P's belief that Com Hem's organic
revenues and EBITDA will increase in 2014 and 2015, supported by
the TiVo TV platform and cross-selling opportunities, notably for
broadband business.  S&P also anticipates that Com Hem will
sustain its market positions and profitability and increase its
ratio of FOCF to debt to 5% in 2015.

S&P could raise the rating if adjusted FOCF to debt were
comfortably in the 5%-10% range, while adjusted debt to EBITDA
declined to 4.5x or lower.  A gradual exit of the financial
sponsor's stake in Com Hem to below 40% would have a positive
impact on S&P's adjusted debt ratios as this would lead it to
deduct surplus cash from S&P's debt calculations.

Although unlikely in the next 12 months, S&P could lower the
ratings if it reassessed the group's business risk profile to
"fair."  This could be triggered by a decline in revenues or the
adjusted EBITDA margin during 2014, for example, because of lower
prices or market share erosion that could translate into negative
FOCF.  S&P could also lower the rating if the company's debt and
therefore its leverage increased, for instance, after an
acquisition.


=====================
S W I T Z E R L A N D
=====================


DUFRY AG: S&P Affirms 'BB+' CCR on Nuance Acquisition Plan
----------------------------------------------------------
Standard & Poor's Ratings Services said that it has affirmed its
'BB+' long-term corporate credit rating on Swiss travel retailer
Dufry AG.  S&P removed the rating from CreditWatch with negative
implications, where it had placed it on June 10, 2014.  The
outlook is stable.

At the same time, S&P affirmed its 'BB+' issue rating on Dufry's
senior unsecured Swiss franc (CHF)650 million revolving credit
facility (RCF) due 2017 and its senior unsecured US$500 million
notes due 2020.  The recovery rating on these facilities remains
at '4', indicating S&P's expectation of average (30%-50%) recovery
in the event of a payment default.

S&P has assigned a 'BB+' issue rating to Dufry's proposed CHF900
million RCF due 2019, which will replace the RCF described above.
In addition, S&P assigned a 'BB+' issue rating to a proposed
EUR500 million bond due 2022.  A proposed CHF1.5 billion term loan
due 2019 will likely replace both the existing US$1.0 billion
multicurrency unsecured term loan due 2016 and Dufry's EUR500
million term loan due 2018.  S&P expects to withdraw its 'BB+'
issue and '4' recovery ratings on the existing RCF on successful
issuance of the new RCF.

The ratings on the proposed instruments are subject to the
satisfactory review of the final documentation and the successful
implementation of the planned financing structure.

The affirmation takes into account Dufry's plans to acquire
Switzerland-based competitor Nuance Group AG for an enterprise
value of CHF1.55 billion.

S&P expects the acquisition, including transaction costs, to be
financed through a new EUR500 million bond due 2022 and a CHF725
million equity rights issue.  In addition, Dufry has placed a
CHF275 million mandatory convertible due June 2015.

On top of that, Dufry plans to replace its US$1.0 billion
unsecured term loan due 2016 and its EUR500 million term loan due
2018 with a new CHF1.5 billion term loan due 2019.  Given the
larger size of the group after the completion of the acquisition,
Dufry will also replace its CHF650 million RCF with a new CHF900
million RCF.  It will finance an additional letter of credit
facility of CHF300 million-CHF350 million separately.

"In our view, the acquisition confirms our assessment of Dufry's
"satisfactory" business risk profile.  Its current market share of
9%-10% already makes Dufry the world's leading airport retailer.
The acquisition of Nuance would boost Dufry's market share to
about 15%, ahead of the world's No. 2, World Duty Free, which has
market share of roughly 8%. The increased purchasing power would
likely enable the company to improve its purchasing conditions and
realize efficiency gains through its integrated information
technology (IT) and logistics systems.  In addition, we expect
cost savings from the merger of the two headquarters.  Dufry
calculates synergies could reach about CHF70 million a year," S&P
said.

The stable outlook on Dufry reflects S&P's view that the company
will implement its financing structure as planned and will
integrate Nuance smoothly into its operations.  S&P also expects
Dufry to deleverage over the coming two years by increasing free
cash flow generation and avoiding large debt-financed
acquisitions.

Because Dufry has structured its operating leases in a manner that
does not require the disclosure of minimum payments, S&P has not
adjusted its leverage ratios for Dufry's minimum operating lease
commitments.  For this reason, S&P views a 2.5x-3.5x
debt-to-EBITDA ratio as in line with a "significant" financial
risk profile for Dufry, compared with the 3.0x-4.0x suggested in
S&P's criteria.  However, S&P takes into account Nuance's minimum
operating lease expenses.  S&P estimates that the present value of
these expenses will account for about 20%-25% of Dufry's total
adjusted debt in 2015.

S&P could take a negative rating action if Dufry's financial
covenant headroom tightened more than S&P currently expects.  This
could occur if event risks resulted in EBITDA volatility or if
management pursued a major debt-financed acquisition.
Specifically, S&P could lower the rating if FFO to debt fell below
20% and debt to EBITDA exceeded 3.5x on a sustainable basis.  That
said, one aspect of Dufry's business model is to pursue
acquisitions and to deleverage quickly thereafter, resulting in
highly volatile leverage ratios.

Rating upside is limited by management's continued appetite for
acquisitions, which S&P thinks prevents a sustainable improvement
in the company's financial metrics.  However, S&P could consider a
positive rating action if Dufry's management committed to a
sustained ratio of adjusted debt to EBITDA of less than 2.5x, and
improved FFO to debt to comfortably more than 30%.


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


CNG HOLDINGS: Moody's Lowers CFR & Sr. Secured Rating to 'Caa1'
---------------------------------------------------------------
Moody's Investors Service downgraded CNG Holdings, Inc.'s
corporate family rating and Senior Secured notes rating to Caa1
from B3. Moody's also changed the rating outlook to negative from
stable.

Ratings Rationale

The downgrade reflects the anticipated deterioration in CNG's
credit metrics as a result of substantial restructuring costs
related to the company's recent suspension of lending activities
in the U.K., as well as sizeable losses from its majority stake in
the specialty finance business WhyNot Leasing, LLC (WNL).

CNG voluntarily suspended lending in the U.K. after it concluded
that it would not be able to comply with the requirements imposed
by the Financial Conduct Authority (FCA), which assumed regulatory
responsibility for the consumer credit industry earlier this year.
The company expects to resume lending in early 2015, provided that
the improvements it makes to its lending policies and procedures
are satisfactory to the FCA. CNG's recently announced
restructuring plan entails a significant reduction in the total
number of operating stores in the U.K. (approximately 300, or two-
thirds of total stores in the U.K.). The company expects to incur
US$25 million of cash charges associated with this restructuring,
most of which would relate to reductions in workforce and
termination of occupancy obligations.

Worse than anticipated performance of WNL's fourth quarter 2013
lease vintages have resulted in substantial losses in this
business to date. The higher-than-expected leasing volumes
resulting from the addition of a large client stressed WNL's
customer service and collections infrastructure and exposed
vulnerabilities in its underwriting and fraud prevention
capabilities.

The negative outlook reflects the uncertainty related to CNG's
ongoing restructuring efforts in the U.K. as well as to the
turnaround of the financial performance of WNL.

CNG's high financial leverage and absence of capital cushion are
indicative of a Caa rating. In addition to the negative
developments described above, the rating also reflects a number of
credit challenges facing the company, including ongoing regulatory
risks in the U.S. payday lending business, as well as execution
risks related to the company's installment product expansion.
CNG's credit strengths include its extensive and well-established
retail network in the U.S., with satisfactory underlying demand
fundamentals for short-term and installment loan products.

CNG's ratings are unlikely to be upgraded given the negative
outlook. The outlook could return to stable if the company
demonstrates cost containment in its U.K. business, as well a
sustained improvement in the financial performance of WNL. Ratings
could be downgraded should costs related to the U.K. restructuring
escalate above expectations, or WNL's financial performance fail
to meaningfully improve. Further, a legislative action which would
severely impact CNG's franchise positioning and profitability in
the U.S. could also have negative rating implications.

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


TES GLOBAL: S&P Assigns 'B' Corp. Credit Rating; Outlook Stable
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' long-term
corporate credit rating to TES Global Financial S.a.r.l. and its
subsidiary TSL Education Group Ltd. (together TSL Education), the
U.K.-based teaching job classified group.

In addition, S&P has assigned its 'B' issue rating to the proposed
GBP100 million senior secured floating-rate notes and proposed
GBP200 million senior secured fixed-rate notes due 2020, to be
issued by TES Finance PLC.  The recovery rating on these notes is
'4', indicating S&P's expectation of average (30%-50%) recovery in
the event of a payment default.

The rating mainly reflects S&P's assessments of TSL Education's
financial risk profile as "highly leveraged" and its liquidity as
"adequate".  S&P also factors in its view that these assessments
will likely remain unchanged after the group's planned refinancing
with the proposed issue of GBP300 million in senior secured notes,
despite the increased leverage we foresee, post refinancing.  The
rating also incorporates S&P's assessment of the group's business
risk profile as "weak."

The rating is primarily constrained by S&P's view of TSL
Education's financial risk profile as "highly leveraged."  S&P
understands that a significant amount of shareholder loans are at
the TES Global Financial level.  S&P considers these shareholder
loans to be debt-like obligations, under its criteria.  S&P
understands that, as part of the transaction, the amount of these
loans will be reduced by the amount of dividends paid to
shareholders, investment funds affiliated with financial sponsor
owner TPG Capital LLP, and management.  Consequently, S&P
estimates that TSL Education's Standard & Poor's adjusted gross
debt-to-EBITDA ratio will be about 8.3x by year-end 2014 (fiscal
year ending Aug. 31, 2014) including the shareholder loans, or
about 6x excluding the shareholder loans.

The pace of TSL Education's future deleveraging depends on its
ability to sustain revenue and earnings growth over the next few
years, after a trough in fiscal 2011 -- mainly because of a
reduction in turnover among teaching professionals following the
2008-2009 global financial crisis.

The financial risk profile also incorporates TSL Education's
coverage ratio of adjusted funds from operations (FFO) to cash
interest of about 2.5x, which S&P views as in line with a 'B'
long-term rating.  Furthermore, S&P sees the group's sound free
operating cash flow (FOCF) conversion and generation as
supportive, together with S&P's assessment of "adequate"
liquidity, thanks to the group's long-term debt maturity schedule.

"Our assessment of the business risk profile as "weak" reflects
our opinion that TSL Education operates in the niche teacher
recruitment market in the U.K., which we view as a mature market
that is sometimes exposed to large swings in volumes of job
advertisements.  These fluctuations are generally related to the
perception of teacher job security and opportunity, which is
linked to announcements on and levels of public funding in the
secondary education sector and general confidence in the overall
job and economic environment.  Other factors constraining the
business risk profile are TSL Education's limited geographic and
product diversification, and its high fixed-cost base.  We think
it could be tough for the group to quickly make a large reduction
in the cost base if revenues dropped markedly and led to
substantial margin erosion," S&P said.

These factors are, however, partly offset by S&P's opinion of TSL
Education's market position as the breakaway leader in the U.K.
teacher recruitment market in print and online, which, together
with proven high efficiency in matching suitable candidates to job
advertisements, results in fairly high barriers to entry.  New
entrants consequently have difficulty in quickly gaining market
share.  TSL Education's market position is also supported by a
successful migration of its business model to online, supplemented
by S&P's view that the group retains some degree of pricing
flexibility and proven upselling capabilities.  Finally, the group
reports generally high EBITDA margins, which compare favorably
with those of peers and result in sound free cash flow generation
thanks to low investment and working capital needs.

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

   -- Revenue growth at about 30% in fiscal 2014 (including the
      acquisition of Vision from June 2014) and 5%-10% growth in
      fiscal 2015. EBITDA margin, post restructuring costs,
      between 45% and 48% in fiscal 2014 and between 44% and 46%
      in 2015.  S&P anticipates a slight dilution of the EBITDA
      margin following the integration of the lower-margin Vision
      business.

   -- Existing bank loans to be fully repaid and dividends of
      GBP65 million to be paid to shareholders using the proceeds
      of the proposed senior secured notes.  S&P also assumes
      that the group will reduce its existing shareholder loans
      by the amount of the proposed dividend distribution.

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

   -- A Standard & Poor's adjusted debt-to-EBITDA ratio of about
      8.3x in fiscal 2014, remaining broadly stable in fiscal
      2015.

   -- A Standard & Poor's adjusted FFO-to-cash interest coverage
      ratio of about 2.5x in fiscal 2014, increasing slightly in
      fiscal 2015.

The stable outlook on TSL Education reflects S&P's that the group
will maintain nominal EBITDA growth and adequate liquidity over
the next 12 months.  S&P views adjusted cash interest coverage by
FFO exceeding 2x and consistently positive free cash flow
generation as commensurate with the current ratings.

S&P could consider lowering the ratings if TSL Education's
operating performance significantly deteriorated over the next 12
months, resulting in a weakening liquidity position and credit
metrics no longer commensurate with the current ratings, such as
adjusted cash interest coverage falling below 2x.  In particular,
if the group drew more than GBP6 million under its RCF and if
covenant headroom under the RCF was less than 15% in the same
period, S&P could downgrade the ratings.  Downward rating pressure
could also arise if free operating cash flow turned negative, or
if TSL Education's strategy, financial policy, or operating
process changed noticeably, resulting in weaker-than-expected
operating performance or pronounced releveraging of the group.

S&P sees limited rating upside at this stage, given its assessment
of TSL Education's business risk profile as "weak".  If S&P was to
revise the business risk profile to "fair," it might consider
raising the ratings if adjusted cash interest coverage sustainably
exceeded 2.5x.  A revision of the business risk profile to "fair"
would, all other things remaining equal, hinge on the group's
ability to substantially increase its scale of operations through
steady revenues and earnings growth, and significantly increase
its geographic and business diversity over the next few years.


TSL EDUCATION: Moody's Assigns 'B2' Corporate Family Rating
-----------------------------------------------------------
Moody's Investors Service has assigned a corporate family rating
(CFR) of B2 and a probability of default rating (PDR) of B2-PD to
TSL Education Group Limited (TSL), the holding and parent company
to the TES Global group of companies.

Concurrently, Moody's has assigned a (P)B2 rating to the GBP300
million Senior Secured Notes due 2020 to be issued by TES Finance
plc. The outlook is stable.

This is the first time Moody's has assigned a rating to TSL.
Moody's issues provisional ratings in advance of the completion of
the transaction and these ratings reflect Moody's preliminary
credit opinion regarding the transaction only. Upon a conclusive
review of the final documentation, Moody's will endeavor to assign
a definitive rating to the Senior Secured Notes. A definitive
rating may differ from a provisional rating.

Together with a portion of cash on balance sheet, proceeds from
the note issuance will be used to refinance the existing debt
facilities, fund a repayment of shareholder loan notes, finance
the acquisition of Vision for Education Ltd (Vision) and pay
transaction costs. A new GBP20 million RCF will be also be
available for working capital needs and general corporate
purposes, and is expected to be undrawn at closing.

Ratings Rationale

The B2 corporate family rating reflects TSL's (1) high opening
financial leverage; (2) sensitivity to the UK macroeconomic
environment; (3) small scale; and (4) lack of product and
geographic diversity.

However, the B2 CFR also reflects the company's (1) leading market
position in the UK teacher recruitment market; (2) diversified
customer portfolio, with long-term relationships; and (3) success
to date in its digital migration.

Approximately 82% of TSL's financial year-end (FYE) August 2013
revenues were derived from school teacher classified
advertisements. Demand for these advertisements from schools is
driven by teacher turnover, which has proved to be highly
cyclical, reducing significantly during periods under recessionary
pressure.

This cyclicality was evidenced during the height of the UK
government's austere response to the 2008 recession, when TSL's
FYE 2011 revenues fell more than 13% (volumes fell 21%) year-on-
year, before rebounding 23% in FYE 2012 (volumes increased 25%).
TSL was able to mitigate some of the volume declines by
successfully increasing revenues per advertisement, or yield,
through price increases and implementing an up-selling scheme for
their advertisement offerings.

TSL is the leading player in the UK education recruitment
advertising market, with a market share of 55% by volume according
to Nielsen (and estimated to be considerably higher for secondary
school teachers). TSL estimates its inventory of job listings to
be almost six times larger than that of its nearest competitor.
When a school has a teacher vacancy to fill, it is under pressure
to do so quickly and therefore is usually prepared to pay for
surety of success, given the more expensive alternative option of
employing a supply teacher. Customers (the schools and media
agencies) value the success rates achieved by TSL through its high
liquidity, with around 82% of jobs advertised filled within four
weeks.

Free listings are offered by several on-line services and as a
result adverts are often dual-listed across TSL and competitor
sites. Margin pressures for TSL will increase if credible
competitors are able to capture volume or demonstrate their
ability to fill advertisements. However, Moody's expects this to
occur outside of TSL's core secondary school teachers market where
its market share is not as strong.

TSL's business model continues to undergo a structural
transformation whereby the company's advertisement offerings
migrate from print to digital on-line media. Approximately 22% of
TSL's FYE 2010 advertisements were on-line only compared with 66%
and the company's target of 85% by FYE 2018. Management has been
successful in managing this transformation to date, having offset
declining print revenues with increased net yields via up-selling
techniques, albeit more recently at a slower rate.

Challenges in the migration to on-line remain, including declining
print classified revenues and falling circulation numbers. Yield
increases and up-selling will need to be carefully managed in the
face of the free or competitive offerings available in the market
and therefore increases are likely to become more difficult to
achieve. In addition, the content of the TES publication needs to
continually evolve in order to continue to reflect the changing
target audience.

Having spent approximately GBP17 million on the Resources platform
(an education resource sharing platform) between FYE 2010 and FYE
2013, management will now seek to monetize this investment. The
headline numbers are impressive: 5.9 million teachers from 197
countries, 790,000 resources and up to 10 downloads per second.
However, the ability to generate revenue from the site is still
very much unproven. Moody's sees limitations to the amount
teachers are prepared to pay personally for such resources and
therefore considers buy-in from schools will be critical to its
success.

TSL's small size influences its credit rating. Additionally, the
breadth of TSL's revenue generating product offering is limited,
with the majority of revenue generated from classified
advertisements for teachers within the UK. TSL has been seeking to
diversify its product and income streams, as evidenced by the
acquisition of Vision, a supply teacher agency business, and its
plans to monetize the Resources platform, although such moves away
from its core recruitment business are not without risks and
challenges.

The company enjoys a diversified customer base with the largest
five customers accounting for 20% of advertising revenues, these
being agencies who represent multiple schools. Its high success
rate has resulted in long term relationships established with
schools and a high numbers of repeat customers -- 77% of FYE 2013
revenues were from schools who had advertised with TSL in FYE
2010.

Moody's considers opening leverage of 5.3x (LTM May 2014 Moody's-
adjusted, pro forma for the acquisition of Vision) to be high.
Given the non-amortizing nature of the new capital structure, its
ability to reduce leverage will be driven by improvements in
EBITDA. Initially EBITDA growth will be limited by the continued
investment into the Resources platform without meaningful
associated revenues, although this could be scaled back if
necessary. In addition, the growth of the core TES business is
expected to be slower than the last three years as hiring volumes
trend close to the long-term mean and yield increases become more
constrained. As a result, Moody's expects leverage to trend
towards 4.5x over the next two to three years. However, low capex
requirements (around GBP3 million p.a.) and limited working
capital movements result in strong levels of cash conversion, with
free cash flow/debt expected to remain above 10% in the medium
term.

Moody's considers TSL's near-term liquidity to be adequate, with
sufficient internal resources to service debt offset by a small
RCF. Moody's expects that free cash flow will be around
GBP30 million for FYE 2015 and FYE 2016, resulting in a build-up
of cash balances, which may be used for acquisitions or additional
distributions to shareholders, subject to the restricted payment
tests (which are shareholder-friendly). Pro forma for the proposed
transaction, Moody's expects the company to have around GBP14
million of cash on balance sheet and access to the undrawn GBP20
million revolving credit facility. The RCF has a springing
maintenance leverage covenant when drawn more than 30%.

The Senior Secured Notes and RCF will share the same security and
guarantee package, although, the RCF has first priority in respect
to enforcement proceeds. The RCF at GBP20 million is small
relative to the senior secured notes issuance and as a result the
instrument rating of the notes is in line with the B2 CFR.

Rationale for the Stable Outlook

The rating and stable outlook assume that TSL will be able to
retain its leading position in the teacher recruitment market and
continue to successfully manage its migration to on-line. The
outlook also incorporates Moody's expectation that the company's
leverage will trend towards 5x and will not embark on any
transforming acquisitions or make debt-funded shareholder
distributions.

What Could Change the Rating Up/Down

In view of the company's relatively weak position in the B2
category, there is limited near-term upwards rating pressure.
However, there could be positive pressure on the rating if the
Moody's-adjusted debt/EBITDA falls below 4x on a sustainable
basis, with Moody's-adjusted EBITDA minus capex coverage of
interest expenses above 3.5x and FCF/debt materially exceeding
10%.

Conversely, downward pressure on the rating could arise if
Moody's-adjusted debt/EBITDA increases towards 5.5x or Moody's-
adjusted EBITDA minus capex coverage of interest expenses falling
towards 2.0x and/or liquidity concerns emerge. Moody's could also
consider downgrading the ratings in the event of any material
debt-funded acquisitions or changes in financial policy.

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

Headquartered in London and founded over 100 years ago, TSL is a
leading provider of teacher recruitment classifieds, or vacancy,
advertisements for secondary and primary schools in the UK. The
company offers placement of these teacher recruitment
advertisements through their proprietary print and digital on-line
media offering. Its digital platform is the world's largest
network of teachers, providing a highly liquid marketplace for
content sharing and teacher recruitment. For FYE 2013 the company
reported revenues of GBP88 million and EBITDA of GBP46 million.


                            *********

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.

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

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

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


                 * * * End of Transmission * * *