/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/140815.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Friday, August 15, 2014, Vol. 15, No. 161 Headlines B U L G A R I A * BULGARIA: Must Prepare Restructuring Plans for Banks G E R M A N Y CARLYLE GLOBAL 2013-2: Fitch Affirms 'B-sf' Rating on Cl. D Notes GERMAN RESIDENTIAL 2013-2: Fitch Affirms BB Rating on Cl. F Notes TAURUS CMBS 2006-1: S&P Lowers Ratings on 2 Note Classes to 'D' H U N G A R Y FHB MORTGAGE: Moody's Lowers Covered Bonds Rating to 'Ba3' I R E L A N D BACCHUS 2006-2: S&P Affirms 'CCC+' Rating on Class E Notes L U X E M B O U R G CD&R MILLENNIUM: S&P Assigns B Corp Credit Rating; Outlook Stable MINERVA LUXEMBOURG: S&P Keeps BB- Rating on Unsec. Notes Due 2023 MINERVA LUXEMBOURG: Fitch Rates $100-Mil. Add-On Notes 'BB-' N E T H E R L A N D S PANGAEA ABS 2007-1: S&P Lowers Rating on Class D Notes to 'CCC-' * NETHERLANDS: Number of Bankruptcies Up in July 2014 P O R T U G A L BANCO ESPIRITO: S&P Suspends 'C' Ratings on 2 CD Programs R O M A N I A OLTCHIM SA: Asset Auction Scheduled for December 15 R U S S I A RSHB CAPITAL: Fitch Affirms 'BB+' Rating on Old-Style Sub. Debt S W E D E N NATIONAL ELECTRIC: Labo Test Withdraws Bankruptcy Petition U N I T E D K I N G D O M ALPHA TOPCO: Moody's Assigns 'B3' Corporate Family Rating DECO 6 UK LARGE: Moody's Lowers Rating on Class B Notes to 'C' EUROSAIL 2006-4NP: S&P Affirms 'B-' Rating on Class E1C Notes MENARYS: Enters Into Creditors Voluntary Arrangement TAURUS CMBS 2006-2: S&P Lowers Ratings on 3 Note Classes to 'D' VOYAGE HOLDINGS: Fitch Says Acquisition No Impact on 'B' IDR X X X X X X X X * BOOK REVIEW: Roy C. Smith's The Money Wars ********* =============== B U L G A R I A =============== * BULGARIA: Must Prepare Restructuring Plans for Banks ------------------------------------------------------ SeeNews reports that the European Commission said Bulgaria should prepare by the end of August a restructuring plan for the banks which received BGN3.3 billion (US$2.3 billion/EUR1.7 billion) in liquidity support from the state. On June 29, the European Commission approved Bulgaria's request that the country extend a BGN3.3 billion (US$2.3 billion/EUR1.7 billion) credit line in support of its banking system, following speculative attacks, SeeNews relates. Three days earlier, Bulgaria's central bank said there was an organized attack carried out through rumors and ill-intentioned statements against local banks, First Investment Bank in particular, which jeopardizes the stability of the country's banking system, SeeNews recounts. First Investment Bank received the full amount of the funding envisaged under the liquidity support scheme, SeeNews says, citing local daily Capital. "Bulgaria commits to provide the Commission individual restructuring or liquidation plans, within two months, for banks which use the measure described in this decision," SeeNews quotes the Commission as saying in a statement published on its Web site. According to the terms of the scheme, Bulgaria will make state deposits to credit institutions in need of liquidity support with maturity of five months. "The state deposits will be remunerated in line with State aid rules and will be at least at the level observed in the market for the same maturity in the period preceding the State intervention by one month," the Commission, as cited by SeeNews, said. The Commission noted that the beneficiaries of the scheme should be credit institutions in need of liquidity support, adding that it is open to solvent institutions according to the existing rules in place within the applicable CRR/CRD IV framework, according to SeeNews. ============= G E R M A N Y ============= CARLYLE GLOBAL 2013-2: Fitch Affirms 'B-sf' Rating on Cl. D Notes ----------------------------------------------------------------- Fitch Ratings has affirmed Carlyle Global Market Strategies Euro CLO 2013-2 Limited as follows: EUR179.0 million class A-1 affirmed at 'AAAsf'; Outlook Stable EUR31.5 million class A-2A affirmed at 'AAsf'; Outlook Stable EUR19.9 million class A-2B affirmed at 'AAsf'; Outlook Stable EUR19.4 million class B affirmed at 'Asf'; Outlook Stable EUR18.8 million class C affirmed at 'BBBsf'; Outlook Stable EUR19.9 million class D affirmed at 'BBsf'; Outlook Stable EUR7.8 million class E affirmed at 'B-sf'; Outlook Stable Carlyle GMS Euro 2013-2 is an arbitrage cash flow collateralized loan obligation. Net proceeds from the issuance of the notes were used to purchase a EUR325 million portfolio of European leveraged loans and bonds. The portfolio is managed by CELF Advisors LLP (part of The Carlyle Group LP). Key Rating Drivers The affirmation reflects the transaction's performance being in line with Fitch's expectations. All portfolio quality tests and portfolio profile tests are passing. The transaction became effective as of January 2014. Between closing in September 2013 and the report date as of July 2014, credit enhancement increased marginally on all notes through trading and par building. There is no defaulted or CCC assets and the majority of underlying assets are rated in the 'B' category. Senior secured assets make up 98.68% of the portfolio and the rest are mezzanine obligations. The largest country is Germany, followed by France. European peripheral exposure is presented by Spain, Italy and Ireland, which make up for 7.67% of the performing portfolio and cash balance. Fixed rate assets represent 5.08% of the performing portfolio and cash while fixed rate liabilities accounts for 5.9% of the structure. The 10 largest obligors account for 19.83% of the portfolio. The largest obligor is 2.53% of the portfolio. The notes pay interest quarterly and the transaction uses an interest smoothing account and a liquidity facility to mitigate reset risk. As of the July 2014 payment date, the liquidity facility was undrawn and the balance of the interest smoothing account is zero. The notes will switch to semi-annual payments once the liquidity facility matures. Rating Sensitivities Fitch has incorporated two stress tests to simulate the ratings' sensitivity to changes in the underlying assumptions. A 25% increase in the expected obligor default probability would lead to a downgrade of zero to two notches for the rated notes. A 25% reduction in the expected recovery rates would lead to a downgrade of one to four notches for the rated notes. GERMAN RESIDENTIAL 2013-2: Fitch Affirms BB Rating on Cl. F Notes ----------------------------------------------------------------- Fitch Ratings has affirmed German Residential Funding 2013-2 Limited's (GRF 2013-2) ratings, as follows: EUR76.6 million senior debt: Not rated EUR429.4 million class A due November 2024 (ISIN XS0973049983): affirmed at 'AAAsf'; Outlook Stable EUR83.3 million class B due November 2024 (ISIN XS0973050569): affirmed at 'AAsf'; Outlook Stable EUR53.5 million class C due November 2024 (ISIN XS0973050726): affirmed at 'Asf'; Outlook Stable EUR59.5 million class D due November 2024 (ISIN XS0973051021): affirmed at 'BBBsf'; Outlook Stable EUR23.8 million class E due November 2024 (ISIN XS0973051294): affirmed at 'BBB-sf'; Outlook Stable EUR47.6 million class F due November 2024 (ISIN XS0973051450): affirmed at 'BBsf'; Outlook Stable EUR36.9 million class G due November 2024 (ISIN XS0977930261): not rated Key Rating Drivers The affirmations reflect the stable operating performance since the notes' issue in Oct. 2014, reinforced by stable demand for low-risk income streams, such as that generated by well-managed German multi-family housing (MFH) assets. Residential vacancy has slightly decreased to 5.7% (May 2014) from 5.9% at issuance, and remains in line with Fitch's expectations. Residential rents have increased to EUR5.22/sq. m/month from EUR5.18/sq. m/month at issuance, supported by continued growth of the mid-sized German cities, where a large part of the assets are located. Irrecoverable costs, a key driver of operating margins, remain at around 40% of net cold rent (rental net of recoverable items), in line with other comparable diversified MFH portfolios. Higher capital expenditure for modernization and energy efficiency may temporarily increase the cost ratio, but investment in the maintenance of the buildings is favorable for value and occupancy over the long term. Fitch expects investor appetite for well-managed German MFH portfolios to remain strong in 2014-2015, following record sales volume in 2013 since the previous peak in 2007. Fitch expects the portfolio's market value will be supported by strong investor appetite in the medium term, drawn by stable cash flows based on a highly granular tenant base. Rating Sensitivities Any disruption in the management of the portfolio or a sharp economic decline in the regions represented in the portfolio could prompt downgrades or revisions of the Outlooks to Negative. Fitch estimates 'Bsf' collateral proceeds of EUR870 million. TAURUS CMBS 2006-1: S&P Lowers Ratings on 2 Note Classes to 'D' --------------------------------------------------------------- Standard & Poor's Ratings Services lowered to 'D(sf)' from 'CC(sf)' its credit ratings on Taurus CMBS (Germany) 2006-1 PLC's class C and D notes. Following the repayment of the Bewag Berlin loan at a loss, the issuer applied a non-accruing interest (NAI) amount to the class C and D notes on the April 2014 interest payment date (IPD). Given the NAI amount allocated, the class C notes only received interest on the portion of the balance which was not subject to an NAI amount on the July 2014 IPD. As such, the class C notes have not received their full interest payment, in S&P's view. Similarly, given that the current principal balance (including the NAI amount) of the class D notes is zero, this class of notes did not receive any interest payments on the July 2014 IPD. S&P's ratings on Taurus CMBS (Germany) 2006-1's notes address the timely payment of interest quarterly in arrears, and the payment of principal no later than the legal final maturity date in April 2015. The rating actions on the class C and D notes reflect S&P's view that, given the NAI amount outstanding, both of these classes of notes have experienced interest shortfalls, which S&P believes will likely continue to increase on future IPDs. S&P also expects both classes of notes to experience principal losses on their final payment date. S&P has therefore lowered to 'D (sf)' from 'CC (sf)' its ratings on the class C and D notes. Taurus CMBS (Germany) 2006-1 is a 2006 vintage commercial mortgage-backed securities (CMBS) transaction backed by two senior loans secured by two commercial properties in Germany. RATINGS LIST Taurus CMBS (Germany) 2006-1 PLC EUR571.25 mil commercial mortgage-backed floating-rate notes Rating Rating Class Identifier To From C XS0257715242 D (sf) CC (sf) D XS0257715838 D (sf) CC (sf) ============= H U N G A R Y ============= FHB MORTGAGE: Moody's Lowers Covered Bonds Rating to 'Ba3' ---------------------------------------------------------- Moody's Investors Service has downgraded to Ba3 from Ba2 the ratings on the covered bonds issued by FHB Mortgage Bank Co. Plc. (FHB, deposits B3 negative; bank financial strength rating E/adjusted baseline credit assessment caa1). Ratings Rationale The rating action on FHB's covered bonds was prompted by Moody's downgrade of the issuer's deposit rating to B3 from B2 on August 12, 2014. A downgrade of an issuer's ratings negatively affects the covered bond ratings through its impact on both the timely payment indicator (TPI) framework and the expected loss method. FHB's covered bonds are assigned a TPI of "Very Improbable". Hence, the TPI framework indicates a maximum rating range of Ba2- B1 for FHB's covered bonds. Therefore, the upper bound of the TPI range does not constrain the ratings of the covered bonds. The covered bondholders' significant exposure to both refinancing and foreign-exchange risk is the primary driver of the limited rating uplift of the covered bonds above the issuer ratings. FHB's covered bond programs has material amounts of foreign exchange denominated assets and covered bonds. More precisely, 45.9% of the assets in the cover pool (Swiss franc and Euro) are foreign-exchange denominated. Foreign-exchange denominated covered bonds account for 18.9%. In this context, Moody's believes that recoveries for covered bondholders may be threatened by political and economic factors, such as devaluation, redenomination and a foreign-exchange debt moratorium. In this scenario, FHB may not be in the position to fulfil their obligations on their covered bonds, and in particular the foreign-exchange denominated covered bonds. Moody's have considered these uncertainties in Moody's analysis. This risk therefore constrains the rating of FHB's covered bonds at two notches above the CB anchor. For this program the CB anchor is the deposit rating plus one notch. Key Rating Assumptions/Factors Moody's determines covered bond ratings using a two-step process: an expected loss analysis and a TPI framework analysis. EXPECTED LOSS: Moody's uses its covered bond model (COBOL) to determine a rating based on the expected loss on the bond. COBOL determines expected loss as (1) a function of the probability that the issuer will cease making payments under the covered bonds (a CB anchor event); and (2) the stressed losses on the cover pool assets following a CB anchor event. The CB anchor for this program is the deposit rating plus one notch given the debt ratio is above 10%. The cover pool losses for this program are 41.8%. This is an estimate of the losses Moody's currently models following a CB anchor event. Moody's splits cover pool losses between market risk of 29.1% and collateral risk of 12.7%. Market risk measures losses stemming from refinancing risk and risks related to interest rate and currency mismatches (these losses may also include certain legal risks). Collateral risk measures losses resulting directly from cover pool assets' credit quality. Moody's derives collateral risk from the collateral score, which for this program is currently 19.0%. The over-collateralization in the cover pool is 31.3 %, of which the issuer provides 13.0% on a "committed" basis. The minimum OC level consistent with the Ba3 rating target is 0%. These numbers show that Moody's is not relying on "uncommitted" OC in its expected loss analysis. All numbers in this section are based on the most recent performance overview based on data, as per 31 March 2014. For further details on cover pool losses, collateral risk, market risk, collateral score and TPI Leeway across covered bond programs rated by Moody's please refer to "Moody's Global Covered Bonds Monitoring Overview", published quarterly. TPI FRAMEWORK: Moody's assigns a "timely payment indicator" (TPI), which measures the likelihood of timely payments to covered bondholders following a CB anchor event. The TPI framework limits the covered bond rating to a certain number of notches above the CB anchor. Factors that would lead to an upgrade or downgrade of the rating: The CB anchor is the main determinant of a covered bond program's rating robustness. A change in the level of the CB anchor could lead to an upgrade or downgrade of the covered bonds. The TPI Leeway measures the number of notches by which Moody's might lower the CB anchor before the rating agency downgrades the covered bonds because of TPI framework constraints. The TPI assigned to this program is Very Improbable. The TPI Leeway for this program is limited, and thus any reduction of the CB anchor may lead to a downgrade of the covered bonds. A multiple-notch downgrade of the covered bonds might occur in certain limited circumstances, such as (1) a sovereign downgrade negatively affecting both the issuer's deposit rating and the TPI; (2) a multiple-notch downgrade of the issuer; or (3) a material reduction of the value of the cover pool. ============= I R E L A N D ============= BACCHUS 2006-2: S&P Affirms 'CCC+' Rating on Class E Notes ---------------------------------------------------------- Standard & Poor's Ratings Services raised its credit ratings on BACCHUS 2006-2 PLC's class A-1, A-2A, A-2B, B, and C notes. At the same time, S&P has affirmed its ratings on the class D and E notes. The rating actions follow S&P's analysis of the transaction using data from the trustee report dated May 30, 2014, and the application of S&P's relevant criteria. "We conducted our cash flow analysis to determine the break-even default rate (BDR) for each rated class of notes at each rating level. The BDR represents our estimate of the maximum level of gross defaults, based on our stress assumptions, that a tranche can withstand and still fully repay interest and principal to the noteholders. We used the aggregate collateral balance that we consider to be performing (EUR163 million), the reported weighted-average spread, and the weighted-average recovery rates calculated in line with our criteria. We applied various cash flow stresses using our standard default patterns and timings for each rating category assumed for each class of notes, combined with different interest stresses as outlined in our criteria," S&P said. "Since our previous review on April 30, 2012, the portfolio's aggregate collateral balance has significantly reduced by approximately EUR197 million, leading to the further amortization of the class A-1 and A-2A notes, which we expect will be fully repaid with the available cash and scheduled principal amortization proceeds on the next interest payment date, in accordance with the priority of payments. As a result, the available credit enhancement has increased for all rated classes of notes, which now pass all their coverage tests. Additionally, the weighted-average spread has increased to 3.94% from 3.50%, the weighted-average life has shortened over the same period to 3.8 years from 4.5 years, and the weighted-average recovery rates have increased overall. However, the obligor concentration has increased, with 33 different obligors compared with 80 in our previous review. Over this period, we have also observed a slight negative rating migration in the portfolio. Furthermore, the pool's share of defaulted assets has increased," S&P added. In S&P's opinion, the documentation for the non-euro denominated asset swaps (representing 4.2% of the aggregate collateral balance) is not fully in line with S&P's current counterparty criteria. Therefore, in S&P's cash flow analysis for ratings that are more than one notch above its long-term 'A' issuer credit rating on Bank of America N.A., S&P considered potential scenarios where the swap counterparties fail to perform, and where the transaction is consequently exposed to greater currency risk. Taking into account S&P's credit and cash flow analysis and the application of its current counterparty criteria, S&P considers that the available credit enhancement for the class A-1, A-2A, and A-2B notes to be commensurate with higher ratings. S&P has therefore raised to 'AAA (sf)' its ratings on these classes of notes. The results of S&P's analysis also indicate that the class B, C, D, and E notes can sustain defaults at higher rating levels. At the same time, the largest obligor test constrains S&P's ratings on these classes of notes at lower rating levels than its credit and cash flow analysis. The largest obligor test measures the risk of several of the portfolio's largest obligors defaulting simultaneously. S&P has therefore raised its ratings on the class B and C notes, in line with the test results. At the same time, S&P has affirmed its ratings on the class D and E notes, as the largest obligor test still constrains these tranches at the same rating levels. BACCHUS 2006-2 is a cash flow collateralized loan obligation (CLO) transaction that securitizes loans granted to primarily speculative-grade corporate firms. Its reinvestment period ended in August 2012 and IKB Deutsche Industriebank AG is the manager. RATINGS LIST BACCHUS 2006-2 PLC EUR491.21 mil senior secured and deferrable floating-rate notes Rating Rating Class Identifier To From A-1 XS0260552962 AAA (sf) AA- (sf) A-2A XS0261928039 AAA (sf) AA+ (sf) A-2B XS0261928468 AAA (sf) AA- (sf) B XS0260554232 A+ (sf) BBB+ (sf) C XS0260554661 BBB+ (sf) BB+ (sf) D XS0260555395 B+ (sf) B+ (sf) E XS0260555981 CCC+ (sf) CCC+ (sf) =================== L U X E M B O U R G =================== CD&R MILLENNIUM: S&P Assigns B Corp Credit Rating; Outlook Stable ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' long-term corporate credit rating to Luxembourg-registered CD&R Millennium HoldCo 6 S.a.r.l (CD&R Millennium), an indirect holding company for rigid packaging manufacturer Mauser Holding GmbH (Mauser). The outlook is stable. "At the same time, we assigned our 'B' issue rating to CD&R Millennium's EUR150 million revolving credit facility (RCF) and EUR50 million acquisition facility, in line with its corporate credit rating. The recovery rating on this RCF is '3'. We also assigned our 'B' issue rating to the EUR445 million and $320 million first-lien term loans. The recovery rating on these notes is '3'. Finally, we assigned our 'CCC+' rating to the $402 million second-lien term loan. The recovery rating on these notes is '6'," S&P said. The rating on CD&R Millennium reflects S&P's assessment of Mauser's business risk profile as "fair," and its financial risk profile as "highly leveraged." The financial sponsor, Clayton Dubilier & Rice (CD&R), financed its EUR1.2 billion acquisition of Mauser by placing EUR975 million-equivalent first- and second-lien loans, making a EUR187 million pure equity contribution, and issuing EUR55 million in preferred equity certificates. S&P estimates that the group will report Standard & Poor's-adjusted debt to EBITDA of about 6.9x for the financial year ending Dec. 31, 2014. S&P's assessment of the business risk profile as "fair" is based on Mauser's products having commodity-like characteristics and it operating in a competitive industry. Sales volumes and operating profits can therefore vary, depending on supply-and-demand conditions and pricing pressures, caused by exposure to fluctuations in the cost of key raw materials. Steel and high- density polyethylene resin are two primary inputs. These risks are partly offset by Mauser's ability to pass through raw material price changes due to mechanisms in their contracts with most of its customers. It also reflects its large market shares in rigid packaging, including steel and plastic drums and containers, and intermediate bulk containers (IBCs). These are mainly used for petrochemical and specialty chemical applications and sold through a global distribution network. Mauser also benefits from long-standing relationships with its diversified customer and supplier base. S&P's base case assumes: -- Organic revenue growth (excluding foreign exchange impact) of about 5%-6%, supported by the higher growth potential of its IBC and reconditioned IBC segments; -- Improving margins, with Standard & Poor's-adjusted margins of about 13.0%-13.5% for next two years; and -- Bolt-on acquisitions of EUR20 million per year. Based on these assumptions, S&P arrives at the following credit measures: -- Debt to EBITDA of about 6.9x; and -- Free operating cash flow of about EUR25 million for financial year 2014. On the basis of S&P's criteria "The Treatment Of Non-Common Equity Financing In Nonfinancial Corporate Entities," published on April 29, 2014, on RatingsDirect, S&P has included the EUR55 million preferred equity certificates in its calculation of the leverage ratio. The company maintains "adequate" liquidity as a result of its ability to generate positive free cash flow because of moderate capital expenditure requirements, an undrawn RCF at close, and long-dated debt maturities. S&P expects sources to exceed uses by 1.2x over the next 24 months. Management estimates that the minimum cash balance to run the combined company is about $30 million. Working capital tends to peak in the June/July period, before winding down and hitting a low point in Dec. The group is subject to just one financial maintenance covenant -- leverage of less than 6.75x -- which will be tested only when 30% of the facility is utilized. S&P estimates that the group has the following principal liquidity sources after completing the transaction: -- Funds from operations of EUR90 million or more per year. -- Availability under the EUR150 million RCF maturing in 2019. -- Availability under a EUR50 million acquisition facility. -- Modest cash balances. S&P estimates that the group has the following principal liquidity uses after completing the transaction: -- Peak working capital requirement of around EUR30 million. -- EUR55 million-EUR65 million of capital spending per year. -- Bolt-on acquisitions of EUR20 million per year. -- Modest amortization of about EUR6 million per year under the senior term loan. The stable outlook reflects S&P's view that Mauser will improve its Standard & Poor's-adjusted EBITDA margin to about 13% over the next 12-18 months. In S&P's base case, it assumes that EBITDA will improve because of earlier restructuring efforts, efficiency gains, and the higher margins in the IBC segments. The stable outlook also reflects S&P's view that the group will maintain its credit metrics in line with a "highly leveraged" financial risk profile in the near term, including a ratio of adjusted debt to EBITDA of about 6.9x. S&P do not anticipate substantial deleveraging of the group's balance sheet over the next year. Consequently, S&P do not expect to raise the rating in the next 12-18 months. S&P could consider lowering the rating if Mauser posted negative free operating cash flow or we observed a sustained contraction in its EBITDA margin. This could arise if its profitability deteriorates markedly in its various markets or if the IBC segment grows far more slowly than S&P currently expects. MINERVA LUXEMBOURG: S&P Keeps BB- Rating on Unsec. Notes Due 2023 ----------------------------------------------------------------- Standard & Poor's Ratings Services said that its 'BB-' global scale and 'brA' national scale corporate credit ratings and 'BB-' issue-level ratings on Minerva S.A. remain unchanged following the proposed add-on to the company's 2023 notes. S&P expects Minerva to use the proceeds from the issuance to pay down interest and short-term debt, maintaining its current gross and net credit metrics and improving its capital structure somewhat. Ratings List Minerva S.A. Issuer credit rating Global scale BB-/Stable/-- National scale brA/Stable/-- Minerva Luxembourg S.A. Senior unsecured notes due 2023 BB- MINERVA LUXEMBOURG: Fitch Rates $100-Mil. Add-On Notes 'BB-' ------------------------------------------------------------ Fitch Ratings rates Minerva Luxembourg S.A.'s proposed USD100 million add-on issuance in a reopening of its 2023 notes (rated 'BB-'). The notes are unconditionally and irrevocably guaranteed by Minerva S.A. (Minerva). The purpose of the re-opening is to repay higher coupon outstanding indebtedness. The notes are unsecured, unsubordinated obligations of the issuer and rank equally in right of payment with unsecured and unsubordinated indebtedness of Minerva. KEY RATING DRIVERS Positive Industry Fundamentals The fundamentals of the Brazilian beef industry remain positive due to the abundant cattle herd, low cost structure and positive revenue momentum derived from strong revenue growth from exports; Fitch expects this favorable environment to remain in the near term. In July 2014, China removed its embargo of Brazilian beef, which will benefit companies such as Minerva that have export capacity. Minerva has one plant in Barretos that is qualified to export to China. Positive Performance Minerva reported improving revenues and EBITDA in 2Q'14. The company's net revenue reached BRL1.7 billion, which is 25% higher than in 2Q'13. Sales from the Beef Division and the Others Division, which includes Live Cattle and Leather, performed strongly. Export market revenues increased by 28% year-over- year. During the same period, Minerva's EBITDA increased 33% year-over-year. LTM EBITDA margins for the period ended June 30, 2014 was 10.9%, up 20 bps over the same period in 2013. The group's debt maturity schedule remains comfortable with the next material maturity date due in 2023 when its USD850 million unsecured notes fall due (the group has bought back BRL 286 million of these notes). Improve Credit Metrics Expected Fitch expects Minerva's net debt to EBITDA ratio to improve toward 3x over the next two years; it was 3.4x as of June 30, 2014. The company is doing bolt-on acquisitions that will significantly increase its production capacity and should improve operating cash flow. In early 2014, the company acquired a slaughtering and deboning plant in Janauba, Minas Gerais state for BRL40 million and concluded the acquisition in Uruguay, of Frigorifico Matadero Carrasco S.A. for USD37 million. The group has also signed a six-month agreement with BRF SA (IDR 'BBB- '/Stable Outlook) in which Minerva will supply cattle to BRF, which will offer slaughtering and deboning services, including the packaging, storage and offer of beef in its production units. Then, Minerva will collect and distribute these products. This agreement became effective on July 15th. The company is awaiting for the Brazilian Antitrust Agency's (CADE) final approval of the acquisition of BRF's plants. Product and Country Concentration Risks Minerva is less diversified from a product and geographic position than two other large protein companies based in Brazil, JBS S.A. and Marfrig S.A. Minerva's operations are highly focused on beef production with exports representing about 68% of its revenues as of 2Q'14, Minerva's performance is exposed to exchange rate variations. A downturn in the economy of a given export market, the imposition of increased tariffs or commercial or sanitary barriers, and strikes or other events that may affect the availability of ports and transportation are also significant risks faced by the company. Rating Sensitivities A negative rating action could occur as a result of a sharp contraction of the group's performance, an increase in net leverage close to 4.0x as a result of either a large debt- financed acquisition and/or a sharp operational deterioration. A positive rating action could be triggered by additional geographic and protein diversification and substantial decrease in gross and net leverage. Fitch currently rates Minerva as follows: Minerva S.A.: -- Local Currency Issuer Default Rating (IDR) 'BB-'; -- Foreign currency IDR 'BB-'; -- National scale rating 'A-(bra)'; Minerva Luxembourg S.A.: -- Local currency IDR 'BB-'; -- Foreign currency IDR 'BB-'; -- Senior unsecured notes due in 2017, 2019, 2022 and 2023 'BB-'; -- Perpetual notes 'BB-'. The corporate Rating Outlook is Stable. ===================== N E T H E R L A N D S ===================== PANGAEA ABS 2007-1: S&P Lowers Rating on Class D Notes to 'CCC-' ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its credit ratings on PANGAEA ABS 2007-1 B.V.'s class A, B, C, and D notes. The downgrades follow the application of S&P's relevant criteria. CAPITAL STRUCTURE Notional Current amount as notional of November amount 2013 (mil. Current OC November Deferrable Class (mil. EUR) EUR) (%) 2013 (%) (Y/N) A 143.65 166.56 33.8 32.3 No B 16.00 16.00 26.4 25.8 No C 18.00 18.00 18.1 18.5 No D 24.03 23.85 7.0 8.8 Yes E 19.00 18.69 0.0 1.2 Yes F 7.17 6.90 0.0 0.0 Yes Sub. 19.17 18.12 0.0 0.0 Yes OC-Overcollateralization. EURIBOR-Euro Interbank Offered Rate. Since S&P's previous review on Nov. 22, 2013, it has lowered its ratings on 18 assets in the underlying portfolio. As a result, the portfolio's weighted-average rating has deteriorated to 'B+' from 'BB-'. This has been detrimental to the scenario default rate (SDR) at each rating level. The SDR is S&P's expectation of the level of defaults the portfolio will experience in a specific rating environment using Standard & Poor's CDO evaluator. In the interest proceeds waterfall, interest on the nondeferrable notes (the class A, B, and C notes) is paid before principal on the rated notes when the coverage tests are failing. If the interest proceeds are insufficient to fully pay interest on the class A, B, and C notes, the issuer will use principal proceeds to pay such interest. Since S&P's previous review, the break-even default rates (BDRs) at each rating level have decreased for all of the classes of notes. The BDRs represent S&P's estimate of the maximum level of gross defaults, under its stress assumptions, that the notes can withstand and still fully pay interest and principal to the noteholders. As the weighted-average premium of the class A, B, and C notes increased, the proportion of available collateral that will be used to pay interest under our rating scenarios also increased. In addition, S&P notes that class D notes continued to defer interest and that the overcollateralization for the class C and D notes has decreased. As a result, S&P's analysis shows that the available credit enhancement for the class A, B, C, and D notes is commensurate with lower ratings than those previously assigned. S&P has therefore lowered its ratings on these classes of notes. PANGAEA ABS 2007-1 is a cash flow collateralized debt obligation (CDO) transaction, which is backed by a portfolio of mainly mezzanine and junior tranches of residential mortgage-backed securities (RMBS), asset-backed securities (ABS), CDOs, and commercial mortgage-backed securities (CMBS). The transaction closed in March 2007 and entered its amortization period in June 2013. It is managed by Investec Bank (U.K.) Ltd. RATINGS LIST PANGAEA ABS 2007-1 B.V. EUR309.2 mil asset-backed floating-rate notes Rating Rating Class Identifier To From A XS0287257280 BB- (sf) BB (sf) B XS0287266356 B+ (sf) BB- (sf) C XS0287267677 CCC+ (sf) B (sf) D XS0287268642 CCC- (sf) CCC (sf) * NETHERLANDS: Number of Bankruptcies Up in July 2014 ----------------------------------------------------- According to Statistics Netherlands, 621 businesses and institutions (excluding one-man businesses) were declared bankrupt in July 2014, i.e. nearly 160 more than in the preceding month. The increase is due to the extra day courts were in session in July, Statistics Netherlands notes. The number of bankruptcies was considerably lower than in July 2013, when 782 businesses and institutions were declared bankrupt, Statistics Netherlands states. In July 2014, the number of court session days was the same as in July 2013, Statistics Netherlands relays. From June to July, the number of bankruptcies rose across nearly all sectors, but most notably in the sectors trade (123), financial services (112) and specialist services, e.g. consultancy and research (66), Statistics Netherlands discloses. =============== P O R T U G A L =============== BANCO ESPIRITO: S&P Suspends 'C' Ratings on 2 CD Programs --------------------------------------------------------- Standard & Poor's Ratings Services affirmed and then suspended its 'C' ratings on two short-term certificate of deposit programs and one commercial paper program originally issued by Portugal- based Banco Espirito Santo S.A. (BES). As S&P publically communicated on Aug. 8, 2014, most of BES' senior unsecured debt has been transferred to newly formed Novo Banco S.A. (not rated) as part of BES' resolution proceedings. S&P currently does not have satisfactory information to perform its ratings analysis on these debt instruments, and S&P is therefore suspending its ratings on them. Due to an administrative error, the suspension of the ratings listed below was not previously processed in S&P's database. S&P is now correcting this error. RATINGS LIST To Intermediate From 3(A)3 CP program NR C C EUR10 bln CD Program NR C C EUR15 bln CD Program NR C C CP--Commercial paper. CD--Certificate of deposit. ============= R O M A N I A ============= OLTCHIM SA: Asset Auction Scheduled for December 15 --------------------------------------------------- Edith Balazs at Bloomberg News reports that the judicial administrator of insolvent chemical company Oltchim invites bids for all assets held in Oltchim SPV. According to Bloomberg, an auction is called for Dec. 15 and bids can be submitted by Dec. 12. Oltchim is based in Romania. The company has been under insolvency procedures since January 2013. This came soon after the state failed to privatize Oltchim in its first privatization stage, which was won by media mogul Dan Diaconescu. =========== R U S S I A =========== RSHB CAPITAL: Fitch Affirms 'BB+' Rating on Old-Style Sub. Debt --------------------------------------------------------------- Fitch Ratings has affirmed Russian Agricultural Bank's (RusAg) Long-term Issuer Default Ratings (IDRs) at 'BBB-'. The Outlooks are Negative. KEY RATING DRIVERS -- IDRs, NATIONAL RATING, SENIOR DEBT RATINGs, SUPPORT RATING, SUPPORT RATING FLOOR The affirmation reflects Fitch's assessment of potential support from the Russian authorities for the bank, in case of need. In Fitch's view, the propensity to support the bank would likely be high, given the bank's full ownership by the State and its policy role of supporting the agriculture sector, which may become even more important in light of Russia's recently introduced ban on food imports from major western countries. There is no indication so far of a weakened propensity to support foreign creditors of state-owned banks, although tail risks could emerge in case of further escalation of geopolitical tensions and further sanctions. The government's ability to provide assistance is currently sound, in particular considering the moderate size of RusAg's balance sheet relative to the sovereign's available financial resources. RusAg's Long-term IDRs, Support Rating Floor and senior debt ratings are notched down once from the sovereign's ratings due to the only moderate capital injections provided to the bank so far relative to the scale of its asset quality problems, and the absence at present of a confirmed and sufficiently robust recapitalization plan. Earlier this year, the government included RusAg's future recapitalization into the state program of agribusiness development (part of the federal budget) for the next six years, but it has not yet decided on the size and the schedule of capital injections. The bank's management expects the total amount of this recapitalization to be around RUB100 billion. The Negative Outlook on the bank's Long-term IDRs mirrors that on the sovereign and reflects potential deterioration of the government's ability to provide support, given the weakening economy and risks from sanctions. The affirmation of RusAg's debt ratings applies to all debt issued prior to August 1, 2014. KEY RATING DRIVERS -- VIABILITY RATING The affirmation of RusAg's Viability Rating (VR) at 'b-' primarily reflects the bank's still weak asset quality and moderate capitalization. The rating also considers RusAg's modest profitability and significant reliance on wholesale funding. RusAg's asset quality remains weak, with non-performing loans (NPLs, including all loans over 90 days, whether classified as impaired or watch list exposures in the IFRS accounts) comprising a high 15% of the end-2013 loan book. In addition, there were around 8% of rolled-over and/or restructured loans designated as watch list, resulting in total recognized problem/high risk exposures of 23% of the loan book. Reserve coverage of these exposures was a moderate 36%, with the unreserved part amounting to RUB206 billion or 94% of Fitch Core Capital (FCC). There is also a risk of further problems being recognized upon seasoning of the predominantly long-term loan book, in particular as exposures are often structured with bullet repayments and subsidized interest rates. The bank has received RUB70 billion of equity injections in the last two years, and at end-2013 the FCC ratio stood at 13.2%. Capital is sufficient to fully reserve NPLs without the FCC falling below 8%, but would not be enough to increase reserving of restructured loans or any new potential problems, or support future growth. Internal capital generation is weak with pre- impairment profit (net of accrued but not received interest income) amounting to only RUB9 billion (equal to 0.6% of average risk-weighted assets) in 2013. The recent government decision allowing RusAg to convert its RUB25bn subordinated loan from Vnesheconombank into preferred shares would moderately support its regulatory Tier 1 ratio, although the instrument would have weak loss absorption capacity (due to its low 2% conversion trigger) and so would not improve core Tier 1 capital. RusAg's high loans/deposits ratio (190% at end-2013) and the fairly long-term nature of its loan book make the bank's liquidity position somewhat vulnerable to a sustained reduction in access to wholesale funding. However, near-term maturities are moderate and liquidity is comfortable at present, so recently introduced sanctions are unlikely to result in a sharp increase in refinancing risks. At end-1H14, RusAg had USD10 billion of foreign liabilities (22% of total non-equity funding) with negligible maturities in 2H14 and USD0.7 billion due for repayment in 2015, while the bank held USD4.3 billion of liquid assets (including USD0.9 billion of foreign correspondent accounts and short-term bank placements). RATING SENSITIVITIES -- IDRS, NATIONAL RATING, SENIOR DEBT RATINGS, SUPPORT RATING, SUPPORT RATING FLOOR RusAg's ratings could be downgraded, or the Outlook revised to Stable, in case of a similar rating action on the Russian sovereign. The ratings could be equalized with the sovereign if the support framework for the bank materially strengthens or if future support made available to the bank enables it to operate with consistently stronger capitalization over an extended period of time. The ratings could be downgraded if capital or liquidity support is not forthcoming when urgently required, or if the bank's policy role is considerably weakened. However, Fitch views these scenarios as unlikely. RATING SENSITIVITIES -- VR A further marked deterioration in asset quality could result in a downgrade of the VR. A strengthening of capitalization, which significantly alleviates asset quality risks, could lead to an upgrade. KEY RATING DRIVERS AND SENSITIVITIES -- SUBBORDINATED DEBT The rating of RusAg's subordinated debt continues to be notched off the bank's Long-term IDRs, reflecting Fitch's methodology for rating 'old style' subordinated debt in Russia. Accordingly, an upgrade or downgrade of the subordinated debt rating would follow similar actions on the bank's Long-term IDRs. The rating actions are as follows: Long-term foreign currency IDR: affirmed at 'BBB-'; Outlook Negative Long-term local currency IDR: affirmed at 'BBB-'; Outlook Negative Short-term foreign currency IDR: affirmed at 'F3' National Long-term rating: affirmed at 'AA+(rus)'; Outlook Stable Viability Rating: affirmed at 'b-' Support Rating: affirmed at '2' Support Rating Floor: affirmed at 'BBB-' Senior unsecured debt: affirmed at 'BBB-'/'BBB- (EXP)'/'AA+(rus)'/AA+(EXP)(rus)' Senior unsecured debt of RSHB Capital S.A.: affirmed at 'BBB-' /'AA+(rus)' "Old-style" subordinated debt of RSHB Capital S.A.: affirmed at 'BB+' =========== S W E D E N =========== NATIONAL ELECTRIC: Labo Test Withdraws Bankruptcy Petition ---------------------------------------------------------- Christina Zander at The Wall Street Journal reports that National Electric Vehicle Sweden AB (NEVS), the Chinese-backed company that bought Sweden's Saab automobile brand out of bankruptcy, said on Wednesday that a petition from one of its suppliers to declare it bankrupt will be withdrawn. NEVS said in an interview that it has run out of cash to pay its suppliers, the Journal relates. The company stopped what was only limited production of Saab-branded cars earlier this year after it ran into financial difficulties, the Journal notes. Labo Test, one of NEVS' suppliers, had petitioned a Swedish court to declare the auto maker bankrupt over unpaid bills of SEK150,000 (US$21,800), the Journal recounts. According to the Journal, NEVS said that the petition has now been withdrawn. Labo Test isn't the only creditor NEVS has to worry about, the Journal states. The auto maker has debts amounting to SEK3.6 million at the Swedish Enforcement Authority waiting to be paid, the Journal discloses. The government agency, as cited by the Journal, said that another 91 claims, many of which are for several million kronor each, are waiting in the pipeline for NEVS to acknowledge them. NEVS bought the Saab brand out of bankruptcy in 2012 and restarted production of the Saab 9-3 sedan on Sweden's west coast late last year, the Journal recounts. National Electric Vehicle Sweden AB is a Swedish holding company. Nevs is majority owned by British Virgin Islands-registered, Hong Kong-based, National Modern Energy Holdings Ltd., an energy company with operations in China, Macau, and Hong Kong. =========================== U N I T E D K I N G D O M =========================== ALPHA TOPCO: Moody's Assigns 'B3' Corporate Family Rating --------------------------------------------------------- Moody's Investors Service has assigned a B3 corporate family rating (CFR) and B3-PD probability of default rating (PDR) to Alpha Topco Limited, a holding company of the Formula One group of companies. Concurrently, Moody's has withdrawn Delta Debtco's B2 CFR and B2-PD PDR. Moody's has also assigned a definitive B2 rating to the senior secured term loans and Caa2 to the new second lien term loans borrowed at Delta 2 (Lux) S.a.r.l. The outlook on all ratings is stable. The rating action follows the closing of the refinancing and shareholder distribution, and concludes the review initiated on July 17, 2014. Ratings Rationale Moody's has moved the CFR and PDR to Alpha Topco Limited following the repayment of the high yield debt at Delta Debtco Limited and the resulting change in the restricted group. Alpha Topco Limited is a direct subsidiary of Delta Debtco Limited and holding company of the restricted group and a guarantor of the new debt. The change in CFR to B3 from B2 reflects the company's high expected Moody's adjusted debt/EBITDA of around 9x for 2014 following completion of the US$1 billion increase in term loans (to US$4.1 billion) to fund a distribution to shareholders. It also continues to consider: (1) the company's asset-light business model that relies on the continuation of current contractual relationships; (2) its dependence on a relatively small number of revenue generating events; (3) the need for Formula One to innovate and adapt the franchise to keep and enhance its appeal to its fan base; (4) degree of key person risk given the long tenure and deep involvement of CEO Bernie Ecclestone and (5) the Formula One group's complex corporate structure. Moody's also notes a fall in viewership numbers in 2013 and a delay in advertising sales for the current season. However, the B3 also recognizes the strength of Formula One's position as one of the world's best-known sport franchises and leading motorsport event with a well-established tradition and large global fan base. The rating also acknowledges: (1) Formula One's consistent operational track record and solid financial performance over the last few years; (2) a good level of revenue visibility from multi-year contracts with key commercial partners, including promoters and broadcasters; and (3) the cash generative nature of the business with limited ongoing capital expenditure needs. The B3-PD PDR, aligned with the CFR, reflects Moody's assumption of a 50% recovery rate. The Caa2 on the US$1 billion of second lien term loans due 2022 reflects the subordination to a substantial amount of priority debt including the US$3.1 billion of senior secured term loans due 2021 and US$75 million revolving credit facility due 2020. Moody's also notes the weaker covenant package following the transaction including a financial maintenance covenant that is tested when the revolver is at least 40% drawn and the introduction of a portability clause. Liquidity Profile Moody's views Alpha Topco Limited's liquidity as strong. Although the higher interest burden from the transaction will reduce free cash flows, the business remains cash generative (as measured by Moody's -- after capex and dividends) and, together with existing cash balances and an undrawn $75 million revolving credit facility, should be in a position to cover any ongoing liquidity needs. The next major debt maturity will be in 2020 and 2021. Outlook The stable outlook reflects Moody's expectation that Formula One will continue to show solid revenue growth and be in a position to reduce leverage from current levels. What Could Change the Rating DOWN/UP Following the company's recent aggressive distribution step, which followed similar transaction in 2012/2013, ratings could come under negative pressure if: (i) leverage measured by Debt/ EBITDA (as adjusted by Moody's) continues to rise; (ii) the company generates negative free cash flow; (iii) (EBITDA- CAPEX)/interest approaches 1.5x; or (iv) there are signs that the company loses operating momentum on a sustained basis e.g. losses of major broadcasting contracts, material disruptions to the race schedule or a deterioration in audience trends. Conversely, ratings could come under upward pressure if the company reduces leverage visibly and sustainably towards 7x, together with ongoing free cash flow generation and steady operational performance (revenue growth, margin maintenance). The principal methodology used in these ratings was Global Business & Consumer Service Industry Rating Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Alpha Topco Limited is the holding company for the group of companies that exploit the commercial rights to the FIA Formula One World Championship. In 2013, the companies held by Alpha Topco Limited generated revenues of US$ 1.6 billion. Alpha Topco -- through Delta Debtco Limited and Delta Topco Limited -- is owned by a group of private investors with voting control held by funds advised by CVC Capital Partners Limited. It derives its revenues mainly from promoters, broadcasters and advertisers/sponsors. DECO 6 UK LARGE: Moody's Lowers Rating on Class B Notes to 'C' -------------------------------------------------------------- Moody's Investors Service has downgraded the class A2 and B Notes, and affirmed the class C and D Notes issued by Deco 6 - UK Large Loan 2plc. Moody's rating action is as follows: Issuer: DECO 6 - UK Large Loan 2 plc GBP259.9M (current outstanding balance of EUR109.6M) A2 Notes, Downgraded to Caa3 (sf); previously on Oct 29, 2012 Downgraded to Caa2(sf) GBP43M (current outstanding balance of EUR34.4M) B Notes, Downgraded to C (sf); previously on Oct 29, 2012 Downgraded to Ca(sf) GBP49.1M (current outstanding balance of EUR39.3M) C Notes, Affirmed C (sf); previously on Oct 29, 2012 Downgraded to C(sf) GBP30.119911M(current outstanding balance of EUR24.1M) D Notes, Affirmed C (sf); previously on Jan 18, 2012 Downgraded to C(sf) Ratings Rationale The downgrade of the Class A2 and B Notes is driven by an increase in Moody's loss expectation for both remaining loans. This is principally due to a continued deterioration in performance of the remaining eight Mapeley assets, with the income profile resulting in the latest reported ICR of 0.12x. Additionally, the Brunel shopping center has posted further declines in net income due to higher irrecoverable costs and lower achievable rents. A new valuation taken in January 2014 shows the shopping center declining in value from GBP87.2 million to GBP63 million. The Class C and D Notes are affirmed because the respective ratings are in line with Moody's recovery expectations for the Notes. Moody's downgrade reflects a base expected loss in the range of 60%-70% of the current balance, compared with 50%-60% at the last review. Moody's derives this loss expectation from the analysis of the default probability of the securitized loans (both during the term and at maturity) and its value assessment of the collateral. Methodology Underlying the Rating Action: The principal methodology used in this rating was Moody's Approach to Rating EMEA CMBS Transactions published in December 2013. Other factors used in this rating are described in European CMBS: 2014-16 Central Scenarios published in March 2014. Factors that would lead to an upgrade or downgrade of the rating: Main factors or circumstances that could lead to a downgrade of the ratings are a further deterioration of the Mapeley loan stemming from increased vacancy, thereby depressing market values and ultimate recoveries even further. The main factors or circumstances that could lead to an upgrade of the ratings are higher than expected sales proceeds from the remaining Mapeley assets. Previous asset sales have been above their January 2012 market values, however these have tended to be the better located London properties. It remains doubtful if the remaining assets would achieve sales above their current market values. Moody's Portfolio Analysis As of the April 2014 IPD, the transaction balance has declined by 62.6% to GPB207.4 million from GPB555.1 million at closing in December 2005 due to the pay off of two loans originally in the pool. The notes are currently secured by first-ranking legal mortgages over nine commercial properties. The pool has an above average concentration in terms of geographic location (100% UK, based on UW market value) and property type (74% retail and 26% office). Moody's uses a variation of the Herfindahl Index, in which a higher number represents greater diversity, to measure the diversity of loan size. Large multi-borrower transactions typically have a Herf of less than 10 with an average of around 5. This pool has a Herf of 1.6, slightly lower than the 1.9 seen at Moody's prior review.The WA Moodys LTV on the securitized pool is 355% up from the 233% at the last review. Currently both loans are in special servicing, with Hatfield Phillips undertaking the role for the Mapeley loan whilst Solutus are acting for the Brunel loan. SUMMARY OF MOODY'S LOAN ASSUMPTIONS Below are Moody's key assumptions for both loans. Mapeley (51.9% of pool) - LTV: 538% (Whole)/ 538% (A-Loan); Total Default probability -- N/A; Expected Loss 80%-90%. * The collateral backing the loan is comprised of eight secondary office properties located throughout the UK in predominantly provincial towns in classic 'back office' locations. Five of the assets are known to be 100% vacant, whilst the occupational situation of the largest asset, Chesser House is unknown. The eight assets have collectively suffered a 74% market value decline from their closing valuation, highlighting the weak underlying property fundamentals. * The loan was transferred to special servicing in October 2011, due to the sponsor indicating that they would not be injecting any further equity. The loan was accelerated in July 2012 with Jones Lang Lasalle acting as receiver. Since Jan 2013, 12 assets have been sold with proceeds used to pay interest, swap breakage fees, opex costs and corporate expenses, along with paying down the loan. Brunel (48.1%) - LTV: 170% (Whole)/ 159% (A-Loan); Total Default probability -- N/A; Expected Loss 30%-40%. * The loan is secured on a regional in-town shopping centre located in Swindon. * The loan was transferred into special servicing in June 2011 due to a default under the DSCR covenant. * Since the last review the asset has been revalued in January 2014 for GBP63 million down from GBP87.2 million. During this time, frame net income has also reduced from GBP4.66 million to GBP3.92 million reflecting an increase in irrecoverable costs and lower achievable rents. EUROSAIL 2006-4NP: S&P Affirms 'B-' Rating on Class E1C Notes ------------------------------------------------------------- Standard & Poor's Ratings Services took various credit rating actions on all rated classes of notes in Eurosail 2006-4NP PLC. Specifically, S&P has: -- Raised to 'A (sf)' from 'A- (sf)' and removed from CreditWatch positive its ratings on the class M1a and M1c notes; -- Raised to 'BBB+ (sf)' from 'BBB (sf)' its rating on the class B1a notes; and -- Affirmed its ratings on the class A3a, A3c, C1a, C1c, D1a, D1c, and E1c notes. The rating actions follow S&P's credit and cash flow analysis using the most recent data, and the application of its relevant criteria. On May 14, 2014, S&P placed on CreditWatch positive its 'A- (sf)' ratings on the class M1a and M1c notes following its upgrade of Danske Bank A/S. In the December 2012 investor report, the servicer (Acenden Ltd.) updated how it reports arrears to include amounts outstanding, delinquencies, and other amounts owed, which include, among other items, arrears of fees, charges, costs, ground rent, and insurance. Delinquencies include principal and interest arrears on the mortgages, based on the borrowers' monthly installments. Amounts outstanding are principal and interest arrears, after the servicer allocates borrower payments to other amounts owed. In this transaction, the servicer first allocates any arrears payments to other amounts owed, then interest and principal amounts. From a borrowers' perspective, the servicer first allocates any arrears payments to interest and principal amounts, and then to other amounts owed. This difference in the servicer's allocation of payments for the transaction and the borrower results in amounts outstanding being greater than delinquencies. Since S&P's previous review, amounts outstanding have breached the 90+ days arrears trigger and have increased to 24.88% from 14.68%. Total amounts outstanding have also increased, representing 33.48% of the pool, up from 23.97% in December 2011. The notes in this transaction are currently amortizing sequentially, as they have breached the pro rata payment triggers relating to arrears and cumulative repossessions. As the amounts outstanding continue to increase, S&P considers that the transaction will likely continue paying principal sequentially and S&P has incorporated this assumption in its cash flow analysis. S&P's weighted-average foreclosure frequency (WAFF) assumptions and its weighted-average loss severity (WALS) assumptions have increased for this transaction since S&P's previous review. Primarily, projected arrears have increased S&P's WAFF assumptions, while its WALS assumptions have increased because it expects potential losses to be higher, given the servicer's method of allocating payments of other amounts owed for the transaction. WAFF (%) WALS (%) Expected loss (%) AAA 41.86 49.77 20.83 AA 34.05 43.23 14.73 A 27.19 33.45 9.00 BBB 22.34 27.92 6.24 BB 16.91 23.66 4.00 B 14.35 20.38 2.92 The available credit enhancement has increased for the senior classes of notes, particularly since March 2013 when the transaction started to pay sequentially, which has offset the pool's increased credit risk. Since Danske Bank's upgrade in April this year, the cap on the ratings has also increased to 'A'. Taking these factors into account, S&P considers that the available credit enhancement is now commensurate with higher ratings for the class M1a, M1c, and B1a notes. S&P has therefore raised to 'A (sf)' from 'A- (sf)' and removed from CreditWatch positive its ratings on the class M1a and M1c notes. At the same time, S&P has raised to 'BBB+ (sf)' from 'BBB (sf)' its rating on the class B1a notes, as it believes that the transaction will continue to pay down sequentially because the pro rata payment trigger is referencing amounts outstanding, rather than pure delinquencies. In S&P's view, the available credit enhancement for the class A3a, A3c, C1a, C1c, D1a, D1c, and E1c notes is commensurate with its currently assigned ratings. S&P has therefore affirmed its ratings on these classes of notes. Following the breach of the documented rating trigger, the cash bond administrator did not replace Danske Bank when it was due to be replaced as the bank account and guarantee investment contract provider. Additionally, the currency swap agreement between the issuer and Barclays is not in line with S&P's current counterparty criteria. Accordingly, S&P's ratings on the notes in this transaction are capped at 'A', the long-term issuer credit rating (ICR) on Barclays Bank. Eurosail 2006-4NP is a U.K. nonconforming residential mortgage- backed securities (RMBS) transaction, which Southern Pacific Mortgage Ltd., Preferred Mortgages Ltd., and GMAC-RFC Ltd. originated. RATINGS LIST Eurosail 2006-4NP PLC EUR327.5 mil, GBP496.45 mil, US$64 mil mortgage-backed floating- rate notes, excess-spread backed floating-rate notes Rating Class Identifier To From A3a 29880JAR3 A (sf) A (sf) A3c 29880JAT9 A (sf) A (sf) M1a 29880JAU6 A (sf) A- (sf)/Watch Pos M1c 29880JAW2 A (sf) A- (sf)/Watch Pos. B1a 29880JAG7 BBB+ (sf) BBB (sf) C1a 29880JAK8 BB (sf) BB (sf) C1c 29880JAM4 BB (sf) BB (sf) D1a 29880JAN2 B (sf) B (sf) D1c 29880JAQ5 B (sf) B (sf) E1c XS0274216018 B- (sf) B- (sf) MENARYS: Enters Into Creditors Voluntary Arrangement ----------------------------------------------------- BBC News reports that Menarys has entered a voluntary arrangement with its creditors. Details filed at Companies House indicate the creditors voluntary arrangement took effect on July 17, BBC relates. It can sometimes involve a debt write-off or standstill arrangement but the details of the Menarys CVA are unclear, BBC notes. The most recent accounts for Menarys main firm, Menary's Retail Ltd., show it made a loss of GBP3.6 million in 2013, BBC discloses. According to BBC, that was largely due to an exceptional cost of GBP2.7 million which related to the write-off of loans due from related firms. Menarys is a Northern Ireland fashion chain. TAURUS CMBS 2006-2: S&P Lowers Ratings on 3 Note Classes to 'D' --------------------------------------------------------------- Standard & Poor's Ratings Services lowered to 'D (sf)' from 'CC (sf)' its credit ratings on Taurus CMBS (U.K.) 2006-2 PLC's class B, C and D notes. Following the repayment of the Time Square loan at a loss, the issuer applied a non-accruing interest (NAI) amount to the class B, C, and D notes reverse sequentially on the April 2014 interest payment date (IPD). On the July 2014 IPD, the class B notes only received interest on the portion of their balance that is not subject to a NAI amount. As such, the class B notes did not receive their full interest payment, in S&P's view. Similarly, given that the class C and D notes' current principal balance (including the NAI amount) is zero, they did not receive any interest payments on the July 2014 IPD. S&P's ratings in Taurus CMBS (U.K.) 2006-2 address the timely payment of interest quarterly in arrears and the payment of principal no later than the legal final maturity date in April 2024. The downgrades reflect S&P's view that, given the outstanding NAI amount, the class B, C, and D notes have experienced interest shortfalls, which S&P believes will likely continue to increase on future IPDs. S&P also expects that these classes of notes will experience principal losses on their final payment date. S&P has therefore lowered to 'D (sf)' from 'CC (sf)' its ratings on the class B, C, and D notes. Taurus CMBS (U.K.) 2006-2 is a 2006-vintage securitization of two loans secured on 89 U.K. commercial properties. RATINGS LIST Taurus CMBS (U.K.) 2006-2 PLC GBP447.15 mil commercial mortgage-backed floating-rate notes Rating Rating Class Identifier To From B XS0271523259 D (sf) CC (sf) C XS0271523846 D (sf) CC (sf) D XS0271524653 D (sf) CC (sf) VOYAGE HOLDINGS: Fitch Says Acquisition No Impact on 'B' IDR ------------------------------------------------------------ Fitch Ratings says the acquisition of Voyage Holdings Limited's (Voyage) by Partners Group and Duke Street from HgCapital has no impact on Voyage's ratings. This is because the debt levels of the restricted group are unaffected by the shareholding change. The acquisition price of the transaction is GBP375 million. Voyage is rated at Issuer Default Rating (IDR) 'B' with Stable Outlook, while at its subsidiary, Voyage Care BondCo plc's senior secured notes are rated 'BB'/'RR1' and second lien notes 'CCC+'/ 'RR6'. As part of this transaction, the existing debt structure comprising a GBP30 million revolving credit facility (RCF), GBP222 million senior secured notes and GBP50 million second lien notes is intended to remain in place. To this effect, the issuer of the notes, VoyageBondCo plc has launched a consent solicitation with the noteholders seeking a waiver of the requirement for the issuer to offer to repurchase the notes if the transaction proceeds, and also an amendment of the indentures to deem each of Partners Group and Duke Street and their respective affiliates permitted holders. The change in ownership will not result in fresh equity injection into the group at completion. As part of the transaction, the existing loan notes, which amounted to about GBP400 million as of the financial year to March 2014, will remain in place but will be reduced to GBP110 million after the transaction. Fitch continues to exclude these instruments from the calculation of its leverage metrics due to their equity-like features. Voyage's ratings continue to reflect its leading market position as the independent provider of care to people with learning disability. They also take into account on-going pressure on its EBITDA margins from limited fee inflation and rising costs reflected in the high funds from operations (FFO) lease-adjusted gross leverage at FYE14 of 7.1x (6.7x adjusted for lower lease costs and bolt-on acquisitions in FY14). While leverage is tight for the 'B' rating, its FFO fixed charge cover at 1.8x (1.9x pro- forma) remains consistent with the rating. Fitch expects improvement in Voyage's operating performance and cost control to result in gradual deleveraging from FY15. The new ownership will not result in any change to the current strategy or financial policy of the group. =============== X X X X X X X X =============== * BOOK REVIEW: Roy C. Smith's The Money Wars -------------------------------------------- Author: Roy C. Smith Publisher: Beard Books Softcover: 370 pages List Price: $34.95 Review by David Henderson The Money Wars: The Rise and Fall of the Great Buyout Boom of the 1980s Get your own personal today at http://is.gd/kxvqjA Business is war by civilized means. It won't get you a tailhook landing on an n aircraft carrier docked in San Diego, but the spoils of war can be glorious to behold. Most executives do not approach business this way. They are content to nudge along their behemoths, cash their options, and pillage their workers. This author calls those managers "inertia ridden." He quotes Carl Icahn describing their companies as run by "gross and widespread incompetent management." In cycles though, the U.S. economy generates a few business warriors with the drive, or hubris, to treat the market as a battlefield. The 1980s saw the last great spectacle of business titans clashing. (The '90s, by contrast, was an era of the investment banks waging war on the gullible.) The Money Wars is the story of the last great buyout boom. Between 1982 and 1988, more than ten thousand transactions were completed within the U.S. alone, aggregating more than $1 trillion of capitalization. Roy Smith has written a breezy read, traversing the reader through an important piece of U.S. history, not just business history. Two thirds of the way through the book, after covering early twentieth century business history, the growth of financial engineering after WWII, the conglomerate era, the RJR-Nabisco story, and the financial machinations of KKR, we finally meet the star of the show, Michael Milken. The picture painted by the author leads the reader to observe that, every now and then, an individual comes along at the right time and place in history who knows exactly where he or she is in that history, and leaves a world-historical footprint as a result. Whatever one may think of Milken's ethics or his priorities, the reader will conclude that he is the greatest financial genius this country has produced since J.P. Morgan. No high-flying financial era has ever happened in this country without the frothy market attracting common criminals, or in some cases making criminals out of weak, but previously honest men (and it always seems to be men). Something there is about testosterone and money. With so many deals being done, insider trading was inevitable. Was Michael Milken guilty of insider trading? Probably, but in all likelihood, everybody who attended his lavish parties, called "Predators' Balls," shared the same information. Why did the Justice Department go after Milken and his firm, Drexel Burnham Lambert with such raw enthusiasm? That history has not yet been written, but Drexel had created a lot of envy and enemies on the Street. When a better history of the period is written, it will be a study in the confluence of forces that made Michael Milken's genius possible: the sclerotic management of irrational conglomerates, a ready market for the junk bonds Milken was selling, and a few malcontent capitalist like Carl Icahn and Ted Turner, who were ready and able to wage their own financial warfare. This book is a must read for any student of business who did not live through any of these fascination financial eras. Roy C. Smith is a professor of entrepreneurship, finance and international business at NYU, and teaches on the faculty there of the Stern School of Business. Prior to 1987, he was a partner at Goldman Sachs. He received a B.S. from the Naval Academy in 1960 and an M.B.A. from Harvard in 1966. ********* 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. 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, and Peter A. Chapman, Editors. Copyright 2014. 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 * * *