/raid1/www/Hosts/bankrupt/TCREUR_Public/190214.mbx        T R O U B L E D   C O M P A N Y   R E P O R T E R

                          E U R O P E

          Thursday, February 14, 2019, Vol. 20, No. 33

                           Headlines



F R A N C E

SPCM SA: Moody's Affirms CFR & USD500M Sr. Notes Rating at Ba2
[*] FRANCE: Business Failures Rise to 4.2% in 4th Quarter 2018


G E R M A N Y

KME AG: Fitch Affirms B- Long-Term IDR, Outlook Stable
TUI AG: Fitch Affirms Ba2 CFR, Alters Outlook to Stable


I T A L Y

AUTOSTRADA BRESCIA: Fitch Affirms BB+ Rating on EUR400M Bond


N E T H E R L A N D S

PRINCESS JULIANA: Moody's Cuts Rating on USD142.6MM Notes to Ba2


R U S S I A

MOSCOW OBLAST: Moody's Raises LT Issuer Rating to Ba1
STATE TRANSPORT: Moody's Raises CFR to Ba1, Outlook Stable


S P A I N

GAT ICO-FTVPO 1: Moody's Cuts Class D(CT) Notes Rating to Caa3
THINK SMART: Madrid Court Declares Insolvency Proceedings


U N I T E D   K I N G D O M

ADIENT GLOBAL: Moody's Affirms B2 CFR, Outlook Remains Negative
FLYBE GROUP: Biggest Shareholder Expresses Concern Over Sale
INTESERVE PLC: Farringdon Capital Opposes Debt-for-Equity Swap
KELDA FINANCE NO. 2: Fitch Affirms BB LT IDR, Outlook Negative
KEYSTONE MIDCO: Moody's Withdraws B3 CFR for Business Reasons

NORDGOLD SE: Fitch Affirms 'BB' Long-Term IDR, Outlook Stable
UTILITYWISE: Founder in Talks to Bail Out Business

                           - - - - -


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F R A N C E
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SPCM SA: Moody's Affirms CFR & USD500M Sr. Notes Rating at Ba2
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Moody's Investors Service affirmed French global leading specialty
chemical firm SPCM SA's Ba2 Corporate Family Rating (CFR), Ba2-PD
probability of default rating (PDR) and the Ba2 instrument rating
on the existing USD500 million senior unsecured notes due 2025.
Outlook remains stable.

RATINGS RATIONALE

The affirmation of SPCM's ratings reflects the company's global
leading market positions in the polyacrylamide (PAM) market in
terms of capacity, long-term customer relations and global
footprint, which all support its robust Moody's adjusted EBITDA
margin in the mid to high teens throughout an industry cycle. The
company's profitability has been fairly stable over the last three
years, demonstrating the resilience of its main municipal and
industrial water treatment markets.

However, the ratings are weakly positioned in the Ba2 category as
the company's Moody's adjusted gross debt to EBITDA increased over
the last two years to 3.9x expected for 2018 from 3.3x in 2016.
Since 2015 the company has followed an ambitious capacity expansion
program which resulted in a continuous negative Moody's adjusted
free cash flow (FCF) generation and the increase of bank debt. The
negative cash generation has been partly mitigated by SPCM not
paying dividends to its shareholders. Funds from operation (FFO),
as adjusted by Moody's is expected to remain solid at EUR295
million this year compared to an expected Moody's adjusted EBITDA
of EUR410 million. The cash outflow is mostly driven by the high
capital expenditure of EUR330 million resulting from the company's
growth capacity programs, accounting for 11% of 2018 sales. Moody's
believes, however, that SPCM has some flexibility to reduce that
amount going forward in case of a severe downturn. Maintenance
capex is estimated at EUR50 million per annum. Working capital
requirements will also be a significant drag on the operating cash
flow this year because of raw material price inflation up to Q3
2018, and revenue growth.

Moody's expects that the company will be able to gradually reduce
its financial leverage over the next 12-18 months based on the
expectation that the company will improve its EBITDA towards EUR450
million (as adjusted by Moody's) in 2020, from EUR410 million
expected for 2018. The EBITDA growth is supported by the increased
production capacity and the expectation of a continued growth in
demand for SPCM's products, even in a declining economic growth
environment. Driven by improved EBITDA and with continued
conservative financial policy that includes the expectation that no
dividends will be paid in 2019, the company's adjusted leverage
should reduce to 3.5x over the same period.

The Ba2 CFR primarily reflects SPCM's (1) global market leading
position as a specialty chemicals producer in the PAM value chain,
with a diverse customer base across several end-markets; (2)
resilient business model with a large exposure to the stable water
treatment sector (40% of 2018E sales); (3) balanced global
footprint with close relationship with customers; (4) robust
profitability underpinned by product differentiation and scale
advantage; and (5) defensible leading market position.

However, the CFR also reflects: (1) product concentration into the
PAM value chain; (2) exposure to raw materials price fluctuations,
particularly propylene and acrylonitrile, both oil based; (3)
competition from substantially larger and more financially flexible
companies such as BASF (SE) (A1 stable) and Ecolab, Inc. (Baa1
stable); (4) its exposure to the cyclical oil & gas production
end-market (27% of 2018E sales); and (5) an ambitious capital
expenditure program mostly aimed at expanding capacity, leading to
negative free cash flow and high leverage.

Liquidity profile remains solid despite historical negative Moody's
adjusted FCF, and supported by the recently renewed EUR350 million
revolving facility and cash on balance sheet expected at around
EUR140 million at year end 2018. SPCM does not have any maturities
before June 2023 having recently refinanced its debt, creating a
comfortable maturity profile.

RATIONALE FOR STABLE OUTLOOK

The stable outlook assumes that the company will maintain its
Moody's EBITDA margins in the mid to high-teens and Moody's
adjusted leverage closer to 3.5x over the next 12-18 months. It
also assumes the company maintains good liquidity.

STRUCTURAL CONSIDERATIONS

SPCM's Probability of Default Rating (PDR) of Ba2-PD, at the same
level as the CFR, is typical for a capital structure that consists
of a mix of bank credit facilities and bond debt.

The USD500 million unsecured senior notes due 2025 are rated Ba2,
in line with the CFR, and rank equally with the EUR350 million
unsecured RCF (unrated) and the EUR550 million notes due 2023
(unrated) that constitute the vast majority of the capital
structure. The 2025 notes are not guaranteed by any subsidiaries,
in line with the 2023 notes. They have incurrence covenants,
including limiting the company's ability to incur additional
indebtedness and pay dividends.

WHAT COULD CHANGE THE RATING -- UP/DOWN

An upgrade would require SPCM to (1) reduce its Moody's-adjusted
debt/EBITDA to under 3x, (2) improve its retained cash flow/debt to
above 20% and (3) demonstrate the ability to sustainably generate
positive Moody's adjusted free cash flow.

Conversely, Moody's could downgrade SPCM, if (1) leverage were to
sustainably exceed 4x Moody's-adjusted debt/EBITDA, (2) its
retained cash flow/debt falls to the low teens in percentage terms,
(3) the company pursues a more aggressive financial policy, or its
liquidity deteriorates.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Chemical
Industry published in January 2018.

SPCM SA is the parent holding company of the SNF Group (SNF). SNF,
headquartered in Andrezieux, France, is the world's largest
chemical company producing non-captive polyacrylamide (PAM). SNF
has a global manufacturing network of 18 sites that include five
major sites (two sites in the US and others in France, China, and
South Korea), with two additional sites being commissioned in China
and the UK.

The company is privately held and owned by a US-based trust whose
beneficiaries are charities. At the end of September 2018, the
group generated EUR2.9 billion of revenue and a Moody's adjusted
EBITDA of EUR388 million (13.4% margin).


[*] FRANCE: Business Failures Rise to 4.2% in 4th Quarter 2018
--------------------------------------------------------------
Rudy Ruitenberg at Bloomberg News, citing data-analysis firm
Altares, reports that the number of companies in France seeking
protection from creditors, going into receivership or filing for
bankruptcy rose 4.2% in the fourth quarter of 2018 from a year
earlier.

According to Bloomberg, French business failures in the fourth
quarter of 2018 rose to 14,815 versus 14,220 a year earlier.

The number of businesses going into liquidation in the fourth
quarter of 2018 rose to 9,994 versus 9,609 year-on-year, Bloomberg
discloses.

Fast-food restaurant failures jumped 17% in the fourth quarter of
2018, while failures also increased in businesses from hair
dressers to car retailers and home builders, Bloomberg states.

The number of jobs at risk in the fourth quarter of 2018 rose to
48,600 versus 42,500 a year earlier, Bloomberg notes.

Altares says pace of failures accelerated at the end of the year,
after growth forecasts were cut throughout the year, Bloomberg
relates.

At the start of France's Yellow Vest protests in November,
companies were already weakened due to treasuries that had been
under pressure for several weeks, Thierry Millon, head of research
at Altares, says in a statement, notes the report.



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G E R M A N Y
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KME AG: Fitch Affirms B- Long-Term IDR, Outlook Stable
------------------------------------------------------
Fitch Ratings has affirmed German-based manufacturer KME AG's
Long-Term Issuer Default Rating (IDR) at 'B-' and senior secured
instrument rating at 'B' with a Recovery Rating of 'RR3' (65%). The
Rating Outlook is Stable.

The affirmation reflects Fitch's view that the company's M&A
activity will have a mildly positive impact on the business profile
while being not materially detrimental to the company's financial
profile. This follows the company's announcement that it has signed
a definitive agreement to dispose of its brass unit and copper
tubes operations to Zhejiang Hailiang Co. Ltd. for EUR119 million
in cash. The proceeds will be used to fund its EUR80 million
purchase of MKM Mansfelder Kupfer und Messing GmbH (MKM), which is
expected to close in 1Q19.

KME will sharpen its product offering of higher-margin copper and
special products and should be able to lift scale efficiencies
through the integration of MKM. Fitch expects both transactions to
close in 1Q19 without necessitating additional debt-financing, as
they are essentially self-funding, yielding a broadly neutral net
cash change (including related one-off costs).

KEY RATING DRIVERS

Rating Constrained by Leverage: Fitch views KME's high financial
leverage as a rating constraint, with an estimated funds from
operations (FFO) adjusted gross leverage of 7.7x at end-2018.
De-leveraging prospects are moderate, with FFO adjusted gross
leverage estimated to drop to 6.2x by 2021. KME's FFO fixed charge
cover is expected to be 1.9x-2.3x over 2019-2021. High financial
leverage represents a key rating constraint on the IDR, and results
in tight headroom under the 'B-' rating. Any underperformance
against Fitch's rating case would lead to negative rating action.

Low Free Cash Flow: Fitch projects that KME's free cash flow (FCF)
margins will remain in the low single digits over the medium term.
Such FCF margins are in line with low non-investment-grade credit
risk and do not pose a threat to KME's credit quality, as long as
the company's underlying commercial performance remains healthy and
trade working capital does not drain cash.

Self-Funding M&A Credit-Neutral: Fitch views the pending
acquisition of MKM as neutral to the ratings as the purchase price
of EUR80 million will be entirely funded with disposal proceeds of
non-core operations. In January 2019, KME announced the signing of
an agreement with Zhejiang Hailiang Co. Ltd. for the sale of its
brass rods operations in Germany and its tubes business in Germany
and Spain. The acquisition consideration amounts to EUR119 million
plus working capital and certain inter-company payables
outstanding. Fitch expects the transaction to be completed in 1Q19,
at about the same time as the MKM acquisition.

Moderately Improved Business Profile: The disposal of the brass
unit and the acquisition of MKM will improve the company's business
profile in terms of size, diversification, and product offering.
The transactions are in line with KME's previously announced
strategy to further optimise the business model through site
specialisation on specific products or product groups. Fitch
understands from management that related run-rate synergies (around
EUR20 million) will be lifted by 2020 through production
efficiencies and economies of scale, owing to channelling
production volumes and improved utilisation rates, which is likely
to lead to working capital inflows. Further, MKM shows limited
customer overlap with KME, expanding the company's customer
portfolio.

The sale of the company's lower-margin brass and copper tube
products should also enhance the overall product mix. Fitch views
integration risks of MKM as modest, reflecting the relative size of
the target, which is mitigated by high industrial overlap and an
experienced management team.

Bond Recovery Expectations Unchanged: Fitch believes that the M&A
related changes to the company structure will not affect the
recovery prospects for KME's bondholders. Certain assets, including
the brass sites in Menden, Germany and Seravalle, Italy, will
shrink the guarantee scope, while MKM will accede as restricted
subsidiary under the bond documentation, although it will not
guarantee the notes. The company's EUR300 million senior secured
notes are rated 'B' with a Recovery Rating of 'RR3'. Fitch's
recovery analysis assumes only the secured notes' first-priority
claim on KME's Osnabruck property, which is unimpaired by changes
to guarantee quantum.

Diversified Customer Base: KME sells to approximately 4,700
customers across around 70 countries with a primary focus on
Europe, which accounted for around 90% of 2017 revenue. Customer
concentration is low, with the company's top 50 clients accounting
for roughly 21% of revenue. A short-dated contract portfolio (the
majority of contracts have one-year duration) limits visibility on
both revenue and cash flow. However, this is mitigated by KME's
track record of maintaining long-term customer relationships,
ranging up to 20 years with some large blue-chip clients.

Effective Cost Pass-Through: KME has only minimal exposure to
volatility in copper prices, which it views as credit-positive, so
the company can fully focus on the underlying economics of its
transformation business, reflected in the fabrication cost mark-up
charged to end-customers. KME uses a contractual pass-through
("back-to-back" pricing) for essentially all of its contracts.
Under a back-to-back pricing agreement, customers pay the same
copper price KME pays to its suppliers plus a customary LME
mark-up, which covers transportation and interest costs.

Established Player: KME is an established player in the copper and
copper-alloy processing industry with a history dating back to
1886. The processing of the majority of copper and brass products
is highly commoditised, reflecting low barriers of entry. In
contrast, engineered products generate a higher margin, due to
higher technological content and a more complex manufacturing
process, creating moderate entry barriers.

Senior Secured Uplift: KME's senior secured notes' 'B' rating takes
into account the notes' equal ranking with the company's borrowing
base facility (BBF) and factoring lines in right of payment, and
effective subordination of the collateral securing those
facilities. However, Fitch understands from management that the
security package for each facility is different and that the senior
secured noteholders will be given first-priority payments on KME's
Osnabruck property. Hence, Fitch has based its recovery analysis on
the book value of aforementioned assets.

DERIVATION SUMMARY

KME's high leverage is comparable to the mean level of 'B-'
diversified industrial companies rated by Fitch. Compared with
direct peer Global Brass and Copper, KME exhibits weaker margins
and is higher in leverage. Aluminium-processing peer Constellium is
somewhat larger, and has stronger EBITDA margins given its higher
value-added product portfolio for aerospace/automotive end-markets.
At the same time, KME exhibits stronger FCF, driven by
comparatively lower capex requirements, and is on a par in terms of
fixed charge coverage and FFO adjusted gross leverage. When
benchmarked against a broader portfolio of diversified industrial
peers, KME's metrics, in particular FFO adjusted gross leverage and
FFO fixed charge coverage (around 2.0x), are largely in line with
'B-' rated peers'.


KEY ASSUMPTIONS

  - Capital structure comprising EUR300 million senior secured
notes, a EUR365 million BBF(fully utilised by letters of credit),
and a EUR30 million shareholder working capital facility line
(currently undrawn)

  - Revenue to grow in the low single digits, on the back of a
broadly flat copper price assumption

  - EBITDA margin to slightly increase over 2019-2021 (2017: 3.9%;
2016: 1.9%)

  - No dividends during 2019-2021

  - Fitch's recovery analysis takes into account the specific
security package for the senior secured notes, comprising
first-priority security interests over i) land charges encumbering
the property at the Osnabruck production site, and ii) machines and
equipment at the same location

  - Recovery values are derived using the liquidation value of
assets, yielding a higher claim for distribution

RATING SENSITIVITIES

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

  - FFO adjusted gross leverage sustainably below 6.0x

  - FFO fixed charge coverage sustainably above 2.0x

  - Operating EBITDA margin maintained at above 4%

  - Growth in production output of engineered products

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

  - FFO adjusted gross leverage in excess of 8.0x

  - FFO fixed charge coverage less than 1.5x

  - EBITDA margin below 2%

LIQUIDITY AND DEBT STRUCTURE

Weak Liquidity: Fitch views KME's liquidity profile as weak, albeit
in line with the current rating levels. This is based on EUR62
million cash on balance sheet as at end-3Q18 (after adjusting for
not readily available cash of around EUR5 million), and access to a
committed EUR365 million BBF, which is mostly utilised for
outstanding letters of credit. In addition, KME has access to an
undrawn EUR30 million shareholder working capital facility line.
However, the remaining four years to maturity of the senior secured
notes somewhat eases liquidity needs in the short- to medium-term.

Further, Fitch assumes that KME will continue having access to its
factoring facilities, which mitigates liquidity risks.  

TUI AG: Fitch Affirms Ba2 CFR, Alters Outlook to Stable
-------------------------------------------------------
Moody's Investors Service has affirmed the Ba2 corporate family
rating (CFR), the Ba2-PD probability of default rating (PDR) and
the Ba2 senior unsecured rating of the world's leading tourism
company TUI AG's (TUI). Concurrently, TUI's rating outlook has been
changed to stable from positive.

"Our decision to affirm TUI's rating, but to change the outlook
back to stable from positive is based on the ongoing market
weakness in TUI's tour operator business, which prompted the
company's unexpected announcement that it will not be able to
increase its underlying earnings in fiscal year 2019. Previously,
the positive rating outlook was based on the assumption that TUI
will continue to deliver on its guidance of a double-digit earnings
growth through FY2020" says Vitali Morgovski, a Moody's Assistant
Vice President-Analyst and lead analyst for TUI. "A further
deleveraging of TUI's capital structure, which is a requirement for
positive rating pressure, is now less likely over the next 12 to 18
months," Mr. Morgovski continues.

RATINGS RATIONALE

In contrast to the previous guidance of at least 10% growth in the
underlying EBITA at constant currencies in the fiscal 2019, TUI now
expects a broadly stable earning development. This weaker than
expected earnings development is predominantly driven by weaker
margins in the group's tour operator business (Markets & Airlines).
While the company sees the volume to remain solid, reflecting
customers willingness to travel, the margins are under pressure due
to a knock-on effect from the last summer's hot weather resulting
in later bookings also this year; a demand shift from Western to
Eastern Mediterranean, which created an overcapacity in popular
destinations as the Canaries; overcapacity also in certain Airline
segments such as from Germany to Spain; and a continued weakness of
the Pound Sterling leading to a margin decline in the UK tour
operator business.

TUI's underlying EBITA developed strongly in fiscal 2018, showing a
double-digit percentage growth for the fourth consecutive year.
This was again driven by a solid performance in the group's high
margin segments, Hotels & Resorts (up 19%) and Cruises (up 27%),
and despite the weakness in the tour operator business (Markets &
Airlines), which was down 14% on the underlying EBITA basis.
However, Moody's adjusted EBITDA remained broadly stable in fiscal
year 2018, as unlike company's definition of underlying EBITA it
excludes at equity consolidated joint ventures (JVs) such as TUI
Cruises, where performance was especially strong (underlying EBITA
up 33%). Furthermore, adverse FX effects and some increases in
exceptional items, mostly arising from additional costs of airline
disruptions and the Niki bankruptcy as well as the gain on Riu
disposals, held back Moody's adjusted EBITDA.

Moody's adjusted credit metrics softened somewhat during the last
fiscal year driven by an increase in gross debt that covered a
negative free cash flow generation due to the high level of
investments. This was witnessed for example by an increase of
Moody's adjusted gross debt/ EBITDA ratio to 3.7x from 3.5x a year
ago. However, investments were partly pre-funded by earlier asset
disposals totaling EUR2 billion that TUI is gradually reinvesting
into the business over the 2017-19 period. Moody's definition of
EBITDA excludes any contribution from JVs, though TUI has a
track-record of receiving a growing amount of regular cash
dividends from its JVs. If included, Moody's adjusted gross
leverage ratio would remain stable in 2018.

In its rating affirmation in December 2018 Moody's already pointed
to a number of market headwinds facing the company in 2019. They
were ranging from an intensified competition in the tour operator
segment coming from dynamic packaging by OTAs combining hotel and
flight offerings, as well as airline operators providing hotel
accommodations as add-on to their flights; continued cost pressure
(fuel, hotel rates etc.), capacity shift from Western to Eastern
Mediterranean and the uncertainty in regards to the final outcome
of the Brexit negotiations and their impact on consumer confidence
and behavior. The rating agency stated that in case any of those
headwinds would prevent TUI from reaching its guidance, its rating
outlook could be stabilized or even a negative rating action could
follow.

Though, Moody's views positively TUI's adaption of its business
model away from a classic tour operator to an integrated provider
of holiday experiences during the recent few years, its credit
metrics will unlikely exceed the upgrade requirements in the coming
12-18 months. Consequently the positive rating outlook, that has
been initially assigned in February 2018, is no longer adequate and
has been changed back to stable.

IFRS16 adoption for fiscal years starting in October 2019 onwards
can potentially strengthen Moody's adjusted credit metrics by
reducing adjustments currently applied for operating leases. More
public disclosures on this topic during 2019 would allow Moody's to
fine-tune its expectations and to include the impact more
implicitly into the rating.

Moody's views TUI's liquidity as solid. This is underpinned by
EUR2.5 billion of cash on the balance sheet at the end of September
2018 (unchanged compared to September 2017), of which around EUR0.2
billion were subject to restrictions, as well as EUR1.75 billion
syndicated revolving credit facility (RCF) maturing in 2022, which
allows for EUR1, 535 million cash drawings. Cash RCF remained fully
undrawn at the fiscal year-end 2018. The available liquidity is
sufficient to meet TUI's high seasonal working capital needs during
the first fiscal quarter that Moody's does not expect to exceed
EUR1.5 billion.

RATIONALE FOR STABLE OUTLOOK

The stable outlook reflects Moody's view that TUI's operating
performance will remain largely resilient to external shocks and
structural challenges in the tour operator business. The outlook
also assumes that the company can keep its underlying EBITA broadly
stable in fiscal 2019 and improve it in the following years.
Furthermore, TUI continues to have a solid liquidity position in
order to manage effectively the high seasonality of its working
capital.

WHAT COULD CHANGE THE RATING UP/DOWN

Moody's would consider upgrading TUI's rating if the company were
to demonstrate further resilience of its business model to external
shocks and to continue the adaption of its business model to
structural challenges. Quantitatively, positive pressure could
arise if the group's gross leverage ratio (Moody's adjusted) were
to fall below 3.5x and the retained cash flow/ net debt (Moody's
adjusted) to remain above 25% throughout the seasonal swings of the
year. The group is expected to retain a good liquidity profile to
address the high seasonal cash swings during the year.

The rating could be under negative pressure should TUI not be able
to fully offset any additional external shocks that might occur or
shows a lack of ability to offset structural challenges.
Quantitatively, the rating could be lowered if the leverage ratio
(Moody's adjusted) were to increase above 4.5x and the retained
cash flow/ net debt (Moody's adjusted) were to fall below 15%, or
if the group's liquidity profile were to deteriorate materially.

PROFILE

TUI AG, headquartered in Hanover, Germany, is the world's largest
integrated tourism group. In the fiscal year to September 2018 the
group reported revenues and underlying EBITA of EUR19.5 billion and
EUR1.1 billion, respectively. TUI is listed on the Frankfurt and
London Stock Exchanges with a current market capitalisation of
EUR6.5 billion.

The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.




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AUTOSTRADA BRESCIA: Fitch Affirms BB+ Rating on EUR400M Bond
------------------------------------------------------------
Fitch Ratings has affirmed Autostrada Brescia Verona Vicenza
Padova's (ABVP) EUR400 million senior secured bond at 'BB+'. The
Outlook is Stable.

KEY RATING DRIVERS

The 'BB+' rating reflects ABVP's solid operating profile, the
persistent regulatory uncertainties due to delays in the approval
of regulatory business plan (BP), as well as the bond's exposure,
albeit reducing, to refinancing risk. The narrow minimum project
life coverage ratio (PLCR) of 1.2x in the updated Fitch rating case
(FRC) further underpins the sub-investment grade rating in the
context of criteria guidance.

The Stable Outlook reflects the company's significant steps in
tackling refinancing risk ahead of the single bullet bond maturity
next year. The recent signature of a EUR100 million revolving
credit facility (RCF) and around EUR200 million available cash at
December 2018, cover most of the EUR400 million outstanding bond.
However, the issuer remains exposed to refinancing risk as the bond
repayment still relies on free cash flow (FCF) generation in FY19.


ABVP operates one of the busiest Italian toll road networks under
an unusual concession structure where capex and related debt are
mainly recovered through a terminal value (TV) payment. The TV is
paid by a new concessionaire at concession maturity (2026) or, in
case of delays, two years later by the grantor in 2028 at the
latest. If the TV is not paid, ABVP will continue to operate the
concession. In Fitch's view, the TV mechanism is robust as its
payment is contractually calculated on net book value, allowing
ABVP to recover realised investments. However, the TV scheme is
unusual and broadly untested in Italy, which may affect banks'
appetite to refinance these transaction structures.

Robust Traffic, Moderate Volatility - Revenue Risk (Volume):
Midrange

The network is strategically located at the centre of the A4
corridor linking the east-west stretch of northern Italy, a wealthy
and industrialised catchment area. Traffic in vehicles km
experienced a peak to trough of 8% in 2012-2013 as austerity
measures led to a collapse in domestic consumption. This is
slightly better than Italian peers, Autostrade per l'Italia (-11%)
and Sias (-12%). In Fitch's view, the inherent uncertainty of
traffic related to the new Valdastico Nord stretch is not material
for the rating, given the small proportion of cash flow expected
from this part of the network.

RAB-Based Model - Revenue Risk (Price): Midrange

The price mechanism allows a return on the asset base and recovery
of operating costs and depreciation of assets, which worked well in
2010-2012 when tariffs materially increased in exchange for capex
on the Valdastico Sud. Nonetheless, tariff suspensions or cap in
recent years indicate some political interference. However, the
regulatory framework appears to allow ABVP to ultimately recover
the tariff shortfall.

Ambitious Capex Plan - Infrastructure Development and Renewal:
Midrange

The company faces an ambitious and largely debt funded capex
programme of around EUR2.5 billion until 2026, including the
Valdastico Nord, a greenfield project covering the north-east of
Italy in ABVP's network. The final design and location of a section
of this project is still under discussion and exposed to cost
increase. The concession framework provides comfort as higher than
expected capex would ultimately increase the TV paid at concession
maturity. Furthermore, ABVP's experience in delivering investments
on its network and the grantor's extensive oversight in the tender
and execution phase of Valdastico Nord mitigate the execution
risk.

Unusual Debt Structure - Debt Structure: Weaker

The rated bond is senior secured, bullet and fixed-rate. Caps on
distribution and lock-up covenants are protective features as are
the broad set of ring-fencing provisions included in the concession
agreement.

ABVP will remain cash flow-negative post interest payment until the
end of the concession due to high capex requirements. New lenders
considering refinancing the bond in 2020 will therefore rely on the
TV payment at concession maturity. A delay in the receipt of the TV
payment would mechanically delay the reimbursement of that loan and
ABVP would continue to run the concession. This would incentivise
lenders to roll over their debt until the TV is paid. However, in
Fitch's view, the uncertainty around banks' and the capital
market's appetite for financing this type of transaction structure
leaves bondholders exposed to refinancing risk.

Financial Profile

The minimum PLCR under the updated FRC is 1.2x and the TV/net debt
remains largely above 1.2x over the concession period, ensuring
adequate coverage of the outstanding debt. PLCR and TV/net debt are
relevant as a large part of debt raised will be reimbursed through
the TV payment.

PEER GROUP

ABVP is not directly comparable with any peer. Its transaction
structure is fully based on the TV payment at concession maturity
rather than the usual path of debt-funded capex and subsequent debt
repayment by free cash flow available by concession maturity.

RATING SENSITIVITIES

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

  - Failure to fully prefund its bullet debt - with committed bank
lines and/or available cash - by YE19 at the latest could be credit
negative. Itwill continue to monitor the pace of FCF generation in
2019 and it may react if the available cash fails to progress as
expected.

  - Minimum PLCR breaching 1.1x or minimum TV/net debt below 1.2x
under the FRC would put pressure on the rating.

  - Adverse changes to the regulatory framework or the TV scheme or
material cost overruns on the Valdastico Nord project not being
recognised in TV could also be rating-negative.

Fitch views the grantor's obligation to pay the TV as subordinated
to Italy's financial obligations and ABVP's issue rating would be
negatively affected if Italy's rating was downgraded by more than
one notch unless there was clear evidence that the bond is fully
pre-funded.

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

  - A substantially higher than expected minimum PLCR or minimum
TV/net debt would be rating positive but unlikely to trigger an
upgrade until there is clear evidence of the refinancing process.


CREDIT UPDATE

Performance Update

In 2018, traffic growth stabilised at +1.3% from the previous year,
down from +3.2% growth a year before. This reflected weakening in
consumption and industrial production in Italy feeding into
flattish traffic growth in 2H18.

The grantor froze 2019 tariffs due to the alleged breach of the
concessionaire's ordinary maintenance schedule in 2016, which
appears to be largely attributable to the lengthy tendering
processes under public procurement process.

Regulatory Framework

The 2013-2017 BP has been agreed and signed among parties, but not
formally approved as the ratification from Corte dei Conti (Italian
court of accounts) is still pending. The agreed level of WACC
should be aligned with its expectations last year but uncertainties
remain. Discussions with the grantor on the approval of the
2018-2022 regulatory BP are ongoing and there is no visibility on
the timing of approval.

Valdastico Nord

The project has recently experienced further delay, as the grantor
is eager to have higher visibility on the overall project,
including in particular the section ending in Trentino, which is
the most contentious section. Fitch also notices a recent ruling
from the Italian Consiglio di Stato, which overturned a government
decision in 2013 on the Valdastico project and which could further
delay the overall project roll-out.

These delays are positive for the rated debt in the context of the
enhanced cash flow generation before bond maturity in 2020.

RCF

In 2019 ABVP plans to raise a term loan, which combined with
available liquidity should be sufficient to repay in full the
outstanding EUR400 million single bullet bond due in March 2020.
Simultaneously, management has prudently entered into a EUR100
million RCF due 2022 with a leading Italian bank. The RCF is
intended to be used as a back-up option, should the market not
being supportive of a refinancing transaction. Available cash at
December 2018 was around EUR200 million.

The terms and conditions of the RCF are aligned with the existing
bond documents, except for the event of default in case of a
concession event. An early termination of the concession would not
trigger the bond acceleration, which is related to cessation of
business, but would accelerate the RCF with a potential knock-on
effect on the rated bond due to the presence of the cross-default
clause. Nonetheless, in Fitch's view, this scenario is unlikely and
extreme. Should this happen, Fitch also believes that the presence
of strong sponsors like Abertis Infraestructuras, S.A. (Abertis;
BBB/Stable) and Atlantia could bring a soft qualitative support to
the issuer and its refinancing process.

Fitch Cases

The Fitch base case (FBC) assumes traffic growth will stabilise at
1.3% on average until 2022. Fitch expects +1.7% yoy growth in
tariff. Compared with the sponsor's case, the FBC also includes
more conservative assumptions on capex and the cost of the bond's
refinancing facility. Projected minimum PLCR and TV/net debt are
1.3x.

The FRC takes a more prudent stance on tariff increase, capex and
long-term WACC, resulting in minimum PLCR and TV/net debt of 1.2x.

The breakeven and sensitivities are robust. The interest rate would
have to climb to 14.0% before the PLCR reaches 1.0x.

Ownership

ABVP is 90% owned by Abertis. Fitch analyses ABVP on a standalone
basis, but it believes that Abertis' and Atlantia's indirect
ownership of ABVP brings extensive operational expertise in cost
control and capex execution while also being a soft qualitative
support in the refinancing phase of ABVP's rated debt.

Asset Description

ABVP is a pure toll road operator managing a small network of 235km
under a single concession maturing in 2026.




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

PRINCESS JULIANA: Moody's Cuts Rating on USD142.6MM Notes to Ba2
----------------------------------------------------------------
Moody's Investors Service downgraded to Ba2 from Ba1 the rating of
the USD142.6 million (approximate original issuance amount) Senior
Secured Notes issued by Princess Juliana International Airport
Operating Company N.V. due in 2027. Moody's also maintained the
negative outlook on the rating.

Downgrades:

Issuer: Princess Juliana Intl Airport Op Company N.V.

Senior Secured Regular Bond/Debenture due 2027, Downgraded to Ba2
from Ba1

Outlook Actions:

Issuer: Princess Juliana Intl Airport Op Company N.V.

Outlook, Remains Negative

RATINGS RATIONALE

The rating downgrade reflects its lowering of PJIA's Baseline
Credit Assessment (BCA), a measure of the airport's standalone
credit quality, to b3 from b1. The Ba2 rating continues to
incorporate PJIA's status as a Government Related Issuer with its
assessment of "High" default dependence and "Strong" likelihood of
extraordinary support from the Government of St. Maarten (Baa2
negative), the sole owner of PJIA.

The BCA change reflects the tight liquidity conditions that PJIA
continues to face as evidenced by the reliance on the Debt Service
Reserve Account for the most recent coupon payment last December.
Moody's notes the gradual progress that PJIA has registered in
improving its overall operating conditions as measured by
enplanement growth which as of December 2018 reached approximately
61,400, a 133% increase compared to December 2017. That ongoing
progress leads us to expect that Airport Departure Fees will be
sufficient to ensure the continuous debt service payments in the
coming quarters. According to PJIA's projections, Airport Departure
Fees (ADF) are expected to reach approximately $24 million in 2019
compared to debt service payments of roughly $14 million. Under
Moody's Base Case Scenario, which considers a 10% revenue haircut,
ADF will be close to $22 million. However, debt service payments
will leave PJIA with limited space to cover operating costs which
Moody's estimates at around $37 million in 2019. As a result, PJIA
will very likely require support from St. Maarten to cover its
operating expenses. PJIA expects to receive up to $20 million of
"Emergency Financing" from the Government of St. Maarten during the
first quarter of 2019, of which $5 million have already been
transferred and used to replenish the Debt Service Reserve Account.
These transfers will help PJIA cover operating expenses and
alleviate short term liquidity needs. St. Maarten's willingness to
support PJIA backs its "Strong" support assumption under its
Government Related Issuer framework.

The negative rating outlook reflects its expectation of a slow,
gradual traffic recovery and very weak financial position in the
near term that will likely continue to require cash financing from
the Government of St. Maarten.

WHAT COULD CHANGE THE RATING UP/DOWN

Given the negative outlook, a rating upgrade in the near term is
unlikely. A sustained resumption of PJIA's commercial operations
leading to better financial and liquidity positions could lead to
the stabilization of the rating. In addition, the stabilization of
the rating would require its assessment of a "Strong" support
assumption from the Government of St. Maarten.

A downgrade would result from slower than expected enplanement
recovery, leading to further deterioration of PJIA's financial and
liquidity standing or from a reduced willingness or capacity from
the Government of St. Maarten to support PJIA.

The methodologies used in this rating were Privately Managed
Airports and Related Issuers published in September 2017, and
Government-Related Issuers published in June 2018.




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

MOSCOW OBLAST: Moody's Raises LT Issuer Rating to Ba1
-----------------------------------------------------
Moody's Investors Service has upgraded the ratings of 12 regional
governments (RLGs) in Russia and two government-related issuers
(GRIs). At the same time, Moody's affirmed the ratings of four
other RLGs. Following these rating actions, the long-term issuer
rating of Oblast of Moscow carries a positive outlook while
long-term ratings of all other affected RLGs and GRIs carry stable
outlooks.

The upgrades reflect the easing in systemic pressures following the
upgrade of Russia's sovereign rating to Baa3 from Ba1 on 8 February
2019, as well as idiosyncratic credit improvements. The
affirmations reflect persistent idiosyncratic credit challenges
which limit upside rating potential.

Moody's upgraded the following 12 RLGs by one notch: Moscow, City
of (upgraded to Baa3 from Ba1), St. Petersburg, City of (upgraded
to Baa3 from Ba1), Moscow, Oblast of (upgraded to Ba1 from Ba2),
Bashkortostan, Republic of (upgraded to Ba1 from Ba2), Tatarstan,
Republic of (upgraded to Ba1 from Ba2), Khanty-Mansiysk AO
(upgraded to Ba1 from Ba2), Samara, Oblast of (upgraded to Ba2 from
Ba3), Chuvashia, Republic of (upgraded to Ba2 from Ba3), Krasnodar,
Krai of (upgraded to Ba3 from B1), Krasnoyarsk, Krai of (upgraded
to Ba3 from B1), Komi, Republic of (upgraded to Ba3 from B1) and
Nizhniy Novgorod, Oblast (upgraded to Ba3 from B1).

Moody's upgraded the following two GRIs by one notch: SUE Vodokanal
of St. Petersburg (upgraded to Ba1 from Ba2) and OJSC Western
High-Speed Diameter (upgraded to Ba2 from Ba3).

Conversely, Moody's affirmed the following four RLGs: Omsk, Oblast
of (Ba3), Omsk, City of (B1), Krasnodar, City of (B1), and
Volgograd, City of (B2).


RATINGS RATIONALE

  -- RATIONALE FOR UPGRADE OF 12 RLGs AND TWO GRIs

The one-notch upgrade of the issuer ratings of the 12
abovementioned RLGs reflects the easing in systemic pressures
following the upgrade of Russia's sovereign rating to Baa3 from Ba1
as well as idiosyncratic credit improvements.

The revenues of these RLGs have grown strongly in the last two
years, mainly driven by modest real GDP growth in 2017-18 and
favorable commodity prices in Russian rubles, which have lifted the
profits of Russia's largest taxpayers and fueled regional budgets
with higher profit tax contributions. Improvements in tax
administration also helped to increase revenue from existing
sources and expand the tax base. Together with tighter cost
controls, higher revenues have improved regions' operating
performances in the last two years and provide greater financial
flexibility for 2019-2021.

Moreover, the Russian government's program for refinancing market
debt with cheap budget loans reduced many regions' refinancing
risks. At the same time, strict controls over regions' debt levels
have also helped to decrease leverage over the last two years and
provide better long-term visibility over regions' future debt
policies, mitigating refinancing risks.

Furthermore, despite periodic market turbulence, overall debt
affordability has improved compared to 2015-16, supported by
ongoing lending from banks, sporadic access to the local capital
market and, although recently increasing, the historically low
interest rate environment.

The upgrade of the two GRIs -- SUE Vodokanal of St. Petersburg and
OJSC Western High-Speed Diameter -- reflects their status as GRIs
fully owned by the City of St. Petersburg and their strong credit
linkages with the city. OJSC Western High-Speed Diameter also
benefits from a guarantee on its debt principal payments from the
Russian government.

  -- RATIONALE FOR AFFIRMATION OF FOUR RLGs

The affirmation of the Ba3 issuer ratings of the Oblast of Omsk
with a stable outlook reflects its weak operating performance and
significant refinancing risks which are unlikely to improve in
2019-2020 given the subdued growth of the regional economy. Moody's
estimates the region's gross operating balance will remain modest
at around 3%-5% of operating revenues in 2019-2020. At the same
time, its leveraged financial profile and a high share of
short-term debt will continue to constrain the region's credit
profile. Modest operating performances and a consistent need for
market access for debt refinancing mean the Oblast of Omsk is more
vulnerable than higher-rated Russian regions to an ongoing supply
of credit and possible adverse economic scenarios.

The affirmation of the B1 issuer ratings of the City of Omsk
reflects its strong linkages with the Oblast of Omsk given that it
is reliant on transfers to service its debt. Moody's expects these
transfers to remain at around 50% of the city's total revenues in
2019-2020. At the same time, the city has operated with a small
negative gross operating balance as a percentage of operating
revenue in recent years. While this should marginally improve in
the next two years, the city's operating performance will remain
weaker than the Oblast's for the foreseeable future, making it more
vulnerable to economic shocks.

The affirmation of the B1 issuer ratings of the City of Krasnodar
reflects the fact that unlike the Krai, that improved its operating
performance in the last two years, the city continues to operate
with a negative gross operating balance of around -1% of operating
revenue. The city is also reliant on transfers from the Krai of
Krasnodar's to generate revenue (50% of revenue over the last three
years) and service its debts. This relative credit weaknesses
compared to the Krai explain the one-notch differential.

The affirmation of the B2 issuer ratings of the City of Volgograd
reflects the city's very high debt burden and significant near-term
refinancing pressure. Its net direct and indirect debt relative to
own-source revenue remains the highest among Moody's Russian rated
RLGs and is estimated at around 1.3x in 2018. Moreover, absent any
external assistance, Moody's does not expect the city's fiscal
performance to improve going forward. These negative credit
pressures substantially outweigh the positives related to the
sovereign upgrade and constrain the issuer ratings at B2.

  -- OUTLOOKS

The stable outlook for 17 of the affected issuers is aligned with
the stable outlook on the Russian sovereign ratings and reflect
Moody's expectations of no substantial changes in the RLGs'
idiosyncratic risk factors in 2019-2020.

The positive outlook assigned to Oblast of Moscow reflects Moody's
expectations that the dynamic local economy, fueled by the rapidly
growing population and investments into real sectors of the
economy, will support growth of the region's revenue and will lift
the region's wealth compared to the Russian average. At the same
time, healthy gross operating balance will support capital
investments to address demographic and social challenges without
incurring additional leverage. These trends should increase the
region's budget flexibility and help diversify the region's revenue
sources.

  -- WHAT COULD CHANGE THE RATINGS UP/DOWN

Another upgrade in the sovereign rating could exert upward credit
pressure on Russian RLG and GRI ratings provided their budget
performances do not deteriorate. For the Oblast of Moscow, upward
credit pressure could also arise if it is able to sustain
improvements in its financial performances and debt metrics.

Given the recent upgrade and stable outlooks, negative credit
pressures are unlikely to develop for the RLGs and GRIs covered in
Moody's rating action. At the same time, any unexpected
deterioration in the credit metrics of sub-sovereigns, i.e.
unexpected revenue declines or more generous expenditures resulting
into growing debt burdens, could exert downward pressure on their
ratings or outlooks.

The sovereign action required the publication of this credit rating
action on a date that deviates from the previously scheduled
release date in the sovereign release calendar.

The specific economic indicators, as required by EU regulation, are
not available for these entities. The following national economic
indicators are relevant to the sovereign rating, which was used as
an input to this credit rating action.

Sovereign Issuer: Russia, Government of

GDP per capita (PPP basis, US$): 27,893 (2017 Actual) (also known
as Per Capita Income)

Real GDP growth (% change): 1.6% (2017 Actual) (also known as GDP
Growth)

Inflation Rate (CPI, % change Dec/Dec): 2.5% (2017 Actual)

Gen. Gov. Financial Balance/GDP: -1.5% (2017 Actual) (also known as
Fiscal Balance)

Current Account Balance/GDP: 2.1% (2017 Actual) (also known as
External Balance)

External debt/GDP: 32.8% (2017 Actual)

Level of economic development: Moderate level of economic
resilience

Default history: At least one default event (on bonds and/or loans)
has been recorded since 1983.

SUMMARY OF MINUTES FROM RATING COMMITTEE

On February 7, 2019, a rating committee was called to discuss the
rating of the Bashkortostan, Republic of; Chuvashia, Republic of;
Khanty-Mansiysk AO; Komi, Republic of; Krasnodar, City of;
Krasnodar, Krai of; Krasnoyarsk, Krai of; Moscow, City of; Moscow,
Oblast of; Nizhniy Novgorod, Oblast; OJSC Western High-Speed
Diameter; Omsk, City of; Omsk, Oblast of; SUE Vodokanal of St.
Petersburg; Samara, Oblast of; St. Petersburg, City of; Tatarstan,
Republic of; Volgograd, City of. The main points raised during the
discussion were: The systemic risk in which the issuer operates has
materially decreased. Improvements in idiosyncratic factors for
some entities.

The principal methodology used in rating Moscow, City of, St.
Petersburg, City of, Bashkortostan, Republic of, Tatarstan,
Republic of, Khanty-Mansiysk AO, Moscow, Oblast of, Samara, Oblast
of, Chuvashia, Republic of, Krasnodar, City of, Krasnodar, Krai of,
Nizhniy Novgorod, Oblast, Omsk, Oblast of, Komi, Republic of,
Volgograd, City of, Krasnoyarsk, Krai of and Omsk, City of was
Regional and Local Governments published in January 2018. The
principal methodology used in rating SUE Vodokanal of St.
Petersburg and OJSC Western High-Speed Diameter was
Government-Related Issuers published in June 2018.

The weighting of all rating factors is described in the methodology
used in this credit rating action, if applicable.

  -- RATINGS AFFECTED

Upgrades:

  - Issuer: Bashkortostan, Republic of

LT Issuer Rating, Upgraded to Ba1 from Ba2

  - Issuer: Chuvashia, Republic of

LT Issuer Rating, Upgraded to Ba2 from Ba3

  - Issuer: Khanty-Mansiysk AO

LT Issuer Rating, Upgraded to Ba1 from Ba2

  - Issuer: Komi, Republic of

LT Issuer Rating, Upgraded to Ba3 from B1

  - Issuer: Krasnodar, Krai of

LT Issuer Rating, Upgraded to Ba3 from B1

  - Issuer: Krasnoyarsk, Krai of

LT Issuer Rating, Upgraded to Ba3 from B1

  - Issuer: Moscow, City of

LT Issuer Rating, Upgraded to Baa3 from Ba1

  - Issuer: Moscow, Oblast of

LT Issuer Rating, Upgraded to Ba1 from Ba2

  - Issuer: Nizhniy Novgorod, Oblast

LT Issuer Rating, Upgraded to Ba3 from B1

  - Issuer: Samara, Oblast of

LT Issuer Rating, Upgraded to Ba2 from Ba3

Senior Unsecured Regular Bond/Debenture, Upgraded to Ba2 from Ba3

  - Issuer: St. Petersburg, City of

LT Issuer Rating, Upgraded to Baa3 from Ba1

  - Issuer: Tatarstan, Republic of

LT Issuer Rating, Upgraded to Ba1 from Ba2

  - Issuer: OJSC Western High-Speed Diameter

Backed Senior Unsecured Regular Bond/Debenture, Upgraded to Ba2
from Ba3

  - Issuer: SUE Vodokanal of St. Petersburg

T Issuer Rating, Upgraded to Ba1 from Ba2

Affirmations:

  - Issuer: Krasnodar, City of

LT Issuer Rating, Affirmed B1

  - Issuer: Omsk, City of

LT Issuer Rating, Affirmed B1

  - Issuer: Omsk, Oblast of

LT Issuer Rating, Affirmed Ba3

  - Issuer: Volgograd, City of

LT Issuer Rating, Affirmed B2

Outlook Actions:

  - Issuer: Omsk, City of

Outlook, Remains Stable

  - Issuer: Omsk, Oblast of

Outlook, Remains Stable

  - Issuer: Samara, Oblast of

Outlook, Changed To Stable From Positive

  - Issuer: St. Petersburg, City of

Outlook, Changed To Stable From Positive

  - Issuer: Tatarstan, Republic of

Outlook, Changed To Stable From Positive

  - Issuer: Volgograd, City of

Outlook, Remains Stable

  - Issuer: OJSC Western High-Speed Diameter

Outlook, Changed To Stable From Positive

  - Issuer: SUE Vodokanal of St. Petersburg

Outlook, Changed To Stable From Positive

  - Issuer: Bashkortostan, Republic of

Outlook, Changed To Stable From Positive

  - Issuer: Chuvashia, Republic of

Outlook, Changed To Stable From Positive

  - Issuer: Khanty-Mansiysk AO

Outlook, Changed To Stable From Positive

  - Issuer: Komi, Republic of

Outlook, Changed To Stable From Positive

  - Issuer: Krasnodar, City of

Outlook, Remains Stable

  - Issuer: Krasnodar, Krai of

Outlook, Changed To Stable From Positive

  - Issuer: Krasnoyarsk, Krai of

Outlook, Changed To Stable From Positive

  - Issuer: Moscow, City of

Outlook, Changed To Stable From Positive

  - Issuer: Moscow, Oblast of

Outlook, Remains Positive

  - Issuer: Nizhniy Novgorod, Oblast

Outlook, Changed To Stable From Positive


STATE TRANSPORT: Moody's Raises CFR to Ba1, Outlook Stable
----------------------------------------------------------
Moody's Investors Service has upgraded the corporate family rating
(CFR) of Russia-based State Transport Leasing Company PJSC (STLC)
to Ba1 from Ba2. At the same time, Moody's has upgraded the foreign
currency backed senior unsecured debt rating of GTLK Europe DAC (an
Ireland-based wholly-owned subsidiary of STLC) to Ba2 from Ba3. The
issuer outlooks for STLC and GTLK Europe DAC were changed to stable
from positive.

The rating action follows Moody's upgrade of Russia's sovereign
debt rating to Baa3 from Ba1 on February 8, 2019.

Moody's has also withdrawn the existing outlooks on STLC's CFR and
GTLK Europe DAC's backed senior unsecured debt rating for its own
business reasons.

RATINGS RATIONALE

The upgrade of Russia's sovereign rating to Baa3 from Ba1 led
Moody's to upgrade the CFR of STLC. The rating agency considers
that STLC benefits from the enhanced creditworthiness of Russian
government given its systemic importance, government ownership and
role in discharging public policy.

As a result, STLC's CFR incorporates a high likelihood of
government support, resulting in four notches of rating uplift from
its standalone assessment of b2. Moody's support assumptions
reflect (1) STLC's 100% government ownership and operational
control via the Ministry of Transport and 2) the company's special
policy role as a government agent to facilitate the development of
the transport sector in Russia. As a result, Moody's believes the
Russian government has a strong incentive to support STLC, should
the need arise.

STLC's b2 standalone assessment incorporates the company's (1)
leading market franchise in Russia with solid and strengthening
competitive position in aviation, railroad and water transportation
sectors; (2) good quality of its lease portfolio which is almost
equally split between finance and operating leases (3) ample
capitalization supported by government capital injections with
tangible common equity (TCE) to tangible managed assets (TMA) of
around 14% at end-September 2018. These strengths are balanced
against: (1) risks related to the company's rapid growth in recent
years, which Moody's expects will continue albeit at a slower pace;
(2) fast liquidity consumption because of the rapid growth, thereby
increasing funding needs; (3) concentrated lease portfolio (4)
historically modest profitability which along with increasing
borrowings results in high leverage, measured as Debt/EBITDA.

For the first nine months of 2018, STLC reported net income of
RUB523 million up from a net loss of RUB1.6 billion reported for
9M2017. STLC's profitability has historically been modest and is
not a key performance indicator for the company, given its policy
role.

The upgrade of GTLK Europe DAC's backed senior unsecured debt
rating to Ba2 from Ba3 is driven by the upgrade of STLC's CFR to
Ba1 and reflects the application of Moody's Loss Given Default for
Speculative-Grade Companies and the structural subordination of
unsecured obligations to STLC's substantial amount of secured
debt.

WHAT COULD CHANGE THE RATINGS UP/DOWN

A positive rating action is unlikely over the next 12-18 months.
However, in the longer term, the company's ratings could be
upgraded following a material improvement of the country's
macroeconomic environment, combined with a material improvement in
the company's profitability and strengthening its liquidity
profile. The backed senior unsecured debt rating could be upgraded
if the CFR is upgraded or due to a positive change to STLC's debt
capital structure that would increase the recovery rate for senior
unsecured debt classes.

STLC's CFR could be downgraded as a result of 1) negative action on
the sovereign ratings or Moody's perception of a reduced
probability of government support for the company; 2) as a result
of material deterioration in the company's standalone assessment if
its rapid expansion results in a material weakening of its asset
quality and/or capitalisation metrics and increased reliance on
extraordinary capital or liquidity support from the government. The
backed senior unsecured debt rating could be downgraded if the CFR
is downgraded.

LIST OF AFFECTED RATINGS

Issuer: State Transport Leasing Company PJSC

Upgrades:

  - Long-term Corporate Family Rating, upgraded to Ba1 from Ba2,
previously Positive debt level outlook withdrawn

Outlook Action:

  - Outlook changed to Stable from Positive

Issuer: GTLK Europe DAC

Upgrades:

  - Backed Senior Unsecured Regular Bond/Debenture, upgraded to Ba2
from Ba3, previously Positive debt level outlook withdrawn

Outlook Action:

  - Outlook changed to Stable from Positive

The principal methodologies used in rating State Transport Leasing
Company PJSC were Finance Companies published in December 2018, and
Government-Related Issuers published in June 2018. The principal
methodology used in rating GTLK Europe DAC was Finance Companies
published in December 2018.




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

GAT ICO-FTVPO 1: Moody's Cuts Class D(CT) Notes Rating to Caa3
--------------------------------------------------------------
Moody's Investors Service has upgraded the ratings of two Notes and
downgraded the ratings of two Notes in GAT ICO-FTVPO 1, FTH, a
Spanish RMBS deal.

The upgrade rating action reflects:

  - Better than expected collateral performance

  - The increased levels of credit enhancement for the affected
Notes.

The downgrade rating action reflects:

  - Deterioration in the levels of credit enhancement for Class
C(CP), and higher losses expected in Class D(CT).

Moody's has also affirmed the ratings of nine Notes that had
sufficient credit enhancement to maintain current rating on the
affected Notes.

RATINGS RATIONALE

The upgrades are prompted by:

  - Decreased key collateral assumptions, namely the portfolio
Expected Loss (EL) assumptions due to better than expected
collateral performance of two sub-portfolios, Caixa Manresa and
Caixa Terrassa.

  - Deal deleveraging resulting in an increase in credit
enhancement for the affected tranches; credit enhancement for the
Class C(CM) has increased to 10.0%, as of December 2018, from 8.9%
as of June 2018, and for Class C(CT) it has increased to 15.4% from
13.1% during the same period.

The downgrades are prompted by:

  - Deterioration in the level of available credit enhancement, at
6.2% as of December 2018 from 11.2% in June 2018, for the Class
C(CP) due to the amortization of the cash reserve backing the Caixa
Penedes pool following temporary cure of the default trigger for
this pool during September's payment date.

  - Expectation of higher losses for the Class D(CT), which already
reached approximately 25% of its original balance.

The default trigger to stop amortization of the cash reserves is
currently hit in all sub-portfolios. However, there is uncertainty
if the trigger can revert as reperforming loans can be excluded
from the total amount of defaults in each sub-portfolio. This
situation increases the uncertainty for a cash reserve release down
to the floor levels in Caixa Manresa and Caixa Terrassa.

Revision of Key Collateral Assumptions:

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

Moody's has decreased the EL assumptions for the combined portfolio
of GAT ICO-FTVPO 1, FTH and two of its sub-portfolios from Caixa
Manresa, and Caixa Terrassa at 1.2%, 1.2%, 1.5% respectively, due
to the improving performance; whilst it has maintained the EL
assumptions of its other two sub-portfolios from Caixa Catalunya,
and Caixa Penedes.

Moody's has maintained all the MILAN CE assumptions for the
combined portfolio of GAT ICO-FTVPO 1, FTH and its four
sub-portfolios for Caixa Catalunya, Caixa Manresa, Caixa Penedes
and Caixa Terrassa.

Principal Methodology

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

The Credit Ratings for GAT ICO-FTVPO 1, FTH were assigned in
accordance with Moody's existing Methodology entitled "Moody's
Approach to Rating RMBS Using the MILAN Framework" dated 11th
September 2017. Please note that on November 14, 2018, Moody's
released a Request for Comment, in which it has requested market
feedback on potential revisions to its Methodology for RMBS. If the
revised Methodology is implemented as proposed, the Credit Ratings
for GAT ICO-FTVPO 1, FTH are not expected to be affected.

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

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

Factors or circumstances that could lead to an upgrade of the
ratings include: (i) a decrease in sovereign risk; (ii) performance
of the underlying collateral that is better than Moody's expected;
(iii) deleveraging of the capital structure; and (iv) improvements
in the credit quality of the transaction counterparties.

Factors or circumstances that could lead to a downgrade of the
ratings include: (i) an increase in sovereign risk; (ii)
performance of the underlying collateral that is worse than Moody's
expected; (iii) deterioration in the Notes' available credit
enhancement; and (iv) deterioration in the credit quality of the
transaction counterparties.

LIST OF AFFECTED RATINGS

Issuer: GAT ICO-FTVPO 1, FTH

  - EUR 331.6M Class A(G) Notes, Affirmed Aa1 (sf); previously on
Jul 16, 2018 Affirmed Aa1 (sf)

  - EUR 3.3M Class B (CM) Notes, Affirmed Aa1 (sf); previously on
Jul 16, 2018 Affirmed Aa1 (sf)

  - EUR 9.8M Class B(CA) Notes, Affirmed Aa1 (sf); previously on
Jul 16, 2018 Affirmed Aa1 (sf)

  - EUR 2.7M Class B(CP) Notes, Affirmed Aa1 (sf); previously on
Jul 16, 2018 Upgraded to Aa1 (sf)

  - EUR 2.0M Class B(CT) Notes, Affirmed Aa1 (sf); previously on
Jul 16, 2018 Upgraded to Aa1 (sf)

  - EUR 3.2M Class C(CA) Notes, Affirmed A3 (sf); previously on Jul
16, 2018 Affirmed A3 (sf)

  - EUR 2.3M Class C(CM) Notes, Upgraded to A1 (sf); previously on
Jul 16, 2018 Affirmed Baa1 (sf)

  - EUR 1.5M Class C(CP) Notes, Downgraded to Baa1 (sf); previously
on Jul 16, 2018 Upgraded to A1 (sf)

  - EUR 1.5M Class C(CT) Notes, Upgraded to Aa1 (sf); previously on
Jul 16, 2018 Upgraded to A1 (sf)

  - EUR 6.1M Class D(CA) Notes, Affirmed Caa3 (sf); previously on
Jul 16, 2018 Affirmed Caa3 (sf)

  - EUR 2.5M Class D(CM) Notes, Affirmed Caa3 (sf); previously on
Jul 16, 2018 Affirmed Caa3 (sf)

  - EUR 1.6M Class D(CP) Notes, Affirmed Caa3 (sf); previously on
Jul 16, 2018 Affirmed Caa3 (sf)

  - EUR 1.4M Class D(CT) Notes, Downgraded to Caa3 (sf); previously
on Jul 16, 2018 Affirmed Caa2 (sf)


THINK SMART: Madrid Court Declares Insolvency Proceedings
---------------------------------------------------------
Reuters reports that Think Smart SA on Feb. 12 said the commercial
court in Madrid declared insolvency proceedings of the company.

According to Reuters, the court named Quabbala Abogados y
Economistas s.l.p. as trustee in the company's insolvency.



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

ADIENT GLOBAL: Moody's Affirms B2 CFR, Outlook Remains Negative
---------------------------------------------------------------
Moody's Investors Service upgraded Adient Global Holdings Ltd's
("Adient") Speculative Grade Liquidity Rating to SGL-3 from SGL-4.
In a related action Moody's affirmed Adient's Corporate Family
Rating (CFR) and Probability of Default Rating at B2, and B2-PD,
respectively, Adient's senior secured ratings at Ba2, and senior
unsecured ratings at B3. The rating outlook remains negative.

Moody's took the following rating actions on Adient Global Holdings
Ltd:

The following rating was upgraded:

Speculative Grade Liquidity Rating: to SGL-3 from SGL-4.

The following ratings were affirmed:

Corporate Family Rating, at B2;

Probability of Default, at B2-PD;

$1.5 billion senior secured revolving credit facility due 2021, at
Ba2 (LGD2);

$1.2 billion (remaining amount) senior secured term loan facility
due 2021, at Ba2 (LGD2);

Euro dollar guaranteed senior unsecured notes due 2024, at B3
(LGD4);

U.S. dollar guaranteed senior unsecured notes due 2026, at B3
(LGD4).

Rating Outlook: Negative

RATINGS RATIONALE

The upgrade of Adient's Speculative Grade Liquidity Rating to SGL-3
reflects the recent amendment to the financial maintenance
covenants under the company's senior secured credit facilities to
provide additional covenant cushion that supports operating
flexibility over the next 12-15 months. The additional flexibility
is credit positive, but Moody's affirmed the B2 CFR because
continued operating performance deterioration and broad management
changes reflect cost and launch execution challenges that will take
time and significant effort to overcome, leading to sustained
weaker credit metrics and negative free cash flow beyond fiscal
2019.

The B2 CFR reflects Adient's position as a leading global supplier
of automotive seating and related components, but also its high
leverage and cyclical end market demand. The company maintains
strong regional and customer diversification, longstanding customer
relationships, and benefits from realized earnings from
unconsolidated affiliates. Over the past several quarters Adient's
growth in new platform launches combined with related additional
complexities has driven high levels of excess costs. While these
excess costs have supported the timely delivery of automotive
manufacturer customer requirements, Adient's profitability has
suffered. Adient's new CEO appears to have taken hold of the
operational and product pricing issues, identified areas of
required improvement, and has replaced a significant number of
leadership positions. Yet, certain operational challenges in fiscal
2018 are continuing into fiscal 2019, as the company continues to
execute high levels of new product launches. Moody's estimates that
Adient's debt/EBITDA in fiscal 2019 will remain well over 5x while
EBITA/interest will remain under 2x. The ratings nevertheless
reflect Moody's view that the operating problems are fixable and
that Adient has the capability to improve credit metrics and
restore positive free cash flow by fiscal 2021.

Adient will need to demonstrate a recovery of its operating
performance by mid-fiscal 2020 to reduce refinancing risk. This
time frame is pressured by the July 2021 maturity of Adient's
senior secured credit facilities, which become a current liability
in July 2020. Adient has previously announced its intention to
proactively address its capital structure to something more
supportive of additional flexibility over the long-term.

The negative rating outlook continues to reflect the challenges to
quickly restoring margins to competitive levels and uncertainty
over the timing of Adient's operational recovery following the
company's recent string of guidance misses.

Adient's SGL-3 Speculative Grade Liquidity Rating is supported by
availability under the $1.5 billion revolving credit facility, and
the additional covenant cushion provided under the recent bank
credit facility amendment. Moody's continues to believe that
Adient's negative cash flow generation will further deteriorate to
about 10% of adjusted debt over the next 12 months as the company
manages through operational difficulties and global automotive
industry conditions soften. Cash on hand at December 31, 2018 was
$406 million, reflecting seasonal cash draws typical in the
automotive industry. The revolving credit facility was undrawn at
December 31, 2018. There are no meaningful debt maturities until
2021.

Adient's EUR200 million accounts receivable transfer and servicing
arrangement had $142 million of usage under the program as of
December 31, 2018. While not expected, if the company is unable to
maintain and extend these receivable programs, additional
borrowings under the revolving credit facility would be required to
meet liquidity needs.

The ratings could be downgraded with the expectation of material
deterioration of automotive demand, the loss of or meaningful
decline in volume from a major customer, or if the company is
unable to demonstrate progress improving operating performance over
the next 12 months. A deterioration in liquidity or if Moody's
expects weak free cash flow performance to worsen could also lead
to a downgrade.

An upgrade is unlikely over the next 12 months. However, the
ratings could be upgraded if the company demonstrates improved
operating performance that leads to an expectation of positive free
cash flow generation and a reduction in debt-to-EBITDA below 5x
(excluding consideration for equity income from joint ventures). A
revision to the company's capital structure that addresses the 2021
senior secured debt maturities which provides longer-term financial
flexibility as the company executes its turnaround could contribute
to a stable outlook if there is progress improving margins.

The principal methodology used in these ratings was Global
Automotive Supplier Industry published in June 2016.

Adient plc, the publicly-traded parent of Adient Global Holdings
Ltd, is one of the world's largest automotive seating suppliers
with a leading market position in the Americas, Europe and China,
and has longstanding relationships with the largest global original
equipment manufacturers (OEMs) in the automotive space. Adient's
automotive seating solutions include complete seating systems,
frames, mechanisms, foam, head restraints, armrests, trim covers
and fabrics. Adient also participates in the automotive seating and
interiors market through its joint ventures in China. Revenues for
the fiscal year ended September 2018 were approximately $17.4
billion


FLYBE GROUP: Biggest Shareholder Expresses Concern Over Sale
------------------------------------------------------------
Oliver Gill at The Telegraph reports that Flybe's biggest
shareholder raised concerns about the airline's sale several weeks
before a consortium led by Virgin Atlantic swooped in with a
one-penny-a-share rescue deal.

According to The Telegraph, London investment firm Hosking Partners
expressed concern to investment bankers running the sale process
that suitors were communicating with one another in mid-December.

Connect Airways, a consortium of the Sir Richard Branson-backed
airline, Southend Airport owner Stobart and US private equity firm
Cyrus Capital, shocked investors on Jan. 11 by offering just GBP2.2
million to buy Flybe, The Telegraph relates.

Shares in the London-listed airline had been worth between GBP35
million to GBP40 million prior to Connect's bid, The Telegraph
notes.

INTESERVE PLC: Farringdon Capital Opposes Debt-for-Equity Swap
--------------------------------------------------------------
Jack Torrance at The Telegraph reports that Interserve bosses face
an uphill struggle to win approval for its proposed GBP480 million
rescue deal after a second major shareholder came out against it.

According to The Telegraph, Dutch hedge fund Farringdon Capital
Management, which holds a 6.2% stake in the ailing government
contractor, has written to its board telling them it will oppose
the planned debt-for-equity swap.  

It joins New York's Coltrane Asset Management, which controls 27%
of shareholder votes, in indicating it will vote against the deal,
which will all-but wipe out Interserve's current shareholders if it
goes ahead, The Telegraph discloses.

The news leaves Interserve bosses with a dwindling pool of
shareholders to win over if they are to secure the majority they
need, The Telegraph states.

KELDA FINANCE NO. 2: Fitch Affirms BB LT IDR, Outlook Negative
--------------------------------------------------------------
Fitch Ratings has revised the Outlook on Yorkshire Water Services
Limited's (YW) class A and class B debt to Negative from Stable,
while affirming their ratings at 'A' and 'BBB+', respectively.
Fitch has also affirmed the holding company Kelda Finance (No.2)
Limited's (Kelda) Long-Term Issuer Default Rating (IDR) at 'BB'
with Negative Outlook.

The revision of the Outlook reflects Fitch's expectations that YW's
financial profile and, in particular, gearing in the next
regulatory period, AMP7, could be weak for the current ratings.
Fitch's preliminary forecast suggests net senior adjusted
debt-to-regulatory capital value (RCV) of around 81% at FYE25
(financial year ending March) versus its negative rating
sensitivity of 77%.

The Outlook could be revised to Stable if the company's final
business plan demonstrates balance sheet strengthening and a
potential to earn meaningful financial rewards for operational
performance in AMP7. Fitch expects to revisit the Outlook after the
regulator publishes its AMP7 price determinations.

The affirmation of Kelda's rating with a Negative Outlook reflects
Fitch's expectation of weak forecast dividend cover and high level
of uncertainty over the financial profile of the underlying
operating company, YW. Kelda's cash flows and debt service are
entirely reliant on dividends from YW.

KEY RATING DRIVERS

Weaker Returns After 2020: In December 2017, the UK water industry
regulator, Ofwat, announced a significant step down of the allowed
return on capital for AMP7. Real, RPI-linked weighted average cost
of capital (WACC) of 3.6% (excluding retail margin) is set to
decline to 2.3%. This will create a significant decline in YW's
EBITDA and post- maintenance cash flow. The regulator also plans to
introduce more challenging cost and performance targets, with
higher penalties for inefficiency. Additionally, pressure on the
gearing ratio will come from a midnight inflation correction
adjustment to RCV (GBP103 million in 12/13 prices), which could add
around 1.5% to debt/RCV at the beginning of AMP7.

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

Stretched Gearing in AMP7: Fitch's preliminary analysis of YW's
business plan submitted to Ofwat in September 2018 suggests that
the company may struggle to maintain gearing in line with its
revised rating sensitivities during the next price control. Under
Fitch's rating case, Fitch expects class A and total senior
swap-adjusted net debt/RCV to be substantially over its negative
rating sensitivities of 67% and 77% and average PMICRs at its
negative rating sensitivities of 1.6x and 1.3x, assuming
approximately 2% total expenditure (totex) outperformance and GBP32
million of outcome delivery incentives (ODI) rewards (in nominal
terms).

Given the company's middle-ranking regulatory performance in AMP6,
the total wholesale cost challenge of 18% recently announced by
Ofwat and more demanding cost and incentive targets for AMP7, the
extent of potential out/(under)performance is highly uncertain at
this point in the regulatory price-setting process.

Regulatory Performance Stable: In FY18, the company achieved 22 out
of 26 commitment performance targets, resulting in a net positive
reward of GBP12.66 million (in 12/13 prices), with the main rewards
coming from water supply interruptions and internal flooding
incidents. Reliability measures were stable across all four of the
company's key asset categories. The company met its service
incentive mechanism (SIM) score, which slightly improved to 84.3
from 83.4, reflecting higher customer satisfaction.

However, In FY18 the company missed its drinking water quality
contacts target (leading to a penalty of GBP6.6 million in 2012/13
prices) and it expects to continue missing its performance targets
on this measure for the rest of the AMP, leading to an estimated
overall penalty of GBP14.4 million (in 12/13 prices). Severe
weather conditions negatively impacted YW's leakage performance,
which resulted in the company just missing its leakage target. This
did not result in financial penalties. Overall, YW is a
middle-ranking performer and forecasts a net cumulative reward of
GBP68 million in AMP6 (in 2012/13 prices).

AMP6's Totex Outperformance Reinvested: In early 2018 YW decided to
increase its capex and reinvest around GBP230 million of totex
outperformance achieved in FY16-FY17 in service improvements within
the last two years of the AMP6 period. Key areas of reinvestment
are reduction of leakage, water supply interruptions, pollution
incidents and sewer flooding incidents. The company expects these
investments to deliver dramatic service enhancements including a
40% reduction in leakage and a 70% reduction in internal sewer
flooding by the end of AMP7. As a result of larger capex, Fitch now
expects higher closing gearing at FYE20, at around 78.4% versus 77%
previously. At FYE18, the company reported net debt-to-shadow RCV
of 76.6%.

Swap Restructuring Lowers Cash Interest: In 2017-2018 the company
completed a number of swap restructurings. As a result of these, YW
extended mandatory breaks on some of its swaps and arranged for a
temporary step-up in the cash interest received from the swaps in
FY18-FY32 of around GBP45 million p.a. on average. A forecast
reduction in the net cash interest paid results in improved class A
and total senior PMICR metrics, which had previously been under
pressure.

Swap-Related Adjustment: Fitch views YW's proactive approach in
managing the breaks and the super-senior accretion pay-downs on its
swap portfolio positively. However, since a substantial part of the
fixed cash interest savings was funded through extending the tenor
on out-of-money swaps, the cash flow benefit received in FY18-FY30
could be paid back by YW to swap counterparties in the price
controls following AMP8. Fitch views this as a way to borrow
through swaps, although the amount payable in the future will
depend on the real interest rates.

To reflect potential cash outflow after FY30, Fitch adds the
re-couponing benefit to the reported net debt in each respective
year, on a cumulative basis, excluding funding other than tenor
extensions. This reflects a general approach Fitch has developed
for similar swap re-couponing transactions funded through swap
tenor extensions. The adjustment starts accruing in FY19 and
reaches a peak by FY30, with a gradual decrease thereafter.

Base Dividends Planned for AMP7: YW's shareholders demonstrated
their flexibility over cash dividends in AMP5 and AMP6. In
particular, during 2017, shareholders agreed to waive dividends for
the rest of AMP6, resulting in dividends being significantly below
the level assumed at the price determination. The AMP6's dividends
primarily cover operating costs and external interest costs at
Kelda. For AMP7, YW followed Ofwat's proposal for setting base
dividend at a 5% equity yield, noting that this plan will be
subject to financial resilience testing prior to deciding on actual
distributions. Overall, total external dividends in AMP7 amount to
GBP236 million versus only GBP45 million in AMP6, which contributes
to a higher forecast gearing.

Index-linked Swaps: YW has a portfolio of index-linked swaps with a
notional amount of GBP1,289 million and a negative money-to-market
(MtM) value of GBP2,399 million at March 31, 2018. Although Fitch
does not adjust the gearing ratio for these contingent liabilities
unless the swaps crystallise, it factors them in its overall rating
assessment as they could substantially increase the company's
senior debt. The company paid down around GBP130 million of RPI
accretion on these swaps in November 2018, actively managing its
super-senior trigger event covenant of 6% RCV. Fitch expects
management to continue managing YW's liquidity exposure associated
with the breaks and accretion pay-downs in the swaps at least 24
months in advance.

Weak Dividend Cover at Kelda: Based on the submitted business plan
and dividend forecast by YW, Fitch estimates average dividend cover
of 2.8x in FY21-FY25. Given that YW is no longer an outlier among
its rated peers in low expected senior gearing, Fitch has decided
to align Kelda's dividend cover sensitivity with the rest of the
rated UK water holding companies. This resulted in a negative
sensitivity of 3.0x versus 2.5x previously. Fitch will have more
clarity around any changes in the dividend cover forecast after the
draft and final determinations are published by Ofwat.

DERIVATION SUMMARY

Kelda is a holding company of YW (class A debt A/Negative, class B
debt BBB+/Negative), one of the regulated monopoly providers for
water and wastewater services in England and Wales. Its higher
rating than that of peers such as Greensands UK Limited
(B-/Negative) and Kemble Water Finance Limited (BB-/Negative)
reflects YW's stronger regulatory performance and lower gearing. No
Country Ceiling, constraints affect the rating. Parent/subsidiary
Linkage is applicable but given the structural and contractual
ring-fence structure of the group it does not impact the ratings.

The senior secured ratings and credit metrics reflect the highly
geared nature of YW's secured covenanted structure versus that of
peers such as United Utilities Water Limited (IDR: BBB+/Stable,
senior unsecured A-) and Wessex Water Services Limited (IDR:
BBB+/Negative, senior unsecured: A-), which have lower leverage and
are not covenanted secured structures. YW's debt financing benefits
from structural enhancements, including trigger mechanisms (such as
dividend lock-up provisions tied to financial, positive and
negative covenants) and debt service reserve liquidity. The
company's higher ratings compared to similar peers with covenanted
structures such as Southern Water (class A: BBB+/ class B:
BBB-/Stable) reflects stronger credit metrics and more robust
regulatory performance. No Country Ceiling constraints affect the
rating. Parent/Subsidiary Linkage is applicable but given the
regulatory, structural and contractual ring-fenced structure of the
group it does not impact the ratings.

KEY ASSUMPTIONS

YW

Fitch's Key Assumptions within its Rating Case for the Issuer

  - Long-term RPI at 3%, long-term CPIH at 2%

  - Allowed WACC in AMP7 declines to 2.3% (RPI based) and 3.3%
(CPIH based) in real terms, excluding retail margins

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

  - AMP7 totex of GBP5.5 billion in nominal terms

  - Pay-as-you-go (PAYG) ratio of 53.4%, run-off rate at 3.8%

  - Net AMP6-related ODI rewards of GBP105 million (nominal) are
included in AMP7's revenue adjustments

  - 2% totex outperformance, GBP32 million ODI-related rewards in
AMP7 (nominal)

  - Retail EBITDA of GBP12 million p.a. on average during AMP7

  - EBITDA from unregulated businesses of GBP20 million in total
over AMP7

  - Average YW's cash cost of debt of 3.2% (including the benefit
from swap-re-couponing), total cost of debt of 4.9% in AMP7

  - Average Kelda's cost of debt of 5.9% and annual corporate costs
of around GBP9 million

  - Pension deficit recovery payments of around GBP14 million p.a.
in FY19-FY22

  - YW's AMP7 total dividend of GBP417 million and Kelda's AMP7
dividend of GBP326 million

RATING SENSITIVITIES

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

  - An upgrade is unlikely for both classes of debt, given the
pressure on the gearing

  - The Outlooks could be revised to Stable if Fitch expects class
A debt gearing below 67% and net senior gearing below 77% in AMP7,
through a combination of expected operational outperformance and
changes to planned distributions.

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

  - Class A debt gearing above 67% and/or PMICR materially below
1.6x on a sustained basis

  - Net senior gearing above 77% and/or PMICR materially below 1.3x
on a sustained basis

  - Deterioration in operational or regulatory performance

  - Regulatory decisions that may materially impact cash flow
generation such as opening up additional parts of the value chain
to competition

Kelda

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

  - Upside is limited given the Negative Outlook. Fitch may revise
the Outlook to Stable if YW and Kelda materially reduce regulatory
gearing and expected dividend cover improves materially to above
3.0x throughout the AMP6 and AMP7 price controls

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

  - A dividend cover below 3.0x on a sustained basis while YW
continues to retain dividends, rather than upstreaming them to
Kelda to aid deleveraging

  - Group gearing above 82% and consolidated PMICR below 1.2x on a
sustained basis

  - A marked reduction in RPI on a sustained basis that may further
reduce the dividend being up-streamed from YW

  - Marked deterioration in operating and regulatory performance of
YW or a material change in the business risk of the UK water
sector

LIQUIDITY

YW

As of September 30, 2018, the company had GBP23.3 million in cash
and cash equivalents and GBP684.0 million in available undrawn
committed bank facilities. Of the available liquidity facilities,
GBP405 million (recently extended to Oct 2023) can be used without
restriction while the remaining GBP279 million of operational and
maintenance and debt service reserve facilities can only be
utilised by YW during a standstill period. This funding position
provides sufficient financial resources for operating requirements
and debt maturities for the next 18 months. YW's senior net
indebtedness was GBP5 billion at end-September 2018 and GBP4.9
billion at FYE18.

Kelda

As of September 30, 2018, the holding company had available a GBP30
million undrawn, committed revolving credit facility with maturity
in October 2022 and GBP2.3 million readily available cash. The next
debt maturity is a GBP200 million bond in February 2020. Kelda had
senior net indebtedness of GBP460 million at end-September 2018,
unchanged from FYE18.

FULL LIST OF RATING ACTIONS

YW

Yorkshire Water Services Bradford Finance Limited (programme
issuer)

  -- Class A notes: Outlook revised to Negative from Stable; senior
secured rating affirmed at 'A'

  -- Class B notes: Outlook revised to Negative from Stable; senior
secured rating affirmed at 'BBB+'

Yorkshire Water Services Odsal Finance Limited's (exchange issuer)

  -- Class A notes: Outlook revised to Negative from Stable; senior
secured rating affirmed at 'A';

Yorkshire Water Services Services Finance Limited's (YWSF)

  -- Class A notes: Outlook revised to Negative from Stable; senior
secured rating affirmed at 'A'

  -- Non-participatory bonds: Outlook revised to Negative from
Stable; senior secured rating affirmed at 'A-'

Kelda

Kelda Finance (No.2) Limited

  -- Long-Term IDR affirmed at 'BB', Outlook Negative

  -- Senior secured rating affirmed at 'BB+'

Kelda Finance (No.3) PLC

  -- Senior secured bonds issued by Kelda Finance (No.3) PLC
affirmed at 'BB+'.

The bonds are guaranteed by Kelda.

Kelda Finance (No.3) PLC (FinCo) is the financing vehicle for
Kelda, which guarantees the issued bonds together with its parent,
Kelda Finance (No.1) Limited.


KEYSTONE MIDCO: Moody's Withdraws B3 CFR for Business Reasons
-------------------------------------------------------------
Moody's Investors Service has withdrawn Keystone Midco Limited's
(Keepmoat) corporate family rating (CFR) of B3 and probability of
default rating (PDR) of B3-PD. At the time of withdrawal, there was
no instrument rating outstanding. Prior to the withdrawal the
outlook on the ratings was stable.

RATINGS RATIONALE

Moody's has withdrawn the ratings for its own business reasons.


NORDGOLD SE: Fitch Affirms 'BB' Long-Term IDR, Outlook Stable
-------------------------------------------------------------
Fitch Ratings has affirmed UK-based gold mining company Nord Gold
SE's (Nordgold) Long-Term Issuer Default Rating (IDR) at 'BB'. The
Outlook on the company's Long-Term IDR is Stable.

The rating affirmation reflects Fitch's view that Nordgold will
achieve solid operational and financial performance in 2019-2021
after a challenging 2018, when the company's projected output and
costs were weaker than previously anticipated. Launched in 2H18,
the Gross mine is currently ramping up to 200 thousand ounces (koz)
per annum. Fitch expects additional gold volumes in Russia from the
Gross mine and the underground mine at Berezitovy to increase the
group's total output to above 1 million oz.

The Stable Outlook reflects Fitch's view that Nordgold's business
profile will not improve significantly by end-2021 and that the
group's credit metrics will remain commensurate with the current
rating for a single-commodity miner operating exclusively in
emerging markets with a weak operating environment.

KEY RATING DRIVERS

Mid-Size Diversified Goldminer: Nordgold is a mid-sized
Russian-owned gold miner with producing mines in Burkina Faso,
Russia, Guinea and Kazakhstan and exploration and development
projects in French Guiana (Montagne d'Or) and Russia (Uryakh). Its
9M18 gold production totalled 676 koz. Nordgold has large JORC
reserves of 15.2 million ounces (Moz) with a mine life of about 16
years. In 2018, the company successfully launched Gross, its third
greenfield mine commissioned since 2013.

Gross Mine Ramps Up: Commissioned in September 2018, Gross is an
all-season open pit, heap leach operation located in Yakutia in
Russia's eastern Siberia. Management estimates that Gross's large
resource base is sufficient to maintain average production at
around 200 koz for about 17 years. In 4Q18 Gross's performance was
in line with the group's expectations. With Gross ramping up to
full capacity in 2019, Fitch estimates that Nordgold's total annual
gold production will exceed one million ounces.

2018 Results below Expectations: In 2018, Nordgold's performance
will fall short of Fitch's February 2018 rating case. In 9M18 gold
output declined 6% yoy due to higher volumes of lower-grade ore
processed at Bissa-Bouly and Taparko mines in Burkina Faso and
waste stripping at Berezitovy. This was partially offset by a 14%
increase in total processed ore volumes, with a 93% increase in
gold production at Neryungri on both higher ore volumes and better
grades. In November 2018, Nordgold reduced production guidance for
2018 to 900 koz - 950 koz from 950 koz - 1,000 koz.

Cash Costs to Stabilise: In 9M18 Nordgold's all-in sustaining costs
(AISC) increased 16% to USD1,049/oz on 9M17 due to higher stripping
costs at Bissa, Berezitovy and Taparko. Management confirmed
full-year AISC guidance for 2018 of USD975/oz- USD1,025/oz. In
2018-2021, Fitch expects Nordgold to maintain flat average total
cash costs (TCC) of around USD690/oz. This is due to the ramp-up of
relatively low-cost Gross production, which would help the group
control the overall cost per ounce.

Slower Deleveraging: Fitch expects Nordgold's total funds from
operations (FFO) gross leverage to average 2.3x in 2018-2021, with
negative free cash flow (FCF) in 2018 due to lower absolute EBITDA
and unplanned investments towards waste stripping. While Fitch had
expected a gradual deleveraging below 2.0x under the previous base
case, it believes that at 2.3x gross leverage remains commensurate
with the rating in light of the commissioning and ramp-up at Gross.
With capex intensity declining, it forecasts FCF to turn positive
in 2019.

Capex Peak in 2018: Nordgold's capital intensity (capex/revenue)
peaked in 2018 and is expected to exceed 40% with total capex of
around USD500 million, mainly due to the development of Gross and
large stripping works at Gross, Bissa-Bouly, Taparko and Berezitovy
to prepare the mines for higher production volumes in 2019. In 2019
capex intensity should fall towards 30% and then to 20% in 2020
onwards. Fitch expects leverage to be maintained within the revised
rating guidance as the group invests in existing mines and new
projects.

Fitch projects the group's gold production to increase to about
1.25 million oz in 2021, largely driven by Berezitovy's underground
mining with high-grade ore and the Gross ramp-up. Nordgold reported
in 3Q18 that the development of Berezitovy's underground project is
progressing well.

New Project Pipeline: Nordgold has a number of new projects in its
pipeline. Two major current exploration and development projects
are Montagne d'Or in French Guiana and Uryakh in Russia. Fitch's
base case currently excludes these projects as visibility on their
likelihood and timing remains low. In addition, there are
development projects at existing mines, where exploration works
resulted in discovery of a number of satellite deposits, thus
extending the life of existing mines.

Diverse Country Risk Exposure: Nordgold has operations in Burkina
Faso (41% of total output in 9M18), in Russia (BBB-/Positive, 27%),
Guinea (22%) and Kazakhstan (BBB/Stable, 9%). Following the launch
of Gross in September 2018, Fitch expects the share of Russian
production in its total gold output to reach 40% by end-2020. Less
developed economies such as these can be less favourable for mining
companies as a result of a number of factors, eg poor roads and
other infrastructure, uncertainty in the application and/or
enforceability of taxation, mining and other laws, and less stable
governmental finances. In this regard, Fitch views Nordgold's
operational diversification as a partial mitigating factor against
the risk from disruption in one of the countries in which the group
operates.

DERIVATION SUMMARY

Nordgold's business profile is commensurate with the 'BB' rating
category given the group's single-commodity operations, medium
production scale and proved reserve life of about 16 years.
Nordgold is significantly smaller than Goldcorp Inc. (BBB/Rating
Watch Positive), Kinross Gold Corp (Kinross, BBB-/Stable) and PJSC
Polyus (BB/Stable) by production and revenue, while its AISC are
higher. Goldcorp and Kinross have a higher proportion of mines
located in stable countries but also have a number of mines in
Mexico/South America (Goldcorp) and Russia/West Africa (Kinross).
Yamana Gold Inc. (Yamana, BBB-/Stable) is similar to Nordgold in
scale and also has a majority of assets located in emerging
economies (South America).

In terms of leverage, Nordgold compares well with Goldcorp and
Polyus, but lags behind Kinross and Yamana.

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

No Country Ceiling or parent/subsidiary aspects impact the rating.

KEY ASSUMPTIONS

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

  - Fitch gold price deck of USD1,200/oz in 2019-2021

  - Total refined gold production at the lower end of the company's
guidance or 900 koz in 2018, 1,025 koz in 2019 and 1,250 koz in
2020-2021

  - Capex at USD500 million in 2018 and average USD343 million per
annum in 2019-2021

  - Discretionary dividends at 30% of net income

RATING SENSITIVITIES

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

  - Further improvement in the operational profile beyond the
successful commissioning and ramp-up of Gross and other projects
currently in the pipeline

  - Conservative financial profile, e.g. FFO adjusted gross
leverage below 1.5x on a sustained basis (2018 forecast: 2.4x)

  - EBITDA margin above 40% (2018 forecast: 40%) and positive FCF
on a sustained basis

  - One year liquidity ratio sustainably above 1.25x

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

  - EBITDA margin below 30% on a sustained basis

  - Failure to deleverage in line with Fitch's expectations,
resulting in FFO gross leverage above 2.5x on a sustained basis

LIQUIDITY

Tightening Liquidity in 2018: In May 2018 Nordgold redeemed its
USD500 million Eurobonds, paying USD448 million in cash. This
amount was paid from cash on hand as well as from the drawdown of a
USD300 million syndicated loan. Fitch-projected negative FCF in
2018 due to higher-than-expected capex was a further drain on
liquidity. Nordgold had drawn a further USD75 million in its
revolving credit facility in April 2018 and another USD50 million
in June 2018.

As of September 30, 2018, Nordgold reported cash on hand of USD139
million vs USD275 million in short-term debt. At end-2018,
according to preliminary management estimates, unrestricted cash
balances were approximately USD90 million vs. short-term debt
maturities of about USD125 million (of which a USD50 million RCF
was to be rolled over).

Additional sources of liquidity at end-2018 included unsold
finished gold inventory, an undrawn uncommitted RCF from a major
Russian state-owned bank and an overdraft facility form a major
international bank for a total of about USD140 million.

Fitch expects that Nordgold will continue to have access to the
bank and capital markets, which supports its assessment of
liquidity.

FULL LIST OF RATING ACTIONS

Nord Gold S.E.

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

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

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

  - Foreign Currency senior unsecured rating: affirmed at 'BB'


UTILITYWISE: Founder in Talks to Bail Out Business
--------------------------------------------------
Jillian Ambrose at The Telegraph reports that the founder of
Utilitywise is in talks to bail out the troubled energy broker just
months after offloading his remaining stake in the business.

According to The Telegraph, Tyneside business man Geoffrey Thompson
has put forward an eleventh hour deal which could save the company,
feared to be only weeks away from collapse.

Utilitywise is scrambling to secure a sale or raise at least GBP10
million in fresh funds to avoid its lenders wresting control of the
business through its unpaid debts at the end of next month, The
Telegraph relates.

The last-ditch plan to bring the broker back from the brink has
emerged just months after the founder and former chairman dumped
his remaining 6% stake in the business, The Telegraph notes.

Utilitywise is Britain's largest energy broker.



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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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