/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/101125.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 25, 2010, Vol. 11, No. 233 Headlines C Y P R U S CYPRUS AIRWAYS: Restructuring Plan Needed for Survival G E R M A N Y DEUTSCHE HYPOTHEKENBANK: Fitch Lowers Ratings on Notes to 'Csf' HECKLER & KOCH: S&P Junks Corporate Credit Rating From 'B-' SKY DEUTSCHLAND: BaFin Finds Irregularities in Financial Documents * GERMANY: Wants Private Creditors to Help Ailing EU Nations First H U N G A R Y BKV: Sued by Alstom for Failing to Get HUF37BB Bank Guarantee I R E L A N D ALLIED IRISH: Government May Hold 99.9% Stake After External Aid ANGLO IRISH: Ex-Chief's Wife Has Own Legal Representative BANK OF IRELAND: Government Set to Take Majority Stake IRISH NATIONWIDE: Wins Bid to Dismiss Bondholders Lawsuit TBS INTERNATIONAL: Lenders Extend Forbearance Until Dec. 29 * IRELAND: Rescue Package May Amount to EUR85 Billion * IRELAND: Bailed-Out Banks Should Be Sold, Central Bank Head Says * IRELAND: ECB Shouldn't Act Before Banking Sector Reform I T A L Y SIENA MORTGAGES: Moody's Puts Caa1 (sf) Rating on Class B Notes P O R T U G A L * PORTUGAL: May Request European Bailout Following Ireland R U S S I A HOME CREDIT: Moody's Revises Outlook on 'Ba3' Rating to Stable LOCKO-BANK: Moody's Assigns 'B2' Rating to Senior Unsecured Debt MOBILE TELESYSTEMS: Sets Junk Bond Sale Record PROMSVYAZBANK OJSC: Moody's Assigns 'Ba2' Rating to Senior Debt T U R K E Y SEKERBANK TAS: Moody's Assigns 'D' Bank Financial Strength Rating U N I T E D K I N G D O M ECHELON WEALTH: Investors Make EUR25-Mil. Claim Against IG Group SCREEN EAST: Goes Into Liquidation TATA STEEL UK: Fitch Changes Outlook to Stable; Affirms BB+ Rating TAYLOR WIMPEY: S&P Assigns 'B+' Long-Term Corporate Credit Rating THORNTON TRUST: Goes Into Insolvency; Projects in Limbo * UK: Number of Insolvent Insurance Firms Drop to 6 in October X X X X X X X X * Upcoming Meetings, Conferences and Seminars ********* =========== C Y P R U S =========== CYPRUS AIRWAYS: Restructuring Plan Needed for Survival ------------------------------------------------------ Stelios Orphanides at Bloomberg News reports that Cyprus Finance Minister Charilaos Stavrakis must cut staffing levels and improve productivity as part of a reorganization. According to Bloomberg, Mr. Stavrakis said the airline has a future provided management and staff "agree on a realistic restructuring plan to decrease this year's loss of EUR30 million (US$40.5 million)" or "ideally" make a profit in the next 12 months. Bloomberg relates in August, Cyprus Airways, which is 70% state-owned, reported a loss of EUR25.5 million in the first six months of 2010, compared to a EUR3.5 million loss a year earlier. Cyprus Airways is the national airline of Cyprus, a public limited company with its head offices located in the capital of the island, Nicosia. ============= G E R M A N Y ============= DEUTSCHE HYPOTHEKENBANK: Fitch Lowers Ratings on Notes to 'Csf' --------------------------------------------------------------- Fitch Ratings has downgraded Deutsche Hypothekenbank's (Actiengesellschaft), Hannover 1999-1 fixed- and floating-rate notes: -- EUR8.8m class B-1A (DE0002537883) downgraded to 'Bsf' from 'BBsf'; Outlook Negative EUR8.2m class B-1B downgraded to 'Bsf' from 'BBsf'; Outlook Negative -- EUR5m class B-2aA (DE0002537891) downgraded to 'Csf' from 'CCCsf'; Recovery Rating revised to 'RR5' from 'RR4' -- EUR2m class B-2aB downgraded to 'Csf' from 'CCCsf'; Recovery Rating revised to 'RR5' from 'RR4' -- EUR5m class B-2b (DE0002537909) downgraded to 'Csf' from 'CCCsf'; Recovery Rating is 'RR5' The downgrades reflect the expected erosion of the first loss piece (the unrated Class B-3 notes) and, subsequently, the first loss allocation to the rated B-2 notes. By August 2010, the first loss piece had been reduced to EUR1.8 million from EUR9.3 million at closing in November 1999. There are currently 11 loans with an aggregate balance of EUR3.4 million in foreclosure. Due to the second-lien nature of the collateral and the historical loss severity of 100% across foreclosed loans, the workout of these 11 loans is expected to result in a shortfall on the B-2 notes. At the August 2010 interest payment date, 18 loans with an aggregate balance of EUR9.3 million were in arrears or in restructuring agreements. The arrears, amounting to 30% of the remaining portfolio's balance, include the loans currently in foreclosure. The transaction is no longer considered granular and a default of one of the remaining larger borrower groups would increase the expected loss and, ultimately, the risk for the B-1 notes, significantly. In August 2010, approximately 11.5% of the original issuance remained outstanding. The issuer has the right (but no obligation) to redeem all outstanding notes once the current issuance comprises less than 10% of the original amount. HECKLER & KOCH: S&P Junks Corporate Credit Rating From 'B-' ----------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its long- term corporate credit rating on Germany-based defense contractor Heckler & Koch GmbH to 'CCC+' from 'B-'. The outlook is negative. In addition, S&P lowered the issue rating on HK's EUR120 million 9.25% senior secured notes to 'CCC+' from 'B-', in line with the corporate credit rating. The recovery rating on the senior secured notes is unchanged at '4', indicating S&P's expectation of average (30%-50%) in the event of a payment default. "The downgrade reflects HK's inability to meaningfully address the refinancing of its EUR120 million 9.25% senior secured notes, which mature in July 2011," said Standard & Poor's credit analyst Jebby Jacob. The situation is further exacerbated by the payment- in-kind notes of a nominal value of EUR100 million, issued by HK's indirect parent, Heckler and Koch Beteiligungs GmbH (not rated). This is because any early repayment of the senior secured notes would require a proportional reduction in the amount of HKB's PIK notes, which ordinarily would mature in April 2013. "S&P believes that HK's strategy to address this situation will be to establish a facility on which the group can draw when its senior secured notes mature," added Mr. Jacob. S&P thinks that HK's decision to pay out a dividend while its refinancing risk is unresolved reflects its very aggressive financial profile. For the financial year ending Dec. 31, 2010, S&P anticipates that discretionary cash flow will be negative or at best neutral, because of the dividend payout and also because of working capital build-up in connection with a Middle East project. (This project involves the delivery of a substantial order to certain Middle Eastern countries.) S&P views HK's financial risk profile as highly leveraged. This is underpinned by S&P's view of HK's very aggressive financial policy, weak liquidity position, and high level of debt. S&P adjust reported debt by adding the value of HKB's PIK notes--which S&P understand will be worth about EUR168 million by year-end 2010--after including accrued interest. In S&P's view, there are uncertainties over HK's ability to refinance its senior secured notes on their maturity date in July 2011. In the coming months, S&P will closely monitor HK's progress in its discussions with various parties on the refinancing of these notes. S&P could lower the ratings further if S&P were to see a growing risk of the group's inability to refinance the notes. S&P could take a positive rating action if S&P was to become more certain of HK's ability to refinance the senior secured notes. However, any positive rating actions would also depend on S&P's assessment of HK's liquidity position and financial policy at the time of the refinancing. SKY DEUTSCHLAND: BaFin Finds Irregularities in Financial Documents ------------------------------------------------------------------ Matthew Campbell and Sarah Rabil at Bloomberg News report that Sky Deutschland AG said financial regulator BaFin had found irregularities in the company's statements for 2007 and the first half of 2008 that could result in fines or claims for damages. Bloomberg relates Sky Deutschland on Monday said the regulator's claims are "inapplicable" and will be legally reviewed, and have no immediate effect on its balance sheet. The company is in the midst of a turnaround plan under Chief Executive Officer Brian Sullivan, Bloomberg notes. According to Bloomberg, on Aug. 2, the company, which posted a loss in 2009, said it expects a loss before interest, taxes, depreciation and amortization in 2010 and that although 2011 will be "significantly better," it "will still remain negative." Bloomberg relates Mr. Sullivan said at a conference in Barcelona last week that it has a "long way to go" before becoming profitable. Bloomberg notes BaFin said the pay-TV operator overstated profit as a result of incorrect accounting for the purchase of World Cup soccer broadcast rights and didn't sufficiently point out credit risks. The regulator, as cited by Bloomberg, said at the end of 2007, the company's value was overstated by EUR248.4 million because of inaccurate accounting for some acquisitions. Sky Deutschland AG, formerly known as Premiere AG, -- http://info.sky.de/-- is a Germany-based company, which operates a subscription television network in Germany and Austria. Its network is available via satellite, cable and Internet protocol television. Sky Deutschland's service offers channels to cater for all audiences, including themed channels dedicated to broadcasting feature films, live sporting events, foreign language content, children's programming and interactive betting. Sky Deutschland's high definition television (HDTV) package shows selected content derived from Sky Deutschland's other channels and the Discovery Channel in HDTV format. One of the Company's core competencies is pay-per-view television. The Company also markets advertising space and promotional opportunities. As of Dec. 31, 2009, Sky Deutschland AG operates through its eight domestic and three foreign subsidiaries. * GERMANY: Wants Private Creditors to Help Ailing EU Nations First ------------------------------------------------------------------ Matthew Brockett at Bloomberg News, citing the Financial Times Deutschland, reports that Germany wants private creditors to help over-indebted euro nations first, so that governments come to the rescue only after banks and insurance companies have made their contribution. Bloomberg says the plans envisage lengthening the maturities of outstanding bonds as a first step in an emergency case. Creditors would then have to negotiate with the borrower over the conditions of repayment, the FTD reported, according to Bloomberg. Bloomberg relates the newspaper said at the same time, euro states could provide liquidity support, though only after a unanimous decision to do so. ============= H U N G A R Y ============= BKV: Sued by Alstom for Failing to Get HUF37BB Bank Guarantee ------------------------------------------------------------- MTI, citing news portal index.hu, reports that Alstom, the French conglomerate whose contract to supply underground trains to Budapest was recently terminated, is suing BKV at a French court for failing to obtain a bank guarantee worth HUF37 billion (EUR134 million) which was stipulated in the contract. According to MTI, the managing director of BKV, Istvan Kocsics, terminated the contract for Alstom to supply the trains on October 20 after the French company failed to secure a permit from Hungary's transport authority for his Metropolis trains, which were to have run on the new fourth metro line as well as the existing second line. Both sides have held out the prospect of going back to the negotiating table in spite of the contract's termination, MTI relates. Mr. Kocsis is to travel to Nantes on December 12 for the first round of negotiations, MTI states. As reported by the Troubled Company Reporter-Europe on Aug. 30, 2010, that the National Economy Ministry, as cited by MTI Econews, said that the Hungarian government decided to set up a "bankruptcy committee" in order to settle the finances of BKV. MTI disclosed the Ministry said the setting up the bankruptcy committee would be the first step in consolidating BKV's financial position, and the government intended to negotiate on the company's future and a financial bailout package with the new city municipality. BKV is Budapest's public transport company. ============= I R E L A N D ============= ALLIED IRISH: Government May Hold 99.9% Stake After External Aid ---------------------------------------------------------------- John Fraher at Bloomberg News, citing RTE, reports that Allied Irish Banks Plc may be 99.9% state controlled after the Irish government uses external aid to boost its capital levels. According to Bloomberg, RTE said Irish lenders core tier 1 capital level may be raised to 12% from 8%. Bloomberg notes RTE also said the government may seek to share losses with Allied Irish's subordinated bondholders, though senior debt would be honored. 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. ANGLO IRISH: Ex-Chief's Wife Has Own Legal Representative --------------------------------------------------------- Colm Keena at The Irish Times reports that the David Drumm bankruptcy case has been told that the former banker's wife, Lorraine, now has her own legal representative. The Irish Times relates in a filing Monday, attorney Christopher Panos of Boston said he is now representing Ms. Drumm. According to The Irish Times, Mr. Panos has requested that copies of all orders, pleadings, etc in the case now be forwarded to him. This means both Mr. Drumm and his wife will be receiving copies of the filings in the case, The Irish Times notes. In a filing some weeks ago, Mr. Drumm, who stepped down as Anglo Irish Bank chief executive in December 2008, included his wife among the creditors to whom he said he owed money, The Irish Times discloses. The Irish Times notes Mr. Drumm said he owed his wife US$210,347 (EUR154,509) arising from "various loans". The Irish Times says Anglo wants to question him about what income his wife has that would permit such loans, her contribution to family expenses and details about her employment. As reported by the Troubled Company Reporter-Europe on Oct. 19, 2010, Bloomberg News said Mr. Drumm filed for bankruptcy, months after the bank sought repayment of loans from him. Bloomberg disclosed Mr. Drumm, who resigned from the Dublin-based bank in December 2008, listed assets and liabilities at US$1 million to US$10 million on Oct. 14 in U.S. Bankruptcy Court in Boston. Anglo Irish Bank's lawyers told a court in Dublin in December that the bank is seeking repayment of loans valued at about EUR8 million (US$11.3 million) from Mr. Drumm, according to Bloomberg. His liabilities are primarily business debts, Bloomberg said, citing the Oct. 14 filing under Chapter 7 of the U.S. Bankruptcy Code. About Anglo Irish Bank Anglo Irish Bank Corp PLC -- http://www.angloirishbank.com/-- operates in three core areas: business lending, treasury and private banking. The Bank's non-retail business is made up of more than 11,000 commercial depositors spanning commercial entities, charities, public sector bodies, pension funds, credit unions and other non-bank financial institutions. The Company's retail deposits comprise demand, notice and fixed term deposit accounts from personal savers with maturities of up to two years. Non-retail deposits are sourced from commercial entities, charities, public sector bodies, pension funds, credit unions and other non-bank financial institutions. In addition, at Sept. 30, 2008, its non-retail deposits included deposits from Irish Life Assurance plc. The Private Bank offers tailored products and solutions for high net worth clients and operates the Bank's lending business in Ireland and the United Kingdom. * * * As reported by the Troubled Company Reporter-Europe on Oct. 29, 2010, 2010, Standard & Poor's Ratings Services lowered its rating on Anglo Irish Bank Corp. Ltd.'s nondeferrable dated subordinated debt (lower Tier 2) securities to 'D' from 'CCC'. The downgrade of the lower Tier 2 debt rating reflects S&P's opinion that the bank's exchange offer is a "distressed exchange" and tantamount to default in accordance with its criteria. BANK OF IRELAND: Government Set to Take Majority Stake ------------------------------------------------------ David Oakley at The Financial Times reports that the Irish government is poised to take a majority stake in Bank of Ireland, which will leave the Republic without a single significant lender independent of state control. According to the FT, the increased government stake is under discussion as part of an EUR85 billion rescue package from the European Union and International Monetary Fund, which aims to restore confidence in Ireland's troubled economy and its ailing banking industry. The FT notes the details of the Irish rescue package are still being finalized but will include a large capital injection into Ireland's banks to lift their core tier one capital ratios -- a measure financial strength -- up to 12%. While the Irish government is keen to avoid a full nationalization of Bank of Ireland, the amount of capital that will be pumped into the bank will leave Dublin with a large stake, the FT says, citing Irish government officials. The government currently holds 36% of the bank, the FT discloses. The move will be a blow to Bank of Ireland, which, until recently, looked to be the only lender likely to emerge from the financial crisis without succumbing to majority state control, the FT 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 Nov. 4, 2010, Moody's Investors Service assigned A3/P-2 bank deposit ratings and a D+ bank financial strength rating to Bank of Ireland (UK) plc. Moody's said the outlook is stable. IRISH NATIONWIDE: Wins Bid to Dismiss Bondholders Lawsuit --------------------------------------------------------- Lindsay Fortado at Bloomberg News reports that Irish Nationwide Building Society won a bid to have a lawsuit filed by two subordinated bondholders seeking the liquidation of the nationalized property lender thrown out. Bloomberg relates Judge George Mann said in his ruling Tuesday at a London court that the bondholders, Satinland Finance Sarl and Trimast Holding Sarl, didn't have a valid claim. Bloomberg says the investors are seeking to force a BNP Paribas SA unit, the debt program trustee, to file a winding-up petition against Irish Nationwide. According to Bloomberg, the investors sued after Irish Finance Minister Brian Lenihan said Sept. 30 that holders of subordinated bonds would be expected to share in the cost of bailing out Irish Nationwide and Anglo Irish Bank Corp., the country's two nationalized lenders. The case was "bound to fail," Bloomberg quoted Judge George Mann as saying. "This was not, in my view, a promising action at all." According to Bloomberg, Satinland Finance and Trimast Holding, which hold 25.6% of Irish Nationwide's 13% lower Tier 2 bonds due 2016, filed the lawsuit against the lender and BNP Paribas Trust Corp., the trustee for its subordinated bonds. Irish Nationwide asked for the case to be dismissed at a hearing last week. In a statement after the lawsuit was filed, Bloomberg relates Irish Nationwide said no event of default has occurred and the terms of the bonds are being honored. The lender said it would "vigorously defend the proceedings." 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. TBS INTERNATIONAL: Lenders Extend Forbearance Until Dec. 29 ----------------------------------------------------------- TBS International plc said in a filing with the U.S. Securities and Exchange Commission that various lender groups have agreed to continue to forbear from November 15, 2010, to December 29, 2010, from exercising their rights and remedies which arise from the Company's failure to make principal payments when due. The Company said it will not make principal payments due on its financing facilities during the extended forbearance period, but it will continue to pay interest on those facilities at the default interest rate. The Company and its lenders continue to negotiate amendments to its various financing facilities that will change the current payment schedules and cure any existing defaults, and TBS believes that appropriate amendments to its various financing facilities will be executed prior to the expiration of the deferral. The new forbearance agreements replace the Company's minimum cash liquidity covenant during the forbearance period, providing that the Company's cash balance as of the last business day of any week or averaged weekly cash balance must not fall below US$15.0 million. Each lender who consented to the forbearance agreements will receive a consent fee equal to 0.05% of its total outstanding loan amount. About TBS International plc Dublin, Ireland-based TBS International plc (NASDAQ: TBSI) -- http://www.tbsship.com/-- is a fully-integrated transportation service company that provides worldwide shipping solutions to a diverse client base of industrial shippers. As reported in the Troubled Company Reporter on March 19, 2010, PricewaterhouseCoopers LLP, in New York, expressed substantial doubt about the Company's ability to continue as a going concern, following its 2009 results. The independent auditors noted that the Company believes it will not be in compliance with the financial covenants under its credit facilities during 2010, which under the agreements would make the debt callable. "This has created uncertainty regarding the Company's ability to fulfill its financial commitments as they become due." * IRELAND: Rescue Package May Amount to EUR85 Billion ----------------------------------------------------- European Union officials estimate that a rescue package for Ireland may amount to about EUR85 billion (US$114 billion), John Fraher at Bloomberg News reports, citing officials familiar with the talks. According to Bloomberg, the people, who spoke on condition of anonymity because the talks were private, said the European Commission cited the figure as a preliminary estimate on a conference call of euro-region finance ministers on Nov. 21. Bloomberg says of the total, EUR35 billion would be earmarked for banks and EUR50 billion to help finance the Irish government. Bloomberg relates contagion is spreading through the euro region as Ireland hammers out an aid package with the EU and the International Monetary Fund to rescue its banking system. Elections Emma Ross-Thomas at Bloomberg News reports amid increasing concerns over implementation of the rescue, Prime Minister Brian Cowen said Monday night he would seek national elections early next year after his government passes its 2011 budget. The announcement came hours after the Green Party said it would pull out of the ruling coalition following the budget vote, Bloomberg relates. According to Bloomberg, the group said Mr. Cowen has misled voters in negotiating the bailout. * IRELAND: Bailed-Out Banks Should Be Sold, Central Bank Head Says ------------------------------------------------------------------ BBC News reports that Patrick Honohan, the head of the Republic of Ireland's central bank, has said that country's top banks -- bailed out by the government at huge cost during the downturn -- should be sold. BBC says Ireland is getting a European Union-led bail-out that may total EUR90 billion. The International Monetary Fund will also contribute to the rescue package, BBC discloses. BBC relates Mr. Honohan described the EU and IMF funding as "a kind of a backstop for the banking system". According to BBC, analysts said that the government would have to accept a cut-price deal in the event of any sale. BBC notes Mr. Honohan also said that plans for a so-called "bad bank", known as the National Assets Management Agency (NAMA), designed to buy up the bad debts of the big Irish banks, had not worked as planned. He did, however, say that it was "not surprising" the plan had not yet worked given the scale of the bad debts held by Irish banks, according to BBC. Nationalization Sharlene Goff and Patrick Jenkins at The Financial Times report that full-blown nationalization of Ireland's banking system sounds extreme, but that option is edging closer as Irish government and regulatory officials thrash out the details of a bail-out with officials from the EU and IMF. Mr. Honohan, the FT says, has prepared the ground for tough action -- including forced asset sales and mergers -- as payback for the support the banks are set to receive. According to the FT, people close to the bail-out talks now believe the amount of capital that will be pumped into the banks as part of the rescue package is likely to result in the government taking majority control of those that it does not already own, most notably Bank of Ireland. The FT says taking control of the banks would give the government more control over what is set to be a radical restructuring. "Full nationalization would give the government far more room for maneuver," said one banking analyst, according to the FT. "I would be staggered if it didn't nationalize at least Allied Irish Banks." Full ownership of the banks would give the government the option of cleaning up their balance sheets in one fell swoop by siphoning off tens of billions of euros of toxic loans into a state-owned "bad" bank -- much like the action taken to resolve the problems at Northern Rock, the nationalized UK lender, the FT states. The FT says the government is exploring a number of other potentially less drastic options. People involved in the restructuring talks say that a combination of legislative restrictions and rash government attempts to stabilize flare-ups in the wake of the global crisis have made such extreme solutions difficult to apply, according to the FT. One likely solution is for the government to adopt a similar strategy to that used to restructure Royal Bank of Scotland, the British state-backed bank, the FT states. The FT says this would mean forcing Bank of Ireland and Allied Irish to split their balance sheets into core and non-core divisions and sell-off or run down large swaths of assets. The FT relates another option would be to widen the scope of "bad bank" Nama to take in a broader range of loans than the commercial property that makes up most of its assets. Alternatively, Ireland could set up an insurance system modeled on the UK's asset protection scheme to deal with residential mortgages and corporate loans, the FT discloses. * IRELAND: ECB Shouldn't Act Before Banking Sector Reform --------------------------------------------------------- Kati Pohjanpalo at Bloomberg News reports that Finnish Finance Minister Jyrki Katainen said that the European Central Bank shouldn't withdraw support measures including record-low interest rates and emergency liquidity until Ireland has restructured its banks. "Once we have restructured the banking sector, then the ECB can act again," Mr. Katainen said in an interview in Helsinki on Monday, according to Bloomberg. "The banking sector must be restructured, otherwise help by anybody is impossible." Bloomberg relates Ireland on Nov. 21 became the second euro nation to seek a financial rescue package as the cost of saving its banks threatened to trigger a repeat of the Greek debt crisis that destabilized the single currency. Renewed fiscal turmoil in the region so far hasn't prompted the ECB to abandon plans to exit its crisis measures, Bloomberg notes. Mr. Katainen, as cited by Bloomberg, said failure to provide Ireland with the financial support it needs would risk undermining the euro. ECB Executive Board member Gertrude Tumpel-Gugerell on Tuesday said the bank has continued phasing out liquidity measures since the third quarter, the report adds. ========= I T A L Y ========= SIENA MORTGAGES: Moody's Puts Caa1 (sf) Rating on Class B Notes --------------------------------------------------------------- Moody's Investors Service has assigned definitive long term ratings to Italian RMBS notes issued by Siena Mortgages 10-7 S.r.l. -- Aaa (sf) to the EUR595,000,000 Class A1 Residential Mortgage Backed Floating Rate Notes due 2070 -- Aaa (sf) to the EUR400,000,000 Class A2 Residential Mortgage Backed Floating Rate Notes due 2070 -- Aaa (sf) to the EUR1,666,900,000 Class A3 Residential Mortgage Backed Floating Rate Notes due 2070 -- Caa1 (sf) to the EUR817,600,000 Class B Residential Mortgage Floating Rate Notes due 2070 Moody's has not assigned any rating to the subordinated EURO 106,626,000 Class C Residential Mortgage Backed Variable Return Notes. Ratings Rationale The ratings of the Notes take into account the credit quality of the underlying mortgage loan pool, from which Moody's determined the MILAN Aaa Credit Enhancement and the portfolio expected loss, as well as the transaction structure and any legal considerations as assessed in Moody's cash flow analysis. The expected portfolio loss of 3.35% of the original balance of the portfolio and the MILAN Aaa required Credit Enhancement of 12.5% served as input parameters for Moody's cash flow model, which is based on a probabilistic lognormal distribution as described in the report "The Lognormal Method Applied to ABS Analysis", published in September 2000. The transaction represents the ninth securitization of the Siena's RMBS series, the seventh rated by Moody's. The assets supporting the notes, which amount to around EUR3,479.5 million, are prime mortgage loans secured on residential properties located in Italy originated by Banca Monte dei Paschi di Siena SpA ("BMPS"; A2/P- 1), Banca Antonveneta, Banca Toscana, Banca Agricola Mantovana and Banca 121, all part of the Banca Monte dei Paschi di Siena Group (Banca 121, BAM and BT merged in BMPS since 2002, 2008 and 2009 respectively; BAV merged in BMPS in 2008 and partly spun off in 2009). The portfolio will be serviced by BMPS. The key drivers for the MILAN Aaa Credit Enhancement number, which is higher than other comparable prime Italian RMBS transactions, are (i) the weighted average loan-to-value of 58.84%, which is in line with other Italian RMBS transactions but with an higher than average portion of loans with current LTV higher than 70% (39.6%), (ii) missing data on the current/arrear status and, for a portion of the portfolio (26%), on employment type and (iii) comparison with the historical default static cohorts volatility. The key drivers for the portfolio expected loss are (i) defaults on global BMPS residential mortgage book, which have experienced a substantial increase in the last periods and show high volatility among vintages (ii) rolls rate derived from previous transactions and (iii) benchmarking with comparable transactions in the Italian market. Moody's believes the assumed expected loss is appropriate for this transaction. The structure will benefit from a swap, provided by Royal Bank of Scotland plc (Aa3/P-1), which guarantees a margin above notes' index (135 bps) and from an amortizing cash reserve fully funded at closing for an amount equal to 3% of the rated notes. Liquidity in the transaction comes from principal to pay interest and from the cash reserve, but given the replenishment of the cash reserve will rank junior to payment of interest and principal on Class B, if the cash reserve has been fully drawn under extreme cases (such as servicer disruption) there may not be liquidity available to cover interests on the rated notes; however, the transaction documents contain certain mechanisms that mitigate this weakness. The rating addresses the expected loss posed to investors by the legal final maturity of the notes. In Moody's opinion, the structure allows for timely payment of interest and ultimate payment of principal on or before the legal final maturity with respect of the Class A1, Class A2 and Class A3 notes, and ultimate payment of interest and principal on or before the legal final maturity with respect of the Class B notes. Moody's ratings only address the credit risk associated with the transaction. Other non-credit risks have not been addressed, but may have a significant effect on yield to investors. The V-Score for this transaction is Low/Medium, which is in line with the V-Score assigned for the Italian RMBS sector. Only two sub components underlying the V Score deviate from the average for the Italian RMBS sector: i) the "Quality of historical data for the Issuer/Sponsor/Originator" which is assessed at Medium, higher than the Low /Medium sector's average, because the securitized portfolio has mainly (around 83%) been originated in 2009 and 2010: BMPS's originated volumes during these years have almost doubled the average origination volumes of the preceding five years and eventually historical data could not represent the portfolio future performance and ii) "Issuer/Sponsor/Originator's Historical Performance Variability" because of the high volatility among static cohorts performance and steep increase in defaults during the last market downturn. V-Scores are a relative assessment of the quality of available credit information and of the degree of dependence on various assumptions used in determining the rating. High variability in key assumptions could expose a rating to more likelihood of rating changes. The V-Score has been assigned accordingly to the report "V-Scores and Parameter Sensitivities in the Major EMEA RMBS Sectors" published in April 2009. Moody's Investors Service received and took into account a third party due diligence report on the underlying assets in this transaction and the due diligence report had a neutral impact on the rating. Moody's Parameter Sensitivities: The model output indicated that Class A1, Class A2 and Class A3 would have achieved Aaa even if expected loss was as high as 10.05% (3.0x base case) assuming Milan Aaa CE at 12.5% (base case) and all other factors remained the same. Classes B would have achieved Caa1 for this same scenario. The model output further indicated that the Class A1 and Class A2 would have achieved Aaa with Milan Aaa CE of 20.0% (1.6x base case), and expected loss of 3.35% (base case); Class A3 would have achieved Aa1 and Class B B3 for this same scenario. Moody's Parameter Sensitivity provide a quantitative/model- indicated calculation of the number of rating notches that a Moody's-rated structured finance security may vary if certain input parameters used in the initial rating process differed. The analysis assumes that the deal has not aged and is not intended to measure how the rating of the security might migrate over time, but rather how the initial rating of the security might have differed if key rating input parameters were varied. Qualitative factors are also taken into consideration in the ratings process, so the actual ratings that would be assigned in each case could vary from the information presented in the Parameter Sensitivity analysis. =============== P O R T U G A L =============== * PORTUGAL: May Request European Bailout Following Ireland ---------------------------------------------------------- Emma Ross-Thomas at Bloomberg News reports that even as European Union leaders said Ireland's bailout will stem contagion in the euro region, investors are turning their attention to Portugal, which hasn't cut government spending and has barely grown for a decade. "I think that we're likely to see that liquidity assault shift from Ireland to Portugal," DeAnne Julius, a former Bank of England policy maker who is now chairman of Chatham House, a U.K.-based research group, said in an interview with Bloomberg Television on Tuesday. "The real issue will be if it then moves on to Spain, which is of course is a more economically weighty country within the euro zone." There's a "substantial risk" that Portugal will have to follow Ireland into a European rescue, said Ralph Solveen, an economist at Commerzbank AG in Frankfurt, according to Bloomberg. "They have problems to reach their deficit goal this year, they have big structural problems and therefore they will still be in the focus of the market." Bloomberg says Portugal's debt amounts to 76% of gross domestic product, compared with 53% in Spain, 66% in Ireland and 116% in Italy last year. According to Bloomberg, Finance Minister Fernando Teixeira dos Santos said on Nov. 17 spending by the Portuguese government, which lacks a parliamentary majority, continued to grow in the first 10 months of 2010. The country has pledged to cut its deficit to 7.3% of GDP this year and 4.6% in 2011, compared with last year's 9.3%, the fourth- largest shortfall in the euro region, Bloomberg discloses. It is "inevitable" that Portugal will seek help, said Stuart Thomson, who helps manage US$110 billion at Ignis Asset Management in Glasgow, according to Bloomberg. Bloomberg notes Royal Bank of Canada Europe Ltd. said it expects Portugal to request aid in the first quarter of 2011 at "the latest." Bloomberg notes that inevitability in the minds of investors was reflected in the rising cost of insuring against a Portuguese default. Credit-default swaps tied to Portuguese debt jumped 28.5 basis points on Tuesday to 486, Bloomberg relates. =========== R U S S I A =========== HOME CREDIT: Moody's Revises Outlook on 'Ba3' Rating to Stable -------------------------------------------------------------- Moody's Investors Service has revised the outlook to stable from negative on Home Credit and Finance Bank's Ba3 long-term local and foreign currency deposit and debt ratings, and the D- Bank Financial Strength Rating. The banks' NP short-term local and foreign currency deposit ratings, and its Aa3.ru national scale rating remain unchanged. Moody's has also assigned a long-term rating of Ba3 to HCFB's senior unsecured local currency debt instruments (four domestic bonds: RUB3 billion due 2011, RUB4 billion due 2013, RUB5 billion due 2014, RUB5 billion due 2015); the rating carries a stable outlook. Any subsequent senior local currency debt issuance by HCFB will be rated at the same rating level subject to there being no material change in the bank's overall credit rating. The Ba3 rating was assigned to these debt instruments: -- Ru.Ruble3000 M Senior Unsecured Regular Bond Due 2011 -- Ru.Ruble4000 M Senior Unsecured Regular Bond Due 2013 -- Ru.Ruble5000 M Senior Unsecured Regular Bond Due 2014 -- Ru.Ruble5000 M Senior Unsecured Regular Bond Due 2015 Moody's assessment is primarily based on HCFB's audited financial statements for 2009 prepared under IFRS. At the same time, Moody's caution that Moody's assessment, in part, incorporates information from HCFB's non-audited interim consolidated statements under IFRS for H1 2010. Ratings Rationale The outlook change is driven by the stabilization and/or improvements in the bank's financial fundamentals. HCFB's franchise value is stable, despite the fact that its main competitors have materially scaled down their operations in 2008- 2009. This allowed HCFB to rank as the number one player in Russian point-of-sale business, with a market share of around 29% (according to HCFB). In terms of asset quality, loans overdue by more than 90 days decreased to below 10% of gross loans at H1 2010, compared to 12-13% in 2007-2008. Adding loans written off to loans overdue by more than 90 days also signals an improvement in asset quality: 16% at H1 2010, compared to 20% pre-crisis (2007-2008). The bank's Tier 1 capital ratio improved to a strong 36% at H1 2010 (YE2009: 36.4%, YE2008: 19.6%), supported by retained earnings. This very high capitalization level (fully composed of Tier 1 capital) is likely to lead to dividend payments to PPF in future. Still, Moody's expect that the bank will remain highly capitalized in the medium term, even taking into account an acceleration in lending growth in 2011. HCFB's profitability is very high, with an RoAA of 11.3% for H1 2010 (annualized), and 5.1% for full-year 2009. The bank channeled 17% of its pre-provision income into loan loss reserves in H1 2010, compared to around 60% for full years 2009 and 2008. HCFB's earnings structure is very granular, dominated by net interest income (around 80%) and fees (around 20%). HCFB's liquidity profile was adequate at H1 2010, with a cash cushion of 23% of assets and access to funding from parent PPF group (through a RUB21.5 billion committed line, fully unutilized). The current cash and money market assets cover HCFB's debt repayments till mid-2011. The bank has been successful is raising new debt on the market since early 2009, particularly through domestic bonds (two deals for a total of RUB10 billion). The funding structure has also become more granular due to the increase in retail deposits to 26% of liabilities at H1 2010 from around 10% in 2008. To some extent, the liquidity risk is mitigated by the relatively short-term nature of HCFB's loan book, which amortizes by RUB5-6 billion every month. In case of need, HCFB can scale down new lending and strengthen its liquidity profile relatively quickly. Negative rating drivers for HCFB include the bank's high exposure to credit risk in consumer lending, and exposure to refinancing risk as it is wholesale funded. The assigned Ba3 long-term global local currency debt rating is in line with the bank's global local currency deposit rating, which is in turn based on the bank's D- bank financial strength rating (mapping to a baseline credit assessment of Ba3) and does not incorporate any probability of systemic or parental support. Headquartered in Moscow, Russia, Home Credit & Finance Bank reported total assets of RUB88 billion (US$ 2.8 billion) at H1 2010. The bank's net income stood at RUB5.1 billion for H1 2010, up from RUB0.9 billion posted for H1 2009. LOCKO-BANK: Moody's Assigns 'B2' Rating to Senior Unsecured Debt ---------------------------------------------------------------- Moody's assigns a B2 long-term global local currency debt rating to Locko-bank's senior unsecured debt. The rating carries a stable outlook. Any subsequent local currency senior unsecured debt issuance by Locko-bank will be rated at the same rating level subject to there being no material change in the bank's overall credit rating. The B2 rating was assigned to this debt instrument: -- RUB2,500M Senior Unsecured Regular Bonds due 2015 Ratings Rationale The assigned rating is in line with Locko-bank's global local currency deposit rating, which is in turn based on the bank's E+ BFSR mapping to a baseline credit assessment of B2. According to Moody's, Locko-bank's ratings remain constrained by the bank's modest franchise value, the still material single-name concentration in the bank's loan portfolio and its reliance on short-term funding sources. At the same time, the rating agency notes Locko-bank's adequate corporate governance and risk management practices, which have contributed to the bank's relatively resilient financial fundamentals during the recent financial crisis. Domiciled in Moscow, the Russian Federation, Locko-bank reported -- as at June 30 2010 -- total IFRS assets of US$1,275 million and total equity of US$180 million. The bank's net IFRS profits for the first-half 2010 amounted to US$13 million. MOBILE TELESYSTEMS: Sets Junk Bond Sale Record ---------------------------------------------- Maria Levitov at Bloomberg News reports that OAO Mobile TeleSystems is setting a record for Russia's junk bonds by selling debt maturing in seven years, taking advantage of demand for higher yields. According to Bloomberg, MTS, as the company is known, received investor orders for 1.6 times the RUR10 billion (US$320 million) of bonds, which are ranked one level below investment-grade at BB+ by Fitch Ratings. The securities are poised to rally when they begin trading next week, Bloomberg says, citing Dmitry Turmyshev, fixed income analyst at Moscow-based Trust Investment Bank. The notes sold by MTS have no put option, Bloomberg states. The MTS notes were priced to yield 8.7%, 260 basis points more than the 6.1% on the Moscow-based company's securities due in four years and puttable in 2011, data compiled by Bloomberg show. Bloomberg relates Mr. Turmyshev said the bonds may climb 30 to 40 basis points, or 0.3 to 0.4 percentage point, above their issue price of 100 when they start trading next week. Headquartered in Moscow, Mobile TeleSystems OJSC -- http://www.mtsgsm.com/-- is a provider of mobile cellular communications services in Russia, Uzbekistan, Turkmenistan and Armenia and Ukraine. During the year ended December 31, 2008, the Company had a subscriber base of 91.33 million (64.63 million in Russia, 18.12 million in Ukraine, 5.65 million in Uzbekistan, 0.93 million in Turkmenistan and 2.02 million in Armenia). In addition to standard voice services, the Company offers its subscribers value added services, including voice mail, short message service (SMS), general packet radio service (GPRS), augmented by enhanced data rates for GSM evolution (EDGE), high-speed downlink packet access (HSDPA), and various SMS- and GPRS/EDGE/HSDPA-based information and entertainment services (including multi media message service (MMS)). It also offers its subscribers the ability to roam automatically throughout Europe and in much of the rest of the world. * * * MTS is rated Ba2 by Moody's Investors Service and BB by Standard & Poor's, both two levels below investment grade. PROMSVYAZBANK OJSC: Moody's Assigns 'Ba2' Rating to Senior Debt --------------------------------------------------------------- Moody's assigns a Ba2 long-term global local currency debt rating to Promsvyazbank's senior unsecured debt. The rating carries a stable outlook. Any subsequent local currency senior unsecured debt issuance by Promsvyazbank will be rated at the same rating level subject to there being no material change in the bank's overall credit rating. These debt instruments were assigned ratings: -- RUB4,500M Senior Unsecured Regular Bonds due 2012 - Ba2 -- RUB5,000M Senior Unsecured Regular Bonds due 2013 - Ba2 Ratings Rationale The assigned rating is in line with Promsvyazbank's global local currency deposit rating, which is in turn based on the bank's D BFSR mapping to a baseline credit assessment of Ba2. Promsvyazbank's BFSR is underpinned by (i) the bank's entrenched market franchise in the corporate segment, along with some diversification of its business to SME and retail segments, (ii) its significant geographical coverage, with a sizeable portion of business volume attributable to the regional network, (iii) favourable liquidity profile and sound liquidity management, and (iv) the bank's well-diversified operating income streams and sound cost management. The factors constraining Promsvyazbank's ratings are: (i) the bank's historically modest capital levels, (ii) the deterioration of its asset quality during the crisis times, which continues to exert negative pressure on the bank's bottom-line profitability and capital levels, and (iii) the significant single-name concentration of the bank's loan book. Headquartered in Moscow, Russia, Promsvyazbank reported IFRS total assets of US$14.0 billion and total equity of US$1.4 billion at June 30, 2010. The bank's net IFRS profit for the six months ended June 30, 2010 was US$18.0 million. =========== T U R K E Y =========== SEKERBANK TAS: Moody's Assigns 'D' Bank Financial Strength Rating ----------------------------------------------------------------- Moody's Investors Service has assigned first-time ratings to Sekerbank T.A.S. The bank was assigned a bank financial strength rating of D, local currency deposit ratings of Ba1/Not Prime and foreign currency deposit ratings of Ba3/Not Prime. In addition, Moody's assigned A2.tr long-term and TR-1 short-term Turkish national scale ratings to the bank. The outlook on foreign currency deposit ratings is positive, while all the other ratings carry a stable outlook. Ratings Rationale The D BFSR, which maps to a Baseline Credit Assessment of Ba2, represents the bank's stand-alone financial strength and is driven by Sekerbank's good regional franchise, especially in the small-and medium-sized enterprises segment. At the same time, Moody's notes that the BFSR is also supported by the bank's satisfactory profitability despite comparatively weak efficiency partially due to focus on labor intensive small and micro business, high capitalization levels and relatively low market risk appetite. The rating also takes into account the bank's comfortable liquidity profile, as well as its high exposure to government securities, a common feature in the Turkish banking system, certain asset quality challenges and weak earnings stability as the more recent business development of retail activities are currently unprofitable. Sekerbank is an expanding, regional Turkish bank, with a market share of around 1.3% of total banking sector assets and was established in 1953 as the Sugar Beet Co-operative Bank. The bank's current business activities are mainly focused on the micro and SME segments in Anatolia with an increasing emphasis on expanding into the retail and corporate sectors in a fast- developing and growing market. Sekerbank's liquidity and funding profile is sound, with a strong customer deposit base as well as longer-tenured funds -- either from the respective European Union or from international development banks. Overall, Moody's observes that the bank displays an acceptable asset quality, although high NPLs in the recently developed business segments or retail and corporate lending illustrate the challenges to adapt the business model and risk management requirements in a fast- evolving, highly competitive and dynamic Turkish banking market. Moody's adds that the bank's Ba1/Not Prime global local currency deposit ratings reflect a one-notch systemic support uplift. Moody's regards Turkey as a high support country, and assesses a moderate likelihood of systemic support for Sekerbank, reflecting the rating agency's view of the bank's limited importance to the national financial system, as well as its relevance for the local financial system. Sekerbank's Ba3/Not Prime foreign currency deposit ratings are derived from the local currency deposit ratings and are capped by Moody's Ba3/Not Prime ceiling for such deposits in Turkey. Moody's believes that Sekerbank pursues a sound business strategy, given the prospects for further growth in commercial and retail lending in Turkey. Positive pressure could be exerted on the bank's BFSR over the medium term by improvements in asset quality, efficiency, and deepening of the retail franchise in an improving operating environment, coupled with successful diversification in the bank's business segments. Conversely, negative pressure could be exerted on Sekerbank's ratings if competitive pressures constrain further franchise development or lead to a material decline in profitability or asset quality metrics. In addition, Moody's notes that the ratings could also be negatively affected if the bank's capital position fails to keep pace with its robust asset growth, although current capitalization levels are sound. Headquartered in Istanbul, Turkey Sekerbank's assets (audited) totaled TRY10.8 billion (US$6.8 billion) at the end of June 2010. =========================== U N I T E D K I N G D O M =========================== ECHELON WEALTH: Investors Make EUR25-Mil. Claim Against IG Group ---------------------------------------------------------------- RTTNews reports that IG Group Holdings plc said its wholly owned subsidiary, IG Markets Limited, has been served with a claim issued in the High Court in relation to the insolvency of Echelon Wealth Management Ltd., a former client of IG Markets. RTTNews relates that three former clients of Echelon are seeking to recover damages from IG Markets in a sum in excess of EUR25 million. According to RTTNews, IG considers the claim to be speculative and without foundation and will defend itself vigorously. It is not expected that this matter will have any material impact on the group. Echelon Wealth Management Ltd. is a Glasgow-based derivative broker. Echelon Wealth Management Ltd. was placed into provisional liquidation on October 17, 2008. Blair Nimmo of KPMG was appointed Provisional Liquidator. This appointment was subsequently recalled and Stephen Cork and Anthony Spicer of Smith & Williamson were appointed joint liquidators on November 11, 2008. Annette Menzies and Eileen Blackburn were then appointed Joint Liquidators of Echelon Wealth Management Limited at a meeting of creditors held on July 22, 2009, at which Stephen Cork and Anthony Spicer of Smith & Williamson were removed as Joint Liquidators. SCREEN EAST: Goes Into Liquidation ---------------------------------- BBC News reports that Screen East, a government-backed film agency, has gone into liquidation. Paul Gregson, of Bulley Davey, Peterborough, has been appointed liquidator. BBC News relates that Screen East went insolvent in September. The company had assets of about GBP4 million and debts of about GBP4.5 million. According to BBC News, Mr. Gregson said Screen East's employees had been made redundant in September. "The liquidation was in October. It is very difficult to give any time scale. Clearly a lot needs to be looked into," he said, BBC relates. The UK Film Council said it is concerned about these developments and the possible impact they may have on film in the East of England, the report notes. "While we are unable to comment further at this time, the UK Film Council is working to assess and, as far as possible, minimize the effect of Screen East's closure on film activity in the region," the council said, according to BBC News. Based in Norwich, Screen East was the Regional Screen Agency for the East of England. It was responsible for promoting the east of England as a location for film and TV productions. TATA STEEL UK: Fitch Changes Outlook to Stable; Affirms BB+ Rating ------------------------------------------------------------------ Fitch Ratings has revised the Outlook on Tata Steel Limited's and Tata Steel UK Holdings Limited's (formerly Tata Steel UK Limited) Long-term foreign currency Issuer Default Ratings to Stable from Negative, while affirming the ratings at 'BB+' and 'B+', respectively. The agency has also revised the Outlook on TSL's National Long-term Rating to Stable from Negative while affirming the rating at 'AA(ind)'. Fitch has also assigned a 'BB-' rating to TSUKH's secured bank facilities aggregating approximately GBP3.53bn with a recovery rating of 'RR3'. A full list of rating actions on the two companies and their respective instruments can be found at the end of this release. The revisions in Outlook reflect the improvement in performance of TSUKH's operations during 1HFY11 (April -September) in line with Fitch's expectations, resulting in greater certainty of the consolidated entity deleveraging below 4x during FY11. The revisions in Outlook also reflect the additional financial flexibility provided by TSUKH's recent refinancing of its secured facilities with longer maturity debt with back ended repayments. The European operations have reported EBITDA profits for the past three quarters (Q4FY10 to Q2FY11) after recording EBITDA losses from Q4FY09 to Q3FY10, reflecting the sensitivity of the operations to raw material price volatility and the relatively slower improvement in demand in the European markets. Fitch expects TSUKH's profitability to remain volatile; however, the value added nature of the product profile and greater discipline in use of production capacities is likely to mitigate the risks partially. The Indian operations of TSL on the other hand, continue to remain robust as reflected in its performance in Q1FY11 and Q2FY11 with EBITDA margins of 44.5% and 36.9% respectively. The positive outlook for Indian steel demand and TSL's value added product profile are expected to provide the consolidated entity sustained and high levels of EBITDA. The brownfield expansion will aid this further from FY12. The agency continues to take a consolidated view of TSL in line with its Parent and Subsidiary Rating Linkage methodology with TSUKH's rating benefiting from potential parental support. Fitch notes that TSL, as part of the new secured facilities, has provided a support undertaking to TSUKH thus making the support explicit though this remains a credit neutral event from Fitch's perspective. In addition, the FC IDR and the National Ratings of TSL continue to benefit from a one notch uplift on account of the potential support from the Tata group. Fitch has also reviewed the ability of the Tata group to provide support to TSL and in the context of potential group support, continues to draw comfort from the strategic importance of TSL to the group. Any weakening of linkages between the group and TSL, and/or the group's inability to provide support would likely affect the ratings negatively. The ratings continue to reflect the benefits of strong liquidity maintained by TSL and TSUK at all times with consolidated cash and bank balances of US$1,437 million as at September 30, 2010 and access to undrawn lines of US$1,231 million. Fitch notes that the increase in raw material prices and its consequent volatility has had an impact on the profitability and working capital needs of TSUKH during 2QFY11. However, with limited repayments in the next 4.5 years and value added nature of its product profile, the risks of cash flow mismatches remain low. While the new debt facilities at TSUKH provide leeway for additional capex as part of the revised covenants, the majority of the capex remains focused on its India operations which are expected to be hugely value accretive. The brownfield expansion at Jamshedpur for an additional 2.9 metric tonnes per annum capacity is on track for completion from the last quarter of FY12. The expenditure on its greenfield project in Orissa presently remains limited and is expected to pick up only in the next two to three years. The positive rating guideline for the standalone FC IDR of TSL is net financial leverage below 2.5x on a sustained basis coupled with sustained profitable operations at TSUKH, whereas for National ratings, the guideline for an upgrade is net financial leverage of below 3x on a sustained basis. Net financial leverage of more than 4x on a sustained basis may warrant a notch downgrade on both the national and the international ratings. TSL is the flagship of the Tata group and one of the 10 largest steel producers in the world with the Indian operations being the dominant contributor to consolidated EBITDA Full list of rating actions for Tata Steel: -- Long-term IDR affirmed at 'BB+'; Outlook Revised to Stable from Negative; -- National Long-term rating affirmed at 'AA(ind)'; Outlook Revised to Stable from Negative; -- Commercial paper/short-term debt of INR9.75bn affirmed at 'F1+(ind)'; -- Non-convertible debenture INR30bn affirmed at 'AA (ind)'; -- Non-convertible debenture of INR20bn affirmed at 'AA(ind)'; -- National Long-term debt of INR65bn affirmed at 'AA(ind)'; -- Non-convertible debenture of INR12.5bn affirmed at 'AA(ind)'; -- Fund-based cash credit limits of INR10.6bn affirmed at 'AA(ind)'; -- Non-fund based limits of INR23.4bn affirmed at 'AA(ind)'; -- Fund-based limits of INR7.25bn affirmed at 'F1+(ind)'; and -- Non-fund based limits of INR7.6bn affirmed at 'F1+(ind)'. Full list of rating actions for Tata Steel UK Holdings Limited: -- Long-term IDR affirmed at 'B+'; Outlook Revised to Stable from Negative; and -- Secured bank facilities aggregating approximately GBP3.53bn assigned at 'BB-' with a recovery rating of 'RR3'. TAYLOR WIMPEY: S&P Assigns 'B+' Long-Term Corporate Credit Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'B+' long-term corporate credit rating to U.K.-based housebuilder Taylor Wimpey PLC. The outlook is negative. At the same time, S&P assigned an issue rating of 'B+' to Taylor Wimpey's proposed GBP250 million senior unsecured notes, along with a recovery rating of '4', indicating S&P's expectation of average (30%-50%) recovery prospects in the event of a payment default. "The ratings on Taylor Wimpey reflect S&P's assessment of the company's business risk profile as fair and its financial risk profile as aggressive," said Standard & Poor's credit analyst Maxime Puget. The company's business risk profile is constrained by the high level of cyclicality in the housebuilding industry, which translates into highly volatile operating margins. The sector is currently facing unfavorable market conditions in the U.K. and the U.S., mainly due to the low availability of mortgages and fragile consumer confidence. However, these risks are mitigated, in S&P's view, by the company's leading market position in the U.K.; an improved operating performance resulting from stronger pricing and contained land and building costs; and a solid order book that should help to stabilize revenues in the near term. Taylor Wimpey's financial risk profile is negatively affected by the large refinancing risk related to the company's debt maturities. S&P believes that the company's liquidity position could be weakened if the refinancing is not concluded within the next six to eight months. The company also has a highly leveraged capital structure and a widening pensions deficit, as well as volatile cash flow generation. However, S&P takes a positive view of the currently adequate liquidity position; the large amount of headroom under the debt covenants; and the deleveraging actions that the company has taken since 2009. "In S&P's view, there is a significant risk for the stability of the rating should Taylor Wimpey be unable to refinance its debt maturities before July 2011," said Mr. Puget. "In addition, the company's credit metrics are likely to remain weak over the next 12 months because S&P does not expect any substantial recovery in the U.K. and U.S. housing markets in 2011." S&P is likely to lower the rating if the company does not refinance its debt before July 2011 at the latest, or if the company does not manage its debt leverage very carefully while acquiring new land. S&P could consider raising the rating if the company were to successfully conclude the debt refinancing within the next six to eight months and show strong and sustainable improvements in its financial profile. S&P would also view positively clear evidence of a solid recovery in the U.K. housing market, and the successful execution of the company's plan to divest its U.S. operations. THORNTON TRUST: Goes Into Insolvency; Projects in Limbo ------------------------------------------------------- The Portadown Times reports that the Thornton Trust is going into insolvency, leaving a number of projects in Portadown in limbo. These include projects at High Street -- among them the retail premises next to the High Street Mall and the former Wellworth's building -- as well as a block of flats in Thomas Street, and other reported future developments. The Portadown Times says creditors of the trust, set up by the late Mr. Robin Thornton for the benefit and improvement of the town, gathered for an insolvency meeting in Newry on Friday. The Portadown Times relates the assets of the trust are being taken over by a financial institution, which will decide on the future of the unfinished projects. According to The Portadown Times, a source close to the trust said that the insolvency was "sad, but a symptom of today's property collapse" and that the business scene was very different from the days of Mr. Thornton, a quiet, almost reclusive, man who owned a lot of property in Portadown. "His driving force was for the good of the town," the source added, The Portadown Times notes. Portadown-based Thornton Trust is charitable organization. * UK: Number of Insolvent Insurance Firms Drop to 6 in October -------------------------------------------------------------- Experian said in a report that there has been a general decrease in the number of insurance companies that have to become insolvent in the past year, LifeInsurance.co.uk says. LifeInsurance.co.uk reports that the Experian study found that there was a fall in the percentage of insurance businesses that were failing from the level reported in October 2009. The Experian study, according to LifeInsurance.co.uk, also revealed that the amount of insurance firms becoming insolvent in October this year had fallen to 6 from the 18 insolvencies in the same period in 2009, although the level of the business population failing has remained the same, at 0.13 per cent. =============== X X X X X X X X =============== * Upcoming Meetings, Conferences and Seminars --------------------------------------------- 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 * * *