text: TCREUR_Public/140619.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, June 19, 2014, Vol. 15, No. 120 HeadlinesA U S T R I AHYPO ALPE-ADRIA: Restructuring Draft Law May Hike Financing CostsB E L G I U METHIAS SA: Belgian Insurer Okayed to Amend Restructuring PlanD E N M A R KSCANDFERRIES APS: S&P Raises Corp. Credit Rating to 'BB-'F R A N C EACCOR SA: Fitch Assigns 'BB(EXP)' Rating to Reset Rate NotesACCOR SA: S&P Assigns 'BB' Rating to Proposed Hybrid NotesDECOMEUBLES PARTNERS: Fitch Assigns 'B-(EXP)' Longterm IDRI R E L A N DALFA HOLDING: Fitch Assigns Final 'BB+' Rating to $350MM NotesI T A L YBANCA CARIGE: S&P Keeps 'B-' Rating on CreditWatch NegativeBANCA POPOLARE DELL'EMILIA: S&P Lifts Counterparty Rating to 'BB'BANCA POPOLARE DI MILANO: S&P Affirms 'B+' Rating; Outlook StableBANCO POPOLARE SOCIETA: S&P Affirms 'BB-/B' Counterparty RatingsFGA CAPITAL: S&P Revises Outlook to Stable & Affirms 'BB+' RatingILVA: Italy Invites Arcelormittal to Invest or Buy BusinessMEDIOCREDITO CENTRALE: S&P Affirms BB+ Counterparty Credit RatingUNIPOL BANCA: S&P Affirms 'BB-/B' CCRs; Outlook NegativeVENETO BANCA: S&P Affirms 'BB' Counterparty Credit RatingL U X E M B O U R GTIGERLUXONE SARL: S&P Assigns Prelim. 'B' CCR; Outlook StableN E T H E R L A N D SFAB CBO 2002-1: S&P Raises Rating on Class A-2 Notes to 'B'LEOPARD CLO V: S&P Affirms 'CCC-' Rating on Class F NotesS P A I NBBVA EMPRESAS 6: Fitch Says Swap Removal No Impact on 'BB' Rating* SPAIN: May Extend Debt Rules to Companies in LiquidationU N I T E D K I N G D O MCARROS UK HOLDCO: S&P Lowers Rating on 1st Lien Debt to 'B'LAKELAND LEATHER: In Administration; More Than 200 Jobs at Risk *********=============A U S T R I A=============HYPO ALPE-ADRIA: Restructuring Draft Law May Hike Financing Costs-----------------------------------------------------------------Nicole Lundeen at The Wall Street Journal reports that WillibaldCernko, the president of the Austrian Bankers' Association, saidAustria's draft law on restructuring heavily indebted Hypo Alpe-Adria Bank International AG could lead to higher financing costsfor the country's banks and damage investors' trust if enacted.According to the Journal, under the draft law, which was approvedby the government's weekly cabinet meeting last week, but has yetto be passed by parliament, holders of subordinate bonds valuedat EUR890 million (US$1.21 billion) with a guarantee from theProvince of Carinthia, where the bank is based, could face atotal write-down.Another EUR1 billion worth of subordinate bonds with a federalgovernment guarantee won't be included in the bail-in, theJournal notes. The decision not to honor the provincialgovernment guarantee has been met with criticism at home andabroad, and has raised worries about Austria's commitment tostand behind its guarantees, the Journal relays.Citing a December 2010 report from the Austrian central bank,Mr. Cernko said the move could increase the cost of financing forAustrian banks by as much as 70 basis points, or EUR1.5 billion ayear, over the medium term, the Journal relates. About Hypo Alpe-AdriaHypo Alpe-Adria International AG is a subsidiary of BayernLB. Itis active in banking and leasing. In banking, HGAA serves bothcorporate and retail customers and offers services ranging fromtraditional lending through savings and deposits to complexinvestment products and asset management services.Hypo Alpe has received EUR1.75 billion in aid in emergencycapital from the Austrian government. European Union CompetitionCommissioner Joaquin Almunia said in March 2013 that Hypo facedpossible closure for failing to adequately restructure.The European Commission approved Hypo's recapitalization inDecember 2013, but made it conditional on the managementpresenting a thorough plan to overhaul the group. The Austrianfinance ministry, which effectively runs Hypo Alpe, submitted arestructuring plan to the Commission on Feb. 5.=============B E L G I U M=============ETHIAS SA: Belgian Insurer Okayed to Amend Restructuring Plan-------------------------------------------------------------Law360 reported that Belgian insurance giant Ethias SA has wonEuropean Commission approval to amend its 2010 restructuringplan, prolonging by three years the rundown of its unprofitableretail life insurance portfolio, the agency announced. Accordingto the report, the amendments enabled Ethias to continue to rundown its retail life reserves for another three years, but nolonger obligate it to fully divest or run down the portfoliounless an increase in market interest rates allows it to sell thecontracts, the commission said.The amendments also alter the corporate governance to giveVitrufin more independence from Ethias, the report cited thestatement. The proposed new commitments replace those in theoriginal restructuring plan that were never implemented,according to the commission's statement, the report said.=============D E N M A R K=============SCANDFERRIES APS: S&P Raises Corp. Credit Rating to 'BB-'---------------------------------------------------------Standard & Poor's Ratings Services said that it had raised itslong-term corporate credit rating on Denmark-based ferry servicesprovider, Scandferries Aps (known as Scandlines), to 'BB-' from'B+'. The outlook is stable.S&P also raised its issue rating on the company's senior secureddebt to 'BB' from 'BB-'. The recovery rating remains at '2',indicating S&P's expectation of substantial (70%-90%) recovery inthe event of a payment default.The rating actions reflect S&P's reassessment of the influence ofScandlines' financial sponsor (FS) ownership to "FS-5" from "FS-6," leading it to revise its view of the financial risk profileto "aggressive" from "highly leveraged," as S&P's criteria definethe terms. S&P now considers it unlikely that the company'sfinancial policy and funding decisions, involving for example apotential acquisition of a 50% stake in the Helsingborg-Helsingorroute from Stena Line AB, will constrain improvement of theleverage ratio. S&P therefore forecasts Standard & Poor's-adjusted debt to EBITDA to decline sustainably to less than 5.0xover the coming 18 months. Furthermore, S&P believes that thecompany will maintain "adequate" liquidity, with sufficientcovenant headroom. Scandlines is fully owned by 3i Group Plc(3i), a U.K.-based private equity company."We view Scandlines' business risk profile as "fair,"incorporating our assessment of the shipping industry's "high"risk and the company's narrow business scope and diversitycompared with global shipping operators'. Scandlines' businessmodel is built around three ferry routes deploying 12 well-maintained, but aging, vessels and two border/duty free shops.Furthermore, the company is highly dependent on one route (Rodby-Puttgarden) and the related retail business (border/duty freeshop Puttgarden), which together account for about 75% ofScandlines' EBITDA. Scandlines is exposed to cargo traffic aswell, which we consider to be cyclical and accounts for about 20%of its revenues. We also see a long-term risk of the possibleopening of the Fehrman Belt Fixed Link, a tunnel that wouldconnect Germany and Denmark, which would likely reduce trafficvolumes and, therefore, earnings on Scandlines' main route(Rodby-Puttgarden), although from 2022 at the earliest," S&Pnoted."These weaknesses are mitigated, in our view, by Scandlines'leading and fairly protected position as a ferry operator forfoot passengers, cars, cargo, and border shoppers in the corridorbetween Denmark, Sweden, and Germany, underpinned by a well-recognized brand. We also believe that Scandlines' efficientbusiness model and ownership of key port infrastructure provideoperational benefits and high barriers to entry for competitors,thereby ensuring recurring income streams. Furthermore,Scandlines has a demonstrated ability to manage costs duringdifficult market conditions, as shown by a track record ofachieving "above average" returns on capital, compared with theindustry peer group. We incorporate these factors into ourassessment of Scandlines' profitability as "strong." Moreover,the company operates in the Northern European catchment area,with German and Scandinavian economies holding up better than theoverall economy of the European Economic and Monetary Union.This results in relatively good resilience to economic swings, inour view. Our assessment of Scandlines' "fair" business riskincorporates our view of "very low" country risk," S&P said."We assess the influence of Scandlines' FS ownership at "FS-5,"leading to a financial risk profile assessment of "aggressive."We believe that the company's leverage ratio (Standard & Poor's-adjusted debt to EBITDA) will improve to less than 5.0x over thenext 18 months and we consider the risk of it increasing beyond5.0x as low," S&P added.S&P's assessments of an "aggressive" financial risk profile and a"fair" business risk profile indicate an anchor of 'bb-', as perour criteria. S&P removed the upward adjustment of one notchfrom its comparable rating analysis, given that S&P now considersScandlines' credit measures to be consistent with the financialrisk profile.No other modifiers affect the rating, leading to a corporatecredit rating of 'BB-'.In S&P's base-case scenario for Scandlines over 2014-2015, itassumes: -- Low single-digit-percentage sales growth, linked to S&P's estimates of inflation and annual GDP growth rates for Denmark, Sweden, and Germany. -- Modest cost-base growth that should allow Scandlines to maintain a Standard & Poor's-adjusted EBITDA margin of 33%- 35%. -- A EUR50 million downpayment for the leasing of two new vessels on the Gedser-Rostock route, to be delivered in 2015 but paid for in advance in 2014. Apart from that, modest capital expenditures of EUR20 million-EUR35 million annually for fleet maintenance and improvement. -- No surplus cash adjustment to calculate adjusted debt because of Scandlines' FS ownership.Based on these assumptions, S&P arrives at the following creditmeasures: -- A weighted average ratio of adjusted funds from operations (FFO) to debt of 14%-15% in 2014-2015, up from 12.9% in 2013. -- A weighted average ratio of adjusted debt to EBITDA of 4.5x-5.0x in 2014-2015, down from 5.4x in 2013.The stable outlook reflects S&P's view that Scandlines willsustain its fairly resilient operating performance, underpinnedby its efficient business model and proven cost-controlcapabilities. Combined with its improving credit ratios andadequate liquidity, this should enable the company to maintain acredit profile commensurate with the rating.For Scandlines, S&P considers ratios of adjusted debt to EBITDAof less than 5.0x and adjusted FFO to debt of more than 12% to beconsistent with a 'BB-' rating, and S&P believes that the companywill achieve these ratios in the next 18 months. Furthermore,the rating is predicated on the assumption that Scandlines willimplement a prudent financial policy, which should allow it toimprove and keep its credit measures consistent with the rating.Downside scenarioA downgrade would likely stem from large, unexpected debt-fundedacquisitions or shareholder returns, or from an unforeseensignificant setback in operating performance, which couldmaterially weaken liquidity or credit measures, for example, withthe ratio of adjusted debt to EBITDA remaining above 5.0x for aprolonged period.Upside scenarioS&P could consider an upgrade if it believed that Scandlines'financial policy had moderated, becoming consistent with S&P's"FS-4" category. This might result, among other things, fromshareholders other than the financial sponsors owning a material(at least 20%) stake in Scandlines and evidence that 3i wouldrelinquish control over the medium term. In addition, S&P wouldhave to forecast that Scandlines would achieve and maintain thecore credit ratios of adjusted debt to EBITDA of less than 4x andadjusted FFO to debt of more than 20%. S&P believes that thisscenario is unlikely over the next 18 months.===========F R A N C E===========ACCOR SA: Fitch Assigns 'BB(EXP)' Rating to Reset Rate Notes------------------------------------------------------------Fitch Ratings has assigned Accor SA's (Accor; BBB-/Stable)proposed deeply subordinated fixed to reset rate (DS) notes a'BB(EXP)' expected rating. Fitch has applied 50% equity credittreatment to this issue. The assignment of the final rating issubject to the receipt of final documentation conforming toinformation already received.The proposed hybrid issue will be deeply subordinated and rankssenior only to Accor's share capital, while coupon payments canbe deferred at the discretion of the issuer. As a result the'BB(EXP)' rating is two notches below Accor's 'BBB-' Long-termIssuer Default Rating (IDR), reflecting the notes' higher lossseverity and risk of non-performance relative to seniorobligations. This approach is in accordance with the agency'scriteria, "Treatment and Notching of Hybrid in NonfinancialCorporate and REIT Credit Analysis" dated December 23, 2013available at www.fitchratings.com.The proposed securities qualify for 50% equity credit as theymeet Fitch's criteria with regard to subordination, remainingeffective maturity of more than five years, full discretion todefer coupons for at least five years and limited events ofdefault. Deferrals of coupon payments are cumulative and thereare no look-back provisions.The DS bonds are perpetual notes with no legal maturity date. Thebonds are callable on the first call date, and subsequently fiveyears after that date and then on any interest payment datethereafter. Under Fitch's criteria, the effective maturity dateis the point in time when replacement intention falls away. Fitchwill remove the equity credit of the notes for its ratingforecasts five years before the Fitch effective maturity date isreached (ie equity credit will fall away for the above in 2035).KEY RATING DRIVERSSize and DiversificationAccor's Issuer Default Rating (IDR) of 'BBB-' continues toreflect the group's positioning in the economy and mid-scalesegments, strong brand awareness, scale and geographicaldiversification as a leading hotel group in the world and numberone in Europe in terms of hotel rooms.New Property StrategyUnder its new strategy announced in November 2013, Accor has seta value-oriented disciplined hotel ownership strategy, whichincludes an end to expansion through leases and no furtherdisposals of hotels, unless they are structurally underperformingassets. This should assist in reducing the group's lease adjusteddebt burden in the next three to four years.In purchasing the Moor Park Fund portfolios for EUR722 million in1Q14, Accor acquired hotel assets already operated and leased bythe Accor group under various brand names, but is replacing moreexpensive variable-cost lease liabilities with cheaper debtfinancing. Following the Moor Park transaction in January 2014,Accor has a total of around EUR2.4 billion of unencumberedbranded hotel assets, which underpin the investment grade rating.Stable LeverageLeverage reduced in 2013 to FFO lease-adjusted gross leverage of4.7x at end-2013, versus 5.0x at end-2012 driven by reduced leaseliabilities. This was broadly in line with Fitch's estimates. Weexpect a small rise in FFO lease-adjusted gross leverage in 2014to around 4.9x due to the combination of various new fundingtransactions, including the planned hybrid bond, the 2021 EUR750million bond issued in January 2014 and the EUR1.8 billionsyndicated facility announced in June 2014, partly offset by areduction in capitalized lease obligations.New Business ModelThe new business model splits the group into two distinctentities with their own targets and is a further step towardsAccor's objective of becoming an asset light operator. TheHotelInvest division owns and leases 1,400 hotels and is yield-oriented. Accor's HotelServices division is the hotel operatorand brand franchisor within the group and is fee-oriented. Itsdevelopment strategy is based on management and franchisecontracts. From a rating perspective, this new hotel "twin track"strategy should ensure that Accor generates additional free cashflow (FCF) in the medium term, as it moves more towards a fee-based structure and reduces expensive variable-lease payments.Low FCFAccor's FCF remains limited as the group continues to own amaterial proportion of its properties. In addition the group isexpanding rapidly, mainly in Asia Pacific and Europe, and isspending around 9%-10% of its revenues in capex. We expect Accorto generate mildly positive FCF margin over the next few years.Still High Lease LiabilitiesWhile Accor's new property policy includes a firm commitment tonot sign any new leases, Accor still has significant rentalliabilities totalling over EUR845 million at FY13. However, Accoris reviewing all its leases and particularly its variable leases,which are likely to be restructured and reduced over the nextthree to four years. Consequently, both lease adjusted leverageand fixed charge cover should slightly improve in the next threeyears, giving some additional financial flexibility.Manageable Shareholder PressureWe believe that shareholder pressure from investors such as PEhouse Colony Capital will continue. Accor has a publicly statedpolicy of a dividend pay-out ratio of 50%, but Accor does notrule out greater cash returns as long as this remains in linewith Accor's investment-grade rating objective. Further materialcash returns to shareholders and sustained negative FCF could putnegative pressure on the ratings.Adequate LiquidityAt FY13 Accor had EUR1,500 million of undrawn committedfacilities and EUR1,772 million of unrestricted cash (out of atotal of EUR2.0 billion). This is comfortable liquidity as Accoronly has EUR490 million of bond and bank debt maturities untilend-2016 and little working capital requirement volatility. OnJune 16, 2014 Accor announced the signing of its new EUR1.8billion five year syndicated facility, which will further improveits liquidity and debt maturity profile.RATING SENSITIVITIESFuture developments that could lead, both individually orcollectively, to a positive rating action include: -- Group EBIT margin above 15%. -- Fitch FFO lease adjusted gross leverage below 4.0x and lease- adjusted net debt /EBITDAR ratio below 3x on a sustained basis. -- Lease-adjusted EBITDAR/gross interest plus rents ratio of above 2.5x. -- Sustainable positive FCF (excluding exceptional costs).Future developments that could lead, both individually orcollectively, to a negative rating action include: -- Group EBIT margin below 8%. -- Fitch FFO lease adjusted gross leverage above 5.0x and lease adjusted net debt/ EBITDAR ratio above 4.0x on a sustained basis. -- Lease-adjusted EBITDAR/gross interest plus rents ratio of below 2.0x.ACCOR SA: S&P Assigns 'BB' Rating to Proposed Hybrid Notes----------------------------------------------------------Standard & Poor's Ratings Services said that it assigned its 'BB'issue rating to the proposed six-year non-call, perpetual,optional deferrable, and deeply subordinated hybrid notes to beissued by France-based lodging company Accor S.A.(BBB-/Stable/A-3).The completion and size of the placement remain subject to marketconditions, but S&P anticipates issuance could total up toEUR1 billion. Accor has indicated it plans to use the proceedsfor general corporate purposes and to strengthen its balancesheet in light of its recently announced strategy of increasingthe share of fully-owned hotels. In S&P's view, the proposedhybrids will restore some of Accor's financial flexibility andenable it to regain some rating headroom following theacquisition of 97 hotels in Europe for a total of EUR900 million.According to S&P's criteria, it classifies the proposed hybridnotes as having "intermediate" equity content until the firstcall dates in June 2020. Therefore, in S&P's calculation ofAccor's credit ratios, it will treat 50% of the principaloutstanding and accrued interest under the notes as equity-likerather than debt-like.S&P's assessment of the proposed notes' "intermediate" equitycontent reflects the following: -- The notes are unsecured and deeply subordinated instruments. -- Accor has the option to defer coupon payment, and deferred interest is cumulative and bears interest. -- The notes have no maturity date, but S&P considers the effective maturity date to be June 2040, when coupon payments will increase by 275 basis points.Therefore, S&P will no longer recognize the notes as having"intermediate" equity content after the first call date in 2020because the remaining periods until the effective maturity would,by then, be less than 20 years.S&P may also revise its equity content assessment to "minimal" ifit has reason to believe that Accor is likely to redeem the notesbefore their effective maturity. This would be the case if S&Pobserved that the loss of the "intermediate" equity content in2020 would cause the company to call the notes without replacingthem with similar instruments. The issuer's willingness tomaintain or replace the instruments in the event of areclassification of equity content to "minimal" is underpinned byits statement of intent.S&P could also revise the equity content to "minimal" if itbelieved that a change in Accor's financial policy may prompt thegroup to buy a substantial amount of hybrids in the open market.In S&P's view, Accor's option to defer payment on the proposedsecurities is discretionary. However, any outstanding deferredinterest payment will have to be settled in cash if Accordeclares or pays an equity dividend or interest on equallyranking securities (not present in the capital structure), and ifthe group or its subsidiaries redeem or repurchase shares orequally ranking securities (not present in the capitalstructure). S&P sees this as a negative factor. That said, thiscondition remains acceptable under our methodology because onceAccor has settled the deferred amount, it can still choose todefer on the next interest payment date.As per S&P's criteria, the two-notch differential between its'BB' rating on the proposed notes and its 'BBB-' corporate creditrating on Accor is based on: -- A one-notch differential for the proposed notes' subordination; and -- A further one-notch differential for the optional deferability of interest.DECOMEUBLES PARTNERS: Fitch Assigns 'B-(EXP)' Longterm IDR----------------------------------------------------------Fitch Ratings has assigned French retailing group DecomeublesPartners SAS (BUT) an expected Long-term Issuer Default Rating(IDR) of 'B-(EXP)' with a Stable Outlook.Fitch has also assigned 100% subsidiary BUT SAS's prospectiveEUR170 million senior secured notes due 2019 an expected ratingof 'B(EXP)'/RR3'. The notes are rated one notch above the IDR,reflecting above-average recovery prospects.The assignment of final ratings is subject to a review of thefinal documentation materially conforming to information alreadyreceived by Fitch. Failure to conduct the planned refinancingwould result in the withdrawal of the ratings.The IDR of 'B-(EXP)' reflects BUT's concentration on the Frenchhome improvement retail market that is characterized by weakmacroeconomic fundamentals and by competitive pressures in theconsolidating higher-value end of the market, as well as itslarge size, strong market position and brand. With limitedorganic growth opportunities, the ratings assume continuedinvestment in the expansion of the BUT store network to protectmarket share and to grow sales and profitability.The ratings also reflect the aggressive financial profile andasset-light structure of the business, which increases its costbase and operational leverage and impacts profitability and freecash flow generation. Post-refinancing lease-adjusted grossleverage of 6.7x, based on the target capital structure, andfixed charge cover of 1.3x underpin the 'B-(EXP)' IDR relative tosector peers.The Stable Outlook reflects limited organic growth opportunitiesin the French home improvement market and stable financialleverage in the absence of debt amortization.KEY RATING DRIVERSConcentration in FranceLimited geographic diversification and concentration on theFrench retail market are a key rating constraint, given a subduedFrance retail environment in the near term weighed down by lowconsumer confidence, sticky unemployment and projected GDP growththat is below key European peers. In addition, Fitch expectsfurther medium-term consolidation and competitive pressures atthe higher-value end of the home equipment market in France.BUT's strategy to concentrate in smaller cities is sensible inthat it should help boost market share against smallercompetitors.High Operating LeverageWith the planned debt issue BUT aims to simplify the group'sfinancial structure, by removing mezzanine debt and shareholderloans and replacing both instruments with a two-tier capitalstructure comprising a super senior working capital facility andsenior secured notes. Although financial debt has been decliningsince the original buy-out of the group in 2008 BUT has graduallymoved to an 'asset-light' capital structure and repaid seniorsecured property debt by selling and leasing back assets. The keyassets in the business therefore remain the brand value andinventory.While an asset-light capital structure is not uncommon in non-food retail, it nonetheless leads to pressures on profitabilityand cash flows due to high rental costs, therefore translatinginto high operating leverage and potentially a volatile earningsprofile in a downturn.Aggressive Financial ProfileDespite fairly manageable balance-sheet debt post-refinancing,high rental expenses reflect an aggressive financial risk profileas reflected in the group's lease-adjusted debt protection ratios(which Fitch conservatively has based on the full value of'occupancy costs' as presented by management). The FFO adjustedgross leverage based on the targeted capital structure is 6.7xwhich remains in line with Fitch's base case. The associated FFOfixed charge cover remains on average at 1.3x over the ratinghorizon, underpinning the 'B-(EXP)' IDR with Stable Outlook.Fitch bases its leverage ratio assessment on gross figures givenBUT's pronounced working capital cycles and restricted cash inthe business. The rating assumes that seasonal working capitalwill require a conservatively estimated liquidity buffer up toEUR50 million of cash. In addition, BUT maintains an estimatedEUR5 million restricted cash at the consumer finance and warrantybusiness.Established Brand and Market PositionThe ratings reflect BUT's position as a leading home equipmentretailer in France, with a strong nationwide store footprint anda diversified product range spanning across home furnishing anddecoration, domestic appliances as well as select home-relatedconsumer electronics. BUT's promotional-driven business model issupported by a strong and well-recognized retail brand.Evolving Business ModelWe recognize that to remain competitive amid challenging tradingconditions. BUT's is streamlining operations and optimizing costand cash management by simplifying its supply chain andcentralizing the logistics function domestically. It is alsoaiming at increasing direct control over its brand and storeappearance by moving away from the traditional franchise modeland taking a more centralized approach to key managementdecisions including range, pricing, marketing and multi-channeloffering. The evolving business model and operating efficienciescould result in rating upside if translated into improvingprofitability and cash generation.Profitability Supported by Consumer FinancingCredit income generated from consumer financing supports EBITDA,adding approximately 100bp of EBITDA margin. Consumer finance isa key part of BUT's promotional activity and a strong salesdriver, with a 24% credit penetration rate of its customer base.The group offers consumer finance products (including storecards, installment loans, personal loans) in combination withCetelem (consumer finance arm of BNP Paribas Personal Finance),which manages credit risks on a non-recourse basis for BUT. Inaddition BUT offers appliance warranties, which are managed viaan in-house insurance vehicle. The insurance entity holds EUR5million of restricted cash, which may grow over time if incomefrom sales of extended warranties starts to grow. All theseconsumer finance and insurance arrangements are subject toregulatory risks.Given the integral role of consumer finance in BUT's businessmodel and the ring-fenced nature of the associated credit risk,Fitch includes the consumer finance contribution in its operatingEBITDA calculation.Above-average RecoveriesIn line with its Recovery Ratings methodology, the 'B(EXP)/RR3'for the senior secured debt reflects our view of above-averagerecovery prospects for noteholders in the event of default. Fitchconsiders that expected recoveries would be maximised in a going-concern scenario rather than in a liquidation scenario given theasset-light nature of BUT's business, where Fitch views the brandvalue and established retail network as key assets.Senior secured noteholders could expect a recovery rate withinthe 51%-70% range (RR3), leading to a one-notch uplift from theIDR to 'B(EXP)'. The expected recovery is underpinned byguarantors representing at least 85% of the group's EBITDA and bynoteholders' second-ranking claim on any enforcement proceeds ina distressed sale of assets or the business.RATING SENSITIVITIESPositive: Future developments that, individually or collectively,could lead to positive rating actions include: -- FFO adjusted gross leverage below 6x or below, FFO fixed charge cover sustained at above 1.5x, combined with sustainable market share gains, sustainable improvements in FCF generation, and operating profitabilityNegative: Future developments that, individually or collectively,could lead to negative rating actions include: -- FFO gross lease adjusted leverage of 7.0x or above on a sustained basis -- FFO fixed charge cover of 1.0x or below on a sustained basis -- A significant deterioration in market share, revenues and/or operating profitability -- Negative FCF eroding the group's liquidity cushion=============I R E L A N D=============ALFA HOLDING: Fitch Assigns Final 'BB+' Rating to $350MM Notes--------------------------------------------------------------Fitch Ratings has assigned Alfa Holding Issuance plc's (AHI)EUR350 million 5.5% fixed-rate senior limited recourse loanparticipation notes, due June 10, 2017, a final 'BB+' rating.AHI, an Irish SPV issuing the bonds, is on-lending the proceedsto Cyprus-based ABH Financial Limited (ABHFL, BB+/Negative), asthe ultimate borrower under the notes.KEY RATING DRIVERSThe rating of the issue is driven by ABHFL's Long-term IssuerDefault Rating (IDR) of 'BB+'. The issue is not guaranteed byAlfa Bank (BBB-/Negative), the main operating subsidiary ofABHFL. However, there is a cross-default clause in some of AlfaBank's public obligations in case of a default of ABHFL, whichprovides an additional incentive for the bank to ensure thatABHFL meets its obligations given that the current issue size ishigher than the threshold amount for cross default.The proceeds from the issue are being used by ABHFL mainly torefinance existing liabilities and therefore will not lead to anincrease in the company's net leverage.The terms of the current issue contain a cross-default clause incase of insolvency or default of Alfa Bank (the threshold amountfor cross default set above 3% of ABHFL's consolidated equity --about USD145 million at end-2013). There is also a covenantlimiting disposals, whereby ABHFL's take in Alfa Bank should notfall below 50%.The rating of the issue (as well as that of ABHFL) is not cappedby Cyprus's Country Ceiling of 'B' due to the transactionstructure (and ABHFL's business overall) having minimum exposureto domestic operating risks.RATING SENSITIVITIESThe rating of the issue is likely to move in tandem with ABHFL'sLong-term IDR, which in turn is currently notched down once fromthat of Alfa Bank. The Negative Outlook on Alfa Bank's Long-termIDRs reflects the potential for a downgrade due to the possibleweakening of the Russian operating environment, maintaining aone-notch difference between the bank's rating and that of theRussian sovereign (BBB/Negative).If ABHFL significantly increases leverage, which is currently notour base case expectation, both ABHFL's and the issue ratings maybe notched further down from Alfa Bank's rating.=========I T A L Y=========BANCA CARIGE: S&P Keeps 'B-' Rating on CreditWatch Negative-----------------------------------------------------------Standard & Poor's Ratings Services kept its 'B-' long-termcounterparty credit rating on Italy-based Banca Carige SpA onCreditWatch with negative implications, where it was originallyplaced on March 22, 2013. At the same time, S&P affirmed its 'C'short-term rating on Banca Carige.The ongoing CreditWatch status reflects S&P's view that BancaCarige's capital increase continues to be subject to considerableexecution risk.In line with S&P's expectations, on June 12 2014, Banca Carige'smanagement announced the final conditions of its EUR800 millionrights issue, which S&P understands is covered by a finalunderwriting agreement. At this stage S&P don't have all of thedetails of the final underwriting agreement's conditions. Inaddition, S&P considers Banca Carige's financial profile to beweak. S&P also notes that the capital increase will come to themarket at the same time as many other Italian banks' shareofferings. In S&P's view, these factors continue to pose amaterial execution risk to Banca Carige's capital increase.If Banca Carige is not able to strengthen its capitalization asplanned, S&P believes that its already-weak solvency positioncould deteriorate further over the next 24 months. S&P notesthat Banca Carige is raising capital at the Bank of Italy'srequest and, despite its current compliance with minimum capitalrequirements, S&P understands that its solvency remains below thelevel that the regulator considers to be adequate. Failure toincrease its capital could, in S&P's view, also negatively affectBanca Carige's business stability and liquidity position."Our ratings on Banca Carige continue to incorporate a one-notchuplift above its stand-alone credit profile (SACP) for potentialextraordinary government support. We have finished our review ofpotential extraordinary government support for European banks andconcluded that this level of government support is likely todecrease as resolution frameworks are put into place. We observethat European authorities are taking steps to increase theresolvability of banks and require creditors rather thantaxpayers to bear the burden of the costs of failure. In thenear term, we expect that governments will remain supportive ofsystemically important banks' senior unsecured creditors whileresolution frameworks take shape. From January 2016, however,the EU Bank Recovery and Resolution Directive (BRRD) is set tointroduce the mandatory bail-in of a minimum amount of eligibleliabilities, potentially including certain senior unsecuredobligations, before governments could provide solvency support.Accordingly, we believe that the potential extraordinarygovernment support currently available to senior unsecuredbondholders of Banca Carige will likely diminish within our two-year rating horizon," S&P said."We aim to resolve the CreditWatch status once we have morecertainty about the likelihood that the capital increase willmaterialize as planned. Even if Banca Carige is able tosuccessfully raise capital, as requested by the regulator, wewould still assess how the recapitalization would likely affectour views of Banca Carige's currently weak solvency position andthe risks we perceive to its business and liquidity profiles,"S&P noted.On resolving the CreditWatch status, S&P could lower the long-term rating on Banca Carige, or affirm it.S&P could lower the ratings by one or more notches if, for anyreason, Banca Carige is not able to successfully implement itsplanned capital increase and no alternative recapitalizationplan, either market-based or through regulatory action, is likelyto materialize.In this case, S&P anticipates that Banca Carige's already-weakcapital position would likely further deteriorate over the next24 months as a result of still-high credit losses and decliningpre-provision income. As a result, Banca Carige would likelyfail to pass the upcoming European Central Bank's (ECB) stresstests. If this were to occurr, S&P believes that it could: -- Undermine Banca Carige's capacity to preserve its franchise and, more generally, its business stability; and -- Heighten the pressure S&P sees on Banca Carige's liquidity position, which could result in it having to further increase its reliance on funding from the ECB.S&P could also lower the ratings if it was to consider that BancaCarige's asset quality could deteriorate significantly beyond itscurrent expectations, further weakening its solvency position.S&P could affirm its long-term rating on Banca Carige if itsuccessfully executes its recapitalization plan and if this issufficient to ease the pressure S&P sees on Banca Carige'sbusiness and financial profiles.In addition, S&P may lower Banca Carige's long-term counterpartycredit rating by one notch if it considers that extraordinarygovernment support is less predictable under the new EUlegislative framework.In addition to potential changes in the SACP and governmentsupport, S&P will review other relevant rating factors whentaking any rating actions. These might include any steps BancaCarige might take to mitigate bail-in risks to senior unsecuredcreditors, such as building a large buffer of subordinatedinstruments.BANCA POPOLARE DELL'EMILIA: S&P Lifts Counterparty Rating to 'BB'-----------------------------------------------------------------Standard & Poor's Ratings Services said that it upgraded to 'BB'from 'BB-' its long-term counterparty credit rating on Italy-based Banca Popolare dell'Emilia Romagna S.C. (BPER). Theoutlook is negative. At the same time, S&P affirmed its 'B'short-term rating on BPER. S&P also raised the issue ratings onBPER's non-deferrable subordinated debt to 'B' from 'B-'.The upgrade reflects S&P's view that the successful completion ofBPER's announced capital increase should enhance its solvency,and push S&P's capital measures substantially above the levelsthat it previously factored into the ratings. S&P alsoanticipates that BPER will be able to maintain its enhancedcapital position, as it expects the bank will continue to reportpositive operating performance and deleverage to support internalcapital generation.At an extraordinary general meeting on June 7, BPER'sshareholders approved management's plan to raise up to EUR750million in new capital through a rights issue. The capitalincrease is fully covered by a pre-underwriting agreement, andS&P thinks that there is limited execution risk given BPER'ssound franchise. S&P now believes that BPER is likely to be ableto complete the capital increase by the end of July."Our risk-adjusted capital (RAC) ratio for BPER was 5.3% onDec. 31, 2013, and we estimate that the capital increase willimprove this figure to 6.3%. We also think that the bank shouldbe able to sustain its improved capital position over time,despite the high credit losses we factor into our capitalestimates, which underlie our assessment of its risk position as"weak." In particular, we think BPER's high pre-provisionprofitability will allow it to maintain positive net income overthe next two years and that its risk-weighted asset base willslightly decline due to deleveraging," S&P said. S&P hastherefore revised upward its assessment of BPER's capital andearnings to "moderate" from "weak."S&P continues to assess BPER's business position as "adequate."S&P is also maintaining its "adequate" view of its funding andliquidity profile.Following S&P's review of BPER's capital position, it has revisedits assessment of the bank's stand-alone credit profile (SACP) to'bb-' from 'b+'. Consistent with S&P's criteria, it rates BPER'snon-deferrable subordinated debt two notches below the SACP. Assuch, S&P raised the issue ratings on the bank's subordinateddebt to 'B' from 'B-'.S&P's ratings on BPER continue to incorporate one notch of upliftover the SACP for potential extraordinary government support,based on its view of the bank's "high" systemic importance andItaly's supportive stance toward its banking system.The negative outlook reflects that on Italy. S&P could lower itsratings on BPER if it lowered the sovereign credit rating onItaly. If that happened, all else being equal, S&P would nolonger include the one-notch uplift for potential support in itsratings on BPER, in accordance to S&P's criteria."We could also lower the ratings by one notch by year-end 2015 ifwe consider that extraordinary government support is lesspredictable under the new EU legislative framework. We couldremove the one notch of uplift for potential extraordinarysupport shortly before the January 2016 introduction of bail-inpowers under the European Union's Bank Resolution and RecoveryDirective (BRRD) for senior unsecured liabilities. The BRRD'sbail-in powers indicate to us that EU governments will be lesswilling to bail out senior unsecured bank creditors, even thoughit may take several more years to eliminate concerns aboutfinancial stability and the resolvability of systemicallyimportant banks," S&P said.In addition to potential changes in the SACP and governmentsupport, S&P will review other relevant rating factors whentaking any rating actions. These might include any measures BPERmight take that provide substantial additional flexibility toabsorb losses while a going-concern and mitigate bail-in risks tosenior unsecured creditors.S&P could revise the outlook back to stable if it also revise theoutlook on Italy back to stable, and if S&P considers thatpotential extraordinary government support for BPER's seniorunsecured creditors is unchanged in practice, despite theintroduction of bail-in powers and international efforts toincrease banks' resolvability. S&P could also revise the outlookback to stable if it believes that other rating factors, such asa stronger SACP or a large buffer of subordinated instruments,fully offset increased bail-in risks.BANCA POPOLARE DI MILANO: S&P Affirms 'B+' Rating; Outlook Stable-----------------------------------------------------------------Standard & Poor's Ratings Services affirmed its 'B+/B' long- andshort-term counterparty credit ratings on Italy-based BancaPopolare di Milano SCRL (BPM), and core subsidiary Banca AkrosSpA. At the same time, S&P removed the long-term ratings on thetwo banks from CreditWatch with negative implications, where itplaced them on Nov. 6, 2013. The outlook is stable. S&P alsoraised its issue rating on BPM's EUR300 million Tier 1 hybriddebt (ISIN: XS0372300227) to 'CCC' from 'D'.The affirmation follows BPM's successful execution of the EUR500million capital increase on May 27, 2014. This, in S&P's view,creates an additional capital buffer prior to the upcoming assetquality review (AQR) by the European Central Bank (ECB). BPM'sCore Tier 1 (CT1) ratio was 7.2% on Dec. 31, 2013, and S&Pestimates that the capital increase will benefit the CT1 ratio byabout 120 basis points (bps). The capital increase has mitigatedthe pressures we perceived to BPM's financial profile.S&P has therefore maintained its "moderate" assessment of BPM'scapital and earnings. S&P estimates that the EUR500 rights issueimproves its risk-adjusted capital (RAC) ratio by about 80 bps to6.1% from 5.3% at end-2013. S&P anticipates that BPM would nowlikely maintain capitalization in line with its currentassessment even if economic conditions in Italy were todeteriorate further."In our view, the successful execution of the capital increaserepresents an important step forward for BPM's management incarrying out its business and financial plans. In particular, weunderstand that management remains committed to launching severalmeasures aimed at improving the bank's corporate governancestructure by 2015, to address issues raised by the Bank of Italy(BoI). We anticipate that, if BPM's management executes itsplans successfully, this should benefit the bank's franchise and,ultimately, our view of BPM's business position over the next 12-18 months," S&P noted.In addition, management is committed to obtaining the removal ofthe "add-ons" to BPM's regulatory capital ratios that the BoIimposed after the inspection in 2011.The add-ons are higher risk weightings for BPM's exposures thanfor those of other Italian banks on the construction and realestate sectors and for operational risk; they also mean thebenefits in terms of a lower risk weighting for mortgage-backedloans are not applied. S&P understands that the add-onscurrently penalize BPM's Core Tier 1 ratio by 169 bps. In S&P'sview, the removal of the add-ons could create an additionalregulatory capital buffer in advance of the ECB's AQR and stresstest. However, this would not affect S&P's RAC calculation,because it calculates risk-weighted assets by applying ourindustrywide calibrated risk weights to a bank's exposures atdefault (EAD). Still, because some aspects of governance reformhave stalled, in S&P's view, it sees a risk that the BoI maydecide not to remove the add-ons until the governance reform isapproved.The upgrade of BPM's EUR300 million Tier 1 hybrid debt reflectsS&P's expectation that BPM will resume the coupon payment on thedue date of June 25, 2014. This is because the bank has notnotified bondholders of its intention not to pay the couponbetween 15 and 25 days prior to the June 25 payment date, whichis the required notice period under the terms and conditions ofthis instrument.This follows BPM's resumption of payment in April 2014 on itsEUR160 million 8.393% noncumulative perpetual preferredsecurities issued by BPM Capital Trust I and guaranteed by BPM.The stable outlook reflects S&P's belief that BPM's businessprofile will benefit from the successful execution of themanagement's plan to consolidate the bank's franchise andstrengthen its reputation, including measures to improve itsweaker-than-peers corporate governance. This shouldcounterbalance, in S&P's view, the potential removal by end-2015of the notch of uplift in the ratings for extraordinarygovernment support, which is likely to be less predictable underthe new EU Bank Recovery and Resolution Directive (BRRD).S&P could lower the long-term ratings on BPM and its coresubsidiary Banca Akros if it considers that BPM's management'sefforts to improve the bank's corporate governance structure havenot succeeded, and if S&P also believes that extraordinarygovernment support is less predictable under the new EU BRRD.S&P could also lower the ratings if it was to consider that BPM'sasset quality would deteriorate by far more than its currentforecast, affecting its view of its risk position. In 2014 and2015, S&P anticipates that BPM will likely accumulate net newnonperforming assets amounting to about a cumulative 4% ofcustomer loans as of end-2012. S&P also estimates that, by end-2015, BPM's credit losses will be about 2.7%-2.9% of customerloans as of end-2012.S&P could raise the ratings if it believes that BPM's businessposition has improved thanks to the execution of the bank'smanagement plans, including better corporate governance, and ifS&P considers that potential extraordinary government support forBPM's senior unsecured creditors is unchanged in practice,despite the introduction of bail-in powers and internationalefforts to increase banks' resolvability.BANCO POPOLARE SOCIETA: S&P Affirms 'BB-/B' Counterparty Ratings----------------------------------------------------------------Standard & Poor's Ratings Services affirmed its 'BB-/B'counterparty credit ratings on Italy-based Banco Popolare SocietaCooperativa SCRL (Banco Popolare) and its core subsidiariesCredito Bergamasco and Banca Aletti & C. SpA. The outlook isnegative. S&P also raised the issue ratings on Banco Popolare'snondeferrable subordinated debt to 'B-' from 'CCC+'.In addition, S&P withdrew its ratings on Credito Bergamascofollowing its merger with the parent on June 1, 2014.The rating action reflects S&P's view that Banco Popolare'sstand-alone creditworthiness has improved following itssuccessful unwinding of its funding imbalances, which it hadaccumulated since the downturn."We have improved our assessment of Banco Popolare's liquidityposition to "adequate" from "moderate" in response to the actionsit has taken to improve its liquidity position. In particular,Banco Popolare has successfully reduced its exposure to short-term wholesale funding since end-2012 while also slightlyincreasing its buffer of liquid assets, mainly Italian governmentbonds. As a result, Banco Popolare improved the liquiditymetrics we use in assessing its creditworthiness to levelscomparable with peers that we assess as having an "adequate"funding and liquidity position. In particular, we estimate thatits coverage of short-term wholesale funding by broad liquidassets has improved to 0.95x in March 2014, compared with 0.81xin December 2012. As a result of this process, Banco Popolarehas reduced its commercial funding gap, mainly through reducingthe amount of outstanding loans -- we believe this loandeleverage contributes to the sustainability of the improvementof its liquidity position -- and regained access to long-termwholesale funding," S&P said.S&P's assessment of Banco Popolare's liquidity incorporates theassumption that it will repay the European Central Bank's (ECB)LTRO without substituting it with other forms of short-termwholesale funding and that, as a consequence, it will keepimproving its liquidity metrics. S&P expects Banco Popolare toachieve this because of the positive impact of: -- the EUR1.5 billion capital increase it completed in April 2014; -- the reduction in its commercial funding gap, mainly though loan deleverage; -- new issuances of long-term wholesale funding instruments, in line with its funding plan; and -- lower maturities over the next years.S&P continues to assess the bank's funding profile as "average."At the same time, S&P has removed the one notch of uplift ofshort-term support previously included in its ratings to reflectthat access to ECB facilities, particularly the LTRO, gave BancoPopolare time to rebalance its funding profile to a moresustainable position."As a consequence of our improved view of Banco Popolare'sliquidity, we have revised the bank's stand-alone credit profile(SACP) to 'b+' from 'b'. Our SACP continues to incorporate our"adequate" assessment of Banco Popolare's business position. Weare also retaining our "weak" assessment on Banco Popolare'scapital and risk positions. Consistent with our criteria, werate Banco Popolare's nondeferrable subordinated debt two notchesbelow the SACP. As such, we raised the issue ratings on BancoPopolare's subordinated debt to 'B-' from 'CCC+'," S&P noted."Our ratings on Banco Popolare continue to incorporate one notchof uplift over the SACP for potential extraordinary governmentsupport, based on our view of the bank's "high" systemicimportance and Italy's supportive stance toward its bankingsystem," S&P said.In addition, S&P has withdrawn its 'BB-/B' ratings on CreditoBergamasco because it has merged with its parent. The merger ispart of Banco Popolare's reorganization plan, and took effect onJune 1, 2014, when Credito Bergamasco ceased to exist as aseparate legal entity.The negative outlook reflects S&P's expectation that it couldlower its ratings on Banco Popolare by one notch by year-end 2015if S&P considers that extraordinary government support is lesspredictable under the new EU legislative framework. S&P couldremove the one notch of uplift for potential extraordinarysupport, which S&P currently incorporates into the ratings,shortly before the January 2016 introduction of bail-in powersunder the European Union's Bank Resolution and Recovery Directive(BRRD) for senior unsecured liabilities. The BRRD's bail-inpowers indicate to S&P that EU governments will be less willingto bail out senior unsecured bank creditors, even though it maytake several more years to eliminate concerns about financialstability and the resolvability of systemically important banks.In the meantime, although S&P thinks it is unlikely at present,if Banco Popolare's asset quality deteriorates by more than S&Pcurrently expect over the next two years, it would also evaluatethe effect of associated credit losses on its capital position.If S&P lowered its assessment of Banco Popolare's capital andearnings score it would not necessarily affect the ratingsbecause, according to S&P's criteria, it may incorporate onenotch of uplift for additional extraordinary government supportin its ratings on Banco Popolare.In addition to potential changes in the SACP and governmentsupport, S&P will review other relevant rating factors whentaking any rating actions. These might include any measuresBanco Popolare might take that provide substantial additionalflexibility to absorb losses while a going-concern and mitigatebail-in risks to senior unsecured creditors.S&P could revise the outlook to stable if it considers thatpotential extraordinary government support for Banco Popolare'ssenior unsecured creditors is unchanged in practice, despite theintroduction of bail-in powers and international efforts toincrease banks' resolvability; and if S&P believes that otherrating factors, such as a stronger SACP or a large buffer ofsubordinated instruments, fully offset increased bail-in risks.FGA CAPITAL: S&P Revises Outlook to Stable & Affirms 'BB+' Rating-----------------------------------------------------------------Standard & Poor's Ratings Services revised its outlook on Italianbank FGA Capital SpA (FGAC) to stable from negative. At the sametime, S&P affirmed its 'BB+/B' long- and short-term counterpartycredit ratings on FGAC.S&P considers that the risk that systemwide funding for theItalian banking sector could deteriorate further has diminished,indicating that the trend in S&P's industry risk assessment forItalian banks is now stable. The outlook revision reflects thisview and S&P's opinion that FGAC's geographic diversificationoutside Italy, strong capital position, and resilient assetquality would provide it with a cushion sufficient to withstandthe impact of a weaker-than-anticipated economic recovery inItaly.In S&P's view, FGAC is less exposed than most Italian banks tothe effect of further weakening in the Italian economy becauseonly 40% of its outstanding loans were to Italian borrowers inDecember 2013. S&P expects this proportion to remain about 40%-45% for the next two years. Most of FGAC's remaining activity isin countries where S&P sees lower economic risks than in Italy,such as Germany, France, and the U.K. As a result of FGAC'sdiversification, S&P anticipates that its anchor for FGAC (thestarting point for our assessment of the bank's stand-alonecredit profile) would remain unchanged if economics risksincreased in Italy.S&P considers that FGAC's geographic diversification enabled itto maintain what it classifies as satisfactory asset qualitymetrics through the economic downturn. Credit losses were around75 basis points in 2012 and 2013, a low level for the Italianconsumer finance market and well below that at most Italianbanks. That said, this level of credit losses is in line withlevels at international peers.FGAC continues to benefit from its strong capital position, whichis mainly based on its ability to maintain resilientprofitability, contain the cost of risk, and moderate itsdividend pay-out. S&P projects that FGAC's risk-adjusted capital(RAC) ratio will be 11.0%-11.5% by the end of 2015.In S&P's view, FGAC will still benefit significantly frommaterial ongoing funding support from Credit Agricole S.A.(CASA), through Credit Agricole Consumer Finance (CACF). S&Punderstands that Credit Agricole remains strongly committed toproviding funding support to FGAC, through unsecured and securedlines, in the context of the joint venture agreement updated inJuly 2013.S&P continues to incorporate one notch of uplift for groupsupport in the rating on FGAC. This reflects S&P's view thatFGAC is a moderately strategic subsidiary of CASA and itsexpectation that CASA would provide extraordinary financialsupport if needed. S&P considers that car financing throughjoint ventures with auto manufacturers is a key strategic focusfor CASA.The stable outlook reflects S&P's opinion that FGAC's geographicdiversification is likely to enable it to withstand the impact ofa potentially weaker-than-anticipated economic recovery in Italy.S&P anticipates that should the economic risks we see in Italyincrease, it might not necessarily cause us to downgrade FGAC.That said, S&P could lower the rating if it anticipates thatFGAC's projected RAC ratio will not remain sustainably above 10%over the next two years, most likely because of a combination ofhigher economic risk in Italy and materially lower-than-expectedearnings retention.S&P could also lower the rating on FGAC if it perceives that theCASA group's commitment to support FGAC has diminished, which, inS&P's view, could negatively affect FGAC's funding and businessposition, among other factors.S&P could raise the ratings on FGAC if it anticipates an materialeasing in the downside risks to the Italian economy or FGAC'sgeographic diversification improves further, providing that itsasset quality metrics remains as resilient as they were duringthe economic downturn.ILVA: Italy Invites Arcelormittal to Invest or Buy Business-----------------------------------------------------------Allison Martell at Reuters reports that the Italian governmenthas asked ArcelorMittal SA to consider investing in or buyingIlva.Arcelormittal CEO Lakshmi Mittal played down the potential for aspeedy decision though, saying it will be a long, drawn-outprocess with social, political and economic problems making thesituation very complex, Reuters relates.According to Reuters, sources said among other parties which haveshowed some interest in buying a stake in the loss-making plantare Italian steel companies Marcegaglia and Arvedi and Indiansteel producer Jindal.The Ilva complex, Europe's biggest steel plant by capacity andone of the largest employers in southern Italy, has been underspecial administration since June last year, Reuters discloses.Its existence is now under threat since it is losing cash at arate of EUR60 million to EUR80 million (US$81.7 to US$108.9million) a month, Reuters says, citing Italian steel industrybody Federacciai, Reuters notes.Ilva is an Italian steel producer.MEDIOCREDITO CENTRALE: S&P Affirms BB+ Counterparty Credit Rating-----------------------------------------------------------------Standard & Poor's Ratings Services affirmed the 'BB+/B' long- andshort-term counterparty credit ratings on MedioCredito CentraleSpA. The outlook is negative.The affirmation follows S&P's classification of MedioCredito as a"moderately strategic" subsidiary of Italian government-relatedpostal services provider Poste Italiane SpA (BBB/Negative/A-2),under its criteria. This supersedes the previous methodology S&Pused to define the link between Poste Italiane and MedioCredito.S&P's assessment incorporates Poste Italiane's full ownership ofMedioCredito and its recent strong track record of capital andliquidity support to MedioCredito (with a commitment to providefurther support if needed), balanced against S&P's view thatMedioCredito's lines of business are not integral to PosteItaliane's group strategy.S&P has not changed the level of parent support it incorporatesin its rating on MedioCredito. The 'BB+' long-term ratingcontinues to incorporate one notch of uplift over the 'bb' stand-alone credit profile (SACP), as S&P believes that Poste Italianeis likely to provide extraordinary capital or liquidity supportto MedioCredito if needed."In our opinion, MedioCredito Centrale benefits from the materialongoing support it has received from the parent, which supportsthe ratings. Our "strong" assessment of the bank's capital andearnings is underpinned by the recent EUR240 million capitalinjection MedioCredito received from the parent to support thebank's business expansion in the coming years. We expect thebank's risk-adjusted capital to sustainably exceed 10% over thenext two years. In our opinion, the bank's funding and liquidityposition benefits from its access to Poste Italiane's extensivebranch network and retail customer base, and from the credit linethe parent has made available," S&P said.Conversely, MedioCredito's ratings remained constrained by S&P'sview of its "weak" business position, mainly due to its smallsize and limited diversification.In addition, S&P believes its measure of the bank's risk-adjustedcapital does not fully capture MedioCredito's potentially higher-than-average credit risk. In S&P's view, credit risk isheightened by its lending to small and midsize enterprises inSouthern Italy and potential single-name concentration. S&Preflects this in its "moderate" assessment of the bank's riskposition.S&P considers MedioCredito to be a government-related entity(GRE). In accordance with S&P's criteria for GREs, it bases itsview of a "moderate" likelihood of extraordinary governmentsupport on S&P's assessment of MedioCredito's: -- "Limited" role for Italy. MedioCredito is a profit-seeking bank whose activity could be easily undertaken by a private sector entity if it ceased to exist; and -- "Strong" link with the Italian government. MedioCredito is fully owned by government-owned Poste Italiane, which effectively drives its strategy and operations and, S&P believes, will provide support in case of need. -- Owing to the "strong" link between Poste Italiane and the Italian government, S&P believes a default of MedioCredito could indirectly affect the government's reputation.Under S&P's GRE methodology, taking into account MedioCredito's'bb' SACP, the 'BBB' unsolicited rating on Italy, and S&P's viewof the "moderate" likelihood of extraordinary support, S&P do notincorporate into the long-term rating on MedioCredito any upliftrelated to potential support from the Italian government.The negative outlook reflects the possibility that S&P couldlower the rating on MedioCredito if it perceived an increase inthe economic risks Italian banks are facing. It also reflectsthe negative outlook on its parent Poste Italiane.S&P would not automatically downgrade MedioCredito if it took thesame action on Poste Italiane, but S&P believes it would putpressure on ratings on the bank, and could result in a downgradeif it did not also see an improvement in MedioCredito's stand-alone creditworthiness.S&P could also lower its ratings on MedioCredito if it perceivedthat its stand-alone creditworthiness had deteriorated and thatthe willingness and ability of Poste Italiane or the Italiangovernment to provide timely extraordinary support toMedioCredito had not strengthened beyond the level that S&Pcurrently incorporates into the ratings.S&P do not currently expect to revise the outlook on MedioCreditoto stable. However, S&P could do so if it also revised that onthe long-term ratings on Italy and on Poste Italiane to stable,and if S&P anticipated that downside risks to the bank'sfinancial profile from the still-difficult economic environmentin Italy were likely to abate.UNIPOL BANCA: S&P Affirms 'BB-/B' CCRs; Outlook Negative--------------------------------------------------------Standard & Poor's Ratings Services affirmed the 'BB-/B' long- andshort-term counterparty credit ratings on Unipol Banca SpA. Theoutlook is negative.The affirmation reflects that S&P now sees a stable trend in theindustry risks that Italian banks face, as S&P sees a lower riskof a sharp and rapid deterioration of its creditworthiness,potentially affecting banks' access to capital markets.Still, in S&P's view, Unipol Banca remains more exposed thanpeers to a potentially weaker-than-expected economic recovery inItaly. This is mainly due to its very high stock of nonperformingassets (NPAs) that S&P estimates at 30.2% of gross customer loansat end-2013. The pace of deterioration in asset quality in 2013was significantly worse than the Italian banking system average(about 6% of the loan book versus 2.6% at the system level). S&Pattributes this underperformance partly to the clean-up of thecorporate loan portfolio by the bank's new management. S&Pincorporates this in its "weak" assessment of the bank's riskposition."We believe that Unipol Banca has improved its risk managementand underwriting standards following the corporate loan portfolioclean-up. It is also refocusing on retail clients andcooperatives that are linked with the shareholding structure ofUnipol Banca's parent Unipol Gruppo Finanziario SpA (UGF). Inour view, these actions will likely limit the pace of assetquality deterioration in 2014 and 2015. However, given the highstock of NPAs, our base-case scenario is for the bank to continueto report high credit losses in 2014 and 2015, which we forecastwill average about 2% of customer loans per year. Our assessmentof Unipol Banca's stand-alone credit profile incorporates ourview that the parent would provide sufficient support to maintainUnipol Banca's regulatory core Tier 1 capital ratio at 8%, inline with UGF's commitment to the Bank of Italy," S&P said."Our long-term rating on Unipol Banca continues to include threenotches of uplift for parental support, reflecting our view ofUGF's commitment to provide extraordinary support to UnipolBanca, if needed. We partly base this opinion on the strongreputational and financial links between Unipol Banca and UGF.These links include the shared brand, the EUR0.8 billion incapital UGF has invested in Unipol Banca, the EUR1.4 billion infunding provided to Unipol Banca by UnipolSai and UGF, and UGF'sguarantee of EUR0.5 billion of Unipol Banca's NPAs at end-2013.In addition, most Unipol Banca branches are located inside oradjacent to the branches of the group's insurance agencies, andinsurance clients represent about 36% of Unipol Banca's fundingbase," S&P noted.The negative outlook reflects S&P's view that Unipol Banca's weakasset quality makes it more exposed than peers to a potentiallyweaker-than-expected economic recovery in Italy.In S&P's downside scenario, it considers that an increase ineconomic risks could result in higher-than-expected credit lossesfor Unipol Banca. In this scenario, S&P expects that UGF wouldincrease its support in order to compensate for at least part ofthe additional credit losses.Specifically, S&P could lower the ratings to the 'B' category ifit anticipates that one of the following conditions is likely tooccur: -- Unipol Banca's asset quality deteriorating further, with credit losses significantly above those that S&P estimates in its base-case scenario; -- a deterioration in the economic environment in Italy, without a sufficient buffer from UGF's ongoing parent support to cover potential additional credit losses; -- a weakening of the quality and timeliness of UGF's ongoing support, contrary to S&P's base-case scenario. This could also result from funding support being insufficient for Unipol Banca to reduce its reliance on long-term European Central Bank funding at a pace in line with the Italian banking system; or -- a reassessment of Unipol Banca's strategic importance for UGF.S&P do not currently expect to revise the outlook on Unipol Bancato stable. However, S&P could do so if it saw significantimprovement in the bank's asset quality metrics and if S&Pexpected an easing in the risks to the economic environment inItaly.VENETO BANCA: S&P Affirms 'BB' Counterparty Credit Rating---------------------------------------------------------Standard & Poor's Ratings Services affirmed its 'BB' long-termcounterparty credit rating on Italy-based Veneto Banca SCPA andremoved it from CreditWatch negative, where it was originallyplaced on April 14, 2014. S&P also affirmed its 'B' short-termrating. The outlook is negative.At the same time, S&P affirmed and removed from CreditWatchnegative its 'B-' issue ratings on Veneto Banca's subordinateddebt, and its 'CCC' issue ratings on the bank's preferred stock.The rating actions primarily reflect S&P's view that Veneto Bancais likely to be able to successfully complete the capital-enhancing actions that it announced on March 25, 2014. In thiscontext, S&P notes that Veneto Banca has completed all of theactions required to address the Bank of Italy's concernsregarding the bank's governance and strategy, including theappointment of a new board of directors. S&P believes VenetoBanca also benefits from the strength of its franchise, as wellas the loyalty of its shareholders and customer base. In S&P'sview, the combination of these factors reduces the execution riskof the announced capital-strengthening measures. The successfulcompletion of these actions would be sufficient to offset theeffect of deteriorating asset quality on S&P's view of the bank'srisk position.S&P understands that the Bank of Italy explicitly required VenetoBanca to take several actions aimed at changing several featuresof its governance structure. These actions included theappointment of a completely new board of directors, a feworganizational changes, and some internal restructuring aimed atstreamlining the bank's organization. While S&P considers thatthe need for the Bank of Italy to request such changes might havenegatively affected Veneto Banca's reputation, S&P believes thatthe proven strength of its franchise, as well as the loyalty ofzts customer and shareholder base, reduce the execution risk ofits announced capital plan.S&P therefore believes that, in the next few months, Veneto Bancawill likely be able to complete all of its capital-enhancingactions. These actions mainly include the conversion of a EUR350million convertible bond into equity and a capital increase ofabout EUR500 million through a rights issue (which is expected tobe completed by early October).The successful completion of these measures should, in S&P'sopinion, allow Veneto Banca to absorb the sizable credit losseson its capital base and to enhance its total solvency level. S&Pestimates that, as a result, Veneto Banca's risk-adjusted capital(RAC) ratio before diversification would stand in the 5.5%-6.0%range by the end of 2014. S&P is therefore revising VenetoBanca's capital and earnings assessment to "moderate" from"weak." In addition, Veneto Banca is also aiming to sell itsstake in Banca Intermobiliare. However, this process could takelonger than anticipated and S&P is not incorporating the benefitof this potential sale in its assessment of Veneto Banca'scapital position."At the same time, we expect that asset quality will continue todeteriorate in coming quarters, and that Veneto Banca is likelyto accumulate a higher level of problematic assets than wepreviously incorporated into the ratings. We think that thetotal problematic assets that Veneto Banca will accumulate duringthe full economic cycle is likely to exceed 20% of its totalloans, before stabilizing. Our estimates take into account thecontinued performance deterioration in Veneto Banca's assetquality over the past 18 months. We also consider that the totalNPL coverage level, at about 33% as of year-end 2013, remainsmodest overall, when compared with domestic and internationalstandards. The combined effect of increasing problem assets andlower coverage of loan-loss reserves makes Veneto Banca, in ourview, highly vulnerable to higher credit losses. We havetherefore revised our assessment of the bank's risk position to"weak" from "moderate"," S&P said"We continue to assess Veneto Banca's liquidity profile as being"moderate," taking into account the fact that, in our view, itstill relies on substantial short-term funding sources, despitesome improvement. These sources include liquidity facilitiesprovided by the European Central Bank's (ECB) long-termrefinancing operation (LTRO). In our view, Veneto Banca remainsdependent on the completion of several liquidity-enhancingactions--including continued access to the wholesale market ataffordable prices--in order to reach what we consider to be anadequate liquidity position on a sustainable basis by the timethe LTRO expires. We continue to incorporate one notch of short-term support into our 'BB' long-term rating on Veneto Banca toreflect our view that its ongoing access to the ECB's LTRO givesit time to implement the plans that will help it to rebalance itsliquidity profile to a more sustainable position," S&P added.As a result of the factors above, S&P's assessment of VenetoBanca's stand alone credit profile (SACP) remains unchanged, at'b+'.S&P's ratings on Veneto Banca continue to incorporate one notchof uplift on the SACP. This accounts for potential extraordinarygovernment support, based on S&P's view of the bank's "moderate"systemic importance and Italy's supportive stance toward itsbanking system.The negative outlook reflects the possibility that S&P couldlower its ratings on Veneto Banca if any of the followingconditions were to occur: -- the economic conditions in which Italian banks operate deteriorate further and this, combined with weaker-than- expected capital generation were to negatively affect S&P's view of the bank's capital position; -- Veneto Banca were ultimately unable to complete its plan to reduce its exposure to funding from the ECB and correct its funding imbalances. -- under this scenario, S&P would be unlikely to consider that the bank would be able to achieve an "adequate" liquidity position according to S&P's criteria by the time the ECB LTRO expires; or -- if S&P was to envisage any evidence of unexpected corporate governance issues, particularly if regulatory authorities were to request Veneto Banca to take additional significant restructuring actions.S&P do not currently expect to revise the outlook on Veneto Bancato stable. However, S&P could do so if the bank were tosuccessfully deliver its business and financial plans, and if S&Pwas to believe that downside risks to the economic operatingenvironment in Italy -- and subsequently to S&P's assessment ofVeneto Banca's capital -- were easing."In addition, we could lower our ratings on Veneto Banca by onenotch by year-end 2015 if we were to consider that extraordinarygovernment support is less predictable under the EU's newlegislative framework. We could remove the notch of uplift forpotential extraordinary support, which we currently incorporateinto the ratings, shortly before the January 2016 introduction ofbail-in powers under the EU's Bank Resolution and RecoveryDirective (BRRD) for senior unsecured liabilities. The BRRD'sbail-in powers indicate to us that EU governments will be lesswilling to bail out senior unsecured bank creditors, even thoughit may take several more years to eliminate concerns aboutfinancial stability and the resolvability of systemicallyimportant banks," S&P said.In addition to potential changes in the SACP and governmentsupport, S&P will review other relevant rating factors whentaking any rating actions. These might include any measures thatVeneto Banca might take that provide substantial additionalflexibility to absorb losses while a going-concern and mitigatebail-in risks to senior unsecured creditors.===================L U X E M B O U R G===================TIGERLUXONE SARL: S&P Assigns Prelim. 'B' CCR; Outlook Stable-------------------------------------------------------------Standard & Poor's Ratings Services assigned its preliminary 'B'corporate credit rating to TigerLuxOne Sarl (TeamViewer). Theoutlook is stable.At the same time, S&P assigned its preliminary 'B' and 'CCC+'issue ratings to the EUR325 million-equivalent first-lien seniorsecured term loan (as well as an undrawn, at closing, RCF ofabout EUR25 million-equivalent) and to the EUR90 million-equivalent second-lien senior secured term loan, respectively.The preliminary ratings are subject to S&P's satisfactory reviewof the final documentation. If there are any changes to theamount, terms, or conditions of the instruments, S&P could reviewand change the corporate credit or issue ratings.Private equity firm Permira, through TigerLuxOne, has acquiredTeamViewer from GFI Software in a leveraged buyout transaction.The preliminary ratings on TigerLuxOne reflect S&P's assessmentof TeamViewer's business risk profile as "weak" and its financialrisk profile as "highly leveraged".S&P's assessment of TeamViewer's business risk profile isconstrained by the relatively small size of the company, itsnarrow product focus, and its perpetual-license business model.S&P sees the latter as potentially less predictable than theother software subscription models. Also, the company has tocompete with much larger, more diversified, and financiallystronger software companies -- Cisco (and its Webex service) andMicrosoft.However, these weaknesses are partly offset by the company'srelatively good competitive position in its niche market, thewide diversity in its client base (the company mainly focuses onsmall and midsize enterprises), the top-notch margin of about 70%on a cash-EBITDA basis, and very high cash conversion (an EBITDA-minus-capex margin of more than 98%). In addition, and despitethe perpetual-license business model, the company has a trackrecord of generating recurring revenues from customers havingbought a license in the past (over the past seven years, 20% ofthe revenues generated in Year 0 have recurred), demonstratingthe quality of the product and the willingness of existingcustomers to pay for periodic upgrades.S&P's assessment of TeamViewer's financial risk profile primarilyreflects its high post-acquisition leverage and private equityownership. S&P nonetheless sees the company as havingsignificant deleveraging potential thanks to its growth prospectsand the high cash conversion of profits afforded by its lowcapital and working capital intensity. S&P estimates that by theend of 2014, the adjusted leverage ratio could drop to slightlybelow 5.0x from 5.5x (non-adjusted) at the closing of theacquisition."Furthermore, we forecast that the company's adjusted leverageshould stay below 5.0x if it directs excess cash generation todebt repayment, as mandated by its debt documentation, for aslong as the net secured leverage is above 4.5x. This is coveredin the cash flow sweep clause in the documentation, and offerssignificant deleveraging prospects. At the same time, thedocumentation is not particularly restrictive in terms ofpermitted debt and only bears a springing leverage covenant onits RCF (with very wide headroom) that would potentially allowthe owner to extract exceptional returns over a medium-termhorizon. Finally, the group generates cash flow in variouscurrencies, which could potentially lead to a mismatch with thegroup's euro- and dollar-denominated debt service obligations,"S&P said.S&P's base case assumes: -- continued robust top-line growth underpinned by the combination of relatively flat new-customer gain and good recurring revenue flows. -- slight erosion of the adjusted cash EBITDA margin due to the company's strategy to increase its sales force, leading to a decrease of the adjusted cash margin to slightly below 70% in 2016. -- minor capital expenditure (capex) of about 1% of the revenues.Based on these assumptions, S&P arrives at the following creditmeasures: -- adjusted leverage of about 4.9x in 2014, expected to decrease if cash generated is utilized for debt repayment. -- adjusted funds from operations (FFO) to debt slightly above 10% in 2014 and beyond. -- adjusted free operating cash flow to debt above 10%, in line with S&P's FFO-to-debt ratio, thanks to the very low capex required. -- Strong cash interest coverage comfortably above 3.0x.S&P bases its calculation on a cash measure of EBITDA, reflectingpayments received from software users. S&P has adjusted for thedeferred revenues portion that IFRS mandates. This produces asignificantly higher cash number.The stable outlook reflects S&P's anticipation that TigerLuxOnewill continue to generate sufficient cash to maintain a steadydeleveraging profile while keeping EBITDA interest coverage above3.0x.Upside scenarioS&P could see some potential upside if the company directs excesscash to debt repayment and keeps growing its earnings. S&P couldraise the rating on TigerLuxOne if its adjusted leverage fallsand remains at about 4.0x on a sustainable basis, whilemaintaining EBITDA coverage of more than 3.0x.Downside scenarioS&P believes that rating downside is currently limited due to thecompany's high cash generation leading to a strong EBITDAinterest coverage of more than 3.0x. However, pressure on thetop line because of a decrease of new customers could imply adrop in profitability and therefore cash generation.=====================N E T H E R L A N D S=====================FAB CBO 2002-1: S&P Raises Rating on Class A-2 Notes to 'B'-----------------------------------------------------------Standard & Poor's Ratings Services raised its credit ratings onF.A.B. CBO 2002-1 B.V.'s class A-1 and A-2 notes. At the sametime, S&P has affirmed its rating on the class B notes.The rating actions follow S&P's credit and cash flow analysis ofthe transaction using data from the trustee report dated April30, 2014, and the application of its relevant criteria."We conducted our cash flow analysis to determine the break-evendefault rate (BDR) for each rated class of notes. The BDRrepresents our estimate of the maximum level of gross defaults,based on our stress assumptions, that a tranche can withstand andstill fully repay the noteholders. We used the portfolio balancethat we consider to be performing, the reported weighted-averagespread, and the weighted-average recovery rates that weconsidered to be appropriate. We incorporated various cash flowstress scenarios using our shortened and additional defaultpatterns and levels for each rating category assumed for eachclass of notes, combined with different interest stress scenariosas outlined in our criteria," S&P said.The transaction's reinvestment period ended in June 2007. SinceS&P's Jan. 22, 2013 review, the class A-1 notes have amortized byapproximately EUR28 million. Just over 6% of the class A-1notes' original principal balance remains outstanding.According to S&P's cash flow results, the available creditenhancement for the class A-1 notes has increased since S&P's2013 review. S&P has therefore raised to 'A+ (sf)' from 'A-(sf)' its rating on the class A-1 notes.The available credit enhancement for the class A-2 notes is alsocommensurate with a higher rating than previously assigned. InS&P's view, this is mainly due to the amortization of the classA-1 notes since its 2013 review. As a result, S&P has raised to'B (sf)' from 'CCC+ (sf)' its rating on the class A-2 notes.The maximum rating that the class B notes can achieve under S&P'ssupplemental stress test is 'CCC-'--also supported by its cashflow analysis. S&P has therefore affirmed its 'CCC- (sf)' ratingon the class B notes.F.A.B. CBO 2002-1 is a collateralized debt obligation (CDO)transaction backed by pools of structured finance assets, whichclosed in April 2002. The reinvestment period ended in June2007. Since then, all scheduled principal proceeds have gonetowards the payment of the notes in accordance with the priorityof payments.RATINGS LISTClass Rating Rating To FromF.A.B. CBO 2002-1 B.V.EUR309.5 Million Asset-Backed Floating-Rate NotesRatings RaisedA-1 A+ (sf) A- (sf)A-2 B (sf) CCC+ (sf)Rating AffirmedB CCC- (sf)LEOPARD CLO V: S&P Affirms 'CCC-' Rating on Class F Notes---------------------------------------------------------Standard & Poor's Ratings Services raised its credit ratings onLeopard CLO V B.V.'s class VFN, A, B, C-1, C-2, and R Combonotes. At the same time, S&P has affirmed its ratings on theclass D, E-1, E-2, and F notes.The rating actions follow S&P's credit and cash flow analysis ofthe transaction using data from the trustee report dated April30, 2014 and the application of its relevant criteria."We conducted our cash flow analysis to determine the break-evendefault rate (BDR) for each rated class of notes. The BDRrepresents our estimate of the maximum level of gross defaults,based on our stress assumptions, that a tranche can withstand andstill fully repay the noteholders. We used the portfolio balancethat we consider to be performing, the reported weighted-averagespread, and the weighted-average recovery rates that weconsidered to be appropriate. We applied various cash flowstress scenarios using our standard default patterns, levels, andtimings for each rating category assumed for each class of notes,combined with different interest stress scenarios as outlined inour criteria," S&P said."Our review of the transaction highlights that the class VFN andA notes, which we rate based on the timely payment of interestand ultimate repayment of principal and rank pari passu, haveamortized by approximately EUR54 million since the transactionstarted to amortize in July 2013. The transaction has also beendeleveraging because the class D, E, and F notes' par value testshave been failing since August 2013. This has resulted in higheravailable credit enhancement for the class VFN, A, B, and C notessince our previous review on April 27, 2012," S&P added.S&P has observed an increase in the transaction's weighted-average spread to 4.0% from 3.2% and a shortening of itsweighted-average life. However, S&P has also observed a relativereduction of the performing collateral due to defaults, a slightnegative migration in the portfolio's credit quality, and anincrease in obligor concentration. The weighted-average recoveryrates have also decreased slightly.The results of S&P's cash flow analysis indicate that the classVFN, A, and B notes can sustain defaults at a higher rating levelthan that currently assigned. S&P's cash flow results show thatthe available credit enhancement for the class VFN and A notes iscommensurate with a 'AA+ (sf)' rating and a 'AA- (sf)' rating forthe class B notes. S&P has therefore raised its ratings on theseclasses of notes.Due to the class VFN and A notes' amortization, as well as theother positive developments mentioned above, S&P considers theavailable credit enhancement for the class C-1 and C-2 notes tobe commensurate with higher ratings than previously assigned.S&P has therefore raised to 'A- (sf)' from 'BBB- (sf)' itsratings on the class C-1 and C-2 notes.S&P's cash flow analysis indicates that the available creditenhancement for the class D, E-1, E-2, and F notes iscommensurate with their currently assigned ratings. S&P hastherefore affirmed its ratings on these classes of notes.The class R Combo notes comprise class C-2 (70%) and E-2 (30%)components. Their rated balance has decreased to EUR7.6 millionfrom EUR10.0 million through interest distributions from theircomponents. Under S&P's cash flow analysis, the class R Combonotes' BDRs pass their scenario default rates (SDRs) at 'A-(sf)'. The SDR is the minimum level of portfolio defaults thatS&P expects each CDO tranche to be able to support the specificrating level using Standard & Poor's CDO Evaluator. However, S&Phas qualitatively adjusted its rating and raised it to 'BBB+(sf)' instead as the payment of interest and principal on theclass R Combo notes still depends on the class E-2 notes.Leopard CLO V is a cash flow collateralized loan obligation (CLO)transaction that securitizes loans to primarily speculative-gradecorporate firms.RATINGS LISTLeopard CLO V B.V.EUR430 mil floating- and fixed-rate notes Rating RatingClass Identifier To FromVFN AA+ (sf) AA- (sf)A 52668SAH5 AA+ (sf) AA- (sf)B 52668SAK8 AA- (sf) A+ (sf)C-1 52668SAM4 A- (sf) BBB- (sf)C-2 52668SAJ1 A- (sf) BBB- (sf)D 52668SAL6 BB- (sf) BB- (sf)E-1 52668SAF9 CCC (sf) CCC (sf)E-2 52668SAG7 CCC (sf) CCC (sf)F XS0294796239 CCC- (sf) CCC- (sf)R Combo 52668SAD4 BBB+ (sf) BB+ (sf)=========S P A I N=========BBVA EMPRESAS 6: Fitch Says Swap Removal No Impact on 'BB' Rating-----------------------------------------------------------------Fitch Ratings says that the SME CDOs BBVA Empresas 5 and BBVAEmpresas 6 notes' ratings are not affected by the interest rateswap removal that took place on 4 June.Under the swap agreements the issuer exchanged the actualinterest collected from the asset pool for the weighted averageinterest rate of the notes plus 50 basis points on a notionaldefined as the non-delinquent balance.All notes from both transactions pay floating interest rateswhile a small portion of the assets pay fixed interest rate -3.7% for BBVA Empresas 5 and 6.3% for BBVA Empresas 6respectively. Fitch has assessed the impact of the swap removalfor each series and determined that no rating action is warrantedon any of the transactions as sufficient credit enhancement is inplace. The ratings of the notes are as follows:BBVA Empresas 5Class A (ISIN ES0313281000): rated at 'A+sf', Outlook StableClass B (ISIN ES0313281018): rated at 'BBBsf', Outlook StableBBVA Empresas 6Class A (ISIN ES0314586001): rated at 'A+sf'; Outlook StableClass B (ISIN ES0314586019): rated at 'BBB+sf'; Outlook StableClass C (ISIN ES0314586027): rated at 'BBsf'; Outlook Negative* SPAIN: May Extend Debt Rules to Companies in Liquidation----------------------------------------------------------Jesus Aguado at Reuters reports that Economy Minister Luis deGuindos said on Tuesday Spain is looking at extending a lawenacted in March which helps struggling companies cut debt andavoid bankruptcy to firms already in the liquidation process.According to Reuters, the rules were designed to ease loanrefinancings by making it harder for small creditors to vetodeals between companies and their lenders and create a mechanismfor creditors to write off part of the debt.Mr. de Guindos, as cited by Reuters, said the amendment would bepassed in the next few weeks.Hundreds of Spanish companies have been forced to the wall sincea property bubble burst in 2008, leaving millions out of work andfirms struggling to sell goods and services to cash-strappedconsumers, Reuters notes.The law allows, among other points, companies to cut debts if 75%of their lenders agree to take losses, or "haircuts", Reutersdiscloses. Creditors not in agreement would be forced to acceptthe deal, Reuters states.===========================U N I T E D K I N G D O M===========================CARROS UK HOLDCO: S&P Lowers Rating on 1st Lien Debt to 'B'-----------------------------------------------------------Standard & Poor's Ratings Services lowered its issue-level ratingon Carros UK HoldCo Ltd.'s upsized first-lien credit facility to'B' from 'B+' and revised the recovery rating to '3' from '2'.The rating actions follow Carros' upsizing of its proposed first-lien term loan by $120 million. The proposed first-lien creditfacility will now consist of a US$590 million first-lien termloan and a US$75 million revolving credit facility.At the same time, S&P withdrew its 'B-' issue-level rating and'5' recovery rating on Carros' proposed US$120 million second-lien term loan. Because Carros no longer plans to borrow underthe second-lien term loan, the total debt amount remainsunchanged.With the first-lien credit facility's larger loan size, theprojected recovery on the credit facility drops below the 70%threshold for a '2' recovery rating. The '3' recovery ratings onthe term loan and the senior secured revolver indicate S&P'sexpectation for meaningful recovery (50%-70%) in the event of apayment default. The 'B' issue-level rating on the creditfacility is the same as the corporate credit rating on Carros,which is in line with S&P's notching guidelines for a '3'recovery rating.Carros Finance Luxembourg S.a.r.l. and Carros US LLC arecoborrowers of the first-lien credit facility.The 'B' corporate credit rating and stable outlook on Carrosremain unchanged.RATINGS LISTCarros UK Holdco Ltd. Corporate Credit Rating B/Stable/--Ratings Lowered; Recovery Rating Revised To FromCarros Finance Luxembourg S.a.r.l.Carros US LLC $75 mil. senior secured revolver bank ln due 2019 B B+ Recovery Rating 3 2 $590 mil. first-lien term bank ln due 2021 B B+ Recovery Rating 3 2Ratings WithdrawnCarros Finance Luxembourg S.a.r.l.Carros US LLC $120 mil second-lien term bank ln due 2022 NR B- Recovery Rating NR 5NR-Not rated.LAKELAND LEATHER: In Administration; More Than 200 Jobs at Risk---------------------------------------------------------------Graham Ruddick at The Telegraph reports that more than 200 jobsare at risk after Lakeland Leather called in administrators.Lakeland Leather, which has 22 stores across the country, says ithas struggled after a mild winter damaged sales, The Telegraphrelates.Lakeland has appointed McTear, Williams & Wood as administrator,The Telegraph discloses.According to The Telegraph, Martin Foster, the managing directorof Lakeland, said the decision to call in administrators was onlytaken after a "ceaseless interrogation" of the alternatives.It is understood that a deal may be in place to try to rescuesome of the stores, but four have already closed, The Telegraphnotes.Lakeland Leather is a clothing retailer. *********Monday's edition of the TCR delivers a list of indicative pricesfor bond issues that reportedly trade well below par. Prices areobtained by TCR editors from a variety of outside sources duringthe prior week we think are reliable. Those sources may not,however, be complete or accurate. The Monday Bond Pricing tableis compiled on the Friday prior to publication. Prices reportedare not intended to reflect actual trades. Prices for actualtrades are probably different. Our objective is to shareinformation, not make markets in publicly traded securities.Nothing in the TCR constitutes an offer or solicitation to buy orsell any security of any kind. It is likely that some entityaffiliated 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 withinsolvent balance sheets whose shares trade higher than US$3 pershare in public markets. At first glance, this list may looklike the definitive compilation of stocks that are ideal to sellshort. Don't be fooled. Assets, for example, reported athistorical cost net of depreciation may understate the true valueof a firm's assets. A company may establish reserves on itsbalance sheet for liabilities that may never materialize. Theprices at which equity securities trade in public market aredetermined by more than a balance sheet solvency test.Each Friday's edition of the TCR includes a review about a bookof interest to troubled company professionals. All titles areavailable at your local bookstore or through Amazon.com. Go tohttp://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 NTroubled Company Reporter-Europe is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills,Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez,Joy A. Agravante, Ivy B. Magdadaro, and Peter A. Chapman,Editors.Copyright 2014. All rights reserved. ISSN 1529-2754.This material is copyrighted and any commercial use, resale orpublication in any form (including e-mail forwarding, electronicre-mailing and photocopying) is strictly prohibited without priorwritten permission of the publishers.Information contained herein is obtained from sources believed tobe reliable, but is not guaranteed.The TCR Europe subscription rate is US$775 per half-year,delivered via e-mail. Additional e-mail subscriptions formembers of the same firm for the term of the initial subscriptionor balance thereof are US$25 each. For subscription information,contact Peter Chapman at 215-945-7000 or Nina Novak at202-241-8200. * * * End of Transmission * * *