/raid1/www/Hosts/bankrupt/TCREUR_Public/160603.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Friday, June 3, 2016, Vol. 17, No. 109
Headlines
F R A N C E
EUROPCAR GROUPE: Moody's Affirms B1 CFR, Outlook Stable
G E R M A N Y
MINIMAX VIKING: Moody's Raises CFR to Ba3, Outlook Stable
NORDDEUTSCHE LANDESBANK: Moody's Reviews Ba2 BCA for Downgrade
I R E L A N D
EGRET FUNDING I: Moody's Affirms B1(sf) Rating on Class E Notes
PB DOMICILE 2006-1: Moody's Lowers Rating on Class E Notes to Ba2
JAZZ PHARMACEUTICALS: S&P Affirms 'BB' CCR, Outlook Stable
STRAWINSKY I PLC: Moody's Raises Rating on Class C Notes to Ba1
L U X E M B O U R G
AVANTOR PERFORMANCE: S&P Lowers CCR to 'B', Outlook Stable
N E T H E R L A N D S
EFR GROUP: Moody's Affirms B2 CFR & PDR, Outlook Positive
NEPTUNO CLO II: Moody's Affirms Caa2(sf) Rating on Class E Notes
PB DOMICILE 2006-1: Moody's Lowers Rating on Class E Notes to Ba2
P O L A N D
JSW: Strikes Deal with Bondholders on Restructuring Terms
R U S S I A
ALFA-BANK JSC: S&P Affirms 'BB/B' Counterparty Credit Ratings
CB BFG-CREDIT LLC: DIA to Oversee Provisional Administration
NLMK: Moody's Assigns Ba1 Rating to Loan Participation Notes
S P A I N
BANCO POPULAR ESPANOL: Moody's Affirms 'B1' BCA
T U R K E Y
* TURKEY: 1,000 Companies Applied for Bankruptcy Postponement
U N I T E D K I N G D O M
BHS GROUP: To Wind Down After Talks Fail, 11,000 Jobs Affected
CLAYTON WEST: Parents Recover 75% of School Fees
CRAIGSHAW: Oil Slump Prompts Administration; 60 Jobs Affected
INOVYN LIMITED: Moody's Assigns B2 CFR, Outlook Stable
X X X X X X X X
* BOOK REVIEW: The Financial Giants In United States History
*********
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F R A N C E
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EUROPCAR GROUPE: Moody's Affirms B1 CFR, Outlook Stable
-------------------------------------------------------
Moody's Investors Service has affirmed Europcar Groupe S.A.'s
corporate family rating (CFR) of B1, and the probability of
default rating (PDR) of B1-PD. Concurrently, Moody's has assigned
a B3 instrument rating to the new EUR125 million Senior Notes tap
due 2022, issued by Europcar Groupe S.A. and affirmed the B3
instrument rating on the EUR475 million Senior Notes due 2022,
issued by the same entity, and the B2 instrument rating on the
EUR350 million Senior Secured Notes due 2021, issued by EC
Finance Plc. The outlook on all ratings is stable.
RATINGS RATIONALE
The net proceeds of the tap issuance will be used to fund
Europcar's further organic and acquisitive growth strategy. Pro
forma for the EUR125 million new tap issuance, Europcar's
adjusted leverage at the end of 2015 increases to 4.2x, from 3.9x
actual (gross leverage as adjusted by Moody's).
The increase in financial leverage as a result of the tap
issuance, although only small, is a credit negative and further
strengthens Moody's expectation of limited deleveraging prospects
in the context of revenue growth and growing fleet base to be
funded by drawings under the asset backed fleet financing. In
addition, the B1 CFR reflects Europcar's (1) exposure to the
cyclical and highly competitive car rental sector; (2) heavy
reliance on capital market access to fund its seasonal fleet
purchases and (3) moderate scale, relative to its direct peers,
with limited operations outside of Europe.
However, these factors are mitigated by Europcar's (1) Moody's
continued expectation of a moderate but relatively stable growth
of the European car rental market of 2-3% over the next 3 years,
(2) the company's strong brand and market position with a well-
balanced revenue mix between leisure and business customers, (3)
improving credit metrics driven by better market fundamentals,
the company's optimized cost structure, and the improved capital
structure following last years' IPO, (4) protection of the fleet
from residual value risk, as evidenced by the high proportion
(more than 90%) of vehicles being acquired under buy-back
agreements.
Moody's expects the liquidity profile to remain adequate, further
supported by the proceeds from the new tap issuance.
STRUCTURAL CONSIDERATIONS
The B3 instrument rating assigned to the new EUR125 million
Senior Notes is aligned with the B3 instrument rating of the
existing EUR475 million Senior Notes due 2022. The B3 reflects
their relatively weaker security package and/or the absence of
guarantees from operating subsidiaries compared with Europcar's
other debt facilities, including the EUR350 million Senior
Secured Notes due 2021 rated B2 issued at the level of EC Finance
plc. Moody's also considers that the Senior Secured Notes should
remain below the CFR considering their subordination to other
bank facilities. These bank facilities include the EUR350 million
Revolving Credit Facility, which benefits from a strong
collateral package, considering its first ranking collateral on
bank accounts, receivables, and share pledges, as well as
guarantees by the majority of Europcar's operating entities. In
addition, the EUR350 million Senior Secured Notes rank junior
relative to sizeable fleet debt, as they are secured on a second
priority interest on some fleet assets, that are also securing
the Senior Asset Revolving Facility, which has a first priority
ranking.
OUTLOOK
The stable outlook reflects Moody's expectation that Europcar
will experience continued top line growth over the rating horizon
in the context of a more favorable macro-economic environment.
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G E R M A N Y
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MINIMAX VIKING: Moody's Raises CFR to Ba3, Outlook Stable
---------------------------------------------------------
Moody's Investors Service has upgraded to Ba3 from B1 the
corporate family rating of German active fire detection and
protection solutions provider Minimax Viking GmbH. Concurrently,
Moody's upgraded to Ba3 (LGD2) from B1 (LGD3) the ratings on the
group's senior secured credit facilities and affirmed the B1-PD
probability of default rating (PDR) of Minimax. The outlook on
all ratings has been changed to stable from positive.
List of Affected Ratings:
Upgrades:
Issuer: Minimax Viking GmbH
Corporate Family Rating, Upgraded to Ba3 from B1
Backed Senior Secured Bank Credit Facility, Upgraded to Ba3
(LGD 2) from B1 (LGD 3)
Issuer: Minimax GmbH & Co. KG
Backed Senior Secured Bank Credit Facility, Upgraded to Ba3
(LGD 2) from B1 (LGD 3)
Issuer: MX Holdings US, Inc.
Backed Senior Secured Bank Credit Facility, Upgraded to Ba3
(LGD 2) from B1 (LGD 3)
Affirmations:
Issuer: Minimax Viking GmbH
Probability of Default Rating, Affirmed B1-PD
Outlook Actions:
Issuer: Minimax Viking GmbH
Outlook, Changed To Stable From Positive
Issuer: Minimax GmbH & Co. KG
Outlook, Changed To Stable From Positive
Issuer: MX Holdings US, Inc.
Outlook, Changed To Stable From Positive
RATINGS RATIONALE
"The rating action was prompted by Minimax's strongly improved
operating performance through fiscal year 2015 and the first
quarter of this year. Particularly fuelled by sustained high
demand in North America, a further growing services business in
Germany, but also positive currency effects, group sales for the
12 months ended 31 March 2016 increased by 16.5% year-over-year
and management-adjusted EBITDA by almost 18%", says Goetz
Grossmann, Moody's lead analyst for Minimax. "Correspondingly,
the group's leverage as adjusted by Moody's has notably reduced
to 4.2x debt/EBITDA in the 12 months through March 2016 from 4.9x
in fiscal year 2014. This, together with our expectation of a
further gradual improvement of Minimax's leverage and cash flow
metrics over the next two years, support the group's solid
positioning in the Ba3 rating category", adds Mr. Grossmann.
Thanks to an unabated buoyant business environment across many of
the group's key geographies and end-markets, but primarily driven
by further booming demand in North America, Minimax delivered
strong organic growth in sales and earnings in fiscal year 2015
(FY 2015) and the first three months this year (Q1-16). With
sales and profit growth in North America (by now Minimax's
largest single market before Germany) in excess of 30%, group
sales and EBITDA (as adjusted by Minimax) surged to EUR1,439
million and EUR175 million in FY 2015, respectively (+17.7% and
18.4% yoy). Although partly driven by sizeable currency effects
(mainly stemming from a strengthening US dollar against the euro,
positive sales and EBITDA impact of EUR112 million and EUR16
million, respectively), organic growth in sales (+9.6%) and
EBITDA (+7.8%) was still stronger than Moody's had anticipated.
Continued strong topline growth (+8.7% yoy) and a significant
increase in EBITDA (+16.8%) also in Q1-16 resulted in a further
improvement of Minimax's credit metrics, which Moody's now
considers appropriate for the Ba3 rating level. Moody's also
recognises the group's solid liquidity profile, including its
further increased cash position amounting to EUR155 million at
the end of March 2016. That said, the rating agency expects
Minimax to continue to use its available cash primarily for
extraordinary debt reduction. In addition, the upgrade to Ba3
with a stable outlook assumes that the group will maintain a
prudent financial policy, including no excessive distributions to
its shareholders, while potential growth through acquisitions
should be largely funded with available cash and internal free
cash flow generation.
Based on expected favorable market conditions also over the next
two years, combined with supportive market fundamentals (e.g.
increasing safety demand, more stringent regulation and
tightening insurance norms), Moody's projects Minimax to achieve
mid-single-digit annual sales growth and to at least maintain its
current profitability. This should support a gradual further
reduction in leverage to around 3.8x Moody's-adjusted debt/EBITDA
by year-end 2017 (assuming no additional voluntary debt
repayments).
LIQUIDITY
Minimax's liquidity profile is good. As of March 31, 2016, the
group's available cash sources include a sizeable EUR155 million
amount of cash on the balance sheet and Moody's-projected funds
from operations of more than EUR120 million per annum over the
next 12-18 months. These cash sources together with access to
its fully undrawn EUR40 million committed revolving credit
facility (maturing 2019), comfortably cover all expected
liquidity requirements of the group in 2016 and next year. Cash
needs mainly comprise capital expenditures of around EUR50
million this year (including expansionary capex of around EUR20
million), minor working capital spending and debt amortization of
about EUR6 million per annum.
The liquidity assessment also incorporates the assumption that
the group will remain in compliance with financial covenants as
stipulated in the debt documentation, under which it maintained
significant headroom at March 31, 2016.
OUTLOOK
The stable outlook assumes that Minimax will benefit from a
sustained healthy market environment in its key regions Germany
and the US, which should support moderate organic growth in sales
and further strengthening leverage metrics, such as a Moody's-
adjusted leverage ratio of below 4x debt/EBITDA. It also
reflects the expectation of the group to generate solid positive
FCF and to maintain a conservative financial policy.
WHAT COULD CHANGE THE RATING
An upgrade of Minimax's ratings would require a sustained further
improvement in credit metrics, including (1) EBITA margins
(Moody's-adjusted) of around 12% (Q1-16 LTM 10.5%), (2) leverage
(Moody's-adjusted) of below 3.5x gross debt/EBITDA, (3) improved
free cash flow generation and Moody's-adjusted FCF/debt ratios in
the high-single-digit percentage range (Q1 2016 LTM 8.4%),
combined with (4) a conservative financial policy, evidenced by
no excessive profit distributions to shareholders and/or larger
debt-funded acquisitions.
Downward pressure on Minimax's ratings would evolve, if (1)
profitability were to weaken, exemplified by Moody's-adjusted
EBITA margins reducing to 10% or lower, (2) leverage (Moody's-
adjusted) materially exceeds 4x gross debt/EBITDA, and/or (3)
free cash flows deteriorated materially with Moody's-adjusted
FCF/debt ratios of persistently below 5% (either operationally
driven or by a potential initiation of dividend payments).
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Global
Manufacturing Companies published in July 2014.
Minimax Viking GmbH, headquartered in Bad Oldesloe, Germany, is a
global operator in the active fire protection and detection
markets. The group serves industrial and commercial clients
through the development, manufacturing and installation of
tailor-made fire protection solutions and offers follow-up and
post system installation services. The group employs around
7,600 people globally and generated sales of EUR1.47 billion and
group-adjusted EBITDA of about EUR181 million in the twelve
months through March 31, 2016.
NORDDEUTSCHE LANDESBANK: Moody's Reviews Ba2 BCA for Downgrade
---------------------------------------------------------------
Moody's Investors Service has placed on review for downgrade the
ratings of Norddeutsche Landesbank GZ (NORD/LB) and affiliates,
including the bank's A2 long-term deposit ratings, A3 long-term
debt and issuer ratings and its Prime-1 short-term debt and
deposit ratings. This follows Moody's initiation of a review for
downgrade of NORD/LB's ba2 baseline credit assessment (BCA) and
baa3 Adjusted BCA.
The rating actions were prompted by NORD/LB's Q1 2016 results
reporting a loss, reflecting further increased loan loss
provisioning needs in its sizeable shipping loan book and warning
of an expected loss for the full-year 2016. Based on Moody's
preliminary assessments, the group is facing rising solvency
risks from its exposure to the global shipping industry, which is
in the midst of a multi-year cyclical downturn.
Concurrently, Moody's also placed on review for downgrade the
debt and deposit ratings of NORD/LB's domestic subsidiaries
Bremer Landesbank Kreditanstalt Oldenburg GZ (BremerLB) and
Deutsche Hypothekenbank AG (Deutsche Hypo). BremerLBs b1 BCA and
ba2 adjusted BCA were also placed on review for downgrade.
Deutsche Hypo's b1 BCA was affirmed while its baa3 adjusted BCA
was placed on review for downgrade.
Furthermore, Moody's also placed on review for downgrade
NORD/LB's A2(cr) long-term counterparty risk assessment, its
Prime-1(cr) short term counterparty risk assessment, the bank's
Ba1 subordinate debt ratings and the Ba3(hyb) ratings of the non-
cumulative preference shares vehicles Charlottenburg Capital
Intl. S.ar.l. & Cie and Fuerstenberg Cap Internat S.ar.l. & Cie
(IV).
Moody's downgraded to B2(hyb) and B3(hyb), respectively, from
Ba3(hyb) the ratings of the non-cumulative preference share
vehicles Fuerstenberg Capital GmbH (I) and Fuerstenberg Capital
II GmbH and placed these ratings on review for further downgrade.
RATINGS RATIONALE
REVIEW FOR DOWNGRADE OF NORD/LB'S AND BREMERLB'S BASELINE CREDIT
ASSESSMENT
The review for downgrade of NORD/LB's ba2 BCA and BremerLB's b1
BCA is driven by Moody's assessment of rising solvency risks
resulting from both entities' exposures to the global shipping
industry. NORD/LB reported a first quarter 2016 loss as a result
of further increased loan loss provisioning needs related to its
shipping loan book and warned of an expected negative full-year
result for 2016.
NORD/LB targets a material reduction of its exposure to the
shipping sector within the next years, which in Moody's view
means that the bank would accelerate the booking of loan loss
provisions that bridge the gap between current book values and
expected proceeds from the disposal or liquidation of such loans.
"Over the past quarters, NORD/LB has taken a series of measures
to improve capitalization levels and strengthen its resilience
against sources of volatility. Even so, the extended shipping
sector crisis eventually led the bank and its particularly
exposed subsidiary BremerLB to tackle their asset quality issues
faster and at a higher cost than previously targeted by NORD/LB,"
says Bernhard Held, a Moody's Vice President.
Moody's expects elevated provisioning costs to burden NORD/LB's
financial results particularly in 2016, but also in 2017/18,
depending inter alia on charter rate developments and
supply/demand dynamics for container and bulker ships, which
represent the largest collateral categories in NORD/LB's shipping
loan book. Moody's notes that NORD/LB faces gradually rising
regulatory capital requirements, in the coverage of which
earnings retention will be instrumental given the tight framework
the EU Bank Recovery and Resolution Directive (BRRD) established
for capital support by the bank's public-sector owners.
In contrast to the more diversified NORD/LB, BremerLB's shipping
segment plays a dominant role in the bank's risk profile, so that
in Moody's view BremerLB finds it increasingly difficult to
offset shipping segment pressures with earnings from other
segments.
The rating review will focus on NORD/LB's and BremerLB's plans
and initial progress in reducing their shipping books at
manageable costs and how this impacts the banks' financial
results and solvency.
DEUTSCHE HYPO'S BCA AFFIRMED AND ITS AFFILIATE SUPPORTED ADJUSTED
BCA PLACED ON REVIEW FOR DOWNGRADE
The rating agency considers Deutsche Hypo, NORD/LB's specialized
commercial real estate lender, to be "affiliate backed" by
NORD/LB, resulting in its baa3 adjusted BCA being equally placed
on review for downgrade. This close linkage supersedes partial
improvements in Deutsche Hypo's standalone financial profile,
which today led Moody's to affirm Deutsche Hypo's b1 BCA.
REVIEW FOR DOWNGRADE OF NORD/LB'S AND ITS AFFILIATES' LONG-TERM
DEBT AND DEPOSIT RATINGS
The magnitude of a possible downgrade of the long-term debt,
issuer and deposit and subordinated ratings, as well as the CR
Assessment of NORD/LB and its affiliates, could be more than one
notch, reflecting the potential magnitude of downgrade for
NORD/LB's BCA and Adjusted BCA. Against the background of its
concentrated shipping exposure, Moody's may downgrade the BCA and
long-term debt, issuer and deposit ratings of BremerLB by more
than one notch.
Furthermore, the rating review will also focus on NORD/LB's
liability structure following the expiry of the majority of its
grandfathered debt instruments by year-end 2015. Under Moody's
Advanced Loss Given Failure (LGF) Analysis, the assessment
captures NORD/LB's resolution perimeter, which is applied to all
its rated domestic subsidiaries.
RATING ACTIONS ON NORD/LB'S AND DEUTSCHE HYPO'S HYBRID RATINGS
The downgrades to B2(hyb) from Ba3(hyb) of the rating of non-
cumulative preference shares issued by Fuerstenberg Capital GmbH
(I) and to B3(hyb) from Ba3(hyb) of the rating of non-cumulative
preference shares issued by Fuerstenberg Capital II GmbH follow
the announcements by both entities that they may need to suspend
coupons in 2017 and possibly thereafter, based on an expected
balance sheet loss of NORD/LB for the year 2016.
For debt instruments very likely to become impaired, Moody's
ratings reflect the rating agency's expectations for recovery of
principal and interest, as well as the uncertainty around that
expectation. The application of such an expected loss approach
instead of the prior notching off NORD/LB's Adjusted BCA results
in a two notch and three notch downgrade, respectively, which
incorporates Moody's expectation of one interest payment being
more likely than not missed. The rating review on these
instruments will focus on whether additional payments may be lost
as a result of temporary principal write-downs or extended coupon
suspensions. Both instruments could be downgraded by multiple
notches if the likelihood of such additional losses grows
materially.
The Ba3(hyb) ratings of Charlottenburg Capital Intl. S.ar.l. &
Cie and Fuerstenberg Cap Internat S.ar.l. & Cie (IV) were also
placed on review for downgrade. Moody's expects both instruments
to continue to be subject to the approach of applying LGF- and
additional notching to the Adjusted BCAs of Deutsche Hypo and
NORD/LB, respectively, because Moody's does not expect these
instruments to be at risk of coupon suspension for 2016. Moody's
will, however, review the degree to which investors in
Fuerstenberg Cap Internat S.ar.l. & Cie (IV) and Charlottenburg
Capital Intl. S.ar.l. & Cie are negatively affected by a possible
reduction in the financial strength of the parent entities
NORD/LB and Deutsche Hypo. Fuerstenberg Cap Internat S.ar.l. &
Cie (IV) has been called by the issuer and will be repaid on 30
June 2016.
WHAT COULD CHANGE THE RATING -- UP
There is currently no upward pressure on the ratings of NORD/LB
and its affiliates, as indicated by the direction of the rating
review.
Moody's may confirm the ratings at their current levels when
closing the rating review if: (1) Tangible progress in the
reduction of shipping exposure risks is achieved in the first
half of 2016 without incurring disproportionate losses; and/or
(2) NORD/LB is able to significantly dampen the expected costs
from reducing its shipping exposure from income in other business
areas.
WHAT COULD CHANGE THE RATING -- DOWN
Moody's may downgrade the BCA of NORD/LB and BremerLB and the
ratings of the bank and its affiliates linked to it as a result
of: (1) a confirmation of adverse business trends in NORD/LB's
and BremerLB's shipping portfolio during the first half of 2016,
which has the potential to affect medium-term profitability and
solvency of both entities; and/or (2) a lack of progress in
reducing the shipping exposure towards NORD/LB's medium-term
target size of EUR12-14 billion.
In addition, NORD/LB's and its affiliates' senior debt ratings
may be downgraded if the group's senior unsecured debt layer
provided less loss absorption capacity following last year's
maturities of grandfathered debt than Moody's previously
expected.
NORD/LB's hybrid instruments Fuerstenberg Capital GmbH (I) and
Fuerstenberg Capital II GmbH may be further downgraded if the
chances of a coupon suspension for 2016 and the following years
increase materially.
LIST OF AFFECTED RATINGS
Issuer: Norddeutsche Landesbank GZ
-- Placed on Review for Downgrade:
-- Adjusted Baseline Credit Assessment, currently baa3
-- Baseline Credit Assessment, currently ba2
-- Commercial Paper, currently P-1
-- Long-term Counterparty Risk Assessment, currently A2(cr)
-- Short-term Counterparty Risk Assessment, currently P-1(cr)
-- Long-term Issuer Rating, currently A3, outlook changed to
Rating Under Review from Negative
-- Short-term Deposit Ratings, currently P-1
-- Senior Unsecured Medium-Term Note Program, currently (P)A3
-- Subordinate Medium-Term Note Program, currently (P)Ba1
-- Other Short Term, currently (P)P-1
-- Subordinate Regular Bond/Debenture, currently Ba1
-- Deposit Note/CD Program, currently P-1
-- Senior Unsecured Regular Bond/Debenture, currently A3,
outlook changed to Rating Under Review from Negative
-- Long-term Deposit Ratings, currently A2, outlook changed to
Rating Under Review from Negative
-- Outlook Actions:
-- Outlook, changed to Rating Under Review from Negative
Issuer: Bremer Landesbank Kreditanstalt Oldenburg GZ
-- Placed on Review for Downgrade:
-- Adjusted Baseline Credit Assessment, currently ba2
-- Baseline Credit Assessment, currently b1
-- Short-term Counterparty Risk Assessment, currently P-2(cr)
-- Long-term Counterparty Risk Assessment, currently Baa1(cr)
-- Long-term Issuer Rating, currently Baa2, outlook changed to
Rating Under Review from Stable
-- Short-term Deposit Ratings, currently P-2
-- Subordinate Medium-Term Note Program, currently (P)Ba3
-- Other Short Term, currently (P)P-2
-- Senior Unsecured Medium-Term Note Program, currently (P)Baa2
-- Commercial Paper, currently P-2
-- Senior Unsecured Regular Bond/Debenture, currently Baa2,
outlook changed to Rating Under Review from Stable
-- Long-term Deposit Ratings, currently Baa1, outlook changed to
Rating Under Review from Stable
-- Outlook Actions:
-- Outlook, changed to Rating Under Review from Stable
Issuer: Deutsche Hypothekenbank AG
-- Placed on Review for Downgrade:
-- Adjusted Baseline Credit Assessment, currently baa3
-- Long-term Counterparty Risk Assessment, currently A2(cr)
-- Short-term Counterparty Risk Assessment, currently P-1(cr)
-- Short-term Deposit Ratings, currently P-1
-- Senior Unsecured Medium-Term Note Program, currently (P)A3
-- Subordinate Medium-Term Note Program, currently (P)Ba1
-- Other Short Term, currently (P)P-1
-- Subordinate Regular Bond/Debenture, currently Ba1
-- Senior Unsecured Regular Bond/Debenture, currently A3,
outlook changed to Rating Under Review from Negative
-- Long-term Deposit Ratings, currently A2, outlook changed to
Rating Under Review from Negative
-- Affirmations:
-- Baseline Credit Assessment, affirmed b1
-- Outlook Actions:
-- Outlook, changed to Rating Under Review from Negative
Issuer: Charlottenburg Capital Intl. S.ar.l. & Cie
-- Placed on Review for Downgrade:
-- Pref. Stock Non-cumulative, currently Ba3(hyb)
-- Outlook Actions:
-- Outlook, changed to Rating Under Review from No Outlook
Issuer: Fuerstenberg Cap Internat S.ar.l. & Cie (IV)
-- Placed on Review for Downgrade:
-- Pref. Stock Non-cumulative, currently Ba3(hyb)
-- Outlook Actions:
-- Outlook, changed to Rating Under Review from No Outlook
Issuer: Fuerstenberg Capital GmbH (I)
-- Downgraded and placed on Review for further Downgrade:
-- Pref. Stock Non-cumulative, downgraded to B2(hyb) from
Ba3(hyb)
-- Outlook Actions:
-- Outlook, changed to Rating Under Review from No Outlook
Issuer: Fuerstenberg Capital II GmbH
-- Downgraded and placed on Review for further Downgrade:
-- Pref. Stock Non-cumulative, downgraded to B3(hyb) from
Ba3(hyb)
-- Outlook Actions:
-- Outlook, changed to Rating Under Review from No Outlook
Issuer: Norddeutsche Landesbank GZ, New York Branch
-- On Review for Possible Downgrade:
-- Long-term Counterparty Risk Assessment, currently A2(cr)
-- Short-term Counterparty Risk Assessment, currently P-1(cr)
-- Commercial Paper, currently P-1
-- Outlook Actions:
-- Outlook, changed to Rating Under Review from Negative
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I R E L A N D
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EGRET FUNDING I: Moody's Affirms B1(sf) Rating on Class E Notes
---------------------------------------------------------------
Moody's Investors Service announced that it has taken rating
actions on the following classes of notes issued by Egret Funding
CLO I Plc:
-- EUR30.2 million (current balance of EUR27.46M) Class B Senior
Floating Rate Notes due 2022, Affirmed Aaa (sf); previously
on Sep 9, 2015 Affirmed Aaa (sf)
-- EUR24.6 million Class C Deferrable Floating Rate Notes due
2022, Upgraded to Aaa (sf); previously on Sep 9, 2015
Upgraded to Aa3 (sf)
-- EUR23.1 million Class D Deferrable Floating Rate Notes due
2022, Upgraded to Ba1 (sf); previously on Sep 9, 2015
Affirmed Ba2 (sf)
-- EUR12.25 million (current balance of EUR 10.85 million) Class
E Deferrable Floating Rate Notes due 2022, Affirmed B1 (sf);
previously on Sep 9, 2015 Affirmed B1 (sf)
Egret Funding CLO I Plc, issued in December 2006, is a
Collateralised Loan Obligation ("CLO") backed by a portfolio of
mostly high yield European senior secured loans managed by Lyxor
Asset Management UK LLP. This transaction's reinvestment period
ended in December 2012.
RATINGS RATIONALE
According to Moody's, the upgrades of Class C and Class D notes
are the result of deleveraging since the last rating action based
on the June 2015 report.
Class A notes have paid down by EUR32.7 million (their entire
outstanding balance) and Class B notes have paid down by EUR0.7
million on the December 2015 payment date, as a result of which
over-collateralization (OC) ratios of senior classes of rated
notes have increased significantly. As per the trustee report
dated 31 March 2016, Class A/B, Class C, Class D, and Class E OC
ratios are reported at 340.00%, 179.35%, 124.23%, and 108.56%
compared to June 2015 levels of 209.72%, 149.40%, 117.63%, and
106.95% respectively.
The key model inputs Moody's uses in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. In its base
case, Moody's analyzed the underlying collateral pool as having a
performing par and principal proceeds of EUR97.03 million,
defaults of EUR10.58 million, a weighted average default
probability of 27.50% (consistent with a WARF of 4009 over a
weighted average life of 4.01 years), a weighted average recovery
rate upon default of 43.21% for a Aaa liability target rating, a
diversity score of 11 and a weighted average spread of 3.75%.
The default probability derives from the credit quality of the
collateral pool and Moody's expectation of the remaining life of
the collateral pool. The estimated average recovery rate on
future defaults is based primarily on the seniority of the assets
in the collateral pool. Moody's generally applies recovery rates
for CLO securities as published in "Moody's Approach to Rating SF
CDOs". In some cases, alternative recovery assumptions may be
considered based on the specifics of the analysis of the CLO
transaction. In each case, historical and market performance and
a collateral manager's latitude to trade collateral are also
relevant factors. Moody's incorporates these default and recovery
characteristics of the collateral pool into its cash flow model
analysis, subjecting them to stresses as a function of the target
rating of each CLO liability it is analyzing.
Moody's notes that shortly after this analysis was completed, the
April 2016 trustee report has been issued. There is no material
change in key portfolio metrics such as WARF, diversity score,
and weighted average spread as well as OC ratios for Classes A/B,
C, D, and E from their March 2016 levels.
PB DOMICILE 2006-1: Moody's Lowers Rating on Class E Notes to Ba2
-----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of two notes
in PB Domicile 2006-1. The rating action reflects the level of
credit enhancement available in the deal, exposure to losses and
pace of amortisation for the affected notes.
Issuer: PB Domicile 2006-1
EUR48.9 mil. D Notes, Downgraded to Baa3 (sf); previously on
April 8, 2016, Baa1 (sf) Placed Under Review for Possible
Downgrade
EUR15.4 mil. E Notes, Downgraded to Ba2 (sf); previously on
March 1, 2016, Baa3 (sf) Placed Under Review for Possible
Downgrade
RATINGS RATIONALE
The downgrade of the Class D and E Notes is prompted by the level
of credit enhancement, exposure to losses and pace of
amortization for the affected notes. The Class D Notes benefit
from the subordination of the Class E Notes and synthetic excess
spread. The Class E Notes only benefit from synthetic excess
spread. Moody's received additional information on the
amortization profile of the reference portfolio as a whole, from
which losses can arise and be allocated to the notes, and of the
overdue reference claims, which form the basis for amortizing the
Class D and E Notes. Moody's also received additional
information on the performance of the overdue reference claims.
Moody's considered this information in determining the weighted
average life of the notes and the tranches' expected loss.
Moody's have taken into consideration the available protection,
in view of portfolio performance and comparatively short weighted
average life, in its analysis to determine the revised rating of
the Class D Notes. The Class E Notes have a longer weighted
average life and thus a longer exposure to losses combined with a
high sensitivity to the pace of amortization and low credit
enhancement.
The issuance proceeds that ultimately back the principal
repayment of the Class D and E Notes are invested in unsecured,
unsubordinated bearer notes (the "Series D Collateral" and
"Series E Collateral", collectively the "Postbank Notes").
Deutsche Postbank AG (with a senior unsecured rating of (P)Baa2)
acts as issuer and custodian of the Postbank Notes. Whilst this
is not currently constraining the notes' ratings, the Class D and
E Notes would be capped at Baa2.
Revision of Key Collateral Assumptions
As part of this rating action, Moody's reassessed its lifetime
loss expectation for the portfolio reflecting the collateral
performance to date.
The performance of the transaction has continued to improve in
2015. Total delinquencies have decreased in the past year, with
90 days plus arrears currently standing at 0.99% of current pool
balance compared to 1.73% a year earlier. Cumulative losses
currently stand at 0.29% of original pool balance compared to
0.28% a year earlier.
Moody's decreased the expected loss assumption to 0.60% as a
percentage of original pool balance from 0.67% due to the
improving performance.
Moody's has maintained the MILAN CE assumption at 6.00%.
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.
Factors that would lead to an upgrade or downgrade of the
ratings:
Factors or circumstances that could lead to an upgrade of the
ratings include (1) performance of the underlying collateral that
is better than Moody's expected, (2) deleveraging of the capital
structure and (3) improvements in the credit quality of the
transaction counterparties.
Factors or circumstances that could lead to a downgrade of the
ratings include (1) deterioration in the credit quality of the
transaction counterparties, (2) performance of the underlying
collateral that is worse than Moody's expected, (3) deterioration
in the notes' available credit enhancement and (4) a significant
increase in sovereign risk.
JAZZ PHARMACEUTICALS: S&P Affirms 'BB' CCR, Outlook Stable
----------------------------------------------------------
S&P Global Ratings affirmed its 'BB' corporate credit rating on
Ireland-based Jazz Pharmaceuticals plc following the company's
announcement of its proposed acquisition of Celator
Pharmaceuticals Inc. The outlook is stable. At the same time,
S&P affirmed its 'BB+' rating on the company's senior secured
debt and S&P's 'B+' rating on its senior unsecured debt.
Jazz Pharmaceuticals' planned acquisition of Celator
Pharmaceuticals Inc. is consistent with Jazz's strategy of
acquiring promising portfolio and pipeline products that will
diversify its offerings and drive future revenue and earnings
growth longer term. Celator develops therapies to treat cancer.
The company's lead development candidate VYXEOS, formerly CPX-
351, completed a Phase 3 registration trial for the treatment of
acute myeloid leukemia earlier this year and the company expects
to submit a New Drug Application with the U.S. Food and Drug
Administration in the third quarter of 2016.
S&P does not expect Celator to contribute meaningful sales and
cash flows until 2018. However, longer term, Celator does bring
cash flow and diversification benefits. Jazz is transitioning
from a purely commercial to both a commercial and development
company. The stable outlook on Jazz Pharmaceuticals PLC reflects
S&P's expectation that strong operating trends will continue
through 2016, and that product concentration will continue to
limit the prospects for an upgrade. Although S&P expects the
company to pursue acquisitions that will gradually increase
diversification, it expects leverage will remain below 3x. S&P's
stable outlook is also predicated on its expectation that Xyrem
will continue to generate double-digit-sales growth without
facing significant generic competition in 2016.
S&P could lower the rating if it believes debt-financed
acquisitions or an unexpected high-impact event, like a loss of
exclusivity on narcolepsy drug Xyrem, would result in leverage
being sustained above 3x. S&P estimates it would take
$1.0 billion in additional debt for a hypothetical acquisition of
a prospective new product to push 2016 leverage above 3x.
Although less likely, S&P could raise the rating if the company
increases the diversity of its product portfolio, so that no
single product represents more than about 40% of revenues. This
would likely come from continued acquisitions that could prompt
reconsideration of S&P's business risk assessment, but must be
accompanied leverage sustained below 2x.
STRAWINSKY I PLC: Moody's Raises Rating on Class C Notes to Ba1
---------------------------------------------------------------
Moody's Investors Service announced that it has upgraded the
rating of these notes issued by Strawinsky I P.L.C.:
EUR19,000,000 Class C Senior Secured Deferrable Floating Rate
Notes due 2024, Upgraded to Ba1 (sf); previously on July 27,
2015, Upgraded to Ba3 (sf)
Moody's also affirmed these notes issued by Strawinsky I P.L.C.:
EUR23,000,000 (Current Outstanding Balance of EUR7.16 mil.)
Class B Senior Secured Floating Rate Notes due 2024, Affirmed
Aaa (sf); previously on July 27, 2015, Upgraded to Aaa (sf)
EUR12,000,000 (Current Outstanding Balance of EUR14.28 mil.)
Class D Senior Secured Deferrable Floating Rate Notes due
2024, Affirmed Ca (sf); previously on July 27, 2015, Affirmed
Ca (sf)
EUR10,270,000 (Current Outstanding Balance of EUR 14.95 mil.)
Class E Senior Secured Deferrable Floating Rate Notes due
2024, Affirmed C (sf); previously on July 27, 2015, Affirmed
C (sf)
Strawinsky I P.L.C., issued in August 2007, is a Collateralised
Loan Obligation backed by a portfolio of mostly high yield senior
secured European loans. The portfolio is managed by IMC Asset
Management BV. This transaction passed its reinvestment period
in August 2013. The majority of the transactions assets are
denominated in Euro with limited exposure to Swedish Kronas and
Swiss Francs.
RATINGS RATIONALE
According to Moody's, the rating action taken on the Class C
notes results from an improvement in over-collateralization
ratios following the January 2016 payment date. The Class B has
amortized to EUR7.16 mil. from EUR22.94 mil. Classes D and E are
currently failing their over-collateralization coverage tests and
Class E is accruing deferred interest.
As a result of the deleveraging, over-collateralization of
Classes A/B and C have increased. As of the trustee's April 2016
report, the Class B, Class C, Class D and Class E had over-
collateralization ratios of 490.21%, 134.11%, 86.75% and 63.33%,
respectively, compared with 214.97%, 117.60%, 87.73% and 69.96%
respectively, as of the trustee's July 2015 report.
The key model inputs Moody's uses, such as par, weighted average
rating factor, diversity score and the weighted average recovery
rate, are based on its published methodology and could differ
from the trustee's reported numbers. In its base case, Moody's
analyzed the underlying collateral pool as having a performing
par and principal proceeds balance of EUR44.03 mil. and defaulted
par of EUR12.10 mil., a weighted average default probability of
36.09% (consistent with a WARF of 5572 over a WAL of 3.61), a
weighted average recovery rate upon default of 42.59% for a Aaa
liability target rating, a diversity score of 6 and a weighted
average spread of 3.50%.
The default probability derives from the credit quality of the
collateral pool and Moody's expectation of the remaining life of
the collateral pool. The estimated average recovery rate on
future defaults is based primarily on the seniority of the assets
in the collateral pool. In each case, historical and marker
performance. In each case, historical and market performance and
a collateral manager's latitude to trade collateral are also
relevant factors. Moody's incorporates these default and
recovery characteristics of the collateral pool in its cash flow
model analysis, subjecting them to stresses as a function of the
target rating of each CLO liability it is analyzing.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's
Global Approach to Rating Collateralized Loan Obligations"
published in December 2015.
Factors that would lead to an upgrade or downgrade of the
ratings:
In addition to the base-case analysis, Moody's conducted
sensitivity analyses on the key parameters for the rated notes,
for which it assumed a lower weighted average recovery rate for
the portfolio. Moody's ran a model in which it reduced the
weighted average recovery rate by 5%; the model generated outputs
that were within two notches compared to the base case results.
This transaction is subject to a high level of macroeconomic
uncertainty, which could negatively affect the ratings on the
note, in light of uncertainty about credit conditions in the
general economy. CLO notes' performance may also be impacted
either positively or negatively by 1) the manager's investment
strategy and behavior and 2) divergence in the legal
interpretation of CDO documentation by different transactional
parties due to embedded ambiguities.
In addition to the base-case analysis, Moody's conducted
sensitivity analyses on the key parameters for the rated notes
and also assumed repayment of about 9% of the portfolio from
asset in Greece; the model generated outputs were consistent with
the today's rating actions.
Additional uncertainty about performance is due to these:
1) Portfolio amortization: The main source of uncertainty in
this transaction is the pace of amortization of the
underlying portfolio, which can vary significantly depending
on market conditions and have a significant impact on the
notes' ratings. Amortization could accelerate as a
consequence of high loan prepayment levels or collateral
sales by the collateral manager or be delayed by an increase
in loan amend-and-extend restructurings. Fast amortization
would usually benefit the ratings of the notes beginning
with the notes having the highest prepayment priority.
2) Around 41% of the collateral pool consists of debt
obligations whose credit quality Moody's has assessed by
using credit estimates.
3) Recovery of defaulted assets: Market value fluctuations in
trustee-reported defaulted assets and those Moody's assumes
have defaulted can result in volatility in the deal's over-
collateralization levels. Further, the timing of recoveries
and the manager's decision whether to work out or sell
defaulted assets can also result in additional uncertainty.
Moody's analyzed defaulted recoveries assuming the lower of
the market price or the recovery rate to account for
potential volatility in market prices. Recoveries higher
than Moody's expectations would have a positive impact on
the notes' ratings.
4) Lack of portfolio granularity: The performance of the
portfolio depends on the credit conditions of a few large
obligors. Because of the deal's low diversity score and
lack of granularity, Moody's substituted its typical
Binomial Expansion Technique analysis by a simulated default
distribution using Moody's CDOROMTM software.
In addition to the quantitative factors that Moody's explicitly
modeled, 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.
===================
L U X E M B O U R G
===================
AVANTOR PERFORMANCE: S&P Lowers CCR to 'B', Outlook Stable
----------------------------------------------------------
S&P Global Ratings lowered the corporate credit rating on Avantor
Performance Materials Holdings S.A. to 'B' from 'B+'. The
outlook is stable.
At the same time, S&P assigned its 'B' issue-level rating and '3'
recovery rating to the proposed first-lien credit facility,
consisting of a $670 million term loan B and a $50 million
revolving credit facility based on preliminary terms and
conditions. The '3' recovery rating indicates S&P's expectation
of meaningful (lower end of the 50% to 70% range) recovery in the
event of a payment default. S&P also assigned its 'CCC+' issue-
level rating and '6' recovery rating to the company's proposed
$165 million second-lien term loan based on preliminary terms and
conditions. The '6' recovery rating indicates S&P's expectation
of negligible (0% to 10% range) recovery in the event of a
payment default. The debt is to be issued by Avantor Performance
Materials Holdings Inc. and guaranteed by Avantor Performance
Materials Holdings S.A.
S&P will withdraw its issue-level and recovery ratings on the
existing term loan due 2017 and revolving credit facility due
2017, once they are repaid.
"The downgrade of Avantor Performance Materials Holdings S.A.
reflects the increasing debt, following the closure of the
announced dividend recapitalization," said S&P Global Ratings
credit analyst Brian Garcia. "As a result of the company's
weakened credit measures following the transaction, we have
revised our assessment of the company's financial risk profile to
highly leveraged from aggressive," he added.
S&P expects adjusted debt to EBITDA to be over 6x immediately
following the transaction and remain above 5x on a sustainable
basis. Given the increase in debt leverage to above 5x, and
S&P's expectation that it will remain at that level on a
weighted-average basis, S&P has reassessed the company's
financial policy. S&P has revised its financial policy modifier
to 'FS-6' from 'FS-5'. S&P has also removed the negative
comparable rating analysis modifier, as it now believes the
company's credit profile is in line with similarly rated peers.
The stable outlook reflects S&P's view that, while the proposed
dividend recapitalization will lead to a significant increase in
debt leverage, the company's credit measures should strengthen
over the next year. This is due to expected EBITDA growth from
successfully implemented cost-saving and price-improvement
initiatives, as well as a recovery from operational setbacks.
S&P expects adjusted debt to EBITDA to increase above 6x, pro
forma for the transaction, before improving and remaining between
5x and 6x on a sustainable basis.
S&P could lower the ratings within the next 12 months if sales to
a major customer dropped unexpectedly, or if a shift in
technology resulted in significantly lower sales of a product (or
group of products), without improvements in other areas to offset
them. In such a scenario, S&P would expect growth 6% below its
expectations and the EBITDA margin to be about 200 basis points
(bps) below S&P's expectations, causing the debt to EBITDA ratio
to remain above 7x on a sustained basis. S&P could also consider
a downgrade if liquidity diminished and covenant compliance
became a risk, or if the company increased debt leverage further
to fund an additional return to shareholders or growth
investments.
S&P could raise the ratings within the next 12 months if the
company were to reduce debt significantly, resulting in debt to
EBITDA improving to below 5x on a sustainable basis. To consider
an outlook revision, S&P would also expect the company's business
risk profile to remain what we consider fair and for the company
to maintain liquidity S&P assess as adequate. S&P would also
expect the company to maintain supportive financial policies
going forward, including a prudent approach to funding growth
initiatives and shareholder rewards while maintaining debt to
EBITDA below 5x.
=====================
N E T H E R L A N D S
=====================
EFR GROUP: Moody's Affirms B2 CFR & PDR, Outlook Positive
---------------------------------------------------------
Moody's Investors Service has affirmed the B2 corporate family
rating and B2-PD probability of default rating of the Netherlands
based fuel forecourt operator EFR Group B.V. Concurrently,
Moody's has affirmed the instrument ratings of EFR B.V.'s EUR555
million senior secured and revolving facilities at B1 and of the
EUR100 million second lien facility at Caa1. The agency has
changed the outlook on all ratings to positive from stable.
RATINGS RATIONALE
The outlook change reflects the positive developments in
underlying financial performance since the ratings were first
assigned in 2014, during which time EFR has increased sales and
profitability related to non-fuel activities.
Notwithstanding the inherently low profit margins associated with
fuel retail and EFR's high earnings concentration on a relatively
modest number of sites, the company's credit profile benefits
from the resilience of fuel volumes and margins, and the
increased strategic focus on more profitable, accretive non-fuel
activities under the new management team put in place subsequent
to the acquisition by TDR Capital in 2014.
Moody's anticipates that the positive impact of a number of
restructuring and strategic initiatives undertaken in 2015 will
result in EFR recording growth in earnings this year and as such,
absent any change in the capital structure, adjusted leverage
will reduce further from the 4.5x level recorded as at Dec. 31,
2015.
WHAT COULD CHANGE THE RATING -- UP/DOWN
Continued earnings growth driven by an increasing and sustainable
contribution from non-fuel activities and a stable environment
and contribution in respect of fuel sales, leading to a
debt/EBITDA ratio falling sustainably below 4.5x could put
positive pressure on the ratings. Moody's would also expect any
upgrade to be dependent upon communication of and adherence to
conservative financial policies.
Negative pressure could be exerted on EFR's ratings if: (1)
operating performance were to deteriorate e.g., due to large
declines in fuel volumes and lack of growth in the non-fuel
segment, such that leverage would exceed 6.0x on a sustained
basis; or (2) free cash flow turned negative for an extended
period of time; or (3) its liquidity profile were to weaken.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Retail
Industry published in October 2015.
Headquartered in Breda, the Netherlands, EFR is a large
independent motor fuel forecourt operator with approximately
1,100 sites across the Benelux and France.
NEPTUNO CLO II: Moody's Affirms Caa2(sf) Rating on Class E Notes
----------------------------------------------------------------
Moody's Investors Service has taken rating actions on the
following notes issued by Neptuno CLO II B.V.:
-- EUR308.5 million (current balance of EUR46.9M) Class A Senior
Secured Floating Rate Notes due 2023, Affirmed Aaa (sf);
previously on Sep 16, 2015 Affirmed Aaa (sf)
-- EUR28 million Class B Senior Secured Floating Rate Notes due
2023, Affirmed Aaa (sf); previously on Sep 16, 2015 Upgraded
to Aaa (sf)
-- EUR23 million Class C Senior Secured Deferrable Floating Rate
Notes due 2023, Upgraded to Aa3 (sf); previously on Sep 16,
2015 Upgraded to A1 (sf)
-- EUR23 million Class D Senior Secured Deferrable Floating Rate
Notes due 2023, Affirmed Ba2 (sf); previously on Sep 16, 2015
Affirmed Ba2 (sf)
-- EUR19 million (current balance of EUR16.5M) Class E Senior
Secured Deferrable Floating Rate Notes due 2023, Affirmed
Caa2 (sf); previously on Sep 16, 2015 Affirmed Caa2 (sf)
Neptuno CLO II B.V., issued in December 2007, is a Collateralised
Loan Obligation ("CLO") backed by a portfolio of mostly senior
secured European loans. The portfolio is managed by Halcyon
Neptuno II Management LLC. This transaction exited its
reinvestment period on 16 January 2013.
RATINGS RATIONALE
The rating actions on the notes are primarily a result of
deleveraging of the senior notes. Class A notes have paid down by
approximately EUR 19.4mçllion since the last rating action in
September 2015. As a result, over-collateralization (OC) ratios
of classes A, B and C have increased. As per the trustee report
dated April 2016, the Classes A/B and OC ratios are reported at
185.4% and 141.8% respectively, compared to 175.2% and 140.9% in
the August 2015 report. Moody's notes that such deleveraging is
having a less pronounced impact on the junior notes due to an
increase in the Caa--rated obligations and the associated haircut
being applied by the trustee. The OC ratios for Classes D and E
have decreased to 114.8% and 101.0% respectively, from 117.8% and
105.4% in August 2015. Class E's turbo feature is likely to be
triggered at the next payment date in July 2016.
The key model inputs Moody's uses in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. In its base
case, Moody's analyzed the underlying collateral pool as having a
performing par and principal proceeds balance of EUR140.
5million, defaulted par of EUR3.8 million, a weighted average
default probability of 27.6% (consistent with a WARF of 4061 and
WAL of 3.98), a weighted average recovery rate upon default of
46.3% for a Aaa liability target rating, a diversity score of 16,
a weighted average spread of 3.1%.
The default probability derives from the credit quality of the
collateral pool and Moody's expectation of the remaining life of
the collateral pool. The estimated average recovery rate on
future defaults is based primarily on the seniority of the assets
in the collateral pool. Moody's generally applies recovery rates
for CLO securities as published in "Moody's Approach to Rating SF
CDOs". In some cases, alternative recovery assumptions may be
considered based on the specifics of the analysis of the CLO
transaction. In each case, historical and market performance and
a collateral manager's latitude to trade collateral are also
relevant factors. Moody's incorporates these default and recovery
characteristics of the collateral pool into its cash flow model
analysis, subjecting them to stresses as a function of the target
rating of each CLO liability it is analyzing.
PB DOMICILE 2006-1: Moody's Lowers Rating on Class E Notes to Ba2
-----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of two notes
in PB Domicile 2006-1. The rating action reflects the level of
credit enhancement available in the deal, exposure to losses and
pace of amortization for the affected notes.
Issuer: PB Domicile 2006-1
EUR48.9 mil. D Notes, Downgraded to Baa3 (sf); previously on
April 8, 2016, Baa1 (sf) Placed Under Review for Possible
Downgrade
EUR15.4 mil. E Notes, Downgraded to Ba2 (sf); previously on
March 1, 2016, Baa3 (sf) Placed Under Review for Possible
Downgrade
RATINGS RATIONALE
The downgrade of the Class D and E Notes is prompted by the level
of credit enhancement, exposure to losses and pace of
amortization for the affected notes. The Class D Notes benefit
from the subordination of the Class E Notes and synthetic excess
spread. The Class E Notes only benefit from synthetic excess
spread. Moody's received additional information on the
amortization profile of the reference portfolio as a whole, from
which losses can arise and be allocated to the notes, and of the
overdue reference claims, which form the basis for amortizing the
Class D and E Notes. Moody's also received additional
information on the performance of the overdue reference claims.
Moody's considered this information in determining the weighted
average life of the notes and the tranches' expected loss.
Moody's have taken into consideration the available protection,
in view of portfolio performance and comparatively short weighted
average life, in its analysis to determine the revised rating of
the Class D Notes. The Class E Notes have a longer weighted
average life and thus a longer exposure to losses combined with a
high sensitivity to the pace of amortization and low credit
enhancement.
The issuance proceeds that ultimately back the principal
repayment of the Class D and E Notes are invested in unsecured,
unsubordinated bearer notes (the "Series D Collateral" and
"Series E Collateral", collectively the "Postbank Notes").
Deutsche Postbank AG (with a senior unsecured rating of (P)Baa2)
acts as issuer and custodian of the Postbank Notes. Whilst this
is not currently constraining the notes' ratings, the Class D and
E Notes would be capped at Baa2.
Revision of Key Collateral Assumptions
As part of this rating action, Moody's reassessed its lifetime
loss expectation for the portfolio reflecting the collateral
performance to date.
The performance of the transaction has continued to improve in
2015. Total delinquencies have decreased in the past year, with
90 days plus arrears currently standing at 0.99% of current pool
balance compared to 1.73% a year earlier. Cumulative losses
currently stand at 0.29% of original pool balance compared to
0.28% a year earlier.
Moody's decreased the expected loss assumption to 0.60% as a
percentage of original pool balance from 0.67% due to the
improving performance.
Moody's has maintained the MILAN CE assumption at 6.00%.
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.
Factors that would lead to an upgrade or downgrade of the
ratings:
Factors or circumstances that could lead to an upgrade of the
ratings include (1) performance of the underlying collateral that
is better than Moody's expected, (2) deleveraging of the capital
structure and (3) improvements in the credit quality of the
transaction counterparties.
Factors or circumstances that could lead to a downgrade of the
ratings include (1) deterioration in the credit quality of the
transaction counterparties, (2) performance of the underlying
collateral that is worse than Moody's expected, (3) deterioration
in the notes' available credit enhancement and (4) a significant
increase in sovereign risk.
===========
P O L A N D
===========
JSW: Strikes Deal with Bondholders on Restructuring Terms
---------------------------------------------------------
PAP reports that JSSW said in a market filing the company struck
terms with most of its bondholders for restructuring its core
financing and will make payments of PLN50 million annually
through 2018 and then minimum annual payments of PLN178 million
annually thereafter.
The deal was struck exclusively with state-controlled
bondholders, while the lone private bondholder, ING Bank Slaski,
was not mentioned in the restructuring deal, PAP relates.
According to PAP, at issue is a bond program, PLN0.7 billion and
USD164 million, with state development bank BGK, state-controlled
commercial bank PKO BP, ING Bank Slaski and investment funds of
state-controlled insurer PZU from 2014 used to finance
acquisition of a mine from a troubled state-owned peer.
JSW failed to meet a mid-2015 deadline for refinancing that
exposure, PAP notes.
JSW last extended its stand-still deal with creditors in December
to June 30, 2016, PAP recounts.
Fresh terms with banks were a required key element of JSW's
recovery program, which includes asset sales that had been
considered blocked by bank pledges on cash flows between JSW and
the units now for sale, insiders to the talks have previously
told PAP.
JSW is a state-run coal miner.
===========
R U S S I A
===========
ALFA-BANK JSC: S&P Affirms 'BB/B' Counterparty Credit Ratings
-------------------------------------------------------------
S&P Global Ratings revised the outlook on JSC Alfa-Bank to stable
from negative. S&P also affirmed its 'BB/B' long- and short-term
counterparty credit ratings and 'ruAA' Russia national scale
rating on the bank.
At the same time, S&P revised the outlook on ABH Financial Ltd.
(ABHFL), Alfa-Bank's Cyprus-based owner, to stable from negative.
S&P also affirmed its 'B+/B' long- and short-term counterparty
credit ratings on ABHFL.
The rating actions reflect that Alfa-Bank's strategy has allowed
it to successfully adjust to the deteriorated economic
conditions. The bank's profitability metrics have been
historically better than privately owned domestic peers'. In
2015, the group demonstrated a good performance with net income
of $480 million, despite considerable provisions of Amsterdam
Trade Bank N.V., an Alfa-Bank subsidiary. As a result, Alfa-
Bank's capital buffers strengthened, supported by internal
capital generation, despite the weakened operating environment.
S&P believes that revenue generation capacity remains adequate,
despite losses the bank posted under Russian accounting standards
in the first quarter of 2016, that were mainly driven by the
ruble appreciation. S&P expects the bank will be profitable over
the next two years and follow the same strategy aimed to preserve
its capital at S&P's adequate level.
"We expect the bank's S&P Global Ratings' risk-adjusted capital
(RAC) ratio will strengthen in the next two years to 7.5%-8.0%.
We understand that shareholders are ready and capable to provide
additional Tier 1 capital to the bank if needed. However, in our
base-case projections, we do not include any additional capital
injections for the next two years. We understand that the bank
is compliant with the new Basel III requirements, and no
additional Tier 1 or Tier 2 capital injections are currently
required. We also note that the bank received Russian ruble
(RUB)62.8 billion ($869 million as of end-2015) subordinated debt
via the Deposit Insurance Agency capitalization program at year-
end 2015, which further strengthened its regulatory ratios.
However, we do not include this subordinated debt in our
calculation of total adjusted capital (TAC) and consequently into
our RAC calculation, due to its low loss-absorbing capacity," S&P
said.
"Our analysis focuses on the consolidated accounts of ABHFL, the
holding company of Alfa-Bank. Alfa-Bank houses the banking
operations of ABHFL in Russia, which are by far the largest
operations of the group. Therefore, we view Alfa-Bank as a core
entity of the group, and we equalize the rating on the bank with
the group credit profile (GCP), which we assess at 'bb'. The
ratings on Alfa-Bank reflect our 'bb-' anchor for banks operating
predominantly in Russia, as well as our view of Alfa-Bank's
leading competitive position among private sector banks in Russia
in terms of assets, product lines, efficiency, and comprehensive
approach to its clients. We view positively the bank's efficient
risk-management framework and no directed lending, as well as its
swift reaction in terms of collateral foreclosure, which should
somewhat counterbalance negative trends in asset quality. We
assess the bank's funding as average and liquidity as adequate,
while we view its systemic importance in Russia as high.
However, the ratings on the bank currently do not incorporate any
government support due to the relative level of the stand-alone
credit profile (SACP) and sovereign ratings. The GCP (which is
equivalent to the SACP in this case) is 'bb', and is among the
strongest of banks we rate in Russia," S&P noted.
The stable outlook on Alfa-Bank and ABHFL reflects S&P's view
that the group's financial profile will remain resilient to the
economic slowdown in Russia over the next 12 months. Although it
remains, like its peers, vulnerable to deterioration of the
creditworthiness of its main borrowers, and this risk is
accentuated by high concentration risks in the loan book, S&P
notes that its adequate capitalization, which is above that of
comparable peers', should allow the bank to better absorb credit
losses.
S&P would consider revising down the SACP if the bank's financial
profile deteriorates significantly. This could occur if Alfa-
Bank's asset quality weakened significantly, resulting in
nonperforming loans above 10% or credit costs being substantially
above the levels S&P currently forecasts. However, a weaker SACP
would not trigger a downgrade, all other factors being equal, as
S&P would start to incorporate one notch of uplift to reflect the
likelihood of extraordinary government support in case of need.
S&P considers the possibility of a positive rating action to be
remote in the current environment.
CB BFG-CREDIT LLC: DIA to Oversee Provisional Administration
------------------------------------------------------------
The Bank of Russia took a decision to appoint the state
corporation Deposit Insurance Agency to perform the functions of
the provisional administration of CB BFG-Credit LLC from May 30,
2016. In this connection, the activity of the provisional
administration of CB BFG-Credit LLC appointed by Bank of Russia
Order No. OD-1207, dated April 12, 2016, is terminated.
The provisional administration will inspect the financial
standing of CB BFG-Credit LLC, resulting in proposals of follow-
up actions with respect to the bank.
NLMK: Moody's Assigns Ba1 Rating to Loan Participation Notes
------------------------------------------------------------
Moody's Investors Service has assigned a Ba1 rating (LGD 3) to
the senior unsecured loan participation notes to be issued by
Steel Funding Limited for the sole purpose of financing a loan to
NLMK (Ba1 negative). NLMK intends to use the proceeds from the
loan primarily to finance the repurchase of part of Steel
Funding's existing $800 million notes due 2018 and $500 million
notes due 2019, under the tender offer announced on May 31, 2016.
RATINGS RATIONALE
The assignment of a Ba1 rating to the proposed notes reflects
Moody's assumption that (1) the notes will rank pari passu with
other senior unsecured debt of NLMK group, including the existing
Steel Funding's $800 million and $500 million notes, both rated
Ba1; and (2) the new notes' placement will not result in any
material change in NLMK group's total debt, as the proceeds will
be primarily used for refinancing existing debt.
NLMK's Ba1 rating is constrained by Russia's Ba1 sovereign rating
with a negative outlook and the Ba1 country ceiling for foreign-
currency debt. Despite having considerable international sales
and European and US assets, the company remains exposed to
Russian macroeconomic challenges as most of its upstream and
steel-making production facilities are Russia-based, although up
to 65% of NLMK's revenues come from sales in international
markets. The company's rating takes into account weak demand for
steel in Russia as a result of Russia's GDP contraction and
volatile steel prices in international markets, although the
company has been fairly resilient to market challenges.
More positively, NLMK's Ba1 rating reflects its diversified
product mix and geography of assets and sales, particularly its
rolling assets in the EU and the US which reduce its
susceptibility to protective measures against cheap steel imports
in those markets. Further credit positives include the company's
sustainable high utilization rates of above 90% in its core
plants in Russia, self-sufficiency in low-cost iron ore
concentrate and low steel costs. NLMK benefits from high
profitability owing to operational enhancements, integration in
low-cost feedstock and the weak rouble. The rating also factors
in the company's strong financial metrics, sustainable free cash
flow generation, solid liquidity and good corporate governance.
RATIONALE FOR THE NEGATIVE OUTLOOK
The negative outlook for NLMK's rating is in line with the
negative outlook for the sovereign rating and reflects the fact
that a potential downgrade of Russia's sovereign rating may
result in a lowering of Russia's foreign-currency bond country
ceiling. This would result in a downgrade of the company's
rating.
WHAT COULD CHANGE THE RATING UP/DOWN
Moody's could upgrade NLMK's rating if (1) it were to upgrade
Russia's sovereign rating and/or raise the foreign-currency bond
country ceiling; and (2) the company were to maintain its strong
financial metrics, cash flow generation and solid liquidity.
NLMK's rating could be downgraded if (1) there were a downgrade
of Russia's sovereign rating and/or a lowering of the foreign-
currency bond country ceiling; or (2) the company's operating and
financial performance, market position or liquidity were to
deteriorate materially.
LIST OF AFFECTED RATINGS
Assignments:
Issuer: Steel Funding Limited
Senior Unsecured Regular Bond/Debenture, Assigned Ba1 (LGD 3)
PRINCIPAL METHODOLOGY
The principal methodology used in this rating was Global Steel
Industry published in October 2012.
NLMK is one of Russia's largest vertically integrated steel
companies. Based on volumes, the company is a leading global
supplier of slabs and transformer steel, and is one of the
leading suppliers to the domestic market of high value-added
products including pre-painted, galvanized and electrical steel
as well as a variety of long steel products and feedstock for
large-diameter pipes (LDP). In 2015, NLMK generated revenues of
$8.0 billion and reported EBITDA of $1.9 billion. A controlling
85.5% stake in NLMK is indirectly owned by Mr. Vladimir Lisin,
chairman of the board of directors, while the remaining 14.5% is
in free float, including shares on the Moscow Exchange and GDRs
on the London Stock Exchange.
=========
S P A I N
=========
BANCO POPULAR ESPANOL: Moody's Affirms 'B1' BCA
-----------------------------------------------
Moody's Investors Service has affirmed the b1 Baseline Credit
Assessment (BCA)/ adjusted BCA of Banco Popular Espanol, S.A.
(Banco Popular). Concurrently, the rating agency has affirmed its
long- and short-term deposit ratings at Ba1/Not-Prime, its long-
term senior unsecured programme ratings at (P)Ba2 and its short-
term commercial paper rating at Not-Prime. The outlook on the
long-term deposit ratings was changed to positive from stable.
The rating action was prompted by the announcement on May 26,
2016 of a fully underwritten EUR2.5 billion rights issue and a
revised corporate strategy targeting a significant increase in
problem loan coverage and an accelerated disposal of problematic
assets over the next three years. In Moody's opinion, the rights
issue will allow Banco Popular to immediately strengthen its loss
absorption capacity in the face of still significant asset
quality challenges faced by the bank. At the same time, the
rating agency cautions that further improvements in the financial
profile are contingent on the bank's success in executing its
ambitious asset disposal program.
All other ratings of Banco Popular and its supported entities
have also been affirmed. Banco Popular's Counterparty Risk
Assessment was also affirmed at Baa3(cr)/Prime-3(cr).
RATINGS RATIONALE
RATIONALE FOR THE AFFIRMATION WITH A POSITIVE OUTLOOK OF BANCO
POPULAR'S RATINGS
The affirmation of Banco Popular's ratings reflect the very high,
albeit stabilizing, level of problematic exposures which is a key
factor constraining Banco Popular's current ratings. The positive
outlook stems primarily from the bank's improved risk-absorption
capacity driven by the EUR2.5billion rights issue announced on 26
May 2016 -- which has been fully underwritten -- and the decision
to accelerate the disposal of problematic exposures.
At close to 30%, Banco Popular's level of non-performing assets
(NPAs, defined as non-performing loans and real estate assets) at
end of 2015 largely exceeds the system's average of 17% for the
same period. Furthermore, when aggregating refinanced loans,
which are not already captured in the NPL ratio, the overall NPA
ratio increases to 35.8% (compared to the system's average of
24.5%), indicating the magnitude of the existing balance-sheet
pressures the bank faces.
The capital raise is expected to fully offset the negative impact
arising from the EUR4.7 billion provisions that the bank expects
to set aside this year with the aim to increase the coverage of
its high stock of NPAs to 50% from the existing 38%. A
strengthened risk-absorption capacity places the bank on a more
solid footing to be able to off-load its problematic exposures
and accomplish its new target of a EUR15 billion reduction over
the next three years. A reduction of this portfolio will be
credit positive for Banco Popular's risk profile; however Moody's
cautions that such improvement may take time to materialize. Lack
of clear progress in achieving Banco Popular's targeted reduction
in NPAs could lead to the stabilization of the outlook.
Due to the magnitude of expected provisions (more than three
times those booked in 2015), Banco Popular will report a sizeable
loss in 2016. Going forward, Moody's expects that stronger
coverage levels should alleviate the pressure on the bank's
modest recurrent bottom-line profitability which has been
impacted by high credit costs.
The affirmation of Banco Popular's long-term deposit and senior
unsecured debt program ratings at Ba1 with a positive outlook and
(P)Ba2 respectively also reflects: (1) the result from the rating
agency's Advanced Loss-Given Failure (LGF) analysis which results
in an unchanged two notches of uplift for the deposit ratings and
one notch of uplift for the senior program ratings; and (2)
Moody's assessment of moderate probability of government support
for Banco Popular, which results in an unchanged further one
notch of uplift for both the deposit and the senior program
ratings.
RATIONALE FOR AFFIRMING THE CR ASSESSMENT
As part of the rating action, Moody's has also affirmed at
Baa3(cr)/Prime-3(cr) the CR Assessment of Banco Popular, four
notches above the adjusted BCA of b1. The CR Assessment is driven
by the banks' b1 adjusted BCA, the cushion against default
provided to the senior obligations represented by the CR
Assessment by subordinated instruments amounting to 17% of
tangible banking assets and a moderate likelihood of systemic
support.
WHAT COULD CHANGE THE RATING UP/DOWN
The bank's ratings could be upgraded as a consequence of: (1)
Further significant improvement of asset risk indicators, namely
a material reduction of the stock of problematic assets, while
solvency levels are preserved; and (2) a sustained recovery of
recurrent profitability levels.
Any change to the BCA would likely also affect debt and deposit
ratings, as they are linked to the BCA. Banco Popular's senior
unsecured program and deposit ratings could also change as a
result of changes in the loss-given-failure faced by these
securities.
Moody's said, "Downward pressure could be exerted on Banco
Popular's BCA if (1) a broad deterioration of the bank's
financial fundamentals hinders its ability to preserve its
solvency levels; (2) operating conditions worsen beyond our
current expectations; and/or (3) the bank's liquidity profile
deteriorates significantly.
"In addition, any changes to our considerations of government
support could trigger downward pressure on the bank's deposit and
program ratings."
Banco Popular's senior unsecured program and deposit ratings
could also change as a result of changes in the loss-given-
failure faced by these securities.
LIST OF AFFECTED RATINGS
Issuer: Banco Popular Espanol, S.A.
-- Affirmations:
-- Adjusted Baseline Credit Assessment, affirmed b1
-- Baseline Credit Assessment, affirmed b1
-- Short-term Counterparty Risk Assessment, affirmed P-3(cr)
-- Long-term Counterparty Risk Assessment, affirmed Baa3(cr)
-- Short-term Deposit Ratings, affirmed NP
-- Subordinate Medium-Term Note Program, affirmed (P)B2
-- Other Short Term, affirmed (P)NP
-- Senior Unsecured Medium-Term Note Program, affirmed (P)Ba2
-- Pref. Stock Non-cumulative, affirmed Caa1(hyb)
-- Subordinate Regular Bond/Debenture, affirmed B2
-- Commercial Paper, affirmed NP
-- Long-term Deposit Ratings, affirmed Ba1, outlook changed to
Positive from Stable
-- Outlook Actions:
-- Outlook, changed to Positive from Stable
Issuer: BPE Capital International Limited
-- Affirmations:
-- Backed Subordinate Medium-Term Note Program, affirmed (P)B2
Outlook Action:
No outlook assigned
Issuer: BPE Finance International Limited
-- Affirmations:
-- Backed Senior Unsecured Medium-Term Note Program, affirmed
(P)Ba2
-- Backed Senior Unsecured Regular Bond/Debenture, affirmed Ba2,
outlook changed to Positive from Stable
-- Outlook Actions:
-- Outlook, changed to Positive from Stable
Issuer: BPE Financiaciones, S.A.
-- Affirmations:
-- Backed Subordinate Medium-Term Note Program, affirmed (P)B2
-- Backed Senior Unsecured Medium-Term Note Program, affirmed
(P)Ba2
-- Backed Subordinate Regular Bond/Debenture, affirmed B2
-- Backed Senior Unsecured Regular Bond/Debenture, affirmed Ba2
outlook changed to Positive from Stable
-- Outlook Actions:
-- Outlook, changed to Positive from Stable
Issuer: Banco Pastor, S.A.
-- Junior Subordinated Regular Bond/Debenture, affirmed B3(hyb)
-- Subordinate Regular Bond/Debenture, affirmed B2
Outlook Action:
No outlook assigned
Issuer: Pastor Particip. Preferent., S.A. Unipersonal
-- Backed Pref. Stock Non-cumulative, affirmed Caa1(hyb)
Outlook Action:
No outlook assigned
Issuer: Popular Capital Europe B.V.
-- Backed Subordinate Medium-Term Note Program, affirmed (P)B2
Outlook Action:
No outlook assigned
Issuer: Popular Capital, S.A.
-- Backed Pref. Stock Non-cumulative, affirmed Caa1(hyb)
Outlook Action:
No outlook assigned
Issuer: Popular Finance Europe B.V.
-- Backed Senior Unsecured Medium-Term Note Program, affirmed
(P)Ba2
Outlook Action:
No outlook assigned
Issuer: Popular Preference (Cayman) Limited
-- Backed Pref. Stock Non-cumulative, affirmed Caa1(hyb)
Outlook Action:
No outlook assigned.
===========
T U R K E Y
===========
* TURKEY: 1,000 Companies Applied for Bankruptcy Postponement
-------------------------------------------------------------
Ercan Ersoy at Bloomberg News reports that Abdulkadir Kahraman,
head of tax division and partner at KPMG Turkey, said in an
e-mailed statement about 1,000 Turkish companies applied for
bankruptcy postponement since the beginning of 2015.
According to Bloomberg, the abuse of bankruptcy postponement may
hamper state tax collection from such companies, causing a
"domino effect" in market.
Courts decide on postponement just one day after application,
Bloomberg discloses.
Bankruptcy postponement applications should be accompanied by
detailed, doable plans to improve financials, Bloomberg says.
The law regarding bankruptcy postponement should be reviewed to
prevent abuse, Bloomberg states.
===========================
U N I T E D K I N G D O M
===========================
BHS GROUP: To Wind Down After Talks Fail, 11,000 Jobs Affected
--------------------------------------------------------------
The Scotsman reports that BHS Group is to disappear from the
high street, resulting in the loss of up to 11,000 jobs, after
administrators failed to find a buyer for the retailer.
According to The Scotsman, the business will be wound down and
all BHS's 163 shops will close and be sold off to other
retailers. Administrator Duff & Phelps said that 8,000 permanent
jobs are likely to be lost and another 3,000 not directly
employed by BHS are also at risk, The Scotsman relates.
The news comes after last-ditch rescue bids from former
Mothercare boss Greg Tufnell and Mike Ashley's Sports Direct
failed, The Scotsman notes.
Duff & Phelps, as cited by The Scotsman, said: "Although multiple
offers were received, none were able to complete a deal due to
the working capital required to secure the future of the
company."
The administrator added that BHS will be in "close-down sale
mode" over the coming weeks as it proceeds an "orderly wind-down"
of the business, The Scotsman relays.
BHS fell into administration in April, leaving behind a GBP571
million pensions black hole and sparking an investigation by MPs
into its demise, The Scotsman recounts.
BHS Group is a department store chain. The company employs
10,000 people and has 164 shops.
CLAYTON WEST: Parents Recover 75% of School Fees
------------------------------------------------
Phil Booth at The Huddersfield Daily Examiner reports that
parents who lost thousands of pounds when a children's nursery
suddenly closed are celebrating after winning a legal fight with
an insolvency firm.
Forty-six parents have received 75% of the fees they paid to
Clayton West Day Care just before it went bust last year, The
Huddersfield Daily Examiner relates.
Begbies Traynor was appointed liquidator after the nursery, in
Edan Court, Colliers Way, Clayton West , closed at the end of
October, The Huddersfield Daily Examiner recounts.
In the months leading up to the closure, the company running the
nursery -- Walker Day Care Nurseries -- had brought in advisers
from Begbies Traynor to attempt a rescue of the business via a
Corporate Voluntary Arrangement (CVA), The Huddersfield Daily
Examiner relays.
The parents claim Begbies should have notified all known
creditors of the meetings called to vote on the CVA proposal, but
the parents who paid deposits in advance were not told, The
Huddersfield Daily Examiner discloses.
They were unaware of the impending insolvency proceedings, and
continued to pay further deposits, which were lost when the
company ceased trading on Oct. 30, The Huddersfield Daily
Examiner notes. It went into liquidation on Nov. 4, The
Huddersfield Daily Examiner relays.
The parents were then advised by the liquidators that there was
very little prospect of recovering any of the money they had
prepaid to the nursery, The Huddersfield Daily Examiner states.
But the parents launched a legal fight and Begbies Traynor has
now settled out of court, and will pay 75% of the claims,
according to The Huddersfield Daily Examiner.
CRAIGSHAW: Oil Slump Prompts Administration; 60 Jobs Affected
-------------------------------------------------------------
Gareth Mackie at The Scotsman reports that almost 60 staff at
Craigshaw have lost their jobs after administrators were called
in.
Blair Nimmo -- blair.nimmo@kpmg.co.uk -- Tony Friar --
tony.friar@kpmg.co.uk -- and Geoff Jacobs --
geoffrey.jacobs@kpmg.co.uk -- of KPMG have been appointed joint
administrators of Craigshaw, the holding company for Enterprise
Engineering Services (EESL), which employed 115 people, The
Scotsman relates.
According to The Scotsman, EESL has been trading for 50 years and
worked with a large number of oil and gas and utility clients,
but has suffered a "significant" fall in orders amid the
sustained drop in crude oil prices.
Turnover at the business fell to GBP17 million last year, from
GBP23 million in 2014, with the resulting losses prompting its
directors to call in administrators, The Scotsman discloses.
Fifty-four staff in Aberdeen and four in Caithness have now been
made redundant, The Scotsman relates. A further 49 employees
have been sent home "pending clarification of ongoing customer
requirements", while the remaining eight have been retained to
assist the administrators, The Scotsman notes.
Craigshaw is an Aberdeen-based engineering firm.
INOVYN LIMITED: Moody's Assigns B2 CFR, Outlook Stable
------------------------------------------------------
Moody's Investors Service has assigned a definitive B2 Corporate
Family Rating and a B2-PD Probability of Default Rating to INOVYN
Limited. Concurrently, Moody's has assigned a definitive B2
rating to the senior secured facilities borrowed by Inovyn
Finance plc, a direct subsidiary of INOVYN, comprising a EUR535
million Term Loan B, EUR240 million Term Loan A and EUR300
million Senior Secured Notes, all of which rank pari-passu. The
outlook on all ratings is stable.
Moody's has also withdrawn the CFR of Caa1 of Inovyn Finance Plc
and its Probability of Default Rating (PDR) of Caa1-PD (both
under review for upgrade).
RATINGS RATIONALE
Moody's definitive ratings for INOVYN's CFR and debt facilities
are in line with the provisional ratings assigned on 26 April
2016 despite raising senior secured notes in place of part of the
Term Loan B. The final terms of the facilities were broadly in
line with the drafts reviewed for the provisional instrument
rating assignments. The proceeds of the debt will be used to pay
out an EUR335 million exit payment to Solvay SA (Baa2 negative)
and were used on May 26, 2016, to repay EUR785 million of 10.625%
outstanding senior secured notes due February 2017 issued by
Inovyn Finance Plc (at the time Kerling Plc).
The B2 CFR reflects (1) that the group is the number one PVC
player in the European market, and has integrated and well-
invested production facilities at its major sites located in
Germany, the UK, Norway, Sweden, Belgium and France, which are
largely converted to the more competitive membrane production
technology; (2) that the company is a solid low-cost producer
benefitting from a good track record of cost-cutting
implementation in the Ineos family, with expected cost savings of
EUR150 million per year to be achieved by year-end 2017 compared
to Moody's expectation of a reported EBITDA of approximately
EUR450 million; (3) that the company is expected to benefit from
a recovering European PVC market; and (4) INOVYN's favorable
long-term feedstock arrangements with strategic suppliers and
partners, including Ineos Group Holdings S.A. (B1 stable).
However, the rating also incorporates the group's significant
exposure to a cyclical European PVC market environment and
caustic soda prices. The inherent cyclicality of the business
and its exposure to volatile raw materials (mainly ethylene)
represent a structural weakness of the issuer's credit profile,
as historically evidenced by volatile earnings displayed through
the cycle. Moody's notes that the high degree of cyclicality of
the issuer's revenues and operating cash flows derives from the
composition of its portfolio, which is geared towards PVC, a
commodity chemical highly exposed to applications in the
construction and building material markets.
In addition, the rating also reflects: (1) the company's limited
product diversification; (2) risk related to the implementation
of the restructuring program following the recent joint venture
transaction; (3) capital expenditure requirements related to its
mercury based plants, that are required to be converted into a
membrane cell by year-end 2017 according to the EU regulation;
and (4) the company's shareholder-friendly policy.
The PDR of B2-PD, in line with the B2 CFR, is consistent with
companies that have a mixed capital structure consisting of both
bank and bond debt, where Moody's has assumed a 50% family
recovery rate.
RATIONALE FOR STABLE OUTLOOK
The stable outlook reflects Moody's view that INOVYN will
continue to operate at satisfactory margin levels, successfully
implement its cost-savings program in a timely matter and will
continue to generate positive free cash flow. It also assumes
that the company maintains adequate liquidity.
WHAT COULD CHANGE THE RATING UP/DOWN
The ratings could be upgraded if (1) the company's Moody's-
adjusted EBITDA margin were to rise sustainably in the mid-teens;
and (2) it were to reduce its Moody's-adjusted Debt/EBITDA to
less than 3.0x on a sustained basis and substantially reduces
debt.
Conversely, INOVYN's ratings could be downgraded if its
performance were to deteriorate such that (1) the company's
Moody's-adjusted EBITDA margin falls below 10% for a prolonged
period; (2) the criteria for the stable outlook are not met; or
(3) its Moody's adjusted Debt/EBITDA rises above 4.0x on a
persistent basis.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Global
Chemical Industry Rating Methodology published in December 2013.
INOVYN Limited is a leading pan-European polyvinyl chloride (PVC)
and caustic soda producer, with additional positions in salt and
brine. It was formed on July 1, 2015, as a joint-venture between
INEOS Group Investments Limited (unrated) and a subsidiary of
Solvay S.A. For the 12 months ended Dec. 31, 2015, on an un-
audited basis, INOVYN had Post-Remedy Revenue (after the sale of
Kerling-owned assets to International Chemical Investors Group
(ICIG, unrated) in August 2015) of approximately EUR3.1 billion,
and Post-Remedy Adjusted EBITDA before exceptionals of
EUR429 million.
===============
X X X X X X X X
===============
* BOOK REVIEW: The Financial Giants In United States History
------------------------------------------------------------
Author: Meade Minnigerode
Publisher: Beard Books
Softcover: 260 pages
List Price: $34.95
Order your personal copy today at http://is.gd/tJWvs2
The financial giants were Stephen Girard, John Jacob Astor, Jay
Cooke, Daniel Drew, Cornelius Vanderbilt, Jay Gould, and Jim
Fisk.
The accomplishments of some have made them household names today.
But all were active in the mid 1800s. This was a time when the
United States, having freed itself from Great Britain only a few
decades earlier, was gaining its stride as an independent nation.
The country was expanding westward, starting to engage in
significant international trade, and laying the foundations for
becoming a major industrial power. Astor, Vanderbilt, Gould, and
the others played major parts in all these areas. During the
Civil War in the first half of the 1860s, some became leading
suppliers of goods or financiers to the Federal government.
Minnigerode's focus is the highlights of the life of each of the
seven. Along with this, he identifies each one's prime
characteristics contributing to his road to fortune and how his
life turned out in the end. Not all of the men managed to keep
and pass on the fortunes they amassed. They are seen a "financial
giants" not only because they made fortunes in the early days of
American business and industry, but also for their place in
laying out the groundwork for American business enterprise,
innovation, and leadership, and for the notoriety they had in
their day. Minnigerode summarizes the style or achievement of
each man in a single word or short phrase. Stephan Girard is "The
Merchant Banker"; Cornelius Vanderbilt, "The Commodore." "The Old
Man of the Street" summarizes Daniel Drew"; with "The Wizard of
Wall Street" summarizing Jay Gould. Jim Fisk is "The Mountebank."
Jay Cooke, "The Tycoon," was to be "known throughout the country
for his astonishingly successful handling of the great Federal
loans which financed the Civil War." After the War, one of the
leaders of the Confederacy remarked that the South was really
defeated in the Federal Treasury Department thus, even on the
enemy side, giving recognition to Cooke's invaluable work of
enabling the Federal government to meet the huge costs of the
War.
After the War, having earned the reputation as "the foremost
financier in the country," Cooke became involved in many large
financial ventures, including the building of a railroad to link
the East and West coasts of America. In this railroad venture,
however, Cooke and his banking firm made a fatal misstep in
investing in the Northern Pacific railway. The Northern Pacific
turned out to be a house of cards. When Cooke's firm was unable
to meet interest payments it owed because of money it had put
into the Northern Pacific, the firm went bankrupt; and this
caused alarm in the stock market and financial circles.
The roads to wealth of the "financial giants" were not smooth.
Like others amassing great wealth, they had to take risks. The
tales Minnigerode tells are not only instructive on how
individuals have historically made fortunes in business and the
characteristics they had for this, but are also cautionary tales
on the contingency of great wealth in some circumstances. Jim
Fisk, for instance, a larger-than life character "jovial and
quick witted [who was also] a swindler and a bandit, a destroyer
of law and an apostle of fraud," was presumably killed by a
former business partner. Unlike Cooke and Fisk, Cornelius
Vanderbilt and John Jacob Astor built fortunes that lasted
generations.
Vanderbilt -- nicknamed Commodore -- starting in the New York
City area, built ships and established domestic and international
merchant and passenger lines. With the government coming to
depend on these with the rapid growth of commerce of the period
and the Civil War for a time, Vanderbilt practically had
monopolistic control of private shipping in the U.S. Astor made
his fortune by developing trade and other business in the upper
Midwest, which was at the time the sparsely-populated frontier of
America, rich in natural resources and other potential with the
Great Lakes and regional rivers as a means for transportation.
Although the social and business conditions in the early and mid
1800s when the U.S. was in the early stages of its development
were unique to that period, by concentrating on the
characteristics, personalities, strategies, and activities of the
seven outstanding businessmen of this period, Minnigerode
highlights business traits and acumen that are timeless. His
sharply-focused, short biographies are colorful and memorable.
This author has written many other books and worked in the
military and government.
*********
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.
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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.
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