/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/160407.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, April 7, 2016, Vol. 17, No. 068 Headlines B E L A R U S BELARUSBANK JSC: S&P Affirms 'B-/C' Counterparty Credit Ratings G E R M A N Y STEILMANN SE: Group of Companies to File for Insolvency I R E L A N D PETROCELTIC INT'L: Board to Support Worldview's Buy-Out Bid I T A L Y LKQ ITALIA: Moody's Assigns Ba2 Rating to EUR500MM Sr. Notes S P A I N ABENGOA SA: Judge OKs Moratorium Amid Debt Restructuring Talks BANKIA: S&P Raises Long-Term Counterparty Credit Ratings to 'BB+' T U R K E Y GLOBAL ENERJI: Istanbul Court Suspends Debt Enforcement Process U K R A I N E KHRESCHATYK BANK: Declared Bankrupt Following Liquidity Woes U N I T E D K I N G D O M MIZZEN MEZZCO: Fitch Affirms 'B+' Long-Term Issuer Default Rating TATA STEEL: Welsh Gov't Can't Offer Tax Cuts to Port Talbot TOWD POINT 2016-GRANITE 1: Moody's Rates Class G Notes (P)B1 X X X X X X X X * Fitch: Crossover Credits to Lead to EMEA Bond Issuance Recovery ********* ============= B E L A R U S ============= BELARUSBANK JSC: S&P Affirms 'B-/C' Counterparty Credit Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services said that it has affirmed its 'B-/C' long- and short-term counterparty credit ratings on JSC Savings Bank Belarusbank. The outlook is stable. The affirmation reflects S&P's view that Belarusbank can withstand the deterioration of the market environment and that it demonstrates better performance than peers', due to its market- leading business position and ongoing support from the Belarusian government. S&P has changed its assessment of Belarusbank's capital and earnings to weak from moderate because increased credit costs are weighing on the bank's profitability and capitalization. However, this is neutral to our assessment of the bank's stand- alone credit profile (SACP), since S&P's Banking Industry Country Risk Assessment places Belarus' banking sector in group '10', among the riskiest banking sectors. As a result, Belarusbank's SACP remains at 'b'. S&P's long-term rating on the bank remains at 'B-' because it is capped by S&P's sovereign rating on Belarus. The bank's state ownership makes it strongly dependent on the Belarusian government's fiscal position, which is currently vulnerable. Also, the bank operates exclusively in Belarus and remains highly exposed to country risk. The government's capital injection in the nominal amount of BYR10 trillion (about $597 million) in August 2015 increased Belarusbank's capital by BYR1.2 trillion under International Financial Reporting Standards. However, it was lower than S&P expected and didn't provide a sufficient capital cushion for the bank to withstand additional credit losses, in S&P's view. Belarusbank's credit costs rose to 1.2% in 2015 from 0.44% as of year-end 2014. S&P expects this ratio to increase further to 2.0%-2.5% in 2016, in line with the gradual deterioration of asset quality observed in the Belarusian banking system since 2015. However, Belarusbank's credit costs are likely to be lower than the sector average because the majority of its loan portfolio comprises the financing of state-sponsored development programs or state-directed lending to large government-owned producers. The higher credit costs will weigh markedly on the bank's profitability, and S&P projects that its risk-adjusted capital (RAC) ratio for the bank will fall below 5% as a result, leading to S&P's view of capital and earnings as weak. S&P still regards Belarusbank's risk position as adequate, taking into account the government guarantees provided for most of the corporate loan book. In addition, the quality of the loan portfolio has been supported by the transfer of some nonperforming loans (NPLs) to the Development Bank of the Republic of Belarus. S&P expects Belarusbank's NPLs will increase to 4.5%-5% in 2016 but remain lower than the projected 6% average for the banking sector. In S&P's view, Belarusbank's funding remains above average and its liquidity adequate. Belarusbank remains the leading retail bank in Belarus, with a 47% market share in retail deposits and 72% in retail loans. It has a stable and well-diversified funding base, with retail funds representing 45% of liabilities, and sufficient liquid assets on the balance sheet. S&P's view of Belarusbank as a government-related entity (GRE) is unchanged. S&P continues to believe that the bank plays a very important role for the Belarusian government, being among the key financial players implementing government development programs and providing funding to strategically important economic sectors. At the same time, S&P notes that large contingent liabilities continue to affect the Belarusian government's capacity to provide extraordinary support to GREs. Therefore, S&P regards the bank's link with the government as limited. As a result, the likelihood of Belarusbank receiving extraordinary support from the government remains moderately high, in S&P's view. The stable outlook reflects S&P's view that, despite the difficult market conditions, Belarusbank can continue generating positive net income and preserve its current capitalization over the next 12 months, thanks to its dominant market position, strategic importance to Belarus' economy, and regular government support. Given the bank's state ownership and high dependence on the government's fiscal position, S&P would downgrade Belarusbank if S&P was to downgrade Belarus. Although not part of its base case for the next 12 months, S&P could lower its ratings on Belarusbank to 'CCC+' or lower if the loan portfolio's quality deteriorated more than S&P currently expects, pushing up credit costs further and reducing S&P's RAC ratio forecast below 3%, leading S&P to revise its capital and earnings assessment to very weak from weak. If S&P raised its long-term sovereign credit rating on Belarus, other factors remaining unchanged, S&P could consider a positive rating action on Belarusbank. ============= G E R M A N Y ============= STEILMANN SE: Group of Companies to File for Insolvency ------------------------------------------------------- The management board of Steilmann SE on April 5 provided notice with respect to the 6.75 % 2012-2017 bond issued by it (ISIN DE000A1PGWZ2) -- and having regard to corporate group companies of Steilmann Holding AG -- as follows: IDS Idea Development Solution GmbH, Kettenbach GmbH Herstellung und Vertrieb von Designerstruempfen and MR Hometextile GmbH, each of which is a wholly-owned subsidiary of Steilmann Holding AG, as well as Hermann van Dillen Asiatex GmbH, a wholly-owned subsidiary of MR Hometextile GmbH, and Jansen Textile GmbH, a wholly-owned subsidiary of Kettenbach GmbH Herstellung und Vertrieb von Designerstruempfen, will immediately file for insolvency on grounds of illiquidity with the respective local courts having jurisdiction over these. The management board of Steilmann Holding AG has provided notice that -- having regard to this background, in particular corresponding necessary valuation adjustments -- it assesses that Steilmann Holding AG is over-indebted. Headquartered in Bergkamen, Germany, Steilmann SE engages in the design, manufacture, and sale of fashion clothes for men and women worldwide. ============= I R E L A N D ============= PETROCELTIC INT'L: Board to Support Worldview's Buy-Out Bid ----------------------------------------------------------- Jillian Ambrose at The Telegraph reports that the board of embattled oil explorer Petroceltic has said it will support the controversial 3p a share buy-out bid from Russian-backed fund Worldview, just days before insolvency proceedings are due to move ahead. According to The Telegraph, the largest shareholder made an offer to buy Dublin-based Petroceltic at an 83% discount to its market value, which was initially rebuffed by the board as "undervaluing" the company. But the fund retaliated by purchasing almost 70% of the group's senior debt facility totaling US$233 million (GBP163 million) in a bid to take control of its restructuring as it moves into insolvency, The Telegraph relates. The company now faces insolvency proceedings in the Irish courts beginning this Friday, April 8, and has urged shareholders to accept the offer by April 14, The Telegraph relays. Worldview will need to secure support of 90% of shareholders in order to snap up the explorer at the bargain rate, The Telegraph notes. The company has debts of US$200 million (GBP140 million) versus a stock market value of just GBP46 million earlier this year before trading of the stock was suspended, The Telegraph discloses. Petroceltic International is a Dublin-based oil and gas explorer. ========= I T A L Y ========= LKQ ITALIA: Moody's Assigns Ba2 Rating to EUR500MM Sr. Notes ------------------------------------------------------------ Moody's Investors Service assigned a Ba2 rating to LKQ Italia Bondco S.p.A.'s EUR500 million senior unsecured notes due 2024. LKQ Italia Bondco S.p.A. is an indirect wholly owned subsidiary of LKQ Corporation ("LKQ"). The new notes are expected to be guaranteed by LKQ Corporation and each of its 100% owned domestic subsidiaries that guarantee the company's existing senior secured credit facilities as well as certain other foreign subsidiaries that are subsidiaries of Rhiag-Inter Auto Parts Italia S.p.A. (Rhiag), the Italian-based entity LKQ bought in March of this year. Moody's affirmed all of LKQ's existing ratings including its Ba1 Corporate Family Rating ("CFR"), Ba1-PD Probability of Default Rating and Ba2 rating on its 4.75% $600 million senior notes due 2023. The ratings outlook is negative. The outlook remains negative primarily due to the currently elevated financial leverage pro forma for the acquisition of Rhiag and the pending acquisition of Pittsburgh Glass Works (PGW). However, Moody's anticipates in the ratings that the company will use a portion of anticipated free cash flow to repay acquisition-related borrowings under its revolver. As the company had previously indicated, the proposed notes are being issued to term out a portion of the revolver borrowings used to fund its recent acquisitions. As a result, the proposed transaction is leverage neutral. Net proceeds from the proposed offering are expected to be used to repay approximately $542 million of revolver borrowings and pay related fees and expenses. The proposed notes are in a slightly better credit position than LKQ's existing senior unsecured notes because they have a structurally senior claim on certain Italian assets and operations. However, Moody's does not believe such assets are material enough to warrant a higher rating than the existing 2023 notes. Moody's has taken these rating actions: Ratings assigned: LKQ Italia Bondco S.p.A. Backed Senior Unsecured Notes due 2024, at Ba2 (LGD-5) Outlook, Negative Ratings affirmed: LKQ Corporation Corporate Family Rating, at Ba1; Probability of Default Rating, at Ba1-PD; Existing $600 million senior unsecured notes due 2023, at Ba2 (LGD5) Speculative Grade Liquidity Rating, at SGL-2 Outlook, Negative Moody's does not rate LKQ's $3.2 billion senior secured bank credit facility. RATINGS RATIONALE LKQ's Ba1 CFR was affirmed primarily because it incorporates the company's demonstrated ability to globally grow its presence in the market for non-OEM aftermarket collision replacement parts while maintaining credit metrics consistent with the rating. Over the past several years LKQ has grown through both acquisitions and organically. These acquisitions have expanded the company's market share and its global reach. Its acquisition strategy has expanded product offerings to the automotive aftermarket specialty and mechanical replacement parts markets. Management has completed other vertical acquisitions in order to support the company's competitive position as well as undertaken other profitability initiatives and streamlining of operations to improve margins. However, the margin profile of some of the target businesses are lower than that of LKQ's traditional businesses. Pro forma for the acquisition of Rhiag and pending acquisition of Pittsburgh Glass Works, financial leverage metrics would be elevated for the rating category with debt/EBITDA increasing by roughly one turn to 3.3 times from 2.3 times. Moody's anticipates that the company will not enter into another meaningfully-sized acquisition before substantially restoring its credit metrics to pre-acquisition levels, including using part of its healthy free cash flow generation to repay acquisition- related debt. Revenue scale, geographic breadth and market presence should counterbalance some of the near-term revenue growth headwinds presented by a weaker Euro and low steel prices. Moody's also anticipates that LKQ will maintain a good liquidity profile characterized by consistent free cash flow generation and revolver availability, as a buffer against the business challenges. The negative outlook incorporates the higher financial risk from plans to fund the PGW and Rhiag acquisitions with debt, and the relatively short time between the Rhiag and PGW acquisitions. The negative outlook also reflects Moody's concern that a continued broadening of product offerings exposes the company to areas where their competitive position is weaker and margins are lower. The absence of another sizable debt financed acquisition while the company integrates Rhiag and PGW while using free cash flow generation to reduce debt levels could lead to a stabilization of the ratings outlook. Although unlikely over the near-term, ratings could be upgraded if LKQ were to meaningfully reduce absolute debt levels subsequent to the closing of the PGW and Rhiag acquisitions while reducing the pace of acquisition activity to enable time for acquisition integration. In addition, Moody's belief that LKQ's pace of growth through acquisitions has abated away from larger market expansion transactions toward bolt-on level transactions to fill-out the company's regional exposure and product offerings could also lead to upward ratings momentum. In addition to the above, consideration for a higher rating could result from debt/EBITDA being maintained at approximately 2.0x and retained cash flow/net debt of about 35% while maintaining a good liquidity profile. Factors that could lead to a downgrade of the ratings include complications in the integration of acquisitions or additional debt financed acquisitions which increase leverage. Debt/EBITDA approaching 3.5x, retained cash flow/net debt approaching 15%, EBITA/interest coverage below 4x, or a significant deterioration in liquidity could cause downward ratings pressure. The principal methodology used in these ratings was Global Automotive Supplier Industry published in May 2013. LKQ Corporation, headquartered in Chicago, Illinois, is a leading provider of alternative and specialty parts to repair and accessorize automobiles and other vehicles. LKQ has operations in North America, the United Kingdom, the Netherlands, Belgium, France, Australia and Taiwan. The company offers its customers a broad range of replacement systems, components, equipment and parts to repair and accessorize automobiles, trucks, and recreational and performance vehicles. Revenues for the fiscal year ended Dec. 31, 2015 totaled approximately $7.2 billion. LKQ acquired Rhiag, an Italian-based aftermarket parts distributor and is in the process of acquiring PGW, a U.S.-based manufacturer, supplier and distributor of automotive glass products. Pro forma for these two acquisitions, annual revenues total $9.2 billion. ========= S P A I N ========= ABENGOA SA: Judge OKs Moratorium Amid Debt Restructuring Talks -------------------------------------------------------------- Katie Linsell at Bloomberg News reports that a Spanish judge approved Abengoa SA's application for more time to win investor support for a EUR9.4 billion (US$10.7 billion) debt restructuring plan. The ruling puts a hold on all repayments until Oct. 28 while the company seeks a debt deal, Bloomberg says. Abengoa said in a regulatory filing on April 6 the firm won backing for a standstill from more than 75% of lenders last month and the Seville judge's decision makes that binding on all lenders, Bloomberg relates. Abengoa wants the breathing space to give it time to shore up support for the restructuring plan and avoid becoming Spain's largest corporate failure, Bloomberg notes. About Abengoa Spanish energy giant Abengoa S.A. is a leading engineering and clean technology company with operations in more than 50 countries worldwide that provides innovative solutions for a diverse range of customers in the energy and environmental sectors. Abengoa is one of the world's top builders of power lines transporting energy across Latin America and a top engineering and construction business, making massive renewable- energy power plants worldwide. As of the end of 2015, Abengoa, S.A. was the parent company of 687 other companies around the world, including 577 subsidiaries, 78 associates, 31 joint ventures, and 211 Spanish partnerships. Additionally, the Abengoa Group held a number of other interests of less than 20% in other entities. On Nov. 25, 2015, in Spain, Abengoa S.A. announced its intention to seek protection under Article 5bis of Spanish insolvency law, a pre-insolvency statute that permits a company to enter into negotiations with certain creditors for restricting of its financial affairs. The Spanish company is facing a March 28, 2016, deadline to agree on a viability plan or restructuring plan with its banks and bondholders, without which it could be forced to declare bankruptcy. On Feb. 24, 2016, Abengoa Bioenergy US Holding, LLC and five other U.S. units of Abengoa S.A. each filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Missouri. The cases are pending before the Honorable Kathy A. Surratt-States and are jointly administered under Case No. 16- 41161. Abengoa, S.A., and 24 of its subsidiaries filed Chapter 15 petitions (Bankr. D. Del. Case Nos. 16-10754 to 16-10778) on March 28, 2016, to seek U.S. recognition of a standstill agreement with creditors and its restructuring proceedings in Spain. Christopher Morris signed the petitions as foreign representative. DLA Piper LLP (US) represents the Debtors as counsel. BANKIA: S&P Raises Long-Term Counterparty Credit Ratings to 'BB+' ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it raised its long- term counterparty credit ratings on Spain-based Bankia to 'BB+' from 'BB', and on its parent company BFA Tenedora de Acciones S.A.U. (BFA) to 'BB-' from 'B+'. S&P also affirmed its 'B' short-term ratings on both entities. The outlook remains positive. S&P also raised to 'B+' from 'B' the issue ratings on nondeferrable subordinated instruments issued by Bankia because S&P revised up the stand-alone credit profile (SACP) to 'bb+' from 'bb'. The rating action reflects S&P's belief that Bankia is successfully enhancing its funding and liquidity position by further closing its commercial gap, accessing longer-term financing sources, disposing part of its legacy public debt and other liquid bonds, and selling problematic assets, including real estate and nonperforming loans. As a result of these actions, the bank has successfully reduced its reliance on ECB funding, which S&P considers to be extraordinary in nature and short term despite its contractual maturity. As of year-end 2015, funding from the ECB accounted for about EUR19.5 billion, or less than 10% of Bankia's total funding, from EUR74.3 billion at end-2012. S&P therefore anticipates that total short-term financing, including market repurchase agreements, will account for about 10%-15% of the bank's total funding base as of end-2016. S&P considers this level to be manageable overall, particularly as liquid assets fully cover potential short-term financing risks. S&P estimates its liquidity coverage ratio to account for about 1.03x as of end-2015--a level S&P expects to remain broadly stable in the next 12-18 months. Despite additional provisions to cover litigation costs related to the bank's 2011 IPO, Bankia posted sound financial results in 2015. This was also due to the large capital gains on bond disposals that boosted BFA group's bottom-line performance. The expected lower contribution of this extraordinary income, combined with the impact of low interest rates and declining contribution from fixed income securities portfolios to the group's net interest income, could drive some reduction in operating profitability in 2016. Operating results, however, are likely to remain sound overall, with return on equity (ROE) at about 8%-9%, benefitting from a further decline in cost of risk, which S&P expect to stay in the 30-40 basis point (bp) range. At the same time, asset quality measures have continued to improve on the back of strong economic conditions and an accelerated clean-up of the bank's credit portfolio. Bankia's nonperforming loans accounted for about 10.7% of total outstanding credit at end-2015, down from about 14.8% as of end- 2013. S&P expects this trend to continue in the next couple of years while the economy maintains its steady growth path. In addition, Bankia is disposing most of its real estate asset stock, which now accounts for a fairly limited 3% of total credit. Bankia has also successfully implemented its strategic plan. In S&P's view, this has allowed it to preserve its business stability and stabilize its franchise, despite the high level of financial stress it experienced between 2011 and 2013, thus reducing its overall risk profile. S&P anticipates that the bank's next business plan will primarily focus on new initiatives aimed at enhancing the group's commercial dynamism and ultimately strengthening its profitability. However, S&P don't expect the new plan to increase Bankia's risk appetite or heighten its risk profile. The positive outlook reflects the possibility that S&P could raise its long- and short-term ratings on Bankia by one notch in the next 12-18 months if it continues to enhance its capital position in line with its targets. S&P currently estimates the bank's risk-adjusted capital (RAC) ratio will account for about 6.8%-7.0% as of end-2015, following the successful implementation of several actions. S&P anticipates that organic capital generation, combined with potential issuance of hybrid instruments to comply with MREL requirements (minimum requirement for own funds and eligible liabilities), could allow Bankia to sustainably push its RAC ratio above 7% by end-2017. Moreover, a further reduction of economic risks in Spain could also benefit S&P's view of Bankia's solvency. S&P could revise the outlook to stable if it concluded that the bank will not be able to achieve a sustainable RAC ratio above 7%. Specifically, this could occur if BFA were to start paying significant dividends to the state, contrary to S&P's current expectations that it would retain most of the earnings generated, or if potential additional provisioning needs related to the bank's IPO were to materialize. This could be detrimental to the expected evolution of the bank's capital position, in S&P's view. The positive outlook on BFA mirrors that on Bankia. An upgrade of Bankia by one notch would trigger a two-notch upgrade of BFA. In line with S&P's methodology, if a group credit profile is 'bbb-' or above, the gap between the rating on a nonoperating holding company and its core operating company would reduce to one notch. =========== T U R K E Y =========== GLOBAL ENERJI: Istanbul Court Suspends Debt Enforcement Process --------------------------------------------------------------- Taylan Bilgic at Bloomberg News reports that Isiklar Enerji ve Yapi Holding said in a public filing the court in Istanbul suspended all debt enforcement proceedings against Global Enerji Elektrik. Isiklar holds a 15.78% stake in Global Enerji, Bloomberg discloses. Global Enerji Elektrik Uretimi A S owns and operates natural gas and renewable energy sources power plants, and a steam/hot water supply unit in Turkey. ============= U K R A I N E ============= KHRESCHATYK BANK: Declared Bankrupt Following Liquidity Woes ------------------------------------------------------------ Ukraine Today reports that Vice-Governor of the National Bank of Ukraine (NBU) Kateryna Rozhkova announced that the NBU decided on April 5, 2016, to include Khreschatyk Bank in the group of insolvent banks. "Late last week, the situation with the bank's liquidity sharply worsened. Experiencing lack of funds, the bank made transfers with delays, and was unable to handle the situation without the shareholders' help," Ukraine Today quotes Ms. Rozhkova as saying at a press conference on April 5. "Taking this fact into account and Khreschatyk's failure to meet capital liquidity requirements, the NBU's board designated the bank as insolvent." According to Ukraine Today, Ms. Rozhkova said the central bank conducted talks with the shareholders, but they did not bring expected results. Managing Director of the Individuals' Deposit Guarantee Fund Andriy Olenchyk, who was also present at the press conference, said that the Fund had introduced an interim administration at the bank in keeping with the NBU's decision on its insolvency, Ukraine Today relates. Khreschatyk Bank is based in Kyiv. =========================== U N I T E D K I N G D O M =========================== MIZZEN MEZZCO: Fitch Affirms 'B+' Long-Term Issuer Default Rating ----------------------------------------------------------------- Fitch Ratings has affirmed Mizzen Mezzco Limited's (MML) Long- term Issuer Default Rating (IDR) at 'B+'. The Outlook is Stable. Fitch has also affirmed the Long-term rating of the GBP189 million senior notes issued by MML's subsidiary, Mizzen Bondco Limited (MBL) at 'B-'/'RR6'. KEY RATING DRIVERS IDR AND SENIOR DEBT MML, a holding company, is the ultimate 100% parent of Premium Credit Limited (PCL), the leading provider of insurance premium finance in the UK and Ireland. MML's Long-term IDR is based on Fitch's assessment of the overall credit risk profile of PCL, its only operating entity, and on PCL's capacity to upstream dividends. As this dividend flow is the only source of funds available to service obligations within both MML and intermediate subsidiary MBL, the ratings also consider the structural subordination of these entities' debt to obligations within PCL. The group's leverage and debt servicing requirements mean potential for internal capital generation is limited, reducing protection against unexpected losses. Funding also remains reliant on the wholesale markets, although associated refinancing risk was reduced in 2015 by the extension of the group's GBP1 billion securitization facility to September 2018. Earnings lack diversification and are very dependent on lending volumes, but their stability is enhanced by a high level of repetitive business. Furthermore, asset quality is strong, with loss experience consistently low, underpinned by both the short- term nature of PCL's lending and the resilience of its monitoring and recovery processes. Fitch's assessment of PCL's creditworthiness also takes into account its strong market position in premium finance, where it benefits from over 25 years of experience and well-established relationships with many of the sector's principal intermediaries. The senior notes are rated two notches below MML's Long-term IDR, in line with their 'RR6' Recovery Rating. The low recovery expectations are mainly driven by the notes' structural subordination to PCL's securitization facility, which encumbers the majority of group receivables. RATING SENSITIVITIES IDR AND SENIOR DEBT "MML's Long-term IDR is mainly sensitive to a change in our view of PCL's creditworthiness, or its capacity to upstream dividends. Evidence of increased risk appetite, for example through PCL pursuing a more substantial volume of non-recourse lending, could have a negative impact. Lower leverage and greater diversification of funding could have positive influences." The rating of MBL's senior notes is primarily sensitive to any movement in their anchor rating, MML's Long-term IDR. A reduction in asset encumbrance levels could also have a positive impact by improving recovery prospects. TATA STEEL: Welsh Gov't Can't Offer Tax Cuts to Port Talbot ----------------------------------------------------------- Michael Pooler, Kiran Stacey and Henry Mance at The Financial Times report that The Welsh government has said it cannot offer significant tax cuts to the stricken Port Talbot steelworks because of European Union rules. Ministers are scrambling to find ways to help ease the costs for the south Wales plant, which employs around 4,000 people, all of whose jobs have been put at risk by Tata Steel's decision to sell its UK business, the FT relates. According to the FT, Sajid Javid, the business secretary, said on April 3 he would back a temporary relief in business rates for the plant, but that this was an issue for ministers in Cardiff. Welsh ministers on April 4 however said they were hamstrung by EU rules, which forbid state aid for certain industries, the FT relays. In a statement, the Labour administration, as cited by the FT, said it could only offer a maximum of EUR200,000 over a three- year period, against an annual estimated business rates bill of GBP10 million. Separately, The Telegraph's Alan Tovey reports that the government on April 6 said talks on the future of Tata's UK steel business between Mr. Javid and Cyrus Mistry, chairman of the parent company, will be "wide ranging". Mr. Javid flew to Mumbai on April 5 to meet the Tata chief as he attempts to get a grip on the crisis engulfing Britain's steel industry, The Telegraph relates. According to The Telegraph, a spokesman for the Department for Business, Innovation and Skills said Mr. Javid's aim was "to secure as many jobs as possible" after Tata put its UK business -- including its giant Port Talbot plant -- up for sale last week, throwing doubts over the future of up to 40,000 British jobs, The Telegraph notes. The Government has pledged to offer support to secure a deal, but has so far refused to say exactly how far it is prepared to go to save jobs, The Telegraph states. According to The Telegraph, Commodities group Liberty House is the most high profile potential bidder to emerge so far. There have also been reports Tata's UK business could need a cash injection of as much as GBP300 million to keep it going, placing further hurdles in the way of securing its future, The Telegraph relays. Other potential suitors are thought to include turnaround group Greybull, which is expected any day to announce a deal to buy Tata's Scunthorpe plant, and German industrial giant ThyssenKrupp, The Telegraph discloses. Tata Steel is the UK's biggest steel company. TOWD POINT 2016-GRANITE 1: Moody's Rates Class G Notes (P)B1 ------------------------------------------------------------ Moody's Investors Service has assigned provisional credit rating to these Notes to be issued by Towd Point Mortgage Funding 2016- Granite 1 plc: GBP Class A Floating Rate Note due July 2046, Assigned (P)Aaa (sf) GBP Class B Floating Rate Note due July 2046, Assigned (P)Aa1 (sf) GBP Class C Floating Rate Note due July 2046, Assigned (P)Aa2 (sf) GBP Class D Floating Rate Note due July 2046, Assigned (P)A1 (sf) GBP Class E Floating Rate Note due July 2046, Assigned (P)Baa1 (sf) GBP Class F Floating Rate Note due July 2046, Assigned (P)Ba1 (sf) GBP Class G Floating Rate Note due July 2046, Assigned (P)B1 (sf) The GBP Class Z Subordinated Note due July 2046, the GBP [?] Class X Note due July 2046 and the Senior Deferred Certificate, Deferred Certificate 1, 2 and 3 have not been rated by Moody's. The loans are backed by a pool of prime UK residential mortgages, which were previously securitized assets within the Granite Master Trust ("Granite") transaction currently held within the Neptune Rated Warehouse and Neptune Unrated Warehouse. NRAM Plc sold the beneficial interest in the assets to Cerberus European Residential Holdings B.V. which will further sell the beneficial interest in the assets to Towd Point Mortgage Funding 2016- Granite 1 plc (the "Transaction"). Moody's notes that following the sale of NRAM Plc to Cerberus, NRAM Plc is likely to lose the UK government guarantee which currently covers all unsubordinated and unsecured wholesale debt and deposits of NRAM Plc. Consequently, Moody's has factored into its analysis the effects of the loss of the UK government guarantee by NRAM Plc. RATINGS RATIONALE The rating of the Notes is based on an analysis of the characteristics of the underlying mortgage pool, sector wide and originator specific performance data, protection provided by credit enhancement, the roles of external counterparties including the backup servicer and the structural features of the transaction. Expected Loss and MILAN CE Analysis Moody's determined the MILAN CE of [16.0]% and the portfolio expected loss of [2.1]% as input parameters for Moody's cash flow model, which is based on a probabilistic lognormal distribution. Portfolio expected loss of [2.1]%: This is higher than the UK Prime sector average of 1% and is based on Moody's assessment of the lifetime loss expectation for the pool taking into account (i) the collateral performance of NRAM Plc originated loans to date, as provided by NRAM Plc and observed in Granite. [7.9]% of the provisional pool (as of 31st December 2015) are 1 month or more in arrears; (ii) the current macroeconomic environment in the UK and the potential impact of future interest rate rises on the performance of the mortgage loans and (iii) benchmarking with comparable transactions in the UK market. MILAN Credit Enhancement of [16.0]%: This is higher than the UK Prime sector average of 9% and follows Moody's assessment of the loan-by-loan information taking into account the following key drivers (i) the loan characteristics including [42.5]% of the provisional pool being Together loans for which an unsecured loan balance is outstanding. These are loans where the borrower obtained a secured and an unsecured loan; (ii) the weighted average current loan-to-value of [76.2]%, which is higher than the average seen in the sector; and (iii) the historical performance of the loans with [68.6]% of the loans in the pool having been current over the last five years. Moody's notes that the expected loss is higher for this transaction compared to Neptune Rated Warehouse and is in line with the assumption previously in place for Granite. Prior to the Granite asset sale to the Neptune Rated Warehouse the expected loss in Granite was 2.1%. The [10]bps increase in the expected loss assumptions to [2.1]% from 2.0% between the Neptune Rated Warehouse and Towd Point Mortgage Funding 2016-Granite1 Plc is largely driven by the inclusion of loans more than 12 months in arrears which were previously excluded from the Neptune Rated Warehouse. The MILAN Credit Enhancement is lower for this transaction compared to Granite and is in line with the Neptune Rated Warehouse. Prior to the Granite asset sale to the Neptune Rated Warehouse the MILAN Credit Enhancement in Granite was 19%. The reduction in the MILAN Credit Enhancement from 19.0% to [16.0]% is largely driven by the additional information provided on the number of months a loan has been current which was previously not provided. -- Operational Risk Analysis NRAM Plc will be the contractual servicer sub delegating all its servicing to Bradford & Bingley plc ("B&B"). A back up servicer (Homeloan Management Limited (Not rated) and Western Mortgage Services Limited (Not rated)), and Back-Up Servicer Facilitator (Wilmington Trust SP Services (London) Ltd) have been appointed at closing. The backup servicer is required to step in within 90 days and perform the duties of the servicer or delegated servicer if, amongst other things, the servicer and/ or delegated servicer is insolvent or defaults on its obligation under the servicing agreement or sub delegated servicing agreement. Moody's notes that the B&B servicing platform is currently in the process of being sold with Computershare being announced as the preferred bidder. Should the sale of the B&B servicing platform to Computershare be successful, B&B will continue as interim servicer until the new long term servicing contract is in place between NRAM Plc and the replacement service provider. Citibank, N.A. (London Branch) (A1/(P)P-1/A1(cr)) is appointed as cash manager. There will be no back up cash manager in place at closing. To help ensure continuity of payments the deal contains estimation language whereby the cash flows will be estimated from the three most recent servicer reports should the servicer report not be available. The collection account is held at National Westminster Bank PLC ("NATWEST") (A3/P-2/A3(cr)). There is a daily sweep of the funds held in the collection account into the transaction account. In the event NATWEST rating is below Baa3 the collection account will be transferred to an entity rated at least Baa3. The transaction account is held at Citibank, N.A. (London Branch) (A1/(P)P-1/A1(cr)) with a transfer requirement if the rating of the account bank falls below A3. Moody's has taken into account the commingling risk within its cash flow modeling. -- Transaction structure There will be no Liquidity Reserve Fund in place at closing. Following the step up date (3 years from closing) the Liquidity Reserve Fund will be equal to [1.7]% of the Class A outstanding balance and can be used to pay senior fees and interest on class A. Prior to the step up date liquidity is provided via a 365 day revolving Liquidity Facility equal to [1.7]% of the Class A outstanding balance provided by Wells Fargo Bank, National Association, London Branch (Wells Fargo Bank, N.A (Aa1/P- 1/Aa1(cr)). At closing, the Liquidity Facility provides approx. [3.0] months of liquidity to the Class A assuming Libor of 5.0%. Principal can be used as an additional source of liquidity to meet shortfall on senior fees and interest on the most senior outstanding class. In addition, Moody's notes that unpaid interest on the Class B, C, D, E, F and G is deferrable. Non- payment of interest on the Class A notes constitutes an event of default. Interest on the notes (excluding Class A) are subject to a Net Weighted Average Coupon (Net WAC) Cap. Net WAC additional amounts are paid junior in the revenue waterfall being the difference between the class B, C, D, E, F and G coupon and the Net WAC Cap. Net WAC additional amounts occur if interest payments to the respective notes are greater than the Net WAC Cap. Moody's notes that the Net WAC additional amounts are not part of the interest payment promise to the referenced Classes and as such Moody's ratings assigned to the Class B, C, D, E, F and G do not address the timely and/ or ultimate payment of such payments. -- Interest Rate Risk Analysis As there are no swaps in the transaction, Moody's has modelled the spread taking into account the minimum margin covenant of Libor plus [2.4]%. Due to uncertainty on enforceability of this covenant, Moody's has taken the view not to give full credit to this covenant. Instead, Moody's has stressed the interest rate of the pool by assuming that loans revert to SVR yield equal to Libor + 2.0%. -- Parameter Sensitivities Moody's Parameter Sensitivities provide a quantitative/model- indicated calculation of the number of rating notches that a Moody's structured finance security may vary if certain input parameters used in the initial rating process differed. The analysis assumes that the deal has not aged and is not intended to measure how the rating of the security might migrate over time, but rather how the initial rating of the security might have differed if key rating input parameters were varied. Parameter Sensitivities for the typical EMEA RMBS transaction are calculated by stressing key variable inputs in Moody's primary rating model. If the portfolio expected loss was increased from [2.1]% of current balance to [6.3]% of current balance, and the MILAN Credit Enhancement was increased from [16.0]% to [22.4]%, the model output indicates that the Class A would still achieve (P)Aaa assuming that all other factors remained equal. Factors that would lead to an upgrade or downgrade of the ratings: Factors that would lead to a downgrade of the ratings include economic conditions being worse than forecast resulting in worse- than-expected performance of the underlying collateral, deterioration in the credit quality of the counterparties and unforeseen legal or regulatory changes. Factors that would lead to an upgrade of the ratings include economic conditions being better than forecast resulting in better-than-expected performance of the underlying collateral. The rating addresses the expected loss posed to investors by the legal final maturity of the loan facilities. Moody's ratings only address the credit risk associated with the transaction. Other non-credit risks have not been addressed, but may have a significant effect on yield to investors. The principal methodology used in these ratings was "Moody's Approach to Rating RMBS Using the MILAN Framework" published in January 2015. The analysis undertaken by Moody's at the initial assignment of ratings for RMBS securities may focus on aspects that become less relevant or typically remain unchanged during the surveillance stage. Moody's issues provisional ratings in advance of the final sale of securities, but these ratings only represent Moody's preliminary credit opinion. Upon a conclusive review of the transaction and associated documentation, Moody's will endeavor to assign definitive ratings to the Notes. A definitive rating may differ from a provisional rating. Moody's will disseminate the assignment of any definitive ratings through its Client Service Desk. Moody's will monitor this transaction on an ongoing basis. =============== X X X X X X X X =============== * Fitch: Crossover Credits to Lead to EMEA Bond Issuance Recovery ----------------------------------------------------------------- Fitch Ratings expects crossover credits and 'BB' issuers in the European high-yield bond market to lead the recovery in new issuance for 2016. Monetary policy stimulus will support the rollover of maturing liabilities. This, together with equity market recoveries and strong cross-border M&A volumes, will allow corporate managers more tactical discretion to address longstanding sectoral challenges such as global excess capacity, technological disruption and weak pricing and volume trends. Fitch has released its latest bi-annual EMEA Fitch 50 report, offering in-depth analysis on crossover credits (rated between 'BBB-' and 'BB+') and those in the 'BB' rating category. This is to help global high yield investors identify the key rating drivers for issuers downgraded to speculative grade (fallen angels) and upgraded to investment grade (rising stars). This latest report complements the 'B+' and Below' EMEA Fitch 50 issued in October 2015 and draws more distinctions between the cohorts of the European high-yield bond market. The report includes 50 case studies discussing rating drivers for select crossover credits including notable fallen angels such as Anglo American Plc, ArcelorMittal SA, ThyssenKrupp AG and Tesco Plc. Each case study examines the causes of recent rating actions, and what it would take for each company to either be upgraded to investment grade, or downgraded to speculative grade. Since 2010, 19 Fitch-rated EMEA speculative-grade corporates have been upgraded to 'BBB-' or above. Improvements in operating performance, business profile or cost-saving programs have boosted cash generation and reduced the leverage of companies such as Pernod Ricard, GKN Holdings, Renault and Taylor Wimpey. Industry consolidation and the need to provide wider product offerings drove M&A activity in the building materials and telecoms sectors, leading to the upgrades of Lafarge SA, Cableurope and Kabel Deutschland. However, slowing growth in emerging markets (EMs), commodity price weakness and limited rating headroom for many EMEA corporates amid an anaemic European recovery suggest that rating risk remains weighted to the downside. 2015 witnessed a widening in the disparity between EM and developed European corporates, and faltering EM growth has now become the greatest risk to corporate ratings. Over the last year, downgrades in the Fitch rating portfolio have dominated upgrades across all corporate sectors. The differential between upgrades and downgrades has also reached its widest level since 2011, driven by challenging conditions across emerging markets and low commodity prices. These trends are likely to maintain rating pressure on EMEA corporates in 2016. The buffer that corporates have to absorb weaker performance at their current ratings remains thin, although it is slowly improving. At end-2015 median headroom to the tightest downgrade guidelines for EMEA corporates was 5.1% compared with just 3% in 2014. The report, Fitch 50 Europe, is available at www.fitchratings.com or by clicking on the link above. ********* 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 * * *