/raid1/www/Hosts/bankrupt/TCREUR_Public/190319.mbx        T R O U B L E D   C O M P A N Y   R E P O R T E R

                          E U R O P E

          Tuesday, March 19, 2019, Vol. 20, No. 56

                           Headlines



A Z E R B A I J A N

SOUTHERN GAS: Fitch Affirms Sr. Unsec. Eurobonds' LT Rating at BB+


F R A N C E

DELACHAUX GROUP: Moody's Rates New EUR855MM Loans 'B2'
DELACHAUX S.A.: S&P Affirms 'B+' ICR on Acquisition & Refinancing


G E O R G I A

JSC SILKNET: Fitch Affirms 'B+' IDR, Rates New $200M Bond 'B+(EXP)'


I R E L A N D

CARLYLE EURO 2019-1: Fitch Assigns Class E Notes Final B-sf Rating
CARLYLE EURO 2019-1: Moody's Rates EUR10MM Class E Notes B2
EURO-GALAXY VII: Fitch Puts 'BB- (EXP)sf' Rating on Class E Notes
EURO-GALAXY VII: Moody's Gives (P)B2 Rating to Class F Notes
EUROCHEM FINANCE: Fitch Rates US$700MM Guaranteed Notes Final 'BB'



I T A L Y

ALITALIA SPA: Italian Officials Attempt to Resurrect Rescue Deal


M O N T E N E G R O

MONTENEGRO: S&P Affirms 'B+/B' Sovereign Credit Ratings


N E T H E R L A N D S

STEINHOFF INTERNATIONAL: To Dig Deeper Into Accounting Misdeeds


R U S S I A

EVRAZ PLC: Moody's Assigns Ba1 CFR, Outlook Stable
ORIENT EXPRESS: Moody's Cuts LT Bank Deposit Ratings to Caa1


S P A I N

THINK SMART: Court Decides to Dissolve Business


U K R A I N E

KHARKOV: Fitch Affirms 'B-' IDR; Outlook Stable
KYIV: Fitch Affirms 'B-' IDR; Outlook Stable


U N I T E D   K I N G D O M

ARCADIA GROUP: Green Working on Restructuring Amid Tough Market
INTERSERVE PLC: Mitie Group Mulls Acquisition of Largest Unit
NEWGATE FUNDING 2006-2: Fitch Ups Class E Notes Rating to 'BB+sf'
PATISSERIE VALERIE: Shareholders Plan to Take KPMG to Court
SBOLT 2018-1: Moody's Affirms Ba2 Rating on GBP14MM Class D Notes



X X X X X X X X

HAMKORBANK: Moody's Hikes Local Currency Deposit Rating to B1

                           - - - - -


===================
A Z E R B A I J A N
===================

SOUTHERN GAS: Fitch Affirms Sr. Unsec. Eurobonds' LT Rating at BB+
------------------------------------------------------------------
Fitch Ratings has affirmed Southern Gas Corridor CJSC's (SGC)
senior unsecured Eurobonds' long-term rating at 'BB+'.

The affirmation reflects Fitch's unchanged view on SGC's USD2
billion Eurobonds maturing in 2026 fully guaranteed by the Republic
of Azerbaijan (BB+/Stable).

KEY RATING DRIVERS

The rating reflects the unconditional, unsubordinated and
irrevocable guarantee of full and timely repayment provided to
noteholders by the Azerbaijan government. As a result, Fitch views
the notes' rating as equalised with the sovereign's Long-Term
Issuer Default Rating (IDR).

Azerbaijan explicitly guarantees SGC's notes, while the noteholders
can enforce their claims directly against the state without being
required to institute legal actions or proceedings against SGC
first. The guarantee is governed by English law and ranks pari
passu with all other unsecured external sovereign debt.
Historically, the reserves for the guarantee coverage had been
appropriated in the annual state budgets for 2016-2018, and Fitch
expects continuity of this practice in 2019 onwards.

According to the management forecast SGC's total needs for cash,
net of expected proceeds from operations of Shah Deniz, South
Caucasus Pipeline and planned divestments, will be close to USD700
million in 2019-2020.

SGC's funding stems from a combination of debt and equity
injections from the state, with the latter amounting to USD2.4
billion as of end-2018. SGC's debt stock as of end-2018, comprised
38% bonds purchased by State Oil Fund of the Republic of Azerbaijan
(SOFAZ), followed by loans originated or guaranteed by IFIs (32%)
and Eurobonds (30%).

SGC acts as a financial vehicle and asset holding agent in the gas
export sector of Azerbaijan with stakes in the Shah Deniz
gas-condensate field and gas pipelines stretching to southern
Europe via Georgia and Turkey. Azerbaijan tightly controls SGC as
it ultimately owns 100% of the entity via a 51% stake held by the
Ministry of Economy and a 49% stake held by the State Oil Company
of Azerbaijan Republic (SOCAR, BB+/Stable).

RATING SENSITIVITIES

The rating of the senior unsecured notes is equalised with that of
the Republic of Azerbaijan. Accordingly, changes in the sovereign
rating will be reflected in the notes' rating. Furthermore, any
sign of the Republic of Azerbaijan's intention to revoke or failure
to honour the guarantee would be rating-negative.



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F R A N C E
===========

DELACHAUX GROUP: Moody's Rates New EUR855MM Loans 'B2'
------------------------------------------------------
Moody's Investors Service has affirmed the B2 corporate family
rating (CFR) and the B2-PD probability of default rating (PDR) of
the Delachaux Group S.A. ("Delachaux" or "group"). Concurrently,
Moody's has assigned the B2 rating to the proposed EUR855 million
equivalent multi-currency issuance of senior secured term loans
borrowed by Delachaux and its subsidiaries: the EUR678 million
TL-B1, the USD 200 million TL-B2 and EUR75 million senior secured
revolving credit facility (RCF). The outlook remains stable.

Delachaux will use the proceeds of the new senior secured term
loans due in 2026 to refinance its existing terms loans due in 2021
as well as to finance the acquisition of Frauscher Sensor
Technology Group GmbH ("Frauscher"), the Austria-based provider of
engineered solutions in tracking and monitoring of trains and rail
infrastructure. Upon completion of the transaction Moody's expects
to withdraw the B2 instrument rating on the old credit facilities.

RATINGS RATIONALE

The debt refinancing transaction and the corresponding increase in
Delachaux's outstanding debt for the purpose of accommodating the
Frauscher acquisition will increase Moody's adjusted gross leverage
to around 6.7x on a pro forma basis as of year-end 2018 compared to
5.9x at the end of 2017. While this positions Delachaux's rating
weakly in the B2 rating category, Moody's expects the ratio to
decline to below 6.5x already by the end of this year, followed by
a further deleveraging in 2020 driven by positive free cash flows.

The expected deleveraging will be in Moody's view driven by an
increase in profitability in rail infrastructure. While an increase
in some raw material prices presented headwinds in 2018 due to the
time lag of pass-through price increases to customers, the company
actively undertakes purchasing initiatives in order to mitigate
higher raw material prices and pursues several footprint
optimization and cost cutting initiatives that should result in a
margin uplift. Moody's expects that thanks to favourable market
fundamentals (ageing infrastructure in developed countries and
urbanization in emerging markets pushing up demand for rail network
expansion) and Delachaux's ongoing efforts to expand into
high-growth regions, the group will be able to show low to
mid-single digit top line growth in the coming 12-18 months in both
segments, Rail Infrastructure (55% of group sales) and Diversified
Industries (45%).

The rating affirmation reflects the group's dominant niche market
position as a global leader in fastening systems and alumino
thermic welding for rail infrastructure with a high proportion of
resilient maintenance business as well as leading positions in
conductic and chromium businesses servicing a wide range of end
markets. Combined with a relatively flexible cost base and low
capex requirements, Moody's believes Delachaux is able to generate
positive free cash flow even in a cyclical downturn, as it did back
in 2009. The rating affirmation reflects Moody's expectation of a
gradual deleveraging of the capital structure, following the
debt-financed acquisition of Frauscher.

Moody's noted positively a change in the Delachaux's ownership
structure following CVC Capital Partners's exit in November 2018.
Delachaux family has increased its stake to majority (56% from 50%
previously) whereas La Caisse de Dépôt et Placement du Québec
(CDPQ), as a long-term oriented investor, acquired the rest. The
group's financial policy is focused on deleveraging, though it
permits a payment of dividends depending on the level of net
leverage. The partners agreed on a mid-term net financial leverage
target of 3.5x -- 4x for the Delachaux group (5.4x pro-forma
2018).

The acquisition of Frauscher, whilst increasing company's financial
leverage -- a key limiting factor for the rating, strengthens
Delachaux's market positions in the area of predictive maintenance
for rail infrastructure.

LIQUIDITY

Pro forma for the refinancing Delachaux's liquidity remains solid.
At transaction closure the group is expected to have EUR84 million
of cash as well as EUR75 million undrawn revolving credit facility
maturing in 2025, which Moody's expects to remain undrawn for the
foreseeable future. These liquidity sources and expected funds from
operations (FFO) provide the group with an ample cushion to cover
expected capex, working capital and minor scheduled debt
repayments.

STRUCTURAL CONSIDERATIONS

Delachaux's targeted capital structure will consist of the proposed
EUR855 million equivalent senior secured TLB and EUR75 million
equivalent RCF, both ranking pari passu in terms of priority of
claims, share the same security and will be guaranteed by entities
accounting for at least 80% of consolidated EBITDA. In Moody's Loss
Given Default (LGD) analysis the senior secured facilities are
rated in line with the corporate family rating at B2, reflecting
that Moody's does not differentiate priority of claims in this
capital structure. Considering the financial covenants are not
constraining the financial flexibility, the recovery in case of
default is modelled as 50%, hence a PDR at B2-PD.

RATING OUTLOOK

The stable outlook reflects Moody's expectation of a sustained
benign rail market environment in which the group operates. This
should support a decline in Moody's-adjusted debt/EBITDA to below
6.5x and a continued positive FCF generation, whilst assuming a
conservative financial policy with a clear focus on deleveraging
given the change in ownership structure.

WHAT COULD CHANGE THE RATINGS UP/DOWN

Moody's would consider upgrading Delachaux if the group's
Moody's-adjusted gross debt/EBITDA were to decline below 5.5x on a
sustainable basis. Moody's would also require FCF/debt (Moody's
adjusted) to remain around the mid-single digit range and EBITA
margins to stay above 12% on a sustainable basis.

Negative rating action could be driven by Moody's-adjusted gross
debt/EBITDA consistently exceeding 6.5x or in case the group would
generate consistently negative free cash flow. Signs of a material
weakening in its core market positions with a deterioration in
EBITA margins to below 10% may also exert downward pressure on the
rating as indicative of fiercer competition and/or pricing
pressure.

Delachaux Group S.A. was initially founded in 1902 by the Delachaux
family with operations primarily in rail infrastructure. In 2018,
the company generated EUR995 million of revenues on a pro-forma
basis including Frauscher and EUR143 million of management-adjusted
EBITDA. Following the exit of funds controlled by CVC Capital
Partners Ltd. in November 2018, Delachaux is now owned by Ande
Investissements (56% stake), which belongs to Delachaux family, and
Caisse de Depot et Placement du Quebec (CDPQ) holding a 43% stake.

DELACHAUX S.A.: S&P Affirms 'B+' ICR on Acquisition & Refinancing
-----------------------------------------------------------------
S&P Global Ratings affirms its 'B+' long-term issuer credit rating
on Delachaux S.A. S&P also assigns its 'B+' issue rating and '3'
recovery rating to the group's proposed senior secured term loan.

On Feb. 28, 2019, Delachaux S.A. completed the acquisition of
Austria-based Frauscher for an enterprise value of about EUR230
million, which it partly funded via a EUR160 million incremental
facility under its existing term loan and equity. At the same time,
Delachaux launched the refinancing of its capital structure with a
new EUR855 million senior secured term loan B.  

S&P said, "The affirmation reflects our view that Frauscher's
stronger profitability and the potential for free operating cash
flow (FOCF) generation will offset increased indebtedness stemming
from the acquisition. We therefore expect that, after a peak in
adjusted debt to EBITDA of 6.5x in 2019 (or 7.7x including
preferred shares owned by CDPQ), it will return to 6.0x in the
following year (7.3x including preferred shares). At the same time,
we anticipate that Delachaux's (the group) unadjusted free
operating cash flow (FOCF) could exceed EUR50 million in 2020,
compared with EUR30 million-EUR35 million per year in 2018 and
2019."

Delachaux plans to issue a new EUR855 million seven-year term loan
B that it will use to repay its outstanding EUR637 million term
loan B maturing in 2021, fund the acquisition, and repay EUR30
million of drawn overdrafts. S&P notes that the group's
shareholders, CDPQ and the Delachaux family--as well as Frauscher's
management team--have contributed EUR36 million in equity to
finance the acquisition. The refinancing package also includes a
new EUR75 million revolving credit facility (RCF), which will
remain undrawn.

S&P said, "We base the stable outlook on our expectation that
Delachaux will continue to demonstrate steady 2%-3% expansion
across its key divisions, while at the same time befitting from the
integration of the faster-growing and more profitable Frauscher
business. We expect the EBITDA margin will return to 14%-15%, while
FFO to debt--excluding preferred shares--will remain at 8%-9% over
the coming 12 months. We also expect Delachaux to consistently
generate positive FOCF of at least EUR30 million per year in 2018
and 2019.

"We could consider a positive rating action if Delachaux's debt to
EBITDA reduced to less than 5.0x, excluding preferred shares, and
FFO to debt rose above 12%, with shareholders demonstrating a
strong commitment to maintaining these levels on a sustainable
basis.

"We could lower the ratings if Delachaux's EBITDA margin declined
to about 12%, FOCF dropped below EUR30 million, and FFO cash
interest coverage weakened to less than 2.5x with no near-term
recovery prospects. Significant debt-funded acquisitions, dividend
recap, or other shareholder distributions that put pressure on
liquidity or significantly increase leverage, could also trigger a
downgrade."



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G E O R G I A
=============

JSC SILKNET: Fitch Affirms 'B+' IDR, Rates New $200M Bond 'B+(EXP)'
-------------------------------------------------------------------
Fitch Ratings has affirmed Georgian-based telecoms company JSC
Silknet's Long-Term Issuer Default Rating (IDR) at 'B+' with a
Stable Outlook. Fitch also assigned Silknet's forthcoming USD200
million bond issue an expected senior unsecured rating of
'B+(EXP)'/'RR4'/50%. The company will use the proceeds to refinance
existing indebtedness.

The assignment of a final rating on the bond is contingent upon the
receipt of final documents conforming to the information already
received.

Silknet is the incumbent fixed-line telecoms operator in Georgia
with an extensive backbone and last-mile infrastructure across the
country. The company holds sustainably strong market shares of
above 35% in fixed-voice, broadband services and pay-TV services by
revenue. The acquisition of Geocell in 2018 has turned the company
into a full bundle-enabled operator.

Key Rating Drivers

Improved Liquidity: The new bond issue should improve the company's
liquidity by repaying a major part of existing debt and extending
the next largest debt maturity to 2024. Currently, Silknet's debt
largely consists of secured loans with annual amortisations, which
imply some refinancing risks that are partially mitigated by
established relationships with TBC bank (BB-/Positive). Liquidity
would also be supported by strong free cash flow (FCF) generation,
which Fitch expects from 2020, following the completion of network
upgrades and subsequent capex reduction.

Reduced FX Risk: Silknet plans to enter into a currency swap
agreement for USD70 million to reduce FX exposure post-bond issue.
The swap instrument will match the maturity of the new notes. Fitch
estimates that this swap should reduce the amount of FX-denominated
debt to 65% of total debt, from 80% at end-2018. At the same time,
the swap increases interest costs. Despite this partial hedge, FX
risk remains significant, which Fitch has reflected in tighter
downgrade leverage triggers for Silknet relative to its peers. Most
of the company's revenue is in local currency.

Leverage to Spike in 2019: Fitch estimates Silknet's funds from
operations (FFO) adjusted net leverage (pro-forma for the Geocell
acquisition) to have increased to 2.9x at end-2018 from 2.1x in
2017. Fitch's forecasts show leverage increasing further to 3.2x at
end-2019 due to significant network investment, an assumed one-time
dividend payment of GEL40 million, together with increased interest
and transaction costs related to the new notes. Leverage is likely
to ease back to below 3.0x in 2020 on improved FCF as realised
Geocell synergies lead to higher EBITDA, together with lower
capex.

Stronger Operating Profile: The acquisition of the second-largest
mobile operator in Georgia in 2018 has a strong strategic
rationale, enabling Silknet to start offering bundled fixed and
mobile services and improving its competitive standing versus its
key domestic rival Magticom, which is also fully four-play-enabled
(i.e. offering fixed voice, broadband, pay-TV and mobile services).
Fitch expects Silknet to gradually improve its competitive position
after becoming four-play-enabled, and on the back of significant
network investments already completed in 2015-2018 and expected in
2019.

Dominant Shareholder Influence: The company's 100% shareholder Silk
Road Group can exercise significant influence on the company and
has access to Silknet's cash flows. Silknet's governance is
commensurate with the 'B' rating category. Silk Road Group does not
publicly disclose its financial results.

Derivation Summary

Silknet benefits from its established customer franchise and the
wide network of a telecoms incumbent combined with a growing mobile
business similar to its higher-rated emerging markets peers such as
Kazakhtelecom JSC (BB+/RWP) and PJSC Tattelecom (BB/Stable).
However, Silknet is smaller in size with revenue of less than
EUR150 million and faces significantly higher FX risk. Its
corporate governance is shaped by the dominant shareholder.

Key Assumptions

Fitch's key assumptions within the rating case for Silknet include:


  -- Significant reduction of interconnect revenue proportional to
the regulator-announced interconnect rate cuts, pressuring headline
revenue growth in both fixed-line and mobile segments;

  -- Broadband revenue growth in high-to-mid single digits, pay-TV
revenue growth in double digits in 2018-2020, gradually declining
to high-single digits afterwards;

  -- High-to-mid single digit mobile revenue growth excluding
interconnect;

  -- Substantial integration synergies following the acquisition of
Geocell leading to absolute EBITDA increase;

  -- An assumed GEL40 million one-off dividend payment in 2019 as a
maximum amount allowed under provisions in the new notes
documentation.  Regular dividends in line with the historical
pay-outs in 2020-2021; and

  -- High capex of above 25% of revenue in 2019, declining to
around 20% thereafter.

KEY RECOVERY RATING ASSUMPTIONS

  -- Fitch conducts the recovery analysis on the post bond-issue
basis which implies that the company will have GEL597 million of
unsecured debt instruments, including GEL536 million senior
unsecured notes, and GEL31 million of subordinated debt

  -- The recovery analysis assumes that Silknet would be considered
a going-concern in bankruptcy and that the company would be
reorganised rather than liquidated

  -- A 10% fee for administrative claims

  -- The going-concern EBITDA estimate of GEL152 million reflects
Fitch's view of a sustainable, post-reorganisation EBITDA level
upon which it bases the valuation of the company. This
going-concern EBITDA is 20% below Fitch's estimate of the company's
2018 pro-forma EBITDA

  -- An enterprise value/EBITDA multiple of 4.0x is used to
calculate a post-reorganisation valuation, reflecting a
conservative post-distressed valuation

  -- USD20 million revolving credit facility (RCF) is assumed to be
fully drawn and has priority over senior unsecured notes as it will
be secured. Fitch also treats only 50% of USD30 million trade
finance facility (TFF) as secured claims because the facility can
be drawn only for specific uses.

The Recovery Rating for Georgian issuers is capped at 'RR4' and
hence the rating of the Silknet's new senior unsecured instrument
is 'B+'/'RR4'/50% although the underlying recovery percentage is
higher than 'RR4'.

RATING SENSITIVITIES

Positive: Future developments that may, individually or
collectively, lead to positive rating action include:

  -- Improved market positions, stronger FCF generation
post-Geocell acquisition, alongside comfortable liquidity and a
track record of improved corporate governance, and

  -- FFO adjusted net leverage sustainably below 2.5x in the
presence of significant FX risks.

Negative: Future developments that may, individually or
collectively, lead to negative rating action include:

  -- FFO-adjusted net leverage rising above 3x on a sustained basis
without a clear path for deleveraging in the presence of
significant FX risks, and

  -- A rise in corporate governance risks due to, among other
things, related-party transactions or up-streaming excessive
distributions to shareholders.

Liquidity and Debt Structure

Liquidity to Improve: Fitch expects Silknet's liquidity to improve
following the bond issue as the company will not be exposed to a
substantial debt maturity in a single year until 2024. Liquidity
should also be supported by the undrawn USD20 million (GEL54
million) RCF and improved FCF generation. Historically Silknet had
relied on TBC Bank (BB-/Positive), its largest creditor and key
relationship bank, for refinancing and liquidity support. Fitch
expects the bank to continue to provide support if needed.

Summary of Financial Adjustments

  -- Amortisation of content rights is treated as a cash-like
operating expense

                   RATING ACTIONS
ENTITY/DEBT        RATING                      RECOVERY  PRIOR

Silknet JSC        LT IDR   B+ Affirmed                     B+  

   Sr. unsecured   LT       B+(EXP)  Expected       RR4
                                     Rating



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I R E L A N D
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CARLYLE EURO 2019-1: Fitch Assigns Class E Notes Final B-sf Rating
------------------------------------------------------------------
Fitch Ratings has assigned Carlyle Euro CLO 2019-1 DAC these final
ratings:

EUR2,500,000 Class X: 'AAAsf'; Outlook Stable
EUR240,000,000 Class A-1: 'AAAsf'; Outlook Stable
EUR36,000,000 Class A-2A: 'AAsf'; Outlook Stable
EUR10,000,000 Class A-2B: 'AAsf'; Outlook Stable
EUR23,000,000 Class B: 'Asf'; Outlook Stable
EUR27,000,000 Class C: 'BBB-sf'; Outlook Stable
EUR22,700,000 Class D: 'BB-sf'; Outlook Stable
EUR10,000,000 Class E: 'B-sf'; Outlook Stable
EUR37,900,000 subordinated notes: 'NRsf'

Carlyle Euro CLO 2019-1 DAC is a cash flow collateralised loan
obligation (CLO). Net proceeds from the notes have been used to
purchase a EUR400 million portfolio of mainly euro-denominated
leveraged loans and bonds. The transaction has a 4.5-year
reinvestment period, and a weighted average life of 8.5 years. The
portfolio of assets are managed by CELF Advisors LLP.

KEY RATING DRIVERS

'B' Portfolio Credit Quality

Fitch assesses the average credit quality of obligors at the 'B'
category. The Fitch-calculated weighted average rating factor
(WARF) of the underlying portfolio is 32.9.

High Recovery Expectations

At least 90% of the portfolio comprises senior secured obligations.
Recovery prospects for these assets are typically more favourable
than for second-lien, unsecured and mezzanine assets. The
Fitch-calculated weighted average recovery rate (WARR) of the
identified portfolio is 65.4%.

Diversified Asset Portfolio

The transaction includes four Fitch matrices that the manager may
choose from, corresponding to the top 10 obligor limits at 16% and
20% as well as a maximum allowance of fixed-rate assets of 0% and
10%, respectively. The covenanted maximum exposure to the top 10
obligors for assigning the ratings is 20% of the portfolio balance.
The transaction has various concentration limits, including a
maximum exposure of 40% to the three-largest (Fitch-defined)
industries in the portfolio. These covenants ensure that the asset
portfolio will not be exposed to excessive obligor concentration.

Portfolio Management

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

Cash Flow Analysis

Fitch used a customised proprietary cash flow model to replicate
the principal and interest waterfalls, and the various structural
features of the transaction, as well as to assess their
effectiveness, including the structural protection provided by
excess spread diverted through the par value and interest coverage
tests.

RATING SENSITIVITIES

A 125% default multiplier applied to the portfolio's mean default
rate, and with this increase added to all rating default levels,
would lead to a downgrade of up to three notches for the class A-1
notes and a downgrade of up to two notches for the other rated
notes.

A 25% reduction in recovery rates would lead to a downgrade of up
to four notches for the class D notes and a downgrade of up to two
notches for the other rated notes.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO RULE 17G-10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.

DATA ADEQUACY

The majority of the underlying assets or risk-presenting entities
have ratings or credit opinions from Fitch and/or other Nationally
Recognised Statistical Rating Organisations and/or European
Securities and Markets Authority-registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information.

Overall, Fitch's assessment of the asset pool information relied
upon for the agency's rating analysis according to its applicable
rating methodologies indicates that it is adequately reliable.

SOURCES OF INFORMATION

The information below was used in the analysis.

  -- Loan-by-loan data provided by BNP Paribas as at 13 November
2018

  -- Offering circular provided by BNP Paribas as at 13 March 2019

REPRESENTATIONS AND WARRANTIES

A description of the transaction's representations, warranties and
enforcement mechanisms (RW&Es) that are disclosed in the offering
document and which relate to the underlying asset pool was not
prepared for this transaction. Offering documents for EMEA CLO
transactions do not typically include RW&Es that are available to
investors and that relate to the asset pool underlying the
security. Therefore, Fitch credit reports for EMEA CLO transactions
will not typically include descriptions of RW&Es. For further
information, see Fitch's Special Report titled "Representations,
Warranties and Enforcement Mechanisms in Global Structured Finance
Transactions," dated 31 May 2016.

CARLYLE EURO 2019-1: Moody's Rates EUR10MM Class E Notes B2
-----------------------------------------------------------
Moody's Investors Service announced that it has assigned the
following definitive ratings to the notes issued by Carlyle Euro
CLO 2019-1 DAC (the "Issuer"):

  EUR2,500,000 Class X Senior Secured Floating Rate Notes due
  2032, Definitive Rating Assigned Aaa (sf)

  EUR240,000,000 Class A-1 Senior Secured Floating Rate Notes due
  2032, Definitive Rating Assigned Aaa (sf)

  EUR36,000,000 Class A-2A Senior Secured Floating Rate Notes due
  2032, Definitive Rating Assigned Aa2 (sf)

  EUR10,000,000 Class A-2B Senior Secured Fixed Rate Notes due
  2032, Definitive Rating Assigned Aa2 (sf)

  EUR23,000,000 Class B Senior Secured Deferrable Floating Rate
  Notes due 2032, Definitive Rating Assigned A2 (sf)

  EUR27,000,000 Class C Senior Secured Deferrable Floating Rate
  Notes due 2032, Definitive Rating Assigned Baa3 (sf)

  EUR22,700,000 Class D Senior Secured Deferrable Floating Rate
  Notes due 2032, Definitive Rating Assigned Ba2 (sf)

  EUR10,000,000 Class E Senior Secured Deferrable Floating Rate
  Notes due 2032, Definitive Rating Assigned B2 (sf)

RATINGS RATIONALE

As described in Moody's methodology, the ratings analysis considers
the risks associated with the CLO's portfolio and structure. In
addition to quantitative assessments of credit risks such as
default and recovery risk of the underlying assets and their impact
on the rated tranche, our analysis also considers other various
qualitative factors such as legal and documentation features as
well as the role and performance of service providers such as the
collateral manager.

The Issuer is a managed cash flow CLO. At least 96% of the
portfolio must consist of senior secured obligations and up to 4%
of the portfolio may consist of senior unsecured obligations,
second-lien loans, mezzanine obligations and high yield bonds. The
portfolio is fully ramped up as of the closing date and comprises
predominantly corporate loans to obligors domiciled in Western
Europe.

CELF Advisors LLP will manage the CLO. It will direct the
selection, acquisition and disposition of collateral on behalf of
the Issuer and may engage in trading activity, including
discretionary trading, during the transaction's 4.5-year
reinvestment period. Thereafter, purchases are permitted using
principal proceeds from unscheduled principal payments and proceeds
from sales of credit risk obligations, and are subject to certain
restrictions.

Interest and principal amortisation amounts due to the Class X
Notes are paid pro rata with payments to the Class A-1 Notes. The
Class X Notes amortise by EUR 312,500 over the first 8 payment
dates.

In addition to the eight classes of notes rated by Moody's, the
Issuer will issue EUR37.9 million of Subordinated Notes which are
not rated.

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

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

The rated notes' performance is subject to uncertainty. The notes'
performance is sensitive to the performance of the underlying
portfolio, which in turn depends on economic and credit conditions
that may change. The collateral manager's investment decisions and
management of the transaction will also affect the notes'
performance.

Moody's modeled the transaction using CDOEdge, a cash flow model
based on the Binomial Expansion Technique, as described in Section
2.3 of the "Moody's Global Approach to Rating Collateralized Loan
Obligations" rating methodology published in March 2019.

Moody's used the following base-case modeling assumptions:

Par Amount: EUR 400,000,000

Diversity Score: 44

Weighted Average Rating Factor (WARF): 2900

Weighted Average Spread (WAS): 3.70%

Weighted Average Coupon (WAC): 4.30%

Weighted Average Recovery Rate (WARR): 43.5%

Weighted Average Life (WAL): 8.5 years

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

EURO-GALAXY VII: Fitch Puts 'BB- (EXP)sf' Rating on Class E Notes
-----------------------------------------------------------------
Fitch Ratings has assigned Euro-Galaxy VII CLO DAC these expected
ratings:

EUR2million Class X: 'AAA(EXP)sf'; Outlook Stable
EUR208 million Class A-1: 'AAA(EXP)sf'; Outlook Stable
EUR40 million Class A-2: 'AAA(EXP)sf'; Outlook Stable
EUR37 million Class B: 'AA(EXP)sf'; Outlook Stable
EUR26 million Class C: 'A(EXP)sf'; Outlook Stable
EUR26.5 million Class D: 'BBB-(EXP)sf'; Outlook Stable
EUR22.5million Class E: 'BB-(EXP)sf'; Outlook Stable
EUR9.5 million Class F: 'B-(EXP)sf'; Outlook Stable
EUR4 million Class Z: 'NR(EXP)sf'
EUR37.5million subordinated notes: 'NR(EXP)sf'

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

Euro-Galaxy VII CLO DAC is a securitisation of mainly senior
secured loans (at least 90%) with a component of senior unsecured,
mezzanine and second-lien loans. A total expected note issuance of
EUR413.25 million will be used to fund a portfolio with a target
par of EUR400 million. The portfolio will be managed by PineBridge
Investments Europe Limited. The CLO envisages a 4.5-year
reinvestment period and an 8.5-year weighted average life.

KEY RATING DRIVERS

'B' Portfolio Credit Quality

Fitch places the average credit quality of obligors in the 'B'
range. The Fitch-weighted average rating factor (WARF) of the
identified portfolio is 33.22, while the indicative covenanted
maximum Fitch WARF for assigning the expected ratings is 33.50.

High Recovery Expectations

At least 90% of the portfolio comprises senior secured obligations.
Fitch views the recovery prospects for these assets as more
favourable than for second-lien, unsecured and mezzanine assets.
The Fitch-weighted average recovery rate (WARR) of the identified
portfolio is 62.61%, while the indicative covenanted minimum Fitch
WARR for assigning expected ratings is 63.00%. The WARR calculation
was based on the identified portfolio, which represents 84.42% of
the target par.

Limited Interest Rate Exposure

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

Diversified Asset Portfolio

The covenanted maximum exposure to the top 10 obligors for
assigning the expected ratings is 20% of the portfolio balance. The
transaction also includes limits on maximum industry exposure based
on Fitch's industry definitions. The maximum exposure to the three
largest (Fitch-defined) industries in the portfolio is covenanted
at 40%. These covenants ensure that the asset portfolio will not be
exposed to excessive concentration.

Adverse Selection and Portfolio Management

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

Cash Flow Analysis

Fitch used a customised proprietary cash flow model to replicate
the principal and interest waterfalls and the various structural
features of the transaction, and to assess their effectiveness,
including the structural protection provided by excess spread
diverted through the par value and interest coverage tests.

RATING SENSITIVITIES

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

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO RULE 17G-10

Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.

DATA ADEQUACY

The majority of the underlying assets or risk-presenting entities
have ratings or credit opinions from Fitch and/or other nationally
recognised statistical rating organisations and/or European
Securities and Markets Authority-registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information.

Overall, Fitch's assessment of the asset pool information relied
upon for the agency's rating analysis according to its applicable
rating methodologies indicates that it is adequately reliable.

SOURCES OF INFORMATION

The information below was used in the analysis.

  -- Loan-by-loan data provided by Credit Suisse Securities
(Europe) Limited as of 5 March 2019

  -- Draft offering circular provided by Credit Suisse Securities
(Europe) Limited as of 13 March 2019

REPRESENTATIONS AND WARRANTIES

A description of the transaction's representations, warranties and
enforcement mechanisms (RW&Es) that are disclosed in the offering
document and which relate to the underlying asset pool was not
prepared for this transaction. Offering documents for EMEA CLO
transactions do not typically include RW&Es that are available to
investors and that relate to the asset pool underlying the
security. Therefore, Fitch credit reports for EMEA CLO transactions
will not typically include descriptions of RW&Es.

EURO-GALAXY VII: Moody's Gives (P)B2 Rating to Class F Notes
------------------------------------------------------------
Moody's Investors Service announced that it has assigned the
following provisional ratings to notes to be issued by Euro-Galaxy
VII CLO DAC.

  EUR2,000,000 Class X Senior Secured Floating Rate Notes due
  2032, Assigned (P)Aaa (sf)

  EUR208,000,000 Class A-1 Senior Secured Floating Rate Notes due
  2032, Assigned (P)Aaa (sf)

  EUR40,000,000 Class A-2 Senior Secured Fixed Rate Notes due
  2032, Assigned (P)Aaa (sf)

  EUR37,000,000 Class B Senior Secured Floating Rate Notes due
  2032, Assigned (P)Aa2 (sf)

  EUR26,000,000 Class C Senior Secured Deferrable Floating Rate
  Notes due 2032, Assigned (P)A2 (sf)

  EUR26,500,000 Class D Senior Secured Deferrable Floating Rate
  Notes due 2032, Assigned (P)Baa3 (sf)

  EUR22,500,000 Class E Senior Secured Deferrable Floating Rate
  Notes due 2032, Assigned (P)Ba3 (sf)

  EUR9,500,000 Class F Senior Secured Deferrable Floating Rate
  Notes due 2032, Assigned (P)B2 (sf)

Moody's issues provisional ratings in advance of the final sale of
financial instruments, but these ratings only represent Moody's
preliminary credit opinions. Upon a conclusive review of a
transaction and associated documentation, Moody's will endeavor to
assign definitive ratings. A definitive rating (if any) may differ
from a provisional rating.

RATINGS RATIONALE

Moody's provisional ratings of the rated notes reflect the risks
due to defaults on the underlying portfolio of loans given the
characteristics and eligibility criteria of the constituent assets,
the relevant portfolio tests and covenants as well as the
transaction's capital and legal structure. Furthermore, Moody's is
of the opinion that the collateral manager, PineBridge Investments
Europe Limited ("PineBridge"), has sufficient experience and
operational capacity and is capable of managing this CLO.

Euro-Galaxy VII is a managed cash flow CLO. At least 90% of the
portfolio must consist of secured senior loans or senior secured
bonds and up to 10% of the portfolio may consist of unsecured
senior obligations, second-lien loans, high yield bonds and
mezzanine obligations. The portfolio is expected to be
approximately 75% ramped up as of the closing date and to be
comprised predominantly of corporate loans to obligors domiciled in
Western Europe. The remainder of the portfolio will be acquired
during the ramp-up period in compliance with the portfolio
guidelines.

PineBridge will manage the CLO. It will direct the selection,
acquisition and disposition of collateral on behalf of the Issuer
and may engage in trading activity, including discretionary
trading, during the transaction's four and a half years
reinvestment period. Thereafter, purchases are permitted using
principal proceeds from unscheduled principal payments and proceeds
from sales of credit risk obligations, and are subject to certain
restrictions.

In addition to the eight classes of notes rated by Moody's, the
Issuer will issue EUR 37.75M of Subordinated Notes and EUR4.0M
Class Z Notes which are not rated. Holders of the Class Z Notes,
including the Manager, will be entitled to receive on each payment
date an amount equivalent to the subordinated management fee paid
in most CLO 2.0 deals.

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

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

The rated notes' performance is subject to uncertainty. The notes'
performance is sensitive to the performance of the underlying
portfolio, which in turn depends on economic and credit conditions
that may change. PineBridge's investment decisions and management
of the transaction will also affect the notes' performance.

Moody's modeled the transaction using CDOEdge, a cash flow model
based on the Binomial Expansion Technique, as described in Section
2.3 of the "Moody's Global Approach to Rating Collateralized Loan
Obligations" rating methodology published in March 2019.

Moody's used the following base-case modeling assumptions:

Target Par Amount: EUR 400,000,000

Diversity Score: 44

Weighted Average Rating Factor (WARF): 2900

Weighted Average Spread (WAS): 3.7%

Weighted Average Coupon (WAC): 5.5%

Weighted Average Recovery Rate (WARR): 44%

Weighted Average Life (WAL): 8.5 years

As part of the base case, Moody's has addressed the potential
exposure to obligors domiciled in countries with a local currency
country risk ceiling (LCC) of A1 or below. As per the portfolio
constraints, exposures to countries with a LCC of A1 or below
cannot exceed 10%, with exposures to countries with LCCs of Baa1 to
Baa3 further limited to 5%. Following the effective date, and given
these portfolio constraints and the current sovereign ratings of
eligible countries, the total exposure to countries with a LCC of
A1 or below may not exceed 10% of the total portfolio. As a worst
case scenario, a maximum 5% of the pool would be domiciled in
countries with LCCs of Baa1 to Baa3 while an additional 5% would be
domiciled in countries with LCCs of A1 to A3. The remainder of the
pool will be domiciled in countries which currently have a LCC of
Aa3 and above. Given this portfolio composition, the model was run
with different target par amounts depending on the target rating of
each class of notes as further described in the methodology. The
portfolio haircuts are a function of the exposure size to countries
with a LCC of A1 or below and the target ratings of the rated
notes, and amount to 0.75% for the Class X, A-1 and A-2 Notes,
0.50% for the Class B Notes, 0.375% for the Class C Notes and 0%
for Classes D, E and F.

EUROCHEM FINANCE: Fitch Rates US$700MM Guaranteed Notes Final 'BB'
------------------------------------------------------------------
Fitch Ratings has assigned EuroChem Finance Designated Activity
Company's (DAC) USD700 million 5.5% notes due 2024 a final senior
unsecured rating of 'BB'. EuroChem Finance DAC is an Ireland-based
special purpose financing vehicle of EuroChem Group AG (EuroChem,
BB/Stable). The assignment of the final rating to the notes
followed the receipt of final documentation in line with the draft
documentation reviewed.

The notes are issued to refinance part of the existing notes due in
2020 issued by EuroChem Global Investments DAC and part of the
existing notes due in 2021 issued by EuroChem Finance DAC. The
notes benefit from the guarantees of EuroChem and JSC MCC EuroChem,
the holding company for the group's Russia-based assets, and rank
pari passu with current and future outstanding unsecured and
unsubordinated debt.

KEY RATING DRIVERS

2018 Performance Within Expectation: EuroChem's funds from
operations (FFO)-adjusted net leverage fell to 3.1x in 2018, below
Fitch's expectation of 3.4x and from 4.5x at end-2017. This mostly
reflects a better-than-expected pricing environment for fertilisers
throughout 2018, while gross debt only decreased by slightly more
than USD200 million. Fitch forecasts positive pre-dividend free
cash flow (FCF) from 2019 as the group's capex levels normalise and
contributions from the new ammonia and potash capacity ramp up. In
the absence of specific guidance, Fitch conservatively assumes that
some of the group's FCF will up-streamed to the shareholder in the
form of loan repayments or dividends from 2020.

Business Profile Enhanced Beyond 2021: Fitch maintains a cautious
view on the ramp-up of potash volumes as the two projects have been
delayed from original projections. Fitch's base case assumes that
they start contributing materially to earnings in 2021 with full
ramp-up of phase 1 to 4 million tonnes a year of potash production
in aggregate. The projects are estimated to have a first-quartile
position on the global potash cost curve. Along with the northwest
ammonia project in Kingisepp, which targets a capacity of almost
1mtpa by 2021, they should more than cover EuroChem's internal
needs and enhance the group's vertical integration and product
diversification with presence in all three major nutrients.

Supportive Market Environment: Global prices for fertiliser
products increased in 2018, on the back of idle/suspended
capacities or delayed ramp-ups, higher feedstock costs and solid
demand. As a result, EuroChem's sales and EBITDA increased 15% and
30% yoy in 2018. In the medium term, Fitch expects the robust
trends to persist in nitrogen markets on the back of limited
capacity additions and cost increase at non-integrated producers
while phosphates and potash are likely to face supply-driven price
volatility. Fitch believes that EuroChem's scale, market reach and
strong cost position should support profitability and cash flow
generation through the cycle.

Potash and Ammonia Projects Progress: EuroChem's Usolskiy potash
mine produced 0.3mt of potash in 2018 and the group targets to
ramp-up to 1.1mt in 2019 and 3mt by 2021. Two trains (out of four)
are fully operational in commissioning mode and working at their
projected capacity of 1.1mt per year. The VolgaKaliy floatation
plant is in commissioning mode and first production of marketable
product is expected in 1H19. The group is building a freeze wall
around the cage shaft where water inflow halted sinking progress in
March 2017. The first commercial ammonia from EuroChem Northwest
ammonia project in Kingisepp was obtained in early 2019. The
project targets almost 1mtpa of ammonia by 2021.

Normalised Capex to Support FCF: Out of about USD8 billion
dedicated to the potash and ammonia projects, USD5.5 billion has
been spent with the remaining USD2.9 billion mostly earmarked for
phase 2 of the potash expansion over the next five years. Fitch's
base case assumes annual capex of USD700 million-USD800 million
from 2019 (USD1.1 billion in 2018), which also includes several
small and medium-sized investments across the range of EuroChem's
fertiliser production and trading facilities. Production ramp-up
and decreasing investments should support positive pre-dividend FCF
generation from 2019.

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

Strong Business Fundamentals: EuroChem has a strong presence in CIS
and European fertiliser markets (more than 50% of 2018 sales) with
around a 15% share of premium fertiliser sales. It is the
seventh-largest EMEA fertiliser company by total nutrient capacity
and aims to join the top three in the world with capacity in all
three primary nutrients. The group also has access to the premium
European compound fertiliser market, with production in Antwerp,
trademarks and third-party sales (25% of sales) distributed through
its own network.

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

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

DERIVATION SUMMARY

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

EuroChem's partial vertical integration underpins a cost position
on the lower part of the global urea and diammonium phosphate (DAP)
cost curves, but substantial trading operations partly dilute the
group's EBITDAR margins to 27% (23% in 2017). This is below other
cost leaders', such as Uralkali (2017: 49%), Acron (32%), CF
Industries (31%) or PhosAgro (29%), but comparable with OCP (26%)
and above OCI (23%) and Mosaic (17%).

EuroChem's rating also incorporates Fitch's expectation of
deleveraging given the end of the capex cycle. FFO adjusted net
leverage peaked in 2017 at 4.5x before decreasing to 3.1x in 2018
and it is now below most of its peers'. However, the rating is
still constrained by negative FCF generation and potential further
delays in ramping up of potash projects, especially for VolgaKaliy
project.

KEY ASSUMPTIONS

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

  -- Nitrogen and phosphate fertilisers pricing to remain positive
over the next three years; potash prices to decrease gradually

  -- VolgaKaliy Potash and Kingisepp Ammonia projects to start
adding production volumes from 2019

  -- USD/RUB at around 62 from 2019

  -- Capex/sales to normalise at 15% by 2021

  -- Shareholder loan repayment in 2020 and 2021 equally

  -- Dividend distribution at around USD500 million from 2020
leading to neutral FCF

RATING SENSITIVITIES

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

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

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

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

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

LIQUIDITY

Manageable Liquidity: At end-2018, EuroChem had cash balances of
USD342 million, undrawn committed credit facilities of about USD226
million and USD97 million under the ammonia project facility
against USD609m million of short-term debt. Fitch believes that
EuroChem's liquidity remained manageable and is supported by a
combination of uncommitted revolving facilities of about USD1.1
billion, and by the group's proven and continued access to the
international and domestic funding. The group also has access to a
remaining USD150 million of a shareholders loan.



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

ALITALIA SPA: Italian Officials Attempt to Resurrect Rescue Deal
----------------------------------------------------------------
Oliver Gill at The Telegraph reports that Italian officials have
crossed the Atlantic in a bid to resurrect a rescue deal for
Alitalia as concerns mount that easyJet is about to walk away from
a deal to save the bankrupt carrier.

According to The Telegraph, sources said US airline Delta hosted
Italian state rail company Ferrovie dello Stato in Atlanta,
Georgia, on March 15.  EasyJet and Delta announced in February that
they are in talks to inject up to EUR400 million (GBP341 million)
and create a "new Alitalia", The Telegraph relates.

But easyJet's interest cooled last week, with it reportedly only
interested in short-haul slots from Milan's Linate airport, The
Telegraph discloses.  Some EUR900 million of government funding is
due to be repaid by April, The Telegraph states.  Refinancing this
will trigger a EU state aid review, The Telegraph notes.





===================
M O N T E N E G R O
===================

MONTENEGRO: S&P Affirms 'B+/B' Sovereign Credit Ratings
-------------------------------------------------------
On March 15, 2019, S&P Global Ratings affirmed its 'B+/B' long- and
short-term foreign and local currency sovereign credit ratings on
Montenegro. The outlook on the long-term ratings remains stable.

RATIONALE

Montenegro's high net general government debt burden--which S&P
expects will peak at 63% of GDP in 2020--constrains its ratings on
the sovereign. This is especially pertinent given the country's
unilateral adoption of the euro, which leaves almost no room for
monetary policy flexibility. Montenegro also remains vulnerable to
balance-of-payment risks, with a large net external liability
position and persistent historical current account deficits.

Montenegro's favorable growth potential, stemming from the
possibilities for further development of tourism and the energy
sector, continues to support the ratings. The country's
comparatively strong institutional settings in a regional context,
as well as upside potential from structural reforms that the
government will need to implement for Montenegro to become an EU
member, also support the ratings.

Institutional and economic profile:

-- Growth exceeded S&P's projections last year, reaching an
estimated 4.7%, but it is set to moderate

-- Despite the wide-ranging demands, S&P expects any immediate
implications of recent public protests to be contained. We estimate
that economic growth will moderate after strong 4.7% expansion in
2018.

-- The country's long-term potential remains favorable, stemming
from opportunities in the tourism and energy sectors.

Several public protests have taken place in Montenegro in recent
weeks, but S&P does not expect any immediate implications, despite
the wide-ranging demands. The participants opposed corruption,
demanding the resignations of the government and President Milo
Djukanovic--a long-standing veteran of Montenegrin politics.
Revelations exposing several government officials appear to have
fanned the protests. The authorities could heed some of the calls,
but the resignations of the government or the President seem
unlikely. Although the current coalition government between
Djukanovic's Democratic Party of Socialists (DPS) and several
ethnic minority parties commands a narrow majority, opposition so
far appears disunited. S&P also notes that Djukanovic and the DPS
have weathered periods of public discontent in the past.

S&P said, "More broadly, we think recent developments underscore
the evolving nature of Montenegro's institutional arrangements,
which are characterized by several shortcomings typical of the
countries in the West Balkan region. These include high levels of
perceived corruption, media freedom limitations, and judicial
weaknesses. To this end, we note that several local journalists
have been attacked in the past year. Risks were also highlighted by
the developments around the 2016 general election, when an alleged
coup took place. Multiple opposition members have faced allegations
in the aftermath with opposition parties boycotting Parliament.

"Montenegro remains an EU candidate country, and we view positively
the potential for the early implementation of reforms that will
align it with the EU's Acquis Communautaire. That said, the process
will likely be only gradual. Unlike NATO membership, which appears
to be a divisive topic among the population, there is broader
support for integration with the EU; however, we consider the
announced possible accession date of 2025 as optimistic. Further
progress could be hampered by both domestic developments and rising
euroscepticism among the existing member states, which--under EU
rules--will ultimately have to unanimously approve Montenegro's
membership bid. That said, we think the ongoing EU accession
negotiations strengthen Montenegro's policy frameworks and we view
the country's institutional settings favorably in a regional
context."

Positively, occasional political volatility does not appear to have
harmed the economy in recent years. S&P estimates that last year's
growth reached 4.7%, exceeding our previous forecast of 3.5%.
Montenegro's economy is primarily driven by tourism and related
activities, and strong visitor growth has contributed to broader
economic dynamics.

S&P notes that the public-financed, ongoing construction of a new
highway has also underpinned Montenegro's growth. Upon completion,
the government expects the highway to link the coastal port of Bar
with the Serbian border, connecting remote regions and improving
road safety. Only the first section, a 41 kilometer segment north
of the capital, Podgorica, is so far under construction. Because of
difficult terrain, the cost of the first section is high, estimated
at close to 20% of 2018 GDP and largely financed by a U.S.
dollar-denominated loan from China. The first section of the
highway was originally scheduled to be finalized this year, but it
is currently facing delays and potential cost overruns.

Aside from political considerations, the direct net economic
benefits from the highway are uncertain. S&P believes that its
construction has led to a notable accumulation of debt and erosion
of fiscal headroom. This is particularly pertinent because
budgetary policy is the government's main lever to influence
domestic economic conditions, given that Montenegro's unilateral
euro adoption means it has no independent monetary policy.

To curb the increase in debt from the highway construction, in
mid-2017 the government announced a fiscal consolidation strategy
aimed at reducing the non-highway deficit. Consequently, S&P
expects some moderation of growth rates to below 3%, as fiscal
consolidation advances and the first highway section is completed
in 2020, later than originally planned. The weaker outlook for the
European economy will also likely contribute to a softening of
growth in Montenegro.

S&P continues to view Montenegro's long-term economic prospects as
favorable. This primarily stems from the multiple opportunities
that exist in the tourism sector. A number of hospitality projects
are currently under way, including several high-end coastal
resorts. S&P also understands that there is untapped potential in
mountain ski tourism and energy generation.

Flexibility and performance profile: Elevated net general
government debt is projected to peak at 63% of GDP in 2020

-- S&P expects net general government debt to start declining from
a peak of 63% of GDP in 2020, as the first section of the highway
is completed.

-- Balance-of-payments vulnerabilities remain elevated, given the
recurrent historical current account deficits and the resulting
large net external liability position, which S&P estimates at close
to 200% of GDP.

-- Montenegro has no monetary policy flexibility because it has
unilaterally adopted the euro while not being part of the
eurozone.

-- Two small domestic banks have run into trouble but S&P does not
expect any material spillover to the rest of the financial system.


Montenegro has historically posted recurring fiscal deficits, which
have led to a substantial accumulation of public debt and reduced
the available fiscal space. This is particularly important given
the lack of independent monetary policy. The shortfalls have been a
result of high social spending and transfers, as well as the
substantial shadow economy, which eludes taxation. More recently,
deficits have widened as a result of the implementation of the
highway project.

Despite originally being scheduled for completion in 2019, the
first section of the highway project is facing delays and we now
expect it to be completed by the end of 2020. There will also
likely be a cost overrun. We understand that, under the contract
with Chinese Road and Bridge Corporation, the government of
Montenegro is responsible for financing any extra costs of up to
10% of the originally agreed amount, while the Chinese contractor
will bear any overhead on top of that. As such, extra budgetary
burden is unlikely to exceed EUR80 million--about 1.5% of 2019
GDP--which S&P does not think will materially affect Montenegro's
fiscal position.

That said, substantial fiscal risks remain. Primarily, the
government may decide to implement further sections of the highway,
financed by debt--northward to the border with Serbia, and another
section linking Podgorica with the coastline. In S&P's view,
further leverage would weaken Montenegro's already vulnerable
fiscal position. S&P understands that the government is
alternatively considering implementing the remaining sections via
the Public Private Partnership (PPP) mechanism, without incurring
extra debt directly. Nevertheless, a PPP arrangement could still be
risky because such contracts typically include either a debt
assumption clause or a minimum usage guarantee, de facto exposing
the budget to debt-type risks.

To control the upward public debt trajectory in recent years, the
government embarked on a fiscal consolidation strategy announced in
mid-2017. The strategy included a number of revenue and expenditure
items, such as raising the VAT rates and excise taxes, as well as
controlling public employment levels and spending efficiency.

S&P has previously outlined that the fiscal targets in the
consolidation strategy are overly optimistic and unlikely to be
achieved. Under the fiscal strategy, the government planned to
reduce the general government deficit to 1.8% of GDP in 2018 before
turning to a surplus from 2019 onward. According to government
estimates, general government deficit amounted to 3.7% of GDP in
2018, only slightly better than our previous forecast of 4% of GDP.
S&P understands that several developments have contributed to this
outcome. These have included the difficulty in implementing the
higher excise taxes adopted at the beginning of the year because
tax evasion has intensified. As a result, the authorities had to
revert to a more gradual rise of excise levels in steps. Salaries
have also been adjusted upward for some public sector employees,
while weaknesses in budgeting and planning, primarily on the local
government level, led to a repayment of some extra
arrears--amounting to 1.5% of GDP--from the previous periods. The
latter has been a recurrent problem in Montenegro in the past.

In addition to weaker headline fiscal performance, the government
made a one-off payment of about EUR70 million (1.5% of 2018 GDP) to
Italian utility company A2A. The payment relates to A2A's option
that allowed it to exit its stake in Montenegrin majority
state-owned electricity company EPCG and receive compensation from
the government. S&P has not included this one-off expenditure
within the 2018 general government deficit but instead accounted
for it below the line. The increase in net general government debt
in 2018 is therefore higher than the headline deficit implies. The
government will make an additional EUR40 million (1% of GDP)
budgetary payment this year to A2A with the rest of the obligations
to A2A covered using EPCG's cash buffers and profits.

S&P said, "We currently forecast that budget deficits would narrow
over the next four years, averaging 2% of GDP as fiscal adjustment
advances and the first section of the highway is completed in 2020.
Nevertheless, we consider that the government's projected surplus
for 2020 is unattainable, given the possible cost overruns related
to the highway construction and likely pressures to increase
spending ahead of the general elections that will take place in the
latter half of 2020.

"Given our base-line forecast of continued gradual fiscal
consolidation, we expect net general government debt will peak at
63% of GDP in 2020 and reduce thereafter. Positively, refinancing
risks have reduced, in our view. Montenegro previously faced
Eurobond redemptions totaling a substantial EUR1.1 billion over
2019-2021. In April 2018, the government issued a EUR500 million
Eurobond that was partly used to buy back EUR360 million of debt
maturing over 2019-2021. Moreover, in May 2018, the authorities
secured a World Bank guarantee-supported syndicated loan of EUR250
million. In 2019-2020, the Montenegrin government plans to use the
proceeds of the loan to meet debt redemptions coming due in May
2019 and in later years. We understand the authorities are
exploring the possibility of attracting a second similar
arrangement to manage the refinancing risks in the future."

More broadly, Montenegro primarily finances fiscal shortfalls on
the foreign markets, and nonresidents hold close to 70% of
commercial debt. S&P expects this to remain the case in the future,
which exposes the country to risks of European Central Bank (ECB)
tightening monetary policy.

Montenegro's weak balance-of-payments position remains a key
ratings constraint. The country has consistently posted
double-digit current account deficits and S&P estimates the net
external liability position totaled close to 200% of GDP at the end
of 2018. Positively, Montenegro has seen substantial amounts of
inbound foreign direct investment, averaging more than 10% of GDP
over the past five years. These investments are concentrated in
real estate, tourism, and energy sector projects, and tend to be
import-intensive. As such, the investments cause the current
account to be in a recurrent deficit, rather than the other way
around. That said, risks remain because the economy could be hit if
foreign direct investment unexpectedly dries up.

Montenegro's external accounts show persistent and positive errors
and omissions, which--following recent data revisions--average 3%
of GDP over the past five years. These discrepancies may reflect
unrecorded tourism export revenues and the underestimation of
remittances from the large Montenegrin diaspora, among other
factors. This could mean that the current account deficit may be
lower than the reported data indicate. S&P understands that the
authorities are in the final stages of producing comprehensive
International Investment Position statistics, which they aim to
publish this year, as opposed to the original plan to do so in
2018. The work to improve external statistics is ongoing; S&P notes
that net errors and omissions previously amounted to a more
substantial average of 5% of GDP compared with the current 3%.

Montenegro's unilateral adoption of the euro prevents the Central
Bank of Montenegro from setting interest rates and controlling the
money supply, and restricts its ability to act as a lender of last
resort. Although the central bank has some options to provide
liquidity support to banks, its inability to create the currency
needed in a stress scenario effectively prevents it from fulfilling
a lender of last resort function, in S&P's view. Unilateral euro
adoption also makes the country's economy highly sensitive to
cross-border capital movements.

S&P considers that there are pockets of risk in Montenegro's
financial system:

-- Two domestic Montenegrin banks have been under stress in recent
months--Invest Banka Montenegro (IBM) and Atlas Bank. The regulator
has taken the decision to close down IBM; the fate of Atlas remains
uncertain as the bank tries to attract extra capital from external
sources after the existing owners failed to provide resources. In
S&P's view, the developments in the two banks potentially highlight
the regulatory shortcomings, given that some transactions went
undetected and later negatively and substantially affected the
capitalization level of Atlas Bank. Importantly, there has not been
any negative spillover effect on the rest of the system so far, and
S&P does not expect any to materialize, given that the two banks
combined amount to about 6% of the system. According to the
authorities, the Deposit Protection Fund currently has enough
resources to pay out the insured depositors, should Atlas be
liquidated, without the need for any budgetary support.  

-- The government-owned Investment Development Fund (IDF) has been
expanding at an accelerating pace in recent years, focused on
financing SMEs at favorable interest rates. S&P understands that
its balance sheet amounts to about 7% of GDP and that the
institution benefits from a sovereign guarantee on its liabilities.
Therefore, if IDF's asset quality were to deteriorate, the
government may have to bear some of the cost via the guarantee
exposures.

Apart from the aforementioned institutions, Montenegro's banking
system appears broadly stable and liquid. Nonperforming loans have
declined to about 5% of the total, compared to 20% in 2013. S&P
still views the government's contingent liabilities from the
banking system as limited, because it thinks the government would
provide only minimal support--that is, to cover the insured
deposits--in the event of a bank default.

S&P said, "In our view, the financial system is potentially
overbanked, given the existence of more than 10 institutions for a
country with a small population. We expect this number to reduce
not only because some banks could close down but also due to the
orderly consolidation of the sector. To this end, we note that
Societe Generale is exiting its investment in Montenegro, with its
operations taken over by another domestic bank, owned by Hungary's
OTP group."

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

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

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


  RATINGS LIST
  Ratings Affirmed

  Montenegro
   Sovereign Credit Rating                B+/Stable/B
   Transfer & Convertibility Assessment   AAA
   Senior Unsecured                       B+




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

STEINHOFF INTERNATIONAL: To Dig Deeper Into Accounting Misdeeds
---------------------------------------------------------------
Janice Kew at Bloomberg News reports that Steinhoff International
plans to dig deeper into the accounting misdeeds that brought the
retailing giant to its knees as it seeks to get to the bottom of
some US$7.4 billion in fictitious or improper deals.

A forensic probe by PwC found that a small group of former
executives -- with the help of others outside the company --
structured phony transactions that substantially inflated earnings
and asset values, Bloomberg relays, citing a 10-page summary of the
report published on March 15.  The deals, orchestrated over several
years, enabled Steinhoff to artificially boost profits, puff-up
property values and inflate cash and so-called cash equivalents,
Bloomberg states.

"There are still a number of unanswered questions, particularly in
relation to the identification of the true nature of the
counter-parties or the ultimate beneficiaries to various
transactions," Bloomberg quotes Steinhoff as saying in the summary.
"These matters will be the subject of further investigation in
order to assist potential recoveries for the group."

The discovery of accounting issues and the departure of Chief
Executive Officer Markus Jooste in December 2017 erased more than
95% of Steinhoff's market value, forced billions of dollars in
asset sales and unleashed a flood of regulatory probes and
lawsuits, Bloomberg recounts.

No executives involved were identified in the summary of the
exhaustive PwC probe, but Steinhoff did say Mr. Jooste hasn't made
himself available for interviews with investigators, Bloomberg
notes.

At the least, Steinhoff can now proceed with preparing its 2017 and
2018 audited earnings, which will show whether the retailer is
keeping sales moving as it seeks to complete its debt
restructuring, according to Bloomberg.

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




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

EVRAZ PLC: Moody's Assigns Ba1 CFR, Outlook Stable
--------------------------------------------------
Moody's Investors Service has assigned a Ba1 corporate family
rating (CFR) and Ba1-PD probability of default rating (PDR) to
EVRAZ plc, which owns a 100% stake in Evraz Group S.A., one of the
largest vertically integrated steel, mining and vanadium companies
in Russia. The outlook of EVRAZ plc is stable.

At the same time, Moody's has affirmed the Ba2 rating of the $750
million senior unsecured notes due 2023 issued by EVRAZ plc (the
Notes), following the substitution of the Notes' issuer, as a
result of which all rights and obligations under the Notes were
transferred from Evraz Group S.A. to EVRAZ Plc on 13 March 2019.

Moody's will subsequently withdraw the Ba1 CFR, Ba1-PD PDR and
stable outlook of Evraz Group S.A. The assignment of ratings to
EVRAZ plc and the pending withdrawal of the ratings of Evraz Group
S.A. follow the company's corporate reorganisation, under which
EVRAZ plc replaced Evraz Group S.A. as the issuer of the group's
notes. EVRAZ plc consolidates all the group's assets and will
remain the reporting entity for the consolidated group.

RATINGS RATIONALE

-- ASSIGNMENT OF Ba1 RATING TO EVRAZ PLC --

EVRAZ plc's Ba1 rating factors in (1) Moody's expectation that the
company will maintain its Moody's-adjusted total debt/EBITDA below
2.5x on a sustainable basis, continue to gradually reduce its total
debt and generate sustainable positive post-dividend free cash
flow; (2) the company's profile as a low-cost integrated
steelmaker, including low cash costs of coking coal and iron ore
production, and a large low-cost producer of vanadium; (3) its high
self-sufficiency in iron ore and coking coal; (4) its product,
operational and geographical diversification; (5) its strong market
position in long steel products in Russia (including leadership in
rail manufacturing), large diameter pipes and rails in North
America, and vanadium globally; (6) the sustained demand for EVRAZ
plc's steel products in Russia, and oil country tubular goods
(OCTG) and rails in North America; (7) the company's financial
policy, which targets to maintain net debt below $4 billion and net
debt/EBITDA below 2.0x; and (8) its long-term debt maturity profile
and strong liquidity.

EVRAZ plc's rating also takes into account (1) the fact that the
company's public guidance indicates only a minimum dividend amount
and a leverage cap but lacks any target dividend payout ratio,
which creates uncertainty over its post-dividend free cash flow,
although Moody's expects EVRAZ plc to tailor its dividend payouts
to the steel and coking coal market pricing environment and capital
spending; (2) the sluggish demand for steel in the Russian
construction sector, which is the major consumer of EVRAZ plc's
steel products, although we expect this demand to improve over the
next 12-18 months, supported by state initiatives to develop
infrastructure and boost residential construction; (3) the overall
negative effect of the 25% steel import tariff, imposed by the US
in March 2018 and Canada in October 2018, on EVRAZ plc's business
in North America, although we do not expect it to have any material
effect on the company's consolidated financial performance; (4) the
company's plan to increase capital spending in 2019-22; and (5)
continued volatility in prices of steel, coking coal and vanadium.

-- AFFIRMATION OF Ba2 NOTES' RATINGS --

The affirmation of the Notes' ratings follows (1) the substitution
of the Notes' issuer, as a result of which all rights and
obligations under the Notes were transferred from Evraz Group S.A.
to EVRAZ plc on 13 March 2019; and (2) the assignment of CFR to
EVRAZ plc, which is a parent company of Evraz Group S.A. The
affirmation of the rating, which is one notch below EVRAZ plc's
CFR, reflects the fact that after the issuer substitution (1) the
Notes will continue to rank pari passu with other unsecured and
unsubordinated obligations of Evraz group; and (2) the Notes remain
structurally subordinated to more senior obligations of Evraz
group, primarily to unsecured borrowings at the level of the
group's operating companies, including its two core steelmaking
plants Evraz NTMK and Evraz ZSMK.

-- WITHDRAWAL OF EVRAZ GROUP S.A.'S RATINGS --

Moody's will subsequently withdraw Evraz Group S.A.'s ratings
because of the corporate reorganisation, as a result of which EVRAZ
plc, which owns Evraz Group S.A., has become the issuer of the
group's notes instead of Evraz Group S.A., following the transfer
of all rights and obligations under all four outstanding Eurobond
issues from Evraz Group S.A. to EVRAZ plc. EVRAZ plc consolidates
all the group's assets and will remain the reporting entity for the
consolidated group. Please refer to the Moody's Investors Service's
Policy for Withdrawal of Credit Ratings, available on its website,
www.moodys.com.

RATIONALE FOR THE STABLE OUTLOOK

The stable outlook reflects EVRAZ plc's solid positioning in the
current rating category, despite volatility in steel, coking coal
and vanadium prices and generous dividend payouts.

WHAT COULD CHANGE RATINGS UP/DOWN

Moody's could upgrade EVRAZ plc's ratings if the company (1)
maintains its Moody's-adjusted total debt/EBITDA below 1.5x on a
sustainable basis; (2) adheres to balanced financial policies and
generates sustainable positive post-dividend free cash flow; and
(3) continues to pursue conservative liquidity management and
maintains healthy liquidity.

Moody's could downgrade the ratings if the company's (1)
Moody's-adjusted total debt/EBITDA rises towards 3.0x on a
sustained basis; (2) post-dividend free cash flow turns negative on
a sustained basis; or (3) liquidity and liquidity management
deteriorate materially.

EVRAZ plc is one of the largest vertically integrated steel, mining
and vanadium companies in Russia. The company's main assets are its
steel plants and rolling mills (in Russia, North America, Europe
and Kazakhstan), iron ore and coal mining facilities, as well as
trading assets. In 2018, EVRAZ plc generated revenue of $12.8
billion (2017: $10.8 billion) and Moody's-adjusted EBITDA of $3.8
billion (2017: $2.6 billion). The company is jointly controlled by
Roman Abramovich (30.52%), Alexander Abramov (20.69%), Alexander
Frolov (10.33%) and Gennady Kozovoy (5.80%).

ORIENT EXPRESS: Moody's Cuts LT Bank Deposit Ratings to Caa1
------------------------------------------------------------
Moody's Investors Service downgraded Orient Express Bank's (OEB)
local and foreign currency long-term bank deposit ratings to Caa1
from B3, its Baseline Credit Assessment (BCA) to caa1 from b3,
adjusted BCA to caa1 from b3, the long-term Counterparty Risk
Assessment (CRA) to B3(cr) from B2(cr), and the long-term
counterparty risk ratings to B3 from B2.

The outlook on the bank's long-term deposit ratings changed to
negative from rating under review.

The rating action concludes the review for downgrade on OEB's
ratings and assessments initiated on 19 September 2018. Today's
one-notch downgrade of the long-term ratings and assessments
reflects corporate governance weaknesses at OEB reflected by a
material understatement of problem assets on its balance sheet, as
well as an ongoing conflict between its largest shareholders which
could disrupt a planned RUB5 billion share issuance .

RATINGS RATIONALE

The Central Bank of Russia (CBR) conducted an inspection in 2018
which revealed material underprovisioning against OEB's corporate
loan portfolio, securities and non-core assets under local
reporting standards. According to OEB's senior management and
shareholders' public statements, the additional provisioning
requirement exceeds RUB19 billion, a significant amount compared to
the bank's RUB12.6 billion tangible common equity as of 30
September 2018.

The bank plans to create provisions of RUB13.5 billion through
2019-20 in addition to RUB6 billion reserves already created in
late 2018, indicating some forbearance on the part of the CBR.

Despite this elevated level of expected provisioning charges
through 2019-20, OEB's robust pre-provision income will help it
absorb both the provisioning charges against its legacy corporate
loan book and non-core assets on top of expected credit losses in
its retail portfolio.

The rating agency understands that a conflict between the two main
shareholders of OEB, Evison Holdings Limited (with 51.6% of shares
on behalf of Baring Vostok private equity funds) and Mr. Avetisyan
(who holds 32% of shares via Finvision Holdings Limited) is still
ongoing. This has resulted in management team reshuffles: since
2018 three CEOs or acting CEOs have been appointed, while several
senior managers have left the bank. Such management shake-ups
increase the uncertainty about the bank's strategy and risk
profile. In addition, the recent detention of several partners and
senior managers of Baring Vostok Capital Partners significantly
reduces the likelihood of a planned RUB5 billion capital injection
into OEB by its largest shareholders and in particular Baring
Vostok.

So far, neither shareholder conflict nor the sudden changes in the
bank's management board have affected the bank's funding base,
which is dominated by retail deposits (85% of total deposits).
Between 1 September 2018 and 1 March 2019 individual deposits
increased to RUB161.9 billion or by 2.2%.

WHAT COULD MOVE THE RATINGS DOWN / UP

OEB's ratings might be downgraded if the bank faces a material
decline in funding or if provisioning requirements exceed those
already identified.

Given the negative outlook, an upgrade of the bank's ratings is
unlikely. Moody's could change the outlook to stable if the
shareholders provided the planned capital support and the agency
observed a sustainable improvement in the bank's solvency metrics.

LIST OF AFFECTED RATINGS

Issuer: Orient Express Bank

Affirmations:

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

  Short-term Counterparty Risk Rating, Affirmed NP

  Short-term Bank Deposits, Affirmed NP

Downgrades:

  Adjusted Baseline Credit Assessment, Downgraded to caa1 from b3

  Baseline Credit Assessment, Downgraded to caa1 from b3

  Long-term Counterparty Risk Assessment, Downgraded to B3(cr)
  from B2(cr)

  Long-term Counterparty Risk Rating, Downgraded to B3 from B2

  Long-term Bank Deposits, Downgraded to Caa1 from B3, Outlook
  Changed To Negative From Rating Under Review

Outlook Action:

  Outlook Changed To Negative From Rating Under Review



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

THINK SMART: Court Decides to Dissolve Business
-----------------------------------------------
Reuters reports that the court has resolved to dissolve Think Smart
SA.

According to Reuters, the administrators will be replaced by
insolvency administration.

The insolvency administration will present a plan for execution of
assets and rights integrated in active mass of company within 15
days, Reuters discloses.

Think Smart, S.A. develops a system that enhances the performance
of the individuals and groups involved in the sales process in
North America, Europe, and Latin America.  The company was founded
in 1998 and is based in Madrid, Spain.





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

KHARKOV: Fitch Affirms 'B-' IDR; Outlook Stable
-----------------------------------------------
Fitch Ratings has affirmed the Ukrainian City of Kharkov's
Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs)
at 'B-' with Stable Outlooks and Short-Term Foreign-Currency IDR at
'B'. The city's National Long-Term Rating has been affirmed at
'AA-(ukr)' with Stable Outlook.

Fitch continues to view the city's ratings as being constrained by
Ukraine's sovereign ratings (B-/Stable/B) and the weak
institutional framework governing Ukrainian local and regional
governments (LRGs).

The affirmation reflects the city's sound operating performance and
debt-free status, although increasing contingent liabilities
stemming mostly from the debt of municipal companies remain a risk.


KEY RATING DRIVERS

Institutional Framework Assessed as Weakness
Ukraine's institutional framework lacks clarity and sophistication,
hindering long-term development and budget planning of Ukrainian
subnationals. The national government is under pressure from the
challenging reform agenda imposed by the IMF in return for funding
for the repayments on external debt. Repayments will resume in 2019
after a break following the 2015 restructuring. Institutional
constraints, political risks ahead of presidential and
parliamentary elections in 2019 and geopolitical risks arising from
unresolved conflict in eastern Ukraine create pressure on overall
macroeconomic performance and stability.

Fiscal Performance Assessed as Neutral

Fitch expects Kharkov's financial performance will remain sound
over the medium-term with an operating margin of around 20%.
However, this will be subject to the political agenda and
priorities set by the new government after the 2019 national
elections. The operating margin was 21.9% in 2018, little changed
from 20.2% in 2017. This was supported by 13.6% revenue growth on
the back of a continuing economic recovery. Operating spending rose
11.2% in 2018, in line with inflation.

The budget recorded a small surplus at below 1% of total revenue in
2018, following a deficit of 4.8% in 2017, which allowed the city
to maintain its debt-free status. Fitch expects capital expenditure
to rise, driven by the necessity to upgrade the city's
infrastructure. This will lead to a budget deficit in 2019 and new
borrowings.

Debt and Other Long-Term Liabilities Assessed as Neutral

According to Fitch's base case scenario Kharkov's debt metrics will
remain sound over the medium-term. The administration plans to
issue a UAH1 billion bond in 2019 following the return to the
capital market of other domestic peers (i.e. City of Lviv and City
of Kyiv - both rated B-/Stable). A high policy rate of 18% and
limited horizon of budget planning constrain the debt and
investment policies of Ukrainian LRGs.

Kharkov remains exposed to material contingent risk. The net
financial result of municipal companies remains negative, forcing
the city to provide support through operating subsidies or capital
injections. Support amounted to UAH2.3 billion in 2017 (data for
2018 will be available later in the year). Most of the funding goes
to utility and transport companies due to historically low tariffs
that do not cover the main cost of services provided.

The debt of municipal companies has also been gradually increasing,
to UAH1.6 billion in 2018 (2017: UAH0.8 billion in 2017), which
represented 11% of operating revenue. The majority of debt came
from three public companies: Kharkov's Water Utility Company,
Heating Company and Central Park of Culture.

The city has guaranteed the debt of Water Utility Company for
modernisation of the city's water utility system. The debt has an
amortising structure and is US dollar-denominated. As of 1 January
2019, the outstanding guaranteed amount was equivalent to UAH89.9
million. Kharkov's guarantee has not been called to date, although
the city makes adequate provisions in its budget annually in case
the company fails to meet its obligation.

Economy Assessed as Weakness

Kharkov is the capital of the country's fourth-largest region,
which contributed 6.5% to Ukraine's GDP in 2016 and 6.4% of the
total population in 2017. Kharkov's economy is well-positioned
among its domestic peers, but significantly lags its international
peers. Its GRP per capita is materially below the EU average, which
underlines Fitch's assessment of the economy as a weakness.

In 2018 the Ukrainian economy continued its recovery with an
estimated GDP growth of 3.2%. Fitch expects Ukraine's GDP to slow
to 2.6% in 2019, which would likely be reflected in Kharkov's
economic prospects.

Management and Administration Assessed as Neutral

The city's administration follows a prudent approach in its
budgetary policy. It usually plans a social-oriented budget and
aims for a close-to-balanced budget. The limited horizon of budget
planning hinders the administration's forecasting ability and makes
strategic planning more challenging. Overall, the legal framework
for LRGs is subject to frequent changes, which requires a swift and
adequate response to potential developments.

One of the administration's priorities is development of the city's
infrastructure, i.e. expansion of the metro lines, renewal of the
stock of the city's transport assets and roads construction. The
administration works closely with international financial
institutions to attract investments and implement infrastructure
projects.

RATING SENSITIVITIES

Kharkov's ratings are constrained by the sovereign IDRs and could
be positively affected by a sovereign upgrade, providing the city
maintains its current sound fiscal performance.

Negative rating action on Ukraine would be mirrored on the city's
ratings.

KYIV: Fitch Affirms 'B-' IDR; Outlook Stable
--------------------------------------------
Fitch Ratings has affirmed the Ukrainian City of Kyiv's Long-Term
Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'B-'.
Kyiv's National Long-Term Rating was also affirmed at 'A(ukr)'. The
Outlooks are Stable.

Fitch has also affirmed PBR Kyiv Finance PLC's USD115.1 million
loan participation notes (LPNs) due December 2022 at 'B-'.

KEY RATING DRIVERS

Institutional Framework Assessed as Weakness

Ukraine's institutional framework lacks clarity and sophistication,
hindering long-term development and budget planning of
subnationals. The national government is under pressure from a
challenging reform agenda imposed by the IMF in return for external
funding. Political risks, which stem from powerful vested interests
and fragmented political parties, are growing ahead of presidential
and parliamentary elections in 2019.

Fiscal Performance Assessed as Neutral

Fitch expects Kyiv's financial performance to remain satisfactory
over the medium term. The city is likely to continue to see an
operating margin of close to 25%. Performance will be supported by
tax revenue growth on the back of continuing economic recovery and
a steady inflow of current transfers from the central government.
However, it remains fragile due to the overall weakness of
sovereign public finances and unpredictable fiscal changes amid
continued uncertainty over the pace of macroeconomic stabilisation.


Kyiv recorded a moderate deficit before debt at 1.9% of total
revenue in 2018, which was funded by accumulated cash. Fitch base
case assumes this trend will continue over the medium term. Fitch
rating case envisages a widening of the deficit (averaging 5% of
total revenue in 2020-2023), driven by higher capex, which could
lead to direct debt exceeding 20% of current revenue, albeit
remaining moderate in absolute terms.

Debt and Other Long-Term Liabilities Assessed as Neutral

Following material fiscal surpluses over the last three years,
Kyiv's direct risk has declined to a moderate 22.7% of current
revenue at end-2018 from a peak of 67% in 2014. However, the debt
is fully US dollar-denominated, exposing the city to FX risk.

As of end-2018, the city's outstanding direct debt was represented
by USD115.1 million LPNs (about UAH3.1 billion), issued by PBR Kyiv
Finance PLC on 4 September 2018 in exchange for USD101.2 million of
the non-restructured part of Kyiv's USD250 million Eurobond due in
2015. The new LPNs bear a 7.5% semi-annual coupon and will be
redeemed in four equal semi-annual instalments in 2021 and 2022.

The issuer is the city's financial SPV, and the LPNs were issued on
a limited recourse basis for the sole purpose of financing a loan
made to the city. They therefore represent direct, unconditional,
unsecured and unsubordinated obligations of Kyiv and at all times
rank pari passu with all its unsecured and unsubordinated
obligations.

Kyiv's direct risk also includes USD351.1 million obligations to
Ukraine's Ministry of Finance (MoF). This is a result of the
exchange of Kyiv's Eurobonds into Ukraine sovereign debt in
December 2015. According to the terms of debt exchange, Kyiv makes
semi-annual payments to compensate for the coupon payment related
to this debt servicing and should repay the principal in two equal
instalments in 2019 and 2020.

The repayments expose the city to two peaks of annual refinancing
of about UAH5 billion each in 2019 and 2020. However, following
negotiations with the Ukrainian government the principal amount at
the due date will be reduced by UAH1.9 billion (equivalent to
Kyiv's repayment of domestic bonds series G in November 2016), and
by the amount of Kyiv's capex on bridge and metropolitan
construction (about UAH1.39 billion in 2017 and UAH3.9 billion in
2018). This means that the principal debt amortisation in 2019 will
be fully reduced by the amount of the above-mentioned expenditure.
Fitch expects the city to continue its negotiations with the
central government in writing off the remaining liabilities.

Kyiv's other obligations are UAH3.7 billion of interest-free
treasury loans contracted prior to 2014. As these loans were
granted to the city to finance mandates delegated by the central
government and will be written off by the state in the future Fitch
does not include these treasury loans in its calculation of direct
risk.

Kyiv remains exposed to contingent risk stemming from public sector
companies. The city had several outstanding guarantees totalling
about EUR40 million as of 1 January 2019 to support projects in
public transportation, infrastructure and energy-saving. The
guaranteed loans are euro-denominated and relate mostly to two
city-owned companies, Kyivpastrans and Kyivmetropoliten. The
guarantees expire in 2021.

Economy Assessed as Weakness

Kyiv benefits from its status as Ukraine's capital and remains the
largest and wealthiest city in the country, with gross city product
accounting for about 23% of the country's GDP (2016). Its economy
is diversified across manufacturing and services, and supported by
a large number of major national and international companies.
However, Kyiv's economy still significantly lags international
peers, which underlines Fitch's assessment of the economy as
weakness.

In 2018 the Ukrainian economy continued its recovery with an
estimated GDP growth of 3.2%. Fitch expects Ukraine's GDP to slow
to 2.6% in 2019, which could hinder Kyiv's economic prospects.

Management and Administration Assessed as Neutral

Ukrainian local and regional governments' long-term financial
planning is under-developed, and the city administration's planning
horizon is limited to one year. This hinders the forecasting
ability of the administration and makes strategic planning
challenging. High, albeit declining, inflation and interest rates
also hamper debt and investment policies.

RATING SENSITIVITIES

Kyiv's ratings are constrained by the sovereign IDRs and could be
positively affected by a sovereign upgrade, providing the city
maintains its current sound fiscal performance.

Negative rating action on Ukraine would be mirrored on the city's
ratings. A material increase of the city's indebtedness, combined
with deterioration of financial flexibility, would lead to a
downgrade.



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

ARCADIA GROUP: Green Working on Restructuring Amid Tough Market
---------------------------------------------------------------
James Davey at Reuters reports that British retail businessman
Philip Green is working on a restructuring of his Arcadia Group
which owns the Top Shop, Miss Selfridge and Dorothy Perkins chains,
the firm said on March 15.

According to Reuters, in a statement Arcadia said it was dealing
with "an exceptionally challenging retail market" and "continued
pressures that are specific to the UK high street."

The retailer said it was exploring several options to enable
Arcadia operate in a more efficient manner, Reuters relates.

"None of the options being explored involve a significant number of
redundancies or store closures.  The business continues to operate
as usual including all payments being made to suppliers as normal,"
Reuters quotes the retailer as saying.

Earlier on March 15, media reports said Mr. Green was considering a
company voluntary arrangement (CVA), a restructuring mechanism
which allows firms to close unwanted stores and cut rent bills,
Reuters recounts.

INTERSERVE PLC: Mitie Group Mulls Acquisition of Largest Unit
-------------------------------------------------------------
Suzy Waite at Bloomberg News reports that outsourcing company Mitie
Group is considering acquiring the largest unit of Interserve Plc,
the troubled U.K. construction company that collapsed this week and
had its assets taken over by lenders.

Sky News reported on March 16 Mitie's chief executive officer, Phil
Bentley, is working on plans to offer Interserve's owners, which
include a consortium of banks and hedge funds, about GBP100 million
for its support services unit, Bloomberg relates.  According to
Bloomberg, Sky reported this unit carries out facilities management
work for government and various private sector clients in the U.K.
and Middle East.

The talks come as Interserve Plc, which maintains hospitals and
roads for the government, was formally placed under administration,
a preliminary form of bankruptcy in the U.K., the company, as cited
by Bloomberg, said in a statement on March 15. The move followed
the rejection by shareholders led by U.S. hedge fund Coltrane Asset
Management of a rescue plan, Bloomberg notes.

If completed, the Mitie deal would create a company employing close
to 100,000 people in the U.K., making it one of the country's
biggest private sector employers, Bloomberg states.


NEWGATE FUNDING 2006-2: Fitch Ups Class E Notes Rating to 'BB+sf'
-----------------------------------------------------------------
Fitch Ratings has upgraded nine tranches of three 2006 Newgate
Funding (NF) transactions and affirmed 19 tranches.

The Newgate Funding 2006 series are securitisations of UK
non-conforming residential mortgages originated by Mortgages plc, a
subsidiary of Bank of America Merrill Lynch. The three transactions
have similar portfolio characteristics with high proportions of
self-certified borrowers, ranging between 57% and 75% of the
outstanding portfolio, and interest-only loans representing roughly
80% of the respective pools.

KEY RATING DRIVERS

Growing Credit Enhancement

Credit enhancement (CE) has increased across the series, despite
the pay-down switching to pro rata back in 2017, due to the reserve
fund in each transaction no longer amortising after having breached
the cumulative loss trigger. CE has built up sufficiently to
withstand higher stresses, resulting in the upgrades.

Improved Asset Performance

Performance since the last rating action in March 2018 has improved
across the transactions. Three month plus arrears have fallen for
all three transactions over the past 12 months to 13.9% from 15.27%
for NF 2006-1, to 14.59% from 14.87% for NF 2006-2 and to 13.44%
from 15.16% for NF 2006-3. The portion of the original balance that
has been repossessed has only increased by a low amount since the
last rating action by 0.13% for NF 2006-1, 0.2% for NF 2006-2 and
0.12% for NF 2006-3.

The improved performance and increasing CE have led to the
affirmations and upgrades for some of the junior notes of each of
the transactions.

Pro-Rata Amortisation
The pro-rata amortisation of these transactions is mitigated by
non-amortising reserve funds and a 10% switchback trigger for the
NF 2006-2 and NF 2006-3 transactions. The NF 2006-1 transaction has
no switch back trigger and this has led to the affirmations,
despite the model-implied ratings suggesting modest upgrades for
the class B to E notes.

Unhedged Basis Risk

There are no hedging agreements in place in any of the transactions
to mitigate the basis risk arising from the Libor-linked notes and
underlying mortgages, linked to standard variable rates or the
originator's base rates. Consequently, in its analysis Fitch
applied haircuts to the coupons received to reduce the credit given
to the excess spread generated by the structure.

Collection Rates Remain a Challenge

Recent collection rates show that over 20% of borrowers in arrears
for over one month are currently making no monthly payment,
suggesting a low propensity for borrowers to clear arrears.
However, Fitch notes a continuing improvement since the last rating
review as a result of the reduction in arrears.

RATING SENSITIVITIES

The existing pipeline of late-stage arrears may put a strain on
excess spread when the pace of possessions eventually increases,
although current loss severities (averaging 21.8%) observed to date
are in line or better than those observed on comparable
non-conforming transactions. Additionally, collection rates on
borrowers in arrears could deteriorate if interest rates rise
moderately.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO RULE 17G-10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.

DATA ADEQUACY

Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset pool
and the transaction. There were no findings that were material to
this analysis.

Fitch did not undertake a review of the information provided about
the underlying asset pool ahead of the transaction's initial
closing. The subsequent performance of the transactions over the
years is consistent with the agency's expectations given the
operating environment and Fitch is therefore satisfied that the
asset pool information relied upon for its initial rating analysis
was adequately reliable.

Overall and together with the assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.

SOURCES OF INFORMATION

The information below was used in the analysis:
  
  -- Loan-by-loan data obtained from US Bank website as at: 3
December 2018 for NF 2006-1, 2 January 2019 for NF 2006-2, and 1
February 2019 for NF 2006-3.

  -- Transaction reporting provided by U.S. Bank Global Corporate
Trust Services as at: 3 December 2018 for NF 2006-1, 2 January 2019
for NF 2006-2, and 1 February 2019 for NF 2006-3.

MODELS

The models below were used in the analysis. Click on the link for a
description of the model:

ResiGlobal.

EMEA RMBS Surveillance Model.

EMEA Cash Flow Model.

The rating actions are as follows:

Newgate Funding 2006-1 plc:
Class A4 (ISIN XS0248865494): affirmed at 'AAAsf'; Outlook Stable
Class Ma (ISIN XS0248221920): affirmed at 'AAAsf'; Outlook Stable
Class Mb (ISIN XS0248866542): affirmed at 'AAAsf'; Outlook Stable
Class Ba (ISIN XS0248222142): affirmed at 'AAsf'; Outlook Stable
Class Bb (ISIN XS0248866971): affirmed at 'AAsf'; Outlook Stable
Class Ca (ISIN XS0248222225): affirmed at 'A+sf' Outlook Stable
Class Cb (ISIN XS0248867789): affirmed at 'A+sf' '; Outlook Stable
Class D (ISIN XS0248867946): affirmed at 'BBB-sf'; Outlook Stable
Class E (ISIN XS0248222571): affirmed at 'BB+sf' '; Outlook Stable

Newgate Funding 2006-2 plc:
Class A3a (ISIN XS0257991603): affirmed at 'AAAsf'; Outlook Stable
Class A3b (ISIN XS0257989458): affirmed at 'AAAsf'; Outlook Stable
Class M (ISIN XS0257992676): affirmed at 'AAAsf'; Outlook Stable
Class Ba (ISIN XS0257993138): affirmed at 'AA-sf'; Outlook Stable
Class Bb (ISIN XS0257993302): affirmed at 'AA-sf'; Outlook Stable
Class Ca (ISIN XS0257994532): upgraded to 'Asf' from 'A-sf';
Outlook Stable
Class Cb (ISIN XS0257994888): upgraded to 'Asf' from 'A-sf';
Outlook Stable
Class Da (ISIN XS0257995265): affirmed at 'BB+sf'; Outlook Stable
Class Db (ISIN XS0257996073): affirmed at 'BB+sf'; Outlook Stable
Class E (ISIN XS0257996743): upgraded to 'BB+sf' from 'BB-sf';
Outlook Stable

Newgate Funding 2006-3 plc:
Class A3a (ISIN XS0272617282): affirmed at 'AAAsf'; Outlook Stable
Class A3b (ISIN XS0272626788): affirmed at 'AAAsf'; Outlook Stable
Class Mb (ISIN XS0272627836): affirmed at 'AAsf'; Outlook Stable
Class Ba (ISIN XS0272619817): upgraded to 'A+sf' from 'Asf';
Outlook Stable
Class Bb (ISIN XS0272629295): upgraded to 'A+sf' from 'Asf';
Outlook Stable
Class Cb (ISIN XS0272629881): upgraded to 'BBBsf' from 'BB+sf';
Outlook Stable
Class Da (ISIN XS0272621805): upgraded to 'BBsf' from 'BB-sf';
Outlook Stable
Class Db (ISIN XS0272630624): upgraded to 'BBsf' from 'BB-sf';
Outlook Stable
Class E (ISIN XS0272622795): upgraded to 'B+sf' from 'Bsf'; Outlook
Stable

PATISSERIE VALERIE: Shareholders Plan to Take KPMG to Court
-----------------------------------------------------------
The Telegraph reports that Patisserie Valerie shareholders are
threatening to take the collapsed chain's administrators KPMG to
court to get hold of a devastating report alleged to show how the
company's cash balances were artificially inflated.

According to The Telegraph, the document, produced by forensic
accountants at PwC, is alleged to detail a suspected fraud running
to tens of millions of pounds.

It is claimed to reveal how suppliers provided fake invoices and
multi-million pound cheques were submitted to bolster the company's
finances, The Telegraph discloses.

Discovery of a black hole in Patisserie Valerie's accounts, which
is now put at GBP94 million, led to its collapse into
administration in January with the loss of 900 jobs, The Telegraph
relates.

SBOLT 2018-1: Moody's Affirms Ba2 Rating on GBP14MM Class D Notes
-----------------------------------------------------------------
Moody's Investors Service has upgraded the ratings of 3 classes of
notes in Small Business Origination Loan Trust 2018-1 DAC ("SBOLT
2018-1", or the "Issuer"). Moody's also affirmed the ratings of one
class of note in the same transaction.

The upgrade rating action reflects increased levels of credit
enhancement for the affected notes. Moody's affirmed the rating of
the note that had sufficient credit enhancement to maintain its
current rating.

  GBP128.07 million (current outstanding balance of GBP82.15
  million) Class A Floating Rate Asset-Backed Notes due December
  2026, Upgraded to Aa1 (sf); previously on May 16, 2018
  Definitive Rating Assigned Aa3 (sf)

  GBP12.39 million (current outstanding balance of GBP7.95
  million) Class B Floating Rate Asset-Backed Notes due December
  2026, Upgraded to Aa3 (sf); previously on May 16, 2018
  Definitive Rating Assigned A2 (sf)

  GBP 14.46 million (current outstanding balance of GBP9.28
  million) Class C Floating Rate Asset-Backed Notes due December
  2026, Upgraded to Baa1 (sf); previously on May 16, 2018
  Definitive Rating Assigned Baa2 (sf)

  GBP14.46 million (current outstanding balance of GBP9.28
  million) Class D Floating Rate Asset-Backed Notes due December
  2026, Affirmed Ba2 (sf); previously on May 16, 2018 Definitive
  Rating Assigned Ba2 (sf)

RATINGS RATIONALE

The upgrade rating action is prompted by:

-- an increase in credit enhancement for the affected tranches,
    alongside excess spread having been sufficient to broadly
    offset defaults which have already occurred in the
    transaction.

Revision of Key Collateral Assumptions:

As part of the rating action, Moody's reassessed its default
probability assumptions for the portfolio reflecting the collateral
performance to date.

The default performance of the transaction has been in line with
expectations since closing. Total delinquencies have increased
steadily since closing; as of March 2019 the percentage of loans
which are 30 days plus in arrears stands at 2.87% of current pool
balance, whilst the percentage of loans which are 60 days plus in
arrears stands at 1.72% of current pool balance.

Cumulative defaults currently stand at 3.44% of original pool
balance, equivalent to an amount of GBP7.10M. Approximately GBP6.89
million of the defaulted amount has been recovered through the
capture of excess spread.

Moody's has maintained its original default probability assumption
for the transaction of 11% of original balance. The portfolio has
so far performed slightly better than Moody's initial default
expectations, and in order to maintain our original default
probability assumption for the life of the transaction, we have
increased our expectations of future defaults on current portfolio
balance to 12.3%.

Moody's closing assumptions of a mean recovery rate of 25% with a
standard deviation of 20% has been transformed into a fixed
recovery rate assumption of 20%. Recovery timings, with 25% of the
recovery amount received 1 year after default, 25% after 2 years
and the remaining 50% after 3 years, are unchanged.

Moody's has maintained its portfolio credit enhancement at a value
of 42% which, combined with the revised key collateral assumptions,
results in an adjusted CoV of 47.5%.

Today's rating action also took into account the increased
uncertainty relating to the impact of the performance of the UK
economy on the transaction over the next few years, due to the
on-going discussions relating to the final Brexit agreement.

Increase in Available Credit Enhancement

Non-amortising reserve funds and trapping of excess spread led to
the increase in the credit enhancement available in this
transaction.

For instance, the credit enhancement for the most senior tranche
affected by today's rating action increased to 42.13% in March 2019
from a value of 39.75% at closing.

Counterparty Exposure

The rating action took into consideration the notes' exposure to
relevant counterparties, such as servicer, account banks or cap
providers.

Moody's assessed the default probability of the transaction's
account bank providers by referencing the bank's deposit rating.
Moody's also factored into its analysis the limited track history
of the collateral type and the nature of the Servicer's business
model, which restricted the upgrade potential of the notes.

Moody's assessed the exposure to NatWest Markets Plc acting as cap
counterparty. Moody's analysis considered the risks of additional
losses on the notes if they were to become unhedged following a
derivative counterparty default by using the CR Assessment as
reference point for derivative counterparties. Moody's concluded
that the ratings of the notes are not constrained by the cap
agreement entered into between the issuer and NatWest Markets Plc.

METHODOLOGY

The principal methodology used in these ratings was "Moody's Global
Approach to Rating SME Balance Sheet Securitization" published in
August 2017.

The Credit Rating for Small Business Origination Loan Trust 2018-1
DAC was assigned in accordance with Moody's existing Methodology
entitled "Moody's Global Approach to Rating SME Balance Sheet
Securitization", dated 31th August 2017. Please note that on 14th
November 2018, Moody's released a Request for Comment, in which it
has requested market feedback on potential revisions to its
Methodology for rating SME Balance Sheet Securitizations. If the
revised Methodology is implemented as proposed, the Credit Rating
of the notes issued by Small Business Origination Loan Trust 2018-1
DAC may be neutrally affected. Please refer to Moody's Request for
Comment, titled " Proposed Update to Moody's Global Approach to
Rating SME Balance Sheet Securitizations" for further details
regarding the implications of the proposed Methodology revisions on
certain Credit Ratings.

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

Factors or circumstances that could lead to an upgrade of the
ratings include (1) performance of the underlying collateral that
is better than Moody's expected, (2) deleveraging of the capital
structure and (3) improvements in the credit quality of the
transaction counterparties.

Factors or circumstances that could lead to a downgrade of the
ratings include (1) an increase in sovereign risk, (2) performance
of the underlying collateral that is worse than Moody's expected,
(3) deterioration in the notes' available credit enhancement and
(4) deterioration in the credit quality of the transaction
counterparties.



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

HAMKORBANK: Moody's Hikes Local Currency Deposit Rating to B1
-------------------------------------------------------------
Moody's Investors Service has upgraded to b1 from b2 the Baseline
Credit Assessment (BCA) and adjusted BCA of Uzbekistan-based
Hamkorbank. Concurrently, Hamkorbank's long-term local currency
deposit rating was also upgraded to B1 from B2, the outlook on this
rating was changed to stable from positive. Hamkorbank's B2
long-term foreign currency deposit rating was affirmed with stable
outlook. The bank's long-term local currency Counterparty Risk
Rating (CRR) was upgraded to Ba3 from B1, whereas its long-term
foreign currency CRR was affirmed at B1. Moody's also affirmed
Hamkorbank's Not Prime short-term local and foreign currency
deposit ratings, as well as the bank's Not Prime short-term local
and foreign currency CRR. The bank's long-term Counterparty Risk
Assessment (CR Assessments) was upgraded to Ba3(cr) from B1(cr),
whilst its short-term CR Assessment of Not Prime(cr) was affirmed.

RATINGS RATIONALE

RATIONALE FOR THE UPGRADE OF THE BANK'S BCA AND LONG-TERM LOCAL
CURRENCY DEPOSIT RATING

According to Moody's, the upgrade of Hamkorbank's BCA and adjusted
BCA and, concurrently, of its long-term local currency deposit
rating and its long-term local-currency CRR reflects the bank's
robust financial performance as well as expectations that its
metrics will remain better than those reported by Uzbekistan's
banking sector on average. These include, in particular, sound
asset quality, strong profitability, as well as the stable funding
and liquidity profile. The rating action also factors in the bank's
upcoming pipeline for attracting external capital contributions
which should further support its business expansion.

Hamkorbank has historically reported better-than-sector average
asset quality metrics. Over 2016-2018, the bank's problem loans
(defined as loans that are past due by more than 90 days and
impaired loans) consistently accounted for less than 1% of its
total gross loans, compared with the sector-wide ratio that Moody's
estimates to exceed 3% as of the end of 2018. Hamkorbank's
loan-loss reserves at 1.2% of gross loans reported under local GAAP
as of 31 December 2018 appear sufficient.

Hamkorbank's loan portfolio has been growing fast, with a 55%
growth pace recorded in 2018, according to local GAAP. Although
this accelerated growth may have some medium- to long-term negative
effect on the quality of the bank's loans, the rating agency still
expects the bank's asset quality metrics to remain
better-than-sector average, owing to (1) the granular composition
of the bank's loan portfolio, which to a large extent consists of
loans to micro-entities, as well as small and medium-sized
enterprises; and (2) the bank's long track record and experience in
its key lending products, supported by consultancy, technical
assistance and oversight from its institutional shareholders, in
particular International Finance Corporation (IFC, Aaa stable)
which holds 7.66% of Hamkorbank's shares.

Hamkorbank has so far been successful to balance its business
expansion by internal capital generation. Hamkorbank's
profitability metrics are among the highest in Uzbekistan, given
the bank's focus on the relatively high-yielding retail,
microfinance and SME lending, combined with stringent credit
underwriting procedures resulting in low credit costs. The bank's
return on average equity varied from 28% to 30%, annually, during
2016-2018. As a result, its capital adequacy has remained good to
date, supported by high retained profits.

Hamkorbank has plans to attract Tier 1 capital from existing and
new shareholders over 2019, and the bank management expects that
the first capital injection will be completed already in the second
quarter of 2019. The rating agency estimates that, if Hamkorbank's
2019 capital injection programme materializes as intended, the
bank's ratio of tangible common equity to risk-weighted assets will
be above 11% as of the end of 2019, assuming a 30% return on
average equity and 40% growth in risk-weighted assets. The planned
external capital injections will bridge the gap between the bank's
asset growth and its internal capital generation.

Hamkorbank's funding and liquidity positions will remain
satisfactory, as they have historically been, supported by a stable
and committed core customer funding base and the bank's access to
long-term funding from a diversified number of international
financial institutions. Although Hamkorbank's liquidity cushion
almost halved over 2018, it still remains at comfortable level of
around 20% of total assets, and Moody's does not expect it to
reduce further.

RATIONALE FOR THE AFFIRMATION OF THE BANK'S LONG-TERM FOREIGN
CURRENCY DEPOSIT RATING

Hamkorbank's long-term foreign currency deposit rating of B2 is
capped by Uzbekistan's foreign currency deposit ceiling of B2. The
level of the ceiling reflects the foreign currency transfer and
convertibility risks in Uzbekistan.

OUTLOOK ON THE LONG-TERM DEPOSIT RATINGS

The stable outlook on Hamkorbank's B1 long-term local currency
deposit ratings reflects Moody's expectations that the risks of the
bank's fast loan growth will be counter-balanced by its
consistently stringent credit underwriting procedures, sustainable
strong profitability, as well as the liquidity and capital support
stemming from a wide array of international financial institutions
with which Hamkorbank maintains stable long-term relationships.

The outlook on Hamkorbank's B2 long-term foreign currency deposit
rating is also stable. Uzbek banks' long-term foreign currency
deposit ratings are capped by Uzbekistan's foreign currency deposit
ceiling of B2.

WHAT COULD MOVE THE RATINGS UP / DOWN

Hamkorbank's long-term local and foreign currency deposit ratings
are at the highest levels currently assigned by Moody's to any
Uzbek bank. In particular, Hamkorbank's B1 long-term local currency
deposit rating is at the same level as Uzbekistan's long-term
issuer and debt ratings of B1 (stable). Hamkorbank's ratings are
constrained by the risks inherent in the country's operating
environment, and a prerequisite for an upgrade of the bank's
ratings would be an upgrade of the country's sovereign ratings.

Hamkorbank's BCA and long-term local currency deposit rating could
be downgraded or its outlook revised to negative from stable, in
case the bank fails to sustain its strong solvency and liquidity
metrics in the medium- to long-term, in contrast with Moody's
current expectations.

Headquartered in the City of Andijan, Republic of Uzbekistan,
Hamkorbank reported -- as of the end of 2018 - total assets of
UZS6.9 trillion and total equity of UZS763 billion under local
GAAP. Net local GAAP profit earned in 2018 was UZS190 billion.

LIST OF AFFECTED RATINGS

Issuer: Hamkorbank

Upgrades:

  Adjusted Baseline Credit Assessment, upgraded to b1 from b2

  Baseline Credit Assessment, upgraded to b1 from b2

  Long-term Counterparty Risk Assessment, upgraded to Ba3(cr) from

  B1(cr)

  Long-term Counterparty Risk Rating (Local Currency), upgraded to

  Ba3 from B1

  Long-term Bank Deposits (Local Currency), upgraded to B1 from
  B2, Outlook Changed To Stable from Positive

Affirmations:

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

  Long-term Counterparty Risk Rating (Foreign Currency), affirmed
  B1

  Short-term Counterparty Risk Rating, affirmed NP

  Long-term Bank Deposits (Foreign Currency), affirmed B2, Outlook

  Remains Stable

  Short-term Bank Deposits, affirmed NP

Outlook Action:

Outlook Changed To Stable from Positive (m)


                           *********


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

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

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

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