/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/100811.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 Wednesday, August 11, 2010, Vol. 11, No. 157 Headlines G E R M A N Y WESTLB AG: Banks File US$490 Mil. Damage Claim in New York Court I R E L A N D ALLIED IRISH: Forced to Take 85% Writedown on Winthrop ARNOTTS HOLDINGS: European Commission Approves Takeover by Banks BANK OF IRELAND: To Face EUR1.6BB Loss After Impairment Charges CITYWEST HOTEL: Denis Desmond Eyes Acquisition EBS BUILDING: Extends Deadline for Takeover Bids to August 20 EIRCOM GROUP: STT Explores Debt Refinancing Options MCINERNEY HOLDINGS: Close to Securing Major Capital Injection * IRELAND: More Lenders Opt for Debt-Equity Swaps * IRELAND: Seeks to Ensure Viability of Hotel Sector K A Z A K H S T A N KAZINVESTBANK JSC: Moody's Assigns 'B2' Ratings on Senior Bonds KAZKOMMERTSBANK JSC: Moody's Affirms Junk Jr. Sub. Debt Ratings SB SBERBANK: Moody's Changes Outlook on 'Ba2' Rating to Stable TRISTAN OIL: Moody's Withdraws 'C' Corporate Family Rating N E T H E R L A N D S CREDIT EUROPE: Fitch Affirms Issuer Default Ratings at 'BB' R O M A N I A * Fitch Affirms Romania's 'BB+' Long-Term Issuer Default Ratings S P A I N BANKINTER 12: Fitch Affirms Rating on Class E Notes at 'CCC' * SPAIN: Corporate Bankruptcies Down 13.7% in Second Qtr. 2010 S W I T Z E R L A N D FOSTER WHEELER: S&P Raises Corporate Credit Rating From 'BB+' U N I T E D K I N G D O M ANGEL MINING: US$4.5MM Loan Payment Deadline Extended to Aug. 31 CALYX: Hires Adviser to Explore Debt-Reduction Options CORSAIR LIMITED: Fitch Downgrades Ratings on Two Notes to 'D' LIVERPOOL FOOTBALL: Did Not Get Formal Bid From Kenneth Huang LLOYDS BANKING: Nears Sale of Properties to Legal & General ON A MISSION: Goes Into Liquidation * UK: Company Administrations Down 0.8% in Second Quarter 2010 E U R O P E * Moody's: European Default Rate Rises to 6.2% in July 2010 ********* ============= G E R M A N Y ============= WESTLB AG: Banks File US$490 Mil. Damage Claim in New York Court ---------------------------------------------------------------- Daniel Schafer at The Financial Times reports that a group of several banks and investors has filed a damage claim of more than US$490 million against WestLB at New York's district court, accusing the publicly-owned Landesbank of "fraud and other wrongdoings". According to the FT, the claimants -- government-owned Anglo Irish Bank, Israel's Hapoalim and Mizrahi Tefaot banks, Arab Banking Corporation and off-shore fund Justinian -- were all investors in WestLB's former US$14 billion investment vehicles, which wrecked havoc three years ago after the US housing market crashed. The FT relates group accused WestLB of holding on for too long to its failed investments. They claim that this procrastination ultimately led to much larger losses for the investors than would have resulted from a fire sale at the time, the FT notes. A WestLB spokesman dismissed the allegations, the FT states. "WestLB deems these allegations against her be unjustified and rejects them vehemently. She will defend herself against this pending court case and is convinced that she will win it," the FT quoted the spokesman as saying. The FT recalls in a motion to dismiss filed by WestLB in June, the bank described the claimants as experienced investors who simply tried to recoup losses suffered from their subordinate investments. About WestLB Headquartered in Duesseldorf, Germany, WestLB AG (DAX:WESTLB) -- http://www.westlb.com/-- provides financial advisory, lending, structured finance, project finance, capital markets and private equity products, asset management, transaction services and real estate finance to institutions. In the United States, certain securities, trading, brokerage and advisory services are provided by WestLB AG's wholly owned subsidiary WestLB Securities Inc., a registered broker-dealer and member of the NASD and SIPC. WestLB's shareholders are the two savings banks associations in NRW (25.15% each), two regional associations (0.52% each), the state of NRW (17.47%) and NRW.BANK (31.18%), which is owned by NRW (64.7%) and two regional associations (35.3%). * * * As reported by the Troubled Company Reporter-Europe on May 6, 2010, Moody's Investors said the E+ bank financial strength rating (BFSR, which maps directly to a B2 baseline credit assessment, BCA), was affirmed and the outlook on this rating changed to stable from developing. Moody's affirmation of the E+ BFSR and the change of its outlook to stable reflects that, despite positive developments, the BFSR remains constrained by the bank's weak franchise, which includes several core segments that do not (or only insufficiently) contribute to group profits, thus resulting in the bank's continued dependence on volatile, wholesale-focused sources of income. Moody's does not rule out that the bank could be split up and unwound if efforts to divest the bank were to prove unsuccessful. ============= I R E L A N D ============= ALLIED IRISH: Forced to Take 85% Writedown on Winthrop ------------------------------------------------------ Suzanne Lynch at The Irish Times reports that Allied Irish Banks has been forced to take an 85% writedown on a US property investment debt. According to the report, the bank is one of a group of debt holders led by Winthrop Realty Trust which holds about US$300 million in senior mezzanine debt on an 80-acre apartment complex in east Manhattan known as Stuyvesant Town-Peter Cooper Village. The report recalls in one of the biggest property collapses in American history, the developers of the project were forced to hand the development back to lenders in January after efforts to restructure debt failed. The report relates Winthrop Realty Trust on Tuesday said it had entered a partnership with Pershing Square Capital Management to buy the defaulted EUR300 million loans for EUR45 million -- a discount of 85%. The report notes that while it is not clear how much of the debt is held by AIB, the book value of the Irish bank's stake has been estimated to be in the region of US$50 million, although this has not been confirmed by the bank. Allied Irish Banks, p.l.c., together with its subsidiaries -- http://www.aibgroup.com/-- conducts retail and commercial banking business in Ireland. It also provides corporate lending and capital markets activities from its head office at Bankcentre and from Dublin's International Financial Services Centre. The Group also has overseas branches in the United States, Germany, France and Australia, among other locations. The business of AIB Group is conducted through four operating divisions: AIB Bank Republic of Ireland division, Capital Markets division, AIB Bank UK division, and Central & Eastern Europe division. In February 2008, the Group acquired the AmCredit mortgage business in the Baltic states of Latvia, Lithuania and Estonia. In September 2008, the Group also acquired a 49.99% shareholding in BACB. * * * As reported by the Troubled Company Reporter-Europe on July 23, 2010, Moody's Investors Service affirmed AIB's long-term bank deposit and debt ratings. These are A1 for long-term bank deposits and senior debt, A2 for dated subordinated debt, Ba3 for undated subordinated debt, B1 for cumulative tier 1 securities and Caa1 for non-cumulative tier 1 securities. Moody's said the outlook on these ratings is stable. AIB's bank financial strength rating of D, which maps to Ba2 on the long term rating scale, with a positive outlook was unaffected by the rating action. ARNOTTS HOLDINGS: European Commission Approves Takeover by Banks ---------------------------------------------------------------- Ciaran Hancock at The Irish Times reports that the European Commission approved a proposal from Anglo Irish Bank and Ulster Bank to take control jointly of Arnotts in a debt restructuring deal. According to the report, the banks are preparing to retain ownership of Arnotts for the medium term -- a period they hope will allow for the stabilization of trading and a recovery in property values. The report says sources in the banks acknowledge privately there will not be a quick sale of the department store. Arnotts owes the two banks more than EUR300 million and Anglo and Ulster, a subsidiary of the Royal Bank of Scotland, will now move to appoint new directors to its board, the report discloses. Mark Schwartz, the head of US-based Palladin Capital Group, is expected to be one of those appointed to the board, the report states. The report notes trade union Mandate on Tuesday said it was "looking forward to engaging on an ongoing basis with the new management regarding the future of Arnotts". Established in 1843, Arnotts Holdings Ltd. is the largest department store in the country, with a selling area of more than 27,000sq m. It employs some 950 people and has been an anchor for other stores on Dublin's Henry Street for over 150 years, according to The Irish Times. BANK OF IRELAND: To Face EUR1.6BB Loss After Impairment Charges --------------------------------------------------------------- Brian O'Mahony at The Irish Examiner reports that Bank of Ireland, which got stress test clearance from the EU recently, is expected to post a profit before bad debts of EUR465 million today, August 11. The report says the bank still has to raise capital funding of EUR7.2 billion to bring it into line with the regulatory requirements to have its Tier 1 ratio up to 8% by end December 2010. According to the report, in a note on BOI Monday NCB Stockbrokers said it expected an underlying loss of EUR1.1 billion, after impairment charges of EUR1.6 billion. The final figure will be determined on the amount of funds set aside by the bank for future loan transfers to NAMA, the report notes. One of the big tests facing the bank will be its return to the unguaranteed area of borrowing in the period ahead following its fundraising efforts that has left the state holding a 36% equity stake in the group, the report states. Headquartered in Dublin, Bank of Ireland -- http://www.bankofireland.com/-- provides a range of banking and other financial services. These include checking and deposit services, overdrafts, term loans, mortgages, business and corporate lending, international asset financing, leasing, installment credit, debt factoring, foreign exchange facilities, interest and exchange rate hedging instruments, executor, trustee, life assurance and pension and investment fund management, fund administration and custodial services and financial advisory services, including mergers and acquisitions and underwriting. The Company organizes its businesses into Retail Republic of Ireland, Bank of Ireland Life, Capital Markets, UK Financial Services and Group Centre. It has operations throughout Ireland, the United Kingdom, Europe and the United States. * * * As reported by the Troubled Company Reporter-Europe on July 23, 2010, Moody's Investors Service affirmed Bank of Ireland's long- term bank deposit and senior debt ratings. These were A1 for long-term bank deposits and senior debt, A2 for dated subordinated debt, Ba3 for undated subordinated debt, B1 for cumulative tier 1 securities and Caa1 for non-cumulative tier 1 securities. Moody's said the outlook on these ratings is stable. BoI's bank financial strength rating is D, on review for possible upgrade and this was also unaffected by the rating action. CITYWEST HOTEL: Denis Desmond Eyes Acquisition ---------------------------------------------- InsolvencyJournal.ie, citing the Sunday Business Post, reports that businessman Denis Desmond has expressed a preliminary interest in buying Jim Mansfield's Citywest hotel complex, which was taken over by its banks in July. According to the report, Mr. Desmond, who controls concert promotions firm MCD, is thought to be particularly interested in the Citywest Convention Centre, a three-storey structure with a capacity to host 4,000 delegates. The report recalls Bank of Scotland (Ireland) installed a receiver over Citywest last month after restructuring negotiations broke down. Mr. Mansfield has not given up hope of regaining control of the property and is working on plans for a proposed third level institute of education on the site, the report notes. As reported by the Troubled Company Reporter-Europe on July 8, 2010, Irish Examiner.com said that Martin Ferris of Ferris & Associates was appointed as receiver to the company HSS, trading as Citywest hotel, golf and leisure, by Bank of Scotland (Ireland). EBS BUILDING: Extends Deadline for Takeover Bids to August 20 ------------------------------------------------------------- Suzanne Lynch at The Irish Times reports that EBS Building Society has extended the deadline for offers for the purchase of the building society for the second time. Final bids for the building society had been due Monday, August 9, but the deadline has been extended to August 20. The report says it is understood that bidders requested more details from the building society relating to the pricing of any prospective deal. The building society has been seeking investors since March, the report notes. According to the report, four interested parties are submitting detailed proposals. These are US private equity firm JC Flowers, British private equity firm Doughty Hanson, which owns TV3, and Cardinal Asset Management, which is backed by Carlyle Group, the report discloses. Irish Life Permanent, whose banking arm, Permanent TSB is facing funding issues, is the fourth interested party, the report states. EBS requires EUR785 million to meet the Financial Regulator's new capital rules after a EUR90 million debt buyback reduced the original target of EUR875 million, according to the report. The Irish government has injected EUR350 million -- EUR100 million in cash and EUR250 million in promissory notes or IOUs -- but EBS still has a shortfall of EUR435 million, the report says. EBS Building Society is Ireland's largest building society. Servicing more than 400,000 members, it distributes its products through a branch and franchised agency network as well as handling direct business both over the telephone and via the Internet. EBS Building Society provides mortgage lending, savings, investments, and insurance products in Ireland. * * * As reported by the Troubled Company Reporter-Europe on June 7, 2010, Moody's Investors Service downgraded the non-cumulative Tier 1 instruments of EBS Building Society to Ca from Caa1 (issued through EBS Capital No1 S.A.), and the dated subordinated debt one notch to Baa1 from A3. These rating actions follow the issuance of a "Special Investment Share" to the Irish government that is similar in scope to a nationalization, and the forthcoming issuance of a Promissory Note to the government that will provide capital to the society. The other ratings of the society including the D BFSR, the A2 long-term bank deposit and senior debt rating and the Aa1-rated government guaranteed debt were all unaffected. EIRCOM GROUP: STT Explores Debt Refinancing Options --------------------------------------------------- Fierce Telecom reports that Eircom's major stakeholder Singapore Technologies Telemedia is considering how it's going to refinance the Irish service provider's US$4.4 billion of debt. According to Fierce Telecom, Ireland's Communications Minister Eamon Ryan spent time talking to Terry Clontz, STT's managing director and CFO Stephen Miller, about refinancing plans prepared by Gleacher Shacklock and JP Morgan. Fierce Telecom says a combination of new telecom competition and the global recession attributed to the company's revenue decline from US$2 billion to US$1.7 billion in the nine months that ended March 31. As reported by the Troubled Company Reporter-Europe on June 3, 2010, The Financial Times said that while the company has no large debt repayments until 2014, when EUR1.2 billion (US$1.5 billion) is due, it is expected to come under pressure from tightening financial covenants. The FT disclosed a person familiar with the company said that the options the company is understood to be considering in the longer term include a potential bond issue or bond exchange, and a possible equity injection from shareholders. In the short term, it is also considering talks with banks about changing its covenants, the FT noted. Eircom has EUR3.3 billion of cash-interest paying debt, EUR350 million of which is floating rate bonds, and EUR600 million of debt on which interest is paid in kind, according to the FT. Headquartered in Dublin, Ireland, Eircom Group plc -- http://www.eircom.ie/-- is an Irish telecommunications company, and former state-owned incumbent. It is currently the largest telecommunications operator in the Republic of Ireland and operates primarily on the island of Ireland, with a point of presence in Great Britain. MCINERNEY HOLDINGS: Close to Securing Major Capital Injection ------------------------------------------------------------- Brian O'Mahony at The Irish Examiner reports that McInerney Holdings on Monday said that it is at an advanced stage of securing a major capital injection for the troubled group to prevent it going into receivership. According to The Irish Examiner, sources close to the deal said it is understood that a recapitalization deal is close to completion and looks to be 90% certain at this stage. The Irish Examiner relates that in a statement on Monday McInerney said the overall restructuring was at an advanced stage and involves "a leading international equity partner regarding a substantial injection of new capital". Talks have been ongoing since April 2010 and due diligence has been continuing for the past two months, and at one point involved a number of potential investors, The Irish Examiner notes. The Irish Examiner says the group owes EUR236 million, of which EUR111 million is due to Bank of Ireland, Anglo Irish Bank and KBC Ireland. It has been struggling since the property bubble burst, The Irish Examiner discloses. Separately, BreakingNews.ie reports McInerney also said that its Irish loans have not yet been transferred to National Asset Management Agency, and formal talks have not been held with NAMA regarding any restructuring plan. "The Group's Irish syndicated lenders and their advisers are engaged in a review of the Group's restructuring proposals," the statement said, according to BreakingNews.ie. "This review has yet to be completed and the Group continues to engage with its Irish lenders and their advisers on an optimal restructuring proposal for the Irish business." McInerney Holdings plc -- http://www.mcinerneyholdings.eu/-- is a home builder and regional home builder in the North and Midlands of England. It also undertakes commercial and leisure projects in Ireland, United Kingdom and Spain. It operates in Ireland, the United Kingdom and Spain. The main trading activities of the Company's Irish home building business during the year ended December 31, 2008 consisted of construction of private houses, trading in developed sites and land, development of residential land for third-parties and in joint-ventures, and contracting for third-parties. The Company's commercial property development division, Hillview Developments Ltd (Hillview), develops industrial units in the Greater Dublin area. Hillview completed 1,223 square meters of industrial units as of December 31, 2008. Its Spanish division, Alanda Group, is developing freehold apartment schemes. As of December 31, 2008, the Company completed 1,359 private and contracting residential units in Ireland, the United Kingdom and Spain. * IRELAND: More Lenders Opt for Debt-Equity Swaps ------------------------------------------------- InsolvencyJournal.ie reports that an increasing number of lenders are dabbling in debt-equity swaps as a viable alternative to insolvency. The report says as the downturn continues to bite, and investors as scarce as hen's teeth, there's very little appetite for business assets in Ireland at the moment. Fire-sales can result in lower loan recoveries and because of this, liquidation is often not the best option for banks who wish to recover some of the debts owed to them when companies default on loans, the report states. Instead, it seems some lenders are taking a medium-to- long term approach with cash-generating indebted businesses and are engaging in debt-equity buyouts as a way of dealing with non- performing loans, rather than engineering a forced sale of business assets, the report discloses. The report relates in the past few weeks, a number of high-profile debt-equity swaps have been mooted, with nationalized lender Anglo Irish Bank leading the charge. Debt-equity swaps can offer a lifeline to struggling businesses, freeing up cash-flow and allowing firms to retain staff but they can be risky territory for banks, the report notes. "Debt-for-equity deals haven't really been a big feature in Ireland. Banks are uncomfortable about owning equity as it raises all sorts of difficult issues for them -- the management of accounts, do they sit on the board of the company -- it's a very tricky one for banks. They [debt-for-equity swaps] also require a massive write-off of loans for the banks and it's a debt that some banks just aren't able to take. Sometimes it's a better idea for the banks to recognize their loss and move on," the report quoted Max Doyle, an investment and restructuring professional and Principal of Prime Focus Management, as saying. * IRELAND: Seeks to Ensure Viability of Hotel Sector ---------------------------------------------------- Elaine Edwards at The Irish Times reports that Ireland's Minister for Tourism Mary Hanafin has said that the government is working closely with the hotels industry to examine where there is an oversupply of beds, to ensure the sector has a viable future. The Irish Times relates the minister was addressing the question of the possible closure of a number of non-viable hotels where related loans had been transferred to the National Asset Management Agency (Nama). Citing the Irish Hotels Federation, The Irish Times says as many as 200 hotels -- containing 15,000 beds -- need to be closed in order to bring the hospitality sector back to viability. Ms. Hanafin told The Irish Times the question was not to identify just numbers of hotels and beds, but to establish their location and how they were spread around the country, so they could be discussed with the Nama from a policy perspective. Nama had indicated that it would get around to examining the hotels sector at the end of the year, The Irish Times notes. According to The Irish Times, among the EUR80 billion in loans being sold to Nama are associated loans owing on hotels built and owned by developers moving under the agency's control. The Irish Times notes Nama's business plan says that where a number of Nama-funded hotels are competing in a location where there is only potential for a single facility, the agency "will make its decision based on the optimal commercial outcome". =================== K A Z A K H S T A N =================== KAZINVESTBANK JSC: Moody's Assigns 'B2' Ratings on Senior Bonds --------------------------------------------------------------- Moody's Investors Service has assigned these long-term local currency debt ratings to Kazinvestbank's KZT11.5 billion (approximately US$78 million) multiple seniority bonds program: B2 for senior unsecured bonds issues and B3 for subordinated bonds issues. At the same time Moody's assigned a B3 long-term local currency subordinated debt rating to the upcoming first drawdown of KZT4 billion (approximately US$27 million) under this program. The bonds represent a subordinated unsecured claim on the bank. The outlook on the program and the upcoming subordinated debt ratings is stable, in line with the stable outlook on the bank's long-term bank deposit ratings. The subordinated bonds have a tenor of five years, and the interest rate is fixed at 10% per annum. No covenants or put option clauses are provided in the bonds' documentation. Both the program and the first drawdown have been registered with Kazakhstan's FSA (financial services regulator). The B3 rating reflects subordination of the bonds to Kazinvestbank's senior obligations, including deposits, which are rated B2 with a stable outlook. Moody's previous rating action on Kazinvestbank was implemented on July 21, 2010, when the rating agency assigned these global-scale ratings: a B2 long-term and Not-Prime short-term local and foreign-currency deposit ratings, and an E+ bank financial strength rating (BFSR). A stable outlook was assigned on all of the bank's ratings. Headquartered in Almaty, Kazakhstan, Kazinvestbank reported total audited IFRS consolidated assets and net income of US$601 million and US$0.7 million, respectively, at year-end 2009 (2008: US$567 million and US$2.1 million, respectively). KAZKOMMERTSBANK JSC: Moody's Affirms Junk Jr. Sub. Debt Ratings --------------------------------------------------------------- Moody's Investors Service has changed the outlook on Kazkommertsbank's E+ bank financial strength rating to stable from negative, while the negative outlook on the deposit and debt ratings is maintained. At the same time Moody's affirmed the bank's following global-scale ratings: Ba3 local and foreign- currency deposit and senior unsecured debt ratings, B1 foreign- currency subordinated debt and Caa1 foreign-currency junior subordinated debt ratings, and E+ BFSR. The change of the outlook on the bank's BFSR to stable from negative takes account Kazkommertsbank's resilience to the ongoing adverse pressure on its asset quality, revenue generation and capitalization. Moody's believes that in the medium-term the bank's asset quality, capitalization, as well as liquidity position will be adequate for an E+ BFSR, which matches to a Baseline Credit Assessment of B2, However, there is some downward pressure on the B2 BCA, which could therefore become more weakly positioned at B3 level, and that this underlies the negative outlook on Kazkommertsbank's deposit and debt ratings. According to Moody's base-case stress-testing results for Kazkommertsbank its capital, loan loss reserves and earnings will provide an acceptable cushion for further asset quality weakening in the near-term. Moody's also indicated concern that the bank remains largely reliant on customer funding from a limited number of government owned companies. According to the bank, the principal amount of its wholesale debt due in 2011 is US$738 million. Kazkommertsbank's liquid assets of about US$2.2 billion as of end-May, 2010 should be sufficient to make these repayments assuming no material outflow of customer deposits. Kazkommertsbank's E+ BFSR and B2 BCA are underpinned by the bank's leading market position in Kazakhstan, with a 20.25% share in aggregate banking assets and an 18.35% share in retail deposits. However, they also take into account the risks associated with the bank's weak asset quality, stemming from the difficult economic conditions in Kazakhstan and exacerbated by high borrower and industry concentration in KKB's loan portfolio. Kazkommertsbank's Ba3 deposit and senior unsecured debt ratings are based on its B2 BCA and Moody's assessment of a moderate probability of systemic support due to the bank's importance for the country's banking system. This support assessment results in a two-notch uplift from Kazkommertsbank's B2 BCA. Moody's notes that in the medium term the BFSR of E+ has limited upside potential due to ongoing pressure on the bank's financial fundamentals. However the deposit and debt ratings may benefit from a considerable improvement in the bank's asset quality and its funding structure. Moody's previous rating action on Kazkommertsbank was implemented on January 29, 2010, when Kazkommertsbank's junior subordinated debt rating was downgraded to Caa1 from B3. Headquartered in Almaty, Kazakhstan, Kazkommertsbank reported total assets, equity and net income of US$17.99 billion, US$2.69 billion and US$38.1 million, respectively at end-1Q 2010, according to the bank's reports prepared under IFRS. SB SBERBANK: Moody's Changes Outlook on 'Ba2' Rating to Stable -------------------------------------------------------------- Moody's Investors Service has changed the outlook on SB Sberbank's Ba2 local and foreign currency deposit ratings to stable from negative. The bank's E+ bank financial strength rating remains unchanged with a stable outlook. The change of the outlook on the bank's deposit ratings reflects the stabilization of the bank's credit profile as evidenced by (i) the bank's strengthening franchise with increasing market share in lending and deposit taking, (ii) the relatively low level of problem loans that may peak in H2 2010, and (iii) strong liquidity with liquid assets accounting for over 40% of the bank's total assets at end-May 2010. The change of outlook also takes account the change of outlook to stable from negative for the D+ BFSR of its parent, Russia's Sberbank, on July 21, 2010. Moody's added that the bank's improving earnings along with lower loan loss charges in the near term should ensure it is able to increase its loan book, while maintaining sufficient capital to provide a cushion to absorb the potential risks from this. According to Moody's, SB Sberbank's E+ BFSR, which translates into a Baseline Credit Assessment of B2, is underpinned by the bank's strong liquidity, adequate capitalization and acceptable asset quality. The BFSR is constrained primarily by the bank's still modest, but increasing, market share and significant borrower concentration relative to its gross loans. The bank's Ba2 deposit ratings are based on its B2 BCA and Moody's assessment of a high probability of support from Russia's Sberbank (rated A3/D+ mapping to a BCA of Ba1), which fully controls the bank. Consequently, the bank's deposit ratings receive a three- notch uplift from the B2 BCA. Moody's notes that in the medium-term, SB Sberbank's deposit ratings may be upgraded if the bank continues to strengthen its franchise while significantly reducing borrower concentration and maintaining adequate financial fundamentals, including capital adequacy. Conversely, the bank's ratings can come under negative pressure in case of a material increase in its balance sheet concentrations or substantial asset quality deterioration. Moody's previous rating action on SB Sberbank was implemented on February 24, 2009, when the bank's local and foreign currency deposit ratings of Ba2 were confirmed with a negative outlook. Headquartered in Almaty, Kazakhstan, SB Sberbank reported total assets and net income of US$1.48 billion and US$14.5 million at year-end 2009, according to the bank's IFRS financial statements. TRISTAN OIL: Moody's Withdraws 'C' Corporate Family Rating ---------------------------------------------------------- Moody's Investors Service has withdrawn the C corporate family and senior secured bond ratings, and D probability of default rating of Tristan Oil Ltd. The ratings were withdrawn as a result of the company defaulting on its senior secured notes coupon payment due July 1, 2010, upon expiration of the 30-day grace period and its current insolvency. Moody's previous rating action on Tristan Oil took place on 26 July 2010 when the agency changed the PDR to D from C and changed the outlook on the ratings to negative in expectation of default. Tristan is a special purpose vehicle domiciled in the British Virgin Islands created for the sole purpose of issuing secured notes to finance a loan to two oil and gas companies, KPM and TNG, organised under the laws of Kazakhstan. The guarantors of the notes, KPM and TNG, have been engaged in the exploration and development of two oil and gas fields and in the production of oil, condensate and gas in the Pre-Caspian basin of Western Kazakhstan. All companies are directly or indirectly owned by Mr. Stati, a Moldovan citizen, and certain members of his family. ===================== N E T H E R L A N D S ===================== CREDIT EUROPE: Fitch Affirms Issuer Default Ratings at 'BB' ----------------------------------------------------------- Fitch Ratings has upgraded Credit Europe Bank N.V.'s Individual Rating to 'C/D' from 'D'. Its other ratings are affirmed at Long- term Issuer Default 'BB' with a Stable Outlook, Short-term IDR 'B', Support '5' and Support Rating Floor of 'No Floor'. The upgrade of the Individual rating reflects management's ability to react quickly to worsening economic conditions in its main markets. As a result, in 2009 and in H110 the bank slowed down loan growth dramatically and reduced exposures to higher-risk counterparts. It has also shored up its liquidity by extending the maturity profile of its savings and investing in liquid securities. Although the negative impact of maintaining such high liquidity buffers on its net interest revenue was significant, overall profitability was kept fairly stable. A reduction of the excess liquidity buffer in 2010 should lift the pressure on margins. The IDRs and the Individual rating of CEB reflect its medium-size, niche focus and large exposures to developing markets which generate fairly high credit risk. Its exposures are mainly concentrated in Romania (19%), Turkey (17%), Russia (17%), Ukraine (2%) and other emerging markets (2%). Concentrations by customer group are moderately high, reflecting its corporate focus and relatively small equity base in absolute terms. The bank's impaired loans at end-2009 reached 4.6% of the total and remained stable in H110. Impaired loans were reasonably reserved, at 76% of gross loans, although the collateral is subject to some recovery risk, particularly in some emerging countries. Fitch views the quality of its funding as weak, as it relies on internet channels in Western Europe to obtain funds to invest overseas. While these deposits have remained fairly stable, only a small proportion can be considered core for liquidity purposes. Nonetheless, some of these savings deposits now have contractual maturities of up to 10 years. The bank's Support rating and its Support Rating Floor reflect Fitch's opinion that while the its ultimate shareholder is committed to supporting its growth given the subsidiary's strategic importance, such support cannot be relied upon to drive the ratings. This is because the ability of this shareholder to provide support in case of need cannot be quantified by Fitch. CEB is fully owned by Credit Europe Group, itself ultimately fully-owned by Fiba Group, a leading Turkish group with significant cash resources and 100% owned by Husnu Ozyegin, a prominent businessman. CEB was established in 1994 as Finansbank (Holland) N.V. in Amsterdam. At end-2009 it had assets of EUR10 billion and equity of EUR638 million. It provides worldwide tailor-made trade and commodity finance and retail banking services to around 3 million customers through branches in the Netherlands, Germany, Belgium and Malta and subsidiaries in Russia, Romania, Switzerland, Dubai and Ukraine. ============= R O M A N I A ============= * Fitch Affirms Romania's 'BB+' Long-Term Issuer Default Ratings ---------------------------------------------------------------- Fitch Ratings has affirmed Romania's Long-term foreign and local currency Issuer Default Ratings at 'BB+' and 'BBB-', respectively, with Stable Outlooks. Romania's Country Ceiling and Short-term foreign currency IDR are affirmed at 'BBB' and 'B' respectively. "Romania faces significant challenges in cutting its large budget deficit in the midst of a recession," says Douglas Renwick, Associate Director in Fitch's Sovereign Group. "However, the government has demonstrated its commitment to fiscal consolidation and the agency's central expectation is that Romania will be able to steer a path towards an export-led recovery and stabilize its public finances." Romania's external position has improved considerably over the past 18 months due to official balance-of-payments support and a sharp adjustment in the current account. Fitch now expects Romania's foreign liquid assets to cover 150% of maturing external debt in 2010. The main risk to sovereign creditworthiness has therefore shifted to public finances from external finances. The scale of Romania's budgetary problems weighs on its rating, with the general government deficit reaching 8.3% in 2009. The government passed a major package of expenditure cuts in June 2010. However, the constitutional court subsequently ruled against part of the package relating to a proposed 15% cut in pension payments. While the other measures, most notably a 25% cut in public-sector salaries, have been implemented, the government was forced to make up the gap with a 5pp rise in the VAT rate. Fitch believes the government has consolidated its finances sufficiently to rein the deficit in to 7.3% of GDP for 2010. The policy risk is nonetheless significant given the unpredictable nature of Romanian politics and the need for further tightening in 2011 and beyond to stabilize the debt stock. Although the fiscal deficit is large, public debt/GDP was just 23.7% at end-2009, albeit up sharply from 13.3% at end-2008. The sovereign is also a net external creditor, with net foreign assets of 14% of GDP at end-2009. While heavy recourse to short-term financing has worsened the domestic debt profile, this has been balanced by official borrowing at longer maturities. The additional consolidation has had a negative impact on the wider economy and Fitch has revised down its GDP forecast to a 2% contraction in 2010. The depth of the economic recession worsens the risk profile through adverse debt dynamics and pressure on the banking system. In addition, the high rate of dollarization in Romania (over 90% of mortgages are EUR-denominated) means economic and financial performance is sensitive to large movements in the exchange rate. The banking system, roughly 90% foreign-owned by assets, is well capitalized after injections from a number of foreign parents, but it has experienced a sharp rise in non-performing loans to 10.2% of total by H110. Foreign parent banks have committed themselves under the Vienna Initiative to broadly maintain the balance sheets of their Romanian subsidiaries and to maintain capital adequacy at over 10%. The capital adequacy ratio for the system as a whole is 15%. Although the liquidity risk posed by Greek-owned banks, which constitute 18% of system assets, has increased since the Greek fiscal crisis, this represents only around 7% of GDP and could not be rapidly withdrawn, so that the National Bank of Romania should be able to manage even high stress scenarios. Romania's ratings are supported by strong credit fundamentals for the 'BB' range. The country is more in line with 'BBB' range norms when judged by measures of income per capita, the business environment and governance standards, and by its EU membership. ========= S P A I N ========= BANKINTER 12: Fitch Affirms Rating on Class E Notes at 'CCC' ------------------------------------------------------------ Fitch Ratings has upgraded two tranches and affirmed 12 tranches of the Bankinter series, Fondos de Titulizacion Hipotecaria y Fondo de Titulizacion de Activos. The upgrades of Bankinter 7 FTH class C notes and Bankinter 9 FTA, series (P) class B notes reflect adequate credit support provided to these notes and the good performance of the underlying assets which has resulted in minimal defaults. The revision of the Outlook on Bankinter 7 FTH class B to Stable from Positive and the Stable Outlook on class C is due to the fact that since the March 2009 interest payment date (IPD) the amortization of the notes has switched to pro-rata, after the outstanding amount conditions have been met. This is not expected to revert to sequential in the short term. The transaction also includes an amortizing reserve fund, which in combination with the pro-rata pay-down on the notes, is limiting the credit enhancement (CE) to the current levels of 10.4% for class A (5.2% at issuance), 5.1% for class B (2.55%) and 3% for class C (1.5%). CE is only likely to start increasing again once the reserve fund reaches its floor amount of 1% of the initial note balance and stops amortizing. Given the current economic environment in Spain Fitch does not expect to upgrade these tranches until CE begins to increase. Furthermore, the reserve fund for Bankinter 7 FTH, which provides credit support to the most junior tranche, is deposited with Bankinter S.A. bank ('A+'/Stable/'F1+'). As per Fitch's counterparty criteria, the rating of the junior notes would not be upgraded beyond the rating of the counterparty where the majority of subordination is provided by a reserve fund held with one entity. Hence, the rating on the class C tranche will be capped at that of Bankinter S.A. bank. The revision of the Outlooks on Bankinter 12 FTH, class B and C notes, to Stable from Positive are due to worsening pool performance. Although the volume of loans in arrears by three or more months remains low, at 0.65% of the current loan balance, the volume of loans being classified as defaulted has increased in recent months to 0.21% of the initial pool balance but is still within Fitch's rating scenarios. However, as the current level of new defaults has depressed net excess spread, resulting in an increased likelihood of reserve fund draws in the short-term, Fitch is unlikely to upgrade the B and C tranches. The Bankinter 12 FTH notes benefit from a sequential pay down of the principal amount and a fully funded reserve fund of EUR11.3m (0.95% of the initial note balance). In Fitch's view this is a positive feature which will improve the credit support available to each class of notes. The upgrade of Bankinter 9 FTA, series (P) class B, and the outlook revision to Positive from Stable on the series (T) class B notes reflect adequate credit support resulting from sequential pay-down and a fully funded reserve fund of EUR7.45 million for series (P) and EUR7.83 million for series (T) (both being 1% of the initial note balance). Fitch does not expect the series (T) to switch to pro-rata amortization, or for the reserve fund to begin amortizing in the next 18 months. Conversely, the series (P) reserve fund is expected to amortize in the short-term, impacting the CE growth mostly on the junior tranche. This is reflected in the Outlook revision to Stable from Positive on the series (P) Class C notes. At closing, Bankinter 9 FTA issued two series of notes backed by two segregated portfolios of residential mortgage loans. The pools were segregated according to their loan-to-value (LTV) ratios. Series (P) is backed by a pool of loans with an LTV below 80%, while series (T) is backed by loans with an LTV of over 80%. The series are not cross-collateralized, and have separate subordination, reserve funds and payment waterfalls. Despite the more adverse pool characteristics of series (T), performance has been above expectations compared to other Spanish residential mortgages transactions characterized by the same LTV levels. This is reflected in the series (T) class B's Positive Outlook. The Bankinter series classifies defaulted loans as loans in arrears by more than 18 months and, like other Spanish RMBS, they use available excess revenue to write off this portion of the pool to avoid the cost of carry of these loans. Bankinter 7 Fondo de Titulizacion Hipotecaria (Bankinter 7 FTH): -- Class A (ISIN ES0313547004): affirmed at 'AAA'; Outlook Stable; assigned a Loss Severity Rating of 'LS-1' -- Class B (ISIN ES0313547012): affirmed at 'AA+'; Outlook revised to Stable from Positive; assigned a 'LS-1' -- Class C (ISIN ES0313547020): upgraded to 'A+' from 'A'; Outlook Stable; assigned a 'LS-1' Bankinter 9 Fondo de Titulizacion de Activos (Bankinter 9 FTA): -- Series P Class A2 (ISIN ES0313814016): affirmed at 'AAA'; Outlook Stable; assigned a 'LS-1' -- Series P Class B (ISIN ES0313814024): upgraded to 'AA+' from 'AA'; Outlook Stable; assigned a 'LS-1' -- Series P Class C (ISIN ES0313814032): affirmed at 'BBB+'; Outlook revised to Stable from Positive; assigned a 'LS-2' -- Series T Class A2 (ISIN ES0313814057): affirmed at 'AAA'; Outlook Stable; assigned a 'LS-1' -- Series T Class B (ISIN ES0313814065): affirmed at 'A+'; Outlook revised to Positive from Stable; assigned a 'LS-1' -- Series T Class C (ISIN ES0313814073): affirmed at 'BBB'; Outlook Stable; assigned a 'LS-2' Bankinter 12 Fondo de Titulizacion Hipotecaria (Bankinter 12 FTH): -- Class A2 (ISIN ES0313715015): affirmed at 'AAA'; Outlook Stable; assigned a 'LS-1' -- Class B (ISIN ES0313715023): affirmed at 'A+'; Outlook revised to Stable from Positive; assigned a 'LS-2' -- Class C (ISIN ES0313715031): affirmed at 'A-'; Outlook revised to Stable from Positive; assigned a 'LS-3' -- Class D (ISIN ES0313715049): affirmed at 'BBB-'; Outlook Stable; assigned a 'LS-3' -- Class E (ISIN ES0313715056): affirmed at 'CCC'; assigned a Recovery Rating of 'RR-6' * SPAIN: Corporate Bankruptcies Down 13.7% in Second Qtr. 2010 -------------------------------------------------------------- Xinhua, citing a report from the National Statistics Institute, says the number of companies declaring bankruptcy in Spain saw a drop of 13.7% in the second quarter of 2010 compared with the previous same period. According to Xinhua, the report said during the period, a total of 1,243 companies had to suspend their payments, down 9.5% from the first quarter of the year. One in three companies declaring bankruptcy during the period operates in either the construction industry or in property management, Xinhua notes. ===================== S W I T Z E R L A N D ===================== FOSTER WHEELER: S&P Raises Corporate Credit Rating From 'BB+' ------------------------------------------------------------- Standard & Poor's Ratings Services said that it has raised its corporate credit rating on Zug, Switzerland-based engineering and construction company Foster Wheeler AG to 'BBB-' from 'BB+'. S&P removed the rating from CreditWatch Positive, where it was placed on April 21, 2010. At the same time, S&P withdrew the 'BBB' issue-level and '1' recovery ratings on Foster Wheeler LLC's senior credit facilities, which the company has refinanced. The outlook is stable. "The upgrade reflects S&P's view that, despite economic conditions and moderately lower revenues in 2010, S&P believes Foster Wheeler's good free cash flow generation, strong liquidity position, and satisfactory credit metrics will continue to support the 'BBB-' rating," said Standard & Poor's credit analyst Robyn Shapiro. "The company has generated good free cash flow for the past several years, allowing it to hold sizable cash balances. As of June 30, 2010, the company had about US$1 billion in cash and funds from operations to total debt of 73%. S&P expects the company to maintain strong liquidity and satisfactory credit metrics despite a moderate decline in sales in 2010." The 'BBB-' rating on Foster Wheeler reflects S&P's opinion that the company has established a track record of good operating performance and moderate financial policy. The ratings also reflect the company's intermediate financial risk profile and satisfactory business risk profile. The ratings incorporate the inherent cyclicality of the E&C services sector. In the past, strong demand and capacity constraints on engineering services enabled energy- and power- focused companies like Foster Wheeler to exert pricing power, despite increased labor and materials costs. However, during cycle troughs, these companies may find it difficult to negotiate for new contracts. Consolidated backlog totaled US$3.7 billion as of June 30, 2010--down from US$5.5 billion on Dec. 26, 2008. However, the backlog has been strong, providing solid earnings with a lower risk profile. The portion representing cost- reimbursable projects was about 70% of the total as of June 30, 2010 (60% in 2005). The outlook is stable. "S&P could lower the rating if the company's liquidity or credit protection measures decline significantly due to cost overruns or working capital swings (for instance, if liquidity weakens to less than adequate or if FFO to total debt appears likely to fall below 25%). S&P is unlikely to raise the ratings, because of S&P's current assessment of the company's business risk profile, which S&P considers to be a ratings constraint," Ms. Shapiro added. =========================== U N I T E D K I N G D O M =========================== ANGEL MINING: US$4.5MM Loan Payment Deadline Extended to Aug. 31 ---------------------------------------------------------------- Angel Mining plc failed to pay a bridging Loan and accrued interest due August 9, 2010. Angel Mining said Cyrus Capital Partners, L.P., as agent, agreed to forbearance on the default until the close of business on August 31, 2010. Angel Mining on July 8 2010, announced that Cyrus, the agent under the financing agreements with FBC Holdings Sarl, agreed to advance an additional US$4.5 million -- Bridging Loan -- to Angel Mining bringing the total indebtedness with FBC to US$21.0 million plus accrued interest. Under the terms of the arrangements, the Bridging Loan and accrued interest was repayable August 9, 2010. The July 8 Announcement also described the Company as being in advanced discussions with another party in relation to a significant new financing facility, pursuant to which it is anticipated that the Third Party will, subject to Angel Mining shareholder approval, commit to a debt facility of US$100 million which will include associated equity subscription rights. The negotiations in this respect are nearing completion and the Company will announce further details in due course. On May 24 2010, the Company said it was in default in relation to its financing agreements with FBC and that it was in discussions with Cyrus to ensure continued access to liquidity. U.K.-based Angel Mining plc -- http://www.angelmining.com/-- grew out of the exploration company Angus and Ross plc and is now a mining operation focused on Greenland. Angel Mining is registered in England & Wales and its shares are listed on the AIM market of the London Stock Exchange (Symbol: ANGM). CALYX: Hires Adviser to Explore Debt-Reduction Options ------------------------------------------------------ Sam Trendall at CRN reports that Calyx has hired an adviser to examine debt-reduction possibilities. The report says Calyx is working with adviser Livingstone Partners to formulate debt reduction strategies. According to the report, the firm is seeking to reduce its significant debt levels, with the most likely options being a venture capital cash injection or a debt-for-equity swap. The report relates during 2008, the Anglo-Irish integrator posted UK operating losses of GBP2.4 million on sales of GBP37.4 million. Meanwhile, the report discloses the company's chief financial officer, David Hargaden, has stepped down from the board following the appointment of Livingstone Partners. Calyx is an independent provider of Managed ICT Services in the UK & Ireland. CORSAIR LIMITED: Fitch Downgrades Ratings on Two Notes to 'D' ------------------------------------------------------------- Fitch Ratings has downgraded both Corsair (Jersey) Limited's Series 327 and 328 credit-linked notes to 'D'/'RR6' from 'C'/'RR6'. The full list of rating actions is: -- JPY3.1 billion* Series 327 downgraded to 'D' from 'C'; Recovery Rating of 'RR6'; -- JPY0.7 billion* Series 328 downgraded to 'D' from 'C'; Recovery Rating of 'RR6'. * as of 6 August 2010 These transactions are managed synthetic corporate CDOs. The notes have been partially written down as a result of the cumulative losses from seven credit events in each reference portfolio: Freddie Mac, Fannie Mae, Lehman Brothers Holdings Inc., Glitnir Banki hf, Kaupthing Banki hf, Syncora Guarantee Inc. and Ambac Assurance Corporation. This rating action follows the receipt of the valuation notices on these credit events. LIVERPOOL FOOTBALL: Did Not Get Formal Bid From Kenneth Huang ------------------------------------------------------------- Jamil Anderlini at The Financial Times reports that China Investment Corp., the country's main sovereign wealth fund, said it had never heard of a plan to buy Liverpool or of Kenneth Huang, the man reported to be fronting a Chinese bid to buy the English Premier League club. According to the FT, Liverpool chairman Martin Broughton and Barclays Capital -- both brought in by Liverpool's American owners to broker a sale -- have yet to receive a formal bid. The FT relates a person close to the situation said that there were no credible hard bids at the moment. The FT notes the person said potential buyers had been told to say what they were offering or walk away, a process that would take about a week. UK media have reported that Mr. Huang, owner of a small sports marketing company with an office in Beijing, is bidding for the club with backing from CIC, the FT notes. Mr. Huang himself issued a statement on August 4 saying that although he has registered interest in investing in Liverpool, he has not made a formal bid, the FT discloses. According to the FT, a person who has worked closely with CIC said there was "no way" the fund would get involved in such a high- profile, symbolic and potentially risky deal. As reported by the Troubled Company Reporter-Europe on Aug. 6, 2010, Mail Online said the American owners, Tom Hicks and George Gillett, were forced to put the club up for sale in April after coming under pressure for owing its lender, Royal Bank of Scotland, GBP237 million. Liverpool Football Club and Athletic Grounds owns and operates one of the more popular and most successful franchises in the UK Premier League. Known as The Reds, Liverpool has won 18 first division titles and seven FA Cups since it was founded by John Houlding in 1892. In addition to the football club, the company owns and operates Anfield Stadium, Liverpool's home ground. The company generates revenue primarily through sponsorships, broadcasting fees, and ticket sales. The company was acquired by US businessmen George Gillett and Tom Hicks in 2007. LLOYDS BANKING: Nears Sale of Properties to Legal & General ----------------------------------------------------------- Daniel Thomas at The Financial Times reports that Scottish entrepreneur Sir Tom Hunter and Lloyds Banking Group are close to completing the sale of GBP150 million (US$240 million) of retail properties to Legal & General. Mr. Hunter's West Coast Capital and Lloyds each own about 40% of a fund called LxB3, which holds the retail properties, the FT discloses. According to the FT, Mr. Hunter and Lloyds have been in talks with potential buyers over the past few months but are now close to completing the deal with L&G. The GBP150 million price tag represents a yield of less than 6%, the FT notes. The LxB3 portfolio comprises bulky goods retail parks, food and department stores as well as the Royal Spa retail park in Tunbridge Wells, Kent, the FT states. About Lloyds Banking Group PLC Lloyds Banking Group PLC, formerly Lloyds TSB Group plc, (LON:LLOY) -- http://www.lloydsbankinggroup.com/-- is a United Kingdom-based financial services group providing a range of banking and financial services, primarily in the United Kingdom, to personal and corporate customers. The Company operates in three divisions: UK Retail Banking, Insurance and Investments, and Wholesale and International Banking. Its main business activities are retail, commercial and corporate banking, general insurance, and life, pensions and investment provision. The Company also operates an international banking business with a global footprint in 40 countries. Services are offered through a number of brands, including Lloyds TSB, Halifax, Bank of Scotland, Scottish Widows, Clerical Medical and Cheltenham & Gloucester. On January 16, 2009, Lloyds Banking Group plc acquired HBOS plc. * * * As reported by the Troubled Company Reporter-Europe on March 17, 2010, Standard & Poor's Ratings Services said that it lowered its rating on a GBP56.472 million 6.475% preference share issue by Lloyds Banking Group (A/Stable/A-1) to 'C' from 'CC' following the first missed coupon payment. The rating action was the first of S&P's forthcoming rating actions on over 40 hybrid instruments issued by Lloyds and related entities with discretionary coupon payments. According to S&P, each security would be lowered to 'C' from 'CC' on the date of the first coupon payment to be missed. ON A MISSION: Goes Into Liquidation ----------------------------------- Mix 96 reports that On A Mission Coaches LLP has gone into liquidation. According to Mix 96, liquidator Robert Day, from Robert Day and Company Limited, said the company ceased trading on Aug. 3. Mr. Day was approached by members to assist them in placing the business into creditors' voluntary liquidation, Mix 96 relates. On A Mission Coaches LLP was one of the coach companies who take Buckinghamshire children to school. * UK: Company Administrations Down 0.8% in Second Quarter 2010 -------------------------------------------------------------- The number of troubled companies falling into insolvency has dropped by less than 0.8% with 777 companies being placed into administration in England and Wales in the second quarter of 2010, according to statistics released last week by the Government's Insolvency Service. This is 24.3% drop year-on-year, compared to the 1,027 administrations recorded in Q2 2009. "Administrations have now fallen for five quarters in a row since they peaked in Q1 2009, which saw 1,311 companies fall into administration. This is a welcome trend in the number of business failures, but the UK economy is not out of the woods yet. The recent lackluster performance of the important services sector is a real cause of concern, coming before the full impact of the reductions in government spending and the impending VAT rise. We expect to see an increase in business failures in outsourcing, as well as the hotel and leisure services sectors," commented Malcolm Shierson, Partner at Grant Thornton's Recovery and Reorganisation practice. "There is widespread concern that the recovery of the UK economy will suffer some set-backs, which is why the Bank of England kept interest rates on hold at 0.5%. The purchasing managers' index indicates that full year growth may well fall short of the 1.1% rise in GDP reported in the second quarter of 2010. "Company liquidations in England and Wales also dropped to 4,080 in Q2 2010. This figure reflects a fall of 0.5% on the previous quarter (4,060 in Q1 2010) and a fall of 19.1% against the same period in the previous year (5,041 in Q2 2009). "The health of the UK economy is mainly reflected in the number of administrations. Typically large employers are placed in administration when they run into trouble, whereas liquidations are more common among smaller enterprises," concluded Mr. Shierson. =========== E U R O P E =========== * Moody's: European Default Rate Rises to 6.2% in July 2010 ----------------------------------------------------------- The European speculative-grade default rate rose from a revised rate of 5.7% in June to 6.2% in July 2010, Moody's Investors Service said in its latest report. Last year, the European default rate stood at 7.8% in July. Globally, the trailing 12-month global speculative-grade default rate continued its downward path, sliding to 5.5% in July, marking the eight consecutive monthly decline since the peak of 13.5% in November 2009. The current global rate is down from previous month's revised level of 6.2% and a year ago's 11.7%. Moody's default rate forecasting model now predicts that the global speculative-grade default rate will fall to 2.6% by the end of this year, before declining to 1.8% a year from now. "Absent a substantial retreat in available financing, the global default rate will continue to slow," said Albert Metz, Moody's Director of Credit Policy Research. "The apparent softness in the economic recovery will not be enough to re-accelerate the default rate." Among European speculative-grade issuers, Moody's forecasting model projects the speculative-grade default rate declining to 2.4% by the end of this year. For U.S. speculative-grade issuers, Moody's forecasting model foresees default rate falling to 2.7% by December 2010. Measured on a dollar volume basis, the European speculative-grade bond default rate increased to 4.2% in July from 3.4% in June. The rise in the European bond default rate was mainly driven by approximately US$1.6 billion of defaulted bonds by Weather Finance III S.a.r.l., a telecom company in Greece. At this time last year, the European speculative-grade bond default rate stood at 8.1%. In the U.S., the dollar-weighted speculative-grade bond default rate fell from 3.0% in June to 2.5% in July. The comparable rate was 19.0% a year ago. Moody's speculative-grade corporate distress index -- which measures the percentage of rated issuers that have debt trading at distressed levels -- came in at 15.6% in July, down slightly from June's revised level of 16.0%. A year ago, the index was higher at 36.7%. A total of 34 Moody's-rated corporate debt issuers have defaulted so far this year, of which seven were recorded in July. In comparison, there were 196 defaults in the same period of last year. In the leveraged loan market, American Safety Razor Company was the sole Moody's-rated loan issuer that defaulted in July. The total default count was 17 from year to date. In comparison, there were 89 loan defaults in the first seven months of last year. The trailing 12 month U.S. leveraged loan default rate fell to 5.2% in July from June's revised level of 6.2%. A year ago, the loan default rate stood at 9.4%. Across industries over the coming year, default rates are expected to be highest in the Durable Consumer Goods sector in Europe and in the Hotel, Gaming, & Leisure sector in the U.S. ********* 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. A list of Meetings, Conferences and Seminars appears in each Thursday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com 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., Frederick, Maryland USA. Joy A. Agravante, Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez, Frauline S. Abangan and Peter A. Chapman, Editors. Copyright 2010. 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$625 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *