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

                          E U R O P E

          Friday, March 1, 2019, Vol. 20, No. 44

                           Headlines



A Z E R B A I J A N

AZERENERJI JSC: S&P Alters Outlook to Stable, Affirms 'BB/B' Rating


F R A N C E

FCT GIAC II: Moody's Downgrades EUR28.5MM Mezzanine A Bonds to B3
REXEL SA: Moody's Rates New EUR600M Senior Unsecured Notes Ba3


G E R M A N Y

BLOKS GMBH: Alber Acquires E-bike Display Assets
SENVION SA: Moody's Downgrades CFR to Caa1, Outlook Negative
SOLARWORLD INDUSTRIES: To Auction for Assets in Germany Soon


I T A L Y

BANCA CARIGE: Administrators Need to Find Buyer by April
ITALY: Prepares New Decree to Help Banks Shed Pile of Bad Loans


R O M A N I A

GARANTI BANK: Fitch Affirms BB- Long-Term IDR, Outlook Stable


R U S S I A

CB BTF-BANK: Declared Insolvent by Moscow Arbitration Court
METALLOINVEST JSC: S&P Ups Long-Term Ratings to BB+, Outlook Stable


S W E D E N

POLYGON AB: Moody's Affirms B1 CFR, Alters Outlook to Stable
SAMHALLSBYGGNADSBOLAGET I NORDEN: S&P Affirms BB ICR, Outlook Pos.


U K R A I N E

ZLATOBANK PJSC: NBU Comments on the Supreme Court Decision


U N I T E D   K I N G D O M

A1 ALPHA: Financial Difficulties Prompt Administration
INTERSERVE PLC: Agrees to New Terms for Debt-for-Equity Swap
NORDIC PACKAGING: S&P Places B Rating on Watch Dev. on VPK Deal
PLAYTECH PLC: Moody's Rates Proposed EUR350M Sr. Sec. Notes Ba2
THOMAS COOK: Fitch Cuts Long-Term IDR to B, Outlook Negative



X X X X X X X X

[*] BOOK REVIEW: THE SUCCESSFUL PRACTICE OF LAW

                           - - - - -


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A Z E R B A I J A N
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AZERENERJI JSC: S&P Alters Outlook to Stable, Affirms 'BB/B' Rating
-------------------------------------------------------------------
S&P Global Ratings is revising its outlook on Azerenerji to stable
from negative and affirming its 'BB/B' ratings.

S&P said, "We revised our outlook to stable because we don't expect
any weakening of ongoing and extraordinary government support for
Azerenerji in the medium term. In our view, the government has so
far been able and willing to cover Azerenerji's liquidity
shortages, including maturing debt and interest payments, to
cofinance the company's investment program. We understand that more
than 80% of Azerenerji's debt is to the government, and the rest is
guaranteed by the government. Despite sizeable capex needs, we
expect the company to avoid incurring any third-party debt without
government guarantees. We also believe that Azerenerji's operating
performance has stabilized and we don't expect any deterioration in
the company's stand-alone creditworthiness in the medium term,
thanks to almost full cash collection, improved liquidity, and
ongoing state support.

"However, we continue to see uncertainty about the government's
commitment to the company in the longer term. Although the
government provides financial support to cover the company's
ongoing debt payments and monitors cash collection, it tolerates
high debt at Azerenerji, and funding of enlarged capex has not yet
been approved. We also note that the government generally refrains
from public commitments to support Azerenerji. We cannot rule out
that the government may eventually reduce monitoring of the
company's performance and liquidity if its stand-alone credit
quality improves further.

"Also, we understand that Azerbaijan's road map for the energy
sector's development proposes privatizing certain energy assets. In
addition, we note that the government has tolerated restructuring
of non-government-guaranteed debt at certain large
government-related entities, such as the International Bank of
Azerbaijan in 2017. Therefore, we do not equalize our ratings on
Azerenerji with those on Azerbaijan (BB+/Stable/B). Rather, our
long-term rating on Azerenerji remains one notch lower than that on
the sovereign."

S&P continues to see an almost certain likelihood of government
support based on our view of Azerenerji's:

-- Critical role for the government as the sole transmission
system operator and the state's largest electric utility.
Azerenerji is also a government arm for implementing strategies in
the electricity sector. Furthermore, the state's economic
development and social mandates ensure reliable and affordable
electricity provision, in S&P's view; and

-- Integral link with the government, given its 100% ownership of
Azerenerji and S&P's expectation that this will not change in the
next three years. According to company, the state guarantees all of
its external debt. The government has also closely overseen
Azerenerji's operations and strategies, and a default of the
company would put the sovereign's reputation at risk. Azerbaijan's
president appoints Azerenerji's CEO and must approve new
state-guaranteed debt at the company. S&P understands that, during
2016-2018, the government supported Azerenerji's debt repayments
and S&P expects this will continue in 2019.

The government guaranteed all of the company's debt to third
parties as of year- 2018 and, in line with a cabinet decision, will
provide equity injections to Azerenerji to support repayments of
foreign currency loans over 2019-2025. S&P understands that the
government has budgeted sufficient financial injections to cover
the company's debt and interest payments due in 2019, if needed.

S&P said, "We believe that the Ministry of Finance continues to
monitor Azerenerji's debt payments closely because any delays in
the payment schedule poses risks to the government's reputation. We
think that Azerenerji, like other government-related entities in
the country, cannot incur any new borrowings without the
government's approval."

In July 2018, Azerbaijan experienced a massive blackout caused by
an accident at Azerenerji's Mingachevir thermal power plant, which
led to the government's review of the energy system. As a result,
Azerenerji's investment program will likely increase materially
beyond Azerbaijan manat (AZN) 1 billion (about $0.6 billion) in
2018-2020. Although full financing of this capex has not yet been
decided, S&P expects the state will cofinance Azerenerji's capex
via equity or direct state loans, and avoid any third-party debt
that will not be guaranteed by the government.

S&P said, "Under our base case for 2019, we assume Azerenerji will
generate stable funds from operations and partly finance its
investment program with internal cash sources. We also assume the
Ministry of Finance will cover any liquidity shortages at the
company. Thus, we continue to assess Azerenerji's stand-alone
credit profile at 'b-', including the ongoing state support. This
takes into account high risks related to the company's current
capital structure, since the debt portfolio is predominantly
denominated in foreign currencies and the company remains exposed
to the risk of exchange rate fluctuations. There are no substantial
cash flows in foreign currencies to mitigate this risk.

"The stable outlook on Azerenerji reflects that on the sovereign
rating. We see an almost certain likelihood of extraordinary state
support for Azerenerji and expect the government will continue to
cofinance Azerenerji's large investment program and cover any
liquidity shortages. In our base case, we expect the company will
not issue new debt with third parties and that its structure and
current asset composition will remain unchanged in the medium to
long term.

"If we were to lower our long-term rating on Azerbaijan by one
notch, we would likely take a similar rating action on Azerenerji,
all else remaining equal.

"Apart from a sovereign rating action, we could also downgrade
Azerenerji if we do not observe measures that would eventually
enable the company to repay maturing debt from its own sources, or
if we believe the government is no longer committed to fully
covering the company's debt in the long term. In our view, the
latter could indicate weakening of the likelihood of extraordinary
government support. This could lead us to reduce the notches of
uplift in the long-term rating on Azerenerji, which is only one
notch below the sovereign rating.

"In addition, indications of negative government intervention or
deterioration of Azerenerji's stand-alone credit profile--for
instance, due to new debt issuance without state guarantees or
further weakening of the local currency--could lead us to revise
down our assessment of the likelihood of government support and
lower our ratings.

"We would likely take a positive rating action on Azerenerji
following the same action on Azerbaijan.

"We could also upgrade Azerenerji if we observe the government's
clear commitment to the company in the longer term, including steps
to reduce debt leverage, the official commitment of full government
funding of the capex program, and other improvements in
Azerenerji's stand-alone creditworthiness."



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F R A N C E
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FCT GIAC II: Moody's Downgrades EUR28.5MM Mezzanine A Bonds to B3
-----------------------------------------------------------------
Moody's Investors Service has upgraded the ratings of two notes
issued by FCT GIAC Obligations Long Terme. At the same time,
Moody's has downgraded the ratings of two notes and affirmed the
rating of one note issued by FCT GIAC Obligations Long Terme II.

Issuer: FCT GIAC Obligations Long Terme

  - EUR40M Obligations Prioritaires P1 Notes, Upgraded to Aaa (sf);
previously on Apr 26, 2018 Upgraded to Aa1 (sf)

  - EUR10M Obligations Prioritaires P2 Notes, Upgraded to Aa2 (sf);
previously on Apr 26, 2018 Upgraded to Baa1 (sf)

Issuer: FCT GIAC Obligations Long Terme II

  - EUR75M Senior Bonds P1, Affirmed Aa3 (sf); previously on Aug 8,
2017 Downgraded to Aa3 (sf)

  - EUR15M Senior Bonds P2, Downgraded to Baa3 (sf); previously on
Aug 8, 2017 Downgraded to Baa2 (sf)

  - EUR28.5M Mezzanine A Bonds, Downgraded to B3 (sf); previously
on Aug 8, 2017 Downgraded to B2 (sf)

FCT GIAC OLT and FCT GIAC OLT II are collateralised loan
obligations ("CLO") backed by portfolios of bonds issued by French
SMEs and mid-cap corporates. FCT GIAC OLT was issued in July 2012
and the portfolio is now in its amortization phase. FCT GIAC OLT II
was issued in May 2015; the initial 2 year ramp-up period ended in
July 2017 and the portfolio will enter scheduled amortisation phase
in May 2020.

RATINGS RATIONALE

In FCT GIAC OLT, the upgrade actions are the result of (i) the
partial redemption of the senior notes following amortisation of
the underlying portfolio and (ii) correction of errors in the
weighted average life of the portfolio, the recovery rate, and the
margin on the senior notes used to model the transaction at the
last rating action in April 2018. The correction to those inputs
has no impact on Obligations Prioritaires P1 notes but beneficial
effects on the Obligations Prioritaires P2 notes. Obligations
Prioritaires P1 notes have paid down by approximately EUR 13.0
million since the last rating action in April 2018. As a result of
the deleveraging, the overcollateralization has increased
significantly across the capital structure.

In FCT GIAC OLT II, the downgrade actions are due to the
deterioration in the credit quality of the underlying collateral
pool in the past year, as measured by the weighted average rating
factor, or WARF, which increased from 3030 in April 2018 to 3246 in
Jan 2019 and the default of one obligor with a notional principal
amount of EUR 2.6 million recorded in October 2018. Moody's also
observes that the defaulted loans (amounting 3.6mln since closing)
together with prepayments have led to increasing concentration risk
as the largest 8 loans now account around 49% of the total pool
balance. The ratings on all the notes also incorporates the
correction of errors relating to the weighted average life, the
recovery rate, and the trigger to switch payments on the notes from
pro-rata to sequential used to model the portfolio when Moody's
monitored the transaction in April 2018. The correction to those
inputs has no impact on Senior Bonds P2 notes but slight benefit
for the Senior Bonds P1 and the Mezzanine A Bonds.

In FCT GIAC OLT, the key model inputs Moody's uses in its analysis,
such as par, weighted average rating factor, diversity score and
the weighted average recovery rate, are based on its published
methodology and could differ from the trustee's reported numbers.
In its base case, Moody's analysed the underlying collateral pool
as having a performing par and principal proceeds balance of EUR
34.4 million, a weighted average default probability of 13.7%
(consistent with WARF of 3224 and a weighted average life of 1.8
years), a diversity score of 16 and a weighted average spread of
3.05%.

In FCT GIAC OLT II, the key model inputs Moody's uses in its
analysis, such as par, weighted average rating factor, diversity
score and the weighted average recovery rate, are based on its
published methodology and could differ from the trustee's reported
numbers. In its base case, Moody's analysed the underlying
collateral pool as having a performing par and principal proceeds
balance of EUR 56.2 million, a weighted average default probability
of 21.5% (consistent with WARF of 3246 and a weighted average life
of 3.8 years), a diversity score of 15 and a weighted average
spread of 3.11%.

In FCT GIAC OLT and FCT GIAC OLT II, the obligors of the underlying
bonds are not rated by Moody's. Their credit quality has been
assessed using the Ellipro score produced by Ellisphere. A mapping
has been put in place to convert the Ellipro Scores into Moody's
rating factors. In its base case, Moody's has stressed large
concentrations of single obligors, with an additional stress on
obligors deemed more vulnerable to sudden adverse difficulties
according to the size of their revenues.

Loss and Cash Flow Analysis:

Moody's used CDOROM to model the default distribution of the
portfolio and CDOEdge to model the cash flows and determine the
loss for each tranche. Moody's CDOROM is a Monte Carlo simulation
that uses Moody's default probabilities as input. Moody's models
each corporate reference entity individually with a standard
multi-factor model that incorporates both intra and inter-industry
correlations. The correlation structure is based on a Gaussian
copula. CDOEdge is a cash flow model which evaluates all default
scenarios that are then weighted considering the probabilities of
the derived default distribution using CDOROM. In each default
scenario, the corresponding loss for each class of notes is
calculated given the incoming cash flows from the assets and the
outgoing payments to third parties and noteholders. Therefore, the
expected loss or EL for each tranche is the sum product of (i) the
probability of occurrence of each default scenario and (ii) the
loss derived from the cash flow model in each default scenario for
each tranche.

The default probability derives from the credit quality of the
collateral pool and Moody's expectation of the remaining life of
the collateral pool. The estimated average recovery rate on future
defaults is based primarily on the seniority of the assets in the
collateral pool. In each case, historical and market performance
and a collateral manager's latitude to trade collateral are also
relevant factors. Moody's incorporates these default and recovery
characteristics of the collateral pool into its cash flow model
analysis, subjecting them to stresses as a function of the target
rating of each CLO liability it is analyzing.

Methodology Underlying the Rating Action:

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

The credit ratings of the notes issued by FCT GIAC OLT and FCT GIAC
OLT II were assigned in accordance with Moody's existing
methodology entitled "Moody's Global Approach to Rating
Collateralized Loan Obligations" dated August 31, 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 collateralized loan obligations.
If the revised methodology is implemented as proposed, the credit
ratings of the notes issued by FCT GIAC OLT and FCT GIAC OLT II may
be neutrally affected.

Counterparty Exposure:

Following the recent replacement of management company by
EuroTitrisation in both transactions, Moody's has reviewed the
counterparty risk, using the methodology "Moody's Approach to
Assessing Counterparty Risks in Structured Finance" published in
January 2019. Moody's concluded the ratings of the notes are not
constrained by these risks.

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

This transaction is subject to a high level of macroeconomic
uncertainty, which could negatively affect the ratings on the note,
in light of uncertainty about credit conditions in the general
economy. CLO notes' performance may also be impacted either
positively or negatively by 1) the manager's investment strategy
and behaviour and 2) divergence in the legal interpretation of CDO
documentation by different transactional parties because of
embedded ambiguities.

Additional uncertainty about performance is due to the following:

  - Portfolio amortisation: The main source of uncertainty in this
transaction is the pace of amortisation of the underlying
portfolio, which can vary significantly depending on market
conditions and have a significant impact on the notes' ratings.
Amortisation could accelerate as a consequence of high loan
prepayment levels or collateral sales by the collateral manager or
be delayed by an increase in loan amend-and-extend restructurings.
Fast amortisation would usually benefit the ratings of the notes
beginning with the notes having the highest prepayment priority.

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

REXEL SA: Moody's Rates New EUR600M Senior Unsecured Notes Ba3
--------------------------------------------------------------
Moody's Investors Service has assigned a Ba3 rating to Rexel SA's
(Rexel) EUR600 million senior unsecured notes due 2026. Rexel's
existing ratings, comprising of Ba2 corporate family rating (CFR),
Ba2-PD probability of default rating (PDR), Ba3 ratings on the
company's existing senior unsecured notes and the NP short-term
rating of the company's EUR300 million commercial paper programme,
remain unaffected. The outlook remains stable.

Moody's understands that the proceeds from the new senior unsecured
notes, together with available cash, will be used to redeem in full
the EUR650 million 3.5% senior notes due 2023 and related
transaction expenses.

Moody's will withdraw the Ba3 rating on EUR 650 million 3.5% senior
notes due 2023 upon their full redemption.

RATINGS RATIONALE

The Ba3 rating assigned to the EUR600 million senior unsecured
notes due 2026 reflects their pari passu ranking with all other
unsecured indebtedness issued by Rexel and their unmitigated
structural subordination to nonfinancial liabilities at the
operating companies. Similar to Rexel's existing senior unsecured
notes issued in 2015, 2016 and 2017 the new notes will have a light
covenant package, i.e. exclude clauses for limitation on:
restricted payments; sales of assets and subsidiary stock; and
restrictions on distributions.

Rexel's Ba2 CFR is supported by (1) the company's large scale and
geographic diversification; (2) strong market positions with either
number one or two market rankings in most Western European
countries and North American states; and (3) prudent financial
policy and solid cashflow generation.

The rating is constrained by high financial leverage and low
profitability over the last few years, although showing signs of
improvement. Moody's remain cautious about the pace at which the
performance might improve on an organic basis given the somewhat
limited macroeconomic recovery in Europe and the late-cycle nature
of the industry.

Rexel demonstrated a return to top-line growth during the last few
years supported by improved macroeconomic conditions in North
America and good performance in other geographical regions.

Reported revenue in 2018 increased by 0.5% year-on-year (or 3.5% on
a constant currency and same-day basis). The company's adjusted
EBITA margin during 2018 improved year-on-year to 4.6% from 4.5% in
2017 and Moody's adjusted leverage declined to 4.7x from 5.0x at
the end of 2017.

Rexel's liquidity profile remains adequate, supported by EUR545
million cash on balance sheet as of 31 December 2018 and EUR850
million undrawn revolving credit facility (RCF) due 2023. In
addition, Rexel also utilises EUR1.2 billion of securitisation
programs.

RATIONALE FOR THE STABLE OUTLOOK

The stable outlook reflects Moody's expectation that Rexel will
continue to demonstrate resilient performance in the current
macroeconomic climate with sales growth and profitability improving
from current levels. The stable outlook also assumes no adverse
change in the company's current financial policy in relation to
dividends and acquisitions.

WHAT COULD CHANGE THE RATING UP/DOWN

While unlikely at this stage, upward pressure on the rating could
materialise over the medium term if Rexel demonstrates a prudent
financial policy as well as successfully achieving its target for
improving its profitability, leading to a leverage ratio (gross
debt/EBITDA, as adjusted by Moody's) trending towards 3.5x and a
Retained Cash Flow/debt (as adjusted by Moody's) above 15%.

The ratings could be downgraded if as a result of continued volume
pressure and a decline in Rexel's margins, its leverage (gross
debt/EBITDA, as adjusted by Moody's) rises materially above 5.0x or
if its Retained Cash Flow/debt (as adjusted by Moody's) falls
substantially below 10%.

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was Distribution &
Supply Chain Services Industry published in June 2018.

CORPORATE PROFILE

Headquartered in Paris, France, Rexel SA (Rexel) is a global leader
in the low and ultra-low voltage electrical distribution market.
Rexel addresses three main markets: commercial, industrial and
residential. The company's distribution network is comprised of
nearly 2,000 branches in 26 countries employing almost 27,000
employees as at December 31, 2018. For the financial year ended 31
December 2018 Rexel reported total sales and Adjusted EBITA of
EUR13.4 billion and EUR608 million respectively representing 4.6%
of 2018 sales. Rexel is a public company listed on Euronext Paris.



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G E R M A N Y
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BLOKS GMBH: Alber Acquires E-bike Display Assets
------------------------------------------------
Bike Europe reports that E-bike drivetrain manufacturer Alber
acquired a part of Bloks GmbH.  The company filed for insolvency
last July. The administrator failed to find a new investor and
Bloks was brought to bed at the end of 2018, the report says.

Since the start of 2019 Alber produces the Bloks 20C displays for
its electric drive system Neodrives. According to the report,
Alber's Neodrives Business Unit Manager Andreas Binz commented,
"Despite Bloks' insolvency the supply chain has never been
interrupted. Supplies to both manufacturers and retailers is still
guaranteed, only the value chain is now being controlled by
Alber."

"We are convinced of the display's high quality," the report quotes
Mr. Binz as saying. "For this reason, we will continue support,
service and future development of the display. Thanks to previous
generations of Neodrives products and their displays, we have
already gained a lot of experience in the product category. Next to
our own produced and developed rear hub motor and the batteries of
our partner BMZ, the display is an important element of our drive
system. We are pleased to be able to steer its development and
production ourselves again."

According to Bike Europe, Alber said the production of the displays
has already started at the company's headquarters in Albstadt.
"This ensures a seamless transition for all e-bike owners with
Neodrives rear motors," explains Andreas Binz. "The Z20 generation
can still be combined and exchanged with previous series made by
Bloks in case of a complaint. There is no optical, technical or
functional difference. Following the takeover, we now focus on the
development of the service tool and the new app. Thanks to the
independent control system, the planning and the implementation of
updates and optimization is more reliable,"
Mr. Binz, as cited by Bike Europe, said.

Munich-based Bloks GmbH was an electronics specialist and display
supplier.

SENVION SA: Moody's Downgrades CFR to Caa1, Outlook Negative
------------------------------------------------------------
Moody's Investors Service downgraded to Caa1 from B3 the corporate
family rating (CFR) and to Caa1-PD from B3-PD the probability of
default rating (PDR) of Senvion S.A. (Senvion). Concurrently
Moody's downgraded to Caa2 from Caa1 the rating of the senior
secured notes issued by Senvion Holding GmbH. The outlook on both
entities remains negative.

RATINGS RATIONALE

"Moody's decision to downgrade Senvion's ratings by one notch was
triggered by the company's announcement issued on February 23,
regarding the postponement of the publication of the annual
financial statements," said Oliver Giani, lead analyst for Senvion.
"According to the release Senvion has commissioned a restructuring
opinion and is currently in discussions with its main shareholder,
lenders and other financing sources to secure financing for the
Company," he added. "In Moody's view the release uncovers an even
worse situation than expected after the recent revision of its
guidance for 2018 and signals an increased likelihood for a debt
restructuring", Mr. Giani continued.

Senvion's CFR is constrained by (1) its leveraged capital structure
and declining profitability, driven by the structurally low
profitability of the consolidating and intensely competitive wind
turbine industry as well as some loss-making projects, (2) the
limited product and end-industry diversification with more than 75%
of revenues (September 2018 LTM) coming from the installation of
new wind turbines and (3) some geographical concentrations with
Senvion's historical key markets of Germany, France and the UK
still representing 55% of new installations and 46% of revenues in
2017.

Senvion's CFR is supported (1) the company's size and market
positions, albeit significantly smaller than the leaders Vestas,
Siemens Gamesa and GE Renewables, and (2) a solid level of firm
order book (+37% y-o-y as of September 2018) which provides good
revenue visibility for the next 12-18 months.

LIQUIDITY

The Caa1 rating incorporates Moody's expectation that Senvion will
preserve a sufficient liquidity cushion, in particular the ability
to remain in compliance with financial covenants of the EUR 125
million revolving credit facility maturing in April 2022, as well
as continued access to the EUR825 million letter of guarantee
facility. Furthermore the current rating is based on the
expectation that Senvion will be able to stop the liquidity drain
seen in 2018, driven by an improvement of the operating
performance. However, Moody's acknowledges the fact that there is
an element of unpredictability and volatility in cash flows,
considering the large size and long lead times of projects.

STRUCTURAL CONSIDERATIONS

Senvion Holding GmbH's EUR400 million senior secured notes due 2022
are rated Caa2, one notch below the Caa1 CFR. This principally
reflects the subordinated position of the notes in the loss given
default waterfall with regards to the super senior secured
syndicated facility in a default scenario, even though the facility
and the notes share the same guarantor and collateral package. The
facility is large enough (i.e., EUR125 million in revolving credit
facility and EUR825 million in letter of guarantee facility) to
justify the notching of the senior secured notes below the CFR. The
EUR825 million letter of guarantee facility, although not a cash
credit, enjoys super seniority status versus the notes.

RATIONALE FOR OUTLOOK

The negative outlook mirrors Moody's concern that a capital
restructuring may become necessary. Over the next 3 to 6 months
Moody's will continue to closely monitor the further development in
particular with regard to the outcome of the restructuring opinion
commissioned by Senvion and possible further restructuring needs
being identified, management's business plan for 2019 and beyond,
the quality of the order book and the magnitude of potential
cancellations of orders, the company's ability to reduce leverage
as well as liquidity and covenant compliance.

WHAT COULD CHANGE THE RATING UP/DOWN

The ratings on Senvion could be downgraded (1) in case the company
fails to grow its order book and topline and improve its operating
performance in 2019, or (2) if the company's liquidity profile
deteriorates due to continued negative free cash flow generation or
the inability to comply with the financial covenant under its
credit facilities agreement. Likewise, any further indications that
the capital structure may not be sustainable or increased risk of a
distressed exchange would lead to a negative rating action.

Albeit unlikely at the moment, upward potential would develop if
the company's (1) Moody's-adjusted EBITA margin remains positive on
a sustained basis, (2) free cash flow turns positive, and (3)
Moody's-adjusted gross leverage declines below 7.0x on a sustained
basis.

LIST OF AFFECTED RATINGS:

Issuer: Senvion Holding GmbH

Downgrade:

  - BACKED Senior Secured Regular Bond/Debenture, Downgraded to
Caa2 from Caa1

Outlook Action:

  - Outlook, Remains Negative

Issuer: Senvion S.A.

Downgrades:

  - LT Corporate Family Rating, Downgraded to Caa1 from B3

  - Probability of Default Rating, Downgraded to Caa1-PD from
B3-PD

Outlook Action:

  - Outlook, Remains Negative

The principal methodology used in these ratings was Global
Manufacturing Companies published in June 2017.

Senvion S.A. is a publicly quoted entity and the ultimate holding
company of the Senvion group. Headquartered in Hamburg, Germany,
Senvion is one of the leading manufacturers of wind turbine
generators (WTGs). The group develops, manufactures, assembles and
installs WTGs with nominal outputs ranging from 2.0 MW to 6.3 MW,
covering all wind classes in both onshore and offshore markets.
Moody's notes that Senvion can also occasionally partner with its
clients via codevelopment/coinvestment projects. Senvion has a
workforce of about 4,500 worldwide and generated revenue of close
to EUR1.4 billion during the twelve months period to September
2018, with cumulative global installed capacity of around 18.1 GW.
In March 2016, private equity firm Centerbridge Partners sold a
stake of around 26.4% in Senvion S.A. to private investors in an
initial public offering.

SOLARWORLD INDUSTRIES: To Auction for Assets in Germany Soon
------------------------------------------------------------
Renewables Now, citing the Leipziger Volkszeitung, reports that an
auction will start this or next month for all equipment that can be
taken out of insolvent German firm SolarWorld's site in Freiberg as
the search for an investor has failed.

Renewables Now relates that Christoph Niering, appointed insolvency
administrator in March 2018, was cited as saying that a number of
prospective buyers have checked the production and research
facilities, but no deal could be reached. For some, the economic
prospects of module manufacturing were not attractive enough, while
for others, the lack of funding proved an obstacle, the report
says.

Competition remains fierce in the solar industry, the report notes.
A month ago, Germany-based firm Astronergy Solarmodule GmbH said it
would discontinue solar module manufacturing at its 350-MWp factory
in Frankfurt (Oder) as the market situation, and increased
competition from China in particular, did not allow production to
continue at the site.

SolarWorld Industries GmbH produces photovoltaic (PV) modules in
Germany.  SolarWorld AG filed for insolvency in May 2017. In August
2017, its assets were acquired by SolarWorld Industries GmbH, in
which the Qatar Foundation had a 49% stake, while SolarWorld
founder Frank Asbeck held 51%, Renewables Now recalls. The company
then filed for insolvency proceedings again in March 2018.

The report notes that Solytic, a solar monitoring software
developer, recently said it was buying an online portal for solar
power systems from SolarWorld. Other assets have also been sold
and, in addition to auctioning equipment, Niering will also be
seeking buyers for land and buildings.

SolarWorld America, the former US subsidiary of the German
manufacturer, was bought by SunPower Corp. in 2018, the report
adds.



=========
I T A L Y
=========

BANCA CARIGE: Administrators Need to Find Buyer by April
--------------------------------------------------------
Valentina Za at Reuters reports that temporary administrators of
Banca Carige said they had to find a buyer by April for the Italian
bank, after unveiling a EUR630 million (GBP540 million) capital
shortfall.

The European Central Bank on Jan. 2 placed Italy's 10th largest
bank under special administration -- its first ever such move --
after the top investor in the Genoa-based lender blocked a EUR400
million cash call, Reuters recounts.

Announcing a restructuring plan that envisaged 1,000 job cuts, the
special administrators said on Feb. 27 Carige's capital needs had
increased partly due to a more ambitious bad loan clean-up, Reuters
relates.

Carige reported a EUR273 million loss for 2018 after writing down
loans to enable it to make disposals, including a EUR1.9 billion
bad loan sale agreed with state-owned debt recovery specialist SGA,
Reuters discloses.

According to Reuters, Commissioner Fabio Innocenzi said SGA's offer
will stand for several months so as to give a number of funds and
banks currently studying Carige the option of bidding for the
cleaned-up bank or buy the bank with the bad loans earmarked for
SGA.

"We're in the process of setting a date in April in accordance with
supervisors . . . to receive binding bids," Mr. Innocenzi, as cited
by Reuters, said at a press conference, adding the ECB would decide
Carige's future if an offer failed to materialize.


ITALY: Prepares New Decree to Help Banks Shed Pile of Bad Loans
---------------------------------------------------------------
Reuters reports that Italy is preparing a decree to renew and
possibly modify a state guarantee scheme designed to help its banks
shed a mountain of bad loans, two sources close to the matter said
on Feb. 27.

The scheme, known by the acronym GACS, was introduced in 2016 and
is set to expire on March 6, Reuters notes.

According to Reuters, the government now aims to launch a new
program and is in talks with European authorities, which must
approve it.

"The agreement has not yet been reached but we are quite close,"
one of the sources asking not to be named, as cited by Reuters,
said.

Italian banks sold more than EUR17 billion (US$19 billion) of bad
loans in December, cutting the pile left on their balance sheets to
EUR100.2 billion, the lowest level since July 2011, central bank
data showed this month, Reuters discloses.

They completed 13 GACS-backed deals in 2018, using the scheme to
shed some EUR44 billion in bad debt, Reuters relays, citing bad
loan data group Credit Village.

Italy said in September it would start talks with European
competition authorities to obtain approval for a new program,
possibly widening its scope to include "unlikely-to-pay" (UTP)
loans which are not yet in default, Reuters recounts.



=============
R O M A N I A
=============

GARANTI BANK: Fitch Affirms BB- Long-Term IDR, Outlook Stable
-------------------------------------------------------------
Fitch Ratings has affirmed Garanti Bank S.A.'s (GBR) Long Term
Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook and its
VR at 'bb-'.

The affirmation reflects Fitch's view that GBR's financial profile
remains sufficiently resilient despite increased operating
environment risks to the banking sector from a series of proposed
or adopted legislative measures, the most acute of which is a
special tax on bank assets. The final design of the bank tax
remains uncertain, but if it remains in place in its current form
over the medium term, weaker internal capital generation capacity
could erode banks' headroom to absorb higher credit costs and
restrict growth.

KEY RATING DRIVERS

IDRS AND SUPPORT RATINGS

GBR's Long-Term IDR is driven by its standalone profile as
expressed by its VR. GBR is directly owned by Turkiye Garanti
Bankasi A.S. (TGB; BB-/Negative), which in turn is controlled by
Banco Bilbao Vizcaya Argentaria (BBVA; A/Negative). GBR's IDRs do
not benefit from any rating uplift for likely extraordinary support
from the ultimate parent because Fitch does not expect BBVA to
support GBR over and above the support it would extend to TGB.
Because of this, TGB's IDR effectively caps GBR's maximum
support-implied IDR.

The Stable Outlook on GBR's IDR reflects Fitch's view that GBR is
sufficiently independent from TGB and that internal and regulatory
restrictions on capital and funding transfers are sufficiently
strict to allow for GBR to be rated above TGB's IDR if the latter
is downgraded again, as indicated by its Negative Outlook.

VR

The affirmation of the VR reflects Fitch's view that the bank's
improving capital metrics and reasonable pre-provision
profitability provide a cushion against the potentially significant
impact of a punitive bank tax in the short to medium term. GBR's VR
is also underpinned by its sound funding profile, notwithstanding a
small deposit franchise, and by improved risk controls implemented
as part of its alignment with BBVA's processes and risk appetite
framework.

GBR's earnings over the past two years have been helped by a benign
operating environment and impairment recoveries after a clean-up
undertaken in 2016. Fitch does not expect these favourable
operating conditions to persist into 2019, so a combination of
weaker pre-impairment pre-tax profitability, rising credit costs,
and the impact of the bank tax on the business could significantly
lower earnings from the otherwise reasonably good 2.2% operating
return on risk-weighted assets achieved in 1H18.

Mitigating this uncertainty is GBR's improved capitalisation as
Fitch expects GBR to have increased its regulatory capital ratios
in 2018 primarily through retained earnings. GBR's Fitch Core
Capital (FCC) ratio of 15.2% at end-1H18 was lower than larger
peers.

Asset quality metrics are marginally better than the sector's and
were on an improving trajectory in 2018, but the bank's links to
Turkish entities, albeit limited and loan book concentration,
continue to pose risks.

Funding is predominantly from customer deposits and the bank is not
reliant on parent funding. GBR's liquidity position is adequate as
reflected by cash, accounts at the national bank and other liquid
assets in the form of Romanian government bonds, equivalent to 26%
of total funding at end-1H18.

RATING SENSITIVITIES

IDRS AND SUPPORT RATING

GBR's IDR is mainly sensitive to changes in the VR. It is also
sensitive to the rating of its direct owner TGB, and to the
strategic importance for the ultimate owner BBVA.

An upgrade of TGB's Long-Term IDR would result in an upgrade of
GBR's Long-Term IDRbecause it would provide headroom for us to
consider support uplift. Increased strategic importance within the
BBVA group could also positively impact GBR's IDR.

A one-notch downgrade of TGB's Long-Term IDR would likely lead to a
downgrade of GBR's Support Rating, but is unlikely to impact the
subsidiary's Long-Term IDR because Fitch views GBR's IDR and VR as
moderately resilient to contagion from the parent.

GBR's Short-Term IDR of 'B' corresponds to a Long-Term IDR between
'BB+' and 'B-' and will only change if the Long-Term IDR moves
outside this range.

VR

GBR's VR could be downgraded if the bank tax or other measures
undermine performance to the extent that this results in a
weakening of its solvency. The VR could also be downgraded if there
is a sharper than expected deterioration of asset quality.

An upgrade of the bank's VR would require a strengthening of its
franchises, a track record of profitable growth while maintaining
adequate asset quality and capital metrics.

The rating actions are as follows:

Long-Term IDR affirmed at 'BB-'; Outlook Stable

Short-Term IDR affirmed at 'B'

Support Rating affirmed at '3'

Viability Rating affirmed at 'bb-'



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

CB BTF-BANK: Declared Insolvent by Moscow Arbitration Court
-----------------------------------------------------------
The provisional administration to manage JSC CB BTF-Bank
(hereinafter, the Bank) appointed by virtue of Bank of Russia Order
No. OD-2534, dated September 28, 2018, following the banking
license revocation, in the course of the inspection of the Bank's
financial standing established that the Bank's management conducted
operations to divert funds through lending to an affiliated
borrower incapable to meet its obligations.

In addition, the provisional administration established an offence
committed by the Bank's officer to misappropriate depositors'
funds.

The provisional administration estimates the value of the Bank's
assets to be no more than RUR2,419.4 million, vs RUR2,945 million
of its liabilities to creditors.

On January 15, 2019, the Arbitration Court of the city of Moscow
recognized the Bank as insolvent (bankrupt). The State Corporation
Deposit Insurance Agency was appointed as a receiver.

The Bank of Russia submitted the information on the financial
transactions bearing the evidence of criminal offence conducted by
the Bank's executives to the Prosecutor General's Office of the
Russian Federation, the Ministry of Internal Affairs of the Russian
Federation and the Investigative Committee of the Russian
Federation for consideration and procedural decision-making.

The current development of the bank's status has been detailed in a
press statement released by the Bank of Russia.


METALLOINVEST JSC: S&P Ups Long-Term Ratings to BB+, Outlook Stable
-------------------------------------------------------------------
S&P Global Ratings is raising its long-term ratings on
Metalloinvest JSC to 'BB+' from 'BB', including its ratings on
bonds issued through Metalloinvest Finance D.A.C.

S&P raised the ratings because it believes Metalloinvest can
maintain credit metrics in line with the 'BB+' rating over at least
the next two years, notably FFO to debt comfortably above 45% and
debt to EBITDA at about 1.5x, accompanied by solidly positive FOCF.
This view is underpinned by:

-- Significant debt reduction, since Metalloinvest's gross and net
reported debt declined to $4.1 billion and $3.4 billion,
respectively, at year-end 2018 from $6.0 billion and $5.4 billion
at year-end 2013. Metalloinvest achieved this by reducing capital
expenditure (capex) and dividends over that period and using the
proceeds from the sale of its stake in Nornickel to repay debt.
With lower absolute debt, even a material decline in EBITDA should
still allow for solid credit metrics.

-- Management's reiteration of its commitment to further reducing
debt in 2019-2021, which we think will enhance the company's
resilience to potential volatility in commodities markets.

-- S&P's expectation that the company will adopt a new dividend
policy linking the amount of distributions to debt leverage,
stipulating that discretionary cash flow should be positive at all
times.

-- Metalloinvest's continued flexibility, in S&P's opinion, in
moderating capex and dividends, if needed, as demonstrated in
2015-2016 during periods of low iron ore prices. This should
support continued positive FOCF and discretionary cash flow.

S&P said, "We anticipate that Metalloinvest will post strong
operating and financial results for 2018, owing to the favorable
pricing environment and increased demand for high-quality iron ore
products (Fe 65% and pellets) in China, which is boosting the
related price premiums. The company is focused on maintaining its
low cost position in the left side of the first quartile of global
cash cost curves for pellets and HBI/DRI (hot briquetted
iron/direct reduced iron). We think investments in operating
efficiencies, favorable assets location, and depreciation of the
local currency are key success factors in this initiative in the
medium term.

"For 2019-2020, we anticipate less-favorable pricing conditions for
Metalloinvest, notably because of a projected gradual decline in
iron ore prices. Still, we expect the company to maintain healthy
earnings and cash flow generation, with EBITDA of $2.3 billion-$2.5
billion and FOCF of $1.2 billion-$1.4 billion. This view is also
supported by elevated spot prices for iron ore following the Vale
dam incident in Brazil, which will likely boost Metalloinvest's
cash flow generation in the first half of 2019. Moreover, in our
base case, we forecast further moderate debt reduction and early
refinancing of maturing debt.

"The stable outlook reflects our view that Metalloinvest's solid
market positions in iron ore pellets and HBI/DRI, low production
costs, and improved credit metrics balance the risks associated
with industry volatility and the changing pricing environment.
Furthermore, we regard as positive the expected adoption of the new
distribution policy and management's further commitment to reducing
debt over the next three years.

"Our current base case for Metalloinvest incorporates stable
production volumes and a slight decrease in prices, notably to $60
per metric ton (/MT) in 2020 and $55/MT in 2021 for iron ore, from
$65/MT in 2019; the current spot price is $84/MT. Still, we think
that annual FOCF of $1.2 billion-$1.4 billion in 2019-2020 together
with the leverage-linked dividend policy will help the company
absorb market volatilities and maintain credit metrics commensurate
with our 'BB+' rating, notably FFO to debt exceeding 45%, assuming
supportive prices.

"At the same time, when iron ore and steel prices are at cyclical
low points, we might tolerate temporary weakening of FFO to debt to
30%-45%, but don't expect this will translate into a rise in
absolute debt.

"We would consider a downgrade if Metalloinvest's profits and
credit metrics deteriorated significantly without short-term
recovery prospects, with FFO to debt falling below 45% despite
supportive market conditions, or below 30% at a cyclical low point.
This could happen in the event of a global steel industry downturn
similar to that in 2009, or if the Russian economy went into a deep
recession for several years with suppressed steel and iron ore
demand, translating into an EBITDA contraction of more than 35%
compared with the 2018 figure.

"Although currently unlikely in the next 12 months, we might
consider a positive rating action if the group's credit metrics
improved significantly, supported by industry and price
improvements and a considerable reduction of debt, such that FFO to
debt is sustainably above 60%. This would also require management's
commitment to such lower leverage levels, which Metalloinvest's
higher-rated peers, such as Severstal or NLMK, have demonstrated
over the past several years."



===========
S W E D E N
===========

POLYGON AB: Moody's Affirms B1 CFR, Alters Outlook to Stable
------------------------------------------------------------
Moody's Investors Service has affirmed Polygon AB's B1 Corporate
Family Rating, its B1-PD Probability of Default Rating and its B1
instrument rating on the group's EUR210 million senior secured
euronotes maturing in 2023. Concurrently, Moody's changed the
outlook of Polygon to stable from positive.

"Today's rating action reflects our revised assessment, that
Polygon is unlikely to achieve the profitability and credit metrics
improvement requirements for a rating upgrade within the next 12-18
months", says Daniel Harlid, Moody's lead analyst for Polygon. "At
the same time, the affirmation of the B1 ratings considers the
robust operating performance of the company over the last years",
Mr. Harlid continues.

RATINGS RATIONALE

The B1 corporate family rating (CFR) is supported by Polygon's (1)
leadership position in the fragmented European property damage
restoration (PDR) market, (2) broad offering of 24/7 preventive and
loss mitigating services, operational flexibility to meet demand
peaks and advanced technical capabilities, which give the group a
competitive edge and help secure long-standing customer
relationships, (3) stable demand for historically recurring water
and fire damage restoration, providing for good revenue and
earnings visibility, (4) flexible cost base with close to 90% of
total costs in EBITDA being variable, allowing for expected margin
stability, (5) moderate leverage, exemplified by Moody's-adjusted
debt/EBITDA of around 4x as of year-end 2018, (6) projected
positive free cash flow (FCF) generation in 2019 and beyond and
good liquidity, and (7) a dedicated management team with a track
record of developing the business and improving profitability over
the last three years.

Credit challenges constraining the rating relate to Polygon's (1)
relatively small scale in terms of group revenues of EUR619 million
in 2018, (2) geographic focus on Germany, albeit tempered by a
presence in 13 countries worldwide, whilst most competitors are
local players, (3) limited track record of current profitability
with a Moody's-adjusted EBIT margin of 5.3% as of 2018, improved
from only 0.1% in 2014, (4) approximately 5% of revenues generated
from extreme weather events historically, resulting in some demand
volatility and forecast uncertainty, (5) foreign currency exposure
as around 26% (40%) of group sales (EBITA) are denominated in
currencies other than the euro, albeit this is predominantly a
translational risk, (6) challenge to smoothly integrate occasional
bolt-on acquisitions whilst ensuring consistent high quality and
customer satisfaction, (7) a growth-oriented business strategy,
implying the risk of debt-funded acquisitions and/or integration
challenges, and (8) private equity ownership structure, which poses
the event risk of occasional recapitalisation measures.

LIQUIDITY

Polygon's liquidity is good, supported by a cash balance of EUR33
million as of year-end 2018 and funds from operations of EUR35 to
EUR40 million generated annually in the next 12-18 months. Moody's
expects that Polygon will generate positive free cash flows going
forward. There is meaningful intra year working capital swings with
typical build up in the first nine months of the year and a release
in Q4, all comfortably backed by internal liquidity sources. In
addition, liquidity benefits from a EUR40 million committed super
senior revolving credit facility (RCF) that matures in 2023, of
which EUR4 million currently is reserved for performance
guarantees. The RCF carries a springing covenant (super senior
leverage ratio), which needs to be tested when the facility is
drawn by more than 35% and which Moody's understands to be set with
ample headroom.

STRUCTURAL CONSIDERATIONS

In Moody's loss given default (LGD) assessment the EUR210 million
senior secured euronotes (due 2023) rank as contractually
subordinated obligations behind the EUR40 million super senior
secured RCF (maturing 2023). Both instruments are guaranteed by the
group's parent Polygon Holding AB and certain subsidiaries, which
together account for at least 85% of consolidated EBITDA and are
secured by pledges over shares in group companies and intercompany
loans. Given the weak collateral value of such assets in a
potential default scenario, the LGD analysis assumes these
instruments as unsecured.

While trade payables according to Moody's LGD analysis together
with the super senior RCF (not rated) rank senior to the notes,
unsecured short-term lease commitments and pension obligations rank
second at the level of the notes, which results in a B1 (LGD4)
rating on the notes in line with the CFR.

RATING OUTLOOK

The change in outlook to stable from positive reflects Moody's view
that improvements in profitability will be slower than previously
anticipated, leading to a Moody's-adjusted EBIT Margin of 5.3% -
5.6% in the next 12-18 months, against its previous expectations of
6.3% already last year. The backdrop of this is pressure on gross
margins due to high organic growth but also underperformance in
some of the countries as well as continuing restructuring charges.
Given the recent decision to stop rolling out the new mobile field
system -- an important driver of improved gross margins in its base
case when the rating was assigned in February 2018 -- Moody's now
project a very slow improvement. Nevertheless, deleveraging has
been material, with Moody's-adjusted debt/EBITDA falling to 4.0x in
2018 from 4.6x in 2017, which it thinks will continue given its
projected sales growth of around 5% this year (3% organic, 2%
M&A).

WHAT COULD CHANGE THE RATINGS UP/DOWN

Positive rating pressure would build, if Polygon's (1)
Moody's-adjusted debt/EBITDA declined and were sustained below
3.5x, (2) Moody's-adjusted EBIT margins were sustained at 6.5% or
higher, and (3) Moody's-adjusted FCF/debt ratios exceeded 10%,
while preserving its good liquidity profile.

Downward pressure on the ratings would result from (1)
Moody's-adjusted debt/EBITDA exceeding 4.5x, (2) Moody's-adjusted
EBIT margins falling towards 5.0%, and (3) FCF/debt metrics of 5%
or below and/or a failure to maintain a solid liquidity profile.
Moreover, evidence of a more aggressive financial policy such as
larger debt-funded acquisitions and/or distributions to
shareholders would exert pressure on the ratings.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Environmental
Services and Waste Management Companies published in April 2018.

Headquartered in Stockholm, Sweden, Polygon AB (Polygon) is a
provider of property restoration services for water and fire
damages (together 75% of sales as of 2018), major and complex
claims (11%), temporary climate solutions (7%), leak detection
services (4%) and other services (3%). The group is present in 13
countries in Western and Northern Europe (around 94% of sales, of
which 57% in Germany), North America (6%) and Singapore and employs
over 3,800 people across 252 depots. As of year-end 2018, Polygon
reported sales of EUR619 million and company-adjusted EBITDA of
EUR53 million (8.5% margin).

The group was founded in 1985 as the Moisture Control Services
business of its previous parent Swedish Munters Group. In 2010, it
was acquired by funds advised by private equity firm Triton
Partners, which currently owns about 85% of the group besides
management and the board of directors together holding a 15%
stake.


SAMHALLSBYGGNADSBOLAGET I NORDEN: S&P Affirms BB ICR, Outlook Pos.
------------------------------------------------------------------
Samhallsbyggnadsbolaget i Norden AB (SBB) owns a SEK25.2 billion
portfolio of community services and residential properties in
Sweden and Norway, as well as other assets with development
potential. SBB has improved its credits metrics through
refinancing, equity and hybrid issuances, the disposal of non-core
assets, and positive portfolio revaluation, with its S&P Global
Ratings-adjusted debt-to-debt-plus-equity falling to 61.7% in 2018
from 70.3% in 2017. We believe the company may deleverage its
capital structure further in 2019.

S&P Global Ratings said that it revised its outlook on Swedish
property company SBB to positive from stable. At the same time, S&P
affirmed its 'BB' long-term issuer credit rating on SBB.

S&P said, "The outlook revision reflects our view that SBB's credit
metrics have strengthened more than we anticipated as a result of
equity issuances, refinancing activities, and the solid positive
revaluation of its properties. We believe SBB may continue
strengthening its financial position in the coming years, assuming
building rights disposals, further refinancing, and stronger cash
flow generation.

SBB's financial risk profile is characterized by the recent
improvement in its credit metrics. Debt to debt plus equity stood
at 61.7% as of Dec. 31, 2018 compared with 70.3% in 2017. This
includes S&P's adjustments for the hybrid bonds, which it views as
having intermediate equity content, and the preference shares,
which S&P views as 100% debt.

SBB's credit metrics have improved due to the issuance of ordinary
D shares of Swedish krona (SEK) 1.3 billion; ordinary B shares of
0.135 million; the repurchase of SEK362 million preference shares
to replace them with ordinary D shares; and a bond repurchase of
SEK 1.3 billion. SBB also divested SEK3.3 billion non-core assets
and enjoyed a strong 6.2% portfolio positive revaluation in 2018.

S&P said, "We consider the newly issued class D shares as common
equity with similar features to other common shares--that is, class
A and B shares--mostly because they rank at the same seniority in
case of potential liquidation and for the payment of dividends. The
class D common shares do not have any call or put option and
entitle holders to one-tenth of a vote (same as for class B).

"We understand that SBB aims to increase the value of its portfolio
from the current SEK25.2 billion to around SEK40.0 billion by 2023,
but this will depend on further leverage reduction. We therefore
believe such growth would likely be funded through cash flow
generation, disposals, or new equity.
As a result, in our view, SBB could improve its
debt-to-debt-plus-equity firmly below 60%, which would be beyond
our current base-case expectation and commensurate with a higher
rating.

"SBB suffers from a weaker EBITDA-interest-coverage ratio than
other rated residential real estate peers, amounting to 1.6x as of
Dec. 31, 2018. This is mainly due to SBB's higher financing costs
than peers; non-recurring costs relating to refinancing; our
assessment of its hybrid bond as having intermediate equity
content, with 50% of its dividend payments accounted for as
interest; and 100% of the preference share dividends accounted for
as interest. We do not apply any equity content to the preference
shares. Due to refinancing activities in 2018, the cost of debt
improved to 2.4% at end-2018 from 3.5% in 2017. We therefore
believe SBB's EBITDA interest coverage could strengthen firmly
above 2.0x in the next 12 months.

"We continue to classify the company's hybrid bond as having
intermediate equity content, and treat 50% of the principal
outstanding and all related payments--including accrued dividends
under the hybrid bond--as debt and 50% as equity. Furthermore, we
treat 100% of the preference shares as debt (see "Swedish Property
Company Samhallsbyggnadsobolaget i Norden 'BB' Rating Affirmed;
Outlook Stable," published March 15, 2018 on RatingsDirect).

"We understand that SBB has committed to keeping hybrid capital,
including preference shares, below 15% of total capitalization--our
threshold for assessing the equity content of hybrid instruments.
SBB intends to redeem the remaining outstanding preference shares.
We would revise our assessment regarding the equity content of the
hybrid bonds if this commitment changes or our view of permanence
or deferability weakens.

"Our rating on SBB also remains supported by the company's
resilient property portfolio with a high occupancy rate, which
generates stable and predictable cash flow over the business
cycle." The community service property portfolio is characterized
by strong demand based on demographic changes, publicly financed
tenants, and long leases. The regulated residential portfolio
allows for strong demand underpinned by the housing shortage and
limited new supply.

SBB generated like-for-like rental income growth exceeding 2%-3%
for the past two years, and maintained a strong occupancy rate of
about 97%. The company has strengthened its overall asset quality
by divesting some of its non-core assets located in less demanded
peripheral cities. As a result, 68% of the properties were located
in larger cities as of Dec. 31, 2018, versus 53% in 2017.

SBB's portfolio size of SEK25.2 billion is smaller than those of
other real estate companies S&P rates in the Nordics--such as
Akelius Residential Properties (SEK 128.8 billion), Balder
(SEK114.6 billion), and Heimstaden (SEK72.3 billion)--and therefore
constrains the company's business risk profile. SBB also has some
geographical concentration risk in S&P's view, as it conducts all
of its business activities in Sweden and Norway, compared with, for
instance Akelius and Balder, which are diversified internationally.


Finally, compared with high-rated peers, S&P sees SBB as a
relatively young company, although it has expanded significantly in
the past few years. As a result, its track record in terms of
operational performance and cash flow potential of the portfolio is
limited compared with other more established companies.

SBB's plan to expand its portfolio in the coming years to around
SEK40.0 billion could create some volatility in the credit metrics.
This growth target, combined with the lack of clarity around the
pace of disposals and future equity issuances, results in some
uncertainty about the achievement and sustainability of the ratios
in the long term.

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

-- Like-for-like rental income growth of 3.0%-2.5% through
2019-2020, supported by positive inflation trends in Sweden and
Norway, and potential rent increases following refurbishments.

-- A stable occupancy rate of 96%-97% in 2019-2020, reflecting the
strong demand anticipated for SBB's assets.

-- A 1%-3% increase in portfolio value, assuming a moderate uplift
where most of SBB's properties are located.

-- Acquisitions of around SEK500 million-SEK550 million per year.

-- Disposals of around SEK650 million per year.

-- Capex increases to around SEK400 million per year as SBB
increases the number of units under refurbishment.

Based on these assumptions, S&P arrives at the following credit
measures for SBB in 2019-2020:

-- Debt to debt plus equity of about 60%. If the company were to
generate more cash flows, disposals, and share issuances, and a
higher portfolio revaluation than S&P currently anticipates, its
debt to debt plus equity could reach 55%-57%.

-- EBITDA interest coverage improving toward 2.0x-3.0x.

S&P said, "The positive outlook reflects our belief that SBB may
improve its credit metrics above our base-case expectations while
maintaining its growth ambitions.

"We could raise the rating in the next 12 months if the company
demonstrates capacity to reduce its S&P Global Ratings-adjusted
debt-to-debt-plus-equity firmly below 60% (translating into
reported loan-to-value of around 50%) while improving its
EBITDA-interest-coverage above 2x. SBB could achieve this by
issuing additional equity, disposing of non-core assets, and
generating stronger cash-flow generation than we currently expect.
A positive rating action would also depend on continuing positive
trends in the Swedish community services and residential sectors,
which would result in like-for-like growth in rental income and
portfolio value.

"We could revise the outlook to stable if SBB does not improve its
credit metrics as per its expectations, with
debt-to-debt-plus-equity staying around or above 60%, or EBITDA
interest-coverage below 2.0x. This could happen if property values
declined, equity issuances failed, or SBB pursued higher value
acquisitions than we expect. Rating pressure could also emerge if
the portfolio shrinks or shifts to riskier assets."



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

ZLATOBANK PJSC: NBU Comments on the Supreme Court Decision
----------------------------------------------------------
The National Bank of Ukraine (NBU) is deeply concerned with the
decision of the Supreme Court as of Feb. 5, 2019, that found
illegitimate the regulator's decision as of Feb. 13, 2015, on
classifying Zlatobank PJSC as insolvent.

In addition to overturning the decision of the regulator, the court
compelled the NBU to grant Zlatobank the term, as set out in
Article 75 part seven of the Law of Ukraine On Banks and Banking,
assigned for financial rehabilitation after liquidation, beyond the
expired term.

Please be reminded that the procedure for incorporation of a legal
entity intending to engage in banking, regulation of such activity,
and bank liquidation are set out by laws and regulations of
Ukraine. At the same time, law does not provide for a mechanism for
restoring, including by a court decision, after the regulator
decided to revoke the banking license and liquidate the bank.

"The NBU is certain that overturning the decision on classifying a
bank as insolvent will by no means restore either its solvency or
customer trust. Despite the liquidation procedure prescribed by
law, the court gives rise to legal uncertainty annihilating
operation of law. This, in its turn, infringes the rights of
depositors and creditors that will be deprived of their funds as
prescribed by the bank's liquidation procedure," argued Viktor
Hryhorchuk, Head of the Litigation Office of the NBU Legal
Department.

Taking into account Article 19 of the Constitution of Ukraine and
the principles of legal certainty and the rule of law, the NBU
hopes that the Supreme Court will provide in its decision an
exhaustive clarification regarding the legal means for implementing
the court decision, the status of the liquidation procedure of the
bank, etc.

The NBU awaits the complete text of the decision of the Grand
Chamber of the Supreme Court and will consider filing a petition
for clarification of the court decision, after examining it.
However, considering the history of similar cases, the NBU has not
received any clarifications from courts on such decisions.

On Feb. 13, 2015, the NBU Board approved Resolution No. 105 On
Classifying Zlatobank Public Joint-Stock Company as Insolvent.
According to the ruling of the Kyiv District Administrative Court
dated July 14, 2017, and the ruling of the Kyiv Administrative
Court of Appeal dated Oct. 25, 2017, the NBU's decision in question
was overturned.



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

A1 ALPHA: Financial Difficulties Prompt Administration
------------------------------------------------------
Business Sale reports that A1 Alpha Properties (Leicester) Limited,
a property development company based in Leicester, has fallen into
administration after experiencing a string of financial
difficulties, forcing the business to take steps to handle the
insolvency.

According to Business Sale, the company, trading from Gateshead,
has called in business advisory firm Quantuma LLP to handle the
administration process, with partners Nick Simmonds --
nick.simmonds@quantuma.com -- and Paul Zalkin --
paul.zalkin@quantuma.com -- appointed as joint administrators.

Established in 2001, the company managed the development of
residential, commercial and retail construction and assets,
Business Sale discloses.

Although Quantuma noted that A1 Alpha Properties (Leicester) had a
successful turnover of GBP1 million, the business was faced with a
series of financial difficulties as a result of unpaid monies owed
to the company's rental investors at the beginning of this year,
Business Sale relates.

The business was forced to call in administrators on Feb. 21, but
as it has no members of staff, there will be no redundancies
because of the administration process, Business Sale states.


INTERSERVE PLC: Agrees to New Terms for Debt-for-Equity Swap
------------------------------------------------------------
Global Construction Review reports that troubled UK outsourcing
company Interserve has agreed new terms for a debt-for-equity swap
with its lenders as it tries to appease shareholders and avoid
collapsing under its GBP631 million debt mountain.

The original plan would have cut existing investors' holding to
2.5%, but it was rejected by New York hedge fund Coltrane and Dutch
hedge fund Farringdon Capital Management, who together hold
approximately one-third of Interserve's shares, GCR relates.

Coltrane had also called for the entire Interserve board to be
removed apart from chief executive Debbie White, GCR discloses.

According to GCR, the revised deal doubles shareholders' remaining
stake to 5%, with 95% going to the firm's lenders, RBS, BNP
Paribas, HSBC and hedge funds Emerald Investment and Davidson
Kempner.  It also involves a 10% write off of the company's debts,
and gives the company a GBP110 million credit line until 2022, GCR
states.

Shareholders, GCR says, are due to vote on the new plan at a
general meeting on March 15, brought forward from the 26th of the
month.

The deal will need to receive a majority of votes to pass, GCR
notes.  If the firm fails to push through its restructuring, it has
lined up accountant EY to act as administrator, raising the
prospect of up to 25,000 job losses in the UK, according to GCR.


NORDIC PACKAGING: S&P Places B Rating on Watch Dev. on VPK Deal
---------------------------------------------------------------
S&P Global Ratings placing its 'B' rating on Nordic Packaging and
Container Holdings Ltd. (NPAC) and the 'B' issue rating on its
senior secured debt on CreditWatch with developing implications.

The CreditWatch placement reflects VPK's intention to acquire the
European and Chinese business of Corenso from Nordic Packaging and
Container International Inc. As a result, S&P understands that the
ownership of U.K.-based Nordic Packaging and Container Holdings
Ltd. (NPAC) and Nordic Packaging and Container (Finland) Holdings
Oy will also be transferred to VPK. The North American operations
will be carved out and continue to be owned by MDP.

S&P said, "Upon close of the transaction, we anticipate that the
change of control will trigger mandatory repayment of the €140
million senior secured term loan B. However, we have limited
information on the pro forma capital structure and VPK's financial
policies.

"The CreditWatch placement indicates that we could affirm, raise,
or lower our ratings on NPAC depending on our assessment of the
effect the transaction could have on the company's financial and
business risk profiles, including its capital structure, liquidity
profile, the financial policy of the new owner, and NPAC's standing
in the overall VPK Group.

"We estimate that the European and Chinese operations comprised
roughly half of NPAC's consolidated EBITDA in 2018. The carve out
of the North American operations is likely to result in a weaker
business risk profile on a stand-alone basis due to its reduced
scale and lower margins.

"In resolving the CreditWatch placement, we expect to assess NPAC's
operations and capital structure at transaction close. We could
affirm the ratings if NPAC's financial measures remain in a range
we view as consistent with a 'B' rating. We could raise the ratings
if the transaction results in credit measures more consistent with
a higher rating following mandatory debt repayment. We could lower
the ratings if the proposed transaction leads to a meaningful
deterioration of the company's business and financial risk
profiles.

"We expect to resolve the CreditWatch placement following the close
of the transaction, which the company expects to occur in the
second quarter of 2019."

PLAYTECH PLC: Moody's Rates Proposed EUR350M Sr. Sec. Notes Ba2
---------------------------------------------------------------
Moody's Investors Service has assigned Ba2 rating to the proposed
EUR350 million senior secured notes due 2026, to be issued by the
UK listed global technology leader for the gambling and financial
trading industries Playtech PLC. Concurrently, Moody's has affirmed
the company's Ba2 corporate family rating (CFR), the Ba2-PD
probability of default rating (PDR) and the Ba2 rating of the
EUR530 million senior secured notes due 2023 also issued by
Playtech. The outlook is stable.

The proceeds from new 2026 notes will be used to refinance the
EUR297 million convertible bonds due November 2019, for general
corporate purposes and to pay the transaction fees. At closing of
this refinancing transaction, Moody's expects Playtech to have
approximately EUR297 million of available cash adjusted for
EUR309.5 million funds attributable to clients and jackpots and
EUR70 million cash for capital adequacy purposes, and the EUR272
million revolving credit facility (RCF) due April 2021 entirely
undrawn.

RATINGS RATIONALE

While the proposed refinancing transaction is broadly leverage
neutral at around 2.6x based on 2018 pro forma results and
positively extends the maturity profile of the group's debt
obligations, it will weaken the liquidity by increasing the
interest cost by approximately EUR14-15 million per annum.

However, the group is more weakly positioned in the Ba2 category
compared to when Moody's assigned the first time ratings in October
2018, due to a deteriorated trading environment and limited
visibility as to the extent Playtech will be able to mitigate these
various downside risks with cost optimization measures and a new
commercial strategy. These include the ongoing highly competitive
Asian market (12% of pro forma revenue), particularly China,
increased gambling taxes and other regulatory measures introduced
in the UK and Italy in Q4 2018 and Q1 2019 respectively and
potential for more stringent measures in light of government budget
constraints and decelerated growth expectation in key countries of
operations, as well as tightening financial market regulation. As a
result, Moody's expects Playtech credit metrics to weaken in 2019
with gross leverage trending towards 3.0x and cash flow generation
turning negative provided that the Italian sports betting licences
are renewed in 2019. Conversely, Moody's positively notes that the
group renegotiated the Sun Bingo contract and expects it to become
profitable in 2019 and signed a new long-term agreement with GVC
Holdings PLC ("GVC"). Under the agreement, Playtech will provide
its services and products to all GVC brands, in existing and new
markets, representing an extension in scope and duration to the
current arrangements.

The rating also takes into consideration (1) the high degree of
customer concentration (10 largest customers account for 54% of B2B
gambling) and some exposure unregulated markets within the gambling
division, albeit this has diluted with Snaitech and recent
headwinds underpinning the Asian operations; (2) the fact the group
operates in a highly competitive operative environment, as
evidenced by the recent events in China and competition, where new
players or technologies as well as consolidation and in sourcing
trends represent a threat to Playtech's business model; (3) the
risk of substantial losses in the financial trading division as a
result of extreme market movements, partially mitigated by the risk
management processes; and (4) ongoing threat for more stringent
regulatory requirements in both gambling and financial trading
(following ESMA's adoption of MiFid2 guidelines in August 2018).

The Ba2 rating is however positively supported by (1) Playtech's
position as established global technological operator in the online
gaming software market; (2) the medium term contracts and
entrenched relationships particularly with the largest customers
within the B2B gambling division; (3) positive fundamentals
underpinning the online gambling and financial trading industries;
(4) the historic strong organic growth of Playtech stand-alone
albeit this has decelerated in 2017 and became negative in 2018
mainly due to changes in the market conditions in Malaysia and
China, and weak performance of the B2C gaming; (5) the high level
of cash generated from operations, however used either for
shareholders distributions or pursue the group's acquisition
strategy, but expected to weaken in the next 12 to 18 months.

LIQUIDITY

Moody's considers Playtech's liquidity position to be good for its
near term requirements. This is supported by (1) available cash on
balance sheet of at least EUR297 million at close; (2) full
availability under its EUR272 million RCF maturing April 2021; and
(3) continued positive operating cash flow. These sources are
sufficient to cover capital expenditures of EUR120-130 million per
annum (excluding bolt-on acquisitions), the EUR60 million cost to
renew the sports betting rights in Italy likelyto occur in 2019,
shareholders' distributions (dividends and shares buy-back) and M&A
activity. Additionally, the group has EUR159 million earn-out
liabilities due over the next three years.

The RCF has two financial maintenance covenants to be tested on a
quarterly basis, which are a maximum leverage ratio of 3.25x
(stepping down to 3.1x in October 2019) and minimum interest cover
ratio of 4.0x. Moody's anticipates large headroom under these
covenants in the next 12-18 months.

STRUCTURAL CONSIDERATIONS

Using Moody's Loss Given Default (LGD) methodology, the Ba2-PD PDR
rating is aligned to the Ba2 CFR. This is based on a 50% recovery
rate, as is typical for transactions including both bonds and bank
debt. The Ba2 rating assigned to the EUR530 million and EUR350
million SSNs is also in line with the CFR.

Both the notes and the RCF rank pari passu and are secured mainly
against share pledges of certain companies of the group. As at
December 2017 the notes benefit from the guarantees of subsidiaries
representing, together with the issuer, 137% of consolidated
adjusted EBITDA and 55% of total net assets. However, this excludes
Snaitech which will not provide guarantees to the group. The RCF is
guaranteed by material subsidiaries representing at least 75% of
consolidated EBITDA and 55% of gross assets.

RATIONALE FOR THE STABLE OUTLOOK

The stable outlook assumes that Playtech will maintain Moody's
adjusted leverage below 3.0x over time as well as a cash cushion,
and will be able to adapt and partially offset adverse regulatory
changes in the gambling or financial trading industries with no
material customer or volume losses. The stable outlook also
incorporates the assumptions that the group will continue to make
bolt-on acquisitions and distribute dividends while maintaining a
prudent capital structure.

WHAT COULD CHANGE THE RATING UP/DOWN

Positive pressure on the ratings is unlikely in the near term due
to the high uncertainty of the market conditions. However, it could
develop if Playtech can successfully adapt to the changes in the
operating environment by sustaining revenue and EBITDA growth,
demonstrates stabilization of its Asian operations and recovery in
the casual games and Sun Bingo, maintains its profitability
measured as EBITDA margin at around 25%, as well as positive free
cash flow generation. Quantitatively, positive pressure could occur
if Moody's-adjusted debt/EBITDA falls towards 2.0x, FCF/Debt stays
above 10%, while maintaining good liquidity.

Conversely, negative pressure on the ratings could arise if (1) the
Moody's-adjusted debt/EBITDA moves towards 3.5x on a sustained
basis; (2) its free cash generation and liquidity profile weaken;
and (3) its profitability deteriorates owing to competitive,
regulatory and fiscal pressure or an inability to integrate
acquired businesses. A more aggressive financial policy including
large-scale debt-funded acquisitions which significantly increase
leverage would be likely to cause negative rating pressure.

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

Headquartered in the Isle of Man, Playtech is a leading technology
company in the gambling and financial trading industries and the
world largest online gambling software and services supplier,
employing over 5,800 people across 17 offices, of which 1,800 are
developers. Playtech was founded by Israeli entrepreneur Teddy Sagi
in 1999 and has grown through a combination of organic growth and
acquisitions. It is currently listed on the London Stock Exchange
with a market capitalisation of approximately GBP1.3 billion. For
the financial year 2018, the group, pro forma for Snaitech,
generated EUR1,623 million of revenue and EUR405 million of
EBITDA.

Assignments:

Issuer: Playtech Plc

  - Backed Senior Secured Regular Bond/Debenture, Assigned Ba2

Affirmations:

Issuer: Playtech Plc

  - Probability of Default Rating, Affirmed Ba2-PD

  - Corporate Family Rating, Affirmed Ba2

  - Backed Senior Secured Regular Bond/Debenture, Affirmed Ba2

Outlook Actions:

Issuer: Playtech Plc

  - Outlook, Remains Stable

THOMAS COOK: Fitch Cuts Long-Term IDR to B, Outlook Negative
------------------------------------------------------------
Fitch Ratings has downgraded Thomas Cook Group PLC's (TCG)
Long-Term Issuer Default Rating to 'B' from 'B+'. The Outlook is
Negative. Fitch has also downgraded the senior unsecured rating to
'B+'/'RR3' from 'BB-'/'RR3' for the bonds issued by TCG and Thomas
Cook Group Finance Plc.

The downgrade reflects prolonged operating weakness at TCG, as
Fitch expects price pressure to continue, prompted by the knock-on
effect of an exceptionally warm summer of 2018 on bookings for the
current year. This will delay deleveraging, with funds from
operations (FFO) adjusted gross leverage now expected to return to
5.5x by end-2021 at the earliest. The Negative Outlook also
reflects the deterioration in TCG's liquidity profile, with
liquidity headroom likely to be limited by the critical, seasonally
low cash point in winter 2019 and early 2020.

KEY RATING DRIVERS

Relentless Competition: In both the tour operator (TO) and airline
markets, competition remains fierce both from existing incumbents
such as TUI AG and British Airways Plc (BBB-/ Stable) but also from
disruptors such as Ryan Air and On the Beach Group plc. In
addition, pure online TOs, such as On the Beach Group, benefit from
lower cost bases, in some cases, due to their digital-only business
model, and hence greater operational flexibility, including an
ability to price aggressively. This puts TCG's cost base, and in
particular, its still large store portfolio in the UK, under
pressure.

Reduced Capacity, Prices Rising: TCG has reduced its holiday
package and airline seat capacity to better manage the risk to its
pricing structure and cost base. Fitch estimates that capacity has
been reduced by between 5% and 15% for the 2019 summer season. As a
result, summer TO bookings are down 12%, which has helped lift
pricing by 4% in the first quarter of the financial year to
September 2019. Airline bookings have also declined due to a
shrinkage in capacity through lower aircraft "wet leases" take-up
in 2019, while average selling price is around 6% higher. Overall
Fitch expects a fall in revenue in FY19 of around 3%-3.5% and a
mild increase in EBIT margin to around 2.8% (2.6% in FY18).

EBIT Margin Recovery Slows: Under Fitch's revised forecasts, TCG's
EBIT margins should recover more slowly than previously envisaged,
increasing to 3.1% by 2020. This is below Fitch's previous
sensitivity of 4% to maintain a 'B+' rating. This profit margin
weakness will also impact the group's ability to generate free cash
flow (FCF) and de-leverage.

De-leveraging Delayed: According to Fitch's revised estimates, it
expects FFO lease-adjusted gross leverage to be 6.3x in FY19, which
is more aligned with a 'B' rating. Fitch also expects slower
deleveraging than under its September 2018 forecasts and thus FFO
lease-adjusted gross leverage may reduce below 5.5x only in FY21 at
the earliest. In addition, slow profitability recovery also impacts
Fitch's FFO fixed charge cover metrics, which, similar to the
leverage profile, are now expected to remain weak at between 1.5x
and 1.8x by FY22, against its previous negative sensitivity of 2.0x
for maintaining the 'B+' rating.

Tight Liquidity Headroom: TCG has tight liquidity headroom in light
of the high working capital movementsunder its business model,
particularly in the last and first quarters of the year when
suppliers have to be paid. The undrawn portion of the group's
revolving credit facilities (RCF) at end-September 2018, (GBP630
million), along with cash on balance sheet of GBP1 billion, were
just sufficient to fund operations for the entire year without the
support of the commercial paper (CP) programme (GBP177 million
outstanding at FYE18).

As the CP is an uncommitted facility, unfavourable market
conditions may further constrain financial flexibility and
capacity. This will be exacerbated by the small negative FCF that
Fitch forecasts for FY19, on the back of negative working capital
given the capacity reduction, leading to a forecast increase in
debt by up to GBP50 million-GBP60 million. Fitch understands from
management that TCG is currently working on other measures to
improve liquidity.

Airline Strategic Review Announced: The group's current debt
structure provides TCG with little financial flexibility and leaves
it with insufficient funds to develop its higher-margin own-hotel
concepts and digital offer.  As a result TCG has now decided to
review the strategy for its airline business.  This could involve
either a partial or whole sale of the airline division before the
end of 2019. TCG owns attractive slots at airports both in the UK
and Germany and European operating licenses but the need to retain
some capacity for TCG's own customers and an ageing aircraft fleet
could weigh on the price obtained on a disposal. Fitch would expect
proceeds to be used for a combination of debt repayment and capex.
The valuation to be obtained, in case of a sale, and application of
the sale proceeds will be critical to Fitch's assessment of its
credit impact.

Brexit Uncertainty Maintained: Although TCG advises that Brexit has
not materially affected the group's UK bookings, the current level
of uncertainty and approaching deadline (29 March 2019) could mean
greater prudence from UK customers in spending. Nevertheless, TCG
has a Brexit price promise, which guarantees there will be no
surcharges before departure. Summer 2019 pricing is protected as
sterling volatility as been mitigated by FX and fuel hedging.

In northern Europe and Germany, Fitch waits to see if demand will
return as consumer confidence remains broadly flat at the current
time. Early bookings for the 2019 summer season show a drop in
volume by 12% for TCG's TO, mainly due to reduced capacity.

Exposure to External Risks: As a TO , TCG's business remains
vulnerable to a high level of risks, most notably geopolitical
events, macroeconomic pressure and changing weather patterns. TCG
is also exposed to fuel price risk, although nearly 100% of FY19
fuel costs are already hedged (70% for winter 2019). Such
underlying risks are reflected in the 'B' category rating.

Resilience Tested, Brand Differentiation: TCG benefits from a
strong and trusted brand and is the world's second-largest TO. The
ratings reflect the high risk inherent in the TO sector, but the
group has consistently demonstrated its flexibility in coping with
external shocks and stiff competition. This risk is further reduced
by the group's diversification of source markets in Europe, with
the UK business now only contributing roughly one-third to
operating profit. In addition, the group is expanding its
differentiated own brand and higher-margin hotel concepts such as
Casa Cook and Cook's Club.

DERIVATION SUMMARY

TCG is the second-largest TO in the world, behind TUI AG (TUI) by
revenue. It is less geographically diverse than TUI, which also has
a more diverse and resilient product base including cruise ships.
TCG's FFO margin is also lower than Expedia Inc's (BBB-/Stable) or
traditional hotel operators such as NH Hotels Group S.A.
(B+/Positive) and Radisson Hospitality AB (B+/Stable). Nevertheless
compared with hotel operators, TCG has more stable and positive
FCF, along with slightly stronger FFO charge coverage on the back
of lower rent costs and a more asset-light business model. Its
airline operations include both short and long-haul destinations
but its operating margin is low by peer standards.

TCG's business risk is higher than an internet travel company's or
hotel operator's due to the need to manage an airline cost base.
However its business risk is much lower than pure airline
companies, due to its flexible operating model (more asset- light
than an airline company, flexibility in reducing capacity and
re-routing customers, inbuilt passenger capacity and being a
multi-channel operator).

KEY ASSUMPTIONS

  - Decrease in revenue in FY19 by 3.3% following capacity
reduction at airline and TO. Stable growth thereafter at 2.3% p.a.
in FY20-22

  - EBIT margin at 2.8% in FY19, improving towards 3.1% by FY21.
Fitch expects the effect of the 2018 summer heatwave to not repeat
itself in 2019. EBIT margin should also be sustained by reduced
capacity and TCG's focus on profitability

  - Capex of around GBP210 million-GBP230 million over the next
three years, equal to 2.3% of sales

Recovery Assumptions

  - Fitch's recovery analysis assumes that TCG would be treated as
a going concern in a restructuring and that the group would be
reorganised rather than liquidated. Fitch has assumed a 10%
administrative claim.

  - TCG's going-concern EBITDA is based on FY18 EBITDA of GBP469
million. Given the going-concern assumption, Fitch deducts the
present value of finance leases payable in FY19 of GBP34 million as
well as interest payable of GBP17 million.

  - After these deductions and implying a stressed discount, Fitch
arrives at an estimated post-restructuring EBITDA available to
creditors of GBP324 million. Fitch then applies a conservative
distressed enterprise value (EV)/EBITDA multiple of 4.5x, resulting
in an EV of GBP1,313 million.

  - In terms of distribution of value, unsecured debtholders
(including bonds and pension obligations) would recover 56% in the
event of default consistent with a Recovery Rating of 'RR3',
consistent with an instrument rating of 'B+', one notch above TCG's
IDR. In this analysis, Fitch assumes that the full amount under
TCG's RCF will be fully drawn.

RATING SENSITIVITIES

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

  - Continued improvements in business model and profit resilience
resulting in EBIT margin remaining above 4% on a sustained basis
and continuing positive FCF margin of at least 1% of revenue

  - Maintenance of conservative capital allocation policy reflected
in FFO lease-adjusted gross leverage (including additional GBP200
million RCF drawing) falling consistently below 5.5x.

  - A reduction in overall interest expenses and enhanced
profitability leading to FFO fixed charge cover rising to above
2.0x on a sustained basis

Developments That May, Individually or Collectively, Lead to the
Outlook being revised to Stable

  - Improvements in the business model and profit resilience
resulting in EBIT margin improvement above 3% on a sustained basis
and neutral-to-positive FCF

  - Liquidity headroom of around GBP200 million supported by
further measures to improve access to liquidity throughout the
year

  - FFO lease-adjusted gross leverage of around 6.0x, based on a
sustainable operational turnaround and/or application of proceeds
from asset disposals to debt reduction

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

  - Competitive pressures and deterioration in airline
profitability resulting in the EBIT margin remaining continually
below 3%

  - FFO lease-adjusted gross leverage remaining above 6.5x on a
sustained basis

  - Weakening financial flexibility measured as FFO fixed charge
cover staying below 1.5x on a sustained basis
  - Liquidity headroom below GBP150 million

LIQUIDITY AND DEBT STRUCTURE

Tight Liquidity: As at end-September 2018, TCG's liquidity headroom
comprised the undrawn portion of the RCF, which stood at GBP630
million and according to Fitch's adjustments GBP1 million of
readily available cash. This is after deducting GBP1 billion for
working capital purposes and GBP38 million of restricted cash.
Fitch also assume a further GBP200 million drawdown from the RCF to
cover working capital requirements. These funds were sufficient to
cover GBP218 million of short-term financial liabilities in 2019,
but tight to fund working capital movements for the entire year,
including the critical fourth quarter of the calendar year.

The group drew down its entire RCF in 1Q FY19 for working capital
purposes. This is when the minimum level of liquidity is
traditionally reached after payments to hotels for the previous
summer season. Fitch currentlys expect liquidity to build up
towards the peak level of September as customers book their summer
holidays. TCG is committed to maintaining minimum liquidity
headroom of GBP150 million during the year and has used uncommitted
CP funding to meet this target (GBP177million at FYE18).
Nevertheless Fitch understands that the company could use further
levers to improve its liquidity position.



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

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-----------------------------------------------
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Mr. Chauncey M. Depew: "The valedictorian of the college, the
brilliant victors of the moot courts who failed to fulfill the
promise of their youth have neglected to continue to study and have
lost the enthusiasm to which they owed their triumphs on mimic
battle fields." Mr. Tracy advises against playing golf with one's
client every time he asks: "My advice would be to accept his
invitation the first time, but not the second, possibly the third
time but not the fourth."

Other topics discussed by Mr. Tracy, with the same practical, sound
advice, include fixing fees, drafting legal instruments, examining
an abstract of title, keeping an office running smoothly, preparing
a case for trial, and trying a jury case. But some of best counsel
he offers is the following: You cannot afford to overlook the fact
that you are in the practice
of law for your lifetime; you owe a duty to your client to look
after his interests as if they were your own and your professional
future depends on your rendering honest, substantial services to
your clients. Every sound lawyer will tell you that straightforward
conduct is, in the end, the best policy. That kind of advice never
ages.

John E. Tracy was Professor Emeritus and Member of University of
Michigan Law School Faculty from 1930 to 1969. Professor Tracy
practiced law for more than a quarter century in Michigan,
New York City, and Chicago before joining the Law School faculty in
1930. He retired in 1950. He was born in 1880. He died in December
1969.



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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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