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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

            Tuesday, May 10, 2016, Vol. 17, No. 092


                            Headlines


A R M E N I A

AMERIABANK CJSC: Fitch Affirms B+ IDR & Revises Outlook to Stable


A Z E R B A I J A N

AGBANK: Fitch Cuts Foreign Currency Issuer Default Rating to RD


B E L G I U M

TELENET GROUP: S&P Affirms B+ Long-Term CCR, Outlook Stable


G R E E C E

GREECE: IMF Threatens to Pull Out of Rescue Plans


I R E L A N D

AUTHORPRENEUR PRODUCTIONS: Poor Ticket Sales Prompt Liquidation


K A Z A K H S T A N

* Fitch Lowers Ratings on Four Kazakh Public Sector Entities
* Fitch Cuts Ratings on 6 Kazakh Cos. After Sovereign Downgrade


L U X E M B O U R G

ARCELORMITTAL SA: Fitch Affirms BB+ IDR, Outlook Negative


R U S S I A

FAR-EASTERN SHIPPING: Fitch Cuts LT Issuer Default Rating to C


S P A I N

LIBERBANK SA: Fitch Affirms BB/B Long-Term IDRs, Outlook Stable


U K R A I N E

DTEK ENERGY: Expects to Sign Debt Agreement Before Oct. 28


U N I T E D   K I N G D O M

BHS GROUP: Directors May Face Disqualification Over Collapse
CORRAL PETROLEUM: Fitch Assigns Final B+ Issuer Default Rating
HARKAND: Eidesvik Loses Contract Following Administration
LLOYD'S BANKING: Fitch Affirms BB+ Rating on Tier 1 Instruments
ROYAL BANK: Fitch Affirms BB+ Rating on Sub. Upper Tier 2 Debt

* UK: Meeting Set as Care-Home Providers Face Closure Threat


                            *********


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A R M E N I A
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AMERIABANK CJSC: Fitch Affirms B+ IDR & Revises Outlook to Stable
-----------------------------------------------------------------
Fitch Ratings has revised the Outlook on CJSC Ameriabank's
(Ameria) Long-term Issuer Default Rating to Stable from Negative,
while affirming the IDR at 'B+'.  It has also affirmed CJSC
Ardshinbank's Long-term IDR at 'B+' with Negative Outlook.

Fitch has also assigned Ameria's upcoming issue of senior
unsecured notes an expected Long-term rating of 'B+(EXP)' and a
Recovery Rating of 'RR4'.  The total amount of issue is USD15
million and final maturity is 2018.  The final rating is
contingent upon the receipt of final documents conforming to
information already received.

KEY RATING DRIVERS - IDRS, VRS, SUPPORT RATINGS

The affirmation of the banks' IDRs, which are driven by their
'b+' Viability Ratings (VRs), reflects the banks' reasonable
financial metrics, albeit under moderate pressure from a
challenging operating environment.  The VRs also reflect
Ardshin's and Ameria's respectively moderate and solid loss
absorption capacities, adequate liquidity buffers in light of
upcoming wholesale funding maturities and strong domestic
franchises (market shares of 13%-15% in domestic lending).  The
ratings also consider the high dollarization and concentration of
both banks' balance sheets, and recent rapid credit growth in
Armenia's fairly high-risk environment.

The revision of the Outlook on Ameria's ratings to Stable
reflects Fitch's expectation that the bank is likely to remain
resilient to pressures from the difficult operating environment,
as reflected by only moderate deterioration of its asset quality
and sound collateral coverage of problem loans.  The bank also
has a fairly strong ability to absorb impairment through earnings
and improved capital buffer following the USD30m equity injection
in December 2015.

The Negative Outlook on Ardshin's ratings reflects the bank's
more vulnerable credit profile due to the high-risk nature of
some of the bank's major exposures, which although currently
reported as performing may require provisioning.  It also
reflects the bank's more moderate capacity to absorb credit
losses through pre-impairment profits and smaller capital buffer.

Asset quality deteriorated moderately at Ameria during 2015 as
non-performing loans (NPLs, over 90 days overdue) increased to
4.9% from 2.3%, while Ardshin's NPLs remained stable at 3%.
However, Ameria has a lower share of restructured loans at 1%
than Ardshin's 5%.  Although Ameria has a low NPL reserve
coverage of only 34%, Fitch views this as reasonable given strong
collateral coverage and a track record of recoveries.  Ardshin's
NPL reserve coverage was a stronger 82%, although its
restructured loans are weakly reserved and viewed by Fitch as a
potential source of problems.

Lending in the Armenian banking sector is highly dollarised (78%
at Ameria and 66% at Ardshin), while the share of hedged
borrowers is generally limited, which may result in asset quality
pressure, although the magnitude of devaluation in Armenia was
much lower (19%) compared with other regional currencies.  Risk
concentrations are large at both banks, heightening their risk
profiles: at end-2015, exposure to the top 25 groups of connected
borrowers accounted for 2.3x Fitch Core Capital (FCC) at Ameria
and 2.7x at Ardshin.

Ameria has solid pre-impairment profitability (on cash basis)
sufficient to cover up to 4% of potential credit losses and
strong equity buffer (regulatory capital adequacy ratio (CAR) of
20.2% and FCC of 14.5% at end-2015), which allows absorption of
further 12% of potential loan losses before breaching any of the
regulatory capital ratios.  However, Ameria's capitalization
should be viewed in light of the bank's aggressive (about 20% in
2016) growth plans.

Ardshin has lower resilience to asset quality deterioration due
to smaller pre-impairment profit (on cash basis) of 2.4% of gross
average loans in 2015, and a moderate capital buffer (regulatory
CAR at 13.2% and FCC at 16% at end-2015, reflecting capital
deductions according to the regulatory rules) allowing the bank
to absorb only 1.5% of additional loan losses before breaching
the regulatory minimum of 12%.

Fitch expects net profitability to remain under pressure in 2016
from high loan impairment charges, which shaved off 46% and 66%,
respectively, of Ameria's and Ardshin's pre-impairment profits in
2015.  However, decreasing deposit rates could help to ease
pressure on margins.

Deposits are concentrated, although the banks keep large cushions
of liquid assets (mainly cash and equivalents, non-mandatory
placements with the central bank, and unpledged government
securities) equivalent to 35%-40% of customer deposits.  Non-
deposit funding is significant at both banks (35% of end-2015
liabilities at Ameria and 42% at Ardshin), although wholesale
funding maturities are manageable (below 10% of liabilities for
both banks in 2016).

Both banks' Support Rating Floors of 'No Floor' and '5' Support
Ratings mainly reflect Fitch's view that the Armenian authorities
have limited financial flexibility to provide extraordinary
support to banks, if necessary, given the banking sector's large
foreign currency liabilities relative to the country's
international reserves. Potential support from the private
shareholders is also not factored into the ratings, as it cannot
be reliably assessed.

                    SENIOR UNSECURED DEBT RATINGS

The senior unsecured debt ratings of Ameria and Ardshin (issued
through Dilijan Finance B.V.) are aligned with their Long-term
IDRs, as they represent direct, unsecured and unconditional
obligations of the respective banks.  The issues' Recovery
Ratings of 'RR4' reflect average recovery prospects for
noteholders in case of default.

                 RATING SENSITIVITIES - ALL RATINGS

Credit metrics of both banks are highly reliant on the
performance of the economy and stability of the local currency,
although Ardshin's ratings, being on Negative Outlook, are more
sensitive to a potential downturn.  Deterioration in the domestic
economy, resulting in the marked weakening of the banks' asset
quality or capitalisation, without sufficient support being
provided by the shareholders, may result in rating downgrades.
Improvement of the country's economic prospects would reduce
downward pressure on Ardshin's ratings and would be supportive of
Ameria's credit profile, although an upgrade is unlikely in the
medium-term.

Changes to the banks' Long-term IDRs would have similar impact
the senior unsecured debt ratings.

The rating actions are:

Ameria
  Long-term IDR: affirmed at 'B+', Outlook revised to Stable from
   Negative
  Short-term IDR: affirmed at 'B'
  Viability Rating: affirmed at 'b+'
  Support Rating: affirmed at '5'
  Support Rating Floor: affirmed at 'No Floor'
  Senior unsecured debt: assigned at 'B+(EXP)', Recovery Rating
   'RR4'

Ardshin
  Long-term IDR: affirmed at 'B+', Outlook Negative
  Short-term IDR: affirmed at 'B'
  Viability Rating: affirmed at 'b+'
  Support Rating: affirmed at '5'
  Support Rating Floor: affirmed at 'No Floor'
  Senior unsecured debt (issued by Dilijan Finance B.V.):
   affirmed at 'B+', Recovery Rating 'RR4'



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A Z E R B A I J A N
===================


AGBANK: Fitch Cuts Foreign Currency Issuer Default Rating to RD
---------------------------------------------------------------
Fitch Ratings has downgraded Azerbaijan-based AGBank's (AGB)
Long-Term foreign currency Issuer Default Rating (IDR) to 'RD'
(Restricted Default) from 'CCC' following a distressed debt
exchange. The rating has then been upgraded to 'CCC'. The agency
has also upgraded the bank's Viability Rating to 'ccc' from 'f'.
The rating actions follow the completion of recapitalization
measures.

KEY RATING DRIVERS

IDRS AND VR

The downgrade of AGB's Long-term and short-term foreign currency
IDRs to 'RD' follows the completion of the AZN77 mil.
recapitalization of the bank on March 31, 2016. Fitch understands
that AGB largely used the funds of its depositors for
recapitalization by means of an exchange of deposits for equity
(including AZN49 mil. of deposits from existing shareholders,
their family members and other related parties and AZN28 mil. of
third-party deposits). In accordance with Fitch's Distressed Debt
Exchange (DDE) Criteria, Fitch views AGB's recapitalization as a
DDE because (i) the recapitalization imposed a material reduction
in terms for the third-party depositors who participated in the
exchange compared with the original contractual terms; and (ii)
in Fitch's opinion, the recapitalization was conducted to avoid
bankruptcy, insolvency or intervention proceedings as the bank
had a significant capital shortfall that it needed to address.
Fitch estimates AGB's regulatory total capital ratio (CAR) was
around 1% before the recapitalization, well below the regulatory
minimum of 10%.

Following the DDE, Fitch has upgraded AGB's foreign currency
Long-Term IDR to 'CCC' from 'RD' and its VR to 'ccc' from 'f'.
The upgrades reflect Fitch's assessment of the bank's standalone
credit profile post recapitalization. In particular, the ratings
reflect AGB's still weak capital position, tight liquidity,
considerable refinancing needs and substantial asset quality
problems.

Fitch estimates AGB's Fitch Core Capital (FCC) to equal AZN16m or
3% of risk-weighted assets post-recap. The reported regulatory
CARs are now more solid at 15.1% (Tier 1 ratio, regulatory
minimum 5%) and 16.6% (total capital ratio, regulatory minimum
10%). The difference between the regulatory and IFRS equity was
mainly due to higher provisions in IFRS accounts, exceeding the
regulatory ones by around AZN50 mil. However, the bank's capital
position remains vulnerable and is significantly undermined by
(i) sizable unreserved non-performing loans (NPLs; loans 90+ days
overdue) and accrued interest on them equalling to AZN69 mil., or
4.3x of the estimated FCC; (ii) weak core profitability (the bank
has been loss-making on a cash basis for several years and return
to break-even performance is unlikely in the near term); and
(iii) the AZN40 mil. receivable (2.5x the estimated FCC) from
AGB's shareholders and key customers recognized as a fair value
of non-deliverable foreign currency forward agreements. However,
according to AGB's management the latter has been partially
repaid in April and could be fully repaid in May.

The funding and liquidity profile deteriorated markedly in 4Q15-
1Q16 following significant deposit outflows (AGB lost around 35%
of its customer accounts). In order to fulfil depositors' claims,
the bank has raised substantial AZN50 mil. of short-term
wholesale funding (11% of end-1Q16 liabilities, mainly from local
banks), which heightens near-term refinancing risks and may put
additional pressure on AGB's liquidity position. At end-1Q16,
AGB's liquidity buffer was only AZN20 mil. or 5% of total
liabilities.

"We placed AGB's IDR on Rating Watch Negative (RWN) in December
2015 shortly after the second currency devaluation in Azerbaijan.
The Rating Watch was revised to Evolving in February 2016 given
significant uncertainty about the near-term risks facing AGB's
creditors on the then anticipated merger with Demirbank (B/RWN).
Although the merger plans were then abandoned, the RWE on AGB's
IDR continued to reflect both upside and downside risks for the
bank's ratings following the recapitalization announcement."

SUPPORT RATING (SR) AND SUPPORT RATING FLOOR (SRF)

AGB's SRF of 'No Floor' and SR of '5' reflect its relatively
limited scale of operations and market share. Although Fitch
expects some regulatory forbearance to be available for the bank,
in case of need, any extraordinary direct capital support from
the Azerbaijan authorities cannot be relied upon, in the agency's
view. Potential for support from the bank's private shareholders
is also not factored into the ratings, as it cannot be reliably
assessed.

RATING SENSITIVITIES - ALL RATINGS

AGB's ratings could be downgraded in the event of further
liquidity stress making it difficult for the bank to service its
obligations. Negative rating pressure could also stem from
potential further asset quality deterioration and/or a further
material devaluation of the local currency, which could result in
capital shortfalls. However, to a large extent these risks are
already factored into the bank's low ratings.

Upside potential for AGB's ratings is limited at the moment and
would require (i) a significant improvement of liquidity
position; and (ii) additional recapitalization that would be
sufficient relative to the amount of potential asset quality
problems.

Given AGB's limited systemic importance and private ownership,
changes in the bank's SR and SRF are unlikely.

The rating actions are as follows:

AGBank:

  Long-term foreign currency IDR: downgraded to 'RD' and upgraded
  to 'CCC', off RWE

  Short-term foreign currency IDR: downgraded to 'RD' and
  upgraded to 'C', off RWE

  Viability Rating: upgraded to 'ccc' from 'f'

  Support Rating: affirmed at '5'

  Support Rating Floor: affirmed at 'No Floor'



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B E L G I U M
=============


TELENET GROUP: S&P Affirms B+ Long-Term CCR, Outlook Stable
-----------------------------------------------------------
S&P Global Ratings affirmed its 'B+' long-term corporate credit
rating on Telenet Group Holding N.V., a Belgian provider of
telecommunications and cable TV services.  The outlook is stable.

At the same time, S&P assigned its 'B+' long-term corporate
credit rating to Telenet's fully owned finance subsidiaries
Telenet International Finance Sarl and Telenet Financing USD LLC.
The outlook for both is stable.

In addition, S&P assigned its 'B+' issue rating to Telenet's
proposed $850 million new senior secured term loan, issued by
Telenet Financing USD LLC, and affirmed S&P's 'B+' issue ratings
on its senior secured debt.  The recovery rating on all of
Telenet's senior secured loans is '3', indicating S&P's
expectation of recovery in the lower half of the 50%-70% range in
the event of a payment default.

The affirmation reflects S&P's expectation that the proposed
issuance will be broadly leverage neutral for Telenet and that
Telenet has performed in line with S&P's base-case assumptions.
Telenet is seeking to issue an eight-year $850 million term loan
to early refinance its outstanding EUR300 million senior secured
fixed rate notes and EUR400 million senior secured floating rate
notes, both due 2021.  The term loan will be issued by Telenet
Financing USD LLC, an entity newly created for this purpose.

S&P's assessment of Telenet's business risk profile as
satisfactory continues to be supported by the company's strong
market positions as the leading provider of broadband and cable
TV services in its service area, spanning the Flanders region and
about one-third of Brussels.  In addition, S&P's assessment
incorporates Telenet's strong network capabilities and scalable
infrastructure, which enable it to provide high-speed broadband
services, as well as its attractive content offering.  These
strengths are partly offset by S&P's expectation of continued
competitive pressure in the TV segment and ongoing competition
for broadband and telephony services from other fixed-line and
mobile operators.

The acquisition of BASE Company N.V. (BASE) incrementally
strengthens Telenet's business risk profile, in S&P's view,
because it improves Telenet's commercial flexibility in designing
its "quad-play" offers for the Belgian market--in which demand
for converged fixed and mobile services is increasing.  However,
the consolidation of BASE will dilute Telenet's operating margins
in the near to medium term, given the lower-margin nature of
BASE's operations as well as merger-related integration costs,
but S&P believes this dilution is likely to be tempered over time
through the realization of cost synergies.

S&P's view of Telenet's financial risk profile continues to be
impacted by S&P's expectation that Telenet's majority owner
Liberty Global will continue to pursue an aggressive financial
policy, making it unlikely that Telenet will sustainably
deleverage through EBITDA growth or free cash flow generation.
Specifically, S&P sees a risk that, going forward, Telenet will
spend substantial amounts of cash in excess of its free operating
cash flow (FOCF) for uses other than debt reduction, including
further acquisitions.

In S&P's base case, it assumes:

   -- Revenue growth of 2.0%-2.5% for the combined entity in 2016
      and 1%-2% in 2017, supported by a blend of revenue growth
      at Telenet and modest revenue declines at BASE.

   -- EBITDA margins, as adjusted by S&P Global Ratings, and
      after integration costs and synergies, of 41%-45% in 2016
      and 42%-46% in 2017.

   -- Capital expenditures (capex) of 21%-25% of sales for the
      combined entity in 2016 and 2017, including integration-
      related capex.

Based on these assumptions, S&P arrives at these credit measures:

   -- Debt to EBITDA, as adjusted by S&P Global Ratings, of 4.5x-
      5.0x in 2016 and 2017.

   -- FOCF to debt of 2%-4% in 2016 and 2017.

   -- Discretionary cash flow to debt of about zero or negative
      in the next 24 months.

S&P views Telenet International Finance S.a.r.l. and Telenet
Financing USD LLC as core subsidiaries of Telenet Group Holding
N.V., as these entities serve the sole purpose of raising
financing for the group, are fully owned by Telenet, and share
the same corporate name.

The stable outlook on Telenet reflects S&P's view that the
combined group, including BASE, will report modest pro forma
revenue growth and approximately stable EBITDA in 2016, mainly
supported by good up-selling performance in Telenet's existing
customer base, and accelerating EBITDA growth from 2017 thanks to
the increasing realization of synergies.  The outlook also takes
into account S&P's anticipation that Telenet will maintain its
aggressive financial policy under the influence of its majority
shareholder, Liberty Global.  S&P forecasts that this will result
in S&P Global Ratings-adjusted debt to EBITDA of 4.5x-5.0x in
2016, with potential shareholder distributions or cash needs for
further acquisitions likely to fully consume or exceed its FOCF
from 2016.

"Rating upside remains constrained by our expectation of high
leverage and substantial shareholder distributions or cash needs
for further acquisitions equivalent to or in excess of FOCF from
2016.  However, we might consider raising our rating on Telenet
if its adjusted debt to EBITDA declines to about 4.5x on a
sustainable basis and if, at the same time, the successful
integration of BASE and realization of synergies supports FOCF to
debt sustainably above 5%, coupled with a predictable financial
policy that limits shareholder distributions or cash spending for
further acquisitions so that these do not materially exceed FOCF.
In any event, before considering a positive rating action, we
would reassess Liberty Global's strategy and financial policy for
Telenet," S&P said.

S&P could also upgrade Telenet if S&P revised upward its view of
its strategic importance to Liberty Global.  S&P would bring the
rating in line with its view of Liberty Global's group credit
profile if S&P was to consider Telenet a core subsidiary.

S&P would lower its rating on Telenet if S&P lowered its rating
on Liberty Global and if, at the same time, Telenet's ratio of
adjusted debt to EBITDA increased to more than 6x on a prolonged
basis, for example, as a result of an even more aggressive
financial policy, or operating underperformance, due for example
to difficulties integrating BASE.



===========
G R E E C E
===========


GREECE: IMF Threatens to Pull Out of Rescue Plans
-------------------------------------------------
Helena Smith at The Guardian reports that Christine Lagarde
issues warning in letter leaked three days before eurozone
finance ministers discuss help for Athens.

Hopes of an end to the impasse between Greece and its creditors
have appeared to evaporate after a surprise intervention from the
International Monetary Fund, The Guardian states.

According to The Guardian, in a letter -- leaked three days
before eurozone finance ministers are scheduled to discuss how
best to put the crisis-plagued country back on its feet -- IMF
chief Christine Lagarde issued her most explicit warning yet:
either foreign lenders agree to restructure Greece's runaway debt
or the Washington-based organization will pull out of rescue
plans altogether.

"For us to support Greece with a new IMF arrangement, it is
essential that the financing and debt relief from Greece's
European partners are based on fiscal targets that are realistic
because they are supported by credible measures to reach them,"
Ms. Lagarde, as cited by The Guardian, said, lamenting the lack
of structural reforms underlying Athens' abortive adjustment
program so far.

Six years have elapsed since Greece, revealing a deficit that was
four times higher than previously thought, received its first
loans from a bailout program that has since exceeded more than
EUR240 billion (GBP190 billion) in emergency funding, The
Guardian relays.  Since a third EUR86 billion bailout last
summer, talks have been largely deadlocked, The Guardian
discloses.

Laying bare the differences of view prevailing among those
consigned to keep the insolvent nation afloat, Ms. Lagarde said
it was imperative that a lower primary surplus goal was achieved,
The Guardian notes.



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I R E L A N D
=============


AUTHORPRENEUR PRODUCTIONS: Poor Ticket Sales Prompt Liquidation
---------------------------------------------------------------
Shane Phelan at Irish Independent reports that Authorpreneur
Productions Limited, the company behind a major conference on
empowering women, has gone into liquidation after poor ticket
sales forced the event's cancellation.

The Herizon conference has been due to take place at Dublin's RDS
Simmonscourt over three days at the end of April, but was
abandoned and ticket holders refunded, Irish Independent relates.

According to Irish Independent, only a few hundred tickets were
sold in advance, well short of the 2,000 to 3,000 advance sales
hoped for by organizer Maura Byrne, who previously created The
Baby and Kids Show, a successful pregnancy and parenting event in
the 1990s.

The company filed for voluntary liquidation last week, with PJ
Lynch appointed liquidator, Irish Independent discloses.

According to Irish Independent, a meeting of creditors on May 4
heard the company had a EUR135,000 shortfall.



===================
K A Z A K H S T A N
===================


* Fitch Lowers Ratings on Four Kazakh Public Sector Entities
------------------------------------------------------------
Fitch Ratings has downgraded Kazakhstan public sector entities
(PSEs) JSC Sovereign Wealth Fund Samruk-Kazyna (SK) and JSC
National Management Holding Baiterek's (Baiterek) Long-term
foreign currency IDRs to 'BBB' from 'BBB+'.

At the same time, Fitch has also downgraded KazAgro National
management holding JSC (KazAgro) and Kazakhstan Mortgage
Company's (KMC) Long-term foreign currency IDRs to 'BBB-' from
'BBB'.

KEY RATING DRIVERS

The rating actions follow Fitch's recent downgrade of
Kazakhstan's Long-term foreign currency IDR to 'BBB' from 'BBB+'.

Fitch uses its PSE rating criteria, top-down approach, in its
analysis of four Kazakhstan PSEs and views them as being credit-
linked to the sovereign. The ratings of the four entities do not
extend to their subsidiaries' obligations.

SK's IDRs remain equalized with those of Kazakhstan, reflecting
its strong links with the sovereign and high propensity of state
support. This is evidenced by SK's special legal status, its
strategic role as an extension of the government in managing its
core assets, strong operational and financial integration with
the government, and tight control by the latter along with
maintenance of 100% state ownership.

Baiterek's IDRs remain equalized with the sovereign IDRs, which
reflects the company's unchanged special legal status, its
strategic importance for state policy on economic development and
diversification, and strict state control. Fitch considers that
the recently announced large-scale national privatization program
will not weaken these major rating factors.

KazAgro's IDRs have been downgraded and a one-notch rating
differential from Kazakhstan's ratings has been maintained,
reflecting a "mid-range" degree of integration in light of
market-originated funding. Unchanged special legal status,
strategic importance for state policy on agriculture support and
strict state control over the company underpin ongoing credit
linkage with its sponsor.

The Outlook remains Negative after its recent revision from
Stable, reflecting the risk of further weakening of the
integration with the Kazakhstan's government in light of a
declining share of state-originated funding.

KMC's IDRs remain one notch below the sovereign, which Fitch
considers the company's ultimate sponsor, and reflects full
ownership by the government through Baiterek, its high strategic
importance in social housing and strong control and oversight by
the state. The one-notch rating differential factors in a "mid-
range" assessment of its integration with the state as KMC's
financial flows and the fact that KMC's debt is not consolidated
in any government bodies.

RATING SENSITIVITIES

Samruk-Kazyna:

Positive rating action could result from an upgrade of
Kazakhstan. Conversely, negative rating action on Kazakhstan or a
weakening of the fund's links with the state would lead to a
downgrade.

Baiterek:

Baiterek's ratings mirror those of the sovereign. Positive rating
action would result from an upgrade of Kazakhstan. Conversely,
negative rating action on Kazakhstan or weakening of Baiterek's
links with the state, as evidenced, by issuance of material
unguaranteed market debt, would lead to a downgrade.

KazAgro:

A downgrade would follow the materialization of diminishing
propensity for support from the state as measured by a
sustainable shift in the long-term funding structure in favor of
market instruments, leading to widening of the rating
differential with the sovereign to two notches. Negative rating
action on the Republic of Kazakhstan would also be reflected by
KazAgro's rating.

KMC:

An upgrade may result from an upgrade of the sovereign ratings
provided that KMC's links to the government are unchanged, or
from tighter integration with the sovereign, including an
explicit government guarantee.

Changes to the legal status leading to a dilution of control or
weakening of support by the sovereign could lead Fitch to widen
the notching from the sovereign to two notches, resulting in a
downgrade. Negative rating action on the Republic of Kazakhstan
would also be reflected by KMC's ratings.

The rating actions are as follows:

JSC Sovereign Wealth Fund Samruk-Kazyna

-- Long-term foreign currency IDR: downgraded to 'BBB' from
    'BBB+'; Outlook Stable

-- Long-term local currency IDR: downgraded to 'BBB' from 'A-';
    Outlook Stable

-- Short-term foreign currency IDR: affirmed at 'F2'

-- National Long Term Rating: affirmed at 'AAA(kaz)'; Outlook
    Stable

-- Senior unsecured domestic bonds: downgraded to 'BBB' from 'A-
    ', affirmed at 'AAA(kaz)'

National Management Holding Baiterek

-- Long-term foreign currency IDR: downgraded to 'BBB' from
    'BBB+'; Outlook Stable

-- Long-term local currency IDR: downgraded to 'BBB' from 'A-';
    Outlook Stable

-- Short-term foreign currency IDR: affirmed at 'F2'

-- National Long Term Rating: affirmed at 'AAA(kaz)'; Outlook
    Stable

-- Senior unsecured domestic bonds: downgraded to 'BBB' from 'A-
    ', affirmed at 'AAA(kaz)'

JSC KazAgro National management holding

-- Long-term foreign currency IDR: downgraded to 'BBB-' from
    'BBB'; Outlook Negative

-- Long-term local currency IDR: downgraded to 'BBB-' from
    'BBB+'; Outlook Negative

-- Short-term foreign currency IDR: affirmed at 'F3'

-- Senior unsecured eurobonds: downgraded to 'BBB-' from 'BBB'

-- Senior unsecured domestic bonds: downgraded to 'BBB-' from
    'BBB+'

Kazakhstan Mortgage Company

-- Long-term foreign currency IDR: downgraded to 'BBB-' from
    'BBB'; Outlook Stable

-- Long-term local currency IDR: downgraded to 'BBB-' from
    'BBB+'; Outlook Stable

-- Short-term foreign currency IDR: affirmed at 'F3'

-- Senior unsecured domestic bonds: downgraded to 'BBB-' from
    'BBB+'

-- Senior secured domestic bonds: downgraded to 'BBB-' from
    'BBB+'

-- Subordinated domestic bonds: downgraded to 'BB+' from 'BBB'


* Fitch Cuts Ratings on 6 Kazakh Cos. After Sovereign Downgrade
---------------------------------------------------------------
Fitch Ratings on May 5, 2016, downgraded the ratings of six
Kazakh corporates following its recent downgrade of Kazakhstan.

The core rationale for these rating actions is the direct impact
of the sovereign downgrade on the ratings of state-owned
entities.

                         KEY RATING DRIVERS

JSC National Company Kazakhstan Engineering (Long-term Foreign
Currency IDR downgraded to 'BB+' from 'BBB-'; Outlook Stable)
We continue to view the operational and strategic links between
Kazakhstan Engineering (KE) and the state as moderate to strong,
which supports the application of the top-down rating approach.
The strength of these ties is underpinned by the state control,
strategic importance of the company to the government's ambition
to expand the country's industrial base and diversify the
national economy as well as the tangible financial support from
the state that has already been exhibited and pledged.  The
two-notch differential reflects the lack of debt guarantees
provided by the state and the slightly lower priority Kazakhstan
Engineering would likely receive compared with key natural
resources, utilities or infrastructure companies.

Kazakhstan Electricity Grid Operating Company (KEGOC; Long-term
Foreign Currency IDR downgraded to 'BBB' from 'BBB+'; Outlook
Negative)

KEGOC's ratings are aligned with those of Kazakhstan.  The
ratings continue to reflect overall strong links with the
government, albeit with weakening legal ties.  Fitch expects
timely support in case of need, including should financial
covenants need to be waived or renegotiated.

The Negative Outlook reflects Fitch's view of weakening support
of KEGOC by its dominant, indirect shareholder -- the Republic of
Kazakhstan, especially in light of a decline in the share of
state-guaranteed debt and high dividend payout policy of no less
than 40% (100% in 2015) following its partial IPO.  Fitch is
likely to downgrade KEGOC by one notch if the guaranteed debt
falls below 40% of total (44% at 9M2015).

JSC Samruk-Energy (Long-term Foreign Currency IDR downgraded to
'BB+' from 'BBB-'; Outlook Stable)

Fitch applies a two-notch differential between the rating of
Samruk-Energy and the state.  Fitch continues to view the
operational and strategic links between Samruk-Energy and
ultimately the state as strong, which supports the application of
the top-down rating approach.  The strength of these ties is
underpinned by the company's strategic importance to the Kazakh
economy as the company controls about 39.8% of total installed
electricity generation capacity and 35.6% of total coal output in
the country.  The strength of ties is also supported by the
state's approval of the company's strategy and capex program, and
by tangible financial support in the form of equity injections,
asset contributions, subordinated loans and subsidies.

JSC Mangistau Electricity Distribution Company (MEDNC; Long-term
Foreign Currency IDR downgraded to 'BB' from 'BB+'; Outlook
Negative)

MEDNC's ratings are currently notched down three levels from the
sovereign's, reflecting moderately strong links between the
company and its ultimate parent.

The Negative Outlook reflects our assessment of weakening ties
between MEDNC and its ultimate parent, Kazakhstan.  This is due
to the planned sale of the full 75% stake owned by 100%
state-owned JSC Samruk-Energy (BB+/Stable) in MEDNC over the
medium term as well as expected material deterioration of the
company's credit metrics over 2015-2018 due to debt-funded large
capex imposed by the state.

JSC National Company Kazakhstan Temir Zholy (KTZ; Long-term
Foreign Currency IDR downgraded to 'BBB-' from 'BBB'; Outlook
Stable)

KTZ is rated one notch lower than the state.  Fitch applies a top
down approach to KTZ's ratings, reflecting strong strategic and
operational ties with the state but also the absence of
significant explicit guarantees or cross-default provisions.
Fitch believes the state would provide sufficient tangible
support for KTZ to repay or service its liabilities, despite
rapid deterioration of KTZ's standalone creditworthiness.

The Stable Outlook reflects our view of continued state support
and alleviated liquidity pressure.  KTZ successfully raised debt
funding for the USD350 mil. Eurobond refinancing falling due on
the May 11, 2016.  The government's support during the
refinancing process included allocation of tenge liquidity for
the issuance of 10-year KZT50 billion local bonds, which also
reduces the company's foreign currency risk exposure.

JSC National Company KazMunayGas (NC KMG; Long-term Foreign
Currency IDR downgraded to 'BBB-' from 'BBB'; Outlook Stable)

Fitch maintains a one-notch difference between Kazakhstan and NC
KMG's ratings, given the absence of an explicit state guarantee
for a significant portion of NC KMG's debt and based on our
expectation that the state will provide sufficient and timely
tangible support to NC KMG when needed.

JSC KazTransOil (KTO; Long-term FC IDR downgraded to 'BBB-' from
'BBB'; Outlook Stable)

KTO's ratings are capped by those of NC KMG, its majority
shareholder, due to the parent's significant influence over KTO's
free cash flow (FCF) through dividends.  KTO's dividend payout
has been relatively high historically, from 66% to 231% in 2011-
2014.

KazTransGas JSC (KTG) and subsidiaries (Long-term Foreign
Currency IDR downgraded to 'BB+' from 'BBB-'; Outlook Stable)
KTG's ratings are notched down one level from NC KMG's ratings.
KTG, Intergas Central Asia JSC (ICA) and KazTransGas Aimak JSC
(KTGA), qualify as material subsidiaries in NC KMG's Eurobonds
and are subject to cross-default provisions, but NC KMG does not
guarantee their debt.

Fitch views the intra-group links between KTG, ICA and KTGA as
strong and hence align the ratings of the two subsidiaries with
KTG's.  The evidence of strong linkage includes KTG's financial
guarantees to KTGA, operational interdependence and a common
planning and budgeting process between the companies.



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


ARCELORMITTAL SA: Fitch Affirms BB+ IDR, Outlook Negative
---------------------------------------------------------
Fitch Ratings has affirmed ArcelorMittal S.A's (AM) Long-term
Issuer Default Rating (IDR) at 'BB+'. The Outlook is Negative.

"The affirmation reflects the positive steps AM has taken since
the beginning of the year to decrease its debt levels which we
expect to translate into a slight improvement in credit metrics
in 2016, despite weaker average steel prices than 2015. In
February 2016, AM announced debt protection measures including
the $US1 billion asset sale of Gestamp Automocion and the $US3
billion rights issue. While this will decrease net debt by $US4
billion, AM's funds from operations (FFO) adjusted leverage
remains high (2015:7.4x). Consequently, the Outlook remains
Negative."

"The Negative Outlook also reflects the potential risks and
uncertainties in the global steel industry, which could easily
derail AM's deleveraging path. We currently project leverage to
be around 3.6x in 2018, given no recovery in steel prices in 2016
and a gradual recovery in prices after 2016. While we are seeing
some evidence of price recovery materializing, such as steel
prices being supported by rationalization of higher cost
producers or protectionist measures in AM's key markets, we
believe that this will take longer than we initially expected. As
a result, the $US4 billion cash proceeds received from the asset
sale and rights issue, although positive, will not accelerate
deleveraging beyond our previous esimates."

KEY RATING DRIVERS

Elevated Leverage Metrics

"Fitch expects AM's leverage metrics to decrease to 6.7x in 2016
from 7.4x in 2015, and reach 3.6x by 2018. The deleveraging path
is largely in line with what we previously projected, primarily
due to a longer steel market recovery timeframe than previously
expected off-setting the impact of the rights issue and asset
sale. The deleveraging in 2016 is driven by the $US1.8 billion
conversion of the convertible bonds from debt to 100% equity and
the recently announced $US3 billion rights issue and $US1 billion
asset sale of Gestamp, which is being used to repay debt."

"After 2016, we expect the decrease in leverage to be driven by a
gradual improvement in steel prices and the asset optimization
program. We expect AM's leverage to reach a level more in line
with a 'BB+' rating by 2018, but we still believe that the key
risks and uncertainties in the global steel market remain and
acknowledge that the current projected deleveraging profile could
easily be disrupted, as reflected by the Negative Outlook."

No Major Change In Fundamentals

"AM has faced pressure from falling steel prices since the start
of 2015, which was driven by Chinese exports. While we have seen
some progress in protectionist measures in AM's key markets and
the expectation of cutbacks in production in China, we believe
that these measures will take longer to translate in to an
improvement in AM's credit metrics. The recent price pick up has
been driven by a number of factors and we remain more cautious
and continue to monitor the impact of protectionist measures and
capacity rationalization."

There may be pressure on steel prices in China as Fitch expects
the supply of steel to increase as rising prices has led to
capacity resumption, as seen in March production figures, where
daily crude steel production rose to 2.28m tonnes, up 12.9%
compared with January and February 2016. Fitch expects production
to increase further in April, as the suspended furnaces are fired
up. Together with weak demand growth for steel in 2016, this may
result in moderating steel prices. However, AM's ratings factor
in that prices will not reach the lows seen in December 2015 and
January 2016.

"Underlying end-market demand for AM's products continue to
remain neutral/positive for 2016 in North America and Europe, and
more difficult in Brazil and some Africa & CIS countries. Fitch
expects AM's total steel shipments in 2016, of around 86mt, to
remain flat in 2016. We project sales volume growth of 1.2% yoy
in 2017."

Cost Cutting & Debt Protection Measures Continue

In February AM announced actions to further strengthen its
balance sheet with the $US3 billion rights issue and the $US1
billion asset sale of Gestamp. The rights issue and the proceeds
from the asset sale are being used to repay debt. Additionally,
AM outlined its 'Action 2020 plan', which indicates further
structural improvements. Together with the previously announced
cost-cutting measures this will lead to around a $US3 billion
improvement in EBITDA, and free cash flow (FCF) generation of
around $US2 billion, at steel spreads of 85/t by 2020. While
these steps are positive, the short-term impact will be muted
given the low steel prices the industry is currently
experiencing.

Significant Scale and Diversification
The ratings continue to reflect AM's position as the world's
largest steel producer. AM is also the world's most diversified
steel producer in product and geography, and benefits from a
solid and increasing level of vertical integration into iron ore.

KEY ASSUMPTIONS

-- Chinese exports continue to impact the market in 2016: Total
    shipments remain flat, coupled with a decline in average
    steel selling price for 2016.
-- Price stabilization by end-2016/2017
-- Continued reduction in cash costs in 2016 to support
    profitability.
-- Iron ore price - $US45/t in 2016- 2017, $US50/t in 2018 and
    long term).
-- Capex of $US2.4 billion in 2016.
-- Assets sales of $US1 billion in 2016.
-- No dividends.
-- $US3 billion rights issue in 2016

RATING SENSITIVITIES

"We reviewed ArcelorMittal's rating sensitivities in comparison
with those of its peers. Considering our views of the relative
business risks of the issuers, we have widened the upgrade and
downgrade triggers by 0.5x. The current threshold for a downgrade
is FFO adjusted gross leverage above 3.5x by 2018. Previously
this was 3.0x."

Positive: Future developments that could lead to the Outlook
being revised to Stable:

-- Successful implementation of 'Action 2020' and price
    improvements that translate into stronger cash flow
    generation and hence more rapid deleveraging towards the
    expected FFO gross leverage of 3.5x than currently forecast.
-- EBIT margins of at least 5% (2015: 3.2%).
-- Positive FCF across the cycle.

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

-- Further material price declines in 2016 vs. 2015 prices.
-- Inability to execute the recently announced 'Action 2020'
    plan.
-- FFO margin below 4%.
-- Inability to achieve FFO adjusted (including true sale of
    receivables (TSR)) gross leverage above 3.5x by end-2018.
-- Persistently negative FCF.

LIQUIDITY

"At December 31, 2015, AM had a cash of $US4.0 billion and
undrawn long-term credit lines of $US6 billion ($US2.5 billion
matures in April 2018, $US3.5 billion matures in April 2020).
This is more than adequate to cover its short-term debt of $US2.3
billion. We view AM's liquidity as strong and supportive for the
ratings, given that they are actively managing their debt
maturity profile and are using the proceeds from the rights issue
and asset sale to pay down debt."

CORRECTION OF ERROR

Fitch has adjusted its analysis of AM's TSR program and now
includes this off balance-sheet receivables factoring as debt in
its credit metrics. We first outlined this change in analysis in
the Special Report, "Debt Factoring: Analytical Adjustments for
Corporate Issuers and Their Recovery Ratings" published in
February 2013. Including the receivables increases reported debt
by $US4.6 billion. Based on Fitch's previous projections, this
would have increased 2015 FFO adjusted gross leverage by
approximately 1.0x from 5.5x to 6.5x and 2018 leverage by
approximately 0.8x from 2.8x to 3.6x.

FULL LIST OF RATING ACTIONS

Long-term IDR affirmed at 'BB+', Outlook Negative
Short-term IDR affirmed at 'B'
Senior unsecured rating affirmed at 'BB+'



===========
R U S S I A
===========


FAR-EASTERN SHIPPING: Fitch Cuts LT Issuer Default Rating to C
--------------------------------------------------------------
Fitch Ratings has downgraded Russia-based Far-Eastern Shipping
Company Plc's (FESCO) Long-term foreign currency Issuer Default
Rating to 'C' from 'CC'.

The downgrade indicates that default is imminent, following the
company's announcement that it will not pay the Eurobond coupon
payments due on 4 May 2016 in respect to its two Eurobonds
maturing in 2018 and 2020, thus entering a grace period of 30
days.

The downgrade also reflects FESCO's weak liquidity, the continued
deterioration of operational performance, weaker cash generation,
and exposure to a contracting economy and rouble exchange rate
volatility.  Fitch expects the company's financial performance to
have deteriorated in 2015 and believe that an improvement in 2016
is uncertain.

                        KEY RATING DRIVERS

Debt Restructuring Expected

The uncured expiry of 30 days grace period following the
company's decision not to pay the coupon on its Eurobonds may
result in a downgrade to 'RD'.

FESCO has announced its intention to negotiate a rescheduling of
its further maturities and coupon/interest payments in the medium
term.  Given the failure of coupon payment and continuing weak
operating cash flows, we believe a debt restructuring is likely
in 2H16.

Insufficient Liquidity

Fitch assessed FESCO's liquidity position at end-3Q15 as
insufficient for debt coverage over 4Q15-2016.  The company's
cash and cash equivalents of USD68m at end-3Q15 and Fitch-
projected 4Q15-2016 negative free cash flows (FCF) do not cover
expected maturities and coupon/interest payments over 4Q15-2016
of about USD150m and about USD125m, respectively.  Financial
covenants in the Eurobond documentation (i.e. fixed charge
coverage ratio at 2.0x or higher and consolidated total leverage
ratio of less than 3.25x) limit FESCO's ability to incur
additional debt over certain limits but their breach does not
constitute an event of default.

Low Coverage, High Leverage

At end-3Q15, FESCO's debt was USD921 million. Fitch has included
USD220 mil. Eurobonds that were bought back in May 2015 in its
adjusted debt calculations as these Eurobonds were pledged as
collateral under a USD44 mil. loan agreement provided by an
international bank for funding the Eurobond buyback and should be
released back to FESCO upon the final fulfillment of obligations
under this loan in February 2018.

Fitch expects FESCO's funds from operations (FFO) adjusted net
leverage to increase to above 10x over 2015-2018 from slightly
above 6x at end-2014 on the back of deteriorating operational
performance.  Fitch expects FESCO to report negative FFO over
2016-2018 due to lower operational cash flows, resulting in FFO
interest coverage falling to below 1x over 2015-2018, from
slightly above 1x at end-2014.

Weak Market Fundamentals, Earnings Pressure

The Russian transportation market remained under pressure in 2015
from a contracting domestic economy and rouble depreciation,
which affected import and transit transportation volumes and
consumer purchasing power.  The container throughput in the Far
East ports and rail container transportation in Russia declined
24% and 8% yoy in 2015, respectively.  This has negatively
affected FESCO's operational performance in all business
segments.

In 9M15, FESCO's port container volumes, intermodal
transportation volumes and rail container transportation volumes
fell 32%, 23% and 11%, respectively.  Fitch expects FESCO's 2015
revenue and EBITDA to drop by about 40% and 30% yoy,
respectively, driven by lower volumes and rates.  Fitch expects
2016 to be another challenging year for container transportation
as we forecast Russian GDP to decline further by 1.5% and the
rouble to remain weak.

FX Risks Still High

Despite the buyback of foreign-denominated debt in May 2015 and
conversion of certain port tariffs to US dollars from rouble at
end-2014, FESCO remains exposed to foreign currency fluctuations
as 84% of its total debt at end-3Q15 was denominated in foreign
currencies, mainly US dollars.  In contrast, about 60% of
revenues in 9M15 were US dollar-linked or US dollar-denominated.

Expected Negative FCF
Despite significant reduction in capex to a maintenance level of
about USD20m annually versus USD62m on average over 2012-2014 we
expect FESCO to generate negative FCF.  This is mainly due to
weaker cash generation from operations on the back of falling
volumes, continued pressure on rates and high interest/coupon
payments on debt. Fitch does not expect operating cash flows to
improve in 2016.

                          KEY ASSUMPTIONS

Fitch's key assumptions within its rating case for the issuer
include:

   -- Russian GDP decline of 3.7% in 2015 and 1.5% in 2016 and
      growth of 1.5% in 2017; Chinese GDP growth of 6%-6.9% over
      2015-2017
   -- Russian CPI of 6.8%-12.9% over 2015-2017
   -- No dividends payments
   -- Capex of about USD20m annually over 2015-2017
   -- USD/RUB exchange rate of 70-75 over 2015-2017

                        RATING SENSITIVITIES

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

   -- Uncured payment default on a bond, loan or other material
      financial obligation.

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

   -- Attaining a more sustainable liquidity profile.
   -- Improvement of the macro-economic environment and company's
      operational performance.

FULL LIST OF RATING ACTIONS

Far-Eastern Shipping Company Plc

   -- Long-term foreign currency IDR downgraded to 'C' from 'CC'
   -- Long-term local currency IDR downgraded to 'C' from 'CC'
   -- National Long-term rating downgraded to 'C(rus)' from
      'CC(rus)'
   -- Local currency senior unsecured rating affirmed at 'C' with
      a Recovery Rating of 'RR6'

Far East Capital Limited S.A. (Luxembourg)

   -- Foreign currency senior unsecured rating affirmed at
      'C'/RR6



=========
S P A I N
=========


LIBERBANK SA: Fitch Affirms BB/B Long-Term IDRs, Outlook Stable
---------------------------------------------------------------
Fitch Ratings has affirmed Liberbank, S.A.'s Long-term Issuer
Default Ratings at 'BB', its Short-term IDR at 'B' and Viability
Rating (VR) at 'bb'.  The Outlook on its Long-term IDR is Stable.

                        KEY RATING DRIVERS

IDRS, VR AND SENIOR DEBT

Liberbank's Long-term IDR is driven by the bank's standalone
creditworthiness, as captured by the VR.  The ratings reflect the
bank's sound regional franchise and comfortable funding and
liquidity profile for its current risk profile.  The ratings also
factor in the bank's exposure to a legacy portfolio of
problematic assets under an asset protection scheme (APS), which
undermines its asset quality and capital at risk, and its modest
core profitability.

Despite improvement in 2015, Liberbank's asset quality continues
to be heavily affected by a legacy real estate portfolio acquired
in 2010 that was not transferred to SAREB, Spain's bad bank.
This exposure has an APS from the banks' Deposit Guarantee Fund
that expires at end-2016.  The APS provided reserve coverage of
up to about a reasonable 53% as of end-2015.  The bank's non-
performing loans (NPL) ratio was a high 19.9% at end-2015 (25.4%
if foreclosed assets are included).  However, excluding the APS
the bank's NPL ratio would be significantly better at 10.6%
(11.4% including FAs) and in line with sector average, thanks to
a large stock of good quality residential mortgages from home
regions.  NPL coverage levels not related to the APS remained
stable at about 45%.  Combined with the large portion of
collateralised loans, this should provide some protection against
housing price shocks.

Liberbank's Fitch core capital (FCC) ratio remained broadly
stable in 2015 at an adequate 13.2%, while its fully-loaded CET1
ratio was 11.7%.  However, capital at risk from unreserved
problem assets remained very high and well above the sector
average at about 218% of FCC, although this would fall
dramatically to about 72% excluding the APS.  Fitch expects the
capital impact from risk weighting APS assets once the APS
expires will be manageable. Regular fair valuation assessments on
APS assets' collateral by a third party since their acquisition
also provides some comfort that coverage levels are adequate.

Liberbank's funding structure is well-balanced with customer
deposits being the main funding source and broadly funding the
bank's loan book.  The bank's liquidity position is comfortable
as debt maturities are manageable and well spread over time and
are well covered by an ample stock of unencumbered assets.

Banco CLM, a 75%-owned bank subsidiary of Liberbank, is the spun-
off banking business of the failed Caja de Ahorros de Castilla-La
Mancha and is fully consolidated into the group's accounts.
Banco CLM is highly-integrated into the group, strengthens the
bank's franchise in Castilla-La Mancha and provides geographical
diversification to the group.

Fitch assesses the VRs of Liberbank and Banco CLM on a
consolidated basis in view of the latter's relative size and role
within the group.  The common VR also reflects a high degree of
integration, including capital and liquidity fungibility between
the entities and the shared brand and jurisdiction.  In addition,
the group's management is centralized at Liberbank, underlining
Fitch's view that individual credit profiles cannot be
meaningfully disentangled.

              SUPPORT RATING AND SUPPORT RATING FLOOR

Liberbank's Support Rating (SR) of '5' and Support Rating Floor
(SRF) of 'No Floor' reflect Fitch's belief that senior creditors
of the bank can no longer rely on receiving full extraordinary
support from the sovereign in the event that the bank becomes
non-viable.

The downgrade of Banco CLM's SR to '5' from '3' reflects the
assignment of a common VR and the related shift from
institutional support to sovereign support as per Fitch's
criteria.  In view of Banco CLM's relatively large size in the
context of the overall group, Fitch believes that it would be
difficult for Liberbank to provide support to its subsidiary.

Fitch views the EU's Bank Recovery and Resolution Directive
(BRRD) and Single Resolution Mechanism (SRM) provide a framework
for resolving banks that is likely to require senior creditors
participating in losses, if necessary, instead of or ahead of a
bank receiving sovereign support.  BRRD has been effective in EU
member states since Jan. 1, 2015, including minimum loss
absorption requirements before resolution financing or
alternative financing (eg, government stabilisation funds) can be
used.  Full application of BRRD, including the bail-in tool, is
required from Jan. 1, 2016.  BRRD was transposed into Spanish
legislation on June 18, 2015.

                        RATING SENSITIVITIES

IDRS, VR AND SENIOR DEBT

Liberbank's VR is primarily sensitive to developments in asset
quality and capitalization.  In particular, Liberbank's asset
quality will be negatively affected by the expiration of the APS.
Hence, the ratings will be sensitive to the bank's ability to
effectively manage down the APS portfolio and the pace in doing
so.  Liberbank's VR could be upgraded if the bank is successful
in reducing materially the stock of problem loans (including APS
loans) together with strengthening banking earnings.  These
factors will ultimately support Liberbank's capital, either
through internal capital generation or reduced capital at risk
from unreserved problem assets.

Conversely, downwards rating pressure could come from the bank's
inability to manage down significantly the APS book, preventing
material asset quality improvements, and hence capital relief
from high unreserved problem assets.  Similarly, a deterioration
of the bank's funding and liquidity profile would put pressure on
the ratings.

Banco CLM's ratings are sensitive to a change in its integration
in the group, which Fitch does not currently expect.

SUPPORT RATING AND SUPPORT RATING FLOOR

An upgrade of the SR and upward revision of the SRF would be
contingent on a positive change in the sovereign's propensity to
support its banks.  While not impossible, this is highly
unlikely, in Fitch's view.

The rating actions are:

Liberbank:
  Long-term IDR: affirmed at 'BB'; Outlook Stable
  Short-term IDR: affirmed at 'B'
  VR: affirmed at 'bb'
  Support Rating: affirmed at '5'
  SRF: affirmed at 'No Floor'

Banco CLM:
  Long-term IDR: affirmed at 'BB'; Outlook Stable
  Short-term IDR: affirmed at 'B'
  VR: assigned at 'bb'
  Support Rating: downgraded to '5' from '3'
  SRF: assigned at 'No Floor'
  Senior unsecured debt: affirmed at 'BB'



=============
U K R A I N E
=============


DTEK ENERGY: Expects to Sign Debt Agreement Before Oct. 28
----------------------------------------------------------
Ukrainian News Agency reports that DTEK said in a statement it
expects to sign an agreement with its creditors on conditions of
long-term restructuring of eurobonds and bank debt before
Oct. 28.

On April 29, the company paid to eurobond holders in compliance
with the standstill -- 10% of the coupon on interest payments and
a fee worth 0.25% of the eurobond volume.

DTEK issued eurobonds for US$500 million in 2010 and for US$750
million in 2013, Ukrainian News recounts.

DTEK is the largest privately-owned vertically-integrated energy
company in Ukraine.

                             *   *   *

As reported by the Troubled Company Reporter-Europe on March 14,
2016, Fitch Ratings downgraded Ukraine-based DTEK Energy B.V.'s
Long-term Issuer Default Rating (IDR) to 'RD' (Restricted
Default) from 'C', as Fitch understands from management that the
company is in the payment default under several bank loans due to
uncured expiry of the grace period on some bank debt.



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


BHS GROUP: Directors May Face Disqualification Over Collapse
------------------------------------------------------------
Jane Bradley at The Scotsman reports that directors of collapsed
retail chain BHS could face being disqualified from acting as a
company director for up to 15 years -- and pay compensation to
creditors -- if they are found to have been guilty of misconduct,
according to letters published by the UK government.

Business secretary Sajid Javid has ordered an immediate inquiry
into the collapse of the retailer, rather than waiting the usual
three months for an administrator's report, The Scotsman relates.

The investigation is believed to be set to look at the conduct of
directors at the time of its insolvency, as well as individuals
who were previously directors, if it is thought their actions
could have caused detriment to the chain's creditors, The
Scotsman says.

Meanwhile, retail tycoon Sir Philip Green -- who sold the company
to Retail Acquisitions for GBP1 last year -- is said to have
agreed to appear before a committee of MPs to face questions
about the chain, The Scotsman relates.

Earlier last week, Iain Wright MP warned that the firm was
"crashed into a cliff" by its new owners, The Scotsman relays.

According to The Scotsman, Mr. Wright, chairman of the business
select committee, claimed that Sir Philip had "stripped" BHS of
cash and said he would query whether the Arcadia boss thought
that was "appropriate stewardship" of a company.

Mr. Javid on May 3 wrote to Sarah Albon, inspector general and
chief executive of the Insolvency Service, to ask her to begin
the investigation.

In her reply, published by the government, Ms. Albon pointed out
that if the Insolvency Service finds a director guilty of
misconduct, they could be "disqualified from acting as a director
for a period of between two and 15 years", The Scotsman
discloses.

As reported by the Troubled Company Reporter-Europe on April 26,
2016, Reuters related that BHS was placed into administration on
April 25.  Once a mainstay of the British high street, BHS has
been in decline for years, unable to keep up with demand for fast
fashion, online sales and improved customer services, Reuters
disclosed.  Saddled with over 1 billion pounds of debt, including
the pension deficit, BHS failed to raise the additional funds it
required, particularly from planned asset sales, to meet all its
contractual payments, prompting the administration process,
according to Reuters.

BHS Group is a department store chain.  The company employs
10,000 people and has 164 shops.


CORRAL PETROLEUM: Fitch Assigns Final B+ Issuer Default Rating
--------------------------------------------------------------
Fitch Ratings has assigned Corral Petroleum Holdings AB (CPH) a
final Long-term Issuer Default Rating (IDR) of 'B+' and its
payment-in-kind toggle notes (PIK) a final issue rating of 'B'
(RR5). The Outlook is Stable.

The rating actions follow the issuance of EUR570 million
11.750%/13.250% PIK notes and SEK500 million 12.250%/13.750% PIK
notes, both due 15 May 2021. The proceeds will be mainly used to
repay in full the $US613m (equivalent as of end-March 2016)
outstanding under CPH's existing 15% euro-denominated and dollar-
denominated senior notes due 31 December 2017.

CPH's ratings are supported by the high complexity of CPH's
refinery in Lysekil, increasing biodiesel sales, and strong
liquidity. The ratings are constrained by the inherent volatility
of the refining earnings, weaker business diversification than
peers, and high leverage.

CPH is a holding company, and owns Preem AB, a medium-sized,
Sweden-based refining company that operates two refineries (89%
of EBITDA) and a retail network (11% of EBITDA). CPH accounts for
80% and 29% of Swedish and Nordic refining capacity,
respectively. The marketing segment includes 341 Preem-branded
stations and 165 diesel truck stops. CPH's ultimate shareholder
is Mohammed Al-Amoudi, who acquired the company in 1994.

KEY RATING DRIVERS

Good-Quality Assets

Preem operates two refineries, the 220,000 barrel per day (bpd)
Preemraff Lysekil plant and the 125,000 bpd Premraff Gothenburg
site. Lysekil is a hydrocracking refinery with a Nelson
complexity index (NCI) of 10 using mainly sour crude (81% of
total feedstock). The Gothenburg refinery operates as a
hydroskimming plant with an NCI of 7.1, processing primarily
(91%) sweet crude. The average NCIs in Europe and North America
were 9 and 11.7, respectively, in 2014.

"We view the high complexity of the Lysekil refinery positively,
as it allows the company to benefit from higher yield of light
and middle distillates (diesel and gasoline account for 74% of
output) and the ability to process lower-quality crude blends
such as Urals."

Hydroskimming margins were on average $US5.1/bbl lower than
hydrocracking margins in 2011-2015 in northwest Europe, which
limits the profitability of the Gothenburg site. However, use of
renewable feedstock and large storage capacity, coupled with
coastal location and access to a variety of crude oil blends
allowed CPH to reach gross margins at Gothenburg that were
$US3.1/bbl higher in 2011-2015 than the average for hydroskimming
refineries in northwest Europe.

"We view Preem's overall asset quality as good. Its coastal
location allows it to use short-term possibilities for crude oil
supply and shipping products to external customers, but also
exposes Preem to significant global competition, where trade in
oil products is increasing."

Focus on Refining

CPH's retail network accounts for about 11% of EBITDA, which is
positive for the credit profile because of the greater stability
of marketing earnings than refining margins. However, the
concentration of earnings on supply and trading of refined
products means CPH's business diversification is weaker than for
peers such as Polski Koncern Naftowy ORLEN S.A. (BBB-/Stable) or
MOL Hungarian Oil and Gas Company Plc (BBB-/Stable), which also
own petrochemical and upstream assets and have strong retail
networks.

CPH's closest peer is Turkiye Petrol Rafinerileri A.S. (BBB-
/Stable), which is also predominantly focused on supply and
trading of oil products. Its ratings are supported by the growing
Turkish fuel market and lower leverage on a through-the-cycle
basis.

Biofuel Supports Results

CPH is the largest supplier of ultra-low-sulphur diesel fuel in
Sweden, with a sulphur content of less than 5 parts per million,
significantly below the Euro 4 requirement of 50 parts per
million. CPH's biofuel, which qualifies as Swedish Environmental
Class 1 diesel, attracts tax incentives from the Swedish Tax
Agency of about EUR0.60 per litre. CPH produces 160,000 cubic
metres of the biofuel, which translates into an annual tax
incentive of SEK900m.

"The current Swedish regulation will remain until 2018 and is
then likely to be replaced with a new permanent system. Although
there is a risk that tax incentives will be lower after 2018, we
assume the difference would not be material due to European
government's support for environmentally friendly policies. CPH
also plans to increase biofuel output, which may help offset
potential negative tax changes."

Volatile Cash Flows and Credit Metrics

Comparability of results between periods is hindered by inventory
effects. Fuel prices tend to lag behind oil prices. Therefore
when oil prices fall, as in 2014, fuel prices at the time of sale
reflect lower crude oil prices than the price at the time of
refining. This reduces gross profit. The impact on cash flow from
operations and free cash flow is typically offset by working
capital inflows.

"Nevertheless, the inherent volatility of refining margins
coupled with the inventory effect has resulted in significant
swings in CPH's historical leverage metrics. FFO net adjusted
leverage was 5.0x in 2015 and we expect the ratio to be 3.6x-4.6x
in 2016-2018. Our forecasts, prepared on a current cost of supply
basis assuming hydrocracking margins in northwest Europe of
around $US5/bbl and Fitch's oil price deck ($US35/bbl in 2016,
$US45/bbl in 2017 and $US55/bbl in 2018), show much more stable
cash flows. However, a period with low refining margins and more
volatile oil prices may result in high inventory effects and
working capital swings affecting CPH's credit metrics. The
volatility is largely offset by deleveraging plans and good
liquidity."

Manageable Capex Requirements

Annual capex requirements total around SEK1 billion. Spending in
2016 and 2017 will be higher, between SEK1.5 billion and SEK2.4
billion, mainly due to turnaround at the Gothenburg refinery and
investment in vacuum distillation equipment at Lysekil, planned
to be completed in 4Q18 (expected payback period of 3 years). CPH
also plans to further increase its retail network in the medium
term. The next turnaround at Lysekil will be in 2019.

Favourable Refining Environment

CPH's net refining margins in 2015 increased to $US6.62bbl
($US4.12/bbl in 2014), in line with the improved European
refining environment. Fitch expects refining margins to moderate
in 2016 from the highs of 2015, but they are unlikely to revisit
the lows of 2H13 and 1H14, due to depressed oil prices supporting
demand for fuel and lower cost of oil for refineries' own
consumption.

Oversupply in Europe to Return

"The longer-term outlook for Europe's refining sector is more
uncertain. Excess refining capacity, structural decline in fuel
consumption because of growing engine efficiency and
environmental policies, and stronger competition from new
refineries in the Middle East are likely to put pressure on the
European refining sector in the medium to long term. CPH supplies
fuel mainly to mature markets such as the UK, Sweden and the
Netherlands (35%, 16% and 14% of total supply and trading
revenue, respectively), where we expect demand to shrink due to
structural factors such as improved energy efficiency and greater
use of renewable energy."

     Competition in Crude to Benefit European Refiners

"The lifting of the US ban on oil exports in December 2015
resulted in the Brent-WTI differential collapsing, which improved
the competitiveness of European refining companies compared with
their US peers. We expect the Brent-WTI differential to remain
nil on average over the rating horizon, although with significant
volatility."

The discount of Urals crude oil to Brent widened in 4Q15 and
exceeded $US3.5/bbl in late October and November 2015, compared
with the average of $US1.3/bbl in 2012-2014. The widening gap
reflected higher availability of Russian crude in the Baltic Sea
region as production in Russia reached post-Soviet highs. Saudi
crude oil deliveries to PKN and Preem in early November might
have also contributed to the widening Urals discount. This is
positive for the refinery in Lysekil, which mainly uses Russian
crude oil.

Consolidated Rating Approach

Preem has a $US1.5 billion borrowing base and revolving credit
facility, which contains a cross-default provision. CPH's
subordinated PIK toggle notes contain a cross-payment default
provision. The senior lenders at Preem level will negotiate in
good faith before opting to accelerate, but once that happens all
the debt becomes due and payable. Fitch has therefore ascribed a
Long-term IDR to the restricted group comprising the issuer and
its subsidiaries, the most important of which is Preem. The
shareholder loans were excluded from the debt amount, as they are
structured to have equity-like characteristics.

High Recoveries

In an enforcement scenario, all or most of the exposure at Preem
level can be satisfied through collection of receivables and
marketing of crude and inventories. Although the banks are over-
collateralized and may enforce against the refinery and other
assets, if necessary, recovery analysis indicates that the
creditors at CPH level should be able to comfortably achieve RR5
recoveries, even in a distressed scenario.

The subordinated PIK toggle notes make up a much higher
proportion of permanent debt, effectively financing long-term
assets, than for leveraged finance transactions rated in the 'B'
category, where the second lien or mezzanine debt layer normally
only accounts for 15%-25% of long-term debt. These proportions
result in better recoveries for Corral, as a large part of the
proceeds from fixed assets should be available for distribution
among the subordinated PIK toggle noteholders.

KEY ASSUMPTIONS

Fitch's key assumptions within its rating case for the issuer
include:

-- Brent price of $US35/bbl in 2016, $US45/bbl in 2017,
    $US55/bbl in 2018 and $US65/bbl in 2019

-- North-west Europe hydrocracking margin of $US5.5/bbl in 2016,
    $US5/bbl in 2017-2019

-- US dollar/Swedish kroner exchange rate of 8.9 in 2016, 8.2 in
    2017, 7.5 thereafter

-- Capital expenditure of SEK1.5 billion in 2016, SEK2.4 billion
    in 2017 and SEK1.1 billion in 2018

RATING SENSITIVITIES

Positive: Developments that may, individually or collectively,
lead to positive rating action include:

-- Reduction in gross debt (revolving credit facility and PIK
    toggle notes)

-- Higher business diversification leading to less volatile cash
    flows

-- FFO-adjusted net leverage sustained below 3.5x

-- Quicker-than-expected refining capacity reduction in Europe
    leading to improved outlook for margins

Negative: Developments that may lead to negative rating action
include:

-- Failure to maintain refining margins at the Gothenburg
    refinery above benchmark

-- Unfavorable changes in regulation for biofuels

-- FFO-adjusted net leverage sustained above 5.5x

LIQUIDITY

CPH plans to reduce its gross leverage. In 2016 the company
expects to make a final payment under the $US650 million term
loan entered into in 2011 (outstanding balance at end-September
2015 of $US133 million). CPH can amortize 10% of the PIK notes
annually from 2017. At end-2015 utilization under the credit
facility at Preem was around $US0.8 billion. The borrowing base
of the loan corresponds to the balance of receivables and
inventory and the limit can be increased to $US1.65 billion and
then further to $US1.8 billion if the oil price rises above
$US100/bbl.


HARKAND: Eidesvik Loses Contract Following Administration
---------------------------------------------------------
Offshore Energy Today reports that Norwegian offshore shipping
company Eidesvik Offshore has lost its contract for the Viking
Poseidon vessel it had with Harkand, which recently entered into
administration following losses as a result of a prolonged low
oil price environment.

Eidesvik on May 6 said it had received a notice from the
administrators that they would terminate the charter party for
the Offshore Construction Vessel Viking Poseidon "immediately",
Offshore Energy Today relates.

Deloitte was appointed on May 4 as joint administrators of
Harkand Group Holdings Ltd. and a number of its subsidiaries,
Offshore Energy Today discloses.

Harkand -- http://www.harkand.com-- provides subsea capabilities
and services to the energy industry including multi-purpose and
dive support vessels, ROVs, inspection, diving, survey, project
management and engineering.  Headquartered in London with
operations bases in Aberdeen, Houston, Mexico and Ghana, Harkand
aims to be a leading subsea IRM and light construction contractor
globally.


LLOYD'S BANKING: Fitch Affirms BB+ Rating on Tier 1 Instruments
---------------------------------------------------------------
Fitch Ratings has affirmed the Long- and Short-Term Issuer
Default Ratings (IDRs) of Lloyds Banking Group plc (LBG), Lloyds
Bank plc (LB), HBOS and Bank of Scotland (BoS) at 'A+' and their
Viability Ratings (VR) at 'a'. The Outlooks on the IDRs are
Stable.

KEY RATING DRIVERS

IDRs AND SENIOR DEBT

"The Long-Term IDRs and senior debt of LBG, LB, BOS and HBOS are
notched up once from their VRs because we believe that the risk
of default on senior obligations, as measured by the Long-term
IDRs, is lower than the risk of the banks failing, as measured by
their VRs."

This is because of the large buffer of 'qualifying junior debt'
within the group that could be made available to protect senior
obligations from default in case of failure, either under a
resolution process or as part of a private sector solution, for
instance in the form of a distressed debt exchange, to avoid a
resolution action.

"Without such a private sector solution, we would expect a
resolution action being taken on LBG when it is likely to breach
its pillar 1 and pillar 2A CET1 capital requirements. On a risk-
weighted basis, these are currently around 6.6% of risk-weighted
assets (RWA). Fitch believes that the group would need to meet
its pillar 1 and pillar 2A total capital requirements immediately
after a resolution action. On a risk-weighted basis, these are
currently around 11.8% of RWA."

Given its systemic importance, in Fitch's opinion, LBG would
likely also need to maintain most, if not all, of its combined
buffer requirement. This means a post resolution action CET1
requirement of around or above 16% of (post recapitalization) RWA
is plausible under a bail-in scenario, dependent on final
combined buffer requirements. This figure could be lower under a
private sector (ie distressed debt exchange) scenario as part of
a broader rehabilitation plan that averts a resolution action.
Fitch's view of the regulatory intervention point and post-
resolution capital needs taken together suggest a junior debt
buffer of 9%-10% of RWA could be required to restore viability
without hitting senior creditors.

"LBG's qualifying junior debt was above 12% of RWA at end-2015
although the overall debt buffer reduced slightly at end-Q116 due
to the redemption of the group's outstanding enhanced capital
notes and issuing Tier 2 debt out of LBG. While we expect a
moderate reduction in this ratio over time, we expect the buffer
to remain substantial and our ratings assume it will not fall
much below 10% of RWA."

The 'F1' Short-term IDRs of LBG, LB, BOS and HBOS are at the
lower of the two possible Short-term ratings mapped to a Long-
term IDR of 'A+'. This reflects Fitch's view that the group's
liquidity is sound but not exceptionally strong to warrant an
'F1+' rating.

VR

Fitch assigns common VRs to LB and BOS. Fitch assesses the group
on a consolidated basis as it is managed as a group and is highly
integrated. Capital and liquidity remain fungible within the
group, subject to legal entities meeting regulatory requirements.
LBG acts as the holding company for the group, and its VR is
equalized with that of the operating subsidiaries. LBG's VR
reflects its role in the group and the modest holding company
double leverage of 110% at end-2015. As a result, Fitch believes
that LBG's failure risk is broadly in line with that of the
banking operations in its main operating subsidiaries.

The VRs primarily reflect the group's strong UK franchise,
diversified business mix, solid capitalization and funding, and
the significant progress in de-risking its balance sheet to match
its low risk appetite. It also considers the impact that legacy
and one-off issues continue to have on the group's profitability.

"Fitch considers LBG's franchise and business model to be key
rating strengths for the group. Our assessment of its franchise
is underpinned by the group's strong market position across
several businesses, which provides it with considerable deposit
and loan pricing-power. As a universal retail bank, LBG's
business model is well diversified, offering a full range of
retail, corporate and SME products across its multi-brand and
multi-channel strategy. This allows it to address a wide range of
customers with different pricing and product ranges.
Geographically, the group concentrates on the UK, which limits
its ability to diversify."

"LBG's Fitch Core Capital (FCC) to RWA ratio fell slightly to
12.1% at end-2015 but has been on a sustained upward trend in
recent years. Capitalization has been supported by material
balance sheet deleveraging and improving profitability. We do not
anticipate any significant improvement in core capitalization
from current levels with LBG targeting a fully-loaded CET 1 ratio
of around 12% plus one years' ordinary dividend (around 1%).
Management has stated that the board will give consideration to
the distribution of surplus capital above this level, in the form
of special dividends or share buybacks. We believe that the
group's target capital ratios are commensurate with its VR."

The group's underlying profitability has improved materially in
recent years, supported by low loan impairment charges,
decreasing funding costs and strong growth in higher yielding
assets including consumer finance and asset finance. However, net
income continues to be negatively affected by large costs,
principally legacy conduct charges. In 2015, LBG provided an
additional GBP4 billion for payment protection insurance (PPI),
of which GBP2.1 billion was booked in 4Q15, largely in response
to the consultation relating to the FCA's proposal for a time
bar. Although conduct costs are difficult to predict, Fitch
believes that these charges should become less material in the
future, which should enable net income to move more in line with
underlying profit.

"We expect profitability to be adequate, but low interest rates
are putting pressure on earnings. To date, LBG has benefited from
lower funding costs, which have mitigated ongoing pressure on
asset spreads. We believe that there is still some scope for
funding costs to decline, but low interest rates will put revenue
under pressure. However, further scope to reduce operating
expenses should mitigate the effect on profitability."

"LBG's asset quality is strong with low levels of impaired loans.
The progress in reducing the group's exposure to legacy assets
and the good quality of new loans in a good operating environment
are key factors behind the improved asset performance in recent
years. Impaired loans as a proportion of gross loans fell to a
low 2.1% at end-2015 and are well covered by provisions with
unreserved impaired loans accounting for a modest 19.1% of FCC.
We expect asset quality to remain stable due to sound
underwriting practices and a stable outlook for the UK operating
environment."

Funding is sound, with the group's subsidiary retail banks
providing a stable and ample source of stable and cheap deposit
funding, supplemented by well-diversified wholesale funding. On-
balance sheet liquidity in the form of cash and cash equivalents,
and high quality liquid assets is sound and supported by access
to contingent liquidity sources through various central bank
facilities.

Fitch has withdrawn HBOS's VR as it is no longer considered
relevant to the agency's coverage. HBOS's IDRs are driven by
institutional support.

SUPPORT RATING (SR) and SUPPORT RATING FLOOR (SRF)

"LBG's, LB's, and BOS's SRs and SRFs reflect Fitch's view that
senior creditors cannot rely on extraordinary support from the UK
authorities in the event they become non-viable. In our opinion,
the UK has implemented legislation and regulations that are
sufficiently progressed to provide a framework that is likely to
require senior creditors participating in losses for resolving
even large banking groups."

Any upgrade to the SR and upward revision to the SRF would be
contingent on a positive change in the sovereign's propensity to
support its banks. While not impossible, in Fitch's opinion this
is highly unlikely.

"HBOS is an intermediate holding company and its SR is based on
our view that institutional support from LBG is highly likely."

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

The ratings of all banks' subordinated debt and hybrid securities
are notched down from their VRs, reflecting a combination of
Fitch's assessment of their incremental non-performance risk
relative to their VRs (up to three notches) and assumptions
around loss severity (one or two notches).

These features vary considerably by instrument. Subordinated debt
is notched down once for loss severity. Upper Tier two debt is
notched down three times (once for loss severity and twice for
incremental non-performance risk). Discretionary Tier 1
instruments, including AT1s, are notched down five times (twice
for loss severity and three times for incremental non-performance
risk). Other legacy Tier 1 instruments are notched down four
times (twice for loss severity and twice for incremental non-
performance risk).

LB'S GOVERNMENT-GUARANTEED SENIOR DEBT

The ratings of LB's UK government-guaranteed senior debt is rated
in line with the UK's sovereign rating (AA+/Stable) and reflects
Fitch's expectation that the government would honor its
guarantee, if needed.

RATING SENSITIVITIES

IDRS AND SENIOR DEBT

"As the Long-Term IDR and senior debt ratings are notched up from
the group's VR, they are sensitive to a change in the VR. As we
believe that the VRs and Long-term IDRs of banks concentrated on
the UK are effectively capped in the 'a'/'A' range, an upgrade of
the Long-Term IDRs and senior debt ratings, while not impossible,
is unlikely and would require exceptionally strong financial
metrics."

"LBG and its subsidiaries' Long-Term IDRs and Long-Term senior
debt ratings are sensitive to a material reduction in the size of
the qualifying junior debt buffer. The notching is sensitive to
changes in assumptions on the UK authorities' resolution
intervention point, post-resolution capital needs for large
banking groups such as LBG, and the development of resolution
planning more generally. We expect senior debt to be issued by
LBG in order to adhere to new regulations, namely minimum
requirement for eligible liabilities (MREL). If this debt is
downstreamed to the operating subsidiaries in a manner that
effectively protects operating company senior debt holders, this
form of debt would be included in the operating companies' junior
debt buffer. A reduction in the group's overall junior debt
buffer but a sufficient buffer for operating companies in the
form of downstreamed senior holdco debt could result in the Long-
Term IDRs of the operating companies remaining one notch above
their VRs even if LBG's Long-Term IDR no longer benefits from the
junior debt buffer, which has to be in the form of subordinated
debt to protect holding company senior creditors."

VR

"LBG's VR reflects its strong UK franchise, which Fitch considers
a ratings strength. However, because of the high indebtedness of
the UK private sector, Fitch currently effectively caps the VRs
of domestic retail banks in the UK in the 'a' category. LBG has
demonstrated that it has successfully executed its de-risking
strategy. We believe that the group's profitability can improve
if operating expenses are managed carefully to offset revenue
pressure. Evidence that the group can generate strong net profit
from recurring earnings without increasing its risk appetite and
maintaining capital ratios in line with current targets could
result in upward momentum for the group's VR in the medium term
once conduct charges no longer affect its earnings."

"LBG's VR is also sensitive to an increase in risk appetite,
which we do not expect in the medium term. A weaker funding
profile, for example a material increase in the group's reliance
on wholesale funding along with reduced liquidity buffers would
put pressure on the VR."

The group's VRs and IDRs (and those of its subsidiaries) could be
affected by a material change in its operating environment, for
example were there to be material economic and financial market
fallout from any decision by the UK to leave the EU.

LBG's VR could be downgraded if holding company double leverage
increases above 120%.

SR and SRF

Any upgrade of the SRs and upward revision of the SRFs of LBG, LB
and BOS would be contingent on a positive change in the
sovereign's propensity to support domestic banks. While not
impossible, in Fitch's opinion this is highly unlikely. HBOS's SR
is primarily sensitive to a change in the ability or propensity
of LBG to provide support to the intermediate holding company.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

The ratings are primarily sensitive to changes in the VRs from
which they are notched. AT1 and other discretionary Tier 1
instruments are also sensitive to Fitch changing its assessment
of the probability of their non-performance relative to the risk
captured in LBG's VR. This could occur if there is a change in
capital management or flexibility, or an unexpected shift in
regulatory buffers. The ratings are also sensitive to a change in
Fitch's assessment of each instrument's loss severity, which
could reflect a change in the expected treatment of liability
classes during a resolution.

LB'S GOVERNMENT-GUARANTEED SENIOR DEBT

The ratings of LB's UK government-guaranteed senior debt are
primarily sensitive to changes in the UK's sovereign rating.

The rating actions are as follows:

LBG

Long-term IDR: affirmed at 'A+'; Stable Outlook
Short-term IDR: affirmed at 'F1'
Viability Rating: affirmed at 'a'
Support Rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'
Senior unsecured EMTN Long-term: affirmed at 'A+'
Senior unsecured EMTN Short-term: affirmed at 'F1'
Subordinated debt affirmed at 'A-'
All other Upper Tier 2 subordinated bonds: affirmed at 'BBB'
Subordinated non-innovative Tier 1 discretionary debt: affirmed
  at 'BB+'
Subordinated alternative Tier 1 instruments: affirmed at 'BB+'

LB

Long-term IDR: affirmed at 'A+'; Stable Outlook
Short-term IDR: affirmed at 'F1'
Viability Rating: affirmed at 'a'
Support Rating: : affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'
Senior unsecured Long-term debt: affirmed at 'A+'
Commercial paper and senior unsecured Short-term debt: affirmed
  at 'F1'
Market linked securities: affirmed at to 'A+emr'
Lower Tier 2: affirmed at 'A-'
Upper Tier 2 subordinated debt: affirmed at 'BBB'
Innovative Tier 1 subordinated non-discretionary debt
  (US539473AE82, XS0474660676): affirmed at 'BBB-'
Other Innovative Tier 1 subordinated discretionary debt:
  affirmed at 'BB+'
Guaranteed senior debt affirmed at 'AA+'

HBOS

Long-term IDR: affirmed at 'A+'; Stable Outlook
Short-term IDR: affirmed at 'F1'
Viability Rating: affirmed and withdrawn at 'a'
Support Rating: affirmed at '1'
Senior unsecured debt: affirmed at 'A+'
Innovative Tier 1 subordinated discretionary debt: affirmed at
  'BB+'
Innovative Tier 1 subordinated non-discretionary debt: affirmed
  at 'BBB-'
Upper Tier 2 subordinated debt: affirmed at 'BBB'
Lower Tier 2 debt: affirmed at 'A-'

BOS

Long-term IDR: affirmed at 'A+'; Stable Outlook
Short-term IDR: affirmed at 'F1'
Viability Rating: affirmed at 'a'
Support Rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'
Senior unsecured debt: affirmed at 'A+'
Commercial paper and senior unsecured Short-term debt: affirmed
  at 'F1'
Lower Tier 2: affirmed at 'A-'
Upper Tier 2: affirmed at 'BBB'
Preference Stock: affirmed at 'BBB-'


ROYAL BANK: Fitch Affirms BB+ Rating on Sub. Upper Tier 2 Debt
--------------------------------------------------------------
Fitch Ratings has affirmed the Long- and Short-Term Issuer
Default Ratings (IDRs) of The Royal Bank of Scotland Group plc
(RBSG), The Royal Bank of Scotland Plc (RBS), National
Westminster Bank plc (NatWest), Royal Bank of Scotland
International Limited (RBSIL), Royal Bank of Scotland NV and RBS
Securities Inc. (RBSSI) at 'BBB+'/'F2'. The Outlooks on all Long-
Term IDRs are Stable.

KEY RATING DRIVERS

IDRs, VRs AND SENIOR DEBT - RBSG, RBS AND NATWEST

RBSG's, RBS's and NatWest's IDRs are driven by their standalone
creditworthiness and are hence equalized with their Viability
Ratings (VRs). Fitch assigns common VRs to the group and to the
operating banks as they are managed as a group and they are
highly integrated.

RBSG's VR and IDRs are equalized with the ratings of its
operating banks and are primarily based on its role as a holding
company, but also take into account the absence of holding
company double leverage.

The VRs primarily reflect the significant progress made in
improving the group's overall risk profile and its
capitalization, but also the remaining challenges, which include
weak profitability, uncertainty over the potential fine for
legacy US RMBS activities, the ongoing restructuring of the group
and the need to divest a number of branches grouped under
Williams & Glyn (W&G). The group's organizational structure is
becoming simpler, with a significantly moderated geographic
footprint, reducing duplications, and improving IT systems,
processes and controls.

Capitalization has a high influence on the VRs. The group
generated 430bp of capital during 2015, largely through the
accelerated deleveraging of its Capital Resolution division and
the sale of Citizens Financial Group, the latter completed a year
ahead of schedule in October 2015. However, a dividend payment to
the government and the accelerated payment to its pension fund
reduced the end-1Q16 CET1 ratio to 14.6%, still above its medium-
term target of 13%, providing cushion for the expected conduct
and litigations charges, notably US RMBS-related fines.

"Profitability is the group's main weakness and remains under
significant pressure from high restructuring costs. These are
mainly related to the restructuring of the corporate and
investment banking business, costs related to the separation of
W&G branches and expenses incurred preparing for the
establishment of a UK ring-fenced bank, and implementing its
transformation and simplification program. Results are likely to
be affected by further large conduct and litigation costs.
Overall, we expect the bank to continue to report statutory
losses in 2016 and possibly into 2017, depending on when the
conduct costs will be booked. In 1Q16 the group reported a
statutory net loss of GBP968m, primarily caused by a GBP1.2
billion dividend payment to the government to simplify its
capital structure."

"In the longer term, we expect RBSG to generate less volatile and
stronger profits. The group is set to benefit from a strong UK
franchise where it has leading market shares within the SME,
retail and medium-sized corporate segments. For now, the
continuing restructuring of the group weighs on our overall
assessment of the group's company profile, management and
strategy relative to UK peers, which constrains the group's
ratings."

While the proportion of impaired loans on its balance sheet is
still higher than its UK peers, it has been reducing. At end-
1Q16, the group reported a 3.6% gross impaired loan ratio, on a
statutory basis down from 6.8% at end-2014. Impaired loans are
also well covered by impairment allowances, reducing the
proportion of the bank's capital, which is still at risk as the
net impaired loans/Fitch Core Capital ratio was around 13.4% at
end-2015. A large portion of its problem assets are in the
Republic of Ireland extended through its subsidiary, Ulster Bank
Ireland Limited, where residential mortgage loans remain part of
its core activities but are significantly underperforming both in
terms of delinquencies and profitability.

The group's funding profile is now much more balanced than in the
past, with an improved balance between the maturities of its
assets and liabilities, a much reduced reliance on wholesale
funds, and a large, high-quality liquidity buffer.

SUPPORT RATING (SR) AND SUPPORT RATING FLOOR (SRF) - RBSG, RBS
AND NATWEST

RBSG's, RBS's and NatWest's SRs and SRFs reflect Fitch's view
that senior creditors cannot rely on extraordinary support from
the UK authorities in the event they become non-viable. In our
opinion, the UK has implemented legislation and regulations that
are sufficiently progressed to provide a framework that is likely
to require senior creditors participating in losses for resolving
even large banking groups.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

The ratings of all subordinated debt and hybrid securities issued
by RBSG group companies are notched down from the common VR
assigned to individual group companies, reflecting Fitch's
assessment of their incremental non-performance risk relative to
their VRs (up to three notches) and assumptions around loss
severity (one or two notches).

These features vary considerably by instrument. Subordinated debt
with no coupon flexibility is notched down once from the VR for
incremental loss severity. Upper Tier 2 subordinated debt is
notched down three times (once for loss severity and twice for
incremental non-performance risk). Innovative and non-innovative
legacy Tier 1 and preferred stock is notched down either four or
five times, dependent on incremental non-performance risk (twice
for loss severity and either two or three times for incremental
non-performance risk). Contingent convertible capital notes are
notched five times (twice for loss severity and three times for
incremental non-performance risk) given their fully discretionary
coupon payment.

SUBSIDIARIES - RBS NV, RBSIL AND RBSSI

The IDRs of RBSSI, the group's US broker-dealer, are equalized
with RBSG's IDRs, reflecting Fitch's view that the refocused
activities of RBSSI are core to the group's strategy, and that
the ability to support RBSSI, relative to RBSG's financial
resources, is easily manageable. Although no explicit guarantees
or cross default provisions are present, a default of RBSSI would
be viewed as damaging to RBSG's global franchise and operations.
The SR of '2' assigned to RBSSI reflects Fitch's view that there
is a high propensity of support being extended to RBSSI from
RBSG.

RBSIL's IDRs are equalized with RBSG, reflecting a high
probability that RBSG would support it, if needed. It is a fairly
small, but wholly owned and integrated deposit-gathering
subsidiary of the group, whose default would have serious
implications for the wider group.

RBS NV's IDRs are equalized with RBSG's, reflecting a high
probability that RBSG would support it, if needed. It is a fairly
small, but wholly owned, integrated subsidiary of the group, akin
to a division, whose default would have serious implications for
the wider group.

RATING SENSITIVITIES

IDRs, VRs AND SENIOR DEBT - RBSG, RBS AND NATWEST

RBSG's ratings are currently constrained by uncertainty over the
size and timing of the expected fines it faces, and by still
material execution risk from restructuring the group. In Fitch's
opinion, the group's IDRs and VRs could be upgraded once these
uncertainties are removed, if the group maintains good
capitalization and reaches a sound profitability. However, if the
fines imposed on the bank are particularly high or if litigation
or reputation risk proves particularly disruptive, RBSG's ratings
could be downgraded.

An upgrade of RBSG's VRs and IDRs would also require stronger
revenue generation and achievement of the bank's aim to reduce
operating expenses. Fitch believes that the bank's strong core
franchise across many segments should help the bank to achieve
these goals over the medium term.

"Fitch equalizes the Long-term IDRs of RBSG's large domestic
operating subsidiaries with their VRs despite significant layers
of subordinated debt and hybrid capital that we expect will
protect the operating companies' senior creditors. We have not
given any uplift to the operating companies' Long-term IDRs
relative to their VRs because we expect maturing junior debt to
be gradually replaced with senior debt by the holding company.
This debt should also protect operating company senior creditors
once it has been downstreamed in a manner that is junior to
senior creditors of these companies. The Long-Term IDRs could be
notched up once from their VRs once the group nears the
completion of its restructuring. RBSG's ratings would be
downgraded if there was a material increase in double leverage at
the holding company, which we do not expect."

"The group currently expects that a large majority of its
operations will be undertaken within its ring-fenced bank. The
VRs of the various group entities could diverge if the
establishment of the ring-fenced bank results in weaker
businesses being moved to the non-ring-fenced entities, but we
expect that any rating differentiation would be limited given the
group's ability to support its main subsidiaries."

The group's VRs and IDRs (and those of its subsidiaries) could be
affected by a material change in its operating environment, for
example were there to be material economic and financial market
fallout from any decision by the UK to leave the EU.

SUPPORT RATING AND SUPPORT RATING FLOOR - RBSG, RBS AND NATWEST

Any upgrade of the SR and upward revision of the SRF would be
contingent on a positive change in the sovereign's propensity to
support its banks. While not impossible, in Fitch's opinion this
is highly unlikely.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

Subordinated debt and other hybrid capital ratings are primarily
sensitive to changes in the VRs of the issuers or their parents.
The securities' ratings are also sensitive to a change in their
notching, which could arise if Fitch changes its assessment of
the probability of their non-performance relative to the risk
captured in the issuers' VRs. This may reflect a change in
capital management in the group or an unexpected shift in
regulatory buffer requirements, for example. The ratings are also
sensitive to a change in Fitch's assessment of each instrument's
loss severity, which could reflect a change in the expected
treatment of liability classes during a resolution.

SUBSIDIARIES - RBS NV, RBSIL AND RBSSI

"RBS NV and RBSIL's ratings are sensitive to a change in Fitch's
assessment of RBSG's propensity to support them (which we
consider unlikely) or to a change in RBSG's IDRs."

RBSSI's ratings are primarily sensitive to changes in RBSG's
ratings. In addition, RBSSI's ratings could be negatively
affected by a change in Fitch's perception of the likelihood of
support being extended to RBSSI from RBS Group. This could result
in notching between the ratings if Fitch views the propensity to
support as being materially diminished.

The rating actions are as follows:

The Royal Bank of Scotland Group plc

Long-term IDR affirmed at 'BBB+'; Stable Outlook
Short-term IDR affirmed at 'F2'
Viability Rating affirmed at 'bbb+'
Support Rating affirmed at '5'
Support Rating Floor affirmed at 'No Floor'
Senior unsecured debt affirmed at 'BBB+'/'F2'
Commercial paper affirmed at 'F2'
Subordinated debt affirmed at 'BBB'
Subordinated debt (US780097AM39) affirmed at 'BBB-'
Innovative, Non-innovative Tier 1 and Preferred stock
  (US780097AH44; XS0121856859; US780097AE13; US7800978790)
   affirmed at 'BB'
Innovative, Non-innovative Tier 1 and Preferred stock affirmed
   at 'BB-'
Contingent Convertible Capital Notes affirmed at 'BB-'

The Royal Bank of Scotland plc

Long-term IDR affirmed at 'BBB+'; Stable Outlook
Short-term IDR affirmed at 'F2'
Viability Rating affirmed at 'bbb+'
Support Rating affirmed at '5'
Support Rating Floor affirmed at 'No Floor'
Senior unsecured debt affirmed at 'BBB+'/'F2'
Senior unsecured market linked securities affirmed at 'BBB+emr'
Commercial paper affirmed at 'F2'
Short-term debt affirmed at 'F2'
Subordinated Lower Tier 2 debt affirmed at 'BBB'
Dated subordinated debt (XS0201065496) affirmed at 'BBB-'
Subordinated Upper Tier 2 debt affirmed at 'BB+'

National Westminster Bank plc

Long-term IDR affirmed at 'BBB+'; Stable Outlook
Short-term IDR affirmed at 'F2'
Viability Rating affirmed at 'bbb+'
Support Rating affirmed at '5'
Support Rating Floor affirmed at 'No Floor'
Long-term and Short-term senior unsecured debt affirmed at
  'BBB+'/'F2'
Subordinated Lower Tier 2 debt affirmed at 'BBB'
Subordinated Upper Tier 2 debt affirmed at 'BB+'

Royal Bank of Scotland NV

Long-term IDR affirmed at 'BBB+'; Stable Outlook
Short-term IDR affirmed at 'F2'
Support Rating affirmed at '2'
Senior unsecured debt affirmed at 'BBB+'/'F2'
Senior unsecured market linked securities affirmed at 'BBB+emr'
Subordinated debt affirmed at 'BBB'

Royal Bank of Scotland International Ltd

Long-term IDR affirmed at 'BBB+'; Stable Outlook
Short-term IDR affirmed at 'F2'
Support Rating affirmed at '2'

RBS Securities Inc. (rated under Fitch's Global Non-Bank
Financial Institutions Rating Criteria)

Long-term IDR affirmed at 'BBB+'; Stable Outlook
Short-term IDR affirmed at 'F2'
Support Rating affirmed at '2'


* UK: Meeting Set as Care-Home Providers Face Closure Threat
------------------------------------------------------------
Gill Plimmer at The Financial Times reports that Britain's
biggest care-home operators, including Bupa, and Four Seasons,
were set to meet Department of Health officials on May 9 amid
concerns that an increase in council tax to pay for elderly care
may not be passed on in time to avert closures.

After George Osborne, the chancellor, announced in the Autumn
Statement last year that local authorities could increase council
tax by an extra 2% to pay for adult social care, care-home
companies have been anticipating a rise in the fees they receive
per resident, the FT relates.

More than 90% of local authorities chose to enforce the tax
increase, which could raise GBP382 million for social care this
year, the FT discloses.  But although the change came into effect
in April, care-home operators are concerned that the increase in
funding has not yet been passed on and that their letters to
local authorities have gone unanswered, the FT notes.

According to the FT, the crisis meeting on May 9 was expected to
be attended by the chief executives of the biggest care-home
chains, including Bupa, Care UK and Four Seasons, as well as some
of the larger lobbying groups such as Care England, which
represents care-home owners.

The pleas come in the wake of further warnings that care homes
are struggling under the weight of hefty debts, which combined
with the cuts in local authority fees, is encouraging them to
reduce beds or shift to the more lucrative self-paying market,
the FT relays.

Research by the insolvency agency Opus for BBC Radio 4's You and
Yours said that more than a quarter of care homes were in danger
of going bust in the next three years, the FT relates.  It said
that about 13% of operators were "zombie operators" that pay more
in interest and servicing debt than they earn in profits, the FT
notes.

Care-home owners that cater for state-funded residents were
already under pressure from a 5% cut in real terms fees from
local authorities since 2010, the FT says.  But the rise in the
minimum wage to GBP7.10 for over-25s since April has piled on the
pressure and added to warnings that the pace of home closures
will accelerate, according to the FT.


                            *********

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

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

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


                            *********


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

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

Copyright 2016.  All rights reserved.  ISSN 1529-2754.

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

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

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


                 * * * End of Transmission * * *