/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/151111.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, November 11, 2015, Vol. 16, No. 223 Headlines A Z E R B A I J A N * AZERBAIJAN: Number of Banks in Liquidation Process Reaches 7 C Y P R U S FBME BANK: Shareholders to Oppose Liquidation Plan G E R M A N Y TANTALUS RARE: Enters Preliminary Insolvency Proceedings G R E E C E GREECE: Needs Few More Days to Reach Agreement on EUR2BB Aid H U N G A R Y BUDAPEST: Moody's Affirms Ba1 Rating & Changes Outlook to Pos. I R E L A N D TALISMAN-5 FINANCE: Fitch Cuts Rating on Class C Notes to 'Csf' K A Z A K H S T A N KASSA NOVA: S&P Revises Outlook to Neg. & Affirms 'B/C' Rating KAZAKHTELECOM JSC: Fitch Affirms 'BB' LT Issuer Default Rating N E T H E R L A N D S HARBOURMASTER CLO: Fitch Affirms 'B-sf' Ratings on 2 Note Classes * NETHERLANDS: Number of Bankruptcies Rises to 47 in October 2015 U K R A I N E FORUM BANK: Liquidator Puts Bakkara Hotel Up for Sale UKRLANDFARMING: To Pay US$20-Mil. to Creditors Before Year-End U N I T E D K I N G D O M ADUR OUTDOOR: To Go Into Voluntary Liquidation, Council Reveals FAIRLINE BOATS: Seeks Company Voluntary Arrangement, Jobs at Risk GEMGARTO 2015-2: Moody's Assigns (P)Caa3 Rating to Class X1 Notes GEMGARTO 2015-2: Fitch Assigns 'BB(EXP)' Rating to Class X1 Debt MARBLE ARCH NO 4: Fitch Affirms 'Bsf' Rating on Class E1c Debt MOY PARK: S&P Raises Corp. Credit Rating to 'BB', Outlook Stable ********* =================== A Z E R B A I J A N =================== * AZERBAIJAN: Number of Banks in Liquidation Process Reaches 7 -------------------------------------------------------------- APA News reports that in the third quarter, the banking sector lost 2 banks -- Eurobank and Azerbaijan Credit Bank. Licenses of these banks have been cancelled under the decision of Central Bank of Azerbaijan, according to APA News. The report notes that at present, 43 banks operate in Azerbaijan. Two of them are state-owned banks, while 41 are private banks. The report relays that number of banks with foreign capital reduced to 22 from 23, as Eurobank left the sector. According to outcomes of the third quarter, Azerbaijan-based banks operate 758 branches, while they operated 763 in the second quarter. Banks link the reduction with optimization, the report relays. The report discloses Departments of local banks increased to 165 from 163. =========== C Y P R U S =========== FBME BANK: Shareholders to Oppose Liquidation Plan -------------------------------------------------- Stelios Orphanides at Cyprus Mail reports that the shareholders of FBME Bank said that they will resist a plan to liquidate its Cyprus branch. The Central Bank of Cyprus placed the lender under administration more than a year ago, Cyprus Mail relates. FBME Bank provides banking solutions for personal, corporate banking and investment services. ============= G E R M A N Y ============= TANTALUS RARE: Enters Preliminary Insolvency Proceedings -------------------------------------------------------- Reuters reports that the District Court in Munich on Nov. 4 ordered Tantalus Rare Earths to enter into preliminary insolvency proceedings. Axel W. Bierbach of Munich-based Mueller-Heydenreich Bierbach and Co. has been appointed preliminary administrator, Reuters relates. Tantalus Rare Earths AG is a Germany-based company that is primarily engaged in the discovery, selection and development of mineral deposits outside China. =========== G R E E C E =========== GREECE: Needs Few More Days to Reach Agreement on EUR2BB Aid ------------------------------------------------------------ Richard Bravo at Bloomberg News reports that Greece and its European Union creditors need a few more days to reach an agreement that would release an aid payment of EUR2 billion (US$2.2 billion). According to Bloomberg, an EU official with knowledge of the talks said the two sides need to resolve several issues, including how to deal with housing foreclosures. Two other European officials said the Greeks are seeking a system that would shield about 70% of homeowners from foreclosure, Bloomberg notes. Auditors from the International Monetary Fund, the European Commission, the European Stability Mechanism and the European Central Bank say the Greek limit is overly generous and are seeking a stricter framework that would only cover the most vulnerable, Bloomberg relays. Euro-area finance ministers were scheduled to meet on Nov. 9 in Brussels to review the implementation of Greece's latest bailout program and whether the nation is meeting certain milestones required for the disbursement of aid and the recapitalization of its banks, Bloomberg discloses. Failure to complete the review could put the solvency of the sovereign and of its financial system in doubt, Bloomberg states. ============= H U N G A R Y ============= BUDAPEST: Moody's Affirms Ba1 Rating & Changes Outlook to Pos. -------------------------------------------------------------- Moody's Public Sector Europe has changed to positive from stable the outlook on the City of Budapest. MPSE has also affirmed the city's Ba1 rating. The main drivers of the rating action are (1) the improving Hungarian operating environment, as reflected in Moody's outlook change on Hungary's Ba1 government bond rating to positive from stable; and (2) the strong correlation between sovereign and sub- sovereign credit risk, reflected in macroeconomic and financial linkages as well as in institutional factors. The change in outlook and the affirmation follow similar actions on Hungary's government bond rating on Nov. 6, 2015. For full details, please refer to the sovereign press release: https://www.moodys.com/research/--PR_337832 RATINGS RATIONALE The outlook change reflects the improving operating environment of Hungary, as reflected by the positive outlook on the sovereign rating. The outlook change also reflects Moody's view that the creditworthiness of Budapest is closely linked to that of the sovereign, as Hungarian local governments depend on revenues that are linked to the sovereign's macroeconomic and fiscal performance. Approximately 70% of Budapest's operating revenues in 2014 were from intergovernmental revenues, in the form of shared taxes and central government transfers that are set at the national level. Moody's expects that the comparatively good national economic growth will be sustained. This will result in growing central government allocations, which will be a positive for the city's income stream. RATIONALE FOR RATING AFFIRMATION The affirmation of Budapest's Ba1 rating reflects the city's proven track record of prudent budgetary management, as mirrored by its solid operating surpluses and good financial performance. Budapest's rating is underpinned by almost zero net direct and indirect debt, which is a result of the decision of Hungarian central government to cut public debt within its efforts to consolidate municipal finances. As such, Budapest's net debt fell to a very low 3% of operating revenues in 2015 from 97% in 2012. Moody's also notes that the Ba1 rating reflects Budapest's strong liquidity and sound governance and management practices, as well as its strong internal budget procedures. WHAT COULD CHANGE THE RATINGS UP/DOWN Upward pressure on Budapest's rating could arise from an upgrade of the sovereign rating associated with continued solid operating performance and strong liquidity position. Downward pressure on the rating could result from a downgrade of Hungary's sovereign rating; and/or a material deterioration in the city's operating and financial performance. The publication of this rating action deviates from the previously scheduled release date in the sovereign release calendar published on Moody's. The reason for the deviation is the rating action on the sovereign rating. The specific economic indicators, as required by EU regulation, are not available for this entity. These national economic indicators are relevant to the sovereign rating, which was used as an input to this credit rating action. Sovereign Issuer: Hungary, Government of GDP per capita (PPP basis, US$): 25,019 (2014 Actual) (also known as Per Capita Income) Real GDP growth (% change): 3.7% (2014 Actual) (also known as GDP Growth) Inflation Rate (CPI, % change Dec/Dec): -0.9% (2014 Actual) Gen. Gov. Financial Balance/GDP: -2.5% (2014 Actual) (also known as Fiscal Balance) Current Account Balance/GDP: 2.3% (2014 Actual) (also known as External Balance) External debt/GDP: [not available] Level of economic development: High level of economic known as Fiscal Balance) Default history: No default events (on bonds or loans) have been recorded since 1983. On Nov. 5, 2015, a rating committee was called to discuss the rating of the Budapest, City of. The main points raised during the discussion were: The issuer's institutional strength/ framework, have not materially changed. The systemic risk in which the issuer operates has materially decreased. The principal methodology used in these ratings 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. ============= I R E L A N D ============= TALISMAN-5 FINANCE: Fitch Cuts Rating on Class C Notes to 'Csf' --------------------------------------------------------------- Fitch Ratings has downgraded TALISMAN -5 Finance plc's class A, B and C notes due in July 2016 and affirmed the others as follows: EUR57.4 million class A (XS0278333736) downgraded to 'B-sf' from 'BBBsf'; Outlook Negative EUR35.9 million class B (XS0278334460) downgraded to 'CCsf' from 'BBsf'; Recovery Estimate (RE) 100% EUR26.1 million class C (XS0278334973) downgraded to 'Csf' from 'CCsf'; RE75% EUR9.4 million class D (XS0278335277) affirmed at 'Dsf'; RE0% EUR0m class E (XS0278335863) affirmed at 'Dsf'; RE0% TALISMAN - 5 Finance plc originally was a EUR544.2 million securitization of seven CMBS loans, originated by ABN AMRO. As of end-October 2015, three loans were outstanding with a cumulative balance EUR121.5 million. All loans are currently in special servicing. KEY RATING DRIVERS The downgrades reflect the diminishing prospects of the issuer repaying its liabilities by legal final maturity in July 2016. In the last 12 months the main success was the resolution of the Fish loan, fetching EUR50.3 million (at a EUR7.3 million loss) in recoveries. Elsewhere progress has slowed and in some cases reversed: bids have been withdrawn (eg Reindeer loan), local politics have added complication and uncertainty (eg Penguin loan), while marketing efforts have been slow (eg Monkey loan). Added to this, vacancy has been steadily rising and expected to rise further, as some large tenants follow through on previous notices to vacate. Fitch estimates that sizeable pockets of collateral value remain in each of the three portfolios, thus supporting the recovery estimates (which look through bond maturity). However, the special servicer's ability to release this value in time for bond maturity has fallen markedly, leaving no margin of safety for class A investors. The Negative Outlook on this tranche reflects the risk of a further downgrade in the months ahead unless significant progress on work-outs can be demonstrated. The Penguin loan (39.3% of the pool) is secured by six offices in the Paris region. The sale and purchase agreement that was signed with a major French residential developer regarding the Colombes site (comprising four of the properties) was rejected by the mayor, on the grounds that the scheme would have been above the desired residential density. Should the mayor purchase the site for the city's own redevelopment plans, as intended, and while an offer for the site may come soon, it is likely to be well down from the previous bids. The two remaining Penguin offices are in Evry and Suresnes. The Evry property is let on a 3/6/9 lease to Carrefour, which Fitch expects to vacate in December 2017. The borrower restarted marketing the multi-let Suresnes property in 2Q15, with several bids reportedly received. Fitch understands from the special servicer that they expect the property will be sold for at least EUR12m. The Reindeer loan (32.5%) is secured by a portfolio of secondary Finnish retail properties. Challenges in the Finnish retail market have resulted in a gradual increase in vacancy to approximately 35% currently, from 28% a year ago. Fitch understands from the special servicer that final offers for the portfolio have been received and are currently being evaluated. If a portfolio sale is not achieved by year end, an asset-by-asset sale strategy will be pursued, limiting the prospect of significant proceeds flowing in time for bond maturity in Fitch's view. The Monkey loan (28.4%) is secured by a business park and a hotel on the outskirts of Munich. The largest tenant at the business park (accounting for 40% of income) has terminated its lease contract and is due to vacate in December. An attempt to refinance the property has failed, and a borrower-led sale process is now being pursued. This offers the greatest chance of realising material proceeds in the short term given the hotel is leased for nine years to Holiday Inns. RATING SENSITIVITIES The Negative Outlook on the class A notes reflects the risk of a further downgrade in the months ahead unless significant progress on work-outs can be demonstrated. Fitch estimates ultimate 'Bsf' recoveries of EUR105m - EUR120m DUE DILIGENCE USAGE No third party due diligence was provided or reviewed in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. There were no findings that were material to this analysis. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. Fitch did not undertake a review of the information provided about the underlying asset pool ahead of the transaction's initial closing. The subsequent performance of the transaction over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable. =================== K A Z A K H S T A N =================== KASSA NOVA: S&P Revises Outlook to Neg. & Affirms 'B/C' Rating -------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Kazakhstan-based Kassa Nova Bank JSC to negative from stable. At the same time, S&P affirmed its long- and short-term counterparty credit ratings on the bank at 'B/C' and the national scale rating at 'kzBB'. The outlook revision reflects S&P's view that Kassa Nova Bank's capital buffers are likely to come under increasing pressure because of the slowdown of the Kazakh economy and associated deterioration of creditworthiness of the bank's borrowers. S&P expects the bank's operating margins to decrease slightly, due to elevated cost of funding in Kazakhstan, exacerbated by the market turmoil and rapid depreciation of the Kazakh tenge since August 2015. Given the bank's rather low internal capital generation levels, S&P thinks that its strong capitalization in the next 12- 18 months will depend to a large extent on the capital injection from shareholders that the bank expects at the beginning of 2016. Any change of plans by shareholders with regards to capital provision or a delay in providing the capital may lead S&P to revise downward its assessment of the bank's capitalization, which S&P currently considers to be "strong." S&P believes that the major risks for the bank's lending operations are related to its focus on retail customers and small and midsize companies, which S&P considers vulnerable in the currently depressed economic environment. However, S&P believes that the bank will be able to keep the level of nonperforming loans (loans overdue by more than 90 days) below 5% of total loans in the next 12-18 months, due to its strong underwriting and good risk management systems. S&P also thinks that Kassa Nova Bank's funding base will remain stable. The bank's customer accounts grew 15% over the first eight months of 2015 (adjusted for currency revaluation effects). The bank's deposit base mostly comprised corporate deposits, which accounted for 91% of total liabilities on July 1, 2015. In addition, S&P considers that management has been successful in diversifying the bank's funding base and gradually diminishing dependence on shareholders' deposits. Finally, S&P notes that the bank hedges its open currency position with foreign currency swaps with the National Bank of Kazakhstan (NBK) that expire in October 2016. Currently, S&P don't have sufficient clarity on whether NBK is going to extend the foreign currency swaps with banks when they expire or whether an alternative hedging instrument will be developed. In the absence of such a hedging instrument, the bank would have to recognize a substantial amount of losses from currency revaluation of its assets and liabilities following depreciation of the tenge between August and November 2015. The negative outlook reflects S&P's expectation of pressure on Kassa Nova Bank's capital ratios in the next 12 months, due to increasing credit costs and narrowing margins, as well as some uncertainty with regards to the capital increase that the bank expects in 2016. S&P could take a negative rating action if its forecast risk- adjusted capital (RAC) ratio before adjustments for diversification and concentration decreased below 10% in the next 12 months. This could happen if the bank did not receive the capital injection in early 2016 as currently expected, or if its credit costs increased substantially above 3% of total loans per year, putting significant pressure on the capital buffers and also resulting in deterioration of S&P's RAC ratio below our current base-case forecasts. In addition, a negative rating action could follow if the bank's liquidity cushion, which S&P currently considers to be adequate, weakened materially. S&P could revise the outlook to stable if the bank's projected RAC ratio stayed sustainably above 10% and the bank demonstrated better operating performance than local peers during the economic slowdown and maintained satisfactory loan portfolio quality, with nonperforming loans remaining below 5% of total loans. KAZAKHTELECOM JSC: Fitch Affirms 'BB' LT Issuer Default Rating -------------------------------------------------------------- Fitch Ratings has affirmed Kazakhtelecom JSC's (Kaztel) Long-term Issuer Default Rating (IDR) at 'BB' with a Positive Outlook. "The creation of a joint venture (JV) from the combination of Kaztel's and Tele2 AB's mobile assets in Kazakhstan should significantly strengthen Kaztel's position in mobile services. We are maintaining the Positive Outlook on the company's IDR as this transaction should only have a slightly negative impact on its leverage. We believe the company should be able to digest a spike in leverage if it has to purchase in three years the 49% stake in the mobile JV it does not own." Kaztel is a strong fixed-line incumbent, with dominant market shares in traditional telephony and fixed-line broadband services, operating in a benign regulatory environment. The company re- entered the mobile mass market with its LTE/GSM service in 2014, providing it with a capability to offer both fixed and mobile services. KEY RATING DRIVERS Stronger Mobile Business The transaction should strengthen the mobile market positions of both parties. The JV will have a 22% share of Kazakhstan's mobile subscriber market or 5.6 million active customers. The companies will continue operating separately under their current brand names. Fitch does not expect any significant subscriber cannibalization as both brands should continue to operate in separate consumer niches. Kaztel and Tele2 Group will hold 51%/49% economic interest and 49%/51% voting interest, respectively. Kaztel will contribute its mobile subsidiary Altel on a debt-free basis while Tele2 will contribute its mobile assets in Kazakhstan with a KZT97 billion shareholder loan. Tele2 will retain management control over the JV and will appoint all of the Management Board apart from CFO. The deal is subject to regulatory approval and is expected to close in 1Q16 More Rational Mobile Market Tele2 and Altel compete aggressively with mobile market leaders JSC Kcell and Vimpelcom Ltd. The price war initiated by the operators in 2015 along with mobile termination rates cuts have led to pressure on mobile average revenue per user. With a combined subscriber share of 22%, the JV has less incentive for disruptive price behavior to acquire customers. We expect the focus to shift towards the value of offers and quality of service. LTE Remains an Advantage Kaztel is rapidly growing the number of its data-hungry 4G customers as it remains the only Kazakh provider of LTE mobile services capable of managing high data volumes. Once the JV is created, Tele2's subscribers will be able to use 4G network while both companies' customers will benefit from wider 2G/3G coverage. Expected Synergies The merger of companies should generate synergies in operating costs and capital expenditures. The JV should be able to save money on network construction while the overlap of existing networks should lead to a higher quality of service and wider coverage. Given Kaztel's ability to provide the whole spectrum of telecom services, the upselling efforts in the mobile business may help it expand its broadband and pay-TV subscriber base. Leverage to Increase Marginally As a result of the transaction, Kaztel will guarantee up to 51% of the JV's total external debt. Fitch projects that the JV will require external funding in 2016-2017 to finance capex. Fitch includes these guarantees in Kaztel's total debt calculation. This results in a marginal deterioration of the company's leverage profile. Fitch still expects funds from operations (FFO) adjusted gross leverage to decline below 2.0x in 2017-2018 on the back of continuing strong operating cash flow generation and lower capex. Call/Put Options As part of the merger Kaztel will have a call option allowing it to buy out the share of Tele2 in the JV in three years at a price determined by an independent appraiser. Tele2 has a mirroring put option with the same terms. Fitch conservatively assumes that this option is exercised and includes the shareholder loan repayment in its calculations, which causes FFO adjusted gross leverage in 2019 to exceed 2.0x. Due to robust free cash flow (FCF) generation, leverage should drop below 2.0x again in 2020. Mobile Margins to Improve Tele2 Kazakhstan and Altel have launched their mobile operations recently compared with market leaders Kcell and Vimpelcom. Rapid network development and aggressive subscriber acquisition have put pressure on the companies' margins. Tele2's mobile operations in Kazakhstan turned EBITDA-positive in 2014 and now generate a low single-digit margin while Altel reached EBITDA-breakeven only in 2015. Further profitability growth is likely from stabilizing subscriber acquisition costs and cost synergies from the merger. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for Kaztel include the following: -- Low single-digit consumer revenue declines in the fixed-line segment; -- A decline in capex to below 20% of revenues from 2016 excluding the mobile JV; -- Positive FCF generation from 2016 excluding the mobile JV; -- Rapid mobile JV revenue growth of double digits in 2016-2017, declining to high single-digits thereafter; -- 100% ownership of the mobile JV in 2019 conservatively assuming earliest possible exercise of the put/call option; -- Kaztel's guarantees for external debt issued by the mobile JV are included in total debt calculation -- Priority of debt repayment over dividends distribution at the mobile JV RATING SENSITIVITIES Positive: Future developments that may, individually or collectively, lead to a positive rating action include: -- A sustained decrease in FFO adjusted gross leverage to below 2x (end-2014: 1.9x); -- Maintaining sufficient liquidity that is diversified between external and internal sources; -- Stronger FCF generation with pre-dividend FCF margin in the mid-single digit range; -- Successful integration of Tele2's and Altel's assets and further strong execution of Kaztel's mobile strategy. Negative: Future developments that may, individually or collectively, lead to a negative rating action include: -- A protracted rise in FFO-adjusted gross leverage to above 3x and/or a material increase in refinancing risks, which would lead to a downgrade -- Operating underperformance in the fixed and/or mobile segment, which may cause the Outlook to be revised to Stable. LIQUIDITY Kaztel has a few credit lines from foreign banks and the domestic Development Bank of Kazakhstan (BBB/Stable) which are sufficient to cover its short-term refinancing needs and fund its expansionary capex program. Facilities from foreign banks are in foreign currency, which match its forthcoming foreign currency maturities. The company also has a 10-year KZT18 billion credit line from Development Bank of Kazakhstan. It is available for financing mobile development but it would also allow Kaztel to divert operating cash flow from internal capex funding to other needs, including refinancing. Kaztel's debt profile is well spread with no medium-term debt redemption peaks. FULL LIST OF RATING ACTIONS Kazakhtelecom JSC Long-term foreign and local IDRs: affirmed 'BB', Outlook Positive Short-term foreign currency IDR: affirmed at 'B' National Long-term rating: affirmed at 'A+(kaz)', Outlook Positive Senior unsecured debt in foreign and local currency: affirmed at 'BB' Senior unsecured debt in local currency: affirmed at 'A+(kaz)' ===================== N E T H E R L A N D S ===================== HARBOURMASTER CLO: Fitch Affirms 'B-sf' Ratings on 2 Note Classes ----------------------------------------------------------------- Fitch Ratings has taken multiple rating actions on Harbourmaster CLO 5 B.V.'s notes as follows: EUR5.5 million Class A3 (XS0223503078): upgraded to 'Asf' from 'BBBsf'; Outlook Stable EUR9 million Class A4E (XS0223503151): affirmed at 'BBsf'; Outlook Stable EUR16 million Class A4F (XS0223503581): affirmed at 'BBsf'; Outlook Stable EUR4 million Class B1E (XS0223503664): affirmed at 'B-sf'; Outlook revised to Stable from Negative EUR15 million Class B1F (XS0223503748): affirmed at 'B-sf'; Outlook revised to Stable from Negative EUR5.9 million Class B2E (XS0223503821): affirmed at 'CCCsf'; Recovery Estimate (RE) 0% EUR4.7 million Class B2F (XS0223504043): affirmed at 'CCCsf'; RE 0% Harbourmaster CLO 5 B.V. is a managed cash arbitrage securitization of secured leveraged loans, primarily domiciled in Europe. The portfolio is managed by Blackstone/GSO Debt Funds Europe Limited. KEY RATING DRIVERS The upgrade reflects an improvement in credit enhancement (CE) over the past 12 months while the affirmations reflect the higher CE being offset by increased portfolio concentration risk. The class A2 notes have been paid in full and the class A3 notes have been paid down significantly to 17.3% of the original note balance. The Outlook on the class B1 notes has been revised to Stable from Negative following a 13.7% increase in CE. In March 2015, EUR376,693 or 35% of the excess spread was used to pay down the class B2 notes to cure the class B2 overcollateralization (OC) test. The OC test has since been met and is now passing with a 11.1% cushion. The portfolio has become highly concentrated following amortization. The number of issuers in the current portfolio has been reduced to 10 from 15 over the past 12 months and the largest 10 assets account for 79.7% of the par value. The Fitch-weighted average rating factor increased to 41.3 from 33.6, well above the trigger at 30, indicating weakening credit quality of the underlying assets. The high concentration, coupled with the low credit quality, suggest that portfolio default rates can be highly volatile. There are currently no defaulted assets compared with EUR15.5 million a year ago. However, as the transaction becomes more concentrated, the note's sensitivity to defaults increases, particularly at the junior level. RATING SENSITIVITIES Increasing the default probability by 25% would likely result in a downgrade of up to three notches to the class B1 and B2 notes. Furthermore, applying a recovery rate cut of 25% on all the assets would likely result in a downgrade of up to two notches. DUE DILIGENCE USAGE No third party due diligence was provided or reviewed in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pools and the transactions. There were no findings that were material to this analysis. Fitch did not undertake a review of the information provided about the underlying asset pools ahead of the transaction's initial closing. The subsequent performance of the transactions over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable. Overall, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. * NETHERLANDS: Number of Bankruptcies Rises to 47 in October 2015 ----------------------------------------------------------------- Statistics Netherlands reports that adjusted for court session days, the number of bankruptcies rose by 47 in October 2015 relative to September. The number of bankruptcies increased notably in the sectors construction and hotels and restaurants, Statistics Netherlands relates. The number of bankruptcies adjusted for court session days peaked in May 2013 and in August 2015 dipped to the lowest level since October 2008, Statistics Netherlands notes. In October, the number of businesses declared bankrupt grew by 47 relative to September, Statistics Netherlands discloses. If the number of court session days is not taken into account, 366 businesses and institutions (excluding one-man businesses) were declared bankrupt in October 2015, resulting in a total of 4,399 bankruptcies over the first 10 months of this year, i.e. 22 percent down from the same period last year, Statistics Netherlands states. With a total of 82, the trade sector had the highest number of bankruptcies, Statistics Netherlands says. The financial institutions sector accounted for 59 bankruptcies, Statistics Netherlands states. These two sectors also include the highest number of businesses, Statistics Netherlands discloses. In relative terms, the construction sector recorded the highest number of bankruptcies (56), according to Statistics Netherlands. ============= U K R A I N E ============= FORUM BANK: Liquidator Puts Bakkara Hotel Up for Sale ----------------------------------------------------- Ukrainian News Agency reports that the liquidator of Forum bank has decided to put up for sale the Bakkara hotel in Kyiv. According to Ukrainian News, the liquidators said in a statement the tender for the sale of the hotel will take place on Nov. 23. The organizer of the auction is Kyiv-based Samson limited liability company, Ukrainian News discloses. The participants of the upcoming auction will have to pay the registration fee worth UAH100, as well as the guarantee fee worth 10% of the starting price of the lot, Ukrainian News states. The bids for the online-auction are accepted at torgi.samson.com.ua until Nov. 20, Ukrainian News says. The starting price of the hotel will make up UAH48.063 million, Ukrainian News notes. The hotel is located on a bank of the Dnieper river in Kyiv, Ukrainian New discloses. The hotel has 200 rooms, a conference- hall for 100 seats with the area of 105 square meters and a negotiation room for 20-30 seats with the area of 52 square meters, according to Ukrainian New. Bank Forum was founded in 1994. According to the National Bank of Ukraine, on January 1, 2014, by total assets the bank ranked 24th (UAH10.404 billion) among 180 banks in Ukraine. In June 2014, the National Bank of Ukraine put the bank under liquidation. UKRLANDFARMING: To Pay US$20-Mil. to Creditors Before Year-End -------------------------------------------------------------- Ukrainian News Agency reports that UkrLandFarming plans to pay extra US$20 million to creditors before the yearend. According to Ukrainian News, UkrLandFarming says any talk about restructuring of its Eurobond is premature, because in September, it paid the coupon and looks to successful next payout in March 2016 with support of investors. The company is not planning to convert a part of its debt into stock, respecting creditors' interests, Ukrainian News notes. UkrLandFarming in September paid US$27 million of yield for the third coupon period on its five-year US$500 million Eurobond issued in March 2013, Ukrainian News recounts. UkrLandFarming is a Ukrainian agricultural holding company. * * * As reported by the Troubled Company Reporter-Europe on April 06, 2015, Standard & Poor's Ratings Services lowered its long-term foreign currency corporate credit rating on Ukraine-based agribusiness company UkrLandFarming PLC to 'CC' from 'CCC-'. S&P said the outlook is negative. S&P said the downgrade of UkrLandFarming reflects the increased risk that the company could default on its financial debt obligations in the next few months. =========================== U N I T E D K I N G D O M =========================== ADUR OUTDOOR: To Go Into Voluntary Liquidation, Council Reveals --------------------------------------------------------------- http://www.worthingherald.co.uk/news/local/adur-outdoor- activities-center-goes-into-liquidation-1-7044155#axzz3r2wMQNqd The Worthing Herald reports that West Sussex County Council disclosed that Adur Outdoor Activities Center will go into voluntary liquidation, but revealed that a number of parties have expressed an interest in taking over. Following the shock announcement last month that the activities center will close following the withdrawal of the center's Trust, clubs and customers have been up in arms over the center's uncertain future, according to The Worthing Herald. The report notes that a spokesman for West Sussex County Council said: "FRP Advisory has now been formally instructed to place the Adur Outdoor Activity Center into creditor's voluntary liquidation. "We have also been informed the staff at the center have been made redundant with effect from October 31," the spokesman said. "The AOAC will continue caretaking arrangements for the building until November 12. After that it is likely the keys will return into the possession of the County Council," spokesman added. A meeting of shareholders and creditors is to be held on Nov. 12 in Worthing to decide what happens next, spokesman relays. An inventory of AOAC assets has been compiled ahead of the meeting. The report discloses the spokesman continued: "A number of parties have expressed an interest in taking over the center. We are currently considering a number of options to try and keep the building running for the benefit of the local community, even if there has to be a period of closure over the winter period." FAIRLINE BOATS: Seeks Company Voluntary Arrangement, Jobs at Risk ----------------------------------------------------------------- Paul Grinnell at Peterborough Telegraph reports that bosses of Fairline Boats have warned of "significant" job losses as they battle to keep the troubled company afloat. According to Peterborough Telegraph, the company, which has bases at Oundle and Corby, says it has already begun a consultation period with staff about possible redundancies as it seeks to stem financial losses. The 52-year-old business has also announced it is seeking agreement from its creditors for a Company Voluntary Arrangement to help it repay burdensome debt, Peterborough Telegraph relates. The news comes just weeks after the company announced it was temporarily laying off 109 of its 465 staff for four weeks, Peterborough Telegraph notes. That action come just a day after the company had been bought by Wessex Bristol Investments from Better Capital, Peterborough Telegraph states. "Fairline has procured the services of turnaround specialists KSA who are assisting in the development of a complete and robust recovery and restructuring plan for the business," Peterborough Telegraph quotes a statement issued by the company as saying. "This will involve the company proposing a Company Voluntary Arrangement (CVA) which, if agreed by creditors, will allow the company to restructure its debt and move forward with a sensible and manageable cost base." Fairline Boats is a yacht-builder. GEMGARTO 2015-2: Moody's Assigns (P)Caa3 Rating to Class X1 Notes ----------------------------------------------------------------- Moody's Investors Service has assigned provisional long-term credit ratings to Notes to be issued by Gemgarto 2015-2 Plc: Class A mortgage backed floating rate notes due Feb. 2054, Assigned (P)Aaa (sf) Class B mortgage backed floating rate notes due Feb. 2054, Assigned (P)Aa1 (sf) Class C mortgage backed floating rate notes due Feb. 2054, Assigned (P)Aa2 (sf) Class D mortgage backed floating rate notes due Feb. 2054, Assigned (P)A2 (sf) Class E1 mortgage backed floating rate notes due Feb. 2054, Assigned (P)Ba1 (sf) Class E2 mortgage backed floating rate notes due Feb. 2054, Assigned (P)Caa1 (sf) Class X1 floating rate notes due Feb. 2054, Assigned (P)Caa3 (sf) Moody's has not assigned ratings to the Class Z floating rate notes due Feb. 2054, the Class X2 fixed rated notes due Feb. 2054, the Class Y floating rate notes due Feb. 2054 and the R Certificates. The portfolio backing this transaction consists of UK prime residential loans originated by Kensington Mortgage Company Limited. On the closing date, KMC Stirling Square Limited (which is the warehouse funding entity) will sell the beneficial interest in the portfolio to Kayl PL S.a.r.l. (as to one part of the portfolio) and Koala Warehouse Limited (as to another part of the portfolio). In turn each Seller will sell the beneficial interest in its respective part of the portfolio to Gemgarto 2015-2 plc. Kensington Mortgage Company Limited holds legal title to the portfolio. RATINGS RATIONALE The ratings take into account the credit quality of the underlying mortgage loan pool, from which Moody's determined the MILAN Credit Enhancement and the portfolio expected loss, as well as the transaction structure and legal considerations. The expected portfolio loss of [1.8]% and the MILAN required credit enhancement of [11]% serve as input parameters for Moody's cash flow model and tranching model, which is based on a probabilistic lognormal distribution. Portfolio expected loss of [1.8]%: this is higher than the UK Prime RMBS sector average and was evaluated by assessing the originator's limited historical performance data and benchmarking with other UK prime RMBS transactions. It also takes into account Moody's positive UK Prime RMBS outlook and the improved UK economic environment. MILAN CE of [11]%: this is higher than the UK Prime RMBS sector average and follows Moody's assessment of the loan-by-loan information taking into account the historical performance available and the following key drivers: (i) although Moody's have classified the loans as prime, it believes that borrowers in the portfolio often have characteristics which could lead to them being declined from a high street lender; (ii) the weighted average CLTV of [72.20]%, (iii) the very low seasoning of [0.68] years, (iv) the presence of [8.68]% of borrowers with prior CCJs, (v) the very low proportion of interest-only loans ([0.55]%); and (vi) the absence of any buy-to-let, right-to-buy, shared equity, fast track or self-certified loans. At closing the mortgage pool balance will consist of million of loans. The total reserve fund of [2.0]% of the initial mortgage pool balance will be split into the Liquidity Reserve Fund and the Non Liquidity Reserve Fund. The Reserve Fund Required Amount will equal the higher of (i) the sum of [2.5]% of the outstanding balance of Class A and B notes and [2.0]% of the initial balance of Class C,D, E1 and E2 notes; and (ii) [2.0]% of the initial balance of Class A to E2 notes. On the first interest payment date, an amount equal to [0.5]% of the initial balance of Class A and B notes will be diverted from the principal waterfall to top- up the Liquidity Reserve Fund. Thereafter, the Liquidity Reserve Fund Required Amount will equal [2.5]% of the outstanding balance of Class A and B notes and will only be available to cover senior expenses, Class A and Class B interest. The Non Liquidity Reserve Fund will equal the difference between the total Reserve Fund and the Liquidity Reserve Fund, and will be used to cover interest shortfall and cure PDL for Class A to D notes. For the avoidance of doubt, the Non Liquidity Reserve Fund will not be available to cover interest shortfall and cure PDL for Class E1 and E2 notes. Operational risk analysis: Kensington Mortgage Company Limited ("KMC", not rated) will be acting as servicer. KMC will sub- delegate certain primary servicing obligations to HomeLoan Management Limited (HML, not rated). In order to mitigate the operational risk, there will be a back-up servicer facilitator, and Wells Fargo Bank, N.A. (Aa1/P-1/Aa1(cr)) will be acting as a back-up cash manager from close. To ensure payment continuity over the transaction's lifetime, the transaction documents including the swap agreement incorporate estimation language whereby the cash manager can use the three most recent servicer reports to determine the cash allocation in case no servicer report is available. The transaction also benefits from principal to pay interest mechanism for Class A to D notes, subject to certain conditions being met. Interest rate risk analysis: BNP Paribas (A1/P-1/Aa3(cr)) is expected to act as the swap counterparty for the fixed-rate mortgages in the transaction. The floating-rate loans will be unhedged. Moody's has taken into consideration the absence of basis swap in its cash flow modeling. The provisional ratings address the expected loss posed to investors by the legal final maturity of the Notes. In Moody's opinion, the structure allows for timely payment of interest with respect to Class A, B, C and D Notes, ultimate payment of interest for Class E1, E2 and X1 Notes and ultimate payment of principal with respect to all rated notes by legal final maturity. Moody's issues provisional ratings in advance of the final sale of securities, but these ratings represent only Moody's preliminary credit opinions. Upon a conclusive review of the transaction and associated documentation, Moody's will endeavor to assign definitive ratings to the Notes. A definitive rating may differ from a provisional rating. Other non-credit risks have not been addressed, but may have a significant effect on yield to investors. The principal methodology used in these ratings was "Moody's Approach to Rating RMBS Using the MILAN Framework" published in Jan. 2015. The analysis undertaken by Moody's at the initial assignment of ratings for RMBS securities may focus on aspects that become less relevant or typically remain unchanged during the surveillance stage. Factors that would lead to an upgrade or downgrade of the rating: Significantly different loss assumptions compared with our expectations at close due to either a change in economic conditions from our central scenario forecast or idiosyncratic performance factors would lead to rating actions. For instance, should economic conditions be worse than forecast, the higher defaults and loss severities resulting from a greater unemployment, worsening household affordability and a weaker housing market could result in downgrade of the ratings. Deleveraging of the capital structure or conversely a deterioration in the notes available credit enhancement could result in an upgrade or a downgrade of the rating, respectively. Stress Scenarios: Moody's Parameter Sensitivities: If the portfolio expected loss was increased from [1.8]% to [5.4]% of current balance, and the MILAN CE was increased from [11]% to [17.6]%, the model output indicates that the Class A notes would still achieve (P)Aaa(sf) assuming that all other factors remained equal. Moody's Parameter Sensitivities quantify the potential rating impact on a structured finance security from changing certain input parameters used in the initial rating. The analysis assumes that the deal has not aged and is not intended to measure how the rating of the security might change over time, but instead what the initial rating of the security might have been under different key rating inputs. Moody's Parameter Sensitivities provide a quantitative/model- indicated calculation of the number of rating notches that a Moody's structured finance security may vary if certain input parameters used in the initial rating process differed. The analysis assumes that the deal has not aged and is not intended to measure how the rating of the security might migrate over time, but rather how the initial rating of the security might have differed if key rating input parameters were varied. Parameter Sensitivities for the typical EMEA RMBS transaction are calculated by stressing key variable inputs in Moody's primary rating model. GEMGARTO 2015-2: Fitch Assigns 'BB(EXP)' Rating to Class X1 Debt ---------------------------------------------------------------- Fitch Ratings has assigned Gemgarto 2015-2 plc's notes expected ratings, as follows: Class A: 'AAA(EXP)sf', Outlook Stable Class B: 'AA(EXP)sf', Outlook Stable Class C: 'A(EXP)sf', Outlook Stable Class D: 'BBB+(EXP)sf', Outlook Stable Class E1: 'BB+(EXP)sf', Outlook Stable Class E2: 'BB(EXP)sf', Outlook Stable Class X1: 'BB(EXP)sf', Outlook Stable Class Z: not rated Class X2: not rated Class Y: not rated The final ratings are subject to the receipt of final documents conforming to information already received. This is an RMBS securitization by Gemgarto 2015-2, an SPV incorporated in England and Wales. The collateral comprises near- prime owner-occupied residential mortgages originated by Kensington Mortgage Company in the UK. The expected ratings are based on the quality of the collateral, the available credit enhancement, the origination and underwriting processes used by Kensington for this collateral, the servicing capabilities of Homeloan Management Limited (HML), and the financial and legal structure. KEY RATING DRIVERS Post-Crisis, Near-Prime The first transaction in the series, Gemgarto 2012-1, has performed strongly, with three-month plus arrears at 1.6%, compared with the Fitch prime index of 0.8% and non-conforming index of 9.8%. Kensington has a manual approach to underwriting, focusing on borrowers with some form of adverse credit and/or complex income. Underwriting practices are robust and the lending criteria does not allow for any adverse credit 24 months before application. Fitch applied an underwriter adjustment of more than one while assigning base default probabilities using its prime default matrix. Adverse Credit The pool has a higher proportion of adverse credit than Gemgarto 2015-1 but lower than Gemgarto 2012-1. The number of county court judgments was 10.7%, compared with 2.2% in Gemgarto 2015-1, and is lower than non-conforming transactions. Fitch has applied an upward adjustment to the default probability for these characteristics in line with its criteria. Unrated Originator and Seller The originator and seller are unrated entities and so may have limited resources to repurchase mortgages if there is a breach of the representations and warranties (RW). This is a risk, but there are a number of mitigating factors, such as the low occurrence of previous breaches of the RW and an extended file review. Combined Liquidity, General Reserve The transaction is supported by a non-amortizing rated note reserve fund (RNRF) set at 2% of the collateral balance at closing. Initially, most of the RNRF provides liquidity only to the class A and B notes, but as these notes amortize, the amount allocated for liquidity will fall in line with the note balances (2.5% of class A and B outstanding), and the rest will become available to absorb credit losses. RATING SENSITIVITIES The assigned ratings and the related analysis performed are based on the assumptions in the existing criteria - Criteria Addendum: UK, dated 11 June 2015. Fitch's exposure draft report - Exposure Draft - Criteria Addendum: UK, dated 22 September 2015 has not been adopted (and the related model has not been through the full validation process), and these were not used in the rating analysis. Fitch has performed a sensitivity analysis which shows that if the criteria in that Exposure Draft (and the related model) were used, the assigned ratings would be: Class A 'AAA(EXP)sf' Class B 'AA+(EXP)sf' Class C 'A+(EXP)sf' Class D 'BBB+(EXP)sf' Class E1 'BB+(EXP)sf' Class E2 'BB+(EXP)sf' Class X1 'BB+(EXP)sf' Material increases in the frequency of defaults and loss severity on defaulted receivables could produce loss levels greater than Fitch's base case expectations, which in turn may result in negative rating actions on the notes. Fitch's analysis revealed that a 30% increase in the weighted average (WA) foreclosure frequency, along with a 30% decrease in the WA recovery rate, would imply a downgrade of the class A notes to 'AA-sf' from 'AAAsf' and the class B notes to 'Asf' from 'AAsf'. DATA ADEQUACY Kensington provided Fitch with a loan-by-loan data template. All relevant fields were provided in the data tape, with the exception of prior mortgage arrears. Performance data on historic static arrears were provided for all loans originated by Kensington, but the scope of the data was limited due to rather low origination volumes, especially from 2010 to 2012, and the length of available history (Kensington restarted with its new lending program in 2010). Due to its limited origination history, only four cases of sold repossessions have been experienced to date. When assessing the relevant assumptions to apply for the QSA Fitch considers the robustness of the initial valuations as the key driver together with the special servicing arrangements in place. Considering the QSA assumptions are based on a comparison between sale price and an indexed original valuation, it is important for Fitch to have comfort that the original valuations obtained were robust and that sufficient controls and processes were in place to help ensure the veracity of the valuations received. In Fitch's view, Kensington has a robust approach to obtaining property valuations - with full valuations always required with additional desktop valuation checks and audits in cases when the valuation differs substantially. Furthermore, it is Fitch's view that the special servicing, which is performed by Kensington, demonstrates a high performance in overall servicing ability. Given this, the agency has applied QSA assumptions as per its standard criteria and has not applied any upward adjustments. During the previous 12 months, Fitch conducted a site visit to Kensington's offices and conducted a file review to check the quality of Kensington's originations. During the site visit, Fitch conducted a review of a small targeted sample of the originator's origination files and found the information contained in the reviewed files to be adequately consistent with the originator's policies and practices and the other information provided to the agency about the asset portfolio. Fitch reviewed the results of a third party assessment conducted on the asset portfolio information, which indicated no adverse findings material to the rating analysis. Overall and together with the assumptions referred to above, Fitch's assessment of the asset pool information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. To analyze the credit enhancement levels, Fitch evaluated the collateral using its default model ResiEMEA. The agency assessed the transaction cash flows using default and loss severity assumptions under various structural stresses including prepayment speeds and interest rate scenarios. Fitch rates the notes to the terms and conditions of the notes, which states that interest can be deferred for the class B to X1 notes given any such note is not the most senior class outstanding. However, Fitch always rates notes 'AA' or above for timely interest. Fitch's ratings scenarios indicate that the class A to D notes receive interest payments in our modelling scenarios without incurring any interest shortfall at any time. MARBLE ARCH NO 4: Fitch Affirms 'Bsf' Rating on Class E1c Debt -------------------------------------------------------------- Fitch Ratings has upgraded six and affirmed nine tranches of Marble Arch Residential Securitisation Ltd No 3 (MARS 3) and Marble Arch Residential Securitisation Ltd No 4 (MARS 4). The two transactions comprise UK non-conforming residential mortgages originated by Matlock Bank for MARS 3 and the London Mortgage Company and London Personal Loans Limited for MARS 4. KEY RATING DRIVERS Strong Credit Enhancement (CE) The combination of sequential amortization and non-amortizing reserve funds has led to a substantial build-up in CE available to the senior notes; 63.9% for MARS 3 and 84.9% for MARS 4. The agency deems the current CE to be sufficient to withstand the 'AAAsf' rating stresses applied in its analysis, as reflected by the affirmation. For MARS 3's class M2 and B notes and MARS 4's class C and D notes of, Fitch notes the build-up in CE over the past 12 months allows the notes to sustain stresses associated with higher ratings, leading to the upgrades. Stable Performance The issuers have reported stable asset performance over the past year. Loans in arrears by more than three months, excluding loans with properties in possession increased to 24% from 21.9% and to 14.6% from 14.4% over the past 12 months for MARS 3 and 4, respectively. The increase in the proportion of loans in late stage arrears in MARS 3 is driven by the small collateral pool and a small number of new mortgages entering the three months plus arrears stage. The build-up in late-stage arrears is driven by the servicer's decision to apply more stringent foreclosure practices. This is also evident from the marginal increase in the outstanding balance of loans associated with properties taken into possession as a proportion of the original collateral balance, which in the past 12 months went up to 15.3% from 15.2% in MARS 3 and to 11.8% from 11.6% in MARS 4. Unhedged Interest Rate Risk MARS 4's notes are exposed to basis risk due to 88% of the collateral paying a variable rate linked to BBR, while the notes pay an interest linked to three month Libor. There is no swap in place to hedge this risk. Fitch accounted for the unhedged basis risk by reducing the excess spread generated by the BBR-linked portions of the portfolio. RATING SENSITIVITIES The transactions are backed by floating-interest-rate loans. In the current low interest rate environment, borrowers are benefiting from low borrowing costs. An increase in interest rates could lead to performance deterioration of the underlying assets and consequently downgrades of the notes if defaults and associated losses exceed those of Fitch's stresses. As the reserve fund is the only source of CE for MARS 3's class B notes, the rating of the notes is now capped at the Long-term Issuer Default Rating of the account bank (Barclays Bank plc); currently implying a cap of 'A'/Stable. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pools and the transactions. There were no findings that were material to this analysis. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. Fitch did not undertake a review of the information provided about the underlying asset pools ahead of the transactions' initial closing. The subsequent performance of the transactions over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable. Overall, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating ResiEMEA. EMEA RMBS Surveillance Model. The rating actions are as follows: Marble Arch Residential Securitisation Ltd No 3 Class A1a (ISIN XS0214916081): affirmed at 'AAAsf'; Outlook Stable Class A1b (ISIN XS0214916917): affirmed at 'AAAsf'; Outlook Stable Class M1 (ISIN XS0214917303): affirmed at 'AAAsf'; Outlook Stable Class M2 (ISIN XS0214917642): upgraded to 'AAsf' from 'AA-sf'; Outlook Stable Class B (ISIN XS0214918533): upgraded to 'Asf' from 'BBB+sf'; Outlook Stable Class A1b Currency Swap Obligation (ISIN XS0214916917): affirmed at 'AAAsf'; Outlook Stable Marble Arch Residential Securitisation Ltd No 4 Class A3c (ISIN XS0270513590): affirmed at 'AAAsf'; Outlook Stable Class B1a (ISIN XS0270496994): affirmed at 'AAAsf'; Outlook Stable Class B1b (ISIN XS0270510224): affirmed at 'AAAsf'; Outlook Stable Class B1c (ISIN XS0270513756): affirmed at 'AAAsf'; Outlook Stable Class C1a (ISIN XS0270497612): upgraded to 'AA+sf' from 'AAsf'; Outlook Stable Class C1c (ISIN XS0270513830): upgraded to 'AA+sf' from 'AAsf'; Outlook Stable Class D1a (ISIN XS0270498180): upgraded to 'BBB+sf' from 'BBBsf'; Outlook Stable Class D1c (ISIN XS0270513913): upgraded to 'BBB+sf' from 'BBBsf'; Outlook Stable Class E1c (ISIN XS0270514309): affirmed at 'Bsf'; Outlook Stable MOY PARK: S&P Raises Corp. Credit Rating to 'BB', Outlook Stable ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its long-term corporate credit rating on U.K. poultry producer Moy Park Holdings Europe to 'BB' from 'B+'. S&P removed the ratings from CreditWatch with positive implications, where they had initially been placed on June 25, 2015. The outlook is stable. At the same time, S&P raised the issue ratings on the existing GBP300 million senior unsecured notes due 2021 to 'BB' from 'B+'. The '3' recovery rating on these notes remains unchanged, reflecting S&P's expectation of average (50%-70%) recovery in the event of a payment default. U.K.-based poultry producer Moy Park has been sold by its previous owner Marfrig Global Foods S.A. and is now a fully owned subsidiary of Brazil-based JBS S.A. Following the acquisition, S&P assess Moy Park's status within the new JBS group as "strategically important" under our criteria definitions. S&P bases its opinion on these four factors: -- JBS is unlikely to sell Moy Park; -- Moy Park is important to JBS' long-term strategy; -- Moy Park benefits from the long-term commitment of its parent; and -- Moy Park is reasonably successful at what it does. JBS (BB+/Stable) fully consolidates all its subsidiaries and has a GCP of 'bb+'. Under S&P's group rating methodology, the long-term issuer credit rating of a "strategically important" subsidiary can receive three additional notches of uplift above its SACP. However, it is capped at one notch below the GCP. S&P therefore is applying one notch of uplift to Moy Park's 'bb-' SACP and raising its long-term issuer credit rating to 'BB'. Moy Park's 'bb-' SACP remains unchanged. Before the acquisition, S&P rated Moy Park one notch lower that its SACP to reflect the weaker credit standing of its previous owner Marfrig. S&P continues to assess Moy Park's business risk profile as "weak" and its financial risk profile as "significant," resulting in an anchor of 'bb-'. The business risk assessment reflects Moy Park's geographic concentration in the U.K. and France; limited product diversity, with over 75% of revenue derived from poultry products; and significant exposure to private label retailers. Moy Park's "significant" financial risk profile reflects S&P's base-case forecast of stable Standard & Poor's-adjusted free operating cash flow of about GBP18 million-GBP23 million for the next 12-18 months, and the group's ability to maintain debt to EBITDA of 3x- 4x. The SACP is equal to the anchor of 'bb-' as there is no impact from rating modifiers. In S&P's base case, it assumes: -- Low-single-digit revenue growth, reflecting modest increases in consumer demand offset by deflationary price pressures. -- Stable operating performance resulting in Standard & Poor's adjusted EBITDA margins of 8.0%-8.5% in 2015 and 2016. -- Annual capital expenditure (capex) of approximately 4.0%- 5.0% of revenues. Negligible movement in working capital requirements and no acquisitions. Based on these assumptions, S&P arrives at these credit metrics: -- Standard & Poor's adjusted debt to EBITDA of 3.2x in 2015 and 3.1x in 2016. -- Standard & Poor's adjusted EBITDA interest coverage of 5.5x-6.5x in 2015 and 5.0x-6.0x in 2016. The stable outlook reflects S&P's view that Moy Park will maintain fairly stable revenues and profitability, resulting in the continued generation of free cash flow. S&P expects Standard & Poor's-adjusted debt to EBITDA to remain at 3.0x-3.5x with EBITDA interest coverage of 5.0x-6.0x over the next 18-24 months. S&P bases its financial policy assessment of Moy Park on statements from management and representatives of JBS that the group has no plans to increase debt leverage from current levels through debt- financed acquisitions or a step-up in the distribution of funds to shareholders. S&P could lower the ratings if it was to revise Moy Park's status within the group to "moderately strategic" or lower. This would limit the uplift to its stand-alone credit profile (SACP). Such a revision could come from Moy Park no longer being as important to the group's long-term strategy, or if JBS' commitment to the success of the business became uncertain. Substantial leverage not commensurate with that of the rest of the group, such that adjusted debt-to-EBITDA remained above 5.0x on a sustainable basis, could be seen as evidence that Moy Park's group status had weakened and could lead S&P to review this status. Operational factors that could lead S&P to revise Moy Park's SACP include material adversity (such as avian disease) in the trading environment for Moy Park, but these are not currently central to our operating base-case scenario. S&P could raise the ratings if it was to revise Moy Park's SACP to a level equal with the 'bb+' GCP. This could occur if its financial risk profile improved significantly, with a reduction in long-term debt resulting in adjusted debt-to-EBITDA below 2x on a sustainable basis. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than US$3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/booksto order any title today. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2015. 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. 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