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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

           Friday, November 2, 2018, Vol. 19, No. 218


                            Headlines


A R M E N I A

IDBANK: Moody's Reviews B2 Deposit Ratings for Downgrade


F R A N C E

OPTIMUS BIDCO: S&P Assigns B Issuer Credit Rating, Outlook Stable


I R E L A N D

DUBLIN BAY 2018-MA1: Moody's Assigns B3 Rating to 2 Tranches
PHOENIX PARK: Moody's Rates EUR11.8MM Class E Notes 'B2'


I T A L Y

ALITALIA SPA: EasyJet Revives Takeover Proposal for Airline
ALITALIA SPA: State Administrators Receive Two Binding Offers


K A Z A K H S T A N

TENGRI BANK: Moody's Assigns B2 Deposit Ratings, Outlook Stable


L U X E M B O U R G

AI SIRONA: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
TES GLOBAL: S&P Affirms CCC+ Issuer Credit Rating, Outlook Neg.


M O N A C O

DYNAGAS LNG: Moody's Cuts CFR to Caa1 & Alters Outlook to Stable


N E T H E R L A N D S

STEINHOFF INTERNATIONAL: Mulls Sale of Conforma Properties


P O R T U G A L

LUSITANO MORTGAGES 5: S&P Raises Class D Notes Rating to CCC+


R U S S I A

ASIAN-PACIFIC BANK: Fitch Hikes LT IDRs to B-, Outlook Stable


S W I T Z E R L A N D

EUROCHEM GROUP: Fitch Alters Outlook to Stable & Affirms BB IDR


U N I T E D   K I N G D O M

ARDONAGH MIDCO 3: Moody's Alters Outlook to Stable & Affirms CFR
ARDONAGH MIDCO 3: Fitch Revises Outlook on B IDR to Negative
CRAWSHAW GROUP: To Appoint Administrators Amid Financial Woes
KEMBLE WATER: Fitch Lowers Senior Secured Debt Rating to BB-
MANNA DEVELOPMENTS: Receivership May Impact Lake Torrent Project

MOTHERCARE PLC: To Axe 200 Jobs as Part of Restructuring
VICTORIA PLC: Fitch Assigns BB-(EXP) LT IDR, Outlook Stable


X X X X X X X X

* BOOK REVIEW: Inside Investment Banking, Second Edition


                            *********



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A R M E N I A
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IDBANK: Moody's Reviews B2 Deposit Ratings for Downgrade
--------------------------------------------------------
Moody's Investors Service placed on review for downgrade the B2
long-term foreign and local currency deposit ratings and B1 long-
term counterparty risk ratings of IDBank. The bank's Baseline
Credit Assessment and adjusted BCA of b2 and long-term
Counterparty Risk Assessment at B1(cr) were also placed on review
for downgrade. In addition, Moody's affirmed IDBank's Not Prime
short-term deposit and Counterparty Risk ratings and Not
Prime(cr) short-term CRA.

RATINGS RATIONALE

The rating action reflects downward pressure on IDBank's credit
profile, arising from a material deterioration of its asset
quality metrics, with a problem loan ratio of around 25% at
September 30, 2018. The review also reflects Moody's concerns
regarding the transparency of the corporate loan book, in
particular certain large transactions equivalent to around 30% of
the bank's shareholders equity, which are impaired but carry
relative low provisions.

The significant volatility of the bank's balance sheet in recent
years and potential exposures to transactions with related
parties suggest deficiencies in IDBank's governance practices,
which could be detrimental to the bank's financial performance in
the long-term.

IDBank's problem loans (comprising individually impaired
corporate loans and retail loans more than 90 days past due)
materially increased to 29% of the loan book at end-2017, up from
3.4% the previous year as a result of (1) increase in
individually impaired corporate loans by 2.4x in absolute terms,
and (2) a significant (70%) contraction of its loan portfolio
after repayment of a few large corporate loans.

Despite this deterioration in asset quality, IDBank has a
relatively low loan-loss coverage level of 23% and Moody's
therefore expects IDBank's profitability and capitalisation to
come under pressure as a result of the additional provisioning
that could be required to cushion these problem loans.

Nevertheless, IDBank still has solid loss absorption capacity
with Moody's estimated Tangible Common Equity ratio of above 20%,
reported regulatory capital of AMD38.6 billion and healthy pre-
provision profitability at the end of Q3 2018.

During the review period, Moody's will seek to assess the quality
of large impaired corporate exposures as well as the nature of
the bank's corporate governance arrangements. The agency expects
to conclude the review within the next 90 days.

WHAT COULD MOVE THE RATINGS UP/DOWN

Moody's could downgrade IDBank's ratings if its concerns over the
bank's corporate governance remain or if the bank fails to
strengthen its asset quality metrics. A substantial deterioration
of the bank's capital position and profitability would also lead
to ratings downgrades. Moody's could confirm the ratings in case
of material improvement of the bank's asset quality or if the
rating agency concludes that risks stemming from IDBank's
corporate lending practices are adequately managed and pressures
on the banks profitability and capital position will be limited.

LIST OF AFFECTED RATINGS

Issuer: IDBank

Placed on Review for Downgrade:

Long-term Counterparty Risk Ratings, currently B1

Long-term Bank Deposits, currently B2, outlook changed to Ratings
under Review from Stable

Long-term Counterparty Risk Assessment, currently B1(cr)

Baseline Credit Assessment, currently b2

Adjusted Baseline Credit Assessment, currently b2

Affirmations:

Short-term Counterparty Risk Ratings, affirmed NP

Short-term Bank Deposits, affirmed NP

Short-term Counterparty Risk Assessment, affirmed NP(cr)

Outlook Action:

Outlook changed to Rating under Review from Stable



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OPTIMUS BIDCO: S&P Assigns B Issuer Credit Rating, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B' long-term issuer credit
rating to Optimus Bidco SAS, holding company of France-based
storage system manufacturer Financiere EFEL SAS, and Averys SA,
the group's main operating entity. The outlook is stable.

S&P said, "We also withdrew our 'B' issuer credit rating on
Financiere EFEL SAS, the former holding company of Averys.

"At the same time, we assigned our 'B' issue rating to the EUR400
million first-lien term loan issued by Optimus Bidco (Euribor
+3.75). The recovery rating on the debt is '3', indicating our
expectation of average recovery (50%-70%; rounded estimate: 60%)
in the event of a default.

"We also assigned our 'CCC+' issue rating to the EUR85 million
second-lien term loan issued by Optimus Bidco (Euribor +8.25%).
The recovery rating is '6', indicating our expectation of zero
recovery in the event of a payment default."

The ratings are in line with the preliminary ratings we assigned
on July 30, 2018. The final documentation does not depart
materially from what we reviewed in July. The issue amount was in
line with the figure proposed, and the achieved interest rate was
slightly higher than S&P expected, albeit in line with its
assessment of the group's financial risk profile and the current
rating.

Averys/Optimus is a European leader in the manufacture of storage
systems (heavy and light duty racking) and metal furniture for
numerous applications in industrial warehouses. Headquartered in
France, the group operates through 11 industrial sites in Europe
and in 13 countries across Europe, the Middle East, and Asia-
Pacific, through a portfolio of five brands. S&P said, "Our
rating reflects our view that Averys/Optimus benefits from the
distribution network of Storax, the leading Southern European
manufacturer racking products, which it acquired in 2017. The
acquisition has allowed the group to access the Spanish and
Portuguese storage racking products market, with further
potential to penetrate new markets and expand its geographic
footprint. Including Storax, Averys/Optimus generated sales of
about EUR304 million and EBITDA of EUR39 million for the first
half of 2018. We expect the combined group will generate sales of
EUR640 million and EBITDA of EUR80 million in 2018 on a pro-forma
basis."

S&P said, "We assess Averys/Optimus' business risk profile as
weak because it is constrained by the limited scale, scope, and
diversification of its operations compared with that of other
capital goods sector companies. The group has addressed its
geographic concentration over the past 10 years by acquiring
Standard in Turkey, and Stow International N.V. across Europe.
The integration of Storax reduced the importance of revenue
generation in France (about 35%), but Europe still accounts for
90% of the group's revenue base. We also view the market for
racking storage products as fragmented and competitive, which is
a further constraining factor.

"We positively view Averys/Optimus' solid market shares in its
core geographic markets (38% in France and 42% in Belgium)
translating into its No.1 position as a storage solution provider
in Europe and a No.3 position globally. Furthermore, on the
strength of its leading market position, Averys/Optimus has
maintained long-term relationships with a fairly wide range of
customers from original equipment manufacturers such as forklift
companies, to E-retailers and traditional retailers, with no
contract losses. While its top-10 customers account for less than
30% of its sales, the group remains somewhat exposed to its
relationships with its largest industrial customers. We also view
positively the group's variable cost structure, which has
historically enabled the group to deliver an EBITDA margin of
10%-12% through the cycle. At the end of fiscal year 2017 (fiscal
year ended Dec. 31), we estimate a S&P Global Ratings-adjusted
EBITDA margin of 12.2%.

"In July 2018, private equity firm Blackstone acquired Financiere
EFEL from Equistone Partners Europe. The group's private-equity
ownership by a financial sponsor constrains our financial risk
profile assessment. We expect that Averys/Optimus' S&P Global
Ratings-adjusted debt-to-EBITDA ratio will be 6.2x in 2018,
reducing to below 5.7x from 2019. Our adjusted debt includes EUR5
million in pension liabilities and about EUR18 million of
operating leases, resulting in a total debt of about EUR509
million for 2018.

"The financial risk profile is, however, supported by our
expectation of moderate volatility in Averys/Optimus' operating
cash flow, and our expectation that Averys/Optimus will be able
to continue generating positive free operating cash flow (FOCF)
under our base case, and maintain healthy cash interest-coverage
ratios above 2.5x in 2018 and 2019. Our financial risk profile
assessment also incorporates our expectation of the group's
adequate liquidity in the next 12 months.

"The stable outlook reflects our expectation that Averys/Optimus
will expand organically and will likely generate positive FOCF
over 2018-2019. We base this view on our assumption that the
group will be able to execute on its increased order backlog,
leading to a stronger operating performance than in the past 12
months, and an EBITDA margin of 12%-13%. We estimate reported
adjusted debt to EBITDA of below 6.0x at year-end 2019 and FFO to
cash interest coverage comfortably more than 2.5x by year-end
2018, as well as adequate liquidity.

"We could lower the rating if the company lost a major customer
contract, or if the anticipated growth did not materialize due to
a sharp downturn in the global economy, leading to lower revenues
and EBITDA, and a contraction in operating cash flow generation
compared with our base case. A more aggressive financial policy,
for example in the form of shareholder distributions, or
deteriorating liquidity could also put the rating under pressure.
Likewise, FFO cash interest coverage converging toward less than
2.5x, or adjusted debt to EBITDA not improving into 2019 to below
6.0x, or less-than-adequate liquidity would likely trigger a
negative rating action."

Given the company's small absolute size, S&P sees an upgrade as
remote. Any positive rating action would require:

-- Further significant diversification;

-- The company outperforming S&P's base-case projections, with
    the EBITDA margin improving sustainably; and

-- Demonstration of a supportive financial policy, such as a
    constant deleveraging path combined with a lack of further
    returns to shareholders. This is unlikely over the next 12
    months, in S&P's view.



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DUBLIN BAY 2018-MA1: Moody's Assigns B3 Rating to 2 Tranches
------------------------------------------------------------
Moody's Investors Service has assigned definitive long-term
credit ratings to the following Notes issued by Dublin Bay
Securities 2018-MA1 DAC:

EUR6,000,000 Class S Residential Mortgage Backed Floating Rate
Notes due September 2053, Definitive Rating Assigned Aaa (sf)

EUR50,300,000 Class A1 Residential Mortgage Backed Floating Rate
Notes due September 2053, Definitive Rating Assigned Aaa (sf)

EUR105,270,000 Class A2A Residential Mortgage Backed Floating
Rate Notes due September 2053, Definitive Rating Assigned
Aaa (sf)

EUR 157,900,000 Class A2B Residential Mortgage Backed Floating
Rate Notes due September 2053, Definitive Rating Assigned Aaa
(sf)

EUR 17,000,000 Class B Residential Mortgage Backed Floating Rate
Notes due September 2053, Definitive Rating Assigned Aa3 (sf)

EUR 11,100,000 Class C Residential Mortgage Backed Floating Rate
Notes due September 2053, Definitive Rating Assigned A2 (sf)

EUR 13,100,000 Class D Residential Mortgage Backed Floating Rate
Notes due September 2053, Definitive Rating Assigned Baa3 (sf)

EUR 9,000,000 Class E Residential Mortgage Backed Floating Rate
Notes due September 2053, Definitive Rating Assigned Ba2 (sf)

EUR 9,000,000 Class F Residential Mortgage Backed Floating Rate
Notes due September 2053, Definitive Rating Assigned B3 (sf)

EUR 11,100,000 Class Z1 Residential Mortgage Backed Floating Rate
Notes due September 2053, Definitive Rating Assigned B3 (sf)

Moody's has not rated the EUR 18,070,000 Class Z2 Residential
Mortgage Backed Zero Rate Notes due September 2053, Class X1
Residential Mortgage Backed Notes due September 2053, Class X2
Residential Mortgage Backed Notes due September 2053 and Class R
Residential Mortgage Backed Fixed Rate Notes due September 2053.

The subject transaction is a static cash securitisation of
residential mortgage loans, extended to obligors in Ireland,
originated by Bank of Scotland plc (Aa3/P-1; Aa3(cr)/P-1(cr)). In
September 2018, Erimon Home Loans Ireland Limited, a special-
purpose vehicle, purchased around EUR5 billion of assets from
Bank of Scotland plc, of which around 8% are sold on to the
issuer. The portfolio sold to the issuer is a positive selection
of the total assets purchased and consists of 2,310 mortgage
accounts extended to 1,918 primary borrowers with a total pool
balance of around 401.8 million as of the cut-off date (July 31,
2018).

RATINGS RATIONALE

The ratings take into account the credit quality of the
underlying mortgage loan pool, from which Moody's determined the
MILAN Credit Enhancement and the portfolio expected loss, as well
as the transaction structure and legal considerations. The
expected portfolio loss of 4.5% and the MILAN CE of 16%, serve as
input parameters for Moody's cash flow model and tranching model,
which is based on a probabilistic lognormal distribution.

The key drivers for the portfolio's expected loss of 4.5%, which
is lower than the Irish residential mortgage-backed securities
(RMBS) sector average, are as follows: (i) the collateral
performance of the loans to date, as provided by the sponsor;
(ii) restructured loans accounting for 11.8% of the portfolio;
(iii) seasoning of the pool with a WA seasoning of 11.9 years;
(iv) the current macroeconomic environment in Ireland; (v) the
stable outlook that Moody's has on Irish RMBS; and (vi)
benchmarking with other comparable Irish RMBS transactions.

The key drivers for the MILAN CE number of 16%, which is in line
with the Irish RMBS sector, are as follows: (i) the WA Current
LTV at around 58.3%; (ii) the positive selection of the
portfolio, whereby no loan in the pool is more than one month in
arrears; (iii) the restructured loans accounting for 11.8% of the
portfolio; (iv) the well-seasoned portfolio of 11.9 years; and
(v) benchmarking with other Irish RMBS transactions.

Transaction structure: The transaction benefits from an
amortising liquidity reserve fund, sized at 1.25% of the Class
A1, A2A, A2B Notes, dedicated to pay senior fees and interest on
Class S, X1 and A Notes. In addition, the Class A2A and A2B Notes
benefit from a protected amortisation reserve fund (not funded at
closing) building up to 2% of the original balance of the
collateralized Notes. The protected amortisation reserve fund is
in place to ensure that the scheduled payment due to the Class
A2A and A2B Notes is met. Further, There is complex waterfall in
place in respect of the principal repayment mechanism of the
Class A Notes. Class A2A and A2B amortisation follow a predefined
amortisation schedule which under certain circumstances will be
dynamically adjusted. Further, in the event the scheduled payment
due on the Class A2A and A2B is not met, a Class A2 Deficit Event
of Default occurs upon which all available funds will be used to
amortise the Class A Notes. Following such event, the Class B, C,
D, E, F, and Z1 Notes will only be able to access the available
funds if the more senior Notes are fully repaid except for the
Class B which can access the liquidity reserve in order to make
interest payments, subject to certain conditions.

Operational risk analysis: Pepper Finance Corporation (Ireland)
DAC acts as the servicer of the portfolio during the life of the
transaction. In addition, CSC Capital Markets UK Limited
(unrated) acts as back-up servicer facilitator. Citibank, N.A.,
London Branch (A1/P-1) was appointed as independent cash manager
at closing. To ensure payment continuity over the transaction's
lifetime, the transaction documents incorporate estimation
language according to which the cash manager, will prepare the
payment report based on estimates if the servicer report is not
available.

Interest rate risk analysis: The portfolio comprises floating
rate loans linked to standard variable rate 29.5%, loans linked
to ECB Base Rate 70.5% and fixed rate loans 0.06%, whereas, the
rated Notes pay 3-month Euribor plus a spread. There is no swap
in the transaction to hedge the fixed-floating rate risk and the
basis risk. Moody's has taken those risks into consideration in
deriving the portfolio yield.

In Moody's opinion, the structure allows for timely payment of
interest and ultimate payment of principal by the legal final
maturity with respect to the Class S, A1, A2A and A2B. Other non-
credit risks have not been addressed, but may have significant
effect on yield to investors.

Principal Methodology

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

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

FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE
RATINGS:

Factors that may lead to an upgrade of the ratings include
significantly better than expected performance of the pool and an
increase in the credit enhancement of the Notes.

Factors that may cause a downgrade of the ratings include,
significantly different realized losses compared with its
expectations at close due to either a change in economic
conditions from its central scenario forecast or idiosyncratic
performance. For instance, should economic conditions be worse
than forecast, the higher defaults and loss severities resulting
from a greater unemployment, worsening household affordability
and a weaker housing market could result in downgrade of the
ratings. A deterioration in the Notes available credit
enhancement could result in a downgrade of the ratings.
Additionally, counterparty risk could cause a downgrade of the
ratings due to a weakening of the credit profile of transaction
counterparties. Finally, unforeseen regulatory changes or
significant changes in the legal environment may also result in
changes of the ratings.


PHOENIX PARK: Moody's Rates EUR11.8MM Class E Notes 'B2'
--------------------------------------------------------
Moody's Investors Service announced that it has assigned the
following definitive ratings to refinancing notes issued by
Phoenix Park CLO Designated Activity Company:

EUR1,600,000 Class X Senior Secured Floating Rate Notes due 2031,
Definitive Rating Assigned Aaa (sf)

EUR240,000,000 Class A-1A Senior Secured Floating Rate Notes due
2031, Definitive Rating Assigned Aaa (sf)

EUR7,000,000 Class A-1B Senior Secured Floating Rate Notes due
2031, Definitive Rating Assigned Aaa (sf)

EUR22,000,000 Class A-2A1 Senior Secured Floating Rate Notes due
2031, Definitive Rating Assigned Aa2 (sf)

EUR10,000,000 Class A-2A2 Senior Secured Floating Rate Notes due
2031, Definitive Rating Assigned Aa2 (sf)

EUR10,000,000 Class A-2B Senior Secured Fixed Rate Notes due
2031, Definitive Rating Assigned Aa2 (sf)

EUR9,000,000 Class B-1 Senior Secured Deferrable Floating Rate
Notes due 2031, Definitive Rating Assigned A2 (sf)

EUR15,000,000 Class B-2 Senior Secured Deferrable Floating Rate
Notes due 2031, Definitive Rating Assigned A2 (sf)

EUR26,800,000 Class C Senior Secured Deferrable Floating Rate
Notes due 2031, Definitive Rating Assigned Baa3 (sf)

EUR20,200,000 Class D Senior Secured Deferrable Floating Rate
Notes due 2031, Definitive Rating Assigned Ba3 (sf)

EUR11,800,000 Class E Senior Secured Deferrable Floating Rate
Notes due 2031, Definitive Rating Assigned B2 (sf)

RATINGS RATIONALE

Moody's definitive ratings of the rated notes reflect the risks
from 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 considers that the collateral manager Blackstone / GSO
Debt Funds Management Europe Limited has sufficient experience
and operational capacity and is capable of managing this CLO.

The Issuer issued the refinancing notes in connection with the
refinancing of the following classes of notes: Class A-1 Notes,
Class A-2 Notes, Class B Notes, which were refinanced in January
2017 and Class C Notes, Class D Notes and Class E Notes due 2027
(the "Original Notes"), previously issued on July 24, 2014 (the
"Original Closing Date"). On the refinancing date, the Issuer has
used the proceeds from the issuance of the refinancing notes to
redeem in full the Original Notes.

On the Original Closing Date, the Issuer also issued EUR 45.25
million of subordinated notes, which will remain outstanding. The
terms and conditions of the subordinated notes have been amended
in accordance with the refinancing notes' conditions.

Interest and principal amortisation amounts due to the Class X
Notes are paid pro rata with payments to the Class A-1A Notes.
The Class X Notes amortise by 12.5% or EUR 200,000 over the first
8 payment dates, starting on the 1st payment date.

Interest and principal payments due to the Class A-1B Notes are
subordinated to interest and principal payments due to the Class
X Notes and the Class A-1A Notes.

As part of this reset, the Issuer has set the reinvestment period
to 4.5 years and the weighted average life to 8.5 years. In
addition, the Issuer has amended the base matrix and modifiers
that Moody's has taken into account for the assignment of the
definitive ratings.

The Issuer is a managed cash flow CLO. At least 96% of the
portfolio must consist of secured senior loans or senior secured
bonds and up to 4.0% of the portfolio may consist of unsecured
senior loans, second-lien loans, high yield bonds and mezzanine
loans. The underlying portfolio is approximately 99.5% ramped as
of the closing date. The issuer will apply approximately EUR 2.2
million of proceeds from the issuance of refinancing notes to the
purchase of additional collateral obligations in order to fully
ramp-up the portfolio to the target par amount.

Blackstone/GSO 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 4.5-year reinvestment period.
Thereafter, purchases are permitted using principal proceeds from
unscheduled principal payments and proceeds from sale of credit
risk obligations, and are subject to certain restrictions.

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

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. The collateral manager'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:

Target Par Amount: EUR 400,000,000

Defaulted Par: EUR 0 as of September 20, 2018

Diversity Score: 42

Weighted Average Rating Factor (WARF): 2800

Weighted Average Spread (WAS): 3.45%

Weighted Average Coupon (WAC): 4.25%

Weighted Average Recovery Rate (WARR): 43.5%

Weighted Average Life (WAL): 8.5 years

Moody's has addressed the potential exposure to obligors
domiciled in countries with local currency ceiling (LCC) of A1 or
below. As per the portfolio constraints and eligibility criteria,
exposures to countries with LCC of A1 to A3 cannot exceed 10% and
obligors cannot be domiciled in countries with LCC below A3.



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ALITALIA SPA: EasyJet Revives Takeover Proposal for Airline
-----------------------------------------------------------
Ellen Milligan at Bloomberg News reports that EasyJet Plc has
revived its proposal to take over bankrupt airline Alitalia, as
Italy's new government closes in on a deal to re-nationalize the
airline.

According to Bloomberg, the U.K.-based discount carrier has shown
interest in Alitalia for at least a year.  It's been in talks
over short-haul operations with the populist Italian government
that took over in spring, which plans to put the Italian airline
in the hands of state-owned railway company Ferrovie dello Stato,
Bloomberg relates.

Alitalia went into administration last year after losing
customers to rival airlines like Ryanair and EasyJet, as well as
the country's own high speed trains, Bloomberg recounts.


ALITALIA SPA: State Administrators Receive Two Binding Offers
-------------------------------------------------------------
Crispian Balmer and Alberto Sisto at Reuters report that
state-appointed administrators at Alitalia said on Oct. 31 they
had received two binding offers for the Italian airline and one
non-binding expression of interest.

According to Reuters, they gave no details of the bids, saying
only that they would examine the proposals carefully in the
coming days.

Italy's state-controlled railways Ferrovie dello Stato said on
Oct. 30 they would put in an offer for the airline, Reuters
relates.

A source with knowledge of the matter said Delta Air Lines had
submitted the second binding offer for Alitalia, Reuters notes.



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K A Z A K H S T A N
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TENGRI BANK: Moody's Assigns B2 Deposit Ratings, Outlook Stable
---------------------------------------------------------------
Moody's Investors Service, assigned the following global scale
ratings to Kazakhstan-based Tengri Bank: long-term local and
foreign currency deposit ratings of B2, BCA of b3 and adjusted
BCA of b2, long-term Counterparty Risk Assessment of B1(cr),
long-term Counterparty Risk Ratings of B1, short-term deposit
ratings and CRRs of Not Prime and short-term CRA of Not
Prime(cr). The outlook on the global scale long-term deposit
ratings is stable.

The bank's adjusted BCA and deposit ratings incorporate a
moderate probability of affiliate support from India's Punjab
National Bank (PNB; Ba1/Ba1 Stable; b1), which owns a 49% stake
in Tengri Bank, resulting in a one-notch uplift above the bank's
BCA.

Moody's also assigned a national scale long-term deposit rating
of Ba2.kz and a national scale long-term CRR of Baa3.kz to Tengri
Bank.

Tengri Bank's BCA of b3 reflects (1) the bank's unseasoned
business model and loan book, given very rapid new lending
growth; (2) currently insufficient loan-loss reserve coverage of
problem loans and unproven ability to sustainably cover cost of
risk with recurring pre-provision income; (3) capital-raising
plans, which should support the bank's capital buffer; and (4) a
concentrated funding base, with high reliance on corporate
deposits and a significant share of market funding.

RATINGS RATIONALE

Tengri Bank is a small commercial bank in the Republic of
Kazakhstan, providing a wide range of banking services to legal
entities as well as individuals. As of September 1, 2018, the
bank held a market share of 0.6% in Kazakhstan by total assets.
Tengri Bank's focus and main area of expertise is small- and
medium-sized enterprise (SME) lending. As of June 30, 2018, 81%
of the bank's loan portfolio comprised loans to SMEs.

Moody's expects that Tengri Bank will require substantial
additional loan loss provisions in the next 12-18 months, in
order to ensure adequate reserve coverage of its existing problem
loans (7.5% of the loan book as of H1 2018, only 65% covered by
the bank's total loan loss reserves) and strengthen the coverage
of the currently performing loan book, which is unseasoned
following the period of rapid loan growth (27% in 12 months
ending June 30, 2018, 65% in 2017 and 131% in 2016). In addition,
new lending to the typically vulnerable SME segment, as well as
the recently launched scoring-based consumer lending, will
require elevated annual provisions compared to the sector
average.

According to Moody's, Tengri Bank's capital cushion and its
capital-raising plans provide an adequate loss absorption buffer
against potential credit losses. The bank's Basel I Tier 1 ratio
and Total Capital Adequacy Ratio stood at 17.5% and 18.4%,
respectively, as of year-end 2017, and its local GAAP regulatory
capital ratio of 13.4% as of October 1, 2018 provided headroom
above the minimum requirement of 8%. In addition, the bank plans
to raise KZT 7.35 billion with its new share issue in November
2018, which may be followed by a KZT 5 billion capital injection
from PNB in 2019. Moody's estimates that November's capital
raising, if successful, will enable the bank to ensure adequate
coverage of potential credit losses and support loan growth at
its current pace.

Going forward, Tengri Bank has yet to demonstrate its ability to
sustainably cover its cost of risk with recurring pre-provision
income. In H1 2018, Tengri Bank reported annualized return on
average assets (ROAA) of 2.3% (up from 1.2% in 2017) and pre-
provision income at 3.9% of average assets (up from 2.2% in
2017). Tengri Bank's profitability is constrained by its
relatively weak cost efficiency and non-interest income
generation (despite recent strong growth in net fee and
commission income, it only covered one-third of operating
expenses in H1 2018). On the other hand, the reported profits are
supported by a high net interest margin (around 6% in 2017 - H1
2018) and recently subdued cost of risk (1.4-1.5% in 2017-H1
2018). Moody's expects Tengri Bank's cost of risk to increase as
its loan book seasons, and maintaining adequate interest income
collection will be key to the bank's ability to remain
profitable: in H1 2018, all the accrued interest income was
received in cash, while in 2016-2017 the gap amounted to a high
35-43% of accrued interest.

Tengri Bank's funding profile is pressured by high reliance on
relatively unstable funding sources: as of H1 2018, corporate
deposits accounted for 45% of total funding and market funding
(excluding the credit line from PNB) contributed another 13%. In
addition, the bank's deposit base displays high single-name
concentration, with the largest five deposits accounting for 36%
of total customer funds as of year-end 2017. The risks are
mitigated by (1) the bank's adequate liquidity cushion (22% of
total assets as of H1 2018), and (2) the predominantly short-term
nature of its SME and retail loans.

AFFILIATE SUPPORT

Moody's incorporates one notch of affiliate support uplift into
Tengri Bank's adjusted BCA of b2 and its ratings, given the
rating agency's assessment of a moderate probability of support
from the bank's shareholder, Punjab National Bank of India. This
assessment reflects (1) PNB's significant 49% stake in Tengri
Bank and its involvement in operational control of the bank, (2)
PNB's recent track record of providing support to its overseas
subsidiaries and affiliates, (3) Tengri Bank's full brand name
including reference to PNB, and (4) the relatively small size of
Tengri Bank (just 0.4% of PNB's assets, based on the latest
reported IFRS figures).

COUNTERPARTY RISK ASSESSMENT

Tengri Bank's global scale CR Assessment is positioned at
B1(cr)/NP(cr). Such assessments are opinions of how counterparty
obligations are likely to be treated if a bank fails and relates
to a bank's contractual performance obligations (servicing),
derivatives (e.g., swaps), letters of credit, guarantees and
liquidity facilities. Senior obligations represented by the CR
Assessments are more likely to be preserved to limit contagion,
minimize losses and avoid disruption of critical functions.

WHAT COULD MOVE THE RATINGS UP/DOWN

Tengri Bank's BCA could be upgraded if (1) the bank demonstrates
good control over its asset quality amid rapid lending growth,
(2) coverage of problem loans strengthens, while an adequate
capital position is maintained, (3) recent improvements in
profitability prove sustainable, and (4) loan book and deposit
base become more granular. The bank's deposit ratings could also
be upgraded if Moody's upgrades the BCA of PNB.

The bank's ratings could be downgraded if (1) the bank fails to
raise capital in November 2018, as planned, (2) asset quality
deteriorates below Moody's expectations, (3) the bank's deposits
display volatility and its liquidity buffer weakens, or (4) PNB's
propensity or ability to provide support in case of stress
significantly weakens.

LIST OF ASSIGNED RATINGS

Issuer: Tengri Bank

Assignments:

  NSR LT Bank Deposits, Assigned Ba2.kz

  NSR LT Counterparty Risk Rating, Assigned Baa3.kz

  LT Bank Deposits, Assigned B2, Outlook Stable

  ST Bank Deposits, Assigned Not Prime

  Adjusted Baseline Credit Assessment, Assigned b2

  Baseline Credit Assessment, Assigned b3

  LT Counterparty Risk Assessment, Assigned B1(cr)

  ST Counterparty Risk Assessment, Assigned Not Prime(cr)

  LT Counterparty Risk Ratings, Assigned B1

  ST Counterparty Risk Ratings, Assigned Not Prime

Outlook Action:

  Outlook, Assigned Stable



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


AI SIRONA: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
---------------------------------------------------------------
S&P Global Ratings assigned its 'B' long-term issuer credit to
Luxembourg-based AI Sirona Acquisition Sarl, parent of operating
entity Zentiva. The outlook is stable.

S&P said, "At the same time, we assigned a 'B' issue rating to AI
Sirona's EUR880 million senior secured term loan B (split into a
EUR680 million tranche and a GBP175 million tranche). The
recovery rating is '3', indicating our expectation of meaningful
recovery prospects (50%-70%; rounded estimate: 60%).

"We also assigned a 'CCC+' issue to the second lien EUR275
million loan. The recovery rating is '6', indicating out
expectation of negligible recovery (0%-10%; rounded estimate 0%).

"Our final ratings are in line with the preliminary ratings
assigned on May 22, 2018."

In September 2018, after receiving regulatory approval, Advent
International acquired Zentiva, Sanofi's European generics
business, via AI Sirona, for an enterprise value of EUR1.92
billion.

Zentiva is a pan-European generic company, manufacturing and
developing diversified products in Western and Eastern Europe.
Headquartered in Prague, Zentiva generated revenues of EUR742
million and reported pro forma EBITDA of EUR162 million in the 12
months ending Dec. 31, 2017.

S&P said, "The rating reflects our view of Zentiva's well-
entrenched position in the major European markets of the U.K.,
Germany, and France, and leading positions in core local markets
in the Czech Republic, Romania, and Slovakia. This is supported
by a diverse product portfolio, highly competitive manufacturing
costs, good brand recognition among physicians and prescribers,
and a track record of winning tenders. We view positively that
the European market for generics remains fragmented, having
different regulatory regimes and pricing environments, and offers
diversification in terms of pricing and customers.

"We view the European generics market as fragmented and price
competitive, with growth trends driven by volume as a result of
governments trying to reduce healthcare spending. We expect the
market will expand at a compound annual growth rate of about 4%
in 2017-2022, as a result of new molecule launches and low price
erosion, benefiting from an aging demographic, increasing
prevalence of chronic diseases, and a stable regulatory
environment."

On a global scale, Zentiva is small compared with big generic
companies like Sandoz, Mylan N.V., or Teva Pharmaceutical
Industries Ltd., which have a strong presence in the large U.S.
market. From a credit perspective, S&P notes that Zentiva focuses
on Europe only, which increases exposure to specific end markets.
Zentiva enjoys a balanced position, operating in what management
calls three market archetypes. The first of these is a
combination of tender and wholesale systems, which is volume and
price driven and is typical for Germany (22% of Zentiva's 2017
pro forma sales) and the U.K. (10% of Zentiva's 2017 pro forma
sales). The second type is where pharmacists are the primary
focus points for sales and marketing, requiring substantial
investment in relationships, and is typical for France (22% of
Zentiva's 2017 pro forma sales) and Italy (7% of Zentiva's 2017
pro forma sales). Finally, the third type is markets where
physicians are the primary decision makers and where brand adds
value. Examples of the third type include markets in the Czech
Republic, Slovakia and Romania, countries in which Zentiva has
long history, strong brand recognition, and relationships with
local physicians, enabling the company to deliver high margins.

Zentiva sells a broad range of products, with about 340
molecules, although there is some therapeutic and product
concentration. Cardiovascular and nervous system therapies
account for 27% and 25%, respectively, of the company's sales.
Overall, the top-five products account for less than 20% of
sales.

Zentiva has a low-cost manufacturing base thanks to its in-house
platforms in the Czech Republic and Romania. It also has access
to the EU-standard low-cost Sanofi sites in India, which will be
covered by a five-year manufacturing and supply agreement.
Zentiva sources its active pharmaceutical ingredients (APIs) from
Sanofi (22% of API supply), as well as from more than 100
suppliers in Europe, India, and China. S&P understands that the
plants run at utilization rates that offer some scope for better
optimization. The company has the ability to manufacture solid
and non-solid dosage forms, hormones, and complex formulations
such as sterile injectables.

The ability to launch new products is of paramount importance,
given intense competition and price pressure. Currently, in-
licensing is pursued mainly for products needed for portfolio
completion, but as more complex molecules lose patent protection,
the company must invest in research capabilities to enable it to
remain competitive. During 2013-2017, the company launched
several new products, which it expects will cover the majority of
the 2018-2020 loss-of-exclusivity pharmaceutical market value.

Pro forma from the carve-out, the company expects it will
generate an EBITDA margin of about 22%, in line with that of
similarly sized peers. Zentiva's profitability benefits from a
low manufacturing cost base but is partially offset by
significant elements of sales, marketing, and support costs
required in pharmacy markets such as in France and Italy. The
company also faced operational disruption in France after the
carve-out announcement in 2016, which impacted performance in
2017. S&P expects that the EBITDA margin will strengthen over the
next three years thanks to cost optimization post carve out, in
particular thanks to the repatriation of products in Zentiva's
manufacturing department and renegotiations with external
suppliers. Nevertheless, the timing of the cost benefits is
difficult to estimate at this point.

S&P said, "We assess Zentiva's financial risk profile as highly
leveraged, reflecting its financial sponsor ownership, with
leverage projected to remain above 5.0x. Specifically, we
estimate that its S&P Global Ratings-adjusted debt to EBITDA will
be 7.5x-8.0x in 2018, decreasing to 7.0x-7.5x in 2019 and 6.5x-
7.0x in 2020 as EBITDA improves. We include in our debt
calculations senior secured first-lien debt of EUR880 million,
second-lien debt of EUR275 million, and marginal adjustments for
pension liabilities. We estimate that EBITDA interest coverage
will remain at about 2.5x-3.0x, and that the company will be able
to generate positive free operating cash flow (FOCF) of at least
EUR60 million per year.

"The stable outlook on Zentiva reflects our view that, in the
next 12-18 months, the company will continue to benefit from its
well-balanced presence in the three market archetypes in Europe,
which should support its volume, revenue, and EBITDA growth. We
assume that Zentiva will maintain an EBITDA margin close to 20%
over the next three years and will generate positive FOCF of at
least EUR60 million. Finally, we expect Zentiva will maintain our
adjusted debt to EBITDA between 6.0x and 7.0x on average over the
next three years.

"We could consider a negative rating action if there is a
significant decrease in revenues and EBITDA stemming from a
failure to turn around sales volumes and pricing in France, as
well as unexpected pricing erosion in the U.K. Additionally, even
though the company has transitional service agreements with
Sanofi, the timescale and terms for moving production away might
be affected by conditions in the contract manufacturing industry,
which could also result in lower FOCF and rating downside. This
could also lead us to revise our assessment of the company's
business risk profile.

"We would consider raising the rating if Zentiva significantly
outperforms our base case, mainly by increasing its size and
strengthening its portfolio through new product launches, while
generating organic revenue growth and improving significantly its
profitability, leading to stronger cash flow generation and
material debt reduction. This would need to be supported by
credit ratios strengthening such that adjusted debt to EBITDA
approaches 5.0x on a sustainable basis, with commitment from the
financial sponsor not to releverage."


TES GLOBAL: S&P Affirms CCC+ Issuer Credit Rating, Outlook Neg.
---------------------------------------------------------------
S&P Global Ratings said that it affirmed its 'CCC+' long-term
issuer credit rating on TES Global Financial S.a.r.l., the parent
company of TES Global Holdings Ltd. (together "TES" or "the
group"). The outlook is negative.

S&P said, "We also affirmed our 'CCC+' issue rating on the
group's senior secured notes. The recovery rating is unchanged at
'4', reflecting our expectation of average recovery (30%-50%,
rounded estimate: 40%) in the event of payment default.

"The affirmation reflects our view that TES' current capital
structure is unsustainable. However, we do not currently envisage
any specific default events in the next 12 months. This is based
on S&P Global Ratings-adjusted leverage metrics of debt to EBITDA
above 15x, which we forecast will remain at this level for
financial year 2019 (FY2019; ending Aug. 31). This is in the
context of less than two years until the group's July 2020 term
facilities mature, with business operations that we view as
relatively narrow in size, scale, and scope compared with media
peers, in addition to exposure to regulatory and competitive
risks."

TES' two main business divisions are school services and
university services. School services comprise the group's
operations in advertising, agency, and content. Within
advertising, the group places job advertisements for schools,
primarily in a digital format on its TES teaching portal online.
The agency business provides supply teacher support for schools
for short-to-medium term teacher needs, and content provides
teachers with resources via an online portal to use as support in
their teaching plans and classrooms. The group's operations are
primarily U.K.-focused (more than 90% of revenues). University
services comprise the Times Higher Education (THE) operations,
which publishes the THE University Rankings list and provides
data and consulting services to universities.

TES reported revenue growth in FY2018 of around 5% net, to
GBP110.9 million, equivalent to about 2% gross growth to GBP148.8
million.  Within the different operations, agency and advertising
revenues were slightly down to around 1% year-on-year, with
growth stemming from a 23% increase in content revenues and 26%
increase in university services revenues. S&P said, "We view the
group as significantly smaller than its rated peers, with a
narrower focus, since school services represents 85% of group
revenues.  TES does not report individual profitability for the
individual subsectors in school services. However, we understand
that content division is around break-even. Nevertheless, we view
this operation as strategically linked to the performance of the
broader schools services segment, particularly as a funnel to
providing traffic and audience to the other advertising and
supply operations."

TES continues to progress in transitioning its advertising
customers to a subscription model, but exposure to cyclical and
volatile advertising still represents 46% of recognized
advertising revenues, with the more stable and predictable
subscriptions only representing GBP30.5 million (annualized) of
total revenue in 2018, with renewal rates on subscriptions of
86%.

S&P said, "We view heightened risk from regulatory and government
competition in the sector. School budgets remain under pressure
and the effect on the Department for Education spending from the
government's ultimate decision on Brexit, and related
uncertainties, remain unknown. Additionally, we note the
government now has an operational beta version of a free teacher
recruitment website operational, called TJS. While we note it has
only had a limited rollout and as TES have commented, no jobs
have yet been filled via this portal, we still view the
progression of this service as a material risk to TES'
profitability in the advertising business.

"We forecast 2018 S&P Global Ratings-adjusted EBITDA of around
GBP23 million-GBP26 million, after restructuring costs,
increasing to GBP30 million to GBP35 million in FY2019-FY2020. We
estimate that TES adjusted debt to EBITDA will be above 15x in
2018-2020 (or above 10x in FY2018 and above 9x in FY2019-FY2020,
excluding TPG shareholder loans, which we treat as debt). We
include approximately GBP220 million of shareholder loans
provided by TPG to TES Global Financial as debt in FY2018, and
these loans are payment-in-kind (PIK) 10% annually. We anticipate
that TES will be FOCF positive in FY2018-FY2020, with our
forecasts of GBP5 million-GBP10 million."

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

-- U.K. GDP growth of 1.3% in 2018 and 2019 increasing to 1.5%
    in 2020. Typically, TES' revenue has been uncorrelated to GDP
    growth, although the health of the broader economy and U.K.
    government spend on education can affect the rate of teacher
    turnover, which impacts activity rates in the advertising and
    agency operations. S&P forecasts a small increase in revenue
    in FY2019 to GBP150 million and flat revenue in FY2020 (on a
    gross reported revenue basis).

-- S&P Global Ratings-adjusted EBITDA of around GBP23 million-
    GBP26 million in FY18 and GBP30 million-GBP35 million in
    FY2019 and FY2020.

-- The EBITDA growth forecast in FY2019 and FY2020 is largely
     due to a reversal in significant restructuring and
     transaction charges incurred in FY2018.

-- S&P said, "We forecast total restructuring charges of around
    GBP10 million-GBP12 million in FY2018. This comprises ongoing
    restructuring costs, costs associated with relocation to the
    Sheffield office, an onerous lease provision, and other
    advisor transaction costs. In FY2019 and FY2020, our
     restructuring costs estimate falls to around GBP2 million-
     GBP3 million per year."

-- Capital expenditure (capex) of around GBP9 million in FY2018
    and around GBP8.5 million in FY2019 and FY2020.

-- Earnouts and deferred consideration payments of around GBP5.9
    million in FY2018, GBP1.8 million in FY2019, and GBP1.5
    million in FY2020.

-- S&P understands that TES is continuing to discuss the
    potential sale of the THE business, however S&P does not
    factor any mergers or acquisitions, or disposal proceeds in
    its forecasts.

Based on these assumptions, S&P arrives at the following credit
measures for FY2018:

-- Adjusted debt to EBITDA above 15x in FY2018-FY2020. This
    corresponds to greater than 10x in FY2018 and above 9x in
    FY2019-FY2020 (excluding shareholder loan instruments).

-- EBITDA interest coverage of 1.0x-1.5x in FY2018 and 1.5x-2.0x
    in FY2019-FY2020.

S&P said, "The negative outlook on TES Global Financial reflects
our view of a risk of reducing liquidity for TES and the
decreasing time to maturity of the group's term debt. We view the
current capital structure as unsustainable due to the group's
leverage. However, we anticipate that TES will continue to report
positive FOCF and in the next 12 months and do not envisage a
specific default scenario over the next 12 months under our base
case.

"We could consider lowering the ratings if TES' operating
performance deteriorated over the next 12 months, such as from
competitive market pressures or greater traction in the
government-led TJS initiative, resulting in a flagging liquidity
position or a further weakness in earnings. If TES were to buy
back its outstanding debt instruments below par or agree
amendments such that financiers receive less than par, we could
also consider a downgrade. However, we understand this is not
TES' intention.

"We currently view upside to the rating as remote in the next 12
months under the current capital structure and financing.
However, we could revise the outlook if the group materially
reduced leverage and refinanced its term facilities such that
weighted-average maturities extended beyond two years. This would
also need to be accompanied by positive sustainable improvement
in operating performance, such as rising EBITDA and alongside
sustainable increasing positive FOCF."



===========
M O N A C O
===========


DYNAGAS LNG: Moody's Cuts CFR to Caa1 & Alters Outlook to Stable
----------------------------------------------------------------
Moody's Investors Service downgraded the corporate family rating
of Dynagas LNG Partners LP to Caa1 from B3, its probability of
default rating to Caa1-PD from B3-PD. Moody's also downgraded the
senior secured bank credit facility rating of Arctic LNG Carriers
Ltd, a wholly owned subsidiary, to B2 from B1. The rating
outlooks have been changed to stable from negative.

"The downgrade reflects the uncertainty associated with Dynagas'
plans to refinance its $250 million senior unsecured notes due in
the next twelve months," says Maria Maslovsky, a Vice President-
Senior Analyst at Moody's and the lead analyst for Dynagas LNG
Partners LP. "Moody's will reassess Dynagas' ratings and outlook
in line with the new capital structure once the planned
refinancing is complete," adds Maslovsky.

RATINGS RATIONALE

The rating downgrade reflects the lack of clarity with regard to
refinancing the $250 million unsecured bond due October 30, 2019.
Positively, though, Dynagas recently placed $55 million of
preferred stock which Moody's views as equity. If the proceeds
are used for deleveraging, this would reduce Dynagas' debt/EBITDA
for 2018 to approximately 8.5x from over 9.0x. Also positively,
Dynagas was able to charter all of its vessels through 2021 with
the majority contracted through to 2028.

Dynagas Partners' Caa1 corporate family rating reflects its long-
term charter agreements with an average duration of over 10 years
and corresponding revenue backlog of almost $1.5 billion. The
rating further incorporates Dynagas' competitive advantage in
owning and operating ice class vessels, and a slight improvement
in the LNG market recently, although volatility remains.

Counterbalancing these strengths are Dynagas Partners' asset and
customer concentrations as a result of its small, six-vessel
fleet and exposure to Russian entities some of which are part of
larger groups that have been affected by US sanctions, such as
Gazprom, PJSC (Baa3 positive) which accounted for 72% of Dynagas'
revenues in 2017. Moody's notes however that so far none of
Dynagas' direct counterparties have been affected and charter
contracts are carried out smoothly. In addition, Dynagas relies
on its sponsor and manager, both of which are related entities,
to operate its fleet.

Dynagas' leverage is very material at 7.6x for the twelve months
ending June 30, 2018 and is expected to increase to over 8.0x in
2018 as a result of some downtime for its Yenisei River and Lena
River vessels. Moody's expects that leverage will subsequently
reduce to below 8.0x in 2019 and closer to 7.0x in 2020 following
the recent issuance of $55 million perpetual preferred stock
which Moody's views as equity. Still, the company is expected to
remain highly leveraged and there is potential for volatility in
credit ratios despite long-term charter contracts as seen over
the past two years.

The LNG market continues to be volatile with orderbook as of
August 2018 at approximately 24% of total fleet according to
Drewry Maritime Research. While rapid supply additions have
pressured spot rates earlier this year, the market recovered over
the summer but is expected to remain volatile. A more sustainable
positive shift in the LNG market is anticipated after 2020 when
material additional liquefaction capacity comes on line in the US
and Australia.

The stable rating outlook reflects Moody's expectations that
Dynagas will demonstrate consistent performance given its strong
contract coverage and high EBITDA margins.

Positive rating momentum could result from addressing the
maturity of the senior unsecured notes.

Negative rating pressure could be precipitated by any weakening
of contract coverage. Any charter impairment as a result of
Dynagas' counterparties being affected by US sanctions against
Russian companies and individuals would also be viewed
negatively, as would any reduction in recovery expectations.

The principal methodology used in these ratings was Shipping
Industry published in December 2017.

Dynagas Partners LNG LP is a master limited partnership formed by
its sponsor, Dynagas Holding Ltd, to own and operate LNG vessels
under long-term charters. Currently, Dynagas owns six vessels
chartered under long-term contracts. For 2017, Dynagas reported
$139 million of revenue and $1.1 billion of total assets.



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


STEINHOFF INTERNATIONAL: Mulls Sale of Conforma Properties
----------------------------------------------------------
Loni Prinsloo at Bloomberg News reports that Steinhoff
International Holdings NV is considering the sale of properties
within French furniture chain Conforama, the latest move by the
embattled retailer to shore up its balance sheet.

According to Bloomberg, people familiar with the matter said the
value of the portfolio is about EUR800 million (US$907 million).
They said the properties are held outside European real-estate
subsidiary Hemisphere, which is disposing of assets as part of a
debt-restructuring deal, Bloomberg relates.

The move would represent the latest fund-raising effort by the
South African retailer, which has been battling for survival
since announcing accounting irregularities in December that wiped
more than 96 percent off the share price, Bloomberg notes.

Conforama has about 300 stores, of which two thirds are in
France, Bloomberg relays, citing Steinhoff's most recent
presentation to lenders.

Steinhoff won support from a majority of creditors in July to
restructure its EUR9.4 billion of debt, stabilizing its finances,
Bloomberg recounts.  That included an agreement to refinance a
EUR750 million revolving bridge facility at Hemisphere, on
condition that an asset disposal plan was set up, Bloomberg
states.

Steinhoff International Holdings NV's registered office is
located in Amsterdam, Netherlands.



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


LUSITANO MORTGAGES 5: S&P Raises Class D Notes Rating to CCC+
-------------------------------------------------------------
S&P Global Ratings raised its credit ratings on all of Lusitano
Mortgages No. 5 PLC's classes of notes. At the same time, S&P
removed from CreditWatch positive its ratings on the class A, B,
and C notes.

S&P said, "The rating actions follow the application of our
relevant criteria and our full analysis of the most recent
transaction information that we have received, and reflect the
transaction's current structural features. We have also
considered our updated outlook assumptions for the Portuguese
residential mortgage market.

"Our structured finance ratings above the sovereign (RAS)
criteria classify the sensitivity of this transaction as
moderate. Therefore, the highest rating that we can assign to the
senior-most tranche in this transaction is six notches above the
Portuguese sovereign rating, or 'AA- (sf)', if certain conditions
are met. For all the other tranches, the highest rating that we
can assign is four notches above the sovereign rating.

"Our current counterparty criteria cap our ratings in this
transaction at the long-term issuer credit rating (ICR) plus one
notch ('AA-') on Credit Agricole Corporate and Investment Bank as
swap counterparty, as we do not consider the replacement language
in the swap agreement to be in line with our current counterparty
criteria.

"Our European residential loans criteria, as applicable to
Portuguese residential loans, establish how our loan-level
analysis incorporates our current opinion of the local market
outlook. Our current outlook for the Portuguese housing and
mortgage markets, as well as for the overall economy in Portugal,
is benign. Therefore, we revised our expected level of losses for
an archetypal Portuguese residential pool at the 'B' rating level
to 1.0% from 1.7%, in line with table 80 of our European
residential loans criteria, by lowering our foreclosure frequency
assumption to 2.00% from 3.33% for the archetypal pool at the 'B'
rating level.

"After applying our European residential loans criteria to this
transaction, the overall effect in our credit analysis results is
a decrease in the required credit coverage for each rating level
compared with our previous review."

  Rating level     WAFF (%)    WALS (%)
  AAA                 21.35       11.04
  AA                  14.76        8.64
  A                   11.21        4.40
  BBB                  8.40        2.63
  BB                   5.62        2.00
  B                    3.48        2.00

The credit enhancement has increased for all classes of notes due
to their amortization, which is sequential as the reserve fund
has been totally depleted since October 2012.

S&P said, "Following the application of our criteria, we have
determined that our assigned ratings on the classes of 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
counterparty criteria, or (iii) the rating that the class of
notes can attain under our European residential loans criteria.

"Our RAS criteria constrain our rating on the class A notes at
'AA- (sf)', which is six notches above our 'BBB-' long-term
rating on the sovereign. We have therefore raised to 'AA- (sf)'
from 'BBB+ (sf)' and removed from CreditWatch positive our rating
on this class of notes.

"Our RAS criteria constrain our rating on the class B notes at
'BBB- (sf)', which is in line with our 'BBB-' long-term rating on
the sovereign. We have therefore raised to 'BBB- (sf)' from 'BB+
(sf)' and removed from CreditWatch positive our rating on this
class of notes.

"The application of our European residential loans criteria,
including our updated credit figures and our cash flow analysis,
indicates that our rating on the class C notes could withstand
our stresses at a higher rating level than that currently
assigned. However, we do not consider the current credit
enhancement to be commensurate with an investment-grade rating as
our rating is constrained by the level of credit enhancement and
its position in the priority of payments. We have therefore
raised to 'BB+ (sf)' from 'BB- (sf)' and removed from CreditWatch
positive our rating on this class of notes.

"Our rating on the class D notes is based on the
undercollateralization they are experiencing, which has improved
since our last review. We consider the current credit enhancement
for this class of notes to be commensurate with a higher rating
than the one currently assigned. However, we still consider that
the issuer is dependent on favorable economic conditions to fully
meet its financial obligations on this class of notes in the long
term. We have therefore raised to 'CCC+ (sf)' from 'CCC (sf)' our
rating on this class of notes."

Lusitano Mortgages No. 5 is a Portuguese residential mortgage-
backed securities (RMBS) transaction, which closed in September
2006 and securitizes first-ranking mortgage loans. Novo Banco
S.A. originated the pool, which comprises loans granted to prime
borrowers for the acquisition of residential properties located
in Portugal, mainly located in the Lisbon region.

  RATINGS RAISED AND REMOVED FROM CREDITWATCH POSITIVE

  Lusitano Mortgages No. 5 PLC

  Class          Rating
             To          From

  A          AA- (sf)    BBB+ (sf)/Watch Pos
  B          BBB- (sf)   BB+ (sf)/Watch Pos
  C          BB+ (sf)    BB- (sf)/Watch Pos

  RATING RAISED

  Class          Rating
             To          From

  D          CCC+ (sf)   CCC (sf)



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


ASIAN-PACIFIC BANK: Fitch Hikes LT IDRs to B-, Outlook Stable
-------------------------------------------------------------
Fitch Ratings has upgraded Russia-based PJSC Asian-Pacific Bank's
(APB) Long-Term Local- and Foreign-Currency Issuer Default
Ratings (IDRs) to 'B-' from 'CCC' and removed them from Rating
Watch Positive (RWP). Outlooks are Stable. Fitch has also
upgraded APB's Viability Rating (VR) to 'b-' from 'f'.

The rating actions follow the completion of recent
recapitalisation measures undertaken by the Central Bank of
Russia (CBR), which is the current 99.9% owner of the bank.

KEY RATING DRIVERS

IDRS AND VR

The upgrade of APB's VR to 'b-' follows its downgrade to 'f' in
May 2017 after the failure of its subsidiary, M2M Private Bank,
which had its licence withdrawn in December 2016. In April 2018,
CBR announced that financial rehabilitation measures would be
applied to APB through the Banking Sector Consolidation Fund. The
shareholders and top managers at the time were suspended from the
day-to-day operational management of the bank. CBR recently
announced that it anticipates to sell the bank to a third-party
investor by end-1Q19.

On September 28, 2018, the CBR injected RUB9 billion core equity
into APB, which, coupled with the write-down of subordinated
debt, resulted in APB complying with prudential capital
requirements.

Fitch considers APB's capital buffers as being moderate over
regulatory minimums and vulnerable to moderate shocks, despite
the recapitalisation. At end-9M18, regulatory core Tier 1, Tier 1
and total capital ratios were reported at 9%, 9% and 11%,
respectively, with regulatory minimums of 6.375%, 7.875% and
9.875% (including capital buffers of 1.875%). Post-recap Fitch
Core Capital (FCC) was estimated at 17% of risk-weighted assets,
which is 11pp higher than reported at end-1H18. However, the
bank's capital position should be viewed in light of its
vulnerable asset quality and poor financial performance. Its
expectation is that potential legal risks will be covered by the
CBR.

APB's asset quality remains vulnerable, with impaired loans
(defined as IFRS 9 Stage 3 loans) of 41% of end-6M18 gross loans
(80% covered by specific loan loss allowances). Although retail
loans are reasonably reserved, Fitch expects that the unreserved
portion of impaired corporate loans (RUB4.2 billion, or 29% of
post-recap FCC), mostly represented by a single exposure of
RUB3.1 billion, would require additional provisioning, which
would decrease the bank's FCC ratio to about 12%. These loans are
better reserved at regulatory accounts, but they may still
require additional reserves of at least RUB1.2 billion (15% of
regulatory core Tier 1 capital).

The bank's profitability is poor with annualised return on annual
equity of negative 8% in 1H18 and 2017, due to significant
impairment charges and weak operating efficiency amid the
contraction of new business generation after the regulatory
intervention. Fitch expects the performance could moderately
improve in 2H18-2019 as most of the impaired charges reported in
1H18 and 2017 were related to provisioning of problem exposures
to M2M Private Bank and affiliated entities, equal to RUB8.8
billion at end-2016 (62% of IFRS equity).

Its base case is that potential legal risks would not prevent the
sale of APB to a third-party investor, and that the CBR will
either cover such potential losses or provide additional
safeguards prior to the sale. The legal cases relate to
individuals who have purchased promissory notes of a failed
affiliated entity for the total amount of over RUB4 billon (29%
of post-recap FCC), and the International Financial Corporation,
which had USD24 million of subordinated debt written down as a
part of financial rehabilitation measures (this amounted to
RUB1.6 billion, or 11% of post-recap FCC).

Liquidity position has significantly improved following timely
and sufficient support from the authorities. This included a RUB3
billion deposit from the CBR and a RUB3 billion short-term repo
from the Federal Treasury (both have been subsequently repaid).
At end-9M18, APB was mostly funded by granular customer accounts
(96% of liabilities), while liquidity cushion (cash and cash
equivalent, short-term interbank placements and unpledged
securities) comfortably covered over 40% of customer accounts.

Fitch does not factor sovereign support into the ratings, despite
the fact that APB is almost fully owned by the CBR, due to the
limited systemic importance of the bank and the CBR's plan to
sell the bank in the short term, which is reflected by '5'
Support Rating and 'No Floor' Support Rating Floor.

RATING SENSITIVITIES

APB's ratings could be upgraded further if the bank is sold to a
higher-rated strategic investor or its asset quality,
capitalisation and performance significantly improve. Conversely,
further deterioration in asset quality or performance, eroding
the bank's capital, may result in a downgrade.

The rating actions are as follows:

PJSC Asian-Pacific Bank

  Long-Term Foreign- and Local-Currency IDRs: upgraded to 'B-'
  from 'CCC'; Off RWP; Outlooks Stable

  Short-Term Foreign-Currency IDR: upgraded to 'B' from 'C', Off
  RWP
  Viability Rating: upgraded to 'b-' from 'f'

  Support Rating: affirmed at '5'

  Support Rating Floor: affirmed at 'No Floor'



=====================
S W I T Z E R L A N D
=====================


EUROCHEM GROUP: Fitch Alters Outlook to Stable & Affirms BB IDR
---------------------------------------------------------------
Fitch Ratings has revised the Outlook on Switzerland-based
holding company EuroChem Group AG's to Stable from Negative. The
Long-Term Issuer Default Ratings has been affirmed at 'BB'.

The Outlook revision reflects its view that EuroChem's funds from
operations (FFO) adjusted net leverage will fall below its 3.5x
sensitivity by end-2018, against 5.0x anticipated previously. The
group's financial metrics came under pressure in 2016 as high
capex coincided with weakening market conditions. The improvement
is driven by debt repayments and a favourable market momentum for
fertilisers. Its base case now assumes FFO-adjusted net leverage
below 3x from 2019, supported by positive pre-dividend free cash
flow (FCF) generation as EuroChem reaches the end of its
investment cycle and the new ammonia and potash capacities ramp-
up.

KEY RATING DRIVERS

Deleveraging Supports Outlook: Fitch now expects EuroChem's FFO-
adjusted net leverage at around 3.4x at end-2018, down from 5.0x
in its previous base case and from 4.5x at end-217. This reflects
a better-than-anticipated pricing environment for fertilisers as
well as a USD0.5 billion reduction in reported gross debt in
1H18. From 2019, Fitch forecasts positive pre-dividends FCF as
the group's capex levels normalise and contributions from the new
ammonia and potash capacity ramp up. In the absence of specific
guidance, Fitch conservatively assumes that some of the group's
FCF will upstreamed to the shareholder in the form of loan
repayments or dividends.

Business Profile Enhanced Beyond 2021: Fitch maintains a cautious
view on the ramp-up of potash volumes as the two projects have
been delayed from original projections. Its base case assumes
that they start contributing materially to earnings in 2021 with
full ramp-up to 2.3 million tonnes a year of potash capacity
each. The projects are estimated to have a first-quartile
position on the global potash cost curve. Along with the
Northwest ammonia project in Kingisepp, which targets a capacity
of almost 1mtpa by 2021, they should more than cover EuroChem's
internal needs and enhance its vertical integration and product
diversification with presence in all three major nutrients.

Supportive Market Environment: Global prices for fertiliser
products have increased in 2018, on the back of solid demand,
higher feedstock costs and idle/suspended capacities or delayed
ramp-ups. As a result, EuroChem sales and EBITDA increased 11%
and 15% yoy in 1H18. In the medium term, Fitch expects the robust
trends to persist in nitrogen markets on the back of limited
capacity additions and cost push for non-integrated producers
while phosphates and potash are likely to face supply-driven
price volatility. Fitch believes that EuroChem's scale, market
reach and strong cost position should support profitability and
cash flow generation through the cycle.

Potash Projects Progress: Marketable production started in 2Q18
at Usolskiy potash mine, where the company targets 0.3mt of
potash by year end, followed by the ramp-up towards 1mt in 2019
and 2.3mt phase 1 capacity by 2021. Commissioning of the second
production train (out of four) is expected for 3Q18. The
VolgaKaliy floatation plant is in commissioning mode and first
production of marketable product is expected in 1H19. The company
is building a freeze wall around the cage shaft where water
inflow halted sinking progress in March 2017. Production of the
first commercial ammonia from EuroChem Northwest ammonia project
in Kingisepp is expected this year. The project targets almost
1mtpa of ammonia by 2021.

Normalised Capex to Support FCF: Out of about USD8 billion
dedicated to the potash and ammonia projects, USD5.5 billion has
been spent with the remaining USD2.9 billion mostly earmarked for
phase 2 of the potash expansion over the next five years. Its
base case assumes annual capex of USD700 million-USD800 million
from 2019 (USD1.5 billion in 2017), which also includes several
small and medium-sized investments across the range of EuroChem's
fertiliser production and trading facilities. Production ramp-up
and decreasing investments should support positive pre-dividend
free cash flow generation from 2019.

Return of Cash Flow to Shareholders: In 2016, the group signed an
agreement for a perpetual shareholder loan of up to USD1 billion,
of which USD250 million were outstanding in 2016 and USD850
million at end-2018. The loan has been treated as equity under
Fitch's methodology. The 2018 drawdown was used towards the
repayment of the Usolskiy project finance facility. Fitch
believes that under the current rating case, the group will start
to return cash to shareholders under the form of loan repayments
and/or dividends from 2020. Fitch does not expect EuroChem to
make overly aggressive distributions and expect the group to
maintain neutral free cash flow.

Strong Business Fundamentals: EuroChem has a strong presence in
European and CIS fertiliser markets (more than 50% of 2017 sales)
with around a 15% share of premium fertiliser sales. It is the
seventh-largest EMEA fertiliser company by total nutrient
capacity and aims to join the top three in the world with
capacity in all three primary nutrients. The group also has
access to the premium European compound fertiliser market, with
production in Antwerp, trademarks and third-party sales (25% of
sales) distributed through its own network.

EuroChem's Russia-based phosphate and nitrogen production assets
are comfortably placed in the first quartile of their respective
global cost curves, supported by the weaker rouble.

Project Financing Facilities Consolidated: EuroChem had procured
project financing for its Usolskiy Potash project (repaid) and
its Baltic ammonia project. Even though the financing is specific
to the projects and has non-recourse features that separate it
from EuroChem's outstanding debt, Fitch continues to consolidate
the debt due to the strategic importance of the investments and
the inclusion of a cross default clause within the financing
agreements.

DERIVATION SUMMARY

EuroChem's scale is on par with large fertiliser peers such as CF
Industries Holdings, Inc. (BB+/Negative) or Israel Chemicals Ltd.
(ICL, BBB-/Stable) or OCP S.A. (BBB-/Negative). The group's level
of diversification across nutrients and complex fertilisers is
similar to that of PJSC PhosAgro (BBB-/Stable), The Mosaic
Company (BBB-/Stable), ICL and PJSC Acron (BB-/Stable). EuroChem
also has some exposure outside of the fertiliser market (iron
ore) but it remains limited if compared with ICL's bromine-based
specialty chemicals and OCI N.V.'s (BB/Stable) industrial
chemicals. EuroChem ranks behind OCP and PhosAgro in terms of
leadership in the more concentrated phosphates market, and Mosaic
and PJSC Uralkali (BB-/Stable) in the more concentrated potash
segment.

EuroChem's partial vertical integration underpins a cost position
on the lower part of the global urea and DAP cost curves, but
substantial trading operations partly dilute its EBITDAR margins
to 23% (2017). This is below other cost leaders, such as Uralkali
(2017: 49%), Acron (32%), CF Industries (31%) or PhosAgro (29%),
but comparable with OCP (26%) and OCI (23%), and above Mosaic
(17%).

EuroChem's ratings also incorporate the capex-driven leverage
level with FFO adjusted net leverage exceeding 4x in 2017,
ranking below most of its peers excluding Uralkali, OCI and OCP.
Fitch expects EuroChem to continue deleveraging from the 2017
peak.

KEY ASSUMPTIONS

Fitch's Key Assumptions Within Its Rating Case for the Issuer

  - Nitrogen and phosphate fertilisers pricing to remain positive
    over the rating horizon, potash to decrease gradually;

  - Potash and ammonia project to start to add production volumes
    from 2018

  - USD/RUB at around 60 in 2018, 62 from 2019

  - Capex/sales to normalize at 15% by 2021

  - Shareholder loan repayment in 2020 and 2021 equally

  - Dividend distribution at around USD500 million from 2020
    leading to neutral free cash flow

RATING SENSITIVITIES

Developments That May, Individually or Collectively, Lead to
Positive Rating Action

  - Visible progress in ramping up potash operations resulting in
    an enhanced operational profile.

  - Positive free cash flow on moderated capex leading to FFO
    adjusted net leverage at or below 3.0x.

Developments That May, Individually or Collectively, Lead to
Negative Rating Action

  - Continued aggressive capex or shareholder distributions
    translating into FFO adjusted net leverage sustainably above
    3.5x.

LIQUIDITY

Manageable Liquidity: At end-June 2018, EuroChem counted on cash
balances of USD221 million, undrawn committed credit revolving
facilities of about USD409 million and USD170 million under the
ammonia project facility against USD1.1 billion of short-term
debt. Fitch believes that EuroChem's liquidity remained
manageable and supported by a combination of uncommitted
revolving facilities of about USD700 million, and its proven and
continued access to the international and domestic funding.

In 3Q18, EuroChem repaid USD695 million of debt, reducing short-
term liabilities to USD392 million. Availability under committed
credit lines increased to USD508 million (including USD170
million under ammonia project finance facility) and availability
under uncommitted credit lines increased to USD1.1 billion. The
company also has access to remaining USD150 million of a loan
from shareholders.

FULL LIST OF RATING ACTIONS

EuroChem Group AG

  - Long-Term Foreign-Currency IDR: Affirmed at 'BB'; Outlook
    Stable;

EuroChem Global Investments DAC

  - Foreign-currency senior unsecured rating on loan
    participation notes: Affirmed at 'BB';

EuroChem Finance Designated Activity Company

  - Foreign-currency senior unsecured rating on guaranteed notes:
    Affirmed at 'BB'



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


ARDONAGH MIDCO 3: Moody's Alters Outlook to Stable & Affirms CFR
----------------------------------------------------------------
Moody's Investors Service has affirmed Ardonagh Midco 3 plc's B3
Corporate Family Rating and B3-PD probability of default rating.
Moody's also changed Ardonagh's outlook to stable from positive.

The action follows the planned acquisition of Swinton and Nevada
3 announced on October 2, 2018 and October 29, 2018 respectively.

RATINGS RATIONALE

Moody's affirmed Ardonagh's B3 CFR rating, reflecting the group's
strong business profile and product diversification together with
good EBITDA margins and earnings growth prospects. The
affirmation also reflects the fact that Moody's expects run-rate
savings (approximately GBP40 million in 2018) to materialize over
the next couple of years and exceptional costs to come down. As
this happens, the group will be in a strong position to grow its
statutory earnings and start generating organic positive net cash
flows.

The change in outlook to stable reflects the increase in debt
amount as part of the planned acquisition of Swinton and Nevada 3
and the limited track record of Ardonagh operating as a combined
group. In Moody's opinion, the debt increase will delay the
group's deleveraging, on a reported basis. Moody's currently
expects Ardonagh's financial leverage to decline below the
agency's 6.5x (on a reported basis) upgrade trigger beyond the
next 12-month, a longer time period than initially anticipated.
In order to fund the acquisition of Swinton as well as for
general corporate purposes and further investments, Ardonagh will
raise an additional GBP175 million equivalent of the USD
denominated backed senior secured notes, increasing total
borrowings to GBP1,145 million (GBP825 million reported debt at
YE2017). Moody's debt-to-EBITDA ratio is expected to remain very
high at around 7.9x (on a reported adjusted basis) as at year end
2018. On a pro forma basis, adjusting for run rate savings of
GBP40 million, this ratio is lower at 6x.

From a business perspective, Moody's views Swinton as a good
strategic fit that will strengthen Ardonagh's personal lines
brokerage business. Ardonagh expects Swinton to add GBP34.3
million to EBITDA in LTM June 2018 on a pro forma basis, 18% of
total pro forma EBITDA. Swinton's business will be integrated
with Autonet & Carole Nash that operate under the same IT
platform, which mitigates integration risk.

In addition to the purchase of Swinton, Ardonagh is acquiring
Nevada 3. This includes three specialised and complementary
businesses, which will be merged into Ardonagh in exchange for
equity. The company expects this transaction to deliver c.
GBP18.8 million in income, GBP6.9 million in pro forma adjusted
EBITDA LTM June 2018.

RATING DRIVERS

Moody's says the following factors, based on reported figures,
could lead to a ratings upgrade: (1) positive free cash flows
consistently above 3% of debt; (2) gross debt-to-EBITDA
consistently below 6.5x with EBITDA-CAPEX coverage of interest
sustainably above 2.0x; and (3) Moody's adjusted EBITDA
consistently surpassing GBP125 million with EBITDA margins above
25%. All based on reported figures.

The following factors could lead to a downgrade on Ardonagh: (1)
adjusted gross debt-to-EBITDA remaining above 8.0x; (2) a
weakening in the group's liquidity position or cash flows
generation; and/or (3) EBITDA before exceptional items, excluding
run-rate cost savings below GBP100 million with EBITDA margins
below 23%.

RATINGS LIST

Moody's has affirmed the following ratings on Ardonagh Midco 3
plc:

  --- Corporate Family Rating at B3

  --- GBP455 million and USD520 million Backed Senior Secured
      Debt Ratings at B3

  --- GBP120 million Backed Super Senior Secured Bank Credit
      Facility Rating at Ba3

  --- Probability of Default Rating at B3-PD

Moody's has assigned the following rating on Ardonagh Midco 3
plc:

  --- USD225 million Backed Senior Secured Debt Ratings at B3

Outlook Action:

Outlook changed to Stable from Positive


ARDONAGH MIDCO 3: Fitch Revises Outlook on B IDR to Negative
------------------------------------------------------------
Fitch Ratings has revised the Outlook on Ardonagh Midco 3 plc's
Long-Term Issuer Default Rating (IDR) to Negative from Stable and
affirmed the IDR at 'B'.  The Negative Outlook reflects the
underperformance of the business relative to expectations,
particularly in the MGA (underwriting) segment, and the increased
execution risk from the acquisition of Swinton Holdings Limited.
This acquisition, combined with several other transactions and
the business underperformance, delay deleveraging of the business
from previous forecasts by one year but leave it with a more
diversified firm that has better market position and greater
scale. To mitigate this underperformance, Ardonagh is evaluating
strategic options for the commercial MGA business. Fitch expects
the benefits of several years of restructuring will be realised
in 2019, with a normalised business profile delivered in 2020. As
a result, Fitch observes a balance between the overall
strengthened business profile and improving liquidity, and the
delayed deleveraging.

Ardonagh has agreed to acquire Swinton , the fourth-largest
personal lines broker in the UK. This business will be combined
with Autonet and Carole Nash to form the largest personal lines
broker in the UK.  Swinton focuses more on standard products
versus Ardonagh's focus on specialty products, but the greater
scale, brand recognition and strengthened relationships with
insurance partners should lead to an overall stronger business.
Prior to Ardonagh's purchase of Swinton, Covea has substantially
completed its own restructuring of the company.  Swinton is
transitioning from retail distribution model to an online
distribution model. It has also installed a new IT platform,
comparable and from the same provider as  the Ardonagh platform,
limiting integration risk.
KEY RATING DRIVERS

Swinton Acquisition Increases Scale; Execution Risk: Ardonagh has
agreed to purchase Swinton from Covea, a French insurance
company, in a transaction that will increase scale and expand
Ardonagh's personal insurance offerings. Swinton will be
integrated into the Autonet and Carole Nash segment and the
combined group will benefit from its expertise in pricing,
technology and relationships with insurance partners. Swinton is
currently at the end of a EUR70 million turnaround led by Covea
and is in the process of closing its retail outlets.  As a
result, this transaction increases execution risk.  The risk is
mitigated by the expansion of the management team with
experienced members of Swinton and reduced IT risk as the two
firms share a similar core IT platform.

Leverage Elevated After Swinton Acquisition: Fitch expects funds
from operations (FFO) adjusted leverage to remain at 7.9x in 2018
and reduce towards 6.3x by 2020.  This results in Ardonagh
deleveraging below its negative sensitivity of 7.0x one year
later than previously expected, which is reflected in the
Negative Outlook. In addition, the FFO fixed charge coverage
ratio remains below 2x due to the increased debt issuance to fund
both the Swinton acquisition and investments in the business.  If
the Ardonagh Group is not able to successfully integrate its
acquisitions and deliver on the operational improvements it has
outlined, further negative rating actions could occur.

MGA Business Deteriorates: Ardonagh's MGA business has
underperformed expectations in 2018.  Sales in 1H18 were GBP27
million versus GBP31.7 million in 1H17, representing a 14.7%
decline.  In addition, adjusted EBITDA turned negative in 1H18 to
-GBP0.4 million versus GBP4.5 million in 1H17 after allocation
of group overheads. The primary driver was commercial MGA results
below expectations.  As a result, management is evaluating
strategic options for this line of business. The remaining MGA
business will focus on specialty lines such as agriculture, non-
standard personal lines and international business.

Bolt-on Acquisitions Accretive: Ardonagh plans to acquire three
businesses from its shareholders in exchange for equity (the
Nevada 3 transaction). These businesses include Milton House
Group, which offers staff absence insurance, The Health Insurance
Group, which offers UK private medical insurance to SMEs and
individuals, and Professional Fee Protection Limited, which is a
small UK niche tax investigation fee protection MGA.  These
businesses should be immediately accretive and their acquisition
will include limited integration risk.  In addition, Ardonagh
announced the sale of Direct Group's claims business to Davies
Group for up to GBP36 million.  Davies Group will provide claims
management services to Ardonagh's underwriting and broking
businesses in a six-year agreement.  In addition, Ardonagh plans
to use proceeds from the Nevada 3 transaction to further develop
the specialty MGA business.

Continued Shareholder and Regulatory Support: Shareholders have
invested at least GBP680 million in the Ardonagh group and have
demonstrated their support both through transactions to provide
liquidity to Ardonagh during the transformation plan and by
financing the acquisitions to form the Ardonagh group.  This
support continued with the sale of the remaining stake in The
Broker Network for GBP30 million to entities affiliated with its
shareholders and the acquisition of three bolt-on acquisitions
through its Nevada 3 platform by Ardonagh.  Continued shareholder
support is a positive factor for the group.  Management expects
the acquisition to be approved and to continue its constructive
relationship with the FCA. In addition, the ETV redress payments
will be distributed over the next 18 to 24 months, resolving the
remaining expected regulatory payments.

DERIVATION SUMMARY

Ardonagh has significantly smaller scale than its large publicly
rated insurance broker peers and a less diverse product line.
However, Ardonagh has greater scale and a more diverse product
offering than Siaci Saint Honore (B(EXP)/Stable). While its
expertise in niche, high margin product lines and its leading
position among UK insurance brokers underpin a sustainable
business model, Ardonagh's higher financial risk and
underperforming business lines constrain the rating.

KEY ASSUMPTIONS

Fitch's Key Assumptions Within Its Rating Case for the Issuer:

  - Revenues grow at 7.4% CAGR 2017-2021 driven by 24% PF growth
    in 2018 from M&A. 2.4% CAGR 2018-2021

  - EBITDA margins grow from 21.3% in 2017 to 28.4% in 2021

  - EBITDA adjustments reflect acquisitions of Swinton and Nevada
    3, disposals of Claims and resolution of the strategic
    direction of the MGA business

  - Cash taxes as around 4% of EBITDA per year

  - Change of working capital as outflow of 2.2% of revenues per
    year

  - Capex includes maintenance & growth capex of around GBP15
    million per year

  - Exceptional items include regulatory fees (ETV redress
    payments), transaction costs, and restructuring costs

  - No additional M&A assumed

  - No common dividends assumed

RATING SENSITIVITIES

Developments That May, Individually or Collectively, Lead to
Positive Rating Action

  - FFO adjusted leverage sustainably below 5.5x

  - FFO fixed charge coverage above 2.5x

  - EBITDA margins greater or equal to 27%

  - Successful M&A that diversifies the business and builds on
    its leadership in the UK brokerage and wholesale market

  - Organic growth supporting the capital structure that allows
    for refinancing at lower cost of debt combined with
    operational turnaround in the MGA business

Developments That May, Individually or Collectively, Lead to
Negative Rating Action

  - FFO adjusted leverage sustainably above 7.0x

  - FFO fixed charge coverage below 2x and declining liquidity

  - EBITDA margins below 22%

  - Weak organic growth and sustained integration costs

LIQUIDITY AND DEBT STRUCTURE

Since the last review, Ardonagh has increased the RCF to GBP120
million and added a GBP50 million letter of credit facility to
backstop the ETV payments. The drawing on the RCF is limited to
GBP90 million. In addition, cash has increased to an expected
GBP140 million by year end 2018 after the transactions are
completed from GBP48 million in 2017. In addition, Fitch expects
FCF to trend towards neutral to slightly negative in 2019 from an
expected outflow of GBP54 million in 2018. From 2020, FCF is
expected to be positive with margins above 5%.


CRAWSHAW GROUP: To Appoint Administrators Amid Financial Woes
-------------------------------------------------------------
Muvija M at Reuters reports that Crawshaw Group Plc became the
latest British retailer to be hit by tough trading conditions, as
it announced plans on Oct. 31 to appoint administrators to seek
buyers after failed discussions with investors to raise capital.

The Rotherham-based butcher, which said that it does not have
sufficient cash to restructure, has requested its trading on
LSE's junior market to be suspended, Reuters relates.

Crawshaw shares have lost 82.2% in value so far this year,
Reuters notes.

The company confirmed last week that it was considering actions
including raising additional funding through an equity issue
after reviewing its structure and investment in High Street
locations, Reuters discloses.

Crawshaw last month reported a double-digit drop in like-for-like
sales and flagged that UK High Streets are under increasing
pressure that was unlikely to change, Reuters recounts.

Crawshaw was launched in Yorkshire in 1954 and has 662 employees
at 54 stores, with 42 on the High Street and the rest in the
Midlands and North of England, according to Reuters.


KEMBLE WATER: Fitch Lowers Senior Secured Debt Rating to BB-
------------------------------------------------------------
Fitch Ratings has downgraded Kemble Water Finance Limited's
senior secured debt rating to 'BB-' from 'BB' and affirmed Kemble
Water's Issuer Default Rating at 'BB-' and removed both ratings
from Rating Watch Negative. The Outlook on the IDR is Negative.

The downgrade of the senior secured debt reflects its expectation
of average debt recovery prospects based on Kemble Water's plan
to raise more incremental debt and increase the standalone
gearing towards 9%. The Negative Outlook is driven by the
uncertainty around Kemble Water's ability to achieve the
financial profile commensurate with the 'BB-' IDR in the
remainder of the current (AMP6) and in the new price control
(AMP7).

Fitch expects to review the Negative Outlook when there is more
certainty around the company's financial profile evolution in
AMP7, once the draft and final price determinations are published
by the Water Services Regulation Authority, Ofwat.

KEY RATING DRIVERS

Reliance on Opco's Dividends: Kemble Water's main source of cash
flow is its operating company, Thames Water Utilities Limited.
Kemble Water relies predominantly on the dividends from Thames
Water to service its debt. We, therefore, place a lot of emphasis
on the analysis of the dividend stream, which could be negatively
affected by the regulatory guidance, operational or financial
underperformance of the Opco, low annual inflation index driving
revenue growth, as well as, in an extreme case, the inability of
Thames Water to distribute dividends due to its net debt to
regulatory capital value (RCV) exceeding the covenanted dividend
lock-up level of 85%.

New Incremental Debt at Kemble: Thames Water plans to de-lever
via refinancing some of its debt at Kemble Water (Holdco) level.
The company's business plan suggests that GBP470 million of
additional debt will be raised by Kemble Water in the remaining
years of AMP6, while another GBP460 million in AMP7. As a result,
Fitch estimates that Kemble Water's standalone gearing could go
up to about 9% net debt to RCV by March 2025 from about 6% in
March 2018. Redistribution of debt between the Opco and the
Holdco is credit-positive for the Opco and moderately credit-
negative for the Holdco.

Lower Shareholder Distributions: Fitch expects cash dividend
cover to be weak in the remainder of AMP6 and in AMP7 at 1.3x on
average, due to Thames Water's decision to significantly reduce
dividend distributions to ultimate shareholders. However, Fitch
does not consider low cash dividend cover a rating limiting
factor in this context. Given the circumstances, Fitch places
more emphasis on the dividend cover capacity of Kemble Water.
Dividend reduction is credit-positive as it would help reducing
Thames Water's total senior gearing, creating greater buffer
against the lock-up covenant levels at the Opco.

Its preliminary modelling, based on the company's business plan
and its conservative assumptions, suggests that Thames Water's
adjusted net debt to RCV would go down to 80% in the financial
year to end-March 2025 (FY25) from 82% in FY18.

Financial Policy Drives Dividend Cover Capacity: Kemble Water's
dividend cover capacity incorporates an assumption that Thames
Water would utilise the headroom of up to 83% net debt to RCV (2%
below the 85% dividend lock-up covenant level) to allow continued
dividend payment to the Holdco. The headroom between this level
and its preliminary expectation of Thames Water's gearing of 79%-
81% (on unadjusted basis) translates into additional dividend
cover capacity for Kemble Water.

Dividend Cover Capacity Borderline: Its early estimate of the
average dividend cover capacity is 2.5x in AMP6-AMP7. However, it
could be lower at around 1.9x should the benchmark 5% base
dividend yield, used by Ofwat as a reference point for a company
performing in line with its price determination, be followed
strictly. These estimates provide limited buffer against the
current negative rating sensitivity of 2.5x. There is a high
level of uncertainty around the company's business plan in FY21-
FY25 as draft or final price determinations for the new price
control are not yet available.

Underperformance Anticipated: Fitch expects Thames Water to
underperform total expenditure (totex) targets over AMP6 by about
GBP394 million in nominal terms. The higher spending is driven by
the need to improve regulatory performance, especially in leakage
and customer services. In addition, the company has accumulated
about GBP230 million of penalties for its incentive performance
in AMP6, including in relation to service incentive mechanism
(SIM). The performance challenges, if not addressed
appropriately, may lead to overspending on totex and incentive
penalties in AMP7, and may result in lower dividend distribution
capacity to Kemble Water.

Fitch notes the progress in preventing pollution incidents,
improving leakage find and fix activities and customer service.

Increased Business Risk: Fitch tightened ratio guidelines for all
rated UK water holding and operating companies in July 2018 to
reflect the increase in business risk from the next price
control. This is because the tougher proposed regulatory package
offers lower cash-flow visibility as more revenue will be at risk
with a higher proportion of the allowed return linked to
performance. Fitch has lowered the gearing rating sensitivity by
3% and increased post-maintenance interest cover sensitivity by
0.1x for Fitch-rated entities for the upcoming price control.

Recovery Uplift Revisited: Fitch no longer evaluate the creditor
recovery of Kemble Water's senior secured debt as above average,
given Thames Water's plans to increase the Holdco's gearing and
taking into account general reduction of the valuation multiples
in the sector. We, therefore, removed the one-notch uplift from
the IDR to the senior secured debt. Its analysis also takes into
account Thames Water's large index-linked swap portfolio, which
was out-of-money by GBP875 million as at end-March 2018
(including inflation accretion of GBP267 million, included in the
net debt at end-March 2018).

Although these liabilities depend on the level of interest rates,
they could potentially reduce the recovery value of the Holdco's
creditors in a hypothetical default scenario.

DERIVATION SUMMARY

Kemble Water Finance Limited is a Holdco of Thames Water
Utilities Limited, one of the regulated, monopoly providers for
water and wastewater services in England and Wales. Kemble
Water's weaker rating compared with peers such as Osprey
Acquisitions Limited (BB/Negative) and Kelda Finance (No.2)
Limited (BB/Negative) reflects its weaker credit metrics as well
as the weaker regulatory performance of the underlying Opco.

KEY ASSUMPTIONS

Fitch's Key Assumptions Within Its Rating Case for the Issuer

  - Long-term retail price index (RPI) between 2.7% to 3.1%,
    long-term consumer price inflation including housing costs
    (CPIH) approximates 2%;

  - allowed weighted average cost of capital in AMP7 goes down to
    2.3% (RPI-based) and 3.3% (CPIH-based) in real terms,
    excluding retail margins;

  - 50% of the RCV is RPI-linked and another 50% plus capital
    additions is CPIH-linked, starting from FY21;

  - AMP7 totex allowance of GBP11.5 billion in nominal terms;

  - average Pay-as-you-go ratio of 43.1%, average run-off rate at
    3.8%;

  - capital expenditure underperformance of 5%, no operating
    expenditure (under)/outperformance assumed for AMP7;

  - GBP82 million of leakage-related and GBP106 million SIM-
    related penalties carried into AMP7;

  - GBP50 million of Outcome Delivery Incentives underperformance
    assumed for AMP7;

  - retail EBITDA of about GBP6 million a year in AMP7;

  - non-regulated EBITDA of about GBP17 million a year;

  - receipts from asset disposals of about GBP20 million a year
    in FY19-FY25;

  - dividends paid are based on company guidance with no external
    distributions in the remainder of AMP6 and GBP20 million a
    year in AMP7;

  - GBP67 million of pension deficit allowance included in
    revenue building blocks for AMP7 (in nominal terms);

  - pension deficit repair payments of GBP117 million over AMP7
    in nominal terms;

  - incremental debt raised at Kemble Water of GBP470 million in
    AMP6 and GBP460 million in AMP7;

  - Thames Water's cash cost of debt goes down from 3.3% to 2.9%,
    total cost of debt goes down from 4.9% to 4.3% in FY19-FY25.

Key Recovery Rating Assumptions

   - Kemble Water's recovery analysis is driven by liquidation
     value, with an assumption of 10% of liquidation value
     administrative claim;

   - 100% of RCV would be recoverable at default;

   - the hypothetical default scenario happens due to the
     dividend lock-up the Opco level (85% net debt to RCV), and
     the Opco has drawn its liquidity facility;

   - forecast Holdco gearing of 9% net debt to RCV, plus a full
     draw-down of the liquidity facility; and

   - waterfall results in a 40% recovery corresponding to 'RR4'
     recovery for the senior secured debt.

RATING SENSITIVITIES

Developments That May, Individually or Collectively, Lead to
Positive Rating Action

A rating upgrade is unlikely. Fitch may revise the Outlook to
Stable if there is sufficient evidence of:

  - Kemble Water's ability to sustain dividend cover capacity
    above 2.5x and post-maintenance and post-tax interest cover
    above 1.1x during the remainder of AMP6 and during AMP7 price
    controls.

  - Material reduction of the regulatory gearing to below 87% and
    substantial improvement in regulatory performance and at the
    Opco level.

Developments That May, Individually or Collectively, Lead to
Negative Rating Action

Fitch could downgrade the rating if its expectation of a
sustained deterioration in the expected credit metrics
materialised:

  - Dividend cover capacity below 2.5x, increase of gearing above
    87% and/or decrease of post-maintenance and post-tax interest
    cover below 1.1x during the remainder of AMP6 and during AMP7
    price controls.

LIQUIDITY

As at end-March 2018, Kemble Water held GBP15.5 million in
unrestricted cash and cash equivalents and GBP65 million of
committed, undrawn revolving credit facility maturing in 2022,
compared with an annual finance charge of around GBP55 million
(GBP54 million for interest, GBP1 million for working capital).
Kemble Water has recently refinanced and upsized the GBP65
million facility to GBP110 million to cover approximately 18
months of its interest payments, as these will increase with
incremental debt issuance. The new facility expires in October
2023. The next debt maturity is a GBP400 million bond in April
2019, and the company is in the process of finalising its
refinancing plans.

FULL LIST OF RATING ACTIONS

Kemble Water Finance Limited

  - Long-Term IDR: affirmed at 'BB-'; Off RWN; Outlook Negative

  - Senior Secured debt: downgraded to 'BB-'/'RR4' from 'BB'; Off
    RWN

Thames Water (Kemble) Finance plc

  - Senior Secured debt issued by Thames Water (Kemble) Finance
    plc and guaranteed by Kemble Water: downgraded to 'BB-'/'RR4'
    from 'BB'; Off RWN


MANNA DEVELOPMENTS: Receivership May Impact Lake Torrent Project
----------------------------------------------------------------
BBC Sport reports that Manna Developments Ltd., the developer
behind the plans for the multi-million pound Lake Torrent project
in County Tyrone, Northern Ireland, has gone into receivership.

According to BBC Sport, Companies House records show the company
went into receivership on Oct. 22, which may be a fatal blow to
the proposed circuit.

The GBP30 million project was set to develop 160 acres of clay
pits in Coalisland into a world class motorsport facility, BBC
Sport discloses.

Development on the site stalled earlier this year, BBC Sport
relates.


MOTHERCARE PLC: To Axe 200 Jobs as Part of Restructuring
--------------------------------------------------------
Sangameswaran S and Muvija M at Reuters report that Mother and
baby products chain Mothercare Plc on Oct. 31 said it has told
about 200 employees their jobs will be terminated as part of a
restructuring.

According to Reuters, a spokesman said in a statement the job
cuts will affect the struggling British-based retailer's head
office and the reorganisation will create 50 new roles.

The Watford, UK-based retailer announced plans in May to seek
creditor approval for so-called company voluntary arrangement
proposals that would enable it to shut 50 stores and secure rent
reductions on 21 others, Reuters recounts.

The company's sales and profit have been hammered by intense
competition from supermarket groups and online retailers in its
main UK market as well as by rising costs, Reuters discloses.


VICTORIA PLC: Fitch Assigns BB-(EXP) LT IDR, Outlook Stable
-----------------------------------------------------------
Fitch has assigned Victoria plc a first-time expected Long-Term
Issuer Default Rating of 'BB-(EXP)' with a Stable Outlook. Fitch
has also assigned the proposed EUR450 million senior secured
notes due 2023 an expected instrument rating of 'BB(EXP)'/'RR2'.
The notes will refinance the bridge facility put in place to fund
the acquisition of Saloni and repay existing debt. Final ratings
are subject to the completion of the bond issuance in line with
terms already reviewed.

The 'BB-(EXP)' IDR reflects a business profile that is in line
with its expectations for a 'BB' category rating. In its view,
Victoria's established market position, competitive offering at
the higher end of the European flooring market, diversified
customer base of independent retailers and high profitability
through the cycle compensate for its relatively small scale and
moderate product and geographical diversification, in comparison
with building products peers in Fitch's rated portfolio.

The IDR also reflects the group's moderate leverage with expected
funds from operations (FFO) adjusted net leverage at 4.0x (around
3.0x on a net debt/EBITDA basis), pro forma for the bond issuance
which will be used to partly refinance the acquisition of Spanish
ceramic tile maker, Saloni. Despite healthy free cash flow (FCF)
generation that suggests capacity to deleverage, Fitch expects
leverage to remain around 4.0x over the rating horizon, given
management's appetite for further partly debt-funded
acquisitions. However, the 'BB-(EXP)' rating is supported by
Victoria's stated financial policy that leverage will be
maintained within a 2.0x-3.0x net debt/EBITDA range.

KEY RATING DRIVERS

Better Resilience Through Last Cycle: Victoria has demonstrated
relatively better revenue and profit resilience during the last
financial crisis and economic downturn than some of its building
products peers in Fitch's leveraged finance portfolio. Fitch
believes that the resilience results from the company's focus on
the improvement and repair segment of the market (as opposed to
new build), its strategy to target customers that are relatively
less price sensitive in the mid/high-end of the market (as
opposed to the mass market) and its wide customer base, which
involves many independent flooring retailers with no particular
distributor concentration.

Upper Market Target: Fitch believes that consumers in the mid- to
high-end of the market are less price-sensitive than those in the
mass market. As a result, Fitch believes that, unlike its mass-
market competitors, Victoria can maintain its prices and retain
customers under more difficult market conditions. In a
challenging UK consumer spending environment, Fitch notes that
Victoria had like-for-like revenue growth of 3.3% yoy (YTD August
2018) in its UK division, which contrasts with Balta, one of its
direct competitors in the UK market, which suffered deeply
negative LFL sales evolution over the same period.

Large Europe and UK Exposure: Victoria lacks the geographical
diversification of some of its higher-rated peers. Nearly 75% of
the group's EBITDA is generated in Europe (30% in the UK), pro
forma for the most recent acquisitions. Fitch sees potential
downside risk for consumer spending in the UK as Brexit looms,
although Fitch believes Victoria's position at the higher end of
the market mitigates this risk. Additionally, FX headwinds
resulting from Brexit uncertainty (and potentially weaker
sterling) may have an adverse impact, albeit mild on Victoria's
profitability as UK operations partly rely on euro-denominated
raw material imports (Fitch estimates 13% of total raw material
costs).

Variable Cost Base, Lower Capex Intensity: Over the past few
years, the company has sought to establish a more variable cost
base and has undertaken various initiatives to rationalise its
cost structure and logistics as well as selectively outsource
manufacturing in specific areas. Margins could be adversely
impacted by a drop in volumes in a recession as consumers may
delay their floor renewal decisions or look for cheaper
alternatives. However, Fitch believes that these changes put
Victoria in a better position to withstand the next downturn. As
a result, Victoria has relatively lower capex intensity than most
of its peers, stronger FCF generation and Fitch expects the FCF
margin to be above 7% over the rating horizon.

Acquisition-Driven Growth in Fragmented Market: Victoria has
delivered significant growth in revenues and profitability since
2013, mainly via acquisitions. The group plans to continue doing
so over the forecast period, driven by opportunities presented
from the fragmented nature of its core markets. The acquisitive
strategy entails moderate execution risks, in its view. However,
Fitch views the management team as experienced and disciplined,
with a track record of successful integrations and reasonable
acquisition valuation multiples. Fitch also believes that if
there was an economic downturn, Victoria could stop making
acquisitions without compromising its overall deleveraging
capacity.

Higher Margin Ceramic Tiles: Over FY17-18, Victoria acquired a
number of ceramic tile companies in Italy and Spain, which
increased the scale of the business and broadened the range of
products and geographies. The higher-margin nature of the ceramic
tiles businesses will also boost the group's profitability as
they will contribute over 50% of EBITDA. Fitch has yet to see the
performance of the newly acquired tiles businesses through an
economic downturn but after modelling several stress scenarios,
Fitch believes that Victoria can accommodate some cash flow
pressure and a temporary spike in leverage through the cycle,
supporting the 'BB-(EXP)' rating.

Moderate Leverage, Clear Financial Policy: FFO adjusted net
leverage is expected to reach 4.0x in FY19 following the recent
acquisitions and the prospective issuance of the new bond. Fitch
has assumed the leverage metrics will remain stable over the
rating horizon as management plans to make further partly debt-
funded acquisitions. However, the enhanced scale and
diversification resulting from the acquisitions should help the
company tolerate moderately higher leverage. The 'BB-(EXP)'
rating is supported by Victoria's stated financial policy that
leverage will be maintained within a 2.0x-3.0x net debt/EBITDA
range.

Higher than Average Recoveries: Fitch expects that recoveries for
the prospective senior secured notes will be above average,
falling within the 71%-90% range. This is consistent with a 'RR2'
rating under its criteria. This primarily results from its
expectations of moderate senior secured leverage through the
cycle.

DERIVATION SUMMARY

Victoria is significantly smaller and less diversified than
Mohawk Industries Inc. (BBB+/Stable), the world's leading
flooring manufacturer. In its view, Victoria exhibits an
unlevered business profile that is consistent with the 'BB'
category. The group's profitability levels are particularly
strong based on its Building Products Rating Navigator . However,
Fitch believes that the IDR is better placed at the 'BB-' level
"through the cycle" given the company's decision to re-leverage
the capital structure to finance its expansion into ceramic
tiles. While the company has a target net leverage of 2.0x EBITDA
(absent acquisitions), Fitch believes that leverage is likely to
be maintained around 3.0x (4.0x on a FFO net basis) over its
rating horizon given the company's M&A appetite. As a listed
company, Victoria also benefits from more diverse sources of
funding than private-equity owned, higher leveraged companies
operating in the same segment, which tend to be rated in this
sector in the single 'B' category.

KEY ASSUMPTIONS

  -- Revenue to grow by 44% in FY19 on a reported basis, largely
     driven by the inclusion of Saloni's earnings. After FY19,
     revenue is forecast to grow at 14%-15% per year over FY20-21
     driven by further acquisitions;

  -- EBITDA margins are expected to increase to 16.6% in FY19 and
     further to exceed 17% over FY20-21, driven by favourable
     business mix effects from acquiring higher-margin ceramic
     tiles businesses;

  -- Capex over the forecast period is expected to be steady at
     around 4.0%-4.5% of sales;

  -- Changes in net working capital are expected to be limited in
     line with historical levels;

  -- Two acquisitions are forecast, one each in FY20 and FY21
     with incremental debt raised to fund them;

  -- No dividends paid.

RATING SENSITIVITIES

Developments That May, Individually or Collectively, Lead to
Positive Rating Action

Continued increase in scale and product/geographical
diversification as well as successful integration of the latest
acquisitions, leading to:

  -- FFO adjusted net leverage below 2.5x

  -- EBITDA margin increasing towards 19%

Developments That May, Individually or Collectively, Lead to
Negative Rating Action

  -- Departure from stated financial policy leading to FFO
     adjusted net leverage above 4.0x for a sustained period

  -- Material drop in EBITDA margin towards 15%

  -- FCF margin reduced to lower single digit

LIQUIDITY AND DEBT STRUCTURE

Comfortable Liquidity: At closing of the bond issuance, Fitch
expects cash on balance sheet to be around GBP55 million, which
along with the company's cash generation capability, the new
GBP60 million revolving credit facility and a five-year debt
maturity profile lead to a comfortable liquidity position.

SUMMARY OF FINANCIAL STATEMENT ADJUSTMENTS

  - Fitch has treated EUR10 million of cash as not readily
    available for debt service given working capital
    requirements.

  - Fitch has adjusted its leverage calculation by capitalising
    the operating lease expense at an 8x multiple, in line with
    its criteria.



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


* BOOK REVIEW: Inside Investment Banking, Second Edition
--------------------------------------------------------
Author: Ernest Bloch
Publisher: Beard Books
Softcover: 440 Pages
List Price: US$34.95
Order your personal copy at
http://www.beardbooks.com/beardbooks/inside_investment_banking.ht
ml

Even though Bloch states that "no last word may ever be written
about the investment banking industry," he nonetheless has
written a definitive book on the subject.

Bloch wrote Inside Investment Banking after discovering that no
textbook on the subject was available when he began teaching a
course on investment banking. Bloch's book is like a textbook,
though one not meant to be limited to classroom use. It's a
complete, knowledgeable study of the structure and operations of
the field of investment banking. With a long career in the field,
including work at the Federal Reserve Bank of New York, Bloch has
the background for writing the book. He sought the input of many
of his friends and contacts in investment banking for material as
well as for critical guidance to put together a text that would
stand the test of time.

While giving a nod to today's heightened interest in the
innovative securities that receive the most attention in the
popular media, Inside Investment Banking concentrates for the
most part on the unchanging elements of the field. The book takes
a subject that can appear mystifying to the average person and
makes it understandable by concentrating on its central
processes, institutional forms, and permanent aims. The author
shows how all aspects of the complex and ever-changing field of
investment banking, including its most misunderstood topic of
innovative securities, leads to a "financial ecology" which
benefits business organizations, individual investors in general,
and the economy as a whole. "[T]he marketplace for innovative
securities becomes, because of its imitators, a systematic
mechanism for spreading risk and improving efficiency for market
makers and investors," says Bloch.

For example, Bloch takes the reader through investment banking's
"market making" which continually adapts to changing economic
circumstances to attract the interest of investors. In doing so,
he covers the technical subject of arbitrage, the role of the
venture capitalist, and the purpose of initial public offerings,
among other matters. In addition to describing and explaining the
abiding basics of the field, Bloch also takes up issues regarding
policy (for example, full disclosure and government regulation)
that have arisen from the changes in the field and its enhanced
visibility with the public. In dealing with these issues, which
are to a large degree social issues, and similar topics which
inherently have no final resolution, Bloch deals indirectly with
criticisms the field has come under in recent years.
Bloch cites the familiar refrain "the more things change, the
more they remain the same" and then shows how this applies to
investment banking. With deregulation in the banking industry,
globalization, mergers among leading investment firms, and the
growing number of individuals researching and trading stocks on
their own, there is the appearance of sweeping change in
investment banking. However, as Inside Investment Banking shows,
underlying these surface changes is the efficiency of the market.

Anyone looking for an authoritative work covering in depth the
fundamentals of the field while reflecting both the interest and
concerns about this central field in the contemporary economy
should look to Bloch's Inside Investment Banking.
After time as an economist with the Federal Reserve Bank of New
York, Ernest Bloch was a Professor of Finance at the Stern School
of Business at New York University.



                            *********

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 * * *