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/raid1/www/Hosts/bankrupt/TCREUR_Public/170831.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, August 31, 2017, Vol. 18, No. 173 Headlines B U L G A R I A PLOVDIV CITY: S&P Affirms 'BB+' LT Issuer Credit Rating C Y P R U S RCB BANK: Moody's Hikes Long-Term Deposit Ratings to B1 G E R M A N Y AIR BERLIN: Legal Challenge Won't Halt Government Bridging Loan E.ON SE: Egan-Jones Lowers Senior Unsecured Ratings to BB HEIDELBERGER DRUCKMASCHINEN: S&P Affirms 'B' CCR, Outlook Stable G R E E C E DRYSHIPS INC: Egan-Jones Withdraws 'D' Sr. Unsecured Ratings SKW STAHL-METALLURGIE: Reaches Restructuring Deal with Speyside I R E L A N D GRIFFITH PARK CLO: S&P Affirms B-(sf) Rating on Class E Notes IRELAND: Egan-Jones Assigns 'B' FC Sr. Unsecured Debt Rating L U X E M B O U R G ALTISOURCE SOLUTIONS: Moody's Affirms B3 CFR, Outlook Stable ARCELORMITTAL: Egan-Jones Hikes Sr. Unsecured Ratings to BB+ N E T H E R L A N D S CNH INDUSTRIAL: Egan-Jones Lowers Sr. Unsecured Ratings to BB- RENOIR CDO: S&P Raises Ratings on Two Note Classes to BB+ N O R W A Y NORWEGIAN AIR: Egan-Jones Hikes Commercial Paper Rating to B R U S S I A DALNYAYA STEP: Sept. 7 Hearing in Browder Tax, Bankruptcy Case OTKRITIE: Russia's Central Bank to Intervene in Rescue S P A I N ATLANTIC YIELD: Egan-Jones Cuts Commercial Paper Rating to C BANCO POPULAR ESPANOL: Investors File 51 Suits Over Rescue REPSOL SA: Egan-Jones Hikes Senior Unsecured Ratings to BB TDA IBERCAJA 1: S&P Affirms B(sf) Rating on Class D RMBS Notes T U R K E Y * TURKEY: Rescue Fund Needed for Ailing Corporate Bond Market U K R A I N E FERREXPO PLC: Moody's Raises Corporate Family Rating to Caa1 U N I T E D K I N G D O M SEADRILL LTD: Egan-Jones Cuts Sr. Unsecured Ratings to CCC+ ********* =============== B U L G A R I A =============== PLOVDIV CITY: S&P Affirms 'BB+' LT Issuer Credit Rating ------------------------------------------------------- S&P Global Ratings, on Aug. 25 , 2017, affirmed its 'BB+' long- term issuer credit rating on the Bulgarian City of Plovdiv. The outlook remains positive. OUTLOOK The positive outlook reflects S&P's outlook on the Republic of Bulgaria. Upside Scenario Any rating action S&P takes on the sovereign in the next 12 months would likely be followed by a similar action on Plovdiv. This scenario assumes no changes in Plovdiv's credit characteristics. Downside Scenario S&P said, "We would revise the outlook to stable following a similar action on Bulgaria. We view a downside scenario based on Plovdiv's stand-alone credit profile (SACP) as unlikely, since the SACP is higher than the long-term rating on the city. We would revise our assessment of Plovdiv's SACP downward if we saw a significant worsening of the city's operating performance that would widen capital account deficits above 5%, in turn depleting cash levels or resulting in a structural increase in debt." RATIONALE S&P said, "Our rating on Plovdiv reflects our belief that the city's financial management will use its cash and proceeds from future debt issuance to fund its deficits after capital accounts, which we expect to widen due to the increased expenses for the ECoC event in 2019. The rating on the city remains constrained by the evolving and unbalanced institutional framework and the city's weak economy. "Our assessment of Plovdiv's SACP is 'bbb-'. In accordance with our criteria for rating non-U.S. local and regional governments (LRGs), we generally cap the long-term rating on an LRG at the same level as its respective sovereign. We believe the institutional and financial framework of Bulgarian LRGs limits their ability to meet the conditions specified in our criteria in order to be rated above their related sovereign. In particular, we view their autonomy to be limited by the still-high dependency on central government grants, subjecting local budgets to volatility stemming from intergovernmental relations. The system is also still relatively centralized, with low predictability on the outcome of reforms. "The institutional framework, the economy, and financial management limit the creditworthiness of Plovdiv The Bulgarian political environment continues to limit the predictability of Plovdiv's finances, given the important role the central government plays in the intergovernmental system. In light of the ongoing decentralization process, we don't rule out the possibility of unexpected changes in the distribution of revenues and government-mandated spending." Plovdiv's GDP per capita is relatively low compared with international peers, with average GDP over the past three years of about $7,400. On the upside, the structure of the economy has been improving, which is why we expect this figure to grow more or less in line with the national average. With approximately one third of the labor force still working in the manufacturing sector, the city is striving to move away from a low-skilled/low- tech structure to one requiring, and creating, higher-skilled jobs. S&P also expects tourism to pick up, especially given the city's role as the ECoC in 2019. The ECoC event has also allowed management to renew its efforts to tackle a backlog of key projects. In general, S&P assesses that the city's financial team is hampered by limited long-term planning and a lack of liquidity management policies, with no established internal guidelines aside from those set in the national legislation. Budgetary surpluses will remain positive but capital account deficits will widen S&P said, "We understand that the transfers provided to the city to fund state-delegated tasks -- principally maintenance and wages expenses -- are calculated on a per-capita basis. Therefore, we have revised our approach to examining all Bulgarian entities and we now include both local and state- delegated revenues and expenditures, roughly doubling Plovdiv's financials. As flows on both sides are similar, this change had no major effect on individual rating factors, but some of our ratios have changed, as detailed below. "We believe that, like in the past, Plovdiv will maintain solid operating surpluses, averaging 5% over 2017-2019. This represents a slight decrease compared with the 2015-2016 results, based on the increasing expenses related to the 2019 ECoC event. Funding for the event should come mostly from the municipal budget, although we expect external parties will also contribute. We expect the central government to contribute to finance capital projects over the next few years. This will enable the city to tackle some of the backlog in its capital program, which is why we believe capital expenses will remain at high levels over our forecasting period. Based on volatile results on the execution of budgets in the past, as well as the fact some of these revenue sources are not yet secured, we believe the actual financial results may be subject to volatility, which we continue to incorporate in our assessment. "The city's total capital plan currently includes renovation of major boulevards, a water treatment facility, and renovation of the city's river bank. While we acknowledge the possibility that the capital program might be scaled down if the city does not secure funding from the EU or other external sources, we believe the city sees most projects as almost mandatory and hence is not likely to postpone them further. The continued pickup in capital expenditures drives our forecast of deficits after capital accounts widening to an average of 2.7% of total revenues over 2017-2019. "Because of the important nature of some of the infrastructure projects, we think that Plovdiv will finance any funding shortfalls by issuing debt. We expect some debt absorption through an already contracted loan with the European Bank for Reconstruction and Development, and more debt will probably be contracted at a later stage through local banks or the Bulgarian Fund for Local Authorities and Governments, as the city has done in the past. Despite this expected debt increase, the inclusion of state-delegated activities in our calculations and the amortizing debt profile support our expectation that the debt burden will now remain well below 30% of operating revenues. "We further expect that despite increasing expenses, the liquidity coverage ratio will remain solid in the next 12 months. Adjusted for our base case of budget execution in the next 12 months, free cash will continue to cover more than 5x the debt falling due over that period. However, we think that management's financial policy remains relatively unpredictable, which constrains our liquidity assessment, especially in light of the fact that the city is capitalizing on the ECoC in 2019 to push through some key projects that have large expected funding needs. "Furthermore, similar to other Bulgarian cities we rate, Plovdiv's access to external liquidity is limited, based on Bulgaria's weak domestic banking sector. This is reflected in our review of the country's banking industry (see "Banking Industry Country Risk Assessment: Bulgaria," published Dec. 30, 2016). "We further note that Plovdiv's flexibility over its budget is now weaker than we had previously forecast. We note that about half of the budget comprises local revenues, which we see as adjustable within certain brackets set by the central government. However, we consider the city's ability to fully utilize this flexibility in practice as limited, due to taxpayers' unwillingness and inability to pay higher taxes. Furthermore, we believe that the headroom to cut expenditures remains limited due to the persistent infrastructure needs and service-related expenses that are necessary for the proper functioning of the city, and preparation for the ECoC event. "Exposure from contingent liabilities arises primarily from payables of health care companies and outstanding litigation cases, but the volume is low compared with consolidated revenues. Although we understand that the city has no plans to financially support its municipal companies, we do not completely disregard the risk of the city stepping in if the municipal companies are in need or under financial distress. "In accordance with our 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 the debt burden had improved, and that budgetary flexibility had deteriorated. All other key rating factors were unchanged. Key rating factors are 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 Rating To From Plovdiv (City of) Issuer Credit Rating Foreign and Local Currency BB+/Positive/-- BB+/Positive/-- Senior Unsecured Foreign Currency BB+ BB+ =========== C Y P R U S =========== RCB BANK: Moody's Hikes Long-Term Deposit Ratings to B1 ------------------------------------------------------- Moody's Investors Service has upgraded RCB Bank's long term local- and foreign-currency deposit ratings to B1 from B3 and its baseline credit assessment to b2 from b3. The rating action concludes the review initiated on May 19, 2017 and reflects (1) RCB Bank's strong solvency as well as Moody's expectation that the bank will continue to grow its standalone business and strengthen its franchise and (2) Moody's expectation that RCB Bank will maintain its strong links with Bank VTB, JSC (Bank VTB) (long-term local currency deposits: Ba1 stable, BCA: b1) one of its main shareholders with 46.3% stake, which has led the agency to incorporate one notch of rating uplift in RCB Bank's deposit ratings to capture a moderate probability of support from Bank VTB in case of need. The outlook on the long-term deposit ratings was changed to stable reflecting Moody's expectation that the bank's financial fundamentals will remain broadly unchanged over the next 12-18 months. RATINGS RATIONALE THE UPGRADE OF THE STANDALONE BCA TO B2 The upgrade of the BCA to b2 from b3 reflects RCB Bank's strong solvency, reflected in high capital and low levels of problem loans as well as Moody's expectation that the bank will continue to grow its standalone business and strengthen its franchise. Although currently most of RCB Bank business stems from its links with Bank VTB, with more than 60% of RCB Bank's loans guaranteed by Bank VTB, RCB Bank has been strengthening its stand-alone franchise over the last few years. Moody's expects the bank to gradually grow further its standalone operations both with foreign customers based in Cyprus and to a lesser extent with Cypriot customers. RCB Bank maintains a strong solvency position. As of December 2016, the ratio of the bank's shareholder's equity to total assets improved to 5.8% from 4.6% the year before, while its Tier 1 capital ratio was a high 20.79%. At the same time, RCB Bank's ratio of non-performing loans (NPLs) to gross loans stood at a low 0.83%. The bank is further buffered by its high coverage of problem loans, with the ratio of loan loss reserves to NPLs increasing to 90.3% in December 2016 from 82.1% in December 2015, and its high profitability, with a 1.0% return on assets as of December 2016. DEPOSIT UPLIFT DUE TO AFFILIATE SUPPORT RCB Bank's deposit ratings now incorporate one notch of uplift reflecting Moody's view of a moderate likelihood of support from Bank VTB in case of need. Although in 2014 VTB Bank's ownership in RCB Bank declined to 46.3% from 60% previously, RCB continues to have strong ties with Bank VTB which were tested during the financial crisis in Cyprus. Bank VTB continues to fund and guarantee most of RCB Bank's loans and Moody's expects RCB Bank to maintain these links while it continues to develop its standalone franchise in parallel, and this view underlies the decision too incorporate uplift from affiliate support into RCB Bank's deposit ratings. MOODY'S LOSS GIVEN FAILURE ANALYSIS In its application of its Loss Given Failure analysis for RCB Bank, Moody's continue to incorporate a high, 62%, proportion of corporate deposits in the bank's liability structure which is in line with its mainly corporate business focus. Moody's now also assumes a 25% outflow of corporate deposits prior to failure, an assumption applied to all European banks. The revised LGF assumptions do not have an impact on RCB Bank's ratings. WHAT COULD MOVE THE RATINGS UP/DOWN RCB Bank's ratings could be upgraded following a material strengthening in its standalone franchise leading to reduced concentration and lower reliance on wholesale funding, while maintaining its current strong capital buffers and low levels of problem loans. An improvement in the credit risk profile of Bank VTB and/or an increased likelihood of support in Moody's view, could also lead to an upgrade of RCB Bank's ratings. RCB Bank's ratings could be downgraded following a sharp rise in problem loans which would erode its profitability and weaken its capital buffers, or a material decline in capital due to high growth. A reduced capacity or willingness by Bank VTB to support RCB Bank in case of need could also result in a downgrade List of Affected Ratings Upgrades: -- LT Bank Deposits, Upgraded to B1 Stable from B3 Rating under Review -- Adjusted Baseline Credit Assessment, Upgraded to b1 from b3 -- Baseline Credit Assessment, Upgraded to b2 from b3 -- LT Counterparty Risk Assessment, Upgraded to Ba2(cr) from B1(cr) Affirmations: -- ST Bank Deposits, Affirmed NP -- ST Counterparty Risk Assessment, Affirmed NP(cr) Outlook Actions: -- Outlook, Changed To Stable From Rating Under Review The principal methodology used in these ratings was Banks published in January 2016. ============= G E R M A N Y ============= AIR BERLIN: Legal Challenge Won't Halt Government Bridging Loan --------------------------------------------------------------- Gernot Heller at Reuters reports that the German government said on Aug. 29 a legal challenge against Berlin's decision to grant a state bridging loan for insolvent airline Air Berlin won't stop dispersal of the funds. "The submission of the application . . . has no suspensory effect," Reuters quotes the economy ministry as saying in a statement, adding that Berlin expected the European Commission to approve the loan. Rival German airline Germania on Aug. 29 asked a Berlin court to block the bridge loan until the European Commission has given its go-ahead for such state aid, Reuters relates. The government has agreed to a EUR150-million loan to ensure that flights continue for a period of three months and to secure the positions of the airline's 8,000 employees in Germany, Reuters recounts. About Air Berlin In operation since 1978, Air Berlin PLC & Co. Luftverkehrs KG is a global airline carrier that is headquartered in Germany and is the second largest airline in the country. In 2016, Air Berlin operated 139 aircraft with flights to destinations in Germany, Europe, and outside Europe, including the United States, and provided passenger service to 28.9 million passengers. Within the first seven months of 2017, the Debtor carried approximately 13.8 million passengers. It employs approximately 8,481 employees. Air Berlin is a member of the Oneworld alliance, participating with other member airlines in issuing tickets, code-share flights, mileage programs, and other similar services. Air Berlin has racked up losses of about EUR2 billion over the past six years, and has net debt of EUR1.2 billion. On Aug. 15, 2017, Air Berlin applied to the Local District Court of Berlin-Charlottenburg, Insolvency Court for commencement of an insolvency proceeding. On the same day, the German Court opened preliminary insolvency proceedings permitting the Debtor to proceed as a debtor-in-possession, appointed a preliminary custodian to oversee the Debtor during the preliminary insolvency proceedings, and prohibited any new, and stayed any pending, enforcement actions against the Debtor's movable assets. To seek recognition of the German proceedings, representatives of Air Berlin filed a Chapter 15 petition (Bankr. S.D.N.Y. Case No. 17-12282) on Aug. 18, 2017. The Hon. Michael E. Wiles is the case judge. Thomas Winkelmann and Frank Kebekus, as foreign representatives, signed the petition. Madlyn Gleich Primoff, Esq., at Freshfields Bruckhaus Deringer US LLP, is serving as counsel in the U.S. case. E.ON SE: Egan-Jones Lowers Senior Unsecured Ratings to BB --------------------------------------------------------- Egan-Jones Ratings Company, on July 7, 2017, downgraded the local currency and foreign currency senior unsecured ratings on debt issued by E.On SE to BB from BB+. E.ON SE is a European holding company based in Essen, North Rhine-Westphalia, Germany. HEIDELBERGER DRUCKMASCHINEN: S&P Affirms 'B' CCR, Outlook Stable ---------------------------------------------------------------- S&P Global Ratings affirmed its 'B' long-term corporate credit rating on Germany-based printing equipment manufacturer Heidelberger Druckmaschinen (HDM). The outlook is stable. S&P said, "At the same time, we affirmed our 'CCC+' issue rating on the group's senior unsecured notes. The recovery rating on the notes is '6', indicating our expectation of negligible recovery prospects (0%-10%) in the event of a payment default. "The rating affirmation reflects our expectation that the operating performance of HDM will be stable over the next 12 months and that the group will achieve credit metrics according to our expectations for the rating, meaning adjusted debt to EBITDA of around 5.5x in fiscal 2018 (year ending March 30, 2018), improving toward 5.0x in fiscal 2019, and funds from operations (FFO) to debt higher than 10.5%. "HDM aims to become a digital products- and services-driven business and is in the process of changing its business model in order to achieve this long-term goal. The group has been able to largely finalize its operational restructuring program, although we expect some further restructuring costs as a result of the ongoing portfolio shift toward services and digital products." With more than a 40% market share, HDM is the largest global player and a technological leader in the sheetfed printing presses industry. However, the segment overall suffers from structural overcapacity due to the rise in electronic publishing and digital press. This shift in recent years has caused a decline in capacity utilization of printing shops, especially in developed economies. Furthermore, the commercial printing business is highly dependent on volatile advertising budgets, which increases end market volatility, whereas packaging-segment demand is more stable over the cycle. Some of these risks are mitigated by the strong market position in the services segment and focus on growth business units like consumables (around a 5% market share) and digital (less than a 5% market share). HDM has also been able to cut production capacity and reduce overhead costs. Although the adjusted EBITDA margin declined slightly year on year during fiscal 2017 (to 6.3%, versus 7.1% in fiscal 2016), S&P expects a slight margin improvement over the coming years, owing to modest sales growth, lower restructuring charges, and containment of the cost base. After extensive refinancing activities in previous years, HDM plans to further diversify financial sources and to reduce interest expenses. The group managed to decrease its debt and interest costs by around EUR5 million with the conversion of almost 95% of its EUR60 million convertible bond into equity on June, 30, 2017. In addition, in June 2016, it repaid in full its 2011 corporate bonds maturing in 2018 and S&P expects the group to further reduce the level of its financial debt over the coming years. The group has also diversified its financing sources, with a EUR100 million European Investment Bank loan and a EUR42 million KfW loan to finance its capital expenditure and its investments in digitalized products. Additionally, the group bought back its global logistics center, which it financed with a bilateral EUR30 million long-term loan. Overall, S&P expects HDM's key credit metrics to gradually improve over the coming years as a result of stabilization of the business and reduced finance expenses and leverage. S&P said, "Our stable outlook incorporates our expectation that HDM's underlying operating and financial performance will improve slightly over the next 12 months as a result of the unfolding benefits of cost-saving initiatives and reduced financing costs, which we expect to improve free cash flow generation. In our view, rating-commensurate credit measures include EBITDA interest coverage comfortably above 2x and no significantly negative free operating cash flow (FOCF) over the next 12 months. "We might consider a negative rating action on HDM in the case of weaker-than-expected market conditions, resulting in depressed operating results due to a considerable decline in sales. Rating pressure could also occur if the group is not able to improve its FOCF sustainably. A decline in the company's liquidity situation, arising either from weak financial performance or tightening covenant headroom, could also cause ratings pressure. A downgrade could also result from the company's inability to maintain its EBITDA interest coverage ratio comfortably above 2x. "We do not envisage raising the ratings on HDM during the next year. Rating upside would require a sustainable improvement in operating performance, supported by positive print equipment market developments, continued demonstration of a prudent financial policy, and substantial deleveraging, resulting in our adjusted ratios of debt to EBITDA of comfortably less than 5x and FFO to debt higher than 15% on a sustained basis. We view this as unlikely in the near term." =========== G R E E C E =========== DRYSHIPS INC: Egan-Jones Withdraws 'D' Sr. Unsecured Ratings ------------------------------------------------------------ Egan-Jones Ratings Company, on July 25, 2017, withdrew the 'D' local currency and foreign currency senior unsecured ratings on debt issued by DryShips Inc. DryShips Inc is a dry bulk shipping company based in Athens, Greece. It is a Marshall Islands corporation, formed in 2004. The Company transports commodities such as major bulks, which include iron ore, coal, and grain, and minor bulks such as bauxite, phosphate and steel products. DryShips also owns Ultra Deep Water Rigs. SKW STAHL-METALLURGIE: Reaches Restructuring Deal with Speyside --------------------------------------------------------------- The management board of SKW Metallurgy agreed with the sector experienced financial investor Speyside Equity on a concept for the necessary and sustainable financial restructuring after intensive negotiations. End of July 2017, Speyside Equity negotiated a cornerstone agreement with SKW's lenders on the conditions, under which the private equity company plans to take over the receivables of the syndicated loan agreement dated January 23, 2015 in the amount of EUR74 million. The banks have made significant concessions in a double digit million Euro range. The loan agreement has a maturity date of January 31, 2018. "The outcome of the negotiations proves that Speyside Equity believes in the prospects and the strategic positioning of our company that operationally has recovered but still suffers from am overgeared balance sheet. We appreciate Speyside Equity's willingness to materially invest into SKW's future setting the course for its further sustainable development", states Kay Michel, CEO of SKW Stahl-Metallurgie Holding AG. "Our efforts in the year of steel crises 2016 resulting in an operationally superior performance compared to many competitors are paying off." Several incidents in the past lead to the fact, that the SKW group shoulders a too high debt burden and is massively undercapitalized. A refinancing of the company has no prospect of success. The initiation of a financial restructuring has been unavoidable and crucial. Speyside Equity plans to provide EUR45 million of the EUR74 million syndicated loan agreement as non-cash contribution to the SKW group. The remaining loan is planned to be refinanced in the course of the transaction. "With this step, the equity basis would be sustainably strengthened, the risk of insolvency eliminated and thus the strategic development of the company ensured", adds Michel. Capital reduction unavoidable for restructuring On the annual general meeting on October 10, 2017, the shareholders need to decide on SKW's future, since restructuring contributions are expected in the form of a capital reduction. This creates the basic capital structure, which allows for the capital increase in kind by Speyside Equity. As a second step, Speyside Equity can then contribute its receivables in the form of a contribution in kind, in case the general meeting approves a contribution in kind, that by nature excludes the subscription right of the existing shareholders. Speyside Equity owns the respective receivables against SKW Metallurgy exclusively that are the subject of the contribution. The capital measure would result in a dilution to 5% of the existing shareholders. Speyside Equity has announced that they intend to file a request as of Sec. 327a AktG (Squeeze out) shortly after the capital measure will have been executed. An expert report of a renown consulting firm will be provided to the shareholders describing the company-value and the adequacy of the contribution in kind confirming the assessment of the company. A rejection of this restructuring measure poses the threat of total loss for the shareholders, because the continuation prognosis under insolvency law would be void and the company's existence would be at threat. Supervisory board and management board are appealing to the shareholders to agree to this incisive step, which the lenders have already gone through. "This is a hard request to the existing shareholders, which is nevertheless without alternative. Only by these means the future of the long-standing traditional company can be secured," emphasizes the chairman of the supervisory board of SKW Volker Stegmann. Insights of the investment process Management board and supervisory board of the SKW Stahl- Metallurgie Holding AG carried out a structured investment process since February 2017 to facilitate the financial restructuring of SKW. The global market approach of a renowned investment bank in an early stage lead to the conclusion, that the outstanding financial restructuring in the view of potential investors can only be pursued in conjunction with a capital decrease. Alternative offers compared with Speyside Equity's offer were less attractive and they were not providing strategic opportunities. One single interested party was generally ready to make an offer, that would under certain conditions support a cash capital increase with subscription rights for the shareholders. Nevertheless, this interested party could not find an agreement with the lenders. Furthermore, the management board and the supervisory board regarded the presented conditions neither credible nor legally and economically justifiable. Finally, the providers of the syndicated loan decided against the originally planned repayment of a part of the syndicated loan via cash capital increase with subscription rights for the shareholders and preferred the sale of the receivables to Speyside Equity with a significant discount. Management board and supervisory board of SKW support the negotiated solution, because it secures besides the inevitable financial restructuring also the refinancing and opens substantial strategic potentials especially in the North American key-market. It ensures the continuation of the SKW group subsequent to a comprehensive operational restructuring and allows the company to enlarge its competitive position in the world-market and to actively participate in the consolidation of the industry. About SKW Stahl-Metallurgie The SKW Metallurgie Group -- http://www.skw-steel.com-- is a global market leader for chemical additives for hot metal desulphurization and for cored wire and other products for secondary metallurgy. The Group's products enable steel-makers to efficiently manufacture high-quality steel products. Clients include the world's leading companies in the steel industry. The SKW Metallurgie Group has more than 50 years of metallurgical know how, and currently operates in more than 40 countries. What is more, the Group is a leading supplier of Quab specialty chemicals, which are mainly used in the global production of industrial starch for the paper industry. The SKW Metallurgie Group is headquartered in Germany with production facilities in France, the US, Canada, Mexico, Brazil, South Korea, Russia, the Peoples' Republic of China and India (joint venture). ============= I R E L A N D ============= GRIFFITH PARK CLO: S&P Affirms B-(sf) Rating on Class E Notes ------------------------------------------------------------- S&P Global Ratings affirmed its credit ratings on Griffith Park CLO DAC's class A-1, A-2A, A-2B, B, C, D, and E notes. S&P said, "The affirmations follow our analysis of the transaction's performance and the application of our relevant criteria. "We subjected the capital structure to our cash flow analysis to determine the break-even default rate (BDR) for each class of notes at each rating level. The BDRs represent our estimate of the level of asset defaults that the notes can withstand and still fully pay interest and principal to the noteholders. "We have estimated future defaults in the portfolio in each rating scenario by applying our corporate collateralized debt obligation (CDO) criteria (see "Global Methodologies And Assumptions For Corporate Cash Flow And Synthetic CDOs," published on Aug. 8, 2016). "Our analysis indicates that the available credit enhancement for all of the rated classes of notes is still commensurate with the currently assigned ratings. Therefore, we have affirmed our ratings on the class A-1, A-2A, A-2B, B, C, D, and E notes. "As the transaction allows the manager to have a few years to reinvest and change the credit risk profile, we have not considered upgrades to the rated tranches, in accordance with paragraph 92 of our corporate CDO criteria." Griffith Park CLO is a cash flow corporate loan collateralized debt obligation (CLO) transaction, which securitizes a revolving pool of mainly senior secured loans granted to broadly syndicated corporate borrowers. Blackstone/GSO Debt Funds Management Europe Ltd. manages the transaction. The deal closed in September 2016 and its reinvestment period lasts until October 2020. RATINGS LIST Griffith Park CLO Designated Activity Company EUR453.6 mil senior secured and subordinated notes Rating Class Identifier To From A-1 XS1464949780 AAA (sf) AAA (sf) A-2A XS1464950366 AA (sf) AA (sf) A-2B XS1464950879 AA (sf) AA (sf) B XS1464952651 A (sf) A (sf) C XS1464951760 BBB (sf) BBB (sf) D XS1464952909 BB (sf) BB (sf) E XS1464952065 B- (sf) B- (sf) IRELAND: Egan-Jones Assigns 'B' FC Sr. Unsecured Debt Rating ------------------------------------------------------------ Egan-Jones Ratings Company, on July 3, 2017, assigned 'B' foreign currency senior unsecured rating on debt issued by the Republic of Ireland. EJR also lowered its local currency senior unsecured debt rating on Ireland. =================== L U X E M B O U R G =================== ALTISOURCE SOLUTIONS: Moody's Affirms B3 CFR, Outlook Stable ------------------------------------------------------------ Moody's Investors Service has confirmed Altisource Solutions S.a.r.l.'s (Altisource) B3 Corporate Family Rating and Senior Secured Bank Credit Facility Rating. The outlook is stable. This concludes a review for downgrade Moody's initially assigned to ratings of both Altisource and Ocwen Financial Corporation (Caa1, negative) on April 21, 2017. RATINGS RATIONALE The rating action reflects Altisource's 8-year cooperative brokerage agreement with New Residential Investment Corp. (B1, stable) finalized August 28. The cooperative brokerage agreement secures Altisource's role as the exclusive provider of marketing and listing services for real estate owned (REO) properties in approximately $110 billion in unpaid principal balance (UPB) of mortgage loans for which New Residential has acquired, or will acquire, the mortgage servicing rights (MSRs), even if those portfolios are transferred away from Ocwen. The rating action also reflects Altisource's continued reliance for a large percentage of its revenues on the portfolio of approximately $81 billion of UPB of servicing rights owned by Ocwen, the ratings of which Moody's downgraded on 16 June due to the increased risk that the Consumer Financial Protection Bureau's (CFPB) lawsuit and cease and desist orders from 30 states posed to Ocwen's financial strength and credit profile. Despite modest steps Altisource has taken to diversify its businesses, its financial position is highly reliant on its Ocwen and New Residential relationships from which Altisource continues to derive about 75% of its revenues either directly or indirectly. The stable outlook reflects the expectation that Altisource and New Residential will, in the next 60 days, sign a definitive services agreement under which Altisource would be the exclusive provider of certain fee-based services with respect to Ocwen's servicing portfolio, for which the companies signed a letter of intent and continue to negotiate. Altisource's ratings could be downgraded in the event of a material reduction in net income or increase in leverage. In addition, a ratings downgrade could result if the volume of non- GSE loans for which Ocwen owns the MSRs and services declines significantly. Altisource's ratings could be upgraded if Altisource's financial profile strengthens through a significant increase in income from the company's non-Ocwen businesses, or significant deleveraging. The principal methodology used in these ratings was Finance Companies published in December 2016. ARCELORMITTAL: Egan-Jones Hikes Sr. Unsecured Ratings to BB+ ------------------------------------------------------------ Egan-Jones Ratings Company, on June 28, 2017, raised the local currency and foreign currency senior unsecured ratings on debt issued by ArcelorMittal to BB+ from BB. ArcelorMittal S.A. is a Luxembourg-based multinational steel manufacturing corporation headquartered in Boulevard d'Avranches, Luxembourg. It was formed in 2006 from the takeover and merger of Arcelor by Mittal Steel. ===================== N E T H E R L A N D S ===================== CNH INDUSTRIAL: Egan-Jones Lowers Sr. Unsecured Ratings to BB- -------------------------------------------------------------- Egan-Jones Ratings Company, on June 23, 2017 lowered the local currency and foreign currency senior unsecured ratings on debt issued by CNH Industrial NV to BB- from BB+. EJR also lowered the ratings on commercial paper issued by the Company to B from A2. CNH Industrial NV through its brands, designs, produces and sells trucks, commercial vehicles, buses, special vehicles, agricultural and construction equipment, in addition to engines and transmissions for those vehicles and engines for marine applications. The company also provides equipment financing services. It is based in London, the United Kingdom. RENOIR CDO: S&P Raises Ratings on Two Note Classes to BB+ --------------------------------------------------------- S&P Global Ratings raised its credit ratings on Renoir CDO B.V.'s class B, C, D1, and D2 notes. At the same time, S&P has affirmed its 'A+ (sf)' rating on the class A notes. S&P said, "The rating actions follow our review of the transaction's performance, using data from the June 27, 2017 report, and the application of our relevant criteria. "Since our previous review on Aug. 3, 2016, the weighted-average spread earned on the collateral pool has decreased to 1.37% from 1.44% and the transaction's weighted-average life has increased to 9.6 years from 6.37 years (see "Ratings Raised In Cash Flow CDO Transaction Renoir CDO Following Portfolio Amortization And Growth In Credit Enhancement"). The movements in portfolio statistics have been the result of portfolio maturation and amortization as the manager has been restricted from reinvesting any proceeds except prepayments. A lower weighted-average spread would generally result in lower break-even default rates (BDRs) while a higher weighted-average life would generally result in higher scenario default rates (SDRs). The BDR is the maximum default rate that a tranche can withstand while the SDR measures the expected default rate. "We have also observed that despite the notional value of assets that we consider to be rated in the 'CCC' category ('CCC+', 'CCC', and 'CCC-') decreasing from EUR8.1 million to EUR5.1 million, the proportion of these assets has increased to 9.5% from 9.2% of the performing portfolio. Assets that we consider to be defaulted (i.e., debt obligations of obligors rated 'CC', 'SD' [selective default], or 'D') have increased both in notional value and percentage terms following the default of an asset with a par balance of EUR1.15 million. "As a result of portfolio amortization, the class A notes have repaid by EUR32.0 million since our August 2016 review and now have an outstanding balance of EUR3.3 million. Due to the repayment of the class A notes, available credit enhancement has increased significantly for all classes of notes. In our analysis, we also considered that the transaction is in its post- reinvestment period, as it has been since April 2010. The class D par value test, which was in breach at our previous review, is now passing following the diversion of interest proceeds on previous payment dates. Despite the class D par value test now passing, the class D notes deferred interest at the previous payment date in July 2017, due to a shortfall of interest proceeds. In our opinion, the class D notes remain vulnerable to interest deferral at future payment dates, due to the high cost of these liabilities when compared to the yield generated by the assets. In our analysis, in order to pass a cash flow scenario, the capitalised interest on the class D notes must be repaid by principal proceeds once the class D notes becomes the controlling class. "We subjected the capital structure to our cash flow analysis, by applying our corporate cash flow collateralized debt obligation (CDO) criteria, to determine the BDR at each rating level (see "Global Methodologies And Assumptions For Corporate Cash Flow And Synthetic CDOs," published on Aug. 8, 2016). We used the reported portfolio balance that we considered to be performing, the principal cash balance, the weighted-average spread, and the weighted-average recovery rates that we considered to be appropriate. "We incorporated various cash flow stress scenarios, using various default patterns, levels, and timings for each liability rating category, in conjunction with different interest rate stress scenarios. To help assess the collateral pool's credit risk, we used CDO Evaluator 7.2 to generate SDRs at each rating level. We then compared these SDRs with their respective BDRs. "Taking into account our observations outlined above, we consider the available credit enhancement for the class B, C, D1, and D2 notes to be commensurate with higher ratings than those currently assigned. We have therefore raised our ratings on these classes of notes. "Our rating on the class A notes is capped at the 'A+' rating level, under our current counterparty criteria, due to the replacement language in the account bank agreement, which is not in line with our current counterparty criteria (see "Counterparty Risk Framework Methodology And Assumptions," published on June 25, 2013). We have therefore affirmed our 'A+ (sf)' rating on the class A notes. "Based on our counterparty risk analysis, we have concluded that the transaction documents for the credit default swap and repo counterparty (BNP Paribas Fortis SA/NV) are not in line with our current counterparty criteria. As such, we have conducted our cash flow analysis assuming that the transaction does not benefit from support from a derivative counterparty in rating scenarios that are one notch above the rating of the counterparty--issuer credit rating (ICR) plus one notch. We use the ICR plus one notch as the downgrade provisions are in line with our previous counterparty criteria. Above these rating levels, we considered in our analysis that these counterparty agreements do not exist and that the assets are exposed to currency risk. "The portion of performing assets not rated by S&P Global Ratings is 11.7%. In this case, we apply our mapping criteria to map notched ratings from another ratings agency and to infer our rating input for the purpose of inclusion in CDO Evaluator (see "Mapping A Third Party's Internal Credit Scoring System To Standard & Poor's Global Rating Scale," published on May 8, 2014). In performing this mapping, we generally apply a three- notch downward adjustment for structured finance assets that are rated by one rating agency and a two-notch downward adjustment if the asset is rated by two rating agencies. "We have applied our supplemental tests to address event and model risk, in line with our corporate CDO criteria. As the transaction employs excess spread, we have applied this test by running our cash flows using the forward interest rate curve." Renoir CDO is a cash flow CDO transaction that securitizes structured finance assets. RATINGS LIST Class Rating To From Renoir CDO B.V. EUR280 Million Fixed- And Floating-Rate Notes Ratings Raised B A+ (sf) A (sf) C A- (sf) BBB (sf) D1 BB+ (sf) B+ (sf) D2 BB+ (sf) B+ (sf) Rating Affirmed A A+ (sf) =========== N O R W A Y =========== NORWEGIAN AIR: Egan-Jones Hikes Commercial Paper Rating to B ------------------------------------------------------------ Egan-Jones Ratings Company, on July 5, 2017, upgraded the local currency and foreign currency ratings on commercial paper issued by Norwegian Air Shuttle ASA to B from C. Norwegian Air Shuttle ASA, trading as Norwegian, is a Norwegian low-cost airline that is the third largest low-cost carrier in Europe, the largest airline in Scandinavia, and the ninth-largest airline in Europe in terms of passenger number. =========== R U S S I A =========== DALNYAYA STEP: Sept. 7 Hearing in Browder Tax, Bankruptcy Case -------------------------------------------------------------- Sputnik reports that the case of the Hermitage Capital Management investment fund founder William Browder on the tax evasion was transferred to Moscow's Tverskoy District Court, Mr. Browder's lawyer Alexander Antipov said on Aug. 25, adding that the defendant himself would not be taking part in the trial. Mr. Browder is charged with the organization of tax evasion, organization of deliberate bankruptcy and an attempt to breach the duties of a tax agent, Mr. Antipov said, adding that the accusations include episodes of bankruptcy of the Dalnyaya Step company and the illegal transfer of Gazprom shares abroad, Sputnik relates. The investigators estimated the total damage from the actions of Mr. Browder and his business partner Ivan Cherkasov in the case of deliberate bankruptcy and tax crimes at RUR3.5 billion (US$59 million), Sputnik discloses. Mr. Antipov pointed out that a duty lawyer was appointed by the court, according to Article 51 of the Criminal Procedure Code, Sputnik relays. According to court files, the next hearing on the case is scheduled for Sept. 7, Sputnik notes. OTKRITIE: Russia's Central Bank to Intervene in Rescue ------------------------------------------------------ Max Seddon at The Financial Times reports that Russia's central bank said on Aug. 29 it would intervene to save Otkritie, the country's largest privately held lender, from collapse. According to the FT, the central bank in a statement said it planned to become Otkritie's "main investor" with public funds. Otkritie would continue to function normally without resorting to the bail-in measures the fund was originally created for. Otkritie's well-connected shareholders -- who include founder Vadim Belyaev, oil giant Lukoil, state-run bank VTB, and the oligarchs Alexander Nesis and Alexander Mamut -- and current management, will cooperate with regulators to "ensure it continues to function on the banking services market without interruption and enact every measure hereon to ensure the continued growth of the Bank," the central bank, as cited by the FT, said. Otkritie lost RUR611 billion in deposits -- 20% of its balance sheet -- in June and July, including from the personal accounts of its then-CEO, as fears grew over its stability, the FT discloses. Three senior state bankers told the FT that Otkritie had a balance sheet hole comparable to the one found at the Bank of Moscow in 2011, which required a EUR$14 billion bailout. ========= S P A I N ========= ATLANTIC YIELD: Egan-Jones Cuts Commercial Paper Rating to C ------------------------------------------------------------ Egan-Jones Ratings Company, on July 17, 2017, lowered ratings on commercial paper issued by Atlantica Yield plc to C from B. Based in Madrid, Spain, Repsol S.A., through subsidiaries, explores for and produces crude oil and natural gas, refines petroleum, and transports petroleum products and liquefied petroleum gas (LPG). The Company retails gasoline and other products through its chain of gasoline filling stations. BANCO POPULAR ESPANOL: Investors File 51 Suits Over Rescue ---------------------------------------------------------- Francesco Guarascio at Reuters reports that disgruntled investors have filed 51 lawsuits against European Union regulators for shutting Spain's Banco Popular Espanol, marking one of the largest legal challenges yet to the EU and a fresh attack on the bloc's rules on bank rescues. The deluge of cases, filed with the European Union's General Court, are the first legal test of how the EU applies new bank rules aimed at forcing investors to bear the costs of rescuing a failing lender before taxpayer money is used, Reuters notes. In June, European authorities intervened following a run on the bank and a sale was hastily organized after the European Central Bank determined that the lender was likely to fail, Reuters relates. Banco Popular's shareholders and junior bondholders lost around EUR4 billion (US$4.82 billion) after an EU agency forced the sale of the lender, then the sixth largest in Spain, to bigger rival Santander for the nominal price of one euro, Reuters discloses. Spanish taxpayers were spared from footing a bill and the bank's savers and activities were not affected, as Santander took over the ailing rival, Reuters notes. But the rescue, decided overnight on June 7 by the EU's bank disposal agency -- the Single Resolution Board (SRB) -- and the European Union's executive Commission, hit some of the bank's bond and stock investors hard, Reuters relays. They are now trying to hit back, Reuters states. According to Reuters, a court official said the 51 lawsuits that have been lodged with the EU General Court before the August 17 deadline against the SRB, and in some cases also against the Commission, are among the highest number of legal actions against a single EU decision ever filed before the General Court. The General Court hears cases against EU institutions, Reuters discloses. Its decisions can be appealed on points of law to the European Court of Justice, Reuters says. The plaintiffs include big international investment funds, such as Algebris and Anchorage Capital, Spanish pension funds, consumers groups, Italian cooperative banks and Mexican investors, Reuters relays, citing information shown on the website of the EU court. About Banco Popular Banco Popular Espanol SA is a Spain-based commercial bank. The Bank divides its business into four segments: Commercial Banking, Corporate and Markets; Insurance Activity, and Asset Management. The Bank's services and products include saving and current accounts, fixed-term deposits, investment funds, commercial and consumer loans, mortgages, cash management, financial assessment and other banking operations aimed at individuals and small and medium enterprises (SMEs). The Bank is a parent company of Grupo Banco Popular, a group which comprises a number of controlled entities, such as Targobank SA, GAT FTGENCAT 2005 FTA, Inverlur Aguilas I SL, Platja Amplaries SL, and Targoinmuebles SA, among others. In January 2014, the Company sold its entire 4.6% stake in Inmobiliaria Colonial SA during a restructuring of the property firm's capital. As reported in the Troubled Company Reporter-Europe on June 15, 2017, S&P Global Ratings said that it raised its long- and short- term counterparty credit ratings on Banco Popular Espanol S.A. to 'BBB+/A-2' from 'B/B'. The outlook is positive. In addition, S&P lowered its issue-level ratings on Banco Popular's outstanding preference shares and subordinated debt to 'D' from 'CC' and 'CCC-', respectively, and S&P subsequently withdrew them. The rating actions follow the Single Resolution Board's announcement on June 7, 2017, that it had taken a resolution action in respect of Banco Popular. This resulted from the ECB's conclusion that the bank was failing or likely to fail as a result of a significant deterioration in its liquidity position. The resolution entailed the sale of Banco Popular to Banco Santander S.A. (A-/Stable/A-2) for EUR1, after absorption of losses by Banco Popular's shareholders and holders of Tier 1 and Tier 2 capital instruments. REPSOL SA: Egan-Jones Hikes Senior Unsecured Ratings to BB ---------------------------------------------------------- Egan-Jones Ratings Company, on July 18, 2017, raised the local currency and foreign currency senior unsecured ratings on debt issued by Repsol SA to BB from BB-. Based in Madrid, Spain, Repsol S.A., through subsidiaries, explores for and produces crude oil and natural gas, refines petroleum, and transports petroleum products and liquefied petroleum gas (LPG). The Company retails gasoline and other products through its chain of gasoline filling stations. TDA IBERCAJA 1: S&P Affirms B(sf) Rating on Class D RMBS Notes -------------------------------------------------------------- S&P Global Ratings affirmed its credit ratings on TDA Ibercaja 1 Fondo de Titulizacion de Activos' class A, B, C, and D notes. S&P said, "T[he] affirmations follow the application of our relevant criteria and our credit and cash flow analysis of the most recent transaction information that we have received, and reflect the transaction's current structural features. Long-term delinquencies (defined in this transaction as loans in arrears for more than 90 days, excluding defaults) have been very low and stable for the life of the transaction. They have decreased to 0.22% from 0.35% since our previous full review on Oct. 31, 2014 (see "Various Rating Actions Taken On TDA Ibercaja 1 And TDA Ibercaja 2's Spanish RMBS Notes Following Criteria Updates"). S&P said, "In our opinion, the outlook for the Spanish residential mortgage and real estate market is not benign and we have therefore increased our expected 'B' foreclosure frequency assumption to 3.33% from 2.00%, when we apply our European residential loans criteria, to reflect this view." S&P's Credit Analysis Results Rating level WAFF (%) WALS (%) AAA 18.04 11.15 AA 13.39 10.02 A 10.97 6.44 BBB 7.94 6.75 BB 5.02 5.46 B 4.18 4.34 The reserve fund is at the required level and is currently at its floor value of EUR4.2 million, which represents 0.7% of the current notes' balance. Available credit enhancement for all classes of notes has increased since s&P's previous review, as a consequence of the amortization of the all classes of notes and the reserve fund being at its floor level. The notes have been amortizing pro rata since October 2008. There are interest deferral triggers for the subordinated notes in this transaction, based on the level of 90+ days delinquencies (excluding defaults) over the current balance of the non-defaulted assets, which as of today is 0.22%. Given that the lowest interest deferral trigger (class D trigger) is set at 10%, and based on the pool's historical favorable performance, S&P doesn't expect the triggers to be breached. S&P said, "Ibercaja Banco S.A. has a standardized, integrated, and centralized servicing platform. It is a servicer for a large number of Spanish residential mortgage-backed securities (RMBS) transactions, and the historical performance of the Ibercaja Banco transactions has outperformed our Spanish RMBS index (see "Spanish RMBS Index Report Q1 2017," published on June 1, 2017). We believe that these factors should contribute to the likely lower cost of replacing the servicer, and have therefore applied a lower floor to the stressed servicing fee, at 35 basis points (bps) instead of 50 bps in our cash flow analysis, in line with table 74 of our European residential loans criteria." The bank account provider in this transaction is Societe Generale S.A. (Madrid Branch), which has downgrade language commensurate with a 'AAA' rating level. The swap counterparty is Banco Santander S.A. (A-/Stable/A-2). Considering the remedial actions defined in the swap counterparty agreement, that the swap counterparty is not currently posting collateral, and its current issuer credit rating (ICR), under S&P's current counterparty criteria the maximum rating the notes in this transaction can achieve is 'AA'. S&P said, "The cost of replacement, if the bank account is substituted because of a downgrade below the documented minimum required rating, will not be borne by the downgraded counterparty, which is not in line with our current counterparty criteria. Therefore, we have assumed remedy costs in our analysis at rating levels above 'A'. Consequently, our ratings on the class B, C, and D notes are linked to our long-term ICR on the account provider. "Following the application of our structured finance ratings above the sovereign (RAS) criteria, counterparty, and European residential loans criteria, we have determined that our assigned rating on the class A notes in this transaction should be the lower of (i) the rating as capped by our RAS criteria, (ii) the rating as capped by our current counterparty criteria, and (iii) the rating that the class of notes can attain under our European residential loans criteria (see "Ratings Above The Sovereign - Structured Finance: Methodology And Assumptions," published on Aug. 8, 2016). "Taking into account the results of our application of our European residential loans criteria, the class A notes are able to pass our 'AA' rating level stresses. However, in this transaction the application of our RAS criteria caps our rating on the class A notes at four notches above our 'BBB+' foreign currency long-term sovereign rating on the Kingdom of Spain, i.e., 'AA-'. Accordingly, we have affirmed our 'AA- (sf)' rating on the class A notes. "Applying our European residential loans criteria, we believe that the current available credit enhancement for the class B, C, and D notes is commensurate with their currently assigned ratings. We have therefore affirmed our 'BBB+ (sf)', 'BB+ (sf)', and 'B (sf)' ratings on the class B, C, and D notes, respectively. Our ratings on the class C and D notes are linked to our long-term ICR on the servicer, Ibercaja Banco (BB+/Positive/B), as the available credit enhancement for these tranches is commensurate with the stresses we apply at these rating levels, excluding the application of a commingling loss." TDA Ibercaja 1 is a Spanish RMBS transaction that closed in October 2003. The transaction securitizes residential loans originated by Ibercaja Banco, which were granted to individuals for the acquisition of their first residence, mainly concentrated in Madrid and Aragon, Ibercaja Banco's main markets. RATINGS LIST TDA Ibercaja 1 Fondo de Titulizacion de Activos EUR600 Million Mortgage-Backed Floating-Rate Notes Class Rating Ratings Affirmed A AA- (sf) B BBB+ (sf) C BB+ (sf) D B (sf) =========== T U R K E Y =========== * TURKEY: Rescue Fund Needed for Ailing Corporate Bond Market ------------------------------------------------------------- Asli Kandemir and Constantine Courcoulas at Bloomberg News report that the Turkish lira corporate bond market is in the doldrums and the nation's largest independent fund manager says the government needs to step in to get it going again. A string of defaults and restructurings has dampened investor appetite for the TRY18 billion (US$5.2 billion) market in corporate debt, issuance has slowed, and a borrowing binge by the Treasury has increased competition for a limited savings pool, Bloomberg relates. According to Bloomberg, the general manager of Italy's Azimut Holding Spa's local unit says the government should mandate the sector to establish a rescue fund to help troubled firms and restore investor confidence. He proposes the industry put aside half a percent of the value of each new lira issue for a rainy day, Bloomberg relays. The fund would make investors whole again if companies run into repayment troubles and thus help revive appetite for Turkey's nascent market for company debt, Bloomberg states. He likens it to the TRY250 billion government credit backstop for Turkey's commercial lenders that revived lending and resuscitated the economy following last year's coup attempt, Bloomberg notes. "If the government also contributes to this fund, it'll open the way for the market," Murat Salar, general manager of Azimut Portfoy, as cited by Bloomberg, said in an interview in Istanbul on Aug. 23. Because if investors perceive these instruments as risky permanently, "we'll lose this market," Bloomberg quotes Mr. Salar as saying. "It shouldn't be tainted." ============= U K R A I N E ============= FERREXPO PLC: Moody's Raises Corporate Family Rating to Caa1 ------------------------------------------------------------ Moody's Investors Service has upgraded to Caa1 from Caa2 the corporate family ratings (CFRs) and to Caa1-PD from Caa2-PD the probability of default ratings (PDRs) of three companies operating in Ukraine: Ferrexpo Plc, Metinvest B.V. and MHP SE. Concurrently, Moody's has upgraded the national scale corporate family ratings (NSRs) of Metinvest and MHP to Baa3.ua from B1.ua and the senior unsecured ratings of notes issued by Ferrexpo Finance plc to Caa1 from Caa2. The outlook on the ratings of Metinvest and MHP has been changed to positive from stable. The outlook on the ratings of Ferrexpo Plc and Ferrexpo Finance plc remains stable. The rating action follows Moody's upgrade of Ukraine's government bond rating to Caa2 from Caa3, with a positive outlook, and raising of the foreign-currency bond country ceiling to Caa1 from Caa2 on August 25, 2017. RATINGS RATIONALE The rating action primarily reflects the upgrade of Ukraine's government bond rating to Caa2 from Caa3 and raising of the foreign-currency bond country ceiling, which remains the key constraint for the companies' ratings, to Caa1 from Caa2. The upgrade of Ukraine's government bond rating is based on the following key drivers: (1) the cumulative impact of structural public finance and anti-corruption reforms that, if sustained, will improve government debt dynamics absent a large depreciation of the hryvnia; and (2) a strengthened external position and likely market access sufficient to reduce the risk of default and loss given default. The business profile and financial metrics of Metinvest and MHP are strong for a Caa1 rating. However, the companies are directly exposed to Ukraine's political, legal, fiscal and regulatory environment, despite significant share of export revenues, given that most or all of their assets are located within the country. The same applies to Ferrexpo as the business profile and financial profile are strong for a Caa1 rating, while all of its assets are located in Ukraine. However, Ferrexpo faces material refinancing risk for its debt maturities in 2018 and 2019 of $298 million (out of which $173 million matures in April 2018) and $187 million respectively, assuming an iron ore price of $50/tonne. The upgrade of Ferrexpo's ratings with stable outlook assumes the company will likely be able to successfully address this risk given its strong financial profile. Moody's understands that the company is currently in discussion with the banks. RATIONALE FOR FERREXPO'S STABLE OUTLOOK The stable outlook reflects Moody's expectations that Ferrexpo will sustain strong operating and financial performance for its current rating level despite high event risks. The outlook also reflects its refinancing risk for the 2018-19 debt maturities, which Moody's believes the company will likely be able to address. Once the refinancing risk is resolved, a positive outlook can be considered. RATIONALE FOR POSITIVE OUTLOOK FOR METINVEST AND MHP The positive outlook on the ratings of Metinvest and MHP is in line with the positive outlook on Ukraine's sovereign rating, and reflects the fact that the companies' ratings could be upgraded if Moody's were to upgrade the sovereign rating and raise Ukraine's foreign-currency bond country ceiling. The positive outlook also reflects Moody's expectations that these companies will sustain strong operating and financial performance for their current rating level despite high event risks, and maintain adequate liquidity. WHAT COULD CHANGE FERREXPO'S RATINGS UP/DOWN Ferrexpo's ratings are not currently constrained by the foreign- currency bond country ceiling. An upgrade would require the company to resolve its refinancing risk for the debt maturities in 2018 and 2019. Once the refinancing risk is resolved, the ratings could become constrained by the country ceiling and Moody's could upgrade the rating if Moody's was to upgrade Ukraine's sovereign rating and/or raise the foreign-currency bond country ceiling, provided there is no material deterioration in the company-specific factors, including its operating and financial performance, market position and liquidity. Moody's could downgrade the rating if Moody's was to downgrade Ukraine's sovereign rating and/or lower the foreign-currency bond country ceiling, or the company's operating and financial performance or market position were to deteriorate materially. A downgrade could also take place if Ferrexpo's liquidity position weakens and the refinancing risk for the 2018-19 debt maturities is not addressed in time. WHAT COULD CHANGE METINVEST AND MHP's RATINGS UP/DOWN Moody's could upgrade the ratings of Metinvest and MHP if it were to upgrade Ukraine's sovereign rating and/or raise the foreign- currency bond country ceiling, provided there is no material deterioration in the company-specific factors, including their operating and financial performance, market position and liquidity. Moody's could downgrade the ratings if it were to downgrade Ukraine's sovereign rating and/or lower the foreign-currency bond country ceiling, or the companies' operating and financial performance, market position or liquidity were to deteriorate materially. PRINCIPAL METHODOLOGIES The principal methodology used in rating MHP SE was Global Protein and Agriculture Industry published in June 2017. The principal methodology used in rating Ferrexpo Plc and Ferrexpo Finance plc was Global Mining Industry published in August 2014. The principal methodology used in rating Metinvest B.V. was Global Steel Industry published in October 2012. Ferrexpo Plc, headquartered in Switzerland and incorporated in the UK, is a mid-sized iron ore pellet producer with mining and processing assets located in Ukraine. The group has total Joint Ore Reserves Committee Code (JORC) classified resources of 6.7 billion tonnes, around 1.4 billion tonnes of which are proved and probable reserves. The average grade of Ferrexpo's ore is approximately 31% Fe. In 2016, the group achieved a pellet production of 11.2 million tonnes and generated revenues of $986 million. Ferrexpo is listed on the London Stock Exchange and 50.3% of its shares are held by Fevamotinico S.a.r.l, a Luxembourg based holding company owned by Kostyantin Zhevago, CEO of Ferrexpo Plc. and the remaining is free float. Metinvest B.V., registered in the Netherlands, is the parent company of a vertically integrated group, Metinvest, which is one of the largest steelmakers and iron ore producers in the Commonwealth of Independent States. The company produces finished flat and long steel products, semi-finished steel products (slabs and billets), pig iron and coke products, iron ore and coking coal concentrate, and iron ore pellets. In 2016, Metinvest reported revenue of $6.2 billion (2015: $6.8 billion) and its Moody's-adjusted EBITDA amounted to $896 million (2015: $377 million). Metinvest's major shareholders are System Capital Management (71.24% share in Metinvest) and SMART group (23.76%). MHP SE is one of Ukraine's leading agro-industrial groups. The company's operations include the production of poultry and sunflower oil, as well as the production and sale of convenience foods. MHP is vertically integrated into grain and fodder production, and operates one of the largest land banks in Ukraine. For the 12 months ended June 2017, the company's total revenue and adjusted EBITDA amounted to around $1.25 billion and $453 million, respectively. MHP's controlling beneficiary shareholder (with a stake of approximately 60%) is Mr. Yuriy Kosyuk, the founder and CEO of the company. MHP has traded on the London Stock Exchange since its May 2008 initial public offering. =========================== U N I T E D K I N G D O M =========================== SEADRILL LTD: Egan-Jones Cuts Sr. Unsecured Ratings to CCC+ ----------------------------------------------------------- Egan-Jones Ratings, on July 26, 2017, lowered the local currency and foreign currency senior unsecured ratings on debt issued by Seadrill Ltd. to CCC+ from B. Seadrill is a deepwater drilling contractor, which provides drilling services to the oil and gas industry. It is incorporated in Bermuda and managed from London. ********* 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. Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2017. 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 Joseph Cardillo at 856-381-8268. * * * End of Transmission * * *