TCREUR_Public/141015.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

          Wednesday, October 15, 2014, Vol. 15, No. 204



* Global Signs of Slowdown Ripple Across Markets


BARION FUNDING: S&P Raises Rating on Tier 22 Notes From 'BB-'
SLOYAN BROTHERS: Liquidator Accuses Family Members of Fraud


FIAT CHRYSLER: S&P Assigns 'BB-' CCR; Outlook Stable


KAZKOMMERTSBANK: S&P Puts 'B' ICR on CreditWatch Negative


ESPIRITO SANTO: Declared Bankrupt by Luxembourg Court


WOOD STREET II: Moody's Affirms B1 Rating on EUR9MM Cl. E Notes
* NETHERLANDS: Company Bankruptcies Up in September 2014


BAYERNGAS NORGE: S&P Assigns 'B+' CCR; Outlook Negative


BANCO ESPIRITO: S&P Withdraws 'R/R' Counterparty Credit Ratings


KAMAZ OJSC: Moody's Lowers Corporate Family Rating to 'Ba2'
MECHEL OAO: Losses Down in 1H14; Debt Restructuring Talks Ongoing


BANKIA SA: High Court Investigates Credit Card Scandal
FUNDACION BANCARIA: S&P Affirms 'BB/B' Counterparty Ratings

U N I T E D   K I N G D O M

ROYAL BANK OF SCOTLAND: Deed Poll No Impact on Moody's D+ BFSR
* U.S. & UK Meet to Discuss Key Components for G-SIB Resolution


* EUROPE: Fitch Says ECB Program May Affect Finance Market



* Global Signs of Slowdown Ripple Across Markets
Ian Talley, Brian Blackstone and Raymond Zhong, writing for The
Wall Street Journal, reported that gathering signs of slowdown
across many parts of the world, including Germany, China, Japan,
Brazil and South Africa, are roiling financial markets and
confounding policy makers, who after years of battling anemic
economic growth have limited tools left to jump-start a recovery.

According to the report, the pullback is sending tremors through
global markets, hammering equities after years of steady gains
and knocking down commodity prices, although the U.S. remains a
relative bright spot, particularly its job market, which is
gaining traction after years of fitful growth.


BARION FUNDING: S&P Raises Rating on Tier 22 Notes From 'BB-'
Standard & Poor's Ratings Services took various credit rating
actions in Barion Funding Ltd.

Specifically, S&P has:

   -- Raised its ratings on all of the junior senior notes,
      except the junior senior series 2010-1 tranche 1 tier 4

   -- S&P has affirmed its 'AA+ (sf)' rating on the junior senior
      series 2010-1 tranche 1 tier 4;

   -- Affirmed its ratings on the super senior, fast pay, and
      slow pay income notes; and

   -- Withdrawn its ratings on the US$5.394 million tier 1 slow
      pay income and US$5.394 million tier 1 slow pay income
      notes following the issuer's exchange offer in March 2014.

The rating actions follow S&P's assessment of the transaction's
performance using the latest available data, in addition to S&P's
cash flow analysis.  S&P has taken into account recent
developments in the transaction and reviewed the transaction
under S&P's relevant criteria.

"We subjected the capital structure to a cash flow analysis based
on the methodology and assumptions as outlined by our criteria,
to determine the break-even default rate (BDR) for each rated
class of notes at each rating level.  The BDR represents our
estimate of the maximum level of gross defaults, based on our
stress assumptions, that a tranche can withstand and still fully
repay interest and principal on notes.  At the same time, we
conducted a credit analysis based on our assumptions, to
determine the scenario default rate (SDR) at each rating level,
which we then compared against its respective BDR.  The SDR is
the minimum level of portfolio defaults we expect each CDO
tranche to be able to support at the specific rating level using
Standard & Poor's CDO Evaluator," S&P said.

"In our analysis, we used the reported portfolio balance that we
considered to be performing, the weighted-average spread, and the
weighted-average recovery rates that we considered to be
appropriate.  We applied various cash flow stress scenarios using
our standard default patterns and timings for each rating
category assumed for all classes of notes, in conjunction with
different interest rate stress scenarios," S&P added.

The Barion portfolio comprises approximately 84% structured
finance securities, of which nearly 38% of the performing balance
comprises European and U.S. residential mortgage-backed
securities (RMBS).  The remaining portion of the structured
finance securities mainly comprises a diversified mix of high-
grade commercial mortgage-backed securities (CMBS),
collateralized loan obligations (CLOs), and student loans.

Since S&P's previous review on April 19, 2012, the super senior
notes have amortized to US$1.789 billion from US$3.500 billion.
This amounts to an almost 50% reduction in the notional
outstanding amount and is the primary driver behind today's
rating actions.  As a result, the available credit enhancement
for all classes of notes has increased over the same period, and
therefore the structure is now able to withstand higher losses.

S&P's credit analysis of the transaction highlights that the
overall credit quality of the underlying portfolio has not
changed since S&P's previous review.  The current weighted-
average rating on the assets in the portfolio is in the 'A'
category, unchanged from the weighted-average rating at S&P's
previous review.  The SDRs at all rating levels have either
remained stable or decreased since S&P's previous review.

The deleveraging of the super senior notes has, in S&P's view,
increased the available credit enhancement for all other tranches
to the extent that it is now commensurate with higher ratings.
S&P has therefore raised its ratings on all junior senior
tranches, except the junior senior series 2013-1 tranche 1 tier 4

While the available credit enhancement for both the super senior
notes and the junior senior series 2013-1 tranche 1 tier 4 notes
has also increased since S&P's previous review, its analysis
shows that the BDRs for these classes of notes are unable to
surpass S&P's modeled SDR at the 'AAA' rating level.  S&P has
therefore affirmed its 'AA+ (sf)' rating on these classes of

At the same time, S&P has affirmed its 'CCC- (sf)' ratings on the
fast pay and slow pay income notes.  While S&P's cash flow
results indicate that these notes are able to withstand its
credit and cash flow stresses at a 'B+' rating level, S&P's
supplemental stress tests constrain its ratings on these tranches
of notes at 'CCC- (sf)'.

In March 2014, the issuer conducted an exchange offer on some of
the outstanding notes that Barion Funding issued, purchasing and
subsequently cancelling the notes.  As part of the exchange
offer, the issuer purchased and fully cancelled the $5.394
million tier 1 slow pay income and $5.394 million tier 1 slow pay
income notes. S&P has therefore withdrawn its ratings on these
classes of notes.


Class                             Rating           Rating
                                  To               From

Barion Funding Ltd.

Ratings Raised

$165 Million Junior Senior
Series 2010-2 Tranche 1 Tier 6    AA (sf)          AA- (sf)

$165 Million Junior Senior
Series 2010-3 Tranche 1 Tier 8    AA- (sf)         A+ (sf)

$110 Million Junior Senior
Series 2010-4 Tranche 1 Tier 10   A+ (sf)          BBB+ (sf)

$110 Million Junior Senior
Series 2010-5 Tranche 1 Tier 12   A (sf)           BBB+ (sf)

EUR15 Million Junior Senior
Series 2010-6 Tranche 1 Tier 14   A (sf)           BBB (sf)

$70 Million Junior Senior
Series 2010-7 Tranche 1 Tier 16   A- (sf)          BB+ (sf)

$50 Million Junior Senior
Series 2010-8 Tranche 1 Tier 18   A- (sf)          BB+ (sf)

$50 Million Junior Senior
Series 2010-9 Tranche 1 Tier 20   BBB+ (sf)        BB+ (sf)

$50 Million Junior Senior
Series 2010-10 Tranche 1 Tier 22  BBB (sf)         BB- (sf)

$50 Million Junior Senior
Series 2010-11 Tranche 1 Tier 24  BBB (sf)         B+ (sf)

$35 Million Junior Senior
Series 2010-12 Tranche 1 Tier 26  BBB- (sf)        B+ (sf)

Ratings Affirmed

$802.95 Million Floating-Rate Notes
Euro Super Senior Term Repurchase Facility   AA+ (sf)

$303.572 Million Floating-Rate Notes
GBP Super Senior Term Repurchase Facility    AA+ (sf)

$2.524 Billion Floating-Rate
USD Super Senior Term Repurchase Facility    AA+ (sf)

$191.06 Million Junior Senior
Series 2010-1 Tranche 1 Tier 4               AA+ (sf)

EUR28.291 Million Tier 1
Fast Pay Income Notes                        CCC- (sf)

GBP5.783 Million Tier 1
Fast Pay Income Notes                        CCC- (sf)

$33.233 Million Tier 1
Fast Pay Income Notes                        CCC- (sf)

$3.808 Million Tier 1
Fast Pay Income Notes                        CCC- (sf)

EUR19.875 Million Tier 1
Slow Pay Income Notes                        CCC- (sf)

GBP16.509 Million Tier 1
Slow Pay Income Notes                        CCC- (sf)

JPY1.191 Billion Tier 1
Slow Pay Income Notes                        CCC- (sf)

$216.44 Million Tier 1
Slow Pay Income Notes                        CCC- (sf)

$3.88 Million Tier 1
Slow Pay Income Notes                        CCC- (sf)

Ratings Withdrawn

$5.394 Million Tier 1
Slow Pay Income Notes             NR               CCC- (sf)

$5.394 Million Tier 1
Slow Pay Income Notes             NR               CCC- (sf)

NR--Not rated.

SLOYAN BROTHERS: Liquidator Accuses Family Members of Fraud
The Irish Times reports that Aidan Garcia, liquidator of the
Sloyan Brothers building/development company wound up in 2007,
has alleged members of a family perpetrated a fraud against the
development firm before it went bust by transferring a EUR4
million company property to themselves for no charge.

A tax bill of EUR4.4 million remains unpaid, The Irish Times

According to The Irish Times, Mr. Garcia claims a property at
Abbeyglen, Johnstown Road, Cabinteely, Co Dublin, where 44
apartments were built, was transferred to company shareholders
Joseph, Seamus and Sean Sloyan and Catherine Doherty, and also to
Maura Sloyan and Clare Sloyan-Roche, in March 2006.

Mr. Garcia, of Copsey Murray Chartered Accountants, claims these
individuals never paid the Sloyan Brothers company for the land,
The Irish Times discloses.  He also alleges Allied Irish Banks
knew the company had not been paid for the land when the bank
sanctioned a mortgage for the lands to be repaid once the
apartments were built, The Irish Times relays.

AIB says it lent the money to the Sloyan family members, not to
the company, while the Sloyans contend EUR4 million was repaid to
the company for the Abbeyglen lands, The Irish Times relates.

Mr. Garcia is suing the six family members and AIB seeking the
return to the company of either the Abbeyglen asset or its
current estimated value of EUR8 million, The Irish Times

Mr. Justice Brian McGovern granted an application by Gary
McCarthy SC, for the liquidator, to fast-track the case in the
Commercial Court, The Irish Times relates.  According to the
report, the judge rejected arguments by counsel for the six
Sloyan shareholders and family members of culpable delay in
bringing proceedings.


FIAT CHRYSLER: S&P Assigns 'BB-' CCR; Outlook Stable
Standard & Poor's Ratings Services assigned its 'BB-' long-term
and 'B' short-term corporate credit ratings to Fiat Chrysler
Automobiles N.V. (FCA).  The outlook is stable.

S&P understands that FCA, the group's new parent holding company,
has succeeded to and assumed all of the rights and obligations,
as well as the assets, liabilities, and other legal relationships
of Fiat SpA under a universal title of succession.

FCA has replaced Fiat SpA as issuer and guarantor on debt
previously issued by Fiat SpA, or guaranteed by Fiat SpA and
issued by finance subsidiaries Fiat Finance and Trade Ltd. and
Fiat Finance North America Inc. The 'BB-' issue and '4' recovery
ratings are therefore unchanged.

At the same time, S&P affirmed and withdrew the corporate credit
ratings on Fiat SpA, at the issuer's request.

The existing corporate credit, debt, and recovery ratings on
FCA's wholly-owned subsidiary, Chrysler Group LLC, are
unaffected.  S&P continues to assess Chrysler as "core" to the
group, and expects the rating on Chrysler to move in tandem with
that on FCA.

The ratings on FCA are the same as those on Fiat SpA before the
withdrawal because, in S&P's view, the creation of FCA as the new
parent holding company of the group has no material impact on the
group's operations or credit quality.

S&P understands that FCA has taken over the assets and
liabilities and all legal obligations of Fiat SpA, including its
debt obligations.  Furthermore, S&P sees no change to the group's
financial performance or liquidity as a result of the
transaction. S&P has also made no changes to its analytical
approach in assessing the group.

FCA is listed in New York; we consider that this is intended to
improve the group's access to equity and debt capital markets,
but S&P do not factor any near-term change in financial policy or
dividend policy into S&P's expectations.

The corporate credit ratings on FCA reflect S&P's view of the
group's well-established market positions in passenger cars and
light trucks and its good regional diversity in the North
American Free Trade Agreement (NAFTA) region, Europe, the Middle
East, and Africa (EMEA), and Latin America.  Improving market
conditions in the U.S. also support S&P's assessment.  These
strengths are partly offset by the group's focus on the small to
midsize car and light truck segments.  In the European volume
segment, the group also faces ongoing overcapacity and low
capacity utilization.  As a result of this, losses have
continued, although they are narrowing.  Furthermore, market
conditions in Latin America have deteriorated significantly.  S&P
continues to assess the group's business risk profile as "fair."

The ratings also reflect S&P's view of FCA's significant cash
balances of EUR8.7 billion in its industrial business (excluding
cash held by Chrysler) as at June 30, 2014, which provides a
buffer against a market downturn, and may be used as a source of
financing.  These strengths are partly offset by S&P's forecast
that free operating cash flows (FOCF) will be negative in both
2014 and 2015 at EUR2.0 billion-EUR2.5 billion because of capital
expenditure (capex) in support of the company's expansion plans
of EUR8.0 billion-EUR9.0 billion in each year.  However, should
capex spending this year be lower than S&P's forecast, it would
expect to see more moderately negative FOCF.  S&P continues to
assess the group's financial risk profile as "aggressive."

S&P's base case assumes:

   -- Low-single-digit revenue growth in 2014 and 2015, mainly
      due to higher volumes in NAFTA and Asia-Pacific, offsetting
      weak conditions in Latin America and EMEA.

   -- For 2014, S&P forecasts a reported EBITDA margin (before
      unusual items) of 8.5%-9.0%, with a slight improvement to
      9.0%-9.5% in 2015.

   -- S&P forecasts negative free operating cash flows of EUR2.0
      billion-EUR2.5 billion in both 2014 and 2015, depending in
      part on the level of capex, which S&P expects to be EUR8.0
      billion-EUR9.0 billion in each year, leading to rising
      adjusted debt.

   -- No dividends are expected during 2014 and 2015.

   -- S&P continues to exclude sizable cash balances in Chrysler
      from S&P's leverage and liquidity analysis.

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

   -- During 2014 and 2015, S&P sees the ratio of funds from
      operations (FFO) to debt in the 10%-13% range, and the
      ratio of adjusted debt to EBITDA in the 4.5x-5.0x range.

S&P expects FCA and Chrysler to continue to operate their
treasury and liquidity separately, as FCA's access to Chrysler's
cash flow and retained cash is significantly constrained by terms
and conditions in Chrysler's debt agreements.  As a result, S&P
excludes Chrysler's cash balances from S&P's leverage metrics and
liquidity analysis.  That said, S&P assess FCA's business and
financial risk profiles on a consolidated basis.  S&P also
excludes FCA's financial services activities from S&P's analysis.

Over the next one-to-two years, S&P expects FCA and Chrysler to
operate its treasury and liquidity on a more integrated basis, as
it seeks to remove restrictions on the movement of cash within
the group.  This could allow FCA to gain full access to
Chrysler's cash flow and retained cash.  S&P makes no assumptions
on this integration at this stage, until it sees the company take
concrete steps in this direction.

As at June 30, 2014, Standard & Poor's-adjusted debt was EUR28.8
billion.  S&P makes analytical adjustments to reported gross debt
of EUR32.0 billion, mainly by adding EUR6.9 billion for pensions,
subtracting EUR4.8 billion for captive finance debt, and EUR6.9
billion for surplus cash.  For S&P's surplus cash adjustment, it
deducts EUR10.0 billion, which is held by Chrysler and the
captive finance operations, and apply a 25% haircut to the
remaining EUR9.1 billion.  S&P also adds EUR1.4 billion to debt
for trade receivables sold and operating leases.

The stable outlook on FCA reflects S&P's view that the company
will demonstrate credit metrics which S&P considers to be
consistent with the ratings during 2014 and 2015, namely adjusted
debt to EBITDA of 4.5x-5.0x, and FFO to adjusted debt of 10%-13%.
These ratio levels are at the weaker end of the range for the

Although S&P anticipates that FCA will begin to take measures to
facilitate cash flow movements within the group during the next
one or two years, S&P do not factor this into its current

S&P could lower the long-term rating on weaker-than-expected
operating cash flows or profitability at FCA -- for example, if
results in Latin America were persistently weak -- and FCA also
maintained its high level of capital expenditures, such that
leverage metrics became sustainably weaker than adjusted debt to
EBITDA of above 5.0x and FFO to debt below 12%.

S&P could raise the long-term rating if FCA achieved far stronger
credit metrics on a sustainable basis -- such as debt to EBITDA
below 4.0x and adjusted FFO to debt above 20% -- and reduced its
absolute amount of adjusted debt.  Actions to permanently
strengthen access to Chrysler's cash flows and retained cash
balances could also result in a positive rating action.


KAZKOMMERTSBANK: S&P Puts 'B' ICR on CreditWatch Negative
Standard & Poor's Ratings Services placed its 'B' long-term
issuer credit rating on Kazakhstan-based Kazkommertsbank (KKB) on
CreditWatch with negative implications.  S&P affirmed the short-
term rating at 'C'.

At the same time, S&P lowered its national scale rating on the
bank to 'kzBB' from 'kzBB+' and its rating on its subordinated
debt to 'CCC' from 'CCC+'.  S&P placed both ratings on
CreditWatch with negative implications.

The CreditWatch placement reflects S&P's view that KKB's
capitalization on a consolidated basis has weakened following its
acquisition of 46.5% of Kazakhstan-based BTA Bank and the
subsequent buyback of shares in both banks.  The buyback amount
totaled Kazakhstani tenge (KZT) 54.8 billion (US$304 million), or
11.8% of KKB's capital on a consolidated basis as of June 30,
2014.  S&P believes that the bank's capital will likely remain
weak given the weak earnings generation of both KKB and BTA.

As of June 30, S&P's risk-adjusted capital (RAC) ratio for KKB on
a consolidated basis was 5% before adjustments for
diversification.  S&P projects that this ratio will be in the
range of 4.5%-4.8% over the next 12-24 months, incorporating the
impact of the share buyback program, and assuming no significant
growth of earning assets of the bank and no meaningful relief
materializing for its large problem loan portfolio.

S&P also expects the bank's profitability to remain low in the
coming two years, largely due to the significant amount of
problem assets at BTA and KKB (63% of the total loan book of two
banks combined) and low new business generation.

S&P believes that it will be extremely challenging for KKB to
achieve meaningful problem asset recovery at BTA and KKB without
material government support.  S&P's understanding is that, given
the significant market share of the combined bank in the banking
sector of Kazakhstan (about 40% of total loans in the banking
sector and over 70% of total assets overdue more than 90 days),
the government might be willing to provide some support.  One of
the plans under discussion is the involvement of the state-
controlled Problem Asset Fund (PAF) in recovery of problem assets
of BTA and KKB.  In principle, this may enable KKB and BTA to
clean up their balance sheet, supporting the banks'
capitalization.  When S&P has clarity on this, it will reassess
the potential impact on KKB's capital position.

S&P will resolve the CreditWatch once it has information
regarding the possibility of Kazakhstan government providing
support for the working-out of problem assets at KKB and BTA,
taking into account any other developments that might change
S&P's assessment of the capital of the consolidated bank.  S&P
expects to have more clarity on these issues toward the end of

S&P could lower the ratings if KKB does not receive sufficient
capital relief to cause S&P's forecast RAC ratio to rise above
5%. A downgrade would become more likely if S&P observes a
further deterioration in the quality of the loan portfolio,
weakening the capital position.


ESPIRITO SANTO: Declared Bankrupt by Luxembourg Court
Robert-Jan Bartunek at Reuters reports that a Luxembourg court on
Oct. 10 declared two holding companies of Portugal's Espirito
Santo family bankrupt.

According to Reuters, the court said this meant that the
companies concerned, Espirito Santo Financial Group and its
subsidiary Espirito Santo Financiere, had ceased payments and
that they no longer had access to credit.

As reported by the Troubled Company Reporter-Europe on Oct, 10,
2014, Bloomberg News related that Espirito Santo Financial Group
was forced to file for bankruptcy after a court rejected a
request for creditor protection.  ESFG said in a regulatory
filing on Oct. 9 that the board's decision follows a ruling by a
Luxembourg court on Oct. 3, rejecting the July request, Bloomberg
disclosed.  While Banco Espirito Santo SA, formerly partly owned
by ESFG, received a EUR4.9 billion (US$6.3 billion) rescue by the
Bank of Portugal in August, the court ruled a restructuring of
ESFG was "impossible", Bloomberg noted.

                      About Espirito Santo

Espirito Santo Financial Group SA is the owner of about 20% of
Banco Espirito Santo SA.

Banco Espirito Santo is a private Portuguese bank based in
Lisbon, Portugal.

In August 2014, Banco Espirito Santo was split into "good"
and "bad" banks as part of a EUR4.9 billion rescue of the
distressed Portuguese lender that protects taxpayers and senior
creditors but leaves shareholders and junior bondholders holding
only toxic assets.  A total of EUR4.9 billion in fresh capital is
being injected into this "good bank", which will subsequently be
offered for sale.  It has been renamed "Novo Banco", meaning new
bank, and will include all BES's branches, workers, deposits and
healthy credit portfolios.

Also in August 2014, Espirito Santo Financial Portugal, a unit
fully owned by Espirito Santo Financial Group, filed under
Portuguese corporate insolvency and recovery code.

In August 2014, Espirito Santo Financiere SA, another entity of
troubled Portuguese conglomerate Espirito Santo International SA,
filed for creditor protection in Luxembourg.

In July 2014, Portuguese conglomerate Espirito Santo
International SA filed for creditor protection in a Luxembourg
court, saying it is unable to meet its debt obligations.


WOOD STREET II: Moody's Affirms B1 Rating on EUR9MM Cl. E Notes
Moody's Investors Service announced that it has upgraded the
ratings on the following notes issued by Wood Street CLO II B.V.:

  EUR31.08M Class B Senior Secured Floating Rate Notes, Upgraded
  to Aaa (sf); previously on Aug 28, 2013 Upgraded to Aa2 (sf)

  EUR25.84M Class C Senior Secured Deferrable Floating Rate
  Notes, Upgraded to A1 (sf); previously on Aug 28, 2013 Affirmed
  Baa1 (sf)

Moody's also affirmed the ratings on the following notes issued
by Wood Street CLO II B.V.:

  EUR228.12M (currently EUR67.4M outstanding) Class A-1 Senior
  Secured Floating Rate Notes, Affirmed Aaa (sf); previously on
  Aug 28, 2013 Affirmed Aaa (sf)

  EUR40M (currently EUR11.8M outstanding) Class A-2 Senior
  Secured Floating Rate Notes, Affirmed Aaa (sf); previously on
  Aug 28, 2013 Affirmed Aaa (sf)

  EUR25.26M Class D Senior Secured Deferrable Floating Rate
  Notes, Affirmed Ba2 (sf); previously on Aug 28, 2013 Affirmed
  Ba2 (sf)

  EUR9.135M Class E Senior Secured Deferrable Floating Rate
  Notes, Affirmed B1 (sf); previously on Aug 28, 2013 Affirmed B1

  EUR4.5M (current rated balance outstanding is EUR 3.1M), Class
  Z Combination Notes, Affirmed Baa3 (sf); previously on Aug 28,
  2013 Affirmed Baa3 (sf)

Wood Street CLO II B.V., issued in March 2006 and managed by
Alcentra Limited, is a Collateralised Loan Obligation ("CLO")
backed by a portfolio of mostly high yield European loans. The
transaction passed its reinvestment period in March 2011.

Ratings Rationale

According to Moody's, the upgrade of the notes is primarily a
result of continued deleveraging of the senior notes and
subsequent increase in the overcollateralization (the "OC
ratios"). Moody's notes that as of the September 2014 payment
date report, the Class A-1 and class A-2 notes have amortized by
approximately EUR 189 million (or 70.5% of its original balance).
As a result of this deleveraging, the OC ratios of the senior
notes have significantly increased. As per the latest trustee
report dated September 2014, the Class A/B and Class C OC ratios
are 149.43%% and 125.87%, respectively, versus March 2014 levels
of 138.44% and 121.15%. Moody's notes the actual OC ratios are
likely to be higher than those reported because the levels
reported per the September 2014 trustee report do not reflect the
principal payments that occurred in September 2014.

The rating of the Combination Notes address the repayment of the
Rated Balance on or before the legal final maturity. For Class Z,
the 'Rated Balance' is equal at any time to the principal amount
of the Combination Note on the Issue Date minus the aggregate of
all payments made from the Issue Date to such date, either
through interest or principal payments. The Rated Balance may not
necessarily correspond to the outstanding notional amount
reported by the trustee.

The key model inputs Moody's uses in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. In its base
case, Moody's analyzed the underlying collateral pool as having a
performing par and principal proceeds balance of approximately
EUR173.8 million, defaulted par of EUR15.5 million, a weighted
average default probability of 22.22%% (consistent with a WARF of
3199 with a weighted average life of 4.2 years), a weighted
average recovery rate upon default of 48.73% for a Aaa liability
target rating, a diversity score of 16 and a weighted average
spread of 4.26%.

In its base case, Moody's addresses the exposure to obligors
domiciled in countries with local currency country risk bond
ceilings (LCCs) of A1 or lower. Given that the portfolio has
exposures to 3.5% of obligors in Italy, whose LCC is A2 and 12.8%
in Spain, whose LCC is A1, Moody's ran the model with different
par amounts depending on the target rating of each class of
notes, in accordance with Section 4.2.11 and Appendix 14 of the
methodology. The portfolio haircuts are a function of the
exposure to peripheral countries and the target ratings of the
rated notes, and amount to 2.51% for the Class A-1, Class A-2 and
class B notes, 0.63% for the Class C notes and 0% for the Class D
and Class E notes.

The default probability derives from the credit quality of the
collateral pool and Moody's expectation of the remaining life of
the collateral pool. The estimated average recovery rate on
future defaults is based primarily on the seniority of the assets
in the collateral pool. For a Aaa liability target rating,
Moody's assumed that 96.9% of the portfolio exposed to senior
secured corporate assets would recover 50% upon default, while
the remainder non first-lien loan corporate assets would recover
15%. In each case, historical and market performance and a
collateral manager's latitude to trade collateral are also
relevant factors. Moody's incorporates these default and recovery
characteristics of the collateral pool into its cash flow model
analysis, subjecting them to stresses as a function of the target
rating of each CLO liability it is analyzing.

Methodology Underlying the Rating Action:

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

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

In addition to the base-case analysis, Moody's conducted
sensitivity analyses on the key parameters for the rated notes,
for which it assumed a lower credit quality in the portfolio to
address refinancing risk. Loans to European corporates rated B3
or lower and maturing between 2014 and 2015 make up approximately
6.97% of the portfolio, which could make refinancing difficult.
Moody's ran a model in which it raised the base case WARF to 3617
by forcing ratings on 50% of the refinancing exposures to Ca; the
model generated outputs that were within one notch of the base-
case results.

This transaction is subject to a high level of macroeconomic
uncertainty, which could negatively affect the ratings on the
note, in light of 1) uncertainty about credit conditions in the
general economy and 2) the concentration of lowly- rated debt
maturing between 2014 and 2015, which may create challenges for
issuers to refinance. CLO notes' performance may also be impacted
either positively or negatively by 1) the manager's investment
strategy and behavior and 2) divergence in the legal
interpretation of CDO documentation by different transactional
parties due to because of embedded ambiguities.

Additional uncertainty about performance is due to the following:

1) Portfolio amortization: The main source of uncertainty in this
transaction is the pace of amortization of the underlying
portfolio, which can vary significantly depending on market
conditions and have a significant impact on the notes' ratings.
Amortization could accelerate as a consequence of high loan
prepayment levels or collateral sales by the collateral manager
or be delayed by an increase in loan amend-and-extend
restructurings. Fast amortization would usually benefit the
ratings of the notes beginning with the notes having the highest
prepayment priority.

2) Recovery of defaulted assets: Market value fluctuations in
trustee-reported defaulted assets and those Moody's assumes have
defaulted can result in volatility in the deal's over-
collateralization levels. Further, the timing of recoveries and
the manager's decision whether to work out or sell defaulted
assets can also result in additional uncertainty. Moody's
analyzed defaulted recoveries assuming the lower of the market
price or the recovery rate to account for potential volatility in
market prices. Recoveries higher than Moody's expectations would
have a positive impact on the notes' ratings.

3) Around 14% of the collateral pool consists of debt obligations
whose credit quality Moody's has been assessed by using credit

4) Long-dated assets: Moody's notes that the underlying portfolio
includes investments in securities that mature after the maturity
date of the notes. As of September, reference securities that
mature after the maturity date of the notes currently make up
approximately 6.5% of the underlying reference portfolio. These
investments potentially expose the notes to market risk in the
event of liquidation at the time of the notes' maturity.

In addition to the quantitative factors that Moody's explicitly
modelled, qualitative factors are part of the rating committee's
considerations. These qualitative factors include the structural
protections in the transaction, its recent performance given the
market environment, the legal environment, specific documentation
features, the collateral manager's track record and the potential
for selection bias in the portfolio. All information available to
rating committees, including macroeconomic forecasts, input from
other Moody's analytical groups, market factors, and judgments
regarding the nature and severity of credit stress on the
transactions, can influence the final rating decision.

* NETHERLANDS: Company Bankruptcies Up in September 2014
Statistics Netherlands reports that 524 businesses and
institutions (excluding one-man businesses) were declared
bankrupt in September 2014, 59 more than in the preceding month.

According to Statistics Netherlands, the increase was caused by
the fact that September had one court session day more than
August.  Compared with July, which had the same number of court
session days as September, the number of bankruptcies was
considerably lower, Statistics Netherlands notes.

The trade sector (wholesale and retail) had the highest number of
bankruptcies (115), Statistics Netherlands discloses.  The number
of bankruptcies was also relatively high in the financial
services sector (83), Statistics Netherlands says.


BAYERNGAS NORGE: S&P Assigns 'B+' CCR; Outlook Negative
Standard & Poor's Ratings Services assigned its 'B+' long-term
corporate credit rating to Norway-based oil and gas exploration
and production company Bayerngas Norge AS.  The outlook is

The rating on Bayerngas Norge reflects S&P's view of its business
risk profile as "vulnerable" and its financial risk profile as
"highly leveraged."

S&P's assessment of Bayerngas Norge's business risk profile as
vulnerable takes into account the company's activity in a
cyclical, competitive, and capital-intensive industry,
characterized by large investments for exploration and
development.  Furthermore, Bayerngas Norge's business risk
profile reflects the small scale of its production and its modest
reserves base by global standards.  Bayerngas Norge produced 13.6
thousands of barrels of oil equivalent per day (Kboepd) in 2013.
As of Jan. 1, 2014, the company had reserves of 111 million
barrels of oil equivalent (boe). Bayerngas Norg's production is
concentrated in a few producing fields, all of which are in
Norway except for Clipper South and Babbage, both in the U.K.,
and the company is not presently the operator of any of its
fields.  In addition, Bayerngas Norge's capital expenditures
(capex) are sizable (standing at Norwegian krone [NOK] 3.2
billion (about US$520 million) in 2013) and will remain so in the
coming years, owing to its aggressive growth strategy.

Offsetting these risks, in S&P's view, are ongoing shareholder
support, the likelihood of further production growth in the long
term, mainly thanks to Bayerngas Norge's potential to grow its
resource base, and its major presence in Norway.  The company has
an established regulatory framework and stable taxation regime in
its domestic market, even though upstream taxation remains high
at 78% and it could be subject to change.

Despite a track record of lower-than-anticipated production
(owing for instance to production delays and operational
disruptions at the Trym oil and gas field in 2013), S&P
anticipates that the company will increase its production in 2014
to about 17 Kboepd and benefit from supportive oil and gas prices
in 2014-2016.  S&P also forecasts that oil will account for one-
half of Bayerngas Norge's total production, although it might
decline to about 40% in 2015-2016 because of increasing gas
production at the Trym and Clipper South fields while the
company's oil fields deplete.

S&P notes that Bayerngas Norge is exposed to commodity prices and
currency risk.  This is because it does not have any hedging
instruments in place and there is a currency mismatch between its
U.S. dollar- and NOK-denominated cash flows and euro-denominated

Bayerngas Norge's highly leveraged financial risk profile mainly
reflects the company's weak credit metrics and that its strategy
to develop its assets is a constraint.  S&P treats the
shareholder loans as debt, mostly due to S&P's understanding that
Bayerngas Norge's production does not meet Stadtwerke Munchen
asbeteiligungs GmbH & Co. KG (SWM)'s expectations, although S&P
notes that a portion has been converted to equity.  The
development entails substantial capex, continuing material
negative free cash flow, high debt, additional financing needs
over the next few months, and, critically, dependence on the
shareholders' funding support.

S&P foresees that Standard & Poor's-adjusted funds from
operations (FFO) to debt will continue to be less than 10% in
2014-2016.  This is predominantly due to Bayerngas Norge's
substantial amount of new debt to develop its assets and despite
S&P's assumption of supportive energy prices and a relatively
sound adjusted EBITDA margin at about 60%.  In S&P's
calculations, it assumes a 78% tax rate (comprising "special tax"
of 51%, plus "ordinary tax" of 27%) on Bayerngas Norge's upstream
oil and gas activities in Norway, as well as a reduction of up to
30% against the tax base for capex on new fields approved before
May 5, 2013 (the tax rate is 22% for projects approved after this
date).  S&P also takes into consideration a tax refund in
relation to 78% of Bayerngas Norge's exploration costs in the
prior year.

S&P forecasts that Bayerngas Norge's free operating cash flow
(FOCF) will remain negative after capital investments in the next
couple of years.  In particular, S&P anticipates that capex will
be about NOK4.5 billion in 2014 and NOK3.5 billion in 2015.  S&P
do not factor any acquisition into its base case because it
thinks that the company will focus on developing existing assets
rather than growing through acquisitions.

"We expect debt, which consists only of shareholder loans, to
remain high.  Moreover, we project that Bayerngas Norge will need
additional funding from its shareholders to execute its capex
plan, and we consider that there is a risk that Bayerngas Norge
may not secure this funding in the near term.  We understand that
Bayerngas Norge's shareholders' existing loans, totaling EUR1.5
billion, have been fully drawn since September 2014.  A NOK1.3
billion (about EUR160 million) bridge loan facility was put in
place in August 2014 to provide short-term funding, but it
matures at the end of October 2014.  S&P anticipates that the
shareholders will very likely increase the loan funding limit to
approximately EUR1.85 billion in October while providing further
additional equity of about EUR150 million.  However, these plans
are not yet set and remain uncertain.  S&P anticipates that
Bayerngas Norge's ability to finance its capex program and meet
its financial obligations will be impaired in the near term if it
does not receive further funding above the EUR1.5 billion limit.

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

   -- Production will increase in 2014, including average
      production of between 15 Kboepd and 20 Kboepd, with 2015
      production generally stable compared with 2014's.

   -- A Brent oil price of $105 per barrel (bbl) for the rest of
      2014 and in 2015, and $100/bbl in 2016.

   -- A gas price of close to NOK2.0 per standard meter cubed
      (Sm3) (about NOK0.56 per Btu) in 2013 and between NOK2.0
      per Sm3 and NOK2.5 per Sm3 in 2015.

   -- Annual revenues of about NOK2.5 billion in 2014 and 2015.

   -- A tax refund related to 78% of exploration costs incurred
      in previous years.

   -- Capex of about NOK4.5 billion in 2014 and NOK3.5 billion in

Based on these assumptions, S&P arrives at these credit measures
for Bayerngas Norge:

   -- Adjusted debt to EBITDA at between 6.5x and 7.5x in 2014,
      and between 7x and 10x in 2015.

   -- Adjusted FFO to debt at 5%-10% in 2014 and less than 10% in

   -- Revenues of roughly NOK2.5 billion per year in 2014 and

   -- EBITDA margin of about 60% in 2014 and 2015.

The rating on Bayerngas Norge includes three notches of uplift
from S&P's 'ccc+' stand-alone credit profile (SACP) assessment
for the company to reflect likely support from the shareholders
in the event of financial distress, based on S&P's view that
Bayerngas Norge is a strategically important subsidiary to SWM.

The uplift is mainly based on SWM's ownership of about 90% of
Bayerngas Norge (directly and through subsidiary Bayerngas GmbH),
its full consolidation of Bayerngas Norge, and Bayerngas Norge's
importance to SWM's long-term strategy.  S&P considers that
Bayerngas Norge could increase its production so that SWM in turn
has higher gas production and can diversify its energy sources
within the next several years, which is increasingly relevant in
the context of increased political tensions in Russia.  Moreover,
S&P thinks that Bayerngas Norge is unlikely to be sold, given the
high capital that the shareholders have already invested in the

However, S&P's view of the strength of the relationship between
Bayerngas Norge and SWM under S&P's parent-subsidiary criteria is
weakened by two considerations in particular:

   -- Ongoing support is not unlimited.  S&P understands that the
      whole EUR1.5 billion limit on support is already committed.
      Although S&P assumes that the shareholders will increase
      the existing limit, Bayerngas Norge effectively must become
      self-financing if further funding is not provided.

   -- SWM does not currently benefit to a large extent from
      Bayerngas Norge's gas production, nor is it in need of this
      gas.  The benefit of Bayerngas Norge providing for SWM's
      gas needs is therefore low, whereas Bayerngas Norge's
      funding needs remain sizable.  Potentially, the likelihood
      of support in the event of financial distress at Bayerngas
      Norge could increase if Bayerngas Norge raised production
      in the future.

The negative outlook reflects a one-in-three possibility that S&P
could downgrade Bayerngas Norge if its shareholders do not
increase their funding limit or inject further equity in the next
few months.  S&P projects that daily production will be between
15,000 Kboepd and 20,000 Kboepd in 2014 and 2015, assuming that
the shareholders continue to provide ongoing support for
Bayerngas Norge's investment strategy, which is not yet

S&P could downgrade Bayerngas Norge if we see indications of
weaker support or negative intervention from the shareholders.
More specifically, S&P could revise down its assessment of
exceptional support from the group, leading potentially to a
multiple-notch downgrade if the shareholders fail to increase
their funding limit or inject further equity in the near term or
if S&P assess Bayerngas Norge's funding strategy as
unsustainable. Downward rating pressure could also arise if
production decreased or costs increased markedly compared with
S&P's base case. Deterioration in liquidity could also lead to
rating downside.

S&P could revise the outlook to stable if shareholders increase
their total investment limit or inject further equity in the near
term for a total of at least EUR500 million, which S&P would
consider as a sustainable funding strategy over the next couple
of years.  S&P would also factor in no deterioration in
liquidity, and S&P's view that Bayerngas Norge could achieve its
production plan, including daily production of 15,000-20,000
Kboepd in 2014 and 2015.


BANCO ESPIRITO: S&P Withdraws 'R/R' Counterparty Credit Ratings
Standard & Poor's Ratings Services said that it has lowered its
long- and short-term counterparty credit ratings on Portugal-
based Banco Espirito Santo S.A. (BES) to 'R/R' from 'CC/C'.

S&P also lowered its issue credit rating on BES Finance's EUR600
million variable-rate perpetual callable non-cumulative
preference shares series A, guaranteed by BES, to 'D' from 'C'.

S&P also affirmed all its remaining issue credit ratings on BES'
subordinated debt at 'C'.

In addition, S&P also removed the ratings from CreditWatch, where
they were placed with negative implications on July 11, 2014 and
Aug. 11, 2014.

S&P has subsequently withdrawn all its issuer and issue credit
ratings on BES.

The rating action on the counterparty credit rating on BES
reflects S&P's understanding that BES, owing to its financial
condition, is under regulatory supervision where the Bank of
Portugal has the power to authorize payment of some obligations
and not others.

As a result of the resolution plan implemented by the Bank of
Portugal, BES was required to retain certain senior obligations,
including customer deposits owed to certain individuals or
entities affiliated with BES, as specified by the Bank of
Portugal in its resolution plan.

The payment at contractual maturity and reimbursement of the
above-mentioned obligations is conditioned by the one-year
renewable waiver that the Bank of Portugal has granted BES, as
part of which S&P understands BES can only make payments upon
Bank of Portugal's authorization.  The waiver dispenses BES from
compliance with the prudential rules and the timely fulfillment
of previously contracted obligations -- including contractually
senior financial obligations -- except where such fulfillment is
deemed indispensable for the preservation and valuation of BES'
assets, in which case the Bank of Portugal may authorize, under a
BES proposal, the operations required for the purpose.

S&P has therefore lowered its long-term counterparty credit
rating on BES to 'R' from 'CC'.  According to S&P's rating
definitions criteria, it assigns a counterparty credit rating of
'R' if the issuer is under regulatory supervision owing to its
financial condition, during the pendency of which the regulator
may have the power to favor one class of obligations over others
or pay some obligations and not others.

BES Finance has not declared the coupon on its EUR600 million
variable-rate perpetual callable non-cumulative preference shares
series A, which are guaranteed by BES.  As a result, neither BES
Finance nor BES, acting as guarantor, have paid the coupon on
these preference shares due, according to contractual terms, on
Oct. 2, 2014.  Therefore, S&P has lowered its issue credit rating
on this instrument to 'D' from 'C'.

S&P is affirming all its remaining issue credit ratings on BES'
subordinated debt at 'C'.

BES has stated in a press release published on Sept. 12, 2014,
that it will not make payments of coupons and reimbursements at
maturity in connection with at least certain of its debt
instruments whilst the Bank of Portugal's waiver of fulfillment
of obligations is in force.  In this context and given the above-
mentioned resolution process, S&P expects all subordinated debt
instruments to default, according to its ratings definitions of a
'D' rating, on the following coupon payment dates according to
contractual terms:

   -- Nov. 8, 2014 -- BES Finance's EUR500 million
      variable-/fixed- rate perpetual junior subordinated hybrid
      series 18 (ISIN: XS0147275829).

   -- Nov. 27, 2014 -- BES' EUR50 million floating-rate/step-up
      callable subordinated medium-term notes series 9 due
      May 27, 2018 (ISIN: PTBERYOM0012).

   -- Nov. 28, 2014 -- BES' EUR750 million 7.125% subordinated
      callable medium-term notes series 34 due Dec. 28, 2023
      (ISIN: PTBEQJOM0012).

   -- March 16, 2015 -- BES Finance's EUR500 million variable-
      rate fixed/step-up/floating junior subordinated callable
      perpetual hybrid (ISIN: XS0207754754).

Following the rating actions, S&P has subsequently withdrawn all
issuer and issue credit ratings on BES as it considers that S&P
no longer has sufficient information of satisfactory quality to
perform surveillance of the ratings going forward.  The waiver,
including the necessary authorization by Bank of Portugal to make
payments for as long as the above-mentioned waiver is in force
could result, in S&P's view, in the waiver acting as a de facto
quasi-moratorium on BES' senior financial debt, including
deposits.  However, S&P currently do not have reliable
information to conclude on whether a default according to its
ratings definition criteria has occurred.  S&P understands that
the institution is under a wind-down process that is most likely,
in S&P's view, to ultimately end in its liquidation -- a
situation which would be consistent with all of S&P's issuer and
issue credit ratings either being revised to, or remaining at,


KAMAZ OJSC: Moody's Lowers Corporate Family Rating to 'Ba2'
Moody's Investors Services has downgraded to Ba2 from Ba1 the
corporate family rating (CFR) and to Ba2-PD from Ba1-PD the
probability of default rating (PDR) of OJSC KAMAZ (KAMAZ). The
outlook is negative.

Rating Rationale

As KAMAZ is 49.9% owned by the Russian government through State
Corporation Rosstechnologii (RosTec, unrated) Moody's determines
KAMAZ's CFR in accordance with its government related issuer
(GRI) methodology, which consists of the following inputs: (1) a
baseline credit assessment (BCA) of b2, which measures the
company's underlying fundamental credit strength, excluding
government support; (2) the Baa1 local-currency rating of the
Russian government with a negative outlook; (3) strong
probability of the provision of state support to the company in
the event of financial distress; and (4) high default dependence
between the company and the government. The downgrade was
triggered by Moody's decision to lower KAMAZ's BCA to b2 from b1.
The other rating inputs of support and dependence are not

The downgrade of the BCA to b2 is triggered by Moody's
expectation that KAMAZ's financial metrics will weaken in 2014
and 2015. In particular, Moody's expects that KAMAZ's adjusted
EBITA margin will reduce below 4% and KAMAZ's leverage (measured
by adjusted debt/EBITDA) grows above 4x. This weakening of
metrics is driven by the slowdown of the Russian truck market,
which is negatively affected by the weakening domestic economy
(Moody's forecasts anemic growth of 0.5% of Russia's GDP in 2014
and contraction of GDP by 1% in 2015). In the first half 2014,
the domestic truck market contracted by around 20%, which was
reflected in the reduction of KAMAZ's revenue and adjusted EBITDA
in this period by 10% and 90% respectively in comparison with
first half-2013. As of June 2014, KAMAZ's adjusted EBITA margin
dropped to 0.6% (FY2013: 4.7%), and adjusted leverage (measured
as debt/EBITDA) increased to 6.6x (FY: 2.4x). Moody's also
forecasts that government efforts to support the market (such as
the recently introduced "utilization program") will not be
sufficient to fully offset negative trends in the truck market
but should result in some recovery of the demand.

In addition to market weakness, KAMAZ's profitability will be
also negatively affected by around 20% devaluation of the Russian
rouble since the beginning of 2014, which will add to cost
increases as certain truck components are priced in hard
currency. Moody's also forecasts that KAMAZ's leverage will be
affected by growing debt in 2015 to finance KAMAZ's capex
program, a program aimed at supporting the company's strategy.
However, Moody's notes that this new debt will be covered by the
RUB35 billion (around US$700 million) guarantee which has been
recently approved by the Russian state in favor of KAMAZ, which
also supports the view that Kamaz should continue to benefit from
strong state support.

KAMAZ's BCA also reflects its (1) geographical concentration of
sales in Russia, which exposes KAMAZ to the weaknesses and
volatility of this particular market; (2) concentration on the
production of trucks and spare truck parts (around 85% of revenue
in 2013) exposing the company to cycles of the truck market; and
(3) modest size in an international context in comparison to its
global peers such as Daimler AG (A3 stable) or MAN SE (A3
positive), which may constrain KAMAZ's ability to diversify
globally and compete with larger global peers, or to perform
sufficient R&D.

More positively, the BCA factors in (1) KAMAZ's strong position
in the Russian truck market, with its share in the domestic
market exceeding 40% and likely to benefit from lower foreign
competition; (2) the company's close co-operation through joint
ventures and partnerships with leading global auto parts and
automotive producers such as Cummins Inc. (A3 stable), ZF
Friedrichshafen AG (unrated) and KAMAZ's minority shareholder
Daimler; (3) the expectation that the truck market should benefit
from the "utilization program" put in place by the government;
and (4) the company's focus on efficiency improvements and cost

Rationale for the Negative Outlook

The negative outlook for the ratings reflects Moody's concerns
that challenges for the Russian economy as well as in Russian
truck market may be deeper and longer than the rating agency
currently anticipates, possibly resulting in KAMAZ's (1)
continued erosion in sales and/or profitability; (2) increase in
leverage above current Moody's expectations, which anticipates
leverage not sustainably exceeding 5x; and (3) deterioration of
the liquidity position.

What Could Change the Rating - Up/Down

Given the current negative trends in the domestic track market
and negative outlook for the rating Moody's does not envisage
positive pressure on KAMAZ's ratings in the next 12-18 months.
Nevertheless, Moody's would consider an upgrade if (1) conditions
in the domestic trucks market recover and start strengthening;
and (2) the company were to demonstrate a track record of solid
profitability, with EBITA margin of above 4% on a sustainable
basis, financial metrics within its stated financial policy and
leverage (measured as adjusted debt/EBITDA) below 3.5x and a
solid liquidity profile on a sustainable basis. If the Russian
market recovers from a poor first half-2014 and KAMAZ's EBITA
margin stabilizes above 3%, the rating outlook could be

Downward pressure could be exerted on KAMAZ's rating on evidence
of (1) the market environment becoming more challenging than
currently anticipated in terms of volumes or prices, resulting in
a material deterioration in profitability (measured as adjusted
EBITA margin) below 2.5% on a sustained basis, and in KAMAZ's
leverage (measured as adjusted debt/EBITDA) above 5x on a
sustained basis; and (2) material debt-financed expansion
projects and/or acquisitions, or shareholder initiatives, which
cause the company to materially deviate from its stated financial
policies or abovementioned financial thresholds; or (3) liquidity
deterioration. A revision of Moody's macroeconomic forecasts
might also negatively affect the rating or the outlook. A one-
notch downgrade or upgrade of the sovereign rating would not in
itself trigger a rating action on KAMAZ's rating, assuming all
the other GRI inputs remain unchanged.

Principal Methodology

The principal methodology used in this rating was the Global
Manufacturing Companies, published in July 2014. Other
methodologies used include the Government-Related Issuers
Methodology Update published in July 2010.

OJSC Kamaz (KAMAZ) is a leading player in the Russia market
producing a wide range of commercial vehicles, including trucks,
trailers, tow tractors and buses. The company also manufactures
engines, power units, and various tools and auto parts. Russia's
100% state-owned investment holding State Corporation
Rosstechnologii (RosTec, not rated) holds a 49.9% stake in KAMAZ.
Another key shareholder is Daimler AG (which owns 15% of KAMAZ's
share capital). In 2013, KAMAZ generated revenue of RUB114.3
billion (around US$3.5 billion) and adjusted EBIT of RUB6.7
billion (around US$200 million).

MECHEL OAO: Losses Down in 1H14; Debt Restructuring Talks Ongoing
Platts reports that Mechel remains in talks with creditors to
finalize a debt restructuring to help it cope with low commodity
pricing as it narrowed losses in the first-half of 2014 by 69%
year on year to US$648 million.

"We continue to actively negotiate it with banks and count on
promptly reaching agreements," Platts quotes Mechel CEO Oleg
Korzhov as saying on its debt restructuring in an earnings
statement on Oct. 14.

The group suffered a 26% drop in first-half revenue to US$3.4
billion on lower met coal and iron ore prices, decreased third-
party iron ore concentrate sales, and a halt at the US Bluestone
met coal mining operation, Platts relates.

On June 30, Mechel's net debt, excluding financial lease
obligations, was US$8.65 billion after nearly US$300 million was
paid off in the first half, Platts discloses.

Foreseeing the slump in metallurgical coal prices would hit its
financial results and affect the ability to service debt, early
this year Mechel began negotiations on changing its debt terms,
Platts relays.

Mechel, as cited by Platts, said that the move was also needed to
enable stability for the company's operations.

"While continuing to service our debt, we have had a significant
decrease in our working capital, which began to have its negative
impact on our operations," Platts quotes Mr. Korzhov as saying.

He said that currently, creditors have been offered a
restructuring option that would enable the company "even now to
service our obligations, ensuring debt repayment in the future,"
Platts notes.

Mechel said that over the period, the company's trade working
capital went down by 96% to US$40 million, Platts discloses.

Mechel OAO is a Russian steel and coking coal producer.

As reported by the Troubled Company Reporter-Europe on October 3,
2014, Moody's Interfax Rating Agency downgraded Mechel OAO's
national scale rating (NSR) to from The outlook
on the rating is negative. Moody's Interfax is majority-owned by
Moody's Investors Service (MIS).  Moody's Interfax's downgrade of
the NSR of Mechel follows MIS's downgrade of the company's
corporate family rating to Caa3 with a negative outlook.


BANKIA SA: High Court Investigates Credit Card Scandal
Guy Hedgecoe at The Irish Times reports that revelations related
to how 82 executives and board members of a Spanish bank were
given credit cards to spend freely on personal items and without
apparent controls have dealt a blow to efforts to restore the
image of the country' financial sector.

According to The Irish Times, the high court is investigating the
credit cards, which were given out by Caja Madrid savings bank
and Bankia, the lender that absorbed it in 2010, and they were
not registered in official accounts.  The cards were in use
between 2003 and 2012, when new leadership took over at Bankia,
and an estimated EUR15.5 million was charged to them, The Irish
Times discloses.

A string of public figures have been forced to resign from their
posts after it emerged earlier this month that they had used the
cards, The Irish Times relates.  Many were politicians from the
governing Popular Party and the main opposition Socialist Party,
or senior union figures, The Irish Times notes.

According to information released by the investigation, the
biggest spender was Caja Madrid's former chief financial officer,
Ildefonso Sanchez, who charged EUR574,000 to his credit card, The
Irish Times states.

Miguel Blesa, the former chairman of Caja Madrid, spent
EUR437,000, about EUR82,000 of which he withdrew at cash
machines, The Irish Times discloses.

The government part-nationalized Bankia in 2012 after the
lender's mismanagement during the country's property bubble
became apparent, The Irish Times recounts.  That same year, it
became the biggest beneficiary of a EUR40 billion EU bailout for
the Spanish banking sector, The Irish Times relays.  With the
economy finally recovering from a double-dip recession, the
government has been trying to restore Spaniards' faith in their
financial system, according to The Irish Times.

Bankia SA is a Spanish banking conglomerate that was formed in
December 2010, consolidating the operations of seven regional
savings banks.  As of 2012, Bankia is the fourth largest bank of
Spain with 12 million customers.

FUNDACION BANCARIA: S&P Affirms 'BB/B' Counterparty Ratings
Standard & Poor's Ratings Services said that it affirmed its
unsolicited 'BB/B' long- and short-term counterparty credit
ratings on Spain-based Fundacion Bancaria Caja de Ahorros y
Pensiones de Barcelona (la Caixa), as well as S&P's 'B' issue
ratings on its nondeferrable subordinated debt.  S&P also removed
the ratings from CreditWatch negative, where it placed them on
April 14, 2014.

S&P then withdrew all unsolicited issuer credit ratings on la
Caixa and its issue credit ratings owing to reduced market
interest.  At the time of withdrawal, the outlook was positive.

The affirmation reflects S&P's belief that, despite la Caixa's
change in legal status and its ongoing corporate reorganization,
it will continue to be regulated and supervised by banking
authorities for the foreseeable future.  S&P understands that
authorities will maintain full prudential regulatory powers over
the whole la Caixa group.

On May 22, 2014, la Caixa transformed its legal form from a
savings bank to a banking foundation and announced that it would
undertake a group restructuring, which is currently ongoing.
While some specific developments of Spanish banking foundations'
regulation have not yet been approved by the government and the
supervisory authorities, S&P understands that, for the
foreseeable future, la Caixa group will continue to be supervised
and regulated by banking regulators at a consolidated level and
that they will also retain full prudential regulatory powers over
la Caixa.  S&P's views are supported, among other things, by the
fact that the ongoing asset quality review and stress test
exercises from European authorities are being conducted at a
consolidated group level and that regulatory capital is measured
on a consolidated basis.

S&P understands that the meaningful reduction of the amount of la
Caixa's rated debt following the early redemption of EUR2.5
billion of nondeferrable subordinated debt significantly reduces
market interest in S&P's issue and issuer ratings.  S&P has
therefore withdrawn its counterparty credit ratings on la Caixa,
as well as its 'B' issue ratings on la Caixa's EUR1.5 billion
nondeferrable subordinated debt -- which accounts for all
remaining rated debt.  As part of its corporate reorganization,
S&P notes that la Caixa will transfer its EUR1.5 billion debt to
its controlled subsidiary, Criteria (not rated).

In accordance with S&P's methodologies, at the time of the
withdrawal it analyzed Caixabank and its controlling holding
company, la Caixa, on a consolidated basis, using la Caixa's
consolidated financial information.  S&P considers Caixabank to
be the group's core operating entity.  S&P rated la Caixa two
notches below Caixabank to reflect the structural subordination
of la Caixa's creditors to those of Caixabank.

At the time of withdrawal, the outlook was positive, mirroring
the positive outlook on S&P's long-term rating on Caixabank.

U N I T E D   K I N G D O M

ROYAL BANK OF SCOTLAND: Deed Poll No Impact on Moody's D+ BFSR
Moody's Investors Service has announced that the execution of a
deed poll by The Royal Bank of Scotland plc (RBS; deposits Baa1
negative, standalone bank financial strength rating D+/ adjusted
baseline credit assessment ba1) relating to a swap agreement
between BA Covered Bond Issuer and RBS would not, in and of
itself and as of this time, result in the downgrade or withdrawal
of the current rating of the bonds issued by the Issuer.

On March 13, 2014, Moody's downgraded the long-term senior
unsecured rating of RBS to Baa1 from A3, on watch for downgrade.
This resulted in a "ratings trigger event" under the Swap
Agreement, which would give rise to an additional termination
event, unless RBS took suitable remedial action within 30 days.
The Swap Agreement contemplated several alternative remedial
actions, which are in each case, broadly: (a) transferring the
swap to an appropriately higher-rated third party; (b) obtaining
a guarantee by an appropriately rated guarantor; and (c) taking
some other action such that the downgrade of RBS does not have a
negative rating impact on the Bonds. RBS proceeded to take
remedial action under (c) by executing a deed of undertaking.

Under the Previous Deed, RBS proposed to take one of the remedial
actions (a) to (c) above within 160 business days from the date
of the Downgrade. Failure to take one of these actions would
constitute an additional termination event under the swap
agreement. Therefore, the Previous Deed effectively extended the
Cure Period from 30 days to 160 business days.

RBS has elected to take such other action, pursuant to remedial
action (C) in the Swap Agreement (as outlined above), by
executing the New Deed. Pursuant to the New Deed, as long as RBS
or a Relevant Entity (any entity which has become co-obligor or
guarantor in respect of all of RBS' present and future
obligations under the Swap Agreement) does not have the newly
introduced Qualifying Transfer Trigger Rating of Baa1, RBS will
undertake in favor of the Issuer to (a) transfer the Swap
Agreement to a third party, (b) obtain a guarantee, or (c) take
some other action that Moody's has confirmed will not negatively
affect the ratings of the notes.

Moody's has determined that RBS' execution of the New Deed, in
and of itself and at this time, will not result in the downgrade
or withdrawal of the rating currently assigned to the bonds that
BA Covered Bond issues. However, Moody's opinion addresses only
the credit impact associated with the New Deed, and Moody's is
not expressing any opinion as to whether the New Deed has, or
could have, other non-credit-related effects that may have a
detrimental impact on the interests of covered bondholders and/or

Moody's ratings address the expected loss posed to investors by
the legal final maturity of the Bonds. Moody's ratings address
only the credit risks associated with the transaction. Other
risks have not been addressed, but may have a significant effect
on yield to investors.

The principal methodology used in this rating was "Moody's
Approach to Rating Covered Bonds", published in March 2014.
Moody's will continue monitoring the ratings. Any change in the
ratings will be publicly disseminated by Moody's through
appropriate media.

* U.S. & UK Meet to Discuss Key Components for G-SIB Resolution
The Bank of England and Federal Deposit Insurance Corporation
disclosed that the heads of the Treasuries and leading financial
regulatory bodies in the United States and United Kingdom on
Oct. 13 participated in an exercise designed to further the
understanding, communication, and cooperation between U.S. and
U.K. authorities in the event of the failure and resolution of a
global systemically important bank, or G-SIB.

The event was hosted by Federal Deposit Insurance Corporation
Chairman Martin Gruenberg.

Additional participants from the United States were Treasury
Secretary Jacob J. Lew, Board of Governors of the Federal Reserve
System Chair Janet Yellen, Comptroller of the Currency Thomas
Curry, U.S. Securities and Exchange Commission Chair Mary Jo
White, U.S. Commodity Futures Trading Commission Chairman Timothy
Massad, Federal Deposit Insurance Corporation Vice Chairman
Thomas Hoenig, Federal Deposit Insurance Corporation Board Member
Jeremiah Norton, Federal Reserve Board Governor Daniel Tarullo,
Federal Reserve Bank of New York President William Dudley, and
Deputy Treasury Secretary Sarah Bloom Raskin.

Participants from the United Kingdom were Chancellor of the
Exchequer George Osborne, Bank of England Governor Mark Carney,
Deputy Governor for Financial Stability Sir Jon Cunliffe, Deputy
Governor for Prudential Regulation and Chief Executive Officer of
the Prudential Regulation Authority Andrew Bailey, Deputy
Governor for Markets & Banking Minouche Shafik; and Financial
Conduct Authority Chief Executive Martin Wheatley.

The exercise's high level discussion furthered understanding
among these principals regarding G-SIB resolution strategies
under U.S. and U.K. resolution regimes, aspects of those
strategies requiring coordination between U.S. and U.K.
authorities, and key challenges to the successful resolution of
U.S. and U.K. G-SIBs.  This exercise builds on prior bilateral
work between U.S. and U.K. authorities, which, since late 2012,
has included the publication of a joint paper on G-SIB
resolution, participation in detailed simulation exercises for G-
SIB resolution, and participation in other joint G-SIB resolution
planning efforts.

The exercise demonstrates the continued commitment of the United
States and the United Kingdom since the financial crisis to
promote a safer and sounder financial system by cooperating to
address issues involved in the orderly resolution of large and
complex financial institutions without cost to taxpayers.  Both
countries reiterated their commitment to the Financial Stability
Board's ongoing work concerning G-SIB resolution.  The exercise
was timed to coincide with the IMF annual meeting.


* EUROPE: Fitch Says ECB Program May Affect Finance Market
European credit investors expect the European Central Bank's
purchase program to influence both supply and spreads in the
structured finance market, according to Fitch Ratings' latest
investor survey.

Nearly 60% of respondents think that structured finance issuance
will increase over the next 12 months, compared with 33% in our
previous survey. The 3Q14 reading is the highest in our survey
history, and is higher than for any other asset class.
More than a third (37%) of respondents expect spreads to tighten
somewhat and 10% expect them to tighten significantly. Nobody
expected spreads to tighten significantly in our previous survey,
which closed in May shortly before the ECB said it was
accelerating preparations to buy asset-backed securities. Less
than a quarter of respondents expected spreads to tighten

In Fitch's view, spread tightening will improve the economics of
structured finance for issuers, but it will not necessarily
broaden participation in the market. Existing active structured
finance investors have expressed concerns that ECB purchases
could see spreads tighten to the point where they do not receive
sufficient returns for their funding and capital costs; they also
have alternative investment opportunities.

In the operational details of its purchase program it gave on 2
October the ECB said that it would buy a maximum of 70% of any
issue, suggesting that buying by private sector investors is
still key to increasing overall issuance. The effectiveness of
the program will depend on whether additional investment funds
are allocated to the market due to the presence of the ECB
backstopping the sector. The responses of the participants to
Fitch's survey suggest that fixed-income investors became more
confident about the future of the structured finance market even
before the details of the program were announced last week, with
the ECB first mooting its interest in using the ABS market for
this purpose in May.

ECB purchases will start this year and last at least two years.
To qualify, ABS senior tranches must be eligible under the
collateral framework for Eurosystem credit operations. However,
the requirement for a second-best rating of at least 'BBB-sf'
does not apply to Greek or Cypriot ABS. The ECB will also buy
guaranteed mezzanine tranches, but agreement has yet to be
reached about how such guarantees will operate.

Fitch's 3Q14 survey closed on October 3. It represents the views
of managers of an estimated EUR7.1 trillion of fixed income
assets. We will publish the full results later this month.


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

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

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


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

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

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

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

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

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

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