/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/181005.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Friday, October 5, 2018, Vol. 19, No. 198 Headlines A R M E N I A INECOBANK CJSC: Moody's Assigns B1/B2 LT Deposit Ratings A Z E R B A I J A N ACCESSBANK: Fitch Withdraws 'C' Long-Term Issuer Default Rating D E N M A R K DANSKE BANK: Faces US Probe Over Money Laundering Scandal PRIMERA AIR: Passengers Left Stranded Amidst Collapse F R A N C E UNIFIN SAS: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable I R E L A N D C&W SENIOR: Moody's Rates New $500MM Unsec. Notes Due 2026 'B2' C&W SENIOR: S&P Assigns 'BB-' Rating to New $500MM Senior Notes ULSTER BANK: New Complaints Have Until Year End to File Claims I T A L Y ITALY: Outlines Plans to Trim Deficit Over Next 3 Years K A Z A K H S T A N TSESNABANK: S&P Affirms 'B/B' Issuer Credit Ratings, Outlook Neg. R U S S I A VOZROZHDENIE BANK: Moody's Hikes Deposit Rating to Ba2 VOZROZHDENIE BANK: S&P Raises Long-Term ICR to 'B+', Outlook Pos. U N I T E D K I N G D O M ARCH ANGELZ: Faces Administration, 120 Jobs at Risk ARQIVA BROADCAST: Fitch Rates GBP625MM Notes B-, Outlook Stable BAIN CAPITAL 2018-2: Fitch Gives B-(EXP) Rating to Class F Debt BAIN CAPITAL 2018-2: Moody's Assigns B2 Rating to Class F Notes DUNSCAR BREWERY: Up for Auction After Falling Into Administration BEATTIES: Sports Direct Boss Vows to Keep Store Open ********* ============= A R M E N I A ============= INECOBANK CJSC: Moody's Assigns B1/B2 LT Deposit Ratings -------------------------------------------------------- Moody's Investors Service has assigned the following ratings to Armenia-based Inecobank CJSC: B1 long-term and Not Prime short-term local currency bank deposit ratings, B2 long-term and Not Prime short-term foreign currency bank deposit ratings, b1 baseline credit assessment and adjusted BCA, Ba3 long-term and Not Prime short-term Counterparty Risk Ratings, Ba3(cr) long-term and Not Prime(cr) short-term Counterparty Risk Assessments. The long-term deposit ratings carry a stable outlook. RATINGS RATIONALE The B1 local currency long-term deposit ratings assigned to Inecobank incorporates its b1 BCA and reflects the bank's: (1) good loan book diversification; (2) solid loss absorption capacity as evidenced by its high capital adequacy and good internal capital generation; (3) stable funding and ample liquidity; At the same time, Inecobank's ratings are constrained by the bank's high exposure to foreign currency loans. Moody's expects Inecobank's asset quality to remain broadly stable in the foreseeable future, supported by improving economic conditions in Armenia (B1, positive) and Moody's expectation that the local currency will remain stable over the next 12-18 months. Inecobank's asset quality indicators have remained robust with problem loans (which include impaired corporate loans and retail loans overdue by more than 90 days) amounting to 5.7% of gross loans as of YE2017. Inecobank's asset quality benefits from good diversification of its granular loan book. In addition, the favourable operating environment amid robust economic growth (Moody's forecasts GDP growth of 6% in 2018) suggests better business conditions for new lending prospects. Exposure to foreign-currency denominated loans accounted for a high 55% of total loans as of end-2017, a level that, while typical for many Armenian banks, renders asset quality vulnerable to potential currency volatility. Inecobank benefits from its shareholder's structure with over 30% of the bank's equity controlled by international financial institutions (IFIs; the European Bank for Reconstruction and Development and agRIF Cooperatief U.A). The rating action also reflects Inecobank's solid loss absorption capacity, supported by the bank's robust capital buffers and strong income generation. At the end of Q1 2018, Inecobank reported a TCE / RWAs ratio of 16.7% and Moody's expects its capital adequacy to remain solid in the long term, supported by its good internal capital generation. Moody's expects Inecobank's recurring profitability to remain strong, supported by its healthy interest margin of 6%, given the focus on high-yielding products and good cost efficiency. For Q1 2018, the bank reported net profit of AMD2.0 billion (a 19% increase from the AMD1.7 billion reported for Q1 2017) which translated to annualized return on average assets of 3.0% and return on equity of 16.5%. Inecobank's liquidity and funding profiles will remain stable over the next 12-18 months and will be supported by the good granularity of its deposit base which accounted for 62% of total liabilities and its longstanding partnership with IFIs. In addition, the bank maintains a good level of liquidity cushion at around 30% of total assets at end-Q1 2018, comprising cash and government securities. FOREIGN CURRENCY DEPOSIT RATING The bank's B2 foreign-currency deposit rating is constrained by Armenia's foreign-currency deposit ceiling. GOVERNMENT SUPPORT Inecobank's long-term global local currency (GLC) deposit rating of B1 incorporates Moody's assessment of a moderate probability of support from the Government of Armenia (B1, positive) in the event of need, which is based on the bank's notable market position, including over 5% market share in customer deposits. However, this support does not provide any rating uplift to Inecobank's GLC rating as Armenia's B1 sovereign rating is at the same level as the bank's BCA. STABLE OUTLOOK The stable outlook ratings reflect Moody's expectations for a steady performance over the next 12-18 months supported by a favorable operating environment. WHAT COULD MOVE THE RATING UP/DOWN Given the stable outlook, an upgrade of the B1 local currency deposit rating is not likely over the next 12-18 months. The foreign currency deposit rating B2 would be upgraded if country's ceiling were raised. In the longer term, a positive rating action might be considered as a result of a material improvement in economic conditions, further strengthening the bank's financial performance along with decreased exposures to foreign currency loans. Conversely, in the longer term, Inecobank's ratings could be downgraded in the event of a material deterioration in the operating environment, asset quality impairment beyond Moody's expectations, capital erosion or liquidity shortage. The principal methodology used in these ratings was Banks published in August 2018. LIST OF AFFECTED RATINGS Assignments: Issuer: Inecobank CJSC LT Deposit Rating (Foreign Currency), Assigned B2, Stable LT Deposit Rating (Local Currency), Assigned B1, Stable ST Deposit Rating (Foreign and Local Currency), Assigned NP Adjusted Baseline Credit Assessment, Assigned b1 Baseline Credit Assessment, Assigned b1 Counterparty Risk Assessment, Assigned NP(cr) Counterparty Risk Assessment, Assigned Ba3(cr) ST Counterparty Risk Rating (Foreign and Local Currency), Assigned NP LT Counterparty Risk Rating (Foreign Currency), Assigned Ba3 LT Counterparty Risk Rating (Local Currency), Assigned Ba3 Outlook : Assigned Stable =================== A Z E R B A I J A N =================== ACCESSBANK: Fitch Withdraws 'C' Long-Term Issuer Default Rating --------------------------------------------------------------- Fitch Ratings has affirmed Azerbaijan-based AccessBank's (AB) Long-Term Issuer Default Rating at 'C'. Fitch has simultaneously withdrawn the ratings for commercial reasons and will no longer provide rating and analytical coverage of AB. KEY RATING DRIVERS On August 31, 2018 Fitch downgraded AB's Long-Term Issuer Default Rating to 'C' from 'BB-' following the bank's standstill arrangement with foreign creditors. Fitch has affirmed the ratings of AB prior to withdrawal due to limited changes to its credit profile since the downgrade. RATING SENSITIVITIES Not applicable The rating actions are as follows: Long-Term IDR: affirmed at 'C'; withdrawn Short-Term IDR: affirmed at 'C'; withdrawn Viability Rating: affirmed at 'f'; withdrawn Support Rating: affirmed at '5'; withdrawn ============= D E N M A R K ============= DANSKE BANK: Faces US Probe Over Money Laundering Scandal --------------------------------------------------------- Richard Milne at The Financial Times reports that Danske Bank is facing a criminal investigation by US federal prosecutors into its EUR200 billion money laundering scandal, raising the possibility of a large fine for Denmark's biggest lender. The FT relates that Danske disclosed on Oct. 4 that it had received requests for information from the US Department of Justice. "We are co-operating with the authorities investigating us as a result of the case. However, it is too early to speculate on any outcome of the investigations," the report quotes Jesper Nielsen, Danske's interim chief executive, as saying. Danske ousted its previous chief executive, Thomas Borgen, on Oct. 1 following disclosures he ignored warnings about the Estonian branch, the FT says. According to the report, the Danish government said it is doing everything to avoid Danske suffering the same fate as ABLV, a Latvian lender that was forced to liquidate itself earlier this year. The FT says analysts predict Danske could face a multibillion- dollar fine over the scandal, with Danish lender Jyske estimating markets are factoring in total penalties of $6.2 billion to $7.7 billion. The FT notes that Danske's growing scandal has already cost Mr. Borgen his job after the bank outlined how EUR200 billion in money from Russia and other former Soviet states had passed through its Estonian branch between 2007 and 2015. Investigations are under way in at least six countries, with criminal probes in Denmark and Estonia, as well as the US, the FT states. Analysts at Berenberg noted that Danske had downplayed the risks of a US fine last month as it had no US banking or dollar clearing license and no access to the Federal Reserve's liquidity window, according to the report. However, about 15 per cent of its funding is in dollars, according to Berenberg, which added: "Danske will likely remain under pressure, as money laundering investigations are not complete, and regulatory fine risk continues," the FT relates. According to the FT, Danske also announced on Oct. 4 that it was stopping its share buyback programme after Danish regulators called for it to hold more capital because of increased compliance and reputational risks. The Danish Financial Supervisory Authority ordered Danske in May to increase its solvency need by DKR5 billion and on Oct. 4 increased it to DKR10 billion (US$1.5 billion). The FT relates that Danske said it had reassessed its capital targets and taken further "prudency measures" by lifting its total capital ratio from 19 per cent to more than 20 per cent and its core equity tier 1 ratio from 14 to 15 per cent previously to about 16 per cent. It said it already met its new targets. PRIMERA AIR: Passengers Left Stranded Amidst Collapse ----------------------------------------------------- Kara Godfrey at Express reports that thousands of passengers have been left stranded abroad in the US and Europe as low-cost airline Primera Air has gone into administration. All flights, primarily from Stansted Airport, have been stopped with immediate effect from October 2, with Norwegian Airlines offering to repatriate passengers with half-price flight tickets for those affected, according to Express. The report notes that the announcement comes almost a year to the day when low-cost airline Monarch also collapsed. Passengers are advised not to travel to Stansted or Birmingham Airport where the airline is based, the report relays. They should attempt to contact the airline as well as their insurance provider, the report notes. If they booked through a travel agent then they will be most likely be covered by ATOL protection, which covers airlines which go into administration, the report discloses. However, those who booked their flights through the website will not be covered by this and will have to try and claim through their travel insurance under the clause of Scheduled Airline Failure or End Supplier Failure, the report relays. The report notes that the Civil Aviation Authority (CAA) has warned that "Primera Air is not covered by the UK Civil Aviation Authority's ATOL Protection scheme which only covers passengers booked on a package holiday." Reasons for the airline going into administration were blamed on a delay in Airbus aircraft deliveries as well as competing with other low-cost airlines such as Norwegian Air and Wizz Air, the report says. =========== F R A N C E =========== UNIFIN SAS: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable ---------------------------------------------------------------- S&P Global Ratings assigned its 'B' long-term issuer credit rating to UniFin SAS, the holding company of Unither Pharmaceuticals, a France-based contract developer and manufacturer of pharmaceutical products. S&P also assigned its 'B' issue rating to the proposed EUR305 million bullet term loan B. The recovery rating is '3', indicating our expectation of 50%-70% recovery (rounded estimate: 60%) in the event of a payment default. The long-term rating on Unither reflects the group's relatively small size and limited product diversity. These weaknesses are partly mitigated by the group's leading position in the niche European BFS CMO market and the relatively high barriers to entry created by regulatory and capital investment requirements, which protect Unither's market position. With a reported opening debt- to-EBITDA ratio of 4.9x, in S&P's view, Unither's financial profile is not excessively leveraged. However, the group's ownership by French private equity investment firm Ardian as a financial sponsor and its modest free operating cash flow (FOCF) generation constrains our overall financial risk assessment. That said, S&P anticipates that Unither will continually expand its EBITDA base and gradually deleverage, such that its S&P Global Ratings-adjusted debt-to-EBITDA ratio remains between 4x and 5x in 2019-2020. Unither offers manufacturing capacities to branded pharmaceutical groups and generics companies. The group specializes in sterile single-unit-dose preparations (liquids), mostly for ophthalmologic and respiratory treatments, using the BFS technology. This technology compares favorably with alternative filling processes, such as glass, due to its higher level of sterility, absence of preservatives, and lower operating costs. Unither also manufactures non-sterile liquid single-dose vials, non-sterile bottles, powder stick pack, effervescent and orally dissolving tablets, as well as suppositories. Similar to other CMOs, in S&P's opinion, Unither is subject to stringent manufacturing standards and lacks pricing powers. As such, operating efficiency and capacity to renew or gain new contracts- -in order to continually increase volumes--are essential to our assessment of Unither's business risk profile. Unither's operations are concentrated in the small doses BFS CMO markets in Europe. Unither benefits from the manufacturing outsourcing trend of big pharma groups to CMOs, but the niche nature of its addressable market of operations constrains its overall business risk profile. The company derives just over one- half of its total revenues (55% as of end-2017) and the majority of its profitability from BFS-technology-based products for ophthalmology and respiratory treatments. The group's other business lines, such as non-sterile liquids (22% of revenues in 2017) or solids and semi solids (15%) operate in commoditized and highly fragmented markets, and face stiff competition. S&P said, "We therefore expect these products to contribute only marginally to the group's EBITDA. However, Unither expects new business lines such us non-sterile liquid sticks and multi-dose preservative free, to diversify its products mix and drive growth. Nevertheless, we note that these products are still in very early stages of production." The company's relative small scale limits its pricing power. This means that the group has to consistently deliver appropriate product quality and sufficient volumes without increasing prices in order to retain its customer base. Positively, Unither has maintained long-standing relationships with its clients and has not lost any pharmaceutical customers since 1993. While this highlights Unither's strong client retention rate, it also underscores the niche nature of the BFS-technology market, with its small number of players and high switching hurdles. Unither's top four clients represent 46% of sales and big pharma companies generate 47%, indicating modest customer diversification. S&P said, "This leaves the company subject to changes in client preferences, since we understand that a 20%-30% price gap could justify the switch to another CMOs provider for its existing clients. Furthermore, we consider that operational setbacks, such as material production bottlenecks, could jeopardize Unither's capacity to retain its customer base." S&P said, "We consider that the group benefits from a well- established position in Europe, but its presence in the U.S. and emerging markets remains small. We note, however, that Unither intends to expand its operations in the U.S. on the back of its 2013 acquisition of UCB's manufacturing plant in Rochester, New York. Unither acquired the plant at virtually no cost, but the tradeoff was to commit to a certain level of supply to UCB at low and decreasing prices over the life of the contract. As a result, Unither retains legacy products that contribute minimally to profitability but help to absorb fixed costs. In our view, the success of the group's expansion plans is contingent on Unither's capacity to effectively launch its BFS product lines in the U.S. Given the highly competitive nature of the U.S. market, this casts some clouds over our forecasts. "Despite the presence of unprofitable product lines, we consider that Unither's credit profile benefits from good profitability levels, with a forecasted S&P Global Ratings-adjusted EBITDA margin above 20% over 2018-2020. The company has adequate operating efficiency, with a low-cost positioning, high capacity usage, and no need to build a new plant to accommodate growth plans. We note that, of the company's six manufacturing sites, Coutances (France) and Rochester (U.S), are FDA approved--pivotal to entering the U.S. market. Still, in our view, six is a limited number of plants, and the temporary closure of one plant or failure to comply with FDA requirements could meaningfully hinder the group's operations. Finally, we assume that the company's increasing capacity needs, in response to higher volumes, would lead to rising capital expenditures (capex) that could constrain Unither's FOCF generation over 2018-2020. This weighs negatively on our assessment. "We estimate that Unither will post adjusted debt to EBITDA close to 5x on average over the next two years. Our debt calculation excludes the group's EUR274 million non-common equity, subject to final documentation. The equity sponsor ownership of the group and the uncertainty as to whether Ardian will sustainably support Unither's deleveraging trajectory and FOCF generation, however, weighs on our assessment. "The stable outlook reflects our view that, in the next 12-18 months, Unither will retain its leading position in the niche small-volumes BFS CMO market. We anticipate that the company will continue to benefit from the manufacturing outsourcing trend of big pharma group to CMOs, translating into continued EBITDA growth. We forecast the group's adjusted debt to EBITDA will be above 5x in 2018, but dip slightly to the 4x-5x range in 2019- 2020, since we expect the company to deleverage gradually. The stable outlook also incorporates our view that the group's undrawn EUR25 million revolving credit facility and available cash balance will support the company's liquidity over the coming 12 months. "We could take a negative rating action if the company failed to successfully increase its EBITDA base, such that the group's adjusted debt-to-EBITDA ratio is significantly above 5x or its adjusted EBITDA interest coverage was below 3x for a protracted period. Such a scenario could arise if Unither experiences material operational disruptions or fails to renew existing contracts, causing a drop in volumes in its BFS business line. Similarly, failure to meet FDA requirements could significantly damage Unither's operating efficiency, which is a key credit factor, notably in terms of quality and sustainability, and would jeopardize its business risk profile. We could also lower the rating if Unither's FOCF remained negative beyond this year, due to higher-than-expected working capital outflows or capex. "A positive rating action is unlikely in the next 12-24 months. However, we could raise the rating if Unither materially increased the scale and diversity of its product offerings without hindering profitability. Ratings upside could also emerge if we were convinced that Ardian would consistently support the group's deleveraging trajectory such that its adjusted debt to EBITDA remained comfortably below 5x, supported by sizable FOCF that would enable the company to withstand any unforeseen negative events, such as pressure on profitability, greater working capital outflow, or an increase in interest rates." ============= I R E L A N D ============= C&W SENIOR: Moody's Rates New $500MM Unsec. Notes Due 2026 'B2' --------------------------------------------------------------- Moody's Investors Service has assigned a B2 rating to the proposed USD500 million senior unsecured notes due 2026 to be issued by C&W Senior Financing Designated Activity Company, a trust-owned special purpose vehicle that Cable & Wireless Communications Limited consolidates. The Ba3 corporate family rating of CWC, as well as the ratings of the other debt instruments of the group, remain unchanged. The rating outlook is stable. The SPV Issuer will on-lend the USD500 million proceeds from the notes issuance to Sable International Finance Limited, through a proceeds loan. The new USD500 million notes will rank pari passu with the SPV Issuer's existing USD700 million notes due 2027 and with SIFL's existing USD750 million senior unsecured notes due 2022. CWC will use the notes proceeds to (1) repay in full the GBP147 million (around USD200 million) notes issued by Cable & Wireless International Finance B.V. (CWIF) at maturity (March 2019); (2) partially redeem the existing USD750 million SIFL notes due 2022; and (3) pay related transaction fees. Although the notes will not benefit from a direct guarantee at the SPV level, the proceeds loan will benefit from the same direct subsidiary guarantees as SIFL's existing USD750 million senior unsecured notes. The rating of the proposed notes assumes that the final transaction documents will not be materially different from draft legal documentation reviewed by Moody's to date and that these agreements are legally valid, binding and enforceable. Assignment: Issuer: C&W Senior Financing Designated Activity Company USD500 million Senior Unsecured Regular Bond/Debenture, Assigned B2 RATINGS RATIONALE The B2 rating of the new USD500 million notes issued by the SPV Issuer, which is in line with the existing USD700 million notes at the SPV Issuer and the existing USD750 million SIFL notes, reflects their positioning in the waterfall, ranking behind SIFL's USD1,875 million senior secured term loan and USD625 million senior secured revolving credit facility (RCF). While the term loan and RCF only benefit from a share pledge security, which Moody's considers of limited value, the existence, in case of security enforcement, of a standstill period on the unsecured notes and the option by secured creditors to release existing guarantees on the senior unsecured notes, results in the notes having access to CWC's cash flows after the term loan creditors, ranking behind in the priority of claims. The issuance of the new notes does not have a material effect on CWC's absolute debt levels and will extend its maturity profile. According to the indenture of the new USD500 million SPV Issuer notes and the existing USD700 million SPV Issuer notes, under certain group refinancing transactions (i.e. full redemption of the USD750 million SIFL notes), the notes could be assumed by a new intermediate holding company and their guarantors would subsequently be released. This would enable CWC to eventually simplify its debt structure by having two layers of debt, one secured and one unsecured. CWC's Ba3 corporate family rating continues to reflect its effective business model, strong profitability and leading market positions throughout the Caribbean and Panama. At the same time, the rating also takes into consideration the company's large exposure to emerging economies, high competitive pressures in most of its markets and its fairly high leverage for the Ba3 rating. CWC is one of the three rated Latin American and Caribbean credit pools owned by Liberty Latin America Limited (LLA), which was split off from Liberty Global plc (Liberty Global, Ba3 stable) in December 2017. While CWC reaps some benefits from being part of a wider group and still having certain links with Liberty Global through a two-year service agreement and sharing of technology, the ownership by LLA also raises some risks. LLA, which is a holding company and does not have operating activities, aims to grow its Latin American and Caribbean business further, both organically and through acquisitions, and may need to upstream cash from its subsidiaries to fund these acquisitions. The stable outlook on CWC's rating reflects Moody's expectations that the company's revenue growth will be modest, with its EBITDA margin (including Moody's adjustments) maintained at around 40% and liquidity remaining adequate in the next 12-18 months. The outlook also incorporates slightly positive free cash flow for the next 12-18 months and a gradual decline in adjusted debt/EBITDA. A rating upgrade could be considered if more conservative financial policies lead to deleveraging to under 2.5x (adjusted debt/EBITDA) on a consolidated basis, while maintaining a stable adjusted EBITDA margin and generating strong positive free cash flow, all on a sustained basis. CWC's ratings could be downgraded if (1) the company's adjusted debt/EBITDA remains over 4.0x (on a consolidated basis) on a sustained basis; (2) its adjusted EBITDA margin declines toward 35% on a sustained basis; (3) the company's market shares decline or its liquidity position weakens; (4) it makes a large cash distribution to its parent company. C&W SENIOR: S&P Assigns 'BB-' Rating to New $500MM Senior Notes --------------------------------------------------------------- S&P Global Ratings assigned its 'BB-' issue-level rating to C&W Senior Financing Designated Activity Company's proposed $500 million senior notes due 2026. The company is a trust-owned special purpose vehicle (SPV) that Cable & Wireless Communications Limited (CWC; BB-/Negative/B) consolidates. The SPV will transfer the notes' proceeds to Sable International Finance Ltd. (SIFL), CWC's subsidiary. This will allow the group to refinance in full Cable & Wireless International Finance B.V.'s GBP147 million, 8.625% senior notes due March 2019; make partial redemption of CWC's $750 million, 6.875% senior notes due 2022; and pay transaction-related premiums, fees, and expenses. The issuance won't have impact on CWC's leverage, because the group will use most of the proceeds for debt repayment. S&P expects a proportionate debt-to-EBITDA ratio below 4.0x and funds from operations to debt of 18% by the end of 2018, in line with the current rating on CWC. In S&P's view, the SPV meets the following conditions: -- All of its debt obligations are backed by equivalent-ranking obligations with equivalent payment terms that SIFL issued. -- As a strategic financing entity for CWC, its set up solely to raise debt on behalf of the group; and -- S&P believes CWC is willing and able to support the SPV to ensure full and timely payment of interest and principal on its debt, including payment of the SPV's any expenses. Therefore, S&P rates the SPV's debt relative to other debt obligations of CWC and treat the contractual obligations of the SPV as financial obligations of the parent. The issue-level rating on the proposed notes is in line with the issue-level ratings on senior unsecured debt issued by SIFL, reflecting the pari passu ranking. RATINGS LIST Cable & Wireless Communications Limited Issuer credit rating BB-/Negative/B Rating Assigned C&W Senior Financing Designated Activity Company Senior notes BB- ULSTER BANK: New Complaints Have Until Year End to File Claims -------------------------------------------------------------- The Irish Times reports that Ulster Bank will give new complainants up until the end of the year to seek compensation from a scheme that was set up for companies whose businesses were impacted by being put into a controversial restructuring unit during the financial crisis, According to the Irish Times, the lender is currently issuing a follow-up letter to about 2,000 Irish customers who were put into the group's now-defunct global restructuring group (GRG), informing them that they have until December 31st to file a complaint about their treatment in the division. The report relates that the bank's UK parent, Royal Bank of Scotland (RBS), set aside GBP400 million (EUR449 million) two years ago to cover redress and compensation after the Financial Conduct Authority in London concluded the group was guilty of "systemic" mistreatment of distressed firms that came to it for help. However, the authority cleared RBS of the allegation that it had forced businesses into default for its own benefit while in the GRG unit, the report says. "Since the GRG complaints process was opened to customers in the Republic of Ireland in January 2017, we have received 69 complaints and have worked hard to ensure fair decisions have been reached in response to the issues raised," the report quotes a spokeswoman for Ulster Bank as saying. Of the 2,000 Irish small- to medium-sized enterprises (SMEs) that went into GRG, about 100 went out of business and a similar number recovered while within the division. Some 1,800 borrowers' loans were sold on mainly to overseas-based investment firms, the report notes. The Irish Times says businessman Bill Cullen launched a multimillion-euro legal action earlier this year against Ulster Bank and the receivers of his Glencullen Group, alleging that the bank and its GRG unit targeted his business. The report relates that Mr. Cullen's partner, Jackie Lavin, and a group of other borrowers whose facilities were moved to the GRG during the crisis plan to file complaints with An Garda Siochana in Harcourt Square in Dublin and the Police Service of Northern Ireland on Oct. 3. "To date, there has been no appetite on the part of policing and regulatory authorities to investigate," said Kevin Winters, managing partner of Belfast-based law firm KRW Law Advocates, who says that he is acting on behalf of 50 former GRG clients, the Irish Times relays. The report adds that Mr. Winters said the RBS/Ulster Bank compensation scheme "falls way short of expectations in terms of addressing what's at the root" of the matter. RBS is set to close its compensation scheme to new complaints in the UK on October 22, according to the Irish Times. Of the 69 complaints received by Ulster Bank, 53 have been deemed to fall within the scope of the GRG complaints process, of which 36 have been assessed, the report discloses citing sources. The bank has upheld 15 complaints in full or in part. Customers who wish to make a complaint once the scheme has closed will be able to use the bank's usual complaints procedure but will not be able to appeal to an independent third party currently involved in the process, adds the Irish Times. ========= I T A L Y ========= ITALY: Outlines Plans to Trim Deficit Over Next 3 Years ------------------------------------------------------- Miles Johnson at The Financial Times reports that Italy's populist coalition has said it will reduce the country's budget deficit over the next three years but will press ahead with its controversial planned increase in spending for 2019. According to the FT, Italian prime minister Giuseppe Conte said Rome would aim to reduce its budget deficit to 2.1 per cent of GDP in 2020 and to 1.8 per cent of gross domestic product by 2021. The Italian government will stick to its plan of a budget deficit of 2.4 per cent of GDP for 2019. Economy minister Giovanni Tria had indicated the government would take steps to bring down its deficit earlier on Oct. 3, the report relates. However the Italian government gave no further details on the economic forecasts that were used to reduce its deficit in the future, the FT says. Senior officials from the European Commission have said that Rome's plans for next year would risk breaching European spending rules, according to the FT. The coalition must send a draft budget to the European Commission for review by the middle of this month, the FT adds. =================== K A Z A K H S T A N =================== TSESNABANK: S&P Affirms 'B/B' Issuer Credit Ratings, Outlook Neg. ----------------------------------------------------------------- S&P Global Ratings affirmed its 'B/B' long- and short-term issuer credit ratings on Kazakhstan-based Tsesnabank. The outlook remains negative. S&P is also affirming its 'kzBB+' national scale rating on the bank. S&P said, "The affirmation reflects our assumption that the government of Kazakhstan will buy Kazakhstani tenge (KZT) 450 billion (about $1.3 billion) of Tsesnabank's loans to the agricultural sector, at book value, following its announcement on Sept. 20, 2018. As we understand, KZT300 billion of these loans have already been purchased and the remainder are expected to be bought in the coming weeks. At the same time, we anticipate that the deposit volatility we have observed recently at Tsesnabank, especially among government-related entity (GRE) depositors, will recede, with no major withdrawals expected over the next 12 months. The loan buyout and expected stability of GRE deposits have helped shore up the bank's liquidity and partly address its asset quality problems. "Although we think that negative market sentiment regarding Tsesnabank may have eased since the buyout was announced, we still consider the bank's liquidity position to be fragile and dependent on large corporate depositors remaining with the bank. However, in our view, the volatility of GRE deposits should not be significant in the future. Tsesnabank's cash and interbank placements declined substantially over the first eight months of 2018, and it received emergency funding from the National Bank of Kazakhstan (NBK) in August to compensate for any further liquidity shortfalls. In September, the bank also experienced a deposit outflow of more than 10% of total deposits. However, we understand that the KZT300 billion in loan-purchase proceeds Tsesnabank has received have helped the bank build up its liquidity buffers as of the end of September. Tsesnabank also has a renewable liquidity line from the NBK that it can use in the future, if needed. "In view of these recent developments, we think it will take some time for Tsesnabank to restore confidence among all its customers and address asset quality problems in the remainder of its loan book. We expect the bank will report losses in the next 12-18 months and will need to deal with brand and reputation issues. We have therefore revised our assessment of the bank's business position to moderate from adequate. However, we still assess the bank's stand-alone credit profile at 'b-' because we do not foresee a likely scenario of default over the next 12 months, considering the provided and announced extraordinary government support for Tsesnabank and potential further support in the future. We assess Tsesnabank as a moderately systemically important bank in Kazakhstan, where we view the authorities as supportive toward the banking system. The long-term rating on Tsesnabank therefore incorporates one notch of uplift, compared with its stand-alone credit profile. "The negative outlook reflects our view that Tsesnabank's liquidity profile remains vulnerable to any unexpected large withdrawals of deposits or the absence of expected government support. In such a scenario, we might lower the rating by several notches. We could also downgrade the bank if we observed further deterioration of the business position and weakening of the bank's role in the banking sector and economy. "We could revise our outlook to stable if we were to see that the pressures on the bank's liquidity and asset quality have eased. This could follow an orderly cleanup of the bank's balance sheet, or our belief that the bank would be able to adjust its business model to allow for consistent revenue generation and capital buildup." =========== R U S S I A =========== VOZROZHDENIE BANK: Moody's Hikes Deposit Rating to Ba2 ------------------------------------------------------ Moody's Investors Service upgraded Vozrozhdenie Bank's long-term local and foreign currency deposit ratings to Ba2 from B3; its baseline credit assessment to b2 from b3; its adjusted BCA to b1 from b3; its long-term Counterparty Risk Assessment to Ba2(cr) from B2(cr) and its long-term Counterparty Risk Ratings (CRRs) to Ba2 from B2. The bank's short-term deposit ratings and CRRs of Not Prime as well as short-term CRA of Not Prime(cr) were not affected by this action. The outlook on the long-term local and foreign currency deposit ratings was changed to positive and stable, respectively, from ratings under review. This action completes the review process that Moody's initiated on August 23, 2018, following the announcement by Bank VTB, PJSC (Bank VTB; Ba1 positive, b1) that it intends to acquire a controlling stake in Vozrozhdenie Bank. The upgrade of Vozrozhdenie Bank's ratings follows the announcement on October 2, 2018 by Bank VTB that it has acquired a controlling stake (85%) of Vozrozhdenie Bank, aiming to increase its stake to 100% over the next 12-18 months and legally merge with Vozrozhdenie Bank in 2020. RATINGS RATIONALE The upgrade of Vozrozhdenie Bank's BCA reflects Moody's view that the acquisition by Bank VTB improves Vozrozhdenie Bank's credit profile, as it removes prolonged uncertainties regarding Vozrozhdenie Bank's development prospects and its ownership. As a member of VTB group, Vozrozhdenie Bank will also benefit from (1) Bank VTB's larger scale and stronger credit profile, and (2) potential access to support from the Government of Russia (Ba1 positive), which is Bank VTB's controlling shareholder. These considerations are reflected in the upgrade of the Vozrozhdenie Bank's deposit ratings, which now benefit from affiliate support and government support. OUTLOOK The outlook on the long-term local currency deposit rating is now positive, which reflects Moody's expectations that in the next 18-24 months the bank will be merged into Bank VTB, whose local currency deposit rating is currently higher. WHAT COULD MOVE RATINGS UP/DOWN Vozrozhdenie Bank's ratings would be upgraded if the bank were merged with Bank VTB. Given the positive outlook on the local currency deposit ratings, the downside risk for Vozrozhdenie Bank's deposit ratings is currently limited. However, the outlook could be changed to stable if Bank VTB's plans with respect to the legal merger in 2020 changed. Also, Vozrozhdenie Bank's BCA could be downgraded if the bank's asset quality and capitalization worsen beyond what Moody's currently expects. LIST OF AFFECTED RATINGS Issuer: Vozrozhdenie Bank Upgrades: Adjusted Baseline Credit Assessment, Upgraded to b1 from b3 Baseline Credit Assessment, Upgraded to b2 from b3 Local Currency LT Bank Deposits, Upgraded to Ba2 from B3, Outlook Changed To Positive From Rating Under Review Foreign Currency LT Bank Deposits, Upgraded to Ba2 from B3, Outlook Changed To Stable From Rating Under Review LT Counterparty Risk Assessment, Upgraded to Ba2(cr) from B2(cr) LT Counterparty Risk Rating, Upgraded to Ba2 from B2 Outlook Action: Outlook changed to Positive(m) from Rating Under Review VOZROZHDENIE BANK: S&P Raises Long-Term ICR to 'B+', Outlook Pos. ----------------------------------------------------------------- S&P Global Ratings raised its long-term issuer credit rating on Russia-based Vozrozhdenie Bank to 'B+' from 'B' and removed the rating from CreditWatch with developing implications, where it was initially placed on June 19, 2018. The outlook is positive. At the same time, S&P affirmed its 'B' short-term issuer credit rating on the bank. The rating action follows VTB Bank's acquisition of Vozrozhdenie Bank. S&P now sees Vozrozhdenie Bank as a moderately strategic subsidiary of VTB Bank (BBB-/Stable/A-3) and expect it will benefit from ongoing implicit or explicit support of a stronger financial group, as well as access to the group's IT infrastructure and managerial expertise. S&P said, "We also see potential for further strengthening of group support because we expect Vozrozhdenie Bank's strategy will gradually be aligned with that of the group. Historically, Vozrozhdenie Bank has had a significant presence in the socially important Moscow region, and we see the strengthening of positions in this region also as one of VTB Bank's important targets. We believe that stabilization of Vozrozhdenie Bank's ownership structure should allow it to re-attract major clients that left the bank during the prolonged period of turbulence surrounding the shareholder structure, which began at the end of 2017. "We continue to assess Vozrozhdenie Bank's stand-alone credit profile at 'b'. This reflects our expectation that the bank will regain its solid franchise in the wealthy Moscow region, which suffered somewhat during the period of stress around the shareholders over the past 12 months. On Sept. 1, 2018, the bank's market shares were 6.0% by retail loans and 6.5% by retail customer deposits in the Moscow region. "We project pressure on Vozrozhdenie Bank's capital adequacy ratios after it resumes active lending operations under the new ownership, which will likely result in risk-weighted asset growth outpacing earnings retention. Accordingly, we forecast our risk- adjusted capital ratio in the range of 4.1%-4.3%, assuming loan portfolio growth of 10%-15% and no new capital injections or dividends outflows during next two years. We expect Vozrozhdenie Bank will maintain asset quality comparing well with that of local peer banks. The bank reported nonperforming loans (loans more than 90 days overdue) of 6.1% of total loans under International Financial Reporting Standards on June 30, 2018, which is well below the sector average level of 8%-10% under our assessment. We currently estimate the level of loans to companies linked with the Ananiev brothers (formerly controlling shareholders) at about 2.7% of total loans, decreasing from about 4.1% at mid-2018. "We expect that Vozrozhdenie Bank will maintain sufficient liquidity buffers. On Sept. 1, 2018 the bank's highly liquid assets, including cash and money market instruments and liquid securities (excluding those pledged under repurchase order transactions) comprised about 24% of total assets, and net broad liquid assets covered the bank's short-term customer deposits by 66%, which is quite high compared with local peers. The positive outlook indicates that we would consider an upgrade in the next 12 months if we saw the bank's strategic importance to VTB Bank had increased as a result of successful strategic, operational, and organizational group integration. We would also consider an upgrade if Vozrozhdenie Bank's stand-alone creditworthiness improved as a result of a materially strengthened business position and customer franchise in the Moscow region. "We would revise the outlook on Vozrozhdenie Bank to stable if we considered that VTB Bank had failed to successfully integrate and develop Vozrozhdenie Bank's business franchise. The outlook revision or even a negative rating action could follow if Vozrozhdenie Bank's stand-alone credit profile came under undue pressure because the bank did not receive group support, or as a result of more aggressive lending practices or liquidity management strategies, or tighter capital, for example." =========================== U N I T E D K I N G D O M =========================== ARCH ANGELZ: Faces Administration, 120 Jobs at Risk ---------------------------------------------------- BBC News reports that Arch Angelz Limited, which was established in 2008, has gone into administration with 120 jobs at risk. Administrators Quantuma, BBC News relays, has said the Company has faced financial difficulties this year. The "beauty bar", which operated 31 concessions in Debenhams stores, had tried to find a buyer but was unsuccessful, according to BBC News. Seven of the concessions are in Wales, with others in England, the report notes. The report relays that a Quantuma statement said: "This will be a difficult time for staff in the period leading up to Christmas and it is our priority to assist all employees with their claims while conducting an orderly wind down of the business and seeking to maximise the recovery for creditors." ARQIVA BROADCAST: Fitch Rates GBP625MM Notes B-, Outlook Stable --------------------------------------------------------------- Fitch Ratings has assigned Arqiva Broadcast Finance plc's high- yield (HY) GBP625 million senior notes due 2023 a final rating of 'B-'. The agency has also affirmed Arqiva Financing plc and Arqiva PP Financing's whole business securitisation (WBS) bonds at 'BBB'. The Outlooks are Stable. KEY RATING DRIVERS The final rating of the HY notes reflects the structural subordination of the bonds, weak creditor protection and exposure to dividend pay-out disruptions from the WBS group in cash lockup or cash sweep scenarios. The bullet nature of the HY notes exposes them to significant refinancing risk in five years. The rating of the WBS (senior) notes reflects gradual expected deleveraging, in line with Arqiva's largely contracted revenue profile and resilience to RPI and LIBOR sensitivities. Fitch expects net debt to EBITDA of the WBS notes to fall to under 3.0x by 2025 from 5.1x in FY17 and to close to 0x by FY30. Long-term RPI linked contracts and a monopoly position in terrestrial television and radio broadcasting partly underpin Arqiva's revenues. However, Fitch perceives technology risk could affect contract renewals in other segments such as the Digital Platform (DP) business line. Revenues Underpinned by Long-Term Contracts: Industry Profile - Stronger Operating Environment: Stronger Arqiva is the sole UK national provider of network access and managed transmission services (regulated by the UK Office of Communications; Ofcom) for terrestrial television and radio broadcasting. The company owns and operates all television and over 90% of the radio transmission towers used for digital terrestrial television (DTT) and terrestrial radio broadcasting in the UK. Arqiva has long-term contracts with public service broadcasters to provide coverage to 98.5% of the UK population as well as with commercial broadcasters. Arqiva owns two of the three main national DTT commercial multiplexes (out of a total of six) plus two new HD-compatible DTT multiplexes. In radio broadcasting, Arqiva owns licenses for operating one national commercial digital radio multiplex and more than 40% of the second. Arqiva is the largest independent provider of wireless tower sites in the UK, which are licensed to the mobile networks operators (MNOs) and other wireless network operators, with approximately 25% of the total active licensed macro cell site market. Due to its industry nature, Arqiva is not exposed to discretionary spending and Fitch does not view the sector as cyclical. Barriers to Entry: Stronger Fitch views the industry's barriers to entry as high due to the stringent regulatory framework and the industry's capital- intensive nature. Sustainability: Midrange Arqiva is exposed to potential changes in technology in the medium to long term, for instance, with the emergence of new means for content delivery (e.g. IPTV), which may affect pricing, in particular in the DP and Satellite and Media divisions. New Management Team, Ambitious Business Plan: Company Profile - Midrange Financial Performance: Midrange Arqiva has under 10 years of overall stable trading history. Revenue reductions in some business lines have been compensated by gains in margins. Since FY09, EBITDA has grown strongly at a CAGR of 6.1% but since FY13, Arqiva's performance has been lower, with CAGR dropping to 4.4%. Company Operations: Midrange The sponsors are experienced and have a long-term view. A large portion of Arqiva's revenues are derived from long-term RPI linked contract revenues with customers with strong credit ratings in telecoms, mobile network operators and TV and radio broadcasting, with the BBC accounting for a large share of revenues. There have been significant changes in management in the past few years. The current management team is committed to the business transformation programme, focused on cost-cutting and strategic growth. Transparency: Midrange Good insight into Arqiva's financials and operations is balanced by the inherent complexity of the operations. Dependence on Operator: Weaker Given the specialised and complex nature of Arqiva's operations, there are only a few alternative operators capable of running its secured assets, which diminishes the value of administrative receivership. Asset Quality: Midrange Assets of this nature are very infrequently traded and there are no alternative values, but assets can be disposed of individually or on a going-concern basis. Maintenance capex is generally well defined but timing and the exact funding amount could be uncertain. Standard WBS Structure: Debt Structure - Stronger (Senior Debt) Debt Profile: 'Midrange', Security Package: 'Stronger', Structural Features: 'Midrange' The senior debt is fully amortising by either cash sweep or following a fixed schedule. There are many large swaps due to legacy positions, including super senior index-linked swaps (ILS) and index-linked swaps overlays and other interest rate (IRS) and FX swaps, which adds to the complexity of the debt structure. The senior debt still contains some prolonged interest-only periods, which is credit negative. The senior debt benefits from a typical WBS security package, namely, first ranking security over freehold/long leasehold sites with the possibility of appointing an administrative receiver. The senior debt benefits also from a comprehensive set of covenants and cash lockup triggers set at moderate levels. The issuer liquidity facility covers only 12 months of debt service. The issuer is not an orphan SPV. However, Fitch deems the potential conflicts of interest due to the non-orphan status of the SPVs and their directors also being directors of other group companies remote and consistent with the notes' ratings, given the structural protection in the transaction's legal documentation. Subordinated Debt, Refinance Risk: Debt Structure - Weaker (Junior Debt) Debt Profile: 'Weaker', Security Package: 'Weaker', Structural Features: 'Weaker' The HY bonds are bullet, deeply structurally subordinated and would default if dividends from the WBS group are disrupted for more than six months. Fitch views their security package as weak as it consists of share pledges over holding companies with no second lien security over the WBS security package. The covenants and lockup triggers are comprehensive but are set at low levels. The issuer's new liquidity facility is only expected to cover about six months of interest payments. Financial Profile Under Fitch's rating case, the net debt to EBITDA of the notes reduces from 6.4x in 2019 to 5.7x in 2023 at maturity. At the senior debt, net debt to EBITDA remains below 3.0x in 2025. Peer Group The WBS senior notes have similar debt characteristics to CPUK (Center Parcs, a holiday parks operator) of cash sweeps at expected maturity. However, the free cash flow debt service coverage ratios for CPUK are higher than Arqiva's to compensate for the 'Weaker' Industry Profile key rating driver of CPUK in contrast to Arqiva's 'Stronger'. The bullet and deeply subordinated nature of the junior debt, which is at risk from dividend disruption when the senior debt is in cash sweep and exposed to refinancing risk in five years positions the rating at 'B-'. RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Negative Rating Action: - Under Fitch's rating case, if net debt to EBITDA is forecast to be above 3x in FY25 and 0x in FY32, it could result in a downgrade of the senior debt. The HY notes could be downgraded if their refinancing risk increases or if the full cash sweep features embedded in some of the senior debt is close to being triggered. - Arqiva's future cash flow could be curtailed following unfavourable and unforeseen significant changes in regulation by Ofcom with regard to its pricing formulas, particularly for future DTT or radio broadcasting contracts, licensing costs such as administrative incentive pricing, or even spectrum allocations. The risk of alternative and emerging technologies such as IPTV could also threaten Arqiva's revenues, either through technology obsolescence risk or a lower ad-pool available to linear TV content providers. This risk is currently mitigated by the transaction's potentially rapid deleveraging assuming cash sweep amortisation and the long-term contracts securing significant revenues. Future Developments That May, Individually or Collectively, Lead to Positive Rating Action: - The senior notes could be upgraded if under Fitch's base case, net debt to EBITDA remains below 3x in FY25 and 0x in FY30 and if the company signs new long-term contracts or if renewals of existing contracts are renegotiated on better terms than expected. The HY notes are unlikely to be upgraded. CREDIT UPDATE For the year ended June 30, 2018, revenue for the group was GBP962 million, an increase of 2% from GBP941 million in the previous year and broadly in line with its rating case expectations. EBITDA for the group was GBP518 million, representing a 9% increase from 2017 (GBP474 million), and slightly ahead of the rating case forecast, reflecting Arqiva's continued progress in its business transformation plan. Fitch Cases Its rating case continues to assume that the senior loans and notes with expected maturities would not be refinanced but would instead be paid back by a cash sweep. The principles of the rating case remain the same as previous years, but the 2018 rating case reflects contracts won or extended over the past year. Overall, its rating case reflects uncertainty in longer-term digital platform content demand and telecom growth expectations modelled through price and volume declines at contract renewal. Fitch takes a similar but harsher approach for satellite revenues. Smart Metering revenues in its rating case only reflect contracts already won. Arqiva expects to achieve cost savings by FY22 through a combination of third-party savings and headcount savings. Fitch has given partial credit to the expected savings but added an additional stress on operating expenditure as Fitch does not yet have a track record of crystallised savings. BAIN CAPITAL 2018-2: Fitch Gives B-(EXP) Rating to Class F Debt --------------------------------------------------------------- Fitch Ratings has assigned Bain Capital Euro CLO 2018-2 DAC expected ratings, as follows: Class A: 'AAA(EXP)sf'; Outlook Stable Class B-1: 'AA(EXP)sf'; Outlook Stable Class B-2: 'AA(EXP)sf'; Outlook Stable Class C: 'A(EXP)sf'; Outlook Stable Class D: 'BBB(EXP)sf'; Outlook Stable Class E: 'BB(EXP)sf'; Outlook Stable Class F: 'B-(EXP)sf'; Outlook Stable M-1 subordinated notes: 'NR(EXP)sf' M-2 subordinated notes: 'NR(EXP)sf' The assignment of final ratings is contingent on the receipt of final documents conforming to information already reviewed. Bain Capital Euro CLO 2018-2 DAC is a securitisation of mainly senior secured loans and bonds (at least 90%) with a component of senior unsecured, mezzanine, high-yield bonds and second-lien assets. A total expected note issuance of EUR385.8 million will be used to fund a portfolio with a target par of EUR375 million. The portfolio will be managed by Bain Capital Credit U.S. CLO Manager, LLC.. The CLO envisages a 4.17-year reinvestment period and an 8.5-year weighted average life (WAL). KEY RATING DRIVERS 'B' Portfolio Credit Quality Fitch places the average credit quality of obligors in the 'B' range. The Fitch weighted average rating factor (WARF) of the identified portfolio is 31.7. High Recovery Expectations At least 90% of the portfolio comprises senior secured obligations. Recovery prospects for these assets are typically more favourable than for second-lien, unsecured and mezzanine assets. The Fitch weighted average recovery rating (WARR) of the identified portfolio is 65.9%. Diversified Asset Portfolio The covenanted maximum exposure to the top 10 obligors for assigning the expected ratings is 18% of the portfolio balance. The transaction also includes limits on maximum industry exposure based on Fitch's industry definitions. The maximum exposure to the three largest (Fitch-defined) industries in the portfolio is covenanted at 40%. These covenants ensure that the asset portfolio will not be exposed to excessive concentration. Portfolio Management The transaction features a 4.17-year reinvestment period and includes reinvestment criteria similar to other European transactions. Fitch's analysis is based on a stressed-case portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines. Cash Flow Analysis Fitch used a customised proprietary cash flow model to replicate the principal and interest waterfalls and the various structural features of the transaction, and to assess their effectiveness, including the structural protection provided by excess spread diverted through the par value and interest coverage tests. RATING SENSITIVITIES A 125% default multiplier applied to the portfolio's mean default rate, and with this increase added to all rating default levels, would lead to a downgrade of up to two notches for the rated notes. A 25% reduction in recovery rates would lead to a downgrade of up to four notches for the rated notes. BAIN CAPITAL 2018-2: Moody's Assigns B2 Rating to Class F Notes --------------------------------------------------------------- Moody's Investors Service announced that it has assigned the following provisional ratings to notes to be issued by Bain Capital Euro CLO 2018-2 Designated Activity Company: EUR232,500,000 Class A Senior Secured Floating Rate Notes due 2032, Assigned (P)Aaa (sf) EUR13,800,000 Class B-1 Senior Secured Floating Rate Notes due 2032, Assigned (P)Aa2 (sf) EUR20,000,000 Class B-2 Senior Secured Fixed Rate Notes due 2032, Assigned (P)Aa2 (sf) EUR29,100,000 Class C Senior Secured Deferrable Floating Rate Notes due 2032, Assigned (P)A2 (sf) EUR18,900,000 Class D Senior Secured Deferrable Floating Rate Notes due 2032, Assigned (P)Baa2 (sf) EUR22,900,000 Class E Senior Secured Deferrable Floating Rate Notes due 2032, Assigned (P)Ba2 (sf) EUR11,600,000 Class F Senior Secured Deferrable Floating Rate Notes due 2032, Assigned (P)B2 (sf) RATINGS RATIONALE Moody's provisional rating of the rated notes addresses the expected loss posed to noteholders by the legal final maturity of the notes in 2032. The provisional ratings reflect the risks due to defaults on the underlying portfolio of loans given the characteristics and eligibility criteria of the constituent assets, the relevant portfolio tests and covenants as well as the transaction's capital and legal structure. Furthermore, Moody's is of the opinion that the collateral manager, Bain Capital Credit U.S. CLO Manager, LLC, has sufficient experience and operational capacity and is capable of managing this CLO. Bain Capital Euro CLO 2018-2 Designated Activity Company 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 obligations, second-lien loans, mezzanine loans and high yield bonds. The portfolio is expected to be approximately at least 80% ramped up as of the closing date and to be comprised predominantly of corporate loans to obligors domiciled in Western Europe. Bain Capital 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 obligations, and are subject to certain restrictions. In addition to the seven classes of notes rated by Moody's, the Issuer will issue EUR 37.0 million 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. Bain Capital's investment decisions and management of the transaction will also affect the notes' performance. Moody's modeled the transaction using CDOEdge, a cash flow model based on the Binomial Expansion Technique, as described in Section 2.3 of the "Moody's Global Approach to Rating Collateralized Loan Obligations" rating methodology published in August 2017. Moody's used the following base-case modeling assumptions: Par amount: EUR 375,000,000 Diversity Score: 46 Weighted Average Rating Factor (WARF): 2800 Weighted Average Spread (WAS): 3.55% Weighted Average Recovery Rate (WARR): 44.0% Weighted Average Life (WAL): 8.5 years Moody's has analysed the potential impact associated with sovereign related risk of peripheral European countries. As part of the base case, Moody's has addressed the potential exposure to obligors domiciled in countries with local currency country risk ceiling of A1 or below. Following the effective date, and given the portfolio constraints and the current sovereign ratings in Europe, such exposure may not exceed 10% of the total portfolio. As a result and in conjunction with the current foreign government bond ratings of the eligible countries, as a worst case scenario, a maximum 10% of the pool would be domiciled in countries with A3. The remainder of the pool will be domiciled in countries which currently have a local or foreign currency country ceiling of Aaa or Aa1 to Aa3. DUNSCAR BREWERY: Up for Auction After Falling Into Administration ----------------------------------------------------------------- The Bolton News reports that Dunscar Brewery has gone into administration and is up for auction. Rising costs in an increasingly competitive industry have been blamed, according to The Bolton News. Based in Dunscar Business Park, Blackburn Road, the company had been trading since 2008 and operated a 27-barrel brewing plant, the report notes. It also incorporated The Bleachworks private function room, which was a popular party venue in area, the report relays. The report discloses that Ian McCulloch of administrators Begbies Traynor said: "Dunscar was a well-established and highly regarded brand supplying products to the local area and beyond. Unfortunately, it has ceased to trade as a result of rising costs in an increasingly competitive industry." "We are currently in the process of marketing the business and assets for sale in order to identify interested parties that may wish to continue the business," he added. It has already being advertised as a "high calibre brewing plant" which had a turnover of GBP349,000 last year, the report notes. The business began as a small 3.5 brewers' barrel plant in The Brewhouse pub in Dunscar Bridge, the report relays. The whole brewery fitted in one end of the pub behind a glass wall so that customers could watch the brewers producing what they would shortly be drinking, the report says. Initially, it produced a large range of beers which gained early praise from customer and trade organizations alike, including the Campaign for Real Ale and the Society of Independent Brewers, which gave the brewery an award, the report notes. When it moved to the Dunscar Business Park site in 2012, the new brewery had approximately ten times the capacity of the old one, and a new team was built to both perfect the beers and begin to develop the distribution across the northwest, the report discloses. By 2015, the brewery was owned by a combination of family members and best friends who set about the task of improving both practices and processes to international standards, the report says. New recipes were introduced and, only this year, its 'Big D' range of edgy, craft beers was launched with great success. As well as producing quarterly special brews and special event beers for Halloween, Christmas, and Valentine's day, the company also held popular tours of the brewery, the report adds. BEATTIES: Sports Direct Boss Vows to Keep Store Open ---------------------------------------------------- BBC News reports that the 141-year-old Beatties store, on Victoria Street, in Wolverhampton, gets a lifeline as new owner, Sport Direct boss Mike Ashley pledged to keep the store open. The store faced a shutdown after parent company House of Fraser went into administration in August, BBC News cites. If the store had closed, about 280 jobs would have been at risk, the report notes. Mr. Ashley bought House of Fraser out of administration for GBP90 million in August, the report cites. Beatties began life as a draper's shop in 1877 before expanding over the decades into a department store. It remained in the hands of the Beattie family until 2005, when House of Fraser took over, the report notes. The news comes after Sports Direct said it sacked the senior management team at House of Fraser, the report adds. ********* 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. * * * End of Transmission * * *