/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/160203.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 Wednesday, February 3, 2016, Vol. 17, No. 023 Headlines D E N M A R K FONA: At Risk of Bankruptcy Due to Stiff Competition F R A N C E WFS GLOBAL: Moody's Assigns (P)Caa1 Rating to EUR150MMM Sr. Notes H U N G A R Y * HUNGARY: Number of Mandatory Liquidations Down 44% in 2015 I R E L A N D KENMARE RESOURCES: Defaults on Debts, Bank Talks Ongoing I T A L Y MANUTENCOOP FACILITY: Moody's Lowers CFR to B3, Outlook Stable ONORATO ARMATORI: Moody's Assigns (P)Ba3 CFR, Outlook Stable ONORATO ARMATORI: S&P Assigns Prelim. B+ CCR, Outlook Developing K A Z A K H S T A N EURASIAN RESOURCES: S&P Puts 'B-/B' CCR on CreditWatch Negative N E T H E R L A N D S HOLLAND HOMES: Fitch Affirms 'BBsf' Rating on Class B Notes R U S S I A CB INTERCOMMERZ: S&P Lowers Counterparty Credit Ratings to 'R/R' HEPHAESTUS INSURANCE: Placed Under Provisional Administration KOMMERCHESKY MEZHREGIONALNY: Under Provisional Administration RUSSIA: Mulls Privatization of Seven State Companies ZSG INSURANCE: Placed Under Provisional Administration U N I T E D K I N G D O M GULF KEYSTONE: Prepares for Debt Restructuring After Cash Falls LEHMAN BROTHERS UK: February 15 Claims Filing Deadline Set TURBO FINANCE 6: Moody's Assigns (P)Ba2 Rating to Class C Notes * UK: Number of Administrations in Retail Sector Down 19% in 2015 U Z B E K I S T A N AGROBANK: Moody's Raises Long-Term Currency Deposit Ratings to B3 X X X X X X X X * S&P Takes Various Rating Actions on 17 European CDO Tranches ********* ============= D E N M A R K ============= FONA: At Risk of Bankruptcy Due to Stiff Competition ---------------------------------------------------- Online Post, citing Berlingske, reports that Fona has announced it is facing potential bankruptcy. According to Online Post, a long price war with competitors has taken its toll, and Fona finds itself in a state of insolvency and unable to pay its creditors. In an official statement, the company has ensured customers won't be affected and its stores, including the webshop, will remain open, Online Post relates. Fona, Online Post says, is currently looking for a new owner or partner prepared to invest much-needed capital into the chain, which operates 56 stores across Denmark. Over the last two financial years, Fona has chalked up losses that run into tens of millions of kroner, Online Post discloses. Fona is a Danish electronics chain. =========== F R A N C E =========== WFS GLOBAL: Moody's Assigns (P)Caa1 Rating to EUR150MMM Sr. Notes ----------------------------------------------------------------- Moody's Investors Service has assigned a (P)Caa1 rating to proposed EUR150 million senior notes due 2022 to be issued by WFS Global Holding S.A.S., the top entity of the WFS borrowing group. Concurrently, Moody's affirmed the existing WFS's corporate family rating (CFR) of B2, Probability of Default (PDR) of B2-PD and a B2 rating of WFS's EUR225 million senior secured notes due 2022. The outlook on all ratings is stable. WFS is in the process of raising EUR240 million new debt split between EUR150 million new senior notes and EUR90 mil. tap issuance to the existing senior secured notes. The debt proceeds, together with equity contribution of USD90 million, will be used to support the acquisition of Consolidated Aviation Services, a leading US cargo handler, announced on Jan. 11, 2016. Moody's issues provisional ratings in advance of the final sale of securities and these ratings reflect Moody's preliminary credit opinion regarding the transaction only. Upon closing of the transaction and a conclusive review of the final documentation, Moody's will endeavor to assign definitive ratings to the notes. A definitive rating may differ from a provisional rating. RATINGS RATIONALE WFS's B2 CFR reflects: (i) the exposure of WFS's core cargo business to economic and international trade cyclicality; (ii) WFS's airline customer base leading to price pressure and consolidation risk; and (iii) geographic concentration in France, although reduced to c. 30% of total revenue proforma for the proposed CAS contribution. The B2 CFR also reflects: (i) strong position in cargo business as the number one independent global player complemented by its trucking network across Europe; (ii) growth and synergies opportunities offered by the proposed CAS acquisition; and (iii) relatively stable client base offsetting some customer concentration. The proposed acquisition of CAS will strengthen WFS's business profile by consolidating its leading independent cargo handler status, both worldwide and in the US. It will also diversify its revenue and income stream away from Europe into the US market. The business combination is also expected to generate substantial SG&A and operational costs synergies arising from duplicative overhead and warehouse capacity. WFS has demonstrated strong performance during financial year ending December 2015 (FY15) due to growth in new contract wins and within its existing business. YTD September 2015 sales increased by 19% year-on-year, out of which 5% was organic growth. WFS Ground Italy, launched in June 2015 through a partnership agreement between WFS Group and ATA Italia, has contributed EUR12 million to revenue. Moody's expects the growth to continue, supported by ground handling business won in five airports in Spain in June 2015, full year contribution from Ortibal and synergies from an acquisition of a 51% stake of Fraport, consolidated from Nov. 1, 2015. Moody's adjusted gross leverage as of Sept. 30, 2015, is 4.1x, based on WFS standalone basis, full-year contribution of Orbital (100% consolidation). EBITDA excludes some one-off costs which are considered non-recurring. Proforma for CAS acquisition, Moody's adjusted leverage is expected to stay at around 4.1x in 2015E (before synergies). Thereafter Moody's expects to see a gradual de-leveraging through EBITDA growth, in part due to further synergies roll-out. Cash flow generation is expected to weaken in 2016 due to substantial restructuring costs, both on WFS standalone basis and related to the CAS integration. The rating incorporates an expectation that the company would maintain an adequate liquidity cushion, including access to EUR85 million of revolving credit facility (RCF), expected to be increased from current EUR50 million as part of CAS transaction. Around EUR30 million of RCF is expected to be utilized for letters of credit. The springing net leverage financial covenant under the revolving credit facility is expected to remain in compliance. The existing senior secured notes share security (comprising of share pledges in subsidiaries; intragroup receivables due to subsidiaries; and cash) and guarantees with the RCF however rank behind the RCF due to contractual subordination via the intercreditor agreement in an enforcement. The proposed senior notes are guaranteed by the same companies as the senior secured notes but on senior subordinated basis. The (P)Caa1 rating on the senior notes, two notches below CFR and the rating of senior secured notes, reflects their subordinated status. The ratings also incorporate Moody's understanding that the shareholder funding into the restricted group, including that for CAS acquisition, is wholly via common equity. RATIONALE FOR THE STABLE OUTLOOK The stable outlook reflects Moody's expectation of a gradual deleveraging of the business based on maintaining or growing its market share in a reasonably stable market environment and successful integration of CAS. The outlook does not take into account any further material debt funded acquisition nor any potential shareholder friendly actions, including a repayment of the vendor loan outside of the restricted group. WHAT COULD CHANGE THE RATING UP/DOWN Moody's could upgrade the ratings if WFS's credit metrics were to improve as a result of a stronger-than-expected operational performance, leading to (i) debt/EBITDA ratio sustainably below 3.5x, (ii) EBITA / interest above 1.5x and (iii) continuing positive free cash flow generation. Moody's could downgrade the ratings if: (i) Moody's adjusted debt/EBITDA ratio (on a proforma CAS basis) increases above 4.5x; (ii) EBITA/interest ratio falls materially below 1.5x or (iii) liquidity profile or covenant headroom weakens. The principal methodology used in these ratings was Business and Consumer Service Industry published in December 2014. WFS is a global aviation services company principally focused on cargo handling and ground handling. As of Sept. 30, 2015, WFS operated at 136 airports in 20 countries (principally in Europe) and served more than 198 airlines and 10 airport customers worldwide. The company generated EUR597 million net sales (under IFRS) in FY 2014. The company was acquired by Platinum Equity from LBO France on Oct. 1, 2015. ============= H U N G A R Y ============= * HUNGARY: Number of Mandatory Liquidations Down 44% in 2015 ------------------------------------------------------------ MTI-Econews, citing Bisnode, which compiles information on companies, reports that the number of mandatory liquidations launched in Hungary fell 44% to around 10,000 last year. According to MTI-Econews, Bisnode said the number was even lower than 2008, in the period before the global economic and financial crisis, and it was less than half the 23,000 mandatory liquidations launched in 2012. The number of companies struck from the company registry fell 27% to just over 31,000 last year, MTI-Econews discloses. The number of voluntary liquidations reached almost 8,000 last year, slightly under the number in 2014, MTI-Econews notes. ============= I R E L A N D ============= KENMARE RESOURCES: Defaults on Debts, Bank Talks Ongoing -------------------------------------------------------- Charlie Taylor at The Irish Times reports that Kenmare Resources has defaulted on its debts after failing to reach agreement with lenders on a new deleveraging plan by an agreed deadline of Jan. 31. The explorer however said negotiations with banks on a deal are ongoing, The Irish Times relates. At the end of December, bank loans amounted to US$341.9 million and cash and cash equivalents were US$14.3 million, The Irish Times discloses. Lenders agreed to defer payment of US$2.3 million in fees last April, The Irish Times relays. According to The Irish Times, in a statement issued on Feb. 1, Kenmare said it continues to monitor and manage its liquidity positions and currently retains the support of its lenders. "Although there can be no certainty that these matters will be agreed or that the deleveraging plan can be implemented, the Board of Kenmare looks forward to progressing this plan and the related capital raising, subject to the support and co-operation of lenders and key shareholders, and with the indicated support of SGRF," The Irish Times quotes the company as saying. "Power interruptions and instability have been the key bottleneck to production at the Moma Mine in recent years and acutely felt in the first quarter of 2015, when flooding resulting in a prolonged outage. However, the investment by EdM to enhance the transmission infrastructure has resulted in a step change in the quality and consistency of our power supply since coming on line in late December," managing director Michael Carvill, as cited by The Irish Times, said. "Prices of ilmenite, our major product, have remained under pressure in the fourth quarter of 2015. However, the recent closures of titanomagnetite mines in Russia and China and the reduction of feedstock inventories at Chinese ports are encouraging." Kenmare Resources is an exploration company based in Dublin. ========= I T A L Y ========= MANUTENCOOP FACILITY: Moody's Lowers CFR to B3, Outlook Stable -------------------------------------------------------------- Moody's Investors Service has downgraded Manutencoop Facility Management S.p.A.'s corporate family rating to B3 from B2 and probability of default rating (PDR) to B3-PD from B2-PD. Concurrently, the rating agency has downgraded to B3 from B2 the instrument rating on the senior secured notes issued by Manutencoop Facility Management S.p.A. The outlook on the ratings is stable. RATINGS RATIONALE "The downgrade has been triggered by the announcement of the Italian Competition Authority (ICA) to levy a EUR48.5 million fine against Manutencoop Facility Management S.p.A. and the company's potential resulting tight liquidity profile," says Pieter Rommens, Moody's lead analyst for Manutencoop. Manutencoop's B3 CFR reflects the company's (1) limited access to committed liquidity facilities; (2) sole exposure to the Italian economy; (3) strong reliance on the Italian public sector and Italian public authorities' payment discipline; (4) potential negative reputational impact from the ICA verdict; (5) additional potential credit negative effects from the Brindisi and Milan Expo 2015 investigations; and (6) expected Moody's-adjusted gross leverage increasing towards 5.0x by the end of FY2016 driven by debt funded liquidity requirements. However, the rating also reflects the company's (1) leading position in the fragmented Italian facilities management sector; (2) relative size compared to other local players, manifesting itself in a dense regional network and the benefits of economies of scale; (3) sizeable order book with approximately 70% of expected FY2016 revenues already contracted and only one of the top ten contracts up for renewal before 2017; (4) improved net working operational capital position as a result of the Italian government paying overdue receivables of EUR 140 million in 2013 and 2014. On Jan. 20, 2016, the ICA has announced it has found 4 companies guilty of the infringement of competition rules in the tender arranged by Consip for the cleaning services of school buildings. Manutencoop announced it will appeal (of first degree at Regional Administrative Tribunal) (1) the merits of the decision, and (2) request the suspension of the obligation to pay the fine. The company expects the appeal process on the merits (1) to take 12-18 months (including all possible levels of appeal), while the fee suspension appeal (2) could take up to 6 months. In addition, the company informed investors of a performance bond contract of EUR24.5 million between Manutencoop and Consip. The performance bond can be triggered by the ICA decision (at the discretion of Consip) and therefore could become payable. In practice, Manutencoop management reasonably expects Consip to await the final outcome of the appeal process before claiming eventually under the bond. Until further notice, Manutencoop continues to service the Consip scuole contract. The contract was won in late 2013, worth EUR174 million over a four year period between 2014-2017. Although the timing and the requirement of the payment of fine and performance bond is unknown today and the company has recently shown improvements in working capital, Moody's considers the current liquidity position as very tight. This is the result of (1) the potential EUR48.5 million ICA fine and EUR24.5 million performance bond payments due if Manutencoop's appeals are overruled and (2) no additional liquidity headroom as the EUR10 million committed bank facility is fully drawn and the company's EUR 30 million RCF was voluntarily cancelled in July 2014. As of September 2015, the company reports a net cash position of EUR 32 million, based on EUR 55 million of cash on balance sheet balanced by approximately EUR23 million drawings under EUR 52 million uncommitted short term bank facilities (invoice advancing and overdraft facilities) and its fully drawn EUR10 million committed bank debt facility. In addition, the company has EUR 50 million uncommitted factoring facility (undrawn). Rating Outlook The stable outlook reflects Moody's view that Manutencoop will manage its liquidity position through drawings under its uncommitted short term debt facilities and factoring lines. In addition, we expect the company to counter the accelerating pressure on revenue and margin decline by implementing its cost reduction programme, while defending its leading position in the Italian market and generate modest (albeit still positive) free cash flow. What Could Change the Rating -- UP Positive pressure on the ratings could materialise if Manutencoop sustainably improves its liquidity position through signing additional committed liquidity facilities and operational cash flow. This includes a positive final outcome of the ICA appeal. Quantitatively, positive pressure could materialise if the company (1) maintains its current operating performance in relation to EBITDA margins; (2) generates sustained positive free cash flow; and (3) maintains leverage profile such that its Moody's-adjusted debt/EBITDA ratio stays below 5.0x. What Could Change the Rating -- DOWN Conversely, negative pressure could be exerted on the ratings if Manutencoop's liquidity profile and credit metrics deteriorate as a result of (1) weakening operational performance or loss of material contracts; (2) additional penalty payments or significant legal cost; or (3) an aggressive change in its financial policy. Quantitatively, we would also consider downgrading Manutencoop's ratings if its adjusted debt / EBITDA sustainably increases above 6x; or if the company reports negative free cash flow on a sustained basis. Furthermore, any negative consequences resulting from the investigations ranging from management distraction to reputation risk or even financial damage would create negative pressure on the company's rating position. The principal methodology used in these ratings was Business and Consumer Service Industry published in December 2014. ONORATO ARMATORI: Moody's Assigns (P)Ba3 CFR, Outlook Stable ------------------------------------------------------------ Moody's Investors Service has assigned a first-time provisional (P)Ba3 corporate family rating to Italian maritime transportation services company Onorato Armatori S.p.A., a holding company owning 100% of Moby S.p.A. and Tirrenia-CIN. Concurrently, Moody's has assigned a provisional (P)Ba2 rating with a loss given default assessment of LGD3 to the issuer's proposed EUR300 million worth of senior secured notes due 2023. The outlook on the ratings is stable. This is the first time that Moody's has assigned ratings to Onorato Armatori S.p.A. "The (P)Ba3 CFR reflects the issuer's well established market positioning in the Mediterranean ferry and cargo markets, coupled with its good revenue visibility and positive free cash flow generation," says Guillaume Leglise, Moody's lead analyst for Onorato Armatori. "Nevertheless, the rating also factors in the company's high reliance on the Italian economy as well as its inherent business seasonality and exposure to fuel price volatility, the latter risk being mitigated by the company's hedging policy." The proceeds of the refinancing transaction will be used to (1) refinance Moby's and Tirrenia-CIN's existing debts, (2) refinance the issuer's shareholder existing debt in relation to the recent acquisition of the remaining 60% of Tirrenia-CIN and the acquisition of the remaining 32% of Moby that it did not already own, and (3) pay fees and expenses incurred in connection with the refinancing transaction. The ratings have been assigned on the basis of Moody's expectations that the transaction will close as expected. Moody's issues provisional ratings in advance of the final sale of securities and these ratings reflect Moody's preliminary credit opinion regarding the refinancing transaction only. Upon a conclusive review of the final documentation, Moody's will endeavor to assign a definitive CFR and a definitive rating to the senior secured notes. Definitive ratings may differ from provisional ratings. RATINGS RATIONALE -- ASSIGNMENT OF (P)Ba3 CFR The (P)Ba3 CFR assigned to Onorato Armatori reflects the company's leading market position in the Italian maritime transportation segment. With the integration of Tirrenia-CIN, the issuer holds combined markets shares of around 82% and 86%, respectively, by number of passengers and linear meters transported in the Sardinian maritime transportation market as of September 30, 2015. The issuer benefits from one of the largest ferry fleet in the Mediterranean sea, with 63 vessels, of which 54 are owned. Moody's believes that the issuer's sizeable fleet, which would be costly and take significant time to replicate, creates some barriers to entry. The issuer rating is also supported by good revenue visibility underpinned by the company's long-term public subvention schemes. The issuer benefits from two subvention schemes contracted with the Italian government to guarantee all-year service on certain routes, which together represent around 15% of the issuer's pro forma revenues in the last 12 months to Sept. 30, 2015. In addition, the issuer's freight activities, which represents around 30% of its pro forma revenues, are deemed relatively stable given the limited alternatives to transport vehicles and freight on and off Italian islands. Nevertheless, the issuer exhibits a narrow business focus, with a high concentration on the Italian market, in particular Sardinia where the group derives most of its revenues (71% of pro forma revenues in the last 12 months to Sept. 30, 2015). While Moody's acknowledges that Sardinia, Sicilia and Corsica remain very popular tourist destinations during summer holiday periods, the issuer is highly reliant on Italian domestic demand for passenger and cargo growth, its two main businesses. Albeit showing some signs of recovery, the Italian economy is still challenged by weak economic prospects. That being said the issuer has improved its profitability in recent years on the back of increased revenues owing to a mild recovery in passenger and freight volumes, and costs rationalization. More importantly, Moody's notes that the refinancing transaction is occurring at a time when the company has a very strong trading performance, with reported EBITDA up 38% and 41% in first nine months of 2015 respectively for Moby and Tirrenia-CIN. This mostly reflects the significant decline in bunker prices in the last 12 months, with bunker representing the largest cost item for the issuer. While the decline in fuel price is currently beneficial to the group's profitability, Moody's cautions that fluctuations in fuel price can result in material volatility for the group's profitability in the future. This risk is however partly mitigated for the next 12 to 18 months by the company's hedging agreements in place. Moody's believes that the completion of the integration of Tirrenia-CIN entails some execution risks. While the combination of Moby and Tirrenia-CIN's respective businesses offer some potential revenue synergies and cost rationalization opportunities, the integration will involve large operations and will therefore demand a considerable amount of management time and attention to secure the efficiency of the group. In addition, Moody's notes that the issuer currently faces intense regulatory scrutiny. While the acquisition of the remaining 60% of Tirrenia- CIN it did not already own was recently approved by Italian Antitrust authorities, the European Commission is currently investigating the existing and historical public subvention payments received by Tirrenia-CIN, with a final decision expected in mid-2016. The (P)Ba3 CFR also reflects the issuer's moderate leverage. Pro forma of the proposed refinancing transaction, Moody's estimates that the issuer's leverage (i.e. gross debt/EBITDA, including Moody's adjustments) will be around 4.2x. The issuer presents a good deleveraging profile owing to the planned mandatory debt repayments, notably the EUR180 million of deferred payments due by the company in connection with the acquisition of Tirrenia's assets in July 2012. The issuer's high debt service over the next three years is mitigated by its solid free cash flow generation prospects. Onorato Armatori presents a conservative liquidity profile, with an opening cash balance expected at c. EUR90 million pro forma of the refinancing transaction as at end-December 2015. The company's core passenger ferry activities involve some seasonality in cash flows given the nature of demand, which peaks during the summer holiday season. To mitigate this risk, the issuer can rely on a covenanted EUR60 million revolving credit facility (RCF, with a maturity of five years). This facility is expected to remain largely undrawn or may be used to cover some working capital requirements during the off-peak season, notably dry-docking costs. Moody's expects that the issuer will retain an adequate liquidity profile thanks to positive free cash flow generation anticipated in the next 12 to 18 months, as the company has no new ships on order and no major replacement of assets currently planned. STRUCTURAL CONSIDERATIONS The (P)Ba2 rating (LGD3), which is one notch above the CFR, assigned to the company's proposed EUR300 million senior secured notes, reflects the significant amount of lower priority obligations in the capital structure. The proposed notes will rank pari passu with the issuer's EUR200 million new secured term loan due 2021 and the EUR60 million RCF due 2021. The notes will be secured on a first-priority basis by most of the group's assets (including mortgages over Moby and Tirrenia-CIN's vessels) and will benefit from a guarantor package including upstream guarantees from Moby and Tirrenia-CIN, representing around 91% of the group's EBITDA. The EUR180 million deferred payments due by Tirrenia-CIN are unsecured obligations and will be subordinated to the issuer's notes and credit facilities instruments with respect to the collateral enforcement proceeds. Moody's cautions that upstream guarantees from Moby and Tirrenia- CIN are limited by the amount of available reserves under Italian law. However Moody's expects that (i) the planned merger between Moby and Onorato Armatori following the transaction and (ii) the accumulation of profits at Tirrenia-CIN's level will substantially reduce this risk over time. RATIONALE FOR THE STABLE OUTLOOK The stable rating outlook reflects Moody's expectation that Onorato Armatori will maintain its competitive positioning and continue to improve its profitability, notably through the achievement of cost savings expected as part of the integration of Tirrenia-CIN. The stable outlook also reflects Moody's expectations of continued positive free cash flow generation. WHAT COULD CHANGE THE RATING UP/DOWN Moody's could upgrade the ratings if Onorato Armatori maintains a solid positive free cash flow generation. In addition, from a quantitative perspective, an adjusted (gross) debt/EBITDA sustainably below 3.5x could trigger an upgrade. Conversely, Moody's could downgrade the ratings if Onorato Armatori's free cash flow generation becomes negative for a prolonged period of time as a result of a weakened operating performance or higher-than-expected capital expenditures. Quantitatively, an adjusted (gross) debt/EBITDA ratio trending towards 4.5x could trigger a downgrade. A weakening in the company's liquidity profile could also exert downward pressure on the rating. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Global Shipping Industry published in February 2014. Headquartered in Milan, Italy, Onorato Armatori S.p.A. is a maritime transportation services company that focuses primarily on passengers and freight services in the Tyrrhenian Sea, mainly between continental Italy and Sardinia. Through Moby and Tirrenia-CIN, the group operates a fleet of 63 ships. In the last 12 months September 2015, the company recorded, pro forma revenues of EUR614 million and pro forma EBITDA of EUR162 million. ONORATO ARMATORI: S&P Assigns Prelim. B+ CCR, Outlook Developing ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its preliminary 'B+' long-term corporate credit rating to Italy-based ferry operator Onorato Armatori SpA. The outlook is developing. The final ratings will depend on S&P's receipt and satisfactory review of all final transaction documentation. Accordingly, the preliminary ratings should not be construed as evidence of the final ratings. If Standard & Poor's does not receive final documentation within a reasonable time frame, or if final documentation departs from materials reviewed, S&P reserves the right to withdraw or revise its ratings. The preliminary rating on Onorato Armatori reflects S&P's assessment of the company's fair business risk profile and significant financial risk profile. S&P's preliminary rating also incorporates a one-notch downward adjustment for its assessment of liquidity of less than adequate and a one-notch downward adjustment under S&P's comparable rating analysis modifier following its evaluation of the group's credit characteristics in aggregate. "Our assessment of Onorato Armatori's business risk profile as fair reflects the company's exposure to the cyclical transportation industry, which we view as high risk, and its narrow business scope compared with global ship operators and transport service providers. The company's business model is built mainly around ferry operations providing services via two main operating subsidiaries: Moby and Tirrenia-CIN, which jointly manages a fleet of 46 passenger and cargo ferries and 17 tug boats. Onorato Armatori predominantly serves routes between continental Italy and Italian islands (also Corsica), with a large concentration on the Sardinia route, which accounts for more than two-thirds of the company's revenues. We understand that the passenger ferry routes, which account for more than half of Onorato Armatori's revenues, are highly seasonal with some not being profitable during the low tourist season and certain routes never turning a profit. Nevertheless, annual contracted subsidies of about EUR87 million from the Italian government for all of Tirrenia-CIN's and some of Moby's loss-making routes -- in exchange for a provision of a certain standard and frequency of service -- help to smooth earnings and boost profitability. However, the European Commission has challenged this payment as potential unauthorized state subvention and the outcome of the ongoing investigation, which also encompasses other issues related to the alleged unfair conduct of the privatization of Tirrenia-CIN business, is difficult to predict. On top of its ferry operations, Onorato Armatori generates about 30% of its total revenue from cargo transportation, which we consider to have more stable volume patterns throughout the year," S&P said. "The weaknesses to Onorato Armatori's business risk profile are furthermore mitigated, in our view, by its leading and fairly protected position as a ferry operator in the niche Italian market. This is underpinned by a well-recognized and long- standing brand, notably Moby, operating in the maritime industry since the 18th century. The weaknesses are also mitigated by Onorato Armatori's well-invested, relatively young, and difficult- to-replicate vessel fleet. We also believe that the company's business model of mainly targeting families with children, who prefer to travel in their own car, faces little competition from other means of transport, such as airlines. The company's competitive advantage is further supported by its relatively large fleet, compared with other European ferry operators, which provides frequent rides to match high season demand, drives the economies of scale, and underpins operating efficiencies. We also take a positive view of Onorato Armatori's demonstrated ability to proactively manage its exposure to fluctuations in bunker fuel prices (95% and 80% of the 2015-fuel cost has been hedged for 2016 and 2017, respectively) and its fairly flexible cost base. We consider this flexibility to be essential in managing profitability during the slack winter season," S&P noted. S&P's assessment of Onorato Armatori's financial risk profile reflects S&P's forecast of the company's continued revenue growth and persistent EBITDA margins. These are backed by bunker fuel cost hedging and realization of the synergies unlocked from a consolidation of Moby and Tirrenia-CIN's businesses, which result in positive free operating cash flows. S&P therefore believes the company will be able to achieve Standard & Poor's-adjusted funds from operations (FFO) to debt of 20%-23% over the 2016-2017 forecast period, which S&P sees as commensurate with a significant financial risk profile. S&P's base case assumes: -- Mid-single-digit percentage sales growth, linked to S&P's estimates of annual GDP and inflation growth rates for Italy and the eurozone. -- Low cost-base growth reflecting hedged bunker fuel exposure over the next two years and cost synergies, which should enable Onorato Armatori to generate an average adjusted EBITDA margin of about 30%. -- Proceeds of about EUR40 million from vessel disposal in 2016. -- The addition of a few chartered-in vessels, resulting in higher annual charter expenses. -- Annual capital expenditure (capex) of EUR45 million-EUR75 million in 2016-2017 for fleet modernization, dry-dockings and the purchase of one extra vessel over the forecast period. -- State subventions continuing in 2016 and in 2017. S&P assumes that any potential changes to state-subvention could be largely mitigated by termination of services and other efficiency measures. -- No dividend distribution. -- About 95% of the company's cash is immediately accessible and deducted from debt for our ratio calculation purposes. Based on these assumptions, S&P arrives at these credit measures: -- A weighted-average ratio of adjusted FFO to debt of 20%-23% in 2016-2017. -- A weighted-average ratio of adjusted debt to EBITDA of 3x-4x in 2016-2017. The preliminary rating incorporates a one-notch downward adjustment for S&P's assessment of liquidity of less than adequate and one-notch downward adjustment under S&P's comparable rating analysis modifier following its evaluation of the company's credit characteristics in aggregate, which mainly reflects S&P's view that Onorato Armatori's business risk and financial risk profiles are at the weaker end of their range. Specifically, S&P could take a positive rating action if the repayment amount ruled by the European Commission did not considerably exceed the deferred amount of EUR180 million, which would remove the uncertainty over Onorato Armatori's liquidity position and stabilize its credit quality. In addition, ratings upside would depend on the company being able to maintain the ratio of FFO to debt at more than 20%. S&P would be likely to lower the rating by one or more notches if the European Commission's decision resulted in Onorato Armatori having to repay significantly more than the deferred payment amount, likely leading to a liquidity shortfall for the company. S&P considers the downside scenario as less likely than the upside scenario. =================== K A Z A K H S T A N =================== EURASIAN RESOURCES: S&P Puts 'B-/B' CCR on CreditWatch Negative --------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B-/B' corporate credit ratings on Kazakh miner Eurasian Resources Group S.a.r.l. (ERG) on CreditWatch with negative implications. The CreditWatch placement reflects the possibility that S&P could lower the ratings if ERG's liquidity further deteriorates. Although ERG has recently signed an agreement with one of its main lenders, and S&P understands that the signing of a further agreement with the company's other lender is imminent, these agreements (to refinance a total $5.7 billion of debt) would remain unavailable until various conditions are satisfied. Moreover, S&P believes that ERG needs to secure additional funds to finance an expected widening free operating cash flow deficit in 2016, as commodities continue to trade at very low levels. S&P recently revised its 2016 price assumptions for iron ore and aluminum, key commodities in ERG's portfolio, down to $40 per ton (/ton) for iron ore and $1,500/ton for aluminum. In S&P's view, these very weak commodity prices impair the company's cash- generating capacity (after taking into account some favorable contracts the company has in place). S&P believes that, apart from ferrochrome, most ERG divisions will report negative to break-even operating cash flows this year (including maintenance capital expenditure). In 2015, the average price of ferrochrome fell by 10% compared to the average price in 2014. The current spot price is more than 15% below the average price in 2015, representing a material downside to the company's EBITDA in 2016. Under S&P's base-case scenario, it expects a deficit of more than $200 million in 2016. S&P understands that the company will shortly conclude the signing of facility agreements, restructuring its $5.7 billion debt (including the $1.7 billion due June 2016) with Russian lenders, VTB and Sberbank. The company expects to draw the new loan facilities by the end of the first quarter, following the satisfaction of the conditions precedent. That said, S&P believes that the capital structure of the company will remain unsustainable under current commodity prices after the refinancing. In S&P's view, the combination of the operating cash flow deficit and pro forma debt maturities will consume all of the cash on ERG's balance sheet in the second half of 2016 (as of October 2015, the company had $528 million readily available). According to management, the completion of the refinancing should remove some uncertainty and allow the company to negotiate new facilities to meet the expected cash flow deficit. In S&P's view, without attracting sizable facilities, the company could default in the second half of the year. S&P's rating continues to reflect the potential support of the Kazakh government, the largest shareholder in ERG with a 40% stake. S&P takes into account the government's extensive involvement in the running of ERG and the company's public role as the main mining company in Kazakhstan, with a large workforce in remote regions. Over the past year, the government has provided some indirect support through measures such as providing more than $400 million of loans from the Development Bank of Kazakhstan, lowering some taxes, and others. However, S&P also factors some uncertainty in regard to the timeliness and extent of such support, especially as ERG's liquidity deteriorates. The CreditWatch placement reflects the possibility that S&P could downgrade ERG by more than one notch in the coming months, indicating a potential default over the short term, should the refinancing not proceed as expected and the company is unable to secure new facilities to finance the expected widening deficit in free operating cash flow in 2016. S&P aims to resolve the CreditWatch placement by the end of April 2016. ===================== N E T H E R L A N D S ===================== HOLLAND HOMES: Fitch Affirms 'BBsf' Rating on Class B Notes ----------------------------------------------------------- Fitch Ratings has placed Holland Homes Oranje MBS B.V.'s class A notes on Rating Watch Negative (RWN) and affirmed two tranches, as follows: Class A (ISIN XS0238851827): 'AAAsf'; on RWN Class S (ISIN XS0729849439): affirmed at 'BBB+sf'; Outlook Stable Class B (ISIN XS0238855141): affirmed at 'BBsf'; Outlook Stable The Dutch RMBS transaction is backed by Nationale Hypotheek Garantie (NHG) residential mortgage loans originated by DBV Levensverzekeringsmaatschappij B.V. (DBV; part of SNS Bank N.V.; BBB/Stable/F3). KEY RATING DRIVERS Stable Asset Performance The asset performance has remained stable over the past 12 months. As of October 2015, the portion of loans in arrears by more than three months was reported as 0.1% of the outstanding pool balance, which is well below Fitch's NHG three-months plus index of 0.4%. To date, only 0.1% of the initial pool balance has been foreclosed at a loss since closing. Counterparty Exposure The RWN on the class A notes reflects the exposure to payment interruption risk. The loans in the portfolio are serviced by SRLEV, which has appointed Stater Nederland (part of ABN AMRO; Fitch Servicer Rating: RPS1-) as a sub-servicer. While Stater remains one of the highest rated servicers with strong industry experience, Fitch believes the absence of structural features that would mitigate any disruption in borrower collections in the event of servicer default is a risk. In its analysis, Fitch assessed the liquidity available in the transaction to fully cover stressed senior fees, net swap payments and note interest in the event of servicer default. This showed that the reserve fund balance is insufficient to provide payments to the notes for one payment period should the servicer default. Fitch will monitor the progress of potential remedial actions, if any, and expects to resolve the RWN in three months' time. Failure to implement appropriate remedial actions will result in multi- category downgrades of the class A notes. Fitch notes that the expected substitution of SRLEV by SNS Bank as servicer does not have an impact on the payment interruption analysis, as the sub-servicing will continue to be performed by Stater Nederland. RATING SENSITIVITIES The class A and S notes have low credit enhancement relative to other Dutch transactions with similar pool characteristics. Hence, these tranches are more sensitive to a change in asset performance and an increase in arrears and defaults, beyond Fitch's stresses, could have a negative impact on the ratings. DUE DILIGENCE USAGE No third party due diligence was provided or reviewed in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. There were no findings that were material to this analysis. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. Fitch did not undertake a review of the information provided about the underlying asset pool ahead of the transaction's initial closing. The subsequent performance of the transaction over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable. Overall, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. =========== R U S S I A =========== CB INTERCOMMERZ: S&P Lowers Counterparty Credit Ratings to 'R/R' ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long- and short- term foreign and local currency counterparty credit ratings on Russia-based CB Intercommerz Ltd. to 'R/R' from 'B-/C' and its Russia national scale rating to 'R' from 'ruBBB-'. On Jan. 29, 2016, the Central Bank of Russia (CBR) introduced temporary administration for Intercommerz for the next six months, and S&P understands that the CBR has suspended the authority of the bank's management. The rating actions reflect S&P's view of the regulatory risk related to the CBR's intervention. S&P believes that the CBR's measures indicate that Intercommerz is under financial stress and may face difficulties meeting its financial obligations. Under such a scenario, in S&P's opinion, the Russian regulators (the CBR or the Deposit Insurance Agency [DIA]) may execute the power to favor one class of the bank's obligations over others or suspend payment of the bank's outstanding liabilities. This is in line with S&P's 'R' (under regulatory supervision) rating category. Any further rating actions on Intercommerz will depend largely on the CBR's future decisions regarding the bank, as well as S&P's opinion of the bank's business and financial prospects once this information becomes available. In S&P's opinion, based on similar situations in Russia, the outcome of the placement of a bank under temporary administration could be: -- A total or partial sale to a strategic investor that is willing to take over the bank; -- A potential bail-in by the bank's creditors; -- Transfer of the bank for long-term management under the DIA's rehabilitation plan; or -- Run-off of the bank's operations if it appears that its business model is not viable. At this stage, it is not clear how Intercommerz's placement under temporary administration will be resolved. S&P will continue to monitor how the CBR proceeds to handle Intercommerz's management. HEPHAESTUS INSURANCE: Placed Under Provisional Administration ------------------------------------------------------------- The Bank of Russia, by its Order No. OD-237, dated January 28, 2016, took a decision to appoint from January 28, 2016, provisional administration to HEPHAESTUS Insurance JSC. The decision to appoint the provisional administration was taken due to the improper fulfillment by the Company of its solvency restoration plan. The powers of the executive bodies of the Company are suspended. Alexander M. Pastushkov, receiver, member of SRO SEMTEK non-profit partnership, has been approved as a head of the provisional administration. KOMMERCHESKY MEZHREGIONALNY: Under Provisional Administration ------------------------------------------------------------- The Bank of Russia, by its Order No. OD-269, dated January 29, 2016, revoked the banking license of Moscow-based credit institution Kommerchesky Mezhregionalny Trastovy Bank, LLC from January 29, 2016. The Bank of Russia took such an extreme measure -- revocation of the banking license -- because of the credit institution's failure to comply with federal banking laws and Bank of Russia regulations, equity (capital) adequacy ratios below 2 per cent, inability to meet creditors' claims on monetary obligations, and application of supervisory measures envisaged by the Federal Law "On the Central Bank of the Russian Federation (Bank of Russia)." LLC CB MTB Bank implemented high-risk lending policy and did not create loan loss provisions adequate to risks assumed. The bank's equity (capital) adequacy was reduced to a critical level. Due to the loss of liquidity the credit institution failed to meet its obligations to creditors on a timely basis. Besides, the bank was involved in conducting large-value dubious transit operations. The management and owners of the credit institution did not take effective measures to normalize its activities. Under these circumstances, Bank of Russia performed its duty on the revocation of the banking license from the credit institution in accordance with Article 20 of the Federal Law "On Banks and Banking Activities". The Bank of Russia, by its Order No. OD-270, dated January 29, 2016, appointed a provisional administration to LLC CB MTB Bank for the period until the appointment of a receiver pursuant to the Federal Law "On the Insolvency (Bankruptcy)" or a liquidator under Article 23.1 of the Federal Law "On Banks and Banking Activities". In accordance with federal laws, the powers of the credit institution's executive bodies are suspended. LLC CB MTB Bank is a member of the deposit insurance system. The revocation of banking license is an insured event envisaged by Federal Law No. 177-FZ "On Insurance of Household Deposits with Russian Banks" regarding the bank's liabilities on deposits of households determined in accordance with the legislation. The said Federal Law stipulates the insurance premium as one hundred per cent reimbursement of the entire deposit to bank depositors, including individual entrepreneurs, but not more than 1.4 million rubles in aggregate per depositor. According to the financial statements, as of January 1, 2016, LLC CB MTB Bank ranked 329th by assets in the Russian banking system. RUSSIA: Mulls Privatization of Seven State Companies ---------------------------------------------------- BBC News reports that Russia is lining up seven state companies, including airline Aeroflot, for potential privatization. Kremlin spokesman Dmitry Peskov said the list of companies to be privatized and the size of the stakes were yet to be finalized, BBC relates. But he said that foreign investors would be welcome to buy shares in the sale, BBC notes. The potential sell-off is expected to raise in the region of RUR500 to RUR800 billion (US$6.5 billion; GBP4.5 billion), BBC says. According to BBC, the firms that could be privatized are: -- airline Aeroflot -- oil company Bashneft -- oil company Rosneft -- Shipping firm Sovkomflot -- diamond miner Alrosa -- State bank VTB -- Russian railways The heads of seven state owned businesses were invited to the Kremlin by President Putin to discuss the possible privatization plans, BBC relays. The list is still under discussion and it's believed the sale could take place in the second half of this year, BBC states. The fall in oil prices has left a large shortfall in the country's income and there are worries this could force Russia into a second year of recession, BBC discloses. The country has relied on oil and gas revenues for more than half of its budget until 2014, but the drastic fall in oil prices has dented this income drastically, according to BBC. ZSG INSURANCE: Placed Under Provisional Administration ------------------------------------------------------ The Bank of Russia, by its Order No. OD-240, dated January 28, 2016, took a decision to appoint from January 28, 2016, provisional administration to ZSG Insurance Company, LLC. The decision to appoint the provisional administration followed the suspension of the Company's insurance license (Bank of Russia Order No. OD-3721, dated December 24, 2015). The powers of the executive bodies of the Company are suspended. Nikolay Ye. Gulyashchikh, receiver, member of the non-profit partnership of the First SRO AU Association, has been approved as a head of the provisional administration. =========================== U N I T E D K I N G D O M =========================== GULF KEYSTONE: Prepares for Debt Restructuring After Cash Falls --------------------------------------------------------------- Luca Casiraghi at Bloomberg News reports that Gulf Keystone Petroleum Ltd. bondholders are preparing for a potential debt restructuring after the company's cash holdings fell below an alert-trigger level in October. According to Bloomberg, two people familiar with the matter said GLG Partners, Sothic Capital Management and Taconic Capital Advisors are among distressed-debt investors who have banded together and hired Houlihan Lokey Inc. to advise them. The bondholders are organizing as Gulf Keystone contends with late payments from the Kurdistan Regional Government and slumping oil prices, Bloomberg relays. Notes issued by the company, which holds licenses to export crude from the autonomous Kurdish region in northern Iraq, are quoted near record lows, Bloomberg states. Bondholders agreed to a change of terms in April, when they also added a clause saying the company had to make an announcement when cash holdings were below $50 million for five consecutive days, Bloomberg discloses. The London-based company said in October that cash had fallen below this level, Bloomberg recounts. The people said the oil producer may be able to meet interest payments totaling USUS$53 million due in April and October because it has started to receive more regular payments from Kurdistan, Bloomberg notes. They said still, refinancing US$575 million of debt maturing next year will be difficult unless payments continue and oil prices rebound, Bloomberg relates. Gulf Keystone Petroleum Limited is an oil and gas exploration and production company operating in the Kurdistan region of Iraq. It is listed on the main market of the London Stock Exchange. LEHMAN BROTHERS UK: February 15 Claims Filing Deadline Set ---------------------------------------------------------- Pursuant to Rule 2.95 of the Insolvency Rules 1986, Derek Howell, Anthony Victor Lomas, Steven Pearson, Gillian Bruce and Julian Guy Parr, the Joint Administrators of Lehman Brothers UK Holdings Limited ("LBUKH"), intend to make a distribution (by way of paying an interim dividend) to the unsecured, non-preferential subordinated creditors of LBUKH. Proofs of debt may be lodged at any point up to (and including) 15 February 2016, the last date for proving claims, however, creditors are requested to lodge their proofs of debt at the earliest possible opportunity. Persons so proving are required, if so requested, to provide such further details or produce such documents or other evidence as may appear to the Joint Administrators to be necessary. The Joint Administrators will not be obliged to deal with proofs lodged after the last date for proving but they may do so if they think fit. The Joint Administrators intend to make such distribution within the period of two months from the last date for proving claims. For further information, contact details, and proof of debt forms, please visit http://is.gd/Tg3gx2 Please complete and return a proof of debt form, together with relevant supporting documents, to PricewaterhouseCoopers LLP, 7 More London Riverside, London SE1 2RT marked for the attention of Jennifer Hills. Alternatively, you can email a completed proof of debt form to lehman.affiliates@uk.pwc.com Rule 2.95(2)(c) of the Insolvency Rules 1986 requires the Joint Administrators to state in this notice the value of the prescribed part of LBUKH's net property which is required to be made available for the satisfaction of LBUKH's unsecured debts pursuant to section 176A of the Insolvency Act 1986. There are no floating charges over the assets of LBUKH and accordingly, there shall be no prescribed part. All of LBUKH's net property will be available for the satisfaction of LBUKH's unsecured debts. TURBO FINANCE 6: Moody's Assigns (P)Ba2 Rating to Class C Notes --------------------------------------------------------------- Moody's Investors Service has assigned these provisional ratings to the Notes to be issued by Turbo Finance 6 plc: GBP M Class A Floating Rate Asset Backed Notes due February 2023, Assigned (P)Aaa(sf) GBP M Class B Floating Rate Asset Backed Notes due February 2023, Assigned (P)Aa3(sf) GBP M Class C Fixed Rate Asset Backed Notes due February 2023, Assigned (P)Ba2(sf) Moody's has not assigned ratings to the subordinated Class D Notes. The proceeds of the Class D Notes will be applied to fund the reserve fund in the transaction. RATINGS RATIONALE The transaction is a revolving cash securitization of hire purchase agreements (auto leases) extended to obligors in the United Kingdom by MotoNovo Finance Ltd, a division of FirstRand Bank Limited ("FRB") (Baa2/P-2/Baa1(cr)/Negative Outlook) acting through its London Branch ("FRB London"). This will be the sixth public securitization transaction in the United Kingdom sponsored by FRB London. The sponsor will also act as the servicer of the portfolio during the life of the transaction. The portfolio of receivables backing the notes consists of hire purchase agreements granted to individuals and companies resident in the United Kingdom collateralized by mostly used vehicles. In each underlying agreement, the obligor is required to pay a monthly installment of interest and principal during the term of the contract. Title to the vehicle passes to them only once they have paid all the installments under their agreements. The majority of the hire purchase agreements in the portfolio do not have any balloon risk, and the replenishment criteria limit balloon agreements to a maximum of 3%. As of Dec. 31, 2015, the provisional portfolio consists of 53,342 hire purchase contracts, with a weighted average seasoning of 4 months and a weighted average remaining term of 48 months. The transaction's main credit strengths are the granular portfolio, relatively simple waterfall, significant excess spread and counterparty support through the back up servicer, swap provider and independent cash manager. The 0.7% reserve fund (which will grow to 1.3% of the portfolio balance and can amortize subject to a floor of 0.5% of the initial pool balance) will be available to cover liquidity shortfalls on Classes A and B throughout the life of the transaction and can serve as credit enhancement following repayment of the Class A and B Notes. The transaction benefits from a weighted-average minimum yield of 12.5% for replenished assets, and has 12.7% currently. Available excess spread can be trapped to cover defaults and losses, as well as to build the reserve fund to its target level through the waterfall mechanism present in the structure. However, Moody's notes some credit weaknesses. As with all auto hire purchase agreements in the UK, the portfolio is exposed to the risk of voluntary termination. The obligor has the option to return the vehicle to the originator as long as the obligor has made payments equal to at least one half of the total amount which would have been payable under the contract. If the obligor returns the vehicle, then the issuer may be exposed to residual value risk. Moody's did not receive gross VT default data from the originator, but only net VT default data (i.e. with recoveries included). In addition, Moody's did not receive static recovery data for a full product cycle, as prior to 2012 only dynamic recovery data was available. Furthermore, the revolving period introduces an element of uncertainty into the portfolio credit quality through time. These aspects were factored in Moody's overall analysis. The Class C Notes do not benefit from the cash reserve until Classes A and B are repaid, and Class C interest and principal is subordinated to interest and principal payments on Classes A and B in the waterfall. Hence, there is an increased possibility of interest deferral on the Class C Notes. Moody's took this into account in its quantitative analysis. Moody's analysis focused, among other factors, on (i) an evaluation of the underlying portfolio; (ii) historical performance information; (iii) the credit enhancement provided by subordination, by the excess spread and the reserve fund; (iv) the liquidity support available in the transaction, by way of principal to pay interest and the reserve fund; (v) the back-up servicing arrangement of the transaction; (vi) the independent cash manager and (vii) the legal and structural integrity of the transaction. MAIN MODEL ASSUMPTIONS Moody's assumed a mean default rate of 4.75% for the entire pool, which takes into account both defaults arising from normal payment defaults by the obligors and losses arising from the exercise of the obligors' VT rights. The fixed recovery rate assumption is 45.0%. A portfolio credit enhancement (PCE) of 15.0% and a coefficient of variation of 48.6%, respectively, are used as the other main inputs for Moody's cash flow model ABSROM. Whilst the historical default rate for older vintages showed default rates higher than the assumed gross loss level, Moody's has given benefit to the lower default rate observed in more recent vintages as a result of updated underwriting methods used by the originator. Commingling risk and set-off risk were assessed to be commensurate with the ratings assigned on the Notes. METHODOLOGY The principal methodology used in these ratings was Moody's Approach to Rating Auto Loan-and Lease-Backed ABS published in December 2015. FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS: Factors that may cause an upgrade of the ratings include significantly better than expected performance of the pool together with an increase in credit enhancement of the Notes. Factors that may cause a downgrade of the ratings include a significant decline in the overall performance of the pool and/or a significant deterioration of the credit profile of the originator. The ratings address the expected loss posed to investors by the legal final maturity of the Notes. In Moody's opinion the structure allows for timely payment of interest on the Class A and Class B Notes, ultimate repayment of interest on the Class C Notes and ultimate payment of principal on or before the rated final legal maturity date on the Class A, B and C Notes. Moody's ratings address only the credit risks associated with the transaction. Other non-credit risks have not been addressed, but may have a significant effect on yield to investors. LOSS AND CASHFLOW ANALYSIS: In rating this transaction, Moody's used ABSROM to model the cash flows and determine the loss for each tranche. The cash flow model evaluates all default scenarios that are then weighted considering the probabilities of the lognormal distribution assumed for the portfolio default rate. In each default scenario, the corresponding loss for each Class of the Notes is calculated given the incoming cash flows from the assets and the outgoing payments to third parties and noteholders. Therefore, the expected loss or EL for each tranche is the sum product of (i) the probability of occurrence of each default scenario; and (ii) the loss derived from the cash flow model in each default scenario for each tranche. STRESS SCENARIOS: Parameter sensitivities for this transaction have been calculated in the following manner: Moody's tested 9 scenarios derived from the combination of the mean default rate: 4.75% (base case), 5.00% (base case +0.25%), 5.25% (base case + 0.5%) and recovery rate: 45% (base case), 40% (base case - 5%), 35% (base case - 10%). The 4.75% / 45% scenario would represent the base case assumptions used in the initial rating process. At the time the rating was assigned, the model output indicated that Class A would have achieved Aa1 even if mean default was as high as 5.25% with a recovery as low as 35% (all other factors unchanged). Under the same assumptions, the Class B would have achieved A2 and the Class C would have achieved B1. Parameter sensitivities provide a quantitative, model-indicated calculation of the number of notches that a Moody's-rated structured finance security may vary if certain input parameters used in the initial rating process differed. The analysis assumes that the deal has not aged. It is not intended to measure how the rating of the security might migrate over time, but rather, how the initial rating of the tranches might differ as certain key parameters vary. Therefore, Moody's analysis encompasses the assessment of stress scenarios. Moody's issues provisional ratings in advance of the final sale of securities, but these ratings only represent Moody's preliminary credit opinion. Upon a conclusive review of the transaction and associated documentation, Moody's will endeavor to assign definitive ratings to the Notes. A definitive rating may differ from a provisional rating. Moody's will disseminate the assignment of any definitive ratings through its Client Service Desk. * UK: Number of Administrations in Retail Sector Down 19% in 2015 ----------------------------------------------------------------- The number of retailers entering administration fell from 119 in 2014 to 96 during 2015, a decrease of 19%. The number of administrations in all sectors in England also fell from 1,302 in 2014 to 1,147 companies last year, a 12% decrease, according to analysis from Deloitte. Lee Manning, restructuring services partner at Deloitte, said: "We seem to have avoided what was once a traditional New Year clear- out of the High Street, with only Brantano and Blue Inc. calling in the administrators this month. Although the clothing sector was heavily impacted by unseasonably warm weather, the value of December's online sales figures was well ahead of expectations. "The annual data reminds us that administration is being used less and less as a restructuring tool, especially by the medium and larger players in the retail sector. Solvent restructuring practices are more common due to the current availability of funding and a pattern is emerging whereby we are working with companies on restructuring and refinancing." The English regions saw a decrease in all sectors, with the biggest drop being in Yorkshire and the North East of 18% from 203 in 2014 to 167 in 2015. The smallest decrease was in the North West, at 7%, while London saw a reduction of 9% in the number of administrations. Only two out of the eleven sectors reported on saw an increase in administrations -- Mining, Energy & Agriculture with a 12% increase and Transport & Communication with a 5% increase. Meanwhile the technology and media sector saw the biggest drop in administrations, 40% from 90 to 54. =================== U Z B E K I S T A N =================== AGROBANK: Moody's Raises Long-Term Currency Deposit Ratings to B3 ----------------------------------------------------------------- Moody's Investors Service has upgraded the long-term foreign and local currency deposit ratings of Uzbekistan-based Agrobank to B3 with a positive outlook from Caa1. Concurrently, Moody's upgraded the bank's baseline credit assessment (BCA) and adjusted BCA to caa3 from ca and the bank's long-term Counterparty Risk Assessment (CR Assessment) to B2(cr) from B3(cr). The rating agency also affirmed the bank's short-term local and foreign currency deposit ratings of Not-Prime and the short-term CR Assessment of Not-Prime(cr). "Moody's upgrade of Agrobank's ratings with a positive outlook is primarily driven by material improvements to Agrobank's loss absorption capacity," says Lev Dorf, an Assistant Vice President at Moody's. "In addition, the rating action reflects Moody's expectation that the bank will largely address its significant capital shortfall after successful completion of its capital- raising plan for 2015-2016." RATINGS RATIONALE The upgrade of Agrobank's ratings with a positive outlook reflects material improvements to Agrobank's loss absorption capacity in recent years and Moody's expectation that after successful completion of its capital-raising plan for 2015-2016, the bank will largely address its significant capital shortfall, which has been the key negative rating driver in recent years. Moody's says that under its capital-raising plan for 2015-2016, Agrobank will raise UZS100 billion (the amount equivalent to around 24% of its shareholders equity as at YE2014). According to Moody's, the bank already received the first tranche of UZS50 billion at the end of December 2015, and expects to receive the second tranche from its shareholder in H1 2016. Moody's notes that over the past five years, the bank has demonstrated progress in strengthening its capital base and addressing its fraud-related capital shortfall with the help of regular capital injections by the Uzbekistan government, Agrobank's majority shareholder. As a result, Agrobank's shareholders' equity increased by UZS249 billion to UZS469 billion at YE2015 from UZS221 billion at YE2010 (according to local GAAP). Moody's also notes that the capital increase in recent years has been offset by lending growth, and the bank's reported capital levels remain relatively stable. At the end of 2015, Agrobank reported total regulatory capital adequacy ratio of 13.4% , compared with 13.3% at the end of 2014. SUPPORT CONSIDERATION Agrobank's B3 deposit ratings incorporate a three-notch uplift from its standalone BCA of caa3, reflecting a very high probability of systemic support, given Agrobank's government ownership, its large market shares and systemic importance for Uzbekistan's economy. The bank has a special mandate for servicing the socially important agriculture sector and plays an instrumental role in the implementation of government policy, acting as a government agent. WHAT COULD MOVE THE RATINGS UP/DOWN A further upgrade of Agrobank's ratings (which carry a positive outlook) will be contingent on its successful completion of its capital rising programme, resulting in further improvement of its loss absorption capacity, as well as on the bank's ability to maintain adequate quality of its loan portfolio. However, the outlook on Agrobank's ratings could be changed to stable from positive should the bank fail to obtain additional capital from its shareholder, or due to any adverse changes in the bank's risk profile. The principal methodology used in these ratings was Banks published in January 2016. =============== X X X X X X X X =============== * S&P Takes Various Rating Actions on 17 European CDO Tranches -------------------------------------------------------------- Standard & Poor's Ratings Services took various credit rating actions on 17 European synthetic collateralized debt obligation (CDO) tranches. Specifically, S&P has: -- Raised and removed from CreditWatch positive its ratings on 13 tranches in 10 corporate-backed European synthetic CDO transactions; -- Affirmed and removed from CreditWatch positive S&P's ratings on three tranches in one synthetic CDO transaction; and -- Affirmed, removed from CreditWatch positive, and withdrawn S&P's rating on one tranche in one corporate-backed European synthetic CDO transaction. The rating actions are part of S&P's review of various European synthetic CDOs. The actions reflect, among other things, the effect of recent rating migration within reference portfolios and recent credit events on referenced obligations. S&P has used its SROC (synthetic rated overcollateralization; see "What Is SROC?" below) tool to surveil our ratings on these synthetic CDOs. WHERE S&P HAS RAISED ITS RATINGS S&P has raised its ratings to the level at which SROC exceeds 100% and meets its minimum cushion requirement. WHERE S&P HAS AFFIRMED OUR RATINGS S&P has affirmed its ratings on those tranches for which credit enhancement is, in S&P's opinion, still at a level commensurate with their current ratings. WHERE S&P HAS LOWERED ITS RATINGS TO 'D' S&P has lowered its ratings to 'D' where losses from credit events in the underlying portfolio exceeded the available credit enhancement, which caused the rated notes to incur an interest shortfall or principal losses. ANALYSIS S&P has used its CDO Evaluator model 6.3 to determine the amount of net losses in each portfolio that S&P expects to occur in each rating scenario. S&P has also applied our top obligor and industry tests. WHAT IS SROC? One of the main steps in S&P's rating analysis is the review of the credit quality of the portfolio referenced assets. SROC is one of the tools S&P uses when surveilling our ratings on synthetic CDO tranches with reference portfolios. SROC is a measure of the degree by which the credit enhancement (or attachment point) of a tranche exceeds the stressed loss rate assumed for a given rating scenario. SROC helps capture what S&P considers to be the major influences on portfolio performance: Credit events, asset rating migration, asset amortization, and time to maturity. It is a comparable measure across different tranches of the same rating. A list of the Affected Ratings is available at: http://is.gd/ahuLfs ********* 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 2016. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000 or Nina Novak at 202-362-8552. * * * End of Transmission * * *