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

                           E U R O P E

          Tuesday, January 22, 2019, Vol. 20, No. 015


                            Headlines


B E L A R U S

BELARUS: Fitch Affirms B LT IDR, Outlook Stable
BELARUS: IMF Says Cyclical Recovery of Economy Continues


C Z E C H  R E P U B L I C

SAZKA GROUP: S&P Assigns 'BB-' Issuer Credit Rating, Outlook Pos.


F I N L A N D

FINLAND: In its 3rd Year of Economic Recovery, IMF Says


F R A N C E

ACCOR SA: S&P Assigns 'BB' Rating to Subordinated Hybrid Notes


G R E E C E

GREECE: S&P Affirms 'B+/B' Sovereign Credit Ratings, Outlook Pos.


I R E L A N D

CADOGAN SQUARE XIII: Fitch Assigns B-(EXP) Rating to Cl. F Notes
FLY LEASING: Moody's Affirms Ba3 CFR, Alters Outlook to Stable
PREMIER IRISH: Gardai Probe Loans as Company Shuts Doors


M A C E D O N I A

MACEDONIA: Fitch Affirms BB LT IDR, Outlook Positive


R U S S I A

REPUBLIC OF SAKHA: S&P Withdraws 'BB' Issuer Credit Ratings


U Z B E K I S T A N

KAFOLAT INSURANCE: Fitch Ups IFS Rating to BB-, Outlook Stable
ORIENT FINANS: S&P Alters Outlook to Positive & Affirms B-/B ICR


U N I T E D  K I N G D O M

ALPAMARE UK: Faces Winding-Up Bid Over Unpaid British Gas Debts
CO-OPERATIVE GROUP: Sells Insurance Business for GBP185 Million
MALACHITE FUNDING: S&P Cuts Tier 2 Income Notes Rating to D (sf)
NEW LOOK: Fitch Downgrades Issuer Default Rating to C
THE POSTINGS: Shopping Center Up for Sale Amid Retail Woes

UNIQUE PUB: Fitch Places 3 Notes on Rating Watch Positive
UNITED KINGDOM: BoE Says Loans Echo Pre-Crisis Subprime Crash
WALSHAM CHALET: In Administration, Deloitte Explores Sale


                            *********



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B E L A R U S
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BELARUS: Fitch Affirms B LT IDR, Outlook Stable
-----------------------------------------------
Fitch Ratings has affirmed Belarus's Long-Term Foreign- and
Local-Currency Issuer Default Ratings at 'B' with a Stable
Outlook.

KEY RATING DRIVERS

Belarus's ratings balance improving macroeconomic stability, a
strong structural profile in terms of income per capita and human
development indicators, and a clean debt repayment record against
low foreign exchange reserves, relatively subdued growth
prospects, government debt highly exposed to foreign currency
risks, a weak banking sector, high external indebtedness and weak
governance indicators relative to rating peers. Despite some
progress towards diversification, Belarus is highly dependent on
Russia for trade and external financing support.

Macroeconomic stability continued to improve in 2018 due to a
combination of a favourable external environment and sustained
improvements in the policy mix. Average inflation declined to
4.9%, in line with the current 'B' median, and below the
objective of the National Bank of the Republic of Belarus (NBRB).
Fitch expects average inflation to increase to 6% in 2019 with
upside risks stemming from trading partners, financial markets
volatility and continued rapid wage growth.

As favourable cyclical factors ease, growth is likely to
moderate. Growth reached 3% in 2018, driven by favourable
external financing conditions, export prices and demand from
trade partners, as well as household consumption boosted by rapid
real wage and credit growth. Fitch expects growth to slow down to
2.2% in 2019 and 2.0% in 2020, below expected growth of 3.4% and
3.5% for rating peers, reflecting weaker growth in trade partners
as well as slower household consumption.

Belarus is currently negotiating a potential compensation
mechanism given the negative budgetary impact from Russia's oil
tax manoeuvre. Total maximum costs could rise to USD10.6 billion
between 2019 and 2024, if oil prices average USD70 and Belarus's
refineries increase the volume of oil processed from 18 million
tonnes in 2019 to 24 million tonnes in 2020-2024. Losses could be
partly mitigated by higher domestic fuel prices and lower volumes
of crude processing, but this would still likely require
budgetary adjustments and weigh on growth prospects.

Near-term public and external financing risks remain manageable.
2019 sovereign foreign currency (FC) debt service will equal
USD3.2 billion, and the main principal repayment is USD600
million under Russian loans, which could be refinanced through a
new loan from Russia. Belarus is expected to receive the final
disbursement (USD200 million) under the Eurasian Fund for
Stabilisation and Development (EFSD) programme, and also plans to
issue in the domestic market (partly in local currency) and use a
portion of FC export custom duties. The government's strong cash
position (USD5 billion) can provide short-term financing
flexibility, but this cannot be fully used without a sharp drop
in international reserves.

FC debt amortisation and interest payments will remain high,
averaging USD3.5 billion in 2020-2021. Belarus could pre-finance
some 2020 debt repayments through issuance in the Russian market.
There are still plans to issue in the Chinese market, but a
return to the eurobond market is not planned before 2020. Fitch
does not factor an IMF programme into its forecasts.

Fitch expects international reserves to decline slightly to
USD6.8 billion in 2019, from USD7.1 billion in 2018, due to debt
service and reduced net FX sales by residents. External liquidity
will remain among the weakest in the 'B' rating category. Fitch
expects the current account to widen to 3.8% in 2019, up from
2.1% in 2018, as the nuclear power plant (NPP) ramps up and
higher oil import costs before narrowing to 2.6% in 2020. Net
external debt at 42% of GDP at end-2018, is well above the
historical 'B' range median of 15%.

Fitch estimates that the general government (GG) balance reached
a deficit of 0.4% of GDP in 2018 after adjustments to the
estimated officially reported consolidated GG surplus of 2.6% of
GDP. These adjustments reflect expenditure related to the NPP
(2.7% of GDP), execution of guarantees (0.2% of GDP) and
capitalisation transfer (0.2% of GDP). Belarus targets a fiscal
surplus of BYN1.4 billion (1.2% of GDP) for 2019, at the
officially reported consolidated level. Fitch forecast a GG
deficit of 3.1% of GDP reflecting weaker revenue growth,
estimated NPP expenditures at 3.6% of GDP, as well as potential
bank-related costs and guarantees.

The 2019 budget does not include any potential compensation for
the budgetary losses derived from the tax manoeuvre (USD192
million or 0.3% of GDP in 2019). The negative impact is on lower
revenues from outbound custom duties on oil and oil products and
lower excise taxes. However, revenues losses will increase every
year, in line with higher oil import prices.

GG debt (including guarantees accounting for 8.1% of GDP)
declined to 51.4% of GDP in 2018 reflecting reduction in
guarantees, debt prepayments and lower than anticipated
disbursements (EFSD). Currency risk remains high as 90% of public
debt is FC denominated. Weaker macroeconomic performance and
exchange volatility could create fiscal risks for public finances
due to the large presence of SOEs in the economy.

Pressures on the financial sector have eased, but it remains
vulnerable to weaker growth prospects and exchange rate
volatility (49% of loans FC-denominated). Although NPLs equalled
4.1% in 3Q18, Fitch considers that asset quality is likely to be
weaker when assessed in terms of IFRS impaired loans. Authorities
introduced macroprudential measures in May in response to rapid
household credit growth, but given the continued rapid pace,
further measures could be considered.

Political power is concentrated in the hands of President
Lukashenko, who has been in power since 1994, and Fitch assumes
that he will remain in power over the medium term. In August,
President Lukashenko appointed a new government headed by Prime
Minister Siarhei Rumas. While more emphasis will be given to
improvements in the business environment, the pace of reform,
especially in terms of SOEs is not likely to accelerate.
Parliamentary and presidential elections are scheduled to be held
no later than 2020.

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

Fitch's proprietary SRM assigns Belarus a score equivalent to a
rating of 'BB-' on the Long-Term Foreign-Currency (LT FC) IDR
scale. Fitch's sovereign rating committee adjusted the output
from the SRM to arrive at the final LTFC IDR by applying its QO,
relative to rated peers, as follows:

  - Macro: -1 notch, to reflect weaker medium-term growth
prospects relative to rating peers.

  - External finances: -1 notch, to reflect a high gross external
financing requirement, low net international reserves, and
reliance on often ad hoc external financial support from Russia
to meet external obligations, which is vulnerable to changes in
bilateral relations. Belarus's net external debt/GDP is high.

Fitch's SRM is the agency's proprietary multiple regression
rating model that employs 18 variables based on three-year
centred averages, including one year of forecasts, to produce a
score equivalent to a LT FC IDR. Fitch's QO is a forward-looking
qualitative framework designed to allow for adjustment to the SRM
output to assign the final rating, reflecting factors within its
criteria that are not fully quantifiable and/or not fully
reflected in the SRM.

RATING SENSITIVITIES

The main factors that could, individually or collectively,
trigger a positive rating action are:

  - Sustained increase in international reserves supporte
  d by further progress in diversification in external financing
sources.

  - Fiscal consolidation at the broader general government level,
leading to a reduction in public debt/GDP and/or contingent
liabilities.

  - Sustained improvement in Belarus's medium-term growth
performance in the context of macroeconomic stability, for
example stemming from implementation of structural reforms.

The main factors that could, individually or collectively,
trigger a negative rating action are:

  - Re-emergence of external financing pressures and erosion of
international reserves.

  - Increased macroeconomic instability, for example due to
weakening in the coherence or credibility of economic policy.

  - Deterioration in public finances resulting in a significant
rise in government debt or contingent liabilities.

KEY ASSUMPTIONS

Fitch's assumes that Belarus will receive ad-hoc financial
support from Russia and that there is no major breakdown in the
bilateral relationship notwithstanding periodic disputes.

Fitch assumes that the Russian economy will grow 1.5% in 2019 and
1.9% in 2020.

The full list of rating actions is as follows:

Long-Term Foreign-Currency IDR affirmed at 'B'; Stable Outlook

Long-Term Local-Currency IDR affirmed at 'B'; Stable Outlook

Short-Term Foreign-Currency IDR affirmed at 'B'

Short-Term Local-Currency IDR affirmed at 'B'

Country Ceiling affirmed at 'B'

Issue ratings on long-term senior-unsecured foreign-currency
bonds affirmed at 'B'


BELARUS: IMF Says Cyclical Recovery of Economy Continues
--------------------------------------------------------
On January 16, 2019, the Executive Board of the International
Monetary Fund (IMF) concluded the Article IV consultation with
the Republic of Belarus.

The cyclical recovery of the Belarusian economy continues, with
growth in the first three quarters of 2018 reaching 3.7 percent.
Higher oil prices and robust external demand have supported
exports, while domestic demand got an impulse from double-digit
wage growth in response to ambitious wage targets. In turn,
stronger imports, including related to the nuclear power plant
construction, have led to some deterioration in the external
accounts despite the positive terms of trade; the current account
deficit could thus reach 2 1/2 percent of GDP in 2018, versus 1.6
percent in 2017. Prudent monetary policy coupled with increasing
central bank credibility are keeping inflation at historically
low levels (5 percent y/y in November) despite rapid wage growth.
Importantly, the exchange rate has remained relatively stable on
a nominal effective basis, as have international reserves.

Strong external demand, better terms of trade, and a higher-than-
expected redistribution of import duties within the Eurasian
Economic Union have boosted budget revenues, which could increase
by some 3/4 percentage points of GDP in 2018 relative to 2017.
Expenditures, however, have been rising even faster, particularly
capital spending but also wages and salaries. All in all, the
overall budget deficit including quasi-fiscal spending on state-
owned enterprises could reach 1.3 percent of GDP in 2018, from
0.3 percent in 2017. The deficit is projected to fall modestly
over the medium-term to about 1/2 percent of GDP, notably thanks
to the planned completion of the nuclear power plant.

The medium-term outlook is subdued absent vigorous structural
reforms, weighed down by unfavorable demographics and weak
productivity. At this juncture, medium-term growth is projected
at 2 percent, limiting convergence towards the income levels of
richer neighboring countries. This modest outlook is conditional
on full compensation from Russia for losses triggered by the
latter's new energy taxation system (the so-called tax maneuver).
Should compensation be significantly less than full - and this is
the key risk hovering over the Belarusian economy at this stage -
medium-term growth could be materially lower than 2 percent, and
the budget and current account deficits higher than projected
above.

                  Executive Board Assessment

Executive Directors welcomed Belarus' continued economic
recovery, supported by improved policy frameworks. However,
Directors noted that rapidly rising public debt, high
dollarization, and the uncertainty about negative spillovers from
Russia's new energy taxation system pose risks. They encouraged
the authorities to use the current cyclical recovery to implement
comprehensive macroeconomic policies and ambitious reforms,
including the reform of state-owned enterprises, to strengthen
economic resilience and increase potential growth.

Directors noted that, while the authorities have undertaken
several fiscal adjustment measures, more needs to be done to stem
the rapidly rising public debt. They encouraged the authorities
to undertake additional consolidation, spread over the next three
years, to achieve a credible medium-term debt target, which
strikes an appropriate balance between development needs and
fiscal sustainability. Directors also encouraged the authorities
to monitor fiscal risks from state-owned enterprises and to
gradually switch funding toward rubel-denominated debt, in order
to make debt less susceptible to exchange rate movements.

Directors agreed on the importance of continued central bank
independence. They supported the authorities' current monetary
policy stance, which is consistent with the inflation target
goal. Looking ahead, Directors welcomed continued progress
towards inflation targeting. In this context, they commended the
authorities for the liberalization of the FX market and for
reductions in directed lending. It will be equally important to
eliminate interest rate caps.

Directors encouraged the authorities to continue to strengthen
financial sector stability. They welcomed the progress made in
implementing the FSAP recommendations and encouraged
implementation of the remaining ones. Directors emphasized the
need to further reduce the high dollarization to continue
building confidence in the rubel. They also stressed that
developing local capital markets will be a key component of
successful de-dollarization.

Directors emphasized that advancing structural reforms is key to
reducing macroeconomic vulnerabilities and raising growth
potential. They called for a comprehensive reform of state-owned
enterprises via a systematic, risk-based assessment of SOEs'
viability, followed by an actionable plan to guide restructuring.
In addition, Directors underscored the need for enhanced social
safety nets, to cushion the impact of restructuring on vulnerable
groups. Separately, facilitating private sector activity by
improving the business climate and leveling the playing field
will also be important.



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C Z E C H  R E P U B L I C
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SAZKA GROUP: S&P Assigns 'BB-' Issuer Credit Rating, Outlook Pos.
-----------------------------------------------------------------
S&P Global Ratings is assigning its 'BB-' issuer credit rating to
Sazka Group A.S.

S&P said, "The positive outlook indicates that we expect Sazka
Group's revenue to grow by about 5%-6% in the next 12 months and
its adjusted EBITDA to be about EUR390 million-EUR410 million,
leading to a debt-to-EBITDA ratio of below 3.0x and free
operating cash flow (FOCF) to debt above 20%."

S&P's rating on Sazka Group reflects its position as the largest,
and leading, lottery operator in Europe. Sazka Group owns the
following stakes in four independent companies that are
predominantly lottery operators and one sports betting and online
casino operator:

-- 100% stake in Sazka a.s., operating in the Czech Republic;

-- A controlling stake of 33% in OPAP S.A. (rated BB-/Stable/--)
    which operates in Greece;

-- A noncontrolling stake of 38.2% in Casino Austria (CASAG);

-- A minority stake of 32.5% in Italy-based LOTTOITALIA, a joint
    venture with Lottomatica SpA; and

-- A 67% stake in SuperSport, which operates in Croatia.

Based on the above holding structure, in its analysis S&P
accounts for Sazka a.s. and SuperSport on a fully consolidated
basis, OPAP on a proportional basis, and value CASAG and
LOTTOITALIA under the equity method (taking into account only the
cash dividends received).

Sazka Group has a strong competitive advantage in all five
countries in which it operates. In the Czech Republic, although
it does not have an exclusive license, it has been the largest
lottery operator for many years and currently controls over 95%
of the market. In Croatia, SuperSport is the leading sports
betting and online casino operator; it has 55% market share of
the sports betting segment and about 60% of the online casino
operator segment. In its other three main markets (Greece,
Austria, and Italy), Sazka Group's subsidiaries hold long-term
exclusive licenses to operate lotteries and face very little
potential competition. This, coupled with its substantial
distribution networks and well-known brands, results in good
geographical diversification, limited competition and high
barriers to entry, differentiating Sazka Group from other rated
gaming companies. In S&P's view, the exclusivity of the contracts
supports the business' long-term sustainability and is the main
rating strength.

Sazka Group benefits from its focus on the lottery segment, which
accounts for around 75% of total revenues. S&P said, "We view
this segment as having lower operational risk than other, more
volatile, betting products, but we acknowledge that it offers
lower product diversity. This is offset by the technological and
product synergies between the group's subsidiaries, and by our
view that lotteries are less volatile and less risky than sports
betting. This risk is further reduced by the long-term exclusive
licenses needed to operate in the lottery space, and by
governments' interest in keeping the business profitable." Its
strong cash generation, combined with the historically consistent
level of participation in betting across much of society, leads
to higher gaming tax income for the government.

The group's acquisition of SuperSports added some product
diversification, mainly in online sports betting and the e-casino
segment. That said, S&P views these operations as more volatile
and operationally riskier than lotteries.

Sazka Group is well-diversified geographically. It operates in
all continental Europe countries where lotteries are privately
operated (Czech Republic, Greece, Cyprus, Italy, and Austria), as
well as in Croatia. Although this reduces its exposure to a
single market, Sazka Group's profitability and cash flows are
still significantly exposed to Greece-based OPAP (around 35% of
group EBITDA) and to the recovering, but still unstable, Greek
economy. Although the rating on Sazka is not capped at the rating
on Greece (B+/Positive/B), S&P does factor the risk associated
with the exposure to Greece into our analysis.

Sazka Group holds small stakes in most of its subsidiaries
(despite controlling some of them). This acts as a rating
constraint because S&P considers that the minority stakeholders
could influence decision making. Sazka's ability to extract and
move cash between holdings and up to the holding level in times
of need could also be hampered.

Historically, the individual entities within the Sazka Group have
been resilient, being able to adjust costs during periods of
recession and where governments have increased gaming taxes. S&P
said, "Therefore, we see the predictability of dividends paid to
Sazka Group by its subsidiaries as strong. We do not expect Sazka
Group to expand significantly in the lottery segment in the next
couple of years, given that no new privately operated market is
expected to open up in Europe. Nevertheless, we understand that
should new lottery markets transfer to private operators, or if
any lottery license is tendered (such as the recent bid on the
SuperEnalotto Italian license) Sazka Group could be one of the
bidders. We also acknowledge that the group could expand its
operations in other gaming activities such as sports betting.
Since the time frame for any change in the lotteries market or
expansion in other gaming segment is unclear, we do not currently
factor them into our base case."

The group's debt comprises EUR200 million senior unsecured debt
issued at the parent level, EUR535 million debt issued by various
intermediary entities, and a pro rata EUR595 million debt issued
at the operating subsidiary levels. S&P said, "Our assessment of
Sazka Group's financial risk profile incorporates our weighted-
average adjusted debt to EBITDA of 3.0x-3.2x in 2018-2019. Our
adjusted EBITDA is calculated under the full consolidation of
Sazka a.s. and SuperSports, a proportional consolidation for OPAP
(33%), and under the equity method for LOTTOLITALIA and CASAG."
S&P's growth assumptions for each of the subsidiaries include:

-- Sazka a.s.' revenue growth estimate at about 27% in 2018 and
    forecast at about 3%-5% in 2019-2020 and that it will report
    an EBITDA of EUR75 million-EUR80 million.

-- OPAP's gross gaming revenue growth estimated at about 7% in
    2018 and forecast at 2019 thanks to its implementation of
    VLTs and at about 2%-3% in 2020. The EBITDA margin is
    expected to be around 23%-25% over 2018-2020.

-- Considering the shareholder agreement with LOTTOITALIA, under
    which Sazka Group is entitled to annual dividend distribution
    of net profits, S&P forecasts that Sazka Group will receive
    EUR90 million-EUR100 million of yearly dividends over 2018-
    2020.

-- From CASAG, S&P estimates dividend income of EUR18 million in
    2018 and about EUR25 million in 2019 and 2020.

-- SuperSport reported strong gross gaming revenue (GGR) growth
    of 45% in 2017, mainly thanks to the introduction of online
    casinos. For 2018, S&P estimates growth of about 17% followed
    by forecast growth of 7%-8% in 2019 and 5%-6% in 2020. S&P
    estimates an EBITDA margin of around 48%, based on GGR.

S&P said, "In 2018, we estimate that Sazka Group's funds from
operations (FFO) to debt were around 21% and its FOCF to debt was
around 18%, supported by strong dividends upstreamed from
LOTTOITALIA and CASAG, and limited capital expenditure (capex)
for the group. Capex in 2018 mainly related to the cost of
implementing VLT machines at OPAP stores and this will continue
in 2019. The subsidiaries don't require meaningful capex to
expand, as Sazka Group uses a capex-light model and a large
third-party distribution network that does not require many
investments.

"We consider the group well-positioned to deliver adjusted EBITDA
estimated at around EUR365 million in 2018 and EUR390 million-
EUR410 million in 2019, based on our consideration of each
subsidiaries' historical performance and the group's strategy
regarding the launch of new products, expansion of the online
business, and implementation of cost-efficiency measures. We
anticipate that Sazka Group's solid future performance and
gradual contractual debt amortizations will lead it to reduce
leverage and strengthen cash flows. We expect the group's
adjusted net leverage to be below 3.0x by end of 2019."

During the first half of 2018, all subsidiaries within the group
reported strong performance, with particularly strong EBITDA
growth at Sazka a.s. (33%), SuperSport (85%), and OPAP (20%).
EBITDA growth at LOTTOITALIA (10%) was also solid while CASAG's
EBITDA was flat. Sazka Group received dividends from LOTTOITALIA
as planned and the annual dividend income of EUR18 million from
CASAG was approved in June 2018. This reflects the group's
ability to upstream dividends from these subsidiaries.

S&P said, "The positive outlook reflects our expectation that
Sazka Group's revenue will increase at around 5%-6% over the next
12 months and adjusted EBITDA will be at around EUR390 million-
EUR410 million. We expect this to be mainly based on continued
implementation of VLTs at OPAP, exceptional dividend distribution
from LOTTOITALIA, the introduction of new products, expansion of
the online segment, and various cost-efficiency measures at all
subsidiaries. If this happens, we could see credit measures
improving, leading us to re-examine our financial risk
assessment.

"We could upgrade Sazka in the next 12 months if its financial
measures strengthened because the group's subsidiaries improved
their performance or reduced their debt, leading to a decrease in
adjusted leverage to below 3.0x while increasing FOCF to debt to
above 20% on a weighted-average basis. The improvement in FOCF is
likely to be based on the limited capex needed and higher amounts
of dividend upstreamed from LOTTOITALIA and CASAG to the parent
company.

"We could also consider an upgrade if the financial policy
remains disciplined and in line with our base assumptions (even
after acquisitions), and if the group extends its track record of
controlling its subsidiaries and the ability to upstream
dividends from the noncontrolled subsidiaries.

"We could revise the outlook to stable if Sazka Group failed to
increase its profitability and its FOCF, thereby failing to
reduce leverage in line with our base case." This could occur if
the company does not repay debt as planned, dividends received
from LOTTOITALIA are materially smaller than expected, or if
there were a significant regulatory or taxation change that
threatened any of the companies' exclusive positions in their
respective markets.

Evidence of a more-aggressive financial policy on a sustainable
basis could also lead to a weakening of Sazka Group's credit
metrics and could put the rating under pressure.

Sazka Group was formed in 2016 as a joint venture that combined
KKCG's and EMMA Capital's gaming assets. The group is the largest
provider of numerical lotteries in Europe, having a stake in all
lotteries in continental Europe where lotteries are privately
managed. Consumers spend over EUR17.5 billion on wagers through
Sazka Group's portfolio companies and the aggregate EBITDA
amounts to over EUR1 billion, which corresponds to adjusted
EBITDA (proportionally consolidated) of about EUR365 million.

S&P's base-case scenario assumes:

-- Czech Republic GDP growth estimated at 3.2% in 2018 and
    forecast at 2.4% in 2019; unemployment to remain close to 3%.

-- The Italian economy to grow slowly, by around 1.1% in 2018
    and 2019, and unemployment to fall below 11%.

-- Greece to show some recovery, with GDP growth estimated at 2%
    in 2018 and forecast at 2.2% in 2019 and unemployment
    reduction at below 20%.

-- Austria's GDP growth estimated at 3% in 2018 and forecast at
    2% in 2019, while unemployment reduces to around 5%.

-- Croatia's GDP growth estimated at 2.8% in 2018 and forecast
    at 2019, while unemployment stands at around 10%.

-- Group subsidiaries in each country are unlikely to grow in
    direct proportion to that country's specific GDP growth.
    Instead, growth is likely to be tied to the subsidiary's
    organic growth, and be only partly related to consumer
    spending and free household income.

-- Group revenue growth estimated at about 13%-14% in 2018 and
    forecast at about 5%-6% in 2019 will primarily be supported
    by the inorganic growth coming from the newly acquired
    SuperSports subsidiary, as well as organic growth derived
    from OPAP's implementation of VLT and online lottery growth.
    The group's plans to introduce new products across different
    subsidiaries should also stimulate improved performance in
    future.

-- Adjusted EBITDA margins (including operating leases) of
    around 40%-42% during 2018 and 2019, assuming around EUR90
    million-EUR95 million of annual dividends received from
    LOTTOITALIA. Dividend income of EUR18 million in 2018 and
    EUR25 million in 2019 from CASAG is included in the group
    EBITDA. Cost-efficiency measures -- coupled with increased
    online sales, which carry lower costs -- will contribute to
    the significant margin improvement.

-- Capex of approximately EUR20 million in 2018 and EUR11
    million in 2019 are mainly related to new product
    introductions and OPAP's VLT implementation and development.

Based on these assumptions, S&P arrives at the following credit
metrics over 2018-2020:

-- Adjusted debt to EBITDA of 3.4x in 2018, decreasing to around
    2.5x in 2019-2020.

-- FFO to debt of around 21% in 2018, increasing to about 30%
    during 2019-2020.

-- Adjusted FOCF to debt of 18% in 2018, rising to close to 30%
    in 2019-2020, given the reduction in capex.

S&P said, "Under our scenario analysis, we forecast that credit
metrics wouldn't show material changes, even if Sazka Group
expanded by 400 basis points more or less than our base case.

"We assess Sazka Group's liquidity position as adequate under our
criteria, and calculate that sources should exceed uses by more
than 2x over the next 12 months. Our assessment of Sazka Group's
liquidity position is supported by the group's sufficient cash on
hand, the solid cash flow generation, and limited debt repayment
and capex.

"We also view the group's risk management as generally prudent in
the context of an adequate assessment, but anticipate that Sazka
Group is unlikely to absorb high-impact, low-probability events
without a need for refinancing, given its complex holding
structure. In our view, this limits its ability to extract and
move cash between subsidiaries and up to the holding level in
times of need."

S&P estimates the company's principal liquidity sources over the
next 12 months will include:

-- Cash on balance sheet of about EUR130 million (at the parent
    level, the fully consolidated Sazka a.s. and SuperSports);
    and

-- S&P's forecast of FFO of about EUR120 million.

S&P estimates the company's principal liquidity uses over the
next 12 months will include:

-- Capex of about EUR10 million in 2019; and
-- EUR115 million of debt repayment.

The current senior unsecured EUR200 million local notes include a
maximum net consolidated leverage covenant of 4.0x. S&P does not
expect the company to trigger this covenant over the forecasted
period, due to its manageable leverage and the high headroom.



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F I N L A N D
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FINLAND: In its 3rd Year of Economic Recovery, IMF Says
-------------------------------------------------------
On January 11, 2019, the Executive Board of the International
Monetary Fund (IMF) concluded the Article IV consultation with
Finland.

Finland is enjoying its third consecutive year of economic
recovery. The employment rate has picked up sharply and the
unemployment rate has declined to its lowest level since 2011.
Wages have started to recover, but inflation remains low. Export
market shares have improved slightly leading to a pickup in
exports, while stronger tax revenues and lower spending,
including on unemployment benefits, have improved fiscal
balances. Growth in 2018 is expected to be 2.4 percent, then 1.9
percent in 2019 as global demand slows and financial conditions
tighten. There are downside risks to this outlook, particularly
from the global environment: an increase in protectionism could
weaken demand for Finnish exports and damage confidence, and
higher bank funding costs could mean tighter credit.

Recent reforms have boosted trade and employment. The 2016
Competitiveness Pact helped make Finnish exports more cost
competitive. Changes to social benefits enhanced incentives to
look for jobs, and new rules for temporary hires have the
potential to boost employment and labor flexibility.
Nevertheless, problems remain with productivity and the labor
market. Firms are facing difficulties matching workers to job
opportunities. Unemployment rates remain persistently high in
some regions despite ample vacancies in others. Job mobility is
low and has not picked up. Meanwhile, productivity growth is
still below pre-crisis rates, despite the strength of the
recovery.

The 2019 budget implies a moderate tightening of fiscal policy.
The planned health and social services reform targets substantial
savings from efficiency gains which, if realized, would make a
substantial contribution toward closing the fiscal sustainability
gap and restoring fiscal buffers. That said, savings from the
proposed reform are uncertain and will depend crucially on
implementation.

The banking sector is sound but has distinctive features that
pose challenges for supervision. Immediate financial stability
risks appear limited, but the system is highly concentrated,
interconnected with financial sectors of other Nordic countries,
and reliant on wholesale funding. In addition, the size of the
banking sector has increased substantially with the recent
redomicile of Nordea to Finland. This has increased demands on
supervision and heightens the importance of continued close
regional cooperation and preparedness for crises.

Household financial vulnerabilities remain a concern. Household
debt has been increasing as the economy has recovered, and some
borrowers appear vulnerable to interest rate increases. The
growth in consumer credit raises the question of whether some
borrowers are sufficiently informed about the conditions of their
loans.

                  Executive Board Assessment

Executive Directors agreed with the thrust of the staff
appraisal. They welcomed the continued good economic performance
but noted that growth is likely to slow next year as global
demand moderates and financial conditions tighten. Given
relatively modest potential growth, Directors stressed the need
for structural reform, particularly in the labor market, and
cautious fiscal policy. While sound overall, the financial
sector's increased size and regional inter-connectedness have
increased the demands on supervision.


Directors welcomed recent reforms that have made Finnish exports
more cost competitive and helped boost employment. They noted,
however, that productivity growth remains below what was seen
before the crisis. Therefore, Directors stressed the need for
ongoing structural reforms and targeted infrastructure investment
to bolster long-term productivity growth.

Directors agreed that the focus of structural reforms should be
on increasing labor market dynamism while maintaining a strong
safety net. This would call for increased wage flexibility at the
firm level and further changes to unemployment benefits to foster
increased job search. Directors also noted that efforts to
increase regional labor mobility could help reduce regional
disparities in unemployment rates.

Given looming age-related spending pressures and contingent
liabilities, Directors underscored the need to continue to
rebuild fiscal buffers. Thus, they supported the moderate
tightening implied by the 2019 budget and noted that fiscal
policy should concentrate on raising the effectiveness of public
spending, such as those proposed in the social services and
health care reform.

Directors noted that the size of the banking sector has increased
substantially with the recent redomicile of the largest financial
group in the Nordic countries to Finland, increasing the demands
on supervision and regional cooperation as well as crisis
preparedness. While housing price increases have been relatively
moderate, risks from the real estate sector should be monitored
closely due to the high level of household indebtedness.

Directors also noted that growing reliance on consumer credit
calls for additional consumer protection measures, such as better
information disclosure requirements and interest rate caps.
Macroprudential policies could be improved by the use of debt-
based tools and access to better data, such as from a
comprehensive positive credit registry.



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F R A N C E
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ACCOR SA: S&P Assigns 'BB' Rating to Subordinated Hybrid Notes
--------------------------------------------------------------
S&P Global Ratings said that it assigned its 'BB' long-term issue
rating to the proposed undated, non-call 5.25 years, optionally
deferrable, and deeply subordinated hybrid notes to be issued by
Accor S.A. (BBB-/Stable/A-3). The amount of the hybrids remains
subject to market conditions, but S&P understands it is expected
to be EUR500 million. The proceeds will be used to partially
refinance its EUR900 million hybrid issued in 2014 with a first
step-up date, when bonds become callable, in June 2020. At the
same time, S&P assigned its 'BBB-' issue rating to the company's
proposed senior unsecured bond of between EUR500 million and
EUR750 million.

AccorHotels announced a liability management transaction to
optimize its capital structure and benefit from current low
interest rates on an opportunistic basis. The transaction
includes:

-- The issuance of a new up to EUR500 million deeply
    subordinated notes to refinance a portion of the current
    EUR900 million outstanding deeply subordinated notes, which
    have a first step-up date in June 2020, when bonds also
    become callable; and

-- The issuance of a new rated senior unsecured bond of between
    EUR500 million and EUR750 million of six to seven years to
    refinance the remaining outstanding part of the March 2019
    bonds and part of June 2021 bonds.

S&P said, "We consider the proposed deeply subordinated notes to
have intermediate equity content until the first step-up date
after 5.25 years because they meet our criteria in terms of
subordination, permanence, and deferability at the company's
discretion during this period." The terms and conditions of the
new notes are generally in line with the previous subordinated
notes issued in 2014.

Concomitant with the launch of this transaction, Accor is
launching a tender offer on the current hybrid instrument with a
tender cap at new issue amount. The residual amount of the
existing hybrid is expected to be refinanced ahead of the call
date, in a second step. S&P understands that, after the
replacement and liability management transactions, the group
intends to permanently maintain the total amount of hybrids
outstanding at its current EUR900 million.

The two-notch differential between S&P's 'BB' rating on the
proposed hybrid notes and its 'BBB-' issuer credit rating on
Accor is based on:

-- A one-notch differential for the proposed notes'
    subordination, since S&P's long-term rating on Accor is
    investment grade (that is, higher than 'BB+'); and

-- An additional notch for payment flexibility, to reflect that
    the deferral of interest is optional.

S&P said, "Therefore, in our calculation of Accor's credit
ratios, we will treat 50% of the principal outstanding and
accrued interest under the notes as equity-like rather than debt-
like. In addition, we will allocate 50% of the related payments
on the securities as a fixed charge and 50% as equivalent to a
common dividend."

KEY FACTORS IN S&P's ASSESSMENT OF THE SECURITIES' PERMANENCE

Following an initial non-call period of 5.25 years (including a
three-month par call), Accor can redeem the securities for cash
at every annual interest payment date thereafter. Although the
proposed notes have no final maturity date, they can be called at
any time for a tax deduction, withholding tax, gross-up, rating,
accounting, equity credit rating, substantial repurchase, or
change-of-control event.

S&P said, "We understand that the interest to be paid on the
proposed securities will increase by 25 basis points (bps) no
earlier than 5.25 years from issuance (first step-up date) and by
275 bps after the second step-up date (in line with Accor's
existing perpetual notes issued in 2014), upon the bond's 27th
anniversary of the issue date. We consider the cumulative step-
ups as significant, which is currently unmitigated by any binding
commitment to replace the instruments at that time. This step-up
provides an incentive for the issuer to redeem the instruments on
the first step-up date.

"Consequently, we will no longer recognize the instrument as
having intermediate equity content after its first reset date,
because the remaining period until its economic maturity (second
step-up date) would then be less than 20 years. However, we
classify the instruments' equity content as intermediate until
its first reset date, as long as we think that the loss of the
beneficial intermediate equity content treatment will not cause
the issuer to call the instruments at that point. Accor's
willingness to maintain or replace the instruments in the event
of a reclassification of equity content to minimal is underpinned
by its public statement of intent, as mentioned in the hybrid's
prospectus. In our view, Accor's statement of intent mitigates
the issuer's ability to repurchase the notes in the open market."

KEY FACTORS IN S&P's ASSESSMENT OF THE SECURITIES' DEFERABILITY

S&P said, "In our view, Accor's option to defer payment on the
proposed perpetual securities is discretionary, and deferred
interest is cumulative and bears interest. The notching applied
to the rating of the proposed perpetual securities reflects our
view that there is a relatively low likelihood that the issuer
will defer interest. Should our view change, we may increase the
number of notches we deduct to derive our issue rating."

However, according to its documentation, any outstanding deferred
interest payment will have to be settled in cash if Accor
declares or pays an equity dividend or interest on equally
ranking securities, or if the group or its subsidiaries redeem or
repurchase shares or equally ranking securities. S&P said, "We
see this as a negative factor. That said, this condition remains
acceptable under our methodology because once Accor has settled
the deferred amount, it can still choose to defer on the next
interest payment date."

KEY FACTORS IN S&P's ASSESSMENT OF THE SECURITIES' SUBORDINATION

The proposed perpetual securities and coupons are intended to
constitute the issuer's direct, unsecured, and subordinated
obligations, ranking senior to their common shares.

S&P said, "The 'BBB-' rating on the new senior unsecured bonds
reflects our review of Accor's debt structure, under which we
concluded that there is no material structural or contractual
subordination to the senior unsecured instruments. In our
assessment, we take into account that there is no material
secured debt in the company's capital structure.

"We note that the company's EUR600 million 2.5% senior unsecured
notes due March 2019 were partially repaid in September 2015,
with EUR335 million still outstanding before the present
refinancing."



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G R E E C E
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GREECE: S&P Affirms 'B+/B' Sovereign Credit Ratings, Outlook Pos.
----------------------------------------------------------------
On Jan. 18, 2019, S&P Global Ratings affirmed its 'B+/B' foreign
and local currency long- and short-term sovereign credit ratings
on Greece. The outlook is positive.

OUTLOOK

S&P said, "The positive outlook signifies that we could raise our
ratings on Greece within the next 12 months if the economic
recovery strengthens. This could result from further economic
reforms implemented by the government. Another potential trigger
for an upgrade would be a marked reduction in nonperforming
assets in Greece's impaired banking system, as well as the
elimination of all remaining capital controls. Mitigation of
fiscal risks related to the pending court decisions regarding the
past pension system reforms could also trigger a rating upgrade.

"We could revise the outlook to stable if, contrary to our
expectations, there are reversals of previously implemented
reforms, or if growth outcomes are significantly weaker than we
expect, restricting Greece's ability to continue fiscal
consolidation, debt reduction, and financial sector
restructuring."

RATIONALE

S&P said, "Our ratings on Greece reflect the stabilizing economic
outlook, accompanied by solid budgetary performance and a very
favorable government debt structure, balanced against the
country's high external and public debt burdens as well as a
difficult situation in the banking system, characterized by a
large stock of nonperforming loans, a challenged monetary
transmission mechanism, and capital controls.

"In terms of maturity and average interest costs, Greece has one
of the most advantageous debt profiles of all our rated
sovereigns. Our rating pertains to the commercial portion of
Greece's central government debt, which is less than 20% of total
Greek debt, or less than 40% of GDP. The final disbursement from
the European Stability Mechanism (ESM) program provided Greece
with a sizable cash buffer, which we estimate will meet central
government debt servicing into 2022. We project that Greece's
debt-to-GDP ratio will decline from 2019, aided by a recovery in
nominal GDP growth."

Institutional and Economic Profile: Following the ESM program
exit, Greece's economic recovery prospects are promising

-- Greece graduated from its ESM program in August 2018, having
    secured further debt relief and a sizable cash buffer.

-- S&P projects that the economy will grow by 2.4% on average
    over 2019-2022 as domestic demand strengthens and solid
    export performance continues.

-- The pace of further economic reforms may be negatively
    affected by potential political maneuvering during 2019, an
    election year.

S&P said, "Following real GDP growth that we estimate at about
2.1% in 2018, we expect the economy will expand by about 2.4% in
2019, before the pace gradually strengthens over 2020-2022.
Employment growth continues to be solid: We forecast above 2%
growth annually through 2022, although the economy would benefit
from a higher share of permanent jobs, given that in 2018
slightly more than half of new employees were hired on temporary
contracts.

"Over the next three years, we expect Greece's economic growth
will surpass the eurozone average, including in real GDP per
capita terms, reflecting a steady recovery following a deep and
protracted economic and financial crisis. We also expect economic
performance to remain balanced, with domestic demand and exports
continuing as the key drivers of growth. In this context, we
expect slowly rising private consumption on the back of improved
employment prospects." A key constraint on the economic outlook
remains authorities' decision to subordinate public investment
spending (including on education) to current expenditure,
particularly on social transfers. The outlook for private
investment is also still subdued, given the challenges to the
banking sector, and only modest net foreign direct investment
(FDI) inflows compared with peers.

Absent the materialization of external risks, such as from
mounting global protectionism and a faster-than-forecast slowdown
in eurozone economic growth, Greece's export sector is well
positioned to benefit from its reinforced competitiveness. In
this context, Greece's labor cost competitiveness has improved to
its level before 2000 and, together with the reorientation of
domestic businesses from domestic to external demand, has
resulted in almost a doubling of the share of exports of goods
and services (excluding shipping services) in GDP terms, from 19%
in 2009. Greece's market shares in global trade have increased
correspondingly and we expect further gains over the forecast
period through 2022.

Since 2015, policy uncertainty has receded, and in August 2018,
the Syriza-led government exited the country's third consecutive
lending program, having overseen large fiscal and external
adjustments. Nevertheless, S&P believes that a faster economic
recovery could result from additional reforms to the product and
services markets as well as improvements in the banking sector
with respect to its capacity to fund the economy.

Although Greece's labor cost competitiveness has been restored,
S&P believes that its competitiveness in other areas remains
weak. While its labor market is arguably highly flexible, Greece
compares poorly with its peers due to its many impediments to
competition in its product and professional services markets,
alongside relatively weak property rights, complex bankruptcy
procedures, an inefficient judiciary, and the low predictability
of the enforcement of contracts. As a consequence, while net FDI
inflows have recently improved, they may not be sufficient to
fund a more powerful economic recovery. At the same time, a
possible reversal of labor reform, which could reintroduce
collective wage negotiations at the national level, might weaken
the ongoing recovery in the job market by reducing companies'
flexibility to navigate a tough economic situation. Over the long
term, however, in the absence of reforms to the business
environment, S&P thinks that GDP growth is unlikely to exceed 3%
on a sustained basis, constrained by administrative burdens and
anti-competitive behavior across the economy--particularly
concentrated in the services sector.

The inability of Greece's banks to finance the economy is also
weighing on the strength of the recovery. Without access to
working capital, the broader small and midsize enterprise sector-
-the economy's largest employer--remains in varying degrees of
distress. Private sector default is widespread, including on tax
debt, and the process of declaring bankruptcy is particularly
convoluted relative to EU norms. Moreover, the economy's ability
to attract foreign investment to finance growth remains weak.
Complacency in addressing structural problems may not adversely
affect macroeconomic outcomes or sovereign debt servicing ability
in the medium term, but would likely cap Greece's growth
prospects in the long run.

Following the successful termination of the ESM program, Greece
is subject to quarterly reviews by the European Commission under
the "enhanced surveillance framework." Ongoing debt relief and
the return of profits on Greek bonds held by the European Central
Bank (ECB) and the eurozone's national central banks will be
subject to ongoing compliance with the program's objectives. The
use of the cash buffer for purposes other than debt servicing
will have to be agreed with the European institutions. S&P
therefore believes that the Greek authorities will be strongly
incentivized to avoid backtracking markedly on most previously
legislated reforms.

The next general election is scheduled for October 2019, although
early elections cannot be excluded given the recent departure of
the government's junior coalition partner. Given that 2019 will
also see local and European elections, it is very likely that the
polarization of the political landscape will escalate in the
coming months. S&P said, "In our view, this represents a risk
that areas such as privatization, increasing the efficiency of
the judicial system, and further improvements in the business
environment will face delays. Moreover, a more resolute approach
toward the reduction of nonperforming exposures (NPEs) in the
banking sector may see little further progress before the
electoral challenges play out. However, we expect Greece's
economic and budgetary policies to broadly comply with its
commitments made at the time of the termination of the ESM
program."

Flexibility and Performance Profile: Greece's government debt is
finally declining

-- S&P projects general government debt will decline during
    2019-2022.

-- The creation of cash buffers via the final ESM program
    disbursement limits risks to debt repayments over S&P's
    forecast horizon.

-- Although improved, the banking sector faces multiple
    challenges.

Following a large budgetary adjustment since the start of the
economic and financial crisis, Greece has established a track
record of exceeding budgetary targets via rigid expenditure
controls and improved revenue performance. In 2018, S&P estimates
that the primary balance was about 3.7% of GDP, outperforming the
target agreed with the creditors of 3.5% of GDP, although
slightly below the government's own target of 4.0% of GDP. The
underperformance against the government's own target is mainly a
result of a delayed payment to the government for the concession
of Athens International Airport, now scheduled for January 2019.
As a result of the better-than-planned budgetary performance,
contingent deficit reducing measures, such as pension spending
cuts, did not need to be implemented. The 2018 performance was
characterized by higher government revenues, in particular from
higher indirect taxes, which appears to have nevertheless been
lower than the government's own plans. In addition, primary
expenditure was lower than budgeted (government expenditure
without interest payments), reflecting compliance with the
spending restraints in place, including in health care and the
public sector wage bill. While headline consolidation progress
has been dramatic, it is notable that key components of spending
on human capital, particularly on education and health, have been
cut sharply to below European averages since the beginning of the
crisis.

The 2019 budget includes a series of measures aimed at improving
hiring incentives, including focusing on reducing the temporary
character of the current employment structure. For example, in
the education sector, 4,500 teachers and specialized staff will
be hired on a permanent basis for positions currently occupied by
temporary teachers, without an impact on the overall headcount in
the public sector. The budget also includes a reduction of social
security contributions for independent professionals, the self-
employed, and farmers, as well as a subsidy to social security
contributions for the young. Finally, the government aims at
reducing the tax burden on the economy by reducing tax rates on
corporate income, dividends, and basic property.

The execution of the 2019 budget could be negatively affected by
pending court rulings on a past government decision on public
sector wages, as well as on the 2012, 2015, and 2016 pension
system reforms. In S&P's view, this would make compliance with
the 2019 primary balance target more difficult. Moreover, given
the upcoming elections, political maneuvering of the government
could lead to lower compliance with its expenditure ceiling.

S&P said, "If these risks do not materialize, we project that in
2019-2022 Greece will report general government primary surpluses
above the 3.5% of GDP target agreed with official creditors,
which should see gross general government debt decrease to about
150% of GDP in 2022 from an estimated 181% in 2018. Net of cash
buffers, we project that net general government debt will decline
below 140% of GDP in 2022. Even in nominal terms, we forecast
gross general government debt to decline from 2019, in line with
the central government amortization schedule and our expectation
of headline fiscal surpluses."

Despite the size of its debt, the average cost of servicing this
debt, at 1.7% at the end of 2018, is significantly lower than the
average cost of refinancing for the majority of sovereigns rated
in the 'B' category. S&P said, "We anticipate that, even with
increasing commercial debt issuance, the proportion of commercial
debt will remain less than 20% of total general government debt
through year-end 2021. We therefore expect a gradual reduction in
interest costs relative to government revenues. We estimate the
average remaining term of Greece's debt at 18.5 years in
September 2018, although this is set to increase further with the
implementation of the debt relief measures granted in June."

In 2018, Greek banks made further progress in reducing their NPE
stocks, which at the end of June stood at EUR88.6 billion
(excluding off-balance-sheet items) from the peak in March 2016
when they reached EUR107.2 billion. Despite the improvement in
reducing the stock of NPEs, about one-third of banks' loan books
are likely to remain impaired until 2021 even if their ambitious
plans to tackle NPEs succeed. Initiatives to tackle the high
stock of NPEs are underway, including the implementation of out-
of-court restructuring, the development of a secondary market,
and electronic auctions. S&P said, "However, we think that write-
offs will remain one of the most important means of reducing
these exposures over the next few years. The large stock of NPEs
constrains the effective transmission of ECB monetary policy into
the Greek economy, in our opinion. Based on experience in other
peers, like Spain, Ireland, Slovenia, and Cyprus, we believe that
a faster decline in NPEs may not be possible without a more
resolute approach and involvement of additional government
support. We therefore consider the banking sector as a moderate
contingent liability for the government's balance sheet. Besides
constraints on effectiveness of monetary policy transmission
emanating from the abovementioned large NPEs in the banking
sector, the Greek economy's unsynchronized character with respect
to the rest of the monetary union in terms of price trends and
capital controls weigh on our monetary assessment."

At the same time, the liquidity of the banking system has
significantly improved. The banks continued to reduce their
reliance on official ECB financing, including on the more costly
emergency liquidity assistance, which S&P expects to be fully
repaid in early 2019. An uptick in deposits has helped, as have
repurchase transactions with international banks. While deposits
into the banking system have been growing--household and
corporate deposits grew by about 6% in 2018--confidence has not
returned to the extent that would enable a full dismantling of
capital controls, although these have been eased, most recently
in October 2018. Over the past year, Greece's systemically
important banks have issued covered bonds--like the sovereign,
this was their first market foray since 2014. With Greece having
graduated from the ESM program, its banks lost the waiver that
allowed them to access regular ECB financing using Greek
government bonds as collateral. However, despite the loss of the
waiver, the banks' funding was not disrupted.

Greece has had a significant adjustment in its external deficit.
The current account deficit fell from nearly 14.5% of GDP in 2008
to the record low of 0.8% of GDP in 2015, mainly via significant
import compression, before widening somewhat as the economy
started to recover. In 2018, the solid export performance,
including the substantial growth in the services surplus was more
than offset by a higher oil deficit and import growth. S&P
projects the current account deficit will decline slightly over
its forecast period with further improvement in export
performance, but expansion of imports on the heels of consumption
and investment recovery as well as a slowdown in global economic
trade could lead to a wider current account deficit.

In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable. At the onset of the committee, the chair
confirmed that the information provided to the Rating Committee
by the primary analyst had been distributed in a timely manner
and was sufficient for Committee members to make an informed
decision.

After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.

The committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.

The chair ensured every voting member was given the opportunity
to articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision.
The views and the decision of the rating committee are summarized
in the above rationale and outlook. The weighting of all rating
factors is described in the methodology used in this rating
action.

  RATINGS LIST
  Ratings Affirmed

  Greece
   Sovereign Credit Rating                B+/Positive/B
   Senior Unsecured                       B+
   Commercial Paper                       B
   Transfer & Convertibility Assessment   AAA


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I R E L A N D
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CADOGAN SQUARE XIII: Fitch Assigns B-(EXP) Rating to Cl. F Notes
----------------------------------------------------------------
Fitch Ratings has assigned Cadogan Square XIII CLO DAC notes
expected ratings, as follows:

EUR1.5 million Class X: 'AAA(EXP)sf'; Outlook Stable

EUR246 million Class A: 'AAA(EXP)sf'; Outlook Stable

EUR40 million Class B: 'AA(EXP)sf'; Outlook Stable

EUR26 million Class C: 'A(EXP)sf'; Outlook Stable

EUR26 million Class D: 'BBB-(EXP)sf'; Outlook Stable

EUR22 million Class E: 'BB-(EXP)sf'; Outlook Stable

EUR9 million Class F: 'B-(EXP)sf'; Outlook Stable

EUR36.9 million Class M subordinated notes: 'NR(EXP)sf'

Cadogan Square CLO XIII DAC (the issuer) is a securitisation of
mainly senior secured obligations with a component of senior
unsecured, mezzanine and second-lien loans. A total expected note
issuance of EUR407.4 million will be used to fund a portfolio
with a target par of EUR400 million. The portfolio will be
managed by Credit Suisse Asset Management Limited. The CLO
envisages a further 4.5-year reinvestment period and an 8.5-year
weighted average life (WAL).

The assignment of final ratings is contingent on the receipt of
final documents conforming to information already received.

KEY RATING DRIVERS

'B' Portfolio Credit Quality: Fitch considers the average credit
quality of obligors to be in the 'B' range. The Fitch-weighted
average rating factor (WARF) of the identified portfolio is 30.9.

High Recovery Expectations: At least 90% of the portfolio
comprises senior secured obligations. Fitch views the recovery
prospects for these assets as more favourable than for second-
lien, unsecured and mezzanine assets. The Fitch-weighted average
recovery rate (WARR) of the current portfolio is 65.1%.

Interest Rate Exposure: Up to 12.5% of the portfolio can be
invested in fixed-rate assets, while fixed-rate liabilities
represent 10% of the target par. Fitch modelled both 0% and 12.5%
fixed-rate buckets and found that the rated notes can withstand
the interest rate mismatch associated with each scenario.

Diversified Asset Portfolio: The covenanted maximum exposure to
the top 10 obligors for assigning the expected ratings is 20% of
the portfolio balance. This covenant ensures that the asset
portfolio is not exposed to excessive obligor concentration.

Adverse Selection and Portfolio Management: The transaction
features a 4.5 year reinvestment period and includes reinvestment
criteria similar to other European transactions. Fitch's analysis
is based on a stressed-case portfolio with the aim of testing the
robustness of the transaction structure against its covenants and
portfolio guidelines.

Limited FX Risk: The transaction is allowed to invest up to 20%
of the portfolio in non-euro-denominated assets, provided these
are hedged with perfect asset swaps within six months of
purchase. Unhedged and principal hedged obligations are limited
at 2.5% and subject to principal haircuts. Unhedged and principal
hedged obligations can only be purchased if the transaction is
above the reinvestment target par.

Effective Date Rating Event Mechanism: If an effective date
rating event occurs, the notes are usually redeemed on the
payment dates following the effective date out of interest and
principal proceeds until the effective date rating event is cured
or the rated notes are redeemed in full. This transaction differs
from most other European CLOs rated by Fitch in that the manager
can apply the proceeds that would have been used to redeem the
notes to acquire additional assets in an amount sufficient to
cure the effective date rating event

RATING SENSITIVITIES

A 125% default multiplier applied to the portfolio's mean default
rate, and with this increase added to all rating default levels,
would lead to a downgrade of up to two notches for the rated
notes. A 25% reduction in recovery rates would lead to a
downgrade of up to five notches for the BB- level and up to two
notches for the other rated notes.


FLY LEASING: Moody's Affirms Ba3 CFR, Alters Outlook to Stable
--------------------------------------------------------------
Moody's Investors Service affirmed the Ba3 corporate family
rating of Fly Leasing Limited and revised Fly's outlook to stable
from negative. Moody's also withdrew the outlooks on Fly Leasing
Limited and Fly Funding II S.a.r.l.'s existing instrument ratings
for its own business reasons.

Affirmations:

Issuer: Fly Funding II S.a.r.l.

Senior Secured Bank Credit Facility, Affirmed Ba2

Issuer: Fly Leasing Limited

Corporate Family Rating, Affirmed Ba3

Pref. Shelf, Affirmed (P)B3

Subordinate Shelf, Affirmed (P)B2

Senior Unsecured Shelf, Affirmed (P)B1

Pref. Non-cumulative Shelf, Affirmed (P)Caa1

Senior Unsecured Regular Bond/Debenture, Affirmed B1

Outlook Actions:

Issuer: Fly Funding II S.a.r.l.

Outlook, Changed To Stable From Negative

Issuer: Fly Leasing Limited

Outlook, Changed To Stable From Negative

RATINGS RATIONALE

Moody's revised Fly's rating outlook to stable in recognition of
the company's progress reducing debt/equity leverage and Air Asia
Group customer concentrations that arose from its acquisition of
33 A320 aircraft from AirAsia Berhad (AAB) during 2018. Moody's
had expected Fly's leverage to increase to 5x as the company
borrowed to acquire the aircraft, but during 2018 Fly sold or
committed to sell eleven of the aircraft as well as 10 other
fleet aircraft to reduce its borrowing need and its AirAsia Group
concentrations. Moody's now expects Fly's leverage to decline to
less than 4x this quarter. Similarly, Moody's anticipates that
Fly's AirAsia Group concentration will decline to less than 20%
of the fleet from an original forecast of 24%.

Under the terms of the purchase agreement with AAB, Fly will
acquire 8 A320 NEO and 13 A321 NEO aircraft as they are delivered
between 2019 and 2021; these aircraft are also committed to
AirAsia Group leases. Fly will also have the option to purchase
20 A320 NEO family aircraft to be delivered beginning in 2019
that are not yet committed to leases. Fly's aircraft acquisitions
are part of a larger transaction involving Incline Aviation and
Nomura Babcock & Brown, capital partners of Fly's external
manager BBAM Limited Partnership (BBAM), which will acquire a
total of 127 aircraft and 50 options from AAB. BBAM is ahead of
its multi-year plan to sell $150 million of aircraft annually, to
manage Fly's exposure concentrations and recycle capital for
committed acquisitions.

Moody's affirmed Fly's ratings to reflect the expected positive
effects the aircraft acquisitions and fleet management efforts
will have on the company's franchise positioning, profitability
and fleet quality. Moody's expects that the acquired aircraft
will provide strong revenues and cash flows to Fly, helping to
sustain strong earnings. The acquired aircraft will further
improve Fly's fleet composition, adding popular current and new
generation narrowbody models with a large user base and for which
remarketing risks are expected to be manageable.

The rating affirmation is also based on Fly's good liquidity
position, anchored by predictable operating cash flows and
extended debt maturity profile.

Rating constraints include the possibility that Fly's leverage
could remain above 4x based upon the company's history of higher
leverage, higher top ten airline concentrations than rated peers,
and a higher reliance on secured funding, which encumbers its
fleet and limits financial and operational flexibility.

Moody's could upgrade Fly's ratings if the company further
reduces leverage (net debt/tangible net worth) to 3.5x, reduces
its ratio of secured debt to tangible managed assets to less than
50%, reduces its top ten airline concentrations to 50% or less,
and maintains strong profitability considering its fleet risk
profile.

Moody's could downgrade Fly's ratings if its debt to equity
leverage increases above 4.5x, single name or top ten airline
concentrations increase, or if profitability and liquidity
positions weaken materially.

The principal methodology used in these ratings was Finance
Companies published in December 2018.


PREMIER IRISH: Gardai Probe Loans as Company Shuts Doors
--------------------------------------------------------
The Irish Times reports that An Garda Siochana are investigating
a series of loans raised on peer-to-peer lending websites last
year after a Co Kerry company closed its doors without repaying
its six-figure debts.

The report relates that the company, Premier Irish Golf Tours,
raised several hundred thousand euro on crowdfunding websites
last summer. The websites connect individual lenders with
businesses that want to raise money.

Correspondence sent to the lenders on one of the sites, Linked
Finance, shows that the Garda are investigating the company after
a complaint by the website, the Irish Times says.

The communication to lenders, seen by The Irish Times, states
that "following the drawdown of this loan agreement, the
subsequent closure of the business and the absence of any co-
operation from the borrower, Linked Finance made contact with An
Garda Siochana. The Irish Times says Linked Finance have been
working with the authorities since July to validate the accuracy
and authenticity of all statements and documentation provided by
the borrower in support of this loan application."

The company went on to confirm that it has made a statement to
the gardai. It is understood that Premier Irish Golf Tours raised
upwards of EUR100,000 on the crowdfunding platform, and another
loan of around the same size on a second peer-to-peer lending
site, Grid Finance, according to the Irish Times.

The Irish Times relates that a source with knowledge of the
investigation confirmed that it is at an advanced stage. The
former chief executive of the company, David McMahon, is thought
to have left Ireland some time last summer, and gardai believe he
is still overseas.

Derek Butler, chief executive of Grid Finance, confirmed that his
company had also made a statement to the Garda, the report says.

"Our normal recovery process is in operation. We have not been
able to locate the individual in question, but we are attempting
to do that through a range of measures," the report quotes
Mr. Butler as saying. "We have served proceedings on the company
to try and recover the debt."

A spokesman for Linked Finance said the company would not comment
on individual cases, but pointed out that the rate of default on
its platform is less than 1 per cent, the report relays.

The Irish Times notes that crowdfunding is in its infancy in
Ireland, accounting for less than 0.5 per cent of the SME funding
market, compared to 12 per cent in the UK. However, it is
unregulated, meaning that Central Bank codes of conduct and
protections do not apply.

The Department of Finance announced in last year's finance bill
that it would be introducing a regulatory regime for
crowdfunding, the Irish Times adds.



=================
M A C E D O N I A
=================


MACEDONIA: Fitch Affirms BB LT IDR, Outlook Positive
----------------------------------------------------
Fitch Ratings has affirmed Macedonia's Long-Term Foreign and
Local-Currency Issuer Default Ratings at 'BB'. The Outlook is
Positive.

KEY RATING DRIVERS

Macedonia's ratings are supported by a track record of coherent
macroeconomic and financial policy, which underpins its
longstanding exchange rate peg to the euro. The rating is capped
by a volatile political environment in 2014-17, net external debt
that is higher than peers, and euroisation, which exposes the
economy to exchange rate risk. The Positive Outlook reflects the
stabilisation of the political environment and, as a result,
material progress towards accession to the EU and increased
economic confidence.

Significant progress has been made in resolving the long-standing
name issue with Greece. The Macedonian parliament approved
changes to the constitution on January 11, including altering the
country's name to the Republic of North Macedonia, in line with
an agreement with Greece. The Greek parliament also needs to
approve the name change. The victory of the Greek prime minister
in a confidence vote on the issue on January 16 makes approval
likely. This would pave the way for Macedonia's membership of
NATO (a conditional invitation was issued in 2018) and would
support the start of formal negotiations on EU accession, which
would anchor Macedonia's economic and political reforms more
firmly.

The name change process highlights the improvement in the
domestic political environment. It was achieved in the face of
strong opposition from former ruling party VMRO-DPMNE and
nationalists and after a September consultative referendum did
not meet the threshold for turnout. Nonetheless, it proceeded
without an adverse impact on political stability. Governance
indicators, as measured by the World Bank, are in line with the
current 'BB' median.

Improved political stability has supported a revival in economic
activity. Fitch estimates growth to have recovered to 2.3% in
2018 and forecasts a strengthening to 3.2% and 3.6% in 2019 and
2020, respectively, compared with the current peer median of 3.1%
in 2019. Consumption growth will remain underpinned by labour
market developments (unemployment is at a long-term low) and
higher government capex execution and private sector investment
in free zones will boost investment growth.

Preliminary estimates from the authorities show a narrowing of
the central government deficit to 1.8% of GDP in 2018 from 2.7%
in 2017. The improvement reflects higher tax revenues, stemming
from the strengthening local economy and improved revenue
collection, and a significant underspending of the capital
budget, as the government re-examined projects awarded under the
previous administration and tightened the procurement process.
Fitch expects that a rebound in capex will push the deficit to
2.7% of GDP in 2019 before stronger growth and fiscal reforms
narrow the deficit to 2.5% in 2020.

Improvements to public finance management are being pursued under
a programme agreed with the EU. The pension contribution rate was
raised in the 2019 budget, which also contains measures to
improve targeting of social assistance through benefit
consolidation and greater means testing. A fiscal rule for
municipalities has been introduced, a new procurement law is
passing through parliament and a new customs reporting system
should be operational around mid-year.

General government debt, officially estimated at 40.8% of GDP at
end-2018, is below the current peer median (47%), but is forecast
to remain on a gradual upward trend. The government is planning
to finance the bulk of the 2019 deficit through domestic sources
(a Eurobond covered the bulk of the 2018 financing needs) and
also aims to build deposits in advance of a 2020 external
maturity. Government guarantees on state-owned enterprises are
estimated by the authorities at 8% of GDP at end-2018.

Fitch estimates that Macedonia recorded a rare current account
surplus in 2018, of 0.2% of GDP. This was due to a broad-based
improvement, with exports jumping due to an increase in
production capacity in free zones and stronger external demand,
lower capex reducing imports and the improved political climate
supported higher tourism revenues and a higher net inflow of
private transfers. Higher import spending is forecast to return
the current account to a deficit in 2019 and 2020.

Net external debt is higher than peers, at an estimated 25.9% of
GDP at end-2018 (current 'BB' median 13.8%) and is expected to
widen to 30% in 2020. A significant share of external debt
consists of FDI-related loans that are unlikely to cause external
financing pressures. In addition to the current account surplus,
a revival in FDI, together with a sovereign Eurobond have
bolstered foreign exchange reserves to four months of current
external payments. The stronger FX buffer, together with low
inflationary pressures (inflation averaged 1.5% in 2018 and is
forecast to rise gradually to 2% in 2020) allowed the central
bank to narrow the difference between its policy rate (at a
historic low of 2.5%) and the ECB's, without putting pressure on
the exchange rate peg.

Macedonia's business climate, according to the World Bank's Ease
of Doing Business Survey, stands out as significantly better than
the median of its current 'BB' peer group, and supports a stable
net inflow of FDI and dynamic export performance. However, FDI is
concentrated in Technological and Industrial Development Zones
that are not well integrated with the rest of the economy.
Unemployment is structurally high at 20.8% (end 3Q18), reflecting
a large informal economy. Low productivity growth and skills
mismatches present a challenge to the labour market outlook.

The banking sector is benefiting from the more stable political
and economic environment. Deposit growth was in double digits for
the bulk of 2H18, credit growth has picked up and foreign
currency deposits, at 41.2% of total deposits at end-November,
are close to their long-term low. NPLs remain on a downward trend
and hit a long-term low of 5% at end-3Q and are more fully
provisioned.

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

Fitch's proprietary SRM assigns Macedonia a score equivalent to a
rating of 'BB+' on the Long-Term FC IDR scale.

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

  - Structural Features: -1 notch, to reflect Fitch's assessment
that risks to political stability are still assessed to be higher
than in the current 'BB' peer group following the extended 2014-
17 political crisis.

Fitch's SRM is the agency's proprietary multiple regression
rating model that employs 18 variables based on three-year
centred averages, including one year of forecasts, to produce a
score equivalent to a LT FC IDR. Fitch's QO is a forward-looking
qualitative framework designed to allow for adjustment to the SRM
output to assign the final rating, reflecting factors within its
criteria that are not fully quantifiable and/or not fully
reflected in the SRM.

RATING SENSITIVITIES

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

  - An improvement in governance standards and further reduction
in political risk, for example through a continuation of
political stability and progress towards EU accession.

  - Implementation of a medium-term fiscal consolidation
programme consistent with a stabilisation of the public debt/GDP
ratio.

The main factors that could, individually or collectively, lead
to a stabilisation of the Outlook include:

  - Adverse political developments that affect governance
standards and the economy.

  - Fiscal slippage or the crystallisation of contingent
liabilities that increases risks to the sustainability of the
public finances.

  - A widening in the current account deficit that exerts
pressure on foreign currency reserves and/or the currency peg
against the euro.

KEY ASSUMPTIONS

Fitch assumes that Macedonia will continue to pursue monetary,
fiscal and financial policies consistent with its currency peg to
the euro.

The full list of rating actions is as follows:

Long-Term Foreign-Currency IDR affirmed at 'BB'; Outlook Positive

Long-Term Local-Currency IDR affirmed at 'BB'; Outlook Positive

Short-Term Foreign-Currency IDR affirmed at 'B'

Short-Term Local-Currency IDR affirmed at 'B'

Country Ceiling affirmed at 'BB+'

Issue ratings on long-term senior unsecured foreign-currency
bonds affirmed at 'BB'

Issue ratings on long-term senior unsecured local-currency bonds
affirmed at 'BB'

Issue ratings on short-term senior unsecured local-currency bonds
affirmed at 'B



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


REPUBLIC OF SAKHA: S&P Withdraws 'BB' Issuer Credit Ratings
-----------------------------------------------------------
On Jan. 18, 2019, S&P Global Ratings withdrew its 'BB' long-term
issuer credit ratings on the Republic of Sakha and its 'BB' long-
term issue rating on the republic's senior secured debt at the
issuer's request. At the time of the withdrawal, S&P's outlook on
the issuer credit ratings was stable.

As a "sovereign rating" (as defined in EU CRA Regulation
1060/2009 "EU CRA Regulation"), the ratings on Sakha are subject
to certain publication restrictions set out in Art 8a of the EU
CRA Regulation, including publication in accordance with a pre-
established calendar. Under the EU CRA Regulation, deviations
from the announced calendar are allowed only in limited
circumstances and must be accompanied by a detailed explanation
of the reasons for the deviation. In this case, the reason for
the deviation is the issuer's request that we withdraw the
ratings.

  RATINGS LIST
  Ratings Withdrawn
                               To         From
  Sakha (Republic of)
   Issuer Credit Rating        NR         BB/Stable/--
   Senior Unsecured            NR         BB

  NR--Not rated.



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


KAFOLAT INSURANCE: Fitch Ups IFS Rating to BB-, Outlook Stable
--------------------------------------------------------------
Fitch Ratings has upgraded Uzbekistan-based Kafolat Insurance
Company JSC's Insurer Financial Strength Rating to 'BB-' from
'B+'. The Outlook is Stable.

KEY RATING DRIVERS

The upgrade follows Fitch assigning Uzbekistan Long-Term Foreign-
and Local-Currency IDRs of 'BB-' with a Stable Outlook.

The equalisation of Kafolat's rating with that of the sovereign
reflects Fitch's view of a high propensity of the Uzbek
authorities to provide support to the insurer in case of need.

Kafolat's business profile benefits from the insurer's ownership.
The state controls 93% in Kafolat, with the Ministry of Finance
the main shareholder owning 66.51%. Kafolat is one of three
state-owned non-life insurers in Uzbekistan. The other two are
the non-life leader with a focus on agriculture and an export
credit agency that also writes regular non-life insurance
business. Kafolat has not had a specific role, but was intended
to write a broad range of traditional retail and commercial non-
life insurance lines.

RATING SENSITIVITIES

A change in Fitch's view of the financial condition of Uzbekistan
is likely to have a direct impact on Kafolat's rating.

Sustained reserving deficiencies or underwriting losses leading
to operational losses or capital depletion could lead to a
downgrade.


ORIENT FINANS: S&P Alters Outlook to Positive & Affirms B-/B ICR
----------------------------------------------------------------
S&P Global Ratings revised its outlook on Uzbekistan-based Orient
Finans Bank (OFB) to positive from stable. The 'B-' long-term and
'B' short-term issuer credit ratings were affirmed.

The positive outlook reflects that OFB's improved capitalization
supports the bank's overall creditworthiness. In S&P's opinion,
however, the bank's aggressive asset growth over the past three
years, high loan concentrations, and overall weaker-than-
international-peers' risk management system could hinder the
bank's risk profile and, in particular, the credit quality of the
loan book.

S&P said, "We consider the bank's capitalization to be adequate,
supported by strong profitability, in line with tighter
regulatory capital requirements. Support also stems from the
expected decrease in the bank's growth appetite, which leads us
to forecasted substantially lower loan growth compared with
levels over the past three years. Adequate loss absorption
capacity--also reflects our recent assessment of lower economic
risks for banks in Uzbekistan. This is thanks to the modest
economic imbalances, in our view. Uzbekistan has been more
involved in increasing lending than its regional peers, and
Uzbekistani banks have lower exposure to the real estate market
and mortgage lending as a percentage of systemwide loans,
alongside underdeveloped commercial real estate and equity
markets, in our view."

S&P expects OFB's RAC ratio to be within the 9%-10% range over
the next 18 months (8.2% on Dec. 31, 2017). Besides lower risk
weights due to the lower economic risk, our RAC forecast reflects
the following assumptions:

-- Loan book growth in 2018 estimated at about 20% and annual
    40%-45% in 2019-2020 (relative to the almost fivefold
    increase in the loan book between end-2015 and end-2017);

-- No external capital injections;

-- Annual cost of risk to have increased to approximately 1% in
    2018, followed by a 1.5% rise in 2019-2020; and

-- Capitalization supported by strong internal capital
    generation and no dividends.

OFB plans to maintain a local capital adequacy ratio (CAR) at
above 15% over the next 18 months, compared with the minimum 13%
in 2019-2020 (16.0% as of the beginning of December 2018 versus
the 12.5% minimum). As per local regulation, only 50% of earned
income of the year can be reflected as regulatory capital until
an auditor confirms the current year's earnings; if total income
taken into account, OFB's CAR would be 18.5% as of the beginning
of December 2018.

S&P said, "At the same time, we see high risks related to
previously very aggressive loan growth, high loan concentrations,
and relatively weak (in an international context) risk management
systems. In our view, this might result in an accumulation of
problem loans and a pronounced increase in credit costs while the
loan portfolio seasons. In addition, a high--approximately 45%--
share of loans denominated in foreign currency represents an
additional risk should the exchange rate unexpectedly weaken.
This risk is somewhat mitigated by some of these exposures being
to government-related entities and our expectation that the
government will support many of those if needed." Also, some
exposures are extended to exporters with revenues in hard
currency, which also mitigates the currency risk. These issues,
reflected in weak risk position, currently constrain the ratings
on the bank.

The positive outlook indicates the potential for an upgrade over
the next 12 months if there is strong evidence that OFB can
maintain adequate capitalization, while the seasoning of the loan
book does not lead to a material deterioration of the quality of
the loan book and provisions, and credit losses do not increase
markedly above our current expectations. Any positive rating
action would also hinge on further lending growth that does not
compromise the bank's business position or the stability of its
funding base or liquidity position.

S&P sad, "We could take a negative rating action if we saw asset
quality deterioration beyond the market average levels and
significantly above our current projections that would affect the
bank's business stability and/or capitalization. A material
weakness in the funding profile or liquidity position could also
lead to a downgrade."



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


ALPAMARE UK: Faces Winding-Up Bid Over Unpaid British Gas Debts
---------------------------------------------------------------
Carl Gavaghan at Teesside Live reports that Scarborough Council
has backed the operator of GBP14 million waterpark in the town
following news that it faces a winding-up petition.

Alpamare UK, which operates the waterpark in Scarborough's North
Bay, is being taken to court by British Gas this week over
outstanding debts, the report discloses.

According to the report, the council funded the construction of
the waterpark by giving a GBP9 million loan to the developers of
the project, Benchmark Leisure.

Teesside Live says Alpamare is hoping that by Jan. 22, the day
before the British Gas Trading Ltd case is due to be held in
London, it can secure a Company Voluntary Arrangement (CVA) to
meet its debt obligations.

However, the company has said that it will "adapt" the way the
Scarborough attraction is run moving forward, the report notes.

The report relates that Anton Hoefter, Alpamare's Head of
Operations told the BBC Local Democracy Reporting service that
once a new wellness spa opens on the site then the plan will be
to "reduce the winter opening hours for the waterpark".

He added: "The Spa [will] always [be] open, [with the waterpark
open] weekends and holidays," the report relays.

"Alpamare has made us aware of the CVA proposal and its plans to
adapt its business operation model with the aim of increasing
profitability going forward," the report quotes Cllr Helen
Mallory, Scarborough Borough Council's Deputy Leader," as saying
in response to the news.

"This does not affect the council's ongoing relationship with
Benchmark or the security of the loan agreement we have with
them. We are delighted to hear that Alpamare's plans include the
forthcoming opening of the state of the art Wellness Spa, which
will attract more visitors and may well appeal to a different
type of customer compared to those that have visited the
waterpark to date."

The attraction opened in July 2016. It boasts adrenaline inducing
waterslides, which are the UK's longest and fastest, a giant
indoor wave pool that erupts every 30 minutes with metre-high
waves, an outdoor garden pool and an iodine infinity pool with
massage jets, whirlpools and bubble benches -- both heated to 35
degrees Celsius.


CO-OPERATIVE GROUP: Sells Insurance Business for GBP185 Million
---------------------------------------------------------------
Oliver Ralph at The Financial Times reports that the UK's Co-op
has sold its insurance underwriting business, CIS General
Insurance, to Markerstudy for GBP185 million.

According to the FT, the deal is the latest in a series of
disposals for the mutually owned Co-op, which almost collapsed
five years ago and now focuses on food stores, food wholesaling
and funeral homes. It had previously sold its troubled banking
division and a number of properties, the report says.

Co-op will continue to sell insurance after the deal under a
13-year distribution agreement with privately held Markerstudy,
which already owns well known brands such as Auto Windscreens and
Zenith Direct, the FT notes.

"From the outset we've been very clear that we intend to enhance
our insurance offer for Co-op members and this agreement provides
the means for us to do this in an effective way," the FT quotes
Pippa Wicks, deputy chief executive at Co-op, as saying.

Co-op was advised by Fenchurch Advisory Partners and Allen &
Overy. Markerstudy was advised by HFW, the FT discloses.

                     About Co-operative Group

Founded in 1863, The Co-operative Group is UK's largest mutual
business owned by nearly 8 million members.  The consumer
cooperative organization is widely known as "The Co-op."  It has
a diverse range of retail businesses, which include food,
financial services, funeral care, legal services and online
electricals.  It operates 4,500 retail outlets, employs about
87,000 people, and has an GBP11 billion annual turnover.

In May 2013, the Group mulled the sale of a GBP2 billion loan
portfolio after Moody's downgraded the rating on the Group's
banking arm to "junk" status and raised concerns that the
division needed a government bail-out.  This was also around the
time Euan Sutherland took over Peter Marks as chief executive.
Euan Sutherland eventually resigned in March 2014, saying that
the mutual is "ungovernable."

On Aug. 30, 2014, members approved board reforms.  About 80% of
member representatives voted to replace the existing board with a
plc-style body dominated by independent directors.  With this new
development, the number of board members is expected to be
decreased by 50%.

In 2014, the Group sold its pharmacy unit, The Co-operative
Pharmacy, to Bestway Group for GBP620 million; and its farming
business, Co-operative Farms, to Wellcome Trust for GBP249
million -- all in an effort to reduce debt.


MALACHITE FUNDING: S&P Cuts Tier 2 Income Notes Rating to D (sf)
----------------------------------------------------------------
S&P Global Ratings lowered to 'D (sf)' from 'CCC- (sf)' its
credit ratings on three classes of junior mezzanine notes issued
by Malachite Funding Ltd.

The downgrades follow the liquidation of the portfolio.
The issuer, in accordance with the transaction documents,
announced a clean-up redemption of the notes in the last quarter
of 2018. The Tier 2 income notes could not be fully repaid due to
insufficient funds following the liquidation of the portfolio.
Based on the redemption notice, each of these Tier 2 notes were
unpaid approximately 13.4% of the outstanding principal amount.

S&P said, "Our ratings on these classes of notes address the
ultimate payment of the principal amount outstanding plus the
current and all the capitalized interest. Consequently, we have
lowered to 'D (sf)' from 'CCC- (sf)' our ratings on these classes
of notes. Our ratings on these classes of notes will remain at 'D
(sf)' for 30 days before the withdrawal becomes effective."

Malachite Funding is an HSBC-sponsored vehicle that securitizes a
portfolio of predominantly structured finance securities.

  RATINGS LOWERED

  Malachite Funding Ltd.

  Class                                        Rating
                                         To            From

  EUR14.32 Million Tier 2 Income Notes   D (sf)        CCC- (sf)
  GBP4.80 Million Tier 2 Income Notes    D (sf)        CCC- (sf)
  $31.772 Million Tier 2 Income Notes    D (sf)        CCC- (sf)


NEW LOOK: Fitch Downgrades Issuer Default Rating to C
-----------------------------------------------------
Fitch Ratings has downgraded New Look Retail Group Limited's
Long-Term Issuer Default Rating to 'C' from 'CC'. It has affirmed
New Look Secured Issuer plc's senior secured notes due 2022 at
'C'/'RR5' and New Look Senior Issuer plc's senior notes due in
2023 at 'C'/'RR6'.

The downgrade of the IDR follows New Look's agreement in
principle with a group of senior secured creditors to implement a
financial restructuring including a comprehensive debt write-
down. On January 17, 2019, New Look informed that 90.52% of the
holders of the outstanding principal amount of the senior secured
notes, including affiliated holders, have voted in favour of the
proposed amendments. If the restructuring plan is approved, upon
completion Fitch will downgrade the IDR to 'RD'. Subsequently,
Fitch will re-assess New Look's IDR and assign a rating
consistent with the agency's forward-looking assessment of the
company's credit profile following the distressed debt exchange.

KEY RATING DRIVERS

The exchange offer launched on January 14, 2019, if agreed, will
constitute a distressed debt exchange under Fitch's criteria, as
investors face a material reduction in terms and conditions and
the restructuring is being undertaken to avoid a payment default.
Fitch believes alternative options to be limited. Fitch
recognises the positive impact that the proposed agreement would
have on both the group's liquidity and debt service capacity,
given the proposed reduction in leverage, extended maturity dates
and lower interest payments.

Under the proposed exchange, senior secured noteholders will
convert all their existing claims of GBP1,070 million into GBP250
million of new senior secured notes and 20% of the ordinary share
capital of New Look Retail Group Limited post-restructuring. In
addition the group's liquidity will be strengthened by a new
five-year GBP150 million funding in the form of new money bonds
(including a Payment-In-Kind (PIK)/ toggle option), which will
receive around 72% of the group's equity upon closing. The
existing GBP100 million revolving credit facility (RCF) and the
GBP100 million operating facility will also remain in place.

The restructuring plan also envisages a full write-down of the
GBP177 million senior notes issued by New Look Senior Issuer plc
for a maximum 2% of the group's equity, subject to a majority of
senior noteholders agreeing to support the transaction.

DERIVATION SUMMARY

New Look is a fast fashion multi-channel retailer operating in
the value segment of the UK clothing and footwear market for
women, men and teenage girls. Its e-commerce platform has been a
key differentiating factor relative to other sector peers, such
as Financiere IKKS S.A.S (C) or Novartex SA (CCC-/RWN). However
the company's unsustainable leverage (Fitch-estimated funds from
operations (FFO) adjusted net leverage of 13.9x at end-March 2018
(FY18)) and compromised liquidity had placed New Look's rating in
the 'CC' category, below performing peers, before the announced
debt-for-equity swap proposal.

New Look's EBITDAR margin is also below most non-food retailers.
However, Fitch expects a rebound in profitability driven to a
large extent by the reduction in rents due to the company
voluntary arrangement (CVA) concluded in March 2018. Fitch
expects an EBITDAR margin trending to, or exceeding 17%, which
would be more aligned with Novartex (17.4% at FY18). New Look
needs to demonstrate positive results from its wide turnaround
plan in a fast-changing clothing market in UK. The traditional
store-based business model, a large debt burden and significant
capex needs, combined with heavy restructuring costs, has
weakened New Look's cash conversion capability compared with
asset-light competitors, some of which are pure online retailers
such as Boohoo, ASOS and Shop Direct (B/Negative).

KEY ASSUMPTIONS

Fitch's Key Assumptions within its Rating Case for the Issuer:
Once the proposed debt restructuring completes Fitch will
establish new assumptions in support of its long-term forecasts
for the new capital structure. This will happen once Fitch has
discussed the company's revised business plan with management and
assessed its reasonableness.

Key Recovery Assumptions

  - The recovery analysis assumes that New Look would be
considered a going concern in bankruptcy and that the company
would be reorganised rather than liquidated. This is what is
happening with the proposed debt restructuring whereby New Look
continues to trade as a going concern. Fitch has assumed a 10%
administrative claim in the recovery analysis to be funded by
GBP80 million interim funding provided by the bondholder
committee and Brait (to be refinanced upon closing by issuing the
new money bonds).

  - The intention to exchange the existing GBP1,070 million of
senior secured notes into GBP250 million new senior secured notes
suggest an actual recovery rate of around 23% in the 'RR5'
category (instrument rating affirmed at 'C'). However, Fitch
assumes that the surviving drawn debt in the capital structure of
around GBP500 million (including GBP100 million drawn RCF)
equates to the group's sustainable enterprise value. This
represents an implied valuation of around 6.0x EBITDA taking the
company's projected FY19 EBITDA of GBP84 million for its core
business (UK retail, e-commerce, third party e-commerce/wholesale
and ROI). The implied valuation for the proposed debt
restructuring is marginally higher that its previous assessment
of GBP456 million.

  - As anticipated following the payment waterfall, the senior
noteholders receive no recovery, in line with a 'C'/'RR6' rating.

RATING SENSITIVITIES

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

A direct upgrade to 'CC' is unlikely at this point. The following
sensitivity applies post restructuring:

  - A new capital structure leading to a sustainable debt service
capability, improved liquidity and maturity profiles, enabling
the company to strengthen its operating profile.

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

  - Execution of a distressed debt exchange (downgrade to RD)

  - Failure to receive approval for a comprehensive debt
restructuring, leading to administration proceedings (downgrade
to D)


THE POSTINGS: Shopping Center Up for Sale Amid Retail Woes
----------------------------------------------------------
Judith Evans at The Financial Times reports that a Scottish
shopping centre owned by a global asset manager is up for auction
with a starting price of GBP1, in the latest sign of the downturn
in the retail property market.

The Postings centre in Kirkcaldy, owned by a pension fund run by
Columbia Threadneedle Investments, is being auctioned through
Allsop with a reserve price of GBP1 -- implying a gross initial
yield of 15.6m per cent, the FT relates citing the
auctioneer's website.

The FT relates that the sale comes as a crisis on the high street
starts to eat into retail property values. A wave of retail
insolvencies and store closures in 2018 looks set to
continue into this year as retailers battle with the transition
to online shopping, higher costs and Brexit uncertainty, the FT
notes.

The FT says the asset manager Fidelity International late last
year forecast a fall of between 20 and 70 per cent in UK retail
real-estate asset values, depending on location and quality.

Some shopping centres, including the Postings, are now being sold
as opportunities to demolish and redevelop the site.

According to the FT, the eastern Scottish centre lost its anchor
tenant Tesco in 2015, and a person familiar with the centre said
it was now costing more to run than it generates in income. The
sale is due to complete on February 15, Allsop said, the report
relays.

"We acquired the Postings more than 15 years ago as an income
proposition and it has since been re-positioned as a development
opportunity, which does not fit the holding fund's investment
strategy," Columbia Threadneedle said.  "The reserve price of
GBP1 is generating significant attention and we expect to get a
considerable amount at the auction."

The centre is made up of 21 stores, of which 13 are empty, and a
299-space car park leased to the local council. It generates
GBP152,005 of income a year, Allsop said, but leases on the
occupied stores expire in 2020 or 2021, the FT discloses.

The FT relates that one property executive said it was still "too
expensive". "There are going to be a number of locations where,
due to the liability of business rates and the cost of
demolition, there is a negative site value until [the shopping
centre] can be demolished and built back into an economic use.

"There are places where these alternative uses may not stack up
either."

The FT notes that Columbia Threadneedle, which is owned by the US
group Ameriprise, holds the centre -- built in the 1980s for a
reported GBP4.2 million -- within one of its institutional
pension funds.

The Postings centre, which faces competition from another nearby
shopping venue, the Mercat centre, has struggled to attract
tenants because of its "out of date structure and location", the
person familiar with the sale said, the FT relays.

Preston Benson, founder of the Really Local Group, which
specialises in high-street regeneration, said: "Well-located
retail with redevelopment potential and supportive local councils
will find a price floor above zero, but other [properties] will
go straight to zero value with councils stepping in and taking
over," the FT states.


UNIQUE PUB: Fitch Places 3 Notes on Rating Watch Positive
---------------------------------------------------------
Fitch Ratings has placed Unique Pub Finance plc's class A notes
rated 'BB', class M notes rated 'B+' and class N notes rated 'B'
on Rating Watch Positive.

The rating action follows the recent announcement by Ei Group plc
of the disposal of 370 properties within Ei Commercial Properties
for GBP348 million. Part of the proceeds must be used to prepay
the class A notes, which should improve the coverage ratios for
all notes within the securitisation group. As a result, Fitch
believes that the disposal could result in a one-notch upgrade of
the class A, M and N notes. However, there is still uncertainty
as the disposal is subject to shareholders' approval and
execution.

KEY RATING DRIVERS

Management estimates that around GBP180 million of proceeds from
the disposal must be used for the full repayment of the class A3
notes and partial prepayment of the class A4 notes. Fitch's
preliminary estimates indicate that all classes would have higher
debt service coverage ratios (DSCR), above the upgrade triggers
of 1.3x, 1.1x and 1.0x for the class A, M and N notes,
respectively, until 2021.

RATING SENSITIVITIES

Upon completion of the disposal and prepayment of the notes, the
ratings of Unique's notes will depend on the respective projected
free cash flow DSCRs and their structural features.

Asset Description

Unique is a securitisation of tenanted pubs in the UK. As of June
2018, the transaction consisted of 2,153 pubs, down from 2,217 at
June 2017. Unique's leased/tenanted business model hinders the
group's ability to adapt to the dynamic and increasingly
competitive UK eating and drinking out market. The fully
amortising debt, strong liquidity and deferability of the junior
notes mitigate covenant weaknesses, such as the restricted
payment covenant. The class A4 2027 notes amortise concurrently
with the junior and deferrable class M 2024 notes.


UNITED KINGDOM: BoE Says Loans Echo Pre-Crisis Subprime Crash
-------------------------------------------------------------
Huw Jones at Reuters reports that Bank of England Governor Mark
Carney likened the $2 trillion leveraged loan market to subprime
mortgages that defaulted 10 years ago and triggered a global
financial crisis, in a warning to British lawmakers.

Leveraged loans are made to companies that are highly indebted,
and growth has been driven by investment funds and collateralized
loan obligations (CLOs) linked to the loans, according to
Reuters.

"We are concerned just because the pace of growth has been quite
rapid for some time," Mr. Carney told the lawmakers, the report
notes. "The subprime analogy . . . isn't perfect, but it's on the
road to 'no doc' underwriting which happened 11 years ago."

'No doc' refers to the lack of affordability checks on subprime
home loans in the United States before the crisis, he added.

Last year, the BoE tested British banks' exposure to leveraged
loans by applying shocks that were greater than those seen during
the financial crisis, Mr. Carney said, the report notes.  All the
banks passed, the report relays.

The BoE first made similar warnings to Carney's in its November
Financial Stability Report, which was the subject of the hearing
in the Treasury Select Committee in parliament, the report notes.

London is Europe's center for leveraged loans, boosting
profitability of banks and bringing in foreign capital to help
Britain fund its current account deficit, the report discloses.

"My personal sense is the market is undergoing an adjustment,
there is greater focus on underwriting," the report quoted Mr.
Carney as saying.

Richard Sharp, a member of the BoE's Financial Policy Committee,
said leveraged lending needed to be better managed, not banned,
the report notes.

"It's not just all bad.  It's a source of major employment and
profitability here.  It lowers the cost of capital for
investment," the report quoted Mr. Sharp as saying.

Debt based on U.S. subprime mortgages was tucked away in "shadow
banks" in the run-up to the financial crisis, making it harder to
assess exposures, said Alex Brazier, BoE executive director for
financial stability, the report relays.

Exposures at UK banks to leveraged loans is among the lowest in
the world, accounting for about 1 percent of global stock of
CLOs, and 1.5 percent of the major banks' core capital buffers,
BoE data showed, the report notes.

"That is one of the big differences with subprime. Even if the
growth rates look the same, the underwriting standards have some
disturbing similarities . . . there is none of this shadow
banking activity," Mr. Brazier said, the report adds.


WALSHAM CHALET: In Administration, Deloitte Explores Sale
---------------------------------------------------------
Business-Sale.com reports that an Essex-based company which
operates eight luxury lodge parks throughout the South of England
has fallen into administration.

According to the report, professional services firm Deloitte have
been called in to handle the administration process for Walsham
Chalet Park Limited, which trades under the name Dream Lodge
Group. Restructuring partners Richard Hawes and Rob Harding have
been appointed as joint administrators.

Business-Sale.com relates that the partners cited "immediate
funding constraints and seasonality of the business", as well as
a "period of financial pressure" as the reasons for the business
entering administration.

Despite this, the administrators have said that the lodges will
continue their services while a potential sale is being explored.

"[Although] it is no longer possible to continue to operate the
business in its existing format . . . while a sale is explored,
all lodge parks will remain operational," the report quotes
Mr. Hawes as saying.

Business-Sale.com says the Group manages the Lazy Otter Meadows
in Ely, Blosson Hill Park in Devon, Woodlands Park in East Sussex
as well as The Sanctuary in Berkshire. It attracted the interest
of investors with promises of personal use of the lodges, and
either a fixed rental income or a profit after three years of
operation.

It realised its declining financial situation in October 2018,
when auditors from KPMG were invited to find new investment or a
buyer for the business, Business-Sale.com notes.

As a result of the administration, the Dream Lodge Group has told
its investors that they will receive a "guaranteed return" on
their investment, after costing them millions of pounds due to
its collapse, relays Business-Sale.com.

Potential buyers are invited to express their interest
immediately, the report adds.



                            *********

Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par.  Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable.  Those sources may not,
however, be complete or accurate.  The Monday Bond Pricing table
is compiled on the Friday prior to publication.  Prices reported
are not intended to reflect actual trades.  Prices for actual
trades are probably different.  Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind.  It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.

Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than US$3 per
share in public markets.  At first glance, this list may look
like the definitive compilation of stocks that are ideal to sell
short.  Don't be fooled.  Assets, for example, reported at
historical cost net of depreciation may understate the true value
of a firm's assets.  A company may establish reserves on its
balance sheet for liabilities that may never materialize.  The
prices at which equity securities trade in public market are
determined by more than a balance sheet solvency test.

Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals.  All titles are
available at your local bookstore or through Amazon.com.  Go to
http://www.bankrupt.com/booksto order any title today.


                            *********


S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter-Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante,
Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman,
Editors.

Copyright 2019.  All rights reserved.  ISSN 1529-2754.

This material is copyrighted and any commercial use, resale or
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Information contained herein is obtained from sources believed to
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