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        T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

          Wednesday, December 17, 2014, Vol. 15, No. 249

                            Headlines

F R A N C E

ELIOR SCA: S&P Affirms 'BB' Corp. Credit Rating; Outlook Stable
ELIS SA: S&P Keeps 'B+' CCR on CreditWatch Positive


G E R M A N Y

WINDERMERE XIV: Fitch Affirms 'Dsf' Rating on Class F Loan
YI-KO HOLDING: Burger King Restaurants to Reopen This Week


H U N G A R Y

* HUNGARY: NAV Seeks to Recover HUF500MM From Liquidated Firms


I R E L A N D

IRISH BANK: May 31 Claims Filing Deadline Set
RYE HARBOUR: Moody's Assigns (P)B2 Rating to EUR11MM Cl. F Notes


I T A L Y

SESTANTE FINANCE 4: S&P Cuts Rating on Class B Notes to 'CCC'


L U X E M B O U R G

ALISON LUXCO: S&P Assigns 'B' Corp. Credit Rating; Outlook Stable
SODRUGESTVO GROUP: Fitch Affirms 'B' FC Issuer Default Rating


N E T H E R L A N D S

EUROSAIL-NL 2007-1: Moody's Reviews Notes Rating for Downgrade
HARBOURMASTER CLO 5: Fitch Affirms CCC Ratings on 2 Note Classes
* Business Bankruptcies Down to 50 in November 2014


P O R T U G A L

BANCO ESPIRITO: Chief Aware of Financial Woes & Irregularities


R O M A N I A

BANCA TRANSILVANIA: Fitch Puts 'BB-' IDR on Watch Evolving


R U S S I A

MECHEL OAO: Moody's Assigns LD Designation to Ca-PD Rating
RASPADSKAYA OAO: Fitch Affirms 'B+' Issuer Default Rating
TMK OAO: Moody's Affirms National Scale Rating
TMK OAO: Moody's Affirms B1 Corp. Family Rating; Outlook Negative
TRANSTELECOM JSC: Fitch Affirms 'B+' LT Issuer Default Ratings


S P A I N

FTPYME SABADELL 6: S&P Lowers Rating on Cl. C Notes to 'CCC-(sf)'
OBRASCON HUARTE: Fitch Affirms 'BB-' LT Issuer Default Rating


T U R K E Y

ASYA KATILIM: Moody's Confirms Caa1 Long-Term Deposit Rating


U K R A I N E

FIRST UKRAINIAN: Moody's Affirms 'Ca' Long-Term Deposit Rating
UKRAINE MORTGAGE: Fitch Hikes Class B Notes' Rating to 'BB-sf'


U N I T E D   K I N G D O M

BCA OSPREY: S&P Assigns 'B' Corp. Credit Rating; Outlook Stable
HELLERMANNTYTON GROUP: S&P Revises Outlook & Affirms 'BB' CCR
HH REALISATIONS: Legal Fees, Damages Prompt Collapse


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F R A N C E
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ELIOR SCA: S&P Affirms 'BB' Corp. Credit Rating; Outlook Stable
---------------------------------------------------------------
Standard & Poor's Ratings Services said it affirmed its long-term
corporate credit rating on France-based food services provider
Elior S.C.A. at 'BB'.  The outlook is stable.

At the same time, Standard & Poor's affirmed its 'BB' issue
rating on the EUR228 million senior secured notes due 2020,
issued by special-purpose vehicle (SPV) Elior Finance & Co.
S.C.A.; facility H1 loan that Elior Finance extends to Elior and
the group's other senior secured facilities.  The '3' recovery
rating on the debt is unchanged.

In addition, Standard & Poor's assigned its issue rating of 'BB'
and '3' recovery rating to Elior's new EUR800 million senior
secured facility maturing in 2019 and EUR150 million senior
secured facility maturing in 2022.

"The rating action follows the initiation of the refinancing of
Elior's senior banking facilities," said Standard & Poor's credit
analyst Andrew Stillman.  The company is undertaking the
repayment of a 2019 facility borrowed by Elior (EUR303 million),
a 2019 facility borrowed by Holding Bercy Investissement (HBI)
(EUR200 million), and repay Facility I1 (EUR453 million) borrowed
by Elior.  These facilities will be repaid by way of a new term
loan totaling EUR950 million as well as a small amount of cash
from the balance sheet.  In effect, our calculated credit metrics
will be broadly stable and we continue to assess Elior's
financial risk profile as "aggressive."

"We continue to assess Elior's business risk profile as
"satisfactory," which reflects the company's leading positions in
the markets that it operates; it is the third-largest concession
operator and the fourth-largest contract caterer globally.  Our
assessment is also supported by the company's sustainable and
predictable cash flow generation based on its medium- and long-
term contracts, elevated retention rates, significant end-market
diversification, and low volatility of profitability.  Our
assessment is limited by Elior's presence in a highly competitive
and fragmented market, and its geographical concentration in
Western Europe (87% of revenues stem from France, Spain,
Portugal, and Italy), which limits the group's ability to service
global requests.  The vulnerability of Elior's profitability to
unfavorable French labor regulations and expected wage and food
price inflation also restricts our assessment," S&P added.

S&P's business risk assessment also incorporates its view of the
business and consumer services industry's "intermediate" risk and
the company's "intermediate" country risk exposure.

The stable outlook reflects S&P's view that Elior's operating
performance will remain steady, with slower organic growth in the
concession business offset by higher growth in the catering
segments.  Furthermore, S&P expects that generated cash flows
will continue to support credit metrics at levels commensurate
with the company's "aggressive" financial risk profile through
2015.  This includes adjusted FFO to debt above 12% and debt to
EBITDA of 4x-5x.

S&P could lower the ratings should Elior have difficulty in
integrating recent acquisitions or experience a reduced ability
to pass along food price inflation, leading to lower margins than
S&P currently expects, a reduction in cash flow generation, or
tightening liquidity.  In addition, debt-financed acquisitions,
shareholder distributions, and adjusted FFO to debt of less than
12% could cause S&P to lower the ratings.

The potential for an upgrade depends on the impact of the
company's adoption of a financial policy and capital structure
more in line with public ownership, such as how regular dividend
payments will now affect cash flow progression and deleveraging.
Having said that, improvements in EBITDA and cash flow
generation, as well as stronger credit metrics than S&P currently
expects, a reduction in leverage resulting in sustained adjusted
FFO to debt of more than 20%, and adjusted debt to EBITDA of less
than 4x, alongside a less aggressive financial policy, could
cause S&P to consider raising the rating.


ELIS SA: S&P Keeps 'B+' CCR on CreditWatch Positive
---------------------------------------------------
Standard & Poor's Ratings Services said it kept its ratings,
including its 'B+' long-term corporate credit rating, on French
textile and appliances rental provider ELIS SA (formerly Holdelis
SAS) and its holding company Legendre Holding 27, on CreditWatch
with positive implications, where they had been placed on
Sept. 16, 2014.

Standard & Poor's also extended the CreditWatch placement on
these issues:

   -- The 'B+' rating on Novalis S.A.S.' EUR450 million senior
      secured notes due 2018.  The recovery rating on this
      instrument is '3'.

   -- The 'B-' rating on the EUR380 million private senior
      subordinated notes due 2018.  The recovery rating on this
      instrument is '6'.

   -- The 'B-' rating on holding company Legendre Holding 27's
      EUR173 million private senior payment-in-kind (PIK) notes
      due 2018.  The recovery rating on this instrument is '6'.

"The ratings remain on CreditWatch following ELIS' indication
that the IPO, initially scheduled for the last quarter of 2014,
has been postponed to 2015 due to unfavorable market conditions,"
said Standard & Poor's credit analyst Carole Missoudan.  After a
relatively buoyant first half of the year, equity markets cooled
down during the fourth quarter, leading a number of companies to
postpone their IPO plans.  Alongside Spie (B+/Stable/--) in early
October, ELIS also had to face particularly shaky equity markets.
Because of the IPO postponement to early 2015, S&P is extending
its CreditWatch on ELIS by a further 90 days.  Yet S&P
acknowledges that such transaction contains clear execution risk
as dependent on opportunistic market conditions.

S&P continues to assess the group's financial risk profile as
"highly leveraged" given its current credit metrics,
specifically, total debt to EBITDA above 5x and funds from
operations (FFO) to debt improving toward approximately 12%-13%
by year-end 2014.  That said, S&P considers that the group's
sound and sustainable cash flow generation more than offsets the
EUR20 million yearly build-up in debt resulting from the PIK
notes.

S&P still assess ELIS' business risk profile as "satisfactory,"
given the group's concentration in the French market, although
somewhat reduced with the recent acquisition of the Brazilian
entities, which accounted for 7% of the group's revenues as of
Sept. 30, 2014.  Moreover, ELIS operates in a fragmented and
competitive industry and focuses on Western European markets,
where S&P anticipates economic conditions will return to
sluggishness in 2014 and through 2015.  This is mitigated by the
company's leading positions in its key operating segments.  Its
resilient and healthy EBITDA margins at about 30%, which S&P
considers to be higher than the industry average, provide further
support to the group's business risk profile.

The CreditWatch extension reflects S&P's opinion that it could
raise its long-term corporate credit rating on ELIS by at least
one notch upon completion of the IPO, and of S&P's review of its
financial policy and new ownership structure.

S&P aims to resolve the CreditWatch placement in the next 90 days
following ELIS' completion of the IPO and allocation of the
proceeds in line with the plan.  S&P would assess the extent of
the deleveraging and revise its assessment of the group's
financial risk profile.  The magnitude of any potential ratings
upside would depend on S&P's view of the group's ability to
deliver stronger credit metrics; its new capital structure;
possible changes in its financial policy; its future shareholding
structure; and its liquidity remaining "adequate" under S&P's
criteria.

S&P would likely affirm the ratings if ELIS does not succeed in
placing the IPO.



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G E R M A N Y
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WINDERMERE XIV: Fitch Affirms 'Dsf' Rating on Class F Loan
----------------------------------------------------------
Fitch Ratings has affirmed Windermere XIV CMBS Ltd, as follows:

EUR140.9 million class A (XS0330752436) affirmed at 'BBBsf';
Outlook Negative

EUR78.0 million class B (XS0330752782) affirmed at 'Bsf'; Outlook
Negative

EUR63.5 million class C (XS0330752949) affirmed at 'CCCsf';
assigned Recovery Estimate (RE) RE15%

EUR26.9 million class D (XS0330753244) affirmed at 'CCsf'; RE0%

EUR35.6 million class E (XS0330753590) affirmed at 'CCsf'; RE0%

EUR17.3 million class F (XS0330753673) affirmed at 'Dsf'; RE0%

Windermere XIV is a securitization of four commercial mortgage
loans (down from eight loans at closing in November 2007)
originated by subsidiaries of Lehman Brothers Inc.

Key Rating Drivers

The affirmation is driven by the stable performance of the
largest loan in the pool, the EUR246 million Fortezza II loan
(68% of the pool). Since Fitch's last rating action, the income
profile improved as no break options were exercised in July 2014.
Four leases have been subject to a rent reduction of 15% due to a
recent Italian law disposition benefiting government tenants.

A portfolio of five properties is currently being marketed by the
borrower. Despite the improvement of the income profile, Fitch
envisages a costly, protracted workout, leading to significant
principal losses on the loan. Fitch notes that the Fortezza II
loan and the Fortezza loan (reported as IFB and Pavia Fortress I
and Naples Enel Tower Fortress II loans in the investor report)
in Windermere X CMBS Ltd share the same borrower, an Italian
closed ended real estate fund, therefore an enforcement of one of
these loans will automatically trigger the enforcement of the
other loan. Both loans mature in April 2015. As a result, the
Fortezza II loan is unlikely to be enforced at maturity in April
2015.

The performance of the three other loans is in line with Fitch's
expectations with assets sales for the Baywatch and Sisu loans
progressing.

Rating Sensitivities

Should the Fortezza II loan enter a protracted workout, slow
progress with liquidating the portfolio will determine future
rating actions. Fitch will look for indications of a credible
unwinding being planned in the months following maturity. Without
visible progress handling the technicalities of the workout and
disposing the assets, there is a possibility of downgrades within
the next two years.

Fitch estimates 'Bsf' net property proceeds of approximately
EUR228 million.


YI-KO HOLDING: Burger King Restaurants to Reopen This Week
----------------------------------------------------------
Alexander Huebner at Reuters reports that German Burger King
restaurants that were shut down last month in a row between their
operator and the U.S. fast food company will re-open this week.

According to Reuters, Burger King on Monday said in a statement
that 26 of the 89 outlets will open their doors again on Monday,
Dec. 15, and the rest by Wednesday, Dec. 17.

Burger King had told Yi-Ko Holding, formerly the biggest operator
of the restaurants in Germany, to shut down the restaurants
immediately last month, saying the franchisee had violated its
rules on the treatment of employees.

Last week, Yi-Ko filed for insolvency, putting 3,000 jobs at the
restaurants at risk, Reuters recounts.

Burger King has now given insolvency administrator Marc Odebrecht
a temporary license to operate the outlets under the company's
brand and has provided a loan for the business, Reuters
discloses.

Yi-Ko Holding is an operator of Burger King restaurants in
Germany.



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H U N G A R Y
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* HUNGARY: NAV Seeks to Recover HUF500MM From Liquidated Firms
--------------------------------------------------------------
According to MTI-Econews, daily Magyar Nemzet said on Monday that
the tax authority NAV is trying to recover around HUF500 million
in about 200 court procedures initiated over tax arrears of
companies under liquidation.

MTI relates that the paper said companies under liquidation owed
more than HUF1,800 billion in taxes in September.

In the cases submitted to the court, Magyar Nemzet said, there is
reason to assume that the company in question failed to pay its
taxes because the owners or managers made the assets vanish in a
dubious way, MTI notes.



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I R E L A N D
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IRISH BANK: May 31 Claims Filing Deadline Set
---------------------------------------------
Any party holding or wishing to assert any claim against Irish
Bank Resolution Corporation Limited (In Special Liquidation) or
its predecessor entities Ango Irish Bank Corporation Limited or
Irish Nationwide Building Society must submit their names,
addresses, the names and addresses of their solicitors, if any,
and a description of their debts and claims, along with copies of
supporting documentation, if any to Kieran Wallace and Eamonn
Richardson, Joint Special Liquidators for and on behalf of Irish
Bank Resolution Corporation Limited (In Special Liquidation), PO
Box 12410, Dublin 2, Ireland.

The submissions must be actually received on or before 5:00 p.m.
GMT on May 31, 2015.

Following review of such submissions by the Joint Special
Liquidators, such parties may be required, by written notice from
the Joint Special Liquidators, to file affidavits or attend at
such time and place specified in any such written notice.
Failure to comply with the requirements of any such written
notice may result in such party's exclusion from any distribution
made in connection with outstanding debts or claims.

Any holder of a claim against IBRC or its predecessor entities
Anglo Irish Bank Corporation Limited or Irish Nationwide Building
Society who fails to make a submission in accordance with this
notice on or before the Claim Deadline shall be excluded from any
distribution made in connection with outstanding debts or claims.
For the avoidance of doubt, proofs of claim filed solely in the
United States with the United States Bankruptcy Court for the
District of Delaware are invalid.

Any inquiries with respect to the claim submission procedures
should be directed to: Deirdre Moran and/or Niall Macklin, KPMG,
1 Stokes Place, Dublin 2.


RYE HARBOUR: Moody's Assigns (P)B2 Rating to EUR11MM Cl. F Notes
----------------------------------------------------------------
Moody's Investors Service announced that it has assigned the
following provisional ratings to notes to be issued by Rye
Harbour CLO, Limited:

  EUR211,750,000 Class A Senior Secured Floating Rate Notes due
  2028, Assigned (P)Aaa (sf)

  EUR5,000,000 Class B-1 Senior Secured Floating Rate Notes due
  2028, Assigned (P)Aa2 (sf)

  EUR10,000,000 Class B-2 Senior Secured Fixed Rate Notes due
  2028, Assigned (P)Aa2 (sf)

  EUR20,000,000 Class B-3 Senior Secured Fixed/Floating Rate
  Notes due 2028, Assigned (P)Aa2 (sf)

  EUR12,500,000 Class C-1 Senior Secured Deferrable Floating Rate
  Notes due 2028, Assigned (P)A2 (sf)

  EUR10,250,000 Class C-2 Senior Secured Deferrable Floating Rate
  Notes due 2028, Assigned (P)A2 (sf)

  EUR20,125,000 Class D Senior Secured Deferrable Floating Rate
  Notes due 2028, Assigned (P)Baa3 (sf)

  EUR22,000,000 Class E Senior Secured Deferrable Floating Rate
  Notes due 2028, Assigned (P)Ba2 (sf)

  EUR11,000,000 Class F Senior Secured Deferrable Floating Rate
  Notes due 2028, Assigned (P)B2 (sf)

Moody's issues provisional ratings in advance of the final sale
of financial instruments, but these ratings only represent
Moody's preliminary credit opinions. Upon a conclusive review of
a transaction and associated documentation, Moody's will endeavor
to assign definitive ratings. A definitive rating (if any) may
differ from a provisional rating.

Ratings Rationale

Moody's provisional rating of the rated notes addresses the
expected loss posed to noteholders by legal final maturity of the
notes in 2028. The provisional ratings reflect the risks due to
defaults on the underlying portfolio of loans given the
characteristics and eligibility criteria of the constituent
assets, the relevant portfolio tests and covenants as well as the
transaction's capital and legal structure. Furthermore, Moody's
is of the opinion that the collateral manager, Sankaty Advisors,
Limited, has sufficient experience and operational capacity and
is capable of managing this CLO.

Rye Harbour is a managed cash flow CLO. At least 90% of the
portfolio must consist of senior secured obligations and up to
10% of the portfolio may consist of senior unsecured obligations,
second-lien loans, mezzanine obligations and high yield bonds.
The portfolio is expected to be 60% ramped up as of the closing
date and to be comprised predominantly of corporate loans to
obligors domiciled in Western Europe. The remainder of the
portfolio will be acquired during the six month ramp-up period in
compliance with the portfolio guidelines.

Sankaty will manage the CLO. It will direct the selection,
acquisition and disposition of collateral on behalf of the Issuer
and may engage in trading activity, including discretionary
trading, during the transaction's four-year reinvestment period.
Thereafter, purchases are permitted using principal proceeds from
unscheduled principal payments and proceeds from sales of credit
risk obligations or credit improved obligations, and are subject
to certain restrictions.

In addition to the nine classes of notes rated by Moody's, the
Issuer will issue EUR 41,400,000 of subordinated notes. Moody's
has not assigned rating to this class of notes.

The transaction incorporates interest and par coverage tests
which, if triggered, divert interest and principal proceeds to
pay down the notes in order of seniority.

Loss and Cash Flow Analysis:

Moody's modeled the transaction using CDOEdge, a cash flow model
based on the Binomial Expansion Technique, as described in
Section 2.3 of the "Moody's Global Approach to Rating
Collateralized Loan Obligations" rating methodology published in
February 2014. The cash flow model evaluates all default
scenarios that are then weighted considering the probabilities of
the binomial distribution assumed for the portfolio default rate.
In each default scenario, the corresponding loss for each class
of notes is calculated given the incoming cash flows from the
assets and the outgoing payments to third parties and
noteholders. Therefore, the expected loss or EL for each tranche
is the sum product of (i) the probability of occurrence of each
default scenario and (ii) the loss derived from the cash flow
model in each default scenario for each tranche.

Moody's used the following base-case modeling assumptions:

Par Amount: EUR 350,000,000

Diversity Score: 36

Weighted Average Rating Factor (WARF): 2800

Weighted Average Spread (WAS): 3.80%

Weighted Average Coupon (WAC): 5.70%

Weighted Average Recovery Rate (WARR): 42.00%

Weighted Average Life (WAL): 8 years.

Stress Scenarios:

Together with the set of modelling assumptions above, Moody's
conducted an additional sensitivity analysis, which was an
important component in determining the provisional rating
assigned to the rated notes. This sensitivity analysis includes
increased default probability relative to the base case. Below is
a summary of the impact of an increase in default probability
(expressed in terms of WARF level) on each of the rated notes
(shown in terms of the number of notch difference versus the
current model output, whereby a negative difference corresponds
to higher expected losses), holding all other factors equal.

Percentage Change in WARF: WARF + 15% (to 3220 from 2800)

Ratings Impact in Rating Notches:

Class A Senior Secured Floating Rate Notes: 0

Class B-1 Senior Secured Floating Rate Notes: -2

Class B-2 Senior Secured Fixed Rate Notes: -2

Class B-3 Senior Secured Fixed/Floating Rate Notes: -2

Class C-1 Senior Secured Deferrable Floating Rate Notes:-2

Class C-2 Senior Secured Deferrable Floating Rate Notes:-2

Class D Senior Secured Deferrable Floating Rate Notes: -1

Class E Senior Secured Deferrable Floating Rate Notes: -1

Class F Senior Secured Deferrable Floating Rate Notes:-1

Percentage Change in WARF: WARF +30% (to 3640 from 2800)

Class A Senior Secured Floating Rate Notes: -1

Class B-1 Senior Secured Floating Rate Notes:-3

Class B-2 Senior Secured Fixed Rate Notes: -3

Class B-3 Senior Secured Fixed/Floating Rate Notes: -3

Class C-1 Senior Secured Deferrable Floating Rate Notes:-4

Class C-2 Senior Secured Deferrable Floating Rate Notes:-4

Class D Senior Secured Deferrable Floating Rate Notes: -2

Class E Senior Secured Deferrable Floating Rate Notes: -2

Class F Senior Secured Deferrable Floating Rate Notes:-3

Further details regarding Moody's analysis of this transaction
may be found in the upcoming pre-sale report, available soon on
Moodys.com.

Methodology Underlying the Rating Action:

The principal methodology used in this rating was "Moody's Global
Approach to Rating Collateralized Loan Obligations" published in
February 2014.

Factors that would lead to an upgrade or downgrade of the rating:

The rated notes' performance is subject to uncertainty. The
notes' performance is sensitive to the performance of the
underlying portfolio, which in turn depends on economic and
credit conditions that may change. Sankaty's investment decisions
and management of the transaction will also affect the notes'
performance.



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SESTANTE FINANCE 4: S&P Cuts Rating on Class B Notes to 'CCC'
-------------------------------------------------------------
Standard & Poor's Ratings Services took various credit rating
actions in Sestante Finance S.r.l.'s series 1, 2, and 4.

Specifically, S&P has:

   -- Lowered its ratings on series 1's class A1 and A2 notes,
      series 2's class A, B, C1, and C2 notes, and series 4's
      class A2 and B notes; and

   -- Affirmed its ratings on series 4's class A1, C1, and C2
      notes.

Upon publishing S&P's updated criteria for Italian residential
mortgage-backed securities (RMBS criteria) and its updated
criteria for rating single-jurisdiction securitizations above the
sovereign foreign currency rating (RAS criteria), S&P placed
those ratings that could potentially be affected "under criteria
observation" (UCO).

Following S&P's review of these transactions, its ratings that
could potentially be affected by the criteria are no longer under
criteria observation.

The rating actions follow S&P's credit and cash flow analysis of
the most recent transaction information that S&P has received as
of the September 2014 payment date for series 1 and October 2014
payment date for series 2 and 4.  S&P's analysis reflects the
application of its RMBS criteria and its RAS criteria.

Under S&P's RAS criteria, it applied a hypothetical sovereign
default stress test to determine whether a tranche has sufficient
credit and structural support to withstand a sovereign default
and so repay timely interest and principal by legal final
maturity.

S&P's RAS criteria designate the country risk sensitivity for
RMBS as 'moderate'.  Under S&P's RAS criteria, these
transactions' notes can therefore be rated four notches above the
sovereign rating, if they have sufficient credit enhancement to
pass a minimum of a "severe" stress.  However, as not all of the
conditions in paragraph 48 of the RAS criteria are met, S&P
cannot assign any additional notches of uplift to the ratings in
these transactions.

As S&P's long-term unsolicited rating on the Republic of Italy is
'BBB-', its RAS criteria cap at 'A (sf)' the maximum potential
rating in these transactions for all classes of notes.

Credit enhancement, considering performing collateral only, has
increased for the senior classes of notes in series 1, 2, and 4,
and decreased for all other classes of notes in the transactions
since our previous reviews.

Class         Available Credit
               Enhancement (%)

Series 1
A1                        29.3
A2                        29.3

Series 2
A                         22.8
B                          5.0
C1                       (3.0)

Series 4
A1                       3.4[1]
A2                         3.4
B                        (9.1)
C1                      (14.8)

[1] Considering the current sequential repayment of the class A1
     and A2 notes' principal, the available credit enhancement
     would be 87.4%

The class C2 notes in series 2 and 4 are backed by excess spread.

Due to the transaction's weak performance, series 1's reserve
fund is, as of the September 2014 payment date, at 37.0% of its
required level.  It currently represents 6.8% of the outstanding
performing balance of the mortgage assets.

Series 2 and 4's reserve funds were fully drawn in October 2009
and August 2009, respectively, and have not been replenished
since.

Severe delinquencies of more than 90 days at 4.5%, 5.9%, and 6.9%
for series 1, 2, and 4, respectively, continue to be on average
higher for these transactions than S&P's Italian RMBS index.
Defaults are defined as mortgage loans in arrears for more than
12 months in this transaction.  Cumulative defaults, at 7.3%,
8.7%, and 15.1% for series 1, 2, and 4, respectively, are also
higher than in other Italian RMBS transactions that S&P rates.
Prepayment levels remain low and the transactions are unlikely to
pay down significantly in the near term, in S&P's opinion.

After applying S&P's RMBS criteria to these transactions, its
credit analysis results show a slight increase in the weighted-
average foreclosure frequency (WAFF) and an increase in the
weighted-average loss severity (WALS) for each rating level in
series 1.  S&P's credit analysis results show a decrease in the
WAFF and an increase in the WALS for each rating level in series
2 and 4.

Rating level    WAFF (%)    WALS (%)

Series 1
AAA                 22.2        12.1
AA                  16.4         9.0
A                   11.7         3.3
BBB                  9.7         2.0
BB                   7.3         2.0
B                    4.8         2.0

Series 2
AAA                 22.4        14.7
AA                  17.3        11.0
A                   12.3         5.4
BBB                 10.3         3.1
BB                   7.8         2.0
B                    5.2         2.0

Series 4
AAA                 24.4        28.7
AA                  18.8        24.8
A                   13.3        17.3
BBB                 11.2        13.3
BB                   8.5        10.7
B                    5.7         8.3

The increase in the WAFF for series 1 is mainly due to the
adjustment that S&P applies to the broker-originated loans (the
entire pools for all transactions are originated through brokers)
and increasing arrears in the pool.

The decrease in the WAFF for series 2 and 4 is mainly due to the
seasoning benefit, which offsets the higher broker adjustment.

The increase in the WALS for all three transactions is mainly due
to the application of S&P's revised market value decline
assumptions.  The overall effect is an increase in the required
credit coverage for each rating level.

Following the application of S&P's RAS criteria and its RMBS
criteria, S&P has determined that its assigned rating on each
class of notes in these transactions should be the lower of (i)
the rating as capped by S&P's RAS criteria and (ii) the rating
that the class of notes can attain under S&P's RMBS criteria.
S&P's ratings on series 1's class A1 and A2 notes, series 2's
class A notes, and series 4's class A1 notes are constrained by
the rating on the sovereign.  However, S&P's ratings on all of
the mezzanine and junior classes of notes in series 2 and 4
(including series 4's class A2 notes) are constrained by the
application of our RMBS criteria.

Taking into account the results of S&P's updated credit and cash
flow analysis, S&P considers that the available credit
enhancement for series 1's class A1 and A2 notes, series 2's
class A notes, and series 4's class A1 notes is commensurate with
the currently assigned ratings.  However, S&P's RAS criteria caps
the rating on these notes at 'A (sf)', four notches above its
rating on Italy. S&P has therefore lowered to 'A (sf)' from 'A+
(sf)' its ratings on series 1's class A1 and A2 notes, and series
2's class A notes. At the same time, S&P has affirmed its 'A
(sf)' rating on series 4's class A1 notes.

S&P's rating actions also reflect the fact that these classes of
notes can now withstand the stresses that it applies at the
assigned rating levels without giving benefit to the swap
provider.  Therefore, in S&P's analysis, it did not give benefit
to the swap provider (Commerzbank AG) and it removed it from the
supporting parties for these classes of notes.

S&P's current counterparty criteria continue to constrain its
ratings on all of the junior and mezzanine classes of notes
(including series 4's class A2 notes) in all three transactions
at 'A (sf)', one notch above our long-term 'A- (sf)' issuer
credit rating on Commerzbank as the swap provider.  This is
because they cannot withstand our stresses without the benefit of
the swap, the documentation for which does not comply with S&P's
criteria.

Under S&P's cash flow analysis and considering the pools'
worsening performance, S&P considers that the available credit
enhancement for series 2's class B notes and series 4's class A2
notes is not commensurate with the currently assigned ratings.
As a result, S&P has lowered to 'BBB (sf)' and 'BBB- (sf)' from
'A (sf)' its ratings on series 2's class B notes and series 4's
class A2 notes, respectively.

There is no interest deferral trigger for series 2's class C1 and
C2 notes.  However, according to S&P's cash flow analysis, the
repayment on these classes of notes depends significantly on
favorable circumstances.  S&P has therefore lowered to 'B- (sf)'
from 'B (sf)' and to 'CCC+ (sf)' from B- (sf)' its ratings on
series 2's class C1 and C2 notes, respectively.

Interest payments on series 4's class B, C1, and C2 notes can be
deferred if the cumulative gross default ratio rises above
certain documented levels.  The interest deferral triggers are
set at 17% for the class B notes and at 13% for the class C1 and
C2 notes. The cumulative gross default ratio was 15.1% on the
October 2014 interest payment date.  According to S&P's analysis,
the class B notes' creditworthiness is now commensurate with a
'CCC (sf)' rating level, given that S&P believes the cumulative
default ratio is likely to exceed the trigger in the near term.
S&P has therefore lowered to 'CCC (sf)' from 'B- (sf)' its rating
on the class B notes.  The class C1 and C2 notes breached the
interest deferral trigger in October 2013, at which time S&P
downgraded them to 'D (sf)' as a result.  Since the interest
deferral is irreversible, S&P has affirmed its 'D (sf)' ratings
on the class C1 and C2 notes.

In S&P's opinion, the outlook for the Italian residential
mortgage and real estate market is not benign and it has
therefore increased its expected 'B' foreclosure frequency
assumption to 2.55% from 1.50%, when S&P applies its RMBS
criteria, to reflect this view.  S&P bases these assumptions on
its expectation of modest economic growth, continuing high
unemployment, and sluggish house price appreciation for the
remainder of 2014 and 2015.

On the back of the weak macroeconomic conditions, S&P don't
expect the performance of the transactions in our Italian RMBS
index to significantly improve in 2015.

S&P expects severe arrears in the portfolio to remain at their
current levels, as there are a number of downside risks.  These
include weak economic growth, high unemployment, and fiscal
tightening.  On the positive side, S&P expects interest rates to
remain low for the foreseeable future.

Sestante Finance's series 1, 2, and 4 are Italian RMBS
transactions, which closed in December 2003, December 2004, and
December 2006, respectively.  They securitize pools of
residential mortgage loans.  Meliorbanca SpA originated the
pools, which comprise loans granted mostly to non-prime
borrowers, mainly located in Lombardy.

RATINGS LIST

Class       Rating            Rating
            To                From

Sestante Finance S.r.l.
EUR412.3 Million Asset-Backed Floating-Rate Notes Series 1

Ratings Lowered

A1          A (sf)            A+ (sf)
A2          A (sf)            A+ (sf)

Sestante Finance S.r.l.
EUR647.2 Million Asset-Backed Floating-Rate Notes Series 2

Ratings Lowered

A           A (sf)            A+ (sf)
B           BBB (sf)          A (sf)
C1          B- (sf)           B (sf)
C2          CCC+ (sf)         B- (sf)

Sestante Finance S.r.l.
EUR647.9 Million Asset-Backed Floating-Rate Notes Series 4

Ratings Affirmed

A1          A (sf)
C1          D (sf)
C2          D (sf)

Ratings Lowered

A2          BBB- (sf)         A (sf)
B           CCC (sf)          B- (sf)



===================
L U X E M B O U R G
===================


ALISON LUXCO: S&P Assigns 'B' Corp. Credit Rating; Outlook Stable
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' long-term
corporate credit rating to Luxembourg-based auxiliary components
business Alison LuxCo S.a.r.l.  The outlook is stable.

At the same time, S&P assigned:

   -- Its 'B' issue rating to the proposed first-lien senior
      secured debt, comprising a EUR40 million revolving credit
      facility (RCF), and a EUR310 million term loan B.  The
      recovery rating on these facilities is '3', reflecting
      S&P's expectations of meaningful (50%-70%) recovery in a
      default scenario;

    -- S&P's 'CCC+' issue rating to the EUR120 million second-
       lien senior secured term loan.  The recovery rating on
       these notes is '6', reflecting S&P's expectations of
       negligible (0%-10%) recovery.

The ratings on Alison, the top holding company of Arvos Group and
formerly the auxiliary components business of French industrial
group Alstom S.A., reflect S&P's view of the group's aggressive
capital structure as a result of the leveraged buyout by private
equity group Triton.  The buyout was announced on April 1, 2014,
and was completed in the third quarter of 2014.

S&P assess Alison's financial risk profile as "highly leveraged"
under S&P's criteria.  S&P estimates that the group's Standard &
Poor's-adjusted net debt-to-EBITDA ratio will be close to 7.5x-
8.0x by its fiscal year-end, March 31, 2015.  S&P assess Alison's
business risk profile as "weak," based primarily on the group's
exposure to cyclical and mature end markets.

Alison has leading positions in some niche markets.  It generates
solid EBITDA margins of about 16%-17%, which is at the high end
of the 11%-18% range that we define as "average" for capital
goods companies.  S&P also assess Alison's geographic diversity
as sound.

The stable outlook reflects S&P's opinion that Alison should
continue to generate moderately positive FOCF over 2015-2016,
based on S&P's assumption that it will gradually improve its
operating performance and control expansionary capex investments,
while reducing working capital.

S&P could consider a positive rating action if Alison's fully
adjusted debt to EBITDA reduces below 5x, if the group
simultaneously continues to generate positive FOCF while
liquidity remains at least "adequate."  S&P sees this scenario as
unlikely in the near term, however, given the elevated leverage
post the buyout by Triton.

S&P could lower the rating on Alison if unexpected adverse
operating developments occurred, such as a sharp economic
downturn in the global economy that affects the group's end
markets or a steep drop in demand for its products in coal power.
This could squeeze the group's reported EBITDA margin to less
than 12% and spark a contraction in operating cash flow
generation.  The rating could also come under pressure if the
group's FOCF turned negative as a result of operating shortfalls
or adverse working capital swings.


SODRUGESTVO GROUP: Fitch Affirms 'B' FC Issuer Default Rating
-------------------------------------------------------------
Fitch Ratings has revised Luxembourg-based Sodrugestvo Group
S.A.'s (Sodru) Outlook to Negative from Stable. Sodru's Long-term
foreign currency Issuer Default Rating (IDR) has been affirmed at
'B'.

The affirmation reflects Fitch's expectation that Sodru's
business profile will emerge stronger once the major greenfield
projects consolidated in FY14 (fiscal year-ending June 2014)
operate at enhanced capacities. At present we expect Sodru to
benefit from government support to the food producing sector
given the food import bans in place and other measures as the
country aims to attain food self-sufficiency.

However, the Negative Outlook captures the stretched financial
metrics, in particular leverage which will likely remain at or
above 5.0x (Readily Marketable Inventories (RMI)-adjusted) for
longer than expected, which will translate into weak financial
flexibility. In particular Fitch would view negatively if
management were to pursue an aggressive expansion plan which may
necessitate additional debt financing.

The Negative Outlook also factors in our assessment of the weak
liquidity position although we acknowledge the loan from the
controlling shareholders (USD48.5 million received in cash in
FY14) together with recent refinancing activity has helped shore
up liquidity. Any indication that liquidity resources would
deteriorate given the difficult operating environment could cause
a downgrade of the IDR of at least one notch.

Key Rating Drivers

Stretched Credit Metrics

Consolidation of the port terminal, processing plant and
logistics company, which were previously held off balance sheet,
resulted in additional debt and interest costs which were higher
than originally envisaged. In addition, new facilities were not
fully operational throughout the year and thus we expect new
assets to contribute to profits starting from FY15. As a result,
we anticipate Readily Marketable Inventories (RMI)-adjusted funds
from operations (FFO) leverage of 5.7x in FY15 (an improvement
relative to 8.4x in FY14) which, together with FFO fixed charge
cover of 2.0x in FY15, if maintained, would be more consistent
with a 'B-' rating profile.

Future deleveraging may be accelerated by higher sales growth
(mostly traded volumes of grain and crushed volumes in soybean
processing) supported by an upside in prices. In addition, the
ratings affirmation assumes a sustained EBITDAR margin at or
above 6.5%, equivalent to an FFO margin around 3%, together with
controlled capex spending and low dividend pay outs.

More Conservative Growth Strategy

Fitch expects Sodru to pursue more conservative expansion after
its greenfield projects were finalized in FY14. Substantial debt-
funded growth will be also constrained by leverage covenants,
which the company has under its major loan agreements. In our
projections we assumed capex of around USD50m a year, which,
however, may be scaled down to around USD10m due to low
maintenance capex requirements of newly constructed facilities.

Strengthening Forward Integration

The rating remains supported by Sodru's asset-heavy business
model with vertical integration into soybean origination,
storage, processing and product delivery. Acquisition of a
logistics company and newly constructed port terminal and
processing plant in FY14 is expected to provide synergies to
existing operations and strengthen Sodru's market position.

Moderate but Improving Diversification

While Sodru's vertically-integrated business model is obviously
beneficial in terms of control over the soybean meal and oil
production cycle, Fitch stresses that this approach leaves Sodru
exposed to the global soybean market dynamics and prices.
However, we expect Sodru's diversification into grains to improve
in line with expanding collaboration with its strategic partner
Mitsui & Co Ltd.

EBITDA Margin Stabilization in FY15

We expect the EBITDA margin to improve in FY15 up to 6.5% and
remain at similar levels thereafter thanks to close to full
utilization of crushing capacity and greater contribution of
logistics and infrastructure segments, which will be also
supported by growing grain trading volumes. In FY14, Sodru's
EBITDA margin had decreased to 3.0% (FY13: 5.4%) due to delays in
the ramp-up of production in the new plant and the lower
utilization of newly added transportation and infrastructure
assets.

Limited Rouble Depreciation Impact

The recent sharp depreciation of the rouble should not jeopardize
Sodru's capacity to service its debt, which is primarily in US
dollars. We consider the company's operations as naturally hedged
as revenues as well as operating and interest costs are well-
matched due to the linkage of soybean and grain prices to world
dollar-based prices.

We also do not expect rouble depreciation to drive a substantial
decrease in demand for soybean meal, which is sold mostly within
Russia, thanks to low world soybean prices. We also expect the
demand for soybean meal in FY15 to be supported by Russian food
ban, which will be beneficial for Sodru's main customers - meat
producers.

Rating Sensitivities

Negative: Future developments that could lead to a negative
rating action include:

-- FFO adjusted gross leverage (RMI-adjusted) sustainably above
    5.0x if coupled with negative free cash flow (FCF) from
    larger-than-expected capex or working capital or acquisitive
    activity.

-- Deterioration of FFO margin sustainably below 2.5% as a
    result of operating underperformance or increasing interest
    burden.

-- Liquidity erosion caused by the limited availability of bank
    financing in relation to short-term maturities or refinancing
    at more onerous terms than expected.

Positive: Future developments that could lead to a stabilization
of the rating outlook include:

-- FFO adjusted gross leverage (RMI-adjusted) sustainably below
    5.0x supported by positive FCF, conservative business
    expansion  funded by cash flows or equity rather than debt.

-- FFO margin sustainably around 3%.

-- Enhanced liquidity buffer relative to short-term debt
    maturities combined with continuing government support to the
    sector.

Liquidity and Debt Structure

Weak Liquidity
As a soybean processor and soft commodity trader, Sodru strongly
depends on the availability of working capital financing, which
leads to a high proportion of short-term debt. As at end-
September 2014, Sodru's short-term debt amounted to around USD879
million or more than 60% of total debt.

Liquidity is considered weak as short-term debt exceeds liquidity
sources such as expected mildly positive FCF, available undrawn
bank lines of USD117 million as at end-September 2014 and Fitch-
adjusted unrestricted cash balances of USD43 million as at FYE14.
However, we note that a seasonally high debt level at end-
September should be offset by higher RMI, which Fitch estimates
at USD315 million as at FYE14.



=====================
N E T H E R L A N D S
=====================


EUROSAIL-NL 2007-1: Moody's Reviews Notes Rating for Downgrade
---------------------------------------------------------------
Moody's Investors Service has placed under review for downgrade
six classes of notes issued by two Dutch Non-Conforming RMBS
transactions; Eurosail-NL 2007-1 B.V and EMF-NL Prime 2008-A B.V.
and at the same time placed under review for upgrade four classes
of notes issued by two Dutch NHG RMBS transactions; PEARL
MORTGAGE BACKED SECURITIES 1 B.V. and PEARL MORTGAGE BACKED
SECURITIES 2 B.V.

Ratings Rationale

The rating action affecting the two non-conforming transactions
was prompted by the worse-than-expected performance of the
collateral backing the affected notes.

The rating action on the two NHG transactions was mainly prompted
by the increased levels of credit enhancement for the affected
notes.

In identifying the affected notes, Moody's conducted a review of
all the outstanding Dutch RMBS transactions rated by Moody's.
During the analysis, the rating agency took into account the
performance of the collateral to date, its deviation from Moody's
expectations as well as the levels of credit enhancement
available to absorb the future projected losses on the respective
portfolios.

Within the Dutch RMBS sector, the mortgage portfolios in the
affected non-conforming transactions have shown a material
deviation from Moody's performance expectations. After taking
into account the levels of credit enhancement in each structure,
the worse-than-expected performance has prompted Moody's to place
the ratings of the affected notes on review for downgrade.

For the Dutch NHG transactions, the good performance and the
increased levels of credit enhancement in each structure have
prompted Moody's to place the ratings of the affected notes on
review for upgrade.

The full review of the ratings of the affected notes will take
into account the current capital structures in their respective
transactions. As a part of its detailed transaction review, for
each mortgage portfolio Moody's will reassess its lifetime loss
expectation reflecting the collateral performance to date as well
as the future macro-economic environment. Moody's will also
request, whenever not already available, updated loan-by-loan
information to revise its MILAN Aaa credit enhancement.

Moody's has also factored into its analysis the stable sector
outlook for Dutch RMBS.

Factors that would lead to an upgrade or downgrade of the
ratings:

Factors or circumstances that could lead to an upgrade of the
ratings include (1) performance of the underlying collateral that
is better than Moody's expected, (2) deleveraging of the capital
structure and (3) improvements in the credit quality of the
transaction counterparties.

Factors or circumstances that could lead to a downgrade of the
ratings include (1) performance of the underlying collateral that
is worse than Moody's expected, (2) deterioration in the notes'
available credit enhancement and (3) deterioration in the credit
quality of the transaction counterparties.

The principal methodology used in these ratings was "Moody's
Approach to Rating RMBS Using the MILAN Framework" published in
March 2014.

List of Affected Ratings:

Issuer: Eurosail-NL 2007-1 B.V.

  EUR14.525 million Class B Notes, Aa2 (sf) Placed Under Review
  for Possible Downgrade; previously on Nov 23, 2010 Downgraded
  to Aa2 (sf)

  EUR14 million Class C Notes, A2 (sf) Placed Under Review for
  Possible Downgrade; previously on Nov 23, 2010 Downgraded to A2
  (sf)

  EUR12.775 million Class D Notes, Ba1 (sf) Placed Under Review
  for Possible Downgrade; previously on Nov 23, 2010 Downgraded
  to Ba1 (sf)

  EUR2.45 million Class E1 Notes, Caa1 (sf) Placed Under Review
  for Possible Downgrade; previously on Nov 23, 2010 Downgraded
  to Caa1 (sf)

  EUR11.2 million Class ET Notes, Caa1 (sf) Placed Under Review
  for Possible Downgrade; previously on Nov 23, 2010 Confirmed at
  Caa1 (sf)

Issuer: EMF-NL Prime 2008-A B.V.

  EUR110 million Class A2 Notes, Aa1 (sf) Placed Under Review for
  Possible Downgrade; previously on Nov 23, 2010 Confirmed at Aa1
  (sf)

Issuer: PEARL MORTGAGE BACKED SECURITIES 1 B.V.

  EU13.7 million Class B Notes, Ba2 (sf) Placed Under Review for
  Possible Upgrade; previously on Aug 14, 2009 Downgraded to Ba2
  (sf)

  EUR64 million Class S Notes, Baa1 (sf) Placed Under Review for
  Possible Upgrade; previously on Jan 20, 2012 Assigned Baa1 (sf)

Issuer: PEARL MORTGAGE BACKED SECURITIES 2 B.V.

  EUR8.1 million Class B Notes, Ba2 (sf) Placed Under Review for
  Possible Upgrade; previously on Aug 14, 2009 Downgraded to Ba2
  (sf)

  EUR44 million Class S Notes, Baa1 (sf) Placed Under Review for
  Possible Upgrade; previously on Jan 20, 2012 Assigned Baa1 (sf)


HARBOURMASTER CLO 5: Fitch Affirms CCC Ratings on 2 Note Classes
----------------------------------------------------------------
Fitch Ratings has affirmed Harbourmaster CLO 5 B.V.'s notes, as
follows:

-- Class A2E (XS0223490235) at 'A+sf'; Outlook Stable;
-- Class A2F (XS0223502856) at 'A+sf; Outlook Stable;
-- Class A3 (XS0223503078) at 'BBBsf'; Outlook Stable;
-- Class A4E (XS0223503151) at 'BBsf'; Outlook Stable;
-- Class A4F (XS0223503581) at 'BBsf'; Outlook Stable;
-- Class B1E (XS0223503664) at 'B-sf'; Outlook Negative;
-- Class B1F (XS0223503748) at 'B-sf'; Outlook Negative;
-- Class B2E (XS0223503821) at 'CCCsf'; Recovery Estimate
   (RE) 0%;
-- Class B2F (XS0223504043) at 'CCCsf'; RE 0%.

Key Rating Drivers

The affirmation reflects the portfolio's stable performance and
significant amortization of the A1 and A2 notes. Since the last
review in January 2014 the A1 notes have paid in full and the A2
notes have paid down to 28% of their original outstanding
balance. Credit enhancement (CE) on the A2 notes has risen to 72%
from 34% at last review.

The portfolio has become significantly more concentrated with the
largest 10 assets accounting for 81% of the par value. A total of
31% of performing assets are rated 'B-sf'/Outlook Negative or
below, which the agency considers to be at risk issuers. The high
concentration, coupled with the low credit quality of the
remaining assets, may mean that portfolio default rates can be
highly volatile, which, in Fitch's view, is not commensurate with
the highest ratings. Therefore, the agency affirmed the class A2
notes despite the high credit enhancement.

The number of assets has more than halved to 27 loans from 62 and
the number of issuers decreased to 15 from 27 over the last year.
As the transaction becomes more concentrated, the note's
sensitivity to defaults increases, particularly at the junior
level. For example, one asset was recently designated as
defaulted and, as a result, the CE on the junior B1 notes
decreased by over three percentage points.

There are two defaulted assets in the portfolio accounting for
10.8% of the total investment amount; this has increased from
last review when 4.5% of the transaction was defaulted. The WARF
as reported in the November investor report has increased to 33.6
from 31 at last review.

The weighted average life as calculated by Fitch has decreased
only slightly to 3.12 years from 3.64% at last review. This is
because the portfolio has seen some loan extension activity, but
not as much as observed in similar CLO transactions. The maturity
profile of the assets is relatively unchanged; however, 4.1% of
the pool is long dated, and these assets pose a potential market
risk to the transaction at final maturity.

The A2 interest coverage test and senior overcollateralization
tests are passing with substantial cushions. The junior
overcollateralization tests are also passing, however their
cushions are tighter and further defaults may trigger a diversion
of interest.

The Outlook for the B1 notes remains Negative despite their
overall improved CE when compared to January 2014 as they are
still susceptible to further defaults.

Rating Sensitivities

In its rating sensitivity analysis, Fitch found that a 25%
increase of the default probability would result in downgrade of
one notch to the A4 notes.

A 25% reduction of the recovery rate would result in a downgrade
of one notch the A3 notes and two notches to the A4 notes. All
other note classes are unaffected.


* Business Bankruptcies Down to 50 in November 2014
---------------------------------------------------
According to Statistics Netherlands, 487 businesses and
institutions (excluding one-man businesses) were declared
bankrupt in November 2014, 50 fewer than in October.

In the period January to November, 6,124 businesses and
institutions were declared bankrupt, Statistics Netherlands
discloses.  This is 21% down on the same period last year,
Statistics Netherlands notes.  The number of bankruptcies is
still high compared to the pre-crisis level: 3,420 businesses and
institutions went bankrupt in the first eleven months of 2008,
Statistics Netherlands states.



===============
P O R T U G A L
===============


BANCO ESPIRITO: Chief Aware of Financial Woes & Irregularities
--------------------------------------------------------------
Sergio Goncalves at Reuters reports that the Espirito Santo Group
(GES), whose collapse led to a state rescue of Portugal's second
largest bank in August, was a financially fragile "house of
cards" for years and its chief knew of irregularities there.

Pedro Queiroz Pereira, chairman of conglomerate Semapa and a
former GES shareholder, told a parliament committee he had
ordered a team of experts to scrutinize GES accounts after its
chief and the Espirito Santo family patriarch Ricardo Salgado
tried to sell debt of GES holding companies to Semapa and even
win control of Semapa, Reuters relates.

Semapa held a stake in ES Control -- a top-level holding company
of GES -- up until a year ago, Reuters recounts.

"But we concluded that the group's financial situation was
calamitous," Reuters quotes Mr. Queiroz Pereira as saying in a
hearing that lasted until late on Dec. 10.

According to Reuters, the committee is looking into the
circumstances that led to the EUR4.9 billion (US$6.1 billion)
rescue of Banco Espirito Santo, which was founded by the Espirito
Santo family.

Mr. Salgado on Dec. 9 denied any wrongdoing and said everything
he did was only meant to help bank clients, Reuters relays.

GES's operations are now under investigation by authorities in
Portugal and elsewhere, Reuters notes.

"GES had a reason not to join, consolidate its (holding)
companies -- and that hid a lot of things, for many years,"
Mr. Queiroz Pereira, as cited by Reuters, said, adding that after
first discovering the real state of affairs in early 2013 he
alerted various top figures at BES.

"I understood things were not running well at GES many years ago,
at the start of the century," Reuters quotes Mr. Queiroz Pereira
as saying, adding difficulties became untenable after the 2008
world financial crisis.

He said that irregularities included problems with asset
evaluation, hiding capital losses and potential insolvency,
Reuters notes.

                  About Banco Espirito Santo

Banco Espirito Santo is a private Portuguese bank based in
Lisbon, Portugal.  It is 20% owned by Espirito Santo Financial
Group.

In August 2014, Banco Espirito Santo had been split into "good"
and "bad" banks as part of a EUR4.9 billion rescue of the
distressed Portuguese lender that protects taxpayers and senior
creditors but leaves shareholders and junior bondholders holding
only toxic assets.  A total of EUR4.9 billion in fresh capital is
being injected into this "good bank", which will subsequently be
offered for sale.  It has been renamed "Novo Banco", meaning new
bank, and will include all BES's branches, workers, deposits and
healthy credit portfolios.

In August 2014, Espirito Santo Financial Portugal, a unit fully
owned by Espirito Santo Financial Group, filed under Portuguese
corporate insolvency and recovery code.

Also in August 2014, Espirito Santo Financiere SA, another entity
of troubled Portuguese conglomerate Espirito Santo International
SA, filed for creditor protection in Luxembourg.

In July 2014, Portuguese conglomerate Espirito Santo
International SA filed for creditor protection in a Luxembourg
court, saying it is unable to meet its debt obligations.

                        *     *     *

On Aug. 15, 2014, The Troubled Company Reporter reported that
Standard & Poor's Ratings Services affirmed and then suspended
its 'C' ratings on two short-term certificate of deposit programs
and one commercial paper program originally issued by Portugal-
based Banco Espirito Santo S.A. (BES).  As S&P publically
communicated on Aug. 8, 2014, most of BES' senior unsecured debt
has been transferred to newly formed Novo Banco S.A. (not rated)
as part of BES' resolution proceedings.  S&P currently does not
have satisfactory information to perform its ratings analysis on
these debt instruments, and S&P is therefore suspending its
ratings on them.

The TCR, on Aug. 14, 2014, also reported that Moody's Investors
Service has assigned debt, deposit ratings and a standalone bank
financial strength rating (BFSR) to the newly established
Portuguese entity Novo Banco, S.A., in response to the transfer
of the majority of assets, liabilities and off-balance sheet
items from Banco Espirito Santo, S.A. (BES), together with the
banking activities of this bank. The following ratings have been
assigned: (1) long- and short-term deposit ratings of B2/Not-
Prime; (2) a standalone BFSR of E (equivalent to a ca baseline
credit assessment [BCA]).



=============
R O M A N I A
=============


BANCA TRANSILVANIA: Fitch Puts 'BB-' IDR on Watch Evolving
----------------------------------------------------------
Fitch Ratings has placed Romania-based Banca Transilvania S.A.'s
(BT) 'BB-' Long-term IDR and 'bb-' Viability Rating on Rating
Watch Evolving (RWE).

The rating action follows the announcement on December 10 that BT
intends to acquire Volksbank Romania (VBRO) from current
shareholders, Oesterreichische Volksbanken-Aktiengesellschaft
(OeVAG:51%; BBB-/RWN), Groupe BPCE (BPCE:24.5%; A/Stable), DZ
Bank AG (DZ:16.36%; A+/Stable) and WGZ Bank AG (WGZ:8.14%;
A+/Stable).

Key Rating Drivers

The RWE reflects the potential for the acquisition to
significantly alter BT's financial profile, given VBRO's material
relative size (assets equal to 43% of BT's at end-2013, the
latest date for which IFRS accounts are available). However, it
is not possible at present to accurately assess the extent to
which the transaction will be positive or negative for BT's
credit profile, as financial terms and conditions have not been
disclosed.

The potential for the acquisition to negatively affect BT's
credit profile reflects VBRO's weaker reported financial metrics
at end-2013, in terms of asset quality (34% overdue loans, driven
in part by the bank's foreign currency mortgage portfolio vs. 15%
at BT), funding (loans/deposits ratio of 256% vs. 76% at BT) and
profitability (moderately negative pre-impairment profit vs.
positive pre-impairment profit of 2.9% of average assets at BT).
VBRO reported a higher Fitch core capital (FCC) ratio (19% vs.
BT's 14.8%), but net overdue loans were equal to 75% of FCC (7%
at BT). VBRO's financial statements also referred to potentially
significant litigation risks.

At the same time, notwithstanding the weaknesses in VBRO's
accounts, there is also potential for BT to be upgraded following
the acquisition, given (i) the possibility that VBRO's balance
sheet strengthened over 2014 and that the acquisition price may
be attractive for BT; (ii) the significant increase in BT's
franchise that will result from the acquisition, with possible
benefits in term of scale and efficiency improvements; (iii) BT's
ability to absorb some of the weaknesses in VBRO's financial
profile (e.g. the combined loans/deposits ratio of the two banks
at end-2013 was a still reasonable 102%; VBRO's negative pre-
impairment profit was equal to just 8% of BT's positive result);
and (iv) the fact that Fitch had already identified the potential
for BT's ratings to be upgraded if the bank's asset quality
stabilizes.

The affirmation of the 'B' Short-term IDR reflects Fitch's
expectation that potential changes to BT's Long-term IDR upon the
resolution of RWE are likely to be limited to one notch, and so
would not result in any change in the Short-term IDR of 'B'.

The Support Rating and Support Rating Floor are unaffected by the
rating action. Fitch expects the SR to be downgraded to '5' and
the SRF to be revised to 'No Floor', reflecting the probably
weakening of government support for banks in the European Union
in light of further progress in addressing impediments to
effective bank resolution.

Rating Sensitivities: Long-Term IDR and VR

Fitch expects to resolve the RWE after the transaction is
completed and sufficient information on its impact on BT's credit
profile is available. The parties expect the acquisition to be
completed in 1H15 following receipt of regulatory approvals.
Depending on the timing of completion and the availability of
information, the resolution of the RWE could extend beyond the
typical six-month horizon.

BT's ratings could be upgraded if the bank's financial metrics do
not deteriorate materially as a result of the acquisition, and
its own asset quality and capital ratios stabilize. BT could be
downgraded if the acquisition has a significant negative effect
on key financials metrics.

At end-2013, BT had an 8.9% share of banking sector assets with
total assets of RON32.1bn. This compares with VBRO's market share
of 3.8% and balance sheet of RON13.8bn. Both BT and VBRO operate
a universal banking model; however, VBRO focuses primarily on
residential mortgages, which accounted for roughly 70% of net
loans at end-2013. These were mainly denominated in foreign
currency, with lending in Swiss francs and euros accounting for
46% and 45%, respectively, of total net lending at end-2013.

OeVAG's ratings are unaffected by this transaction as the planned
sale of VBRO was a known aspect of the bank's restructuring
program. OeVAG's ratings are entirely support-driven and we do
not assign a Viability Rating to the bank.

The rating actions are as follows:

BT:

Long-term foreign currency IDR of 'BB-' placed on RWE
Short-term foreign currency IDR: affirmed at 'B'
Viability Rating: of 'bb-' placed on RWE
Support Rating: of '3'; unaffected
Support Rating Floor: of 'BB-'; unaffected



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R U S S I A
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MECHEL OAO: Moody's Assigns LD Designation to Ca-PD Rating
----------------------------------------------------------
Moody's Investors Service has assigned a limited default (LD)
designation to Mechel OAO's Ca-PD probability of default rating
(PDR). Concurrently, Moody's has affirmed the PDR rating. There
are no changes to Mechel's other ratings, including its Caa3
corporate family rating. The outlook remains negative.

"Our decision to assign a limited default designation to Mechel's
PDR, follows the company's announcement that it had suspended
principal and cut interest payments on its debt obligations in
the third quarter," says Denis Perevezentsev, a Moody's Vice
President -- Senior Analyst and lead analyst for the issuer. "The
Arbitrage Court of Moscow's recent ruling, which acknowledged
interest payment default by Mechel on at least one of its credit
facilities, confirms the company's statement."

Ratings Rationale

The change in Mechel's PDR to Ca-PD/LD follows the company's
announcement that it had suspended principal payments to
financial institutions and cut interest payments. Mechel's
decision is further corroborated by the Arbitrage Court of
Moscow's decision, which on December 5, 2014 established interest
payment default of RUB3.0 billion (approximately US$55 million at
current exchange rate) by Mechel on one of its credit facilities
with Bank VTB, JSC (Baa3, negative). The decision was published
on December 11, 2014.

The suspension of principal and/or interest payments falls under
Moody's definition of default.

The company has agreed upon a restructuring agreement with
Gazprombank (Ba1 negative), the terms of which has not been made
publicly available, and is currently in negotiation with Sberbank
(Baa2 negative) and Bank VTB, JSC. Debt owed to the latter three,
which are state-controlled banks, comprises 68% of Mechel's debt
portfolio as of 1 December 2014 and therefore consensual
restructuring with these three banks is of pivotal importance for
Mechel to remain a going concern.

On the positive side, Moody's noted a degree of improvement in
Mechel's performance in the third quarter. Although Mechel's
absolute debt levels decreased to US$7 billion as of 1 December
2014 from US$9 billion as of December 31, 2013, mainly as a
result of sharp rouble devaluation as 53% of Mechel's debt is
denominated in roubles, this level of debt is unlikely to be
sustainable. A wider restructuring of Mechel's debt may be
necessary considering its substantial maturities of US$2.07
billion and US$2.17 billion due in 2015 and 2016, respectively,
while cash level as of September 30, 2014 amounted to only US$72
million.

Rating Outlook

The negative outlook reflects the potential for further downward
pressure to be exerted on Mechel's Caa3 corporate family rating
if (1) the company fails to complete the consensual restructuring
plan with its lenders, possibly resulting in bankruptcy; or (2)
actual debt restructuring results in a substantial loss,
particularly in the form of severe write-downs on the principal
for lenders.

What Could Change The Rating -- Down/Up

Negative pressure on the Caa3 corporate family rating would
result from Mechel's inability to complete a consensual
restructuring, which would probably leave no other alternative
than bankruptcy.

Upward pressure on the rating is currently unlikely. However,
Moody's would consider an upgrade of the rating if the company
manages to complete its restructuring. This would lead to a more
sustainable capital structure with a reduced debt burden and
better liquidity cushion. Positive rating pressure would also
require signs of a gradual recovery in the reference markets for
the company, especially the currently depressed coal prices.

Principal Methodology

The principal methodology used in this rating was Global Mining
Industry published in August 2014.

Mechel OAO is a vertically integrated mining and metals group.
Its business comprises three segments: mining, steel and power.
The group produces coal, iron ore, ferrosilicon, as well as long
(rebar, wire rod, structural shapes, etc), and carbon flat-rolled
steel products, engineered steel, hardware and other high value
added steel products. Mechel's products are sold domestically and
internationally, with approximately 71% of mining segment sales
and 18% of steel segment sales (2013) made outside of Russia. The
group's subsidiaries are located in Russia, Ukraine, Lithuania,
and the US. Mechel owns three trade ports and a transport
operator.

In 2013, Mechel reported revenue of $8.6 billion (a 19% decrease
year-over-year) and EBITDA of $0.7 billion (a 50% decrease year-
over-year). Mechel is majority owned by its Chairman of the Board
of Directors Mr. Igor Zyuzin, who controls 67.4% of the voting
shares. After its initial public offering in 2004, 32.6% of the
company's shares are in free float.


RASPADSKAYA OAO: Fitch Affirms 'B+' Issuer Default Rating
---------------------------------------------------------
Fitch Ratings has affirmed Russia-based coal producer OAO
Raspadskaya's Long-term foreign and local currency Issuer Default
Rating (IDR) at 'B+', senior unsecured rating at 'B+' (RR4) and
National Long-term rating at 'A(rus)'. The Outlooks on the Long-
term ratings are Stable. The company's foreign Short-term rating
has been affirmed at 'B'.

The affirmation reflects a strengthening of ties between
Raspadskaya and its parent Evraz plc (BB-/Stable). We assess
operational, legal and strategic ties with Evraz group as strong,
however the lack of downstream corporate guarantees for
Raspadskaya's debt results in a one-notch differential between
the companies' ratings.

Key Rating Drivers

Ratings Linked to Evraz

Evidence of stronger ties between Evraz plc and Raspadskaya
followed Evraz's increased ownership to 82% in January 2013. The
companies have since merged several support departments, such as
treasury, logistics and other operations to increase synergies.
Evraz also refinanced all of Raspadskaya's bank debt in 3Q13.
Evraz remains a top-three offtaker for Raspadskaya, which plays a
crucial part in Evraz's integration into coal. Despite these
factors a one-notch differential remains appropriate and reflects
the absence of any formal downstream corporate guarantees for
Raspadskaya's debt from Evraz.

No Debt Maturities Until 2017

Raspadskaya's debt consists of USD94 million intercompany loans
from Evraz due in 3Q16 and USD400 million Eurobonds due in 2017.
While Raspadskaya's liquidity is currently significantly
stretched given overall market conditions, its only sizeable and
unconditional principal instalment (i.e. the bond) is not due
until 2017.

Challenging Export Markets Price

Asian export coal concentrate prices declined by 17% to USD50/t
in 1H14 and are marginally below Raspadskaya's USD56/t production
cash cost. Asian markets accounted for 31% of 2013 sales and for
41% in 1H14, diluting the EBITDAR margin in 2013 and 1H14. A
recovery in Chinese spot markets or an increase in Raspadsaya's
longer-term supplies to premium Japanese and Korean markets
remain key export profitability drivers.

Russian Market Volumes Limited

The Russian coal concentrate market is the most profitable for
Raspadskaya, with a USD88/t price level in 2013 and USD72/t in
1H14. However, the high (more than 60%) level of vertical
integration among Russian coal customers limits Raspadskaya's
ability to increase its market share in Russia. Nonetheless, we
acknowledge that cash costs are likely to decrease following
production ramp up, increasing chances for Raspadskaya to further
penetrate the profitable Russian market.

Low Prices Damage Profitability

A 20%-25% drop in the free carrier-based price for coal
concentrate for the Russian and export markets in 2013 and
continued decline in 1H14 (-17% vs. the previous period) put the
company's operational and financial metrics under pressure. An
11% decline in 2013 in the cash cost of coal production softened
the price decline, but Raspadskaya's EBITDAR margin still fell
sharply to 5%, from 25% in 2012. Rouble devaluation contributed
to a further reduction in cash costs in 2014 due to a partly US
dollar-denominated revenues base and rouble-denominated cost
structure.

Leverage Peak

The depressed pricing environment negatively impacted operating
cash flows and resulted in FFO adjusted leverage peaking at 13.6x
at end-2013 despite a 10% decrease in total debt. Fitch expects
negative FFO in 2014 and only limited price improvement in 2015,
driving FFO back in marginally positive levels, causing leverage
to remain above 10x. This level is incompatible with the 'B'
rating category on a standalone basis. However, the combination
of maturities due only in 2017, financial support from Evraz, and
the zero dividend policy, are clear credit positive items for
Raspadskaya to outlast the market pressure.

Rating Constraints

Raspadskaya's standalone ratings are weak for the single 'B'
category and constrained by its smaller scale relative to global
peers, exposure to single product and execution risks inherent
for the coal mining industry. Its ratings also incorporate higher
than average political, business and regulatory risks.

Rating Sensitivities

Positive: Future developments that could lead to positive rating
action include:

-- Stronger operational and legal ties with Evraz, including a
    corporate guarantee of Raspadskaya's debt could lead to the
    equalization of the companies' ratings.

-- A positive rating action on Evraz plc could lead to a
    corresponding rating action on Raspadskaya.

Negative: Future developments that could lead to negative rating
action include:

-- Evidence of weakening operational and legal ties between
    Evraz and Raspadskaya

-- A negative rating action on Evraz plc could lead to a
    corresponding rating action on Raspadskaya.


TMK OAO: Moody's Affirms National Scale Rating
----------------------------------------------
Moody's Interfax Rating Agency has affirmed OAO TMK's A2.ru
national scale rating (NSR). Moody's Interfax is majority-owned
by Moody's Investors Service (MIS).

Ratings Rationale

Moody's Interfax's affirmation of TMK's NSR follows MIS's
affirmation of the company's B1 corporate family rating and the
change of outlook to negative.

The principal methodology used in this rating was Global Steel
Industry published in October 2012.

OAO TMK is Russia's largest producer -- and one of the world's
largest producers -- of steel pipe products for the oil and gas
industry, operating around 30 production sites across the US,
Russia, Romania and Kazakhstan. The largest proportion of TMK's
shipments comprises high-margin Oil Country Tubular Goods (OCTG),
encompassing tubing, casing and drill pipes, complemented with
line pipe, large-diameter pipe and industrial pipe also in the
company's sales mix, including pipes with the entire range of
premium connections. More than half of TMK's sales by volume, are
of seamless pipe. In nine months 2014, TMK shipped approximately
3.2 million tonnes of steel pipes, including 1.9 million tonnes
of seamless pipes. The company reported revenues of approximately
US$4.5 billion and EBITDA of around US$0.6 billion over the same
period. TMK's largest shareholder is Mr. Dmitriy Pumpyanskiy, who
owns an approximate 70% stake in the company.

Moody's Interfax Rating Agency's National Scale Ratings (NSRs)
are intended as relative measures of creditworthiness among debt
issues and issuers within a country, enabling market participants
to better differentiate relative risks. NSRs differ from Moody's
global scale ratings in that they are not globally comparable
with the full universe of Moody's rated entities, but only with
NSRs for other rated debt issues and issuers within the same
country. NSRs are designated by a ".nn" country modifier
signifying the relevant country, as in ".ru" for Russia. For
further information on Moody's approach to national scale
ratings, please refer to Moody's Rating Methodology published in
June 2014 entitled "Mapping Moody's National Scale Ratings to
Global Scale Ratings".

               About Moody's and Moody's Interfax

Moody's Interfax Credit Rating Agency (MIRA) specializes in
credit risk analysis in Russia. MIRA is a joint-venture between
Moody's Investors Service, a leading provider of credit ratings,
research and analysis covering debt instruments and securities in
the global capital markets, and the Interfax Information Services
Group. Moody's Investors Service is a subsidiary of Moody's
Corporation (NYSE: MCO).


TMK OAO: Moody's Affirms B1 Corp. Family Rating; Outlook Negative
-----------------------------------------------------------------
Moody's Investors Service, has affirmed the B1 corporate family
rating (CFR) of OAO TMK (TMK) and the rating of TMK Capital S.A.,
the issuer of senior unsecured loan participation notes issued
for the sole purpose of financing loans to TMK. TMK's probability
of default rating (PDR) is affirmed at B1-PD. The outlook is
changed to negative from stable on all ratings.

Ratings Rationale

The change in outlook is driven by falling oil prices, which make
it more challenging for TMK to meet the credit metrics set for
its current rating in the next 12 to 18 months. Brent oil price
dropped by 41% to 66 US$/bbl in December 2014 from 112 US$/bbl in
June 2014 on supply/demand imbalance owing to growing supply from
North America, Libya and Nigeria. This imbalance will drive down
oil country tubular goods (OCTG) prices and negatively affect oil
drilling activity. This poses downside risk to 2015 financial
results and might delay deleveraging. The company's leverage as
measured by Moody's-adjusted total debt/EBITDA increased to 4.4x
as of September 30, 2014 from 4.0x as of December 31, 2013, while
Moody's-adjusted EBITDA margin fell to 13.7% in nine months 2014
from 15.0% in 2013. Geopolitical tensions between Russia and the
EU/US over Ukraine, Russian oil and gas majors being subject to
EU/US sanctions including a ban on the provision of financing and
a ban on certain services necessary for deep-water oil
exploration and production, arctic oil exploration or production
and shale oil projects in Russia, create additional downside
risks.

TMK's B1 corporate family rating (CFR) reflects exposure to the
oil and gas sector, which can lead to wide swings in demand for
OCTG and line pipes and cause volatility in TMK's profitability
and leverage. In addition the rating is constrained by (1) a
sharp decrease in oil prices during 2014, which might exert
negative pressure on demand for OCTG and/or line pipes in Russia
and US -- the company's key markets; (2) ruble devaluation during
2014, which will cause domestic deliveries' profitability to
deteriorate unless prices are gradually adjusted as revenue in
hard currency comprises less than 50% of the company's revenue;
(3) volatility of steel prices; (4) TMK's high leverage; and (5)
the company's liquidity profile with substantial maturities in
2015 and 2016 and high dependence on covenanted committed lines
of credit.

However, the rating also captures TMK's (1) leading market
position in Russia and US, especially in high margin seamless
OCTG pipes; (2) geographical diversification, with meaningful
production assets in North America and Europe; (3) favorable cost
profile, which will be further supported by ruble devaluation
partially counterbalancing the negative effect on revenue; (4)
substantial unutilized credit facilities and Moody's assumption
of continuing support from Russian state-owned and private banks;
and (5) the company's efforts to increase the share of export
sales, which will support its profitability metrics over longer-
term.

Sharp ruble devaluation since the beginning of 2014 will have a
moderately negative effect on the company's financial metrics.
The company estimates that approximately 40% of revenue, 35% of
operating expenses, 65% of debt and 50% of capex are denominated
in foreign currency. Decreased dollar-denominated revenue in the
domestic market will be partially counterbalanced by lower costs,
while management's efforts to ramp up export deliveries and
implement price hikes in the domestic market, mitigates the
negative effect of ruble devaluation on EBITDA and cash flows.

Rating Outlook

The negative rating outlook is in line with negative global
outlooks for 2015 for the oil exploration and production, as well
as drilling and oil field services sectors. Ruble volatility and
the potentially negative effect of EU/US sanctions on the
drilling programs of Russian oil and gas majors are additional
drivers. Recovering oil prices, underpinning robust drilling
activity and OCTG prices in Russia and US with leverage, as
measured by Moody's-adjusted debt/EBITDA falling to below 4.0x,
supported by ruble strengthening, might lead to a stabilization
of the outlook.

What Could Change the Rating UP/DOWN

The upgrade of the company's rating is unlikely given the
negative outlook. However, TMK's rating could be upgraded if the
company is able to (1) generate positive free cash flow; (2)
reduce leverage as measured by Moody's-adjusted debt/EBITDA to
below 2.75x on a sustainable basis; and (3) maintain good
liquidity.

A rating downgrade could be triggered by (1) a failure to
generate positive free cash flow on a rolling 12-month basis; (2)
leverage as measured by Moody's-adjusted debt/EBITDA exceeding
4.0x on a sustainable basis; (3) lack of recovery in oil prices
and evidence of curtailments of drilling programs by oil and gas
companies; and (4) liquidity profile deterioration.

Principal Methodologies

The principal methodology used in these ratings was Global Steel
Industry published in October 2012. Other methodologies used
include Loss Given Default for Speculative-Grade Non-Financial
Companies in the U.S., Canada and EMEA published in June 2009.

OAO TMK is Russia's largest producer -- and one of the world's
largest producers -- of steel pipe products for the oil and gas
industry, operating around 30 production sites across the US,
Russia, Romania and Kazakhstan. The largest proportion of TMK's
shipments comprises high-margin Oil Country Tubular Goods (OCTG),
encompassing tubing, casing and drill pipes, complemented with
line pipe, large-diameter pipe and industrial pipe also in the
company's sales mix, including pipes with the entire range of
premium connections. More than half of TMK's sales by volume, are
of seamless pipe. In nine months 2014, TMK shipped approximately
3.2 million tonnes of steel pipes, including 1.9 million tonnes
of seamless pipes. The company reported revenues of approximately
US$4.5 billion and EBITDA of around US$0.6 billion over the same
period. TMK's largest shareholder is Mr. Dmitriy Pumpyanskiy, who
owns an approximate 70% stake in the company.


TRANSTELECOM JSC: Fitch Affirms 'B+' LT Issuer Default Ratings
--------------------------------------------------------------
Fitch Ratings has affirmed JSC Transtelecom Company's (TTK)
foreign and local currency Long-term Issuer Default Ratings (IDR)
at 'B+' and National Long-term rating at 'A-(rus)' and maintained
a Negative Outlook on these ratings. TTK's senior unsecured debt
has been affirmed at 'B+'/'RR4' and domestic senior unsecured
debt at 'A-(rus)'.

The Negative Outlook reflects significant execution risks of the
company's strategy to increase broadband customer penetration on
already covered territories and improve margins and cash flow
generation. Average revenue per user (ARPU) and penetration
growth may be susceptible to the deteriorating macroeconomic
outlook for Russia.

TTK operates a large-capacity fibre backbone network laid along
Russian railways. It holds established positions in the inter-
operator segment, and pursues a strategy of diversifying into
end-user broadband services. The company operates under an asset-
light business model and depends on its shareholder for leasing
the core fibre network.

Key Rating Drivers

Change in Broadband Strategy Will Lead to Deleveraging.

The company significantly curtailed its broadband expansion
ambitions in mid-2014 aiming to improve cash flows and reduce
leverage. In Fitch's view, the new strategy should allow the
company to delever to approximately 4x funds from operations
(FFO) adjusted net leverage by end-2015. However, the margin for
error within the current rating level is small. A failure to
increase customer penetration of covered territories on a par
with peers in similar locations and/or ARPU pressure on the back
of difficult macroeconomic situation in Russia may compromise
deleveraging efforts.

The new strategy envisions an abrupt end to new broadband
development. Instead, continuing marketing efforts to sell newly
built broadband lines should lead to a steady increase in
customer penetration. In view of a fast network expansion on
previously uncovered territories in 2012-2014, we believe these
are realistic expectations. Customer growth should improve
operating cash flow and, coupled with a dramatically reduced
capex, would pave the way for deleveraging. However, a change of
strategy entails substantial execution risks reflected in the
Negative Outlook.

A change in strategy was driven by the unfavorable regulatory
situation and rising interest rates which reduces the number of
commercially attractive broadband development projects,
particularly small ones. Rostlelecom (BBB-/Stable), the fixed-
line incumbent, was chosen as the only operator for a government-
sponsored project to bridge the digital divide in less developed
Russian territories. This promises to significantly increase
competition in TTK's targeted areas - the company was going to
capitalize on its backbone infrastructure laid along railways
across the country by building short network extensions to
underpenetrated territories.

Focus on Profitability, Cost Efficiency

Fitch expects that TTK's margins in the broadband segment should
improve with the end of one-off roll-out, connection and
marketing costs, and sign-up promotions. The company's broadband
and pay-TV subscriber base exceeded 1.7 million and is growing
which provides for a reasonably large size necessary for
sustainably profitable operations.

The company remains focused on improving cost efficiency, which
will contribute to stronger margins. In absolute terms, EBITDA
generation should grow. However, TTK operates with a mix of low-
margin segments that are likely to demonstrate significant
revenue volatility with an impact on headline reported margins.

Leverage, Cash Flows to Improve

An end of the active development phase will turn TTK into a
strongly cash flow positive company which would allow
deleveraging from both absolute debt reduction and stronger
EBITDA and cash flow with a positive impact on metrics. TTK's
leverage is high, reported at 4.8x FFO adjusted net leverage and
3.3x net debt/EBITDA at end-2013. We expect these metrics to
improve to 4.3x and 3.2x respectively by end-2014, and further
down to 2.8x and 4.0x respectively by end-2015. An abrupt end of
the massive capex program in mid-2014 will only have a full
impact in 2015 as the company will continue to settle accounts
payable to contractors for accrued capex until end-2014.

A significant factor behind a leverage rise was a delayed revenue
recognition of Indefeasible Rights of Use (IRU) network capacity
sales under IFRS standards. IRU contracts are concluded on 'take
or pay' terms for a relatively long period of time, typically 10
years. Contract costs are primarily related to putting in place
necessary network capacity, and buyers make a bulk of their
payments at the start of the service. However, these
disbursements are treated as pre-payments amortizing through the
profit and loss statement over the contract life under IFRS
rules. This treatment does not have an impact on cash flows,
however, dramatically reduces reported revenue at an early
contract phase, with reported IRU sales in later periods being
non-cash. Whereas TTK achieved its targets in terms of IRU volume
sales, only a fraction of these was reflected in its reported
revenues.

Outperformance in the Shrinking Inter-Operator Segment

TTK has outperformed its competitors in a shrinking inter-
operator wholesale market reporting market share gains. We expect
some outperformance to continue in the short to medium term but
it is not sustainable in the long run and the segment revenue
will remain under pressure. Counter-intuitively, an economic
slowdown in Russia may mitigate this negative trend. Large
telecoms operators tend to skimp on investing into new backbone
infrastructure and prefer to continue relying on leasing network
capacity from independent providers such as Transtelecom.

Relationship With Shareholder

Fitch rates TTK on a standalone basis. Legal ties are weak
between TTK and its parent JSC Russian Railways (RZD)
('BBB'/Negative) as the latter does not guarantee TTK's debt.
Owning a telecoms company is not strategic for a railway
operator. However, operating ties are strong and RZD is likely to
retain control over TTK in the medium term at least. Any
divestment plans are likely to be limited to selling a minority
stake in the company.

TTK provides critical telecom and maintenance services to RZD.
Replacing it as a core telecoms operator is not a feasible option
for the railway monopoly, at least not in the span of three to
five years.

Liquidity

At end-1H14, the company had sufficient liquidity to cover its
debt maturities until the end of this year. TTK's 2015 debt
maturities of approximately RUB3.6bn will be covered by positive
free cash flow and RUB3bn of new debt that the company expects to
raise by end-2014.

Rating Sensitivities

Negative: Insufficient broadband growth, ARPU declines and/or
additional pressures in the inter-operator segment leading to a
sustained rise in leverage to above 3.0x net debt/EBITDA and 4.0x
FFO adjusted net leverage without a clear path for deleveraging
will likely lead to a downgrade. Liquidity and refinancing
pressures may also be negative.

Positive: Ratings may be stabilized if the company manages to
improve EBITDA generation in the broadband segment and reduce
leverage to below downgrade triggers.



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S P A I N
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FTPYME SABADELL 6: S&P Lowers Rating on Cl. C Notes to 'CCC-(sf)'
-----------------------------------------------------------------
Standard & Poor's Ratings Services raised its credit rating on GC
FTPYME SABADELL 6, Fondo de Titulizacion de Activos' class A3(G)
notes.  At the same time, S&P has lowered its rating on the class
B notes and affirmed its rating on the class C notes.

Upon publishing its updated criteria for rating single-
jurisdiction securitizations above the sovereign foreign currency
rating (RAS criteria), S&P placed those ratings that could
potentially be affected "under criteria observation" (UCO).

Following S&P's review of this transaction, its ratings that
could potentially be affected by the criteria are no longer under
criteria observation.

S&P has used data from the October 2014 investor report to
perform its credit and cash flow analysis and has applied its
European small and midsize enterprise (SME) collateralized loan
obligation (CLO) criteria and its current counterparty criteria.
For ratings in this transaction that are above S&P's rating on
the sovereign, it has also applied its RAS criteria.

CREDIT ANALYSIS

GC FTPYME SABADELL 6 is a single-jurisdiction cash flow CLO
transaction securitizing a portfolio of SME loans that was
originated by Banco de Sabadell in Spain.  The transaction closed
in June 2007.

S&P has applied its European SME CLO criteria to determine the
scenario default rate (SDR) -- the minimum level of portfolio
defaults that S&P expects each tranche to be able to withstand at
a specific rating level using CDO Evaluator.

To determine the SDR, S&P adjusted the archetypical European SME
average 'b+' credit quality to reflect two factors (country and
originator and portfolio selection adjustments).

"We ranked the originator into the moderate category.  Taking
into account Spain's Banking Industry Country Risk Assessment
(BICRA) score of 6 and the originator's average annual observed
default frequency, we have applied a downward adjustment of one
notch to the 'b+' archetypical average credit quality.  To
address differences in the creditworthiness of the securitized
portfolio compared with the originator's entire loan book, we
further adjusted the average credit quality by three notches,"
S&P said.

"As a result of these adjustments, our average credit quality
assessment of the portfolio was 'ccc', which we used to generate
our 'AAA' SDR of 86.15% of the outstanding portfolio balance.
The portfolio has significant regional exposure, with 46.0% of
the loans concentrated in Catalunya," S&P added.

"We have calculated the 'B' SDR, based primarily on our analysis
of historical SME performance data and our projections of the
transaction's future performance.  We have reviewed the
originator's historical default data, and assessed market
developments, macroeconomic factors, changes in country risk, and
the way these factors are likely to affect the loan portfolio's
creditworthiness.  As a result of this analysis, our 'B' SDR is
17.0% of the outstanding portfolio balance," S&P noted.

S&P interpolated the SDRs for rating levels between 'B' and 'AAA'
in accordance with its European SME CLO criteria.

RECOVERY RATE ANALYSIS

S&P applied a weighted-average recovery rate (WARR) at each
liability rating level by considering the asset type and its
seniority, the country recovery grouping, and the observed
historical recoveries in this transaction.

COUNTRY RISK

S&P's long-term rating on the Kingdom of Spain is 'BBB'.  S&P's
RAS criteria require the tranche to have sufficient credit
enhancement to pass a minimum of a "severe" stress to qualify to
be rated above the sovereign.

COUNTERPARTY RISK

As swap counterparty, Banco de Sabadell (BB+/Negative/B)
mitigates basis risk and ensures a certain yield in the
transaction.  As in S&P's previous review, the swap counterparty
is no longer eligible to remain in the transaction as the remedy
actions covenanted in the documents have not taken place.
Therefore, when S&P conducted its scenario analysis at rating
levels above 'BB+', it analyzed the transaction's cash flow
without giving benefit to the swap counterparty.

Barclays Bank PLC is the bank account provider for the
transaction and the downgrade provisions are in line with S&P's
current counterparty criteria.

CASH FLOW ANALYSIS

S&P used the reported portfolio balance that it considered to be
performing, the principal cash balance, the current weighted-
average spread, and the weighted-average recovery rates that S&P
considered to be appropriate.  S&P subjected the capital
structure to various cash flow stress scenarios, incorporating
different default patterns and timings and interest rate curves,
to determine the rating level, based on the available credit
enhancement for each class of notes under our European SME CLO
criteria.

Under S&P's RAS criteria, it can rate a securitization up to four
notches above its foreign currency rating on the sovereign if the
tranche can withstand "severe" stresses.  However, if all six of
the conditions in paragraph 48 of the RAS criteria are met
(including credit enhancement being sufficient to pass an extreme
stress), S&P can assign ratings in this transaction up to a
maximum of six notches (two additional notches of uplift) above
the sovereign rating.  The available credit enhancement for the
class A3(G) notes withstands severe stresses.  S&P has therefore
raised to 'A+ (sf)' from 'BBB+ (sf)' its rating on the class
A3(G) notes.  Available credit enhancement for the class A3(G)
notes has increased as they are currently amortizing sequentially
and have a note factor (the current notional amount divided by
the notional amount at closing) of 66.0% at present.

Given that the rating levels for the class B and C notes are
lower than the sovereign rating, S&P has not applied its updated
criteria for rating single-jurisdiction securitizations above the
sovereign.  Based on S&P's credit and cash flow analysis and the
application of its current counterparty criteria, S&P considers
the available credit enhancement for the class B notes to be
commensurate with a lower rating than that currently assigned.
S&P has therefore lowered to 'B- (sf)' from 'B+ (sf)' its rating
on the class B notes.

S&P considers the available credit enhancement for the class C
notes to be commensurate with the currently assigned rating.  S&P
has therefore affirmed its 'CCC- (sf)' rating on the class C
notes.

The transaction's priority of payments incorporates interest
deferral triggers for the class B and C notes, which are linked
to the cumulative level of defaults in the portfolio.  The
interest deferral trigger for the class C notes was breached in
October 2014.  Following this breach, the interest payments on
the class C notes will have a lower priority in the payment
waterfall from the next payment date.  In S&P's view, the payment
of timely interest on the class C notes will largely depend on
the level of the reserve fund, which in turn depends on defaults
and recoveries. The class C notes are therefore highly vulnerable
to nonpayment of timely interest.

The reserve fund, which provides credit and liquidity support to
the rated classes of notes, is currently at 23.18% of its
required balance.

RATINGS LIST

  Class       Rating            Rating
              To                From

GC FTPYME SABADELL 6, Fondo de Titulizacion de Activos
EUR1 Billion Floating-Rate Notes

Rating Raised

  A3(G)       A+ (sf)           BBB+ (sf)

Rating Lowered

  B           B- (sf)           B+ (sf)

Rating Affirmed

  C           CCC- (sf)


OBRASCON HUARTE: Fitch Affirms 'BB-' LT Issuer Default Rating
-------------------------------------------------------------
Fitch Ratings has affirmed Obrascon Huarte Lain's (OHL) Long-term
Issuer Default (IDR) and senior unsecured ratings at 'BB-'. Fitch
has also affirmed OHL's Short-term IDR at 'B'. The Rating Outlook
is Stable.

Fitch's affirmation reflects OHL's ability to keep net recourse
leverage under control following two recent asset disposals,
which will largely be used to repay gross corporate debt (via an
early redemption of the 2015 bond). Fitch notes OHL's
management's strong financial commitment to maintain net debt to
EBITDA on a recourse basis below 3x. Fitch also takes a positive
view that the latter has been achieved through asset disposals
rather than by re-leveraging the non-recourse business and
transferring the proceeds to the recourse perimeter.

Fitch adjusts leverage calculations for OHL to reflect the non-
recourse nature of concessions by excluding related EBITDA and
non-recourse debt but including sustainable dividends. Fitch
calculated recourse leverage includes off-balance sheet
receivables factoring (around EUR100 million in FY14) and assumes
that cash held in joint-ventures (EUR140 million) is not readily
available for debt repayment.

Key Rating Drivers

Supportive Recent Disposals

OHL has received a total amount of EUR936 million as a result of
the two asset disposals. A significant part of the cash received
will be used to repay back by the end of December 2014 the 7.375%
bond falling due in April 2015 (EUR523.8 million). The rest of
the proceeds have largely been used to prepay around EUR277m of
the EUR1.2 billion margin call loan (non-recourse debt) at OHL
Concesiones. Fitch positively assesses the company's strong
commitment to keep net recourse leverage below 3x as shown with
the below transactions.

Following these transactions Fitch now expects adjusted net
recourse leverage (net debt plus factoring to EBITDA) to be
around 3.3x in FY14. Fitch highlights that without these
transactions, OHL's net leverage would have been around 5.4x
(compared to Fitch's negative trigger of net leverage of 4x for a
downgrade).

Decreasing Headroom

Fitch highlights that OHL's operating performance is suffering in
2014 with construction EBITDA falling around 9.4% on a like-for-
like basis in 9M2014 with a large number of international
projects still in ramp-up stage. Our current expectations for
2015 include a low single digit EBITDA increase mainly driven by
OHL's international activity and adjusted net leverage around
3.5x in 2015 and 2016 (compared to our previous expectations of
around 3x).

Working Capital Drains Cash

OHL's working capital outflows during the year have been
significant (EUR391m in the first nine months of 2014).We
highlight that OHL is experiencing some operational problems and
late payments regarding some international projects such as
Qatar, Oran and Algeria. Regarding these last two contracts, the
company is claiming for a total EUR288m mainly due to contractual
disputes. OHL has announced its intention to launch a new
business plan during Q115 which Fitch will closely monitor.

Fitch highlights that should OHL experience a protracted working
capital outflow in 2015 (similar to the one seen in 2014), the
company would probably need to focus again on asset disposals to
shield their financial profile. Fitch will monitor this situation
as this would provide further evidence that the company is not
being able to solve the late payments on significant
international contracts which could be negative for the ratings.

Attractive Non-Recourse Business

The stakes in Abertis (13.9%) and OHL Mexico (56.1%) are the main
concessions investments, ring-fenced from the rest of the group
and self-funded with an overall combined loan to value (LTV) of
around 40%. Compared to its peers, we assess OHL's concession
profile as stronger given its equity value and liquidity (as
shown with the recent transactions).

Complex Debt Structure

OHL's business is split between construction activities financed
with unsecured facilities (recourse), its ring-fenced concession
activities (non-recourse) funded with senior project finance
loans and junior concession holding company debt collateralized
on the underlying equity value of its Abertis and OHL Mexico
stakes.

Internationally Diversified

OHL has been very proactive in diversifying its business outside
Spain and other weak developed markets. As of September 2014,
OHL's backlog was around EUR8.5 billion providing around three
years of earnings visibility with around 81% of international
projects. However, downside risks relate to the execution risk of
the order book, which has an element of concentration risk when
compared to OHL's peers. Construction activity in Spain
represented around 18% of total revenues in the first nine months
of the year.

Fitch notes that the increase of international activity of OHL
has improved its business profile but had also a negative impact
on working capital as stated above. The unwinding of working
capital suffered by the issuer since 2009 is a consequence of the
lower weight of OHL's national business with a significant
decrease on the use of factoring and reduced amount of advanced
payments received.

Relatively High Leverage

With recourse cash flow stemming from the relatively higher risk
construction industry and susceptible to operational risks such
as cyclical demand and project delays, 3.0x leverage is deemed
comparatively high. OHL has considerable equity value on its
balance sheet from concession assets, although senior unsecured
bondholders remain subordinated to non-recourse debt and
potentially exposed to inherent equity value cyclicality.

Rating Sensitivities

Positive: Future developments that could lead to positive rating
actions include:

-- Fitch's adjusted recourse net leverage around 2.0x and EBITDA
    interest cover above 3.0x on a sustained basis;

-- A material increase in recurrent and stable up-streamed
    dividends from the concession business without a re-
    leveraging of assets.

Negative: Future developments that could lead to negative rating
action include:

-- Continued deterioration of the company's working capital
    position on a recourse basis;

-- Fitch's adjusted recourse net leverage above 4.0x and EBITDA
    interest cover below 2.0x on a sustained basis;

-- A LTV higher than 50% at the OHL Concesiones HoldCo level
    (collateralized debt/stakes in OHL Mexico and Abertis) to the
    extent that this may destabilize the standalone financial
    profile and lead to material margin calls.

Liquidity and Debt Structure

OHL's recourse liquidity profile is healthy and should be
sufficient to cover the company's financial needs for the next 24
months. As of September 2014, OHL's liquidity was around EUR1.2
billion including cash and equivalents of around EUR338 million
(excluding EUR140 million of cash held in joint ventures) plus
around EUR879 million of available and committed credit
facilities. Fitch assumes that OHL will repay back the 2015 bond
(EUR524 million) as recently announced with the proceeds received
by the two asset disposals explained above. Given this, OHL's
next bond maturity is in 2018.

Fitch affirms the following:

Obrascon Huarte Lain, S.A. (OHL)

-- Long-term IDR at 'BB-'; Outlook Stable;
-- Senior unsecured rating at 'BB-';
-- Short term rating at 'B'.



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T U R K E Y
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ASYA KATILIM: Moody's Confirms Caa1 Long-Term Deposit Rating
------------------------------------------------------------
Moody's Investors Service has confirmed the Caa1 long-term
deposit rating of Asya Katilim Bankasi A.S. (Bank Asya) with a
negative outlook. At the same time, Moody's adjusted downwards
Bank Asya's standalone baseline credit assessment (BCA) to ca
from caa3.

The bank's long-term national scale rating was confirmed at B1.tr
with a negative outlook, the short-term national scale rating was
affirmed at TR-4.The subordinated debt rating (issued under Asya
Sukuk Company Limited) was downgraded to C from Ca.

This rating action concludes the review for downgrade that
Moody's initiated in August 2014.

Ratings Rationale

The confirmation of the long-term deposit ratings reflects
Moody's view that Bank Asya's strong capitalization -- a Tier 1
ratio of 14.2% as at Q3 2014 -- and sizeable liquid-assets, limit
the likelihood of depositors having to absorb losses in the event
that the bank were to default. Moody's also notes that the bank's
shareholders' meeting, in November 2014, approved a capital
increase of TL225 million that would, if completed, further
improve the bank's risk-absorption capacity. The bank expects
this to be finalized by end-January 2015.

Moody's says that the lowering of the bank's BCA to ca from caa3
reflects ongoing pressure on some of the bank's financial
metrics, as well as its highly constrained business prospects and
franchise. During the review period the bank's deposit base and,
correspondingly, its on-balance sheet loan book continued to
shrink, by almost 20%, to TL12.3 billion as at Q3 2014 from TL
15.4 billion as at Q2 2014. Its asset quality deteriorated
significantly during the same period, with non-performing loans
increasing to 16.2% as at Q3 2014, from 9.8% as at Q2 2014,
partly due to the contraction in the loan book. Additionally, the
bank became loss making during this period, recording a
cumulative net loss of TL256 million in Q3 2014 and it is
expected to continue to post losses in the last quarter of the
year due to increased provisioning requirements.

These trends indicate that a BCA of ca better reflects the
magnitude of the stress facing this institution and the
possibility that it may need external support to stabilize its
franchise, restore profitability and reverse the contraction in
its deposit base and loan book.

Support Assumptions and Negative Outlook

Moody's loss-expectation analysis leads to maintaining the bank's
long-term deposit rating at Caa1, three notches above the BCA. At
the same time, the negative outlook reflects Moody's view that
the bank is facing significantly increasing operational
challenges and pressures, which could increase the risk of higher
losses to creditors in a default scenario.

Moody's does not incorporate any government (systemic) support
uplift in the bank's deposit ratings.

What Could Move the Ratings UP/DOWN

Given the low position of the standalone BCA, the possibility of
a further downside adjustment is limited, but is likely in case
the authorities place the bank into a resolution process. The
long-term deposit ratings could be downgraded if the possibility
of losses on the bank's obligations increases as a result of
further deterioration in the bank's financial position.

Given the negative pressures on the bank's performance, an
upgrade is unlikely in the short-term. However, the long-term
deposit rating could be upgraded following either a potential
merger with or an acquisition by another entity. This could,
depending on the acquiring entity's credit strength and extent of
potential support for Bank Asya, exert upward pressure on the
deposit ratings. Sustained trends in improving financial
fundamentals would also exert upward pressure on current ratings.

Subordinated Debt Rating

The subordinated debt rating (issued under Asya Sukuk Company
Limited) was downgraded to C from Ca, one notch below the bank's
BCA and in line with Moody's standard notching guidelines for
subordinated instruments.

National Scale Ratings (NSR)

The long-term NSR was confirmed at B1.tr with a negative outlook
and the short-term NSR was affirmed at TR-4. Bank Asya's NSR
reflects its creditworthiness within the Turkish credit
environment and is derived from the mapping of the bank's global
long-term deposit ratings. Therefore, the direction of the change
in the long-term deposit rating will influence the future
adjustment in this rating.

Principal Methodology

The principal methodology used in these ratings was Global Banks
published in July 2014.

Moody's National Scale Credit Ratings (NSRs) are intended as
relative measures of creditworthiness among debt issues and
issuers within a country, enabling market participants to better
differentiate relative risks. NSRs differ from Moody's global
scale credit ratings in that they are not globally comparable
with the full universe of Moody's rated entities, but only with
NSRs for other rated debt issues and issuers within the same
country. NSRs are designated by a ".nn" country modifier
signifying the relevant country, as in ".za" for South Africa.
For further information on Moody's approach to national scale
credit ratings, please refer to Moody's Credit rating Methodology
published in June 2014 entitled "Mapping Moody's National Scale
Ratings to Global Scale Ratings".



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U K R A I N E
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FIRST UKRAINIAN: Moody's Affirms 'Ca' Long-Term Deposit Rating
--------------------------------------------------------------
Moody's Investors Service has affirmed First Ukrainian
International Bank, PJSC's (FUIB) following ratings:

-- Long-term foreign-currency senior unsecured debt rating
    of Caa3

-- Long-term local-currency deposit rating of Caa3

-- Long-term foreign-currency deposit rating of Ca

-- National Scale Ratings (NSR) of Caa3.ua

The outlook on FUIB's deposit and debt ratings remains negative.
The bank's E bank financial strength rating (BFSR) was also
affirmed with a stable outlook, however it is now equivalent to a
baseline credit assessment (BCA) of ca (formerly caa3). The
short-term deposit ratings of Not Prime are unaffected by the
rating action.

The rating action is driven by FUIB's recent offer to restructure
its outstanding US$250 million Eurobonds maturing on 31 December
2014.

Ratings Rationale

Standalone BCA

Moody's says that the lowering of FUIB's BCA to ca from caa3
primarily reflects the very week liquidity conditions of the bank
resulting in a distressed exchange of its bonds. The BCA also
reflects the growing negative pressure on the bank's overall
credit profile which increases the likelihood that external
capital or liquidity assistance will be required, for the bank to
honor its contractual obligations and meet regulatory guidelines.

FUIB's total CAR ratio (under Basel 1 rules) declined to 18.1% at
end-Q3 2014 from 21.23% at year-end 2013 as the bank reported
losses in the first 9 months of 2014 stemming from increased loan
loss provisions. The bank's net losses for the period amounted to
UAH212 million, resulting in a negative annualized return on
average assets (ROA) of 0.8%. Moody's expects that FUIB's capital
adequacy will remain under pressure from rising loan loss
reserves against its non-performing loans (NPLs, 90+ days
overdue), which accounted for 18.9% of the bank's gross loans at
end-Q3 2014.

Similar to most Ukrainian banks, FUIB's liquidity conditions are
under stress stemming from a lack of FX funding and ongoing
deposit outflow. The downward pressure on the local currency
exacerbates FX funding conditions for the Ukrainian banks. Whilst
a successful restructuring of the Eurobonds, including maturity
extension, will reduce the risk of re-default on the bonds in the
next 12-18 months, the bank's liquidity will remain under stress
as over 50% of the customer deposits are denominated in FX as of
end-Q3 2014, according to FUIB's regulatory reports.

Debt and Deposit Ratings

The Caa3 rating of FUIB's foreign-currency senior unsecured debt
reflects the level of expected losses on the Eurobonds that will
be restructured. Based on the agreed terms, the maturity of the
bonds will be extended to year-end 2018 with quarterly
amortization. The 11% coupon rate will remain unchanged. Although
the proposed transaction presumes par-to-par debt exchange,
Moody's estimates that the extension of the repayment will result
in about 35% losses for the bondholders based on the net present
value of the amended cash flows.

The Caa3 rating of the bank's local-currency deposits reflects
the expected losses in the event of default.

The bank's Ca foreign-currency deposit rating is constrained by
the ceiling for foreign-currency deposits in Ukraine.

What Could Move The Ratings Up/Down

Moody's could downgrade FUIB's deposit and debt ratings in the
event of default, which would lead to losses for bondholders or
uninsured depositors in excess of 35% -- which would not be
commensurate with the current Caa3 rating. At the same time
stabilization of the ratings outlook is possible in the event of
a material improvement of the Ukrainian banks' operating
environment.

Principal Methodology

The principal methodology used in this rating was Global Banks
published in July 2014.

Domiciled in Ukraine, FUIB reported total assets of UAH39.4
billion (US$3.04 billion) as of October 1, 2014, in accordance
with its unaudited IFRS financial statements.

Moody's National Scale Credit Ratings (NSRs) are intended as
relative measures of creditworthiness among debt issues and
issuers within a country, enabling market participants to better
differentiate relative risks. NSRs differ from Moody's global
scale credit ratings in that they are not globally comparable
with the full universe of Moody's rated entities, but only with
NSRs for other rated debt issues and issuers within the same
country. NSRs are designated by a ".nn" country modifier
signifying the relevant country, as in ".za" for South Africa.
For further information on Moody's approach to national scale
credit ratings, please refer to Moody's Credit rating Methodology
published in June 2014 entitled "Mapping Moody's National Scale
Ratings to Global Scale Ratings".


UKRAINE MORTGAGE: Fitch Hikes Class B Notes' Rating to 'BB-sf'
--------------------------------------------------------------
Fitch Ratings has upgraded Ukraine Mortgage Loan Finance No.1
plc's class B notes (ISIN: XS0285819123) to 'BB-sf' from 'CCCsf'.
The Outlook is Stable.

Key Rating Drivers

The rating on the notes is capped at four notches above Ukraine's
Country Ceiling (CCC), because there is a cash reserve in place
that provides substantial coverage of class B interest and senior
expenses and is also available to clear any debits in the
principal deficiency ledger (PDL). This reserve is held at a bank
outside Ukraine - Bank of New York Mellon, London branch (BNYM,
AA-/Stable/F1+).

Privatbank (CCC/C), acting as the servicer, transfers borrower
payments to BNYM (issuer account bank). If interest collections
received by BNYM are not sufficient to make payments in the
interest waterfall, the cash reserve will be used to cover this
shortfall. The reserve provides substantial liquidity coverage
even in the agency's stressed interest rate scenario. Hence, in
Fitch's view if Ukrainian authorities were to introduce transfer
and convertibility restrictions on interest collections received
on the servicer's account, the cash reserve would sufficiently
mitigate this risk.

The class B notes have built up substantial credit support, which
consists of overcollateralization (USD15 million) and the cash
reserve (USD8.4 million), as of the October 2014 investor report.
This means that the notes can withstand even a material
deterioration in portfolio performance. For this reason, Fitch
has upgraded the note to its rating cap level.

The performance of the underlying assets since last review in
February 2014 has deteriorated. The cumulative default rate has
increased from 4.8% to 5.9% of the initial pool balance (in
absolute terms total defaults equal USD10.6 million), while the
cumulative loss rate is currently at 2% (USD3.6 million) compared
with 1% in January 2014.

The loans are US dollar-denominated. However, the majority of the
borrowers receive their income in the national currency (hryvna).
The hryvna has depreciated significantly since the beginning of
the year. Together with a weakening economy and political
uncertainty, this has had a negative impact on the borrowers'
ability to service their loans. However, the observed losses are
still quite low and significantly below the available credit
protection.

Fitch considers payment interruption and commingling risk
mitigated by the substantial credit enhancement and the current
levels of the cash reserve and commingling reserve. Both reserves
are at their respective required amounts -- the cash reserve
equals USD8.4 million (51% of the outstanding note balance), the
commingling reserve equals USD0.7 million (4% of the outstanding
notes).

Rating Sensitivities

A revision of Ukraine's Country Ceiling could result in a
revision of the highest achievable rating for the class B notes.

An introduction of transfer and convertibility restrictions by
Ukrainian authorities for a lengthy period of time could
adversely affect the payments on the notes.

Further depreciation of the local currency in relation to the US
dollar, continuing political uncertainty and rising unemployment
could lead to a further increase in portfolio losses. However,
the substantial credit protection of the class B notes would
enable it to survive even a material performance deterioration.



===========================
U N I T E D   K I N G D O M
===========================


BCA OSPREY: S&P Assigns 'B' Corp. Credit Rating; Outlook Stable
---------------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned its 'B'
long-term corporate credit rating to BCA Osprey IV Ltd., an
intermediate holding company for BCA, Europe's largest used-
vehicle remarketing and buying businesses.  The outlook is
stable. S&P also assigned 'B' long-term issue ratings to BCA's
senior secured facilities and a 'CCC+' long-term issue rating to
the group's second-lien term loan B.

The 'B' rating on BCA Osprey IV is based on S&P's analysis of BCA
Remarketing Group Ltd. (BCA), its immediate parent, as BCA's
accounts fully consolidate the group's two main operating
divisions: British Car Auctions and We Buy Any Car.  The accounts
of BCA Osprey IV are stand-alone.  S&P equalizes the rating on
BCA Osprey IV with the 'b' group credit profile (GCP) of BCA, as
S&P considers the subsidiary to be "core" to its parent.

The GCP on BCA is derived from S&P's assessment of the group's
"fair" business risk profile and "highly leveraged" financial
risk profile, as S&P's criteria define these terms.

BCA relies on one niche market of used-vehicle auctioning to
generate profits, mostly in the U.K.  However, British Car
Auctions and We Buy Any Car have leading market positions and
strong business growth, and the group has a relatively flexible
cost base.  S&P expects the group to continue to maintain solid,
long-term relationships with its key customers and continue to
expand its physical and online distribution networks to protect
its competitive position.

BCA is proposing to replace non-cash pay subordinated debt with
senior debt in its capital structure.  Specifically, the group is
proposing to fully refinance its existing GBP183.4 million high-
yielding noncash payment-in-kind (PIK) notes, and partially repay
GBP61.0 million of its preferred equity certificates (PECs) with
a GBP113.3 million new first-lien term loan B and GBP122.0
million second-lien term loan B.  S&P notes that the refinancing
of the PIK notes means that the group will avoid triggering the
early maturity of some of its senior secured facilities.  As part
of the transaction, the group is also proposing to upsize its
current revolving credit facility (RCF) to GBP100 million from
GBP65 million.

Following the refinancing, which S&P anticipates will be signed
by the end of 2014, it expects that BCA's Standard & Poor's-
adjusted debt to EBITDA will be around 8.0x-8.5x and adjusted
funds from operations (FFO) to debt will be below 5% over our
forecast period of two-to-three years.  These metrics are well
within the "highly leveraged" category and S&P do not anticipate
material improvements, despite the group's strong business
growth.

Although the transaction will result in a weakening of FFO cash
interest coverage from current levels of around 8.0x, S&P
nonetheless expects this ratio to remain strong and above 3.5x
over the medium term.

The high leverage is somewhat offset by the group's strong and
stable cash generation, supported by low working capital and
maintenance capital expenditure (capex) requirements.  There is
some working capital seasonality around the end-of-year sales
period and registration plate changes in March and September in
the U.K.

S&P's total adjusted debt calculation is based on the group's
proposed new capital structure, which includes GBP385.9 million
of senior secured facilities, GBP122.0 million of second-lien
debt, and GBP141.1 million of PECs--which S&P considers to be
debt-like. S&P also makes an adjustment for operating leases of
GBP275.0 million.

S&P's base case assumes:

   -- Strong revenue growth for BCA exceeding 15% in 2014 and 10%
      per year thereafter, supported by the solid recovery in new
      car registrations in the U.K. and the group's fast-growing
      We Buy Any Car business.

   -- EBITDA margins to decline to around 8%-9% by the end of its
      forecast period, from about 20% prior to last year's
      acquisition of We Buy Any Car, which is faster-growing but
      lower-margin due to its higher revenue base.

   -- Small bolt-on acquisitions that are complimentary to BCA's
      current business model, with no material or
      transformational acquisitions.

   -- No dividends to shareholders over our forecast period.

The stable outlook reflects S&P's view that BCA will deliver
strong revenue growth of at least 10% per year over the medium
term, with stable cash generation and strong FFO cash interest
coverage of above 3.5x.  Despite this, S&P do not expect material
improvements in credit metrics due to the group's high leverage.
S&P expects adjusted debt to EBITDA to remain at around 8.0x-8.5x
over the medium term.

S&P could lower the ratings if it expected BCA's credit metrics
to materially deteriorate beyond current levels, particularly if
FFO cash interest coverage falls below 2.0x.  This could occur if
the group does not achieve business growth in line with S&P's
forecasts, makes material debt-financed acquisitions, or
distributes dividends to shareholders.  S&P could also take a
negative rating action if the group's liquidity weakens below its
current "adequate" assessment.  This could happen if liquidity
sources to uses falls below 1.2x or if the group does not have
sufficient headroom under its financial maintenance covenants.

In S&P's opinion, an upgrade is unlikely over the medium term due
to BCA's high leverage.  S&P could consider an upgrade if the
group materially reduces leverage to a level commensurate with an
"aggressive" financial risk profile -- that is, if adjusted debt
to EBITDA decreased sustainably below 5x and adjusted FFO to debt
increased sustainably above 12%.


HELLERMANNTYTON GROUP: S&P Revises Outlook & Affirms 'BB' CCR
-------------------------------------------------------------
Standard & Poor's Ratings Services revised the outlook on U.K.-
based cable management solutions provider HellermannTyton Group
PLC to positive from stable and affirmed the 'BB' long-term
corporate credit rating.

At the same time, S&P affirmed the 'BB' issue rating on the
EUR230 million unsecured revolving credit facility (RCF) issued
by HellermannTyton Group.  The recovery rating on this debt is
'3', indicating S&P's expectation of meaningful (50%-70%)
recovery in the event of a payment default.

The outlook revision reflects S&P's view that HellermannTyton's
credit ratios could further strengthen in 2015.  There is a one-
in-three chance that S&P could revise the company's financial
risk profile upward to "intermediate" over the coming 12 months,
possibly leading in turn to a one-notch upgrade of the rating.

HellermannTyton is a global manufacturer and provider of high-
performance cable management solutions.  Owing to its customized
product offering and efficient mass production, the company is
able to charge high prices in its markets, while operating with
sound profitability.  These factors are offset, however, by
HellermannTyton's exposure to volatile end-markets--such as the
automotive industry, which now contributes half of group sales--
and its small size relative to other companies S&P rates in the
cable manufacturing sector.

The company's operating profitability, measured by its EBITDA
margin, has been commonly above 18%, which is above average and
less volatile than other capital goods companies.

The positive outlook reflects S&P's view that HellermannTyton
should be able to maintain its operating performance in 2015,
with a reported EBITDA margin above 18% and credit ratios
remaining robust throughout the year.  As a result, S&P sees the
possibility that it could revise the company's financial profile
to "intermediate" in the coming 12 months, assuming the company
maintains stable moderate free cash flow generation, solid credit
ratios for the current rating and an "adequate" liquidity
profile.

S&P could consider raising the rating if HellermannTyton's
financial profile further strengthens and credit ratios become
well established in the "intermediate" category, such as adjusted
FFO to debt in the 30%-45% range and positive FCOF generation.

S&P could consider revising the outlook to stable if credit
ratios do not improve according to its expectations and FFO to
debt remains at 20%-30%, which is commensurate with the current
rating.


HH REALISATIONS: Legal Fees, Damages Prompt Collapse
----------------------------------------------------
Storm Rannard at Insider Media reports that almost GBP3 million
in legal fees and damages associated with a lost court case led
to the collapse of HH Realisation.

According to Insider Media, the trade and assets of the company,
formerly known as Hydropath until its administration, have now
been bought by a former employee for GBP45,000, saving 12 jobs.

Weatherford Global Products and a number of other parties took
legal action against Hydropath in 2012 after concerns were raised
about its Clearwell product, an electronic box attached to oil
pipes to prevent any limescale build-up, Insider Media recounts.

Hydropath lost the case, leading to interim costs of GBP975,000
which were due for payment on September 12, 2014, Insider Media
discloses.  When the deadline passed, the business was engaged in
discussions with Weatherford and other parties to enter into a
company voluntary arrangement (CVA), but creditors could not
agree to the terms, Insider Media relates.

James Martin and Mark Newman, of insolvency firm CCW Recovery
Solutions, were appointed joint administrators to Hydropath
Holdings Ltd. on October 1, 2014, which later changed its name to
HH Realisations, Insider Media relays.

According to Insider Media, a report to creditors has now
revealed that unsecured creditors owed a total of GBP4.1 million
face an uncertain wait for repayment, after administrators were
unable estimate a distribution.

This includes GBP1.8 million in legal fees, which CCW advised may
not be the "final figure", and a further GBP1 million in damages
as a result of the lost court case, which has "not yet been
quantified", Insider Media notes.

Hydropath Holdings Ltd. changed its name to HH Realisations after
administrators sold its trade and assets to Castlegate, a
business led by former employee Jacqueline Burchell, Insider
Media states.

HH Realisation is a Nottingham-based developer of domestic
treatments for limescale.


                            *********

Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par.  Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable.  Those sources may not,
however, be complete or accurate.  The Monday Bond Pricing table
is compiled on the Friday prior to publication.  Prices reported
are not intended to reflect actual trades.  Prices for actual
trades are probably different.  Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind.  It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.

Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than US$3 per
share in public markets.  At first glance, this list may look
like the definitive compilation of stocks that are ideal to sell
short.  Don't be fooled.  Assets, for example, reported at
historical cost net of depreciation may understate the true value
of a firm's assets.  A company may establish reserves on its
balance sheet for liabilities that may never materialize.  The
prices at which equity securities trade in public market are
determined by more than a balance sheet solvency test.

Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals.  All titles are
available at your local bookstore or through Amazon.com.  Go to
http://www.bankrupt.com/booksto order any title today.


                            *********


S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter-Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez,
Joy A. Agravante, Ivy B. Magdadaro, and Peter A. Chapman,
Editors.

Copyright 2014.  All rights reserved.  ISSN 1529-2754.

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.

The TCR Europe subscription rate is US$775 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each.  For subscription information,
contact Peter Chapman at 215-945-7000 or Nina Novak at
202-362-8552.


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