/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/170817.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 Thursday, August 17, 2017, Vol. 18, No. 163 Headlines F R A N C E VEOLIA ENVIRONNEMENT: Fitch Affirms BB+ Rating on Sub. Notes G E R M A N Y AIR BERLIN: Thomas Cook Ready to Pay Active Role in Restructuring AIR BERLIN: Germany Provides EUR150-Mil. Bridging Loan AIR BERLIN: Easyjet in Talks to Buy Assets Following Insolvency I R E L A N D AVOCA CLO VIII: Fitch Affirms 'B+sf' Rating on Class E Notes CAVENDISH SQUARE: S&P Raises Rating on Class C Notes to BB+(sf) HARVEST CLO X: S&P Affirms B(sf) Rating on Class F Notes L U X E M B O U R G COMMERZBANK FINANCE: Moody's Hikes BCA From B2, Outlook Stable SWISSPORT GROUP: S&P Affirms 'B' Long-Term CCR, Outlook Stable N E T H E R L A N D S ARES EUROPEAN VII: Moody's Assigns B2 Rating to Cl. E-R Notes ARES EUROPEAN VII: S&P Assigns B-(sf) Rating to Class E-R Notes CONTEGO CLO II: Moody's Assigns B2(sf) Rating to Cl. F-R Notes S E R B I A HIP PETROHEMIJA: Serbian Court Approves Pre-Pack Bankruptcy Plan S P A I N BANCO POPULAR ESPANOL: CDS Holders Await Compensation ********* =========== F R A N C E =========== VEOLIA ENVIRONNEMENT: Fitch Affirms BB+ Rating on Sub. Notes ------------------------------------------------------------ Fitch Ratings has affirmed Veolia Environnement S.A.'s Long-Term Issuer Default Rating (IDR) and senior unsecured rating at 'BBB'. The rating of its undated deeply subordinated notes has been affirmed at 'BB+'. The Outlook on the IDR has been raised to Positive from Stable. The Outlook revision reflects an acceleration in revenues across all businesses, supported by a higher target for 2016-18 cost reductions, taking estimated FFO adjusted net leverage from 2018 to within Fitch guidelines for positive rating action. This is despite Fitch's decision to withdraw equity credit for the EUR1.5 billion hybrid issue. Fitch also expects Veolia to turn slightly free cash flow positive (FCF) from 2018 and for fixed charge cover to remain within positive guidelines. However, capex is likely to increase and, although there are no current plans with a heavy refinancing schedule, any large-scale debt-funded M&A would limit rating upside. KEY RATING DRIVERS Implications of Cyclical Recovery: Recent first-half results showed an acceleration in revenue growth across all businesses, especially in waste. However, despite the impact of revenue growth on a high fixed-cost base, EBITDA margins are under pressure. Veolia's announcement of further restructuring of the French water business underlines the need for additional cost reduction. In addition, with a focus on new contract wins, plans to raise capex to support longer-term growth have been delayed. Cost Reduction: Veolia needs to cut costs in order to remain competitive. In view of its cyclical exposure in waste, cost reduction gives greater visibility to EBITDA and cash flows. The company has raised its 2016-18 target from EUR600 million to EUR800 million and H117 results suggest that it is on track to hit this target. This is further supported by plans for additional restructuring of the French water business. If Veolia succeeds in doubling French water EBIT by 2020, this would improve the chances of recovering EUR400 million of French tax loss carry forwards, effectively lowering the tax rate. However, this is not yet reflected in Fitch's projections. Underlying FCF Still Negative: Veolia has continued to generate slightly negative underlying FCF into H117. Although Fitch expects FCF to turn slightly positive from next year, this hinges partly on working capital improvements and estimated FCF margins at around 1% from 2018 are still well below US waste peers, Waste Management and Republic Services. Veolia acknowledges that it has underspent on capex and in Fitch views this is likely to change in future. Sector M&A: Veolia returned to making small to medium acquisitions in 2016, particularly in the US. Moreover, following the sale of Transdev last year, asset sales are virtually complete. There has been significant large-scale M&A recently, notably with the closest peer Suez's EUR3.2 billion acquisition of GE Water in March 2017, though this was funded with a debt/equity mix close to 50/50. However, Fitch sees greater potential for M&A in waste. Although no large-scale M&A is currently planned, Fitch perceives a more aggressive debt-funded strategy as a potential risk to the rating. Proactive Treasury Management: Faced with a heavy debt maturity schedule of EUR7 billion potentially including the EUR1.5 billion hybrid issue, Veolia has issued around EUR2.5 billion of bonds over the last 12 months to reduce refinancing risk. Fitch expects refinancing relatively expensive legacy debt at lower rates to support an expected continued improvement in fixed charge cover. Fitch has removed the equity credit from the hybrid bonds reflecting Fitch reduced conviction on their permanence in Veolia's capital structure. DERIVATION SUMMARY The rating reflects Veolia's scale and diversification both by business (mostly contracted and quasi-regulated water and somewhat riskier waste management) and geographic region. EBITDA from France is 23% of the group total and this will probably fall further in future. Waste Management Inc (BBB/Stable) and Republic Services Inc (BBB/Stable) are solely present in the US waste industry and thus lack Veolia's diversity, but report stronger credit metrics such as leverage and FCF. Veolia's FFO adjusted net leverage is comparable to that of Italian multi-utility Acea SpA (BBB+/Stable) which has a stronger business profile dominated by regulated network business. FCC Aqualia, S.A. (BB+/Stable) is focused on contracted water business in Spain and has significantly higher leverage compared with Veolia. KEY ASSUMPTIONS Fitch's key assumptions within its ratings case for the issuer are: - Higher revenues than previously, reflecting 3.1% growth in H117 at constant scope and exchange rates, based on stronger than expected revenue growth in energy (H1 organic growth of +6.5% on stronger volumes in central Europe and China), and especially waste (H1 organic growth of +3.8% on stronger volumes and above all pricing, including recyclates). - Slightly lower EBITDA margins than previously, reflecting margin pressures in H117, despite additional cost-cutting and the cosmetic impact of IFRIC12, but higher estimates of revenue imply higher absolute EBITDA estimates. The mix is higher EBITDA estimates in waste by around EUR100 million and lower EBITDA estimates in water by around EUR50 million. - No tax impact as a result of higher French water EBIT by 2020. - Capex around EUR1.5 billion pa during 2017-2018 and dividend growth in line with earnings, both in line with guidance. - Sale of remaining stake in Transdev for EUR330 million in 2018. RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Positive Rating Action - Additional cost-cutting beyond the scope of the current EUR800 million 2016-18 programme aiding to positive FCF and FFO net adjusted leverage falling below 4.2x (revised from 4.5x reflecting the peer comparison) and improvement in FFO fixed charge cover ratio to well above 3.0x Future Developments That May, Individually or Collectively, Lead to Negative Rating Action - Operational underperformance and/or a more aggressive debt funded acquisition strategy - FFO net adjusted leverage above 5.0x, a fall in FFO fixed charge cover ratio towards 2.0x and negative FCF, on a sustained basis. LIQUIDITY Sufficient Liquidity: As of June 30, 2017, Veolia had group net liquidity of EUR4.4 billion and Fitch therefore believes that Veolia has an adequate position to meet operating requirements and debt maturities until 2018. FCF at end-1H17 was negative EUR197 million pre-disposals, acquisitions and movement in working capital, with the latter expected to reverse by year end. ============= G E R M A N Y ============= AIR BERLIN: Thomas Cook Ready to Pay Active Role in Restructuring ----------------------------------------------------------------- Victoria Bryan at Reuters reports that Thomas Cook said on Aug. 16 that tour operator Thomas Cook and its German airline Condor are prepared to play an active role in a restructuring of insolvent carrier Air Berlin. "Thomas Cook and its subsidiary, the strengthened German holiday airline Condor, are standing ready to play an active role in the future of Air Berlin," Reuters quotes a spokesman for Thomas Cook as saying in an e-mailed statement. Thomas Cook books some of its customers on flights with Air Berlin and its unit Niki, which means it is in the tour operator's interest that the German airline's operations continue, Reuters notes. About Air Berlin Air Berlin Plc is a Germany-based airline that is registered in the United Kingdom. On August 15, 2017, Air Berlin's Board of Directors filed with the competent local district court of Berlin-Charlottenburg a petition for the opening of debtor-in- possession insolvency proceedings. In addition, a petition for the opening of debtor-in-possession insolvency proceedings was filed with the local district court of Berlin-Charlottenburg for Air Berlin PLC & Co. Luftverkehrs KG and airberlin technik GmbH and will be filed for further subsidiaries of the Air Berlin group. The Board has, after close evaluation, determined that Air Berlin has no longer a positive continuation prognosis. The reason for this conclusion is that its main shareholder Etihad Airways PJSC has notified Air Berlin of the fact that it will not provide any further financial support to the Air Berlin group. AIR BERLIN: Germany Provides EUR150-Mil. Bridging Loan ------------------------------------------------------ Madeline Chambers and Joseph Nasr at Reuters report that Germany has made a bridging loan of EUR150 million (US$176.16 million) available to Air Berlin to ensure flights continue after the airline filed for insolvency. "This bridging loan will be made available via the KfW (state development bank) and backed by a federal guarantee," Reuters quotes the economy and transport ministries as saying in a joint statement. According to Reuters, the ministries also said they expected a decision from Lufthansa and another airline concerning the sale of parts of the business in coming weeks. About Air Berlin Air Berlin Plc is a Germany-based airline that is registered in the United Kingdom. On August 15, 2017, Air Berlin's Board of Directors filed with the competent local district court of Berlin-Charlottenburg a petition for the opening of debtor-in- possession insolvency proceedings. In addition, a petition for the opening of debtor-in-possession insolvency proceedings was filed with the local district court of Berlin-Charlottenburg for Air Berlin PLC & Co. Luftverkehrs KG and airberlin technik GmbH and will be filed for further subsidiaries of the Air Berlin group. The Board has, after close evaluation, determined that Air Berlin has no longer a positive continuation prognosis. The reason for this conclusion is that its main shareholder Etihad Airways PJSC has notified Air Berlin of the fact that it will not provide any further financial support to the Air Berlin group. AIR BERLIN: Easyjet in Talks to Buy Assets Following Insolvency --------------------------------------------------------------- Tom Koerkemeier and Victoria Bryan at Reuters report that Easyjet is in talks to buy assets from insolvent Air Berlin, a person familiar with the matter told Reuters, adding that the talks centered on the German airline's slots. "The goal has been to keep out Ryanair," Reuters quotes the person as saying in reference to negotiations. About Air Berlin Air Berlin Plc is a Germany-based airline that is registered in the United Kingdom. On August 15, 2017, Air Berlin's Board of Directors filed with the competent local district court of Berlin-Charlottenburg a petition for the opening of debtor-in- possession insolvency proceedings. In addition, a petition for the opening of debtor-in-possession insolvency proceedings was filed with the local district court of Berlin-Charlottenburg for Air Berlin PLC & Co. Luftverkehrs KG and airberlin technik GmbH and will be filed for further subsidiaries of the Air Berlin group. The Board has, after close evaluation, determined that Air Berlin has no longer a positive continuation prognosis. The reason for this conclusion is that its main shareholder Etihad Airways PJSC has notified Air Berlin of the fact that it will not provide any further financial support to the Air Berlin group. ============= I R E L A N D ============= AVOCA CLO VIII: Fitch Affirms 'B+sf' Rating on Class E Notes ------------------------------------------------------------ Fitch Ratings has affirmed all rating on Avoca CLO VIII Limited's notes: Class A1 (ISIN XS0312372112): affirmed at 'AAAsf'; Outlook Stable Class A2 (ISIN XS0312377772): affirmed at 'AAAsf'; Outlook Stable Class B (ISIN XS0312378747): affirmed at 'AAsf'; Outlook Positive Class C (ISIN XS0312379984): affirmed at 'Asf'; Outlook Positive Class D (ISIN XS0312380305): affirmed at 'BBBsf'; Outlook Positive Class E (ISIN XS0312380727): affirmed at 'B+sf'; Outlook Positive Class U (ISIN XS0312840746): affirmed at 'BBBsf'; Outlook Positive KEY RATING DRIVERS The affirmation reflects increased credit enhancement (CE) across the capital structure due to the deleveraging of the transaction since October 2016. The deleveraging was mainly driven by the amortisation of the class A1 notes to EUR51.7 million. CE for the class A1 notes has increased to 77.8% from 61% over the past 12 months, while CE for the class E notes has increased to 9.2% from 6.7%. The Positive Outlook on the mezzanine and junior notes reflects the possibility of a further upgrade if the deleveraging continues at the current pace. As the portfolio deleverages the transaction is becoming more exposed to obligor concentration. The top 10 obligors currently represent 39%, compared with 36% a year ago and the largest obligor now represents 6.3%, compared with 4% previously. For this review a sensitivity analysis was performed to assess near- term performance volatility if the top three obligors were to default. The transaction currently benefits from significant excess spread. The weighted average spread of the portfolio is 3.55% while the weighted average spread on the rated notes is only 0.94%. The portfolio remains diversified across countries and industrial sectors. There are currently no defaulted assets in the portfolio and assets rated 'CCC' or below represent 5.4%. The weighted-average rating of the portfolio remains at 'B'/'B+'. The Fitch weighted average rating factor, as calculated by the trustee, has increased to 29.7 from 26.7 over the past year and the Fitch weighted average recovery rate has decreased to 63.4 from 67.32. Fitch has adjusted the default timing in the cash flow model, as the current portfolio has a short tenor of 3.3 years. The default timing used is 25%, 25% and 50 % for front-loaded, 25%, 50% and 25% for middle-loaded and 50%, 25% and 25% for back-loaded scenarios. RATING SENSITIVITIES In its rating sensitivity analysis, Fitch found that a 25% increase of the default probability could result in a downgrade of up to one notch and a 25% reduction of the recovery rate could result in a downgrade of up to two notches across the junior notes. CAVENDISH SQUARE: S&P Raises Rating on Class C Notes to BB+(sf) --------------------------------------------------------------- S&P Global Ratings raised its credit ratings on Cavendish Square Funding PLC's class A1-N, A2, B, and C notes. Today's upgrades follow S&P's analysis of the transaction using data from the May 31, 2017 trustee report, and the application of our relevant criteria (see "Related Criteria"). S&P said, "The transaction's post-reinvestment period began in February 2011. The class A1-N notes have amortized further since our Aug. 25, 2016 review (see "Various Rating Actions Taken In Cash Flow CDO Of ABS Transaction Cavendish Square Funding Following Performance Review"). Of the class A1-N notes, just EUR 18.35 million remains outstanding following the repayment of EUR 35.36 million since our previous review. As a result, available credit enhancement for all the outstanding classes of notes increased over the same period. "From our analysis, we observed that there has been a slight negative rating migration in the asset portfolio as the proportion of the collateral rated 'CCC+' or below rose from 15.8% of the performing pool to 21.4%. This resulted in an increase in the scenario default rates (SDRs) at each rating level. The SDR is the minimum level of portfolio defaults that we expect each collateralized debt obligations (CDO) tranche to be able to support the specific rating level using CDO Evaluator. "The portion of performing assets not rated by S&P Global Ratings is 19.9%. In this case, we apply our mapping criteria to map notched ratings from another ratings agency and to infer our rating input for the purpose of inclusion in CDO Evaluator (see "Mapping A Third Party's Internal Credit Scoring System To Standard & Poor's Global Rating Scale," published on May 8, 2014). In performing this mapping, we generally apply a three- notch downward adjustment for structured finance assets that are rated by one rating agency and a two-notch downward adjustment if the asset is rated by two rating agencies, for up to 15% of the portfolio. For assets in excess of 15% of the portfolio, which we consider to be performing, we will assign a 'CCC-' rating in our analysis. In this transaction, the proportion of assets mapped from other rating agencies that mapped to a rating above 'CCC-' was below 15%, and we therefore did not make any additional adjustments. "We conducted our cash flow analysis to determine the break-even default rate (BDR) for each rated class of notes at each rating level. The BDR represents our estimate of the maximum level of gross defaults, based on our stress assumptions, that a tranche can withstand and still pay interest and fully repay principal to the noteholders. We applied various cash flow stresses using our standard default patterns and timings for each rating category assumed for each class of notes. We used the reported weighted- average spread of 1.35%, and the weighted-average recovery rates calculated in accordance with our 2012 criteria for CDOs of pooled structured finance assets (see "Global CDOs Of Pooled Structured Finance Assets: Methodology And Assumptions," published on Feb. 21, 2012). The weighted-average spread (WAS) is also lower than at our previous review (1.35% now compared with 1.42% in August 2016). The WAS and weighted-average recovery rates are some of the key components that determine the required credit enhancement at each rating level in our cash flow analysis. "We have applied our supplemental tests to address event and model risk, in line with our corporate cash flow CDO criteria (see "Global Methodologies And Assumptions For Corporate Cash Flow And Synthetic CDOs," published on Aug. 8, 2016). As the transaction employs excess spread, we have applied this test by running our cash flows using the forward interest rate curve. "Our analysis indicates that the available credit enhancement for the class A1-N, A2, B, and C notes in this transaction is commensurate with higher ratings than those currently assigned. We have therefore raised our ratings on these classes of notes." The application of the largest obligor default or largest industry test did not constrain our ratings on any of the classes of notes. Cavendish Square Funding is a cash flow mezzanine structured finance CDO of a portfolio that comprises predominantly mortgage- backed securities. The transaction closed in February 2006 and AE Global Investment Solutions Ltd. manages it. RATINGS LIST Class Rating To From Cavendish Square Funding PLC EUR 297.45 Million Secured Floating-Rate Notes Revolving Credit Facility Secured Fixed-Rate Notes And Subordinated Notes Ratings Raised A1-N AA- (sf) A- (sf) A2 BBB (sf) BB+ (sf) B BBB (sf) BB+ (sf) C BB+ (sf) BB- (sf) HARVEST CLO X: S&P Affirms B(sf) Rating on Class F Notes -------------------------------------------------------- S&P Global Ratings assigned its credit ratings to the class A-R, B-R, C-R, and D-R notes from Harvest CLO X DAC, a collateralized loan obligation (CLO) managed by Investcorp Credit Management EU Ltd. The replacement notes were issued via a supplemental trust deed. The replacement notes were issued at a lower spread over Euro Interbank Offered Rate (EURIBOR) than the original notes they replace. The cash flow analysis demonstrates, in S&P's view, that the replacement notes have adequate credit enhancement available at the current rating levels. The transaction has experienced overall stable performance since our previous rating affirmations on Feb. 16, 2015 (see "Ratings Affirmed In Harvest CLO X After The Transaction's Effective Date"). All coverage ratios are above the minimum triggers, and the post-refinance structure has improved its cash flow results. S&P said, "On the Aug. 15, 2017 refinancing date, the proceeds from the issuance of the replacement notes redeemed the original notes, upon which we withdrew the ratings on the original notes and assigned ratings to the replacement notes. We have affirmed our ratings on the class E and F notes." CASH FLOW ANALYSIS RESULTS Current date after refinancing Class Amount Interest (mil. EUR) rate (%) A-R 264.4 3ME plus 0.92 B-R 56.3 3ME plus 1.50 C-R 30.4 3ME plus 2.00 D-R 23.6 3ME plus 2.85 E 29.2 3ME plus 5.00 F 12.4 3ME plus 6.00 3ME--Three-month EURIBOR. Current date before refinancing Class Amount Interest (mil. EUR) rate (%) A 264.4 3ME plus 1.25 B 56.3 3ME plus 2.07 C 30.4 3ME plus 2.30 D 23.6 3ME plus 3.20 E 29.2 3ME plus 5.00 F 12.4 3ME plus 6.00 3ME--Three-month EURIBOR. RATINGS LIST Ratings Assigned Harvest CLO X DAC EUR 466.5 Million Senior Secured Floating-Rate And Subordinated Notes Replacement Rating class A-R AAA (sf) B-R AA+ (sf) C-R A (sf) D-R BBB (sf) Ratings Withdrawn Class Rating To From A NR AAA (sf) B NR AA+ (sf) C NR A (sf) D NR BBB (sf) Ratings Affirmed E BB (sf) F B (sf) =================== L U X E M B O U R G =================== COMMERZBANK FINANCE: Moody's Hikes BCA From B2, Outlook Stable -------------------------------------------------------------- Moody's Investors Service has upgraded Commerzbank Finance & Covered Bond S.A.'s (CFCB) long-term local-currency issuer rating to Baa1 from Baa3. The outlook on the rating is stable. In addition, the rating agency upgraded the bank's Counterparty Risk (CR) Assessment to A2(cr)/P-1(cr) from Baa2(cr)/P-2(cr). At the same time, the bank's Baseline Credit Assessment (BCA) has been upgraded to baa3 from b2 and the Adjusted BCA to baa3 from ba2. The various upgrades effectively align CFCB's ratings, a wholly owned Luxembourg-based subsidiary of Commerzbank AG (deposits A2 stable / senior unsecured Baa1 stable, BCA baa3), with those of its German parent. RATINGS RATIONALE Moody's decision to fully align CFCB's ratings with those of its parent reflects the rating agency's assessment that the Luxemburg entity's operations are very closely integrated with those of Commerzbank after CFCB concluded its multi-year restructuring last summer. The bank now carries the name of its parent, which injected additional EUR291 million of capital into CFCB in H2 2016 and which holds all of CFCB's senior unsecured funding. Moreover, CFCB only displays a very limited local franchise in Luxembourg. The close ties between CFCB and its parent are further strengthened through a letter of comfort and various service level agreements to the benefit of CFCB. The aligned ratings are therefore based on the same rating architecture as applicable for Commerzbank's ratings. Accordingly, and based on Moody's approach of rating CFCB as a highly integrated and harmonized subsidiary of Commerzbank, Moody's decided to align CFCB's BCA (and Adjusted BCA) with the baa3 BCA (and baa3 Adjusted BCA) of Commerzbank. In addition, the rating agency also adopted the parent's Loss Given Failure (LGF) perimeter for CFCB, thereby including into CFCB's ratings the same notching uplift resulting from Moody's Advanced LGF analysis, which it performs at the German group level. Furthermore, Moody's now also includes one additional notch of rating uplift from government support, mirroring the support factored into the senior unsecured debt and deposit ratings of the German parent bank. Moody's performs its Advanced LGF analysis on the consolidated financials of the German parent, based on the assumption that resolution would be addressed for the German parent bank and its Luxembourg subsidiary at the same time. Common resolution with the parent is likely given that CFCB is strongly interconnected with Commerzbank, as illustrated by its funding reliance for the majority of its balance sheet. Such interconnectedness implies limited options for a subsidiary's ring-fencing in resolution. Moody's decision on whether government support assigned to the parent bank is also available to CFCB as a cross-border subsidiary considers the degree of integration of CFCB into the group's operations as well as the very high level of group funding available to CFCB. -- RATIONALE FOR STABLE OUTLOOK The stable outlook on CFCB's long-term issuer rating mirrors the stable outlook on Commerzbank's long-term ratings. WHAT COULD MOVE THE RATINGS UP An upgrade of CFCB's issuer ratings could be prompted by (1) an upgrade of Commerzbank's BCA; or (2) a reduction of the expected loss severity following a shift in Commerzbank's funding mix, which could result in higher rating uplift under Moody's LGF analysis for Commerzbank's senior unsecured debt ratings and, thus, CFCB's long-term issuer rating. Upward pressure on Commerzbank's BCA could result from (1) a further significant improvement of its asset risk metrics, including a further meaningful reduction of sector concentrations and/or significantly improved problem loan coverage; combined with (2) a sustained and pronounced improvement of its fully phased-in capital ratios and balance sheet leverage; and (3) a persistent strengthening of the bank's recurring earnings power. WHAT COULD MOVE THE RATINGS DOWN A downgrade of CFCB's issuer rating could result from (1) a downgrade of Commerzbank's BCA; (2) an increase in the expected loss severity following a shift in Commerzbank's funding mix, which could result in fewer notches of rating uplift as a result of Moody's LGF analysis; (3) signs that CFCB returns to a lower level of integration within Commerzbank; or (4) a reduction in Moody's government support assumptions for Commerzbank and, thus, CFCB. Downward pressure on Commerzbank's BCA could result from (1) a weakening of the bank's Strong+ Macro Profile, (2) renewed pressure on its asset quality and capital adequacy metrics; and (3) failure to improve its risk-return profile in the medium term. LIST OF AFFECTED RATINGS The following ratings and rating assessments have been upgraded: -- Long-term local currency issuer rating to Baa1 from Baa3, outlook stable -- Long-term Counterparty Risk Assessment to A2(cr) from Baa2(cr) -- Short-term Counterparty Risk Assessment to P-1(cr) from P-2(cr) -- Baseline Credit Assessment to baa3 from b2 -- Adjusted Baseline Credit Assessment to baa3 from ba2 Outlook Action: -- Outlook remains Stable PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Banks published in January 2016. SWISSPORT GROUP: S&P Affirms 'B' Long-Term CCR, Outlook Stable -------------------------------------------------------------- S&P Global Ratings said that it affirmed its 'B' long-term corporate credit rating on Luxembourg-based airport services provider Swissport Group S.a r.l (Swissport) and the group's related entities. S&P said, "We removed all ratings from CreditWatch negative. The outlook is stable." S&P related, "At the same time, we assigned a new 'B' long-term corporate credit rating, with a stable outlook, to Swissport Financing S.a r.l, the entity issuing the new debt. "We assigned a 'B' issue rating to the refinanced EUR 460 million term loan B and EUR 364 million new senior secured notes issued by Swissport Financing S.a r.l. The recovery rating on the debt is '3', reflecting our expectations of recovery in the 50%-70% range (rounded estimate: 55%) in the event of default. We also assigned a 'CCC+' issue rating to the new EUR 265 million senior notes with a recovery rating of '6', indicating our expectation of negligible recovery (0%-10%) in the event of a default. "We lowered to 'CCC+' from 'B' our rating on the remaining senior secured notes that have not consented to the exchange and affirmed the 'CCC+' rating on the remaining senior unsecured notes issued by Swissport Investments S.A. We revised downward the recovery rating on the remaining senior secured notes to '6' from '3', reflecting our reduced recovery expectations as they have no recourse to the restricted group assets in an event of default. The recovery rating on the remaining senior unsecured notes remains unchanged at '6'. "We also affirmed our 'B' issue rating on the Swiss franc (CHF) 110 million senior secured revolving credit facility (RCF) issued by Swissport International Ltd. The recovery rating on this instrument remains unchanged at '3', reflecting our recovery expectations in the 50%-70% range (rounded estimate: 55%) in the event of a payment default." The affirmation and stable outlook reflect the completion of Swissport's refinancing and exchange transaction, in line with S&P's expectations. The company has refinanced its EUR 660 million term loan by raising a new EUR 460 million term loan B and repaying EUR 200 million of it with existing cash. The consent solicitation and exchange offer was accepted by 90.93% of senior secured lenders and 94.49% of senior unsecured lenders. The exchange was carried out at par and the notes maintain the same interest rates and tenor. As part of the transaction, the new capital structure has migrated to a new entity and the perimeter of the restricted group has changed to ensure no impact from the share pledges made by Swissport's parent, HNA. S&P said, "The terms of the exchange offer on the new notes are broadly unchanged and we understand that the existing lenders that have not consented to the exchange will no longer be entitled to the benefits of all of the restrictive covenants. In addition, any remaining existing lenders -- both secured and unsecured -- will be structurally subordinated to the new notes. As a result, we have lowered our issue ratings on the group's remaining secured notes to 'CCC+' with a recovery rating of '6', reflecting our substantially reduced expectations of recovery in the event of default. Our issue rating on the remaining unsecured notes remains unchanged at 'CCC+', with a recovery rating of '6'. "While the transaction resulted in a modest improvement in leverage, we still view Swissport's capital structure as highly leveraged, as we forecast that S&P Global Ratings-adjusted debt to EBITDA will remain more than 5.5x over the next 12 months. In addition, overall interest costs remain broadly in line with our expectations, since the EUR 200 million debt repayment of the term loan B with cash was already considered in our previous forecast. As a result, our funds from operations (FFO) to debt forecasts remain unchanged at just below 12%, and we expect EBITDA interest coverage to be at about 3.0x in the next 12 months. "Swissport's 100% shareholder, the Chinese privately owned HNA Group, injected EUR 718 million of pure cash equity to the group in April 2017, which clearly demonstrates its supportiveness. However, given our view of HNA's acquisition strategy, we expect that the remaining cash proceeds after the EUR 200 million debt reduction will likely be used to finance acquisitions, which would likely add to the group's EBITDA. "The stable outlook reflects our view that Swissport will likely maintain or improve its profitability, especially when it fully realizes synergies from its recent acquisitions and successfully executes its growth strategy in Asia and the Middle East. "Furthermore, we believe that Swissport's major acquisitions will have a deleveraging effect, prompting gradually improved credit measures in the next 12 months, including adjusted EBITDA interest coverage of about 3.0x and debt to EBITDA around 5.5x. We also anticipate that the group will maintain adequate liquidity, and that our assessment of the HNA Group's creditworthiness will not weaken and therefore will not weigh on our rating on Swissport. "We could raise our rating on Swissport if it reduced its debt using further proceeds from the equity injection or through improved operating performance, leading to stronger credit metrics. Specifically, we would look for a decrease in adjusted debt to EBITDA to less than 5.0x on a sustainable basis. An upgrade would also depend on our view on whether our assessment of HNA Group's creditworthiness would support a higher rating on Swissport. "We could lower our rating on Swissport if we observed that HNA Group's creditworthiness had significantly weakened in the next 12 months. "We could also downgrade Swissport if we view that its subsidiary status within HNA Group was no longer consistent with a moderately strategic assessment." A downgrade could also stem from a significant cash outflow due to higher-than-expected integration and start-up costs for new businesses, or excessive debt-funded investments. This could trigger a fall in the group's EBITDA interest coverage to less than 1.5x, or prompt marked weakening its liquidity. Such deterioration might also signal a weakening of the strategic importance of Swissport to HNA Group, potentially leading us to reassess Swissport's subsidiary status within the group. ===================== N E T H E R L A N D S ===================== ARES EUROPEAN VII: Moody's Assigns B2 Rating to Cl. E-R Notes ------------------------------------------------------------- Moody's Investors Service announced that it has assigned the following definitive ratings to notes ("Refinanced Notes") issued by Ares European CLO VII B.V., (the "Issuer" or "Ares Euro VII"), following a restructuring of the transaction which closed on September 2014. Issuer: Ares European CLO VII B.V.: -- EUR265,000,000 Class A-1-R Senior Secured Floating Rate Notes due 2030, Definitive Rating Assigned Aaa (sf) -- EUR52,000,000 Class A-2A-R Senior Secured Floating Rate Notes due 2030, Definitive Rating Assigned Aa2 (sf) -- EUR10,000,000 Class A-2B-R Senior Secured Fixed Rate Notes due 2030, Definitive Rating Assigned Aa2 (sf) -- EUR29,000,000 Class B-R Senior Secured Deferrable Floating Rate Notes due 2030, Definitive Rating Assigned A2 (sf) -- EUR20,000,000 Class C-R Senior Secured Deferrable Floating Rate Notes due 2030, Definitive Rating Assigned Baa2 (sf) -- EUR29,000,000 Class D-R Senior Secured Deferrable Floating Rate Notes due 2030, Definitive Rating Assigned Ba2 (sf) -- EUR12,500,000 Class E-R Senior Secured Deferrable Floating Rate Notes due 2030, Definitive Rating Assigned B2 (sf) RATINGS RATIONALE Moody's ratings of the rated notes address the expected loss posed to noteholders by the legal final maturity of the notes in 2030. The ratings reflect the risks due to defaults on the underlying portfolio of loans given the characteristics and eligibility criteria of the constituent assets, the relevant portfolio tests and covenants as well as the transaction's capital and legal structure. Furthermore, Moody's is of the opinion that the collateral manager, Ares European Loan Management LLP (the "Collateral Manager"), has sufficient experience and operational capacity and is capable of managing this CLO. The Issuer has issued the Refinancing Notes in connection with the refinancing of the following classes of notes: Class A-1 Notes, Class A-2A Notes, Class A-2B Notes, Class C Notes, Class D Notes and Class E Notes due 2028 (the "Original Notes"), previously issued on September 3, 2014 (the "Original Closing Date"). On the Refinancing Date, the Issuer will use the proceeds from the issuance of the Refinancing Notes to redeem in full its respective Original Notes. On the Original Closing Date, the Issuer also issued one class of subordinated notes, which will remain outstanding. Ares Euro VII is a managed cash flow CLO. At least 96% of the portfolio must consist of senior secured loans and senior secured bonds and up to 4% of the portfolio may consist of unsecured loans, second-lien loans, mezzanine obligations and high yield bonds. The portfolio is expected to be fully ramped up as of the Issue Date and to be comprised predominantly of corporate loans to obligors domiciled in Western Europe. The Collateral Manager will direct the selection, acquisition and disposition of collateral on behalf of the Issuer and may engage in trading activity, including discretionary trading, during the transaction's four-year reinvestment period. Thereafter, purchases are permitted using principal proceeds from unscheduled principal payments and proceeds from sales of credit improved and credit impaired obligations, and are subject to certain restrictions. The transaction incorporates interest and par coverage tests which, if triggered, divert interest and principal proceeds to pay down the notes in order of seniority. Factors that would lead to an upgrade or downgrade of the ratings: The rated notes' performance is subject to uncertainty. The notes' performance is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. The Collateral Manager's investment decisions and management of the transaction will also affect the notes' performance. Loss and Cash Flow Analysis: Moody's modeled the transaction using CDOEdge, a cash flow model based on the Binomial Expansion Technique, as described in Section 2.3 of the "Moody's Global Approach to Rating Collateralized Loan Obligations" rating methodology published in October 2016. The cash flow model evaluates all default scenarios that are then weighted considering the probabilities of the binomial distribution assumed for the portfolio default rate. In each default scenario, the corresponding loss for each class of notes is calculated given the incoming cash flows from the assets and the outgoing payments to third parties and noteholders. Therefore, the expected loss or EL for each tranche is the sum product of (i) the probability of occurrence of each default scenario and (ii) the loss derived from the cash flow model in each default scenario for each tranche. As such, Moody's encompasses the assessment of stressed scenarios. Moody's used the following base-case modeling assumptions: Par amount: EUR450,000,000 Diversity Score: 38 Weighted Average Rating Factor (WARF): 2750 Weighted Average Spread (WAS): 3.65% Weighted Average Recovery Rate (WARR): 43% Weighted Average Life (WAL): 8 years Weighted Average Coupon (WAC): 4.75% As part of the base case, Moody's has looked at the potential exposure to obligors domiciled in countries with local currency country risk ceiling (LCC) of A1 or below. As per the portfolio constraints, exposures to countries with a LCC of A1 or below cannot exceed 10%, with exposures to countries with LCCs of Baa1 to Baa3 further limited to 0%. Given these portfolio constraints and the current sovereign ratings of eligible countries, no additional stress runs were performed as further described in the methodology. Stress Scenarios: Together with the set of modeling assumptions above, Moody's conducted additional sensitivity analysis, which was an important component in determining the ratings assigned to the rated notes. This sensitivity analysis includes increased default probability relative to the base case. Below is a summary of the impact of an increase in default probability (expressed in terms of WARF level) on each of the rated notes (shown in terms of the number of notch difference versus the current model output, whereby a negative difference corresponds to higher expected losses), holding all other factors equal. Percentage Change in WARF: + 15% (from 2750 to 3163) Ratings Impact in Rating Notches: Class A-1-R Senior Secured Floating Rate Notes: 0 Class A-2A-R Senior Secured Floating Rate Notes: -3 Class A-2B-R Senior Secured Fixed Rate Notes: -3 Class B-R Senior Secured Deferrable Floating Rate Notes: -2 Class C-R Senior Secured Deferrable Floating Rate Notes: -2 Class D-R Senior Secured Deferrable Floating Rate Notes: -1 Class E-R Senior Secured Deferrable Floating Rate Notes: -1 Percentage Change in WARF: +30% (from 2750 to 3575) Ratings Impact in Rating Notches: Class A-1-R Senior Secured Floating Rate Notes: -1 Class A-2A-R Senior Secured Floating Rate Notes: -4 Class A-2B-R Senior Secured Fixed Rate Notes: -4 Class B-R Senior Secured Deferrable Floating Rate Notes: -5 Class C-R Senior Secured Deferrable Floating Rate Notes: -3 Class D-R Senior Secured Deferrable Floating Rate Notes: -2 Class E-R Senior Secured Deferrable Floating Rate Notes: -4 Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in October 2016. ARES EUROPEAN VII: S&P Assigns B-(sf) Rating to Class E-R Notes --------------------------------------------------------------- S&P Global Ratings assigned its credit ratings to Ares European CLO VII B.V.'s class A-1-R, A-2A-R, A-2B-R, B-R, C-R, D-R, and E- R notes. At closing, the issuer also issued unrated subordinated notes. The transaction is a reset of an existing transaction, which closed in 2014. The proceeds from the issuance of these notes were used to redeem the existing rated notes. In addition to the redemption of the existing notes, the issuer used the remaining funds to purchase additional collateral and to cover fees and expenses incurred in connection with the reset. The portfolio's reinvestment period ends approximately 4.2 years after the reset closing, and the portfolio's maximum average maturity date is eight years after the reset closing. The ratings assigned to the notes reflect S&P's assessment of: -- The diversified collateral pool, which consists primarily of broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which is bankruptcy remote. S&P said, "We consider that the transaction's documented counterparty replacement and remedy mechanisms adequately mitigate its exposure to counterparty risk under our current counterparty criteria. "Following the application of our structured finance ratings above the sovereign criteria, we consider the transaction's exposure to country risk to be limited at the assigned rating levels, as the exposure to individual sovereigns does not exceed the diversification thresholds outlined in our criteria (see "Ratings Above The Sovereign - Structured Finance: Methodology And Assumptions," published on Aug. 8, 2016). "We consider that the transaction's legal structure to be bankruptcy remote, in line with our legal criteria (see "Structured Finance: Asset Isolation And Special-Purpose Entity Methodology," published on March 29, 2017). "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe that our ratings are commensurate with the available credit enhancement for each class of notes." Ares European CLO VII is a European cash flow corporate loan collateralized loan obligation (CLO) securitization of a revolving pool, comprising euro-denominated senior secured loans and bonds issued mainly by sub-investment grade borrowers. Ares European Loan Management LLP is the collateral manager. RATINGS LIST Ares European CLO VII B.V. EUR 472.6 Million Floating- And Fixed-Rate Notes (Including EUR 55.1 Million Subordinated Notes) Class Rating Amount (mil. EUR ) A-1-R AAA (sf) 265.00 A-2A-R AA (sf) 52.00 A-2B-R AA (sf) 10.00 B-R A (sf) 29.00 C-R BBB (sf) 20.00 D-R BB (sf) 29.00 E-R B- (sf) 12.50 Subordinated NR 55.10 NR--Not rated. CONTEGO CLO II: Moody's Assigns B2(sf) Rating to Cl. F-R Notes --------------------------------------------------------------- Moody's Investors Service announced that it has assigned the following definitive ratings to refinancing notes issued by Contego CLO II B.V. -- EUR209,500,000 Class A-R Senior Secured Floating Rate Notes due 2026, Definitive Rating Assigned Aaa (sf) -- EUR37,600,000 Class B-R Senior Secured Floating Rate Notes due 2026, Definitive Rating Assigned Aa2 (sf) -- EUR24,250,000 Class C-R Senior Secured Deferrable Floating Rate Notes due 2026, Definitive Rating Assigned A2 (sf) -- EUR16,250,000 Class D-R Senior Secured Deferrable Floating Rate Notes due 2026, Definitive Rating Assigned Baa2 (sf) -- EUR23,400,000 Class E-R Senior Secured Deferrable Floating Rate Notes due 2026, Definitive Rating Assigned Ba2 (sf) -- EUR10,800,000 Class F-R Senior Secured Deferrable Floating Rate Notes due 2026, Definitive Rating Assigned B2 (sf) RATINGS RATIONALE Moody's definitive ratings of the rated refinancing notes address the expected loss posed to noteholders by legal final maturity of the notes in 2026. The definitive ratings reflect the risks due to defaults on the underlying portfolio of loans given the characteristics and eligibility criteria of the constituent assets, the relevant portfolio tests and covenants as well as the transaction's capital and legal structure. Furthermore, Moody's is of the opinion that the collateral manager, Five Arrows Managers LLP, has sufficient experience and operational capacity and is capable of managing this CLO. The Issuer will issue the Refinancing Notes in connection with the refinancing of the following classes of notes: Original Class A Notes, Original Class B Notes, Original Class C Notes, Original Class D Notes, Original Class E Notes and Original Class F Notes due 2026 (the "Refinanced Notes"), previously issued on November 5, 2014 (the "Issue Date"). On the refinancing date, the Issuer will use the proceeds from the issuance of the Refinancing Notes to redeem in full its respective Refinanced Notes. On the Issue Date, the Issuer also issued one class of subordinated notes, which will remain outstanding. Other than the changes to the spreads of the notes, the Weighted Average Life test covenant will be extended by 20 months and the collateral quality matrix of the CLO will be modified in connection to the refinancing. Contego CLO II is a managed cash flow CLO. At least 90% of the portfolio must consist of secured senior obligations and up to 10% of the portfolio may consist of unsecured senior loans, second-lien loans, mezzanine loans and high yield bonds. The portfolio is expected to be 100% ramped up as of the closing date and to be comprised predominantly of corporate loans to obligors domiciled in Western Europe. Five Arrows Managers LLP manages the CLO. It directs the selection, acquisition and disposition of collateral on behalf of the Issuer and may engage in trading activity, including discretionary trading, during the transaction's reinvestment period which will end in November 2018. Thereafter, purchases are permitted using principal proceeds from unscheduled principal payments and proceeds from sales of credit risk obligations, and are subject to certain restrictions. The transaction incorporates interest and par coverage tests which, if triggered, divert interest and principal proceeds to pay down the notes in order of seniority. Factors that would lead to an upgrade or downgrade of the ratings: The rated notes' performance is subject to uncertainty. The notes' performance is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. Five Arrows Managers LLP's investment decisions and management of the transaction will also affect the notes' performance. Loss and Cash Flow Analysis: Moody's modeled the transaction using CDOEdge, a cash flow model based on the Binomial Expansion Technique, as described in Section 2.3 of the "Moody's Global Approach to Rating Collateralized Loan Obligations" rating methodology published in October 2016. The cash flow model evaluates all default scenarios that are then weighted considering the probabilities of the binomial distribution assumed for the portfolio default rate. In each default scenario, the corresponding loss for each class of notes is calculated given the incoming cash flows from the assets and the outgoing payments to third parties and noteholders. Therefore, the expected loss or EL for each tranche is the sum product of (i) the probability of occurrence of each default scenario and (ii) the loss derived from the cash flow model in each default scenario for each tranche. As such, Moody's encompasses the assessment of stressed scenarios. The key model inputs Moody's used in its analysis, such as par, weighted average rating factor, diversity score and the weighted average recovery rate, are based on its published methodology and could differ from the trustee's reported numbers. For modeling purposes, Moody's used the following base-case assumptions: Performing par, recoveries and principal proceeds balance: EUR349,289,690 Defaulted par: EUR0 Diversity Score: 30 Weighted Average Rating Factor (WARF): 3050 Weighted Average Spread (WAS): 3.80% Weighted Average Recovery Rate (WARR): 44.50% Weighted Average Life (WAL): 6.57 years As part of the base case, Moody's has addressed the potential exposure to obligors domiciled in countries with local currency country risk ceiling (LCC) of A1 or below. As per the portfolio constraints, exposures to countries with foreign currency government bond rating of A3 or below cannot exceed 10%, with exposures to countries foreign with currency government bond rating of Baa3 further limited to 5%. Following the effective date, and given these portfolio constraints and the current sovereign ratings of eligible countries, the total exposure to countries with a LCC of A1 or below may not exceed 10% of the total portfolio. As a worst case scenario, a maximum 5% of the pool would be domiciled in countries with LCC of A3 and 5% in countries with LCC of Baa3. The remainder of the pool will be domiciled in countries which currently have a LCC of Aa3 and above. Given this portfolio composition, the model was run with different target par amounts depending on the target rating of each class of notes as further described in the methodology. The portfolio haircuts are a function of the exposure size to peripheral countries and the target ratings of the rated notes and amount to 0.75% for the Class A Notes, 0.50% for the Class B Notes, 0.375% for the Class C Notes and 0% for Classes D, E and F Notes. Stress Scenarios: Together with the set of modelling assumptions above, Moody's conducted an additional sensitivity analysis, which was an important component in determining the definitive ratings assigned to the rated notes. This sensitivity analysis includes increased default probability relative to the base case. Below is a summary of the impact of an increase in default probability (expressed in terms of WARF level) on each of the refinancing notes (shown in terms of the number of notch difference versus the current model output, whereby a negative difference corresponds to higher expected losses), holding all other factors equal. Percentage Change in WARF: WARF + 15% (to 3508 from 3050) Ratings Impact in Rating Notches: Class A-R Senior Secured Floating Rate Notes: 0 Class B-R Senior Secured Floating Rate Notes: -2 Class C-R Senior Secured Deferrable Floating Rate Notes: -2 Class D-R Senior Secured Deferrable Floating Rate Notes: -1 Class E-R Senior Secured Deferrable Floating Rate Notes: 0 Class F-R Senior Secured Deferrable Floating Rate Notes: 1 Percentage Change in WARF: WARF +30% (to 3965 from 3050) Ratings Impact in Rating Notches: Class A-R Senior Secured Floating Rate Notes: -1 Class B-R Senior Secured Floating Rate Notes: -3 Class C-R Senior Secured Deferrable Floating Rate Notes: -3 Class D-R Senior Secured Deferrable Floating Rate Notes: -2 Class E-R Senior Secured Deferrable Floating Rate Notes: -1 Class F-R Senior Secured Deferrable Floating Rate Notes: -2 Further details regarding Moody's analysis of this transaction may be found in the related New Issue report, published around the Issue Date in November 2014 and available on Moodys.com. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in October 2016. =========== S E R B I A =========== HIP PETROHEMIJA: Serbian Court Approves Pre-Pack Bankruptcy Plan ---------------------------------------------------------------- Misha Savic at Bloomberg News reports that HIP Petrohemija said the Serbian court approved a pre-packaged bankruptcy plan for the company, allowing conversion into equity of 52.3% of all creditors' claims that existed before end-January, and writedown of remaining 47.7%. According to Bloomberg, under the plan, the government and state- owned entities are expected to own 76% of HIP Petrohemija, while Lukoil and Gazprom Neft's NIS is expected to own a combined 24% stake. The financial restructuring is expected to be completed by year-end, Bloomberg notes. HIP Petrohemija is Serbia's biggest maker of petrochemicals. ========= S P A I N ========= BANCO POPULAR ESPANOL: CDS Holders Await Compensation ----------------------------------------------------- Katie Linsell and Tom Beardsworth at Bloomberg News report that more than two months after junior notes were wiped out in Europe's first forced sale of a failing lender under its new resolution regime, holders of credit-default swaps haven't been compensated. Banco Popular Espanol SA subordinated bonds were written off in June, when the struggling Spanish lender was sold to Banco Santander SA for one euro by the European Union's Single Resolution Board, Bloomberg recounts. Within days, the group of traders that makes decisions for the US$10 trillion credit derivatives market ruled unanimously that credit-default swaps should pay out, Bloomberg relates. The sticking point is whether bondholders' rights to litigate should affect the amount paid, Bloomberg notes. "Calling a credit event was straightforward, but deciding how the payout should work is proving tricky," Bloomberg quotes Edmund Parker, global head of derivatives and structured products at law firm Mayer Brown in London, as saying. "A gray area has arisen in the new definitions." Banco Popular's sale constituted a governmental intervention credit event triggering payouts under the new rules, the International Swaps & Derivatives Association said on June 9, Bloomberg discloses. According to Bloomberg, Depository Trust & Clearing Corp. data show outstanding contracts covered a net US$162 million of Banco Popular's debt as of that date. Traders had expected insurance payouts on Banco Popular to vindicate the market overhaul, Bloomberg relays. But so far, the first test under Europe's new resolution regime is highlighting the challenge of protecting bondholders as regulators shift the burden of bank rescues to creditors from taxpayers, Bloomberg states. Lawyers representing a group of Banco Popular's junior bondholders, including Pacific Investment Management Co. and Anchorage Capital Group, are already challenging the decision to impose losses, Bloomberg relays. The EU's Bank Recovery and Resolution Directive states that creditors shouldn't be worse off if a bank is resolved than if it were liquidated, according to Bloomberg. Some holders of credit protection are concerned that including existing legal claims and the right to start future proceedings in settlement auctions would lower the payout on swaps and hurt the credibility of the derivatives market, Bloomberg states. It's unfair to some protection holders because the rights aren't transferable, Bloomberg relays, citing Jochen Felsenheimer, the Munich-based managing director of XAIA Investment GmbH, which holds swaps on Banco Popular. ISDA's determinations committee has met at least seven times since June to discuss settlement auction terms and held talks with market participants to establish whether defunct bonds have a market value and have changed hands, Bloomberg notes. They'll meet again on Friday, Aug. 18, Bloomberg discloses. According to Bloomberg, the determinations committee said it will seek additional public comment after agreeing terms of the settlement auctions. Mr. Parker said if it can't agree, the issue could be sent to an external review panel that would further delay the outcome, Bloomberg notes. Banco Popular Espanol SA is a Spain-based commercial bank. The Bank divides its business into four segments: Commercial Banking, Corporate and Markets; Insurance Activity, and Asset Management. The Bank's services and products include saving and current accounts, fixed-term deposits, investment funds, commercial and consumer loans, mortgages, cash management, financial assessment and other banking operations aimed at individuals and small and medium enterprises (SMEs). The Bank is a parent company of Grupo Banco Popular, a group which comprises a number of controlled entities, such as Targobank SA, GAT FTGENCAT 2005 FTA, Inverlur Aguilas I SL, Platja Amplaries SL, and Targoinmuebles SA, among others. In January 2014, the Company sold its entire 4.6% stake in Inmobiliaria Colonial SA during a restructuring of the property firm's capital. ********* 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. Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2017. 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 Joseph Cardillo at 856-381-8268. * * * End of Transmission * * *