TCREUR_Public/140808.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

           Friday, August 8, 2014, Vol. 15, No. 156




C Z E C H   R E P U B L I C

RPG BYTY: Fitch Affirms 'B+' LT Issuer Default Rating


REMY COINTREAU: Fitch Withdraws 'BB+' LT Issuer Default Rating


HEIDELBERGCEMENT AG: Fitch Affirms 'BB+' IDR; Outlook Stable
OPERA GERMANY: Fitch Lowers Rating on Class B Notes to 'Bsf'
SOLARSTROM AG: Sells Remaining German Projects; In Investor Talks


ATHENS: Moody's Raises Issuer Rating to 'Caa1'; Outlook Stable


AVOCA CLO XII: Moody's Assigns '(P)B2' Rating to Class F Notes
BACCHUS 2006-1: S&P Affirms 'CCC+' Rating on Class E Notes
O'FLYNN CONSTRUCTION: Directors Want to Overturn Examiner Appt.
STARTS CDO1-2008: S&P Lowers Ratings on 2 Note Classes to 'B+'
WINDERMERE XII: Fitch Cuts Ratings on 4 Note Classes to 'Dsf'

XLIT LTD: Fitch Raises Ratings on Two Share Classes From 'BB+'


POPOLARE DELL'ALTO ADIFE: Moody's Withdraws Ba1 Sr. Unsec. Rating
ROTTAPHARM SPA: Moody's Puts 'B1' CFR on Review for Downgrade


NORTHLAND RESOURCES: Units' Creditors Support Reorganization Plan


DELEK EUROPE: S&P Assigns Preliminary 'B' CCR; Outlook Stable


BANCO ESPIRITO: Break-Up Not Bankruptcy Credit Event, ISDA Rules


MOSENERGO OJSC: Fitch Affirms 'BB+' Long-Term IDR; Outlook Stable


NOVA KREDITNA: S&P Withdraws 'Bpi' Public Information Rating


ALMIRALL SA: S&P Puts 'BB-' CCR on CreditWatch Developing
CABLEUROPA SA: Fitch Raises LT Issuer Default Rating From 'B'
GROUPAMA SA: Fitch Affirms 'BB' Rating on Sub. Debt Instruments


TURK EKONOMI: Moody's Affirms 'D 'Bank Financial Strength Rating


LEMTRANS LLC: S&P Affirms 'CCC' Long-Term CCR; Outlook Negative

U N I T E D   K I N G D O M

AFREN OIL: S&P Revises Outlook to Negative & Affirms 'B+' CCR
CO-OPERATIVE GROUP: Agrees to Sell Farms Business for GBP249MM
CONDUIT SKEGNESS: Goes Into Administration
CORNERSTONE TITAN 2005-2: Fitch Cuts, Withdraws Rating on F Notes
HBOS PLC: Investors File Suit v. Lloyds Over 2008 Takeover

NEW LOOK: Fitch Affirms 'B-' Long-Term IDR; Outlook Stable
UK GROUP OF HOTELS: Goes Into Administration
WIMBLEDON STUDIOS: Goes Into Administration, Cuts 4 Jobs


* BOOK REVIEW: Risk, Uncertainty and Profit



Moody's Investors Service has downgraded the issuer, senior unsecured
debt and deposit ratings of Oesterreichische Volksbanken AG (VBAG) to
Ba3 from Ba1. The ratings now include four notches of support down
from previously six notches and reflect the implications of Moody's
reassessment of the support environment in Austria for VBAG.

The rating agency also affirmed the standalone bank financial strength
rating (BFSR) at E, equivalent to a caa1 baseline credit assessment
(BCA), accounting for the bank's improved capitalisation and the
progress VBAG has made in deleveraging its substantial legacy
portfolios. This rating action closes the review opened on March 27,

The outlook on the bank's long-term ratings is negative driven by
pressure on the bank's intrinsic creditworthiness and on support. The
pressure on support results from the recent adoption of the Bank
Recovery and Resolution Directive (BRRD) and the Single Resolution
Mechanism (SRM) regulation in the EU.

Moody's also downgraded to Ba3 from Ba1 the senior unsecured ratings
of VBAG's former subsidiary Investkredit Bank AG (which VBAG assumed
in September 2012). The Caa2 ratings of the subordinate and senior
subordinate debt of VBAG and its former subsidiary Investkredit Bank
AG (Investkredit) were confirmed with a negative outlook. Hybrid
capital instruments of VBAG, Investkredit or other issuing entities of
the group continue to be rated on an expected loss basis and were
affirmed at their current levels by the rating action.

Ratings Rationale

Downgrade Reflects Change In Support Assumptions

Moody's lowered the support uplift to four notches from six previously
to reflect the implications of Moody's reassessment of the support
environment in Austria for VBAG. Moody's support assumptions for VBAG
are now aligned with other systemically relevant banks in Austria that
benefit from high support uplift.

The four notches of support also reflect the additional capital
cushion provided by EUR557 million subordinated debt at the level of
VBAG as of March 31, 2014 (EUR891 million at the level of the sector
as of December 31, 2013). This cushion may become available as part of
a bail-in solution in case of need.

Affirmation Reflects Substantial Deleveraging Progress

VBAG has made substantial progress in further deleveraging its legacy,
non-core portfolio which still accounted for EUR7.1 billion assets
according to their FY 2013 accounts. On 28 July 2014, VBAG announced
that it sold EUR495 million or almost half of its portfolio of
non-performing loans in Romania. During the review period, VBAG also
announced the sale of its private equity portfolio, VB-Leasing
International's subsidiaries in Poland and Romania and Volksbank

At the same time, the fundamental rating at E / caa1 also reflects
VBAG's weak operating performance as reflected in its recent EUR57
million loss in Q1 2014 following a EUR73 million loss in 2013.
Visibility of VBAG's earnings remains low as VBAG continues to
deleverage and unwind its legacy portfolios. VBAG's state aid approval
requires the bank to sell VB-Leasing International by year-end 2014
and VB Romania by year-end 2015.

Potential Additional Capital Needs to Ensure Ongoing Compliance
With Capital Requirements at Volksbanken Sector Level

A potential remapping of VBAG's E BFSR could result from additional
capital needs that may necessitate a capital injection at the level of
the sector. On 6 May 2014, the Austrian regulator informed VBAG that
the Association of Volksbanken (unrated) needs to maintain an equity
ratio of 13.6% under Basel 3, compared to a 14.6% capitalization as of
January 1, 2014. Capital needs may also be triggered by the European
Central Bank's Comprehensive Assessment which the sector is subject
to, in particular the ECB's requirement to maintain a 5.5% CET1 ratio
in its stress case scenario.

Key drivers for potential capital needs are that (1) major parts of
VBAG's current capital base will be derecognized once Basel III has
been fully phased in, including EUR300 million participation capital
injected by the government during the financial crisis, and (2) VBAG's
continued weak operating performance and profitability as reflected in
recent losses.

Moody's believes that there is a reasonable likelihood that additional
capital will be needed at the level of the sector. In Moody's central
scenario, the sector continues to be able to address capital needs on
its own, which may include additional capital raising at the level of
the sector. In addition, Moody's expects that VBAG's deleveraging will
also be a crucial element for the sector to comply with the minimum
capitalization needs from the Austrian regulator.

Rationale for the Negative Outlook

The negative outlook reflects the downward pressure on the BCA on the
back of continued pressure on the bank's capitalization. This may
occur in a stressed environment, but is also driven by the
de-recognition of major parts of its current capital base once Basel
III has been fully phased-in.

The negative outlook also reflects the recent adoption of the BRRD and
the Single Resolution Mechanism (SRM) regulation in the EU, which will
have further negative consequences for banks' creditors as indicated
by Moody's rating action on European banks of May 29, 2014.

What Could Move the Rating - UP/DOWN

Downward pressure on VBAG's standalone BCA would emerge if Moody's
believes that the sector does not have the capacity to support VBAG,
or if the sector faces pressure on its own capitalization. Capital
shortfalls at the level of VBAG might trigger the need for sector
support. Further pressure would arise if VBAG's funding profile and
liquidity comes under pressure; any delay in the bank's ability to
offload its substantial run-down portfolio would likely trigger this
extra pressure.

VBAG's debt and deposit ratings could suffer from downward pressure as
a result of (1) pressure on its BCA; and/or (2) if Moody's further
revises its assumptions regarding the likelihood of the Austrian
government being willing to provide systemic support to VBAG in the
event of need.

Upward pressure on VBAG's BFSR would result from a successful
recapitalization and/or a successful deleveraging and de-risking of
its balance sheet that would allow and support VBAG to execute its
restructuring plan and preserve an adequate liquidity position.

Upward pressure on the bank's debt and deposit rating would require
substantial improvements in the bank's standalone creditworthiness
that would prompt an upward adjustment of the BCA. Moody's believes
that these improvements are currently unlikely given the high level of
support still incorporated into the bank's ratings.

List of Affected Ratings

The following ratings of VBAG were downgraded:

-- Long-term senior debt and deposit ratings and issuer rating
    to Ba3 negative, from Ba1 review for downgrade;

The following ratings of VBAG were confirmed:

-- Subordinate and senior subordinate debt ratings at Caa2

The following ratings of VBAG were affirmed:

-- E BFSR, equivalent to a BCA of caa1.

-- Short-term debt and deposit rating at Not Prime.

-- Pref. Stock Non-cumulative at Ca (hyb) stable.

-- Junior Subordinate at Ca (hyb) stable.

The following ratings of Investkredit were downgraded:

-- BACKED Long-term senior unsecured debt ratings to Ba3
    negative, from Ba1, review for downgrade.

The following ratings of Investkredit were confirmed:

-- BACKED Subordinate debt ratings at Caa2 negative.

The following ratings of Investkredit Bank AG and were affirmed:

-- BACKED Junior Subordinate debt at Ca (hyb) stable.

The following ratings of OEVAG Finance (Jersey) Limited were affirmed:

-- BACKED Pref. Stock Non-cumulative at Ca (hyb), stable.

The following ratings of Investkredit Funding Ltd were affirmed:

-- Pref. Stock Non-cumulative at Ca (hyb), stable.

C Z E C H   R E P U B L I C

RPG BYTY: Fitch Affirms 'B+' LT Issuer Default Rating
Fitch Ratings has affirmed Czech Republic-based property group RPG
Byty's (RPG) Long-term Issuer Default Rating (IDR) at 'B+' with Stable
Outlook and its EUR400 million senior secured bond at
'BB-'/Recovery Rating 'RR3'.

The ratings reflect RPG's high geographical concentration and a
challenging vacancy outlook.  They also factor in stable rental income
received from its Czech residential housing portfolio,
de-regulation of rents and limited future capex requirements Fitch
expects leverage to remain stable at around 40% of loan-to-value (LTV)
and interest cover around 2.0x.

The senior secured notes are rated a notch above the IDR as they
benefit from a security package including a first rank mortgage on the
real estate portfolio offering around 2.0x asset cover and a pledge on
issuer shares.


Challenging Vacancy Rate Outlook

Following rental increases resulting from de-regulation, vacancies
increased to 10.8% at FYE13 from a low 4.7% in 2010, as tenants left
what had been heavily subsidized accommodation (60%-65% below markets
rents in 2009).  Management expects rent to increase for another three
to four years as the gap with market rents further shrink.  The
de-regulation is widely expected to increase rental income above
inflation over the medium term.  While Fitch acknowledges that an
increase in rent will support revenues, a narrower gap may pressure
the vacancy ratio.  While the headline vacancy rate has stabilized
over the last quarters the structural vacancy rate has been increasing
(6.6% at FYE13 vs. 5.8% at FYE12).

Potential Corporate Governance Improvements

RPG financed part of its 2012 and 2013 dividend with debt raised from
the debt capital markets.  An IPO was recently postponed due to market
conditions but in Fitch's view a successful IPO would likely pave the
way for a more appropriate dividend policy (in-line with actual cash
flows) and improved corporate governance. Nonetheless Fitch does not
expect the current financial difficulties facing RPG's ultimate owner
- an investment vehicle owned by Zdenek Bakala and BXR group - to have
a material impact on the company as dividend is currently limited to
50% of its net income as per bond documentation.

FX and Bullet Refinancing Risk

RPG is a Czech business with all rental income in local currency.
While the coupon on its sole EUR400m bond is fully hedged against CZK
depreciation, the principal is not.  Fitch views this exposure as a
significant risk for the company even though the Czech currency has so
far been fairly stable versus the euro, with declines failing to have
a negative cash impact.  In an extreme scenario of depreciation of
15%-20% versus the EUR option protection on 50% of the bond principal
would kick in at CZK/EUR 32.3, resulting in a still manageable LTV of
around 50% (within our guidelines).  RPG has sufficient liquidity up
to bond maturity in 2020 but could face significant refinancing risk
at a later stage.

Reasonable Leverage Metrics

Fitch forecasts loan-to-value (LTV) leverage to remain around 40% (42%
in 2013).  RPG does not undertake any residential development and
hence execution and budget risk on capex is low.  Since 2006 EUR280
million has been spent on upgrading the portfolio and Fitch expects a
low run-rate of maintenance capex.

Stable Rental Income

RPG's business strategy is based on delivering increased rents as
contractually agreed with its tenants and tightly managing operating
costs.  Rental income has grown as a result of the Czech rental market
de-regulation in 2010.  The average tenure for residents is long at 15
years, reflecting a high average age group of 56 years old.  Around
22% of the tenants are retired, indicating positive tenant retention

Strong Concentration Risk

RPG's 44,000 unit portfolio is located in the Moravia-Silesia region
with all properties situated within a 50km radius.  Rental income and
portfolio valuations are strongly linked to the local economy.
Although local demographics are not entirely favorable, Moravia's
economic performance has been solid with an average annual growth rate
of 4.7% over the last 10 years, above the EU average of 1.3%.

Positively, the region has attracted new sectors of activity, such as
electronics, software companies and pharmaceutical groups; however, a
strong focus is still on the cyclical industrial sector.  In both
Ostrava and Havirov, RPG's portfolio represents over 10% and 30% of
the town's housing stock respectively.  In addition, Ostrava and
Havirov together accounted for 65% of the portfolio by value at
December 2013.  However, the portfolio is sizeable and RPG benefits
from economies of scale in terms of letting and asset management.


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

   -- Improved corporate governance with an established dividend
      policy, most likely through a successful IPO

   -- Improved portfolio diversification where RPG establishes a
      critical size of residential portfolio outside the Ostrava

   -- A sustainable improvement in financial metrics with LTV
      below 40%, net debt/ EBITDA below 5.0x and EBITDA net
      interest cover (NIC) ratio above 2.0x

   -- Increased liquidity on a sustained basis to a score of
      1.0x, resulting from undrawn committed debt facilities or
      increased unrestricted cash.

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

   -- Significant deterioration in vacancy rates or rise in
      tenant arrears

   -- EBITDA NIC falling below 1.5x and net debt to EBITDA rising
      above 8.0x

   -- Declining valuation or FX mismatch leading to weaker
      leverage metrics (LTV above 55%) that make re-financing
      prospects for this bullet bond more difficult

   -- Evidence that financial problems at the ultimate owner
      level are having a negative impact on RPG


REMY COINTREAU: Fitch Withdraws 'BB+' LT Issuer Default Rating
Fitch Ratings has affirmed French alcoholic beverage group Remy
Cointreau SA's Long-term Issuer Default Rating (IDR) and senior
unsecured debt rating at 'BB+'.  The Outlook is Stable.  Fitch has
simultaneously withdrawn the ratings as Remy Cointreau SA has chosen
to stop participating in the rating process.

Accordingly, Fitch will no longer provide ratings or analytical
coverage of Remy Cointreau SA.


The ratings reflect the group's sharper-than-expected deterioration in
its credit metrics in the financial year ended March 2014, due to a
combination of lower profitability, weaker cash flow generation and
net debt increase.  Given an uncertain cognac market recovery and the
still high investments required by the group's liqueurs & spirits
category, Fitch expects profitability, free cash flow and leverage to
only slowly recover from their FY14 levels over the next three years.

Remy's liquidity is adequate due to a EUR225 million revolving credit
facility (EUR148 million drawn as of FYE14), EUR186 million of cash
and cash-like instruments and limited debt redemptions due in FY15.
Additional flexibility is provided by a EUR75 million receivable
facility from Europeenne de Participation Industrielle due in 2017.


HEIDELBERGCEMENT AG: Fitch Affirms 'BB+' IDR; Outlook Stable
Fitch Ratings has affirmed Germany-based HeidelbergCement AG's (HC)
Long-term Issuer Default Rating (IDR) at 'BB+' and Short-term IDR at
'B'.  The Outlook on the Long-term IDR is Stable.  The agency has also
affirmed the senior unsecured rating of debt issued by HC's related
entities, HeidelbergCement Finance BV, HeidelbergCement Finance
Luxembourg SA and Hanson Ltd at 'BB+'.

The affirmation reflects HC's investment grade business profile as the
world leader in aggregates and a top three cement producer. The group
weathered the downturn relatively well, thanks to its geographical
diversification and limited exposure to crisis-stricken Southern
European and politically turbulent Northern African markets.  These
factors mitigate the group's current high leverage which is not
commensurate with a 'BB+' rating.

The Stable Outlook is predicated on our assumption that management
will apply the majority of proceeds from the disposal of its North
American and UK building products business to reduce debt in line with
its target of 2.8x reported net debt/EBITDA.  It also reflects our
expectation that HC's improved operating leverage from past years'
cost cutting will benefit from the nascent recovery in construction
end-markets in North America and north-western Europe.


High Leverage

FFO adjusted leverage at end-2013 of 6.4x is not commensurate with the
current ratings.  Fitch forecasts FFO adjusted leverage to reduce to
around 4.5x in 2015, based on management's commitment to reduce
leverage to around 2.8x reported net debt/EBITDA and Fitch's
assumption that the majority of proceeds from the building products
disposal will be used for debt repayment.

End-Markets Recovery

HC posted a strong performance in 1H14 with 11% revenue and 15% EBITDA
growth like for like, although FX headwinds diminished actual revenue
and EBITDA growth to 2%.  The operating performance was supported by
mid to high single digit volume growth in all segments from increased
activity in nearly all regions.  Fitch expects a solid operating
performance in 2H14 based on positive demand trends in the US and in
key markets in North Western Europe, including UK, Germany and

Building Products Disposal

The disposal of the group's North American and UK building products
business is credit positive.  The loss in diversification from this
business is limited and offset by the increase in profitability from
its deconsolidation.  The entire building products segment, of which
the disposals form part, contributed 7% to group revenues in 2013
(excluding intra-group eliminations). Fitch expects disposal proceeds
to be used for debt reduction, as management remains committed to
reducing leverage.

Successful Efficiency Program

HC cut EUR391 million in cash costs in FY13, substantially exceeding
management's target of EUR240 million cash for the year.  Since the
launch of this program in 2011, the group has achieved more than
EUR1.1 billion of savings against an original target of EUR600

Investment-Grade Business Profile

HC's business profile is compatible with an investment-grade rating,
thanks to its geographical diversification and solid market
positioning, as it is the world leader in aggregates and is among the
top-three producers in the cement sector.  The group's strong business
profile mitigates its relatively high leverage, which is not
commensurate with an investment-grade rating.


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

   -- A higher and faster deleveraging with FFO gross leverage
      declining below 3.5x on a sustainable basis.

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

   -- A deterioration of the trading activity affecting operating
      cash flow generation and resulting in FFO gross leverage in
      excess of 4.5x on a sustainable basis and continued
      negative FCF.


Liquidity is adequate and amounted to EUR2.7 billion from undrawn
committed facilities at end-2013, compared with EUR2.3 billion of debt
maturities in 2014.  Fitch considers readily available cash
immaterial, as Fitch adjusts the group's sizeable cash of EUR1.5
billion for around EUR1.0 billion of cash at local subsidiaries that
is subject to exchange controls, EUR400 million for intra-year working
capital swings and EUR20 million in restricted cash.  Fitch notes that
cash in countries with exchange controls can be repatriated via
dividends, although Fitch do not consider this cash readily available
for ratio calculation purposes.

OPERA GERMANY: Fitch Lowers Rating on Class B Notes to 'Bsf'
Fitch Ratings has taken the following rating actions on Opera Germany
(No. 2) p.l.c.'s CMBS notes:

EUR273.7m class A (XS0278492706) upgraded to 'AA-sf' from
'BBsf'; Outlook Stable

EUR46.8m class B (XS0278493001) downgraded to 'Bsf' from 'BBsf';
Outlook Negative

EUR65.6m class C (XS0278493266) affirmed at 'Bsf'; Outlook

EUR63.7m class D (XS0278493340) upgraded to 'Bsf' from 'CCCsf';
Outlook Negative
EUR9.4m class E (XS0278493423) upgraded to 'Bsf' from 'CCCsf';
Outlook Negative


The upgrade of the class A notes reflects the receipt of EUR286.8
million of net disposal proceeds from the Koe Galerie property sale.
This cash is being held at the account bank (HSBC plc; AA-/Stable/F1+)
until the next and final interest payment date (IPD) in Oct. 2014. Due
to the short time (less than three months) until funds distribution to
the noteholders, Fitch has linked the class A notes' rating to that of
the account bank.

The repayment of the remaining notes at final legal maturity in
October 2014 depends on the sponsor's success in refinancing the
remaining Rhein-Ruhr-Zentrum property prior to the next (and last)
IPD.  According to the latest investor report, the refinancing is
moving forward, but a considerable number of conditions have to be
fulfilled prior to the drawdown of the new facility.  The servicer is
confident that the refinancing will be completed prior to October

Fitch therefore expects the refinancing to be finalized prior to the
final IPD and the remaining rated notes to repay.  The class B to E
notes carry therefore the same risk, since failure to refinance the
outstanding debt would most likely bring about a default given the
short time to bond final maturity.


Should the refinancing not be in place to repay the remaining loan on
the October IPD, a default of the class B to E notes will occur and
the notes will be downgraded to 'Dsf'.

SOLARSTROM AG: Sells Remaining German Projects; In Investor Talks
John Parnell at PV-Tech reports that insolvent project developer
Solarstrom has sold the last three projects in its German portfolio
with a total capacity of 5MW.

The company also confirmed that it is in talks with investors from
Asia, Europe and North America about its long-term future, PV-Tech

The collapse of equipment suppliers and delays to project sales
created a cashflow problem that forced the company into insolvency,
PV-Tech discloses.  With impending project sales in Italy, the firm is
optimistic that it will meet its obligations and secure an investor,
PV-Tech says.

Chief executive Karl Kuhlmann said the company was being careful to
ensure it gets a fair price for its projects, PV-Tech relays.

According to PV-Tech, administrator Dr. Joerg Nerlich of Cologne law
firm Goerg, said the international nature of interested investors was
extending the due diligence period.

                  About S.A.G. Solarstrom AG

Headquartered in Freiburg i.Br., Germany S.A.G. Solarstrom AG
(German security identification number: 702 100, ISIN:
DE0007021008) -- is a
manufacturer-independent provider of photovoltaic plants
configured to customers' individual needs.  The Group constructs
plants of all sizes both in Germany and abroad. S.A.G. Solarstrom
AG also produces solar energy at its own plants.

S.A.G. Solarstrom AG's service portfolio covers the entire life
cycle of photovoltaic plants, including forecast and energy
services, yield reports, and remote service and maintenance, as
well as insurance and financing.  The Group thus offers a
comprehensive value chain in photovoltaics, from yield reports,
planning, construction, operations, and monitoring to
optimization, repowering, and deconstruction.

S.A.G. Solarstrom AG was founded in 1998.  Around 190 specialists
work at the four locations in Germany and the foreign

S.A.G. Solarstrom AG is listed in the Prime Standard of the
Frankfurt Stock Exchange as well as according to the rules and
standards M:access of the Munich Stock Exchange.


ATHENS: Moody's Raises Issuer Rating to 'Caa1'; Outlook Stable
Moody's Investors Service, has upgraded the City of Athens' issuer
rating to Caa1 from Caa3, following a similar action on Greece's
sovereign rating. The outlook on the rating is stable.

Ratings Rationale

Athens' upgrade is primarily driven by Moody's upgrade of the Greece's
sovereign rating to Caa1 from Caa3. The upgrade also reflects Athens'
continuity in pursuing budgetary balances and slight debt reduction in
a challenging, albeit improving, economic environment.

The sovereign rating upgrade indicates a reduction in the systemic
risk to which Athens is exposed given the close macroeconomic and
financial linkages between the two. Specifically Moody's expects that
Athens will benefit from the improving sovereign conditions, which
will translate into improving tax revenues over the next few years and
more predictable state transfers.

Greece is expected to grow 0.4% in 2014 and 1.2% in 2015, which will
likely have a positive effect on Athens as a major economic hub.
Athens' key revenue sources, of which 40% comprise of taxes and
tariffs, are highly sensitive to the local economic conditions. In
addition, the improved sovereign fiscal position should improve the
predictability of government transfers to Athens, which account for a
substantial 38% of Athens' operating revenue in 2013, easing pressure
on fiscal consolidation.

The Caa1 rating is also underpinned by the renewed commitment of the
new administration elected in 2014 to prudent budgetary policy.
Moody's notes that the city's self-imposed fiscal discipline combined
with the strict consolidation efforts enforced by the Greek government
enabled Athens to consolidate its rigid budget and pursue financial
equilibrium for the third consecutive year. Moody's expects that
Athens will maintain a cautious approach to expenditures. The city
plans not to borrow at least for the next two years.

What Could Move the Rating Up/Down

An upgrade of Athens' rating will require a similar change in Greece's
sovereign rating.

Although unlikely given the recent sovereign upgrade, a deterioration
of the sovereign credit strength would apply downward pressure on
Athens' rating given the close macroeconomic and financial linkages
between the two. Fiscal slippage or the emergence of significant
liquidity risks would also exert downward pressure on Athens' rating.

Specific economic indicators as required by EU regulation are not
applicable for this entity.

On July 31, 2014, a rating committee was called to discuss the rating
of the Athens, City of. The main points raised during the discussion
were: The systemic risk in which the issuer operates has materially

The principal methodology used in this rating was Regional and Local
Governments published in January 2013.

The weighting of all rating factors is described in the methodology
used in this rating action, if applicable.


AVOCA CLO XII: Moody's Assigns '(P)B2' Rating to Class F Notes
Moody's Investors Service announced that it has assigned the following
provisional ratings to notes to be issued by Avoca CLO XII Limited:

EUR240,000,000 Class A Senior Secured Floating Rate Notes due 2027,
Assigned (P)Aaa (sf)

EUR43,000,000 Class B Senior Secured Floating Rate Notes due 2027,
Assigned (P)Aa2 (sf)

EUR27,000,000 Class C Deferrable Mezzanine Floating Rate Notes due
2027, Assigned (P)A2 (sf)

EUR19,000,000 Class D Deferrable Mezzanine Floating Rate Notes due
2027, Assigned (P)Baa2 (sf)

EUR26,000,000 Class E Deferrable Junior Floating Rate Notes due 2027,
Assigned (P)Ba2 (sf)

EUR13,000,000 Class F Deferrable Junior Floating Rate Notes due 2027,
Assigned (P)B2 (sf)

Moody's issues provisional ratings in advance of the final sale of
financial instruments, but these ratings only represent Moody's
preliminary credit opinions. Upon a conclusive review of a transaction
and associated documentation, Moody's will endeavor to assign
definitive ratings. A definitive rating (if any) may differ from a
provisional rating.

Ratings Rationale

Moody's provisional rating of the rated notes addresses the expected
loss posed to noteholders by legal final maturity of the notes in
2027. The provisional ratings reflect the risks due to defaults on the
underlying portfolio of loans given the characteristics and
eligibility criteria of the constituent assets, the relevant portfolio
tests and covenants as well as the transaction's capital and legal
structure. Furthermore, Moody's is of the opinion that the collateral
manager, Avoca Capital Holdings ("Avoca Capital"), has sufficient
experience and operational capacity and is capable of managing this

Avoca CLO XII Limited is a managed cash flow CLO. At least 90% of the
portfolio must consist of senior secured loans and up to 10% of the
portfolio may consist of senior unsecured loans, second-lien loans,
mezzanine obligations. The portfolio is expected to be 70% ramped up
as of the closing date and to be comprised predominantly of corporate
loans to obligors domiciled in Western Europe. The remainder of the
portfolio will be acquired during the six month ramp-up period in
compliance with the portfolio guidelines.

Avoca Capital will manage the CLO. It will direct the selection,
acquisition and disposition of collateral on behalf of the Issuer and
may engage in trading activity, including discretionary trading,
during the transaction's four-year reinvestment period. Thereafter,
purchases are permitted using principal proceeds from unscheduled
principal payments and proceeds from sales of credit risk obligations,
and are subject to certain restrictions.

In addition to the six classes of notes rated by Moody's, the Issuer
will issue EUR 47 million of subordinated notes which will not be

The transaction incorporates interest and par coverage tests which, if
triggered, divert interest and principal proceeds to pay down the
notes in order of seniority.

Avoca Capital will acquire and hold 50% of the outstanding shares in
the Issuer. The remaining 50% of the Issuer's outstanding shares will
be held by a charitable trust. However, in a typical CLO transaction
100% of the Issuer's shares would be held by a charitable trust. As a
result, certain structural mitigants have been put in place to ensure
that Avoca CLO XII will remain bankruptcy remote from Avoca Capital
(for example, covenants to maintain a majority of independent
directors in Avoca CLO XII, prohibition on Avoca Capital from
acquiring more shares in Avoca CLO XII, covenants to maintain that
Avoca CLO XII and Avoca Capital are operated as separate businesses,
and a share charge given by Avoca Capital over it's shares in the
Issuer securing it's observance of such covenants).

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

The rated notes' performance is subject to uncertainty. The notes'
performance is sensitive to the performance of the underlying
portfolio, which in turn depends on economic and credit conditions
that may change. Avoca Capital's investment decisions and management
of the transaction will also affect the notes' performance.

Loss and Cash Flow Analysis:

Moody's modeled the transaction using CDOEdge, a cash flow model based
on the Binomial Expansion Technique, as described in Section 2.3 of
the "Moody's Global Approach to Rating Collateralized Loan
Obligations" rating methodology published in February 2014. The cash
flow model evaluates all default scenarios that are then weighted
considering the probabilities of the binomial distribution assumed for
the portfolio default rate. In each default scenario, the
corresponding loss for each class of notes is calculated given the
incoming cash flows from the assets and the outgoing payments to third
parties and noteholders. Therefore, the expected loss or EL for each
tranche is the sum product of (i) the probability of occurrence of
each default scenario and (ii) the loss derived from the cash flow
model in each default scenario for each tranche. As such, Moody's
encompasses the assessment of stressed scenarios.

Moody's used the following base-case modeling assumptions:

Par amount: EUR400,000,000

Diversity Score: 34

Weighted Average Rating Factor (WARF): 2750

Weighted Average Spread (WAS): 3.75%

Weighted Average Recovery Rate (WARR): 44.5%

Weighted Average Life (WAL): 8 years.

Moody's has analyzed the potential impact associated with sovereign
related risk of peripheral European countries. As part of the base
case, Moody's has addressed the potential exposure to obligors
domiciled in countries with local currency country risk ceiling of A1
or below. Following the effective date, and given the portfolio
constraints, only up to 10% of the pool can be domiciled in countries
with foreign currency government bond rating below A3 with a further
constraint of 5% to exposures with foreign currency government bond
rating below Baa3. Given this portfolio composition, the model was run
with different target par amounts depending on the target rating of
each class of notes as further described in the methodology. The
portfolio haircuts are a function of the exposure size to peripheral
countries and the target ratings of the rated notes and amount to
0.75% for the class A notes, 0.5% for the Class B notes, 0.375% for
the Class C notes and 0% for Classes D, E and F.

Stress Scenarios:

Together with the set of modeling assumptions above, Moody's conducted
an additional sensitivity analysis, which was an important component
in determining the provisional rating assigned to the rated notes.
This sensitivity analysis includes increased default probability
relative to the base case. Below is a summary of the impact of an
increase in default probability (expressed in terms of WARF level) on
each of the rated notes (shown in terms of the number of notch
difference versus the current model output, whereby a negative
difference corresponds to higher expected losses), holding all other
factors equal:

Sensitivities are:

Percentage Change in WARF: WARF + 15% (to 3163 from 2750)

Ratings Impact in Rating Notches:

Class A Senior Secured Floating Rate Notes: 0

Class B Senior Secured Floating Rate Notes: -1

Class C Senior Secured Deferrable Floating Rate Notes: -2

Class D Senior Secured Deferrable Floating Rate Notes: -1

Class E Senior Secured Deferrable Floating Rate Notes: -1

Class F Senior Secured Deferrable Floating Rate Notes: 0

Percentage Change in WARF: WARF +30% (to 3575 from 2750)

Class A Senior Secured Floating Rate Notes: -1

Class B Senior Secured Floating Rate Notes: -3

Class C Senior Secured Deferrable Floating Rate Notes: -3

Class D Senior Secured Deferrable Floating Rate Notes: -2

Class E Senior Secured Deferrable Floating Rate Notes: -1

Class F Senior Secured Deferrable Floating Rate Notes: -2

Further details regarding Moody's analysis of this transaction may be
found in the upcoming pre-sale report, available soon on

Methodology Underlying the Rating Action:

The principal methodology used in this rating was "Moody's Global
Approach to Rating Collateralized Loan Obligations" published in
February 2014.

Other Factors used in this rating are described in "Bankruptcy
Remoteness Criteria for Special Purpose Entities in Structured Finance
Transactions" published in May 2013.

BACCHUS 2006-1: S&P Affirms 'CCC+' Rating on Class E Notes
Standard & Poor's Ratings Services raised its credit ratings on
BACCHUS 2006-1 PLC's class A-1A, A-2A, A-2B, B, and C notes.  At the
same time, S&P has affirmed its 'B+ (sf)' and 'CCC+ (sf)' ratings on
the class D and E notes, respectively.

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

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

Since S&P's previous review on May 21, 2012, the portfolio's aggregate
collateral balance has significantly reduced by approximately EUR217
million, leading to the further amortization of the class A-1A and
A-2A notes, in accordance with the priority of payments.  As a result,
the available credit enhancement has increased for all rated classes
of notes and all coverage tests continue to pass, and now do so at
higher levels than in S&P's previous review.  Additionally, the
weighted-average spread has increased to 3.90% from 3.50% and the
weighted-average life has shortened over the same period to 3.9 years
from 4.3 years.

However, the obligor concentration has increased to 76 from 30
different obligors since S&P's previous review, and it has also
noticed a negative rating migration.  Furthermore, defaulted assets
have increased while weighted-average recovery rates have decreased
since S&P's previous review.

In S&P's opinion, the documents for the portfolio asset swaps, which
hedge non-euro denominated assets (representing 10% of the performing
assets), do not fully comply with S&P's 2013 counterparty criteria.
Therefore, in S&P's cash flow analysis for ratings that are more than
one notch above its issuer credit rating on the relevant
counterparties, S&P also considered potential scenarios where the swap
counterparties fail to perform, and where the transaction is exposed
to greater currency risk as a result.

Taking into account S&P's credit and cash flow analysis, and its 2013
counterparty criteria, S&P considers that the available credit
enhancement for the class A-1A, A-2A, A-2B, and B notes is
commensurate with higher ratings than currently assigned.  S&P has
therefore raised to 'AAA (sf)' its ratings on these classes of notes.

The results of S&P's cash flow analysis also indicate that the class
C, D, and E notes can sustain defaults at higher rating levels than
those currently assigned.  However, the largest obligor test
constrains S&P's ratings on these classes of notes. The largest
obligor test measures the risk of several of the largest obligors
within the portfolio defaulting simultaneously. S&P has therefore
raised to 'BBB+ (sf)' from 'BBB- (sf)' its rating on the class C notes
and affirmed our 'B+ (sf)' and 'CCC+ (sf)' ratings on the class D and
E  notes, respectively.

BACCHUS 2006-1 is a cash flow collateralized loan obligation (CLO)
transaction that securitizes loans to primarily speculative-grade
corporate firms.  It is managed by IKB Deutsche Industriebank AG and
its reinvestment period ended in April 2012.


EUR400 mil senior secured and deferrable floating-rate notes
                               Rating          Rating
Class       Identifier         To              From
A-1A        XS0245462923       AAA (sf)        AA- (sf)
A-2A        XS0245463657       AAA (sf)        AA+ (sf)
A-2B        XS0245464200       AAA (sf)        AA- (sf)
B           XS0245464895       AAA (sf)        A+ (sf)
C           XS0245465439       BBB+ (sf)       BBB- (sf)
D           XS0245466247       B+ (sf)         B+ (sf)
E           XS0245467641       CCC+ (sf)       CCC+ (sf)

O'FLYNN CONSTRUCTION: Directors Want to Overturn Examiner Appt.
Barry O'Halloran at The Irish Times reports that private equity fund
Blackstone's affiliate Carbon Finance failed to disclose key facts to
the High Court when it sought to have O'Flynn Construction Group
placed in examinership.

Blackstone acquired the O'Flynn group's EUR1.8 billion debts from the
National Asset Management Agency in May, giving it the right to take
control of the assets against which the loans are secured in the event
the Cork-based business cannot repay them, The Irish Times recounts.

The High Court last week appointed Michael McAteer of Grant Thornton
as interim examiner to four trading O'Flynn companies following an
application from Blackstone subsidiary, Carbon Finance, which had
placed other parts of the group, including its parent, in
receivership, The Irish Times recounts.  It claimed that the
construction and property empire was insolvent, The Irish Times notes.

Michael Cush SC, for the O'Flynn group, told the High Court on Tuesday
that Carbon was "guilty of the most extraordinary
non-disclosures" when it applied for the examinership and, as a
result, had failed in its obligation to act with the utmost good
faith, The Irish Times relays.

Mr. Cush, as cited by The Irish Times, said Carbon had failed to make
it clear to the court that none of the O'Flynn Group's companies was
in default on any loans and that they had substantial amounts of cash
on hand, which were more than enough to meet interest payments due in

The barrister told Ms. Justice Mary Irvine that Carbon had also failed
to make it clear to the court that it had access to large amounts of
information on the O'Flynn Group, dating back to before it bought the
debts in May, The Irish Times notes.

The group and its directors and shareholders, brothers
Michael and John O'Flynn, are asking the High Court to overturn the
appointment of the examiner and the receivers, The Irish Times
discloses.  They claim that Carbon took those steps simply to gain
control of the group's assets and had intended doing this since it
bought the loans from NAMA, according to The Irish Times.

O'Flynn Construction is a property development and construction
company based in Cork.

STARTS CDO1-2008: S&P Lowers Ratings on 2 Note Classes to 'B+'
Standard & Poor's Ratings Services lowered its credit ratings on
STARTS (Ireland) PLC Series CDO1-2008's class A2 and A3 notes.  At the
same time, S&P has affirmed its 'A+ (sf)' rating on the class A1

The rating actions follow S&P's analysis of the transaction using data
from the trustee and note valuation report dated June 24, 2014, and
the application of S&P's relevant criteria.

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

"Since our previous review on Aug. 8, 2012, the portfolio's aggregate
collateral balance has significantly reduced by approximately EUR155
million, leading to further amortization of the class A1 notes.  We
have observed that the notes have been redeemed sequentially as the
transaction still does not meet the prorata conditions, which it met
at closing and up until shortly before our previous review.  As a
result, the available credit enhancement has increased for all rated
classes of notes. Additionally, the transaction continues to pass all
coverage tests at higher levels than in our previous review," S&P

However, S&P also notices a significant increase in the obligor
concentration and a negative rating migration with an average rating
of 'BBB+', compared with 'A' at S&P's previous review. Other negative
developments in the transaction include a reduction of the
weighted-average recovery rates and a marginal decrease in the
weighted-average spread to 0.16% from 0.17%.  Due to this structural
negative carry risk, where the assets yield significantly less than
the weighted-average cost of liabilities, the transaction still relies
on the interest payment deferral feature of all its classes of notes
as well as its single priority of payments.

The results of S&P's analysis indicate that the class A1 notes can
sustain defaults at a higher rating level than that currently
assigned.  However, the largest obligor test still constrains S&P's
rating on this class of notes at 'A+(sf)'.  S&P has therefore affirmed
its 'A+ (sf)' rating on the class A1 notes.  The largest obligor test
measures the risk of several of the largest obligors within the
portfolio defaulting simultaneously.

S&P's analysis also indicates that the credit support available to the
class A2 and A3 notes is still commensurate with their currently
assigned ratings, but S&P's largest obligor test now caps S&P's
ratings on both classes of notes at 'B+ (sf)'.  S&P has therefore
lowered to 'B+ (sf)' from 'BBB+ (sf)' and from 'BBB- (sf)' its ratings
on the class A2 and A3 notes, respectively.

STARTS (Ireland)'s series CDO1-2008 is a static cash flow
collateralized debt obligation (CDO) of European residential
mortgage-backed securities, commercial mortgage-backed securities,
consumer and commercial asset-backed securities, and collateralized
loan obligations.  It closed in June 2008.


STARTS (Ireland) PLC
EUR447.9 mil secured limited-recourse deferrable
floating-rate notes series CDO1-2008
Class     Identifier         To          From
A1        XS0367108700       A+ (sf)     A+ (sf)
A2        XS0367112132       B+ (sf)     BBB+ (sf)
A3        XS0367115317       B+ (sf)     BBB- (sf)

WINDERMERE XII: Fitch Cuts Ratings on 4 Note Classes to 'Dsf'
Fitch Ratings has downgraded Windermere XII FCC's class E, F, G and H
floating-rate notes due July 2017 and withdrawn the ratings as

EUR0 million class E (FR0010501965) downgraded to 'Dsf' from 'Csf';
rating withdrawn

EUR0 million class F (FR0010501973) downgraded to 'Dsf' from 'Csf';
rating withdrawn

EUR0 million class G (FR0010501981) downgraded to 'Dsf' from 'Csf';
rating withdrawn

EUR0 million class H (FR0010501999) downgraded to 'Dsf' from 'Csf';
rating withdrawn


The downgrade follows the repayment in part of the underlying
securitized loan, which resulted in a full redemption of the class A
through D notes and partial redemption of the class E notes (50%),
totaling EUR1.3 billion of principal and EUR5.4 million of interest.
The remaining notes (50% of class E and the entire remaining class F,
G and H notes) have been written down, resulting in a EUR339 million
loss to noteholders.

As part of the safeguard proceedings, the shares in the borrower were
sold in March 2014 and the funds, together with escrowed amounts, were
utilized to make the final debt service payment in April 2014. In the
absence of lender approval (with Lehman Brothers no longer existing),
noteholders had voted in favor of the proposed paydown.  With the
notes delisted by the issuer in July 2014, the first (and arguably
highest profile) safeguard case in EMEA CMBS has come to an end.

The underlying asset had been an office property located in Paris's La
Defense district.  It was reported 76% occupied in January 2014; with
main tenants including AXA (A/Stable), HSBC (AA-/Stable), Allianz
(AA-/Stable) and EDF (A+/Negative).  The collateral had been valued at
EUR1.28 billion in June 2013, almost matching the settlement amount.

XLIT LTD: Fitch Raises Ratings on Two Share Classes From 'BB+'
Fitch Ratings has upgraded its ratings on XLIT Ltd. (a Cayman Islands
subsidiary of XL Group plc) and its property/casualty (re)insurance
subsidiaries (collectively XL) as follows:

   -- Issuer Default Rating (IDR) to 'A-' from 'BBB+';
   -- Senior unsecured notes to 'BBB+' from 'BBB';
   -- Series D and E preference ordinary shares to 'BBB-' from
   -- Insurer Financial Strength (IFS) to 'A+' from 'A'.

The Rating Outlook on the IDR is Positive.  The Rating Outlook on the
IFS is Stable.


Fitch's rating rationale for the one-notch upgrade of XL's ratings
reflects favorable recent underlying net earnings from improving
calendar year and run-rate accident year underwriting results,
particularly in the company's insurance segment, as well as improving
operating earnings-based interest and preferred dividend coverage.
The ratings also continue to reflect the company's solid
capitalization, reasonable financial leverage and large diversified
market position in both insurance and reinsurance lines, as well as
anticipated challenges in the overall competitive property/casualty
market rate environment.

The Positive Outlook on the IDR reflects XL's improved operating
earnings-based interest and preferred dividend coverage that could
potentially result in a return to standard notching for the moderate
Bermuda regulatory environment that reflects the existence of limited
payment restrictions to the holding company. Currently, the holding
company IDR reflects nonstandard wider notching due to unfavorable
fixed-charge coverage.

XL posted a net loss of US$24 million through the first six months of
2014, as favorable underwriting results were offset by a US$621
million net loss on the sale of its life reinsurance subsidiary to
GreyCastle Holdings Ltd. in June 2014.  Fitch views this transaction
as overall neutral to the rating as the immediate accounting write-off
charge is manageable (about 5% of XL's total shareholders' equity) and
is offset by reduced future volatility, with the investment market
risk passed on to the buyer through a funds withheld liability.  As
such, this should help XL to increase focus on its core
property/casualty business.  Net earnings totaled US$1.1 billion in
2013 and US$651 million in 2012, years which included modest
catastrophe losses.

XL's core property/casualty operations posted a very favorable
six-month 2014 GAAP combined ratio of 89.0%, which included minimal
catastrophe losses (1.9 points).  This is improved from 92.5% and
96.3% for full years 2013 and 2012, respectively, which included 5.3
points and 8.0 points (6.2 points from Hurricane Sandy) for
catastrophe losses.

Excluding the impact of catastrophes and favorable reserve
development, XL's underlying accident year combined ratio has
exhibited considerable improvement in recent periods to 91.5% in the
first half of 2014 (1H:14), 92.0% in full-year 2013 and 93.7% in 2012.
This is down from 98.5% for 2011, primarily driven by reduced large
non-catastrophe property loss activity and business mix changes.  XL's
insurance segment, in particular, has demonstrated meaningful
improvement, with an accident year combined ratio excluding
catastrophes of 95.3% in 1H'14, compared with 96.7% in full-year 2013,
98.5% in 2012 and a sizable 104.2% in 2011.  This favorable result is
due in part to underwriting actions taken by the company over the last
several years to improve margins in its poorer performing challenged
insurance businesses.

XL's operating earnings-based interest and preferred dividend coverage
has been weak in recent years, averaging a low 4.4x from 2009-2013.
However, earnings coverage improved to more historical levels at 6.0x
both through the first six months of 2014 and in 2013, with more
manageable catastrophe losses and overall reduced interest costs.
This follows 4.3x in 2012 and 1.6x in 2011, years with higher
catastrophe losses.

XL continues to maintain a reasonable financial leverage ratio
(adjusted for equity credit and excluding unrealized net gains/losses
on fixed maturities) of 17.7% at June 30, 2014 and 16.9% at Dec. 31,
2013, with debt plus preferred equity-to-total capital of 26.4% at
June 30, 2014, compared with 26.5% at
Dec. 31, 2013.  XL's capital position has remained stable, with
shareholders' equity of US$11.4 billion at June 30, 2014, up slightly
from US$11.3 billion at Dec. 31, 2013, as the net loss and share
buybacks were offset by net unrealized investment gains.


The key rating triggers that could result in a near-term upgrade to
XL's IDR and debt ratings includes operating-earnings-based interest
and preferred dividend coverage maintained at 6.0x or higher.  Key
rating triggers that could lead to an upgrade in XL's ratings over
time include favorable earnings with low volatility, including a
combined ratio in the low 90s.  In addition, continued strong
capitalization of the insurance subsidiaries, with a net premiums
written-to-equity ratio of 0.8x or lower, a financial leverage ratio
maintained at or below 20% and operating-earnings-based interest and
preferred dividend coverage of at least 10x could generate positive
rating pressure.

Key rating triggers that could result in a downgrade include
significant charges for reserves that affect equity and the
capitalization of the insurance subsidiaries, financial leverage ratio
maintained above 20% or debt plus preferred equity to total capital
above 30%, operating-earnings-based interest and preferred dividend
coverage below 6.0x-7.0x, increases in underwriting leverage above
1.0x net premiums written-to-equity ratio, earnings below industry
levels and failure to maintain consistent underwriting profitability.

Fitch has upgraded the following ratings:


   -- IDR to 'A-' from 'BBB+';
   -- $600 million 5.25% senior notes due 2014 to 'BBB+' from
   -- $300 million 2.30% senior notes due 2018 to 'BBB+' from
   -- $400 million 5.75% senior notes due 2021 to 'BBB+' from
   -- $350 million 6.375% senior notes due 2024 to 'BBB+' from
   -- $325 million 6.25% senior notes due 2027 to 'BBB+' from
   -- $300 million 5.25% senior notes due 2043 to 'BBB+' from
   -- $345 million series D preference ordinary shares to 'BBB-'
      from 'BB+';
   -- $999.5 million series E preference ordinary shares to
      'BBB-' from 'BB+'.

The IDR Rating Outlook is Positive.

Fitch has also upgraded to 'A+' from 'A' the IFS ratings of the
following XL (re)insurance subsidiaries:

   -- XL Insurance (Bermuda) Ltd;
   -- XL Re Ltd;
   -- XL Insurance Switzerland Ltd;
   -- XL Re Latin America Ltd;
   -- XL Insurance Company SE;
   -- XL Insurance America, Inc.;
   -- XL Reinsurance America Inc.;
   -- XL Re Europe SE;
   -- XL Insurance Company of New York, Inc.;
   -- XL Specialty Insurance Company;
   -- Indian Harbor Insurance Company;
   -- Greenwich Insurance Company;
   -- XL Select Insurance Company.

The IFS Rating Outlook is Stable.


POPOLARE DELL'ALTO ADIFE: Moody's Withdraws Ba1 Sr. Unsec. Rating
Moody's Investors Service has withdrawn Banca Popolare dell'Alto Adige
-- Suedtiroler Volksbank's (BP Alto Adige) D+ standalone bank
financial strength rating (BFSR), which is equivalent to a ba1
standalone baseline credit assessment (BCA), the Ba1/Not-Prime deposit
ratings, and the Ba1 senior unsecured rating. At the time of the
withdrawal, the D+ standalone BFSR, the Ba1
long-term deposit rating, and the Ba1 senior unsecured rating carried
a negative outlook.

Ratings Rationale

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

Ratings Withdrawn

- Bank Deposits: Ba1/Not-Prime

- Standalone BFSR: D+, equivalent to a standalone BCA of ba1

- Senior Unsecured: Ba1

Headquartered in Bolzano, Italy, BP Alto Adige reported total assets
of EUR6.2 billion as at June 2014.

ROTTAPHARM SPA: Moody's Puts 'B1' CFR on Review for Downgrade
Moody's Investors Service placed Rottapharm SpA's B1 corporate family
rating (CFR) and B1-PD probability of default rating (PDR) on review
for downgrade. Concurrently, Moody's has also placed the Ba3 rating of
the bond issued at Rottapharm Ltd under review for downgrade.

Ratings Rationale

The review follows the announcement made on July 31 whereby Meda AB
(unrated) said it had reached an agreement to acquire Rottapharm for
an enterprise value of EUR2.275 billion. Moody's understands the
transaction is expected to close in the fourth quarter of 2014.

The combination of the two entities will create a leading European
player within the field of specialty pharma and will have combined
revenues of close to EUR2 billion. The combined entity will benefit
from a solid geographical footprint and a diverse product portfolio
with overall limited product concentration. Moody's understands the
combined entity to benefit from a high level of profitability with
EBITDA-margins expected to increase towards 33% pro-forma for run-rate
synergies. As such, Moody's would believe the combined entity to
continue producing solid free cash flows.

Moody's understands the transaction to be funded by (1) EUR1.643
billion in cash (2) EUR357 million in shares; and (3) EUR275 million
in non-contingent deferred payment in January 2017. As a consequence,
Moody's would anticipate the combined entity to operate with a
substantial leverage over the next two years and Moody's understand
Meda said its reported net leverage was 3.9x prior to the transaction.
The review will seek to explore to what extent the increased leverage
-- compared to Rottapharm on a stand-alone basis -- puts downward
pressure on the ratings. Moody's notes the outstanding bond at
Rottapharm is currently benefiting from a one-notch uplift to the CFR.
At this stage, Moody's believes this uplift is unlikely to be

The review will also assess the financial information likely to be
made available to monitor Rottapharm's credit worthiness going
forward. Moody's will also seek to understand how Rottapharm's
outstanding bond will be structured post acquisition (e.g. if it will
be legally assumed or guaranteed by Meda) if it remains outstanding.
Moody's notes that the bond indenture contains a change of control

Principal Methodologies

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

Rottapharm SpA is an Italy-based pharmaceutical company represented in
more than 85 countries worldwide. For the financial year ending
December 2013, it reported total net revenues of EUR536 million and
EBITDA (before non-recurring items) of EUR138 million.


NORTHLAND RESOURCES: Units' Creditors Support Reorganization Plan
Northland Resources S.A. on Aug. 4 disclosed that the creditors for
the Company's subsidiaries in reorganization support the preliminary
reorganization plan that was presented at the creditors meeting at the
Lulea District Court.  The reorganization will therefore continue.

At the creditors' meeting held on Aug. 4 as a part of the
reorganization for the Company's subsidiaries, the preliminary
reorganization plan was presented by the appointed administrator, Lars
Soederqvist.  The creditors were entitled to express their opinion
regarding whether or not the reorganization should proceed.

As the creditors showed its support at the meeting, the District Court
determined that the reorganization should proceed in accordance with
the preliminary reorganization plan.

As announced on July 14, 2014, the Swedish Subsidiaries, Northland
Sweden AB, Northland Resources AB (publ), and Northland Logistics AB
has filed for and entered into a reorganization in accordance with the
District Court's decision.

                         About Northland

Headquartered in Luxembourg, Northland Resources S.A. is a
producer of iron ore concentrate, with a portfolio of production,
development and exploration mines and projects in northern Sweden
and Finland.  The first construction phase of the Kaunisvaara
project is complete and production ramp-up started in November
2012.  The Company expects to produce high-grade, high-quality
magnetite iron concentrate in Kaunisvaara, Sweden, where the
Company expects to exploit two magnetite iron ore deposits,
Tapuli and Sahavaara.  Northland has entered into off-take
contracts with three partners for the entire production from the
Kaunisvaara project over the next seven to ten years.  The
Company is also preparing a Definitive Feasibility Study for its
Hannukainen Iron Oxide Copper Gold project in Kolari, northern
Finland and for the Pellivuoma deposit, which is located 15 km
from the Kaunisvaara processing plant.


DELEK EUROPE: S&P Assigns Preliminary 'B' CCR; Outlook Stable
Standard & Poor's Ratings Services assigned its preliminary 'B'
long-term corporate credit rating to Netherlands-based fuel retailer
DLK Group B.V. (Delek Europe).

The preliminary issue rating on the EUR310 million term loan B and
EUR75 million revolving credit facility (RCF) is 'B', with a
preliminary recovery rating of '3', indicating S&P's expectation of
meaningful (50%-70%) recovery prospects in the event of default.  The
preliminary issue rating on the EUR100 million second lien term loan
is 'CCC+' with a preliminary recovery rating of '6,' indicating S&P's
expectation of negligible
(0%-10%) recovery prospects in the event of default.

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
debt proceeds, maturity, size and conditions of the debt instruments,
financial and other covenants, security and ranking.

The preliminary rating on Delek Europe reflects its "weak" business
risk profile combined with its "highly leveraged" financial profile.

TDR, a U.K.-based private equity firm, is in the process of acquiring
Delek Europe from Delek Group in an LBO financed by a EUR310 million
of term loan, a EUR100 million second lien loan, EUR70 million of new
equity, and EUR175 million of Delek Group notes (due in five and a
half years), which S&P treats as debt.

"Our view of Delek Europe's "weak" business risk profile reflects the
company's moderate EBITDA and funds from operations (FFO) base, which
we estimate at approximately EUR100 million and EUR60 million,
respectively, for 2014 in our base case.  Profits derive from fuel
stations in France, The Netherlands, Belgium, and Luxembourg -- all
highly competitive markets. Several competitors are much larger,
including oil majors and hypermarket chains. Barriers to entry are
generally moderate, except in motorways given the concession-based
business model.  A relatively moderate number of sites account for the
majority of Delek Europe's EBITDA, with the top 100 contributing about
55% and the top 200 (out of over 1,200) about 75%, most of them in
motorways," S&P said.

The company is exposed to fluctuations in consumer discretionary
spending, traffic volumes, and potential swings in fuel margins. While
motorway sites are much better protected than other retails sites --
given the captive audience and limited number of sites by contract --
consumers can opt to purchase their fuel and other convenience store
products outside motorways to benefit from much lower prices.  In
S&P's view, this holds especially true during difficult economic

The company relies on third-party brands -- for instance it has
licenses from BP, Texaco, and Esso to use their brands -- although S&P
do not see this as a ratings constraint over the next couple of years
given the long duration of such licenses.

S&P anticipates, in its base case, fuel demand to be slightly down to
broadly stable over 2014-2016, owing to weak industry conditions.
Demand has somewhat declined in recent years.

S&P estimates profitability to be moderate.  In S&P's base case it
forecasts an EBITDA margin of around 3% over 2014-2016.  Profits in
fuel retail are moderate, generally.

The company derives significant profits from convenience stores and
other activities at its fuel stations, which results in higher EBITDA
margin and increased diversification.  Convenience stores contributed
about 35% of the group's 2013 gross margin.

Other positive factors include reduced competition and higher
profitability of its motorway stations (compared to its fuel stations
located elsewhere).  Motorway stations also benefit from barriers to
entry given the concession business model, unlike non-motorway sites.
That said, significant capital expenditure (capex) is needed to retain
such sites as they are put for renewal every few years or decades, at
the expiration of the concession. S&P sees this risk as longer term,
however, given the average duration of its motorway licenses.

S&P notes very positively that Delek Europe's environment-related
capex for the next several years is moderate, as its sites are largely
compliant with tight Western Europe standards for fuel stations,
including for double-hulled tanks.

"Our view of Delek Europe's "highly leveraged" financial risk profile
reflects its private equity ownership, high leverage, and modest
de-leveraging capabilities under our base case. Specifically, its free
operating cash flow (FOCF) levels are small, and it has noteworthy
debt of EUR310 million due by end-2018.  Our debt adjustments are
significant, comprising operating leases.  We also treat the EUR175
million of Delek Group notes as debt since we view these as a deferred
purchase consideration and Delek Group has no common equity in Delek
Europe.  We add the accrued interest to our debt calculation," S&P

S&P notes positively the structurally-favorable working capital
business model, as customers pay well before suppliers are paid.

S&P's base-case assumptions include no acquisitions, no disposals and
no dividends -- as per the company's strategy -- although it
recognizes that small amounts might appear.

S&P's base case assumes:

   -- Flat fuel volumes in 2014-2015 compared with 2013, given
      industry conditions.  S&P do not see much upside or
      downside to fuel-volume trends.

   -- Flat fuel spreads over 2014-2016 as the company fully
      passes on fuel prices fluctuation to clients and
      competitive pressures do not increase.

   -- Decreasing capex compared to 2013, at about EUR60 million
      in 2014 and EUR30 million in 2015, given reduced non-core
      and concession capex.

   -- No dividend, acquisition, or share buy-back.

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

   -- FFO to debt around 10% over 2014-2015.

   -- Debt to EBITDA around 5.5x over 2014-2015 and around 4.5x
      when excluding the preferred equity.

   -- EBITDA interest coverage below 3x.

   -- Slightly negative FOCF in 2014 and about EUR20 million
      generated in 2015.

   -- S&P recognizes that upside and downside exists, depending
      on EBITDA and working capital changes.

The stable outlook reflects S&P's base-case assumption that EBITDA
will reach EUR105 million in 2014, then increase or stay flat in 2015,
given broadly flat volumes and fuel spreads.  The stable outlook also
captures S&P's assumption that the Standard & Poor's-adjusted debt to
EBITDA will be above 5.5x in 2014 and 2015.

S&P do not see rating upside, given its expectation of only modest
absolute de-leveraging over at least 2014-2015.

Rating downside risks will appear if EBITDA were to decline in 2014 or
2015, which could be the result of lower volumes or increased
competition.  Rating pressure would also stem from adverse changes in
working capital or reduced covenant leeway.


BANCO ESPIRITO: Break-Up Not Bankruptcy Credit Event, ISDA Rules
Ben Edwards at The Wall Street Journal reports that a panel of the
International Swaps and Derivatives Association on Wednesday ruled
that the Portuguese central bank's decision to break up Banco Espirito
Santo won't trigger a payout on insurance-like contracts linked to the
stricken lender's debt.

ISDA was asked late Monday to rule whether the Portuguese Central
Bank's decision to split BES into two would qualify as a so-called
bankruptcy credit event, meaning that any contracts on BES debt --
known as credit default swaps -- would be activated, the Journal

According to the Journal, ISDA ruled that BES isn't in a bankruptcy
credit event.

Separately, an ISDA panel is preparing to rule whether the BES breakup
is a so-called succession event, which could mean existing CDS
contracts on BES debt will be transferred to a new bank set up as part
of the rescue deal, the Journal discloses.  ISDA, as cited by the
Journal, said it would meet again to make a decision today, Aug. 8.

Banco Espirito Santo is a private Portuguese bank based in Lisbon.  It
is 20% owned by Espirito Santo Financial Group.


MOSENERGO OJSC: Fitch Affirms 'BB+' Long-Term IDR; Outlook Stable
Fitch Ratings has affirmed OJSC Mosenergo's Long-term foreign currency
Issuer Default Rating (IDR) at 'BB+'.  The Outlook is Stable.

Mosenergo's 'BB+' rating incorporates a one-notch uplift for parental
support from its majority shareholder (53.5%), Gazpom Energoholding
and ultimately OAO Gazprom (BBB/Negative), which solely owns Gazprom

Mosenergo's standalone 'BB' rating reflects its strong market position
in electricity and heat sales in Moscow and Moscow region, favorable
geography of operations and relatively good quality assets.  Its
exposure to market risk and fuel prices growth is mitigated by the
relative stability of its cash flow supported by new capacity sales
under the capacity supply agreements (CSAs) with attractive economics
along with its strong financial profile.  Positive rating momentum
could build if the company achieves the forecast credit metrics
improvement, which is largely reliant on capex moderation and
maintenance of prudent financial policy.  However, high regulatory
risk is the key factor that in Fitch's view caps Russian utilities'
standalone ratings at sub-investment grade.


Strong Market Position

Mosenergo's standalone 'BB' rating reflects its strong market position
in Moscow and Moscow region (66% of electricity supplies), favorable
geography of operations and fairly good quality asset base, which is
arguably an industry benchmark among its domestic peers.  The
company's geography of operations ensures its dominance in the region,
which tends to be the most dynamically growing in terms of electricity
consumption and the most lucrative in respect of customers' purchasing
power, as reflected in the higher income per capita compared with the
Russian average.  While this does not fully mitigate the company's
exposure to electricity demand volatility, it can alleviate the impact
if electricity sales decline.

Volume and Price Risk Exposure

Despite its near monopoly position in Moscow and Moscow region,
Mosenergo bears market risk, which is a function of volume and price
risk.  Fitch assess the company's exposure to the market risk in
conjunction with the regulatory risk that can exacerbate price risk.
While the market risk adds to the cash flow volatility, we believe it
is mitigated by the company's strong financial profile that contains
sufficient headroom to absorb volume and/or price shocks.

Fuel Prices Growth Moderation

With fuel expenses accounting for over two-thirds of Mosenergo's 2013
operating costs, the company's profitability is highly sensitive to
changes in fuel prices.  Its fuel mix is dominated by natural gas,
which comprises 98% of total fuel consumption.  The government's
decision to freeze tariffs for natural monopolies for 2014, including
Gazprom, will result in moderation of domestic gas prices growth to
about half of the previously forecast 15% annual growth and should
ease pressure on Mosenergo's margins.  Fitch assumed gas prices growth
slightly above inflation over 2015-2018 with electricity prices
increasing largely in line with inflation. While this is likely to
result in some margin squeeze, the impact will be much more limited
than in our previous forecast when we assumed 15% annual growth for
gas prices.


Stable earnings and a guaranteed return for capacity sales under the
CSAs are the key factors that mitigate Mosenergo's exposure to the
market risk, support stability of its cash flow generation and enhance
its business profile.  The company estimates that the newly
commissioned units operating under the CSAs contributed about half of
its 2013 EBITDA and expects their share to increase to about 70% of
EBITDA by 2015 once all new capacity under the CSA framework is

Assets Swap with MIPC

Following the acquisition of a 89.98% stake in OJSC Moscow Integrated
Power Company (MIPC) by Gazprom Energoholding, Mosenergo and MIPC
commenced their heat assets swap.  While Fitch believes there are some
operational benefits to this transaction, the financial impact, at
least in the short term, is less certain. This transaction should
increase Mosenergo's heat production and expand its market share in
heat sales in Moscow and Moscow region. However, we do not consider it
to be margin enhancing as the heating segment is fully regulated with
uneconomic residential tariffs.

Strong Financial Profile

Following Mosenergo's strong financial performance in 2013, we expect
some deterioration of its credit metrics in 2014 as the final upswing
in capex is likely to lead to negative free cash flow (FCF) and would
require partial debt funding.  Fitch forecasts FFO net adjusted
leverage to increase to about 2x in 2014 from 1.2x in 2013.  However,
Fitch expects planned capex moderation from 2015 along with healthy
and stable cash flow generation from capacity sales under the CSAs to
result in quick de-leveraging with FFO net adjusted leverage falling
below 1.5x by 2016 and FFO gross interest coverage staying at above 8x
over the forecast period.  Achieving the forecast credit metrics'
improvement would support positive momentum for the company's ratings.
However, it is largely reliant on Mosenergo's adherence to modest
capex after 2015, maintenance of conservative financial policy and to
a lesser extent more prudent working capital management.

Unpredictable Regulatory Regime

Similarly to other Russian utilities, Mosenergo is exposed to high
regulatory risk reflected in frequent modifications of the regulatory
regime and political interventions.  This undermines the
predictability of the regulatory framework that is necessary for
utilities to make long-term investment decisions.  The instability
builds uncertainty into companies' operations and weighs on their cash
flow generation, increasing business and financial risks.  The
uncertainties surrounding the regulatory regime are the key factor
that in our view caps Russian utilities' standalone ratings at
sub-investment grade.

One-Notch Uplift for Parental Support

Mosenergo's 'BB+' rating benefits from a one-notch uplift for support
from its majority shareholder -- Gazprom Energoholding and ultimately
OAO Gazprom.  In accordance with Fitch's Parent and Subsidiary Rating
Linkage methodology, we assess the strategic, operational and to a
lesser extent legal ties between Mosenergo and its parent company as
moderately strong.  The strength of the ties is supported by
Mosenergo's integral role in Gazprom's strategy of vertical
integration and the fact that it contributed almost half of Gazprom
Energoholding's EBITDA in 2013.  It also consumes about 7% of gas sold
by Gazprom on the domestic market. Given Mosenergo's strong credit
metrics, financial support from its majority shareholder has not been
needed in the past.  However, Fitch would expect timely financial
support to be available if the need arises.


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

   -- Higher than expected growth rate for electricity and heat
      tariffs in comparison with domestic gas prices increase
      and/or capex moderation resulting in improvement of the
      financial profile (e.g. FFO net adjusted leverage below
      1.5x and FFO interest coverage above 8x on a sustained

   -- Stronger parental support.

   -- Increased predictability of the regulatory and operational
      framework in Russia.

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

   -- Margin squeeze due to the rise of domestic gas pieces not
      fully compensated by the electric and heat prices growth,
      poor working capital management, significant debt-funded
      acquisitions and/or intensive capex program that would
      lead to a material deterioration of the company's credit
      metrics (e.g. FFO net adjusted leverage above 3x and FFO
      interest coverage below 5x on a sustained basis).

   -- Weakening of the parental support may result in a removal
      of the one-notch uplift to Mosenergo's standalone rating.

   -- Deterioration of the regulatory and operational environment
      in Russia.


Adequate Liquidity

Mosenergo's debt repayment schedule is not onerous.  Its first large
repayment falls due in 2014 for RUB7.3 billion, including RUB5 billion
domestic bonds, with the next sizeable repayment not due until 2018.
The company's cash position of RUB4.7 billion at end-1Q14 along with
available credit lines of RUB16.8 billion from VTB due in 2018 and
RUB30 billion from Gazprombank (BBB-/Negative) provide sufficient
liquidity to cover its upcoming maturities.  Mosenergo also has access
to the five-year
RUB10 billion credit line from OAO Gazprom. Fitch expect the company
to commence positive FCF generation from 2015.  Fitch do not view
Mosenergo's FX risk exposure (42% of debt at end-2013 was
euro-denominated whereas revenue is ruble-denominated) as a credit
concern due to the group's strong financial profile, which has
significant headroom to absorb FX shocks.


Long-term foreign currency IDR: affirmed at 'BB+'; Outlook

Short-term foreign currency IDR: affirmed at 'B'

Long-term local currency IDR: affirmed at 'BB+'; Outlook Stable

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


NOVA KREDITNA: S&P Withdraws 'Bpi' Public Information Rating
Standard & Poor's Ratings Services affirmed its unsolicited public
information (pi) long-term counterparty credit rating on Slovenian
bank Nova Kreditna Banka Maribor d.d. (NKBM) at 'Bpi'.  S&P's pi
ratings generally do not bear plus (+) or minus (-) modifiers.

S&P then withdrew the pi rating on the bank owing to lack of market
interest.  S&P had initiated the rating based on publicly available

S&P don't rate any of NKBM's currently outstanding debt.

The affirmation followed NKBM's reported profit in first-quarter 2014,
after three straight years of losses and the Slovenian government's
rescue of the bank in December 2013.

At the time of withdrawal, the ratings on NKBM incorporated S&P's
'bb-' anchor -- which it applies to all banks operating mainly in
Slovenia -- and S&P's view of the bank's business position and risk
position as negative rating factors, and capital and earnings,
funding, and liquidity as neutral rating factors.  In addition, S&P
considered the bank's high systemic importance as positive for the

The bank's business profile remained constrained by weak credit demand
in Slovenia, especially in the corporate sector, and by uncertainties
about its future ownership structure and strategic orientations.

NKBM's financial profile -- particularly capitalization and liquidity
-- has improved since the government's equity injection in December
2013 and the transfer of some nonperforming loans to a workout unit.
Nonperforming loans still exceeded 15% of total loans on March 31,
2014, and we think they'll remain high throughout the remainder of


ALMIRALL SA: S&P Puts 'BB-' CCR on CreditWatch Developing
Standard & Poor's Ratings Services said that it had placed its 'BB-'
long-term corporate credit rating on Spain-based ethical
pharmaceutical company Almirall S.A. on CreditWatch with developing

At the same time, S&P placed its 'BB-' issue credit ratings on the
company's EUR325 million senior unsecured notes on CreditWatch
developing.  The recovery rating of '3' indicates S&P's expectation of
meaningful recovery (50%-70%) in the event of a payment default.

The CreditWatch placement follows Almirall's unexpected announcement
on July 30, 2014, that it had sold key parts of its respiratory
division to AstraZeneca PLC for an upfront payment of US$875 million.
S&P understands there is a potential further US$1.2 billion related to
meeting certain milestones, as well as royalty payments mainly from
the pulmonary disease treatment Eklira.

Although the transaction could lead S&P to revise its assessment of
Almirall's business risk profile to "weak" from "fair," it may
strengthen Almirall's financial risk profile, depending on
management's future financial policy.

Following the transaction, which includes flagship product Eklira and
pipeline assets, Almirall is set to shift its focus to the dermatology
treatment area from respiratory diseases.  The dermatology division
was strengthened by Almirall's acquisition of U.S.-based Aqua
Pharmaceuticals in Dec. 2013.  With the disposal of the respiratory
assets, the company's potential for future revenue growth will reduce,
in S&P's view.  Previously, the main revenue earner was Eklira, one of
the major new long-acting beta2 agonist products available globally in
the rapidly expanding respiratory treatment area.

Almirall suffered a steep decline in group operating margins to just
8% in 2013 compared with about 20% in 2010, as a consequence of
Spain's austerity measures and patent expires.  Based on the
respiratory franchise's good growth in the first six months of 2014,
with sales of Eklira up by about 50%, the EBITDA margin recovered to
14% in that period.  Furthermore, the group's smaller revenue base
after the disposal will also result in higher therapeutic
concentration, reflecting the stronger focus on dermatology.  S&P's
previous positive outlook on the rating reflected the prospects for
further recovery of the group's margin as well as sales growth

The developing implications of the CreditWatch reflect that S&P is
awaiting more detailed information that will allow it to gauge how the
transaction will affect Almirall's credit profile.

S&P expects to resolve the CreditWatch within the next three months,
after evaluating Almirall's financial policy and business strategy.
S&P could raise, affirm, or lower the ratings depending on its
reevaluation of Almirall's business and financial risk profiles.

A downgrade would be by at most one notch, while the potential rating
upside could be stronger, depending on the company's future financial
policy, especially regarding the use of the disposal proceeds.

CABLEUROPA SA: Fitch Raises LT Issuer Default Rating From 'B'
Fitch Ratings has upgraded Cableuropa S.A.'s Long-term Issuer Default
Rating to 'BBB' from 'B' and withdrawn its Short-term IDR of 'B'.  The
ratings have been removed from Rating Watch Positive and the Outlook
on the Long-term IDR is Stable.

The upgrade follows the completion of the acquisition by Vodafone
Group Plc (BBB+/Stable) and reflects the application of Fitch's parent
subsidiary linkage methodology and our view of the legal, operational
and strategic ties that exist between the parent and newly acquired
Spanish subsidiary.

Fitch has also upgraded Cableuropa's senior secured debt (including
the outstanding bonds at Nara Cable Finance and Nara Cable Funding II)
to 'BBB' from 'BB-' and the group's unsecured bonds to 'BBB-' from


Parent-Subsidiary Linkage

Fitch considers the strategic and operational ties between Vodafone
and Cableuropa to be strong, given the strategic importance of the
Spanish market to Vodafone, the significant investment the parent has
made in acquiring fixed line assets in Europe (including Cableuropa
which was acquired for a cash sum of EUR7.2 billion) and the
importance we believe Vodafone is placing on being able to provide
convergent services in its core markets. Operationally Fitch expects
Cableuropa's network to form an important part of Vodafone's
integrated network infrastructure providing backhaul efficiencies and
the ability to offer fully convergent services.  Legal ties are
considered less strong given the absence of a parent guarantee of the
acquired subsidiary's debt.  Nevertheless, Fitch expects Cableuropa's
debt to be refinanced at the parent level relatively quickly.

Taking all of these factors into account we consider that the
parent-subsidiary linkage is sufficiently strong to apply a "notched
down" approach, with Cableuropa rated one notch below the parent at

Call Dates; Expected Bond Take-Out

With the exception of the 8.5% secured notes due 2020, the call dates
of Cableuropa's public debt have passed and can therefore be prepaid.
Fitch expects that with the acquisition complete, Cableuropa's debt
(both bank and bonds) will be prepaid and refinanced at the Vodafone
level, as soon as practicable, generating significant funding cost

Notching of Outstanding Debt

Despite the structured and secured nature of Cableuropa's secured
debt, Fitch applies no notching to instrument ratings at this level.
This is in line with our approach to funding structures of issuers
with an investment grade rating and takes into account the likelihood
that these instruments will be refinanced well ahead of contractual
maturity.  However, Fitch has notched the ratings of the unsecured ONO
Finance II debt down by one notch from the IDR given that 4.2x of
EBITDA leverage (based on 1Q14 LTM figures) currently sits ahead of
these bonds in the context of Cableuropa's standalone credit profile.

Pressured Standalone Fundamentals

With a DOCSIS 3.0 upgraded fibre network covering approximately 49% of
Spain's primary homes and with 1.8 million unique customers,
Cableuropa is sustaining its competitive position in a market affected
by a weakened economy, high unemployment and tough competition.
Residential fixed-line metrics are under pressure and a shift in the
revenue mix towards wholesale and mobile has had a significant impact
on reported EBITDA, with the 1Q14 EBITDA margin down 4.6pp yoy at

Tough Operating Conditions in Spain

The operating pressures described are having a tangible effect on
Cableuropa's residential business with customers down 47,000, or 2.6%
yoy at end-1Q14.  Subscriber losses are not material and services per
customer (2.9x in 1Q14) and average revenue per user (ARPU; EUR54.2)
remain resilient, but customer attrition where the cable operator is
the challenger telecom is unusual.  Margin pressure driven by the
changing revenue mix is increasing leverage with net debt/EBITDA of
4.9x at end-1Q14 (end-1Q13: 4.6x).

Mobile Strategy

Cableuropa launched its virtual mobile network operator (MVNO) service
in 2011, wholesaling minutes from the incumbent Movistar's mobile
network.  Marketing a low-cost SIM-only product targeted at existing
cable customers has led to rapid mobile customer growth to 1.3 million
at end-1Q14.  One of the most aggressive MVNO cable roll-outs in the
sector, the pace of mobile revenue growth (1Q14 service revenues up
136% yoy), and margins reported to be in the 10% range are dilutive at
the group level.  The success of MVNOs in Spain has been highly
disruptive to the established network operators, including Vodafone.
Cableuropa's acquisition by Vodafone could change these dynamics; it
may introduce a more rational development to the market.


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

   -- Any negative rating action on Vodafone's ratings.
   -- Evidence that strategic and operational ties between the
      parent and subsidiary are not as strong as currently

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

   -- Any positive action in relation to Vodafone's ratings.
   -- Improved legal ties, eg, the provision of a parent company
      guarantee for Cableuropa's debt.


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

   -- FFO-adjusted net leverage trending towards 3.5x
   -- Pressure on free cash flow driven by EBITDA margin erosion,
      higher capex and shareholder distributions, or significant
      underperformance in the main operating subsidiaries

Positive: Future developments that could, individually or
collectively, result in positive rating action include:

   -- FFO-adjusted net leverage below 2.5x on a sustained basis
   -- Strong free cashflow generation with high single digit pre-
      dividend free cash flow margin (FY14: 9% based on statutory
      reporting) on a sustainable basis
   -- Evidence of successful monetization of the Project Spring
      investments, leading to an improved competitive position
      for Vodafone in its European operations

The rating actions are as follows:


Long-term IDR upgraded to 'BBB' from 'B'; Stable Outlook
Short-term IDR of 'B' is withdrawn
Senior secured bank facility upgraded to 'BBB' from 'BB-'

Nara Cable Funding

Senior secured bonds: upgraded to 'BBB' from 'BB-'

Nara Cable Funding II

Senior secured bonds: upgraded to 'BBB' from 'BB-'

ONO Finance II plc

Unsecured notes: upgraded to 'BBB-' from 'CCC+'

GROUPAMA SA: Fitch Affirms 'BB' Rating on Sub. Debt Instruments
Fitch Ratings has affirmed Groupama S.A. and its core subsidiaries'
Insurer Financial Strength (IFS) ratings at 'BBB'. Groupama S.A.'s
Issuer Default Rating (IDR) has also been affirmed at 'BBB-'.  The
Outlooks on the IDR and IFS ratings are Positive

The subordinated debt instruments issued by Groupama S.A. have been
affirmed at 'BB'.


Groupama SA's ratings reflect its improving capital adequacy,
manageable debt and significant business and risk diversification. The
ratings also take into account Groupama's solid business position,
with a strong franchise in France in particular and recovering

The group returned to profit in 2013 and 1H14, reflecting the limited
impact of exceptional charges and improving underlying operating
performance. Both French and international operations contributed to
profit recovery.

The ratings also reflect an improvement in Groupama's combined ratio
to 98.5% in 1H14 (100.8% in 2013) as well as management's conservative
decision to strengthen the life fund for future appropriation by about
EUR500m over the past 18 months.

In addition, Groupama's solvency was solid at 1H14 (Solvency 1 ratio
of 239%) and financial leverage remains broadly unchanged at about
30%.  Both metrics are strong compared with the Fitch median for
insurance groups rated in the 'BBB' category.

The significance of risky investments (stocks and below investment
grade bonds) is still high compared with surplus but has materially
reduced over the past three years to reach 152% at end-2013.  Fitch
expects this downward trend to continue in 2014.

The Positive Outlook reflects Fitch's expectation that the recovery in
profitability is likely to be sustained for the full year 2014.


Key rating triggers that could result in an upgrade include a
sustained improvement in profitability, with annual net income for
full year 2014 of more than EUR200m, together with no material
deterioration in solvency or financial leverage from current levels
(200% regulatory solvency and 31% Fitch calculated financial leverage
ratio at end-2013).

The ratings actions are as follows:

Groupama S.A.

IFS rating affirmed at 'BBB'; Outlook Positive
Long-term IDR affirmed at 'BBB-'; Outlook Positive
Dated subordinated debt (ISIN FR0010815464) affirmed at 'BB'
Undated subordinated debt (ISIN FR0010208751) affirmed at 'BB'
Undated subordinated debt (ISIN FR0011896513) affirmed at 'BB'
Undated deeply subordinated debt (ISIN FR0010533414) affirmed at

Groupama GAN Vie

IFS rating affirmed at 'BBB'; Outlook Positive

GAN Assurances

IFS rating affirmed at 'BBB'; Outlook Positive


TURK EKONOMI: Moody's Affirms 'D 'Bank Financial Strength Rating
Moody's Investors Service has affirmed the Baa3 and Prime-3 long and
short-term local-currency deposit ratings of Turk Ekonomi Bankasi AS
(TEB). The outlook on the long-term local currency deposit rating
remains stable. All other ratings of TEB are unaffected by the rating

Ratings Rationale

The affirmation of TEB's Baa3 and Prime-3 long- and short-term
local-currency deposit ratings, with a stable outlook, reflects
Moody's assumption of a high probability of parental support from BNP
Paribas (BNPP), (BNPP, deposits A1 negative, BFSR C-/BCA baa1,
negative) and the current stable outlook on TEB's standalone bank
financial strength rating (BFSR) of D which is equivalent to a
baseline credit assessment (BCA) of ba2.

Moody's believes that TEB's local-currency deposit ratings are
resilient to the current negative outlook on BNPP's standalone bank
financial strength, expressed in its BFSR of C- which is equivalent to
a BCA of baa1. This view is underpinned by Moody's assumption of high
parental support from BNPP in the event of need, which is, in turn,
based on (1) the latter's 68.5% ownership of TEB; and (2) the
significant brand and management association of TEB with that of BNPP.
This support assumption provides rating uplift of two notches for
TEB's local-currency deposit ratings from the ba2 BCA.

What Could Move the Ratings Up/Down

Currently there is no upward pressure on TEB's deposit ratings, as
reflected by the negative outlooks on the standalone financial
strength rating of BNPP and on the Baa3 bond rating of the Turkish
government. The key factors that could prompt Moody's to upgrade the
D/ba2 standalone financial strength rating of TEB would be a
significant improvement both in the operating environment and in the
external liquidity conditions available towards emerging markets which
will contribute to a stronger and more sustainable performance of the

Downward pressure could be exerted on TEB's long- and short-term
deposit ratings (1) if the bank's standalone financial strength rating
weakens; or (2) in the event of any adverse changes to Moody's
assumptions of parental support or a significant weakening of the
standalone financial strength of BNPP. In addition, a change in
Turkey's foreign-currency deposit rating ceiling would exert similar
pressure on the bank's foreign-currency deposit ratings -- towards the
lower of the ceiling and the local-currency deposit ratings.


LEMTRANS LLC: S&P Affirms 'CCC' Long-Term CCR; Outlook Negative
Standard & Poor's Ratings Services affirmed its 'CCC' long-term
corporate credit ratings on Ukrainian freight rail operator Lemtrans
LLC and its holding company Lemtrans Ltd. (together Lemtrans).  The
outlook is negative.

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

A big portion of Lemtrans' operations are concentrated in the east of
Ukraine, where the company derives more than 70% of its revenues
transporting coal from the country's main coal mines. This area has
seen major military actions in recent months.  S&P understands that to
date there have been no major disruptions in Lemtrans' operations, but
it believes that operational risks have increased as ongoing military
actions could damage or destroy rail infrastructure and company's
assets (railcars).

S&P continues to assess Lemtrans' stand-alone credit quality as higher
than that of the sovereign, as our stand-alone credit profile (SACP)
of 'b-' reflects.

S&P assess Lemtrans' financial risk profile as "aggressive," based on
the following base-case assumptions:

   -- No sales growth and an EBITDA margin of about 20% in 2014;
   -- A dividend payout of 25% of net income; and
   -- Capital expenditure (capex) of about Ukrainian hryvnia
     (UAH)1 billion in 2014.  This figure includes some growth
      capex, but S&P understands that most of these investments
      are contingent on the operating environment stabilizing.

Based on these assumptions, S&P arrives at the following credit
measures in 2014-2015:

   -- Standard & Poor's-adjusted debt to EBITDA of about 2.5x-
      3.2x; and

   -- Adjusted funds from operations (FFO) to debt of about 15%-

S&P assess Lemtrans' business risk position as "weak."  This reflects
the high concentration of Lemtrans' customer base (the group's top
three customers accounted for more than 85% of its revenues in 2013)
and its lack of geographical diversification, with most revenues
generated in Ukraine (which S&P assess as having "very high" country
risk, as S&P's criteria define this term).  Lemtrans also has a
limited service offering, a lack of long-term contracts (although this
is gradually changing), and operates in a competitive gondola rail
freight market.  S&P's assessment also reflects the underlying revenue
volatility inherent in freight transportation, which is closely linked
to the volatility of the generally commodity-dependent Ukrainian

S&P acknowledges Lemtrans' solid market position in the gondola rail
freight market.  It operates the largest fleet among private freight
rail operators in Ukraine and has a track record of profitable growth.
S&P views Lemtrans' profitability as "fair."

From S&P's assessment of Lemtrans' "aggressive" financial risk profile
and "weak" business risk profile it derives an anchor of 'b+', as per
S&P's criteria.  The SACP is two notches lower at
'b-' due to S&P's negative financial policy and comparable rating
analysis modifiers.

S&P's negative assessment of Lemtrans' financial policy reflects its
opinion that the company's ambitious growth strategy may depress
credit metrics over the medium term.  S&P also notes that the company
envisages continuing paying dividends despite the weak operational

S&P applies a further downward adjustment of one notch for its
"comparable rating analysis," whereby it reviews an issuer's credit
characteristics in aggregate.  This reflects that Lemtrans' business
risk profile currently sits at the low end of the "weak" category, and
incorporates additional considerations of unpredictable aspects of
country risk that are not captured elsewhere in S&P's analysis.

S&P considers the group's liquidity to be "less than adequate,"
according to its criteria, despite its forecast that liquidity sources
are likely to exceed uses by more than 1x in the 12 months to June 30,

S&P's liquidity assessment continues to be constrained by its view of
Ukraine's weak banking sector -- in which the group holds its cash
balances -- current foreign exchange controls, and the likelihood of
continued restricted access to financial markets for Ukrainian
corporations.  S&P's assessment also incorporates Lemtrans' lack of
established long-term committed revolving lines, a common feature of
companies operating in transitional economies.

As of June 30, 2014, S&P estimates that liquidity sources for the
upcoming 12 months will include:

   -- About UAH569 million in cash at the parent and the main
      group subsidiaries; and
   -- FFO of about UAH450 million-UAH500 million.

S&P estimates that uses of liquidity over the same period will include:

   -- About UAH137 million of contractual debt amortization (not
      including about UAH495 million of amortization at a
      subsidiary under a financial subleasing agreement, which
      S&P expects to be covered by a corresponding inflow in
      finance lease receivables once the new payment schedule
      comes into force);
   -- Capex of about UAH400 million, including some expansionary
      spending already made this year; and
   -- Dividend payments of 25% of net income.

S&P currently do not include any major expansionary capex in its
liquidity calculations.  S&P understands that Lemtrans will not
undertake expansion unless it successfully raises sufficient capital
and transportation volumes and gondola rail car rates rebound.

S&P understands that Lemtrans' debt portfolio does not currently
contain any financial covenants.

The negative outlook reflects the possibility of a downgrade if
liquidity risk escalates.  In S&P's view, the company's operating
environment continues to be challenging and local financial markets
remain vulnerable.

S&P could revise the outlook to stable if the situation in Ukraine
stabilizes and if liquidity pressures ease.  Any upside potential for
the rating would be connected with S&P raising the sovereign rating on

S&P could lower the rating if it forecasts that a default, distressed
exchange, or redemption is almost inevitable within six months, absent
significantly favorable changes in Lemtrans' circumstances.  This
could occur, for instance, if the company no longer benefited from the
liquid funds that currently support its liquidity position; if its
customers' payment discipline weakened substantially; or if cash flows
deteriorated significantly more than S&P forecasts.

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

U N I T E D   K I N G D O M

AFREN OIL: S&P Revises Outlook to Negative & Affirms 'B+' CCR
Standard & Poor's Ratings Services said it revised its outlook to
negative from stable on Afren PLC, a U.K.-headquartered oil and gas
exploration and production company with most of its operations in
Nigeria.  At the same time, S&P affirmed the 'B+' long-term corporate
credit rating.

S&P also affirmed its 'B+' long-term issue rating on the company's
notes maturing in 2016, 2019, and 2020.

The outlook revision reflects S&P's belief that Afren's governance has
deteriorated significantly after the discovery of the receipt of
unauthorized payments -- not from the company --potentially for the
benefit of the CEO-founder and COO, which led to their suspension on
July, 31, 2014.  S&P views these allegations as severe and rare, and
are therefore revising its assessment of Afren's management and
governance to "weak" from "fair."  This is further supported by S&P's
perception of the board's poor track record in terms of providing
appropriate oversight of conflicts of interest, illustrated by the
late disclosure of management's shares in First Hydrocarbon Nigeria, a
Nigerian oil and gas company that holds a 45% interest in one of
Afren's key onshore Nigerian assets, in 2013.  S&P notes, however, as
a positive that the current investigation was initiated by the board.

S&P don't believe that the deterioration in governance will have a
significant impact on the company's ability to meet its production and
financial targets over the next couple of years, and S&P's forecast
for robust credit metrics underpins the ratings.  However, S&P thinks
that there is a degree of uncertainty regarding the outcome of the
investigation into the payments, the severity of the findings, and the
potential implications for the company.

S&P believes the investigation could limit Afren's ability to attract
additional funding, which could impair liquidity in the short- to
medium-term.  In S&P's opinion, banks could be reluctant to sign
credit facilities on favorable terms with Afren, and this could
prevent the company from funding the development of its Okwok asset.

The negative outlook reflects S&P's view that Afren's ability to
attract further funding and obtain bank support on favorable terms
could be impaired in the short- to medium-term.  It also reflects the
uncertainty regarding the outcome and timing of the current
investigation and whether this could have a negative impact on
production or existing contracts, although this is not S&P's base

S&P could lower the rating by one notch if it saw a risk that
governance issues might affect the company's ability to generate cash
flows or impair liquidity.  S&P could also consider lowering the
rating if it believed that operational, country, or acquisition risks
had heightened or if FFO to debt fell sustainably below 30%, while at
the same time free operating cash flow to debt fell below 15%.

A revision of the outlook to stable would hinge on the building of a
track record of access to long-term bank funding and on the
improvement of governance practices.  S&P would also need to believe
there was no significant negative impact on the company's operations
from the current investigation.

CO-OPERATIVE GROUP: Agrees to Sell Farms Business for GBP249MM
Gareth Mackie at The Scotsman reports that Co-operative Group has
ended more than a century of crop-growing tradition by agreeing to
sell its farms business for GBP249 million.

The disposal, to the health-focused Wellcome Trust charitable
foundation, comes just weeks after the group struck a
GBP620 million deal to offload its pharmacies stores as it seeks to
recover from the downfall of its banking arm, The Scotsman relates.

Under Monday's deal, Wellcome Trust is buying 39,533 acres of land, 15
farms, more than 100 residential properties and 27 commercial
properties, The Scotsman discloses.

The sale includes six farms in Scotland -- spanning Aberdeenshire,
Angus, Ayrshire, the Borders and Perthshire -- employing a total of 85
workers, The Scotsman notes.

Monday's deal came as the group seeks to focus on its core retail,
funeral and general insurance services after last year's discovery of
a GBP1.5 billion shortfall in its banking arm's finances, The Scotsman

Co-operative Group is a mutually owned food-to-funerals conglomerate.
Founded in 1863, the Co-op Group has more than six million members,
employs more than 100,000 people, and has turnover of more than GBP13

CONDUIT SKEGNESS: Goes Into Administration
------------------------------------------ reports that Conduit Skegness Limited, the company that owns
the Fantasy Island amusement park in Skegness, has gone into

Conduit Skegness and associated group trading companies own Fantasy
Island, which includes theme park rides, Europe's largest permanent
seven-day market and 340 static caravan pitches.

The business will continue to operate as usual while the
administrators review the company's financial position, and no job
losses are expected among permanent staff, according to

The report notes that the seasonal temporary expansion of the payroll
during the summer holiday season will also continue as usual.

Paul Clark and Ben Wiles, Managing Directors of Duff & Phelps, have
been appointed as administrators, the report adds.

CORNERSTONE TITAN 2005-2: Fitch Cuts, Withdraws Rating on F Notes
Fitch Ratings has downgraded Cornerstone Titan 2005-2 plc's class F
notes due October 2014 and affirmed the class G notes.  Both ratings
have been withdrawn.

GBP0 million Class F (XS0237331615) downgraded to 'Dsf' from 'Csf';
rating withdrawn

GBP0 million Class G (XS0237330302) affirmed at 'Dsf'; rating withdrawn

The transaction was a securitization of seven commercial mortgage
loans originated by Credit Suisse (rated A/Stable) and GMAC Commercial
Bank Europe, with collateral located in the UK.


The downgrade follows the finalization of the workout of the last
remaining loan, GBP8.1 million Bradford Retail.  The underlying asset
has been sold for GBP3.45 million (approximately 11% above the 2009
valuation) and net proceeds of GBP3.2 million were used to pay senior
expenses, note interest and partial class F principal.  The remaining
class F and G notes were written off, after absorbing a GBP5.2 million
principal loss.

The sold collateral had comprised seven retail units near the Bradford
city center.  The occupancy rate had been low (47%) due to the default
of tenants including Birthdays (Clinton Cards subsidiary) and Zavvi,
although Fitch notes that the special servicer had secured tenants for
the entire vacant space prior to the sale.

The ratings were withdrawn as the transaction has been discontinued
following the write-offs.

HBOS PLC: Investors File Suit v. Lloyds Over 2008 Takeover
Caroline Binham and Martin Arnold at The Financial Times report
that Lloyds Banking Group, the UK-government-supported lender, has
vowed to defend itself against a lawsuit filed by investors that has
the potential to be one of the largest in terms of damages ever heard
by the English courts.

The bank, in which the taxpayer owns a 25% stake, was sued in London
on Wednesday by investors over the government-arranged takeover of
HBOS by Lloyds TSB at the height of the financial crisis in 2008, the
FT relates.  Also named as defendants are the bank's former chairman,
Sir Victor Blank, and its former chief executive, Eric Daniels, the FT

According to the FT, the claimants argue that they were misled into
approving the merger as key information over the true financial health
of HBOS was withheld.

The investors, who have clubbed together under the Lloyds Action Now
shareholder group, allege that GBP25 billion of emergency support from
the Bank of England for HBOS and US$18 billion from the US Federal
Reserve was not disclosed, the FT relays.  A statement on LAN's
website said the group also alleges that Lloyds secretly loaned HBOS
GBP10 billion to stay afloat, the FT notes.

The investors' legal team is seeking a group litigation order, which
must first be approved by the court, which would enable thousands of
similar investors to join the claim, potentially raising its value to
GBP12 billion, the FT says.  This would make it one of the
highest-value claims heard in an English court, the FT states.

HBOS plc is a banking and insurance company in the United
Kingdom, a wholly owned subsidiary of the Lloyds Banking Group
having been taken over in January 2009.  It is the holding
company for Bank of Scotland plc, which operates the Bank of
Scotland and Halifax brands in the UK, as well as HBOS Australia
and HBOS Insurance & Investment Group Limited, the group's
insurance division.  The group became part of Lloyds Banking
Group through a takeover by Lloyds TSB January 19, 2009.

NEW LOOK: Fitch Affirms 'B-' Long-Term IDR; Outlook Stable
Fitch Ratings has affirmed UK-based New Look Retail Group Limited's
Long-term Issuer Default Rating (IDR) at 'B-' with a Stable Outlook.
Fitch has also affirmed New Look Bondco I plc's senior secured notes
at 'B'/Recovery Rating 'RR3'.

The IDR is constrained by the group's strong concentration in the UK
market -- which accounted for 66% of sales and 75% of EBITDA in the
financial year to March 2014 -- high competitive pressures, and
aggressive financial leverage following last year's refinancing. It
also reflects its modest, but improving, scale and diversification, as
well as the limited track record of the business model following the
strategic changes implemented under new management.

Positively, the rating reflects the group's leading UK market position
in its targeted clothing retail market segment of young women's wear,
supported by a selective and growing presence on international

Fitch expects satisfactory free cash flow (FCF) generation to support
further modest deleveraging and PIK debt retirement.


Aggressive Financial Profile

The 2013 debt refinancing has strengthened the group's liquidity,
establishing a tiered capital structure, consisting of a super senior
revolving credit facility (SSRCF; GBP75 million), senior notes and PIK
debt.  All instruments share identical security with priority ranking
established by way of inter-creditor agreement. Accordingly, Fitch
gives the PIK notes full consideration as debt.

In view of the asset-light business model and therefore allowing for
capitalized rent obligations (applied multiple of 8x) funds from
operations (FFO)-adjusted net leverage in the financial year to March
2014 stood at 7.3x and FFO adjusted fixed charge cover at 1.5x, which
constrain the rating to the 'B-' level.  The company has used excess
cash generation during the year to retire some of the PIK notes (GBP40
million), and to manage financial leverage.  Fitch expects the company
to continue to do so in line with permitted carve-outs in the senior
notes.  For the calculation of the leverage ratio, Fitch has excluded
reported cash by GBP45 million that was considered restricted and
absorbed in the company's pronounced seasonal working capital cycles.

Established Brand on Competitive Markets

The rating reflects New Look's established brand associated with high
a fashion content and value preposition, which is considered the key
differentiating factor for the group and has led to a market-leading
position in the UK young women's wear market.  It operates a fast
fashion approach, refreshing ranges every 4-6 weeks, with a clear
pricing position in the value fashion segment. The total size of the
clothing market for women's wear is estimated GBP41.1 billion with an
estimated CAGR of 3.1%, of which the value market represents GBP12.5
billion with a CAGR of 4.6%.  New Look positions its price point ahead
of value orientated mass-market retailers, including supermarket
brands, but at a clear discount to high fashion high street retailers
and mid-market brands characterized by lower fashion content.

Evolving Business Model

Online presence and multichannel integration is becoming a key
differentiating factor and success factor in the fast-fashion business
model and is considered the key growth driver for New Look's UK
business.  Online brand positioning and social media presence is
increasingly underpinning the brand's reputation for fashion trends
and building customer loyalty.  The group continues to invest in its
online business -- an integrated in-store and online experience -- as
well as improving logistics and fulfillment to catch up with
best-in-class practices.

In addition to its own online offering, New Look partners with
dedicated online fashion retailers in 10 selected markets, adding
geographic reach to the brand and scale to the operation in a
capital-efficient way.

Focused International Expansion

A key strategic pillar growing the business is international expansion
with New Look's new management implementing a stronger focus on
disciplined investment and on key markets identified as Germany,
expected to grow from its currently successful concession-based
business model into a full multichannel retailer, Poland, where the
group has bought back the original franchise, which is expected to
grow under direct management control, Russia, where the company is in
search of a strategic partnership, and China, targeting 20 stores by
FY15 from the current base of 10). Fitch considers a broader
geographic diversification a rating positive as it reduces reliance on
the UK consumer, although establishing its brand in new markets
carries execution risk.


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

   -- FFO adjusted net leverage (incl. PIK debt) above 8.5x
   -- FFO fixed charge cover below 1.2x
   -- EBITDA margins below 10% (FY14: 13.1%) and negative FCF
      margin (FY14: 4.8%)

Positive: At present the high financial leverage and evolving business
model, targeting improved diversification and scale, make an upgrade
in the near term unlikely.  However, future developments that could
lead to a positive rating action include:

   -- FFO adjusted net leverage (including PIK debt) consistently
      below 6.5x,
   -- FFO fixed charge cover moving towards 2.0x
   -- EBITDA margin at or above 15%, driven by improvement in the
      core UK business, and disposal/turnaround of the
      underperforming Mim business
   -- FCF margin sustainably above 3.5%
   -- Improving business profile achieved by the successful
      integration of e-commerce within the existing business, as
      well as successful international expansion, increasing
      scale in the business, and a proven track record of
      successful strategy implementation over the medium term


Satisfactory Cash Generation & Liquidity

Projected FCF margin remains acceptable at more than 2% and readily
available cash balances of minimum GBP65 million plus the GBP75
million SSRCF support adequate liquidity.  Fitch considers GBP45
million of cash restricted and not freely available for debt service,
due to the pronounced seasonality of the cash flows.

Above Average Recoveries

The 'B'/'RR3' senior secured rating reflects Fitch's expectation that
the enterprise value (EV) of the company -- and resulting recovery for
creditors -- will be maximized in a going concern restructuring
scenario as opposed to liquidation.  This is due to the asset-light
business model of the business, with brand and inventory regarded as
key assets in a distressed scenario.  Fitch's recovery analysis
assumes a 25% discount to FY14 EBITDA and a distressed EV/EBITDA
multiple of 5.0x, resulting in
above-average expected recoveries (51%-70%) and hence triggering a
one-notch uplift of the instrument rating from the group's IDR.

UK GROUP OF HOTELS: Goes Into Administration
-------------------------------------------- reports that the Hotel Corporation's 49.92%-held
UK Group of Hotels (formerly Puma Hotels) has gone into

The Hotel Corporation says it was advised that Paul John Clark, Paul
David Williams and David John Whitehouse of Duff & Phelps  have been
appointed as joint administrators, according to

The report relates that the company said its investment in UK Group of
Hotels plc was fully written down to nil in the accounts as at
December 31, 2013.

WIMBLEDON STUDIOS: Goes Into Administration, Cuts 4 Jobs
The Stage News reports that Wimbledon Studios Ltd has gone into administration.

Rob Croxen -- --  and Jane Moriarty -- -- from financial services firm KPMG, have
been appointed to oversee the company's administration.

Wimbledon Studios Ltd employs 16 staff.  However, four employees were
made redundant when the administrators were appointed, according to
The Stage News.

The report notes that Mr. Croxen said that despite financial support
from its principal investor and landlord, Panther Securities,
Wimbledon Studios Ltd had been "unable to generate the revenues
required to maintain the business."

"We are now assessing the options available to the business and, with
the continued support from Panther Securities, we are hopeful that an
orderly process can be conducted over the coming weeks," the report
quoted Mr. Croxen as saying.

That Wimbledon Studios Ltd is the company behind the TV studios where
series such as the BBC comedy Episodes is filmed.  The company
operates three film and television studios in south west London and
the Wimbledon Media Village, which is the base for a number of
post-production and media businesses.


* BOOK REVIEW: Risk, Uncertainty and Profit
Author: Frank H. Knight
Publisher: Beard Books
Softcover: 381 pages
List Price: $34.95
Review by Gail Owens Hoelscher
Order your personal copy today at

The tenets Frank H. Knight sets out in this, his first book,
have become an integral part of modern economic theory. Still
readable today, it was included as a classic in the 1998 Forbes
reading list. The book grew out of Knight's 1917 Cornell
University doctoral thesis, which took second prize in an essay
contest that year sponsored by Hart, Schaffner and Marx. In it,
he examined the relationship between knowledge on the part of
entrepreneurs and changes in the economy. He, quite famously,
distinguished between two types of change, risk and uncertainty,
defining risk as randomness with knowable probabilities and
uncertainty as randomness with unknowable probabilities. Risk,
he said, arises from repeated changes for which probabilities
can be calculated and insured against, such as the risk of fire.
Uncertainty arises from unpredictable changes in an economy,
such as resources, preferences, and knowledge, changes that
cannot be insured against. Uncertainty, he said "is one of the
fundamental facts of life."

One of the larger issues of Knight's time was how the
entrepreneur, the central figure in a free enterprise system,
earns profits in the face of competition. It was thought that
competition would reduce profits to zero across a sector because
any profits would attract more entrepreneurs into the sector and
increase supply, which would drive prices down, resulting in
competitive equilibrium and zero profit.

Knight argued that uncertainty itself may allow some
entrepreneurs to earn profits despite this equilibrium.
Entrepreneurs, he said, are forced to guess at their expected
total receipts. They cannot foresee the number of products they
will sell because of the unpredictability of consumer
preferences. Still, they must purchase product inputs, so they
base these purchases on the number of products they guess they
will sell. Finally, they have to guess the price at which their
products will sell. These factors are all uncertain and
impossible to know. Profits are earned when uncertainty yields
higher total receipts than forecasted total receipts. Thus,
Knight postulated, profits are merely due to luck. Such
entrepreneurs who "get lucky" will try to reproduce their
success, but will be unable to because their luck will
eventually turn.

At the time, some theorists were saying that when this luck runs
out, entrepreneurs will then rely on and substitute improved
decision making and management for their original
entrepreneurship, and the profits will return. Knight saw
entrepreneurs as poor managers, however, who will in time fail
against new and lucky entrepreneurs. He concluded that economic
change is a result of this constant interplay between new
entrepreneurial action and existing businesses hedging against
uncertainty by improving their internal organization.

Frank H. Knight has been called "among the most broad-ranging
and influential economists of the twentieth century" and "one of
the most eclectic economists and perhaps the deepest thinker and
scholar American economics has produced." He stands among the
giants of American economists that include Schumpeter and Viner.
His students included Nobel Laureates Milton Friedman, George
Stigler and James Buchanan, as well as Paul Samuelson. At the
University of Chicago, Knight specialized in the history of
economic thought. He revolutionized the economics department
there, becoming one the leaders of what has become known as the
Chicago School of Economics. Under his tutelage and guidance,
the University of Chicago became the bulwark against the more
interventionist and anti-market approaches followed elsewhere in
American economic thought. He died in 1972.


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, Editors.

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

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

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

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

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