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

                           E U R O P E

           Wednesday, July 27, 2016, Vol. 17, No. 147


                            Headlines


A R M E N I A

ARMENIA: Fitch Affirms LT FC, LC Issuer Default Ratings at 'B+'


C R O A T I A

ZAGREB: S&P Affirms 'BB' LT Issuer Credit Rating; Outlook Neg.
ZAGREBACKI HOLDING: S&P Raises CCR to 'BB-'; Outlook Negative


C Y P R U S

IG SEISMIC: S&P Lowers Long-Term Corporate Credit Rating to 'B-'


G R E E C E

GREECE: Central Bank Loosens Capital Controls to Attract Deposits
GREECE: Fitch Affirms 'CCC' Local Currency Issuer Default Rating
GREECE: S&P Affirms 'B-/B' Sovereign Credit Ratings


I R E L A N D

ADAGIO V CLO: Moody's Assigns (P)B2 Rating to Class F Notes
ADAGIO V CLO: S&P Assigns Prelim. B- Rating to Class F Notes
EUROSURGICAL: May Face Substantial Tax Liability
GRIFFITH PARK: Moody's Assigns (P)B2 Rating to Class E Notes
GRIFFITH PARK: S&P Assigns Prelim. B- Rating to Class E Notes


I T A L Y

BANCA POPOLARE DI MILANO: Egan-Jones Cuts Unsec. Rating to BB


L U X E M B O U R G

PATAGONIA FINANCE: Moody's Cuts Rating on EUR453.2MM Notes to Ca


N E T H E R L A N D S

AVAST HOLDING: Moody's Affirms Ba3 CFR; Outlook Remains Stable


P O L A N D

TVN SA: Moody's Withdraws Ba2 Corporate Family Rating


R U S S I A

KIROV REGION: Fitch Affirms 'BB-' LC Issuer Default Ratings
KOSTROMA REGION: Fitch Affirms 'B+' LC Issuer Default Ratings
MOSCOW UNITED: S&P Affirms 'BB-' CCR; Outlook Stable
NIZHNIY NOVGOROD: Fitch Affirms 'BB-' LC Issuer Default Ratings
RYAZAN REGION: Fitch Affirms 'B+' LT Issuer Default Ratings
VOLGOGRAD REGION: Fitch Affirms 'B+' LT Issuer Default Ratings


S L O V E N I A

KD GROUP: Fitch Affirms 'BB' Issuer Default Ratings


S P A I N

AUTO ABS 2012-3: DBRS Hikes Class B Debt Rating to B(sf)


T U R K E Y

EXPORT CREDIT: S&P Cuts Ratings to 'BB/B'; Outlook Negative
OYAK: S&P Lowers LT, ST Corp. Credit Ratings to 'BB+/B'
TURKIYE IS BANKASI: S&P Cuts Counterparty Credit Rating to 'BB'


U K R A I N E

UKRAINE: Fitch Affirms 'CCC' LC Issuer Default Ratings


U N I T E D   K I N G D O M

BHS GROUP: Sir Philip Says MPs Report "Biased and Unfair"
EMERALD 2 LIMITED: Moody's Affirms B2 CFR; Outlook Negative
HBOS PLC: MPs Calls for FCA Break-Up After Probe Failures
TAURUS CMBS 2014-1: DBRS Confirms BB(sf) Rating on Class C Debt
TURNSTONE BIDCO: S&P Assigns 'B' Rating to GBP425MM Sr. Notes

* DBRS Confirms Ratings of Four U.K. CMBS Transactions


X X X X X X X X

* EU Banks Brace for Stress Tests, Investors Express Fear


                            *********


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A R M E N I A
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ARMENIA: Fitch Affirms LT FC, LC Issuer Default Ratings at 'B+'
---------------------------------------------------------------
Fitch Ratings has affirmed Armenia's Long-Term Foreign and Local
Currency IDRs at 'B+' with Stable Outlooks. The issue ratings on
Armenia's senior unsecured Foreign-Currency bonds have also been
affirmed at 'B+'. The Country Ceiling has been affirmed at 'BB-'
and the Short-Term Foreign Currency IDR at 'B'. Fitch has
assigned a new Short-Term Local Currency (STLC) IDR rating of
'B'.

Assignment of STLC IDR
In line with the updated guidance contained in Fitch's revised
Sovereign Rating Criteria dated 18 July 2016, and as part of a
broader portfolio review, the assignment of a STLC IDR of 'B' to
Armenia is consistent with Fitch's approach to assigning ST
ratings by using its Long-Term/Short-Term Rating Correspondence
table to map the STLC IDR from the LTLC rating scale. According
to Fitch's Rating Definitions, the Fitch Rating Correspondence
Table is "a guide only and variations from this correspondence
will occur". However, variations to this approach are rare in the
case of sovereign ratings.

Armenia's STLC IDR is derived from the mapping to its LTLC IDR of
'B+'.

KEY RATING DRIVERS
The 'B+' rating is supported by Armenia's favorable business
climate, relatively high per capita income level, IMF Extended
Arrangement program, and the extended maturity profile and low
interest burden of public debt. Conversely, the ratings are
weighed down by high net external debt, the large share of public
debt denominated in foreign currency, a highly dollarized banking
sector and tensions in relations with some neighboring countries.

Armenia's economy continues to grow at a healthy rate, and Fitch
expects this to remain the case during the forecast period,
despite the continued negative external shock from Russia and the
wider CIS region. The economy has faced significant external
headwinds since late 2014, as the plunge in oil prices saw major
contractions in the economies of energy exporters across the CIS.
Nevertheless, in 2015 the Armenian economy grew by 3%, with a
strong net export adjustment outweighing weakness in domestic
demand. Although remittance inflows plunged and export demand
fell, a depreciation of the dram, diversification of export
destinations and increased export capacity in the mining sector
helped offset this.

2016 started strongly, with the economy growing by 4.4% year on
year in 1Q16. Industry, agriculture and some service sectors made
the biggest positive contributions, pointing to the continued
importance of the external sector. Growth in exports to countries
outside the region, notably Iraq and China (8.8% and 11.1% of
exports, respectively, in 2015), was particularly strong. Fitch
expects the economy to grow by 3.5% in 2016, up from 2.0% at the
time of our last review, although still below the 'B' median of
4.2% (five-year average). Growth is expected to average 3.6% in
2017-18, as the Russian economy returns to positive growth and
demand in the immediate region picks up more broadly.

The current account deficit narrowed to 2.7% of GDP in 2015 ('B'
median: 7%), compared with 7.3% in 2014, thanks to significant
import compression. In US dollar terms, merchandise imports fell
by 26% year on year in 2015, compared with a much more moderate
4.2% fall in exports. The relative resilience of exports was
supported by some export diversification.

Despite the sharp narrowing of the current account deficit, net
external debt rose to 46.8% of GDP at end-2015, from 40.7% of GDP
a year earlier (and well above the 'B' median of 18.6%), largely
thanks to revaluation effects. Fitch expects the current account
deficit to average 2.3% of GDP in 2016-18, owing to strong export
performance and relatively subdued import growth. This will help
net external debt to fall to 40.7% of GDP by 2018. International
reserves (including gold) reached US$1.8billion at end-2015,
equivalent to 4.2 months of current external payments (CXP),
above the 'B' median of 3.6 months. Fitch expects reserves to
remain at around 4.6 months of CXP in 2016-18.

Fiscal dynamics deteriorated in 2015, as weakness in the tax-rich
domestic economy weighed on revenue and expenditure continued to
grow strongly. The fiscal deficit reached 4.8% of GDP, compared
with an original target of 2.3%, and above the 'B' median of
4.3%. The deterioration continued at the beginning of 2016, with
the deficit widening on the central government measure widening
to AMD64.4billion, compared with AMD40.3billion in the same
period in 2015. Fitch now expects a general government shortfall
equivalent to 4.5% of GDP this year, well above the original 3.5%
target. Beyond that the deficit is expected to narrow, to 2.8% of
GDP by 2018, as tax-rich domestic demand growth recovers. Fitch
expects the general government debt/GDP ratio to reach 52.4% of
GDP in 2016, from 48.7% in 2015 ('B' median: 51.8%).

Fitch said, "Tensions with neighboring Azerbaijan continue to
weigh on the rating, and the security environment in the region
has deteriorated since our last review. In April, armed conflict
in the disputed region of Nagorno-Karabakh reached its most
serious level since the 1994 ceasefire, and dozens of soldiers
were killed on both sides. A truce was called on April 3, but
tensions remain high. Although a permanent solution to the
conflict appears some way off, the continued active involvement
of the OSCE Minsk Group, chaired by Russia, France and the US,
indicates that a prolonged outbreak of fighting is unlikely.
Fitch's base case is that the conflict will remain frozen during
the forecast period. Armenia's border with Turkey has been closed
since 1993, depriving Armenia of a major potential trade partner.
Fitch does not expect a normalization of relations between the
countries during the forecast period."

In the context of a sharp fall in the dram at the end of 2014,
and with dollarization of loans at above 65%, the situation in
the banking sector remains manageable. Asset quality has
deteriorated, with the non-performing loan ratio reaching 10% at
end-May. Profitability remains under pressure, but should improve
gradually during the forecast period as the situation in the
domestic economy improves. Banks keep open currency positions
within the 10% of capital limit set by the central bank, which
minimizes direct market risks from the high level of
dollarization.

High reserve requirements for FX liabilities introduced in
December 2014 have helped keep the level of liquid assets well
above 100% of short-term liabilities. Banks' external liabilities
are high (foreign funding makes up over 30% of total liabilities,
the highest in the CIS and Georgia), but risks are mitigated by
the fact that 75% is long term, and most is raised from IFIs and
foreign shareholders. Sector capitalization is adequate, with a
capital ratio of 17.2% at end-May and Fitch expects it to improve
further as a result of new minimum capital requirements.

SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO)
Fitch's proprietary SRM assigns Armenia a score equivalent to a
rating of 'B+' on the Long-Term FC IDR scale. Fitch's sovereign
rating committee did not adjust the output from the SRM to arrive
at the final LTFC IDR.

Fitch said, "Our SRM is the agency's proprietary multiple
regression rating model that employs 18 variables based on three
year centered averages, including one year of forecasts, to
produce a score equivalent to a LTFC IDR. Fitch's QO is a
forward-looking qualitative framework designed to allow for
adjustment to the SRM output to assign the final rating,
reflecting factors within our criteria that are not fully
quantifiable and/or not fully reflected in the SRM."

RATING SENSITIVITIES
The Stable Outlook reflects Fitch's assessment that upside and
downside risks to the rating are currently balanced.

The main risk factors that, individually or collectively, could
trigger positive rating action are:
-- A sustained improvement in external economic conditions and
    Armenia's continued resilience to them.
-- A firm downward path in the government debt-to-GDP ratio.
-- A sustained improvement in the external balance sheet.

The main risk factors that, individually or collectively, could
trigger negative rating action are:
-- Severe adverse spill-over from worsening economic conditions
    in Russia or lower commodity prices.
-- A marked drop in foreign exchange reserves.
-- Fiscal slippage leading to a significant rise in the
    government debt-to-GDP ratio.

KEY ASSUMPTIONS
Fitch assumes that Armenia will continue to experience broad
social and political stability and there will be no prolonged
escalation in the conflict with Azerbaijan regarding Nagorno-
Karabakh to a level that would affect economist and financial
stability.

Fitch assumes that the Russian economy will contract by 0.7% in
2016, before growing by 1.3% in 2017.


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C R O A T I A
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ZAGREB: S&P Affirms 'BB' LT Issuer Credit Rating; Outlook Neg.
--------------------------------------------------------------
S&P Global Ratings affirmed its 'BB' long-term issuer credit
rating on Croatia's capital, the City of Zagreb.  The outlook
remains negative.

                              RATIONALE

The rating on Zagreb reflects the city's weak budgetary
flexibility, financial management, and liquidity position and the
volatile and unbalanced institutional framework for Croatian
local and regional governments (LRGs).  Supportive factors are
S&P's assessment of Zagreb's average economy, very strong
budgetary performance, low debt, and moderate contingent
liabilities.  S&P assess Zagreb's stand-alone credit profile
(SACP) at 'bb'.

The affirmation reflects S&P's view that Zagreb will continue to
perform in line with its base case through to year-end 2018,
owing to demonstrated tight control over spending.  At the same
time, S&P assess the institutional framework under which Zagreb
operates as volatile and unbalanced as the central government has
taken several measures to alleviate the tax burden on the
population. One effect of this is the continuous shrinking of
local governments' revenue-raising capacity and the weakening of
their revenue-expenditure balance, exemplified by the 2015
changes to the personal income tax regime which reduced Zagreb's
operating revenues by about 7%, compared to 2014.

"We consider that Zagreb lacks long-term planning as a result of
the institutional framework under which it operates.  The central
government changed the personal income tax system, the city's
main revenue source, at the beginning of 2015.  The negative
impact of this was mitigated by growth in employment after six
years of recession, rendering the actual 2015 results better than
we had previously forecast.  We expect this growth momentum in
Croatia to continue over the forecast horizon, and as a result we
expect the city's budgetary performance to remain very strong.
The central government's strained financial position, however,
limits its capacity to provide extraordinary support to Zagreb or
other Croatian LRGs, in our opinion," S&P said.

This situation is exacerbated by Zagreb's weak financial
management and volatile political situation.  A party under the
chairmanship of the city's mayor, Milan Bandic, participated in
last year's parliamentary election at the national level and will
likely also participate in the early elections in September this
year.  Therefore, S&P cannot rule out that the mayor may leave
for a different political office following the parliamentary
election, although S&P do not view this scenario as likely.

"Our assessment of Zagreb's financial management reflects the
city's generally limited political and managerial strength, with
a history of very strained relations between the government and
the council; short-term financial planning; broad use of
unconventional debt instruments; and relatively loose control
over government-related entities. After the city's government
reestablished control over Zagrebacki Holding in 2014, it took
measures to strengthen both its and the company's liquidity
position and financial performance.  We understand the city plans
to gradually reduce its direct financial involvement in its main
government-related entity Zagrebacki Holding (ZGH), partly owing
to the city's budgetary limitations.  However, the city continues
to actively support ZGH and a city-issued guarantee was provided
in the holding's eurobond refinancing process," S&P said.

S&P views Zagreb's economy as average. Although Croatia's GDP per
capita is relatively low, at around US$12,000 on average in 2016-
2018, Zagreb boasts a broad and diversified economy thanks to its
dominant economic, financial, and political role in the country.
Adding to the diversification of Zagreb's economy is the
increasing numbers of tourist arrivals to the city.  It is home
to 19% of the country's population and produces about 33% of the
national GDP leading to per capita income, which is significantly
higher than the national average.

"In our base-case scenario, we project that the city's budgetary
performance will remain very robust.  Because national
legislation imposes strict limits on gross municipal borrowings,
the city cannot afford to continue posting a deficit after
capital accounts.  Moreover, in 2013-2014 the city provided
financial support to Zagrebacki Holding via factoring contracts,
which we now view as Zagreb's direct debt.  Although this
increased Zagreb's debt, it has also improved its surplus after
capital accounts in our forecasts because we reclassify spending
on contracts as debt service.  Consequently, in our base-case
scenario for 2016-2018, we expect Zagreb to maintain a moderate
surplus after capital accounts of about 3% of revenues, slightly
higher than the 2.4% average surplus in 2013-2015," S&P said.

At the same time, despite tight control over operating spending,
S&P expects the city's operating surplus to be about 11.5% of
operating revenues on average over 2016-2018 following the
central government's reform of the personal income tax regime.
This is lower than the 13.7% average over 2012-2014.  This
reduction is mostly due to the central government's reform of the
personal income tax regime, which halved the local government's
personal income tax absorption rate.

S&P also considers that the city's commitment to providing
ongoing support to Zagrebacki Holding constrains its budgetary
flexibility and increases its contingent liabilities.  The
transfers are to service debt at Zagrebacki Holding, which is
linked to Zagreb's outsourcing of its investment program and the
associated debt accumulation by Zagrebacki Holding.  Moreover,
the city's major public transit company ZET may be transferred
back into the city's portfolio.

"In our base-case scenario, we assume that the city's tax-
supported debt will remain low.  Including Zagrebacki Holding's
debt, it will likely decrease to about 69% of consolidated
operating revenues by year-end 2018 from 83% at year-end 2015.
Zagreb's reported direct debt is even lower at a fairly modest
45% of operating revenues for 2015.  The city's direct debt
includes guarantees that it currently services and two factoring
deals it services on behalf of Zagrebacki Holding.  We also
assume that Zagreb will continue to generate strong operating
surpluses that will mitigate its debt burden in line with
Croatia's economic recovery, after six years of recession.  The
city's budgetary performance, even in this adverse environment,
has been quite solid," S&P said.

S&P views Zagreb's budgetary flexibility as weak, mainly because
the city cannot influence the personal income tax rate, its main
source of revenue.  In addition, the central government has
limited Zagreb's ability to raise the surcharge on this tax
beyond its current level of 18%.  The city is finding it
difficult to cut expenditures further because about two-thirds of
its operating spending is extremely inflexible and almost 50% of
capital expenditure has already been allocated.  However, it has
implemented some measures to offset the revenue shortfall.  For
instance, it cut subsidies to Zagrebacki Holding and the holding
further reduced staff levels.  In addition, the city plans to
keep compensating for potential revenue shortfalls by selling
some of its assets, particularly real estate.  Even if these
sales materialize, however, they would have only a one-time
benefit for the budget.

S&P views the city's contingent liabilities as moderate.  After a
favorable court decision concerning outstanding payables and the
partial payment of overdue payables to suppliers, the city's
payables reduced to a moderate 10% of revenues in 2014 and has
been reduced considerably since then.  Noting that Zagrebacki
Holding has also managed to reduce its overdue payables, S&P now
estimates the potential cost to recapitalize the budget at about
10%-12% of consolidated operating revenues.

                             LIQUIDITY

S&P views Zagreb's liquidity position as weak, owing to the
city's less-than-adequate debt service coverage and limited
access to external liquidity.  S&P also believes that the
dwindling operating surplus indicates that the city's internal
cash-generating capacity has somewhat weakened.

"We forecast the city's average cash position, including the
projected surplus after capital accounts, will reach about
Croatian kuna (HRK) 250 million (about US$40 million) over the
next 12 months.  This will likely cover slightly over 40% of the
city's debt service falling due within this period.  We estimate
the city's annual debt service in 2016 at about HRK600 million,
including payments for factoring agreements made on behalf of
Zagrebacki Holding.  The city's debt repayment schedule is smooth
and doesn't contain any large one-time payments.  In line with
our base-case scenario for 2016, we project Zagreb's operating
surplus before interest to be lower than 2x its annual debt
service in 2016," S&P noted.

That said, the city had substantially decreased its payables to a
moderate 10% of its annual budget by the end of 2014, thereby
alleviating pressure on its liquidity position.  During the
toughest stage of economic contraction, payables accumulated
quickly and peaked at about 23.7% of annual expenditures at year-
end 2011.

S&P views Croatia's banking system as exposed to ongoing economic
contraction.  This is reflected in S&P's placement of the
country's system in group '8' according to S&P's Banking Industry
Country Risk Assessment, on a scale of '1' to '10' with group '1'
indicating the lowest risk.

Because the city continues to accumulate debt, thereby increasing
its exposure to market sentiment, S&P views its access to
external liquidity as limited.  S&P considers its inclusion of
the factoring deals the city concluded on behalf of Zagrebacki
Holding in our calculation of direct debt and liquidity as a
mitigating factor.

                             OUTLOOK

The negative outlook on Zagreb reflects that on Croatia.  If S&P
lowered the long-term rating on Croatia, S&P would lower the
long-term rating on Zagreb because S&P considers that Croatian
cities cannot be rated above the sovereign, according to S&P's
criteria.

Moreover, S&P might consider a negative rating action on Zagreb
if S&P sees weakening budgetary performance, which could also
lead to a weaker assessment of the city's debt if operating
surpluses were lower-than-expected in S&P's forecast.  S&P could
also lower the rating if the city's liquidity position
deteriorated due to dwindling cash reserves, or if S&P changed
its assessment of the city's financial management because of
uncertainties regarding political leadership.

S&P could revise the outlook on Zagreb to stable if S&P revised
the outlook on the long-term sovereign credit rating on Croatia
to stable and, at the same time, Zagreb continued to perform in
line with our base-case scenario.

In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable.  At the onset of the committee, the chair
confirmed that the information provided to the Rating Committee
by the primary analyst had been distributed in a timely manner
and was sufficient for Committee members to make an informed
decision.

After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.

The committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.

The chair ensured every voting member was given the opportunity
to articulate his/her opinion.  The chair or designee reviewed
the draft report to ensure consistency with the Committee
decision. The views and the decision of the rating committee are
summarized in the above rationale and outlook.  The weighting of
all rating factors is described in the methodology used in this
rating action.

RATINGS LIST

                                Rating
                                To                From
Zagreb (City of)
Issuer Credit Rating
  Foreign and Local Currency    BB/Negative/--    BB/Negative/--


ZAGREBACKI HOLDING: S&P Raises CCR to 'BB-'; Outlook Negative
-------------------------------------------------------------
S&P Global Ratings raised its long-term corporate credit rating
on Zagrebacki Holding d.o.o. (ZGH) to 'BB-' from 'B+'.  The
outlook is negative.

The rating action reflects S&P's view that ZGH's management has
made substantial successful efforts to improve its financial
standing and liquidity position.  These efforts include the
refinancing of short-term debt, extension of its maturity
profile, improvement of the company's liquidity, and optimization
of business operations through cost reductions and strategic
decision-making.  Based on these positive developments, S&P now
assess ZGH's management and governance as fair.

S&P has also revised its assessment of ZGH's financial risk
profile to aggressive from highly leveraged based on ZGH's
improved credit metrics and standing among peers.  S&P thinks
that the financial risk profile will be supported by funds from
operations (FFO) to debt staying at about 12% in 2016-2017, with
a trend of slight improvement thereafter, and an FFO interest
coverage ratio of 3.0x-4.0x in the next two years.

S&P also notes that more than 50% of the group's debt is euro
denominated without any hedges in place, which is why S&P still
applies a negative capital structure modifier.

Based on the abovementioned changes, S&P has revised its
assessment of ZGH's stand-alone credit profile (SACP) to 'b' from
'b-'.

S&P has observed a number of supportive measures taken by the
city's administration to improve ZGH's financial position,
including provision of a guarantee on the recent bonds placed by
the group.  S&P thinks that the city has shown strong commitment
to provide extraordinary support to ZGH under stressed
conditions, as well as effective mechanisms to monitor its
financial condition and influence its major decisions.  As such,
S&P has revised its assessment of the group's link with the city
to very strong from strong.

S&P views the likelihood of ZGH receiving extraordinary support
from the city of Zagreb as very high, based on S&P's assessment
of ZGH's:

   -- Very important role in providing essential municipal
      services, such as transport, gas supply, water supply, and
      waste collection, as well as its role as the city's
      financial vehicle in the context of strict legal limits
      imposed on municipal borrowing in Croatia.  In the event of
      a default, S&P believes the failure to roll over debt
      falling due would result in ZGH scaling down its activity;
      and

   -- Very strong link with Zagreb.  S&P thinks that the ties
      between ZGH and the city have strengthened, which is
      illustrated by the city's supportive actions recently aimed
      at improving ZGH's financial position, notably provision of
      the guarantee on the newly issued bond.  The city council
      has decisive influence on ZGH's strategy, and S&P believes
      the city's 100% ownership is unchallenged in the medium
      term.  S&P also assumes that a default of the company would
      affect the city's reputation in the market.  S&P also notes
      that the city helped ZGH in the past to turn its short-term
      debt into long-term debt by buying property from ZGH and
      concluding factoring deals on behalf of ZGH.  It has also
      assisted in ZGH's negotiations with lenders and creditors.

Because of S&P's view of a very high likelihood of extraordinary
support from Zagreb, the rating on ZGH is two notches higher than
its 'b' SACP.

S&P's assessment of the business risk profile continues to
reflect ZGH's weak regulatory environment, its poor operational
performance (for instance, water leakage at ZGH's water-supply
subsidiary amounts to about 50% of the total water supply), low
profitability, and track record of inefficient decisions and
negative returns.  These weaknesses are offset by ZGH's monopoly
position as a provider of public services; strong ongoing support
from its owner via operating and capital subsidies; guarantees on
some debt (which is repaid indirectly from the city's budget);
and asset transfers.  Overall, transfers from the city's budget
make up almost 14% of the company's revenues and about 23% when
taking financing, rents, and subsidies into account.  The city's
government determines the makeup of ZGH's management board, most
tariffs for its regulated businesses, and its investment plan.

The negative outlook reflects that on ZGH's immediate parent, the
city of Zagreb.

S&P might downgrade ZGH if we downgrade Zagreb.

Negative pressure on the rating might also arise if S&P revised
downward its assessment of ZGH's SACP by one notch.  This might
be driven by deterioration of liquidity or extensive debt
accumulation because of higher capex than S&P assumes, a decrease
in tariffs, or lower ongoing support from the city (in the form
of subsidies and long-term receivables repayment), with FFO to
debt falling below 12% without short-term recovery prospects.

S&P might revise the outlook to stable if it revised the outlook
on Zagreb to stable.


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IG SEISMIC: S&P Lowers Long-Term Corporate Credit Rating to 'B-'
----------------------------------------------------------------
S&P Global Ratings lowered its long-term corporate credit rating
on Cyprus-headquartered seismic group IG Seismic Services PLC
(IGSS) and its Russia-domiciled core subsidiary GEOTECH Seismic
Services to 'B-' from 'B'.  At the same time, S&P lowered its
Russia national scale rating on GEOTECH to 'ruBBB-' from
'ruBBB+'. All the ratings were placed on CreditWatch with
negative implications.

The downgrade of IGSS reflects S&P's expectation, firstly, that
the company's credit metrics will remain weak in 2016-2017 due to
challenging market conditions and onerous interest payments.
Secondly, it factors in IGSS' aggressive approach toward
refinancing, which is not commensurate with a 'B' rating, in
S&P's view.  The company has not yet secured financing to address
the put option, which falls due on its Russian ruble (RUB)3
billion bond in October 2016.  This has also lead S&P to place
the rating on CreditWatch pending confirmation of the completed
refinancing.

"In our revised base-case scenario, we project IGSS' funds from
operations (FFO) to debt to be about 5%-7% in 2016, with only
modest potential for recovery in 2017-2018 subject to an
improvement in industry conditions.  Similar to industry peers,
we believe that 2016 will be the weakest year for IGSS in terms
of revenues and EBITDA generation given the expected reduction in
seismic volumes, or at least a reduction in volumes of more
profitable HD- and 3D-seismic. Although IGSS has responded to the
weak industry conditions with a material reduction in capital
expenditures (capex) to about RUB1 billion in 2016-2017 from the
historical level of above RUB2 billion, we think material
deleveraging is unlikely in 2016-2017," S&P said.

"We now assess IGSS' liquidity as weak because the company has
not yet secured financing to address the put option on its RUB3
billion bond in October 2016.  In addition, the company is likely
to breach the covenants on its bank debt at the end of 2016 and
will have to request a waiver from its key lending bank,
Otkrytie, which accounts for all of IGSS' debt except for the
bond.  Although we believe that the company is likely to obtain
the required financing in the next few months, we think that such
an approach to refinancing reflects the company's aggressive
liquidity management, which is not commensurate with a 'B'
rating. The 'B-' rating factors in a track record of support from
Otkrytie, which has demonstrated its commitment to providing IGSS
with necessary liquidity or covenant waivers in the past.  This
is also demonstrated by the recently signed revolving credit line
of RUB2.3 billion," S&P noted.

S&P aims to resolve the CreditWatch in mid-September, once it has
obtained clarity from the company regarding the sources of
refinancing for its RUB3 billion bond due in October 2016.

S&P could lower the rating by one or more notches if it sees a
risk that IGSS will be unable to push back its short-term
maturities due to weakened market conditions or the absence of
support from its key lending bank.  S&P could affirm the rating
if IGSS secures medium-term financing to address the put option
on the bond.


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


GREECE: Central Bank Loosens Capital Controls to Attract Deposits
-----------------------------------------------------------------
Kerin Hope at The Financial Times reports that Greece's central
bank has loosened capital controls it imposed 13 months ago in
the hope that depositors will return some of the cash they pulled
from banks during last year's panic.

George Chouliarakis, deputy finance minister, said he expected
that lifting various restrictions on cash withdrawals would soon
attract some EUR3-EUR4 billion in fresh deposits, the FT relates.

The controls were imposed in June last year to stem a run on
Greek banks as the government's negotiations with its
international creditors foundered and many feared the country was
poised to crash out of the euro, the FT recounts.  Among other
measures, they set strict limits on how much money depositors
could withdraw from their accounts each week, the FT discloses.

Lifting the controls will pose a critical test of confidence in
the leftwing Syriza-led government of Alexis Tsipras, the prime
minister, the FT says.  Specifically, it will show whether Greeks
now feel safe holding their cash in the country's banks, the FT
notes.

Mr. Tsipras's government last month successfully completed the
first review of an EUR86 billion bailout that ultimately eased
last year's panic, the FT relays.  Still, it faces further tough
negotiations with international creditors on structural reforms
in September, according to the FT.


GREECE: Fitch Affirms 'CCC' Local Currency Issuer Default Rating
----------------------------------------------------------------
Fitch Ratings has affirmed Greece's Long-Term Local Currency
(LTLC) IDR at 'CCC'. The issue ratings on Greece's long-term
senior unsecured local currency bonds have also been affirmed at
'CCC'. The Short-Term Foreign Currency (STFC) IDR has been
affirmed at 'C' and a new Short-Term Local Currency (STLC) IDR of
'C' has been assigned. The issue ratings on Greece's short-term
foreign currency commercial paper have also been affirmed at 'C'.

Fitch said, "Under EU credit rating agency (CRA) regulation, the
publication of sovereign reviews is subject to restrictions and
must take place according to a published schedule, except where
it is necessary for CRAs to deviate from this in order to comply
with their legal obligations. Fitch interprets this provision as
allowing us to publish a rating review in situations where there
is a change in our criteria that we believe makes it
inappropriate for us to wait until the next scheduled review date
to update the rating or Outlook/Watch status. The next scheduled
review date for Fitch's sovereign rating on Greece is 2 September
2016, but Fitch believes that a portfolio review is now warranted
based on recent changes to our criteria."

Fitch will make public a more detailed country-specific report
outlining its rationale for these rating actions within 10
working days of this Rating Action Commentary.

Fitch said, "The rating committee that assigned the ratings
included within this Rating Action Commentary was a portfolio
review following recent changes to our criteria, and focused on
three areas, namely the assignment of STLC IDRs, the review of
existing STFC IDRs and the review of the notching relationship
between existing LTLC IDRs and Long-Term Foreign Currency (LTFC)
IDRs. The committee approved a variation from criteria on the
basis that the review applied all relevant sections of our
criteria related to the above rating types but did not apply the
sections of the criteria related to LTFC IDRs, as the latter were
not included in the scope of this review."

KEY RATING DRIVERS

The affirmation of Greece's LTLC IDR at 'CCC' reflects the
following key rating driver:

-- In line with the updated guidance contained in Fitch's
    revised Sovereign Rating Criteria dated July 18, 2016,
    Greece's credit profile does not support a notching up of the
    LTLC IDR above the LTFC IDR. This reflects Fitch's view that
    neither of the two key factors cited in the criteria that
    support upward notching of the LTLC IDR are present for
    Greece. Those two key factors are: (i) strong public finance
    fundamentals relative to external finance fundamentals, and
   (ii) previous preferential treatment of LC creditors relative
    to FC creditors. Additionally, Greece is a member of the
    eurozone currency union, which constrains the LTLC IDR at the
    same level as the LTFC IDR.

The affirmation of Greece's STFC IDR at 'C' reflects the
following key rating driver:

-- In line with the updated guidance contained in Fitch's
    revised Sovereign Rating Criteria dated July 18, 2016,
    Greece's STFC IDR is derived from the mapping to its LTFC IDR
    of 'CCC'.

The assignment of a STLC IDR of 'C' to Greece reflects the
following key rating driver and its weight:

HIGH
The assignment of the STLC IDR is consistent with Fitch's
approach to assigning ST ratings by using its Long-Term/Short-
Term Rating Correspondence table to map the STLC IDR from the
LTLC rating scale. According to Fitch's Rating Definitions, the
Fitch Rating Correspondence Table is "a guide only and variations
from this correspondence will occur". However, variations to this
approach are rare in the case of sovereign ratings.

Greece's STLC IDR is derived from the mapping to its LTLC IDR of
'CCC'.

RATING SENSITIVITIES
The main factors that could lead to a change in the LTLC IDR are
as follows:

-- A change in the LTFC IDR
-- A change in the key factors or supporting factors for
    notching up of the LTLC IDR from the LTFC IDR

The main factors that could lead to a change in the STFC IDR or
the STLC IDR are as follows:

-- A change in the LTFC IDR (for the STFC IDR)
-- A change in the LTLC IDR (for the STLC IDR)

The rating sensitivities outlined in the previous Rating Action
Commentary dated 11 March 2016 are unchanged in respect of the
LTFC IDR. Consistent with the criteria variation referred to
above, a review of the LTFC IDR and associated rating
sensitivities was not included as part of this review.

ASSUMPTIONS
The assumptions outlined in the previous Rating Action Commentary
dated March 11, 2016, are unchanged in respect of the LTFC IDR.
Consistent with the criteria variation referred to above, a
review of the LTFC IDR and associated assumptions was not
included as part of this review.


GREECE: S&P Affirms 'B-/B' Sovereign Credit Ratings
---------------------------------------------------
S&P Global Ratings affirmed its 'B-/B' long- and short-term
foreign and local currency sovereign credit ratings on the
Hellenic Republic (Greece).  The outlook is stable.

                             RATIONALE

The affirmation reflects S&P's assessment that the Greek
government is meeting -- albeit with delays -- the formal terms
of its EUR86 billion financial support program (Third Economic
Adjustment Programme) financed by eurozone member states via the
European Stability Mechanism (ESM).  S&P understands that one of
the objectives of Greece's Third Economic Adjustment Programme is
to enable the government to refinance itself fully in commercial
debt markets by August 2018, when the program concludes.

S&P estimates that at the end of this year, Greece's stock of net
general government debt will peak at 179% of GDP, the highest of
all the sovereigns S&P rates.  Gradually returning nominal
growth, fiscal consolidation, and cumulative privatization
receipts of around 2% of GDP over the next four years will likely
lower net general government debt to 173% of GDP by 2018, the
final year of Greece's current three-year support program.  That
figure would still be the highest projected debt burden of all
rated sovereigns.  Even under optimistic assumptions of recurrent
nominal average GDP growth of 4.5% and an annual primary surplus
of 1.5% of GDP and borrowing costs of below 2%, it will still
take another 17 years before Greek net general government debt
falls below 100% of GDP.

In contrast to most governments that S&P rates, the lion's share
of Greece's sovereign debt -- about 83% -- is official, with over
four-fifths lent by Eurozone governments and institutions at
highly concessional rates and maturities, including grace periods
on principal payments averaging between three years for the Greek
Loan Facility (GLF) to 17 years for ESM loans.  The cost of
servicing this debt is low, currently ranging between 1.0% and
1.5%.

By these standards, Greece's debt burden is arguably affordable,
and can remain so, provided:

   -- The country can refinance itself on similarly favorable
      terms in commercial markets at the end of the current
      program; and

   -- The Greek economy can grow consistently and rapidly in real
      and nominal terms.

The risk to public debt sustainability in Greece is that one or
both of these caveats does not hold.

Flagging the high affordability of its concessional lending, the
Eurogroup of eurozone member finance ministers has maintained
that, for the present, a write-down of the face value of Greece's
official obligations is not required to make debt sustainable.
Due to domestic considerations, Greece's official creditors are
understandably reluctant to grant any write-off that would
transfer debt onto their own balance sheets.  In May, as an
alternative to a haircut, the Eurogroup agreed to cap post-
program government gross financing needs (GFN) for Greece at 15%
of GDP. This figure is equivalent to 6.4% of GDP after netting
out treasury bill refinancing amounting to 8.6% of GDP.  Greece's
official creditors are committed, as S&P understands it, to
meeting this GFN target via further maturity extensions, debt
reprofiling, and the restoration of transfers of Eurosystem
profits on its Greek government bond holdings.  Although S&P
views such offers of GFN relief to be helpful in backstopping the
sustainability of Greece's concessional debt burden, S&P don't
see contingent promises of net present value reductions as
equivalent to frontloaded principal write-downs if the goal is to
restore confidence in Greece's solvency, and, at the same time,
to enable Greece to finance itself in commercial debt markets at
low interest rates and long maturities.  Public debt write-offs
would also, importantly, improve Greece's net external position,
since over 80% of general government debt is owed to
nonresidents.

"Our baseline expectation is that Greece can and will service its
limited commercial debt stock (about one-sixth of the total or
30% of GDP) when it comes due.  Other than treasury bill
redemptions, the next maturity of Greek commercial debt is not
until July 17, 2017, for EUR2.09 billion, followed by a EUR4.03
billion redemption to the private sector on April 17, 2019.  We
anticipate that by the end of this year, the small amount of
Greek government bonds still in the market are likely to become
eligible for purchase by the Bank of Greece under quantitative
easing.  This should lower interest rates for Greece in the
secondary market, versus the current approximately 7.9% yield on
the 10-year benchmark government bond," S&P noted.

"Earlier this year the government legislated fiscal measures
worth about 3% of GDP, split two-thirds to one-third in favor of
tax hikes versus expenditure cuts.  These included an increase in
value-added tax (VAT) and excise taxes, pension cuts, and a
simplification of the personal income tax framework.  Although we
expect the government will meet the 0.5%-of-GDP primary surplus
target this year, we think in subsequent years the government
will find it difficult to operate primary surpluses above 1.5% of
GDP, without creating arrears elsewhere in the public and private
sector (including fresh arrears for Public Power Corp. and
Athens' rapid-transit system Attiko Metro).  About 10% of
Greece's population contributes approximately 60% of tax receipts
to the state, while more than one-half of the country's wage and
pension earners are exempt from income tax (versus 9% on average
in the euro area).  Focusing fiscal pressure on the most
productive and mobile part of the population could stunt growth
and worsen fiscal outputs, in our view.  But perhaps the largest
medium-term fiscal risk remains the pension system, with current
spending on pensions easily the highest in the eurozone, at 17.5%
of GDP.  Annual transfers to the social security system equate to
10% of GDP, compared with the euro area average of 2.5% of GDP,"
S&P said.

"Ultimately, fiscal outputs will reflect the performance of
Greece's economy, which has declined by 24% in euro terms over
the last nine years, with investment down an estimated 66% since
2007. For 2016, we project that the Greek economy will contract
by 1%, reflecting additional fiscal drag, a blocked banking
system, and moribund private-sector confidence.  We forecast that
the economy will stage a statistical recovery in 2017, followed
by GDP growth averaging 2.75% in real and 4.25% in nominal terms
during 2018 and 2019.  Despite its small size, Greece's economy
is relatively closed, with exports as a percentage of GDP
representing an estimated 31%.  On the positive side, this year's
financing arrangements under the ESM program include plans to pay
down an estimated 3% of GDP of arrears (and another 2.6% of GDP
between 2017 and 2019) to the private sector, where firms are
likely to clear their own wage arrears to employees, who may then
spend them.  On the downside, the government's delivery on
structural and particularly labor market reforms appears to us to
be piecemeal, with limited success in attracting private foreign
capital into sectors that could create employment.  Although down
from its peak in 2014, at 23.3% in April (ELSTAT data), Greek
unemployment remains the highest in the EU and the Organisation
for Economic Co-operation and Development," S&P said.

"A main stumbling block for the economy is the long-standing
distress in Greece's financial sector.  Like the government,
Greece's banks depend on official financing, with European
Central Bank (ECB) and emergency liquidity assistance (ELA) lines
covering 25% of assets.  Between Sept 2010 and May 2016, an
estimated EUR136.4 billion or 77% of GDP of deposits exited the
Greek banking system, though levels have stabilized during the
second quarter. With nonperforming exposures at 44% of the loan
book, banks are not in a position to finance private-sector
investment, while companies and households may choose to
prioritize payment of their rising tax debt (which the Greek tax
administration estimates at 50% of GDP) rather than their bank
loans.  Distress in the banking system represents a potential
contingent liability to the state. Our projections for public-
sector debt don't reflect any further government capital
injections into domestic banks, although the ESM program retains
EUR19.6 billion in reserve financing for further financial
support, and there is a material risk that additional public
support is required.  We think that the ECB's reinstating of its
waiver on the eligibility of Greek sovereign and sovereign
guaranteed bank collateral for ECB financing, rather than
costlier Bank of Greece ELA, will lift the profitability of
Greece's highly challenged banking system.  We anticipate,
however, an only gradual lifting of the capital controls still in
place, including withdrawal limits on household deposits," S&P
said.

"Greece's external liabilities, both private and public, remain
high.  The economy's net external debtor position as a percentage
of current account receipts is the second highest of all rated
sovereigns.  It is important to understand that 84% of Greece's
external debt is public, combining concessional lending both to
the sovereign and to the banks (through the Eurosystem).  The
large-scale withdrawal of deposits from Greece's banking sector
last year led to an estimated EUR51 billion rise in ELA to Greek
banks during 2015, equating to 29% of GDP or 76% of current
account receipts.  Because we classify Eurosystem national
central banks as nonresidents, this led to a rise in Greece's
narrow net external debt liability to 485% of current account
receipts in 2015 from 395% a year earlier.  In this context, an
upfront write-down of Greece's public debt would markedly improve
the country's external position, something that would over time,
in our view, encourage private-sector nonresidents' willingness
to invest in the economy," S&P said.

Greece's current account improved by 2.1% of GDP last year to a
deficit of just 0.1% of GDP, although this also indirectly
reflects large capital -- particularly deposit -- outflows from
the domestic banking system and an associated contraction in
import demand.  Merchandise imports (excluding volatile oil and
ships) contracted slightly in 2015, while exports (without
volatile segments) continued to do relatively well, having
increased 4% on average in euro terms over the past four years.
The outlook for Greece's major services sectors is mixed.
Shipping remains mired in a supply glut, combined with a global
slowdown in trade.  And during 2016, tourism may not repeat the
strong growth it enjoyed in the summer of 2015 given Greece's
fairly large exposure to U.K.-based visitors.  Over the medium
term, we expect the current account deficit will widen, although
not to levels far exceeding the capital account surplus
(transfers), which last year totaled 1.2% of GDP," S&P said.

Given the current Greek government's narrow majority of three
seats, the probability of implementing long-term reforms to, for
instance, the judicial system and public administration seems
low. Still, S&P's baseline expectation remains that, regardless
of what government is in power, Greece will largely comply with
the terms of the ESMprogram.  S&P takes this view because it
don't think the alternative would be viable for Greece's
financial stability.

                              OUTLOOK

The stable outlook indicates S&P's view that, over the next 12
months, risks to its 'B-' rating on Greece are balanced.

S&P could consider an upgrade if it saw stronger growth
performance and measureable progress in reducing the still-high
ratio of nonperforming loans in Greece's banking system.  Rating
upside would also stem from the lifting of capital controls,
including deposit withdrawal limits, which would be a strong
indication of recovered confidence in financial stability and, in
turn, growth.  S&P could also consider raising the rating in the
event of an unexpected write-down of Greece's level of net
general government debt.

S&P could lower the ratings on Greece if the new government
didn't implement the reforms it has agreed to with the ESM in
their memorandum of understanding.  Prolonged non-implementation
of the ESM program could, over time, lead to a general default on
Greek government debt.

In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable.  At the onset of the committee, the chair
confirmed that the information provided to the Rating Committee
by the primary analyst had been distributed in a timely manner
and was sufficient for Committee members to make an informed
decision.

After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.

The committee agreed that all key rating factors were unchanged.

The chair ensured every voting member was given the opportunity
to articulate his/her opinion.  The chair or designee reviewed
the draft report to ensure consistency with the Committee
decision. The views and the decision of the rating committee are
summarized in the above rationale and outlook.  The weighting of
all rating factors is described in the methodology used in this
rating action.

RATINGS LIST

                                        Rating
                                        To            From
Greece (Hellenic Republic)
Sovereign Credit Rating
  Foreign and Local Currency            B-/Stable/B   B-/Stable/B
Transfer & Convertibility Assessment   AAA           AAA
Senior Unsecured
  Foreign and Local Currency [#1]       B-            B-
  Foreign and Local Currency            B-            B-
Short-Term Debt
  Foreign and Local Currency [#1]       B             B
Commercial Paper
  Local Currency                        B             B

[#1] Issuer: National Bank of Greece S.A., Guarantor: Greece
(Hellenic Republic)


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


ADAGIO V CLO: Moody's Assigns (P)B2 Rating to Class F Notes
-----------------------------------------------------------
Moody's Investors Service announced that it has assigned these
provisional ratings to notes to be issued by Adagio V CLO
Designated Activity Company:

  EUR206,500,000 Class A Senior Secured Floating Rate Notes due
   2029, Assigned (P)Aaa (sf)
  EUR45,400,000 Class B Senior Secured Floating Rate Notes due
   2029, Assigned (P)Aa2 (sf)
  EUR25,600,000 Class C Deferrable Mezzanine Floating Rate Notes
   due 2029, Assigned (P)A2 (sf)
  EUR14,600,000 Class D Deferrable Mezzanine Floating Rate Notes
   due 2029, Assigned (P)Baa2 (sf)
  EUR19,000,000 Class E Deferrable Junior Floating Rate Notes due
   2029, Assigned (P)Ba2 (sf)
  EUR12,100,000 Class F Deferrable Junior Floating Rate Notes due
   2029, Assigned (P)B2 (sf)

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

                         RATINGS RATIONALE

Moody's provisional rating of the rated notes addresses the
expected loss posed to noteholders by the legal final maturity of
the notes in 2029.  The provisional ratings reflect the risks due
to defaults on the underlying portfolio of loans given the
characteristics and eligibility criteria of the constituent
assets, the relevant portfolio tests and covenants as well as the
transaction's capital and legal structure.  Furthermore, Moody's
is of the opinion that the collateral manager, AXA Investment
Managers, Inc., has sufficient experience and operational
capacity and is capable of managing this CLO.

Adagio V is a managed cash flow CLO.  At least 90% of the
portfolio must consist of senior secured loans and secured senior
bonds and up to 10% of the portfolio may consist of unsecured
senior obligations, second-lien loans, mezzanine obligations and
high yield bonds.  The portfolio is expected to be approximately
80% ramped up as of the closing date and to be comprised
predominantly of corporate loans to obligors domiciled in Western
Europe.

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

In addition to the eight classes of notes rated by Moody's, the
Issuer will issue EUR 37,800,000 of subordinated notes, which
will not be rated.

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

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

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

Loss and Cash Flow Analysis:

Moody's modeled the transaction using CDOEdge, a cash flow model
based on the Binomial Expansion Technique, as described in
Section 2.3 of the "Moody's Global Approach to Rating
Collateralized Loan Obligations" rating methodology published in
December 2015.  The cash flow model evaluates all default
scenarios that are then weighted considering the probabilities of
the binomial distribution assumed for the portfolio default rate.
In each default scenario, the corresponding loss for each class
of notes is calculated given the incoming cash flows from the
assets and the outgoing payments to third parties and
noteholders.  Therefore, the expected loss or EL for each tranche
is the sum product of (i) the probability of occurrence of each
default scenario and (ii) the loss derived from the cash flow
model in each default scenario for each tranche.  As such,
Moody's encompasses the assessment of stressed scenarios.

Moody's used these base-case modeling assumptions:

Par amount: EUR 350,000,000
Diversity Score: 37
Weighted Average Rating Factor (WARF): 2750
Weighted Average Spread (WAS): 4.20%
Weighted Average Coupon (WAC): 5.25%
Weighted Average Recovery Rate (WARR): 43.5%
Weighted Average Life (WAL): 8 years.

As part of the base case, Moody's has addressed the potential
exposure to obligors domiciled in countries with local a currency
country risk ceiling (LCC) of A1 or below.  As per the portfolio
constraints, exposures to countries with a LCC of A1 or below
cannot exceed 10%, with exposures to countries with LCCs of Baa1
to Baa3 further limited to 5%.  Following the effective date, and
given these portfolio constraints and the current sovereign
ratings of eligible countries, the total exposure to countries
with a LCC of A1 or below may not exceed 10% of the total
portfolio.  As a worst case scenario, a maximum 5% of the pool
would be domiciled in countries with LCCs of Baa1 to Baa3 while
an additional 5% would be domiciled in countries with LCCs of A1
to A3.  The remainder of the pool will be domiciled in countries
which currently have a LCC of Aa3 and above.  Given this
portfolio composition, the model was run with different target
par amounts depending on the target rating of each class of notes
as further described in the methodology.  The portfolio haircuts
are a function of the exposure size to peripheral countries and
the target ratings of the rated notes and amount to 0.75% for the
Class A notes, 0.50% for the Class B notes, 0.38% for the Class C
notes and 0% for Classes D, E and F.

Stress Scenarios:

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

Percentage Change in WARF: WARF + 15% (to 3163 from 2750)
Ratings Impact in Rating Notches:
Class A Senior Secured Floating Rate Notes: 0
Class B Senior Secured Floating Rate Notes: -1
Class C Deferrable Mezzanine Floating Rate Notes: -2
Class D Deferrable Mezzanine Floating Rate Notes: -2
Class E Deferrable Junior Floating Rate Notes: -1
Class F Deferrable Junior Floating Rate Notes: 0

Percentage Change in WARF: WARF +30% (to 3575 from 2750)
Class A Senior Secured Floating Rate Notes: 0
Class B Senior Secured Floating Rate Notes: -3
Class C Deferrable Mezzanine Floating Rate Notes: -3
Class D Deferrable Mezzanine Floating Rate Notes: -2
Class E Deferrable Junior Floating Rate Notes: -1
Class F Deferrable Junior Floating Rate Notes: -2

Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's
Global Approach to Rating Collateralized Loan Obligations"
published in December 2015.


ADAGIO V CLO: S&P Assigns Prelim. B- Rating to Class F Notes
------------------------------------------------------------
S&P Global Ratings assigned its preliminary credit ratings to
Adagio V CLO Designated Activity Company's class A, B, C, D, E,
and F notes.  At closing, Adagio V CLO will also issue an unrated
subordinated class of notes.

Adagio V CLO is a cash flow collateralized loan obligation (CLO)
transaction securitizing a portfolio of primarily broadly
syndicated speculative-grade senior secured loans and bonds
issued mainly by European borrowers.  AXA Investment Managers,
Inc. is the collateral manager.

Under the transaction documents, the rated notes pay quarterly
interest unless there is a frequency switch event.  Following
such an event, the notes will switch to semiannual payments.  The
transaction has a six-month ramp-up period, a four-year
reinvestment period, and a maximum weighted-average life of eight
years from the closing date.

At the end of the ramp-up period, S&P understands that the
portfolio will represent a well-diversified pool of corporate
credits.  Therefore, S&P has conducted its credit and cash flow
analysis by applying its criteria for corporate cash flow
collateralized debt obligations.

"Our preliminary ratings reflect our assessment of the
preliminary collateral portfolio's credit quality and the
available credit enhancement for the rated notes through the
subordination of payable cash flows.  In our cash flow analysis,
we used the EUR350 million target par amount, the covenanted
weighted-average spread (4.20%), the covenanted weighted-average
coupon (5.25%), and the covenanted weighted-average recovery
rates at each rating level.  We applied various cash flow stress
scenarios, using four different default patterns, in conjunction
with different interest rate stress scenarios for each liability
rating category," S&P said.

The Bank of New York Mellon, London Branch is the bank account
provider and custodian.  The portfolio can comprise a maximum of
30% non-euro-denominated obligations, subject to an asset swap
provided by a hedge counterparty.  The participants' downgrade
remedies are expected to be in line with S&P's current
counterparty criteria.

The issuer is expected to be bankruptcy remote, in accordance
with S&P's European legal criteria.

Following S&P's's analysis of the credit, cash flow,
counterparty, operational, and legal risks, S&P's believes its
preliminary ratings are commensurate with the available credit
enhancement for each class of notes.

RATINGS LIST

Adagio V CLO Designated Activity Company EUR361.00 Million Senior
Secured And Deferrable Floating-Rate Notes

Class                Prelim.        Prelim.
                     rating          amount
                                   (mil. EUR)
A                    AAA (sf)        206.50
B                    AA (sf)          45.40
C                    A (sf)           25.60
D                    BBB (sf)         14.60
E                    BB (sf)          19.00
F                    B- (sf)          12.10
Subordinated notes   NR               37.80

NR--Not rated.


EUROSURGICAL: May Face Substantial Tax Liability
-----------------------------------------------
Barry O'Halloran at The Irish Times reports that Eurosurgical is
likely to owe the Revenue Commissioners a substantial sum when
the company's final tax liability is calculated by its
liquidator.

The High Court recently appointed George Maloney of RSM as
liquidator to Dublin-based Eurosurgical, whose main creditor is
Revenue, which had issued it with an assessment for EUR3 million,
The Irish Times relates.

Mr. Maloney, The Irish Times says, is investigating
Eurosurgical's activities over a lengthy period leading up to the
court's decision to place it in liquidation.  He is also
calculating its final Revenue liability, which is understood to
be substantial, The Irish Times discloses.  There are other
creditors, although the number is not thought to be large,
according to The Irish Times.  Eurosurgical's business was
specialized, and sources said on July 24 the suppliers of the
equipment that it sold to hospitals often sought up-front
payment, The Irish Times relays.

In a deal announced last week, Mr. Maloney sold Eurosurgical's
businesses and most of its assets to rival HSL, a move that saved
a majority of the group's jobs, The Irish Times recounts.  He
retained the company's book debts -- the money due to
Eurosurgical from its customers -- but HSL has agreed to act as
his agent and collect this cash, according to The Irish Times.


GRIFFITH PARK: Moody's Assigns (P)B2 Rating to Class E Notes
------------------------------------------------------------
Moody's Investors Service announced that it has assigned these
provisional ratings to notes to be issued by Griffith Park CLO
Designated Activity Company:

  EUR238,000,000 Class A-1 Senior Secured Floating Rate Notes due
   2029, Assigned (P)Aaa (sf)
  EUR43,000,000 Class A-2A Senior Secured Floating Rate Notes due
   2029, Assigned (P)Aa2 (sf)
  EUR10,000,000 Class A-2B Senior Secured Fixed Rate Notes due
   2029, Assigned (P)Aa2 (sf)
  EUR20,600,000 Class B Senior Secured Deferrable Floating Rate
   Notes due 2029, Assigned (P)A2 (sf)
  EUR21,400,000 Class C Senior Secured Deferrable Floating Rate
   Notes due 2029, Assigned (P)Baa2 (sf)
  EUR24,400,000 Class D Senior Secured Deferrable Floating Rate
   Notes due 2029, Assigned (P)Ba2 (sf)
  EUR10,700,000 Class E Senior Secured Deferrable Floating Rate
   Notes due 2029, Assigned (P)B2 (sf)

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

                      RATINGS RATIONALE

Moody's provisional rating of the rated notes addresses the
expected loss posed to noteholders by legal final maturity of the
notes in 2029.  The provisional ratings reflect the risks due to
defaults on the underlying portfolio of loans given the
characteristics and eligibility criteria of the constituent
assets, the relevant portfolio tests and covenants as well as the
transaction's capital and legal structure.  Furthermore, Moody's
is of the opinion that the collateral manager, Blackstone / GSO
Debt Funds Management Europe Limited, has sufficient experience
and operational capacity and is capable of managing this CLO.

Griffith Park CLO Designated Activity Company is a managed cash
flow CLO.  At least 96% of the portfolio must consist of secured
senior obligations and up to 4% of the portfolio may consist of
unsecured senior loans, second lien loans, mezzanine obligations,
high yield bonds and/or first lien last out loans.  The portfolio
is expected to be 70% ramped up as of the closing date and to be
comprised predominantly of corporate loans to obligors domiciled
in Western Europe.  This initial portfolio will be acquired by
way of participations which are required to be elevated as soon
as reasonably practicable.  The remainder of the portfolio will
be acquired during the three month ramp-up period in compliance
with the portfolio guidelines.

Blackstone / GSO Debt Funds Management Europe Limited will manage
the CLO.  It will direct the selection, acquisition and
disposition of collateral on behalf of the Issuer and may engage
in trading activity, including discretionary trading, during the
transaction's four-year reinvestment period.  Thereafter,
purchases are permitted using principal proceeds from unscheduled
principal payments and proceeds from sales of credit impaired
obligations, and are subject to certain restrictions.

In addition to the seven classes of notes rated by Moody's, the
Issuer will issue EUR44,400,000 of subordinated notes.  Moody's
will not assign a rating to this class of notes.

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

Loss and Cash Flow Analysis:

Moody's modeled the transaction using CDOEdge, a cash flow model
based on the Binomial Expansion Technique, as described in
Section 2.3 of the "Moody's Global Approach to Rating
Collateralized Loan Obligations" rating methodology published in
December 2015.  The cash flow model evaluates all default
scenarios that are then weighted considering the probabilities of
the binomial distribution assumed for the portfolio default rate.
In each default scenario, the corresponding loss for each class
of notes is calculated given the incoming cash flows from the
assets and the outgoing payments to third parties and
noteholders.  Therefore, the expected loss or EL for each tranche
is the sum product of (i) the probability of occurrence of each
default scenario and (ii) the loss derived from the cash flow
model in each default scenario for each tranche.

Moody's used these base-case modeling assumptions:

Par Amount: EUR 400,000,000
Diversity Score: 38
Weighted Average Rating Factor (WARF): 2850
Weighted Average Spread (WAS): 4.10%
Weighted Average Coupon (WAC): 5.00%
Weighted Average Recovery Rate (WARR): 43.0%
Weighted Average Life (WAL): 8 years

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

Percentage Change in WARF: WARF + 15% (to 3278 from 2850)
Ratings Impact in Rating Notches:
Class A-1 Senior Secured Floating Rate Notes: 0
Class A-2A Senior Secured Floating Rate Notes: -2
Class A-2B Senior Secured Fixed Rate Notes: -2
Class B Senior Secured Deferrable Floating Rate Notes: -2
Class C Senior Secured Deferrable Floating Rate Notes: -2
Class D Senior Secured Deferrable Floating Rate Notes: -1
Class E Senior Secured Deferrable Floating Rate Notes: 0
Percentage Change in WARF: WARF +30% (to 3705 from 2850)

Ratings Impact in Rating Notches:
Class A-1 Senior Secured Floating Rate Notes: -1
Class A-2A Senior Secured Floating Rate Notes: -4
Class A-2B Senior Secured Fixed Rate Notes: -4
Class B Senior Secured Deferrable Floating Rate Notes: -4
Class C Senior Secured Deferrable Floating Rate Notes: -3
Class D Senior Secured Deferrable Floating Rate Notes: -2
Class E Senior Secured Deferrable Floating Rate Notes: -3

Methodology Underlying the Rating Action:

The principal methodology used in these ratings was "Moody's
Global Approach to Rating Collateralized Loan Obligations"
published in December 2015.

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

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


GRIFFITH PARK: S&P Assigns Prelim. B- Rating to Class E Notes
-------------------------------------------------------------
S&P Global Ratings assigned its preliminary credit ratings to
Griffith Park CLO DAC's class A-1, A-2A, A-2B, B, C, D, and E
senior secured notes.  At closing, the issuer will also issue
unrated subordinated notes.

The transaction is a cash flow collateralized loan obligation
(CLO), securitizing a portfolio of primarily senior secured loans
granted to speculative-grade corporates.  Blackstone/GSO Debt
Funds Management Europe Ltd.  will manage the transaction.

The issuer expects to purchase more than 50% of the effective
date portfolio from Blackstone/GSO Corporate Funding Designated
Activity Company (BGCF).  The assets from BGCF that can't be
settled on the closing date will be subject to participations.
The transaction documents require that the issuer and BGCF use
commercially reasonable efforts to elevate the participations by
transferring to the issuer the legal and beneficial interests in
such assets as soon as reasonably practicable.

Under the transaction documents, the rated notes will pay
quarterly interest unless a frequency switch event occurs.
Following this, the notes will permanently switch to semiannual
interest payments.

The portfolio's reinvestment period will end 4.1 years after
closing, and the portfolio's maximum average maturity date will
be eight years after closing.

On the effective date, S&P understands that the portfolio will
represent a well-diversified pool of corporate credits, with a
fairly uniform exposure to all of the credits.  Therefore, S&P
has conducted its credit and cash flow analysis by applying its
criteria for corporate cash flow collateralized debt obligations.

In S&P's cash flow analysis, it has used the portfolio target par
amount of EUR400.0 million, the covenanted weighted-average
spread of 4.10%, the weighted-average coupon of 5.00%, and the
covenanted weighted-average recovery rates at each rating level.

Citibank N.A. (London Branch) will be the bank account provider
and custodian. At closing, S&P anticipates that the participants'
downgrade remedies will be in line with its current counterparty
criteria.

At closing, S&P understands that the issuer will be in line with
its bankruptcy remoteness criteria.

Following S&P's analysis of the credit, cash flow, counterparty,
operational, and legal risks, S&P believes its preliminary
ratings are commensurate with the available credit enhancement
for each class of notes.

RATINGS LIST

Griffith Park CLO Designated Activity Company
EUR0 mil secured fixed- and floating-rate notes
                                             Prelim Amount
Class                 Prelim Rating          (mil, EUR)
A-1                   AAA (sf)               TBD
A-2A                  AA (sf)                TBD
A-2B                  AA (sf)                TBD
B                     A (sf)                 TBD
C                     BBB (sf)               TBD
D                     BB (sf)                TBD
E                     B- (sf)                TBD
Sub                   NR                     TBD

NR--Not rated
TBD--To be determined


=========
I T A L Y
=========


BANCA POPOLARE DI MILANO: Egan-Jones Cuts Unsec. Rating to BB
-------------------------------------------------------------
Egan-Jones Ratings Company downgraded the senior unsecured
ratings on debt issued by Banca Popolare di Milano Scarl to BB
from BB+ on July 11, 2016.

Banca Popolare di Milano Scarl (BPM) attracts deposits and offers
commercial banking services. The Bank offers brokerage, trust,
lease financing, asset management, private banking, and factoring
services, manages mutual funds, and offers insurance services.
BPM serves its customers through a branch network located
primarily in Italy, London, and New York.


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


PATAGONIA FINANCE: Moody's Cuts Rating on EUR453.2MM Notes to Ca
----------------------------------------------------------------
Moody's Investors Service has downgraded the rating on the notes
issued by Patagonia finance S.A.:

  EUR453.2115 mil. (current outstanding balance of
   EUR283,500,000) Senior Zero coupon notes, Downgraded to Ca;
   previously on April 29, 2015, Upgraded to Caa3

                        RATINGS RATIONALE

Moody's explained that the rating action taken on July 22 is the
result of a rating action on the subordinate rating of Banca
Monte dei Paschi di Siena S.p.A., which was downgraded to Ca from
Caa3 on July 15, 2016.

This transaction represents a repackaging of a Banca Monte dei
Paschi di Siena S.p.A subordinated bond.

Methodology Underlying the Rating Action:

The principal methodology used in this rating was "Moody's
Approach to Rating Repackaged Securities" published in June 2015.

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

This rating is essentially a pass-through of the rating of the
underlying securities.  Noteholders are exposed to the credit
risk of Banca Monte dei Paschi di Siena S.p.A. and therefore the
rating moves in lock-step.

Moody's notes that this transaction is subject to a high level of
macroeconomic uncertainty, which could negatively impact the
ratings of the notes, as evidenced by 1) uncertainties of credit
conditions in the general economy and 2) more specifically, any
uncertainty associated with the underlying credits in the
transaction could have a direct impact on the repackaged
transaction.


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


AVAST HOLDING: Moody's Affirms Ba3 CFR; Outlook Remains Stable
--------------------------------------------------------------
Moody's Investors Service has affirmed the Ba3 corporate family
rating and Ba3-PD probability of default rating (PDR) of global
provider of security software Avast Holding B.V., following an
announcement that the company is borrowing USD 1,600 million
(equivalent) of senior secured first lien term loan B to (1) fund
the acquisition of AVG Technologies N.V. (B1 stable), (2)
refinance Avast's and AVG's existing debt and (3) pay for
transaction expenses.  Moody's has also affirmed the Ba3 rating
on the USD 274 million senior secured term loan and USD 40
million revolving credit facility of Avast Software B.V. The
outlook on all ratings remains stable.

The affirmation was driven by:

   -- Expectation of significant increase in EBITDA in 2017-18
   -- Anticipation that the elevated opening leverage will reduce
      through underlying profit growth and high cash conversion
      rates
   -- The combined group's greater scale, which will enable it to
      expand profitably in growth areas
   -- Its strong free cash flow (FCF) and liquidity profile

Concurrently, Moody's has assigned a provisional (P)Ba3 rating to
Avast's proposed new USD1,600 million (equivalent) senior secured
first lien term loan B, which shall be borrowed by Avast Software
B.V. and certain subsidiaries.  Moody's has also assigned a
provisional (P)Ba3 rating to the proposed new and USD 85 million
senior secured revolving credit facility (RCF), which shall be
borrowed by Avast Software B.V. and Avast Holding B.V.
respectively, and certain subsidiaries.

Moody's issues provisional ratings in advance of the final sale
of loans and these ratings reflect Moody's preliminary credit
opinion regarding the transaction only.  Upon a conclusive review
of the final documentation, Moody's will endeavor to assign
definitive instrument ratings.  A definitive rating may differ
from a provisional rating.

                         RATINGS RATIONALE

The affirmation primarily reflects Moody's expectation that the
rise in leverage resulting from the company's planned debt-funded
acquisition of AVG will be partially mitigated by anticipated
EBITDA growth in 2017 in excess of 20%.  This will be underpinned
by continued revenue growth, an operating leverage effect from
the combined group's greater scale and anticipated cost
synergies.

"Despite our expectation of continued growth in EBITDA, we
anticipate that Avast's debt burden and leverage will be high for
the rating category post-transaction, circa 4.8x Moody's adjusted
debt/EBITDA at closing," says Frederic Duranson, a Moody's
Analyst and lead analyst for Avast.  "However, we believe that
the acquisition of AVG is an important strategic milestone for
Avast to achieve scale in emerging growth areas, such as mobile,
and we anticipate material commercial and cost synergies from the
combination of the two groups," says Mr. Duranson.

Avast's Ba3 CFR is supported by (1) the company's large and
geographically diversified user base, (2) high, albeit reduced,
margins of the combined group and strong free cash flow
generation, (3) solid underlying EBITDA growth and prospects of
cost reductions, which will reduce leverage in 2017-18, and (4)
greater scale in emerging growth areas such as mobile.
Conversely, Avast's CFR is constrained by (1) the company's
relatively small percentage of paid users and current revenue
concentration in consumer PC security software, (2) the intense
industry competition and inherent technology risks in security
software markets, (3) relatively low customer switching costs,
and (4) its elevated Moody's adjusted gross debt/EBITDA.

Moody's estimates that Avast's debt-funded acquisition of AVG
will increase leverage substantially, to about 4.8x at closing,
including a full year of EBITDA contribution from AVG.

However, Avast's credit profile is supported by its track record
of deleveraging since 2014 as well as Moody's expectation that
Moody's adjusted gross debt/EBITDA will drop below 4.0x by the
end of 2017.  Furthermore, Moody's believes that the rise in
leverage is to a certain extent compensated by the greater scale
and scope of the combined business, which will provide
opportunities for revenue and EBITDA growth.

Avast will become the clear number one freemium player in the
consumer endpoint market, covering approximately 20% of the
global PC installed base (excluding China).  Its mobile user base
will exceed 160 million users, 260% higher than it is on a
standalone basis.

The increase in scale will help Avast grow in mobile's main
monetization channels: mobile operators and advertising.  It will
provide the enlarged group with better bargaining power versus
large mobile operators and will feed Avast more customer data to
offer solutions to operators.  In addition, the user base will
have critical mass to attract advertising contracts.

Moody's expects that Avast will continue to grow its revenue and
EBITDA, building upon its solid track record in its consumer
business, as well as ramp-up growth in mobile solutions.
Combining Avast and AVG can also yield material cost synergies
given the product overlap, particularly in consumer solutions.
Moody's also expects that cost savings efforts undertaken by AVG
in its small and medium businesses (SMB) segment will continue.

Given the rating agency's view of the business combination as a
good strategic and cultural fit, the rating factors in moderate
execution risk for the integration, including potential cost
savings.  Furthermore, Moody's believes that Avast will continue
to benefit from an operating leverage effect, in light of its
largely fixed costs base and in the context of ongoing revenue
growth.  However, Moody's views growth prospects in SMB and
platform as rather weak and therefore expects that they will
represent a drag on growth.  The expected drop in platform's
contribution will compress the EBITDA margin as this segment
carries a very high margin, whilst the integration of AVG, which
has significantly lower margins than Avast will dilute margins by
close to 20 percentage points, to below 50% (on Moody's adjusted
basis) before recouping some of the loss through cost cutting and
operating leverage.

The acquisition of AVG does not alter Avast's significantly FCF
generative profile although the combined group's cash flow
available for debt service will represent at least 35% of
revenues versus over 50% for Avast standalone as a result of
AVG's lower margins.  Avast's FCF will continue to be supported
by its asset-light model, resulting in low capex, and negative
working capital (including deferred revenues).  Moody's
anticipates that integration costs associated with the
acquisition will somewhat dent FCF in 2016-17 but the rating
agency expects that Avast will generate at least $220 million FCF
(after interest and integration costs) per annum in the next 12
to 18 months.

Moody's also highlights that the covenant-lite transaction will
result in weak protection for lenders.  Avast's recent track
record of deleveraging notwithstanding, it will notably have the
ability to raise up to $300 million in incremental facilities.

Moody's views Avast's liquidity profile as excellent.  While the
proposed transaction will partially consume the existing cash
balances at Avast and AVG, liquidity will be supported by an
estimated cash overfunding of $89 million at closing and full
availability under the upsized $85 million RCF maturing in 2021.
Avast's strong cash flow generation will further boost liquidity,
in spite of the integration costs to be borne in the remainder of
2016 and in 2017.

The Ba3-PD, in line with the CFR, assumes a 50% recovery rate.
The senior secured first lien term loans and RCF are the only
financial debt instruments in the capital structure, hence they
are rated in line with the CFR.

                    RATIONALE FOR STABLE OUTLOOK

The stable outlook reflects Moody's expectation that Avast will
achieve strong EBITDA growth following the acquisition of AVG
such that Moody's adjusted gross debt/EBITDA will decrease
towards 3.5x and FCF/debt will remain well above 10% in the next
12 to 18 months.  In addition, the outlook assumes no material
debt funded acquisitions or shareholder distributions in the next
few years.

              WHAT COULD CHANGE THE RATING UP/DOWN

Given Avast's weak positioning in the Ba3 category, an upgrade is
unlikely in the next 12 to 18 months.  However, positive ratings
pressure could develop over time if Avast (1) successfully
continues to diversify its revenue and profit streams, (2)
maintains Moody's adjusted EBITDA margins well above 50%, (3)
delevers towards 2.0x and (4) pursues a conservative financial
policy with no debt-funded acquisitions or shareholder
distributions.

Conversely, negative pressure could materialize if (1) the paid
user base declines on a sustainable basis, (2) EBITDA does not
increase such that leverage does not decline towards 3.5x 12 to
18 months after closing, (3) FCF/debt falls to around 10% or (4)
the liquidity profile weakens.

                      PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Software
Industry published in December 2015.

Avast was founded in 1988 in the Czech Republic and has grown to
become a global provider of security software and related
solutions -- primarily focused on the consumer (including mobile)
market with small business clients as well.  The company has
developed strong positions globally and is one of the world's
largest online service companies in terms of installed user base,
which includes approximately 240 million protected devices (of
which 11 million are paying subscribers) as of June 2016.  For
the last twelve months to March 2016, the company reported sales
of $273 million and EBITDA of $187 million.  Avast is 41% owned
by funds advised by CVC Capital Partners, Summit Partners (6%),
with the founders, management and employees holding the balance.


===========
P O L A N D
===========


TVN SA: Moody's Withdraws Ba2 Corporate Family Rating
-----------------------------------------------------
Moody's Investors Service has withdrawn TVN S.A.'s Ba2 corporate
family rating and Ba2-PD probability of default rating (PDR) as
well as the Ba2 rating and loss given default (LGD) assessment of
LGD4 of TVN Finance Corporation III AB's EUR430 million 7.375%
guaranteed senior unsecured notes due in 2020.

                         RATINGS RATIONALE

Moody's has withdrawn the ratings because it believes it has
insufficient or otherwise inadequate information to support the
maintenance of the rating.

Headquartered in Warsaw, TVN S.A. is one of the leading
television broadcasters in Poland.  TVN and its subsidiaries own
and operate 12 television channels including a leading free-to-
air national channel, news channel and other thematic channels.
TVN also has a stake ownership in the digital pay-TV platform
nC+, which was created in December 2012 through the combination
of Canal+'s CYFRA+ and TVN's "n", in two leading Direct-To-Home
(DTH) TV platforms as well as an indirect interest in Polish
internet portal Onet.pl.  TVN was acquired in the middle of 2015
by an American public company Scripps Networks Interactive, Inc.
(Baa3, Stable) and consequently it was removed from the Warsaw
Stock Exchange at the end of 2015.


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


KIROV REGION: Fitch Affirms 'BB-' LC Issuer Default Ratings
-----------------------------------------------------------
Fitch Ratings has revised Russian Kirov Region's Outlook to
Stable from Negative and affirmed the region's Long-Term Foreign
and Local Currency Issuer Default Ratings (IDRs) at 'BB-',
National Long-Term Rating at 'A+(rus)' and Short-Term Foreign
Currency IDR at 'B'.

The Outlook revision reflects the recovery of Kirov Region's
operating performance accompanied by an improved debt structure,
leading to reduced refinancing pressure.

KEY RATING DRIVERS
The Outlook revision reflects the following rating drivers and
their relative weights:

HIGH
Kirov Region improved its operating balance to 2.7% of operating
revenue in 2015, from 0.6% in 2014 and a negative 3.2% in 2013.
This was driven by strict control on operating expenditure, which
remained almost unchanged in 2015, and growth of operating
revenue supported by increased tax proceeds. Tax revenue
increased 15%, due to higher corporate income tax (CIT), which
offset a moderate decline in current transfers and other
operating revenue. Fitch expects CIT to fall back in 2016 and
projects 2%-4% annual tax revenue growth in 2016-2018.

Fitch forecasts an operating margin of 2%-3%, which will be
sufficient to cover interest payments over the medium term. In
2015, Kirov's current balance returned to positive territory
after three years of being in deficit, due to stronger operating
performance and reduced interest payments. Interest payments
declined to RUB0.8 billion in 2015 from RUB1.2 billion in 2014 as
the region increased the proportion of low-cost budget loans in
its debt portfolio.

In 2015, Kirov contracted RUB10 billion three-year budget loans
to refinance its short-term bank loans. This improved its debt
structure by increasing the share of subsidized funding to 70% of
direct risk at end-2015 (2014: 34%), and by shifting about 40% of
the region's refinancing needs to 2018. As of June 1, 2016, the
region's direct risk composed RUB7.5 billion bank loans and
RUB18.8 billion budget loans; only 26% of direct risk is due in
2016. Kirov has RUB5.4 billion undrawn credit lines,
RUB1.4 billion in cash balance and also expects to contract an
additional budget loan by end of the year, all of which will
fully cover its refinancing needs for 2016.

Fitch said, "We project Kirov's direct debt to remain moderate at
below 40% of current revenue (2015: 18%) and direct risk to reach
70% by end-2018 (2015: 59%) due to expected budget deficit. We
forecast the region's budget deficit to further narrow to 5%-7%
of total revenue over the medium term, from 7.7% in 2015 and an
average 11% in 2012-2014, driven by requirements imposed by the
Ministry of Finance as a condition for granting budget loans to
the region. We expect Kirov to follow a strict cost control
policy as its expenditure flexibility remains limited."

The region's ratings also reflect the following key rating
drivers:

Kirov's economic profile is weaker than the average Russian
region. Gross regional product (GRP) per capita was 66% of the
national median in 2014. The economy is diversified. The top 10
taxpayers contributed less than 20% of the region's tax revenue
in 2014. The major taxpayers are spread across various sectors of
the economy, which makes the region's tax proceeds less
vulnerable to the economic cycle. Based on the region's
preliminary estimates GRP contracted 4% in 2015 (2014: grew
2.2%), in line with the national economic trend. The regional
administration expects the local economy to stagnate or grow only
1% per annum in 2016-2018.

Russia's institutional framework for sub-nationals is a
constraint on the region's ratings. Frequent changes in the
allocation of revenue sources and in the assignment of
expenditure responsibilities between the tiers of government
hamper the forecasting ability of local and regional governments
in Russia.

RATING SENSITIVITIES
An improvement in the operating margin towards 10%, coupled with
a debt payback ratio (direct risk to current balance) of around
10 years on a sustained basis, could lead to an upgrade.

The inability to maintain a positive operating margin on a
sustained basis or an increase in direct risk above 80% of
current revenue could lead to a downgrade.


KOSTROMA REGION: Fitch Affirms 'B+' LC Issuer Default Ratings
-------------------------------------------------------------
Fitch Ratings has revised Russian Kostroma Region's Outlook to
Stable from Negative while affirming the Long-Term Foreign and
Local Currency Issuer Default Ratings (IDRs) at 'B+', National
Long-Term Rating at 'A-(rus)' and Short-Term Foreign Currency IDR
at 'B'. Kostroma region's outstanding senior unsecured domestic
bonds have been affirmed at 'B+' and 'A-(rus)'.

The Outlook revision reflects Fitch's expectation that Kostroma's
operating balance will recover and that the region's fiscal
deficit will narrow over the medium term. The ratings also factor
in the region's high direct risk, a weak local economy and an
evolving Russian institutional framework.

KEY RATING DRIVERS
The Outlook revision reflects the following rating drivers and
their relative weights:

HIGH
Fitch projects that Kostroma's operating balance will further
improve to 6%-7% of operating revenue in the medium term, from
2.9% in 2015 and 0.2% in 2014. This should be sufficient for
interest payments, which should therefore allow the current
balance to return to a small surplus.

Fitch said, "We forecast Kostroma's deficit before debt variation
will gradually narrow to 6%-7% of total revenue from a high
average 14% in 2013-2015, due to extensive cost-cutting in
operating and capital expenditure. We expect the region to follow
the strict cost control policy imposed by the Ministry of Finance
as a condition for granting state support to the regional
government."

Fitch expects Kostroma to keep operating expenditure growth below
4% over the medium term, while freezing capital expenditure.
Operating revenue, which will be weighed down by a sluggish
national economy, is projected by Fitch to grow 4%-5%, as a
result of inflation-driven nominal tax-base expansion.

The region's operating margin improvement in 2015 was driven by
strict control on operating expenditure -- which fell 4.6% yoy --
offsetting weak operating revenue. Operating revenue declined 2%
as corporate income (CIT) tax fell 14% on a weak economy. Fitch
expects CIT to recover in 2016 and projects 4%-5% annual tax
revenue growth in 2016-2018.

MEDIUM
Fitch expects the region's direct risk to continue to grow to
103% of current revenue by end-2016, which is slightly lower than
its previously projected 110% in January 2016. This is due to a
smaller expected deficit of RUB1.7 billion (January forecast:
RUB2.5 billion) based on budget execution during January-June
2016. We expect the region's direct risk to continue to increase
in 2017-2018, towards 110% of current revenue, which will
nevertheless remain commensurate with current ratings.

Kostroma's direct risk has risen over the last five years to
RUB17.7 billion or 97% of current revenue at end-2015 (2014:
RUB15.9 billion and 86%). The region is among the most indebted
Russian regions and its debt metrics are weaker than the 'B+'
peer median.

Kostroma's debt profile is short-term, with 95% of total direct
risk maturing in 2016-2018. Fitch expects the region's current
balance to be weak over the medium term, leading to more capital
market funding. However, Fitch believes the region will be able
to attain the required funding in advance of the existing debt
maturity given its reasonable access to domestic capital markets.

Refinancing risk is partly mitigated by the region's reliance on
federal budget loans, which accounted for 46% of direct risk at 1
June 2016. Maturing federal budget loans are likely to be rolled
over by the federal government.

The region's ratings also reflect the following key rating
drivers:

The region's economic profile is weaker than the average Russian
region. Gross regional product (GRP) per capita was 77% of the
national median in 2014 and average salary was 80% of the
national median in December 2015. Fitch forecasts national GDP
will fall 0.7% in 2016, which in turn will weigh on the region's
economic and budgetary performance.

Russia's institutional framework for sub-nationals is a
constraining factor on the region's ratings. It has a shorter
record of stable development than many of its international
peers. The predictability of Russian LRGs' budgetary policy is
hampered by frequent reallocation of revenue and expenditure
responsibilities within government tiers.

RATING SENSITIVITIES
Improvement in the operating balance towards 10% of operating
revenue and stabilization of direct risk below 100% of current
revenue on a sustained basis could lead to an upgrade.

The region's inability to curb debt growth, accompanied by
persistent refinancing pressure and a negative operating balance,
would lead to a downgrade.


MOSCOW UNITED: S&P Affirms 'BB-' CCR; Outlook Stable
----------------------------------------------------
S&P Global Ratings affirmed its 'BB-' long-term corporate credit
rating and 'ruAA-' Russia national scale rating on Russia-based
electricity utility Moscow United Electric Grid Co. (MOESK).  The
outlook is stable.

The affirmation reflects S&P's expectation of MOESK's resilient
operating performance in the coming years.  S&P thinks the
company's expected performance will largely offset the recent
increase in dividend distributions and still-high capital
expenditures (capex).

"We factor in that MOESK will maintain or moderately grow EBITDA
in 2016-2017, on the back of tariff increases broadly in line
with inflation and despite somewhat lower electricity
transmission volumes that suffer from the weak economic backdrop
in Russia.  We expect the company will maintain its S&P Global
Ratings-adjusted ratio of funds from operations (FFO) to debt
comfortably above 30% (above 20% excluding connection fees),
which we see as commensurate with the current rating.  This is
despite the negative discretionary cash flow we anticipate, owing
to still-high capex and dividends.  The latter have increased
following the government's decision to increase dividends to 50%
of net income under International Financial Reporting Standards
(IFRS), at least in 2015, for government-owned companies
including MOESK.  We currently anticipate that these high
dividend distributions may continue in the future.  Highly
volatile cash flows, related notably to the high share of
revenues from connection fees (24% of EBITDA in 2015) that depend
on economic growth, further constrain our assessment of MOESK's
financial risk profile as aggressive," S&P said.

MOESK's fair business risk profile remains constrained by a
tariff regime that lacks protection from political interventions,
a track record of government attempts to manually control
electricity tariffs, a somewhat concentrated customer base, and
an above-industry-average level of losses in grids.

These constraints are mitigated by MOESK's role as the major
distribution grid operator in Moscow and Moscow Oblast (which S&P
considers to be the most lucrative areas in the country) and its
relatively stable earnings base derived from regulated power
distribution.  A portion of revenues is generated by the new
connections segment, which S&P considers to be more volatile.

S&P also continues to believe that there is a moderate likelihood
that MOESK would receive timely and sufficient extraordinary
support from the Russian government (Russian Federation; foreign
currency BB+/Negative/B, local currency BBB-/Negative/A-3), its
ultimate owner, if needed.  S&P views the role of the company as
important and link as limited.  In particular, S&P thinks that
privatization risk is low in the next 12 months, given the
current economic environment, but it might again increase when
economic conditions stabilize.

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

   -- A marginal decline in volumes of electricity distributed in
      2016, then almost flat in 2017.
   -- A 6%-8% rise in tariffs in 2016-2017.
   -- Flat EBITDA margin of 31.5%-32.5% in 2016-2017, on the back
      of a moderate tariff rise and effective operating costs
      management.
   -- Capex of about Russian ruble (RUB)36 billion-RUB38
      billion ($0.5 billion) in 2016-2017.
   -- A higher dividend payout of RUB5.5 billion-RUB6 billion
     (50% of net income under IFRS).

Based on these assumptions, S&P arrives at these credit measures
for MOESK in 2016-2017:

   -- A debt-to-EBITDA ratio of about 2x.
   -- FFO to debt in the 33%-42% range.

The stable outlook reflects S&P's opinion that MOESK will
maintain moderate leverage over the next 12 months, with adjusted
FFO-to-debt in the 30%-45% range (20%-30% excluding connection
fees from EBITDA) despite continued negative discretionary cash
flow generation, and continue to prudently manage its liquidity.
This would correspond to debt to EBITDA in the 2x-3x range (3x-4x
excluding connection fees from EBITDA).  S&P's outlook, in
particular, factors in continued tariff increases in line with
inflation and no substantial decline in collection of
receivables. The outlook also takes into account that if S&P
lowers its local currency long-term sovereign rating on Russia by
one notch, all else remaining equal, S&P is unlikely to take a
similar rating action on MOESK.

S&P might lower its rating on MOESK if the FFO-to-debt ratio fell
below 30% (below 20% excluding connection fees), for example, as
a result of further weakening in the economy and problems with
collecting of receivables.  Metrics may also deteriorate as a
result of the government's reluctance to continue raising tariffs
to compensate for the company's high capex and dividends.
Alternatively, downward pressure might arise if the company
starts to rely excessively on short-term financing.

Although not anticipated in the next 12 months, S&P could raise
the rating if Russia's economic stabilizes and MOESK's financial
risk profile strengthens, with FFO to debt above 45% on a
consistent basis (above 30% excluding connection fees from
EBITDA).  Also, S&P would raise its rating on MOESK if S&P raise
the local currency sovereign rating on Russia as S&P would then
incorporate a notch for extraordinary government support in S&P's
rating on MOESK to reflect the government's increased ability to
intervene.  S&P views an upgrade of Russia as unlikely at this
stage, however, giver S&P's negative outlook on the long-term
rating.


NIZHNIY NOVGOROD: Fitch Affirms 'BB-' LC Issuer Default Ratings
---------------------------------------------------------------
Fitch Ratings has affirmed the Russian City of Nizhniy Novgorod's
Long-Term Foreign and Local Currency Issuer Default Ratings
(IDRs) at 'BB-', with Stable Outlooks, and Short-Term Foreign
Currency IDR at 'B'. The agency has also affirmed the city's
National Long-Term Rating at 'A+(rus)' with Stable Outlook.

The affirmation reflects Fitch's unchanged base case scenario
regarding Nizhniy Novgorod's weak operating balance, and
increasing direct risk driven by an ongoing deficit before debt
variation over the medium term.

KEY RATING DRIVERS
The ratings reflect the city's a moderate, but short-term, direct
risk, a low operating balance that is insufficient to cover
interest payment and a weak institutional framework for Russian
sub-nationals. The ratings also factor in a diversified local
economy and potential support from the Nizhniy Novgorod Region
(BB/Negative/B).

Fitch said, "We expect the city's current balance to remain
negative over the medium-term, weighed down by growing direct
debt and high interest rates on the domestic capital market. At
the same time Fitch is projecting a modest recovery of the
operating margin to 1%-2% over 2016-2018, after a close to zero
margin during 2014-2015. This is based on our expectation that
the administration will keep operating expenditure growth below
operating revenue growth.

"We expect direct risk will grow to RUB9.5 billion by end-2016,
from RUB8.2 billion in 2015. We project a deficit at 6.8% of
total revenue for 2016 (2015: deficit 6%) and 5.9% by 2018.
Despite growth, direct debt remains moderate and should stay
below 55% of current revenue up to end-2018."

Historically the City of Nizhniy Novgorod's debt had been biased
towards one-year bank loans, which led to ongoing refinancing
pressure. In 2016 the city has contracted several three-year bank
loans totalling RUB3.7 billion (46% of total debt stock as of 1
July 2016), extending its debt repayment profile till 2019 and
mitigating refinancing pressure. However, the city still has to
repay RUB2 billion of bank loans and RUB1 billion short-term
treasury loans (34% of direct risk) during 2H16. Fitch expects
the city to be able to refinance its maturing liabilities,
although the short-term tenor of its debt means that it will
continue to face refinancing risk.

The city has a population of 1.3 million and is the capital of
Nizhniy Novgorod Region, one of the top 15 Russian regions by
gross regional product, which provides an industrialized and
diversified tax base. The city receives negligible general-
purpose financial aid from the region as its fiscal capacity is
stronger than the average municipality in the region. Fitch
forecasts a 0.7% decline of national GDP in 2016, which in turn
will weigh on the city's economic and budgetary performance.

The City of Nizhniy Novgorod's credit profile remains constrained
by the weak institutional framework for local and regional
governments (LRGs) in Russia. Russia's institutional framework
for LRGs has a shorter record of stable development than many
international peers. The predictability of Russian LRGs'
budgetary policy is hampered by the frequent reallocation of
revenue and expenditure responsibilities among government tiers.

RATING SENSITIVITIES
A downgrade may result from a further increase of the city's
direct risk, driven by short-term financing, to above 60% of
current revenue, and weak budgetary performance with a continuing
negative current balance.

An upgrade may result from direct debt stabilizing at below 50%
of current revenue, coupled with a lengthening of the debt
maturity profile and improvement of budgetary performance with a
positive current balance on a sustained basis.


RYAZAN REGION: Fitch Affirms 'B+' LT Issuer Default Ratings
-----------------------------------------------------------
Fitch Ratings has affirmed Russian Ryazan Region's Long-Term
Foreign and Local Currency Issuer Default Ratings (IDR) at 'B+'
with Stable Outlook, Short-Term Foreign Currency IDR at 'B' and
National Long-Term Rating at 'A(rus)' with Stable Outlook.

The region's outstanding senior unsecured domestic bonds have
been affirmed at Long-term local currency 'B+' and National Long-
term 'A(rus)'.

The affirmation reflects Fitch's view that Ryazan's direct risk
will remain high but stable while its fiscal performance will be
satisfactory for the current rating in the medium term.

KEY RATING DRIVERS
The 'B+' rating reflects the region's high debt and weak Russia's
institutional framework. It also reflects the region's
satisfactory fiscal performance amid stable economic prospects.

Fitch said, "In its base case scenario Fitch expects Ryazan to
record satisfactory fiscal performance over 2016-2018. Over the
medium term we expect an operating surplus of 6%-7% of operating
revenue, sufficient to cover interest payments. Our forecasts are
based on the region's resilient tax base -- which should drive a
4%-5% yoy increase of operating revenue in 2016-2018 -- and on
continued operating spending (opex) restraint.

"Ryazan reported an operating margin of 8.6% in 2015 (2014:
6.5%), while its deficit before debt variation narrowed to 2.1%
of total revenue from 6% over the same period, underpinned by
spending optimization. We expect the region to post a moderate
deficit before debt variation in 2016 onwards at about 5%-7% of
total revenue, driven by capex funding requirements. In Fitch's
view the region's self-financing capacity should remain
satisfactory, with capital revenue and current balance covering
about 60% of capex (2011-2015: average 64%). At the same time
Fitch expects annual capex to fall to 12% of total expenditure
over 2016-2018 average 20% over 2011-2015.

"Fitch expects the region's direct risk to increase up to 75%-80%
of current revenue in 2016-2018, from average of 70% in 2011-
2014. The region's administration managed to contain direct risk
at RUB26.8 billion at end-2015 (2014: RUB26.9 billion), in line
with our expectations. By end-1H16 the region repaid some of its
bonds and bank loans, replacing them with budget loans from the
federal government. As a result its debt stock as of 1 July 2016
was 62% composed of federal budget loans (43% at end-2015), 36%
bank loans (50%) and 2% domestic bonds (7%)."

Ryazan's debt servicing ratio remains weak, with direct debt
servicing exceeding more than 2x the region's operating balance
in 2015. Additionally, the region's debt payback period in 2015
was over nine years, which is substantially more than the average
maturity of the region's debt portfolio of three years. Ryazan
therefore remains exposed to moderate refinancing risk as 45% of
its debt maturities are in 2H16-2017.

The region's latest forecast sees the local economy growing 1%-
2.5% annually in 2016-2018. According to the administration's
preliminary estimates, the local economy contracted 0.9% yoy in
real terms in 2015 after expanding 1.7% a year earlier. The
region's economy is modest in the national context but is fairly
diversified and local producers benefit from the region's close
proximity to Moscow, the country's largest market.

Russia's institutional framework for local and regional
governments is a constraint on the region's ratings. It has a
shorter track record of stable development than many of its
international peers. Weak institutions lead to limited
predictability of Russian LRGs' budgetary policies, which tend to
be shaped by the federal government's constant reallocation of
revenue and expenditures within government tiers.

RATING SENSITIVITIES
A positive rating action could result from an improvement of the
region's fiscal performance, leading to a smaller budget deficit
consistently below 5% of total revenue and an improved direct
risk-to-current revenue ratio of less than 70% on a sustained
basis.

Increased total indebtedness with net overall risk above 90% of
total revenue, accompanied by persistent refinancing pressure and
a negative current balance, would lead to a downgrade.


VOLGOGRAD REGION: Fitch Affirms 'B+' LT Issuer Default Ratings
--------------------------------------------------------------
Fitch Ratings has affirmed Volgograd Region's Long-Term Foreign
and Local Currency Issuer Default Ratings (IDR) at 'B+', Short-
Term Foreign Currency IDR at 'B' and National Long-Term rating at
'A(rus)'. The Outlooks on the Long-Term ratings are Stable. The
region's outstanding senior unsecured domestic bond issues have
been affirmed at 'B+' and 'A(rus)'.

The affirmation reflects the region's budgetary performance and
debt metric being in line with Fitch's base case scenario. The
Stable Outlook reflects the agency's expectation that the
region's direct risk will stabilize over the medium term.

KEY RATING DRIVERS
The 'B+' rating reflects Volgograd's historically weak budgetary
performance and high direct risk due to a persistent budget
deficit in the past. In 2011-2015, the region's average operating
balance was about zero and the average deficit before debt
variation 12% of total revenue, which resulted in sharp growth of
direct risk to 64% of current revenue by end-2015 from 16% at
end-2010.

Fitch projects a moderate improvement of the operating
performance over the medium term and forecasts current balance at
about 3% of current revenue and budget deficit narrowing to 3%-5%
in 2016-2018. Since 2015, the region's administration has been
implementing extensive cost-cutting measures in operating and
capital expenditure. Volgograd is optimizing the list of social
aid recipients, freezing wages indexation for administration
staff, implementing centralized state procurement and optimizing
the network of budgetary institutions.

Fitch said, "In 2015, the region narrowed the budget deficit to
8.4% from 10.6% in 2014 and intends to record a budget surplus in
2016-2018. Fitch has a more conservative view and projects a
gradual reduction of the deficit. We consider the region has
limited headroom to sharply reverse the five-year weak
performance given stagnating tax revenues and the rigidity of
most budget expenditure."

Fitch forecasts Volgograd's direct risk growth to slow in 2016-
2018. Risk will stabilize at about 70% of current revenue as a
result of the expected reduction of the budget deficit. In
5M2016, the direct risk remained almost unchanged, although its
structure improved towards budget loans. Volgograd contracted
RUB6.3 billion low-cost budget loans and refinanced maturing
bonds and bank loans. As a result, the subsidized funding
composed 49% of direct risk at June 2016, up from 36% at end-
2015. Fitch views this positively as the budget loans are almost
free (0.1% annual interest rate), which helped the region save on
interest payments.

The region's refinancing risk is lower than its 'B' category
peers. In its debt policy, Volgograd relies on bonds, which
comprise 32% of its debt stock, and three-year banks loans (19%).
About 80% of maturities are spread between 2017 and 2019; by end-
2016 Volgograd needs to repay RUB5.6 billion, or 12% of its
direct risk. The administration plans to fund 2016 refinancing
needs with bank loans and budget loans. The region does not plan
to issue new bonds in 2016.

Volgograd region has an industrialized economy with a
concentrated tax base. The top 10 taxpayers are subsidiaries of
large national companies operating in oil & gas, power
generation, transportation and financial sectors. They
contributed about 40% of total tax revenue in 2015, which makes
the region's revenue vulnerable to economic cycles. The region's
administration preliminarily estimated that GRP declined 1% in
2015, which is better than the 3.7% national. It expects a 1%-3%
restoration in 2016-2018 supported by development of local
industries.

Russia's institutional framework for sub-nationals is a
constraining factor on the region's ratings. Frequent changes in
the allocation of revenue sources and in the assignment of
expenditure responsibilities between the tiers of government
hampers the forecasting ability of local and regional governments
in Russia.

RATING SENSITIVITIES
Stabilization of direct risk at below 70% of current balance and
sustainable improvement of the operating balance sufficient to
cover interest payments could lead to an upgrade.

The region's inability to curb continuous growth of total
indebtedness, accompanied by an increase of the region's
refinancing pressure and a negative operating balance, would lead
to a downgrade.


===============
S L O V E N I A
===============


KD GROUP: Fitch Affirms 'BB' Issuer Default Ratings
---------------------------------------------------
Fitch Ratings has affirmed Slovenian composite insurer Adriatic
Slovenica Zavarovalna druzba d.d.'s (Adriatic Slovenica) 'BBB-'
Insurer Financial Strength (IFS) Rating and its holding company,
KD Group financna druzba, d.d.'s (KD Group) 'BB' Issuer Default
Rating (IDR). The Outlooks on both ratings are Stable.

KEY RATING DRIVERS
The ratings reflect KD Group's high financial leverage,
historically weak profitability and fairly small size by global
standards. However, KD Group has a strong market position in the
Slovenian insurance and asset management market.

KD Group's high financial leverage remains a negative rating
driver. Adriatic Slovenica issued EUR50 million of subordinated
Tier 2 notes in May 2016 and used EUR27.6 million of the proceeds
to repay existing bank debt on KD Group level. This caused KD
Group's financial leverage to increase to 46% on a pro-forma
basis from 40% at end-2015 (2014: 47%, 2013: 51%). However, the
group plans to reduce leverage in the medium term, which Fitch
views positively for the ratings.

Fitch views KD Group's capitalization as "adequate" on a
consolidated basis as measured by the agency's Prism factor-based
capital model (Prism FBM). While Adriatic Slovenica reported a
strong regulatory solvency ratio of 172% on a Solvency I basis
and its Solvency Capital Requirement (SCR) ratio under Solvency
II was 124% at end-2015, KD Group's consolidated Prism FBM score
is negatively affected by a high amount of goodwill on the
holding company's consolidated balance sheet, which Fitch does
not give credit for in its capital assessment.

Fitch expects Adriatic Slovenica's Solvency II SCR ratio and KD
Group's Prism FBM score to improve in 2016, benefiting from the
subordinated notes issued in May 2016 and additional reinsurance
cover.

KD Group's reported net income declined to EUR0.8 million in 2015
from EUR4.7 million in 2014 (2013: EUR6.6 million). The reduction
in 2015 was mostly driven by the gross written premiums (GWP) of
the group's health business declining to EUR101 million in 2015
(2014: EUR108 million) and the segment's combined ratio worsening
to 101.6% (2014: 97.8%). Adriatic Slovenica has been consistently
profitable, reporting annual net income of over EUR10 million for
each of the past five years and an average return on equity of
18%.

KD Group's market position and scale are small, based on global
benchmarks, with GWP of EUR298 million in 2015 (2014: EUR302
million), total assets of EUR0.8 billion and shareholders' funds
of EUR121 million. Nevertheless, it is one of the largest
financial service providers in the Balkan region, with Adriatic
Slovenica being the second-largest insurer in Slovenia and the
group's asset management operations being the third-largest in
the Slovenian mutual fund market by assets under management.
Fitch views this strong position in the local market as a
rating-positive.

KD Group is in the process of divesting most non-core assets to
focus on its core insurance and asset management businesses.
Fitch expects this measure to improve the group's performance and
generate extra cash flow over the next three years.

As around two thirds of the group's assets are held in Slovenian
investments and 98% of the group's revenue is in Slovenia
(BBB+/Positive), the group's performance is exposed to the local
economy. This exposure includes the risk of losses on its
EUR324 million of non-unit linked investments, as of end-2015,
and the risk of lapses on its EUR260 million of unit-linked
liabilities. For example, write-downs on Slovenian banks led to
investment losses of EUR16 million in 2013, EUR2 million in 2014
and EUR2 million in 2015 for Adriatic Slovenica.

RATING SENSITIVITIES
KD Group's leverage improving to below 40%, in combination with
stabilized profitability, could lead to an upgrade.

The ratings could be downgraded if the group's consolidated
capital position weakens to a Prism FBM score of below "adequate"
for a sustained period. Financial leverage in excess of 50% could
also lead to a downgrade.


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


AUTO ABS 2012-3: DBRS Hikes Class B Debt Rating to B(sf)
--------------------------------------------------------
DBRS Ratings Limited upgraded the following notes issued by Auto
ABS 2012-3, FTA (Auto ABS 2012-3):

-- Class A upgraded to AAA (sf) from AA (high) (sf)
-- Class B upgraded to B (sf) from CCC (sf)

The rating actions are based on the following analytical
considerations as described more fully below:

-- Portfolio performance, in terms of delinquencies and
    defaults.
-- The default, recovery and loss assumptions on the remaining
    receivable portfolio.
-- Current credit enhancement (CE) available to the notes to
    cover the expected losses at each tranche's respective rating
    levels.

Auto ABS 2012-3, which closed in November 2012, is a
securitization of a portfolio of Spanish auto loan receivables
originated by Banque PSA Finance S.A., Sucursal en Espana. The
servicing of the receivables was transferred in October 2015 to a
newly formed entity, PSA Financial Services Spain, E.F.C.,
jointly owned by Banque PSA Finance S.A. and Santander Consumer
Finance, S.A.

Portfolio Performance
The collateral pool is performing in line with DBRS's
expectations. As of 31 May 2016, the receivable pool factor was
just below 50%. The gross default as a percentage of the
portfolio balance at the closing of the transaction is 1.34%. The
outstanding loan delinquencies remain stable. Loans more than 90
days delinquent but not defaulted as a percentage of the
outstanding receivable balance increased slightly to 0.09% from
0.06% year over year, whereas loans more than 30 days delinquent
increased to 1.16% from 0.96%. The cumulative recoveries on the
defaulted receivables are 56.25%. DBRS has updated the default
and recovery rate assumptions on the remaining receivable
portfolio to 6.98% and 22.71% from 7.68% and 22.21%,
respectively.

Credit Enhancement
The CE available to the notes has increased since the last rating
review as the transaction deleverages. As of 28 June 2016, the CE
to Class A increased to 35.05% and increased to 2.00% for Class
B. The sources of CE are the subordination of the Class B notes
for Class A, and the Reserve Fund and the excess spread for both
Class A and Class B.

The Reserve Fund in the transaction is currently at its target
level of EUR8.0 million and will start to amortize to 1.00% of
the outstanding Class A and Class B notes balance from the next
payment date in July 2016. The Reserve Fund provides both
liquidity and credit supports to Class A and B.

The net excess spread has increased and remained above 7.80%
since the restructuring in February 2015 when the coupons on the
notes were reduced. As of the last payment date of 28 June 2016,
the net excess spread was 8.21%.

Banco Santander SA (Santander) replaced Barclays Bank PLC,
Sucursal en Espana as the Account Bank to the transaction in June
2016. The Account Bank reference rating of "A", being one notch
below Santander's Long Term Critical Obligations Rating at A
(high), meets the Minimum Institution Rating criteria given the
AAA (sf) rating assigned to the Class A notes, as described in
DBRS's "Legal Criteria for European Structured Finance
Transactions" methodology.


===========
T U R K E Y
===========


EXPORT CREDIT: S&P Cuts Ratings to 'BB/B'; Outlook Negative
-----------------------------------------------------------
S&P Global Ratings lowered its foreign and local currency ratings
on Export Credit Bank of Turkey (Turk Eximbank) to 'BB/B' and
'BB+/B', respectively, from 'BB+/B' and 'BBB-/A-3'.  The outlook
is negative.

The rating action follows S&P's downgrade of the Republic of
Turkey.  S&P equalizes the ratings on Turk Eximbank with those on
its sole owner, the Republic of Turkey.  The ratings reflect
S&P's opinion that there is an almost certain likelihood that the
Turkish government would provide timely and sufficient
extraordinary support to Turk Eximbank in case of financial
distress.  S&P's rating approach for Turk Eximbank is based on
S&P's view of the bank's:

   -- Critical role in supporting Turkish exports, which is a key
      focus of national economic development; and

   -- Integral link with the Turkish government through the
      sovereign's sole ownership, government control of the board
      of directors, and the sovereign's guarantee on the ultimate
      recovery of losses on loans extended by the bank.

Turk Eximbank is the official state export credit agency.  Its
mandate is to support foreign trade and Turkish contractors and
investors operating abroad, through credit, guarantee, and
insurance programs.  The bank does not compete against commercial
banks, but works closely with them, encouraging them to increase
their support for the export sector.  As well as offering direct
lending, the bank also provides insurance and guarantees to
Turkish exporters.

Outstanding loans extended by Turk Eximbank have increased by
nearly 5x since 2011 to reach Turkish lira (TRY) 43.3 billion
(US$14.8 billion) in 2015.  Over the same period, total assets
increased to 9.3x of total equity from 2.6x.  Turk Eximbank's
direct and indirect exposure to the Turkish banking sector is
substantial.  As of end-December 2015, about 12.2% of the bank's
loans were to financial institutions and the rest were guaranteed
by banks.  A deterioration of the Turkish banking sector could
weigh on Turk Eximbank's financial performance, in S&P's opinion.

Various bodies govern Turk Eximbank.  The highest ranked is the
Supreme Advisory and Credit Guidance Committee, which is
currently chaired by the economy minister.  The committee is the
main decision-making authority for developing the bank's
strategy, and sets limits for credit, guarantees, and insurance
transactions.

The state minister in charge of the bank's activities selects the
board of directors.  The bank's general manager is named by
decree, signed by the minister in charge of the bank's
activities, the prime minister, and the president.

In S&P's opinion, the government has demonstrated its strong
support for Turk Eximbank through its repeated capital
contributions to the bank's equity base.

These have been either directly paid-in capital or retained
earnings that are managed by the bank and incorporated into its
total shareholder funds.  Furthermore, losses incurred by Turk
Eximbank due to political risk under its credit, guarantee, and
insurance programs are covered by the Turkish treasury.

As a 100% state-owned, wholesale bank, Turk Eximbank does not
accept deposits.

Funding from the Central Bank of the Republic of Turkey finances
most of Turk Eximbank's operations; the remaining funding comes
from market debt issuance, syndicated and bilateral loans, and
loans from supranationals.  Funding from the central bank is only
in foreign currency.  However, for rediscount facilities extended
to exporters, Turk Eximbank borrows the foreign currency
equivalent in Turkish lira from the central bank and repays these
loans in foreign currency, thereby contributing to the
accumulation of the country's foreign reserves.

S&P do not anticipate any changes to Turk Eximbank's underlying
role for the national economy or in its close links with the
Turkish state.

The negative outlook on Turk Eximbank mirrors that on Turkey.
Any change to the ratings on Turkey will likely result in a
similar rating action on Turk Eximbank.  Conversely, any change
in S&P's assessment of Turk Eximbank's critical role for or
integral link with the government could lead S&P to consider
lowering the ratings on Turk Eximbank below those on Turkey.


OYAK: S&P Lowers LT, ST Corp. Credit Ratings to 'BB+/B'
-------------------------------------------------------
S&P Global Ratings said that it has taken various rating actions
on Turkey-based Koc Holding A.S., OYAK (Ordu Yardimlasma Kurumu),
and Dogus Holding A.S., specifically S&P:

   -- Lowered its long- and short-term corporate credit ratings
      on Koc Holding to 'BBB-/A-3' from 'BBB/A-2'; and

   -- Lowered its long- and short-term corporate credit ratings
      on OYAK to 'BB+/B' from 'BBB-/A-3', and S&P's Turkey
      long-term national scale rating on OYAK to 'trAA+' from
     'trAAA', while affirming S&P's 'trA-1' short-term national
      scale rating.

The outlooks on both entities are negative.

At the same time, S&P revised its outlook on Dogus to negative
from stable and affirmed S&P's 'BB-/B' long- and short-term
corporate credit ratings.

The rating actions follow S&P's review of the three investment
holding companies after the downgrade of Turkey.  Because these
entities' portfolios are predominantly invested in domestic
assets, S&P considers that they are highly exposed to country
risk in Turkey and the resulting heightened unpredictability of
the operating environment.

                            KOC HOLDING

Koc Holding still passes S&P's hypothetical sovereign-default
stress test.  Therefore, S&P can rate it up to two notches higher
than the sovereign foreign currency rating on Turkey.  The two-
notch difference compared with the sovereign rating is
predominantly thanks to Koc's strong net cash position.  S&P
views as positive that the company's cash holding (mostly held in
lower-rated Turkish banks) is dominated by use of hard currency.
As of March 31, 2016, 68% of Koc's cash was in U.S. dollars,
while 32% was in Turkish lira.  As per S&P estimates, there is no
material change in the cash composition per currency as of June
30, 2016. On March 31, 2016, Koc had a net cash position of
Turkish lira (TRY) 2.2 billion (about $778 million), which S&P
estimates is somewhat lower as of June 30, 2016, due to payment
of TRY655 million related to the purchase of KFS shares at the
end of June. The negative outlook mirrors that on the sovereign.

                             OYAK

S&P thinks that, given OYAK's sizable cash position of TRY8.6
billion (broadly equivalent to $3 billion) mostly held in lower-
rated Turkish banks as of June 30, 2016, of which about 36% is in
U.S. dollars, the company should be in a position to withstand a
sovereign default.  Therefore S&P continues to rate OYAK one
notch higher than the sovereign.  The negative outlook reflects
that on the sovereign.

                               DOGUS

S&P has revised its outlook on Dogus to negative from stable to
factor in the rising uncertainties in the operating environment
of the group's investments, given their exposure to GDP-related
sectors such as construction and tourism.

RATINGS LIST

Koc Holding A.S.

Downgraded
                               To                 From
Koc Holding A.S.
Corporate Credit Rating       BBB-/Negative/A-3  BBB/Stable/A-2
Senior Unsecured              BBB-               BBB

OYAK (Ordu Yardimlasma Kurumu)

Downgraded; Ratings Affirmed
                                To                 From
OYAK (Ordu Yardimlasma Kurumu)
Corporate Credit Rating        BB+/Negative/B    BBB-/Stable/A-3
Turkey National Scale Rating   trAA+/--/trA-1    trAAA/--/trA-1

Dogus Holding A.S.

Ratings Affirmed; Outlook Action
                                 To                 From
Dogus Holding A.S.
Corporate Credit Rating         BB-/Negative/B     BB-/Stable/B

New Rating

Dogus Holding A.S.
Turkey National Scale Rating    trA/--/trA-1


TURKIYE IS BANKASI: S&P Cuts Counterparty Credit Rating to 'BB'
---------------------------------------------------------------
S&P Global Ratings said it took these rating actions on five
Turkish financial institutions:

   -- S&P lowered its long-term counterparty credit ratings on
      Turkiye Is Bankasi AS (Isbank), Garanti Finansal Kiralama
      A.S. (Garanti Leasing), Yapi ve Kredi Bankasi A.S.
      (YapiKredi), and Turkiye Vakiflar Bankasi TAO (VakifBank)
      to 'BB' from 'BB+'.  At the same, S&P affirmed its 'B'
      short-term counterparty credit ratings on these entities.

   -- S&P lowered its long-term counterparty credit rating on
      Turkiye Garanti Bankasi A.S. (Garanti) to 'BB' from 'BB+'.

   -- S&P also lowered its long-term Turkey national scale
      ratings on Isbank, VakifBank, and YapiKredi to 'trAA-' from
      'trAA+'. S&P affirmed its 'trA-1' short-term Turkey
      national scale ratings on these entities.

The outlooks on all five financial institutions are negative.

The rating actions follow S&P's downgrade of the Republic of
Turkey.  The downgrade reflects S&P's view that following the
attempted coup on July 15, Turkey's political landscape has
fragmented further.  S&P believes this will undermine Turkey's
investment environment, growth, and capital inflows into its
externally leveraged economy.  In the aftermath of the failed
coup, S&P believes that the risks to Turkey and Turkish banks'
ability to roll over its external debt have increased.

Potential erosion of investor confidence in Turkey could affect
banks' wholesale funding, which relies heavily on foreign
financing sources, with a significant portion of external debt
being short-term.  Also, any marked weakening in economic growth
could negatively affect Turkish banks' asset quality, earnings,
and capitalization, in S&P's view, although this is not its base-
case scenario.  Furthermore, an escalation of volatility in the
Turkish lira could damage domestic corporate borrowers' repayment
ability because they carry a large open position in foreign
currency, in S&P's opinion.

On the upside, decelerating credit growth to just 4.4% on a
nonannualized basis in first-half 2016 has eased pressure on
systemwide funding.  S&P also views positively the authorities'
recent proactive measures to support banks' liquidity if needed.
Although the operating environment will likely become more
difficult for Turkish banks, their sound asset quality, earnings,
and capitalization provide a good buffer to absorb the elevated
risks over the next 12 months, without dramatically damaging the
banks' financial profiles.

The banks' stand-alone credit profiles (SACPs) remain unchanged
at 'bb+'.

The negative outlooks on Garanti, Garanti Leasing, Isbank,
VakifBank, and YapiKredi reflect the negative outlook on Turkey.
In S&P's opinion, Turkish banks' financial profiles and
performance will remain highly correlated with the sovereign's
creditworthiness, owing to their significant holdings of
government securities and exposure to the domestic environment.
Bank-specific factors that might lead S&P to revise its ratings
on these five financial institutions are limited, and S&P's
future rating actions on these entities will be mainly contingent
on S&P's rating actions on Turkey.  Therefore, a lowering of the
foreign currency rating on the sovereign would trigger a lowering
of the ratings on these five financial institutions.

S&P would not lower its ratings on Garanti, its core subsidiary
Garanti Leasing, and YapiKredi if S&P revised downward its
assessments of their SACPs, all other factors being equal,
because S&P would start to take into account the likelihood of
extraordinary support from their foreign parents.

S&P would very likely revise the outlooks on these entities to
stable if S&P revised its outlook on the sovereign to stable.

RATINGS LIST

Downgraded; Ratings Affirmed
                                 To                  From
Turkiye Garanti Bankasi A.S.
Counterparty Credit Rating      BB/Neg./--      BB+/Stable/--

Yapi ve Kredi Bankasi A.S.
Garanti Finansal Kiralama A.S.
Counterparty Credit Rating      BB/Neg./B       BB+/Stable/B

Turkiye Vakiflar Bankasi TAO
Turkiye Is Bankasi AS
Counterparty Credit Rating      BB/Neg./B       BB+/Negative/B

Turkiye Is Bankasi AS
Turkiye Vakiflar Bankasi TAO
Yapi ve Kredi Bankasi A.S.
National Scale Rating           trAA-/--/trA-1  trAA+/--/trA-1


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


UKRAINE: Fitch Affirms 'CCC' LC Issuer Default Ratings
------------------------------------------------------
Fitch Ratings has affirmed Ukraine's Long-Term Local Currency
(LTLC) IDR at 'CCC'. The issue ratings on Ukraine's Long-Term
senior unsecured Local Currency bonds have also been affirmed at
'CCC'. The Short-Term Foreign Currency (STFC) IDR has been
affirmed at 'C' and a new Short-Term Local Currency (STLC) IDR of
'C' has been assigned.

Fitch said, "Under EU credit rating agency (CRA) regulation, the
publication of sovereign reviews is subject to restrictions and
must take place according to a published schedule, except where
it is necessary for CRAs to deviate from this in order to comply
with their legal obligations. Fitch interprets this provision as
allowing us to publish a rating review in situations where there
is a change in our criteria that we believe makes it
inappropriate for us to wait until the next scheduled review date
to update the rating or Outlook/Watch status. The next scheduled
review date for Fitch's sovereign rating on Ukraine is 11
November 2016, but Fitch believes that a portfolio review is now
warranted based on recent changes to our criteria.

"The rating committee that assigned the ratings included within
this Rating Action Commentary was a portfolio review following
recent changes to our criteria, and focused on three areas,
namely the assignment of STLC IDRs, the review of existing STFC
IDRs and the review of the notching relationship between existing
LTLC IDRs and Long-Term Foreign Currency (LTFC) IDRs. The
committee approved a variation from criteria on the basis that
the review applied all relevant sections of our criteria related
to the above rating types but did not apply the sections of the
criteria related to LTFC IDRs, as the latter were not included in
the scope of this review."

KEY RATING DRIVERS
The affirmation of Ukraine's LTLC IDR at 'CCC' reflects the
following key rating driver:

-- In line with the updated guidance contained in Fitch's
    revised Sovereign Rating Criteria dated July 18, 2016,
    Ukraine's credit profile does not support a notching up of
    the LTLC IDR above the LTFC IDR. This reflects Fitch's view
    that neither of the two key factors cited in the criteria
    that support upward notching of the LTLC IDR are present for
    Ukraine. Those two key factors are: (i) strong public finance
    fundamentals relative to external finance fundamentals; and
   (ii) previous preferential treatment of LC creditors relative
    to FC creditors.

The affirmation of Ukraine's STFC IDR at 'C' reflects the
following key rating driver:

-- In line with the updated guidance contained in Fitch's
revised Sovereign Rating Criteria dated July 18, 2016, Ukraine's
STFC IDR is derived from the mapping to its LTFC IDR of 'CCC'.

The assignment of a STLC IDR of 'C' to Ukraine reflects the
following key rating driver and its weight:

HIGH
The assignment of the STLC IDR is consistent with Fitch's
approach to assigning ST ratings by using its Long-Term/Short-
Term Rating Correspondence table to map the STLC IDR from the
LTLC rating scale. According to Fitch's Rating Definitions, the
Fitch Rating Correspondence Table is "a guide only and variations
from this correspondence will occur". However, variations to this
approach are rare in the case of sovereign ratings.

Ukraine's STLC IDR is derived from the mapping to its LTLC IDR of
'CCC'.

RATING SENSITIVITIES
The main factors that could lead to a change in the LTLC IDR are
as follows:
-- A change in the LTFC IDR
-- A change in the key factors or supporting factors for
notching
    up of the LTLC IDR from the LTFC IDR

The main factors that could lead to a change in the STFC IDR or
the STLC IDR are as follows:
-- A change in the LTFC IDR (for the STFC IDR)
-- A change in the LTLC IDR (for the STLC IDR)

The rating sensitivities outlined in the previous Rating Action
Commentary dated 13 May 2016 are unchanged in respect of the LTFC
IDR. Consistent with the criteria variation referred to above, a
review of the LTFC IDR and associated rating sensitivities was
not included as part of this review.

ASSUMPTIONS
The assumptions outlined in the previous Rating Action Commentary
dated May 13, 2016, are unchanged in respect of the LTFC IDR.
Consistent with the criteria variation referred to above, a
review of the LTFC IDR and associated assumptions was not
included as part of this review.


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


BHS GROUP: Sir Philip Says MPs Report "Biased and Unfair"
---------------------------------------------------------
Ashley Armstrong at The Telegraph reports that Sir Philip Green
has broken cover to complain that a highly damning report by MPs
was a "biased and unfair process" and is considering a legal
complaint against the co-chairman of the Commons select committee
responsible for the inquiry into BHS.

The retail tycoon had been branded the "unacceptable face of
capitalism" by a joint select committee who held him responsible
for the demise of BHS, The Daily Telegraph relates.

The senior MPs had been particularly scathing about the
multimillion pound dividends Sir Philip's family received from
BHS, which they argued weakened the retailer's chances of
survival, and the billionaire's decision to sell to a "manifestly
unsuitable" buyer, former bankrupt Dominic Chappell, The Daily
Telegraph discloses.

According to The Daily Telegraph, Sir Philip said "with the
benefit of hindsight, clearly Retail Acquisitions and
Mr. Chappell were very bad choice as purchaser on many fronts and
I feel badly let down.  Sadly, one cannot turn the clock back."

The man, once known as the King of the High Street, said that he
had sold BHS "100pc in good faith" and that he had given
Mr. Chappell around GBP200 million in cash and assets to take the
business forward, The Daily Telegraph relays.

However, Sir Philip rejected the MPs report, which he said was
"the predetermined and inaccurate output of a biased and unfair
process", The Daily Telegraph notes.

"I am sad and sorry for all the BHS people caught up in this
horrid story, but I do not believe that this story is being in
any way fairly portrayed," The Daily Telegraph quotes Sir Philip
as saying.

The retail magnate's outburst also follows the Prime Minister's
suggestion that he had been "irresponsible and reckless" as she
vowed to "reform capitalism so it works with everyone", The Daily
Telegraph relates.

Sir Philip has taken umbridge with comments made by Frank Field
MP, who told the BBC that the billionaire had "stolen money" from
BHS and Arcadia's pension funds, and directed his lawyers at
Schillings to threaten Mr. Field to apologize within 24 hours or
face legal action, The Daily Telegraph states.

Mr. Field has also called for Sir Philip to write a "big cheque"
for GBP700 million to cover the costs of BHS's pension deficit if
he wants to keep his knighthood, The Daily Telegraph discloses.
However, it has emerged the Topshop boss may only have to pay a
fraction of that, according to the head of the retailer's pension
trustees, The Daily Telegraph notes.

Chris Martin told The Daily Telegraph that politicians' attempts
to publicly decide on the right sum was like "pinning fog".

"I think the GBP700 million figure has been pulled out of thin
air," Mr. Martin, as cited by The Daily Telegraph, said.  "It is
far better for Sir Philip and the pensions regulator to quickly
decide what benefits should be protected and covered and then pay
that cost rather than argue over a number which changes on a
daily basis."

Mr. Martin said that if Sir Philip went ahead with his preferred
route of setting up a special vehicle, rather than pumping his
cash into the Pension Protection Fund, he might only have to pay
GBP110 million, The Daily Telegraph notes.

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


EMERALD 2 LIMITED: Moody's Affirms B2 CFR; Outlook Negative
-----------------------------------------------------------
Moody's Investors Service has changed Emerald 2 Limited (a
holding company of Environmental Resources Management, "ERM", or
the company) and Emerald 3 Limited's rating outlook to negative
from stable.  At the same time, Moody's has affirmed Emerald 2
Limited's B2 corporate family rating (CFR) and B2-PD probability
of default rating, as well as the B1 instrument ratings on
Emerald 3 Limited's USD754 million first-lien senior secured
facilities due in 2021 and Caa1 instrument rating on the USD175
second-lien secured facilities due 2022.

                         RATINGS RATIONALE

"The change in the outlook to negative reflects Moody's
expectations that current soft trading with pressure on top-line
and margins will result the company's financial leverage to
remain above 7.0x"says Pieter Rommens, a Moody's Vice President
and Senior Analyst.

However, ERM's B2 CFR reflects the company's (1) adequate
liquidity profile supported by the high cash generative nature of
the capex-lite business model; (2) track record of resilient
performance during last recession as a result of flexible cost
structure; (3) good geographic and sector revenue
diversification; (4) stable client base and revenue from repeat
business resulting in 11 months revenue visibility and (5)
leading position as pure-play provider of environmental
consulting in fragmented and highly competitive market.  Also,
any equity-funded acquisition brought into the restricted group
that contributes positively to EBITDA generation would be credit
positive.

Nevertheless, the CFR is constrained by the company's (1)
exposure to the energy and commodity sector resulting in pressure
on top line and margins; (2) very highly leveraged structure with
gross debt/EBITDA at 7.4x, based on LTM May 2016 EBITDA (as
adjusted by Moody's); (3) financial covenants block access to
Revolving Credit and Permitted Acquisitions Facilities; (4)
reliance to retain key quality staff and exposure to reputational
risk.

Despite the full drawdown of its acquisition facility, ERM's
liquidity profile remains adequate, with USD111 million
unrestricted cash on balance sheet at May 2016.  Only
USD2.5 million of the USD50 million RCF is used for bonds and
guarantees (the balance of USD47.5 million is undrawn).  However,
with May 2016 management reported Senior Net Leverage ratio of
5.67x, the financial covenant restricts the drawing of the RCF to
less than 30% ($15 million).  The covenanted Senior Net Leverage
ratio at June 2016 is 5.9x, falling to 5.6x in December 2016.
This covenant applies only for draw-down of the RCF, there are no
other ongoing leverage testing covenants on the drawn facilities.

In addition, the company Senior Facility Agreement allows for
$150 million Additional Facility, currently uncommitted and
undrawn. However, drawing under the Additional Facility are
restricted by a leverage test of 4.5x Net Senior and 6.0x Net
Total Leverage.

                              OUTLOOK

The negative outlook reflects Moody's expectation that the
company will report gross leverage above 7.0x in the next 6-12
months, but maintain an adequate liquidity profile as a result of
its good cash flow conversion and flexible cost structure.

                WHAT COULD CHANGE THE RATINGS UP

The company is currently weakly positioned in the B2 rating
category.  Moody's would consider stabilizing the rating outlook,
if ERM strengthens its liquidity profile and improves performance
so that adjusted debt/EBITDA moves towards 6.5x.

Although not foreseen in the near term, we would consider
upgrading the rating if adjusted debt/EBITDA falls below 5.5x on
a sustainable basis and the company maintains an adequate
liquidity profile.

                 WHAT COULD CHANGE THE RATINGS DOWN

Downward pressure on the rating could develop if Moody's expects
ERM's debt/EBITDA to remain above 7.0x for a sustained period of
time, its liquidity position deteriorates or free cash flow
becomes negative.

List of affected ratings:

Affirmations:

Issuer: Emerald 2 Limited
  Corporate Family Rating, Affirmed B2
  Probability of Default Rating, Affirmed B2-PD

Issuer: Emerald 3 Limited
  Backed Senior Secured Bank Credit Facility, Affirmed B1 (LGD 3)
  Backed Senior Secured Bank Credit Facility, Affirmed Caa1 (LGD
   6)

Outlook Actions:

Issuer: Emerald 2 Limited
  Outlook, Changed To Negative From Stable

Issuer: Emerald 3 Limited
  Outlook, Changed To Negative From Stable

The principal methodology used in these ratings was Business and
Consumer Service Industry published in December 2014.

ERM is a global leading provider of environmental, health,
safety, risk and social consulting services with 150 offices in
40 countries.  In July 2015, OMERS Private Equity and the Alberta
Investment Management Corporation completed the acquisition of a
59% stake in ERM as part of a management buy-out from
Charterhouse Capital Partners for an enterprise value of $1.7
billion.  The 41% balance of ERM is owned by ERM partners.  As of
May 31, 2016, the company employed 4,696 people, including 565
partners, and reported LTM net revenue of USD632 million.


HBOS PLC: MPs Calls for FCA Break-Up After Probe Failures
---------------------------------------------------------
Tim Wallace at The Telegraph reports that an influential group of
MPs has said the Financial Conduct Authority should be broken in
two so that one unit can properly hunt down bad bankers while the
other supervises the wider state of the finance industry.

According to The Telegraph, MPs believe the sprawling nature of
the old Financial Services Authority, and the Financial Conduct
Authority which replaced it in 2013, meant bankers including
former HBOS chief Andy Hornby have not been properly
investigated.

Reports from regulators and Andrew Green QC last year found a
series of problems led to the downfall of HBOS in 2007, including
management error and weak supervision, The Telegraph recounts.

The Green report also found that enforcement regulators built a
case to investigate Mr. Hornby, but the investigation never
happened as communications broke down and the FSA's boss was not
informed of the study, The Telegraph relays.

"A separate body would bolster the perception of the enforcement
function's independence, and provide the regulators with greater
clarity over their objective," The Telegraph quotes Andrew Tyrie
MP, chairman of the Treasury Select Committee, as saying.  "The
case for separation merits serious re-examination.  The Treasury
should appoint an independent person to undertake a review."

Mr. Tyrie first proposed this in 2014 but the Treasury decided
against splitting up the FCA -- something the MPs want to be re-
examined in light of the new evidence, The Telegraph recounts.

By having two separate regulators the Treasury Committee believes
enforcement will always be given top priority by one regulator,
rather than being lost in the wider remit of the FCA, The
Telegraph notes.

HBOS plc is a banking and insurance company in the United
Kingdom, a wholly owned subsidiary of the Lloyds Banking Group
having been taken over in January 2009.  It is the holding
company for Bank of Scotland plc, which operates the Bank of
Scotland and Halifax brands in the UK, as well as HBOS Australia
and HBOS Insurance & Investment Group Limited, the group's
insurance division.  The group became part of Lloyds Banking
Group through a takeover by Lloyds TSB January 19, 2009.


TAURUS CMBS 2014-1: DBRS Confirms BB(sf) Rating on Class C Debt
---------------------------------------------------------------
DBRS Ratings Limited confirmed all classes of the Commercial
Mortgaged-Backed Floating-Rate Notes due May 2022 (the Notes)
issued by Taurus CMBS UK 2014-1 Limited, as follows:

Taurus CMBS UK 2014-1 Limited
-- Class A at A (sf)
-- Class B at BBB (sf)
-- Class C at BB (sf)

All trends are Stable with the exception of Class B and C, which
have had their trend changed to Negative from Stable.

The decision to change the trend of Classes B and C of the Notes
to Negative from Stable is a result of the potential decline in
commercial real estate (CRE) property values and the slowdown of
investments in the United Kingdom following the EU Referendum
vote in June. The collateral for this loan is primarily located
in secondary markets in the U.K. and the sponsor's business plan
is to liquidate the properties during the loan term, which could
be negatively impacted. Classes B and C are most vulnerable to
prolonged value decline during the sponsor's execution of the
business plan. Since closing, 42 properties have been sold,
resulting in a 39.6% property collateral reduction. The
collateral primarily consists of retail (high street retail,
shopping centers and retail warehouses), office and industrial
properties. As of the May 2016 remittance report, the outstanding
securitized balance has been reduced to GBP127.7 million and
there were 90 properties remaining in the transaction. The
sponsor is an affiliate of Apollo Global Management, which
purchased the portfolio through various loan foreclosures.

DBRS recently reviewed the transaction on 24 June 2016 and noted
that there is rollover risk as 23.7% of contractual income
expires on or before April 2017. DBRS applied an additional
stress to its NCF to account for this concentration.
Additionally, DBRS will monitor the leasing velocity as the
current uncertainty may also decrease occupier demand and
increase the sponsor's re-letting costs. The portfolio was last
valued in September 2015. The reported value for the 90
properties remaining is GBP249.8 million, a 4% like-for-like
increase since closing. As a result of the release premium paid
for disposed properties and the marginal value increase, the
reported loan-to-value ratio is 53.8%, down from 65.0% at
issuance. DBRS's current underwritten value represents a 33.7%
stress over the CBRE's appraisal value.

DBRS has completed a review of all DBRS-rated transactions with
collateral within the United Kingdom following the recent EU
Referendum vote in June. This impact has been addressed on a
deal-by-deal basis.


TURNSTONE BIDCO: S&P Assigns 'B' Rating to GBP425MM Sr. Notes
-------------------------------------------------------------
S&P Global Ratings assigned its 'B' issue rating and '4' recovery
rating to the proposed GBP425 million senior secured notes to be
issued by IDH Finance PLC.  The '4' recovery rating reflects
S&P's expectations of average recovery (in the higher half of the
30%-50% range) in the event of default.  IDH Finance will on-lend
the notes' proceeds to Turnstone Bidco 1 Ltd.

At the same time, S&P assigned its 'BB-' issue rating and '1'
recovery rating to Turnstone's proposed GBP100 million super
senior revolving credit facility (RCF).  The '1' recovery rating
reflects S&P's expectations of very high recovery (90%-100%) in
the event of a default.  S&P takes into account the RCF's super
senior position in the capital structure.

S&P understands that Turnstone will use the proceeds of its
proposed senior secured, alongside proceeds from its GBP130
million second-lien notes that also form part of the transaction,
to refinance existing debt.  The security package provided to
senior secured noteholders -- shared with RCF lenders --
comprises share pledges and substantially all tangible and
intangible assets of the issuer and guarantors, including
receivables under proceeds loan.  However, the National Health
Service contracts are not pledged.  S&P therefore views the
collateral as relatively weak.

The proposed senior secured notes and the RCF will be guaranteed
on a senior basis by Turnstone Midco 2 Ltd., the parent
guarantor, and by subsidiaries representing 84.5% of consolidated
EBITDA before exceptional items (as of March 31, 2016).
Turnstone Midco 2 Ltd. and these subsidiaries will also guarantee
the second-lien notes but on a subordinated basis.

The 'B' corporate credit rating on Turnstone Bidco 1 Ltd. is
based on S&P's assessment of the company's fair business risk
profile and highly leveraged financial risk profile.  The outlook
is stable.

                         RECOVERY ANALYSIS

SIMULATED DEFAULT ASSUMPTIONS
   -- Year of default: 2019
   -- EBITDA at emergence: GBP65 million
   -- Implied enterprise value multiple: 5.0x
   -- Jurisdiction: U.K.

SIMPLIFIED WATERFALL
   -- Net enterprise value available to creditors: GBP307 million
   -- Super senior debt claims: GBP88 million*
      -- Recovery expectations: 90%-100%
   -- Senior secured debt claims: GBP442 million*
      -- Recovery expectations: 30%-50% (higher half of range)
   -- Second-lien debt claims: GBP136 million*
      -- Recovery expectations: Not rated
*All debt amounts include six months of pre-petition interests.


* DBRS Confirms Ratings of Four U.K. CMBS Transactions
------------------------------------------------------
DBRS Ratings Limited confirmed the following classes of European
CMBS transactions, as follows:

DECO 2012-MHILL Limited
-- Class A at AAA (sf);
-- Class B at AA (high) (sf);
-- Class C at A (high) (sf).

INDUS (ECLIPSE 2007-1) PLC
-- Class B at AAA (sf);
-- Class X at AAA (sf).

MINT 2015 PLC
-- Class GBP-A rated AAA (sf);
-- Class GBP-B rated AA (low) (sf);
-- Class GBP-C rated A (low) (sf);
-- Class GBP-D rated BBB (low) (sf);
-- Class GBP-E rated BB (low) (sf);
-- Class GBP-F rated B (high) (sf);

-- Class EUR-A rated AAA (sf);
-- Class EUR-B rated AA (high) (sf);
-- Class EUR-C rated A (low) (sf);
-- Class EUR-D rated BBB (low) (sf);
-- Class EUR-E rated BB (high) (sf).

WESTFIELD STRATFORD CITY FINANCE PLC
-- Class A at AAA (sf).

All trends across all transactions are Stable.

DBRS analyzed the portfolios in various stressed scenarios based
on its current expectations of the Brexit impact on commercial
real estate values. All ratings were confirmed given the
historical performance trends and DBRS value haircut at issuance
that is expected to sufficiently buffer the transactions from any
value declines.

DBRS has completed a review of all DBRS-rated transactions with
collateral within the United Kingdom following the recent EU
Referendum vote in June. This impact has been addressed on a
deal-by-deal basis. For more information on the impact to the UK
commercial real estate market, please see the press release,
"DBRS Takes Several Rating Actions on UK CMBS." Individual press
releases for the other transactions with collateral in the UK are
available on www.dbrs.com.


===============
X X X X X X X X
===============


* EU Banks Brace for Stress Tests, Investors Express Fear
---------------------------------------------------------
Patrick Jenkins at The Financial Times reports that EU stress
tests, the results of which are due out on Friday, July 29, are
focused on how short of capital the banks look in various
scenarios -- not how overcapitalized they are.

Rather than championing the robustness of the system, investors
fear the exercise will expose its weakness, the FT says.

European bank capital is stronger than it was back then, but it
is still feeble compared with US rivals', the FT notes.  And
Europe's headwinds -- anaemic economic growth, slim margins in
the middle of low interest rates and uncertain disruption
following the UK's vote to leave the EU -- are stiffer, according
to the FT.

Of late, the sharpest focus has been on Italy's banks, where
investors have been alarmed by the extent of non-performing
loans, the FT notes.  Monte dei Paschi di Siena, the world's
oldest bank, is also Italy's biggest problem -- with gross NPLs
of EUR50 billion, equivalent to nearly a third of assets, the FT
relays.  MPS's shares are currently trading at just 9% of the net
book value of its assets, the FT discloses.

Many of Italy's other lenders are also deeply troubled, putting
Rome in conflict with the EU over how to rescue them without
breaching European rules on state aid, the FT states.

According to the FT, a new European banks research paper from
analysts at Credit Suisse predicts that more than a quarter of
the lenders it has studied will fall below minimum capital
requirements in the stress test's "adverse scenario".


                            *********

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 * * *