TCREUR_Public/140724.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

            Thursday, July 24, 2014, Vol. 15, No. 145



HYPO ALPE-ADRIA: Vienna Insurance Intends to Fight Bail-In Law


FEDERAL BANK: Put Under Administration; Cyprus Gov't Seeks Buyer


CIDRON GLORIA: S&P Assigns Preliminary 'B' CCR; Outlook Stable
HP PELZER: Moody's Assigns '(P)B2' Corporate Family Rating
PROKON REGENERATIVE: Majority of Shareholders Back Asset Sale


IBUDALANASJODUR: S&P Lowers ICR to 'BB-'; Outlook Stable


DEPFA BANK: Fitch Affirms 'C' Ratings on Hybrid Instruments


GSC EUROPEAN CDO II: S&P Affirms CCC- Ratings on 2 Note Tranches
OAK FINANCE: Moody's Rates Class A1 & A2 Secured Notes 'B3'
RIOFORTE INVESTMENTS: Files for Creditor Protection in Luxembourg


POBJEDA: Podgorica Government to File Bankruptcy Petition


TMF GROUP: Moody's Rates New EUR20MM Sr. Unsecured Notes 'Caa1'
TMF GROUP: S&P Affirms 'B' Corp. Credit Rating; Outlook Stable


MEZHPROMBANK: Court Serves $2BB Asset Freeze Order on Pugachev
MMC NORILSK: Fitch Raises LT Issuer Default Rating From 'BB+'
PERESVET: Moody's Withdraws 'B3' Long-Term Deposit Ratings
RUSNANO: S&P Affirms 'BB/B' Issuer Credit Ratings; Outlook Neg.
URALSIB BANK: Fitch Affirms 'B+' Long-Term IDR; Outlook Negative


MBS BANCAJA 3: Fitch Affirms 'CCsf' Rating on Class E Notes
CAIXA PENEDES 1: Fitch Affirms 'BBsf' Rating on Class C Notes


DOGAN YAYIN: Fitch Withdraws 'BB-' Issuer Default Rating

U N I T E D   K I N G D O M

DECO 11: Moody's Lowers Rating on Class A-1B Notes to 'B3'
EDINBURGH TIMBER: Director Banned for 12 Years
ELEMENT MATERIALS: Moody's Assigns 'B2' Corporate Family Rating
ELEMENT MATERIALS: S&P Assigns Prelim. 'B' CCR; Outlook Stable



HYPO ALPE-ADRIA: Vienna Insurance Intends to Fight Bail-In Law
Georgina Prodhan at Reuters reports that Peter Hagen, Vienna
Insurance's chief executive, on Tuesday said the company intends
to fight a new law bailing-in Hypo Alpe Adria subordinated debt
holders in Austria's constitutional court.

According to Reuters, Peter Hagen told the WirtschaftsBlatt
newspaper in an interview published on Tuesday, "This action is
ultimately a cold-blooded expropriation and we will fight it in
the constitutional court because, in my opinion, it is

Austria's lower house of parliament passed legislation this month
to wipe out some subordinated creditors of nationalized bank Hypo
despite guarantees from its home province, entering uncharted
territory for debt markets, Reuters relates.

Vienna Insurance faces a EUR50 million (US$67 million) hit from
the move, which is designed to ensure that investors share with
taxpayers the costs of winding down the bank, which has swallowed
EUR5.5 billion in state aid so far, Reuters discloses.

                     About Hypo Alpe-Adria

Hypo Alpe-Adria International AG is a subsidiary of BayernLB.  It
is active in banking and leasing.  In banking, HGAA serves both
corporate and retail customers and offers services ranging from
traditional lending through savings and deposits to complex
investment products and asset management services.

Hypo Alpe has received EUR1.75 billion in aid in emergency
capital from the Austrian government.  European Union Competition
Commissioner Joaquin Almunia said in March 2013 that Hypo faced
possible closure for failing to adequately restructure.
The European Commission approved Hypo's recapitalization in
December 2013, but made it conditional on the management
presenting a thorough plan to overhaul the group.  The Austrian
finance ministry, which effectively runs Hypo Alpe, submitted a
restructuring plan to the Commission on Feb. 5.


FEDERAL BANK: Put Under Administration; Cyprus Gov't Seeks Buyer
Kerin Hope and Andreas Hadjipapas at The Financial Times report
that Cyprus plans to seek a buyer for the local operation of
Federal Bank of the Middle East (FBME), a Lebanese-controlled
lender, which has been placed under administration by the
island's central bank following allegations of money-laundering.

FBME, which has a US$2 billion balance sheet, was accused by the
US Treasury's financial crimes enforcement network (FinCEN) of
facilitating a "substantial volume" of money-laundering through
its network for many years, the FT discloses.

In an eight-page report released last week detailing the
allegations against FBME, the US regulator, as cited by the FT,
said FBME was used by its customers to facilitate "money-
laundering, terrorist financing, transnational organized crime,
fraud, sanctions evasion and other illicit activity
internationally and through the US financial system."

FBME, strongly denied wrongdoing, the FT notes.  FBME said it had
not been consulted by US authorities about the allegations and
was co-operating with the central bank of Cyprus, the FT relays.

Last year, FBME came under scrutiny by the Cyprus central bank
for allegedly violating capital controls imposed under the terms
of its bailout by the EU and International Monetary Fund, the FT
recounts.  FBME disputed the central bank's claim it had made
illegal foreign transfers amounting to EUR120 million, the FT

The Cyprus government has agreed to a proposal by the central
bank to sell FBME's Cypriot assets in order to protect depositors
and "demonstrate our commitment to safeguarding financial
stability," the FT quotes a Cypriot official as saying on

FBME was established in Cyprus as a subsidiary of the Federal
Bank of Lebanon SA.


CIDRON GLORIA: S&P Assigns Preliminary 'B' CCR; Outlook Stable
Standard & Poor's Ratings Services assigned a preliminary 'B'
long-term corporate credit rating to Cidron Gloria Holding GmbH
(Cidron), the holding company of Germany-based home health care
services provider GHD GesundHeits Deutschland GmbH (GHD).  The
outlook is stable.

At the same time, S&P assigned its preliminary 'B' long-term
issue rating to Cidron's proposed EUR310 million first-lien term
loan and our preliminary 'B' long-term issue rating to the EUR45
million secured RCF.  The preliminary recovery ratings on these
instruments are '4' indicating our expectation of 30%-50%
recovery prospects in the event of a payment default," S&P said.

The final ratings will be subject to the successful closing of
the transaction under terms similar to those currently indicated,
and 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 the final ratings.
If the terms and conditions of the final transaction depart from
the material S&P has already reviewed, or if the transaction does
not close within what it considers to be a reasonable time frame,
S&P reserves the right to withdraw or revise its ratings.

The stable outlook reflects S&P's view that Cidron will maintain
stable operating margins notwithstanding the ongoing pressure on
prices mainly due to the constraints on Germany's public health
care budget.  S&P believes that the company will gain from its
presence in growing sectors and its market-leading position in
Germany.  S&P assumes that it will maintain FFO to cash interest
coverage at about 2x and that no significant cash outflows will
take place beyond those indicated in the base-case assumptions.

S&P could take a negative rating action if the external
environment deteriorates significantly or if GHD experiences a
pronounced deterioration in its market position.  Both events
could result in weaker operational performance and financial
ratios.  In particular, S&P would consider a downgrade if the FFO
interest coverage falls below 1.5x.

S&P sees the possibility of a positive rating action in the next
12 months as remote due to the highly leveraged financial
structure.  A positive rating action would depend on an
improvement of the assessment of the group's business risk

HP PELZER: 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 HP Pelzer Holding Gmbh (HP
Pelzer), which is part of the Adler Group (not rated).
Concurrently, Moody's has assigned a provisional (P)B2 rating,
with a loss given default (LGD) assessment of LGD4 - 52%, to the
proposed EUR230 million worth of senior secured notes due 2021 to
be issued by the company. The outlook on the ratings is stable.

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 closing of the refinancing 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.

"The assigned (P)B2 CFR reflects HP Pelzer's worldwide presence
and market leadership in the supply of noise reduction components
to the automotive industry, as well as its long standing
relationship with the larger original equipment manufacturers
(OEMs), which provide for a degree of revenues visibility," says
Paolo Leschiutta, a Moody's Vice President - Senior Credit
Officer and lead analyst for HP Pelzer. "However, the rating also
incorporates the company's constrained negotiation power in
comparison to a much larger and concentrated customer base,
represented by big OEMs, its exposure to the automotive
industry's cyclicality and its need to remain innovative in a
highly competitive segment," adds Mr. Leschiutta.

While HP Pelzer does not benefit from aftermarket activity,
Moody's expects that the company's credit metrics will remain
supportive of the rating and compensate some of the
aforementioned weaknesses.

Ratings Rationale

* Assignment of (P)B2 CFR

The assignment of a (P)B2 CFR reflects HP Pelzer's well-
established position as a key supplier of noise reduction
components to the automotive industry. The company has been
operating with a number of the largest OEMs for over 20 years,
proving itself to be a reliable strategic partner that is capable
of providing ongoing innovation within its product range.
Moreover, the company's global presence makes it the partner of
choice for global manufacturers that need suppliers able to
provide products on a global basis for an increasing number of
global platforms. In this respect, the increasing reliance of
OEMs on outsourcing, together with the recent uptick in
automotive demand, provides the potential for growth in the
supplier industry. The company's participation in the development
phase of new auto models also provides a strong tie with its
customers, who are also involved at this phase of production,
while the average life of model platforms (3 to 5 years) to which
the company supplies its products also provides visibility on
future revenues. As at March 2014, the company had contracted
revenues of EUR4.85 billion, representing revenues for the next
five years of business although a large part of these will be
subject to ongoing demand of new car registrations globally.

Although some of the aforementioned strengths provide for
recurring revenues, the rating remains constrained by (1) the
company's small size in comparison to much larger customers; and
(2) its modest negotiation power, with the key risk for HP Pelzer
being an inability to pass through raw material cost increases.
The company's modest margins (EBITA margin at 3.4% for fiscal
2013 on a Moody's adjusted basis) offer modest capacity to absorb
potential shocks in the market. In this respect, Moody's notes
that the company's concentration on new light vehicles with no
aftermarket activity, which normally has higher profitability and
provides for greater revenue stability, is constraining its
profitability and exposing it to greater revenue volatility.

In addition, in light of the high consolidation of the automotive
industry, HP Pelzer now has a fairly concentrated customer base
with Volkswagen AG (A3 positive), General Motors (Ba1 senior
unsecured and Baa2 senior secured, stable) and Ford Motor Company
(Baa3 stable) representing 67% of the company's revenues. The
rating agency also notes that in order to maintain its reputation
for innovation the company will need to maintain high capital
expenditure levels, which could potentially limit the generation
of positive free cash flow. That said, the company's good
relationship with the major OEMs, its reputation as an innovative
supplier and its leadership position offset some of the
aforementioned weaknesses.

Substitution risk is mitigated to an extent by HP Pelzer's wide
geographical presence (i.e., in 18 countries, with a gradual
reduction in its European exposure) and the fact that it is one
of only three independent global players in its industry. Moody's
also recognizes that the increasing penetration of noise
reduction components in the various vehicle segments could
increase demand for the company's products. Since the global
financial crisis of 2007-09, the company has been focusing on
reducing fixed costs and increasing flexibility in order to be
more reactive to potential demand volatility. In addition Moody's
note the exposure to a potential negative outcome of the ongoing
German anti-trust investigation.

The company is planning a new EUR230 million bond issuance, the
proceeds of which it will use to (1) repay existing debt of
EUR86.2 million; (2) repay a EUR52.6 million intercompany loan
provided by a shareholder, the Adler Group; and (3) acquire some
of Adler Plastic's non-Italian automotive subsidiary, which HP
Pelzer plans to incorporate, for EUR22.5 million. As part of the
issuance, the company intends to repay a number of loans
(totaling EUR34.8 million) made to it by customers and suppliers
during the financial crisis. The company will either keep the
remaining proceeds on balance sheet as cash or use them to pre-
finance working capital and capex needs.

Pro-forma for the issuance, Moody's expects that HP Pelzer will
maintain financial leverage, measured as debt/EBITDA (as adjusted
by Moody's), of around 4.0x and a retained cash flow (RCF)/net
debt ratio slightly above 20%. These metrics are at the higher
end of the rating range and compensate for some of the weaknesses
in the company's business profile and a low EBITA margin.
Although the company anticipates a degree of improvement in its
EBITDA and positive free cash flow generation over the coming
years, Moody's expects that its key credit metrics will remain
overall stable and support the rating. The rating agency views HP
Pelzer's liquidity profile as being only adequate, as it will not
benefit from any committed long-term credit facility. That said,
business seasonality tends to be modest in the automotive
supplier industry and, as such, the company should be able to
satisfy its financing and working capital needs with cash
available on balance sheet. Pro-forma for the transaction, and
including the cash that the company will retain as part of the
proceeds of the bond issuance, Moody's expects that the company
will have a cash balance of EUR32.6 million available. The
company capital structure will include a BRL62 million facility
in Brazil which will include financial covenants under which
Moody's expect the company to maintain adequate headroom.

* Assignment of (P)B2 Rating to Senior Secured Notes

The (P)B2 rating (LGD4 - 52%) assigned to the company's proposed
senior secured notes due 2021 reflects the predominance of the
proposed bond issuance within the capital structure. The new
notes will be issued by HP Pelzer, the parent company of the
group and will be guaranteed by operating subsidiaries
representing around 69% of the consolidated EBITDA. The new notes
will be senior obligation and secured against the parent
company's shares and some assets of guarantors subsidiaries.
Along with the new notes, Moody's expect the company to retain
around EUR33 million (at year end 2014) of other financial debt
at the non-guarantor level. Although this debt will be senior to
the new notes, given its proximity to some of the group's assets,
the small size of the senior debt is insufficient, in Moody's
view, to cause a subordination of the bond.

The (P)B2 rating on the notes, in line with the CFR, assumes a
standard recovery rate of 50% for the company.

Rationale for the Stable Outlook

The stable outlook on the ratings reflects Moody's expectation
that HP Pelzer will continue to show stable results and will
benefit from improving market conditions in the automotive
sector. The rating agency also expects that the company will (1)
benefit from its recent restructuring, which is aimed at
increasing cost flexibility; and (2) maintain relatively stable
credit metrics.

What Could Change the Rating Up/Down

Upward rating pressure is currently limited by the business
profile of the group. Over time, however, upward rating pressure
could build if the company's solid track record in delivering
stable operating results and positive free cash flow were to lead
to a reduction in the debt/EBITDA ratio towards 3.5x, a
strengthening of the EBITA margin above 4.5% and improvement in
the company's liquidity profile. Conversely, a rating downgrade
could result from a deterioration in the company's operating
performance or major contract or customer losses, translating in
turn in financial leverage rising to 4.5x, as well as prolonged
negative free cash flow or deterioration in the company's
liquidity profile

Principal Methodologies

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

Headquartered in Witten, Germany, HP Pelzer is a leading designer
and manufacturer of acoustic and thermal reduction components for
the automotive industry. The company is owned by Adler Group, an
Italian diversified group also active in the automotive and
aerospace industries. For the 12 months ended March 2014, on a
pro-forma basis for the enlarged perimeter, the group generated
approximately EUR998 million and EUR70 million of revenues and
EBITDA, respectively.

PROKON REGENERATIVE: Majority of Shareholders Back Asset Sale
Deutsche Welle reports that a majority of shareholders of the
Prokon Regenerative Energien GmbH have voted in favor of
restructuring efforts that could see creditors recoup at least
some of their original investment.

During what was heralded as one of the biggest creditors'
assemblies in German business history, thousands of people
expressed their support to sell off some of the company's assets
in order to settle EUR391 million (US$542 million) in outstanding
investor claims, Deutsche Welle relates.

The vote was a victory for the insolvency administrator Dietmar
Penzlin, who had said Prokon's files have revealed evidence of
fraud, Deutsche Welle notes.

The vote Mr. pitted Penzlin against Prokon's ex-CEO, Carsten
Rodbertus, who was looking to regain control of the company he
founded before Penzlin fired him once the company went bust,
Deutsche Welle relays.

According to Deutsche Welle, Penzlin's plan could keep Prokon up
and running, but with fewer wind parks.

The public prosecutor has begun an investigation of allegations
of financial irregularities at Prokon, Deutsche Welle discloses.

Prokon Regenerative Energien GmbH is a German wind farm operator.


IBUDALANASJODUR: S&P Lowers ICR to 'BB-'; Outlook Stable
Standard & Poor's Ratings Services lowered its long-term foreign
and local currency issuer credit ratings on Ibudalanasjodur
(Housing Financing Fund; HFF) to 'BB-' from 'BB'.  At the same
time, S&P affirmed the short-term ratings at 'B'.  The outlook is

The downgrade reflects what S&P sees as HFF's diminishing public-
policy role following the recommendations of the project
committee on the organization of housing system in Iceland.  S&P
now assess HFF's role for the government as important rather than
very important, under its criteria for rating government-related
entities (GREs).  Therefore, S&P believes there is a high
likelihood -- compared with extremely high previously -- that the
government of Iceland would provide timely and sufficient
extraordinary support to HFF in the event of financial distress.

S&P currently expects HFF's operations to gradually discontinue
following the housing policy proposals put forward by the project
committee appointed by Iceland's Minister of Social Affairs and
Housing.  S&P understands that these proposals are to address the
need for limiting persistent losses posted by the HFF in recent
years, as well as promote the development of an active rental
market.  They also answer the requirements of the European Free
Trade Association Surveillance Authority (ESA), which has on
multiple occasions expressed concerns that some operations of HFF
entail state aid and do not comply with the rules of the European
Economic Area (EEA) agreement, demanding changes to the scope of
HFF's operations.

Under the existing system, HFF provides mortgage loans, as do
commercial banks, and, to a lesser extent, pension funds.  The
new approach calls for the establishment of specialized mortgage
companies, which will be allowed to provide mortgage loans only,
and finance them through issuance of covered bonds.

The proposals specify that HFF will cease lending and its
portfolio will be allowed to expire.  A new state-owned housing
loan company will be established.  The entity will operate on the
same terms as other specialized mortgage companies and, unlike
HFF, will not benefit from a state guarantee.

"In our view, HFF's public policy role has diminished following
the proposals and we have revised the assessment of its role for
the government to important from very important, as our criteria
define these terms.  Our view of HFF's important role is
primarily based on the consequences that HFF's default could have
for the government and the domestic capital market.  As of end-
2013, HFF's bonds amounted to about 47% of Iceland's 2013 GDP,
with about two-thirds held by Icelandic pension funds.  The
institution's default could therefore entail losses for the
pension funds, which is unlikely to be politically acceptable for
the government in office.  HFF's default could also undermine
confidence in the companies benefiting from similar guarantees by
the government," S&P said.

"We continue to assess HFF's link with the government as
integral. The institution remains 100% state-owned and we do not
expect this to change.  As a state agency, HFF is not subject to
bankruptcy proceedings and is exempt from taxation.  The
government has provided support to HFF through capital injections
on three occasions during 2010-2014 totaling more than Icelandic
krona (ISK) 50 billion.  The government also provides an
ultimate, but not timely, guarantee on HFF's outstanding debt,"
S&P added.

The new proposals on the organization of the housing system are
likely to be considered in parliament in the coming months.  So
far, the timeline for their implementation remains uncertain.
S&P understands, however, that HFF is likely to continue
extending some loans -- especially to the residents of rural
areas of Iceland -- before the new specialized mortgage companies
become operational.

While many uncertainties remain, S&P's base case assumes a
gradual and orderly disbanding of HFF over several years.  S&P
expects HFF's operations to be downsized so as to reduce fixed
costs, while the government will only provide capital injections
sufficient to ensure timely honoring of HFF's obligations.  The
government has also recently acknowledged that it will continue
to guarantee HFF's debt.

S&P continues to assess HFF's stand-alone credit profile (SACP)
at 'b-'.

"We have revised our view of HFF's risk position and now consider
it to be moderate.  This reflects our expectations of a slight
improvement in its asset quality, as well as the removal of
uncertainty around the financing of the government's proposal to
offer debt-relief measures; these measures will take the form of
write-downs of private individuals' indexed mortgages.  However,
we continue to believe that HFF's asset quality will likely
remain pressured as a meaningful part of the portfolio is either
in payment suspension or overdue past 90 days.  In addition, more
than half of the total private individual loan portfolio has
undergone some form of restructuring, including longer
amortization periods or links to a wage index rather than the
initial inflation index.  On the positive side, no new names have
been added to the largest problem loans, and we believe the
situation is starting to stabilize," S&P noted.

"At the same time, we have also revised our view of HFF's funding
profile to below average to reflect its reliance on the capital
markets without any central bank access.  HFF has maintained
stable access to the domestic bond market since the onset of the
financial crisis in 2008, despite very high impairments and an
eroding capital base.  This has been possible, in our view, due
to the close link to the government and the outstanding
guarantee, and does not signify a stand-alone strength.  We
assess HFF's liquidity position as adequate, taking into account
the expected contractual cash flows from prepayments and
amortizing loans, and the cash liquidity buffer.  We expect that
HFF will receive state support, if needed, to meet any liquidity
needs," S&P added.

S&P continues to assess HFF's business position as adequate
despite the likely upcoming parliamentary decision to gradually
wind the fund down.  S&P believes the wind down could put
pressure on revenues, especially net interest income, but expects
that the state would support a gradual and orderly process.
Further, S&P expects this will hasten the reduction in HFF's
dominant market share in the mortgage market in Iceland.

Capitalization remains very weak based on S&P's projected risk-
adjusted capital ratio, which it expects to remain around 2% over
the next two years.  The government injected ISK13 billion in
2012 and ISK4.5 billion in 2013 to strengthen HFF's very low
regulatory ratio of 3.4% but a significant portion was consumed
by high provisions.  S&P believes that HFF will likely see
further losses in 2014 and 2015, although smaller than in
previous years, and S&P expects the government will provide more
capital injections.

The stable outlook reflects S&P's expectation that HFF's current
stand-alone creditworthiness remains unchanged, and that the
likelihood of the government of Iceland providing timely and
sufficient extraordinary support to HFF in the event of financial
distress remains high (albeit revised down from extremely high).

S&P could lower the ratings if it revised the SACP downward, for
example as a result of further significant loan losses or policy-
induced write-downs without timely compensation from the state.

S&P could raise the rating if HFF was to significantly reinforce
its currently very weak capital adequacy, for example through a
capital increase.

On July 18, 2014, S&P revised the outlook on the long-term
sovereign ratings of Iceland to positive.  However, under S&P's
criteria for rating GREs, the ratings on HFF will not change if
it raises the long-term local currency sovereign credit rating on
Iceland by one or more notches, all else being equal.


DEPFA BANK: Fitch Affirms 'C' Ratings on Hybrid Instruments
Fitch Ratings has affirmed the ratings of subordinated debt and
hybrid debt securities issued by KA Finanz AG (KF), Portigon AG,
Depfa Bank plc (Depfa, and its three tier 1 issuing vehicles),
Dexia and Dexia Credit Local (DCL).  All five banks are in wind
down.  Their support-driven ratings are unaffected by this rating


For performing subordinated debt Fitch typically notches
subordinated and hybrid securities down from an anchor rating,
usually an issuer's VR (see Fitch's criteria, 'Assessing and
Rating Bank Subordinated and Hybrid Securities Criteria').  The
number of notches reflects an assessment of both the relative
loss severity and the incremental non-performance risk, relative
to that captured by the anchor rating.

However, Fitch does not assign VRs to banks in orderly wind down,
such as these, because in our view they have no viable standalone
business model, and could not operate without receiving or being
expected to receive external support.  In the absence of a VR or
alternative rating that could act as an anchor, we have adopted a
more bespoke analysis of the risks of the non-performance and
loss severity risks for these securities.

The ratings of still performing subordinated debt securities
issued by KF, Depfa and DCL reflect the banks' still material
credit risk, lack of financial flexibility for subordinated
instruments and limited margin of safety which, in Fitch's view,
is situated in the 'B' category on Fitch's rating scale.  The
material credit risk is driven by potential 'burden sharing' on
the banks' respective subordinated debt holders triggered by
additional state support to accompany the orderly wind down of
these banks.

Fitch differentiates the wind-down banks' subordinated debt
securities within the 'B' category by comparing these banks'
respective operating income forecasts, credit exposures and
related potential losses and available capital buffers to
determine the potential need for further extraordinary state
support.  The notching differences reflect Fitch's view of the
somewhat different probability of further state support for each

DCL's subordinated debt instruments XS0307581883 and XS0284386306
are dated bonds (maturing in 2017 and 2019 respectively) with
contractually mandatory coupon payment.  Fitch rates these
securities 'B-' to reflect the risk that losses would be imposed
on these securities, if further state support would, at some
point, be provided to Dexia.  DCL's subordinated debt securities
are rated lower than KF's and Depfa's, as Fitch believes the risk
of potential loss for DCL's bondholders is the highest among the
three banks.

In turn, the agency estimates the risk of potential loss for KF's
subordinated bondholders (rated B) is somewhat higher than for
investors in Depfa's subordinated debt security, which are rated
the highest at 'B+'.  The one-notch difference between Depfa's
and KF's subordinated ratings reflects Fitch's view of the
relative non-performance risk for KF compared with Depfa, driven
by our view on the sensitivity of each entity to operating
losses. Furthermore, the only dated subordinated debt instrument
issued by Depfa that is rated by Fitch will mature in December
2015.  The five rated subordinated debt instruments issued by KF
have longer-term maturity dates, ranging from 2021 to 2031.

Fitch has removed the Rating Watch Evolving from Depfa's
subordinated debt rating because Fitch now expects that the
securities will run off in the normal course of the bank's wind-
down, including after the planned transfer of Depfa's ownership
from Hypo Real Estate Holding AG (A-/Negative) to FMS
Wertmanagement (AAA/Stable).  The rating is sensitive to
deviation from this base case, however.


For the 'B' range subordinated debt instruments, there is upside
potential to the ratings should the banks' wind-down progress
significantly with capital being retained at the same time.
Downside pressure arises from the risk of the instruments being
bailed in.  Given the high degree of concentration risk in these
banks' asset portfolios, this scenario could be driven by large
single credit losses that would mean the banks requiring further
state support.  Should these instruments be bailed in then loss
severity would likely be high, which could result in a downgrade
to 'CC' or 'C'.


The 'C' ratings of the junior subordinated and hybrid securities
issued by these banks reflect ceased coupon payments and poor
recovery prospects.

KF's junior subordinated debt rating of 'C' reflects the deferral
of coupon payments and Fitch's view that payments are unlikely to
be resumed given that KF is in wind-down.

Depfa's non-performing hybrid Tier 1 securities (Depfa Funding
II, III and IV LP) are rated 'C' to reflect the uncertain timing
of these issues being serviced again.  The European Commission's
state-aid agreement does not permit distribution on Depfa's
profit-related capital instruments -- unless they are issued by
SoFFin, the German financial market stabilization agency, or
payment is mandatory for legal reasons - prior to Dec. 31, 2015.

The 'C' ratings of DCL's (FR0010251421) and Dexia 's
(XS0273230572) hybrid Tier 1 securities reflect the coupons
missed as part of successive restructuring and orderly resolution
plans, and a continued ban on coupon payment of subordinated debt
and hybrid securities (unless contractually mandatory) imposed by
the European Commission since 2010 and the first restructuring

Fitch does not expect that any of these instruments will become
performing and therefore sees no upside for the instruments'


Portigon's (A+/Stable) grandfathered subordinated debt is rated
'AAA', reflecting the grandfathered guarantee
(Gewaehrtraegerhaftung) from the former WestLB's owners,
especially the State of North Rhine Westphalia (NRW; AAA/Stable).
The ratings are sensitive to Fitch's view of the ability or
propensity of the guarantor to provide support.  A diminished
ability to support would likely be implied by a downgrade of the
'AAA' rating of NRW, while a weakened support propensity under
the guarantee could be signalled in the highly unlikely event
that grandfathered state guarantees of any German Landesbank's
debt is called into question for any reason.

Fitch's view is also underpinned by the stability of the German
solidarity system linking NRW's creditworthiness to that of the
Federal Republic of Germany (AAA/Stable).  Fitch does not believe
that the German government would override the state guarantees
for German banks despite recent attempts by the Austrian federal
government to impose losses on subordinated debt guaranteed by
the Austrian province of Carinthia, in the case of Hypo Alpe-
Adria-Bank International AG.

The rating actions are as follows:

Depfa Bank plc

Subordinated debt (ISIN XS0229524128): affirmed at 'B+', RWE
Depfa Funding II LP: hybrid capital instruments (ISIN
   XS0178243332) affirmed at 'C'
Depfa Funding III LP: hybrid capital instruments (ISIN
   DE000A0E5U85) affirmed at 'C'
Depfa Funding IV LP: hybrid capital instruments (ISIN
   XS0291655727) affirmed at 'C'

KA Finanz AG

  Subordinated debt (ISINs XS0257275098, AT0000441209,
    XS0185015541, XS0144772927 and XS0255270380) affirmed at 'B'
  Junior subordinated debt (ISINs XS0284217709 and XS0270579856)
    affirmed at 'C'


  XS0273230572 Tier 1 hybrid securities: affirmed at 'C'

Dexia Credit Local:

  Tier 1 hybrid securities FR0010251421: affirmed at 'C'
  Subordinated debt securities XS0307581883 and XS0284386306:
   affirmed at 'B-'

Portigon AG

  State-guaranteed/grandfathered subordinated debt: affirmed at


GSC EUROPEAN CDO II: S&P Affirms CCC- Ratings on 2 Note Tranches
Standard & Poor's Ratings Services took various credit rating
actions on all classes of notes in GSC European CDO II S.A.

Specifically, S&P has:

   -- Raised its ratings on the class A1, A2, B, C1, C2, D1, and
      D2 notes;

   -- Affirmed its 'CCC- (sf)' ratings on the class E1 and E2
      notes; and

   -- Withdrawn its 'AA+ (sf)' rating on the class A1-D notes.

S&P conducted its credit and cash flow analysis and applied its
supplemental tests (which addresses event and model risk that is
not captured in S&P's cash flow analysis.  S&P has based this
review on data from the May 2014 trustee report, along with the
application of its relevant criteria.

Since S&P's May 31, 2012 review, the transaction has benefited
from further amortization of the class A notes, which have been
amortizing since the end of the reinvestment period in July 2010.
This, in conjunction with interest proceeds used to deleverage
the class A1 and A2 notes has resulted in increased in available
credit enhancement for all classes of notes.  S&P also observed a
higher weighted-average spread earned on the portfolio and
improved par coverage tests for all classes of notes.

The proportion of assets that S&P considers to be rated in the
'CCC' category ('CCC+', 'CCC', and 'CCC-') have increased to
26.24% from 11.43% since its previous review.  Defaulted assets
(i.e., obligors rated 'CC', 'SD' [selective default], or 'D')
have also increased to 17.90%.  Total defaults in S&P's last
review was 9.95%.  Overall, S&P has observed a negative rating
migration of the portfolio compared with its previous review.
This has resulted in an increase in the scenario default rates
(SDRs) at each rating level.  S&P considers the transaction to be
well-diversified in terms of industry and geographical
distribution. There are no performing assets from sovereigns with
a rating of 'BBB+' and below.  The class E1 and E2 notes continue
to fail their overcollateralization tests.

The transaction is only exposed to counterparty risk from the
bank account and custodian.  BNP Paribas (A+/Negative/A-1) is the
bank account provider and custodian.  The documented downgrade
provisions with the bank account provider and custodian complies
with our current counterparty criteria.  S&P has therefore not
applied any additional stresses to the structure.

"We conducted our cash flow analysis to determine the break-even
default rate (BDR) for each class of notes at each rating level.
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 criteria.  We also tested the sensitivity of
all classes of notes by applying high and low correlation and
lower recovery sensitivity tests at each rating level.  In
addition, we conducted our cash flow analysis with the covenented
weighted-average spread for rating levels above the initial
ratings," S&P said.

S&P applied its supplemental tests, which address event and model
risk.  These tests assess whether a collateralized debt
obligation (CDO) tranche has sufficient credit enhancement to
withstand the default of a certain number of the largest obligors
at different liability rating levels.

Based on the above observations and the results of S&P's cash
flow analysis and supplemental tests, it considers the available
credit enhancement for the class A1, A2, B, C1, C2, D1, and D2
notes to be commensurate with higher ratings than previously
assigned.  S&P has therefore raised its ratings on these classes
of notes.

The available credit enhancement for the class E1 and E2 notes is
commensurate with their current ratings.  S&P has therefore
affirmed its 'CCC- (sf)' ratings on these classes of notes.

The class A1-D notes are no longer outstanding as these notes are
now consolidated with the class A1 notes.  S&P has therefore
withdrawn its 'AA+ (sf)' rating on the class A1-D notes.

GSC European CDO II is a cash flow collateralized loan obligation
(CLO) transaction that securitizes loans granted to primarily
speculative-grade corporate firms.  Its only purposes are to
acquire the portfolio, issue the notes, and engage in certain
related activities.  The transaction closed in 2005 and is
currently in its amortization phase.  The collateral manager is

During S&P's rating process (for which it considered the May 2014
trustee report), it received an updated report dated June 2014.
S&P has compared the two reports and have concluded that the
rating actions are not affected by the updated report.


GSC European CDO II S.A.
EUR410 mil floating- and fixed-rate notes

                     Rating      Rating
Class   Identifier   To          From
A1      36293RAA8    AAA (sf)    AA+ (sf)
A1-D    36293RAS9    NR          AA+ (sf)
A2      36293RAB6    AAA (sf)    AA+ (sf)
B       36293RAC4    AAA (sf)    AA- (sf)
C1      36293RAD2    A+ (sf)     BBB+ (sf)
C2      36293RAE0    A+ (sf)     BBB+ (sf)
D1      36293RAF7    BB+ (sf)    B+ (sf)
D2      36293RAT7    BB+ (sf)    B+ (sf)
E1      36293RAG5    CCC- (sf)   CCC- (sf)
E2      36293RAH3    CCC- (sf)   CCC- (sf)

NR-Not Rated.

OAK FINANCE: Moody's Rates Class A1 & A2 Secured Notes 'B3'
Moody's Investors Service has assigned definitive B3 ratings to
each of the two fixed rate secured installment notes due 2016 and
2018 issued on July 3, 2014 by Oak Finance Luxembourg S.A. acting
in respect of Compartment 1.

At the same time, Moody's placed these ratings on review for

Issuer: Oak Finance Luxembourg S.A.

  Series 2014-01 Class A1 USD484,600,000 Fixed Rate Secured
  Instalment Notes due 2016, assigned B3 and placed under review
  for downgrade

  Series 2014-01 Class A2 USD300,000,000 Fixed Rate Secured
  Instalment Notes due 2018, assigned B3 and placed under review
  for downgrade

The ratings of the notes address the expected loss posed to
investors by the legal final maturity.

Moody's ratings address only the credit risks associated with the
transaction. Other non-credit risks have not been addressed, but
may have a significant effect on yield to investors.

Ratings Rationale

The ratings of both of the class A1 and class A2 notes are the
same as Banco Espirito Santo, S.A. Luxembourg Branch's ("BES")
long-term senior debt rating, which is B3 and on review for

This is because the two notes rank pari passu with each other and
are fully secured by a USD834,642,768 corporate loan to BES. The
loan is granted by the issuer directly to BES.

BES's loan payment obligations to the issuer also rank pari passu
with the claims of all of its other unsecured and unsubordinated
creditors, except for obligations mandatorily preferred by law.

Moody's analysis of the transaction is based primarily on the
unsecured and unsubordinated obligations of BES to pay the loan,
which fully secures the notes.

As such, the ratings of both of the notes are directly linked to
the senior debt rating of BES.

The issuer will apply BES loan payments to pay the fixed-rate
interest payments and the scheduled principal repayments on both
of the notes.

The loan to BES is a 4-year amortizing loan. The loan does not
bear any interest, but has scheduled principal installments with
different fixed amounts on various fixed payment dates.

The scheduled principal repayments of the two notes are
different. For instance, there is no scheduled principal
repayment on the class A2 notes until December 2016, while the
class A1 notes will have their first scheduled principal
repayment in December 2014.

The issuer, Oak Finance Luxembourg S.A., is a newly set-up
special purpose vehicle incorporated in Luxembourg for the
purpose of this transaction.

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

Given the repack nature of the structure, investors are mainly
exposed to the credit risk of BES. The ratings on the notes will
be sensitive to any change in the senior debt rating of BES.

The principal methodology used in this rating was "Moody's
Approach to Rating Repackaged Securities" published in April

RIOFORTE INVESTMENTS: Files for Creditor Protection in Luxembourg
Peter Wise at The Financial Times reports that Rioforte, the
holding company for the Espirito Santo group's non-financial
assets, said it had filed for court protection in Luxembourg less
than a week after it failed to meet debt repayments totaling
EUR897 million owed to Portugal Telecom.

Fears over the exposure of Banco Espirito Santo, Portugal's
largest listed lender by assets, to the financial woes of the
Espirito Santo group, its main shareholder, sparked a brief
sell-off across European stock markets earlier this month and
continue to weigh on the bank's shares, the FT relays.

Espirito Santo International, the group's parent company, has
already had a request for creditor protection accepted by the
Luxembourg courts after submitting an application on Friday, the
FT relates.

According to the FT, both companies said their requests to be
placed under controlled management were partly aimed at achieving
an orderly disposal of their assets.

"A transparent and orderly restructuring" of the company would
provide for "long-term financial sustainability," the FT quotes
Rioforte as saying.

Rioforte employs about 10,000 people.  Its assets, estimated last
year to be worth about EUR3.2 billion, include hotels, hospitals,
energy companies, real estate developers, farms and cattle
ranches in Europe, Africa and Latin America, according to the FT.

Rioforte Investments is the holding company of the Espirito Santo
Group for its non-financial investments.  The company is present
in Portugal, Spain, Brazil, Paraguay, Angola and Mozambique,
among other countries, through various companies operating in
different economic sectors.


POBJEDA: Podgorica Government to File Bankruptcy Petition
SeeNews reports that the government in Podgorica said on Tuesday
Montenegro's tax authorities planned to seek bankruptcy for
Pobjeda over EUR1.15 million (US$1.5 million) in overdue taxes.

According to SeeNews, the government said in a statement that the
tax authorities was set to file with a court in Podgorica a
request to open bankruptcy proceedings against Pobjeda yesterday,
July 23.

Pobjeda is a majority state-owned publishing and printing


TMF GROUP: Moody's Rates New EUR20MM Sr. Unsecured Notes 'Caa1'
Moody's Investors Service assigned a B1 rating to the new EUR45
million senior secured notes due 2018 and a Caa1 rating to the
new EUR20 million senior unsecured notes due 2019 (together, the
tap issues) to be issued by TMF Group Holding B.V.  TMF's B2
corporate family rating (CFR), the B1 instrument rating of the
EUR405 million senior secured notes due 2018, and the Caa1
instrument rating of the EUR175 million senior unsecured notes
due 2019 are all unaffected by the tap issues. The outlook on all
ratings remains stable.

Proceeds from the tap issues will be used to finance the
acquisition of KCS, a leading corporate services company
operating across the Asia Pacific region, as well as for future
acquisition, working capital and general corporate matters.

KCS provides similar services to TMF in the Asia Pacific region,
operating with more than 470 professionals in 14 locations (eight
of which overlap with TMF's existing footprint). The acquisition
is consistent with TMF's strategy of accelerated growth in Asia

TMF have successfully integrated acquisitions to date and so
Moody's expects that the company will be able to achieve their
targeted cost synergies. KCS's client portfolio includes large
multinationals, which should provide additional cross-sale
opportunities for the enlarged group. Therefore, Moody's believes
that the acquisition is a good strategic fit.

Ratings Rationale

The B2 CFR rating reflects TMF's strong position as a corporate
services provider in the Benelux region, complemented by a global
network of offices in 82 jurisdictions that enables growth for
clients into new regions and offers cost-efficient outsourcing of
corporate functions. The business benefits from clients' needs
for quality, expertise and responsiveness over cost, and TMF's
services are sometimes deeply embedded in the clients' processes.
This results in significant switching cost and risks, allowing
for stable performance throughout the cycle, good margins and
solid cash flow generation.

However, the rating also reflects TMF's limited size and reliance
on Europe, in particular the Benelux region, for a large part of
revenues and EBITDA. However, Moody's acknowledges that both
these factors will improve as a result of the KCS transaction. It
further considers the need for strong compliance and know-your-
customer (KYC) procedures given the complexity of regulation, tax
and reporting requirements across the world and elevated legal
risks inherent in the industry, particularly related to
situations where TMF provides trustee, (independent) director, or
proxy management representative services for clients.

Importantly, the CFR also incorporates the significantly
leveraged capital structure and Moody's notes that the company
incurred significant restructuring and integration cost in the
past, primarily related to acquisitions, that pressured operating
cash flow generation.

TMF reported solid operating performance in 2013 compared to the
prior year period including revenue and EBITDA growth of 1.3% and
1.5% respectively, although more positive on a constant scope and
currency basis at 4.1% and 3.2% respectively. Revenue growth in
EMEA and APAC was offset by declines in Private Client Services
and Fund Services, the latter being principally as a result of
the loss of a significant client. EBITDA margins were flat year-
on-year reflecting the investment in sales staff but lower
operating expenses, including office rental. Moody's expects an
improvement to these trends in 2014.

Moody's considers TMF's liquidity to be good, with an expected
cash balance of EUR99 million pro forma for the acquisition and
EUR51 million available under its revolving credit facility.
However, Moody's cautions that approximately one third of the
company's cash balance may not be readily available given TMF's
business needs or regional or other restrictions. The remaining
EUR19 million of the revolver amount is for bank guarantees of
which EUR15 million is drawn. The revolver carries one financial
maintenance covenant with sufficient headroom.

The different ratings for the notes reflect the relative ranking
within the capital structure. The enlarged EUR450 million senior
secured floating rate notes together with the EUR70 million
revolving credit facility benefit from a guarantor and security
package that comprises around 80% of total group EBITDA,
excluding those entities with negative EBITDA. However, the
revolver also benefits from priority of payment according to the
intercreditor agreement. The enlarged EUR195 million senior
unsecured notes rank behind these instruments and benefit from a
senior subordinated guarantee from the same guarantor group.

The stable outlook reflects Moody's expectations that the company
will continue to deliver resilient operating performance through
the cycle.

Negative pressure on the rating could arise if any concerns
around the resilience of the business materializes, for example
from changes in the Netherlands' or Luxembourg's appeal as tax-
efficient regions. Negative pressure could also arise if any
legal dispute becomes more substantiated. In any case, the rating
would come under pressure if the ratio of adjusted Debt/EBITDA
moves towards 6x or free cash flow generation turns negative.

Conversely, positive pressure on the rating could arise if the
company successfully executes on its growth plans diversifying
the business into APAC and Americas regions so that adjusted
Debt/EBITDA falls sustainably below 5x and free cash flow/Debt
exceeds 5%.

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

TMF is a provider of business process services mainly for
companies but also for individuals, funds and structured finance
with 63% of revenues generated in EMEA (including 32% in the
Benelux region) in 2013, not counting the relatively small fund
services business. Services include the establishment and
maintenance of operating or holding entities and the provision of
accounting and reporting, legal administrative and HR services
(e.g. payroll) on an ongoing basis. The group operates over
36,500 client entities across 82 jurisdictions. The business is
owned by Doughty Hanson (63.2%) and current and former management
and employees (36.8%). For the financial year-end December 2013
the company reported revenues of EUR397 million and EBITDA of
EUR109 million.

TMF GROUP: S&P Affirms 'B' Corp. Credit Rating; Outlook Stable
Standard & Poor's Ratings Services affirmed its 'B' long-term
corporate credit rating on Dutch corporate services provider TMF
Group Holding B.V.  The outlook is stable.

At the same time, S&P affirmed its 'B' issue rating on the EUR450
million senior secured notes, and 'CCC+' issue rating on the
EUR195 million senior unsecured notes.

The recovery rating on the senior secured notes is '3',
indicating S&P's expectation of meaningful (50%-70%) recovery
prospects in the event of a payment default.  The recovery rating
on the senior unsecured notes is '6', indicating S&P's
expectation of negligible (0%-10%) recovery prospects in the
event of a payment default.

The affirmation incorporates the proposed EUR45 million increase
to the senior secured notes and the EUR20 million increase to the
senior unsecured notes under TMF's existing facilities.  The
proceeds will be used by TMF to fund acquisitions, including Hong
Kong-based K Corporate Services (KCS), and for general corporate
purposes.  The affirmation reflects S&P's assessment that the
bond tap and acquisition of KCS will not materially alter the
company's "fair" business risk profile and "highly leveraged"
financial risk profile.

TMF's financial profile will continue to be "highly leveraged"
after the company issues the additional notes.  Including the
transaction, leverage for year-end 2014 will be between 9x-10x
(5x-6x excluding shareholder's loans).

TMF's private equity ownership has led the group to adopt a
higher tolerance for aggressive financial policies, including
debt-funded acquisitions.  The group's capital structure includes
shareholder loans that generate payment-in-kind (PIK) interest at
an aggressive rate of 16%.

"We assess TMF's business risk profile as "fair" under our
criteria.  The group operates in a fragmented industry and has
ongoing exposure to potential litigation that could cause
reputational damage.  In absolute terms, TMF has smaller
operations and weaker brand recognition than the larger
accounting and consultancy firms.  These factors are partially
offset by the group's good geographic spread.  It has 116 offices
in 82 jurisdictions, and a wide client base of more than 36,000
names, none of which account for more than 1% of the group's
total revenues.  TMF benefits from profitable and cash-generative
operations and a flexible cost base.  The corporate services
market generally has moderate barriers to entry, such as
professional qualifications for staff, local/regional regulatory
operating requirements, and a traditionally low churn rate among
service providers. TMF's global presence gives it a competitive
edge over its competition, specifically when executing cross-
border services for its clients," S&P said.

Despite difficult market conditions, TMF exhibited good margin
resilience during the downturn.  It has reported an adjusted
EBITDA margin of about 30% over the past few years.  S&P sees the
lack of volatility in the company's profitability as a supportive
factor to its business risk profile.

S&P's base case assumes:

   -- Revenue will increase to about EUR430 million in 2014.
      This will include organic growth of around 4%-6%, and
      additional revenue from the KCS transaction.

   -- Organic growth will result from global sales initiatives,
      the enhancement of services and values, and the
      exploitation of existing alliances.  Going forward, S&P
      expects growth of approximately 12%-14% in Asia-Pacific,
      8%-10% in the Americas, 2%-3% in Benelux, 4%-6% in EMEA
      (excluding Benelux) and flat-to-declining growth in the
      funds business.

   -- S&P expects adjusted EBITDA of about EUR120 million for
      2014.  The EBITDA margin will be about 29% for 2014, and
      will improve to 30% going forward, on economies of scale,
      the realization of synergies from the KCS transaction, and
      better operating efficiency.

S&P sees potential downside in its revenue forecast, because some
growth depends on the delivery of revenue from global sales force
initiatives.  The sales force targets complex multinational
contracts; these are larger, but their revenue takes longer to

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

   -- Adjusted EBITDA of between 9x-10x (5x-6x excluding
      shareholder's loans) for 2014.

   -- Adjusted funds from operations (FFO) to total debt of minus
      1% to 0% (about 10% excluding shareholder loans) for 2014.

The stable outlook on TMF reflects S&P's expectation that TMF
will continue to increase revenues and that its margins will
improve marginally over the next 12-18 months.  S&P anticipates
that the group will be able to maintain cash interest coverage of
about 2x over this rating horizon.

S&P could lower its rating on TMF if the group's operating
performance becomes weaker than it forecasts, or if TMF's EBITDA
margin declines, resulting in weaker leverage metrics.  S&P could
also lower the rating if it sees a decline in the group's cash-
conversion rate, resulting in weaker liquidity, or if cash
interest coverage were to fall to below 2x on a sustained basis.

"We do not expect to raise the ratings because of TMF's private
equity ownership and aggressive financial policies; tolerance for
high leverage; and the potential for shareholder returns.
However, sustained deleveraging, improvements in EBITDA and cash
flow generation, and stronger credit metrics than those we
currently anticipate could cause us to raise the ratings.
Specifically, if the group improves its Standard & Poor's-
adjusted debt to EBITDA to less than 5x and adjusted FFO to debt
to more than 12% (including shareholder loans), and sustain these
ratios at these levels, we could consider raising the ratings,"
S&P noted.


MEZHPROMBANK: Court Serves $2BB Asset Freeze Order on Pugachev
Reuters reports that Sergei Pugachev, a Russian tycoon once
dubbed "the cashier to the Kremlin", has been served with a UK
Court order freezing $2.0 billion of his assets in a case linked
to the insolvency of Russian bank Mezhprombank.

The order applies worldwide and Pugachev had until July 18 to
disclose his assets, Reuters relates citing law firm Hogan
Lovells, which is representing the Russian Deposit Insurance
Agency (DIA).

The law firm said a London High Court judge on July 16 confirmed
the order had been served, Reuters relays.

According to Reuters, the DIA, which was appointed as liquidator
to Mezhprombank at the end of 2010, said it believes
Pugachev -- once seen as close to Russian President Vladimir
Putin -- owned or controlled the bank and should therefore be
held liable for its insolvency.

Reuters says the DIA, which plans to pursue Pugachev in London as
well as Russia, alleges that he extracted money from the bank for
his benefit when it was already insolvent, transferring millions
of dollars into a private bank account in Switzerland.

It was not immediately possible to reach Pugachev in London or to
contact his Russian lawyer or spokesman.

The DIA said Pugachev fled Russia in early 2011 after the bank
collapsed and criminal investigations began into its collapse.

"These matters will form the subject of proceedings that the DIA
is commencing in England, where Mr. Pugachev is now resident," it
said in an emailed statement obtained by Reuters.

As reported by the Troubled Company Reporter-Europe on July 9,
2010, the Financial Times said Mezhprombank failed to repay
EUR200 million (US$251 million) in eurobonds.

Mezhprombank is a mid-sized Russian bank owned by Sergei

MMC NORILSK: Fitch Raises LT Issuer Default Rating From 'BB+'
Fitch Ratings has upgraded Russia-based OJSC MMC Norilsk Nickel's
(NN) Long-term Issuer Default Rating (IDR) to 'BBB-'from 'BB+'.
The Outlook is Stable.

The upgrade reflects a positive track record of improvement in
specific corporate governance factors, which were the reason for
a three-notch reduction of NN's IDR from its standalone ratings.


Corporate Governance

In December 2012, NN's main shareholders, Rusal and Interros, and
Millhouse (a company affiliated with Mr Roman Abramovich, which
was introduced as a new shareholder of NN) signed a shareholder
agreement.  The shareholder agreement is designed to improve the
corporate governance and transparency of NN, to maximize
profitability and shareholder value and to settle all
disagreements between Interros and Rusal in relation to the
company.  After a visible improvement in corporate governance,
Fitch has narrowed the notching of NN's IDR to two notches from
three.  A discount of two notches from their standalone IDR is
average for Russian companies rated at a similar level to NN.
Corporate Strategy with Focus on Delivery

In May 2014, the company presented its strategy update where its
top managers, including Vladimir Potanin, the company's CEO and
main shareholder, revealed the key points of NN's strategic
development, results and mid-term expectations.  The company will
focus on the development of Tier 1 assets that should meet the
following criteria: to be large scale, i.e. more than USD1bn
revenue; high margin, i.e. an EBITDA margin of more than 40%; and
to have a reserve life of more than 20 years.  International and
non-core assets that do not meet Tier 1 criteria will be
divested. Capital allocation discipline has also been mentioned
as a pillar of the new strategy.

Strong Reserve Base

The company possesses a best-in-class polymetallic mineral
resource base containing nickel, copper and PGMs.  Revaluation of
deposits under JORC standards in 2014 resulted in over 50% growth
in Proved & Probable reserves vs the last estimate made in 2008.
The latest reserve estimate of nickel was 6.7Mt while that for
copper was 12.2Mt, which implies more than 30 years of remaining
operating life at current production levels.  New green field
exploration projects in the Taymir peninsular provide potential
for further reserve base improvement.

Solid Financial Performance

Despite a weak price environment for metals in 2013, NN's
financial performance was solid and in line with Fitch's
expectations.  The company reported EBITDA of USD4.2 billion.
The EBITDA margin deteriorated YoY due to weaker pricing but
still remained quite high at 36.5%.  The company also achieved a
healthy working capital reduction of over USD1 billion.  Over
2014-2017, we expect largely stable EBITDAR margins of around 40%
due to an improving pricing environment for nickel.  Fitch
expects free cash flow over this period will be consistently
negative due to a high dividend pay-out as well as a pick up in
capital spending, resulting in funds from operations (FFO) gross
leverage peaking at 2.31x in 2016.  Leverage could be lower if
the company is flexible with its dividend levels or if is
successful in maximizing non-core asset sales proceeds.

Leading Market Positions

NN is the world's largest producer of nickel and palladium,
providing approximately 14% and 41% of world total output,
respectively.  The company is also a leading producer of platinum
and copper, with 11% and 2% of world output, respectively.

Country and Industry Risks

Key rating constraints include NN's exposure to the base metal
demand cycle as well as legal, business and regulatory risks
associated with Russia (BBB/Negative), although NN's industry
leading cost position provides some protection compared with
peers.  Following the positive track record of improving
corporate governance, Fitch has narrowed the notching of NN's IDR
to two notches from its standalone rating.


Fitch considers NN's liquidity position as strong as the company
had around USD1.6bn of cash and equivalents on balance as of end-
2H13, while short-term debt was USD1bn.  The company had
available committed lines of USD2.4bn.


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

   -- An upgrade of NN's standalone rating based upon its
      financial and operational characteristics is not considered

   -- Further improvement in corporate governance practices
      commensurate with those of industry leaders could result in
      an upgrade by further narrowing of the corporate governance

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

   -- Reccurrence of negative corporate governance events.

   -- Persistent negative FCF resulting in FFO gross leverage
      sustained in excess of 2.5x.

Full List of Ratings

OJSC MMC Norilsk Nickel

  Long-term foreign currency IDR: upgraded to 'BBB-' from 'BB+';
  Outlook Stable

  Short-term foreign currency IDR: upgraded to 'F3' from 'B'

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

  LPNs issued by MMC Finance Limited

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

PERESVET: Moody's Withdraws 'B3' Long-Term Deposit Ratings
Moody's Investors Service has withdrawn PERESVET's B3 long-term
local and foreign-currency deposit ratings, the Not-Prime short-
term deposit ratings and the E+ standalone bank financial
strength rating (BFSR), equivalent to a b3 baseline credit
assessment. At the time of the withdrawal all the bank's long-
term ratings and its BFSR carried a stable outlook.

Ratings Rationale

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

RUSNANO: S&P Affirms 'BB/B' Issuer Credit Ratings; Outlook Neg.
Standard & Poor's Ratings Services affirmed its 'BB/B' long- and
short-term issuer credit ratings and 'ruAA' Russia national scale
rating on Russian state-owned technology investment vehicle
RusNano.  The outlook is negative.

"The ratings reflect our opinion that there is a "high"
likelihood that the government of the Russian Federation (foreign
currency BBB-/Negative/A-3; local currency BBB/Negative/A-2;
Russia national scale ruAAA/--/--) would provide timely and
sufficient extraordinary support to RusNano in the event of
financial distress.  They also incorporate its stand-alone credit
profile (SACP), which we now assess at 'b' versus 'b+'
previously," S&P said.

RusNano receives strong ongoing support from the Russian
government in the form of conditional non-timely guarantees on
all currently issued debt.  S&P regards RusNano as a government-
related entity (GRE).  In accordance with S&P's criteria for
GREs, it bases its view that there is a "high" likelihood of
extraordinary government support on S&P's assessment of

   -- "Important role" for the Russian government.  The
      government created RusNano to support state policies on
      promoting economic diversification in innovative sectors.
      RusNano's mandate is to invest in projects that apply
      nanotechnology and to promote these investments in the

   -- Consequently, RusNano is one of the government's main tools
      of economic diversification in high tech industries, which
      is confirmed by the government's large equity injections
      and guarantees; and

   -- "Very strong" link with the Russian government, its full

   -- Privatization of RusNano is unlikely to happen, in S&P's
      view.  S&P expects the government to continue guaranteeing
      RusNano's new borrowings in 2014-2015.  S&P don't think
      that the recent creation and the ensuing expected
      privatization of RusNano's "management company" will affect
      the company's link with the government. RusNano will remain
      the owner and creditor of all investment projects, in S&P's

Accordingly, the ratings on RusNano are three notches higher than
its 'b' SACP, which S&P has revised down from 'b+' on continued
losses that have led to weaker capitalization.  The SACP reflects
S&P's expectation of strong ongoing government support, but also
the company's very short track record and credit history,
together with aggressively growing borrowing (albeit issued
within a government guarantee program), and losses reported in
2012-2013. It is constrained by high credit risk from investments
in very risky and unpredictable high tech projects still in the
early stages, together with an expanding investment portfolio and
enterprise risk management that needs strengthening.

The negative outlook reflects that on Russia but also risks
related to the weak financial performance that S&P thinks RusNano
will deliver in the next two or three years.  Taking into account
RusNano's current SACP of 'b', S&P would lower the rating on
RusNano if it lowered its local currency ratings on Russia.

"We could take a negative rating action on RusNano if we observed
continued very weak performance of its investment portfolio,
leading to pronounced losses and depletion of capital.  Much
larger-than-expected borrowings and strong deterioration in
RusNano's liquidity could also prompt a negative rating action.
In addition, we could lower our ratings on RusNano within the
next 12 months if we observed signs of a lower likelihood of
timely and sufficient extraordinary support from the government,"
S&P said.

URALSIB BANK: Fitch Affirms 'B+' Long-Term IDR; Outlook Negative
Fitch Ratings has affirmed Russia-based URALSIB Bank's (UB) and
its subsidiary Uralsib Leasing Group's (ULG) Long-term Issuer
Default Rating (IDR) at 'B+'.  The Rating Outlook is Negative.


The affirmation of ratings with a Negative Outlook reflects
Fitch's view that the credit profile remains under downward
pressure from extremely weak capitalization, slow progress with
reduction of large non-core assets and related-party exposures,
poor operating performance, and a moderate liquidity position.

Positively the ratings are supported by the bank's granular
corporate loan book of generally decent quality, adequately
performing retail lending and a solid retail deposit collection
capability.  Fitch also gives some credibility to the bank's
capital-raising plan and its efforts to improve profitability by
rebalancing the loan book in favor of higher-yielding retail
loans, by re-pricing corporate loans and cost cutting.

The major weakness is capitalization (Fitch Core Capital [FCC]
ratio of 8.9% at end-2013) in light of the large holdings of non-
core assets and related-party exposures cumulatively equaling to
1.5x of FCC at end-2013.

These exposures included:

   -- RUB19 billion (62% of FCC) indirect (held through a mutual
      fund) investment in 92.7% equity stake of insurance group
      SG Uralsib (SGU), which is not consolidated by UB due to
      lack of operational control and plans to sell it.  However,
      the sale at the currently high valuation (6x net assets)
      could be problematic given its poor performance and a
      challenging Russian insurance market.

   -- RUB19 billion (62% of FCC) of real-estate investments (also
      held through mutual funds), some of which (e.g. land in
      Moscow about a third of the total amount) are also
      aggressively valued, in Fitch's view.

   -- RUB8 billion of related-party exposures (26% of FCC),
      including RUB1.8 billion of unsecured interbank placements
      and RUB6.2 billion of receivables and loans secured with

Regulatory capitalization is of particular concern (core Tier I
and Total ratios of 7.9% and 11.2%, respectively, at end-1H14),
because Basel III regulations introduced in 2014 require
investments in financial companies (even if held indirectly, such
as SGU) to be gradually deducted (by 20% each year starting from1
January 2014) from core Tier 1 capital.  UB expects next such
deduction at January 1, 2015 to be around RUB3.6 billion (about
11% of Tier 1 regulatory capital at end-1H14).

Although not a base case, further downside risks for the
regulatory capitalization may arise from potential changes with
respect to regulatory treatment of UB's holding of RUB6.3 billion
(20% of FCC) convertible subordinated bonds of ULG (treated as
equity in the company's accounts) or above real estate
investments (currently 250% risk-weighted) should deductions for
these from the bank's core Tier I capital become required as is
for equity investments in financial organizations/subsidiaries.

To relieve regulatory capital pressure UB plans to slash capital
distributions (after RUB1.5 billion of mostly dividends and
charitable contributions on behalf of the shareholder in 2013)
and, make a perpetual debt placement in 4Q14 among private
investors, according management.  However, the latter would not
improve core Tier 1 ratio, which in the medium-term would still
require profitability improvement and/or a new equity

The ratio of non-performing (overdue by more than 90 days) loans
(NPLs)/ gross loans was roughly stable in 2013 at about 10%, due
to problem loan sales equaling to 4% of corporate loans and
generally sound performance of retail loans.  In 1H14, few
defaults among large borrowers led to elevated impairment charges
in regulatory accounts, although these are unlikely to require
significant additional provisioning.

Fitch does not see imminent risks from UB's 40 largest third-
party loan exposures (20% of loans), except an exposure to OAO
Mechel, highly-indebted metals and mining group of companies, and
its shareholder.  This exposure totals 1.2% of gross loans (11%
of FCC), and although currently performing, is subject to whether
and how the state intends to save the company from bankruptcy.

Liquidity has been volatile, but remains supported by a granular
depositor base and a strong retail deposit collection capacity.
UB's standalone liquid assets (cash, bank placements and
unencumbered repo-able debt securities), net of its near-term
debt maturities, represent a moderate 17% of customer deposits on
July 17, 2014, up on end-May 2014's 9%.  ULG's upcoming
repayments are not significant, and hence unlikely to be a source
of liquidity pressure for UB.


The ratings could be downgraded if capital-raising plan fails or
if capitalization and/or its quality erodes further due to either
deterioration of performance, downward adjustments to some of the
asset valuations or any new material capital withdrawals by the
shareholder. A major liquidity squeeze could also lead to a

Ratings could stabilize at the current level if the bank is able
to raise new capital by end-2014 to support regulatory
capitalization, as well as delivering on its target to improve
core profitability thereby reducing the need for external capital
in the face of future capital deductions for non-core/financial


UB's '4' Support Rating and 'B' Support Rating Floor reflect the
moderate probability of government support, given the bank's
broad regional coverage across Russia and significant deposit
franchise. The ratings could be downgraded if state support fails
to be made available when needed.  The Support Rating could be
upgraded if UB becomes owned by a high-rated entity.


ULG's IDRs are equalized with the parent's IDRs based on Fitch's
view that ULG is a core subsidiary and would likely be supported
by UB in case of need.  This view is based on majority 87.6%
ownership by UB, a significant level of supervision by the parent
through the Board of Directors and at management level, high
reputational risk for UB of ULG's potential default due to, among
other things, the entities' common branding.

ULG's IDRs are likely to move in tandem with the parent's
ratings. Although we believe UB currently retains flexibility to
provide support, we could start notching down ULG's ratings from
UB's if the latter's ability to provide timely support to the
leasing subsidiary deteriorates significantly as a result of
weakened financial standing and/or regulatory limitations.

The rating actions are as follows:


  Long-Term IDR affirmed at 'B+'; Outlook Negative
  Short-Term IDR affirmed at 'B'
  Viability Rating affirmed at 'b+'
  Support Rating affirmed at '4'
  Support Rating Floor affirmed at 'B'

Uralsib Leasing Group:

  Long-Term Foreign Currency IDR affirmed at 'B+'; Outlook
  Short-Term Foreign Currency IDR affirmed at 'B'
  Long-Term Local Currency IDR affirmed at 'B+'; Outlook Negative
  Support Rating affirmed at '4'


MBS BANCAJA 3: Fitch Affirms 'CCsf' Rating on Class E Notes
Fitch Ratings has upgraded two and affirmed nine tranches of AyT
Caja Murcia Hipotecario I (Caja Murcia), AyT Goya Hipotecario III
(Goya III), AyT Goya Hipotecario V (Goya V) and MBS Bancaja 3.


Upgrades Driven by Sovereign Ceiling Revision

Fitch placed the class A notes (A2 in MBS Bancaja 3) of all four
transactions on Rating Watch Positive (RWP) following the
revision of Spain's Country Ceiling to 'AA+', six notches above
its sovereign Issuer Default Rating (IDR) of 'BBB+'.

With the publication of its updated criteria assumptions for
Spanish RMBS on June 5, 2014, Fitch set its assumptions for
'AA+sf' rating stresses used to analyze the ability of some
senior tranches to withstand higher rating stresses.  The
analysis showed that the credit enhancement (CE) available to the
class A notes of Goya III and V is sufficient to warrant a two-
notch upgrade, while Caja Murcia's class A notes and MBS Bancaja
3's A2 notes are not able to support rating stresses higher than
those of 'AA-sf' and so have been affirmed.

Solid Asset Performance

The affirmation of the remaining tranches reflects the
performance of the transactions.  As of the latest reporting
periods, three-months plus arrears (excluding defaults) ranged
from 2.7% (MBS Bancaja 3) to 1.0% (Goya V) of the current pool
balances.  The cumulative gross defaults (defined as loans in
arrears for more than 18 months) ranged between 0.1% (Caja
Murcia) and 3.1% (MBS Bancaja 3) of the initial portfolio
balance, all of which have been fully provisioned by using excess
spread in Caja Murcia and Goya V, leaving their reserve funds
fully funded.  Meanwhile, gross excess spread in Goya III and MBS
Bancaja 3 has been insufficient to fully cover period defaults
and consequently there have been drawings on the reserve funds.
The reserve fund levels were 97% and 74% in Goya III and MBS
Bancaja 3, respectively.

Partial Credit Given to Strong Performance in Caja Murcia

Fitch believes that the originator of Caja Murcia has been
offering financial support to troubled borrowers by refinancing
securitised loans with new loans outside the pool.  This support
is visible in the performance, with only four loans having been
recognised as defaulted to date since the transaction closed in
December 2005.  As a result Fitch has not given full credit to
the strong past performance because it believes this support is
not sustainable, particularly in times of stress and has
consequently applied standard default and recovery assumptions.

Material Counterparty Dependency in Goya Deals

Goya III and V are highly exposed to a single counterparty, as
Barclays Bank S.A. acts as originator, servicer, swap provider
and financial agent.  This dependency is mitigated by downgrade
language linked to its parent company Barclays Bank plc's rating
(A/Stable/F1).  The transaction documents require Barclays Bank
plc to maintain at least 90% of all existing shares of Barclays
Bank S.A., or the ratings of the parent company will not be
eligible for its Spanish subsidiary.  Fitch is aware Barclays
Bank plc is currently seeking buyers for its Spanish retail bank
and will monitor the effect of any sale on the transactions'
credit quality.


Deterioration in asset performance may result from economic
factors, in particular the increasing effect of unemployment.  A
corresponding increase in new defaults and associated pressure on
excess spread levels and reserve funds could result in negative
rating action.

The rating actions are as follows:

AyT Caja Murcia Hipotecario I

  Class A (ISIN ES0312282009): affirmed at 'AA-sf'; off RWP,
  Outlook Stable

  Class B (ISIN ES0312282017): affirmed at 'Asf'; Outlook Stable

  Class C (ISIN ES0312282025): affirmed at 'BB+sf'; Outlook

AyT Goya Hipotecario III

  Class A (ISIN ES0312274006): upgraded to 'AA+sf'; off RWP,
  Outlook Stable

  Class B (ISIN ES0312274014): affirmed at 'BBB+sf'; Outlook

AyT Goya Hipotecario V

  Class A (ISIN ES0312276001): upgraded to 'AA+sf'; off RWP,
  Outlook Stable

MBS Bancaja 3

  Class A2 (ISIN ES0361796016): affirmed at 'AA-sf'; off RWP,
  Outlook Stable

  Class B (ISIN ES0361796024): affirmed at 'AA-sf'; Outlook

  Class C (ISIN ES0361796032): affirmed at 'Asf'; Outlook Stable

  Class D (ISIN ES0361796040): affirmed at 'BB+sf'; Outlook

  Class E (ISIN ES0361796057): affirmed at 'CCsf'; Recovery
  Estimate 85%

CAIXA PENEDES 1: Fitch Affirms 'BBsf' Rating on Class C Notes
Fitch Ratings has upgraded the senior notes of Caixa Penedes 1
TDA, FTA (Penedes), Caja Ingenieros TDA 1, FTA (Ingenieros 1),
and Caja Ingenieros 2 AyT, FTA (Ingenieros 2), removing them from
Rating Watch Positive (RWP).


Sovereign Ceiling Revision

Fitch placed the class A notes of all three transactions on RWP
in April 2014 following the revision of Spain's Country Ceiling
to 'AA+', six notches above its sovereign Issuer Default Rating
(IDR) of 'BBB+'.

With the publication of its updated criteria assumptions for
Spanish RMBS on June 5, 2014, Fitch set its assumptions for
'AA+sf' rating stresses to assess the ability of the senior
tranches to withstand higher rating stresses.  The analysis
showed that the credit enhancement (CE) available to the most
senior class of all three transactions is sufficient for an
upgrade to 'AA+sf'.

Solid Asset Performance

The affirmation of the remaining tranches reflects the stable
performance of all three transactions.  As of the latest interest
payment date (IPD), three-months plus arrears (excluding
defaults) were between 0.2% (Ingenieros 1) and 1.4% (Penedes) of
their current collateral balances, lower than Fitch's Spanish
RMBS index (2.1%).  Cumulative gross defaults (defined as 18-
months plus in arrears for Ingenieros 2 and 12-months plus in
arrears for the other two) ranged between 0.1% (Ingenieros 2) and
2.5% (Penedes) of their respective initial balances.  These
defaults have been fully provisioned for using excess spread
generated by the structures, leaving the reserve funds fully
funded.  Combined with the sequential redemption of the notes,
Fitch expects this robust asset performance to contribute to an
increase in the CE available to the notes.

Potential Lender Support

A higher than typical prepayment rate until the end of 2013 and
an almost 100% recovery rate for Penedes suggest originator
support from Banco Mare Nostrum (BB+/Negative) for troubled
borrowers. However, Fitch believes such support was suspended by
end-2013 as a result of the tightening in liquidity in the
market, as evidenced by the rising default and declining recovery
rate since then.


A change in Spain's IDR and Country Ceiling may result in a
revision of the highest achievable rating and hence the ratings
of the transactions.

An increase in defaults and associated pressure on excess spread
levels and reserve funds beyond Fitch's expectations could result
in negative rating action.

The rating actions are as follows:

Caja Ingenieros 2 AyT, FTA

  Class A (ISIN ES0312092002) upgraded to 'AA+sf' from 'AA-sf';
  off RWP, Outlook Stable

Caja Ingenieros TDA 1, FTA

  Class A2 (ISIN ES0364376014) upgraded to 'AA+sf' from 'AA-sf';
  off RWP, Outlook Stable

  Class B (ISIN ES0364376022) affirmed at 'AA-sf'; Outlook

  Class C (ISIN ES0364376030) affirmed at 'Asf'; Outlook Stable

Caixa Penedes 1TDA, FTA

  Class A (ISIN ES0313252001) upgraded to 'AA+sf' from 'AA-sf';
  off RWP, Outlook Stable

  Class B (ISIN ES0313252019) affirmed at 'A+sf'; Outlook Stable

  Class C (ISIN ES0313252027) affirmed at 'BBsf'; Outlook Stable


DOGAN YAYIN: Fitch Withdraws 'BB-' Issuer Default Rating
Fitch Ratings has withdrawn Turkey-based Dogan Yayin Holding's
(DYH) and subsidiary Hurriyet Gazetecilik ve Matbaacilik AS's
(Hurriyet) Long-term foreign and local currency Issuer Default
Ratings (IDR) at 'BB-' and Hurriyet's National Long-term Rating
at 'A+(tur)'.  Both ratings remained on Rating Watch Negative
prior to withdrawal.

DYH is in the process of merging all of its assets and
liabilities with its parent company Dogan Holding.  The
transaction remains subject to the approval of the shareholders
of both entities at the annual general meetings scheduled in
August 2014.

The ratings were withdrawn as DYH has chosen to stop
participating in the rating process.  As a result, Fitch does not
have sufficient information to resolve the Rating Watch before
withdrawal.  Accordingly, Fitch will no longer provide ratings or
analytical coverage of DYH and Hurriyet.


DYH has market-leading positions in the Turkish media sector,
which is currently experiencing healthy growth trends in
advertising as well as increasing penetration rates of pay-TV
services.  Nonetheless, DYH's credit profile is constrained by
its limited cash flow generation, weak liquidity profile and
significant foreign currency exposure through its USD and EUR-
denominated debt and operating expenses.  Fitch notes that Dogan
Holding, with which DYH is merging, has a significant cash

Hurriyet's credit profile is supported by strong legal ties with
its parent DYH.  DYH guarantees Hurriyet's debt, which Fitch
views as sufficient to justify the equalisation of the ratings of
the two entities in accordance with its "Parent and Subsidiary
Rating Linkage" criteria.  Fitch believes the two entities also
share strong operational and strategic ties, as Hurriyet carries
out printing and distribution operations for other entities of
the DYH group.  This, combined with Hurriyet's high visibility in
the Turkish news media sector, makes it likely that DYH would
support one of its major assets, in case of need.

U N I T E D   K I N G D O M

DECO 11: Moody's Lowers Rating on Class A-1B Notes to 'B3'
Moody's Investors Service has affirmed the class A-1A of Notes
and downgraded the ratings of class A-1B Notes issued by DECO 11
- UK Conduit 3 p.l.c.

Moody's rating action is as follows:

Issuer: DECO 11 - UK Conduit 3 p.l.c

  GBP220M (current outstanding balance of GBP100. 6M) A-1A Notes,
  Affirmed Aa1 (sf); previously on Oct 24, 2013 Affirmed Aa1 (sf)

  GBP74.5M (current outstanding balance of GBP70.7M) A-1B Notes,
  Downgraded to B3 (sf); previously on Oct 24, 2013 Downgraded to
  B1 (sf)

Moody's does not rate the Class A2, Class B, Class C, Class D,
Class E and the Class F Notes.

Ratings Rationale

The affirmation of the Class A-1A notes reflects the high credit
enhancement and moderate notional balance of the tranche. The
Starcharm loan is scheduled to redeem in full on the next
interest payment date (IPD) with the proceeds applied
sequentially, further reducing the Class A-1A balance to
approximately GBP66 million. Moody's expects the bulk of the
remaining Class A-1A notes will be paid down through recoveries
of the Mapeley Gamma loan which will account for 78.4% of pool
aggregate loan balance post the paydown of Starcharm. Although
this loan is quite granular with 24 assets, and as such is at
risk of a prolonged workout, the top five properties account for
nearly three-quarters of portfolio market value. Four of the top
five assets have relatively short WA lease lengths to first
break, and so Moody's believes the special servicer may look to
dispose of assets closer to loan maturity in Jan 2017 as this
would allow time to regear certain major leases and for the
reduction of swap breakage costs.

The downgrade of Class A-1B is due to higher expected losses (EL)
on the Wildmoor Northpoint loan brought about by the sustained
high level of irrecoverable costs, which Moody's calculate to now
be over 60% of current gross rent.

Moody's have also assessed there to be less upside potential in
the Mapeley Gamma loan, with any lease renewals likely coming at
the expense of a steep reduction in rent, and as such have
decreased Moody's value by a further GBP3.3 million to GBP104.3
million this year. Moody's also note that the increase in NOI is
not borne by increased gross rent (gross rent has actually fallen
since last review), but rather through a decline in irrecoverable

Moody's rating action reflects a base expected loss in the range
of 50%-60% of the current pool balance, compared with 40%-50% at
the last review. Moody's derives this loss expectation from the
analysis of the default probability of the securitized loans
(both during the term and at maturity) and its value assessment
of the collateral.

For a summary of Moody's key assumptions for the loans in the
pool please refer to the section SUMMARY OF LOAN ASSUMPTIONS.

Methodology Underlying the Rating Action:

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

Other factors used in this rating are described in European CMBS:
2014-16 Central Scenarios published in March 2014.

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

Main factors or circumstances that could lead to a downgrade of
the ratings are an increase in vacancy in the Mapeley Gamma loan.
The large discrepancy between the current MV of GBP107.8 million
and the VPV of GBP60.5 million shows that a significant portion
of the value is in the current leases. This is further
exasperated by the fact that 14 of the 24 assets (over 70% by MV)
are single tenanted, including seven of the top 10.

Main factors or circumstances that could lead to an upgrade of
the ratings are higher recoveries on the Mapeley Gamma loan. This
could be realised through either increased occupancy, or
increasing rents above the current estimated rental values on the
underlying assets.

Moody's Portfolio Analysis

As of the April 2014 IPD, the transaction balance has declined by
30.7% to GPB310.2 million from GPB449 million at closing in
December 2006 due to the pay off of 10 loans originally in the
pool. The notes are currently secured by first-ranking legal
mortgages over 30 commercial properties. The pool has an above
average concentration in terms of geographic location (100% UK,
based on UW market value) and property type (69.7% office, 19.3%
retail, 6.4% hotels and 4.6% industrial). Moody's uses a
variation of the Herfindahl Index, in which a higher number
represents greater diversity, to measure the diversity of loan
size. Large multi-borrower transactions typically have a Herf of
less than 10 with an average of around 5. This pool has a Herf of
1.6, slightly lower than the 2.0 seen at Moody's prior review.

The WA Moodys LTV on the securitized pool is 217.9% up from from
the 189% at the last review.

There are currently five loans in special servicing, with only St
Christopher Nottingham Limited and LML Overseas Investments
Limited being in primary.

Summary Of Moody's Loan Assumptions

Below are Moody's key assumptions for the top two loans which
represent 92% of outstanding pool balance.

Mapeley Gamma (78.4% of pool) - LTV: 207% (Whole)/ 207% (A-Loan);
Total Default probability: N/A - Defaulted; Expected Loss 50%-

* The collateral backing the loan is comprised of 24 secondary
office properties located throughout the UK in predominantly
provincial towns in classic 'back office' locations. The tenants
are of strong covenants, being either strong corporates such as
IBM, HSBC and KPMG or government authorities, however the WA
lease length to break is only 3.9 years raising the prospect of
having to re-let large secondary assets that are dominant in
their sub-market.

* The loan was transferred to special servicing in October 2012
after a LTV covenant breach following a valuation which showed a
42% MV decline and resulted in an LTV of 186.2% at the time,
which has since increased to 200.7%. The loan was subsequently
accelerated by the Special Servicer (Hatfield Philips) as the
sponsor, Fortress funds, was not willing to inject equity. LPA
receivers have been appointed, whilst the operating advisor
requested a change of special servicer to Solutus, although this
still has not occurred.

* Although net income has increased since the last review to
GBP15.8 million from GBP15.3 million, this has been through a
decrease in irrecoverable costs (down from GBP2.1 million to
GBP1.3 million), as actual gross rent has also been falling.

* In April 2014 the special servicer Hatfield Philips appointed
Cordatus as Asset Manager for the portfolio. The special servicer
continues working with the borrower as laid out in the business

Wildmoor Northpoint (13.8%) - LTV: 370% (Whole)/ 331% (A-Loan);
Total Default probability: N/A - Defaulted; Expected Loss 70%-

* The loan is secured on a regional in-town shopping center
located in Bransholme, Hull, in a heavy residential area which is
one of the largest council estates in Europe.

* The loan was transferred into special servicing in March 2010
due to an LTV covenant breach, and subsequently failed to repay
at it scheduled maturity in July 2010. In Jan 2011, Solutus
replaced Hatfield Phillips as special servicer. Prior to Solutus
becoming the special servicer the borrower was placed into

* Since the last review net income has reduced from GBP1.2
million to GBP1.1 million, with irrecoverable costs rising above

EDINBURGH TIMBER: Director Banned for 12 Years
Ian MacKay, a director of Edinburgh Timber Products Limited, a
joinery company, has been disqualified as director for 12 years
for acting as a director while bankrupt.

Mr. MacKay has given an undertaking to the Secretary of State for
Business Innovation and Skills not to act as a director, manager,
or in any way control a company for 12 years from June 26, 2014.

Commenting on the disqualifications, Robert Clarke, Group Leader
for Insolvent Investigations North, said: "In order to maintain
stakeholder trust in the corporate structure, it is imperative
that we have sufficient transparency, such that businesses know
that the registered directors of a company are responsible
individuals who will effectively discharge the stewardship
function for which they are responsible.

"Where individuals seek to hide their involvement to act in
contravention of a statutory ban, and others assist in that
deception, they can expect to be the subject of rigorous
investigation and to be removed from the corporate arena for a
lengthy period."

Mr. MacKay's co-directors, William Holmes and Craig MacKenzie,
who were both registered directors of the company for 18 months
were also disqualified for a period of 2 1/2 years each in March
2014 due to their failure to supervise and control the company's

Mr. MacKay was a director of Edinburgh Timber Products Limited,
which was wound up with debts of nearly GBP100,000 in Edinburgh
Sheriff Court on May 28, 2012, following a petition by HM Revenue
& Customs.

The investigation found he acted as a director of the company
from its incorporation on Feb. 16, 2009 until the appointment of
the Liquidator on May 28, 2012, notwithstanding that as a result
of his bankruptcy, he was prohibited from acting in this
capacity, whilst he was sequestrated over the period Oct. 6, 2010
to Oct. 6, 2011.

The investigation found that Mr. MacKay used Edinburgh Timber
Products Limited as a successor enterprise to allow his failed
sole trader business, Ian MacKay Joiners, to continue trading and
that throughout the entire trading period of the company, he
maintained full control of its affairs.

The investigation also found that for 16 months between February
2011 and May 28, 2012, Mr. MacKay caused the company to trade to
the detriment of HM Revenue & Customs, paying out over GBP400,000
against other debts over the course of trading but making no
payments to HM Revenue & Customs, leaving them with a debt of
GBP68,548 when the company failed, a debt which spanned three
consecutive tax years.

Edinburgh Timber Products Limited went into compulsory
liquidation on May 28, 2012 with a deficiency to creditors of
GBP96,806.  The company nature of trading was "Joinery" from
leased premises at 21 Graham Street, Edinburgh, EH6 5QN between
December 2010 and May 28, 2012, the date of the appointment of
the Liquidator.

ELEMENT MATERIALS: Moody's Assigns 'B2' Corporate Family Rating
Moody's Investors Service has assigned a B2 corporate family
rating (CFR) and B2-PD probability of default rating (PDR) to
Element Materials Technology Group Holding CC1 Limited (Element
Materials). Concurrently, Moody's has assigned a provisional
(P)B2 rating to the USD285 million Term Loan B Facility due 2021
and USD40 million Revolving Credit Facility (RCF) due 2019 raised
by Element Materials Technology Group US Holding Inc. and Element
Materials Technology UK Holding Ltd., both subsidiaries of
Element Materials. The outlook on all ratings is stable.

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

The proceeds from this issuance alongside USD15 million of cash
from the company's balance sheet will be used to refinance
existing debt put in place at the time of the acquisition of
Element Materials by 3i in 2010, to finance two add-on
acquisitions (one of which is still pending), to fund a
shareholder distribution, and to pay related fees and expenses.

Ratings Rationale

"Element Materials' B2 CFR is supported by the company's well-
established position in its niche markets which benefit from good
growth prospects and high barriers to entry with significant
switching costs for customers, and the relative resilience of
revenues due to the recurring and non-discretionary nature of
most of the company's testing services", says Sebastien
Cieniewski, Moody's lead analyst for Element Materials. However,
the rating is constrained by the company's high adjusted leverage
at the closing of the transaction at around 5x with Moody's
expectation of limited de-leveraging due to the company's
acquisitive behavior in a consolidating industry, the small size
of the business as evidenced by its geographical and sector
concentration, and the limited free cash flow (FCF) generation
due to significant capex investments.

Element Materials' rating is constrained by its small scale. The
company generated pro-forma revenues of USD232 million in the
last twelve months (LTM) to 31 May 2014 (pro-forma for 2 pending
acquisitions representing approximately $14 million of revenues).
These revenues are geographically concentrated with the US
accounting for approximately 80% of sales with the remaining 20%
derived from Europe. Despite its small size, the company has a
strong position in the Aerospace, Oil & Gas, and Transportation &
Industrials sectors due to the market's high fragmentation.

The testing, inspection, and certification (TIC) market benefits
from strong underlying fundamentals driven by increasing
regulation and outsourcing. Element Materials has exposure to the
Aerospace and Oil & Gas end-markets which are expected to
outperform the overall TIC market over the next 4 years. The main
drivers for growth are the strong demand for airplanes from
emerging markets with significant need of renewal of existing
fleet in developed countries as well as the increase focus on
off-shore drilling, in particular deep sea, due to a prolonged
period of high oil and gas prices. Moody's thus assumes that the
company should be able to generate mid- to high-single digit
organic revenue growth over this period. Due to the operating
leverage of the business, Moody's expect the pro-forma EBITDA
margin to continue improving from the 23% achieved in LTM 31 May
2014 (as reported by the company).

Element Materials operates in heavily regulated markets where
accreditations from regulatory bodies and approvals from
customers are complex and lengthy. The stringent regulatory
environment alongside significant investment required to set up
laboratories result in high barriers to entry -- a credit
positive. Switching costs for customers are high for the same

Element Materials' adjusted gross leverage at around 5.0x as of
LTM 31 May 2014 EBITDA (pro-forma for completed and pending
acquisitions) is high. Based on Element Material's track record
of acquisitions over the last three years and the overall trend
for consolidation of the industry, Moody's considers that the
company will pursue debt-funded acquisitions going forward which
will slow down Element Materials' de-leveraging. Acquisitions
could be funded by uncommitted incremental facilities included in
the legal documentation.

Moody's considers Element Materials' liquidity position as good.
Indeed, pro-forma for the transaction, the company's relatively
low cash balance at USD10 million as of 31 May 2014 will be
supported by the USD40 million RCF which will be undrawn at
closing. The RCF has a springing leverage covenant that acts as a
draw stop, tested only once 30% of the facility is drawn -- the
financial covenant is based on a Total Net First Lien Leverage
Ratio. Element Materials projects high capex over the next 3
years -- well above the maintenance capex level - which will
limit the company's free cash flow generation to around 5% in the
first year and slightly growing in the following years.

The Term Loan B Facility and the RCF (together the senior secured
facilities) rank pari passu and benefit from first lien
guarantees from the company and its material subsidiaries. The
senior secured facilities are also secured by a first lien pledge
over substantially all the assets and shares of the borrowers and
guarantors. The (P)B2 rating assigned to the Term Loan B Facility
and RCF, at the same level as the CFR, reflects the absence of
any significant non-debt liabilities ranking ahead or behind.

Element Materials' stable outlook reflects Moody's expectation
that the company will experience a continued organic growth in
revenues driven by strong underlying fundamentals partially
mitigating the negative impact on leverage of future debt-funded
bolt-on acquisitions. Positive ratings pressure could arise if
the company's three divisions experience continued strong growth
improving the scale and diversification of the business; leverage
decreases sustainably to around 4.5x; FCF/debt increases to high
single digit on a sustainable basis; while maintaining a solid
liquidity position. The ratings could be downgraded if (1) the
EBITDA margin as adjusted by Moody's decreases to below 20%; (2)
leverage increases towards 6.0x; (3) FCF is negative for a
prolonged period of time; or (4) other liquidity weaknesses

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

Headquartered in the United Kingdom (relocated from the
Netherlands post transaction), Element Materials is an
independent global materials testing provider offering a full
suite of laboratory-based services operating mainly in the US and
Europe. These services cover technically demanding testing for a
broad range of advanced materials, components, products and
systems to ensure compliance with safety, performance and quality
standards imposed by customers, accreditation bodies and
regulatory authorities.

ELEMENT MATERIALS: S&P Assigns Prelim. 'B' CCR; Outlook Stable
Standard & Poor's Ratings Services assigned its preliminary 'B'
long-term corporate credit rating to U.K.-based Element Materials
Technology Group Holding CC1 Limited.  The outlook is stable.

At the same time, S&P assigned its preliminary 'B' issue rating
to the $285 million first-lien term loan B to be drawn by Element
Materials Technology (UK) Holding Ltd. and guaranteed by Element,
in line with its corporate credit rating.  The recovery rating on
this loan is '3'.

The 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, it reserves the
right to withdraw or revise its ratings.  Potential changes
include, but are not limited to, use of loan proceeds, maturity,
size and conditions of the loans, financial and other covenants,
security, and ranking.

The preliminary rating reflects S&P's assessment of Element's
business risk profile as "fair," and its financial risk profile
as "highly leveraged."

S&P's assessment of its business risk profile is based on
Element's smaller scale in the global testing, inspection, and
certification (TIC) industry and more limited geographical
diversity compared to many of its peers.  Nearly 80% of revenues
come from the U.S. (albeit a large market).  Element provides
services to a narrow group of sectors, primarily Aerospace and
Oil and Gas -- and some transportation clients -- giving it
more-limited end-market diversity than larger, more-diverse

These constraints are partially offset by Element's leading
positions in the niche markets in which it operates.  In S&P's
view, the significant complexity of the services the company
provides, its highly educated workforce, and the "mission
critical" nature of its services differentiates it from general
TIC providers and enhances its competitive advantage.  Along with
accreditations and certifications required from TIC providers,
the abovementioned factors create high entry barriers.  In
addition, increasingly stringent regulations and outsourcing
tendencies in the TIC industry support Element's business
prospects, in S&P's view.  Further support for the business risk
profile stems from the company's long-standing relationships with
its clients.

S&P's assessment of Element's business risk profile incorporates
its view of the global TIC industry's "intermediate" risk and
"very low" country risk.

"We assess Element's financial risk profile as "highly
leveraged," primarily reflecting our estimate of the group's
Standard & Poor's-adjusted debt to EBITDA of over 5x and funds
from operations (FFO) to debt of around 13% for the financial
year ending Dec. 31, 2014.  For our analysis, we consider
preferred equity certificates (PECS) held above the structure to
be equity under our criteria.  Our assessment of Element's
financial policy as "aggressive" reflects its private equity
ownership as well as the shareholder distributions.  The
conversion of a portion of the above-mentioned PECs into pure
debt -- part of this refinancing -- also weighs on the rating.
Our estimate of adjusted total debt of about US$320 million at
end-2014 includes the US$285 new term loan B; our adjustment for
operating lease commitments of nearly US$28 million; and deferred
consideration of over US$6 million.  We consider Element's
positive free cash flow as supportive of the rating," S&P said.

S&P's base case assumes:

   -- Revenue growth of over 20% to nearly US$255 million in 2014
      as Element fully incorporates financial results of the
      business acquired in 2013; and just over 7% revenue growth
      in 2015;

   -- Standard & Poor's-adjusted margins of about 23%-24% for the
      next 18 months, an improvement from just under 21% in 2012;

   -- No acquisition assumptions.

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

   -- Debt to EBITDA of just above 5x;

   -- FFO to debt of about 13%; and

   -- Modest free operating cash flow of nearly $6 million.

S&P assess Element's liquidity as "adequate," according to its
criteria.  This is based on S&P's expectation that available
liquidity sources, including available cash and cash FFO, will
cover expected cash outflows by at least 1.2x over the next 12

S&P estimates sources of liquidity for the 2014 financial year

   -- Available cash on balance sheet of US$40 million at the
      beginning of the year;

   -- FFO of nearly US$27 million;

   -- Availability under the US$40 million revolving credit
      facility (RCF); and

   -- Proceeds from the US$285 million term loan B.

S&P estimates uses of liquidity for the 2014 financial year as:

   -- Repayment of over US$166 million existing debt as well, as
      partial repayment of PECs of US$69.8 million;

   -- Shareholder distributions of US$20 million;

   -- Pending acquisition payment of US$21.8 million;

   -- Peak working capital requirement of around US$7 million;

   -- Nearly US$18 million of capital spending.

The group is subject to just one financial maintenance covenant
which will be tested only when 30% of the RCF is utilized.  S&P
anticipates that this covenant will initially be set with
adequate headroom.

The stable outlook reflects S&P's view that Element will retain
its leading position as a materials testing provider in its niche
sectors in the U.S., as well as in European markets, and its good
profitability.  The stable outlook also reflects S&P's view that
the company will maintain its credit metrics in line with a
"highly leveraged" financial risk profile in the near term,
including a ratio of adjusted debt to EBITDA of above 5x.

Upside scenario

S&P could consider raising the rating if Element demonstrated a
track record of improved credit metrics, such that adjusted debt
to EBITDA were sustained at below 5x, as well as an absence of
shareholder distributions.  An improvement in credit metrics
could result from better operating conditions than S&P currently
forecasts, leading to growth in adjusted EBITDA.

Downside scenario

S&P could consider lowering the rating if Element posted negative
free operating cash flow or it observed a sustained contraction
in its EBITDA margin triggered by unexpected adverse operating
developments.  Likewise, tightened liquidity or covenant headroom
could pressure the ratings.


Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par.  Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable.  Those sources may not,
however, be complete or accurate.  The Monday Bond Pricing table
is compiled on the Friday prior to publication.  Prices reported
are not intended to reflect actual trades.  Prices for actual
trades are probably different.  Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind.  It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.

Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than US$3 per
share in public markets.  At first glance, this list may look
like the definitive compilation of stocks that are ideal to sell
short.  Don't be fooled.  Assets, for example, reported at
historical cost net of depreciation may understate the true value
of a firm's assets.  A company may establish reserves on its
balance sheet for liabilities that may never materialize.  The
prices at which equity securities trade in public market are
determined by more than a balance sheet solvency test.

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


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

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

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

This material is copyrighted and any commercial use, resale or
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Information contained herein is obtained from sources believed to
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