/raid1/www/Hosts/bankrupt/TCREUR_Public/121116.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
Friday, November 16, 2012, Vol. 13, No. 229
Headlines
C Y P R U S
CYPRUS ORGANISATION: Moody's Withdraws 'B3' Corp. Family Rating
E S T O N I A
ESTONIAN AIR: "Managed Insolvency" Among Options
F R A N C E
BANQUE PSA: Moody's Remaps 'D+' Bank Fin'l Strength Rating to ba1
SEAFRANCE SA: Eurotunnel Wins OK on EUR65MM Channel Ferry Buy
G E R M A N Y
FRANKFURTER RUNDSCHAU: Administrator Mulls Reorganization
GATE SME 2006-1: S&P Lowers Rating on Class E Notes to 'CCC+'
QIMONDA AG: Court Calls for Experts to Examine Validity of Claims
TITAN EUROPE 2006-5: Fitch Cuts Ratings on 4 Note Classes to 'D'
G R E E C E
OVERSEAS SHIPHOLDING: Athens Unit Not Part of U.S. Bankruptcy
H U N G A R Y
RISAB INGATLANFORGALMAZO: Hotel Aquarius Put Up for Sale
I R E L A N D
CAVENDISH SQUARE: Fitch Affirms 'Bsf' Rating on Class C Notes
KINTYRE CLO: Moody's Confirms 'Caa1' Rating on Cl. E Notes
* IRELAND: Moody's Issues Annual Credit Report
L U X E M B O U R G
EUROPEAN ENHANCED: S&P Cuts Ratings on Three Note Classes to 'B+'
P O L A N D
PBG SA: PRID Unit Obtains Bankruptcy Protection
P O R T U G A L
BANCO POPULAR: Fitch Affirms 'BB' LT Issuer Default Rating
S P A I N
BBVA RMBS 11: S&P Assigns 'BB+' Rating to Class C Notes
FTPYME BANCAJA 6: S&P Cuts Rating on Class B Notes to 'CCC-'
S W I T Z E R L A N D
IBERIAN MINERALS: S&P Assigns 'B+' Long-Term Corp. Credit Rating
T U R K E Y
DOGAN YAYIN: Fitch Affirms 'B+' LT Issuer Default Ratings
GARANTI BANK: Fitch Affirms 'BB+' Long-Term IDR; Outlook Stable
HURRIYET GAZETECILIK: Fitch Affirms 'B+' Issuer Default Ratings
U N I T E D K I N G D O M
AG SHAKESPEARE: Goes Into Administration
CABOT FINANCIAL: Moody's Assigns 'B1' CFR; Outlook Stable
CARE UK: Moody's Lowers CFR/PDR to 'B2'; Outlook Negative
CARE UK: S&P Cuts Long-Term Corporate Credit Rating to 'B'
COMET: Administrators Launch Collective Consultation Program
EPIC PLC: Fitch Affirms Rating on Class D Notes at 'BBsf'
X X X X X X X X
* Moody's Says EU ABS & RMBS Deterioration Likely Moderate
* BOOK REVIEW: Learning Leadership
*********
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C Y P R U S
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CYPRUS ORGANISATION: Moody's Withdraws 'B3' Corp. Family Rating
---------------------------------------------------------------
Moody's Investors Service has withdrawn the B3 corporate family
rating (CFR) and B3 probability of default rating (PDR) of Cyprus
Organisation for the Storage and Management of Oil Products
("KODAP").
Ratings Rationale
Moody's has withdrawn the ratings for its own business reasons.
KODAP, domiciled in Nicosia, Cyprus, is the organization
responsible for maintaining compulsory strategic reserves of
petroleum products in Cyprus equivalent to a minimum of 90 days
of national consumption. In 2010, KODAP reported revenues of
EUR23.8 million and a net surplus of EUR6.4 million.
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E S T O N I A
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ESTONIAN AIR: "Managed Insolvency" Among Options
------------------------------------------------
Ott Ummelas at Bloomberg News reports that Economy Minister Juhan
Parts said Estonian Air's options, presented to the Cabinet on
Thursday, are closure through a "managed insolvency" or
government financing of the company to continue as independent
operator.
According to Bloomberg, Mr. Parts said that the first option
would mean the government would organize a state tender for
flight connections that are in public interest. He said that the
second option would have two main preconditions: carrier has to
be regionally competitive, including change of current collective
agreement; and it has to meet EU rules on state aid.
Mr. Parts said that the cabinet is set to discuss the issue again
in three weeks with the final decision to be made during the
first quarter of 2013.
AS Estonian Air is the flag carrier airline of Estonia, and is
based in Tallinn.
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F R A N C E
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BANQUE PSA: Moody's Remaps 'D+' Bank Fin'l Strength Rating to ba1
-----------------------------------------------------------------
Moody's Investors Service has announced that the review for
downgrade will be maintained on Banque PSA Finance ("BPF")'s Baa3
and Prime-3 senior unsecured long-term and short-term debt and
deposit ratings, pending finalization of the state support plan
for the bank and European Commission (EC) approval, as well as
the conclusion of the review of BPF's D+ Bank Financial Strength
Rating (BFSR) related to Moody's ongoing rating reviews on
European car financiers.
At the same time, the rating agency has taken the following
actions:
- BPF's D+ BFSR was remapped to ba1 from baa3 to reflect the
weakening of BPF's risk profile as a result of the downgrade
of its parent Peugeot S.A. ("PSA"; see press release "Moody's
downgrades Peugeot to Ba3; negative outlook" dated October 10,
2012). The BFSR remains on review for downgrade;
- BPF's provisional subordinated and Tier 3 debt programs were
downgraded to (P)Ba2 from (P)Ba1, and the junior subordinated
debt programs to (P)Ba3, from (P)Ba2 as a result of the
lowering of BPF's standalone credit assessment to D+/ba1 from
which these ratings are notched. In line with the BFSR, these
ratings remain on review for downgrade; and,
- BPF's long-term and short-term senior unsecured debt and
deposit ratings were held at Baa3 and Prime-3 respectively
notwithstanding the reduction in the standalone credit
assessment, pending the completion of the ongoing review of
those ratings, and following the announcement that the French
government (Aaa, negative) has proposed a support package for
BPF which may offset the downward pressures on the bank's
standalone risk profile.
The ongoing ratings review will primarily focus on the following
two drivers:
- The assessment of the implications for BPF's BFSR of the
broader review of European captive auto finance institutions
announced on October 19, 2012, and the extent to which support
from the French government could mitigate any further
reduction in BPF's standalone strength resulting from this
review; and
- Finalization of the French government's support plan for BPF
and assessment of the impact of any conditions or restrictions
the EC may impose.
Moody's expects to conclude the review before year-end.
Ratings Rationale
BPF'S STANDALONE CREDIT ASSESSMENT LOWERED TO REFLECT DOWNGRADE
OF PARENT'S CREDIT RATING
Moody's has lowered BPF's standalone credit assessment, remapping
its BFSR to D+/ba1 from D+/baa3. The standalone credit assessment
remains on review for further downgrade.
The lowering of the bank's standalone credit assessment follows
the downgrade of the credit rating of BPF's parent, Peugeot SA
(PSA), and reflects Moody's view that given the intricate
strategic, commercial and financial ties to its parent, BPF's
creditworthiness is inherently linked to that of PSA.
Accordingly, a reduction in the credit standing of the parent, as
reflected in the downgrading of PSA's senior unsecured rating to
Ba3, implies a lowering of BPF's standalone credit profile.
These credit linkages with PSA include:
- BPF's dependence on PSA for its own business and franchise
value;
- the potential for adverse developments at PSA to impair BPF's
funding capacity;
- the ability of PSA to require BPF to pay exceptional dividends
(Moody's notes that a EUR360 million exceptional dividend was
paid in 2012), subject to regulatory constraints;
- BPF's credit exposures to PSA's car dealer networks; and,
- the risk associated with a possible decline in the value of
the vehicles, representing the collateral against BPF's loan
book, that could materialize in case of default of PSA.
The lowering of the standalone credit assessment reflects these
factors. Continued stress at the parent could result in further
rating actions on BPF. While Moody's recognizes that BPF's
financial performance has so far shown little correlation with
that of the car manufacturer, the rating agency believes that
this would be unlikely to hold true in the event of the parent's
financial distress. Nonetheless, the current standalone credit
assessment of D+/ba1 reflects the strengths of the subsidiary and
a credit profile healthier than that of its parent, considering
the bank's good capitalization and profitability track record,
and its matched funding policy along with its liquidity buffer.
ANNOUNCED GOVERNMENT SUPPORT PLAN IS SUPPORTIVE FOR BPF's SENIOR
RATINGS
BPF's senior unsecured debt and deposit ratings remain Baa3, on
review for downgrade, notwithstanding the lowering of the bank's
standalone credit assessment, reflecting the announcement of a
support package by the French government.
PSA announced on 24 October 2012 a restructuring program which
included a support package for BPF comprising the following key
aspects: (i) a EUR7 billion refinancing guarantee provided by the
French government for the period 2013-2015; and (ii) the
renegotiation of existing credit lines provided by partner banks
totaling EUR11.5 billion, and including EUR1 billion of
additional funding, assured for the same period.
In Moody's view, the pledged support demonstrates that there is
some willingness and commitment on the part of the French
government to support BPF as a means of stabilizing the franchise
of PSA, given its economic relevance as a major car manufacturer
and employer in France. The proposals are subject to approvals by
both the French parliament and the EC, which are expected by the
end of 2012.
This support plan could result in senior creditors being somewhat
insulated from the downward pressure on BPF's ratings resulting
from stress at the parent level and weaker industry trends. For
this reason, Moody's has introduced one notch of systemic support
into BPF's long-term ratings at this time, allowing the senior
ratings to be maintained, pending the completion of the review.
CONTINUING REVIEW OF SENIOR UNSECURED DEBT AND DEPOSIT RATINGS
WILL ASSESS IMPACT OF BROADER TRENDS AFFECTING EUROPEAN CAPTIVE
CAR FINANCIERS FOR BPF'S STANDALONE CREDIT ASSESSMENT, AND
FINALISATION OF SUPPORT PACKAGE
The review of BPF's senior unsecured debt and deposit ratings
will first assess the implications for the bank's BFSR of the
review of broader industry trends affecting four rated European
captive car finance companies, including BPF (see press release
"Moody's reviews ratings of four European captive auto finance
institutions" of October 19, 2012). These industry trends
comprise:
- The general adverse impact of the deterioration in
macroeconomic conditions in Europe, in particular on the auto
manufacturing industry;
- Concentrated exposures to car dealers, which are highly
correlated with the manufacturers;
- High reliance on market funding, which can be subject to
sudden changes in investor confidence; and,
- Some reliance on bank credit lines, the availability and terms
of which could be compromised by funding pressure on the
banking industry and the prospect of regulatory changes.
Moody's assessment of the strength and implications of these
broader trends will determine their impact on BPF's standalone
credit assessment. Should that broader industry review result in
BPF's BFSR being downgraded, Moody's will assess the potential
for support from the French government to mitigate the reduction
in BPF's standalone strength.
Finally, the review will monitor the finalization of the French
government's support plan for BPF, and assess the impact of any
conditions or restrictions the EC may impose for the support that
might be made available to BPF.
SUBORDINATED DEBT
Moody's downgraded the bank's provisional subordinated and Tier 3
debt programs to (P)Ba2 from (P)Ba1, and the junior subordinated
debt programs to (P)Ba3, from (P)Ba2. These downgrades result
from the reduction in BPF's standalone credit assessment to
D+/ba1 from which these ratings are notched.
OTHER RATINGS
Moody's has also maintained its review on the Baa3 backed senior
unsecured rating of Peugeot Finance International NV, and on the
Prime-3 backed commercial paper rating of SOFIRA SNC. Both these
entities are subsidiaries of BPF.
WHAT COULD CHANGE THE RATING UP/DOWN
Moody's believes there is little likelihood of any upward rating
pressure on BPF. Moody's would likely affirm BPF's senior ratings
in the event of (i) the French government implementing its plan
as currently pledged and without any material conditions being
imposed upon BPF by the EC, and (ii) the review of the bank's
standalone profile against the broader trends affecting European
captive car financiers leading to no reduction in BPF's BFSR.
If, however the EC were to reject the support plan or impose
conditions adversely affecting BPF's credit profile, then Moody's
may downgrade the bank's senior ratings. The review of the bank's
standalone profile against the background of the weaker risk
profile of its parent PSA or the broader trends affecting
European captive car financiers may also lead to a lowering of
the BPF's standalone risk assessment, other things being equal.
The principal methodology used in these ratings was Moody's
Consolidated Global Bank Rating Methodology published in June
2012.
SEAFRANCE SA: Eurotunnel Wins OK on EUR65MM Channel Ferry Buy
-------------------------------------------------------------
Bill Donahue at Bankruptcy Law360 reports that France's
competition watchdog said Thursday it had given the green light
to Groupe Eurotunnel SA's EUR65 million (US$84 million)
acquisition of three English Channel ferries from the now-
liquidated ferry operator SeaFrance SA, after Eurotunnel promised
to keep separate its rail and ferry units.
Bankruptcy Law360 relates that the French Competition Authority
approved the deal on the grounds that Eurotunnel -- which
operates the Channel Tunnel between the U.K. and France -- does
not try to force or persuade Chunnel freight customers to use its
new MyFerryLink service, or vice versa.
SeaFrance is the operator of the undersea rail link between
Britain and continental Europe.
The Commercial Court in Paris has ordered the full liquidation of
SeaFrance on the Jan. 9, 2012. As a result, the company is no
longer able to trade.
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G E R M A N Y
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FRANKFURTER RUNDSCHAU: Administrator Mulls Reorganization
---------------------------------------------------------
Mariajose Vera at Bloomberg News reports that Frankfurter
Rundschau insolvency administrator is looking for possibilities
to reorganize Frankfurter Druck- und Verlagshaus GmbH.
According to Bloomberg, the possibilities being considered
include search for an investor.
The administrator's assessment of company's financial situation
will last "a few more days", Bloomberg notes.
The insolvency administrator will furnish an opinion to the court
whether or not company could have a future, Bloomberg discloses.
Ingo Schorlemmer, the administrator's spokesman, said that this
will be given to the court at the end of January at the latest,
Bloomberg relates.
As reported by the Troubled Company Reporter-Europe on Nov. 15,
2012, Bloomberg News related that Frankfurter Rundschau filed for
insolvency six years after publisher M. DuMont Schauberg GmbH
bought control to keep it alive. Roland Gloeckner, a spokesman
for Frankfurt's local court, said that Frank Schmitt, a lawyer at
Schultze & Braun was appointed preliminary administrator, and was
scheduled to meet on Tuesday, Nov. 13, with the 500 employees
affected to discuss the newspaper's future, Bloomberg disclosed.
Frankfurter Rundschau is the newspaper founded by the U.S. Army
after World War II to promote democracy in Germany.
GATE SME 2006-1: S&P Lowers Rating on Class E Notes to 'CCC+'
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on the
class A, B, C, D, and E floating rate credit-linked notes issued
by GATE SME CLO 2006-1 Ltd. (Gate 2006).
"The actions reflect our assessment of the performance of the
transaction, and are primarily based on our assessment of the
concentration risk inherent in the portfolio. We have based our
analysis on the information report and loan-level data, both as
of Sept. 28, 2012, provided to us by the originator," S&P said.
"Our credit analysis for this type of transaction is primarily
based on stochastic default analysis (using CDO Evaluator) as
well as additional stress tests that include scenarios in which
the largest obligors default with very low recoveries. These
tests indicate that the class A notes would likely experience a
principal shortfall if more than the top two obligor groups were
to default. According to the stress tests, the class B, C, and D
notes could sustain a default by the largest obligor group, while
for the class E notes, available credit enhancement is not
sufficient to sustain the default of the largest obligor group.
Compared with our last review, this represents a worsening in
coverage levels across the capital structure by one obligor
group," S&P said.
"In our opinion, the rise in the amount of defaulted loans caused
the worsening in obligor coverage levels. Compared with our last
review, the principal amount of outstanding defaulted loans rose
by EUR17.3 million and now stands at EUR37.9 million. Taking into
account interest losses, the aggregate defaulted amount currently
undergoing workout equals about EUR43.5 million. Deutsche Bank
has purchased credit protection for principal and interest losses
whereby interest losses are capped at 9.3% of the liquidation
amount," S&P said.
"Since our last review, no additional losses have been allocated
to the class F notes, which act as a first-loss piece. From the
information provided to us on liquidated loans, we see that to
date loan liquidation has occurred up to about two years after
the credit event. We would expect further losses to be allocated
to the class F notes over the coming payment dates as more
defaulted loans should complete their workout procedures. We took
this expected loss allocation into account in our analysis by
reducing the credit enhancement available to the notes. This
reduction is based on a recovery assumption for defaulted loans
of 27%, which is equivalent to the overall recovery rate achieved
to date following loan liquidation in the transaction. The
resulting adjusted credit enhancement levels equal about 4.66%
for the class A notes, 3.36% for the class B, 2.99% for the class
C, 2.01% for the class D, and 1.25% for the class E. To put this
in context, the top five obligor groups account for about 8.4% of
the portfolio amount," S&P said.
"In our analysis, we have also taken into account the downward
rating migration that has occurred within the largest 10 obligor
groups. We measure the credit quality of the loans by using a
mapping of Deutsche Bank's internal rating scale to our rating
scale. Accordingly, at our last review, all of the largest 10
groups benefitted from an investment-grade rating, i.e., 'BBB-'
or better. Currently, one group (equivalent to 1.62% of the
maximum portfolio amount of EUR2.04 billion) carries a rating of
'B', while another group (amounting to 1.27% of the maximum
portfolio amount) carries a rating of 'BB'. The remaining eight
largest groups continue to benefit from an investment-grade
rating," S&P said.
"In our view, an additional risk arises from the EUR13.8 million
of loans that currently carry a rating equivalent to Standard &
Poor's 'D' rating but have not triggered a credit event to date.
As such, there is a relatively high likelihood of further credit
events occurring," S&P said.
"In overall terms, the cumulative principal amount of defaulted
loans since closing amounts to about EUR62.21 million.
Considering that the transaction has been actively replenishing
for the past six years, the current amount of cumulative defaults
remains comparatively low at 0.82% of the sum of the initial
portfolio notional and the replenished amount. In our view, this
reflects the overall portfolio credit quality: about 78% of
assets continue to carry a rating of 'BBB-' or better. At the
same time, according to the transaction documents, replenished
loans must have a weighted-average rating that is at least 'BBB'.
Since our last review, the weighted-average portfolio rating has
remained stable at 'BB-'," S&P said.
"However, based on our assessment of the concentration risk
inherent in the transaction resulting from the low level of
obligor coverage achieved with the credit enhancement available
to the notes, we are lowering our ratings on the notes to levels
that, in our view, are commensurate with the credit enhancement
available to them," S&P said.
POTENTIAL EFFECTS OF PROPOSED CRITERIA CHANGES
"We have taken the rating actions based on our criteria for
rating European SME securitizations. However, these criteria are
under review," S&P said.
"Until such time that we adopt new criteria for rating European
SME securitizations, we will continue to rate and surveil these
transactions using our existing criteria," S&P said.
STANDARD & POOR'S 17G-7 DISCLOSURE REPORT
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities. The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.
If applicable, the Standard & Poor's 17g-7 Disclosure Report
included in this credit rating report is available at:
http://standardandpoorsdisclosure-17g7.com
RATINGS LIST
Class Rating
To From
GATE SME CLO 2006-1 Ltd.
EUR185 Million Floating-Rate Credit-Linked Notes
Ratings Lowered
A BBB- (sf) A (sf)
B BB (sf) BBB (sf)
C BB- (sf) BBB- (sf)
D B- (sf) BB (sf)
E CCC+ (sf) B (sf)
QIMONDA AG: Court Calls for Experts to Examine Validity of Claims
-----------------------------------------------------------------
Karin at Matussek at Bloomberg News reports that a Munich court
says it will call experts to determine whether a EU3.35 billion
damage claimed by Qimonda's insolvency administrator in a suit
against Infineon Technologies AG is valid.
As reported by the Troubled Company Reporter-Europe on June 18,
2012, Bloomberg News related that the insolvency administrator of
Infineon's former Qimonda unit doubled the amount it's seeking in
a legal dispute to at least EUR3.35 billion (US$4.23 billion)
plus interest.
About Qimonda AG
Qimonda AG (NYSE: QI) -- http://www.qimonda.com/-- was a global
memory supplier with a diversified DRAM product portfolio. The
Company generated net sales of EUR1.79 billion in financial year
2008 and had -- prior to its announcement of a repositioning of
its business -- roughly 12,200 employees worldwide, of which
1,400 were in Munich, 3,200 in Dresden and 2,800 in Richmond, Va.
Qimonda AG commenced insolvency proceedings in a local court in
Munich, Germany, on Jan. 23, 2009. On June 15, 2009, QAG filed
a petition (Bankr. E.D. Va. Case No. 09-14766) for relief under
Chapter 15 of the U.S. Bankruptcy Code.
Qimonda North America Corp., an indirect and wholly owned
subsidiary of QAG, is the North American sales and marketing
subsidiary of QAG. QNA is also the parent company of Qimonda
Richmond LLC. QNA and QR sought Chapter 11 protection (Bankr.
D. Del. Case No. 09-10589) on Feb. 20, 2009. Mark D. Collins,
Esq., Michael J. Merchant, Esq., and Lee E. Kaufman, Esq., at
Richards Layton & Finger PA, in Wilmington Delaware; and Mark
Thompson, Esq., Morris J. Massel, Esq., and Terry Sanders, Esq.,
at Simpson Thacher & Bartlett LLP, in New York City, represented
the Debtors as counsel. Roberta A. DeAngelis, the United States
Trustee for Region 3, appointed seven creditors to serve on an
official committee of unsecured creditors. Jones Day and Ashby &
Geddes represented the Committee. In its bankruptcy petition,
Qimonda Richmond, LLC, estimated more than US$1 billion in assets
and debts. The information, the Chapter 11 Debtors said, was
based on QR's financial records which are maintained on a
consolidated basis with QNA.
In September 2011, the Chapter 11 Debtors won confirmation of
their Chapter 11 liquidation plan which projects that unsecured
creditors with claims between US$33 million and US$35 million
would have a recovery between 6.1% and 11.1%. No secured claims
of significance remained.
TITAN EUROPE 2006-5: Fitch Cuts Ratings on 4 Note Classes to 'D'
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Fitch Ratings has downgraded Titan Europe 2006-5 plc's classes A3
to F and affirmed all others classes; as follows:
-- EUR140.0m Class A1 (XS0277721618) affirmed at 'AAsf';
Outlook Stable
-- EUR109.0m Class A2 (XS0277725361) affirmed at 'Asf'; Outlook
Stable
-- EUR60.1m Class A3 (XS0277726500) downgraded to 'Bsf' from
'BBsf'; Outlook Negative
-- EUR55.1m Class B (XS0277728381) downgraded to 'CCsf' from
'CCCsf'; Recovery Estimate (RE) 30%
-- EUR7.9m Class C (XS0277729439) downgraded to 'Dsf' from
'CCsf'; RE0%
-- EUR0.0m Class D (XS0277732144) downgraded to 'Dsf' from
'Csf'; RE0%
-- EUR0.0m Class E (XS0277733548) downgraded to 'Dsf'from
'Csf'; RE0%
-- EUR0.0m Class F (XS0277734199) downgraded to 'Dsf' from
'Csf'; RE0%
The downgrade of the class A3 to F notes were driven by lower
than expected recoveries on the Diva loan and the performance
deterioration of the Quartier 206 loan.
Diva recovered EUR159.6 million (net of senior costs) from the
sale of the German multifamily portfolio, which was applied
sequentially to the class A1 notes. The resulting losses of
EUR86.4 million have been allocated to the bottom four classes of
notes although senior costs (which equated to 21.6% of gross
recoveries) were greater than initially anticipated and have
caused a larger write down of the class C notes than expected.
The credit quality of the Quartier 206 loan has continued to
deteriorate: a major tenant, previously responsible for circa 9%
of passing rent, vacated the premises in August 2012; as a
result, the vacancy rate rose to 24% from 21% by area. Fitch
believes there is scope for income stabilization, mainly due to
the asset's good location; however, the current pace of income
decline could lead to interest shortfalls on the loan, if the
asset management efforts are not successful.
Fitch believes that the EUR160m Hotel Adlon loan provides the
bulk of investment grade recoveries. Although the class A1 debt
yield of 20% and a Fitch advance rate of 33.7% are in many
instances commensurate with a higher rating, the exposure to a
single asset loan has effectively capped the class A1 rating at
'AAsf'.
Titan Europe 2006-5 plc closed in December 2006 and was
originally the securitization of eight commercial loans
originated by Credit Suisse ('A'/Stable/'F1'). At the first
interest payment date (IPD), the EUR40.2 million Hotel Balneario
Blancafort loan defaulted due to non-payment of debt service and
was subsequently repurchased by the originator. The only other
loan to have repaid is the aforementioned Diva loan leaving the
portfolio with six loans secured over 32 properties located
across Germany with an aggregate securitized balance of EUR372.1
million.
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G R E E C E
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OVERSEAS SHIPHOLDING: Athens Unit Not Part of U.S. Bankruptcy
-------------------------------------------------------------
Overseas Shipholding Group, Inc., and 180 affiliates filed
voluntary Chapter 11 bankruptcy petitions (Bankr. D. Del. Lead
Case No. 12-20000) on Nov. 14.
Overseas Shipholding, owner or operator of 111 vessels that
transport oil and petroleum products throughout the world, said
in a statement that it intends to use the Chapter 11 process to
significantly reduce its debt profile, reorganize other financial
obligations and create a strong financial foundation for the
Company's future.
The Debtors disclosed US$4.15 billion in assets and US$2.67
billion in liabilities as of June 30, 2012.
Captain Robert E. Johnston, senior vice president and head of the
U.S. Flag Strategic Business Unit of the Debtors, explains in a
court filing, "Two main factors have led the Debtors to commence
these Chapter 11 cases: First, over the past several years, there
has been a general decline in global demand for oil and petroleum
products while, at the same time, global shipping capacity
increased dramatically as new vessels entered the market. This
has lead to a sharp decrease in international tanker utilization
and downward pressure on industry charter rates. Second, OSG
faces a liquidity shortfall due to the approaching maturity of
certain debt obligations, at the same time that it has announced
it is investigating whether its financial statements need to be
restated, which has severely limited any access to the capital
and credit markets."
On Oct. 22, 2012, OSG publicly announced that it was in the
process of reviewing a tax issue arising from the fact that OSG
is domiciled in the United States but has substantial
international operations, in relation to the interpretation of
certain provisions contained in OSG's loan agreements. As a
result, OSG announced that investors should not rely on its
financial statements for at least the last three years. The
company's regulatory filing further stated that the Company is
reviewing whether a restatement of those financial statements may
be required and "evaluating its strategic options, including the
potential voluntary filing of a petition for relief to reorganize
under Chapter 11 of the Bankruptcy Code." On Oct. 22, Standard &
Poor's and Moody's downgraded OSG's credit ratings, which further
jeopardized the ongoing relationship between OSG and its
creditors and complicated the process of obtaining additional
liquidity.
OSG said it has been assessing its projected liquidity position,
particularly taking into account its highly leveraged debt
position, downgraded credit ratings, and significant other
practical limitations.
After exploring all practicable alternatives, OSG has concluded
that, if it does not seek protection from creditors in an
organized reorganization, it faces significant risk of individual
creditor action to the detriment of the value and stability of
its business.
Morten Arntzen, President and CEO, commented, in a statement,
"The last few years have been difficult for everyone in our
industry, but OSG has continued to provide safe, incident-free
and reliable shipping services for our global client base. Our
Jones Act fleet, in particular, has performed very well the last
18 months and has secured a number of notable contract
extensions. Over the past two weeks, OSG has continued to fix
vessels with our clients. We will use the Chapter 11 process to
definitively resolve our financial issues. An orderly
restructuring in Chapter 11 will provide stability both to OSG
and to the entire shipping industry. We expect to emerge from our
Chapter 11 reorganization with a solid financial base and clear
path to future success.
"During the reorganization, we have more than enough cash to
support our operations, and we expect it to be business as usual
for OSG's customers, employees, partners and suppliers. Thanks
to our talented and dedicated employees around the world, we
continue to enjoy a great reputation in our markets. I would
like to thank them for their continued support and hard work,"
Mr. Arntzen continued.
Foreign Affiliates
The OSG group consists of Overseas Shipholding Group, Inc., the
ultimate corporate parent, and over 250 affiliates around the
world.
Certain subsidiaries, including those that manage the Company's
facilities in Manila, Singapore, Greece, London and Newcastle,
have not filed for Chapter 11 reorganization.
OSG Companies that are not part of the Chapter 11 filing include
OSG Ship Management (UK) Ltd., which is domiciled in England,
OSG Ship Management Asia Pacific Pte. Ltd., which is domiciled
in Singapore, OSG-NNA Ship Management Services, Inc., which is
domiciled in the Philippines, and OSG Ship Management (GR) Ltd.,
which is domiciled in Greece. The Debtors intend that the Non-
Debtor Affiliates will continue to operate in the ordinary course
of business during the pendency of the Chapter 11 cases.
The Newcastle, England office is responsible for financial
services and information technology services internationally. In
addition, the Newcastle office handles the LNG and FSO technical
operations. The Athens office manages the international tanker
fleet of crude and product tankers, focusing on technical
operations. The Manila office operates part of the Debtors'
international flag operations, especially crewing and training
operations. The Singapore office focuses on commercial aspects
of the international flag business.
A complete list of the OSG entities which filed, and those which
did not file, Chapter 11 petitions, is available at
http://www.kccllc.net/osg
Business as Usual
OSG intends to work with its constituencies to emerge from
bankruptcy as quickly as possible while maintaining the company's
market position, business model and strategy.
OSG will continue to serve customers without interruption while
it reorganizes its debt. OSG has more than adequate cash to
allow the company to continue operating as usual and does not
require debtor-in-possession financing. In addition, the company
expects to generate significant cash flow while in Chapter 11,
further ensuring its ability to maintain safe, reliable and high-
quality operations throughout the process.
OSG has filed first-day motions that ask the Court to approve,
among other things, payment of employee wages and benefits that
were incurred before the petition was filed, payment of certain
pre-filing amounts owed to vendors and suppliers, and continued
access to the company's cash collateral and cash management
systems. The company is working closely with its vendors to
secure their continued support.
The Debtor said in a court filing that they intend to pay $4.8
million of outstanding prepetition claims of critical and foreign
vendors.
During the process, John Ray, CEO of Greylock Partners LLC, will
serve as Chief Reorganization Officer. OSG is being advised by
its legal counsel, Cleary Gottlieb Steen & Hamilton LLP, and its
financial advisor, Chilmark Partners LLC.
NOL Motion
The Debtors have filed U.S. federal income tax returns reflecting
net operating losses ("NOLs") of approximately $310 million
through the end of the taxable year ending December 31, 2011. I
am advised that, because the Internal Revenue Code permits
corporations to carry forward NOLs to offset future income and
reduce future tax liabilities, these NOLs are valuable assets of
the Debtors' estates. In fact, based on a federal corporate
income tax rate of 35%, Debtors' NOLs through December 31, 2011
could yield future tax savings to the Debtors of in excess of
$100 million.
The Debtors seek the authority from the Bankruptcy Court to
enforce the stay to preclude certain transfers of OSG's common
stock and to monitor and possibly object to other changes in the
ownership of the stock. The Debtors said that if too many blocks
of equity securities representing 5% or more of the Debtors'
shares are created through purchases, sales or issuances, or too
many shares are added to or sold from such blocks, the Debtors
may lose their ability to utilize their NOLs. The Debtors
believe the availability of these tax savings may prove important
to the financial health of the Debtors and the formulation of any
plan of reorganization.
About Overseas Shipholding
Overseas Shipholding Group, Inc., headquartered in New York City,
NY, is one of the largest publicly traded tanker companies in the
world, engaged primarily in the ocean transportation of crude oil
and petroleum products.
=============
H U N G A R Y
=============
RISAB INGATLANFORGALMAZO: Hotel Aquarius Put Up for Sale
--------------------------------------------------------
According to MTI-Econews, business daily Napi Gazdasag said on
Thursday that liquidator Felszamolo-Reorg is asking
HUF700 million for Hotel Aquarius, a four-star hotel in
Budapest's green belt.
Hotel Aquarius has 41 rooms, four conference rooms and a
restaurant, MTI discloses. It is the most valuable asset in the
portfolio of troubled company Risab Ingatlanforgalmazo, MTI
notes.
Offers for the hotel are being accepted until December 3, MTI
says.
Risab Ingatlanforgalmazo is a Hungarian property company.
=============
I R E L A N D
=============
CAVENDISH SQUARE: Fitch Affirms 'Bsf' Rating on Class C Notes
-------------------------------------------------------------
Fitch Ratings has affirmed Cavendish Square Funding 2 Limited's
notes, as follows:
Revolving Credit Facility: affirmed at 'Asf'; Outlook Stable
-- Class A1-N: affirmed at 'Asf'; Outlook Stable
-- Class A2: affirmed at 'BBB-sf'; Outlook Negative
-- Class B: affirmed at 'BBsf'; Outlook Negative
-- Class C: affirmed at 'Bsf'; Outlook Negative
-- Class P combination notes: affirmed at 'BBsf'; Outlook
Negative
The affirmation reflects the notes' level of credit enhancement
relative to the portfolio's credit quality. The portfolio's
credit quality has slightly deteriorated since the last review in
November 2011, with assets rated 'CCCsf' or below representing
12% of the portfolio, up from 11% in November 2011 and cumulative
defaults increasing to EUR30.3 million from EUR25.9 million.
All over-collateralization (OC) and interest coverage (IC) tests
are passing since closing.
The collateral manager has managed to build par building up the
performing portfolio to EUR487 million compared with a total
liabilities balance of EUR398 million. The transaction is still
within its reinvestment period, which ends in September 2013.
However, after the end of the reinvestment period the collateral
manager has the discretion to continue to reinvest certain
principal proceeds including unscheduled principal proceeds, and
sales proceeds from credit improved and credit impaired assets
subject to compliance with certain conditions. The two largest
industry sectors are RMBS at 78.0% of the portfolio and CMBS at
11.6%. Additionally, the pool mainly comprises Spanish and
Italian assets, which account for 25% and 21% of the collateral's
balance respectively. The total portfolio exposure to assets of
the eurozone periphery (Spain, Italy, Portugal, Greece) is 55% of
the portfolio.
Fitch believes that a material risk for the transaction is that
the portfolio assets' maturity may extend beyond their reported
weighted-average expected life. The affirmations and Negative
Outlooks on the class A2 to C notes reflect the extension risk of
the portfolio assets, which may prolong the risk horizon of the
portfolio.
The rating of the class P combination notes reflect the ratings
of its component classes i.e. EUR14.8 million class B notes and
EUR4.4 million subordinated notes, total distributions to date
(which count towards reducing the rated balances) and future
distributions expected on each of the component classes. The
rated balance of the class P notes currently stands at EUR13.7
million.
KINTYRE CLO: Moody's Confirms 'Caa1' Rating on Cl. E Notes
----------------------------------------------------------
Moody's Investors Service has upgraded and confirmed the ratings
of the following notes issued by Kintyre CLO I:
EUR239,750,000 Class A Senior Secured Floating Rate Notes due
2023, Upgraded to Aaa (sf); previously on Jul 10, 2012 Aa1
(sf) Placed Under Review for Possible Upgrade
EUR20,300,000 Class B Senior Secured Deferrable Floating Rate
Notes due 2023, Upgraded to Aa3 (sf); previously on Jul 10,
2012 A3 (sf) Placed Under Review for Possible Upgrade
EUR21,700,000 Class C Senior Secured Deferrable Floating Rate
Notes due 2023, Upgraded to Baa1 (sf); previously on Jul 10,
2012 Ba1 (sf) Placed Under Review for Possible Upgrade
EUR19,950,000 Class D Senior Secured Deferrable Floating Rate
Notes due 2023, Confirmed at Ba3 (sf); previously on Jul 10,
2012 Ba3 (sf) Placed Under Review for Possible Upgrade
EUR11,550,000 Class E Senior Secured Deferrable Floating Rate
Notes due 2023, Confirmed at Caa1 (sf); previously on Jul 10,
2012 Caa1 (sf) Placed Under Review for Possible Upgrade
Kintyre CLO I P.L.C., issued in March 2007, is a Collateralised
Loan Obligation ("CLO") backed by a portfolio of mostly high
yield European loans. The portfolio is managed by BNP Paribas.
This transaction will be in reinvestment period until 20 December
2012. It is predominantly composed of senior secured loans.
Ratings Rationale
According to Moody's, the rating actions taken on the notes
reflect a resilient performance, and the benefit regarding
Moody's modelling assumptions of the short period of time
remaining before the end of the reinvestment period in December
2012. The actions also reflect a correction to the rating model
Moody's used for this transaction. Moody's corrected the rating
model and put the ratings of the above tranches on review for
upgrade on 10 July, 2012.
In consideration of the reinvestment restrictions applicable
during the amortization period, and therefore the limited ability
to effect significant changes to the current collateral pool,
Moody's analyzed the deal assuming a higher likelihood that the
collateral pool characteristics will continue to maintain a
positive buffer relative to certain covenant requirements. In
particular, the deal is assumed to benefit from a shorter
amortization profile, higher spread and diversity levels compared
to the levels assumed at the last rating action in September
2011.
Moody's notes that the overcollateralization ratios of the rated
notes have been stable since the rating action in September 2011.
The Class A, Class B, Class C, Class D and Class E
overcollateralization ratios are reported at 136.70%, 124.70%,
114.01%, 105.28% and 100.20%, respectively, versus July 2011
levels of 136.30%, 124.70%, 114.31%, 105.79% and 101.06%,
respectively. Moody's also notes that the Class D and Class E
Notes are still deferring interest.
Reported WARF has increased slightly from 2859 to 2987 between
July 2011 and September 2012. Defaulted securities total about
EUR26 million of the underlying portfolio compared to EUR22
million in July 2011. In addition, securities rated Caa or lower
make up approximately 12.61% of the underlying portfolio versus
11.5% in July 2011.
Due to the impact of revised and updated key assumptions
referenced in "Moody's Approach to Rating Collateralized Loan
Obligations" published in June 2011, key model inputs used by
Moody's in its analysis, such as the portfolio par amount, WARF,
diversity score, and weighted average recovery rate, may be
different from the trustee's reported numbers. In its base case,
Moody's analyzed the underlying collateral pool to have a
performing par and principal proceeds balance of EUR 291 million,
defaulted par of EUR26 million, a weighted average default
probability of 19.41% (consistent with a WARF of 2966), a
weighted average recovery rate upon default of 46.31% for a Aaa
liability target rating, a diversity score of 37 and a weighted
average spread of 3.52%. The default probability is derived from
the credit quality of the collateral pool and Moody's expectation
of the remaining life of the collateral pool. The average
recovery rate to be realized on future defaults is based
primarily on the seniority of the assets in the collateral pool.
For a Aaa liability target rating, Moody's assumed that 91% of
the portfolio exposed to senior secured corporate assets would
recover 50% upon default, while the remainder non first-lien loan
corporate assets would recover 10%. In each case, historical and
market performance trends and collateral manager latitude for
trading the collateral are also relevant factors. These default
and recovery properties of the collateral pool are incorporated
in cash flow model analysis where they are subject to stresses as
a function of the target rating of each CLO liability being
reviewed.
In the process of determining the final ratings, Moody's took
into account the results of a number of sensitivity analyses:
(1) Deterioration of credit quality to address the refinance and
sovereign risks -- Approximately 31% of the obligors in the
portfolio are rated B3 and below with their loans maturing
between 2014 and 2016, which may create challenges for those
obligors to refinance. Approximately 18% of the portfolio is
exposed to obligors located in Greece, Portugal, Ireland, Spain
and Italy. Moody's considered a scenario where the WARF was
increased to be 3645 by forcing the credit quality on 25% of such
exposure to Ca. This scenario generated model outputs that were
one to three notches lower than the base case results.
(2) Lower Diversity Score Levels - Moody's also tested the
sensitivity of the rated tranches to certain key parameters.
Moody's modelled a lower diversity score of 31, which is
corresponding to the covenanted level. This scenario generated
model outputs that were zero to one notch lower than the base
case results.
Moody's notes that this transaction is subject to a high level of
macroeconomic uncertainty, which could negatively impact the
ratings of the notes, as evidenced by 1) uncertainties of credit
conditions in the general economy, especially as 18% of the
portfolio is exposed to obligors located in Greece, Portugal,
Ireland, Spain and Italy and 2) the large concentration of
speculative-grade debt maturing between 2014 and 2016 which may
create challenges for issuers to refinance. CLO notes'
performance may also be impacted either positively or negatively
by 1) the manager's investment strategy and behavior and 2)
divergence in legal interpretation of CDO documentation by
different transactional parties due to embedded ambiguities.
Sources of additional performance uncertainties are described
below:
1) Portfolio amortization: The main source of uncertainty in this
transaction is the pace of amortization of the underlying
portfolio. Pace of amortization could vary significantly subject
to market conditions and this may have a significant impact on
the notes' ratings. In particular, amortization could accelerate
as a consequence of high levels of prepayments in the loan market
or collateral sales by the Collateral Manager or be delayed by
rising loan amend-and-extent restructurings. Fast amortization
would usually benefit the ratings of the notes.
2) Moody's also notes that around 71% of the collateral pool
consists of debt obligations whose credit quality has been
assessed through Moody's credit estimates. Further information
regarding specific risks and stresses associated with credit
estimates are available in the report titled "Updated Approach to
the Usage of Credit Estimates in Rated Transactions" published in
October 2009.
3) Recovery of defaulted assets: Market value fluctuations in
defaulted assets reported by the trustee and those assumed to be
defaulted by Moody's may create volatility in the deal's
overcollateralization levels. Further, the timing of recoveries
and the manager's decision to work out versus sell defaulted
assets create additional uncertainties. Moody's analyzed
defaulted recoveries assuming the lower of the market price and
the recovery rate in order to account for potential volatility in
market prices. Realization of higher than expected recoveries
would positively impact the ratings of the notes.
The principal methodology used in this rating was "Moody's
Approach to Rating Collateralized Loan Obligations" published in
June 2011.
Moody's modeled the transaction using the Binomial Expansion
Technique, as described in Section 2.3.2.1 of the "Moody's
Approach to Rating Collateralized Loan Obligations" rating
methodology published in June 2011.
The cash flow model used for this transaction, whose description
can be found in the methodology listed above, is Moody's CDOEdge
model.
This model was used to represent the cash flows and determine the
loss for each tranche. The cash flow model evaluates all default
scenarios that are then weighted considering the probabilities of
the binomial distribution assumed for the portfolio default rate.
In each default scenario, the corresponding loss for each class
of notes is calculated given the incoming cash flows from the
assets and the outgoing payments to third parties and
noteholders. Therefore, the expected loss or EL for each tranche
is the sum product of (i) the probability of occurrence of each
default scenario; and (ii) the loss derived from the cash flow
model in each default scenario for each tranche. As such, Moody's
analysis encompasses the assessment of stressed scenarios.
In addition to the quantitative factors that are explicitly
modeled, qualitative factors are part of the rating committee
considerations. These qualitative factors include the structural
protections in each transaction, the recent deal performance in
the current market environment, the legal environment, specific
documentation features, the collateral manager's track record,
and the potential for selection bias in the portfolio. All
information available to rating committees, including
macroeconomic forecasts, input from other Moody's analytical
groups, market factors, and judgments regarding the nature and
severity of credit stress on the transactions, may influence the
final rating decision.
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.
* IRELAND: Moody's Issues Annual Credit Report
----------------------------------------------
In its annual credit report on Ireland, Moody's Investors Service
says that the country's Ba1 rating reflects the significant
deterioration in the government's financial strength following
the crystallization of contingent liabilities in the banking
sector and a severe economic contraction. On the basis of
Ireland's fiscal consolidation plan and the country's lackluster
economic outlook, Moody's expects its debt/GDP to peak at around
120% in 2013-14. Ireland's modest economic growth prospects are
driven by the ongoing fiscal consolidation process and the
limited availability of private-sector credit.
The rating agency's report, "Credit Analysis: Ireland, Government
of", is an annual update to the markets and does not constitute a
rating action.
Moody's determines a country's sovereign debt rating by assessing
it on the basis of four key factors -- economic strength,
institutional strength, government financial strength and
susceptibility to event risk -- as well as the interplay between
them.
There are a number of key factors that support Ireland's Ba1
rating. Firstly, the country's relatively predictable policy
framework, its commitment to fiscal consolidation and structural
reforms, and its success in achieving all of its objectives under
the fiscal adjustment required by the EU/IMF program, account for
an assessment of high institutional strength. Secondly, Moody's
highlights the economy's competitiveness, its business-friendly
tax environment and the labor market's flexibility as reflected
by the considerable wage adjustment that occurred during the
crisis. However, while Ireland's supply-side characteristics are
favorable, uncertainty remains over whether the economic
environment with its demand-side weaknesses will allow the Irish
economy to leverage its strengths in terms of flexibility and
competitiveness.
Moody's also notes that Ireland has sufficient funding under the
EU/IMF support package to cover all its financing requirement
until the end of 2013. Moreover, it has made preliminary steps in
an attempt to return to markets on a sustained basis, from which
it had been excluded since October 2010. Nevertheless, the rating
agency expects that the end of Ireland's current EU/IMF support
program at year-end 2013 will prompt the need for official
financing being available, possibly in the form of a
precautionary program.
The negative ratings outlook reflects the implementation risks to
the country's deficit-reduction plan, particularly in light of
the continued weakness in the Irish economy. Moreover, the
broader euro area debt crisis complicates the government's fiscal
consolidation efforts. These challenges also account for Moody's
assessment of Ireland's high susceptibility to event risk.
===================
L U X E M B O U R G
===================
EUROPEAN ENHANCED: S&P Cuts Ratings on Three Note Classes to 'B+'
-----------------------------------------------------------------
Standard & Poor's Ratings Services raised its credit rating on
European Enhanced Loan Fund S.A.'s class C notes to 'A- (sf)'
from 'BBB+ (sf)'. At the same time, S&P has affirmed its ratings
on the class A-1, A-2, A-3A, A-3B, B-1, B-2, D-1, D-2, D-3, and
D-4 notes, and lowered to 'B+ (sf)' from 'BB (sf)' our ratings on
the class E-1, E-2, and E-3 notes.
"The rating actions follow our assessment of the transaction's
performance since our previous review on Nov. 11, 2011," S&P
said.
"In our review, we considered recent transaction developments. We
included data from the September 2012 trustee report, our ratings
database, and our cash flow analysis. We applied our 2012
counterparty criteria and our 2009 cash flow collateralized debt
obligation (CDO) criteria," S&P said.
CREDIT ANALYSIS
"In terms of the portfolio's credit quality, the level of assets
that we consider to be rated in the 'CCC' category ('CCC+',
'CCC', or 'CCC-') has decreased to 2.09% from 3.57%, as a
percentage of performing assets excluding cash. In addition, the
weighted-average life of the assets in the portfolio has
decreased to 3.91 years from 4.38 years," S&P said.
"These revised parameters have led to a lower scenario default
rate (SDR) for all classes of notes compared with our previous
review, as provided by our CDO Evaluator (Version 6.0.1) model.
Through a 'Monte Carlo' methodology, the CDO Evaluator evaluates
a portfolio's credit quality. It considers the issuer credit
rating, size, domicile, and maturity date of each asset and the
correlation between each pair of assets. It presents the
portfolio's credit quality in terms of a probability distribution
for potential default rates. From this distribution, it derives a
set of SDRs that identify, for each rating level, the minimum
level of portfolio defaults a class of notes should be able to
withstand without defaulting," S&P said.
"We also note that defaulted assets (i.e., debt obligations of
obligors rated 'CC', 'SD' [selective default], or 'D'), as a
percentage of all assets excluding cash now total 4.96% compared
with none observed in our previous review. This has had a
negative effect on the transaction," S&P said.
CASH FLOW ANALYSIS
"Following our credit analysis, we subjected the transaction's
capital structure to a cash flow analysis to determine the break-
even default rate (BDR) for each rated class of notes at each
rating level. The tranche BDR and the SDR, provided by our CDO
Evaluator, are the key parameters in our methodology for the
rating and surveillance of CDO transactions," S&P said.
"In our analysis, we used the portfolio balance that we
considered to be performing (EUR309.9 million), the reported
weighted-average spread (3.194% for euro-denominated assets and
3.950% for sterling-denominated assets), and the weighted-average
recovery rates as per our 2009 cash flow CDO criteria. We
incorporated various cash flow stress scenarios using our
standard default patterns, levels, and timings for each rating
category assumed for each class of notes, in conjunction with
different interest rate and currency stress scenarios," S&P said.
COUNTERPARTY RISK
The issuer has entered into options agreements with JP Morgan
Chase Bank N.A. (A+/Negative/A-1).
"In our opinion, the downgrade provisions of the counterparty
agreements do not fully comply with our 2012 counterparty
criteria," S&P said.
ADDITIONAL SCENARIOS TESTED FOR COUNTERPARTY RISK
"Therefore, in our cash flow analysis, we assume that there are
no options in the transaction for all scenarios at a rating
higher than the long-term rating on the counterparty plus one
notch, 'AA- (sf)'. This affected class A-1, A-2, A-3B, B-1, and
B-2 notes, which results in a cap at 'AA (sf)' for the class A-1,
A-2, and A-3B notes, and at 'AA- (sf)' for the class B-1 and B-2
notes," S&P said," S&P said.
"For the class A-1, A-2, A-3A, A-3B, B-1, and B-2 notes, our
credit and cash flow analysis, with additional scenarios under
which we assume there are no options, indicate that the level of
credit enhancement available to the notes is commensurate with
the current ratings. We have therefore affirmed our ratings on
those classes of notes," S&P said.
RATINGS CONSTRAINED BY SUPPLEMENTAL STRESS TESTS
"The ratings on the class D-1, D-2, D-3, and D-4 notes, and the
class E-1, E-2, and E-3 notes are constrained by the application
of the largest obligor default test, a supplemental stress test
that we introduced in our 2009 criteria update for CDOs. We have
therefore affirmed our ratings on the class D-1, D-2, D-3, and D-
4 notes as the ratings on these notes are constrained at their
current levels by the application of the largest obligor default
test," S&P said.
"We have lowered our ratings to 'B+ (sf)' from 'BB (sf)' on the
class E-1, E-2, and E-3 notes; the ratings on these notes are
constrained at those lowered levels by the application of the
largest obligor default test," S&P said.
RATINGS NOT CONSTRAINED BY SUPPLEMENTAL STRESS TESTS
"The rating on the class C notes is not constrained by the
application of the largest obligor default test. Our credit and
cash flow analysis indicate that the level of credit enhancement
available to the class C notes is commensurate with a higher
rating of 'A-(sf)'. We have therefore raised our rating on the
class C notes to 'A- (sf)' from 'BBB+ (sf)'," S&P said.
"European Enhanced Loan Fund is a cash flow collateralized debt
obligation (CDO) transaction, backed primarily by leveraged loans
to speculative-grade corporate firms. The transaction closed on
May 18, 2006, and is managed PIMCO Europe Ltd. The transaction
ended its reinvestment period on May 18, 2012," 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 property-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
European Enhanced Loan Fund S.A.
EUR413 Million Secured Floating- and Fixed-Rate Notes
Class Rating
To From
RATING RAISED
C A- (sf) BBB+ (sf)
RATINGS LOWERED
E-1 B+ (sf) BB (sf)
E-2 B+ (sf) BB (sf)
E-3 B+ (sf) BB (sf)
RATINGS AFFIRMED
A-1 AA (sf)
A-2 AA (sf)
A-3A AA+ (sf)
A-3B AA (sf)
B-1 AA- (sf)
B-2 AA- (sf)
D-1 BB+ (sf)
D-2 BB+ (sf)
D-3 BB+ (sf)
D-4 BB+ (sf)
===========
P O L A N D
===========
PBG SA: PRID Unit Obtains Bankruptcy Protection
-----------------------------------------------
Bokszczanin Marcin at Polska Agencja Prasowa reports that PBG SA
said in a market filing that PRID, one of the company's units,
was granted bankruptcy protection for restructuring by a district
court in Poznan.
As reported by the Troubled Company Reporter-Europe on June 15,
2012, Bloomberg News related that a Poznan, western Poland-based
court agreed to declare bankruptcy of PBG aimed at arrangement
with creditors.
PBG SA is Poland's third largest builder.
===============
P O R T U G A L
===============
BANCO POPULAR: Fitch Affirms 'BB' LT Issuer Default Rating
----------------------------------------------------------
Fitch Ratings has affirmed Banco Popular Portugal's (BPP) Long-
term Issuer Default Rating (IDR) at 'BB', Short-term IDR at 'B'
and Support Rating at '3'. The Outlook on the Long-term IDR is
Stable. Fitch has simultaneously withdrawn all BPP's ratings as
they are no longer considered by Fitch to be analytically
meaningful. Consequently, Fitch will no longer provide rating or
analytical coverage for this issuer.
The affirmation of BPP's IDRs reflects parent support from its
sole shareholder, Banco Popular Espanol (BPE, 'BB+'/Stable).
Fitch considers BPP to be strategically important for BPE given
its high integration with the group. Therefore, its IDR is rated
one notch below the parent's. The Stable Outlook on BPP's Long-
term IDR is based on that on BPE. Fitch does not assign a
Viability Rating to BPP as the agency considers that given its
close integration within the parent, it cannot be viewed as an
independent entity.
BPP is a small and purely domestic retail Portuguese bank
entirely owned by the Spanish banking group, BPE. BPP has nearly
a 2% market share in loans and deposits in Portugal.
=========
S P A I N
=========
BBVA RMBS 11: S&P Assigns 'BB+' Rating to Class C Notes
-------------------------------------------------------
Standard & Poor's Ratings Services assigned its credit ratings to
BBVA RMBS 11 Fondo de Titulizacion de Activos' class A, B, and C
mortgage-backed floating-rate notes.
"The transaction closed in June 2012, but we were not engaged to
rate the notes at that time. Since closing, the class A notes
have amortized to EUR1,189.05 million from an initial amount of
EUR1,204 million. The notes amortize sequentially. As a
consequence, the class B and C notes have not yet started to
amortize," S&P said.
"We have based our ratings on our assessment of the credit and
cash flow characteristics of the underlying asset pool, the
transaction's structural features, as well as an analysis of the
transaction's counterparty and operational risks," S&P said.
"The originator of the loans backing the residential mortgage-
backed securities (RMBS) notes is Banco Bilbao Vizcaya
Argentaria, S.A. (BBVA; BBB-/Negative/A-3), one of the largest
Spanish primary lenders. In addition to originating the loans,
BBVA is the servicer, paying agent, and bank account provider for
the transaction. There is no swap in the transaction," S&P said.
"The portfolio comprises mortgage loans secured to Spanish
residents, with loan-to-value (LTV) ratios higher than 80%. The
loans are 'flexible' loans because their maturities can be
modified, installments can be deferred, a loan in the pool could
have a balloon payment, or they can change from a fixed to a
floating rate of interest subject to certain conditions. We have
considered these factors in our analysis," S&P said.
The main features of the transaction are:
-- As with other Spanish transactions, interest and principal
are combined into a single priority of payments. The class A
notes benefit from interest-deferral triggers in the class B
and C notes, which are standard features that S&P sees in
securitizations with a combined waterfall. Therefore, if
certain performance triggers are breached, senior noteholders
will receive cash flows normally used to service the
subordinated notes in order to speed up the amortization of
senior notes. The notes amortize sequentially.
-- At closing, the principal reserve fund totaled EUR178.5
million, which represents 12.89% of the outstanding balance
of the class A, B, and C notes and it is currently at its
required level under the transaction documents. The reserve
fund is only used to pay senior items during the lifetime of
the transaction, including interest on the class A, B, and C
notes and to redeem the principal on the notes. A
subordinated loan fully funded the reserve fund at closing.
-- A secondary reserve fund totaling EUR42 million was set up at
closing by a separate subordinated loan. It is to be used
exclusively to pay senior fees and interest on the class A
notes during the life of the transaction.
-- S&P has not stressed commingling risk as a loss in this
transaction because the transaction documents establish that,
if the ratings on the servicer are lowered below a defined
trigger, certain remedies will be taken in line with our 2012
counterparty criteria.
S&P's analysis indicated these key risks:
-- All the loans had initial LTV ratios above 80%. S&P took
this into account in its credit analysis.
-- There is no interest swap in the transaction. Therefore, it
has stressed the basis risk between assets and liabilities
in this transaction. Consequently, it has also made
assumptions for margin compression in its cash flow
analysis.
-- The rating on BBVA as bank account provider and the defined
trigger and remedy actions in the bank account agreement,
which its 2012 counterparty criteria classify as 'bank
account (limited)' support, constrain its rating on the
class A notes at 'A- (sf)'.
"Our analysis indicates that the level of credit enhancement
available to the class A, B, and C notes is sufficient to
mitigate the credit and cash flow risks at the assigned rating
levels. We also consider that the transaction documents
adequately mitigate the counterparty risk of the bank account
provider to the assigned rating levels, in line with our 2012
counterparty criteria. We have therefore assigned a 'A- (sf)'
rating to the class A notes, a 'BBB (sf)' rating to the class B
notes, and a 'BB+ (sf)' rating to the class C notes," S&P said.
"The class A notes could achieve a 'AAA (sf)' rating under our
credit, cash flow, and structural analysis of the transaction.
However, the rating on the class A notes is constrained by
sovereign risk and counterparty risk related to BBVA's role as
bank account provider," S&P said.
"The highest rating we would assign to a structured finance
transaction is six notches above the investment-grade rating on
the country in which the securitized assets are located. Since
Spain is currently rated 'BBB-/Negative/A-3', the maximum rating
achievable in this transaction is 'AA- (sf)'," 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 Standard & Poor's 17g-7 Disclosure Report included in this
credit rating report is available at:
http://standardandpoorsdisclosure-17g7.com/1111.pdf
RATINGS LIST
BBVA RMBS 11 Fondo de Titulizacion de Activos
EUR1.4 Billion Mortgage-Backed Floating-Rate Notes
Ratings Assigned
Class Rating Current Amount at
amount closing
(mil. EUR) (mil. EUR)
A A- (sf) 1,189.045 1,204.00
B BBB (sf) 119.00 119.00
C BB+ (sf) 77.00 77.00
FTPYME BANCAJA 6: S&P Cuts Rating on Class B Notes to 'CCC-'
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its credit rating on
FTPYME Bancaja 6, Fondo de Titulizacion de Activos' class B
notes. At the same time, S&P has affirmed its ratings on all
other classes of notes.
The rating actions follow S&P's assessment of the transaction's
performance since its previous review of the underlying
portfolio's credit quality and capital structure in May 2011. It
has also applied its 2012 counterparty criteria, its criteria for
rating European small and midsize enterprise (SME)
securitizations, and our nonsovereign ratings criteria.
"We have performed our credit and cash flow analysis using data
from the September 2012 trustee report. We have observed full
amortization of the class A1 notes and significant amortization
of the class A2 and A3 notes in accordance with the transaction
documents. This has resulted in higher subordination for the
class A2, A3, and B notes. We have also observed increasing
cumulative defaults (defined in the transaction documents as
loans in arrears for more than 18 months) in the portfolio and
higher regional concentration risk," S&P said.
"The number of loans has reduced to 1,144 from 2,856 at closing
in 2007, with the top 10 obligors accounting for 11.9% of the
outstanding pool balance. Obligors are diversified among 18
regions of Spain, however Valencia now accounts for over 47% of
the outstanding balance," S&P said.
"The reserve fund now totals EUR0.6 million, which constitutes
only a fraction of the required level of EUR27 million under the
transaction documents," S&P said.
"We subjected the capital structure to our cash flow analysis,
based on the methodology and assumptions outlined in our 2009
European SMEs criteria. We used the reported portfolio balance
that we considered to be performing, the reserve fund balance,
and the current weighted-average coupon. We also incorporated
default and recovery rates to the cash flow model that we
considered to be appropriate based on the transaction's past
performance, and considering Spain's current difficult market
conditions. We incorporated various cash flow stress scenarios
using various default patterns, interest rate scenarios, and
recovery timings," S&P said.
"In our analysis we assumed a stressed commingling loss level of
monthly interest and principal because the interest and principal
collections are transferred to the issuer's account only once a
month," S&P said.
"In our view, the increased credit enhancement levels due to the
transaction's amortization have helped to mitigate the risk of
higher defaults for the class A2 and A3 notes. The effect of
higher defaults, however, will make full repayment of the class
B, C and D notes unlikely. Consequently, we have lowered to 'CCC-
(sf)' from 'CCC (sf)' our rating on the class B notes, and have
affirmed our 'CCC- (sf)' and 'D (sf)' ratings on the class C and
D notes," S&P said.
"Although the results of our cash flow analysis suggest higher
ratings for the class A2 and A3 notes, we have affirmed our 'AA-
(sf)' ratings on these notes as a result of the application of
our nonsovereign ratings criteria. Under these criteria, the
highest rating we would assign to a structured finance
transaction is six notches above the investment-grade rating on
the country in which the securitized assets are located. Since
Spain's current rating is BBB-/Negative/A-3, the maximum rating
achievable in this transaction is 'AA- (sf)'," S&P said.
"BNP Paribas (A+/Negative/A-1) acts as a swap counterparty in the
transaction. We assumed that it will continue to perform its
obligations under the swap agreements because the application of
our 2012 counterparty criteria indicates that the swap
counterparty can support a maximum 'AA- (sf)' rating," S&P said.
FTPYME Bancaja 6 closed in September 2007 and is collateralized
by loans granted to Spanish SMEs originated by Caja de Ahorros de
Valencia, Castell¢n y Alicante (Bancaja).
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 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
FTPYME Bancaja 6, Fondo de Titulizacion de Activos
EUR1.028 Billion Mortgage-Backed Floating-Rate Notes
Rating Lowered
B CCC- (sf) CCC (sf)
Ratings Affirmed
A2 AA- (sf)
A3 AA- (sf)
C CCC- (sf)
D D (sf)
=====================
S W I T Z E R L A N D
=====================
IBERIAN MINERALS: S&P Assigns 'B+' Long-Term Corp. Credit Rating
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' long-term
corporate credit rating to Iberian Minerals Corp., a mining
company that is registered in Switzerland and has assets in Spain
and Peru. The rating is in line with the 'B+' preliminary rating
assigned Sept. 13, 2012. The outlook is stable.
"The rating reflects our view of Iberian Minerals' 'weak'
business risk profile and 'aggressive' financial risk profile, as
our criteria define the terms," S&P said.
Iberian Minerals is a base metals mining company which is 98.1%
owned by Trafigura Beheer B.V. (not rated), a global physical
commodities trading group. The rating is based on Iberian
Minerals' stand-alone credit quality and does not factor in
extraordinary timely support from Trafigura. "Although we see
Trafigura's credit quality as stronger than Iberian Minerals', we
perceive Iberian Minerals as small and not the core of
Trafigura's main trading activities. Trafigura's strategy is
primarily focused on accessing metal to trade and as such it buys
100% of Iberian Minerals' production," S&P said.
"Our assessment of Iberian Minerals' business risk profile as
'weak' is based on the cyclical and capital intensive nature of
the mining industry. Iberian Minerals is a small player operating
one underground mine in Spain and two in Peru. The share of the
Spanish contribution to EBITDA is set to rise over the next
several years. Key risks are operating challenges related to
underground mining, the limited scope of operations, and narrow
product diversification. We expect copper concentrate production
to remain the main revenue contributor -- in 2011 it contributed
208,000 dry metric tons, or 68% of sales," S&P said.
"Our assessment of the company's business risk profile is further
constrained by the short reserve lives of the Raul and
Condestable mines in Peru of 4.6 and 3.6 years despite a track
record of full reserve replacement in these two mines over recent
years. Supportive rating factors include modest geographic
diversification of assets and overall perceived moderate country
risks. The reserve life of Iberian Minerals' Spanish mine,
operated by Minas de Aguas Tenidas S.A. (MATSA) is considerable
at 18 years," S&P said.
"In our assessment, Iberian Minerals has a mid-cost-curve
position, which should support its future profitability, as
should its copper price hedges that are much higher than in
previous years. Moreover, we expect cash costs to further improve
in Spain in the next two to three years as production expands and
by-product credit from zinc, silver, and lead increases," S&P
said.
"We assess the company's financial risk profile as 'aggressive,'
constrained by its limited track record given low historic cash
flow generation owing to low price hedges. Higher copper price
hedges should ensure a significant improvement in cash flows in
2012-2013, however. We also expect free operating cash flow to be
negative in 2013 if the company executes its capital expenditure
(capex) program as planned. These weaknesses are partly offset by
the company's limited exposure to volatile copper spot market
prices, thanks to hedging contracts that cover 60% of production
in 2012-2013, and a comparable part in 2014-2015. Iberian
Minerals' financial risk profile also benefits from its current
moderate debt," S&P said.
"The stable outlook reflects our base-case expectation of
strongly improved profitability in 2012-2013 as the company
benefits from much-higher-priced hedge contracts. We also factor
in that the company will manage its investment program to
maintain adequate liquidity, namely through using long-term
funding for its capex program," S&P said.
"We might consider a negative rating action if we saw a
substantial debt increase compared with our base-case scenario.
Such an increase might be prompted by operational
underperformance and/or higher capex in a weak price environment,
a more aggressive financial policy that could include large near-
term dividend distributions to Trafigura, or weakened liquidity,"
S&P said.
"A positive rating action is unlikely in the next 12 months,
given the company's small asset base, limited forecast free
operating cash flow in view of its sizable capital spending
plans, limited track record in terms of improved profitability,
and the longer time that will be needed for the company to
advance its capex program. Rating upside over the medium term
could result from a better track record on sustainable profits
and successful progress on Iberian Minerals' capital program in
combination with a supportive financial policy," S&P said.
===========
T U R K E Y
===========
DOGAN YAYIN: Fitch Affirms 'B+' LT Issuer Default Ratings
---------------------------------------------------------
Fitch Ratings has revised the Outlook on Dogan Yayin Holding
(DYH) to Positive from Stable and affirmed its Long-term foreign
and local currency Issuer Default Ratings (IDRs) at 'B+'.
The ratings reflect the company's dominant position in the
Turkish media sector but still high FFO adjusted net leverage at
YE 2012 of 6.5x. The Positive Outlook reflects Fitch's
expectation that this will substantially reduce in 2013, mainly
from the disposal proceeds of Star TV as well as improved
performance at key operating subsidiary, D-SMART.
DYH's underlying creditworthiness will be mainly driven by the
improved operational performance of its broadcasting
subsidiaries, and the credit quality of its main operating
subsidiaries, Hurriyet Gazetecilik ve Matbaacilik A.S.
('B+'/Positive) in print and Kanal D in broadcasting.
Fitch recognizes that the group structure is much clearer since
tax obligations to the Turkish Treasury were completed in
September 2012. This was achieved through capital increases at
both DYH and Dogan TV level, (TRY1 billion and TRY832 million,
respectively) and additional borrowing of US$170 million at Dogan
TV level. The agency expects continued growth in ad spend in
line with economic growth in Turkey, but also notes that short to
mid-term volatility may be expected if economic growth continues
to suffer due to the weaker global environment.
D-SMART, DYH's digital platform will continue to reflect negative
free cash flow carry in 2012 and 2013 despite positive EBITDA,
but borrowing needs for its capex spending will gradually decline
starting from 2013. D-SMART is still gaining net subs in H212
ahead of management targets, and there is potential for future
growth in the new digital environment (analogue switch-off has
been delayed but is still expected over the next few years).
This business poses the main risk for the broadcasting segment
although it reached positive EBITDA in Q212 due to the continuing
growth of its subscriber base.
DYH's maturities are concentrated in 2013 and 2014 (US$586
million and US$224 million, respectively, based on management
accounts at September 2012). The company's consolidated cash
position of US$233 million at Q312 and significant cash inflows
from the asset sales in 2013 are strong enough to offset
liquidity needs until H213. Healthy cash flow generation due to
lower capex and higher broadcasting EBITDA as well as D-SMART's
reduced cash needs will also help support cash flow.
What Could Trigger A Rating Action?
Positive: Future developments that may, individually or
collectively, lead to positive rating action include:
-- More evidence on the sustainability of the operating
performance at D-SMART
-- Deleveraging to FFO adjusted net leverage of 4x may result
in an upgrade
Negative: Future developments that may, individually or
collectively, lead to negative rating action include:
-- Releveraging above 6x on weak operating results would be
negative for the rating
DYH is owned by the Dogan Group through Dogan Sirketler Grubu
A.S. (74.53%), the Dogan Family (2.3%) and Aydin Dogan Vakfi
(0.67%), giving the Dogan Group a combined 77.5% equity holding
and voting interests. The remaining 22.5% of DYH's shares are
free float.
GARANTI BANK: Fitch Affirms 'BB+' Long-Term IDR; Outlook Stable
---------------------------------------------------------------
Fitch Ratings has affirmed Banca Comerciala Romana S.A. (BCR) and
BRD-Groupe Societe Generale S.A.'s (BRD) Long-term Issuer Default
Ratings (IDR) at 'BBB+'. The agency also affirmed Garanti Bank
S.A.'s (Garanti Romania)'s Long-term IDR at 'BB+'. The Outlook
on all three Long-term IDRs is Stable.
RATING ACTION RATIONALE, DRIVERS AND SENSITIVITIES: IDR's,
SUPPORT RATINGS
BCR's, BRD's and Garanti Romania's IDRs reflect the support they
can expect to receive from their respective majority
shareholders: Erste Group Bank AG ('A'/Stable/'a-'), Societe
Generale (SG; 'A+'/Negative/'a-') and Turkiye Garanti Bankasi
A.S. (TGB; 'BBB-'/Stable/'bbb-'), respectively. Fitch considers
that the subsidiaries are strategically important investments for
their respective parents in the Central and Eastern European
(CEE) region, despite the weak performance of the Romanian market
during the past three years.
BCR's and BRD's IDRs are constrained by Romania's Country
Ceiling, and the Stable Outlooks on the banks' IDRs reflect that
on the sovereign. Any change in the Country Ceiling would likely
result in a change in the banks' IDRs. Any marked reduction in
the parent banks' commitment to the CEE region and to the
Romanian market in particular (not Fitch's base case expectation
at present) could also trigger a negative rating action.
Garanti Romania's IDRs are driven by the support that it can
expect to receive from its ultimate shareholder TGB and are
sensitive to any change in the IDRs of TGB. Fitch expects to
review the ratings of TGB during the next few weeks following the
recent upgrade of the Turkish sovereign. Garanti Romania's IDRs
could be downgraded in case of a marked reduction in the
strategic importance of the bank for the parent, but this is not
currently anticipated by Fitch.
RATING ACTION RATIONALE, DRIVERS AND SENSITIVITIES: VIABILITY
RATINGS
BCR is the largest bank in Romania in terms of asset market
share. The Viability Rating reflects its strong franchise, solid
efficiency and comfortable liquidity. At the same time, it
reflects a continued weakening of asset quality, negative
operating profitability due to high loan impairment charges, and
reliance on its parent for funding. BCR's operating
profitability suffered from rapidly rising loan impairment
charges in 9M12 and 2011. Credit impairments are the biggest drag
on profitability, and should peak in 2012, although large
downside risks exist. Meanwhile, margins have suffered somewhat
from competition and historically low interest rates. Efficiency
is solid and benefits from economies of scale and sound cost
controls.
The impaired loan ratio, as per IFRS accounts, increased to a
high 25.8% at end-Q312, although loans overdue by 90 days in
unconsolidated accounts (17.5% at end-H112) are moderately lower.
Further increases in impaired loans are possible due to risks of
an economic downturn and a further decline in real estate prices.
The high share of foreign-currency loans could also amplify
credit risk in case of sharp currency depreciation. The coverage
ratio of impaired loans, not allowing for collateral, has
improved in 9M12 but still remains low, with unreserved impaired
loans equal to 92% of equity at end-H112. BCR is largely funded
by customer deposits, which provide a comfortable funding and
liquidity position in RON. However, the bank is dependent on its
parent for euro-denominated funds (around 35% of non-equity
liabilities). The regulatory capital ratio at 13.2% at end-Q312
was only moderate, in particular given weaknesses in asset
quality and reserve coverage. Erste's commitment to support
funding and capital provides some comfort. An expected capital
increase of RON501m in December 2012 may contribute to a 100bp
increase in the capital ratio in Fitch's view.
Downside risk for BCR's Viability Rating could arise from
continued weakness in asset quality leading to further pressure
on profitability and capitalization. An upgrade is not likely in
the medium term.
BRD is Romania's second-largest bank, with around 13% of total
assets at end-H112. Fitch has not undertaken a full review of
BRD, and has therefore not assigned a VR to the bank. However,
the agency notes that most of BRD's key credit metrics have
significantly deteriorated in 2011 and 9M12, reflecting the
challenging market environment.
Garanti Romania has around 2% share of total assets and its
Viability Rating reflects its small size, its limited franchise
and short track record as a fully-fledged bank. It also reflects
its better asset quality compared with the Romanian banking
system in general. Its reliance on funding from the parent
remained high at 31% of non-equity liabilities at end-H112, in
line with its foreign-owned peers. Capitalization and growth of
the bank is supported by the parent via cash capital injections,
retained earnings and subordinated debt. Fitch Core Capital
equaled 14.6% at end-H112.
The Viability Rating may be upgraded should Garanti achieve
sustainable profitability and improve the diversification of
funding and loan book, while maintaining adequate capitalization
and solid asset quality. Downside to the Viability Rating could
stem from a marked deterioration in asset quality and
profitability leading to erosion in capitalization which is
considered unlikely by Fitch.
The rating actions are as follows:
Banca Comerciala Romana S.A.:
-- Long-term foreign currency IDR: affirmed at 'BBB+'; Outlook
Stable
-- Short-term foreign currency IDR: affirmed at 'F2'
-- Long-term local currency IDR: affirmed at 'BBB+'; Outlook
Stable
-- Support Rating: affirmed at '2'
-- Viability Rating: affirmed at 'bb-'
BRD-Groupe Societe Generale S.A.:
-- Long-term foreign currency IDR: affirmed at 'BBB+'; Outlook
Stable
-- Short-term foreign currency IDR: affirmed at 'F2'
-- Support Rating: affirmed at '2'
Garanti Bank S.A.:
-- Long-term foreign currency IDR: affirmed at 'BB+'; Outlook
Stable
-- Short-term foreign currency IDR: affirmed at 'B'
-- Support Rating: affirmed at '3'
-- Viability Rating: affirmed at 'b'
HURRIYET GAZETECILIK: Fitch Affirms 'B+' Issuer Default Ratings
---------------------------------------------------------------
Fitch Ratings has revised the Outlook on Hurriyet Gazetecilik ve
Matbaacilik A.S. to Positive from Stable and affirmed its Long-
term foreign and local currency Issuer Default Ratings (IDRs) at
'B+'. The agency has also affirmed Hurriyet's National Long-term
rating at 'A(tur)' and revised its Outlook to Positive.
The ratings reflect the company's leading market position in the
newspaper segment but still high FFO adjusted net leverage at YE
2012 of 4.5x. The Positive Outlook reflects Fitch's expectation
that this will substantially reduce in 2013, mainly from the sale
of real estate.
Hurriyet's Long-Term IDRs are at the same level as the IDRs of
its parent company, Dogan Yayin Holding AS (DYH, 'B+'/Positive),
in line with Fitch's parent and subsidiary rating linkage
criteria. DYH and its flagship newspaper have an established
strong rating linkage as DYH guarantees Hurriyet's bank debt.
(DYH holds 67% of Hurriyet).
There has been a structural trend of falling circulation and
declining share of newspapers in local advertising market
spending relative to television and the internet. Fitch expects
this to continue as the internet increases its share of
advertising spending to 20% by 2016.
The same trends apply to TME, which has also experienced a
structural decline in operating margins due to price-based
competition and the negative impact of the internet. TME's
revenue has suffered significantly due to elevated competition
from online classifieds and the stabilization of the business is
the main concern in the medium term. TME faces direct
competition from the internet, mainly in the lucrative Moscow
region where EBITDA is nearly breakeven at H112.
Hurriyet's strong free cash flow (FCF) generation capability is
hindered by falling EBITDA margins due to rising newsprint prices
and falling circulation, as a result of the structural decline in
the print business as well as the pressure on the EBITDA of its
main subsidiary, Trader Media East (TME). However, the company
is still able to generate significant free cash flow due to low
capex requirements and positive working capital.
Hurriyet's maturities are concentrated in 2013 and 2014 at US$154
million and US$64 million, respectively. The group's
consolidated cash position of US$50 million at H112, expected
proceeds from the sale of its real estate and annual FCF
generation capability are adequate to offset any liquidity needs
by end-2014.
What Could Trigger A Rating Action?
Positive: Future developments that may, individually or
collectively, lead to positive rating action include:
-- Exposure to DYH group-wide risks is a significant credit
constraint on Hurriyet due to the strong rating links
between the company and DYH. Consequently, an upgrade of
DYH's rating would have direct implications for Hurriyet's
ratings.
-- A reduction of FFO adjusted net leverage to 2x supported by
FCF and higher EBITDA margins, and a turnaround of TME
through its online strategy would also be positive for the
standalone ratings, but it is already captured in the
current rating.
Negative: Future developments that may, individually or
collectively, lead to negative rating action include:
-- Exposure to DYH group-wide risks is a significant credit
constraint on Hurriyet due to the strong rating links
between the company and DYH. Consequently, a downgrade of
DYH's rating would have direct implications for Hurriyet's
ratings.
===========================
U N I T E D K I N G D O M
===========================
AG SHAKESPEARE: Goes Into Administration
----------------------------------------
Bromsgrove-based electrical contractors AG Shakespeare Limited
has gone into administration.
The firm, which has been in operation since 1998, has reluctantly
decided to cease trading.
John Kelly and Nigel Price, of Birmingham-based insolvency
specialists Begbies Traynor, were appointed administrators to the
company on November 2.
Mr. Price said: "Some final completion works have been carried
out on a small number of contracts after the making of the
administration order, but the majority of the employees have now
been made redundant. The construction sector is particularly
tough at the moment and trading has been difficult for some
time."
The company, based on Harris Business Park, in Stoke Prior, has
18 employees.
CABOT FINANCIAL: Moody's Assigns 'B1' CFR; Outlook Stable
---------------------------------------------------------
Moody's Investors Service has assigned a B1 Corporate Family
rating to Cabot Financial Ltd (CFL), a company purchasing past
due consumer debt. Moody's has also assigned a B1 rating to the
GBP265 million long term, senior secured bond issued by Cabot
Financial (Luxembourg) S.A. The outlook is stable on all ratings.
Moody's ratings on CFL confirm the provisional ratings assigned
on September 10, 2012. The final terms and conditions of the
senior secured bond issuance, which was fully placed as at
October 5, 2012, are in line with the draft documentation
reviewed for the provisional (P)B1 rating assigned on September
10, 2012.
Ratings Rationale
CFL operates in the UK consumer debt market as a purchaser of
consumer debt from the financial services industry. The company
acquires aged debt at a deep discount to the total outstanding
balance and uses in-house collections teams and a multi-channel
communications strategy (phone calls, SMS, emails etc) to contact
the debtors and start the process of debt collection. CFL also
acts as a debt collections agency, collecting on past due debt on
behalf of debt originators in the financial services industry.
However, the debt purchasing operations account for the majority
of CFL's activities.
As outlined in Moody's Press Release dated September 10, 2012,
the CFR of B1 reflects CFL's strong market positioning, stable
operating cash flow and satisfactory level of debt service
capability and tangible common equity, as well as the monoline
business model, concentrated debt maturity profile, supplier
(i.e. debt originators) concentration and model risk in terms of
valuation and pricing of its purchased debt portfolio (i.e. the
risk of the models over-estimating projected cash flow generation
of a portfolio of purchased debt). The rating also reflects the
projected increase in leverage as a result of the bond issuance,
although it is expected to remain at a relatively modest level.
CFL's refinancing package incorporates GBP265 million Senior
Secured Notes, which are guaranteed on a senior basis by CFL and
all material subsidiaries of Cabot Credit Management (the
ultimate holding company of the group), as well as a GBP50
million Revolving Cash Facility (RCF), fully undrawn at issuance.
Both the Senior Secured Notes and the RCF are secured by a first
ranking security interest in substantially all the assets of the
issuer and the guarantors.
The following ratings have been assigned:
Cabot Financial Limited
- Corporate Family Rating, Assigned B1
Cabot Financial (Luxembourg) SA
- Senior Secured Regular Bond/Debenture, Assigned B1
What Could Change The Rating Up/Down
Upward rating pressure could arise from a sustained improvement
in the leverage metrics (debt-to-adjusted EBITDA) to around 1.5x
-- 1.8x, while maintaining other financial metrics and ratios at
current levels
The rating could come under downward pressure due to (i)
significant deterioration in income from operations (after
interest expense) and cash flow from operations, stemming from
factors such as underperforming collections productivity,
underperforming portfolio acquisitions and lower than forecast
collections; or (ii) an increase in leverage or sustained decline
in operating performance, leading to a debt ratio which is higher
than 4.0 times adjusted EBITDA or a tangible common equity-to-
tangible managed assets ratio which is below 15%; or (iii)
significant decline in interest coverage, with an adjusted
EBITDA-to-interest expense ratio below 3.5x - 1.0x.
The principal methodology used in this rating was Finance Company
Global Rating Methodology, published in March 2012.
CARE UK: Moody's Lowers CFR/PDR to 'B2'; Outlook Negative
---------------------------------------------------------
Moody's Investors Service has downgraded the corporate family
rating (CFR) and probability of default rating (PDR) of Care UK
Health & Social Care Investments Ltd. by one notch to B2. At the
same time Care UK Health & Social Care plc's GBP250 million
senior secured notes have been downgraded to B3 and the announced
increase of the notes by GPB75 million was assigned a B3 rating.
The outlook on the ratings is negative.
The rating action concludes the review for a possible downgrade
initiated by Moody's on August 30, 2012 and reflects an increase
in operating lease commitments and the recently announced largely
debt-financed acquisition of HWH Group Limited ("Harmoni").
Ratings Rationale
The downgrade is prompted by Care UK's increasing pace of debt
funded external growth over the last 12 months. The take over of
a large leasehold portfolio from Southern Cross, smaller
acquisitions of freehold properties and a continued large
development program have increased Care UK's net debt as reported
as well as its operating leasing liabilities, which Moody's adds
back to debt. Excluding the Harmoni acquisition and without
considering the impact of recently won Suffolk contract, reported
nominal lease obligations have increased by materially over
GBP200 million (to some GBP360 million on nominal undiscounted
basis) compared to last year, against relatively flat operating
results.
Whereas Moody's recognizes that lease adjusted debt would tend to
overstate leverage in the short-term, given delays in
contribution from newly developed and currently restructured
leaseholds, Moody's believes that Care UK's gross leverage
(Moody's adjusted) might remain over 6.0x over the next couple
years. Gradual deleveraging would only be possible on the back of
synergies realization (in case of Harmoni, please see Issue
Comment dated November 7th, 2012) and rapidly improving
contribution from existing and new properties, which, however,
would be partly offset by higher lease payments which Moody's
expects to almost double in the next several years as compared to
average 2011/12 levels.
Given the overall long life of Care UK's leasing contracts,
Moody's adjustment to debt is significant based on reported 2012
figures, accounting for some GBP180 million based on the
estimated net present value of the operating leases.
Care UK's B2 rating is a reflection of (i) the company's solid
market position as a leading private provider of various
outsourced healthcare and social care services in the UK; (ii)
the stable and recurring revenue and cash generation basis of the
services provided and the further growth potential stemming from
favorable demographics and the continued outsourcing of public
services to private operators; and (iii) expected positive
contribution from newly developed and restructured properties
which is currently not reflected in trading figures.
At the same time, the rating is constrained by (i) the relative
small scale of the company; (ii) its relatively high financial
leverage and weak financial metrics (RCF/Net debt of below 5%,
EBITA/Interest Cover below 1.0x and Debt/EBITDA trending above
6.0x); (iii) the constraints on the UK healthcare budget and
resulting pressure on profitability of renewal contracts; and
(vi) the relatively high capital intensity, and the ongoing
negative free cash flow generated due to ongoing modernization
and extension programs and required funding needs with an
increasing share of leasehold properties in the portfolio,
resulting in limited deleveraging profile.
What Could Change the Rating
A positive rating action is currently unlikely. An upgrade would
require a sustained period of maintaining profitability and cash
flow generation at a high level, with a subsequent reduction in
leverage, such that Care UK's adjusted debt/EBITDA ratio improves
below 5.5x and/or EBITA/Interest exceeds 1.4x with RCF/Net Debt
trending towards 10%.
Negative pressure could be exerted on the rating in the event of
(i) Care UK failing to reduce debt/EBITDA ratio below 6.25x over
the next 12-18 months; or (ii) EBITA/Interest falls below 1.0x or
iii) Company continues to generate negative FCF, maintaining
aggressive debt-funded acquisition/expansionary capex profile.
The principal methodology used in rating Care UK Health & Social
Care Investments Ltd and Care UK Health & Social Care plc was the
Global Healthcare Service Providers Industry Methodology
published in December 2011. Other methodologies used include Loss
Given Default for Speculative-Grade Non-Financial Companies in
the U.S., Canada and EMEA published in June 2009.
Care UK is a leading independent provider of health and social
care services in the UK. The company generated annual revenues of
GBP490 million (financial year ending September 2012).
CARE UK: S&P Cuts Long-Term Corporate Credit Rating to 'B'
----------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term
corporate credit and senior secured debt ratings on U.K.-based
health care group Care UK Health & Social Care Investments Ltd.
to 'B' from 'B+'. The outlook is stable.
"On Nov. 6, 2012, Care UK announced that it had acquired Harmoni,
a provider of out-of-hours health care services to the National
Health Service (NHS) in England, for an enterprise value of GBP48
million. The rating action reflects that as a consequence of this
acquisition, we estimate that Care UK's debt protection metrics
will be significantly weaker for the next 12 to 18 months. As
such, we no longer view them as commensurate with a 'B+' rating,"
S&P said.
"Following the announced acquisition, we have revised Care UK's
financial risk profile to 'highly leveraged' from 'aggressive,'
reflecting management's greater willingness to incur additional
debt and to accept a more highly leveraged balance sheet
following the debt-financed acquisition. We estimate that for the
year ending on Sept. 30, 2013, Care UK's Standard & Poor's-
adjusted leverage will be about 6x, decreasing to between 5x and
5.5x in the year ending Sept. 30, 2014. These figures include
about GBP325 million of financial debt and about GBP134 million
in the form of operating leases adjustments," S&P said.
"The ratings continue to reflect the group's relatively small
size, focus on the U.K. market, and a certain degree of reliance
on public funds, which are exposed to the vagaries of the U.K.'s
political climate and changes in reimbursement policies. We take
a negative view of the risks associated with independent sector
treatment centers (ISTCs), including a lack of guaranteed
procedure volumes priced at NHS tariffs," S&P said.
"These negative factors are partly offset by Care UK's good
revenue predictability; a high proportion of its services are
provided under forward contracts, especially in its residential
care business," S&P said.
"The stable outlook reflects our view that Care UK should be able
to balance potential fee and volume pressure against cost savings
and new contract wins while maintaining its operating performance
momentum, especially in its residential division. Ii also assumes
that the company will successfully integrate Harmoni and achieve
projected volumes under the new contracts and synergies stemming
from merging the two business," S&P said.
"We could take a negative rating action if adjusted EBITDA
interest coverage were to drop significantly below 1.5x, or if
Care UK proves unable to return to generating free operating cash
flow of at least GBP10 million from 2014. Factors that could
contribute to such a development include a failure to
successfully execute a proposed integration strategy and achieve
operating
efficiencies and deliver projected volumes. The company's
residential care division represents a less likely cause of a
negative rating action in our view, as about 43% of its beds are
on long-term block contracts," S&P said.
"In our opinion, a positive rating action is unlikely over the
next 12-18 months, due to Care UK's high adjusted leverage. This
is estimated to be well above 5x, a level that we would not view
as commensurate with a higher rating," S&P said.
COMET: Administrators Launch Collective Consultation Program
------------------------------------------------------------
Graham Ruddick at The Daily Telegraph reports that the
administrators to Comet are to launch consultations with all of
the company's staff as fears mount over the future of more than
6,000 jobs.
According to the Daily Telegraph, a letter which is being sent to
staff this week by Deloitte say the administrators will begin a
"collective consultation program" because of the "potential for
redundancies" and the "possibility of a transfer of some or all
of the Comet business".
Comet, which was bought by private equity firm OpCapita for
GBP2 less than a year ago, called in administrators earlier this
month, putting at risk 6,611 jobs, the Daily Telegraph relates.
Around 330 jobs in head office were cut last week, the Daily
Telegraph recounts.
Staff still working for Comet fear that the start of
consultations is to pave the way for mass lay-offs, the Daily
Telegraph notes.
It is understood that a collection of businesses have expressed
an interest in parts of Comet, but hopes of a savior for the
entire company and its 236 sites are fading, the Daily Telegraph
discloses.
About Comet
Headquartered in Rickmansworth, Comet is an electrical retailer.
Comet operates out of 236 stores across the UK, and employed
6,611 people - a full time equivalent workforce of 4,682
employees.
Neville Kahn, Nick Edwards and Chris Farrington of Deloitte were
appointed Joint Administrators to Comet on Nov. 2, 2012.
Deloitte said like many other retailers, Comet has been hit hard
by the uncertain economic environment, slow consumer spending and
lack of consumer confidence. Despite significant investment in
the business and the efforts of the experienced management team,
Comet has struggled to compete with online retailers which have
far lower overhead costs and can offer cheaper products, Deloitte
added.
EPIC PLC: Fitch Affirms Rating on Class D Notes at 'BBsf'
---------------------------------------------------------
Fitch Ratings has downgraded Epic (Caspar) plc's class A, B and C
floating-rate notes due October 2014 as follows:
-- GBP81.1m Class A (XS0201996369) downgraded to 'AAsf' from
'AAAsf'; RWN maintained
-- GBP29.1m Class B (XS0201997094) downgraded to 'Asf' from
'AAsf'; RWN maintained
-- GBP29.1m Class C (XS0201997177) downgraded to 'BBBsf' from
'Asf'; off RWN; Negative Outlook
-- GBP27.4m Class D (XS0201997250) affirmed at 'BBsf'; off RWN;
Negative Outlook
The downgrade reflects the maturity default of the sole loan in
the transaction. This leaves limited time prior to legal
maturity of the notes (less than two years) in which the servicer
would be able to sell the underlying assets (into a buyers'
market) should the borrower's disposal plan fall through. The
active engagement of the sponsor alongside evidence of successful
asset sales provides a reprieve from more severe rating action,
although the RWN on the class A and B notes highlights falling
confidence in the continued adequacy of the tail period.
The borrower failed to repay its GBP166.8 million securitized
loan on October 29, 2012. The exit strategy, which involves a
bulk sale of the 24 remaining UK mixed-use commercial real estate
assets, is yet to be executed, prompting the borrower to request
a creditor 'standstill' until January to allow it to finalize
ongoing sales negotiations. The issuer stated that the sales
price quoted should be sufficient for all its indebtedness to be
redeemed in full and on time. The short length of the standstill
lends credence to the borrower's plans.
Fitch intends to resolve the RWN soon after the January 2013
interest payment date. If the classes A and B notes remain
outstanding without much more visibility regarding redemption,
they will be subject to further downgrade. Fitch applies a
'soft' cap at 'BBBsf' for notes within the past 18 months of
their life, which would guide rating action. The affirmation of
the Class D note (albeit with a Negative Outlook) reflects
Fitch's view that sufficient collateral value remains to repay
the loan (and the notes) in full by October 2014.
===============
X X X X X X X X
===============
* Moody's Says EU ABS & RMBS Deterioration Likely Moderate
----------------------------------------------------------
Moody's Investor Services expects that Dutch, German and UK
asset-backed securities (ABS) and residential mortgage-backed
securities (RMBS) will come under minimal further pressure
following recent actions on bank ratings and current proposed
changes to Moody's structured finance methodologies. However, the
likely impact of both the rating actions and the proposed
methodology changes on RMBS and ABS in Spain, Portugal, Italy and
Ireland, will range from moderate to significant.
The new report is titled "European ABS and RMBS: Structured
finance ratings in Aaa-countries ratings are stable; downgrades
expected in other countries".
Moody's anticipates that less than 10% of transactions in
European countries with an Aaa country ceiling (France, Germany,
Netherlands, and the UK) would be affected by fewer than two
notches, with the remainder unaffected.
However, deterioration in Irish, Italian, Portuguese and Spanish
ABS and RMBS will range from moderate to significant, driven by
(1) deterioration of the credit quality of sovereign and
financial institutions serving as transactions' parties in the
past 12 months; (2) June 2012 updates to Moody's European RMBS
rating methodology and Moody's approach to analyzing set off risk
in Italian transactions; (3) continued collateral performance
deterioration and/or greater uncertainty about future
performance; (4) Moody's proposed methodology changes to capture
the effects of rapid and significant country credit deterioration
on structured finance transactions; and (5) Moody's proposed
approaches to assess the linkage to swap counterparties, account
banks and eligible temporary cash investments in structured
finance transactions. Many structured finance transactions in
countries where the country ceilings are below Aaa are affected
by a combination of these drivers.
In Spain, Portugal, Italy and Ireland, the ratings have been
lowered to the country ceiling and the majority of senior,
mezzanine and subordinated ratings affected were placed under
review for downgrade. 60% of deals in the combined four countries
have ratings under review, almost 100% only in Spain. Moody's
expects to undertake an initial phase of rating actions that will
be completed by the end of the fourth quarter of 2012, to
incorporate ratings drivers that have developed in the past 12
months. Ratings that are likely to be further affected by a
detailed assessment of pool performance, country risk and
counterparty exposure, as well as proposed methodology updates
will remain on review. Moody's will address these changes in a
second phase of rating actions, which is expected to be concluded
by the second quarter of 2013.
In all European countries, Moody's expects to have final review
of the remedial actions that have been implemented following
downgrades of financial institutions in the second quarter of
2012 and take rating actions on structured finance transactions
where necessary.
* BOOK REVIEW: Learning Leadership
----------------------------------
Author: Abraham Zaleznik
Publisher: Beard Books
Hardcover: 548 pages
Listprice: $34.95
Review by Henry Berry
The lesson in Learning Leadership -- The Abuse of Power in
Organizations is to "use power so that substance leads process."
This is done, says the author, by keeping the "content of work at
the center of communication."
The premise of this intriguing book is that many managers,
executives, and other business leaders allow "forms of
communication [to become] the center of work." As a result,
misguided and counterproductive leadership and management
practices have settled into many organizations. A culprit is the
popular "how-to" leadership manuals that offer simple,
superficial principles that only skim the surface of leadership.
Zaleznik argues that the primary way to get work done is to put
aside personal agendas and deal directly with those who are
involved in the work.
With this emphasis on substance over process, the concept of
leadership lies not in techniques, but personal qualities. The
essential personal qualities of leadership are captured by the
"three C's" of competence, character, and compassion. The author
then delves more deeply into each of these C's. We learn, for
example, that the three C's are not learned skills. Competence
entails "building one's power base on talent."
Character and compassion are the two other qualities of a leader
that must be present before there is any talk about methods of
operation, lines of communication, definition of goals, structure
of a team, and the like. There is more to character that the
common definition of the "quality of the person." Character also
embraces, says the author, the "code of ethics that prevents the
corruption of power." Compassion is defined as a "commitment to
use power for the benefit of others, where greed has no place."
This concept of a good leader is not idealized or unrealistic. It
takes into account human nature and the troubling behavior of
many leaders. Of course, any position of leadership brings with
it temptations and the potential to abuse power. Effective
leaders are those who "take responsibility for [their] own
neurotic proclivities," says the author. They do this out of a
sense of the true purpose of leadership, which is communal
benefit. The power holder will "avoid the treacheries of an
unreasonable sense of guilt, while recognizing the omnipresence
of unconscious motivation."
Zaleznik's definition of the essentials of leadership comes from
his study of notable (and sometime notorious) leaders. Some tales
are cautionary. The Fashion Shoe Company illustrates the problems
that can occur when a leader allows action to overcome thought.
The Brandon Corporation illustrates the opposite leadership
failing -- allowing thought to inhibit action. Taken together,
the two examples suggest that balance is needed for good
leadership.
Andrew Carnegie exemplifies the struggle between charisma and
guilt that affects some leaders. Frederick Winslow Taylor is seen
by the author as an obsessed leader. From his behavior in the
Sicilian campaign in World War II, General Patton is
characterized as a leader who violated the code binding leaders
and those they lead.
With his training in psychoanalysis and his experience in the
business field, Zaleznik's leadership dissections and discussions
are instructive. The reader will find Learning Leadership -- The
Abuse of Power in Organizations to be an engaging text on the
human qualities and frailties of leaders.
Abraham Zaleznik is emeritus Konosuke Matsushita Professor of
Leadership at the Harvard Business School. He is also a certified
psychoanalyst.
*********
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 * * *