/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/230913.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, September 13, 2023, Vol. 24, No. 184 Headlines G E R M A N Y REVOCAR 2023-2: Moody's Assigns (P)Ba1 Rating to Class D Notes K A Z A K H S T A N FORTELEASING JSC: Fitch Hikes LongTerm IDR to 'BB', Outlook Stable N E T H E R L A N D S FBN FINANCE: Fitch Affirms 'B-' LT Sr. Unsec Notes Rating R U S S I A UZAGROLEASING JSC: Fitch Lowers LongTerm IDR to 'B-', Outlook Neg. S L O V A K I A 365.BANK AS: Fitch Hikes LongTerm IDR to 'BB', Outlook Stable 365.BANK AS: Moody's Assigns 'Ba1' Deposit & Issuer Ratings T U R K E Y TURKIYE: Fitch Affirms 'B' Foreign Currency IDR, Outlook Now Stable U N I T E D K I N G D O M BUCKINGHAM GROUP: Mace Takes Over Birmingham City Stadium Work CHI CHI: Bought Out of Administration by Reem Clothing HAYA HOLDCO 2: S&P Lowers Long-Term Issuer Credit Rating to 'D' INDEPENDENTLY EAST: Enters Liquidation After FCA Froze Accounts INLAND HOMES: Breaches Loan Covenant with HSBC NOSTRUM OIL: S&P Withdraws 'SD' Long-Term Issuer Credit Rating WILKO LTD: Poundland Agrees to Take on Leases of Up to 71 Stores X X X X X X X X [*] EUROPE: Solar Cos. Face Bankruptcy Risk After Prices Fall - - - - - ============= G E R M A N Y ============= REVOCAR 2023-2: Moody's Assigns (P)Ba1 Rating to Class D Notes -------------------------------------------------------------- Moody's Investors Service has assigned the following provisional ratings to Notes to be issued by RevoCar 2023-2 UG (haftungsbeschraenkt): EUR[ ]M Class A Floating Rate Asset Backed Notes due September 2036, Assigned (P)Aaa (sf) EUR[ ]M Class B Floating Rate Asset Backed Notes due September 2036, Assigned (P)Aa2 (sf) EUR[ ]M Class C Floating Rate Asset Backed Notes due September 2036, Assigned (P)A3 (sf) EUR[ ]M Class D Floating Rate Asset Backed Notes due September 2036, Assigned (P)Ba1 (sf) Moody's has not assigned a rating to the EUR[ ]M Class E Floating Rate Asset Backed Notes due September 2036. RATINGS RATIONALE The Notes are backed by a static pool of German auto loans originated by Bank11 fuer Privatkunden und Handel GmbH (Bank11). This represents the thirteenth issuance out of the RevoCar program. The preliminary portfolio of assets amount to approximately EUR400.0 million as of July 31, 2023 pool cut-off date. The Liquidity Reserve for senior fees, swap rate and Class A Notes coupon payments will be funded to 1.2% of the total pool balance at closing and the total credit enhancement for the Class A Notes will be 11.8%. The ratings are primarily based on the credit quality of the portfolio, the structural features of the transaction and its legal integrity. According to Moody's, the transaction benefits from various credit strengths such as a granular portfolio and an experienced originator and servicer. However, Moody's notes that the transaction features some credit weaknesses such as an unrated servicer. Various mitigants have been included in the transaction structure such as a back-up servicer facilitator, which is obliged to appoint a back-up servicer if certain triggers are breached. The preliminary portfolio of underlying assets was distributed through dealers to private individuals (94.1%) and commercial borrowers (5.9%) to finance the purchase of new (29.3%) and used (70.7%) cars. As of July 31, 2023, the preliminary portfolio consists of 19,158 auto finance contracts with a weighted average seasoning of 3.9 months. The contracts have equal instalments during the life of the contract and a larger balloon payment at maturity. On average, the balloon contracts account for 76.1% of the entire portfolio cash flows. Moody's determined the portfolio lifetime expected defaults of 1.5%, expected recoveries of 35.0% and Aaa portfolio credit enhancement (PCE) of 8.0% related to borrower receivables. The expected defaults and recoveries capture Moody's expectations of performance considering the current economic outlook, while the PCE captures the loss Moody's expect the portfolio to suffer in the event of a severe recession scenario. Expected defaults and PCE are parameters used by Moody's to calibrate its lognormal portfolio loss distribution curve and to associate a probability with each potential future loss scenario in the cash flow model to rate Auto ABS. Portfolio expected defaults of 1.5% are in line with the EMEA Auto ABS average and are based on Moody's assessment of the lifetime expectation for the pool taking into account: (i) historical performance of the book of the originator, (ii) benchmark transactions, and (iii) other qualitative considerations. Portfolio expected recoveries of 35.0% are in line with the EMEA Auto ABS average and are based on Moody's assessment of the lifetime expectation for the pool taking into account: (i) historical performance of the originator's book, (ii) benchmark transactions, and (iii) other qualitative considerations. PCE of 8.0% is in line with the EMEA Auto ABS average and is based on Moody's assessment of the pool which is mainly driven by: (i) the relative ranking to originator peers in the EMEA market, and (ii) the weighted average current loan-to-value of 86.9% which is in line with the sector average. The PCE level of 8.0% results in an implied coefficient of variation (CoV) of 66.9%. The principal methodology used in these ratings was "Moody's Global Approach to Rating Auto Loan- and Lease-Backed ABS" published in November 2022. Factors that would lead to an upgrade or downgrade of the ratings: Factors that may cause an upgrade of the ratings of the Notes include significantly better than expected performance of the pool together with an increase in credit enhancement of the Notes. Factors that would lead to a downgrade of the ratings include: (i) increased counterparty risk leading to potential operational risk of servicing or cash management interruptions; and (ii) economic conditions being worse than forecast resulting in higher arrears and losses. =================== K A Z A K H S T A N =================== FORTELEASING JSC: Fitch Hikes LongTerm IDR to 'BB', Outlook Stable ------------------------------------------------------------------ Fitch Ratings has upgraded JSC ForteLeasing (FL) Foreign-and Local-Currency Long-Term Issuer Default Ratings (IDRs) to 'BB' from 'BB-' and National Long-Term Rating to 'A(kaz)' from 'A-(kaz)'. The Outlooks are Stable. Fitch has also upgraded FL's Shareholder Support Rating (SSR) to 'bb' from 'bb-'. The rating action follows the upgrade of ForteBank Joint Stock Company's (FB) Long-Term IDRs to 'BB' from 'BB-' on 31 August 2023. KEY RATING DRIVERS Strong Likelihood of Support: FL's ratings are driven by Fitch's assessment of potential shareholder support and are equalised with FB's ratings, reflecting a high level of management and operational integration, strong synergies with the parent as the only entity providing leasing services to clients of the banking group, and the high reputational risk to FB in case of FL's default, given the same branding and full ownership. FB is one of the largest privately-owned banks in Kazakhstan. High Level of Integration: Fitch's view of support is additionally underpinned by the close supervision of FL by the bank's management, sizeable parental funding (73% of FL's borrowings at end-1H23) and record of acceptable performance. Fitch believes FL's small size relative to FB (less than 1% of its total assets) would make any required extraordinary support manageable for the shareholder. Limited Standalone Viability: In Fitch's view, FL's standalone credit profile would be materially lower than the support-driven IDRs. This is due to FL's narrow independent franchise, which is highly correlated with that of FB, modest absolute size and high reliance on FB for funding. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A weakening of FB's propensity to support FL triggered, for example, by weaker integration, reduced ownership or potential deviation of FL from the group's objectives could lead to a downgrade of FL's SSR and Long-Term IDRs. - A downgrade of FB's Long-Term IDRs and National Long-Term Rating would result in a corresponding downgrade of FL's SSR, Long-Term IDRs and National Long-Term Rating. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - An upgrade of FB's Long-Term IDR would result in a corresponding upgrade of FL's SSR and Long-Term IDR. - An upgrade of FB's National Long-Term Rating could lead to an upgrade of FL's National Long-Term Rating, provided FL's relevance for FB continues to increase. PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS FL's ratings are linked to and will therefore likely move in tandem with FB's IDRs. ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- JSC ForteLeasing LT IDR BB Upgrade BB- ST IDR B Affirmed B LC LT IDR BB Upgrade BB- LC ST IDR B Affirmed B Natl LT A(kaz)Upgrade A-(kaz) Shareholder Support bb Upgrade bb- ===================== N E T H E R L A N D S ===================== FBN FINANCE: Fitch Affirms 'B-' LT Sr. Unsec Notes Rating --------------------------------------------------------- Fitch Ratings has affirmed FBN Holdings Plc's (FBNH) and First Bank of Nigeria Ltd's (FBN) Long-Term Issuer Default Ratings (IDRs) at 'B-' with a Stable Outlook. Fitch has also affirmed the issuers' National Long-Term Ratings at 'A(nga)' and assigned Stable Outlooks. KEY RATING DRIVERS FBNH's and FBN's Long-Term IDRs of 'B-' are driven by their standalone creditworthiness, as expressed by their Viability Ratings (VR) of 'b-'. The VRs are constrained by Nigeria's Long-Term IDRs due to the issuers' high sovereign exposure relative to their capital and the concentration of their operations in Nigeria. The issuers' National Ratings balance a strong franchise, healthy profitability, moderate capital buffers and a stable funding profile against high credit concentrations. VRs Equalised with Group VR: FBNH is a non-operating bank holding company (BHC). Its VR is equalised with the group VR, derived from the consolidated risk assessment of the group, due to the absence of double leverage and the BHC's strong liquidity management. As the main operating entity (end-2022: 95% of consolidated group assets), FBN's VR is also equalised with the group VR. Fast Pace of Reforms: Recently-elected President Bola Tinubu has pursued key reforms faster than Fitch Ratings had expected, removing the fuel subsidy and devaluing the official exchange rate within weeks of inauguration in May 2023. These reforms overall are positive for the sovereign's credit profile but pose near-term challenges, including adding to inflationary pressures and risks of social unrest. Strong Franchise: FBN is Nigeria's third-largest bank, accounting for 10.4% of banking system assets at end-2022. Its strong franchise supports a stable funding profile and low funding costs. Revenue diversification is significant, with non-interest income representing 36% of operating income in 2022. High Sovereign Exposure: Single-borrower credit concentration is material, with the 20-largest loans representing over 200% of total equity at end-2022. Oil and gas exposure (end-2022: 31% of net loans) is greater than the banking-system average. Sovereign exposure through securities and cash reserves at Central Bank of Nigeria is high relative to FBNH's Fitch Core Capital (FCC), at over 350% at end-2022. High Stage 2 Loans: FBNH's impaired loans (Stage 3 loans under IFRS 9) ratio declined significantly to 4.7% at end-2022 from a peak of 25% at end-2018 as a result of sizeable write-offs, reclassifications and, more recently, the flattering effect of strong loan growth. Specific loan loss allowance coverage of impaired loans was 44% at end-2022. Stage 2 loans remain high (end-2022: 20% of gross loans; concentrated with oil and gas and largely US-dollar denominated) and represent a key risk to asset quality, having inflated following the naira devaluation. Healthy Profitability: FBNH delivers healthy profitability, as indicated by operating returns on risk-weighted assets (RWAs) averaging 2.9% over the past four years. Earnings benefit from a low cost of funding and strong non-interest income, but are constrained by a high cost-to-income ratio (2022: 63%) and significant loan impairment charges (LICs). Moderate Capital Buffer: FBN's standalone total capital adequacy ratio (CAR; end-1H23: 16.5% including unaudited interim profits) has a moderate buffer over the bank's minimum regulatory requirement of 15%. Impaired loans net of specific loan loss allowances has declined as a share of FCC to 10% at end-2022. Capitalisation may improve in the near term due to a proposed NGN150 billion rights issue. Stable Funding Profile: FBNH's customer deposit base (end-1H23: 77% of total non-equity funding) comprises a high share of retail deposits and current and savings accounts (end-1H23: 80%), supporting funding stability and low funding costs. Depositor concentration is fairly low. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A sovereign downgrade could result in a downgrade of the VR and Long-Term IDR if Fitch believes that the direct and indirect effects of a sovereign default are likely to have a sufficiently large effect on capitalisation and FC liquidity to undermine the bank's viability. Absent a sovereign downgrade, a downgrade of the VR and Long-Term IDR could result from the combination of a sharp naira depreciation and a marked increase in the impaired loans ratio, resulting in a breach of minimum capital requirements without near-term prospects for recovery. It could also result from a severe tightening of FC liquidity. A downgrade of the bank's National Ratings would result from a weakening of its creditworthiness relative to other Nigerian issuers'. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade of the VR and Long-Term IDR would require a sovereign upgrade and for the bank to maintain a strong financial profile. An upgrade of the bank's National Ratings would result from a strengthening of its creditworthiness relative to other Nigerian issuers'. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS Senior unsecured debt issued through FBN Finance Company B.V. is rated at the same level as FBN's Long-Term IDR, reflecting Fitch's view that the likelihood of default on these obligations is the same as the likelihood of default of the bank. The Recovery Rating of these notes is 'RR4', indicating average recovery prospects. FBNH's Government Support Rating (GSR) of 'no support' (ns) reflects Fitch's view that sovereign support is unlikely to extend to a BHC, given its low systemic importance and a liability structure that may be more politically acceptable to be bailed in. The government's ability to provide full and timely support to commercial banks is weak due to its constrained FC resources and high debt-servicing metrics. The GSR for FBN is therefore 'ns', reflecting its view of no reasonable assumption of support for senior creditors being forthcoming should the bank become non-viable. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES The rating of the senior unsecured debt is sensitive to changes in FBN's Long-Term IDR. An upgrade of FBN's GSR would require an improvement in the government's ability to provide support, which would most likely be indicated by an increase in international reserves and an improvement in debt servicing metrics. As a bank holding company, upside for FBNH's GSR is limited. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit neutral or have only a minimal credit impact on the entities, either due to their nature or the way in which they are being managed by the entities. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation of the materiality and relevance of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- FBN Finance Company B.V senior unsecured LT B- Affirmed RR4 B- First Bank of Nigeria Ltd LT IDR B- Affirmed B- ST IDR B Affirmed B Natl LT A(nga) Affirmed A(nga) Natl ST F1+(nga)Affirmed F1+(nga) Viability b- Affirmed b- Government Support ns Affirmed ns FBN Holdings Plc LT IDR B- Affirmed B- ST IDR B Affirmed B Natl LT A(nga) Affirmed A(nga) Natl ST F1+(nga)Affirmed F1+(nga) Viability b- Affirmed b- Government Support ns Affirmed ns =========== R U S S I A =========== UZAGROLEASING JSC: Fitch Lowers LongTerm IDR to 'B-', Outlook Neg. ------------------------------------------------------------------ Fitch Ratings has downgraded Uzbekistan's Uzagroleasing Joint Stock Company (UAL) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to 'B-' from 'B+'. The Outlooks are Negative. The rating action reflects heightened risk over support from the state not being fully sufficient to offset UAL's deteriorated financial performance, which may negatively affect its already weak Standalone Credit Profile (SCP). Fitch continues to link UAL with Uzbekistan (BB-/Stable), given its role as key provider of leasing solutions to national agribusinesses. Its reassessment of support rating factors under Fitch's Government-Related Entities (GRE) Criteria resulted in a lower score of 22.5 (previously 35) out of a maximum 60, which combined with a SCP of 'ccc', leads to UAL's IDR being three notches below Uzbekistan's sovereign rating. KEY RATING DRIVERS Status, Ownership and Control: 'Very Strong' Fitch views UAL as a public-mission GRE majority-owned and controlled by Uzbekistani state. The state exercises prudent control over UAL's operations, primarily through a supervisory board consisting of five state-appointed directors and two independent directors. The board ensures that UAL implements its strategy under target priorities outlined in the state programme for agricultural support and development. The state also controls, via Uzbekistan State Asset Management Agency (SAMA), UAL's investment, debt and dividend policy. UAL operates under ordinary commercial law but Fitch assumes that liability transfer to the state or a state-designated entity may be among the supportive measures in a UAL default. Support Track Record: 'Moderate' Fitch has revised support track record to 'Moderate' from 'Very Strong' to reflect weaker-than-expected support from the state not fully offsetting UAL's losses incurred in 2022 and its missed payments to a state-owned bank. Although the state has recently proposed an equity swap on the funding it has so far provided to UAL, which will improve UAL's capital structure, lack of new funding will lead to continued deterioration of the financial profile and accumulation of losses, given UAL's structurally weak liquidity. Socio-Political Implications of Default: 'Moderate' Fitch has revised the assessment of this factor to 'Moderate' from 'Strong' to reflect a weaker incentive for the state to intervene in settling UAL's past missed timely payments on its debt. In its view UAL's dependence on regular access to funding, without which it would likely discontinue leasing operations, remains crucial. Financial Implications of Default: 'Moderate' State-originated debt comprised about 50% of UAL's total debt in 2018-2022. The entire debt stock of UAL is in local currency and at fixed rates. UAL is a regular participant in the domestic capital market, but its market borrowing remains modest relative to larger national government-related entities' (GRE). This means its distress would have lower financial implications than other large GREs for investors. It also means a UAL default would have a moderate impact on the availability and cost of finance for the government and other GREs. Fitch has revised UAL's SCP at 'ccc' from 'ccc+' under its Non-Bank Financial Institutions Rating Criteria, following the recent court ruling in favour of its lender Xalq Bank for overdue material debt from UAL. Fitch believes this undermines UAL's reputation and constrains access to funding or makes it more expensive, thus negatively affecting its funding and liquidity profile on a standalone basis. The ruling also highlights limitations in liquidity management. UAL's SCP reflects a weak financial profile, specifically weak asset quality; high encumbrance of capital and leverage; as well as a reliance on subsidised state funding. ESG - Governance Structure: As an integral part of the state system of subsidised agricultural production, UAL has limited autonomy. In recent years this has led to accumulation of losses, deterioration of its funding base and weak liquidity. UAL is exposed to the risk of negative profitability and poor asset quality, due to state decisions aimed at providing concessionary support of the agricultural sector, which could lead to sudden increases in impaired leases and materialisation of losses. ESG - Data Transparency: UAL's financial transparency is limited, marked by late publication of financial reports, and more importantly incomplete, inconsistent or missing disclosure of considerable information. UAL's limited compliance with timely and accurate disclosure of important financial information could lead to last-minute materialisation of credit risks, eroding its financial profile and funding availability. Derivation Summary Fitch classifies UAL as a GRE of Uzbekistan under its GRE Criteria, as it is majority owned and controlled by the state. Under the GRE Criteria, Fitch applies a top-down approach based on its assessment of the strength of linkage with and incentive to support by the sovereign. UAL's lower support score of 22.5 points results in its IDR being three notches below Uzbekistan sovereign's IDR. UAL 'ccc' SCP, being more than four notches away from the sovereign's IDR, is not driving the rating but indirectly underscores the importance of the scope and timeliness of state support. Liquidity and Debt Structure According to audited financials UAL's full-year 2022 debt increased to UZS1.7 trillion (2021: UZS1.7 trillion), underpinned by a growing leasing portfolio. UAL's debt is composed of local preferential state loans and bank loans. Preferential loans from State Fund for Agriculture Support carry below market interest rates on average at 3.4% compared with 16.2% on bank loans, and have longer maturity. Debt maturing in 2024 totals UZS326 billion, which is slightly above the debt Fitch expects to be swapped into equity. The latter should help ease liquidity stress. Issuer Profile UAL is a national leasing company, and had total assets of UZS2.0 billion (USD181 million-equivalent) at end-2022. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Continued deterioration of UAL's links with the state, leading to further lowering of its support score, which combined with a downward SCP revision, would lead to a withdrawal of support assessment, with SCP becoming the primary driver of IDR - Downgrade of Uzbekistan's ratings Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Improved links with the state from markedly stronger provision of support and/or upward reassessment of incentives for state support - Upgrade of Uzbekistan's ratings ESG Considerations UAL has an ESG Relevance Score of '5' for Management Strategy, revised from '4', as UAL's limited autonomy from state decision making has led to the accumulation of losses, deterioration of its funding base and weak liquidity. These factors have a negative impact on the credit profile, and are highly relevant to the rating, resulting in the current downgrade and the assignment of a Negative Outlook. UAL has an ESG Relevance Score of '5' for Financial Transparency, revised from '4', as UAL's financial disclosure is marked by the late publication of financial reports, and more importantly incomplete, inconsistent or missing disclosure of considerable information. These factors have a negative impact on the credit profile, and are highly relevant to the rating, resulting in the current downgrade and the assignment of a Negative Outlook. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Uzagroleasing Joint Stock Company LT IDR B- Downgrade B+ ST IDR B Affirmed B LC LT IDR B- Downgrade B+ LC ST IDR B Affirmed B =============== S L O V A K I A =============== 365.BANK AS: Fitch Hikes LongTerm IDR to 'BB', Outlook Stable ------------------------------------------------------------- Fitch Ratings has upgraded 365.bank, a.s.'s Long-Term Issuer Default Rating (IDR) to 'BB' from 'BB-' with Stable Outlook and Viability Rating (VR) to 'bb' from 'bb-'. The upgrade captures the improvements in the bank's risk profile following an intended reduction in the legacy corporate loans and continued growth in lower-risk mortgages along with the maintenance of adequate financial metrics. The Stable Outlook reflects Fitch's expectations that continued de-leveraging in the corporate segment and moderation of growth in housing lending will underpin the bank's financial performance during 2023-2025. KEY RATING DRIVERS 365.bank's IDRs are driven by its standalone creditworthiness, as expressed by its 'bb' VR. The VR balances the bank's adequate profitability and solvency metrics and healthy funding and liquidity profile against the moderate market franchise and residual risks stemming from the still significant, albeit reducing, legacy corporate exposures and the retail loans' seasoning after a period of rapid growth. Improving Risk Profile: Credit risks are reducing following the bank's continued de-leveraging in the legacy higher-risk corporate segment. Net of specific loan loss allowances it was equal to 0.5x IFRS equity at end-1H23 (end-1H22: 0.8x), while management targets a further moderate reduction in the next two years. This will be positive for the bank's credit metrics. Stronger Retail Focus: The corporate loan book more than halved in size from end-2020 to 21% of loans at end-1H23 (end-2020: 49%). Most loan growth remains in the retail segment, primarily mortgages (end-1H23: 47% of loans), and consumer finance (30%). Reasonable Asset Quality Metrics: The bank's impaired (Stage 3) loans ratio of 5.8% at end-1H23 is above the sector average of 2%. This is mainly driven by consumer finance loans, which are legacy in nature given the limited previous write-offs, but reasonably provisioned. In 2023-2024, Fitch expects impaired loans to remain broadly in line with the current levels. Operating Environment Pressures Ease: Fitch has revised the outlook on the operating environment in Slovakia to stable from negative, considering expected normalisation in domestic consumption and export performance, as captured by its forecasts for the country's real GDP growth (2023F: 1.3%; 2024F: 1.9%). Fitch also expects annual inflation to moderate closer to an average 5% in 2024 (2023F: 11.2%). Banking sector performance remains stable and asset-quality has been resilient, helped by government energy support measures for households and firms and a steady labour market. Good Profitability: Pre-impairment profit equalled an annualised 3.2% of average gross loans in 1H23, providing the bank with moderate capacity to absorb impairment losses through its income statement. Earnings remained strong in 1H23, with an annualised operating profit at 3.3% of risk-weighted assets (RWAs). Fitch expects it to moderate in the next two years due to growth in lower-margin mortgages and normalisation of loan impairment charges. High Capital Ratios: The bank's capital ratios declined in 1H23 after a large cash pay-out but the common equity Tier 1 (CET1) ratio remained high, at 20.9% at end-1H23. Fitch's assessment of the bank's capitalisation also captures the reduced but still-significant exposure to legacy corporate lending. The management targets managing the CET1 ratio at around the current levels in 2023-2024, before moderating closer to 17%. Reasonable Funding Profile: The bank's funding and liquidity profile is a rating strength as it is almost entirely funded by granular customer deposits, predominantly sourced from retail customers. Fitch expects the gross loans-to-deposits ratio (end-1H23: 89%) to increase over the medium term with higher wholesale funding and loan growth. Fitch expects buffers of high-quality liquid assets to remain strong. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade 365.bank's VR, and consequently Long-Term IDR, would be downgraded if the bank experiences a sharp and sustained deterioration in asset quality (Stage 3 loans ratio at above 10%), pressuring its capitalisation and operating profitability metrics without clear prospects for recovery. A substantial increase in risk appetite, including evidence of higher risk concentrations, especially if combined with asset quality and profitability deterioration, or evidence of material governance weakness would be negative for the ratings. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upside potential is currently limited, although further significant reduction of risks from legacy corporate lending would be positive for the bank's risk profile. An upgrade would require a material strengthening of the bank's franchise with a record of a stable business model and profitability and improved asset-quality metrics, evidenced by low generation of impaired loans and moderation of risks in other credit exposures, while maintaining adequate capital ratios and a stable liquidity profile. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS 365.bank's senior preferred (SP) debt is aligned with its Long-Term IDR. This reflects Fitch's view that the default risk of SP debt is equivalent to the default risk captured by the IDR and that this debt class has average recovery prospects in a resolution. This is because Fitch expects the bank to predominantly use SP debt to meet its resolution buffer requirements, and Fitch does not expect the bank to issue and maintain senior non-preferred and more junior debt of more than 10% of the resolution group's RWAs. The bank's GSR of 'no support' reflects Fitch's view that support from the authorities cannot be relied on, given that Slovakia has adopted resolution legislation that requires senior creditors to participate in losses. In its view, although support from 365.bank's majority shareholder, J&T Finance Group, is possible, it cannot be relied upon in all circumstances. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES 365.bank's SP debt rating is sensitive to the same factors driving the bank's Long-Term IDR. An upgrade of the GSR would be contingent on a positive change in Slovakia's propensity to support domestic banks. While not impossible, this is highly unlikely, in Fitch's view, in light of the prevailing resolution regime. VR ADJUSTMENTS The earnings & profitability score at 'bb' is below the 'bbb' category implied score due to the following adjustment reason: earnings stability (negative). The capitalisation & leverage score at 'bb' is below the 'a' category implied score due to the following adjustment reason: risk profile and business model (negative). The funding and liquidity score at 'bb+' is below the 'bbb' category implied score due to the following adjustment reason: deposit structure (negative). ESG CONSIDERATIONS Fitch has revised 365.bank's ESG Relevance Score to '3' from '4' for Governance Structure considering the reduction of related-party lending along with the bank's de-leveraging in the corporate segment. This has underpinned its assessment of the bank's risk profile. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Prior ----------- ------ ----- 365.bank, a.s. LT IDR BB Upgrade BB- ST IDR B Affirmed B Viability bb Upgrade bb- Government Support ns Affirmed ns Senior preferred LT BB Upgrade BB- 365.BANK AS: Moody's Assigns 'Ba1' Deposit & Issuer Ratings ----------------------------------------------------------- Moody's Investors Service has assigned Ba1/ Not Prime (NP) long- and short-term deposit and issuer ratings to 365.BANK A.S. (365.bank), as well as Baa2/Prime-2 (P-2) long and short-term Counterparty Risk Ratings (CRRs). The outlook on the long-term deposit ratings is positive and the outlook on the long-term issuer ratings is stable. Concurrently, the rating agency assigned a ba1 Baseline Credit Assessment (BCA) and ba1 Adjusted BCA, as well as a Baa1(cr)/P-2(cr) Counterparty Risk Assessment (CR Assessment) to the bank. RATINGS RATIONALE --ASSIGNMENT OF BASELINE CREDIT ASSESSMENT AND ADJUSTED BASELINE CREDIT ASSESSMENT With a total of EUR4.7 billion in assets as of year-end 2022, 365.bank is one of the smaller banks in Slovakia (Government of Slovakia issuer rating A2 negative), while still ranking 7th in the domestic banking sector. It operates as a universal bank, providing a wide range of banking services, lending and savings products, as well as asset management services through its wholly-owned subsidiary, 365.invest. 365.bank is the legal successor of Postova banka, holds the exclusive right to utilize the offices of the Slovak Post and continues to operate 'Postova banka' as an additional brand along its more innovative 365.bank brand. The Post office franchise grants 365.bank access to a substantial customer base of nearly 800 thousand individuals. With a stake of more than 98%, J&T Finance Group SE (JTFG), domiciled in the Czech Republic, holds the majority ownership in the bank. 365.bank is presently in a multi-year transformation process, redirecting its focus from high-risk corporate lending towards a primarily retail lender with focus on mortgages and unsecured consumer loans. Moody's acknowledges the progress made by the bank in reducing its corporate loan book, yet the rating agency still sees some execution challenges until completion, particularly in the highly competitive Slovak residential mortgage sector. The current operating environment, characterized by high interest rates and subdued loan demand, also adds to the difficulties the bank will face in this transition. These remaining execution risks and a rather limited track record in achieving a sustainably improved business model constrain the ba1 BCA assigned to the bank. 365.bank's ba1 BCA reflects its solvency profile, incorporating the bank's asset risks stemming from the overall weak quality of legacy corporate loans with single borrower concentration risks and often complex loan structures. While 365.bank has made notable progress in cleaning up its loan portfolio over the past few years, its level of problem loans remains considerably above that of the system, also driven by the weak quality of its unsecured consumer loans. Asset risks are further amplified by the rapid expansion of residential mortgages. These loan book risks are mitigated by 365.bank's rather comfortable level of capitalization. While Moody's anticipates that the on-going process of de-risking the bank's balance sheet will result in the distribution of high dividends, it expects 365.bank to maintain robust buffers well above the regulatory minimum requirements and sufficient to balance remaining and future credit risks. Moody's expects the bank's profitability, which was above the sector average in the past years, will moderate over the next 12 to 18 months but to remain solid. Its large low-cost deposit base keeps funding costs below that of peers and will support the bank's ability to offer new retail loans at a competitive pricing while gradually phasing out higher yielding corporate loans. 365.bank's ba1 BCA is supported by its sound liquidity and funding profile resulting from the bank's extensive regional presence and its high share of granular deposits, which Moody's considers a key strength. This competitive advantage helps protect the bank's fully deposit-oriented funding profile in a system where deposit scarcity is increasingly common, and supports its liquidity. The assigned ratings also incorporate 365.bank's environmental, social and governance (ESG) considerations, as per Moody's General Principles for Assessing Environmental, Social and Governance Risks Methodology. Because of the magnitude of the business model transformation, 365.bank's governance risks are high, which the rating agency reflects in a one-notch negative qualitative adjustment to the bank's BCA and a Governance Issuer Profile score (IPS) of G-4. While the bank has demonstrated credibility of management decisions so far, this assessment considers the bank's ongoing transformation process, remaining challenges towards a successful transitioning and a limited track record to underpin the new business model's success. These remaining risks have a negative impact on the bank's ratings and result in a Credit Impact Score of CIS-4. Moody's considers 365.bank's strategic importance to JTFG to be limited, reflected - among others - by distinct branding and independent operations as well as a multiple point of entry resolution approach adopted by the group. Therefore Moody's assesses the probability of affiliate support from JTFG to be moderate, which does not translate into any uplift from 365.bank's BCA and results in an Adjusted BCA of ba1, at the same level as the BCA. --ASSIGNMENT OF RATINGS 365.bank's ratings reflect the bank's ba1 BCA and Adjusted BCA and the results from Moody's Advanced Loss Given Failure (LGF) analysis, which does not result in any uplift for deposit and issuer ratings; and the agency's assumption of a low government support, given the bank's small size in the Slovak banking sector, which does not result in any rating uplift. The bank is subject to the EU Bank Recovery and Resolution Directive (BRRD), which Moody's considers to be an Operational Resolution Regime (ORR). For banks operating in ORRs the rating agency applies its Advanced LGF analysis, which takes into account the risks faced by the different instrument classes across the liability structure, should the bank enter resolution. The Advanced LGF analysis incorporates the expected evolution of 365.bank's liability structure, which results in no rating uplift for deposit and issuer ratings. This is explained by the bank's predominately retail deposit base and low volumes of bail-in-able debt instruments protecting the bank's senior creditors. The Advanced LGF analysis for the bank's CRR and CR Assessment results in two notches and three notches of uplift from the Advanced LGF analysis, respectively, as these instruments also benefit from the volume of (junior) deposits, which are subordinated to counterparty risk liabilities in Moody's opinion. OUTLOOK The positive outlook on the long-term deposit ratings reflects a possible reduction in loss severity for this instrument class, provided that 365.bank will increase the volume of bail-in-able instruments, as a higher volume of liabilities subordinated to the deposits would provide higher loss protection to depositors. The stable outlook on the long-term issuer ratings reflects Moody's expectation that the bank's solvency and liquidity profile will remain stable over the next 12-18 months. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS 365.bank's BCA could be upgraded if the bank demonstrates a proven track record in maintaining its solvency and liquidity levels under its new, more risk-adverse business model. The bank's deposit and issuer ratings have potential for an upgrade if it increases the volume of debt instruments, which are subordinated to these instrument classes, such that it reduces the loss severity and results in an improved outcome from Moody's Advanced LGF analysis. Downward pressure on the deposit and issuer ratings could arise if 365.bank's BCA is downgraded, particularly due to a substantial deterioration in its solvency profile, or if the bank faces unexpected challenges in its business transformation. The principal methodology used in these ratings was Banks Methodology published in July 2021. =========== T U R K E Y =========== TURKIYE: Fitch Affirms 'B' Foreign Currency IDR, Outlook Now Stable ------------------------------------------------------------------- Fitch Ratings has revised the Outlook on Turkiye's Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) to Stable from Negative and affirmed the IDR at 'B'. KEY RATING DRIVERS The revision of the Outlook on Turkiye's IDRs reflects the following key rating drivers and their relative weights: Medium Significant Policy Shift: The revision of the Outlook to Stable reflects the return to a more conventional and consistent policy mix that reduces near-term macro-financial stability risks and eases balance of payments pressures. There is still uncertainty regarding the magnitude, longevity and success of the policy adjustment to bring down inflation, partly due to political considerations. Turkiye's 'B' ratings reflects a record of political interference, high inflation, weak external buffers relative to high external financing needs and financial dollarisation. These weaknesses are balanced against the sovereign's low general government debt relative to peers, a record of external market access and manageable debt repayment profile. Improved Policy Consistency: President Erdogan appointed a new economic team that has re-introduced interest rates as the main monetary policy tool, and seeks to improve policy consistency by containing the increased budget deficit and slowing domestic demand by changing the composition and pace of credit growth. They have also allowed the lira to depreciate (26% since May), in marked contrast to the relative stability prior to the elections, which has eased pressures on international reserves. Monetary Policy Normalisation, Political Risks: The Central Bank of the Republic of Turkiye has increased its policy rate by 1650bp to 25% since June. It aims to bring inflation expectations and core inflation under control, supported by changes in existing targeted financial regulations to increase deposit and credit rates above its main policy rate. Although Fitch forecasts the bank will lift its policy rate to 35% by end-2023 and remain at that level in 2024, there is a high degree of uncertainty about the future pace and duration of monetary policy tightening. Pressures on Reserves Easing: Gross international reserves have noticeably recovered since mid-May and Fitch forecasts they will reach USD115 billion by end-2023 and remain relatively stable in 2024, bringing reserve coverage of current external payments to 3.2 months, slightly below the forecast 3.4 'B' median. The central bank's net foreign asset position remains significantly negative (minus USD67 billion) when excluding FX swaps. Moreover, reserve coverage remains weak given high financial dollarisation (42.2%; 58.7% when including FX-protected deposits) and large external financing requirements. Authorities have signalled their intention to reduce FX protected deposits (USD125.3 billion in September), but this is dependent on sustained improvement in inflation and lira depreciation expectations. Turkiye's 'B' IDRs also reflect the following key rating drivers: High Inflation, Slower Growth: High inflation remains Turkiye's main risk and policy challenge. Annual inflation rose sharply in August to 58.9%, as strong core inflation pressures were exacerbated by the pass-through of the sharp lira depreciation, minimum wage increases and continued strength of domestic demand. Fitch forecasts end-year inflation at 65%, averaging 51.9% in 2023. The inflation trajectory remains highly uncertain, due to risks of backward indexation, inflation expectations, high commodity prices and additional lira depreciation. Authorities are seeking to rebalance domestic demand away from consumption and towards investment and supporting exports. Fitch forecasts growth to reach 4.3% in 2023 before slowing to 3.0% in 2024, as reduced credit availability and easing of policy stimulus after the March local elections will be somewhat mitigated by earthquake reconstruction efforts and improved external demand. High External Financing Needs: Turkiye's current account deficit will remain high in 2023, reaching 4.7% of GDP in 2023 reflecting strong domestic consumption and gold imports. Fitch forecasts the external deficit will ease to 2.9% of GDP in 2024 on the back of slower growth and improving external demand. Total external debt maturing over the next 12 months amounted to USD206 billion at end-June, leaving Turkiye vulnerable to changes in investor sentiment. The sovereign debt service profile is manageable, with USD2.6 billion principal payments remaining in 2023 and USD11 billion (USD8.9 billion Eurobonds) in 2024. Resilient External Financing: There is a record of resilience in access to external financing for the sovereign and private sector. Sovereign yields have come down significantly since the appointment of the new economic team and the government has reportedly agreed significant financing from Middle East partners, including USD51 billion investment commitments from the UAE over three years, of which approximately USD8 billion could be allocated to sovereign sukuks. Additional multilateral support is also possible. However, the precise timing of the disbursements remains uncertain. Increased Deficits, Manageable Debt: Pre-election stimulus and the cost of the February earthquakes' relief and reconstruction efforts will lead to significant expansion of the central government deficit to 5.3% of GDP (estimated at 5.4% at the general government level) in 2023. The government introduced a series of tax increases in mid-2023 and intends to maintain an underlying central government deficit (without taking into account earthquake reconstruction costs) below 3% of GDP. Fitch forecasts the general government deficit will widen to 6.3% in 2024, as the main year of earthquake reconstruction and possible easing ahead of the local elections, before declining to 4.8% of GDP in 2025. Fitch forecasts that general government debt will reach 33.7% of GDP in 2023, balancing high nominal GDP growth and negative rates in domestic financing against increased pace of borrowing and the depreciation of the lira. Debt subject to interest rate re-fixing within 12 months has declined since 2020 but remains high at 62%. Moreover, despite increased issuance of local-currency debt and repayment of foreign-currency debt in the local market, the share of foreign-currency denominated debt at end-July remained high at 67.1%. Reduced Political Uncertainty, Geopolitical Tensions: Near-term political uncertainty has declined after the May general elections. Nevertheless, Fitch considers that the space for policy normalisation continues to be conditioned by political factors, including the proximity of the March 2024 local elections. Post-elections, Turkiye has moved quickly to reduce tensions with NATO allies, signalled its intention to revive the negotiation process for the upgrade of the Customs Union with the EU and continued to rebuild relations with countries in the region. Turkiye continues to play an active diplomatic role regarding the war in Ukraine, for example, by negotiating the extension of the 'grain corridor'. ESG - Governance: Turkiye has an ESG Relevance Score (RS) of '5' for both Political Stability and Rights and for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. Theses scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in its proprietary Sovereign Rating Model. Turkiye has a medium WBGI ranking at the 35th percentile reflecting a recent track record of peaceful political transitions, a moderate level of rights for participation in the political process, moderate but deteriorating institutional capacity due to increased centralisation of power in the office of the president and weakened checks and balances, uneven application of the rule of law and a moderate level of corruption. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Macro: A return to unconventional policy mix or an incomplete policy rebalancing that increases macroeconomic and financial stability risks, for example, an inflation-exchange rate depreciation spiral, weaker depositor confidence and/or increased vulnerabilities in banks' balance sheets. - External Finances: Increased balance of payments pressures, including sustained reduction in international reserves, for example, due to reduced access to external financing for the sovereign or the private sector and/or sustained widening of the current account deficit. - Structural Features: Serious deterioration of the domestic political or security situation or international relations that severely affects the economy and external finances. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Macro: Greater confidence in the sustainability of the current policy normalisation and rebalancing process resulting in improved macroeconomic stability, including a sustained reduction in inflation. - External Financing: A reduction in external vulnerabilities, for example, due to sustained narrowing of the current account deficit, increased capital inflows, improvements in the level and composition of international reserves and reduced dollarisation. SOVEREIGN RATING MODEL (SRM) AND QUALITATIVE OVERLAY (QO) Fitch's proprietary SRM assigns Turkiye a score equivalent to a rating of 'BB-' on the Long-Term Foreign-Currency (LT FC) IDR scale. Fitch's sovereign rating committee adjusted the output from the SRM score to arrive at the final LT FC IDR by applying its QO, relative to SRM data and output, as follows: - Structural: The removal of the -1 notch reflects Fitch's view that the risk of geopolitical tensions and domestic political instability have substantially eased after the May general elections and are comparable to similarly-rated sovereigns. - Macro: -1 notch, to reflect Turkiye's weak macroeconomic policy credibility and predictability due to a track record of delayed response to mounting macroeconomic pressures, premature policy easing and political interference. - External Finances: -1 notch, to reflect a very high gross external financing requirement, low international liquidity ratio, a weak central bank net foreign asset position, and risks of renewed balance of payments pressures in the event of changes in investor sentiment. Fitch's SRM is the agency's proprietary multiple regression rating model that employs 18 variables based on three-year centred averages, including one year of forecasts, to produce a score equivalent to a LT FC IDR. Fitch's QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within its criteria that are not fully quantifiable and/or not fully reflected in the SRM. COUNTRY CEILING The Country Ceiling for Turkiye is 'B' in line with the LT FC IDR. This reflects no material constraints and incentives, relative to the IDR, against capital or exchange controls being imposed that would prevent or significantly impede the private sector from converting local currency into foreign currency and transferring the proceeds to non-resident creditors to service debt payments. Fitch's Country Ceiling Model produced a starting point uplift of 1 notch above the IDR. Fitch's rating committee applied an offsetting - 1 notch qualitative adjustment to this, under the Balance of Payments Restrictions pillar reflecting Turkiye's introduction and current maintenance of export surrender requirements since 2022. Moreover, authorities have relied in targeted financial regulations to reduce FX demand and convert FX deposits to FX-protected or lira deposits. ESG CONSIDERATIONS Turkiye has an ESG Relevance Score of '5' for Political Stability and Rights as World Bank Governance Indicators have the highest weight in Fitch's SRM and are therefore highly relevant to the rating and a key rating driver with a high weight. As Turkiye has a percentile rank below 50 for the respective Governance Indicator, this has a negative impact on the credit profile. Turkiye has an ESG Relevance Score of '5' for Rule of Law, Institutional & Regulatory Quality and Control of Corruption as World Bank Governance Indicators have the highest weight in Fitch's SRM and are therefore highly relevant to the rating and are a key rating driver with a high weight. As Turkiye has a percentile rank below 50 for the respective Governance Indicators, this has a negative impact on the credit profile. Turkiye has an ESG Relevance Score of '4'for Human Rights and Political Freedoms as the Voice and Accountability pillar of the World Bank Governance Indicators is relevant to the rating and a rating driver. As Turkiye has a percentile rank below 50 for the respective Governance Indicator, this has a negative impact on the credit profile. Turkiye has an ESG Relevance Score of '4' for International Relations and Trade, as Turkiye faces the risk of renewed balance of payments pressures in the event of changes in investor sentiment given the high external financing requirements., which has a negative impact on the credit profile, is relevant to the rating and a rating driver. Turkiye has an ESG Relevance Score of '4' for Creditor Rights as willingness to service and repay debt is relevant to the rating and is a rating driver for Turkiye, as for all sovereigns. As Turkiye has track record of 20+ years without a restructuring of public debt and captured in its SRM variable, this has a positive impact on the credit profile. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Turkiye LT IDR B Affirmed B ST IDR B Affirmed B LC LT IDR B Affirmed B LC ST IDR B Affirmed B Country Ceiling B Affirmed B senior unsecured LT B Affirmed B Hazine Mustesarligi Varlik Kiralama Anonim Sirketi senior unsecured LT B Affirmed B =========================== U N I T E D K I N G D O M =========================== BUCKINGHAM GROUP: Mace Takes Over Birmingham City Stadium Work -------------------------------------------------------------- Charlotte Banks at Construction News reports that Mace has been appointed as construction manager on remediation works at Birmingham City Football Club's stadium, taking over from Buckingham Group. The stadium's Tilton and Kop stands have been partially shut since 2020 due to asbestos damage, and their remediation was left with an uncertain future after Buckingham collapsed into administration last week, Construction News relates. According to Construction News, in a statement, Birmingham City Football Club said that it will be responsible for hiring and managing subcontractors. Work on the site stopped earlier this month, when Buckingham announced its intention to appoint administrators, Construction News recounts. It restarted at 9:00 a.m. on Sept. 11, Construction News notes. Work on the lower Tilton Stand had been due to complete by Sept. 15, while the lower Kop Stand was given a target date of Nov. 16, Construction News discloses. On Friday, Sept. 8, it was announced that Lancashire firm Rayner Rowen Construction had been appointed to finish building Liverpool Football Club's Anfield Road Stand, which was impacted by Buckingham's insolvency, Construction News relays. CHI CHI: Bought Out of Administration by Reem Clothing ------------------------------------------------------ Mike Sheen at This is Money reports that partywear group Chi Chi London has been sold after falling into administration last week, leaving some customers worrying that they will face an even lengthier wait for overdue refunds. According to This is Money, the brand, whose products are stocked by the likes of Debenhams, House of Fraser and John Lewis, told customers by email that holding company Chi Chi Collection had fallen into administration on Sept. 8. It has been subsequently sold by joint administrators at Interpath to Swindon-based Reem Clothing, This is Money discloses. As a result of the administration, customers "will regrettably be unable to claim refunds in the normal way," administrators said in an email seen by This is Money. Reem, customers were told, has bought the brand name, website and social media accounts of Chi Chi, which will continue to trade on the same platform, This is Money notes. Chi Chi faced "challenging trading conditions" since 2020 covid lockdowns, according to the letter to customers, and directors were unable to "sell, refinance or get investment in the business as cash flows continued to worsen", This is Money relates. Customers owed cash will have to apply to the administrator, which will divide remaining money after paying secured creditors and staff between everyone who's submitted a claim, This is Money discloses. The fashion retailer was launched in 1982 as a family run design house based in North London, embracing a philosophy of "inclusive sizing". HAYA HOLDCO 2: S&P Lowers Long-Term Issuer Credit Rating to 'D' --------------------------------------------------------------- S&P Global Ratings lowered its long-term issuer credit ratings on Haya Holdco 2 and on its core subsidiary, Haya Real Estate S.A.U., to 'D' (default) from 'CC'. S&P also lowered the issue rating on the group's floating-rate senior secured notes due 2025 to 'D' from 'CC'. S&P subsequently withdrew the ratings at the company's request. The downgrade follows Haya Holdco 2's completion of a debt restructuring on Sept. 6, 2023. In May 2023, Haya Holdco 2 agreed to sell 100% of its share capital and shareholder loan (in which Haya Holdco 2 acts as a lender to Haya Real Estate) to Intrum Holding Spain for a cash consideration of EUR140 million. To facilitate the sale, Haya Holdco 2 proposed a debt restructuring, whereby the company sought consent from the holders of the existing floating-rate senior secured notes due 2025. In July 2023, over 90% of noteholders supported the debt restructuring, which was carried out via a binding lock-up agreement and later implemented via a scheme of arrangement. Following the noteholder approval and court sanction of the scheme in August 2023, S&P understands the debt restructuring is now complete. S&P said, "We view the completed debt restructuring as a distressed exchange and tantamount to default. Following the effective implementation of debt restructuring, we understand the existing floating-rate senior secured notes have been partially redeemed from the net proceeds of the initial cash consideration (about EUR84 million). Meanwhile, the remaining unredeemed amount of about EUR266 million was cancelled, in line with the restructuring agreement. Noteholders will also receive a debt-like instrument issued by Haya Holdco 2, representing their future entitlement to the potential earn-outs and other post-closing proceeds. In our view, the sum of the current and any future repayment is significantly less than the outstanding principal amount of EUR350 million. Under our criteria, we consider the completed debt restructuring as a distressed exchange and tantamount to default because creditors would receive less value than originally promised. As such, we lowered to 'D' from 'CC' our issuer credit ratings on Haya Holdco 2 and core subsidiary Haya Real Estate S.A.U., as well as our issue rating on the group's floating-rate senior secured notes due 2025. "We subsequently withdrew all our ratings on Haya Holdco 2 and its debt. At the company's request, we withdrew our issuer credit ratings on Haya Holdco 2 and core subsidiary Haya Real Estate S.A.U. and our issue rating on the group's floating-rate senior secured notes." INDEPENDENTLY EAST: Enters Liquidation After FCA Froze Accounts --------------------------------------------------------------- Amy Austin at FTAdviser reports that Independently East Ltd has entered liquidation after an application made by the Financial Conduct Authority. According to the FCA, Independently East entered liquidation on Sept. 11 and the Official Receiver has been appointed as liquidator, FTAdviser relates. Independently East is a regulated firm which was authorised to provide financial advice. In February, the FCA froze the firm's accounts and cancelled its permissions to carry out regulatory activities, FTAdviser recounts. This action was taken after the firm failed to provide the regulator with the information it requested about its clients, its financial position, or a Financial Ombudsman Service award it was due to pay out, FTAdviser discloses. INLAND HOMES: Breaches Loan Covenant with HSBC ---------------------------------------------- Grant Prior at Construction Enquirer reports that cash-strapped house builder and brownfield developer Inland Homes has breached a loan covenant with banker HSBC. In a stock exchange announcement, the firm confirmed: "Inland Homes has advised HSBC that it considers that its subsidiary Inland Homes Developments Ltd is in breach of certain historic and forward looking covenants in relation to a debt facility of GBP13.6 million provided to that company. "The facility is guaranteed by Inland Homes plc. "The total amount drawn under this facility from HSBC to date is approximately GBP11 million. Inland Homes plc is in active discussions with HSBC regarding waivers for the breaches and a further announcement will be made in due course." The breach comes two months after veteran house builder Jolyon Harrison was appointed as CEO in a bid to turn the business around, notes the report. He joined after Inland delayed publishing its latest results for the year to September 2022 while a series of accountants went through transactions in the books. Losses are expected to hit GBP91 million. NOSTRUM OIL: S&P Withdraws 'SD' Long-Term Issuer Credit Rating -------------------------------------------------------------- S&P Global Ratings withdrew its ratings on Nostrum Oil and Gas PLC, a U.K.-headquartered company with operations in Kazakhstan, because of insufficient information to maintain them. The long-term issuer credit rating was 'SD' (selective default) at the time of the withdrawal. WILKO LTD: Poundland Agrees to Take on Leases of Up to 71 Stores ---------------------------------------------------------------- BBC News reports that the owner of Poundland has agreed to take on the leases of dozens of Wilko shops. According to BBC, Pepco Group, which owns Poundland in the UK, is expected to convert up to 71 Wilko stores to the Poundland brand. Poundland boss Barry Williams said it recognised the last few weeks had been difficult for Wilko workers, BBC relates. In a statement, the company said that Wilko staff would have priority when applying for new jobs at the Poundland shops, BBC notes. Wilko fell into administration in August as it struggled with sharp losses and a cash shortage, BBC recounts. It was founded in 1930 and by the 1990s became one of Britain's fastest-growing retailers. But the discount chain has faced strong competition from competitors including B&M, Poundland and Home Bargains, as the high cost of living has pushed shoppers to seek out bargains, BBC states. Mr. Williams, the managing director of Poundland, said the company would work quickly with landlords in the coming weeks to get its new shops open once the administration process is wound up, according to BBC. In a statement, the Poundland owner, as cited by BBC, said that it expected the rebranded shops to open by the end of this year, although workers will not be transferred directly. Poundland has undergone a big transformation in recent years, adding chilled and frozen food as well as clothes to its offer, BBC relays. The deal will see the Wilko sites added to its 800 existing shops in the UK, BBC notes. =============== X X X X X X X X =============== [*] EUROPE: Solar Cos. Face Bankruptcy Risk After Prices Fall ------------------------------------------------------------- Marine Strauss at Reuters reports that Europe's solar power industry warned on Sept. 11 of a "precarious" situation for European solar photovoltaic (PV) manufacturers as solar PV prices reached record lows. According to Reuters, industry trade group SolarPower Europe said in a letter sent to the European Commission that European companies risk bankruptcies, which they said would hurt the EU's goal of reshoring 30 GW of the solar PV supply chain. Prices of PV modules have dropped by more than a quarter since the beginning of the year, according to SolarPower, Reuters discloses. "This is creating concrete risks for companies to go into insolvency as their significant stock will need to be devalued," Reuters quotes SolarPower Europe as saying. Strong demand, combined with large investments and fierce competition among Chinese suppliers led to overcapacities in the market and a price fall, Reuters notes. ********* 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 2023. 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. * * * End of Transmission * * *