/raid1/www/Hosts/bankrupt/TCREUR_Public/151204.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Friday, December 4, 2015, Vol. 16, No. 240
Headlines
C Z E C H R E P U B L I C
NEW WORLD: Czech Government Won't Buy Mining Unit, Minister Says
F R A N C E
FINANCIERE LULLY: S&P Assigns 'B' CCR & Rates 1st Lien Loans 'B'
G E R M A N Y
CART 1 LIMITED: Fitch Affirms 'CCsf' Rating on Class E Notes
CORNERSTONE TITAN 2007-1: Fitch Affirms 'Dsf' Ratings on 6 Notes
GATE SME 2006-1: Fitch Hikes Class A Notes Rating to 'B+sf'
JK-HOLDING: Moody's Hikes Corporate Family Rating to B1
KLOECKNER & CO: S&P Lowers CCR to 'B', Outlook Stable
I C E L A N D
ORUVEITA REYKJAVIKUR: Moody's Hikes Issuer Rating to Ba3
I R E L A N D
ALLIED IRISH: Fitch Assigns 'B-' Rating to EUR500MM AT1 Notes
CORK STREET: Moody's Assigns 'Ba2' Rating to Class D Notes
DAN MORRISSEY: AIB Seeks EUR24.9MM Judgment Against Businessman
TYMON PARK: Moody's Assigns '(P)B2(sf)' Rating to Class E Notes
TYMON PARK: Fitch Assigns 'B-(EXP)sf' Rating to Class E Notes
M A C E D O N I A
MACEDONIA: Fitch Assigns 'BB+' Rating to EUR270-Mil. Eurobond
N E T H E R L A N D S
QUEEN STREET CLO II: S&P Raises Rating on Class E Notes to B+
P O L A N D
ROOF POLAND: Fitch Assigns 'BB-' Rating to Class B Notes
R U S S I A
RUSSIAN BANKS: Fitch Takes Rating Actions on Four Institutions
S E R B I A
PIK BECEJ: Asset Auction Scheduled for Dec. 17
S P A I N
ABENGOA SA: Seeks EUR150 Million to Pay Wages, Suppliers
T U R K E Y
PLASPAK KIMYA: Debt Restructuring Among Rescue Measures
U K R A I N E
INTEGRAL-BANK PJSC: Deposit Fund Begins Closedown Procedure
U N I T E D K I N G D O M
BIBBY OFFSHORE: Moody's Cuts Corporate Family Rating to 'B3'
CAPARO INDUSTRIES: Jobs Saved a Month After Administration
FAIRLINE BOATS: Enters Administration, 450 Jobs at Risk
KONECRANES PLC: Moody's Assigns B1 CFR, Outlook Stable
* Declercq, Van de Graaff Join Morrison's UK Insolvency Group
X X X X X X X X
* S&P Affirms Most European Bank Ratings Following Govt. Support
* BOOK REVIEW: The Sorcerer's Apprentice - Medical Miracles
*********
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C Z E C H R E P U B L I C
===========================
NEW WORLD: Czech Government Won't Buy Mining Unit, Minister Says
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Ladka Bauerova at Bloomberg News reports that Industry and Trade
Minister Jan Mladek said the Czech government won't buy the mining
unit of the struggling coal company New World Resources Plc.
NWR has suffered as the global glut depressed prices, making its
mines unprofitable, Bloomberg relates. The company has gone
through forced debt restructuring last year and analysts estimate
it may run out of cash as early as next year, Bloomberg recounts.
Government representatives are to meet with NWR's management and
bondholders on Dec. 9 to discuss how to proceed, Mr. Mladek, as
cited by Bloomberg, said, adding it would be "totally
unacceptable" to put public money into the debt-ridden company.
NWR had EUR77 million (US$81 million) in cash available in
October, but said its net debt was EUR321 million, which it might
not be able to repay, Bloomberg discloses. The company said in
November a dip below EUR40 million in available cash would trigger
an early repayment of the company's EUR35 million super senior
credit facility, maturing in Oct. 2016, and would force to company
to sell some or all of its assets, Bloomberg recounts.
According to Bloomberg, Mr. Mladek said while the government is
"aware of the social problem" that could arise if suddenly 13,000
miners would be out of work, it's willing to let the company enter
bankruptcy proceedings. He said the state could then take over
those assets that nobody wants to buy and progressively end their
operations, Bloomberg relays.
New World Resources Plc is the largest Czech producer of coking
coal.
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F R A N C E
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FINANCIERE LULLY: S&P Assigns 'B' CCR & Rates 1st Lien Loans 'B'
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' long-term
corporate credit rating to France-based micro-connector
manufacturer Financiere Lully C SAS (Linxens). The outlook is
stable.
S&P also assigned its 'B' issue rating to the first-lien term
loans due 2022 and revolving credit facility (RCF) due 2022,
issued by Luxembourg-based financing subsidiary Lully Finance
S.a.r.l. and U.S.-based co-borrower Lully Finance LLC. S&P has
assigned its recovery rating of '3' to both the first-lien loans
and the RCF, indicating S&P's expectation of meaningful recovery
in the higher half of the 50%-70% range in the event of a payment
default.
At the same time, S&P assigned a 'CCC+' issue rating to the
second-lien term loan due 2023 and issued by the financing
subsidiaries. S&P assigned a recovery rating of '6' to this loan,
indicating our expectation of negligible (0-10%) recovery in the
event of a payment default.
These ratings are in line with the preliminary ratings S&P
assigned on July 16, 2015.
On Oct. 16, 2015, financial sponsor CVC Capital Partners (CVC)
acquired France-based micro-connector manufacturer Linxens Holding
SAS. At closing, all existing debt at Linxens Holding was repaid.
To finance the transaction, the holding company Financiere Lully C
has issued first-lien term loans, a second-lien term loan, and a
revolving credit facility (RCF).
S&P assesses Linxens business risk profile as "fair" and its
financial risk profile as "highly leveraged," as defined in S&P's
corporate methodology criteria.
Linxens' business risk profile is constrained by the company's
small size, particularly compared with its main customers (smart
card and semiconductor manufacturers), its lack of meaningful
product diversification, very high customer concentration, and its
exposure to medium- to long-term technology shifts, in S&P's
opinion. Nevertheless, the risk of migration toward pure
contactless technology or embedded handset SIM seems limited in
the near term. In S&P's view, these weaknesses are partly offset
by Linxens' strong market position as the world's No. 1 supplier
of tapes for smart cards; solid growth opportunities, mainly for
banking cards, as well as for government and healthcare cards; and
good profitability. Linxens' competitive position and margins are
currently supported by its larger scale and superior manufacturing
process know-how. In addition, S&P expects Linxens will report
relatively resilient profit margins, thanks to a mainly variable
cost structure, and a track record of steady efficiency gains in
its production process that offsets price declines.
Linxens' financial risk profile is primarily constrained by debt-
to-EBITDA and funds from operations (FFO)-to-debt ratios, as
adjusted by Standard & Poor's, of about 9.2x (about 6.8x excluding
shareholder loans) and 4% (9%), respectively, post-closing. S&P
expects leverage to gradually improve thereafter, due to higher
EBITDA generation. This will, however, be partly offset by a
EUR300 million noncash interest accruing shareholder loan, which
S&P views as debt under its criteria. Nevertheless, S&P
acknowledges certain equity characteristics, such as the maturity
after the senior financing, the lack of cash interest payments,
and the structural subordination of the shareholder loan, which
will be issued outside the restricted group by a holding company
of Linxens.
S&P's base-case assumptions for Linxens have not changed since S&P
assigned the preliminary rating on July 16, 2015. S&P continues
to anticipate revenue growth of 20%-25% in 2015, mainly supported
by solid demand in payment cards due to the EMV (Europay
Mastercard Visa) standard rollout in the U.S. and similar roll-out
in China, as well as solid demand for SIM cards. In addition,
Linxens' revenues are likely to benefit meaningfully from the
strengthening U.S. dollar against the euro. S&P expects Standard
& Poor's-adjusted EBITDA margins to gradually increase due to
higher volumes, improving productivity, and efficiency offsetting
ongoing price declines, and continued lower precious metal
content. In addition, 2015 EBITDA will benefit from favorable
foreign exchange effects. Furthermore, due to investments in
product lines, 2015 capital expenditure will represent about 6% of
revenues. S&P expects the ratio to decline to about 5% in 2016-
2017.
S&P does not deduct surplus cash in its leverage calculations,
primarily because private-equity owned companies are more likely
than other companies to pursue an aggressive financial policy, in
S&P's view. These weaknesses are partially offset by S&P's
expectations of free operating cash flow (FOCF) generation in
excess of 4% of Standard & Poor's adjusted debt (6% excluding
shareholder loans) and solid EBITDA cash interest coverage of
about 2.5x to 3.0x in 2015-2017. Linxens' FOCF generation is
supported by modest capital expenditure and limited cash tax
payments.
The stable outlook on Linxens reflects S&P's expectations that
group revenues and EBITDA will continue to grow, and S&P's
estimate of adjusted debt to EBITDA between 9x and 10x (6x and 7x
excluding shareholder loans) and FOCF to debt of about 4% (5%)
over the next 12 months.
S&P could raise the ratings if stronger-than-expected revenues and
EBITDA growth, as well as voluntary senior debt prepayments
through excess cash flows, materially strengthen Linxens' credit
metrics. In particular, adjusted debt to EBITDA sustainably below
9x (6x excluding shareholder loans) and FOCF to debt of more than
6% (8%-10% excluding shareholder loans) could support a higher
rating.
S&P could lower the ratings if Linxens' operating performance
deteriorates, for instance if EBITDA declines significantly on
lower revenues or weaker margins, resulting in adjusted debt to
EBITDA above 10x (7x excluding shareholder loans) and only
modestly positive FOCF generation.
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G E R M A N Y
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CART 1 LIMITED: Fitch Affirms 'CCsf' Rating on Class E Notes
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Fitch Ratings has affirmed Cart 1 Limited's class E notes at
'CCsf' and assigned a Recovery Estimate (RE) of 60%.
The transaction is a partially funded synthetic CDO referencing a
portfolio of loans, revolving credit facilities and other payment
claims to SMEs and larger companies based predominantly in
Germany. The debt instruments were originated by Deutsche Bank AG
(A/Negative/F1).
KEY RATING DRIVERS
Scheduled maturity was reached on June 15, 2015, on which date the
class A+ through D notes were paid in full. Only the 'CCsf' rated
class E notes and the not rated class F notes remain outstanding.
The portfolio currently consists solely of non-performing loans.
The cumulative recovery rate since closing is 49.8%. Even if all
the remaining defaulted loans are liquidated before the legal
maturity in June 2018 (which is unlikely, given the typically long
workout process) and the same recovery rate is obtained, this
would still be insufficient to completely repay the outstanding
class E notes. There is no synthetic excess spread or other
potential sources of collections. Therefore, default on the class
E notes is probable, which is commensurate with their 'CCsf'
rating.
RATING SENSITIVITIES
Fitch assigns REs to all notes rated 'CCCsf' or below. REs are
forward-looking, taking into account Fitch's expectations for
principal repayments on a distressed structured finance security.
The RE of 60% was derived based on Fitch's projection of future
recovery prospects and the fact that the majority of the loans are
unsecured.
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.
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.
CORNERSTONE TITAN 2007-1: Fitch Affirms 'Dsf' Ratings on 6 Notes
----------------------------------------------------------------
Fitch Ratings has affirmed Cornerstone Titan 2007-1 plc's notes,
as:
EUR21.4 class A2 (XS0288055600) affirmed at 'Csf'; Recovery
Estimate (RE) revised to RE0% from 90%
EUR39.2 mil. class B (XS0288056673) affirmed at 'Dsf'; RE0%
EUR0 mil. class C (XS0288057218) affirmed at 'Dsf'; RE0%
EUR0 mil. class D (XS0288057648) affirmed at 'Dsf'; RE0%
EUR0 mil. class E (XS0288058885) affirmed at 'Dsf'; RE0%
EUR0 mil. class F (XS0288059420) affirmed at 'Dsf'; RE0%
EUR0 mil. class G (XS0288060196) affirmed at 'Dsf'; RE0%
Cornerstone Titan 2007-1 plc is a CMBS transaction secured by
three loans backed by commercial real estate assets in Germany and
Switzerland.
KEY RATING DRIVERS
The affirmation reflects the continued weak performance of the
remaining loans, derived to a large extent from the weak recovery
prospects of the underlying collateral. The downward revision of
the RE on the class A2 notes is primarily due to the litigation
against the issuer brought by the class X noteholder.
According to a notice on Oct. 9, 2015, Credit Suisse Asset
Management (CSAM) believes that it has been underpaid class X
payments because of alleged calculation errors (specifically the
exclusion of default interest). Should the courts find in favor
of CSAM, it will likely be entitled to accrued interest as well,
at a rate also subject to doubt.
Based on Fitch's estimates, a legal award could account for all
prospective recoveries -- particularly as collateral liquidation
has progressed in the past 12 months. Since the last rating
action, four loans have been resolved with mixed results. Two
loans repaid in full, while the other two suffered losses, broadly
in line with Fitch's expectations.
These distributions have already been made to investors, and only
three loans remain. The bulk of the EUR16 million of recoveries
projected by Fitch is expected to come from the German Retail 2
loan, backed by 10 properties. While Fitch has little visibility
as to the likelihood and consequence of the claim being upheld, we
assume that the plaintiff - an affiliate of the originator - would
only have taken legal action and risked its reputation in the eyes
of investors if it stood a strong chance of winning a material
sum.
RATING SENSITIVITIES
Any loss suffered on the class A2 notes will result in their
downgrade to 'Dsf' and subsequent withdrawal.
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.
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.
GATE SME 2006-1: Fitch Hikes Class A Notes Rating to 'B+sf'
-----------------------------------------------------------
Fitch Ratings has upgraded Gate SME CLO 2006-1 Ltd's class A and B
notes, as follows:
EUR42 million class A notes (ISIN: XS0271959388): upgraded to
'B+sf' from 'Bsf'; Outlook Stable
EUR26.5 million class B notes (ISIN: XS0271960048): upgraded to
'Bsf' from 'B-sf'; Outlook Stable
EUR7.5 million class C notes (ISIN: XS0271960550): affirmed at
'B-sf'; Outlook Stable
EUR20 million class D notes (ISIN: XS0271961012): affirmed at
'CCsf'; RE0%
EUR15.5 million class E notes (ISIN: XS0271961103): affirmed at
'CCsf'; RE0%
The transaction is a partially funded synthetic CDO referencing a
portfolio of loans, revolving credit facilities and other payment
claims to SMEs and larger companies based predominantly in
Germany. The debt instruments were originated by Deutsche Bank AG
(A/Negative/F1).
KEY RATING DRIVERS
The portfolio performance remains stable. Additional defaults
since last review amount to EUR1.8 million, or 0.09% of the
initial portfolio notional. Cumulative realised losses equal 1.98%
of the initial pool. No additional losses have been realised since
the last review. The cumulative recovery rate achieved from
liquidations equals 30%.
To analyze the portfolio credit quality, Fitch used its Portfolio
Credit Model, which derives rating-dependent default, recovery and
loss rates. Credit enhancement for the class A and B notes has
increased, enabling them to withstand slightly higher losses,
which led to their upgrade. The credit protection for the other
notes is commensurate with their ratings.
RATING SENSITIVITIES
The transaction is sensitive to the default of a few large
obligors (event risk). The portfolio is highly concentrated. The
largest obligor group accounts for 1.8% of the pool, while the top
10 obligor groups amount to 14.7%.
Fitch assigns Recovery Estimates (RE) to all notes rated 'CCCsf'
or below. REs are forward-looking, taking into account Fitch's
expectations for principal repayments on a distressed structured
finance security. The REs of 0% mirrors the agency's expectation
of a full loss allocation to the class D and E notes.
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.
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.
JK-HOLDING: Moody's Hikes Corporate Family Rating to B1
-------------------------------------------------------
Moody's Investors Service upgraded to B1 from B2 the Corporate
Family Rating ("CFR") and to B1-PD from B2-PD the Probability of
Default Rating (PDR) of JH-Holding GmbH, the ultimate holding
company for paper-packaging producer Progroup AG.
At the same time, the instrument rating of the existing EUR125
million subordinated PIK Toggle Notes, issued by JH-Holdings
Finance SA was upgraded to B3 (LGD6) from Caa1 (LGD6) while the B1
(LGD 3) rating of the EUR400 million Senior Secured Notes
(consisting of a fixed rate tranche and a floating rate tranche)
issued by Progroup AG, a majority owned subsidiary of JH-Holding
GmbH, was affirmed. The outlook on all ratings is stable.
"The upgrade of its CFR to B1 reflects Progroup's strong current
trading, evidenced by increased sales of 3.2% and strong EBITDA
margin exceeding 20% during the first nine months of 2015. The
upgrade also considers the envisaged acquisition of the combined
heat and power plant (CHP)," says Matthias Volkmer, a Moody's Vice
President and lead analyst for Progroup.
RATINGS RATIONALE
The decision to upgrade the ProGroup's CFR to B1 considers the
potential for Progroup's credit metrics to strengthen further
following its strong performance during the first nine months of
2015. This development was driven by volume and price increases,
but also by an improved degree of integration of Propapier
(containerboard) and Prowell (corrugated board) that has resulted
in cost benefits. We expect that Progroup will be able to sustain
EBITDA margins in the mid to high teen percentages in the long-
term, which positions the company strongly compared to some of its
peers. Moreover, the stable outlook is based on Moody's
expectation that Progroup will preserve sufficient liquidity
supported by continued positive free cash flow generation in the
absence of material debt financed acquisitions and shareholder
distributions.
The rating action also takes into account Progroup's announcement
to acquire the combined heat and power plant (CHP) of EnBW Energie
Baden-Wuerttemberg AG (rated A3 negative) for a total
consideration of EUR184 million (excluding transaction costs).
Moody's understand that this transaction will be financed by a mix
of cash on balance sheet and additional debt. The acquisition is
credit positive, because it is expected to have a positive impact
of approximately EUR30 million per year on Progroup's EBITDA and
will also improve the company's annual cash flow by EUR23 million
(before tax and working capital) from 2016 onwards.
The B1 rating on the Senior Secured Notes has not been upgraded.
This is due to the fact that the share of subordinated debt will
decline as a consequence of the additional secured debt that is
added to Progroup to finance the acquisitioin of the CHP. This
will reduce the cushion for first losses stemming from the
subordinated PIK Toggle Notes in a default scenario, and is now
not sufficient any more to justify a higher than the corporate
family rating for the secured debt. While the Senior Secured Notes
and the RCF share the same collateral package, lenders under the
RCF have priority access to any enforcement proceeds in a default
scenario. The B3 rating on the PIK toggle notes reflect their
junior ranking in the capital structure.
What Could Change the Rating -- UP
Positive rating pressure could build if Progroup was able to
sustain RCF/debt in the mid teen percentages as adjusted by
Moody's. In terms of leverage, we would expect the group's
debt/EBITDA as adjusted by Moody's to decline to 4x or below to
consider an upgrade. A rating upgrade would also require a well
managed liquidity profile.
What Could Change the Rating -- DOWN
Moody's could consider downgrading Progroup's ratings if the
group's RCF/ debt declined below the low teen percentages with
debt/EBITDA being above 5.5x for an extended period of time. Also,
a deterioration in liquidity would be negative for the rating.
KLOECKNER & CO: S&P Lowers CCR to 'B', Outlook Stable
-----------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term corporate
credit rating on German steel distributor Kloeckner & Co. S.E. to
'B' from 'B+'. The outlook is stable.
The downgrade reflects Kloeckner's very weak performance in the
first nine month of 2015, which was well below S&P's previous
expectations that assumed a recovery in the second half of the
year. Moreover, S&P expects that improvement will start from the
second quarter of 2016. The downgrade also takes into account low
margins and higher earnings volatility than S&P previously
factored in. The company's reported EBITDA (before restructuring
costs) was only EUR76 million compared with EUR158 million a year
earlier. This owed to the continued decline in steel prices
throughout the year and the company's very limited pricing power
vis-a-vis its customers due to high competition in the steel
distribution industry, as well as the company's low share of
value-added services. S&P therefore now sees Kloeckner's business
risk profile at the low end of the weak range, resulting in a one-
notch negative comparable rating analysis modifier.
The stable outlook reflects S&P's expectation that Kloeckner's
operating performance will improve starting from the second
quarter of 2016, up from a likely very weak full-year 2015. This
assumes steel prices stabilize at the current low level, without
further negative inventory impacts from price declines. S&P also
factors in that the company will maintain its significant
availability under committed bank lines and will continue to
regularly extend their maturity.
Rating upside over the next 24 months may be driven by improved
profitability and resulting materially lower leverage with debt to
EBITDA consistently about or below 4x.
S&P currently sees rating downside as unlikely, but it could occur
if Kloeckner doesn't extend in the first half of 2016 its bank
lines maturing in 2017 or if S&P revises down its strong liquidity
assessment. Lack of improvement in operating performance with
debt to EBITDA remaining consistently at or above 6x will also
lead to a downgrade.
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I C E L A N D
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ORUVEITA REYKJAVIKUR: Moody's Hikes Issuer Rating to Ba3
--------------------------------------------------------
Moody's Investors Service upgraded to Ba3 from B1 the issuer
rating of Orkuveita Reykjavikur (OR). Concurrently, the outlook
has been changed to stable.
RATINGS RATIONALE
The upgrade of OR's issuer rating to Ba3 reflects the progress the
company has made with regard to improving its operational
performance, strengthening its liquidity position and reducing
financial leverage against the background of an improving
macroeconomic environment and market conditions in Iceland. It
also takes into account of Moody's expectation that OR should be
able to maintain its improved financial profile and better
withstand adverse aluminium, foreign exchange and interest rate
movements.
OR's financial profile has improved as a result of the company's
successful execution of a five-year plan approved by the board of
directors in March 2011. The company has outperformed against
almost all targets, including those to increase revenues, reduce
costs, and postpone certain investments. Overall, OR has already
exceeded the Plan's goals more than one year ahead of its intended
completion date in December 2016.
The rating upgrade takes account of the fact that the Icelandic
economy has been on an improving trend over the last few years,
which is expected to continue. Moody's forecasts GDP growth in
Iceland of 4.7% in 2015 and 3.9% in 2016, underpinned by
increasingly robust domestic demand from business investments and
private consumption, which should be supportive of demand growth
for utility services. Moreover, we expect that higher inflation
will have a positive impact on the tariffs of OR's regulated
services.
Nevertheless, foreign currency exposure remains substantial owing
to a significant mismatch between the majority of OR's revenues
being generated in Icelandic krona and the majority of debt being
denominated in foreign currency. OR has a number of long-term
take-or-pay US dollar-denominated contracts with aluminium
smelting companies that provide valuable foreign currency
earnings, but these contracts are indexed to aluminium prices and
therefore expose the company to an additional source of
volatility.
OR's liquidity has improved owing to the company's effective cash
management and implementation of hedging agreements, which
provides greater visibility of cash flow and helps to partially
reduce its interest rate, exchange rate and commodity risks in the
shorter term.
OR is a partnership and under its governing act the partners --
the City of Reykjavik, which owns 93.5% of OR, the Town of Akranes
and the Municipality of Borgabyggd, which have shares for 5.5% and
1% respectively -- are responsible for the company's financial
liabilities in proportion to their shareholding (a guarantee of
collection). The company's Ba3 rating incorporates one notch of
uplift for potential extraordinary support to the company's
baseline credit assessment (BCA, a measure of standalone credit
strength) of b1.
OR's rating factors in positively (1) the company's strong market
position and strategic importance to Reykjavik, and Iceland more
broadly, as the provider of essential utility services to more
than 70% of Iceland's population; (2) the low business risk
profile associated with regulated activities, which account for
more than 60% of the company's EBITDA and provide a good degree of
cash flow predictability; and (3) its asset base with predictable
and low levels of capital expenditure requirements. However, the
rating also takes account of (1) OR's still significant financial
leverage; (2) the foreign currency risk; and (3) the company's
exposure to unregulated business and long-term power purchase
agreements with aluminium smelters, which expose revenues to
volatility in the price of aluminium.
RATIONALE FOR STABLE OUTLOOK
The stable outlook reflects Moody's expectation that OR will
continue to prudently manage its liquidity and improve its
financial position, such that credit metrics will be comfortably
positioned within the ratio guidance for a b1 BCA, namely the
maintenance of an FFO/ Net debt ratio in the low to mid-teens in
percentage terms.
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I R E L A N D
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ALLIED IRISH: Fitch Assigns 'B-' Rating to EUR500MM AT1 Notes
-------------------------------------------------------------
Fitch Ratings has assigned Allied Irish Banks, plc's (AIB
BB/Positive/B/bb) issue of EUR500 million perpetual additional
Tier 1 (AT1) notes a final rating of 'B-'.
The final rating is in line with the expected rating Fitch
assigned to the notes on Nov. 25, 2015.
KEY RATING DRIVERS
The notes are CRD IV-compliant perpetual non-cumulative resettable
AT1 instruments with fully discretionary interest payments and are
subject to write-down if AIB's Basel III common equity Tier 1
(CET1) ratio falls below 7%. The trigger ratio is calculated on a
'phased-in' basis under the EU capital requirement regulations
(CRR).
The rating is four notches below AIB's 'bb' Viability Rating (VR),
the maximum rating under Fitch's Global Bank Rating Criteria that
can be assigned to deeply subordinated notes with fully
discretionary coupon omission issued by banks with a VR anchor of
'bb'.
The notching reflects the notes' higher loss severity relative to
senior unsecured creditors (two notches) and higher non-
performance risk (two notches) given the fully discretionary
coupon payments. Fitch considers the latter to be the most easily
activated form of loss absorption.
AIB's transitional CET1 ratio, which includes the bank's
government-held preference shares (EUR3.5 billion), was 18.2% at
end-3Q15, well above the trigger point of 7%. Fitch expects the
phased-in CET1 ratio to fall to 15% by end-2015 following a
capital reorganization announced by AIB on Nov.6, 2015. The
capital reorganization plan has received regulatory approval and
is aimed at simplifying its capital stack. It includes the
issuance of EUR500 million. AT1 securities and the partial
conversion of its government-held preference shares (EUR1.8
billion) into ordinary bank shares. The bank will redeem its
convertible securities (EUR1.6 billion) as they mature in July
2016 and also repay the balance of preference shares still
outstanding (EUR1.7 billion). The capital reorganization also
includes the EUR750 million Tier 2 capital notes issued on
Nov. 18, 2015.
Fitch understands from AIB's management that the expected 15%
transitional CET1 ratio remains well above the bank's combined
buffer requirement (SREP) and that the bank plans to maintain a
buffer above its requirement to avoid any regulatory restriction
on the payment of AT1 distributions if its SREP is breached.
At end-1H15, the amount available to AIB for distribution to AT1
holders amounted to more than EUR5 billion, although Fitch expects
this to reduce by EUR1.7 billion upon redemption of the preference
shares. Nonetheless, the bank forecasts restoring this fairly
swiftly to ensure it has sufficient amounts to honor interest
payments on the notes at all times.
Fitch has assigned 100% equity credit to the securities. This
reflects their full coupon flexibility, the ability to be
converted into ordinary shares before the bank becomes non-viable,
their permanent nature and their subordination to all senior
creditors.
RATING SENSITIVITIES
As the securities are notched down from AIB's VR, their rating is
mostly sensitive to any change in this rating. The Positive
Outlook on AIB's Long-term IDR reflects Fitch's view that as
improvements in the bank's capital profile and deleveraging of
problematic assets continue to feed through to its credit profile,
the VR and IDR may be upgraded.
However, if any of Fitch's expectations are not met, or if
macroeconomic conditions reverse and cause further weakening of
asset quality to the extent that impairment charges would
compromise the bank's profitability and therefore capital
flexibility, this would be negative for the rating.
The securities' ratings are also sensitive to a change in their
notching, which could arise if Fitch changes its assessment of the
probability of their non-performance or loss-severity relative to
the risk captured in AIB's VR. This could reflect a change in
capital management or flexibility or an unexpected shift in
regulatory buffers, for example. The notching would also likely
increase to five notches if AIB's VR anchor rating is upgraded to
at least 'bbb-', in line with Fitch's criteria.
CORK STREET: Moody's Assigns 'Ba2' Rating to Class D Notes
----------------------------------------------------------
Moody's Investors Service announced that it has assigned these
definitive ratings to notes issued by Cork Street CLO Designated
Activity Company:
EUR127,300,000 Class A-1A Senior Secured Floating Rate Notes
due 2028, Definitive Rating Assigned Aaa (sf)
EUR112,700,000 Class A-1B Senior Secured Step-up Floating Rate
Notes due 2028, Definitive Rating Assigned Aaa (sf)
EUR15,650,000 Class A-2A Senior Secured Floating Rate Notes due
2028, Definitive Rating Assigned Aa2 (sf)
EUR26,350,000 Class A-2B Senior Secured Fixed Rate Notes due
2028, Definitive Rating Assigned Aa2 (sf)
EUR24,000,000 Class B Senior Secured Deferrable Fixed Rate
Notes due 2028, Definitive Rating Assigned A2 (sf)
EUR21,000,000 Class C Senior Secured Deferrable Fixed Rate
Notes due 2028, Definitive Rating Assigned Baa2 (sf)
EUR26,000,000 Class D Senior Secured Deferrable Fixed Rate
Notes due 2028, Definitive Rating Assigned Ba2 (sf)
RATINGS RATIONALE
Moody's definitive rating of the rated notes addresses the
expected loss posed to noteholders by legal final maturity of the
notes in 2028. The definitive ratings reflect the risks due to
defaults on the underlying portfolio of loans given the
characteristics and eligibility criteria of the constituent
assets, the relevant portfolio tests and covenants as well as the
transaction's capital and legal structure. Furthermore, Moody's
is of the opinion that the collateral manager, Guggenheim Partners
Europe Limited has sufficient experience and operational capacity
and is capable of managing this CLO.
Cork Street is a managed cash flow CLO. At least 90% of the
portfolio must consist of senior secured loans and senior secured
bonds and up to 10% of the portfolio may consist of unsecured
senior loans, second-lien loans, mezzanine obligations and high
yield bonds. The portfolio is expected to be at least 66.6%
ramped up as of the closing date and to be comprised predominantly
of corporate loans to obligors domiciled in Western Europe.
Guggenheim will manage the CLO. It will direct the selection,
acquisition and disposition of collateral on behalf of the Issuer
and may engage in trading activity, including discretionary
trading, during the transaction's four-year reinvestment period.
Thereafter, purchases are permitted using principal proceeds from
unscheduled principal payments and proceeds from sales of credit
risk and credit improved obligations, and are subject to certain
restrictions.
In addition to the seven classes of notes rated by Moody's, the
Issuer issued EUR53.5 million of subordinated notes which will not
be rated.
The transaction incorporates interest and par coverage tests
which, if triggered, divert interest and principal proceeds to pay
down the notes in order of seniority.
Loss and Cash Flow Analysis:
Moody's modeled the transaction using CDOEdge, a cash flow model
based on the Binomial Expansion Technique, as described in Section
2.3 of the "Moody's Global Approach to Rating Collateralized Loan
Obligations" rating methodology published in Sept. 2015. The cash
flow model evaluates all default scenarios that are then weighted
considering the probabilities of the binomial distribution assumed
for the portfolio default rate. In each default scenario, the
corresponding loss for each class of notes is calculated given the
incoming cash flows from the assets and the outgoing payments to
third parties and noteholders. Therefore, the expected loss or EL
for each tranche is the sum product of (i) the probability of
occurrence of each default scenario and (ii) the loss derived from
the cash flow model in each default scenario for each tranche.
Moody's used these base-case modeling assumptions:
Par amount: EUR 400,000,000
Diversity Score: 34
Weighted Average Rating Factor (WARF): 2800
Weighted Average Spread (WAS): 3.90%
Weighted Average Coupon (WAC): 5.5%
Weighted Average Recovery Rate (WARR): 42.75%
Weighted Average Life (WAL): 8 years
Stress Scenarios:
Together with the set of modeling assumptions above, Moody's
conducted additional sensitivity analysis, which was an important
component in determining the definitive rating assigned to the
rated notes. This sensitivity analysis includes increased default
probability relative to the base case. Below is a summary of the
impact of an increase in default probability (expressed in terms
of WARF level) on each of the rated notes (shown in terms of the
number of notch difference versus the current model output,
whereby a negative difference corresponds to higher expected
losses), holding all other factors equal:
Percentage Change in WARF: WARF + 15% (to 3220 from 2800)
Ratings Impact in Rating Notches:
Class A-1A Senior Secured Floating Rate Notes due 2028: 0
Class A-1B Senior Secured Step-up Floating Rate Notes due 2028: 0
Class A-2A Senior Secured Floating Rate Notes due 2028: -2
Class A-2B Senior Secured Fixed Rate Notes due 2028: -2
Class B Senior Secured Deferrable Fixed Rate Notes due 2028: -2
Class C Senior Secured Deferrable Fixed Rate Notes due 2028: -2
Class D Senior Secured Deferrable Fixed Rate Notes due 2028: -1
Ratings Impact in Rating Notches:
Class A-1A Senior Secured Floating Rate Notes due 2028: -1
Class A-1B Senior Secured Step-up Floating Rate Notes due
2028: -1
Class A-2A Senior Secured Floating Rate Notes due 2028: -3
Class A-2B Senior Secured Fixed Rate Notes due 2028: -3
Class B Senior Secured Deferrable Fixed Rate Notes due 2028: -3
Class C Senior Secured Deferrable Fixed Rate Notes due 2028: -2
Class D Senior Secured Deferrable Fixed Rate Notes due 2028: -1
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's
Global Approach to Rating Collateralized Loan Obligations"
published in Sept. 2015.
Factors that would lead to an upgrade or downgrade of the ratings:
The rated notes' performance is subject to uncertainty. The
notes' performance is sensitive to the performance of the
underlying portfolio, which in turn depends on economic and credit
conditions that may change. Guggenheim's investment decisions and
management of the transaction will also affect the notes'
performance.
DAN MORRISSEY: AIB Seeks EUR24.9MM Judgment Against Businessman
---------------------------------------------------------------
Irish Times reports that AIB is seeking summary judgment for
EUR24.9 million against a Co Carlow businessman Philip Morrissey.
The bank claims the sum is due on foot of a personal guarantee
entered into by Mr. Morrissey of the obligations of concrete and
quarrying company Dan Morrissey (Irl) Ltd, which went into
receivership last year, according to Irish Times.
The report notes that Justice Brian McGovern admitted the case to
the fast-track Commercial Court list and returned it to next
month.
AIB said Mr. Morrissey agreed to pay up to a capped amount of
EUR24.9 million and interest, the report discloses.
In June last year, a demand was sent to the company for EUR26.9
million, the report notes. When that was not paid, a receiver was
appointed by the bank, the report relays. An examiner was
appointed in June 2014 but was discharged in July after
unsuccessful efforts to come up with a survival plan, the report
discloses.
Irish Times says that an affidavit for the bank said the
borrowings related to loans totaling EUR16 million relating to
acquisition of quarrying lands in Carlow and Kildare, and that a
personal guarantee was granted by Mr. Morrissey in respect of
liabilities of the quarrying company to the bank and was capped at
EUR24.9 million, the report adds.
TYMON PARK: Moody's Assigns '(P)B2(sf)' Rating to Class E Notes
---------------------------------------------------------------
Moody's Investors Service announced that it has assigned the
following provisional ratings to notes to be issued by Tymon Park
CLO Limited:
-- EUR238,000,000 Class A-1A Senior Secured Floating Rate Notes
due 2029, Assigned (P)Aaa (sf)
-- EUR5,000,000 Class A-1B Senior Secured Fixed Rate Notes due
2029, Assigned (P)Aaa (sf)
-- EUR27,000,000 Class A-2A Senior Secured Floating Rate Notes
due 2029, Assigned (P)Aa2 (sf)
-- EUR15,000,000 Class A-2B Senior Secured Fixed Rate Notes due
2029, Assigned (P)Aa2 (sf)
-- EUR24,000,000 Class B Senior Secured Deferrable Floating Rate
Notes due 2029, Assigned (P)A2 (sf)
-- EUR22,000,000 Class C Senior Secured Deferrable Floating Rate
Notes due 2029, Assigned (P)Baa2 (sf)
-- EUR26,500,000 Class D Senior Secured Deferrable Floating Rate
Notes due 2029, Assigned (P)Ba2 (sf)
-- EUR12,000,000 Class E Senior Secured Deferrable Floating Rate
Notes due 2029, Assigned (P)B2 (sf)
Moody's issues provisional ratings in advance of the final sale of
financial instruments, but these ratings only represent Moody's
preliminary credit opinions. Upon a conclusive review of a
transaction and associated documentation, Moody's will endeavor to
assign definitive ratings. A definitive rating (if any) may differ
from a provisional rating.
RATINGS RATIONALE
Moody's provisional rating of the rated notes addresses the
expected loss posed to noteholders by legal final maturity of the
notes in 2029. The provisional ratings reflect the risks due to
defaults on the underlying portfolio of loans given the
characteristics and eligibility criteria of the constituent
assets, the relevant portfolio tests and covenants as well as the
transaction's capital and legal structure. Furthermore, Moody's is
of the opinion that the collateral manager, Blackstone / GSO Debt
Funds Management Europe Limited, has sufficient experience and
operational capacity and is capable of managing this CLO.
Tymon Park CLO Limited is a managed cash flow CLO. At least 90% of
the portfolio must consist of secured senior obligations and up to
10% of the portfolio may consist of unsecured senior loans, second
lien loans, mezzanine obligations, high yield bonds and/or first
lien last out loans. The portfolio is expected to be 62% ramped up
as of the closing date and to be comprised predominantly of
corporate loans to obligors domiciled in Western Europe. This
initial portfolio will be acquired by way of participations which
are required to be elevated as soon as reasonably practicable. The
remainder of the portfolio will be acquired during the six month
ramp-up period in compliance with the portfolio guidelines.
Blackstone / GSO Debt Funds Management Europe Limited will manage
the CLO. It will direct the selection, acquisition and disposition
of collateral on behalf of the Issuer and may engage in trading
activity, including discretionary trading, during the
transaction's four-year reinvestment period. Thereafter, purchases
are permitted using principal proceeds from unscheduled principal
payments and proceeds from sales of credit impaired obligations,
and are subject to certain restrictions.
In addition to the eight classes of notes rated by Moody's, the
Issuer will issue EUR 44,500,000 of subordinated notes. Moody's
will not assign a rating to this class of notes.
The transaction incorporates interest and par coverage tests
which, if triggered, will divert interest and principal proceeds
to pay down the notes in order of seniority.
Loss and Cash Flow Analysis:
Moody's modeled the transaction using CDOEdge, a cash flow model
based on the Binomial Expansion Technique, as described in Section
2.3 of the "Moody's Global Approach to Rating Collateralized Loan
Obligations" rating methodology published in September 2015. The
cash flow model evaluates all default scenarios that are then
weighted considering the probabilities of the binomial
distribution assumed for the portfolio default rate. In each
default scenario, the corresponding loss for each class of notes
is calculated given the incoming cash flows from the assets and
the outgoing payments to third parties and noteholders. Therefore,
the expected loss or EL for each tranche is the sum product of (i)
the probability of occurrence of each default scenario and (ii)
the loss derived from the cash flow model in each default scenario
for each tranche.
Moody's used the following base-case modeling assumptions:
Par Amount: EUR 400,000,000
Diversity Score: 36
Weighted Average Rating Factor (WARF): 2700
Weighted Average Spread (WAS): 4.05%
Weighted Average Coupon (WAC): 5.00%
Weighted Average Recovery Rate (WARR): 41.5%
Weighted Average Life (WAL): 8 years
Stress Scenarios:
Together with the set of modelling assumptions above, Moody's
conducted an additional sensitivity analysis, which was an
important component in determining the rating assigned to the
rated notes. This sensitivity analysis includes increased default
probability relative to the base case. Below is a summary of the
impact of an increase in default probability (expressed in terms
of WARF level) on each of the rated notes (shown in terms of the
number of notch difference versus the current model output,
whereby a negative difference corresponds to higher expected
losses), holding all other factors equal:
Percentage Change in WARF: WARF + 15% (to 3105 from 2700)
Ratings Impact in Rating Notches:
Class A-1A Senior Secured Floating Rate Notes: 0
Class A-1B Senior Secured Fixed Rate Notes: 0
Class A-2A Senior Secured Floating Rate Notes: -2
Class A-2B Senior Secured Fixed Rate Notes: -2
Class B Senior Secured Deferrable Floating Rate Notes: -2
Class C Senior Secured Deferrable Floating Rate Notes: -2
Class D Senior Secured Deferrable Floating Rate Notes: -1
Class E Senior Secured Deferrable Floating Rate Notes: 0
Percentage Change in WARF: WARF +30% (to 3510 from 2700)
Ratings Impact in Rating Notches:
Class A-1A Senior Secured Floating Rate Notes: -1
Class A-1B Senior Secured Fixed Rate Notes: -1
Class A-2A Senior Secured Floating Rate Notes: -3
Class A-2B Senior Secured Fixed Rate Notes: -3
Class B Senior Secured Deferrable Floating Rate Notes: -3
Class C Senior Secured Deferrable Floating Rate Notes: -2
Class D Senior Secured Deferrable Floating Rate Notes: -2
Class E Senior Secured Deferrable Floating Rate Notes: -2
TYMON PARK: Fitch Assigns 'B-(EXP)sf' Rating to Class E Notes
-------------------------------------------------------------
Fitch Ratings has assigned Tymon Park CLO Limited notes expected
ratings, as:
Class A-1A: 'AAA(EXP)sf'; Outlook Stable
Class A-1B: 'AAA(EXP)sf'; Outlook Stable
Class A-2A: 'AA+(EXP)sf'; Outlook Stable
Class A-2B: 'AA+(EXP)sf'; Outlook Stable
Class B: 'A(EXP)sf'; Outlook Stable
Class C: 'BBB(EXP)sf'; Outlook Stable
Class D: 'BB(EXP)sf'; Outlook Stable
Class E: 'B-(EXP)sf'; Outlook Stable
Subordinated notes: not rated
The assignment of final ratings is contingent on the receipt of
final documents conforming to information already reviewed.
Tymon Park CLO Limited is an arbitrage cash flow collateralized
loan obligation (CLO).
KEY RATING DRIVERS
'B'/'B-' Portfolio Credit Quality
Fitch places the average credit quality of obligors in the
'B'/'B-' range. The agency has public ratings or credit opinions
on all but one of the obligors in the identified portfolio. The
covenanted maximum Fitch weighted average rating factor (WARF) for
assigning expected ratings is 34. The WARF of the identified
portfolio is 33.6.
High Recovery Expectations
The portfolio will comprise a minimum of 90% senior secured
obligations. The covenanted minimum weighted average recovery
rate (WARR) for assigning expected ratings is 67.5%. The WARR of
the identified portfolio is 68.5%.
Limited Interest Rate Risk Exposure
Fitch modelled both a 10% and a 0% fixed-rate bucket in its
analysis, and the rated notes can withstand the interest rate
mismatch associated with both scenarios.
Diversified Asset Portfolio
The transaction contains a covenant that limits the top 10
obligors in the portfolio to 20% of the portfolio balance. This
ensures that the asset portfolio will not be exposed to excessive
obligor concentration.
Participation Agreement
At closing, the issuer will enter into a participation agreement
with Blackstone/GSO Corporate Funding Limited (the seller)
regarding the initial portfolio assets. The seller has granted
the issuer a fixed charge over the initial portfolio assets while
the title is being transferred to the issuer. A fixed charge over
such financial assets is difficult to establish, given the lack of
control. However, Fitch received a legal opinion that the fixed
charge in this case is likely to be upheld, given the control over
the accounts of the seller.
TRANSACTION SUMMARY
Net proceeds from the notes issue will be used to purchase a
EUR400 mil. portfolio of mostly European leveraged loans and
bonds. The portfolio is managed by Blackstone/GSO Debt Funds
Management Europe Limited. The reinvestment period is scheduled
to end in January 2020.
The transaction documents may be amended subject to rating agency
confirmation or noteholder approval. Where rating agency
confirmation relates to risk factors, Fitch will analyze the
proposed change and may provide a rating action commentary if the
change has a negative impact on the ratings. Such amendments may
delay the repayment of the notes as long as Fitch's analysis
confirms the expected repayment of principal at the legal final
maturity.
If in the agency's opinion the amendment is risk-neutral from a
rating perspective, Fitch may decline to comment. Noteholders
should be aware that confirmation is considered to be given if
Fitch declines to comment.
RATING SENSITIVITIES
A 25% increase in the obligor default probability would lead to a
downgrade of up to three notches for the rated notes. A 25%
reduction in expected recovery rates would lead to a downgrade of
up to four notches for the rated notes.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation
to this rating action.
DATA ADEQUACY
All but one of the underlying assets have ratings or credit
opinions from Fitch. Fitch has relied on the practices of the
relevant Fitch groups to assess the asset portfolio information.
Overall, 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.
=================
M A C E D O N I A
=================
MACEDONIA: Fitch Assigns 'BB+' Rating to EUR270-Mil. Eurobond
-------------------------------------------------------------
Fitch Ratings has assigned Macedonia's EUR270 million Eurobond
issuance, maturing December 1, 2020, with a coupon of 4.875% a
'BB+' rating.
KEY RATING DRIVERS
The rating is in line with Macedonia's Long-term foreign currency
Issuer Default Rating (IDR) of 'BB+', on which the Outlook is
Negative.
RATING SENSITIVITIES
The rating would be sensitive to any changes in Macedonia's Long-
term foreign currency IDR. On August 21, 2015, Fitch revised the
Outlooks on Macedonia's Long-term foreign and local currency IDRs
to Negative from Stable and affirmed the IDRs at 'BB+'.
=====================
N E T H E R L A N D S
=====================
QUEEN STREET CLO II: S&P Raises Rating on Class E Notes to B+
-------------------------------------------------------------
Standard & Poor's Ratings Services raised its credit ratings on
Queen Street CLO II B.V.'s class A-2, B, C, D, and E notes. At
the same time, S&P has affirmed its rating on the class A-1 notes.
The rating actions follow S&P's analysis of the transaction's
performance and the application of its relevant criteria.
Since S&P's May 15, 2014 review, the class A-1 notes have
amortized further to 11.76% of its initial balance. As a result,
all of the rated classes of notes have benefited from an increase
in par coverage.
S&P has subjected the capital structure to its cash flow analysis
to determine the break-even default rates (BDRs) for each class of
notes at each rating level. The BDRs represent S&P's estimate of
the level of asset defaults that the notes can withstand and still
fully pay interest and principal to the noteholders.
As a result of the increase in par coverage, S&P believes the
rated notes are now able to withstand a larger amount of asset
defaults.
S&P has estimated future defaults in the portfolio in each rating
scenario by applying its updated corporate collateralized debt
obligation (CDO) criteria.
S&P's analysis shows that the available credit enhancement for the
class A-2, B, C, D, and E notes is now commensurate with higher
ratings than those previously assigned. Therefore, S&P has raised
its ratings on these classes of notes.
At the same time, S&P has affirmed its rating on the class A-1
notes as it considers the available credit enhancement to be
commensurate with the currently assigned rating.
None of the ratings were capped by the application of S&P's
largest obligor or largest industry test, which are supplemental
stress tests that S&P outlines in its corporate CDO criteria.
Queen Street CLO II is a cash flow CLO transaction managed by Ares
Management Ltd. A portfolio of loans to European and U.S.-based,
mainly speculative-grade, corporate firms backs the transaction.
Queen Street CLO II closed in June 2007 and its reinvestment
period ended in August 2013.
RATINGS LIST
Class Rating
To From
Queen Street CLO II B.V.
EUR450 Million Senior Secured Floating-Rate and Subordinated Notes
Rating Affirmed
A-1 AAA (sf)
Ratings Raised
A-2 AAA (sf) AA+ (sf)
B AAA (sf) AA- (sf)
C AA- (sf) BBB+ (sf)
D BBB+ (sf) BB+ (sf)
E B+ (sf) B- (sf)
===========
P O L A N D
===========
ROOF POLAND: Fitch Assigns 'BB-' Rating to Class B Notes
--------------------------------------------------------
Fitch Ratings has assigned Roof Poland Leasing 2014 DAC (Roof)
final ratings, as:
PLN636 mil. Class A-1 floating rate secured notes: 'AA-sf';
Outlook Stable
PLN234.2 mil. Class A-2 floating rate secured notes: 'AA-sf';
Outlook Stable
PLN383.5 mil. Class B floating rate secured notes: 'BB-sf';
Outlook Stable
PLN221.23 mil. subordinated loan: not rated
The transaction is a securitization of lease receivables
originated in Poland by Raiffeisen Leasing Polska S.A. (RLP).
KEY RATING DRIVERS
Established Performance
RLP is a major company in the Polish leasing market, operating
since 1998. Fitch derived performance assumptions based on
leasing data from 2005 onwards. The agency expects a weighted
average lifetime default rate of 4.4% under the transaction's
definition before any adjustment, and 5.7% if early lease
terminations are incorporated.
Limited Originator Dependence
Fitch's analysis assumes RLP's insolvency. This assumption mainly
impacts the commingling of funds -- for which Fitch has assumed a
6% loss -- and the exclusion from assumed recoveries of asset sale
proceeds, which the transaction might not be able to access after
RLP's insolvency. The risk that the new owner of RLP, currently
for sale, may relax underwriting standards during the revolving
period is in our view addressed by our stressed assumptions.
Controlled Revolving
In Fitch's view, the risk of portfolio deterioration is reduced by
the revolving covenants, as well as the random selection of new
leases, as stated within the eligibility criteria. Fitch
considers the amortization events reasonably stringent, but the
residual risk of receivable repurchases decreasing the triggers'
efficiency cannot be entirely eliminated.
Class B Notes' Carry Cost
Fitch considers the structure particularly exposed in high default
and interest rates scenarios to the risk that collections may be
diverted away from the class A notes to service class B interest.
This is because the class B notes are always due to be paid senior
in the priority of payments, irrespective of portfolio
performance.
Sovereign-Related Cap
Default and recovery stresses applied at each rating scenario
depend on the Polish sovereign's local currency Issuer Default
Rating (A/Stable). Therefore, rating action on the sovereign may
lead to a review of the notes' ratings.
Stable Asset Outlook
Fitch expects economic growth in Poland to remain favorable in
2015-2017 at 3.5% on average, driven mainly by domestic demand.
As a result we maintain a stable asset performance outlook for
Polish leasing.
RATING SENSITIVITIES
Rating sensitivity to increased default rate assumptions
(class A / class B)
Current ratings: 'AA-sf' / 'BB-sf'
Increase in default rate by 10%: 'Asf' / 'B+sf'
Increase in default rate by 25%: 'A-sf' / 'Bsf'
Increase in default rate by 50%: 'BBBsf' / below 'Bsf'
Rating sensitivity to reduced recovery rate assumptions
(class A / class B)
Current ratings: 'AA-sf' / 'BB-sf'
Decrease in recovery rate by 10%: 'A+sf' / 'B+sf'
Decrease in recovery rate by 25%: 'A+sf' / 'B+sf'
Decrease in recovery rate by 50%: 'A+sf' / 'B+sf'
Rating sensitivity to multiple factors (class A / class B)
Current ratings: 'AA-sf' / 'BB-sf'
Increase in default rate by 10%, decrease in recovery rate by
10%: 'Asf' / 'B+sf'
Increase in default rate by 25%, decrease in recovery rate by
25%: 'BBB+sf' / 'Bsf'
Increase in default rate by 50%, decrease in recovery rate by
50%: 'BBB-sf' / below 'Bsf'
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation
to this rating action.
DATA ADEQUACY
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.
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.
Overall, 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.
===========
R U S S I A
===========
RUSSIAN BANKS: Fitch Takes Rating Actions on Four Institutions
--------------------------------------------------------------
Fitch Ratings has upgraded Expobank's LLC's (EB) Long-term Issuer
Default Rating to 'B+' from 'B' with Stable Outlook and downgraded
Spurt-Bank's Long-term IDR to 'B-' from 'B' with Negative Outlook.
The agency has also affirmed the Long-term IDRs of Russian
Universal Bank (Rusuniversal) at 'B' with Stable Outlook and
Uraltransbank (UTB) at 'B-'with Negative Outlook.
KEY RATING DRIVERS
ALL BANKS' IDRS, NATIONAL LONG-TERM RATINGS AND VIABILITY RATINGS
The upgrade of EB mainly reflects longer track record of
successfully managed and capital accretive acquisitions of banking
assets, while maintaining reasonable asset quality and
capitalization, improved core banking profitability and adequate
liquidity.
The downgrade of Spurt reflects the bank's weak asset quality with
significant additionally identified risky related
party/relationship lending, weak capitalization and weak
pre-impairment profitability.
The affirmation of Rusuniversal reflects limited changes in the
credit profile since our last review, including the bank's narrow
franchise and highly concentrated mostly relationship-based
business at both sides of the balance sheet. At the same time,
the bank's ratings take into account good asset quality, very high
capital ratios and robust liquidity.
The affirmation of UTB reflects narrow franchise, weak asset
quality and core operating profitability and only moderate
capitalization.
The Negative Outlooks on Spurt's and UTB's ratings reflect the
potential for further deterioration of their credit profiles over
the next 12-18 months, as asset quality remains under pressure,
while core pre-impairment profitability will be insufficient to
cover even a moderate increase of credit losses, which could thus
eat into the banks' capital. The Stable Outlooks on EB's and
Rusuniversal's ratings reflect less vulnerable asset quality, good
pre-impairment profitability, large capital buffer (Rusiniversal)
and therefore less likelihood of capital pressure.
EB's IDRs, NATIONAL RATING, VIABILITY RATING AND SENIOR UNSECURED
DEBT RATING
EB has demonstrated a successful track record of managing
acquisitions of banking assets having bought four banks, one
leasing company and significant loan portfolios over the past five
years. The banks were purchased with considerable discounts to
book values resulting in total RUB2.5 billion of gains for EB (31%
of end-1H15 equity). At the same time, EB's traditional banking
franchise remains limited, which coupled with appetite for further
acquisitions and contingent risks related to shareholder's other
assets is likely to constrain EB's ratings to the 'B' category.
EB's recently announced acquisition of Royal Bank of Scotland
Russia (RBSR, assets of RUB28bn at end-11M15) is unlikely to
impact its rating, because RBSR's balance sheet will be de-risked
prior to the acquisition in 1Q16. Most of the remaining assets
will be cash and equivalents, while the equity will be acquired
with a discount to book value.
EB's asset quality is good with non-performing loans (NPLs, 90
days overdue) being negligible 1.1% of total loans at end-1H15,
fully covered by impairment reserves. The loan book is highly
concentrated - the 25 largest made up 50% of total loan book (60%
net off held to maturity corporate eurobonds accounted as loans).
In Fitch's view, most of the top 25 loans are of acceptable
quality being reasonably well secured, issued to companies with
reasonable performance.
Core profitability is decent further boosted by gains from
acquisitions. The gain on purchase of MAK-Bank in 1H15 pulled
annualized ROAE to 33%. Net of this gain EB's ROAE would have
been still solid 20% helped by healthy net interest of 6.5%
(almost unchanged from 2014) and low impairment charges.
The Fitch Core Capital (FCC) ratio was adequate 16.7% at end-1H15.
The regulatory Tier 1 ratio was lower 11.1%, because 1H15 profit
was not yet audited and therefore accounted as Tier 2 capital.
Fitch estimates that the bank's regulatory capital buffer was
sufficient to increase impairment reserves up to 15% of total
loans (compared to 3.5% at end-1H15) before breaching regulatory
minima. Loss absorption capacity is also underpinned by solid
pre-impairment operating profit net of one-off M&A gains
(annualized 6.5% of average loans in 1H15.
A cushion of liquid assets (cash and equivalents, bonds eligible
for refinancing with Central Bank and short-term interbank)
covered 70% of customer accounts.
EB's senior unsecured debt is rated in line with the banks' Long-
term IDRs, reflecting Fitch's view of average recovery prospects
(corresponding to a Recovery Rating of '4'), in case of default.
SPURT's IDRs, VR AND NATIONAL LONG-TERM RATING
Spurt's reported NPLs (mostly retail) were a moderate 4.5% of
loans at end-1H15, 1.6x covered by reserves. However, a further
5% of loans (mostly corporate) were restructured and weakly
provisioned/collateralized. Additional asset quality risks stem
from significant exposure (20% of loans or 1.7x FCC) to companies,
which Fitch views as related to the bank. Most of this exposure
has been recently identified by Fitch and comprises small, quite
granular loans.
Of total related party exposure Fitch views as somewhat lower risk
loans amounting to 0.8x FCC issued to a related petrochemical
plant and a large construction company dealing with state
contracts. The remaining exposure (0.9x FCC) is of higher risk
being loans to companies with limited operations.
Profitability is weak due to margin compression and FX losses.
Annualized pre-impairment operating result net of unreceived
interest accruals was only 0.5% of average loans at end-1H15. Net
income was significantly pressured by impairment charges, with the
latter comprising 84% of pre-impairment profit at end-1H15.
Capitalization (regulatory Tier 1 ratio was 9% at end-9M15) is
considered tight given the risks from the related party lending,
restructured loans and the retail portfolio.
Liquidity and refinancing risks should be manageable, providing
deposits remain relatively stable, with the bank's liquid assets
net of near-term wholesale repayments 22% of customer accounts at
end-9M15. Bulky repayments maturing until-end-2015 have been
already repaid, and refinancing needs after 2015 are limited.
UTB's IDRs, VR AND NATIONAL LONG-TERM RATING
UTB's credit losses, defined as NPLs originated in the period to
average performing loan book, were 10% in 1H15 (annualized)
compared with 5.8% in 2014, while the share of NPLs in the loan
portfolio was a significant 17.7%. A further 8% of problem loans
were transferred to bad debt collection companies with the bank
retaining credit risk. Both on balance sheet NPLs and transferred
problem loans were fully covered by loan impairment reserves.
However, restructured loans, which otherwise would be NPLs,
accounted for another 5% of loans and were weakly provisioned.
The FCC ratio was a reasonable 17.5% at end-1H15, but the
regulatory Tier 1 ratio was much tighter 8% at end-10M15, mainly
because of lower property revaluation reserves and larger
operational risks component under regulatory rules. Regulatory
capitalization was sufficient to increase impairment reserves by
only 2.9% (up to maximum 21%) before breaching the minimum
required levels, which is a small safety buffer.
UTB reported a moderate annualized ROAE of 9% in 1H15. However,
this was solely due to gain on earlier redemption of subordinated
debt from EBRD with a discount. Without that gain, ROAE would
have been negative 13.8%. Pre-impairment profitability is weak
(equal to 0.1% of assets, annualized, in 1H15, net of the
redemption gain).
Liquidity is comfortable with liquid assets covering 40% of
customer accounts at end-1H15 (44% at end-10M15 under local GAAP).
RUSUNIVERSAL's IDRs, VR and NATIONAL LONG-TERM RATING
Rusuniversal focuses mainly on defense sector companies with whom
the bank's management and shareholders have long-term relations.
Both loans and deposits are extremely concentrated. The top 10
loans made up 90% of gross loans and the top 10 deposits 86% of
customer accounts. Fitch believes there is regulatory risk as
there is an overlap between some depositors and borrowers, and the
state may also tighten the legislation and force defense industry
companies to transfer financial flows to state-owned banks,
potentially challenging Rusuniversal's business.
Franchise and concentration issues aside, the bank's metric are
strong. Zero NPLs, high regulatory capitalization (64% at end-
10M15) sufficient to reserve almost the entire loan book, good
profitability (annualized ROAE of 8.2% in 1H15) considering a high
capital base and solid liquidity covering all customer funding.
ALL BANKS' SUPPORT RATINGS AND SUPPORT RATING FLOORS
The '5' Support Ratings and 'No Floor' Support Rating Floors of
the banks reflect their small size, limited market shares and
retail deposit franchises, making government support uncertain.
In Fitch's view, support from the banks' private shareholders can
also not be relied upon.
RATING SENSITIVITIES
EB's IDRs, NATIONAL RATING, VIABILITY RATING AND SENIOR UNSECURED
DEBT RATING
Upside potential for EB's ratings is currently limited. Downward
pressure may arise if capitalization and/or liquidity deteriorates
as a result of mismanaged M&As, or asset quality weakening causing
high impairment losses and pressure on capital. Any changes to
EB's VR would likely impact senior unsecured debt rating.
RUSUNIVERSAL's IDRs, NATIONAL RATING AND VIABILITY RATING
Given the franchise limitations, upside potential for the ratings
is limited. The bank's ratings could be downgraded if regulatory
pressures significantly impact its business and/or if the bank's
capitalization deteriorates as a result of either shareholders
decision to withdraw a significant amount of capital or major
asset quality deterioration.
SPURT's AND UTB's IDRs, NATIONAL RATING AND VIABILITY RATING
Deterioration in asset quality and continued weak pre-impairment
performance leading to capital erosion may result in negative
rating action. Spurt's rating could also be downgraded in case of
further significant increase in related party lending and/or
weakening of the bank's relations with the authorities. Should
the banks demonstrate moderation of credit losses and improvement
in operating profits this could lead to stabilization of the
ratings.
ALL BANKS' SUPPORT RATINGS AND SUPPORT RATING FLOORS
Positive rating action is unlikely in the foreseeable future,
although acquisition by a stronger owner could lead to an upgrade
of the Support Rating.
The rating actions are:
Expobank LLC:
Long-term foreign and local currency IDRs upgraded to 'B+' from
'B'; Outlooks Stable
Short-term foreign currency IDR affirmed at 'B'
Support Rating affirmed at '5'
Viability Rating upgraded to 'b+' from 'b'
Support Rating Floor affirmed at 'No Floor'
National Long-Term Rating upgraded to 'A-(rus)' from
'BBB(rus)'; Outlook Stable
Senior unsecured debt upgraded to 'B+'/Recovery Rating 'RR4'
Senior unsecured debt National Long-term Rating upgraded to
'A-(rus)' from 'BBB(rus)'
Spurt Bank:
Long-term foreign currency IDR downgraded to 'B-' from 'B';
Outlook Negative
Short-term foreign currency IDR affirmed at 'B'
Viability Rating downgraded to 'b-' from 'b'
Support Rating affirmed at '5'
Support Rating Floor affirmed at 'No Floor'
National Long-term Rating downgraded to 'BB(rus) from
'BBB-(rus)'; Outlook Negative
Russian Universal Bank:
Long-term foreign currency IDR affirmed at 'B', Outlook Stable
Local Currency long-term IDR affirmed at 'B', Outlook Stable
National Long-term Rating affirmed at 'BBB-(rus)', Outlook
Stable
Short-term foreign currency IDR affirmed at 'B'
Viability Rating affirmed at 'b'
Support Rating affirmed at '5'
Support Rating Floor affirmed at 'No Floor'
UralTransBank:
Long-term foreign currency IDR affirmed at 'B-'; Outlook
Negative
National Long-term rating affirmed at 'BB-(rus)', Outlook
Negative
Short-term foreign currency IDR affirmed at 'B'
Viability Rating affirmed at 'b-'
Support Rating affirmed at '5'
Rating Floor affirmed at 'No Floor'
===========
S E R B I A
===========
PIK BECEJ: Asset Auction Scheduled for Dec. 17
----------------------------------------------
Pavel Severinji, the bankruptcy trustee of PIK Becej, a
shareholding company in bankruptcy, is advertising the sale of the
debtor as a legal entity by public bidding.
Significant assets to be sold at the auction are:
1. Working unit "Ratarstvo"
1.1 Agricultural land owned by and under irrigation system in
total area of 2,908 hectares 23 acres and 63 m2
1.2 Centre for processing seeds with capacity of 24,000 tons
per year with storehouse of 12,850 tons
1.3 Feed mixers with capacity of 42,000 tons per year
1.4 Silos of 44,500 tons of storage space
1.5 Significant mechanization: Number of Universal harvesters
10, number of Vegetable harvesters 5, number of Forage
harvester 2, number of Corn harvesters 4, number of Panicle
cutters 7, number of Melioration machines 6, number of
Heavy tractors 23.
2. Working unit "Svinjarstvo"
2.1 Facilities of 6 farms with capacity of 4,600 sows and 4,390
suckling pigs allowing production of 100,000 fatlings per
year
3. Working unit "Govedarstvo"
3.1 Facilities of 2 farms with capacity of 1,950 cows and milk
production of up to 12,000,000 litres per year
4. Working unit "Flora"
4.1 Complete factory for vegetable processing with drive for
cold processing, which means canning vegetables by freezing
them and with drive for warm processing, which means
canning by pasterization, with total capacity of 20,000
tons per year for both drives.
4.2 Cold rooms capacity of 3,000 tons and warehouse of 2,700
tons
5. Working unit "Ribnjak"
5.1 Total area of 666 hectares 57 acres 51 m2 of which 160
hectares 87 acres and 26 m2 owned, with total production
capacity of 600 tons of fish per year
5.2 Restaurant "Ribnjak" completely refurbished in 2012,
capacity of 120 seats with terrace.
6. Business place in Master centre (Novosadski sajam), area of 94
m2.
Estimated value of the debtor, which is being sold as a legal
entity, is EUR85,515,736.
Initial selling price is 50% of the total estimated value and
amounts to EUR42,757,868.
Deposit is 20% of the total estimated value of the debtor and
amounts EUR17,103,147.20 euros or dinar equivalent at average
exchange rate of National Bank of Serbia on the day of payment.
Public bidding is scheduled to take place on December 17, 2015, at
12:00 on the following address:
PIK Becej office
No. 2 Novosadska street
First Floor, Bankruptcy Trustee's Office
The bankruptcy trustee can be reached at
pavel.severinji@pikbecej.rs , with phone number 064/8980301.
For more information on the sale procedure, one may visit
http://www.pikbecej.rs/documents/Advertisement.pdf
Pik Becej operates in the agriculture sector and offers
cultivation of wheat, crops, and plants. Pik Becej is based in
Becej, Serbia & Montenegro.
=========
S P A I N
=========
ABENGOA SA: Seeks EUR150 Million to Pay Wages, Suppliers
--------------------------------------------------------
Macarena Munoz and Rodrigo Orihuela at Bloomberg News report that
Abengoa SA has asked banks for as much as EUR150 million (US$158
million) to pay employees' wages and suppliers through the end of
the year.
According to Bloomberg, three people familiar with the matter said
the company, which filed for creditor protection last week, is
also seeking about EUR100 million per month from January to keep
operating.
The people, as cited by Bloomberg, said Abengoa's banks formed a
steering committee on Dec. 1 and the members are now analyzing the
company's liquidity needs. They said the bank committee consists
of at least eight banks, including Banco Santander SA and HSBC
Holdings Plc, Bloomberg relates.
Lenders are holding talks with Abengoa as part of a four-month
period granted under Spanish bankruptcy law to negotiate a
restructuring, Bloomberg states.
If the talks fail, Abengoa, which has EUR8.9 billion of gross
debt, will need to file for full creditor protection, Bloomberg
notes.
Abengoa SA is a Spanish renewable-energy company.
* * *
As reported by the Troubled Company Reporter-Europe on Dec. 1,
2015, Standard & Poor's Ratings Services lowered its long-term
corporate credit rating on Spanish engineering and construction
company Abengoa S.A. to 'CCC-' from 'B+'. S&P said the outlook is
negative.
===========
T U R K E Y
===========
PLASPAK KIMYA: Debt Restructuring Among Rescue Measures
-------------------------------------------------------
Taylan Bilgic at Bloomberg News, citing public filing, reports
that measures that may be taken to improve the situation of
Plaspak Kimya, include increasing capital by TRY2 million, finding
new partner from Turkey or abroad, revising production system and
restructuring debt.
According to Bloomberg, the court also asked for a "revised
project" on planned measures.
Reuters reports that the company on Nov. 20 applied for suspension
of bankruptcy.
Plaspak Kimya Sanayi ve Ticaret A.S. supplies polymers, plastics,
raw materials, additives, and machinery and equipment for
plastics, packaging, and chemical industries in Turkey.
=============
U K R A I N E
=============
INTEGRAL-BANK PJSC: Deposit Fund Begins Closedown Procedure
-----------------------------------------------------------
Ukrainian News Agency reports that the Deposit Guarantee Fund has
started the closedown of Integral-Bank and appointed Oleh Andronov
as the liquidator.
Integral-Bank was declared a troubled financial institution in
August 2015 due to bank's failure to meet its obligations to the
depositors and creditors, Ukrainian News recounts.
According to Ukrainian News, in order to protect interests of
depositors and other creditors, on September 15, the National Bank
of Ukraine declared the bank insolvent, and on November 25, it
decided to close the bank down.
The closedown procedure was launched on November 26 and will last
until November 26, 2017, Ukrainian News discloses.
On September 15, the Central Bank declared Integral-Bank
insolvent, Ukrainian News relates.
Integral-Bank is based in Kyiv.
===========================
U N I T E D K I N G D O M
===========================
BIBBY OFFSHORE: Moody's Cuts Corporate Family Rating to 'B3'
------------------------------------------------------------
Moody's Investors Service downgraded Bibby Offshore Holdings
Limited's Corporate Family Rating (CFR) to B3 from B2 and the
Probability of Default Rating (PDR) to B3-PD from B2-PD.
Concurrently, Moody's also downgraded the rating of Bibby Offshore
Services Plc GBP175 million senior secured notes due 2021 to B3
from B2. The outlook on all ratings is negative.
RATINGS RATIONALE
The action reflects the deteriorating credit metrics of the
company due to difficult market conditions resulting in a 30%
decline in year-to-date sales and a lower total fleet utilization
rate of 77% compared to 89% last year as of 30 September 2015,
although utilization of the company's key DSV assets remained high
at 92%. Performance was further impacted by significant planned
maintenance work performed in the first quarter, and to Bibby
Topaz unavailable for 55 days in the third quarter, which reduced
the contribution from this asset but conversely exempted the
company from associated charter costs. Over the same period,
EBITDA as reported by the company was down 42% year-on-year at
GBP33 million. As of 30 September 2015, Bibby Offshore's Moody's-
adjusted leverage stood at 3.2x including an adjustment for
operating lease and charter costs compared to 2.7x at year-end
2014.
Furthermore, Moody's expects leverage to increase over the next 12
to 18 months due to lower level of activity and further pricing
pressures. Following the completion of large projects in the first
half the year, the company will be more exposed to shorter term
projects at lower day rates going forward. Volume are expected to
be down 10% to 15% next year with further pricing pressure in the
same range as customers postpone or cancel works that are not
critical. Moody's also anticipates higher idle time between jobs
owing to lower visibility on tenders and hence, greater difficulty
in optimizing vessel utilization.
More positively, the ratings reflect: (1) the company's position
as a leading regional competitor with control of key operating
assets; (2) its project track record and exposure to less cyclical
opex related projects and less risky reimbursable type contracts;
and (3) its ability to scale investment spend to changing demand.
Moody's expects the company's liquidity to weaken in 2016 due to
the expected negative free cash flow, albeit it should remain
adequate overall. As at 30 September 2015, the company had cash of
GBP93 million and access to an undrawn super senior RCF of GBP20
million. Whilst the company still benefits from some headroom
under its springing covenant tested only when the RCF is drawn by
at least 25%, Moody's cautions against a potential tightening of
the headroom below the minimum covenant level which would restrain
the company's ability to draw under its RCF.
RATING OUTLOOK
The negative outlook reflects the continued softening of market
conditions combined with the lack of visibility around an eventual
recovery.
WHAT COULD CHANGE THE RATING -- UP
There could be positive pressure if the Moody's-adjusted
debt/EBITDA ratio remains below 4.0x on a sustained basis and the
company improves its Moody's-adjusted EBITDA margin towards 40%,
whilst generating positive free cash flow and keeping a solid
liquidity profile. Any potential upgrade would also include an
assessment of market conditions.
CAPARO INDUSTRIES: Jobs Saved a Month After Administration
----------------------------------------------------------
Surrey Mirror reports that Caparo Industries has been saved from
collapse as a new owner bought the company's Testing Technologies
division on Nov. 26.
It means 76 jobs across four Caparo centers in the UK, including
the one in Reigate, a town in Surrey, England, have been saved as
a result of the deal made by administrators PricewaterhouseCoopers
(PwC), the report relays.
Surrey Mirror notes that partner Robert Moran, who is leading the
process, said the sale "represents a highly strategic acquisition
and demonstrates the quality of this business".
Mr. Moran, the report cites, added: "It is also great news for 76
employees of the Caparo Industries Group. We would like to thank
all of the Caparo people involved for their dedicated support in
securing this transaction."
During the deal, employees based at the site in Albert Road North
continued to work, the report discloses.
Administrators are still in discussions to sell the remaining
divisions of Caparo Industries, the report relays.
Caparo plc is a British company involved mainly in the steel
industry, primarily in the design, manufacturing and marketing of
steel and niche engineering products. House of Lords peer Swraj
Paul founded Caparo Industries in 1968 with a GBP5,000 loan. His
son Angad Paul took over as chief executive until he fell to his
death on November 6, 2015, two weeks after the company went into
administration.
FAIRLINE BOATS: Enters Administration, 450 Jobs at Risk
-------------------------------------------------------
Alan Jones at Press Association reports that Fairline Boats has
gone into administration, threatening hundreds of job losses.
Fairline Boats employed around 450 workers before calling in
administrators, at sites in Northamptonshire, Press Association
discloses.
The firm was acquired by Wessex Bristol in September and recently
announced a number of layoffs, Press Association relates.
"We will be talking to the administrator as soon as practical to
see if a buyer can be found and jobs saved. We understand that
there are orders in the pipeline," Press Association quotes Unite
regional officer Mick Orpin as saying.
Administrators at FRP Advisory have warned of redundancies, Press
Association relays.
Fairline Boats is a luxury boat manufacturer.
KONECRANES PLC: Moody's Assigns B1 CFR, Outlook Stable
------------------------------------------------------
Moody's Investors Service assigned to Konecranes Plc a first time
Corporate Family Rating of B1 and Probability of Default Rating of
B1-PD. Konecranes Plc is the ultimate parent and will change its
name to Konecranes Terex Plc upon close of the transaction.
Concurrently, Moody's assigned a Ba2 rating to the proposed senior
secured credit facilities of which Konecranes Finance Oy and Terex
Corporation will be the co-borrowers. Ratings affirmed by Moody's
include Terex Corporation's CFR at B1, PDR at B1-PD, and senior
secured bank credit facilities at Ba1, as well as Terex
International Financial Services Co. debt instrument ratings at
Ba1. Moody's downgraded Terex's unsecured debt ratings to B3 from
B2 to reflect the large level of senior debt in the proposed
capital structure. Lastly, Terex's Speculative Grade Liquidity
Rating of SGL-2 was withdrawn. The ratings outlooks for
Konecranes, Terex, and TIFSC are stable.
On Aug. 11, 2015, Terex Corporation and Konecranes announced it
entered into a definitive agreement to combine in an all-stock
transaction with an estimated combined market capitalization of
around $5.9 billion. Post transaction, Terex shareholders will
own approximately 60% of the combined company and Konecranes
shareholders will own approximately 40%.
As part of the merger transaction the company is refinancing its
existing debt facilities and issuing approximately $1.6 billion of
equity. Terex's existing unsecured debt will be rolled over into
the new capital structure. Upon closing of the transaction,
Moody's will withdraw the CFR and PDR ratings for Terex
Corporation and TIFSC's debt instrument ratings.
RATINGS RATIONALE
The B1 CFR reflects the combined company's improved competitive
position, extended geographic footprint, and the potential for
synergies. Terex has had a strong market share in the Aerial Work
Platform (AWP) business with over 60% of profits recently coming
from this segment. The combined company will see the AWP business
concentration fall to below 35% of operating profits and will
create a more competitive and broader product lineup in other
segments including port solutions and industrial cranes. Moody's
notes that the port solutions market is highly competitive, with a
foreign Chinese company having over a 50% market share position.
This has traditionally made it difficult for Terex and Konecranes
to gain market share. Nevertheless, the combined company should
have an improved opportunity in bidding for new port business as
the world's ports are refurbished.
Moody's downgrade of the unsecured debt ratings to B3 from B2
reflect the large level of senior secured debt in the pro forma
capital structure and the large share buyback program that is
anticipated to be partially funded with debt. The CFR rating is
constrained by the company's announced share buyback program,
notable in its amount, and large when compared to its operating
income. Weak performance of a number of its operating units also
underlies the ratings. As a result of lackluster economic growth,
there will be an increased reliance on cost cutting and efficiency
gains to grow profits. Execution risk is an issue particularly as
the companies have different manufacturing facilities and some
product overlap. Moody's notes that Konecranes has a large
service segment that helps diversify its performance outside of
manufacturing.
Moody's notes that future performance is highly uncertain given
Terex's weak operating units (Terex represents approximately 75%
of pro forma sales) and the overall difficulty that most of its
business segments have experienced in rebounding since the
economic downturn. Weak demand is the core issue and, in Moody's
view, greater scale is insufficient without lower costs. The
combined entity's credit quality would benefit if it becomes more
efficient and experiences higher returns. Konecranes' return on
capital employed of 17% for 2014 is considered strong. Moreover,
Konecranes has a much larger services business that enhances
returns and improves maintenance based (recurring) revenues.
The overall leverage of the combined entity is expected to be
around 4.5 times for 2016 (inclusive of Moody's standard
adjustments). The company will therefore have good leverage and
scale for the rating category. However, these positive attributes
are offset by weak macro demand, significant competition in port
cranes, and low profitability at most of Terex's operations
outside of the AWP business.
The ratings outlook for Konecranes Plc, Terex Corporation, and
Terex International Financial Services Co. are stable. The stable
outlook reflects Moody's view that the company will take some time
in integrating the operations and that ongoing weakness in the end
markets will continue to create challenges to its overall
profitability.
The ratings could come under pressure or the ratings could be
downgraded if the company's cash flow turns negative, or if Debt
to EBITDA is anticipated to rise and be sustained at about 5
times. Contracting sales, inability to show steady improvement
with the struggling business units, a shrinking backlog, or
weakening margins could also create downwards ratings pressure.
EBITDA to interest sustained under 2.5 times could result in a
change in outlook or even the rating if deemed to be weakening
further. A weakening of its liquidity could also create negative
ratings pressure.
The ratings or outlook could be upgraded if the company's leverage
improves and is sustained below 3.5 times and EBITDA to interest
sustained above 3.5 times while improving diversification and
profitability of its businesses. Stable margins in its AWP
business (its best performing unit) would be an important factor
in positive ratings traction. It is also important that the
company make progress turning around its underperforming
businesses. Successful expansion of Konecranes' business strategy
to provide extensive services to Terex's traditional businesses
could support higher margins and provide positive ratings
traction.
The principal methodology used in these ratings was Global
Manufacturing Companies published in July 2014.
Moody's assigned these ratings:
Konecranes Plc:
Corporate Family Rating, assigned B1;
Probability of Default rating, assigned B1-PD;
Proposed senior secured credit facilities, assigned Ba2 (LGD2).
Moody's affirmed these ratings:
Terex Corporation:
Corporate Family Rating, B1;
Probability of Default Rating, B1-PD;
Senior Secured Credit Facilities, affirmed Ba1 (LGD2).
Terex International Financial Services Co.:
Senior Secured Credit Facilities, affirmed Ba1 (LGD2)
Moody's downgraded these ratings:
Terex Corporation:
$300 million 6.5% senior unsecured notes due 2020, to B3 (LGD5)
from B2 (LGD4);
$850 million 6% senior unsecured notes due 2021, to B3 (LGD5)
from B2 (LGD4).
Moody's withdrew these ratings:
Terex Corporation:
Speculative Grade Liquidity Rating, SGL-2.
All of the rating outlooks are stable.
Terex Corporation, headquartered in Westport, CT, is a lifting and
material handling solutions company reporting in five business
segments: Aerial Work Platforms, Construction, Cranes, Material
Handling & Port Solutions and Materials Processing. Terex
manufactures a broad range of equipment for use in various
industries, including the construction, infrastructure,
manufacturing, shipping, transportation, refining, energy,
utility, quarrying and mining industries. Terex offers financial
products and services to assist in the acquisition of Terex
equipment through Terex Financial Services. Terex's reported
revenues for the last twelve month period through Sept. 30, 2015,
was $6.8 billion, down from $7.3 billion in 2014 and $7.1 billion
in 2013. Konecranes is a global manufacturer of industrial cranes
and components and provider of crane servicing. Konecranes
reported a sales decline to EUR2.0 billion for 2014 from EUR2.1 in
2013.
* Declercq, Van de Graaff Join Morrison's UK Insolvency Group
-------------------------------------------------------------
Morrison & Foerster, a global law firm, on Dec. 2 disclosed that
Peter Declercq and Sonya Van de Graaff have joined its London
office as partners in the Business Restructuring & Insolvency
Group. Mr. Declercq and Ms. Van de Graaff come to Morrison &
Foerster from Schulte Roth & Zabel where they regularly
represented distressed investors -- including individual and ad
hoc groups of bondholders -- in restructuring matters.
Mr. Declercq and Ms. Van de Graaff joining Morrison & Foerster is
a natural expansion of the firm's UK and global Business
Restructuring & Insolvency Group, and provides even stronger
capabilities to represent clients in London and in cross-border
restructuring matters. It follows the appointment last year of
James M. Peck, a former bankruptcy judge who presided over the
Lehman Brothers bankruptcy, as the global co-chair of the Business
Restructuring & Insolvency Group.
"Our global restructuring group has an outstanding diverse
practice representing creditors, debtors, lenders, banks and other
participants in the distressed markets," said Gary Lee, co-chair
of Morrison & Foerster's Finance Department. "Peter and Sonya's
focus on the representation of distressed investors and their
experience in cross-border restructurings and insolvencies in
Europe and beyond further builds on our strong expertise in the
UK, Europe, and globally."
Paul Friedman, managing partner of Morrison & Foerster for Europe,
added: "Peter and Sonya's arrival is another signal of Morrison &
Foerster's strong commitment to continue to expand its UK practice
following highly experienced restructuring and insolvency lawyer
Howard Morris joining us from Dentons in 2013, and recent
strategic recruits including Graeme Sloan and Vlad Maly from
Latham & Watkins. In addition to strengthening our restructuring
group in the UK and Europe, Peter and Sonya will drive
opportunities for the firm's corporate, finance, and litigation
practices."
Mr. Declercq is a highly recognized global restructuring and
insolvency lawyer and an INSOL International Fellow. Mr. Declercq
provides comprehensive counsel to distressed investors in Europe,
including hedge funds, private equity funds, and investment banks,
and also represents formal and ad hoc creditor groups in
connection with multinational out-of-court restructuring
transactions and formal insolvency proceedings. In addition, he
has experience advising buyers and sellers of distressed assets
including non-performing loan (NPL) portfolios -- throughout
Europe.
"Morrison & Foerster has a phenomenal reputation for offering
strong regional and global support to its clients and provides us
with the ideal opportunity to further strengthen and deepen our
international practice," Mr. Declercq said. "I am delighted to be
part of this thriving global practice that is renowned and
recognized for its cross-border restructuring expertise."
Ms. Van de Graaff specializes in European restructuring,
distressed investing and financing, including direct lending.
Ms. Van de Graaff represents hedge funds and other distressed
investors, and has vast experience in identifying and analyzing
distressed investment opportunities and restructuring strategies.
She also advises clients in connection with custody and prime
brokerage matters, and counsels private creditors and shareholders
regarding financial institution restructurings where government
intervention could result in subordination and disparate treatment
of private investors.
"London is one of the biggest centers in the world for
restructuring work," Ms. Van de Graaff said. "I am looking
forward to working with Peter and our other leading restructuring
practitioners to build and grow my practice by connecting clients
with Morrison & Foerster's global platform and diverse
capabilities."
Morrison & Foerster's Business Restructuring & Insolvency Group
has one of the strongest practices in the industry and has advised
on many of the most complex matters in recent years. Its most
recent high-profile cases include representing:
-- The creditors' committee in the chapter 11 case of
Energy Future Holdings
-- Residential Capital as the debtor in its chapter 11 case
-- The Chapter 11 trustee for MF Global
-- The winding-up board of LBI (formerly Landsbanki) through
its cross-border restructuring and its recently filed
composition
About Morrison & Foerster
Morrison & Foerster is a global firm of exceptional credentials.
Its clients include some of the largest financial institutions,
investment banks, Fortune 100, and technology and life sciences
companies. The Financial Times has named the firm to its lists of
most innovative law firms in Northern America and Asia every year
that it has published its Innovative Lawyers Reports in those
regions. In the past few years, Chambers USA has honored MoFo's
Bankruptcy and IP teams with Firm of the Year awards, the
Corporate/M&A team with a client service award, and the firm as a
whole as Global USA Firm of the Year.
===============
X X X X X X X X
===============
* S&P Affirms Most European Bank Ratings Following Govt. Support
----------------------------------------------------------------
Standard & Poor's Ratings Services said that it has taken various
rating actions on many European commercial banks following the
introduction of well-formed bank resolution frameworks in these
countries, the ongoing regulatory impetus to have systemic banks
hold sizable buffers of bail-inable instruments that the
authorities could use to recapitalize them, and the associated
reduced prospects for extraordinary government support.
S&P has also taken rating actions on certain Swedish and Italian
banks, although these actions also take into account S&P's view of
their developing operating environments, as reflected in the
banking industry country risk assessment (BICRA) for those
countries.
The outcome of this review follows the review that S&P concluded
for major U.K., German, Austria, and Danish banks in mid-2015.
For the latest European review, S&P considered the government
support classification and resolution framework effectiveness in
the following countries: Belgium, Bulgaria, Finland, France,
Hungary, Ireland, Italy, Luxembourg, The Netherlands, Portugal,
Slovenia, Spain, Sweden, and Switzerland. S&P then reviewed the
consequences for the ratings on systemic banks in those countries.
In a few cases it was clear that S&P's ratings on a systemically
important bank in these countries would be unaffected by these
developments, so it did not review them.
Overall, S&P reviewed 45 systemically important European banks
(and their affiliates) in 13 countries, affirmed the counterparty
credit ratings on 42 of them, lowered the long-term counterparty
credit rating on one (Central Bank of Savings Banks Finland),
raised the long-term counterparty credit rating on one (Banca
Popolare di Milano SCRL) and raised the long-term and short-term
counterparty credit ratings on one (Swedbank AB).
S&P affirmed bank ratings where the removal of systemic support
notches was offset by strengthening intrinsic creditworthiness
and/or notches for potential support to senior creditors from
sizable buffers of additional loss-absorbing capacity (ALAC). S&P
lowered bank ratings, however, where a bank lost more notches of
support than it gained through the other assessments. Even when
S&P affirmed the counterparty credit rating, it raised the issue
credit ratings on banks' hybrid capital instruments if S&P raised
its view of their intrinsic creditworthiness.
S&P's updated views on government support very largely accord with
its base-case expectation explained in "Standard & Poor's To
Conclude Its Review Of Systemic Support For Remaining EU Banks By
Early December 2015," published Oct. 1, 2015. Since April 2014,
S&P has signaled its view that the EU's Bank Recovery and
Resolution Directive (BRRD) could reduce the predictability of
government support for systemically important commercial banks in
the bloc. S&P's review was timed to reflect these countries' full
implementation of the BRRD into national law, which in most cases
will happen by Jan. 1, 2016. For the two major Swiss banks, S&P's
review timing similarly reflects the enhancements to the local
resolution framework that come into force on Jan. 1, 2016.
Although S&P now generally classifies the prospect of support from
these governments as "uncertain" and the resolution framework as
"effective," notable exceptions include Sweden, where S&P
considers that the government remains "supportive," and Bulgaria
and Hungary where, like in a few other non-eurozone Central and
Eastern European (CEE) countries, S&P sees the prospect of
extraordinary government support as "uncertain," but do not yet
regard the resolution framework as "effective" due to an apparent
lack of preparedness.
The very limited number of downgrades was to some extent already
anticipated by the fact that fewer than half of the banks under
review were on negative outlooks. Furthermore, with two
exceptions, the ratings on these banks included at most one notch
of government support, leaving downside risk only if there was no
compensating factor, such as ALAC. For some banks, this limited
uplift was in part due to us having already anticipated the
removal of government support notching through a negative notch of
adjustment. As S&P moves through 2016, it will be monitoring
closely the progress that banks make in building their ALAC
buffers, and could yet take negative rating action if a bank's
ramp-up of ALAC appears likely to fall short or be materially
delayed.
Looking forward, a few European countries continue to develop
their legal and resolution frameworks. These include the Czech
Republic and Poland, where there is a legislative delay in
transposing BRRD into national law. It also includes
Liechtenstein and Norway, outside the EU. S&P expects to review
government support and resolution framework effectiveness for
these countries only in 2016.
OVERVIEW
Further to this announcement, within the next 24 hours S&P will
publish a research update on each banking group where the rating
drivers have changed. This will explain in more detail the rating
action S&P has taken, the reasons behind it, and its view of the
likely future ratings drivers.
To summarize, these actions reflect S&P's view that these
countries' recent or impending implementation of a comprehensive
resolution framework, including bail-in powers, mean that the
prospect for extraordinary government support now appears
uncertain, even for systemically important bank operating
companies and even while these banks remain in a transitional
phase of building buffers of loss-absorbing debt instruments.
However, S&P expects that regulators will (in most cases) require
these banks within the next few years to build those buffers to a
level that offers a material level of protection to senior
unsecured creditors on a nonviability (or "gone concern") basis.
For two reasons, S&P's review primarily focused on the
implications of the above for the counterparty credit ratings on
these banks' operating companies and the issue credit ratings on
their senior unsecured debt issue instruments:
-- S&P's ratings on EU banks' subordinated debt instruments
and Swiss nonoperating bank holding companies already
excluded any uplift for government support; and
-- S&P saw no prospect of uplift under its ALAC criteria for
the instruments cited in the bullet above because
regulators intend them to act as a source of bail-in
capital to support the systemic functions provided by bank
operating companies, including the servicing of certain
senior obligations.
S&P's review also took account of any developments in its view of
the intrinsic creditworthiness of these banks, expressed through
their stand-alone credit profile (SACP). Because S&P notches
hybrid capital instruments for these banks generally from the
SACP, a change in these assessments led to a change in the issue
credit ratings on certain hybrids.
By and large, the rating actions on these bank operating companies
led to the same action on their "core" and "highly strategic"
banking subsidiaries, where the ratings on those subsidiaries
previously reflected an expectation that government support
received by the parent would be downstreamed to the subsidiary.
SYSTEMIC SUPPORT IS NOW "UNCERTAIN" IN MOST EUROPEAN COUNTRIES,
BUT NOT IMPOSSIBLE
S&P's base-case expectation has long been that it would reclassify
the supportiveness of these governments as "uncertain" and remove
notches of extraordinary government support for affected banks.
This is indeed the outcome of S&P's review, with the exception of
Sweden.
This assessment takes into account S&P's view that:
-- These governments have become significantly less willing to
use taxpayer funds to bail-out banks;
-- Complex systemic banks in these countries are generally not
yet "resolvable," meaning that a disorderly resolution or
insolvency could carry systemic consequences;
-- But even if these governments wished to provide capital
support to a failed systemic bank, the bank resolution
frameworks being implemented in the EU countries in
response to the BRRD heavily constrain these governments'
capacity to provide such support without substantial
burden-sharing by creditors;
-- For Switzerland, there is no legal impediment to providing
extraordinary government support, but S&P sees
significantly reduced willingness and necessity to so do
given the sizable buffers of core capital and gone-concern
loss-absorbing capacity; and
-- Some senior creditors face substantial risk of being
mandatorily bailed-in as part of that process, unless they
are protected by a substantial buffer of subordinated
instruments.
While S&P do not rule out the possibility that systemic banks in
these countries might receive extraordinary government support,
S&P sees the predictability of such support as having materially
reduced to the point that it regards it as being "uncertain". As
a result, S&P no longer includes such support in the ratings on
these banks as a matter of course. That said, if a systemic bank
came under stress and S&P saw clear evidence that government
support would be forthcoming, it could still reflect this
"additional short-term support" in the ratings on the bank.
Sweden is the only EU country that has fully implemented the BRRD,
but which S&P still regards as being "supportive". S&P explains
its views in more detail in "Various Rating Actions Taken On
Swedish Banks On Continued Government Support And Heightened
Economic Risks" and "Credit FAQ: How Standard & Poor's Applied Its
Government Support And ALAC Criteria To European Banks in Dec.
2015". But, briefly, taking into account Swedish political
intent, the regulatory and legal framework, and the dedicated
support fund, S&P expects that Sweden will operate a proactive
regulatory approach that relies on early intervention to avoid the
constraints imposed by the BRRD when a bank fails. S&P will
nevertheless continue to monitor the situation.
BANK RESOLUTION FRAMEWORKS ARE GENERALLY NOW "EFFECTIVE", BUT
RAMP-UP PERIODS
AWAIT FOR SOME
On April 29, 2015, S&P announced a new component called ALAC to
our framework for rating banks globally. This new component of
S&P's criteria adds another route for extraordinary external
support in its bank rating framework. Notably, as government
support becomes less predictable in these countries, the ALAC
criteria allow S&P to reflect a reduced likelihood of default for
senior unsecured bank creditors due to buffers of contractually or
structurally subordinated instruments in the banks' capital
structures.
In view of their implementation of the BRRD in full in national
legislation, by or shortly after Jan. 1, 2016, S&P regards the
regimes in most of the EU countries it reviewed as having a
resolution process for systemic banks that is sufficiently well-
defined to allow for the effective recapitalization of a failing
systemic bank, aided by associated liquidity or funding support.
This view acknowledges that final requirements for each bank's
required bail-in buffer -- known in the EU as the minimum
requirement for eligible liabilities (MREL) -- will only be
phased-in from 2016. Where relevant, S&P's rating actions also
acknowledge that other relevant aspects, such as prepositioning of
the bail-in buffer among material subsidiaries, will only become
clearer over time.
In a few CEE countries, S&P do not yet regard the resolution
framework as "effective". In this review S&P identified Bulgaria
and Hungary as being in this position, and it already regarded
Croatia as such. S&P will monitor developments in these countries
and might revise its assessment in 2016 if it observes progress.
ALAC UPLIFT VARIES ACROSS THE REVIEWED BANKS, AND DOES NOT ACCRUE
TO ALL SUBSIDIARIES
Even though S&P now regards most of these resolution frameworks as
being "effective", it has only included notches for ALAC uplift in
the ratings on a bank where:
-- S&P is convinced that the authorities would use resolution
powers to maintain the bank as a going concern if it was at
risk of failing; and
-- It already meets the relevant minimum threshold for ALAC
uplift or, as in several cases, where S&P expects that it
will exceed the threshold within a ramp-up period.
Of the 45 systemically important European banks that S&P reviewed
it includes ALAC uplift in the ratings on only 12, and, for one
other, a related notch of positive adjustment for anticipated ALAC
building. Generally, the small size of this cohort reflects the
relatively quite limited volumes of ALAC instruments currently
issued by many continental European banks, particularly when
measured by Standard & Poor's risk-weighted assets (RWAs), as
opposed to regulatory RWAs. In some cases, it also reflects S&P's
doubts about the extent or pace that the banks will build these
buffers to a level that S&P considers sufficient.
For the 13 banks where S&P gives uplift, this reflects its view
that the banks will build their ALAC buffers over the next two to
four years. Therefore, as S&P moves through 2016, it will be
monitoring closely the progress that these banks make, and whether
their governments implement national legal frameworks that are
supportive of this. S&P could yet take negative rating action on
any of these banks if their ramp-up of ALAC appears likely to fall
short or be materially delayed. This is particularly true for BNP
Paribas, where S&P placed the long-term rating on CreditWatch with
negative implications because the bank has so far built a very
modest buffer of bail-inable instruments compared with global
peers and intends to issue additional TLAC-eligible notes,
potentially different from Tier 1 and Tier 2, for which the terms
and maturity are yet to be defined.
Generally, S&P is expecting that the core and highly strategic
banking subsidiaries of these banking groups would form an
integral part of the resolution strategy for the parent and be
similarly recapitalized in case of need. However, aside from a
few captive companies, this is not true for any of the insurance
subsidiaries of the systemically important European banks that S&P
reviewed, meaning that they do not benefit from ALAC uplift.
RECAPITALIZATION, RESTRUCTURING AND STRONGER ECONOMIC PROSPECTS
HAVE IMPROVED
INTRINSIC CREDITWORTHINESS FOR SOME BANKS, BUT RISKS ARE GROWING
IN SWEDEN
Among the 45 banks that S&P reviewed, it raised the SACP (or
unsupported GCP) of 11 of them across seven countries. In a few
cases, this action reflected bank-specific factors, such as
materially improving core capitalization -- something that S&P
usually already anticipated through its recognition of a positive
transition or through a stable outlook. S&P sees a broader
improvement in Spain, where bank creditworthiness is being
supported by a strengthening economy -- something that S&P already
reflected in generally stable outlooks going into the review.
In Italy, S&P now considers that a more benign operating
environment -- which it reflects in positive trends to S&P's
assessments of economic and industry risk -- will gradually drive
some improvements in banks' asset quality and profitability over
the next two years. However, S&P has not revised upward Italian
banks' SACPs as a result. Indeed, the generally stable outlooks
across the sector demonstrate S&P's view that, by themselves,
these tailwinds are unlikely to result in widespread positive
rating actions on Italian banks.
By contrast, in Sweden S&P sees heightened economic risk for the
banking system. In S&P's view, house price appreciation and the
resurgence in household debt are on an unsustainable path and
continue to diverge from fundamentals. S&P now has a negative
outlook on six Swedish banks, reflecting the possibility that it
could revise its view of economic imbalances and/or credit risk in
the Swedish economy over the coming two years.
S&P will respond to questions from market participants regarding
the rating actions in "Credit FAQ: How Standard & Poor's Applied
Its Government Support And ALAC Criteria To European Banks In
December 2015," which will be available on RatingsDirect.
RATINGS LIST
BELGIUM
Ratings Affirmed; Outlook Action
To From
Argenta Spaarbank N.V.
Counterparty credit rating A-/Stable/A-2 A-/Negative/A-2
Ratings Affirmed
Belfius Bank SA/NV
Counterparty credit rating A-/Negative/A-2
Ratings Affirmed
Ceskoslovenska Obchodni Banka A.S.
KBC Bank N.V.
Counterparty credit rating A/Negative/A-1
KBC Group N.V.
Counterparty credit rating A-/Negative/A-2
Downgraded
KBC Insurance N.V.
Counterparty credit rating A-/Stable/-- A/Negative/--
Financial strength rating A-/Stable/-- A/Negative/--
BULGARIA
Ratings Affirmed
UniCredit Bulbank AD
Counterparty credit rating BB+/Stable/B
Ratings Affirmed
United Bulgarian Bank AD
Counterparty credit rating B-/Negative/C
FINLAND
Ratings Affirmed
Aktia Bank PLC
Counterparty credit rating A-/Negative/A-2
Downgraded
To From
Central Bank of Savings Banks Finland Plc
Counterparty credit rating BBB+/Stable/A-2 A-/Negative/A-2
Ratings Affirmed
Pohjola Bank PLC
Counterparty credit rating AA-/Negative/A-1+
Downgraded
To From
Pohjola Non-Life Insurance Co. Ltd.
Counterparty credit rating A+/Negative AA-/Negative
Financial strength rating A+/Negative AA-/Negative
FRANCE
Ratings Affirmed
La Banque Postale
Counterparty credit rating A/Stable/A-1
Ratings Affirmed; CreditWatch Placement
To From
BNP Paribas
BNP Paribas Fortis SA/NV
BGL BNP Paribas S.A.
Counterparty credit rating A+/Watch Neg/A-1
A+/Negative/A-1
Downgraded
BNP Paribas Cardif
Counterparty credit rating A-/Stable/-- A/Neg./--
Cardif-Assurances Risques Divers
Cardif Assurance Vie
Counterparty credit rating A/Stable/-- A+/Neg./--
Financial strength rating A/Stable/-- A+/Neg./--
Ratings Affirmed; Outlook Action
To From
BPCE
Natixis S.A.
Counterparty credit rating A/Stable/A-1 A/Neg./A-1
Credit Foncier de France
Counterparty credit rating A-/Stable/A-2 A-/Dev./A-2
Ratings Affirmed
Caisse Centrale du Credit Mutuel
Counterparty credit rating A/Neg./A-1
Ratings Affirmed; Outlook Action
To From
Credit Agricole S.A.
Credit Agricole Corporate and Investment Bank
Counterparty credit rating A/Stable/A-1 A/Neg./A-1
Downgraded
Credit Agricole Assurances
Counterparty credit rating BBB+/Stable/-- A-
/Negative/--
Pacifica IARD
Predica Assurance Vie
Counterparty credit rating A-/Stable/-- A/Neg./--
Financial strength rating A-/Stable/-- A/Neg./--
Ratings Affirmed
RCI Banque
Counterparty credit rating BBB/Negative/A-2
Ratings Affirmed; Outlook Action
To From
Societe Generale
Komercni Banka A.S.
Counterparty credit rating A/Stable/A-1 A/Neg./A-1
Downgraded
Sogecap S.A.
Counterparty credit rating A-/Stable/-- A/Neg./--
Financial strength rating A-/Stable/-- A/Neg./--
IRELAND
Ratings Affirmed; Outlook Action
To From
Allied Irish Banks PLC
Counterparty credit rating BB+/Positive/B BB+/Stable/B
Ratings Affirmed
AIB Group (U.K.) PLC
Counterparty credit rating BB+/Stable/B
Ratings Affirmed
Bank of Ireland
Counterparty credit rating BBB-/Positive/A-3
Ratings Affirmed
Permanent TSB PLC
Counterparty credit rating BB-/Stable/B
LUXEMBOURG
Ratings Affirmed; Outlook Action
To From
Banque Internationale a Luxembourg
Counterparty credit rating A-/Stable/A-2 A-/Neg./A-2
NETHERLANDS
Ratings Affirmed; Outlook Action
To From
ABN AMRO Bank N.V.
Counterparty credit rating A/Stable/A-1
A/Negative/A-1
Ratings Affirmed; Outlook Action
To From
Rabobank Nederland
Counterparty credit rating A+/Stable/A-1
A+/Negative/A-1
Ratings Affirmed
ING Bank N.V.
ING Belgium S.A./N.V.
Counterparty credit rating A/Stable/A-1
ING Groep N.V.
Counterparty credit rating A-/Stable/A-2
Ratings Affirmed
KAS BANK N.V.
Counterparty credit rating BBB+/Negative/A-2
Ratings Affirmed; Outlook Action
To From
SNS Bank N.V.
Counterparty credit rating BBB/Positive/A-2
BBB/Negative/A-2
PORTUGAL
Ratings Affirmed
Banco Comercial Portugues S.A.
Counterparty credit rating B+/Positive/B
SLOVENIA
Ratings Affirmed; Outlook Action
To From
Nova Ljubljanska Banka D.D.
Counterparty credit rating BB-/Stable/B BB-/Neg./B
SPAIN
Ratings Affirmed
Abanca Corporacion Bancaria S.A
Counterparty credit rating B+/Stable/B
Ratings Affirmed; Outlook Action
To From
Banco de Sabadell S.A.
Counterparty credit rating BB+/Stable/B
BB+/Negative/B
Ratings Affirmed; Outlook Action
To From
Banco Popular Espanol S.A.
Counterparty credit rating B+/Positive/B B+/Stable/B
Ratings Affirmed
Banco Santander S.A.
Counterparty credit rating A-/Stable/A-2
Santander Consumer Finance S.A.
Counterparty credit rating BBB+/Stable/A-2
Ratings Affirmed; Outlook Action
To From
Bankia S.A.
Counterparty credit rating BB/Positive/B BB/Stable/B
BFA Tenedora de Acciones, S.A.U.
Counterparty credit rating B+/Positive/B B+/Stable/B
Ratings Affirmed
Cecabank S.A.
Counterparty credit rating BBB/Stable/A-2
Ratings Affirmed
Ibercaja Banco S.A.
Counterparty credit rating BB/Positive/B
SWITZERLAND
Ratings Affirmed
Credit Suisse Group AG
Counterparty credit rating BBB+/Stable/--
Credit Suisse AG
Credit Suisse International
Credit Suisse Securities (Europe) Ltd.
Credit Suisse Securities (USA) LLC
Counterparty credit rating A/Stable/A-1
Ratings Affirmed; Outlook Action
To From
UBS Group AG
Counterparty credit rating BBB+/Positive/A-2
BBB+/Stable/A-2
UBS AG
UBS Ltd.
UBS Securities LLC
UBS Switzerland AG
Counterparty credit rating A/Positive/A-1 A/Stable/A-1
Ratings Affirmed
UBS Bank USA
Counterparty credit rating --/--/A-1
NB: This list does not include all ratings affected.
* BOOK REVIEW: The Sorcerer's Apprentice - Medical Miracles
-----------------------------------------------------------
Author: Sallie Tisdale
Publisher: BeardBooks
Softcover: 270 pages
List Price: $34.95
Review by Henry Berry
Order your own personal copy at http://is.gd/9SAfJR
An earlier edition of "The Sorcerer's Apprentice" won an American
Health Book Award in 1986. The book has been recognized as an
outstanding book on popular science. Tisdale brings to her subject
of the wide and engrossing field of health and illness the
perspective, as well as the special sympathies and sensitivities,
of a registered nurse. She is an exceptionally skilled writer.
Again and again, her descriptions of ill individuals and images of
illnesses such as cancer and meningitis make a lasting impression.
Tisdale accomplishes the tricky business of bringing the reader to
an understanding of what persons experience when they are ill; and
in doing this, to understand more about the nature of illness as
well. Her style and aim as a writer are like that of a medical or
science journalist for leading major newspaper, say the "New York
Times" or "Los Angeles Times." To this informative, readable style
is added the probing interest and concern of the philosopher
trying to shed some light on one of the central and most
unsettling aspects of human existence. In this insightful,
illuminating, probing exploration of the mystery of illness,
Tisdale also outlines the limits of the effectiveness of
treatments and cures, even with modern medicine's store of
technology and drugs. These are often called "miracles" of modern
medicine. But from this author's perspective, with the most
serious, life-threatening, illnesses, doctors and other healthcare
professionals are like sorcerer's trying to work magic on them.
They hope to bring improvement, but can never be sure what they do
will bring it about. Tisdale's intent is not to debunk modern
medicine, belittle its resources and ways, or suggest that the
medical profession holds out false hopes. Her intent is do report
on the mystery of serious illness as she has witnessed it and from
this, imagined what it is like in her varied work as a registered
nurse. She also writes from her own experiences in being
chronically ill when she was younger and the pain and surgery
going with this.
She writes, "I want to get at the reasons for the strange state of
amnesia we in the health professions find ourselves in. I want to
find clues to my weird experiences, try to sense the nature of
being sick." The amnesia of health professionals is their state of
mind from the demands placed on them all the time by patients,
employers, and society, as well as themselves, to cure illness, to
save lives, to make sick people feel better. Doctors, surgeons,
nurses, and other health-care professionals become primarily
technicians applying the wonders of modern medicine. Because of
the volume of patients, they do not get to spend much time with
any one or a few of them. It's all they can do to apply the
prescribed treatment, apply more of it if it doesn't work the
first time, and try something else if this treatment doesn't seem
to be effective. Added to this is keeping up with the new medical
studies and treatments. But Tisdale stepped out of this
problemsolving outlook, can-do, perfectionist mentality by opting
to spend most of her time in nursing homes, where she would be
among old persons she would see regularly, away from the high-
charged atmosphere of a hospital with its "many medical students,
technicians, administrators, and insurance review artists." To
stay on her "medical toes," she balanced this with working
occasional shifts in a nearby hospital. In her hospital work, she
worked in a neonatal intensive care unit (NICU), intensive care
unit (ICU), a burn center, and in a surgery room. From this
combination of work with the infirm, ill, and the latest medical
technology and procedures among highly-skilled professionals,
Tisdale learned that "being sick is the strangest of states." This
is not the lesson nearly all other health-care workers come away
with. For them, sick persons are like something that has to be
"fixed." They're focused on the practical, physical matter of
treating a malady. Unlike this author, they're not focused
consciously on the nature of pain and what the patient is
experiencing. The pragmatic, results-oriented medical profession
is focused on the effects of treatment. Tisdale brings into the
picture of health care and seriously-ill patients all of what the
medical profession in its amnesia, as she called it, overlooks.
Simply in describing what she observes, Tisdale leads those in the
medical profession as well as other interested readers to see what
they normally overlook, what they normally do not see in the
business and pressures of their work. She describes the beginning
of a hip-replacement operation, the surgeon "takes the scalpel and
cuts -- the top of the hip to a third of the way down the thigh --
and cuts again through the globular yellow fat, and deeper. The
resident follows with a cautery, holding tiny spraying blood
vessels and burning them shut with an electric current. One small,
throbbing arteriole escapes, and his glasses and cheek are
splattered." One learns more about what is actually going on in an
operation from this and following passages than from seeing one of
those glimpses of operations commonly shown on TV. The author
explains the illness of meningitis, "The brain becomes swollen
with blood and tissue fluid, its entire surface layered with pus .
. . The pressure in the skull increases until the winding
convolutions of the brain are flattened out . . . The spreading
infection and pressure from the growing turbulent ocean sitting on
top of the brain cause permanent weakness and paralysis,
blindness, deafness . . . ." This dramatic depiction of meningitis
brings together medical facts, symptoms, and effects on the
patient. Tisdale does this repeatedly to present illness and the
persons whose lives revolve around it from patients and relatives
to doctors and nurses in a light readers could never imagine, even
those who are immersed in this world.
Tisdale's main point is that the miracles of modern medicine do
not unquestionably end the miseries of illness, or even
unquestionably alleviate them. As much as they bring some relief
to ill individuals and sometimes cure illness, in many cases they
bring on other kinds of pains and sorrows. Tisdale reminds readers
that the mystery of illness does, and always will, elude the
miracle of medical technology, drugs, and practices. Part of the
mystery of the paradoxes of treatment and the elusiveness of
restored health for ill persons she focuses on is "simply the
mystery of illness. Erosion, obviously, is natural. Our bodies are
essentially entropic." This is what many persons, both among the
public and medical professionals, tend to forget. "The Sorcerer's
Apprentice" serves as a reminder that the faith and hope placed in
modern medicine need to be balanced with an awareness of the
mystery of illness which will always be a part of human life.
*********
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.
Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.
The TCR Europe subscription rate is US$775 per half-year,
delivered via e-mail. Additional e-mail subscriptions for members
of the same firm for the term of the initial subscription or
balance thereof are US$25 each. For subscription information,
contact Peter Chapman at 215-945-7000 or Nina Novak at
202-362-8552.
* * * End of Transmission * * *