/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/151229.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 Tuesday, December 29, 2015, Vol. 16, No. 255 Headlines C Y P R U S ANORTHOSIS: Creditor Files for Club's Liquidation F R A N C E AREVA: S&P Lowers CCR to 'B+', Outlook Developing LA FINANCIERE: S&P Affirms 'B+' CCR, Outlook Remains Stable G E R M A N Y HECKLER & KOCH: S&P Lowers Corporate Credit Rating to 'SD' G R E E C E TIM HELLAS: PE Firms Get Favorable Ruling in Suits v. Units I R E L A N D ANGLO IRISH BANK: Ireland Cancels More Debt Tied to Firm I T A L Y BANCA ETRURIA: Government Rescue Ignites Bail-in Debate ISTITUTO CENTRALE: S&P Lowers Ratings to 'BB-', Outlook Stable K A Z A K H S T A N EKIBASTUZ GRES-1: Fitch Affirms 'BB+' IDR, Outlook Stable L U X E M B O U R G ALTISOURCE PORTFOLIO: S&P Affirms 'B+' ICR, Outlook Stable AXIUS EUROPEAN: S&P Lowers Rating on Class E Notes to B DEUTSCHE BANK: S&P Lowers Ratings on 3 Note Classes to 'CC' N E T H E R L A N D S KONINKLIJKE AHOLD: S&P Raises Rating on Financing Shares to 'BB+' N O R W A Y NORSKE SKOG: Bondholders Present New Debt Restructuring Proposal P O R T U G A L BANCO SANTANDER: S&P Affirms 'BB+/B' Counterparty Credit Ratings R U S S I A BALTIC FINANCIAL: S&P Affirms 'B/B' Counterparty Credit Ratings BANIF - BANCO FUNCHAL: Fitch Withdraws 'B-' Issuer Default Rating CARCADE LLC: Fitch Puts 'BB-' IDR on Rating Watch Negative EVRAZ GROUP: Fitch Assigns 'BB-' Rating to USD750MM Unsec. Notes METINVEST BV: To Propose U.K. Scheme of Arrangement S P A I N ABENGOA SA: Inks Agreement with Creditor Banks on Credit Line S W E D E N DOMETIC GROUP: S&P Raises CCR to 'BB-'; Outlook Positive U K R A I N E KYIV CITY: S&P Raises ICR to 'CCC+', Outlook Stable U N I T E D K I N G D O M B RILEY & SONS: Falls Into Administration, Cuts 131 Jobs CAPARO INDUSTRIES: Cuts 33 Jobs at Caparo Precision CLAVIS RMBS 2006-01: Fitch Affirms 'BBsf' Rating on Cl. B2a Notes COLCHESTER WINTER: Goes Into Liquidation, Closes Down GEMINI ECLIPSE 2006-3: S&P Lowers Ratings on 2 Note Classes to CC HERCULES ECLIPSE 2006-4: S&P Cuts Ratings on 2 Notes to CCC LITT CORPORATION: Falls Into Liquidation SANDS HERITAGE: Creditors Approve Company Voluntary Arrangement VITA CAPITAL VI: S&P Assigns BB Rating on to Class A Notes WESTWOOD YARNS: In Administration, 135 Jobs at Risk * UK: Atradius Sees New Round of Retail Insolvencies in New Year ********* =========== C Y P R U S =========== ANORTHOSIS: Creditor Files for Club's Liquidation ------------------------------------------------- cyprus-mail.com reports that the company that has been assigned the maintenance of Famagusta football club Anorthosis 'Antonis Papadopoulos' stadium has filed for the club's liquidation, citing non-payment for its work since 2013, with the Larnaca District Court scheduled to hear the case on January 25. According to the suit, Greentech Trading Ltd, a Nicosia-based landscaping business, is owed a total EUR185,000 by the football club, which it has repeatedly sought to be paid, the report notes. The report relays that Anorthosis, the plaintiffs claim, has repeatedly reneged on settlement agreements signed between the two companies, and is thus unreliable and uncreditworthy. Greentech asked the court to order the liquidation of the company, or "any other measure deemed appropriate by the court", in order to receive its dues, the report discloses. Originally filed in November, the case was set for hearing by the court on January 25, 2016, the report adds. =========== F R A N C E =========== AREVA: S&P Lowers CCR to 'B+', Outlook Developing ------------------------------------------------- Standard & Poor's Ratings Services said that it had lowered its long-term corporate credit rating on France-based nuclear services group AREVA to 'B+' from 'BB-'. The outlook is developing. At the same time, S&P affirmed the 'B' short-term corporate credit rating. S&P also lowered its rating on AREVA's senior unsecured debt to 'B+' from 'BB-'. The recovery rating is unchanged at '3', indicating S&P's expectation of recovery in the higher half of the 50%-70% range in the event of a default. The downgrade follows AREVA's announcement on Dec. 17, 2015, that it expects further large losses on completion of its reactors and services activities, and additional losses on its discontinued renewable activities. These losses will further reduce AREVA's equity, while its capital structure is already unsustainable, in S&P's view. In addition, S&P previously expected more clarity on a pending capital increase by the end of this year, but details of the financing plan will only be available by February 2016. This means a shorter period for AREVA to arrange financing for a EUR1 billion bond that matures in September 2016. S&P believes AREVA's current liquidity might not be sufficient to fully cover the bond repayment, even if AREVA draws on its EUR1.25 billion syndicated loan and other bilateral credit lines of approximately EUR800 million, since it will depend on the amount of negative free cash flow. For these reasons, S&P considers that AREVA's SACP has weakened to 'ccc+' from 'b-'. Nonetheless, S&P still sees a high likelihood of extraordinary government support for AREVA, due to AREVA's important role as France's leading nuclear services provider, and its very strong link with the state, which owns 87% of AREVA. S&P therefore adds three notches of uplift to the SACP. S&P still assumes that the French government will provide substantial equity or loans to the company under the plan, to be announced in January or February alongside AREVA's 2015 results. But obtaining approvals from European authorities may take time, so S&P understands that the capital increase will only be completed by the end of 2016. AREVA's highly leveraged financial risk profile reflects its very high Standard & Poor's-adjusted debt of more than EUR9 billion as of June 30, 2015, which S&P forecasts will increase further. S&P assumes Standard & Poor's-adjusted free operating cash flow (FOCF) will remain negative at about EUR1.1 billion in 2015 and possibly lower in 2016, due to restructuring cash outlays, before reducing considerably by 2017. The main reason for the cash burn is AREVA's discontinued activities, notably Olkiluoto 3 (OL3) and other large contracts at the reactors and services segment. On the positive side, the company has indicated that cost savings and delays in its restructuring program should have reduced negative free cash flow in the second half of 2015. The developing outlook reflects that S&P may take a positive or negative rating action on AREVA depending on the details of the state-supported financing plan and 2015 results to be announced in January or February 2016. Specifically, S&P could take a positive rating action if AREVA's credit quality stabilizes or improves as a result of the financing plan and clear intention by the state regarding its commitment to the capital increase. In addition, ratings upside could stem from the disposal of AREVA NP to EDF. S&P currently assumes that the capital increase, shareholder loans, and asset disposals will well exceed EUR5 billion. Conversely, if state support and financing measures are not clearly laid out publicly by February 2016, S&P would likely lower the ratings by one or several notches. Other risk factors relate to: -- The European authorities' approval of the state's capital injection into AREVA; -- The French nuclear authorities' ongoing testing of the Flamanville reactor pressure vessel, which is expected to be concluded by midyear 2016 and, if unsuccessful, could entail major costs and jeopardize the disposal of AREVA NP; and -- The complexity of future risk and liability assumptions by the state, in relation to OL3. LA FINANCIERE: S&P Affirms 'B+' CCR, Outlook Remains Stable ----------------------------------------------------------- Standard & Poor's Ratings Services said that it affirmed its 'B+' corporate credit rating on France-based facilities management provider La Financiere Atalian SAS. The outlook remains stable. At the same time, S&P affirmed its 'B' issue rating on Atalian's EUR250 million notes due January 2020. The recovery rating on the notes is unchanged at '5', indicating S&P's expectation of modest recovery prospects in the lower half of the 10%-30% range in the event of default. Atalian's financial metrics continue to be at the weaker end of the range for an aggressive financial risk profile assessment. The company's three-year weighted-average Standard & Poor's- adjusted ratio of funds from operations to debt is 12%, borderline between S&P's aggressive and highly leveraged financial risk profile categories, and the three-year weighted- average adjusted debt-to-EBITDA ratio is 4.7x, close to S&P's 5x threshold for a highly leveraged assessment. Because S&P expects metrics to remain within the aggressive category, it has revised its financial risk profile assessment upward to aggressive from highly leveraged. This has not had an impact on the rating because S&P now applies a downward adjustment to the rating under S&P's "comparable ratings analysis" modifier to reflect that the core credit ratios are at the weaker end of S&P's aggressive assessment. S&P also takes into account the company's degree of reliance on the French low- wage training tax subsidy CICE for maintaining credit metrics. S&P do not yet know if CICE will be continued beyond 2016, and this uncertainty constrains the group's potential for deleveraging. Atalian operates in a highly competitive and fragmented sector with limited barriers to entry, fairly low margins, and significant exposure to wage-cost inflation. Atalian's margins continue to be supported by CICE, which represents about one- third of the group's EBITDA (as S&P treats it as operating income) but is set to expire in 2016. The company's geographic diversification has improved over the last two years, and S&P expects diversification will continue to increase. Nevertheless, in the financial year ending Aug. 31, 2015, the group sourced roughly 70% of revenues from its core market of France, where it has a stable market position. S&P continues to assess Atalian's business risk profile as fair. The combination of a fair business risk profile and aggressive financial risk profile result in an anchor -- S&P's initial analytical outcome -- of 'bb-'. S&P then adjusts the anchor downward by one notch to reflect its negative comparable ratings analysis modifier, as noted above. The stable outlook reflects S&P's expectation that the group's continuing expansion outside Europe will partly offset the still- uncertain market conditions prevailing in France. S&P expects the company's adjusted debt-to-EBITDA ratio will stay below 5x. S&P could lower the rating during the next 12 months if Atalian's operating performance is weaker than S&P expects -- with margins falling below 5%, causing ongoing cash outflows to increase and liquidity to deteriorate, and adjusted debt to EBITDA rising above 5x. Although S&P don't currently expect to raise the rating, it could consider an upgrade if the company sustained adjusted debt to EBITDA ratios of 4.0x-4.5x and if the French government confirmed that the CICE tax would continue beyond 2016. ============= G E R M A N Y ============= HECKLER & KOCH: S&P Lowers Corporate Credit Rating to 'SD' ---------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its long-term corporate credit rating on German defense contractor Heckler & Koch GmbH to 'SD' from 'CCC' and its long-term issue rating on the company's senior secured notes to 'D' from 'CCC-'. On Dec. 17, 2015, during Heckler & Koch's third quarter results call, the company announced that it had acquired EUR45 million of its outstanding EUR295 million senior notes due 2018 at below par value. The repurchase was at a discount of about 11%. During the call, management also stated that they are considering additional repurchases subject to market conditions and sufficient liquidity. S&P views this exchange as distressed rather than opportunistic considering the fact that both the rating and below-par bond prices indicate a realistic possibility of conventional default over the near- to medium-term. S&P plans to raise the corporate credit rating on Heckler & Koch back to 'CCC' in the coming days to reflect S&P's forward-looking opinion of the company's creditworthiness. The issue rating will remain at 'D' until such time that S&P assess the likelihood of further distressed exchanges as low. =========== G R E E C E =========== TIM HELLAS: PE Firms Get Favorable Ruling in Suits v. Units ----------------------------------------------------------- Stephanie Bodoni at Bloomberg News reports that the Luxembourg court ruled in favor of private equity firms, TPG and Apax, in a lawsuit over the legality of a 2006 transaction involving a Luxembourg holding of former TIM Hellas. According to Bloomberg, liquidators for Hellas Telecommunications (Luxembourg) II sued former subsidiaries of TPG and Apax in Luxembourg, seeking payback of almost EUR1 billion they say the firms got illegally. The Luxembourg commercial court ruled that the Luxembourg Court decision, which rejects claims as inadmissible, can be appealed, Bloomberg relates. TIM Hellas was formerly Greece's third-largest wireless phone operator. About Hellas Telecommunications In February 2007, Hellas Telecommunications was purchased from TPG Capital LP and Apax Partners by the Italian telecommunications giant Weather Group. The Company later suffered liquidity problems and commenced administration proceedings in the U.K. in November 2009. The administrators sold 100% of the shares of Wind Hellas to the existing owners, the Weather Group. An order placing the Company into liquidation was entered on Dec. 1, 2011. Andrew Lawrence Hosking and Carl Jackson, as Joint Liquidators petitioned for the Chapter 15 protection for the Company (Bankr. S.D. N.Y. Case No. 12-10631) on Feb. 16, 2012. Bankruptcy Judge Martin Glenn presides over the case. The Debtor estimated assets and debts of more than US$100,000,000. The Debtor did not file a list of creditors together with its petition. The petitioners are represented by Howard Seife, Esq., at Chadbourne & Parke LLP . ============= I R E L A N D ============= ANGLO IRISH BANK: Ireland Cancels More Debt Tied to Firm -------------------------------------------------------- Reuters reports that Ireland's debt agency purchased EUR500 million of Irish government bonds from the central bank and cancelled them, bringing to EUR2 billion the total cancelled this year relating to a deal to ease the state's debt burden. As part of a 2013 deal struck with the European Central Bank to stretch out the cost of liquidating the collapsed Anglo Irish Bank, Ireland pledged to slowly feed new bonds worth EUR25 billion into the market via the central bank, according to Reuters. Last year, the central bank sold the minimum EUR500 million of bonds acquired during Ireland's financial crisis but, under pressure from the ECB, it has now disposed of EUR2 billion this year, the report notes. The bank is obliged to sell at least EUR500 million a year until 2018, the report adds. ========= I T A L Y ========= BANCA ETRURIA: Government Rescue Ignites Bail-in Debate ------------------------------------------------------- James Politi at The Financial Times reports that the bail-in of Banca Etruria sparked a debate in Italy. Banca Etruria never closed: in fact it was saved from collapse last month along with three other small banks in a dramatic rescue operation engineered by the center-left Italian government led by Matteo Renzi, the FT relates. The trouble is there was a price to pay: under the terms of the deal, several thousand subordinated bondholders were wiped out along with Banca Etruria shareholders, while holders of senior debt and depositors were spared, the FT notes. Though their numbers are small, the plight of the distressed Banca Etruria retail investors has shaken Arezzo, a city known for its gold jewellery manufacturers, the FT discloses. But the reverberations of the bank rescue have also been felt far beyond Tuscany: as Europe prepares to institute new rules from next year which would force losses on bank creditors and big depositors, the saga of Banca Etruria serves as a cautionary tale to politicians and policymakers about the public backlash that could follow any future "bail-ins", the FT states. On a national level, anger has been mounting towards Mr. Renzi for his handling of the affair, the FT says. The main criticism of Mr. Renzi -- who is otherwise known for his sharp political instincts -- is that he botched the rescue by giving in to EU rules on state aid which prevented the government from protecting all Banca Etruria investors, the FT discloses. Italian officials have stridently defended the terms of the rescue, saying it was the best option available, the FT relays. Had the rescue waited until January 2016, tougher EU rules would have kicked in that could have forced a "bail-in" of depositors with over EUR100,000 in order to save the hit to public finances, according to the FT. Meanwhile, the government has set up a fund worth about EUR100 million to help compensate the hardest hit victims of the rescue and damp some of the increasingly vocal protests, the FT discloses. Banca Etruria is a local bank based in the medieval Tuscan city of Arezzo. ISTITUTO CENTRALE: S&P Lowers Ratings to 'BB-', Outlook Stable -------------------------------------------------------------- Standard & Poor's Ratings Services said that it had lowered to 'BB-' from 'BB+' its long-term ratings on Istituto Centrale delle Banche Popolari Italiane SpA (ICBPI) and its core subsidiary CartaSi. At the same time, S&P removed the ratings from CreditWatch with negative implications, where they were placed on June 24, 2015. S&P also affirmed the 'B' short-term ratings on both entities. The outlook on ICBPI and CartaSi is stable. At the same time S&P assigned a 'B' counterparty credit rating to MercuryBondCo, the new issuing vehicle established by ICBPI's acquirers. The outlook is stable. S&P also assigned a 'B' issue rating to the payment in kind (PIK) toggle notes issued by MercuryBondCo. These ratings are in line with the preliminary ratings S&P assigned on Nov. 2, 2015. The downgrade reflects S&P's view that the approved ICBPI acquisition by a private equity consortium diminishes ICBPI's creditworthiness, mainly because of the double leverage that the transaction is expected to generate for the wider group and the broader potential implications it may have on ICBPI's financial policy and strategy. Under the transaction terms, the consortium financed the ICBPI acquisition by raising EUR1.1 billion debt (through the issuance of senior PIK toggle notes issued by MercuryBondCo). The remainder, around EUR900 million, was financed through equity. MercuryBondCo issued the new debt instruments as senior PIK toggle notes. The interest payments on these will depend on the flows of dividends upstreamed from ICBPI. S&P consequently sees ICBPI as part of a larger group, of which it is by far the biggest component. In S&P's view, ICBPI's creditworthiness will be influenced by weaker (and more leveraged) parts of the group. To better assess the impact of the increased leverage on ICBPI, S&P has broadly estimated the capital position of the new group. S&P estimates that, under the proposed terms, the consolidated risk-adjusted capital (RAC) in 2016 and beyond would be negative due to material intangible assets not being offset by the retained earnings S&P expects during the forecast period. S&P views this as more negative than its projected 7% RAC ratio for ICBPI. In addition, S&P thinks that ICBPI's creditworthiness could be compromised by a more aggressive business strategy. S&P is therefore lowering its capital and earnings assessment to moderate from adequate, and its risk position assessment to weak from adequate, while keeping all the other SACP components unchanged. This results in a new entity's group credit profile (GCP) of 'bb-'. S&P consequently assigns its rating to MercuryBondCo based on S&P's view that it is an issuing vehicle of a nonoperating holding company (NOHC). Under S&P's group rating methodology for NOHCs, the gap between the issuer credit rating (ICR) of a NOHC and the zperating companies (OpCos) is at least two notches when the GCP is lower than 'bbb-'. S&P's assessment incorporates the subordination of MercuryBondCo compared to ICBPI (especially given the latter's regulated nature) and the debt-servicing ability of MercuryBondCo. S&P usually derives the ICR for a NOHC by applying standard notching down from the group's main operating entity. This is to reflect the reliance of the NOHC on dividend distributions from the OpCo to meet its obligations, as well as supervisory barriers to payments, potentially different treatment in a default situation, and the structural subordination of NOHC obligations to those at the OpCo level. S&P equalizes the rating on the PIK toggle notes with the ICR of the issuer, MercuryBondCo. According to S&P's methodology, a PIK feature does not cause an instrument to be rated lower than the ICR on the issuer. The stable outlook reflects S&P's view that the prospect of a rating change from 'BB-' is remote over the next 12 months. Although unlikely at this stage, S&P could upgrade ICBPI if S&P was to expect the bank to maintain its RAC ratio above 7% over the next 12 to 18 months, mainly as a result of a combination of diminished economic risks in Italy and higher-than-S&P-expects earning generation. S&P could lower the ratings if it anticipated that ICBPI's solvency or liquidity position were to significantly deteriorate as a result of a financial policy that is more aggressive than expected. =================== K A Z A K H S T A N =================== EKIBASTUZ GRES-1: Fitch Affirms 'BB+' IDR, Outlook Stable --------------------------------------------------------- Fitch Ratings has affirmed Kazakhstan-based electricity power plant Ekibastuz GRES-1 LLP's Long-term foreign currency Issuer Default Rating at 'BB+'. The Outlook is Stable. The ratings reflect the risks inherent in Ekibastuz GRES-1 business profile, including uncertainty in regulated tariffs after 2015. They also reflect significant capex in 2016-2018, which will result in negative free cash flow (FCF) and gradual deterioration of funds from operation (FFO) adjusted leverage to 1.9x in 2018 from 0.2x in 2014, based on Fitch's conservative assumptions. Positively, the ratings factor in the strong market position of Ekibastuz GRES-1, its strategic importance for the Kazakh state (BBB+/Stable), its high profitability and its solid credit metrics. While Ekibastuz GRES-1's forecast credit metrics are strong for its rating, these are offset by the business risk profile. Ekibastuz GRES-1's ratings also benefit from a one-notch uplift for support from its 100% shareholder - JSC Samruk-Energy (Samruk-Energy, BBB-/Stable), which is in turn 100% state-owned via National Welfare Fund Samruk-Kazyna JSC (Samruk-Kazyna, BBB+/Stable). KEY RATING DRIVERS Tariff Uncertainty after 2015 The introduction of the capacity market in Kazakhstan, initially planned for 2016, was postponed until 2019 at the request of industrial producers who appealed to the inadmissibility of high tariff growth during economic slowdown. The final impact on Ekibastuz GRES-1's operational and financial profile is unclear at present since a potential decrease in the company's approved tariffs would be compensated by larger sales volumes due to increased competitiveness. Nevertheless, tariff uncertainty for 2016 and beyond is reducing the company's cash flow visibility. Fitch conservatively assumes 0% tariff growth for 2016-2018 and postponement of part of the company's capex to 2018-2019. This would result in Fitch's negative rating guidelines not being breached until 2019. Intensive Capex to Weaken Leverage Fitch expects Ekibastuz GRES-1's extensive investment program of KZT125 billion over 2016-2019 (including development and maintenance projects) to be extensively debt-funded. Fitch estimates the company will continue generating healthy cash flows from operations of KZT34 billion on average over 2016-2019. However, FCF is likely to remain negative due to ambitious investment plans and dividend payments of KZT8bn annually. Fitch forecasts, under its conservative assumptions, that Ekibastuz GRES-1's FFO adjusted gross leverage will deteriorate to 1.9x in 2018 from 0.2x at end-2014. However, Fitch's negative rating guidelines are not expected to be breached until 2019 when substantial amounts of capex postponed from 2016-2018 are expected to be spent. Weak Results for 2015 Expected Fitch estimates EBITDA for 2015 to have declined 19%, due to the lack of electricity exports to Russia and economic slowdown in Kazakhstan. Electricity exports to Russia, which accounted for 10% of the company's sales last year, ceased since November 2014, mostly due to adverse RUB/KZT fluctuations. Further Ekibastuz GRES-1 has borne the brunt of the economic slowdown and declining electricity demand in Kazakhstan since it has one of the largest approved tariffs in the country. Despite significant tenge depreciation vs. USD in 2H15, Fitch does not expect exports to Russia to resume. Financial Profile Remains Strong Ekibastuz GRES-1's 'BB' standalone rating is underpinned by solid credit metrics and high profitability (EBITDA margin of 61% in 1H15), double-digit FFO interest coverage and low FFO adjusted grow leverage (below 1x in 2014-2015). Fitch expects some deterioration of the company's financial profile over the next three years due to ambitious capex program. Nevertheless, FFO adjusted gross leverage is expected to remain below 2.0x over 2016-2018, placing the company favorably against similarly rated CIS counterparts and on a par with certain higher rated international peers. One-Notch Uplift for Parent Support Fitch continues to consider strategic, operational and legal ties between Ekibastuz GRES-1 and its parent Samruk-Energy to be fairly strong and incorporate a one-notch uplift for parental support into the company's 'BB+' rating. While there are no debt guarantees between the company and its parent, we believe that the cross-default provisions in Samruk-Energy's USD500 million eurobonds could be triggered by a default on Ekibastuz GRES-1's domestic bonds. KEY ASSUMPTIONS Fitch's key assumptions within our rating case for the issuer include: -- Zero tariff growth in 2016-2018 -- Electricity production to increase below GDP growth -- Inflation-driven cost increase (including coal) -- Dividends of KZT8bn per year for 2016-2018 -- Part of capex postponed to 2018-2019 from 2016-2017, while maintaining total amount in line with management guidance RATING SENSITIVITIES Positive: Future developments that could lead to positive rating action include: -- Stronger parental support; -- Long-term predictability of the regulatory framework after 2015; -- A more diversified and efficient asset base. Negative: Future developments that could lead to negative rating action include: -- Weaker parental support, especially regarding short-term liquidity provision and refinancing backstop. Inability to refinance existing loans and to raise new debt to cover cash shortfall in 2016; -- FFO-adjusted gross leverage persistently higher than 2x and FFO interest coverage below 4x, for instance, due to a substantially above-inflation increase in coal price and/or tariffs materially lower than Fitch's forecasts; -- A substantial increase in coal price without a full pass- through to power price; -- Committing to capex without sufficient available funding, worsening overall liquidity position. LIQUIDITY AND DEBT STRUCTURE Fitch views Ekibastuz GRES-1's liquidity as weak but manageable. At end-9M15 Ekibastuz GRES-1 had cash and cash equivalents of KZT1.1 billion vs. short-term debt of KZT35 billion. Outstanding debt is represented by a KZT23 billion loan from Sberbank (BBB- /Negative) and a KZT12bn loan from Halyk Bank of Kazakhstan (BB/Stable) carrying a 14% interest rate. All debt facilities are due in April-May 2016, creating refinancing risks for the company. Ekibastuz GRES-1 anticipates refinancing these loans with a bond issue or a loan. The parent has confirmed to Fitch its ability and willingness to provide liquidity to Ekibastuz GRES-1 on a timely basis for the subsidiary's debt maturities. FULL LIST OF RATING ACTIONS Long-term foreign currency IDR affirmed at 'BB+', Outlook Stable Long-term local currency IDR affirmed at 'BB+', Outlook Stable National Long-term Rating affirmed at 'AA-(kaz)', Outlook Stable Expected local currency senior unsecured rating on the proposed KZT20bn notes affirmed at 'BB+(EXP)' Expected National senior unsecured rating assigned on the proposed KZT20bn notes affirmed at 'AA-(kaz) (EXP)' =================== L U X E M B O U R G =================== ALTISOURCE PORTFOLIO: S&P Affirms 'B+' ICR, Outlook Stable ---------------------------------------------------------- Standard & Poor's Ratings Services said it revised its rating outlook on Altisource Portfolio Solutions S.A. to stable from negative and affirmed its 'B+' issuer credit rating. "The outlook revision reflects our view that Altisource's largest client, Ocwen Financial Corp., which contributes approximately 60% to total revenues, has made progress during the past several years to address many of the concerns and violations identified by various regulatory bodies," said Standard & Poor's credit analyst Richard Zell. "As of late, much of the regulatory news coming from Ocwen has been positive developments involving settlements, a contrast with the stream of negative announcements during 2011-2014." Additionally, Ocwen has made a concerted effort to deleverage during 2015, thus improving the firm's financial risk profile. S&P believes that the relative reduction of regulatory risk and the lower leverage profile at Ocwen results in increased operational stability at Altisource. The stable outlook on Altisource reflects Standard & Poor's view that much of the regulatory risk that threatened the viability of Ocwen, the firm's largest client, has abated. S&P expects that revenues will remain concentrated in products and services that are focused on the domestic mortgage and real estate industry, an industry that S&P believes is prone to cyclicality, which will limit its assessment of Altisource's business risk profile long- term. Additionally, S&P expects that the firm will operate with a debt-to-EBITDA ratio of 2x-3x during the next 12 months. S&P could lower the rating on Altisource if S&P expects a material change to the company's relationship with Ocwen, such that a large portion of the firm's revenues are at risk and it becomes evident that Altisource does not have an effective strategy to replace this lost revenue. For instance, S&P could lower the rating if it expected that reduced revenues would cause debt to EBITDA to sustainably exceed 3x. An upgrade of Altisource is unlikely during the next 12 months, given its reliance on Ocwen for approximately 60% of its revenue, the concentration of revenue related to U.S. real estate activities, and the debt-to-EBITDA ratio that is on the weaker side of the 2x-3x range. Additionally, S&P's rating on Altisource is currently limited by the company's governance structure. If S&P believes that corporate governance has been enhanced, it could revise its assessment of management and governance, possibly leading to an upgrade. Additionally, if Altisource commits to operating with a debt-to-EBITDA ratio below 2x, S&P could raise the rating. AXIUS EUROPEAN: S&P Lowers Rating on Class E Notes to B ------------------------------------------------------- Standard & Poor's Ratings Services raised its credit ratings on Axius European CLO S.A.'s class A, B1, B2, and C notes. At the same time, S&P has affirmed its rating on the class D notes, and lowered its rating on the class E notes. The rating actions follow S&P's assessment of the transaction's performance using data from the Nov. 3, 2015, trustee report and the application of its relevant criteria. "We subjected the capital structure to a cash flow analysis to determine the break-even default rate (BDR) for each rated class at each rating level. The BDR represents our estimate of the maximum level of gross defaults, based on our stress assumptions, that a tranche can withstand and still fully repay the noteholders. In our analysis, we used the portfolio balance that we consider to be performing (EUR162,516,179), the current weighted-average spread (3.92%), and the weighted-average recovery rates calculated in line with our corporate cash flow collateralized debt obligation (CDO) criteria. We applied various cash flow stresses, using our standard default patterns, in conjunction with different interest rate stress scenarios," S&P said. Since S&P's Jan. 17, 2013 review, the aggregate collateral balance has decreased by 50.06% to EUR162.52 million from EUR325.40 million. The class A notes have amortized by EUR157.22 million since S&P's previous review. In S&P's view, this has increased the available credit enhancement for all rated classes of notes. The transaction's weighted-average spread and coverage tests have also improved, however, its weighted-average life has increased since S&P's previous review. The exposure to obligors based in countries rated below 'A-' is greater than 10% of the aggregate collateral balance (11.1%). Therefore, S&P has also applied additional stresses in accordance with its nonsovereign ratings criteria. Taking into account the results of S&P's credit and cash flow analysis and the application of its nonsovereign ratings criteria, S&P considers that the available credit enhancement for the class A, B1, B2, and C notes is commensurate with higher ratings than those previously assigned. S&P has therefore raised its ratings on these classes of notes. S&P's credit and cash flow analysis results indicate that the available credit enhancement for the class D notes is commensurate with the currently assigned rating, while the credit enhancement for the class E notes is commensurate with a lower rating than currently assigned. S&P has therefore affirmed its 'BB+ (sf)' rating on the class D notes and lowered to 'B (sf)' from 'B+ (sf)' its rating on the class E notes. Axius European CLO is a cash flow collateralized loan obligation (CLO) transaction that securitizes loans to primarily speculative-grade corporate firms. The transaction closed in October 2007 and its reinvestment period ended in November 2013. 3i Debt Management Investments is the transaction manager. RATINGS LIST Class Rating To From Axius European CLO S.A. EUR350 Million Floating-Rate Notes Ratings Raised A AAA (sf) AA (sf) B1 AA+ (sf) A+ (sf) B2 AA+ (sf) A+ (sf) C A+ (sf) BBB (sf) Rating Affirmed D BB+ (sf) Rating Lowered E B (sf) B+ (sf) DEUTSCHE BANK: S&P Lowers Ratings on 3 Note Classes to 'CC' ----------------------------------------------------------- Standard & Poor's Ratings Services lowered to 'CC (sf)' from 'CCC- (sf)' its credit ratings on Deutsche Bank Luxembourg S.A. (DBL) series 50's class A2, A3, and A4 notes. At the same time, S&P has affirmed its 'B- (sf)' rating on the class A1 notes. DBL's series 50 is a resecuritization of GEMINI (ECLIPSE 2006-3) PLC's class A notes. At closing, the seller--Deutsche Bank AG-- sold to DBL GBP175.84 million of GEMINI (ECLIPSE 2006-3)'s class A commercial mortgage-backed securities (CMBS) floating-rate notes. The issuance of the notes funded the purchase of this portion of GEMINI (ECLIPSE 2006-3)'s class A notes. The rating actions follow S&P's Dec. 22, 2015 lowering to 'CC (sf)' from 'CCC- (sf)' of its rating on GEMINI (ECLIPSE 2006- 3)'s class A notes. DBL's series 50 receives 30.90% of all of the class A notes' proceeds in GEMINI (ECLIPSE 2006-3). With total net noteholder recoveries of approximately GBP180 million from the GEMINI (ECLIPSE 2006-3) transaction, S&P expects recovery proceeds allocated to DBL's series 50 to be approximately GBP55.6 million. After deducting for senior expenses, this would be sufficient to only repay the class A1 notes. S&P has therefore affirmed its 'B- (sf)' rating on the class A1 notes. At the same time, S&P has lowered to 'CC (sf)' from 'CCC- (sf)' its ratings on the class A2, A3, and A4 notes. S&P rates a tranche 'CC' when it expects a default to be a virtual certainty. This in line with S&P's criteria for assigning such ratings. RATINGS LIST Deutsche Bank Luxembourg S.A. RE Series 50 GBP175.84 mil Fiduciary Notes Series 50 Rating Class Identifier To From A1 XS0570457795 B- B- A2 XS0570458090 CC CCC- A3 XS0570458256 CC CCC- A4 XS0570458413 CC CCC- ===================== N E T H E R L A N D S ===================== KONINKLIJKE AHOLD: S&P Raises Rating on Financing Shares to 'BB+' ----------------------------------------------------------------- Standard & Poor's Rating Services said that it has raised its issue ratings on the cumulative preferred financing shares of Netherlands-based food retailer Koninklijke Ahold N.V. (Ahold; BBB/Stable/A-2) to 'BB+' from 'BB'. No other ratings on the group or its debt ratings have been affected. The paid-in capital for issued cumulative preferred financing shares and the related additional paid-in capital amounts to EUR497 million. Based on S&P's review of the available documentation for these securities, it now assess that the securities have optional deferability of interest payments. S&P now rates these cumulative preferred financing shares two notches below the 'BBB' issuer credit rating on the group. The 'BB+' issue rating reflects a downward adjustment from the issuer credit rating of one notch for subordination--because the corporate credit rating on Ahold is investment grade--and another notch for the optional deferability of interest payments. In S&P's opinion, there is a relatively low likelihood that the issuer will defer interest; should S&P's view change, it may increase the number of downward notches that it applies to the issue rating. CREDIT RATIO TREATMENT In S&P's calculation of Ahold's credit ratios, S&P will treat 100% of the cumulative preferred financing shares as debt-like, as the instruments are classified as having low equity content. S&P's calculation is consistent with the treatment in the group's IFRS financial statements. =========== N O R W A Y =========== NORSKE SKOG: Bondholders Present New Debt Restructuring Proposal ---------------------------------------------------------------- Luca Casiraghi at Bloomberg News reports that a group of Norske Skogindustrier ASA's secured bondholders sent management a new proposal to restructure the company's debt, countering the terms of an offer announced on Dec. 22. Rothschild, which is advising 62% of holders of EUR290 million (US$317 million) of bonds due December 2019, is asking management to consider a plan to limit obligations that pay interest in cash to a maximum of five times earnings before interest, taxes, depreciation and amortization without necessarily diluting shareholders, according to a document seen by Bloomberg. The unprofitable Norwegian newsprint producer is seeking to restructure its approximately US$1 billion of debt as it closes in on its ninth year of declining sales, Bloomberg discloses. The company agreed last week on terms of an exchange offer with GSO Capital Partners and Cyrus Capital Partners LP, which own some of its unsecured bonds due in the next two years and 11.5% of its shares, Bloomberg relates. The company, Bloomberg says, will hold an extraordinary general meeting to discuss the exchange offer and the replacement of three board members on Jan. 6 as requested by GSO and Cyrus this month. Rothschild is asking management to share the terms of its plan with shareholders before the meeting, Bloomberg relays, citing the document. Norske Skogindustrier ASA or Norske Skog, which translates as Norwegian Forest Industries, is a Norwegian pulp and paper company based in Oslo, Norway and established in 1962. * * * As reported by the Troubled Company Reporter-Europe on November 20, 2015, Moody's Investors Service, downgraded Norske Skogindustrier ASA's (Norske Skog) Corporate Family Rating ("CFR") to Caa3 from Caa2 and its Probability of Default Rating (PDR) to Ca-PD from Caa2-PD. Moody's said the outlook is negative. =============== P O R T U G A L =============== BANCO SANTANDER: S&P Affirms 'BB+/B' Counterparty Credit Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed the 'BB+/B' long- and short-term counterparty credit ratings on Portugal-based Banco Santander Totta S.A. The outlook is stable. S&P also affirmed the issue credit ratings, including the 'B-' rating on the preference stock guaranteed by Totta. The affirmation follows Totta's announcement that it will acquire a substantial part of the commercial activity of Banif (not rated), which is being resolved, for EUR150 million. The transaction has been approved by the European Commission and is effective from the announcement date of Dec. 21, 2015. The transaction does not affect S&P's view of Totta's highly strategic importance to Banco Santander S.A. In S&P's view, the acquisition will be neutral for Totta's 'bb+' stand-alone credit profile (SACP) and ratings, although the bank's capital will likely weaken. S&P estimates that Totta's year-end 2016 RAC ratio, before diversification adjustments, could be about 100 bps lower than S&P had previously estimated, at 6.0%-6.5% compared to its prior forecast of 7.0%-7.5%. S&P therefore now assess Totta's capital and earnings as moderate, rather than adequate, although this is neutral to S&P's assessment of the bank's SACP. S&P does not expect Banif to increase the risk profile of Totta, despite Banif's weak asset-quality track record (Banif reported a credit-at-risk ratio of 23.6% at end-June 2015, almost double that of the Portuguese financial system). S&P takes comfort from the fact that an important share of Banif's impaired assets -- with a net book value of about EUR2.2 billion -- will be transferred to an asset management vehicle, fully owned by the Portuguese Resolution Fund. Furthermore, S&P understands that any remaining nonperforming exposure acquired by Totta will be adequately provisioned. S&P does not expect Totta's funding profile and liquidity metrics to be affected by the addition of Banif. From a business perspective, the acquisition will allow Totta to increase its domestic market share in loans and deposits by around 2.5% from 10%-11% currently. It will also significantly enhance its presence in the regions of Acores and Madeira, where Banif has market shares of more than 30% and 20%, respectively. S&P do not expect significant business attrition following the acquisition. However, nor do S&P sees the addition of Banif as transformational for Totta. S&P's current ratings on Totta remain at the level of its SACP. S&P continues to see Totta as a highly strategic subsidiary of Banco Santander S.A. Under S&P's group methodology criteria, Totta would be eligible to be rated one notch below its parent. However, at the current level, Totta does not benefit from uplift for group support as this would lead to the subsidiary being rated above the Portuguese sovereign. The outlook on Totta remains stable, mirroring that on Portugal. All other things being equal, only changes to the sovereign rating would lead S&P to upgrade or downgrade Totta. =========== R U S S I A =========== BALTIC FINANCIAL: S&P Affirms 'B/B' Counterparty Credit Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services said that it had affirmed its 'B/B' long- and short-term counterparty credit ratings on Baltic Financial Agency Bank (BFA Bank). The outlook is negative. At the same time, S&P affirmed its Russia national scale rating on BFA Bank at 'ruBBB+'. All these ratings were removed from CreditWatch with negative implications, where S&P placed them on Oct. 16, 2015. S&P expects BFA Bank to maintain at least moderate capitalization over the next 12-18 months. Although S&P anticipates its risk- adjusted capital (RAC) ratio will dip as low as 4.8% at year-end 2015, S&P believes it will rebound to 5.0%-5.1% by late 2016. S&P's forecast is based on the assumption that BFA Bank will build its loan book by no more than 20% in 2016, with assets expanding by around 8%-10%. S&P expects the net interest margin to rebound to 2.6% in 2016 compared with 1.1%-1.2% for 2015 on the back of the gradual decline of the central bank's key rate. Moreover, S&P believes that fees and commissions will pick up, albeit from a very low base. S&P's forecast includes very high new loan-loss provisions for 2015 of Russian ruble (RUB) 3.5 billion, or 9% of the average loan book, with a major portion of this figure stemming from the need to provide for foreign currency-denominated exposure to Transaero Airlines. At the same time, S&P believes that the cost of risk will likely be contained at 2.5% or less, as borrowers' projects unwind. S&P expects BFA Bank's earnings buffer, which measures a bank's ability to cover normalized losses, to rebound in 2016 with the three-year average figure improving to 40 basis points (a level commensurate with that of many peers with higher stand-alone credit profiles). S&P notes that Vladimir Kogan, whose son, Efim, and other business partners own BFA Bank, became involved with the financial rehabilitation of Bank URALSIB. S&P has no sufficient information to assess the impact the support of Bank URALSIB will have on the creditworthiness of BFA Bank, but expect to obtain more clarity in the next six months. The negative outlook reflects S&P's view that, in the next 12 months, BFA Bank's capitalization will remain vulnerable to further deterioration of credit quality of its exposures and challenging operational environment in Russia. S&P may take a negative rating action if it sees BFA Bank's capitalization deteriorating to what S&P considers a weak level, with the RAC ratio declining below 5%. This would likely come from higher-than-expected growth or credit costs not compensated by sufficient capital injections from the shareholders. A decline in customers' confidence and withdrawal of deposits, or inability to shift to a more sound business model would also likely trigger a negative rating action. A positive rating action is unlikely in the next 12 months. BANIF ? BANCO FUNCHAL: Fitch Withdraws 'B-' Issuer Default Rating ----------------------------------------------------------------- Fitch Ratings has downgraded Banif - Banco Internacional do Funchal, S.A.'s Viability Rating (VR) to 'f' from 'b-'. The agency has simultaneously withdrawn all of the bank's ratings, including its 'B-' Long-term Issuer Default Rating. The rating actions follow the Bank of Portugal's decision to put Banif into resolution on Dec. 19, 2015. In conjunction with this, the European Commission has approved plans to provide EUR2.25 bil. of state aid to cover the bank's funding gap. This additional state aid facilitated the transfer of a large part of Banif's activities to Banco Santander Totta (BBB/Positive) and the orderly wind-down of the remainder of Banif's impaired assets. Fitch understands from the bank that the resolution does not result in losses on any senior liabilities, while holders of junior debt are subject to bail-in. KEY RATING DRIVERS - IDRS, SUPPORT RATING, SUPPORT RATING FLOOR, VR, SUBORDINATED DEBT AND OTHER HYBRID SECURITIES Fitch's decision to withdraw the IDR, Support Rating and Support Rating Floor reflects its view that with the reorganization related to the resolution, among other aspects involving the transfer of assets and liabilities, the remaining entity no longer holds senior obligations to third-party, non-government creditors that represent reference liabilities for the IDR. Following the reorganization, information regarding its remaining balance sheet is limited. The downgrade of the VR reflects Fitch's view that the bank has failed due to the required extraordinary support, subordinated obligations being subject to bail-in and its resolution resulting in the transfer of the bulk of its assets and liabilities. Fitch believes that in the absence of these measures the bank would not have been viable. The downgrade of Banif's Lower Tier 2 subordinated debt ratings to 'C' from 'CCC' reflects Fitch's assumption that recoveries following the resolution of the entity are unlikely to be better than average, given the limited amount of assets remaining at the entity. Fitch's decision to withdraw the VR, subordinated debt, preference shares and recovery ratings reflects limited information available following its reorganization. Accordingly, Fitch will no longer provide ratings or analytical coverage for Banif. RATING SENSITIVITIES IDRS, VR, SUBORDINATED DEBT AND OTHER HYBRID SECURITIES, SUPPORT RATING AND SUPPORT RATING FLOOR Not applicable The rating actions are: Long-term IDR: withdrawn at 'B-'/Stable Short-term IDR: withdrawn at 'B' Viability Rating: downgraded to 'f' from 'b-' and withdrawn Support Rating: withdrawn at '5' Support Rating Floor: withdrawn at 'No Floor' Lower Tier 2 subordinated debt: downgraded to 'C' from 'CCC' and withdrawn; 'RR5' withdrawn Preference shares: withdrawn at 'C'/'RR6' CARCADE LLC: Fitch Puts 'BB-' IDR on Rating Watch Negative ---------------------------------------------------------- Fitch Ratings has placed Russian leasing company Carcade LLC on Rating Watch Negative (RWN), following its recent announcement that its current owners have agreed to sell the company to the shareholders of Russia-based Forus Bank. KEY RATING DRIVERS The RWN reflects potential changes in Carcade's strategy, risk appetite, balance sheet structure, financial metrics and possible contingent risks arising from other assets of the new owners, including Forus Bank, following the change in ownership. Fitch's previous rating action was on 11 December when the agency affirmed Carcade at 'BB-' with a Negative Outlook, reflecting the company's sound liquidity and solid solvency. The Negative Outlook reflected moderate deterioration of asset quality and financial performance, as well as potential further pressure on metrics from a difficult operating environment, including in the core car/SME segments. RATING SENSITIVITIES The ratings could be downgraded if Fitch concludes that the company's strategy, risk appetite balance sheet structure and/or financial metrics are likely to significantly weaken following the ownership change, or if the company becomes significantly exposed to related parties, non-core assets or other significant contingent risks arising from the other assets of the new owners. In line with other privately-owned Russian leasing companies, the company could also be downgraded if (i) the weaker operating environment translates into significant deterioration of financial metrics; or (ii) prospects for Russia's economy weaken further beyond Fitch's current expectations. The ratings could be affirmed if Fitch concludes that the change in ownership is broadly neutral to the company's credit profile, the Russian economy performs better than currently expected and Carcade's performance remains sound. The rating actions are: Long-term foreign and local currency Issuer Default Ratings (IDRs): 'BB-', placed on RWN Short-term foreign-currency IDR: affirmed at 'B' National Long-term Rating: 'A+(rus)', placed on RWN Senior unsecured debt: 'BB-'/'A+(rus)', placed on RWN EVRAZ GROUP: Fitch Assigns 'BB-' Rating to USD750MM Unsec. Notes ---------------------------------------------------------------- Fitch Ratings has assigned Evraz Group S.A.'s USD750 million 8.25% unsecured notes due in 2021 a final 'BB-' senior unsecured rating. The rating is in line with Evraz's Long-term Issuer Default Rating of 'BB-'/Stable. The bonds rank pari passu with existing senior unsecured debt and include limitations on additional indebtedness (subject to consolidated debt/EBITDA being less than 3.5x). Simultaneously with the bond issue, Evraz has tendered its 2017/2018 existing bonds, using USD550 million to reduce the outstanding amount across all three series. The remaining funds are held in reserve to meet other debt maturities. The assignment of the final rating follows the receipt of documents conforming to the information previously received. The final rating is the same as the expected rating assigned on Dec. 4, 2015. Fitch last affirmed Evraz in September 2015, post-1H15 results publication, reflecting our expectation that Evraz will continue to generate positive free cash flow (FCF) through the steel market cycle. Despite challenging market conditions, Evraz's financial performance remained strong (USD922 million EBITDA, 19% EBITDA margin). Fitch expects this trend to continue in 2H15, assisted by the favorable foreign exchange impact on rouble- denominated costs. Fitch expects that the company will continue using a significant portion of its FCF for further debt reduction. Funds from operations (FFO) adjusted gross leverage was reduced to 3.5x in 2014 from 5.2x in 2013. Despite the expectation of further absolute debt reduction in 2015 the company's FFO gross leverage will increase to 3.9x due to a drop in EBITDA in the current difficult market. Thereafter, leverage metrics should show a downward trend but will remain higher than its main Russian peers'. KEY RATING DRIVERS Rouble Devaluation Boosts Earnings Difficult market conditions impacted Evraz's financial performance in 1H15 (15% decrease in EBITDA yoy due to 28% fall in revenues). However, EBITDA margin in 1H15 rose to 19% (+3 points yoy), assisted by favorable foreign exchange impact on rouble-denominated costs. Overall costs decreased 31% yoy to USD1.6 billion, mostly due to RUB/UAH devaluation but also because of cost efficiency measures. Fitch expects this trend to continue in 2H15, resulting in USD1.8 billion EBITDA and USD650 million-USD700 million FCF. Fitch expects that the company will use a significant portion of this (USD350 million- USD400 million) for further debt reduction. Mixed Outlook for Key End-Markets Evraz's key domestic Russian end-markets are construction (34% of 1H15 production volumes) and railway products (8%). Around 50% of Russian production is exported in the form of semi-finished products. The near-term outlook for the Russian construction market is weak, with demand forecasted to have fallen 15% yoy in 2015. Actual Evraz volumes as of 1H15 supplied to the construction market saw a 10% decline. Demand for railway products was also negatively impacted (-31%) following a drop in demand from Russian railcars producers and slower rail sales to CIS countries (ex. Russia). Demand for rails in Russia was stable, with only a 5% yoy decline, supported by steady demand for maintenance from Russian Railways. In contrast, demand for railway products in North America remains robust. Among other North American markets the order book for large diameter energy pipes remains solid, while -- in line with its competitors -- Evraz's OCTG sales continue to suffer from an inventory overhang in the market and a substantial reduction in capex by E&P companies. Challenging Price Environment The significant decline since 3Q14 in steel input costs (iron ore, coking coal and energy prices) and more evidence of deteriorating demand from China have put steel prices under pressure globally. Separately, the negative outlook for the Russian economy (sanctions, oil prices, etc) has triggered a steep depreciation of the rouble, hurting domestic steel products' prices in dollar terms (prices of Evraz's domestic finished products dropped 24% yoy on average in 1H15). Fitch expects this dynamic to continue in 2H15 (in line with 1H15) despite higher price inflation as a result of the weaker rouble. Raspadskaya Ratings Linked to Evraz Stronger ties between Evraz plc and Raspadskaya developed after Evraz increased ownership in the subsidiary to 82% in January 2013. The companies have since merged several support departments, such as treasury, logistics and other operations to increase synergies. Evraz also refinanced all of Raspadskaya's bank debt in 3Q13. Evraz remains a top-three offtaker for Raspadskaya, which plays a crucial part in Evraz's integration into coal. Despite these factors a one-notch differential remains appropriate and reflects the absence of formal downstream corporate guarantees for Raspadskaya's debt from Evraz. High Raw Material Self-Sufficiency Evraz Group benefits from high self-sufficiency in iron ore and coking coal, including supplies of coal from its subsidiary Raspadskaya. Consequently, it is better placed across the steel market cycle to control the cost base of its upstream operations than less integrated Russian and international steel peers. The cash cost of slab production at Evraz's Russian steel mills is estimated to have fallen by around 50% in absolute terms since 2012, reflecting a combination of operating cost efficiencies and the fall in the value of the rouble, which have enabled the company to maintain full plant capacity utilization. Corporate Governance Fitch regards Evraz's corporate governance as reasonable compared with its Russian peer group, but Fitch continues to notch down the rating by two levels relative to international peers. This notching-down factors in not only our view of company-specific corporate governance practices but also the higher-than-average systemic risks associated with the Russian business and jurisdictional environment. KEY ASSUMPTIONS Fitch's key assumptions for the rating case of the issuer include: -- USD/RUB exchange rate: 63 in 2015, 60 in 2016 and 2017 -- Slight decrease in steel sales volumes in 2015 (-2.6%), progressive recovery thereafter (1% p.a. in 2016 and 2.4% in 2017 and 2018) -- Steep decrease in coal sales volume in 2015 (-8%), steady growth thereafter (2% p.a. in 2016-2018) -- Sharp decrease in prices of steel products and coal in 2015 (-22% for steel and -13% for coal), steady increase thereafter -- USD587 mil. capex in 2015, USD600 mil. each in 2016 and 2017 -- No dividends payments over the next 3 years or share buybacks RATING SENSITIVITIES Evraz plc/ Evraz Group SA Positive: Future developments that could lead to positive rating actions include: -- Further absolute debt reduction with FCF; -- FFO gross leverage moving sustainably below 3.0x -- FFO-adjusted net leverage sustained below 2.5x (2014: 2.9x) -- Sustained positive FCF -- Operational performance in Russia remaining within expectations, including the Russian construction market declining 10% in 2015 and being flat in 2016 Negative: Future developments that could lead to negative rating action include: -- FFO-adjusted gross leverage above 4.0x by end-2016 or above 3.5x over a sustained period -- FFO-adjusted net leverage sustained above 3.0x -- Persistently negative FCF -- Failure to extend debt maturities falling due in 2017 and 2018 OAO Raspadskaya Positive: Future developments that could lead to positive rating actions include: -- Stronger operational and legal ties with Evraz, including a corporate guarantee of Raspadskaya's debt, which could lead to the equalization of the companies' ratings. -- A positive rating action on Evraz plc, which could lead to a corresponding rating action on Raspadskaya. Negative: Future developments that could lead to negative rating action include: -- Evidence of weakening operational and legal ties between Evraz and Raspadskaya -- A negative rating action on Evraz plc, which could lead to a corresponding rating action on Raspadskaya. LIQUIDITY The refinancing of USD750 million of the company's 2015-2018 debt maturities with proceeds from the new issue has rebalanced the company's overall maturity profile. Fitch believes that the company is in a position to service all of its mandatory repayments until 2017 out of FCF, cash and an available undrawn revolving credit facility. At end-1H15, Evraz had USD996 million unrestricted cash, USD272 million undrawn committed bank facilities and strong FCF generation. Fitch expects the company to generate about USD890 million FCF for 2H15 and 2016. FULL LIST OF RATINGS Evraz Group SA -- Long-term foreign currency IDR: 'BB-'/ Stable Outlook -- Short-term foreign currency IDR: 'B' -- Senior unsecured rating: 'BB-' Evraz plc -- Long-term foreign currency IDR: 'BB-'/ Stable Outlook -- Short-term foreign currency IDR: 'B' OAO Raspadskaya -- Long-term foreign currency IDR: 'B+'/ Stable Outlook -- Short-term foreign currency IDR: 'B' -- Long-term local currency IDR: 'B+'/ Stable Outlook -- Senior unsecured rating: 'B+'/ RR4 -- National long-term rating: 'A(rus)'/ Stable Outlook METINVEST BV: To Propose U.K. Scheme of Arrangement --------------------------------------------------- Katie Linsell at Bloomberg News reports that Metinvest BV, the steelmaker controlled by Ukrainian billionaire Rinat Akhmetov, said it issued a practice statement letter to propose a U.K. debt restructuring, known as a scheme of arrangement. According to Bloomberg, Metinvest said the scheme provides for a moratorium, which will prevent bondholders from taking enforcement action and is meant to give the company time to negotiate with investors. The letter was sent to holders of US$1.1 billion of bonds maturing in 2016, 2017 and 2018, Bloomberg discloses. Metinvest, Bloomberg says, is seeking to restructure more than US$3 billion of debt after shelling and mortar attacks hit almost all of its facilities in eastern Ukraine, hurting production and reducing its access to international capital markets. Metinvest BV is Ukraine's largest steelmaker. ========= S P A I N ========= ABENGOA SA: Inks Agreement with Creditor Banks on Credit Line ------------------------------------------------------------- Paul Day at Reuters reports that Abengoa SA signed an agreement with its creditor banks on Dec. 24 for a EUR106 million (US$116.1 million) credit line to help avert what would be Spain's biggest- ever bankruptcy. The loan will be used for general corporate necessities, Abengoa, as cited by Reuters, said in a statement to the stock market regulator. The company said it is using some shares held in the affiliate Abengoa Yield as collateral for the loan, Reuters relates. As reported by the Troubled Company Reporter-Europe on Nov. 30, 2015, Bloomberg News related that Abengoa on Nov. 27 said it had formally applied to a court in Seville for preliminary creditor protection. Under Spanish bankruptcy law, the company may now suspend payments and keep negotiating with lenders for a maximum of four months, Bloomberg disclosed. If Abengoa hasn't reached a deal by the end of March, it will have to file for full-blown creditor protection, Bloomberg noted. Abengoa SA is a Spanish renewable-energy company. * * * As reported by the Troubled Company Reporter-Europe on Dec. 21, 2015, Standard & Poor's Ratings Services lowered to 'SD' (selective default) from 'CCC-' its long-term corporate credit rating on Spanish engineering and construction company Abengoa S.A. S&P also lowered the short-term corporate credit rating on Abengoa to 'SD' from 'C'. S&P said the downgrade reflects Abengoa's failure to pay scheduled maturities under its EUR750 million Euro-Commercial Paper Program. =========== S W E D E N =========== DOMETIC GROUP: S&P Raises CCR to 'BB-'; Outlook Positive -------------------------------------------------------- Standard & Poor's Ratings Services said that it had raised its long-term corporate credit rating on Sweden-based leisure product manufacturer Dometic Group AB to 'BB-' from 'B'. The outlook is positive. At the same time, S&P removed the rating from CreditWatch, where it placed it with positive implications on Nov. 5, 2015. S&P also assigned a 'BB-' issue rating to Dometic's new SEK5.8 billion senior unsecured bank facilities. The recovery rating is '3', indicating S&P's expectation of recovery in the lower half of the 50%-70% range. The upgrade follows Dometic's successful IPO on the Stockholm Stock Exchange on Nov. 25, 2015, which brought in Swedish krona (SEK) 4.5 billion (about EUR500 million) and subsequent debt reduction. Dometic used some of the proceeds to repay EUR314 million of payment-in-kind notes, resulting in a much improved financial risk profile since its credit metrics strengthened following the debt reduction. In addition, private-equity group EQT Partners, which S&P regards as a financial sponsor, has reduced its shareholding in Dometic to approximately 57%. As a result, S&P considers that Dometic's financial risk profile has improved to significant from highly leveraged. Specifically, S&P has revised its assessment of Dometic's financial policy to financial sponsor (FS)-4 from FS-6 because the company's leverage is consistent with a significant financial risk profile, and S&P perceives the risk of releveraging as low. The reduction of the financial sponsor's shareholding and Dometic's repayment of debt should, in S&P's opinion, indicate that the company will likely pursue a more moderate and predictable financial policy, particularly with respect to shareholder returns. This is underlined by the company's stated financial policy, in which it targets net debt to EBITDA of about 2x and dividends of at least 40% of the previous year's net income. The business risk profile is still constrained by the group's moderate size by global standards and high concentration in mature markets: About 85% of revenue stems from Europe, the Middle East, Africa, and the Americas. In addition, Dometic's end markets are cyclical and reliant on consumer spending, which is subject to general economic conditions. These constraints are mitigated by Dometic's leading positions in its niche markets, strong relationships with original equipment manufacturers, and its comprehensive product offering, which provides high barriers to entry and solid pricing power. The group also benefits from a significant share of more stable aftermarket sales. These factors translate into solid operating margins and cash flow, which are key factors supporting the rating and are reflected in the group's fair business risk profile. The significant financial risk profile reflects S&P's view that the company's Standard & Poor's-adjusted ratio of funds from operations (FFO) to debt would be about 20% and that adjusted debt to EBITDA (including S&P's adjustment for operating lease obligations) would be below 3x for the fiscal year ending Dec. 31, 2015, before improving toward 30% and 2.5x, respectively, by year-end 2016. The positive outlook reflects S&P's expectation that Dometic will build a track record of a more prudent financial policy following the overhaul of its financial structure. S&P could upgrade Dometic if it performs at least in line with S&P's base case and demonstrates financial management that allows S&P to to remove the negative notch under its comparable rating analysis. S&P expects Standard & Poor's-adjusted FFO to debt to remain above 25% on a weighted-average basis. S&P could lower the rating if an unexpectedly sharp economic downturn in Europe or the U.S. were to occur, or if operating issues reappeared, squeezing the EBITDA margin. FFO to debt below 20% on a weighted-average basis could lead to a downgrade, as could large debt-funded acquisitions, if in S&P's view, they might weaken the group's metrics without prospects for a rapid recovery. ============= U K R A I N E ============= KYIV CITY: S&P Raises ICR to 'CCC+', Outlook Stable --------------------------------------------------- Standard & Poor's Ratings Services raised its long-term foreign and local currency issuer credit ratings on Kyiv to 'CCC+' from 'D'. At the same time, S&P raised its issue ratings on Kyiv's two domestic bonds to 'CCC+' from 'D'. S&P also withdrew its 'D' issue ratings on the city's two dollar-denominated Eurobonds. The outlook is stable. As a "sovereign rating" (as defined in EU CRA Regulation 1060/2009 "EU CRA Regulation"), the ratings on the city of Kyiv are subject to certain publication restrictions set out in Art 8a of the EU CRA Regulation, including publication in accordance with a pre-established calendar. Under the EU CRA Regulation, deviations from the announced calendar are allowed only in limited circumstances and must be accompanied by a detailed explanation of the reasons for the deviation. In Kyiv's case, the deviation was prompted by the completion of what, under S&P's criteria, it is treating as a distressed debt restructuring. RATIONALE The rating action follows the completion of Kyiv's distressed debt exchange on Dec. 22, 2015. The raising of the ratings to 'CCC+' reflects stronger budgetary performance on the back of a strong recovery of tax revenues and a lower debt burden following debt restructuring. According to S&P's criteria, a 'CCC+' rating means that the issuer is currently vulnerable and is dependent upon favorable business, financial, and economic conditions to meet its financial commitments. The rating also indicates that the issuer's financial commitments appear to be unsustainable in the long term, although the issuer may not face a near-term (within 12 months) credit or payment crisis. As a result of the debt exchange, Kyiv has restructured $550 million of Eurobonds: the bonds' principal was haircut by 25%, interest agreed at 7.75%, and maturities extended to 2019 and 2020. The new bond will be issued by Ukraine's Ministry of Finance, which will be liable for its repayment. At the end of September 2015, the city also restructured domestic bonds totaling Ukrainian hryvnia (UAH) 4,163 million ($180 million) by extending their maturities by one year. The long-term rating on Kyiv is equivalent to S&P's 'ccc+' assessment of the city's stand-alone credit profile. S&P views Ukraine's institutional framework for local governments as very volatile and underfunded. This continues to limit the city's budgetary flexibility, which S&P assess as very weak. S&P's view of Kyiv's very weak financial management and weak liquidity, as well as high contingent liabilities, also constrains the ratings. S&P views the city's economy as weak although diversified. The ratings are supported by S&P's assessment of the city's average budgetary performance and moderate debt burden. "We have revised our assessment of the city's budgetary performance to average from weak, on the back of a strong recovery of tax and nontax revenues. In our 2015-2017 forecast period, we expect the operating balance to average almost 10% of operating revenues compared with 6% on average in 2012-2014. This is due to high revenue growth, fueled by high inflation and allocation of some additional taxes to the city budget from the sovereign level (corporate-profit tax, excise, and property tax). We expect central government grants to continue supporting the city. At the same time, spending growth will likely lag behind that of revenues. Given a relatively high operating balance and very modest capital spending, we expect the city to post a surplus after capital accounts of about 3% of total spending on average in 2015-2017, compared with a deficit of 2.5% on average in 2012-2014. We note, however, that budgetary performance will remain volatile and might weaken in the medium term, since spending will likely catch up with revenues and the central government is currently discussing a tax reform proposal that might change the bases and rates of taxes that contribute to Kyiv's budget," S&P said. S&P has also revised its assessment of Kyiv's debt burden to moderate from high. Under S&P's base-case scenario, Kyiv's tax- supported debt will decline gradually and make up 38% of operating revenues by the end of 2017. Volatility risk has materialized already, with a depreciation of the hryvnia by 3x, and S&P now expects the debt burden to stabilize in the medium term. Although the issuer of the restructured Eurobonds will be the Ukrainian Ministry of Finance, S&P understands that the city and the central government have agreed that this debt will be mirrored by an intergovernmental debt liability of the city to the central government. S&P includes this liability in the city's debt burden. S&P's calculation of tax-supported debt also incorporates debt at Kyiv's government-related entities (GREs), including guaranteed loans from multilateral lending institutions. The city's fiscal flexibility remains severely constrained because of very limited discretion over revenue sources and spending policies, and S&P's view of Ukraine's very volatile and underfunded public finance system. The city's substantial investment requirements continue to restrict its spending flexibility. S&P assess the city's financial management as very weak. This assessment implies only emerging long-term planning, as well as weak liquidity management, and weak oversight over the city's GREs. Kyiv's economy is weak in an international context. The city's economy is diversified and is Ukraine's wealthiest, although wealth levels are low in a global context (national GDP per capita was $2,800 in 2014). The city's personal income levels are likely to remain twice as high as the national average, by S&P's estimates. S&P also thinks the unemployment rate will continue to be the lowest in Ukraine. S&P assess Kyiv's contingent liabilities as high, due to accumulated payables at the level of the city's GREs. LIQUIDITY S&P regards Kyiv's liquidity position as weak. Although the city has accumulated some cash reserves in 2015, the cash position will likely remain weak and volatile. S&P believes that Kyiv's access to external liquidity will remain uncertain and the city will be continuously exposed to material refinancing risks. S&P estimates that Kyiv's average cash position over the past 12 months stood at UAH2 billion, which, together with the surplus after capital accounts, will cover about 56% of the city's debt service coming due over the next 12 months. S&P expects debt service to stay high, at about 15%-17% of operating revenues in 2016-2017. The city faces bullet repayments on domestic bonds in October-December 2016, with debt service expected to hit about 17% of expected operating revenues in 2016. In S&P's current base-case scenario, it assumes these bonds will be refinanced similarly to those refinanced in 2014. S&P regards Kyiv's access to external liquidity as uncertain. The weaknesses of Ukraine's banking sector are reflected in S&P's Banking Industry Country Risk Assessment (BICRA), which classifies Ukraine in group '10'. S&P's BICRA ranks risk relating to banking systems on a scale of '1' to '10', with '1' being the lowest risk and '10' being the highest risk. OUTLOOK The stable outlook assumes that, over the next 12 months, Kyiv's average budgetary performance will counterbalance its weak liquidity. The outlook also factors in S&P's base-case expectation that that the city will secure refinancing of its domestic bonds due in October to December 2016. S&P might lower the ratings within the next 12 months if, ahead of a domestic bond maturity, the city faces challenges in implementing its refinancing or repayment plans for domestic bonds. S&P could consider a positive rating action if the city's refinancing risks decreased materially, supported by consistently strong budgetary performance. In accordance with S&P's relevant policies and procedures, the Rating Committee was composed of analysts that are qualified to vote in the committee, with sufficient experience to convey the appropriate level of knowledge and understanding of the methodology applicable. At the onset of the committee, the chair confirmed that the information provided to the Rating Committee by the primary analyst had been distributed in a timely manner and was sufficient for Committee members to make an informed decision. After the primary analyst gave opening remarks and explained the recommendation, the Committee discussed key rating factors and critical issues in accordance with the relevant criteria. Qualitative and quantitative risk factors were considered and discussed, looking at track-record and forecasts. The committee's assessment of the key rating factors is reflected in the Ratings Score Snapshot above. The chair ensured every voting member was given the opportunity to articulate his/her opinion. The chair or designee reviewed the draft report to ensure consistency with the Committee decision. The views and the decision of the rating committee are summarized in the above rationale and outlook. The weighting of all rating factors is described in the methodology used in this rating action. RATINGS LIST Rating To From Kyiv (City of) Issuer credit rating Foreign and Local Currency CCC+/Stable/-- D/--/-- Senior Unsecured Foreign Currency D D Local Currency CCC+ D Kyiv Finance PLC Senior Unsecured Foreign Currency D D Ratings Subsequently Withdrawn Kyiv (City of) Senior Unsecured Foreign Currency NR D Kyiv Finance PLC Senior Unsecured Foreign Currency NR D NR--Not rated =========================== U N I T E D K I N G D O M =========================== B RILEY & SONS: Falls Into Administration, Cuts 131 Jobs -------------------------------------------------------- Oscar Rousseau at meatinfo.co.uk reports that Burnley-based abattoir, B Riley & Sons, has been forced to close down after experiencing 'significant cash flow difficulties' resulting in 131 staff have being made redundant just before Christmas. Administrators from KPMG were appointed on December 16, 2015 for B Riley & Sons and the notice of administration has been filed on the London Gazette, according to meatinfo.co.uk. The report notes that the business ceased trading in early December 2015, and upon appointment of the KPMG administrators, all 131 employees were made redundant just eight days before Christmas. The report relays that Paul Flint, associate partner at KPMG and joint administrator, said: "We are assisting the employees through this difficult time with making claims to the Redundancy Payments Office for their wages and other associated redundancy claims. The report discloses that Mr. Flint added: "The business is one of the largest independent abattoirs in the North of England, holding BRC accreditation focusing primarily on sheep throughput for the Halal wholesale market in the UK and EU, but also having beef capabilities. "The premises consist of an abattoir facility which was extended and fully renovated in October 2014 to enable throughput to increase to 12,000 sheep per week; a farm comprising three freehold dwellings; a butchers shop; and an additional 60 acres of agricultural land. We are now seeking a buyer for the business and its assets, and would urge any interested parties to contact the joint administrators as soon as possible," Mr. Flint added. B Riley & Sons is one of the largest abattoirs in the North of England working within halal beef and lamb verticals, as well as meat processing. CAPARO INDUSTRIES: Cuts 33 Jobs at Caparo Precision --------------------------------------------------- Pricewaterhousecoopers gaves updates on Caparo Industries plc and its subsidiaries -- collectively the "Caparo Industries Group" or "CIP" -- in administration. Since their appointment, PwC's administrators have been working closely with CIP, its customers, suppliers, employees and their representatives including three trade unions, according to Pricewaterhousecoopers. "It is with regret that we now announce 33 redundancies with immediate effect at the Ductile business unit of Caparo Precision Strip Limited, based in Willenhall." The reports relays that the administrators have confirmed that all staff affected will be paid for their work and thank them for the support, service and co-operation that they have provided to CIP, both before and during the administration. Matthew Hammond, PwC partner and lead administrator, said: "After saving a total of 1,111 jobs at Caparo, it is with regret that we have made these decisions today. Despite sustained efforts to find a solution, including approaching key stakeholders in a bid to preserve funding, it was not possible to find a buyer for the business. "Without a buyer or the ability to continue to trade economically, we were forced to take the difficult decision to close the unit with immediate effect. Those staff affected by today's announcements were consulted and kept fully informed throughout the entire process. "We thank those former members of staff for their service to CIP; we will work closely with them, their representatives and agencies to provide support and ensure that their redundancy and other claims are handled efficiently at this difficult time. "We will also work closely with other bodies who naturally will want to assist at this time with regard to future employment opportunities." CLAVIS RMBS 2006-01: Fitch Affirms 'BBsf' Rating on Cl. B2a Notes ----------------------------------------------------------------- Fitch Ratings has upgraded two and affirmed 16 tranches of the Clavis RMBS series. The Clavis transactions are securitizations of UK non-conforming loans, originated by GMAC-RFC Limited. KEY RATING DRIVERS Steady Build-up of Credit Enhancement The robust performance of both transactions has led to pro-rata amortization of the notes. The reserve fund for Clavis 2006 has amortized to its floor level, while the reserve fund of Clavis 2007 is no longer allowed to amortize as a result of a breach of the cumulative repossession trigger (set at 2.25% of the initial portfolio balance). As a result, credit enhancement (CE) across the series has continued to build up steadily. In particular, Fitch believes the build-up of CE on the M1 tranches of Clavis 2006 can now sustain higher ratings stresses, resulting in the upgrades. Solid Performance The portfolios in both transactions were formed via positive selection of GMAC-originated loans and are considered to be of near-prime nature. The better-than-average characteristics of the underlying borrowers have contributed towards the robust performance of the series as reflected in the affirmations. As of September 2015 the volume of loans in arrears by more than three months remained between 3.9% (Clavis 2006) and 6.3% (Clavis 2007) of their respective portfolio balances. These levels remain below the UK non-conforming average of 9.6%. If CE continues to build up and performance remains solid the M2 and B notes of Clavis 2006 may be upgraded in the next 12 to 18 months, as reflected in today's Positive Outlooks. Unhedged Interest Rate Risk Unlike Clavis 2006, Clavis 2007 is not hedged against the basis risk between the LIBOR-linked notes and BBR mortgages. In its analysis, Fitch stressed the excess spread to account for this risk and found the CE available to the rated notes sufficient to withstand the stresses. Interest-only Concentration The transactions have material concentration of interest-only loans maturing within a three-year period during the lifetime of the transaction. As per its criteria, Fitch carried out a sensitivity analysis assuming a 50% default probability for these loans. No rating action was deemed necessary as a result of the interest-only loan concentration. Nevertheless, Fitch will keep monitoring this risk as the transactions continue to amortize. Currency Swap Obligations The affirmation of the currency swap ratings are based on Fitch's view that the swap payment obligations rank pro rata and equally with the referenced notes. Consequently, the credit profiles of the currency swap payment obligations are consistent with the long-term rating on the referenced notes. RATING SENSITIVITIES The transactions are backed by floating-interest-rate loans. In the current low interest rate environment, borrowers are benefiting from low borrowing costs. An increase in interest rates could lead to performance deterioration of the underlying assets and consequently downgrades of the notes if defaults and associated losses exceed those of Fitch's stresses. A change to the rating of the corresponding notes will likely lead to an equal change in the rating of the SPV's currency swap obligations. The rating sensitivity will primarily be driven by the rating analysis applicable to the corresponding note. The rating of the SPV's currency swap obligations will be withdrawn if the currency swap agreement is terminated due to non- performance by the swap counterparty or a non-credit related event. 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 pools and the transactions. 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 pools ahead of the transactions' initial closing. The subsequent performance of the transactions 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 -- Loan-by-loan data provided by Bluestone (Bluestone Group acquired Basinghall Finance in December 2014, and subsequently renamed the business as Bluestone Mortgages) for both deals with a cut-off date of Aug. 31, 2015, -- Transaction reporting provided Bluestone for both deals since close and until September 2015 MODELS ResiEMEA. EMEA RMBS Surveillance Model. The rating actions are: Clavis Securities plc Series 2006-01: Class A3a (ISIN XS0255457706): affirmed at 'AAAsf'; Outlook Stable Class A3b (ISIN XS0255438748): affirmed at 'AAAsf'; Outlook Stable Class M1a (ISIN XS0255424441): upgraded to 'AA+sf'; from 'AAsf'; off Rating Watch Positive (RWP); Outlook Stable Class M1b (ISIN XS0255439043): upgraded to 'AA+sf'; from 'AAsf'; off RWP; Outlook Stable Class M2a (ISIN XS0255425414): affirmed at 'Asf'; Off RWP; Outlook Positive Class B1a (ISIN XS0255425927); affirmed at 'BBBsf'; Off RWP; Outlook Positive Class B1b (ISIN XS0255440728); affirmed at 'BBBsf'; Off RWP; Outlook Positive Class B2a (ISIN XS0255426818); affirmed at 'BBsf'; Off RWP; Outlook Stable Clavis Securities plc Series 2007-01: Class A3a (ISIN XS0302268361): affirmed at 'AAAsf'; Outlook Stable Class A3b (ISIN XS0302269096): affirmed at 'AAAsf'; Outlook Stable Class A3b currency swap: affirmed at 'AAAsf'; Outlook Stable Class AZa (ISIN XS0302268445): affirmed at 'AAAsf'; Outlook Stable Class M1a (ISIN XS0302269682): affirmed at 'AAsf'; off RWP; Outlook Stable Class M1b (ISIN XS0302270854): affirmed at 'AAsf'; off RWP; Outlook Stable Class M2a (ISIN XS0302270185): affirmed at 'Asf'; off RWP; Outlook Stable Class M2b (ISIN XS0302271662): affirmed at 'Asf'; off RWP; Outlook Stable Class M2b currency swap: affirmed at 'Asf'; off RWP; Outlook Stable Class B1a (ISIN XS0302270268): affirmed at 'BBBsf'; off RWP; Outlook Stable Class B1b (ISIN XS0302271829): affirmed at 'BBBsf'; off RWP; Outlook Stable Class B1b currency swap: affirmed at 'BBBsf'; off RWP; Outlook Stable Class B2 (ISIN XS0302270342): affirmed at 'BBsf'; off RWP; Outlook Stable COLCHESTER WINTER: Goes Into Liquidation, Closes Down ----------------------------------------------------- itv.com reports that a winter wonderland attraction has been forced to close down due to the unseasonably mild weather. Colchester Winter Wonderland and Ice Rink opened 25 days ago but has been unable to open on six of those days, according to itv.com. The report notes that about 5,000 people are thought to have booked tickets to attend between now and January 3. But attraction bosses Reflective Ice said it had become financially impossible to continue operating, the report relays. It comes as the chances of a white Christmas look slim with the country bracing itself for Storm Eva after a period of unusually mild temperatures, the report discloses. The report notes that the company said it had to close due to "unseasonably high temperatures and strong winds throughout November and December". Staff have begun dismantling the site which included fairground attractions and festive stalls, the report relays. The report notes that the statement said: "After taking legal advice, Reflective Ice Ltd is going into liquidation and has begun the process of appointing administrators. "This decision has been taken with deep regret as it will have a major impact on its staff, partners and customers. "Reflective Ice Ltd sincerely thanks their staff, customers, business partners and supporters. "There has been a huge amount of support for the ice rink in Colchester and on social media. This is a very sad day for Reflective Ice Ltd." GEMINI ECLIPSE 2006-3: S&P Lowers Ratings on 2 Note Classes to CC ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered to 'CC (sf)' from 'CCC- (sf)' its credit ratings on GEMINI (ECLIPSE 2006-3) PLC's class A and B notes. At the same time, S&P has affirmed its 'D (sf)' ratings on the class C, D, and E notes. On Dec. 10, 2015, the special servicer completed the sale of 23 of the remaining 24 properties securing GEMINI (ECLIPSE 2006-3), with total net noteholder recoveries expected to be approximately GBP170.6 million. Additionally, the special servicer expects approximately GBP10.9 million of recoveries for the remaining property in January 2016. S&P's ratings in GEMINI (ECLIPSE 2006-3) address the timely payment of interest, payable quarterly in arrears, and payment of principal not later than the legal final maturity date in July 2019. With total expected recoveries of approximately GBP180 million, this will be only enough to partially repay the class A notes. S&P has therefore lowered to 'CC (sf)' from 'CCC- (sf)' its ratings on the class A and B notes. S&P rates an issue 'CC' when it expects default to be a virtual certainty. At the same time, S&P has affirmed its 'D (sf)' ratings on the class C, D, and E notes because they have experienced interest shortfalls and S&P expects them to experience principal losses. GEMINI (ECLIPSE 2006-3) is a single-borrower secured-loan transaction originally backed by 36 properties in England, Scotland, and Wales. The transaction closed in 2006. RATINGS LIST GEMINI (ECLIPSE 2006-3) PLC GBP918.862 mil commercial mortgage-backed floating-rate notes Rating Class Identifier To From A XS0273576107 CC (sf) CCC- (sf) B XS0273576289 CC (sf) CCC- (sf) C XS0273576446 D (sf) D (sf) D XS0273576792 D (sf) D (sf) E XS0273576958 D (sf) D (sf) HERCULES ECLIPSE 2006-4: S&P Cuts Ratings on 2 Notes to CCC ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its credit ratings on HERCULES (ECLIPSE 2006-4) PLC's class C, D, and E notes. On the October 2015 interest payment date (IPD), the class D and E notes experienced interest shortfalls. The transaction continues to experience cash flow disruptions due to a combination of spread compression between the loan and the notes, as well as high prior ranking transaction costs which, together, have resulted in insufficient funds available to meet all interest payments due on the notes. As indicated in the cash manager reports over recent IPDs, the transaction has become more exposed to periodic spikes in prior ranking transaction costs. S&P's analysis indicates that the transaction is particularly vulnerable to periodic spikes in servicing-related fees payable as and when a loan is being worked out. With the risk of higher work-out fees, together with further principal repayments, and the subsequent spread compression between the loan and the notes, S&P's analysis indicates that it may become harder for the transaction to repay existing shortfalls. Furthermore, S&P also believes that the class C notes have become more vulnerable to cash flow disruptions. S&P's ratings on HERCULES (ECLIPSE 2006-4)'s notes address the timely payment of interest and repayment of principal not later than the legal maturity date in October 2018. Although S&P considers the available credit enhancement for the class C notes to be sufficient to mitigate the risk of losses from the underlying loans in higher rating stress scenarios, S&P believes that this class of notes has become vulnerable to interest shortfalls as a result of periodic increases in senior costs, in particular, servicing-related fees. S&P has therefore lowered to 'B-(sf)' from 'B+ (sf)' its rating on the class C notes. The class D notes have experienced interest shortfalls. The shortfall is likely to continue in future quarters, in S&P's opinion. S&P has therefore lowered its rating to 'CCC (sf)' from 'B- (sf)' in line with its criteria for assigning 'CCC' category ratings to reflect the higher risk of payment default. S&P believes this class of notes faces at least a one-in-two likelihood of default. The class E notes also experienced cash flow disruptions on the October 2015 IPD and will likely experience principal losses, in S&P's view. S&P has therefore lowered to 'CCC (sf)' from 'B- (sf)' its rating on the class E notes. S&P believes this class of notes faces at least a one-in-two likelihood of default. HERCULES (ECLIPSE 2006-4) is a true sale transaction that closed in December 2006 and was backed by a pool of seven loans secured against U.K. commercial properties. Four loans have repaid since closing and the outstanding note balance has reduced to GBP302.9 million, from GBP814.9 million at closing. RATINGS LIST HERCULES (ECLIPSE 2006-4) PLC GBP814.95 mil commercial mortgage-backed floating-rate notes Rating Class Identifier To From C XS0276412375 B- (sf) B+ (sf) D XS0276413183 CCC (sf) B- (sf) E XS0276413340 CCC (sf) B- (sf) LITT CORPORATION: Falls Into Liquidation ---------------------------------------- media247.co.uk reports that Litt Corporation, which was originally set up in 1989 as the parent company of the UK's first commercial Asian radio station has gone into liquidation. On November 27, 2015, the digital radio service provider, Switch Digital's petition to wind-up Litt Corporation was approved by a Manchester court, according to media247.co.uk. On December 11, 2015, the "wind-up" message was relayed to Companies House, the report relays. According to DueDil, Litt Corporation Ltd was registered on 14th March 1989 with its registered office in Middlesex, the report notes. The business has a status listed as "Active" and it currently has two directors, the report relays. The company's first director was Dr Avtar Lit. They have one subsidiary, Sunrise Radio Limited. A "wind-up" petition can be made against a company, who is unable to pay debts of more than GBP750, the report notes. Litt Corporation has no direct link to Sunrise Radio (Sunrise Radio London Limited) on 963/972AM in Greater London. SANDS HERITAGE: Creditors Approve Company Voluntary Arrangement --------------------------------------------------------------- BBC News reports that creditors have given Sands Heritage, the operator of Margate's Dreamland theme park, five years to repay nearly GBP3 million of debts. The company announced earlier this month it was seeking a company voluntary arrangement (CVA) to stop it going into administration, BBC recounts. The seaside attraction reopened in June but its Scenic Railway, thought to be Britain's oldest rollercoaster, did not open until Oct. 15, BBC discloses. Creditors voted to accept the arrangement in Canterbury on Dec. 23, BBC relates. According to BBC, the deal will allow the theme park, which features vintage rides, to remain open while Sands Heritage pays back a proportion of the money it owes over the next five years. VITA CAPITAL VI: S&P Assigns BB Rating on to Class A Notes ---------------------------------------------------------- Standard & Poor's Ratings Services said that it has assigned its 'BB (sf)' issue credit rating to the U.S. dollar-denominated class A notes to be issued by Vita Capital VI Ltd. These notes are sponsored by Swiss Reinsurance Co. Ltd. (Swiss Re), which is the risk transfer counterparty. The noteholders are exposed to extreme mortality events in Australia, Canada, and the U.K. They are at risk from an increase in age- and gender-weighted mortality rates that exceeds a specified percentage of a reference mortality index value specific to a given country, and over five calendar years. These mortality indices are constructed from information obtained from The Australian Bureau of Statistics, Statistics Canada, and the U.K. Office for National Statistics, or their successors. The notes are collateralized by notes issued by the International Bank for Reconstruction and Development (IBRD). Should the IBRD note be downgraded below 'AA-', the issuer will maintain cash or money market funds as collateral. S&P expects the money market funds to be rated 'AAAm'. S&P has based its issue credit rating on the lower of its 'bb' implied risk factor on the mortality risk; S&P's long-term 'AAA' issue credit rating on the International Bank for Reconstruction and Development (IBRD) notes; S&P's assessment of the creditworthiness of the account bank, the London branch of The Bank of New York Mellon, whose parent is rated AA-/Stable/A-1+; and the rating on Swiss Re (AA-/Stable/A-1+) as the risk premium payer. S&P's rating on the series 2015-1 class A notes addresses timely payment of interest and repayment of the original principal amount by the final scheduled maturity date of Jan. 8, 2021. The maturity may be extended up to Jan. 8, 2024. In this case, the interest payable on the notes will step down. WESTWOOD YARNS: In Administration, 135 Jobs at Risk --------------------------------------------------- Neil Atkinson at examiner.co.uk reports that Westwood Yarns is to go into administration -- and there are fears for many of the 135 jobs. All of the staff have been called to a special meeting of the carpet yarns firm this morning, amid fears for its future, according to examiner.co.uk. It follows a letter sent to the workers saying that administrators are about to be called in, the report notes. And director Richard Collinge said it was "devastating" news. The company is based at Washpit Mills in Holmfirth and has a history going back well over a century. Mr. Collinge and Mr. Timothy Kay took over the company in October and said they had tried repeatedly to avoid the latest move, the report discloses. The report relays that Mr. Collinge said: "We saw the workers yesterday and had to make the very hard decision to call in the administrators. "It is devastating especially coming at this time of year. But we have been told our trade credit insurance has been withdrawn and without that our suppliers are not prepared to do business. "We have been looking at various options including refinancing the company but cannot find a solution. "We are hoping that the administrators can come in with a plan to enable the company to carry on. We have orders and we have work in but the suppliers need the reassurance of the insurance to cover their debts. "I am so sorry to have to break the news to our staff, many of whom have been here a long time. I cannot comment on what may happen with the jobs until we have met with the administrators." The report notes that the letter sent out to all the staff warns that redundancies are possible. It said: "Following the withdrawal of trade credit insurance, we have been left with no alternative but to put Westwood Yarns into administration. Administrators will be called to deal with the issues as they see fit. "The fate of the company has not been determined but it is possible that redundancies may occur. "Employee representatives will be appointed to deal with the consultation process. We make this announcement with great regret and with empathy to our workforce given the time of year." * UK: Atradius Sees New Round of Retail Insolvencies in New Year ---------------------------------------------------------------- Retailers are holding out hopes for a last minute Christmas shopping frenzy to keep them afloat throughout 2016, say retail experts at trade credit insurer Atradius. With more positive economic news on the horizon, improving employment prospects, low inflation and a significant drop in the cost of fuel, consumer confidence has been boosted to arguably the highest level in a decade. Against this backdrop, Owen Bassett, senior risk underwriter at Atradius, observes that conditions for a strong retail performance this Christmas should be close to perfect -- however, he fears that instead there may just be a perfect storm -- withshoppers still hungry for bargains, discounting remains high leaving retailers facing another difficult festive season. The New Year could start bleakly for some and a fresh wave of insolvencies could be around the corner. Mr. Bassett commented: "With consumer confidence riding high, retailers might have hoped for improved customer spending in the run up to Christmas. However, so far, retail hasn't performed as strongly as anticipated and it seems that the extra pound in people's pocket has been spent on leisure activities such as holidays, entertainment events and eating out. "Retailers traditionally take upwards of 40% of their annual profits between October and December so it is a crucial time of year for them. Those who went into the fourth quarter needing -- rather than wanting -- a strong performance could be looking at a troubled future. Experience tells us that when retailers need an exceptional seasonal sales period and then hit financial difficulty, we often see failures in the first quarter. It is not unusual in this sector to be loss-making during Q1 and with the first payment of quarterly rent due in January it can be difficult to survive after a poor Q4." In a bid to pull in customers, we are now seeing heavy discounting in stores but Atradius also warns that for many Black Friday may prove to have a negative revenue impact in the post-Christmas analysis after the hype failed to materialize on the high street, causing real problems for retailers. Mr. Bassett continued: "Last year, retailers felt that they gave away too much with such heavy discounting leading to finer margins and some retailers having to release profit warnings. This year, the market was more measured having learned their lesson the hard way last year. Some didn't compete at all and others reduced their offering. However, for in-store retailers the lack of a rush for bargains has left many with significant stock to shift and, if sales cannot be achieved at normal price before Christmas, retailers will be forced into discounts after Christmas. Last year the revenue impact from Black Friday was felt immediately, this time the effect on margin erosion is slower to show -- but will still be felt. "Looking at the sector as a whole, while electrical, furniture and DIY retailers have performed well this year, clothing retailers -- particularly female fashion -- have struggled and that pattern continues. Certain sub sectors are benefiting from pent-up demand. After a long spell of 'tight belts', consumers are no longer delaying spend on their homes and on items that are overdue for replacement such as electrical appliances which only have a limited lifespan." "However, the story for high street fashion is not so positive and despite continued demand, the outlook is mixed. The female fashion sector is now saturated with many similar businesses competing for the same pound. Those that cannot compete in terms of operational efficiency or that don't continue to appeal to consumers' tastes in fashion will find themselves in difficulty." Trade credit insurance supports businesses in all sectors to manage risk and to trade safely. ********* 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. 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