/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/130520.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 Monday, May 20, 2013, Vol. 14, No. 98 Headlines A U S T R I A ALPINE HOLDING: Fails to Raise EUR200 Million From Unit Sales C R O A T I A CROATIA AIRLINES: May Face Bankruptcy if Restructuring Plan Fails C Z E C H R E P U B L I C CKD BLANSKO: Creditors File CZK955 Million Worth of Claims F I N L A N D WINDERMERE XIV: S&P Lowers Rating on Class D Notes to 'B-' F R A N C E CMA CGM: S&P Retains 'B-' Corp. Rating on CreditWatch Positive SOCIETE GENERALE: Fitch Rates Hybrid Capital Instruments at 'BB+' * Moody's: French Corporates to Look for New Funding Sources G E R M A N Y PROVIDE DOMICILE 2009-1: S&P Affirms 'BB' Rating on Class E Notes G R E E C E FREESEAS INC: Issues 350,000 Additional Shares to Hanover NAT'L BANK OF GREECE: Fitch Upgrades Long-Term IDR to 'B-' PIRAEUS BANK: S&P Lowers Rating on Non-Deferrable Sub. Notes to D TANEO: Fitch Upgrades Ratings to 'B-' I C E L A N D GLITNIR BANK: DekaBank Loses EUR388MM in Suit Over Gov't Takeover I R E L A N D ALME LOAN 2013-1: S&P Assigns 'B' Rating on Class E Notes I T A L Y BANCA POPOLARE: Moody's Lowers Long-Term Deposit Rating to 'Ba3' WIND ACQUISITION: Fitch Rates US$550MM Secured Fixed Notes 'BB' * Moody's: Italian Commercial Debt Refinancing to Raise Leverage L I T H U A N I A BANKAS SNORAS: LHV, RAZFin to Buy Leasing Unit for LTL74 Million UKIO BANKO: Is Insolvent; Among List of Companies in Debt Default L U X E M B O U R G MONIER GROUP: Moody's Changes Outlook on Caa1 Rating to Negative OXEA SARL: Moody's Revises Outlook on 'B1' CFR to Negative M O L D O V A * MOLDOVA: Moody's Says B3 Bond Rating Reflects Very Low GDP N E T H E R L A N D S DOME 2006-I: S&P Assigns 'B-' Rating on Class D Notes DUTCH MBS XV: S&P Affirms 'BB+' Rating on Class E Notes GRAND HARBOUR I: S&P Assigns Prelim. 'B' Rating on Class E Notes R U S S I A BANK VTB: Public Offering to Help Support 'bb-' Viability Rating MMK FINANCE: Fitch Withdraws 'BB+' Expected Notes Rating TINKOFF.CREDIT SYSTEMS: Moody's Affirms B2 Debt & Deposit Ratings UNIASTRUM BANK: Moody's Withdraws 'E' Standalone BFSR UNIASTRUM BANK: Moody's Withdraws B3.ru Long-Term NSR * Moody's: Russian CFOs Optimistic on Bank Performance S E R B I A & M O N T E N E G R O LUKA BEOGRAD: Seeks Creditor Approval of Debt Restructuring Plan S P A I N AVANZA SPAIN: Moody's Assigns 'B1' CFR; Outlook Stable AVANZA SPAIN: S&P Assigns Preliminary 'B+' CCR; Outlook Stable S W I T Z E R L A N D CREDIT SUISSE: Fitch Affirms 'BB+' Capital Perpetual Notes Rating T U R K E Y CUKUROVA HOLDING: TMSF Seizes Assets Following Debt Default U K R A I N E * UKRAINE: S&P Affirms 'B/B' Credit Ratings; Outlook Negative U N I T E D K I N G D O M ATMOSPHERE BARS: In Administration, 2 Bars at Risk BARCLAYS BANK: Fitch Affirms 'BB+' Preference Shares Rating BOND AVIATION: Moody's Assigns Definitive B2 Corp. Family Rating CO-OPERATIVE GROUP: S&P Affirms 'BB+' Ratings; Outlook Negative DANIEL CONTRACTORS: In Administration, 1,400 Jobs at Risk DECO 6: S&P Lowers Rating on Class B Notes to 'CCC' DECO 6: S&P Lowers Rating on Class B Notes to 'CCC' GALA GROUP: Fitch Raises Rating on GBP350MM Sec. Notes to 'BB' QUEENSFERRY HOTEL: In Administration, Cuts 40 Jobs THOMAS COOK: S&P Puts 'B-' Corp. Rating on CreditWatch Positive THOMAS COOK: Fitch Rates New EUR525MM Unsecured Notes at 'B+' VEDANTA RESOURCES: S&P Affirms 'BB' Corp. Rating; Outlook Neg. * Moody's: UK Water Sector's Totex No Impact on Financeability X X X X X X X X * Fitch: Investors Uncertain About EU Bank Sovereign Support * Moody's: European High-Yield Issuance Remains Strong in April * Moody's: Falling US Oil Imports to Hit Global Shipping Sector * BOND PRICING: For the Week May 13 to May 17, 2013 ********* ============= A U S T R I A ============= ALPINE HOLDING: Fails to Raise EUR200 Million From Unit Sales ------------------------------------------------------------- Jonathan Tirone at Bloomberg News, citing Presse, reports that Alpine Holding GmbH has been unable to raise EU200 million anticipated through the sale of subsidiaries. According to Bloomberg, Presse, citing unidentified people familiar with the company, said that Alpine is unlikely to receive additional aid from FCC. Alpine Holding GmbH diverted insolvency threat in March when creditor banks banks agreed to reduce unprofitable Austrian builder's liabilities, Bloomberg recounts. Alpine Holding GmbH is a builder based in Salzburg, Austria. ============= C R O A T I A ============= CROATIA AIRLINES: May Face Bankruptcy if Restructuring Plan Fails ----------------------------------------------------------------- Kurt Hofmann at ATWOnline reports that as the strike by Croatia Airlines pilots and flights attendants over pay cuts stretches into its third day, Minister of Transport Sinisa Hajdas Doncic said the carrier would go bankrupt if the restructuring plan is not put into action. The walkout, which began early Tuesday, continued Thursday as management and unions failed to reach a deal on new contracts after two days of negotiations, ATWOnline relates. According to ATWOnline, local newspapers reported that the unions said the restructuring measures include plans to cut around 200 employees and salaries to 40%. In the meantime, the airline is posting a special schedule on its Web site, ATWOnline notes. Croatia Airlines, as cited by ATWOnline, said the indefinite strike is causing only a partial disruption of flight operations. Croatia Airlines d.d. is the national airline and flag carrier of the Republic of Croatia. =========================== C Z E C H R E P U B L I C =========================== CKD BLANSKO: Creditors File CZK955 Million Worth of Claims ---------------------------------------------------------- CTK, citing the insolvency administrator's report in the insolvency register, reports that creditors have filed claims worth CZK955 million into the insolvency proceedings with CKD Blansko Strojirny and less than a third of the claims are of secured creditors. The Regional Court in Brno declared bankruptcy on CKD Blansko Strojirny this year in February but the company faces insolvency proceedings since May 2012, CTK relates. It has no employees but still owns machines and equipment, license and cash but the insolvency administrator has not disclosed their value in the report, CTK notes. ============= F I N L A N D ============= WINDERMERE XIV: S&P Lowers Rating on Class D Notes to 'B-' ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its credit ratings on Windermere XIV CMBS Ltd.'s class A, B, C, and D notes. At the same time, S&P has removed from CreditWatch negative its rating on the class C notes and has affirmed its 'B- (sf)' ratings on the class E and F notes. Windermere XIV CMBS is a 2007-vintage European CMBS true sale transaction, originally backed by eight loans secured on properties in France, Finland, Italy, and Germany, one of which has prepaid. The rating actions follow S&P's review of the underlying loans and the application of its updated European commercial mortgage- backed Securities (CMBS) criteria. On Dec. 6, 2012, S&P placed on CreditWatch negative its rating on Windermere XIV CMBS' class C notes following the update to its European CMBS criteria. HAUSSMAN LOAN (36.2% OF THE POOL) A prime office property in Paris secures the loan. According to the April 2013 investor report, the outstanding securitized balance is EUR255.2 million. In April 2013, the servicer reported a 4.75x interest coverage ratio (ICR) and a 60.48% securitized loan-to-value (LTV) ratio, based on a January 2007 valuation of EUR422 million. Following considerable property market declines, S&P considers that the value of the property is likely to have declined. The servicer has placed the loan on its watch list following a breach of the maximum 18-month vacancy period covenant. The vacancy rate has remained at 56% for more than 18 months, following a tenant's departure. The largest remaining tenant accounts for 99.6% of the rental income and the lease is due to expire 14 days before the loan maturity date in January 2014. This may cause refinancing problems. In S&P's opinion, full recovery of this loan appears unlikely in our base case scenario. FORTEZZA II LOAN (35.8% OF THE POOL) The loan is secured on 11 Italian office properties, 10 of which are in Rome. All buildings are fully let to entities linked to the Italian Ministry of Economy and Finance. According to the April 2013 investor report, the outstanding securitized balance is EUR252.2 million. The loan matures in January 2014. In April 2013, the servicer reported a 1.50x ICR and a 73.7% securitized LTV ratio, based on an April 2007 valuation of EUR342.4 million. Following considerable property market declines, S&P considers that the value of the properties is likely to have declined since 2007. Consequently, S&P expects the loan to experience principal losses in its base case scenario. SISU LOAN (12.7% OF THE POOL) Eighty-four mainly retail properties in Finland secure the loan. The borrower failed to repay the outstanding principal at its original loan maturity date in April 2012. The servicer extended the loan until April 2013, with the option to extend the maturity date for another year subject to the satisfaction of various extension conditions. The borrower did not meet the extension targets and consequently, the loan maturity date was not extended further, resulting in a payment default under the loan agreement. Consequently, the loan has entered special servicing. In April 2013, the servicer reported a 33.7% vacancy rate and a 68.0% securitized LTV ratio, based on a March 2013 valuation of EUR131 million. This loan is categorized by high vacancies and expenses. In S&P's opinion, full recovery of this loan appears unlikely in its base case scenario. ODIN LOAN (5.5% OF THE POOL) An industrial/logistics complex in Helsinki, Finland, secures the loan. The loan matures in July 2013 and has an outstanding securitized balance of EUR38.9 million. In April 2013, the servicer reported a securitized LTV ratio of 68.3%, based on a January 2012 valuation of EUR57 million. In S&P's opinion, full recovery of this loan appears unlikely in its base case scenario. GSI LOAN (5.1% OF THE POOL) A German office property secures the loan. The property is fully let to the Ministry of Justice of the Federal State of Saxony- Anhalt until 2020. The loan matures in April 2014 and has an outstanding securitized balance of EUR36.2 million. In April 2013, the servicer reported a 98.9% securitized LTV ratio, based on a January 2012 valuation of EUR36.6 million. In S&P's opinion, full recovery of this loan appears unlikely in its base case scenario. OTHER LOANS (4.6% OF THE POOL) German properties back the remaining two loans. S&P has reviewed each loan individually and expect full recovery for both loans. RATING RATIONALE S&P's analysis indicates that the amount of available credit enhancement for the class A, B, and C notes is no longer sufficient to address its principal loss expectations under its rating level scenarios. Therefore, S&P has lowered its ratings on the class A, B, and C notes. S&P has also removed from CreditWatch negative its rating on the class C notes. In S&P's opinion, recovery of full principal appears increasingly unlikely. S&P believes that it is highly likely that the class D, E, and F notes will suffer principal losses under its base case scenario. Therefore, S&P has lowered to 'B- (sf)' from 'B (sf)' its rating on the class D notes and has affirmed its 'B- (sf)' ratings on the class E and F notes. 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 Class Rating To From Windermere XIV CMBS Ltd. EUR1.112 Billion Commercial Mortgage-Backed Floating-Rate Notes Ratings Lowered A BBB (sf) A (sf) B BB-(sf) BBB (sf) D B-(sf) B (sf) Rating Lowered and Removed From CreditWatch Negative C B (sf) BB (sf) /Watch Neg Ratings Affirmed E B- (sf) F B- (sf) =========== F R A N C E =========== CMA CGM: S&P Retains 'B-' Corp. Rating on CreditWatch Positive -------------------------------------------------------------- Standard & Poor's Ratings Services said that its 'B-' long-term corporate credit rating on French ship operator CMA CGM S.A. and its 'CCC' issue rating on the company's senior unsecured notes remain on CreditWatch with positive implications. The recovery rating on the notes is unchanged at '6', indicating S&P's expectation of negligible (0%-10%) recovery in the event of a payment default. The ratings were placed on CreditWatch on Feb. 28, 2013. The CreditWatch status reflects S&P's expectation that CMA CGM's liquidity will likely improve in the short term if the company successfully finalizes its outstanding measures to increase liquidity sources. In S&P's view, CMA CGM's liquidity profile could strengthen if the group successfully closed the disposal of a 49% stake in Terminal Link to China Merchants Holdings (International) Company (CHMI) for EUR400 million in cash, as announced in February 2013, and its equity deal with Fonds Strategique d'Investissement (FSI), which in January 2013 agreed to subscribe to bonds redeemable in shares of CMA CGM for $150 million. Both transactions are subject to regulatory approval, which S&P believes will likely be granted over the next few weeks. In 2012, CMA CGM's revenues increased by about 7%, year on year, underpinned by transport volume growth of about 6%. Largely on account of large cost savings and improved bunker fuel efficiency, the reported EBITDA margin recovered to 8.3% from 4.9%, resulting in a surge in reported EBITDA to about $1.32 billion in 2012, from about $730 million in 2011. This, accompanied by debt reduction, materially improved CMA CGM'S credit metrics. For example, Standard & Poor's-adjusted funds from operations (FFO) to debt reached about 16% from about 7% in 2011. According to S&P's base case, it forecasts 2013 revenue growth to slow to 2%-3%, owing mainly to softer freight rates. Assuming the company maintains firm control over its operating costs, CMA CGM should be able to reach a reported EBITDA margin of 6%-7%. This, combined with reduced debt as forecast in S&P's base case, will likely allow CMA CGM to maintain its ratio of adjusted FFO to debt at about 16% in 2013. The ratings on CMA CGM continue to be constrained in the short term by S&P's view of the company's "less than adequate" liquidity profile, its high debt, and its exposure to the cyclical, capital-intensive, and competitive container shipping industry. However, S&P considers these risks to be partly offset by CMA CGM's leading global market position, diverse route network, high-quality and competitive fleet, and above-industry- average profitability. S&P will resolve the CreditWatch after CMA CGM completes the disposal of a 49% stake in Terminal Link and equity deal with FSI, and once S&P has reviewed the likely impact of the related cash inflows on the company's liquidity profile. S&P could raise the rating on CMA CGM, most likely by one notch, if its liquidity improved markedly and sustainably and its credit measures appeared to be consistently commensurate with the higher rating. Conversely, S&P could affirm or lower the ratings if the disposal or equity deal were delayed or did not materialize. SOCIETE GENERALE: Fitch Rates Hybrid Capital Instruments at 'BB+' ----------------------------------------------------------------- Fitch Ratings has affirmed Societe Generale's (SG) Long-term Issuer Default Rating (IDR) at 'A+' with a Negative Outlook and Short-term IDR at 'F1+'. At the same time, the agency has affirmed the Viability Rating (VR) at 'a-', Support Rating Floor at 'A+' and Support Rating at '1'. The rating actions have been taken in conjunction with Fitch's Global Trading and Universal Bank (GTUB) periodic review. Fitch's outlook for the sector is stable. Positive rating drivers include improved liquidity, funding, capitalization and more streamlined businesses, all partly driven by regulation. Offsetting these positive drivers are substantial earnings pressure, regulatory uncertainty and heightened legal and operational risks. KEY RATING DRIVERS - IDRS, SENIOR DEBT, SUPPORT RATING AND SUPPORT RATING FLOOR SG's Long- and Short-term IDRs, Support Rating, Support Rating Floor and senior debt ratings continue to reflect potential support from France ('AAA'/Negative), if required, and the Long- term IDR is at the same level as its Support Rating Floor. The Negative Outlook on SG's Long-term IDR reflects that on France's Long-term IDR. RATING SENSITIVITIES - IDRS, SENIOR DEBT, SUPPORT RATING AND SUPPORT RATING FLOOR The Long- and Short-term IDRs, Support Rating, Support Rating Floor and senior debt ratings are sensitive to a decrease in France's ability (as measured by its rating) and willingness to support SG. A downgrade of France's Long-term IDR by one notch (to 'AA+') would lead to a downgrade of SG's Support Rating Floor, Long-term IDR and senior debt rating to 'A' and Short-term IDR to 'F1'. The IDRs, Support Rating and Support Rating Floor are also sensitive to a change in Fitch's assumptions around the availability of sovereign support for French banks. There is a clear political intention to ultimately reduce the implicit state support for systemically important banks in Europe and the US, as demonstrated by a series of policy and regulatory initiatives aimed at curbing systemic risk posed by the banking industry. This might result in Fitch revising Support Rating Floors downwards in the medium term, although the timing and degree of any change would depend on developments with respect to specific jurisdictions. In this context, Fitch is paying close attention to ongoing policy discussions around support and 'bail in' for eurozone banks. Until now, senior creditors in major global banks have been supported in full, but resolution legislation is developing quickly and the implementation of creditor "bail-in" is starting to make it look more feasible for taxpayers and creditors to share the burden of supporting large, complex banks. KEY RATING DRIVERS - VR SG's VR benefits from its solid and well-performing franchise in French retail and commercial banking and its leading global franchise in equity derivatives. However, the VR also factors in challenges around a somewhat fragmented business mix and underperformance in CEE/Russia as well as earnings volatility from corporate and investment banking (CIB) business. Further negative VR drivers include a high gross impaired loans ratio and a smaller liquidity buffer than at other GTUBs. Counterbalancing these, a key driver for the VR is management's focus on strengthening its balance sheet in terms of both liquidity and capital. RATING SENSITIVITIES - VR The bank's VR could be downgraded if performance in international retail banking fails to improve and contribute to material earnings diversification. This could arise from significant erosion in asset quality in CEE/Russia or from an inability to increase earnings generation. In CIB, SG is showing some success in expanding its eurobond activity and has established itself as a leading player in the euro corporate bond market, where it has natural synergies with its large French corporate customer base. Its VR is sensitive to its sustaining this success, while managing risk appropriately so as not to be caught by any hike in impairment charges. Moreover, negative pressure on the VR could come if the bank were to add to the fragmentation of its business mix and indicate a lack of strategic focus, for example by making a significant opportunistic acquisition that did not fit with one if its core businesses. The VR is also sensitive to SG continuing to strengthen capitalization and liquidity. Fitch does not expect to upgrade SG's VR in the near term. KEY RATING DRIVERS AND SENSITIVITIES - SUBORDINATED DEBT AND OTHER HYBRID SECURITIES Subordinated debt and other hybrid capital issued by SG and SG Capital Trust III are all notched down from SG's VR in accordance with Fitch's assessment of each instrument's respective non- performance and relative loss severity risk profiles, which vary considerably. Their ratings are primarily sensitive to any change in SG's VR. KEY RATING DRIVERS AND SENSITIVITIES - SUBSIDIARY AND AFFILIATED COMPANY Societe Generale Acceptance N.V., SG Option Europe and SG Structured Products Inc. are wholly owned financing subsidiaries of SG whose debt ratings are aligned with that of SG based on an extremely high probability of support if required and whose ratings are sensitive to the same factors that might drive a change in SG's IDR. The rating actions are: Societe Generale Long-term IDR: affirmed at 'A+'; Outlook Negative Short-term IDR: affirmed at 'F1+' Viability Rating: affirmed at 'a-' Support Rating: affirmed at '1' Support Rating Floor: affirmed at 'A+' Commercial paper: affirmed at 'F1+' Senior unsecured debt: affirmed at 'A+'/'F1+' Short-term debt: affirmed at 'F1+' Lower Tier 2 notes: affirmed at 'BBB+' Upper Tier 2 notes: affirmed at 'BBB-' Hybrid capital instruments: affirmed at 'BB+' Societe Generale Acceptance N.V. Market-linked guaranteed notes: affirmed at 'A+emr' Senior notes: affirmed at 'A+'/'F1+' Senior guaranteed notes: affirmed at 'A+' SG Option Europe Market-linked guaranteed notes: affirmed at 'A+emr' Senior notes: affirmed at 'A+'/'F1+' SG Capital Trust III Preferred stock: affirmed at 'BB+' SG Structured Products Inc. Senior notes: affirmed at 'A+' * Moody's: French Corporates to Look for New Funding Sources ------------------------------------------------------------ French non-financial corporates are likely to continue to seek alternative funding sources in response to a tightening of bank lending and institutional investors' heartier appetites for corporate debt, says Moody's Investors Service in a report on the sector entitled "French Non-Financial Corporates Widen Sources of Funding." "Specifically, we expect French corporate bond issuance to continue to increase both in volume and in value terms, given that bonds present certain advantages over bank loans, including broader access to longer maturities and foreign currency- denominated debt, and that banks have tightened their lending conditions," says Eglantine de Muizon, an Associate Analyst in Moody's Corporate Finance Group and co-author of the report. "In addition, the popularity of certain debt instruments, such as private placements, is likely to grow as they provide needed diversification of assets for investors and sources of funding for corporates." In line with disintermediation, the French corporate bond market has expanded to include a wider range of industries and credit profile, including riskier issuers rated in high-yield territories as well as smaller or privately owned companies. Moody's believes that this trend is also likely to continue, reflecting the needs of corporates for varied funding sources and of investors for diversified portfolios with an increased element of risk, particularly as they search for higher returns in a low- rate environment. However, while presenting some advantages over bank loans, bonds also require a higher degree of public disclosure from issuers and are -- to some extent -- less "agile" instruments. These limits and still-existing barriers to entry for small or sporadic issuers are driving French corporates towards alternative financing solutions. Moody's notes that new kinds of debt instruments have emerged in France that attempt to mimic the features of existing private placement instruments in other geographies, such as US private placements and to a lesser extent the German Schuldschein. In the wake of these instruments, the first French "euro private placement" deals have taken place. However, Moody's notes that these instruments, which combine bond and bank loan features, still lack uniformity and a consistent legal and contractual framework; hence, they may carry particular risks for investors primarily related to creditworthiness, legal protection and liquidity. ============= G E R M A N Y ============= PROVIDE DOMICILE 2009-1: S&P Affirms 'BB' Rating on Class E Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its credit ratings on PROVIDE Domicile 2009-1 GmbH's class B, C, and D notes. At the same time, S&P has affirmed its ratings on the class A+, A, and E notes. The rating actions follows S&P's analysis of the transaction's performance. A combination of subordination and a synthetic excess spread mechanism provide credit enhancement for the notes. While the class A+, A, B, C, and D notes benefit from this combination, the most subordinated class E notes solely rely on available synthetic excess spread. Since S&P's previous review of the transaction on Sept. 28, 2011, cumulative net losses increased to what it considers to be a low level of EUR489,770 (or 0.3% of the closing balance) from EUR271,784. Synthetic excess spread has been available to cure applied net losses to date, so that the class E notes are still fully funded. The transaction's synthetic excess spread equals 6.25 basis points (bps) per quarter on the portfolio's performing balance. If unused, it will accumulate to a cap of 25 bps. While the transaction amortizes, the amount of available excess spread amortizes in absolute terms as well. However, under the transaction documents, synthetic excess spread is subject to a EUR2.5 million floor, which will set in on the July 2013 interest payment date. The notes pay down sequentially. Therefore, as the transaction amortizes, the class A to E notes have remained at the same size as of closing. Subordination has since increased the credit enhancement available to the class A+ to D notes. According to the April 5, 2013, investor report, the current outstanding nominal amount of credit events (defined in the transaction documents as loans that are delinquent for more than 90 days or bankruptcy), has decreased in absolute terms to about EUR6.3 million from a peak of about EUR8.4 million in Q2 2011. In Q2 2012, the proportion of credit events as a percentage of the closing balance increased to about 1.3%--it has since remained at about this level. Severe delinquencies of more than 90 days, currently at 0.70%, have been relatively stable over the past two years, fluctuating between 0.53% and 0.78% of the current outstanding balance. In light of realized losses and delinquencies to date, and taking into account the portfolio's historical recovery rates, S&P has assessed the likelihood of future losses for both the performing and nonperforming parts of the pool. S&P applied a minimum borrower concentration amount, which superseded the results from its weighted-average foreclosure frequency and weighted- average loss severity assumptions for the pool and determines the required credit enhancement at each rating level. The number of obligors to be covered varies at each rating level. S&P applied this concentration floor to ensure that credit enhancement is not below the transaction's aggregate gross exposure to the largest borrowers in the pool. S&P found that the available credit enhancement is above the transaction's aggregate exposure to the largest borrowers in the pool for the class A+ to D notes. Following S&P's review, it has raised its ratings on the class B, C, and D notes due to increased credit enhancement provided by the subordinated classes of notes and available excess spread. S&P has affirmed its ratings on the class A+, A, and E notes, as it considers the current credit enhancement to be commensurate with the currently assigned ratings. At closing, PROVIDE Domicile 2009-1 invested the note proceeds in 'AAA' rated certificates issued by Kreditanstalt fur Wiederaufbau (KfW; AAA/Stable/A-1). Payments on the notes depend on KfW, since it provided the certificate collateral backing the notes. KfW is therefore a fully supporting counterparty under S&P's 2012 counterparty criteria. The transaction's pool factor (i.e., the percentage of principal left to be distributed) has decreased to 31% since closing. S&P will continue to monitor the development of credit events and actual losses in the transaction. PROVIDE Domicile 2009-1 is a synthetic, partially funded, German residential mortgage-backed securities (RMBS) transaction. 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 PROVIDE Domicile 2009-1 GmbH EUR133.7 Million Floating-Rate Credit-Linked Notes Ratings Raised B AAA (sf) AA+ (sf) C AA (sf) A+ (sf) D A- (sf) BBB (sf Ratings Affirmed A+ AAA (sf) A AAA (sf) E BB (sf) =========== G R E E C E =========== FREESEAS INC: Issues 350,000 Additional Shares to Hanover --------------------------------------------------------- The Supreme Court of the State of New York, County of New York, on April 17, 2013, entered an order approving, among other things, the fairness of the terms and conditions of an exchange pursuant to Section 3(a)(10) of the Securities Act of 1933, as amended, in accordance with a stipulation of settlement between FreeSeas Inc., and Hanover Holdings I, LLC, in the matter entitled Hanover Holdings I, LLC v. FreeSeas Inc., Case No. 153183/2013. Hanover commenced the Action against the Company on April 8, 2013, to recover an aggregate of US$1,792,416 of past- due accounts payable of the Company, plus fees and costs. The Order provides for the full and final settlement of the Claim and the Action. The Settlement Agreement became effective and binding upon the Company and Hanover upon execution of the Order by the Court on April 17, 2013. Pursuant to the terms of the Settlement Agreement approved by the Order, on April 17, 2013, the Company issued and delivered to Hanover 560,000 shares of the Company's common stock, US$0.001 par value, on April 22, 2013, the Company issued and delivered to Hanover 300,000 Additional Settlement Shares, on April 29, 2013, the Company issued and delivered to Hanover another 325,000 Additional Settlement Shares, and on May 6, 2013, the Company issued and delivered to Hanover another 335,000 Additional Settlement Shares. The Settlement Agreement provides that the Initial Settlement Shares will be subject to adjustment on the trading day immediately following the Calculation Period to reflect the intention of the parties that the total number of shares of Common Stock to be issued to Hanover pursuant to the Settlement Agreement be based upon a specified discount to the trading volume weighted average price of the Common Stock for a specified period of time subsequent to the Court's entry of the Order. Since the issuance of the Initial Settlement Shares and Additional Settlement Shares, Hanover demonstrated to the Company's satisfaction that it was entitled to receive 350,000 Additional Settlement Shares based on the adjustment formula described above, and that the issuance of those Additional Settlement Shares to Hanover would not result in Hanover exceeding the beneficial ownership limitation set forth above. Accordingly, on May 10, 2013, the Company issued and delivered to Hanover 350,000 Additional Settlement Shares pursuant to the terms of the Settlement Agreement approved by the Order. A copy of the Form 8-K is available for free at: http://is.gd/iVcmKF About FreeSeas Inc. Headquartered in Athens, Greece, FreeSeas Inc., formerly known as Adventure Holdings S.A., was incorporated in the Marshall Islands on April 23, 2004, for the purpose of being the ultimate holding company of ship-owning companies. The management of FreeSeas' vessels is performed by Free Bulkers S.A., a Marshall Islands company that is controlled by Ion G. Varouxakis, the Company's Chairman, President and CEO, and one of the Company's principal shareholders. The Company's fleet consists of six Handysize vessels and one Handymax vessel that carry a variety of drybulk commodities, including iron ore, grain and coal, which are referred to as "major bulks," as well as bauxite, phosphate, fertilizers, steel products, cement, sugar and rice, or "minor bulks." As of Oct. 12, 2012, the aggregate dwt of the Company's operational fleet is approximately 197,200 dwt and the average age of its fleet is 15 years. Freeseas disclosed a net loss of US$30.88 million in 2012, a net loss of US$88.19 million in 2011, and a net loss of US$21.82 million in 2010. The Company's balance sheet at Dec. 31, 2012, showed US$114.35 million in total assets, $106.55 million in total liabilities and US$7.80 million in total shareholders' equity. RBSM LLP, in New York, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has incurred recurring operating losses and has a working capital deficiency. In addition, the Company has failed to meet scheduled payment obligations under its loan facilities and has not complied with certain covenants included in its loan agreements. It has also failed to make required payments to Deutsche Bank Nederland as agreed to in its Sept. 7, 2012, amended and restated facility agreement and received notices of default from First Business Bank. Furthermore, the vast majority of the Company's assets are considered to be highly illiquid and if the Company were forced to liquidate, the amount realized by the Company could be substantially lower that the carrying value of these assets. These conditions among others raise substantial doubt about the Company's ability to continue as a going concern. NAT'L BANK OF GREECE: Fitch Upgrades Long-Term IDR to 'B-' ---------------------------------------------------------- Fitch Ratings has upgraded National Bank of Greece's (NBG), Piraeus Bank's (Piraeus), Alpha Bank's (Alpha) and Eurobank Ergasias' (Eurobank) Long-Term Issuer Default Ratings (IDRs) to 'B-' from 'CCC', Short-term IDRs to 'B' from 'C' and Viability Ratings (VR) to 'b-' from 'f'. The agency has also revised the Greek banks' Support Rating Floors (SRF) to 'No Floor' from 'CCC' and affirmed the Support Rating (SR) at '5'. These rating actions follow the banks' recapitalization and a more stabilized macroeconomic environment in Greece, which is reflected in the agency's upgrade of Greece's sovereign rating to 'B-' from 'CCC' with a Stable Outlook. The Outlook on the banks' Long-term IDRs is Stable, reflecting the close correlation with that of the sovereign. KEY RATING DRIVERS - IDRs, VRs, SENIOR DEBT The Greek banks' Long-term IDRs are upgraded to be in line with their 'b-' VRs. Senior debt ratings have also been upgraded by one notch to 'CCC' in tandem with the banks' IDRs, based on RR5 Recovery Ratings. In the absence of Greek authorities' ability to support the Greek banks, as evidenced by the sovereign's weak creditworthiness and the receipt of a sizeable IMF/EU bail-out plan which included support to banks, the four banks' Long-term IDRs and senior debt ratings are now driven by their improved stand-alone fundamentals as expressed by their VRs. The upgrade of the VRs reflects the banks' recapitalization, which is in its final stage, and a more stabilized macroeconomic environment in Greece, as expressed by the sovereign upgrade. Despite the upgrade, at the 'b-' level the VR denotes weak prospects for ongoing viability as per Fitch's rating definitions. Upon the completion of the capital raising exercises in the coming weeks and considering recent bank acquisitions, the pro forma EBA core capital ratios are estimated to be above 8% for NBG, 10.9% for Eurobank, 13.9% for Alpha (excluding the recently completed liability management exercise) and 14.3% for Piraeus. Except for NBG, this is above the minimum 9% required by the authorities. The VRs also reflect the banks' improved deposit bases and regained access to ECB funding, although banks' funding and liquidity remain highly vulnerable and dependent on central bank funding. The VRs of Alpha and Piraeus acknowledge their improved domestic retail franchises and market shares following bank acquisitions in 2012 and Q113, in particular Piraeus which is now the second largest bank by assets and first by domestic market shares (29% for both loans and deposits). Piraeus made several bank acquisitions, including the healthy balance sheet of ATEbank, the Greek subsidiaries of a French bank as well as a Portuguese bank and the Greek operation of the three Cypriot banks in a short period of time, which allowed it to double its assets size to EUR102 billion. Alpha acquired the Greek subsidiary of Credit Agricole, Emporiki, which accounted for about 30% of its assets. NBG is now the second-largest bank by deposit market share (22% in deposits and 18% in loans) followed by Alpha (20% in deposits and 24% in loans). After the suspension of the merger between NBG and Eurobank, Eurobank has lost ground and is now Greece's fourth largest bank (12% of deposits and 16% of loans). In Fitch's view, Eurobank will be challenged to create value if it remains as an independent entity, given its relatively smaller size and franchise. The VRs of NBG and Eurobank benefit from some geographical diversification, especially NBG through its profitable Turkish operations held by its majority-owned Finansbank A.S. (rated BBB/Stable). The latter provides NBG good internal capital generation prospects. This together with its better than peers credit risk profile, as reflects its better asset quality indicators and comparatively lower credit loss projections under the Black Rock exercise (particularly its Greek loan book) partially mitigates NBG's relatively weaker capital ratios. In this regard, NBG is currently proceeding with capital enhancement measures, which include liability management exercises and the sale of assets. The latter is expected to boost its EBA core capital significantly by June 2013. However, the VRs of Greek banks continue to reflect the risk of potentially higher asset quality and profitability pressures, which if not contained could ultimately renew capital concerns, as well as funding vulnerabilities. Banks also face the challenge of managing restructuring and/or integration risks (particularly Alpha and Piraeus) whilst the economic conditions will remain weak, as shown by Fitch's estimates that Greece's GDP will contract by 4.3% in 2013 and with only a marginal recovery in 2014. The Stable Outlook on the banks' Long-term IDRs is correlated to that of the sovereign. Being largely domestic banks, their revenue generation, credit and funding profiles are, in Fitch's opinion, highly sensitive to Greece's operating environment. As per Fitch's rating definitions, the 'RR5' on the senior notes reflects below average recovery prospects due to downside risks on asset and liabilities valuations from the weak operating environment and the relatively large level of assets pledged (between 38% and 50%), implying some collateral constraints. According to the Black Rock stress test exercise, Greece's four largest banks had combined capital needs of EUR27.5bn. The recapitalization of the four banks has unfolded in several phases with the Hellenic Financial Stability Fund (HFSF) channelling most of the capital needs through capital advances. Banks are now in the final stage of their recapitalization process, which includes the completion of capital raising exercises and potentially the issuance of contingent convertible bonds (CoCos), to be fully subscribed by the HFSF. Under the terms of Greece's international bail-out, Greek banks must raise at least 10% of their capital needs from private investors to remain in private hands. While most of the capital needs are expected to be covered by the HFSF, Fitch understands that Alpha's private rights issue will be fully underwritten by a syndicate of international investment banks that will allow the bank to reach the minimum private participation threshold to avoid nationalization and the bank will not issue heavy interest burden CoCos. NBG and Piraeus also expect to raise capital through private sources and avoid nationalization. Also they may avoid issuing CoCos. Eurobank, by contrast, is the only bank that has stated that it cannot meet the 10% threshold and will be nationalized through an imminent capital injection by the HFSF. Fitch expects banks' capital ratios to remain under pressure in 2013 as profitability and asset quality will continue to deteriorate. However, capital pressures may ease thereafter unless risks of a prolonged and/or deeper recession renew. While capital ratios at Alpha and Piraeus compare better than their domestic peers', these need to be seen in light of their higher pro forma impaired loan (NPL) ratios following acquisitions of weaker banks. Also, these banks, especially Piraeus, face larger restructuring and integration risks. Greek banks' NPL ratios have followed a rapidly increasing trend since 2008 caused by five consecutive years of economic recession. The reported NPL ratios at end-2012 were 19% for NBG (coverage of 54%), 22.8% for Eurobank (42.8%), 28.6% for Alpha (52%) and 28% for Piraeus (52%). The ratios for Alpha and Piraeus are pro forma, which means they include recent bank acquisitions. Fitch expects NPLs to continue rising in 2013, albeit at a slower pace as evidenced in the Q412 results. The four banks made net losses in 2012 mainly due to margin compression and large loan impairment charges (LIC). Fitch expects operating profitability to be negative in 2013 given further revenue pressures and sustained high LIC. The four banks' aggregate net loans/deposits ratio improved to 132% at end-2012 from 142% at end-2011, although figures are not fully comparable due to bank acquisitions in 2012. This was largely the result of loan contraction, although a degree of deposit recovery has also been observed since H212, helped by a stabilization of Greece's political climate and the fading away of the risk of a Grexit. However, the consolidation of this deposit trend still needs to be tested, also in view of depositors' fragile confidence in the aftermath of the Cypriot banking crisis. Central bank funding continues to underpin banks' funding and liquidity, representing about 25% of banks' total assets at end- Q113 from the peak at 32% at end-August 2012. In Fitch's view, correcting banks' funding imbalances will take time, illustrating constraints to access wholesale markets. Positively, Greek banks became ECB eligible from January 2013, and this enabled them to replace more expensive Emergency Liquidity Assistance funds. KEY RATING DRIVERS - SRs AND SRFs The SRs and the revision of the banks' SRFs to 'No Floor' reflects Fitch's view that despite the banks' systemic importance, future support to Greek banks cannot be relied upon in light of scarce resources at the Greek authorities' disposal, even though the state's willingness to provide support may be high. RATING SENSITIVITIES - VRs AND IDRs Any change in the Greek banks' IDRs will be driven by changes in their VRs, for which there is little upside potential in the near term given the challenges that Greek banks are facing. Greek banks remain highly vulnerable to the Greek macroeconomic developments. Their overall financial strength is sensitive to the recessionary pressures in Greece and the risk of this prolonging in time, the return to profits, capacity to absorb further loan losses without putting renewed concerns on capital levels, a material reduction in central bank funding and to depositors' and investors' confidence. Also, banks will need to attain targeted synergies from integration and restructuring, which are vital for future profitability. RATING SENSITIVITIES - SRs AND SRFs Greek banks' SRs and SRFs could benefit from a considerable improvement in the government's ability to provide extraordinary support, although this seems unlikely in the near term considering Greece's debt profile and prevailing sovereign downside risks. Fitch also notes the intent within the EU to reduce implicit state support for banks in view of the EU bank resolution proposals. KEY RATING DRIVERS AND SENSITIVITIES - SUBORDINATED DEBT AND OTHER HYBRID SECURITIES Fitch has affirmed the bank's subordinated debt and hybrid capital issues at 'C/RR6' and 'C', respectively, highlighting a high probability of non-performance under Fitch's definitions. Under Fitch's criteria, hybrid non-performance can arise in a number of ways, including coupon deferral or omission or if a tender or exchange offer is considered to be a distressed debt exchange. The ratings of Greek banks' subordinated debt and hybrid capital issues are primarily sensitive to any change in the banks' VRs. The RRs are sensitive to various factors, most importantly valuation and availability of free assets and the mix of unsecured and secured liabilities. The rating actions are as follows: NBG: Long-term IDR upgraded to 'B-' from 'CCC'; Stable Outlook Short-term IDR upgraded to 'B' from 'C' VR upgraded to 'b-' from 'f' Support Rating affirmed at '5' Support Rating Floor revised to 'No Floor' from 'CCC'; Senior notes upgraded to 'CCC'/'RR5' from 'CC'/'RR5' Short-term senior notes upgraded to 'B' from 'C' Hybrid capital affirmed at 'C' State-guaranteed issues upgraded to 'B-' from 'CCC' Piraeus Bank: Long-term IDR upgraded to 'B-' from 'CCC'; Stable Outlook Short-term IDR upgraded to 'B' from 'C' VR upgraded to 'b-' from 'f' Support Rating affirmed at '5' Support Rating Floor revised to 'No Floor' from 'CCC' Senior notes upgraded to 'CCC'/'RR5' from 'CC'/'RR5' Commercial paper upgraded to 'B' from 'C' Alpha Bank: Long-term IDR upgraded to 'B-' from 'CCC'; Stable Outlook Short-term IDR upgraded to 'B' from 'C' VR upgraded to 'b-' from 'f' Support Rating affirmed at '5' Support Rating Floor revised to 'No Floor' from 'CCC'; Senior notes upgraded to 'CCC'/'RR5' from 'CC'/'RR5' Short-term senior notes upgraded to 'B' from 'C' Market-Linked Senior notes upgraded to 'CCCemr'/'RR5' from 'CCemr'/'RR5' Subordinated notes affirmed at 'C'/'RR6' Junior subordinated notes affirmed at 'C' Hybrid capital affirmed at 'C' State-guaranteed issues upgraded to 'B-' from 'CCC' Short-term state-guaranteed issues upgraded to 'B' from 'C' Eurobank: Long-term IDR upgraded to 'B-' from 'CCC'; Stable Outlook Short-term IDR upgraded to 'B' from 'C' VR upgraded to 'b-' from 'f' Support Rating affirmed at '5' Support Rating Floor revised to 'No Floor' from 'CCC'; Senior notes upgraded to 'CCC'/'RR5' from 'CC'/'RR5' Short-term senior notes upgraded to 'B' from 'C' Market-Linked Senior notes upgraded to 'CCCemr'/'RR5' from 'CCemr'/'RR5' Commercial paper upgraded to 'B' from 'C' Subordinated notes affirmed at 'C'/'RR6' Hybrid capital affirmed at 'C' State-guaranteed issues upgraded to 'B-' from 'CCC' Short-term state-guaranteed issues upgraded to 'B' from 'C' The rating impact, if any, from the above rating actions on Greek banks' subsidiaries and covered bonds will be detailed in separate comments. PIRAEUS BANK: S&P Lowers Rating on Non-Deferrable Sub. Notes to D ----------------------------------------------------------------- Standard & Poor's Ratings Services said it has lowered to 'D' from 'CC' its issue ratings on its non-deferrable subordinated notes issued by Piraeus Group Finance PLC and guaranteed by Piraeus Bank (Piraeus). S&P's downgrade of Piraeus' subordinated debt follows the bank's May 13 announcement of the launch of a tender offer on the outstanding amount of its dated subordinated debt and its Tier 1 preferred securities. As of now, the total amount of dated subordinated debt was EUR262 million and the total amount of preferred securities was EUR59 million. These rating actions do not affect our counterparty credit ratings on Piraeus or any other related issue ratings (see paragraph 15 of our criteria article " Timeliness Of Payments: Grace Periods, Guarantees, And Use Of 'D' And 'SD' Ratings," published Dec. 23, 2010, on RatingsDirect. "The downgrade reflects our opinion that the proposed tender offer constitutes a distressed exchange, as it implies that investors will receive less value than the promise of the original securities. Additionally, we think the offer is not purely opportunistic. The tender proposes to buy back the preferred securities at 35% of nominal value and subordinated debt at 55% of nominal value. We understand the offer follows the European Commission's request that Greek banks conduct a liability management exercise for their remaining subordinated debt as part of the recapitalization of the Greek banks," S&P said. Piraeus Bank recently announced a large recapitalization plan to restore an adequate level of regulatory capital. This is designed to withstand the impact of large losses in 2011 and 2012 and the material loan-portfolio losses the Bank of Greece is assuming in its stress test on Piraeus over the next three years. Piraeus is therefore issuing new ordinary shares up to EUR8.4 billion. The portion that will not be placed with private investors will be covered by the Hellenic Financial Stability Fund, which has already committed the full amount to Piraeus. S&P's long-term rating on Piraeus is 'CCC', with a negative outlook. S&P believes these factors heighten investors' perception that repayment of the nondeferrable subordinated debt is becoming increasingly uncertain. S&P is not lowering the rating on the bank's preferred securities; it is already at 'C' following Piraeus' previous decision to defer the coupon payment from July 2012. S&P's different ratings on both debt instruments reflect the different features that it believes is incorporated in hybrid capital instruments, compared with other instruments. As S&P explains in its criteria, an exchange offer on an equity hybrid instrument may reflect the possibility that, absent the exchange offer taking place, the issuer would exercise the coupon deferral option under the terms of the instrument. In this case, S&P would revise the rating on the hybrid to 'C' rather than the 'D' rating S&P would use for non-hybrids. Since deferral on a hybrid under its terms (outside the offer scenario) would result in a 'C' rating, a distressed exchange offer would unlikely lead to a lower rating than 'C'. On completion of the tender offer, S&P will review its ratings on any untendered nondeferrable subordinated debt. TANEO: Fitch Upgrades Ratings to 'B-' ------------------------------------- Fitch Ratings has upgraded 24, affirmed five and downgraded one tranche of 12 Greek structured finance transactions (two ABS, 10 RMBS). In addition, the three tranches of Lithos Mortgage Finance Plc (Lithos) have been placed on Rating Watch Evolving (RWE) pending the outcome of investigation into the transaction's recent performance. KEY RATING DRIVERS - Country Ceiling Upgrade Following the upgrade of the Greek sovereign by one notch to 'B- ', the agency revised the country ceiling for Greece to 'B' from 'B-'. Consequently, Fitch has upgraded those RMBS tranches that were constrained by the previous country ceiling and have sufficient credit enhancement to withstand the agency's 'Bsf' stresses. - Credit Linked to the Greek Sovereign Fitch considers the creditworthiness of New Economy Development Fund S.A. (Taneo) to be linked to that of the Greek sovereign and has therefore increased its ratings to 'B-' from 'CCC'. The value of Taneo's assets and the corporate creditworthiness of Taneo are insufficient to allow de-linkage from the sovereign rating. The notes were issued in 2003 and are due in June 2013. Taneo is a fund of funds that aims to make investments in funds that will in turn invest in small- to medium-sized firms located in Greece and specializing in new technologies. Amounts realized from the fund investments are well below the amount required to repay the notes. At note maturity this shortfall will be payable by the Greek central government guarantee. - Aeolos S.A. is not fully credit-linked to the sovereign. Aeolos's notes were issued in 2002 and are due in 2019. The notes are backed by receivables due from route charges levied on airlines for the use of the Greek airspace. Although seasonal, the performance of the receivable flows has been strong and stable over the years and comfortably covered payments according to the scheduled amortization. The terms of the notes include a provision for noteholders to call an event of default if the sovereign defaults. This option was not exercised when the Greek sovereign defaulted in 2012. Fitch believes the generated cashflows would be strong enough to ultimately repay all principal and interest and therefore has upgraded the notes to 'B' in line with the sovereign ceiling from 'CCC'. - Deteriorating Performance The asset performance of Byzantium Finance Plc has observed a marked deterioration in the past year, with the portion of loans in arrears by at least three months excluding defaults as a percentage of collateral balance reaching 24.7% in April, compared to 8.2% 12 months earlier. Fitch believes this deterioration is due to a combination of the adverse macroeconomic conditions and the tail risk associated with the small remaining balance of the pool. As of April 2013, the pool factor stood at 12.8%. The downgrade of the class B note to 'CCCsf' from 'B-sf' reflects the agency's concern with tail risk in this transaction. - Further Investigation Required for Lithos Lithos Mortgage Financing PLC has also observed a deterioration in performance with the level of 3m+ arrears increasing to 26.8% from 21.1% a year earlier. It appears that a portion of loans which are in arrears on payments by more than 12 months and therefore classified as defaulted have yet to be provisioned. This partially explains why the reserve fund remains fully funded despite the performance deterioration. Fitch has contacted the servicer and report provider to get further understanding of the reason for these loans to not have been categorized as defaulted and has placed all the tranches on RWE as it awaits a response. RATING SENSITIVITIES - Further rating movement of the Greek sovereign IDR or country ceiling may cause the agency to take action on associated tranches. - A change in legislation that has a material effect on mortgage borrower behavior or repossession activity would cause the agency to revise its assumptions and could have a negative effect on the ratings. ============= I C E L A N D ============= GLITNIR BANK: DekaBank Loses EUR388MM in Suit Over Gov't Takeover ----------------------------------------------------------------- Omar R. Valdimarsson at Bloomberg News reports that DekaBank Deutsche Girozentrale, the third-biggest creditor in failed Glitnir Bank hf, lost a EUR388 million (US$499 million) lawsuit against Iceland's Treasury in a ruling by the island nation's Supreme Court. DekaBank, based in Frankfurt, demanded damages from the Treasury for imposing emergency legislation that allowed the government to take over Glitnir in October 2008, and for failing to properly monitor financial institutions in the north Atlantic country, Bloomberg relates. According to Bloomberg, the ruling posted on the court's Web site on Friday said "It's absolutely clear that the circumstances in the Icelandic financial markets in the fall of 2008 permitted" that emergency legislation would be imposed by the authorities. "It has not been proven that the action taken was more inflictive than necessary," the ruling said. Glitnir, Kaupthing Bank hf and Landsbanki Islands hf all failed within days of each other in October 2008, Bloomberg recounts. That left creditors struggling to recover US$85 billion in debt, Bloomberg notes. DekaBank is owed ISK67.6 billion, Bloomberg says, citing a written answer to parliament by former Economy Minister Gylfi Magnusson. About Glitnir Banki Headquartered in Reykjavik, Iceland, Glitnir banki hf -- http://www.glitnir.is/-- offers an array of financial services to corporation, financial institutions, investors and individuals. Judge Stuart Bernstein of the U.S. Bankruptcy Court for the Southern District Court of New York granted Glitnir permission to enter into a proceeding under Chapter 15 of the U.S. bankruptcy code on January 6, 2008. ============= I R E L A N D ============= ALME LOAN 2013-1: S&P Assigns 'B' Rating on Class E Notes --------------------------------------------------------- Standard & Poor's Ratings Services assigned its credit ratings to ALME Loan Funding 2013-1 Ltd.'s EUR289.10 million floating-rate class A-1, A-2, B, C, D, and E notes. At closing, ALME Loan Funding 2013-1 also issued an unrated subordinated class of notes. S&P's ratings reflect its assessment of the collateral's credit quality. The portfolio, as of closing, is diversified, primarily comprising broadly syndicated speculative-grade senior secured term loans and senior secured bonds. S&P's ratings also reflect the credit enhancement available to the rated notes through the subordination of cash flows payable to the subordinated notes. S&P subjected the capital structure to a cash flow analysis to determine the break-even default rate for each rated class of notes. In S&P's analysis, it used the target par amount, the covenanted weighted-average spread, the covenanted weighted-average coupon, and the covenanted weighted-average recovery rates. S&P applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. The ratings assigned to the notes are commensurate with S&P's assessment of available credit enhancement following its credit and cash flow analysis. S&P's analysis shows that the credit enhancement available to each rated class of notes was sufficient to withstand the defaults applicable under its supplemental tests (not counting excess spread) outlined in S&P's corporate collateralized debt obligation (CDO) criteria. In S&P's analysis, it considered that the transaction documents' replacement and remedy mechanisms adequately mitigate the transaction's exposure to counterparty risk under its 2012 counterparty criteria. Following the application of S&P's criteria for nonsovereign ratings that exceed eurozone (European Economic and Monetary Union) sovereign ratings, it consider the transaction's exposure to country risk to be sufficiently mitigated at the assigned rating levels as the concentration of the pool comprising assets in countries rated lower than 'A-' is limited to 10% of the aggregate collateral balance. The transaction's legal structure is bankruptcy-remote, in accordance with S&P's European legal criteria. ALME Loan Funding 2013-1 is a European corporate cash flow collateralized loan obligation (CLO) securitization of a revolving pool, comprising euro-denominated senior secured loans and bonds issued by European borrowers. Apollo Credit Management (CLO) LLC is the collateral manager. 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/1476.pdf RATINGS LIST ALME Loan Funding 2013-1 Ltd. EUR334.23 Million Floating-Rate And Subordinated Notes Class Rating Amount (mil. EUR) A-1 AAA (sf) 195.00 A-2 AA (sf) 27.00 B A (sf) 27.00 C BBB (sf) 15.20 D BB (sf) 11.90 E B (sf) 13.00 Sub NR 45.13 NR-Not rated. ========= I T A L Y ========= BANCA POPOLARE: Moody's Lowers Long-Term Deposit Rating to 'Ba3' ---------------------------------------------------------------- Moody's Investors Service downgraded Banca Popolare di Milano's (BPM) standalone bank financial strength rating (BFSR) to E+, equivalent to a baseline credit assessment (BCA) of b1, from D+/ba1, and its long-term deposit rating by three-notches to Ba3 from Baa3. The bank's senior debt rating was also downgraded to Ba3 from Baa3. The rating agency has also placed all these ratings on review for further downgrade, with the exception of the BFSR and the short-term deposit rating. This rating action concludes the review initiated in November 2012. The downgrade and review are driven by Moody's concerns about: (1) BPM's deteriorating asset quality and its concentration to the real-estate sector; (2) earnings pressure that is expected to persist on the back of significant losses recorded in 2011 and 2012; and (3) the bank's modest capital base, which provides a limited loss-absorption cushion. The current rating review will also focus on the bank's capital raising plans, its potential transformation into a joint-stock company, the results of the recent inspection carried out by Bank of Italy, and the bank's quarterly performance in 2013. Ratings Rationale: The first driver of this rating action is BPM's weakening asset quality, with the bank reporting a 34.6% annual increase in gross impaired loans to 11.5% of gross loans in 2012 from 8.5% in 2011. Impaired loans -- which include non-performing loans (sofferenze), watchlist (incagli), restructured (ristrutturati) and past due loans (scaduti) -- are likely to continue to deteriorate throughout 2013 and into 2014, given the ongoing recession in Italy and the time lag of asset impairments (typically, 12-18 months after a downturn). BPM also reports a relatively low, by international standards, provisioning coverage for impaired loans of 34.3% in 2012, although this is an improvement on the 28% recorded in 2011. Moreover, the bank maintains high concentration to the real-estate sector (14.3% of total loans to non-financial companies) and to the construction sector (22.8%) as at year-end 2012, which elevate risks to its credit profile. The second driver of the rating action is the pressure on BPM's earnings, that is likely to persist in 2013. The bank incurred a net loss of EUR430 million in 2012, compared to a net loss of EUR614 million in 2011, mainly driven by a 17% increase in loan loss provisions and one-off items of EUR368 million, although the rating agency recognizes that goodwill has been completely written off with no future impairments expected. Normalized earnings (excluding non-recurring items) for 2012 indicate a loss of EUR62 million, suggesting that the bank's credit costs continue to exceed its pre-provision income. Moody's expects that BPM's earnings pressure will persist on the back of elevated loan loss provisions, low net interest margins and limited new business opportunities, leading to subdued loan growth. The third driver of the rating action is Moody's concerns with regards to BPM's capital levels. At year-end 2012, BPM's Core Tier 1 ratio (CT1) was a modest 8.4% (2011: 8%), following a 5.7% decrease in risk-weighted assets (RWAs). Moody's notes that following an inspection in 2011, the regulator forced the bank to increase its RWAs, with an add-on to account for its more risky real-estate exposure and due to a degree of operational weakness not previously recognized. The bank plans to raise around EUR500 million in new capital through a rights issue in Autumn 2013, the proceeds from which will be used to replace its Tremonti bonds (hybrid subscribed by the Italian government in 2009 and recognized as CT1, which the bank intends to repay in June 2013), provided this is authorized by the Italian Finance ministry and the regulator. Although the bank's CT1 is likely to benefit in case of removal of the RWA 'add-on' from the regulator and the adoption of the internal ratings-based (IRB) approach over the medium term, Moody's believes that the bank's current capitalization level provides a relatively low loss absorption cushion, which is not commensurate with the bank's previous rating level. Moody's has also downgraded the rating on the preferred stock (Tier 1 instruments) issued by BPM and its fully backed vehicle BPM Capital Trust I to Caa2(hyb) from B3(hyb). The non-cumulative preferred securities continue to be rated on an expected loss basis, reflecting the rating agency's expectation that the bank will likely continue skipping coupon payments in 2013, as was the case in 2012. The rating on these instruments remain on review for downgrade, mainly to reflect the ongoing review on BPM's ratings. Focus of the Review The current rating review will mainly focus on: - BPM's success in its capital raising plan, which is expected to be approved by an extraordinary general meeting on June 22, 2012. - The potential transformation into a joint-stock company from a cooperative bank, and possible delays to this, as well as on progress in implementing improvements in its corporate governance. - The results of the recent inspection carried out by Bank of Italy, which will drive the possible removal of its RWA add-on and improve its CT1 ratio. - The quarterly performance in 2013 and the bank's ability to enhance its earnings and stabilize its asset quality. The bank's Q1 2013 results do not point to any material change in its underlying financial position. What Could Move the Rating -- Down/Up A downgrade of BPM's ratings could result from (1) a failure to structurally strengthen the group's profitability by regaining some cost flexibility; (2) an unabated deterioration in asset quality; (3) lack of progress in implementing changes to governance or transformation into a joint-stock company or (4) weakening capital adequacy. At present, there is no upwards pressure on the ratings, considering the negative outlook. However, the following factors could have a positive impact on the ratings over the medium term: (1) a material and sustainable improvement in the internal capital generation; and (2) strengthening of the capital base the following repayment of the government's EUR500 million hybrid bond. List of Affected Ratings - Bank Financial Strength Rating / Baseline Credit Assessment: downgraded to E+/b1 from D+/ba1 - Senior unsecured debt and EMTN, and bank deposits: downgraded to Ba3 from Baa3, and to (P)Ba3 from (P)Baa3 - Short-term debt and deposit: downgraded to Not-Prime from Prime-3 - Subordinate debt and EMTN: downgraded to B2 from Ba2, and to (P)B2 from (P)Ba2 - Tier III EMTN: downgraded to (P)B2 from (P)Ba2 - Junior subordinate EMTN: downgraded to (P)B3 from (P)Ba3 - Non-cumulative Preferred stock: downgraded to Caa2(hyb) from B3(hyb) - BPM Capital Trust I (Non-cumulative Preferred stock): downgraded to Caa2(hyb) from B3(hyb) All ratings were also placed on review for further downgrade, with the exception of the BFSR and the short-term deposit rating. Banca Popolare di Milano is headquartered in Milan, Italy and had consolidated total assets of EUR52.6 billion as at March 2013. The principal methodology used in this rating was Moody's Consolidated Global Bank Rating published in June 2012. WIND ACQUISITION: Fitch Rates US$550MM Secured Fixed Notes 'BB' --------------------------------------------------------------- Fitch Ratings has assigned Wind Acquisition Finance S.A.'s (WAF) US$550 million senior secured fixed notes due 2020 and EUR150 million senior secured floating notes due 2019 final 'BB' ratings. The instruments' final documentation conforms to information already received by Fitch. The notes are guaranteed by Wind Telecomunicazioni Spa (WIND; 'BB-', Negative). The new instruments are structured as senior secured obligations of WIND and rank on par with other senior secured obligations of the company including its bank debt and 2018 senior secured notes. Prior to the new issue by WAF, Wind pre-paid 2014 and 2015 maturities of its senior secured bank debt. As a result, the company's debt maturity lengthened while the proportions of secured and unsecured debt in its capital structure did not change. KEY RATING DRIVERS - High Leverage WIND's leverage is high, estimated at around 5x net debt (including payments in kind (PIK))/EBITDA (as calculated by Fitch) at end-2012. Fitch believes the company will be unable to quickly de-lever to below this level. The Negative Outlook reflects that it will be challenging for WIND to stabilize its operating and financial performance on the back of bleak macroeconomic prospects in Italy and even minor additional pressures can compromise deleveraging efforts. - Parental Support WIND's ratings continue to benefit from potential support from its sole ultimate shareholder, Vimpelcom Ltd., whose credit profile remains stronger than WIND's. On a standalone basis, WIND's credit profile corresponds to a 'B+' level, which is uplifted by one notch for benign shareholder influence. However, Fitch cautions that Vimpelcom has not committed itself to any level of support. Fitch believes that a further rise in WIND's leverage may diminish Vimpelcom's propensity for providing support to WIND. - Successful Challenger Operating Profile WIND's credit profile is supported by its established position as the facilities-based number-three mobile operator in Italy, complemented by an expanding alternative fixed-line/broadband business. WIND has been able to outperform both Telecom Italia SpA ('BBB'/Negative) and Vodafone Group Plc ('A-'/Stable) reporting stronger revenue dynamics and improving its market share at the expense of these two operators. - No Short-Term Refinancing Risks Wind does not face any material refinancing risks before 2017 when the bulk of its debt maturities come due. RATING SENSITIVITIES A deterioration in leverage beyond 5.5x net debt (including PIK debt)/EBITDA for a sustained period and/or pressures on EBITDA/FCF generation driven by regulation, austerity and competition may lead to a negative rating action. Any evidence of tangible parental support such as equity contribution or debt refinancing via intercompany loans may trigger a positive rating action as would stabilization of operating and financial performance following three rounds of MTR cuts in 2012 and 2013. * Moody's: Italian Commercial Debt Refinancing to Raise Leverage ---------------------------------------------------------------- Although the long-term loans offered by the central government to repay regions' commercial obligations will stimulate local economies and clean-up long-standing accounts payable, they will increase the leverage and debt-servicing costs of those regions with already stretched budgets, says Moody's Investors Service in a new Special entitled "Italian Regions: Refinancing of Commercial Debts Will Increase Leverage of Weakest Issuers." Moody's expects that a large number of Italian regions will take on the EUR22 billion in loans offered under Decree law n.35/2013 by the central government to clear their commercial liabilities. Those regions that already display the weakest financial metrics, such as Campania, Lazio and Piedmont, are likely to experience the greatest increase in their already high financial leverage. To accommodate the increase in debt-servicing costs from 2014 onwards, those regions will likely have to implement tax hikes and/or further expenditure rationalization. Moody's also notes that the funds provided to regions under this new scheme cover only a portion of their commercial debt exposure. Moreover, the drivers that were originally responsible for the accumulation of large commercial (and financial) debts at the regional level are not within the scope of this legislation. The finances of the regional healthcare sectors remain a concern, particularly for the weakest regions. ================= L I T H U A N I A ================= BANKAS SNORAS: LHV, RAZFin to Buy Leasing Unit for LTL74 Million ---------------------------------------------------------------- Bryan Bradley at Bloomberg News reports that LHV Pank AS, an Estonian banking group, and RAZFin of Lithuania agreed to buy leasing company Snoro Lizingas UAB from bankrupt Lithuanian lender Bankas Snoras AB for LTL74 million (US$28 million). According to Bloomberg, Vilnius-based Snoras, citing bankruptcy administrator Neil Cooper, said in an e-mailed statement on Friday that the transaction is subject to regulatory approval and should be completed by the end of July. "We've long sought expansion options in the Baltic region, but with trustworthy partners and a business of reasonable size," Bloomberg quotes LHV Chief Executive Officer Erki Kilu as saying in a separate e-mailed statement. "Snoras Leasing has a loan portfolio that makes up 6 percent of LHV Pank's balance sheet. This is a suitable size to start with." About Bankas Snoras Bankas Snoras AB is Lithuania's fifth biggest lender. Snoras held LTL6.05 billion in deposits and had assets of LTL8.14 billion at the end of September. It competes with Scandinavian lenders including SEB AB, Swedbank AB (SWEDA), and Nordea AB. It also controls investment bank Finasta and Latvian lender Latvijas Krajbanka AS. As reported in the Troubled Company Reporter-Europe on Dec. 2, 2011, The Baltic Times, citing LETA/ELTA, said Vilnius District Court accepted the application regarding the initiation of bankruptcy proceedings against Snoras bank. The Bank of Lithuania delivered application on Snoras bankruptcy on Nov. 28, 2011. The TCR-Europe, citing Bloomberg News, reported on Nov. 28, 2011, that Lithuania's central bank said that Snoras' financial situation is "worse than previously identified" and saving the bank "would cost significantly more and would take longer than the available liquidity" at Snoras. Governor Vitas Vasiliauskas said at a news conference on Nov. 24 that some LTL3.4 billion (US$1.3 billion) in assets are missing, according to Bloomberg. UKIO BANKO: Is Insolvent; Among List of Companies in Debt Default ----------------------------------------------------------------- Bryan Bradley at Bloomberg News reports that the Lithuania's Department of Enterprise Bankruptcy Management said on its Web site on Thursday Ukio Banko Investicine Grupe, or UBIG, the Lithuanian investment company that controls Scottish soccer club Heart of Midlothian, is insolvent. According to Bloomberg, the department, part of the Economy Ministry, said that Kaunas-based UBIG, at its own request, had been placed on a list of companies unable or unwilling to meet their obligations. UBIG is a sister company of Ukio Bankas AB, a lender that Lithuania's central bank closed in February for risky lending to related parties, Bloomberg notes. Russian-born investor Vladimir Romanov controlled both companies, Bloomberg discloses. UBIG owns 79% of Edinburgh-based Hearts as well as sport, aluminum and real-estate projects in several countries. =================== L U X E M B O U R G =================== MONIER GROUP: Moody's Changes Outlook on Caa1 Rating to Negative ---------------------------------------------------------------- Moody's Investors Service affirmed all ratings of Monier Group S.a.r.l. and changed the outlook on all ratings to negative from stable. The agency will withdraw all ratings for business reasons on the next business day. Moody's has withdrawn the rating for its own business reasons. Ratings Rationale: The change in outlook to negative was driven by very challenging market conditions during 2012 for Monier, which led to a 7% decline in revenues and a 22.5% decline in EBITDA (excluding EUR73.4 million of restructuring expenses, included in Moody's adjusted numbers). This resulted in a debt/EBITDA ratio of above 30x (based on Moody's adjusted numbers), indicating a very weak positioning of Monier in the Caa1 rating category. Despite the sharp deterioration in market conditions Monier was able to generate positive free cash flow (EUR15 million) supported by a strong focus on working capital management, which led to a significant cash inflow, and reduced capex. This enabled the group to maintain an adequate short-term liquidity profile. It is noted that the restructuring measures booked towards the end of the year did not yet lead to material cash outflows and that the cash flow generation in 2013 will be negatively impacted, partly compensated by improved cash flow generation on account of higher EBITDA and sale of idle assets. Monier has addressed the deteriorating market conditions by launching material restructuring programs. The restructuring initiatives are material and were the only viable option to address depressed market conditions across most European markets, which are not expected to improve materially over the next 2-3 years at least. Moody's notes that the restructuring measures bear execution risk especially due to the materiality of the headcount reductions. Moody's also notes that the implementation of the restructuring measures will lead to material cash outflows in the form of severance payments and other costs, which Monier might not be able to fund fully through internally generated cash flow from operations leading to a deterioration of the liquidity profile of the group. The negative outlook assigned to the rating mainly reflects the risk that the liquidity position of the group might weaken as a result of the implementation of the restructuring program. The principal methodology used in this rating was the Global Building Materials Industry published in July 2009. Headquartered in Luxembourg, Monier (Caa1, Negative) is a leading global supplier of building materials for pitched roofs with operations in 40 countries. The company offers a wide range of products including roof, chimney, ventilation and residential energy systems. Monier mainly competes with Wienerberger AG (Ba2, Negative), Etex (unrated), Imerys S.A. (Baa2, Stable) and Terreal (unrated). The group reported consolidated revenues of EUR1.315 billion and an operating EBITDA of EUR132 million in 2012. OXEA SARL: Moody's Revises Outlook on 'B1' CFR to Negative ---------------------------------------------------------- Moody's Investors Service changed to negative from stable the outlook on the B1 corporate family rating and B1-PD probability of default rating of Oxea S.a.r.l. (Oxea), the ultimate holding company of the subsidiary guarantors to the group's senior secured credit facilities. Concurrently, Moody's has affirmed these ratings. In addition, Moody's has changed to negative from stable the outlook on the B2 rating on Oxea's outstanding EUR427 million of equivalent senior secured notes due 2017, issued by Oxea subsidiary Oxea Finance & Cy S.C.A, and at the same time affirmed this rating. In conjunction with the refinancing transaction, these notes are expected to be redeemed by the end of July 2013. Furthermore, the rating agency has assigned a provisional (P)Ba3 rating to Oxea's proposed first-lien senior secured credit agreement and a provisional (P)B3 to the company's proposed EUR250 million second-lien senior secured credit facility due 2020. The first-lien senior secured credit facility consists of a multi-currency EUR120 million equivalent revolving credit facility (RCF) due 2018, a EUR200 million term loan B-1 facility due 2019, and a EUR550 million equivalent term loan B-2 facility also due 2019. Oxea recently announced a refinancing transaction that will result in the issuance of these new senior secured credit facilities that total an equivalent of approximately EUR1.0 billion. Proceeds from this transaction will be used to redeem the senior secured notes due 2017, fund an approximately EUR511 million dividend to shareholders, and pay related transaction fees. The majority of Oxea's shareholders are funds managed or advised by private equity firm Advent International Corporation. "The outlook on Oxea's B1 CFR is now negative, reflecting the company's high financial leverage, ongoing shareholder-friendly financial policy and our expectation that it will remain significantly exposed to the challenging European cyclical chemicals trading environment," says Anthony Hill, a Moody's Vice President - Senior Analyst and lead analyst for Oxea. Moody's issues provisional ratings in advance of the final sale of debt instruments and these ratings reflect the rating agency's preliminary credit opinion regarding the transaction only. Upon a conclusive review of the final documentation, Moody's will endeavor to assign a definitive rating to the debt. A definitive rating may differ from a provisional rating. Ratings Rationale: Change of Outlook to Negative on B1 CFR The change of outlook on Oxea's B1 CFR to negative reflects the increasingly weak positioning of Oxea within the B1 rating category. The B1 CFR and negative outlook, primarily reflect the company's high financial leverage, which Moody's expects will be around 5.4x debt/EBITDA (on a Moody's-adjusted basis) for the 12 months ending March 31, 2013 and pro forma for the transaction. While Moody's expects Oxea to reduce leverage over the coming quarters and achieve a leverage ratio of around 4.9x debt/EBITDA by financial year end (FYE) December 31, 2013, it also expects the company to generate low levels of unencumbered future free cash flow (FCF) and remain significantly exposed to the challenging European cyclical chemicals trading environment, which the rating agency expects will exist through at least 2013 (Europe accounted for 47% of Oxea's FYE 2012 sales). Additionally, the company is exposed to cyclical and highly variable raw materials costs, especially the price of propylene, which accounted for nearly 60% of Oxea's FYE 2012 total raw material costs and is tied to general trends in oil prices. Furthermore, Moody's believes that Oxea's financial policy continues to demonstrate a prioritization of shareholder dividends ahead of the maintenance of financial flexibility. Globally, the oxo chemicals industry continues to be fairly consolidated, with very high capacity utilization rates of around 85%-90%. The tight supply-versus-demand balance makes it necessary for Oxea to ensure sufficient investments in its current plants and its global expansion projects in order to maintain its competitive level of supply for its customers. As the European slowdown continues to exert pressure on Oxea's European margins, and pro forma the refinancing transaction, the rating agency is concerned that the company will not have the financial flexibility to support both its capital investments and its ongoing dividend policy -- the capital investment of which is necessary for Oxea to maintain and improve its competitive position, and both of which show no signs of reducing. However, more positively, the B1 CFR also reflects Moody's positive view that Oxea (1) is a leading pure-play merchant producer of oxo chemicals for the global chemicals market with a track record of maintaining and growing market share positions across a diverse product line; (2) has a proven ability to generate solid cash flows through global and European economic cycles; (3) has a resilient business model, as demonstrated by solid operating performance, and an ability to pass through material and production costs while simultaneously improving overall group marginal income despite the challenging trading environment in Europe; and (4) notwithstanding Moody's forward- looking concerns regarding the company's leverage, has demonstrated a solid track record of deleveraging through voluntary prepayments and improvements in revenues, EBITDA, and cash flow generation. Moody's believes that Oxea's liquidity, pro forma the transaction, will comfortably cover its near-term requirements. Pro forma for the transaction, Moody's expects the company to exhibit an adjusted cash balance of approximately EUR34 million. Internally generated cash flow and the undrawn EUR120 million RCF should cover the company's ongoing basic cash needs, such as debt service and amortization, working capital needs and expected capital expenditures (including expansionary capital investments). Using Moody's Loss Given Default (LGD) methodology, the PDR is equal to the CFR. This is based on a 50% recovery rate, as is typical for a debt capital structure that primarily consists of senior secured facilities. Assignment Of (P)Ba3 Rating To Proposed First-Lien Senior Secured Credit Agreement And (P)B3 Rating To Proposed EUR250 Million Second-Lien Senior Secured Credit Facility: Also in accordance with Moody's LGD methodology, the RCF and first-lien senior secured credit facility are rated (P)Ba3, one notch above the B1 CFR. This is due to the first-lien senior secured facility's ranking priority over the subordinated EUR250 million notional second-lien senior secured credit facility, which is rated (P)B3, two notches below the CFR. The second-lien senior secured credit facility is notched downwards from the CFR, reflecting its subordinated ranking in the capital structure. What Could Change The Rating Up/Down: Moody's does not expect any upward pressure on the rating over the coming quarters. However, the ratings outlook could stabilize if Oxea were to (1) solidly, and consistently, generate positive retained cash flow (RCF); and (2) achieve and maintain a Moody's- adjusted debt/EBITDA ratio below 4.5x. Pro forma for the refinancing transaction, the rating agency notes particular risks associated with Oxea's limited financial flexibility resulting from the company's high financial leverage. As such, the rating would likely be downgraded if Oxea's leverage and liquidity profiles deteriorate due to (1) a weakening of its operational performance; (2) acquisitions; or (3) an aggressive increase in its financial/dividend policy. Quantitatively, Moody's would likely downgrade Oxea's ratings if (1) the company's Moody's-adjusted EBITDA margin falls sustainably below 15%; (2) its debt/EBITDA ratio remains above 4.5x beyond the next 18 months; or (3) its Moody's-adjusted RCF/debt ratio falls sustainably below 10%. Principal Methodology The principal methodology used in this rating was the Global Chemical Industry published in December 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non- Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Luxembourg, Oxea S.a.r.l. is a leading global producer of oxo intermediates and derivatives with a key product portfolio of oxo chemical products and well-established market positions in Europe, North America, Asia-Pacific, and South America. Oxo chemicals are critical to the production of other chemicals used in a variety of industries such as automotive, construction, industrial goods, consumer and retail, pharmaceuticals, cosmetics, agriculture and packaging. For the fiscal year ended December 31, 2012, Oxea reported revenues and EBITDA of EUR1.5 billion and EUR193 million, respectively. ============= M O L D O V A ============= * MOLDOVA: Moody's Says B3 Bond Rating Reflects Very Low GDP ------------------------------------------------------------ In its annual credit report on Moldova, Moody's Investors Service says that Moldova's B3 government bond rating reflects the country's very low GDP per capita, small-scale economy, high dependence on workers' remittances and limited future growth potential. Furthermore the unresolved Transnistria conflict and weaknesses in the political system exacerbate credit risk. The outlook on the ratings is stable. The rating agency's report is an annual update to the markets and does not constitute a rating action. Moody's determines a country's sovereign 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. Moldova's very low economic resilience is a product of its very low economic strength and low institutional strength. Moody's assessment of very low economic strength is driven by Moldova's (1) very low GDP per capita; (2) small-scale economy; (3) high dependence on workers' remittances; and (4) limited future growth potential. Furthermore, Moldova's low institutional strength reflects (1) weak government effectiveness; (2) high levels of corruption; (3) a lack of transparency; as well as (4) country- specific problems, in particular the unresolved Transnistria conflict and weaknesses in the political system. The moderate level of government financial robustness is based on a combination of medium government financial strength and moderate susceptibility to event risk. Moody's medium score for government financial strength is based on Moldova's sound fiscal metrics, such as a low government debt-to-GDP ratio and low debt servicing costs. However, government financial strength is constrained by Moldova's limited access to external liquidity and shallow domestic capital markets. Moldova's moderate assessment of susceptibility to event risk reflects political, economic and financial risks, which could lead to a multi-notch downgrade. Moody's foresees political event risk related to tensions between the main political parties in parliament and the unresolved territorial conflict over Transnistria. Economic event risk is largely driven by the substantial current account deficit, as well as gas debt arrears accumulated in Transnistria. Moody's considers risks stemming from the banking sector to the sovereign's balance sheet as low, although there are modest concerns relating to the deteriorating balance sheet of a state-controlled bank and the potential impact this would have on the sovereign. Moldova's B3 rating could come under downward pressure if the Transnistria situation were to deteriorate rapidly, or following a reversal in the economic reforms that have taken place under a three-year IMF program that started in January 2010. Downward rating pressure could also emerge if external liquidity shortages come to the fore following a prolonged sharp drop in remittances or exports. Conversely, Moldova's B3 rating could come under upward pressure if Transnistria related issues are viably addressed, internal politics become less polarized or the reform momentum, under pressure from the IMF and EU, continues. Rising per capita income and improvements in the long-term growth potential could also trigger an upgrade. ===================== N E T H E R L A N D S ===================== DOME 2006-I: S&P Assigns 'B-' Rating on Class D Notes ----------------------------------------------------- Standard & Poor's Ratings Services assigned its credit ratings to Dome 2006-I B.V.'s EUR500.2 million secured mortgage-backed floating-rate class A, B, C, and D notes. At closing, Dome 2006- I also issued unrated class E notes. The ratings assigned reflects S&P's analysis of the transaction's payment structure and cash flow to determine the likelihood of repayment of the notes under stress test scenarios. In S&P's analysis, it also considered the protection for noteholders provided through a combination of subordination, a liquidity facility, a reserve fund, and excess spread to cover credit losses and income shortfalls. S&P considers the available credit enhancement to be commensurate with the ratings assigned to the notes. The pool comprises residential mortgage loans granted to individuals in the Netherlands. DSB Bank N.V., which was declared insolvent in October 2009, originated the loans between April 2003 and October 2007. All of the loans in the pool are first-ranking mortgages and the portfolio is well seasoned, in S&P's view. A large proportion of the pool currently comprises loans whose borrowers are alleging duty-of-care failures in the sale of accompanying insurance products and the overextension of credit, among other issues. In October 2011, DSB Bank's bankruptcy trustee estimated the maximum potential cost of duty-of-care claims to the transaction to be EUR10 million. S&P has considered this in its analysis and S&P has not given benefit to the claim against the DSB Bank estate for the breach of the representations and warranties provided to the issuer at sale. In S&P's opinion, the transaction's available credit enhancement mitigates the pool's high weighted-average indexed loan-to-value (LTV) ratio. Various incentives under the Dutch tax regime mean that high LTV ratios do not necessarily indicate higher risk in the Dutch mortgage market. Declining Dutch house prices, the contracting Dutch economy, and rising unemployment are all likely to negatively affect collateral performance. To reflect these risks in S&P's analysis, it has factored in an additional 6% decline in Dutch house prices and have considered an additional 1% increase in arrears from their current levels. S&P understands that the noteholders have voted in favor of Quion Services B.V.'s appointment as the transaction's servicer. S&P understands that June 2013 is the target date for Quion Services become the servicer. Under the subdelegation agreement, Quion Services will service DSB Bank's portfolios for an initial period of five years. DSB Bank's bankruptcy trustee is the swap counterparty in this transaction, with the swap counterparty's obligations having the benefit of a guarantee from Cooperatieve Centrale Raiffeisen- Boerenleenbank B.A. (Rabobank Nederland). S&P do not consider the swap agreement for this transaction to be in line with its 2012 counterparty criteria. Rather, the swap counterparty's swap agreement reflects replacement language that is in line with a previous version of S&P's counterparty criteria. Therefore, under S&P's 2012 counterparty criteria, the highest potential rating on the notes in these transactions is equal to the issuer credit rating on the swap guarantor plus one notch. Dome 2006-I is a securitization of a pool of Dutch first-ranking residential mortgage loans. 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/1545.pdf RATINGS LIST Ratings Assigned Dome 2006-I B.V. EUR506.4 Million Floating-Rate Notes Class Rating Amount (mil. EUR) A A+ (sf) 450.5 B BBB+ (sf) 22.1 C BB- (sf) 13.8 D B- (sf) 13.8 E NR 6.2 NR-Not rated. DUTCH MBS XV: S&P Affirms 'BB+' Rating on Class E Notes ------------------------------------------------------- Standard & Poor's Ratings Services affirmed all of its credit ratings in Dutch MBS XV B.V. The rating actions follows S&P's credit and cash flow analysis of the most recent transaction information that it has received (as of February 2013). S&P has applied its criteria for rating Dutch residential mortgage-backed securities (RMBS) transactions. For Dutch RMBS transactions, S&P adjusts its weighted-average loss severity (WALS) assumptions by applying a 6% decrease in house prices and giving full credit to the Dutch house price index (HPI). Since closing, the indexed weighted-average loan-to-value (LTV) ratio has increased, primarily due to the decline in Dutch house prices. The increased weighted-average LTV ratio has led to an increase in S&P's weighted-average foreclosure frequency (WAFF) and WALS assumptions for the pool. Arrears are low and remain below S&P's Dutch RMBS index, although they have recently increased up to 0.85% of the pool. The increase in the pool's seasoning has had a limited positive effect on S&P's WAFF assumptions due to the initial high seasoning at closing. Increased credit enhancement for all classes of notes has offset the increased credit risk in the pool. S&P has therefore affirmed its ratings on all classes of notes in DUTCH MBS XV. Rating WAFF WALS CE level (%) (%) (%) AAA 13.12 33.39 4.38 AA 10.30 30.12 3.10 A 7.43 25.57 1.90 BBB 4.54 22.77 1.03 BB 3.12 18.36 0.57 CE-Credit enhancement. Dutch MBS XV is a Dutch RMBS transaction backed by prime Dutch residential mortgage loans. The transaction closed in March 2010. CREDIT STABILITY S&P's credit stability analysis indicates that the maximum projected deterioration that it would expect at each rating level for time horizons of one year and three years under moderate stress conditions, is in line with its Credit Stability Criteria. 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 Dutch MBS XV B.V. EUR750 Million Floating-Rate Mortgage-Backed Notes and Floating- Rate Subordinated Notes Ratings Affirmed A1 AAA (sf) A2 AAA (sf) B AA+ (sf) C A+ (sf) D BBB (sf) E BB+ (sf) GRAND HARBOUR I: S&P Assigns Prelim. 'B' Rating on Class E Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary credit ratings to Grand Harbour I B.V.'s EUR355.0 million floating-rate class A-1, A-2, B, C, D, and E notes. At closing, Grand Harbour I will also issue an unrated subordinated class of notes. S&P's preliminary ratings reflect its assessment of the preliminary collateral portfolio's credit quality. The portfolio at closing will likely be diversified, primarily comprising broadly syndicated speculative-grade U.S. and European senior secured term loans and senior secured bonds. S&P's preliminary ratings also reflect the credit enhancement available to the rated notes through the subordination of cash flows payable to the subordinated notes. S&P subjected the preliminary capital structure to a cash flow analysis to determine the break-even default rate for each rated class of notes. In S&P's analysis, it used the target par amount, the covenanted weighted-average spread, the covenanted weighted-average coupon, and the covenanted weighted-average recovery rates. S&P applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. The preliminary ratings assigned to the notes are commensurate with S&P's assessment of available credit enhancement following its credit and cash flow analysis. S&P's analysis shows that the credit enhancement available to each rated class of notes was sufficient to withstand scenario default rates, and the defaults applicable under its supplemental tests (not counting excess spread) outlined in S&P's corporate collateralized debt obligation (CDO) criteria. The transaction's legal structure is expected to be bankruptcy- remote, in accordance with S&P's European legal criteria. Grand Harbour I is a European cash flow corporate loan collateralized loan obligation (CLO) securitization of a revolving pool, comprising euro-denominated senior secured loans and bonds issued by European and U.S. borrowers. Blackstone/GSO Debt Funds Europe Ltd. is the collateral manager. 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/1538.pdf RATINGS LIST Grand Harbour I B.V. EUR403.35 Million Floating-Rate and Subordinated Notes Class Prelim. Prelim. rating amount (mil. EUR) A-1 AAA (sf) 240.00 A-2 AA (sf) 15.00 B A (sf) 35.00 C BBB (sf) 22.50 D BB (sf) 32.50 E B (sf) 10.00 Sub NR 48.35 NR--Not rated. =========== R U S S I A =========== BANK VTB: Public Offering to Help Support 'bb-' Viability Rating ---------------------------------------------------------------- Fitch Ratings says that Bank VTB's ('BBB'/Negative/'bb-') secondary public offering (SPO) of shares is unlikely to have any immediate impact on the bank's ratings. At the same time, successful completion of the SPO would bring closer a potential one-notch downgrade of VTB's Long-term Issuer Default Ratings (IDRs) to 'BBB-', while also helping to support the bank's Viability Rating (VR) at the current 'bb-' level. In January 2013, Fitch revised the Outlook on VTB's 'BBB' Long- term IDRs to Negative from Stable, reflecting the planned privatization of the bank and the agency's expectation of a moderate reduction in government support as the privatization progresses. Fitch stated that the Long-term IDRs could be downgraded by one notch, to 'BBB-', if the government makes tangible and significant progress with the privatization, confirming the probability of its stake falling below 50%. VTB recently announced that it plans to raise RUB102.5 billion of new equity through an SPO by the end of May 2013 and that the Russian government is unlikely to participate in the issue. The bank has also stated that it has already obtained firm commitments for the full amount of the issue from a group of investors including the sovereign wealth funds of Norway, Qatar and Azerbaijan. As a result of the SPO, the government's stake in VTB would be diluted to 60.9% from the current 75.5%. This, in Fitch's view, represents a significant reduction in the government's stake and confirms the authorities' intention to gradually privatize the bank. At the same time, the agency believes that reduction of the government's stake to below 50% remains a medium-term prospect, and further progress with the privatization is unlikely in the near future given the statement from VTB's CFO that the government will not be selling shares in VTB for at least a year after the SPO. Fitch's base case expectation is that the privatization process will continue with a further transaction in H214-H115, potentially reducing the government's stake to 50%+1 share, although there is considerable uncertainty on the parameters and timing of any such transaction, given the difficulty of predicting government policy, the bank's capital needs and market conditions. Fitch expects to downgrade the bank's Long-term IDRs by one notch, to 'BBB-', in the event that the government reduces its stake below 50% or when it becomes apparent that this could be achieved through a single transaction and in a relatively short timeframe, also provided that the intention to proceed with the privatization remains. In any case, Fitch expects that VTB's IDRs will continue to be underpinned by a high probability of support from the Russian authorities, in case of need, given the bank's systemic importance, still close ties with the Russian authorities and the likelihood of the government continuing to hold a significant minority stake even after giving up majority control. The SPO would help to support VTB's VR at the current level of 'bb-' due to moderately reduced concerns about the bank's capitalization. Management projects that the Basel Tier 1 and total capital adequacy ratios will improve to, respectively, 11.9% and 16.3% as a result of the share sale, from 10.3% and 14.7% at end-2012. Fitch also estimates that the new capital injection would be sufficient for the parent bank to comply with new Basel III-like capital regulation that may be introduced in Russia later this year (for more information please see "Implementation of New Capital Rules in Russia: Moderately Positive, Unlikely to Lead to Rating Changes" dated 18 April 2013 available at www.fitchratings.com). However, the SPO by itself would not be sufficient to warrant an upgrade of the VR because of the only moderate improvement in capitalization and continued weaknesses in other aspects of the bank's stand-alone profile. Specifically, concerns about the high level of credit risk in the bank's loan book and other asset exposures, weak and volatile performance and still significant market risk appetite/tolerance continue to weigh on the VR. At the same time, the VR benefits from VTB's currently comfortable liquidity position and low refinancing risk. VTB's ratings are: Long-term foreign and local currency IDR: 'BBB'; Outlook Negative Short-term IDR: 'F3' Support Rating: '2' Support Rating Floor: 'BBB' National Long-term Rating: 'AAA(rus)', Outlook Negative Senior unsecured debt long-term rating: 'BBB', 'AAA(rus)' Senior unsecured debt short-term rating: 'F3' "Old-style" subordinated debt rating: 'BBB-' Viability Rating: 'bb-' MMK FINANCE: Fitch Withdraws 'BB+' Expected Notes Rating -------------------------------------------------------- Fitch Ratings has withdrawn MMK Finance Ltd.'s expected notes rating of 'BB+(EXP)' following the company's announcement that it will not proceed with the proposed notes offering. OJSC Magnitogorsk Iron & Steel Work's (MMK) Long-term Issuer Default Rating is 'BB+', Negative Outlook. Proceeds from the notes were to be used for general corporate purposes including the refinance of upcoming debt maturities. Absent the proceeds MMK will continue to have acceptable liquidity. KEY RATING DRIVERS - Increasing Demand for Steel Products in Russia MMK is the leading supplier of steel to the Russian market, having 25%-100% market share in various rolled products. Up to 75% of the company's revenue is generated in Russia. Demand for steel products in Russia is increasing due to the healthy performance of the main steel consuming industries -- construction, pipe production and automotive industry. Fitch views demand-driving factors in steel-consuming industries as quite strong in the medium term - Decrease of Slab Cash Cost In the fourth quarter of 2012 (Q412), MMK's cash cost of slab production was equal to USD374/t, which is 19% lower year-over- year (yoy). Fitch understands that the lower level of vertical integration compared with its Russian peers allowed MMK to benefit from raw material prices' decline. Re-negotiation of the iron ore price formula with the company's largest iron ore supplier ENRC and starting iron ore purchases from JSC Holding Company Metalloinvest ('BB-'/Positive) contributed to the improvement of the company's cost position. Currently, the company's slab cash cost is below the global average. - Finalization of Main Investment Projects, Positive Free Cash Flow Over the past six years, MMK had the heaviest relative capital expenditures compared with other Fitch-rated steel companies. However, after the finalization of the main projects the company invested in purchases of PPE in 2012 of US$674 million (US$1.7 billion in average during 2007-2011). This resulted in positive free cash flow (FCF) generation for the first time since 2007. - Poor Performance of MMK Metalurji in Turkey The agency has a concern regarding the worsening of performance of the company's plant in Turkey. In 2012, MMK's steel segment in Turkey reported a US$190 million operating loss compared with US$140 million operating loss in 2011. MMK decided to stop its hot-rolling mills in Turkey for cost-saving reasons until the recovery of market prices. DEBT AND LIQUIDITY - Decreasing Leverage Due to positive FCF the company was able to decrease funds from operations (FFO) adjusted gross leverage to 2.8x by end-2012 compared with 4.0x at end-2011. Fitch expects MMK to continue generating positive FCF in 2013-2015. This will contribute to the decrease of FFO adjusted gross leverage starting from 2014, to 2.7x by end-2014 and to 2.3x by end-2015 (compared with an expected 2.9x at end-2013) - Acceptable Liquidity The company's liquidity position is assessed as acceptable with US$0.4 billion of cash on hand and US$1.3 billion of committed unutilized bank loans at end-2012 compared with US$1.6 billion of short-term borrowings. Fitch also considers MMK's 5% stake in Fortescue Metals Group Limited ('BB+'/Negative) as an additional source of liquidity in case if necessary. At the beginning of April 2013, the market price of MMK's stake approximated to US$660 million. RATING SENSITIVITIES Positive: Future developments that could lead to positive rating actions include: - Positive FCF in 2013 - FFO adjusted gross leverage below 2.5x (already achieved or expected to be achieved within 12 months) Negative: Future developments that could lead to negative rating action include: - Negative FCF - FFO adjusted gross leverage sustainably above 3.0x FULL LIST OF RATINGS OJSC Magnitogorsk Iron & Steel Works Foreign currency Long-term Issuer Default Rating (IDR): 'BB+'; Negative Outlook Foreign currency Short-term IDR: 'B' Foreign currency senior unsecured rating: 'BB+' Local currency Long-term IDR; 'BB+'; Negative Outlook National Long-term rating: 'AA(rus)'; Negative Outlook MMK Finance Limited Expected foreign currency senior unsecured rating on the proposed LPNs: withdrawn TINKOFF.CREDIT SYSTEMS: Moody's Affirms B2 Debt & Deposit Ratings ----------------------------------------------------------------- Moody's Investors Service affirmed the B2 long-term local- and foreign-currency debt and deposit ratings of Tinkoff.Credit Systems (Russia), as well as the standalone bank financial strength rating (BFSR) of E+, equivalent to a baseline credit assessment (BCA) of b2. The bank's Not Prime short-term local- and foreign-currency deposit and the B3 foreign currency subordinated debt ratings were also affirmed. The outlook on the bank's BFSR and the long-term ratings is stable. Ratings Rationale: Moody's affirmation of Tinkoff.Credit Systems' ratings reflects the bank's entrenched position within the Russian credit card market, the highly profitable nature of the bank's operations, and adequate capital buffer. At the same time, Moody's believes that Tinkoff.Credit Systems' business model and financial profile are closely linked to the performance of the credit card segment, which, despite rapid expansion in recent years, remains vulnerable to Russia's volatile operating environment. In addition, despite the bank's most recent robust performance combined with a rapid growth, it has recently displayed a high credit risk appetite, i.e., positioning Tinkoff.Credit Systems less favorably in the event of any deterioration in the operating environment. Robust Profitability & Adequate Capital Buffer Tinkoff.Credit Systems has been reporting robust profitability metrics since 2010. Return on average assets was 7.9% in 2012 (2011: 10.4%). These strong results stemmed from (1) an established and advanced IT and risk management infrastructure that enabled the bank to effectively target the most profitable clientele; and (2) a high net interest margin that easily absorbed Tinkoff.Credit Systems' high credit-risk appetite and high cost of funding, as discussed below. Moody's expects profitability to remain strong in 2013, but believes that profitability will normalize at a lower level in the next years because of market saturation. As at year-end 2012, Tinkoff.Credit Systems reported a healthy 13.7% equity-to-assets ratio that -- together with the robust profitability -- positions the bank favorably against the risk of asset quality deterioration and potential negative pressure on its capital base. Monoline Nature of Operations Despite Tinkoff.Credit Systems' evident success in building up its franchise over recent years, the bank's ratings are primarily constrained by the monoline nature of its operations as the entire volume of its revenue currently stems from the credit card segment. Thus, the bank's monoline nature renders it potentially vulnerable to sector risks, because any adverse changes in the highly volatile operating and regulatory environment in Russia, coupled with increasingly competitive landscape, may impair the bank's currently healthy performance and/or limit loan origination volumes, i.e., leading to a gradual decrease in interest-earning assets given a fairly short duration of Tinkoff.Credit Systems' loan book. High Credit Risk Appetite Tinkoff.Credit Systems' ambitious business growth targets -- aimed at achieving very rapid growth of the loan book and increasing market share -- represents a potential risk especially amid the highly competitive landscape, as the bank's 2012 data indicates less stringent origination standards (based on loan vintage reports provided by the bank), i.e., leading to a higher cost of credit risk in 2012 compared with the previous years. In 2012, the bank's cost of credit risk (measured as the ratio of loan loss provisions to average gross loans) increased to 10.3% (2011: 8.0%). Although this strategy boosts the bank's absolute profits amid the currently benign credit environment, this policy could render the bank more vulnerable if the Russian operating environment were to deteriorate. Untested Nature of Internet-Based Retail Deposits and a High Reliance on Wholesale Funding Moody's believes that Tinkoff.Credit Systems' high share of wholesale funding and internet deposits render the bank vulnerable to potential periods of liquidity squeeze. Although the bank has successfully diversified and lengthened its funding base over the past two years, thereby enhancing the sustainability of its resource base, the share of wholesale funding remains high while the bank's other major source of funding -- internet deposits -- has not yet been tested by liquidity shocks, therefore, its potential volatility remains highly unpredictable. At year-end 2012, retail deposits accounted for 45% of total liabilities, with the rest being attracted mainly on the wholesale markets. What Could Change the Ratings Up/Down An upgrade of Tinkoff.Credit Systems' B2 long-term deposit ratings will be contingent on its ability to reduce its risk appetite while successfully withstand intensifying competition. Tinkoff.Credit Systems' ratings might be adversely affected in the event of (1) higher risk appetite; or (2) a decline in business volumes and deterioration of its liquidity profile, resulting from restricted access to capital markets and/or a negative operating environment. The principal methodology used in this rating was Moody's Consolidated Global Bank Rating Methodology published in June 2012. Domiciled in Moscow, Russia, Tinkoff.Credit Systems reported total assets of US$2.2 billion at year-end 2012 under IFRS (audited), up 138% compared to year-end 2011. The bank's net profit totaled RUB122 million in 2012, a 78% increase compared to 2011. UNIASTRUM BANK: Moody's Withdraws 'E' Standalone BFSR ----------------------------------------------------- Moody's Investors Service has withdrawn the following ratings of Uniastrum Bank: the E standalone bank financial strength rating (BFSR), which is equivalent to a caa2 baseline credit assessment, and the Caa2/Non-Prime long- and short-term local- and foreign- currency deposit ratings. At the time of the withdrawal, all the BFSR carried a stable outlook, while deposit ratings had a negative outlook. Ratings Rationale: Moody's has withdrawn the rating for its own business reasons. Ratings Withdrawn Standalone Bank Financial Strength Rating of E The long-term and short-term foreign- and local-currency deposit ratings of Caa2/Not Prime Headquartered in Moscow, Russia, Uniastrum Bank reported total assets of US$2.3 billion and net profits of US$3.8 million, according to its non-audited statutory reports under Russian Accounting Standards as at April 1, 2013 UNIASTRUM BANK: Moody's Withdraws B3.ru Long-Term NSR ----------------------------------------------------- Moody's Interfax Rating Agency has withdrawn Uniastrum Bank's B3.ru long-term national scale rating (NSR). Ratings Rationale: Moody's has withdrawn the rating for its own business reasons. Headquartered in Moscow, Russia, Uniastrum Bank reported total assets of US$2.3 billion and net profits of US$3.8 million, according to its non-audited statutory reports under Russian Accounting Standards as at April, 2013 Moody's Interfax Rating Agency's National Scale Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".ru" for Russia. Moody's Interfax Rating Agency (MIRA) specializes in credit risk analysis in Russia. MIRA is a joint-venture between Moody's Investors Service, a leading provider of credit ratings, research and analysis covering debt instruments and securities in the global capital markets, and the Interfax Information Services Group. Moody's Investors Service is a subsidiary of Moody's Corporation (NYSE: MCO). * Moody's: Russian CFOs Optimistic on Bank Performance ------------------------------------------------------ Moody's latest survey of the Chief Financial Officers (CFOs) of around 80 Russian banks reveal cautious optimism regarding the operating environment in Russia and broadly credit-positive views of those CFOs' banks' performance, says Moody's Investors Service in a new Special Comment entitled "Russian Banks: 2013 CFO Survey Shows Expectations of Stability Run Counter to Several Credit- Negative Trends." "Although the CFOs we surveyed expect weak corporate lending growth, they are more bullish on retail lending and expect interest rates, asset quality, and capital adequacy to remain stable. However, we are less sanguine about the stability of these credit drivers in the Russian system," explains Eugene Tarzimanov, a Moody's Vice President - Senior Credit Officer and author of the report. The main findings of the survey are: - Most CFOs expect weak growth in corporate lending, driven by economic problems in Russia and regulatory tightening, in line with Moody's expectations of low double-digit growth in the corporate segment. However, CFOs' expectations on retail growth in 2013 are high: 36% of the respondents expect 15%-30% growth, and 31% expect much more rapid growth of up to 50% or more. Moody's forecasts retail loan growth of around 30% in 2013, but since retail growth is mainly concentrated in unsecured products and far outpaces the growth in real wages, material asset-quality pressure could emerge once these loans start to season and loan growth decreases. - Nearly half of the CFOs expect stable lending and funding rates in 2013 and about one-third of CFOs expect rates to increase. However, the rating agency believes that weak economic growth could prompt the Central Bank of Russia (CBR) to decrease its benchmark rates this year. Under that scenario, borrowers' debt- service capacity would improve somewhat, but banks' margins will come under pressure. - CFOs are optimistic on asset quality: 58% expect that the share of problem loans will remain flat in 2013, while 27% expect improvements in asset quality. However, Moody's forecasts a marginal increase in problem loan levels, reaching the low teens in 2013, because of the macroeconomic challenges that Russia faces and the fact that loans originated during the 2011-12 credit boom will begin to season. - 59% of the CFOs believe that capital adequacy levels will remain stable. However, Moody believes that higher problem loans and lower core earnings will exert negative pressure on banks' capital in 2013, because the growth in risk-weighted assets will likely outpace banks' internal capital generation. This, in turn, will place an increased emphasis on raising capital from shareholders and deleveraging. - No decrease in banks' liquidity buffers, which Moody's views as credit positive. Banks also have no plans to increase their borrowings from CBR, a view not shared by Moody's: the rating agency expects that banks will increase their borrowings from the CBR because of lower growth in customer deposits. ===================================== S E R B I A & M O N T E N E G R O ===================================== LUKA BEOGRAD: Seeks Creditor Approval of Debt Restructuring Plan ---------------------------------------------------------------- Gordana Filipovic at Bloomberg News reports that Milan Beko, owner of Luka Beograd AD, said the company has offered creditors a five-year debt restructuring plan to avoid bankruptcy. According to Bloomberg, Mr. Beko said in an interview in Belgrade on May 10 that the plan includes a new schedule of repayments of an estimated EUR47 million (US$60.4 million) of loans, as well as EUR42 million to Hypo Alpe-Adria Bank AD, which lent Beko's Luxembourg-based Worldfin Fund cash in 2005 to acquire Luka Beograd. Luka Beograd "can't respond to its financial liabilities" and has "no capacity to endlessly service interest rate payments," Mr. Beko, as cited by Bloomberg, said, speaking two days after the police and the public prosecutor questioned him for the third time this year about his role in the sale of the company and its business activities. The government is reviewing the past sale of 24 companies, including Luka Beograd, after criticism from the European Parliament, Bloomberg discloses. The company will ask creditors, including Piraeus, Banca Intesa AD and Komercijalna Banka AD to agree to the restructuring plan and avoid bankruptcy, Bloomberg says. Mr. Beko said that the plan needs to be supported by at least 51% of creditors and also requires a court approval, Bloomberg relates. "This will give Luka Beograd a chance to revitalize" and improve its financial condition, Bloomberg quotes Mr. Beko as saying. Mr. Beko, as cited by Bloomberg, said that the court will appoint a supervisor to oversee the implementation of the program. During that time, the company's accounts cannot be blocked, Bloomberg notes. Luka Beograd, whose port business declined as trade contracted during four years of economic recession, ended 2012 with a RSD356.5 million (US$4.14 million) loss, after a RSD14.6 million profit in 2011, Bloomberg recounts. Luka Beograd AD is the operator of a river port in the capital Belgrade. ========= S P A I N ========= AVANZA SPAIN: Moody's Assigns 'B1' CFR; Outlook Stable ------------------------------------------------------ Moody's Investors Service assigned a corporate family rating of B1 and a probability of default rating of Ba3-PD to Avanza Spain S.A.U., the ultimate holding company of the subsidiary guarantors to the group's senior credit facilities. Concurrently, Moody's has assigned a provisional (P)B1 rating to Avanza's proposed EUR315 million of senior secured bonds due 2018 to be issued by AG Spring Finance Limited ("Senior Secured Bonds") and a provisional (P)B2 rating to the proposed EUR175 million of senior unsecured fixed rate bonds due 2019 to be issued by AG Spring Finance II Limited ("Senior Unsecured Bonds"). The company will also raise a EUR50 million super senior revolving credit facility ("RCF") due 2017. The company is proposing to use the proceeds of the Senior Secured Bonds and the Senior Unsecured Bonds to refinance existing senior facilities within Avanza. As part of the refinancing, Avanza Spain S.A. and Avanza Interurbanos S.L. will be consolidated within Avanza, allowing the key assets of the group to be consolidated going forward. This is the first time that Moody's has assigned ratings to Avanza. "The assigned B1 CFR reflects Avanza's small size, its high reliance on Spanish public authorities for timely settlement of invoices, and the company's high financial leverage albeit somewhat mitigated by the length and steady earnings profile of its regulated concessions" says Declan O' Brien, a Moody's Analyst and lead analyst for Avanza. The B1 CFR assigned to Avanza reflects the company's high financial leverage, which is 7.0x gross debt/EBITDA (on a Moody's-adjusted basis) and 6.5x net debt/EBITDA (on a Moody's- adjusted basis) for the financial year-end December 2012 on a pro forma basis. While the CFR is weakly positioned in the B1 rating category, the rating is based on Moody's expectation that the company will deliver on its business plan to reduce net debt/EBITDA to 6x by financial year-end December 2013 and to continue to decrease net debt thereafter. The high leverage is mitigated by the regulated nature of the long term and exclusive concessions which provides high stability and visibility to EBTIDA as approximately 75% of revenues are generated from concessions protected from cost increase risk and 85% of concessions, by revenues, are in the urban and suburban bus segments where lack of alternative is a significant factor in choosing the company's services; these lines of business have performed robustly through the financial crisis. Additionally, the company's weighted average concession life, by revenues, is 11.6 years as of March 2013 and the company has virtually a 100% renewal rate since 1885 providing additional visibility around medium to long-term earnings. Avanza's liquidity is good with a cash balance of EUR46.8 million for year-end 2012. Internally generated cashflow is adequate and the company is not forecast to draw under its EUR50 million RCF. The business capital expenditure can change substantially from year-to-year as requirements are dependent on the terms of their contracts but the average age of Avanza's fleet is young at 6.4 years, well below requirements under Spanish law. Moody's expects that the company's internally generated cashflow should cover the company's ongoing basic cash needs, such as debt service, working capital needs and expected capital expenditures. Avanza receives approximately 35% of its revenues in the form of subsidies from Spanish public authorities. Avanza had a negative working capital movement in 2011, partly due to a delayed settlement of invoices although this was largely reversed in 2012. Moody's views the timely receipt of subsidy payments as a key credit risk for the company going forward. The B1 CFR also reflects Moody's view that Avanza (1) is a leading company in its key markets of urban, suburban and long distance bus concessions; (2) has increased total revenues and EBITDA by 7.6% and 7.9%, respectively, for the period 2009-2012; (3) that 84% of its revenues are contracted until post 2018; and (4) has regulated concessions with a long weighted average concession life and virtually 100% renewals since the 19th century. However, the CFR also reflects that the company (5) is highly leveraged with gross debt: EBITDA of 7x; (6) is exposed to unfavorable dynamics in the long-distance sector; and (7) has a financing structure which does not include any maintenance covenants. Given the lack of maintenance covenants under the bonds and the RCF, Moody's views the proposed structure as covenant lite. Using Moody's Loss Given Default (LGD) methodology Moody's assumed a 35% recovery rate rather than the standard 50% rate due to the covenant lite nature of the proposed financing. This results in a PDR of Ba3-PD, one notch higher than the CFR. Also in accordance with Moody's LGD methodology, the Senior Secured Bonds are rated (P)B1 (LGD4), in line with the B1 CFR and the Senior Unsecured Bonds are rated (P)B2 (LGD6), one notch below the CFR. Moody's issues provisional ratings in advance of the final sale of debt instruments and these ratings reflect the rating agency's preliminary credit opinion regarding the transaction only. Upon a conclusive review of the final documentation, Moody's will endeavor to assign a definitive rating to the debt. A definitive rating may differ from a provisional rating. Outlook The stable outlook on the rating reflects Moody's expectation that Avanza will (1) maintain its current performance and continue to generate positive free cash flow; and (2) reduce its net debt/EBITDA to below 6.0x. What Could Change the Rating Up/Down Positive pressure on the ratings could materialize if Avanza (1) maintains its current operating performance; (2) generates sustained positive free cash flow; and (3) improves its leverage profile such that its Moody's-adjusted net debt/EBITDA ratio is solidly below 5.0x. Conversely, negative pressure on the ratings would emerge if Avanza's liquidity profile and credit metrics deteriorate as a result of (1) weakening its operational performance; (2) acquisitions; or (3) an aggressive change in its financial policy. Quantitatively, Moody's would also consider downgrading Avanza's ratings if (1) its adjusted net debt/EBITDA ratio remains above 6.0x for a prolonged period and if adjusted gross debt/EBITDA is trending towards 7.0x; or (3) the company reports negative free cash flow on a regular basis. Headquartered in Madrid, Avanza is a leading provider of bus transportation services in Spain. The company is 93% owned by Doughty Hanson, a private equity firm. Avanza has four principal lines of business: urban, suburban and long-distance bus services, and bus terminals, representing 40.4%, 44.4%, 10.9% and 4.3% of revenue in 2012, respectively. Avanza is the largest privately-owned bus transportation operator in the urban and suburban bus transportation markets in Spain and the second largest long-distance bus transportation operator in Spain, in each case in terms of fleet. These ratings were assigned by evaluating factors that Moody's considers relevant to the credit profile of the issuers, such as the company's (1) business risk and competitive position compared with others within the industry; (2) capital structure and financial risk; (3) projected performance over the near to intermediate term; and (4) management's track record and tolerance for risk. Moody's compared these attributes against other issuers both within and outside Avanza's core industry and believes Avanza's ratings are comparable to those of other issuers with similar credit risk. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. AVANZA SPAIN: S&P Assigns Preliminary 'B+' CCR; Outlook Stable -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'B+' long-term corporate credit rating to Spain-based bus service provider Avanza Spain S.A.U. The outlook is stable. At the same time, S&P assigned a preliminary 'B+' issue rating to the proposed EUR315 million senior secured notes to be issued by special-purpose vehicle AG Spring Finance Ltd. (not rated). S&P also assigned a 'B-' issue rating to the EUR175 million senior unsecured notes to be issued by special-purpose vehicle AG Spring Finance II Ltd. (not rated). S&P understands that the proceeds of both notes will be on-lent to Avanza by way of separate back-to-back loans. S&P has assigned a 'B+' issue rating to the back-to-back loan for the senior secured notes and a recovery rating of '3', reflecting its expectation of meaningful (50%-70%) recovery prospects in the event of a payment default. Additionally, S&P assigned a 'B-' issue rating to the unsecured notes' back-to-back loan and a recovery rating of '6', reflecting its expectation of negligible (0%-10%) recovery prospects in the event of a payment default. The final ratings are subject to the successful closing of the proposed transactions, and also to the following: -- The placement of a five-year senior revolving credit facility of EUR50 million; -- The termination of the existing shareholder loan of EUR382.7 million between Avanza and its shareholders; -- Avanza Alpha Sarl transferring its Avanza Interurbanos shares to Avanza Spain without cash implications; and -- S&P's receipt and satisfactory review of all final transaction documentation. Accordingly, the preliminary ratings should not be construed as evidence of the final rating. If Standard & Poor's does not receive the final documentation within a reasonable time frame, or if the final documentation departs from the materials it has already reviewed, S&P reserves the right to withdraw or revise its ratings. The rating reflects S&P's assessment of Avanza's business risk profile as "satisfactory" and its financial risk profile as "highly leveraged." Avanza's partial exposure to Spanish public authorities' payments for revenue shortfalls is a ratings constraint. While 35% of the revenues are collected from public authorities, this is mitigated by the fact that 65% of revenues are collected from passengers. S&P believes that the local authorities' capacity to make timely payments could reduce if economic conditions were to deteriorate further. S&P's view of concession renewal risk is also a ratings weakness. While S&P believes this risk is currently low, the impact of nonrenewal could be significant in the longer term. Avanza's exposure to passenger volume risk is also a rating constraint. For 25% of its revenues, cost recovery is limited to a consumer price index (CPI) adjustment to passenger fares. The rating also reflects S&P's view that Avanza is a relatively small company with more concentration in Spain than international peers, some of which are more diversified. Avanza's strong competitive position as Spain's leading private provider of bus services is a rating strength. S&P notes its track record of sustainable operating profit margins, supported by long-term concession agreements and a business model focused on forced mobility in urban and suburban markets (84% of revenues) that deliver resilient and predictable EBITDA earnings. About 75% of total revenues guarantees cost protection through tariffs; 35% of total revenues do not involve any passenger volume risk. About 40% of revenue is exposed to passenger volume risk but benefits from cost protection through tariffs. Other supporting factors include limited competition--the company operates exclusive concession routes--and supportive regulation in its key role as a provider of efficient urban and suburban transport. S&P's base-case operating scenario for 2013 incorporates its assumption that Avanza will formalize the Zaragoza concession renewal by mid-2013, as it was the sole bidder in the bidding process. S&P also anticipates a decline of 2%-4% in group revenues on reduced kilometers in the Zaragoza urban bus network. Under S&P's base case, it estimates the group's EBITDA margin will remain at 19%-20% for 2013, but could face pressures from price fluctuations and diesel availability; 25% of Avanza's revenues is not protected against fuel costs increases through a price-adjustment mechanism in its concession agreements. S&P estimates that Avanza's Standard & Poor's-adjusted debt to EBITDA will be about 6.0x-6.3x in 2013 (11x in 2012, in which S&P includes the shareholder loans, but this loan should be terminated as part of the refinancing). S&P considers adjusted debt to EBITDA of less than 7x to be commensurate with the rating on Avanza. The stable outlook reflects S&P's view that cash flows will likely remain stable due to the predictable, contractual cash flow of its current concession portfolio, and that this, along with the proposed refinancing, should continue to support an "adequate" liquidity position. S&P also forecasts that Avanza will continue to deliver cash-flow-protection measures in line with a "highly leveraged" financial risk profile for at least the next three years. The typical outlook horizon for speculative- grade ratings is 12 months. S&P could consider lowering the ratings if credit measures deteriorate such that FFO to debt falls below 9% and debt to EBITDA exceeds 7x as a result of higher debt levels. Debt could increase on acquisitions, or working capital loans to bridge delays in payments from the public authorities. If Avanza failed to renew some concession contracts, this would also reduce EBITDA and could pressure the rating. S&P is unlikely to raise the rating in the short-to-medium term as it believes the company's financial risk profile will remain "highly leveraged". S&P is not likely to rate financial-sponsor- owned companies, such as Avanza, with a business risk profile that S&P assess as satisfactory, above 'B+'. ===================== S W I T Z E R L A N D ===================== CREDIT SUISSE: Fitch Affirms 'BB+' Capital Perpetual Notes Rating ----------------------------------------------------------------- Fitch Ratings has affirmed Credit Suisse AG's Long-term Issuer Default Rating at 'A' with a Stable Outlook and Short-term IDR at 'F1'. The agency has also affirmed the bank's Viability Rating (VR) at 'a', Support Rating at '1' and Support Rating Floor (SRF) at 'A'. At the same time, Fitch affirmed the ratings of Credit Suisse's subsidiaries and holding company and of its issues. The rating actions on Credit Suisse have been taken in conjunction with Fitch's Global Trading and Universal Bank (GTUB) periodic review. Fitch's outlook for the industry is stable. Positive rating drivers include improved liquidity, funding, capitalization and more streamlined businesses, all partly driven by regulation. Offsetting these positive drivers are substantial earnings pressure, regulatory uncertainty and heightened legal and operational risk. KEY RATING DRIVERS - IDRS, VR AND SENIOR DEBT The affirmation of Credit Suisse's VR and IDR reflect the bank's operations as a global investment bank and wealth manager with a solid domestic retail and commercial banking franchise. Credit Suisse raised new capital in 2012, which together with the aggressive reduction of risk-weighted assets (RWA) and retention of earnings resulted in stronger capitalization. Following these actions and pending divestments, Credit Suisse's Fitch Core Capital ratio and regulatory capital ratios measured under Basel III RWA are within the peer group range. KEY RATING SENSITIVITIES - IDRS, VR AND SENIOR DEBT Credit Suisse's Long-term IDR is on Stable Outlook, Fitch expects the bank to continue to concentrate on its core segments in investment banking, which will continue to be the group's main risk center. The group has reduced various market risk metrics and has a solid track record in managing the related risks, and as a consequence Fitch expects lower volatility in the investment bank's earnings particularly in periods of stress. Nevertheless, in the agency's opinion, investment banking activities give rise to material market and operational risks, which are captured in Credit Suisse's VR. The high weighting of investment banking in Credit Suisse's risk profile and earnings mix means that an upside to the bank's VR is unlikely in the near term. Fitch views positively the reduced market risk exposure in the investment bank, where Basel III RWA declined by about 43% between end-December 2010 and end-March 2013 (in USD terms). The aggressive RWA reduction has weighed on earnings in recent years, however losses on wind-down activities were immaterial in Q113 and the budgeted FY13 CHF400m burden is manageable. Credit Suisse's VR would come under pressure if the bank materially increased its investment banking risk appetite, which Fitch currently does not expect, or if it was unable to maintain earnings volatility at moderate levels. The VR benefits from Credit Suisse's strong non-investment banking operations, including wealth management, which provide the bank with a more stable source of earnings. With assets under management in the wealth management division of CHF836bn at end- March 2013, Credit Suisse is one the world's largest wealth managers. The bank's VR is sensitive to any material and structural changes in the size of its wealth management operations. Credit Suisse's VR reflects Fitch's expectation that the bank will maintain strong capital ratios. Swiss regulations will require Credit Suisse to operate with a minimum 10% Swiss core capital ratio, similar to Basel III but including certain preferred notes, by 2019, however the bank expects to reach this level by mid-2013. In addition, the bank will have to hold up to 9% of loss-absorbing capital, which can be in the form of contingent convertible instruments. Credit Suisse's capitalization has been improved materially by capital raising initiatives implemented in 2012, including the issuance of CHF3.8 billion of mandatory capital which has since converted into common equity. As a result, Credit Suisse reported a Basel III common equity Tier 1 (CET1) ratio of 8.6% at March 2013, which will rise to 8.8% pro forma for measures still pending (including announced disposals). This level is within the peer group range. Furthermore, Credit Suisse's Basel III ratios are now their primary regulatory measure and therefore subject to increased regulatory scrutiny compared with banks in other jurisdictions that instead provide estimates of Basel III ratios. The increase in equity has also reduced balance sheet leverage, although it remains high compared to peers. Fitch expects the bank to continue its balance sheet reduction, which should result in an improved leverage ratio. The generally solid quality of assets and the group's strong funding mitigates the high leverage. Furthermore, Fitch expects the bank's capital to be sufficient to meet "fully-loaded" leverage requirements under Basel III, which include certain off-balance sheet items, ahead of time, partly because these include contingent notes in addition to common equity in the capital component. In addition to its CET1 capital, the bank has about CHF4.3bn contingent convertible notes, which convert into common equity if the group's CET1 ratio falls below 7%. Fitch has assigned 100% equity credit to the Tier 1 contingent convertible notes and 50% equity credit to the Tier 2 note and considers this buffer positive for the bank's VR as it provides further protection for senior creditors. Failure to reach and maintain strong capital ratios would put pressure on Credit Suisse's VR. Fitch considers Credit Suisse's liquidity strong as it benefits from a large and historically stable customer funding base, and the bank estimates a net stable funding ratio of above 100%. Liquidity is managed centrally, and Credit Suisse maintains a large pool of liquid assets, partly driven by stringent Swiss regulatory requirements. At end-March 2013, the bank reported CHF135bn of cash, securities accepted under central bank facilities and other liquid securities. Deterioration in liquidity would put the VR under pressure. Credit Suisse's Long-term IDR is at its SRF, which means that a downgrade of its VR would only trigger downgrades of the IDRs if the SRF were revised down as well. KEY RATING DRIVERS - SUPPORT RATING AND SRF The affirmation of Credit Suisse's Support Rating and SRF is based on Fitch's view that the probability of support from the Swiss authorities for Credit Suisse, if required, remains extremely high in the near term due to the bank's systemic importance. RATING DRIVERS AND SENSITIVITIES - SUPPORT RATING AND SRF Credit Suisse's Support Rating and SRF are sensitive to a change in Fitch's assumptions around the availability of sovereign support for the bank. There is a clear political intention to ultimately reduce the implicit state support for systemically important banks in Europe and the US, as demonstrated by a series of policy and regulatory initiatives aimed at curbing systemic risk posed by the banking industry. This might result in Fitch revising SRFs downwards in the medium term, although the timing and degree of any change would depend on developments with respect to specific jurisdictions. Until now, senior creditors in major global banks have been supported in full, but resolution legislation is developing quickly and the implementation of creditor "bail-in" is starting to make it look more feasible for taxpayers and creditors to share the burden of supporting large, complex banks. KEY RATING DRIVERS AND SENSITIVITIES - SUBORDINATED DEBT AND OTHER HYBRID SECURITIES Subordinated debt and other hybrid capital issued by Credit Suisse, Credit Suisse Group AG and by various issuing vehicles are all notched down from the VRs of Credit Suisse or Credit Suisse Group AG in accordance with Fitch's assessment of each instrument's respective non-performance and relative loss severity risk profiles, which vary considerably. Their ratings are primarily sensitive to any change in the VRs of Credit Suisse or Credit Suisse Group AG. KEY RATING DRIVERS AND SENSITIVITIES - HOLDING COMPANY Credit Suisse Group AG's IDRs and VR are equalized with those of Credit Suisse and reflect its role as the bank holding company and the modest double leverage of 100% at end-2012 at holding company level. Fitch could notch the holding company's IDRs and VR below Credit Suisse's ratings if double leverage at Credit Suisse Group AG increased above 120% or if the role of the holding company changed, which Fitch currently does not expect. Credit Suisse Group AG's Support Rating and SRF reflect Fitch's view that support from the Swiss authorities for the holding company is possible, but cannot be relied on. As Credit Suisse AG's SRF is 'No Floor', the holding company's Long-term IDR is driven purely by its VR and is therefore primarily sensitive to the same drivers as Credit Suisse's VR. KEY RATING DRIVERS AND SENSITIVITIES - SUBSIDIARIES AND AFFILIATED COMPANIES Credit Suisse International is a UK-based wholly-owned subsidiary of Credit Suisse Group AG, and Credit Suisse (USA) Inc. (CSUSA) is the group's main US-based broker-dealer. Their IDRs are equalized with Credit Suisse's and reflect support from their parent as Fitch views them as core to the group's strategy in its investment banking business. Credit Suisse International is incorporated as an unlimited liability company, which underpins Fitch's view that there is an extremely high probability that it would receive support from its parent if needed. In H112, Credit Suisse International restructured its capital base, redeeming subordinated debt placed with its parent with participating shares placed with the parent, thereby improving the quality of its capital. CSUSA's parent companies (Credit Suisse and Credit Suisse Group AG) in 2007 issued full, unconditional and several guarantees for the firm's outstanding SEC registered debt securities, which in Fitch's opinion demonstrate the role of the subsidiary and the extremely high probability that the firm would be supported if needed. The rating actions are: Credit Suisse: Long-term IDR: affirmed at 'A', Outlook Stable Short-term IDR: affirmed at 'F1' Viability Rating: affirmed at 'a' Support Rating: affirmed at '1' Support Rating Floor: affirmed at 'A' Senior unsecured debt (including program ratings): affirmed at 'A'/'F1' Senior market-linked notes: affirmed at 'Aemr' Subordinated lower Tier 2 notes: affirmed at 'A-' Tier 1 notes and preferred securities: affirmed at 'BBB-' The rating actions have no impact on the ratings of the outstanding covered bonds issued by Credit Suisse Credit Suisse Group AG Long-term IDR: affirmed at 'A', Outlook Stable Short-term IDR: affirmed at 'F1' Viability Rating: affirmed at 'a' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' Senior unsecured debt (including program ratings): affirmed at 'A'/'F1' Senior market-linked notes: affirmed at 'Aemr' Subordinated notes: affirmed at 'A-' Preferred stock (ISIN XS0148995888): affirmed at 'BBB' Preferred stock (ISIN XS0112553291 and JPY30.bn issue): affirmed at 'BBB-' Credit Suisse International: Long-term IDR: affirmed at 'A', Outlook Stable Short-term IDR: affirmed at 'F1' Support Rating: affirmed at '1' Senior unsecured debt (including debt issuance and CP program ratings): affirmed at 'A'/'F1' Dated subordinated notes: affirmed at 'A-' Perpetual subordinated notes: affirmed at 'BBB' Credit Suisse (USA) Inc.: Long-term IDR: affirmed at 'A', Outlook Stable Short-term IDR: affirmed at 'F1' Support Rating: affirmed at '1' Senior unsecured debt (including program ratings): affirmed at 'A' Commercial paper program: affirmed at 'F1' Subordinated notes: affirmed at 'A-' Credit Suisse NY (branch): Long-term IDR: affirmed at 'A', Outlook Stable Short-term IDR: affirmed at 'F1' Senior unsecured debt (including program ratings): affirmed at 'A' Commercial paper program: affirmed at 'F1' Senior market-linked notes: affirmed at 'Aemr' Claudius Limited: Preferred securities: affirmed at 'BB+' Credit Suisse Group (Guernsey) I Limited Tier 2 Contingent Notes: affirmed at 'BBB-' Credit Suisse Group (Guernsey) II Limited Tier 1 Buffer Capital Perpetual Notes: affirmed at 'BB+' Credit Suisse Group (Guernsey) IV Limited Tier 2 Contingent Notes: affirmed at 'BBB-' =========== T U R K E Y =========== CUKUROVA HOLDING: TMSF Seizes Assets Following Debt Default ----------------------------------------------------------- Ercan Ersoy at Bloomberg News reports that the Savings Deposit Insurance Fund, also known as TMSF, said in an e-mailed statement on Friday Cukurova Holding's assets were seized after the company failed to pay debt since October 2012. TMSF has right to collect its receivables as soon as possible and "continues work" on assets seized, Bloomberg notes. According to Bloomberg, TMSF said that implementation of legislation for default on the group is necessary. Cukurova Holding is owned by Mehmet Emin Karamehmet, who holds a controlling stake in Turkey's largest mobile phone operator Turkcell. ============= U K R A I N E ============= * UKRAINE: S&P Affirms 'B/B' Credit Ratings; Outlook Negative ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B/B' long- and short-term foreign and local currency sovereign credit ratings on Ukraine. The outlook remains negative. S&P also affirmed the long-term Ukraine national scale rating at 'uaA-'. The ratings on the Ukraine are constrained by S&P's view of political uncertainty, financial sector stress, and weak external liquidity. In particular, S&P thinks that the government's strategy to secure foreign currency to meet its elevated external financing needs over the medium term remains contingent on favorable financing conditions in the capital markets. The ratings are supported by Ukraine's still relatively low, albeit rising, government debt burden and fairly diversified economy. Net foreign currency reserves declined sharply in 2012 to about three months of capital account payments and less than 40% of external short-term debt. S&P expects this pressure to remain, given the sizable current account deficit, significant short-term external debt (by remaining maturity), and the adherence to a heavily managed exchange rate. "We also anticipate official foreign currency reserves will fall further to around two months of current account payments and below 30% of external short-term debt this year, and to remain at these low levels absent longer-term official financing or some improvement in current account performance. The government has been taking advantage of high levels of global liquidity and the search for yield in international capital markets to cover its financing needs. In our view, these favorable conditions could prove fleeting, however, which would further accentuate external funding pressures. We estimate that so far the government has raised around half of its foreign currency needs in 2013," S&P said. S&P sees limited prospects for fiscal consolidation and has revised its initial expectation that the government will eventually raise domestic gas prices to reduce the financing costs associated with recapitalizing Naftogaz (the state-owned oil and gas company; see "Gas Market Reform In Ukraine Could Provide A Tonic For Ailing Sovereign Creditworthiness," Feb. 5, 2013). As a result, S&P's estimate of the average general government deficit over 2012-2015 has increased to 5% of GDP from around 4%. Due to weak external demand for Ukraine's metals and machinery exports and continued declines in industrial production, S&P now expects real GDP per capita growth to average 2.5% in 2013-2015 (compared with the 4.1% S&P forecasts in its last full report on Ukraine, published Dec. 18, 2012). The government's debt burden could rise sharply if the hryvnia weakens, as about 52% of gross debt is denominated in foreign currency, although mostly on concessional terms. S&P expects a general government net debt burden of around 32% of GDP over the forecast horizon if the currency remains fairly stable and the GDP deflator (a more broad-based measure of inflation than the consumer price index [CPI]) continues to outpace the CPI by 5%-7% annually. In April 2013, the government put forward a draft bill in the Ukrainian parliament to lift the ban on privatizing Naftogaz. This bill could facilitate the EU- and Ukraine-sponsored proposal of a tripartite gas consortium between Ukraine, Russia, and the EU to modernize Ukraine's gas transport system (GTS). However, S&P believes Russia will likely remain more focused on bypassing Ukraine's GTS via its Nord Stream and South Stream pipelines. The future of Ukraine's GTS without Russian gas is questionable, absent a significant increase in domestic production. Without Russian involvement in any privatization deal, it is unlikely that Ukraine would be able to renegotiate a lower price for its gas imports from Gazprom. On the other hand, President Yanukovych could take what S&P would view as a politically costly step of ceding influence to Russia regarding the GTS. Such a move would put at risk Ukraine's stated aim of further integration with European markets. S&P do not see any easy solution to Ukraine's dilemma, but S&P believes the ongoing uncertainty about the country's direction is leading to ad-hoc policymaking, ongoing price distortions in the domestic gas market, and reduced overall investment in the country. The negative outlook reflects S&P's view that there is at least a one-in-three chance that it could lower its long-term rating on Ukraine over the next 12 months if it views as insufficient the government's strategy to secure foreign currency to meet its elevated external financing needs. A sharp and sustained decline in net foreign currency reserves would put downward pressure on the ratings. S&P could revise the outlook to stable if the government secures funding to meet external debt service, in a timely manner, either through the international capital markets, or through bi- or multi-lateral loans, while also providing support for net international reserves and setting the economy on a more sustainable growth path. =========================== U N I T E D K I N G D O M =========================== ATMOSPHERE BARS: In Administration, 2 Bars at Risk -------------------------------------------------- Daily Post reports that Broadway Boulevard on Mostyn Broadway, Llandudno, and Chicago's in Brook Street, Wrexham are under threat after their parent company Atmosphere Bars and Clubs Ltd was put into administration as "a consequence of cash flow problems." The clubs will remain open as administrators seek to sell the parent company, according to Daily Post. The report relates that the firm employs 75 full-time staff and 418 part-time in 24 licensed premises across England and Wales. Daniel Butters and Adrian Berry, of business advisory firm Deloitte, have been appointed joint administrators. "Unfortunately, as a consequence of cash flow problems, the decision was taken by the directors of Atmosphere Bars and Clubs to place the company into administration. . . . We are continuing to trade the business and all venues remain open whilst seeking a sale as a going concern," the report quoted Mr. Butters as saying. BARCLAYS BANK: Fitch Affirms 'BB+' Preference Shares Rating ----------------------------------------------------------- Fitch Ratings has affirmed Barclays Bank plc's Long-term Issuer Default Rating at 'A' with a Stable Outlook and Short-term IDR at 'F1'. The agency has also affirmed the bank's Viability Rating (VR) at 'a', Support Rating (SR) at '1' and Support Rating Floor (SRF) at 'A'. At the same time, Fitch has affirmed the holding company Barclays plc's ratings and all debt ratings. The rating actions on Barclays Bank have been taken in conjunction with Fitch's Global Trading and Universal Bank (GTUB) periodic review. Fitch's outlook for the industry is stable. Positive rating drivers include improved liquidity, funding, capitalization and more streamlined businesses, all partly driven by regulation. Offsetting these positive drivers are substantial earnings pressure, regulatory uncertainty and heightened legal and operational risk. KEY RATING DRIVERS - IDRS, VR AND SENIOR DEBT Barclays Bank's VR, IDRs and senior debt ratings reflect the bank's strong franchise in diversified businesses, its solid track record in managing credit and market risk, healthy customer funding franchise, strong liquidity management and Fitch's expectation that the bank will maintain sound capital ratios that are in line with its global peers. The ratings also reflect market risk exposure through its investment banking operations and the exposure to litigation and reputation risks. RATING SENSITIVITIES - IDRS, VR AND SENIOR DEBT Barclays Bank's Long-term IDR is on Stable Outlook. Fitch expects Barclays Bank to concentrate on the businesses it has identified as core during the strategy review it completed in February 2013. This means that the bank will continue to operate a global investment banking business, where it has strong market shares in several key segments in fixed income and equities, which expose the bank to potentially material market risk. The performance of the bank's investment banking activities inevitably oscillates, but has remained more stable than at many peers, and Fitch expects the bank to continue managing related market risk conservatively as risk-weighted assets (RWA) in investment banking are set to decline further by 2015. Barclays Bank's VR would come under pressure if the bank materially increased its investment banking risk appetite, which Fitch currently does not expect, or if it was unable to maintain earnings volatility at moderate levels. Barclays Bank's VR reflects Fitch's expectation that the bank will maintain strong capital ratios in line with its global peers, and the VR would come under pressure if the bank failed to achieve its target capitalization. Barclays' pro-forma end-March 2013 Basel III look-through common equity Tier 1 (CET1) ratio stood at 8.4%, which brings the bank more in line with its global peers. In addition to CET1 capital, Barclays has issued USD4bn contingent capital notes, which are written down if the bank's CET1 ratio falls below 7%. These notes are not included in Fitch Core Capital but have been assigned 50% equity credit and are included in Fitch Eligible Capital. Barclays' adjusted leverage remains somewhat higher than at its US peers but is at the lower end compared with most of the European GTUBs. Fitch expects leverage to decline as Basel III leverage requirements are introduced. Barclays Bank's VR benefits from its diversified business mix, including a strong and well-performing domestic retail and corporate banking franchise, and its global credit card business, where profitability has been strong. Rating pressure would arise if performance in these stronger businesses weakened. The VR factors in Fitch's expectation that Barclays Bank's European retail and business banking operations will remain a drag on the group's profitability as loan impairment charges are likely to remain high and margins are under pressure. The impact of the European operations on the bank's earnings should remain manageable as the restructuring of the European businesses should improve efficiency, but the unit is unlikely to contribute materially to group profit. The bank's wealth management unit is small relative to those at some of its GTUB peers, but is growing. Barclays Bank's VR is sensitive to any material and structural changes in the size and relative earnings contribution of the non-investment banking operations. Fitch considers Barclays Bank's liquidity positive for its VR. The group's liquidity pool declined to GBP141 billion at end- March 2013 (2012: GBP150 billion) and cash and deposits with central banks in the pool declined as holdings in government bonds increased. Fitch considers liquidity at this level sound given that liquid assets cover unsecured wholesale funding due in less than one year (GBP98 billion) by 144%. Sound liquidity is also reflected in Barclays' estimated 110% Basel III liquidity coverage ratio and the 98% loan/deposit ratio in RBB, Corporate Banking and Wealth and Investment Management. A material deterioration in liquidity, which Fitch does currently not expect, would put the bank's VR under pressure. Barclays Bank's Long-term IDR is at its SRF, which means that a downgrade of its VR would only trigger downgrades of the IDRs if the SRF were revised down as well. KEY RATING DRIVERS - SUPPORT RATING AND SRF The affirmations of Barclays Bank's Support Rating and SRF are based on Fitch's view that the probability of support from the UK authorities for Barclays Bank, if required, remains extremely high in the near term due to the bank's systemic importance. RATING SENSITIVITIES - SUPPORT RATING AND SRF The Support Rating and SRF are sensitive to a change in Fitch's view of the ability or propensity of the UK sovereign to extend full support to the bank's senior creditors. There is a clear political intention to ultimately reduce the implicit state support for systemically important banks in Europe and the US, as demonstrated by a series of policy and regulatory initiatives aimed at curbing systemic risk posed by the banking industry. This might result in Fitch revising SRFs downward in the medium term, although the timing and degree of any change would depend on developments with respect to specific jurisdictions. Until now, senior creditors in major global banks have been supported in full, but resolution legislation is developing quickly and the implementation of creditor "bail-in" is starting to make it look more feasible for taxpayers and creditors to share the burden of supporting large, complex banks. KEY RATING DRIVERS AND SENSITIVITIES - SUBORDINATED DEBT AND OTHER HYBRID SECURITIES Subordinated debt and other hybrid capital, including the contingent capital notes, issued by Barclays Bank is notched down from its VR in accordance with Fitch's assessment of each instrument's respective non-performance and relative loss severity risk profiles, which vary considerably. Their ratings are primarily sensitive to any change in Barclays Bank's VRs . KEY RATING DRIVERS AND SENSITIVITIES - HOLDING COMPANY RATING DRIVERS AND SENSITIVITIES Barclays plc's IDRs and VR are equalised with those of Barclays Bank and reflect its role as the bank holding company and the absence of double leverage at end-2012 at holding company level. Fitch could notch the holding company's IDRs and VR below Barclays Bank's ratings if double leverage at Barclays plc increased above 120% or if the role of the holding company changed, which Fitch currently does not expect. Barclays plc's SR and SRF reflect Fitch's view that support from the UK authorities for the holding company is possible, but cannot be relied on. As the SRF is 'No Floor', the holding company's Long-term IDR is driven purely by its VR and is therefore primarily sensitive to the same drivers as Barclays Bank's VR. The rating actions are: Barclays Bank Long-term IDR: affirmed at 'A'; Outlook Stable Short-term IDR and short-term debt: affirmed at 'F1' Viability Rating: affirmed at 'a' Support Rating: affirmed at '1' Support Rating Floor: affirmed at 'A' Senior unsecured debt: affirmed at 'A' Market linked securities: affirmed at 'Aemr' Government guaranteed senior long-term debt: affirmed at 'AA+' Lower Tier 2 debt: affirmed at 'A-' Upper Tier 2 debt: affirmed at 'BBB' Preference shares with no constraints on coupon omission: affirmed at 'BB+' Other hybrid Tier 1 instruments: affirmed at 'BBB-' Tier 2 contingent capital notes: affirmed at 'BBB-' The rating actions have no impact on the ratings of the outstanding covered bonds issued by Barclays Bank Barclays plc (Barclays's holding company parent) Long-term IDR: affirmed at 'A'; Outlook Stable Short-term IDR: affirmed at 'F1' Viability Rating: affirmed at 'a' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' Barclays US CCP Funding LLC US Repo Notes Programme: affirmed at 'F1' BOND AVIATION: Moody's Assigns Definitive B2 Corp. Family Rating ---------------------------------------------------------------- Moody's Investors Service assigned a definitive B2 Corporate Family Rating to Bond Aviation Group Limited. It also assigned a definitive B2 rating on the GBP200 million Senior Secured Notes, maturing 2019, issued by Bond Mission Critical Services plc. A B2-PD Probability of Default rating has also been assigned to Bond Aviation Group Limited. The outlook on the ratings is stable. Ratings Rationale: The final terms of the Notes are in line with the drafts reviewed for the provisional ratings assignments. What Could Change the Rating -- Up Given the relatively small size of Bond, upward pressure on the rating would be dependent upon a sustained reduction in leverage, as measured by an adjusted debt/EBITDA ratio trending towards 4.0x, as a result of the group demonstrating prudence in its expansion strategy. What Could Change the Rating -- Down The rating could experience downward pressure if the fundamentals of Bond's business dramatically changed or key blue-chip customers significantly reduced their business with the group. Specifically, increased pressure on the rating could result from an adjusted debt/EBITDA ratio higher than 6.0x, and/or an inability of the group to generate FCF to reduce net debt. Downward pressure on the rating could also develop if the group were to experience significant drawings on its RCF to fund rapid expansion. The principal methodology used in these ratings was the Global Business & Consumer Service Industry Rating Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Staverton UK, Bond Aviation Group Limited is one of the leading mission critical helicopter services providers in the UK, providing support services in the areas of Life & Rescue and Safety & Environment to customers including charity-funded air ambulance and, to a lesser extent, local government bodies. The company also provides offshore helicopter support for Energy Support Services, primarily to blue-chip corporate customers. The company operates 44 helicopters, and reported revenues of GBP132.7 million and EBITDA of GBP35.2 million for the 12 months ended December 31, 2012. The present group was formed in May 2011 when it was acquired for approximately GBP260 million (7.9x 2010 EBITDA) by Avincis Mission Critical Services (B2 negative), which is 50.1% owned by World Helicopters SA (advised by Investindustrial) and 49.9% by KKR. CO-OPERATIVE GROUP: S&P Affirms 'BB+' Ratings; Outlook Negative --------------------------------------------------------------- Standard & Poor's Ratings Services said that it revised its outlook on U.K.-based retailer the Co-operative Group Ltd. to negative from stable. At the same time, S&P affirmed its 'BB+' corporate credit and senior unsecured debt ratings on the group. Furthermore, the recovery rating on the group's senior unsecured debt is unchanged at '3', indicating S&P's expectation of meaningful (50%-70%) recovery for debtholders in the event of a payment default. The outlook revision reflects S&P's view that the Co-operative banking group's focus on strengthening its capital position could impede the group's execution of its overall financial objectives. More specifically, S&P believes that it could increase the execution risks surrounding the trading group's deleveraging plans, the realization of which are, in S&P's view, critical for the group to maintain its current ratings. The Co-operative banking group reported a statutory pre-tax loss of GBP668 million for the year-ended February 2013. This arose from a spike in impairments on higher risk mortgage and corporate loans, a write-down of intangible assets, customer redress costs, and transformation expenses. S&P understands that the financial services businesses are ring-fenced from the rest of the group, for regulatory purposes. S&P's corporate credit rating on the group relates to its trading operations. Accordingly, S&P's analysis continues to focus primarily on the Co-operative trading group and S&P deconsolidates the results of the banking group when calculating its adjusted credit metrics. The banking group has acknowledged that it needs to bolster its capital buffers to improve its resilience in the face of still- weak earnings prospects and a prolonged, unsupportive economic environment. With this in mind, management has agreed the sale of the life insurance business to Royal London Mutual Insurance Society Ltd. S&P understands that this transaction is in its final stages, but is subject to regulatory approval. Management is also seeking a buyer for the general insurance business, and intends to further run down non-core banking assets. However, it is currently unclear to S&P whether these actions together will be sufficiently large or timely to deliver the capital strengthening required. S&P believes that a nonfinancial company such as the Co-operative trading group would have limited capacity to provide sizable capital, and/or liquidity support, to banking operations of the size of the Co-operative banking group. While S&P's base-case credit scenario still factors in a low likelihood of any support from the trading group to the banking group, it cannot completely preclude this possibility from its credit analysis of the trading group. S&P also understands from management that even if the trading group wanted to contribute capital to the banking group, the former's loan documentation could potentially impose certain restrictions on this. In S&P's view, it is somewhat conceivable that, at the very least, the Co-operative banking group's focus on strengthening its capital position may affect the trading group's deleveraging plans. This could occur at a time when business trends are flat and headroom under financial metrics is limited, with Standard & Poor's-adjusted debt to EBITDA likely to be higher than 4.0x over 2013. It is also possible that the banking group's focus on its capital position could dilute any potential benefits to the trading group's leverage from the recent withdrawal from the "Verde" transaction with Lloyds Banking Group PLC. S&P had previously estimated that the exit from the Lloyds transaction would moderately benefit the 2013 adjusted-debt-to-EBITDA ratio of the trading group by about 0.2x-0.5x. "We continue to assess the Co-operative Group's business risk profile as "satisfactory" based on its position as the U.K.'s largest consumer co-operative and fifth-largest food retailer. The Co-operative Group also has a well-recognized brand and large store network comprising of local, convenience, and midsize stores. Our base-case forecasts factor in nominal growth in group revenues of less than 1%, with the adjusted EBITDA margin remaining less than 7% in 2013 and 2014, given an intensely competitive trading climate and subdued macroeconomic conditions in the U.K. We assess the Co-operative Group's financial risk profile as "significant" under our criteria, reflecting the group's high debt levels; its inability to raise public equity due to its status as a co-operative; and substantial off-balance- sheet liabilities, such as operating lease commitments. We anticipate that the group will maintain adjusted funds from operations (FFO) to debt at the higher end of 15%-20% and adjusted debt to EBITDA ratios at 4.0x-4.5x throughout 2013. The latter will depend on management's successful reduction of debt, as planned, through disposals, curbed capital expenditure (capex), and member payments," S&P said. The issue rating on the Co-operative Group's GBP450 million and GBP350 million unsecured notes due 2020 and 2026, respectively, is 'BB+', in line with the corporate credit rating. The recovery rating on these unsecured notes is '3', indicating S&P's expectation of meaningful (50%-70%) recovery for debtholders in the event of a payment default. In line with S&P's recovery rating criteria, it generally cap its recovery ratings on unsecured debt issued by corporate entities with corporate credit ratings of 'BB-' or higher at '3'. This reflects S&P's view that their recovery prospects are at greater risk of being impaired by the issuance of additional priority or pari passu debt prior to default. The issue and recovery ratings on the unsecured debt instruments are supported by S&P's valuation of the Co-operative Group as a going concern. S&P's recovery analysis is also underpinned by the large portfolio of stores owned by the group. However, the ratings also reflect the unsecured status of the notes. S&P's hypothetical default scenario assumes a decline in sales and profits, as well as increasing competition from large grocery stores moving into convenience food retailing. In S&P's scenario, rising food commodity prices and energy costs could also reduce the group's profit margin. Based on this, S&P assumes a payment default in 2017, which corresponds to the maturity year of the GBP950 million bank facilities. "The negative outlook reflects our view that the Co-operative banking group's need to strengthen its capital position may increase the execution risks surrounding the trading group's deleveraging plans. This is because the ability of the trading group to maintain its credit ratios of adjusted FFO to debt at the higher end of the 15%-20% range and adjusted debt to EBITDA at between 4.0x and 4.5x throughout 2013, could itself depend on the execution of management's plans to reduce debt, through disposals and curbed capex. We are not currently aware, however, of any intention of management to support the banking group using the trading group's financial resources," S&P said. "We could lower the rating if the Co-operative Group appears to us unable to keep its credit metrics in line with our guidelines for the rating. In our view, this could occur if management is unable to execute its plan to reduce leverage, or if there is a sharper-than-anticipated deterioration in operating performance at the group's food retail or specialist businesses. We could also consider a downgrade if we consider that the likelihood of the trading group having to support the banking group has increased, or if there is any actual or potential breach of the ring-fence on the banking group's operations," S&P added. "We could revise the outlook to stable if the Co-operative Group strengthens its operating performance and improves its adjusted financial metrics, such that FFO to debt is more than 25% and debt to EBITDA is less than 4x, on a sustainable basis. In our view, this outcome could arise following material deleveraging at the trading group as a result of significant disposals. A revision of the outlook to stable would also depend on our increased confidence in the banking group being able to support itself sufficiently in order to fund its future capital needs," S&P noted. DANIEL CONTRACTORS: In Administration, 1,400 Jobs at Risk --------------------------------------------------------- Alistair Houghton at Liverpool Daily Post reports that Daniel Contractors has gone into administration putting 1,400 jobs at risk. Accountancy firm Deloitte has been apppointed to Daniel Contractors and to its subsidiary business, Land and Marine Project Engineering. Deloitte said it would continue to trade two of its three main contracts, while the customer of the third main contract plans to transfer the work and the related Daniel employees to another company, according to Liverpool Daily Post. The report relates that Deloitte said a transfer of those contracts 'would safeguard 990 jobs.' The report notes that the company said it had already received several expressions of interest for Land and Marine, which employs 284 of the group's 1,449 staff. Bill Dawson, joint administrator and partner in Deloitte's restructuring services team, said: "We are in discussions with the key stakeholders and interested parties of the group in an attempt to sell all or parts of the businesses and we will be briefing the employees about the situation," the report adds. Daniel Contractors specialises in work in the utilities sector. DECO 6: S&P Lowers Rating on Class B Notes to 'CCC' --------------------------------------------------- Standard & Poor's Ratings Services lowered to 'B- (sf)' from 'BB (sf)' and removed from CreditWatch negative its credit rating on DECO 6 - UK Large Loan 2 PLC's class A2 notes. At the same time, S&P has lowered to 'CCC (sf)' from 'B- (sf)' its rating on the class B notes, and has affirmed its 'D (sf)' ratings on the class C and D notes. The rating actions follows S&P's review of the underlying loans' credit quality by applying its updated criteria for rating European commercial mortgage-backed securities (CMBS) transactions. On Dec. 6, 2012, S&P placed its rating on the class A2 notes on CreditWatch negative following the update to its European CMBS criteria. THE BRUNEL LOAN The Brunel loan matured in April 2012 and is secured on the Brunel Shopping Centre in Swindon. The loan has been in special servicing since June 2011, and failed to repay at loan maturity in April 2012. The issuer instructed Law Of Property Act receivers to take control of the rental income during the ongoing loan restructuring process. The Oct. 25, 2011 valuation of the property reports a revised figure of GBP87.2 million, reflecting a 33% decline from the GBP130.2 million valuation at closing, and a current senior loan- to-value (LTV) ratio of 116%. The special servicer continues to consider many asset management initiatives. However, S&P considers that the loan will likely experience principal losses. S&P has therefore assumed losses in its base case scenario. THE MAPELEY LOAN The Mapeley loan matures in July 2015 and is secured on a portfolio of 16 secondary U.K. office properties. The loan defaulted in October 2011 due to a breach of the interest coverage ratio (ICR) covenant of 1.15x. The servicer subsequently transferred the loan into special servicing. The excess cash is held in a reserve account and the current balance stands at GBP11 million. S&P understands that this fund is available to top up any future loan interest shortfalls. Hatfield Philips International, as the special servicer, based its post-enforcement workout strategy on the asset management and sale of the individual assets until loan maturity in July 2015. In January 2013, the servicer reported a 228.67% LTV ratio. Given the reported LTV ratio, S&P has assumed losses in its base case scenario. RATING ACTIONS Standard & Poor's ratings address timely payment of interest and payment of principal no later than the legal final maturity date in July 2017. S&P considers the credit enhancement available to the class A2 and B notes to be insufficient to mitigate the risk of losses from the underlying loans at the currently assigned rating levels. S&P has therefore lowered to 'B- (sf)' from 'BB (sf)' and removed from CreditWatch negative its rating on the class A2 notes, and lowered to 'CCC (sf)' from 'B- (sf)' its rating on the class B notes. S&P has affirmed its 'D (sf)' ratings on the class C and D notes because they have experienced interest shortfalls on previous interest payment dates. DECO 6 - UK Large Loan 2 is a 2005-vintage U.K. CMBS transaction. Deutsche Bank AG, London Branch is the transaction's arranger. At closing, the transaction comprised four loans. Two of the loans have prepaid, leaving two loans outstanding with a total senior balance of GBP272.16 million. 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 Class Rating To From DECO 6 - UK Large Loan 2 PLC GBP555.119 Million Commercial Mortgage-Backed Floating-Rate Notes Rating Lowered and Removed From CreditWatch Negative A2 B- (sf) BB (sf)/Watch Neg Rating Lowered B CCC (sf) B- (sf) Ratings Affirmed C D (sf) D D (sf) DECO 6: S&P Lowers Rating on Class B Notes to 'CCC' --------------------------------------------------- Standard & Poor's Ratings Services lowered to 'B- (sf)' from 'BB (sf)' and removed from CreditWatch negative its credit rating on DECO 6 - UK Large Loan 2 PLC's class A2 notes. At the same time, S&P has lowered to 'CCC (sf)' from 'B- (sf)' its rating on the class B notes, and has affirmed its 'D (sf)' ratings on the class C and D notes. The rating actions follows S&P's review of the underlying loans' credit quality by applying its updated criteria for rating European commercial mortgage-backed securities (CMBS) transactions. On Dec. 6, 2012, S&P placed its rating on the class A2 notes on CreditWatch negative following the update to its European CMBS criteria. THE BRUNEL LOAN The Brunel loan matured in April 2012 and is secured on the Brunel Shopping Centre in Swindon. The loan has been in special servicing since June 2011, and failed to repay at loan maturity in April 2012. The issuer instructed Law Of Property Act receivers to take control of the rental income during the ongoing loan restructuring process. The Oct. 25, 2011 valuation of the property reports a revised figure of GBP87.2 million, reflecting a 33% decline from the GBP130.2 million valuation at closing, and a current senior loan- to-value (LTV) ratio of 116%. The special servicer continues to consider many asset management initiatives. However, S&P considers that the loan will likely experience principal losses. S&P has therefore assumed losses in its base case scenario. THE MAPELEY LOAN The Mapeley loan matures in July 2015 and is secured on a portfolio of 16 secondary U.K. office properties. The loan defaulted in October 2011 due to a breach of the interest coverage ratio (ICR) covenant of 1.15x. The servicer subsequently transferred the loan into special servicing. The excess cash is held in a reserve account and the current balance stands at GBP11 million. S&P understands that this fund is available to top up any future loan interest shortfalls. Hatfield Philips International, as the special servicer, based its post-enforcement workout strategy on the asset management and sale of the individual assets until loan maturity in July 2015. In January 2013, the servicer reported a 228.67% LTV ratio. Given the reported LTV ratio, S&P has assumed losses in its base case scenario. RATING ACTIONS Standard & Poor's ratings address timely payment of interest and payment of principal no later than the legal final maturity date in July 2017. S&P considers the credit enhancement available to the class A2 and B notes to be insufficient to mitigate the risk of losses from the underlying loans at the currently assigned rating levels. S&P has therefore lowered to 'B- (sf)' from 'BB (sf)' and removed from CreditWatch negative its rating on the class A2 notes, and lowered to 'CCC (sf)' from 'B- (sf)' its rating on the class B notes. S&P has affirmed its 'D (sf)' ratings on the class C and D notes because they have experienced interest shortfalls on previous interest payment dates. DECO 6 - UK Large Loan 2 is a 2005-vintage U.K. CMBS transaction. Deutsche Bank AG, London Branch is the transaction's arranger. At closing, the transaction comprised four loans. Two of the loans have prepaid, leaving two loans outstanding with a total senior balance of GBP272.16 million. 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 Class Rating To From DECO 6 - UK Large Loan 2 PLC GBP555.119 Million Commercial Mortgage-Backed Floating-Rate Notes Rating Lowered and Removed From CreditWatch Negative A2 B- (sf) BB (sf)/Watch Neg Rating Lowered B CCC (sf) B- (sf) Ratings Affirmed C D (sf) D D (sf) GALA GROUP: Fitch Raises Rating on GBP350MM Sec. Notes to 'BB' -------------------------------------------------------------- Fitch Ratings has upgraded Gala Coral Group Ltd's subsidiary Gala Group Finance plc's GBP350 million senior secured notes to 'BB' from 'BB-' and to 'RR1' from 'RR2'. The agency has simultaneously affirmed Gala Coral Group Ltd's Long-term Issuer Default Rating (IDR) at 'B' and Gala's subsidiary Gala Electric Casinos plc's senior notes 'CCC+' rating and Recovery Rating of 'RR6'. The Outlook on Gala's IDR remains Stable. The upgrade of Gala's senior secured notes reflects the expectation of increased recovery to between 91% and 100% following the application of GBP113 million of GBP175 million net proceeds from the divestment of Gala's casino business to pre- payment of Gala's GBP825 million Term Loan B. Term Loan B ranks pari passu with the senior secured notes. Both instruments enjoy guarantees and share pledges of subsidiaries accounting for over 80% of group EBITDA and gross assets. Consistently with Fitch's methodology, the materiality of the security package and the high expected recovery allow a three-notch uplift from Gala's IDR. At the same time, Fitch has affirmed Gala's IDR. As noted in its May 2012 comment "Fitch: No Rating Impact on Gala Coral from Casino Disposal" at www.fitchratings.com, the agency believes the divestment will provide benefits in terms of improving Gala's chances of focusing resources on fewer core businesses. It also allows it to pay down some debt. However, Gala's leverage is still high and execution risks in its turnaround remain. KEY RATING DRIVERS Free Cash Flow Improvements Gala reported mildly negative free cash flow (FCF) of GBP2.8 million in FY12 due to increased capex and higher restructuring costs. However Fitch expects both of these to decline from FY13, and coupled with better profitability, to lead to increasing FCF. Fitch projects that Gala's FY13 net lease adjusted funds from operations (FFO)-based leverage (calculated including PropCo debt) should drop to between 6.0x and 6.2x (from FYE12's 6.3x) thanks to positive FCF and the disposal of Gala Casinos. This however remains high for Gala's 'B' rating. Stable Outlook In December 2012, Fitch revised the Outlook of Gala's IDR to Stable from Negative reflecting the improved competitive profile of its bingo and high-street betting units. The turnaround plan launched in late 2010 has started to bear fruit with Gala reporting mild organic growth for financial-year-to-September- 2012 (FY12) group turnover, gross profit and EBITDA after five years of decline. Risks Remain Execution risks remain in Gala's turnaround process. In addition, the gaming industry remains exposed to a fast pace of innovation and particularly fierce competition in the online sphere. These risks are mitigated by the company's enhanced innovation ability and pipeline. Coral Stabilizing After gradually losing market share to peers William Hill and Ladbrokes, Coral's performance has improved in FY12, although it is still lagging as competitors have also strengthened. For FY12 Coral's over-the-counter gross win margin grew to 17.3% (FY11: 16.4%) and was better than Ladbrokes' 16.7%, though not as strong as William Hill's 18.2%. Average gross win per machine per week over FY12 grew to GBP920 (GBP887), marginally better than to William Hill (GBP911) but weaker than Ladbrokes (GBP946). Fitch expects further improvements in Coral's machine estate from the forthcoming roll out of Global Draw's new cabinets. Bingo Performance Maintained Admissions declined in FY12 due to the reduction of free bingo and partly because of softer consumer spending. This, however, has been offset by an improvement in spending per head as well as improved margins across all product groups, which offset increased costs to achieve a divisional EBITDA of GBP69 million, excluding week 53 (up 17% yoy). Fitch expects attendance to remain under pressure, but further scope to increase spending and margins will enable further EBITDA improvements. Online Replatforming On Plan 2012 saw the re-launch of galacasino.com and galabingo.com. Both have shown improvements in key performance indicators, albeit from a low base. EBITDA at FYE12 for Interactive was close to GBP26 million, marginally up year on year. Fitch expects only marginal improvements in profitability for FY13 as top-line growth will be achieved through increased marketing costs and these will weigh on divisional profit. RATING SENSITIVITIES Negative: Future developments that could lead to negative rating action include: - EBITDA failing to maintain a trajectory of moderate growth - FCF close to zero - Net lease adjusted FFO-based leverage higher than 6.5x on a sustained basis - Gross lease adjusted FFO-based leverage remaining higher than 7.0x on a sustained basis Positive: Future developments that could lead to positive rating action include: - Net lease adjusted FFO-based leverage falling below 5.0x on a sustained basis - Gross lease adjusted FFO-based leverage falling below 6.0x on a sustained basis QUEENSFERRY HOTEL: In Administration, Cuts 40 Jobs -------------------------------------------------- stv news reports that more than 40 jobs have been saved after a Queensferry Hotel was rescued from administration. The company which owned the Queensferry Hotel in North Queensferry went into administration in January, according to stv news. The report relates that Cairn Hotel Group had bought the freehold for the hotel. The report notes that the Cairn Hotel Group have promised to keep the hotel's 40 existing staff and create new jobs as part of the GBP3 million refusbishment. The report discloses that Aran Handa, director at the Cairn Hotel Group, said: "The Cairn Hotel Group has a proven track record of rescuing and restoring struggling properties like the Queensferry hotel. . . . We are now looking forward to not only returning the property to its former glory but introducing the high levels of customer service and staff satisfaction which operate in all our hotels across the UK." THOMAS COOK: S&P Puts 'B-' Corp. Rating on CreditWatch Positive --------------------------------------------------------------- Standard & Poor's Ratings Services said that it has placed its 'B-' long-term corporate credit rating on U.K.-based tour operator Thomas Cook Group PLC, and 'B-' issue ratings on the company's outstanding notes, on CreditWatch with positive implications. At the same time, S&P assigned a 'B-' issue rating to the proposed EUR525 million unsecured notes, and placed it on CreditWatch positive. The recovery rating on the unsecured notes is '4', indicating S&P's expectation of average (30%-50%) recovery in the event of a payment default. The CreditWatch placement follows the company's announcement that it intends to refinance its upcoming debt maturities with a combination of new equity (GBP425 million) and debt issuance (EUR525 million new notes, a GBP500 million new revolving and bonding facility, and an additional forward start facility of GBP191 million). S&P understands that Thomas Cook will use the proceeds from the new equity and debt issuance to refinance its existing GBP1.311 billion syndicated bank facility maturing in 2015, and the forward start facility will cover most of the refinancing on the EUR400 million bonds at maturity in 2015. If successful, S&P would expect such a plan to materially improve the financial flexibility of the company, both in terms of liquidity headroom and credit metrics. Specifically, S&P would anticipate the following: -- The proceeds from the new equity issuance will reduce outstanding debt by about GBP350 million. This, along with a projected improvement in profitability, is likely to materially reduce leverage from the high level that Thomas Cook reported in 2012. S&P estimates that Standard & Poor's-adjusted gross debt to EBITDA will remain slightly less than 7.0x at both year-end September 2013 and at the seasonal low point in December. This ratio was 8.9x at the end of financial year-ended Sept. 30, 2012. In financial 2013, adjusted interest coverage by EBITDA ratio should reach, under S&P's projections, about 2.0x compared with 1.3x at the end of financial 2012. -- S&P expects leverage to reduce further in financial 2014, when it estimates that adjusted gross debt to EBITDA will be less than 6.0x and adjusted interest coverage will be more than 2.0x. This is mainly based on S&P's assumptions of a material reduction in operating restructuring costs-- which are considered exceptional by the company--and some margin improvement as a result of the cost cutting exercise implemented by the company and better yield management. -- S&P also estimates funds from operations (FFO) to total debt to improve to about 15% by financial 2014 from 9% in 2012. The proceeds will significantly improve Thomas Cook's liquidity position. -- S&P estimates that headroom on covenants will be above the 15% threshold over the next 12 months and that the cash cushion at the seasonal low point in the fourth calendar quarter of 2013 and 2014 will be adequate (at over GBP200 million). If Thomas Cook successfully implements its plan, S&P would assess liquidity as "adequate," under its criteria. The proceeds will improve Thomas Cook's maturity profile. There would be no material debt maturities or debt amortization requirements before 2017 (the EUR400 million notes due 2015 would be mainly refinanced through the committed GBP191 million forward start facility). S&P's assessment of Thomas Cook's business risk profile remains unchanged under its criteria at the low end of the "weak" category. S&P's assessment mainly reflects its view of the cyclicality and seasonality of the tourism industry, which creates ongoing margin pressure; deepening threats to discretionary consumer spending in some markets; and a high level of event risk. S&P's operating scenario for the next 12-18 months includes the following: -- S&P's expectation of a continued weak global economy, which will affect operating trends. That said, under S&P's base- case credit scenario it assumes some moderate improvement in discretionary spending in the group's main countries of operation--the U.K., Germany, and the Nordic region countries. -- A predicted decline in revenues by 3% in 2013 as a result of capacity reduction. In S&P's view, new management initiatives are likely to support low-single-digit sales growth from 2014. Still-sizable restructuring costs (over GBP110 million under S&P's base-case scenario), which will weaken profitability and capacity to generate cash flow in 2013. From 2014, such operating restructuring costs are projected to significantly decline, allowing for margin improvement and better cash flow generation capacity. -- Margins are projected to improve in 2013 and 2014--from about 1% to over 3% and 4% respectively--as growth in the average selling price in the group's main regions outpaces cost inflation, due to better yield management as well as cost savings initiatives implemented by the new management. -- S&P anticipates capital investments of between GBP175 million-GBP185 million in both 2013 and 2014. -- No dividend payments projected in the next 12-18 months The recovery rating on the proposed notes is '4', in line with the rating on the existing unsecured bonds, reflecting S&P's expectation of average (30%-50%) recovery expectations in the case of a payment default. S&P's estimated recovery prospects are at the low end of the 30%-50% range, and reflect its estimate of the company's valuation in case of default, and its proposed capital structure, mainly comprising unsecured debt instruments. S&P expects to resolve the CreditWatch placement within 30 days. S&P will resolve the CreditWatch following the expected completion of the equity offering and partial refinancing of Thomas Cook's upcoming debt maturities. In particular, S&P will review the documentation of Thomas Cook's notes offering and new bank facilities (including the key terms and conditions and the maintenance covenant package), along with the size of the equity offering, and their consistency with the summary terms that were shared with S&P on a draft basis. S&P will raise the rating on Thomas Cook (and its rated debt instruments) to 'B' on the successful completion of the equity injection and partial refinancing, as per the company's announcement. This would be mainly due to S&P's anticipation that the main near-term liquidity issues facing the company, specifically the 2015 debt maturities and tight covenant headroom, will have been satisfactorily addressed, alongside a tangible improvement in projected credit ratios. If management fails to implement the planned changes to the group's capital structure, S&P would likely affirm the current ratings. THOMAS COOK: Fitch Rates New EUR525MM Unsecured Notes at 'B+' ------------------------------------------------------------- Fitch Ratings has placed Thomas Cook Group plc's (TCG) Long-term foreign currency Issuer Default Rating (IDR) and senior unsecured rating on Rating Watch Positive (RWP). Fitch has also assigned expected ratings of 'B+(EXP)'/'RR3' (51%-70%) to the new EUR525m unsecured notes issued by Thomas Cook Finance plc that will be guaranteed by Thomas Cook Group plc. When the announced refinancing plan is completed, Fitch expects to upgrade TCG's IDR to 'B' from 'B-' and assign a Positive Outlook. Fitch expects TCG's existing senior unsecured debt will be upgraded to 'B+'/'RR3' (51%-70%) from 'RR4' (31%-50%) at that point. This follows the announcement of the group's GBP1.6 billion new refinancing plan which includes the following three inter- conditional financing elements. These comprise: (1) a fully underwritten GBP425 million gross proceeds from a placing and rights issue; (2) a new EUR525 million senior unsecured notes maturing in 2020 issued by Thomas Cook Finance plc, guaranteed by Thomas Cook plc, and; (3) a GPP691 million revolving credit facility (RCF) facility maturing in 2017. The latter incorporates a GBP300 million RCF facility and GBP200 million bonding facility (GBP30 million maturing in 2015 and a GBP170 million in 2017) plus an equivalent of GBP191 million additional RCF available for the purpose to repay at maturity the EUR400 million, 6.75% notes due in 22 June 2015. The new bank debt, senior unsecured notes and equity issuance are fully-underwritten. The final equity issuance is subject to the approval of shareholders, with a meeting to be held on June 3, 2013. The prospective upgrade of TCG's IDR to 'B' from 'B-' upon completion of the transaction reflects Fitch's expectation that the refinancing and the already-announced group "transformation plan" are likely to result in a further improvement in both the group's profitability and adjusted leverage ratios. Likewise, the Positive Outlook reflects upside potential, albeit constrained at that point by further inherent execution risks associated with the full realization of the results of the company's transformation plan. Final ratings will be contingent upon completion of the transaction and the receipt of final documentation conforming materially to information already received. KEY RATING DRIVERS Competitive, Low-Margin Industry: Competition in the sector remains intense, notably from low-cost airlines and the rapid development of online companies. Fitch sees TCG's target to increase online penetration as critical to address customer booking behavior, notably in the UK. The group targets the share of passengers booking online to increase to more than 50% from 34% by FY15. The main risk relies on the group's ability to create an online platform working efficiently across all group functions. Turnaround Plan: The group is undertaking a comprehensive turnaround of its UK business as well as a group-wide cost out program. The programs aim to improve EBIT from 2012 to 2015 by GBP390 million (GBP140 million UK turnaround and GBP250 million group-wide cost out). The transformation plan entails inherent execution risks, although Fitch notes that the majority of the improvement is driven by cost-outs that have been clearly identified. However, the full achievement will remain subject to external factors such as the fluctuation of jet fuel prices, FX changes and any external shocks disrupting international tourism. Exceptional Costs: TCG reported high exceptional costs of GBP129.9 million at FYE12. Fitch understands that exceptional costs will be reduced over the period 2013-2015 and will reduce to approximately GBP100 million, mainly related to the group's restructuring plans. However, the group will also incur restructuring costs related to its French operation. Disposals: The group has divested businesses (GBP122.7 million) and carried out some sale and lease-back transactions on its aircraft (GBP189.4 million) in order to improve liquidity and stabilize its debt level in FY12. Fitch expects more modest divestments in the next three years. Management has identified potential for GBP100 million-GBP150 million of gross proceeds from sales of non-core assets. Improved Debt Maturity Profile and Liquidity Headroom: Fitch views the group's refinancing proposal as positive for the lower 'B-' rating as it will extend the group's 2015 bank debt maturities to 2017 and will partly already ensure the refinancing of its June 2015 EUR400 million senior unsecured notes leaving more flexibility for the company to concentrate on its turnaround plan until 2015. Improved Credit Metrics: Fitch expects the new capital structure to delever faster than Fitch initially envisaged in the next two years thanks to the group's turnaround plan and equity injection. Fitch notes that gross debt will initially increase post refinancing due to the low level of undrawn bank debt at September 2012 and the issuance of the new senior unsecured notes. Fitch expects adjusted leverage (assuming a seasonal GBP700 million working capital swing) to decrease to below 3.5x by FY15 from 6.0x at FY12. Seasonality and Leverage: Working-capital cash outflow increases during September to December due to it being a traditionally quieter holiday period. From the low point to the high point during the year the working capital swing is about GBP850 million. From September to December Fitch will continue to conservatively adjust its year-end debt (September) by GBP700 million, although acknowledges that successful implementation of group's working capital initiatives is likely to reduce this amount. Expected Recovery For Creditors Upon Default: TCG's recovery ratings reflect Fitch's expectations that the enterprise value of the company in a default scenario -- and resulting recovery for its creditors would be maximized in a going concern approach, rather than liquidation due to the asset-light nature of the business. The distressed multiple applied across both scenarios is 4.5x. The recovery rate for the senior unsecured debt is estimated at 'RR3' (51%-70%). However, Fitch notes that the company has previously obtained secured bank funding to the amount of GBP200 million. In the event that this happens again, the recovery rate on the unsecured classes of debt could be reduced from the current level of 'RR3' (51%-70%). RATING SENSITIVITIES Positive: Future developments that could lead to positive rating actions for an IDR of 'B+' include: - Generating positive free cash flow (including restructuring and exceptional costs) - Lease-adjusted EBITDAR/ gross interest plus rents above 2.2x - Improvement of the group's operating margin towards 4% - Lease-adjusted net debt / EBITDAR below 3x or lease-adjusted net debt (including GBP700m for working capital swing)/EBITDAR below 4x Negative: Future developments that could lead to negative rating action for an IDR of 'B-' include: - Generating positive free cash flow (including restructuring and exceptional costs) - Lease-adjusted EBITDAR/ gross interest plus rents below 2x - Group operating margin below 3% - Lease-adjusted net debt (including GBP700m for working capital swing)/EBITDAR above 5x - Total liquidity headroom below GBP200m VEDANTA RESOURCES: S&P Affirms 'BB' Corp. Rating; Outlook Neg. -------------------------------------------------------------- Standard & Poor's Ratings Services said that it had affirmed its 'BB' foreign currency long-term corporate credit rating on Vedanta Resources PLC, a London-headquartered oil and metals mining company. The outlook is negative. S&P also affirmed its 'BB' issue rating on Vedanta's outstanding debt issuances. S&P removed all the ratings from CreditWatch, where they were placed with negative implications on April 3, 2013. At the same time, S&P assigned its 'BB' issue rating to Vedanta's proposed senior unsecured notes. "We affirmed the ratings and removed them from CreditWatch because Vedanta's refinancing risk has reduced after the company secured funds for its June 2013 maturities," said Standard & Poor's credit analyst May Zhong. Vedanta has recently finalized a refinancing and liquidity policy to manage its debt maturities and liquidity at the holding company. S&P believes a track record of adherence to the policy will lower risk relating to the company's forthcoming debt maturities. Vedanta has also repaid its April maturities using bank loans and internal cash. S&P assess Vedanta's business risk profile as "fair" to reflect the company's good business diversity following its acquisition of India-based oil company Cairn India Ltd. in 2011. Vedanta has a good cost position in the zinc and oil businesses. However, S&P believes risks related to the company's India operations remain high, as reflected in the recent closure of Vedanta's copper smelting business in India. S&P assess Vedanta's financial risk profile as "aggressive" to reflect its view of the company's aggressive financial strategy and "less than adequate" liquidity at the holding company. Vedanta's historical financial strategy places much of its debt, but very limited cash, at the holding company. On a consolidated basis, Vedanta's liquidity is "adequate." S&P estimates that, on a consolidated basis, the company's sources of liquidity will exceed its uses by more than 1.2x for fiscal 2013 (ended March 31) and fiscal 2014. "The negative outlook on Vedanta reflects continued operating challenges and cash flow pressure at the company's iron ore and copper smelting operations," said Ms. Zhong. The negative outlook also reflects S&P's view that Vedanta is yet to establish a record of delivering on its refinancing and liquidity policy. S&P could revise the outlook to stable if: (1) Vedanta adheres to its liquidity and refinancing policy; (2) iron ore mining restrictions in Goa are lifted and Vedanta's production gradually returns to near pre-ban levels; (3) Cairn's operating performance remains strong, with EBITDA of more than US$2.0 billion; and (4) Sesa Sterlite can comfortably meet its interest payment and dividend obligations using internal cash flows. S&P could lower the rating if: (1) Vedanta refinances its debt too close to the maturity date; (2) the company's ratio of funds from operations to gross debt remains below 25% for a sustainable period; or (3) Vedanta's mining in Goa and copper smelting in India remains shut beyond December 2013, without any compensating cash flow. This could jeopardize Sesa Sterlite's EBITDA generation to meet interest and dividend payments. * Moody's: UK Water Sector's Totex No Impact on Financeability -------------------------------------------------------------- UK water sector regulator Ofwat's proposal to introduce total expenditure (totex) benchmarking, performance incentives and cost recovery mechanisms of water companies' cost submissions is not designed to address potential financeability concerns, says Moody's Investors Service in a report entitled "UK Water Sector: Speed of Money Cannot Address Potential Financeability Concerns." Ofwat published its draft methodology on the framework and approach for setting price limits for the next five-year regulatory period commencing April 1, 2015 (AMP6). The regulator is proposing to use a totex approach in place of conducting a separate analysis of operating expenditure (opex) and capital expenditure (capex). Moody's notes that companies or the regulator could seek to modify the speed of cost recovery under the totex approach in a manner that may offset the negative cash flow impact of lower returns following a likely reduction in the allowed weighted average cost of capital (WACC) -- in itself a result of the decline in interest rates and required return on equity since the last price review in 2009. "Whilst any resulting increase in a company's cash flows could reduce external funding pressures, which would be credit positive from a liquidity perspective, that company may also use the resulting financial flexibility to enhance shareholder distributions at the expense of the economic value of the regulated business and future cash flow generation," says Stefanie Voelz, an Assistant Vice President - Analyst in Moody's Infrastructure Finance Group and author of the report. "If that was the case, that company's leverage could increase, notwithstanding the appearance of healthy cash flow-based credit metrics, and this development could have negative credit implications, if sustained over a period of time," Ms Voelz continues. The adoption of totex will increase the potential misalignment between cost incurrence as reported in a company's financial statements and cost recovery as allowed under the regulatory model. Moody's believes that a faster pace of expenditure recovery may not necessarily correspond to a fundamental improvement in financial strength. The rating agency will reflect this view in its evaluation of the credit metrics it uses to assess companies' financial performance. As a result of Ofwat's adoption of the more sophisticated but also more complex totex methodology additional disclosure by the companies and/or the regulator will be needed to enable the reconciliation of the accounting and regulatory perspectives on the treatment of expenditure for the purpose of determining whether a regulated business is out-performing or under- performing its expenditure allowances as set by Ofwat. Details on how the totex approach for UK water companies will be implemented are still unclear, and hence its overall impact remains uncertain. However, Moody's expects more clarity in further publications over the coming 12 to 18 months, including (1) the regulator's final methodology for setting AMP6 price limits in summer 2013; (2) companies business plans in December 2013; and (3) Ofwat's draft price determination in summer 2014. =============== X X X X X X X X =============== * Fitch: Investors Uncertain About EU Bank Sovereign Support ------------------------------------------------------------ European investors believe that the Cyprus bank resolution has increased the risk that sovereigns will be less likely to support future bank bail-outs, according to a Fitch Ratings investor survey conducted in April. A clear majority of 80% of investors interpret the recent Cyprus bank resolution, which involved the imposition of losses on uninsured depositors and senior bondholders at the country's two largest banks, as some form of precedent for other eurozone countries to bail-in senior bank creditors. However, there was significant variance on how widely bail-in could be applied, highlighting the political and practical complexity of imposing losses on senior creditors. 26% of investors believe the weakening of sovereign support for senior debt affects banks in all eurozone countries. 53% believe it would be more narrowly applied to those countries that need a bail-out, 40% of whom think it would only affect banks in small eurozone states requiring a financial rescue. A fifth of investors said they do not think Cyprus set a precedent and feel more sanguine about bank support in other parts of the eurozone. Investors focused on financial institutions see bail-in as more likely than the wider group. In total, 89% of these specialists believe sovereign support has been eroded and 43% see this applying widely across the whole eurozone compared with 22% of the generalists. Only 11% of the experts did not think Cyprus set any form of precedent. The latest survey also shows how investors have reined in their early-year optimism about the outlook for banks. Only 44% of respondents now expect fundamental credit conditions for the sector to improve, down from 64% in our poll three months ago. This was mirrored in the downturn in sentiment for sovereigns. The Q213 survey was conducted between 3 April and 7 May and represents the views of managers of an estimated USD8.6 trillion of fixed-income assets. We will publish the full survey results in mid-May. * Moody's: European High-Yield Issuance Remains Strong in April --------------------------------------------------------------- The strong pace of European high-yield bond issuance continued in April, despite loss of momentum in economic growth, says Moody's in the May edition of its "High Yield Interest -- European Edition" publication. "Year-to-date high-yield issuance by EMEA companies is just shy of $50 billion," says Chetan Modi, head of Moody's European leveraged finance team. "We expect this strong issuance trend to continue through 2013 from companies across a diverse range of industries, geographies and ratings." The May edition also discusses how holding company payment in kind (PIK) debt continues to provide quasi-equity risk as capital structures evolve, and reveals that since January 2012, EMEA companies already in the B/Caa rating categories have also experienced greatest rating transition. * Moody's: Falling US Oil Imports to Hit Global Shipping Sector --------------------------------------------------------------- Three emerging trends -- falling US oil imports, the return of some manufacturing capacity to rich industrialized nations and advances in vessel design -- could significantly change the competitive landscape for global shipping companies and affect their creditworthiness over the next five years, says Moody's Investors Service in a report on the sector entitled "Global Shipping Industry: Three Emerging Trends That Could Be Game Changers Over The Next Five Years." "The credit impact arising from each of these trends is likely to vary according to industry segment -- crude oil tankers, containers and dry-bulk -- creating the potential for a few winners and many losers," says Marco Vetulli, a Vice President - Senior Credit Officer in Moody's Corporate Finance Group and author of the report. "Rated companies adversely affected by these trends that do not proactively manage these risks are likely to face rising operating and financial pressures that could eventually hurt their ratings." Moody's notes that the ongoing shift in trade patterns owing to falling US oil imports has credit-negative implications for the entire tanker industry as it is likely to depress freight rates. Crude oil tanker companies, such as Overseas Shipholding Group Inc. (OSG, unrated), that operate large fleets of the types of vessels typically used on long-haul routes are the most vulnerable, although OSG's US Flag business will benefit. Companies that operate smaller, more flexible tankers, such as Sovcomflot JSC (Ba2 stable) and Navios Maritime Acquisition Corp. (B3 stable), are likely to fare better. The partial reshoring of manufacturing capacity back to rich industrialized nations and rising income levels in Asia are altering patterns in the trade of semi-finished products, with credit implications mainly for the container segment. Moody's expects that companies with operations on Asia to US trade routes, such as CMA CGM S.A. (B3 positive) and Hapag-Lloyd Holding AG (B2 negative), could be adversely affected as transportation volumes on these routes are likely to fall. Furthermore, such companies might need to rebalance some of their capacity from long-haul trade to smaller vessels more suited to intra-Asia trade. Conversely, companies, such as Wan Hai Lines Ltd. (Ba3 negative), that already operate mainly on intra-Asia routes are likely to benefit from the increase in cargoes. Tightening environmental regulations and high fuel costs are strong incentives for shipowners to invest in the new generation of "greener" vessels to cut operating expenses, but the lack of financing is a constraint. Although this trend is common to all shipping sectors, it represents a particular challenge for the dry-bulk industry, where the average fleet age is quite high and the current financial condition of most players is fairly weak. However, Moody's would expect Navios Maritime Holdings, Inc. (B2 negative) to be less adversely affected by this trend than other dry-bulk carriers because it has a relatively young and efficient fleet. Japanese conglomerates are likely to be affected to a lesser extent. While not immune to the global trends, the two rated Japanese companies, Nippon Yusen Kabushiki Kaisha (NYKK, Baa2 negative) and Mitsui O.S.K. Lines, Ltd. (Baa3 negative), should fare better than some of their peers because of their sheer size, diversification and solid relationships with banks. * BOND PRICING: For the Week May 13 to May 17, 2013 --------------------------------------------------- Issuer Coupon Maturity Currency Price ------ ------ -------- -------- ----- AUSTRIA ------- A-TEC INDUSTRIES 8.750 10/27/2014 EUR 27.75 A-TEC INDUSTRIES 2.750 5/10/2014 EUR 29.13 IMMOFINANZ 4.250 3/8/2018 EUR 4.29 RAIFF CENTROBANK 8.907 7/24/2013 EUR 58.30 RAIFF CENTROBANK 8.588 1/23/2013 EUR 73.37 RAIFF CENTROBANK 7.965 1/23/2013 EUR 55.53 RAIFF CENTROBANK 7.873 1/23/2013 EUR 66.96 RAIFF CENTROBANK 7.646 1/23/2013 EUR 45.43 RAIFF CENTROBANK 5.097 1/23/2013 EUR 58.24 RAIFF CENTROBANK 8.417 1/22/2014 EUR 67.62 RAIFF CENTROBANK 7.122 1/22/2014 EUR 66.49 RAIFF CENTROBANK 11.134 7/24/2013 EUR 66.13 RAIFF CENTROBANK 9.200 7/24/2013 EUR 56.71 RAIFF CENTROBANK 9.304 1/23/2013 EUR 62.19 RAIFF CENTROBANK 9.876 1/23/2013 EUR 60.11 RAIFF CENTROBANK 9.558 1/23/2013 EUR 67.69 RAIFF CENTROBANK 8.920 1/23/2013 EUR 52.62 BELGIUM ------- ECONOCOM GROUP 4.000 6/1/2016 EUR 22.94 TALVIVAARA 4.000 12/16/2015 EUR 72.61 FRANCE ------ AIR FRANCE-KLM 4.970 4/1/2015 EUR 12.38 ALCATEL-LUCENT 5.000 1/1/2015 EUR 2.62 ALTRAN TECHNOLOG 6.720 1/1/2015 EUR 5.62 ASSYSTEM 4.000 1/1/2017 EUR 23.27 ATOS ORIGIN SA 2.500 1/1/2016 EUR 58.17 CAP GEMINI SOGET 3.500 1/1/2014 EUR 38.69 CGG VERITAS 1.750 1/1/2016 EUR 31.64 CLUB MEDITERRANE 6.110 11/1/2015 EUR 17.80 EURAZEO 6.250 6/10/2014 EUR 55.33 FAURECIA 3.250 1/1/2018 EUR 17.91 FAURECIA 4.500 1/1/2015 EUR 19.45 INGENICO 2.750 1/1/2017 EUR 48.14 MAUREL ET PROM 7.125 7/31/2015 EUR 17.13 MAUREL ET PROM 7.125 7/31/2014 EUR 18.15 NEXANS SA 2.500 1/1/2019 EUR 66.69 NEXANS SA 4.000 1/1/2016 EUR 56.09 ORPEA 3.875 1/1/2016 EUR 47.89 PEUGEOT SA 4.450 1/1/2016 EUR 23.56 PIERRE VACANCES 4.000 10/1/2015 EUR 73.63 PUBLICIS GROUPE 1.000 1/18/2018 EUR 54.06 SOC AIR FRANCE 2.750 4/1/2020 EUR 21.24 SOITEC 6.250 9/9/2014 EUR 7.25 TEM 4.250 1/1/2015 EUR 54.36 GERMANY ------- BNP EMIS-U.HANDE 9.750 12/28/2012 EUR 58.32 BNP EMIS-U.HANDE 10.500 12/28/2012 EUR 47.62 BNP EMIS-U.HANDE 9.500 12/31/2012 EUR 64.67 BNP EMIS-U.HANDE 7.750 12/31/2012 EUR 49.92 COMMERZBANK AG 6.000 12/27/2012 EUR 73.49 COMMERZBANK AG 7.000 12/27/2012 EUR 60.71 COMMERZBANK AG 13.000 12/28/2012 EUR 47.48 COMMERZBANK AG 16.750 1/3/2013 EUR 73.77 COMMERZBANK AG 8.400 12/30/2013 EUR 13.74 COMMERZBANK AG 8.000 12/27/2012 EUR 43.32 DEUTSCHE BANK AG 15.000 2/20/2013 EUR 69.20 DEUTSCHE BANK AG 15.000 2/20/2013 EUR 64.90 DEUTSCHE BANK AG 15.000 2/20/2013 EUR 67.10 DEUTSCHE BANK AG 15.000 2/20/2013 EUR 72.90 DEUTSCHE BANK AG 15.000 2/20/2013 EUR 71.60 DEUTSCHE BANK AG 15.000 2/20/2013 EUR 74.20 DEUTSCHE BANK AG 12.000 2/28/2013 EUR 75.00 DEUTSCHE BANK AG 11.000 4/2/2013 EUR 73.80 DEUTSCHE BANK AG 15.000 2/20/2013 EUR 69.50 DEUTSCHE BANK AG 15.000 2/20/2013 EUR 72.10 DEUTSCHE BANK AG 15.000 2/20/2013 EUR 70.30 DEUTSCHE BANK AG 15.000 2/20/2013 EUR 68.00 DEUTSCHE BANK AG 11.000 1/18/2013 EUR 73.10 DEUTSCHE BANK AG 15.000 12/20/2012 EUR 62.10 DEUTSCHE BANK AG 12.000 12/20/2012 EUR 66.50 DEUTSCHE BANK AG 12.000 12/20/2012 EUR 41.90 DEUTSCHE BANK AG 12.000 12/20/2012 EUR 68.10 DEUTSCHE BANK AG 10.000 12/20/2012 EUR 74.90 DEUTSCHE BANK AG 10.000 12/20/2012 EUR 72.10 DEUTSCHE BANK AG 10.000 12/20/2012 EUR 63.00 DEUTSCHE BANK AG 9.000 12/20/2012 EUR 62.90 DEUTSCHE BANK AG 9.000 12/20/2012 EUR 73.40 DEUTSCHE BANK AG 8.000 12/20/2012 EUR 61.20 DEUTSCHE BANK AG 8.000 12/20/2012 EUR 70.40 DEUTSCHE BANK AG 8.000 12/20/2012 EUR 69.50 DEUTSCHE BANK AG 8.000 12/20/2012 EUR 38.60 DEUTSCHE BANK AG 7.000 12/20/2012 EUR 69.40 DEUTSCHE BANK AG 12.000 11/29/2012 EUR 65.20 DEUTSCHE BANK AG 9.000 11/29/2012 EUR 67.10 DEUTSCHE BANK AG 6.500 6/28/2013 EUR 53.50 DEUTSCHE BANK AG 12.000 4/2/2013 EUR 74.50 DEUTSCHE BANK AG 8.000 11/29/2012 EUR 71.50 DZ BANK AG 15.500 10/25/2013 EUR 71.05 DZ BANK AG 15.750 9/27/2013 EUR 74.86 DZ BANK AG 15.750 7/26/2013 EUR 71.21 DZ BANK AG 15.000 7/26/2013 EUR 75.00 DZ BANK AG 6.000 7/26/2013 EUR 69.50 DZ BANK AG 22.000 6/28/2013 EUR 73.36 DZ BANK AG 18.000 6/28/2013 EUR 69.28 DZ BANK AG 14.000 6/28/2013 EUR 73.43 DZ BANK AG 6.500 6/28/2013 EUR 67.14 DZ BANK AG 6.000 6/28/2013 EUR 65.07 DZ BANK AG 19.500 4/26/2013 EUR 61.83 DZ BANK AG 18.500 4/26/2013 EUR 57.11 DZ BANK AG 17.000 4/26/2013 EUR 15.42 DZ BANK AG 16.500 4/26/2013 EUR 59.63 DZ BANK AG 15.750 4/26/2013 EUR 43.33 DZ BANK AG 14.500 4/26/2013 EUR 56.77 DZ BANK AG 20.000 3/22/2013 EUR 70.81 DZ BANK AG 18.500 3/22/2013 EUR 74.74 DZ BANK AG 13.000 3/22/2013 EUR 74.16 DZ BANK AG 13.000 3/22/2013 EUR 73.95 DZ BANK AG 12.500 3/22/2013 EUR 72.97 DZ BANK AG 12.250 3/22/2013 EUR 74.07 DZ BANK AG 13.750 3/8/2013 EUR 54.29 DZ BANK AG 10.000 3/8/2013 EUR 68.17 DZ BANK AG 9.750 3/8/2013 EUR 73.96 DZ BANK AG 15.000 2/22/2013 EUR 74.66 DZ BANK AG 10.000 11/23/2012 EUR 72.63 DZ BANK AG 18.000 1/25/2013 EUR 61.25 DZ BANK AG 19.000 1/25/2013 EUR 44.10 DZ BANK AG 10.250 2/8/2013 EUR 71.38 DZ BANK AG 10.250 2/8/2013 EUR 71.88 DZ BANK AG 15.000 2/22/2013 EUR 70.66 DZ BANK AG 15.000 2/22/2013 EUR 71.94 DZ BANK AG 15.000 2/22/2013 EUR 69.43 DZ BANK AG 15.000 2/22/2013 EUR 73.27 DZ BANK AG 15.000 2/22/2013 EUR 68.24 DZ BANK AG 15.000 2/22/2013 EUR 67.09 DZ BANK AG 11.500 11/23/2012 EUR 74.94 DZ BANK AG 16.750 11/23/2012 EUR 63.46 DZ BANK AG 20.000 11/23/2012 EUR 41.34 DZ BANK AG 5.000 12/14/2012 EUR 69.68 DZ BANK AG 9.750 12/14/2012 EUR 66.05 DZ BANK AG 6.000 1/2/2013 EUR 74.23 DZ BANK AG 9.500 1/2/2013 EUR 71.10 DZ BANK AG 12.000 1/2/2013 EUR 65.09 DZ BANK AG 16.250 1/2/2013 EUR 68.65 DZ BANK AG 10.500 1/11/2013 EUR 66.00 DZ BANK AG 14.000 1/11/2013 EUR 48.04 DZ BANK AG 15.500 1/11/2013 EUR 53.41 DZ BANK AG 12.500 1/25/2013 EUR 50.73 GOLDMAN SACHS CO 13.000 3/20/2013 EUR 74.90 GOLDMAN SACHS CO 17.000 3/20/2013 EUR 73.30 GOLDMAN SACHS CO 16.000 6/26/2013 EUR 74.30 GOLDMAN SACHS CO 18.000 3/20/2013 EUR 69.10 GOLDMAN SACHS CO 14.000 12/28/2012 EUR 72.60 GOLDMAN SACHS CO 15.000 12/28/2012 EUR 71.70 GOLDMAN SACHS CO 13.000 12/27/2013 EUR 72.70 HSBC TRINKAUS 25.500 6/28/2013 EUR 57.61 HSBC TRINKAUS 30.000 6/28/2013 EUR 46.90 HSBC TRINKAUS 26.000 6/28/2013 EUR 48.63 HSBC TRINKAUS 7.500 3/22/2013 EUR 74.76 HSBC TRINKAUS 7.500 3/22/2013 EUR 74.06 HSBC TRINKAUS 8.000 3/22/2013 EUR 67.07 HSBC TRINKAUS 8.500 3/22/2013 EUR 67.98 HSBC TRINKAUS 10.500 3/22/2013 EUR 72.84 HSBC TRINKAUS 10.500 3/22/2013 EUR 62.42 HSBC TRINKAUS 10.500 3/22/2013 EUR 45.38 HSBC TRINKAUS 10.500 3/22/2013 EUR 65.52 HSBC TRINKAUS 12.000 3/22/2013 EUR 72.94 HSBC TRINKAUS 13.000 3/22/2013 EUR 60.74 HSBC TRINKAUS 13.500 3/22/2013 EUR 60.07 HSBC TRINKAUS 13.500 3/22/2013 EUR 61.08 HSBC TRINKAUS 14.000 3/22/2013 EUR 74.53 HSBC TRINKAUS 14.000 3/22/2013 EUR 61.21 HSBC TRINKAUS 15.000 3/22/2013 EUR 71.40 HSBC TRINKAUS 15.500 3/22/2013 EUR 41.52 HSBC TRINKAUS 16.000 3/22/2013 EUR 72.28 HSBC TRINKAUS 16.000 3/22/2013 EUR 67.45 HSBC TRINKAUS 16.500 3/22/2013 EUR 74.88 HSBC TRINKAUS 17.500 3/22/2013 EUR 58.58 HSBC TRINKAUS 17.500 3/22/2013 EUR 65.46 HSBC TRINKAUS 17.500 3/22/2013 EUR 56.90 HSBC TRINKAUS 18.000 3/22/2013 EUR 74.29 HSBC TRINKAUS 18.000 3/22/2013 EUR 69.93 HSBC TRINKAUS 18.000 3/22/2013 EUR 66.09 HSBC TRINKAUS 18.500 3/22/2013 EUR 55.92 HSBC TRINKAUS 18.500 3/22/2013 EUR 73.85 HSBC TRINKAUS 18.500 3/22/2013 EUR 69.38 HSBC TRINKAUS 18.500 3/22/2013 EUR 39.60 HSBC TRINKAUS 19.000 3/22/2013 EUR 55.12 HSBC TRINKAUS 19.500 3/22/2013 EUR 71.17 HSBC TRINKAUS 19.500 3/22/2013 EUR 67.58 HSBC TRINKAUS 20.000 3/22/2013 EUR 72.33 HSBC TRINKAUS 20.500 3/22/2013 EUR 56.78 HSBC TRINKAUS 21.000 3/22/2013 EUR 70.74 HSBC TRINKAUS 21.000 3/22/2013 EUR 54.43 HSBC TRINKAUS 21.000 3/22/2013 EUR 70.19 HSBC TRINKAUS 22.000 3/22/2013 EUR 38.33 HSBC TRINKAUS 22.000 3/22/2013 EUR 54.00 HSBC TRINKAUS 22.500 3/22/2013 EUR 67.68 HSBC TRINKAUS 23.000 3/22/2013 EUR 52.08 HSBC TRINKAUS 23.500 3/22/2013 EUR 65.24 HSBC TRINKAUS 24.000 3/22/2013 EUR 61.96 HSBC TRINKAUS 24.000 3/22/2013 EUR 67.46 HSBC TRINKAUS 24.000 3/22/2013 EUR 73.10 HSBC TRINKAUS 26.500 3/22/2013 EUR 61.24 HSBC TRINKAUS 27.000 3/22/2013 EUR 53.26 HSBC TRINKAUS 27.500 3/22/2013 EUR 43.48 HSBC TRINKAUS 6.000 6/28/2013 EUR 74.16 HSBC TRINKAUS 6.500 6/28/2013 EUR 68.24 HSBC TRINKAUS 7.000 6/28/2013 EUR 73.22 HSBC TRINKAUS 8.000 6/28/2013 EUR 49.20 HSBC TRINKAUS 8.000 6/28/2013 EUR 72.27 HSBC TRINKAUS 8.500 6/28/2013 EUR 69.16 HSBC TRINKAUS 10.000 6/28/2013 EUR 73.12 HSBC TRINKAUS 10.000 6/28/2013 EUR 67.56 HSBC TRINKAUS 10.000 6/28/2013 EUR 67.11 HSBC TRINKAUS 10.500 6/28/2013 EUR 46.20 HSBC TRINKAUS 11.000 6/28/2013 EUR 63.23 HSBC TRINKAUS 12.500 6/28/2013 EUR 63.33 HSBC TRINKAUS 13.500 6/28/2013 EUR 61.67 HSBC TRINKAUS 14.000 6/28/2013 EUR 70.50 HSBC TRINKAUS 14.000 6/28/2013 EUR 43.06 HSBC TRINKAUS 14.000 6/28/2013 EUR 61.82 HSBC TRINKAUS 15.500 6/28/2013 EUR 67.79 HSBC TRINKAUS 16.500 6/28/2013 EUR 59.22 HSBC TRINKAUS 16.500 6/28/2013 EUR 41.80 HSBC TRINKAUS 16.500 6/28/2013 EUR 71.08 HSBC TRINKAUS 16.500 6/28/2013 EUR 59.77 HSBC TRINKAUS 16.500 6/28/2013 EUR 67.72 HSBC TRINKAUS 17.000 6/28/2013 EUR 57.46 HSBC TRINKAUS 17.500 6/28/2013 EUR 74.75 HSBC TRINKAUS 17.500 6/28/2013 EUR 71.43 HSBC TRINKAUS 18.000 6/28/2013 EUR 70.95 HSBC TRINKAUS 18.500 6/28/2013 EUR 73.14 HSBC TRINKAUS 18.500 6/28/2013 EUR 57.51 HSBC TRINKAUS 19.000 6/28/2013 EUR 40.97 HSBC TRINKAUS 19.000 6/28/2013 EUR 74.92 HSBC TRINKAUS 19.500 6/28/2013 EUR 71.78 HSBC TRINKAUS 19.500 6/28/2013 EUR 59.74 HSBC TRINKAUS 19.500 6/28/2013 EUR 56.67 HSBC TRINKAUS 19.500 6/28/2013 EUR 71.65 HSBC TRINKAUS 21.000 6/28/2013 EUR 54.87 HSBC TRINKAUS 21.000 6/28/2013 EUR 64.56 HSBC TRINKAUS 21.500 6/28/2013 EUR 68.02 HSBC TRINKAUS 22.500 6/28/2013 EUR 60.02 HSBC TRINKAUS 23.500 6/28/2013 EUR 64.88 LANDESBK BERLIN 5.500 12/23/2013 EUR 72.60 LB BADEN-WUERTT 9.000 7/26/2013 EUR 74.42 LB BADEN-WUERTT 6.000 8/23/2013 EUR 74.40 LB BADEN-WUERTT 7.000 8/23/2013 EUR 72.18 LB BADEN-WUERTT 9.000 8/23/2013 EUR 69.10 LB BADEN-WUERTT 10.000 8/23/2013 EUR 73.11 LB BADEN-WUERTT 10.000 8/23/2013 EUR 71.91 LB BADEN-WUERTT 12.000 8/23/2013 EUR 68.83 LB BADEN-WUERTT 12.000 8/23/2013 EUR 69.40 LB BADEN-WUERTT 7.000 9/27/2013 EUR 74.38 LB BADEN-WUERTT 9.000 9/27/2013 EUR 71.33 LB BADEN-WUERTT 11.000 6/28/2013 EUR 67.25 LB BADEN-WUERTT 11.000 9/27/2013 EUR 70.06 LB BADEN-WUERTT 7.000 6/28/2013 EUR 73.23 LB BADEN-WUERTT 7.500 6/28/2013 EUR 67.52 LB BADEN-WUERTT 7.500 6/28/2013 EUR 72.98 LB BADEN-WUERTT 7.500 6/28/2013 EUR 73.55 LB BADEN-WUERTT 9.000 6/28/2013 EUR 69.23 LB BADEN-WUERTT 10.000 6/28/2013 EUR 71.99 LB BADEN-WUERTT 10.000 6/28/2013 EUR 68.21 LB BADEN-WUERTT 10.000 6/28/2013 EUR 65.70 LB BADEN-WUERTT 5.000 11/23/2012 EUR 49.15 LB BADEN-WUERTT 5.000 11/23/2012 EUR 18.44 LB BADEN-WUERTT 5.000 11/23/2012 EUR 49.68 LB BADEN-WUERTT 5.000 11/23/2012 EUR 70.65 LB BADEN-WUERTT 5.000 11/23/2012 EUR 71.98 LB BADEN-WUERTT 7.500 11/23/2012 EUR 73.69 LB BADEN-WUERTT 7.500 11/23/2012 EUR 41.51 LB BADEN-WUERTT 7.500 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EUR 26.88 RENEWABLE CORP 6.500 6/4/2014 EUR 61.31 SACYR VALLEHERM 6.500 5/1/2016 EUR 51.72 SWEDEN ------ Rorvik Timber 6.000 6/30/2016 SEK 66.00 SWITZERLAND ----------- BANK JULIUS BAER 8.700 8/5/2013 CHF 60.55 BANK JULIUS BAER 15.000 5/31/2013 USD 69.05 BANK JULIUS BAER 13.000 5/31/2013 USD 70.65 BANK JULIUS BAER 12.000 4/9/2013 CHF 56.05 BANK JULIUS BAER 10.750 3/13/2013 EUR 66.60 BANK JULIUS BAER 17.300 2/1/2013 EUR 54.65 BANK JULIUS BAER 9.700 12/20/2012 CHF 75.00 BANK JULIUS BAER 11.500 2/20/2013 CHF 47.15 BANK JULIUS BAER 12.200 12/5/2012 EUR 54.40 CLARIDEN LEU NAS 0.000 6/10/2014 CHF 62.19 CLARIDEN LEU NAS 0.000 6/10/2014 CHF 62.13 CLARIDEN LEU NAS 0.000 5/26/2014 CHF 65.30 CLARIDEN LEU NAS 0.000 5/13/2014 CHF 63.03 CLARIDEN LEU NAS 0.000 2/24/2014 CHF 55.39 CLARIDEN LEU NAS 0.000 2/11/2014 CHF 54.50 CLARIDEN LEU NAS 18.400 12/20/2013 EUR 74.64 CLARIDEN LEU NAS 0.000 11/26/2013 CHF 64.17 CLARIDEN LEU NAS 4.500 8/13/2014 CHF 48.74 CLARIDEN LEU NAS 16.500 9/23/2013 USD 57.03 CLARIDEN LEU NAS 0.000 9/23/2013 CHF 50.04 CLARIDEN LEU NAS 3.250 9/16/2013 CHF 49.05 CLARIDEN LEU NAS 7.500 11/13/2012 CHF 58.71 CLARIDEN LEU NAS 7.250 11/13/2012 CHF 74.60 CLARIDEN LEU NAS 10.250 11/12/2012 CHF 73.60 CLARIDEN LEU NAS 0.000 8/27/2014 CHF 55.45 CLARIDEN LEU NAS 0.000 9/10/2014 CHF 51.16 CLARIDEN LEU NAS 0.000 10/15/2014 CHF 57.48 CLARIDEN LEU NAS 5.250 8/6/2014 CHF 51.70 CLARIDEN LEU NAS 7.000 7/22/2013 CHF 72.18 CLARIDEN LEU NAS 10.000 6/10/2013 CHF 70.08 CLARIDEN LEU NAS 0.000 5/31/2013 CHF 55.87 CLARIDEN LEU NAS 6.500 4/26/2013 CHF 58.21 CLARIDEN LEU NAS 0.000 3/25/2013 CHF 59.57 CLARIDEN LEU NAS 0.000 3/18/2013 CHF 74.71 CLARIDEN LEU NAS 12.500 3/1/2013 USD 74.21 CLARIDEN LEU NAS 9.000 2/14/2013 CHF 66.37 CLARIDEN LEU NAS 11.500 2/13/2013 EUR 57.40 CLARIDEN LEU NAS 0.000 1/24/2013 CHF 66.96 CLARIDEN LEU NAS 8.750 1/15/2013 CHF 68.73 CLARIDEN LEU NAS 8.250 12/17/2012 CHF 61.30 CLARIDEN LEU NAS 0.000 12/17/2012 EUR 67.37 CLARIDEN LEU NAS 12.500 12/14/2012 EUR 72.83 CLARIDEN LEU NAS 0.000 12/14/2012 CHF 36.53 CLARIDEN LEU NAS 12.000 11/23/2012 CHF 47.83 CLARIDEN LEU NAS 8.000 11/20/2012 CHF 74.87 CLARIDEN LEU NAS 7.125 11/19/2012 CHF 58.17 CLARIDEN LEU NAS 7.250 11/16/2012 CHF 58.79 CREDIT SUISSE LD 8.900 3/25/2013 EUR 57.79 CREDIT SUISSE LD 10.500 9/9/2013 CHF 66.05 S-AIR GROUP 0.125 7/7/2005 CHF 10.63 SARASIN CI LTD 8.000 4/27/2015 CHF 68.67 SARASIN/GUERNSEY 13.600 2/17/2014 CHF 71.51 SARASIN/GUERNSEY 13.200 1/23/2013 EUR 72.52 SARASIN/GUERNSEY 15.200 12/12/2012 EUR 73.12 UBS AG 11.870 8/13/2013 USD 4.68 UBS AG 9.600 8/26/2013 USD 15.21 UBS AG 10.200 9/20/2013 EUR 61.15 UBS AG 12.900 9/20/2013 EUR 57.98 UBS AG 15.900 9/20/2013 EUR 55.99 UBS AG 17.000 9/27/2013 EUR 73.19 UBS AG 17.750 9/27/2013 EUR 73.50 UBS AG 18.500 9/27/2013 EUR 71.56 UBS AG 19.750 9/27/2013 EUR 74.84 UBS AG 20.000 9/27/2013 EUR 70.19 UBS AG 20.500 9/27/2013 EUR 74.87 UBS AG 20.500 9/27/2013 EUR 71.43 UBS AG 21.750 9/27/2013 EUR 72.53 UBS AG 22.000 9/27/2013 EUR 71.57 UBS AG 22.500 9/27/2013 EUR 70.55 UBS AG 22.750 9/27/2013 EUR 67.91 UBS AG 23.000 9/27/2013 EUR 72.72 UBS AG 23.250 9/27/2013 EUR 68.81 UBS AG 23.250 9/27/2013 EUR 68.35 UBS AG 24.000 9/27/2013 EUR 69.47 UBS AG 24.750 9/27/2013 EUR 65.71 UBS AG 8.060 10/3/2013 USD 19.75 UBS AG 13.570 11/21/2013 USD 16.25 UBS AG 6.980 11/27/2013 USD 34.85 UBS AG 17.000 1/3/2014 EUR 74.48 UBS AG 17.500 1/3/2014 EUR 73.41 UBS AG 18.250 1/3/2014 EUR 73.31 UBS AG 18.250 1/3/2014 EUR 74.28 UBS AG 19.500 1/3/2014 EUR 73.10 UBS AG 20.000 1/3/2014 EUR 74.53 UBS AG 20.500 1/3/2014 EUR 71.30 UBS AG 20.750 1/3/2014 EUR 71.59 UBS AG 21.000 1/3/2014 EUR 72.44 UBS AG 22.250 1/3/2014 EUR 74.19 UBS AG 23.000 1/3/2014 EUR 71.55 UBS AG 23.250 1/3/2014 EUR 70.29 UBS AG 23.250 1/3/2014 EUR 70.57 UBS AG 24.000 1/3/2014 EUR 72.95 UBS AG 24.250 1/3/2014 EUR 68.40 UBS AG 24.250 1/3/2014 EUR 70.18 UBS AG 6.440 5/28/2014 USD 51.67 UBS AG 3.870 6/17/2014 USD 38.08 UBS AG 6.040 8/29/2014 USD 35.22 UBS AG 7.780 8/29/2014 USD 20.85 UBS AG 11.260 11/12/2012 EUR 47.13 UBS AG 11.660 11/12/2012 EUR 34.35 UBS AG 13.120 11/12/2012 EUR 68.36 UBS AG 13.560 11/12/2012 EUR 36.51 UBS AG 13.600 11/12/2012 EUR 56.96 UBS AG 13.000 11/23/2012 USD 62.55 UBS AG 8.150 12/21/2012 EUR 72.14 UBS AG 8.250 12/21/2012 EUR 74.88 UBS AG 8.270 12/21/2012 EUR 74.19 UBS AG 8.990 12/21/2012 EUR 72.49 UBS AG 9.000 12/21/2012 EUR 69.13 UBS AG 9.150 12/21/2012 EUR 71.84 UBS AG 9.450 12/21/2012 EUR 74.42 UBS AG 9.730 12/21/2012 EUR 70.24 UBS AG 9.890 12/21/2012 EUR 66.37 UBS AG 10.060 12/21/2012 EUR 72.98 UBS AG 10.060 12/21/2012 EUR 69.64 UBS AG 10.160 12/21/2012 EUR 73.41 UBS AG 10.490 12/21/2012 EUR 68.12 UBS AG 10.690 12/21/2012 EUR 71.60 UBS AG 10.810 12/21/2012 EUR 63.85 UBS AG 11.000 12/21/2012 EUR 67.59 UBS AG 11.260 12/21/2012 EUR 66.14 UBS AG 11.270 12/21/2012 EUR 70.63 UBS AG 11.330 12/21/2012 EUR 70.28 UBS AG 11.770 12/21/2012 EUR 61.53 UBS AG 11.970 12/21/2012 EUR 65.67 UBS AG 11.980 12/21/2012 EUR 69.02 UBS AG 12.020 12/21/2012 EUR 64.27 UBS AG 12.200 12/21/2012 EUR 56.09 UBS AG 12.400 12/21/2012 EUR 68.07 UBS AG 12.760 12/21/2012 EUR 59.39 UBS AG 12.800 12/21/2012 EUR 62.51 UBS AG 12.970 12/21/2012 EUR 63.87 UBS AG 13.320 12/21/2012 EUR 66.64 UBS AG 13.560 12/21/2012 EUR 65.71 UBS AG 13.570 12/21/2012 EUR 60.85 UBS AG 13.770 12/21/2012 EUR 57.41 UBS AG 13.980 12/21/2012 EUR 62.18 UBS AG 14.350 12/21/2012 EUR 59.29 UBS AG 14.690 12/21/2012 EUR 64.44 UBS AG 14.740 12/21/2012 EUR 63.53 UBS AG 14.810 12/21/2012 EUR 55.58 UBS AG 15.000 12/21/2012 EUR 60.59 UBS AG 15.130 12/21/2012 EUR 57.81 UBS AG 15.860 12/21/2012 EUR 53.88 UBS AG 15.920 12/21/2012 EUR 56.41 UBS AG 15.930 12/21/2012 EUR 61.51 UBS AG 16.030 12/21/2012 EUR 59.10 UBS AG 16.600 12/21/2012 EUR 50.18 UBS AG 16.710 12/21/2012 EUR 55.09 UBS AG 16.930 12/21/2012 EUR 52.30 UBS AG 17.070 12/21/2012 EUR 57.69 UBS AG 17.500 12/21/2012 EUR 53.84 UBS AG 18.000 12/21/2012 EUR 50.83 UBS AG 19.090 12/21/2012 EUR 51.52 UBS AG 10.770 1/2/2013 USD 38.33 UBS AG 13.030 1/4/2013 EUR 73.40 UBS AG 13.630 1/4/2013 EUR 71.63 UBS AG 14.230 1/4/2013 EUR 69.95 UBS AG 14.820 1/4/2013 EUR 68.36 UBS AG 15.460 1/4/2013 EUR 74.82 UBS AG 15.990 1/4/2013 EUR 65.39 UBS AG 16.500 1/4/2013 EUR 73.32 UBS AG 17.000 1/4/2013 EUR 73.98 UBS AG 17.150 1/4/2013 EUR 62.69 UBS AG 17.180 1/4/2013 EUR 74.58 UBS AG 18.000 1/4/2013 EUR 73.54 UBS AG 18.300 1/4/2013 EUR 60.23 UBS AG 19.440 1/4/2013 EUR 57.99 UBS AG 19.750 1/4/2013 EUR 69.92 UBS AG 20.500 1/4/2013 EUR 70.21 UBS AG 20.570 1/4/2013 EUR 55.94 UBS AG 21.700 1/4/2013 EUR 54.05 UBS AG 21.750 1/4/2013 EUR 69.65 UBS AG 23.750 1/4/2013 EUR 66.55 UBS AG 11.020 1/25/2013 EUR 67.05 UBS AG 12.010 1/25/2013 EUR 65.34 UBS AG 14.070 1/25/2013 EUR 62.22 UBS AG 16.200 1/25/2013 EUR 74.54 UBS AG 8.620 2/1/2013 USD 14.04 UBS AG 8.980 2/22/2013 EUR 72.86 UBS AG 10.590 2/22/2013 EUR 69.90 UBS AG 10.960 2/22/2013 EUR 67.35 UBS AG 13.070 2/22/2013 EUR 63.96 UBS AG 13.660 2/22/2013 EUR 61.23 UBS AG 13.940 2/22/2013 EUR 73.02 UBS AG 15.800 2/22/2013 EUR 67.24 UBS AG 8.480 3/7/2013 CHF 58.00 UBS AG 10.000 3/7/2013 USD 72.30 UBS AG 12.250 3/7/2013 CHF 59.20 UBS AG 9.000 3/22/2013 USD 11.16 UBS AG 9.850 3/22/2013 USD 19.75 UBS AG 16.500 4/2/2013 EUR 72.16 UBS AG 17.250 4/2/2013 EUR 72.45 UBS AG 18.000 4/2/2013 EUR 73.44 UBS AG 19.750 4/2/2013 EUR 69.63 UBS AG 21.250 4/2/2013 EUR 69.05 UBS AG 21.500 4/2/2013 EUR 73.98 UBS AG 21.500 4/2/2013 EUR 73.88 UBS AG 22.250 4/2/2013 EUR 67.19 UBS AG 22.250 4/2/2013 EUR 69.43 UBS AG 24.250 4/2/2013 EUR 65.24 UBS AG 24.750 4/2/2013 EUR 68.24 UBS AG 10.860 4/4/2013 USD 37.21 UBS AG 9.650 4/11/2013 USD 27.17 UBS AG 9.930 4/11/2013 USD 24.77 UBS AG 11.250 4/11/2013 USD 24.39 UBS AG 10.170 4/26/2013 EUR 67.84 UBS AG 10.970 4/26/2013 EUR 66.50 UBS AG 12.610 4/26/2013 EUR 64.06 UBS AG 7.900 4/30/2013 USD 33.75 UBS AG 9.830 5/13/2013 USD 30.07 UBS AG 8.000 5/24/2013 USD 63.90 UBS AG 11.670 5/31/2013 USD 35.12 UBS AG 12.780 6/7/2013 CHF 62.60 UBS AG 16.410 6/7/2013 CHF 64.70 UBS AG 9.330 6/14/2013 USD 22.00 UBS AG 11.060 6/14/2013 USD 28.17 UBS AG 6.770 6/21/2013 USD 10.43 UBS AG 7.120 6/26/2013 USD 29.83 UBS AG 15.250 6/28/2013 EUR 74.98 UBS AG 17.000 6/28/2013 EUR 74.05 UBS AG 17.250 6/28/2013 EUR 72.59 UBS AG 19.250 6/28/2013 EUR 70.54 UBS AG 19.500 6/28/2013 EUR 70.28 UBS AG 20.250 6/28/2013 EUR 74.82 UBS AG 20.500 6/28/2013 EUR 70.91 UBS AG 21.000 6/28/2013 EUR 68.62 UBS AG 22.000 6/28/2013 EUR 71.86 UBS AG 22.500 6/28/2013 EUR 66.83 UBS AG 23.000 6/28/2013 EUR 67.15 UBS AG 23.500 6/28/2013 EUR 71.72 UBS AG 24.000 6/28/2013 EUR 68.94 UBS AG 24.500 6/28/2013 EUR 67.97 UBS AG 11.450 7/1/2013 USD 27.96 UBS AG 6.100 7/24/2013 USD 30.07 UBS AG 8.640 8/1/2013 USD 27.87 UBS AG 13.120 8/5/2013 USD 4.62 UBS AG 0.500 4/27/2015 CHF 52.50 UBS AG 6.070 11/12/2012 EUR 65.82 UBS AG 8.370 11/12/2012 EUR 59.26 UBS AG 8.590 11/12/2012 EUR 53.53 UBS AG 9.020 11/12/2012 EUR 43.76 UBS AG 9.650 11/12/2012 EUR 37.64 UBS AG 10.020 11/12/2012 EUR 71.72 UBS AG 10.930 11/12/2012 EUR 64.23 BARCLAYS BK PLC 11.000 6/28/2013 EUR 43.13 BARCLAYS BK PLC 11.000 6/28/2013 EUR 74.83 BARCLAYS BK PLC 10.750 3/22/2013 EUR 41.06 BARCLAYS BK PLC 10.000 3/22/2013 EUR 42.44 BARCLAYS BK PLC 6.000 1/2/2013 EUR 50.37 BARCLAYS BK PLC 8.000 6/28/2013 EUR 47.66 ESSAR ENERGY 4.250 2/1/2016 USD 72.62 MAX PETROLEUM 6.750 9/8/2013 USD 40.36 ********* 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., Washington, D.C., 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 2013. 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$775 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 215-945-7000 or Nina Novak at 202-241-8200. * * * End of Transmission * * *