/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/120705.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, July 5, 2012, Vol. 13, No. 133 Headlines A U S T R I A OGX AUSTRIA: Moody's Affirms 'B1' Rating; Outlook Negative B O S N I A & H E R Z E G O V I N A IZOLATER: Bosnian Court Launches Bankruptcy Proceedings F R A N C E DOUX SA: French Breeders Seek Government Aid to Stay Afloat G E R M A N Y DEUTSCHE PFANDBRIEFBANK: Moody's Reviews 'E+' BFSR for Downgrade FRESENIUS SE: Moody's Maintains 'Ba1' CFR on Review for Downgrade GWB IMMOBILIEN: Files for Insolvency Proceedings in Reinbek KONARKA TECHNOLOGIES: Files for Bankruptcy in Nuremberg Court POWERWIND GMBH: Restructuring Continues; Seeks Buyer SOVELLO GMBH: Likely to Cut More Than 500 Jobs, Union Claims G R E E C E NATIONAL BANK OF GREECE: Auditors Raise Going Concern Doubt H U N G A R Y * HUNGARY: Major Banks Shut Down 94 Branches in First Half 2012 I R E L A N D ALBURN: Auditors Cast Going Concern Doubt IRISH LIFE: S&P Lifts Rating on EUR200MM Jr. Sub. Notes From 'BB' MERCATOR CLO: S&P Raises Class B-2def Notes Rating to CCC+ (sf) I T A L Y BANCA DEI PASCHI: S&P Cuts Tier 1 Hybrid Securities Rating to 'C' BANCA NETWORK: Italian Prosecutors Mulls Probe Into Collapse BANCA POPOLARE: Moody's Withdraws 'Ba1' Sr. Unsecured Debt Rating K A Z A K H S T A N ASTANA FINANCE: Creditors Back US$1.9BB Debt Restructuring Plan P O R T U G A L BANCO SANTANDER: Moody's Reviews 'Ba1' Ratings for Downgrade R U S S I A SOVCOMFLOT AO: S&P Cuts Long-Term Corp. Credit Rating to 'BB+' S L O V A K R E P U B L I C ALEX TOUR: Files for Bankruptcy Following Financial Problems S L O V E N I A SKUPINA VIATOR: Failed Capital Increase Prompts Receivership S P A I N FONCAIXA HIPOTECARIO: S&P Withdraws 'D' Rating on Class D Notes S W E D E N NIMBUS: DNB ASA Has Exposure in Bankruptcy T U R K E Y * TURKEY: Moody's Takes Rating Actions on 16 Turkish Banks U N I T E D K I N G D O M CORNERSTONE TITAN: Moody's Cuts Rating on Class E Notes to 'Caa2' DECO 6-UK: S&P Lowers Rating on Class D Notes to D(sf) DECO 8: Fitch Downgrades Rating on Class F Notes to 'Csf' POLLY PECK: "Was Not Insolvent," Asil Nadir Claims PRINTEXPRESS IN WHITEHAVEN: Goes Into Liquidation WRIGHT & SMITH: To Enter Into Liquidation on July 20 X X X X X X X X * S&P Takes Action on 24 European Synthetic CDO Tranches * Upcoming Meetings, Conferences and Seminars ********* ============= A U S T R I A ============= OGX AUSTRIA: Moody's Affirms 'B1' Rating; Outlook Negative ----------------------------------------------------------- Moody's Investors Service affirmed the B1 ratings of OGX Petroleo e Gas Participacoes S.A. (OGX) and OGX Austria GmbH and changed the rating outlook to negative from stable. "The negative rating outlook reflects lower than expected performance from OGX's first two producing wells, negatively impacting cash flows and capital productivity," commented Gretchen French, Moody's Vice President. "OGX's latest setback follows higher debt levels and moderate project delays and cost increases incurred over the past year, which had already diminished flexibility within the B1 rating." Ratings Rationale OGX recently announced the results of extended well tests on its first two production wells in the Tubarao Azul field (formerly known as the Waimea Accumulation). The production flow rate of the two wells, OGX-26 and OGX-68, have been restricted to 5,000 barrels of oil equivalent per day (boe/d), which is materially below management's original estimated range of 10,000 - 20,000 boe/d. The lower well performance highlights one of the many risks of bringing contingent oil and gas resources onto production. The main reason for the lower well productivity is a weaker than expected water drive in the reservoir and significant well interference between these first two wells. The compartmentalized and unpredictable nature of the carbonate reservoir could contribute to increased costs to fully develop the field. OGX's position as an owner of world class hydrocarbon resources remains strong. However, the company's growth rates and returns have been negatively affected by reduced production rates from the initial wells, which will result in lower cash flow and debt capacity for future projects. Furthermore, if OGX is not able to successfully manage its funding needs, cash levels could materially decline by the end of 2013, resulting in constrained liquidity and potentially further reliance on debt funding. A key consideration will be the results of the drilling of its third producing well in the Tubarao Azul field. Field-wide production is estimated to reach around 15,000 boe/d by year end 2012, far short of the previous expectations of nearly 40,000 boe/d. To address the expected cash flow shortfall, the company is reducing its exploration capital spending in 2013 and 2014 by about US$2.1 billion, which will entail reducing its drilling rig commitments to three rigs from six currently and reducing seismic spending. However, the expected reduction in the drilling rig program will not be complete until the fourth quarter of 2013. OGX's B1 rating could be downgraded if production levels decline, liquidity becomes constrained or debt levels materially rise in order to fund cash flow shortfalls. While unexpected over the near-term given the negative outlook, the B1 rating could be upgraded if OGX is successful in growing production (to over 20,000 barrels of oil equivalent per day) and has made substantial progress on the construction of the two additional FPSOs and wellhead platforms. The principal methodology used in rating OGX was the Global Independent Exploration and Production Industry Methodology published in December 2011. Based in Rio de Janeiro, Brazil, OGX is one of the largest independent exploration and production companies in Latin America. ======================================= B O S N I A & H E R Z E G O V I N A ======================================= IZOLATER: Bosnian Court Launches Bankruptcy Proceedings ------------------------------------------------------- SeeNews reports that a Bosnian commercial district court launched bankruptcy proceedings against Izolater. According to SeeNews, the court in Trebinje said in a filing with the Banja Luka Stock Exchange that it decided on June 27 to institute bankruptcy proceedings as the company is unable to pay 369,900 marka (US$239,400/EUR189,100) of outstanding liabilities. Izolater is a construction company based in Trebinje, in the Serb Republic. =========== F R A N C E =========== DOUX SA: French Breeders Seek Government Aid to Stay Afloat ----------------------------------------------------------- Reuters reports that French breeders who supply poultry group Doux SA have asked the government to ensure they continue to receive feed and gas supplies to stay in business until the future of the company is resolved. According to the news agency, unions said the farmers, who need to keep feeding thousands of chickens and turkeys for Doux, fear they may have trouble paying their bills as they await cash from the company, which is struggling with a EUR340 million (US$423.5 million) debt pile. Doux, 80% family-owned with the remainder held by French bank BNP Paribas, has contracts with some 800 poultry breeders in addition to the 3,400 staff it employs in France, Reuters discloses. As reported by the Troubled Company Reporter-Europe on June 4, 2012, Reuters related that Doux collapsed into administration on June 1 after failing to reach an agreement with bankers, putting at risk more than 3,000 jobs. The company was placed in administration by a commercial court in Quimper, northwest France, after saying earlier on June 1 that it had suspended payments to creditors, Reuters disclosed. The government, which had offered a EUR35 million cash injection for the company, blamed Mr. Doux for ending negotiations to save the firm, but vowed to continue working to find solutions, Reuters noted. France-based Doux S.A. produces, sells, and exports poultry and poultry-based processed products for retail, food service and catering, and food processing industries. ============= G E R M A N Y ============= DEUTSCHE PFANDBRIEFBANK: Moody's Reviews 'E+' BFSR for Downgrade ---------------------------------------------------------------- Moody's Investors Service has placed on review for downgrade Deutsche Pfandbriefbank's (pbb) standalone bank financial strength rating (BFSR) of E+ (equivalent to a b1 standalone credit assessment) and pbb's senior debt and deposit ratings of A3. The review for downgrade reflects the pressure that the current operating environment is exerting on pbb's franchise and standalone credit strength as well as concerns regarding the very high support uplift from the German government, pbb's sole owner. As a result, pbb's B2 subordinated debt and Prime-1 short-term ratings have also been placed on review for downgrade. Moody's notes that pbb's senior debt and deposit ratings are likely to remain investment grade. The ratings of pbb's sister company, Depfa plc (Baa3 stable; E+/b2 stable), are not affected by this announcement. The review reflects Moody's concerns regarding the bank's wholesale funded business model together with increased asset- side vulnerabilities, also as result of a deteriorating operating environment in Europe. The review will focus on pbb's ability (i) to raise funding in the debt capital markets at conditions that allow for a suitable margin; (ii) to bear potential losses in the context of its exposures to euro area peripheral countries; (iii) to write new business to replace the existing -- partly low yielding -- asset base; and (iv) to adjust its business profile to the changing regulatory and market environment, as a precondition for the bank to be privatized by 2015. At the same time Moody's will reassess its current very high assumptions for support from the German government in the light of the pending privatization and shifting policy towards support in Europe. Rating Rationale Moody's acknowledges the progress pbb has made in stabilizing and rebuilding its business following the asset transfer to FMS Wertmanagement (Aaa stable) in October 2010. The bank has remained profitable in the last seven quarters and has re-entered the capital markets successfully, including issuing benchmark covered bonds. Moreover, pbb's liquidity levels remain satisfactory and its asset quality compares positively to its peer group as a result of the previous asset transfer. Moody's decision to place the bank's ratings on review for downgrade reflects its concerns regarding the bank's business model in the current operating environment. Review of StandAlone Credit Assessment The rating announcement reflects several factors that are exerting downwards pressure on the long-term viability of pbb's franchise. Moody's believes that pbb is constrained in its ability to obtain senior unsecured funds maturing beyond 2015, which is the date by which the German government -- the bank's current sole owner -- must sell its majority stake according to the state aid ruling of the European Commission (EC). pbb requires such funding to refinance the unsecured portion of its core business in the medium term. Although pbb has a comfortable Tier 1 capital ratio of 15.9%, Moody's cautions that pbb's leverage is high as its Tier 1 capital only accounts for EUR2.8 billion or 2.8% of the operating balance sheet at the end of Q1 2012. In addition, pbb retains sizeable exposures to sectors and regions, which expose it to potentially material losses over the medium term, including exposure to the euro periphery, including Spain (EUR5.1 billion) and Italy (EUR4.2 billion). Moody's considers commercial real estate to be an asset class that is particularly vulnerable to impairments in the weakening European operating environment. Finally, Moody's believes that the longer-term viability of pbb's business model is under increasing pressure, given pbb's current low core profitability, which partly reflects its low yielding public-finance legacy portfolio. Challenges for the bank to build up more profitable businesses (including commercial real estate) have increased as market conditions and the operating environment have deteriorated as a result of the euro area debt crisis. Review of Support Assumptions Moody's will also reassess its assumptions of support forthcoming from the German government in the event of need. The current assumptions are very high, resulting in seven notches of rating uplift from pbb's current b1 standalone credit assessment. This is more than the level of support assumed for pbb's peers, reflecting the strong support that has been evolving since pbb's parent Hypo Real Estate (HRE (unrated) first experienced distress and needed financial assistance in late September 2008, and the role the government has played in restoring pbb's capital and liquidity position. The German government's commitment to supporting the bank, of which it is the sole shareholder, is credit positive for creditors. However, there remain uncertainties regarding the level of support creditors could expect over the rating horizon that arise from the government's need and desire to privatize the bank, and the challenges it will face in doing so given the weak market outlook and pbb's size and profile. Moody's also notes that the implementation of the bank resolution regime as part of the German Bank Restructuring Act in January 2011 allows for more flexibility to impose losses on certain debt classes and has made government support less predictable. The review will assess whether those uncertainties are consistent with such high uplift. What Could Move The Ratings Up/Down The review for downgrade indicates that there is currently no upwards rating pressure for pbb's ratings. Downwards pressure on the E+ BFSR could be triggered by (i) a failure to restore pbb's business franchise; (ii) renewed setbacks due to higher-than- anticipated credit losses in pbb's core business areas; (iii) difficulties in tapping the unsecured debt markets; and/or (iv) unforeseen losses on pbb's selective exposure to peripheral euro area economies. Downward pressure on the A3 ratings could result from (i) a further downgrade of the E+ BFSR; (ii) an unexpected reduction in support or a sooner-than-warranted exit by the German government; and/or (iii) a gradual reduction in pbb's systemic importance. Principal Methodologies The principal methodology used in these ratings was Moody's Consolidated Global Bank Rating Methodology published in June 2012. FRESENIUS SE: Moody's Maintains 'Ba1' CFR on Review for Downgrade ----------------------------------------------------------------- Moody's Investors Service has said that the Ba1 corporate family rating (CFR) of Fresenius SE ("FSE") remains on review for downgrade following the company's announcement on 29 June 2012 that its bid to acquire Rhoen Klinikum AG has failed to achieve the required 90% acceptance. Moody's notes that the total shares tendered amounted to 84.3%, with FSE's bid negatively affected by competitor Asklepios's last-minute acquisition of shares of 5.01%, which were not tendered. Even without Asklepios's shares, more than 10% of shares were not tendered, which could be a combination of retail investors failing to respond and/or other minority shareholders declining the offer. Moody's will maintain FSE's rating on review for downgrade given that the transaction could still go ahead, albeit possibly on modified terms, with the company having communicated that it will be exploring its options over coming days/weeks. If FSE were to abandon the transaction and fail to identify any other means of external growth at a similar size, Moody's would most likely confirm (1) the company's CFR at Ba1; (2) its secured debt at Baa3; and (3) its unsecured notes at Ba1. At the same time, Moody's would likely withdraw the (P)Ba1 rating assigned to around EUR3 billion of bank lines put in place by FSE for the acquisition. Should FSE abandon the transaction, the rating agency does not expect that the company would be materially affected by its likely loss on five million Rhoen shares acquired in the open market. This is because that FSE will continue to benefit from more than EUR1 billion of new equity raised in June 2012, while the Rhoen losses are likely to amount to no more than EUR10-20 million. Depending on how the company uses the proceeds and given its longer-term track record of acquisitive growth, the new equity could exert upward pressure on the rating. GWB IMMOBILIEN: Files for Insolvency Proceedings in Reinbek ----------------------------------------------------------- The Management Board of GWB Immobilien AG on July 3 filed for insolvency proceedings at the competent local court in Reinbek. The Management Board and the preliminary insolvency administrator will work together to secure the continuity of the company within the insolvency proceedings. GWB Immobilien AG develops, builds, and manages shopping malls, and retail and warehouse centers. KONARKA TECHNOLOGIES: Files for Bankruptcy in Nuremberg Court ------------------------------------------------------------- Solar Industry reports that Konarka Technologies GmbH, a subsidiary of Konarka Technologies Inc., says it is facing the threat of insolvency and has filed for bankruptcy with the Nuremberg District Court. According to Solar Industry, a statement from the company said Konarka Technologies GmbH "has been forced to file for bankruptcy" as part of its parent company's liquidation proceedings pursuant to the Chapter 7 bankruptcy filing. Attorney Alexander Kubusch of national German insolvency administration firm CURATOR AG -- who has been appointed as the preliminary insolvency administrator -- is optimistic that operations will continue, Solar Industry notes. "We can sustain the R&D work in Germany without any difficulties at the moment," Solar Industry quotes Mr. Kubusch as saying. "Nonetheless, our objective must be to find a suitable investor as quickly as possible who's prepared to get the company's first- class development work back on track again and to guarantee its production operations and future developments in the long term, because a successful transfer of the U.S. parent group is currently still very much up in the air. "If, however, we are able to find an investor and also keep the existing, as well as government research, contracts in the company, I have every confidence that the company will be able to keep going long term at its Nuremberg site," he adds. Konarka Technologies GmbH is responsible for research and European sales. POWERWIND GMBH: Restructuring Continues; Seeks Buyer ---------------------------------------------------- North American Windpower reports that the restructuring of PowerWind GmbH continues as expected. At the beginning of July, the local court of Hamburg allowed the company to proceed with its restructuring measures, North American Windpower relates. The company says its priority is to stabilize the business and find an investor, North American Windpower notes. After discussions with customers and suppliers, the company says it has been able to continue business activities since the end of April without disruption, North American Windpower discloses. Further, the company notes the discussions formed a structured process for the purposes of finding a buyer, according to North American Windpower. PowerWind, as cited by North American Windpower, said that the objective is to reach an agreement with a potential investor on the acquisition of the company by the beginning of August. PowerWind GmbH is a Hamburg, Germany-based wind turbine manufacturer. SOVELLO GMBH: Likely to Cut More Than 500 Jobs, Union Claims ------------------------------------------------------------ Recharge reports that a trade union representative has revealed that more than 500 posts are likely to be cut at insolvent Sovello GmbH, contradicting the company's own recent claim that no job losses are imminent. Recharge relates that the contrasting stories underscore the confusion felt across Germany's pioneering PV sector as globally renowned names that have recently gone bankrupt -- including Sovello's former parent company Q-Cells -- scramble to restructure themselves and woo foreign buyers. According to the report, Sovello has not directly addressed the union representative's claims that 548 of the company's 1,250- person workforce are to be let go as part of its restructuring program, which was unveiled last month when it announced its insolvency. At the time, Sovello said that it had enough money to pay its full staff through to the end of July, and it planned to continue producing wafers, cells and modules during the restructuring process, Recharge relays. Recharge says Sovello has hired KPMG to lead its quest of identifying and negotiating with potential buyers. Chief executive Reiner Beutel claims that "several interested parties" have already been in touch with the company, the report adds. As reported in the Troubled Company Reporter-Europe on May 16, 2012, Bloomberg News said Sovello GmbH filed for insolvency and will attempt to restructure in the process. According to Bloomberg, Sovello said the company cannot pay its debts and has asked the Dessau insolvency court to be allowed to restructure under its management. The company said that attorney Bernd Depping has been appointed as preliminary administrator. Sovello GmbH is a solar-power company based in Bitterfeld-Wolfen, Germany. =========== G R E E C E =========== NATIONAL BANK OF GREECE: Auditors Raise Going Concern Doubt ----------------------------------------------------------- National Bank of Greece S.A. and subsidiaries filed its annual report on Form 20-F for the fiscal year ended Dec. 31, 2011. Deloitte Hadjipavlou, Sofianos & Cambanis S.A. expressed substantial doubt about National Bank of Greece and subsidiaries' ability to continue as a going concern. The independent auditors noted that the crisis in the Greek economy resulted in impairment losses recorded in several classes of assets, such as Greek government bonds and other loans in Greece. "These have adversely impacted the financial position, the results of operations, cash flows and regulatory ratios of the Bank, and consequently of the Group. Furthermore, the crisis has limited the Bank's access to liquidity from other financial institutions." The Group reported a net loss of EUR14.507 billion on net interest income before provision for loan losses of EUR3.648 billion for 2011, compared with a net loss of EUR308.0 million on net interest income before provision for loan losses of Eur4.084 billion for 2010. The Group's balance sheet at Dec. 31, 2011, showed EUR103.467 billion in total assets, EUR107.371 billion in total liabilities, US$283.4 million of redeemable non-controlling interest, and a shareholders' deficit of EUR4.187 billion. A copy of the Form 20-F is available for free at: http://is.gd/4YvlgY National Bank of Greece S.A., along with subsidiaries, is the largest financial institution in Greece by market capitalization, holding a significant position in Greece's retail banking sector, with more than 11 million deposit accounts, more than three million lending accounts, 539 branches and 1,398 ATMs as at Dec. 31, 2011. The Group's core focus outside of Greece is in Turkey and SEE, where it currently operates in Bulgaria, Serbia, Romania, Albania, Cyprus and FYROM. The Bank is the Group's principal operating company, representing 67.5% of its total assets as at Dec. 31, 2011. ============= H U N G A R Y ============= * HUNGARY: Major Banks Shut Down 94 Branches in First Half 2012 --------------------------------------------------------------- MTI-Econews reports that a survey carried out by the financial daily Vilaggazdasag showed major Hungarian banks shut down 94 branches in the first half of 2012 after closing 60 last year. None of the 14 commercial banks covered by the survey added to its network in the first half, MTI-Econews says. The combined number of their branches fell by 185 from a peak reached at the end of 2009, MTI-Econews discloses. According to MTI-Econews, the daily noted that between 2004 and 2008 the 14 banks combined opened more than 500 branches, raising their network by almost 50%. ============= I R E L A N D ============= ALBURN: Auditors Cast Going Concern Doubt ----------------------------------------- According to Irish Independent's Gordon Deegan, a report lodged by auditors KPMG with the Companies Office showed that Noel Smyth's Alburn business is loss-making and there are a number of material uncertainties that could cast significant doubt on the ability of the company to continue as a going concern. Irish Independent relates that Tom McEvoy of KPMG said: "These matters include the provision by NAMA of working capital facilities and financial support to cover certain operating cash requirements and the continued renewal by NAMA of bank facilities." The note continues: "While the ultimate outcome of these matters cannot be assessed with certainty at this time, the directors are of the opinion that, based on the current discussions and the group's ongoing relationship with NAMA, there is no reason to believe that the continued support from NAMA will not be forthcoming." In his report, Mr. McEvoy confirmed that Alburn was loss-making in the year to the end of June 30, 2011, Irish Independent discloses. According to Irish Independent, he also states that the balance sheet of the company shows an excess of liabilities over assets "and in our opinion, on that basis, there did exist at June 30, 2011, a financial situation which, under Section 40(1) of the Companies (Amendment) Act 1983 would require the convening of an EGM of the company". Last year, the National Asset Management Agency took possession of Mr. Smyth's entire art collection of almost 400 pieces as part of a down-payment on debts owed by Alburn, Irish Independent recounts. The company's loans have been transferred to NAMA, Irish Independent notes. Alburn is a Dublin-based business. IRISH LIFE: S&P Lifts Rating on EUR200MM Jr. Sub. Notes From 'BB' ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its long-term counterparty credit and insurer financial strength ratings on Ireland-based insurer Irish Life Assurance PLC (ILA) to 'BBB+' from 'BBB-'. "We also raised the rating on the EUR200 million junior subordinated notes issued by ILA to 'BBB-' from 'BB' and removed all ratings from CreditWatch with developing implications. The upgrade reflects our view that the sale to the Irish government on June 29, 2012 has significantly reduced ILA's risks and exposures relating to the weaker Permanent TSB Group Holdings PLC, its former parent. The ratings on ILA are now aligned with its stand-alone credit profile. The ratings were originally placed on CreditWatch with negative implications on Nov. 26, 2010, to mirror the CreditWatch placement on Ireland's sovereign rating. Issues relating to its parent bank caused us to lower the ratings to 'BBB-' from 'BBB' on Feb. 2, 2011, and keep them on CreditWatch negative," S&P said. "We revised the CreditWatch to developing on April 5, 2011, when the bank announced that it would sell ILA. The ratings on ILA reflect its strong competitive position, a diversified distribution base, and very strong risk-based capital adequacy. These factors are partially offset, however, by the company's lack of geographic diversity. This is especially relevant given its reliance on the weakened Irish economy, and its relatively volatile operating performance, which leaves revenues sensitive to equity market conditions," S&P said. "According to our government-related entity criteria, there is a "limited" link between ILA and the Irish government and we view ILA's role to the government as being of "limited importance." Accordingly, we consider the likelihood of extraordinary government support to be low. This view is consistent with the government's stated intention to sell ILA as soon as market conditions allow it to do so at a suitable price. The timing of any sale is uncertain, but in our opinion is unlikely to occur before 2014. The negative outlook is aligned with the negative outlook on the Irish sovereign rating. Any downgrade in the Irish sovereign rating will likely trigger a similar rating action on ILA. A significant worsening of ILA's stand-alone credit profile may also result in negative rating action. However, an improvement in ILA's stand-alone characteristics would not lead us to raise the rating, unless we were also taking positive action on the Irish sovereign. ILA's rating is currently constrained by that on the Irish sovereign, reflecting its exposure to sovereign investments, even though this risk is partly mitigated by being shared with policyholders. It also incorporates the risks of having an entirely Irish customer base, given the current economic environment in Ireland," S&P said. MERCATOR CLO: S&P Raises Class B-2def Notes Rating to CCC+ (sf) --------------------------------------------------------------- Standard & Poor's Ratings Services raised its credit ratings on Mercator CLO III Ltd.'s class A-2, A-3def, B-1def, and B-2def notes. "At the same time, we have affirmed our rating on the class A-1 notes," S&P said. "The rating actions follow our assessment of the transaction's performance, and the application of our relevant criteria for transactions of this type," S&P said. "For our review of the transaction's performance, we used data from the trustee report, in addition to our cash flow analysis. We have taken into account recent developments in the transaction, and have applied our counterparty criteria as well as our cash flow criteria," S&P said. "From our analysis, we note that there has been an improvement in the underlying credit quality of the portfolio. For example, our analysis shows a significant reduction in the proportion of assets that we consider to be rated in the 'CCC' category ('CCC+', 'CCC', and 'CCC-') since we last reviewed the transaction. The proportion of 'CCC' rated assets decreased to 7.71% from 14.42% of the portfolio's performing asset balance since our last review. At the same time, we have also observed a decrease in the proportion of defaulted assets (those rated 'CC', 'SD' [selective default], or 'D') to 3.49% from 3.73%. Combined with a shorter weighted-average life, the scenario default rates (SDRs) have reduced at each rating level since our previous review. We have also noted an increase in the weighted-average spread earned on Mercator CLO III's collateral pool. We subjected the capital structure to a cash flow analysis to determine the break-even default rate for each rated tranche. In our analysis, we have used the reported portfolio balance, weighted-average spread, and weighted-average recovery rates that we consider to be appropriate. We have 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. At closing, Mercator CLO III entered into derivative obligations to mitigate currency risks in the transaction. "We consider that the documentation for these derivatives does not fully reflect our 2012 counterparty criteria. We conducted our cash flow analysis assuming that the transaction does not benefit from the support of derivatives. Taking into account our credit and cash flow analysis and our 2012 counterparty criteria, we have concluded that the level of credit enhancement available to the class A-1 notes is commensurate with the current 'AA (sf)' rating," S&P said. "We have therefore affirmed our ratings on the class A-1 notes," S&P said. "In our view, our ratings on the class A-2, A-3def, B-1def, and B-2def notes are commensurate with higher ratings than we previously assigned due to the level of available credit enhancement. We have therefore raised our ratings on these notes. We have also applied the largest obligor default test, a supplemental stress test that we introduced as part of our criteria update," S&P said. The test aims to measure the effect on ratings of defaults of a specified number of largest obligors in the portfolio with particular ratings, assuming 5% recoveries "In addition, we applied the largest industry default test, another of our supplemental stress tests. Our cash flow analysis shows that the level of credit enhancement available commensurate with higher ratings on the class B-2 def notes. However, our analysis also shows that the application of our supplemental stress test constrains the rating on the class B-2def notes at 'CCC+ (sf)'. Mercator CLO III is a cash flow collateralized loan obligation (CLO) transaction that securitizes loans to primarily speculative-grade corporate firms," S&P said. Ratings List Class Rating To From Mercator CLO III Ltd. EUR307.7 Million Floating-Rate Notes Ratings Raised A-2 AA- (sf) A- (sf) A-3def BBB+ (sf) BBB- (sf) B-1def BB+ (sf) B+ (sf) B-2def CCC+ (sf) CCC- (sf) Ratings Affirmed A-1 AA (sf) ========= I T A L Y ========= BANCA DEI PASCHI: S&P Cuts Tier 1 Hybrid Securities Rating to 'C' ----------------------------------------------------------------- Standard & Poor's Ratings Services has lowered its issue ratings to 'C' from 'B' on Tier 1 hybrid securities and to 'C' from 'B+' on Upper Tier 2 securities. "We also removed these ratings from CreditWatch, where we placed them with negative implications on June 18, 2012. The downgrades follow MPS' announcement of the launch of a tender offer on its outstanding Tier 1 and Upper Tier 2 securities on June 27, 2012," S&P said. As of now, the total amounts of securities subject to the offer are: A nominal value of EUR650 million for Tier 1 securities, and A nominal value of EUR750 million and GBP200 million for the Upper Tier 2 securities For Tier 1 rated instruments, the amount affected is EUR350 million, along with about EUR750 million and GBP200 million of securities in the Upper Tier 2 category. The downgrades reflect our view that the tender offer for the Tier 1 and Upper Tier 2 securities is a "distressed exchange" under our criteria. "In other words, if the exchange offer doesn't take place, we see an increased risk that MPS would defer the coupon payments on its Tier 1 and Upper Tier 2 securities in the future. We think it's likely that the European Commission and the Bank of Italy would seek to preserve capital after MPS' request for government support announced on June 27, 2012 to comply with the European Banking Authority's (EBA) 9% recommended core tier 1 ratio by June 30, 2012. As part of the aid package to MPS, we think European authorities and the Italian regulator might impose restrictions, where possible according to contractual terms of the instruments. This could result in dividend and coupon deferrals for MPS' Tier 1 and Upper Tier 2 instruments," S&P said. "We note that the terms and conditions for the Tier 1 instruments only allow for dividend deferral after 12 months have elapsed since the last dividend distribution or other discretionary distribution. The rating actions do not currently affect our counterparty credit ratings on MPS or any other issue ratings on MPS' debt, all of which remain on CreditWatch with negative implications, where they were originally placed on June 18, 2012. "On completion of the tender offer, we will review the ratings on any of MPS' untendered Tier 1 and Upper Tier 2 securities," S&P said. Ratings List Downgraded; CreditWatch Action To From Banca Monte dei Paschi di Siena SpA Junior Subordinated C B+/Watch Neg MPS Capital Trust I Preferred Stock* C B/Watch Neg MPS Preferred Capital I LLC Preferred Stock* C B/Watch Neg *Guaranteed by Banca Monte dei Paschi di Siena SpA BANCA NETWORK: Italian Prosecutors Mulls Probe Into Collapse ------------------------------------------------------------ Chiara Albanese at Investment Europe reports that Italian prosecutors are discussing the possibility of launching an investigation into Banca Network Investimenti, the Italian bank put into administration in November 2011. Investment Europe, citing local press agencies, says the investigation would be launched in Milan for bankruptcy fraud and for white collar crimes committed by the management which led to its insolvency. At the end of May it suspended all payments to its 22,000 creditors, and its network of financial advisers was acquired by Modena-based asset manager Consultinvest, Investment Europe recounts. BANCA POPOLARE: Moody's Withdraws 'Ba1' Sr. Unsecured Debt Rating ----------------------------------------------------------------- Moody's Investors Service has withdrawn the ratings assigned to Banca Popolare dell'Alto Adige-Suedtir. Volksbank's (BPAA) EUR1.0 billion Euro Medium-Term Note (EMTN) program: the Ba1 senior unsecured debt rating, the provisional (P)Ba2 subordinated rating, the (P)Ba3 junior subordinated rating and the (P)Ba2 Tier III rating. BPAA's other ratings -- the Ba1/Not-Prime issuer ratings -- are not affected by these rating actions. Concurrently, Moody's has also withdrawn the Ba1 rating on BPAA's outstanding EUR75 million senior bond (ISIN XS0717070162, maturity date: March 7, 2014). The senior bond was issued under the above-mentioned EMTN program. However, the ratings on BPAA's outstanding EUR100 million senior bond (ISIN XS0591785802, maturity date: February 15, 2013), EUR100 million senior bond (ISIN XS0539339985, September 14, 2012), EUR5 million senior bond (ISIN XS0553054635, maturity: 2 November 2015) and EUR20 million senior bond (ISIN XS0465274370, maturity: November 23, 2012), issued under the above-mentioned EMTN program remain unchanged. Current Bank Ratings - Bank deposits: Ba1/NP - Standalone bank financial strength rating: D+ - Standalone credit assessment: (ba1) - Adjusted standalone credit assessment: (ba1) - Senior unsecured -- local currency: Ba1 Ratings Rationale Moody's has withdrawn the credit ratings for business reasons. This rating action does not reflect a change in BPAA's creditworthiness. Headquartered in Bolzano, Italy, BPAA reported total consolidated assets of EUR5.6 billion under audited IFRS as of the end of December 2011. =================== K A Z A K H S T A N =================== ASTANA FINANCE: Creditors Back US$1.9BB Debt Restructuring Plan --------------------------------------------------------------- Nariman Gizitdinov at Bloomberg News reports that AO Astana Finance's creditors backed a plan to restructure US$1.9 billion of debt, triggering losses for the Kazakh financial company's international investors. Creditors who hold 79.6% of the company's debt approved the plan in Almaty on June 29, Bloomberg says, citing the minutes of a meeting posted on Monday on its Web site. Astana Finance became the third Kazakh financial company to default after it stopped servicing its international debt in May 2009, Bloomberg discloses. Astana Finance will distribute US$100 million in cash to international creditors, issue US$75 million of one-year zero- coupon bonds, and issue at least US$165.6 million of bonds due 2016 according to the minutes of the meeting, Bloomberg notes. The minutes show that in addition, international creditors will get at least 60% of the company's stock and US$50 million of 12- year recovery notes, granting them a share of anything recovered from impaired assets, Bloomberg relates. Astana Finance said in a July 2009 presentation that it owed KZT172.2 billion (US$1.2 billion) to global creditors including export credit agencies, Bloomberg recounts. The minutes also show that senior domestic creditors will receive KZT14.8 billion of bonds, while subordinated domestic debt holders will get KZT5.4 billion of securities, Bloomberg states. The minutes show that the claimants with "operational debt claims" will be entitled to a cash payment of 15% of their outstanding claims, payable in tenge, according to Bloomberg. Joint Stock Company Astana Finance (Astana Finance), through its subsidiaries, provides various financial products and services in the Republic of Kazakhstan. It provides current accounts, saving accounts, and other deposits; investment savings products; and various loans comprising mortgage, consumer, and car loans, as well as other credit facilities. =============== P O R T U G A L =============== BANCO SANTANDER: Moody's Reviews 'Ba1' Ratings for Downgrade ------------------------------------------------------------ Moody's Investors Service has placed on review for downgrade the Ba1 long-term debt and deposit ratings of Banco Santander Totta (BST), the senior subordinated debt of (P)Ba2 and its junior subordinated debt of (P)Ba3, all of which previously had a negative outlook. Ratings Rationale for Review for Downgrade The rating action follows the downgrade and review for further downgrade of the parent bank's (Banco Santander S.A.) standalone bank financial strength rating (BFSR) to C- (equivalent to a baa2 standalone credit assessment) from C/a3, which in turn was prompted primarily by the downgrade and review for further downgrade of the Spanish government's ratings. BST's long-term debt and deposit ratings currently incorporate two-notches of rating uplift from the ba3 standalone credit assessment, reflecting Moody's assessment of a high probability of parental support in case of need. The review of BST will focus on the parental support available to BST in the event of a lower rating of Banco Santander, which may potentially reduce the two- notch parental support uplift of BST's debt ratings. Since the bank's senior subordinated debt and junior subordinated debt also factor in parental support, any change to the assessment of parental support may also impact the ratings of these instruments, and they have consequently also been placed on review for downgrade. BST's BFSR of D-/ba3 and its short-term debt and deposit ratings of Not-Prime have not been affected by today's announcement. What Could Move the Ratings Up/Down Downwards pressure could be exerted on BST's long-term debt and deposit ratings following a downgrade of its parent bank's standalone credit strength, or if there are signs of a lower probability of support from Banco Santander. In addition, Moody's says that the ratings could be downgraded if the Portuguese government's rating, currently Ba3 with a negative outlook, is further downgraded or if BST's BFSR is also downgraded. BST's BFSR could be negatively affected by (i) the failure to accomplish targeted deleveraging and recapitalization plans; (ii) a significant deterioration of its liquidity position; (iii) a greater-than-expected deterioration of the economy that would exert additional pressure on the bank's profitability, asset quality and capital levels; and/or (iv) a relaxation of its risk- management practices. Upwards ratings pressure on BST's standalone rating could be driven by (i) an improvement in its liquidity position, with normalized access to wholesale funding; (ii) a significant reduction of its exposure to sovereign risk either by a reduction of its direct exposure to Portuguese government debt or by diversifying its operations that are 100% concentrated on the domestic market; (iii) a sustainable recovery of its profitability and efficiency indicators; and (iv) a significant reduction in credit-risk. An improvement in BST's BFSR could prompt an upgrade of its debt and deposit ratings; however, Moody's notes that it is unlikely for BST to have a higher standalone rating than the Portuguese sovereign, given its exposure to the Portuguese operating environment. Methodology The principal methodology used in these ratings was Moody's Consolidated Global Bank Rating Methodology published in June 2012. Headquartered in Lisbon, Portugal, BST reported total audited consolidated assets of EUR40.1 billion assets as of December 31, 2011. =========== R U S S I A =========== SOVCOMFLOT AO: S&P Cuts Long-Term Corp. Credit Rating to 'BB+' -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Russian shipping company AO Sovcomflot to 'BB+' from 'BBB-'. The outlook is stable. "At the same time, we lowered the Russia national scale rating on the company to 'ruAA+' from 'ruAAA'. The rating downgrade reflects our revised assessment of Sovcomflot's stand-alone credit profile (SACP), which we lowered to 'bb-' from 'bb'," S&P said. "We anticipate that Sovcomflot's cash flow measures will not improve to a level supportive of the previous SACP by 2013, notably because the company is pursing its partly debt-funded expansion at a time when prospects for a significant rebound in charter rates are weak. We understand that Sovcomflot's committed capital expenditure budget, including vessels to be delivered in 2012-2015, has increased markedly over the past few months and currently amounts to about $1.4 billion. Furthermore, given the company's growth strategy and focus on expanding away from conventional oil shipping, we believe it might pursue further debt-funded investments in the related gas- and offshore sectors in the near to medium term. The rating previously incorporated our expectation that the company would make no additional significant debt-funded capital investments beyond the newbuilding program of about $900 million as of January 2012. This, coupled with a moderate recovery in charter rates in 2013, would have enabled Sovcomflot to achieve a turnaround in cash flow measures commensurate with the previous rating by 2013, such as adjusted funds from operations (FFO) to debt of 15%," S&P said. However, in light of Sovcomflot's enlarged capital spending plan we have revised our base-case forecasts and now anticipate that the company's ratio of adjusted FFO-to-debt will stabilize at 10%-11% this year and subsequently improve to about 12% by 2013. We consider a ratio of adjusted FFO-to-debt of about 12% as consistent with a SACP of 'bb-' on Sovcomflot. In our view, there is a "high" likelihood that Sovcomflot's 100% owner, the government of the Russian Federation (foreign currency BBB/Stable/A-2; local currency BBB+/Stable/A-2) would provide timely and sufficient extraordinary support to Sovcomflot in the event of financial distress," S&P said. "The stable outlook reflects our expectation that Sovcomflot will continue to benefit from a "high" likelihood of government support and that its SACP will stabilize as the company preserves its moderate financial leverage and proactively manages its liquidity position. As we estimate in our base-case operating scenario, the ratio of adjusted FFO to debt will stabilize at 10%-11% in 2012 before improving to a rating-commensurate level of about 12% by 2013, owing to slowly recovering charter rates. We also anticipate that Sovcomflot will be able to sustain adequate liquidity sources, including the timely renewal of maturing revolving credit facilities, to maintain the current ratings," S&P said. ============================= S L O V A K R E P U B L I C ============================= ALEX TOUR: Files for Bankruptcy Following Financial Problems ------------------------------------------------------------ The Slovak Spectator, citing the Sme daily, reports that Alex Tour travel agency filed for bankruptcy on July 2. According to the Slovak Spectator, Hospodarske noviny economic daily wrote that representatives of Alex Tour announced on the travel agency's Web site that the firm had financial problems and was not able to meet its commitments to customers, suggesting that the travelers should contact Kooperat�va insurance company that will ensure the return of about 125 people currently abroad. Alex Tour is based in the Slovak Republic. =============== S L O V E N I A =============== SKUPINA VIATOR: Failed Capital Increase Prompts Receivership ------------------------------------------------------------ SeeNews, citing state-run news agency STA, reports that the Ljubljana district court decided on Tuesday to stay the debt restructuring at Slovenia's Skupina Viator&Vektor, the holding company of the namesake logistics group, and place it in receivership. According to SeeNews, STA said that the decision of the court came after the holding company missed a deadline for the confirmation of a capital increase. Skupina Viator&Vektor is based in Slovenia. ========= S P A I N ========= FONCAIXA HIPOTECARIO: S&P Withdraws 'D' Rating on Class D Notes --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its credit ratings on the class A and B notes in Foncaixa Hipotecario 8, Fondo de Titulizacion Hipotecaria and Foncaixa Hipotecario 10, Fondo de Titulizacion de Activos. "At the same time, we have affirmed our ratings on Foncaixa Hipotecario 8's class C notes, and Foncaixa Hipotecario 10's class C and D notes. We have subsequently withdrawn our ratings on all of the notes in these transactions," S&P said. Caixabank S.A. (BBB+/Stable/A-2) originated the portfolios backing these Spanish residential mortgage-backed securities (RMBS) transactions, which were backed by mortgage loans granted to individuals for the acquisition of residential properties. The rating actions follow notice that the notes in these transactions redeemed on June 29, 2012, without any remedy actions taken following our Feb. 13, 2012 downgrade of Caixabank -- the guaranteed investment contract provider and swap counterparty in these transactions. "Our downgrade of Caixabank resulted in the breach of a counterparty replacement trigger in each of the transactions' documents. In such circumstances, these documents require the counterparty to take remedy action within a prescribed timeframe. Failing this, our ratings in these transactions would be capped at our long-term issuer credit rating on the relevant counterparty. After our downgrade of Caixabank, we received written confirmation from the trustee, Gesticaixa S.G.F.T. S.A., that both transactions would be redeemed early, on June 29, 2012. There have since been no remedy actions, and the issuer has repaid the full balance of the notes. As the remedy actions did not take place, we have today lowered to 'BBB+ (sf)' our ratings on the class A and B notes. Additinoally, we have affirmed our ratings on the rest of the notes in both transactions, which we already rated below the cap outlined in our counterparty criteria. Moreover, as the notes have been fully redeemed, we have subsequently withdrawn all of our ratings in these transactions," S&P said. Ratings List Class Rating To From Foncaixa Hipotecario 8, Fondo de Titulizacion Hipotecaria EUR1 Billion Mortgage-Backed Floating-Rate Notes Ratings Lowered and Withdrawn A BBB+ (sf) AA+ (sf) NR BBB+ (sf) B BBB+ (sf) A (sf) NR BBB+ (sf) Rating Affirmed and Withdrawn C BBB (sf) NR BBB (sf) Foncaixa Hipotecario 10, Fondo de Titulizacion de Activos EUR1.512 Billion Mortgage-Backed Floating-Rate Notes (Of Which 12 Million Are Floating-Rate Notes) Ratings Lowered and Withdrawn A BBB+ (sf) AA+ (sf) NR BBB+ (sf) B BBB+ (sf) AA- (sf) NR BBB+ (sf) Ratings Affirmed and Withdrawn C BBB (sf) NR BBB (sf) D D (sf) NR D (sf) NR-Not rated. =========== S W E D E N =========== NIMBUS: DNB ASA Has Exposure in Bankruptcy ------------------------------------------ Kim McLaughlin at Bloomberg News, citing Dagens Industri, reports that DNB ASA exposed in the bankruptcy of Swedish pleasure boat maker Nimbus, controlled by Altor. According to Bloomberg, in Nimbus' latest annual report, debt to credit institutions is noted at SK275 million. Nimbus is a Swedish pleasure boat maker. =========== T U R K E Y =========== * TURKEY: Moody's Takes Rating Actions on 16 Turkish Banks ---------------------------------------------------------- Moody's Investors Service has taken a range of rating actions on 16 Turkish financial groups and their subsidiaries. The rating actions primarily reflect three drivers: (i) The Turkish sovereign's creditworthiness has improved, reflected in Moody's upgrade on June 20 of Turkey's government bond rating to Ba1, with a positive outlook, from Ba2. Moody's says that the Turkish sovereign upgrade has had credit-positive effects on ratings of various banks. (ii) Moody's has concluded the review -- initiated on 16 March 2012 -- of Turkish banks' standalone credit assessments that were previously above the sovereign rating level. The conclusion of the review reflects Moody's revised assessment of the linkage between the credit profiles of sovereigns and financial institutions globally. Taking into account the high correlation between sovereign and bank creditworthiness, and consistent with Moody's global approach, Moody's has lowered its standalone credit assessments on 11 banks at the level of the sovereign rating. (iii) For three foreign-owned Turkish banks, their parent banks' weakened creditworthiness has negatively affected either their standalone credit assessment or Moody's assumptions of parental support. These partly counter-acting drivers resulted in a number of Turkish bank rating upgrades, downgrades, affirmations and confirmations. The rating actions are summarized below, and the ratings rationales are discussed after that. The numbers of affected banks shown in the summary of actions below focus on Turkish banking groups. The actions on the rated subsidiaries of these groups are discussed later in the press release. Please click on the following link to access the full list of affected credit ratings. This list is an integral part of this press release and identifies each affected issuer: (http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_143429) SUMMARY OF ACTIONS -- FOREIGN-CURRENCY DEPOSIT RATINGS MOSTLY UPGRADED Of the 15 Turkish banks or banking groups with long-term foreign currency deposit ratings, 14 were upgraded by one notch to Ba2, and one is unchanged. In particular, the ratings were upgraded by one notch to Ba2 for all seven-largest Turkish banks, namely Akbank TAS (Akbank), T.C. Ziraat Bankasi (Ziraatbank), Turkiye Garanti Bankasi AS (Garantibank), Turkiye Halk Bankasi AS (Halkbank), Turkiye Is Bankasi AS (Isbank), Turkiye Vakiflar Bankasi TAO (Vakiflar), and Yapi Ve Kredi Bankasi (Yapi Kredi). The upgrades were triggered by Moody's decision to increase its ceiling for foreign currency deposit ratings of private Turkish issuers, which defines the highest foreign currency deposit rating any Turkish bank can achieve. This ceiling increased to Ba2, following the sovereign upgrade. The ratings of the seven largest Turkish banks are now at the revised Ba2 foreign currency deposit ceiling. -- FOREIGN-CURRENCY DEBT AND/OR ISSUER RATINGS MOSTLY UPGRADED Of the seven banking groups with foreign currency debt and/or issuer ratings (as applicable), five banks (Akbank, Garantibank, Isbank, Vakiflar and Yapi Kredi) saw these ratings upgraded by two notches to Baa2; and at two banks they remain unchanged. These upgrades were triggered by Moody's decision to raise its ceiling for foreign currency debt and issuer ratings, which defines the highest such rating any Turkish private issuer (including banks) can achieve. Following the sovereign upgrade, this ceiling was raised to Baa2, and the ratings of Akbank, Garantibank, Isbank, Vakiflar and Yapi Kredi are now at the revised Baa2 foreign currency debt and issuer rating ceiling. -- LOCAL-CURRENCY DEPOSIT RATINGS MOSTLY DOWNGRADED OR UNCHANGED Of the 15 Turkish banking groups with local currency deposit ratings, the ratings of four were upgraded, six remained unchanged and the ratings of another five banks were downgraded. For all of the seven largest Turkish banks, the local currency deposit rating is Baa2. Of the seven largest Turkish banks, Ziraatbank, Halkbank and Vakiflar saw their local currency deposit ratings upgraded by one notch, at Isbank and Yapi Kredi, these ratings are unchanged. The local currency deposit ratings of Akbank and Garantibank were downgraded by one notch. The combination of lower standalone credit assessments (see below) and higher sovereign creditworthiness had counter-acting effects on these ratings. -- STANDALONE CREDIT ASSESSMENTS MOSTLY LOWER Of the 16 Turkish banking groups with standalone credit assessments, five experienced no change, and 11 experienced a decrease. Moody's lowered the standalone credit assessments for all seven largest banks to ba1 (on a scale from aaa, highest, to c, lowest), in line with the sovereign rating, reflecting Moody's view of the linkages between sovereign and bank creditworthiness. -- OTHER RATINGS Other affected ratings include short-term foreign and local currency ratings, as well as national-scale ratings (NSRs). Today's actions on these ratings follow closely the actions on foreign and local currency long-term ratings and standalone credit assessments, as discussed below. RATINGS RATIONALE RATIONALE -- Standalone Credit Assessments The lower standalone credit assessments of 11 Turkish banking groups reflect Moody's assessment of high correlation between sovereign and bank creditworthiness. Moody's believes that the creditworthiness of financial institutions with low cross-border operational diversification and/or high balance-sheet exposure to the debt of their domestic sovereign is closely linked to the domestic sovereign's credit strength. Banks in systems with these characteristics, which apply to Turkey, are unlikely to have standalone credit assessments above the sovereign, which is often viewed as the lowest credit risk in the local market or currency. Turkish banks have strong capital bases against potential losses from their loan portfolios and a moderate reliance on wholesale market funds. Both factors limit the banks' vulnerability to sovereign risk. However, Moody's says that the banks' revenue generation is primarily within Turkey and their balance sheets have a high direct exposure to the sovereign (primarily through securities holdings). These two factors elevate the banks' susceptibility to event risk at the sovereign level. Moody's has therefore adjusted these standalone credit assessments at the same level of the sovereign's rating. The recent upgrade of Turkey's government debt rating limited the scope and magnitude of the number of banks that were downgraded. Moody's says that since the sovereign upgrade, banks with standalone credit assessments of ba1 or lower are no longer constrained by the sovereign rating. These ratings were therefore confirmed at their current level. The outlooks of Moody's standalone credit assessments are stable at nine of the 16 Turkish banking groups that have standalone credit assessments. The outlooks are negative for three banks, positive for one bank and the standalone credit assessments remain on review for downgrade at three banks. In each case, the negative outlooks and ongoing reviews reflect institution- specific drivers. RATIONALE -- Debt and Deposit Ratings In addition to a bank's standalone creditworthiness, Moody's deposit ratings also incorporate assumptions about potential external support from a parent institution, and/or a regional or national government. These assumptions reflect both the capacity and the willingness of such a third party to support a bank in the event of stress. In most cases, the deposit and debt ratings of the banks benefit from several notches of uplift due to government and/or parental support assumptions. These ratings have been positioned up to three notches above the Turkish banks standalone credit assessment, depending on (i) Moody's assessment of the willingness and capacity of parents to provide support in the event of need; and (ii) each bank's systemic importance to the Turkish financial system as a deposit-taker and lender. RATIONALE -- Local Currency Deposit and Issuer Ratings For many banks, the negative impact of lower standalone credit assessments were outweighed by the positive impact of improved sovereign creditworthiness which led to an increase in the support-driven ratings uplift for banks which Moody's views as systemically important in Turkey. For some banks, increased support-driven ratings uplift led to upgrades for their local currency issuer or deposit ratings. For others, Moody's says that this increase was offset by the lowering of their standalone credit assessments and/or the impact of the weakened credit profiles of their European parents. These banks had their local and foreign currency long-term ratings either confirmed or downgraded. At three banks, these ratings remain on review for further downgrade (or with direction uncertain) to capture factors specific to these banks. SUPPORT ASSUMPTIONS LIFT MANY BANK RATINGS ABOVE THEIR STANDALONE CREDIT ASSESSMENTS For 10 out of the 15 Turkish banking groups with local currency deposit and issuer ratings, these ratings are now at Baa3 or Baa2, and thus above the Ba1 government bond rating. The differential reflects Moody's opinion that the Turkish government has a high propensity to provide support to its domestic banking system, even if doing so could weaken the government's own credit profile in the unlikely event of a systemic crisis. Moody's assessment of support takes into account (i) The Turkish government's ability and strong willingness to support the banking system, as demonstrated during past financial crises; (ii) The government's broad array of financial and non-financial tools available to offer support, including liquidity support and regulatory forbearance; and (iii) The banking system's intrinsic strength, demonstrated during the ongoing crisis and past global downturns, as well as the banking system's limited size relative to the Turkish economy which limits the potential support need in a crisis scenario. Given the above-mentioned considerations, support assumptions can result in a Turkish bank's local currency deposit, debt and issuer ratings being up to two notches higher than the sovereign rating. The up-to-two notches differential is higher than for many other countries. This reflects Moody's view that the Turkish government has a comparatively stronger ability and willingness to support domestic banks than, for example, countries whose banking systems are large relative to their economies, because this increases the potential cost of support. Moody's recognizes that government (or systemic) support is a function of evolving social, political, economic and financial developments in a country. Moody's believes that the Turkish banking system and its financial obligations will continue to grow strongly relative to the country's economy and the government's own financial sources in coming years. Therefore, Moody's would expect that over time, the maximum rating level a Turkish bank can achieve as a result of government support assumptions will converge towards the sovereign rating. In this case, further improvements in the creditworthiness and the rating of the Turkish sovereign would have only a muted or no impact on the support-driven uplift factored into bank ratings. Accordingly, Moody's has assigned stable outlooks to most debt, deposit and issuer ratings of Turkish banks, even though the outlook on the sovereign rating is positive. RATIONALE -- Foreign-Currency Deposits, Issuer and Debt Ratings As stated above, the recent upgrade of Turkey's country ceilings for foreign currency bank deposits (to Ba2 from Ba3) and for foreign currency issuer and debt ratings (to Baa2 from Ba1), has led to upgrades of the foreign currency deposit and debt ratings of the banks, where applicable. The outlooks on the foreign currency debt ratings are the same as the outlooks on the local currency deposit ratings. RATIONALE -- Short-Term Ratings Short-term ratings are closely linked to the respective long-term ratings. Accordingly, short-term rating changes follow changes to the respective long-term ratings. RATIONALE --- National Scale Ratings The rating actions on the local currency deposit ratings of the affected banks caused similar rating actions on the NSRs of these banks. The NSRs map directly from the banks' local currency deposit ratings and are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. RATIONALE -- Other Affected Ratings - Turkiye Sinai Kalkinma Bankasi AS's issuer rating has been downgraded due to Moody's reassessment of the level of parental support that is incorporated in the bank's rating. - Garantibank International NV (GBI): The lowering of Garanti Bank's standalone credit assessment (GBI's parent) below that of its Dutch-based subsidiary resulted in the downgrade of GBI's deposit ratings; they are now solely based on the bank's baa2 standalone credit assessment. What Could Move The Ratings Up/Down As the key drivers of today's actions are largely structural in nature, upwards rating pressure is unlikely in the near term, as reflected by stable or negative outlooks on most of the ratings. Beyond the immediate future, a combination of an improvement in the credit risk profile of some of the individual banks and/or the national government could positively influence Turkish banks' ratings. Conversely, deterioration in the banks' operating environment -- and/or a weakening of their standalone financial fundamentals or those of their parents -- could exert downwards pressure on the ratings. Principal Methodologies The methodologies used in these ratings were Moody's Consolidated Global Bank Rating Methodology published in July 2012 and Government-Related Issuers: Methodology Update published in July 2010. Moody's National Scale Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".tr" for Turkey. =========================== U N I T E D K I N G D O M =========================== CORNERSTONE TITAN: Moody's Cuts Rating on Class E Notes to 'Caa2' ----------------------------------------------------------------- Moody's Investors Service has downgraded the following classes of Notes issued by Cornerstone Titan 2005-1 p.l.c. (amounts reflect initial outstandings): Issuer: Cornerstone Titan 2005-1 p.l.c. GBP47.35M C Notes, Affirmed at Baa2 (sf); previously on May 22, 2009 Downgraded to Baa2 (sf) GBP77.06M D Notes, Downgraded to Caa1 (sf); previously on May 22, 2009 Downgraded to Ba3 (sf) GBP7.28M E Notes, Downgraded to Caa2 (sf); previously on May 22, 2009 Downgraded to B2 (sf) Ratings Rationale The downgrade reflects Moody's increased loss expectation for the pool. This is primarily due to the sharp increase in the refinancing risk for the Eagle Office Loan that represents 92.5% of the pool combined with an elevated Moody's securitised pool loan-to-value ("LTV") of 136%. The rating on the Class C Notes is affirmed because its current credit enhancement level of 82% and its Moody's note-to-value of 24% is sufficient to maintain the rating despite the increased loss expectation for the pool. Upward rating pressure on the Class C Notes is tempered as the transaction enters its relatively short tail period in July 2012. The key parameters in Moody's analysis are the default probability of the securitized loans (both during the term and at maturity) as well as Moody's value assessment for the properties securing these loans. Moody's derives from those parameters a loss expectation for the securitized pool. In general, Moody's analysis reflects a forward-looking view of the likely range of commercial real estate collateral performance over the medium term. From time to time, Moody's may, if warranted, change these expectations. Performance that falls outside an acceptable range of the key parameters such as property value or loan refinancing probability for instance, may indicate that the collateral's credit quality is stronger or weaker than Moody's had anticipated when the related securities ratings were issued. Even so, a deviation from the expected range will not necessarily result in a rating action nor does performance within expectations preclude such actions . There may be mitigating or offsetting factors to an improvement or decline in collateral performance, such as increased subordination levels due to amortization and loan re- prepayments or a decline in subordination due to realized losses. Primary sources of assumption uncertainty are the current stressed macro-economic environment and continued weakness in the occupational and lending markets. Moody's anticipates (i) delayed recovery in the lending market persisting through 2013, while remaining subject to strict underwriting criteria and heavily dependent on the underlying property quality, (ii) strong differentiation between prime and secondary properties, with further value declines expected for non-prime properties, and (iii) occupational markets will remain under pressure in the short term and will only slowly recover in the medium term in line with anticipated economic recovery. Overall, Moody's central global macroeconomic scenario is for a material slowdown in growth in 2012 for most of the world's largest economies fueled by fiscal consolidation efforts, household and banking sector deleveraging and persistently high unemployment levels. We expect a mild recession in the Euro area. 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. Furthermore, as discussed in Moody's special report "Rating Euro Area Governments Through Extraordinary Times -- An Updated Summary," published in October 2011, Moody's is considering reintroducing individual country ceilings for some or all euro area members, which could affect further the maximum structured finance rating achievable in those countries. Moody's Portfolio Analysis Cornerstone Titan 2005-1 plc closed in October 2005 and represents the securitization of initially 12 commercial mortgage loans originated by Credit Suisse and GMAC Commercial Mortgage Bank Europe plc and secured by first-ranking legal mortgages over initially 71 commercial properties located across the UK. Currently two loans remain that are secured by first-ranking legal mortgages over two commercial properties. The pool exhibits an above average concentration (95.4% based on UW market value) to a single office property located in Central London. Moody's uses a variation of Herf to measure diversity of loan size, where a higher number represents greater diversity. Large multi- borrower transactions typically have a Herf of less than 10 with an average of around 5. This pool has a Herf of 1.16, slightly lower than the 1.3 at Moody's prior review. Eagle Office is the largest loan representing 92.5% of the pool. The loan is secured by a single office property located in Central London near the Barbican Underground station. Moody's understands that the single tenant under the lease is likely to vacate at lease expiry in around three years time. Moody's securitized loan LTV is 129% compared to 105% as per the April 2012 reporting. Moody's expects the loan to default at its maturity in July 2012. The remaining Jubilee Way loan represents 7.5% of the pool. The loan is secured by a single secondary retail property located in the town of Scunthorpe (East Midlands). Moody's securitized loan LTV is 222% compared to 183% as per the April 2012 reporting. The loan has been in special servicing since April 2009. Portfolio Loss Exposure: Moody's expects a large amount of losses on the securitized portfolio, stemming mainly from the refinancing profile of the securitized portfolio and its elevated Moody's LTV of 136%. Given the default risk profile and the anticipated work-out strategy for potentially defaulting loans, the expected losses are likely to crystallize only towards the end of the transaction term. Rating Methodology The methodology used in this rating is "Moody's Approach to Real Estate Analysis for CMBS in EMEA: Portfolio Analysis (MoRE Portfolio)" published in April 2006. Other methodologies/factors used in this rating are described in "European CMBS: 2012 Central Scenarios" published in February 2012 and "Rating Caps for CMBS in the Tail Period" published in October 2011. The updated assessment is a result of Moody's on-going surveillance of commercial mortgage backed securities (CMBS) transactions. Moody's prior assessment is summarized in a press release dated May 22, 2009. The last Performance Overview for this transaction was published on June 1, 2012. In rating this transaction, Moody's used both MoRE Portfolio and MoRE Cash Flow to model the cash-flows and determine the loss for each tranche. MoRE Portfolio evaluates a loss distribution by simulating the defaults and recoveries of the underlying portfolio of loans using a Monte Carlo simulation. This portfolio loss distribution, in conjunction with the loss timing calculated in MoRE Portfolio is then used in MoRE Cash Flow, where for each loss scenario on the assets, the corresponding loss for each class of notes is calculated taking into account the structural features of the notes. As such, Moody's analysis encompasses the assessment of stressed scenarios. DECO 6-UK: S&P Lowers Rating on Class D Notes to D(sf) ------------------------------------------------------ Standard & Poor's Ratings Services lowered its credit ratings on all classes of DECO 6 - UK Large Loan 2 PLC 's commercial mortgage-backed notes. The transaction closed in December 2005 and was initially secured by four loans (Canary Wharf, St Enoch, Brunel, and Mapeley). Two of the loans, Canary Wharf and St Enoch, have prepaid, and were both secured by prime, well-let assets in their respective office and retail sectors. In contrast, the two remaining loans in the transaction, Brunel and Mapeley, are secured by secondary properties in regional areas of the U.K., which are currently experiencing declines in market rent and capital value. As a result of tenant lease breaks, tenant insolvencies, and a weakened rental market, cash flows have declined at a greater rate than we expected. "In our opinion, the secondary nature of the properties and the continued deterioration of the regional office and retail sectors are likely to result in increased susceptibility to vacancies, which would further depress property values," S&P said. The Brunel Loan The Brunel loan was scheduled to mature in April 2012 and is secured against the Brunel Shopping Centre in Swindon. The loan has been in special servicing since June 2011, and failed to repay at loan maturity in April 2012. The issuer has instructed LPA (Law of Property Act) receivers to take control of the rental income during the ongoing loan restructuring talks. A new valuation of the property, dated Oct. 25, 2011, reports a revised figure of GBP87.2 million, which reflects a 33% decline from the valuation of GBP130.2 million at closing, and a current senior loan-to-value (LTV) ratio of 116%. The new valuation has triggered an appraisal-reduction mechanism in the transaction, which limits the amount available to be drawn from the liquidity facility. On the April 2012 interest payment date (IPD), there was an interest shortfall on the class B, C, and D notes as a result of the Brunel loan being unable to pay loan interest. "However, due to the maturity of the interest rate swap, we do not believe that there will be further interest shortfalls. The expiration of the swap means that the loan reverts to a floating rate upon maturity, thereby increasing cash flow available to meet note interest payments. In our opinion, this excess cash flow will be enough to repay accrued interest, liquidity facility draws, and interest payments for the July IPD," S&P said. The loan has a senior LTV ratio of 116%, the asset income is currently insufficient to cover interest payments, and the secondary real estate market is suffering declines in rental and capital value. "As such, we believe the current restrictive lending conditions will compound the difficulties the borrower faces in refinancing this loan. In view of these factors, even if the loan is restructured as a result of the ongoing discussions, we consider that principal losses are likely," S&P said. The Mapeley Loan The Mapeley loan matures in July 2015 and is secured against a portfolio of 20 secondary office properties located throughout the U.K. The loan defaulted in October 2011, due to a breach of the interest coverage ratio (ICR) covenant of 1.15x (the current ICR is 0.75x), and the servicer subsequently transferred the loan into special servicing. As per the transaction documents, excess cash has been held in a reserve account, and the current balance stands at �11.7 million. "We believe this is available to top up any future loan interest shortfalls, or any potential shortfalls arising from special servicing fees. In September 2011, British Telecommunications PLC (BT), which was the sole tenant in Delta Point Croydon (252,000 sq ft), vacated the property upon expiry of its lease, causing the occupancy rate to fall to 72%, from 98% at closing. BT represented 27% of the portfolio's gross income, and its departure has caused the net operating income to fall substantially to GBP9.7 million at present, from GBP15.9 million at closing," S&P said. In February 2012, the special servicer provided information on an external valuation for the Mapeley loan. This new figure of �74.7 million gives an LTV ratio of 228%, and represents a 70% market value decline from the Day 1 valuation figure of �244.8 million. "We believe this figure to be particularly low, compared with our view on the value of the portfolio. While our view of that value is higher than the most recent valuation figure, we have taken into consideration that the new external valuation figure may constrain potential recoveries. If the Mapeley loan is enforced, material swap break costs would be crystallized. These would rank senior to payments to the noteholders. We understand from the special servicer, Hatfield Philips International, that the presentation of the workout strategy has been postponed to the end of June, after which a decision is expected on available workout options," S&P said. "Although there are three years left to develop and implement a sustainable strategy for the portfolio, we view the prospects of full recovery at or before note maturity as limited, given the factors discussed above," S&P said. Rating Actions "We have lowered our ratings on all classes of notes, to reflect our view of principal recovery expectations. This is a result of credit deterioration in the Mapeley loan, highlighted by an updated valuation showing a 66% market value decline from the Day 1 value. We have lowered our rating on the class D notes to 'D (sf)', to reflect the recent interest shortfall and our opinion that this class is likely to experience significant principal losses," S&P said. DECO 6 - U.K. Large Loan 2 is a U.K. commercial mortgage-backed securities (CMBS) transaction, which closed in December 2005 with notes totaling GBP555.2 million. The current outstanding balance is GBP272.2 million, as of the April 2012 interest payment date. The notes have a final legal maturity in July 2017. Potential Effects of Proposed Criteria Changes "We have taken the rating actions based on our criteria for rating European CMBS. However, these criteria are under review. As highlighted in the Nov. 8 Advance Notice Of Proposed Criteria Change, 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. On June 4, we published a request for comment (RFC) outlining our proposed criteria changes for CMBS Global Property Evaluation Methodology. The proposed criteria do not significantly change Standard & Poor's longstanding approach to deriving property net cash flow (S&P NCF) and value (S&P Value). We therefore anticipate limited impact for European outstanding ratings when the updated CMBS Global Property Evaluation Methodology criteria are finalized," S&P said. However, because of its global scope, the proposed CMBS Global Property Evaluation Methodology does not include certain market- specific adjustments. An application of these criteria to European Transactions will therefore be published when we release our updated rating criteria. "Until such time that we adopt new criteria for rating European CMBS, we will continue to rate and monitor these transactions using our existing criteria," S&P said. Ratings List Class Rating To From DECO 6 - U.K. Large Loan 2 PLC GBP555.119 Million Commercial Mortgage-Backed Fixed-Rate Notes Ratings Lowered A2 BB (sf) A (sf) B B (sf) BB+ (sf) C B- (sf) B- (sf) D D (sf) CCC- (sf) DECO 8: Fitch Downgrades Rating on Class F Notes to 'Csf' --------------------------------------------------------- Fitch Ratings has taken various rating actions on DECO 8 - UK Conduit 2 plc's commercial mortgage-backed notes, as follows: -- GBP125.7m class A1 (XS0251885603): affirmed at 'AAAsf'; Outlook Stable -- GBP255.8m class A2 (XS0251886163): downgraded to 'BBsf' from 'BBB-sf'; Outlook Negative -- GBP32.3m class B (XS0251886833): downgraded to 'Bsf' from 'BBsf'; Outlook Negative -- GBP33.9m class C (XS0251887211): downgraded to 'CCCsf' from 'B+sf'; Recovery Estimate 50% -- GBP23.4m class D (XS0251887724): downgraded to 'CCCsf' from 'Bsf'; Recovery Estimate 0% -- GBP60.9m class E (XS0251889696): affirmed at 'CCsf'; assigned Recovery Estimate 0% -- GBP14.2m class F (XS0251890199): downgraded to 'Csf' from 'CCsf'; assigned Recovery Estimate 0% -- GBP2.8m class G (XS0251890868): affirmed at 'Dsf'; assigned Recovery Estimate 0% The rating downgrades reflect a combination of factors: the viability of the sponsor's business plan backing the Lea Valley loan (given the secondary quality of many of the assets), the concerns over the Mapeley loan (mainly due to the limited information on the sponsor's strategy regarding re-letting) and also the upcoming loan maturity of the Fairhold loan. In January 2012, the sponsor of the largest loan in the portfolio (Lea Valley, accounting for 40% by portfolio loan balance), purchased the subordinate debt (as part of the extension restructure). As a result, any cash previously paid to the subordinated lender will now be applied to amortization of the securitized loan, as well as for the build up of a capex fund (currently at GBP43,852). The sponsor's business plan aims at reducing the debt quantum through asset sales (GBP15 million per year from 2014 through to 2016). Given the secondary nature of most of the assets and the absence of investment demand for such properties, Fitch questions the viability of this plan. While the asset managers have been successful in maintaining rental income at their current levels, the portfolio remains management intensive. Its rental income profile is rather weak, with almost 70% subject to possible lease termination before the end of 2013. The Mapeley loan (the second largest in the portfolio at 35%) is secured by 16 office properties located across the UK, typically in secondary locations and in some cases of below average quality. Since closing, the portfolio income has fallen some 24%, primarily due to rent reductions, since vacancy has remained moderate at 3.7%. After the 2008 revaluation the primary servicer (Deutsche Bank AG, London Branch, rated 'CPS2-') agreed to waive the loan-to-value (LTV) covenant until the July 2012 interest payment date, in return for a full cash sweep. Thus far Fitch understands that the cash sweep has amortized the loan by approximately GBP17m. While it is not clear whether the servicer will waive the LTV covenant again at the July interest payment date (IPD), the agency believes that the loan remains in negative equity, as indicated by a Fitch LTV of 133%. An LTV covenant breach may lead to the transfer of the loan to special servicing, and therefore some level of external intervention. Fitch believes that an active asset management plan is needed by the borrower between now and loan maturity (2016), with particular focus to the retention of the largest tenants, which leases are coming up for expiry in the next two to three years. Fitch also has concerns over the exit strategy of the Fairhold loan (12% of the portfolio). The facility matures in January 2013 and it is hedged with a long dated swap expiring in 2036. This means that significant breakage costs would be incurred on failure to refinance at its maturity. Fitch has considered the potential impact of breakage costs; however, given the legal final maturity of the class A2 to G notes is also 2036, ample time for a loan restructuring is possible, which could limit the impact of such costs. POLLY PECK: "Was Not Insolvent," Asil Nadir Claims -------------------------------------------------- Louisa Peacock at The Telegraph reports that Asil Nadir, the former fugitive tycoon, claimed Polly Peck would have had a "tremendous" future had the board not placed it into administration in October 1990. "I think it had a tremendous future and this attitude was shared by the top brokers and investors in this country and worldwide," the report quotes Mr. Nadir as saying as he testified for the first time during his long-running fraud trial. According to The Telegraph, Mr. Nadir is accused by the Serious Fraud Office of stealing money from Polly Peck between 1987 and 1990, before funnelling it to Swiss and Bahamian companies. The SFO accuses Mr. Nadir of 13 counts of theft amounting to GBP34 million, but prosecutors said on the first day of the trial that the actual amount is closer to GBP150 million. The relates that more than five months after his trial began, the 71 year-old last week denied all charges and explained that he fled Britain in 1993 for northern Cyprus because he was a "broken man" who "could drop dead any minute", with no hope of receiving a fair trial. Mr. Nadir was due to stand trial in 1993 but left Britain for northern Cyprus, returning in August 2010, the report recalls. The report says the cash is alleged to have been taken from three accounts held by Polly Peck International (PPI) with the Natwest and Midland banks between August 1987 and August 1990. According to the report, prosecutors claim Mr. Nadir used millions of pounds he stole to bolster the company's share price and buy exclusive property. Asked by his barrister if he left the country because he was guilty, the report relays, Mr. Nadir said: "That's not true." According to the report, Mr. Nadir said before any monies were moved from Polly Peck, the equivalent sums in Turkish lira in areas where the business operated were banked. He claimed monies had been moved to generate better exchange rates, the report notes. But the prosecution said his flight from the U.K. for 17 years was evidence of dishonesty. When administrators went to Northern Cyprus to recover assets, they found the money had vanished into a "black hole", it was alleged. Polly Peck International (PPI) was a small and barely profitable United Kingdom textile company which expanded rapidly in the 1980s and became a constituent of the FTSE 100 Index before it collapsed in 1991. PRINTEXPRESS IN WHITEHAVEN: Goes Into Liquidation ------------------------------------------------- News & Star reports that Printexpress in Whitehaven has gone into liquidation just a month after its highest sales in 27 years. Despite the record figure in May which saw Printexpress in Whitehaven score the best sales in its history, it closed and 16 jobs were lost, News & Star relates. According to the report, managing director John Jenkinson said the bank had reduced their facilities "at a time when we needed support." "Sadly, though it is a sign of these troubled times, our bankers [Clydesdale], without warning, saw fit to reduce our facilities," the report quotes Mr. Jenkinson as saying. "But this is an all too common story and many other businesses will confirm that." Print Express in Whitehaven was a UK-based printing company. WRIGHT & SMITH: To Enter Into Liquidation on July 20 ---------------------------------------------------- Nick Spoors at The Chronicle & Echo reports that Wright & Smith (Northampton) Ltd has stopped trading, owing money to "quite a few" small businesses. Insolvency managers said the company is due to enter liquidation on July 20 after ceasing business on June 22, 2012, the report says. "It is extremely saddening that a company which has traded for over 50 years has, due to a significant reduction in trade, been forced to close with the loss of some 16 jobs," Ian Cooke, of Business Recovery and Insolvency (BRI), said in a statement cited by The Chronicle & Echo. Mr. Cooke added: "We can't be specific about how much was owed or to exactly how many people, but I can say there will be quite a few local suppliers and subcontractors affected. "We have written to all the creditors we are aware of, but any that are concerned about the potential financial impact of this should seek independent advice or call us to talk things over." Wright & Smith (Northampton) Ltd is Northamptonshire-based construction company. =============== X X X X X X X X =============== * S&P Takes Action on 24 European Synthetic CDO Tranches -------------------------------------------------------- Standard & Poor's Ratings Services took credit rating actions on 24 European synthetic collateralized debt obligation (CDO) tranches. For the full list of rating actions, see http://is.gd/H9O6mR "The rating actions are part of our regular monthly review of synthetic CDOs. The actions incorporate, among other things, the effect of recent rating migration within reference portfolios and recent credit events on several corporate entities. Where losses in a portfolio have already exceeded the available credit enhancement or where, in our opinion, it is highly likely that this will occur once final valuations are known, we have lowered our ratings to 'CC' because we consider the likelihood that the noteholders will not receive their full principal to be high, but has not yet happened. For those transactions where our September 2009 criteria are not applicable, we have run our analysis on the appropriate Evaluator models (versions 2.7 and 4.1)," S&P said. "For the transactions where the September 2009 criteria are applicable, our analysis has been run on Evaluator version 6.0. Today's rating actions and the CreditWatch updates follow two reviews. The first review was of the CreditWatch placements made on June 25, 2012," S&P said. "For the second review, we run SROC for scenarios that project the current portfolio 90 days into the future, assuming no asset rating migration. For the transactions run on version 6.0, we have also run the top obligor and industry test SROCs at the current rating level. The "largest obligor default test" assesses whether a CDO tranche has sufficient credit enhancement to withstand specified combinations of underlying asset defaults based on the ratings on the assets. The "largest industry default test" assesses whether the CDO tranche rated 'AAA' to 'AA-' has sufficient credit enhancement to withstand the default of all obligors in the transaction's largest industry. In addition to the supplemental tests, and the Monte Carlo default simulation results, we may consider certain factors such as credit stability and rating sensitivity to modeling parameters when assigning ratings to CDO tranches," S&P said. "We assess these factors case-by-case and may adjust the ratings to a rating level that is different to that indicated by the quantitative results alone. For any tranches which the updated counterparty criteria is applicable to, where our ratings pass SROC and all the applicable supplemental tests but are higher than one rating level above the issuer credit rating of the lowest-rated counterparty to which they are exposed, we have kept them on CreditWatch negative," S&P said. Ratings List Basic Energy Services Inc. Corporate credit rating B+/Stable/-- Upgraded; Revised Recovery Rating To From Senior unsecured notes B+ B Recovery rating 4 5 * Upcoming Meetings, Conferences and Seminars --------------------------------------------- July 14-17, 2012 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton Amelia Island, Amelia Island, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Aug. 2-4, 2012 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay, Cambridge, Md. Contact: 1-703-739-0800; http://www.abiworld.org/ November 1-3, 2012 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Westin Copley Place, Boston, Mass. Contact: http://www.turnaround.org/ Nov. 29 - Dec. 2, 2012 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference JW Marriott Starr Pass Resort & Spa, Tucson, Ariz. Contact: 1-703-739-0800; http://www.abiworld.org/ April 10-12, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference JW Marriott Chicago, Chicago, Ill. Contact: http://www.turnaround.org/ October 3-5, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Wardman Park, Washington, D.C. Contact: http://www.turnaround.org/ ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than US$3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Thursday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/booksto order any title today. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, 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. The TCR Europe subscription rate is US$625 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 240/629-3300. * * * End of Transmission * * *