/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/101111.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, November 11, 2010, Vol. 11, No. 223 Headlines B U L G A R I A * BULGARIA: NRA Seeks to Liquidate 64 Firms Over Tax Debt G E R M A N Y * GERMANY: Insolvencies Up 11.6% in August 2010 I C E L A N D LANDSBANKI ISLANDS: Assets Will Cover 93% of Priority Claims I R E L A N D BACCHUS 2006-1: S&P Affirms 'CCC- (sf)' Rating on Class E Notes BACCHUS 2006-2: S&P Affirms 'CCC- (sf) Rating on Class E Notes IRISH NATIONWIDE: Subordinated Bonds Fall Amid Loss Concerns PRECINCT INVESTMENTS: Pre-Tax Losses Widen to EUR39.8MM in 2008 * IRELAND: Nama's Strategy "Flawed", Construction Sector Says * IRELAND: Hasn't Asked for Aid, EU Commissioner Olli Rehn Says * IRELAND: Heads For Further Financial Woes, Economist Says * IRELAND: Agencies Compete for Insolvencies I T A L Y TIRRENIA DI NAVIGAZIONE: Mediterranean Shipping Mulls Bid N E T H E R L A N D S EUROCREDIT CDO: S&P Raises Ratings on Various Classes of Notes KPNQWEST NV: Ruling on Bankruptcy Probe Must Be Reconsidered P O L A N D TVN FINANCE: Moody's Assigns 'B1' Rating to EUR175 Mil. Notes TVN SA: S&P Affirms 'B+' Long-Term Corporate Credit Rating P O R T U G A L BANCO ESPIRITO: Fitch Cuts Rating on Preference Shares to 'BB' BANIF: Fitch Downgrades Rating on Preference Shares to 'BB' S W E D E N * SWEDEN: Corporate Bankruptcies Up 1% in October 2010 T U R K E Y * Moody's Assigns 'Ba2' Ratings to Municipality of Izmir U N I T E D K I N G D O M CORSAIR NO 4: Moody's Junks Ratings on Credit-Linked Notes NATIONAL BANK: Fitch Affirms LT Issuer Default Rating at 'BB+' ROK PLC: Projects on Hold as Talks Start With Suitors ROK PLC: PricewaterhouseCoopers Receives 100++ Interests X X X X X X X X * EUROPE: Bruegel Proposes Court-Supervised Debt Restructuring * EUROPE: Private Creditors Must Take Part in EU Debt Mechanism * Upcoming Meetings, Conferences and Seminars ********* =============== B U L G A R I A =============== * BULGARIA: NRA Seeks to Liquidate 64 Firms Over Tax Debt --------------------------------------------------------- The Sofia Echo reports that Bulgaria's National Revenue Agency has called for the liquidation of 64 companies that have repeatedly failed or chosen to ignore calls to pay overdue taxes. The Sofia Echo relates NRA said that about 93 million leva were owed by a number of firms who have systematically ignored all attempts to pay their taxes and mandatory benefits contributions to the state or debts to other creditors. According to The Sofia Echo, the law empowers NRA to seek legal action against companies that dodge their obligations, and have them closed from doing business. The Sofia Echo says companies that are heavily indebted and file for bankruptcy will be then handled by the court. The latter will subsequently impose a lien on all of their property and assets which will then be sold and distributed to creditors. According to The Sofia Echo, the NRA also said that managers and owners of companies that were currently in debt would be banned from setting up new business ventures in the future. Moreover, The Sofia Echo notes, a trader who becomes insolvent and fails to declare his condition in court within 30 days could be facing imprisonment of up to three years and a fine of up to 5000 leva, as recommended by the NRA. ============= G E R M A N Y ============= * GERMANY: Insolvencies Up 11.6% in August 2010 ----------------------------------------------- The Federal Statistical Office said German insolvency courts reported 14,372 insolvencies in August 2010; 2,660 of them referred to enterprises and 9,543 to consumers. The total number of insolvencies increased 11.6% compared with August 2009, enterprise insolvencies increased 1.6% and insolvencies of consumers increased 21.4%. From January to August 2010, 113,305 insolvencies (+6.0%) were registered, 21,888 of which were enterprise insolvencies (+0.4%). Altogether the courts registered 72,751 consumer insolvencies, which were 10.7% more than in the same months one year earlier. ============= I C E L A N D ============= LANDSBANKI ISLANDS: Assets Will Cover 93% of Priority Claims ------------------------------------------------------------ Omar R. Valdimarsson at Bloomberg News reports that Landsbanki Islands hf on Tuesday said in an e-mailed statement that its assets will probably cover 93% of priority claims against it. According to Bloomberg, Landsbanki said the estimate follows an increase in the bank's recovery rate last quarter. About Landsbanki Islands Landsbanki Islands hf, also commonly known as Landsbankinn in Iceland, is an Icelandic bank. The bank offered online savings accounts under the "Icesave" brand. On October 7, 2008, the Icelandic Financial Supervisory Authority took control of Landsbanki and two other major banks. Landsbanki filed for Chapter 15 protection on Dec. 9, 2008 (Bankr. S.D. N.Y. Case No.: 08-14921). Gary S. Lee, Esq., at Morrison & Foerster LLP, represents the Debtor. When it filed for protection from its creditors, it listed assets and debts of more than US$1 billion each. ============= I R E L A N D ============= BACCHUS 2006-1: S&P Affirms 'CCC- (sf)' Rating on Class E Notes --------------------------------------------------------------- Standard & Poor's Ratings Services raised its credit ratings on BACCHUS 2006-1 PLC's class A-1A, A-2A, A-2B, B, and C notes. At the same time, S&P affirmed its ratings on the class D and E notes. The rating actions follow S&P's observations of an increased balance of performing assets in the transaction, due to restructurings of previously defaulted assets. S&P has also observed an increase in the recovery prospects of the portfolio (expressed as a weighted-average recovery rate). There has been a reduction in the gross level of defaults expected on the portfolio over the life of the transaction, due to a reduction in the weighted-average life of the transaction. The weighted- average spread of the transaction has also increased. Finally, S&P has also noted an increase in the credit enhancement in BACCHUS 2006-1 since S&P last took rating action on the transaction in December 2009. This is due to an increase in performing assets, as mentioned above, and a deleveraging of the transaction. Despite some concerns about the level of assets in the portfolio rated in the 'CCC' category ('CCC+', 'CCC', and 'CCC-'), S&P considers the increased credit enhancement available to the class A, B, and C notes to be commensurate with higher ratings than previously assigned. S&P has therefore raised its ratings on these classes. BACCHUS 2006-1 is a cash flow CLO transaction that securitizes loans to primarily speculative-grade corporate firms. Ratings List BACCHUS 2006-1 PLC EUR400 Million Senior Secured and Deferrable Floating-Rate Notes Ratings Raised Rating ------ Class To From ----- -- ---- A-1A AA- (sf) A+ (sf) A-2A AA+ (sf) A+ (sf) A-2B AA- (sf) A- (sf) B BBB+ (sf) BB+ (sf) C B+ (sf) CCC+ (sf) Ratings Affirmed Class Rating ----- ------ D CCC- (sf) E CCC- (sf) BACCHUS 2006-2: S&P Affirms 'CCC- (sf) Rating on Class E Notes -------------------------------------------------------------- Standard & Poor's Ratings Services raised its credit ratings on BACCHUS 2006-2 PLC's class A-1, A-2A, A-2B, B, C, and D notes. At the same time, S&P affirmed its rating on the class E notes. The rating actions follow S&P's observations of an increased balance of performing assets in the transaction, due to restructurings of previously defaulted assets. There has been a reduction in the gross level of defaults expected on the portfolio over the life of the transaction due to a reduction in the weighted-average life of the transaction. The weighted-average spread of the transaction has also increased. Finally, S&P has also noted an increase in the credit enhancement in BACCHUS 2006-2 since S&P last took rating action on the transaction in December 2009. This is due to an increase in performing assets, as mentioned above, and a deleveraging of the transaction. Despite some concerns about the level of assets in the portfolio rated in the 'CCC' category ('CCC+', 'CCC', and 'CCC-') in the portfolio, S&P considers the increased credit enhancement available to the class A, B, C, and D notes to be commensurate with higher ratings than previously assigned. S&P has therefore raised its ratings on these classes. BACCHUS 2006-2 is a cash flow CLO transaction that securitizes loans to primarily speculative-grade corporate firms. Ratings List BACCHUS 2006-2 PLC EUR491.21 Million Senior Secured And Deferrable Floating-Rate Notes Ratings Raised Rating ------ Class To From ----- -- ---- A-1 AA- (sf) A+ (sf) A-2A AA+ (sf) A+ (sf) A-2B AA- (sf) BBB+ (sf) B BBB+ (sf) BB+ (sf) C BB+ (sf) CCC- (sf) D B (sf) CCC- (sf) Rating Affirmed Class Rating ----- ------ E CCC- (sf) IRISH NATIONWIDE: Subordinated Bonds Fall Amid Loss Concerns ------------------------------------------------------------ John Glover at Bloomberg News reports that Irish Nationwide Building Society's subordinated bonds fell as the prospect of a court battle with investors spurred loss concerns. Bloomberg relates the lender's EUR126 million (US$175 million) of 13% lower Tier 2 bonds were quoted at 25 cents on the euro by Jefferies International Ltd. on Tuesday, Nov. 9, down from 32 cents on Thursday, Nov. 4. Satin Finance Sarl and Trimast Holding Sarl started proceedings against the lender and BNP Paribas Trust Corp., the trustee for its subordinated bonds, in the English courts last week, Bloomberg relates. The lender's EUR598 million of senior floating-rate notes due June 2012 declined for a second day, falling 0.75 cent to 78.5 euros, close to the record low level of 77.75 reached in September, pricing data compiled by Bloomberg show. Irish Nationwide Building Society, headquartered in Dublin, had total assets of EUR14.4 billion at year-end 2008. * * * As reported by the Troubled Company Reporter-Europe on Sept. 6, 2010, Fitch Ratings upgraded the Individual rating of Irish Nationwide Building Society to 'E' from 'F'. Fitch said the upgrade of INBS's Individual Rating to 'E' recognizes the government's injection of EUR2.7 billion capital into the society, but also acknowledges that the society is still likely to require further external support. The sale at a loss of loans to NAMA is likely to lead the society to report losses in 2010 which Fitch expects to be larger than the society's capital base. Fitch thus expects that the society will require additional capital to comply with the Irish Financial Regulator's minimum capital requirements of an 8% Tier 1 capital ratio by end-2010. PRECINCT INVESTMENTS: Pre-Tax Losses Widen to EUR39.8MM in 2008 --------------------------------------------------------------- Precinct Investments's pre-tax losses widened to EUR39.8 million in 2008 from EUR4 million in 2007 as the firm incurred a massive property devaluation in the period, John Mulligan at Irish Independent reports, citing new accounts filed for the business. According to Irish Independent, gross profit at the group fell 33% in 2008 to just under EUR11 million, while turnover was down nearly 23% to slightly below EUR23 million. The accounts also note that the hotel group has notched up a further EUR7 million loss in 2009, Irish Independent states. The value of the three hotels in the group at the end of 2008 was slashed by more than a third -- from EUR177.7 million in December 2007 to EUR107.4 million at the end of 2008, although property firm CB Richard Ellis Gunne revalued them again at the end of 2009 at EUR116.4 million, the report relates. Irish Independent says the financial statements also acknowledge that the group has incurred "significant losses and cash outflows due to a high level of debt and asset revaluations". They warn that its bank facilities -- which are held with Anglo Irish Bank and Bank of Ireland -- all have to be renegotiated by the end of this year, Irish Independent notes. "The directors would highlight that the asset disposals form a central part of the strategic plan of the group to restructure its financing and there is no guarantee that future funding will be available on commercially acceptable basis or at all," according to the accounts, Irish Independent discloses. Precinct Investments is solely owned by builder Bryan Cullen and the company was used to take the Gresham Hotel group private in 2004 in a EUR117 million deal. * IRELAND: Nama's Strategy "Flawed", Construction Sector Says ------------------------------------------------------------- Ciaran Hancock and Simon Carswell at The Irish Times report that the Construction Industry Federation told the board of the National Asset Management Agency (Nama) last month that its EUR5 billion working capital facility was "inadequate" to "manage [out] or improve" the EUR74 billion in distressed property assets that have been transferred from Irish-owned banks. In a hard-hitting presentation, made to the board of Nama on October 7 and seen by The Irish Times, the federation added that "most borrowers now believe Nama to be a massive liquidation vehicle". "Nama sees itself as liquidator more than as an asset manager," the federation stated in the presentation to Nama's board, which is chaired by Frank Daly, according to The Irish Times. The Irish Times relates the federation argued that the Nama process had "decimated banks' balance sheets through excessive writedowns and will do likewise for borrower/developers". The Irish Times notes it said Nama's short-term business strategy was "inherently flawed" because of a lack of market. It argued that a 25 per cent reduction in three years would fuel a "vicious cycle" and said planned firesales would further depress the market and result in more defaults, according to The Irish Times. It called for Nama to "optimize returns" in the medium term rather than the short term, The Irish Times discloses. The Irish Times relates the federation also pressed for "viable projects" to be "developed to completion as quickly as possible". "If Nama thinks there should be no new building for the next decade, it will be too late for Ireland when Nama realizes that this was a mistake," it stated, according to The Irish Times. The Irish Times notes the board of Nama was also told the agency was "ill equipped" to manage the assets, or even "bank supervise" them and this must be "urgently addressed". The presentation was made by federation chief Tom Parlon and Hubert Fitzpatrick, its director of development, housing and planning, The Irish Times discloses. The federation has commissioned Lombard Street Research to prepare a report on Nama and its operations, The Irish Times says. This will include a view on targets set out in Nama's business plan, the adequacy of the EUR5 billion working capital facility, and impediments to the future work-out of viable assets, The Irish Times discloses. The report is expected to be submitted to the federation within weeks, The Irish Times states. * IRELAND: Hasn't Asked for Aid, EU Commissioner Olli Rehn Says --------------------------------------------------------------- Joe Brennan and Finbarr Flynn at Bloomberg News report that European Union Economic and Monetary Affairs Commissioner Olli Rehn said Ireland hasn't asked for aid as investors dump the government's bonds on concern that the cost of bailing out its banks may bankrupt the nation. "I can only say that Ireland has not requested the activation of any European financial backstops," said Mr. Rehn at a press conference in Dublin late Monday, according to Bloomberg. He indicated that Ireland may have to abandon the tax policies that helped foster its decade-long economic boom, reiterating that the country couldn't continue as a "low-tax" economy, Bloomberg notes. Bloomberg says Ireland is struggling to convince investors it can avoid a rescue as the nation's finances buckle under the weight of saving Anglo Irish Bank Corp. While Ireland is fully funded until the middle of next year, the yield on Irish 10-year government bonds nevertheless rose above 8 percent on Monday for the first time since the country joined the euro in 1999, Bloomberg relates. That pushed the premium that investors demand to hold Irish debt over German bunds to a record 547 basis points, Bloomberg discloses. Mr. Rehn, as cited by Bloomberg, said he backed the government's plan to narrow the deficit by EUR6 billion (US$8.4 billion) next year, and the state should be given space to formulate its four- year plan to fix the shortfall. * IRELAND: Heads For Further Financial Woes, Economist Says ----------------------------------------------------------- InsideIreland.ie reports that UCD economist Morgan Kelly said Ireland is insolvent and headed for further financial woes due to burgeoning difficulties in the mortgage sector. Writing in the Irish Times Mr. Kelly said that national insolvency caused by banks' bad debts will worsen as the mortgage market is likely to collapse, according to InsideIreland.ie. According to InsideIreland.ie, Mr. Kelly wrote that the government commitments to bail out banks have meant billions of euros are being poured into Anglo Irish Bank, AIB and Bank of Ireland, a policy which the country can simply not afford. InsideIreland.ie says Mr. Kelly predicted that the final cost of bailing out AIB could be EUR26 billion, almost as much as Anglo Irish, with the price tag for Bank of Ireland at EUR16 billion. Mr. Kelly, according to InsideIreland.ie, stated that the amount being spent on bank debts, EUR70 billion, far outweighs the EUR15 billion in savings planned by the government between now and 2014. Mr. Kelly suggested that without this huge deficit from the banks, the government could stablilise the economy within four years. If the government keeps paying for failing banks then there is no end in sight to Ireland's bankruptcy, InsideIreland.ie adds. InsideIreland.ie notes Mr. Kelly said that the next thing to hit the banks' funds will be mortgages, with one in eight not meeting original payment conditions, statistics that are set to worsen. * IRELAND: Agencies Compete for Insolvencies -------------------------------------------- The Irish Times reports that two Dublin-based estate agencies are to go into direct competition with insolvency accountants to handle the ever-increasing number of properties going into receivership. The report relates that the agencies are in the process of setting up individual insolvency divisions to manage non-performing property assets while a strategy is agreed to realize their maximum value. According to The Irish Times, commercial agent HWBC has formed a 50:50 joint venture company with UK agent Allsop to offer fixed- charge receivership in the Republic; while Dublin-based Colliers International is launching a similar service to that already provided by its parent company and its Belfast office. The report notes that a third agency is also understood to be gearing up to offer a fixed-charge receivership in the Irish market. The Irish Times notes that all three contend that the new service will greatly reduce costs for banks and other lending institutions putting properties into receivership. A large number of residential and commercial properties as well as development sites are already in receivership and a great many more are in serious trouble after falling heavily in value because of the collapse of the property market and the turmoil in the banking sector, the report discloses. Meanwhile, the Irish Times relates, the newly formed HWBC Allsop company said it has already secured its first instructions from a number of different financial institutions. They were currently devising a strategy for the various properties and were preparing reports and their initial advices, the report notes. The Irish Times reports that they had yet to meet with all the financial institutions and to date had generally confined meeting with those companies who knew and used Allsops in the UK. Simon Davidson, director of HWBC Allsop, said that over the past year its UK team had seen a considerable increase in demand for receivers with property expertise as lenders needed to release the maximum potential of the assets in a cost-effective manner, The Irish Times says. The Irish Times relates that the new partnership in Ireland was providing both property receivership and management service under one roof. Up to now fixed-charge receivers in Ireland had historically come from accountancy backgrounds, the report adds. ========= I T A L Y ========= TIRRENIA DI NAVIGAZIONE: Mediterranean Shipping Mulls Bid --------------------------------------------------------- Andrew Davis at Bloomberg News, citing Il Sole 24 Ore, reports that Italian-Swiss shipping company Mediterranean Shipping Co. plans to bid for Tirrenia di Navigazione SpA. According to Bloomberg, MSC founder Gianluigi Aponte told Il Sole that MSC will make the bid through Grandi Navi Veloci SpA, a company in which it bought a 50% stake this year. As reported by the Troubled Company Reporter-Europe on Aug. 16, 2010, Bloomberg News said that a Rome judge on Aug. 12 declared Tirrenia insolvent, the first step toward placing the company under state administration. Bloomberg disclosed Italy failed this month to sell Tirrenia and on Aug. 5 approved "emergency financial provisions" to help guarantee ferry services. The sale was pulled after the government did not reach a final agreement with bidder Mediterranea Holding, according to Bloomberg. Bloomberg noted Rome newspaper la Repubblica, citing Nicola Coccia, a Mediterranea shareholder, reported Mediterranea might team up with other operators such as Moby SpA and Grandi Navi Veloci SpA to make a new offer for Tirrenia. Uil Trasporti, as cited by Bloomberg, said it might appeal the ruling and would fight against the state- owned company's breakup. Tirrenia di Navigazione SpA, founded in 1936, runs passenger and cargo ships linking the mainland with islands Sardinia, Sicily and Corsica as well as Albania. ===================== N E T H E R L A N D S ===================== EUROCREDIT CDO: S&P Raises Ratings on Various Classes of Notes -------------------------------------------------------------- Standard & Poor's Ratings Services raised its credit ratings on Eurocredit CDO III B.V.'s class A, B, C, D, E, and R (Combo) notes. At the same time, S&P withdrew its rating on the class S combination notes. Since S&P last took rating action on Eurocredit CDO III in December 2009, S&P has observed improvements in the performance of the transaction, notably an increase in the credit enhancement for all notes. The transaction is past its reinvestment period and principal proceeds are used to redeem the notes in sequential order on payment dates. In S&P's opinion, the improvement in credit enhancement is due to two main factors: The amortization of the class A notes using principal proceeds, and the diversion of interest proceeds to cure the breach of the class E par-value test. In S&P's view, the increase in credit enhancement for the class A, B, C, D, and E notes is commensurate with higher ratings than those currently assigned, and S&P has therefore raised its ratings on these classes. As reported in recent transaction reports, the class E par-value test is currently in breach. As a result, there have been no distributions to the subordinated class M notes, which form part of the class R combination notes. However, S&P's cash flow analysis shows it is likely that the rated balances of class R will be repaid if the class C-2 rated component ultimately repays in full. S&P has therefore raised its rating on the class R notes to 'BB+' from 'BB-', in line with the rating on the class C-2 notes. The trustee has recently informed us that the class S combination notes were split into their component parts earlier this year. In S&P's opinion, combination note ratings are therefore no longer applicable to these classes. Therefore, S&P has withdrawn its ratings on the class S combination notes. Eurocredit CDO III is a cash flow collateralized loan obligation securitizing a pool of loans to primarily speculative-grade corporate firms. The transaction closed in September 2003 and is managed by Intermediate Capital Managers Ltd. Ratings List Eurocredit CDO III B.V. EUR231.3 Million Fixed- & Floating-Rate Notes And Accreting Notes Ratings Raised Rating ------ Class To From ----- -- ---- A-1 AA+ (sf) AA- (sf) A-2 AA+ (sf) AA- (sf) B A+ (sf) BBB+ (sf) C-1 BB+ (sf) BB- (sf) C-2 BB+ (sf) BB- (sf) D-1 B+ (sf) CCC- (sf) D-2 B+ (sf) CCC- (sf) E-1 B- (sf) CCC- (sf) E-2 B- (sf) CCC- (sf) R (Combo) BB+ (sf) BB- (sf) Rating Withdrawn Rating ------ Class To From ----- -- ---- S (Combo) NR CCC- (sf) NR -- Not rated. KPNQWEST NV: Ruling on Bankruptcy Probe Must Be Reconsidered ------------------------------------------------------------ Martijn van der Starre at Bloomberg News reports that an adviser to the Dutch Supreme Court said in an advisory opinion published by Dutch investor group VEB on Tuesday that the Supreme Court should order the Amsterdam Court of Appeal's Enterprise Chamber to reconsider its refusal to end an inquiry into KPNQwest NV's 2002 bankruptcy. Bloomberg relates the Enterprise Chamber turned down a request by VEB to halt the probe earlier this year. As reported by the Troubled Company Reporter-Europe on Oct. 1, 2010, Bloomberg News said that Qwest Communications International Inc., Royal KPN NV and 12 executives were sued by KPNQwest's administrators over the company's 2002 bankruptcy and EUR4.2 billion (US$5.7 billion) of unpaid debt. Bloomberg disclosed KPNQwest's court appointed administrators at law firm Houthoff Buruma said in an e-mailed statement that the defendants have to appear Jan. 19 in a district court in the Dutch city of Haarlem. They said the administrators hold the companies and executives responsible for the bankruptcy, according to Bloomberg. KPNQwest was declared bankrupt in 2002 after building a 60-city phone and Internet network just before prices for telecommunications services collapsed, Bloomberg said. The administrators, as cited by Bloomberg, said the company didn't change strategy and tripled its investments in the network, even though market prices had fallen by as much as 80% by 1999, the year KPNQwest was founded. KPNQwest NV is a joint venture of Royal KPN NV and Qwest Communications International Inc. =========== P O L A N D =========== TVN FINANCE: Moody's Assigns 'B1' Rating to EUR175 Mil. Notes ------------------------------------------------------------- Moody's Investors Service has assigned a provisional (P)B1 rating to the proposed EUR175 million senior unsecured notes due 2018 to be issued by TVN Finance Corporation III AB, a wholly owned finance subsidiary of TVN S.A. TVN's corporate family rating is B1, with a stable outlook. Moody's understands that TVN intends to use the proceeds from the notes to (i) repay outstanding amounts under the PLN500 million unsecured bonds due in June 2013 and (ii) collateralize outstanding amounts under its PLN200 million loan facility, currently used for guarantee purposes, with the proceeds from the new notes. The company has stated in its prospectus that (i) it intends to keep the portion of funds to be used to repay the PLN notes in separate accounts until the earliest call date, expected to be 14 June 2011; and (ii) the loan facility will be cancelled. Ratings Rationale The (P)B1 rating on the new notes -- in line with the CFR -- reflects their unsecured position within TVN's capital structure, as well as their pari passu ranking with TVN's existing senior unsecured notes due in 2017. Both the new and existing notes will share the same guarantee and covenant package. As of 30 September 2010, the guarantor group represented at least 90% of TVN's EBITDA, net income and assets. Subsequent to the transaction TVN's capital structure will consist of an all-bond structure and the group will be subject to, among other restrictions, an incurrence-based covenant restriction at 5.5x consolidated debt/EBITDA and associated carve-outs, including a general basket not to exceed EUR75 million. The B1 CFR of TVN incorporates Moody's expectation that TVN will not take advantage of its flexibility with regard to debt incurrence, as the group currently benefits from a relatively good level of liquidity and cash on the balance sheet. Moody's expects TVN's dividend policy to remain between 30% and 50% of annual net profits and any acquisitions to be of an add-on nature going forward. The B1 CFR is also cognizant of the fact that TVN is a publicly listed company, majority owned and controlled by the ITI Group, itself holding a meaningful amount of external debt. TVN has demonstrated success in further diversifying its revenue base, from TV advertising and carriage fees from the production of TV content into subscription-based revenues from pay TV, thanks to its acquisition of the DTH satellite platform "n". In addition, the group has slightly improved its already strong market position in the Polish TV market. However, the B1 CFR continues to incorporate the evolution of TVN's business risk as a result of the acquisition of "n", which remains in the early stages of development. Moody's notes that "n" has made good progress and exceeded TVN's expectations in terms of subscriber acquisitions as well as revenue and EBITDA performance. However, the rating agency also understands that "n" is expected to remain a negative contributor to the group in terms of cash flow generation for 2010. Moody's notes that TVN's financial profile has improved in 2010 as the TV advertising market has shown signs of stabilization and recovery. The stable outlook reflects Moody's expectation that TVN will gradually return to sustainable positive free cash flow generation -- having taken into account the company's current dividend policy of distributing 30% of net profits -- as the market continues to recover, "n" gradually becomes EBITDA breakeven and improves its cash flow profile. A return to sustainable free cash flow generation, combined with leverage falling sustainably below 4.5x, could exert positive pressure on the rating of TVN. However, Moody's notes that with all of TVN's debt now denominated in euros, the group remains exposed to adverse currency movements, potentially constraining positive pressure on its rating. Negative pressure could be exerted on the rating as a result of a deterioration in TVN's operating performance, leading to an increase in leverage, such that the group's debt/EBITDA ratio moves above 5.5x. Moody's previous rating action on TVN was implemented on 26 April 2010, when a B1 rating was assigned to TVN Finance Corporation II A.B.'s senior notes worth approximately EUR148 million and due in 2017, issued to the parent company of TVN S.A., ITI Group, in March 2010. Headquartered in Warsaw, TVN is one of the leading television broadcasters in Poland. The company also owns and operates Poland's leading internet portal, Onet.pl, and Pay-TV DTH operator "n". In the nine months to 30 September 2010, the company reported net revenues of approximately PLN1.7 billion and EBITDA of PLN425 million. TVN is publicly listed in the Warsaw Stock Exchange, majority owned -- with 56.45% interest -- and controlled by the ITI Group. TVN SA: S&P Affirms 'B+' Long-Term Corporate Credit Rating ---------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' long-term corporate credit rating on Poland-based private TV broadcaster TVN S.A. The outlook is stable. At the same time, S&P affirmed its 'B+' issue rating on the existing cumulative EUR593 million senior unsecured notes due 2017, issued by TVN Finance Corporation II AB. Simultaneously, S&P assigned its 'B+' issue rating to the proposed EUR175 million senior unsecured notes issued by TVN Finance Corporation III AB, a wholly owned subsidiary of TVN. The affirmation follows TVN's launch of the proposed EUR175 million (approximately Polish zloty [PLN] 698 million) senior unsecured notes at TVN Finance Corporation III. TVN plans to use about EUR127.9 million of the proceeds to repay the PLN500 million existing senior unsecured notes due 2013 and to free up EUR8 million of bank guarantees and EUR28.3 million of the PLN200 million revolving credit facility (RCF). The RCF will be cancelled once the current refinancing is completed. After payments of EUR4.5 million in transaction costs, the remaining EUR6.3 million from the proposed notes will shore up TVN's liquidity. "In S&P's view, the refinancing boosts the group's maturity profile, leaving TVN with no debt due until 2017," said Standard & Poor's credit analyst Patrizia D'Amico. The rating on TVN remains constrained by the group's high leverage following last year's agreement to raise its ownership of the direct-to-home platform "n" to 100% from 51%, and by TVN's exposure to cyclical advertising revenues within a single country, Poland. Assuming that the refinancing takes place in 2010, S&P anticipate that the group's adjusted debt-to-EBITDA ratio could decline to about 5.0x by the end of 2010, from 5.6x in 2009, supported by a recovery in the TV advertising markets in Poland and improved performance at "n", which started reporting positive EBITDA in the past two quarters. The rating on the proposed notes reflects the moderate proportion of priority liabilities compared with total assets, and S&P's understanding that the proposed and existing notes would rank pari passu in a hypothetical default scenario. In S&P's view, TVN's credit measures should improve in the near and medium terms, thanks to the group's continuing good operating performance--supported by a steady economic outlook for Poland over the coming years--and to sustained growth at "n." Rating stability depends on TVN continuing to improve its operating performance and maintaining adjusted gross leverage to EBITDA of close to 5x. The ratings could come under pressure if TVN's liquidity were to weaken meaningfully over the next few quarters, or if the group's operating performance and/or improvement in credit ratios were not to match S&P's guidance. A more aggressive financial policy than S&P anticipate, especially in terms of acquisitions, might also result in rating pressure. On the other hand, positive cash flow generation on a sustainable basis resulting in adjusted funds from operations to debt of above 15% and adjusted gross debt to EBITDA of less than 4.5x could result in upward rating momentum. =============== P O R T U G A L =============== BANCO ESPIRITO: Fitch Cuts Rating on Preference Shares to 'BB' -------------------------------------------------------------- Fitch Ratings has downgraded the Long-term Issuer Default Ratings of four Portuguese banks -- Banco Comercial Portugues (Millennium bcp), Banco Espirito Santo, Banco BPI, and Banco Internacional do Funchal. The downgrades reflect increased funding and liquidity risks due to their high reliance on short- and medium-term wholesale funding sources, with increased recourse to ECB funding, in the context of continued difficulties to access the capital markets, and deterioration in domestic performance and asset quality. At the same time, Fitch has downgraded the Individual rating of Millenium bcp, BES and Caixa Geral de Depositos, while affirming those of Banco BPI and Banif. Fitch has also affirmed CGD's Long- term IDR. Banks have increased ECB funding since April 2010, which peaked in August 2010 amid increased difficulties to access the interbank and wholesale markets as a result of concerns surrounding the Portuguese sovereign. While there has been a decline in banks' ECB and other central banks funding to end-September 2010, levels remain well above pre-financial crisis levels, highlighting continued funding and liquidity constraints. This, together with considerable refinancing needs from debt maturities in 2011 and 2012, have added pressure to the banks' liquidity and funding position. Fitch takes comfort from the banks' stable deposit bases, efforts to improve liquidity buffers and significant loan growth deceleration since H110. However, increased investor concerns on Portugal's public finances and economic prospects may limit access to capital markets and prevent the banks from reducing ECB funding in the short-term, and generally on wholesale funding in the medium-term. Also, funding constraint could intensify competition for deposits and accentuate the need for balance sheet deleveraging to ease liquidity pressures. Combined with anticipated asset quality deterioration given Fitch's view that there is a risk of recession in 2011 and anaemic medium-term growth, the banks' profitability is likely to come under further strain. These challenges are reflected in the Negative Outlook on the banks' IDRs. On a positive note, the banks benefit from well-established domestic franchises, which support stable deposit bases, cost containment and adequate capital adequacy, particularly considering that state capital support has not been required. Also, increased pressure on domestic profitability is partly being offset by better-performing foreign operations in emerging countries with high-margin, albeit high-risk, business. CGD has been affirmed at 'A+', reflecting its Portuguese state ownership. CGD's IDRs are driven by the extremely high probability of support from the Portuguese state, as expressed in the '1' Support rating, and are at the bank's Support Rating Floor. CGD's investment bank subsidiary's (Caixa - BI) IDRs are aligned with its parent's, as it is wholly owned by, and an integral part of, the CGD group. Any rating action affecting the sovereign would have an impact on the IDRs of CGD and Caixa - BI. Banco BPI's Individual rating of 'B/C' indicates fewer concerns on its funding and liquidity position, which is comparatively better. This is supported by a greater proportion of its funding coming from deposits, more moderate refinancing needs in the next two years and still robust asset quality indicators. The ratings of the Portuguese banks affected by the rating action are: CGD: -- Long-term IDR affirmed at 'A+'; Outlook Negative -- Short-term IDR affirmed at 'F1' -- Individual Rating downgraded to 'C' from 'B/C' -- Support Rating affirmed at '1' -- Support Rating Floor affirmed at 'A+' -- Senior unsecured debt issues affirmed at 'A+' -- Market-linked securities affirmed at 'A+emr' -- Lower tier 2 subordinated debt issues affirmed at 'A' -- Commercial paper program affirmed at 'F1' -- Preference shares affirmed at 'A-' -- Senior debt guaranteed by the Portuguese state affirmed at 'AA-' Caixa - BI: -- Long-term IDR affirmed at 'A+'; Outlook Negative -- Short-term IDR affirmed at 'F1' -- Support Rating affirmed at '1' Millennium bcp: -- Long-term IDR downgraded to 'BBB+' from 'A'; Outlook Negative -- Short-term IDR downgraded to 'F2' from 'F1' -- Individual Rating downgraded to 'C' from 'B/C' -- Support Rating affirmed at '2' -- Support Rating Floor affirmed at 'BBB' -- Senior unsecured debt downgraded to 'BBB+' from 'A' -- Lower tier 2 subordinated debt downgraded to 'BBB' from 'A-' -- Commercial paper program downgraded to 'F2' from 'F1' -- Preference shares downgraded to 'BBB-' from 'BBB+' -- Senior debt guaranteed by the Portuguese state affirmed at 'AA-' BES: -- Long-term IDR downgraded to 'BBB+' from 'A'; Outlook Negative -- Short-term IDR downgraded to 'F2' from 'F1' -- Individual Rating downgraded to 'C' from 'B/C' -- Support Rating affirmed at '2' -- Support Rating Floor affirmed at 'BBB-' -- Senior unsecured debt issues downgraded to 'BBB+' from 'A' -- Lower tier 2 subordinated debt downgraded to 'BBB' from 'A-' -- Commercial paper program downgraded to 'F2' from 'F1' -- Preference shares downgraded to 'BBB-' from 'BBB+' -- Senior debt guaranteed by the Portuguese state affirmed at 'AA-' Espirito Santo Financial Group, Luxembourg: -- Long-term IDR downgraded to 'BBB-' from 'BBB+'; Outlook Negative -- Short-term IDR downgraded to 'F3' from 'F2' -- Support Rating affirmed at '5' -- Support Rating Floor affirmed at No Floor -- Lower tier 2 subordinated debt downgraded to 'BB+' from 'BBB' -- Commercial paper program downgraded to 'F3' from 'F2' -- Preference shares downgraded to 'BB' from 'BBB-' ESFIL - Espirito Santo Financiere: -- Senior unsecured debt issues downgraded to 'BBB-' from 'BBB+' -- Commercial paper program downgraded to 'F3' from 'F2' Banco BPI: -- Long-term IDR downgraded to 'A-' from 'A'; Outlook Negative -- Short-term IDR downgraded to 'F2' from 'F1' -- Individual Rating affirmed at 'B/C' -- Support Rating affirmed at '2' -- Support Rating Floor affirmed at 'BBB-' -- Senior unsecured debt downgraded to 'A-' from 'A' -- Market-linked securities downgraded to 'A-emr' from 'Aemr' -- Lower tier 2 subordinated debt downgraded to 'BBB+' from 'A-' -- Commercial paper program downgraded to 'F2' from 'F1' -- Preference shares downgraded to 'BBB' from 'BBB+' BPI: -- Long-term IDR downgraded to 'A-' from 'A'; Outlook Negative -- Short-term IDR downgraded to 'F2' from 'F1' -- Support Rating affirmed at '1' Banif: -- Long-term IDR downgraded to 'BBB-' from 'BBB'; Outlook Negative -- Short-term IDR affirmed at 'F3' -- Individual Rating affirmed at 'C' -- Support Rating affirmed at '3' -- Support Rating Floor affirmed at 'BB' -- Senior unsecured debt downgraded to 'BBB-' from 'BBB' -- Lower tier 2 subordinated debt downgraded to 'BB+' from 'BBB- ' -- Preference shares downgraded to 'BB' from 'BB+' -- Senior debt guaranteed by the Portuguese state affirmed at 'AA-' The rating impact, if any, from the above rating actions on BES's and BCP's foreign subsidiaries as well as on the Portuguese banks' securitisation transactions and covered bonds will be detailed in separate comments. BANIF: Fitch Downgrades Rating on Preference Shares to 'BB' ----------------------------------------------------------- Fitch Ratings has downgraded the Long-term Issuer Default Ratings of four Portuguese banks -- Banco Comercial Portugues (Millennium bcp), Banco Espirito Santo, Banco BPI, and Banco Internacional do Funchal. The downgrades reflect increased funding and liquidity risks due to their high reliance on short- and medium-term wholesale funding sources, with increased recourse to ECB funding, in the context of continued difficulties to access the capital markets, and deterioration in domestic performance and asset quality. At the same time, Fitch has downgraded the Individual rating of Millenium bcp, BES and Caixa Geral de Depositos, while affirming those of Banco BPI and Banif. Fitch has also affirmed CGD's Long- term IDR. Banks have increased ECB funding since April 2010, which peaked in August 2010 amid increased difficulties to access the interbank and wholesale markets as a result of concerns surrounding the Portuguese sovereign. While there has been a decline in banks' ECB and other central banks funding to end-September 2010, levels remain well above pre-financial crisis levels, highlighting continued funding and liquidity constraints. This, together with considerable refinancing needs from debt maturities in 2011 and 2012, have added pressure to the banks' liquidity and funding position. Fitch takes comfort from the banks' stable deposit bases, efforts to improve liquidity buffers and significant loan growth deceleration since H110. However, increased investor concerns on Portugal's public finances and economic prospects may limit access to capital markets and prevent the banks from reducing ECB funding in the short-term, and generally on wholesale funding in the medium-term. Also, funding constraint could intensify competition for deposits and accentuate the need for balance sheet deleveraging to ease liquidity pressures. Combined with anticipated asset quality deterioration given Fitch's view that there is a risk of recession in 2011 and anaemic medium-term growth, the banks' profitability is likely to come under further strain. These challenges are reflected in the Negative Outlook on the banks' IDRs. On a positive note, the banks benefit from well-established domestic franchises, which support stable deposit bases, cost containment and adequate capital adequacy, particularly considering that state capital support has not been required. Also, increased pressure on domestic profitability is partly being offset by better-performing foreign operations in emerging countries with high-margin, albeit high-risk, business. CGD has been affirmed at 'A+', reflecting its Portuguese state ownership. CGD's IDRs are driven by the extremely high probability of support from the Portuguese state, as expressed in the '1' Support rating, and are at the bank's Support Rating Floor. CGD's investment bank subsidiary's (Caixa - BI) IDRs are aligned with its parent's, as it is wholly owned by, and an integral part of, the CGD group. Any rating action affecting the sovereign would have an impact on the IDRs of CGD and Caixa - BI. Banco BPI's Individual rating of 'B/C' indicates fewer concerns on its funding and liquidity position, which is comparatively better. This is supported by a greater proportion of its funding coming from deposits, more moderate refinancing needs in the next two years and still robust asset quality indicators. The ratings of the Portuguese banks affected by the rating action are: CGD: -- Long-term IDR affirmed at 'A+'; Outlook Negative -- Short-term IDR affirmed at 'F1' -- Individual Rating downgraded to 'C' from 'B/C' -- Support Rating affirmed at '1' -- Support Rating Floor affirmed at 'A+' -- Senior unsecured debt issues affirmed at 'A+' -- Market-linked securities affirmed at 'A+emr' -- Lower tier 2 subordinated debt issues affirmed at 'A' -- Commercial paper program affirmed at 'F1' -- Preference shares affirmed at 'A-' -- Senior debt guaranteed by the Portuguese state affirmed at 'AA-' Caixa - BI: -- Long-term IDR affirmed at 'A+'; Outlook Negative -- Short-term IDR affirmed at 'F1' -- Support Rating affirmed at '1' Millennium bcp: -- Long-term IDR downgraded to 'BBB+' from 'A'; Outlook Negative -- Short-term IDR downgraded to 'F2' from 'F1' -- Individual Rating downgraded to 'C' from 'B/C' -- Support Rating affirmed at '2' -- Support Rating Floor affirmed at 'BBB' -- Senior unsecured debt downgraded to 'BBB+' from 'A' -- Lower tier 2 subordinated debt downgraded to 'BBB' from 'A-' -- Commercial paper program downgraded to 'F2' from 'F1' -- Preference shares downgraded to 'BBB-' from 'BBB+' -- Senior debt guaranteed by the Portuguese state affirmed at 'AA-' BES: -- Long-term IDR downgraded to 'BBB+' from 'A'; Outlook Negative -- Short-term IDR downgraded to 'F2' from 'F1' -- Individual Rating downgraded to 'C' from 'B/C' -- Support Rating affirmed at '2' -- Support Rating Floor affirmed at 'BBB-' -- Senior unsecured debt issues downgraded to 'BBB+' from 'A' -- Lower tier 2 subordinated debt downgraded to 'BBB' from 'A-' -- Commercial paper program downgraded to 'F2' from 'F1' -- Preference shares downgraded to 'BBB-' from 'BBB+' -- Senior debt guaranteed by the Portuguese state affirmed at 'AA-' Espirito Santo Financial Group, Luxembourg: -- Long-term IDR downgraded to 'BBB-' from 'BBB+'; Outlook Negative -- Short-term IDR downgraded to 'F3' from 'F2' -- Support Rating affirmed at '5' -- Support Rating Floor affirmed at No Floor -- Lower tier 2 subordinated debt downgraded to 'BB+' from 'BBB' -- Commercial paper program downgraded to 'F3' from 'F2' -- Preference shares downgraded to 'BB' from 'BBB-' ESFIL - Espirito Santo Financiere: -- Senior unsecured debt issues downgraded to 'BBB-' from 'BBB+' -- Commercial paper program downgraded to 'F3' from 'F2' Banco BPI: -- Long-term IDR downgraded to 'A-' from 'A'; Outlook Negative -- Short-term IDR downgraded to 'F2' from 'F1' -- Individual Rating affirmed at 'B/C' -- Support Rating affirmed at '2' -- Support Rating Floor affirmed at 'BBB-' -- Senior unsecured debt downgraded to 'A-' from 'A' -- Market-linked securities downgraded to 'A-emr' from 'Aemr' -- Lower tier 2 subordinated debt downgraded to 'BBB+' from 'A-' -- Commercial paper program downgraded to 'F2' from 'F1' -- Preference shares downgraded to 'BBB' from 'BBB+' BPI: -- Long-term IDR downgraded to 'A-' from 'A'; Outlook Negative -- Short-term IDR downgraded to 'F2' from 'F1' -- Support Rating affirmed at '1' Banif: -- Long-term IDR downgraded to 'BBB-' from 'BBB'; Outlook Negative -- Short-term IDR affirmed at 'F3' -- Individual Rating affirmed at 'C' -- Support Rating affirmed at '3' -- Support Rating Floor affirmed at 'BB' -- Senior unsecured debt downgraded to 'BBB-' from 'BBB' -- Lower tier 2 subordinated debt downgraded to 'BB+' from 'BBB- ' -- Preference shares downgraded to 'BB' from 'BB+' -- Senior debt guaranteed by the Portuguese state affirmed at 'AA-' The rating impact, if any, from the above rating actions on BES's and BCP's foreign subsidiaries as well as on the Portuguese banks' securitisation transactions and covered bonds will be detailed in separate comments. =========== S W E D E N =========== * SWEDEN: Corporate Bankruptcies Up 1% in October 2010 ------------------------------------------------------ Nordic Business Report, citing data by business and credit information agency Upplysningscentralen AB, reports that the number of corporate bankruptcies in Sweden increased by 1% year- on-year to 553 in October 2010. After a growth of 15% in September 2010, the bankruptcy count increased for the second month in a row, breaking the declining trend from the beginning of the year, the report relates. According to Nordic Business Report, in the first ten months of 2010, the bankruptcy count shrank by 10% on the year to 5,102, driven by positive development in most sectors. The report says wholesale trade and motor vehicle sales and service registered the biggest decrease (-26% and -25%, respectively), while the increasing trend for hotels and restaurants and for facility services continued. =========== T U R K E Y =========== * Moody's Assigns 'Ba2' Ratings to Municipality of Izmir -------------------------------------------------------- Moody's Investors Service has assigned issuer ratings of Ba2 (Global Scale, local and foreign currency) and A3.tr (Turkey National Scale) to the metropolitan municipality of Izmir, in western Turkey. The rating outlook is stable. Ratings Rationale "Izmir's Ba2/A3.tr ratings reflect its strong operating finances and good controls on debt," says Francesco Soldi, a Moody's Vice President and lead analyst for Izmir. Growing shared taxes, which make of the bulk of revenues, and good expenditure controls have produced an average surplus of 49% of operating income in 2005- 2009. Budgets for 2010-2012 forecast a reduction to just over 35%, but this level will preserve good margins for debt payments as well as support capital funding. Direct municipal debt has fallen over the past five years and at YE 2009 amounted to approximately TRY830 million, equivalent to a moderate 66% of the city's operating income, 82% with the debt of municipal companies, with both figures stable in 2010. With the exception of the water affiliate IZSU, which is profitable and debt-free, municipal-related companies require subsidies from the city and are a contingent liability for Izmir. "We expect Izmir's to continue its conservative financial management during the projected uptake in its investment activity" continues Mr. Soldi. Although equity and cash reserves will continue to represent the major sources of capex financing, direct municipal borrowing is expected to finance a greater proportion of new capital expenditures compared with past years. Nevertheless, Moody's considers this projected debt strategy as manageable in view of growing revenues. With the third-largest economic base in the country, Izmir is well-positioned to benefit from the country's healthy economic prospects. Located on Turkey's western coast, Izmir is the hub of Aegean region with 7% of Turkey's GDP and 3.9 million inhabitants with per capita income 35% above the national average. =========================== U N I T E D K I N G D O M =========================== CORSAIR NO 4: Moody's Junks Ratings on Credit-Linked Notes ---------------------------------------------------------- Moody's Investors Service took these rating actions on notes issued by Corsair (Jersey) No. 4 under Series 6, a CDO square referencing seven static portfolios of corporate and sovereign entities. Issuer: Corsair (Jersey) No. 4 Limited - Series 6 -- US$85M Cross-Contingent Step-Down Portfolio Credit-Linked Notes due 2024, Downgraded to Caa2 (sf); previously on Mar 6, 2009 Downgraded to Ba3 (sf) Ratings Rationale Moody's explained that the rating action taken is the result of the deterioration of the credit quality of the reference portfolio. The 10 year weighted average rating factor, excluding Ca/C rated names, of the inner CDO portfolios currently ranges between 574 and 806, equivalent to an average rating of Baa3. The transaction is exposed to several reference entities that suffered credit events since last rating action date, in particular Takefuji Corporation, Thomson S.A., Syncora Guarantee Inc, Aiful Corporation and CIT Group Inc. These entities are referenced in several inner CDOs and therefore have a significant impact on the expected loss of the outer CDO tranche. The Telecommunications, FIRE: Insurance and Banking sectors are the most represented in the inner portfolios, weighting on average 10.74%, 10.40%, and 9.71%, respectively, of the inner portfolios notional. The transaction has 14.14 years to legal final maturity and 4.14 years until the credit observation end date. While the legal final maturity of the notes is in December 2024, note holders have a put option to redeem their notes in Jan 2015 at the then current notional amount. In the event note holders choose not to exercise the put option, the note coupon will drop to US$-Libor minus 20 bps from US$-Libor plus 55 bps. In the process of determining the final rating, Moody's assigned a low likelihood to the option not being exercised, using the short exposure period as the basis of the rating analysis. Moody's also looked at results of sensitivity analysis -- which included removal of forward-looking measures, the notching adjustment on each entity's rating due to watch for downgrade or negative outlook was removed, resulting in a positive impact of one notch; and the impact of the transaction continuing past the put option redemption date at the lower coupon rate which resulted in a positive impact of two notches. In addition to the quantitative factors that are explicitly modeled, qualitative factors are part of rating committee considerations. These qualitative factors include the structural protections in each transaction, the recent deal performance in the current market environment, the legal environment, and specific documentation features. All information available to rating committees, including macroeconomic forecasts, input from other Moody's analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, may influence the final rating decision. Moody's analysis for this transaction is based on the CDOROMTM. This model is available on moodys.com under Products and Solutions -- Analytical models, upon return of a signed free license agreement. Moody's Investors Service did not receive or take into account a third party due diligence report on the underlying assets or financial instruments related to the monitoring of this transaction in the past 6 months. Due to the impact of revised and updated key assumptions referenced in "Moody's Approach to Rating Corporate Synthetic Obligations", key model inputs used by Moody's in its analysis may be different from the manager/arranger's reported numbers. In particular, rating assumptions for all publicly rated corporate credits in the underlying portfolio have been adjusted for "Review for Possible Downgrade", "Review for Possible Upgrade", or "Negative Outlook". Moody's analysis of corporate CSOs is subject to uncertainties, the primary sources of which includes complexity, governance and leverage. Although the CDOROM model capture many of the dynamics of the Corporate CSO structure, it remains a simplification of the complex reality. Of greatest concern are (a) variations over time in default rates for instruments with a given rating, (b) variations in recovery rates for instruments with particular seniority/security characteristics and (c) uncertainty about the default and recovery correlations characteristics of the reference pool. Similarly on the legal/structural side, the legal analysis although typically based in part on opinions (and sometimes interpretations) of legal experts at the time of issuance, is still subject to potential changes in law, case law and the interpretations of courts and (in some cases) regulatory authorities. Although the impact of these decisions is mitigated by structural constraints, anticipating the quality of these decisions necessarily introduces some level of uncertainty in Moody's assumptions. Given the tranched nature of Corporate CSO liabilities, rating transitions in the reference pool may have leveraged rating implications for the ratings of the Corporate CSO liabilities, thus leading to a high degree of volatility. All else being equal, the volatility is likely to be higher for more junior or thinner liabilities. The base case scenario modeled fits into the central macroeconomic scenario predicted by Moody's of a sluggish recovery scenario of the corporate universe. Should macroeconomics conditions evolves towards a more severe scenario such as a double dip recession, the CSO rating will likely be downgraded to an extent depending on the expected severity of the worsening conditions. NATIONAL BANK: Fitch Affirms LT Issuer Default Rating at 'BB+' -------------------------------------------------------------- Fitch Ratings has affirmed London-based National Bank of Egypt UK's Long-term Issuer Default Rating at 'BB+' with a Stable Outlook, its Short-term IDR at 'B', Individual rating at 'D' and Support rating of '3'. NBE UK's IDRs and Support Rating reflect the moderate probability of support that it would likely receive, ultimately from the Egyptian authorities, via its 100% owner, National Bank of Egypt (NBE, rated 'BB+'/Stable Outlook). The IDRs and Support Rating are aligned with those of NBE and Egypt's sovereign rating ('BB+'/Stable). NBE UK's Individual Rating reflects its balance sheet liquidity, adequate capitalization and declining exposure to impaired assets. However, it also recognizes the bank's constrained profitability and concentrations on both sides of the balance sheet. Downside risk to the Individual Rating would arise if pressure to maintain or increase profitability resulted in a higher risk strategy. However, Fitch considers this unlikely to occur in the short term. Upside potential to the Individual Rating is currently limited. Following the global financial crisis, NBE UK revised its strategy. Management's primary focus is on improving the credit quality of its assets and maintaining liquidity. In line with its revised strategy, management has continued to invest cash flows from maturing assets into 'AAA'-rated government securities and government-guaranteed instruments. At end-FY10, 81% of the balance sheet was invested in investment grade assets, compared with 76% at end-FY09. Apart from improving credit quality, the new strategy also helps NBE UK comply with new liquidity regulations from the Financial Services Authority. In order to mitigate the impact on profitability, NBE UK plans to shift profit generation off balance sheet by growing its trade finance business, which should improve fee income. Fitch believes that NBE UK is adequately capitalized. Driven by a 19% decrease in risk-weighted asset and a full retention of FY10's net income, the bank reported a significantly improved capital adequacy ratio of 27.1% at end-FY10 (end-FY09: 21.9%). The bank does not plan to pay dividends till end-FY12. NBE UK's main areas of activity are the wholesale money-market business, debt securities, syndicated loan facilities and the provision of trade finance facilities, primarily to Egyptian banks. In Fitch's rating criteria, a bank's standalone risk is reflected in Fitch's Individual ratings and the prospect of external support is reflected in Fitch's Support ratings. Collectively these ratings drive Fitch's Long- and Short-term IDRs. ROK PLC: Projects on Hold as Talks Start With Suitors ----------------------------------------------------- Perry Gourley at The Scotsman reports that work on tens of millions of pounds of contracts being carried out by Rok Plc has been suspended as talks with potential buyers continue. As reported in the Troubled Company Reporter-Europe on November 9, 2010, Rok boss Garvis Snook has placed the company into administration. Construction Inquirer related that a stock exchange announcement said: "The board of Rok announces that it has resolved to put the Company into administration and to make an application to the Financial Services Authority to suspend the listing and trading of the Company's Ordinary Shares on the Stock Exchange. It is anticipated that the administration and suspension will become effective shortly." The report noted that the move follows weeks of rumors that the company was struggling in the maintenance sector which has already been hit by the collapse of Connaught. According to The Scotsman, administrators at PricewaterhouseCoopers, who were called in by directors rather than the banks, disclosed that work on existing contracts had been temporarily suspended although employees continued to be paid. The report relates that Alan Brown, director of business recovery services at PwC in Scotland, said there had already been significant interest in the company and in its Scottish interests. Among the major Scottish projects where Rok's work has stopped include brewing and distilling giant Diageo's GBP86 million bottling plant in Leven and a GBP65 million bio-energy plant for the company's Cameronbridge distillery, The Scotsman relates. Highlands & Islands Enterprise, which only last month awarded Rok a GBP32 million contract over four years to carry out most of its building work across the region, has also seen work suspended on projects including a renewable energy manufacturing plant in Machrihanish in Argyll, the report adds. ROK PLC -- http://www.rokgroup.com/-- is a holding company of a group of companies providing response maintenance, planned repairs and refurbishment and new build services in the United Kingdom. The Company operates in three segments: response maintenance; planned repairs and refurbishment, and new build. Rok Plc provides a range of plumbing, heating and electrical (PHE) services. The Company's wholly owned subsidiaries include Rok Building Limited, Rok Development Limited, Richardson Projects Limited, LAS Plant Limited, Rok Civil Engineering Limited and Tulloch Transport Limited. ROK PLC: PricewaterhouseCoopers Receives 100++ Interests -------------------------------------------------------- PricewaterhouseCoopers said it has received more than 100 expressions of interest in failed building contractor Rok after both Rok PLC and Rok Building Limited sunk into administration, 24dash.com reports. According to the report, PwC was confirmed administrator and disclosed its priority to "urgently review the financial position of the company and seek a buyer of the businesses". According to the report, a PwC spokesperson said the interest had been wide-ranging. The report relates that the spokesperson said: "It's been a mixture of everything from those interested in parts of the business to those interested in the whole lot. I think they're [the administrators] hoping to wrap it up quite quickly. Some of the jobs take days or weeks, some take months, but I think they're hoping for more days than weeks on this one." 24dash.com notes that rival Mears, who along with Morgan Sindall, took on most of the Connnaught contracts following its administration in September, confirmed its interest in Rok's "social housing facing" work, but its chairman Bob Holt appeared to rule out any non-core business work. ROK PLC -- http://www.rokgroup.com/-- is a holding company of a group of companies providing response maintenance, planned repairs and refurbishment and new build services in the United Kingdom. The Company operates in three segments: response maintenance; planned repairs and refurbishment, and new build. Rok Plc provides a range of plumbing, heating and electrical (PHE) services. The Company's wholly owned subsidiaries include Rok Building Limited, Rok Development Limited, Richardson Projects Limited, LAS Plant Limited, Rok Civil Engineering Limited and Tulloch Transport Limited. =============== X X X X X X X X =============== * EUROPE: Bruegel Proposes Court-Supervised Debt Restructuring -------------------------------------------------------------- James G. Neuger at Bloomberg News reports that the Bruegel research institute said that Europe needs to create a court- supervised debt-restructuring system that works in tandem with the financial-aid facility set up this year to shield the euro from future debt shocks. According to Bloomberg, Bruegel proposed putting the European Union's supreme court in charge of working out creditors' claims, with emergency loans coming from the European Financial Stability Facility launched this year with a EUR440 billion (US$614 billion) warchest. Set up by European governments in 2005, Bruegel specializes in macroeconomic research and global economic management, Bloomberg discloses. The system must "not be too lenient to private creditors," wrote five authors including Bruegel director Jean Pisani-Ferry, former EU adviser Andre Sapir and Anne Krueger, a former first deputy managing director of the International Monetary Fund, according to Bloomberg. The system would only apply to future debt issues, Bloomberg states. Bloomberg relates the authors said the losses should be adjudicated by the Luxembourg-based European Court of Justice under legal guidelines that treat all creditors equally. * EUROPE: Private Creditors Must Take Part in EU Debt Mechanism --------------------------------------------------------------- Patrick Donahue at Bloomberg News reports that German Chancellor Angela Merkel on Tuesday said in Berlin that private creditors must participate in a permanent crisis mechanism for the euro. As reported by the Troubled Company Reporter-Europe on Nov. 4, 2010, Bloomberg News said European Union leaders endorsed German calls for a rewrite of EU treaties to create a permanent debt- crisis mechanism, while sparring over whether to force bondholders to help pay the bill for rescuing financially distressed states. Bloomberg disclosed as the biggest contributor to this year's hastily arranged EUR860 billion (US$1.2 trillion) in loans and pledges to stem the debt crisis, Germany won backing to set up a permanent system by 2013. Germany rules out extending this year's emergency taxpayer-funded financial assistance mechanisms when they expire in 2013, Bloomberg noted. Ms. Merkel's follow-up system would extend debt maturities, suspend interest payments and waive creditor claims, Bloomberg said, citing an Oct. 28 Handelsblatt newspaper report. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Nov. 11, 2010 AMERICAN BANKRUPTCY INSTITUTE Detroit Consumer Bankruptcy Conference Hyatt Regency Dearborn, Dearborn, Mich. Contact: 1-703-739-0800; http://www.abiworld.org/ Nov. 29, 2010 RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP, INC. 17th Annual Distressed Investing Conference The Helmsley Park Lane Hotel, New York City Contact: 1-903-595-3800; http://www.renaissanceamerican.com/ Dec. 9-11, 2010 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Camelback Inn, a JW Marriott Resort & Spa, Scottsdale, Ariz. Contact: 1-703-739-0800; http://www.abiworld.org/ Dec. 2-4, 2010 AMERICAN BANKRUPTCY INSTITUTE 22nd Annual Winter Leadership Conference Camelback Inn, Scottsdale, Arizona Contact: 1-703-739-0800; http://www.abiworld.org/ January 26-28, 2011 TURNAROUND MANAGEMENT ASSOCIATION TMA Distressed Investing Conference Aria Las Vegas Contact: http://www.turnaround.org/ Jan. 27-28, 2011 AMERICAN BANKRUPTCY INSTITUTE Rocky Mountain Bankruptcy Conference Westin Tabor Center, Denver, Colo. Contact: 1-703-739-0800; http://www.abiworld.org/ Feb. 3-5, 2011 AMERICAN BANKRUPTCY INSTITUTE Caribbean Insolvency Symposium Westin Casuarina Resort & Spa, Grand Cayman Island Contact: 1-703-739-0800; http://www.abiworld.org/ Feb. 24-25, 2011 AMERICAN BANKRUPTCY INSTITUTE Valcon Four Seasons Las Vegas, Las Vegas, Nev. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 4, 2011 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Battleground West Hyatt Regency Century Plaza, Los Angeles, Calif. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 7-9, 2011 AMERICAN BANKRUPTCY INSTITUTE Conrad Duberstein Moot Court Competition Duberstein U.S. Courthouse, New York, N.Y. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 10, 2011 AMERICAN BANKRUPTCY INSTITUTE Nuts and Bolts - Florida Tampa, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 10-12, 2011 AMERICAN BANKRUPTCY INSTITUTE SUCL/ Alexander L. Paskay Seminar on Bankruptcy Law and Practice Marriott Tampa Waterside, Tampa, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 17-19, 2011 AMERICAN BANKRUPTCY INSTITUTE Byrne Judicial Clerkship Institute Pepperdine University School of Law, Malibu, Calif. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 31-Apr. 3, 2011 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, National Harbor, Md. Contact: 1-703-739-0800; http://www.abiworld.org/ April 27-29, 2011 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference JW Marriott, Chicago, IL Contact: http://www.turnaround.org/ May 5, 2011 AMERICAN BANKRUPTCY INSTITUTE Nuts and Bolts - New York City Association of the Bar of the City of New York, New York, N.Y. Contact: 1-703-739-0800; http://www.abiworld.org/ May 6, 2011 AMERICAN BANKRUPTCY INSTITUTE New York City Bankruptcy Conference Hilton New York, New York, N.Y. Contact: 1-703-739-0800; http://www.abiworld.org/ June 6, 2011 AMERICAN BANKRUPTCY INSTITUTE Canadian-American Cross-Border Insolvency Symposium Fairmont Royal York, Toronto, Ont. Contact: 1-703-739-0800; http://www.abiworld.org/ June 9-12, 2011 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa, Traverse City, Mich. Contact: http://www.abiworld.org/ July 21-24, 2011 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Hyatt Regency Newport, Newport, R.I. Contact: 1-703-739-0800; http://www.abiworld.org/ July 27-30, 2011 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Sanctuary at Kiawah Island, Kiawah Island, S.C. Contact: 1-703-739-0800; http://www.abiworld.org/ Aug. 4-6, 2011 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hotel Hershey, Hershey, Pa. Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 14, 2011 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program Tampa Convention Center, Tampa, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. __, 2011 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium Dublin, Ireland Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 25-27, 2011 TURNAROUND MANAGEMENT ASSOCIATION Hilton San Diego Bayfront, San Diego, CA Contact: http://www.turnaround.org/ Dec. 1-3, 2011 AMERICAN BANKRUPTCY INSTITUTE 23rd Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, Calif. Contact: 1-703-739-0800; http://www.abiworld.org/ Apr. 19-22, 2012 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, National Harbor, Md. Contact: 1-703-739-0800; http://www.abiworld.org/ July 14-17, 2012 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton Amelia Island, Amelia Island, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Aug. 2-4, 2012 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay, Cambridge, Md. Contact: 1-703-739-0800; http://www.abiworld.org/ Nov. 29 - Dec. 2, 2012 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference JW Marriott Starr Pass Resort & Spa, Tucson, Ariz. Contact: 1-703-739-0800; http://www.abiworld.org/ ********* 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. Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, 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 * * *