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

                           E U R O P E

          Tuesday, January 23, 2018, Vol. 19, No. 016


                            Headlines


B E L G I U M

BELFIUS BANK: Moody's Assigns Ba2(hyb) Rating to AT1 Securities


C R O A T I A

ZAGREBACKA BANKA: Fitch Raises Viability Rating to 'bb+'


F R A N C E

CCP LUX: S&P Assigns Preliminary 'B' Corporate Credit Rating


I R E L A N D

CADOGAN SQUARE CLO X: Moody's Assigns B2 Rating to Class F Notes


I T A L Y

ICCREA BANCA: Fitch Lowers Long-Term IDR to BB+, Outlook Stable


R U S S I A

ALTAIBIZNES-BANK JSC: Put on Provisional Administration
INVESTGEOSERVIS JSC: Fitch Assigns B+ IDR, Outlook Stable
METALLOINVEST JSC: Moody's Affirms Ba2 CFR, Outlook Positive


S E R B I A

RENEWABLE ENERGY: Reservoir Withdraws Project After Bankruptcy


S P A I N

IM PRESTAMOS: Moody's Puts B1 Rating on Review for Upgrade
MADRID RMBS IV: S&P Raises Class E Notes Rating to CCC (sf)


U K R A I N E

UKRAINE: Insolvent Banks Repaid UAH2.1BB Refinancing Loans to NBU


U N I T E D   K I N G D O M

CARILLION PLC: Private Equity Investors Eye Assets After Collapse
EG GROUP: S&P Affirms 'B' CCR on New Acquisitions & Refinancing
HOUSE OF FRASER: S&P Downgrades CCR to 'CCC+' On Weak Earnings
NOBLE HOLDING: Moody's Rates New $500MM Sr. Guaranteed Notes B2
PAYSAFE GROUP: S&P Lowers CCR to 'B' on Leveraged Buyout

PI UK HOLDCO II: S&P Assigns 'B' CCR, Outlook Stable
POLYUS FINANCE: Fitch Rates Planned Guaranteed Notes 'BB-(EXP)'
SEADRILL: Barclays Makes Deposit Payment for Rival Rescue Plan
THOMAS COOK: S&P Raises CCR to 'B+' on Improved Credit Metrics


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B E L G I U M
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BELFIUS BANK: Moody's Assigns Ba2(hyb) Rating to AT1 Securities
---------------------------------------------------------------
Moody's Investors Service assigned a Ba2(hyb) rating to the
undated deeply subordinated additional tier 1 (AT1) securities to
be issued by Belfius Bank SA/NV (Belfius). Belfius's perpetual
non-cumulative AT1 securities rank junior to Tier 2 capital
instruments and senior only to the bank's Common Equity Tier 1
(CET1) capital. Coupons may be cancelled in full or in part on a
non-cumulative basis at the issuer's discretion or mandatorily in
case the bank's 'distributable items' were insufficient, if the
payment would result in a breach of the Maximum Distributable
Amount restrictions, or if the supervisory authority ordered the
issuer to cancel such payment. These are 'low-trigger' AT1
securities because their principal is partially or fully written
down if Belfius's consolidated or solo CET1 capital ratio falls
below 5.125%, which is considered to be the bank's point of non-
viability.

RATINGS RATIONALE

The Ba2(hyb) rating assigned to Belfius's AT1 securities is based
on Moody's assessment of loss severity resulting from coupon
suspension or principal write-down should the bank breach the
5.125% CET1 trigger ratio. Moody's considers these instruments as
'gone concern' securities, which would likely absorb losses once
the bank has exhausted all other options to restore its
viability, including cessation of common dividends, deleveraging
and sale of assets.

As Belfius is subject to the European Bank Recovery and
Resolution Directive (BRRD), which Moody's considers to be an
Operational Resolution Regime, the rating agency applies its
Advanced Loss Given Failure (LGF) approach to assess loss
severity associated with the bank's 'low trigger' AT1 securities.
For Belfius, Moody's assumes, amongst other standard assumptions,
residual tangible common equity of 3% and losses post-failure of
8% of tangible banking assets. Given the relatively small amount
of AT1 securities to be issued, at least at first, and the
limited current subordination in the form of residual equity, the
LGF analysis indicates likely high loss-given-failure. As a
result, Moody's notches down Belfius's AT1 securities by one
notch from the bank's standalone baseline credit assessment (BCA)
of baa2. Additional downward notching of two notches captures the
risk of coupon suspension on a non-cumulative basis.

The instrument rating does not benefit from any upward notching
relating to government support, as Moody's considers the
probability of government support for Belfius's AT1 securities to
be low.

This leads to a rating of Ba2(hyb), three notches below Belfius's
BCA, in line with Moody's typical notching for this kind of
instrument.

WHAT COULD CHANGE THE RATING UP/DOWN

The Ba2(hyb) rating on Belfius's AT1 securities would be upgraded
together with an upgrade of Belfius's BCA. This could occur if
risk concentrations in the bank's loan and investment portfolios
were to be further reduced, its profit growth were to accelerate,
and/or its capital position continued to strengthen beyond
current expectations.

Conversely, the rating would be downgraded together with a
downgrade of Belfius's BCA. Belfius's BCA could be downgraded as
a result of unexpected losses arising from its investment and/or
loan book.

LIST OF ASSIGNED RATINGS

-- Preferred Stock Non-cumulative, Assigned Ba2(hyb)

PRINCIPAL METHODOLOGY

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


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C R O A T I A
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ZAGREBACKA BANKA: Fitch Raises Viability Rating to 'bb+'
--------------------------------------------------------
Fitch Ratings has upgraded Zagrebacka Banka d.d.'s (ZABA)
Viability Rating (VR) to 'bb+' from 'bb'. Fitch has also affirmed
ZABA's Long-Term Issuer Default Rating (IDR) at 'BBB-', Short-
Term IDR at 'F3' and Support Rating (SR) at '2'. The Outlook on
the Long-Term IDR is Stable.

The upgrade of the bank's VR follows Fitch's upgrade of the Long-
Term IDR of the Croatian sovereign to 'BB+' from 'BB'.

KEY RATING DRIVERS
VR

The upgrade of ZABA's VR to 'bb+' from 'bb' is driven by what
Fitch assesses to be an improvement of Croatia's operating
environment and, in particular, of the sovereign credit risk
profile. Fitch sees a high correlation between the sovereign's
and the bank's credit profiles, in particular given ZABA's high
direct exposure to the sovereign.

The VR continues to factor in the bank's large, albeit declining,
volume of impaired loans and volatile through-the-cycle
performance. The rating is underpinned by ZABA's sizeable capital
buffers and potential capital support from the parent, the bank's
comfortable funding and liquidity position and leading domestic
market franchise.

For Fitch's more detailed view on ZABA's VR drivers, see 'Fitch
Affirms Zagrebacka Banka at 'BBB-'; Outlook Stable' dated
December 20, 2017 at www.fitchratings.com.

IDRS and SR

The affirmation of ZABA's IDRs and SR reflects Fitch's view of a
high probability that the bank would be supported, if required,
by its parent, UniCredit S.p.A. (BBB/Stable/bbb). The Stable
Outlook on ZABA's IDR reflects that on the parent.

Fitch believes that UniCredit has a strong propensity to support
ZABA as the Croatian subsidiary is based in the CEE region, which
is strategically important for UniCredit. This is further
underpinned by ZABA's close operational integration with the
parent group and potential reputational damage for UniCredit from
a subsidiary default. ZABA's relatively small size (about 2% of
UniCredit's consolidated assets) means that potential support
should be manageable for the parent.

RATING SENSITIVITIES
VR

An upgrade of the VR would likely require both: i) an upward
revision of Fitch's assessment of the operating environment in
Croatia, including, but not limited to, a sovereign rating
upgrade; and ii) a material reduction of ZABA's legacy bad debts
and a sustainable improvement in the bank's profitability.

A VR downgrade could be driven by a sovereign rating downgrade or
a significant weakening of the bank's capitalisation, as a result
of asset quality or profitability deterioration.

IDRS, SR

ZABA's IDRs and SR are sensitive to Fitch view of the ability and
propensity of UniCredit to provide support. An upgrade or
downgrade of the parent would likely result in a similar action
on the subsidiary. Fitch do not expect the parent's support
propensity to weaken.


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F R A N C E
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CCP LUX: S&P Assigns Preliminary 'B' Corporate Credit Rating
------------------------------------------------------------
Premium cosmetic packaging manufacturer CCP Lux Holding S.a.r.l.
(Axilone) plans to raise a EUR265 million senior secured term
loan B, a EUR50 million super senior secured revolving credit
facility (RCF) that is expected to be undrawn at closing, and a
EUR90 million second-lien facility. The EUR355 million funded
debt will, together with EUR236 million in equity contributed by
CITIC Capital and EUR79 million rolled over by a minority
shareholder, fund the leveraged buyout of the company.

S&P Global Ratings said that it assigned its preliminary 'B'
long-term corporate credit rating to France-based CCP Lux Holding
S.a.r.l. (Axilone). The outlook is stable.

S&P said, "We also assigned our preliminary 'B' issue and '3'
recovery ratings to the EUR265 million senior secured term loan
B. The preliminary recovery rating indicates our expectation of
meaningful (50%-70%; rounded estimate: 50%) recovery of principal
in the event of payment default.

"We also assigned our preliminary 'CCC+' issue and '6' recovery
ratings to the EUR90 million second-lien facility due 2025. The
preliminary recovery rating indicates our expectation of
negligible (0%-10%; rounded estimate 0%) recovery.

"The final ratings will depend on our receipt and satisfactory
review of all final transaction documentation. Accordingly, the
preliminary ratings should not be construed as evidence of final
ratings. If S&P Global Ratings does not receive final
documentation within a reasonable time frame, or if final
documentation departs from materials reviewed, we reserve the
right to withdraw or revise our ratings. Potential changes
include, but are not limited to, use of loan proceeds, maturity,
size and conditions of the loans, financial and other covenants,
security, and ranking.

The preliminary long-term rating on CCP Lux Holding S.a.r.l.
primarily reflects Axilone's strong market position as a premium
plastic and metal packaging provider of lipstick caps and other
packaging (including closures and jars) to the luxury cosmetics
industry. Sales for the financial year ending (FYE) Dec. 31,
2017, are estimated at around EUR219 million and S&P Global
Ratings-adjusted EBITDA at EUR62 million, resulting in an
adjusted EBITDA margin of 28.5%.

Axilone's business risk profile is underpinned by its leading
niche position as a premium player in the fragmented cosmetic
packaging market, as well as its technical expertise, product
innovation, strong EBITDA margins, longstanding relations with
large luxury brands, and high customer retention rates.

The group's product range includes lipstick packaging (56% of
2016 sales) as well as caps and closures (44% of 2016 sales) for
perfume bottles, creams, and other premium cosmetic products.
Axilone has strong niche positions in the U.S and Europe,
particularly in the lipstick segment, where it primarily competes
with Albea Beauty Holdings S.A. (B/Stable/--) and other
diversified packaging groups. The group is also among the top
three players in the more fragmented premium caps and closures
segment.

Customers include some of the world's leading luxury groups. The
top three customers (Estee Lauder, LVMH, and L'Oreal) account for
54% of revenues. Each of these groups owns numerous brands, which
are largely independent from each other. Demand for cosmetics is
supported by rising revenue per capita in emerging markets
(including China), the adoption of make-up at an earlier age in
Europe and North America, the increased use of skincare products
by men, and a rising demand for innovative packaging.

The company's strong EBITDA margin reflects its large
manufacturing presence in China, lean organizational structure,
and a generally well-invested asset base. Its two plants in China
account for 75% of its total workforce. The other manufacturing
plants are in France (where there are two) and Spain (one).
Although sales are invoiced to the U.S. (37%), France (34%), rest
of Europe (16%), and Asia (13%), the underlying cosmetics are
then distributed worldwide.

Axilone is headquartered in France, close to some of the major
luxury cosmetic groups. Customer retention rates are high due to
the tailor-made nature of the products and the company's focus on
quality and customer service. The products are jointly developed
and designed with clients, who fund and retain the ultimate
ownership of the packaging molds.

S&P said, "Our assessment also reflects the group's smaller size,
narrow manufacturing footprint, significant customer
concentration, and significant foreign exchange (FX) exposure
(mainly U.S. dollar to euro and euro to renminbi). Although most
of its framework agreements do not allow for the automatic pass-
through of raw material price increases to customers, the company
negotiates these on a case-by-case basis.

"We assess Axilone's financial risk profile as highly leveraged,
reflecting our view that it will maintain leverage of above 5.0x
in the near term. We estimate that S&P Global Ratings' adjusted
leverage amounted to 6.3x in December 2017 and that it will have
minimal free cash flow generation in the near term. In 2017, we
estimate that the free operating cash flow (FOCF)-to-debt ratio
was below 5%."

S&P's base case assumes:

-- Eurozone GDP growth of 2.3% for 2017 and 2.0% in 2018. Growth
    prospects will be supported by domestic demand, exports, and
    low unemployment levels. Growth remains challenged by the
    slow decline in unemployment, the recent strengthening of the
    euro, and the modest contribution so far from the upswing in
    bank loans. GDP growth of 2.2% (2017) and 2.6% (2018) in the
    U.S. S&P expects growth to be underpinned by low borrowing
    costs, anticipated fiscal stimulus, low unemployment rates, a
    weaker dollar, and sound business and consumer confidence.
    Growth in Asia, especially China, despite slightly tighter
    local lending conditions and its debt overhang. Disorderly
    deleveraging could destabilize asset and commodity markets.

-- Revenue growth of nearly 8% in 2018 and 3% thereafter, based
    on ongoing market growth, gains in market share, and the
    group's expansion into new products.

-- Adjusted EBITDA margins of 26.5% in 2018, slightly weaker
    than in 2017 due to adverse FX movements. Thereafter, S&P
    assumes flat EBITDA margins. However, there is potential for
    margin improvements from operating efficiencies at the
    European plants.

-- Adjusted EBITDA of EUR62.6 million for FYE December 2017.

-- Capital expenditure (capex) of approximately EUR20.7 million
    in the FYE December 2017.

-- Capex for FYE December 2018 of EUR17.7 million. Capex will
    primarily relate to the group's second, recently acquired
    manufacturing site in China as well as investments in Spain.

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

-- Adjusted debt to EBITDA of 6.3x at FYE December 2017 and
    2018.

-- Adjusted funds from operations (FFO) to debt of around 10.9%
    as of December 2017 and 8.8% in December 2018.

-- FOCF to debt is expected to remain below 5% throughout 2018
    and 2019.

S&P said, "The stable outlook reflects our expectation that
Axilone will continue to capitalize on its solid client
relationships and leading niche position in its main markets. In
the next 12 months, we expect that S&P Global Ratings-adjusted
net leverage will remain at around 6.3x and FFO to debt at 9%. We
anticipate that FOCF will remain modest due to ongoing
expansionary capital investments in China and Europe.

"We could raise the preliminary rating if Axilone showed steady
earnings and EBITDA growth. A positive rating action would also
need to be supported by Axilone retaining robust credit measures
with leverage approaching 5.0x and FFO to debt of at least 12%,
while maintaining positive operating cash flows. An upgrade would
be contingent on the company's and owner's commitment to
maintaining a conservative financial policy that would support
such improved ratios.

"We could lower the preliminary rating if Axilone experienced
unexpected customer losses or margin pressures due to adverse FX
movements or raw material price increases, which it could not
pass on to customers. We could also lower the rating if the
company's financial policy became more aggressive, especially
with regards to shareholder remuneration, preventing any material
deleveraging and resulting in a material decline in EBITDA
margins, negative free operating cash flows, or liquidity
coverage below 1.0x. We could also lower the rating if the debt
to EBITDA ratio deteriorated above 7.0x."


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CADOGAN SQUARE CLO X: Moody's Assigns B2 Rating to Class F Notes
----------------------------------------------------------------
Moody's Investors Service announced that it has assigned the
following definitive ratings to notes issued by Cadogan Square
CLO X DAC ("Cadogan X" or the "Issuer"):

-- EUR253,500,000 Class A-1 Senior Secured Floating Rate Notes
    due 2030, Assigned Aaa (sf)

-- EUR21,000,000 Class A-2 Senior Secured Fixed Rate Notes due
    2030, Assigned Aaa (sf)

-- EUR22,000,000 Class B-1 Senior Secured Floating Rate Notes
    due 2030, Assigned Aa2 (sf)

-- EUR32,000,000 Class B-2 Senior Secured Fixed Rate Notes due
    2030, Assigned Aa2 (sf)

-- EUR17,820,000 Class C-1 Senior Secured Deferrable Floating
    Rate Notes due 2030, Assigned A2 (sf)

-- EUR10,530,000 Class C-2 Senior Secured Deferrable Floating
    Rate Notes due 2030, Assigned A2 (sf)

-- EUR16,030,000 Class D-1 Senior Secured Deferrable Floating
    Rate Notes due 2030, Assigned Baa2 (sf)

-- EUR7,370,000 Class D-2 Senior Secured Deferrable Floating
    Rate Notes due 2030, Assigned Baa2 (sf)

-- EUR24,750,000 Class E Senior Secured Deferrable Floating Rate
    Notes due 2030, Assigned Ba2 (sf)

-- EUR12,150,000 Class F Senior Secured Deferrable Floating Rate
    Notes due 2030, Assigned B2 (sf)

RATINGS RATIONALE

Moody's definitive ratings of the rated notes address the
expected loss posed to noteholders by the legal final maturity of
the notes in 2030. The definitive ratings reflect the risks due
to defaults on the underlying portfolio of loans given the
characteristics and eligibility criteria of the constituent
assets, the relevant portfolio tests and covenants as well as the
transaction's capital and legal structure. Furthermore, Moody's
is of the opinion that the collateral manager, Credit Suisse
Asset Management Limited ("CSAM"), has sufficient experience and
operational capacity and is capable of managing this CLO.

Cadogan Square CLO X DAC is a managed cash flow CLO. 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 is expected to be at least
80% ramped up as of the closing date and to be comprised
predominantly of corporate loans to obligors domiciled in Western
Europe.

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

In addition to the ten classes of notes rated by Moody's, the
Issuer will issue EUR49.55M of subordinated notes which will not
be rated.

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

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.

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

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

Loss and Cash Flow Analysis:

Moody's modelled the transaction using CDOEdge, a cash flow model
based on the Binomial Expansion Technique, as described in
Section 2.3 of the "Moody's Global Approach to Rating
Collateralized Loan Obligations" rating methodology published in
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.

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

Par amount: EUR450,000,000

Diversity Score: 42

Weighted Average Rating Factor (WARF): 2903

Weighted Average Spread (WAS): 3.75%

Weighted Average Coupon (WAC): 4.5%

Weighted Average Recovery Rate (WARR): 44.0%

Weighted Average Life (WAL): 8.5 years

Stress Scenarios:

Together with the set of modelling assumptions above, Moody's
conducted additional sensitivity analysis, which was an important
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 each of the rated notes (shown in terms of the
number of notch difference versus the current model output,
whereby a negative difference corresponds to higher expected
losses), holding all other factors equal.

Percentage Change in WARF: WARF + 15% (to 3338 from 2903)

Ratings 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-1 Senior Secured Deferrable Floating Rate Notes: -2

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

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

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

Class E Senior Secured Deferrable Floating Rate Notes: 0

Class F Senior Secured Deferrable Floating Rate Notes: 1

Percentage Change in WARF: WARF +30% (to 3774 from 2903)

Ratings Impact in Rating Notches:

Class A-1 Senior Secured Floating Rate Notes: -1

Class A-2 Senior Secured Fixed Rate Notes: -1

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

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

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

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

Class D-1 Senior Secured Deferrable Floating Rate Notes: -3

Class D-2 Senior Secured Deferrable Floating Rate Notes: -3

Class E Senior Secured Deferrable Floating Rate Notes: -1

Class F Senior Secured Deferrable Floating Rate Notes: 0


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ICCREA BANCA: Fitch Lowers Long-Term IDR to BB+, Outlook Stable
---------------------------------------------------------------
Fitch Ratings has downgraded Iccrea Banca's (IB) and its main
subsidiary Iccrea BancaImpresa's (IBI) Long-Term Issuer Default
Ratings (IDR) to 'BB+' from 'BBB-' and Viability Ratings (VR) to
'bb+' from 'bbb-'. The Outlooks on the Long-Term IDRs are Stable.

The downgrade primarily reflects Fitch's view that the group's
asset quality is weak and unlikely to improve materially in 2018.
Fitch also believes that the group's capitalisation will remain
under pressure from large unreserved impaired loans. Under the
reform of the mutual banking sector in Italy, which is planned to
be completed by end-2018, IB will become the parent of one of the
new banking groups, including a large number of mutual banks.

KEY RATING DRIVERS
IDRS, VRS AND SENIOR DEBT
IB's and IBI's ratings reflect the group's strong franchise as a
central institution for the Italian mutual banks (BCCs or BCC
sector) and its adequately diversified business model. The
ongoing BCC reform will result in a more cohesive sector and
transform IB into a fully-fledged commercial banking group. Fitch
believe that it will take considerable time before the new
group's profitability will benefit from increased synergies.

The ratings also reflect Fitch's view that profitability is below
the peers' average and that asset quality will remain weak
despite the group impaired loan reduction plans and with a still
large portion of unreserved impaired loans weighing on its
capitalisation.

Fitch assigns common VRs to IB and IBI to reflect the high
integration between the two entities and the large size of IBI
compared with its parent, IB. IB and IBI and their subsidiaries
are supervised and regulated as a consolidated entity. Capital
and liquidity are fungible across the group and all entities
share the same brand, have highly integrated management and
operate in the same jurisdiction.

During 2017 the stock of impaired loans stabilised. However, IB's
gross impaired loans ratio of 18.8% at end-1H17 remains very high
and compares weakly with European and also with the strongest
domestic peers. Fitch expects some modest improvements in the
ratio in 2018 and impaired loan reductions to continue once the
mutual banking group is created, but these improvements will take
time to materialise before they result in material asset quality
improvements for the new group. Fitch therefore expects the new
group will operate with higher impaired loan ratios than its
stronger direct domestic peers for some time.

The group's Fitch Core Capital (FCC)/RWA ratio of 12.8% and
transitional CET1 ratio of 12.3% at end-1H17 are maintained with
moderate buffers over regulatory minimums and in line with
domestic peers. However, capital encumbrance from unreserved
impaired loans remains high at over 73% of FCC at end-1H17. Fitch
believes that capital ratios should benefit from the
consolidation of the mutual banks, which are generally well
capitalised. Nevertheless, unreserved impaired loans will
continue to weigh on capitalisation, which could come under
further pressure from the planned comprehensive assessment that
the ECB will undertake on the new banking group including a large
number of BCCs.

IB's ability to generate profits is weak. Operating costs are
high and loan impairment charges (LICs), largely on IBI's
corporate exposures, have been weighing on the group's
profitability. Fitch expect the new banking group to realise
synergies and exercise some pricing power in the areas where its
franchise will be stronger. However, operating efficiency will
take time to improve and could be subject to the integration
costs.

IB's funding is generally stable and reflects its role of a
central institution of the BCC sector. Fitch assessment of IB's
liquidity benefits from ordinary support from the BCCs, which
place a large proportion of their excess funding with IB.
Customer deposits account for a limited proportion of IB's
funding, but their weight will increase materially as the new
banking group will include the deposit-funded mutual banks.

Fitch has withdrawn the rating on IBI's EMTN programme because
the issuer has no debt outstanding under the programme and no
longer plans to issue new debt under it.

SUPPORT RATING AND SUPPORT RATING FLOOR

The banks' Support Ratings and the Support Rating Floors reflect
Fitch's view that senior creditors cannot rely on receiving full
extraordinary support from the sovereign if a bank becomes non-
viable. The EU's Bank Recovery and Resolution Directive and the
Single Resolution Mechanism for eurozone banks provide a
framework for resolving banks that requires senior creditors to
participate in losses, if necessary, instead of, or ahead of, a
bank receiving sovereign support.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

IB's subordinated debt is rated one notch below the VR for loss
severity to reflect Fitch expectation of below-average recovery
prospects. No notching is applied for incremental non-performance
risk because write-down of the notes will only occur once the
point of non-viability is reached and there is no coupon
flexibility before non-viability.

RATING SENSITIVITIES
IDRS, VRS AND SENIOR DEBT

IB will change fundamentally as a result of the creation of the
new banking group, which will result in the consolidation of a
number of mutual banks into IB. Fitch expects to review IB's and
IBI's ratings when the new banking group has been created, which
the group expects by end-2018.

The ratings could change if the group's financial profile and
plans, particularly asset quality, differ materially from Fitch's
current expectations. The ratings would also come under pressure
if the group fails to improve profitability and are sensitive to
the execution of the group's reorganisation.

The new banking group will be based on a mutual support scheme
between IB, IBI and the member BCCs. If Fitch concludes that
mutual support is sufficiently strong, IB's ratings could become
based on Fitch criteria for rating banking structures backed by
mutual support schemes.

The ratings could, over time, benefit from progress in improving
asset quality while maintaining adequate capitalisation and a
sustainable return to operating profitability. The ratings could
also benefit from the successful completion of the integration of
the new banking group and creation and functioning of the
necessary governance, risk and control functions as well as
evidence of long-term competitive strengths.

SUPPORT RATING AND SUPPORT RATING FLOOR

An upgrade of the Support Ratings and upward revision of the
Support Rating Floors would be contingent on a positive change in
the sovereign's propensity to support the banks. In Fitch's view,
this is highly unlikely, although not impossible.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

The subordinated debt's rating is primarily sensitive to changes
in the VR, from which it is notched. The rating is also sensitive
to a change in the notes' notching, which could arise if Fitch
changes its assessment of their non-performance relative to the
risk captured in the VR or their expected loss severity.

The rating actions are as follows:

ICCREA Banca S.p.A.
Long-Term IDR: downgraded to 'BB+' from 'BBB-'; Outlook Stable
Short-Term IDR: downgraded to 'B' from 'F3'
VR: downgraded to 'bb+' from 'bbb-'
Support Rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'
EMTN Programme: downgraded to 'BB+/B' from 'BBB-'/ 'F3'
Senior unsecured debt: downgraded to 'BB+' from 'BBB-'
Subordinated Tier 2 notes: downgraded to 'BB' from 'BB+'

ICCREA BancaImpresa S.p.A.
Long-Term IDR: downgraded to 'BB+' from 'BBB-'; Outlook Stable
Short-Term IDR: downgraded to 'B' from 'F3'
VR: downgraded to 'bb+' from 'bbb-'
Support Rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'
EMTN Programme: downgraded to 'BB+' from 'BBB-' and withdrawn


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


ALTAIBIZNES-BANK JSC: Put on Provisional Administration
-------------------------------------------------------
The Bank of Russia, by its Order No. OD-83, dated January 19,
2018, revoked the banking license of Barnaul-based credit
institution Joint-stock Company AltaiBiznes-Bank, further
referred to as the credit institution.

According to its financial statements, as of December 1, 2017,
the credit institution ranked 512th by assets in the Russian
banking system.

Problems in the credit institution's operations owe their origin
to the use of a risky business model focused on extending loans
to companies related to the credit institution's management,
which resulted in multiple low-quality assets building up on its
balance sheet.  The due diligence check of credit risk
established a substantial loss of capital and entailed the need
for action to prevent the credit institution's insolvency
(bankruptcy); there arose a real threat to its creditors' and
depositors' interests.

The Bank of Russia had repeatedly applied supervisory measures
against the credit institution, which included restrictions (on
two occasions) and a ban on household deposit taking.

The credit institution's management and owners failed to take any
effective measures to normalize its activities.  More so, the
shareholder conflict in the credit institution, which emerged in
2017, became an obstacle to stabilization in its financial
standing, suggesting its business operations have no future.

As it stands, the Bank of Russia has taken the decision to
withdraw JSC AltaiBiznes-Bank from the banking services market.

The Bank of Russia takes this extreme measure -- revocation of
the banking license -- because of the credit institution's
failure to comply with federal banking laws and Bank of Russia
regulations, due to repeated application, within a year, of
measures envisaged by the Federal Law "On the Central Bank of the
Russian Federation (Bank of Russia)", considering a real threat
to the creditors' and depositors' interests.

The Bank of Russia, by its Order No. OD-2377, dated January 19,
2018, appointed a provisional administration to JSC AltaiBiznes-
Bank for the period until the appointment of a receiver pursuant
to the Federal Law "On the Insolvency (Bankruptcy)" or a
liquidator under Article 23.1 of the Federal Law "On Banks and
Banking Activities".  In accordance with federal laws, the powers
of the credit institution's executive bodies were suspended.

JSC AltaiBiznes-Bank is a member of the deposit insurance system.
The revocation of the banking license is an insured event as
stipulated by Federal Law No. 177-FZ "On the Insurance of
Household Deposits with Russian Banks" in respect of the bank's
retail deposit obligations, as defined by law.  The said Federal
Law provides for the payment of indemnities to the bank's
depositors, including individual entrepreneurs, in the amount of
100% of the balance of funds but no more than a total of RUR1.4
million per depositor.


INVESTGEOSERVIS JSC: Fitch Assigns B+ IDR, Outlook Stable
---------------------------------------------------------
Fitch Ratings has assigned Russia-based oil drilling company JSC
Investgeoservis (IGS) 'B+' Long-Term Foreign and Local Currency
Issuer Default Ratings (IDRs) with Stable Outlook.

The 'B+' IDR reflects IGS's small scale and limited customer and
geographical diversification. The company is a privately-owned
oilfield services provider operating predominantly in the Yamal
region and specialising in natural gas-rich wells. IGS performs
primarily horizontal drilling services and its main customer, PAO
Novatek (BBB/Stable), and its JVs accounted for 63% of metres
drilled in 2016.

The ratings also reflect Fitch expectation that the company's
financial profile will remain conservative in 2017-2021, with
funds from operations (FFO) fixed charge coverage maintained at
above 3.5x and FFO adjusted net leverage below 2.5x under Fitch
base rating case.

KEY RATING DRIVERS

Limited Scale and Geographical Diversification: IGS's small scale
and geographical concentration are key constraints for the
ratings. The group has a fleet of 22 drilling rigs and Fitch
estimate its shares of the Russian onshore and horizontal
drilling markets at around 1% and 2% respectively. This is partly
mitigated, in Fitch view, by IGS's stronger position in the Yamal
region where its market share by volume was an estimated 15% in
2015 and where 16 of its 22 rigs were located as of mid-2017.

Our rating case assumes limited competitive pressures in the
region as the dominant player, Gazprom Burenie, mainly caters to
PJSC Gazprom (BBB-/Positive). The company's strategy is to
gradually increase the number of rigs it operates and to enhance
geographical diversification.

Reliance on Novatek: Although IGS has diversified away from
Novatek, its only customer prior to 2014, its exposure to the
group remains high with 63% of total metres drilled in 2016.
IGS's customer base also includes companies owned by Rosneft Oil
Company, PJSC Gazprom Neft (BBB-/Positive) and other upstream
players.

Our base case assumes that the revenue stream from Novatek will
remain around 70% in 2017-2021. This is partly mitigated by the
long-standing relationship between both companies, IGS's
specialisation in complex gas wells and strong track record on
Novatek's drilling programmes, including the recently completed
Yamal LNG project. Fitch estimate that IGS's share of Novatek's
metres drilled (incl. JVs) increased to 66% in 2016 from 38% in
2014.

FCF Drives Deleveraging: Fitch base case forecasts positive free
cash flow (FCF) generation in 2017-2021 on the back of low
single-digit revenue growth, EBITDA margins at around 19% and
annual capex at around RUB1 billion. IGS's capacity to generate
positive FCF through the cycle is supported by the nature of the
company's capital investments, which provides IGS with the
flexibility to reduce capex if it does not see opportunities of
new drilling projects. Fitch base case assumes dividend
distributions of at least RUB300 million p.a. from 2018 onwards,
and Fitch expect IGS to partially utilise available cash flows to
repay its debt as some of its loan covenants will tighten in
2018.

Limited Revenue Visibility: Although IGS benefits from long-term
turnkey contracts with Novatek and its JVs, its revenue is still
subject to volatility. IGS's order book provides limited
visibility in terms of future drilling volumes and days because
its customers normally have sufficient latitude to optimise their
drilling programmes, which is common in the Russian oilfield
services market.

Contracts agreed for 2018 cover more than 70% of the revenue
forecast under Fitch base case, but upstream companies can cut
their orders with limited penalties to be paid. In mitigation,
Fitch deems drilling volume reduction unlikely in the medium term
in Russia as local oil and gas producers, and Novatek in
particular, are set to continue developing greenfield projects in
response to output declines at mature fields.

Shareholder Distributions Assumed: As a privately-owned company,
IGS is not committed to paying dividends and its track record
suggests that the company prioritises development and value
build-up over shareholder distributions. The company paid RUB500
million in dividends in 2015 as part of an agreement with
Gazprombank JSC (GPB, BB+/Positive), when the bank exercised its
option to sell its 40% stake in IGS. In the absence of a clearly
defined dividend policy, Fitch also conservatively assume
dividend payments of at least RUB300 million p.a. in 2018-2021.

Treasury Shares Sale: IGS plans to sell the 40% stake currently
held as treasury shares to an investor or carry out an IPO of the
shares in the medium term. Fitch do not incorporate the share
sale in Fitch rating case.

DERIVATION SUMMARY

IGS has significantly smaller scale than Eurasia Drilling Company
Limited (EDC, BB/Stable), the largest independent Russian
drilling company. EDC's metres drilled and EBITDA were almost 19x
higher than those of IGS in 2016. IGS's business profile
benefits, however, from a focus on higher-value-added horizontal
drilling. Both IGS and EDC have high reliance on a single
customer, but benefit from long-term agreements with Novatek and
PJSC Lukoil (BBB+/Stable), respectively.

Fitch estimates both EDC's and IGS's EBITDA margins at around 25%
in 2017. Both companies have a comparable leverage profile with
FFO adjusted net leverage below 2.5x, although Fitch expect
faster deleveraging for EDC. IGS's rouble income is matched by
the company's rouble debt, while EDC is exposed to a currency
mismatch. As EDC's debt is mostly in US dollars, which has lower
interest payments, it has substantially better coverage ratios
than IGS. Overall, Fitch view IGS's and EDC's financial profiles
comparable. The rating difference is explained by IGS's smaller
size and market share as well as lower regional diversification.

Both companies' ratings also take into consideration the higher-
than-average systemic risks associated with the Russian business
and jurisdictional environment.

KEY ASSUMPTIONS

Fitch's Key Assumptions within Fitch Rating Case for the Issuer
Include:
- Metres drilled growing to around 300 thousand by 2021 from 254
   thousand in 2016;
- Average price indexation of low single digits annually;
- Growing share of day rate contracts;
- Capex averaging RUB1 billion in 2017-2021; and
- Dividends of at least RUB300 million p.a. in 2018-2021.

RATING SENSITIVITIES

Developments That May, Individually or Collectively, Lead to
Positive Rating Action
- Fitch believe that IGS's limited scale and diversification are
   commensurate with a credit profile in the 'B' category and no
   further positive action is likely without a fundamental change
   in its business profile.

Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Share of Novatek and its affiliates in total revenue
   consistently above 80% with evidence of customer-driven
   pressure on earnings and operating cash flows.
- FFO margin consistently below 10% (2016: 11%).
- FFO fixed charge coverage sustainably lower than 2.5x (2016:
   2.9x).
- FFO adjusted net leverage sustainably exceeding 4x (2016:
   3.1x).

LIQUIDITY

Adequate Liquidity, Manageable Debt Amortisations: IGS's short-
term debt of RUB1.4 billion at 15 December 2017 was covered by a
cash balance of RUB0.1 billion, Fitch-projected FCF of RUB1.2
billion and available long-term uncommitted credit lines from
Russian banks of RUB1.2 billion. In the near future, IGS intends
to re-negotiate a RUB0.5 billion undrawn credit facility that
expired in December 2017. Gross debt amounted to RUB7.9 billion
at Dec. 15, 2017 and Fitch expect the amortisation profile to
remain manageable, with annual repayments below RUB2.5 billion,
and positive FCF in 2019-2021 under Fitch base case.

IGS's main bank loans are subject to financial covenants, some of
which will tighten in 2018. Fitch expect headroom to remain
comfortable over 2018-2021 as debt is gradually reduced. During
2017, IGS reduced its exposure to GPB by RUB2.5 billion from RUB5
billion at end-2016. In December 2017, the company also made an
early repayment on a RUB0.4 billion loan.

Limited FX Risks: IGS has minimal exposure to foreign currency
fluctuations as its revenue, costs and debt are linked to
roubles. FX changes may modestly affect the company's capex size.


METALLOINVEST JSC: Moody's Affirms Ba2 CFR, Outlook Positive
------------------------------------------------------------
Moody's Investors Service has changed to positive from stable the
outlook on the ratings of JSC Holding Company METALLOINVEST
(Metalloinvest). Concurrently, Moody's has affirmed
Metalloinvest's Ba2 corporate family rating (CFR), Ba2-PD
probability of default rating (PDR) and the Ba2 senior unsecured
ratings assigned to the notes issued by Metalloinvest Finance
D.A.C., a wholly-owned indirect subsidiary of Metalloinvest. The
outlook of Metalloinvest Finance D.A.C. has also been changed to
positive from stable.

"We have changed the outlook on Metalloinvest's ratings to
positive to reflect the company's deleveraging in 2017, following
the boost to its earnings and cash flow generation from higher
prices for iron ore and steel and increased production of high
value-added iron ore products," says Artem Frolov, a Vice
President - Senior Credit Officer at Moody's.

RATINGS RATIONALE

The change of Metalloinvest's outlook to positive and affirmation
of its ratings primarily reflect Moody's estimation that the
company's leverage has declined to 2.2x Moody's-adjusted total
debt/EBITDA at year-end 2017 from 3.5x a year earlier, primarily
on the back of increased average prices for iron ore and steel
products.

The rating action also reflects Moody's expectation that
Metalloinvest will (1) be able to maintain its leverage below
2.5x, provided there is no major decline in iron ore and steel
prices; (2) pursue a balanced financial policy, with positive
free cash flow generation; (3) maintain healthy liquidity and
continue to address its refinancing needs in advance; and (4)
adopt a clear dividend policy.

Metalloinvest's leverage is sensitive to the volatile prices of
iron ore and steel, as well as rouble exchange rate to US dollar.
The decline in leverage in 2017 was driven by the increase in the
company's Moody's-adjusted EBITDA by around $850 million to $2.1
billion (Moody's estimation), due to higher average prices for
iron ore and steel products compared with those in 2016, as well
as increased production of high value-added iron ore products. If
prices were to materially decrease or rouble to strengthen,
Metalloinvest's leverage could grow above 2.5x over the next 12-
18 months, reducing the possibility for an upgrade.

Metalloinvest's Ba2 CFR also factors in the company's (1) low-
cost profile and high profitability, supported by the weak rouble
and continuing operational enhancements; (2) integration in steel
business, which generates up to 25% of consolidated EBITDA; (3)
long-life iron ore reserves and high ferrous content of above 65%
in iron ore concentrate; (4) high share of value-added products
(i.e., pellets and hot briquetted iron, or HBI) whose prices are
less volatile than iron ore; (5) geographical diversification of
sales, with 55%-60% of revenues generated from exports; (6)
diversified customer base and a degree of flexibility in
redirecting sales between domestic and export markets; (7) recent
adoption of financial policy that anticipates maintaining
leverage below 2.5x reported net debt/EBITDA on a sustainable
basis, although this level is above Moody's upgrade threshold of
2.5x Moody's-adjusted total debt/EBITDA; and (8) strong
liquidity, long-term debt maturity profile and conservative
liquidity management.

At the same time, Metalloinvest's rating takes into account the
(1) fairly high sensitivity of the company's earnings and
leverage to the volatile prices of iron ore and steel, as well as
rouble exchange rate; (2) lack of visibility into shareholder
distributions, in the absence of a clearly defined dividend
policy; (3) concentrated ownership-related risks, including
potential high shareholder distributions and revisions to
financial policy; (4) substantial amount of loans provided to
shareholders, affiliates and third parties; (5) limited
geographical diversification of assets; and (6) exposure to
Russia's operating environment, given that the company's assets
are located in Russia, where the company generates 40%-45% of its
revenue.

RATIONALE FOR THE POSITIVE OUTLOOK

The positive outlook reflects the company's strong positioning
within the current rating category and the possibility of an
upgrade over the next 12-18 months.

WHAT COULD CHANGE THE RATINGS UP/DOWN

Moody's could upgrade Metalloinvest's rating if the company (1)
gradually reduces its total debt and maintains its Moody's-
adjusted total debt/EBITDA below 2.5x on a sustainable basis; (2)
pursues a balanced financial policy, with positive free cash flow
generation; (3) retains healthy liquidity and continues to
address its refinancing needs in advance; and (4) adopts a clear
dividend policy and curtails loans to shareholders, affiliates
and third parties.

Moody's could downgrade Metalloinvest's rating if the company's
(1) Moody's-adjusted total debt/EBITDA increases above 3.5x on a
sustained basis; (2) free cash flow turns sustainably negative,
which could be a result of generous dividend payouts; (3)
corporate governance deteriorates, which could, among other
things, be indicated by an increase in loans to shareholders,
affiliates and third parties; or (4) liquidity weakens
materially.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Global Mining
Industry published in August 2014.

JSC Holding Company METALLOINVEST is Russia's largest producer of
high-quality iron ore, pellets and hot briquetted iron
(HBI)/direct reduced iron (DRI). It has one of the world's
largest iron ore reserve bases, which the company estimates at
14.2 billion tonnes, indicating an operating life of 140 years.
In the last 12 months to June 30, 2017, Metalloinvest produced
40.5 mt of iron ore, 25.1 mt of pellets, 6.0 mt of HBI/DRI, 2.8
mt of pig iron and 4.7 mt of crude steel. Over the same period,
the company generated revenues of $5.4 billion (2016: $4.3
billion) and Moody's-adjusted EBITDA of $1.8 billion (2016: $1.3
billion). Metalloinvest is wholly owned by Russia-domiciled USM
Metalloinvest LLC, which is ultimately owned by Alisher Usmanov
(49%), Vladimir Skoch (30%) and Farhad Moshiri (10%).


===========
S E R B I A
===========


RENEWABLE ENERGY: Reservoir Withdraws Project After Bankruptcy
--------------------------------------------------------------
SeeNews reports that Canadian renewable energy company Reservoir
Capital said it plans to withdraw from a project for the
construction of two hydropower plants in Brodarevo, in southern
Serbia.

According to SeeNews, the Canadian company said in a statement on
Jan. 18 the decision is in line with the strategy of Reservoir to
shift from long lead-time and risky greenfield project
development to clean power investments in good operating
condition, in order to enhance shareholder returns over the long
term.

The Canadian company said Renewable Energy Ventures Belgrade, the
Serbian subsidiary of Reservoir, has filed a voluntary petition
under the Serbian Bankruptcy Code in the Serbian Bankruptcy Court
in Belgrade, respecting the winding up of its operations and
liquidation of its assets, SeeNews relates.

"Reservoir has chosen to set aside its project aspirations in
Serbia, which included the Brodarevo hydro project, with this
filing," SeeNews quotes the CEO of the company, Lewis Reford, as
saying in the statement.



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


IM PRESTAMOS: Moody's Puts B1 Rating on Review for Upgrade
----------------------------------------------------------
Moody's Investors Service announced that it has taken rating
actions on the following classes of notes issued by IM Prestamos
Fondos Cedulas, FTA (IM Prestamos), and affirmed the rating of
the liquidity facility available to this issuer.

-- EUR0.9M (current outstanding amount 0.7M) Class C Notes, B1
    (sf) Placed Under Review for Possible Upgrade; previously on
    Sep 25, 2017 Upgraded to B1 (sf)

-- EUR344.1M (current outstanding amount 32.7 M) Class A Notes,
    Ba1 (sf) Placed Under Review for Possible Upgrade; previously
    on Sep 25, 2017 Affirmed Ba1 (sf)

-- Liquidity Facility Notes, Affirmed Aa2 (sf); previously on
    Sep 25, 2017 Affirmed Aa2 (sf)

This transaction is a static cash CBO of portions of subordinated
loans funding the reserve funds of two (at closing 14) Spanish
multi-issuer covered bonds (SMICBs), which can be considered as a
securitisation of a pool of CÇdulas. Each SMICB is backed by a
group of CÇdulas which are bought by a Fund, which in turn issues
SMICBs. CÇdulas holders are secured by the issuer's entire
mortgage book. The subordinated loans backing the IM Prestamos
transaction represent the first loss pieces in the respective
SMICB structures (or structured CÇdulas). Therefore this
transaction is exposed to the risk of several Spanish financial
institutions defaulting under their mortgage covered bonds
(CÇdulas).

The liquidity facility may be drawn to fund the difference
between interest accrued and due on the subordinated loans of the
two SMICBs and interest actually received on these loans. The
amount drawn under this facility is thus a function of (i) number
and value of underlying delinquent and defaulted CÇdulas, (ii)
level of short term EURIBOR and (iii) time taken for final
realization of recoveries on defaulted CÇdulas. While the
liquidity facility is currently not drawn, Moody's analysis
assumes that a portion of it will be drawn at some time during
the remaining life of this transaction.

RATINGS RATIONALE

Moodys said rating actions are a result of the merger by
absorption of Bank Mare Nostrum (BMN) by Bankia, S.A. (Bankia)
originally announced in June 2017, but legally completed on
January 8, 2018. Pursuant to the initial announcement, Moody's
affirmed Bankia's ratings but changed the outlook on Bankia's
long term deposit and senior debt ratings to developing from
stable, and closer to the completion of the merger has updated
its credit opinion on Bankia on December 27, 2017.

http://www.moodys.com/viewresearchdoc.aspx?docid=PR_368963

http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_1103933

Prior to the merger, Moody's had evaluated the credit quality of
BMN via a credit estimate. Post-merger BMN's credit quality will
in due course be that of Bankia, whose rating is currently under
developing outlook to assess, amongst other items, the impact of
the merger and the issue of Additional Tier I issuance as noted
in Moody's December 2017 credit opinion.

The credit quality of the reserve funds of the two SMICBs which
form the portfolio of IM Prestamos is driven by the credit
quality of the issuers of the underlying cedulas and the quality
of the underlying cover pools. One of the two SMICBs, namely AyT
Cedulas Cajas VIII -- Series B has a 14.4% exposure to cedulas
issued by BMN. Accordingly, Moody's has placed on review for
upgrade the ratings of IM Prestamos Classes A and C Notes. The
rating of the Liquidity Facility Notes is capped at the sovereign
ceiling for Spain. Moody's expects to conclude the review once
the developing outlook on Bankia's ratings has been finalised.

Methodology Underlying the Rating Action:

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

The rating of the Liquidity Facility Notes is compliant with
"Moody's Approach to Counterparty Instrument Ratings" published
in June 2015.

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

A multiple-notch downgrade of classes of notes of IM Prestamos
might occur in certain circumstances, such as (i) a sovereign
downgrade negatively affecting the SMICBs; (ii) a multiple-notch
lowering of the CB anchor or (iii) a material reduction of the
value of the cover pool.

Moody's notes that this transaction is subject to a high level of
macroeconomic uncertainty, which could negatively impact the
ratings of the notes and liquidity facility as evidenced by 1)
uncertainties of credit conditions in the general economy
especially as 100% of the portfolio is exposed to obligors
located in Spain 2) fluctuations in EURIBOR and 3) amount and
timing of final recoveries on defaulted CÇdulas. Realization of
lower than expected recoveries would negatively impact the
ratings of the notes and the liquidity facility.

In addition to the quantitative factors that are explicitly
modeled, qualitative factors are part of the rating committee
considerations. These qualitative factors include the structural
protections in each transaction, the recent deal performance in
the current market environment, the legal environment, specific
documentation features, the collateral manager's track record,
and the potential for selection bias in the portfolio. All
information available to rating committees, including
macroeconomic forecasts, input from other Moody's analytical
groups, market factors, and judgments regarding the nature and
severity of credit stress on the transactions, may influence the
final rating decision.


MADRID RMBS IV: S&P Raises Class E Notes Rating to CCC (sf)
-----------------------------------------------------------
S&P Global Ratings raised its credit ratings on MADRID RMBS IV,
Fondo de Titulizacion de Activos' class B, C, D, and E notes. At
the same time, we have affirmed our rating on the class A2 notes.

S&P said, "The rating actions follow our credit and cash flow
analysis of the most recent transaction information that we have
received and the November 2017 investor report. Our analysis
reflects the application of our European residential loans
criteria, our structured finance ratings above the sovereign
(RAS) criteria, and our current counterparty criteria."

Available credit enhancement for all the classes of notes has
increased since S&P's previous reviews. This is mainly due to the
class A2 notes' amortization and the reserve fund being partially
replenished.

  Class        Available credit
         enhancement, excluding
            defaulted loans (%)

  A2                      30.36
  B                       23.80
  C                       15.66
  D                        9.88
  E                        7.00

Severe delinquencies of more than 90 days, excluding defaults,
are 0.43%, have more than halved since our previous review and
are below our Spanish residential mortgage-backed securities
(RMBS) index. Defaults are defined as mortgage loans in arrears
for more than 12 months. There is a high portion of defaulted
loans (net of recoveries) that defaulted during the worst part of
the economic crisis, in 2009 and 2010. However, the level of
arrears rolling into defaults is very low, and the outstanding
balance of loans in default represent around 18% of the
outstanding pool balance because recoveries are very limited.

About 65% of the collateral pool is concentrated in the Madrid
region, which was the home region of the originator. As per its
European residential loans criteria, S&P has factored this in its
credit analysis by applying adjustment factors to the foreclosure
frequency.

After applying its European residential loans criteria to this
transaction, S&P's credit analysis results show a decrease in the
weighted-average foreclosure frequency (WAFF) and a decrease in
the weighted-average loss severity (WALS) for all rating levels.

The WAFF decreased compared with our previous review mainly
because it benefitted from the pool's high seasoning and the
lower arrears level. The WALS benefitted from a lower current
indexed loan-to-value ratio due to collateral amortization and a
lower weighted-average repossession market value decline.

  Rating          WAFF      WALS
  level (%)      37.13     48.50
  AAA            27.98     44.69
  AA             23.12     37.28
  BBB            16.86     33.03
  BB             10.65     29.94
  B               8.94     27.02

S&P said, "Following the application of our RAS criteria, our
current counterparty criteria, and our European residential loans
criteria, we have determined that our assigned rating on the
notes in this transaction should be the lower of (i) the rating
as capped by our RAS criteria, (ii) the rating as capped by our
current counterparty criteria, and (iii) the rating that the
class of notes can attain under our European residential loans
criteria.

"Under our European residential loans criteria, the class A2 and
B notes have sufficient credit enhancement to withstand our
stresses at the 'AA' and 'AA-' rating levels, respectively. The
better cash flow results are explained by the increased credit
enhancement and better credit numbers when compared with our
previous reviews. However, the application of our RAS criteria
caps the ratings on the class A2 and B notes at four notches
above the long-term sovereign rating on Spain, 'AA-'."

The collection account is held with Bankia S.A. (BBB-/Positive/A-
3) in the name of the servicer, which is also Bankia. The
documents reflect that two days after the receipt of the
collections, which are evenly distributed during the month, the
available funds are transferred to the transaction account in the
name of the fund. Consequently, the transaction is exposed to
commingling risk. S&P said, "We have therefore stressed
commingling risk as a loss of one month of interest and principal
collections for rating levels above Bankia's long-term issuer
credit rating (ICR) in line with our European residential loans
criteria. As a consequence, in our analysis we have weak-linked
our ratings on the class C, D, and E notes to the long-term ICR
on Bankia, as servicer."

Banco Bilbao Vizcaya Argentaria S.A. (BBVA; BBB+/Positive/A-2) is
the swap counterparty. S&P said, "Under our current counterparty
criteria, the downgrade language in the swap documentation caps
the ratings on the notes at 'A-' when credit is given to the swap
in our cash flow analysis. We have conducted our cash flow
analysis without the benefit of the swap agreement to de-link our
ratings on the notes from the swap counterparty. Our ratings on
all of the notes are de-linked from the long-term ICR on the swap
counterparty."

Banco Santander S.A. (A-/Stable/A-2) has been the transaction
account provider since November 2017, when it replaced BBVA. S&P
said, "The downgrade language in the transaction account
agreement caps the ratings on the notes at 'A', in line with our
current counterparty criteria. We have therefore affirmed our 'A
(sf)' rating on the class A2 notes. At the same time, we have
raised our rating on the class B notes to 'A (sf)' from 'BBB+
(sf)'."

S&P said, "Our credit and cash flow analysis indicates that the
class C notes pass our stresses at the 'BB' rating level, one
notch above the level in our previous full review. This is due to
the increased credit enhancement and better WAFF and WALS
results. We have therefore raised to 'BB (sf)' from 'BB- (sf)'
our rating on the class C notes."

The transaction structure features an interest deferral trigger
for the class B to E notes based on the outstanding balance of
defaults over the closing collateral balance. If triggered, the
interest payments are subordinated below principal in the
priority of payments, however they still benefit from the cash
reserve. These triggers are set at 19.15%, 13.65%, 9.60%, and
8.19% for the class B, C, D, and E notes, respectively. At the
November 2017 interest payment date (IPD) the trigger level was
9.00%. The class E notes' interest is already subordinated to the
principal payment in the priority of payments. However, the class
E notes are paying timely interest due to the benefit of the
reserve fund, which even if it is not at its required level, has
partially replenished at the latest IPDs and is currently at
43.82% of its required level.

S&P said, "The class D and E notes do not pass any of our
stresses under our European residential loans criteria.
Considering the positive macroeconomic conditions for the Spanish
economy and the high seasoning of the assets, we do not expect
the underlying collateral's performance to deteriorate. In line
with our European residential loans criteria and our criteria for
assigning 'CCC' category ratings, , we have raised to 'B- (sf)'
from 'CCC (sf)' our rating on the class D notes. In our opinion,
the class D notes are unlikely to default over a 12-month horizon
based on the current constant prepayment rate levels, stable pool
performance, and improved available credit enhancement.
Additionally, we do not consider that the class D notes are
currently vulnerable to nonpayment, and payment is not dependent
upon favorable business, financial, and economic conditions for
the obligor to meet its financial commitment on the obligation.
This is because even if the class D notes' interest deferral
trigger is breached, and interest on the notes is paid after
principal amortization, the notes will still benefit from the
support of the reserve fund to meet timely interest payments.

"We have raised to 'CCC (sf)' from 'CC (sf)' our rating on the
class E notes because given the current level of credit
enhancement for this class of notes, which has improved since our
previous review, we do not expect default to be a virtual
certainty. Despite the trigger breach, the class E notes benefit
from the reserve fund, currently at 43.82% of its required level,
in the combined waterfall to meet the timely interest payment.

"We also consider credit stability in our analysis. To reflect
moderate stress conditions, we adjusted our WAFF assumptions by
assuming additional arrears of 8% for one- and three-year
horizons, for 30-90 days arrears, and 90+ days arrears. This did
not result in our ratings deteriorating below the maximum
projected deterioration that we would associate with each
relevant rating level, as outlined in our credit stability
criteria.

"In our opinion, the outlook for the Spanish residential mortgage
and real estate market is not benign and we have therefore
increased our expected 'B' foreclosure frequency assumption to
3.33% from 2.00%, when we apply our European residential loans
criteria, to reflect this view. We base these assumptions on our
current outlook for the Spanish housing and mortgage markets, as
well as for the overall economy in Spain."

MADRID RMBS IV is a Spanish RMBS transaction, which securitizes
first-ranking mortgage loans granted to individuals resident in
Spain. Caja de Ahorros y Monte de Piedad de Madrid (Caja Madrid,
now Bankia S.A.) originated the pool between 1995 and 2007.

  RATINGS LIST

    Class             Rating
                To              From
    MADRID RMBS IV, Fondo de Titulizacion de Activos EUR2.4
    Billion Mortgage-Backed Floating-Rate Notes

    Ratings Raised

    B           A (sf)          BBB+ (sf)
    C           BB (sf)         BB- (sf)
    D           B- (sf)         CCC (sf)
    E           CCC (sf)        CC (sf)

    Rating Affirmed

    A2          A (sf)


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


UKRAINE: Insolvent Banks Repaid UAH2.1BB Refinancing Loans to NBU
-----------------------------------------------------------------
Ukrainian News Agency reports that insolvent banks repaid
refinancing loans totaling UAH2.1 billion to the National Bank of
Ukraine in 2017.

This amount includes the funds that the Deposit Guarantee Fund
generated from the sale of collateralized assets and the funds it
received from other sources, Ukrainian News Agency states.  In
particular, the Deposit Guarantee Fund sold collateralized assets
worth UAH595.84 million in 2017, out of which the National Bank
of Ukraine received UAH574.7 million, Ukrainian News Agency
notes.

Rights of claims under the National Bank of Ukraine's loan
agreements accounted for the overwhelming majority (UAH529.2
million) of the assets that were sold, Ukrainian News Agency
discloses.  According to Ukrainian News Agency, the amount that
the National Bank of Ukraine received from the sale of assets in
2017 was 13% higher than the amount it received from sales of
similar assets in 2016 (UAH510.2 million).

The other funds for financing repayment of insolvent banks'
refinancing loans came from redemption of property rights
(UAH764.5 million); redemption of government domestic loan bonds
(UAH664.3 million); sale of precious metals (UAH62 million);
redemption of property rights by third parties (UAH7.3 million),
Ukrainian News Agency relays.



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


CARILLION PLC: Private Equity Investors Eye Assets After Collapse
-----------------------------------------------------------------
Javier Espinoza and Gill Plimmer at The Financial Times report
that private equity groups and distressed buyout firms are
circling collapsed British construction company Carillion to
cherry-pick assets from one of the UK's most politically
sensitive corporate failures.

The interest from private investors -- including the Canadian
fund manager Brookfield and British private equity group Endless,
which specializes in turnrounds -- comes as the government
struggles to protect thousands of jobs left at risk by
Carillion's liquidation, the FT relates.

According to the FT, the market capitalization of Carillion,
which continued to win government construction contracts even
while it issued profit warnings last year as its debts mounted,
fell from GBP2 billion in 2016 to just GBP61 million this month,
becoming the largest financial collapse in UK construction
history.

Despite the failure, several private equity groups are seeking to
identify any divisions that could be rescued, the FT relays,
citing people familiar with the talks.  Investors said the
liquidation process, which is being overseen by accountants PwC,
needed to accelerate for the assets to retain their value, the FT
notes.

Carillion plc employs about 43,000 people worldwide and provides
services to half the UK's prisons, as well as hundreds of
hospitals and schools.


EG GROUP: S&P Affirms 'B' CCR on New Acquisitions & Refinancing
---------------------------------------------------------------
S&P Global Ratings affirmed its 'B' long-term corporate credit
rating on EG Group Ltd., the parent company of the U.K.-based
petrol filling station operator Euro Garages. The outlook is
stable.

S&P said, "At the same time, we assigned our 'B' issue rating and
'3' recovery rating to the proposed senior secured facilities
issued by EG Finco Ltd., the intermediate holding company below
EG Group. The facilities comprise a GBP250 million revolving
credit facility (RCF), a GBP400 million term loan B (TLB), a $500
million TLB split in two tranches ($315 million and $185 million)
and an additional EUR1.985 billion TLB split in three tranches
(EUR990 million, EUR250 million, and EUR745 million). The '3'
recovery rating reflects our expectation of meaningful recovery
(50%-70%; rounded estimate: 50%) in the event of payment default.

"The ratings are subject to the successful completion of the
refinancing transaction, including receipt of the final
documentation. If the refinancing transaction does not complete
or the scope of the transaction or the final documentation
departs materially from the current plan, we reserve the right to
withdraw or revise our ratings.

"We also affirmed our 'B' issue rating and '3' recovery rating on
EG Group's existing senior secured facilities, which consist of a
GBP620 million term loan D1, a EUR914 million term loan D2, a
GBP133 million RCF, and a GBP73 million capital expenditure
(capex) facility. The recovery ratings reflects our expectation
of meaningful recovery (50%-70%; rounded estimate: 55%) in the
event of payment default.

"Upon completing of the proposed refinancing transaction, we will
withdraw the ratings on the existing senior secured debt.

"The affirmation reflects our view that EG Group's recently
announced acquisitions and the proposed refinancing of the
capital structure will not materially weaken its adjusted credit
metrics, despite increasing debt. The proposed refinancing will
significantly increase the cash interest-paying debt by about
EUR1.25 billion to nearly EUR2.85 billion in 2018 to fund the
acquisition prices of EUR1.1 billion plus related transaction
fees and closing cash. We forecast the company's S&P Global
Ratings-adjusted debt-to-EBITDA ratio will be around 6.0x and
adjusted funds from operations (FFO) to debt will be at nearly
10% at end-2019, which will be the first year of full
consolidation of the acquired businesses. This is not materially
different from the adjusted debt to EBITDA of 5.5x and adjusted
FFO to debt of 10% that we anticipate for end-2017."

The acquisition of sites in Italy and Germany will significantly
reinforce EG Group's position as the largest independent petrol
filling station operator in Europe in terms of number of sites
operated, with more than 3,600 sites. S&P said, "In our opinion,
EG Group's expanded operations across the U.K., Germany, France,
Belgium, the Netherlands, Luxembourg (BeNeLux), and Italy will
benefit from increased scale, resulting in stronger negotiation
power with suppliers and improved geographic diversification of
the group's earnings. Moreover, the group will also have a solid
presence in the four-largest European fuel markets after the
acquisitions."

S&P said, "We expect the acquisition of 1,165 sites in Italy and
1,017 sites in Germany from Exxon Mobil will close in February
2018 and October 2018, respectively. The sites are a mix of
freehold and leasehold assets. Despite the large number of sites
acquired, compared with the existing size of the business with a
total of around 1,460 sites across the U.K., France, and BeNeLux,
we believe that execution risk is relatively low, since EG Group
has a proven track record of growth and integrating
acquisitions." Furthermore, EG Group will absorb select overhead
functions in Italy and Germany from Exxon Mobil, and the delayed
consolidation, especially of the German sites (initially carved
out as a separate company), has allowed EG Group additional time
to align functions and gradually roll out and implement its
operational structure to the new businesses. Other initiatives
include the transition of acquired networks to a self-owned,
self-operating model that allows for greater control over
quality, consistency of offerings, and cost base. Additionally,
the group continues to optimize its site portfolio, with new
highway sites (added through acquisitions) where demand is less
price sensitive.

"Our assessment of EG Group's business profile is mainly limited
by its operation in fragmented and competitive markets. Large
supermarkets and major integrated oil companies represent EG
Group's largest competitors and, as an example, account for about
60% of the fuel sold in the U.K. by volume.

"Additionally, we see increasing fuel efficiency and the
increasing share of hybrid and electric cars as a longer-term
threat to fuel station operators. This could likely result in
reduced footfall on EG Group's sites, given lower needs to refuel
and alternative and competing methods of charging infrastructure
for electric cars, for example charging in private homes, public
parking lots, or other general facilities. We note that e-
mobility is encouraged by government policies like the U.K.'s
planned ban of new diesel and petrol cars by 2040. However, we do
not expect any material impact on EG Group's business over the
next five to seven years, given the longer-term time horizon of
these changes and the low current share of electric cars (below
1% in the largest European markets). Furthermore, EG Group has
initiated cooperation with car manufacturers to install fast-
charging stations on some sites to participate in e-mobility in
the future.

The group aims to use its diverse nonfuel offerings in
convenience retail and food-to-go segments to attract and
increase footfall and spending, and lower the reliance on
earnings from fuel sales.

S&P said, "We positively acknowledge the roll out of more than
170 additional convenience stores and food-to-go offerings on
mostly existing sites until mid-2018. Management intends to
accelerate the roll-out of retail and food offering in the
acquired businesses in Germany and Italy, which currently having
lower nonfuel penetration. We expect the group to generate about
45% of its profit margin in nonfuel post acquisitions, which it
aims to increase toward two-third, as this is already the case in
its existing U.K. business."

The proposed acquisitions will result in a high level of S&P
Global Ratings-adjusted debt of EUR3.8 billion in 2018, mainly
comprising EUR2.85 billion of interest-paying term loans and
about EUR890 million in discounted operating lease commitments.
S&P said, "Our adjusted debt and ratio calculations now exclude
the EUR555 million structurally subordinated and pay-in-kind
preferred shares issued above the restricted group and held by
joint shareholder TDR Capital. In our view, the overall terms and
conditions of the preferred shares are aligned with equity
interest and are favorable to third-party creditors. The
preferred shares can only be transferred proportionally with
common equity and are contractually and structurally subordinated
to the senior secured credit facilities. Given these
characteristics, we consider the preferred shares as similar to
equity."

S&P said, "The stable outlook on EG Group reflects our
expectation of a broadly stable fuel demand in major Western
European economies and sound execution on the planned
acquisitions in Germany and Italy. It also reflects our view that
the company will prudently execute its international strategy and
continue to implement various operating initiatives aimed at
improving the quality and consistency of offerings, reducing
costs, and increasing contribution from the developing retail and
food-to-go offerings.

"This should result in an S&P Global Ratings-adjusted debt to
EBITDA of around 6x on a pro forma basis, following the full
integration of the new acquisitions in 2019. At the same time, we
forecast a sound ratio of adjusted EBITDA to interest coverage of
around 3.0x, reported EBITDAR coverage of around 2.0x in 2018 and
2019, and healthy reported free operating cash flow (FOCF) of
nearly EUR100 million in 2018.

"We could lower the rating if there is a material drop in
profitability leading adjusted debt to EBITDA to exceed 7.0x on a
pro forma basis after the acquisition of new sites. This could
arise if, for example, the group experiences setbacks in
integrating the acquired sites or if there is an unexpected drop
in earnings, related, for example, to an inability to manage
labor and input-cost inflation, or if the rollout of nonfuel
offerings failed to meet expectations. In such a scenario, we
also anticipate weakening of our adjusted EBITDA interest
coverage toward 2.0x and reported EBITDAR coverage to below
1.5x."

Ratings downside could also arise if leverage increases due to a
more aggressive financial policy with respect to further
international expansion investments, or any shareholder returns.

S&P said, "We view the potential for a positive rating action as
remote over the next two years, because we already include in our
base-case scenario an improvement in earnings and cash flows.
However, we could raise the ratings if the group expands its
earnings materially beyond our base case, and significantly
improves its FOCF generation, resulting in adjusted debt to
EBITDA falling toward 5.0x. This would also be contingent on our
assessment of the financial policy commitment from the private
equity sponsors."


HOUSE OF FRASER: S&P Downgrades CCR to 'CCC+' On Weak Earnings
--------------------------------------------------------------
S&P Global Ratings lowered its long-term corporate credit rating
on U.K. department store retailer House of Fraser (UK & Ireland)
Ltd. to 'CCC+' from 'B-'. The outlook is negative.

S&P said, "At the same time, we lowered to 'CCC+' from 'B-' our
long-term issue rating on House of Fraser's GBP175 million senior
secured floating-rate notes (of which GBP164.9 million remain
outstanding), in line with the corporate credit rating. The '3'
recovery rating on these notes is unchanged, reflecting our
expectation of meaningful recovery prospects (50%-70%; rounded
estimate: 50%) in the event of default."

In its key Christmas trading period update--spanning the six-week
period from the beginning of the Black Friday event to Dec. 23,
2017--House of Fraser reported that in-store sales had declined
by 2.9% and web sales by 7.5%. S&P said, "Although reducing the
volume of discounted products has increased gross margins by 50
basis points at constant exchange rates over the festive period,
we expect the group's profits will be considerably lower in the
forthcoming financial year than we had previously anticipated. We
expect these reduced profits, coupled with the continued and
material free operating cash flow (FOCF) burn of the past 12
months, will significantly erode the group's credit metrics. In
our view, House of Fraser's liquidity remains under pressure,
with a material risk of a covenant breach under our current base
case."

S&P said, "We see the risk of a covenant breach in the next few
quarters as material owing to a tightening of the test levels and
House of Fraser's ongoing reliance on fourth-quarter earnings and
cash flows. This is notwithstanding the cash contribution of
GBP20 million from the ultimate parent, Sanpower, in FY2018 to
date, and an expected further inflow of GBP30 million from the
sale of certain retired house brands and associated intellectual
property (IP).

"We forecast a further weakening of House of Fraser's credit
metrics in the next 12 months, with S&P Global Ratings-adjusted
debt-to EBITDA climbing to about 10x and adjusted funds from
operations (FFO) to debt dropping to below 5%. In our view, these
high debt levels are unsustainable in the long term, particularly
given the group's limited deleveraging prospects and the
approaching maturity date of the group's GBP125 million term loan
in July 2019.

"That said, we do not anticipate a credit or payment crisis in
our current base-case scenario, as we anticipate that management
will maintain its focus on cost-saving efforts and cash
generation, such that it will maintain adequate cash reserves to
manage its commitments over the next 12 months.

"We forecast that trading conditions in the U.K. will remain
difficult over the next two years. We expect this will weigh on
House of Fraser's top line and its operating margins. Combined
with the group's continued commitment to its ambitious
transformation strategy--which relies on significant investments-
-we anticipate that this will result in a prolonged period of
cash outflows.

"We view House of Fraser as a moderately strategic subsidiary
within the wider Sanpower Group Co. Ltd., a Chinese industrial
conglomerate whose operations span retail, information services,
medical and health care, and real estate. We do not rate
Sanpower, but we estimate the overall creditworthiness of the
Sanpower group as being commensurate with a rating in the 'B'
category."

As part of the Christmas trading update, the chairman of Sanpower
affirmed its commitment to support House of Fraser's
transformation plan. In light of Sanpower's GBP10 million
commitment to contribute to capital expenditure (capex), plus the
further GBP15 million cash injection received in September 2017
for the use of the House of Fraser name and IP in China, S&P
believes the parent could provide some level of liquidity support
to House of Fraser. That said, Sanpower has made no formal
commitments or guarantees and we do not consider that House of
Fraser has a strong enough role within the group to support a
higher rating based on the likelihood, timing, and magnitude of
any potential further support. S&P therefore rates House of
Fraser at the same level as its 'ccc+' stand-alone credit
profile.

S&P said, "Furthermore, we do not view the GBP15 million cash
contributed in September 2017 as material support, given that we
now estimate that House of Fraser's adjusted debt exceeds GBP1.4
billion."

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

-- Mild 1.0%-1.5% GDP growth in the U.K. in 2018 and 2019,
    coupled with continued sterling weakness.

-- The U.K. retail sector will underperform compared to nominal
    GDP over this period, as real wages contract and consumer
    spending continues to shift away from traditional retail
    propositions. S&P therefore forecasts a slowdown in real
    private consumption growth in the U.K. to 0.8% in 2018.

-- Trading conditions in the U.K. retail market will remain
    intensively competitive, causing House of Fraser's top-line
    to decline by about 1%-3% in the financial year (FY) ending
    Jan. 31, 2018, from the GBP836 million posted in FY2017. This
    assumption incorporates a reduction in sales volumes owing to
    the temporary disruption in customer traffic following launch
    of the new online platform and womenswear range, as well as
    disposable income squeezes in the U.K. However, we expect
    average sale price increases to somewhat offset these volume
    declines as a result of general consumer price index (CPI)
    and strategic initiatives aimed at tighter inventory
    management and reducing markdown sales.

-- Drop in reported EBITDA margins in FY2018 to around 6.0%,
    from 8.4% in FY2017, as modest staffing, distribution, and
    rental expense inflation compounds foreign exchange
    pressures, offset somewhat by the group's effort to lower
    discounting.

-- Moderate investment in working capital of GBP10 million-GBP15
    million annually, compared with GBP33 million in FY2017 as
    the group tightens inventory management.

-- Capex of GBP55 million-GBP60 million in FY2018, in line with
    management's public guidance. S&P expects this to fall to a
    normalized level of around GBP30 million-GBP35 million from
    FY2019 onward. Notwithstanding the elevated capex, S&P
    expects that management will prudently moderate capex if it
    encounters any acute liquidity pressure.

-- An expected cash inflow of GBP30 million from the sale of
    certain brand names and IP associated with retired house
    brands.

Based on these assumptions, S&P forecasts the following credit
metrics for FY2018 and FY2019:

-- Adjusted EBITDA of GBP135 million-GBP145 million. This
    translates to a reported EBITDA of around GBP50 million-GBP55
    million.

-- An adjusted debt-to-EBITDA ratio of around 10x, compared with
    9.0x in FY2017.

-- Adjusted FFO to debt of 2%-5%, compared with 4% in FY2017.

-- Reported FOCF outflow of up to GBP45 million in FY2018
    (compared with GBP41 million outflow in FY2017), tempering to
    an outflow of about GBP10 million in FY2019 as capex is
    reduced; and

-- EBITDAR cover -- calculated as reported EBITDA plus rent
    divided by cash interest plus rent -- of 1.3x-1.35x, compared
    with 1.5x in FY2017.

S&P said, "The negative outlook reflects our view that House of
Fraser's operating performance will remain under pressure over
the next 12 months against a backdrop of challenging trading
conditions in the U.K. retail market, increasing the risk of a
covenant breach. At the same time, we expect management will
advance in its cost-saving efforts while focusing on improving
top-line performance and tight working capital management.

"The outlook also reflects our expectation that House of Fraser
will -- in collaboration with Sanpower -- appropriately manage
the tightening of its covenant headroom and will maintain
adequate cash reserves to manage its commitments over the next 12
months, as it implements its transformation plan.

"We could lower the rating on House of Fraser if we perceived the
risk of a breach of financial covenants, a debt restructuring,
bond buyback, or an exchange offer occurring within the next 12
months as further increased. As far as we know, the group is
currently not taking any tangible steps in this direction, but we
would likely see such events as distressed and tantamount to a
default. We could also lower the rating if further liquidity
pressures or refinancing risks emerge.

"This could arise if the group experiences setbacks in its
transformation plan; if there is an unexpected drop in revenues
or a decline in operating margins, such that reported EBITDA
falls short of our forecast of GBP50 million-GBP55 million; or if
reported FOCF outflows do not temper toward the GBP10 million we
currently expect.

"We could revise the outlook to stable if House of Fraser
improved the headroom under its financial covenants and restored
its earnings such that EBITDAR cover approaches the 1.35x level
we forecast for FY2019 while reported FOCF trends toward our
forecast of negative GBP10 million.

"We could also revise the outlook to stable if we were to see an
evidence of timely and tangible commitment from the ultimate
parent, Sanpower, to support House of Fraser's liquidity and to
manage the orderly refinancing of the group's upcoming
maturities.

Any further upside to the rating would be conditional on House of
Fraser sustainably improving its earnings, generating meaningful
and consistent reported FOCF, and restoring adequate headroom --
of at least 15% -- under its financial covenants. An upgrade
would hinge on our anticipation of an orderly and timely
refinancing of its 2019-2020 debt maturities."


NOBLE HOLDING: Moody's Rates New $500MM Sr. Guaranteed Notes B2
---------------------------------------------------------------
Moody's Investors Service assigned B2 ratings to Noble Holding
International Limited's proposed offering of $500 million of
senior guaranteed notes due 2026. The company's existing ratings
were affirmed, including the B3 Corporate Family Rating (CFR),
Caa1 senior unsecured notes ratings and SGL-2 Speculative Grade
Liquidity Rating. The rating outlook remains negative. Noble is
an indirect wholly owned subsidiary of Noble Corporation plc, a
publicly traded offshore drilling company.

The proposed senior guaranteed notes will be unsecured but will
be guaranteed by certain Noble subsidiaries. The proceeds of the
notes offering, together with cash on hand, will be used to
repurchase outstanding notes as outlined in a simultaneously
announced tender offer for an aggregate purchase price of up to
$750 million of existing senior notes maturing in 2018 through
2024, with priority given to nearer-term maturities.

"The new notes refinance nearer-term debt maturities,
strengthening Noble's liquidity as it navigates through weak
offshore drilling market conditions," said Pete Speer, Moody's
Senior Vice President. "The new notes benefit from subsidiary
guarantees that provide a structurally superior claim to Noble's
rigs compared to the existing senior notes, resulting in the
higher B2 rating."

Assignments:

Issuer: Noble Holding International Limited

-- Senior Unsecured Notes, Assigned B2 (LGD3)

Outlook Actions:

-- Issuer: Noble Holding International Limited

-- Outlook, Remains Negative

Affirmations:

-- Issuer: Noble Drilling Corporation

-- GTD Senior Unsecured Notes, Affirmed B3 (LGD4)

-- Issuer: Noble Holding International Limited

-- Probability of Default Rating, Affirmed B3-PD

-- Speculative Grade Liquidity Rating, Affirmed SGL-2

-- Corporate Family Rating, Affirmed B3

-- Senior Unsecured Shelf, Affirmed (P)Caa1

-- GTD Senior Unsecured Notes, Affirmed Caa1 (LGD4)

RATINGS RATIONALE

The assigned B2 rating on Noble's proposed senior guaranteed
notes is one notch higher than the B3 CFR, reflecting the new
notes' structurally superior position in Noble's capital
structure relative to the existing senior notes. The new notes
are senior unsecured but will be guaranteed by intermediate
holding company subsidiaries, effectively giving the new notes a
priority claim to the company's assets over the existing senior
notes that do not have subsidiary guarantees. However, the new
notes will be structurally subordinated to the company's $1.5
billion revolving credit facility, which has operating subsidiary
guarantees that provide a priority claim to the large majority of
Noble's drilling rigs. Given the substantial oversupply of rigs
in offshore drilling markets and uncertain valuations, Moody's
views the B2 rating assigned to the new notes as more appropriate
than the B1 rating that is indicated under Moody's Loss Given
Default Methodology.

Noble's existing senior notes are rated Caa1, or one notch below
the B3 CFR, reflecting their structural subordination to the $1.5
billion revolver and the new senior guaranteed notes. The senior
notes issued by Noble Drilling Corporation (NDC, $202 million
outstanding and assumed by Noble Holding (US) LLC) are either co-
issued by or guaranteed by certain subsidiaries that provides
these notes with a structurally superior claim to a small number
of Noble's drilling rigs compared to Noble's existing senior
notes. Given the benefit of this priority claim to certain assets
and the amount of notes outstanding, the NDC notes are rated B3,
which Moody's views as more appropriate than the Caa1 rating
assigned to Noble's existing senior notes. The NDC notes mature
in March 2019 and are included in the tender offer.

Noble's B3 CFR reflects the company's deteriorating margins and
cash flow, high financial leverage and limited prospects for
meaningful recovery through 2019 based on weak fundamental
conditions for offshore drilling, particularly in deepwater
markets. The B3 rating is supported by the company's good
liquidity, manageable debt maturities through 2022 and contracted
revenue backlog which provides visibility to positive free cash
flow generation in 2018. Noble's credit profile also benefits
from the company's relatively newer rig fleet that is
predominantly high specification, placing it in a good
competitive position to operate in all major global offshore
markets without requiring significant further capital investments
when demand ultimately begins to recover.

Moody's expects Noble to maintain good liquidity through mid-
2019, as indicated by the SGL-2 rating. At September 30, 2017,
the company had $609 million of cash. In December 2017 the
company entered into a new $1.5 billion bank credit facility that
matures in January 2023 and is fully undrawn. The new revolver's
covenants include a minimum liquidity requirement, maximum
consolidated indebtedness to total capitalization, minimum rig
value to total revolver commitments and other guarantor debt, and
minimum value of rigs wholly owned by the subsidiary guarantors
to total rig value (as defined in the agreement). Moody's expects
that the company will maintain good headroom for future
compliance with these new covenants through at least mid-2019.
Noble's liquidity will also benefit from $300 million of
remaining borrowing availability commitments under its prior
revolving credit facility that matures in January 2020. Moody's
expects Noble to generate modest free cash flow in 2018, based on
its backlog and maintenance capital spending levels since the
company has no new rigs under construction. The cash balance and
revolving credit facilities provide ample liquidity to address
working capital needs or if cash flow falls short of forecasts,
and any remaining debt maturities through 2019 following the
tender offer.

The outlook is negative, reflecting the risk that a meaningful
and sustained offshore drilling recovery could still be several
years away, particularly given the oversupply of deepwater and
ultradeepwater rigs. The ratings could be downgraded if interest
coverage (EBITDA/Interest) approaches 1x, the company generates
significant negative free cash flow or its liquidity weakens. In
order to consider a ratings upgrade, Noble will have to achieve
sequential increases in EBITDA in an improving offshore drilling
market such that its interest coverage (EBITDA/Interest) exceeds
2x and the company generates meaningful free cash flow to reduce
debt and maintain good liquidity.

The principal methodology used in these ratings was Global
Oilfield Services Industry Rating Methodology published in May
2017.

Noble Holding International Limited is a wholly owned subsidiary
of Noble Corporation, a Cayman Island company (Noble-Cayman),
which is a wholly owned subsidiary of Noble Corporation plc
(Noble plc), a company incorporated under the laws of England and
Wales, and a leading international offshore oil and gas drilling
contractor. Noble Holding International Limited is the issuer of
the substantial majority of the company's rated debt, and
therefore the CFR is assigned to that company. Noble Holding
International Limited's senior notes and the NDC senior notes are
fully and unconditionally guaranteed by Noble-Cayman.


PAYSAFE GROUP: S&P Lowers CCR to 'B' on Leveraged Buyout
--------------------------------------------------------
On Dec. 20, 2017, private equity investors Blackstone and CVC
completed their leveraged buyout (LBO) of U.K.-based payment
service provider Paysafe Group PLC (Paysafe).

Following the successful transaction, PI UK Holdco II Ltd. (PI
Holdco) has now become the holding company of the restricted
group.

S&P Global Ratings lowered its long-term corporate credit rating
on U.K.-based payment services provider Paysafe Group PLC to 'B'
from 'BB', and removed the rating from CreditWatch with negative
implications. S&P subsequently withdrew the ratings at the
issuer's request. At the time of withdrawal, the outlook was
stable.

S&P said, "At the same time, we withdrew our 'BB+' issue rating
and '2' recovery rating on the group's previous EUR220 million
senior secured term loan B and $85 million revolving credit
facility; all previous debt was repaid after the LBO transaction
closed.

"The rating downgrade reflects our assessment of Paysafe as a
core subsidiary of PI Holdco, given that it essentially
encompasses the group's entire global operations."


PI UK HOLDCO II: S&P Assigns 'B' CCR, Outlook Stable
----------------------------------------------------
S&P Global Ratings said that it assigned its 'B' long-term
corporate credit rating to PI UK Holdco II Ltd., the U.K.-based
holding company of payment solutions provider Paysafe Group PLC,
following the successful completion of its buyout. The outlook is
stable.

S&P said, "At the same time, we assigned our 'B' issue rating to
the about $2 billion equivalent first-lien term loan B facilities
and $175 million revolving credit facility (RCF), with a recovery
rating of '3'. We also assigned our 'CCC+' issue rating to the
about $450 million equivalent second-lien term loan facilities,
with a recovery rating of '6'."

The ratings are in line with the preliminary ratings we assigned
on Nov. 17, 2017.

The rating action follows the completed leveraged buyout (LBO) of
Paysafe by Blackstone and CVC. The transaction was funded by
about $2.4 billion of term loans and equity capital provided by
Blackstone and CVC. These proceeds were applied to the GBP2.96
billion equivalent equity value, the repayment of net debt, and
transaction-related fees.

This new capital structure results in a very high initial S&P
Global Ratings-adjusted debt to EBITDA of above 8.5x in 2017 on a
pro forma basis. S&P said, "We forecast significant deleveraging
from 2018 due to continued growth in EBITDA and growing free cash
flow generation. However, we also consider that such deleveraging
could be somewhat constrained by a more aggressive financial
policy under the group's new financial sponsors, as well as the
group's generally acquisitive appetite."

The buyout includes the sale of Paysafe's Asia Gateway business
(Paysafe Merchant Services Limited; PMSL) for proceeds of up to
$308 million payable over six years. The sale is structured
outside the restricted group of the new capital structure and
therefore the proceeds will not be available to PI Holdco.

The transaction also follows Paysafe's recent successful purchase
of Delta Card Services Inc., the holding company for U.S. payment
services provider Merchants Choice Payment Solutions (MCPS), for
a $470 million enterprise value in August 2017.

S&P said, "In our opinion, the consolidation of MCPS and disposal
of Asia Gateway have a net positive effect on Paysafe's business.
This is despite the negative impact on Paysafe's company-adjusted
EBITDA margins, estimated at around 26% in first-half 2017 on a
pro forma basis compared with 31% on a stand-alone basis. This
results from the consolidation of the lower margin MCPS (about
15% in first-half 2017), and the loss of the Asia Gateway
business' higher EBITDA margin contributions (about 39% in first-
half 2017).

"In our view, these changes in Paysafe's business mix help reduce
the group's exposure to the online gambling sector to 27% of 2016
pro forma revenues from 46% on a stand-alone basis, while
increasing the exposure to lower risk point-of-sale payment
processing. Payment processing now accounts for 56% of pro forma
2016 revenues (47% before), with an increased presence in point-
of-sale channels allowing for omnichannel merchant offerings,
albeit predominantly in the U.S. Additionally, there would be a
significant improvement in customer concentration.

"On a pro forma basis, our business risk assessment generally
reflects Paysafe's substantial exposure to risky sectors like
online gambling and gaming (combined: 32% of 2016 pro forma
revenues) compared to other rated payment service providers.
These sectors are particularly exposed to the risk of unexpected
adverse regulatory changes. They are also mainly served by
Paysafe's prepaid vouchers and digital wallet products
representing about 44% of pro forma revenues. These alternative
payment methods, in our view, are fairly niche and less well-
established within the wider payments industry. These and certain
other products are also subject to significant financial services
regulation. Compared with rated peers, the group's payments
processing business remains relatively small in scale in the
fragmented and competitive payment services industry, at around
$715 million of 2017 pro forma revenues based on our forecasts.
This segment is also targeted more toward higher risk merchants
than is the case with peers."

This is partly offset by Paysafe's strong market positions in the
digital wallets and prepaid vouchers business segments, which
make it the leading payment service provider for the niche online
gambling and gaming markets. Paysafe has a good track record of
double-digit revenue growth through both organic and acquisition-
related contributions. EBITDA margins are adequate compared with
peers, at above 25% on a company-adjusted pro forma basis,
despite the negative impact of the MCPS consolidation and the
Asia Gateway business sale.

S&P said, "Our financial risk profile assessment primarily
reflects our expectation of very high gross debt-to-EBITDA of
above 8.5x in 2017 on an S&P Global Ratings-adjusted basis pro
forma the MCPS consolidation and Asia Gateway sale. This is due
to the large amount of bank debt in the group's final capital
structure. Going forward, there is the potential for considerable
deleveraging, with rising EBITDA levels supported by organic
revenue growth from the continued industrywide shift to digital
and online payments. S&P Global Ratings-adjusted EBITDA margins
should also improve slightly with cost savings, MCPS-related
synergies, and operating leverage. However, we still expect
adjusted gross debt to EBITDA to remain well above 6x over the
next few years."

Free cash flow generation should remain relatively robust with
positive adjusted free operating cash flow (FOCF) of about $80
million in pro forma 2017, improving to $140 million-$160 million
in 2018 helped by relatively modest capital expenditure (capex)
and working capital needs. This is still a significant FOCF
reduction from about $200 million in 2016, mainly due to
increased cash interest payments from the greater amount of
interest-bearing debt. This also reduces EBITDA interest coverage
to less than 3.0x from 10.5x in 2016.

S&P said, "Furthermore, we note that Paysafe's financial policy
under its financial sponsor ownership could constrain meaningful
leverage reduction over the medium term. We also acknowledge that
Paysafe has an acquisitive history and that there could be future
deals of varying sizes to boost growth and potentially further
diversify away from online gambling and toward payment processing
for lower risk merchants. In particular, large debt-funded
acquisitions could be a risk to the deleveraging profile in our
base case.

"Our adjusted debt for 2016 includes $16.7 million for operating
lease liabilities, as well as $48.6 million of acquisition-
related earn-outs and deferred liabilities. Our EBITDA is
adjusted for $27.5 million of capitalized development costs,
treating these as an operating expense, and excludes net fair
value gains and losses on contingent considerations."

S&P's base case assumes:

-- Average growth in transaction values in the global electronic
    commerce market of around 15% over 2016-2021, and 5%-6%
    growth in the online gambling and digital gaming markets over
    2016-2021 and 2016-2019, respectively.

-- Organic constant currency revenue growth of 8%-9% in 2017
    (pro forma the MCPS deal and Asia Gateway sale) and 6%-7% in
     2018 and 2019. This is driven by continued robust
     performance in all segments supported by wider market
     growth.

-- Reported revenue growth of 8%-10% in 2018 and 2019, further
    reflecting assumed ongoing bolt-on acquisitions.

-- Company-adjusted EBITDA margins of 26%-27% in 2017 and 2018,
    and 27%-28% in 2019, after about 30% in 2016 (26% pro forma
    MCPS). This is supported by expected cost savings and MCPS-
    related synergies, as well as operating leverage.

-- EBITDA margins, as adjusted by S&P Global Ratings, of 22%-23%
    in 2017 and 2018, rising to just above 25% in 2019 helped by
    declining acquisition-related costs and MCPS integration
    costs.

-- Capex as a percentage of sales of 4%-5% in 2017-2019, up from
    about 4% of 2016 revenues pro forma MCPS driven by higher c
    capitalized development costs related to platform
    development.

-- Excluding these costs, capex is assumed at around 2% of sales
    in 2017-2019.

-- Cash tax rate of about 19% following the change in tax
    jurisdiction to the U.K.

-- Continued spending on smaller acquisitions of up to $100
    million per year in 2018 and 2019.

Based on these assumptions, S&P arrives at the following adjusted
credit metrics with 2017 being pro forma the MCPS acquisition and
LBO transaction (including the Asia Gateway sale):

-- Debt to EBITDA of 8.6x-8.8x in 2017, reducing to just above
    7.5x in 2018 and 6.4x-6.6x in 2019.

-- Funds from operations (FFO) to debt of about 6% in 2017,
    increasing to about 7.5% in 2018 and 9.3%-9.5% in 2019.

-- EBITDA interest coverage of around 2.2x in 2017, 2.5x-2.7x in
    2018, and 2.8x-3.0x in 2019.

-- FOCF to debt of just above 3% in 2017, improving to around 6%
    in 2018 and 7%-8% in 2019.

S&P said, "The stable outlook reflects our expectation that
Paysafe will continue to experience good organic growth from
positive market dynamics and EBITDA margins of above 20% helped
by the group's operating leverage. This should result in adjusted
leverage reducing to just above 7.5x in 2018, and EBITDA interest
coverage and FOCF to debt improving to about 2.5x and 6.0%,
respectively, within the same time frame.

"We could raise our rating on PI Holdco if its credit measures
considerably improve. In particular, we would expect FOCF-to-debt
of nearly 10% and adjusted leverage of below 6x, as well as a
financial policy commitment to maintain these levels. While we do
not anticipate this scenario over the next 24 months, it could
occur following better-than-expected revenue growth and EBITDA
margin improvements potentially due to greater realized cross-
selling opportunities and cost savings.

"We view ratings downside as unlikely due to our expectations of
significant short-term growth in revenues and EBITDA. We could
lower our rating, however, if FOCF-to-debt sustainably falls
below 2% or interest coverage below 2x, while leverage remains
above 7.5x. This could occur if EBITDA margins decline due to
competitive pressures on pricing, greater-than-expected costs in
realizing cost savings or integrating MCPS, or an unforeseen
negative effect from regulation. It could also be driven by large
debt-funded acquisitions or further aggressive capital structure
changes."


POLYUS FINANCE: Fitch Rates Planned Guaranteed Notes 'BB-(EXP)'
---------------------------------------------------------------
Fitch Ratings has assigned an expected senior unsecured rating of
'BB-(EXP)' to the planned guaranteed notes to be issued by Polyus
Finance Plc, a wholly owned indirect subsidiary of Public Joint
Stock Company (PJSC) Polyus (BB-/Positive). The assignment of a
final rating to the notes is conditional on the receipt of final
documentation in line with the draft documentation reviewed.

The notes will be immediately guaranteed by JSC Polyus
Krasnoyarsk, the principal operating subsidiary, accounting for
100% of consolidated 2016 EBITDA and 100% of fixed assets at end-
2016, and are to be unconditionally and irrevocably guaranteed,
pending corporate approvals, by Polyus, the holding company for
the group's main assets. The notes will rank pari passu with the
existing guaranteed notes due in 2020, 2022 and 2023. The
guarantee will also rank pari passu with all existing and future
unsecured and unsubordinated obligations of the guarantor. The
group intends to use the proceeds primarily for debt refinancing
and other general corporate purposes.

Polyus is Russia's leading gold producer, benefiting from large
and increasing output, low production costs and a high reserve
base. The Positive Outlook on Polyus' Issuer Default Rating (IDR)
reflects Fitch expectation that incremental production from the
Natalka mine and brownfield expansions will support the
deleveraging necessary for an upgrade, ie, funds from operations
(FFO) gross leverage below 3x by end-2019 (against 3.7x expected
at end-2017 and 3.2x at end-2018). The group's significant cash
balances and management's commitment to reduce leverage also
underpin the Positive Outlook.

KEY RATING DRIVERS

Strong Cost Position and Reserves: Polyus' good-quality reserves
and large efficient open pit assets place it in the first
quartile of the global cost curve by total cash costs (TCC). In
2016, TCC fell 8% yoy to USD389/oz. This was mainly due to fall
in the rouble and operational improvements, eg higher processing
volumes and better gold recovery rates. In 9M17 TCC fell a
further 2% to USD380/oz due to operational efficiencies despite
the 9% rouble appreciation. Fitch forecast stable FX rates in
2018-2020 and low single-digit rouble appreciation, but Fitch
expect Polyus to maintain competitive TCC and profitability over
the next three years due to further operating efficiencies.

At end-2016, Polyus had proved and probable (P&P) gold ore
reserves of 71 million oz, excluding Sukhoi Log, and measured,
indicated and inferred (MI&I) resources of 193 million oz,
including Sukhoi Log as at 31 January 2017. It ranks second
globally by attributable gold reserves and third by attributable
gold resources.

Natalka Launch Cements Growth: Natalka, the group's key
development mine, was launched in September 2017. Fitch expect
Natalka to gradually ramp up in 2018-2019, and together with
brownfield expansions to result in 9% CAGR for the group's gold
production between 2016 and 2020. Fitch assume that Polyus'
production will reach 2,160k oz in 2017, 2,300k oz in 2018 and
2,700k oz in 2019. In 2017, Polyus reported production growth of
10% yoy to 2,160k oz, following similar increases in 2016 to
1,968k oz of metal. The Olimpiada, Verninskoye and Kuranakh mines
accounted for most of the increase due to higher processing
volumes and better recoveries.

Elevated Debt Until 2019: Polyus' mostly debt-funded USD3.4
billion share buyback in 1H16 resulted in a material increase in
leverage, driving Fitch-calculated FFO adjusted gross leverage to
4.4x at end-2016, from 2.6x at end-2015. Fitch current base case
assumes annual dividend payments of USD550 million in 2018-2019
(USD564 million already paid in 2017) and USD650 million in 2020-
2021. Therefore, Fitch expect absolute debt levels to remain
high, though falling, at least until 2019.

In January 2017, Polyus announced that the agreement between its
majority shareholder Polyus Gold International Limited and the
consortium led by Fosun International Ltd. to acquire a 10% stake
in Polyus was terminated.

Expected Positive Free Cash Flow: Higher production from Natalka
and most of the existing mines should support deleveraging and
help Polyus generate solid positive post-dividend free cash flow
(FCF) by end-2019. Fitch expect Polyus' FFO gross leverage to
remain above 3x in 2017-2018 before decreasing to just above 2.3x
by end-2019. Fitch forecast FFO net leverage to remain around
0.5x-0.8x below the FFO gross leverage throughout the same period
due to Polyus' large cash balances.

Corporate Governance: Fitch view the group's corporate governance
as broadly in line with that of its peer group of major Russian
corporates. Similar to Russian peers', Polyus' rating reflects
the higher-than-average systemic risks associated with the
Russian business and jurisdictional environment as well as Fitch
assessment of corporate governance practices. In December 2017
Polyus appointed a fourth independent director to the board. The
total number of directors, nine, did not change.

DERIVATION SUMMARY

Polyus' rating reflects an operating profile better than, or
comparable to that of North American peers Goldcorp Inc.
(BBB/Stable), Kinross Gold Corporation (BBB-/Stable) and Yamana
Gold Inc. (BBB-/Stable). Polyus has a comparable market position,
while its higher leverage is partially offset by significantly
lower production costs. Goldcorp and Kinross have a higher
proportion of mines located in stable countries, but also a
number of their mines are in Latin America (Goldcorp) and
Russia/West Africa (Kinross). Yamana is smaller in terms of scale
and most of its assets are located in South America. Nord Gold SE
(Nordgold, BB-/Positive) is smaller than Polyus by gold
production and revenue, but its all-in sustaining costs are
higher than Polyus' at lower leverage levels.

Polyus' IDR also reflects the higher-than-average systemic risks
associated with the Russian business and jurisdictional
environment. This is also valid for Russia-based Nordgold.

No Country Ceiling constraint or parent/subsidiary linkage was in
effect for these ratings.

KEY ASSUMPTIONS

Fitch's Key Assumptions Within Fitch Rating Case for the Issuer:
- no cash upstreamed through share buybacks in 2017-2020;
- dividends in line with Polyus' dividend policy ie the greater
   of 30% of EBITDA if net debt/EBITDA is under 2.5x, and minimum
   annual dividend payments of USD550 million for each of 2018
   and 2019 (USD564 million already paid in 2017);
- average gold price of USD1,193/oz in 2017, USD1,207/oz in 2018
   and USD1,200/oz afterwards, based on Fitch's conservative gold
   price deck adjusted to reflect company's hedges;
- USD/RUB exchange rate of 59 in 2017, 60 in 2018, 58 in in 2019
   and 57 thereafter;
- Natalka project gradually ramping up throughout 2018 and
   reaching full capacity in 2019;
- Operating efficiencies at the existing mines as per
   management's expectations.

RATING SENSITIVITIES

Developments that May, Individually or Collectively, Lead to
Positive Rating Action
- Expected FFO adjusted gross leverage below 3.0x by end-2019
- FFO adjusted net leverage below 2.5x by end-2019
- Sustained positive FCF generation

Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- Higher-than-expected dividend payments or other shareholder
   distributions leading to weaker liquidity and sustained high
   leverage
- FFO adjusted gross leverage above 4.0x or FFO adjusted net
   leverage above 3.0x sustained till end-2019.
- Sustained negative FCF generation

LIQUIDITY

Healthy Liquidity, Negligible Maturities: Polyus' liquidity
position at end-2017 was strong, with estimated cash of USD1.2
billion and USD689 million of undrawn committed facilities. This
comfortably covers short-term maturities of USD14 million and
negative FCF of around USD80 million under Fitch base case
through to end-2018.


SEADRILL: Barclays Makes Deposit Payment for Rival Rescue Plan
--------------------------------------------------------------
Mikael Holter at Bloomberg News reports that Barclays Plc has
made a deposit payment needed to complete an alternative
restructuring plan for Seadrill Ltd. that challenges the proposal
backed by the offshore driller's billionaire chairman John
Fredriksen.

The deposit was made at about the same time as a separate group
of disgruntled Seadrill bondholders made its payment earlier this
month, a person familiar with the matter, as cited by Bloomberg,
said, speaking on condition of anonymity because the information
wasn't public.

Seadrill on Jan. 19 confirmed the two payments, Bloomberg notes.
"Both parties that have provided alternative bids have submitted
the requisite deposits," Bloomberg quotes a company spokesman as
saying in an email.  "Discussions continue."

Barclays and the so-called Ad Hoc Group of Unsecured Noteholders,
which holds more than US$600 million in Seadrill bonds, have
stood up against the plan negotiated between Mr. Fredriksen, a
few select investors and Seadrill, and backed by the company's
banks, Bloomberg discloses.

Under Mr. Fredriksen's proposal, some investors including hedge
fund Centerbridge Partners LP have committed to provide US$1.06
billion in fresh money, leaving them with a majority of the
company after the restructuring, Bloomberg says.  The remaining
unsecured bondholders would be left with 14% to 18% of the new
equity, according to Bloomberg.

The deposit required to complete the offers represent 10% of the
proposed contribution of new capital to the company, Bloomberg
states.  The Ad Hoc Group's plan includes a commitment to
contribute about the same amount as the Mr. Fredriksen plan,
people familiar with the matter said earlier, meaning its deposit
would have been about US$100 million, Bloomberg relates.

                    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.


THOMAS COOK: S&P Raises CCR to 'B+' on Improved Credit Metrics
--------------------------------------------------------------
S&P Global Ratings said that it raised to 'B+' from 'B' its long-
term corporate credit rating on U.K.-based tour operator Thomas
Cook Group PLC. The outlook is stable.

S&P said, "At the same time, we raised to 'B+' from 'B' our
issue-level ratings on the senior unsecured notes issued by
Thomas Cook Group PLC and its fully owned subsidiary Thomas Cook
Finance 2 PLC. The recovery rating on the senior unsecured notes
is unchanged at '3', reflecting our expectation of meaningful
(50%-70%; rounded estimate: 60%) recovery of principal in the
event of a payment default.

"The upgrade reflects Thomas Cook's sound operating performance
in the financial year that ended Sept. 30, 2017 (FY2017), and our
expectation that the company should be able to sustain sound
operating performance and financial metrics during 2018, in spite
of the industry's cyclicality, capital intensity, and exposure to
event risks."

In FY2017, Thomas Cook reported record revenue growth of 15%
year-on-year (9% growth on a like-for-like basis), reflecting
increased demand for holidays -- particularly to Greece and long-
haul destinations -- as well as to Turkey and Egypt following the
latter's reopening after the travel ban in 2016. Overseas
visitors to Turkey and Egypt increased by 25% and 51% in 2017,
respectively, compared with 2016. Reported underlying EBIT
increased by 9% year-on-year to GBP330 million, mostly supported
by the airline division, including a turnaround in the German
airline Condor. This was partly offset by a challenging
environment in the U.K. operations of the tour operator's
division, where -- despite the growth in revenues -- higher U.K.
cost inflation, a weaker pound, and hotel price inflation in
Continental Europe hit the U.K. operation's EBIT (a drop of 40%
year-on-year). As a result of these mixed effects, the company's
underlying reported EBITDA margin declined by 35 basis points to
6.1% (or 6.7% on an S&P Global Ratings-adjusted basis).

S&P said, "We expect that, assuming no meaningful events like
terrorist attacks or geopolitical tensions in tourist
destinations during 2018, earnings should at least stay broadly
flat or increase in FY2018 as a result of largely favorable
demand for holidays in Europe, already observed in current summer
bookings.

"We also expect operating margins and cash generation to remain
at least stable year-on-year as a result of continued
implementation of the new operating model designed to improve
efficiency in the group. In FY2018, we anticipate credit metrics
to be at least sustained at the FY2017 level, supported by a
strengthened demand from key source markets and recovery in the
airline business, tempered by additional costs incurred in the
ongoing efficiency program, which is expected to continue for at
least the next two years. Additionally, the previously announced
GBP200 million debt repayment planned in FY2018 has been
postponed until FY2019.

"We continue to see Thomas Cook as operating in a sector that is
exposed to the cyclicality and seasonality of the tourism
industry and prone to disruptions and geopolitical events. We
also view the company's business model as fairly capital
intensive as a result of operating four airlines with about 100
leased aircrafts, and buying certain capacity in hotels. Equally,
Thomas Cook is exposed to uncertainties relating to the U.K.'s
referendum decision to leave the EU, as the company generates a
significant portion of its underlying EBIT in the U.K. (around a
quarter of the group's EBIT). These weaknesses are tempered, in
our view, by Thomas Cook's strong position as the No. 2 European
travel operator after Tui AG; its well-established brand; its
improving geographic diversification into new source markets,
including long-haul; and its decreasing operating leverage. We
also view positively management's ability to redirect substantial
capacity from Turkey to Spain, Greece, and to long-haul
destinations in the face of security disruption, as demonstrated
in 2016. Finally, we also view positively the travel industry's
underlying long-term growth."

Thomas Cook has been gradually deleveraging over the past three
years. However, its capital structure is still characterized by
high adjusted debt, which includes financial debt and sizable
operating lease and pension adjustments that result in S&P Global
Ratings-adjusted debt to EBITDA of 4.8x in FY2017 and is expected
to stay within 4x-5x over the next two years (although S&P
estimates that leverage is a turn higher at the end of the first
quarter of each year, due to seasonality of the business, as the
company pays its suppliers). There is also a degree of volatility
and unpredictability in ratios and cash flows due to Thomas
Cook's exposure to exogenous shocks. S&P expects capital
expenditures (capex), mostly related to aircraft maintenance and
investment in digital platforms, will continue to weigh on the
company's cash flows. At the same time, S&P expects Thomas Cook
to continue generating meaningful positive free operating cash
flow (FOCF).

S&P's base case assumes:

-- A favorable macroeconomic environment in European markets
    leading to a moderate increase in consumer confidence and
    higher discretionary spending in Thomas Cook's key markets.

-- Additionally, S&P expects low-single-digit revenue growth in
    fiscal 2018 and 2019, supported by sound demand for holiday
    destinations in Europe, including to destinations reopened in
    2017 such as Turkey and North Africa.

-- Flat EBITDA margin in 2018 due to increasing fuel costs,
    foreign exchange headwinds and restructuring costs, and
    improvement of about 200 basis points in 2019 as a result of
    efficiency and capacity improvements.

-- Capex of about GBP200 million in 2018 and GBP230 million-
    GBP235 million in 2019.

-- No major acquisitions or disposals.

-- Dividends paid in 2018 of GBP9 million, rising toward 30% of
    after-tax profit in 2019.

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

-- Adjusted debt to EBITDA of 4.6x-4.7x in FY2018 and below 4.5x
    in FY2019.

-- Adjusted interest cover of about 3.0x in FY2018 and 3.0x-3.5x
    in FY2019.

-- Adjusted FFO to debt of around 12% in FY2018 and 12%-14% in
    FY2019.

S&P said, "The stable outlook reflects our view that Thomas Cook
should be able to achieve sound operating performance and further
increase its nominal EBITDA over the next 12 months on the back
of strong demand to its travel destinations and benefits from
previous years' cost-reduction initiatives, albeit tempered by
restructuring costs. Under our base case, we anticipate that the
group should maintain its S&P Global Ratings-adjusted leverage
meaningfully below 5.0x on a sustainable basis (and preferably
toward 4.5x at least to maintain headroom for unforeseen external
events), coupled with rising earnings and at least stable
operating margins, and materially positive FOCF generation.

"We would likely lower the rating if the security environment in
Thomas Cook's destinations deteriorated, possibly requiring the
company to redirect capacity. Pressure would also rise if Thomas
Cook showed weaker earnings, cash flows, or credit ratios, either
as a result of a tougher-than-expected operating environment,
higher-than-anticipated capex, or excessive dividend payments. We
could also lower the rating if the company pursued meaningful
debt-financed shareholder returns or acquisitions, resulting in
adjusted leverage increasing above 5x."

A positive rating action, although unlikely at this time, would
depend on the company's ability to show further resilience of its
business model to unforeseen events. This is contingent upon the
company achieving further business, product, and geographic
diversity; lowering its operating leverage (meaning improving
profitability and cash flow generation); and further reducing
debt to an adjusted 3.5x on a sustainable basis. All these would
help to stem the cyclicality, seasonality, and event risk of the
industry.



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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 2018.  All rights reserved.  ISSN 1529-2754.

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

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

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


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