/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/120321.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Wednesday, March 21, 2012, Vol. 13, No. 58 Headlines D E N M A R K * DENMARK: Tightens Bank Board Requirements to Avert Bankruptcies * DENMARK: Three-Year Loans to Snub Lenders Facing Insolvency F R A N C E PETROPLUS HOLDINGS: French Plant Bid Deadline Moved to April 5 G E R M A N Y KLOCKNER PENTAPLAST: Lenders to Meet on March 23 in London SOLAR MILLENNIUM: Shares in PV Power, Blue Tower Sold WINDERMERE XIV: S&P Lowers Rating on Class E Notes to 'B-' * GERMANY: Moody's Issues Summary Credit Opinion G R E E C E * GREECE: May Fail to Meet Debt Target & Require Rescue Loan * GREECE: Swap Sellers to Pay US$2.5-Bil. to Settle Contracts H U N G A R Y BKV ZRT: On the Verge of Insolvency as Debt Expired Monday K A Z A K H S T A N KAZKOMMERTSBANK: Moody's Issues Summary Credit Opinion KAZINVESTBANK: Moody's Issues Summary Credit Opinion N E T H E R L A N D S FRESENIUS FINANCE: Moody's Rates EUR500MM Sr. Unsec. Notes 'Ba1' GREEN APPLE: Moody's Assigns Ba1 Rating to EUR3MM Class C Notes JUBILEE CDO V: S&P Affirms 'CCC+' Ratings on Two Note Classes R U S S I A ALFA-BANK: Moody's Issues Summary Credit Opinion COMMERCIAL BANK: Moody's Upgrades Long-Terms Ratings to 'B2' CREDIT BANK OF MOSCOW: Moody's Issues Summary Credit Opinion RUSSIAN AGRICULTURAL: Moody's Issues Summary Credit Opinion UC RUSAL: Two Oligarchs in Dispute Over Corporate Governance * CITY OF SURGUT: S&P Raises Issuer Credit Rating to 'BB+' S E R B I A & M O N T E N E G R O * REPUBLIC OF SERBIA: S&P Affirms 'BB/B' Sovereign Credit Ratings S P A I N * SPAIN: Moody's Says Fiscal Outlook Remains Challenging S W I T Z E R L A N D SERVETTE: Bankruptcy Hearing Adjourned Until April 19 U N I T E D K I N G D O M FIRETRAP: Sports Direct Buys Business; Six Stores Shut Down LLANDUDNO SMOAKERY: Goes Into Liquidation MANSARD MORTGAGES: S&P Affirms 'B-' Rating on Class B2a Notes NOVAE GROUP: Moody's Rates 5-Yr. Sr. Bond under Ba1-Rated Debt PORTSMOUTH FOOTBALL: Council Mulls Bidding for Fratton Park WORLDSPREADS LTD: In Administration; ETX Mulls Acquisition * UK: Number of Company Failures Down 20% in First Quarter 2012 X X X X X X X X * Moody's Says European Banks' Retrenchment No GCC Rating Impact * EU Banks' Retrenchment May Lead to GCC Bank Funding Gaps ********* ============= D E N M A R K ============= * DENMARK: Tightens Bank Board Requirements to Avert Bankruptcies ----------------------------------------------------------------- Frances Schwartzkopff at Bloomberg News reports that Denmark's financial watchdog said it is tightening requirements of bank boards after weak leadership led to several bank collapses since 2008. According to Bloomberg, the Financial Supervisory Authority said on Tuesday on its Web site that boards must undergo an evaluation of whether they have the experience and knowledge to run their banks and to submit the evaluation for review to the agency by October. * DENMARK: Three-Year Loans to Snub Lenders Facing Insolvency ------------------------------------------------------------- Frances Schwartzkopff at Bloomberg News reports that the Danish central bank's attempt to copy the euro zone's success in providing relief to the banking industry with three-year loans will probably fall short by snubbing lenders facing insolvency. Banks will ask for DKK116 billion (US$20.7 billion) when Nationalbanken holds its first offering of three-year loans on March 30, according to the average in a Bloomberg News survey of analysts at Danske Bank A/S, Nordea Bank AB and Sydbank A/S. According to the state-backed resolution agency Financial Stability Co.'s estimates, that's below the DKK150 billion in state-backed debt that banks need to repay by next year, Bloomberg notes. Most of Denmark's 120 banks have been locked out of funding markets since senior creditors lost money on the February 2011 failure of Amagerbanken A/S, Bloomberg discloses. Credit-default swaps show that it costs about 135 basis points more to insure against a default by Danske Bank, Denmark's biggest lender, than it does to protect Sweden's Nordea Bank AB, Bloomberg says. That difference was as small as 36 basis points, or 0.36 percentage point, in April 2011, Bloomberg states. The "potential stabilizing effects" of Denmark's three-year loans "relate to the provision of liquidity for solvent and healthy banks," Bloomberg quotes central bank Deputy Governor Per Callesen as saying in an e-mailed reply to questions on March 12. Mr. Callesen, as cited by Bloomberg, said that the aim is to "help the sector bridge the remaining transition from government guaranteed funding". The Financial Supervisory Authority estimates that about 12 banks have failed since 2008, and 3% of Denmark's financial industry remains at risk of insolvency, Bloomberg discloses. The regulator said the crisis is mostly affecting regional lenders while the country's biggest banks are strong enough to withstand losses, Bloomberg notes. =========== F R A N C E =========== PETROPLUS HOLDINGS: French Plant Bid Deadline Moved to April 5 -------------------------------------------------------------- Reuters reports that a deadline for offers to acquire Petroplus Holdings AG's French Petit-Couronne refinery has been extended by three weeks. Reuters relates that Petroplus Raffinage Petit-Couronne (PRPC) said the administrators of the idled refinery in northern France previously set a March 15 bid deadline, but have now extended this to April 5. According to the news agency, Swiss private investor Gary Klesch said on Thursday he submitted the only offer for the refinery, proposing to invest EUR160 million (US$209.13 million) and maintain 410 out of some 550 jobs. PRPC said Mr. Klesch's bid would need to be clarified, as would expressions of interest made by other parties, the report relays. "The extended period is thus intended to give sufficient time to certain interested investors, including the Klesch group, to finalise their studies in order to make an offer that complies with the legal requirements," PRPC, as cited by Reuters, said. Petroplus is filing for insolvency after battling with high debt and poor refining margins, Reuters notes. As reported by the Troubled Company Reporter-Europe on Feb. 15, 2012, the Scotsman related that the company was forced to shut three of its five refineries in Belgium and France last month because of a lack of crude oil. Based in Zug, Switzerland, Petroplus Holdings AG is Europe's largest independent oil refiner. ============= G E R M A N Y ============= KLOCKNER PENTAPLAST: Lenders to Meet on March 23 in London ---------------------------------------------------------- Patricia Kuo at Bloomberg News reports that Klockner Pentaplast Group, which is seeking to restructure about EUR1.25 billion (US$1.6 billion) of debt, will meet lenders this week to update them about its trading performance. According to Bloomberg, two people with knowledge of the matter said that Klockner Pentaplast, owned by Blackstone Group LP, will meet banks and other lenders on March 23 in London. The company is negotiating with lenders to cut its debt to less than EUR500 million, Bloomberg discloses. The people said that if there's no agreement on the debt plan by March 21, the company will be put up for sale while the talks continue, Bloomberg notes. The people, as cited by Bloomberg, said that under the proposal from senior lenders, Blackstone and Los Angeles-based Oaktree Capital Management LP will have a majority stake in Klockner Pentaplast while claims of all junior creditors owed about EUR350 million will be wiped out. As reported by the Troubled Company Reporter-Europe on March 14, 2012, Bloomberg News related that people with knowledge of the matter said Klockner Pentaplast breached debt terms at the end of last year. The people said that lenders agreed to a waiver on Klockner Pentaplast's debt covenant until the end of June, Blooomerg disclosed. Founded in 1965 in Montabaur, Germany, Klockner Pentaplast Group is a plastic films producer. SOLAR MILLENNIUM: Shares in PV Power, Blue Tower Sold ----------------------------------------------------- Solar Millennium AG's insolvency administrator, Volker Bohm, has sold additional investments of the company to investors. Schoeller Renewables GmbH, headquartered in Pullach im Isartal, has acquired Solar Millennium AG's shares in PV Power Holding GmbH, headquartered in Erlangen. Solar Millennium AG had a 50% holding in the company, which develops photovoltaic projects in Italy. The shares in Blue Tower GmbH, headquartered in Herten, were also sold. Roughly 75% of the company was held by Solar Millennium AG. Blue Tower markets the so-called "Blue-Tower technology," which is used to extract carbon-neutral gas through the decomposition of biomass. The buyer is Concord Blue Engineering GmbH, headquartered in D《seldorf. The parties have agreed not to disclose the purchase price of the two disposals. Solar Millennium AG is an Erlangen-based solar company. It had focused on developing solar-thermal plants in Europe and the U.S. The Local Court of Fuerth initiated the insolvency proceedings for Solar Millennium AG on Feb. 28. The court appointed Volker Boehm, lawyer from Nuremberg, as insolvency administrator. An interim insolvency administrator was appointed last December. Upon the initiation of insolvency proceedings, Mr. Boehm assumes power of administration and disposal from the former Company organs. WINDERMERE XIV: S&P Lowers Rating on Class E Notes to 'B-' ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its credit ratings on Windermere XIV CMBS Ltd.'s class A, B, C, D, and E notes. "At the same time, we have also affirmed our rating on the class F notes," S&P said. "The rating actions follow our review of the credit quality of the seven remaining underlying loans in the pool. We consider that the refinancing risk associated with the remaining loans has increased in the light of the current market lending conditions, and commercial real estate market value declines. We believe these factors may result in principal losses," S&P said. The loans are scheduled to mature between 2012 and 2014, and the note maturity date is in 2018. HAUSSMANN (35% OF THE UNDERLYING LOAN POOL) The Haussmann loan is the largest loan in the transaction, with a securitized balance of EUR260.1 million. It was fully securitized at closing and is secured against a prime office property located in the central business district of Paris. Of the EUR260.1 million balance, EUR2.4 million is currently undrawn, and could be drawn by the borrower, under certain conditions, to fund capital expenditure. "The loan matures in January 2014, but may be extended by one year at the borrower's request, up to three times, if certain conditions are met. In our view, the pre-conditions for an extension are not restrictive and accordingly, if the loan does not repay in January 2014, it is likely to be extended at least once," S&P said. "The loan is paying floating-rate interest and, since the insolvency of Lehman Brothers Holdings, the loan has been unhedged. The borrower has indicated to the servicer that it will only consider the replacement of the hedge arrangements once rates start rising," S&P said. "A reserve is available to Windermere XIV CMBS to mitigate potential loan-level interest shortfalls. We understand this reserve is funded quarterly from excess cash and equity from the sponsor, in case of insufficient cash flow," S&P said. "Two tenants, both rated, initially occupied the property. Euronext (a subsidiary of NYSE Euronext, rated 'A+') and Reuters (a subsidiary of the Thomson Reuters Corp. group, rated 'A-') accounted for 58% and 42% of the initial passing rent. In January 2011, Euronext departed, which led to the occupancy rate falling to 56% from 100%. We understand that the borrower has funded capital expenditures since then as part of its marketing strategy. Given the good quality of the property and its central location, we believe that re-letting at market rates can be achieved," S&P said. "In January 2012, the servicer reported an interest coverage ratio (ICR) of 1.23x (against a covenant of 1.15x). It reported a loan-to-value (LTV) ratio of 61%. We believe this LTV ratio is unlikely to reflect the actual LTV ratio, as the property has not been revalued since closing in 2007. The current value is likely to be materially lower, given market value declines since then, as well as current market conditions," S&P said. S&P believes the risk of the borrower not paying at maturity is significant, in view of: * The current loan maturity performance in European commercial mortgage-backed securities (CMBS), which has one in three loans only repaying at maturity; * The size of this loan when compared with the other loans maturing in 2014; and * The volume of loans maturing around that time (in 2013 and 2014, EUR25 billion of loans are scheduled to mature). "We have given credit to re-lettings in our analysis. Nonetheless, given our view of the loan's leverage and if current market conditions persist, we believe that the risk of principal losses has increased," S&P said. FORTEZZA II (34% OF THE UNDERLYING LOAN POOL) The Fortezza II loan is the second-largest loan in the transaction, with a securitized balance of EUR252.2 million. It was fully securitized at closing. The loan pays fixed-rate interest and matures in January 2014. "The loan is secured by 11 secondary office properties. Of these, 10 are in Rome (mostly located in the southern and eastern periphery of Rome). One is south of Pescara city center, Italy. None of the buildings are trophy assets, in our view," S&P said. Ten properties are fully let to entities linked to the Ministry of Economy and Finance of the Italian Government (unsolicited; BBB+/Negative/A-2). "The Ministry of Economy and Finance of the Italian Government has extended two leases since closing. The weighted-average lease term has remained broadly stable since then (3.2 years in January 2012, compared with 3.8 years at closing). One property in Rome has become vacant and the overall occupancy rate has decreased to 92% from 100% at closing. Nonetheless, the net operating income has remained stable so far," S&P said. "In January 2012, the servicer reported an ICR of 1.50x and a LTV ratio of 74%. The properties have not been revalued since closing, and therefore we believe the reported property values are unlikely to reflect current market conditions and the actual LTV ratio could be higher. Moreover, based on the current lease roll-over profile, about 25% of overall income expires within three years (one year after loan maturity) and about 55% in total may expire within the five years. If leases are not renewed, this could further depress values and recoverable proceeds," S&P said. "We believe that the refinancing risks associated with this loan have increased in view of the factors we considered above in the context of the Haussmann loan (this loan matures around the same time and is of a similar size). We believe that the actual leverage would be higher than the reported LTV ratio if the assets were revalued , and could be higher still by maturity if vacancies rise. As a consequence, we currently anticipate some losses on this loan," S&P said. SISU (13% OF THE UNDERLYING LOAN POOL) The Sisu loan is the third-largest loan in the transaction. It has paid down materially since closing and the securitized balance is currently EUR100.5 million, from EUR329.8 million at closing. It is the senior portion of a larger loan. The whole loan pays floating-rate interest and matures in April 2012. This loan is on the servicer's Watchlist, due to its upcoming maturity as well as a continued breach of an LTV ratio covenant. "The properties are located in Finland and the sponsor's initial strategy was to liquidate the portfolio before April 2012. In our view, this strategy is unlikely to be achieved: There are now 180 properties (predominantly retail) in the portfolio, down from 566 mixed-use commercial real estate properties across Finland at closing. The 10 largest properties account for about 55% of the portfolio (by market value)," S&P said. "The performance has generally declined since closing: The occupancy rate has declined to 68.9% in January 2012 from 81.8% at closing, and rents per square meter have also declined. These factors have resulted in a decline in net operating income," S&P said. In January 2012, the servicer reported a whole-loan ICR of 2.25x and a senior LTV ratio of 62%, based on an April 2011 valuation. This valuation showed a 36% decline in value (like-for-like) since closing. "Despite the whole loan deleveraging since closing and the reported senior LTV ratio, we believe the risk of losses on the senior loan has increased in the light of the factors we considered in the context of the Haussmann loan," S&P said. BAYWATCH (6% OF THE UNDERLYING LOAN POOL) "The Baywatch loan is the fourth-largest loan in the transaction, with a securitized balance of EUR43.8 million. It is the senior portion of a larger loan. The whole loan matures in April 2012 and is on the servicer Watchlist as a result. We understand that the borrower and the servicer are in discussion regarding the strategies for refinancing the loan," S&P said. "The loan is secured by eight mixed-used properties across Germany. The properties are of average quality, in our opinion. The properties are let to multiple tenants, with the top 20 tenants accounting for 98% of the total income," S&P said. "In January 2012, the servicer reported a whole-loan ICR of 2.61x and a senior LTV ratio of 73%, based on an April 2010 valuation. Notwithstanding these factors, overall portfolio performance has declined since closing, despite the borrower's initial plan to grow rental income upon re-lettings on the back of a modernization program to enhance value. Lower passing rents associated with higher property costs have offset the benefit of the increase in occupancy to 96% from 94% at closing. Moreover, the weighted-average lease term of 3.69 years is short and could adversely affect the value of the properties, and in turn the borrower's ability to refinance the loan. Given the current difficult market conditions, we consider that the actual value could be lower than the April 2010 valuation," S&P said. "Accordingly, there is a risk, in our view, that the loan will not pay at maturity next month. Moreover, we consider that the loan could suffer principal losses," S&P said. ODIN (5% OF THE UNDERLYING LOAN POOL) The Odin loan is the fifth largest loan in the underlying pool, with a securitized balance of EUR38.9 million. It was fully securitized at closing. The loan pays fixed-rate interest and matures in July 2013. The loan is secured against a five-building industrial/logistics complex located in an industrial and logistics area close to Helsinki International Airport (Finland). The complex is almost fully occupied by multiple tenants. The top three tenants account for roughly 55% of the income. The reported weighted-average lease term is 4.4 years. In January 2012, the servicer reported an ICR of 1.90x and an LTV ratio of 64%. In March 2012, the servicer reported a revaluation of the property at EUR57.0 million (as of January 2012), compared with an original market value of EUR60.4 million in 2007. Following the updated valuation, the LTV ratio is currently 68%. The weighted-average lease term of 4.5 years is short and it predates note maturity. If the loan does not repay at loan maturity in 2013, as the lease rollovers become imminent the value of the property could be adversely affected, increasing the risk of principal losses. GSI (5% OF THE UNDERLYING LOAN POOL) The GSI loan is the sixth-largest loan in the underlying pool, with a securitized balance of EUR37.1 million. It was fully securitized at closing. The loan pays fixed-rate interest and matures in April 2014. The loan is secured by a single office property located in Halle, Germany. The property is fully let, until 2020, to the Ministry of Justice of the Federal State of Saxony-Anhalt (AA+/Stable/A- 1+), which uses it as a justice center. The reported weighted- average lease term is 8.5 years. In January 2012, the servicer reported an ICR of 1.48x and an LTV ratio of 70%. In March 2012, the servicer reported a revaluation of the property at EUR36.6 million (as of January 2012), compared with an original market value of EUR53.0 million in 2007. Following the updated valuation, the LTV ratio is currently 101%. "Given the specific nature of the asset and the updated LTV ratio, we consider that the loan could suffer principal losses," S&P said. QUEEN MARY (2% OF THE UNDERLYING LOAN POOL) "The Queen Mary loan is the smallest loan in the transaction, with a securitized balance of EUR14.9 million. It is the senior portion of a larger loan. The loan pays fixed-rate interest and was initially scheduled to mature in January 2012. The sponsor's initial business plan was to reduce the vacancy rate and to dispose of all of the assets in the portfolio before January 2012. The servicer granted a one-year extension to January 2013, in order to facilitate the sales business plan for full repayment of the loan," S&P said. In January 2012, the servicer reported a whole-loan ICR of 3.92x. The remaining properties were last revalued in July 2011 at EUR30.7 million. This reflects a senior LTV ratio of 48%. "Initially, the whole loan was secured against 19 commercial real estate assets, and it is now secured by eight commercial mixed- use properties (predominantly offices) located in various cities in Germany. The portfolio is of average quality, although the cash flow has remained consistent. The increased weighted-average lease term to 3.0 years, from 2.7 years at closing, suggests to us that the properties continue to attract tenants," S&P said. "Given the relatively low reported leverage and portfolio performance, we do not anticipate principal losses for this loan," S&P said. STRUCTURAL MATTERS "We note that the remaining securitized loans (even when current) do not generate enough interest collections to fully meet the interest payment obligations under the class E and F notes. The faster amortization of the class A notes since closing (relative to the other classes of notes) has resulted in increasing the weighted-average cost of the notes, in our view," S&P said. "The issuer initially relied on top-ups from eligible investments and loans, from Lehman Brothers Financing Ltd., to make full payments of interest on the notes. Since the insolvency of Lehman's, the liquidity facility has been available to fund interest shortfalls on all notes. As of January 2012, a total of EUR2.4 million has been drawn to cover interest shortfalls," S&P said. "However, the class E and F notes are subject to 'available funds cap' (AFC) that is fairly broadly defined in the transaction documents. This AFC limits interest payments due on the class E and F notes to the amount of cash remaining after the payments of interest due to the most senior classes of notes and issuer's prior-ranking expenses," S&P said. "We understand from the cash manager, that it considers that the interest due on the class E and F notes will not be reduced by the AFC. This, in the cash manager's opinion, is because the current interest shortfall is caused by the absence of the Lehman's quarterly top-up, and not the partial prepayments of some of the loans," S&P said. "Although the liquidity facility currently covers interest shortfalls, we believe that, absent other mitigating factors, the ultimate repayment of the liquidity facility drawings would reduce the level of recoveries available to noteholders, and could contribute to losses under the junior notes. We considered this factor in our recovery analysis, but we do not believe this risk will materialize in the near term," S&P said. COUNTERPARTY RISK "On June 14, 2011, we lowered our rating on the class A notes for counterparty reasons. The counterparty risk in this transaction remains unchanged, in our view," S&P said. RATING ACTIONS "Taking into consideration our review of the seven remaining loans in the transaction, we consider that the risk of principal losses has increased in light of the performance of some of the loans, the decline in asset values and difficult commercial real estate, and lending conditions, which could depress values further. As a consequence, we believe the notes' creditworthiness has deteriorated--with the exception of the class F notes, which already reflects these risks," S&P said. "We have therefore lowered our ratings on the class A to E notes and affirmed our rating on the class F notes. We now rate the class E and F notes at 'B- (sf)', to reflect our view that these classes could suffer principal losses," S&P said. At closing in November 2007, Windermere XIV CMBS acquired eight loans secured by 596 properties in Finland, Italy, France, and Germany. Seven of the original loans remain outstanding and the current note balance is EUR747.5 million (down from EUR1,111.9 million at closing). The final maturity date of the notes is in April 2018. POTENTIAL EFFECTS OF PROPOSED CRITERIA CHANGES "We have taken the rating actions based on our criteria for rating European commercial mortgage-backed securities (CMBS). However, these criteria are under review," S&P said. "As highlighted in the Nov. 8 Advance Notice of Proposed Criteria Change, we expect to publish a request for comment (RFC) outlining our proposed criteria changes for rating European CMBS transactions. Subsequently, we will consider market feedback before publishing our updated criteria. Our review may result in changes to the methodology and assumptions we use when rating European CMBS, and consequently, it may affect both new and outstanding ratings on European CMBS transactions," S&P said. "Until such time that we adopt new criteria for rating European CMBS, we will continue to rate and surveil these transactions using our existing criteria," S&P said. STANDARD & POOR'S 17G-7 DISCLOSURE REPORT SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating relating to an asset-backed security as defined in the Rule, to include a description of the representations, warranties and enforcement mechanisms available to investors and a description of how they differ from the representations, warranties and enforcement mechanisms in issuances of similar securities. The Rule applies to in-scope securities initially rated (including preliminary ratings) on or after Sept. 26, 2011. If applicable, the Standard & Poor's 17g-7 Disclosure Report included in this credit rating report is available at: http://standardandpoorsdisclosure-17g7.com RATINGS LIST Class Rating To From Windermere XIV CMBS Ltd. EUR1.112 Billion Commercial Mortgage-Backed Floating-Rate Notes Ratings Lowered A A (sf) A+ (sf) B BBB (sf) A (sf) C BB (sf) BBB- (sf) D B (sf) BB (sf) E B- (sf) B (sf) Rating Affirmed F B- (sf) * GERMANY: Moody's Issues Summary Credit Opinion ------------------------------------------------ Moody's Investors Service issued a summary credit opinion on Germany and includes certain regulatory disclosures regarding its ratings. The release does not constitute any change in Moody's ratings or rating rationale for Government of Germany. Moody's current ratings on Germany, Government of are: Long Term Issuer (domestic and foreign currency) ratings of Aaa Senior Unsecured (domestic currency) ratings of Aaa Ratings Rationale Moody's Aaa rating on German government debt is underpinned by the advanced and diversified economy, a strong tradition of stability-oriented macroeconomic policies, and the economy's deep integration into the global trade and capital markets. High productivity growth and strong world demand for German products have built a broad economic base with ample flexibility, generating high income levels. Germany's public debt burden is highly affordable more than 20 years after absorbing the high costs of West and East German unification. Indeed, in the two years just prior to the global financial crisis, the ratio of public debt to nominal GDP had stabilized at the mid-60% range and the general government budget position was balanced. This position has provided the government balance sheet with considerable room for shock absorption during the global financial and economic crisis. Very high investor confidence has thereby ensured ready access to domestic and international finance in the event of need. The government's ability to adjust to the challenges for public finances emanating from an increased debt stock combined with a weakening European economic growth outlook will be further tested in coming years, also in view of increasing pension liabilities in an ageing society. Rating Outlook The outlook for Germany's Aaa ratings is stable, although the impact of the global crisis, the working of automatic stabilisers and the government's financial support for the banks and the economy have left their imprint on the key debt metrics. On top of the need to repair domestic banks' balance sheets, there are potential financial burdens stemming from liquidity support commitments to other EU and euro area sovereigns that have their own government and/or banking system financing risks. In the meantime, however, Germany staged a robust economic recovery in 2010 and 2011, with real GDP growth of 3.7% and 3.0% respectively. Together with a commitment to adjust fiscal policy, this suggests that a starting decline in the 81% general government debt-to-GDP ratio can be expected in coming years. The economy's competitiveness and German industry's expertise in supplying investment goods to the rest of the world should sustain economic growth over the next 1 to 2 years, even though economic growth is likely to remain subdued due to a challenging global and European environment. However, the lack of debt-driven economic activity of the kind observed in some other highly advanced economies means there is less need for growth-dampening deleveraging of the private sector. The German government has substantial room for fiscal maneuver without compromising its very high debt financing capacity, helped by the benchmark status of German bunds. Moreover, the constitutional implementation of a public "debt brake" reflects policymakers' commitment to focus on fiscal consolidation. Indeed, the rules of the debt brake require substantial fiscal adjustment. Therefore, consolidation measures of around EUR80 billion are planned for the period 2011-14. The government is ahead of its fiscal consolidation plan, also due to more dynamic economic growth in 2010 and 2011 than initially expected. There will not be such backwind in 2012 though, since the economic outlook has weakened. However, Germany's shock-absorption capacity and its ability to undertake significant fiscal consolidation was amply demonstrated after German unification. Therefore Moody's does not expect the challenging global and euro area environment to translate into unsustainable debt dynamics. What Could Change the Rating - Down A prolonged deterioration in the fiscal position and/or in the economy's long-term strength that would take the debt metrics permanently outside Aaa underlying scores. The principal methodology used in this rating was Sovereign Bond Ratings published in September 2008. =========== G R E E C E =========== * GREECE: May Fail to Meet Debt Target & Require Rescue Loan ------------------------------------------------------------ Juergen Baetz at The Associated Press reports that Greece's international creditors see "significant risks" that the country might fail to bring down its debt burden within targets, meaning it would require more rescue loans. In a document seen by the AP on Tuesday, they say Greece's program of austerity measures and structural reforms "could be accident prone." "Authorities may not be able to implement reforms at the pace envisioned," the AP quotes the report by the International Monetary Fund, the European Commission and the European Central Bank as saying. The Greek program expects to lower debt to 116.5% of GDP by 2020, the AP discloses. The minimum target set by the bailout creditors is 120.5% by 2020, the AP notes. Overall, the bailout creditors' report sees a risk that the program would bring debt down to only 145.5 percent of GDP by 2020, even after taking into account losses accepted by private creditors, the AP discloses. * GREECE: Swap Sellers to Pay US$2.5-Bil. to Settle Contracts ------------------------------------------------------------- Abigail Moses at Bloomberg News reports that sellers of credit- default swaps on Greece will have to pay as much as US$2.5 billion to settle contracts triggered by the nation's debt restructuring. The settlement was determined after dealers agreed a final value for Greek bonds of 21.5% of face value at an auction, according to administrators Markit Group Ltd. and Creditex Group Inc., and is in line with where the notes have been trading, Bloomberg relates. Greek credit-default swaps are being settled after investors were forced to exchange their bonds at a loss in the biggest ever debt restructuring, Bloomberg notes. There were 4,369 outstanding swaps contracts insuring a net US$3.2 billion of Greek debt as of March 9, Bloomberg says, citing data from the Depository Trust & Clearing Corp., which runs a central registry for the market. In Greece's restructuring, investors were forced to write off more than EUR100 billion (US$132 billion) of debt in return for new bonds worth 31.5% of their original investment, Bloomberg discloses. Contracts wouldn't have been triggered if the debt exchange had been voluntary, according to ISDA's rules, Bloomberg states. ============= H U N G A R Y ============= BKV ZRT: On the Verge of Insolvency as Debt Expired Monday ---------------------------------------------------------- According to Dow Jones Newswires, business daily Napi Gazdasag reported that Budapest's troubled public transport company BKV Zrt is on the verge of insolvency, with one of its credit debts expired Monday. The news agency relates that the paper said although the central government last week agreed to provide financial guarantees for the loss-making company, an impending payment obligation may mean the move was in vain. The company, according to Napi, has a Monday deadline to pay HUF5 billion ($22.4 million) to Unicredit S.p.A. (UCG.MI), Dow Jones relays. Napi Gazdasag, citing bank sector experts, said that since the Unicredit agreement was already signed with state backing, failure to pay entails that the bank has to call the guarantee which legally entails that BKV has become insolvent, Dow Jones reports. This would mean that HUF54 billion of the company's debts may be claimed by creditors, Dow Jones notes citing Napi. According to Dow Jones, Napi said Budapest mayor Istvan Tarlos said negotiations have started with the banks on the matter. BKV Zrt is Budapest's public transport company. =================== K A Z A K H S T A N =================== KAZKOMMERTSBANK: Moody's Issues Summary Credit Opinion ------------------------------------------------------ Moody's Investors Service issued summary credit opinion on Kazkommertsbank and includes certain regulatory disclosures regarding its ratings. The release does not constitute any change in Moody's ratings or rating rationale for Kazkommertsbank. Moody's current ratings on Kazkommertsbank are: Senior Unsecured (foreign currency) ratings of B2 Senior Unsecured MTN Program (foreign currency) ratings of (P)B2 Long Term Bank Deposits (domestic and foreign currency) ratings of Ba3 Bank Financial Strength ratings of E+ Short Term Bank Deposits (domestic and foreign currency) rating of NP BACKED Senior Unsecured (foreign currency) ratings of B2 BACKED Subordinate (foreign currency) ratings of B3 BACKED Junior Subordinate (foreign currency) ratings of Caa1, (hyb) Ratings Rationale Moody's assigns an E+ bank financial strength rating (BFSR) to Kazkommertsbank (KKB), which translates into a Baseline Credit Assessment (BCA) of B2. KKB's BFSR is constrained by the bank's weak asset quality, declining earnings, high borrower and industry concentrations and challenging operating environment that limits growth potential in the near-term. However the rating is supported by the bank's substantially reduced reliance on wholesale funding and leading market position in Kazakhstan, with a 20.2% share in aggregate banking assets and an 19.8% share in retail deposits at YE2010. The bank's Global Local Currency (GLC) deposit rating is Ba3, which incorporate KKB's B2 BCA and Moody's assessment of moderate probability of systemic support to the bank's depositors (a component of Moody's Joint Default Analysis (JDA) methodology). Thus the bank's GLC deposit rating gets a two-notch uplift from its BCA. Rating Outlook The outlook on the bank's BFSR is stable, while the outlook on the deposit and debt ratings is negative. What Could Change the Rating - Up KKB's BFSR has limited upside potential in the medium term. However, a change in the deposit and debt ratings outlook from negative to stable could be prompted by stabilisation in the operating environment for banks in Kazakhstan, leading to notable improvements in the bank's asset quality, revenue generation and funding profile. What Could Change the Rating - Down A material decline in the bank's capital adequacy stemming from either increased loan loss charges or the ongoing shrinking of the bank's earnings could result in the ratings downgrade. Reduced systemic support probability may result in a downgrade of KKB's deposit ratings. The methodologies used in this rating were Bank Financial Strength Ratings: Global Methodology published in February 2007 and Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology published in March 2007. KAZINVESTBANK: Moody's Issues Summary Credit Opinion ------------------------------------------------------ Moody's Investors Service issued summary credit opinion on Kazinvestbank and includes certain regulatory disclosures regarding its ratings. The release does not constitute any change in Moody's ratings or rating rationale for Kazinvestbank. Moody's current ratings on Kazinvestbank are: Senior Unsecured MTN Program (domestic currency) ratings of (P)B3 Long Term Bank Deposits (domestic and foreign currency) ratings of B3 Bank Financial Strength ratings of E+ Subordinate (domestic currency) ratings of Caa1 Subordinate MTN Program (domestic currency) ratings of (P)Caa1 Short Term Bank Deposits (domestic and foreign currency) ratings of NP Ratings Rationale KazInvestBank's (KIB) Bank Financial Strength Rating (BFSR) is E+, which translates into a Baseline Credit Assessment (BCA) of B3. The rating is constrained by the bank's small franchise, high concentrations on both sides of the balance sheet, weak asset quality and profitability. However, the rating also takes into account its acceptable liquidity position and shareholders support. KIB's B3 deposit rating does not factor in any probability of systemic support in the event of a stress situation, based on the bank's insignificant national market share and relative importance to the country's banking system. Consequently, the bank's GLC deposit rating is at the same level as its B3 Baseline Credit Assessment. Rating Outlook All of the bank's ratings carry a stable outlook. What Could Change the Rating - Up KIB's ratings are unlikely to be upgraded in the near-term. In the medium-term the BFSR of E+ can map to a higher BCA than B3 in the event of a significant strengthening of the bank's franchise and a reduction in borrower and funding concentrations, coupled with good profitability and capitalization. A higher BCA would result in an upgrade of the bank's deposit ratings. What Could Change the Rating - Down A material deterioration in the liquidity position, asset quality (if not adequately covered by loan-loss provisions) or a further rise in borrower concentration would weigh on KIB's ratings. The methodologies used in this rating were Bank Financial Strength Ratings: Global Methodology published in February 2007 and Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology published in March 2007. ===================== N E T H E R L A N D S ===================== FRESENIUS FINANCE: Moody's Rates EUR500MM Sr. Unsec. Notes 'Ba1' ---------------------------------------------------------------- Moody's Investors Service has assigned a Ba1 rating to the proposed EUR500 million senior unsecured notes to be issued by Fresenius Finance B.V., a wholly owned subsidiary of Fresenius SE & Co KGaA ("FSE" or "the group"). FSE, together with Fresenius Kabi AG and Fresenius ProServe GmbH, guarantees the notes. The senior unsecured notes are expected to be used for acquisitions, to refinance short-term debt and for general corporate purposes. Ratings Rationale "The Ba1 rating on the new senior unsecured notes to be issued at the level of the financing subsidiaries reflects the instrument's relative position in the capital structure of FSE," says Alex Verbov, a Moody's Vice President and lead analyst for FSE. "The notes benefit from a downstream senior guarantee by FSE, and upstream guarantees by Fresenius Kabi AG and Fresenius ProServe GmbH, in line with the outstanding senior unsecured notes of various finance issuers in the group," adds Mr. Verbov. Fresenius' current Ba1 Corporate Family Rating reflects (i) the group's sizeable scale as a global provider of healthcare services and medical products as well as the recurring nature of a large part of its revenue and cash flow base; (ii) its segmental diversification within the healthcare market supported by strong positions in its four segments; (iii) its balanced level of geographical diversification; and (iv) good financial flexibility with an acceptable liquidity cushion. The rating is constrained by (i) the relatively high, financial leverage following a number of sizeable acquisitions announced in recent months, with an estimated debt/EBITDA ratio of 3.6x per year-end 2011 (Moody's adjusted), as well as stated strategy of continued growth via acquisitions in the future, (ii) the exposure to regulatory changes, reimbursement and pricing pressure from governments and healthcare organisations worldwide, and (iii) continued exposure to volatility in the capital markets regularly used by both FSE and FME to cover respective re/financing needs. What Could Change the Rating -- Up Moody's would consider an upgrade to investment grade only upon a significant change in financial strategy that would target debt/EBITDA below 3.0 times, equivalent to reported net debt/EBITDA (management's measure) well below 2.5 times. What Could Change the Rating -- Down The ratings could be subject to downwards pressure if Fresenius' leverage metrics weaken as exemplified by a debt/EBITDA exceeding 4.0x or CFO to debt falling towards the low teens. Large debt financed acquisitions or negative free cash flows, materially reducing the prospect of deleveraging could also be drivers of a downward rating migration. The principal methodology used in rating Fresenius Finance BV was the Global Healthcare Service Providers Industry Methodology published in December 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. GREEN APPLE: Moody's Assigns Ba1 Rating to EUR3MM Class C Notes --------------------------------------------------------------- Moody's Investors Service has assigned definitive credit ratings to the following classes of notes issued by Green Apple B.V. (2007-I NHG Portfolio): EUR1486.5M Senior Class A Mortgage-Backed Notes 2007 due 2046, Assigned A2 (sf) EUR10.5M Mezzanine Class B Mortgage-Backed Notes 2007 due 2046, Assigned Baa1 (sf) EUR3M Junior Class C Mortgage-Backed Notes 2007 due 2046, Assigned Ba1 (sf) The transaction represents the first compartment out of the Green Apple issuer. All notes are backed by a pool of prime Dutch residential mortgage loans which all have the benefit of an NHG- guarantee. The mortgage loans have been originated by Argenta Spaarbank N.V. (Argenta, not rated), acting through the Dutch branch. The total size of the portfolio is EUR1.5 billion. The portfolio will be serviced by Argenta. The sub delegated servicers at closing are Stater Nederland B.V. (Stater, not rated) and Quion Hypotheekbegeleiding B.V. (Quion, not rated). The transaction closed in September 2007 and was initially not rated by Moody's. Until now the transaction has been revolving. Following a restructuring in March 2012, (i) the transaction has become static and (ii) a reserve fund has been added equal to 1.95% of the outstanding 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. The expected portfolio loss of 0.20% of the portfolio at closing and the MILAN Aaa required Credit Enhancement of 4% 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 July 2000. The MILAN Aaa Credit Enhancement is slightly lower than in other recently closed prime Dutch RMBS transactions fully backed by mortgage loans with an NHG guarantee. The key drivers for the MILAN Aaa Credit Enhancement are (i) the proportion of loans benefitting from an NHG guarantee (100%), (ii) the static nature of the pool, (iii) the weighted average loan-to-foreclosure-value (LTFV) of 102.6%, (iv) the proportion of interest-only loans parts (48.4%), (v) the weighted average seasoning of 5 years and (vi) 95.9% of the portfolio has never been in arrears in the past. Since this pool consists of NHG-guaranteed loans, the originators' historic NHG pay-out ratios were also considered for stressed scenarios in which the sellers might no longer be in a position to honour their buy-back obligation for loans that do not meet the NHG criteria. Moody's assumed a rescission rate of 35% in the MILAN analysis. The key drivers for the portfolio expected loss are (i) the fact that all mortgage loans have the benefit of an NHG guarantee, (ii) the buy-back obligation of the sellers in case the mortgage loan is no longer eligible for the NHG guarantee (pre and post foreclosure), (iii) the current performance of the transaction and (iv) benchmarking with comparable transactions in the Dutch market. Some borrowers may have savings deposits with Argenta, which introduces the risk of set-off in case Argenta would go insolvent. Moody's has been provided with data on the amount of deposits held by borrowers with Argenta. Should the actual deposits as a percentage of the total portfolio increase over time as a result of an increase of the amounts held by borrowers at Argenta, Moody's would have to revise Moody's assumption on the set-off of deposits in the cash flow modelling, which may lead to a review of the ratings. Furthermore, collections are collected in an account in the name of Argenta, which introduces the risk of commingling losses in the scenario Argenta would go insolvent. Furthermore, approximately 35.2% of the portfolio is linked to life insurance policies (life mortgage loans), which are exposed to set-off risk in case an insurance company goes bankrupt. The seller has provided loan-by-loan insurance company counterparty data, which Moody's used in the analysis of the set-off risk. A reserve account is funded at 1.95% per cent of the total notes outstanding. The reserve account will amortize to 1.25% of the original note balance. Operational Risk Analysis: Moody's has analyzed the potential operational risks associated with the servicing and cash management functions in the transaction. The named servicer in the transaction is Argenta (not rated). Argenta has sub delegated the loan administration to two sub servicers (Stater and Quion). There is no back-up servicer in place, nor will a back-up servicer be appointed upon a certain event. Furthermore, the issuer and security trustee will use best efforts to appoint a substitute servicer if the main servicer is no longer able to service the mortgage loan pool. Moody's views this undertaking to be similar to a back-up servicer facilitator function. The role of cash manager in this transaction is performed by ATC Financial Services B.V. (not rated). The cash management agreement enables the cash manager to continue to make payments under the notes in a situation when the cash manager receives no mortgage reports from the servicer. In this situation the cash manager can use the most recent available mortgage reports to make payment estimates. The transaction has the benefit of a non amortizing liquidity facility of 1.0 per cent of the initial balance of the notes. The available liquidity in this transaction is sufficient to cover one quarterly interest payment. Furthermore, under the swap agreement the issuer pays interest received by the issuer (minus expenses and the excess margin) and receives the interest payable on the intercompany loans from the issuer, which is equal to the interest payable on the notes. Should the issuer receive no interest at all, the swap would still pay the interest due on the notes. This feature provides additional liquidity following a servicer disruption. Moody's Parameter Sensitivities: If the MILAN Aaa CE was increased from 4.0 per cent to 6.4 per cent (a stress of 1.6 times), the model output indicates that the the Cass A notes would still achieve an A2 rating, assuming that the portfolio expected loss remains at 0.20% and all other factors remain equal. If the portfolio expected loss was increased to 0.60 % from 0.20% and if the MILAN Aaa Credit Enhancement remained at 4.0 percent, the model output indicates that the all Class A notes would no longer achieve A2 but A3 instead. Moody's Parameter Sensitivities provide a quantitative/model-indicated calculation of the number of rating notches that a Moody's structured finance security may vary if certain input parameters used in the initial rating process differed. The analysis assumes that the deal has not aged and is not intended to measure how the rating of the security might migrate over time, but rather how the initial rating of the security might have differed if key rating input parameters were varied. Parameter Sensitivities for the typical EMEA RMBS transaction are calculated by stressing key variable inputs in Moody's primary rating model. The V-Score for this transaction is Low/Medium, which is in line with the Low/Medium V-Score assigned for the Dutch prime RMBS sector. The primary source of uncertainty surrounding Moody's assumptions is the performance of the loans and the rescission rate for which there is limited historical performance data available. Another source of uncertainty is due to the analytic complexity of the transaction resulting from the very limited available credit enhancement in the transaction and the potential impact of set-off related losses. Operational risks relating to the servicing arrangement given that the contractual servicer (Argenta) is not rated by Moody's are another source of uncertainty. 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. The methodologies used in this rating were Moody's Approach to Rating RMBS in Europe, Middle East and Africa published in October 2009, Moody's Updated MILAN Methodology for Rating Dutch RMBS published in October 2009, Cash Flow Analysis in EMEA RMBS: Testing Structural Features with the MARCO Model (Moody's Analyser of Residential Cash Flows) published in January 2006, Moody's Updated Approach to NHG Mortgages in Rating Dutch RMBS published in March 2009, and Moody's Updated Methodology for Set- Off in Dutch RMBS published in November 2009. Other Factors used in this rating are described in The Lognormal Method Applied to ABS Analysis published in July 2000 and Global Structured Finance Operational Risk Guidelines: Moody's Approach to Analyzing Performance Disruption Risk published in June 2011. In rating this transaction, Moody's used ABSROM to model the cash flows and determine the loss for each tranche. The cash flow model evaluates all default scenarios that are then weighted considering the probabilities of the lognormal distribution assumed for the portfolio default rate. In each default scenario, the corresponding loss for each class of notes is calculated given the incoming cash flows from the assets and the outgoing payments to third parties and noteholders. Therefore, the expected loss or EL for each tranche is the sum product of (i) the probability of occurrence of each default scenario; and (ii) the loss derived from the cash flow model in each default scenario for each tranche. As such, Moody's analysis encompasses the assessment of stressed scenarios. As the Euro area crisis continues, the rating of the structured finance notes remain exposed to the uncertainties of credit conditions in the general economy. The deteriorating creditworthiness of euro area sovereigns as well as the weakening credit profile of the global banking sector could negatively impact the ratings of the notes. 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 principal with respect to the notes by the legal final maturity. 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. Moody's will monitor this transaction on an ongoing basis. JUBILEE CDO V: S&P Affirms 'CCC+' Ratings on Two Note Classes ------------------------------------------------------------- Standard & Poor's Ratings Services took various credit rating actions on all rated classes of notes in Jubilee CDO V B.V. Specifically, S&P has: * Raised its rating on the class B notes; and * Affirmed its ratings on the class A-1A, A-1B, A-2, C, D-1, and D-2 notes. "The rating actions follow our assessment of the transaction's Performance -- using data from the latest available trustee report dated Feb. 9, 2012 -- and our cash flow analysis. We have taken into account recent transaction developments and applied our 2010 counterparty criteria," S&P said. "Our analysis indicates that there has been a reduction in the outstanding balance of the class A-1A, A1B, and A-2 notes by 7.7% since we last took rating action in the transaction on May 28, 2010. These notes were paid down from both interest and principal proceeds, to cure previously failing class D coverage tests. In our opinion, this has contributed to an increase in the credit enhancement available for all the rated classes of notes when compared with our last review. From the February 2012 trustee report, we have also observed an increase in the weighted-average spread to 3.41% from 3.03%," S&P said. "In addition, our analysis indicates that the portfolio's weighted-average maturity has decreased to 4.2 years from 4.7 years since our May 2010 review. Together with a general improvement in the portfolio's credit quality, these factors have resulted in a reduction of our scenario default rates (SDRs) for all rating categories in our analysis of this transaction," S&P said. "We have subjected the capital structure to a cash flow analysis to determine the break-even default rate for each rated class. In our analysis, we used the reported portfolio balance that we considered to be performing, the current weighted-average spread, and the weighted-average recovery rates that we considered to be appropriate. We incorporated various cash flow stress scenarios, using alternative default patterns, levels, and timings for each liability rating category, in conjunction with different interest rate stress scenarios," S&P said. "From our analysis, 15.86% of the performing assets are non-euro- denominated, and are hedged under specific cross-currency swap agreements. In our opinion, the documentation for these cross- currency swaps does not fully reflect our 2010 counterparty criteria. Hence, our cash flow analysis has considered scenarios where the currency swap does not perform and where, as a result, the transaction is exposed to changes in currency rates," S&P said. "Our credit and cash flow analyses, without giving credit to the cross-currency swap counterparties, indicate that the credit enhancement available to the class A1-A, A-1B, and A-2 notes is at a level that is commensurate with our current ratings on these notes. We have therefore affirmed our ratings on these notes," S&P said. "Based on our credit and cash flow analyses, we consider that the credit enhancement available to the class B notes is now consistent with a higher rating than previously assigned. We have therefore raised our rating on these notes to 'A+ (sf)' from 'A- (sf)'. In our opinion, the current ratings on the cross-currency swap counterparties can support this rating level, and hence the rating on these notes is not constrained by our current ratings on the cross-currency swap counterparties," S&P said. "We have also affirmed our ratings on the class C, D-1, and D-2 notes, as our analysis indicates that the credit enhancement available to these notes is consistent with the ratings currently assigned. The rating on the class C notes was constrained by the application of the largest obligor default test, a supplemental stress test that we introduced in our 2009 criteria update for corporate collateralized debt obligations (CDOs). We also took into account the overall observed reduction in the coverage test results in our analysis, as well as the sensitivity of the class D-1 and D-2 notes to the largest obligor default test," S&P said. Jubilee CDO V is a managed cash flow collateralized loan obligation (CLO) transaction that securitizes loans to primarily speculative-grade corporate firms. It closed in June 2005 and is managed by Alcentra Ltd. STANDARD & POOR'S 17G-7 DISCLOSURE REPORT SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating relating to an asset-backed security as defined in the Rule, to include a description of the representations, warranties and enforcement mechanisms available to investors and a description of how they differ from the representations, warranties and enforcement mechanisms in issuances of similar securities. The Rule applies to in-scope securities initially rated (including preliminary ratings) on or after Sept. 26, 2011. If applicable, the Standard & Poor's 17g-7 Disclosure Report included in this credit rating report is available at: http://standardandpoorsdisclosure-17g7.com RATINGS LIST Jubilee CDO V B.V. EUR555 Million Secured Floating- And Fixed-Rate Notes Class Rating To From Rating Raised B A+ (sf) A- (sf) Ratings Affirmed A-1A AA+ (sf) A-1B AA (sf) A-2 AA (sf) C BB+ (sf) D-1 CCC+ (sf) D-2 CCC+ (sf) =========== R U S S I A =========== ALFA-BANK: Moody's Issues Summary Credit Opinion ------------------------------------------------ Moody's Investors Service issued a summary credit opinion on Alfa-Bank and includes certain regulatory disclosures regarding its ratings. The release does not constitute any change in Moody's ratings or rating rationale for Alfa-Bank and its affiliates. Moody's current ratings on Alfa-Bank and its affiliates are: Senior Unsecured (domestic and foreign currency) ratings of Ba1 Long Term Bank Deposits (domestic and foreign currency) ratings of Ba1 Bank Financial Strength ratings of D Subordinate (foreign currency) ratings of Ba2 Short Term Bank Deposits (domestic currency) ratings of NP Short Term Bank Deposits (foreign currency) ratings of NP BACKED Senior Unsecured (foreign currency) ratings of Ba1 Alfa MTN Issuance Limited BACKED Senior Unsecured (foreign currency) ratings of Ba1 BACKED Senior Unsecured MTN Program (foreign currency) ratings of (P)Ba1 BACKED Other Short Term (foreign currency) ratings of (P)NP Alfa MTN Markets Limited Senior Unsecured (foreign currency) ratings of Ba1 BACKED Senior Unsecured MTN Program (foreign currency) ratings of (P)Ba1 BACKED Other Short Term (foreign currency) ratings of (P)NP Alfa MTN Invest Ltd BACKED Senior Unsecured (foreign currency) ratings of Ba1 BACKED Senior Unsecured MTN Program (foreign currency) ratings of (P)Ba1 Alfa MTN Projects Limited BACKED Senior Unsecured MTN Program (foreign currency) ratings of (P)Ba1 Ratings Rationale Moody's assigns a bank financial strength rating (BFSR) of D to Alfa-Bank, which translates into a Baseline Credit Assessment (BCA) of Ba2. The BFSR is supported by the bank's strong commercial franchise in Russia, its good business diversification, and adequate capitalization and efficiency. However, the BFSR is constrained by (i) a rapid credit growth which could add pressure on the bank's asset quality a capital adequacy; (ii) high single-name concentrations on both sides of the balance sheet, and (iii) a very high level of related-party exposures. Alfa-Bank's Ba1 debt and deposit ratings are based on the bank's BCA of Ba2 and Moody's assessment of a low probability of systemic support for the bank in case of need. Moody's bases its support assumptions on a history of government support (through a subordinated loan in 2009) to Alfa-Bank, and the bank's moderate market share in retail deposits of around 2%, with around 6 million retail clients. The latter makes Alfa-Bank a top-5 retail deposit-taker in Russia. Rating Outlook Alfa's outlook was revised to stable from negative in November 2010, driven by the stabilization or improvements in main credit metrics, namely in terms of new business growth, asset quality, capitalization and liquidity. What Could Change the Rating - Up Any positive rating actions would require one or more of the following: (i) the ongoing ability to maintain overall profitability commensurate with risks assumed in the current operating environment, (ii) more tangible improvements in asset quality, (iii) a decrease in risk appetite, reflected in lower concentration levels in loans and deposits, and (iv) a decrease in the share of related-party loans. Alfa's Ba1 debt/deposit ratings could be upgraded in case if the bank's stand-alone rating is upgraded, and Moody's current systemic support assumptions for the bank remain unchanged. What Could Change the Rating - Down A significant deterioration of asset quality, capitalization and/or liquidity position could have a negative impact on the BFSR, as could a weakening market position and a material loss of market share. Alfa-Bank's debt/deposit ratings will be downgraded in the event of a downgrade of the bank's BFSR and/or Moody's re- assessment of the low probability of systemic support. The methodologies used in these ratings were Bank Financial Strength Ratings: Global Methodology published in February 2007, Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology published in March 2007 and Mapping Moody's National Scale Ratings to Global Scale Ratings published in March 2011. COMMERCIAL BANK: Moody's Upgrades Long-Terms Ratings to 'B2' ------------------------------------------------------------ Moody's Investors Service has upgraded the long-term local and foreign currency debt and deposit ratings of Commercial Bank Renaissance Capital LLC to B2 from B3. The bank's Not Prime short-term local and foreign currency deposit ratings and the E+ standalone bank financial strength rating (BFSR) remained unchanged, although the BFSR now maps to B2 on the long-term scale (formerly B3). The outlook on the long-term ratings and the BFSR is stable. The upgrade of Commercial Bank Renaissance Capital LLC's ratings is largely based on its unaudited statutory accounts for 2011, unaudited management accounts for 2011, as well as unaudited (reviewed) accounts under IFRS for H1 2011 and audited IFRS for 2010. Ratings Rationale Moody's rating action was driven by (i) the improved funding mix, which enhances Commercial Bank Renaissance Capital LLC's liquidity position; (ii) the growth of the bank's loan book to almost pre-crisis levels, which has enabled it both to restore revenue generation power and to improve profitability and (iii) stronger underwriting standards which has resulted in an improvement in the bank's asset quality. After the 2008 crisis events, Commercial Bank Renaissance Capital LLC curtailed its operations in order to fulfil wholesale repayments. Thereafter, the bank redesigned its funding strategy to retail from wholesale funding (the latter had accounted for the majority of the funding base prior to 2009). As a result, retail funding increased to 57% of total funding at year-end 2011, up from 5% at year-end 2008, and wholesale funding declined to less than 30% of non-equity funding at year-end 2011 from 80% at year-end 2008, thus enhancing the bank's resilience to any shutdown of wholesale markets. In Moody's view, the current funding base better positions the bank to withstand liquidity shocks compared to previous years. Moody's also observes that a significant increase in Commercial Bank Renaissance Capital LLC's retail funding enabled it to fund expansion in its lending operations. The bank has grown its retail loan portfolio by almost 60% since year-end 2009, thus restoring the size of this portfolio to almost pre-crisis levels. Moody's also notes that Commercial Bank Renaissance Capital LLC's profitability has improved significantly as a result of (i) the rise in revenue streams due to expansion of the bank's operations and (ii) improving risk standards, which reduce provisioning costs. As a result, the bank demonstrated solid return on average equity (RoAE) and return on average assets (RoAA) at 22% and 5%, respectively, at year-end 2011. Commercial Bank Renaissance Capital LLC's risk management standards improved after being tested and calibrated throughout the crisis in 2008-2009, thus enabling the bank to significantly ease asset quality pressures. As a result, written-off loans and non-performing loans (NPLs, defined as 90+ days overdue) decreased from over 30% during the period 2007-2010 to less than 10% (of the beginning period loan book) as at end-H1 2011. In light of improved risk quality, Moody's notes that in the event of another crisis, the deterioration in asset quality is not expected to reach the levels recorded in the period 2008-2010. Moody's notes that Commercial Bank Renaissance Capital LLC's ratings continue to be constrained by: (i) still moderate franchise value; (ii) rapid growth, which raises some concerns about the bank's ability to control the quality of such growth; and (iii)) the absence of testing of customer loyalty in the event of economic deterioration -- against the background of the bank's increased reliance of retail deposits. At the same time, Commercial Bank Renaissance Capital LLC's ratings are underpinned by (i) its reasonable profitability due to high earnings generation power and (ii) its good capital cushion which would absorb significant asset quality deterioration in the event of any deterioration in the operating environment. Commercial Bank Renaissance Capital LLC's liquidity is currently adequate, although, in Moody's view, the current liquidity level will not enable the bank to sustain current business volumes in the event of significant financial instability. The methodologies used in this rating were Bank Financial Strength Ratings: Global Methodology published in February 2007, and Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology published in March 2007. Commercial Bank Renaissance Capital LLC's B2/Not Prime long- and short-term deposit ratings do not factor any probability of shareholder support or systemic support in the event of need, as Moody's views this as being unlikely. Headquartered in Moscow, Russia, Commercial Bank "Renaissance Capital" LLC reported total consolidated assets of US$1.6 billion and total equity of US$432 million under unaudited IFRS at end-H1 2011. CREDIT BANK OF MOSCOW: Moody's Issues Summary Credit Opinion ------------------------------------------------------------ Moody's Investors Service issued a summary credit opinion on Credit Bank of Moscow and includes certain regulatory disclosures regarding its ratings. The release does not constitute any change in Moody's ratings or rating rationale for Credit Bank of Moscow. Moody's current ratings on Credit Bank of Moscow are Senior Unsecured (domestic and foreign currency) ratings of B1 Long Term Bank Deposits (domestic and foreign currency) ratings of B1 Bank Financial Strength ratings of E+ Short Term Bank Deposits (domestic and foreign currency) ratings of NP Rating Rationale Moody's assigns a standalone bank financial strength rating (BFSR) of E+ to Credit Bank of Moscow (CBM), which maps to B1 on the long-term scale. The rating is constrained by (i) CBM's modest market positions and concentration to the highly competitive Moscow region, (ii) substantial exposure to market risk which renders profitability somewhat volatile, (iii) moderately high risk appetite with outstanding growth rates of the loan book and rising appetite to the real estate and construction sector, and (iv) potentially vulnerable liquidity which is dependent on volatile sources. More positively, the BFSR reflects the bank's established market positions in certain niches, resulting in solid and stable income generation power, reasonable efficiency, and historically adequate reported capitalisation supported by the shareholder. The bank's long-term global local currency (GLC) deposit rating is B1, the same level as the standalone credit strength. The deposit rating does not incorporate any expectation of systemic or shareholder support for CBM in case of need. Rating Outlook All CBM's ratings have a stable outlook. What Could Change the Rating - Up In Moody's opinion, an upgrade is unlikely in the medium term. In the longer term, CBM's E+ BFSR could be upgraded if the bank demonstrates a diversification of franchise, including by geography. A decline in risk appetite is also an essential factor for an upgrade. What Could Change the Rating - Down The bank's BFSR could be negatively affected by a dramatic deterioration in liquidity and/or asset quality. The methodologies used in this rating were Bank Financial Strength Ratings: Global Methodology published in February 2007, Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology published in March 2007. RUSSIAN AGRICULTURAL: Moody's Issues Summary Credit Opinion ----------------------------------------------------------- Moody's Investors Service's summary credit opinion on Russian Agricultural Bank and includes certain regulatory disclosures regarding its ratings. The release does not constitute any change in Moody's ratings or rating rationale for Russian Agricultural Bank. Moody's current ratings on Russian Agricultural Bank are: Senior Secured (domestic currency) ratings of Baa1 Senior Unsecured (domestic and foreign currency) ratings of Baa1 Senior Unsecured MTN Program (foreign currency) ratings of (P)Baa1 Long Term Bank Deposits (domestic and foreign currency) ratings of Baa1 Bank Financial Strength ratings of E+ Subordinate (foreign currency) ratings of Baa2 Subordinate MTN Program (foreign currency) ratings of (P)Baa2 Short Term Bank Deposits (domestic and foreign currency) ratings of P-2 Ratings Rationale Moody's assigns an E+ bank financial strength rating (BFSR) to Russian Agricultural Bank (RusAg), mapping to B1 on the long-term rating scale. Similar to other state banks in Russia, the rating is constrained by the potential susceptibility of the bank's business to political decisions, as well as the industry concentrations in the loan portfolio, relatively weak asset quality, and significant reliance on market sources for funding. At the same time, the rating is supported by RusAg's developed franchise in the Russian agribusiness sector and its position as the fourth-largest bank in the country in terms of assets and capital. RusAg's Baa1/Prime-2 global local currency (GLC) deposit ratings are based on Moody's assessment that the probability of support from the Russian government in the event of need is very high, as the state holds 100% of RusAg's issued and outstanding shares. In line with Moody's joint-default analysis, the bank's Baa1/Prime-2 deposit and debt ratings therefore benefit from a six-notch uplift from its standalone credit rating. Rating Outlook All of the bank's ratings carry a stable outlook. What Could Change the Rating - Up RusAg's E+ BFSR, long-term GLC deposit rating and senior/subordinated debt ratings could be upgraded if the bank improves its asset quality and profitability. The bank's long- term global foreign currency deposit and debt ratings are likely to mirror future movements in the sovereign ratings of the Russian government, if followed by stand-alone improvements. What Could Change the Rating - Down The bank's BFSR has little downside potential but could be negatively affected by a dramatic deterioration in asset quality and significant weakening of its capital position. The deposit and debt ratings could be downgraded if the probability of external support were perceived to be lower. However, Moody's believes that any of such events are unlikely to arise in the near future. The methodologies used in this rating were Bank Financial Strength Ratings: Global Methodology published in February 2007 and Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology published in March 2007. UC RUSAL: Two Oligarchs in Dispute Over Corporate Governance ------------------------------------------------------------ Catherine Belton and Robert Cookson at The Financial Times report that two Russian billionaires have clashed publicly over corporate governance at the world's largest aluminium company, after Viktor Vekselberg said United Company Rusal was in "deep crisis" because of bad management and a heavy debt load. The FT relates that Mr. Vekselberg resigned as Rusal's chairman on March 14, saying it had been transformed from "a world leader in the aluminium industry into a company overburdened by debt and involved in a huge number of legal battles and social conflicts". Oleg Deripaska, Rusal's controlling shareholder and chief executive, hit back at Mr. Vekselberg on Tuesday, the FT discloses. "There is no crisis, either deep or shallow. There is a difficult situation on the market which determines the economic results," the FT quotes Mr. Derispaka a saying, adding that Rusal would replace him with an independent chairman. The FT notes that Rusal, which suspended its Hong Kong-listed shares on Tuesday, had earlier said that Mr. Vekselberg failed "to perform his duties as a public company board chairman". Rusal's banks, which could have called in the company's loans if aluminium prices continued to fall, gave it a 12-month reprieve in January, the FT recounts. Mr. Deripaska, as cited by the FT, said that the agreement would allow Rusal to service its US$11.4 billion debt. Mr. Vekselberg co-owns a 15.8% stake in Rusal with another Russian oligarch, Leonard Blavatnik, the FT discloses. Mr. Vekselberg and Mr. Deripaska have also been at odds over whether Rusal should sell its 25% stake in Norilsk Nickel, the world's biggest nickel miner, the FT notes. Mr. Vekselberg has been seeking to sell many of his Russian assets over the past year, and supported a US$12.8 billion offer from Norilsk to buy back most of Rusal's stake, the FT says. The deal, made at a big premium to the market price at the time, would have allowed Rusal to pay off its US$11.4 billion debt burden and begin paying dividends to shareholders, the FT relates. But Mr. Deripaska, who sees Norilsk as a "strategic asset", refused to sell, the FT notes. According to the FT, a person close to one of the shareholders claimed the problems had broken out over a potential sale of Mr. Vekselberg's stake in Rusal. United Company RUSAL Plc -- http://www.rusal.com-- engages in the production and sale of aluminum products. The company engages in bauxite and nepheline ore mining and processing; alumina refining; and aluminum smelting and refining operations. It also involves in the sale of bauxite and alumina; and various primary aluminum products, including alloys, as well as value- added products, such as aluminum sheets, ingots, and billets. * CITY OF SURGUT: S&P Raises Issuer Credit Rating to 'BB+' ---------------------------------------------------------- Standard & Poor's Ratings Services raised its long-term issuer credit rating on Russia's City of Surgut to 'BB+' from 'BB' and its Russia national scale rating on the city to 'ruAA+' from 'ruAA'. The outlook is stable. "The upgrade reflects our view of Surgut's better-than- previously-forecast budgetary performance, consistently strong liquidity position, and low debt burden," S&P said. "The ratings are constrained by our view of the city's limited economic growth prospects and low revenue flexibility and predictability stemming from the dependence on transfers from Khanty-Mansiysk Autonomous Okrug (KMAO; BBB/Stable/--; Russia national scale 'ruAAA') and exposure to the volatile oil industry," S&P said. Surgut's high wealth levels, continued prudent financial management, very low debt burden, and consistently positive liquidity position support the ratings. "The stable outlook reflects our view that the adherence of Surgut's management to conservative financial policies and control over expenditure growth will result in sound budgetary performance in 2012-2014, despite only modest expected revenue growth. It also assumes that the city will maintain its positive liquidity and very low debt burden," S&P said. "We could take a negative rating action if the city's inability to control spending growth in accordance with decreasing revenues resulted in a structural deterioration of the city's budgetary performance, leading to gradual cash depletion in line with our downside scenario. However, we view such a scenario as unlikely within the next 12 months," S&P said. "We could take a positive rating action if, in our view, Surgut's management's efforts and documented financial and liquidity policies mitigated budget revenue volatility and led to structurally strong operating margins and further cash accumulation in line with our upside scenario. Improved predictability of intergovernmental relations in Russia would also be positive for the ratings," S&P said. ===================================== S E R B I A & M O N T E N E G R O ===================================== * REPUBLIC OF SERBIA: S&P Affirms 'BB/B' Sovereign Credit Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its long- and short- term foreign and local currency sovereign credit ratings on the Republic of Serbia at 'BB/B'. The outlook is stable. The recovery rating is '4'. The transfer and convertibility (T&C) assessment is 'BB'. "The ratings on Serbia are constrained by our view of vulnerabilities emanating from its high external debt, sizable current account deficits, and limited monetary flexibility due to the euroization of bank deposits and claims. The ratings are supported by Serbia's moderate government debt levels, which we expect will be slightly above 45% of GDP at end-2012 (compared to 67% in 2003), and by its EU candidate status, which boosts the potential for reforms that could stimulate growth and rebalance the economy toward a more export-driven model. We expect that the next government, following the May 6, 2012, parliamentary election, will prioritize fiscal consolidation and the ongoing key structural reforms already committed to under the 2011 Stand- By Arrangement (SBA) with the IMF," S&P said. "On March 1, 2012, the EU granted Serbia official candidate status. We believe the prospect of joining the EU can give candidate countries a strong impetus for reform. That said, an official date for opening talks has yet to be set. We do not expect Serbia will join the EU until the end of the decade," S&P said. "In light of our projections for weak eurozone activity, we expect that Serbia's GDP growth will average 0.5% in 2012, although there are considerable uncertainties surrounding this projection. We anticipate net exports and a gradual recovery of domestic demand will contribute to trend GDP growth returning to 4% by 2014, partly reflecting the increase in inbound FDI in Serbia's expanding tradeables sector," S&P said. "After narrowing significantly during 2009, Serbia's current account deficit widened to 9% of GDP in 2011 on an increase in imports of capital equipment. The large current account deficit was primarily financed by an improvement in FDI--namely investments from Fiat and Belgian Delhaize--and substantial government borrowing (its first eurobond issuance was in September 2011). Indeed, during 2011 Serbia experienced Central and Southeastern Europe's third-highest FDI inflow as a percentage of GDP (after Montenegro and Albania), with net FDI of more than 6% of GDP. We expect Serbia's current account deficit to narrow slightly in 2012 toward 8% of GDP; we believe the impact of weakening eurozone demand on exports will be partially offset by the launch of a new (export-oriented) Fiat model. We expect the current account deficit in 2012 will be financed mainly by government borrowing (after the election) and a drawdown of reserves. As a consequence, we project net foreign exchange reserve coverage of short-term debt by remaining maturity will decline to 90% by end-2012 from 107% in 2011," S&P said. "The government's 2012 budget deficit target of 4.3% of GDP is based on what we view as its optimistic growth assumption of 1.5% (we forecast 0.5%). Because most government revenues come via indirect taxation of domestic demand (in particular VAT and excise receipts), we do not believe the government will meet its budget deficit target even if export performance remains solid, unless the authorities move forward with additional expenditure reductions. Our baseline expectation is that, after the upcoming elections, the new government will adopt what we would consider to be a more conservative supplementary budget. We note that some recent fiscal adjustments--such as the 'Decentralization Law,' which relocates revenues from the central government to local authorities--could, in our view, weaken fiscal accountability at the local level. This might render general government budgetary planning more challenging," S&P said. "Under our baseline scenario, eurozone parent banks will rollover but not increase their lending to Serbian subsidiaries, leaving the subsidiaries to rely on domestic deposit growth to finance any credit expansion. The banking sector appears to us to be fairly well capitalized, but dependent on external financing. The euroization of bank deposits and loans remains high; while the unhedged foreign currency exposure of the corporate sector remains a risk," S&P said. "The stable outlook balances our view of Serbia's monetary and external vulnerabilities against its growth potential and improving policy environment. We could lower the ratings if, all other factors being equal, we determined Serbia's external or fiscal liabilities were increasing significantly, which might arise from widening external deficits. We could also lower the ratings if we consider external liquidity is significantly worsening, such that the rollover rate of external debt would fall below 100%. Conversely, we could raise the ratings if we consider the government has accelerated structural reforms of the public sector, the labor market, and/or the pension system. In our view such reforms would not only improve Serbia's structural fiscal position, but also mature the business environment, enabling the economy to post stronger and more consistent growth performance," S&P said. ========= S P A I N ========= * SPAIN: Moody's Says Fiscal Outlook Remains Challenging -------------------------------------------------------- Moody's Investors Service says that Spain's fiscal outlook remains challenging despite the recently revised deficit targets. The easier targets do not affect the country's A3 government bond rating with negative outlook because Moody's had already incorporated a likely deviation from original fiscal targets and a slower pace of fiscal consolidation into its analysis of Spain's creditworthiness. This is the conclusion of a new Moody's Special Comment which assesses recent developments in Spain's public finances. Moody's new report, entitled "Spain: Fiscal outlook remains challenging despite easier targets" is now available on www.moodys.com. After announcing an even higher deficit for 2011 than previously expected (8.5% of GDP versus a target of 6%), the Spanish government first raised its deficit target for this year from 4.4% to 5.8% of GDP -- but then lowered it somewhat to 5.3% in response to objections from the EU Commission. The government has maintained unchanged its commitment to reducing its budget deficit to 3% of GDP in 2013 at the general government level. The authorities have also recently announced measures to help alleviate the liquidity pressures at the sub-sovereign level. While the revised fiscal target for 2012 is more realistic than the previous one, Moody's believes that the Spanish government will still need to implement a substantial fiscal adjustment this year. Several measures have already been identified, but these will not be sufficient to reach the overall budget deficit target, according to Moody's. In particular, the rating agency continues to see significant risks regarding the ability of Spanish regions to reach their aggregate target this year without profound structural reforms. Moody's stresses that these reforms are also essential if Spain is to have any chance of reducing the budget deficit further to 3% of GDP in 2013, as agreed with the EU Commission. Moody's views positively the recent change in the government's policy stance to promote a more stable and well-established liquidity framework for the regions. The rating agency assesses the size of the new liquidity facilities to be commensurate with the outstanding commercial liabilities of Spanish sub-sovereign entities. However, Moody's believes that these measures do not address the fundamental reasons for the commercial debt accumulation, which are related to structural issues (such as, for instance, the growth in healthcare expenditure) as well as problems of market access for sub-sovereigns. Subscribers can access this report via this link: http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_140666 ===================== S W I T Z E R L A N D ===================== SERVETTE: Bankruptcy Hearing Adjourned Until April 19 ----------------------------------------------------- The Associated Press reports that Swiss football club Servette said a judge has extended its reprieve from bankruptcy for one more month. Servette said in a statement that a bankruptcy hearing has been adjourned until April 19, allowing the club's new owner to organize a rescue package, the AP relates. According to the AP, Canadian businessman Hugh Quennec paid one Swiss franc (US$1.10) to buy the 17-time Swiss champion this month from Iranian Majid Pishyar. Mr. Pishyar filed bankruptcy papers for the club days earlier, the AP recounts. =========================== U N I T E D K I N G D O M =========================== FIRETRAP: Sports Direct Buys Business; Six Stores Shut Down ----------------------------------------------------------- Andrea Felsted at The Financial Times reports that six stores owned by Firetrap are closing after the company went into administration. Firetrap's wholesale business, brands and concessions have been acquired by Sports Direct, the FT discloses. This will secure more than 170 jobs, but 51 people working in the six stores have been made redundant, the FT notes. Ernst & Young was appointed as administrator of World Design & Trade, the operating company for high-street fashion brands Firetrap UK and FullCircle, the FT relates. The sale of part of the business was effected by way of a pre-pack administration, the FT states. Firetrap is a young fashion brand. LLANDUDNO SMOAKERY: Goes Into Liquidation ----------------------------------------- The Daily Post reports that seven jobs were lost when Llandudno Smoakery went into liquidation after trading for more than 25 years. The report relates that the firm's Builder Street West premises is now empty, though auditors UHY Hacker Young said there has been interest in the bespoke unit from other catering companies. "The smokery went into liquidation on Wednesday, and seven workers were affected," the report quotes liquidator Graham Clark as saying. "The business was purchased by its current owner in 2005 and moved to its new premises in 2008; more than GBP300,000 was spent on setting up there. Sadly they never managed to generate enough income to keep it going." Llandudno Smoakery provided a wholesale and retail service for fresh fish, shellfish, game and poultry throughout North Wales, producing a unique range of quality foods smoked over Welsh oak. MANSARD MORTGAGES: S&P Affirms 'B-' Rating on Class B2a Notes ------------------------------------------------------------- Standard & Poor's Ratings Services took various credit rating actions on all classes of notes in Mansard Mortgages 2006-1 PLC and Mansard Mortgages 2007-1 PLC. Specifically, in both transactions, S&P has: * Lowered and removed from CreditWatch negative its ratings on the class M1a, M2a, and B1a notes; and * Affirmed its ratings on the class A2a and B2a notes, and removed from CreditWatch negative our ratings on the class A2a notes. "On Dec. 12, 2011, we placed on CreditWatch negative our ratings on the class, A2a, M1a, M2a, and B1a notes in Mansard Mortgages 2006-1 and Mansard Mortgages 2007-1. These rating actions followed the implementation of our recently updated U.K. residential mortgage-backed securities (RMBS) criteria," S&P said. "The rating actions follow our credit and cash flow analysis of the most recent transaction information that we have received. Our analysis reflects our updated U.K. RMBS criteria, and other criteria for transactions of this type," S&P said. "When applied to both transactions, our updated U.K. RMBS criteria result in an increase to our weighted-average loss severity (WALS) numbers, driven primarily by an increase in our market value decline (MVD) assumptions. The result of this is an increase to our credit coverage numbers--which adversely impacts the rating levels achieved in our cash flow analysis. Additionally under our updated criteria, when running our cash flows, we vary the recession timing such that defaults are applied later in the lifecycle of the transactions. We have observed that both transactions are susceptible to scenarios of high prepayment, as well as scenarios where the recession is timed to occur later in the life of the notes," S&P said. "Both issuances report high levels of cumulative losses--5.00% in Mansard 2006-1, and 4.65% in Mansard 2007-1. The weakening of collateral performance and high loss levels have led to draws on the reserve funds in both transactions; for Mansard 2006-1, the reserve has been fully depleted, and a balance has remained on the class B2 principal deficiency ledger (PDL) since late 2009. Mansard 2007-1 has begun building up its reserve; however, this is yet to reach its required amount, currently at 72.75% of its target level," S&P said. Mansard 2006-1 and Mansard 2007-1 are RMBS transactions, backed by nonconforming U.K. residential mortgages originated by Rooftop Mortgages Ltd. CREDIT STABILITY "We also consider credit stability in our analysis, to determine whether or not an issuer, or security, has a high likelihood of experiencing adverse changes in the credit quality of its pool when we apply moderate stresses. However, the scenarios that we considered under moderate stress conditions did not result in the ratings deteriorating below the maximum projected deterioration that we would associate with each relevant rating level, as outlined in our credit stability criteria," S&P said. STANDARD & POOR'S 17G-7 DISCLOSURE REPORT SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating relating to an asset-backed security as defined in the Rule, to include a description of the representations, warranties and enforcement mechanisms available to investors and a description of how they differ from the representations, warranties and enforcement mechanisms in issuances of similar securities. The Rule applies to in-scope securities initially rated (including preliminary ratings) on or after Sept. 26, 2011. If applicable, the Standard & Poor's 17g-7 Disclosure Report included in this credit rating report is available at: http://standardandpoorsdisclosure-17g7.com RATINGS LIST Class Rating To From RATINGS AFFIRMED AND REMOVED FROM CREDITWATCH NEGATIVE Mansard Mortgages 2006-1 PLC GBP500 Million Mortgage-Backed Floating-Rate Notes A2a AAA (sf) AAA (sf)/Watch Neg Mansard Mortgages 2007-1 PLC GBP250 Million Mortgage-Backed Floating-Rate Notes A2a AAA (sf) AAA (sf)/Watch Neg RATINGS AFFIRMED Mansard Mortgages 2006-1 PLC GBP500 Million Mortgage-Backed Floating-Rate Notes B2a B- (sf) Mansard Mortgages 2007-1 PLC GBP250 Million Mortgage-Backed Floating-Rate Notes B2a B- (sf) RATINGS LOWERED AND REMOVED FROM CREDITWATCH NEGATIVE Mansard Mortgages 2006-1 PLC GBP500 Million Mortgage-Backed Floating-Rate Notes M1a AA- (sf) AA (sf)/Watch Neg M2a BB (sf) BBB (sf)/Watch Neg B1a B (sf) BB (sf)/Watch Neg Mansard Mortgages 2007-1 PLC GBP250 Million Mortgage-Backed Floating-Rate Notes M1a A- (sf) AA-(sf)/Watch Neg M2a BB (sf) BBB-(sf)/Watch Neg B1a B (sf) BB-(sf)/Watch Neg NOVAE GROUP: Moody's Rates 5-Yr. Sr. Bond under Ba1-Rated Debt -------------------------------------------------------------- Moody's Investors Service has assigned a Baa3 rating to the 5 year senior bond to be issued by Novae Group Plc (Novae, rated A2 for insurance financial strength) as part of the tender process for its existing Ba1-rated subordinated debt. The outlook is stable. Ratings Rationale Novae currently has a GBP100 million nominal value subordinated debt issue outstanding (GBP69.375 million principal outstanding) and has conducted a tender offer to exchange these subordinated notes (10NC5, paying an initial coupon of 8.375% and then 3month LIBOR + 3.13% after the April 2012 first call date) with new senior notes exchanged at 90% and paying a coupon of 6.50%, redeemable at par on April 27, 2017. Moody's notes that bondholders holding approximately 96% of the existing subordinated bonds (representing around GBP66.6 million) have participated in the tender and therefore approximately GBP60 million of new senior notes will be issued. As a result of the tender, the accounting implications are anticipated to include an IFRS one-off pre tax gain of GBP6.7 million, together with adjustments to reflect the forward starting swaps fixing the funding costs of the existing notes from 2012-17. The impact on Moody's financial leverage (which as at year-end 2011 was estimated to be around 27%) is also anticipated to be marginally positive, due to both instruments being Basket A and the discount to par within the tender reducing the nominal value of debt outstanding, although Moody's does not consider this to be a distressed exchange. Novae recently reported its full year 2011 results, including a post-tax loss of GBP7.4 million (2010: post-tax profit of GBP24.6 million) driven, inter alia, by i) the high level of catastrophe losses during 2011, which totalled GBP70.2 million in 2011 (2010: GBP30.1 million catastrophe claims), ii) a modest reserve deterioration of GBP4.4 million (2010: release of GBP15.1 million), and iii) lower levels of investment income reflecting a combination of the low interest rate environment and Novae's conservative investment strategy. Commenting on what could lead to a future positive rating action, Moody's noted that this would likely be driven by some combination of improvements in Lloyd's overall financial aggregate position and improvements in Novae's underlying business. Specifically, positive rating action could occur if Novae consistently delivers cross-cycle returns on average capital of at least 7%, if reinsurance recoverables remain consistently below 125% of equity and if financial leverage is consistently below 25%. Conversely, Moody's noted that negative rating action would likely be triggered by a meaningful deterioration in Lloyd's financial position and/or if Novae produces annual returns on capital below 5%, if Novae's leverage exceeds 35% or if gross underwriting leverage exceeds 6x. The following rating has been assigned with a stable outlook GBP59.935 million 6.50% Senior Bond due 2017 -- Baa3 The principal methodology used in this rating was Moody's Global Rating Methodology for Property and Casualty Insurers published in May 2010. PORTSMOUTH FOOTBALL: Council Mulls Bidding for Fratton Park ----------------------------------------------------------- The News reports that Portsmouth city Council may look to buy Fratton Park if Portsmouth Football Club goes into liquidation. Council leader Cllr Gerald Vernon-Jackson stressed the authority is not in negotiations to buy the ground, but could place a bid if the club folds, the report says. The News relates that the announcement comes after Portsmouth Conservative group tabled a motion seeking the council to buy Fratton Park. But Cllr Vernon-Jackson said the idea had already been discussed with Pompey administrator Trevor Birch, former chief executive David Lampitt and members of the Pompey Supporters' Trust, relates The News. "We have been in discussions about it for months . . . a better group of people to buy the ground would be PST so that fans could own it and have a stake in the club," the report quotes Mr. Vernon-Jackson as saying. "My understanding is Fratton Park is 100 per cent owned by the football club and there exists a charge over it by the main creditor, Mr. Chainrai." Mr. Vernon-Jackson, as cited The News, added the land has to be used as an open area sports ground due to restrictions imposed in the council's Portsmouth Plan and believes Fratton Park could be worth around GBP1 million to GBP1.5 million if it goes to auction. As reported in the Troubled Company Reporter-Europe on Jan. 26, 2012, The Financial Times related that Portsmouth Football Club has been issued a winding-up order by Revenue & Customs over an unpaid GBP1.6 million tax bill. The move plunges the Championship side into a fresh survival battle, two years after it became the first Premier League club to go into administration, according to FT. Portsmouth FC's future fell into uncertainty when owner Vladimir Antonov, a Russian businessman with banking assets, was arrested in November in central London at the request of Lithuanian authorities investigating fraud and money laundering, FT noted. In mid-February, Portsmouth were deducted 10 points for going into administration for a second time in three years, according to BBC Sports. HM Revenue and Customs named Trevor Birch of PKF as administrator. About Portsmouth Football Portsmouth Football Club Ltd. -- http://www.portsmouthfc.co.uk/ -- operated Portsmouth FC, a professional soccer team that plays in the English Premier League. Established in 1898, the club boasted two FA Cups, its last in 2008, and two first division championships. Portsmouth FC's home ground is at Fratton Park; the football team is known to supporters as Pompey. Dubai businessman Sulaiman Al-Fahim purchased the club from Alexandre Gaydamak in 2009. A French businessman of Russian decent, Gaydamak had controlled Portsmouth Football Club since 2006. WORLDSPREADS LTD: In Administration; ETX Mulls Acquisition ---------------------------------------------------------- Simon English at The Independent reports that ETX Capital is in exclusive negotiations to buy its collapsed spread-betting rival WorldSpreads. Talks have been ongoing over the weekend and a deal is likely to be announced today, the Independent notes. According to the Independent, although the details are still being finalized, bankers say that ETX is likely to have a particular interest in WorldSpreads' client base and its technology platform. It is not clear whether any money will change hands, the Independent states, but it will be a minimal amount if any. The news came as WorldSpreads confirmed on Monday that KPMG had been appointed as special administrator. After an internal investigation, the company, as cited by the Independent, said on Friday that it was suddenly "unable" to assess its own finances following the discovery of "possible financial irregularities". The Independent notes that around 5,000 of its customers face losses of GBP13 million after the company on Monday admitted to a "shortfall of client money". WorldSpreads believes it owes clients GBP29.7 million but has cash balances of only GBP16.6 million, the Independent discloses. Its shares were suspended on Friday -- a move which came in the wake of the abrupt departure of its chief executive, Conor Foley, last week, the Independent recounts. The chief financial officer, Niall O'Kelly, has also gone, and it is at him that WorldSpreads seems to be pointing the finger, noting that the irregularities emerged within a day of his departure, the Independent notes. Worldspreads Limited is financial spread-betting company. It is a wholly owned subsidiary of Worldspreads plc, a company incorporated in Dublin, Ireland. * UK: Number of Company Failures Down 20% in First Quarter 2012 --------------------------------------------------------------- Company failure rates during the first three months of 2012 were nearly 20 percent (19.9 per cent) lower than the same time period two years ago (2010) according to the latest Graydon UK Insolvency Predictor. Based on data published on March 19 by the commercial credit referencing agency Graydon UK, the number of corporate insolvencies during the first quarter of 2012 were also 22.8 per cent down on the same period three years ago (2009). The numbers of insolvencies in the first quarter of this year (2012) were 3.7 per cent lower than the same period last year (2011). Furthermore, company failures in the first quarter this year are down by nearly 5 per cent (4.4 per cent) compared with the last three months of December 2011. This suggests that company liquidations will continue to decrease this quarter. Gordon Skaljak, External Spokesperson, Graydon UK, commented: "The good news is we are seeing a decrease in the number of business failures. However, although the threat of a double dip recession may appear to be receding, it is still important for businesses to identify both opportunities and risks if they want to increase their businesses efficiency and bottom line growth." This quarter's Graydon UK Insolvency Predictor has found that the number of insolvencies in the manufacturing sector has decreased slightly following the peak at the end of last year. According to a recent UK Trade and Investment report, the UK is one of the top manufacturers in the world and Government initiatives such as 'Made in Britain' and 'Going for Growth' are targeted at helping production businesses in order to rebalance the economy. Gordon Skaljak added: "While support for small and medium sized manufacturing firms exists, in the current economic climate, access to finance is still a challenge for all businesses. Many firms find it difficult to keep their heads above water, putting their suppliers on shaky ground. "However, there are a number of ways businesses can protect themselves from insolvency. Firstly, businesses must ensure that they prevent themselves from the damage caused by late and non- payments. Running regular credit checks is vital for businesses and it will mean that businesses will be alert to any changes in their customers' circumstances that could lead to non-payment in the future. "It's also important that businesses build up a strong credit rating in order to be able to secure alternative sources of funding quickly should their cash flow take a hit. This takes time and businesses must act now to do this." =============== X X X X X X X X =============== * Moody's Says European Banks' Retrenchment No GCC Rating Impact ---------------------------------------------------------------- Over the short term, the ratings of non-financial corporates in Gulf Co-operation Council (GCC) countries will be mostly unaffected by European banks' gradual withdrawal from the region, says Moody's Investors Service in a new report on this sector. However, Moody's explains that corporates with lower ratings will be most vulnerable to the withdrawal of funding, which will become more costly and conditional overall. The retrenchment by European banks from the region has been prompted by the ongoing euro area debt crisis and the banks' need to deleverage and build up capital buffers. This has potential implications for GCC banking systems and by extension also for local corporates, which are typically heavily reliant on bank financing and face significant maturity redemptions over the next few years. Although corporates in the GCC region face sizeable funding requirements, Moody's expects the credit impact on most rated issuers to be limited over the near term. This is because most the 24 Moody's-rated GCC corporates are highly rated government- related issuers (GRIs) that have strengthened their liquidity profiles over recent years and proactively addressed near-term maturities by extending their debt maturity profiles. Nonetheless, the exposure of rated GCC corporates to European banking institutions is significant, with an estimated 34% share of the total bank lending to Moody's-rated corporates. In Moody's view, a retrenchment of European banks will not lead to an abrupt liquidity shock over the short term; however, a more sustained withdrawal of European banks could generate a longer-term structural funding shortfall. This is likely to further encourage the ongoing trend among rated issuers to diversify their funding sources, including through increased capital market issuance, in both conventional and Islamic forms. Rated issuers at the low end of Moody's rating scale are the most vulnerable to a potential funding withdrawal as they are heavily reliant on credit lines from banks to meet their day-to-day financing needs, to address significant upcoming maturities and to amend imbalanced capital structures. Funding will become more costly and come with more strings attached. The potentially most negative factors that Moody's is monitoring are (1) the impact of higher lending costs on cash flows and profitability, and (2) in some cases, the potential for an increase in the prevalence of secured or collateralized forms of lending, which could lead existing unsecured creditors to become subordinated. The new report, entitled "GCC Corporates Limited Near-Term Rating Impact Expected from European Banks' Retrenchment" is now available on www.moodys.com. * EU Banks' Retrenchment May Lead to GCC Bank Funding Gaps ---------------------------------------------------------- Some banking systems in Gulf Co-operation Council (GCC) countries could face funding gaps in the event of a sustained retrenchment by European banks from the region, says Moody's Investors Service in a new report published on March 19. Although the economic reliance on European bank funding varies across the GCC, Moody's says that a decrease in lending from European banks to the region could lead to a short-term liquidity squeeze and, more likely, a longer-term structural shortfall. In order to meet this gap, local GCC banks would need to grow as well as adjust their own funding structures. Asian banks are also likely to be a growing source of foreign funding. The European banks' retrenchment from the region has been prompted by the ongoing euro area debt crisis and their need to deleverage and build up capital buffers. Overall, European bank lending to the GCC region amounted to around US$237 billion as of September 2011. Moody's expects the likely deleveraging to result in a sustained reduction of lending to the GCC at a time when the region faces sizable funding requirements, with an estimated US$1.8 trillion of capital investments underway or planned over the next 15 years. Moody's believes that a short-term liquidity squeeze among GCC banks that would result from European banks' retrenchment could in some cases be moderated through temporary liquidity support from governments, central banks as well as the GCC banks' improved liquidity positions since the last 'crunch' in 2009. However, GCC banks will also face longer-term structural funding shortfalls that would, in Moody's view, be more difficult to address. The affected GCC countries would have to find new sources of funding to support future credit growth and economic development plans. Local banks would need to grow both in size and sophistication as well as undergo structural funding changes to meet this need. Moody's believes that Asian and, to a lesser extent, American banks could potentially fill some of the gap as their bank financing activities in the GCC represented only 1.9% and 2.3%, respectively, of the region's GDP as of September 2011. Moreover, given the relatively low levels of government debt and relatively low cost, increased international sovereign borrowing is also a possibility, while the larger and more creditworthy corporates are likely to seek funding directly from the bond markets. Moody's has classified GCC banking systems into three categories of low, moderate and high vulnerability to European funding: - LOW VULNERABILITY: With European bank financing equivalent to around 10% of GDP, the economies of Saudi Arabia (rated Aa3, stable), Kuwait (Aa2, stable) and Oman (A1, stable) are not highly reliant on European funding and are the best positioned to withstand a sustained retrenchment. - MODERATE VULNERABILTY: For Qatar (Aa2, stable) and the United Arab Emirates (UAE, Aa2, stable) European bank financing in the local economy is equivalent to a significant 25% of GDP. The short-term refinancing and investment needs in Qatar and the UAE can be handled by the respective governments. However, for Bahrain's (Baa1, negative) onshore retail banking sector, European financing is a much higher 75% of GDP due to the sector's size but the mitigant here is that the banks here (unlike those of Qatar and the UAE) show matched levels of foreign assets and liabilities. However, in the long term, a sustained withdrawal of foreign funding would be a structural issue for all three countries, necessitating a change in strategy and any gap would pressure the local economy without new sources of funds. - HIGH VULNERABILITY: European funding accounts for around 40% of the total US$120 billion liabilities held by Bahraini offshore wholesale banks. A sustained outflow of funds would lead to a significant liquidity squeeze, a slowdown in business volumes in the short term and major structural challenges to offshore banks' franchises in the long term. Moody's report, entitled "GCC Banks: Funding Gaps Could Emerge As European Banks Scale Back", is available on www.moodys.com ********* 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, Ivy B. Magdadaro, Frauline S. Abangan and Peter A. Chapman, Editors. Copyright 2012. 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. 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