/raid1/www/Hosts/bankrupt/TCREUR_Public/150220.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, February 20, 2015, Vol. 16, No. 37
Headlines
A U S T R I A
RAIFFEISEN BANK: Moody's Cuts BFSR to 'D-', Outlook Negative
F I N L A N D
METSA BOARD: S&P Raises Corp. Credit Rating to BB, Outlook Stable
F R A N C E
CEGEDIM SA: S&P Keeps 'B+' CCR on CreditWatch Positive
G R E E C E
* Greek Brinkmanship Could Do Lasting Economic Damage, Fitch Says
I R E L A N D
KENMARE RESOURCES: Iluka Takeover Negotiations Ongoing
I T A L Y
ZUCCHERIFICIO: Expressions of Interest Deadline Set for Mar. 31
N E T H E R L A N D S
GM FINANCIAL: Fitch to Rate EUR650MM Sr. Unsecured Notes 'BB+'
LEO MESDAG: Fitch Affirms 'Bsf' Ratings on 2 Note Classes
P O R T U G A L
BANCO ESPIRITO: Bank of Portugal Keeps Goldman Loan in Bad Bank
R O M A N I A
TAROM: Needs Solid Restructuring Process, Minister Says
R U S S I A
BANK TAVRICHESKY: S&P Cuts Rating to R on Regulatory Intervention
FIRST COLLECTION: S&P Assigns 'B' ICR; Outlook Negative
PAO SIBUR: Fitch Affirms 'BB+' LT Issuer Default Rating
SUDOSTROITELNY BANK: S&P Cuts Counterparty Credit Ratings to D/D
S P A I N
BANKINTER 4: S&P Lowers Rating on Class C Notes to 'B-(sf)'
GENOVA HIPOTECARIO IV: Moody's Hikes Cl. B Notes' Rating to Ba1
T U R K E Y
FINANSBANK AS: Moody's Puts 'Ba3' Rating on Review for Downgrade
U N I T E D K I N G D O M
BRIDGE HOLDCO 4: S&P Assigns 'B' CCR; Outlook Negative
BRIT PLC: Fitch Puts Sub. Notes' 'BB+' Rating on CreditWatch Neg.
CAYENNE TRUST: Proposes Liquidation of Assets
CITY LINK: Former Depot Set for GBP1 Million Renovation
HAPPIT: Shop Still Fully Stocked Two Years After Closing Down
PETROPAVLOVSK PLC: Sapinda Proposes Debt Restructuring Deal
X X X X X X X X
* S&P Puts 377 European Structured Finance Ratings on Watch Neg.
* BOOK REVIEW: Landmarks in Medicine - Laity Lectures
*********
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A U S T R I A
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RAIFFEISEN BANK: Moody's Cuts BFSR to 'D-', Outlook Negative
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Moody's Investors Service downgraded Raiffeisen Bank
International AG's long-term debt and deposit ratings to Baa2
from Baa1. At the same time, RBI's standalone bank financial
strength rating was lowered to D- from D, corresponding to a
baseline credit assessment of ba3 from ba2. The outlook on the
BFSR is negative.
RBI's disclosure on Feb. 9, 2015 of their preliminary 2014
results and strategic review has triggered the rating actions.
The announcement highlights the bank's ongoing capital pressures
that have prompted RBI to downsize and/or dispose important and
sizeable parts of its operations. In Moody's opinion, the
strategic realignment carries execution risks in the current
volatile market environment and will only benefit RBI's
capitalization over time. As a result, the group remains
vulnerable to downside risk and volatility in key markets in
Central and Eastern Europe (CEE) and the Commonwealth of
Independent States (CIS).
Moody's also downgraded RBI's subordinated debt ratings to Ba2
from Ba1. RBI's long-term senior ratings, its subordinated debt
ratings as well as its short-term Prime-2 debt and deposit
ratings remain on review for further downgrade.
Furthermore, Moody's downgraded to Baa3 from Baa2 the long-term
deposit and issuer ratings of Raiffeisen Zentralbank Oesterreich
AG, RBI's parent company, as well as certain backed ratings that
benefit from an unconditional and irrevocable guarantee from RBI.
The rating agency also downgraded RZB's short-term deposit
ratings to Prime-3 from Prime-2. All these ratings remain on
review for downgrade.
Moody's decision to lower RBI's standalone BFSR/BCA with a
negative outlook reflects ongoing pressure on RBI's modest
capitalization relative to its business risks. Persistent
tailwinds from its operations in the CIS in particular have led
the bank to announce a set of significant medium-term
restructuring measures.
RBI reported a preliminary consolidated net loss of EUR493
million for 2014 including goodwill impairments. A series of
management actions during Q4 that reduced risk-weighted assets
partly offset the effects of the significant dislocation of the
Russian rouble before year-end. As a result, RBI's transitional
Basel III common equity Tier 1 ratio remained largely unchanged
at 10.9% as of end-2014 compared to 11.0% at end-September 2014.
However, Moody's expects that RBI will continue to face
significant capital and profit pressures in the years to come,
given ongoing challenges in key markets, including Russia (Baa3,
on review for downgrade) and Ukraine (Caa3 negative). The
strengthening of the Swiss franc since beginning of 2015 is
likely to also slightly exacerbate capital pressures. The
announced strategic review program aims to free-up capital and
strengthen capital buffers, thereby focusing on a further
significant reduction in risk-weighted assets, including the
disposal of RBI's Polish subsidiary.
While all of these measures are focused on fostering capital
buffers, Moody's says that the announced measures bear execution
risk with their medium-term horizon until 2017, and are
associated with restructuring costs that overall weaken RBI's
earnings capacity. Additionally, the rouble devaluation will
also result in significantly lower euro-denominated earnings from
the bank's Russian banking activities, a key contributor to RBI's
profits.
RBI's ongoing vulnerability to tail risks, given the bank's
significant exposure to the more volatile operating environments
in CEE and the CIS -- as well as the possibility of lower
earnings and capital generation over the medium term -- mean that
the outlook on the BFSR is negative.
The one-notch downgrade of RBI's long-term debt and deposit
ratings to Baa2 follows the downgrade of its BFSR to D-. These
long-term ratings continue to benefit from four notches of uplift
from the bank's ba3 standalone BCA, consisting of two notches of
uplift from support from Raiffeisen Bankengruppe Austria (RBG;
unrated) and two notches of government support from Austria (Aaa
stable).
The one-notch downgrade of RBI's subordinated debt ratings to Ba2
from Ba1 also follows the BFSR downgrade but continues to benefit
from sector-support uplift as reflected in an adjusted BCA for
RBI of ba1.
The one-notch downgrade of RZB's long-term deposit and issuer
ratings to Baa3 from Baa2 follows the downgrade of RBI's long-
term ratings. RZB's long-term ratings reflect RBI's ratings and
incorporate the structural subordination of the senior
obligations of the parent company RZB to those of its major
operating entity, RBI.
Moody's believes that the rising risks at the level of RBI --
which accounts for almost 50% of the sector's assets -- pose
increasing challenges to the Austrian Raiffeisen sector's
financial strength and cohesion. Thus, all the long and short-
term ratings of RBI and RZB and its funding vehicles remain on
review for downgrade.
During the review period, Moody's will re-assess RBG's ability
and willingness to provide capital support to all of its group
members, including RBI, in an adverse scenario. Moody's
considers the group's capitalization as moderate relative to
RBG's overall credit profile, which is focused on, and therefore
strongly correlated with its higher-risk CEE operations housed at
RBI. To protect RBG against likely losses under an adverse
scenario, comfortable capital resources above minimum
requirements would be required, in Moody's opinion.
There is currently no upward rating pressures as expressed in the
review for downgrade of all of RBI's and RZB's long-term ratings.
A downgrade of RBI's long-term ratings could result from (1) a
weakening of RBI's intrinsic financial strength; (2) the lack of
a credible credit strengthening plan for the Austrian Raiffeisen
sector and the potential impact on RBI; and/or (3) a further
decline in the prospects for systemic support in Austria and in
the EU, in light of developments associated with resolution
mechanisms and burden-sharing for European banks.
Downward pressure on RBI's BFSR could develop if Moody's were to
assess (1) a reduced financial strength of that entity, for
example as a result of further deterioration in its Russian and
Ukrainian activities; (2) substantial additional credit charges
that exceed those Moody's currently expects; (3) an extended
period of declining earnings and internal capital generation;
and/or (4) a decline in capitalisation and regulatory capital.
A downgrade of RZB's long-term ratings could result from a
downgrade of RBI's long-term ratings. In addition, wider
notching between the ratings of RZB and RBI could result from (1)
any double leverage at the holding company; and/or (2) a multi-
notch downgrade or series of downgrades of RBI's ratings.
The following ratings of RBI were downgraded:
-- standalone BFSR to D- from D, equivalent to a BCA of ba3
from ba2, with negative outlook
-- long-term debt and deposits ratings to Baa2 from Baa1, on
review for downgrade
-- subordinated debt ratings to Ba2 from Ba1, on review for
downgrade
RBI's Prime-2 short-term debt and deposit ratings remain on
review for downgrade.
The following ratings of RZB were downgraded and remain on review
for further downgrade:
-- long-term deposit and issuer ratings to Baa3 from Baa2
-- backed senior unsecured debt ratings to Baa2 from Baa1
-- backed subordinated debt ratings to Ba2 from Ba1
-- backed preferred security notes to B1(hyb) from Ba3(hyb),
issued by two funding trusts, RZB Finance (Jersey) III
Limited and RZB Finance (Jersey) IV Limited
-- short-term deposit ratings to Prime-3 from Prime-2
The principal methodology used in these ratings was Global Banks
published in July 2014.
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F I N L A N D
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METSA BOARD: S&P Raises Corp. Credit Rating to BB, Outlook Stable
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Standard & Poor's Ratings Services raised its long-term corporate
credit rating on Finland-based paperboard producer Metsa Board
Corp. to 'BB' from 'B+'. The outlook is stable. At the same
time, S&P affirmed its 'B' short-term corporate credit rating on
Metsa Board.
S&P also raised its issue rating on Metsa Board's senior
unsecured debt to 'BB' from 'B+'. The recovery rating is
unchanged at '4', indicating S&P's expectation of average (30%-
50%) recovery in the event of a payment default.
The upgrade reflects S&P's view that Metsa Board has improved its
financial risk profile substantially in recent years. S&P now
expects funds from operations (FFO) to debt -- based on Standard
& Poor's credit metrics -- to remain at about 30% in the coming
two years; S&P thinks that this ratio can improve further in the
coming two years, as strong cash flow generation will offset
increasing investment.
Metsa Board also continues to gradually improve its operational
performance and is in the final steps of becoming a pure-play
paperboard company. In December 2014, the company announced that
it will invest EUR170 million into a new machine at its Husum
mill site in Sweden, with production capacity of about 400,000
tons of folding boxboard per year. The machine, which is
expected to be fully operational by the end of 2016, will be
important in Metsa Board's strategy to increase exports to the
North American market. At the same time, the company announced it
will phase out paper production at the Husum mill and take
measures to eliminate losses at its Gohrsm hle paper mill in
Germany, which S&P understands made an operating loss of about
EUR20 million in 2014. S&P thinks that these measures are
positive for Metsa Board's business risk profile, as the company
will increase sales of paperboard, which faces demand growth and
stable pricing, and remove paper sales, where profitability has
been low due to uncertain demand prospects and overcapacity.
S&P views Metsa Board's business risk profile as fair,
underpinned by its strong position as the market leader for
folding boxboard d white kraftliner in Europe, well-invested
asset base, proximity and access to key raw materials (including
wood and pulp), and increasing geographical reach through growing
exports to the U.S. Partly mitigating these strengths are Metsa
Board's moderate overall size compared with forest and paper
products peers such as Stora Enso, UPM-Kymmene, and Mondi Group,
which also leads to less geographic and operational
diversification.
"We regard Metsa Board's financial risk profile as intermediate
based on improved cash-flow generation and decreasing debt. We
have changed our approach regarding Metsa Board's cash holdings
and do now consider the cash held within Metsa Group Treasury to
be immediately available for debt repayment; hence, we deduct
this amount from debt to arrive at adjusted debt. As of year-end
2014, there was EUR236 million in surplus cash, which translated
to preliminary adjusted debt of EUR514 million and FFO to debt of
30.5%. We view positively the company's plan to fund part of its
expansionary investments with a EUR100 million rights issue,
which will likely lead to further improving credit metrics in the
coming year. We also view positively that Metsa Board's exposure
to Metsa Fibre's possible new pulp mill will be no more than
EUR30 million (Metsa Board holds a 25% stake in Metsa Fibre).
Still, we see a risk that Metsa Board will not be receiving a
dividend from Metsa Fibre during the investment phase, which
amounted to about EUR25 million in 2014," S&P said.
S&P's base case assumes:
-- Stable demand and pricing for Metsa Board's main paperboard
products in 2014 despite weak economic growth in Europe.
-- Demand to decline by about 3%-5% and continued price
pressure for uncoated and coated wood-free paper, which
Metsa Board will gradually phase out in the coming years.
-- Slightly rising revenues in 2015, as further paperboard
growth will offset discontinued paper operations.
-- Profitability to clearly improve as a result of the
elimination of losses at the Gohrsmuehle mill.
-- Capital expenditures of EUR170 million in 2015 and about
EUR100 million in 2016, including a possible equity
contribution to Metsa Fibre.
-- An equity injection of EUR100 million to be finalized in
the first half of 2015.
-- Dividend payments of EUR40 million in 2015 and rising as
profitability increases in the coming years.
-- No mergers or acquisitions.
Based on these assumptions, S&P arrives at these credit measures:
-- FFO to debt of about 30% in 2015, improving further in
2016.
-- Debt to EBITDA of less than 3x.
-- Slightly negative discretionary cash flow generation in
2015, improving in 2016 as investment levels decreases.
S&P's rating on Metsa Board includes a one-notch negative
adjustment based on S&P's comparable ratings analysis modifier,
which it assess as "negative". This assessment reflects S&P's
view that Metsa Board's financial risk profile is at the lower
end of the intermediate category. In addition, S&P believes that
the company faces execution and project risks relating to its
investments and restructuring measures in the coming years. This
results in a stand-alone credit profile (SACP) of 'bb'.
S&P applies its group rating methodology to take into account the
impact of Metsa Board's close integration into the Metsa Group.
S&P assesses Metsa Board to be a "highly strategic" subsidiary
for the Metsa Group, the parent company of which is Metsaliitto
Cooperative. This is because:
-- The group is unlikely to sell Metsa Board, given that it
provides forward integration in the forest and paper
products value chain;
-- The group's senior management has a track record and long-
term commitment of support for the company;
-- Metsa Board accounts for about 40% of the group's sales;
and
-- Its reputation, brand, name, and treasury management is
closely tied to that of Metsa Group
"We assess Metsa Group's credit profile as 'bb', which is in line
with Metsa Board's SACP. We believe that the group's business
position benefits from scale and diversification compared with
Metsa Board but that it is exposed to cyclicality due to its
large exposure to volatile pulp and wood products segments. This
leads to an overall business risk profile similar to that of
Metsa Board. We assess the group's financial risk profile as
significant despite credit metrics that are currently very
strong, with FFO to debt at about 45% as of year-end 2014. This
is due to our expectation that credit metrics will weaken
substantially in 2015 and 2016 if the planned pulp project at
Metsa Fibre goes through as planned, leading to FFO to debt on a
consolidated basis to decline to about 25% in 2016. However,
Metsa Board and other group companies have significant minority
investors, which can distort underlying cash flows. We do,
however, view positively the strong liquidity profile of the
group, underpinned by large cash balances and committed bank
lines," S&P added.
"We assess Metsa Board's liquidity as "adequate", as our criteria
define this term. In our opinion, the group's liquidity sources
are likely to comfortably cover its short-term liquidity needs by
more than 1.2x over the next 12-24 months. We view the company's
return to the bond markets last year as well as its plan to raise
equity financing later this year as positive, as it demonstrates
the company's access to multiple sources of capital," S&P said.
Principal Liquidity Sources
-- About EUR250 million in cash and cash equivalents as of
Dec 31, 2014. This takes into account EUR14 million of
cash held on Metsa Board's balance sheet as well as about
EUR236 million of cash deposited with Metsa Group's
internal bank, Metsa Group Treasury, under a cash-pooling
system among entities within the Metsa Group. S&P
understands that Metsa Board has access to these funds at
short notice, if needed, to cover temporary liquidity
needs.
-- An unused EUR100 million revolving credit facility that
expires in March 2018. S&P also understands that Metsa
Board has access to a credit line of EUR150 million from
Metsa Treasury, though this depends on cash deposits from
other group companies and thus would be an uncertain source
of liquidity under a stress scenario.
-- Expected FFO of about EUR170 million in 2015.
Principal Liquidity Uses:
-- Debt amortization of about EUR100 million;
-- Capital expenditures of about EUR170 million, the majority
of which pertains to the restructuring and new machine at
the Husum mill;
-- Working capital outflows of EUR15 million-EUR20 million;
and
-- Dividend payments of about EUR40 million.
The stable outlook takes into account further profitability
improvements due to the structural changes within Metsa Board and
continuous careful financial management. S&P thinks that Metsa
Board will maintain strong cash flow generation and that FFO to
debt will remain above 30% in the coming two years. S&P also
expects the company to maintain at least an adequate liquidity
position and a balanced shareholder remuneration policy. Current
ratings also incorporate S&P's view that Metsa Group's credit
metrics will likely weaken in 2015 and 2016 as subsidiary Metsa
Fibre's pulp project proceeds as planned, with consolidated FFO
to debt declining to about 25% in 2016. S&P expects the group to
manage project and execution risks carefully and maintain a
comfortable liquidity position.
Another upgrade is unlikely in the coming 12-24 months given the
high investment levels in the coming two years at the group
level, which will constrain the group's performance metrics.
Nevertheless, S&P could consider upside to the ratings if the
influence of Metsa Group on Metsa Board were to decrease over
time -- such as due to a divestment by Metsa Group of Metsa Board
shares -- to the extent that Metsa Group would lose majority vote
control on Metsa Board.
In S&P's view, negative rating pressure is unlikely in 2015 but
could arise as a result of significantly worsening macroeconomic
conditions, which in turn would put pressure on demand and
pricing of Metsa Board's and lead to significantly lower credit
metrics than S&P's current base case. S&P would view a ratio of
FFO to debt of at least 20% for Metsa Board as commensurate with
the 'BB' ratings.
Downside pressure the rating could also arise if Metsa Group's
credit profile were to weaken significantly from current levels.
This could result from weakening performance in Metsa Board and
the other business segments during the heavy investment period in
2015 and 2016 to such an extent that FFO to debt would fall below
20%.
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F R A N C E
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CEGEDIM SA: S&P Keeps 'B+' CCR on CreditWatch Positive
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Standard & Poor's Ratings Services said that it is keeping its
'B+' long-term corporate credit rating on French health care
software and services group Cegedim S.A. on CreditWatch, where it
was placed with positive implications on Oct. 24, 2014. The 'B+'
issue rating on Cegedim's senior unsecured notes also remains on
CreditWatch positive, given that it will likely remain aligned
with the corporate credit rating. The recovery rating on the
notes remains '4'.
S&P placed the ratings on CreditWatch positive following
Cegedim's announcement on Oct. 20, 2014, that it had reached an
agreement to divest its customer relationship management (CRM)
businesses and strategic data division for EUR385 million in
cash. Cegedim has stated that it will use the proceeds to repay
debt. This will considerably reinforce the group's balance
sheet, which carried restated gross debt of about EUR540 million
as of June 30, 2014.
At this stage, the impact of this transaction on the group's
business risk profile is uncertain. In recent years, the units
Cegedim is divesting -- its CRM businesses and strategic
division -- have posted lower margins than the two other
divisions. Therefore, S&P believes their disposal could be a
positive mechanical improvement to the group's overall
profitability. The two remaining divisions -- health care
professionals and insurance and services -- accounted for more
than 75% of the group's EBITDA in the first half of 2014 and
enjoy better growth prospects. However, these divisions posted
weakening operating performance for first-half 2014.
Based on these factors, S&P is assuming that the upside potential
on the financial risk profile could far exceed the downside, if
any, on the business risk profile. S&P projects that gross debt
to EBITDA could fall below 2x once the cash proceeds are used to
alleviate debt. However, S&P's adjusted leverage ratio will only
improve in July 2015, when the group makes its first EUR63
million payment on the bond debt. This is because, as per S&P's
criteria, it excludes any cash when calculating its credit
metrics for issuers where S&P assess the business risk profile
lower than "fair."
S&P plans to resolve the CreditWatch when it has all the
information to fully assess Cegedim's post-divestiture credit
profile. On the business side, although Cegedim could suffer
from a lower scale of business, the two remaining division could
enjoy good growth prospects. S&P continues to believe that
following the debt repayment, the group's financial metrics
should dramatically strengthen, which could lead to an upgrade.
S&P could consider raising the rating by more than one notch if
it considers that the group's business risk profile has not
deteriorated because of the disposal of the CRM division.
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G R E E C E
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* Greek Brinkmanship Could Do Lasting Economic Damage, Fitch Says
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Continued brinkmanship in the negotiations between the Greek
government and its official creditors has increased risks to
Greece's sovereign credit profile, Fitch Ratings says. The
impact on Greece's sovereign finances remains unclear, but the
resulting uncertainty is amplifying the economic damage caused by
falling confidence.
Press reports suggested that Greece ('B'/Negative) would request
an extension of official financing beyond the expiry of its
current program at end-February. It remains uncertain whether
terms can be agreed with the other eurozone member states after
Monday's meeting of finance ministers ended without agreement.
Fitch's base case remains that the incentives to reach a
negotiated agreement are sufficiently strong, but the risks of a
policy mistake on either side have risen.
Fitch thinks the onus will be on the Greek government to
compromise. Official creditors will be reluctant to set a
precedent for program countries to receive funding support
without what they consider appropriate conditionality. The
longer an agreement takes, the greater the risk that disbursement
of funds to the Greek sovereign is delayed (EUR7.2 billion is
potentially available from the re-branded "Institutions" if the
outstanding review under the current program is successfully
completed).
The damage to investor, consumer, and depositor confidence is
increasing downside risks to growth and Greece's incipient
economic recovery. It may take time to repair even if agreement
with official creditors is reached in the coming days or weeks.
This echoes 2012, when around 30% of deposit outflows from Greek
banks in May and June were not recovered in 2H, even as fears
that Greece would leave the eurozone receded. The private sector
also experienced a long period of limited or costly access to
market financing.
Fitch expects to lower its forecast for real GDP growth in 2015
again, to reflect the risk of Greece re-entering recession.
Fitch reduced it by 1pp, to 1.5%, between our December and
January sovereign ratings reviews.
Rising funding and liquidity risks led Fitch to put four Greek
banks on Rating Watch Negative on Feb. 10. This reflected
Fitch's view that difficult negotiations would prompt further
deposit outflows that could trigger capital controls,
particularly if access to emergency funding were restricted by
the European Central Bank. The ECB has already signalled that it
may take a strict approach by lifting its waiver early on the
eligibility of Greek government and government-guaranteed bonds
in the Eurosystem's monetary policy operations. ECB-sanctioned
funding via the emergency liquidity assistance provided by
Greece's central bank is reviewed regularly (next on Feb. 18).
An agreement would probably ultimately lead to a re-profiling of
Greece's obligations to the official sector ("Official Sector
Involvement", OSI). Face-value haircuts look less likely.
Fitch's sovereign credit ratings reflect the likelihood of a
default on debt to private sector creditors. In the event of
OSI, the ratings would not be affected in the same way as during
Greece's 2012 debt restructuring, which took the form of "Private
Sector Involvement" or PSI. Fitch downgraded Greece's IDRs to
'RD' ('Restricted Default') in March 2012, because the exchange
of government bonds constituted a sovereign default event under
our distressed debt exchange rating criteria.
Fitch considers PSI less likely in 2015 because less than 20% of
Greece's debt stock is held by private-sector creditors, so the
benefits would be limited. The sovereign ratings implications of
OSI would depend more on the overall impact on Greek sovereign
debt sustainability, which could be positive -- although as Fitch
have previously noted the impact may be limited by the
concessional and long-dated nature of Greece's existing official
sector debt.
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I R E L A N D
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KENMARE RESOURCES: Iluka Takeover Negotiations Ongoing
------------------------------------------------------
Geoff Percival at Irish Examiner reports that Australian mineral
exploration company Iluka Resources remains upbeat about its
chances of acquiring Dublin-based miner Kenmare Resources.
According to Irish Examiner, takeover negotiations, resurrected
late last year, are ongoing with Kenmare, with due diligence also
being carried out.
Asked by Australian media and analysts on Feb. 17 about the
length of the process, Iluka managing director David Robb said
that while he was not able to comment on the matter, the company
"continues to believe" in the discussions, Irish Examiner
relates.
"We are being our usual disciplined and diligent selves," Irish
Examiner quotes Mr. Robb as saying.
It was further claimed that Iluka sees no pressure to complete
any planned merger/acquisition activity, Irish Examiner notes.
Meanwhile, Kenmare on Feb. 17 warned of the need to cut 15% to
20% of its workforce at its Moma titanium mine in Mozambique, as
part of a cost-cutting program, which has not been satisfied by
declining operating costs, Irish Examiner relays.
Debt Restructuring
As reported by the Troubled Company Reporter-Europe on Feb. 2,
2015, The Irish Times related that the company, which has been
hit by the fall in commodity prices, now has until Feb. 28 to
agree a budget with project lenders. In a trading update,
Kenmare said its bank loans amounted to US$337.3 million at the
end of last year, down from US$355.2 million at the end of 2013,
according to The Irish Times.
Kenmare Resources is an exploration company based in Dublin.
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I T A L Y
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ZUCCHERIFICIO: Expressions of Interest Deadline Set for Mar. 31
---------------------------------------------------------------
Dr. Lorenzo Di Nicola, the liquidator of the Creditors
Arrangement Act of Zuccherificio del Molise s.p.a., intends to
dispose the following assets in one single batch:
(1) Sugar production and marketing enterprise, consisting of
property, plant, machinery and equipment on an area of
roughly 256,000 m2. The assets are located in Pantano
Basso, S.S. Sannitica km 217, Termoli (CB), Italy.
Interested parties are notified that the business branch of
the company has been leased to Nuovo Zuccherificio del
Molise S.r.l. with deed issued by Notary Colavita in Larino
dated October 7, 2012, while a second branch (packaging) has
been leased free of charge to the same company on January 9,
2014.
(2) Shareholdings comprising the whole share capital of Nuovo
Zuccherificio del Molise s.r.l., with registed office in
Pantano Basso, S.S. Sannitica Km 217, Termoli (CB), Italy.
Share capital is EUR10,000. With Ministry of Agriculture,
Food and Forestry Decree prot. no. 000404 dated July 25,
2012, the Company was assigned the production of 84,326 tons
of white sugar.
The basic tender price for the entire lot is equal to EUR17
million.
The expressions of interest must be received by 1:00 p.m. on
March 31, 2015, at the Liquidator's office. Those submitting
expressions of interest shall be granted access to the Virtual
Data Room.
The binding offers shall be received by 1:00 p.m. on March 31,
2015, at the Bankruptcy Registry of the Court of Larino (CB).
The envelope containing the bids received will be opened on
April 1, 2015 at 12:00 p.m. before the Designated Magistrate at
the Court of Larino (CB) and awarded to the bidder, with relative
tender if more than one bid is received.
The complete Specification, the estimation surveys and other
documents relating to the sale are available on the
www.zuccherificiodelmolise.it and at the Virtual Data Room.
For further information, interested parties may contact:
Dr. Lorenzo Di Nicola
Liquidator
Via Muzii 51 - 65123 Pescara, Italy
Tel No: (39) 085 380207
Fax No: (39) 085 4415009
E-mail: lorendin@tin.it
=====================
N E T H E R L A N D S
=====================
GM FINANCIAL: Fitch to Rate EUR650MM Sr. Unsecured Notes 'BB+'
--------------------------------------------------------------
Fitch Ratings expects to assign a 'BB+' rating to General Motors
Financial International B.V.'s (GMFI) EUR650 million senior
unsecured notes issuance under its EUR10 billion Euro Medium Term
Note (EMTN) program. The notes will pay a coupon of 0.85% and
will be due in February 2018.
Key Rating Drivers
The EUR650 million notes will be guaranteed by General Motors
Financial Company, Inc. (GMF) and by GMF's principal operating
subsidiary in the U.S., AmeriCredit Financial Services, Inc.
(AFSI). The notes will rank pari passu with GMF's other senior
unsecured debt issuance, and therefore, the ratings assigned to
the notes is equalized with GMF's existing long-term Issuer
Default Rating of 'BB+'. The issuance is in line with GMF's
strategy to increase the proportion of unsecured debt in its
capital structure and does not result in a significant increase
in its leverage. As a result, there is no rating impact on GMF's
IDR or Positive Rating Outlook.
GMF's ratings reflect the direct linkage to its parent, General
Motors Company's (GM, rated 'BB+', Positive Outlook by Fitch)
ratings. Fitch considers GMF to be a 'core' subsidiary of GM
based on actual and potential support provided to GMF from GM,
increasing percentage of GMF's earning assets related to GM, and
strong financial and operational linkages between the companies.
The ratings also reflect GMF's seasoned management team,
improving funding profile, consistent operating performance, good
asset quality, and adequate capitalization and liquidity.
RATING SENSITIVITIES
The expected ratings assigned to the proposed notes are equalized
with GMF's IDR, and therefore would be expected to move in
parallel with any changes in GMF's ratings. The Positive Rating
Outlook on GMF is linked to that of its parent, GM. GMF's
ratings will move in tandem with GM. Any change in Fitch's view
on whether GMF remains core to its parent could change this
rating linkage with its parent. A material increase in leverage
without a corresponding decrease in the risk of the portfolio, an
inability to access funding for an extended period of time,
and/or significant deterioration in the credit quality of the
underlying loan and lease portfolio, could become constraining
factors on the parent's ratings.
Fitch has assigned these ratings:
General Motors Financial International B.V. (GMFI)
-- EUR650 million senior unsecured notes due February 2018
'BB+ (EXP)'
Fitch currently rates GMF as:
-- Long-term IDR 'BB+'; (Outlook Positive)
-- Senior unsecured debt 'BB+'.
Fitch currently rates GMFI as:
-- Long-term IDR 'BB+'; (Outlook Positive)
-- Euro Medium Term Note Program 'BB+'.
LEO MESDAG: Fitch Affirms 'Bsf' Ratings on 2 Note Classes
---------------------------------------------------------
Fitch Ratings has affirmed Leo Mesdag B.V., as:
EUR475.2 million class A (XS0266637171) affirmed at 'Asf';
Outlook revised to Stable from Negative
EUR17.4 million class B (XS0266638146) affirmed at 'Asf'; Outlook
revised to Stable from Negative
EUR95.6 million class C (XS0266642171) affirmed at 'BBsf';
Outlook Stable
EUR121.1 million class D (XS0266642767) affirmed at 'Bsf';
Outlook Stable
EUR69.7 million class E (XS0266644383) affirmed at 'Bsf'; Outlook
Stable
KEY RATING DRIVERS
The affirmations reflect the stability of the sole underlying
loan, which is secured on a portfolio of 53 department stores and
two car parks located throughout the Netherlands and
predominantly let to three major Dutch retailers: Hema, Bijenkorf
and V&D on moderate to long leases. The revision of the Outlook
on the class A and B notes to Stable reflects the deleveraging
that has taken place through the refinancing of 18 properties in
2014 in conjunction with the on-going cash sweep.
In June 2014, noteholders agreed to a restructuring of the
transaction that would allow the sponsor, IEF Capital, to
partially refinance the loan ahead of its maturity in August
2016. The first of these refinancings occurred on the August 2014
interest payment date (IPD), reducing the total debt balance by
EUR220.5m and removing 18 properties from the portfolio at their
allocated loan amount. The proceeds from the refinancing were
allocated on a modified pro-rata basis, reducing the class A
balance by EUR165.3m.
In addition to the refinancing, on the August 2014 IPD a full
cash sweep on the loan was triggered, allowing a significant
level of excess cash (the current forward looking interest
coverage ratio stands at 1.63x) to amortize the debt.
The property portfolio is predominantly strong. However, it does
exhibit some differentiation, consisting of trophy assets, such
as the Amsterdam and The Hague De Bijenkorf department stores, as
well as smaller Hema and V&D stores that are more secondary in
nature and/or in peripheral locations. Given the lease
structure, net operating income (NOI, EUR58.7 million), ICR and
vacancy (0.1%) have all remained broadly stable since the
previous rating action in 2014, and while the reported market
value of EUR1,219 million results in a loan-to-value ratio (LTV)
of 64%, Fitch's estimate of sustainable value produces an LTV
nearer to 100%.
As the three main retailers in this transaction are privately
held, there is little information available regarding the sales
performance of the stores. However, the Dutch retail sector
continues to suffer and consequently is likely to be having a
negative effect on their trading figures. Stores in established
retail markets are expected to fare better than those in marginal
locations.
Due to moderately long leases of over 11 years on a weighted
average basis combined with tenant concentration, the main risk
in this transaction is tenant quality. While a tenant default
could precipitate a material fall in NOI, the risk premium
demanded by potential investors in the portfolio is of greater
relevance (given only two years remain on the loan). However,
the recent and expected future refinancings somewhat mitigate
this risk.
RATING SENSITIVITIES
Fitch estimates the 'Bsf' recoveries to be EUR780 million (based
on sustainable long-term value). As current property yields are
generally some way below longer-term averages in the relevant
markets, ratings are not greatly sensitive to modest widening in
yields. However, if market rents fall or other signs emerge of
deterioration in the Dutch retail sector -- including, in
extremis, tenant default -- there would be proportionate
downwards pressure on ratings.
===============
P O R T U G A L
===============
BANCO ESPIRITO: Bank of Portugal Keeps Goldman Loan in Bad Bank
---------------------------------------------------------------
Andrei Khalip at Reuters reports that the Bank of Portugal on
Feb. 17 stuck to a decision to keep a loan linked to Goldman
Sachs in a "bad bank" carved out after the rescue of Banco
Espirito Santo, putting the central bank and Goldman Sachs on
course for a legal battle.
The central bank said any remaining doubts could only be
clarified in court, Reuters relates discloses. Goldman responded
that it intended "to pursue all appropriate legal remedies
without delay," Reuters relates.
The Wall Street bank and some of its clients lent BES US$835
million in July last year using an entity it created called Oak
Finance Luxembourg SA, Reuters recounts.
Sources told Reuters last month that Goldman had to write down
its loan to BES in the fourth quarter, cutting the bank's profit
and some employees' bonuses, after Portugal's central bank
effectively wiped out certain creditors.
Goldman would not say how much of the debt it still holds,
Reuters notes.
According to Reuters, the central bank said in a statement on
Feb. 17 the Oak Finance loan was not transferred to Novo Banco
because it had "serious and well-grounded reasons to consider
that Oak Finance acted for the account of Goldman Sachs
International."
"Under the law, loans in these conditions cannot be transferred
to a bank in transition," the central bank, as cited by Reuters,
said, adding that it had analyzed objections by Goldman Sachs
with the help of an independent external consultant, but the bank
was not convinced that Oak Finance was acting independently from
Goldman.
A transfer to Novo Banco, it said, would carry "serious risk of
irreparable damage to the public interest", Reuters notes.
About Banco Espirito Santo
Banco Espirito Santo is a private Portuguese bank based in
Lisbon, Portugal. It is 20% owned by Espirito Santo Financial
Group.
In August 2014, Banco Espirito Santo was split into "good"
and "bad" banks as part of a EUR4.9 billion rescue of the
distressed Portuguese lender that protects taxpayers and senior
creditors but leaves shareholders and junior bondholders holding
only toxic assets. A total of EUR4.9 billion in fresh capital
was injected into this "good bank", which will subsequently be
offered for sale. It has been renamed "Novo Banco", meaning new
bank, and will include all BES's branches, workers, deposits and
healthy credit portfolios.
In August 2014, Espirito Santo Financial Portugal, a unit fully
owned by Espirito Santo Financial Group, filed under Portuguese
corporate insolvency and recovery code.
Also in August 2014, Espirito Santo Financiere SA, another entity
of troubled Portuguese conglomerate Espirito Santo International
SA, filed for creditor protection in Luxembourg.
In July 2014, Portuguese conglomerate Espirito Santo
International SA filed for creditor protection in a Luxembourg
court, saying it is unable to meet its debt obligations.
=============
R O M A N I A
=============
TAROM: Needs Solid Restructuring Process, Minister Says
-------------------------------------------------------
Romanian Transport Minister Ioan Rus said in an interview to
Agerpres that the situation of TAROM air transporter needs an
extremely solid restructuring process, considering the state-run
company continues to record losses, and bankruptcy is not an
option.
"TAROM is in a situation which is mandatory to see a very solid
restructuring process. I have had talks with several large
companies, to assist us in such a restructuring process and
re-establishing this company on viable existing variants. TAROM
is currently recording losses. What has happened in our proximity
with the similar Bulgarian company, with the similar Hungarian
company, etcaetera -- I mean the bankruptcy -- is not a solution
we should accept," Agerpres quotes the minister as saying.
According to Agerpres, the minister said the authorities in this
field will soon initiate talks with the TAROM representatives in
reference to this restructuring process, an example considered
being the one of the LOT Polish Airlines company.
Romania-based TAROM provides air transport services for domestic
and international routes.
===========
R U S S I A
===========
BANK TAVRICHESKY: S&P Cuts Rating to R on Regulatory Intervention
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long- and short-
term counterparty credit ratings and Russia national scale
ratings on Russia-based Bank Tavrichesky to 'R'.
The downgrade reflects S&P's view of the regulatory risk related
to the Central Bank of Russia's (CBR's) intervention and
appointment of temporary administration to Bank Tavrichesky on
Feb. 11, 2015. At the same time, the CBR suspended the authority
of the bank's management team. This decision from the CBR comes
after weeks of increasing financial stress for the bank. S&P
considers this to be evidence of Bank Tavrichesky's inability to
meet its financial obligations stemming from the liquidity crisis
that the bank has been facing since December 2014. S&P considers
that the temporary administration has the power to authorize
payment of some obligations and not others.
Any further rating actions on Bank Tavrichesky will depend on
whether financial rehabilitation procedures are to take place at
some point. S&P currently has no information on the probability
or scope of such procedures.
FIRST COLLECTION: S&P Assigns 'B' ICR; Outlook Negative
-------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned its 'B'
long-term issuer credit rating and 'ruBBB+' Russia national scale
rating to Russia-based OJSC First Collection Bureau (FCB). The
outlook is negative.
The ratings on FCB reflect the high country and industry risks to
which the company is exposed, the challenging and unstable
regulatory environment, and significant concentrations in the
funding base. These weaknesses are partly mitigated by the
company's leading positions in the Russian debt collection
market, and adequate cash flow generation capacity compared with
peers.
FCB is one of the largest debt-collection agencies in Russia in
terms of the size of its owned distressed debt portfolio, with a
market share more than 30% of all distressed debt sold by the
banks in 2014. In line with domestic peers, EBITDA margins have
historically been about 50%, but, based on preliminary data,
declined to 25% in 2014 due to the weaker operating environment
in Russia.
S&P believes that the operating environment in Russia is high
risk, characterized by the weak rule of law, nontransparent
judicial system, and underdeveloped legal framework. S&P
considers FCB's exposure to operational and regulatory risks to
be one of the main weaknesses of its business profile. Before
the adoption of the Federal Law "On Consumer Credit (Loans)" it
was unclear whether banks could rightfully sell distressed debt
to third parties. The law significantly reduced legal risks for
Russian collection agencies. However, this legislation applies
only to loans purchased on or after July 1, 2014. For debt
purchased earlier, legal ambiguity still exists, and court
decisions often contradict each other with regard to the legality
of the sale of distressed retail bank loans to third parties.
In S&P's view, the company has increased its leverage during
recent years, with debt-to-EBITDA reaching about 1.9x at end-2014
from low levels of 0.45x at end-2013. S&P expects a further
increase in FCB's leverage with the debt-to-EBITDA ratio of about
2.8x by year-end 2016, as the company attracts more debt to
purchase receivables and grow its operations. S&P estimates that
EBITDA coverage of cash interest expense will also be poor,
averaging about 3.7x over the next three years. The likely
evolution of these indicators underpins S&P's assessment of FCB's
financial risk profile as "significant", as S&P's criteria define
this term.
S&P expects the difficult operating environment in Russia to
continue to undermine the company's leverage and interest
coverage, resulting in lower operating margins and still-high
cost of funding. In S&P's view, the company is vulnerable to
interest at risk that could negatively affect FCB's debt service
capacity.
S&P considers the below assumptions when assessing FCB's
financial risk profile:
-- S&P expects FCB to successfully issue a RUB1.5 billion
three-year senior unsecured bond. At the same time, S&P
expects debt issued at a fixed rate, as opposed to floating
rate, to somewhat reduce interest rate risks. S&P expects
the distressed debt portfolio to grow gradually in 2015,
given the Russian banking sector's deterioration in asset
quality. S&P assumes that the EBITDA margin will decrease,
as the company grows and the industry matures.
-- In S&P's view, FCB's shareholders are supporting the
company's leverage profile and we assume no dividend
distribution.
FCB is an open joint stock company. FCB's shareholder structure
was changed in 2014 and now includes one holder -- FCB Holding
Cooperatief U.A. The company does not publicly disclose its
ultimate beneficiaries. S&P notes, however, that Baring Vostok
Capital Partners and Da Vinci Capital -- both large private
equity firms in Russia--have publicly stated that they have
investments in FCB. S&P continues to believe that Orient Express
Bank has strong business ties with FCB. Mr. Vlasov, who used to
be a large shareholder of FCB (21.3% as of June 30, 2014) is
currently chairman of the board of Orient Express. S&P notes
that Baring Vostok Capital Partners owned 33.9% and Mr. Vlasov
owned 11.8% in Orient Express as of June 30, 2014.
In S&P's view, FCB faces significant credit risk as a buyer of
unsecured overdue consumer debt. Even though receivables are
purchased at large discounts to their face value, there is still
a risk that actual collections could be materially lower than the
initial projections incorporated in the purchase price. S&P
believes that FCB's good track record, wide branch network, and
established relationships with the largest Russian retail banks
help the company to manage mispricing risk better than its
competitors. On average, FCB's collections exceeded the price
paid for the portfolios by 2.0x since the first portfolio was
purchased in 2005.
S&P also believes that the continued build-up phase of the
company's assets will hamper positive cash generation, as
measured by adjusted EBITDA minus portfolio acquisition spend,
over S&P's one-year rating horizon. FCB mainly uses its
liquidity to repay debt. S&P expects sources of liquidity to
exceed uses only marginally over the next two years. However,
S&P still sees additional risks stemming from further worsening
in collections against management's expectations that could
reduce liquidity sources generated by the company in the medium
term, which S&P reflects in its outlook.
In 2014, FCB used committed revolving credit facilities from
three Russian banks to purchase new debt portfolios. S&P
believes that funding concentrations constrain the company's
credit profile and business growth, which might be negatively
affected if liquidity lines become unavailable in the event of
market or idiosyncratic stress at one of the partner banks.
These risks are partly mitigated by ongoing funding support from
Orient Express Bank, which has strong business ties with FCB. In
addition to funding sources provided by Orient Express Bank, FCB
benefits from an additional RUB500 million credit lines from a
large Russian bank that are available in case of need. In S&P's
view, the RUB1.5 billion three-year senior unsecured issue could
also mitigate refinancing risks of FCB.
The negative outlook reflects S&P's view that the current
volatile macroeconomic environment poses downside risks to FCB's
collections performance and liquidity position over the medium
term.
There is a one-in-three chance that S&P could lower the rating
within the next 12 months if it sees a marked worsening in cash
collections against management's expectations.
Specifically, S&P would lower its ratings on FCB if it sees
liquidity risks increase. This could happen if, among other
things, FCB does not manage to successfully place its planned
senior unsecured bond, which could increase refinancing risks,
and/or its cash collections significantly worsened, limiting
FCB's ability to service its debt. S&P could also lower the
ratings if changes in the group or shareholder structure trigger
changes in FCB's financial policy which undermine the company's
financial profile.
S&P do not currently expect to revise the outlook on FCB to
stable. However, S&P could do so if it saw risks stemming from
weak economic prospects in Russia and liquidity diminish.
PAO SIBUR: Fitch Affirms 'BB+' LT Issuer Default Rating
-------------------------------------------------------
Fitch Ratings has affirmed Russia-based petrochemical group PAO
SIBUR Holding's (SIBUR) Long-term Issuer Default Rating (IDR) at
'BB+' with a Stable Outlook. Fitch also affirmed SIBUR's Short-
term IDR at 'B', and SIBUR Securities Limited's five-year USD1
billion guaranteed notes due 2018 at 'BB+'.
The affirmation and Stable Outlook reflects SIBUR's ability to
withstand recent market challenges, namely the drop in the price
of oil since late 2014 and rebased foreign-currency liabilities
on a weaker rouble, which has contributed to funds from
operations (FFO) net adjusted leverage of 2.4x at FY14. While
higher than Fitch's medium-term downgrade guidance of 2.0x, Fitch
expect this to be a temporary spike which can be accommodated at
the current rating level. Key drivers of SIBUR's financial
flexibility include its increased export competitiveness as a
result of a weak rouble, its flexibility on investments in the
already committed ZapSib-2 project and its strong EBITDAR margin
due to its low cost base.
SIBUR's ratings are constrained by higher than average systemic
risks associated with the Russian business and jurisdictional
environment. Excluding these risks, Fitch assesses SIBUR's
credit profile in the 'BBB' category.
KEY RATING DRIVERS
Largest Russian Petrochemical Player
SIBUR's ratings reflect its leading market and cost position in
the Russian petrochemical sector, its diversified portfolio and
its access to competitively priced feedstock. Despite a balanced
revenue split across product types, the EBITDA split is formed by
feedstock and energy products. SIBUR remains highly exposed to
Russia and CIS (2013: 63%) followed by the European market (27%).
The export share is 43% and varies across products - from 25%-35%
for plastics and basic polymers, and 50% for energy products to
60% for synthetic rubbers.
FX offsets Oil Price Shock
Up to 50% of SIBUR's sales at 9M2014 retained a material
correlation with oil prices, and given the recent oil price shock
Fitch project a negative impact on EBITDA across SIBUR's product
portfolio. However, the RUB/USD exchange rate has a negative
correlation with the oil price and thus will largely mitigate the
impact, as SIBUR's sales are either exports or linked to non-
rouble export prices, while most of its costs are rouble-
denominated. Sibur also has a long-term strategy to reduce its
exposure to oil prices and the recent Tobolsk Polymer project
(500kt of polypropylene capacity) reflects this.
2014 and 2015 Performance Outlook
Fitch forecast SIBUR's 2014 sales to be above RUB350bn on the
back of a weak rouble and aided by Ust-Luga's low-marginal
trading operations. Rouble devaluation will not be fully
reflected in EBITDAR margin which Fitch expect to be 30%. Fitch
also expects SIBUR's capex to average 18%-20% of sales from 2014,
while conservatively assuming SIBUR follows its dividend policy
(25% payout) -- resulting in low single digit free cash flow
(FCF) margin in 2014. Taking into account the M&A outflows and
joint venture financing (RUB30bn, mostly a payment to Rosneft for
the acquired stake in Yugragazpererabotka) and debt revaluation
on a weaker rouble, Fitch forecasts FFO net adjusted leverage at
2.4x at FY2014.
SIBUR's 2015 sales are forecast to remain above RUB350 billion,
as the Ust-Luga terminal deconsolidation is offset by higher
contributions from the newly launched gas fractionating unit, the
Purovsk-Pyt-Yach pipeline, and the Tobolsk polymer plant. The
weaker rouble will affect the EBITDAR margin, pushing it up to
33%-35%, despite facing rouble cost inflation in the mid-teens.
Moderated capex will offset the remaining USD1 billion payment to
Rosneft, and this will add to the positive factors keeping
leverage flat at 2.4x in 2015, and allowing SIBUR to deleverage
towards 2x from 2016.
Flexibility on ZapSib-2 Project
In 3Q14, SIBUR approved the USD9.5bn ZapSib-2 petrochemical
project which is expected to add 1.5 million tonnes (mt) of
cracking and 2mt of polymer capacity. The project will account
for most of SIBUR's capex over the rating horizon, and the
company's flexibility around it will be a crucial factor for its
ability to withstand market challenges. SIBUR has demonstrated
flexibility on its ZapSib-2 investments in 2015-2016 by
moderating investments and adjusting the project implementation
schedule. Should SIBUR demonstrate its inability to cut or delay
its ZapSib-2 investments further in the case of the prolonged
market downturn, this would create additional pressure on its
leverage and ratings.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch's rating case for the issuer
include:
-- 2014 and 2015 sales of around RUB350 billion impacted by
new operations (Ust-Luga trade operations in 2014, Tobolsk
polymer and new gas fractionation unit ramp up in 2015),
and sustained rouble devaluation, compensating negative oil
impact on sales.
-- EBITDA margin to exceed 30% starting from 2015 due to
sustained rouble devaluation and Tobolsk Polymer.
-- RUB/USD expected to appreciate from 60 in 2015 to 53 in
2017.
-- Oil price in line with Fitch's oil price deck, increasing
from USD55 per barrel of Brent in 2015 to USD80 in the long
run.
-- Capex assumed at 18%-20% of sales in 2015-2016.
-- Dividends are set as 25% of IFRS net profits, in line with
dividend policy. FX loss impact is conservatively excluded.
-- USD1 billion M&A activity in 1Q15 (completion of Yugra
acquisition) falls below FCF line resulting in a leverage
spike in 2015 (2.4x) with deleveraging towards 2x from
2016.
RATING SENSITIVITIES
Positive: Future developments that could lead to positive rating
action include:
-- Further operational improvements and capacity expansion
resulting in enhanced scale and product diversification
and/or portfolio mix.
-- FFO net adjusted leverage at, or below 1.5x through the
cycle.
-- Sustained positive FCF generation.
Negative: Future developments that could lead to negative rating
action include:
-- Material deterioration in the company's cost position or
access to low-cost associated petroleum gas.
-- Aggressive financial or investment strategy, which results
in an increased financial burden or sustained negative FCF
through the investment cycle.
-- FFO adjusted net leverage materially over 2x for a
protracted period, i.e. no move back towards 2x (2014:
2.4x) over the next two years.
SUDOSTROITELNY BANK: S&P Cuts Counterparty Credit Ratings to D/D
----------------------------------------------------------------
Standard & Poor's Ratings Services said that it had lowered its
long- and short-term counterparty credit ratings on Russia-based
Commercial Bank Sudostroitelny Bank LLC to 'D/D' from 'CCC/C'.
At the same time, S&P lowered its Russia national scale rating on
Sudostroitelny Bank to 'D' from 'ruB-'.
S&P removed all the ratings from CreditWatch negative where it
placed them on Jan. 22, 2015, and subsequently withdrew them.
S&P lowered the ratings on the bank and then withdrew them
following the Russian Central Bank's revocation of Sudostroitelny
Bank's banking license on Feb. 16, 2015, and Sudostroitelny
Bank's placement under a temporary administration, which will
manage the bank until the court decides on the timing and other
issues concerning the bank's bankruptcy and liquidation.
S&P understands the central bank withdrew Sudostroitelny Bank's
license because of Sudostroitelny Bank's inability to process
transactions and meet its financial obligations, as well as its
failure to abide with the laws regulating banking activity.
S&P understands that all payments are frozen as a result of the
regulator's intervention and that, as a result, the bank is
currently unable to fulfill its obligations according to the
terms agreed with customers.
S&P has therefore lowered all its ratings on Sudostroitelny Bank
to 'D' and withdrawn all the ratings, given S&P's view that the
bank will be liquidated and therefore will cease to exist under
its current form.
=========
S P A I N
=========
BANKINTER 4: S&P Lowers Rating on Class C Notes to 'B-(sf)'
-----------------------------------------------------------
Standard & Poor's Ratings Services took various credit rating
actions in Bankinter 3 Fondo de Titulizacion Hipotecaria,
Bankinter 4 Fondo de Titulizacion Hipotecaria, Bankinter 6 Fondo
de Titulizacion de Activos, Bankinter 11 Fondo de Titulizacion
Hipotecaria, and Bankinter 13, Fondo de Titulizacion de Activos.
Specifically, S&P has:
-- Affirmed its ratings on Bankinter 3's class A notes,
Bankinter 4's class A and B notes, Bankinter 6's class A
notes, Bankinter 11's class A2 and B notes, and Bankinter
13's class A2 and E notes; and
-- Lowered its ratings on Bankinter 3's class B and C notes,
Bankinter 4's class C notes, Bankinter 6's class B and C
notes, Bankinter 11's class C and D notes, and Bankinter
13's class B, C, and D notes.
Upon publishing S&P's updated criteria for Spanish residential
mortgage-backed securities (RMBS criteria) and its updated
criteria for rating single-jurisdiction securitizations above the
sovereign foreign currency rating (RAS criteria), S&P placed
those ratings that could potentially be affected "under criteria
observation".
Following S&P's review of these transactions, its ratings that
could potentially be affected by the criteria are no longer under
criteria observation.
The rating actions follow S&P's credit and cash flow analysis of
the most recent transaction information that it has received as
of each transaction's latest payment date. S&P's analysis
reflects the application of its RMBS criteria and its RAS
criteria.
Under S&P's RAS criteria, it applied a hypothetical sovereign
default stress test to determine whether a tranche has sufficient
credit and structural support to withstand a sovereign default
and so repay timely interest and principal by legal final
maturity.
S&P's RAS criteria designate the country risk sensitivity for
RMBS as 'moderate'. Under S&P's RAS criteria, these
transactions' notes can therefore be rated four notches above the
sovereign rating, if they have sufficient credit enhancement to
pass a minimum of a "severe" stress. However, as all six of the
conditions in paragraph 48 of the RAS criteria are met, S&P can
assign ratings in these transactions up to a maximum of six
notches (two additional notches of uplift) above the sovereign
rating, subject to credit enhancement being sufficient to pass an
"extreme" stress.
As S&P's long-term rating on the Kingdom of Spain is 'BBB', S&P's
RAS criteria cap at 'AA (sf)' the maximum potential rating for
the class A notes in Bankinter 3 and 6, and the class A2 notes in
Bankinter 11 and 13.
Bankinter 3 and 4 have similar priorities of payments, while
Bankinter 6, 11, and 13 have similar structures. Furthermore,
Bankinter 11 and 13 feature interest deferral triggers, based on
the level of principal deficiency experienced by each
transaction, which protect the more senior classes of notes in
stressful scenarios. The triggers have never been breached and
S&P don't expect them to be breached.
Bankinter 3's and 4's class A and B notes amortize pro rata and
the class C notes amortize fully sequentially. All of Bankinter
6, 11, and 13's classes of notes amortize pro rata. The reserve
funds in all five transactions are at their required levels.
Bankinter S.A. (BBB-/Stable/A-3) is the swap counterparty in
Bankinter 3 and 4, and Credit Agricole Corporate And Investment
Bank (A/Negative/A-1) is the swap provider in Bankinter 6, 11,
and 13. Each transaction's hedge agreement mitigates basis risk
arising from the different indexes between the securitized assets
and the notes. S&P don't consider the replacement language in
the swap agreements of these transactions to be in line with
S&P's current counterparty criteria, although the agreements
feature a minimum required rating and replacement framework to
which S&P gives some credit in our analysis. Under S&P's current
counterparty criteria, its ratings in these transactions are
capped at its long-term issuer-credit rating on the corresponding
swap counterparty, plus one notch. Therefore, S&P's ratings in
Bankinter 3 and 4 are capped at 'BBB (sf)', and at 'A+ (sf)' in
Bankinter 6, 11, and 13, unless higher ratings are possible in
S&P's analysis without giving benefit to the swap agreement.
The available credit enhancement (based on the collateral balance
excluding defaults and including cash reserve available in the
transaction) has increased for all classes of notes in all five
transactions since S&P's previous reviews.
Class Available credit enhancement (%)
3 4 6 11 13
A 19.67 13.34 12.06 - -
A2 - - - 11.03 11.01
B 15.35 10.17 8.16 7.58 8.20
C 7.50 1.91 4.34 4.21 5.17
D - - - 2.04 2.89
E - - - - 0.00
Available excess spread covers defaulted loans and maintains each
reserve fund at its required level in all five transactions. The
level of excess spread in these transactions is relatively low.
Severe delinquencies of more than 90 days are relatively stable
and below S&P's Spanish RMBS index in all five transactions.
Defaults are defined as mortgage loans in arrears for more than
18 months in these transactions. Cumulative defaults are also
generally lower than in other Spanish RMBS transactions that S&P
rates.
Prepayment levels remain low and the transactions are unlikely to
pay down significantly in the near term, in S&P's opinion.
Severe Cumulative
delinquencies (%)[1] defaults (%)[2]
Bankinter 3 0.29 0.11
Bankinter 4 0.36 0.08
Bankinter 6 0.67 0.24
Bankinter 11 0.64 0.36
Bankinter 13 0.97 1.26
[1] As a percentage of the outstanding portfolio.
[2] As a percentage of the closing portfolio.
After applying S&P's RMBS criteria to these transactions, its
credit analysis results show a decrease in the weighted-average
foreclosure frequencies (WAFF) for most rating levels, and an
increase in the weighted-average loss severities (WALS) for each
rating level in all five transactions. The decreases in the WAFF
are mainly due to S&P's updated treatment of original loan-to-
value ratios and the different adjustments that S&P applies to
seasoned loans under its revised RMBS criteria. The increases in
the WALS are mainly due to the application of S&P's revised
market value decline assumptions. The overall effect is an
increase in the required credit coverage for each rating level in
each transaction.
Following the application of S&P's RAS criteria and its RMBS
criteria, S&P has determined that its assigned rating on each
class of notes in these transactions should be the lower of (i)
the rating as capped by S&P's RAS criteria and (ii) the rating
that the class of notes can attain under S&P's RMBS criteria.
S&P's ratings on the class A and B notes in Bankinter 3, 4, and
6, and the class A2 and B notes in Bankinter 11 and 13 are
constrained by the rating on the sovereign.
The senior-most classes of notes in Bankinter 3, 6, 11, and 13
pass all of the conditions under S&P's RAS criteria, and benefit
from enough credit enhancement to withstand S&P's extreme stress.
Consequently, S&P's ratings on these classes of notes can be a
maximum of six notches above the sovereign rating. S&P has
therefore affirmed its 'AA (sf)' ratings on Bankinter 3 and 6's
class A notes, and Bankinter 11 and 13's class A2 notes.
Bankinter 4's class A notes have enough credit enhancement to
withstand S&P's stresses up to four notches above the sovereign
rating. S&P has therefore affirmed its 'A+ (sf)' rating on
Bankinter 4's class A notes.
The class B notes in Bankinter 11 have sufficient credit
enhancement to withstand S&P's severe stresses up to three
notches above the sovereign rating. S&P has therefore affirmed
its 'A (sf)' rating on Bankinter 11's class B notes.
S&P's credit and cash flow results indicate that the available
credit enhancement for Bankinter 13's class B notes is sufficient
to withstand S&P's stresses up to one notch above the sovereign
rating. S&P has therefore lowered to 'BBB+ (sf)' from 'A (sf)'
its rating on Bankinter 13's class B notes.
S&P's credit and cash flow results also indicate that the
available credit enhancement for Bankinter 3 and 6's's class B
and C notes, Bankinter 4's class C notes, and Bankinter 11 and
13's class C and D notes is commensurate with lower ratings than
those currently assigned. S&P has therefore lowered its ratings
on these classes of notes.
S&P's credit and cash flow results also indicate that the
available credit enhancement for Bankinter 4's class B notes is
commensurate with the currently assigned rating. S&P has
therefore affirmed its 'BBB (sf)' rating on this class of notes.
In addition to the decreased WAFF and the increased WALS, the
more severe cash flow modeling assumptions under S&P's revised
RMBS criteria (including additional stresses on servicing fees,
delinquencies, back-ended default curves, delayed recession
timing, and longer recovery timing) contributed to greater
overall stresses on the transactions. These assumptions led to
S&P lowering its ratings on affected mezzanine and junior
tranches.
S&P has affirmed its 'D (sf)' rating on Bankinter 13's class E
notes as they are experiencing ongoing interest shortfalls due to
a lack of liquidity.
S&P also considers credit stability in its analysis. To reflect
moderate stress conditions, S&P adjusted its WAFF assumptions by
assuming additional arrears of 8% for one-year and three-year
horizons. This did not result in S&P's rating deteriorating
below the maximum projected deterioration that S&P would
associate with each relevant rating level, as outlined in its
credit stability criteria.
In S&P's opinion, the outlook for the Spanish residential
mortgage and real estate market is not benign and S&P has
therefore increased its expected 'B' foreclosure frequency
assumption to 3.33% from 2.00%, when S&P applies its RMBS
criteria, to reflect this view. S&P bases these assumptions on
its expectation of modest economic growth, continuing high
unemployment, and house prices leveling off in 2015.
On the back of improving but still depressed macroeconomic
conditions, S&P don't expect the performance of the transactions
in its Spanish RMBS index to improve in 2015.
S&P expects severe arrears in the portfolio to remain at their
current levels, as there are a number of downside risks. These
include weak economic growth, high unemployment, and fiscal
tightening. On the positive side, S&P expects interest rates to
remain low for the foreseeable future.
Bankinter 3, 4, 6, 11, and 13 are Spanish RMBS transactions,
which closed between October 2001 and November 2006, and
securitize mainly first-ranking mortgage loans. Bankinter S.A.
originated the pools, which comprise loans granted to prime
borrowers secured over owner-occupied residential properties in
Spain.
RATINGS LIST
Class Rating Rating
To From
Bankinter 3 Fondo de Titulizacion Hipotecaria
EUR1.323 Billion Mortgage-Backed Floating-Rate Notes
Rating Affirmed
A AA (sf)
Ratings Lowered
B A+ (sf) AA (sf)
C BBB (sf) BBB+ (sf)
Bankinter 4 Fondo de Titulizacion Hipotecaria
EUR1.025 Billion Mortgage-Backed Floating-Rate Notes
Ratings Affirmed
A A+ (sf)
B BBB (sf)
Rating Lowered
C B- (sf) BB+ (sf)
Bankinter 6 Fondo de Titulizacion de Activos
EUR1.35 Billion Mortgage-Backed Floating-Rate Notes
Rating Affirmed
A AA (sf)
Ratings Lowered
B BBB (sf) A+ (sf)
C BBB (sf) A (sf)
Bankinter 11 Fondo de Titulizacion Hipotecaria
EUR900 Million Mortgage-Backed Floating-Rate Notes
Ratings Affirmed
A2 AA (sf)
B A (sf)
Ratings Lowered
C BB+ (sf) BBB- (sf)
D B- (sf) B (sf)
Bankinter 13, Fondo de Titulizacion de Activos
EUR1.57 Billion Mortgage-Backed Floating-Rate Notes
Ratings Affirmed
A2 AA (sf)
E D (sf)
Ratings Lowered
B BBB+ (sf) A (sf)
C BB (sf) BBB (sf)
D B- (sf) BB- (sf)
GENOVA HIPOTECARIO IV: Moody's Hikes Cl. B Notes' Rating to Ba1
---------------------------------------------------------------
Moody's Investors Service upgraded the ratings of 11 notes and
affirmed the ratings of 2 notes in 4 Spanish residential
mortgage-backed securities (RMBS) transactions: AyT GENOVA
HIPOTECARIO IV, FTH, AyT GENOVA HIPOTECARIO VI, FTH, AyT GENOVA
HIPOTECARIO IX, FTH and AyT HIPOTECARIO MIXTO V, FTA.
The rating action concludes the review of 11 notes initiated on
Jan. 23, 2015, following the upgrade of the Spanish country
ceiling to Aa2 from A1.
The rating upgrades reflect (1) the increase in the Spanish
local-currency country ceiling to Aa2, (2) sufficiency of credit
enhancement in the affected transactions for the revised rating
levels and (3) in the case of AyT GENOVA HIPOTECARIO IV, VI and
IX, FTH the reduction in the portfolio credit enhancement (MILAN
CE) following the removal of minimum country requirements.
The affirmations reflect that the current credit enhancement is
sufficient to maintain the current ratings.
The country ceilings reflect a range of risks that issuers in any
jurisdiction are exposed to, including economic, legal and
political risks. On Jan. 20, 2015, Moody's announced a six-notch
uplift between a government bond rating and its country risk
ceiling for Spain. As a result, the maximum achievable rating
for structured finance transactions was increased to Aa2 (sf)
from A1(sf) for Spain.
Moody's has reassessed its lifetime loss expectation taking into
account the collateral performance of the four transactions to
date. Expected Losses on Original Balances have not been updated
in any of the deals as the performance of the underlying asset
portfolio remains in line with Moody's assumptions.
As part of the review, Moody's has assessed the loan-by-loan
information for the four pools to determine the MILAN CE. On
January 20, Moody's announced that the minimum portfolio CE is no
longer applicable for most EMEA markets following the updates to
its ABS and RMBS rating methodologies. As a result Moody's
reduced the MILAN CE to 6% from 10%, for AyT GENOVA HIPOTECARIO
IV, VI and IX, FTH. AyT HIPOTECARIO MIXTO V, FTA Milan CE
assumption was maintained at 15%.
There is a performance trigger in the four transactions that
could switch the amortization and loss allocation from pro-rata
to sequential among senior and junior notes. The trigger will be
hit once the reserve fund falls below its required level. For
AyT GENOVA HIPOTECARIO IV, FTH, which recently switched to
sequential, it could revert to pro-rata amortization in case the
Reserve Fund rebuilds to target level.
For AyT GENOVA HIPOTECARIO VI, FTH, Moody's believe notes will
continue to pay pro-rata, given the low level of delinquencies
and the fully funded Reserve Fund but the possibility to revert
to sequential amortization was reflected in modelling.
For AyT GENOVA HIPOTECARIO IX, FTH and Ayt HIPOTECARIO MIXTO V,
FTA, Moody's believe notes will continue to pay sequentially
though possibility to revert to pro-rata was also reflected in
the modelling.
Moody's rating analysis also took into consideration the exposure
to key transaction counterparties including the roles of
servicer, account bank and swap provider.
The rating action takes into account the servicer commingling
exposure to Barclays Bank, S.A. (NR) for AyT GENOVA HIPOTECARIO
IV, VI and IX, FTH.
The rating action takes into account the servicer commingling
exposure to Banco Bilbao Vizcaya Argentaria, S.A. (Baa2/P-2),
Banco Mare Nostrum (NR) and Caixabank (Baa3/P-3) for AyT
HIPOTECARIO MIXTO V, FTA.
The principal methodology used in these ratings was "Moody's
Approach to Rating RMBS Using the MILAN Framework" published in
January 2015.
Factors or circumstances that could lead to an upgrade of the
ratings include (1) further reduction in sovereign risk, (2)
performance of the underlying collateral that is better than
Moody's expected, (3) deleveraging of the capital structure and
(4) improvements in the credit quality of the transaction
counterparties.
Factors or circumstances that could lead to a downgrade of the
ratings include (1) an increase in sovereign risk, (2)
performance of the underlying collateral that is worse than
Moody's expects, (3) deterioration in the notes' available credit
enhancement and (4) deterioration in the credit quality of the
transaction counterparties.
List of Affected Ratings:
Issuer: AyT GENOVA HIPOTECARIO IV, FTH
-- EUR776 million Class A Notes, Upgraded to A1 (sf);
previously on Jan. 23, 2015 A3 (sf) Placed Under Review for
Possible Upgrade
-- EUR24 million Class B Notes, Upgraded to Ba1 (sf);
previously on Jan. 23, 2015 B1 (sf) Placed Under Review for
Possible Upgrade
Issuer: AyT GENOVA HIPOTECARIO VI, FTH
-- EUR524 million Class A2 Notes, Upgraded to A1 (sf);
previously on Jan. 23, 2015 Baa1 (sf) Placed Under Review
for Possible Upgrade
-- EUR7 million Class B Notes, Upgraded to Ba1 (sf);
previously on Jan. 23, 2015 Ba3 (sf) Placed Under Review
for Possible Upgrade
-- EUR7.7 million Class C Notes, Upgraded to B1 (sf);
previously on Jan. 23, 2015 B2 (sf) Placed Under Review for
Possible Upgrade
-- EUR7.3 million Class D Notes, Affirmed B3 (sf); previously
on Sep. 25, 2014 Confirmed at B3 (sf)
Issuer: AyT GENOVA HIPOTECARIO IX, FTH
-- EUR750 million Class A2 Notes, Upgraded to A1 (sf);
previously on Jan. 23, 2015 Baa1 (sf) Placed Under Review
for Possible Upgrade
-- EUR11 million Class B Notes, Upgraded to Baa3 (sf);
previously on Jan. 23, 2015 Ba3 (sf) Placed Under Review
for Possible Upgrade
-- EUR10.8 million Class C Notes, Upgraded to Ba3 (sf);
previously on Jan. 23, 2015 B3 (sf) Placed Under Review for
Possible Upgrade
-- EUR10.7 million Class D Notes, Upgraded to B3 (sf);
previously on Jan. 23, 2015 Caa1 (sf) Placed Under Review
for Possible Upgrade
Issuer: AyT HIPOTECARIO MIXTO V, FTA
-- EUR649.4 million Class A Notes, Upgraded to Baa2 (sf);
previously on Jan. 23, 2015 Baa3 (sf) Placed Under Review
for Possible Upgrade
-- EUR12.2 million Class B Notes, Upgraded to B2 (sf);
previously on Jan. 23, 2015 B3 (sf) Placed Under Review for
Possible Upgrade
-- EUR13.4 million Class C Notes, Affirmed Caa3 (sf);
previously on May 14, 2014 Affirmed Caa3 (sf)
===========
T U R K E Y
===========
FINANSBANK AS: Moody's Puts 'Ba3' Rating on Review for Downgrade
----------------------------------------------------------------
Moody's Investors Service placed the Ba2 long-term deposit
ratings of Finansbank AS and Ba3 issuer rating of Finansal
Kiralama A.S. on review for downgrade. Finansbank's bank
financial strength rating of E+ and short-term ratings of Not-
Prime/(P)Not-Prime are not affected by this action.
The review for downgrade is due to a similar rating action on
their ultimate parent, National Bank of Greece A.S. (deposits
Caa2 RuRD /Not-Prime; BFSR E/BCA caa2). NBG is Finansbank A.S.'s
controlling shareholder with 99% ownership.
Although Finansbank and FinansLeasing have maintained an
independent franchise and stable financial performance, Moody's
believes that the risk of contagion from the parent group cannot
be wholly mitigated. As a result, Finansbank's standalone BCA of
b1 is constrained to a four notch differential above the BCA of
its parent (NBG) and in Moody's view reflects the extent to which
a possible default of NBG may have negative credit implications
for Finansbank. Moody's assumption is that subsidiaries are
likely to be affected by a severe worsening in parents'
creditworthiness. Accordingly, Moody's says that the review will
mainly focus on the extent to which a downgrade of NBG will
likely lead to a downgrade of Finansbank and FinansLeasing. The
review will therefore assess the positioning of Finansbank's
standalone credit assessment relative to its parent's standalone
profile, possibility of contagion risk due to the difficulties
experienced by the parent, as well as NBG's potential decrease of
its stake in Finansbank, which is expected to be completed in Q1
2015. NBG is however expected to retain a controlling stake in
Finansbank.
Despite the credit pressures stemming from NBG's risk profile,
the wide rating differential between Finansbank's and its parent
reflects Finansbank's (1) overall good financial fundamentals and
performance, (2) no material dependence on parental funding, (3)
low operational interlinkages, and (4) prudent domestic
regulatory environment in Turkey ring-fencing capital and
liquidity transfers to the group.
At the same time, Finansbank's leasing subsidiary FinansLeasing's
Ba3 foreign currency issuer and corporate family ratings have
been placed on review for downgrade, given the review of the
immediate parent's ratings. FinansLeasing's ratings are based on
the BCA of b3 and our assumption of a very high probability of
support from its immediate majority shareholder (69 %) Finansbank
AS.
The review for downgrade will be concluded after the conclusion
of the review on NBG.
As signaled by the review for downgrade, upside potential for
Finansbank and FinansLeasing's ratings is currently limited.
A downgrade of Finansbank and FinansLeasing's standalone ratings
could be triggered by a downwards rating action in the baseline
standalone credit assessment (BCA) of NBG. Moody's believes that
there is a high probability of government support for Finansbank,
in case of need, which currently results in two notches of uplift
for the supported ratings of Finansbank. There is no government
support implied in the issuer rating of FinansLeasing.
List of affected ratings
Issuer: Finansbank AS
-- Long-term Bank Deposit Ratings, Placed on Review for
Downgrade, currently Ba2
-- Senior Unsecured Regular Bond/Debenture, Placed on Review
for Downgrade, currently Ba2
-- Senior Unsecured Medium-Term Note Program, Placed on Review
for Downgrade, currently (P)Ba2
Issuer: Finans Finansal Kiralama A.S. (FinansLeasing)
-- Issuer Rating, Placed on Review for Downgrade, currently
Ba3
-- Corporate Family Rating, Placed on Review for Downgrade,
currently Ba3
The principal methodology used in these ratings was Global Banks
published in July 2014.
===========================
U N I T E D K I N G D O M
===========================
BRIDGE HOLDCO 4: S&P Assigns 'B' CCR; Outlook Negative
------------------------------------------------------
Standard & Poor's Ratings Services said that it had assigned its
'B' long-term corporate credit rating to Bridge Holdco 4 Ltd.,
the holding company of U.K.-based wire rope manufacturer Bridon
(together referred to as Bridon). The outlook is negative.
At the same time, S&P assigned:
-- A 'B' issue rating to the proposed first-lien facilities,
comprising the US$-equivalent of a oe180 million first-lien
facility and a US$40 million revolving credit facility
(RCF). The recovery rating on these facilities s '3',
reflecting S&P's expectation of meaningful (50%-70%)
recovery prospects in the event of a payment default.
-- A 'CCC+' issue rating to the proposed US$-equivalent of a
GBP70 million second-lien facility. The recovery rating on
this facility is '6', indicating S&P's expectation of
negligible (0%-10%) recovery prospects in the event of a
payment default.
The ratings are at the same level as the preliminary rating S&P
assigned on Nov. 12, 2014.
The ratings on Bridon, a leading wire rope manufacturer worldwide
that previously operated under the name Melrose PLC, reflect
S&P's view of the group's relatively aggressive capital structure
following its leveraged buyout by private equity company Ontario
Teachers' Pension Plan. The buyout was announced on Oct. 13,
2014. S&P assess Bridon's financial risk profile as "highly
leveraged" under S&P's criteria. Based on the proposed capital
structure after the buyout, S&P estimates Bridon's Standard &
Poor's-adjusted net debt-to-EBITDA ratio will be at about 7x as
of Dec. 31, 2014. S&P's estimate includes financial debt of
about GBP250 million (excluding a US$40 million undrawn RCF) and
about GBP37 million of debt adjustments related to operating
leases and pension obligations.
S&P does not include in its debt calculation the GBP18.2 million
shareholder loan to be provided by shareholders, since it
qualifies for equity treatment under S&P's criteria. This is
because the loan is stapled to equity, deeply subordinated to all
existing and future debt instruments, and no mandatory cash
payments are associated with the loan.
S&P assesses Bridon's business risk profile as "weak," primarily
constrained by the group's limited business diversification as a
pure manufacturer of wire ropes, with a limited scope of
operations and modest sales of about GBP263.2 million in 2013.
S&P also views negatively the group's exposure to cyclical end
markets, such as oil and gas, mining, and general industrial
markets (through which Bridon generated about three-quarters of
total sales in 2013). The group faces stiff competition from a
number of direct peers, such as WireCo WorldGroup Inc. and
Radaelli.
However, S&P views these risks as partly mitigated by Bridon's
generally high share of recurring revenues and largely stable
margins, with EBITDA margins in the range of 13.5%-15.0% over
2009 to 2014. Over 2008-2012, Bridon was hit by a litigation
case for which it incurred significant charges. Still, the
group's insurance companies partly reimbursed these charges, and
S&P views this case as rather exceptional in nature. S&P also
views positively the group's sound niche market positions.
Bridon has generally long-term customer relationships and good
geographic diversification. S&P views Bridon's operating
profitability -- measured by the EBITDA margin -- as higher than
peers when compared with the metals processing industry
generally, but consistent with its closest direct competitor
WireCo. However, the return-on-capital metrics S&P forecasts are
in line with the industry's.
The negative outlook on Bridon reflects the risk of a downgrade
if Bridon experiences a more drastic revenue and earnings decline
in its oil and gas division than S&P currently expects. This
could lead to a decline of the company's EBITDA interest cover
ratio to below 1.7x, which is a level S&P do not consider
commensurate with the current rating. S&P expects Bridon's
financial risk profile to remain "highly leveraged," as defined
in S&P's criteria, with debt to EBITDA of about 7x and FFO to
debt of about 5% in 2015, but S&P assumes a largely stable
operating trend, thanks to the group's high share of recurring
revenues, which should allow Bridon to generate minimally
positive free operating cash flows.
S&P could lower the rating if Bridon's business position
deteriorates because of a more competitive environment, such that
gross margins decline by more than 200 basis points and caused
EBITDA interest coverage ratios to fall below 1.7x. S&P could
also lower the rating if it lowered its liquidity assessment to
"less than adequate". This could occur if Bridon fails to
generate positive free operating cash flow, owing to weaker
earnings in its oil and gas segment, or fails to effectively
control working capital.
S&P could revise the outlook to stable if it expects to see
Bridon's EBITDA interest cover ratio returning to more than 2x.
If S&P sees continued positive free operating cash flow
generation and an "adequate" liquidity situation, it could also
lead S&P to revise the outlook to stable.
BRIT PLC: Fitch Puts Sub. Notes' 'BB+' Rating on CreditWatch Neg.
-----------------------------------------------------------------
Fitch Ratings has placed Brit PLC's Long-term Issuer Default
Rating (IDR) of 'BBB+' on Rating Watch Negative (RWN). At the
same time, the subordinated notes issued by Brit rated 'BB+' have
also been placed on RWN.
KEY RATING DRIVERS
The rating action follows the announcement of the expected sale
of Brit to the Canadian financial services group, Fairfax
Financial Holdings Limited (Fairfax), following a recommended
cash offer through which the entire issued ordinary share capital
of Brit will be acquired by Fairfax. The RWN reflects Fitch's
uncertainty about whether ownership by Fairfax will constrain
Brit's ratings. Fitch has not maintained a rating on Fairfax
since November 2013.
In resolving the RWN on Brit, Fitch will endeavor to update our
view on Fairfax and the impact on Brit's ratings as part of the
Fairfax group. In particular, Fitch will assess the implications
for Brit's capital management and assess the impact of any
potential changes in Brit's investment strategy. Fitch will also
assess the perceived strategic importance of Brit to Fairfax.
RATING SENSITIVITIES
If Fitch considers that ownership by Fairfax is credit negative,
Fitch will likely downgrade the ratings. If Fitch considers
Fairfax's ownership to be neutral, Fitch will likely affirm the
ratings. Fitch views an upgrade of Brit related to the
acquisition as unlikely in the medium term.
CAYENNE TRUST: Proposes Liquidation of Assets
---------------------------------------------
Alliance News reports that the Cayenne Trust PLC proposed the
liquidation of its assets and the return of cash from
realizations to shareholders on news that James Hart, who co-
manages its portfolio, is to leave fund manager Cayenne Asset
Management in April this year.
Independently, the trust said, Cayenne Asset Management Chief
Executive Len Gayler, who manages the trust's portfolio alongside
Hart, has indicated that he is "not prepared to commit to
continued management of the company's portfolio much beyond
2016," according to Alliance News.
"The board has decided therefore, subject to shareholder
approval, that it will remove the requirement to put a
continuation vote to the company's annual general meeting in 2016
and instead intends to put forward proposals for an orderly
realization of the company's assets," the trust said, the report
relates.
The report relays that Mr. Gayler will oversee the realization of
the trust's assets and the return of cash to shareholders until a
liquidator takes over, the trust said.
Cayenne Trust said it intends to continue until at least August
2016, the redemption date of its 3.25% convertible unsecured loan
stock, the report discloses.
The trust said it has looked at alternatives to liquidation but
that it is yet to see an option "compelling enough" to be put to
shareholders, the report notes.
"The board is focused on maximizing value for its investors and
will give due and proper consideration to any other options which
may be put forward in the lead up to the company's AGM in 2016,"
the trust added, the report says.
CITY LINK: Former Depot Set for GBP1 Million Renovation
-------------------------------------------------------
Evening Express reports that the former Aberdeen depot of a
collapsed courier firm is to be part of a GBP1 million overhaul.
City Link's depot in Altens is set to be redeveloped as well as
several other units including the city's former Tyco base at
Ocean Trade Centre, according to Evening Express.
And the agents for the property say a "national industrial firm"
is set to take over the City Link premises -- less than two
months after the firm collapsed, the report notes.
City Link went into administration on Christmas Eve with 19 jobs
being lost in Aberdeen, the report discloses.
The report relays that works, including the recladding of the
building to make it more energy efficient, will take place as
part of the GBP1 million proposals.
HAPPIT: Shop Still Fully Stocked Two Years After Closing Down
-------------------------------------------------------------
thecourier.co.uk reports that the Happit clothing store in
Arbroath's High Street shut down its doors about two years ago
and is closed for business, but the store location is still
brimming with stock.
The retail unit leased by Happit has been available for let or
possible sale but, despite sporadic interest, no one has been
found to occupy the store, thecourier.co.uk relays.
Local councilor David Fairweather said landlords were all too
often at fault and should be more realistic about the rents they
set, the report says. If they fail to budge, the Scottish
Government should step in, the report quotes Mr. Fairweather as
saying.
The Happit store has the fashions of three winters ago upon
tightly packed rails and it has been suggested that the clothes
might be donated to local charity shops, the report discloses.
Calls and emails to Happit went unanswered, according to
thecourier.co.uk. However, it is understood that the stock
cannot be disposed of due to ongoing legal wrangles after the
chain went into administration, the report cites.
PETROPAVLOVSK PLC: Sapinda Proposes Debt Restructuring Deal
-----------------------------------------------------------
Jack Farchy at The Financial Times reports that Sapinda, the
investment group that is threatening to push Petropavlovsk into
bankruptcy unless it renegotiates it debt restructuring, has said
it is prepared to invest US$100 million into the gold miner as
part of a revised deal.
The Amsterdam-registered investment group on Feb. 17 lifted its
stake in the London-listed miner to nearly 8%, the FT relates.
It said it and other shareholders representing a total of 10.7%
of the shares would vote against the restructuring deal in an
extraordinary shareholder meeting next week, the FT relays.
On Feb. 18, Petropavlovsk said Sapinda had not presented a
"sufficiently detailed or funded" alternative to the
restructuring plan necessary ahead of the maturity of US$310
million in convertible bonds next month, the FT discloses.
In response, Sapinda, which is led by German entrepreneur Lars
Windhorst, said it would invest US$100 million as part of a deal
that would be more favorable to shareholders than the current
proposal, according to the FT.
"If they really want to do a deal which is good for all the
stakeholders, they should postpone the shareholders' meeting and
extend the maturity on the convertible bond," Artem Volynets,
head of Sapinda's Moscow office, told the FT. "Our proposal is
much better for all the stakeholders."
Peter Hambro, Petropavlovsk's founder and chairman, as cited by
the FT, said he would be ready to discuss any proposal that was
"worth discussing", but he stressed that it would be "very
difficult" to redraw the restructuring proposal to satisfy all
parties in such a short time.
Sapinda approached Petropavlovsk with a proposed rescue plan in
November under which the fund would have become a major
shareholder in the gold miner after restructuring, the FT
recounts.
Petropavlovsk PLC is a London-listed mining and exploration
company with its principal assets located in Russia.
===============
X X X X X X X X
===============
* S&P Puts 377 European Structured Finance Ratings on Watch Neg.
----------------------------------------------------------------
Standard & Poor's Ratings Services placed on CreditWatch negative
its credit ratings on 375 tranches in 129 European structured
finance transactions and on two European ABCP programs.
Specifically, S&P has placed on CreditWatch negative its ratings
on:
-- 315 tranches in 99 residential mortgage-backed securities
(RMBS) transactions;
-- 35 tranches in 12 commercial mortgage-backed securities
(CMBS) transactions;
-- One tranche in one asset-backed securities (ABS)
transaction;
-- 24 tranches in 17 structured credit transactions; and
-- Two asset-backed commercial paper (ABCP) programs.
On Feb. 3, 2015, S&P took various rating actions on certain U.K.,
German, Austrian, and Swiss banks following its review of
government support. S&P expects to resolve all of these
CreditWatch placements by early May 2015.
Among the rating actions taken on Feb. 3, S&P placed on
CreditWatch negative its ratings on Barclays Bank PLC, Lloyds
Bank PLC, Lloyds TSB Bank PLC, The Royal Bank of Scotland PLC,
Deutsche Bank AG, Unicredit Bank AG, HSBC Bank PLC, and
Commerzbank AG.
The overarching principle behind S&P's current counterparty
criteria is the replacement of a counterparty when the rating on
the counterparty falls below a minimum eligible rating. Without
the incorporation of replacement mechanisms or equivalent
remedies in the terms of the agreement with the counterparty, and
if there are no other mitigating factors, the rating on the
supported security is generally no higher than the long- or
short-term issuer credit rating (ICR) on the counterparty or the
counterparty's ICR plus one notch for any supported security that
contains a replacement provision that is in line with previous
versions of S&P's counterparty criteria.
The ratings that S&P has placed on CreditWatch negative are
constrained, due to counterparty risk, to S&P's long- or short-
term ICR or long- or short-term ICR plus one notch (depending on
the replacement provisions in place) on the lowest-rated
counterparty to which the transaction is exposed.
Because S&P believes that the downgrade of any of these
counterparties would likely result in rating actions on the
supported securities, S&P has placed on CreditWatch negative its
ratings on these supported securities in line with its use Of
CreditWatch and outlooks criteria. However, depending on the
potential magnitude of any downgrades, it is possible that
additional tranches may be affected.
S&P expects to resolve all of these CreditWatch placements by
mid-May 2015.
* BOOK REVIEW: Landmarks in Medicine - Laity Lectures
-----------------------------------------------------
Introduction by James Alexander Miller, M.D.
Publisher: Beard Books
Softcover: 355 pages
List Price: $34.95
Review by Henry Berry
Order your own personal copy today at http://bit.ly/1sTKOm6
As the subtitle points out, the seven lectures reproduced in this
collection are meant especially for general readers with an
interest in medicine, including its history and the cultural
context it works within. James Miller, president of the New York
Academy of Medicine which sponsored the lectures, states in his
brief "Introduction" that this leading medical organization "has
long recognized as an obligation the interpretation of the
progress of medical knowledge to the public." The lectures
collected here succeed admirably in fulfilling this obligation.
The authors are all doctors, most specialists in different areas
of medicine. Lewis Gregory Cole, whose lecture is "X-ray Within
the Memory of Man," is a consulting roentgenologist at New York's
Fifth Avenue Hospital. Harrison Stanford Martland is a professor
of forensic medicine at New York University College of Medicine.
Many readers will undoubtedly find his lecture titled "Dr. Watson
and Mr. Sherlock Holmes" the most engrossing one. Other doctor
authors are more involved in academic areas of medicine and
teaching. Reginald Burbank is the chairman of the Section of
Historical and Cultural Medicine at the New York Academy of
Medicine. He lectured on "Medicine and the Progress of
Civilization." Raymond Pearl, whose selection is "The Search for
Longevity," is a professor of biology at Johns Hopkins
University.
The authors' high professional standing and involvement in
specialized areas do not get in the way of their aim to speak to
a general audience. They are all skilled writers and effective
communicators. As the titles of some of the lectures noted in the
previous paragraph indicate, the seven selections of "Landmarks
in Medicine" focus on the human-interest side of medicine rather
than the scientific or technological. Even the two with titles
which seem to suggest concern with technical aspects of medicine
show when read to take up the human-interest nature of these
topics. "The Meaning of Medical Research", by Dr. Alfred E. Cohn
of the Rockefeller Institute for Medical Research, is not so much
about methods, techniques, and equipment of medical research, but
is mostly about the interinvolvement of medical research, the
perennial concern of individuals with keeping and recovering good
health, and social concerns and pressures of the day. "The
meaning of medical research must regard these various social and
personal aspects," Cohn writes. In this essay, the doctor does
answer the questions of what is studied in medical research and
how it is studied. And he answers the related question of who
does the research. But his discussion of these questions leads to
the final and most significant question "for what reason does the
study take place?" His answer is "to understand the mechanisms at
play and to be concerned with their alleviation and cure." By
"mechanisms," Cohn means the natural--i. e., biological--causes
of disease and illness. The lay person may take it for granted
that medical research is always principally concerned with
finding cures for medical problems. But as Cohn goes into in part
of his lecture, competition for government grants or professional
or public notoriety, the lure of novel experimentation, or
research mainly to justify a university or government agency can,
and often do, distract medical researchers and their associates
from what Cohn specifies should be the constant purpose of
medical research. Such purpose gives medicine meaning to
humankind.
The second lecture with a title sounding as if it might be about
a technical feature of medicine, "X-ray Within the Memory of
Man," is a historical perspective on the beginnings of the use of
x-ray in medicine. Its author Lewis Cole was a pioneer in the
development of x-rays in the late 1800s and early1900s. He mostly
talks about the development of x-ray within his memory. In doing
so, he also covers the work of other pioneers, notably William
Konrad Roentgen and Thomas Edison. Roentgen was a "pure
scientist" who discovered x-rays almost by accident and at first
resented the application of his discovery to practical uses such
as medical diagnosis. Edison, the prodigious inventor who was
interested only in the practical application of scientific
discoveries, and his co-worker Clarence Dally enthusiastically
investigated the practical possibilities of the discoveries in
the new field of radiation. Dally became so committed to his work
in this field that he shortly developed an illness and died. At
the time, no one knew about the dangers of prolonged exposure to
x-rays. Butsensing some connection between his co-worker's
untimely death and his work with x-rays, Edison stopped his own
investigations. Cole himself became involved in work with x-rays
during his internship at Roosevelt Hospital in New York City in
1898 and 1899. His contribution to this important field was in
the area of interpretation of what were at the time primitive x-
rays and diagnosis of ailments such as tuberculosis and kidney
stones. Cole writes in such a way that the reader feels she or he
is right with him in the steps he makes in improving the use of
x-rays. He adds drama and human interest to the origins of this
important medical technology. The lecture "Dr. Watson and Mr.
Sherlock Holmes" uses 208the popular mystery stories of Arthur
Conan Doyle to explore the role of medicine in solving crimes,
particularly murder. In some cases, medical tests are required to
figure out if a crime was even committed. This lecture in
particular demonstrates the fundamental role played by medicine
in nearly all major areas of society throughout history. The
seven collected lectures have broad appeal. All of them are
informative and educational in an engaging way. Each is on an
always interesting topic taken up by a professional in the field
of medicine obviously skilled in communicating to the general
reader. The authors seem almost mind readers in picking out the
most fascinating aspects of their subjects which will appeal to
the lay readers who are their intended audience. While meant
mainly for lay persons, the lectures will appeal as well to
doctors, nurses, and other professionals in the field of medicine
for putting their work in a broader social context and bringing
more clearly to mind the interests, as well as the stake, of the
public in medicine.
*********
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 2015. 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
202-362-8552.
* * * End of Transmission * * *