/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/150529.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, May 29, 2015, Vol. 16, No. 105 Headlines D E N M A R K WELLTEC A/S: S&P Revises Outlook to Neg. & Affirms 'BB-' CCR F R A N C E EUROPCAR GROUPE: Moody's Puts 'B3' CFR Under Review for Upgrade G R E E C E ELETSON HOLDINGS: Moody's Changes Outlook on B3 CFR to Positive FREESEAS INC: Has Deal for Financing of Vessel Acquisition GREECE: Deposit Outflows Accelerate as Default Fears Rise I R E L A N D ANGLO IRISH: Bankruptcy Court Okays Sept. 11 Auction ION TRADING: S&P Raises CCR to 'B+' on Improving Credit Metrics K A Z A K H S T A N EURASIA INSURANCE: S&P Revises Outlook & Affirms 'BB+' CCR L U X E M B O U R G ALTICE US: Moody's Assigns 'B3' Corporate Family Rating N E T H E R L A N D S CADOGAN SQUARE VI: Moody's Rates Two Note Classes '(P)Ba2' DUTCH MORTGAGE XII: Fitch Affirms 'BB-sf' Rating on Class B Notes HYDE PARK: Moody's Lifts Rating on EUR11.5MM Class E Notes to Ba2 N O R W A Y COPEINCA AS: Fitch Withdraws 'B+' Issuer Default Rating R U S S I A BARS LLC: Bank of Russia Suspends Insurance Broker License CONGRESS-BANK OJSC: Central Bank Ends Provisional Administration KOMESTRA LLC: Bank of Russia Suspends Insurance License PROFILE RE: Bank of Russia Suspends Reinsurance License S P A I N CELLNEX TELECOM: S&P Assigns Prelim. 'BB+' CCR, Outlook Stable U K R A I N E UKRAINE: Decision to Halt Foreign Debt Payments "Odious" U N I T E D K I N G D O M AJ GILBERT: Competition, Revenue Decline Spurred Administration ALTE LIEBE 1: S&P Cuts Rating on EUR102MM Sr. Sec. Notes to 'CCC' DEBENHAMS PLC: S&P Revises Outlook to Stable & Affirms 'BB-' CCR EXETER BLUE: Fitch Affirms 'Bsf' Rating on Class E Notes FAIRHOLD SECURITISATION: Fitch Affirms 'CCC' Rating on B Notes WEBWEAR: Goes Into Liquidation X X X X X X X X * BOOK REVIEW: The Financial Giants In United States History ********* ============= D E N M A R K ============= WELLTEC A/S: S&P Revises Outlook to Neg. & Affirms 'BB-' CCR ------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Denmark-based oil and gas well technology provider Welltec A/S to negative from stable. S&P also affirmed its 'BB-' long-term corporate credit rating on Welltec. At the same time, S&P affirmed its 'BB-' issue rating on Welltec's US$325 million senior secured notes. The recovery rating remains at '4', indicating S&P's expectation of average recovery (30%-50%; higher half of the range) in the event of a payment default. The outlook revision stems from S&P's more pessimistic view on Welltec's ability to maintain credit measures commensurate with the 'BB-' rating in what S&P considers to be persistently challenging market conditions for the global oil and gas sector. This follows Welltec's weaker-than-expected performance in the first quarter of 2015, when reported EBITDA declined by 27% year on year due to a combination of increased costs related to freight and personnel, changes in the sales mix, and, to a lesser extent, unfavorable fluctuations in currency exchange rates. S&P considers the headroom on the current rating to be very narrow, in particular because it has very limited visibility on the company's future cash flow generation, since Welltec has limited contracted revenue. Moreover, S&P believes that the oil and gas sector will remain depressed in 2015, with a recovery in the demand for and price of oilfield services uncertain at this stage. S&P's assessment of Welltec's financial risk profile as "aggressive" reflects S&P's assumptions for the group's credit metrics in 2015-2016. Notably, S&P anticipates that Standard & Poor's-adjusted funds from operations (FFO) to debt will likely be about 15% on average and free operating cash flow (FOCF) modestly positive over this period. S&P notes that the company started to reduce fixed costs and development capital expenditure in 2014 to adapt to the weaker market conditions, which has enabled it to maintain positive cash flows. S&P also takes into account Welltec's comfortable liquidity position. "Our view of Welltec's business risk profile as "fair" reflects the company's leading position in the currently relatively small market of robotic well interventions; exclusive control over the technology it uses, which creates a significant barrier to entry for competitors; and healthy long-term growth opportunities. That said, these business strengths are partly offset by Welltec's small size, relatively narrow service offering, and, in contrast to other players in the oil field services sector, such as drillers, lack of medium- to long-term backlogs. We also think that Welltec's profitability may be volatile because there can be significant quarterly swings in demand, EBITDA, margins, and working capital," S&P said. The negative outlook indicates that S&P could lower the rating if Welltec's credit metrics do not improve as S&P expects in 2016. It also reflects the uncertainty regarding demand and pricing for Welltec's services in the challenging global oil and gas markets. S&P could downgrade Welltec by one notch if S&P believes that FFO to debt will fall significantly below 15% in 2015 or not sustainably reach 20% by 2016. This could result if demand is lower than S&P assumes, or if the adjusted EBITDA margin deteriorates further in 2015 or does not improve in 2016. Negative FOCF would also put pressure on the rating. S&P could revise the outlook to stable if Welltec's credit metrics improved, with FFO to debt comfortably at 20% and FOCF staying positive. This would also likely depend on an improvement of market conditions on the back of increased oil prices. Higher visibility on the company's cash flow generation would also support an outlook revision to stable. =========== F R A N C E =========== EUROPCAR GROUPE: Moody's Puts 'B3' CFR Under Review for Upgrade --------------------------------------------------------------- Moody's Investors Service placed all ratings of Europcar Groupe S.A. under review for upgrade, including the B3 corporate family rating and B3-PD probability of default rating (PDR). The Caa1 rating on the EUR324 million Senior Subordinated Secured Notes due 2017 issued by Europcar Bond Funding Limited and the Caa2 rating on the EUR400 million Senior Subordinated Notes due 2018 (together the old Notes) issued by Europcar, and the B3 rating on the EUR350 million Senior Secured Notes due 2021 issued by EC Finance Plc are under review for upgrade. Concurrently, Moody's has assigned a provisional (P)B3 rating with a stable outlook on the new EUR475 million Senior Notes (the Senior Notes) to be raised by Europcar Notes Limited. This rating is not placed on review for upgrade, which reflects an expectation of a B1 CFR. If the IPO is not executed Moody's expects that this rating would be withdrawn as the bond will be repaid from the escrow account. The B3 rating on the EUR350 million Senior Secured Notes due 2021 issued by EC Finance Plc might be upgraded by one notch if the IPO is executed and the CFR is raised to B1 but should remain below the CFR considering its subordination to other bank facilities. Moody's issues provisional ratings in advance of the final sale of securities and these ratings reflect Moody's preliminary credit opinion regarding the transaction only. Upon a conclusive review of the final documentation, Moody's will endeavor to assign a definitive rating to the facilities. A definitive rating may differ from a provisional rating. The decision to place the ratings under review for upgrade follows Europcar's announcement on May 21, 2015 of the filing of document in preparation for its Initial Public Offering (IPO) on the regulated market of Euronext Paris. As part of the IPO, Europcar expects to raise gross proceeds of EUR475 million. The decision also follows Europcar's announcement that it intends to issue EUR475 million Senior Notes due 2022, the proceeds of which will be put into an escrow and released upon completion of the IPO. The proceeds from the IPO and Senior Notes will be applied towards the early redemption including penalties of the old Notes, the funding of transaction fees, with the EUR125 million overfunding earmarked for strategic initiatives. Moody's expects to conclude the review process with the closing of the IPO before the end of June subject to market conditions and the allocation of its proceeds alongside the proceeds of the Senior Notes for the redemption of the old Notes. The review will also evaluate the company's new ownership structure, financial policy (including dividend policy expected at a minimum 30% of net income to be paid from 2017) and strategic objectives. At this stage Moody's anticipates that the CFR would likely be upgraded by two notches to B1 if the IPO is executed as expected. While the execution of the IPO and debt refinancing will only result in a moderate de-leveraging with pro-forma adjusted debt- to-EBITDA (as adjusted by Moody's mainly for operating leases) decreasing to 5.0x from 5.2x prior to the transaction as of 31 December 2014, it will lead to a more significant improvement in interest coverage. Moody's expects a significant reduction in interest costs thanks to (1) the reduction in the aggregate amount of outstanding debt following the refinancing of the old Notes by the new Senior Notes with a significantly lower coupon, and (2) the reduction in margins on the Revolving Credit Facility and Senior Asset Revolving Facility signed on 12 May 2015. Pro- forma for the lower interest cost, adjusted EBIT-to-interest will improve to 1.3x from 1.0x prior to the transaction as of 31 December 2014. Moody's expect further improvement of EBIT-to- interest ratio in 2015. The expected upgrade of the CFR to B1 also reflects Moody's expectation that Europcar will experience further de-leveraging in 2015 driven by the positive growth momentum which started in 2014 partly offset by additional drawings under fleet financing facilities to fund the increasing fleet base. Such further deleveraging also reflects the company's financial policy to further deleverage. Moody's positively notes that Europcar experienced a 4.0% revenue growth in 2014 following a 2% decline in both 2012 and 2013 driven by the leisure segment which accounted for 55% of group sales in that year with the business segment lagging behind. This positive trend continued in Q1 2015 with revenues growing at 7.4% or 6.2% excluding the impact of the acquisition of the franchisee network Europ'Hall in France in 2014. Following a stabilization of the adjusted EBITDA margin (as adjusted by Moody's) at 37.1% in 2014 vs. prior year, Moody's expects improvement in profitability in 2015 driven by the top line growth and the positive impact from cost savings initiatives implemented as part of the multi-year Fast Lane program, including the implementation of the Shared Service Centre in Portugal in 2014. Moody's finally notes that pro-forma for the IPO, Europcar's liquidity will remain adequate. The liquidity position will benefit from the increased size of the Revolving Credit Facility to EUR350 million from the current EUR300 million and of the Senior Asset Revolving Credit to EUR1.1 billion from EUR1.0 billion. In addition, the debt maturity profile will be improved thanks to (1) the extension of the maturity of the Senior Asset Revolving Facility and the Revolving Credit Facility to 2019 and 2020, respectively, and (2) the redemption of the old Notes due 2017 and 2018 by the longer-dated Senior Notes due 2022. Moody's will monitor the progress of the procedure on potential anti- competitive practices by Europcar and other participants in the vehicle rental sector opened by the French Competition Authority in February 2015. The rating agency would review the ratings if a fine was to be paid with an amount significantly higher than the EUR45 million provisioned by the company and/or further damage claims were to be subsequently brought. Before placing the ratings on review Moody's had indicated that negative pressure could develop if operating performance deteriorates with adjusted leverage trending towards 5.25x; or if EBIT/Interest coverage remains below 1.0x on a sustained basis. On the other hand, positive pressure could arise if the EBIT/Interest coverage exceeds 1.0x and adjusted leverage trends to 4.5x on a sustained basis with a solid liquidity profile; and the European car rental market experiences recovery both in terms of volume and prices. The principal methodology used in these ratings was Equipment and Transportation Rental Industry published in December 2014. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Paris, France, Europcar Groupe S.A. is the European leader in car rental services, providing short- to medium-term rentals of passenger vehicles and light trucks to corporate, leisure and replacement clients. Founded in 1949, Europcar has a global presence in over 140 countries, giving access to a global car rental network with c.3,650 stations (of which around 1,000 are directly operated with the remaining being agent-operated or franchises). Europcar operates in five main markets: Germany, the UK, France, Italy, and Spain with additional operations in Portugal, Belgium, Australia and New Zealand. In 2014, Europcar generated total revenues of EUR1,979 million. =========== G R E E C E =========== ELETSON HOLDINGS: Moody's Changes Outlook on B3 CFR to Positive --------------------------------------------------------------- Moody's Investors Service changed to positive from stable the outlook on the B3 corporate family rating, the B3-PD probability of default rating and the B3 rating on the US$300 million first preferred ship mortgage notes due in 2022 of shipping company Eletson Holdings Inc. At the same time, Moody's has affirmed the ratings assigned to the company including its B3 CFR, B3-PD PDR and B3 senior secured rating. "The positive outlook reflects Eletson's material deleveraging since its rating assignment in December 2013, helped by a more favorable rates environment for tankers, and the expectation of further deleveraging during 2015," says Marie Fischer-Sabatie, a Moody's Senior Vice President and lead analyst for the issuer. The rating action reflects Eletson's material deleveraging since rating assignment, with its debt/EBITDA ratio declining to 6.6x at year-end 2014 from 9.5x at year-end 2013. The improvement was due to an increase in EBITDA, itself driven by an increase in time charter equivalent (TCE) rates (average daily TCE rates increased by 18% between 2013 and 2014 for Eletson's fleet), as well as the growth of Eletson's fleet (number of vessel available days grew 11% between 2013 and 2014). Deleveraging continued during Q1 2015, on the back of further improvements in TCE rates, with average daily rates for Eletson's fleet growing 27% compared with Q1 2014 and 22% compared with Q4 2014. Moody's estimates that the debt/EBITDA ratio for the 12 months ended March 2015 was slightly below 6x. Moody's projects that demand growth will outpace supply growth by around 1% for both crude oil and product tankers during 2015, which will help sustain TCE rates. At the same time, Eletson will further grow its fleet, in particular on the liquefied petroleum gas (LPG) side, with Eletson Gas LLC (its joint venture with Blackstone) getting a delivery of 10 new-building vessels between 2015 and 2017. Moody's therefore expects that Eletson will further deleverage during 2015. Eletson's liquidity, which Moody's deemed as fairly weak when it initially assigned ratings to the company, has improved mainly due to the deleveraging that occurred since then. With the improvement in its credit metrics, Eletson increased the headroom under its financial covenants. Only one financial covenant, which had been waived in 2013 and started to be tested again in December 2014, has still a limited headroom. Eletson's cash balance has been stable at around US$65 million, and the company has now obtained committed financing for all 10 new-building vessels due to be delivered in 2015-17. However, Eletson does not have any material revolving credit facility at its disposal and therefore remains dependent on its internally generated sources of liquidity to cover for its needs. In addition, the company faces some material debt repayments in 2015 (US$54 million) and 2016 (US$118 million) with most of its 2016 debt repayment (US$65 million) related to a maturing facility of Eletson Gas. While domiciled in Liberia, Eletson has its main office in Greece. Its exposure to the Greek economy is very limited, with all its revenues generated in US dollars, outside of Greece. The company only repatriates to Greece the funds needed to cover for payroll and other expenses. Eletson has small local overdraft facilities, used for day-to-day working capital needs (US$13 million). In addition, Eletson has a small portion of debt with Greek banks, which participate in two of the group's syndicated facilities (in total, around US$36 million). These facilities represented 6% of the group's debt at year-end 2014. While Moody's deems the exposure of Eletson to any weakening of Greece's creditworthiness as very limited, the rating agency cautions that an extreme scenario, such as Greece's exit from the euro, would be unpredictable in its consequences and would carry uncertainty for businesses with any linkage to Greece. The prospect of a negative rating action or rating review in such a scenario cannot be completely ruled out, but Eletson's business profile suggests it should be relatively resistant to such a scenario. Moody's would consider upgrading Eletson's rating if its financial leverage were to fall below 6.5x and its funds from operations to interest coverage were to rise above 2.5x on a sustainable basis, in conjunction with an improvement in the group's liquidity. Moody's would consider downgrading the rating if Eletson's debt/EBITDA ratio were to rise above 8.0x and if its funds from operations to interest coverage were to fall below 1.5x for a prolonged period of time. Deterioration in the group's liquidity would also exert immediate pressure on the rating. The principal methodology used in these ratings was Global Shipping Industry published in February 2014. Other methodologies used include Loss Given Default for Speculative-Grade Non- Financial Companies in the U.S., Canada and EMEA published in June 2009. Eletson Holdings Inc. is one of the world's leading owners and operators of product tankers and LPG carriers, with a double- hulled fleet of 25 product tankers and seven LPG/ammonia carriers with a combined capacity of 1.9 million deadweight tonnage at year-end 2014. The group recorded revenues of US$360 million and EBITDA of US$111 million (as reported by the company) in 2014. FREESEAS INC: Has Deal for Financing of Vessel Acquisition ----------------------------------------------------- FreeSeas Inc. has entered into an agreement with a group of Norwegian based investors for the financing of the acquisition of assets valued up to US$15 million. Upon the vessel acquisition by the investors, their ship-owning entities will enter into long-term bareboat charter agreements with the Company's subsidiaries including a number of purchase options in the Company's favor, on a profit-sharing basis with the investors. The Company shall identify suitable acquisition candidates within a six-month period. The investors will be responsible for providing suitable bank financing of approximately up to 50% to 60% to enable the completion of the transaction. Depending on the final leverage and acquisition price, a charter hire rate of up to US$5,600 per day will be payable after the commencement of the charter. Concurrently with the transaction, the Company has agreed to place a mortgage on the M/V "Free Maverick" as security. The Company has the option to replace the vessel with cash security at any time. If however, the vessel is not replaced by cash security, US$1,400 per day will be payable upon the commencement of the bareboat charter of the acquisition vessel. In addition, the M/V "Free Hero" and M/V "Free Goddess" have been sold for consideration as part of the security package, and the Company's subsidiaries have entered into long-term bareboat agreements for those vessels with purchase options at a daily hire rate of US$1,100 per vessel. The total agreed security provided by the Company amounts to US$9 million, with a cash release of up to US$2 million in stages. Mr. Ion G. Varouxakis, chairman, president and chief executive officer of the Company, commented: "We are pleased to enter into these agreements, which enable the Company to leverage its balance sheet for fleet expansion at an opportune time for counter-cyclical investments in the dry-bulk market. Being positioned as a buyer in a falling asset prices environment we believe is the best possible strategy. The demonstrated ability of the Company to raise capital even in difficult environments is a testament to the dedication and determination of management and the board to succeed in its goal to turn around the Company to profitability." About FreeSeas Inc. Headquartered in Athens, Greece, FreeSeas Inc., formerly known as Adventure Holdings S.A., was incorporated in the Marshall Islands on April 23, 2004, for the purpose of being the ultimate holding company of ship-owning companies. The management of FreeSeas' vessels is performed by Free Bulkers S.A., a Marshall Islands company that is controlled by Ion G. Varouxakis, the Company's Chairman, President and CEO, and one of the Company's principal shareholders. The Company's fleet consists of six Handysize vessels and one Handymax vessel that carry a variety of drybulk commodities, including iron ore, grain and coal, which are referred to as "major bulks," as well as bauxite, phosphate, fertilizers, steel products, cement, sugar and rice, or "minor bulks." As of Oct. 12, 2012, the aggregate dwt of the Company's operational fleet is approximately 197,200 dwt and the average age of its fleet is 15 years. Freeseas reported a net loss of US$12.7 million in 2014, a net loss of US$48.7 million in 2013 and a net loss of US$30.9 million in 2012. As of Dec. 31, 2014, the Company had US$64.25 million in total assets, US$39.2 million in total liabilities and US$25 million total shareholders' equity. RBSM LLP, in New York, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2014, citing that the Company has incurred recurring operating losses and has a working capital deficiency. In addition, the Company has failed to meet scheduled payment obligations under its loan facilities and has not complied with certain covenants included in its loan agreements. Furthermore, the vast majority of the Company's assets are considered to be highly illiquid and if the Company were forced to liquidate, the amount realized by the Company could be substantially lower that the carrying value of these assets. Also, the Company has disclosed alternative methods of testing the carrying value of its vessels for purposes of testing for impairment during the year ended December 31, 2014. These conditions among others raise substantial doubt about the Company's ability to continue as a going concern. GREECE: Deposit Outflows Accelerate as Default Fears Rise --------------------------------------------------------- Reuters reports that two banking sources said on May 27 that Greek banks have seen deposit outflows accelerate over the past week as fears rise that the euro zone country will default on debt. The spike follows a steady outflow of money from Greek lenders this year as Athens and its creditors struggle to agree an aid- for-reforms deal before Greece runs out of money, Reuters notes. "The past week in May was more challenging compared to the previous ones in the month, with daily outflows of EUR200 to EUR300 million in the last few days," Reuters quotes a senior Greek banker as saying. Three Greek bankers told Reuters outflows picked up in April to about EUR5 billion from EUR1.91 billion in March. Speculation about capital controls has resurfaced after a prominent lawmaker from the conservative opposition said she was worried about the prospect if no deal is reached with creditors and Athens defaults on an IMF payment next month, Reuters relays. The government's spokesman has dismissed such a scenario, according to Reuters. The European Central Bank did not raise a ceiling on emergency funding for Greek banks at its weekly review on May 27, a banking source, as cited by Reuters, said, the first time since February it has left the cap unchanged. ============= I R E L A N D ============= ANGLO IRISH: Bankruptcy Court Okays Sept. 11 Auction ----------------------------------------------------- The foreign representatives for Irish Bank Resolution Corporation Limited has filed a notice saying that on May 12, 2015, the U.S. Bankruptcy Court for the District of Delaware entered procedures in connection with the sale of IBRC's assets. Pursuant to the court-approved bidding procedures, if two or more qualified bids are received, the Debtor will conduct an auction to determine the highest or otherwise best qualified bid, beginning on Sept. 11, 2015 at 10:00 a.m. (prevailing Eastern Time). Only parties that have submitted a qualified bid by no later than Sept. 3, 2015 at 5:00 p.m. (prevailing Eastern Time) will be allowed to participate in the auction. The sale hearing, if needed, will be held at 10:00 a.m. (prevailing Eastern Time) on Oct. 16, 2015, unless otherwise continued by the Debtor. Objections, if any, to the sale, must be filed with the Bankruptcy Court on or before 4:00 p.m. (prevailing Eastern Time) on Oct. 9, 2015. A copy of the bidding procedures is available for free at: http://is.gd/OiqzKn Mandarin Concerns Addressed Mandarin Oriental Management (USA) Inc. and Mandarin Oriental Overseas Management Limited filed a response to the bidding procedures motion to reserve its rights under certain management agreements that may be included in the sale and its rights to receive a termination fee. Mandarin noted that the motion sought to establish certain bidding procedures in connection with (1) the sale of a mortgage loan encumbering certain assets, including a Boston hotel, which is currently operating under the "Mandarin Oriental" brand, and (2) the sale of the hotel by the Debtor's non-debtor affiliate, CWB Hotel Limited Partnership or approval for the authority of the Debtor through the Special Liquidators to cause CWB Hotel and other subsidiaries to sell their assets, including the hotel. In response, Kieran Wallace and Eamonn Richardson, the Foreign Representatives or Special Liquidators of IRBC, noted that neither Mandarin Oriental Management (USA) Inc. nor Mandarin Oriental Overseas Management Limited are creditors of IBRC. Rather, Mandarin is the manager of the Mandarin Oriental Hotel in Boston, which is owned by a subsidiary of IBRC. IBRC also retains ownership of the secured debt which encumbers the Hotel. As communicated with Mandarin's counsel in advance of the filing of the Mandarin Objection, IBRC agrees that nothing in the proposed Bidding Procedures Order adjudicates Mandarin's rights. Rather, Mandarin will have a full opportunity to object to the terms of an actual sale transaction, to the extent that it believes any of its rights are in fact impacted. As offered by IBRC before the Mandarin Objection was filed, IBRC is willing to include in the data room a statement drafted by Mandarin with respect to Mandarin's alleged rights, in order to provide potential bidders with notice of Mandarin's positions regarding its alleged rights. Mandarin is represented by: Foley & Lardner LLP Mark J. Wolfson, Esq. 100 North Tampa Street Tampa, FL 33602 Tel: (813) 225-4119 Fax: (302) 298-3550 The Foreign Representatives are represented by: Skadden, Arps, Slate, Meagher & Flom LLP Van C. Durrer, II, Esq. Annie Li, Esq. 300 South Grand Avenue Los Angeles, California 90071 Tel: (213) 687-5000 About Anglo Irish Anglo Irish Bank was an Irish bank headquartered in Dublin from 1964 to 2011. It went into wind-down mode after nationalization in 2009. In July 2011, Anglo Irish merged with the Irish Nationwide Building Society, with the new company being named the Irish Bank Resolution Corporation (IBRC). The former Irish bank sought protection from creditors under Chapter 15 of the U.S. Bankruptcy Code on Aug. 26, 2013 (Bankr. D. Del. Case No. 13-12159). The former bank's Foreign Representatives are Kieran Wallace and Eamonn Richardson. Its U.S. bankruptcy counsel are Mark D. Collins, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware. ION TRADING: S&P Raises CCR to 'B+' on Improving Credit Metrics --------------------------------------------------------------- Standard & Poor's Ratings Services raised its long-term corporate credit rating to 'B+' from 'B' on Ireland-headquartered ION Trading Technologies Ltd., a provider of trading software and solutions to financial institutions, and a wholly owned subsidiary of ION Investment Group Ltd. The outlook is stable. At the same time, S&P raised its issue ratings to 'B+' from 'B' on the US$40 million senior secured revolving credit facility (RCF) due 2019 and the first-lien term loans due 2021, both issued by ION Trading's wholly owned subsidiary ION Trading Technologies S.a.r.l. The recovery rating on this debt is '3', indicating S&P's expectation of meaningful recovery in the event of a payment default, in the higher half of the 50%-70% range. S&P also raised its issue ratings to 'B-' from 'CCC+' on the US$250 million second-lien term loan due 2022, issued by ION Trading Technologies S.a.r.l. The recovery rating on this loan is '6', indicating S&P's expectation of negligible (0%-10%) recovery in the event of a payment default. The upgrade primarily reflects larger-than-expected deleveraging after the refinancing in July 2014 and the company's solid free operating cash flow (FOCF) generation, which provides additional room for possible debt reduction. S&P expects the adjusted debt- to-EBITDA ratio to further decline, likely reaching 5.3x by the end of 2015 from 5.5x as of year-end 2014. In addition, the reduced interest burden leads to improved interest coverage and cash flow ratios. S&P continues to assess ION Trading's financial risk profile as "highly leveraged," given an adjusted debt-to-EBITDA ratio above 5x and funds from operations (FFO) to debt somewhat below 12% in 2015. This is partly mitigated by our expectations of solid annual FOCF of EUR70 million-EUR90 million in 2015 and 2016, supported by strong EBITDA margins and very limited capital expenditure requirements, which should allow ION Trading to deleverage swiftly if the company continues to apply excess cash for debt reduction. S&P continues to assess ION Trading's business risk profile as "fair." This notably reflects the company's very narrow product focus on trading solutions for electronic fixed-income markets and its resulting sole reliance on financial institutions as end customers for its product offering. In addition, S&P thinks that the business risk profile is constrained by the still high customer concentration as well as meaningful competition from in- house solutions, a few larger competitors such as SunGard, and many smaller competitors. These constraints are partly offset by the company's: -- Large recurring revenue base (more than 80% of total revenues), through noncancellable subscription agreements that typically last about five years; and -- Strong track record of profitable organic and acquisitive growth, helped by high client retention, successful cross- and up-selling efforts, and new customer wins. Compared with many of its rating peers, ION Trading has markedly higher profit margins, relatively strong interest cover ratios, and solid FOCF prospects. In addition, ION Trading has demonstrated its willingness to use excess cash flows to reduce debt, despite being owned by a financial sponsor. As a result, the corporate credit rating is one notch higher than the anchor to reflect S&P's positive comparable ratings analysis. The stable outlook reflects S&P's assumption that the company will increase its EBITDA interest cover ratio to more than 3.0x and further utilize its solid FOCF generation to maintain leverage sustainably in the 5.0x-5.5x range in 2015. S&P could take a positive rating action if ION Trading were able to maintain profit margins at about 50% and improve cash interest cover to about 3.5x-4.0x, while implementing a financial policy that leads to adjusted debt to EBITDA below 4.5x. S&P also would expect that the company was able to sustain leverage at this level. S&P could lower the rating if: -- ION Trading pursued debt-financed acquisitions or shareholder returns that led to a leverage ratio shooting above 6.0x; -- Sales fell due to another severe financial crisis in Europe that hurt demand from ION Trading's Europe-based customers; -- ION Trading's adjusted EBITDA margin declined to below 40% as a result of increasing competition; or -- EBITDA interest cover dropped below 2.5x. =================== K A Z A K H S T A N =================== EURASIA INSURANCE: S&P Revises Outlook & Affirms 'BB+' CCR ---------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Kazakhstan-based Eurasia Insurance Co. to positive from stable. At the same time, S&P affirmed the 'BB+' long-term counterparty credit and financial strength ratings and the 'kzAA-' Kazakhstan national scale rating. The outlook revision reflects S&P's view that Eurasia Insurance's financial risk profile is gradually improving, thanks to the company's increased level of investments in government and corporate bonds S&P rates 'BBB-' and higher (investment grade). If Eurasia Insurance continues this trend over the next 18-24 months, S&P projects that the average credit quality of the company's invested assets will move to investment grade, thereby moving S&P's assessment of Eurasia Insurance's financial risk profile beyond the benchmarks for S&P's "less than adequate" category, as its criteria. This gradual improvement and diversification of invested assets is partially driven by the regulatory restrictions that require the insurer's exposure to a single counterparty to be at less than 10% of total assets. Furthermore, the company's financial risk profile is supported by solid capitalization, including extremely strong risk-based capital adequacy, and sound operating performance over the past several years. Despite the notable improvements in the credit quality of Eurasia Insurance's investment portfolio and the above-mentioned supporting factors, S&P continues to view the company's risk position as high, reflecting relatively high currency risk with a long unhedged position in U.S. dollars and the complexity of insurance risks that Eurasia writes, in particular some international risks in inward reinsurance portfolio. The ratings on Eurasia Insurance continue to reflect S&P's view of its adequate competitive position, owing to its diverse portfolio of risks and leading positions in Kazakhstan, especially in inward reinsurance. S&P notes that the company is retaining more risks, which makes it more susceptible to large losses. S&P therefore expects that prospectively the net combined ratio will likely be about 95%-97% in 2015-2016. This level is still better than that of some international peers' but higher than the market average in Kazakhstan. In addition, S&P expects that return on equity and return on revenue will at least stay at the current levels of 14% and 27%, respectively, driven by sound underwriting performance. The positive outlook reflects S&P's opinion that Eurasia Insurance will continue to improve the average credit quality of its investments while maintaining an adequate competitive position and very strong capital and earnings. S&P would upgrade Eurasia Insurance if it observed an improvement in the company's credit quality to 'BBB-' and above over the next 18-24 months. Such a sustained improvement would trigger an upgrade, but no more than one notch from the current rating level. S&P could revise the outlook to stable if, contrary to its expectations, the company's investment quality doesn't improve substantially from its current 'BB' category over the next 18-24 months. =================== L U X E M B O U R G =================== ALTICE US: Moody's Assigns 'B3' Corporate Family Rating ------------------------------------------------------- Moody's Investors Service assigned a B3 corporate family rating to Altice US Holding I S.a.r.l., following its announcement that subsidiaries of the company will purchase a 70% equity interest in Cequel Corp. for approximately US$3.4 billion. The transaction values Cequel at US$9.2 billion, or approximately 10x EBITDA. Altice US is a wholly owned subsidiary of Altice S.A. which will raise debt at newly formed subsidiaries in advance of the Cequel purchase and hold the proceeds in escrow until deal close. To finance the acquisition, Altice US will issue US$2.2 billion of new subsidiary debt consisting of US$1.1 billion of new senior secured notes issued by Altice US Finance I Corporation, US$300 million of senior unsecured notes issued by Altice US Finance II Corporation, US$320 million of unsecured notes issued by Altice US Financing S.A. and US$500 million of seller notes issued by the minority shareholders. Moody's has assigned a Ba3 (LGD-2) rating to the secured notes and a Caa1 (LGD-5) rating to the unsecured notes. The holdco notes and seller notes will not be rated at this time. The outlook is stable. On May 20th, Moody's placed the ratings for Cequel Communications Holdings I, LLC ("Cequel") under review for downgrade, including Cequel's B1 CFR, B1-PD PDR, B3 unsecured notes rating and Ba2 secured credit facility. Altice US will seek a consent from existing Cequel creditors to waive the change of control provisions in the existing debt agreements. If the company is successful and the transaction closes as proposed, Moody's is likely to lower Cequel's CFR two notches to B3, its unsecured bonds one notch to Caa1 and the secured credit facility one notch to Ba3, in line with the two similar classes of debt rated. The structurally junior, unrated seller notes and holdco notes provide a new layer of junior capital to the proposed structure, limiting the downgrade of the secured and unsecured notes to one notch. At close, the escrow financing entity (Altice US) rated will be merged with and into the existing Cequel entities and the Altice US CFR will be withdrawn. Assignments: Issuer: Altice US Holding I S.a.r.l. -- Probability of Default Rating, Assigned B3-PD -- Corporate Family Rating, Assigned B3 Issuer: Altice US Holding I S.a.r.l. -- Outlook, Assigned Stable Issuer: Altice US Finance I Corporation -- Senior Secured Regular Bond/Debenture (Foreign Currency), Assigned Ba3, LGD2 Issuer: Altice US Finance II Corporation -- Senior Unsecured Regular Bond/Debenture (Foreign Currency), Assigned Caa1, LGD5 The B3 CFR reflects the company's very high leverage, its limited free cash flow and the parent company's aggressive financial policy. Pro forma for the transaction and excluding any proposed synergies, Cequel's total consolidated leverage will be approximately 8x debt to EBITDA (Moody's adjusted, and including seller notes), which creates risk for a company in a capital intensive, competitive industry. Offsetting these limiting factors are Cequel's stable market position with a strong base of network assets and limited competition within its footprint other than telco DSL. Notwithstanding the maturity of the core video product, the relative stability of the subscription business provides steady cash flow, and the high quality of Cequel's network positions it well to achieve growth in its residential and commercial businesses despite escalating competition. The company's penetration lags behind industry averages, but Moody's expects its high speed data and phone growth to continue to exceed most peers and views the planned infrastructure upgrade investment as a credit positive use of cash that will help Cequel maintain and grow market share. Altice plans to aggressively cut costs at Cequel, with targeted productivity improvements and headcount reductions which aim to produce substantial headcount-related cost savings. Moody's believes that the cost reductions are possible, but that the company may risk its market position if service quality deteriorates. In general, Moody's believes that Cequel has been a well-run cable company and that the opportunity to dramatically reduce operating expense may be difficult or result in operational disruption. However, Cequel's end markets are less competitive relative to the overall US cable industry, which may insulate Altice from market share erosion in the near term. Over a longer time frame, Moody's believes that aggressive cost reductions will lead to a weakened competitive position or invite regulatory scrutiny. Altice's ability to dramatically improve profitability in such a short timeframe is unproven in this environment. This results in credit weakness, especially when combined with very high financial risk. Moody's would consider an upgrade of Altice's CFR if leverage were to be sustained below 7x amidst market share and good liquidity. Moody's could downgrade Altice US if market share or liquidity deteriorate or if leverage rises meaningfully. Headquartered in St. Louis, Missouri, and doing business as Suddenlink Communications, Cequel Communications Holdings I, LLC (Cequel) serves approximately 1.4 million residential and 90 thousand commercial customers. The company provides digital TV, high-speed Internet and telephone services to consumers and businesses and generated revenues of approximately US$2.3 billion for the twelve months ended March 31. BC Partners, CPP Investment Board and certain members of Cequel's executive management acquired Cequel in November 2012. The principal methodology used in these ratings was Global Pay Television - Cable and Direct-to-Home Satellite Operators published in April 2013. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Altice S.A. is a Luxembourg-based holding company, which through its subsidiaries Numericable-SFR S.A. and Altice International S.a.r.l operates a multinational telecommunications and cable business. Numericable-SFR operates in France while Altice International currently has a presence in four regions -- Dominican Republic, Israel, Western Europe and the French Overseas Territories. Altice S.A. is controlled indirectly by French entrepreneur Patrick Drahi. ===================== N E T H E R L A N D S ===================== CADOGAN SQUARE VI: Moody's Rates Two Note Classes '(P)Ba2' ---------------------------------------------------------- Moody's Investors Service assigned the following provisional ratings to notes to be issued by Cadogan Square CLO VI B.V.: -- EUR219,250,000 Class A-1 Senior Secured Floating Rate Notes due 2029, Assigned (P)Aaa (sf) -- GBP8,401,000 Class A-2 Senior Secured Floating Rate Notes due 2029, Assigned (P)Aaa (sf) -- EUR5,000,000 Class A-3 Senior Secured Fixed Rate Notes due 2029, Assigned (P)Aaa (sf) -- EUR10,750,000 Class B-1 Senior Secured Floating Rate Notes due 2029, Assigned (P)Aa2 (sf) -- GBP1,602,000 Class B-2 Senior Secured Floating Rate Notes due 2029, Assigned (P)Aa2 (sf) -- EUR32,000,000 Class B-3 Senior Secured Fixed Rate Notes due 2029, Assigned (P)Aa2 (sf) -- EUR24,000,000 Class C-1 Senior Secured Deferrable Floating Rate Notes due 2029, Assigned (P)A2 (sf) -- GBP900,000 Class C-2 Senior Secured Deferrable Floating Rate Notes due 2029, Assigned (P)A2 (sf) -- EUR23,250,000 Class D-1 Senior Secured Deferrable Floating Rate Notes due 2029, Assigned (P)Baa3 (sf) -- GBP871,000 Class D-2 Senior Secured Deferrable Floating Rate Notes due 2029, Assigned (P)Baa3 (sf) -- EUR25,750,000 Class E-1 Senior Secured Deferrable Floating Rate Notes due 2029, Assigned (P)Ba2 (sf) -- GBP965,000 Class E-2 Senior Secured Deferrable Floating Rate Notes due 2029, Assigned (P)Ba2 (sf) -- EUR9,600,000 Class F-1 Senior Secured Deferrable Floating Rate Notes due 2029, Assigned (P)B2 (sf) -- GBP360,000 Class F-2 Senior Secured Deferrable Floating Rate Notes due 2029, Assigned (P)B2 (sf) Moody's issues provisional ratings in advance of the final sale of financial instruments, but these ratings only represent Moody's preliminary credit opinions. Upon a conclusive review of a transaction and associated documentation, Moody's will endeavor to assign definitive ratings. A definitive rating (if any) may differ from a provisional rating. Moody's provisional rating of the rated notes addresses the expected loss posed to noteholders by the legal final maturity of the notes in 2029. The provisional ratings reflect the risks due to defaults on the underlying portfolio of loans given the characteristics and eligibility criteria of the constituent assets, the relevant portfolio tests and covenants as well as the transaction's capital and legal structure. Furthermore, Moody's is of the opinion that the collateral manager, Credit Suisse Asset Management Limited ("CSAM"), has sufficient experience and operational capacity and is capable of managing this CLO. Cadogan Square CLO VI B.V. is a managed cash flow CLO with a target portfolio made up of EUR400,000,000 equivalent par value of mainly European corporate leveraged loans. At least 90% of the portfolio must consist of senior secured loans, floating rate notes or senior secured bonds, and up to 10% of the portfolio may consist of second-lien loans, unsecured loans, mezzanine obligations and high yield bonds. The portfolio may also consist of up to 12.5% of fixed rate obligations and between 0% and 10% of assets denominated in GBP, which will be unhedged. The portfolio is expected to be 70% ramped up as of the closing date and to be comprised predominantly of corporate loans to obligors domiciled in Western Europe. The remainder of the portfolio will be acquired during the five month ramp-up period in compliance with the portfolio guidelines. CSAM will manage the CLO. It will direct the selection, acquisition and disposition of collateral on behalf of the Issuer and may engage in trading activity, including discretionary trading, during the transaction's four-year reinvestment period. Thereafter, collateral purchases are permitted using principal proceeds from unscheduled principal payments and proceeds from sales of credit risk/improved obligations, and are subject to certain restrictions. In addition to the 14 classes of notes rated by Moody's, the Issuer will issue EUR43.25 million of subordinated notes denominated in EUR and GBP1.621 million denominated GBP, both of which will not be rated. The transaction incorporates interest and par coverage tests which, if triggered, divert interest and principal proceeds to pay down the notes in order of seniority. The rated notes' performance is subject to uncertainty. The notes' performance is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. CSAM's investment decisions and management of the transaction will also affect the notes' performance. Moody's modelled the transaction using its European Cash Flow Model, a cash flow model based on the Binomial Expansion Technique, as described in Section 2.3 of the "Moody's Global Approach to Rating Collateralized Loan Obligations" rating methodology published in February 2014. The cash flow model evaluates all default scenarios that are then weighted considering the probabilities of the binomial distribution assumed for the portfolio default rate. In each default scenario, the corresponding loss for each class of notes is calculated given the incoming cash flows from the assets and the outgoing payments to third parties and noteholders. Therefore, the expected loss or EL for each tranche is the sum product of (i) the probability of occurrence of each default scenario and (ii) the loss derived from the cash flow model in each default scenario for each tranche. As such, Moody's encompasses the assessment of stressed scenarios. Moody's used the following base-case modelling assumptions: - Par amount: EUR400,000,000 - Diversity Score: 39 - Weighted Average Rating Factor (WARF): 2800 - Weighted Average Spread (WAS): 4.10% - Weighted Average Coupon (WAC): 5.00% - Weighted Average Recovery Rate (WARR): 41.5% - Weighted Average Life (WAL): 8 years Together with the set of modeling assumptions above, Moody's conducted additional sensitivity analysis, which was an important component in determining the provisional rating assigned to the rated notes. This sensitivity analysis includes increased default probability relative to the base case. Below is a summary of the impact of an increase in default probability (expressed in terms of WARF level) on each of the rated notes (shown in terms of the number of notch difference versus the current model output, whereby a negative difference corresponds to higher expected losses), holding all other factors equal: Percentage Change in WARF: WARF + 15% (to 3220 from 2800) Ratings Impact in Rating Notches: - Class A-1 Senior Secured Floating Rate Notes: 0 - Class A-2 Senior Secured Floating Rate Notes: 0 - Class A-3 Senior Secured Fixed Rate Notes: 0 - Class B-1 Senior Secured Floating Rate Notes: -1 - Class B-2 Senior Secured Floating Rate Notes:-1 - Class B-3 Senior Secured Fixed Rate Notes:-1 - Class C-1 Senior Secured Deferrable Floating Rate Notes:-2 - Class C-2 Senior Secured Deferrable Floating Rate Notes:-2 - Class D-1 Senior Secured Deferrable Floating Rate Notes:-2 - Class D-2 Senior Secured Deferrable Floating Rate Notes:-2 - Class E-1 Senior Secured Deferrable Floating Rate Notes:-1 - Class E-2 Senior Secured Deferrable Floating Rate Notes:-1 - Class F-1 Senior Secured Deferrable Floating Rate Notes:0 - Class F-2 Senior Secured Deferrable Floating Rate Notes:0 Percentage Change in WARF: WARF +30% (to 3640 from 2800) - Class A-1 Senior Secured Floating Rate Notes: -1 - Class A-2 Senior Secured Floating Rate Notes: -1 - Class A-3 Senior Secured Fixed Rate Notes: -1 - Class B-1 Senior Secured Floating Rate Notes: -3 - Class B-2 Senior Secured Floating Rate Notes:--3 - Class B-3 Senior Secured Fixed Rate Notes:--3 - Class C-1 Senior Secured Deferrable Floating Rate Notes:-4 - Class C-2 Senior Secured Deferrable Floating Rate Notes:-4 - Class D-1 Senior Secured Deferrable Floating Rate Notes:-.3 - Class D-2 Senior Secured Deferrable Floating Rate Notes:-3 - Class E-1 Senior Secured Deferrable Floating Rate Notes:-2 - Class E-2 Senior Secured Deferrable Floating Rate Notes:-2 - Class F-1 Senior Secured Deferrable Floating Rate Notes:-2 - Class F-2 Senior Secured Deferrable Floating Rate Notes:-2 The principal methodology used in this rating was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in February 2014. DUTCH MORTGAGE XII: Fitch Affirms 'BB-sf' Rating on Class B Notes ----------------------------------------------------------------- Fitch Ratings has affirmed Dutch Mortgage Portfolio Loans XII (DMPL XII), as: Class A1 (NL0010773867): affirmed at 'AAAsf'; Outlook Stable Class A2 (NL0010773875): affirmed at 'AAAsf'; Outlook Stable Class B (NL0010773883): affirmed at 'BB-sf'; Outlook Stable The transaction comprises residential mortgage loans originated by Achmea Bank N.V. (A-/Stable/F2) and some of its predecessors. KEY RATING DRIVERS Performance of the Underlying Assets As of the latest interest payment date, three months plus arrears stood at 0.17%, which is in line with the performance of the earlier DMPL transactions. Given the low level of arrears, Fitch expects foreclosures and subsequent losses to remain limited on the coming payment dates. Group Employee Loans At closing, the pool included 10.28% of mortgages where the borrower is employed by Achmea Interne Diensten, an operational entity of the Achmea group. The loan level data in the European Data Warehouse did not include the current percentage of borrowers employed by Achmea Interne Diensten. Therefore Fitch has assumed the same percentage of employee loans in the current portfolio and accordingly increased the default probability for these loans. The analysis shows that the current available credit enhancement is able to withstand the stresses. Partially Hedged Transaction The issuer entered into a swap agreement with Deutsche Bank AG (A+/Negative/F1+) to hedge the mismatch between the fixed-rate mortgages and the floating-rate class A1 and A2 notes. The class B notes are not included in the swap but this is mitigated by the natural hedge from the fixed rate loans in the pool (83.1%). Data Adequacy Fitch has noted inconsistencies in the current property valuations provided by Achmea Bank in comparison with the valuations at closing. In addition, Achmea Bank has informed Fitch that the income data is calculated by the originator, if no data was available at the time of loan origination. Fitch has adjusted its analysis to reflect this. The analysis shows that the current available credit enhancement is able to withstand the stresses. RATING SENSITIVITIES Deterioration in asset performance may result from economic factors. A corresponding increase in foreclosures and the associated pressure on reserve fund could result in negative rating actions, particularly for junior tranches. DUE DILIGENCE USAGE No third party due diligence was provided or reviewed in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. The findings were reflected in this analysis by assuming that income data was not available. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. Prior to the transaction closing, Fitch reviewed the results of a third party assessment conducted on the asset portfolio information, which indicated no adverse findings material to the rating analysis. Prior to the transaction closing, Fitch conducted a review of a small targeted sample of Achmea's origination files and found the information contained in the reviewed files to be adequately consistent with the originator's policies and practices and the other information provided to the agency about the asset portfolio. Overall and together with the assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. SOURCES OF INFORMATION The information below was used in the analysis: -- Loan-by-loan data provided by European Data Warehouse and Achmea Bank N.V. as at Jan. 31, 2015 -- Transaction reporting provided by InterTrust as at 31 March 2015 HYDE PARK: Moody's Lifts Rating on EUR11.5MM Class E Notes to Ba2 ----------------------------------------------------------------- Moody's Investors Service has taken rating actions on the following classes of notes issued by Hyde Park CDO B.V.: -- EUR265.0 million (current balance EUR 48.5 million) Class A- 1 Senior Secured Floating Rate Notes due 2022, Affirmed Aaa (sf); previously on Mar 31, 2014 Affirmed Aaa (sf) -- EUR62.5 million (current balance EUR 11.4 million) Class A-2 Senior Secured Floating Rate Notes due 2022, Affirmed Aaa (sf); previously on Mar 31, 2014 Affirmed Aaa (sf) -- EUR29.5 million Class B-1 Senior Secured Floating Rate Notes due 2022, Affirmed Aaa (sf); previously on Mar 31, 2014 Upgraded to Aaa (sf) -- EUR14.0 million Class B-2 Senior Secured Fixed Rate Notes due 2022, Affirmed Aaa (sf); previously on Mar 31, 2014 Upgraded to Aaa (sf) -- EUR42.5 million Class C Senior Secured Deferrable Floating Rate Notes due 2022, Upgraded to Aaa (sf); previously on Mar 31, 2014 Upgraded to A1 (sf) -- EUR20.0 million Class D Senior Secured Deferrable Floating Rate Notes due 2022, Upgraded to Baa1 (sf); previously on Mar 31, 2014 Affirmed Ba1 (sf) -- EUR11.5 million Class E Senior Secured Deferrable Floating Rate Notes due 2022, Upgraded to Ba2 (sf); previously on Mar 31, 2014 Affirmed B1 (sf) -- EUR21.9 million (current rated balance EUR 13.1 million) Class T Combination Notes due 2022, Affirmed Aaa (sf); previously on Mar 31, 2014 Upgraded to Aaa (sf) Hyde Park CDO B.V., issued in February 2006, is a single currency Collateralised Loan Obligation backed by a portfolio of mostly high yield European senior secured loans managed by Blackstone Debt Advisors L.P. This transaction's reinvestment period ended in June 2012. According to Moody's, the rating actions taken on the notes are the result of deleveraging on the last two payment dates in June 2014 and December 2014. Class A-1 and A-2 notes have paid down by approximately EUR112.7 million (34.4% of closing balance) since April 2014, as a result of which over-collateralization (OC) ratios of all classes of rated notes have increased. As per the trustee report dated April 2015, Class B, Class C, Class D, and Class E OC ratios are reported at 192.77%, 136.64%, 120.17%, and 112.38% compared to April 2014 levels of 144.12%, 120.44%, 111.80% and 107.37% respectively. The rating of the Combination Notes address the repayment of the Rated Balance on or before the legal final maturity. For Class T, the 'Rated Balance' is equal at any time to the principal amount of the Combination Note on the Issue Date minus the aggregate of all payments made from the issue date to such date, either through interest or principal payments. The Rated Balance may not necessarily correspond to the outstanding notional amount reported by the trustee. The key model inputs Moody's uses in its analysis, such as par, weighted average rating factor, diversity score and the weighted average recovery rate, are based on its published methodology and could differ from the trustee's reported numbers. In its base case, Moody's analzsed the underlying collateral pool as having a EUR pool with performing par and principal proceeds balance of EUR199.345 million and defaulted par of EUR3.518 million, a weighted average default probability of 21.32% (consistent with a WARF of 3070) over a weighted average life of 4.19 years, a weighted average recovery rate upon default of 49.37% for a Aaa liability target rating, a diversity score of 19 and a weighted average spread of 3.99%. The default probability derives from the credit quality of the collateral pool and Moody's expectation of the remaining life of the collateral pool. The estimated average recovery rate on future defaults is based primarily on the seniority of the assets in the collateral pool. For a Aaa liability target rating, Moody's assumed that 98.19% of the portfolio exposed to senior secured corporate assets would recover 50% upon default, while the non-first lien loan corporate assets would recover 15%. In each case, historical and market performance and a collateral manager's latitude to trade collateral are also relevant factors. Moody's incorporates these default and recovery characteristics of the collateral pool into its cash flow model analysis, subjecting them to stresses as a function of the target rating of each CLO liability it is analyzing. The principal methodology used in this rating was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in February 2014. In addition to the base-case analysis, Moody's conducted sensitivity analyses on the key parameters for the rated notes, for which it assumed a lower weighted average recovery rate for the portfolio. Moody's ran a model in which it reduced the weighted average recovery rate by 5%; the model generated outputs that were within one notch of the base-case results. This transaction is subject to a high level of macroeconomic uncertainty, which could negatively affect the ratings on the notes, in light of uncertainty about credit conditions in the general economy. CLO notes' performance may also be impacted either positively or negatively by 1) the manager's investment strategy and behavior and 2) divergence in the legal interpretation of CDO documentation by different transactional parties because of embedded ambiguities. Additional uncertainty about performance is due to the following: - Portfolio amortization: The main source of uncertainty in this transaction is the pace of amortization of the underlying portfolio, which can vary significantly depending on market conditions and have a significant impact on the notes' ratings. Amortization could accelerate as a consequence of high loan prepayment levels or collateral sales by the collateral manager or be delayed by an increase in loan amend-and-extend restructurings. Fast amortization would usually benefit the ratings of the notes beginning with the notes having the highest prepayment priority. - Around 17.9% of the collateral pool consists of debt obligations whose credit quality Moody's has assessed by using credit estimates. As part of its base case, Moody's has stressed large concentrations of single obligors bearing a credit estimate as described in "Updated Approach to the Usage of Credit Estimates in Rated Transactions," published in October 2009. - Recoveries on defaulted assets: Market value fluctuations in trustee-reported defaulted assets and those Moody's assumes have defaulted can result in volatility in the deal's over- collateralization levels. Further, the timing of recoveries and the manager's decision whether to work out or sell defaulted assets can also result in additional uncertainty. : Moody's analyzed defaulted recoveries assuming the lower of the market price or the recovery rate to account for potential volatility in market prices. Recoveries higher than Moody's expectations would have a positive impact on the notes' ratings. In addition to the quantitative factors that Moody's explicitly modelled, qualitative factors are part of the rating committee's considerations. These qualitative factors include the structural protections in the transaction, its recent performance given the market environment, the legal environment, specific documentation features, the collateral manager's track record and the potential for selection bias in the portfolio. All information available to rating committees, including macroeconomic forecasts, input from other Moody's analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, can influence the final rating decision. =========== N O R W A Y =========== COPEINCA AS: Fitch Withdraws 'B+' Issuer Default Rating ------------------------------------------------------- Fitch Ratings has withdrawn these ratings for Copeinca AS and its wholly owned subsidiary Corporacion Pesquera Inca SAC (together referred to as Copeinca): Copeinca AS Foreign Currency Issuer Default Rating (IDR) of 'B+' Corporacion Pesquera Inca SAC (COPEINCA) Foreign Currency IDR of 'B+' Fitch is withdrawing Copeinca's ratings as the USD250 million senior unsecured notes due 2017 were fully repaid early on May 20, 2015. Fitch will no longer provide rating or analytical coverage of this issuer but will continue to maintain the ratings of the parent, China Fishery Group Limited (B+/Stable). =========== R U S S I A =========== BARS LLC: Bank of Russia Suspends Insurance Broker License ---------------------------------------------------------- By its Order No. OD-1158, dated May 26, 2015, the Bank of Russia suspended the insurance broker license of the Insurance Broker BARS, limited liability company (registration number in the unified state register of insurance agents 4092). The decision is taken due to the company's failure to timely execute Bank of Russia instructions, namely, due to the non-submission of information on the insurance broker activities in 2014. The decision becomes effective the day it is published in the Bank of Russia Bulletin. The insurance agent is given five calendar days from the date the order becomes effective to eliminate the identified violations. CONGRESS-BANK OJSC: Central Bank Ends Provisional Administration ---------------------------------------------------------------- Due to the ruling of the Arbitration court of the city of Moscow dated May 18, 2015 on the forced liquidation of the credit institution Congress-Bank (open-joint stock company) (Bank of Russia Registration No. 2330, date of registration April 29, 1993), and the appointment of a liquidator in compliance with Clause 3 of Article 18927 of the Federal Law "On the Insolvency (Bankruptcy)", the Bank of Russia took a decision (Order No. OD-1144, dated May 25, 2015) to terminate from May 26, 2015 the activity of the provisional administration of the credit institution Congress-Bank (open joint-stock company) appointed by Bank of Russia Order No. OD-616, dated March 24, 2015, "On the Appointment of the Provisional Administration to Manage the Moscow-based Credit Institution Congress-Bank (Open Joint-Stock Company), or OJSC Congress-Bank, Due to the Revocation of Its Banking License". KOMESTRA LLC: Bank of Russia Suspends Insurance License ------------------------------------------------------- By Order No. OD-1156, dated May 26, 2015, the Bank of Russia suspended the insurance license of the Insurance Company KOMESTRA, limited liability company (registration number in the unified state register of insurance agents 1922). The decision is taken due to the failure of Insurance Company KOMESTRA, limited liability company, to execute Bank of Russia instructions, namely, due to noncompliance with the requirement to financial sustainability and solvency with respect to securing insurance reserves and capital with admissible assets, and due to non-submission of documents at Bank of Russia requests. The decision becomes effective the day it is published in the Bank of Russia Bulletin. Suspended license of the insurance agent shall mean a prohibition on entering into insurance contracts, and also on amending respective contracts resulting in increase in the existing obligations of the insurance agent. The insurance agent shall accept applications on the occurrence of insured events and perform its obligations. PROFILE RE: Bank of Russia Suspends Reinsurance License ------------------------------------------------------- By its Order No. OD-1157, dated 26 May 2015, the Bank of Russia suspended the reinsurance license issued to Reinsurance Company Profile Re, joint-stock company (registration number in the unified state register of insurance agents 3486). The decision is taken due to the reinsurance agent's failure to properly execute Bank of Russia instructions, namely, due to its noncompliance with the requirement to financial sustainability and solvency with respect to securing insurance reserves and capital with admissible assets. The decision becomes effective the day it is published in the Bank of Russia Bulletin. Suspended license of the insurance agent shall mean a prohibition on entering into reinsurance contracts, and also on amending respective contracts resulting in increase in the existing obligations of the insurance agent. ========= S P A I N ========= CELLNEX TELECOM: S&P Assigns Prelim. 'BB+' CCR, Outlook Stable -------------------------------------------------------------- Standard & Poor's Rating Services assigned its preliminary 'BB+' long-term corporate credit rating to Spanish telecom and broadcasting infrastructure group Cellnex Telecom S.A. The outlook is stable. At the same time, S&P assigned its preliminary 'BB+' issue rating to Cellnex's proposed senior unsecured notes. The preliminary '3' recovery rating indicates S&P's expectation of meaningful recovery, in the higher half of the 50%-70% range, in the event of a default. The final ratings will depend on S&P's receipt and satisfactory review of all final transaction documentation. Accordingly, the preliminary ratings should not be construed as evidence of the final ratings. If Standard & Poor's does not receive the final documentation within a reasonable time frame, or if the final documentation departs from the materials S&P has already reviewed, it reserves the right to withdraw or revise its ratings. Potential changes include, but are not limited to, utilization of notes proceeds, the maturity, size, and conditions of the notes, financial and other covenants, security, and ranking. On May 7, 2015, Abertis Infraestructuras SA completed its sale of 66% of Cellnex through an initial public offering (IPO). S&P's preliminary long-term rating on Cellnex reflects S&P's view of the group's leading position, the industry's high barriers to entry, the group's strong revenue and cash flow visibility, high margins, and some growth opportunities. S&P's rating also incorporates its assessments of Cellnex's "strong" business risk and its "aggressive" financial risk profiles, as defined in S&P's corporate methodology criteria. Cellnex is the leading independent provider of telecom infrastructure in Spain and Italy, with market shares of 9.3% and 19.3%, respectively (according to U.K.-based consulting firm Arthur D. Little). S&P thinks the group's share could improve further on outsourcing trends from Spanish and Italian telecom operators. Also, Cellnex is the No. 1 provider of broadcasting infrastructure in Spain, with an 87% market share for national and regional broadcasting. Additionally, Cellnex benefits from high barriers to entry in its markets, mainly due to its comprehensive and difficult-to-replicate asset base of 15,170 towers spread across Spain and Italy. Furthermore, the group has strong revenue and cash flow visibility, given its long-term contracts (up to 25 or 30 years including extensions) and a sizable revenue backlog of close to 12 years (6.7 years when excluding renewal clauses) after the recent acquisition of Galata S.p.A. (owner of 7,377 towers, previously owned by Italian telecom operator Wind Telecomunicazioni S.p.A.). Another strength is Cellnex's satisfactory profitability, in line with that of European peers, such as France-based broadcasting and telecoms infrastructure group Tyrol Acquisition 1 SAS (TDF), but below that of larger U.S. peers, which also benefit from bigger tower portfolios. Finally, S&P thinks Cellnex could benefit from business opportunities on the back of growing mobile data traffic, strict population-coverage obligations, and increasing outsourcing trends from telecom operators. These strengths are partly offset by a rather concentrated customer base, as top-10 customers represent 70%-75% of pro forma revenue estimates, with particular exposure to Wind Telecomunicazioni, and limited geographic diversification with operations in Spain and Italy. In addition, given the relentless pricing pressures in the telecom market, S&P thinks that market consolidation or network-sharing agreements between operators could occur in the future, and this could constrain revenue growth (although S&P is mindful that existing contracts could give some protection to market consolidation). Another weakness is S&P's anticipation of a 13% revenue decline in the broadcasting infrastructure segment in 2015, following the shutdown of nine channels in May 2014 by the Spanish government. Still, S&P thinks that this is temporary and could gradually recover from 2016, after new channels are licensed at the end of 2015. Moreover, S&P views the recent acquisition of Galata as a transformative event with possible integration risks. However, S&P acknowledges that Cellnex's management has a track record of similar acquisitions, given its acquisition of more than 4,200 towers from Spain-based operators Telefonica and Yoigo since 2012. Furthermore, revenues are protected by long-term contracts with Wind Telecomunicazioni (such as for Telefonica and Yoigo). "Our assessment of Cellnex's financial risk profile is based on the group's plans to refinance its debt post-IPO, with at least EUR500 million senior unsecured medium-term notes, in addition to an increase to EUR300 million of its revolving credit facility (RCF; not rated). Our rating on Cellnex is constrained by our estimate of a Standard & Poor's-adjusted debt-to-EBITDA ratio slightly above 5x temporarily and funds from operations (FFO)-to- debt at about 15% in 2015. This is partly offset by our anticipation of solid free operating cash flow (FOCF) and discretionary cash flow generation, given the limited capital expenditures (capex) and limited dividends, based on the group's dividend policy. However, we think that gradual deleveraging could be constrained by management's financial policy. We expect Standard & Poor's-adjusted debt-to-EBITDA ratio to stay at about 4.5x-5.0x (our main debt adjustments include operating lease, accounts receivable sold, and a put option from Wind Telecomunicazioni relating to its remaining 10% in Galata) and FFO to debt to be about 15% over our forecast horizon until 2017," S&P said. The stable outlook reflects S&P's anticipation that Cellnex will maintain a Standard & Poor's-adjusted debt-to-EBITDA ratio between 4.5x and 5.0x and FFO to debt at about 15% over the next 12 months. S&P could raise the rating if Standard & Poor's-adjusted debt to EBITDA improved to about 4x and FFO to debt to about 20%, assuming that S&P would then consider that management would adjust its financial policy to sustain these levels. S&P could lower the rating if Standard & Poor's-adjusted debt to EBITDA remained greater than 5.0x and if FFO to debt fell below 12%. S&P thinks this could be caused either by higher-than- expected shareholder remuneration or debt-funded acquisitions, or by a weaker operational performance than S&P initially anticipated. ============= U K R A I N E ============= UKRAINE: Decision to Halt Foreign Debt Payments "Odious" -------------------------------------------------------- Elaine Moore at The Financial Times reports that Ukraine's decision last week to grant its government the power to stop foreign debt payments marks a distinct shift in tone for the wartorn and recession-battered country. As negotiations between Kiev and its creditors stall and full- blown bankruptcy nears, the rhetoric of government communiques is shifting from conciliation to accusation, the FT says. In March a presentation to investors noted that "a collaborative process is paramount . . . Ukraine is committed to undertake consultations with its creditors", the FT relays. By May the government declared it "has the right . . . not to return loans borrowed by [a] kleptocratic regime", the FT recounts. According to the FT, in sovereign debt circles the tack Ukraine appears to be taking is known as the odious debt argument, which rejects the notion that governments are liable for the debts of their predecessor. It is a strange approach in some ways, because legal enforcement of sovereign debt is already a mirage, the FT states. However, by questioning the legitimacy of debt it does not intend to pay, a country can hope to ward off the sort of informal sanctions that usually accompany default, such as denial of future loans by investors, the FT notes. It is a risky strategy, the FT says. If talks break down into acrimony countries can harm their chances of arranging a restructuring deal to which creditors will agree, and may be locked out of credit markets, according to the FT. For Ukraine, the case rests on the fact that the money owed was taken out during the rule of Viktor Yanukovich, who fled the country last year after the collapse of his pro-Russian regime, the FT discloses. It includes a US$3 billion bond owed to Russia and due for repayment at the end of this year, the FT states. According to the FT, Kiev says the money was not used for the good of the Ukrainian people. "To the public, these funds have not reached. They were wasted in vain for the country . . . Government has the right to direct the funds paid by taxpayers in Ukraine to the needs of its citizens and not to return loans of the kleptocratic regime of Yanukovych." For Ukraine time is running out, the FT notes. Kiev, the FT says, is trying to restructure about US$23 billion of international debt in all. Without a deal by next month it risks losing its next tranche of International Monetary Fund funding, and default may be the only option left, the FT notes. =========================== U N I T E D K I N G D O M =========================== AJ GILBERT: Competition, Revenue Decline Spurred Administration --------------------------------------------------------------- Storm Rannard at Insider Media reports that low cost competitors in the Far East and a revenue decline from a major customer contributed to the administration of AJ Gilbert (Birmingham) Ltd. But more than 30 jobs were saved at the company, which ran into difficulty earlier this year, after it was bought by an associated business, Insider Media relates. The company, which started trading in 1915 and made promotional giftware, called in joint administrators Craig Povey and Kevin Murphy of Chantrey Vellacott on April 8, 2015, Insider Media recounts. According to Insider Media, a report to creditors revealed strain its cashflow was made 'significantly worse' after revenues from its main customer, The Commonwealth Mint, fell from GBP253,000 in 2012 to GBP85,000 in 2013. During the period, the business also lost a number of major clients because of issues with intellectual property rights, while it struggled to contend with competitors in the Far East, Insider Media notes. It entered into a company voluntary arrangement (CVA) with creditors but had difficulty securing credit and continued to make losses, Insider Media relays. Following the appointment of administrators, its assets were bought by AJ Gilbert (Midlands) Ltd., a company led by majority shareholders Anthony Burns, for GBP284,000, Insider Media discloses. The sale preserved 33 jobs, Insider Media states. AJ Gilbert is a historic Birmingham giftware manufacturer. ALTE LIEBE 1: S&P Cuts Rating on EUR102MM Sr. Sec. Notes to 'CCC' ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered to 'CCC' its issue rating on the EUR102 million senior secured amortizing notes, due 2025, issued by Jersey-based special-purpose vehicle Alte Liebe 1 Ltd. The outlook is negative. The notes have an unconditional and irrevocable guarantee of payment of scheduled interest and ultimate principal from controlling creditor Ambac Assurance U.K. Ltd. Under Standard & Poor's criteria, a rating on insured debt reflects the higher of the rating on the insurer or Standard & Poor's underlying rating (SPUR). Because S&P do not rate Ambac Assurance, the long-term debt rating on the notes reflects the SPUR. Alte Liebe ultimately serves its debt from payments from the wind farms to which it onlent funds. S&P considers that a contractual default remains unlikely in the next 12 months, due to the flexible repayment profile of the notes -- with timely payment of interest, but ultimate payment of principal at maturity in 2025. However, based on the current performance of the underlying wind farms and increasingly strained liquidity at Alte Liebe, S&P anticipates that the project will not be able to meet its outstanding liabilities in full on the notes' final maturity date and will start to defer the principal of the notes, unless an unforeseen positive development takes place. S&P does not expect the deferral to be only temporary, because the performance of the weakest farms in the portfolio -- Gerdau- Pulfringen, Helenenberg, and Mangelsdorf/Wilmersdorf -- is likely to continue to deteriorate. According to S&P's criteria, when it anticipates that repayment of deferred amounts due under the terms of the documentation will not be made in full at or before maturity, S&P lowers the issue rating to 'D'. Under S&P's base case, it expects Alte Liebe to start deferring debt service in one year. S&P therefore sees an increasing likelihood that the issue rating could be lowered to 'D' at the same time. Alte Liebe is a special-purpose vehicle that raised the senior secured notes to fund the debt advanced to six individual wind farm companies (WFCs) in Germany with a combined capacity of 142 megawatts. Alte Liebe onlent the proceeds from the notes under individual loan agreements with the WFCs, which used the funds to refinance existing bank debt. The WFCs also used the notes' proceeds to fund various liquidity reserves, including a 12-month debt service reserve account at each wind farm. S&P currently forecasts a transition to 'D' over the next 12 months unless the situation improves materially. The negative outlook reflects S&P's view that Alte Liebe may need to defer the principal on the notes in 2016. S&P do not expect any deferral to be temporary because it would be caused by a structural weakness at the Gerdau-Pulfringen WFC. Under S&P's base case, the rating will likely be lowered by one notch within the next six months, reflecting the anticipated deferral. The rating transition to 'D' could take place more quickly if the deterioration in Alte Liebe's liquidity is faster than S&P currently forecasts, and Alte Liebe starts deferring debt service payment earlier than anticipated. S&P considers an outlook revision to stable is unlikely because it would require a significant and sustainable improvement in Alte Liebe's operating conditions. DEBENHAMS PLC: S&P Revises Outlook to Stable & Affirms 'BB-' CCR ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Debenhams PLC to stable from negative. At the same time, S&P affirmed the 'BB-' corporate credit rating and senior issue-level ratings. The issue and recovery ratings of 'BB-' and '3' on the GBP225 million (current outstanding GBP212 million) 5.25% senior notes, due 2021, are 'BB-' and '3', respectively. S&P's expectation of recovery in the higher half of the 50%-70% range is supported by the low amount of prior-ranking liabilities, but constrained by the unsecured nature. The outlook revision reflects S&P's view that Debenhams will continue to moderately improve its operating performance and is likely to maintain a resilient competitive position. It also incorporates S&P's expectation that the group should continue to moderately improve its margins and free cash flow generation. The modest improvement in profitability, offset by continued capital investment, should result in the group's leverage ratio trending down on a reported basis (it was down to 1.3x on net reported basis at the end of February 2015, from 1.6x in the comparable period in 2014). That said, on a Standard & Poor's lease-adjusted basis, leverage will continue to remain over 5x, after accounting for substantial operating lease commitments. The rating reflects S&P's view of Debenhams' "satisfactory" business risk profile and "aggressive" financial risk profile, as S&P's criteria define the terms. S&P combines these factors to derive an anchor of 'bb'. The rating incorporates a one-notch downward adjustment to the anchor for S&P's "comparable rating analysis," whereby it reviews Debenhams' credit characteristics in aggregate. This primarily reflects S&P's view that Debenhams' business risk profile is at the lower end of the "satisfactory" category. The business risk profile assessment reflects Debenhams' position as a leading U.K. department store operator, with a strong mid- market position, above-average adjusted profitability, and a growing presence online and overseas. In S&P's view, Debenhams will continue to face intensified competition from larger retailers such as Marks & Spencer and Next, and also from specialty apparel retailers such as New Look. That said, Debenhams' business model benefits from its multi- brand approach, with a combination of own-brands, international brands, and concessions on a wide product assortment. Debenhams' profitability, which we still regard as "above average," is supported by its exclusive core and designer brands, which comprise about one-half of its total sales, and the above-average volume of products that it sources directly from suppliers. These strengths are partially offset by Debenhams' exposure to seasonality; shortened inventory cycles due to fast-changing fashion trends, customer tastes, and spending patterns; and its susceptibility to weak economic conditions. These factors cause S&P to position Debenhams' business risk profile at the lower end of the "satisfactory" category. S&P's assessment of Debenhams' "aggressive" financial risk profile reflects the company's high lease-adjusted debt. The bulk of Debenhams' adjusted debt (more than 85%) relates to the capitalization of operating lease commitments. Without the lease adjustment, Debenhams' debt to EBITDA will be substantially lower, with management reporting 1.3x on a net basis at the end of February 2015. Furthermore, in S&P's view, Debenhams' free operating and discretionary cash flow generation and its low level of on-balance-sheet financial debt provide it with considerable financial flexibility. S&P anticipates an improving operating trend in 2015, with the EBITDA margin improving slightly in S&P's base-case scenario. S&P also thinks that Debenhams will be able to generate Standard & Poor's-adjusted discretionary cash flow (DCF) of around GBP90 million, after factoring in capital expenditure (capex) of about GBP130 million and dividend payments of about GBP45 million. "We have revised our GDP projection for the U.K. We now project 2.6% GDP growth this year in 2015 and 2.8% in 2016. We anticipate favorable consumer demand trends, up by 2.4% last year, should continue. Although we foresee that many U.K. retailers with strong brands and market positions could benefit from positive consumer sentiment, competition remains intense and we believe that a high level of promotional activity will continue to be an enduring feature of the U.K. market, at least during 2015. Against this backdrop of intensely competitive trading and somewhat positive macroeconomic conditions, we forecast overall group top-line growth in the low single digits," S&P said. S&P's base case assumes: -- Low-single-digit sales growth in financial year (FY) 2015 (ending Aug. 31, 2015) mainly driven by online sales, franchise stores, and new space as U.K. stores continue to be affected by the shift to online business. Positive, but low, like-for-like sales anticipated in 2015 as online and international like-for-like sales continue to somewhat offset contraction in U.K. stores. S&P also factors in some benefits from the company's stronger focus on increasing sales density within the U.K. stores by adding more concessions. Gross margin up by 10 basis points as the company refocuses its promotional strategy to deliver higher full-price sell-throughs and lower markdowns. -- Slight EBITDA margin improvement due to the continued focus on cost discipline across the business. -- An increase in capex to GBP130 million in FY2015. -- Stable dividends of about GBP40 million-GBP50 million and no share buybacks in the near term. -- Management's commitment to reduce debt and deleverage to 1x on a reported net debt to EBITDA basis over the next few years. Based on these assumptions, S&P arrives at these credit measures for FY2015 and FY2016: -- Adjusted debt to EBITDA decreasing to around 5.9x and then 5.7x and adjusted funds from operations (FFO) to debt improving to around 10.0% and then 10.2% in 2015 and 2016. Both these core credit ratios will remain in the "highly leveraged" financial risk profile category. -- Operating cash flow to debt, free operating cash flow (FOCF) to debt, DCF to debt, and EBITDA interest coverage should remain in the "aggressive" financial risk profile category. -- Adjusted FOCF of around GBP130 million-GBP140 million, with DCF remaining positive at about GBP90 million. The stable outlook reflects S&P's view that the group should continue to maintain its competitive position, and moderately improve its margins and FOCF generation. This will likely occur on the back of improved operating performance due to a combination of stronger U.K. consumer confidence, better margin management, and increased contributions from the online business, franchise stores, and new space. S&P does not currently anticipate raising the rating in the medium term. Nevertheless, S&P would consider an upgrade if, on the back of sustained improvement in trading, margin improvement, and capex reduction, Debenhams materially improved its FOCF generation, leading Standard & Poor's-adjusted FOCF to debt to improve to more than 10%. An upgrade would also be contingent on S&P's assessment of the sustainability of this financial profile and management's financial policy commitment to using DCF for debt reduction. S&P could lower the rating if Debenhams' business risk profile comes under strain due to sustained weak trading, accompanied by a significant drop in sales, trading margins, or market share. Specifically, S&P could consider a downgrade if Debenhams' FOCF- to-debt ratio falls below 5% and deteriorates to the "highly leveraged" financial risk profile category. In S&P's view, this could occur if cash flow declines on the back of lower profits, or if there are unexpected operating setbacks due to a decline in sales, increased competition, a weakening market share, or brand damage. S&P could also lower the rating if Debenhams adopts a more aggressive financial policy with respect to growth, investments, or shareholder returns, causing DCF to decline. EXETER BLUE: Fitch Affirms 'Bsf' Rating on Class E Notes -------------------------------------------------------- Fitch Ratings has upgraded Exeter Blue Limited's class A notes as: EUR31.9 million Class A notes: upgraded to 'A+sf' from 'Asf'; Outlook Stable EUR31.9 million Class B notes: affirmed at 'Asf' ; Outlook revised to Stable from Negative EUR26.6 million Class C notes: affirmed at 'BBBsf'; Outlook Stable EUR10.7 million Class D notes: affirmed at 'BBsf'; Outlook Stable EUR8.5 million Class E notes: affirmed at 'Bsf'; Outlook Stable EUR16.5 million subordinated note: unrated Exeter Blue Limited is a static UK synthetic balance sheet securitization of project finance and infrastructure loans primarily located in western Europe. The senior exposure (currently EUR261.6 million) is retained by the originator and must be repaid in full before any of the rated notes are repaid. The proceeds from the notes are held in a deposit account with Lloyds Bank plc (A+/Stable/F1). KEY RATING DRIVERS The upgrade of the class A notes and revision of the Outlook on the class B notes are a result of the upgrade of Lloyds Bank, which Fitch considers an excessive counterparty to the transaction. As a result, the notes' ratings are linked to the rating of Lloyds Bank and any rating action on Lloyds Bank will result in rating action on the notes. Fitch has determined that the excessive counterparty risk is due to Lloyds Bank holding cash in a deposit account that will be used to repay the notes as the reference portfolio amortizes. In the event that Lloyds Bank were to jump to default, Exeter Blue would become an unsecured creditor of Lloyds Bank and would likely default on contractual payments due to the noteholders. As a result of this excessive counterparty risk, the rated notes are now subject to a cap equal to Lloyds Bank's rating. Portfolio performance has remained unchanged since Fitch reviewed the transaction in April 2015 and as a result the class B, C, D and E notes have been affirmed. The Fitch estimated recovery rates on the underlying portfolio range between 65% and 95%. The analysis is based on asset- specific recovery assumptions in tiers of 85% (base case) to 60% (AAA stress case). Additionally, the correlation assumptions for the analysis were based on a relative ranking of project finance correlations, which are lower than for corporate debt obligations due to structural features. Correlation for projects within the UK, but from different sectors is considered to be 7%, whereas the correlation for two projects in the UK and the same sector, such as healthcare can be up to 13%. RATING SENSITIVITIES As part of its analysis, Fitch considers the sensitivity of the notes' ratings to additional stresses on default and recovery rate assumptions undertaken as part of the rating analysis. The agency tested two additional sensitivities, one by increasing the assumed default rates by 25% and the other by decreasing the assumed recovery rates by 25%. In both cases, there would be a downgrade of up to two notches on the rated notes. DUE DILIGENCE USAGE No third party due diligence was provided or reviewed in relation to this rating action DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. There were no findings that were material to this analysis. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets have ratings or credit opinions from Fitch and/or other Nationally Recognised Statistical Rating Organisations and/or European Securities and Markets Authority registered rating agencies. Fitch has relied on the practices of the relevant Fitch groups and/or other rating agencies to assess the asset portfolio information. Prior to the transaction closing, Fitch conducted a review of a small targeted sample of the originator's origination files and found the information contained in the reviewed files to be adequately consistent with the originator's policies and practices and the other information provided to the agency about the asset portfolio. Overall, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. FAIRHOLD SECURITISATION: Fitch Affirms 'CCC' Rating on B Notes -------------------------------------------------------------- Fitch Ratings has affirmed Fairhold Securitisation Limited's class A and class B notes, as: GBP413.7 million class A due October 2017 (XS0298926360) affirmed at 'Bsf'; Outlook Negative GBP29.8 million class B due October 2017 (XS0298927509) affirmed at 'CCCsf'; Recovery Estimate 0% KEY RATING DRIVERS The affirmation reflects Fitch's unchanged view on the challenges facing the borrower to bring about an orderly refinancing by loan maturity in October, particularly without an injection of fresh equity. The availability and cost of new finance will not compete with the terms of the debt in place. Fitch is not aware of any progress the sponsor may have made in this respect. The reported value of the collateral securing the transaction (inflation-linked sheltered housing ground rent receivables) had risen in February 2015 to GBP1.022 billion from GBP801 million 12 months earlier, reflecting changes in long-term inflation and interest rate expectations. Over the same period, these changes have caused the mark-to-market value of the long-dated interest rate and inflation swaps to rise to GBP472 million from GBP270 million, largely offsetting the gains in real estate value. While the bulk of the income is very high quality, Fitch believes the reported loan-to-value ratio of 81% overstates sponsor equity as it does not allow for the risk premium another financier might require as compensation for the portfolio's illiquidity. There is little visibility of this risk premium, and should the mortgage security be enforced, the risk of credit losses cannot be ruled out, in Fitch's view. In relation to the class A notes, the interest rate swap ranks senior and the inflation swap pari passu; any workout will be complex given the increasing sway of these counterparties as creditors. Refinancing is not inconceivable, particularly as credit spreads across all debt products fall. However, in Fitch's opinion it is more likely that a negotiated settlement will be pursued by the sponsor, which has indicated to Fitch that it is prepared to enter into discussions with key creditors. There is a risk that any equity injected by the borrower will be insufficient to avert credit losses or similar outcomes such as debt forbearance or wider restructuring. Ultimately, Fitch believes the sponsor has the threat of structural and market uncertainty embedded in any recovery process as bargaining power. This could come at the expense of the class B notes, given their junior position and vulnerability to being outvoted, as reflected in the distressed rating and zero Recovery Estimate. The Negative Outlook denotes the continued risk of the class A notes sharing in any economic loss. RATING SENSITIVITIES A change in the ratings is unlikely before possible exit strategies to be negotiated by the sponsor, noteholders and swap counterparties become more visible around the time of loan maturity. DUE DILIGENCE USAGE No third party due diligence was provided or reviewed in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. There were no findings that were material to this analysis. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. Fitch did not undertake a review of the information provided about the underlying asset pool ahead of the transaction's initial closing. The subsequent performance of the transaction over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable. Overall, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. SOURCES OF INFORMATION WEBWEAR: Goes Into Liquidation ------------------------------ Drapers News reports that Webwear, which had approximately 25 employees, has closed its head office at 26-28 Bedford Row in London and its website has been taken down. It is understood the majority of staff have been made redundant, according to Drapers News. It comes after corporate rescue and recovery specialist David Rubin & Partners was appointed as liquidator on May 14, the report notes. A source close to the situation said the business went under after one large retailer decided to move to an offshore supplier, the report says. "One customer changed the way they were trading and decided to buy abroad. Webwear's turnover virtually disappeared overnight. It was a difficult decision [to go into liquidation] but the business couldn't continue with the overheads it had," the unnamed source said, the report relays. The report discloses that Gavin Wise, the joint owner of Webwear, has since set up another supply business called Vertical Clothing. The new company has taken on a "skeleton staff" from Webwear, including former sales director Hayley Nineberg, who is now director at Vertical Clothing, and former Webwear sales executive Francesca O'Connell, who has taken up the role of account manager, the report adds. =============== X X X X X X X X =============== * BOOK REVIEW: The Financial Giants In United States History ------------------------------------------------------------ Author: Meade Minnigerode Publisher: Beard Books Softcover: 260 pages List Price: $34.95 Order your personal copy today at http://is.gd/tJWvs2 The financial giants were Stephen Girard, John Jacob Astor, Jay Cooke, Daniel Drew, Cornelius Vanderbilt, Jay Gould, and Jim Fisk. The accomplishments of some have made them household names today. But all were active in the mid 1800s. This was a time when the United States, having freed itself from Great Britain only a few decades earlier, was gaining its stride as an independent nation. The country was expanding westward, starting to engage in significant international trade, and laying the foundations for becoming a major industrial power. Astor, Vanderbilt, Gould, and the others played major parts in all these areas. During the Civil War in the first half of the 1860s, some became leading suppliers of goods or financiers to the Federal government. Minnigerode's focus is the highlights of the life of each of the seven. Along with this, he identifies each one's prime characteristics contributing to his road to fortune and how his life turned out in the end. Not all of the men managed to keep and pass on the fortunes they amassed. They are seen a "financial giants" not only because they made fortunes in the early days of American business and industry, but also for their place in laying out the groundwork for American business enterprise, innovation, and leadership, and for the notoriety they had in their day. Minnigerode summarizes the style or achievement of each man in a single word or short phrase. Stephan Girard is "The Merchant Banker"; Cornelius Vanderbilt, "The Commodore." "The Old Man of the Street" summarizes Daniel Drew"; with "The Wizard of Wall Street" summarizing Jay Gould. Jim Fisk is "The Mountebank." Jay Cooke, "The Tycoon," was to be "known throughout the country for his astonishingly successful handling of the great Federal loans which financed the Civil War." After the War, one of the leaders of the Confederacy remarked that the South was really defeated in the Federal Treasury Department thus, even on the enemy side, giving recognition to Cooke's invaluable work of enabling the Federal government to meet the huge costs of the War. After the War, having earned the reputation as "the foremost financier in the country," Cooke became involved in many large financial ventures, including the building of a railroad to link the East and West coasts of America. In this railroad venture, however, Cooke and his banking firm made a fatal misstep in investing in the Northern Pacific railway. The Northern Pacific turned out to be a house of cards. When Cooke's firm was unable to meet interest payments it owed because of money it had put into the Northern Pacific, the firm went bankrupt; and this caused alarm in the stock market and financial circles. The roads to wealth of the "financial giants" were not smooth. Like others amassing great wealth, they had to take risks. The tales Minnigerode tells are not only instructive on how individuals have historically made fortunes in business and the characteristics they had for this, but are also cautionary tales on the contingency of great wealth in some circumstances. Jim Fisk, for instance, a larger-than life character "jovial and quick witted [who was also] a swindler and a bandit, a destroyer of law and an apostle of fraud," was presumably killed by a former business partner. Unlike Cooke and Fisk, Cornelius Vanderbilt and John Jacob Astor built fortunes that lasted generations. Vanderbilt - nicknamed Commodore - starting in the New York City area, built ships and established domestic and international merchant and passenger lines. With the government coming to depend on these with the rapid growth of commerce of the period and the Civil War for a time, Vanderbilt practically had monopolistic control of private shipping in the U.S. Astor made his fortune by developing trade and other business in the upper Midwest, which was at the time the sparsely-populated frontier of America, rich in natural resources and other potential with the Great Lakes and regional rivers as a means for transportation. Although the social and business conditions in the early and mid 1800s when the U.S. was in the early stages of its development were unique to that period, by concentrating on the characteristics, personalities, strategies, and activities of the seven outstanding businessmen of this period, Minnigerode highlights business traits and acumen that are timeless. His sharply-focused, short biographies are colorful and memorable. This author has written many other books and worked in the military and government. ********* 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 * * *