/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/160818.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, August 18, 2016, Vol. 17, No. 163 Headlines H U N G A R Y * HUNGARY: Company Liquidations Down 20% in First Half 2016 I T A L Y POPOLARE BARI: DBRS Assigns B (high) Rating to Class B Notes L U X E M B O U R G ARCELORMITTAL: Moody's Changes Outlook on Ba2 CFR to Stable PATAGONIA FINANCE: Moody's Reviews EUR453.2MM Notes' 'Ca' Rating R O M A N I A CARPATICA ASIG: DNA Loses Bid to Block Bankruptcy S E R B I A BEOBANKA: Belgrade to Auction Two Buildings on September 15 INDUSTRIJA MESA: Receiver Puts Properties Up for Sale S W E D E N KNCMINER: Business Bought by Unknown Buyer Following Bankruptcy U K R A I N E CLASSICBANK: NBU Revokes Banking License, Starts Liquidation EUROBANK: National Bank of Ukraine Revokes Banking License U N I T E D K I N G D O M ALGECO SCOTSMAN: Moody's Lowers CFR to Caa1, Outlook Negative DUNNE GROUP: In Administration, Keltbray Buys Assets GHA COACHES: Unfilled Routes to Run with Reduced Service HAWKSMOOR MORTGAGES 2016-1: Moody's Rates Class X Notes Caa3(sf) JAGUAR LAND: S&P Raises CCR to 'BB+', Outlook Stable MOY PARK: S&P Lowers CCR to 'BB-', Outlook Stable ********* ============= H U N G A R Y ============= * HUNGARY: Company Liquidations Down 20% in First Half 2016 ----------------------------------------------------------- MTI-Econews, citing website feketelista.hu, reports that in the first six months of 2016, around 4,333 companies were liquidated in Hungary, 20% less than in the same period a year earlier. According to MTI-Econews, the Web site said the number of liquidations was down mainly because of regulatory changes, primarily the introduction of rules mandating the forced termination of defunct companies. The site said since the economic recession of 2008-2009 around 319,481 companies have been liquidated in Hungary under various procedures, but the number of companies grew as 333,670 companies were founded in the same period, MTI-Econews relates. ========= I T A L Y ========= POPOLARE BARI: DBRS Assigns B (high) Rating to Class B Notes ------------------------------------------------------------ DBRS Ratings Limited assigned the following ratings to the Class A and Class B Notes (the Notes) issued by Popolare Bari NPLS 2016 S.r.l. (the Issuer): -- EUR126,500,000 Class A at BBB (high) -- EUR14,000,000 Class B at B (high) The notes are backed by a portfolio consisting of unsecured and secured non-performing loans originated by Banca Popolare di Bari s.c.p.a. (BPB), Banca Caripe S.p.A. (Banca Caripe) and Banca Tercas S.p.A. (Banca Tercas). In July 2016, Banca Caripe and Banca Tercas were consolidated into BPB. All loans in the portfolio defaulted between 2000 and 2015 and are in various stages of resolution. The portfolio will be serviced by Prelios Credit Servicing S.p.A. (Prelios). Most of the secured loans included in the portfolio are backed by properties primarily concentrated in the southern regions of Italy, which typically have a longer bankruptcy and settlement process. In its analysis, DBRS assumed that all loans are disposed through the auction process, which generally has the longest resolution timeline. The Class B Notes, which represent mezzanine debt, may not be repaid until the Class A Notes are repaid in full. The ratings are based on DBRS's analysis of the projected recoveries of the underlying collateral, the historical performance and expertise of the servicer, Prelios, the availability of liquidity to fund interest shortfalls and special-purpose vehicle expenses, the cap agreement with J.P. Morgan Securities plc and the transaction's legal and structural features. DBRS's BBB (high) and B (high) ratings assume a haircut of 24.03% and of 17.45%, respectively, to Prelios's business plan for the portfolio. Notes: All figures are in euros unless otherwise noted. The principal methodology applicable is: Rating European Non- Performing Loans Securitisations. DBRS has applied the principal methodology consistently and conducted a review of the transaction in accordance with the principal methodology. Other methodologies referenced in this transaction are listed at the end of this press release. The sources of information used for this rating include Banca Popolare di Bari S.c.p.a. and Prelios Credit Servicing S.p.A. DBRS does not rely upon third-party due diligence in order to conduct its analysis. DBRS was supplied with third party assessments. DBRS considers the information available to it for the purposes of providing this rating was of satisfactory quality. DBRS does not audit the information it receives in connection with the rating process, and it does not and cannot independently verify that information in every instance. This rating concerns a newly issued financial instrument. This is the first DBRS rating on this financial instrument. To assess the impact of the changing the transaction parameters on the rating, DBRS considered the following stress scenarios, as compared to the parameters used to determine the rating (the "Base Case"): -- Recovery Rates Used: Cumulative Base Case Recovery Amount of EUR157,078,463 at the BBB (high) stress level, a 5% and 10% decrease of the Cumulative Base Case Recovery Rate. -- Recovery Rates Used: Cumulative Base Case Recovery Amount of EUR170,665,375 at the B(high) stress level, a 5% and 10% decrease of the Cumulative Base Case Recovery Rate. -- DBRS concludes that a hypothetical decrease of the Recovery Rate by 5%, ceteris paribus, would lead to a downgrade of the Class A notes to BBB (sf). -- DBRS concludes that a hypothetical decrease of the Recovery Rate by 10%, ceteris paribus, would lead to a downgrade of the Class A Notes to B (high) (sf). -- DBRS concludes that a hypothetical decrease of the Recovery Rate by 5%, ceteris paribus, would lead to a downgrade of the Class B Notes to B (low) (sf). -- DBRS concludes that a hypothetical decrease of the Recovery Rate by 10%, ceteris paribus, would each lead to a downgrade of the transaction to CCC (sf) for the Class B Notes. Ratings assigned by DBRS Ratings Limited are subject to EU regulations only. =================== L U X E M B O U R G =================== ARCELORMITTAL: Moody's Changes Outlook on Ba2 CFR to Stable ----------------------------------------------------------- Moody's Investors Service has changed the outlook on the Ba2 corporate family rating of multinational steel manufacturing company ArcelorMittal to stable from negative. Moody's has also affirmed the CFR at Ba2 and the company's probability of default rating (PDR) at Ba2-PD. "We have changed the outlook on ArcelorMittal's ratings to stable from negative to reflect a number of positive developments in both the company's market environment and credit metrics", says Hubert Allemani, Moody's lead analyst for ArcelorMittal. "The strong recovery in steel prices in both the US and Europe benefitted the company, with profitability increasing in Q2 2016 to a level we view as sustainable to the end of the year. ArcelorMittal also reduced its gross Moody's-adjusted leverage to a multiple of 4.8x at the end of June 2016, more in line with its rating category", added Mr. Allemani. RATINGS RATIONALE RATIONALE FOR THE STABLE OUTLOOK During the course of Q1 2016, ArcelorMittal announced a series of measures to strengthen its financial profile in the context of a difficult operating environment. These measures include a continued commitment to (1) reducing operating costs and managing its cash flow to remain free cash flow positive ("Action 2020" plan); (2) a $3 billion rights issue, which was successfully closed on 4 April 2016.; (3) divestment of non-core financial investments, such as its 35% stake in Gestamp ($1 billion of proceeds) and long business in the US. The company used the proceeds from the rights issue and the divestments to reduce its gross debt and as such repaid about $4.5 billion of notional value of outstanding debt instruments in Q2 2016. Based on Moody's adjusted LTM EBITDA of $5.3 billion at the end of June 2016 and together with the conversion into equity of the $2.2 billion mandatorily convertible bond in January, the debt repayment resulted in a reduction of the company's Moody's- adjusted leverage to approximately 4.8x at the end of June 2016, from 6.5x at the end of December 2015. The liability management exercise also resulted in an improvement of the company's maturity profile. These measures are additionally supported by the group's increased quarterly profitability with an EBITDA margin of 12% in Q2, compared to 7% in Q1, because of improved pricing environment in both the US and Europe. The change in outlook to stable from negative reflects ArcelorMittal's commitment to defend its credit profile and Moody's expectation that the company's financial metrics will remain in line with current rating for the next 12 months. Moody's expects that the company will be able to benefit from the improved steel prices in both core markets of NAFTA and Europe to generate a full year reported EBITDA higher than the current company's guidance of in excess of $4.5 billion. ArcelorMittal is also likely to benefit from the anti-dumping duties imposed in Europe on cold rolled coils from China and Russia, and in the US for cold and hot rolled coils from various countries including China, South Korea and Japan. Notwithstanding the recent rebound of a number of steel product prices from low levels seen at the end of 2015 and Q1 2016, Moody's expects that steel prices will remain under pressure for the remainder of the year. This is a result from imports and pricing decisions taken in China, which remains a strong driver of global prices. Finally Moody's expects that M&A activity will not significantly negatively affect the company's profitability or positive free cash flow target. AFFIRMATION OF Ba2 RATING The affirmation of ArcelorMittal's Ba2 rating reflects its (1) strong market position in the global steel industry, in particular in the growing automotive sector; (2) strong geographical and product diversification, which helps the company adapt to regional market conditions; (3) partial vertical integration into iron ore and coking coal (the company sells most of its production in the open market), which mitigates the company's exposure to potential increase in its raw material price; and (4) strong liquidity profile. However, the rating also reflects (1) the recession in the Brazilian market, with depressed domestic steel demand and higher difficulties to export production owing to competitiveness and import duties that have risen globally; (2) the high level of competition from imported products from Asia into the US and Europe, which affects pricing discipline and lowers market share; and (3) the company's low profitability and high Moody's adjusted leverage. LIQUIDITY PROFILE Moody's considers ArcelorMittal's liquidity to be solid and expects that it will remain strong over the next 12 months, as evidenced by the large amount of cash held on the balance sheet and the committed facilities available to the company. ArcelorMittal has $1.8 billion worth of debt maturing in the next 18 months, which Moody's expects will be met without putting excessive pressure on the company's liquidity. At the end of June 2016, ArcelorMittal's available liquidity amounted to $8.4 billion, consisting of $2.4 billion cash and cash equivalents, and $6 billion of undrawn committed credit lines. Finally, Moody's notes that ArcelorMittal uses a True Sales of Receivable program as a way to manage its long cycle working capital. Usage under this program at the end of 2015 totalled approximately $4.8 billion. WHAT COULD MOVE THE RATING UP OR DOWN Positive pressure on the rating could develop if (1) ArcelorMittal's leverage decreases to a level of 4.5x debt/EBITDA or below on a sustainable basis; (2) its retained cash flow/debt ratio moves above 15%; and (3) the company's EBIT/interest ratio reaches 1.5x. The rating could move down if (1) its retained cash flow/debt ratio remains below 10%; (2) the company's EBIT/interest ratio remains under 1.0x on an ongoing basis; (3) covenants or other factors constrain liquidity; (4) ArcelorMittal's net debt/EBITDA ratio remains above 6.0x or higher on a prolonged basis; or (5) the company engaged in M&A activity that would result in higher leverage or drive free cash flow to become negative. LIST OF AFFECTED RATINGS Affirmations: Issuer: ArcelorMittal LT Corporate Family Rating, Affirmed Ba2 Probability of Default Rating, Affirmed Ba2-PD Multiple Seniority Shelf, Affirmed (P)Ba2 Senior Unsecured Commercial Paper, Affirmed NP Senior Unsecured Medium-Term Note Program, Affirmed (P)NP Senior Unsecured Medium-Term Note Program, Affirmed (P)Ba2 Senior Unsecured Regular Bond/Debenture, Affirmed Ba2 (LGD3) Outlook Actions: Issuer: ArcelorMittal Outlook, Changed To Stable From Negative The principal methodology used in these ratings was Global Steel Industry published in October 2012. Headquartered in Luxembourg, ArcelorMittal is the world's largest steel company. It has a presence in more than 20 countries, operating 57 integrated and mini-mill steel-making facilities, which have a production capacity of around 119 million tons of crude steel per year. The company also has sizeable captive supplies of iron ore and coking coal, and a trading and distribution network. In fiscal year 2015, ArcelorMittal shipped approximately 84.5 million tons of steel and achieved sales of $63.5 billion. PATAGONIA FINANCE: Moody's Reviews EUR453.2MM Notes' 'Ca' Rating ---------------------------------------------------------------- Moody's Investors Service has placed on review with direction uncertain the rating on the notes issued by Patagonia Finance S.A.: EUR453.2115 mil. (current outstanding balance of EUR283,500,000) Senior Zero coupon notes, Ca Placed Under Review Direction Uncertain; previously on July 22, 2016, Downgraded to Ca RATINGS RATIONALE Moody's explained that the rating action taken today is the result of a rating action on the subordinate rating of Banca Monte dei Paschi di Siena S.p.A., which was placed on review with direction uncertain on 08 August 2016. This transaction represents a repackaging of a Banca Monte dei Paschi di Siena S.p.A subordinated bond. Methodology Underlying the Rating Action: The principal methodology used in this rating was "Moody's Approach to Rating Repackaged Securities" published in June 2015. Factors that would lead to an upgrade or downgrade of the rating: This rating is essentially a pass-through of the rating of the underlying securities. Noteholders are exposed to the credit risk of Banca Monte dei Paschi di Siena S.p.A. and therefore the rating moves in lock-step. Moody's expects to conclude this review when the review of Banca Monte dei Paschi di Siena S.p.A. is completed. Moody's notes that this transaction is subject to a high level of macroeconomic uncertainty, which could negatively impact the ratings of the notes, as evidenced by 1) uncertainties of credit conditions in the general economy and 2) more specifically, any uncertainty associated with the underlying credits in the transaction could have a direct impact on the repackaged transaction. ============= R O M A N I A ============= CARPATICA ASIG: DNA Loses Bid to Block Bankruptcy ------------------------------------------------- Romania Insider reports that the judges of the High Court of Cassation and Justice rejected on Aug. 17 the request of the National Anticorruption Directorate (DNA) related to the bankruptcy of the local insurer Carpatica Asig. DNA had requested the court to block the insurer from going bankrupt as Carpatica Asig is involved in a corruption case DNA currently investigates, Romania Insider relates. However, the judges dismissed the request as "unfounded", Romania Insider discloses. The court's decision is not final and can be challenged, Romania Insider relays, citing local Mediafax. The Financial Supervisory Authority (ASF) withdrew the insurer's operating license at the end of July, Romania Insider recounts. The DNA prosecutors argued that the company would be quickly liquidated and dissolved if the court confirmed its bankruptcy, according to Romania Insider. This means that the insurer could no longer be held responsible in a criminal case, Romania Insider notes. Carpatica Asig was the seventh biggest insurer in Romania, in 2015, with gross premiums underwritten of over EUR130 million and a market share of 6.7%. The company was one of the leaders on the mandatory car insurance (RCA) segment, according to Romania Insider. =========== S E R B I A =========== BEOBANKA: Belgrade to Auction Two Buildings on September 15 ----------------------------------------------------------- SeeNews reports that the city of Belgrade will put up for sale two downtown buildings of bankrupt Beobanka with a starting price of RSD3.1 million (US$3.4 million). According to SeeNews, Belgrade Mayor Sinisa Mali said in a statement on the city's website on Aug. 15 the auction is scheduled for Sept. 15. The mayor said a number of foreign investors have shown interest in the auction, SeeNews relates. Beobanka has been in liquidation since 2002 and most of its assets have been sold to meet its liabilities to creditors, SeeNews discloses. INDUSTRIJA MESA: Receiver Puts Properties Up for Sale ----------------------------------------------------- Serbian Bankruptcy Supervison agency told SeeNews on Aug. 15 the receiver of Industrija Mesa i Konzervi Banat has put up for sale through public bidding properties worth RSD394.4 million (US$3.5 million/EUR3.2 million). According to SeeNews, the offer for the insolvent company's properties includes buildings and properties in five municipalities in the region of Vojvodina. Industrija Mesa i Konzervi Banat is a Serbian meat producer. =========== S W E D E N =========== KNCMINER: Business Bought by Unknown Buyer Following Bankruptcy --------------------------------------------------------------- NewsBTC reports that KnCMiner has been purchased by an unknown buyer. KnCMiner had recently filed for bankruptcy, NewsBTC recounts. The company had stated escalating costs and stiff competition as the reason for bankruptcy, NewsBTC discloses. The apprehensions about the company's future have been put to rest after a Swedish tech magazine reported the news about its sale, NewsBTC relates. According to NewsBTC, the magazine reports that it has spoken to Nils Aberg, a bankruptcy trustee who was involved in the KnCMiner deal. Sam Cole, while announcing the company's decision to file for bankruptcy had stated that the rising cost of energy in Sweden, cheaper mining equipment, and large-scale mining operations in China have made their business uneconomical, NewsBTC relays. The company had outstanding debts of over SEK165.2 million, NewsBTC notes. KnCMiner is a Swedish Bitcoin mining firm. ============= U K R A I N E ============= CLASSICBANK: NBU Revokes Banking License, Starts Liquidation ------------------------------------------------------------ Ukrainian News Agency reports that the National Bank of Ukraine has decided to revoke the banking license of ClassicBank and start the process of its liquidation. The National Bank of Ukraine decided on Aug. 11 to revoke the banking license of ClassicBank and liquidate it at the proposal of the Private Deposit Guarantee Fund, Ukrainian News relates. ClassicBank was classified as an insolvent bank on June 14, the report recounts. According to Ukrainian News, the basis for this decision was the bank's failure to bring its operations in line with the requirements of the law within 180 days of its categorization as a problem bank. ClassicBank was categorized as a problem bank in December 2015 because of its opaque ownership structure, Ukrainian News discloses. ClassicBank is based in Kyiv. EUROBANK: National Bank of Ukraine Revokes Banking License ---------------------------------------------------------- Interfax-Ukraine reports that the National Bank of Ukraine under a proposal of the Deposit Guarantee Fund on Aug. 16 decided to annul the banking license of Eurobank and liquidate it. Earlier the fund expanded temporary administration at insolvent Eurobank until Aug. 16, Interfax-Ukraine recounts. On June 17, the National Bank of Ukraine declared Eurobank insolvent, Interfax-Ukraine discloses. The Individual Deposit Guarantee Fund on the basis of the decision of the NBU on declaring Eurobank insolvent introduced temporary administration in the financial institution, Interfax-Ukraine relates. Administration was introduced for one month -- until July 16 inclusive, Interfax-Ukraine notes. Due to a loss of liquidity the bank has stopped settling client transactions on time, Interfax-Ukraine says. The regulator said that 98% of depositors (8,000) will receive their deposits in full, Interfax-Ukraine relays. According to Interfax-Ukraine, the sum to be refunded as of June 15, 2015 totaled some UAH217 million. Kyiv-based Eurobank was founded in 2005. Its assets as of April 1, 2016, were estimated at UAH1.728 billion, which ranked the bank 47th among 109 operating banks, according to the NBU. =========================== U N I T E D K I N G D O M =========================== ALGECO SCOTSMAN: Moody's Lowers CFR to Caa1, Outlook Negative ------------------------------------------------------------- Moody's Investors Service downgraded Algeco Scotsman Global S.A.R.L.'s corporate family rating to Caa1 from B3. Moody's also downgraded Algeco Scotsman Global Finance PLC's senior secured rating to Caa1 from B3 and senior unsecured rating to Caa3 from Caa2. The rating outlook is negative. The rating action follows Algeco's announcement on August 15th that the conditional merger agreement between its subsidiary Williams Scotsman International, Inc. and Modular Space Corporation ("ModSpace", senior secured rating Ca on review - direction uncertain), announced on March 16, has been terminated. These ratings have been downgraded with the outlook changed to negative from rating under review: Issuer: Algeco Scotsman Global Finance PLC Senior Secured Regular Bond/Debenture, to Caa1 from B3 Senior Unsecured Regular Bond/Debenture, to Caa3 from Caa2 Issuer: Algeco Scotsman Global S.A.R.L. Corporate Family Rating, to Caa1 from B3 RATINGS RATIONALE The rating action reflects Algeco's deteriorating liquidity as a result of a further reduction in borrowing capacity under its Asset Based Lending (ABL) facility and the fact that the conditional merger/sale agreement with ModSpace, which was expected to significantly improve Algeco's liquidity position, has been terminated. Algeco planned to apply the proceeds from this transaction to repay a portion of the outstanding balance under its ABL facility. As of June 30, 2016, Algeco's borrowing availability under its ABL facility was just $26.6 million. Combined with the cash balance of $66.5 million, the company's total liquidity position amounted to $93.1 million, the lowest it has been since the end of 2013, when the facility was upsized to its current limit of $1.4 billion. This leaves the company with limited financial flexibility. In addition, the ABL facility matures in October 2017, presenting refinancing and funding risks. Algeco's financial performance remains weak, which has prevented deleveraging, and is further exacerbated by significant negative shareholders' equity and a major reliance on secured funding, which encumbers assets and also limits financial flexibility. Algeco's ratings could be downgraded if its liquidity position deteriorates further or the company is not able to renew its ABL facility well in advance of its maturity. The outlook can return to stable if the company improves its liquidity position from the current levels and extends the maturity of the ABL facility. The principal methodology used in these ratings was Finance Companies published in October 2015. DUNNE GROUP: In Administration, Keltbray Buys Assets ---------------------------------------------------- thebusinessdesk.com reports that engineering group Keltbray has acquired the assets of the Dunne Group, which went into administration last month. It was initially thought that around 524 jobs would be cut, but the new deal with administrators at FRP Advisory is set to save around 400, according to thebusinessdesk.com. Keltbray has agreed to acquire some of the Dunne Group's assets including the head office for the group in Bathgate in Scotland and a plant used for the construction of reinforced concrete structures, the report notes. The giant, which employs 1,000 and turns over GBP270 million said it saw the acquisition as an opportunity to broaden its services and geographical reach, the report notes. It is unknown how many jobs at the Leeds site were saved. Dunne Group suffered major losses on contracts and suffered a "lack of flexibility in funding" needed to keep up with growth, the report discloses. Tom MacLennan, Iain Fraser and Geoff Rowley, partners at FRP Advisory, were appointed on July 20. Mr MacLennan,said: "We are delighted to have agreed a deal with Keltbray Group, and wish the company every success with their future plans. "We have been delighted with the response of the contracting industry to the administration of the Dunne Group, and estimate that since our appointment over 400 former staff have now found new employment." 13 staff in Leeds, 311 in London and 200 in Scotland were affected by the administration, the report says. 16 were initially retained to deal with the administration, the report adds. GHA COACHES: Unfilled Routes to Run with Reduced Service -------------------------------------------------------- BBC News reports that bus routes left unfilled after the collapse of GHA Coaches in north Wales will be replaced, but with a reduced service. Wrexham council said eight services had not been replaced after GHA Coaches went into administration in July, BBC relates. Contracts have now been awarded for these, but many will not run to the original timetables, BBC discloses. Start dates and new timetables have not yet been finalized, BBC notes. The traffic commissioner needs to approve the new plan before it can be implemented, BBC states. According to BBC, the services covered by the new contract will be: -- 6 & 17 - Wrexham - Ruabon and Wrexham - Moss/Lodge -- 42F - Erbistock Area -- 45F - Maelor Area -- 47F - West Wrexham area -- 64 - Llanarmon DC - Llangollen -- 146 & 34 - Wrexham - Whitchurch and Wrexham - Trevalyn GHA Coaches was a bus firm run by principal directors Gareth and Arwyn Lloyd Davies. HAWKSMOOR MORTGAGES 2016-1: Moody's Rates Class X Notes Caa3(sf) ---------------------------------------------------------------- Moody's Investors Service has assigned definitive long-term credit ratings to notes issued by Hawksmoor Mortgages 2016-1 plc: GBP1,766.24 mil. Class A Mortgage Backed Floating Rate Notes due May 2053, Definitive Rating Assigned Aaa (sf) GBP146.25 mil. Class B Mortgage Backed Floating Rate Notes due May 2053, Definitive Rating Assigned Aa1 (sf) GBP90 mil. Class C Mortgage Backed Floating Rate Notes due May 2053, Definitive Rating Assigned A1 (sf) GBP67.5 mil. Class D Mortgage Backed Floating Rate Notes due May 2053, Definitive Rating Assigned Baa1 (sf) GBP33.75 mil. Class E Mortgage Backed Floating Rate Notes due May 2053, Definitive Rating Assigned Ba2 (sf) GBP27 mil. Class X Floating Rate Notes due May 2053, Definitive Rating Assigned Caa3 (sf) Moody's has not assigned ratings to the GBP 146.26 mil. Class F Mortgage Backed Zero Coupon Notes due May 2053, the GBP 29.25 mil. Class Z1 Floating Rate Notes due May 2053 and GBP 33.76 mil. Class Z2 Zero Coupon Notes due May 2053. Moody's assigned provisional ratings to these notes on Aug. 3, 2016. The portfolio backing this transaction consists of UK Non- conforming residential mortgage loans originated, among others, by GE Money Home Lending Limited, GE Money Mortgages Limited, IGroup2 Limited and IGroup3 Limited. The legal title to the mortgages is held by Kensington Mortgage Company Limited ("KMC", not rated). On the closing date both Virage PL 1 Limited and Virage PL 2 Limited (the "Warehousing Sellers", not rated) sold the portfolio to Junglinster S.a.r.l. (the "Seller", not rated). In turn the Seller sold the portfolio to Hawksmoor Mortgages 2016-1 plc (the "Issuer"). On June 23, 2016, the United Kingdom (UK) voted to leave the European union. Under Moody's central scenario, the UK's decision to leave the European Union will lead to a prolonged period of uncertainty (see "UK Vote for EU Exit Signals A Prolonged Period of Uncertainty, A Credit Negative," published on June 24, 2016). For Hawksmoor Mortgage 2016-1 plc's underlying portfolio, the rating agency does not expect a material impact on defaults or recovery rates due to the good collateral diversification. RATINGS RATIONALE The rating takes into account the credit quality of the underlying mortgage loan pool, from which Moody's determined the MILAN Credit Enhancement and the portfolio expected loss, as well as the transaction structure and legal considerations. The expected portfolio loss of 2.8% and the MILAN required credit enhancement of 16% serve as input parameters for Moody's cash flow model and tranching model, which is based on a probabilistic lognormal distribution. Portfolio expected loss of 2.8%: this is based on Moody's assessment of the lifetime loss expectation taking into account: (i) the weighted average current LTV of around 71.2% on a non- indexed basis; (ii) the collateral performance to date along with an average seasoning of 9.7 years. 13.8% of the pool is in arrears as of 15 July 2016, of which 1.01% is more than 90 days in arrears; (iii) the current macroeconomic environment and our view of the future macroeconomic environment in the UK, and (iv) benchmarking with similar transactions in the UK Non-conforming sector. MILAN CE of 16%: this is lower than the UK Non-conforming RMBS sector average and follows Moody's assessment of the loan-by-loan information taking into account the historical performance available and the following key drivers: (i) the relatively low weighted average current LTV of 71.2% on a non-indexed basis; (ii) the high proportion of self-employed borrowers at 30.5%; (iii) the presence of 28.9% loans where the borrower self- certified its income; (iv) around 58.6% of interest only loans; (v) borrowers with adverse credit history accounting for 13.2% of the pool; (vi) the level of arrears around 13.8% as of July 15, 2016, and (vii) benchmarking with other UK Non-conforming RMBS transactions. At closing the mortgage pool balance consists of GBP 2,250 million of loans. The total Reserve Fund is funded to 3.0% of the initial mortgage pool balance and will amortize to 3.0% of the outstanding balance of Classes A to F notes, subject to a floor of 1.5% of the outstanding balance of Classes A to F notes. The total Reserve Fund is split into the Liquidity Reserve Fund and the Non Liquidity Reserve Fund. The Liquidity Reserve Fund Required Amount is equal to 2.5% of Class A outstanding amount and is available only to cover senior expenses and Class A interest. The Liquidity Reserve Fund is floored at 1% of the initial principal balance of Class A and will be released only after Class A is fully repaid. The Non Liquidity Reserve Fund is equal to the difference between the total Reserve Fund and the Liquidity Reserve Fund, and can be used to cover interest shortfalls and to cure PDL on Classes A to E notes. Operational risk analysis: KMC is acting as servicer of record, delegating servicing responsibilities to Acenden Limited (not rated). The issuer delegates to KMC, as the legal title holder, the responsibility over certain servicing policies and setting of interest rates. In order to mitigate the operational risk, Structured Finance Management Limited (not rated) is appointed as Back-Up Servicer Facilitator at closing, and, in addition, Wells Fargo Bank International (not rated) is acting as a Back-Up Cash Manager from close. To ensure payment continuity over the transaction's lifetime the transaction documents incorporate estimation language whereby the cash manager can use the three most recent servicer reports to determine the cash allocation in case no servicer report is available. The transaction also benefits from principal to pay interest mechanism for the Class A notes and for Classes B to E notes, subject to certain conditions being met. Interest rate risk analysis: 98.1% of the portfolio pay a floating rate of interest, while the remaining 1.7% pay a fixed rate with a weighted average time to reset of approximately 9 months. The interest rate risk in the transaction is unhedged. Moody's has taken into consideration the absence of an interest rate swap in its cash flow modeling. The definitive ratings address the expected loss posed to investors by the legal final maturity of the Notes. In Moody's opinion, the structure allows for timely payment of interest and ultimate payment of principal with respect to the Class A notes by legal final maturity. Other non-credit risks have not been addressed, but may have a significant effect on yield to investors. Stress Scenarios: Moody's Parameter Sensitivities: if the portfolio expected loss was increased from 2.8% to 5.6% of current balance, and the MILAN CE was increased from 16% to 22.4%, the model output indicates that the Class A notes would still achieve Aaa (sf) assuming that all other factors remained equal. Moody's Parameter Sensitivities quantify the potential rating impact on a structured finance security from changing certain input parameters used in the initial rating. Moody's Parameter Sensitivities provide a quantitative/model- indicated calculation of the number of rating notches that a Moody's structured finance security may vary if certain input parameters used in the initial rating process differed. The analysis assumes that the deal has not aged and is not intended to measure how the rating of the security might migrate over time, but rather how the initial rating of the security might have differed if key rating input parameters were varied. Parameter Sensitivities for the typical EMEA RMBS transaction are calculated by stressing key variable inputs in Moody's primary rating model. 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: Significantly different loss assumptions compared with our expectations at close due to either a change in economic conditions from our central scenario forecast or idiosyncratic performance factors would lead to rating actions. For instance, should economic conditions be worse than forecast, the higher defaults and loss severities resulting from a greater unemployment, worsening household affordability and a weaker housing market could result in a downgrade of the ratings. Deleveraging of the capital structure or conversely a deterioration in the notes available credit enhancement could result in an upgrade or a downgrade of the ratings, respectively. JAGUAR LAND: S&P Raises CCR to 'BB+', Outlook Stable ---------------------------------------------------- S&P Global Ratings said it has raised to 'BB+' from 'BB' its long-term corporate credit rating on U.K.-based premium auto manufacturer Jaguar Land Rover Automotive PLC (JLR). The outlook is stable. At the same time, S&P raised its issue ratings on the senior unsecured debt instruments issued by JLR to 'BB+' from 'BB', in line with the corporate credit rating. The '3' recovery rating on these debt instruments is unchanged, reflecting S&P's expectation of average recovery for debtholders (higher end of the 50%-70% range) in the event of a payment default. Furthermore, S&P has withdrawn the 'BB' issue and '3' recovery ratings on GBP500 million 8.25% notes due 2020 and $410 million 8.125% notes due 2021 as these debt instruments have been fully redeemed. The upgrade reflects S&P's view that JLR continues to strengthen its competitive position and business profile by demonstrating successful new model launches, including expanding into new market segments, and extending existing models. Notably, the Jaguar brand is being refreshed with new products such as the XE sedan, launched in May 2015, and more recently the F-Pace crossover available since April 2016. Land Rover is also benefiting from the new Discovery Sport, launched in February 2015. In fiscal 2016 (year to March 31, 2016), JLR's volumes were up 13% to about 522,000 due mainly to the XE and Discovery Sport. During the first four months of fiscal 2017 (year to July 30, 2016), these new models and the F-Pace drove volumes up 20% year- on-year, with Jaguar's volumes ahead by 80%. Volume growth has also been broadly spread by region, including China, which has seen a 28% increase so far this fiscal year. Further new and updated models are in the pipeline, including a Range Rover Evoque convertible (launched in June 2016) and a long-wheel base version of the Jaguar XF in China. Following the U.K.'s recent vote to leave the EU (Brexit), there are no immediate signs that JLR's U.K. volumes (which accounted for 21% of volumes and revenues during fiscal 2016) have been adversely affected. Record retail volumes in July, up 34% year- on-year (including the U.K. up 38%), also highlight the success of the new models. However, S&P do see a risk that U.K. car volumes could be lower than they otherwise would be, due to S&P's expectations of slower macroeconomic growth and weaker consumer confidence. S&P still expects volume growth to continue overall, driven by new models. S&P sees potential benefits to JLR's margins following the Brexit vote if a weaker pound sterling exchange rate against the U.S. dollar and euro is sustained, given significant export volumes being partly offset by historical hedges and potentially higher costs of imported components. However, S&P do not anticipate these benefits to fully offset the potential effect of weaker U.K. volumes. JLR's profit margins were lower in fiscal 2016, primarily due to weaker market conditions, model mix, and higher costs, and S&P expects this to remain the case. However, the S&P Global Ratings-adjusted EBITDA margin of 9.0% for fiscal 2016 remained ahead of many peers. S&P expects JLR's cash flow to remain strong, albeit with high capital expenditures (capex) leading to modestly negative free operating cash flow (FOCF). With zero adjusted debt as of fiscal 2016, JLR has significant financial flexibility in its stand- alone credit profile (SACP), which S&P has raised to 'bbb-' from 'bb+'. S&P's base-case scenario for JLR for fiscal 2017 and 2018 assumes: -- Global GDP growth of about 3% per year, with the U.K. at about 1%, the EU at 1%-2%, the U.S. at about 2%, and China at about 6%. S&P lowered its growth forecasts for the U.K. and EU following the Brexit vote, though these still show positive growth. -- S&P expects global light vehicle volumes to show continued growth of 2%-3% per year, with Asia-Pacific remaining the main growth market, and with the EU also ahead, while growth in the U.S. is slowing and Latin America continues to decline. -- For JLR, S&P forecasts stronger volume growth of 10%-20% per year, due to the success of new model launches. -- Stable reported EBITDA margins of about 14%-15%. -- Sizable capex in fiscal 2017 of GBP3.75 billion as guided by JLR, with continued heavy spending in following years. -- Potentially modestly negative FOCF. Limited annual dividend payments to Tata Motors, consistent with the GBP150 million paid in fiscal 2016. Based on these assumptions, S&P expects leverage metrics to be stronger than its previous expectations. S&P forecasts the following credit measures for JLR in fiscal 2017 and 2018: -- Stronger adjusted EBITDA and FFO in both years compared to fiscal 2016, with zero adjusted debt maintained in fiscal 2017 and only a very low level of adjusted debt in fiscal 2018. -- Leverage metrics for fiscal 2018 are below 0.5x adjusted debt to EBITDA and above 100% FFO to adjusted debt. Based on these assumptions, S&P arrives at these credit measures in fiscal 2017 and 2018 for Tata Motors: -- Stronger operating performance to offset negative FOCF, resulting in FFO to debt of about 40%. -- S&P expects debt to EBITDA of about 1.7x. S&P's assessment of JLR's business risk profile is supported by the group's well-established and improving market position as a global premium auto manufacturer, with well-recognized brands, particularly Range Rover, but increasingly Jaguar as well. JLR has a lengthening track record of successful product extension and development, which includes expanding into new market segments, and continues to improve its competitive position. These strengths are partly offset by JLR's still-modest size and more limited product range compared with larger global peers. JLR is ramping up its joint-venture production in China. Cyclical demand for premium and luxury cars is also a constraining factor in S&P's assessment. S&P's assessment of JLR's financial risk profile is supported by S&P's expectation of zero or very low adjusted debt and strong leverage metrics during the next two years. JLR also has sizable retained cash balances, which represent a source of financing and support strong liquidity. Dividend payments to Tata Motors are low, which enables JLR to retain cash flows for its own investment needs. Offsetting factors include heavy capex in areas such as vehicle programs and new capacity, which S&P expects to lead to modestly negative FOCF. S&P factors in the possibility of higher cash flow volatility in the event of stress. As of fiscal 2016, adjusted debt was zero. S&P makes analytical adjustments to reported gross debt of GBP2.5 billion, mainly by subtracting GBP4.4 billion for surplus cash (after deducting a haircut of GBP0.3 billion), and adding GBP0.6 billion for pensions and operating leases. JLR's SACP of 'bbb-' reflects a revised satisfactory business risk and unchanged intermediate financial risk profiles. S&P's liquidity assessment was raised to strong from adequate. JLR is a wholly-owned subsidiary of India-based Tata Motors Ltd., and accounts for more than 90% of the group's EBITDA, while accounting for about 45% of the group's reported industrial debt. S&P continues to regard JLR as a highly strategic entity of Tata Motors, reflecting S&P's view that JLR is unlikely to be sold, has a long-term commitment from its parent, and constitutes a significant proportion of the consolidated group. However, JLR is operationally separate and does not serve the same customer base. The rating on JLR is constrained by the 'BB+' rating on Tata Motors, as S&P sees a risk that Tata Motors could draw support from JLR in a credit-stress scenario. JLR is a U.K.-based leading automotive manufacturer focused on the premium segment, across Jaguar (sports saloon, sports cars, and luxury sports utility vehicles [SUVs]) and Land Rover (premium/luxury SUVs) brands. Fiscal 2016 revenues were GBP22.2 billion. The stable outlook reflects S&P's expectation that JLR will maintain steady profitability, and that Tata Motors will demonstrate a ratio of FFO to adjusted debt of about 40% over the next one-to-two years. S&P may raise its rating on JLR if S&P raises the rating on Tata Motors. This could occur if JLR's strong operating performance partly offsets higher capex, such that S&P expects Tata Motors to sustain its ratio of FFO to debt above 45%. Strong operating performance could be supported by further strengthening of JLR's product portfolio. S&P may lower the rating on JLR if S&P lowers the rating on Tata Motors. This could occur if operating performance weakens and capex is high, likely resulting in a ratio of FFO to debt below 30% on a sustained basis. A weaker operating performance could be a reflection of lower-than-expected success in new models or a more challenging operating environment, such as a larger than expected adverse impact from Brexit. MOY PARK: S&P Lowers CCR to 'BB-', Outlook Stable ------------------------------------------------- S&P Global Ratings said that it lowered its long-term corporate credit rating on U.K. poultry producer Moy Park Holdings Europe (Moy Park) to 'BB-' from 'BB'. The outlook is stable. At the same time, S&P lowered to 'BB-' from 'BB' its issue ratings on the existing GBP300 million senior unsecured notes due 2021. The recovery rating on these notes is unchanged at '3', reflecting S&P's expectation of average (50%-70%) recovery in the event of a payment default. Brazil-based meat processor JBS S.A. owns Moy Park. Its liquidity position has weakened to less-than-adequate following two consecutive quarters of cash drain caused by poor working capital management, lower-than-estimated operating cash flows, and the liquidation of derivative positions. JBS' financial flexibility has diminished -- it still has sizable short-term maturities and is finding hard to restore its margins at the group's main businesses, such as the U.S. beef and Brazilian poultry operation at Seara. As a result, S&P has downgraded JBS to 'BB' and revised the group credit profile (GCP) to 'bb'. The GCP forms the basis for S&P's assessment of the group support available to Moy Park. Moy Park is fully consolidated into JBS' operations and financial reporting and still meets S&P's criteria definition of an entity that is strategically important to the group. S&P's assessment is supported by its understanding that JBS S.A. is unlikely to sell Moy Park, that Moy Park is a part of the group's long-term strategy, and that Moy Park is reasonably successful at what it does. Given its group status, Moy Park's issuer credit rating is capped at one notch below the GCP. Because the GCP has been revised down, Moy Park will no longer benefit from a one-notch uplift for group support. Moy Park's business risk and financial risk profiles remain unchanged at weak and significant, respectively. S&P combines these to derive the 'bb-' anchor. The business risk assessment reflects Moy Park's geographic concentration in the U.K., Ireland, and France; limited product diversity, with over 75% of revenue derived from poultry products; and significant exposure to private label retailers, which tend to enjoy lower margins than branded products. These weaknesses are offset by Moy Park's position as the second-largest poultry producer in the U.K. and its strong market positions in the "chilled" and "ready-to-eat" segments. "We also view positively the supporting market conditions--market demand for poultry remains steady in the U.K. and management enjoys a track record of managing volatile raw material prices and avoiding disease outbreaks in its operations. We expect Moy Park to continue to record competitive profitability metrics compared with industry averages. That said, we see the product concentration and deflationary retail environment as significant challenges that limit the potential for a stronger business risk assessment at this time," S&P said. "Our financial risk profile assessment reflects our forecast that Moy Park's S&P Global Ratings-adjusted debt-to-EBITDA ratio will be about 3.0x-3.5x in 2016 and 2017. Adjusted debt stood at GBP405 million as of Dec. 31, 2015. The totals included trade receivables sold, operating leases, and unamortized borrowing costs of approximately GBP78 million. For the 2015 financial year, reported revenue stood at GBP1.44 billion and adjusted EBITDA at GBP117 million. We expect steady top-line growth and improved profitability going forward. We forecast that earnings will increase modestly, mainly based on volume growth, continued efficiency gains, and product innovation in poultry production. We anticipate that adjusted free operating cash flow will be at least GBP25 million as we expect working capital movements to be largely neutral and capital expenditure (capex) to be between 4%- 5% annually. The EBITDA interest coverage metric is likely to remain strong at 5x-6x, and as such we expect Moy Park will be able to comfortably meet the interest payments on its GBP300 million senior notes due 2021," S&P noted. In S&P's base case, it assumes: -- Revenue growth of 2%-4%, reflecting modest increases in consumer demand, offset by deflationary price pressures. -- Modest improvement in profitability driven by management's continued efficiency programs and procurement savings. -- Annual capex of about 4.5%-5.5% of revenues. Negligible movement in working capital requirements and no acquisitions. -- No dividend payments or early redemption of outstanding bonds. Based on these assumptions, S&P arrives at these credit metrics: -- Stable operating performance, resulting in adjusted EBITDA margins of 8.0%-8.5% in 2016 and 2017. -- Adjusted debt to EBITDA of 3.0x-3.5x in 2016 and 2017. -- Adjusted EBITDA interest coverage of 5.0x-6.0x in 2016 and 2017. The stable outlook reflects S&P's view that Moy Park will maintain fairly stable revenues and profitability enabling its adjusted debt-to-EBITDA to remain at 3.0x-3.5x and its EBITDA interest coverage to be 5.0x-6.0x while generating modest free cash flow, over the next 18-24 months. S&P also expects JBS S.A. to improve its operating performance by focusing on efficiency and exploiting its diverse product offerings so as to preserve debt protection metrics and generate cash flows. S&P do not expect Moy Park's financial policy to change -- management has stated that the group has no plans to increase debt leverage from current levels through debt-financed acquisitions or a step-up in the distribution of funds to shareholders. S&P could lower the rating should it lower the rating on its parent JBS, all other things being equal. This would likely occur if Moy Park's SACP was 'bb-' or lower and JBS's operating performance and cash flow generation weakened. This would result in higher leverage metrics for JBS than S&P forecasts in its base case and a deteriorating liquidity position. S&P could raise the ratings on Moy Park if JBS' operating performance and liquidity profile were to improve, causing S&P to raise its rating on it. This could occur if JBS were to enhance profit margins on its beef and poultry operations while improving its working capital management and extending its debt maturity profile. Alternatively, if the GCP remained at its current level and Moy Park's financial risk profile were to strengthen, with debt-to-EBITDA below 3.0x on a sustainable basis, S&P could revise upward its financial risk profile and raise the rating by one notch. ********* 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. 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Go to http://www.bankrupt.com/booksto order any title today. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Julie Anne Lopez, 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. 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