/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/160225.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, February 25, 2016, Vol. 17, No. 039 Headlines B U L G A R I A CORPORATE COMMERCIAL: Bankruptcy Report Fails to Meet Second Goal G E R M A N Y WINDERMERE VII CMBS: S&P Lowers Rating on Cl. C Notes to 'CCC-' I R E L A N D BALLYBUNION GOLF: Faces Closure Following Refugee Rumor LADBROKES PLC: Irish Unit Incurs GBP3.8MM in Examinership Costs N E T H E R L A N D S BRUCKNER CDO I: Moody's Raises Rating on Cl. D-1 Notes to Caa2 HALCYON STRUCTURED 2006-I: S&P Raises Rating on Cl. E Notes to B+ UNLIMITED SPORTS: Declared Bankrupt, Two Chains Attract Interest S P A I N CAIXABANK SA: Fitch Hikes LT Issuer Default Ratings to 'BB+' CAIXABANK RMBS: DBRS Gives Prov. C Ratings to Series B Debt * Moody's Changes Outlook on 14 Spanish Sub-Sovereigns to Stable U N I T E D K I N G D O M KELDA FINANCE: Fitch Affirms 'BB' LT Issuer Default Rating KEYDATA INVESTMENT: FCA Wants Ex-Directors' GBP650MM Claim Tossed MOTIVE TELEVISION: To Appoint Administrators, Explores Options TRITON PLC: S&P Lowers Rating on Class F Notes to 'D' ********* =============== B U L G A R I A =============== CORPORATE COMMERCIAL: Bankruptcy Report Fails to Meet Second Goal ----------------------------------------------------------------- According to FOCUS News Agency, Radan Kanev, MP with the Reformist Block, speaking with journalists at parliament, said, "The report on the draining of Corporate Commercial Bank (CorpBank) does not help the Prosecutor's Office to punish those responsible for the bankruptcy of the bank". "I am concerned over whether the report contains enough materials also for the Prosecutor's Office. It has two goals -- civil proceedings to have the money restored and penal proceedings to punish those responsible. The indirect impressions I gained are it does not help [in attaining] the second goal," FOCUS News quotes Mr. Kanev as saying. Corporate Commercial Bank AD is the fourth largest bank in Bulgaria in terms of assets, third in terms of net profit, and first in terms of deposit growth. Bulgaria's central bank placed Corpbank under its administration and suspended shareholders' rights in June 2014 after a run drained the bank of cash to meet client demands. ============= G E R M A N Y ============= WINDERMERE VII CMBS: S&P Lowers Rating on Cl. C Notes to 'CCC-' --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its credit ratings on Windermere VII CMBS PLC's class B and C notes. At the same time, S&P has affirmed its ratings on the class D, E, and F notes. The rating actions follow S&P's review of the two remaining loans in this transaction in light of the transaction's April 22, 2016, legal final maturity date. Both loans are in special servicing. ADDUCTOR LOAN (71.8% OF THE POOL) The loan has a securitized balance of EUR48.7 million with an additional EUR1.8 million in capitalized unpaid interest. The loan transferred into special servicing in July 2012 after failing to repay at its scheduled maturity date. Thirteen mixed retail and office properties in France secure the loan. The borrowing entities are owned by a French holding company under a restructuring procedure, which had a restructuring plan approved by the court in July 2014. Part of the plan involved the repayment of the Adductor loan by the end of March 2015, but the special servicer believes that this timeline has been extended. Starting on the October 2015 interest payment date (IPD), the special servicer has been able to seize part of the rental income directly from the tenants, which has been used to pay debt service on the loan. The borrower had shown evidence that it was in discussions to refinance the outstanding principal and that the option was available until Dec. 18, 2015, subject to certain conditions. It has since been reported in the Feb. 8, 2016, investor report that the borrower has failed to show evidence of the refinancing completion. Therefore, the special servicer is now considering different options. As of the February 2016 investor report, the servicer reported the loan-to-value (LTV) ratio to be 71.0%. This is based on a June 2012 valuation of EUR71.2 million. S&P has assumed principal losses in its 'B' rating stress scenario. MULHEIM LOAN (28.2% OF THE POOL) The loan has a securitized loan balance of EUR19.2 million. The loan transferred into special servicing in April 2011 after failing to repay at its scheduled maturity date. The underlying asset comprises an out-of-town office in Mulheim, Germany. The property is currently let in its entirety to GMG mbH, which Deutsche Telekom AG wholly owns. The lease expired on June 30, 2015 and is on a six-monthly rolling basis where either party can terminate. The tenant is in the process of assessing whether to extend the lease agreement. The special servicer estimates the feedback time to be three months. The special servicer continues to retain surplus funds from the property. To date, EUR1.2 million is being held in account. The LTV ratio is 220.3%, which is based on a March 2013 valuation of EUR8.7 million. S&P has assumed principal losses in its 'B' rating stress scenario. RATING RATIONALE S&P's ratings address the timely payment of interest, payable quarterly in arrears, and payment of principal no later than the legal final maturity date in April 22, 2016. With only two months remaining until legal final maturity, S&P views the risk of payment default as at least a one-in-two likelihood, given that the latest update the servicer provided indicates that the workout of the two remaining loans may not occur before legal final maturity. S&P has therefore lowered to 'CCC (sf)' from 'BBB (sf)' and to 'CCC- (sf)' from 'BB (sf)' its ratings on the class B and C notes, respectively. S&P has also affirmed its 'CCC- (sf) rating on the class D notes. S&P believes that all of these notes face at least a one-in-two likelihood of default, in accordance with S&P's criteria. The one notch difference between the class B notes and the class C and D notes reflects S&P's opinion that collections may still be made available on the next IPD to redeem the class B notes. S&P has affirmed its 'D (sf)' ratings on the class E and F notes because they have already defaulted on a prior IPD. Windermere VII CMBS is a pan-European multi-loan commercial mortgage-backed securities (CMBS) transaction that closed in May 2006 with a note balance of EUR782.25 million. The underlying pool initially comprised 12 loans secured on real estate assets in Germany, France, Spain, and Sweden. RATINGS LIST Windermere VII CMBS PLC EUR782.25 mil commercial mortgage-backed floating-rate notes Rating Rating Class Identifier To From B 973224AD0 CCC (sf) BBB (sf) C 973224AE8 CCC- (sf) BB (sf) D 973224AF5 CCC- (sf) CCC- (sf) E 973224AG3 D (sf) D (sf) F 973224AH1 D (sf) D (sf) ============= I R E L A N D ============= BALLYBUNION GOLF: Faces Closure Following Refugee Rumor ------------------------------------------------------- Joe Leogue at Irish Examiner reports that Michael Carr, owner of the Ballybunion Golf Hotel, on Feb. 23 announced that the hotel is set to close with the loss of some 80 jobs. According to Irish Examiner, in a statement on the hotel's Facebook page, management blamed "a lack of Failte Ireland support and no independent tourism organization in Ballybunion" as the main reason for the hotel closure. However, the statement further claimed the hotel was "also the subject of false information put out last December" by local political representatives, Irish Examiner relates. Speaking to the Irish Examiner, Mr. Carr said the "false information" related to speculation that the hotel was to host hundreds of refugees in its winter season. He said the speculation had an adverse impact on his business, that bookings "completely collapsed" as a result, and that he suffered threats following the claims, Irish Examiner relays. Management say the contents of the hotel will be sold off over the next four weeks, and private viewings will be held ahead of a private auction on March 26, Irish Examiner discloses. Ballybunion Golf Hotel is located in Kerry. LADBROKES PLC: Irish Unit Incurs GBP3.8MM in Examinership Costs --------------------------------------------------------------- John Mulligan at Irish Independent reports that Ladbrokes said its Irish operations returned to profitability in the second half of 2015, following an examinership process last year that saw the group shut 53 of its 196 outlets here. The company said it incurred GBP3.8 million (EUR4.8 million) in legal and redundancy costs related to the examinership, Irish Independent relates. According to Irish Independent, Ladbrokes on Feb. 23 said it also shouldered an additional GBP6.4 million (EUR8.1 million) exceptional charge that was mostly related to the Irish examinership, while the closure of the Irish shops also resulted in a GBP39.7 million (EUR50.7 million) non-cash impairment charge. Ladbrokes is a London-listed bookmaker. ===================== N E T H E R L A N D S ===================== BRUCKNER CDO I: Moody's Raises Rating on Cl. D-1 Notes to Caa2 -------------------------------------------------------------- Moody's Investors Service has upgraded the ratings on these notes issued by Bruckner CDO I B.V.: EUR10.25 mil. (Current balance outstanding: EUR 0.21 mil.) Class B Secured Floating Rate Notes, Upgraded to Aaa (sf); previously on Aug. 24, 2015, Upgraded to Baa1 (sf) EUR4.6 mil. Class C-1 Deferrable Interest Secured Floating Rate Notes, Upgraded to Aaa (sf); previously on Aug. 24, 2015, Upgraded to B2 (sf) EUR1.15 mil. Class C-2 Deferrable Interest Secured Fixed Rate Notes, Upgraded to Aaa (sf); previously on Aug. 24, 2015, Upgraded to B2 (sf) EUR2.6 mil. (Current balance outstanding: EUR 3.04 mil.) Class D-1 Deferrable Interest Secured Floating Rate Notes, Upgraded to Caa2 (sf); previously on Aug. 24, 2015, Affirmed Ca (sf) EUR8.4 mil. (Current balance outstanding: EUR 11.14 mil.) Class D-2 Deferrable Interest Secured Fixed Rate Notes, Upgraded to Caa2 (sf); previously on Aug. 24, 2015, Affirmed Ca (sf) Moody's also affirmed the ratings on these combination notes issued by Bruckner CDO I B.V.: EUR6.3 mil. (Current rated balance: EUR 6.6 mil.) Class Q Combination Notes, Affirmed Ca (sf); previously on Aug. 24, 2015, Affirmed Ca (sf) EUR7 mil. (Current rated balance: EUR 7.9 mil.) Class R Combination Notes, Affirmed Ca (sf); previously on Aug. 24, 2015, Affirmed Ca (sf) This transaction is a managed cash CDO of European Structured Finance ("SF") assets, with exposure to Prime RMBS, CLO, SME and ABS consumer. The portfolio is managed by Deutsche Asset & Wealth Mgmt Int'l GmbH. The transaction's reinvestment period ended on 29 December 2009. RATINGS RATIONALE The rating action on the notes is primarily a result of deleveraging driven by asset sales and principal repayments and the subsequent improvement in over-collateralization (OC) since the last payment date. On December 2015 payment date the Class A2-1 and A2-2 were paid EUR14 million or 37.6% of their original balance and Class B was paid 10.1 million or 98% of its original balance. Furthermore another EUR9 million of assets have repaid following the December 2015 payment date which proceeds will be used at the next payment date in June 2016 to pay in full Class B, Class C-1 and Class C-2 notes and partially redeem Class D notes. Class D notes final payment will depend on the performance of the Caa rated assets in the underlying portfolio since the full repayment of assets rated B3 and above would only be sufficient to recover approximately 85% of the current principal balance of Class D. Current rating of Class D reflects this risk. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Approach to Rating SF CDOs" published in July 2015. Factors that would lead to an upgrade or downgrade of the ratings: Moody's notes that this transaction is subject to a high level of macroeconomic uncertainty, which could negatively affect the ratings on the notes, in light of 1) uncertainty about credit conditions in the general economy 2) divergence in the legal interpretation of CDO documentation by different transactional parties due to or because of embedded ambiguities. Additional uncertainty about performance is due to: Portfolio amortization: The main source of uncertainty in this transaction is the pace of amortization of the underlying portfolio, which can vary significantly depending on market conditions and have a significant impact on the notes' ratings. Amortization could accelerate as a consequence of high prepayment levels or collateral sales by the collateral manager. Fast amortization would usually benefit the ratings of the notes beginning with the notes having the highest prepayment priority. Recovery of defaulted assets: Market value fluctuations in trustee-reported defaulted assets and those Moody's assumes have defaulted can result in volatility in the deal's over- collateralization levels. Further, the timing of recoveries and the manager's decision whether to work out or sell defaulted assets can also result in additional uncertainty. Recoveries higher than Moody's expectations would have a positive impact on the notes' ratings. No cash flow analysis, sensitivity or stress scenarios have been conducted as these rating actions are based on the current asset -- liability coverage calculation and qualitative considerations. In addition to the quantitative factors, qualitative factors are part of the rating committee's considerations. These qualitative factors include the structural protections in the transaction, its recent performance given the market environment, the legal environment, specific documentation features, the collateral manager's track record and the potential for selection bias in the portfolio. All information available to rating committees, including macroeconomic forecasts, input from other Moody's analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, can influence the final rating decision. HALCYON STRUCTURED 2006-I: S&P Raises Rating on Cl. E Notes to B+ ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its credit ratings on Halcyon Structured Asset Management European CLO 2006-I B.V.'s class D and E notes. The upgrades follow S&P's analysis of the transaction's performance and the application of its relevant criteria. Since S&P's previous review on Jan. 29, 2015, the class B and C notes have fully amortized. As a result, the par coverage for the class D and E notes has largely increased since S&P's previous review. S&P subjected the capital structure to its cash flow analysis to determine the break-even default rate (BDR) 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. 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 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. Due to the large concentration of obligors in the portfolio (currently 16, compared with 28 at S&P's previous review), the application of S&P's largest obligor test, which is a supplemental stress test that S&P outlines in its corporate CDO criteria, capped S&P's rating on the class E notes at 'B+ (sf)'. Halcyon Structured Asset Management European CLO 2006-I is a cash flow collateralized loan obligation (CLO) transaction managed by Halcyon Loan Investors LP. A portfolio of loans to mainly European speculative-grade corporate debt backs the transaction. Halcyon Structured Asset Management European CLO 2006-I closed in June 2006 and its reinvestment period ended in June 2011. RATINGS LIST Halcyon Structured Asset Management European CLO 2006-I B.V. EUR400 mil secured floating-rate notes Rating Rating Class Identifier To From D 40536MAC4 AAA (sf) BB+ (sf) E 40536MAB6 B+ (sf) B- (sf) UNLIMITED SPORTS: Declared Bankrupt, Two Chains Attract Interest ---------------------------------------------------------------- DutchNews.nl, citing the Telegraaf, reports that there is a great deal of interest in taking over the bankrupt shops of Perry Sport and Aktiesport. The parent company of the two chains applied for court protection from creditors on Feb. 23 and they were later declared bankrupt, DutchNews.nl relates. According to DutchNews.nl, curator Toni van Hees told broadcaster Nos that the first negotiations will begin next week. "There are many interested parties," DutchNews.nl quotes Mr. van Hees as saying. "There are some great shops among them, some of which are profitable." Parent group Unlimited Sports Group said on Feb. 23 it has been affected by the bankruptcies of department store V&D and shoe chain Scapino, where Perry and Aktiesport had dozens of shop-in- shop operations, DutchNews.nl relays. In total, USG has a workforce of around 800, DutchNews.nl discloses. Unlimited Sports Group B.V. -- http://www.usgbrands.com-- operates as a wholesaler and retailer of sports, outdoor, and lifestyle products for men, woman, and children in Benelux. It offers sportswear, footwear, athletic apparel, skiwear, snowboards, sports accessories, trekking supplies, and protective technical gears. Unlimited Sports Group B.V. was founded in 2006 and is based in Amsterdam, the Netherlands with a sourcing office in Hong Kong. The company has offices and showrooms in Europe. ========= S P A I N ========= CAIXABANK SA: Fitch Hikes LT Issuer Default Ratings to 'BB+' ------------------------------------------------------------ Fitch Ratings has affirmed CaixaBank, S.A. and Banco Popular Espanol S.A.'s (Popular) ratings. The Outlooks on the banks' Long- term Issuer Default Ratings (IDRs) are Positive. Fitch has also affirmed the ratings of Caixabank's parent holding company, Criteria Caixa, S.A., Unipersonal (Criteria) with a Positive Outlook. At the same time, Fitch has upgraded Bankia, S.A.'s Long- term IDR to 'BBB-' and its parent holding company, BFA, Tenedora de Acciones, S.A.U. (BFA) to 'BB+'. Their Outlooks are Stable. The rating actions follow a periodic review of the Fitch-rated large domestic Spanish banks. All three banks' Long-term IDRs are driven by their standalone financial strength as expressed by their Viability Ratings (VR). KEY RATING DRIVERS - IDRS, VRs AND SENIOR DEBT Caixabank The affirmation of Caixabank's ratings largely reflects a sustained decline in non-performing loans (NPLs) and some reduction in its market risk exposure assuming the intragroup deal with Criteria is completed in 2016. However, Fitch also notes that the stock of problem assets (which include foreclosed assets) is still high and risks related to remaining equity investments have heightened in view of market volatility, putting pressure on capital. Despite the latter, Caixabank's capitalization has proved resilient thanks to reasonable internal capital generation and balance sheet de-risking. Other factors supporting the bank's VR include modest but resilient earnings and robust funding and liquidity, largely aided by a leading and diversified domestic franchise. "The Positive Outlook reflects our view that there is upside rating potential, largely tied to developments in Caixabank's asset quality, risk appetite and capital." "Over the past two years, Caixabank's credit risk profile has benefited from a steady decline in NPLs (down 15.6% in 2015; around 24% on a like-for-like basis for the integration of Barclays Spain), a trend we expect to continue in 2016 on the back of Spain's improved economy. However, foreclosed assets have lagged the NPL trend and only stabilized in 2015. The problem asset ratio improved to 11.1% at end-2015, but the total stock of NPLs and foreclosed assets remains high by international standards. At end-2015 the reserve coverage for NPLs was slightly above the sector average at 55%. "In our assessment of Caixabank's risk profile, we also take into account the swap agreement between Caixabank and Criteria announced in early December 2015 (see "Fitch: Caixabank To Reduce Equity Risk Exposure after Transfer of Bank Stakes to Parent" dated 9 December 2015 at www.fitchratings.com). Fitch considers that Caixabank's overall risk profile will benefit from the transfer of EUR2,651 million bank stakes to its parent, reducing its exposure to market risk. Following the transaction, equity investments will nevertheless still account for a significant 69% of Fitch core capital (FCC) and primarily concentrated in two large Spanish corporates, Telefonica SA (BBB+/Stable) and Repsol, S.A. (BBB/Stable). "At end-2015, Caixabank's fully loaded common equity Tier 1 (CET1) and Fitch Core Capital (FCC) ratios were adequate for the bank's rating and risk appetite at 11.6% and 12%, respectively. While the swap transaction is neutral from a fully-loaded capital ratio perspective, it is somewhat detrimental for FCC, which is our main measurement of capital. We estimate that FCC will decline to 11.2% after the swap transaction. Combined with the potential risk of write-downs on equity stakes, particularly on Repsol, given market volatility since the beginning of 2016 and the still relatively high level of unreserved problem assets (90.8% of FCC at end-2015; 100% post swap agreement) this weighs on our assessment of capital and on the bank's ratings. Positively, in 2015 Caixabank booked provisions to cover any potential impact from the pending court decision to remove interest rate floors with retroactivity rights to May 2013.We believe that the bank benefits from financial flexibility to generate capital internally or through further asset de-risking if needed," Fitch said. Caixabank's operating performance has been more resilient throughout the domestic recession than most of its domestic peers on the back of its strong and diversified national retail franchise, which helped sustain sound revenue generation from both interest and commission income. Together with cost control and efficiency gains from recent integrations, this provides some flexibility to cope with profitability headwinds in 2016 from low interest rates and lending volumes as well as lost revenues from the removal of interest rate floors. Lower loan impairment charges from improving credit quality will also support operating profits. CaixaBank's funding structure is good for its business profile. It comprises a large customer deposit base and wholesale funds, largely covered bonds. The liquidity position is comfortable as debt repayments are low in light of ample reserves of liquid assets. Criteria Criteria's Long-term IDR is based on its VR, which is notched down once from Caixabank's VR given that it remains Criteria's main asset accounting for 54.9% of its unconsolidated balance-sheet at end-2015. Although it has no banking license, Criteria is Caixabank's holding company for regulatory supervision purposes. Fitch understands that Criteria intends to remain a significant and influential owner of CaixaBank. The one-notch differential between Criteria's and CaixaBank's VR reflects the planned dilution of Criteria's ownership in CaixaBank to 48.9% from the current 56.8%, once the intragroup deal with Criteria is completed in 1H16 and exchangeable bonds of Criteria are converted into shares of the bank by 2017. Criteria's VR also takes into account the company's large and concentrated equity holdings in corporates (although these are largely liquid and listed), double leverage (95% at end-2015) and an adequate level and structure of its debt and liquidity position. Bankia The upgrade of Bankia's IDRs and VR reflect its strengthened capitalization, a more manageable stock of problem assets after the completion of its restructuring plan and improved funding and liquidity profile. The VR also reflects Fitch's expectation of a modest improvement in Bankia's operating profitability, supported by a gradual change in loan mix, further funding cost reduction, cost control discipline and lower loan impairment charges (LIC). Since 2014, the pace of Bankia's asset quality improvement has accelerated, helped by recoveries and sales. The NPL ratio improved to 10.5% at end-2015 (12.5% with foreclosed assets) from 12.9% and 14.9%, respectively, at end-2014. However, the ratios continue to compare unfavorably with international standards. Asset quality weaknesses are mitigated by good NPL cover at 60%, which is at the higher end of the range for Spanish banks. In our assessment of asset quality, Fitch also expects further improvements in 2016 helped by the more favorable operating environment in Spain but also Bankia's commitment to actively manage down problem assets. In Fitch's opinion, Bankia's capital profile has improved steadily over the past two years, reducing capital at risk from unreserved problem assets to 69% at end-2015 from 140% at end-2013, and with capital ratios (FCC and fully loaded CET1 ratios of 13.4% and 12.3%, respectively at end-2015) reaching levels that we consider to be in line with its risk profile and reflective of an investment grade rating. Improved profitability and significant deleveraging has fed through to capital. Litigation risks relating to the IPO of Bankia shares, miss-selling of hybrid securities to retail investors and the pending court decision on interest rate floors removal with retroactivity rights to May 2013 are mitigated by sizeable provisions booked by Bankia and BFA. Bankia's banking earnings generation capacity is improving but remains modest given its asset mix, with a relatively large legacy bond portfolio and large retail mortgage book. Revenue generation is largely derived from net interest income and Fitch calculates that about one-third of net interest revenue relates to interest earned on securities, which we consider a low-quality source of revenues for a retail bank and sensitive to lower sovereign spreads. In our view, Bankia's challenge is to further rebalance its revenues towards core banking given low interest rates and volumes, but its increased focus on SMEs and consumer lending coupled with further scope to reduce deposits costs may help revenues in 2016. In our assessment of profitability, Fitch expects the bank's cost control discipline and lower LIC to remain a strength, supporting its earnings generation capacity. Bankia's funding structure has improved markedly since 2013 thanks to strong loan contraction and steady growth in deposits. The bank now funds loans primarily with retail deposits but also with some covered bonds issued in the market. At end-2015, the gross loan/deposit ratio was 120%. However, ECB funding remains comparatively higher than peers as it is used to fund a large stock of legacy debt securities, including those related to the transfer of real estate assets to Spain's bad bank (SAREB). Liquidity reserves are adequate for scheduled debt repayments. BFA BFA is wholly owned by Spain's Fund for Orderly Bank Restructuring (FROB) and retained a 64% controlling stake in Bankia at end-2015. BFA's IDRs and senior debt ratings are based on its VR, which is in turn driven by that of Bankia as this is one of BFA's principal assets, at about 42% of BFA's unconsolidated balance-sheet as of end-2015. The other large items on BFA's balance sheet relate to a stake in SAREB and sovereign bond holdings. BFA's VR is notched down once from Bankia's to reflect Fitch's belief that BFA's strategy is to gradually reduce its majority ownership, although the timing is uncertain as there is no deadline set out in its restructuring plan. BFA's VR also addresses its moderate double leverage of 90% at end-2015 and manageable indebtedness given its stock of unencumbered assets. As part of the group's restructuring process, BFA surrendered its banking license in early 2015, but it remains the group's consolidating entity and is supervised by the banking authorities on a consolidated basis given its stake in Bankia. BFA's fully loaded CET1 ratio was 12.9% at end-2015. Popular The affirmation of Popular's ratings largely reflects the bank's improving asset quality trend, which translates into a modest decline of its capital at risk from unreserved problem assets and more resilient pre-impairment operating profitability than peers thanks to its good SME franchise. Other factors supporting Popular's ratings are its adequate funding and liquidity profile. However, the stock of problem assets and capital tied to unreserved problem assets remain very high and need further substantial reduction, to allow for upside rating potential. Popular's problem assets ratio declined to 24.8% at end-2015, from 26.1% at end-2014, despite slight loan deleveraging. Nevertheless, the stock of problem assets remains high, compares unfavourably with its domestic and international peers, and weighs heavily on the bank's rating. Loan impairment reserves for Popular remained stable at 42.6% at end-2015, which is at the lower end of the range for Spanish banks. In Fitch's assessment of asset quality, the rating agency views as ambitious the bank's target to reduce problem assets by EUR4 billion in 2016, which includes EUR2.8 billion foreclosed asset sales, compared with EUR1.4 billion reduction in problem assets achieved in 2015. However, improved macroeconomic and real estate market conditions should help achieve this target. At end-2015 Popular's FCC and fully loaded CET1 ratios stood at 11.8% and 10.9%, respectively, which Fitch considers as just acceptable given that unreserved problem assets account for a very high 217% of FCC, limiting the bank's margin of manoeuvre to absorb unexpected shocks. Positively, Popular benefits from EUR1.4 billion additional loss absorbing instruments which provides some cushion. In 2015, Popular also booked provisions to cover any capital impact from the pending court decision to remove interest rate floors with retroactivity rights to May 2013. The bank's revenue generation capacity has remained relatively resilient to pressure on margins and volumes and should benefit from higher SME loan volumes leveraging on its good franchise and knowledge. The bank also has further scope to reduce funding costs, particularly on retail deposits, which should help to offset the impact from the removal of interest rate floors in January 2016. Control over operating costs remains strong. LICs eroded more than 84% of the pre-impairment operating profit in 2015, and will decline but remain high and undermine the bank's bottom-line earnings in the foreseeable future. Popular's funding mix and liquidity position are adequate. Funding, primarily based on retail deposits, and liquidity is underpinned by a sizeable stock of unencumbered ECB-eligible assets relative to forthcoming wholesale debt maturities. SUPPORT RATING AND SUPPORT RATING FLOOR (ALL BANKS) The Support Ratings (SR) of '5' and Support Rating Floors (SRF) of 'No Floor' of the three banks and two holding parent companies reflect Fitch's belief that senior creditors of these entities can no longer rely on receiving full extraordinary support from the sovereign in the event that they become non-viable. For the parent holding companies Fitch also takes into account their role as holding companies. Fitch views the EU's Bank Recovery and Resolution Directive (BRRD) and Single Resolution Mechanism (SRM) are now sufficiently progressed to provide a framework for resolving banks that is likely to require senior creditors participating in losses, if necessary, instead of or ahead of a bank receiving sovereign support. BRRD has been effective in EU member states since 1 January 2015, including minimum loss absorption requirements before resolution financing or alternative financing (eg, government stabilization funds) can be used. Full application of BRRD, including the bail-in tool, is required from 1 January 2016. BRRD was transposed into Spanish legislation on 18 June 2015, with full implementation from 1 January 2016. RATING SENSITIVITIES IDRS, VRs AND SENIOR DEBT (CAIXABANK, BANKIA, POPULAR) Caixabank The Positive Outlook reflects potential ratings upside if the reduction of problem assets (including foreclosed assets) accelerates in 2016 and the sensitivity of FCC to unreserved problem assets continues to improve to levels comfortably below 100%, while the FCC ratio post swap agreement converges towards levels seen at end-2015. Asset de-risking from equity investments would also be rating positive. Material deterioration in asset quality and capital, which Fitch currently does not expect, could put ratings under pressure. Similarly, a deterioration of the bank's funding and liquidity profile would put pressure on the ratings. Bankia Upward ratings potential could arise in the medium term from further improvement in asset quality, together with strengthened banking earnings. These factors will ultimately support Bankia's capital, either through internal capital generation or reduced capital at risk from unreserved problem assets. Downgrade pressure could come from loan quality and capital shocks and/or a significant increase in appetite for profits that compromise its risk profile amidst low loan growth prospects in the next two years. Similarly, a deterioration of the bank's funding and liquidity profile would put pressure on the ratings. Popular The Positive Outlook reflects potential rating upside if the bank progresses in substantially reducing problem assets (including foreclosed assets) in 2016 combined with capital enhancements, hence reducing the very high sensitivity of FCC to unreserved problem assets to more acceptable levels for a 'BB' category rating. Conversely, any setback on asset quality improvements or shocks to capital, which Fitch currently does not expect, could put ratings under pressure. Similarly, a deterioration of the bank's funding and liquidity profile would put pressure on the ratings. IDRS, VRs AND SENIOR DEBT (CRITERIA, BFA) The two parent holding companies' IDRs, VR and senior debt ratings remain sensitive to the same factors affecting their operating banks' VRs. Their ratings would also suffer from an ownership dilution that resulted in a loss of control over their respective bank and/or changes in the regulatory supervision approach of the group. Downside pressures could also arise from write-downs of assets and/or higher debt or double leverage. SUPPORT RATING AND SUPPORT RATING FLOOR (ALL BANKS) Any upgrade of the SRs and upward revision of the SRFs would be contingent on a positive change in the sovereign's propensity to support its banks. While not impossible, this is highly unlikely, in Fitch's view. KEY RATING DRIVERS AND SENSITIVITIES - STATE-GUARANTEED DEBT (CAIXABANK, BFA) Caixabank's and BFA's state-guaranteed debt issues have been affirmed at 'BBB+', in line with Spain's Long-term IDR. State- guaranteed debt issues are senior unsecured instruments that bear the full guarantee of Spain. Consequently, its ratings are generally the higher of the issuer's Long-term IDR and Spain's Long-term IDR. KEY RATING DRIVERS AND SENSITIVITIES - SUBORDINATED DEBT AND OTHER HYBRID SECURITIES (CAIXABANK, CRITERIA, BANKIA AND POPULAR) Caixabank's, Criteria's, Bankia's and Popular's subordinated (lower Tier 2) debt issues are rated one notch below the respective banks' VRs to reflect the below-average loss severity of this type of debt compared with average recoveries. Caixabank's upper Tier 2 debt securities and Popular's preference shares are rated three notches below the banks' respective VRs to reflect the higher loss severity risk of these securities (two notches) compared with average recoveries as well as moderate risk of non-performance relative to its VR (one notch). The ratings of the instruments are primarily sensitive to a change in the banks' VRs, which drive the ratings, but also to a change in Fitch's view of non-performance or loss severity risk relative to the respective banks' viability. The rating actions are as follows: Caixabank: Long-term IDR: affirmed at 'BBB'; Outlook Positive Short-term IDR: affirmed at 'F2' Viability Rating: affirmed at 'bbb' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' Senior unsecured debt long-term rating: affirmed at 'BBB' Senior unsecured debt short-term rating and commercial paper: affirmed at 'F2' State-guaranteed debt: affirmed at 'BBB+' Lower Tier 2 subordinated debt: affirmed at 'BBB-' Upper Tier 2 subordinated debt: affirmed at 'BB' Criteria: Long-term IDR: affirmed at 'BBB-'; Outlook Positive Short-term IDR: affirmed at 'F3' Viability Rating: affirmed at 'bbb-' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' Senior unsecured debt long-term rating: affirmed at 'BBB-' Senior unsecured debt short-term rating: affirmed at 'F3' Subordinated debt: affirmed at 'BB+' Bankia: Long-term IDR: upgraded to 'BBB-' from 'BB+'; Outlook Stable Short-term IDR: upgraded to 'F3' from 'B' Viability Rating: upgraded to 'bbb-' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' Long-term senior unsecured debt: upgraded to 'BBB-' from 'BB+' Commercial paper: upgraded to 'F3' from 'B' Subordinated debt: upgraded to 'BB+' from 'BB' BFA: Long-term IDR: upgraded to 'BB+' from 'BB'; Outlook Stable Short-term IDR: affirmed at 'B' Viability Rating: upgraded to 'bb+' from 'bb' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' Long-term senior unsecured debt: upgraded to 'BB+' from 'BB' State-guaranteed debt: affirmed at 'BBB+' Popular: Long-term IDR: affirmed at 'BB-'; Outlook Positive Short-term IDR: affirmed at 'B' Viability Rating: affirmed at 'bb-' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' Long-term senior unsecured debt programme: affirmed at 'BB-' Short-term senior unsecured debt programme and commercial paper: affirmed at 'B' Subordinated lower Tier 2 debt: affirmed at 'B+' BPE Financiaciones S.A.: Long-term senior unsecured debt and debt programme (guaranteed by Popular): affirmed at 'BB-' Short-term senior unsecured debt programme (guaranteed by Popular): affirmed at 'B' BPE Preference International Limited: Preference shares: affirmed at 'B-' Popular Capital, S.A. Preference shares: affirmed at 'B-' CAIXABANK RMBS: DBRS Gives Prov. C Ratings to Series B Debt ----------------------------------------------------------- DBRS Ratings Limited assigned provisional ratings to the following notes to be issued by Caixabank RMBS 1 (the Issuer): -- EUR12,851,000,000 Series A at A (sf) -- EUR1,349,000,000 Series B at C (sf) The Issuer is expected to be a securitization of residential mortgage loans secured by first-lien mortgages and "Credito Abierto" drawdowns on properties in Spain originated by Caixabank. At the closing of the transaction, the Issuer will use the proceeds of the Series A and Series B notes to fund the purchase of the mortgage portfolio from the Seller, Caixabank. Caixabank will also be the servicer of the portfolio. In addition, Caixabank will provide separate subordinated loans to fund each the initial expenses and the Reserve Fund. The securitisation will take place in the form of a fund, in accordance with Spanish Securitisation Law. The ratings are based upon a review by DBRS of the following analytical considerations: -- The transaction's capital structure and the form and sufficiency of available credit enhancement. The Series A notes benefit from EUR1,349 million (13.5%) subordination of the Series B notes and the EUR568 million (4.0%) Reserve Fund, which is available to cover senior fees as well as interest and principal of the Series A notes until paid in full. The Reserve Fund will amortize with a target equal to the lower of 8% of the outstanding balance of the Series A and Series B notes and 4% of the initial balance of the Series A and Series B notes, subject to a floor of EUR84 million. The Reserve Fund will not amortize if certain performance triggers are breached. The Series A notes will benefit from full sequential amortization, where principal on the Series B notes will not be paid until the Series A notes have been redeemed in full. Additionally, the Series A principal will be senior to the Series B interest payments in the priority of payments. -- DBRS was provided with the provisional portfolio equal to EUR14,414 million as of 26 January 2016. At closing the portfolio balance will be equal to the balance of the notes (EUR14,200 million). 75.9% of the portfolio are "Credito Abierto" drawdowns where the borrower has the ability to withdraw further advances subject to borrower performance and eligibility criteria. Further draws will not be funded by the Issuer, however further draws will rank pari passu with the loans securitized by the Issuer. The main characteristics of the total portfolio includes: (1) 70.9% weighted-average current loan-to-value (WACLTV) and 108.7% indexed WA CLTV (INE Q3 2015); (2) the top three geographical concentrations of Catalonia (28.2%), Madrid (20.2%) and Andalusia (12.9%); (3) 3.7% of the borrowers are non-nationals; (4) weighted- average loan seasoning of 7.5 years; and (5) the weighted- average remaining term of the portfolio is 22.6 years with 22.3% of the loans having a remaining term greater than 30 years. -- The loans are floating-rate mortgages primarily linked to 12- month Euribor (88.4%). 8.5% of the portfolio is fixed with 3.0% paying a VPO rate which DBRS assumed to be fixed in its cash flow analysis. The notes are floating-rate liabilities indexed to three-month Euribor. The interest rate risk and basis risk is unhedged. Amounts standing in the Reserve Fund are available to cover the interest rate and basis risk for the rated notes. Additionally, the Series A notes benefit from the senior position in the priority of payments to the Series B notes. DBRS stressed the interest rates as described in the DBRS methodology "Unified Interest Rate Model for European Securitisations." -- The credit quality of the mortgages backing the notes and the ability of the servicer to perform its servicing responsibilities. DBRS was provided with Caixabank's historical mortgage performance data separated between first- lien mortgages and "Credito Abierto" drawndowns, as well with loan-level data for the mortgage portfolio. Details of the probability of default (PD), loss given default (LGD), and expected losses (EL) resulting from DBRS's credit analysis of the mortgage portfolio at A (sf) and C (sf) stress scenarios are detailed below. In accordance with the transaction documentation, the servicers are able to grant loan modifications without consent of the management company within the range of permitted variations. According to the documentation, permitted variations are allowed for up to 5% of the initial portfolio for maturity extension to September 2059 and reduction of loan margins down to a portfolio spread equal to 3-month Euribor plus 0.80%. DBRS stressed the margin of the portfolio equal to 0.75% and extended the maturity for 5% of the mortgage loans up to September 2059 in its cash flow analysis. -- The transaction's account bank agreement and respective replacement trigger require Caixabank acting as the treasury account bank to find (1) a replacement account bank or (2) an account bank guarantor upon loss of a BBB (low) rating. The DBRS Critical Obligations Rating of Caixabank is A (high), while the DBRS rating for Caixabank to act as account bank is 'A'. -- The legal structure and presence of legal opinions addressing the assignment of the assets to the issuer and the consistency with the DBRS "Legal Criteria for European Structured Finance Transactions" methodology. As a result of the analytical considerations, DBRS derived a Base Case PD of 8.2% and LGD of 32.4%, which resulted in an EL of 2.7% using the European RMBS Credit Model. DBRS cash flow model assumptions stress the timing of defaults and recoveries, prepayment speeds and interest rates. Based on a combination of these assumptions, a total of 16 cash flow scenarios were applied to test the capital structure and ratings of the notes. * Moody's Changes Outlook on 14 Spanish Sub-Sovereigns to Stable ---------------------------------------------------------------- Moody's Investors Service has changed the outlook on the ratings of 14 Spanish sub-sovereigns to stable from positive. The outlooks on the regions of Junta de Andalucia (positive) and Generalitat de Catalunya (negative) remain unchanged. At the same time, Moody's affirmed the ratings of all Spanish sub-sovereigns. The outlook changes on the Spanish sub-sovereigns were triggered by: (1) the weakening of Spain's credit profile as captured by the outlook change on the Baa2 Spanish sovereign rating to stable from positive on 19 February 2016; and (2) the strong correlation between sub-sovereign and sovereign credit risk, reflected in macroeconomic linkages, institutional factors and financial market conditions. Full details on the sovereign press release available at the Moody's site at http://is.gd/U2EiQI RATINGS RATIONALE RATIONALE FOR THE OUTLOOK CHANGES Moody's believes that the weakening of the sovereign's creditworthiness --captured by the change in outlook to stable from positive on Spain's Baa2 rating -- is reflected at the regional level given the strong correlation between sub-sovereign and sovereign credit risk. Moody's notes the strong reliance of the regions on the Spanish government, given the regions' extensive use of the central government's liquidity mechanisms: the Fondo de Liquidez Autonomico (FLA), established in 2012 for regions that breach deficit targets set by the central government; and the Fondo de Facilidad Financiera (FFF), established in 2015 for regions that comply with deficit targets. In 2015, 15 out of 17 Spanish regions (i.e. all regions with the exception of the Basque Country and Navarra) utilized these liquidity mechanisms. Moody's also notes that there is some uncertainty around the regions' fiscal consolidation path for 2016, given the fragmented political composition at the national level, which could result in the relaxation of deficit reductions for the following years. RATIONALE FOR THE RATING AFFIRMATIONS WITH OUTLOOK CHANGES ENTITIES RATED ABOVE THE SOVEREIGN LEVEL -- THE BASQUE COUNTRY AND THE PROVINCE OF BIZKAIA Moody's decision to affirm the Baa1 ratings of the Basque Country and the province of Bizkaia reflects these entities' unique and constitutionally protected tax regimes. Moody's believes that while the Basque entities are likely to retain greater credit strength than the sovereign given their unique tax regime, they are integrated within the wider Spanish economy and are exposed to similar economic and financial pressures as the sovereign, which do not justify more than a one-notch differential. In addition, the Basque Country and the province of Bizkaia have comfortable liquidity positions. Unlike Bizkaia, which has recorded financing surpluses since 2011, the Basque Country is expected to have a financing deficit of close to 6% of its operating revenue in 2015. However, Moody's notes that this deficit reflected the region's capital expenditure, given its positive gross operating balance. ENTITIES RATED AT THE SOVEREIGN LEVEL -- CITY OF BARCELONA The Baa2 rating reflects the city's good budgetary management and solid financial fundamentals in recent years, which have ensured a high self-financing capacity and, as a result, a limited debt burden. This is mainly reflected in high gross operating balances (20% of operating revenue on average for 2010-14) and moderate debt levels (41% of operating revenue in 2014). The rating also reflects Barcelona's good liquidity position, with abundant cash on hand and limited debt obligations. While Moody's acknowledges Barcelona's robust financials, the city does not have sufficient financial flexibility to justify a rating above that of the sovereign. The central government retains control of Spanish municipalities via legislation, the level of transfers, and the management of pay-rise packages for civil servants. -- REGIONS OF CASTILLA Y LEON, GALICIA AND MADRID Moody's notes that the regions of Castilla y Leon, Galicia and Madrid, rated on par with the Sovereign's Baa2 stable rating, have reported stronger financial performances than other Moody's-rated Spanish regions throughout the financial crisis; these regions' deficits are under control and their debt burdens, although increasing, are still manageable and consistent with this rating level. Nevertheless, their income stream largely relies on state transfers and shared taxes with the sovereign, thus capping their ratings at the sovereign level. ENTITIES RATED BELOW THE SOVEREIGN LEVEL -- REGIONS CASTILLA LA MANCHA, EXTREMADURA, MURCIA AND VALENCIA The rating action on these four Spanish regions primarily reflects their reliance on central government liquidity support through the FLA, which they are currently receiving. However, although the FLA greatly reduces the short-term risk of a region's liquidity-driven default covering their financial obligations, it does not address fundamental economic and fiscal challenges. These regions' fiscal positions will remain fragile in the next few years, evidenced by their high financing deficits and growing debt levels. While regions of Castilla-La Mancha, Murcia and Valencia will retain very high debt ratios, Extremadura's debt levels will remain at low levels. According to Moody's estimations, the region's net direct and indirect debt to operating revenue ratio will be close to 100% of operating revenue at year-end 2015 (compared with 215% on average for Moody's rated regions). Moody's believes that these regions will continue to receive liquidity support from the central government through the FLA for as long as financial pressures persist. At the same time, their ratings incorporate Moody's assessment of a heightened likelihood of government support, as corroborated by the central government's track record of support since the FLA was created in 2012, which partially offsets their weak standalone creditworthiness. RATIONALE FOR RATING AFFIRMATION WITH OUTLOOK UNCHANGED -- REGION OF ANDALUCIA Andalucia's long-term issuer and debt ratings are affirmed at Ba1, with the outlook remaining positive. The region's fiscal position has improved significantly since 2012 and Moody's expects that these improvements in deficit levels will have continued in 2015. The rating affirmation also reflects the region's moderate debt levels at around 130% of operating revenue estimated for 2015 (compared with 215% for the rated regions on average). While other market options are becoming increasingly available to the region, Moody's believes that it will continue to use FLA funding in 2016, given its lower cost. -- REGION OF CATALUNYA The Generalitat de Catalunya's long-term issuer and debt ratings are affirmed at Ba2/NP, with the outlook remaining negative. On Jan. 15, 2016, Moody's changed the outlook on the rating of the Generalitat de Catalunya to negative from stable and affirmed its rating at Ba2/NP. The rationale to change the outlook to negative was mainly based on: (i) the increased risk that the region's fiscal consolidation efforts will halt, (ii) the increasing political tensions between Catalunya and the central government that could negatively affect the investment climate in the region; and (iii) a slight risk that, should political tensions escalate further, the government's liquidity support to the region could be affected. WHAT COULD CHANGE THE RATINGS UP/DOWN The strengthening of Spain's credit profile, as reflected by an upgrade of the sovereign rating, would result in upward pressure on Spanish sub-sovereign ratings in general, and particularly on those ratings currently on par or above that of the sovereign. In addition, upward pressure would develop on sub-sovereigns currently rated below the sovereign, if their fiscal and financial performance were to improve. A downgrade of Spain's sovereign rating leading to indications of weakening government support for the regions, or a deterioration in their fiscal performance, would likely lead to a downgrade of sub-sovereign entities. Given Andalucia's positive outlook, an upgrade would be possible if the region's 2015 financial results improve. In contrast, a stabilisation of the rating's outlook could occur if 2015 financial results lead to a reversal in its deficit reduction trajectory. Given the negative outlook in Catalunya's rating, an upgrade in this region's rating is unlikely. Significant improvements in its own fiscal and financial performance could lead to the stabilization of the rating's outlook. In contrast, downward pressure on the rating could occur if Catalunya's policy changes reverse the fiscal consolidation. In addition, a downgrade of the sovereign rating, or any indication of weakening government support, would likely lead to a downgrade in Catalunya's rating. RATINGS AFFECTED -- Basque Country: long-term issuer and Senior Unsecured ratings affirmed at Baa1; outlook changed to Stable from Positive. -- Diputacion Foral de Bizkaia: long-term issuer rating affirmed at Baa1; outlook changed to Stable from Positive. -- Comunidad Autonoma de Madrid: long-term issuer rating affirmed at Baa2; outlook changed to Stable from Positive. -- Junta de Castilla y Leon: long-term issuer and Senior Unsecured ratings affirmed at Baa2; outlook changed to Stable from Positive. -- Comunidad Autonoma de Galicia: long-term issuer and Senior Unsecured ratings affirmed at Baa2; outlook changed to Stable from Positive. -- City of Barcelona: long-term issuer rating affirmed at Baa2; outlook changed to Stable from Positive. -- Junta de Extremadura: long-term issuer rating affirmed at Baa3; outlook changed to Stable from Positive. -- Junta de Andalucia: long-term issuer and Senior Unsecured ratings affirmed at Ba1, Senior Unsecured MTN affirmed at (P)Ba1; outlook remains Positive. -- Comunidad Autonoma de Murcia: long-term issuer and Senior Unsecured ratings affirmed at Ba2; outlook changed to Stable from Positive. -- Junta de Comunidades de Castilla-La Mancha: long-term issuer and Senior Unsecured ratings affirmed at Ba2; outlook changed to Stable from Positive. -- Generalitat de Catalunya: long-term issuer and Senior Unsecured ratings affirmed at Ba2, Senior Unsecured MTN affirmed at (P)Ba2, Commercial Paper affirmed at Not-Prime and Other Short Term affirmed at (P)Not-Prime; outlook remains Negative. -- Generalitat de Valencia: Senior Unsecured rating affirmed at Ba2, Commercial Paper affirmed at Not-Prime; outlook changed to Stable from Positive. -- Instituto Valenciano de Finanzas: BACKED Senior Unsecured Bank Credit Facility affirmed at Ba2, outlook changed to Stable from Positive, in line with Valencia's ratings; -- CACSA: Underlying Senior Secured affirmed at Ba2, BACKED Senior Secured affirmed at Ba2. Outlook changed to Stable from Positive. -- Universities of Valencia (Universidad de Valencia, Universidad de Alicante, Universidad Jaume 1 de Castellon and Universidad Politecnica de Valencia): Underlying Senior Secured affirmed at Ba2, BACKED Senior Secured affirmed at Ba2. Outlook changed to Stable from Positive. -- Notes of Feria Valencia: Underlying Senior Secured affirmed at Ba2, BACKED Senior Secured affirmed at A2, in line with Assured Guaranty (Europe) Ltd's rating.(A and B Certificates). Outlook changed Stable from Positive. Moody's methodology for rating a security insured by a financial guarantor considers the higher of (i) the guarantor's rating, and (ii) the underlying rating of the security. In cases where the guarantee does not fully mitigate the risks embedded in the country ceiling of the country in which the issuer operates, the security's rating may be constrained at the country ceiling's level. The country ceiling concept is described in Moody's Local Currency Country Risk Ceiling for Bonds and Other Local Currency Obligations cross-sector rating methodology, published in January 2015. The sovereign action required the publication of these credit rating actions on a date that deviates from the previously scheduled release date in the sovereign release calendar. The specific economic indicators, as required by EU regulation, are not available for these entities. These national economic indicators are relevant to the sovereign rating, which was used as an input to this credit rating action. Sovereign Issuer: Spain, Government of GDP per capita (PPP basis, US$): 33,835 (2014 Actual) (also known as Per Capita Income) Real GDP growth (% change): 1.4% (2014 Actual) (also known as GDP Growth) Inflation Rate (CPI, % change Dec/Dec): -1% (2014 Actual) Gen. Gov. Financial Balance/GDP: -5.9% (2014 Actual) (also known as Fiscal Balance) Current Account Balance/GDP: 1% (2014 Actual) (also known as External Balance) External debt/GDP: [not available] Level of economic development: High level of economic resilience Default history: No default events (on bonds or loans) have been recorded since 1983. On Feb. 18, 2016, a rating committee was called to discuss the rating of the Andalucia, Junta de; Barcelona, City of; Basque Country (The); Bizkaia, Diputacion Foral de; CACSA; Castilla y Leon, Junta de; Castilla-La Mancha, Junta de Comunidades de; Catalunya, Generalitat de; Valencia, Generalitat de; Universities of Valencia; Extremadura, Junta de; Galicia, Comunidad Autonoma de; FERIA VALENCIA; Murcia, Comunidad Autonoma de; Madrid, Comunidad Autonoma de; Instituto Valenciano de Finanzas. The main points raised during the discussion were: The systemic risk in which the issuer operates has materially increased. The principal methodology used in rating Junta de Andalucia, City of Barcelona, Basque Country, Diputacion Foral de Bizkaia, Junta de Castilla y Leon, Junta de Comunidades de Castilla-La Mancha, Generalitat de Catalunya, Junta de Extremadura, Comunidad Autonoma de Galicia, Comunidad Autonoma de Madrid, Comunidad Autonoma de Murcia, Generalitat de Valencia was Regional and Local Governments published in January 2013. CACSA, FERIA VALENCIA, Instituto Valenciano de Finanzas, Universities of Valencia's ratings were assigned by evaluating factors that Moody's considers relevant to the credit profile of the issuer, such as the company's (i) business risk and competitive position compared with others within the industry; (ii) capital structure and financial risk; (iii) projected performance over the near to intermediate term; and (iv) management's track record and tolerance for risk. Moody's compared these attributes against other issuers both within and outside CACSA, FERIA VALENCIA, Instituto Valenciano de Finanzas, Universities of Valencia's core industry and believes CACSA, FERIA VALENCIA, Instituto Valenciano de Finanzas, Universities of Valencia's ratings are comparable to those of other issuers with similar credit risk. The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable. =========================== U N I T E D K I N G D O M =========================== KELDA FINANCE: Fitch Affirms 'BB' LT Issuer Default Rating ---------------------------------------------------------- Fitch Ratings has affirmed Kelda Finance (No.2) Limited's Long- term Issuer Default Rating (IDR) at 'BB' and senior secured rating at 'BB+'. The Outlook on the Long-term IDR is Stable. The affirmation reflects Yorkshire Water's adequate dividend capacity in comparison with the debt service requirements of Kelda, even though Yorkshire Water faces pressure on its credit metrics stemming from Ofwat's final determination of tariffs for the period April 2015 to March 2020 and a recent reduction of retail price inflation (RPI). The ratings also take into account Yorkshire Water's solid financial and regulatory performance. Kelda is a holding company of Yorkshire Water Services Limited (Yorkshire Water; class A debt A/Stable, class B debt BBB+/Stable), the regulated, monopoly provider for water and wastewater services that supplies 4.9 million people in the former county of Yorkshire and North Derbyshire. Kelda Finance (No.3) PLC (FinCo) is the financing vehicle for Kelda, which guarantees the issued bonds together with its parent, Kelda Finance (No.1) Limited. KEY RATING DRIVERS Adequate Dividend Cover at Kelda Fitch expects the Kelda group to maintain credit metrics in line with its guidelines, ie dividend cover at around 5.8x (assuming RPI increases to 2.5% by financial year to March 2018) and consolidated net debt/regulatory asset value (RAV) below 85%. Our post-maintenance and post-tax interest cover (PMICR) forecast is at 1.2x. Fitch notes that the GBP265 million of incremental debt at the holding level only represents less than 5% of RAV and incurs an annual finance charge of around GBP15 million-GBP18 million. The reduced dividend stream from Yorkshire Water expected for the current price control will still allow comfortable servicing of the debt. However, if RPI remains materially below 1.5% for an extended period of time, dividend stream from Yorkshire Water would be further reduced. This could lead to negative rating action for Kelda's ratings. KEY ASSUMPTIONS Fitch's key assumptions within our rating case for Yorkshire Water include: -- Regulated revenues in line with the final determination of tariffs for April 2015 to March 2020, ie assuming no material over- or under-recoveries -- Operating expenditure outperformance of GBP50m in nominal terms over the five-year period -- Retail costs in line with allowances -- Non-regulated EBITDA of around GBP2.5m per annum -- RPI of 1.3% for FY16, 2% for FY17 and 2.5% thereafter -- Capital expenditure outperformance of GBP130m in nominal terms over the five-year period In addition, for Kelda Finance Fitch assumes: -- Incremental debt at holding company level to remain at around GBP265million -- An annual finance charge at the holding company level of between GBP15 million -GBP18 million RATING SENSITIVITIES Negative: Future developments that could lead to negative rating action include: -- A sustained decline of dividend cover below 2.5x -- RPI remaining materially below 1.5% over an extended period of time -- Group gearing above 85% on a sustained basis -- Marked deterioration in operating and regulatory performance of Yorkshire Water or a material change in business risk of the UK water sector Positive: Upside is limited unless Yorkshire Water materially reduces its regulatory gearing. LIQUIDITY As of September 30, 2015, the holding company had available a GBP30 million undrawn, committed revolving credit facility with maturity in October 2022. The next debt maturity is GBP200 million in February 2020. FULL LIST OF RATING ACTIONS Kelda Finance (No.2) Limited -- Long-term IDR affirmed at 'BB', Stable Outlook -- Senior secured rating affirmed at 'BB+' Kelda Finance (No.3) PLC -- GBP200 million bonds, 5.75%, February 2020, guaranteed by Kelda Finance (No. 2) Limited, senior secured rating affirmed at 'BB+' KEYDATA INVESTMENT: FCA Wants Ex-Directors' GBP650MM Claim Tossed ----------------------------------------------------------------- Justin Cash at New Model Adviser reports that the Financial Conduct Authority has applied to strike out a GBP650 million civil claim brought against it by two former directors at failed investment company Keydata. According to New Model Adviser, Keydata's former chief executive Stewart Ford and former sales director Mark Owen are seeking GBP650 million from the regulator in damages for "misfeasance in public office". They argue that the actions of the FCA and its predecessor the Financial Services Authority (FSA) contributed to Keydata's collapse and the customer detriment that followed, New Model Adviser relates. Mr. Ford added Keydata's administrators PricewaterhouseCoopers (PwC) to the suit, New Model Adviser discloses. He claimed the regulator knowingly exceeded its statutory authority in order to "bring down" Keydata, and that it worked with PwC to report the company was insolvent when it was not, New Model Adviser relays. Keydata was pushed into administration by the FSA in 2009 over tax debts incurred by mislabelling products as ISAs, New Model Adviser recounts. Mr. Ford, as cited by New Model Adviser, said the hearing to determine the success of the strike-out is likely take place this summer. Keydata Investment Services Ltd. designs, distributes and administers structured investment products. Keydata operates from three locations, being London, Glasgow and Reading and administers its own products as well as portfolios for third parties. Dan Schwarzmann and Mark Batten of PricewaterhouseCoopers LLP were appointed joint administrators of KIS June 8, 2009. The administration of KIS subsequently ended on March 27, 2014 and KIS was dissolved shortly thereafter. MOTIVE TELEVISION: To Appoint Administrators, Explores Options -------------------------------------------------------------- Motive Television PLC on Feb. 23 disclosed that it has filed at court a notice of intention to appoint administrators. The Board has been reviewing its options in order to minimize the financial uncertainty surrounding the Company. While the Board continues to explore these options, the Company has filed a notice of intention to appoint Andrew Hosking -- andrew.hosking@quantuma.com -- Carl Jackson -- carl.jackson@quantuma.com -- and Simon Bonney -- simon.bonney@quantuma.com -- of Quantuma LLP, Vernon House, 23 Sicilian Avenue, London WC1A 2QS as administrators of the Company to assist the directors in this regard and to protect the interests of creditors. The suspension to trading in Motive's shares, as announced on February 15, 2016, remains effective. Further announcements will be made in due course. Motive Television PLC -- http://www.motivetelevision.co.uk-- provides software as a service (SAAS) to broadcasters to enable them to offer their customers time-changing and place changing capabilities for their content. The Company has offices in London, Dublin, Barcelona and Casablanca and operates globally from its HQ in London. TRITON PLC: S&P Lowers Rating on Class F Notes to 'D' ----------------------------------------------------- Standard & Poor's Ratings Services lowered to 'D (sf)' from 'B- (sf)' its credit rating on Triton (European Loan Conduit No. 26) PLC's class F notes. S&P has subsequently withdrawn, effective in 30 days' time, its rating on this class of notes. At the same time, S&P has withdrawn its ratings on the class B and C notes. On the January 2016 interest payment date (IPD), principal payments were applied to fully repay the class B, C, and F notes. At the same time, full interest was not paid on the class C and F notes. The class C and F notes have an accrued interest shortfall amount of GBP944 and GBP8,685, respectively. S&P's ratings address the timely payment of interest and the ultimate payment of principal no later than the October 2019 legal final maturity date. S&P has withdrawn its rating on the class B notes as it has fully repaid. S&P has also withdrawn its rating on the class C notes, as they were fully repaid with regard to principal. The interest shortfall that has occurred with this class of notes represents a de minimis shortfall covered by S&P's imputed promises criteria. Therefore, S&P has not lowered its rating on this class of notes to 'D (sf)' before withdrawing it. "We do not consider the accrued interest shortfall on the class F notes to be de minimis and it therefore represents a failure to pay timely interest. We do not believe the shortfall will be reimbursed within the next 12 months. We have therefore lowered to 'D (sf)' from 'B- (sf)' our rating on the class F notes in line with our criteria. We have subsequently withdrawn our rating on this class of notes. The rating will remain at 'D (sf)' for a period of 30 days before the withdrawal becomes effective," S&P said. RATINGS LIST Triton (European Loan Conduit No. 26) PLC GBP556.65 mil, US$87.309 mil commercial mortgage-backed floating- rate notes Rating Rating Class Identifier To From B 89677HAA5 NR BB+ (sf) C 89677HAB3 NR B (sf) F 89677HAF4 D (sf) B- (sf) NR--Not rated ********* 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 2016. 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 * * *