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        T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

             Friday, May 24, 2013, Vol. 14, No. 102

                            Headlines



A U S T R I A

HYPO ALPE ADRIA: SREI Set to Buy Unit for EUR65.5 Million


G E R M A N Y

BLUE DANUBE II 2013-1: S&P Assigns 'BB+' Rating to Class A Notes


I R E L A N D

BALLYKISTEEN HOTEL: "Business as Usual" After Liquidation


K A Z A K H S T A N

MANGISTAU ELECTRICITY: Fitch Retains 'BB+' LT Foreign Curr. IDR


N E T H E R L A N D S

INTERGEN NV: Moody's Rates $1BB Loans & $800MM Notes 'B1'
QUEEN STREET II: Moody's Affirms 'Ba3' Rating on Class E Notes


R O M A N I A

VULCAN: Obtains Approval for Insolvency Bid


S P A I N

BBVA HIPOTECARIO: Fitch Affirms 'BB' Rating on Class C Notes
CURRUS XIV-XVI: Fitch Cuts Sr. and Subordinated Rating to 'BB'
MIXTO V: Moody's Cuts Rating on EUR13.4M Class C Notes to Caa3
TDA TARRAGONA: Moody's Cuts Rating on EUR11.9MM C Notes to Caa3
* SPAIN: Restructured Loan Provisions May Hit Bank Earnings


T U R K E Y

ORDU YARDIMLASMA: Moody's Reviews Ba1 Corp. Ratings for Upgrade
OYAK: S&P Raises Corporate Credit Rating From 'BB+'


U K R A I N E

AVANGARDCO INVESTMENTS: Fitch Upgrades Local Currency IDR to 'B+'


U N I T E D   K I N G D O M

DUNFERMLINE ATHLETIC: Pars United Launches Takeover Bid
FARRELLY (M&E): Butcher Woods Appointed as Administrator
MORPHEUS EUROPEAN: Fitch Affirms 'CCC' Rating on Class E Notes
MORPHEUS PLC: S&P Cuts Rating on Class D Subordinate Loan to 'D'
TRITON PLC: S&P Lowers Ratings on Two Note Classes to 'B'


X X X X X X X X

* EUROPE: Brussels to Impose Tighter Conditions on Bank Bailouts
* Moody's Comments on Volatility of Solvency II Ratios
* Varied Insolvency Processes in Eur. Challenge Special Servicers
* Recession Concern Dampens European Investor Sentiment
* BOOK REVIEW: Creating Value through Corporate Restructuring


                            *********


=============
A U S T R I A
=============


HYPO ALPE ADRIA: SREI Set to Buy Unit for EUR65.5 Million
---------------------------------------------------------
Reuters reports that newspaper Die Presse said Srei
Infrastructure Finance Ltd. is poised to buy the domestic banking
unit of nationalized Austrian lender Hypo Alpe Adria for EUR65.5
million.

According to Reuters, in a story released ahead of publication on
Thursday, the paper said negotiations on the sale had wrapped up
and that regulators had signalled no problems with the planned
takeover.

"The relevant bodies of the bank have not taken any decision
yet," Reuters quotes a spokesman for Hypo Alpe Adria as saying.

The bank has said a sale is due by mid-2013, Reuters notes.

Hemant Kanoria, chairman and managing director of Srei
Infrastructure denied being interested in Austria or any other
European Union territory when asked by Reuters on May 7 about
reports it was eyeing the Hypo unit, Reuters relates.

The European Commission has put intense pressure on Hypo Alpe
Adria, which Austria had to take over in 2009, to sell its
operating units by the end of this year or else face having to
return more than EUR2 billion of state aid, Reuters discloses.

Hypo Alpe-Adria International AG is a subsidiary of BayernLB.  It
is active in banking and leasing.  In banking, HGAA serves both
corporate and retail customers and offers services ranging from
traditional lending through savings and deposits to complex
investment products and asset management services.



=============
G E R M A N Y
=============


BLUE DANUBE II 2013-1: S&P Assigns 'BB+' Rating to Class A Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services has assigned a 'BB+ (sf)'
credit rating to the series 2013-1 class A notes issued under the
principal-at-risk variable-rate note program Blue Danube II Ltd.
(Blue Danube II).  This is the first series of notes issued under
this program, which is sponsored by Allianz Argos 14 GmbH
(Allianz) and guaranteed by Allianz SE (AA/Stable/A-1+).

The notes are exposed to U.S., Caribbean, and Mexico named storm
risk (the storm risks), and U.S. and Canada earthquake risk (the
earthquake risks) on a per-occurrence basis.

Allianz Argos 14 GmbH is the counterparty to the risk transfer
contract.  Its obligations under the risk transfer contract
benefit from an unconditional and irrevocable guarantee by
Allianz SE.  Allianz transacts insurance business worldwide and
is one of the largest global insurance groups in terms of
premiums written and capital.

Proceeds from the sale of the notes are invested in International
Bank for Reconstruction and Development notes.  The rating on the
notes is based on the lower of the ratings on the catastrophe
risk (rated 'BB+'; currently the lowest rating), the assets in
the issuer's collateral account (rated 'AAA'), and the guarantor
of the risk transfer counterparty (rated 'AA').

AIR Worldwide Corp. (AIR) performed the modeling for this
transaction.



=============
I R E L A N D
=============


BALLYKISTEEN HOTEL: "Business as Usual" After Liquidation
---------------------------------------------------------
Irish Examiner reports that PREM Group, which has been appointed
as a provisional liquidator to Ballykisteen Hotel and Golf
Resort, has said it is "business as usual" at the hotel.

"It is business as usual at Ballykisteen Hotel and Golf Resort.
We look forward to working with the staff here and to continuing
to provide a professional and friendly service at one of
Tipperary's leading hotel and conference venues," Irish Examiner
quotes Jim Murphy, Managing Director, PREM Group, as saying.

Provisional liquidator Jim Hamilton will be taking over the
immediate running of the hotel, Irish Examiner discloses.

Ulster Bank made the move against the insolvent hotel because it
is EUR290,000 overdrawn, Irish Examiner recounts.

Ballykisteen is a four star operation with 36 bedrooms and 45
self-catering lodges.  It employs around 80 people.



===================
K A Z A K H S T A N
===================


MANGISTAU ELECTRICITY: Fitch Retains 'BB+' LT Foreign Curr. IDR
---------------------------------------------------------------
Fitch Ratings has assigned Mangistau Electricity Distribution
Company JSC's (MEDNC) KZT1,700 million 8% domestic bond due 2023
a final local currency senior unsecured 'BBB-' rating.

The rating is in line with MEDNC's Long-term local currency
Issuer Default Rating (IDR) of 'BBB-', which has a Stable
Outlook, as the bond will be direct and unsecured obligations of
the company.

The proceeds of the bond issue will be used by the company for
financing its investment program for 2013-2015.

KEY RATING DRIVERS

- State Support
MEDNC's ratings are linked to those of Kazakhstan (Long-term
foreign and local currency IDRs of 'BBB+'/Stable and 'A-'/Stable,
respectively), and notched down by three levels to reflect that
little indication has been given by MEDNC's state-owned parent,
JSC Samruk-Energy (S-E, 'BBB'/Stable), that it will provide
timely financial assistance to MEDNC in case of need. The
notching reflects the fact that S-E has not provided tangible
financial assistance to MEDNC in the past three years.

The dividend payout ratio to S-E from MEDNC was set back to 50%
of net profit (or KZT83 million) for 2011 from 100% of net income
(or KZT64 million) for 2010, which management expects to remain
the case over the medium term. Fitch believes that this will not
put significant pressure on the rating. Fitch views MEDNC's
standalone business and financial profile as commensurate with a
weak 'BB-' rating.

S-E does not view MEDNC as a strategic investment but is not
actively pursuing a reduction of its stake in MEDNC. The ratings
are based on Fitch's assumption that S-E will retain at least
majority ownership of MEDNC over the medium term.

- Near-Monopoly Position
MEDNC's credit profile is supported by its near-monopoly position
in electricity transmission and distribution in the Region of
Mangistau, one of Kazakhstan's strategic oil & gas regions. It is
also underpinned by prospects for economic development and
expansion in the region, in relation to oil & gas and
transportation, and a cost-plus-based tariff mechanism under
which MEDNC operates. The company also benefits from limited
foreign exchange exposure and absence of interest rate risks.

- Small Scale, High Customer Concentration
The ratings are constrained by MEDNC's small scale limiting its
cash flow generation capacity, high exposure to a single industry
(oil & gas) and, within that, high customer concentration. The
latter is somewhat mitigated by the state ownership of major
customers (Ozenmunaigaz and Kaz GPZ are 100% subsidiaries of
KazMunaiGaz National Company; and Mangistaumunaigas and
Karazhanbasmunai are 50%-owned by KazMunaiGaz National Company)
and by prepayment terms under distribution agreements.

- Stable Cash Flow From Operations Expected
Fitch expects MEDNC to continue generating solid and stable cash
flow from operation over 2013-2016. Free cash flows are likely to
turn negative in 2013 and onwards, due to substantial capex
plans. For 2013, Fitch estimates MEDNC's cash flow from
operations at about KZT1.7 billion, before capex (KZT3 billion)
and dividends (KZT167 million).

- Capex-Driven Leverage Increase Expected
MEDNC's funds flow from operations (FFO) adjusted leverage for
2012 improved to 1.4x from 2.2x at end-2011. This ratio is
expected to remain below 3x in 2013-2014 before increasing to
around 3x in 2015, driven by an increase in capex. FFO interest
cover also increased to 4.2x at end-2012 from 3.6x at end-2011.
Fitch expects interest cover to remain in the low single-digit
territory.

RATING SENSITIVITIES

Positive: Future developments that could lead to positive rating
actions include:

-- A positive change in Kazakhstan's ratings, provided the
   link between MEDNC and the sovereign does not weaken.

-- Stronger links with the sovereign demonstrated by unexpected
   explicit state support.

-- Enhancement of business profile, such as diversification and
   scale with only modest increase in leverage.

Negative: Future developments that could lead to negative rating
action include:

-- A negative change in Kazakhstan's ratings.

-- Reduction of S-E's stake to less than 50% provided that a new
   shareholder does not offer meaningful financial support or
   capex funding.

-- Deterioration in MEDNC's FFO adjusted leverage to 4x or above
   and FFO interest cover to 2x or below on a sustained basis.

Liquidity & Debt Structure

- Manageable Liquidity
Fitch views MEDNC's liquidity as manageable, comprising solely
cash as the company does not have any available credit lines. At
end-2012, MEDNC's cash balance of KZT1.2 billion was sufficient
to cover short-term maturities of KZT1.1 billion. Cash balances
are mostly held in local currency with a domestic bank, which is
a concern. At end-2012, most of MEDNC's debt was represented by
two unsecured fixed-rate bonds of KZT800 million each with
maturity in 2013-2014. The rest of the debt is represented by 25-
year interest-free loans provided until 2009 by MEDNC's customers
to co-finance new network connections. The expected capex and
hence negative free cash flow in 2013 will partially funded from
the proceeds of the new KZT1.7 billion bond.

Full List of MEDNC's Ratings

Long-term foreign currency IDR: 'BB+', Outlook Stable
Long-term local currency IDR: 'BBB-', Outlook Stable
National Long-term rating: 'AA(kaz)', Outlook Stable
Foreign currency short-term IDR: 'B'
Foreign currency senior unsecured rating: 'BB+'
Local currency senior unsecured rating: 'BBB-'



=====================
N E T H E R L A N D S
=====================


INTERGEN NV: Moody's Rates $1BB Loans & $800MM Notes 'B1'
---------------------------------------------------------
Moody's Investors Service assigned a B1 rating to InterGen N.V.'s
proposed US$500 million senior secured revolving credit facility
due 2018, its US$500 million senior secured term loan due 2020,
and its US$800 million senior secured notes due 2021 and 2023.
InterGen's rating outlook is changed to stable from negative.

Ratings Rationale:

The B1 rating reflects InterGen's exposure to weak merchant power
markets in multiple jurisdictions that will impact cash flow
generation at InterGen's core assets over the next 18-24 months.
While financial results will remain challenged in this
environment, the B1 rating and stable rating outlook incorporates
the company's strengthened capital structure that will
materialize following the sponsors injection of US$700 million in
equity into the company. With this balance sheet strengthening
and accompanying debt reduction, Moody's calculates that the
company should be able to maintain a debt service coverage ratio
(DSCR) of holding company interest expense and mandatory term
loan amortization in excess of 1.40 times under most Moody's
downside scenarios, despite operating in weak merchant power
markets.

InterGen's financial profile further benefits from a large and
geographically diverse generating fleet, which features a
component of long-term contracted assets with credit-worthy
counterparties. Notwithstanding the positive implications for
InterGen following the balance sheet strengthening, the
geographic diversity, and the degree of contracted cash flow, the
B1 rating recognizes InterGen's growing exposure to merchant
power markets, the high consolidated debt burden, with the
majority of the debt being project-level and non-recourse to
InterGen, as well as a financing structure that provides the
company with greater financial flexibility than the former
structure.

An important rating consideration is the substantial degree of
sponsor support provided by InterGen's co-owners (Ontario
Teachers' Pension Plan and China Huaneng Group/Guangdong Yudean
Group) as most recently evidenced by the US$700 million equity
contribution to the company in conjunction with the current
refinancing. In addition to the US$700 million incremental equity
contribution, Moody's understands that since 2007 the sponsors
have recommitted more than US$400 million in equity that could
have otherwise been distributed. Moody's views these actions by
the sponsor group as a clear indication of the strategic
importance of the InterGen platform over the long-term.

Upon transaction close, InterGen's holding company debt will be
reduced by US$537 million, enabling the holding company capital
structure to stabilize at approximately 60% debt-to-total
capitalization. Of particular note is the fact that the most
recent credit supportive actions are being taken in the face of
weak merchant markets in several of the regions that InterGen has
operations. As such, Moody's rating incorporates a view that the
sponsors will continue to pursue strategic actions necessary to
support the company over the long-run.

Notwithstanding this substantial level of sponsor support,
InterGen's financial performance in 2012 saw a material decline
in cash flow generated from its core UK assets as distributions
from the UK assets fell by approximately 40% compared with the
prior year owing to the weak wholesale market conditions in the
UK and lower achieved clean spark spreads. The narrowing clean
spark spreads have been driven by a combination of new capacity
additions entering the UK market, declining coal prices that have
pushed natural gas-fired generators further out on the dispatch
curve, high natural gas prices (which are tied to the price of
oil in the UK), a weak economic recovery and low carbon prices.

Moody's believes that many of the factors currently impacting the
UK wholesale power market, especially weak clean spark spreads,
will persist over the next 18-24 months. Current forward curves
show a wide discrepancy between clean spark spreads and clean
dark spreads that favor coal-fired plants over the time horizon.
The influx of combined-cycle gas generation supply that has come
on-line over the last three years will keep the UK market at
over-capacity, at least through 2015, which will temper wholesale
market prices as the overall UK economy struggles to find
consistent growth traction to support electricity demand. Adding
to the challenges for InterGen is the expiration of two power
purchase contracts at the Rocksavage plant which exposes the
company to an additional 704 MW of merchant capacity in the UK
wholesale power market beginning in April 2013.

Additionally, gas-fired power plants in the UK have also seen
their dispatch diminished by the coal plants that opted out of
the EU-wide Large Combustion Plant Directive (LCPD). These plants
have been dispatching more frequently in order to utilize their
maximum 20,000 operating hours by 2015, after which point these
assets will be retired. Approximately 12 GW of UK capacity will
be impacted by the LCPD. If there is no change in legislation and
all of these plants retire as scheduled, the current oversupply
situation in the UK would shrink and therefore lead to improving
market conditions in the post-2015 time period. However, the UK's
commitment to increase the share of renewable energy sources,
primarily wind, in the energy supply mix could temper clean spark
spread improvements, and result in InterGen's merchant UK assets
capturing peak and inter-peak merchant energy gross margins with
lower dispatch factors.

Moody's also observes that 550 MW of La Rosita's capacity will
become merchant by the end of September 2014. The plant's
proximity to the US border with California gives it a favorable
dual-interconnection advantage into the Mexican power market and
the CAISO SP-15 market. SP-15 has seen power prices and clean
spark spreads on the rise this spring due to higher natural gas
prices, weak hydrology flows and the extended San Onofre Nuclear
Generating Station outage. The implementation of AB32 carbon cap-
and-trade should also benefit California power prices. La
Rosita's ramping capabilities will prove increasingly beneficial
as greater amounts of renewable generation are added to the
California grid as utilities work toward the 33% renewable
portfolio standard by 2020. The remaining 489 MW at La Rosita
continue to be contracted with Comision Federal de Electricidad
(Baa1 stable), the Mexican utility, though 2028.

Importantly, the proposed transaction addresses a very large
refinancing risk that the company faced, which had been cited as
a negative rating factor in prior research. The refinancing moves
all of the funded holding company debt to a maturity of at least
seven years, or to 2020, with more than 60% of the holding
company capital structure maturing beyond seven years. The five
year revolving credit facility represents an important source of
liquidity to InterGen, particularly for working capital needs,
letter of credit postings for operational projects and as a
source for securing equity commitments to development projects.
The planned five-year tenor should provide an adequate runway for
the company, particularly as the Altamira gas compression station
and San Luis de la Paz power project achieve commercial
operations in 2014 and 2015, respectively.

The terms and conditions of the proposed transaction structure
does not contemplate an excess cash flow sweep mechanism, nor a
required debt service reserve fund, both credit weaknesses. These
provisions, in addition to the corporate-like flexibility with
regard to asset sale proceeds and investing in other electric
generating assets, make the financing terms more comparable to
the terms and conditions associated with a corporate, unregulated
power producer financing rather than a traditional power project
financing. The revolver, term loan and notes will be secured by a
perfected first lien in the capital stock of the InterGen's
wholly-owned subsidiaries. Importantly, Moody's observes that
there is no indebtedness at the Tier 1 subsidiaries, which
collectively represent 3,545 megawatts (MWs) of electric capacity
or 58% of the company's net MWs owned. Under the terms of the
financing documents, InterGen can only incur limited levels of
indebtedness at the four generation assets that comprise the Tier
1 subsidiaries thereby reducing the degree of structural
subordination for InterGen creditors. The financing documents
contemplate the maintenance of a DSCR of 1.1 times as well as a
restricted payments test for distributions of a DSCR of 1.4
times.

The stable outlook incorporates Moody's view that the current
refinancing transaction and equity contribution have stabilized
the company's financial profile, and should result in holding
company DSCR above 1.40 times on a consistent basis.

The rating is not likely to go higher in the near-to-intermediate
term, given the current outlook for UK spark spreads and the
further shift towards a more merchant generation profile; though
substantial improvements in merchant power markets, re-
contracting existing assets with investment grade counterparties,
or adding additional contracted assets that generate meaningful
cash flow to the company could result in positive rating
implications.

The rating could face downward pressure if there is further
deterioration in cash flow generation that impacts financial
metrics, or if the portfolio assets experience operational issues
that have a sustained impact on the company's performance.

Upon completion of the proposed financing, Moody's intends to
withdraw the B1 ratings assigned to the existing InterGen's debt,
including the senior secured revolver due 2014, the senior
secured term loan due June 30, 2014, and the senior secured notes
due June 30, 2017.

The last rating action was on January 28, 2013, when InterGen's
senior secured rating was downgraded to B1 from Ba3, and a
negative outlook was assigned.

The principal methodologies used in this rating were the Power
Generation Projects methodology published in December 2012, and
the Unregulated Utilities and Power Companies methodology
published in August 2009.

InterGen N.V. is a holding company with a portfolio consisting of
nine combined cycle, natural gas-fired projects and two coal-
fired facilities with a net capacity ownership of 6,101 MW. The
eleven operational plants are located in the UK, the Netherlands,
Mexico and Australia. InterGen also owns the Bajio and
Libramiento natural gas compression facilities and associated
pipeline located adjacent to the Bajio power project. InterGen
N.V. is owned by affiliates of China Huaneng Group, Guangdong
Yudean Group, and The Ontario Teachers' Pension Plan Board.


QUEEN STREET II: Moody's Affirms 'Ba3' Rating on Class E Notes
--------------------------------------------------------------
Moody's Investors Service upgraded the ratings of the following
notes issued by Queen Street CLO II B.V.:

EUR59.85M Class A2 Senior Secured Floating Rate Notes due 2024,
Upgraded to Aaa (sf); previously on Jul 29, 2011 Upgraded to Aa1
(sf)

EUR34.875M Class B Senior Secured Floating Rate Notes due 2024,
Upgraded to Aa2 (sf); previously on Jul 29, 2011 Upgraded to A1
(sf)

EUR38.25M Class C Senior Secured Deferrable Floating Rate Notes
due 2024, Upgraded to A3 (sf); previously on Jul 29, 2011
Upgraded to Baa2 (sf)

Moody's also affirmed the ratings of the following notes issued
by Queen Street CLO II B.V.:

EUR239.4M Class A1 Senior Secured Floating Rate Notes due 2024,
Affirmed Aaa (sf); previously on Jun 28, 2007 Definitive Rating
Assigned Aaa (sf)

EUR16.875M Class D Senior Secured Deferrable Floating Rate Notes
due 2024, Affirmed Ba1 (sf); previously on Jul 29, 2011 Upgraded
to Ba1 (sf)

EUR18M Class E Senior Secured Deferrable Floating Rate Notes due
2024, Affirmed Ba3 (sf); previously on Jul 29, 2011 Upgraded to
Ba3 (sf)

Queen Street CLO II B.V., issued in June 2007, is a
Collateralized Loan Obligation ("CLO") backed by a portfolio of
mostly high yield European loans. The portfolio is managed by
Ares Management Limited. This transaction will be in reinvestment
period until August 2013. It is predominantly composed of senior
secured loans.

Ratings Rationale:

According to Moody's, the rating actions taken on the notes
result primarily from an improvement in key credit metrics of the
underlying portfolio. The rating actions also reflect the benefit
of the short period of time remaining before the end of the
deal's reinvestment period in August 2013.

Improvement of key credit metrics is observed through an
improvement in the average credit rating (as measured by the
weighted average rating factor, or "WARF"), an increase in the
weighted average spread (or "WAS") and an increase in the
diversity score. Since the last rating action in July 2011 the
WARF improved from 2724 to 2598, the WAS increased from 3.03% to
3.74% and the diversity score increased from 37.66 to 42.44. All
collateral quality tests as well as coverage tests are in
compliance.

In consideration of the reinvestment restrictions applicable
during the amortization period, and therefore the limited ability
to effect significant changes to the current collateral pool,
Moody's analyzed the deal assuming a higher likelihood that the
collateral pool characteristics will continue to maintain a
positive buffer relative to certain covenant requirements. In
particular, the deal is assumed to benefit from a shorter
amortization profile and higher spread levels compared to the
levels assumed at the last rating action in July 2011.

In its base case, Moody's analyzed the underlying collateral pool
to have a performing par and principal proceeds balance of EUR
430.96 million, defaulted par of EUR 4.07 million, a weighted
average rating factor of 2668 (corresponding to a default
probability of 18.77%), a weighted average recovery rate upon
default of 48.01% for a Aaa liability target rating, a diversity
score of 36 and a weighted average spread of 3.32%. The default
probability is derived from the credit quality of the collateral
pool and Moody's expectation of the remaining life of the
collateral pool. The average recovery rate to be realized on
future defaults is based primarily on the seniority of the assets
in the collateral pool. For a Aaa liability target rating,
Moody's assumed that 92.72% of the portfolio exposed to senior
secured corporate assets would recover 50% upon default, while
the remainder non-first-lien loan corporate assets would recover
15%. In each case, historical and market performance trends and
collateral manager latitude for trading the collateral are also
relevant factors. These default and recovery properties of the
collateral pool are incorporated in cash flow model analysis
where they are subject to stresses as a function of the target
rating of each CLO liability being reviewed.

In addition to the base case analysis, Moody's also performed
sensitivity analyses on key parameters for the rated notes:
Deterioration of credit quality to address the refinancing and
sovereign risks -- Approximately 11% of the portfolio are
European corporate rated B3 and below and maturing between 2014
and 2016, which may create challenges for issuers to refinance.
Approximately 7.3% of the portfolio are exposed to obligors
located in Italy, Ireland and Spain. Moody's considered a model
run where the base case WARF was increased to 2938 by forcing
ratings on 25% of such exposure to Ca. This run generated model
outputs that were within one notch from the base case results.

Moody's notes that this transaction is subject to a high level of
macroeconomic uncertainty, which could negatively impact the
ratings of the notes, as evidenced by 1) uncertainties of credit
conditions in the general economy and 2) the large concentration
of speculative-grade debt maturing between 2014 and 2016 which
may create challenges for issuers to refinance. CLO notes'
performance may also be impacted either positively or negatively
by 1) the manager's investment strategy and behavior and 2)
divergence in legal interpretation of CDO documentation by
different transactional parties due to embedded ambiguities.

Sources of additional performance uncertainties:

1) Portfolio Amortization: The main source of uncertainty in this
transaction is whether delevering from unscheduled principal
proceeds will continue and at what pace. Delevering may
accelerate due to high prepayment levels in the loan market
and/or collateral sales by the liquidation agent, which may have
significant impact on the notes' ratings.

2) Recovery of defaulted assets: Market value fluctuations in
defaulted assets reported by the trustee and those assumed to be
defaulted by Moody's may create volatility in the deal's
overcollateralization levels. Further, the timing of recoveries
and the manager's decision to work out versus sell defaulted
assets create additional uncertainties. Moody's analyzed
defaulted recoveries assuming the lower of the market price and
the recovery rate in order to account for potential volatility in
market prices.

3) Other collateral quality metrics: The deal is allowed to
reinvest and the manager has the ability to deteriorate the
collateral quality metrics' existing cushions against the
covenant levels. Moody's analyzed the impact of assuming the
worse of reported and covenanted values for certain collateral
quality tests. However, as part of the base case, Moody's
considered spread levels higher than the covenant levels due to
the large difference between the reported and covenant levels.

The principal methodology used in this rating was "Moody's Global
Approach to Rating Collateralized Loan Obligations" published in
May 2013.

Moody's modeled the transaction using the Binomial Expansion
Technique, as described in Section 2.3.2.1 of the "Moody's Global
Approach to Rating Collateralized Loan Obligations" rating
methodology published in May 2013.

Under this methodology, Moody's used its Binomial Expansion
Technique, whereby the pool is represented by independent
identical assets, the number of which is being determined by the
diversity score of the portfolio. The default and recovery
properties of the collateral pool are incorporated in a cash flow
model where the default probabilities are subject to stresses as
a function of the target rating of each CLO liability being
reviewed. The default probability range is derived from the
credit quality of the collateral pool, and Moody's expectation of
the remaining life of the collateral pool. The average recovery
rate to be realized on future defaults is based primarily on the
seniority of the assets in the collateral pool.

The cash flow model used for this transaction, is Moody's CDOEdge
model.

This model was used to represent the cash flows and determine the
loss for each tranche. The cash flow model evaluates all default
scenarios that are then weighted considering the probabilities of
the binomial distribution assumed for the portfolio default rate.
In each default scenario, the corresponding loss for each class
of notes is calculated given the incoming cash flows from the
assets and the outgoing payments to third parties and
noteholders. Therefore, the expected loss or EL for each tranche
is the sum product of (i) the probability of occurrence of each
default scenario; and (ii) the loss derived from the cash flow
model in each default scenario for each tranche. Therefore,
Moody's analysis encompasses the assessment of stressed
scenarios.

In addition to the quantitative factors that are explicitly
modeled, qualitative factors are part of the rating committee
considerations. These qualitative factors include the structural
protections in each transaction, the recent deal performance in
the current market environment, the legal environment, specific
documentation features, the collateral manager's track record,
and the potential for selection bias in the portfolio. All
information available to rating committees, including
macroeconomic forecasts, input from other Moody's analytical
groups, market factors, and judgments regarding the nature and
severity of credit stress on the transactions, may influence the
final rating decision.

On March 12, 2013, Moody's released a report, which describes how
sovereign credit deterioration impacts structured finance
transactions and the rationale for introducing two new parameters
into its general analysis of such transactions. In the coming
months, Moody's will update its methodologies relating to multi-
country portfolios including the one for Collateralized Loan
Obligations (CLOs) as well as for other types of collateralized
debt obligations (CDO), asset-backed commercial paper (ABCP) and
commercial mortgage-backed securities (CMBS).



=============
R O M A N I A
=============


VULCAN: Obtains Approval for Insolvency Bid
-------------------------------------------
Romania-Insider.com reports that Vulcan's request to enter
insolvency has been approved and Euro Insol is the new judiciary
administrator of the company owned by businessman Ovidiu Tender.

Vulcan has asked for insolvency because of the EUR37 million debt
it could no longer handle, Romania-Insider.com relates.

The company saw its turnover dropping to some EUR16 million in
2012, when its loss also widened to some EUR10 million, Romania-
Insider.com discloses.  This was the third year in a row when
Vulcan posted a loss, Romania-Insider.com notes.

Vulcan also had to service prior debt instead of investing in
increasing production capacities, Romania-Insider.com says,
citing the company's insolvency request.

In December 2012, the company announced that it was having
difficulties in ensuring work capital, as orders from clients
were increasing Romania-Insider.com recounts.  Its short-term
focus will be to attract needed financing to serve the ongoing
contracts, and optimize costs via reorganization and
restructuring, according to Romania-Insider.com.

Vulcan has 900 employees and owes them some EUR800,000, Romania-
Insider.com states.

Vulcan is a Romanian equipment producer.



=========
S P A I N
=========


BBVA HIPOTECARIO: Fitch Affirms 'BB' Rating on Class C Notes
------------------------------------------------------------
Fitch Ratings has affirmed BBVA Hipotecario 3, F.T.A's notes, as
follows:

EUR99.3m Class A2 (ISIN ES0314227010)at 'AA-sf'; Outlook
Negative;

EUR46.5m Class B (ISIN ES0314227028) at 'Asf'; Outlook Stable;

EUR15.7m Class C (ISIN ES0314227036) at 'BBsf'; Outlook Stable.

KEY RATING DRIVERS

The affirmation of the notes reflects the stable portfolio
performance. Loans in arrears of more than 90 days account for
2.0% of non-defaulted assets, down from 4.0% in May 2012. The
balance of defaulted assets in the portfolio has increased to
EUR11.5 million from EUR11.1 million one year ago. The
transaction benefits from high realized recoveries. The achieved
weighted average recovery rate currently stands at 61.5%.

The portfolio is significantly exposed to the Spanish real estate
sector (55% of the portfolio notional). Fitch believes that this
exposure can be a source of increased performance volatility
given the challenging macroeconomic environment in Spain.

The class A2 notes' rating and Outlook are limited by the rating
of the Kingdom of Spain ('BBB'/Negative/'F2'). The highest
achievable rating for Spanish structured finance transactions is
'AA-sf', five notches above the sovereign's rating. See 'Fitch:
SF Impact of Spanish, Italian & Irish Sovereign Rating Actions',
dated 1 Feb 2012 at www.fitchratings.com, for details of Fitch's
view on the link between sovereign Issuer Default Ratings and
structured finance ratings for eurozone countries.

RATING SENSITIVITIES

Applying a 1.25x default rate multiplier or a 0.75x recovery rate
multiplier to all assets in the portfolio would result in a
downgrade of the notes by at most one notch.

BBVA Hipotecario 3, F.T.A. is a static securitization of a
EUR1.45bn initial portfolio of Spanish SME loans originated and
serviced by Banco Bilbao Vizcaya Argentaria (BBVA;
'BBB+'/Negative/'F2').


CURRUS XIV-XVI: Fitch Cuts Sr. and Subordinated Rating to 'BB'
--------------------------------------------------------------
Fitch Ratings has downgraded the ratings of the senior and
subordinated facilities of Currus XIV-XVI to 'BBsf' from 'BBBsf'.
The Rating Outlook remains Negative.

KEY RATING DRIVERS

These rating downgrades reflect the current ratings of the
underlying collateral, the class A2 and A4 Spanish residential
mortgage backed security (RMBS) notes issued by Banco Bilbo
Vizcaya's BBVA RMBS II Trust, which were downgraded by Fitch on
May 17, 2013 to 'BBsf' with a Negative Outlook from 'BBBsf', on
Rating Watch Negative. For more information please see Fitch's
rating action commentary entitled 'Fitch Takes Rating Actions on
80 Spanish RMBS' dated May 17, 2013.

Fitch has taken the following rating actions:

Currus XIV Limited
-- EUR166,400,000 senior facility downgraded to 'BBsf' from
   'BBBsf'; Outlook Negative;

-- EUR2,133,333 subordinated B1 facility downgraded to 'BBsf'
   from 'BBBsf'; Outlook Negative;

-- EUR2,133,333 subordinated B2 facility downgraded to 'BBsf'
   from 'BBBsf'; Outlook Negative;

Currus XV Limited
-- EUR166,400,000 senior facility downgraded to 'BBsf' from
   'BBBsf'; Outlook Negative;

-- EUR2,133,333 subordinated B1 facility downgraded to 'BBsf'
   from 'BBBsf'; Outlook Negative;

-- EUR2,133,333 subordinated B2 facility downgraded to 'BBsf'
   from 'BBBsf'; Outlook Negative;

Currus XVI Limited
-- EUR166,400,000 senior facility downgraded to 'BBsf' from
   'BBBsf'; Outlook Negative;

-- EUR2,133,333 subordinated B1 facility downgraded to 'BBsf'
   from 'BBBsf'; Outlook Negative;

-- EUR2,133,333 subordinated B2 facility downgraded to 'BBsf'
   from 'BBBsf'; Outlook Negative.


MIXTO V: Moody's Cuts Rating on EUR13.4M Class C Notes to Caa3
--------------------------------------------------------------
Moody's Investors Service downgraded the ratings of one senior
and six junior notes in four Spanish residential mortgage-backed
securities transactions: AyT Hipotecario Mixto IV, FTA; AyT
Hipotecario Mixto V, FTA; TDA 12, FTH and TDA 13 Mixto, FTA.
Insufficiency of credit enhancement to address sovereign risk,
revision of collateral assumptions and exposure to counterparty
risk have prompted the downgrade action.

The rating action concludes the review of four notes placed on
review on July 2, 2012, following Moody's downgrade of Spanish
government bond ratings to Baa3 from A3 on June 2012. The rating
action also concludes the review of three notes placed on review
on November 23, 2012.

Ratings Rationale

The rating action primarily reflects the insufficiency of credit
enhancement to address sovereign risk and, in the case of AyT
Hipotecario Mixto V, the revision of key collateral assumptions.
In the case of TDA 13 mixto tranche B1, it also reflects exposure
to servicers acting as collection account banks; servicers in
this transaction transfer collections to the Issuer Account Bank
(held by Barclays Bank PLC (A2/P-1)) on a monthly basis.

The determination of the applicable credit enhancement driving
these rating actions reflects the introduction of additional
factors in Moody's analysis to better measure the impact of
sovereign risk on structured finance transactions.

Additional Factors Better Reflect Increased Sovereign Risk

Moody's has supplemented its analysis to determine the loss
distribution of securitized portfolios with two additional
factors, the maximum achievable rating in a given country (the
local currency country risk ceiling) and the applicable portfolio
credit enhancement for this rating. With the introduction of
these additional factors, Moody's intends to better reflect
increased sovereign risk in its quantitative analysis, in
particular for mezzanine and junior tranches.

The Spanish country ceiling, and therefore the maximum rating
that Moody's will assign to a domestic Spanish issuer including
structured finance transactions backed by Spanish receivables, is
A3. Moody's Individual Loan Analysis Credit Enhancement (MILAN
CE) represents the required credit enhancement under the senior
tranche for it to achieve the country ceiling. By lowering the
maximum achievable rating for a given MILAN, the revised
methodology alters the loss distribution curve and implies an
increased probability of high loss scenarios.

Moody's has revised collateral assumptions for Ayt Hipotecario
Mixto V and has maintained current assumptions in the other
transactions. Expected loss assumptions as a percentage of
original pool balance remain at 0.63% for AyT Hipotecario Mixto
IV; 0.45% for TDA 12; 0.44% for subpool 1 of TDA 13 mixto and
0.67% for subpool 2 of TDA 13 Mixto. Moody's increased expected
loss from 1.4% to 2.4% for AyT Hipotecario Mixto V. The MILAN CE
assumptions remain at 10% for AyT Hipotecario Mixto IV, TDA 12
and subpool 1 of TDA 13 mixto; at 12.5% for subpool 2 of TDA 13
Mixto and 15% for AyT Hipotecario Mixto V.

Exposure to Counterparty Risk

The conclusion of Moody's rating review takes into consideration
the exposure to the relevant servicers acting as collection
account banks for the four transactions. Treasury Accounts are
held by Barclays Bank PLC for all deals and TDA 12 Reinvestment
Account is also held by Barclays Bank PLC. Sweeping is weekly in
the case of AyT Hipotecario Mixto IV and V and monthly in the
case of TDA 12 and TDA 13. Exposure to servicers acting as
collection account banks is one of drivers in the downgrade of
class B1 in TDA 13 Mixto.

As part of its analysis Moody's also assessed the exposure to
BBVA (Baa3/P-3) and CECABank (Ba1 DNG/NP) as swap counterparties
for AyT Hipotecario Mixto IV and AyT Hipotecario Mixto V
respectively. The revised ratings of the notes, are not
negatively affected by this exposure.

Other Developments May Negatively Affect the Notes

In consideration of Moody's new adjustments, any further
sovereign downgrade would negatively affect structured finance
ratings through the application of the country ceiling or maximum
achievable rating, as well as potentially increased portfolio
credit enhancement requirements for a given rating.

As the euro area crisis continues, the ratings of structured
finance notes remain exposed to the uncertainties of credit
conditions in the general economy. The deteriorating
creditworthiness of euro area sovereigns as well as the weakening
credit profile of the global banking sector could further
negatively affect the ratings of the notes.

The methodologies used in these ratings were Moody's Approach to
Rating RMBS Using the MILAN Framework published in March 2013,
and The Temporary Use of Cash in Structured Finance Transactions:
Eligible Investment and Bank Guidelines published in March 2013.

Moody's describes additional factors that may affect the ratings
in "Approach to Assessing Linkage to Swap Counterparties in
Structured Finance Cashflow Transactions: Request for Comment".

Moody's used its cash flow model, ABSROM, to determine the loss
for each tranche. The cash flow model evaluates all default
scenarios that are then weighted considering the probabilities of
the lognormal distribution assumed for the portfolio default
rate. In each default scenario, Moody's calculates the
corresponding loss for each class of notes given the incoming
cash flows from the assets and the outgoing payments to third
parties and note holders. Therefore, the expected loss for each
tranche is the sum product of (1) the probability of occurrence
of each default scenario and (2) the loss derived from the cash
flow model in each default scenario for each tranche.

As such, Moody's analysis encompasses the assessment of stressed
scenarios.

In the context of the rating review, the transactions have been
remodeled and some inputs have been adjusted to reflect the new
approach. In addition, the following have been corrected during
the review: Class A and B margins and PDL mechanism were
corrected for AyT Hipotecario Mixto IV; one of the triggers
switching the priority of payments and one of the triggers for
reserve fund amortization were corrected for AyT Hipotecario
Mixto V.

List Of Affected Ratings

Issuer: AYT HIPOTECARIO MIXTO IV

EUR20.1M B Notes, Downgraded to Ba1 (sf); previously on Jul 2,
2012 Baa2 (sf) Placed Under Review for Possible Downgrade

Issuer: AyT HIPOTECARIO MIXTO V

EUR649.4M A Notes, Downgraded to Baa3 (sf); previously on Nov 23,
2012 Downgraded to Baa1 (sf) and Remained On Review for Possible
Downgrade

EUR12.2M B Notes, Downgraded to B3 (sf); previously on Jul 2,
2012 Ba2 (sf) Placed Under Review for Possible Downgrade

EUR13.4M C Notes, Downgraded to Caa3 (sf); previously on Jul 2,
2012 B3 (sf) Placed Under Review for Possible Downgrade

Issuer: TDA 12 Bonos de Titulizacion Hipotecaria

EUR20.6M B Notes, Downgraded to Baa1 (sf); previously on Jul 2,
2012 Downgraded to A3 (sf) and Placed Under Review for Possible
Downgrade

Issuer: TDA 13-MIXTO

EUR12M B1 Notes, Downgraded to Baa3 (sf); previously on Nov 23,
2012 Downgraded to Baa1 (sf) and Remained On Review for Possible
Downgrade

EUR5.4M B2 Notes, Downgraded to Ba1 (sf); previously on Nov 23,
2012 Downgraded to Baa1 (sf) and Remained On Review for Possible
Downgrade


TDA TARRAGONA: Moody's Cuts Rating on EUR11.9MM C Notes to Caa3
---------------------------------------------------------------
Moody's Investors Service downgraded the ratings of two senior
and two junior notes and confirmed the ratings of one junior note
in three Spanish residential mortgage-backed securities (RMBS)
transactions: Foncaixa Consumo 1, FTA, TDA Tarragona 1, FTA and
Unicaja Andalucia FTVivienda TDA 1, FTA. Insufficiency of credit
enhancement to address sovereign risk, deterioration in
collateral performance and exposure to issuer account bank
prompted these downgrades.

The rating action concludes the review of one note placed on
review on July 2, 2012, following Moody's downgrade of Spanish
government bond ratings to Baa3 from A3 on June 13, 2012. This
rating action also concludes the review of four notes placed on
review on November 23, 2012, following Moody's revision of key
collateral assumptions for the entire Spanish RMBS market.

Ratings Rationale:

These downgrades reflect primarily the insufficiency of credit
enhancement to address sovereign risk. Furthermore, Moody's took
into consideration the exposure to Unicaja Banco (Ba1 under
review for downgrade/NP) acting as issuer account bank in Unicaja
Andalucia FTVivienda TDA 1, FTA as well as the deterioration in
collateral performance in the underlying portfolio of TDA
Tarragona 1, FTA. Moody's confirmed the ratings of the junior
notes in Foncaixa Consumo 1, FTA due to sufficient credit
enhancement and enough protection from structural features
against sovereign and counterparty risk.

The determination of the applicable credit enhancement that
drives these rating actions reflects the introduction of
additional factors in Moody's analysis to better measure the
impact of sovereign risk on structured finance transactions.

Additional Factors Better Reflect Increased Sovereign Risk

Moody's has supplemented its analysis to determine the loss
distribution of securitized portfolios with two additional
factors, the maximum achievable rating in a given country (the
Local Currency Country Risk Ceiling) and the applicable portfolio
credit enhancement for this rating. With the introduction of
these additional factors, Moody's intends to better reflect
increased sovereign risk in its quantitative analysis, in
particular for mezzanine and junior tranches.

The Spanish country ceiling, and therefore the maximum rating
that Moody's will assign to a domestic Spanish issuer including
structured finance transactions backed by Spanish receivables, is
A3. Moody's Individual Loan Analysis Credit Enhancement (MILAN
CE) represents the required credit enhancement under the senior
tranche for it to achieve the country ceiling. By lowering the
maximum achievable rating for a given MILAN, the revised
methodology alters the loss distribution curve and implies an
increased probability of high loss scenarios.

Revision of Key Collateral Assumptions

Moody's has increased its lifetime expected loss (EL) assumption
in TDA Tarragona 1, FTA to 9% from 7.7%. The revision follows
further deterioration in collateral performance with loans in
arrears more than 90 days standing at 5.59% in March 2013, which
constitutes a significant increase from 4.08% in September 2012.
In the same period cumulative defaults on original balance,
measured as loans more than 12 months in arrears, climbed to
7.05% from 5.69%. As a result of this the current level of the
reserve fund dropped to EUR 0.2 million or 1.4% of the reserve
fund's target balance as of March 2013 from EUR 4 million or 30%
of its target balance in September 2012.

At the same time Moody's has maintained the EL assumptions in
Foncaixa Consumo 1, FTA and Unicaja Andalucia FTVivienda TDA 1,
FTA at 2.80% and 4.00% respectively.

During its review Moody's also reassessed the MILAN CE
assumptions of the transactions underlying portfolios based on
available loan-by-information. As a result Moody's increased the
MILAN CE in TDA Tarragona 1, FTA to 23.10% from 20.20%. Moody's
has maintained the MILAN CE assumption in Foncaixa Consumo 1, FTA
and Unicaja Andalucia FTVivienda TDA 1, FTA at 16.30% and 13.30%
respectively.

Exposure to Counterparty

Moody's rating review has taken into consideration the exposure
to Unicaja Banco acting as issuer account bank and swap
counterparty in Unicaja Andalucia FTVivienda TDA 1, FTA. Moody's
concluded that the transaction's exposure to Unicaja Banco in its
role as issuer account bank has a negative effect on the
outstanding ratings as the reserve fund is the only source of
hard credit enhancement in the structure and a main provider of
liquidity. In Moody's view the negative impact on the liquidity
profile of the transaction is partially mitigated by the class
A2(G)'s guarantee provided by the Regional Government of
Andalusia (Ba2). Moody's also concluded that the transaction's
exposure to Unicaja Banco in its role as swap counterparty is not
negatively impacting the current ratings. Moody's also analyzed
the exposure to Banco Santander S.A. (Spain) (Baa2/P-2) acting as
issuer account bank and to CECABANK S.A. (Ba1 under review for
downgrade/NP) acting as swap counterparty in TDA Tarragona 1,
FTA. Moody's concluded that these risks do not have a negative
impact on the outstanding ratings.

Other Developments May Negatively Affect the Notes

In consideration of Moody's new adjustments, any further
sovereign downgrade would negatively affect structured finance
ratings through the application of the country ceiling or maximum
achievable rating, as well as potentially increase portfolio
credit enhancement requirements for a given rating.

As the euro area crisis continues, the ratings of structured
finance notes remain exposed to the uncertainties of credit
conditions in the general economy. The deteriorating
creditworthiness of euro area sovereigns as well as the weakening
credit profile of the global banking sector could further
negatively affect the ratings of the notes.

Moody's describes additional factors that may affect the ratings
in "Approach to Assessing Linkage to Swap Counterparties in
Structured Finance Cashflow Transactions: Request for Comment".

The methodologies used in these ratings were Moody's Approach to
Rating RMBS Using the MILAN Framework published in March 2013 and
The Temporary Use of Cash in Structured Finance Transactions:
Eligible Investment and Bank Guidelines published in March 2013.

In reviewing these transactions, Moody's used ABSROM to model the
cash flows and determine the loss for each tranche. The cash flow
model evaluates all default scenarios that are then weighted
considering the probabilities of the lognormal distribution
assumed for the portfolio default rate. In each default scenario,
the corresponding loss for each class of notes is calculated
given the incoming cash flows from the assets and the outgoing
payments to third parties and noteholders. Therefore, the
expected loss or EL for each tranche is the sum product of (i)
the probability of occurrence of each default scenario; and (ii)
the loss derived from the cash flow model in each default
scenario for each tranche.

As such, Moody's analysis encompasses the assessment of stressed
scenarios.

In the context of the rating review, the transactions have been
remodeled and some inputs have been adjusted to reflect the new
approach.

List of Affected Ratings:

Issuer: Foncaixa Consumo 1, FTA

EUR462M B Notes, Confirmed at Ba3 (sf); previously on Jul 2, 2012
Ba3 (sf) Placed Under Review for Possible Downgrade

Issuer: TDA TARRAGONA 1

EUR359.7M A Notes, Downgraded to Ba3 (sf); previously on Nov 23,
2012 Downgraded to Baa1 (sf) and Remained On Review for Possible
Downgrade

EUR11.1M B Notes, Downgraded to Caa2 (sf); previously on Nov 23,
2012 Downgraded to B1 (sf) and Remained On Review for Possible
Downgrade

EUR11.9M C Notes, Downgraded to Caa3 (sf); previously on Nov 23,
2012 Downgraded to Caa1 (sf) and Remained On Review for Possible
Downgrade

Issuer: Unicaja Andalucia FTVivienda TDA 1, FTA

EUR160M A2(G) Notes, Downgraded to Baa2 (sf); previously on Nov
23, 2012 Downgraded to Baa1 (sf) and Remained On Review for
Possible Downgrade


* SPAIN: Restructured Loan Provisions May Hit Bank Earnings
-----------------------------------------------------------
Additional loan-impairment charges from a review of Spanish
banks' restructured loans could cause a further dent to earnings
which are already feeble, Fitch Ratings says. This could
ultimately filter through to capital, and leave some thinly
capitalized banks vulnerable to downward ratings pressure.

"We expect the standardization of the way in which restructured
loans are classified to enhance comparability of asset quality on
banks' balance sheets. The amounts, categorization and
provisioning of restructured loans should be more reflective of
the risks and business model differences between banks than of
accounting discrepancies, once all the central bank's guidelines
are implemented," Fitch says.

"The exercise is likely to lead to some loans which are currently
treated as "normal" and "substandard" to be downgraded in their
classifications -- a shift that would be likely to increase bank
provisions. Restructured loans for the Spanish banks rated by
Fitch totaled close to EUR190 billion at end-2012. Of these, 43%
were "normal", 21% were "substandard", and 36% were "doubtful"
loans already treated as non-performing.

"Potential additional provisions are difficult to estimate
because of the heterogeneous treatment of restructured loans by
different banks. There are stark differences between the level of
provisions that individual entities have made on their
restructured loans, so the sector coverage of doubtful loans at
around 40% and substandard loans at around 15% cannot be broadly
applied.

"However, assuming that a large portion of normal loans become
substandard and are provisioned to the end-2012 level, this would
potentially result in more than EUR10 billion of additional
provisions. "If some were to become doubtful loans and require
higher impairment coverage, then the potential for further
charges would be even higher.

"It is possible that generic provisions taken in 2012 are
available to absorb some of the likely new provisions, and for
some doubtful or substandard loans to return to normal, although
we do not expect these to significantly offset possible new
charges from this review. For some banks, additional provisioning
requirements may exceed net profit, and this would erode their
capital and credit profiles."

On April 30, the Bank of Spain published new guidance for
classifying restructured loans. Lenders have to classify these as
substandard unless there are specific circumstances that justify
a normal or doubtful treatment. Normal loans have to be reviewed
every six months. This is important in light of the weak
macroeconomic conditions that may cause a borrower's temporary
difficulties in servicing a loan to develop into longer-term
issues. Banks have until September 30 to review their loan books
and adopt the approach.



===========
T U R K E Y
===========


ORDU YARDIMLASMA: Moody's Reviews Ba1 Corp. Ratings for Upgrade
---------------------------------------------------------------
Moody's Investors Service placed the Ba1 foreign and domestic
long-term Corporate Family Ratings and the Ba1-PD Probability of
Default Rating for Ordu Yardimlasma Kurumu ("Oyak") on review for
upgrade.

Ratings Rationale:

Moody's has placed ratings on review for upgrade following the
upgrade of Turkey's sovereign debt rating to assess how the
improvement in its forward-looking view of Turkey's macroeconomic
and business environment impacts Oyak's risk profile in
conjunction with the completion of Moody's ongoing annual review.

During the review period Moody's will also assess whether the
cyclical component of its investments that are concentrated in
the steel, building material, automotive and chemical industries
as well as the exposure to the Turkish market can withstand
volatility so that the market-value leverage (MVL) remains
sustainably below 25%.

Oyak's credit profile remains strong as evidenced by year-end MVL
of 25%, cash coverage in excess of 200 times and strong adjusted
liquidity ratio given the absence of short-term debt. The pension
fund's investments are exposed to the Turkish market, cyclical
industries and the three largest investments make up almost two
thirds of the portfolio's value.

The principal methodology used in this rating was the Global
Investment Holding Companies published in October 2007.

Ordu Yardimlasma Kurumu, based in Ankara, Turkey, is the private
top-up pension fund of the Turkish Military personnel, governed
by its own law and run by professionals. As a mutual assistance
organization, its purpose is to provide permanent members with
retirement, death, disability and pension benefits, and to make
personal loans; and to provide temporary members with death and
disability benefits. Oyak functions as an additional pillar to
the pension provided by the state and its pension payments are
not intended to substitute the basic state pension provision.


OYAK: S&P Raises Corporate Credit Rating From 'BB+'
---------------------------------------------------
Standard & Poor's Ratings Services said it raised its long-term
corporate credit rating on Turkey-based pension fund OYAK (Ordu
Yardimlasma Kurumu) to 'BBB-' from 'BB+'.  At the same time, S&P
raised the short-term corporate credit rating on OYAK to 'A-3'
from 'B'.  The outlook is stable.

In addition, S&P raised the long-term Turkish national scale
rating on OYAK to 'trAAA' from 'trAA+', and affirmed the short-
term Turkish national scale rating at 'trA-1'.

The rating action reflects OYAK's continuing track record of
negligible gross debt, conservative financial policy, and
substantial cash balances.  Improved domestic macroeconomic
conditions--as shown by the upgrade of the Republic of Turkey's
sovereign credit rating--are a supporting feature.

Historically, the long-term rating on OYAK was higher than S&P's
long-term foreign currency rating on Turkey and lower than S&P's
transfer and convertibility (T&C) assessment for the country.
S&P's recent upgrade of Turkey raised the long-term foreign
currency rating to 'BB+' and the T&C assessment to 'BBB'.  OYAK's
equity portfolio, which is predominantly invested in Turkish
entities, likewise benefits from this view of reduced country-
specific risks.

S&P believes there is a high likelihood that OYAK could withstand
a sovereign default.  As a consequence, the foreign currency
rating on Turkey is not a cap on OYAK's 'BBB-' rating.  In S&P's
view, the fund has sufficient financial and operational
flexibility to deal with the indirect sovereign risk, given its
strong balance sheet with negligible gross debt, significant bank
deposits outside Turkey, diversity of its holdings, and the low
reliance of its subsidiaries on the public sector.  OYAK has some
holdings with export markets, such as cars and steel, and others
with operations in industries that run on steady demand, like
energy.

OYAK is the largest privately owned supplementary pension
provider for military personnel in Turkey.  S&P understands that
the beneficiaries participate in profits and losses of OYAK's
investments and that OYAK does not bear actuarial risk.  It has
about 270,000 members and investments in more than 20 subsidiary
companies.  S&P assess OYAK's management and governance as
"strong" under its criteria, given the close supervision of its
board of directors and of its general assembly (representative
body of members) over operations and investment decisions.

S&P assess OYAK's business risk profile as "fair" and its
financial risk profile as "modest."

The stable outlook reflects Standard & Poor's view that OYAK will
likely maintain a healthy liquidity position and keep leverage
moderate, through the use of equity partnerships and nonrecourse
debt at the subsidiary level.  Given the company's pension
distribution requirements, S&P considers a maximum ratio of net
debt to the market value of OYAK's investment portfolio of well
below 10% to be commensurate with the current rating.

A positive rating action on OYAK would likely depend upon a more
favorable evaluation of its business risk profile, with emphasis
on asset liquidity and asset quality, coupled with further
improvement in Turkey's foreign currency sovereign rating.

Deteriorating Turkish macroeconomic conditions, signs of
increasing operating and financial risks in invested companies,
or sizable, debt-financed acquisitions impairing the fund's
balance sheet--which S&P do not envisage--might lead S&P to
consider a negative rating action on OYAK.



=============
U K R A I N E
=============


AVANGARDCO INVESTMENTS: Fitch Upgrades Local Currency IDR to 'B+'
-----------------------------------------------------------------
Fitch Ratings has upgraded Avangardco Investments Public
Limited's (Avangardco) Long-term local currency Issuer Default
Rating (IDR) to 'B+' from 'B' and the National Long-term Rating
to 'AA+(ukr)' from 'A+(ukr)'. These ratings have been removed
from Rating Watch Positive (RWP). They were placed on RWP on
March 12, 2013 following the expectation of increased legal
linkages with its parent company, UkrLandFarming PLC (ULF) which
has a local currency IDR of 'B+' and a foreign currency IDR of
'B'. The Foreign Currency IDR and the Senior Unsecured Rating for
the US$200 million 2015 notes have been affirmed at 'B' and
'B'/RR4, respectively. The Outlooks for all ratings are Stable.

These rating actions follow the recent placement of a total of
US$425 million of notes by ULF to which Avangardco's key
operating subsidiaries provide an unconditional and irrevocable
suretyship on a joint and several basis. Such legal ties add to
the cross-default clauses already in place. Although Avangardco's
bondholders do not benefit from a parent guarantee, this is
mitigated by the stronger financial standing of Avangardco and a
diminishing refinancing risk of its own Eurobond due in October
2015. The ratings are predicated upon ULF's commitment to respect
Avangardco's bondholders and minority shareholders' rights.

KEY RATING DRIVERS

Local currency IDR equalized with its parent's
Aside from the increased legal linkages, strategic ties are
expected to remain strong, with Avangardco providing ULF
substantial revenue and profit diversification, being an integral
part to ULF's strategy of increasing its presence across the
agricultural value chain. Fitch acknowledges that Avangardco's
management teams and treasury functions remain separated from ULF
and that trading relations between the two companies are limited.

Standalone profile consistent with a 'B+' local currency rating
On a standalone basis, Avangardco's local currency IDR also
supports a 'B+' rating in our view reflecting its scale and
leading market position supported by its low leverage. Further
scope for an upgrade of Avangardco's local currency IDR would
however only be driven by ULF's rating level and is ultimately
dependant on ULF and Avangardco's efforts to embrace greater
transparency and adherence to high-standard corporate governance
practices.

Improving financial flexibility
Despite Avangardco's recent high capex related to Avis,
Chornobaivske, and Imperovo Foods Fitch expects declining capex
from 2013 and hence funds from operations (FFO) adjusted gross
leverage to decline gradually towards 1.1x by end-2014 from 1.4x
in 2012. Although Avangardco may decide to instate a dividend
policy as free cash flow (FCF) turns positive, the current
ratings do not assume a substantial dividend pay-out until the
company accumulates sufficient resources to repay its Eurobond
due in October 2015.

Weak diversification, strong market positions
Limited diversification beyond its two main product lines of eggs
and egg products weighs negatively on Avangardco's business risk
profile. This is driven by limited scope for further organic
growth in Ukraine where Avangardco holds leading market positions
and per capita consumption of eggs is one of the highest in the
world along with exposure to health scares associated with birds
and thus eggs or poultry production.

Exports critical to strategy
In 2012 exports represented 20% of group sales, approximately
US$128 million. Avangardco is somewhat reliant on export markets
to channel increased expected egg production due to the limited
upside in Ukraine. The main export markets remain North Africa,
the Middle East and Asia; however there are opportunities from
the EU's recent decision to open its egg and poultry market to
imports from Ukraine (albeit subject to import tariffs). This
should contribute to the group's focus on exports and greater
diversification of sales by channel and destination.

High profitability under pressure
Avangardco reported a strong EBITDA margin in 2012 of 39.8%, only
100bp lower than 2011 despite high grain prices reflecting the
group's early purchasing of grain, partnerships with local
farmers and adequate pricing power. High prices of corn and
oilseeds, if combined with failure to channel additional
production capacity externally could create overcapacity in the
domestic egg market and downward price pressure causing some
erosion of profit margins especially after 2014.

Limited impact from guarantee to ULF on Avangardco's bondholders
Previously Fitch had stated that Avangardco's low leverage, with
low secured debt, and an expanding asset base were reflected in
high recovery prospects for bondholders. Fitch estimates that,
even including the burden of the new guarantee (estimated for the
total amount of USD425m including the tap issue amount) as a
contingent liability, net debt to EBITDA would be 2.3x, below
Avangardco's debt incurrence maximum leverage test of 3x. Fitch
expects above-average recovery prospects for unsecured creditors
at Avangardco level, albeit capped at 'RR4' (31%-50%) for the
Ukraine jurisdiction, hence the affirmation of the foreign
currency senior unsecured rating at 'B'.

RATING SENSITIVITIES

Negative: Future developments that could lead to negative rating
action include:

-- FFO adjusted leverage (gross) to 3.0x (both for ULF and
   Avangardco) on a continuing basis

-- FFO fixed charge cover weakening below 4x

-- Diminishing liquidity cushion ahead of the maturity of its
   Eurobond due in October 2015 or evidence of weaker linkages
   with ULF or higher than expected dividends paid.

Positive: While Avangardco's business risk profile would not lend
itself to a higher rating on a standalone basis, future
developments that could lead to a positive rating action are
inherently linked to its parent company assuming either greater
linkages with (or full integration of Avangardco into) ULF:

-- Group consolidated FFO margin above 30%

-- Expansion plan funded mainly by internal cash flows

-- Group consolidated FFO adjusted leverage (gross) below 1.5x
   on a continuing basis

-- Stronger corporate governance practices (and unwinding of
   transactions with related-party banks) at group level.

An upgrade of the foreign currency IDR would be possible only if
the Country Ceiling for Ukraine was upgraded (currently 'B').



===========================
U N I T E D   K I N G D O M
===========================


DUNFERMLINE ATHLETIC: Pars United Launches Takeover Bid
-------------------------------------------------------
BBC News reports that the Pars United community group has
launched its bid to buy administration-hit Dunfermline Athletic.

The campaign hopes to raise "a minimum of GBP500,000" before the
end of July and to establish fan ownership of the club, BBC
discloses.

The financially-troubled Fifers were docked 15 points for
entering administration in April and forced to jettison several
first-team players, BBC recounts.  They were subsequently
relegated to Division Two after a losing play-off final with
Alloa, BBC notes.

According to BBC, Pars United brought together board members,
players, staff, supporters, sponsors and debtors in an effort to
stop the club going into liquidation after facing a winding-up
order over a GBP132,000 tax bill.

The club is now being run by administrator Bryan Jackson, who
hopes to establish a company voluntary arrangement with creditors
before August to prevent the club incurring more football
penalties for next season, BBC says.

According to BBC, Pars United say that "all capital raised will
be held in secure trust accounts to allow the money to be repaid
to those pledging support if a CVA is not successful".

Dunfermline Athletic Football Club is a Scottish football team
based in Dunfermline, Fife, commonly known as just Dunfermline.


FARRELLY (M&E): Butcher Woods Appointed as Administrator
--------------------------------------------------------
The BusinessDesk reports that administrators from Birmingham-
based Butcher Woods have been appointed to a Sutton Coldfield
building services contractor.

Farrelly (M&E) Building Services Ltd lapsed into administration
earlier this month, according to The BusinessDesk.

The report relates that the company, which has been trading since
1995, has carried out work for clients including Asda and Hilton
hotels.  The report relays that it has also completed work for
the RAF through a framework agreement with the Ministry of
Defence.

Since 1995, Farrelly (M&E) Building Services Ltd has provided a
diverse port.


MORPHEUS EUROPEAN: Fitch Affirms 'CCC' Rating on Class E Notes
--------------------------------------------------------------
Fitch Ratings has affirmed Morpheus (European Loan Conduit No.
19) plc's floating rates notes due 2029 as follows:

GBP17.3m class B (XS0198458266) affirmed at 'AA+'; Outlook
Positive

GBP15.3m class C (XS0198459157) affirmed at 'A+'; Outlook Stable

GBP11.3m class D affirmed at 'BBB-sf'; Outlook Stable

GBP7m class E affirmed at 'CCCsf'; Recovery Estimate 90%

KEY RATING DRIVERS

The affirmations reflect the stable performance of the remaining
70 UK commercial loans. The Positive Outlook for the class B
notes is supported by commencement of sequential principal
allocation in February 2013, when the note balance fell below 10%
of that at closing. With class A notes repaid in full in May
2013, all principal is being used to repay the class B notes.
GBP2.2 million of class E principal has been repaid via excess
spread since closing, creating overcollateralization. This was
sufficient to absorb a loan level loss in October 2010, although
only GBP1.4 million is left to absorb further losses, which
explains the distressed rating of the class E notes.

The weighted average (WA) loan-to-value ratio (LTV) of the
portfolio marginally improved, falling to 53.2% in February 2013
from 55.5% one year previously, which reflects that the majority
of loans are amortizing. Although there have been only a few
revaluations since closing (predominantly on underperforming
loans), reported LTVs do offer a sense of the leverage of the
pool as a whole. This is because despite steep value declines
suffered in secondary UK commercial property since 2007, most of
the collateral was valued prior to closing (which was in 2004),
and as such do not reflect the strong growth in values prior to
the financial crisis.

The WA interest and debt service coverage ratios (ICR and DSCR)
are healthy. The 11.3x and 5.4x levels, respectively, reported in
February 2013 overstate the health of borrowers, however.
Stripping out a temporary coverage spike for the largest loan
(resulting from an asset sale and the timing of interest payments
on the reduced loan balance), Fitch estimates ICR and DSCR at
around 6.5x and 3.5x, respectively -- levels that still
understate leverage given the floating interest rate basis of
most loans.

The portfolio is secured by industrial (21.6% of the aggregate
market value), retail (27.2%), office (24.2%), residential
(15.7%) and mixed-use (11.3%) property. The vacancy rate has
remained almost unchanged at 10.7% since the last rating action
in June 2012. Due to loans redeeming, the current portfolio is
less granular than at closing, and the five largest loans now
account for around 40% of the portfolio, almost twice the
concentration measured at closing. However, this is offset by the
less levered capital structure financing the pool.

The largest loan, the GBP8 million MS Acquired Loan No 9 (15% of
the pool), is secured on two office/retail assets located in
London. A third asset was sold in 2012, redeeming GBP4.9 million
of principal. The reported LTV, albeit based on a 2004 valuation,
is a modest 61.4%. The collateral is fully let to seven tenants
on an average remaining lease term of 8.7 years. Fitch does not
expect a loss from this loan when it matures in just over two
years.

A handful of loans with insufficient interest cover are being
kept afloat by the borrowers, reflecting the overall strong
commitment of borrowers to their loans. This is reinforced by
there being only one loan currently in special servicing -- the
GBP0.6 million MS Acquired Loan No 303. In this case the last
property was sold in March 2013, although loan redemption has
been delayed by the administration of the receiver's law firm
(holding back the sales proceeds). The special servicer expects
the issuer to receive all due amounts once the administrator has
reconciled its accounts.

Fitch notes that for several loans, there is still considerable
term remaining, which extends the risk horizon beyond that
typically observed in EMEA CMBS. Therefore, while current credit
indicators are strong and improving, the ratings must take into
account the prolonged exposure to potential deterioration in
financial conditions or in the quality of property, as well as
the risk of idiosyncratic losses from a pool containing a high
number of loans.

Rating Sensitivities

The ratings may be affected upon a sharp increase in loan
defaults, especially involving the larger of the remaining loans.
Interest rate risk contributes to this sensitivity given the
prevalence of floating rate loans.


MORPHEUS PLC: S&P Cuts Rating on Class D Subordinate Loan to 'D'
----------------------------------------------------------------
Standard & Poor's Ratings Services took various credit rating
actions in Morpheus (European Loan Conduit No. 19) PLC.

Specifically, S&P has:

   -- Withdrawn its 'A (sf)' rating on the class A notes;

   -- Affirmed and removed from CreditWatch negative its 'A (sf)'
      ratings on the class B and C notes;

   -- Lowered to 'D (sf)' from 'CCC- (sf)' its rating on the
      class D subordinate loan; and

   -- Affirmed its 'D (sf)' rating on the class E subordinate
      loan.

The rating actions reflects S&P's opinion of cash flow
disruptions in the transaction.  S&P has reviewed the underlying
loans and has applied its updated European commercial mortgage-
backed securities (CMBS) criteria.

On Dec. 6, 2012, S&P placed on CreditWatch negative its ratings
on the class A, B, and C notes following the update to its
European CMBS criteria.

The portfolio comprises 70 loans (down from 419 at closing),
backed by 163 properties (down from 852 at closing).  The
properties are U.K. retail, industrial, office, and residential
buildings, mainly in London (54%).  The majority of the loans
amortize during the loan term.

The note balance has paid down by 91% since closing and the May
2013 cash manager report states that the class A notes have been
repaid in full.

                        INTEREST SHORTFALLS

According to the May 2013 cash manager report, the class D and E
subordinate loans have continued to suffer interest shortfalls.
This is due to the weighted-average loan margin on the loans
being insufficient to pay the weighted-average interest rate
payable on the notes.

In this transaction, the class D and E subordinate loans are
subject to an available funds cap (AFC).  The AFC reduces
interest payable to these two subordinate loans to the amount of
cash available (after servicing the senior classes of notes), if
the mismatch results from loan repayments.  However, the
difference between the interest due and the interest payable is
deferred instead of being extinguished.  Therefore, because S&P's
ratings address timely payment of interest, it has not given
credit to the AFC in its analysis.

A rise in interest shortfall levels is, in S&P's view, unlikely
to affect its ratings on the class A, B, and C notes.  This is
because the liquidity facility is available to mitigate potential
cash flow disruptions on these classes of notes.

                          RATING ACTIONS

S&P's ratings address timely payment of interest, payable
quarterly in arrears, and payment of principal not later than the
November 2029 legal final maturity date.

S&P has lowered to 'D (sf)' from 'CCC- (sf)' its rating on the
class D subordinate loan and has affirmed its 'D (sf)' rating on
the class E subordinate loan because they continue to accrue
unpaid interest.

Under S&P's updated European CMBS criteria, it has assigned an
S&P Value to each loan, which reflects S&P's assessment of
recoveries following a default of all loans in the portfolio.

S&P's analysis indicates that the amount of available credit
enhancement for the class B and C notes is sufficient to maintain
their current ratings.  Therefore, S&P has affirmed and removed
from CreditWatch negative its ratings on the class B and C notes.

S&P has withdrawn its 'A (sf)' rating on the class A notes
following their redemption in full.

Morpheus (European Loan Conduit No. 19) is a 2004 vintage CMBS
transaction that is currently backed by 70 small loans secured on
mainly U.K. commercial real estate.

          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

Morpheus (European Loan Conduit No. 19) PLC
GBP581.883 Million Commercial Mortgage-Backed Floating-Rate Notes
And
Subordinated Loans

Rating Withdrawn

A                  NR            A (sf)/Watch Neg

Ratings Affirmed and Removed From CreditWatch Negative

B                  A (sf)        A (sf)/Watch Neg
C                  A (sf)        A (sf)/Watch Neg

Rating Lowered

D Loan             D (sf)        CCC- (sf)

Rating Affirmed

E Loan             D (sf)


TRITON PLC: S&P Lowers Ratings on Two Note Classes to 'B'
---------------------------------------------------------
Standard & Poor's Ratings Services lowered and removed from
CreditWatch with negative implications its credit ratings on the
class B, C, D, E, and F notes in Triton (European Loan Conduit
No. 26) PLC.  S&P has also affirmed the ratings on the class A1
and A2 notes.

The rating actions follows S&P's review of the loan pools and the
application of its updated European commercial mortgage-backed
securities (CMBS) criteria.

On Dec. 6, 2012, S&P placed on CreditWatch negative its ratings
on Triton's class B, C, D, E, and F notes following an update to
its criteria for rating European CMBS transactions.

    THE ACCESS PORTFOLIO LOAN (85% OF THE POOL BY LOAN BALANCE)

The largest remaining loan in the transaction is the Access
Portfolio Loan which represents 85% of the current securitized
pool and is secured by a portfolio of self-storage properties
located throughout the U.K.  This is a fixed-rate loan of
GBP158.4 million, originated in January 2007 and maturing in
October 2013.  The whole loan was split into a senior portion of
GBP158.4 million and a B-note of GBP25.0 million.  Only the
senior portion was securitized.  The whole loan is interest-only
during its term.

In April 2013, the servicer reported a securitized loan-to-value
(LTV) ratio of 60.43%.  However, this is still based on the
valuation undertaken at closing in 2007.  The servicer also
reported a current interest cover ratio (ICR) of 1.39x and a
projected ICR of 1.44x.  Both current and projected ICR levels
exceed the required threshold of 1.10x.

Access Self Storage is one of the largest brands in the U.K.
self-storage sector and operates throughout the U.K.  Most of the
assets in the portfolio are in good locations--23 of the 30
assets are in London or Greater London.  The stores range in size
from approximately 18,000 sq. ft. to 111,000 sq. ft. of rentable
space. The average size is 51,000 sq. ft.  Property quality is
reasonable and includes assets of varying ages, including
converted period premises as well as more-recent purpose-built
properties constructed within the past 10 years. Current
occupancy levels stand at 75.62%, which is up from 71.1% at
closing.

As the property has not been revalued since closing, S&P
considers the reported LTV ratio unlikely to adequately reflect
the current property value.  S&P anticipates that recoverable
proceeds from the assets will have reduced because of the decline
in commercial property market performance since closing.  In
S&P's opinion, the securitized loan is vulnerable to principal
losses.  That said, S&P anticipates that any losses would be
contained within the class G and H notes, which it do not rate.

     THE NEXTRA 2 U.K. LOAN (15% OF THE POOL BY LOAN BALANCE)

The NEXTRA 2 U.K. Loan is currently secured by two office
buildings, each fully let to single tenants.  Both properties are
in Greater London.  This loan pays a floating rate.  The loan has
a current balance of GBP26.9 million.  It was originated in
December 2006 and matures in October 2013, with a three-year
extension option.

The largest property is in Rickmansworth, Hertfordshire, and
offers 93,719 sq. ft. of office accommodation.  The building was
constructed in 2000 and provides high-quality office
accommodation.  It also benefits from a three-storey car park
containing 387 spaces.  The property is entirely let to Skanska
Construction Ltd. until April 2023, with no break options.  The
current rent passing reflects a rate of GBP24.54 per sq. ft.,
which has not changed since closing.

The Watford asset is situated on three-office campus in a central
Watford location.  The property was constructed in 1990 and
provides a total accommodation area of 71,029 sq. ft.  The
current rent passing has also not changed since closing and
totals GBP1,354,130 per year (GBP19.20 per sq. ft.).  The
property is occupied by Stakis Ltd. (part of the Hilton Group)
until 2017.

In the April 2013 investor report, the servicer reported a loan-
to-value (LTV) ratio of 41.86% (based on a December 2006
valuation).  The weighted-average remaining lease term was
reported as 7.81 years.  The servicer also reported a current ICR
of 11.31x and a projected ICR of 11.54x.  Both current and
projected ICR levels exceed the required threshold of 1.10x.

Property values have softened since origination, thus reducing
the expected recoverable proceeds.  Nevertheless, S&P do not
expect any losses on this loan.

                         RATING RATIONALE

Although S&P considers that the class A1 and A2 notes continues
to be adequately protected, enabling them to achieve high
ratings, our rating remains constrained by counterparty
considerations. Therefore, S&P has affirmed its 'A (sf)' rating
on these notes.

S&P considers the amount of available credit enhancement levels
for the class B, C, D, E, and F notes are no longer sufficient to
cover asset credit risk at their current rating levels.  S&P has
therefore lowered its ratings on these classes of notes and
removed them from CreditWatch negative.

Triton closed in April 2007.  The collateral consists of two
U.K.-based real estate loans originated by Morgan Stanley Bank
International Ltd.  One loan is secured against a portfolio of
office premises; the other against industrial self-storage
premises.  At cut-off, the loan pool consisted of four loans,
ranging from GBP26.8 million to GBP288 million.

The two remaining loans have a total outstanding securitized loan
balance of GBP185.28 million.  The current rated note balance is
GBP167.17 million.  The notes have a legal final maturity date of
Oct. 25, 2019.  This transaction uses a servicer liquidity
advance mechanism, where liquidity available to the issuer is
advanced by an affiliate of the servicer.

          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

Rating

Class            To            From

Triton (European Loan Conduit No.26) PLC
GBP556.65 Million, US$87.309 Million Commercial Mortgage-Backed
Floating-Rate
Notes

Ratings Affirmed

A1              A(sf)
A2              A(sf)

Ratings Lowered

B              BB+ (sf)        BBB (sf)/Watch Neg
C              B+ (sf)         BB+ (sf)/Watch Neg
D              B+ (sf)         BB (sf)/Watch Neg
E              B (sf)          BB (sf)/Watch Neg
F              B (sf)          BB- (sf)/Watch Neg



===============
X X X X X X X X
===============


* EUROPE: Brussels to Impose Tighter Conditions on Bank Bailouts
-----------------------------------------------------------------
Alex Barker at The Financial Times reports that Brussels is to
impose more stringent conditions on state bailouts for troubled
banks so that shareholders and junior bondholders suffer losses
before taxpayers are asked to foot a rescue bill.

According to the FT, the imminent revision of the EU state aid
controls uses the recent Spanish bank bailouts as a Europe-wide
template, ensuring that all 27 member states impose some pain on
creditors, even when it is politically inconvenient and those
governments can afford to use public funds.

Under the European Commission's new rules a higher level of
"burden sharing" will be required for shareholders and junior
creditors through a mandatory "bail-in", while bank restructuring
plans will have to be agreed by Brussels before state support is
issued, the FT discloses.

So far, creditor "haircuts" have largely been forced on countries
receiving EU rescue funds, raising fears in Brussels that,
without common standards, bank bondholders in economically strong
member states will be treated more leniently during a crisis, the
FT recounts.

The updated EU rule book is based on the experiences of Spain and
the Netherlands, the FT notes.  The new state aid guidelines,
which will be applied to future bank failures, are under the
commission's executive powers, the FT says.


* Moody's Comments on Volatility of Solvency II Ratios
------------------------------------------------------
Although the Solvency II regime has yet to be finalized, Moody's
Investor Service has outlined its expectation that solvency
ratios will ultimately exhibit a more complex volatility under
Solvency II than under Solvency I, as both the available capital
and the capital requirements of the solvency ratio will change
with market conditions.

Moody's new report is entitled "European Insurers: Solvency II -
Volatility of Regulatory Ratios Could Have Broad Implications For
European Insurers."

While Moody's acknowledges that the move to Solvency II will not
change insurers' economic reality, the introduction of new
solvency ratios may influence the behavior of investors, insurers
and regulators. The aim of the new regulation is implicitly to
influence market behavior in ways that are favorable to
creditors, but there is nevertheless some risk of the opposite
occurring. The report explores some potential unintended
consequences of the new regulation from the perspective of
investors, insurers and regulators, and discusses Moody's
interpretation of the new solvency ratios in its analysis of
insurers' capital adequacy.

The magnitude of the credit implications will depend on the final
calibrations of Solvency II, which will influence how issuers,
investors and regulators themselves react. In particular, as part
of the preparations for Solvency II, the European Insurance and
Occupational Pensions Authority (EIOPA) has launched the Long-
Term Guarantee Assessment (LTGA), an impact study that is testing
different ways of discounting the liabilities of insurers. In a
separate report, entitled "European Insurers: Solvency II LTGA
Study Assesses Impact of Different Liability Discount Rates"
Moody's has described what it views as the two extremities that
define the range of possible outcomes post the study which are
opposite in terms of implied capital requirements. At one end, a
high discount rate would lead to lower capital requirements,
while a low discount rate would require more capital.

Moody's expects that the eventual outcome post the study will be
to permit relatively generous discounting of liabilities. This is
because law-makers recognize the capital burden that a more
punitive version of Solvency II would place on insurers which
provide guaranteed products, particularly within an extreme low
interest-rate environment. Such an outcome would not lead to
negative rating pressure for most Moody's-rated insurance groups
who the rating agency expects will remain relatively well-
capitalized on an economic basis in this scenario.


* Varied Insolvency Processes in Eur. Challenge Special Servicers
-----------------------------------------------------------------
While there is no slowdown in the number of loans entering
special servicing across commercial mortgage backed securities
(CMBS) transactions in Europe, new challenges emerge for special
servicers who work out loans with borrowers undergoing insolvency
proceedings.

Recent court rulings in France and Germany have raised questions
over not only the level of control the CMBS lenders have, but
also the seniority of their claims within the insolvency estate
of their borrowers.

French Legislation Provides Pre-Insolvency Protection To
Borrowers

In France, safeguard (or pre-insolvency) proceedings provide
insolvency-law protection to borrowers as they prevent their
creditors from enforcing security on the real estate in case of
an event of default. Such protection force their creditors to
negotiate a restructuring plan and consequently increase the
timing and costs necessary to recover their funds.

Recent French Court Ruling Is Credit Positive For CMBS
Transactions Backed By French Loans

In the high profile case involving the EUR1.5 billion Windermere
XII FCT transaction, the Versailles Court of Appeal recently
passed two judgments which Moody's views as credit positive for
this and other CMBS transactions backed by French loans. The
first judgment confirmed the enforceability of the security
assignments (i.e., rental cash flows from the property) to the
issuer, a point of contention since the safeguard proceedings
began in 2008. The second judgment put in place a safeguard plan
with a loan maturity in July 2014, three years prior to the CMBS
legal final maturity date.

Despite the credit positive implications of the judgments, the
workout process remains largely uncertain for other French loans
in default. For example, it is difficult to assess if the special
servicer will be able to return the loan principal of the Target
loan (EUR232 million) securitized in the EUR557 million Titan
Europe 2006-3 plc transaction to noteholders within the three
years remaining until the CMBS legal final maturity date.
Although the borrower filed for safeguard proceedings in April
2013 and the servicer transferred the loan into special servicing
the same month, ahead of its July 2013 maturity, a timely workout
of the loan looks unlikely because 1) the initial observation
period before which the French Courts put a safeguard plan in
place can last up to 18 months ; and 2) French Courts may
restructure the loan term beyond the legal final maturity of the
CMBS notes.

For a small loan (EUR8 million) securitized in the EUR983 million
Titan Europe 2007-2 Limited transaction, the French Courts
rescheduled the payment of the loan such that more than half of
the loan principal becomes due four years after the legal final
maturity date of the CMBS notes. The issuer has appealed the
court decision; therefore, the final outcome is still uncertain.

French Loan Recovery Rates Stressed In Comparison To Creditor-
Friendly Jurisdictions

In terms of recovery estimates for French loans, Moody's takes
into account the limited options of creditors to initiate and
control bankruptcy proceedings against the borrowers and assumes
stressed recovery rates compared to loans in other more creditor-
friendly jurisdictions. One clear lesson learned is the
insufficient tail period available to most securitized French
loans. The tail period for legacy CMBS French loans is 4 years on
average. A restructuring plan under the safeguard proceedings
could extend the period of loan recovery up to an additional 10
years.

On the positive side, the exposure of CMBS transactions to French
loans is relatively limited with a total of 28 French loans
outstanding at end-April. These outstanding loans make up
approximately 4% of the outstanding balance of single borrower
and large multi-borrower transactions rated by Moody's.

German Court Decision Raises Potential Challenges To Loan Workout
Even In Creditor-Friendly Regions

Loan workouts in a more creditor friendly jurisdiction, like
Germany can also be challenging. The sponsor of a large loan
announced last week that the German insolvency court has recently
resolved that the claims under the EUR 391 million whole loan, of
which EUR 360 million is securitized in the Talisman 6 -- Finance
plc transaction could be subject to equitable subordination. Such
a ruling would essentially change the seniority of the
securitized loan against other insolvency creditors, lowering the
ultimate principal recovery on the loan, by an amount that is
difficult to quantify at this stage.

In a subsequent related announcement, the special servicer
clarified details regarding the voting rights granted to the
various creditors and confirmed that the merit and rank of the
claims were to be determined at a later date. The loan under
review entered special servicing in July 2012 due to non-payment
at maturity. The special servicer started the enforcement process
in October 2012 following a failure to achieve a consensual
workout with the borrower.

Varied Insolvency Procedures Across European Jursidictions
Further Complicate Workouts

Moody's has also observed workout complications in loans with
borrowers incorporated in one (or more jurisdictions) with the
underlying properties located in another jurisdiction.
Disagreements and disputes among different insolvency courts and
administrators both prolong the loan workout process and increase
costs for the issuers. An example is the EUR149 million Karstadt
Kompakt Loan securitized in the EUR392 million Deco 7 - Pan
Europe 2 plc transaction in which the borrowing entities are
incorporated in the Netherlands but the properties are located in
Germany. As the Dutch administrators over the borrowers did not
accept any duty to the issuer, the special servicer had to
initiate secondary insolvency proceedings in Germany, which then
convinced the Dutch administrators to cooperate in the
realization process.

In smaller and less creditor-friendly jurisdictions such as
Spain, Italy and Bulgaria, servicers avoid enforcement during
loan workout because of uncertainty and unfamiliarity with the
insolvency process in the context of CMBS loans. In these
regions, servicers and/or special servicers have been following a
consensual (restructuring) workout route with borrowers.

Nearly A Quarter Of All Outstanding Loans Were In Special
Servicing At End-April

As at end-April 2013, 160 loans were in special servicing,
according to Moody's new report "EMEA CMBS: Monthly Update on
Specially Serviced Loans - May 2013". These loans represent
approximately 23% of all loans outstanding across single borrower
and large multi-borrower transactions rated by Moody's.

Whereas the UK contributes the highest portion (45%) to the total
in terms of volume of loans, Germany is the jurisdiction with the
highest number of loans in special servicing (78 loans, 49% of
the total). The UK follows Germany with 49 loans (30%), France
and the Netherlands contribute nine loans each and other
jurisdictions including Italy, Spain, and Finland contribute
three loans or less each.

The complexity of loan workouts is especially high for loans
undergoing enforcement, including the insolvency of their
borrowers. High loan leverage (>100% loan-to-value) and borrower
motivation typically dictate the workout strategy that special
servicers follow.

Of all loans in special servicing, Moody's has identified 58
loans (36%) as undergoing enforcement/forced liquidation. Almost
half of these loans are backed by collateral in the UK, the most
creditor-friendly jurisdiction in Europe. The number of loans
under a standstill and/or restructuring is the next highest (35
loans, 22%) followed by consensual property sales, which is the
case for 20 loans (12%).

Thus far, 89 loans have been worked out with 52 (58%) having
realized principal losses of 36% on a weighted average basis (39%
simple average). For loans that have yet to be worked out,
Moody's expects principal losses of 43% on a weighted average
basis (39% simple average).


* Recession Concern Dampens European Investor Sentiment
-------------------------------------------------------
An increasing number of investors expect fundamental credit
conditions will deteriorate across sectors, according to a Fitch
Ratings investor survey.

The more circumspect sentiment was most notable for the sovereign
segment, where the proportion of survey respondents anticipating
worsening conditions more than doubled to 55%, from 24% in the
last survey. The gloomier outlook appears to reflect rising
recession fears and low inflation expectations.

Nevertheless, the insatiable hunger for high yield (HY)
continues, stoked by continued ultra-easy monetary policy. 27% of
respondents voted HY their most favored investment choice, down
from 29% in the last quarter, but still clearly ahead of runners-
up emerging-market (EM) corporates and banks. Investors expect
the appetite for yield to be met by willing issuers in the HY and
EM corporate segments; the only sectors which a majority of
investors believe will see increasing issuance in the next 12
months. The HY issuance boom has been supported by historically
low default rates.

Fitch conducted the Q213 survey between April 3 and May 7. It
represents the views of managers of an estimated EUR8.6 trillion
of fixed-income assets.


* BOOK REVIEW: Creating Value through Corporate Restructuring
-------------------------------------------------------------
Author: Stuart C. Gilson
Publisher: Wiley
Hardcover: 516 pages
List Price: $79.95
Review by David M. Henderson

Most business books fall into two categories. The first is very
important. It is like that stuff you have to drink before you
have a colonoscopy. You keep telling yourself, this is very
good for me, while you would rather be at the beach reading
Liar's Poker or Barbarians at the Gate.

Stuart Gilson, of the Harvard Business School, has managed to
write a book important to everybody in the distressed market
that is also quite enjoyable. His prose is fluid and succinct
and a pleasure to read. But don't take my word for it. The
dust jacket endorsements come from Jay Alix, Martin Fridson,
Harvey Miller, Arthur Newman, and Sanford Sigoloff. At a
collective gazillion dollars a billing hour, that's a lot of
endorsement.

Be advised that this is designed as a text book. The case study
format might be off-putting to some. The effect can be jarring
as you read the narrative history of the case and suddenly
confront the financial statements without any further clue as to
what to do, but this must be what it is like for the turnaround
manager. Even after reading several of the cases, when I got to
the financials I had that sinking feeling of, what do I do now?
If you read carefully, clues to the solutions are in the
introductions.

The book is divided into three "modules", bizspeek for sections:
Restructuring Creditors' Claims,. Restructuring Shareholders'
Claims, and Restructuring Employees' Claims. The text covers 13
corporate restructurings focusing on debt workouts, vulture
investing, equity spinoffs, tracking stock, assete divestitures,
employee layoffs, corporate downsizing, M & A, HLTs, wage
givebacks, employee stock buyouts, and the restructuring of
employee benefit plans. That's a pretty comprehensive survey,
wouldn't you say?

Dr. Gilson's chapter on "Investing in Distressed Situations" is
an excellent summary of the distressed market and a good
touchstone even for seasoned vultures.

Even in the two appendices on technical analysis, this book is
marvelously free of those charts and graphs that purport to show
some general ROI of distressed investing. Those are cute,
aren't they? As Judy Mencher has famously said, "You can buy
the paper at 50 thinking it's going to 70, but it can just as
easily go to 30 if you are not willing to act on it." Therein
lies the rub and the weakness, if inevitable, of this or any
book on corporate restructurings. As Dr. Gilson notes, no two
are alike, and the outcome is highly subjective, in our out of
Court, but especially in Chapter 11. Is the Judge enthralled by
Jack Butler as Debtor's Counsel or intimidated by Harvey Miller
as Debtor's Counsel? Are you holding "secured" paper only to
discover that when it was issued the bond counsel forgot to
notify the Indenture Trustee of the most Senior debt? Is
somebody holding Junior paper that you think is out of the money
only to have Hugh Ray read the fine print and discover that the
"Junior" paper is secured? This is the stuff of corporate
reorganizations that is virtually impossible to codify into a
textbook.

That said, this is an especially valuable text for anybody
working in the distressed market. As a Duke grad, I tend to be
disdainful of all things Harvard, but having read Dr. Gilson's
book, I am enticed to encamp by the dirty waters of the Charles
long enough to take his course, appropriately entitled,
"Creating Value Through Corporate Restructuring.


                            *********

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 * * *