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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

            Wednesday, July 17, 2013, Vol. 14, No. 140

                            Headlines


B E L G I U M

BASS MASTER: Fitch Cuts & Withdraws 'D' Rating on Class D Notes
DEXIA SA: Obtains Favorable Ruling in Piedmont Swap Suit


F R A N C E

CMA CGM: S&P Raises Corp. Credit Rating to B; Outlook Positive


G E R M A N Y

CONTINENTAL AG: Fitch Raises ST Issuer Default Rating From 'B'
LOEWE AG: Files for Protection From Creditors
TS CO.MIT: Fitch Lowers Then Withdraws 'D' Rating on Cl. E Notes


I R E L A N D

HOMEBASE IRELAND: In Examinership; More Than 550 Jobs at Risk
IRISH BANK: Quinns Opens High Court Bid for Legal Costs Cover
ST. PAUL'S CLO II: S&P Assigns Prelim. BB+ Rating to Cl. E Notes


I T A L Y

BANCA MONTE: Major Investor Agrees to Remove Voting Rights Limit
MANTEGNA FINANCE II: Moody's Cuts Rating on Cl. C Notes to 'Ba2'


K A Z A K H S T A N

AMANAT INSURANCE: Fitch Affirms 'B' IFS Rating; Outlook Stable


L U X E M B O U R G

SPIE BONDCO: New EUR400MM Term Loan Gets Moody's '(P)B2' Rating


N E T H E R L A N D S

GLOBAL TIP: Moody's Rates EUR278-Mil. Term Loan B '(P)B1'


R U S S I A

* RUSSIA: Basel Rule Easing Moderately Negative for Creditors


S P A I N

GRIFOLS SA: Good Performance Cues Moody's to Lift CFR to 'Ba2'
SMART SME: Fitch Affirms 'CC' Rating on EUR58MM Class E Notes


U K R A I N E

PIVDENNYI BANK: Fitch Affirms 'B-' LT Issuer Default Ratings


U N I T E D   K I N G D O M

ALDERSHOT FC: Needs GBP7,000 to Escape Liquidation
BRADFORDS BAKERS: More Than 100 Jobs Lost as Bakery Chain Closes
CO-OPERATIVE BANK: C. Kelly to Lead GBP1.5BB Black Hole Probe
FOUNDATION CMBS: Fitch Affirms & Withdraws Rating on 2016 Notes
HEARTS OF MIDLOTHIAN: Three Formal Bids for Club Received

LAMBDA FINANCE 2007-1: S&P Affirms B Ratings on 2 Note Classes
P&S TOOLS: Business Bought Out of Administration
SILVERDELL: Bank Backs Firm Despite Administration
* U.K. Companies on Brink of Insolvency Decreases in 2Q13


X X X X X X X X

* Fitch Says European Firms Face Negative Free Cash Flow in 2013
* Moody's Notes Changing Strategies for European Insurers


                            *********


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B E L G I U M
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BASS MASTER: Fitch Cuts & Withdraws 'D' Rating on Class D Notes
---------------------------------------------------------------
Fitch Ratings has assigned Bass Master Issuer NV/SA Series
0-2008-1's EUR2.0bn fifth tap issuance final ratings. The agency
has also affirmed the existing class A and B notes, downgraded
the existing class C and D notes and simultaneously withdrawn the
class D notes rating.

The rating actions are as follows:

Fifth tap issuance:

EUR1.8bn class A: 'AAAsf'; Outlook Stable
EUR60m class B: 'AAsf'; Outlook Stable
EUR60m class C: 'BBB+sf'; Outlook Stable

First tranches:

EUR23.4bn class A affirmed at 'AAAsf'; Outlook Stable
EUR780m class B affirmed at 'AAsf'; Outlook Stable
EUR780m class C downgraded to 'BBB+sf' from 'Asf'; Outlook
  Stable; Rating Watch Negative removed
EUR1,040m class D downgraded to 'Bsf' from 'BBsf'; Outlook
  Stable; Rating Watch Negative removed; rating withdrawn.

The class D notes' rating has been withdrawn due to a lack of
market interest.

The tap issue has been consolidated with the prior issued
tranches of Series 0-2008-I to form a single Series 0-2008-I. The
consolidated tranches amount to EUR25.2 billion for the class A
notes, EUR840 million for the class B notes and EUR840 million
for the class C notes.

Key Rating Drivers

Amendments to the Transaction Documentation
On July 15, 2013, the transaction structure has been modified as
follows: (i) the step-up date of the only series outstanding
(i.e. the date on which soft bullet notes become pass-through
notes) has been extended by two additional years (from July 2013
to October 2015), (ii) the notes has been made fixed rate, (iii)
the interest rate hedging has been modified to cover only the
resettable loans portion of the portfolio (40% of the current
portfolio), and (iv) the purchase condition limits have been
slightly loosened in terms of mortgage coverage ratio.

Extension of the Step-Up Date
Fitch analyzed the above changes that have been made to the
transaction. The agency based its analysis on a worst-case
portfolio -- which takes into account the updated mortgage
coverage ratio conditions for the purchase of new mortgage
receivables -- in light of the two years maturity extension of
the step-up (from July 2013 to October 2015) and final maturity
date of the notes (from July 2055 to October 2057).

Tighter Liquidity
Fitch reviewed the interest rate hedging which henceforth only
covers the resettable loans portion of the portfolio (the
previous swap arrangement was based on the whole portfolio). The
interest rate swap provides some liquidity and credit support
through a guaranteed excess margin and the payment of servicing
fees. The agency also took into account the risk that new fixed
rate loans purchased may bear a lower interest rate, which is
partially covered by a 2% limit as per the purchase conditions
(compared to a weighted average rate of 4.1% currently).

The downgrade of the class C and D notes reflects, in particular,
the tighter liquidity conditions due to both the lower coverage
provided by the interest rate hedge agreement and the potential
for replenishment by fixed rate loans paying a lower interest
rate. However, the level of credit support remains adequate for
the class A and B notes.

Credit enhancement is provided by subordination and an amortizing
reserve fund that totals 11% for the class A notes, 8% for the
class B notes and 5% for the class C notes.

Fitch notes that the risk of liquidity outage in case of
servicing disruption is mitigated by the provision to set-up an
adequately sized cash reserve upon a downgrade of BNP Paribas
Fortis (Fortis; A+/Stable) below 'A'/'F1'. In addition, the
borrowers will be notified to directly pay into the issuer
account upon a downgrade of Fortis below 'BBB'.

Rating Sensitivities

Deterioration in asset performance may result from economic
factors, in particular the increasing effect of unemployment, or
further decline in house prices in excess of Fitch's standard
assumptions that could lead to a decline in recovery rates.

Fortis currently performs various roles, including those of
servicer, account bank provider and swap counterparty. A
deterioration in Fortis' credit profile could consequently affect
the transaction's operational performance.


DEXIA SA: Obtains Favorable Ruling in Piedmont Swap Suit
--------------------------------------------------------
Kit Chellel at Bloomberg News reports that the Italian region of
Piedmont must pay about EUR36 million (US$47 million) to Dexia
Crediop SpA and Intesa Sanpaolo SpA after losing a London lawsuit
over interest-rate swap contracts.

Bloomberg relates that Judge Henry Eder said Piedmont hadn't
responded in time to defend the Italian banks' application for
payment, and called the region's allegations of mis-selling
"vague and obscure."  Piedmont hasn't made payments since January
2012, Bloomberg notes.

Italian local governments from Pisa to Sicily lost money on
derivatives sold by investment banks that were supposed to limit
interest-rate exposure on loans, Bloomberg discloses.  In one of
more than half a dozen British and Italian legal cases linked to
the deals, a Milan judge convicted bankers and firms including
Deutsche Bank AG, JPMorgan Chase & Co. and UBS AG of fraud in
December, Bloomberg recounts.

"If Piedmont wished to challenge those figures, they have had
ample -- indeed more than ample -- time to do so," Bloomberg
quotes Judge Eder as saying in a written decision yesterday.

Piedmont, which told the London court its finance director didn't
speak English well enough to understand the contracts, signed the
swaps along with a EUR1.8 billion bond issue in 2006, Bloomberg
says.  It sought a full trial to argue its case that the
agreements weren't valid under Italian law and contained hidden
profits for the banks, Bloomberg recounts.

The judge rejected Piedmont's argument that it wasn't experienced
enough in financial markets to enter into a derivative contract,
Bloomberg relates.

The case is: Dexia Crediop S.p.A. v. Regione Piemonte, High Court
of Justice, Queen's Bench Division Commercial Court.

                             Bailout

As reported by the Troubled Company Reporter-Europe on Feb. 4,
2013, The Financial Times related that Dexia is trying to borrow
EUR40 billion from global investment banks as the thrice bailed-
out Franco-Belgian lender seeks to cut its dependency on the
European Central Bank's financial support.  Dexia Chief Executive
Karel De Boeck, as cited by the FT, said in an interview with a
Belgian newspaper on Jan. 31 that the stricken lender wanted to
return to the market and gradually stop receiving "Eurosystem"
financing.  Dexia, once the world's largest municipal lender, has
been one of the European banks worst affected by the US subprime
mortgages meltdown and the eurozone sovereign debt crisis, the FT
disclosed.  France and Belgium agreed in November to bail out
Dexia for the third time in four years, injecting EUR5.5 billion
of fresh capital into the bank, the FT recounted.

Dexia SA is a Belgium-based banking group with activities
principally in Belgium, Luxembourg, France and Turkey in the
fields of retail and commercial banking, public and wholesale
banking, asset management and investor services.  In France,
Dexia Bank focuses on funding public sector bodies and providing
financial services to local government.  In Luxembourg, Dexia
operates in two main areas: commercial banking (for personal and
professional customers) and private banking (for international
investors).  In Turkey, Dexia is involved in retail and
commercial banking and offers services to ordinary account
holders, business and local public sector customers and
institutional clients. The Company operates through its
subsidiaries, such as Dexia Credit Local, DenizBank, Dexia
Credicop, Dexia Sabadell, Dexia Kommunalbank Deutschland, Dexia
Asset Management, among others.

                          *     *     *

Dexia SA currently carries a 'D-' BFSR from Moody's Investors
Service.



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F R A N C E
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CMA CGM: S&P Raises Corp. Credit Rating to B; Outlook Positive
--------------------------------------------------------------
Standard & Poor's Ratings Services said that it has raised its
long-term corporate credit rating on France-based container ship
operator CMA CGM S.A. to 'B' from 'B-'.  The outlook is positive.

S&P also raised its issue rating on the company's senior
unsecured notes to 'CCC+' from 'CCC'.  The recovery rating on the
notes remains at '6', indicating S&P's expectation of negligible
(0%-10%) recovery in the event of a payment default.

"The rating action reflects CMA CGM's improved capital structure
and liquidity position, after the completion of the disposal of
its 49% stake in Terminal Link to China Merchants Holdings for
EUR400 million in cash and an equity deal with Fonds Strategique
d'Investissement (FSI).  FSI has subscribed to bonds redeemable
in shares of CMA CGM for $150 million, which CMA CGM received in
June 2013.  These cash-accretive transactions follow CMA CGM's
completion of its financial restructuring earlier this year,
which has improved the distribution of the company's debt
maturity profile and the covenant package to ensure sufficient
headroom.  It also follows an equity deal with Turkish holding
company Yildirim Group.  The Yildirim Group subscribed to bonds
redeemable in shares of CMA CGM for US$100 million, which CMA CGM
received in February 2013," S&P said.

"We note that the company's credit ratios and liquidity position
are further underpinned by its significantly improved operating
performance and, therefore, cash flow generation, largely thanks
to the realized cost efficiencies.  In 2012, CMA CGM reported
positive operating cash flow (after interest paid) of about
$600 million compared with negative US$55 million in 2011.  This
improving trend continued in the first quarter of 2013, when the
company reported operating cash flow of about US$200 million
compared with about negative US$190 million a year earlier," S&P
added.

"According to our base-case operating scenario, CMA CGM could
continue reducing debt in 2013 thanks to solid cash flow
generation and balanced capital expenditures.  We believe the
company's operating performance could benefit from a
stabilization of its carried trade volumes on the back of a
gradually recovering global economy, and additional cost savings,
further underpinned by lower bunker fuel price.  However, we
forecast lower EBITDA of US$1.1 billion in 2013, compared with
about US$1.3 billion in 2012. This is mainly due to our estimate
of weaker freight rates," S&P noted.

The positive outlook reflects S&P's view that CMA CGM could
maintain credit measures and liquidity coverage that are
commensurate with a higher rating over the next 12 months,
despite volatile trading conditions.

S&P could raise the ratings if CMA CGM's recently moderated
financial policies continued to support its improved liquidity,
and if the company maintained its prudent expansionary spending
and treasury management.

S&P could revise the outlook to stable or lower the rating in the
event of unexpected negative operating momentum.



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


CONTINENTAL AG: Fitch Raises ST Issuer Default Rating From 'B'
--------------------------------------------------------------
Fitch Ratings has upgraded Continental AG's Long-term Issuer
Default Rating (IDR) to 'BBB' from 'BB' and Short-term IDR to
'F3' from 'B'. The rating of the senior secured notes issued by
Conti-Gummi Finance BV has also been upgraded to 'BBB' from 'BB'.
The Outlook is Stable.

Key Rating Drivers

Standalone Rating
The upgrade reflects Fitch's assessment of the parent subsidiary
linkage between the Schaeffler Group and Continental AG. Fitch
now deems the linkage weak enough to rate Continental on a
standalone basis. The linkage has been weakened by Schaeffler
reducing its stake to 49.9%, Continental extending its bank debt
agreement with tight ring-fencing of cash flows to 2018 and
Continental's independent dividend distribution policy. A
strengthening of the linkage is considered unlikely and treated
as event risk.

Strong Business Profile
Continental's ratings reflect its large manufacturing operations,
global footprint, top ranking positions in the markets in which
it operates, solid end-market diversification with about 30% of
sales in the less volatile replacements business and strong R&D
capability.

Sound Profitability
The company's financial profile is strong and relatively
resilient against the cyclicality and volatility experienced in
the automotive supply industry. Fitch expects EBITDAR margins of
15% for 2013 and after. The profitability is also supported by
Continental's tyre business which accounted for 40.5% of 2012
sales and resulted in an EBITDAR margin of about 19%.

Strong Free Cash Flow
The Stable Outlook reflects Fitch's expectations for
Continental's solid underlying funds from operations (FFO) margin
to be remain at approximately 10% in the next couple of years.
This would be sufficient to cover the high 6% capex to revenue
outlays and the company's conservative dividend policy. Fitch
expects the free cash flow (FCF) margin to remain in the range of
2.5%-3.5% in 2013 and after.

Leverage Decreasing
The Stable Outlook is further supported by Fitch's expectations
that Continental's FFO adjusted leverage will decrease to well
under 2.0x during 2014 from 2.3x at end-2012 and from a peak of
over 6.0x at end-2007.

Strong Liquidity
Fitch estimates that cash and undrawn committed credit facilities
amounted to around EUR4.2 billion at end-June 2013. Fitch expects
FCF of at least EUR1 billion in 2014 and after. Given this
liquidity generating ability, Continental opted for early
redemption in July 2013 of two bonds amounting to EUR1.75 billion
with coupons of 7.5% and 8.5% and the new issuance of a EUR750
million bond with a 3% coupon.

Raw Materials Exposure
Raw materials (RM) constitute a major part of Continental's cost
structure and the historical high volatility of their prices has
been a significant driver of the group's profitability.
Continental does not actively hedge against the risk by using
derivative instruments but intends to compensate for or pass on
its increased costs to customers. A portion of this cost is
typically hedged and covered by RM clauses, but these clauses and
hedges only protect for a limited period of time. Continental
currently benefits from significantly reduced RM prices and
continuing demand especially in the replacement tyre business
driving the high profitability performance.

Rating Sensitivities

Strong FCF Margins
A positive rating action may occur if, on a sustained basis,
EBITDAR margins increase to above 15%, FCF margins improve to
3.0% and FFO adjusted leverage falls well below 1.5x. Fitch
believes that given the independent dividend policy and some
discretionary capex outlays currently, Continental has sufficient
headroom to achieve these guidelines within two years.

Increasing Leverage
An increase in FFO adjusted leverage to above 2.0x or FCF margins
falling to or below 1% to 2% may result in a negative rating
action.

Schaeffler Linkage
Any change in Schaeffler's influence on Continental resulting in
a weakening of Continental's credit profile could lead to a
reassessment of Fitch's standalone approach to Continental's
rating. This may also occur in case of a merger of Continental AG
with Schaeffler Group, if this combination led to a deterioration
of the consolidated financial profile.


LOEWE AG: Files for Protection From Creditors
---------------------------------------------
Maria Sheahan at Reuters reports that Loewe AG has filed for
protection from creditors' demands in a last-ditch effort to turn
around its loss-making business.

Loewe has been struggling to return to profit amid fierce
competition from Asian rivals such as Samsung and LG Electronics
and a slide in the average price of television sets, Reuters
discloses.  Its losses almost tripled to EUR29 million in 2012,
Reuters notes.

The company, which is 28%-owned by Japan's Sharp, filed for
protection from creditors at a German court, under a law that
gives firms up to three months of breathing room to try to fix
their finances to stave off insolvency, Reuters relates.

According to Reuters, Loewe said in a statement yesterday that it
would use the time to drastically expand its existing
restructuring program, increase its share equity and revamp its
brand strategy.

"Since we remain solvent, we can complete all customer orders on
schedule and also settle our accounts with our suppliers which
are accrued during the creditors' protection period," Reuters
quotes Chief Executive Matthias Harsch as saying in the
statement.

Loewe has an outstanding loan for EUR30 million provided by
Deutsche Bank, Commerzbank, IKB and UniCredit, which matures in
June 2015, according to Thomson Reuters LPC data.

Loewe AG is a German high-end television maker.


TS CO.MIT: Fitch Lowers Then Withdraws 'D' Rating on Cl. E Notes
----------------------------------------------------------------
Fitch Ratings has downgraded and withdrawn TS Co.mit One GmbH, as
follows:

  EUR5.91m class E secured notes (ISIN: XS0261662174): downgraded
  to 'Dsf' from 'Csf'; assigned a Recovery Estimate (RE) of
  'RE0%'; withdrawn

  EUR4.96m class F secured notes (ISIN: XS0261662257): downgraded
  to 'Dsf' from 'Csf'; assigned 'RE0%'; withdrawn

The downgrade of the ratings to 'Dsf' and the RE0% reflect the
fact that both classes of notes were not fully repaid by their
legal final maturity on June 28, 2013. Hence the noteholders will
not receive any additional payments.

Fitch regards these notes as defaulted due to their failure to
make principal payments in full by their legal final maturity.
The withdrawal of the ratings follows the tranches' default.



=============
I R E L A N D
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HOMEBASE IRELAND: In Examinership; More Than 550 Jobs at Risk
-------------------------------------------------------------
Peter Flanagan at Independent.ie reports that more than 550 jobs
are at risk after house and garden chain Homebase Ireland went
into examinership.

The High Court appointed an examiner to the business yesterday,
July 16, as the company struggles with the collapse in the retail
market, Independent.ie relates.

In a statement, Homebase Ireland said it was looking at closing
three stores for now: Fonthill in Dublin, Carlow and Castlebar,
in Co Mayo, Independent.ie notes.  Those stores employs 17 full-
time and 79 part-time staff, Independent.ie discloses.

According to Independent.ie, Homebase said that the future of the
other 12 stores depends on landlords' willingness to renegotiate
lease terms.

The company, as cited by Independent.ie, said sales have fallen
by almost a third since 2009 and has not made a profit in five
years, mainly due to the collapse in the housing market and lower
spending on repairs and improvements.

It has also blamed "upward only" rent reviews for its inability
to reduce its operating costs, according to Independent.ie.

Homebase has 15 stores in Ireland and employs some 558 people.


IRISH BANK: Quinns Opens High Court Bid for Legal Costs Cover
-------------------------------------------------------------
independent.ie reports that jailed businessman Sean Quinn's wife
Patricia Quinn and their five adult children have opened their
High Court bid to compel the former Anglo Irish Bank to provide
security for their legal costs.

According to independent.ie, the family of Sean Quinn is seeking
security for EUR6.5 million in legal costs in case the bank, now
in liquidation, is unable to pay their costs if the bank loses
the family's alleged conspiracy case against Anglo.

The IBRC (in Special Liquidation) -- formerly Anglo -- has set
aside some EUR50 million to meet the costs of litigation, the
report notes.

independent.ie says the case was described by High Court Mr.
Justice Peter Kelly as "unusual."  This was because the Special
Liquidator has made an offer to set aside a EUR50 million cash
fund, which will be "ringfenced" for payment of costs "and
nothing else".

According to independent.ie, Shane Murphy SC, for the Special
Liquidator, told the court that the fund will never be allowed to
drop below EUR50 million.  If the fund drops, it will be
immediately replenished and will be available until the
conclusion of the litigation.

independent.ie recalls that when it was liquidated last February
following an all-night sitting of the Dail and Seanad, the IBRC
was involved in 840 legal actions, 120 of which are being taken
against the bank.

The High Court has set aside two days to hear an application by
the Quinns to join the Department of Finance and the Central Bank
-- as successor to the Financial Regulator -- as co-defendants to
their main action against the IBRC, the report relays.

                          About Anglo Irish

Anglo Irish Bank was an Irish bank headquartered in Dublin from
1964 to 2011.  It went into wind-down mode after nationalization
in 2009.  In July 2011, Anglo Irish merged with the Irish
Nationwide Building Society, with the new company being named the
Irish Bank Resolution Corporation (IBRC).

Standard & Poor's Ratings Services said that it lowered its long-
and short-term counterparty credit ratings on Irish Bank
Resolution Corp. Ltd. (IBRC) to 'D/D' from 'B-/C'.   S&P also
lowered the senior unsecured ratings to 'D' from 'B-'.  S&P then
withdrew the counterparty credit ratings, the senior unsecured
ratings, and the preferred stock ratings on IBRC.  At the same
time, S&P affirmed its 'BBB+' issue rating on three government-
guaranteed debt issues.

The rating actions follow the Feb. 6, 2013, announcement that the
Irish government has liquidated IBRC.


ST. PAUL'S CLO II: S&P Assigns Prelim. BB+ Rating to Cl. E Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary
credit ratings to St. Paul's CLO II Ltd.'s class A, B, C, D, and
E floating-rate notes.  At closing, St. Paul's CLO II will also
issue an unrated subordinated class of notes.

S&P's preliminary ratings reflect its assessment of the
preliminary collateral portfolio's credit quality, which has a
weighted-average 'B' rating.  S&P expects the portfolio at
closing to be diversified, comprising senior secured loans and
bonds.

S&P's preliminary ratings also reflect the credit enhancement
available to the rated notes through the subordination of cash
flows payable to the subordinated notes.  S&P subjected the
preliminary capital structure to a cash flow analysis to
determine the break-even default rate (BDR) for each rated class
of notes.

To determine the BDR for each rated class, S&P used the target
par amount, the covenanted weighted-average spread, the
covenanted weighted-average coupon, and the covenanted weighted-
average recovery rates.  S&P applied various cash flow stress
scenarios, using four different default patterns, in conjunction
with different interest rate stress scenarios for each liability
rating category.

S&P's preliminary ratings are commensurate with its assessment of
available credit enhancement following our credit and cash flow
analysis.  S&P's analysis shows that the available credit
enhancement for each rated class of notes was sufficient to
withstand the defaults that S&P applied in its supplemental tests
(not counting excess spread) outlined in S&P's corporate
collateralized debt obligation (CDO) criteria.

In S&P's analysis, it considered that the transaction documents'
replacement and remedy mechanisms adequately mitigate the
transaction's exposure to counterparty risk under S&P's current
counterparty criteria.

Following the application of S&P's non-sovereign ratings
criteria, it considers that the transaction's exposure to country
risk is sufficiently mitigated at the assigned preliminary rating
levels. This is because the concentration of the pool comprising
assets in countries rated lower than 'A-' is limited to 7% of the
aggregate collateral balance.

S&P expects that the transaction's legal structure will be
bankruptcy-remote, in accordance with S&P's European legal
criteria.

St. Paul's CLO II is a European cash flow collateralized loan
obligation (CLO) securitization of a revolving pool, comprising
euro-denominated senior secured loans and bonds issued by
European borrowers.  Intermediate Capital Managers Ltd. is the
collateral manager.

           STANDARD & POOR'S 17G-7 DISCLOSURE REPORT

SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities.  The Standard & Poor's 17g-7 Disclosure Report
included in this credit rating report is available at:

        http://standardandpoorsdisclosure-17g7.com/1661.pdf

RATINGS LIST

St. Paul's CLO II Ltd.
EUR400 Million Floating-Rate Notes

Class                 Prelim.         Prelim.
                      rating           amount
                                     (mil. EUR)
A                      AAA (sf)        240.00
B                      AA (sf)          40.00
C                      A (sf)           26.00
D                      BBB (sf)         17.00
E                      BB+ (sf)         15.00
Subordinated           NR               62.00

NR-Not rated.



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I T A L Y
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BANCA MONTE: Major Investor Agrees to Remove Voting Rights Limit
----------------------------------------------------------------
Elisa Martinuzzi and Sergio Di Pasquale at Bloomberg News report
that Banca Monte dei Paschi di Siena SpA's biggest investor, the
foundation that has controlled the Italian bank for 18 years,
agreed to remove a cap that limits other owners' voting rights as
the lender seeks to raise funds.

According to Bloomberg, a stock-exchange statement said that
Fondazione Monte dei Paschi di Siena, which owns about 34% of
Paschi, said it will back the Siena, Italy-based bank's proposal
to abolish the 4% cap to voting rights at an extraordinary
shareholders meeting on July 18.

Paschi Chief Executive Officer Fabrizio Viola and Chairman
Alessandro Profumo, who were appointed last year to turn the
company around, are seeking to attract new investors in a EUR1
billion (US$1.3 billion) stock sale to help repay state aid,
Bloomberg discloses.  The pair must also return the bank to
profit this year under a rescue plan to avoid handing over a
stake to the government, Bloomberg says.

Banca Monte dei Paschi di Siena SpA -- http://www.mps.it/-- is
an Italy-based company engaged in the banking sector.  It
provides traditional banking services, asset management and
private banking, including life insurance, pension funds and
investment trusts.  In addition, it offers investment banking,
including project finance, merchant banking and financial
advisory services.  The Company comprises more than 3,000
branches, and a structure of channels of distribution.  Banca
Monte dei Paschi di Siena Group has subsidiaries located
throughout Italy, Europe, America, Asia and North Africa.  It has
numerous subsidiaries, including Mps Sim SpA, MPS Capital
Services Banca per le Imprese SpA, MPS Banca Personale SpA, Banca
Toscana SpA, Monte Paschi Ireland Ltd. and Banca MP Belgio SpA.

                          *     *     *


As reported by the Troubled Company Reporter-Europe on June 19,
2013, Standard & Poor's Ratings Services said that it lowered its
long-term counterparty credit rating on Italy-based Banca Monte
dei Paschi di Siena SpA (MPS) to 'B' from 'BB', and affirmed the
'B' short-term rating.  S&P also lowered its rating on MPS' Lower
Tier 2 subordinated notes to 'CCC-' from 'CCC+'.  S&P affirmed
the ratings on MPS' junior subordinated debt at 'CCC-' and on its
preferred stock at 'C'.  At the same time, S&P removed the
ratings from CreditWatch, where it placed them with negative
implications on Dec. 5, 2012.


MANTEGNA FINANCE II: Moody's Cuts Rating on Cl. C Notes to 'Ba2'
----------------------------------------------------------------
Moody's Investors Service has downgraded the rating of all notes
outstanding in Mantegna Finance II S.r.l. Insufficiency of credit
enhancement to address sovereign risk and revision of key
collateral assumptions have prompted these downgrade actions on
Class C. Moody's downgraded the senior and mezzanine notes in
Mantegna Finance II S.r.l. because of lack of back-up servicing
arrangements.

The rating action concludes the review of Class C notes in
Mantegna Finance II S.r.l. placed on review on 13 Mar 2013, due
to the insufficiency of credit enhancement to address sovereign
risk following the introduction of additional factors in Moody's
analysis to better measure the impact of sovereign risk on
structured finance transactions ("Structured Finance
Transactions: Assessing the Impact of Sovereign Risk", March 11,
2013). Moody's has been notified that the notes will be redeemed
by the issuer on August 5, 2013.

Ratings Rationale:

The rating action on Class C primarily reflects the insufficiency
of credit enhancement to address sovereign risk and revision of
key collateral assumptions. The downgrade of class A2 and class B
notes reflects exposure to payment disruption risk due to lack of
back-up servicing arrangements.

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 ("Structured
Finance Transactions: Assessing the Impact of Sovereign Risk",
March 11, 2013).

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 Italian country ceiling, and therefore the maximum rating
that Moody's will assign to a domestic Italian issuer including
structured finance transactions backed by Italian receivables, is
A2. 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 revised the MILAN Credit Enhancement ("MILAN CE")
assumption 18.0% in Mantegna Finance II S.r.l. The increase in
Milan takes also into account the exposure to SME loans in the
portfolio (approx 24% of current pool balance).

Moody's has also revised its lifetime loss expectation assumption
because of worse-than-expected collateral performance since the
last review of the Italian RMBS sector in November 2012. Moody's
increased expected loss from 1.95% to 2.31% as a percentage of
original pool balance.

Lack of Back-up Servicing Arrangements

Moody's downgraded the senior and mezzanine notes in Mantegna
Finance II S.r.l because of lack of back-up servicing
arrangement. The primary servicer is Banca Monte dei Paschi di
Siena S.p.A. (B2, NP) and there is no appointed back-up servicer
or back-up facilitator.

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 principal methodologies used in this rating were "Moody's
Approach to Rating RMBS Using the MILAN Framework", published in
May 2013, "Global Structured Finance Operational Risk Guidelines:
Moody's Approach to Analyzing Performance Disruption Risk",
published in June 2011 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,
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 noteholders. Therefore, the
expected loss or EL 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.

List of Affected Ratings

Issuer: Mantegna Finance II S.r.l.

  EUR216.17M A2 Notes, Downgraded to A3 (sf); previously on Aug
2,
  2012 Downgraded to A2 (sf)

  EUR13.8M B Notes, Downgraded to A3 (sf); previously on Mar 31,
  2003 Definitive Rating Assigned A2 (sf)

  EUR12.27M C Notes, Downgraded to Ba2 (sf); previously on Mar
13,
  2013 Baa2 (sf) Placed Under Review for Possible Downgrade



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


AMANAT INSURANCE: Fitch Affirms 'B' IFS Rating; Outlook Stable
--------------------------------------------------------------
Fitch Ratings has affirmed AMANAT Insurance (Kazakhstan)'s
(AMANAT) Insurer Financial Strength (IFS) rating at 'B' and
National IFS rating at 'BB(kaz)'. The Outlooks are Stable.

Key Rating Drivers

AMANAT's ratings reflect adequate, albeit declining, risk-
adjusted capitalization offset by ongoing regulatory solvency
risk and relatively weak profitability. The ratings also reflect
the low credit quality of AMANAT's investment portfolio, with
substantial holdings of sub-investment-grade debt and equity.

AMANAT's Fitch-calculated risk-adjusted capital adequacy showed a
decline between 2010-2012. The decline in 2011 was caused by the
fact that the net premium growth was higher than the increase in
capital following an equity injection in Q411. In 2012, a
significant dividend payment of KZT400 million further weakened
the risk-adjusted capital position. The dividend withdrawal
raises some concerns about AMANAT's future capital management
policy. Nevertheless, the company's risk-adjusted capital
position remains supportive of the current ratings.

AMANAT's regulatory solvency margin reached a marginal level of
100.3% of the required minimum during Q412 after a period of
comfortable surplus in Q411 and most of 2012. The main reason for
this deterioration was a reduction in available capital, which
followed the acquisition of several large insurance contracts.
The regulatory solvency margin subsequently improved to 120% at
year-end 2012, but declined again to 111% at June 2013.

Fitch is concerned that by maintaining low coverage of the
statutory solvency margin there is an increased risk that a
breach of the minimum regulatory solvency requirement could occur
from unexpected business fluctuations.

AMANAT's return on adjusted equity averaged to only 2% between
2010-2012. The low level of overall profitability is explained by
the poor technical performance of its insurance operations, in
contrast to the good performance of its investment portfolio.
AMANAT's combined ratio improved moderately in 2012 to 108% (2011
- 114%). This was caused by an improvement in the loss ratio
component, while the commission and expense ratios remained
relatively stable compared to 2011.

The accounting year loss ratio decreased to 28.7% at end-2012
from 35.2% at end-2011. This was driven by positive loss reserve
development in the same year, which more than offset a moderate
rise in claims activity across a number of lines.

The riskiness of AMANAT's investment portfolio has been growing
over the past three years. Equity instruments accounted for 19.2%
of total investments at end-2012, up from 8.7% at end-2011 and
4.8% at end-2010. Fitch is somewhat concerned by the growing
equity exposure as AMANAT has recently had negative experience in
equity investments. The investment portfolio also contains
significant concentrations.

RATING SENSITIVITIES

Fitch notes that the scope for positive rating action is
currently limited in the absence of evidence of more conservative
management of the regulatory solvency ratio. Conversely, a
prolonged fall of AMANAT's solvency margin below 100%, in the
absence of further financial support from the shareholder, could
lead to a downgrade.

AMANAT's ratings could be upgraded if the company reported two
consecutive years of underwriting and investment profits.



===================
L U X E M B O U R G
===================


SPIE BONDCO: New EUR400MM Term Loan Gets Moody's '(P)B2' Rating
---------------------------------------------------------------
Moody's Investors Service has assigned a (P)B2 rating to a EUR400
million new 5-year bullet term loan facility proposed under the
credit facilities agreement between the lenders and Clayax
Acquisition SAS, the company within Spie group, headed by Spie
BondCo 3 S.C.A. Concurrently, Moody's affirmed the corporate
family rating (CFR) of B2 and probability of default rating (PDR)
of B2-PD of Spie, as well as the B2 rating on existing bank debt,
and the Caa1 rating on Spie's senior notes due 2019 issued by
Spie BondCo 3 S.C.A.

The outlook on Spie's ratings has also been changed to positive
from stable.

The proceeds from the new term loan will be used to (i) refinance
its outstanding EUR167 million amortizing term loan; (ii) finance
acquisitions, including Hochtief Service Solutions ("HSS")
announced on June 28, 2013; (iii) pay refinancing related fees
and expenses and (iv) for general corporate purposes.

Moody's issues provisional ratings in advance of the final sale
of debt instruments and these ratings reflect the rating agency's
preliminary credit opinion regarding the transaction only. Upon a
conclusive review of the final documentation, Moody's will
endeavor to assign a definitive rating to the debt. A definitive
rating may differ from a provisional rating.

Ratings Rationale:

The (P)B2 rating assigned to the new term loan is at the same
level as the company's CFR and existing senior secured term and
revolving credit facilities, reflecting their pari-passu status.

Spie demonstrated robust financial performance since its
acquisition in July 2011 by a consortium led by Clayton, Dubilier
and Rice, Axa Private Equity and Caisse de Depots du Quebec from
PAI Partners. The year-on year sales growth of approximately 3%
in 2012 was driven by acquisitions, whereas strong performance in
its key market of France (accounting for c. 65% of sales) was
offset by weakness in the UK and Portugal. The company made
eleven acquisitions contributing approximately EUR67 million to
the top line during 2012. Supported by the improvement in
profitability across all divisions, total EBITDA (as adjusted by
Moody's) increased by approximately 9% leading to a decline in
Moody's adjusted gross leverage to 5.5x at the end of 2012 from
5.8x at the end of 2011.

Growth in 2013 is expected to be supported by the ramp-up in
acquisitions as well as positive organic growth following the
operational restructuring in the UK and Portugal. The company
made a few acquisitions in 2013, including the purchase of HSS in
Germany for EUR240 million (financed mostly by debt), which is
expected to close in the third quarter of 2013. This will result
in leverage increasing to close to 6.0x as of the end of 2013,
however leverage is expected to decline thereafter due to full-
year contribution from the acquisitions. HSS is expected to have
a positive impact on Spie's market share in Germany and
geographical diversification, with revenue share from France
reducing to below 60% pro forma for the acquisition.

The acquisitions spend and integration are expected to remain the
key risk for the business assessment, especially given that as
part of the current refinancing the company agreed, among other
things, on the increase in the acquisition basket to EUR500
million from EUR350 million and the right to increase
indebtedness to finance approved acquisitions. However Spie has
so far demonstrated disciplined approach to acquisitions, with
annual spend averaging approximately EUR40 million in each of
2011 and 2012 as well as the ability to de-lever. Furthermore,
the acquisitions will continue to be restrained by net covenant
leverage test and excess cash flow sweep required to repay debt
facilities.

The company's liquidity is adequate, consisting as of 31 December
2012 by EUR284 million cash and cash equivalents on balance
sheet, EUR200 million undrawn revolving credit facility and EUR82
million undrawn under EUR100 million acquisition/capital
expenditure facility. The liquidity is expected to remain
sufficient proforma for the transaction, supported by the bullet
maturity of the new term loan replacing the amortizing tranche.

The positive outlook reflects Moody's expectation of continued
steady deleveraging of the business despite the acquisition
growth strategy

What Could Change The Rating Up/Down

Positive rating pressure could arise if the company (i) de-levers
its balance sheet leading to a Moody's adjusted gross Debt to
EBITDA ratio substantially below 6.0x on a sustainable basis;
(ii) improves its (EBITDA-Capex) to Interest ratio towards 2.0x,
and (iii) maintains positive Free Cash Flow.

Conversely, the ratings outlook could revert back to stable as a
result of underperformance leading to: i) a gross Moody's
adjusted gross Debt/EBITDA ratio returning above 6.0x, (ii) a
(EBITDA-Capex)/Interest approaching 1.5x or iii) Free Cash Flow
falling towards zero. Any significant debt-financed acquisition
may also put negative pressure on the ratings.

The principal methodology used in these ratings was the Global
Business & Consumer Service Industry Rating Methodology published
in October 2010. Other methodologies used include Loss Given
Default for Speculative-Grade Non-Financial Companies in the
U.S., Canada and EMEA published in June 2009.



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


GLOBAL TIP: Moody's Rates EUR278-Mil. Term Loan B '(P)B1'
---------------------------------------------------------
Moody's Investors Service has assigned a (P)B1 corporate family
rating to Global TIP Holdings One B.V. Concurrently, Moody's has
assigned a provisional (P)B1 rating to the EUR278 million term
loan B and EUR55 million revolving credit facility (RCF) to be
raised by Global TIP Finance B.V., a subsidiary of TIP Trailer.
The outlook on all ratings is stable. This is the first time
Moody's has assigned a rating to the company.

Moody's issues provisional ratings in advance of the final sale
of securities and these ratings reflect Moody's preliminary
credit opinion regarding the transaction only. Upon a conclusive
review of the final documentation, Moody's will endeavor to
assign a definitive rating to the facilities. A definitive rating
may differ from a provisional rating.

"The assigned (P)B1 rating balances TIP Trailer's small scale,
limited growth prospects for its core leasing business and the
commoditized nature of its assets with the company's high cash
flow predictability and strong balance sheet, with low leverage
and strong asset/debt coverage," says Sebastien Cieniewski, a
Moody's Assistant Vice President and lead analyst for TIP
Trailer.

Ratings Rationale:

The assigned (P)B1 CFR is constrained by the small scale of TIP
Trailer's operations, with revenues of EUR303 million generated
in 2012, representing a 16% market share of the short- and long-
term operating lease industry in Europe. TIP Trailer's fleet
accounts for only 2.6% of the total European trailer installed
base, with 82% of the units being fully owned by its operators.
The company's revenues have been decreasing over the past couple
of years to EUR303 million in 2012 from a peak of EUR429 million
in 2008, as the company has adjusted its trailer base to
approximately 48,000 units in 2012 from approximately 79,000
units in 2008 to reflect weaker market conditions in Europe.
Moody's views negatively that the company's geographical exposure
is limited to Europe, where growth prospects are weak. In
addition, trailer operating lease penetration in the European
countries where the company operates, including long-term lease
and short-term rental, has remained fairly stable in the past
decade at around 18%. Furthermore, Moody's notes that TIP
Trailer's assets are fairly commoditized in nature, resulting in
more volatile used trailer prices.

However, more positively, the rating also reflects TIP Trailer's
high cash flow predictability due to the long-term nature of the
majority of its lease and maintenance contracts and its strong
balance sheet, with relatively low leverage and strong asset/debt
coverage. In 2012, the company generated 58% of its total
revenues through long-term operating leases -- TIP Trailer
targets a lease term of approximately five years -- deriving an
additional 6% of revenues from typically multi-year FleetCare
maintenance services to third parties' fleets. Moody's also views
positively TIP Trailer's good customer diversification, with its
top 20 clients representing only 33% of 2012 sales and given that
the company is exposed to a wide range of end-users including
food retailers, mail and parcel couriers, and industrial goods
manufacturers. The rating agency expects that pro forma for the
company's acquisition by Chinese conglomerate HNA, expected to be
completed in Q4 2013, TIP Trailer's adjusted gross leverage
(based on Moody's adjustments for operating leases) will be
fairly modest, at 2.6x. This level of leverage allows for a high
asset/debt coverage, with adjusted tangible assets to debt at
close to 2.0x.

Moody's considers that pro forma for the transaction, TIP Trailer
benefits from good liquidity. In addition to a EUR60 million cash
balance at the closing of the transaction, the company will also
benefit from a EUR55 million undrawn RCF. While the capital-
intensive nature of TIP Trailer's business model results in weak
free cash flow generation, Moody's recognizes that the company
benefits from flexibility in terms of capex, leading to a
counter-cyclical cash flow pattern. As demand for rental of
trailers weakens, the company can reduce its capex related to
trailer renewal and allow its fleet to age, as well as dispose of
its sitting fleet in order to maintain a high utilization rate.
This flexibility enabled the company to generate significant
positive free cash flow post disposals of between EUR140 million
and EUR192 million per annum during the period 2009-12. Moody's
expects that as TIP Trailer's fleet stabilizes and renewal capex
increases, the company's free cash flow post disposals will be
only marginally positive. However, the rating agency views
positively management's focus on developing its FleetCare
business. This focus should enable the company to leverage its
existing workshop and affiliated vendors' network and generate
additional revenue and EBITDA at a fraction of the capex required
for its lease business. In 2012, Services (including embedded
maintenance within long- and short-term lease contracts)
represented 43% of TIP Trailer's total revenues.

The term loan B and the RCF rank pari passu and benefit from
senior secured guarantees from material operating subsidiaries
accounting for at least 85% of the group's assets and EBITDA. The
term loan B and the RCF also benefit from a first lien security
over the assets of substantially all the guarantors. These
facilities are rated (P)B1, at the same level as the CFR, in the
absence of significant non-debt liabilities ranking ahead or
below.

Rationale For Stable Outlook

The stable rating outlook reflects Moody's expectation that TIP
Trailer should be able to maintain (1) its current profitability
levels; (2) an adequate liquidity position due to a prudent fleet
investment program, and (3) adjusted leverage below 3.0x.

What Could Change The Rating Up/Down

Moody's does not foresee any upward rating pressure in the short
term. However, longer term, positive rating pressure could arise
if (1) the company's adjusted leverage decreases towards 2.0x on
a sustainable basis; (2) its fleet stabilizes following several
years of decline; and (3) the FleetCare business shows good
traction.

Conversely, negative rating pressure could develop if (1) TIP
Trailer's adjusted leverage ratio trends above 3.5x; (2) the size
of the company's fleet continues to decline; and (3) the
company's liquidity position deteriorates.

Principal Methodology

The principal methodology used in these ratings was the Global
Equipment and Automobile Rental Industry published in December
2010. Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.

TIP Trailer is a holding company set up for the acquisition of GE
Capital's pan-European over-the-road trailer services business.
Pro-forma for the acquisition, the company is an independent
operating lease (short- and long-term lease) provider of trailers
for trucks and had an owned fleet of approximately 48,000 as of
December 2012. TIP Trailer also provides trailer fleet management
services, including maintenance, to its own fleet and on a
standalone basis to third parties. The company's customers are
mainly European transportation and logistics companies. Owned and
operated by General Electric under its GE Capital division from
1993, the European over-the-road trailer services business is
expected to be acquired by the Chinese conglomerate HNA in Q4
2013.



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


* RUSSIA: Basel Rule Easing Moderately Negative for Creditors
-------------------------------------------------------------
The relaxation of the final Basel III capital rules by the
Central Bank of Russia (CBR) is moderately negative for bank
creditors who would have benefitted if lenders held slightly more
capital, Fitch Ratings says. "But we do not expect this to result
in any negative rating actions on Russian banks," Fitch says.

"The CBR retreat announced last week from the stricter original
proposals is unlikely to change the level of capital held by
banks. We had previously expected five larger banks (VTB, Alfa-
Bank, NOMOS, Russian Standard Bank and Probusinessbank) and as
many as 20 medium-sized banks to address capital shortfalls by
raising equity or reallocating group capital to meet the tougher
5.6% minimum core Tier 1 and 7.5% Tier 1 ratios in the CBR's
initial plans," Fitch says.

The watered-down regulation provides banks with greater
flexibility to comply. The final rules are effective from
Jan. 1, 2014 -- a three-month delay from the original tentative
start date -- and set the new minimum ratios at 5% and 5.5%,
respectively, with the latter Tier 1 minimum rising to 6% from
2015. The minimal total capital ratio remains unchanged at 10%.

The overall impact is now limited for Russian banks because they
are effectively already required to maintain Tier 1 capital above
5%, because almost all Tier 1 is core equity capital as few banks
have issued perpetual instruments and Tier 2 capital is capped at
50% of total capital.

The final minimum core Tier 1 ratio is only marginally higher
than the 4.5% Basel recommendation, while the Tier 1 requirement
(from 2015) is in line. We believe banks' credit profiles could
benefit from higher capital buffers as the operating risks in
Russia are high relative to most developed markets. The CBR could
introduce additional conservation or counter-cyclical buffer
requirements, although it has not yet proposed these.

The CBR also lowered the conversion/write-down trigger for Tier 1
instruments to 5.5% from the original 6.4% to make these
instruments moderately more attractive for investors. However, it
is unlikely the banks will need to issue these in large
quantities following the relaxation of the Tier 1 ratio
requirement. Instead, banks will have more scope to issue Tier 2
subordinated debt to make up the gap between the minimum Tier 1
ratio and the 10% total capital ratio.

"We expect the capital rules could be marginally positive for
loan growth. With inflation set to ease, and under new governor
Elvira Nabiullina, the CBR may loosen monetary policy. Last week
it introduced a one-year refinancing instrument for banks with
the aim of guiding market interest downwards. Faster credit
expansion could increase risks in the banking sector if it
undermines bank capitalization. As a moderate mitigant, the CBR
has taken measures to enhance capital quality, including raising
risk weights for non-core assets, FX retail loans and high-rate
retail loans, revising market-risk calculations and increasing
provisioning for certain project finance assets," Fitch says.



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


GRIFOLS SA: Good Performance Cues Moody's to Lift CFR to 'Ba2'
--------------------------------------------------------------
Moody's Investors Service has upgraded to Ba2 the Corporate
Family Rating, and the Ba2-PD Probability of Default Rating (PDR)
of Grifols S.A. and to Ba1 the senior secured ratings (issued by
Grifols S.A.) and B1 senior unsecured rating (issued by Giant
Funding Corp.) of its bank and bond instruments respectively. The
outlook on the ratings is stable.

Ratings Rationale:

The rating action reflects strong levels of operating trading and
continued progress made by the Company in achieving planned
synergies from the acquisition of Talecris Biotherapeutics
Holding Corp, which was announced in June 2010 and completed in
June 2011. This has led to a leverage ratio of Moody's adjusted
debt/EBITDA of 3.7x. The rating action also reflects the
sustainably high profitability with an EBITDA margin of above
30%. The strong profitability in turn enables Grifols to generate
positive free cash flows which has led to a strongly increased
cash position, and therefore a growing gap between gross and
adjusted net debt (c. 0.5x) and Moody's expectation that these
cash balances would be used for debt repayment in 2014, thereby
reducing the gross leverage further.

The Ba2 CFR of Grifols incorporates: (i) the company's large
scale and strong position in the global market for blood plasma
derivatives, with a high degree of vertical integration; (ii) the
numerous barriers to entry to the plasma derivatives market
including, but not limited to, a high degree of capital-
intensiveness and regulatory constraints; (iii) favorable market
dynamics, with attractive volume growth supported by earlier and
enhanced diagnosis of patients, and line extensions of existing
products; and (iv) progress achieved to reduce debt and improve
leverage as well as Grifols' commitment to further debt reduction
as a primary use for free cash flow generated.

These positive rating drivers are balanced by: (i) the company's
narrow diversification, with plasma-derived products being its
main activity, and its corresponding vulnerability with regard to
market imbalances and negative pricing movements; (ii) Grifols'
still relatively high, but declining levels of leverage; and
(iii) Moody's view of high impact /low probability safety risks
relating to product contamination.

Going forward Moody's expects the pace of deleveraging from
increasing EBITDA and free cash flow to be slowing down which is
partly due to the resumption of dividend payments and the
achievement of a significant part of the synergies that were
expected from the Talecris acquisition. However, the stable
outlook incorporates Moody's assumption that the company would
use a large part of its high and further increasing cash balance
to materially reduce its outstanding debt in 2014 and optimize
funding costs as part of likely refinancing. Moody's expects that
leverage levels will improve materially below 3.0x over the next
12 months.

Grifols' financing package consists of around US$3.0 billion of
senior secured facilities (including an undrawn revolver of
around $200 million) and $1.1 billion senior unsecured notes due
2018. The notes benefit from the same, pari-passu ranking
guarantees but are subordinated to the secured debt which
additionally benefits from first priority pledges over the
majority of tangible and intangible assets of the combined group.

An upgrade of the corporate family rating to Ba1 could be
considered if Grifols' leverage trends toward a Debt/EBITDA of
2.5x and/or CFO/Debt improves to sustainably above 25% (17.5% per
end of March 2013). Downward pressure could arise if the
company's leverage remains sustainably over 3.5x and/or CFO/Debt
falls towards 15% or liquidity profile deteriorates
significantly.

The principal methodology used in these ratings was the Global
Medical Product and Device Industry published in October 2012.
Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.

Based in Barcelona, Spain, Grifols is a global healthcare company
with 2012 reported revenues of EUR2.62 billion. The company
operates through four divisions: Bioscience, Diagnostics,
Hospital as well as Raw Materials and Others (mainly royalties).
Bioscience, which accounts for approximately 89% of current
revenues, focuses on the development, manufacturing, marketing
and distribution of a broad range of blood plasma-derived
products. These products are used for the treatment of chronic
and acute conditions, such as immune system deficiencies,
neurological diseases, bleeding diseases, burns and major
surgery. The company is listed on the Madrid Stock Exchange and
is in the IBEX 35 Index and in NASDAQ via ADR's.


SMART SME: Fitch Affirms 'CC' Rating on EUR58MM Class E Notes
-------------------------------------------------------------
Fitch Ratings has affirmed SMART SME CLO 2006-1's notes, as
follows:

  EUR87m class A notes (ISIN: XS0276638938): affirmed at 'AAsf';
  Negative Outlook

  EUR118.9m class B notes (ISIN: XS0276639407): affirmed at
  'BBBsf'; Negative Outlook

  EUR45m class C notes (ISIN: XS0276640082): affirmed at 'BBsf';
  Negative Outlook

  EUR49.3m class D notes (ISIN: XS0276640595): affirmed at 'Bsf';
  Negative Outlook

  EUR58m class E notes (ISIN: XS0276640835): affirmed at 'CCsf';
  assigned Recovery Estimate (RR) of 'RE0%'

Key Rating Drivers

The affirmations reflect the stable portfolio performance since
the previous rating action in July 2012. All realized losses have
been absorbed by the synthetic excess spread (SXS), hence no
losses have been written against the notes. Further, the shares
of Spanish and Italian assets have reduced to 15% and 2%
respectively, from 20.2% and 3.3% at the previous review, which
the agency regards as positive given the current economic
conditions in both countries. Additionally, the agency notes that
the short remaining term until scheduled maturity in December
2013 limits the potential risk horizon.

The pool composition has remained largely unchanged from the last
review. The lowest-rated bucket that comprises assets rated at or
below 'iCCC+' rated according to Deutsche Bank's (DB) internal
rating scale remains at a relatively high level around 10%.
However, this share has been rather stable since March 2011.

Fitch applied its portfolio credit model (PCM) to assess the
credit quality of the portfolio. For this reason, the agency
mapped the originator's internal ratings to Fitch's one-year
probability of defaults by using DB's rating migration tables.
Additionally, the agency applied additional stress to obligor
groups larger than 0.50% of the current pool and to Spanish
assets from the real estate and construction industries. In the
agency's view, the available credit enhancement including the
synthetic excess spread is sufficient to provide for the expected
defaults in the respective rating scenarios.

The replenishing period can continue until the scheduled maturity
date of 27 December 2013 unless terminated earlier for
performance reasons. During this period, no additional credit
enhancement can build up. Additionally, during the replenishing
period the share of Spanish and Italian assets can increase to
24% and 12%, respectively, of the total outstanding pool balance.
These weaknesses of the transaction are reflected in the Negative
Outlook on all the notes rated above 'CCC'.

Despite the relatively high share of the lowest-rated bucket,
Fitch notes that all realized losses have been covered by SXS to
date. Accordingly, the rated notes have not incurred any losses.
Fitch regards the SXS mechanism as a strength of the
securitization since the SXS references the initial pool balance
and the year in which the credit events have occurred. Due to
these features, the SXS is a fixed amount per year and is not
dependent on work-out timing. Despite the strong SXS mechanism,
only 25.6% of the total defaulted assets have been liquidated to
date. As more defaulted assets are liquidated, the SXS may be
insufficient to provide for all additional realized losses.

Fitch assigned a Recovery Estimate (RE) to the 'CCsf'-rated class
E note. REs are forward-looking, taking into account Fitch's
expectations for principal repayments on distressed structured
finance securities rated 'CCCsf' or below.

Rating Sensitivities

The portfolio is vulnerable to defaults of obligors primarily
from Spain and Italy due to the stressed environment in these
countries. The agency notes that the majority of the lower-rated
assets stems from Spain. However, the agency notes that the share
of both countries has been reduced in the total portfolio.
Further, the agency applied additional stress to such assets in
its credit analysis.

The transaction is a partially funded synthetic collateralized
debt obligation (CDO) referencing a portfolio of loans, revolving
credit facilities and other payment claims to SMEs based
predominantly in Germany, but also in Spain and Italy. The debt
instruments were originated by Deutsche Bank AG (A+/Stable/F1+)
and its Spanish and Italian subsidiaries.



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


PIVDENNYI BANK: Fitch Affirms 'B-' LT Issuer Default Ratings
------------------------------------------------------------
Fitch Ratings has affirmed two privately-owned Ukrainian banks:
Pivdennyi Bank (PB) and Industrialbank's (INB) Long-term IDRs at
'B-'. The Outlook on PB is Stable and on INB is Negative.

KEY RATING DRIVERS - PB

The affirmation of PB's ratings reflects the bank's stable
franchise in its home region and reasonable liquidity position.
At the same time, the ratings take into account high balance
sheet concentrations, asset quality concerns, moderate
capitalization and modest performance.

At end-Q113, the bank reported low (by Ukrainian standards) non-
performing loans (NPLs; more 90 days overdue) of 5.6% of total
loans, while restructured and rolled-over exposures made up a
large 37% of the gross portfolio. In this context, the bank's
loss absorption capacity appears modest. Fitch estimates that at
end-Q113 the bank was able to increase impairment reserves only
up to 18% of gross loans without breaching the minimum regulatory
capital level of 10%.

On a consolidated basis, PB's liquidity position is comfortable,
given the liquidity cushion held on the balance sheet of the
bank's Latvian subsidiary -- Regional Investment Bank (RIB): at
end-4M13, highly liquid assets (cash and equivalents, net short-
term interbank placements and securities eligible for repo
financing with Central Banks) accounted for 33% of customer
accounts. However, about half of these assets were booked on
RIB's balance sheet, and RIB's ability to provide funds directly
to the Ukrainian parent at times of stress could be limited by
Latvian regulation, although Fitch understands that liquidity may
flow indirectly, giving moderate comfort.

RATING SENSITIVITIES - PB

Upward pressure on PB's ratings is currently unlikely, but could
stem from an improvement in asset quality (particularly, a
reduction of restructured/rolled-over exposures), franchise
diversification and improvement of the operating environment. If
high impairment losses caused a deterioration of capitalization
or a weakening of liquidity, negative rating action may be
warranted.

KEY RATING DRIVERS - INB

The Negative Outlook on INB's rating reflects Fitch's view of
further potential franchise deterioration following changes in
the ownership of the bank's formerly related party Zaporozhstal
(ZS; large Ukrainian steel producer) in 2012, as a significant
part of INB's business was generated by ZS and its servicing
companies. The decrease in pre-impairment profitability to UAH2
million in 2012 (adjusted for non-recurring gains on a property
sale) from UAH75 million in 2011, a fall in the net interest
margin to 6.9% from 8.7% and the outflow of ZS-funds all in part
reflect franchise deterioration, in the agency's view.

Fitch is also concerned about the quality of INB's economic
capital position. The regulatory capital ratio of 22.4% at end-
Q113 looks solid, but is undermined by the high volume of related
party lending (equal to about 71% of IFRS equity at end-2012),
only partially (for 23%) collateralized by related-party
deposits. Restructured/rolled-over exposures were also a large
42% of the loan book at end-Q113. Fitch notes potential downside
risks stemming from these categories as recovery prospects are
uncertain, while there is also limited transparency with respect
to the purpose of related-party lending and the quality of these
exposures.

RATING SENSITIVITIES - INB

Prolonged deterioration in performance, recognition of
substantial impairment losses or tightening of the liquidity
position could warrant negative rating action. The Outlook could
be revised to Stable if the bank's efforts to diversify franchise
result in better performance, a decrease in related party lending
and stabilization of asset quality.

The rating actions are:

Pivdennyi Bank

Long-term IDR: affirmed at 'B-'; Outlook Stable
Short-term IDR: affirmed at 'B'
Viability Rating: affirmed at 'b-'
Support Rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'

Industrialbank

Long-term IDR: affirmed at 'B-'; Outlook Negative
Short-term IDR: affirmed at 'B'
Viability Rating: affirmed at 'b-'
Support Rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'



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


ALDERSHOT FC: Needs GBP7,000 to Escape Liquidation
--------------------------------------------------
Pete Bryant at gethampshire.co.uk reports that Aldershot Town FC
is just GBP7,000 away from safety as donations from fans continue
to pour in -- and the deadline has been pushed back yet again in
an effort to secure a deal.

By July 8, the total amount raised through donations from
supporters, including ordinary fans, stood at GBP43,000 -- just
short of the GBP50,000 thought to be needed to complete a
takeover of the club, gethampshire.co.uk relates.

According to the report, an appeal was launched to save the Shots
on July 4 after a meeting at the EBB Stadium between the
consortium bidding for ownership and the club's creditors.

gethampshire.co.uk notes that the bid, in the region of
GBP650,000, from the consortium led by club chairman Shahid
Azeem, is the only one on the table, and if the club were to be
liquidated, none of the current creditors would receive any
money.

The report say the fundraising began even before July 4's meeting
had ended, with shareholders pledging sums in an attempt to
convince the creditors to accept the bid.

If the takeover goes ahead, the report notes, the consortium
members have pledged to run the club sustainably and have raised
additional funds to allow it to continue to compete next season
and in future seasons.

The club was initially given 24 hours to raise the funds but this
has been extended several times with a new deadline of the end of
July 9.

Aldershot Town FC went into administration on May 2 with debts of
around GBP1 million, five days after being relegated from the
Football League.


BRADFORDS BAKERS: More Than 100 Jobs Lost as Bakery Chain Closes
----------------------------------------------------------------
stvnews reports that Bradfords Bakers, one of Scotland's best-
known bakery chains, is set to close with the loss of more than
100 jobs.

Liquidators were appointed by Bradfords Bakers following action
by the East Renfrewshire-based company's creditors.

Stvnews discloses that the company has 13 branches across
Scotland, which include its flagship bakery on Sauchiehall Street
and Miss Cranston's Tearooms on the same street.

Its gift website and Bakery ATM, a vending machine service, will
continue to operate, the report says.

Bradfords Bakers, founded by Hugh Bradford and his sons in 1924,
came within a week of being liquidated two years ago when HM
Revenue and Customs filed a petition at Paisley Sheriff Court,
the report recalls.  Since then, it has struggled to cope with
rising costs and poor trading conditions during the recession,
the report adds.


CO-OPERATIVE BANK: C. Kelly to Lead GBP1.5BB Black Hole Probe
-------------------------------------------------------------
Peter Ranscombe at The Scotsman reports that former Treasury
official Sir Christopher Kelly was on Monday drafted in to run an
independent probe into the GBP1.5 billion black hole at the heart
of the Co-operative Bank's finances.

Mr. Kelly, a former chairman of the Financial Ombudsman Service
and the Committee on Standards in Public Life, was chosen by the
Co-operative Group, which was last month forced to launch a
rescue plan for its lending arm, the Scotsman relates.

The Financial Conduct Authority has told the Co-op that it needs
to raise GBP1.5 billion to give it the industry-standard 7%
capital buffer to help it to survive any future financial crises,
the Scotsman discloses.

Under the rescue scheme proposed by the mutual, the Co-op Group
will float its lending arm on the stock market, wiping out its
current shares in the bank, the Scotsman notes.

The Co-op Group will then issue a GBP500 million bond and will
sell its general insurance businesses for a further GBP500
million in order to buy back a controlling stake in the lender,
the Scotsman says.

The remaining cash to fill the black hole would come from bonds
being converted into shares, at an expected 30% discount, the
Scotsman states.

Mr. Kelly's "forensic" inquiry -- which will conclude next May --
will also examine the Co-op Bank's 2009 takeover of the Britannia
Building Society, according to the Scotsman.

Many commentators have suggested that that deal was at the heart
of its current funding shortfall, the Scotsman says.

Mr. Kelly will also inquire into the proposed acquisition of 632
"project verde" branches from Lloyds Banking Group, which
collapsed in April, the Scotsman discloses.

Co-op Bank -- part of the mutually owned food-to-funerals
conglomerate Co-operative Group -- traces its history back to
1872.  The bank gained prominence for specializing in ethical
investment.  It refuses to lend to companies that test their
products on animals, and its headquarters in Manchester is
powered by rapeseed oil grown on Co-operative Group farms.

Founded in 1863, the Co-op Group has more than six million
members, employs more than 100,000 people and has turnover of
more than GBP13 billion.

                           *     *     *

As reported by the Troubled Company Reporter-Europe on May 13,
2013, Moody's Investors Service downgraded the deposit and senior
debt ratings of Co-operative Bank plc to Ba3/Not Prime from
A3/Prime 2, following its lowering of the bank's baseline credit
assessment (BCA) to b1 from baa1.  The equivalent standalone bank
financial strength rating (BFSR) is now E+ from C- previously.


FOUNDATION CMBS: Fitch Affirms & Withdraws Rating on 2016 Notes
---------------------------------------------------------------
Fitch Ratings has affirmed and withdrawn Foundation CMBS Ltd.'s
EUR232.2 million class A commercial mortgage-backed floating-rate
notes due 2016 at 'CCsf'; Recovery Estimate of RE80%.

The affirmation reflects the lack of change in the transaction's
performance since the last rating action on July 8, 2013.

The withdrawal reflects Fitch's understanding that investor
reporting will no longer continue. Fitch has been advised that
the CMBS will shortly be cancelled.


HEARTS OF MIDLOTHIAN: Three Formal Bids for Club Received
---------------------------------------------------------
insolvencynews.com reports that administrators to Heart of
Midlothian FC plc have confirmed three formal offers have been
submitted for the insolvent club.

Bryan Jackson, joint administrator of Heart of Midlothian FC plc
and a partner in the Business Restructuring team at BDO LLP,
warned that the process will take some time to complete,
according to insolvencynews.com.

"Further discussions will now take place with the bidders and
also with the legal representatives of the administrators of Ukio
Bankas," the report quotes Mr. Jackson as saying.

"We would then hope to be in a position to name a preferred
bidder. At this stage, we cannot say how long that process will
take.

"The Corporate Voluntary Arrangement will need the support of the
other major creditor and shareholders, and there may be a delay
in securing that support while administrators are appointed to
those entities.

"Therefore the sale process may take some time before a deal can
be concluded and the club exits administration."

As reported in the Troubled Company Reporter-Europe on June 19,
2013, Press Association said Heart of Midlothian Football Club,
the financially-stricken Scottish Premier League club, lodged
papers at the Court of Session in Edinburgh and have approached
accountancy firm KPMG to act as their administrators.  The club
was faced with a winding-up order after Her Majesty's Revenue and
Customs threatened action over an unpaid GBP100,000 tax bill,
although the majority of that sum has been paid, according to
Press Association.  Hearts were also hit with an immediate
transfer embargo by the Scottish Premier League last June 14
after admitting they could not afford to pay their players.


LAMBDA FINANCE 2007-1: S&P Affirms B Ratings on 2 Note Classes
--------------------------------------------------------------
Standard & Poor's Ratings Services took various credit rating
actions in Lambda Finance B.V.'s series 2007-1.

Specifically, S&P has:

   -- lowered to 'A (sf)' from 'A+ (sf)' its ratings on the class
      A1, A2, A3, AB1, AB2, B1, B2, B3, C1, C2, and C3 notes; and

   -- affirmed its ratings on the class D1, D2, E1, E2, F1, and
      F2 notes.

The rating actions follow S&P's July 2, 2013 lowering of its
long-term issuer credit rating (ICR) on Barclays Bank PLC to 'A'
from 'A+'.  To assess the effect of this downgrade on S&P's
ratings in the transaction, it has applied its current
counterparty criteria.

The issuer has established a cash deposit account with Barclays
Bank.  S&P's current counterparty criteria classify the cash
deposit account as 'direct support, funded synthetic'.
Therefore, S&P's current counterparty criteria cap the maximum
achievable ratings in this transaction at S&P's long-term 'A' ICR
on Barclays Bank, due to the transaction's exposure to Barclays
Bank as the cash deposit account holder.

Consequently, following S&P's downgrade of Barclays Bank and the
application of its current counterparty criteria, it has lowered
to 'A (sf)' from 'A+ (sf)' its ratings on the class A1 to C3
notes.  S&P has affirmed its ratings on the class D1 to F2 notes
because it considers the available credit enhancement to be
commensurate with its currently assigned ratings.

Lambda Finance series 2007-1 is a synthetic balance sheet
collateralized loan (CLO) transaction backed by a pool of loans
granted to U.K. small and midsize enterprises (SMEs).  The
transaction closed in February 2007.

          STANDARD & POOR'S 17G-7 DISCLOSURE REPORT

SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities.  The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.

If applicable, the Standard & Poor's 17g-7 Disclosure Report
included in this credit rating report is available at:

            http://standardandpoorsdisclosure-17g7.com

RATINGS LIST

Lambda Finance B.V.
EUR1.406 Billion, GBP1.396 Billion, and
US$2.323 Billion Secured Floating-Rate Notes
(Gracechurch Corporate Loans Series 2007-1)

Class      Rating            Rating
           To                From

Ratings Lowered

A1         A (sf)         A+ (sf)
A2         A (sf)         A+ (sf)
A3         A (sf)         A+ (sf)
AB1        A (sf)         A+ (sf)
AB2        A (sf)         A+ (sf)
B1         A (sf)         A+ (sf)
B2         A (sf)         A+ (sf)
B3         A (sf)         A+ (sf)
C1         A (sf)         A+ (sf)
C2         A (sf)         A+ (sf)
C3         A (sf)         A+ (sf)

Ratings Affirmed

D1         BBB+ (sf)
D2         BBB+ (sf)
E1         BB+ (sf)
E2         BB+ (sf)
F1         B (sf)
F2         B (sf)


P&S TOOLS: Business Bought Out of Administration
------------------------------------------------
According to Business Sale Report, precision engineering business
P&S Tools has been rescued from administration, with 25 jobs
secured.

The report says the deal was overseen by Mark Bowen of MB
Insolvency and Dan Cambridge, a partner in Harrison Clark
Rickerbys' insolvency team.

Business Sale Report notes that the Malvern-based business, which
has counted Dowty-Meco and Rolls-Royce Aerospace among its
clients, had closed for a time, and then was sold in May, after
many third parties had come forward. It was not revealed who the
buyer is, the report relays.

"The continuity of a business this well established is great for
Worcestershire, with P&S Tools maintaining a rich variety of
clients ranging from CMB, Cameron's and Dowty-Meco to Rolls-Royce
Aerospace," the report quotes Mr. Bowen as saying.

Founded in 1973, P&S Tools offers precision-machined components,
and 3D solid and surface modelling service using CAD software,
among other design and toolmaking services.


SILVERDELL: Bank Backs Firm Despite Administration
--------------------------------------------------
Construction Inquirer reports that demolition, scaffolding and
asbestos specialist Silverdell has received backing from its
bankers at HSBC despite part of the company falling into
administration.

Accountants from Zolfo Cooper were appointed earlier this month
at the Kitsons Environmental Europe division following the
announcement that trading in Silverdell shares would be
suspended, according to Construction Inquirer.

The report notes that the Zolfo Cooper team is currently working
on a turnaround plan for the business.

The report relates that no redundancies have been made among
Silverdell's 750 staff but clients have been cancelling jobs.

Creditors are believed to be owed GBP5millon by the Kitsons
division, the report relays.

The report discloses that an update to the Stock Exchange said:
"The Group announced on July 2, 2013 that it had requested a
suspension of trading in Silverdell's shares pending
clarification of the Group's financial position. . . . This
followed the appointment of administrators to Kitsons
Environmental Europe Limited ("Kitsons"), one of the Group's
principal trading subsidiaries. . . . The Board is pleased to
confirm that discussions with the Group's bankers, HSBC, have
reached a satisfactory outcome. . . . HSBC has confirmed that it
remains supportive of the business and will be providing
additional short term facilities to the Group. . . . The Board
also confirms that Kitsons is the only Group company which is in
administration, and that all other Group companies continue to
trade as normal. . . . The Board is extremely grateful to the
Group's employees, customers and suppliers for their patience and
forbearance."


* U.K. Companies on Brink of Insolvency Decreases in 2Q13
---------------------------------------------------------
Kate Burgess at The Financial Times reports that the number of
companies close to insolvency dropped sharply in the second
quarter, underpinning hopes of a sustainable recovery in the UK's
economy.

This is the third quarter in a row that the number of companies
on the verge of insolvency has fallen, the FT says, citing
Begbies Traynor, the restructuring specialists whose red flag
alert monitors early signs of distress in small and medium-sized
companies across the UK.

According to the FT, Begbies said that the number of companies
showing critical signs of financial distress fell 39% from June
2012 to June this year.

Julie Palmer, a Begbies partner, said that while many
manufacturing companies are still suffering from the prolonged
economic downturn, their distress remains below crisis levels as
measured by creditor actions, county court judgments and wind-up
petitions, the FT notes.

She warned of the large number of "paralyzed" companies that have
so far been able to keep going because of low interest rates and
creditor forbearance but will be unable to fund their working
capital needs as the economy recovers and demand for their
products and services ticks up, the FT discloses.

Leading the recovery were construction companies, professional
services and food and drink manufacturers, where levels of
financial distress fell by more than 45%, year on year, the FT
says.

The exception was the legal profession where there has been a
series of insolvencies amid legal aid cuts and changes to
regulation, the FT states.

According to the FT, bars and restaurants, retailers and hotels
also continued to struggle with consumers showing little sign of
relaxing their hold on their purse strings.

Businesses in the North East, Yorkshire and Humberside and the
East of England experienced the greatest improvement in stress
levels, the FT says.



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


* Fitch Says European Firms Face Negative Free Cash Flow in 2013
----------------------------------------------------------------
European companies will in aggregate generate negative free cash
flow in 2013 as persistent economic weakness across the region
weighs on operations while the need to keep investing pushes up
capex in some sectors, according to Fitch Ratings' latest
forecasts.

"We expect Fitch-rated European corporates to report negative
free cash flow (FCF) of around US$9 billion in 2013, while this
time last year we had expected positive aggregate 2013 FCF of
nearly US$27 billion. The lowered forecast results from negative
nominal flows for utilities and transport, which we no longer
expect to be fully offset by other sectors," Fitch says.

"The change in our EBITDA forecasts was spread more evenly across
sectors, with improving prospects for natural resources and
consumer and healthcare companies offsetting lower expectations
for the industrial, telecoms and utilities sectors. Meanwhile
capex expectations have risen in most sectors. Full details of
the changes in our forecasts for free cash flow, EBITDA and capex
are available in a new report, "EMEA Corporate Forecast
Evolution", published July 15.

"On a through-the-cycle basis, FCF is both a key indicator of
financial strength and a measure of a company's ability to manage
periods of volatility without eroding credit quality. Persistent
negative flows significantly lessen flexibility, for example by
preventing a company reducing its debt. Our latest forecast
indicates that some companies have reached the limit of their
ability to minimize capex while remaining competitive or are
facing significant investor opposition to dividend cuts. But in
the medium term we expect FCF to improve as the European economy
slowly returns to sustainable growth, and we believe further cuts
to capex and dividends could still be found if conditions rapidly
deteriorated.

"Our forecasts for telecom, media and technology companies have
weakened due to the impact of rising competition and worse-than-
expected austerity cuts on peripheral incumbents such as Portugal
Telecom and Telecom Italia. Intense competition in the sector and
the ever-growing data needs of customers also mean that telecom
companies need to invest heavily - which has pushed our capex
forecasts for 2013 and 2014 slightly higher.

"We have lowered our forecasts for utilities due to weaker gas
and electricity demand combined with continued higher gas import
prices, which are hurting earnings among generators. Structural
changes from the growth in renewables and higher taxes in some
parts of the eurozone are also adding to the pressure. But the
prospects for the pharmaceuticals sector look better than they
did a year ago, thanks to receding concerns about patent expiries
and an improving drug pipeline. These factors have helped lift
our 2014 EBITDA forecast for healthcare companies by around 10%.

"The directional changes are more interesting for their root
causes than their ultimate impact. The change in forecasts
reflects a relatively minor shift in revenue base for the
selected corporates of over US$5,989.2 billion, and a netting of
negative FCF of US$48.4 billion in the traditionally cash-thirsty
utilities and transport sectors, compared with positive FCF of
US$38.9 billion in the rest."


* Moody's Notes Changing Strategies for European Insurers
---------------------------------------------------------
Low rates and new regulations are beginning to drive European
insurers to diversify their asset allocation by investing in new,
more illiquid, asset classes, notably private loans, says Moody's
Investors Service in a new Special Comment entitled "European
Insurance: Low Rates and New Regulations Will Drive Increase in
Illiquid Investments."

Moody's believes that the trend towards greater diversification
will accelerate in the coming years for three main reasons.
First, insurers are keen to reduce concentration risk to
sovereign and banking debts that are no longer perceived as risk-
free. Second, interest rates are at historically low levels, and
insurers, both P&C and life, will increasingly chase yields.
Third, the introduction of Basel III and the resulting
deleveraging from banks creates new investment opportunities for
insurers, and there is an increasing willingness from public
authorities to incentivize insurers to, at least partly, replace
bank financing.

"We expect insurers to progressively reduce their exposure to
banking bonds, including covered bonds, and replace part of this
exposure with investments in corporate loans or other types of
loans. Sovereign bonds will remain an important asset class for
insurers because they offer long durations, which enable insurers
to match the duration of their liabilities, a key area of focus
for Solvency II", says Benjamin Serra, senior analyst at Moody's.

Moody's says that insurers will increase their investments in
direct property and also indirectly through mortgage loans.
Insurers could diversify their non-fixed-income portfolio with,
for example, some trade-off between listed equities and
alternative investments. Investments providing regular cash
flows, such as infrastructure, will nonetheless be favored. As
such, a substantial increase in equity weighting from current
levels is unlikely.

Moody's report indicates that there will be only minor changes to
investment portfolios in the next 12-18 months. However, if the
low interest rate environment continues and investment
opportunities arise, more material shifts in insurers' portfolios
will occur. In the long-term, the rating agency expects that
insurers will increase their exposure to real estate and loans at
the expense of public corporate bonds and covered bonds.

Moody's anticipates that these changes will have negative credit
implications for insurance companies for two main reasons. First,
the weight of illiquid investments is likely to increase
substantially, which, even though insurers remain generally very
liquid, is credit negative. Second, some insurers have limited
expertise in some of the illiquid asset classes, and some of
these classes still lack a consistent legal and contractual
framework, hence carrying particular risks for investors.


                            *********

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 * * *