/raid1/www/Hosts/bankrupt/TCREUR_Public/181218.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
Tuesday, December 18, 2018, Vol. 19, No. 250
Headlines
F R A N C E
ALTICE FRANCE: Bank Debt Trades at 4% Off
SFR GROUP: Bank Debt Trades at 5% Off
G E R M A N Y
KLOECKNER PENTAPLAST: Bank Debt Trades at 12% Off
SAFARI BETEILIGUNGS: S&P Alters Outlook to Negative
I R E L A N D
OZLME V: Moody's Rates EUR12MM Class F Notes 'Ba2'
PROTEUS RMBS: S&P Gives (P)B+ Rating to EUR39MM Class E Notes
I T A L Y
ITALY: Budget Concessions May Not Be Enough to Placate Brussels
L U X E M B O U R G
ANACAP FINANCIAL: Moody's Reviews B1 Sr. Rating for Downgrade
N E T H E R L A N D S
OCTAL FINANCE: Moody's Withdraws B1 Senior Unsecured Bond Rating
R U S S I A
BANK URALSKY: Moody's Hikes Deposit Ratings to B2, Outlook Stable
S P A I N
BANKIA SA: Sells "Toxic" Real Estate Assets to Loan Star
MBS BANCAJA 3: Fitch Keeps CC Rating on Cl. E Debt on Watch Pos.
U N I T E D K I N G D O M
BLOODHOUND: Ian Warhurst Buys Project for Undisclosed Amount
DOUBLEPLAY I: S&P Withdraws 'CCC+' ICR Amid Global Media Deal
LAURA ASHLEY: Plans to Close About 40 Stores in UK
MONARCH AIRLINES: Greybull Puts Up Engineering Unit for Sale
RMAC SECURITIES 2006-NS1: Fitch Affirms BB+ Ratings on 3 Tranches
VUE INTERNATIONAL: S&P Withdraws B Rating on GBP65MM Loans
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F R A N C E
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ALTICE FRANCE: Bank Debt Trades at 4% Off
-----------------------------------------
Participations in a syndicated loan under which Altice France Est
[Altice Blue One SAS] is a borrower traded in the secondary
market at 95.59 cents-on-the-dollar during the week ended Friday,
November 23, 2018, according to data compiled by LSTA/Thomson
Reuters MTM Pricing. This represents a decrease of 1.98
percentage points from the previous week. Altice France pays 400
basis points above LIBOR to borrow under the $2.50 billion
facility. The bank loan matures on July 16, 2026. Moody's rates
the loan 'B1' and Standard & Poor's gave a 'B' rating to the
loan. The loan is one of the biggest gainers and losers among
247 widely quoted syndicated loans with five or more bids in
secondary trading for the week ended Friday, November 23.
Altice France Est SAS provides cable operator services. The
company was incorporated in 2002 and is based in Lampertheim,
France. The company operates as a subsidiary of Altice S.A.
SFR GROUP: Bank Debt Trades at 5% Off
-------------------------------------
Participations in a syndicated loan under which SFR Group SA
[ex-Numericable SAS] is a borrower traded in the secondary market
at 94.72 cents-on-the-dollar during the week ended Friday,
November 23, 2018, according to data compiled by LSTA/Thomson
Reuters MTM Pricing. This represents a decrease of 2.20
percentage points from the previous week. SFR Group pays 300
basis points above LIBOR to borrow under the $2.150 billion
facility. The bank loan matures on January 6, 2026. Moody's
rates the loan 'B1' and Standard & Poor's gave a 'B' rating to
the loan. The loan is one of the biggest gainers and losers
among 247 widely quoted syndicated loans with five or more bids
in secondary trading for the week ended Friday, November 23.
SFR Group SA, now known as Altice France SA, is a France-based
company, a cable operator having its activities in France.
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G E R M A N Y
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KLOECKNER PENTAPLAST: Bank Debt Trades at 12% Off
-------------------------------------------------
Participations in a syndicated loan under which Kloeckner
Pentaplast SA is a borrower traded in the secondary market at
88.46 cents-on-the-dollar during the week ended Friday, November
23, 2018, according to data compiled by LSTA/Thomson Reuters MTM
Pricing. This represents a decrease of 7.01 percentage points
from the previous week. Kloeckner Pentaplast pays 425 basis
points above LIBOR to borrow under the $835 million facility.
The bank loan matures on June 17, 2022. Moody's rates the loan
'B3' and Standard & Poor's gave a 'B' rating to the loan. The
loan is one of the biggest gainers and losers among 247 widely
quoted syndicated loans with five or more bids in secondary
trading for the week ended Friday, November 23.
Kloeckner Pentaplast SA, headquartered in Montabaur, Germany and
with legal domicile in Luxembourg, is a leader in the
manufacturing of rigid plastic films for the pharmaceuticals,
food, medical, electronics, and other packaging industries.
SAFARI BETEILIGUNGS: S&P Alters Outlook to Negative
---------------------------------------------------
S&P Global Ratings said that the outlook revision to negative on
Safari Beteiligungs Gmbh reflects the risk of further
deterioration in Safari's operating performance in 2019, as a
result of the implementation of the new gaming ordinance
affecting amusement with prize (AWP) machines in Germany. While
the previous regulatory change -- the Interstate Treaty,
introduced in July 2017 -- was designed to control the supply of
AWPs, the recent implementation of the gaming ordinance is
designed to reduce their attractiveness (in other words, lowering
demand).
These major changes include the manual start of games instead of
auto-start, zero-setting of AWPs after three hours' playing time,
and the restriction that a player can request only one unlocking
card from the arcade operator at a time, to limit the amount of
time and money spent on AWPs. The gaming ordinance will require
all AWPs to have an unlocking card from February 2021.
When the government introduced the new gaming ordinance in
November, Safari proactively opted to replace some of its
existing machines with new machines with an unlocking card.
However, Safari's customers did not respond positively to the new
AWPs, especially those AWPs with unlocking cards, and the daily
gross gaming revenue (GGR) per machine has dropped significantly.
Although it is too early to draw conclusions on the long-term
effects of this change, the company announced that the AWPs with
unlocking cards have been performing significantly weaker than
AWPs without the cards, leading to an overall revenue decrease of
20%-30% in recent weeks. S&P believes that Safari will be able to
partly offset this impact by applying mitigating actions, such as
changing gaming-packages in the AWPs in order to improve actual
performance, testing new set-ups in the arcades, and increasing
the ratio of AWPs without the unlocking cards versus the AWPs
with the cards. However, S&P expects the daily GGR per machine
will decrease to about EUR94 to EUR98 in 2019 from the expected
average of EUR110 to EUR113 during 2018, resulting in a decline
of revenues of about 15%-17% in the next 12 months, and an
increase in leverage to above 5.0x with negative free operating
cash flow (FOCF) generation.
Other regulatory changes are also challenging Safari's future
scope of operations. After the enforcement of the German
Interstate Treaty in July 2017, the majority of municipalities
granted Safari Holding hardship exemptions until July 2021, while
others offered active toleration. S&P understands that active
tolerations currently represent about 15% of the company's German
arcades, and S&P estimates that about half of these tolerations
will be revoked in the next few months, leading to a decline in
AWP machine numbers.
Safari's earnings concentration -- both geographically and in
terms of product offering -- and its limited EBITDA size continue
to constrain the company's business risk assessment. Although the
company is continuing to increase the number of arcades in the
Netherlands, it still derives about 95% of its revenues and
EBITDA from Germany, so it remains highly exposed to future
market changes.
Online gaming is only permitted in one German state, Schleswig-
Holstein, which points to limited growth potential compared with
other European gaming companies that operate in countries where
online gaming is permitted.
In the German coin gaming arcade industry, Safari remains the
second largest operator (after Novomatic's Admiral Play), with
about 400 arcades in Germany and eight in the Netherlands. The
sector continues to be highly fragmented, with the top five
operators accounting for less than 20% of the market. Over the
past four years, the company has been capitalizing on the highly
fragmented German gaming arcade market by acquiring an average of
about 20 arcades per year. Safari's business assessment is also
supported by its strong profitability, higher than most of its
European peers'.
S&P said, "We anticipate that the company will continue pursuing
bolt-on acquisitions in order to offset the revenue loss arising
from the reduction of GGR per machine, as well as the closure of
non-compliant sites. In Germany, we forecast Safari to operate an
average of 8,600 AWP machines in 2018 and 8,400 in 2019, versus
8,800 during 2017, while in the Netherlands we expect the company
to operate 890 machines in 2018 and 1,000 in 2019. We currently
estimate that Safari's S&P Global Ratings-adjusted EBITDA (after
incorporating the operating lease adjustment) will be about
EUR120 million in 2018, EUR85 million-EUR95 million in 2019, and
EUR100 million-EUR110 million in 2020.
"Our assessment of Safari's financial risk profile reflects the
private equity ownership and the consequent risk of a more
aggressive financial policy. For example, cash-interest-paying
debt increased to EUR350 million, following a recapitalization.
As a result, the company's financial debt increased to EUR350
million from EUR204 million (including a EUR44 million
shareholder loan) in first-quarter 2018, leading to expected
adjusted leverage of 3.9x by end-2018.
"Our rating on Safari also takes into account the risk arising
from the full implementation of the Interstate Treaty starting in
July 2021. We do not currently have enough information to fully
assess the potential effect the treaty could have on Safari's
credit profile. However, we will continue to monitor future
updates.
"The negative outlook reflects a one-in-three likelihood that we
could lower the ratings over the next 12 months if the acceptance
of the new generation of AWPs remains low and the mitigating
measures are not effective, therefore leading to a significant
deterioration in the company's revenues, EBITDA, and cash flows.
"We could take a negative rating action if the group's operating
performance falters to such an extent that its leverage increases
above 6.0x or FOCF turns negative on a sustainable basis. Such a
scenario could arise from adverse regulatory changes such as the
gaming ordinance, which could lead to a prolonged reduction on
the daily GGR per machine.
"We could also downgrade Safari if the company's leverage
increases due to material debt-financed acquisitions or
shareholder payments, or if liquidity deteriorates significantly.
"We could consider revising the outlook to stable if the
company's mitigating measures offset the initial adverse impact
of the gaming ordinance and if the expected bolt-on acquisitions
of legal compliant arcades offset some of the effect of
downsizing multi-concession sites to single-concession arcades.
In such a scenario, we would expect adjusted leverage to remain
below 6.0x and FOCF to remain positive."
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I R E L A N D
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OZLME V: Moody's Rates EUR12MM Class F Notes 'Ba2'
--------------------------------------------------
Moody's Investors Service announced that it has assigned the
following definitive ratings to the notes issued by OZLME V
Designated Activity Company:
EUR248,000,000 Class A Senior Secured Floating Rate Notes due
2032, Definitive Rating Assigned Aaa (sf)
EUR19,000,000 Class B-1 Senior Secured Floating Rate Notes due
2032, Definitive Rating Assigned Aa2 (sf)
EUR20,000,000 Class B-2 Senior Secured Fixed Rate Notes due
2032, Definitive Rating Assigned Aa2 (sf)
EUR27,000,000 Class C Senior Secured Deferrable Floating Rate
Notes due 2032, Definitive Rating Assigned A2 (sf)
EUR24,000,000 Class D Senior Secured Deferrable Floating Rate
Notes due 2032, Definitive Rating Assigned Baa3 (sf)
EUR22,000,000 Class E Senior Secured Deferrable Floating Rate
Notes due 2032, Definitive Rating Assigned Ba2 (sf)
EUR12,000,000 Class F Senior Secured Deferrable Floating Rate
Notes due 2032, Definitive Rating Assigned B2 (sf)
RATINGS RATIONALE
Moody's definitive ratings of the rated notes reflect the risks
from defaults on the underlying portfolio of loans given the
characteristics and eligibility criteria of the constituent
assets, the relevant portfolio tests and covenants, as well as
the transaction's capital and legal structure. Furthermore,
Moody's considers that the collateral manager Och-Ziff Europe
Loan Management Limited has sufficient experience and operational
capacity and is capable of managing this CLO.
The Issuer is a managed cash flow CLO. At least 92.5% of the
portfolio must consist of senior secured obligations and up to
7.5% of the portfolio may consist of senior unsecured
obligations, second-lien loans, mezzanine obligations and high
yield bonds. The portfolio is expected to be 80% ramped as of the
closing date and to comprise of predominantly corporate loans to
obligors domiciled in Western Europe.
Och-Ziff Europe will manage the CLO. It will direct the
selection, acquisition and disposition of collateral on behalf of
the Issuer and may engage in trading activity, including
discretionary trading, during the transaction's roughly four and
a half year reinvestment period. Thereafter, purchases are
permitted using principal proceeds from unscheduled principal
payments and proceeds from sales of credit impaired obligations
and are subject to certain restrictions.
In addition to the seven classes of notes rated by Moody's, the
Issuer will issue EUR40 million of Subordinated Notes which are
not rated.
The transaction incorporates interest and par coverage tests
which, if triggered, divert interest and principal proceeds to
pay down the notes in order of seniority.
Methodology underlying the rating action:
The principal methodology used in these ratings was "Moody's
Global Approach to Rating Collateralized Loan Obligations"
published in August 2017.
The Credit Ratings of the notes issued OZLME V Designated
Activity Company were assigned in accordance with Moody's
existing Methodology entitled "Moody's Global Approach to Rating
Collateralized Loan Obligations" dated August 31, 2017. Please
note that on November 14, 2018, Moody's released a Request for
Comment, in which it has requested market feedback on potential
revisions to its Methodology for Collateralized Loan Obligations.
If the revised Methodology is implemented as proposed, the Credit
Ratings of the notes issued by OZLME V Designated Activity
Company may be neutrally affected. Please refer to Moody's
Request for Comment, titled " Proposed Update to Moody's Global
Approach to Rating Collateralized Loan Obligations" for further
details regarding the implications of the proposed Methodology
revisions on certain Credit Ratings.
Factors that would lead to an upgrade or downgrade of the
ratings:
The rated notes' performance is subject to uncertainty. The
notes' performance is sensitive to the performance of the
underlying portfolio, which in turn depends on economic and
credit conditions that may change. The collateral manager's
investment decisions and management of the transaction will also
affect the notes' performance.
Moody's modeled the transaction using CDOEdge, a cash flow model
based on the Binomial Expansion Technique, as described in
Section 2.3 of the "Moody's Global Approach to Rating
Collateralized Loan Obligations" rating methodology published in
August 2017.
Moody's used the following base-case modeling assumptions:
Par Amount: EUR 400,000,000
Diversity Score: 44
Weighted Average Rating Factor (WARF): 2880
Weighted Average Spread (WAS): 3.60%
Weighted Average Coupon (WAC): 4.50%
Weighted Average Recovery Rate (WARR): 44%
Weighted Average Life (WAL): 8.5 years
Moody's has addressed the potential exposure to obligors
domiciled in countries with local currency ceiling (LCC) of A1 or
below. As per the portfolio constraints, exposures to countries
with LCC of A1 or below cannot exceed 10%, with exposures to LCC
of Baa1 to Baa3 further limited to 5% and with exposures of LCC
below Baa3 not greater than 0%.
PROTEUS RMBS: S&P Gives (P)B+ Rating to EUR39MM Class E Notes
-------------------------------------------------------------
S&P Global Ratings has assigned its preliminary credit ratings to
Proteus RMBS DAC's (Proteus) class A, B-Dfrd, C-Dfrd, D-Dfrd, and
E-Dfrd notes. Proteus will also issue unrated class F-Dfrd, Y
notes, and X certificates.
Proteus is a securitization of a pool of buy-to-let (BTL) and
owner-occupied residential mortgage loans secured on properties
in Ireland, other than 77 properties that are located outside
Ireland, originated by Danske A/S.
On Oct. 23, 2017, the seller, Proteus Funding DAC, agreed to
purchase a portfolio of Irish residential mortgages from the
vendor, Danske Bank A/S. On the Dec. 15, 2017 closing date, the
issuer used the note issuance proceeds of the class A, B, C, X,
and Y notes (original notes) to purchase the beneficial interest
of the same portfolio from the seller. After the closing date,
the legal title of the mortgages moved to the servicer, Pepper
Finance Corporation (Ireland) DAC, (Pepper) from the vendor. The
legal title remains with the servicer, unless a perfection
trigger occurs.
On the closing date, S&P did not rate the original notes. On the
new issue date, expected to be in December 2018, the issuer will
issue class A, B-Dfrd, C-Dfrd, D-Dfrd, E-Dfrd, F-Dfrd, Y notes,
and X certificates (new notes), and will exchange the original
notes with the new notes. The new notes will be backed by the
same collateral.
At closing, the transaction did not benefit from external
liquidity support. Protection to the noteholders was provided
only by subordination and excess spread. Following the new issue
date, Proteus will have two reserve funds.
The rated notes' interest rate will be based on an index of
three-month Euro Interbank Offered Rate (EURIBOR). Within the
mortgage pool, the loans are linked to either the European
Central Bank (ECB) base rate, or a standard variable rate (SVR).
There will be no swap in the transaction to cover the interest
rate mismatches between the assets and liabilities.
S&P said, "Our preliminary ratings reflect our assessment of the
transaction's payment structure, cash flow mechanics, and the
results of our cash flow analysis to assess whether the notes
would be repaid under stress test scenarios. Subordination and
the general reserve fund provide credit enhancement to the rated
notes. However, due to the stresses we apply in our analysis the
general reserve never top up under our rated scenario. The notes
will amortize sequentially, and do not include a trigger to
switch to pro rata amortization. Subject to certain documented
conditions, principal can be used to pay interest and further
liquidity is provided through the liquidity reserve fund.
"Taking these factors into account, we consider the available
credit enhancement for the rated notes to be commensurate with
the preliminary ratings that we have assigned. Interest on the
class B-Dfrd to E-Dfrd notes can be deferred, so our analysis of
these notes addresses the ultimate payment of principal and the
ultimate payment of interest. Once one of the mezzanine or junior
notes become the most senior outstanding class of notes, interest
cannot defer anymore, but previously unpaid interest shortfalls
can be repaid by the transaction's legal maturity date.
"Our preliminary ratings also reflect the application of our
criteria for structured finance ratings above the sovereign. Our
RAS criteria designate the country risk sensitivity for
residential mortgage-backed securities (RMBS) as moderate. Under
our RAS criteria, this transaction's notes can therefore be rated
four notches above the sovereign rating, if they have sufficient
credit enhancement to pass at least a severe stress. However, as
all six of the conditions in paragraph 42 of the RAS criteria are
met, we can assign ratings in this transaction up to a maximum of
six notches (two additional notches of uplift for the most senior
class of notes) above the sovereign rating, subject to credit
enhancement being sufficient to pass an extreme stress. As our
long-term sovereign rating on Ireland is 'A+', our RAS criteria
do not currently constrain our ratings on any class of notes."
PRELIMINARY RATINGS ASSIGNED
Proteus RMBS DAC
Class Prelim. Amount (EUR)
Rating
A AAA (sf) 1,199,601,000
B-Dfrd AA- (sf) 86,812,000
C-Dfrd A- (sf) 63,137,000
D-Dfrd BBB- (sf) 47,353,000
E-Dfrd B+ (sf) 39,461,000
F-Dfrd NR 139,908,000
Y NR 2,000,000
X certificates NR 150,000
NR--Not rated.
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I T A L Y
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ITALY: Budget Concessions May Not Be Enough to Placate Brussels
---------------------------------------------------------------
Miles Johnson at The Financial Times reports that the concessions
offered by the Italian government on its planned budget are on
the right track but may not be enough to placate Brussels, the
EU's economy commissioner has warned.
"It is a step in the right direction but we are not there yet,
there are still steps to be taken, perhaps on both sides," the FT
quotes Pierre Moscovici as saying on Dec. 13.
Rome has proposed cutting its planned budget deficit for 2019 to
2.04% from 2.4%of gross domestic product, the FT discloses. The
move marks a significant U-turn for the populist Italian
coalition, which had previously vowed to stick to plans described
by Brussels as an "unprecedented" breach of its spending rules,
the FT notes.
According to the FT, the leaders of the coalition parties have
said their spending programmes would stay intact. They said
their main election promises, including a reduction in Italy's
retirement age and higher welfare payments to the poor, would
remain unchanged, the FT relates.
Dario Galli, Italy's deputy industry minister from the League,
said on Dec. 13 a significant sum could be cut from the pension
reform and so-called citizens' income welfare payments to hit the
new deficit target, the FT recounts.
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L U X E M B O U R G
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ANACAP FINANCIAL: Moody's Reviews B1 Sr. Rating for Downgrade
-------------------------------------------------------------
Moody's Investors Service has taken rating actions on seven
finance companies within the EMEA region. These rating actions
follow the publication of Moody's new Finance Companies rating
methodology, which is now the primary methodology that Moody's
uses to rate finance companies globally, except in jurisdictions
where certain regulatory requirements must be fulfilled prior to
the new methodology's implementation.
Among the rating actions taken are:
- Upgrade of the Corporate Family Rating of Ireland-based Abbey
International Finance Limited to Ba3 from B1 and affirmation
of its local and foreign currency B1 issuer ratings. The
outlook on the issuer remains Stable.
- Affirmation of the CFR of Anacap Financial Europe S.A. SICAV-
RAIF (AFE, registered in Luxembourg, operating company
domiciled in the UK) at B1 and the placing on review for
downgrade of its B1 local currency senior secured rating. The
outlook on the issuer changed to Rating under Review from
Stable.
- Affirmation of the CFR of Norway-based B2Holding ASA
(B2Holding) at Ba3 and the placing on review for downgrade
of its local and foreign currency Ba3 issuer ratings. The
outlook on the issuer changed to Rating under Review from
Stable.
- Affirmation of the CFR of UK-based Cabot Financial Ltd
(Cabot) at B1 and the placing on review for downgrade of
Cabot Financial (Luxembourg) II S.A and Cabot Financial
(Luxembourg) S.A.'s local and foreign currency B1 senior
secured ratings respectively. The outlook on Cabot Financial
(Luxembourg) II S.A and Cabot Financial (Luxembourg) S.A.
changed to Rating under Review from Stable
- Placing on review for upgrade the ba2 Baseline Credit
Assessment (BCA) (equivalent to its standalone credit
profile), and placing on review for upgrade the Baa1 local
currency long term issuer ratings of Latvia-based JSC
Development Finance Institution Altum (Altum). The outlook on
the issuer changed to Rating under Review from Stable.
- Assignment of a Ba2 CFR to Botswana-based Letshego Holdings
Limited (Letshego) and affirmation of its Ba3 local and
foreign currency long term issuer ratings. The outlook on the
issuer remains stable.
- Upgrade of the standalone credit profile of Germany-based
Siemens Bank GmbH (Siemens Bank) to baa3 from ba1 and the
affirmation of its A1 local and foreign currency long term
issuer ratings. The outlook on the issuer remains stable.
Moody's has also withdrawn the outlooks on Abbey International,
Altum, AFE, B2Holding, Cabot, Letshego and Siemens Bank existing
instrument, issuer and corporate family ratings -- where
applicable -- for its own business reasons. The withdrawal of
these outlooks has no impact on the issuer-level rating outlooks
for Abbey International, Altum, AFE, B2Holding, Cabot, Letshego
and Siemens Bank.
RATINGS RATIONALE
Moody's rating actions on Altum, Letshego and Siemens Bank follow
the publication of Moody's new Finance Companies rating
methodology and were driven by revisions of their standalone
profile, resulting from the significant changes and enhancements
under the new methodology relative to Moody's previous
methodology for rating these firms. These changes and
enhancements for rating finance companies include the
introduction of new financial ratios such as a net charge-offs
ratio and a debt maturity coverage ratio, the dynamic weighting
of operating environment conditions that can adversely influence
firms' creditworthiness, and the incorporation of specific
qualitative factors as direct notching adjustments to ratings.
The opening of a review for downgrade on AFE, B2Holding and Cabot
long-term issuer or senior secured ratings was driven by the
application of the loss given default framework for speculative-
grade issuers, which has been introduced for the first time as
part of the implementation of the new Finance Companies
methodology.
The rating action on Abbey was driven by both revision of its
standalone profile resulting from changes under the new
methodology, and the application of the loss given default
framework.
FIRM-SPECIFIC CONSIDERATIONS
Moody's specific rating considerations for the issuers affected
by these rating actions is as follows:
Abbey International Finance Limited (Abbey International)
Moody's upgraded the CFR of Abbey International to Ba3 from B1
and affirmed its B1 local and foreign currency issuer ratings.
The upgrade of Abbey International's CFR reflects its (i) strong
capital adequacy and liquidity; (ii) growing and profitable
insurance business, providing some diversification from leasing.
The company's CFR, however, is constrained by its small
franchise, with high dependence on one client in its US leasing
business. In addition, Abbey International's growing venture
capital business entails higher risks than its larger leasing and
insurance operations. Abbey International is strongly
capitalized, with Tangible Common Equity-to-Tangible Managed
Assets ratio of 48.5% in December 2017, a key credit strength.
The company holds a solid liquidity cushion against its very low
borrowings with no unsecured debt and secured loans accounting
for 10% of its gross tangible assets. Abbey International's good
earnings generation provides additional support to its solvency.
The firm's conservative financial structure partly mitigates its
weak business profile and gives it some financial flexibility for
expansion. Abbey International plans to further grow its
insurance and venture capital businesses, which, together with
the non-US leasing, should generate most of the firm's revenues
in the next few years.
The affirmation of Abbey International's B1 Issuer ratings is
driven by the upgrade of its CFR to Ba3 and one notch lower
issuer rating due to the structural subordination of unsecured
obligations under the LGD model.
The stable outlook balances (i) the execution risk associated
with any strategy change and the evolving risk profile of the
firm, and (ii) the prospect that, if successful, the business
would benefit from a more diversified franchise.
What could change the rating up/down
Abbey International's CFR could be upgraded if the company
demonstrates a successful broadening of the leasing business away
from its key relationship with its single largest client, without
taking undue risks. Abbey International's issuer rating could be
upgraded due to a positive change to its debt capital structure
that would increase the recovery rate for senior unsecured debt
classes.
Abbey International's CFR could be downgraded if the company's
leasing business with the US-based client were lost, without
replacement from other anchor clients; or if its risk appetite
increased substantially through weaker underwriting standards in
its insurance business or larger venture capital investments in
startup companies. Materially increased leverage through secured
borrowings could reduce the loss-absorbing capacity of the firm
and exert downward pressure on the CFR and issuer ratings.
Anacap Financial Europe S.A. SICAV-RAIF (AFE)
Moody's affirmed the B1 CFR of AFE and placed on review for
downgrade the B1 rating on AFE's EUR325 million backed senior
secured notes.
The affirmation of the B1 CFR reflects (i) AFE's variable cost
structure with limited fixed costs, resulting in strong
profitability and scaling flexibility; (ii) Moody's expectations
that leverage, measured as gross debt to adjusted EBITDA, will
remain well below 5.0x; (iii) limited equity to provide loss
absorption to creditors in an unlikely event of default; and (iv)
weak underlying cash flows when excluding cash needed to maintain
expected remaining collections. The CFR also takes into account
AFE's high degree of supplier concentration and its small
franchise compared to peers.
The review for downgrade on AFE's backed senior secured rating
reflects the application of Moody's Loss Given Default for
Speculative-Grade Companies and their priorities of claims and
asset coverage in the company's capital stack, which could
potentially lead to a one notch downgrade.
What could change the rating up/down
AFE's CFR could be upgraded because of (i) return on assets
increasing and stabilising above 2%; (ii) interest coverage,
defined as adjusted EBITDA to interest expense, increasing above
5.0x; (iii) expectations that leverage will remain below 3.8x;
and/or (iv) material improvements in liquidity position and
underlying cash flow generation.
Conversely, AFE's CFR could be downgraded if (i) return on assets
drop below 1%; (ii) interest coverage falling below 3.5x; (iii)
tangible common equity drops below zero absent other mitigating
factors; and/or (iv) the liquidity and cash flow profile
deteriorates.
The rating on AFE's senior secured notes could be downgraded
because of the amount of debt considered senior to the notes,
predominantly the drawings under the EUR90 million revolving
credit facility.
B2Holding ASA (B2Holding)
Moody's affirmed the Ba3 CFR of B2Holding and placed on review
for downgrade B2Holding's Ba3 local and foreign currency issuer
ratings.
The affirmation of the Ba3 CFR reflects B2Holding's: (i) good
historical and anticipated financial performance; (ii) strong
capitalisation and leverage metrics compared to peers; and (iii)
well-diversified portfolio of non-performing loans (NPL),
comprising debt across 20 countries and spread between secured
and unsecured debt; a strength despite a high proportion in
countries Moody's considers to have less mature NPL markets.
These strengths are balanced against: (i) risks related to the
company's rapid historical growth, which Moody's expect will
continue albeit at a slower pace, and the company's limited track
record since its 2011 inception; (ii) fast liquidity consumption
because of the rapid growth, thereby increasing funding needs
beyond what the maturity schedule implies; and (iii) high revenue
concentration of purchased NPLs, with only limited revenue
stemming from third party collection and other sources.
The review for downgrade on B2Holding's issuer rating reflects
the application of Moody's Loss Given Default for Speculative-
Grade Companies and their priorities of claims and asset coverage
in the company's capital stack, which could potentially lead to a
one notch downgrade.
What could change the rating up/down
Moody's could upgrade B2Holding's CFR if the company successfully
meets its financial targets while (i) reducing liquidity risk;
and/or (ii) reducing operational- and execution risks related to
its rapid expansion.
Conversely, B2Holding's CFR could be downgraded if the company's
(i) liquidity position deteriorates beyond Moody's expectations,
for example if the revolving credit facility is fully utilised
over a prolonged period or the company is unable to reduce RCF
utilisation and extend its maturity profile through new bond
issuance over the next 12-18 months; (ii) capitalisation falls
materially, with tangible common equity to tangible assets
dropping below 15%; and/or (iii) profitability metrics falls
below peers.
B2Holding's issuer rating could be downgraded because of the
assumed amount of drawings under its EUR510 million revolving
credit facility, which is senior to the company's senior
unsecured liabilities.
Cabot Financial Ltd (Cabot)
Moody's affirmed the CFR of Cabot at B1 and placed on review for
downgrade Cabot Financial (Luxembourg) II S.A and Cabot Financial
(Luxembourg) S.A.'s B1 backed senior secured ratings.
The affirmation of Cabot's CFR reflects (i) the firm's
competitive edge supported by its leading position in the UK debt
purchasing industry; and (ii) Cabot's enhanced operating
diversification, particularly in terms of sources of revenue,
which the agency expects to create cost synergies and improve the
firm's ability to generate stable earnings streams . The CFR
remains constrained by the firm's relatively high leverage which
limits financial flexibility.
Cabot's 120-month estimated remaining collections (ERC) stood at
GBP2.6 billion as of end-September 2018, higher than all other UK
competitors. Cabot's scale supports its ability to absorb
compliance costs and investments in technological innovation,
while its strong track-record of regulatory compliance is
attractive to vendors facing regulatory scrutiny and conduct-
related costs. Moody's expects that such a dominant franchise,
combined with Cabot's track record of adequately pricing
purchased portfolios, will support Cabot's cash flow generation
capacity, and in turn keep its leverage metric well under 5x. As
of the end of September 2018, Moody's calculates Cabot's debt at
4.2x EBITDA.
The review for downgrade on Cabot's financing vehicles senior
secured ratings reflects the application of Moody's Loss Given
Default for Speculative-Grade Companies and their priorities of
claims and asset coverage in the company's capital stack, which
could potentially lead to a one notch downgrade.
What could change the rating up/down
An expectation that Cabot's long-term strategy will lead to an
improvement of its credit fundamentals -- such as at a minimum a
combination of a decrease of the leverage metric (gross debt-to-
adjusted EBITDA) at under 4x, and of an increase of the interest
coverage (adjusted EBITDA-to-interest expense) at around or above
3x, while maintaining other financial metrics and ratios at
current levels - could lead to an upgrade of Cabot's ratings.
Cabot's CFR could be downgraded due to (i) significant
deterioration in profitability metrics; or (ii) a further
increase in leverage or sustained decline in operating
performance, leading to a debt ratio which is higher than 5x
adjusted EBITDA; or (iii) a significant decline in interest
coverage, with an adjusted EBITDA-to-interest expense ratio
around or below 2.0x. The senior secured rating's of Cabot's
funding vehicles could be downgraded due to (i) a downgrade of
the B1 CFR; or (ii) further utilization of the revolving credit
facility (RCF), the most senior class of debt in Cabot's
liability structure, which would lower the recovery rate for more
junior debt classes.
JSC Development Finance Institution Altum (Altum)
Moody's has placed on review for upgrade the Baa1 long-term
issuer rating of Altum as well as the Baseline Credit Assessment
(BCA) (equivalent to the standalone credit assessment for a
Government Related Issuer (GRI) under the Finance Companies
methodology), of ba2. The short-term issuer rating of P-2 was
affirmed.
The review for upgrade reflects the potential for a higher
overall assessment under the combined application of the updated
Finance Companies methodology (which determines the standalone
assessment or BCA) and the GRI methodology (which determines the
rating uplift on the basis of support assumptions from the
sovereign, Latvia (A3 stable)). Altum is a Latvian government
owned development institution with a mandate to promote the
growth of the Latvian economy. It is the only development
institution in Latvia, and its funding profile is characterised
by both state programs and EU structural funds, complemented by a
small share of market funding.
The updated methodology enables an enhanced ability to reflect
the unique standing and funding conditions of Altum reflecting:
1) its position in the industry, and the scope of its policy
mandate to provide a distribution channel for state and EU
program funds to both end-customers and other financial
institutions, 2) the large share of loss coverage incorporated in
the funding programmes and low refinancing risks.
What could change the rating up/down
The review for upgrade will consider the position of the company
in the industry, both in terms of competition, industry stability
and product risk, as well as the evaluation of key aspects of the
company's financial strength. More specifically, the strengths of
the issuer's market position within the scope of a quasi-public
policy mandate in combination with the company's unique funding
profile have the potential to lead to a higher BCA outcome. As a
result, the uplift potential for the issuer rating from a likely
higher BCA will also have to be re-assessed as part of the
ratings review. The affirmation of the P-2 issuer rating reflects
no potential for the long-term issuer rating to exceed A3 at the
closure of the review.
Altum's ratings could experience downward pressure if the
company's position in the industry deteriorates, for example
through a state decision to alter the company's mandate with
detrimental impact on its franchise and currently largely
insulated competitive position, unwind programmes or funding, or
sell parts of or the entire company.
Letshego Holdings Limited (Letshego)
Moody's assigned a Ba2 CFR to Letshego and affirmed its Ba3 long
term issuer ratings.
The affirmation of Letshego's issuer ratings captures revisions
of its standalone profile resulting from changes under the new
methodology, and the application of the loss given default
framework.
Letshego's Ba2 CFR reflects (1) the company's solid
capitalisation and profitability, supported by its niche, low-
cost, franchise, and (2) Letshego's growing diversification
across regional countries, which makes the company more resilient
to an adverse change in any one of its operating markets. The
rating balances these strengths against Letshego's (3) narrow,
albeit gradually diversifying, business model, with a high
reliance on payroll deductions for loan repayment collections,
(4) high exposure to foreign exchange risk, (5) elevated asset
quality risks, and (6) dependence on market-sensitive wholesale
funding; although actions are being taken to address this
weakness.
Letshego has large solvency buffers (capitalization and
profitability) that will easily absorb credit costs over the next
12 to 18 months. As of June-end 2018, Letsthego's tangible common
equity to tangible managed assets ratio was robust at 38%.
Additionally, Letshego exhibits strong cash generating capability
with an annualized ratio of funds from operations to total debt
of 22% in H1 2018. Moody's expects the company's FFO to total
debt ratio to decline over time as the company raises more long-
term debt but to remain at robust levels.
The stable outlook on Letshego reflects our expectation that the
company's financial fundamentals will remain relatively stable
over the next 12 to 18 months, despite elevated credit risks from
its regional and lending expansion.
What could change the rating up/down
An upgrade of the company's ratings would depend on Letshego
successfully developing broader African financial services
operations, while maintaining strong profitability and
capitalisation, and strengthening its liquidity profile.
Letshego's issuer ratings could be upgraded due to a positive
change to its debt capital structure that would increase the
recovery rate for senior unsecured debt classes.
Negative rating pressure could be exerted on Letshego's ratings
if regional authorities in the company's main operating markets
change the terms of, or impose restrictions on, the deduction (at
source) of loan repayments from the wages of public-sector
employees, leading to a sharp rise in bad debts and impairment
costs. In addition, negative pressure could be exerted on the
rating if (1) Letshego's expansion in other sub-Saharan markets,
client segments and products, results in a material weakening of
asset quality and profitability metrics; or (2) Letshego's
capitalisation metrics were to materially weaken. Letshego's
issuer ratings could be downgraded due to adverse changes to its
debt capital structure that would lower the recovery rate for
senior unsecured debt classes.
Siemens Bank GmbH (Siemens Bank)
Moody's upgraded the standalone credit profile of Siemens Bank to
baa3 from ba1, and affirmed its A1 long term issuer ratings.
The affirmation of Siemens Bank's A1 issuer ratings reflect the
upgrade of its standalone credit profile and Moody's unchanged
assessment of very strong support from its parent and sole owner,
Siemens Aktiengesellschaft (Siemens, A1 stable), which leads to
five notches of rating uplift, from six notches previously. The
outlook on Siemens Bank remains stable.
Siemens Bank's ratings reflect the bank's close integration in
Siemens group, underpinned by (1) its close financial links to
Siemens and its operations; (2) its high integration into
Siemens' financial activities, which are coordinated by Siemens
Financial Services (SFS) division; (3) its strong association
with the parent as reflected by the usage of the Siemens brand;
and (4) a profit and loss transfer agreement between Siemens and
Siemens Bank. The bank's ratings also benefit from a track record
of capital measures, illustrating Siemens' commitment to support
the bank's business expansion to the benefit of the group.
The upgrade of Siemens Bank's standalone credit profile by one
notch to baa3 from ba1 reflects the establishment of (1) a robust
track record in developing the bank from a cash-focused entity
into a lending-focused institution, which supports the financing
of its parent's products for Siemens customers, thereby
underpinning its strategic importance for the group; and (2) a
sustained sound financial profile during the past years.
Siemens Bank's standalone assessment remains constrained by its
status as a captive finance company, as well as its limited
independent funding franchise. Siemens Bank's funding remains
highly reliant on its parent resources, which provided around 88%
of total liabilities at end-September 2017. This support is
reflected in Siemens Bank's long-term issuer ratings, which
incorporates a very strong support assumption, while at the same
time the absence of an independent funding franchise represents a
ratings constraint for Siemens Bank's standalone credit profile.
The rating agency further sees some risks emanating from the
bank's strong lending growth and relatively unseasoned loan
portfolio, including exposure to the construction phase of
projects financed.
What could change the rating up/down
Upwards pressure on Siemens Bank's ratings would develop if the
credit profile of its parent Siemens were to strengthen, which
Moody's does not currently expect as indicated by the stable
outlook on Siemens' A1 rating. An upgrade of Siemens Bank
standalone credit profile would require a significant improvement
of its franchise and risk position, such as establishing a
diversified funding profile, a more mature and more balanced
lending book, combined with improved financials.
Siemens Bank's rating would come under downwards pressure if
Siemens' credit profile was to weaken. The bank could be rated
lower than the parent if (1) its standalone credit profile
weakens; (2) it pursues business objectives that are not fully
aligned with its parent; and/or (3) parental support was to
deteriorate as a result of weaker and/or shorter-dated intragroup
contractual obligations, in particular the profit- and loss-
sharing agreement.
LIST OF AFFECTED RATINGS
Issuer: Abbey International Finance Limited
Upgrade:
Long-term Corporate Family Rating, upgraded to Ba3 from B1,
previously Stable debt level outlook withdrawn
Affirmations:
Long-term Issuer Ratings (local and foreign currency), affirmed
B1, previously Stable debt level outlook withdrawn
Outlook Action:
Outlook remains Stable
Issuer: Anacap Financial Europe S.A. SICAV-RAIF
Placed on Review for Downgrade:
Backed Senior Secured Regular Bond/Debenture (local currency),
currently B1
Affirmation:
Long-term Corporate Family Rating (local currency), affirmed B1,
previously Stable debt level outlook withdrawn
Outlook Action:
Outlook changed to Rating under Review from Stable
Issuer: B2Holding ASA
Placed on Review for Downgrade:
Long-term Issuer Ratings (local and foreign currency), currently
Ba3, previously Stable debt level outlook withdrawn
Affirmation:
Long-term Corporate Family Rating, affirmed Ba3, previously
Stable debt level outlook withdrawn
Outlook Action:
Outlook changed to Rating under Review from Stable
Issuer: Cabot Financial Ltd
Affirmations:
Long-term Corporate Family Ratings (local and foreign currency),
affirmed B1, previously Stable debt level outlook withdrawn
Issuer: Cabot Financial (Luxembourg) II S.A
Placed on Review for Downgrade:
Backed Senior Secured Regular Bond/Debenture (local currency),
currently B1, previously Stable debt level outlook withdrawn
Outlook Action:
Outlook changed to Rating under Review from Stable
Issuer: Cabot Financial (Luxembourg) S.A
Placed on Review for Downgrade:
Backed Senior Secured Regular Bond/Debenture (foreign currency),
currently B1, previously Stable debt level outlook withdrawn
Outlook Action:
Outlook changed to Rating under Review from Stable
Issuer: Letshego Holdings Limited
Assignments:
Corporate Family Ratings (local and foreign currency), assigned
Ba2
Affirmations:
Short-term Issuer Ratings (local and foreign currency), affirmed
NP
Long-term Issuer Ratings (local and foreign currency), affirmed
Ba3, previously Stable debt level outlook withdrawn
Outlook Action:
Outlook remains Stable
Issuer: JSC Development Finance Institution Altum
Placed on Review for Upgrade:
Long-term Issuer Rating (local currency), currently Baa1,
previously Stable debt level outlook withdrawn
Affirmation:
Short-term Issuer Rating (local currency), affirmed P-2
Outlook Action:
Outlook changed to Rating under Review from Stable
Issuer: Siemens Bank GmbH
Affirmations:
Long-term Issuer Ratings (local and foreign currency), affirmed
A1, previously Stable debt level outlook withdrawn
Short-term Issuer Ratings (local and foreign currency), affirmed
P-1
Outlook Action:
Outlook remains Stable
PRINCIPAL METHODOLOGIES
The principal methodologies used in rating Abbey International
Finance Limited, Anacap Financial Europe S.A. SICAV-RAIF,
B2Holding ASA, Cabot Financial Ltd, Cabot Financial (Luxembourg)
II S.A, Cabot Financial (Luxembourg) S.A, Letshego Holdings
Limited and Siemens Bank GmbH was Finance Companies published in
December 2018. The principal methodologies used in rating JSC
Development Finance Institution Altum were Finance Companies
published in December 2018, and Government-Related Issuers
published in June 2018.
=====================
N E T H E R L A N D S
=====================
OCTAL FINANCE: Moody's Withdraws B1 Senior Unsecured Bond Rating
----------------------------------------------------------------
Moody's Investors Service has withdrawn the ratings of OCTAL
Holding SAOC. This includes the company's B1 corporate family
rating, B1-PD probability of default rating, OCTAL Finance B.V.'s
B1 senior unsecured notes rating and the stable outlook on both
entities.
RATINGS RATIONALE
Moody's has withdrawn all of OCTAL's ratings because the
company's contemplated senior unsecured obligations are not
outstanding.
LIST OF AFFECTED RATINGS
Issuer: OCTAL Holding SAOC
Withdrawals:
Probability of Default Rating, Withdrawn, previously rated B1-PD
Corporate Family Rating, Withdrawn, previously rated B1
Outlook Actions:
Outlook, Changed To Rating Withdrawn From Stable
Issuer: OCTAL Finance B.V.
Withdrawals:
BACKED Senior Unsecured Regular Bond/Debenture, Withdrawn,
previously rated B1
Outlook Actions:
Outlook, Changed To Rating Withdrawn From Stable
Headquartered in Oman, OCTAL is a plastic packaging manufacturing
company that specialises in the production of PET sheets and PET
resin for use in consumer packaged goods. The company is owned at
57% by venture capital company Pound Capital Corp. and by a
number of Omani minority shareholders, including Suhail Bahwan
Group (8.7%), Oman Investment Corp (<5%), Muscat Overseas Group
(<5%), and Bank Muscat SAOG (Baa3 negative, <5%).
===========
R U S S I A
===========
BANK URALSKY: Moody's Hikes Deposit Ratings to B2, Outlook Stable
-----------------------------------------------------------------
Moody's Investors Service upgraded Bank Uralsky Financial House's
Baseline Credit Assessment and adjusted BCA to b2 from b3, its
long-term local and foreign currency deposit ratings to B2 from
B3, long-term Counterparty Risk Assessment to B1(cr) from B2(cr),
and long-term Counterparty Risk Ratings to B1 from B2. The
outlook on the long-term deposit ratings changed to stable from
positive.
The rating agency also affirmed the bank's short-term local and
foreign currency deposit ratings and CRRs of Not Prime and its
short-term CR Assessment of Not Prime(cr).
RATINGS RATIONALE
The BCA upgrade to b2 from b3 reflects recent improvements in
UralFD's financial performance, in particular, its net financial
result and capital adequacy, which Moody's expects to remain good
and sustained in the long term and commensurate with those of B2-
rated peers.
The bank posted robust net financial result of RUB320 million in
2017 well above RUB36 million a year before amid strong net
interest margin (5.3%), declined provisioning charges (2.7% of
average gross loans) and material trading gains from securities
of RUB221 million.
For the first nine months of 2018 the bank reported net income of
RUB91 million, which translates into 0.5% annualized return on
average assets compared with 1.5% in 2017 and 0.2% in 2015-16.
The recent net financial result was distorted by additional
provisioning charges incurred in Q1-Q2 2018 following
implementation of IFRS 9 accounting standard. Barring material
external shocks, the rating agency expects that UralFD's
profitability in the next 12-18 months will be supported by its
healthy net interest margin (4.9% over the first nine months of
2018), good pre-provision profitability (2.7% of average assets)
as well as normalized credit costs.
The rating action also reflects UralFD's strengthened capital
buffers. As of September 30, 2018, the bank's tangible common
equity increased to 12.9% of total assets compared with 11.2% at
year-end 2017 and 10.4% at year-end 2016. Moody's expects
somewhat improvement next year thanks to internal capital
generation amid modest loan book expansion.
Following work-out of legacy loans and write-offs the bank
improved its asset quality while the problem loan ratio declined
to 15.0% at year-end 2017 from 17.8% a year before. As of
September 30, 2018 following adoption of IFRS 9 the bank reported
problem loans (defined as stage 3 lending) at 17.6% of gross
loans, along with sufficient problem loan coverage at 84%. The
rating agency believes that legacy problem loans have
crystallized and expects a steady decline of problem loan ratio
in the next 12-18 months.
As of September 30, 2018, the bank reported liquid cushion at
about 30% of total assets. Its funding structure reflects high
reliance on customer deposits, which accounted for around 96% of
total liabilities at the end of September 2018. UralFD's funding
and liquidity profiles benefit from its established deposit-
taking franchise, which provides the bank with a granular and
stable funding source. Moody's expects UralFD's liquidity profile
to remain healthy over the next 12-18 months.
WHAT COULD MOVE THE RATINGS UP/DOWN
A sustained track record of improved asset quality along with
solid profitability could lead to an upgrade of UralFD's BCA and
long-term ratings or the outlook change to positive, provided
there is no significant deterioration in capital adequacy.
The bank's BCA and deposit ratings could be downgraded, or the
outlook on its long-term deposit ratings could be revised to
negative from stable if it fails to generate sustainable positive
net financial result or its asset quality or capital adequacy
remarkably deteriorates.
LIST OF AFFECTED RATINGS
Issuer: Bank Uralsky Financial House
Upgrades:
LT Bank Deposits, Upgraded to B2 from B3, Outlook Changed to
Stable from Positive
Adjusted Baseline Credit Assessment, Upgraded to b2 from b3
Baseline Credit Assessment, Upgraded to b2 from b3
LT Counterparty Risk Assessment, Upgraded to B1(cr) from B2(cr)
LT Counterparty Risk Rating, Upgraded to B1 from B2
Affirmations:
ST Bank Deposits, Affirmed NP
ST Counterparty Risk Rating, Affirmed NP
ST Counterparty Risk Assessment, Affirmed NP(cr)
Outlook Action:
Outlook Changed to Stable from Positive
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks
published in August 2018.
=========
S P A I N
=========
BANKIA SA: Sells "Toxic" Real Estate Assets to Loan Star
--------------------------------------------------------
Ian Mount at The Financial Times reports that Bankia SA has
agreed to the sale of EUR3.07 billion in "toxic" real estate
assets to private equity firm Lone Star, the Spanish lender
announced in a regulatory filing on Dec. 17.
The portfolio includes foreclosed real estate with a gross book
value of approximately EUR1.65 billion, as well as EUR1.42
billion in non-performing loans, the FT discloses.
Bankia will keep a 20% ownership stake in the company formed to
own, manage and sell the foreclosed real estate, while Lone Star
will own 100% of the bad loan portfolio, the FT states.
Bankia has had an especially fraught role in the banking crisis
that followed the bursting of the property bubble, the FT notes.
The lender was formed from the merger of seven regional savings
banks in 2010 and held an initial public offering in 2011, the FT
relates. But a year later, Bankia revealed a vast capital
shortfall that required nationalization and a bailout of more
than EUR20 billion, the FT recounts.
According to the FT, Bankia said the sale of the real estate and
loan portfolios to Lone Star, combined with other reductions in
non-performing loans and foreclosed assets expected for 2018,
will reduce non-performing assets it holds by a gross book value
of more than EUR6 billion.
MBS BANCAJA 3: Fitch Keeps CC Rating on Cl. E Debt on Watch Pos.
----------------------------------------------------------------
Fitch Ratings has maintained the Rating Watch Positive (RWP) on
14 MBS Bancaja RMBS ratings and removed the RWP on three other
ratings. The RWP were assigned on June 18, 2018 following the
publication of Fitch's Counterparty Criteria Exposure Draft.
KEY RATING DRIVERS
MBS Bancaja
Fitch has maintained 14 ratings relating to 3 issuers on RWP.
These ratings will be the subject of a full review by January 31,
2019. The review will take into account the counterparty criteria
update as well as updated transaction data.
Southern Pacific Financing
Fitch has removed classes C, D and E of Southern Pacific
Financing 05-B Plc from RWP. Having completed a review of the
prior analysis of these ratings, Fitch has determined that the
counterparty criteria update will not affect the ratings and
therefore removed the ratings from RWP.
RATING SENSITIVITIES
The ratings maintained on RWP may be positively affected by the
update to the counterparty criteria as described in the exposure
draft report dated May 31, 2018.
MBS Bancaja 2, FTA
Class C (ES0361795026): 'AA+sf'; remains on RWP
Class D (ES0361795034): 'AA-sf'; remains on RWP
Class E (ES0361795042): 'BBB+sf'; remains on RWP
MBS Bancaja 3, FTA
Class A2 (ES0361796016): 'AA-sf'; remains on RWP
Class B (ES0361796024): 'A+sf'; remains on RWP
Class C (ES0361796032): 'Asf'; remains on RWP
Class D (ES0361796040): 'BBB-sf'; remains on RWP
Class E (ES0361796057): 'CCsf'; RE40%; remains on RWP
MBS Bancaja 4, FTA
Class A2 (ES0361797014): 'AA-sf'; remains on RWP
Class A3 (ES0361797022): 'AA-sf'; remains on RWP
Class B (ES0361797030): 'BBB+sf'; remains on RWP
Class C (ES0361797048): 'BBB-sf'; remains on RWP
Class D (ES0361797055): 'BBsf'; remains on RWP
Class E (ES0361797063): 'CCsf'; RE40%; remains on RWP
Southern Pacific Financing 05-B Plc
Class C (XS0221840910): 'AAsf'; off RWP; Outlook Stable
Class D (XS0221841561): 'A-sf'; off RWP; Outlook Stable
Class E (XS0221842023): 'BB+sf'; off RWP; Outlook Stable
===========================
U N I T E D K I N G D O M
===========================
BLOODHOUND: Ian Warhurst Buys Project for Undisclosed Amount
------------------------------------------------------------
BBC News reports that a 1,000mph race car project has been saved
after an entrepreneur stepped in to buy the business.
The Bloodhound supersonic vehicle -- built with a jet engine
bolted to a rocket -- is all but finished, BBC discloses.
Its future was in jeopardy amid a failure to secure investment
which forced the firm financing it into administration, BBC
relates.
But Yorkshire-based entrepreneur Ian Warhurst has bought the
project for an "undisclosed amount", according to BBC.
Mr. Sheridan, as cited by BBC, said the Ministry of Defence and
Rolls Royce had both backed the buyout.
The Bristol-based team behind the Bloodhound project aims to beat
the existing land speed world record of 763mph (1,228km/h), BBC
states.
DOUBLEPLAY I: S&P Withdraws 'CCC+' ICR Amid Global Media Deal
-------------------------------------------------------------
S&P Global Ratings said that it withdrew its 'CCC+' long-term
issuer credit rating on Doubleplay I Ltd., the holding company of
U.K.-based out-of-home advertising group Exterion Media
(Exterion), following the group's acquisition by Global Media &
Entertainment Ltd. for an undisclosed amount. The outlook at the
time of the withdrawal was stable. S&P also withdrew its 'CCC+'
issue and '3' recovery ratings on Exterion's rated debt, which
was repaid as part of the transaction.
RATINGS LIST
Ratings Withdrawn
To From
Doubleplay I Ltd.
Issuer Credit Rating NR/-- CCC+/Stable/--
Exterion Media Hldg Ltd.
Senior Secured NR CCC+
Recovery Rating NR 3(65%)
NR--Not rated.
LAURA ASHLEY: Plans to Close About 40 Stores in UK
--------------------------------------------------
BBC News reports that fashion and home furnishings retailer
Laura Ashley will close about 40 stores in the UK as it plans to
expand its presence in China.
Laura Ashley, which is owned by Malayan United Industries (MUI),
has already closed some 40 UK stores since 2015, BBC notes.
High Street stores in the UK have had a difficult year as
consumer confidence wanes and fewer shoppers visit, BBC relates.
Andrew Khoo Boo Yeow, MUI's newly appointed executive chairman,
told reporters in Malaysia earlier this month that he expected
the business to see some tough headwinds across the next two
years, BBC recounts.
According to BBC, he also said MUI would be restructuring some
arms of its business and rationalizing assets.
Mr. Khoo told the Press Association that the number of UK stores
would be reduced from 160 to 120, but that the remaining stores
would be expanded, BBC notes.
The firm, as cited by BBC, said it would look at moving staff
from any stores that are closing to larger outlets.
MONARCH AIRLINES: Greybull Puts Up Engineering Unit for Sale
------------------------------------------------------------
Sylvia Pfeifer at The Financial Times reports that the
engineering arm of Monarch Airlines, the holiday carrier that
collapsed last year, has been put up for sale by its majority
owner, private equity group Greybull Capital.
Monarch Aircraft Engineering, which services aircraft for a range
of leading airlines including Virgin Atlantic and easyJet, is in
talks with a number of potential buyers about a sale of all or
parts of its business, the FT relates.
It is the last remnant of Monarch Airlines, which went bust last
year after several restructuring attempts, the FT states.
The engineering business survived the collapse but was put
through a company voluntary arrangement (CVA), a form of
insolvency, last month to shed historic debt inherited from its
airline affiliate, the FT recounts. The company said the
insolvency led to the loss of some customers, the FT notes.
According to the FT, Monarch Engineering confirmed it was in
talks with several potential buyers "with a view to selling all
or parts of the business".
Sources close to the process said potential buyers were likely to
be other maintenance, repair and overhaul companies rather than
private equity groups, the FT relays.
Monarch Engineering is based at Luton airport in Bedfordshire and
employs about 700 staff, the FT discloses.
RMAC SECURITIES 2006-NS1: Fitch Affirms BB+ Ratings on 3 Tranches
-----------------------------------------------------------------
Fitch Ratings has upgraded three tranches and two currency swap
obligations (CSO) of RMAC Securities No.1 Plc (Series 2006-NS1)
and affirmed four tranches and two CSOs. Fitch has also affirmed
RMAC Securities No.1 Plc (Series 2006-NS2). 16 tranches have been
removed from Rating Watch Positive (RWP). The Outlooks are
Stable.
Both RMBS transactions are backed by non-conforming loans
originated between 1999 and 2009 (due to further advances), by
GMAC-RFC (now called Paratus AMC Limited).
KEY RATING DRIVERS
Counterparty Criteria Updated
Fitch placed RMAC 2006-NS1's class M1a, M1c, M2a and B1 notes and
RMAC 2006-NS2's class M1a, M1c, M2c, B1a and B1c notes on RWP
following the update of its Structured Finance and Covered Bonds
Counterparty Rating Criteria on August 1, 2018, in particular due
to the change in the way commingling is addressed. As a result of
this change, Fitch now views commingling as an immaterial risk in
the transactions, meaning losses are no longer sized for.
Following this updated analysis Fitch has removed the notes from
RWP and affirmed the relevant notes of RMAC 2006-NS2 and RMAC
2006-NS1's class M1a and M1c notes. Fitch has upgraded RMAC 2006-
NS1's class M2a, M2c and B1c notes.
Increasing Credit Enhancement (CE)
The notes issued across the transactions are currently paying on
a pro rata basis, but the reserve funds are non-amortising due to
performance trigger breaches. This has led to a gradual increase
in CE and consequently Fitch has upgraded RMAC 2006-NS1's class
M2a, M2c and B1c notes.
Interest-Only Loan Maturities
Currently 1.3% of the loans in RMAC 2006-NS1 and 1.5% of the
loans in RMAC 2006-NS2 have gone beyond their maturity date
without meeting the final balloon principal payment. The
borrowers of these loans have made individual arrangements with
the servicer to pay down the principal amount while also
continuing to pay interest. This result in potential
concentration and tail risk, which is likely to increase as more
loans come to the end of their term without borrowers being able
to repay the principal amount.
Fitch has applied a data adjustment to treat these loans as being
in arrears from the scheduled maturity date. This reflects the
outstanding principal payment. Fitch understands from the
servicer that most of these loans are continuing to pay interest
and that borrowers are actively co-operating with the servicer to
repay the loans.
Absence of Basis Hedge
The notes issued across the RMAC series are paying LIBOR
(sterling or euro, depending on the currency of the notes
issued). The currency risk has been hedged, but the structures
remain exposed to basis risk.
The portfolios include 71.0% (RMAC 2006-NS2) and 84.4% (RMAC
2006-NS1) loans linked to the Bank of England Base Rate (BBR),
Fitch has applied the BBR stresses as described in its criteria.
The analysis showed that the structures are able to withstand
tighter revenue streams resulting from the absence of basis risk
hedging mechanisms.
Currency Swap Obligations
Fitch's Criteria for Rating CSOs of an SPV in Structured Finance
Transactions and Covered Bonds expects that a rating action with
respect to a note tranche results in a corresponding rating
action on the related rated swap obligations.
RATING SENSITIVITIES
Fitch analysed the impact of negative payments being payable
within the cross currency swap agreements. If EURIBOR decreases
to the extent the all in rate payable by the swap counterparty is
negative, the issuer is expected to pay this amount to the swap
counterparty. Fitch's analysis showed the impact on the note
ratings to be immaterial.
Changes to the ratings of the swap-referenced notes would likely
lead to an equal change in the rating of the SPV's CSOs. The
rating sensitivity will primarily be driven by the rating
analysis applicable to the corresponding note. The rating of the
SPV's CSO will be withdrawn if the currency swap agreement is
terminated due to non-performance by the swap counterparty or a
non-credit-related event.
USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO RULE 17G-10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
DATA ADEQUACY
Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset
pools and the transactions. There were no findings that affected
the rating analysis. Fitch has not reviewed the results of any
third-party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.
Fitch did not undertake a review of the information provided
about the underlying asset pools ahead of the transactions'
initial closing. The subsequent performance of the transactions
over the years is consistent with the agency's expectations given
the operating environment and Fitch is therefore satisfied that
the asset pool information relied upon for its initial rating
analysis was adequately reliable.
Overall, Fitch's assessment of the information relied upon for
the agency's rating analysis according to its applicable rating
methodologies indicates that it is adequately reliable.
The rating actions are as follows:
RMAC 2006-NS1
Class A2a affirmed at 'AAAsf'; Outlook Stable
Class A2c affirmed at 'AAAsf'; Outlook Stable
Class A2c - CSO affirmed at 'AAAsf'; Outlook Stable
Class M1a affirmed at 'AA+sf'; off RWP; Outlook Stable
Class M1c affirmed at 'AA+sf'; off RWP; Outlook Stable
Class M1c - CSO affirmed at 'AA+sf'; off RWP; Outlook Stable
Class M2a upgraded to 'A+sf' from 'Asf'; off RWP; Outlook Stable
Class M2c upgraded to 'A+sf' from 'Asf'; off RWP; Outlook Stable
Class M2c - CSO upgraded to 'A+sf' from 'Asf'; off RWP; Outlook
Stable
Class B1c upgraded to 'BBB+sf' from 'BBB-sf'; off RWP; Outlook
Stable
Class B1 - CSO upgraded to 'BBB+sf' from 'BBB-sf'; off RWP;
Outlook Stable
RMAC 2006-NS2
Class A2a affirmed at 'AAAsf'; Outlook Stable
Class A2c affirmed at 'AAAsf'; Outlook Stable
Class M1a affirmed at 'AA+sf'; off RWP; Outlook Stable
Class M1c affirmed at 'AA+sf'; off RWP; Outlook Stable
Class M1c - CSO affirmed at 'AA+sf'; off RWP; Outlook Stable
Class M2c affirmed at 'Asf'; off RWP; Outlook Stable
Class M2c - CSO affirmed at 'Asf'; off RWP; Outlook Stable
Class B1a affirmed at 'BB+sf'; off RWP; Outlook Stable
Class B1c affirmed at 'BB+sf'; off RWP; Outlook Stable
Class B1c - CSO affirmed at 'BB+sf'; off RWP; Outlook Stable
VUE INTERNATIONAL: S&P Withdraws B Rating on GBP65MM Loans
----------------------------------------------------------
S&P Global Ratings withdrew its 'B' issue-level and '3' recovery
ratings on Vue International Bidco's proposed GBP65 million
equivalent senior secured RCF and the proposed senior secured
term loans, which included the GBP300 million tranche, EUR480
million tranche, and EUR114 million delayed draw tranche. This
follows Vue's announcement that it has cancelled the issuance due
to unfavorable market conditions.
S&P said, "Our 'B' issuer credit rating and negative outlook on
Vue and our issue ratings on the company's existing capital
structure are unaffected. The existing debt ratings include our
'BB' issue rating and '1+' recovery on the GBP60 million super
senior revolving credit facility (RCF); and the 'B' issue and '3'
(50%-70%, rounded estimate 60%) recovery rating on the EUR120
million term loan B, GBP300 million fixed-rate notes, and EUR360
million floating rate notes."
The proposed transaction was intended to refinance Vue's existing
debt, finance the acquisition of CineStar, and extend maturities.
Vue's GBP300 million senior secured fixed-rate notes and EUR360
million floating and fixed-rate notes mature in June and July
2020. S&P said, "We continue to believe the company will have
adequate liquidity over the next 12 months and will refinance
these notes over the coming months and before mid-2019. However,
if this doesn't happen, for example due to continued volatility
in the capital markets, our view of Vue's liquidity could rapidly
deteriorate, potentially leading us to lower the rating."
The negative outlook on Vue continues to reflect that, over the
next 12 months, the group may fail to grow its reported EBITDA
sufficiently to support positive free operating cash flow
generation, keep reported EBITDA cash interest coverage above 2x,
or improve adjusted leverage toward 9.0x-9.5x.
This could happen if admissions and box office revenues in
Germany and Italy remain subdued because of an unsuccessful film
slate; profitability in the U.K. market reduces amid high
competition, pricing pressure, and softening consumer demand; or
the group experiences higher-than-expected restructuring and
other costs relating to the CineStar acquisition, eroding
profitability.
RATINGS LIST
Not Rated Action
To From
Vue International Bidco plc
Senior Secured NR B
Recovery Rating NR 3(55%)
NR--Not rated.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than US$3 per
share in public markets. At first glance, this list may look
like the definitive compilation of stocks that are ideal to sell
short. Don't be fooled. Assets, for example, reported at
historical cost net of depreciation may understate the true value
of a firm's assets. A company may establish reserves on its
balance sheet for liabilities that may never materialize. The
prices at which equity securities trade in public market are
determined by more than a balance sheet solvency test.
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/booksto order any title today.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante,
Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman,
Editors.
Copyright 2018. All rights reserved. ISSN 1529-2754.
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