/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/121024.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Wednesday, October 24, 2012, Vol. 13, No. 212 Headlines F R A N C E YPSO HOLDING: S&P Affirms 'B' Corp. Credit Rating; Outlook Stable G E R M A N Y SUNSTROM GMBH: Former Management Buys Solarwatt AG Subsidiary G R E E C E FREESEAS INC: Had US$20.8-Mil. Net Loss in 1st Half of 2012 * GREECE: U.S. Distressed Debt Investors Eye Hedge Funds I T A L Y WIND TELECOMUNICAZIONI: S&P Puts 'BB-' CCR on Watch Negative K A Z A K H S T A N KAZAKHSTAN ENGINEERING: Moody's Assigns 'Ba2' CFR; Outlook Stable N E T H E R L A N D S CLONDALKIN INDUSTRIES: Moody's Affirms 'B3' CFR; Outlook Negative DECO 14 - PAN EUROPE: S&P Cuts Rating on Class D Notes to 'CCC-' R O M A N I A ROMREAL: Could Default If Alpha Bank Issue Not Addressed R U S S I A ROSBANK: Fitch Affirms 'bb' Viability Rating S E R B I A A N D M O N T E N E G R O NOVA AGROBANKA: Postanska Stedionica to Take Over Assets S P A I N BANKIA SA: Amongs Banks to Obtain EU Approval for Gov't. Bailouts RIVOLI PAN: Moody's Affirms 'Ba3' Rating on Class X Notes * SPAIN: Moody's Downgrades Ratings of Five Regions T U R K E Y FINANSBANK: Fitch Affirms 'BB-' Support Rating Floor U N I T E D K I N G D O M LABELSPRINT: In Administration, Sold in Pre-Pack Deal MANGANESE BRONZE: In Administration After Failing to Secure Cash NATIONWIDE BUILDING: Fitch Affirms 'BB+' Preferred Shares Rating RANGERS FC: Administrators to Tap BDO as Oldco Rangers Liquidator UK COAL: Warns of Liquidation if Restructuring Deal Fails ********* =========== F R A N C E =========== YPSO HOLDING: S&P Affirms 'B' Corp. Credit Rating; Outlook Stable ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on French cable operator Ypso Holding Sarl to stable from negative. "At the same time, S&P affirmed its 'B' long-term corporate credit rating on the group. The outlook revision follows Ypso's successful refinancing of a large part of its 2013-2015 maturities under existing credit facilities with new long-term secured notes. In S&P's view, this second refinancing transaction completed this year, combined with the new set of covenants and new revolving credit facility (RCF) granted in the first half of 2012, has enabled the group to significantly improve its debt maturity profile and financial flexibility. "We also believe the group has preserved a sound free operating cash flow (FOCF) generation capacity despite the rise in its interest costs as it continues to refinance its debt maturities at much higher rates than its existing bank debt. Still, we note positively that Ypso was able to raise the new notes at rates that were more than 300 basis points (bps) tighter than its initial notes issuance in February 2012," S&P said. "We project that Ypso will post low-single-digit revenue growth over the next two years while preserving strong EBITDA margins at just over 50%. We believe the group will capitalize on the growing market penetration of its bundled service offerings-- either directly or as a wholesaler through a 'white-label' business-to-customer wholesale contract. Additionally, triple- play offers may protect and increase revenue streams as subscribers migrate to higher-end offers, and improve customer loyalty," S&P said. "However, we believe the group's growth will remain constrained by considerable customer churn rate as a result of the market's maturity and fierce competition, Ypso's limited network coverage, and significant losses of legacy analog customers," S&P said. "Based on our expectation of a return to sustained moderate FOCF of at least EUR120 million annually from 2013 under our base-case scenario, we anticipate that adjusted gross leverage, excluding shareholder loans, will remain at or above 5.5x over the next two years. Including noncash pay shareholder loans, we expect Ypso's adjusted leverage to remain at or above 8.0x," S&P said. "The rating on Ypso is constrained by our view of the group's financial risk profile as 'highly leveraged,' as our criteria define the term, including aggressive debt leverage, and only moderate FOCF generation. Additional rating weaknesses include the intense competition in the consolidated French telecoms and pay-TV markets, owing to the early, widespread adoption of digital subscriber line technology in France, and the group's somewhat incomplete network coverage," S&P said. "The rating is supported by Ypso's 'adequate' liquidity position, and by what we view as its 'fair' business risk profile, based on its sound market positions and strong profitability. Ypso is one of the leading providers of triple-play services in its franchise areas. We consider that the group's premium network is of superior quality than its competitors' digital subscriber line (DSL) infrastructures, with sizable upgrades to fiber already achieved," S&P said. "The stable outlook reflects our expectation that Ypso will deliver modest sales and EBITDA growth over the next 12 months, despite ongoing fierce competitive pressures in the French fixed- broadband market, and maintain strong profitability and adequate liquidity," S&P said. "It also factors in our view that the group's FOCF will likely rebound to EUR120 million or more from 2013, while remaining highly leveraged. Our ratio of adjusted debt-to-EBITDA for Ypso will likely remain at or above 5.5x excluding shareholder loans or at or above 8.0x including noncash pay shareholder loans, over the next two years," S&P said. "We might consider a negative rating action if a deterioration in business performance led Ypso to record significantly less FOCF generation and covenant headroom than we expect under our base case," S&P said. "We view rating upside as remote at this stage, owing to Ypso's limited prospects for susbtantial FOCF generation growth and deleveraging to below 5.0x, excluding non-cash pay shareholder loans, and below 7.0x including shareholder loans, which could be levels commensurate with a higher rating. At this point we do not forecast that these levels can be reached over the next two years," S&P said. ============= G E R M A N Y ============= SUNSTROM GMBH: Former Management Buys Solarwatt AG Subsidiary ------------------------------------------------------------- Sandra Enkhardt at pv-magazine.com reports that SunStrom GmbH has been saved after former management purchased the company. All remaining jobs are expected to be maintained. According to the report, insolvency administrator Rudiger Wienberg relates that the Solarwatt AG subsidiary has been saved after former managers Reiner Matthees and Stephan Riedel bought SunStrom. The restructuring was made in the context of a "transferred insolvency." As such, business will be carried out under MR SunStrom GmbH. pv-magazine.com relates that Matthees and Riedel have said they will lead the new company, which will continue to deal with the planning and implementation of photovoltaic projects, and service of existing installations. The purchase price was not disclosed, however it was said that all 64 workers will be kept on. SunStrom filed for insolvency at the end of July. On October 1, the district court in Dresden opened insolvency proceedings. More than half of the original 145-strong workforce were handed their notice at the end of September. SunStrom GmbH is a unit of the German solar-power plant developer Solarwatt AG. =========== G R E E C E =========== FREESEAS INC: Had US$20.8-Mil. Net Loss in 1st Half of 2012 ----------------------------------------------------------- FreeSeas Inc. reported a net loss of US$20.8 million on US$8.9 million of operating revenues for the six months ended June 30, 2012, compared with a net loss of US$49.4 million on US$17.1 million of operating revenues for the same period last year. The higher net loss for the six months ended June 30, 2011, resulted primarily from the higher amount of vessel impairment loss of US$47.3 million the Company recognized in the six months ended June 30, 2011, compared to a vessel impairment loss of US$12.5 million the Company recognized in the six months ended June 30, 2012. The Company's balance sheet at June 30, 2012, showed US$120.8 million in total assets, US$104.1 million in total current liabilities, and shareholders' equity of US$16.7 million. According to the regulatory filing, based on the Company's cash flow projections for the remaining of 2012, cash on hand and cash provided by operating activities including the cash to be provided upon the sale of the vessels currently classified as held for sale will not be sufficient to cover scheduled debt repayments as of June 30, 2012, operating expenses and capital expenditure requirements for at least twelve months from the balance sheet date. "All of the above raises doubt regarding the Company's ability to continue as a going concern." In February, March and April 2012, the Company received notifications from Deutsche Bank and First Business Bank that the Company was in default under its loan agreements as a result of the breach of certain covenants and the failure to pay principal and interest due under the loan agreements. On April 26, 2012, the Company was advised by Deutsche Bank that it would approve the request to permanently amend the amortization schedule including refinancing of the balloon due in November 2012. The Company and the bank entered into an amended and restated facility agreement on Sept. 7, 2012. "Although the Company will continue to seek waivers to certain covenants from its remaining lender, FBB, and to restructure the FBB loan, there can be no assurances that the Company will be able to do so." A copy of the consolidated financial statements for the six months ended June 30, 2012, is available at http://is.gd/zu6Jo9 About FreeSeas Inc. Headquartered in Athens, Greece, FreeSeas Inc., formerly known as Adventure Holdings S.A., was incorporated in the Marshall Islands on April 23, 2004, for the purpose of being the ultimate holding company of ship-owning companies. The management of FreeSeas' vessels is performed by Free Bulkers S.A., a Marshall Islands company that is controlled by Ion G. Varouxakis, the Company's Chairman, President and CEO, and one of the Company's principal shareholders. The Company's fleet currently consists of six Handysize vessels and one Handymax vessel that carry a variety of drybulk commodities, including iron ore, grain and coal, which are referred to as "major bulks," as well as bauxite, phosphate, fertilizers, steel products, cement, sugar and rice, or "minor bulks." As of Oct. 12, 2012, the aggregate dwt of the Company's r operational fleet is approximately 197,200 dwt and the average age of its fleet is 15 years. * * * As reported in the TCR on July 18, 2012, Ernst & Young (Hellas) Certified Auditors Accountants S.A., in Athens, Greece, expressed substantial doubt about FreeSeas' ability to continue as a going concern, following its audit of the Company's financial statements for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has incurred recurring operating losses and has a working capital deficiency. "In addition, the Company has failed to meet scheduled payment obligations under its loan facilities and has not complied with certain covenants included in its loan agreements with banks." * GREECE: U.S. Distressed Debt Investors Eye Hedge Funds -------------------------------------------------------- Charles Forelle, Matina Stevis, and Matt Wirz at Dow Jones Newswires report that ever since Greece completed a debt restructuring in March that turned EUR200 billion in bonds into about EUR60 billion, distressed-debt investors -- many at U.S. hedge funds -- have been picking them over. Hedge-fund analysts have flooded Greek finance officials with requests for information, Dow Jones relates. Prices have climbed, Dow Jones notes. Funds that bought over the summer have done well, Dow Jones discloses. Their performance doesn't mean much for Greece itself, Dow Jones says. Some Greek funds and banks have notched gains, but the government is years away from being able to issue new bonds, according to Dow Jones. Indeed, even through the rosiest of rose-colored glasses, Greece looks troubled, Dow Jones states. Almost no one thinks it will emerge from its deep slump any time soon, or even that it will pay back all it owes, Dow Jones says. The bonds are risky and the market small, Dow Jones says. Just 20% of Greece's EUR300 billion in debt is in private hands; the rest is held by the European Central Bank, the International Monetary Fund and the euro-zone governments that have bailed Greece out, Dow Jones discloses. But, the bulls argue, Greek bonds have been so cheap it hardly matters, Dow Jones notes. Even in the case of a debt default, creditors are likely to get a portion of their money back, Dow Jones states. Most worrying for private investors is that European policy makers remain in charge, according to Dow Jones. In the March restructuring, policy makers forced pain on private investors, but didn't cut the face value of their own loans, Dow Jones says. Private investors have better legal protections now, but they aren't in control, Dow Jones states. ========= I T A L Y ========= WIND TELECOMUNICAZIONI: S&P Puts 'BB-' CCR on Watch Negative ------------------------------------------------------------ Standard & Poor's Ratings Services placed its ratings, including its 'BB-' corporate credit rating, on Wind Telecomunicazioni SpA, Italy's second largest integrated alternative telecommunications operator, on CreditWatch with negative implications. "The recovery rating on the senior secured facilities and notes is unchanged at '2', indicating our expectation of substantial (70%-90%) recovery in the event of a payment default," S&P said. "The recovery ratings on Wind's third-lien (high-yield) notes and subordinated payment-in-kind (PIK) notes remain unchanged at '4' and '6', indicating our expectation of average (30%-50%) and negligible (0%-10%) recovery for noteholders in the event of a payment default," S&P said. "The CreditWatch placement follows Wind's announcement that it has approached its senior facilities lenders with a request to amend the loans' covenants, which were set in 2010. The CreditWatch reflects the likelihood that we could lower the rating on Wind if the company is unable to increase the headroom on its covenants. We have therefore changed our assessment of Wind's liquidity profile to 'less than adequate.' However, in our base-case scenario, we assume that Wind will either succeed with the proposed amendments, or get support from its shareholder, VimpelCom Ltd. (BB/Stable/--). The CreditWatch placement also reflects a possibility of a one-notch downgrade if we see no potential for improvement in Wind's capital structure over the medium term," S&P said. "The tightening headroom on the covenants resulted, among other factors, from the higher than originally anticipated Long-Term Evolution (LTE) spectrum investments and more steep mobile termination rates (MTR) cuts, as well as tougher overall conditions in the Italian telecoms market. However, given that Wind continues to outperform the Italian telecoms market and deliver positive earnings growth excluding the impact of regulatory actions, we view the possibility of the lenders requiring early repayment of the loans as relatively low. We also believe that if Wind does not receive consent from the lenders, it has some short-term flexibility to comply with the existing covenants through internal cash flow management, or VimpelCom may provide it with some sort of support in order to avoid a covenant breach," S&P said. "We intend to resolve the CreditWatch within the next 90 days. We will reassess the company's liquidity position depending on the outcome of the covenant amendment process. We could lower the rating on Wind by one or more notches if the company does not get the required amendments, as it would face a significant risk of covenant breach in 2013," S&P said. "We will also review the company's revised business plan and reassess the sustainability of the company's capital structure and its improvement potential. Given our anticipation of limited prospects for deleveraging on a stand-alone basis because of relatively weak free cash flow generation over the next 18 months, a one-notch downgrade remains possible regardless of the outcome of the covenant amendment process," S&P said. =================== K A Z A K H S T A N =================== KAZAKHSTAN ENGINEERING: Moody's Assigns 'Ba2' CFR; Outlook Stable ----------------------------------------------------------------- Moody's Investors Service has assigned a Ba2 corporate family rating (CFR) and probability of default rating (PDR), as well as a Baa1.kz national scale rating (NSR), to JSC NC Kazakhstan Engineering. Concurrently, Moody's has assigned a (P)Ba2 rating, with a loss given default (LGD) assessment of LGD4/59%, to the proposed KZT15 billion three-year domestic bond to be issued by Kazakhstan Engineering. The outlook on all ratings is stable. This is the first time Moody's has assigned a rating to Kazakhstan Engineering. Ratings Rationale As Kazakhstan Engineering is fully owned by the Government of Kazakhstan through the National Welfare Fund Samruk-Kazyna, Moody's applies its rating methodology for government-related issuers (GRIs) in determining the group's CFR. According to this methodology, the CFR is driven by a combination of (1) Kazakhstan Engineering' baseline credit assessment (BCA) of b2; (2) the Baa2 local currency rating of the Kazakh government; (3) the very high default dependence between the group and the government; and (4) the strong probability of provision of state support to the group in the event of financial distress. Kazakhstan Engineering's assigned b2 BCA reflects the group's (1) small size, with expected revenue of $380 million as of end-2012; (2) lack of track record of operating and financial performance under the new process of contracting state orders, which is to be implemented at the end of 2012; (3) significant customer concentration, with 78% of 2011 revenues derived from state orders and sales to state-controlled companies, which, however, provides for some revenue stability; (4) low market share in the civil segment; (5) lack of geographical diversification, as a predominant portion (around 90%) of the group's revenue is generated from domestic sales; and (6) overall exposure to an emerging market operating environment with a less developed regulatory, political and legal framework. At the same time, the BCA factors in Kazakhstan Engineering's (1) monopoly position in the Kazakh defense machinery industry; (2) favorable conditions enjoyed by the group in terms of processing state orders, as up to 75% of payments are received in advance; (3) status as a preferred supplier for large state-controlled customers, such as national monopolies KazMunayGas NC JSC (KMG) and Kazakhstan Temir Zholy (KTZ) in the civil segment, based on the regulations prescribing that national companies purchase not less than 60% of machinery and equipment from domestic suppliers; (4) moderate supplier concentration, with no supplier representing more than a 10% share of the group's total purchases; (5) moderate expected leverage of 2.9x debt/EBITDA as of end-2012; (6) adequate liquidity, supported by planned equity injections from the sole shareholder; and (7) low foreign currency risk, as all the group's debt is denominated in the Kazakhstani tenge. Moody's assesses the default dependence between the Kazakh government and Kazakhstan Engineering as very high given that (1) a 90% portion of the group's revenues are derived from domestic sales; and (2) 62% of its total revenues come from the state orders. The rating agency assesses the probability of support from the government as strong on account of (1) Kazakhstan Engineering's importance to state security; (2) the absence of domestic competitors in the Kazakh defense segment; and (3) the fact that the government provides equity injections and low interest rate loans to Kazakhstan Engineering through Samruk-Kazyna to finance the group's projects. The rating assigned to the proposed bond is equivalent to Kazakhstan Engineering's CFR, reflecting Moody's assumption that the bond will rank pari passu with the other unsecured and unsubordinated financial debt of Kazakhstan Engineering group. Moody's notes that Kazakhstan Engineering group currently has a significant amount of secured debt located at the level of operating companies. The rating agency's assumption of the unsubordinated nature of the proposed bond is based on its expectation that the group will repay most of its operating companies' debt including all the secured debt, with the proceeds from the bond placement, and will raise any new debt on an unsecured basis and at the holding company level going forward. Following the successful placement of the bond, the group will have no secured debt or debt that is more senior to the bond. The stable outlook on Kazakhstan Engineering's ratings incorporates Moody's expectation that (1) the Kazakh government will continue to support the group; (2) domestic demand for the group's products will remain stable; and (3) the group will maintain debt/EBITDA of less than 3.5x and maintain adequate liquidity. What Could Change The Rating Up/Down Moody's does not envisage positive pressure being exerted on the ratings in the next 12-18 months. However, the rating agency could consider upgrading Kazakhstan Engineering's ratings by one notch if the group were to build a track record of maintaining a strong financial profile over time, while materially increasing the scale of its business. Negative pressure could be exerted on the ratings if (1) Kazakhstan Engineering's debt/EBITDA were to increase above 3.5x on a sustainable basis; or (2) its liquidity were to deteriorate materially. A one-notch downgrade of the sovereign rating would not in itself trigger a downgrade of Kazakhstan Engineering's ratings, provided that all the other GRI inputs remain unchanged. Principal Methodology The principal methodology used in rating Kazakhstan Engineering was the Global Aerospace and Defense Industry Methodology published in June 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009 and the Government-Related Issuers: Methodology Update published in July 2010. JSC NC Kazakhstan Engineering is a state-controlled holding company consolidating the defense, machinery and engineering enterprises in Kazakhstan. The group executes around 75% of state defense orders and produces around 10% of machinery products in Kazakhstan. The group is 100% owned by the Kazakhstan National Welfare Fund Samruk Kazyna and managed by the Kazakhstan Ministry of Defence. In 2011, Kazakhstan Engineering generated revenue of $229 million. 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 ".mx" for Mexico. ===================== N E T H E R L A N D S ===================== CLONDALKIN INDUSTRIES: Moody's Affirms 'B3' CFR; Outlook Negative ----------------------------------------------------------------- Moody's Investors Service affirmed Clondalkin Industries B.V.'s B3 Corporate Family Rating and Probability of Default Rating as well as the B2 rating on the group's senior secured floating rate notes issued by Clondalkin Acquisition B.V. and the Caa2 rating on its senior notes. Concurrently, the outlook on all ratings was changed to negative from stable. Ratings Rationale The outlook change to negative from stable reflects uncertainty regarding a timely refinancing of the group's significant debt maturities which are due in December 2013 and March 2014 and represent all of the Group's debt financing arrangements. Clondalkin's operating profitability in 2012 continues to be challenged by weak macroeconomic environment demand conditions in Europe and supply chain challenges in North America. These have prompted a slower than expected recovery in operating performance in 2012 despite incremental profitability from its recent printed components acquisition and benefits from synergies and restructuring measures. With high net leverage point in time at close to 6x on a reported basis (6.4x on a Moody's as adjusted basis and 7.4x on a gross debt basis), Moody's cautions that Clondalkin could be challenged to implement a successful refinancing, despite currently benign high yield capital market conditions. Moody's understands that management is currently pursuing alternatives to expand the refinancing possibilities, including the disposal of certain parts of the business and introducing new asset based borrowing arrangements such as receivables securitization. Moody's awaits prompt completion of these various actions; which inevitably have associated market execution risks as to value and timing, as they are necessary elements to a successful refinance. Moody's continues to recognize Clondalkin's solid business profile, benefitting from its good substrate diversity, its strong market position in several niche markets with solid geographical diversification, its continued high level of asset efficiency, and its ability to generate meaningful positive free cash flows on a sustainable basis, as evidenced by a FCF/debt ratio of 5.8% per June 2012 on a rolling twelve months basis. In addition, short-term liquidity remains ample with EUR84 million of cash on hand as of June 2012, access to an undrawn EUR19 million revolving facility and a history of positive free cash flow generation, although cash generated has in the past been spent on acquisitions. The rating could be further downgraded absent progress in securing cash proceeds from alternative measures such as asset disposals and/or securitization or other measures to support a refinancing over the coming months. In addition, the inability to gradually improve operating profitability could result in further negative rating actions. A stabilization of the outlook requires visibility on Clondalkin's execution of an orderly refinancing, including the application of some of its cash balance to reduce debt in case of a refinancing exercise, which would lead to a reduction in gross leverage, coupled with a recovery in operating profitability, that would leave Clondalkin with a solid liquidity position and a more sustainable financial profile, as evidenced by Debt/EBITDA clearly below 7x. Outlook Actions: Issuer: Clondalkin Industries B.V. Outlook, Changed To Negative From Stable Issuer: Clondalkin Acquisition BV Outlook, Changed To Negative From Stable Adjustments: Issuer: Clondalkin Industries B.V. Senior Unsecured Regular Bond/Debenture, Downgraded to LGD6, 90% from LGD5, 89% The principal methodology used in rating Clondalkin was the Global Packaging Manufacturers: Metal, Glass, and Plastic Containers Industry Methodology, published June 2009. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Clondalkin is among the leading converters for a number of niche packaging products. In the last twelve months ending June 2012, the company recorded sales of EUR950 million, which were generated in Europe (68%) and North America (32%). Clondalkin Industries B.V., which is owned by Warburg Pincus Funds and management, is domiciled in Amsterdam, Netherlands. DECO 14 - PAN EUROPE: S&P Cuts Rating on Class D Notes to 'CCC-' ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its credit ratings on DECO 14 - Pan Europe 5 B.V.'s class A-1, A-2, A-3, B, C, and D notes. "At the same time, we have affirmed our ratings on the class E, F, and G notes," S&P said. "The rating actions follow the interest shortfall that occurred on the class D, E, F, and G notes on the July 2012 interest payment date (IPD), and reflect our assessment of the issuer's ability to pay interest on all classes of notes on future IPDs," S&P said. "According to the July 2012 cash manager report, the class D, E, F, and G notes experienced interest shortfalls. Although the existing interest shortfall on the class D notes is, in our view, minor, we believe that the risk of additional interest shortfalls on this class has increased. In our opinion, the issuer's ability to service the senior classes of notes will likely deteriorate, given the upcoming refinancing of some of the loans within the next 12 to 18 months and the transaction's cash flow mechanics. In light of these factors, we now believe that the senior classes of notes have become more vulnerable to future cash flow disruptions," S&P said. "We understand that the excess spread, which is distributed to the class X notes, is not available to mitigate interest shortfalls resulting from partial interest collections on the underlying loan pool or from the payment of certain prior-ranking expenses. The issuer relies on the liquidity facility to address timely payment of interest on the notes. However, the transaction documents indicate to us that the liquidity facility is not available to cover interest shortfalls under the notes, if such shortfalls have resulted from," S&P said: Extraordinary expenses payable to the transaction parties (e.g., special servicing fees, special servicing expenses, or certain payments due to the liquidity facility provider); or The reduction of liquidity facility drawings, if required to meet interest shortfalls under any of the loans, following the determination of an appraisal-reduction amount (the appraisal-reduction mechanism prevents drawings on the portion of the securitized loans that represents more than 90% or 98% of the securitized loan). "The rating actions have not resulted from a change in our opinion of the probability of default and likely recovery prospects of the remaining pool of loans backing the transaction. Our ratings in this transaction address timely payment of interest, payable quarterly in arrears, and payment of principal not later than the legal final maturity date in October 2016," S&P said. "We have therefore lowered to 'CCC- (sf)' from 'B+ (sf)' our rating on the class D notes," S&P said. "We have also lowered our ratings on the class A1, A2, A3, B, and C notes as we believe that these classes of notes are now more vulnerable to interest shortfalls. Further rating actions would be likely if further interest shortfalls occur," S&P said. "The class E, F, and G notes, which have already experienced interest shortfalls on previous payment dates, are rated 'D (sf)'. We have affirmed our ratings on these classes of notes," S&P said. "DECO 14 - Pan Europe 5 is a pan-European commercial mortgage- backed securities (CMBS) transaction that closed in March 2007, and is currently secured on 12 pan-European commercial real estate loans," S&P said. 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," S&P said. "As highlighted in our Nov. 8, 2011 Advance Notice Of Proposed Criteria Change, our review may result in changes to the methodology and assumptions that we use when rating European CMBS. Consequently, it may affect both new and outstanding ratings in European CMBS transactions," S&P said. "On Sept. 5, 2012, we published our updated criteria for CMBS property evaluation. These criteria do not significantly change our longstanding approach to deriving property net cash flows and values in European CMBS transactions. We do not expect any rating action in Europe as a result of adopting these criteria," S&P said. "However, because of its global scope, our criteria for global CMBS property evaluation do not include certain market-specific adjustments. We will therefore publish an application of these criteria to European CMBS transactions along with our updated criteria for rating European CMBS," S&P said. "Until such time that we adopt updated criteria for rating European CMBS, we will continue to rate and monitor these transactions using our existing criteria," S&P said. STANDARD & POOR'S 17G-7 DISCLOSURE REPORT SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating relating to an asset-backed security as defined in the Rule, to include a description of the representations, warranties and enforcement mechanisms available to investors and a description of how they differ from the representations, warranties and enforcement mechanisms in issuances of similar securities. The Rule applies to in-scope securities initially rated (including preliminary ratings) on or after Sept. 26, 2011. If applicable, the Standard & Poor's 17g-7 Disclosure Report included in this credit rating report is available at: http://standardandpoorsdisclosure-17g7.com RATINGS LIST Class Rating To From DECO 14 - Pan Europe 5 B.V. EUR1.491 Billion Commercial Mortgage-Backed Floating-Rate Notes Ratings Lowered A-1 A- (sf) A (sf) A-2 BBB+ (sf) A (sf) A-3 BBB (sf) A (sf) B BB (sf) BBB+ (sf) C B- (sf) BBB (sf) D CCC- (sf) B+ (sf) Ratings Affirmed E D (sf) F D (sf) G D (sf) ============= R O M A N I A ============= ROMREAL: Could Default If Alpha Bank Issue Not Addressed -------------------------------------------------------- RomReal provided updates on its "serious financial situation." The Company has a bullet loan of EUR11.6 million with Alpha Bank in Romania which matures on November 30, 2012. All interest on this loan up to maturity has been pre-paid in advance, but the principal payment will become due on the maturity date. The Company does not have sufficient cash to make this payment, or any significant down-payment, as it has been very difficult to divest assets during the severe downturn in Romanian real-estate market. RomReal's management is currently in ongoing discussions with Alpha Bank regarding a restructuring of the loan, but no agreement has been reached at this stage. The Management therefore wants to inform that the Company could enter in a default situation very soon if a solution with Alpha Bank is not found in time. The Management of the Company has over the years put a substantial effort into reducing the operating costs of the company to adjust to the difficult market environment and secure cash to service payments on the loan and the Company's ongoing operating expenses. The Company will need to implement additional significant cost savings to ensure that there is sufficient working capital to fund its operations going forward. If a solution is reached with Alpha Bank on viable terms, it is likely that a capital raising from the shareholders, possibly through a rights issue, will be needed to fund the Company's operations going forward. The details of such capital raising will be very dependent on the potential terms of the loan restructuring and the Company will therefore inform about further details on such a possible issue once the situation with Alpha Bank becomes clearer. As the Company has disclosed in its previous quarterly statements, the Romanian real estate market is in a severe downturn with very few transactions taking place in the residential segment which is the focus area of the Company's assets. Bank financing of both construction and mortgages in Romania has almost come to a halt. On this background, the Board is of the opinion that the external valuation of the Company's assets carried out by the independent valuation firm in connection with the 2012 year-end audit, could lead to further reductions in the valuations of the Company's assets and hence a reduction in the IFRS based NAV. RomReal is a leading Romanian real estate investment company, listed on the Oslo Stock Exchange. =========== R U S S I A =========== ROSBANK: Fitch Affirms 'bb' Viability Rating -------------------------------------------- Fitch Ratings has assigned Rosbank's (RB) RUB10 billion issue of BO-4 senior unsecured bonds with a final maturity in September 2015 and a two-year put option, a final Long-term local currency rating of 'BBB+' and National Long-term rating of 'AAA(rus)'. RB has a Long-term foreign and local currency Issuer Default Rating (IDR) of 'BBB+' with a Stable Outlook, a National Long- term rating of 'AAA(rus)' with a Stable Outlook, a Short-term foreign currency IDR of 'F2', a Viability Rating of 'bb', and a Support Rating of '2'. ========================================= S E R B I A A N D M O N T E N E G R O ========================================= NOVA AGROBANKA: Postanska Stedionica to Take Over Assets -------------------------------------------------------- Gordana Filipovic and Misha Savic at Bloomberg News report that Serbia's Postanska Stedionica Banka AD will take over the assets of Nova Agrobanka. According to Bloomberg, the government in the capital Belgrade said in an e-mailed statement on Monday that the Cabinet will submit to parliament a draft law on the transfer of so-called problematic bank assets to the state. Bloomberg relates that Finance Minister Mladjan Dinkic said, "The decision is designed to preserve financial stability," adding that the transaction will expand Postanska's assets to "more than one billion euros." The government decided to shut down Nova Agrobanka, set up in May as a "bridge bank" after the collapse of Agrobanka AD, leaving the government time to work out a permanent solution, Bloomberg recounts. Authorities fired Agrobanka's management on Dec. 29 and placed it in receivership after inspectors discovered its capital didn't match the risk it had assumed, Bloomberg discloses. Agrobanka, in which the government held a 20% stake, had an unaudited 2011 loss of RSD29.7 billion (US$311.4 million) following a full-year pretax profit of RSD1.18 billion in 2010 and a loss of 2.27 billion dinars at the end of September 2011, Bloomberg notes. The central bank revoked Agrobanka's license on May 26, Bloomberg states. Saving Nova Agrobanka, which is both "illiquid and insolvent," would have cost Serbia "at least EUR230 million (US$300.2 million) and that's irrational," Mr. Dinkic, as cited by Bloomberg, said. Nova Agrobanka held a total of EUR400 million in insured and non- insured savings and other deposits, Bloomberg discloses. Bloomberg notes that Mr. Dinkic said it has been making a loss of "two million euros per month" after the previous government also transferred some "problematic credits". Bloomberg relates that Mr. Dinkic said Agrobanka's minority shareholders will have "all the rights according to Serbia's bankruptcy law". Minority shareholders, who announced plans for a legal action against Serbia, said on Oct. 19 they would "continue with legal activities to regain expropriated property" the value of which they put at EUR70 million, Bloomberg notes. Agrobanka AD is a commercial bank. The Bank offers retail and corporate services in loans for current agricultural productions, such as cattle and plant production, farming machinery, food processing, delivery vehicles, and other agricultural operations. ========= S P A I N ========= BANKIA SA: Amongs Banks to Obtain EU Approval for Gov't. Bailouts ----------------------------------------------------------------- Aoife White at Bloomberg News reports that EU Competition Commissioner Joaquin Almunia said Bankia and three other Spanish lenders will win European Union approval for government bailouts by the end of November. "The Bank of Spain, the Commission and the management of the four entities have been working on their restructuring plans during the summer, and the commission will take a decision approving them by the end of November," Bloomberg quotes Mr. Almunia as saying. Bloomberg relates that Mr. Almunia said restructuring plans for Spanish banks that received help may need to make balance-sheet reductions and accept bans on acquisitions or price leadership. He said the balance sheet reductions may be caused by the transfer of impaired assets to Spain's bad bank, called SAREB, Bloomberg notes. Banks that receive government support require EU approval for the aid and must draw up restructuring plans that may require them to sell units or accept curbs on their business to compensate for the advantage the state aid gives them over rivals, Bloomberg discloses. According to Spanish plans, "the whole Spanish financial system will be fully capitalized by mid-2013 at the latest," Mr. Almunia, as cited by Bloomberg, said. Mr. Almunia said the banks can seek government funding if they aren't able to obtain private capital by the end of June 2013, Bloomberg notes. Bankia SA is a Spain-based financial institution principally engaged in the banking sector. The Bank represents a universal banking business model based on multi-brand and multi-channel management, offering its products and services to various customer segments, such as individuals, small and medium enterprises, large corporations, as well as public and private institutions. The Company's business is structured into seven areas: Retail Banking, Business Banking, Private Banking, Asset Management and Bancassurance, Capital Markets and Holdings. RIVOLI PAN: Moody's Affirms 'Ba3' Rating on Class X Notes --------------------------------------------------------- Moody's Investors Service has confirmed the Baa3(sf) rating of the Class A notes issued by Rivoli Pan Europe 1 plc following the confirmation of the Government of Spain's government bond rating at Baa3. The rating action concludes the review for possible downgrade initiated by Moody's on June 19, 2012. At the same time, Moody's affirmed the rating of the Class X notes at Ba3(sf) because the current rating already incorporates the updated risk assessment of the underlying pool. Moody's does not rate the Class B and C notes issued by Rivoli Pan Europe 1. - RATING CONFIRMED EUR413M Class A Notes, Confirmed at Baa3 (sf); previously on Jun 19, 2012 Downgraded to Baa3 (sf) and Placed Under Review for Possible Downgrade - RATING AFFIRMED X Notes, Affirmed at Ba3 (sf); previously on Aug 22, 2012 Downgraded to Ba3 (sf) Ratings Rationale The confirmation at Baa3(sf) of the Class A notes issued by Rivoli Pan Europe 1 plc reflects the confirmation of the Government of Spain's government bond rating at Baa3 and the assignment of a negative outlook. Moody's rating of the Class A notes incorporates the risk that the factors driving the Spanish sovereign rating will lead to a significant and uniform deterioration in asset performance. In particular, the default probabilities of the underlying loans at loan maturity are driven by constrained commercial real estate lending and low investor demand for assets in Spain. Under Moody's highly adverse scenario, the rating agency assumes that the two loans secured by properties located in Spain, the Parque Principado and the Santa Hortensia Loans (approximately 60% of the pool balance) will default and the underlying properties will be sold only at severely distressed values. Given the confirmation of the Spanish government bond rating, the probability of such a scenario occurring has not increased in likelihood and has, therefore, led Moody's to confirm the rating of the Class A notes. As part of its review of the Class A notes, Moody's also reviewed the performance of the remaining two loans in the pool that are not backed by collateral in Spain: The Rive Defense Loan (21% of the pool) and the Blue Yonder Loan (19% of the pool). The performance of the Blue Yonder Loan is in line with Moody's expectations. Moody's has stressed its refinancing risk assessment of the Rive Defense Loan given the non-payment of the loan on its scheduled maturity date in July 2012 and the six- month loan extension that has been granted. The current rating of the Class A notes reflects the reassessment of these loans combined with the risk assessment associated with the loans backed by collateral in Spain. Rating Methodology The principal methodologies used in the ratings were "Moody's Approach to Real Estate Analysis for CMBS in EMEA: Portfolio Analysis (MoRE Portfolio)" (April 24, 2006) and "Moody's Approach to Rating Structured Finance Interest-Only Securities" (February 22, 2012). Other factors used in this rating are described in "European CMBS: 2012 Central Scenarios" (February 9, 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. On August 21, 2012, Moody's released a Request for Comment seeking market feedback on proposed adjustments to its modelling assumptions. These adjustments are designed to account for the impact of rapid and significant country credit deterioration on structured finance transactions. If the adjusted approach is implemented as proposed, the rating of the notes affected by the rating action may be negatively affected. * SPAIN: Moody's Downgrades Ratings of Five Regions --------------------------------------------------- Moody's Investors Service has downgraded by one or two notches the ratings assigned to five Spanish regions -- Andalucia, Extremadura, Castilla-La Mancha, Catalunya, and Murcia. At the same time, Moody's has confirmed the ratings of the Basque Country and the Diputacion Foral de Bizkaia at Baa2, one notch above the sovereign bond ratings. In addition, the ratings of the regions of Madrid, Castilla y Leon and Galicia have also been confirmed at Baa3, on par with the sovereign ratings. Finally, the ratings of the region of Valencia and of four government- related entities in Valencia have been confirmed at B1. Further to these rating actions, all affected regions carry negative outlooks in line with the negative outlook carried by the Baa3 sovereign bond rating of the Government of Spain. The rating actions conclude the review for downgrade that Moody's initiated on June 15, 2012. A detailed list of the issuers and ratings affected by this rating action is provided at the end of this press release. Ratings Rationale - RATIONALE FOR THE DOWNGRADES -- REGIONS OF ANDALUCIA, CASTILLA LA MANCHA, CATALUNYA, MURCIA Moody's decision to downgrade the ratings of the four Spanish regions of Andalucia (to Ba2 from Baa3), Castilla-La Mancha (to Ba3 from Ba2), Catalunya (to Ba3 from Ba1) and Murcia (to Ba3 from Ba1) was driven by the deterioration in their liquidity positions, as evidenced by their very limited cash reserves as of September 2012 and their significant reliance on short-term credit lines to fund operating needs. In addition, Catalunya, Andalucia and Murcia face large debt redemptions in Q4 2012 when retail bonds issued in 2011 are due to mature. In this context, five regions -- namely, Catalunya, Andalucia, Murcia, Valencia and Castilla La Mancha -- have already requested liquidity support from the Fondo de Liquidez Autonomico (FLA) to cover their financing needs in the second half of 2012. While the FLA greatly reduces the risk of a region's liquidity driven default in the short term, it does not address their fundamental economic and financial weaknesses, namely: (1) the significant uncertainty regarding viable long-term funding alternatives, and the resulting considerable reliance on government funding; and (2) the regions' significant difficulties in controlling their deficit and debt trajectories in an economic environment in which the implementation of cost-cutting measures to redress the regions' structural deficits will likely take longer than expected. Thus, Moody's assesses the standalone creditworthiness (Baseline Credit Assessment or BCA) of regions having requested FLA funding as being very weak, reflecting Moody's view that these regions would have serious difficulties in meeting debt obligations without it. The very low BCAs also reflect Moody's view that these regions, faced with persistent fiscal challenges and weak liquidity positions, will need to seek further external support in the next year. At the same time, their ratings incorporate Moody's assessment of a heightened likelihood of government support, as corroborated by the central government's track record of support over the last few months, which partially offsets the very weak standalone creditworthiness. -- REGION OF EXTREMADURA Moody's decision to downgrade Extremadura's rating by one notch to Ba1 from Baa3 reflects the region's persistently high operating deficits and its weak liquidity position. While the savings measures that the region is currently implementing will help lower the deficit from the 4.59% recorded in 2011, poor budget results in H1 2012 suggest that Extremadura will likely miss the deficit target by a wide margin. Moreover, Moody's assesses the region's liquidity position as being weak, as evidenced by its extensive use of short-term credit lines. While Extremadura has limited refinancing needs in 2012, its large deficit expected in 2012 will result in significant borrowing needs (EUR494 million, or 13% of its operating revenue), for which it has only been able to secure EUR56 million to date. -RATIONALE FOR RATINGS CONFIRMATION -- THE BASQUE COUNTRY AND THE PROVINCE OF BIZKAIA Moody's decision to confirm the Baa2 ratings of the Basque Country and the province of Bizkaia reflects the confirmation of the sovereign bond ratings on October 16, 2012 as well as their unchanged fiscal and financial positions since their downgrade on June 15, 2012. The unique and constitutionally protected tax regime of the Basque Country and the province of Bizkaia currently allows them to retain enough credit strength to maintain their ratings one notch above that of the sovereign. In addition, their limited borrowing needs in 2012 and 2013 as well as their comfortable liquidity positions limit the impact of difficult market conditions on their financial performances. -- REGIONS OF CASTILLA Y LEON, GALICIA AND MADRID The rating agency's decisions to confirm the Baa3 regions of Castilla y Leon, Galicia and Madrid also reflects the confirmation of the sovereign bond ratings on October 16, 2012 and the regions' unchanged fiscal and financial positions since their downgrade on June 15, 2012. Although the three regions have reported stronger financial performances than other Moody's-rated Spanish regions throughout the crisis, the rating agency notes that their income stream largely relies on state transfers and shared taxes with the sovereign, thus capping their ratings at the level of the sovereign rating. -- REGION OF VALENCIA Moody's decision to confirm Valencia's B1 debt rating reflects the fact that the region's high debt ratios and tight liquidity position are already reflected in the region's non-investment- grade rating, currently the lowest amongst Moody's-rated regions in Spain. Valencia has a high level of amortizations remaining before December 2012, which, combined with its low cash on hand and extensive use of its credit line facilities, forced the region to request liquidity support from the sovereign through the FLA. This follows a request for financing support in December 2011, subsequent to the region's difficulties in refinancing its retail bond maturing at that time. While Moody's views the region's consolidation efforts outlined in its restructuring plan positively, the region is likely to miss the deficit target of 1.5% of regional GDP in 2012. What Could Move The Ratings Up/Down A stabilization of the outlooks or an upgrade of the ratings would require (1) the stabilization or upgrade of the sovereign rating; and (2) successful plans from the regional administrations to restore their fiscal performances and reverse debt ratios. Any further deterioration in the operating environment in Spain that would exert pressure on the sovereign rating would also have a negative impact on the ratings of Spanish sub-sovereigns. In addition, any sign of weakening government support would be a credit-negative factor. Finally, a failure of any individual sub- sovereign to progress towards fiscal consolidation targets would add pressure to that specific rating. Ratings Affected The ratings of the following five regions have been downgraded: - Junta de Extremadura: long-term issuer rating downgraded by one notch to Ba1 from Baa3; negative outlook; - Junta de Andalucia: long-term issuer and debt ratings downgraded by two notches to Ba2 from Baa3; negative outlook; - Comunidad Autonoma de Murcia: long-term issuer and debt ratings downgraded by two notches to Ba3 from Ba1; negative outlook; - Castilla-La Mancha: long-term issuer and debt ratings downgraded by one notch to Ba3 from Ba2; negative outlook; - Catalunya: long-term issuer and debt ratings downgraded by two notches to Ba3 from Ba1; negative outlook; short-term rating affirmed at Not-Prime; The ratings of the following regions or entities have been confirmed: - Basque Country: long-term issuer and debt ratings confirmed at Baa2; negative outlook; - Diputacion Foral de Bizkaia: long-term issuer rating confirmed at Baa2; negative outlook; - Comunidad Autonoma de Madrid: long-term issuer rating confirmed at Baa3; negative outlook; - Junta de Castilla y Leon: long-term issuer and debt ratings confirmed at Baa3; negative outlook; - Comunidad Autonoma de Galicia: long-term issuer rating confirmed at Baa3; negative outlook; - Region of Valencia: debt ratings confirmed at B1; negative outlook; short-term rating affirmed at Not-Prime; - Instituto Valenciano de Finanzas: debt rating confirmed at B1, negative outlook, in line with Valencia's ratings; - Notes of CACSA and Universities of Valencia (Universidad de Valencia, Universidad de Alicante, Universidad Jaume 1 de Castellon and Universidad Polit�cnica de Valencia) confirmed at B1, negative outlook; - Notes of Feria Valencia: underlying rating confirmed at B1, negative outlook (A and B Certificates). Principal Methodologies The methodologies used in these ratings were "Regional and Local Governments Outside the US" published in May 2008, and "The Application of Joint-Default Analysis to Regional and Local Governments" published in December 2008. Moody's methodology for rating a security insured by a financial guarantor considers the higher of (i) the guarantor's rating, and (ii) the underlying rating of the security. =========== T U R K E Y =========== FINANSBANK: Fitch Affirms 'BB-' Support Rating Floor ---------------------------------------------------- Fitch Ratings has assigned Finansbank's forthcoming medium-term issue of senior unsecured bonds an expected rating of 'BBB-(EXP)'. The expected rating is in line with Finansbank's Long-term foreign currency Issuer Default Rating (IDR), which is driven by the bank's intrinsic financial strength, measured by the Viability Rating (VR). Despite on-going problems, Finansbank has not been affected by National Bank of Greece (NBG) or Greek- related contagion. NBG (Long-term IDR 'CCC'; VR 'f') controls 94.8% of Finansbank. Finansbank's franchise is well established, particularly within Turkey's dynamic retail banking sector. Management has demonstrated its ability to respond quickly to business cycle changes, while delivering solid profitability, and financial ratios are sound. Finansbank is Turkey's fifth largest private bank with a domestic deposit share of around 4.5%. Finansbank is rated as follows: -- Long-term foreign and local currency IDRs 'BBB-', with Stable Outlooks -- Short-term foreign and local currency IDR 'F3' -- Viability Rating 'bbb-' -- Support Rating '3' -- Support Rating Floor affirmed at 'BB-' -- National Long-term Rating 'AAA(tur)' with Stable Outlook -- Senior unsecured bonds assigned an expected rating of 'BBB- (EXP)' =========================== U N I T E D K I N G D O M =========================== LABELSPRINT: In Administration, Sold in Pre-Pack Deal ----------------------------------------------------- Labels and Labeling reports that Labelsprint was sold in a prepack deal after falling into administration. Kevin Murphy and Andrew Poxon of Leonard Curtis Recovery were appointed on September 13. Labelsprint production manager Gwyn Williams registered a new company, JWS Print, with Companies House on August 22 - less than a month before Labelsprint went into administration, according to Labels and Labeling. The report notes that Labels and Labeling said that in his new role as director of JWS, Williams said: "JWS has taken on all the assets and goodwill of Labelsprint and continues to trade, as a going concern, under the same name." "We have had some difficulties and we have had to take some decisive and difficult actions to restructure our business for the future . . . . Reports of our death have been greatly exaggerated," the report quoted Gavin Scott, managing director of Labelsprint, as saying. The report adds that Mr. Scott will still be involved in the new company but his role is undecided as yet. Labelsprint is a Welsh digital label producer. MANGANESE BRONZE: In Administration After Failing to Secure Cash ---------------------------------------------------------------- The Washington Post Business reports that Manganese Bronze said it was going into administration after failing to secure an injection of cash from one of its largest shareholders. Manganese has been losing money for years, hit both by Britain's economic downturn and stiff rivalry from vehicles such as the Vito, made by Mercedes, an arm of German car giant Daimler AG, according to The Washington Post Business. The report relates that Manganese Bronze launched its latest model, the TX4, in 2006, but a defect in the taxi's steering system recently forced it into a recall -- a damaging move which contributed to the company's woes. The report notes that the company had been in talks about a cash injection with Chinese company Geeley, which already owns a 20% stake. The Washington Post Business says that Manganese said in a statement that a "speedy resolution" of the product recall remained a top priority for the group, which would continue to operate throughout the administration process. Manganese Bronze is the maker of London's famous black cabs. NATIONWIDE BUILDING: Fitch Affirms 'BB+' Preferred Shares Rating ---------------------------------------------------------------- Fitch Ratings has affirmed Nationwide Building Society's (Nationwide) Long-term Issuer Default Rating (IDR) at 'A+' with a Negative Outlook and Viability Rating (VR) at 'a+'. Fitch has also affirmed Santander UK plc's (San UK) Long-term IDR at 'A' with a Stable Outlook, and VR at 'a'. The affirmations reflect both entities' strong franchise in the UK mortgage and savings markets, the low risk profile of their large and well performing mortgage portfolios, their stable deposit bases and their strong liquidity reserves. Profitability in the UK banking and building society sector remains weak, mostly because of revenue pressures in a low interest rate environment combined with a weak demand for credit. These pressures are expected to ease somewhat following the introduction of the UK government's Funding for Lending Scheme (FLS), which Fitch expects to result in the release of some excess liquidity reserves as well as a reduction in overall funding costs, and hence easing margin pressure. However, it is too early to know the extent of these benefits for each individual institution, as it will be partly dependent on their flexibility in replenishing their historical loan books at new rates and partly on the market's reaction to the pricing of these loans. Both entities' ratings take into account their lack of geographic and business diversification. RATING DRIVERS AND SENSITIVITIES - NATIONWIDE Nationwide's Long-term IDR is driven by its VR, which primarily reflects the low risk profile of its business. The VR also factors in Nationwide's weak profitability in conjunction with the current lack of high quality loss absorbing capital that could be raised in times of stress by UK mutual organizations. Although Fitch understands that substantial progress has been made in designing such an instrument, the amount that could be made available to Nationwide will be subject to market conditions and investor appetite, both of which remain untested. Nationwide is diversifying its earnings and increasing non- interest income, and Fitch expects pressure on profitability to ease somewhat, also as a result of declining margin pressure following the introduction of the FLS. In addition, Fitch expects loan impairment charges to remain moderate given the relatively low-risk nature of Nationwide's residential mortgage portfolio. However, Fitch views the 'a+' VR as being under pressure from capital constraints, which may reduce the society's operating flexibility and ability to compete in the expansion of the loan book at the higher rates prevailing in the market. The Negative Outlook on Nationwide's Long-term IDR continues to reflect the possibility that the VR, and therefore also the Long-term IDR, could be downgraded if the building society does not manage to improve operating profitability, or if macro-economic conditions derail the wind down of its commercial property finance book (8% of total loans, but loss-making), both of which may result in further pressure on capital. Fitch expects to review the Negative Outlook by end-2013 and currently expects that if the IDR is downgraded, it would likely be restricted to one notch. The Outlook could be revised to Stable if Nationwide's operating profitability improved moderately, while at the same time capitalization and asset quality remained sound. Nationwide's Support Floor and Support Rating Floor (SRF) reflect the society's systemic importance to the UK, which in Fitch's view, still implies an extremely strong probability of support from the UK authorities if needed. Although on a weakening trend, Fitch expects the UK authorities' propensity to support Nationwide to remain high until UK and EU regulatory and legislative measures designed to improve stability in the financial system are phased in and until measures designed to weaken the implicit support for banks/building societies, also both UK-specific and at an EU level, can be practically implemented. These ratings are sensitive to a change in Fitch's assumptions around the ability or propensity of the UK government to provide extraordinary support to Nationwide, if needed. RATING DRIVERS AND SENSITIVITIES - SAN UK San UK's VR reflects the bank's profitability, which has remained relatively resilient so far, but the protracted low interest rate environment is expected to impinge more strongly on profitability as its macro hedge, taken out in 2009, gradually expires. The bank is looking to improve returns by expanding its SME business as well as by seeking to improve cross selling, particularly through wider usage of current accounts and credit cards. The VR is also based on the bank's sound asset quality, which reflects the high proportion of lending secured by prime residential mortgages. The bank's VR could be downgraded if macro-economic conditions result in a greater than anticipated deterioration in asset quality. Liquidity and capital are both strong, although excess liquidity is expected to be gradually wound down as a result of the FLS and other regulatory measures being implemented by the UK government to stimulate lending. The core Tier 1 capital ratio (12.2% at end-June 2012) is likely to be managed down to around 10% in the medium term. This will occur with a gradual expansion of the business and, possibly, by some form of capital repatriation to its 100% shareholder, Banco Santander S.A. 'BBB+'/'Negative'/'bbb+'). This follows the announcement in October 2012 that the deal to acquire RBS branches will not complete. Banco Santander originally injected the capital into its UK subsidiary, in mid-2010, in preparation for the acquisition. The announcement that San UK will not extend the deadline for completion of the deal (and hence the strong likelihood that it will no longer take place) is viewed by Fitch as ratings neutral for San UK as the lack of competitive edge resulting from an expanded franchise is balanced by higher capital for the short to medium term. However, Fitch expects this excess capital to be gradually managed down. San UK's VR is constrained under Fitch's rating criteria by the rating of its parent, Banco Santander, which currently has a Negative Outlook. San UK's net exposure to the Santander group is not material and is collateralized, and its funding and capital positions are to a large degree ring-fenced from the rest of the group due to strong regulatory oversight by the UK FSA. Nonetheless, in Fitch's opinion, the business flow and reputation of the UK group and the Spanish parent are somewhat interdependent and correlated. For this reason, Fitch is likely to maintain a maximum of two notches between the VR of San UK and the IDR of Banco Santander San UK's Long-term IDR is at its SRF, and this is reflected in the Stable Outlook on the bank's Long- term IDR. The SRF is based on the bank's systemic importance to the UK. As the SRF and VR of San UK are at the same level, a downgrade in its IDR would only take place if the VR is downgraded and, at the same time, Fitch believes that the propensity of the UK government to support San UK has reduced. The IDRs do not factor in any support from its parent. San UK's Support Rating and SRF are sensitive to a change in Fitch's assumptions around the ability or propensity of the UK government to provide extraordinary support to the bank, if needed. RATINGS DRIVERS AND SENSITIVITIES - ABBEY NATIONAL TREASURY SERVICES Abbey National Treasury Services is the main debt issuing vehicle and wholesale counterparty entity of San UK. Its IDRs are aligned with those of San UK because it is effectively an arm of the parent bank and its obligations that have been or will be incurred before 30 June 2015 are guaranteed by San UK. Fitch believes it cannot be meaningfully analysed on a standalone basis (it has no VR) and its IDRs are sensitive to the same considerations that could affect San UK. RATING DRIVERS AND SENSITIVITIES HYBRID AND SUBORDINATED DEBT Subordinated debt and other hybrid capital issued by Nationwide, San UK and ANTS are notched down from the VRs of Nationwide and San UK, respectively, in accordance with Fitch's assessment of each instrument's respective non-performance and relative loss severity risk profiles, which vary considerably. Their ratings are primarily sensitive to any change in Nationwide and San UK's VRs. The rating actions have no impact on Nationwide's and San UK's covered bonds' ratings. The ratings actions are as follows: Nationwide -- Long-term IDR: affirmed at 'A+'; Negative Outlook -- Short-term IDR: affirmed at 'F1' -- VR: affirmed at 'a+' -- Support Rating: affirmed at '1' -- SRF: affirmed at 'A' -- Senior unsecured long-term debt, including programme ratings and member deposits: affirmed at 'A+' -- Commercial paper and short-term debt, including programme ratings: affirmed at 'F1' -- Lower Tier 2: affirmed at 'A' -- Permanent interest bearing securities: affirmed at 'BBB' San UK: -- Long-term IDR: affirmed at 'A'; Outlook Stable -- Short-term IDR: affirmed at 'F1' -- VR: affirmed at 'a' -- Support Rating: affirmed at '1' -- SRF: affirmed at 'A' -- Senior unsecured debt long-term rating, including programme rating: affirmed at 'A' -- Senior unsecured debt short-term rating, including programme rating and commercial paper: affirmed at 'F1' -- Market-linked senior unsecured securities: affirmed at 'Aemr' -- Subordinated debt: affirmed at 'A-' -- Upper Tier 2 subordinated debt: affirmed at 'BBB' -- GBP300m Non-cumulative, callable preference shares, XS05021054: affirmed at 'BB+' -- Other Preferred stock: affirmed at 'BBB-' Abbey National Treasury Services plc -- Long-term IDR: affirmed at 'A'; Stable Outlook -- Short-term IDR: affirmed at 'F1' -- Senior unsecured debt long-term rating, including programme ratings: affirmed at 'A' -- Market-linked senior unsecured securities: affirmed at 'Aemr' -- Government guaranteed Debt Programme: affirmed at 'AAA'/'F1+' Abbey National Capital Trust 1 -- USD1bn Trust Preferred Securities (ISIN: US002927AA95) (guaranteed by San UK): affirmed at 'BBB-' RANGERS FC: Administrators to Tap BDO as Oldco Rangers Liquidator ----------------------------------------------------------------- sports.scotsman.com reports that Oldco Rangers moved a significant step closer to its inevitable liquidation on Monday when creditors approved the end of the administration process, according to Duff & Phelps. The administrators have instructed lawyers to make a formal application to place the company into liquidation in the Court of Session, sports.scotsman.com says. The report notes the club was consigned to liquidation in June when Her Majesty's Revenue and Customs, who are owed up to GBP94 million, rejected an offer to creditors. That prompted Charles Green's Sevco Scotland firm to buy the club's assets and business for GBP5.5 million and relaunch Rangers on the pitch while the original company, which was renamed "RFC 2012", headed for liquidation. sports.scotsman.com reports that Paul Clark, of Duff & Phelps, said in a statement: "Creditors have today given their approval for the administrators to bring the administration process to an end and to place the company into liquidation. "As a result, we as administrators have instructed our legal team to prepare the necessary application for lodging in the Court of Session as a matter of urgency. "Should the application be approved, then Malcolm Cohen and James Bernard Stephen of BDO will be appointed liquidators of RFC 2012 plc, and will undertake the process of liquidation of the 'oldco' company and the continued recovery of funds for creditors. "This will not affect the current operations of The Rangers Football Club in any way as it is a completely separate entity." About Rangers Football Club Rangers Football Club PLC -- http://www.rangers.premiumtv.co.uk/ -- is a United Kingdom-based company engaged in the operation of a professional football club. The Company has launched its own Internet television station, RANGERSTV.tv. The station combines the use of Internet television programming alongside traditional Web-based services. Services offered include the streaming of home matches and on-demand streaming of domestic and European games, which include dedicated pre-match, half-time and post- match commentary. The Company will produce dedicated news magazine and feature programs, while the fans can also access a library of classic European, Old Firm and Scottish Premier League (SPL) action. Its own dedicated television studio at Ibrox provides onsite production, editing and encoding facilities to produce content for distribution on all media platforms. UK COAL: Warns of Liquidation if Restructuring Deal Fails --------------------------------------------------------- Insider Media reports that UK Coal has warned it faces liquidation as early as the first quarter of 2013 if its restructuring proposals are not accepted by stakeholders. As part of the restructure, the company intends to change its name to Coalfield Resources. Insider Media relates that to help implement the restructure, UK Coal also hopes to change its stock exchange listing from premium to standard. In a circular to shareholders, Insider Media relates, the Doncaster business explained the change of listing would provide greater flexibility to implement its restructure while the change of name was intended to reflect its proposed change of emphasis. According to the report, UK Coal said in its interim results that the company has reached a deal with its pension trustees, and an agreement in principle with generators, which would result in a combined GBP80 million of support to UK Coal over the period to the end of 2015, once the proposed restructuring is implemented. Insider Media notes the terms of the restructuring mean the company's shareholders' principal economic interest will be a 24.9% stake in the long term development potential of its property division's assets. UK Coal warned that if the restructuring is not implemented by Dec. 31, 2012, the company could have to appoint receivers, liquidators or administrators as early as the first quarter of 2013, says Insider Media. A general meeting has been convened on November 5. UK Coal plc -- http://www.ukcoal.com/-- is a United Kingdom- based company engaged in surface and underground coal mining, property regeneration and management, and power generation. The Company operates four deep mines, located in Central and Northern England. Its deep mines business consists of Daw Mill (Warwickshire), Kellingley (Yorkshire) and Thoresby and Welbeck (Nottinghamshire). The Company had five active surface mines. Total surface mining reserves and resources are estimated at approximately 55 million tons. The Company owns approximately 45,000 acres (18,200 hectares) of predominantly agricultural land. During the year ended December 31, 2008, it acquired 50% of UK Strategic Partnership Limited as a joint venture company with Strategic Sites Limited for the development of certain investment properties. In January 2009, it sold 50% share in Coal4Energy Limited to Hargreaves Services PLC. ********* 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 * * *