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

                           E U R O P E

         Wednesday, December 20, 2017, Vol. 18, No. 252


                            Headlines


A R M E N I A

ARMENIA: Fitch Alters Outlook to Positive, Affirms B+ IDR


G E R M A N Y

AENOVA GMBH: S&P Alters Outlook to Neg., Affirms 'B-' LT CCR
EYEVIS GMBH: To Restructure Using Insolvency Proceedings
GARDEUR GROUP: Duijndam Group Buys Firm Out of Insolvency
JT TOURISTIK: Lidl Acquires Tour Operator, Retains All Staff
NIKI LUFTFAHRT: Bidders Have Until Dec. 21 to Submit Offers


I T A L Y

BORSALINO: Faces Liquidation After Court Protection Request Nixed
NAPLES: Fitch Cuts Long-Term IDR to BB+, Outlook Negative


K A Z A K H S T A N

EURASIAN BANK: S&P Affirms B/B ICRs, Outlook Remains Negative


K Y R G Y Z S T A N

KYRGYZ REPUBLIC: Fiscal Metrics Constrain Rating, Moody's Says


N E T H E R L A N D S

DRYDEN 29 2013: S&P Assigns Prelim B- Rating to Class F-R Notes
E-MAC PROGRAM: Moody's Reviews for Downgrade Caa2 B Notes Rating
INTERSTATE TIRE: Enters Insolvency Proceedings
JUBILEE CLO 2015-XVI: Moody's Assigns B2 Rating to Class F Notes
JUBILEE CLO 2015-XVI: S&P Assigns BB Rating to Class E-R Notes


N O R W A Y

NORSKE SKOGINDUSTRIER: Files for Bankruptcy in Oslo Court


P O R T U G A L

PORTUGAL: Fitch Upgrades Long-Term IDR From BB+, Outlook Stable


R U S S I A

KOSTROMA REGION: Fitch Affirms B+ Long-Term IDR, Outlook Stable
MAGNIT PJSC: S&P Lowers CCR to 'BB', Outlook Stable


S E R B I A

SERBIA: Fitch Upgrades Long-Term IDR to BB, Outlook Stable
SERBIA: S&P Raises Long-Term Sovereign Credit Ratings to 'BB'


S P A I N

EDT FTPYME 3: Moody's Hikes EUR15.4M Series C Notes Rating to B1
SANTANDER CONSUMER: Moody's Rates Add'l Tier 1 Notes (P)Ba1(hyb)


T U R K E Y

TURKIYE HALK: Moody's Cuts LT Sr. Debt & Deposit Ratings to Ba2


U K R A I N E

BANK MIKHAILIVSKYI: Appeal Court Denies Ex-owner's Claim v. NBU


U N I T E D   K I N G D O M

CAPRI ACQUISITIONS: S&P Assigns 'B-' CCR, Outlook Stable
MITCHELLS & BUTLERS: S&P Cuts Class D1 Notes Rating to 'BB (sf)'
SEADRILL LTD: Barclays Submits Debt Restructuring Proposal
TOYS R US: UK's Pension Scheme Likely to Vote Against CVA


U Z B E K I S T A N

KDB BANK: S&P Affirms 'B+/B' Issuer Credit Ratings


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A R M E N I A
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ARMENIA: Fitch Alters Outlook to Positive, Affirms B+ IDR
---------------------------------------------------------
Fitch Ratings has revised Armenia's outlook to Positive from
Stable, while affirming the sovereign's Long-Term Foreign- and
Local-Currency Issuer Default Ratings (IDRs) at 'B+'.

KEY RATING DRIVERS

Medium
The economy is experiencing a strong recovery following a large
external shock in 2014-15, driven by a structural improvement in
export performance, firmer external demand conditions and
recovering remittances, and supported by a credible monetary
policy framework. Fitch has revised up its growth projection to
4.3% for 2017 from 3.4% previously, as GDP growth averaged 5.3%
in 1Q-3Q. Fitch expect growth to average 3.6% in 2018-2019 due to
a still favourable environment for remittances and export growth.

Armenia has started to implement strong fiscal consolidation.
Fitch forecasts the general government budget deficit will shrink
to 3.3% of GDP in 2017, from 5.5% in 2016, reflecting expenditure
restraint and favourable revenue growth. Fitch expects the
general government deficit to narrow further to 3% in 2018 and
2.7% in 2019, below the 'B' and 'BB' medians.

Fitch's projections for the budget deficit and growth performance
are consistent with stabilisation in government debt. Fitch
forecast debt to rise to 57.5% of GDP in 2017, slightly below the
projected 58.6% 'B' median, peak in 2018 at 58.1% and gradually
decline thereafter. Armenia's government debt structure has a
high level of concessional debt (66% of total debt), but 81% is
foreign currency-denominated, exposing it to exchange rate
volatility.

Armenia has a moderate current account deficit, which Fitch
forecasts at 3% of GDP in 2017 and to average 3.4% in 2018-2019.
Domestic demand-driven import growth will be balanced by export
receipts underpinned by stable commodity prices, diversification
to new markets and stabilisation of the Russian economy
benefitting export and remittances growth. A moderate current
account deficit mitigates external vulnerability arising from
commodity dependence and the small size of the economy. It will
also lead to the stabilisation, and then gradual reduction, of
the country's high net external debt at 44.8% of GDP by end-2017
versus 20% for the 'B' median.

Armenia's 'B+' IDRs also reflect the following key rating
drivers:

Armenia is exposed to external shocks but has shown a capacity to
absorb them, helped by a credible monetary policy framework.
After exiting deflation in April, inflation remains low, and is
expected to average 1% in 2017 before converging to the Central
Bank of Armenia's (CBA) target of 4% in 2018-2019. The central
bank has kept interest rates on hold since early 2017 and has
stated its readiness to tighten policies if demand side pressures
increase.

The banking system remains stable with strengthened
capitalisation (capital adequacy ratio (CAR) 19.1% in October).
Deposit and loan dollarisation have declined but remained high at
57% and 62%, respectively. The banking system's FX position is
balanced and regulations are in place to prevent foreign-currency
lending to non-foreign-currency generators. Non-performing loans
(up to 270 days overdue) equalled 6.7% in October, down from a
peak of 10% in March 2016.

International reserves are above USD2.1 billion (above four
months of current external payments). Fitch estimates that
Armenia's liquid assets as a share of short-term liabilities (at
125% in 2017) will remain below the 'B' category median. Exchange
rate flexibility, reduced external imbalances and access to
external financing reduce the risk of near-term balance-of-
payment pressures. After completing its IMF EFF agreement this
year, Fitch expects the authorities to seek continued engagement
with the fund.

Armenia is in the process of modifying its fiscal rules. As
government debt exceeded 50% of GDP in 2016, the previous fiscal
rule required the government to target deficits lower than 3% of
the previous three years' average GDP. This required an abrupt
adjustment, which the government is unlikely to meet. New rules
are likely to maintain the key 50% and 60% of GDP thresholds,
while allowing a smoother fiscal adjustment path and favour capex
over current expenditure. Armenia's fiscal credibility would also
be strengthened by building a track record of meeting budgetary
targets, as fiscal outturns in 2017 and 2018 will likely
overshoot budgeted deficits, as in 2015 and 2016.

Improving the country's medium-term growth prospects is likely to
require further progress in reforming the investment climate and
increasing domestic savings, as total investment is low at 18.4%
of GDP.

Armenia has structural strengths relative to peers in terms of
higher income per capita and governance indicators. In April
2018, constitutional reforms will come into effect, with the
Prime Minister becoming the Head of State and the President being
elected indirectly by an electoral college/parliament. Fitch
expects the general direction of economic policy to be
unaffected.

Fatalities and military incidents between Nagorno-Karabakh and
Azerbaijan have picked up in intensity and frequency since late
2016. Meetings at the presidential and ministerial level between
Armenia and Azerbaijan under the auspices of the OSCE Minsk Group
in 2H17 have yet to make visible progress in stabilising the
conflict, let alone resolving the Nagorno-Karabakh issue.
Escalation is a material risk.

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 Foreign Currency (LTFC) IDR
scale. Fitch's sovereign rating committee did not adjust the
output from the SRM to arrive at the final LTFC IDR.

Fitch's SRM is the agency's proprietary multiple regression
rating model that employs 18 variables based on three year-
centred 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
Fitch criteria that are not fully quantifiable and/or not fully
reflected in the SRM.

RATING SENSITIVITIES

The main factors that could, individually or collectively, lead
to an upgrade are:

- Confidence that the government debt-to-GDP ratio is on a
   downward trajectory;
- Sustained growth that supports convergence towards income
   levels of higher-rated sovereigns without increasing
   macroeconomic imbalances; and
- A sustained improvement in the external balance sheet.

The main factors that could, individually or collectively, lead
to the Outlook being revised to Stable are:

- Failure to put government debt/GDP on a downward trajectory
   over the medium-term, for example due to fiscal slippage
   and/or growth underperformance;
- A sustained fall in foreign exchange reserves; and
- An escalation in the Nagorno-Karabakh conflict leading to a
   material impact on the Armenian economy or public finances.

KEY ASSUMPTIONS

Fitch assumes that Armenia will continue to experience broad
social and political stability.

Fitch assumes that the Russian economy will grow 1.8% in 2017 and
2% in 2018 and 2019.

The full list of rating actions is as follows:

Long-Term Foreign-and Local Currency IDRs affirmed at 'B+';
Outlook revised to Positive from Stable
Short-Term Foreign- and Local-Currency IDRs affirmed at 'B'
Country Ceiling affirmed at 'BB-'
Issue ratings on long-term senior unsecured foreign-currency
bonds affirmed at 'B+'
Issue ratings on long-term senior unsecured local-currency bonds
assigned at 'B+'
Issue ratings on short-term senior-unsecured local-currency bonds
assigned at 'B'


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G E R M A N Y
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AENOVA GMBH: S&P Alters Outlook to Neg., Affirms 'B-' LT CCR
------------------------------------------------------------
S&P Global Ratings said that it revised the outlook on Aenova
Holding GmbH to negative from stable and affirmed its 'B-' long-
term corporate credit rating on the company.

S&P said, "At the same time, we affirmed our 'B-' issue ratings
on the company's EUR500 million first-lien senior secured debt
and on the company's EUR75 million revolving and acquisition
credit facilities. We affirmed our 'CCC' issue rating on the
company's EUR139 million second-lien facility.

"Our recovery rating on the second-lien loan is unchanged at '6'.
We revised our recovery ratings on the senior secured term loan B
and on the credit facilities to '4' from '3'. Our recovery
expectations are in the 30%-50% range (rounded estimate: 40%) for
the senior secured debt, and in the 0%-10% range for the second-
lien facility."

The outlook revision to negative reflects that any setbacks in
implementing the management's turnaround strategy would
jeopardize a return to positive free operating cash flow (FOCF)
and would put pressure on liquidity, increasing reliance on
external funding either from the sponsor or from asset disposal.

Aenova's past acquisitions have allowed it to grow significantly
in size and become a major European contract drug manufacturer.
S&P said, "However, we believe that these acquisitions have also
increased the complexity of its internal organization and supply
chain, putting pressure on manufacturing effectiveness and cost
structure. Given the ongoing pricing pressure in the
pharmaceutical and over-the-counter (OTC) markets, we believe
that the ability to fulfill orders in a timely manner and to be
cost- and time-efficient is very important."

Aenova started a restructuring plan in 2015, mainly related to
optimizing its manufacturing infrastructure, processes, and
product portfolio. However, the implementation of the plan has
been slower and more expensive than first anticipated. In
addition, in 2017, the company lost some contracts that it was
not able to fully offset with new wins, putting further pressure
on its operating performance and cash flow generation.

S&P said, "This has translated into weaker operating performance
than we previously expected, leading us to revise down our base-
case forecasts. We now estimate that for 2017 the company will
achieve revenues of about EUR735 million and S&P Global Ratings-
adjusted EBITDA (after restructuring costs) of EUR60 million,
representing a decline on last year's revenues (which stood at
EUR753 million at year-end 2016) and EBITDA (which stood at EUR80
million at year-end 2016).

"For 2018, we estimate in our base case that the company will
achieve revenues of EUR755 million and adjusted EBITDA of EUR75
million. This mainly reflects growth in the solids segment with
some contracts already in the pipeline, some slight improvements
in the unadjusted EBITDA margin, but continued costs related to
the restructuring program. We estimate that Aenova will post
negative FOCF, mainly due to weaker EBITDA, negatively impacted
by high costs linked to the restructuring, working capital cash
absorption, and high capital expenditure (capex) needed to
support further growth.

"For 2017, we expect the company will generate negative FOCF of
about EUR40 million. In 2018, we forecast negative FOCF of about
EUR20 million, and by 2019 we expect that the company will be
able to generate positive FOCF of about EUR4 million, as the
efficiency measures will start showing results."

To be able to finance its planned investments and maintain
sufficient cash balances, the sponsor injected about EUR22
million of equity, and the company is planning to dispose of some
of its noncore assets.

S&P said, "Although we estimate that Aenova will continue to face
some operational challenges and high expenses linked to the
implementation of the lean manufacturing program in 2018 (which
will lead to cash consumption), we expect that by 2019 it will be
able to function on a stand-alone basis.

"Aenova continues to operate in a growing contract drug
manufacturing market, benefiting from positive outsourcing trends
from big pharmaceutical companies, as well as from generic
players and potential new commercial-only players. We think that
Aenova can take advantage of the positive market dynamics thanks
to its leading position in the European market, should the
internal supply chain issues be resolved by 2019. We also
recognize that Aenova is well-diversified and has a significant
international presence outside Germany. However, considering the
significant supply chain issues, the underutilization of some
manufacturing sites, and the working capital buildup in 2017, we
now assess the company's operating efficiency as weak, and the
overall business risk profile as weak. We understand that
optimization might include carving out more manufacturing sites,
establishing a new business unit structure, and raising site
utilization rates, but we think it might take some time before
these actions translate into significant efficiency improvements.

"We continue to assess Aenova's capital structure as highly
leveraged, reflecting a weighted average debt-to-EBITDA ratio of
about 14.5x over 2015-2019. Our adjusted debt calculation for
2017 includes financial debt of EUR682 million under the capital
structure, mainly consisting of a first-lien term loan of EUR497
million and a second-lien term loan of EUR137 million. We also
include operating-lease-adjusted debt of about EUR20 million,
EUR63 million usage of the factoring facility, EUR50 million
drawn under the revolving credit facility (RCF), pension and
other postretirement debt of about EUR40 million, and a EUR250
million shareholder loan and accrued interest. Our EBITDA
calculation includes all costs associated with the transformation
program.

S&P's base case assumes:

-- A relatively minimal impact from global macroeconomic cycles;

-- The European contract drug manufacturing market will grow by
    2%-3% for the next three years;

-- About 2% contraction in revenue in 2017, affected by supply
    chain issues, then about 3% revenue growth in 2018 and 2019,
    considering a significant contract pipeline and market
    growth; and

-- Adjusted EBITDA margin of about 8.5% in 2017 and 10% in 2018,
    negatively affected by costs related to the transformation
    program, then back to close to 12% in 2019, reflecting
    successful efficiency measures.

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

-- Adjusted debt to EBITDA of 18x in 2017, 15x in 2019, and 12x
    in 2019, compared with 13x in 2016; excluding the shareholder
    loan, weighted average adjusted debt to EBITDA of 11x over
    2015-2019;

-- Adjusted funds from operations (FFO) cash interest coverage
    of 1.2x-1.9x in 2017-2019; and

-- Adjusted FOCF generation of negative EUR35 million in 2017,
    negative EUR15 million in 2018, and turning positive at EUR8
    million in 2019.

The negative outlook reflects that any setbacks in Aenova
implementing its turnaround plan would weaken the company's
competitive position, as well as its chances of returning to
positive FOCF generation and reducing its reliance on the sponsor
or assets disposal for liquidity. S&P estimates that Aenova will
continue to face weak cash flow generation in 2018, due to costs
associated with the implementation of its transformation program.

S&P said, "We could downgrade Aenova in the next 12 months if its
operational performance does not improve. We expect that Aenova's
revenues will grow in 2018 and that its adjusted EBITDA margin
will improve compared with 2017.

"We could lower the rating if Aenova continues to generate
significant negative FOCF, such that the group's liquidity
position further tightens and rising leverage drives an increase
in future refinancing risk. This would most likely happen if the
group were to record weaker revenue growth due to net contract
value losses, which, combined with any adverse impact on
profitability, would prevent the company from delivering reported
EBITDA before nonrecurring items of about EUR85 million-EUR90
million. We note that the group's turnaround strategy largely
relies on the successful implementation of its proposed
transformation program, and we believe that any deviation from
its synergy targets could substantially constrain Aenova's
ability to remain self-sufficient and comfortably fund its
interest obligations and capex needs.

"We could revise the outlook to stable if the company
successfully implements its business plan in a timely and
efficient way, and the company's strategy ultimately results in
increased profitability levels and positive cash flow generation
in 2019. We would expect Aenova to maintain its market-leading
position under these circumstances, and substantially improve
productivity and its logistical framework to sustainably support
stable EBITDA generation and future deleveraging. The ability to
comfortably meet its liquidity needs, without the need for
additional support from its majority owners, or extraordinary
activities such as asset sales or capex reductions, would also
support an upward revision, in our view."


EYEVIS GMBH: To Restructure Using Insolvency Proceedings
--------------------------------------------------------
Eyevis GmbH said the company wants to complete its initiated
restructuring with the help of insolvency proceedings.

On December 5, the company, which is headquartered in Reutlingen
near Stuttgart, filed a respective application to the local
district court. The district court ordered Attorney Dr. Holger
Leichtle from Schultze & Braun to provisional insolvency
administrator. Business continues unchanged. "All orders are
processed as agreed," says Leichtle. The approximately 120
employees are covered by the insolvency benefit until February.

Already well before the bankruptcy petition, eyevis worked with
consultants to develop a restructuring concept and started
reorganizing the company. Significant success has already been
achieved. In addition, a targeted search for potential investors
was initiated. "The reactions to this M & A process have so far
been very positive," reports provisional insolvency administrator
Leichtle. "In my opinion, the chances are good that we will find
a suitable solution here within the framework of the procedure.
The goal is to reorganize the company and thus maintain the
highest possible number of jobs."

Eyevis came in financial difficulties due to a complex financing
situation with high interest and repayment costs as well as the
high pre-financing requirement of the project business. The
insolvency proceedings include eyevis Gesellschaft fÅr
Projektions- und Gro·bildtechnik GmbH and eyevis Holding GmbH.
The other companies in the eyevis Group, Teracue, eyevis France
and eyevis Spain are not affected by the insolvency petition.

Despite the currently unpleasant situation, the company, which
specializes in the development and sale of large-screen systems
and solutions as well as IT infrastructures for signal
processing, will be represented as an exhibitor at Integrated
Systems Europe. "We will be presenting a series of new
developments as usual at our stand 2-B70 at the fair. Naturally
also as a clear signal for our customers and symbol for the
positive continuation prognosis of the enterprise," so Wolfgang
Schon, managing director of eyevis GmbH.

eyevis GmbH manufactures professional visual display solutions.


GARDEUR GROUP: Duijndam Group Buys Firm Out of Insolvency
---------------------------------------------------------
Fibre2Fashion.com reports that the family-run Duijndam Group from
the Netherlands has signed a contract to save Gardeur Group. The
aim is to stabilise supply in the short term and re-position and
expand Gardeur as the German trouser brand on national and
international markets in the medium term, the report says.

The Gardeur Group had filed insolvency proceedings in early
October 2017, Fibre2Fashion.com discloses. According to the
report, the transaction marks the successful end to the efforts
undertaken by insolvency administrator Dr. Biner Bahr of White &
Case Dusseldorf, who had fought very hard for an investor
solution on behalf of Gardeur.

"The acquisition of Gardeur gives me the opportunity to further
build and develop one of Germany's most popular and renowned
textile brands departing from a difficult situation. Over the
past few weeks I have convinced myself of the concept, processes
and especially the commitment of the employees and managers
surrounding CEO Gerhard KrÑnzle and am convinced that we will be
able to jointly lead the brand to a new position of strength.
Over the coming days I will first personally introduce our ideas
and plans to our customers with a view to strengthening their
confidence in the brand's future as quickly as possible," the
report quotes Steef Duijndam, founder and head of the Duijndam
Group, as saying.

"I am happy to have prevented an asset stripping of the Gardeur
Group thereby giving the company - and in particular most of its
staff - a future. This only became possible by some painful
contributions on the part of creditors and employees. I am all
the more delighted to have a strategic investor in the form of
the Duijndam Group that comes with not only outstanding
experience and contacts from the textile industry but also a
long-term vision for the Monchengladbach site," Dr. Bahr said,
Fibre2Fashion.com relays.

Duijndam Group is a tradition-rich trousers specialist based in
Monchengladbach, Lower Rhine, Germany.


JT TOURISTIK: Lidl Acquires Tour Operator, Retains All Staff
------------------------------------------------------------
fvw reports that discount supermarket group Lidl will take over
insolvent tour operator JT Touristik to expand its travel retail
activities.

The Berlin-based tour operator declared bankruptcy on September
29 but remained in business under Germany's insolvency protection
laws, the report says. Existing bookings were guaranteed until
the end of 2017 under special arrangements with insurance
companies while a buyer was sought, according to fvw.

Under the sale agreement, which was signed on Dec. 9 and
announced on Dec. 11, Lidl will retain the 'JT Touristik' brand
and all 60 employees, fvw relates.

fvw says the sale to Lidl requires regulatory clearance but is
expected to be approved by the start of 2018. The transaction
price was not disclosed but, according to fvw information, is
understood to be a low single-digit million euro figure.

JT Touristik founder Jasmin Taylor, known for her flamboyant
pink-coloured clothing and corporate branding, will leave the
company as of January 1, 2018, fvw says. There is speculation
that she is planning to start a new tour operator specialising in
luxury holidays.

fvw quotes insolvency administrator Stephan Thiemann as saying:
"We have achieved the ideal solution for JT Touristik. With Lidl
E-Commerce International we have found a well-established buyer
who will successfully continue the business of JT Touristik in
the future."

He emphasized that the transaction meant that customers with
existing bookings for trips next year would be able to go ahead
with their holidays as planned, the report relates.

"With this acquisition we are strengthening our existing travel
business. The know-how of JT ideally complements the competences
that we have built up over the last 10 years," fvw quotes
Christoph Hahn, head of travel at Lidl E-Commerce International,
as saying.

Through its website and flyers distributed in supermarkets, Lidl
not only sells 'white label' holidays produced by other tour
operators but also those of Lidl Holidays, an in-house tour
operator business launched one year ago, the report says.

According to the report, the acquisition of JT, including its
complete staff, will give Lidl Holidays a medium-sized tour
operator business with commercial partnerships with hotels,
airlines and incoming agencies as well as sales channels.

Lidl also gains a sizeable customer base, the report notes. JT
Touristik had some 346,000 customers and turnover of EUR176
million in 2015/16, according to fvw's annual German tour
operators dossier. Figures for 2016/17 have not been released.

Lidl will start accepting new bookings for 'the new JT' from mid-
January onwards, fvw says. JT holidays will continue to be sold
through travel agencies but will also be offered through Lidl-
Reisen.de as well as its own retail outlets, which number 3,200
in Germany alone, the report adds.

JT Touristik GmbH is a Berlin-based tour operator.


NIKI LUFTFAHRT: Bidders Have Until Dec. 21 to Submit Offers
-----------------------------------------------------------
Ilona Wissenbach at Reuters reports that bidders for insolvent
airline Niki have until Thursday, Dec. 21, to submit their offers
for the Austrian unit of collapsed Air Berlin.

According to Reuters, Niki's administrator Lucas Floether told
German news agency DPA "None of the possible buyers have
presented a binding, fully financed offer, but there are
indications of interest."

"We have set a deadline for binding offers for midday on
Thursday," Mr. Floether, as cited by Reuters, said, while
declining to provide details on the bidders.

Founder and former Formula One champion Niki Lauda, as well as
tour operator Thomas Cook and Irish budget carrier Ryanair, have
expressed an interest in taking over Niki, Reuters discloses.

As reported by the Troubled Company Reporter-Europe on Dec. 15,
2017, the management of NIKI Luftfahrt GmbH on Dec. 13 filed with
the local court of Berlin-Charlottenburg a petition for the
opening of insolvency proceedings over the assets of NIKI.

NIKI will discontinue to operate further flights for the time
being.

                         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.


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BORSALINO: Faces Liquidation After Court Protection Request Nixed
-----------------------------------------------------------------
Giulia Segreti at The New York Times reports that Borsalino faces
liquidation after a rescue plan was rejected by an Italian court
on Dec. 18.

A local trade union leader told Reuters a judge in the northern
town of Alessandria, where the luxury hat maker was founded 160
years ago, refused a request for court protection from creditors,
who are owed some EUR18 million (US$21 million).

Borsalino, whose hats have been worn by celebrities such as
Humphrey Bogart in "Casablanca" and singer Rihanna, ran into
financial difficulties after posting a large loss in 2013,
Reuters relates.

Borsalino returned to profit in 2015, Reuters recounts. Sales in
2016 rose to EUR17.5 million and core profits more than doubled
to EUR2.6 million, Reuters discloses.  It expected revenue this
year to be in line with last year's and sales to grow by 20% in
2018, Reuters states.

But it was still struggling with debt and sought court protection
from creditors, Reuters notes.

According to Reuters, following the Dec. 18 decision, two court-
appointed officials will wind down the company to pay back
creditors.

The judge's decision will not stop production at Borsalino, which
has 134 workers and makes some 150,000 hats a year, Reuters says.


NAPLES: Fitch Cuts Long-Term IDR to BB+, Outlook Negative
---------------------------------------------------------
Fitch Ratings has downgraded the Italian City of Naples' Long-
Term Foreign and Local Currency Issuer Default Ratings (IDRs) to
'BB+' from 'BBB-' and Short-Term Foreign Currency IDR to 'B' from
'F3'. The Outlook is Negative. The issue ratings on Naples'
senior unsecured bond and on the city's programme have also been
downgraded to 'BB+' from 'BBB-'.

The downgrade reflects higher-than-expected off-balance sheet
liabilities, partially fuelled by ongoing weak tax and fee
collection rates. The Negative Outlook factors in prolonged
prospects of sizeable off-balance sheet liabilities pressuring
liquidity amid uncertain extraordinary support from the national
government.

KEY RATING DRIVERS

The rating action reflects the following rating drivers and their
relative weights:

HIGH

Management and Administration (Weak)
The administration's commitment within the 2014 recovery plan to
overcome (within 10 years) the fund balance deficit has fallen
short of Fitch's expectations, eroding confidence that
improvements may be achieved over the medium term. Collection
rates on own-source revenue have languished at below 85% of
accrued/recorded taxes and fees, sale of assets came in about
EUR10 million out of planned EUR100 million, while subsidiaries
remain mostly loss-making.

A proposed rescheduling of the recovery plan has been opposed by
Corte dei Conti (national audit body) upon low provisions for
litigations. A lengthening of the recovery plan's time horizon to
20 years (currently being considered at the national level) could
facilitate Naples' budgeting while exacerbating the recovery time
for unpaid creditors. Naples' operating payables to suppliers are
1x the city's budget.

Naples' capacity to service debt on time remains reliant on
Italy's preferential payment mechanism, a tool used to smooth out
temporary cash mismatches but which may come under stress from
growing unpaid commitments. Adjusted for about EUR450 million of
potential and actual liabilities from unfavourable court rulings,
the city's free fund balance deficit totals EUR1.2 billion.

MEDIUM

Fiscal Performance (Weak)
Naples' 2016 operating margin was about 6%, adjusted for
difficult-to-collect revenue, which was insufficient to repay
interest expenses that represented 9% of revenue. Stagnant state
transfers and low fiscal flexibility would lead to 1% revenue
CAGR in 2017-2020 under Fitch's scenario, as improved tax
collection from the fight against tax evasion barely matches
current spending growth. Fitch expects the current balance to
remain negative at around 2% over the medium term.

Under Fitch's forecasts, the city's EUR1 billion capex in 2017-
2020 will focus on transportation, extraordinary road
maintenance, public lighting and urban renovation. They will be
mostly funded by non-debt resources such as EU funds and
transfers. According to Fitch's central scenario, new borrowing
of EUR250 million and a new plan to sell real estate assets to
institutional counterparties (governmental real estate fund
INVIMIT and social insurance agency INAIL) will contribute to
funding capex. Although the city is planning asset sales of
EUR300 million over the medium term, Fitch factored in its
central scenario an average of less than EUR60 million per year.

Institutional Framework (Neutral): Fitch views inter-governmental
relations as neutral to Naples' ratings. Despite Naples being
exposed to the national government's spending cuts, the city
benefits from state support, such as equalisation transfers
(EUR350 million in 2016, or nearly 30% of operating revenue, and
an expected EUR330 million in 2017), to offset its weaker-than-
national average fiscal capacity, and funding for large projects.
Naples also received subsidised loans to pay down its commercial
liabilities.

LOW

Debt, Liabilities and Liquidity (Weak): Under Fitch's central
scenario, Naples' direct risk will stabilise at around EUR2.3
billion in 2017-2020 (EUR2.4 billion in 2015 and 2016) net of
pre-financing, or below 200% of the budget when EUR1.1 billion
subsidised loans from Cassa Depositi e Prestiti (CDP, BBB/Stable,
the national government financial arm) to pay down the city's
commercial liabilities are included. CDP and the national
government are counterparties to nearly 75% of Naples' direct
risk and almost the entire stock of Naples' loans carries fixed
interest rates, reflecting a low risk appetite.

Fitch expects debt ratios will remain weak, while cash flows
remain a risk over the medium term.

Economy (Neutral): With nearly 1 million inhabitants, Naples is
one of the biggest Italian cities and, although it is the most
dynamic and industrialised city in southern Italy, its socio-
economic profile remains weak relative to national levels, also
affected by a large shadow economy. Naples' official labour
market continues to underperform the national economy with an
unemployment rate of more than 20% (11.7% nationally). The city's
mild GDP recovery, which has been continuing in 2017, mainly
driven by tourism, industry and commerce, has had no impact on
tax revenue. ]

KEY ASSUMPTIONS

Fitch assumes that the existing preferential payment mechanism as
defined by national law will continue to support timely debt
servicing by Naples, despite the city's growing commercial
liabilities in the medium term as its cash flows generation
capacity continues to be weak.

RATING SENSITIVITIES

Persistently negative adjusted current balance or failure to
shrink the fund balance deficit would lead to a downgrade. The
ratings could also be downgraded if debt and equivalents rise
above 2.5x operating revenue or if the preferential payment
mechanism protecting financial lenders is removed or undermined
by regulatory changes.

The Outlook could be revised to Stable if the fund balance
deficit shrinks as a result of higher- than-expected asset sales
or an improvement in operating performance.


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


EURASIAN BANK: S&P Affirms B/B ICRs, Outlook Remains Negative
-------------------------------------------------------------
S&P Global Ratings affirmed its 'B/B' long- and short-term issuer
credit ratings and 'kzBB' national scale rating on Eurasian Bank.
The outlook remains negative.

With S&P's criteria review complete, it has removed the UCO
(under criteria observation) designation from all the ratings.

The UCO designation removal follows our review of Eurasian Bank's
capital under our updated "Risk-Adjusted Capital Framework
Methodology," published on July 20, 2017, on RatingsDirect. Under
the revised criteria, the risk-adjusted capital (RAC) ratio at
year-end 2016 remained broadly unchanged at 5.1%, which is
approximately the same as under the previous methodology. We
expect our RAC ratio to strengthen to about 5.25% over the next
12 months, from 5.0% as of Sept. 30, 2017. In our base-case
forecast for 2017-2018, we make the following assumptions:

-- A 7%-9% net loan decrease in 2017 as a result of significant
    provisions and consequent write-offs;

-- Limited gross loan growth in 2018, at approximately 10%, as a
    response to adverse economic conditions;

-- Slightly positive or flat total asset dynamics in 2017-2018;

-- No shareholder capital injections beyond the Kazakh tenge
    (KZT)6 billion (about $18 million as of Dec. 13, 2017)
    received in the first half of 2017;

-- Cost of risk of about 11%-12% in 2017 and about 3%-4% in
    2018, which is broadly in line with our nonperforming loan
   (NPL) projections and system average expectations;

-- KZT86 billion net one-time gain from participation in the
    state recapitalization program in 2017; and

-- Return on average equity of under 5% in 2017 and a close-to-
    break-even financial result in 2018.

Eurasian Bank is one of the first banks in Kazakhstan to
participate in the state program to improve the financial
stability of the banking system. Under this program, Kazakh banks
with capital over KZT45 billion (with the exception of foreign
subsidiary banks) and with shareholders that are ready to provide
equity support over the next five years are eligible to receive
subordinated debt from the government (in the form of
subordinated bonds) at a discounted rate and to use the
accounting capital gain for creation of additional provisions on
problem loans.

Eurasian Bank received a KZT150 billion Tier 2 subordinated loan
from the state (in the form of subordinated bonds) on Oct. 18,
2017, at a below-market interest rate. It resulted in a net
capital gain of KZT85 billion, which will be used to create
overall KZT83.4 billion of new loan loss provisions in 2017.

Under the conditions of the program, Eurasian Bank must increase
its Tier 1 equity by an additional KZT51.8 billion through fresh
shareholder equity injections or profit retention over the next
five years. S&P said, "In view of the bank's volatile and low
profitability over the past three years, we do not exclude the
need for the shareholders to inject fresh capital to meet these
requirements. We understand that shareholders are willing and
able to provide additional equity support, in case of need."

S&P said, "Our assessment of the bank's risk position reflects
its aggressive underwriting standards, which resulted in a high
share of problem assets when loans matured in the weakened
macroeconomic environment. We estimate that potentially problem
loans (loans overdue more than 90 days, problem restructured
loans, and other loans with signs of impairment), accounted for
about 25%-35% of total loans as of Dec. 1, 2017. This is somewhat
lower than our estimate for the Kazakh banking sector of about
35%-40%.

The bank reported a significant increase in NPLs (loans over 90
days overdue) to 23.5% of total loans as of Sept. 1, 2017, from
10.3% as of year-end 2016. We expect the share of NPLs to range
between 15% and 20% over the next 12-18 months, despite
significant write offs in 2017."

The negative outlook on Eurasian Bank indicates pressure on the
bank's capitalization and asset quality over the next 12 months
from the still-adverse operating environment, and the bank's weak
risk-management practices.

S&P said, "Given Eurasian Bank's weak earnings, we would take a
negative rating action if our projected RAC ratio for the bank
falls below our base-case expectation of 5.25% over the next 12
months, due to substantially higher-than-expected losses or loan
growth not supported by sufficient equity injections from the
shareholders.

"We could consider a stable outlook, if we see a lower risk of
our projected RAC ratio falling below our forecast base case over
the next 12 months."


===================
K Y R G Y Z S T A N
===================


KYRGYZ REPUBLIC: Fiscal Metrics Constrain Rating, Moody's Says
--------------------------------------------------------------
Moody's Investors Service says that the credit profile of the
Kyrgyz Republic (B2 stable) highlights the economy's
vulnerability to swings in gold output and remittances, and the
government's significant debt burden, which at 59% of GDP at the
end of 2016, is high for a small economy with limited access to
market funding.

In addition, the country's institutions are weak -- particularly
with regard to corruption and the rule of law -- although the
Republic's institutional strength will continue to develop,
including through ongoing reforms, in partnership with the
International Monetary Fund (IMF).

At the same time, domestic political tensions continue to pose a
risk, despite stabilization in recent years.

Moody's conclusions were contained in its just-released credit
analysis titled "Government of Kyrgyz Republic - B2 stable" and
which examines the sovereign in four categories: economic
strength, which is assessed as "low (-)"; institutional strength
"very low (+)"; fiscal strength "low"; and susceptibility to
event risk "moderate".

The report constitutes an annual update to investors and is not a
rating action.

Moody's points out that, balancing some of the credit challenges
mentioned above, continued financial assistance from
international donors represents a major support to the Republic's
credit profile. Technical assistance and a three-year Extended
Credit Facility IMF program approved in April 2015 have made
fiscal policy more transparent and predictable.

Moreover, the high affordability of the government's debt stock -
- with 90% funded on concessional terms as of 2017 -- partially
mitigates risks stemming from the high debt load.

The stable outlook on the B2 rating balances upside risks related
to solid economic growth, ongoing reforms, a large revenue base
and low costs of concessional funding, and downside risks from
potentially more adverse developments in the country's fiscal
metrics, in particular, if fiscal consolidation and structural
improvements -- including those to boost energy and transport
infrastructure -- are significantly delayed.

Upward credit pressure could develop, if fiscal consolidation
leads to a reduction in the government's debt burden, and price
and exchange rate stability is achieved.

By contrast, a downgrade of the rating could result from the
withdrawal of donor support, larger financing needs combined with
a deterioration in the debt structure, and/or economically
destabilizing sociopolitical tensions.


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


DRYDEN 29 2013: S&P Assigns Prelim B- Rating to Class F-R Notes
---------------------------------------------------------------
S&P Global Ratings assigned its preliminary credit ratings to
Dryden 29 Euro CLO 2013 B.V.'s class X-R, A-R, B-1-R, B-2-R, C-R,
D-R, E-R, and F-R notes. At closing, the issuer will also issue
unrated subordinated notes.

This transaction will be a re-issue of an existing transaction.
On the closing date, the issuer will redeem the existing notes
through liquidation of the portfolio and use the proceeds from
the issuance of the newly rated notes to repurchase the
portfolio.

The preliminary ratings assigned to Dryden 29 Euro CLO's notes
reflect S&P's assessment of:

-- The diversified collateral pool, which consists primarily of
    broadly syndicated speculative-grade senior secured term
    loans and bonds that are governed by collateral quality
    tests.

-- The credit enhancement provided through the subordination of
    cash flows, excess spread, and overcollateralization.

-- The collateral manager's experienced team, which can affect
    the performance of the rated notes through collateral
    selection, ongoing portfolio management, and trading.

-- The transaction's legal structure, which S&P expects to be
    bankruptcy remote.

S&P said, "We consider that the transaction's documented
counterparty replacement and remedy mechanisms adequately
mitigate its exposure to counterparty risk under our current
counterparty criteria.

"Following the application of our structured finance ratings
above the sovereign criteria, we consider the transaction's
exposure to country risk to be limited at the assigned
preliminary rating levels, as the exposure to individual
sovereigns does not exceed the diversification thresholds
outlined in our criteria.

"At closing, we consider that the transaction's legal structure
will be bankruptcy remote, in line with our legal criteria (see
"Structured Finance: Asset Isolation And Special-Purpose Entity
Methodology," published on March 29, 2017).

"Following our analysis of the credit, cash flow, counterparty,
operational, and legal risks, we believe that our preliminary
ratings are commensurate with the available credit enhancement
for each class of notes."

Dryden 29 Euro CLO is a European cash flow corporate loan
collateralized loan obligation (CLO) securitization of a
revolving pool, comprising euro-denominated senior secured loans
and bonds issued mainly by European borrowers. PGIM Ltd. is the
collateral manager.

  RATINGS LIST

  Preliminary Ratings Assigned

  Dryden 29 Euro CLO 2013 B.V.
  EUR413.9 Million Senior Secured Floating- And Fixed-Rate Notes
  (Including EUR43.5 Million Subordinated Notes)

  Class            Prelim.         Prelim.
                   rating           amount
                                  (mil. EUR)

  X-R              AAA (sf)            1.0
  A-R              AAA (sf)          230.0
  B-1-R            AA (sf)            21.6
  B-2-R            AA (sf)            40.0
  C-R              A (sf)             23.6
  D-R              BBB (sf)           20.8
  E-R              BB (sf)            21.6
  F-R              B- (sf)            12.8
  Sub.             NR                 43.5

  NR--Not rated.
  Sub.--Subordinated.


E-MAC PROGRAM: Moody's Reviews for Downgrade Caa2 B Notes Rating
----------------------------------------------------------------
Moody's Investors Service has placed on review for downgrade one
note in E-MAC NL 2006-NHG I B.V. and two notes in E-MAC Program
B.V. / Compartment NL 2007-NHG II.

Issuer: E-MAC NL 2006-NHG I B.V.

-- EUR600M Class A Notes, A1 (sf) Placed Under Review for
    Possible Downgrade; previously on Aug 23, 2013 Confirmed at
    A1 (sf)

Issuer: E-MAC Program B.V. / Compartment NL 2007-NHG II

-- EUR600M Class A Notes, A3 (sf) Placed Under Review for
    Possible Downgrade; previously on Aug 1, 2016 Downgraded to
    A3 (sf)

-- EUR7.2M Class B Notes, Caa2 (sf) Placed Under Review for
    Possible Downgrade; previously on Aug 1, 2016 Downgraded to
    Caa2 (sf)

RATINGS RATIONALE

The placement on review for downgrade of one note in E-MAC NL
2006-NHG I B.V. and two notes in E-MAC Program B.V. / Compartment
NL 2007-NHG II reflects the erosion of excess spread in both
transactions, and worse than expected collateral performance in
E-MAC NL 2006-NHG I B.V.  In October 2017, Moody's observed that
the absolute amount of interest proceeds after payments under
hedging arrangements appeared to be negative in both transactions
leading to drawings from the Reserve Accounts which now stand
below their targets. During the review process, Moody's will seek
to clarify the reasons for the negative trend of excess spread.

As part of the rating action, Moody's reassessed its lifetime
loss expectation for the portfolio reflecting the collateral
performance to date.

The performance of E-MAC NL 2006-NHG I B.V. has continued to
deteriorate since October 2016. Total delinquencies have risen in
the past year, with 90 days plus arrears currently standing at
0.41% of current pool balance up from 0.20% a year earlier.
Cumulative losses currently stand at 0.12% of original pool
balance.

Moody's increased the expected loss assumption to 0.23% as a
percentage of original pool balance from 0.20% due to the
deteriorating performance.

The principal methodology used in these ratings was "Moody's
Approach to Rating RMBS Using the MILAN Framework" published in
September 2017.

The analysis undertaken by Moody's at the initial assignment of
these ratings for RMBS securities may focus on aspects that
become less relevant or typically remain unchanged during the
surveillance stage.

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

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

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


INTERSTATE TIRE: Enters Insolvency Proceedings
----------------------------------------------
Tyrepress reports that the Court of The Hague in The Netherlands
has declared Interstate Tire & Rubber BV insolvent.

Tyrepress, citing an official document, says the court reached
this decision on Nov. 30, 2017. Proceedings will be conducted
under case number F.09/17/429, with J.A.M. Reuser appointed as
case curator, the report says.

Further official information regarding the insolvency has not yet
been made available, Tyrepress noes.

Interstate Tire & Rubber began life as the tyre wholesaler
Interstate Europe, and over the past decade or so has primarily
marketed tyres produced for it under offtake agreements in the
Far East; these are sold under the Interstate brand name.


JUBILEE CLO 2015-XVI: Moody's Assigns B2 Rating to Class F Notes
----------------------------------------------------------------
Moody's Investors Service announced that is has assigned the
following definitive ratings to refinancing notes ("Refinancing
Notes") issued by Jubilee CLO 2015-XVI B.V. (the "Issuer"):

-- EUR225,000,000 Class A-1 Senior Secured Floating Rate Notes
    due 2029, Assigned Aaa (sf)

-- EUR5,000,000 Class A-2 Senior Secured Fixed Rate Notes due
    2029, Assigned Aaa (sf)

-- EUR19,000,000 Class B-1 Senior Secured Floating Rate Notes
    due 2029, Assigned Aa2 (sf)

-- EUR37,000,000 Class B-2 Senior Secured Fixed Rate Notes due
    2029, Assigned Aa2 (sf)

-- EUR25,000,000 Class C Deferrable Mezzanine Floating Rate
    Notes due 2029, Assigned A2 (sf)

-- EUR20,000,000 Class D Deferrable Mezzanine Floating Rate
    Notes due 2029, Assigned Baa2 (sf)

-- EUR25,600,000 Class E Deferrable Junior Floating Rate Notes
    due 2029, Assigned Ba2 (sf)

Moody's also affirmed the ratings on the following notes issued
by Jubilee CLO 2015-XVI B.V.:

-- EUR13,000,000 Class F Deferrable Junior Floating Rate Notes
    due 2029, Affirmed B2 (sf); previously on Dec 15, 2015
    Definitive Rating Assigned B2 (sf)

RATINGS RATIONALE

Moody's definitive ratings of the notes address the expected loss
posed to noteholders by the legal final maturity of the notes in
2029. The definitive ratings reflect the risks due to defaults on
the underlying portfolio of assets, the transaction's legal
structure, and the characteristics of the underlying assets.
Furthermore, Moody's is of the opinion that the collateral
manager, Alcentra Limited ("Alcentra"), has sufficient experience
and operational capacity and is capable of managing this CLO.

The Issuer has issued the Refinancing Notes in connection with
the refinancing of the following classes of notes: Class A-1
Notes, Class A-2 Notes, Class B-1 Notes, Class B-2 Notes, Class C
Notes, Class D Notes and Class E Notes due 2029 (the "Original
Notes"), previously issued December 2015 (the "Original Closing
Date"). On the Refinancing Date, the Issuer will use the proceeds
from the issuance of the Refinancing Notes to redeem in full the
Original Notes. On the Original Closing Date the Issuer also
issued the one class of rated Notes, Class F, which will remain
outstanding as will the Subordinated Notes. In connection with
the refinancing, the rating of non refinanced Class F is affirmed
at B2 (sf).

Other than the changes to the spreads of the notes, the only
other material modifications occurring in connection to the
refinancing of the CLO is the extension of the Weighted Average
Life Test, which is being extended from December 15, 2023 to June
15, 2025, an extension of 18 months.

Jubilee CLO 2015-XVI B.V. is a managed cash flow CLO with a
target portfolio made up of EUR400,000,000 par value of mainly
European corporate leveraged loans. At least 90% of the portfolio
must consist of senior secured loans and senior secured bonds and
up to 10% of the portfolio may consist of unsecured senior loans,
second-lien loans, mezzanine obligations and high yield bonds.
The portfolio may also consist of up to 10% of fixed rate
obligations. The portfolio is expected to be 100% ramped up as of
the closing date and to be comprised predominantly of corporate
loans to obligors domiciled in Western Europe.

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

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

Loss and Cash Flow Analysis:

Moody's modeled the transaction using a cash flow model based on
the Binomial Expansion Technique, as described in Section 2.3.2.1
of the "Moody's Global Approach to Rating Collateralized Loan
Obligations" rating methodology published in August 2017. 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.

The key model inputs Moody's used in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. For modeling
purposes, Moody's used the following base-case assumptions:

Performing par and principal proceeds balance: EUR395,199,819

Defaulted par: EUR0

Diversity Score: 42

Weighted Average Rating Factor (WARF): 3095

Weighted Average Spread (WAS): 4.13%

Weighted Average Recovery Rate (WARR): 42%

Weighted Average Life (WAL): 7.5 years

As part of its analysis, Moody's has addressed the potential
exposure to obligors domiciled in countries with a local 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% and none allowed below Baa3. 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 size of the exposure to countries
with a LCC of A1 or below and the target ratings of the rated
notes, and amount to 0.75% for the Class A-1, A-2 Notes, 0.50%
for the Class B-1, B-2 Notes, 0.375% for the Class C Notes and 0%
for Classes D and E.

Stress Scenarios:

Together with the set of modeling assumptions above, Moody's
conducted an additional sensitivity analysis, which was a
component in determining the definitive ratings 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 the notes (shown in terms of the number of
notch difference versus the current model output, whereby a
negative difference corresponds to higher expected losses),
assuming that all other factors are held equal.

Percentage Change in WARF -- increase of 15% (from 3095 to 3559)

Rating Impact in Rating Notches:

Class A-1 Senior Secured Floating Rate Notes: 0

Class A-2 Senior Secured Fixed Rate Notes: 0

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

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

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

Class D Senior Secured Deferrable Mezzanine Floating Rate Notes:
-2

Class E Senior Secured Deferrable Junior Floating Rate Notes: -1

Percentage Change in WARF -- increase of 30% (from 3095 to 4024)

Rating Impact in Rating Notches:

Class A-1 Senior Secured Floating Rate Notes: 0

Class A-2 Senior Secured Fixed Rate Notes: 0

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

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

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

Class D Senior Secured Deferrable Mezzanine Floating Rate Notes:
-3

Class E Senior Secured Deferrable Junior Floating Rate Notes: -2

Further details regarding Moody's analysis of this transaction
may be found in the related new issue report, published after the
Original Closing Date and available on Moodys.com.

Methodology Underlying the Rating Action:

The principal methodology used in these ratings was "Moody's
Global Approach to Rating Collateralized Loan Obligations"
published in August 2017.


JUBILEE CLO 2015-XVI: S&P Assigns BB Rating to Class E-R Notes
--------------------------------------------------------------
S&P Global Ratings assigned its credit ratings to the class A1-R,
A2-R, B1-R, B2-R, C-R, D-R, and E-R notes from Jubilee CLO 2015-
XVI B.V., a collateralized loan obligation (CLO) managed by
Alcentra Ltd. At the same time, S&P has withdrawn its ratings on
the class A-1, A-2, B-1, B-2, C, D, and E notes, and has affirmed
its rating on the class F notes.

The replacement notes were issued via a supplemental trust deed.
The floating-rate replacement notes were issued at a lower spread
over Euro Interbank Offered Rate (EURIBOR) and the fixed-rate
replacement notes at a lower coupon than the original notes they
replace. The cash flow analysis demonstrates, in S&P's view, that
the replacement notes have adequate credit enhancement available
to support the ratings assigned.

As part of the refinance, the maximum weighted-average life test
was also lengthened by 18 months, which we have incorporated in
S&P's analysis.

S&P said, "The transaction has experienced overall stable
performance since our previous review. The available credit
enhancement for all classes of rated notes has decreased due to
the occurrence of defaults in the transaction portfolio. We
calculate the aggregate collateral balance of the portfolio at
EUR397.15 million, while the target par amount is EUR400.00
million. The erosion of credit protection, in our view, is partly
offset by a lower cost of capital for the replacement notes,
which consequently leads to greater excess spread in the
transaction. The transaction's reinvestment period will end in
December 2019, and all coverage ratios are above the minimum
triggers, albeit at levels lower than at closing.

"On refinancing, the proceeds from the issuance of the
replacement notes redeemed the original notes, upon which we
withdrew the ratings on the original notes and assigned ratings
to the replacement notes. Our final rating analysis incorporates
the final pricing achieved on the replacement notes and our
analysis of any changes to the transaction's supporting
documentation.

"At the same time, we have affirmed our 'B- (sf)' rating on the
class F notes as the available credit enhancement for this class
of notes remains commensurate with the currently assigned
rating."

  CAPITAL STRUCTURE

  Current date after refinancing
  Class       Amount      Interest
          (mil. EUR)      rate (%)

  A1-R        225.00     3ME +0.80
  A2-R          5.00          1.10
  B1-R         19.00     3ME +1.05
  B2-R         37.00          1.85
  C-R          25.00     3ME +1.45
  D-R          20.00     3ME +2.30
  E            25.60     3ME +4.60
  F            13.00     3ME +6.85

  Current date before refinancing
  Class       Amount      Interest
          (mil. EUR)      rate (%)

  A-1         225.00     3ME +1.40
  A-2           5.00          1.68
  B-1          19.00     3ME +2.10
  B-2          37.00          2.61
  C            25.00     3ME +2.90
  D            20.00     3ME +3.80
  E            25.60     3ME +5.25
  F            13.00     3ME +6.85

  3ME--Three-month EURIBOR.


  RATINGS LIST

  Jubilee CLO 2015-XVI B.V.
  EUR412.8 Million Senior Secured And Deferrable Fixed- And
  Floating-Rate Notes (Including EUR43.20 Million Subordinated
  Notes)

  Ratings Assigned

  Replacement    Rating
  class
  A1-R           AAA (sf)
  A2-R           AAA (sf)
  B1-R           AA (sf)
  B2-R           AA (sf)
  C-R            A (sf)
  D-R            BBB (sf)
  E-R            BB (sf)

  Rating Affirmed

  F              B- (sf)

  Ratings Withdrawn

  Class          To       From

  A-1            NR       AAA (sf)
  A-2            NR       AAA (sf)
  B-1            NR       AA (sf)
  B-2            NR       AA (sf)
  C              NR       A (sf)
  D              NR       BBB (sf)
  E              NR       BB (sf)

  NR--Not rated.


===========
N O R W A Y
===========


NORSKE SKOGINDUSTRIER: Files for Bankruptcy in Oslo Court
---------------------------------------------------------
The board of Directors of Norske Skogindustrier ASA has decided
to file for bankruptcy at Oslo skifterett (Oslo bankruptcy court)
on Tuesday, December 19, 2017.  The board's decision is unanimous
and is due to the fact that there is no longer a realistic
opportunity to achieve a voluntary recapitalization solution for
the Norske Skog group.  The group's largest secured creditor,
Oceanwood Capital Management Ltd (Oceanwood), has informed the
board that it is not willing to support any such solution.  The
group's operational activities will continue in Norske Skog AS as
normal with as little impact as possible from the bankruptcy
proceedings of the listed Norske Skogindustrier ASA.  The
non-listed Norske Skog AS will be the new operating parent
company of the Norske Skog group, and will continue the head
office function that has been performed by Norske Skogindustrier
ASA.

The board and management of Norske Skogindustrier ASA have over
an extended period worked hard to achieve a consensual
recapitalization of the Norske Skog group and thereby avoid
bankruptcy proceedings for the parent company.  This work was
well advanced and had broad support from the capital structure in
October and November 2017.  The board's decision to file for
bankruptcy is therefore made with great disappointment that this
goal was not achieved, said Christen Sveaas, Chairman of the
board of Norske Skogindustrier ASA

The recapitalization process has been extremely challenging due
to the Group's very complex capital structure.  Therefore, a
contingency plan has been prepared during the autumn for the
event that the consensual recapitalization failed.  Consequently,
the group's seven paper mills and all key stakeholders as well as
employees, customers, suppliers and local authorities are
prepared for the process that now must be implemented.

It is expected that the bankruptcy process of the listed parent
company will not have any particular consequences for operations
at Norske Skog's seven paper mills.  The operations will continue
as normal, and all customers will continue to receive quality
products from Norske Skog as before, Mr. Sveaas said.

The current board of directors was elected on August 24, 2017,
and has from that day worked hard and intensively to analyze the
group's situation and prepare realistic solutions with management
and the company's financial and legal advisors.  The new board
announced on September 12, 2017, the board's plan to launch an
industry-based recapitalization transaction.  This proposal was
based on the board's view of the level of debt and future
interest payments that Norske Skog's business could sustain.  The
recapitalized new Norske Skog consequently had significantly less
debt than in the proposals announced earlier in 2017 from both
the company and the company's creditors.  The Board's industrial
recapitalization proposal was however never made public as a
result of the committee for the secured creditors prior to the
announcement made it clear that they would not support the
board's proposal.

Then, the board proceeded with an adjusted recapitalization
proposal following extensive dialogue with the committee for the
secured creditors, the committee for the unsecured creditors and
the company's shareholders.  The board launched a proposal for a
consensual recapitalization solution on September 18, 2017.  In
this proposal, the debt level was increased somewhat in line with
the view of the secured creditors' committee, and the exchange
ratio for equity of the parent company was adjusted somewhat in
line with the views of both the unsecured and secured creditors'
committees.  While this proposal did not achieve sufficient
support from all creditor groups, there was still broad support
for a recapitalization transaction in which all unsecured bond
debt would be converted into equity and parts of the secured debt
would also be converted into equity in order to achieve a sound
capitalization of the new Norske Skog group.

After further dialogue among stakeholders, the board on
October 11, 2017 announced its third and last recapitalization
proposal.  This proposal obtained support from both the group's
unsecured creditors and among the creditors in the group's
secured bond loan.  However, the recapitalization proposal did
not receive the necessary support from the creditors in the
group's EUR 100 million NSF facility (NSF facility), which is
issued by Norske Skog AS.

The subsequent negotiations with the creditors of the NSF
facility over a solution in which support for the board's
recapitalization proposal could be achieved ended unsuccessfully.
However, the process resulted in Oceanwood resolving to buy out
the creditors of the NSF facility, so that Oceanwood currently
controls 100% of the NSF facility.  Oceanwood also purchased
additional significant holdings in the secured bond loan, where
they are currently expected to own a stake well above 50%.

Oceanwood then chose to enter into an industrial partnership with
Aker Capital AS, and announced on November 23, 2017, through a
joint press release, that they had decided not to support further
work on implementing a consensual recapitalization solution,
despite the fact that the board's third recapitalization proposal
at this time seemed to have support both among the group's
secured creditors, the unsecured creditors and the parent
company's shareholders.  Following the announcement of November
23, 2017, the board of directors of the parent company has
attempted to bring Oceanwood and Aker Capital AS to change their
positions in relation to a consensual recapitalization, but this
has been unsuccessful.  Oceanwood has later, in writing,
confirmed to the board its position, namely that it is not
willing to support a voluntary recapitalization.

The board has in the dialog with Oceanwood and Aker Capital AS
suggested that Oceanwood and Aker Capital AS invite existing
shareholders in Norske Skogindustrier ASA as co-investors on the
same terms as Oceanwood and Aker Capital AS' joint venture, if it
were to become the new owner of Norske Skog AS.  Such a
continuation of today's shareholders would in the view of the
board ensure a strategic value for the new parent company in
having shareholders where a considerable number also are fibre
suppliers to the group, and many which are employed by the group.
It still remains uncertain if such a co-investment opportunity
will be offered to existing shareholders.

In the dialogue with Oceanwood and Aker Capital AS, the Board has
expressed the opinion that it believes that a voluntary
recapitalization solution would be a adequate way to realize Aker
Capital AS's industrially motivated intention to become a new
controlling owner of Norske Skog.  By a voluntary
recapitalization transaction, Oceanwood would through the debt
conversion end up as owner of a substantial part of the equity of
a recapitalized Norske Skog that could have been offered to Aker
Capital AS.  The auction process that will now be implemented for
Norske Skog AS will be open to all stakeholders, and it is
currently unclear who will be the owner of Norske Skog's
operational business when the auction process is completed.

In the period following the announcement of November 23, 2017,
from Oceanwood and Aker Capital AS, the board has explored
whether other realistic solutions could be found in order to
avoid bankruptcy of Norske Skogindustrier ASA.  For instance, it
has been assessed whether it would be possible to convert all
unsecured debt to equity while the secured part of the group's
debt could be handled by selling the group's operating business
through the secured bond loan's ongoing enforcement process.
However, this has also proved to be impossible, partly due to
lack of liquidity, remaining pension commitments, and Oceanwood's
lack of willingness to convert the parent company's debt to
operating subsidiaries and the perpetual bonds to equity.

The board and management have also worked on a contingency plan
for the event that the recapitalization process should end with
enforcement from the secured creditors, and a subsequent
bankruptcy for the listed Norske Skogindustrier ASA.  It is
therefore a well-prepared process that is now being implemented,
in which Norske Skog's operating business is to be valued in
accordance with the requirements agreed between the creditors in
the inter-creditor agreement to which the group is a party.  The
board and management have fully cooperated with both the trustees
for the secured bond loan, their financial and legal advisors and
the board of Norske Skog AS over the recent period in order to
facilitate a smooth process in line with the obligations and
provisions that apply to the current situation.

The management and all employees at the headquarter have received
binding offers of employment from Norske Skog AS, and the head
office function will continue through Norske Skog AS.  The
operating business will continue with the least disturbances
possible, and suppliers and customers of the mills should expect
no changes to Norske Skog's ongoing operations as a result of the
bankruptcy proceedings of Norske Skogindustrier ASA.

The board wishes to thank all the employees of the Norske Skog
group for demonstrating determination and a strong commitment
throughout the demanding recapitalization process that has taken
place during 2017.  The board also wishes to thank the group's
customers and suppliers, who have continued to trade with the
group's companies in the challenging financial situation that has
existed during 2017.

Oslo Stock Exchange has suspended trading of the shares of Norske
Skogindustrier ASA.

                       About Norske Skog

Norske Skogindustrier ASA or Norske Skog, which translates as
Norwegian Forest Industries, is a Norwegian pulp and paper
company based in Oslo, Norway and established in 1962.

                           *   *   *

As reported by the Troubled Company Reporter-Europe on December
5, 2017, S&P Global Ratings said it has revised its long- and
short-term corporate credit ratings on Norske Skogindustrier ASA
(Norske Skog) and its core rated subsidiaries to 'D' (default)
from 'SD' (selective default) as the issuer has now defaulted on
all of its notes.

S&P said, "At the same time, we lowered our issue rating on the
unsecured notes due in 2033 and issued by Norske Skog Holding AS
to 'D' from 'C'. We also removed the issue ratings from
CreditWatch with negative implications, where we had placed them
on June 6, 2017.

"We also affirmed our 'D' ratings on the senior secured notes due
in 2019, and the unsecured notes due in 2021, 2023, and 2026."

The downgrade follows the nonpayment of the cash coupon due on
Norske Skog's unsecured notes due in 2033 before the expiry of
the grace period on Nov. 15, 2017.

The 'D' ratings on the secured notes due 2019, and the unsecured
notes due in 2021, 2023, 2026, and 2033, reflect the nonpayment
of interest payments beyond any contractual grace periods, which
S&P considers a default.

The TCR-Europe reported on July 24, 2017 that Moody's Investors
Service downgraded the probability of default rating (PDR) of
Norske Skogindustrier ASA (Norske Skog) to Ca-PD/LD from Caa3-PD.
Concurrently, Moody's has affirmed Norske Skog's corporate family
rating (CFR) of Caa3.  In addition, Moody's also affirmed the C
rating of Norske Skog's global notes due 2026 and 2033 and its
perpetual notes due 2115, the Caa2 rating of the senior secured
notes issued by Norske Skog AS and downgraded the rating of the
global notes due 2021 and 2023 issued by Norske Skog Holdings AS
to Ca from Caa3.  The outlook on the ratings remains stable.  The
downgrade of the PDR to Ca-PD/LD from Caa3-PD reflects the fact
that Norske Skog did not pay the interest payment on its senior
secured notes issued by Norske Skog AS, even after the 30 day
grace period had elapsed on July 15.  This constitutes an event
of default based on Moody's definition, in spite of the existence
of a standstill agreement with the debt holders securing that an
enforcement will not be made under the secured notes due to non-
payment of interest.  In addition, the likelihood of further
events of defaults in the next 12-18 months remains fairly high,
as the company is also amidst discussions around an exchange
offer that would most likely involve equitisation of debt, which
the rating agency would most likely view as a distressed
exchange.


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


PORTUGAL: Fitch Upgrades Long-Term IDR From BB+, Outlook Stable
---------------------------------------------------------------
Fitch Ratings has upgraded Portugal's Long-Term Foreign-Currency
Issuer Default Rating (IDR) to 'BBB' from 'BB+'. The Outlook is
Stable.

KEY RATING DRIVERS

The upgrade of Portugal's IDRs reflects the following key rating
drivers and their relative weights:

High

Gross general government debt (GGGD) is expected to decline by
more than 3pp of GDP this year, to below 127% of GDP. This will
be the first decline in the GGGD ratio since the sovereign debt
crisis. Fitch's assessment is that the debt trajectory is on a
firm downward trend and the decline in the GGGD ratio will
continue through the medium-term. The favourable debt dynamics
are driven by a combination of previous structural fiscal
measures, the recent cyclical recovery and a substantial
improvement in financing conditions.

The current account will post its fifth consecutive surplus this
year despite buoyant domestic demand growth, underpinned by
structural improvement in external competitiveness. While net
external debt (NXD) close to 90% of GDP remains high relative to
'BBB' rated peers, external deleveraging continues to progress at
a gradual pace.

Medium

Portugal has achieved a significant improvement in the budget
balance since 2014. The overall budget deficit will likely shrink
to 1.4% of GDP in 2017 from 2% in 2016 and 7.2% in 2014,
underpinned by buoyant tax revenue, which rose 5.1% in January-
October 2017.

The Portuguese economy has experienced a strong cyclical recovery
since mid-2016 and the short term outlook has also improved.
Fitch has revised up its GDP forecast to 2.6% and 1.9% in 2017
and 2018, respectively, a cumulative 0.9 pps higher than in the
last rating review in June 2017. Strong labour market performance
confirms the strength of the recovery. Employment grew 3% in 3Q17
and unemployment fell to 8.5% in September, compared with a peak
of 17.5% in January 2013. Notwithstanding the strong performance
in recent quarters Fitch maintains its assumption of medium-term
growth potential at around 1.5%.

The recapitalisations of two largest banks (CGD and BCP) and the
majority sale of Novo Banco to a foreign investor help to
mitigate contingent liabilities and financial stability risks.
However, the high non-performing loan (NPL) ratio remains a risk
and a potential constraint on medium-term growth. The banking
sector was able to shrink the stock of NPLs to EUR42 billion by
mid-2017 from EUR50 billion in mid-2016. Furthermore, the
recovery, underpinned by stronger economic sentiment and
increasing employment, creates a favourable environment for
further normalisation of the banking sector.

Financing conditions have turned favourable for the sovereign in
recent months and debt management is actively taking advantage to
lock in the benign conditions for a longer horizon. The average
issuing yield in 2017 was 2.6% and the average issuing maturity
was 7.8 years. Interest expenditure in the budget is expected to
decline to 3.6% of GDP in 2018 from 3.9% in 2017.

Portugal's 'BBB' IDRs also reflect the following key rating
drivers:

Portuguese sovereign remains heavily indebted with a GGGD ratio
of 127% versus the 'BBB' median of 41% and it is the third
highest in the eurozone.

Fitch forecasts the budget deficit to remain unchanged in 2018 at
1.4% of GDP before shrinking marginally to 1.2% in 2019. While
this deficit projection does not fully meet the medium-term
objective of the Stability and Growth Pact, it paves the way for
a firm decline in the GGGD path over the medium term as the
primary surplus is expected to stabilise at around 2.5% of GDP.

Portugal has gained market share in recent years, not least due
to a surge in tourism, although its trade openness remains low
compared with the 'BBB' median and especially versus similar
sized EU economies.

Human development, governance and income per capita indicators
are above 'BBB' rated peers, highlighting Portugal's
institutional strengths. The Ease of Doing Business indicator is
also well above the rating median.

SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO)

Fitch's proprietary SRM assigns Portugal a score equivalent to a
rating of 'A' on the Long-Term Foreign-Currency (LT FC) IDR
scale.

Fitch's sovereign rating committee adjusted the output from the
SRM to arrive at the final LT FC IDR by applying its QO, relative
to rated peers, as follows:

- Public Finances: -1 notch, to reflect the persistently high
GGGD level and non-linear risks. The SRM is estimated on the
basis of a linear approach to government debt/GDP and does not
fully capture the risk at high debt levels.

- Macro: -1 notch, to reflect a relatively weak medium-term
outlook, constrained by high private sector indebtedness, adverse
demographic trends and prevailing financial sector weakness.

- External finances: -1 notch to reflect the high net external
debt, which is not captured in the SRM and Fitch view that the
SRM enhancement across the eurozone for "reserve currency status"
overstates the degree of flexibility provided to eurozone members
that effectively lost market access during the crises. Steady
declines in external vulnerability over time warrant a revision
of this QO factor to -1 from -2.

Fitch's SRM is the agency's proprietary multiple regression
rating model that employs 18 variables based on three-year
centred averages, including one year of forecasts, to produce a
score equivalent to a LT FC 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
Fitch criteria that are not fully quantifiable and/or not fully
reflected in the SRM.

RATING SENSITIVITIES

The main factors that could, individually or collectively, lead
to a positive rating action:
- Track record of further substantial decline in the GGGD-to-GDP
   ratio;
- Evidence of significantly stronger potential growth over the
   medium term, exceeding 2% without jeopardising the necessary
   external adjustment; and
- Continued strong export growth that leads to widening current
   account surpluses and rapid decline in NXD.

The main factors that could, individually or collectively, lead
to a negative rating action:
- Reversal of the decline in the GGGD-to-GDP ratio; and
- Renewed stress in the financial sector that requires
   significant additional public sector support and/or affects
   financial stability and growth outlook.

KEY ASSUMPTIONS

Fitch's long-run debt sustainability calculations are based on an
average primary surplus of 2.5% of GDP and average annual GDP
growth of 1.5% during 2019-2026, consistent with the European
Commission's latest medium-term growth potential estimates. GDP
deflator is rising gradually to 2% and marginal interest rate is
stable at 3% from 2018 onwards.

The full list of rating actions is as follows:

Long-Term Foreign- and Local-Currency IDRs upgraded to 'BBB' from
BB+; Outlook Stable
Short-Term Foreign- and Local-Currency IDRs upgraded to 'F2' from
'B'
Country Ceiling upgraded to 'AA' from 'A+'
Issue ratings on long-term senior unsecured foreign and local-
currency bonds upgraded to 'BBB' from 'BB+'
Issue ratings on short-term senior unsecured local-currency bonds
upgraded to 'F2' from 'B'


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


KOSTROMA REGION: Fitch Affirms B+ Long-Term IDR, Outlook Stable
---------------------------------------------------------------
Fitch Ratings has affirmed Russian Kostroma Region's Long-Term
Foreign and Local Currency Issuer Default Ratings (IDRs) at 'B+'
and Short-Term Foreign Currency IDR at 'B'. The Outlook on the
Long-Term IDRs is Stable. Kostroma Region's outstanding senior
unsecured domestic bonds have also been affirmed at 'B+'.

KEY RATING DRIVERS

The 'B+' ratings reflect the region's high direct risk resulting
from an ongoing structural deficit, high refinancing risk, a
modest regional economy and a weak Russian institutional
framework. The ratings also reflect continuous support from the
federal government in the form of low-cost budget loans and
grants.

Fitch forecasts Kostroma's direct risk will remain high and could
approach 110% of current revenue by 2019 (2016: 106%) as the
region will likely continue to record budget deficits in 2017-
2019. Kostroma is among the most indebted Russian regions rated
by Fitch. At end-11M17 the region's direct risk amounted to
RUB21.8 billion (2016: RUB21.3 billion) and is forecast to end
this year at RUB22.9 billion, according to Fitch's base case
scenario. The high debt is partly mitigated by the material low-
cost budget loans as a share of total debt (end-November 2017:
34%), which results in savings on interest expenses.

Fitch expects that Kostroma will continue to benefit from ongoing
state support over the medium term. The region plans to contract
a new RUB5.1 billion loan from the federal budget. Additional
support should come from a debt restructuring programme recently
announced by the federal government. According to the programme,
the maturity of most budget loans will be lengthened to seven
years from the current two-to-five years. This will provide
temporary relief to the region in refinancing pressure.

Kostroma is exposed to material refinancing risk stemming from
short-term borrowings. At end-November 2017, about 60% of direct
risk (RUB13.4 billion) was bank loans due in 2018, which makes
the region dependent on access to local debt markets to refinance
maturing debt and exposes it to interest rate volatility.
Kostroma plans to issue up to RUB8 billion five-year bonds to
refinance bank loans, which should smooth its debt repayment
schedule.

Under its base case scenario, Fitch projects Kostroma to return
to a positive current balance of 3%-4% of current revenue over
the medium term after having been in negative territory in 2014-
2016. This will be driven by improved operating performance and
contained interest expenses due to a higher share of low-cost
budget loans in its debt structure and lower interest rates on
the Russian capital market following cuts to the key rate by the
Russian Central Bank.

At end-10M17, Kostroma recorded a RUB1.3 billion interim deficit,
which is in line with Fitch's expectation. Fitch project year-end
deficit of RUB1.9 billion, which corresponds to about 8% of
expected total revenue in 2017. This is an improvement from the
region's performance in 2013-2016 when the budget deficit was
10%-18%. However, the deficit is still material and will drive
further debt growth as fiscal performance remains volatile.

Kostroma's economic profile is weaker than the average Russian
region, with a gross regional product (GRP) per capita at 74% of
the national median in 2015. This results in the region's below-
average fiscal capacity and material reliance on financial aid
from the federal budget, which represents about 30% of the
region's operating revenue. Based on the region's estimates GRP
will see marginal 0.9% growth in 2017 (2016: 0.6%) and 2%-2.5%
growth in 2018-2020, which is in line with Fitch's Russian GDP
growth forecast of 2% in 2018-2019.

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
(LRGs) in Russia.

RATING SENSITIVITIES

Further growth of direct debt above 85% of current revenue (2016:
64%), accompanied by persistent refinancing pressure, would lead
to a downgrade.

An upgrade is unlikely unless direct risk falls below 100% of
current revenue, accompanied by an improvement in the debt
repayment schedule on a sustained basis.


MAGNIT PJSC: S&P Lowers CCR to 'BB', Outlook Stable
---------------------------------------------------
S&P Global Ratings lowered its long-term corporate credit rating
on leading Russian food retailer PJSC Magnit to 'BB' from 'BB+'.
The outlook is stable.

S&P said, "The downgrade reflects our expectation that Magnit
will continue to experience difficult trading conditions,
resulting in lower profitability. We anticipate continued
negative like-for-like sales performance, as consumer confidence
remains challenged amid stiffening market competition. In our
view, despite its market leadership, the group will find it tough
to reverse, on a sustainable basis, operating trends that are
constraining its sales, market share, and profitability. Magnit's
margins have narrowed significantly in recent quarters. We
forecast its reported EBITDA margin will decline to just over 8%
for the 2017, from 9.9% in 2016 and 11.2% in 2015.

"Amid the generally weak economic backdrop, highly competitive
market, and ongoing cost pressures, we do not expect Magnit's
margins will strengthen meaningfully and revert back to their
previous levels. This is particularly because despite the recent
contraction, the group's profitability still remains somewhat
stronger than its food retail peers."

Magnit has, however, also recorded lower revenue growth compared
with its closest rated peers in Russia, X5 Retail Group N.V. (X5)
and Lenta Ltd., posting negative like-for-like sales since
fourth-quarter 2016. Magnit reported overall revenue growth of
6.4% in the first nine months of 2017, with revenues from the
largest segment -- convenience stores (74% of revenues) --
growing by 7%, mostly supported by new store openings and a year-
on-year net selling space jump of more than 15%. The continuing
decline in food price inflation and intensifying competition in
the Russian food retail market have taken a toll on Magnit's
like-for-like sales and traffic performance. S&P said, "Still, we
expect Magnit will continue delivering revenue growth of 7%-8%
over the next two years, mainly driven by further chain expansion
and somewhat limited by refurbishments and cannibalization.
Furthermore, we forecast that growth rates will taper over time,
due to the fierce competition and gradual saturation in the
Russian food retail market."

S&P said, "Our assessment of Magnit's business risk profile
reflects its leading market position as Russia's largest retailer
in terms of revenues and the country's biggest network of
discount grocery stores, hypermarkets, and cosmetics shops. That
said, Magnit has geographic concentration in the Russian market
and exposure to risks in emerging markets, such as currency
volatility, persistent cost inflation, and political uncertainty.
Unlike many food retailers in developed markets, Magnit operates
in a fragmented, increasingly competitive, and still-emerging
food retail market. These factors are partly offset by the
resilience and relative predictability of the food retail
industry; the group's strong market presence, with a leading
position in cities with fewer than 500,000 inhabitants; and its
strong, albeit declining, profitability.

"However, in our view, competition has increased in the past few
years. Other food retailers have improved their merchandising and
customer service, enabling them to deliver better comparable-
store sales than Magnit's. Still, we think that Magnit will
continue to develop its franchise over the next two years,
primarily in the regions where its market positions are the
strongest. We expect Magnit will continue its rapid expansion by
rolling out convenience and cosmetics stores, as well as through
the refurbishment and redesign of existing stores, to keep up
with competitors.

"The group continues to focus on its growth strategy, which
includes further new store openings and ongoing refurbishments.
Therefore, we expect capital expenditures (capex) will continue
to weigh significantly on Magnit's cash flows, with the group
reporting negative free operating cash flow (FOCF) in 2017. At
the same time, we also expect the investments will gradually
contribute to Magnit's earnings and cash flows and enable it to
maintain its position as the largest food retailer in Russia.

"The stable outlook reflects our view that Magnit will defend its
leading position in the Russian food retail market. Despite
intensified market competition and lower margins, we expect
Magnit to post resilient operational performance, stem the
decline in its profitability, and maintain adequate liquidity.
Taking into account Magnit's focus on the acceleration of growth
capex, we expect reported FOCF will turn negative in 2017.

"We anticipate that the group will maintain a ratio of adjusted
debt to EBITDA of around 3x and adjusted FFO to debt of about 25%
in 2017. We do not expect the credit metrics will improve
meaningfully in 2018 unless management proactively implements
financial policy measures to reduce leverage.

"We would consider a negative rating action if weak execution of
management's operating plan, a lukewarm market environment in
Russia, or highly competitive trading conditions resulted in
meaningful deterioration of Magnit's operating performance,
margins, or liquidity.

"In such a scenario, the trend of like-for-like sales growth will
become more significantly negative and squeeze reported EBITDA
margins, triggering a further contraction of 100-120 basis points
to less than 7%. In the absence of tangible financial policy
measures to reduce debt under such conditions, we would see
adjusted FFO to debt falling to below 20%.

"Rating downside could also arise due to Magnit's inability to
access its bank facilities, proactively refinance short-term debt
maturities or implement a prudent financial policy balancing cash
generation with capex investments, acquisitions, and dividends.
Owing to margin pressures, the high level of adjusted debt, and
our forecast of negative free cash flow generation, we consider
an upgrade of Magnit unlikely over the next few years. Magnit
continues to invest, which will likely curtail any meaningful
improvement in its credit metrics.

"We could, however, consider a positive rating action if on the
back of economic recovery in Russia, Magnit achieved strong like-
for-like sales growth leading to a significant improvement in its
profitability. This could result in the group's adjusted FFO-to-
debt ratio strengthening markedly toward 30%. An upgrade would
hinge on Magnit moderating its capital spending and posting, over
time, sustainable and positive discretionary cash flow and
adequate liquidity through advanced refinancing of its upcoming
debt maturities, and demonstrating a track record of prudent
financial policy."


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S E R B I A
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SERBIA: Fitch Upgrades Long-Term IDR to BB, Outlook Stable
----------------------------------------------------------
Fitch Ratings has upgraded Serbia's Long-Term Foreign-and Local
Currency Issuer Default Ratings (IDRs) to 'BB' from 'BB-'. The
Outlooks are Stable.

KEY RATING DRIVERS

The upgrade of Serbia's IDRs reflects the following key rating
drivers and their relative weights:

High
Improving public finances are underpinned by a track record of
fiscal over-performance, supported by front-loaded fiscal
consolidation. Fitch expects fiscal consolidation to continue in
2018-19, leading to smaller general government deficits relative
to 'BB' peers. Since 2014, an estimated 6% of GDP structural
budget adjustment has been achieved, as a result of strong
revenue collection and expenditure restraint on wages and
pensions. Serbia has continued to outperform its budget deficit
targets in 2017, with Fitch forecasting a fiscal surplus of 0.5%
of GDP in 2017, the first since 2005.

Public debt sustainability is improving. After a large decline to
63.6% of GDP in 2017, Fitch expects a gradual decline in
government debt to 62.1% in 2018 and 60.6% in 2019 from a peak of
74.6% in 2015. The decline is underpinned by sustained primary
surpluses, positive nominal GDP growth and moderate exchange rate
depreciation. However, the debt ratio is 16.6ppts of GDP higher
than the 'BB' median and its currency structure (77% of total
public debt is denominated in foreign currency as of end-November
2017) exposes the sovereign to dinar fluctuations.

Medium
External finances continue to improve. At 15% of GDP, net
external debt has been on a declining trend since 2013 and is
converging towards the 'BB' median of 14.8%, which should help
reduce external interest and the debt service ratio. Continued
deleveraging by the private sector, sustained foreign direct
investment (FDI) inflows, a stronger dinar and net external debt
repayments by the sovereign underpin the positive external debt
dynamics.

Fitch expects the current account deficit to average 4.3% of GDP
(2017-2019) as the expanding export base balances higher imports
and oil prices, and to be fully covered by robust net FDI inflows
(5.5% of GDP). Foreign exchange reserves, estimated at USD10.9
billion in 2017, cover just below five months of current external
payments. Serbia's projected liquidity ratio of 163% for 2018 is
in line with the 'BB' median. Although the precautionary IMF SBA
expires in February, Fitch expects continued cooperation and
possibly a successor programme.

The ratings also reflect the following factors:

Fitch expects real GDP growth of 3% in 2018 and 3.3% in 2019, up
from 1.9% in 2017, supported by continuing strong domestic
demand, a favourable cyclical environment, and continued FDI in
the tradable sector to support export growth. Growth in 2017 was
affected by adverse weather conditions which hit the agriculture
sector in 1H17, together with weak energy sector performance;
however, favourable underlying employment trends and wage
dynamics have supported consumption in 2H17 leading into 2018.

Despite acceleration in CPI in 1Q17 as a consequence of adverse
weather conditions, core inflation has remained subdued this
year. Fitch expects 2017 average inflation to equal 3.2% and
remain at 3% in 2018 and 2019. The National Bank of Serbia (NBS)
eased its policy rate to 3.5% with two consecutive 25bps cuts in
September and October, as inflation pressures remained low and
inflation expectations well-anchored. Depreciation pressures have
traditionally been a large component of inflation but strong FDI
and portfolio investment flows, adequate FX reserves together
with the NBS smoothing of dinar fluctuations should mitigate
these risks.

Serbia's structural features are typical of the 'BB' rating
category peers, with GDP per capita broadly in line with the 'BB'
median. Governance and business environment indicators are
favourable versus the 'BB' medians and could improve under EU
accession negotiations. However, potential economic growth, at
around 3.5%, is hampered by unfavourable demographic trends, a
large informal sector and restructuring needs in the large public
sector, and is not strong enough to support income convergence
with the EU. Potential early legislative elections in the coming
year could slow the reform process, even if Fitch expects
continuity in economic policy.

Conditions in the banking sector remain sound. Non-performing
loans (NPLs) having fallen to 11.9% in October this year from a
height of 23% in mid-2015 due to write-offs and sales, encouraged
by NBS. Strong capital adequacy, high provisioning rates and
implementation of Basel III in June this year support the banking
system and partly mitigate financial risks. The moderate
concentration of the banking sector and its large foreign
ownership component (76.7% of assets at end-2016) reduce systemic
risks. Credit growth is forecast at 6.4% in 2017, up from 5.6% in
2016, and is supported by strong underlying growth fundamentals
and progress in the resolution of troubled loans.

SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO)

Fitch's proprietary SRM assigns Serbia a score equivalent to a
rating of 'BB+' on the Long-Term Foreign-Currency (LTFC) IDR
scale.

Fitch's sovereign rating committee adjusted the output from the
SRM to arrive at the final LT FCIDR by applying its QO, relative
to rated peers, as follows:
- Macro: -1 notch, to reflect relatively weak medium-term growth
potential due to structural rigidities (including high
unemployment, large informal economy and adverse demographics)
and the large role of the public sector in the economy.

Fitch's SRM is the agency's proprietary multiple regression
rating model that employs 18 variables based on three-year
centred averages, including one year of forecasts, to produce a
score equivalent to a LT FCIDR. 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
Fitch criteria that are not fully quantifiable and/or not fully
reflected in the SRM.

RATING SENSITIVITIES

The Stable Outlook reflects Fitch's assessment that risks to the
rating are currently balanced.
However, the following factors could, individually or
collectively, lead to a positive rating action:

- An improvement in Serbia's medium-term growth prospects over
time without creating macro-economic imbalances;

- Sustained fiscal consolidation resulting in a reduction in the
general government debt-to-GDP ratio; and

- Sustained reduction in external vulnerabilities, for instance,
through a build-up of official reserves.

The main factors that could, individually or collectively, lead
to negative rating actions are:

- A reversal of fiscal consolidation, or the materialisation of
large contingent liabilities on the government's balance sheet,
that put the general government debt-to-GDP ratio on an upward
path; and

- A recurrence of exchange rate pressures leading to a fall in
reserves and a sharp rise in debt levels and the interest burden.

KEY ASSUMPTIONS

Fitch assumes that the EU accession talks and the IMF programme
will remain important policy anchors.

The full list of rating actions is as follows:

Long-Term Foreign- and Local-Currency IDRs upgraded to 'BB' from
'BB-'; Outlook Stable
Short-Term Foreign- and Local-Currency IDRs affirmed at 'B'
Country Ceiling revised to 'BB+' from 'BB-'
Issue ratings on long-term senior unsecured foreign- and local-
currency bonds upgraded to 'BB' from 'BB-'
Issue ratings on short-term senior unsecured foreign- and local-
currency bonds affirmed at 'B'


SERBIA: S&P Raises Long-Term Sovereign Credit Ratings to 'BB'
-------------------------------------------------------------
On Dec. 15, 2017, S&P Global Ratings raised its long-term foreign
and local currency sovereign credit ratings on Serbia to 'BB'
from 'BB-'. The outlook is stable. S&P affirmed the 'B' short-
term foreign and local currency sovereign credit ratings.

At the same time, S&P revised its Transfer and Convertibility
(T&C) assessment to 'BB+' from 'BB'.

The upgrade reflects Serbia's stronger fiscal metrics,
underpinned by years of cost-containing efforts and revenue
overperformance, amid steady economic recovery and contained
current account deficits.

OUTLOOK

The stable outlook reflects balanced risks to the ratings over
the next 12 months.

S&P might take a positive rating action under the combination of
the following scenarios:

-- If, alongside strong exports growth, we observed further
    reductions in Serbia's external vulnerabilities, signaled,
    for example, by lower external leverage or a continuing drop
    in risks of sudden shifts in foreign direct investment (FDI)
    or portfolio investments, potentially as a result of
    continued reform momentum;

-- If government debt decreased below our current expectations;
    or

-- If Serbia built a strong track record of keeping inflation in
    line with that of trading partners and the central bank's
    target.

Conversely, S&P could take a negative rating action if, contrary
to its expectations, fiscal performance deteriorated, due, for
example, to a stalled restructuring of public enterprises, or if
balance of payments pressures re-emerge.

RATIONALE

S&P said, "We raised the rating because Serbia has displayed
stronger fiscal metrics after years of containing costs and
better revenue performance than anticipated, amid a steady
economic recovery and limited current account deficits. Despite a
temporary slowdown in growth in 2017, Serbia is likely to post
its lowest general government deficits in almost a decade. In
light of a conservative draft budget for 2018 and some progress
in downsizing contingent risks coming from state-owned
enterprises (SOEs), we now think that the likelihood of fiscal
slippages, similar to the one that occurred in 2012-2014, has
reduced. Stronger fiscal performance has put Serbia's high public
debt on a downward path. The upgrade also takes into account a
sustained improvement in Serbia's external performance, which has
resulted in a steady decline in external indebtedness since 2012.

The ratings on Serbia are constrained by relatively low wealth
levels; a high general government debt burden, a major part of
which is denominated in foreign currency; limited monetary policy
flexibility, owing to the banking sector's prevalent euro-
ization; and the country's declining but still-sizable stock of
nonperforming loans (NPLs).

At the same time, favorable economic growth potential and the
government's consistent commitment to fiscal consolidation, which
has resulted in contained fiscal deficits, support the ratings.

Institutional and Economic Profile: Wealth levels are low and
institutions are weak, yet S&P expects some policy continuity

-- Investments and consumption will likely boost growth in the
    medium term, despite a temporary slowdown in 2017.

-- The new government will likely maintain policy continuity and
    fiscal discipline, anchored by the EU accession process.

-- The slow pace of structural reforms remains an obstacle to
    speeding up income convergence with the EU.

The Serbian economy is likely to have expanded in 2017 and to
continue doing so in 2018-2020, on the back of healthy investment
inflows -- mainly FDI -- and stronger private sector consumption.
These have been supported by expanding employment, wage growth,
and a stable inflow of worker remittances. Despite the temporary
slowdown in 2017 due to the one-off impact from adverse weather
conditions, S&P's current assumption is that Serbia will see
steady economic performance in the medium term.

For the same period, S&P forecasts Serbia's per-capita average
real GDP growth will be slightly higher at about 3.2%. This is
due to the population shrinking at an estimated 0.5% per year.
Still, GDP per capita remains moderate at $5,800 in 2017. This is
lower than that of Serbia's EU neighbors due to past periodic
sharp depreciations of the Serbian dinar.

That said, Serbia's long-term growth potential remains hindered
by the large and only a modestly reformed public sector, poor
demography, and relatively low labor participation. Moreover, the
effectiveness of Serbia's public institutions remains contained
by a weak judiciary, relatively high levels of perceived
corruption, and low public governance standards (especially if
compared with the EU average). In this context, structural
reforms (namely to pensions, corporate governance in SOEs, public
administration, and the judicial system), if implemented, could
remove existing bottlenecks and improve the country's growth
potential well above our base-case forecasts for 2.9% growth on
average between 2017 and 2020.

In this context, Serbia's accession negotiations with the EU
could provide a reasonable policy anchor in the medium to longer
term, even though the process of EU accession might be lengthy
and complex. Serbia was granted EU candidate status in 2012 and
since then has opened 12 out of 35 chapters of the Acquis
Communautaire, with two already temporarily closed. Meeting the
conditions of some chapters will likely require difficult
political decisions, though. On top of the complex but usual
areas such as weaknesses in the judiciary and respect for the
rule of law, Serbia will face some sensitive issues with respect
to relations with Kosovo and trade agreements with Russia.

S&P understands that EU accession remains a goal of the new
government headed by Prime Minister Ana Brnabic since June 2017.
EU membership aspirations will likely constrain the ongoing
centralization of power, which gathered pace ahead of the
presidential elections in 2017, accompanied by the increasing
control of and restrictive actions toward independent mass media.
The ruling party -- the Serbian Progressive Party -- currently
controls both the parliament and the presidency. Although this
could support the existing reform impetus and maintain the fiscal
discipline pursued by the previous government and framed by a
precautionary standby agreement with the IMF, weaker checks and
balances between key institutions could undermine policy
predictability, resulting in weaker investor confidence.

Flexibility and Performance Profile: Structural and cyclical
factors support fiscal consolidation and the external position is
improving, but vulnerabilities remain

-- Cost-containment measures and strong revenues, including one-
    off nontax receipts, have supported improvements in public
    finances.

-- Pronounced fiscal slippages are unlikely, and therefore the
    government's currently high debt should gradually decline,
    although the under-reformed public sector remains a source of
    fiscal risks.

-- Credible inflation control will likely be maintained; yet
    high euro-ization continues to limit monetary policy
    effectiveness.

Steady economic performance will solidify the government's
multiyear fiscal effort. With significant budget overperformance
again this year and a 2018 draft budget implying a deficit of
just 0.6% of GDP, S&P now thinks that the significant relaxation
of fiscal discipline in the medium term is less likely. S&P said,
"Our view is based on the government's track record of decisive
fiscal consolidation measures implemented in 2015-2017. Despite
expected moderate hikes in public-sector wages in 2018, we now
forecast average fiscal deficits of about 1.5% on average over
2017-2020 compared with 2.9%-3.0% of GDP, which we expected a
year ago."

Fiscal consolidation stemmed partly from strong revenues
supported by economic recovery, globally low interest rates,
one-off nontax revenues, and underfinancing of planned capital
expenditures. However, S&P acknowledges that budgetary
adjustments have been also supported by improved revenue
mobilization and a strong policy commitment to contain costs.
Under a standby agreement with the IMF, Serbia has made
significant progress in keeping the public wage and pension bill
under control and containing subsidies to SOEs. This resulted in
an impressive expenditure-side adjustment of some 4% of GDP
between 2014 and 2017. General government deficits shrank to an
estimated 1% of GDP (or below) in 2017 from 6.6% of GDP in 2014.

Even though the fiscal outlook is now stronger, S&P still thinks
that the relatively inefficient public sector might continue to
pose some moderate fiscal risk. Large SOEs -- namely
Elektroprivreda Srbije, Srbijagas, and enterprises in the mining
and petrochemical industries -- still suffer from weak corporate
governance, persistent energy arrears, and redundant employment.
Despite the sale of the state-owned pharmaceutical company,
Galenika, in 2017, progress in resolving these SOEs has been
relatively modest. The current IMF program expires in February
2018. The new program that might replace the existing arrangement
could support the required reform momentum.

Diminishing government financing needs and elevated nominal GDP
growth will push down government debt in the medium term. S&P
said, "We expect gross general government debt to continue to
decline until 2020, but to remain above a still high 65% of GDP.
At the same time, we note that the banking system's exposure to
the public sector (the general government together with closely
linked SOEs) remains elevated at slightly above 20% of total
assets. This could result in private-sector borrowing being
crowded out if the government's borrowing needs increase,
contrary to our base-case assumptions. Almost 75% of general
government debt is denominated in foreign currency, principally
euros and U.S. dollars, exposing the government to exchange-rate
risks. However, the recent appreciation of the dinar has been
beneficial for the government's fiscal and debt metrics.

"We note a recent positive trend in terms of external imbalances.
From an average of 8.7% of GDP in 2011-2014, we expect Serbia's
current account deficit to average 4.1% of GDP in 2017-2020, with
strong merchandise and service exports as the key driver behind
this improvement (in dollar terms, total exports almost doubled
to about $22 billion between 2010 and 2017). We see further
upside potential as a significant amount of FDI has entered the
manufacturing sector, taking advantage of Serbia's lower cost
structure. Looking at the current account from a savings-
investment perspective, we believe the improved fiscal
performance will also relieve pressure on the country's overall
current account position.

"In addition to declining current account deficits, we expect the
composition of external financing to improve. In line with a
track record observed in 2015-2017, we expect that FDI net
inflows will fully finance the current account deficits
throughout the next 12 months. Under this assumption, external
debt net of public and financial sector external assets (narrow
net external debt) will decline gradually to below 56.3% of
current account receipts in 2017 from 71% in 2015. Serbia's
accumulated stock of inward FDI is relatively high (over 130% of
current account receipts [CARs]). Although inward FDI generally
presents much a smaller risk than external debt, it still exposes
the economy to potential swings in investor confidence, resulting
in balance of payments pressures.

"Regarding the composition of external debt, we have observed a
pronounced halt of external finance for the private sector.
Unlike a few years ago, the financial sector is now in a net
creditor position and net external nonfinancial private sector
debt has reduced. These outflows were financed by rising public
sector external debt, FDI, and, to a small extent, by the
depletion of official reserves. We believe that this trend has
now run its course, based on the stabilization of funding by the
foreign banks that own most of the Serbian banking sector, as
well as improved fiscal prospects. With this mix of external
debt, we expect that gross external financing needs (annual
payments to nonresidents) should remain slightly below CARs plus
usable reserves.

"We find Serbia's monetary flexibility limited in several
respects. Foreign exchange movements have a pronounced impact on
the government's debt trajectory, on inflation pass-through, and
on bank asset quality. Such vulnerabilities have prompted the
central bank, National Bank of Serbia (NBS), to intervene
occasionally in the foreign exchange market to smooth the short-
term exchange rate volatility. In 2017, pronounced appreciation
pressures led the NBS to intervene by purchasing some EUR740
million (on a net basis) from January to mid-December, resulting
in a hike of its usable reserves by almost 10% since January."

Furthermore, shallow local currency capital markets and high
euro-ization of the banking system continue to constrain the
effectiveness of monetary policies, given that nearly 60% of
deposits and loans are denominated in foreign currency.
Nonperforming loans (NPLs) represent another longer-term
challenge. Despite a drop in NPLs to 11.9% in October 2017 from
more than 21% at the end of 2015, reflecting the government's and
the NBS' regulatory efforts and recent NPL write-offs, their
stock remains relatively high (especially at state-owned banks).
At the same time, banks' profitability is recovering and bank
lending started to accelerate throughout 2017. Policy rate cuts
in September and October 2017 should support this acceleration.
The NBS' Special Diagnostic Studies report indicates that the
banking sector remains adequately capitalized and has sufficient
liquidity.

The NBS has proved its operational independence and earned
credibility over the past few years. Inflation declined to
historical lows in 2014-2016, despite high exchange rate pass-
through. Rising food and energy prices will likely spur headline
inflation through 2020, yet we expect it to stay within the NBS'
target of 3Ò1.5%.

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 fiscal performance had improved. All
other 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
  Serbia (Republic of)
   Sovereign Credit Rating
  Foreign and Local Currency          BB/Stable/B  BB-/Positive/B
  Transfer & Convertibility Assessment BB+          BB
  Senior Unsecured
  Foreign Currency                     BB           BB-


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S P A I N
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EDT FTPYME 3: Moody's Hikes EUR15.4M Series C Notes Rating to B1
----------------------------------------------------------------
Moody's Investors Service has upgraded the rating of the Series C
notes in EdT FTPYME PASTOR 3, FTA. The rating action reflects the
increased levels of credit enhancement for the notes, as a result
of the deleveraging of the transaction following repayment of the
underlying collateral.

-- EUR15.4M (Current outstanding balance EUR6.54 M) Series C
    Notes, Upgraded to B1 (sf); previously on Jan 23, 2015
    Affirmed Caa1 (sf)

EdT FTPYME PASTOR 3, FTA is a transaction backed by loans to
Spanish small and medium-sized enterprises. The deal closed in
2005. The loans were originated by Banco Pastor but are now
serviced by Banco Popular Espanol, S.A (Baa3 / P-3). The
transaction is heavily amortised and only around 1.3% of the
closing portfolio remains outstanding. Consequently, there are
significant individual obligor concentrations within the
remaining performing collateral pool, with the top 5 borrowers
currently comprising approximately 29% of the performing
collateral pool. In total, there are approximately 60 loans with
non-zero balances remaining in the pool.

RATINGS RATIONALE

The rating action is prompted by:

- deal deleveraging resulting in an increase in credit
   enhancement for the affected tranche.

Revision of Key Collateral Assumptions:

As part of the rating action, Moody's reassessed its default
probability and recovery rate assumptions for the portfolio
reflecting the collateral performance to date.

The performance of the transaction has been steady. Total
delinquencies have decreased in the past year, to 17.46% in
October 2017 from 34.77% in January 2017. 90 days plus arrears
currently stand at 6.77% of current pool balance compared to
6.13% of the pool in January 2017. Cumulative defaults currently
stand at 4.67% of original pool balance, comparable with 4.63% in
January 2017.

The current default probability has been maintained at 29.0% of
the current performing portfolio balance and the assumption for
the fixed recovery rate remains at 25%. The maintenance of the
portfolio credit enhancement at 35.40%, combined with the other
key collateral assumptions, results in a CoV of 19.52%.

Moody's has incorporated the sensitivity of the ratings to
borrower concentrations into the quantitative analysis. In
particular, Moody's considered the credit enhancement coverage of
large debtors in the transaction as it shows significant exposure
to large debtors. The results of this analysis limited the
potential upgrade of the rating on the Series C Notes to B1 (sf)
as note credit enhancement is of the same magnitude as the
exposure to the top 5 debtors.

Increase in Available Credit Enhancement

Sequential amortization and non-amortising reserve funds led to
the increase in the credit enhancement available in this
transaction.

For instance, the credit enhancement for the Series C notes
affected by rating action increased to 28.94% in November 2017
from 18.28% in January 2017.

Counterparty Exposure

The rating actions took into consideration the notes' exposure to
relevant counterparties, such as servicer, account banks or swap
providers.

Moody's considered how the liquidity available in the
transactions and other mitigants support continuity of note
payments, in case of servicer default, using the CR Assessment as
a reference point for servicers. The rating of the notes is not
constrained by operational risk.

Moody's matches banks' exposure in structured finance
transactions to the CR Assessment for commingling risk with a
recovery rate assumption of 45%.

Moody's assessed the exposure to Cecabank S.A. acting as swap
counterparty. Moody's analysis considered the risks of additional
losses on the notes if they were to become unhedged following a
swap counterparty default by using the CR Assessment as reference
point for swap counterparties. Moody's concluded that the rating
of the notes is not constrained by the swap agreement entered
between the issuer and Cecabank S.A.

Moody's also assessed the default probability of the
transaction's account bank providers by referencing the bank's
deposit rating. The ratings of the note is not constrained by the
issuer account bank exposure.

The principal methodology used in this rating was "Moody's Global
Approach to Rating SME Balance Sheet Securitizations" published
in August 2017.

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

Factors or circumstances that could lead to an upgrade of the
rating include (1) performance of the underlying collateral that
is better than Moody's expected, (2) deleveraging of the capital
structure and (3) improvements in the credit quality of the
transaction counterparties and (4) a decrease in sovereign risk.

Factors or circumstances that could lead to a downgrade of the
rating include: (1) performance of the underlying collateral that
is worse than Moody's expected, (2) deterioration in the notes'
available credit enhancement, (3) deterioration in the credit
quality of the transaction counterparties, and (4) an increase in
sovereign risk.


SANTANDER CONSUMER: Moody's Rates Add'l Tier 1 Notes (P)Ba1(hyb)
----------------------------------------------------------------
Moody's Investors Service has assigned a (P)Ba1 (hyb) rating to
the Additional Tier 1 non-viability contingent capital securities
to be issued by Santander Consumer Finance S.A. (SCF) (A3/A3
stable, baa2).

The (P)Ba1(hyb) rating assigned to the notes is based on SCF's
standalone creditworthiness and is positioned three notches below
the bank's baa1 adjusted baseline credit assessment (BCA): one
notch below to reflect high loss severity under Moody's Advanced
Loss Given Failure (LGF) analysis; and a further two notches
below to reflect the higher payment risk associated with the non-
cumulative coupon skip mechanism, as well as the probability of
the bank-wide failure. The LGF analysis also takes into
consideration the conversion feature, in combination with the
Tier 1 notes' deeply subordinated claim in liquidation.

Moody's issues provisional ratings in advance of the final
issuance. These ratings represent the rating agency's preliminary
credit opinion. A definitive rating may differ from a provisional
rating if the terms and conditions of the final issuance are
materially different from those of the draft prospectus reviewed.

RATINGS RATIONALE

According to Moody's framework for rating non-viability
securities under its bank rating methodology, the agency
typically positions the rating of Additional Tier 1 (AT1)
securities three notches below the bank's adjusted BCA. One notch
reflects the high loss-given-failure that these securities are
likely to face in a resolution scenario, due to their deep
subordination, small volume and limited protection from residual
equity. Moody's also incorporates two additional notches to
reflect the higher risk associated with the non-cumulative coupon
skip mechanism, which could precede the bank reaching the point
of non-viability.

The notes are unsecured and perpetual, subordinated to
unsubordinated and subordinated instruments that do not
constitute AT1 capital, and senior to ordinary shares. They have
a non-cumulative optional and a mandatory coupon-suspension
mechanism. A conversion into common shares is triggered if the
group's or the bank's transitional Common Equity Tier 1 (CET1)
capital ratio falls below 5.125%, which Moody's views as close to
the point of non-viability. The issuer will calculate and publish
the CET1 ratio on at least a semi-annual basis. At end-June 2017,
Santander Consumer Finance's Common Equity Tier 1 (CET1 phased-
in) group ratio was of 12.5% in line with end-December 2016. The
group's fully loaded Group CET 1 stood at 11.9% at end-December
2016 (latest available) compared to 12.2% at end-December 2015.

WHAT COULD CHANGE THE RATING UP/DOWN

Any changes in the baa1 adjusted BCA of the bank would likely
result in changes to the (P)Ba1(hyb) rating assigned to these
securities. In addition, any increase in the probability of a
coupon suspension would also lead us to reconsider the rating
level.

Upward pressure on Santander Consumer Finance's BCA could be
driven by a further sustained improvement on its key financial
metrics. Conversely, downward pressure on the bank's standalone
BCA could arise if Santander Consumer Finance's credit profile
weakens as a consequence of an unexpected deterioration of any of
its financial fundamentals.

LIST OF AFFECTED RATINGS

Issuer: Santander Consumer Finance S.A.

Assignment:

-- Preferred Stock Non-cumulative, assigned (P)Ba1(hyb)

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was Banks published
in September 2017.


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


TURKIYE HALK: Moody's Cuts LT Sr. Debt & Deposit Ratings to Ba2
---------------------------------------------------------------
Moody's Investors Service has downgraded Turkiye Halk Bankasi
A.S. (Halkbank's) long-term foreign-currency senior unsecured
debt and long-term local-currency deposit ratings to Ba2 from Ba1
and affirmed the long-term foreign currency deposit rating at
Ba2, which remains constrained by the country ceiling. The
outlook was maintained at negative.

Halkbank's standalone Baseline Credit Assessment (BCA) was
downgraded to b1 from ba2.

The bank's long and short-term Counterparty Risk Assessment (CRA)
was affirmed at Ba1(cr)/NP(cr) respectively.

A full list of affected ratings can be found at the end of this
press release.

RATINGS RATIONALE

DOWNGRADE OF THE BCA

The downgrade of the bank's standalone BCA to b1, from ba2, was
driven primarily by: 1) higher funding costs, which reduced the
bank's net interest margin (NIM) and profitability in Q3 2017 and
are expected to continue into 2018; 2) heightened reliance on
shorter-term liabilities as a percentage of the bank's wholesale
liabilities, and 3) pressure on capital ratios, partly due to
rapid lending growth.

At the same time Moody's notes that the bank's BCA continues to
be supported by its leading franchise in the Turkish banking
system, particularly in the SME segment, and its ability to
access customer deposits via its established branch network,
albeit at higher cost. The bank's BCA is also supported by solid
non-performing loan and provisioning coverage ratios in line with
the peer group average.

The bank's earnings for the first nine months of 2017 remain
strong, however Q3 net income as reported declined by 22.5%
compared to Q2 results, principally due to a contraction in
Halkbank's net interest margin (NIM) as well as higher operating
expenses and a trading loss, despite improvements in fee and
commission income. The NIM declined to 3.2% as at Q3 2017 from
3.6% as at Q2 2017, as per Moody's calculation, partly due to the
bank's increased reliance on costly Turkish lira customer
deposits to fund loan growth of 22.5% in 2017. Moody's expects
the bank's higher funding costs to continue to impact its
profitability into 2018, as authorities raise interest rates in
response to inflationary pressures.

Since Q1 2017, Halkbank increased its reliance on shorter-term
funding, including secured funding from the Central Bank of the
Republic of Turkey, having repaid its maturing Eurobonds in July
2017. As of Q3 2017, the bank's reliance on wholesale funds with
the contractual maturity of up to 3 months increased to 70% of
wholesale liabilities, from 60% in Q1 2017.

Finally, the BCA downgrade also takes into account that the
bank's core capitalisation has been declining and is relatively
weak compared to its peer group of leading Turkish banks. As a
result of a very rapid loan growth, the bank's Tangible Common
Equity (TCE) to total assets, as per Moody's calculation, stood
at 7.9% as at Q3 2017 compared to 8.3% as at end-2016. Moody's
notes that despite the TL1 billion of Tier 2 capital issued in
October 2017, which is expected to improve the total capital
adequacy ratio by 50 bps, the bank's total capital adequacy ratio
will remain below its Turkish peers. Moody's does not expect any
significant improvement in the bank's core capitalisation in the
near-term, given the rapid growth of its assets and volatility in
the operating environment.

DOWNGRADE OF LONG-TERM RATINGS

Moody's continues to assume a very high probability of government
support for Halkbank, which is 51% owned by the government,
unchanged from previous assumptions. This support results in a
two notch uplift for the bank's senior unsecured debt and deposit
ratings at Ba2, from the bank's b1 standalone BCA. The
affirmation of the bank's long-term foreign-currency deposit
rating was due to the fact that it is constrained at Ba2, similar
to other Turkish banks.

RATIONALE FOR NEGATIVE OUTLOOK

The negative outlook on Halkbank's long-term senior unsecured
debt and deposit ratings reflect the negative outlook on the
Turkish government rating, as well as the downside risk of the
bank's standalone BCA in light of the increased cost of funding
and heightened reliance on shorter-term liabilities.

Moody's will also continue to monitor potential downside risks
from the ongoing trial by the US authorities of the bank's former
deputy-CEO, which relates to alleged transactions with prohibited
parties. The potential direct involvement of the bank in future
legal proceedings, or the emergence of any indirect repercussions
on the bank's operations, could exert further downward rating
pressure on the bank's ratings.

WHAT COULD MOVE THE RATINGS UP/DOWN

Given the negative pressures on the bank's standalone
performance, an upgrade is unlikely in the short-term.

The standalone BCA could be adjusted downward if there is
evidence that restricted market access leads to a worsening
liquidity position, if there are sizeable losses due to
operational or legal issues, and/or if capitalisation declines
materially below similarly rated peers. The need of any external
involvement to support the bank's solvency and/or liquidity would
also be considered as negative for the bank's standalone rating.

Long-term deposit or debt ratings, which incorporate uplift from
government support, could be affected by changes in the sovereign
rating, Moody's views on the government's willingness to provide
support, or changes to sovereign ceilings.

LIST OF AFFECTED RATINGS

Issuer: Turkiye Halk Bankasi A.S.

Downgrades:

-- LT Bank Deposits (Local Currency), Downgraded to Ba2 from
    Ba1, Outlook Remains Negative

-- Senior Unsecured Regular Bond/Debenture, Downgraded to Ba2
    from Ba1, Outlook Remains Negative

-- Subordinate, Downgraded to (P)B3(hyb) from (P)B1(hyb)

-- Adjusted Baseline Credit Assessment, Downgraded to b1 from
    ba2

-- Baseline Credit Assessment, Downgraded to b1 from ba2

Affirmations:

-- LT Bank Deposits (Foreign Currency), Affirmed Ba2, Outlook
    Remains Negative

-- ST Bank Deposits, Affirmed NP

-- LT Counterparty Risk Assessment, Affirmed Ba1(cr)

-- ST Counterparty Risk Assessment, Affirmed NP(cr)

Outlook Actions:

-- Outlook, Remains Negative

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Banks
published in September 2017.


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


BANK MIKHAILIVSKYI: Appeal Court Denies Ex-owner's Claim v. NBU
---------------------------------------------------------------
The Kyiv Court of Appeal, on Dec. 13, 2017, annulled the decision
of the court of first instance and adopted a new ruling on the
merits of the claim, rejecting the claim of Victor Polischuk, the
former owner of Bank Mikhailivskyi PJSC, against NBU on
protection of business reputation.

On July 11, 2017 Kyiv Pechersk District Court ruled that the
National Bank of Ukraine is obliged to negate the unreliable
information on Victor Polischuk. The claimant demanded that the
information on the sale of Bank Mikhailivskyi PJSC and NBU's
approval of such sale was qualified as unreliable and violating
his business reputation.

The NBU did not agree with such a ruling of Kyiv Pechersk
District Court and appealed against it. The Kyiv Court of Appeal,
having fully reviewed the materials of the court case, allowed
the NBU appeal and annulled the ruling of the court of first
instance and rejected the claims in full.

The National Bank of Ukraine classified Bank Mikhailivskyi as
insolvent on May 23, 2016, and on July 12 last year, the NBU, on
the proposal of the Deposit Guarantee Fund, approved a decision
No. 124-D on withdrawal of the bank license and liquidation of
the bank. The decision to withdraw the bank from the market was
taken due to a large number of transactions for the transfer of
deposits from individuals from a financial company related to the
bank to the bank's balance sheet, which increased the burden on
the Deposit Guarantee Fund.


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


CAPRI ACQUISITIONS: S&P Assigns 'B-' CCR, Outlook Stable
--------------------------------------------------------
S&P Global Ratings assigned its 'B-' long-term corporate credit
rating to Jersey-based Capri Acquisitions Bidco Ltd. (Capri) and
Delaware-based Capri Finance LLC, a finance subsidiary of Capri.
The outlook is stable.

S&P said, "At the same time, we assigned our 'B-' issue-level
rating and '3' recovery rating to Capri's GBP860 million
(sterling equivalent) secured term loan (which consists of an
US$830 million facility and a EUR250 million facility) and GBP80
million secured revolving credit facility (RCF). The '3' recovery
rating reflects our expectation of meaningful recovery prospects
in the event of a payment default (50%-70%; rounded estimate
55%).

"Despite some changes in our underlying assumptions, the ratings
are in line with the preliminary ratings we assigned on Oct. 4,
2017.

"We view Capri's business risk profile as fair. CPA is the market
leader in the niche sector of outsourced patent and trademark
renewal services and related software, a market which we view as
stable, with a high degree of revenue predictability given the
annuity nature of the business. Furthermore, given the high cost
of failure and CPA's good track record, the company benefits from
high client retention rates, which creates reasonably high
barriers to entry for prospective market entrants. That said, the
company's service offering is somewhat limited compared with that
of other outsourced service providers. CPA relies on its core
renewals business for about 70% of total revenues. In addition,
we view growth in the market as being largely driven by corporate
research and development. Coupled with high retention rates, this
makes it difficult for companies such as CPA to drive revenue and
EBITDA growth in the core renewals business.

"Following our review of the final documentation, we consider
that the new GBP1.2 billion of preference shares contributed to
the group by the financial sponsor owners to be debt-like, as the
terms allow the owners to waive the stapling of the preference
and ordinary shares. We view Capri's financial risk profile as
highly leveraged, reflecting the company's aggressive financial
policy, weak credit protection measures, and high adjusted debt
burden of about GBP2.5 billion consisting of:

-- A new $830 million senior secured first-lien term loan;
-- A new EUR250 million senior secured first-lien term loan;
-- New EUR410 million senior unsecured notes;
-- GBP1.2 billion of preference shares; and
-- About GBP30 million of future commitments under operating
    leases.

This results in very high leverage metrics, with debt-to-EBITDA
of greater than 20x (10x-13x excluding preference shares) and
funds from operations (FFO) cash interest coverage of close to 2x
in the financial years (FY) ending July 31, 2018 and 2019.

S&P said, "Because Capri's leverage levels are elevated compared
with other rated issuers in the business services sector, we
apply our comparable ratings analysis modifier to reduce our
anchor by one notch.

"Capri's ownership by financial sponsors and its very high
leverage causes us to assess its financial policy as FS-6. We
expect its leverage to remain elevated over the forecast horizon.
The group published its FY2017 accounts after we assigned the
preliminary ratings. It reported weaker performance for FY2017
than we had forecast when assigning preliminary ratings." Its S&P
Global Ratings-adjusted EBITDA stood at about GBP100 million and
comprised:

-- Reported EBITDA of GBP118 million;
-- Capitalized development costs of about GBP25 million, which
    S&P considers to be operating in nature; and
-- Operating lease adjustment of about GBP5 million.

S&P said, "We forecast steady earnings growth over the next 12-24
months leading to improved leverage ratios that remain well
within the highly leveraged range (debt to EBITDA of greater than
5x). We also expect the company to generate relatively good free
operating cash flow (FOCF) and maintain adequate liquidity while
balancing investments supporting its growth objectives."

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

-- Continued real GDP growth of 2.2% in 2017 and 2.3% in 2018 in
    the U.S., and 2.0% in 2017 and 1.7% in 2018 in the eurozone
    due to increasing employment, alongside growth of 1.3% in
    2017 and 1.1% in 2018 in Japan.

-- Total revenue growth of about 4% in FY2018 and FY2019 as
    growth in intellectual property software and related services
    exceed that of the core renewals business, which S&P
    forecasts will broadly follow GDP growth.

-- Adjusted EBITDA margins to remain largely flat in FY2018 as
    transaction fees offset expected cost rationalization, with
    modest growth in FY2019.

-- Capital expenditure (capex) of about GBP25 million per year
    and working capital outflows of about GBP5 million in FY2018
    and FY2019.

Based on these assumptions, we arrive at the following credit
measures:

-- Debt-to-EBITDA of greater than 20x (10x-13x excluding
    preference shares) in FY2018 and FY2019.

-- FFO cash interest coverage of 1.7x-2.0x in FY2018 and FY2019.

-- FOCF of greater than GBP35 million in FY2018 and FY2019.

S&P said, "The stable outlook reflects our opinion that Capri
will maintain FFO cash interest of close to 2x, while retaining
its leading position in the intellectual property renewals market
with healthy revenue growth and stable operating margins, and
relatively good FOCF generation.

"We could lower the rating if EBITDA margins resulted in Capri
reducing its FOCF generation. Specifically, we could take a
negative rating action if FOCF became negative.

"We could raise the rating if Capri increased its revenues and
EBITDA and made voluntary debt prepayments in line with
management's plan. Specifically, we could consider raising the
rating if debt to EBITDA fell below 8x and FFO cash interest
coverage improved to greater than 3x on a sustained basis."


MITCHELLS & BUTLERS: S&P Cuts Class D1 Notes Rating to 'BB (sf)'
----------------------------------------------------------------
S&P Global Ratings has affirmed its credit ratings on Mitchells &
Butlers Finance PLC's (M&B Finance, the issuer) class A notes. At
the same time, S&P has lowered its ratings on the class AB, B, C,
and D notes.

The transaction is a corporate securitization backed by operating
cash flows generated by the borrower, Mitchells & Butlers Retail
Ltd. (M&B Retail), which is the primary source of repayment for
an underlying issuer-borrower secured loan. M&B Retail operates
an estate of 1,360 pubs, bars, and pub restaurants across the
U.K., which are essentially self-managed. The original
transaction closed in November 2003, and was later tapped in
September 2006.

S&P said "Upon publishing our revised criteria for rating
corporate securitizations, we placed those ratings that could be
affected under criteria observation. Following our review of this
transaction, the ratings are no longer under criteria
observation."

BUSINESS RISK PROFILE AND RECENT PERFORMANCE

S&P said, "We have applied our corporate securitization criteria
as part of our rating analysis on the notes in this transaction.
As part of our analysis, we assess whether the operating cash
flows generated by the borrower are sufficient to make the
payments required under the notes' loan agreements by using a
debt service coverage ratio (DSCR) analysis under a base case and
a downside scenario. Our view of the borrowing group's potential
to generate cash flows is informed by our base-case operating
cash flow projection and our assessment of its business risk
profile, which is derived using our corporate methodology."

The public house (pub) sector accounts for a quarter of the GBP88
billion drinking and eating out market in the U.K. With the long-
term trend of slowly declining alcohol consumption, pub operators
have been adjusting their portfolio through regular pub
disposals. This is evidenced by the estimated 47,000 pubs and
bars competing in the segment today compared with a crowded
57,500 in 2007. This represents an average annual decline of
almost 2%. The major pub operators are Greene King, Mitchells and
Butlers, Ei (previously known as Enterprise Inns), and Punch
Taverns.

As of September 2017, M&B Retail comprised 1,360 pubs, which
represent over three-quarters of the total 1,754 pubs under
Mitchell & Butlers PLC -- the largest managed pub operator in the
U.K. by EBITDA.

In the financial year (FY) ended September 2017, the borrower
disposed of 58 pubs (4.1% by number) from the securitized
portfolio, out of which 55 were disposed of during Q4 FY2017.

M&B Retail's annual revenue increased by 3% to GBP1.6 billion in
FY2017. Over the same period, reported EBITDA per pub has
improved by 0.6%, but total reported EBITDA declined by 0.7% to
GBP358 million, primarily due to increasing operating costs.
These figures are significantly higher than those of its peer,
Greene King Retailing, that has a similar satisfactory business
risk profile. For the FY ending April 2017, Greene King Retailing
generated GBP815 million in revenue and GBP234 million in
reported EBITDA, albeit on the basis of a hybrid managed and
tenanted business model.

With the class A and B notes already amortizing, the leverage has
improved by 0.2x across the capital structure over the last year.
Based on reported EBITDA for FY2017 and debt outstanding as of
Sept. 30, 2017, the leverage was 2.0x, 2.9x, 4.2x, 4.9x and 5.2x
for the class A, AB, B, C and D notes, respectively.

Over 95% of Mitchells & Butlers' pubs operate under a managed
business model. Therefore, S&P believes that M&B Retail is not
materially exposed to the market rent only (MRO) option under the
Statutory Pub Code, unlike the leased and tenanted pub segment.

S&P said, "On the other hand, we expect that the rising national
living wage and increasing drinks and food costs due to the weak
British pound sterling could weigh on the EBITDA margin,
particularly on the managed pub segment, which has direct
exposure to cost inflation. Therefore, we expect that reported
EBITDA margin will continue to drop moderately in the long term
and will be lower than other pub operators whose margins are
supported by the leased and tenanted business model. These
factors support our assessment of the borrower's business risk
profile as satisfactory, which is unchanged since our previous
review."

RATING RATIONALE

M&B Finance's primary sources of funds for principal and interest
payments on the outstanding notes are the loan interest and
principal payments from the borrower, which are ultimately backed
by future cash flows generated by the operating assets.

A tranched GBP295 million liquidity facility, with GBP27.5
million and GBP10 million use caps for class C and D notes,
respectively, is also available at the issuer level and is sized
to cover 18 months of debt service.

S&P's ratings address the timely payment of interest and
principal due on the notes, excluding any subordinated step-up
fees.

DSCR ANALYSIS

S&P said, "Our cash flow analysis serves to both assess whether
cash flows will be sufficient to service debt through the
transaction's life and to project minimum DSCRs in base-case and
downside scenarios."

Base-case scenario

S&P said, "Our base-case EBITDA and operating cash flow
projections for FY2018 and the company's satisfactory business
risk profile rely on our corporate methodology. Beyond FY2018,
our base-case projections are based on our corporate
securitizations criteria, from which we then apply assumptions
for capital expenditures (capex) and taxes to arrive at the
expected cash flow available for debt service." For M&B Retail,
S&P's assumptions were:

-- Maintenance capex (net of expensed amounts): GBP100 million
    for FY2018, reducing to GBP58.1 million thereafter, which is
    in line with transaction documents' minimum requirements.

-- Development capex: GBP21 million for FY2018. Thereafter, as
    S&P's assume no growth and in line with its corporate
    securitization criteria, it considers no investment capex.

-- Tax: S&P assumes a reduced tax rate of 17%, which takes into
    account certain tax reliefs available to M&B Retail.

S&P established an anchor of 'bbb-' for the class A and AB notes,
and of 'bb-' for the class B, C, and D notes based on:

-- S&P's assessment of M&B Retail's satisfactory business risk
    profile, which it associates with a business volatility score
    of '3'; and

-- The minimum DSCR achieved in S&P's base-case analysis, which
    considers only operating-level cash flows but does not give
    credit to issuer-level structural features (such as the
    tranched liquidity facility); and

-- The distribution of the tranches' forecast DSCRs.

The notes are fully amortizing, with some concurrent amortization
between the senior and junior notes. Notably, the class B and C1
notes are scheduled to fully repay before the class AB notes.

Downside Scenario

S&P said, "Our downside DSCR analysis tests whether the issuer-
level structural enhancements improve the transaction's
resilience under a moderate stress scenario. M&B Retail falls
within the pubs, restaurants, and retail industry. Considering
U.K. pubs' historical performance during the financial crisis of
2007-2008, in our view, a 15% decline in EBITDA from our base
case is appropriate for the managed pub subsector.

"Our downside DSCR analysis resulted in an excellent resilience
score for the class A notes, a strong resilience score for the
class AB and B notes, and a fair resilience score for the class C
and D notes."

The combination of the anchors derived in the base-case scenario
and the resilience scores derived in the downside scenario
results in resilience-adjusted anchors of 'bbb+' for the class A
and AB notes, of 'bb+' for the class B notes, and of 'bb' for the
class C and D notes.

Lastly, the issuer's GBP295 million liquidity facility balance
represents a significant level of liquidity support for all
notes, with the exception of the class C and D notes, measured as
a percentage of the current outstanding note balances. Given that
the full two notches above the anchor have been achieved in the
resilience-adjusted anchor of the class A, AB, and B notes, S&P
considers a one-notch increase over their resilience-adjusted
anchor is warranted. The class B and C notes' resilience-adjusted
anchors are only one notch above their anchors and, therefore,
they are not eligible for an additional notch.

Modifiers Analysis

S&P's modifiers analysis did not lead to any specific adjustment.

Comparable Rating Analysis

S&P applied a one-notch downward adjustment to the class AB notes
to reflect their subordination and weaker access to the security
package compared to the senior class A notes.

COUNTERPARTY RISK

S&P said, "As highlighted in our previous review, we do not
consider the liquidity facility, bank account, and hedge
agreements to be in line with our current counterparty criteria.
Our ratings on the notes in this transaction are therefore
constrained by our long-term issuer credit ratings (ICRs) on the
bank account providers (Barclays Bank PLC and Santander UK PLC),
our long-term ICR on the undrawn liquidity facility provider
(Lloyds Bank PLC), and our long-term ICRs plus one notch on the
hedge providers (The Royal Bank of Scotland PLC and Citibank
N.A.). Currently, the lowest rated provider is The Royal Bank of
Scotland, which acts both as drawn liquidity provider and hedge
provider."

OUTLOOK

A change in our assessment of the company's business risk profile
would likely lead to rating actions on the notes. S&P would
require higher/lower DSCRs for a weaker/stronger business risk
profile to achieve the same anchors.

UPSIDE SCENARIO

S&P said, "We do not currently see a scenario that would lead us
to raising our assessment of M&B Retail's business risk profile.

"We may consider raising our ratings on the notes if our minimum
projected DSCR goes above 1.3:1 for the class B notes and 1.2:1
for the class C and D notes in our base-case scenario. Any
upgrade of the senior class A notes is constrained by the current
rating on The Royal Bank of Scotland, acting as hedge provider."

DOWNSIDE SCENARIO

S&P said, "We could also lower our ratings on the notes if we
were to lower the business risk profile to fair from
satisfactory. This could occur if cost headwinds result in a
sharp decline in reported EBITDA or margin.

"We may also consider lowering our ratings on the notes if our
minimum projected DSCRs fall below 1.4:1 for the class A and AB
notes, 1.1:1 for the class B and C notes, and 1.0:1 for the class
D notes in our base-case scenario."

SURVEILLANCE

S&P said, "We currently do not expect bond cash flow disruptions
or rating implications from the potential phase out of LIBOR and
similar IBOR benchmarks after 2021. However, as new proposed
benchmarks emerge, we will need to consider whether they meet our
criteria."

RATINGS LIST

  Mitchells & Butlers Finance PLC
  GBP2.305 Billion, $418.75 Million Fixed- And Floating-Rate
  Asset-Backed Notes (Including GBP1.105 Billion Floating-Rate
  Asset-Backed Notes Tap And Refinancing)

  Class              Rating
               To              From

  Ratings Lowered

  AB           BBB+ (sf)       A- (sf)
  AB (SPUR)    BBB+ (sf)       A- (sf)
  B1           BBB- (sf)       A- (sf)
  B2           BBB- (sf)       A- (sf)
  C1           BB (sf)         BBB+ (sf)
  C2           BB (sf)         BBB+ (sf)
  D1           BB (sf)         BBB+ (sf)

  Ratings Affirmed

  A1N          A- (sf)
  A1N (SPUR)   A- (sf)
  A2           A- (sf)
  A2 (SPUR)    A- (sf)
  A3N          A- (sf)
  A3N (SPUR)   A- (sf)
  A4           A- (sf)
  A4 (SPUR)    A- (sf)


SEADRILL LTD: Barclays Submits Debt Restructuring Proposal
----------------------------------------------------------
Nerijus Adomaitis and Jonathan Saul at Reuters report that
British bank Barclays Plc has submitted an alternative proposal
to restructure Seadrill, the oil rig company said in a U.S. court
filing.

Seadrill, which filed for Chapter 11 restructuring in a U.S.
court on Sept. 12, has already received two restructuring
proposals, Reuters relates.

The Norwegian company, once the largest drilling rig operator by
market value, filed for bankruptcy protection after being hit
hard by oil company investment cutbacks following the fall in oil
prices, Reuters recounts.

"Indeed, the debtors (Seadrill) recently received proposals from
each of Barclays and the Ad Hoc Group," Reuters quotes Seadrill
as saying in the court documents filed on Dec. 14.

The court filing did not give any details of Barclays' plan,
Reuters notes.

Seadrill, as cited by Reuters, said it would continue to engage
with both Barclays and the Ad Hoc Group "in hopes of reaching a
global resolution."

The company also said the original plan proposed by Norwegian-
born billionaire Fredriksen represented "the highest and
otherwise best value-maximizing alternative", Reuters relays.

The proposal from Fredriksen and the group of hedge funds's
envisages investing US$1.06 billion via new equity and secured
debt to restructure Seadrill and its US$12.8 billion in debt and
other liabilities, Reuters discloses.

This plan offered holders of Seadrill's US$2.3 billion of
unsecured bonds 14.3% of the stock in the reorganized company,
while existing shareholders would be left with just 1.9%, Reuters
states.

The plan requires the approval of unsecured bondholders as their
holdings will be impaired in the restructuring, Reuters notes.
According to Reuters, in a court filing on Dec. 15, Seadrill said
this plan was backed by about 40% of unsecured bondholders and
almost all of its bank lenders.

                   About Seadrill Limited

Seadrill Limited is a deepwater drilling contractor, providing
drilling services to the oil and gas industry. It is incorporated
in Bermuda and managed from London. Seadrill and its affiliates
own or lease 51 drilling rigs, which represents more than 6% of
the world fleet.

As of Sept. 12, 2017, Seadrill employs 3,760 highly-skilled
individuals across 22 countries and five continents to operate
their drilling rigs and perform various other corporate
functions.

As of June 30, 2017, Seadrill had $20.71 billion in total assets,
$10.77 billion in total liabilities and $9.94 billion in total
equity.

Seadrill reported a net loss of US$155 million on US$3.17 billion
of total operating revenues for the year ended Dec. 31, 2016,
following a net loss of US$635 million on US$4.33 billion of
total operating revenues for the year ended in 2015.

After reaching terms of a reorganization plan that would
restructure $8 billion of funded debt, Seadrill Limited and 85
affiliated debtors each filed a voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead
Case No. 17-60079) on Sept. 12, 2017.

Together with the chapter 11 proceedings, Seadrill, North
Atlantic Drilling Limited ("NADL") and Sevan Drilling Limited
("Sevan") commence liquidation proceedings in Bermuda to appoint
joint provisional liquidators and facilitate recognition and
implementation of the transactions contemplated by the RSA and
Investment Agreement. Simon Edel, Alan Bloom and Roy Bailey of
Ernst & Young serve as the joint and several provisional
liquidators.

In the Chapter 11 cases, the Company has engaged Kirkland & Ellis
LLP as legal counsel, HoulihanLokey, Inc. as financial advisor,
and Alvarez & Marsal as restructuring advisor. Willkie Farr &
Gallagher LLP, serves as special counsel to the Debtors.
Slaughter and May has been engaged as corporate counsel, and
Morgan Stanley serves as co-financial advisor during the
negotiation of the restructuring agreement.  Advokatfirmaet
Thommessen AS serves as Norwegian counsel.  Conyers Dill &
Pearman serves as Bermuda counsel.  PricewaterhouseCoopers LLP
UK, serves as the Debtors' independent auditor; and Prime Clerk
is their claims and noticing agent.

On September 22, 2017, the Office of the U.S. Trustee appointed
an official committee of unsecured creditors.  The committee
hired Kramer Levin Naftalis& Frankel LLP, as counsel; Cole Schotz
P.C. as local and conflict counsel; Zuill& Co. as Bermuda
counsel; Quinn Emanuel Urquhart & Sullivan, UK LLP as English
counsel; Advokatfirmaet Selmer DA as Norwegian counsel; and
Perella Weinberg Partners LP as investment banker.


TOYS R US: UK's Pension Scheme Likely to Vote Against CVA
---------------------------------------------------------
Hannah Boland at The Telegraph reports that the UK's pension
scheme "lifeboat" looks set to vote against Toys R Us's
restructuring plans this week, amid a stand-off over whether the
retailer can pump GBP9 million into its pension scheme.

The Telegraph understands that the Pension Protection Fund (PPF)
is demanding the funds within two months in an attempt to secure
the future of the pension scheme should Toys R Us's rescue plan
fail.  The amount is equal to that which would be put into the
pension scheme over the next three years, The Telegraph states.

According to The Telegraph, the PPF, whose vote is likely to
determine whether or not the plan ultimately gets the go-ahead,
will need to formally lodge papers on its decision by midday
today, Dec. 20.  The vote is on Thursday, Dec. 21, The Telegraph
discloses.

Toys R Us requires 75% of its creditors, including landlords, to
support the company voluntary arrangement (CVA) at the vote,
which was first reported by Sky News, The Telegraph notes.

If the CVA is given the green light, at least 26 of the chain's
shops will close from next spring, meaning as many as 800 jobs
will be cut, The Telegraph says.

However, sources close to the process, as cited by The Telegraph,
said Toys R Us's hands are tied as it does not have GBP9 million
to put into the pension fund.

Its US parent firm filed for bankruptcy in September, and under
the terms of its court-led bankruptcy protection, is unable to
lend the UK group the funds, The Telegraph notes.

The sources added that the decision over whether to back the CVA
was a binary one for the PPF, but that if they voted against the
restructuring, it would be very likely that Toys R Us would fall
into administration, putting as many as 3,200 jobs at risk, The
Telegraph relays.

                      About Toys "R" Us

Toys "R" Us, Inc., is an American toy and juvenile-products
retailer founded in 1948 and headquartered in Wayne, New Jersey,
in the New York City metropolitan area.  Merchandise is sold in
880 Toys "R" Us and Babies "R" Us stores in the United States,
Puerto Rico and Guam, and in more than 780 international stores
and more than 245 licensed stores in 37 countries and
jurisdictions.

Merchandise is also sold at e-commerce sites including
Toysrus.com and Babiesrus.com.

On July 21, 2005, a consortium of Bain Capital Partners LLC,
Kohlberg Kravis Roberts and Vornado Realty Trust invested $1.3
billion to complete a $6.6 billion leveraged buyout of the
company.

Toys "R" Us is now a privately owned entity but still files with
the Securities and Exchange Commission as required by its debt
agreements.

The Company's consolidated balance sheet showed $6.572 billion in
assets, $7.891 billion in liabilities, and a stockholders'
deficit of $1.319 billion as of April 29, 2017.

Toys "R" Us, Inc., and certain of its U.S. subsidiaries and its
Canadian subsidiary voluntarily filed for relief under Chapter 11
of the Bankruptcy Code (Bankr. E.D. Va. Lead Case No. Case No.
17-34665) on Sept. 19, 2017.  In addition, the Company's Canadian
subsidiary voluntarily commenced parallel proceedings under the
Companies' Creditors Arrangement Act ("CCAA") in Canada in the
Ontario Superior Court of Justice.  The Company's operations
outside of the U.S. and Canada, including its 255 licensed stores
and joint venture partnership in Asia, which are separate
entities, are not part of the Chapter 11 filing and CCAA
proceedings.

Grant Thornton is the monitor appointed in the CCAA case.

Judge Keith L. Phillips presides over the Chapter 11 cases.

In the Chapter 11 cases, Kirkland & Ellis LLP and Kirkland &
Ellis International LLP serve as the Debtors' legal counsel.
Kutak Rock LLP serves as co-counsel.  Toys "R" Us employed
Alvarez & Marsal North America, LLC as its restructuring advisor;
and Lazard Freres & Co. LLC as its investment banker.  It hired
Prime Clerk LLC as claims and noticing agent.  A&G Realty
Partners, LLC, serves as its real estate advisor.

On Sept. 26, 2017, the U.S. Trustee for Region 4 appointed an
official committee of unsecured creditors.  The Committee
retained Kramer Levin Naftalis & Frankel LLP as its legal
counsel; Wolcott Rivers, P.C. as local counsel; FTI Consulting,
Inc. as financial advisor; and Moelis & Company LLC as investment
banker.


===================
U Z B E K I S T A N
===================


KDB BANK: S&P Affirms 'B+/B' Issuer Credit Ratings
--------------------------------------------------
S&P Global Ratings said that it had affirmed its 'B+/B' long- and
short-term issuer credit ratings on Uzbekistan-based KDB Bank
Uzbekistan JSC (KDB Uzbekistan). The outlook remains stable.

S&P said, "The affirmation reflects our expectation that KDB
Uzbekistan will preserve a sufficient capital buffer in the next
12-18 months to support further business expansion, while
maintaining a low risk appetite and good asset quality.

"We expect that KDB Uzbekistan will continue focusing mainly on
providing large and midsize corporate clients with treasury
services, such as settlements, foreign currency conversion
transactions, and trade finance facilitates. As of Sept. 30,
2017, a major part of the bank's assets remained low risk and
liquid. Cash and balances with the central bank represented 35%
of the bank's total assets, while another 47% of assets were
interbank deposits placed with highly rated banks from South
Korea and Europe. We think that the bank's lending activity will
remain minor and its share in the loan portfolio will not exceed
5%-7% of total assets in 2018-2019. KDB Uzbekistan will likely
stick to its low risk appetite and conservative approach to
lending, reflected in persistently low nonperforming assets and
low credit losses through the cycle.

"Our assessment of KDB Uzbekistan's capital and earnings as
adequate mainly reflects our expectations that the bank's
forecast risk-adjusted capital ratio will be in the range of
9.4%-9.7% in the next 12-18 months versus 11.9% as of midyear
2017. The expected decline reflects our assumptions of a material
(about 150%-170%) increase of the bank's risk-weighted assets in
2017 owing to sharp devaluation of local currency and a
relatively large share of assets denominated in U.S. dollars
(about 46% as of year-end 2016). In our view, the increase in
risk-weighted assets will be only partially offset by the
revaluation of U.S. dollar-denominated share capital and growing
net earnings. Although we believe that the bank's profitability
will remain high and will be supported by a stable net interest
margin and good operating efficiency, earnings growth will likely
lag the expected business growth.

"We note that KDB Uzbekistan's depositor base remains sticky and
predominantly consists of current accounts of large local and
international corporations operating in Uzbekistan. Despite their
contractually short-term nature, these current accounts have been
stable for the past five years. We expect that the bank will
continue demonstrating strong funding and adequate liquidity
metrics, exceeding those of local peers, mainly thanks to the
short-term and liquid nature of the bank's assets.

"We consider KDB Uzbekistan to be a strategically important
subsidiary of Korea Development Bank. We base our view on the
high operational integration between the parent and KDB
Uzbekistan. Moreover, we acknowledge that KDB Uzbekistan's
commercial franchise, brand name, and financial profile all
benefit from being part of a large and strong group. However, our
long-term rating on the bank remains at the level of 'B+' as we
cap the rating at the level of our view of the sovereign's
creditworthiness.

"The stable outlook on KDB Uzbekistan reflects our view that the
bank will adhere to its current business model and maintain a low
risk profile over the next 12-18 months, while it will also
continue displaying solid profitability and strong
capitalization.

"We are unlikely to raise the ratings on KDB Bank Uzbekistan over
the next 12-18 months, unless the sovereign's creditworthiness
improves.

"A negative rating action is also unlikely in the next 12-18
months, in our view."



                            *********

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
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Information contained herein is obtained from sources believed to
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