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

                          E U R O P E

          Friday, March 22, 2019, Vol. 20, No. 59

                           Headlines



B E L G I U M

NYRSTAR: S&P Lowers ICR to 'SD' After Missed Interest Payment


C R O A T I A

ULJANIK: Croatia to Decide on Fate in Coming Days


C Z E C H   R E P U B L I C

AVAST HOLDING: S&P Ups Issuer Credit Rating to 'BB' on Refinancing


I R E L A N D

CADOGAN SQUARE XIII: Fitch Rates EUR12.5MM Class F Notes 'B-sf'


I T A L Y

NEXI SPA: S&P Places B+ Issuer Credit Rating on Watch Positive
TERCAS BANK: Italy's Rescue Plan Legal, EU Judges Rule


K A Z A K H S T A N

HOME CREDIT: Fitch Affirms 'B+' IDR, Outlook Stable


M O L D O V A

ARAGVI HOLDING: Fitch Assigns 'B(EXP)' Issuer Default Ratings
ARAGVI HOLDING: S&P Assigns Prelim B- Ratings, Outlook Stable


R U S S I A

ALROSA PJSC: Fitch Hikes LongTerm IDR From BB+, Outlook Stable
BANK PERVOMAISKY: Recognized as Bankrupt by Krasnodar Court
CB AGROSOYUZ: Recognized as Bankrupt by Moscow Court
DELOPORTS LLC: Fitch Affirms BB- Longterm Issuer Default Rating
MEGAFON: S&P Alters Outlook to Negative , Affirms BB+ Ratings

RUSSIAN MORTGAGE: Bank of Russia Submits Bankruptcy Claim


S W E D E N

PERSTORP: S&P Upgrades Long-Term ICR to 'B' on Debt Reduction


T U R K E Y

DOGUS HOLDING: Disposes Assets to Help Restructure Debt Pile


U N I T E D   K I N G D O M

OSPREY ACQUISITIONS: Fitch Affirms BB Issuer Default Rating
PARKDEAN RESORTS: S&P Alters Outlook to Negative & Affirms B- ICR


X X X X X X X X

[*] BOOK REVIEW: Macy's for Sale

                           - - - - -


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B E L G I U M
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NYRSTAR: S&P Lowers ICR to 'SD' After Missed Interest Payment
-------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Nyrstar to
'SD' (selective default) from 'CCC+'. S&P also lowers its rating on
the senior unsecured bonds due 2019 and 2024, on which the coupon
was deferred, to 'D' from 'CCC-'. The recovery rating remains '6',
indicating negligible recovery in the event of default.

The downgrade to 'SD' follows Nyrstar deferring the coupon payments
on its senior unsecured notes (EUR340 million due September 2019
and EUR500 million due March 2024); both were due on March 15,
2019.

The company has announced that it will use the 30-day grace period
to consider its options regarding its capital structure. Nyrstar's
willingness to resume regular payments at the end of the grace
period is currently not clear to us.

Previously in May 2018, the company used its deferral feature under
the Port Pirie A$291 million facility, deferring a $37 million loan
repayment (explained by the delays in the project's ramp-up and its
cash flows). S&P understands that the company continues to repay
interest on its other facilities.

On Oct. 30, 2018, the company announced a capital structure review.
This came after another year of weak results (namely year-to-date
EBITDA) and creeping debt (as of Sept. 30, 2018 the reported gross
debt was EUR1.2 billion or EUR1.9 billion on an S&P Global
Ratings-adjusted basis, versus cash of EUR63 million).

S&P said, "We view the current capital structure as unsustainable,
with an estimated adjusted debt to EBITDA above 10x at year-end
2018. Our previous expectation for 2019 EBITDA was a recovery to
EUR300 million-EUR350 million, with negative free cash flows of
EUR150 million-EUR200 million. We note that under this base-case
scenario, the company will have sufficient liquidity sources to
cover its liquidity needs in 2019.

"In this respect, we believe that the company is more likely to
reach an agreement with the different stakeholders over the coming
weeks, which may include pushing the maturities and / or haircuts
to the outstanding debt, which would also translate into a
'selective default', rather than repaying the deferred coupons.

"Without further news from the company, we will likely maintain the
current ratings until it completes its capital restructuring. A
future rating would require Nyrstar's updated liquidity position,
capital structure, and maturity schedule, as well clarity on
expected EBITDA generation in the next few years."



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C R O A T I A
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ULJANIK: Croatia to Decide on Fate in Coming Days
-------------------------------------------------
Igor Ilic at Reuters reports that Croatia will decide in coming
days whether to place troubled shipbuilder Uljanik into bankruptcy
or try to restructure the business at a cost to the state of around
one billion euros, a top official said on March 20.

Last month Uljanik, the country's largest shipbuilder, chose local
rival Brodosplit as a strategic partner to restructure its
operations, with Italian shipbuilder Fincantieri acting as an
adviser in the process, Reuters recounts.

"The restructuring would cost us EUR1.009 billion (US$1.15
billion), while bankruptcy would cost us EUR557 million," Reuters
quotes Branko Bacic, a leading official of the biggest party in the
ruling coalition, the conservative HDZ, as saying after a meeting
of the ruling conservative-liberal coalition. "Now we know the
figures, but given the significance of the issue not just for
Uljanik, but for our shipbuilding industry as a whole, we took a
few days more for a decision."

Uljanik, which owns two shipyards in the northern Adriatic cities
of Pula and Rijeka and is 25% owned by the state, has been working
to stave off bankruptcy due to liquidity problems that began in
2017, Reuters relates.

The latest difficulties for the government arose when it became
clear that restructuring costs might reach two percent of the
country's gross domestic product, Reuters notes.

According to Reuters, some analysts believe that shipbuilding no
longer holds strategic importance for Croatia, meaning further
state funding to save the dock would be the wrong economic choice.

Economy Minister Darko Horvat, as cited by Reuters, said on March
20 that despite the lower initial cost of bankruptcy, it was
debatable which option was more favorable in the long run.

The government has already paid out HRK3.1 billion (US$474.57
million) on the basis of state guarantees extended in previous
years to help Uljanik stay afloat, driving the general budget into
deficit in 2018, Reuters discloses.




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C Z E C H   R E P U B L I C
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AVAST HOLDING: S&P Ups Issuer Credit Rating to 'BB' on Refinancing
------------------------------------------------------------------
S&P Global Ratings raised its issuer and issue credit ratings on
Avast Holding to 'BB' from 'BB-' because of the planned reduction
in debt, combined with Avast's stronger-than-anticipated operating
performance in 2018. The recovery rating on Avast's term loans is
unchanged at '3'. The company saw strong growth in its consumer
desktop division and integration costs related to the AVG and
Piriform acquisitions have wound down.

Repaying $200 million in debt should cause S&P Global
Ratings-adjusted leverage at Avast to fall to about 2.8x, based on
2018 adjusted EBITDA. S&P said, "We forecast a further decline to
about 2.6x in 2019 and we see limited risk that adjusted leverage
will rise above 3.0x over the medium term. The robust outlook for
the company's consumer desktop division, combined with reduced
integration costs, suggests that EBITDA should continue to grow. We
also expect that gross leverage reduction should benefit from the
5% yearly amortization of the term loans. This is somewhat
balanced, in our view, by the company's appetite for mergers and
acquisitions."

S&P said, "Our assessment of the company's financial risk profile
takes into account its solid FOCF generation--it generated $291.8
million in 2018, equivalent to above 65% of adjusted EBITDA. This
was supported by working capital inflows from deferred revenues and
limited capital expenditure (capex) requirements. We expect Avast
to maintain FOCF to debt above 20% in 2019 and 2020. That said, we
do not adjust the company's debt for surplus cash and do not assume
further debt prepayment from cash on balance sheet. In our view,
Avast is more likely to use future excess cash for shareholder
remuneration or to make an acquisition, if a suitable target
arises.

"Our assessment of Avast's business risk remains constrained by
revenue concentration in the consumer desktop segment, which
generated more than two-thirds of 2018 revenues." Compared with the
enterprise market, we consider switching costs in this segment to
be lower. Subscription periods are also shorter, at one-to-three
years.

Avast faces competition from some larger and better capitalized
competitors, such as Microsoft. In the longer term, Avast will also
face the challenge of generating income from mobile users, given
that PC sales have stagnated as online activity continues to shift
toward mobile devices.

Avast's freemium business model has enabled it to become the global
leading provider of consumer endpoint security to users.
Nevertheless, its revenues rank behind both Symantec and McAfee,
which focus more on the traditional premium market and have more
sizable business customer bases. Avast's S&P Global
Ratings-adjusted EBITDA margins are relatively strong, at 53.7% in
2018, compared with its peer group. Its EBITDA margins are
supported by a cost-effective online direct sales and distribution
model, community-based support, and highly automated threat
detection processes. Avast further benefits from a geographically
diversified revenue base. About 43% of its revenue is generated in
the U.S. and 22.5% of its users are in the U.K., France, and
Germany--the rest are in other countries.

S&P said, "The stable outlook reflects our expectation that Avast
will maintain leverage below 3.0x and FOCF to debt of at least 20%
over the next 12 months. The company is likely to continue to
benefit from strong growth in its consumer desktop division and
improving S&P Global Ratings-adjusted EBITDA margins to about
55%-56% on the back of lower costs related to either integration or
the IPO.

"We could lower the rating if adjusted debt to EBITDA increased
back above 3.0x, or if FOCF to debt deteriorated materially. This
could occur if the company decided to pursue a large debt-funded
acquisition or a more-aggressive shareholder remuneration policy.

"We consider an upgrade to be unlikely over the next 12 months. We
could raise the rating if Avast actively reduced leverage to below
2x while maintaining FOCF to debt above 25% on a sustainable
basis."



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I R E L A N D
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CADOGAN SQUARE XIII: Fitch Rates EUR12.5MM Class F Notes 'B-sf'
---------------------------------------------------------------
Fitch Ratings has assigned Cadogan Square XIII CLO DAC notes
ratings, as follows:

EUR2 million Class X: 'AAAsf'; Outlook Stable
EUR307.5 million Class A: 'AAAsf'; Outlook Stable
EUR50 million Class B: 'AAsf'; Outlook Stable
EUR32.5 million Class C: 'Asf'; Outlook Stable
EUR32.5 million Class D: 'BBB-sf'; Outlook Stable
EUR27.5 million Class E: 'BB-sf'; Outlook Stable
EUR12.5 million Class F: 'B-sf'; Outlook Stable
EUR44.5 million Class M subordinated notes: 'NRsf'

Cadogan Square CLO XIII DAC is a securitisation of mainly senior
secured obligations with a component of senior unsecured, mezzanine
and second-lien loans. A total note issuance of EUR509 million is
being used to fund a portfolio with a target par of EUR500 million.
The portfolio is managed by Credit Suisse Asset Management Limited.
The CLO envisages a further 4.5-year reinvestment period and an
8.5-year weighted average life (WAL).

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 30.9.

High Recovery Expectations
At least 90% of the portfolio comprises senior secured obligations.
Fitch views the recovery prospects for these assets as more
favourable than for second-lien, unsecured and mezzanine assets.
The Fitch-weighted average recovery rate (WARR) of the current
portfolio is 63.3%.

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

Diversified Asset Portfolio
The transaction features four different Fitch tests matrices with
different allowances for exposure to the 10 largest obligors
(maximum 15% and 20%) and fixed-rate assets (maximum 0% and 12.5%).
The manager can interpolate between these matrices. The transaction
also includes limits on maximum industry exposure based on Fitch's
industry definitions. These covenants ensure that the asset
portfolio is not 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.

Limited FX Risk
The transaction is allowed to invest up to 20% of the portfolio in
non-euro-denominated assets, provided these are hedged with perfect
asset swaps within six months of purchase. Unhedged and principal
hedged obligations are limited at 4% and subject to principal
haircuts. Unhedged and principal hedged obligations can only be
purchased if the transaction is above the reinvestment target par.

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

RATING SENSITIVITIES

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




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I T A L Y
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NEXI SPA: S&P Places B+ Issuer Credit Rating on Watch Positive
--------------------------------------------------------------
S&P Global Ratings said it placed its 'B+' long-term issuer credit
rating and 'B+' long-term senior secured issue rating on Italian
payment services company Nexi SpA (Nexi) on CreditWatch with
positive implications. The recovery rating on the senior secured
notes is unchanged at '3'.

The CreditWatch placement follows Nexi's announcement on March 18,
2019, of its intention to float on the Italian stock exchange. This
is part of the private equity owners' intention to list Nexi's
existing ordinary shares and call for about EUR600 million-EUR700
million in fresh capital, as announced on March 1, 2019.

S&P said, "We now understand the company will use the fresh capital
to reduce its financial indebtedness. Specifically, we acknowledge
the IPO proceeds could reduce Nexi's gross debt to about EUR2
billion from EUR2.6 billion. This could improve our view of the
company's financial profile, which we currently assess as highly
leveraged. We consider the high level of debt at Nexi to be one of
its major rating weakness; deleveraging, especially if it reflects
a reduced tolerance for debt, could be positive for the entity's
creditworthiness.

"The current ratings incorporate our view that the debt/EBIDTA
ratio will remain above 5x in 2018 and 2019, before taking into
account the IPO proceeds. In calculating this ratio, we have not
deducted cash from total debt, as we typically do for financial
sponsor-controlled companies.

"We expect to resolve the CreditWatch placement within the next few
months, upon completion of the IPO. The positive CreditWatch
placement indicates that we could raise or affirm the long-term
ratings on Nexi. At this stage, we consider that the upside is
likely to be limited to one notch.

"We could raise the ratings if we expected Nexi to revise its
financial strategy and aim to operate with less debt leverage,
causing its financial risk profile to strengthen in a sustainable
way. An upgrade would depend on the debt-to-EBIDTA ratio falling
below 5x and the funds from operations-to-debt ratio rising above
12%.

"We could affirm the ratings if Nexi's debt does not reduce enough
for us to change our view on the company's financial profile.


TERCAS BANK: Italy's Rescue Plan Legal, EU Judges Rule
------------------------------------------------------
Francesco Guarascio at Reuters reports that the European Union's
top antitrust regulator is facing calls to resign after a
"historic" court ruling involving a small Italian lender upended
Brussels' approach to bank rescues and prompted calls for
compensation.

According to Reuters, in a blow to EU competition commissioner
Margrethe Vestager, EU judges ruled on March 19 that Italy's plan
for the rescue of Tercas bank five years ago was legal, overturning
the Commission's earlier decision that had forced the recouping of
financial aid to the lender.

Ms. Vestager said she had not decided yet on whether Brussels will
appeal the judgment and acknowledged the case could impact the way
the EU antitrust regulator operates in future, Reuters relates.

Italy's Foreign Minister Enzo Moavero Milanesi said Rome will
consider seeking compensation from the Commission, Reuters notes.

EU lawmakers said the ruling shows banking rules had been
interpreted incorrectly and one of them called for Ms. Vestager's
resignation, Reuters discloses.




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K A Z A K H S T A N
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HOME CREDIT: Fitch Affirms 'B+' IDR, Outlook Stable
---------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Ratings
(IDRs) of Altyn Bank at 'BBB-', JSC SB Alfa-Bank Kazakhstan (ABK)
at 'BB-' and SB JSC Home Credit and Finance Bank (HCK) at 'B+'. The
Outlooks are Stable.

KEY RATING DRIVERS

IDRS, NATIONAL LONG-TERM RATINGS, SUPPORT RATINGS

Altyn

Altyn is a subsidiary bank of China CITIC Bank Corporation Limited
(CITIC, BBB/Stable) and its IDRs are driven by potential support
from the parent, as reflected in its '2' Support Rating. In turn,
CITIC's ratings are driven by Fitch's opinion of the high
likelihood of state support from China (A+/Stable) in the event of
stress. Fitch believes that this support would likely be extended
to Altyn.

Fitch's view on support is based on CITIC's strategic commitment to
developing a subsidiary bank in Kazakhstan, potential reputational
risks for CITIC in case of Altyn's default and the small cost of
potential support. However, the Support Rating also captures
Fitch's view that Altyn is unlikely to become a core subsidiary of
CITIC given its small size, different jurisdiction, somewhat
limited role to date in providing financing to Chinese entities in
Kazakhstan and a degree of management independence in day-to-day
running of the bank.

ABK

ABK's IDRs are driven by its standalone financial strength,
reflected in its Viability Rating (VR) of 'bb-'. At the same time,
the bank's Support Rating of '4' reflects Fitch's view that support
may be forthcoming from Russia-based Alfa Bank (ABR, BB+/Stable) or
other group entities, if needed, in light of the common branding,
potential reputational risk of a default at ABK and the small cost
of support that may be required.

Fitch regards ABR's propensity to provide support as limited
because (i) it holds shares in ABK on behalf of ABH Holdings S.A.
(ABHH), to which it has ceded control and voting rights through a
call option, under which ABHH may acquire 100% of ABK from ABH
Financial Limited (the entity controlling 100% of ABR); and (ii)
there is limited operational integration between ABK and ABR.

In Fitch's view, support from other Alfa Group entities also cannot
be relied on, especially in case of a systemic financial crisis in
Kazakhstan. ABHH's failure to provide full support to its
Ukraine-based subsidiary PJSC Alfa-Bank (ABU; B-/Stable) in 2008 is
an example.

HCK

HCK's IDRs are driven by both the bank's standalone
creditworthiness, reflected in its VR of 'b+', and potential
support from its parent, Russia-based Home Credit & Finance Bank
(HCFB; BB-/Stable), reflected in its Support Rating of '4'. HCK's
Support Rating reflects the limited probability of support.

In Fitch's view, HCFB's propensity to support HCK is high given the
full ownership, the subsidiary's favourable performance to date,
common branding and potential reputational damage for the broader
Home Credit group in case of HCK's default. However, HCFB's ability
to provide support to HCK is constrained by its own financial
strength, as expressed by its 'BB-' IDR.

The banks' National Ratings reflect their creditworthiness relative
to other credits in Kazakhstan.

VRs

ALL BANKS

All three banks' VRs reflect their reasonable financial metrics and
stable asset quality, but remain constrained by the limitations of
the banks' franchises as expressed by their small market shares
(1%-2% of sector loans each). HCK's one notch lower VR compared
with the other two banks reflects (i) its focus on risky consumer
finance business, which may expose HCK's asset quality and
performance to cyclicality; and (ii) significant reliance on
non-deposit funding.

Altyn

Fitch has assigned Altyn a VR since the agency believes there is
now sufficient clarity on future strategy, which implies a
considerable degree of operational independence from the parent
bank. Altyn's 'bb-' VR captures the bank's good asset quality,
stable profitability, reasonable capitalisation and a sizeable
liquidity buffer. The VR is constrained by the bank's small
franchise (1.8% of the sector assets at end-2018), high single-name
concentrations in loans and customer deposits, and substantial
appetite for growth in retail lending, albeit from a low base.

Altyn's impaired loans (defined as Stage 3 loans under IFRS 9)
equalled a low 0.7% of gross loans at end-2018 and were 2x covered
by total loan loss allowances (LLAs) while Stage 2 loans were also
small at 0.3%. The corporate loan book is highly concentrated, as
the 25 largest exposures accounted for 99% of gross corporate loans
at end-2018. However, these are typically short-term working
capital loans extended mostly to borrowers operating in lower-risk
industries. The bank's asset quality is also supported by the high
share of liquid assets on its balance sheet (58% of total assets at
end-2018) of mostly investment-grade quality.

Profitability is a relative rating strength. Altyn benefits from
low and stable cost of funding (3.7% in 2016-2018), which supports
the net interest margin (5% in 2018). Low operational expenses
(cost-to-income ratio of 40% or below in recent years) and
consistently low loan impairment charges result in strong
bottom-line profitability, with ROAE and ROAA of 25% and 2.6% in
2018, respectively. Fitch expects a similarly strong performance in
2019.

Altyn's capital position is strong as expressed by its 16.8% Fitch
Core Capital (FCC) ratio at end-2018. Fitch expects capital ratios
to remain stable, as the bank's planned significant retail loan
growth should be in line with the bank's ability to generate
capital internally through profit.

Altyn is almost entirely customer funded, with three-quarters of
customer funds placed in interest-free current accounts. However,
these are highly concentrated, with the 20 largest groups of
customers making up 47% of total funding at end-2018. Positively,
the bank's sizeable cushion of liquid assets covered a high 48% of
customer deposits. Refinancing risks are very low since the bank
has almost no wholesale debt.

ABK

ABK's VR reflects the extended record of good financial
performance, supported by relatively low funding costs and
reasonable asset quality, and adequate capital and liquidity
buffers. The ratings are constrained by the bank's currently
limited franchise and high appetite for growth, which led to high
credit losses in unsecured retail lending in 2018.

The bank's asset quality is underpinned by a sizeable and
relatively low-risk, mostly investment-grade, liquidity portfolio
(40% of total assets at end-2018) and a corporate loan book (40%)
of reasonable quality. Fitch's assessment also factors in the
potentially risky unsecured retail portfolio (13% of total assets
or 0.9x FCC at end-2018).

Unreserved Stage 3 loans (10% of gross loans) were a limited 0.2x
FCC and were 58% covered by total LLA. Stage 2 loans added a
further 17% of gross loans, although in Fitch's view most of these
are of only moderate credit risk, as these are mostly short-term
working capital financing and exposures to state-owned entities.

Retail credit losses were high in 2018, as suggested by a 12% cost
of risk in retail lending. These followed an aggressive 200%
expansion in the unsecured retail segment in 2017 and 30% in 2018.
Fitch expectsthe potential negative effect on the bank's bottom
line to remain containable since the share of unsecured retail
loans in total assets is likely to stay limited following ABK's
revision of its retail expansion strategy towards less rapid
planned growth rates.

ABK's FCC at end-2018 was a decent 15% of regulatory risk-weighted
assets (RWAs), which is in line with the regulatory capital ratios.
The bank's capital buffer allows it to reserve a substantial 10% of
gross loans before breaching regulatory requirements, including the
2% capital conservation buffer. ABK's significant loss absorption
capacity is additionally underpinned by strong pre-impairment
profitability, equal to 10% of gross loans in 2018. Net probability
is also good, as expressed by a 17% return on average equity (ROAE)
in 2018 (2017: 12%).

The bank is mainly funded by customer accounts (93% of liabilities
at end-2018), of which zero-cost current accounts make up around
42%. Concentration markedly decreased, with the 20 largest
depositors accounting for 25% of the total at end-2018 (36% at
end-2017). ABK's liquidity buffer is ample, covering more than 40%
of total customer accounts at end-2018.

HCK

HCK's VR reflects limited changes in the bank's financial metrics
and credit profile since the previous review in October 2018.
Despite exceptionally strong profitability in recent years, the
bank's small size (2% of banking system assets in Kazakhstan),
rapid growth in the potentially risky consumer finance segment, and
concentrated and price-sensitive funding remain major rating
constraints.

The bank's NPL origination ratio (calculated as increase in
non-performing loans (loans 90 days overdue), plus gross
write-offs, divided by average performing loans) was a moderate 5%
in 2017-2018. Stage 3 loans made up 3.5% of gross loans at
end-2018, and these were fully covered by total LLA.

The bank's annualised pre-impairment profit, supported by wide
margins (22% in 2018), equalled 14% of average gross loans in 2018,
providing the bank with significant capacity to absorb losses.
Coupled with low loan impairment charges (2% of average gross
loans), this resulted in very high bottom line results (ROAE of 40%
in 2018). Fitch believes that HCK will retain a strong bottom line
performance in the near term, although this is primarily sensitive
to its asset quality. Fitch also believes that HCK's asset quality
and profitability are prone to volatility given the bank's focus on
the potentially cyclical consumer finance segment.

HCK's funding profile is a relative rating weakness. This is due to
its concentrated and price-sensitive customer deposit base (48% of
total liabilities at end-2018), and a significant reliance on
non-deposit funding (48%), as suggested by the bank's
loans-to-deposits ratio at a high 188% at end-2018.

HCK's liquid assets (equal to 25% of total liabilities) were
sufficient to cover 12 months' wholesale market debt repayments
(12%). However, this is excluding a substantial intra-group funding
(19%), which could be extended, if needed. Liquidity risks are
additionally mitigated by large average monthly proceeds from loan
repayments (equal to about 6% of total liabilities) and the bank's
contingent access to parent funding.

The bank's FCC ratio of 13% of regulatory RWAs at end-2018 compared
well with similarly rated peers and should be viewed in the context
of high statutory risk weights on unsecured retail loans. Fitch
expects capital ratios to remain stable, as profit retention should
offset the high expected loan growth, which may reach high
double-digit rates in 2019.

SENIOR UNSECURED DEBT RATINGS

HCK's senior unsecured debt ratings are aligned with the bank's
Long-Term IDR and National Long-Term Rating, reflecting Fitch's
view of average recovery prospects, in case of default.

RATING SENSITIVITIES

Altyn

Altyn's IDRs are likely to move in tandem with the parent's. Firm
support commitments from the parent would be rating positive, while
any indication of weakening support may lead to wider notching
between the parent and the subsidiary and result in a downgrade of
Altyn's IDRs.

An upgrade of the VR would require a material expansion of Altyn's
franchise and an extended track record of asset quality and
earnings stability. Downward rating pressure could stem from a
marked deterioration of the bank's earnings and capitalisation due
to materially weaker asset quality, although Fitch views this as
unlikely.

ABK

Upside is limited by a challenging operating environment, ABK's
small franchise and large growth appetite. Downside rating pressure
could result from significant deterioration of asset quality and/or
capitalisation if that is not offset by sufficient and timely
equity support from the bank's shareholders.

HCK

An upgrade of HCK's IDRs and National Ratings would require either
(i) an upgrade of the parent, resulting in its improved ability to
provide support to HCK; or (ii) an improvement of HCK's standalone
creditworthiness, including a significantly stronger funding
profile while maintaining a record of resilient asset quality and
consistently strong profitability.

HCK's IDRs and National Ratings would only be downgraded if both
its VR was downgraded (which could result from a sharp increase in
credit losses putting pressure on earnings and capitalisation) and
HCFB fails to provide timely support.

The rating actions are as follows:

Altyn

  Long-Term Foreign- and Local-Currency IDRs: affirmed at 'BBB-';
  Outlooks Stable

  Short-Term Foreign-Currency IDR: affirmed at 'F3'

  National Long-Term Rating: affirmed at 'AA+(kaz)'; Outlook
  Stable

  Viability Rating: assigned at 'bb-'

  Support Rating: affirmed at '2'

ABK

  Long-Term Foreign- and Local-Currency IDRs: affirmed at 'BB-';
  Outlooks Stable

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

  National Long-Term Rating: affirmed at 'BBB+(kaz)'; Outlook
  Stable

  Viability Rating: affirmed at 'bb-'

  Support Rating: affirmed at '4'

HCK

  Long-Term Foreign- and Local-Currency IDRs: affirmed at 'B+';
  Outlooks Stable

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

  National Long-Term Rating: affirmed at 'BBB (kaz)'; Outlook
  Stable

  Viability Rating: affirmed at 'b+'

  Support Rating: affirmed at '4'

  Senior unsecured debt long-term rating: affirmed at 'B+';
  Recovery Rating 'RR4'

  Senior unsecured debt national long-term rating: affirmed at
  'BBB (kaz)'





=============
M O L D O V A
=============

ARAGVI HOLDING: Fitch Assigns 'B(EXP)' Issuer Default Ratings
-------------------------------------------------------------
Fitch Ratings has assigned Moldovan agricultural commodity trader
and processor Aragvi Holding International Limited's (Trans-Oil)
first-time expected Long-Term Foreign and Local Currency Issuer
Default Ratings (IDRs) of 'B(EXP)'. The Outlook on IDRs is Stable.


In addition, Fitch has assigned the 'B(EXP)'/'RR4'/41% senior
secured rating on Trans-Oil's proposed five-year Eurobond, which is
to be issued by Trans-Oil's 100%-owned subsidiary Aragvi Finance
International DAC.

The assignment of final ratings is contingent on the successful
placement of Eurobond and refinancing of the group's short-term
debt maturities. Final documents should conform to information
already received.

The ratings are constrained by Trans-Oil's small scale in the
global agricultural commodity processing and trading market and the
concentration of its crops origination in Moldova. The ratings also
reflect Trans-Oil's dominant and well-protected market position in
agricultural exports and sunflower seed crushing in Moldova and
Fitch's expectation that the company will continue expanding its
EBITDA over the next four years, while maintaining moderate
leverage. Fitch also expects a substantial strengthening in the
group's financial flexibility after placement of the Eurobond and
refinancing of short-term maturities.

KEY RATING DRIVERS

Strong Market Position in Moldova: The ratings of Trans-Oil are
underpinned by its dominant market position in Moldova's
agricultural exports and sunflower seed crushing. In the fiscal
year ended June 2018 Trans-Oil exported 57% of agricultural
commodities in Moldova and accounted for 70% and 95% respectively
of sunflower seeds originated and crushed in the country.

Ownership of material infrastructure assets is Trans-Oil's major
competitive advantage as the company operates the largest inland
silo network and the only seagoing vessel port facility in the
country. This asset-heavy business model and its strong shares in
its procurement market result in Trans-Oil's higher profit margins
than most Fitch-rated peers in the sector.   

Low to Moderate Competition Risks: Trans-Oil's dominant market
position creates substantial market entry barriers for new
competitors and ensures the company's smooth access to crops
procurement in the country. Due to its market position in Moldova,
Trans-Oil benefits from significantly lower competition risks in
procuring crops than its peers operating in Russia and Ukraine, two
other crop-producing countries in Black Sea region. This is due to
higher market consolidation and the absence of international
commodity traders and processors in Moldova. Fitch does not expect
the competitive environment in Moldova to change materially over
the medium term.

On the other hand, Trans-Oil is a small player on the international
commodity trading markets, sourcing from a country that contributes
only a small portion of globally traded wheat, corn and sunflower
seeds and oil and which has no direct access to the sea. This
aspect is mitigated by Trans-Oil's strategy of focusing on selling
directly to end-users, mainly in the Mediterranean basin.

Small Scale, Limited Diversification: The ratings of Trans-Oil are
constrained by its small scale and concentration of crops
procurement in Moldova, which exposes its supply chain to weather
risks due to the country's limited territory. Trans-Oil is a large
company by Moldovan standards as it is approximately 10x larger
than its next local competitor but is a small player in the global
agricultural commodity trading and processing market. Trans-Oil's
scale (as measured by FY18 EBITDAR of USD61 million) is, for
instance, 4.5x lower than its closest peer Ukrainian sunflower seed
crusher and agricultural commodity exporter Kernel Holding S.A.'s
(B+/ Stable). Also, around 90% of Trans-Oil's revenue is from
trading a small selection of commodities (sunflower seeds and oil,
corn and wheat).

EBITDA Growth Potential: Fitch sees potential for Trans-Oil's
EBITDA to increase further by up to USD30 million over the next
four years, despite the company's already high market shares. The
major growth drivers will be the expansion of sunflower seed
crushing capacity through the acquisition of a plant in Romania and
potential development of a new organic and high-oleic seeds
crushing operation in Moldova. Fitch's rating case also assumes
that the company will start internal crops production by leasing
arable land and will continue expanding its partnerships with
farmers.   

RMI Adjustments: Fitch applied readily marketable inventory (RMI)
adjustments in evaluating Trans-Oil's leverage and interest
coverage ratios and liquidity position. Certain commodities traded
by Trans-Oil fulfil the eligibility criteria for RMI adjustments as
set out in Fitch's 'Commodity Processing and Trading Companies
Ratings Navigator Companion' report dated October 2018 as 90% of
the company's oilseeds and grain sales volumes on international
market are made on the basis of forward contracts.

For the purpose of Fitch's RMI calculations Fitch applied a 60%
advance rate to eligible inventory to reflect basis and
counterparty risks. In its calculation of leverage and interest
cover metrics, Fitch excluded debt associated with financing RMI
and reclassified the related interest costs as cost of goods sold.
The differential between RMI-adjusted and RMI-unadjusted funds from
operations (FFO) adjusted net leverage is around 0.5x.

Moderate Leverage to Fall Further: Fitch expects Trans-Oil's
RMI-adjusted FFO adjusted net leverage to decrease to below 2.5x
(FY18: 3.0x) over the next three years, building up substantial
headroom under the 'B(EXP)' ratings. This is premised on EBITDA
expansion and maintenance of its prudent financial policy with no
dividends and M&A and limited capex at around 2% of sales despite
the mentioned expansionary investments. The ratings allow for
potential one-off temporary spikes in leverage due to weather
risks, which are inherent in the industry and may lead to lower
traded volumes.      

Eurobond to Enhance Financial Flexibility: The assignment of final
ratings is contingent on successful placement of the Eurobond as
the expected IDRs incorporate an anticipated strengthening of the
group's financial flexibility. Fitch expects the liquidity and debt
maturity profiles of Trans-Oil to improve materially after the
refinancing of its short-term debt with Eurobond proceeds. The
company will still need to procure trade finance facilities for
each marketing season, albeit in substantially smaller amounts.
Fitch believes that refinancing risks are manageable due to
Trans-Oil's record of re-establishing and increasing the limit of
pre-export financing (PXF) facility since it has been obtained in
July 2014.

DERIVATION SUMMARY

Trans-Oil compares well with Ukrainian sunflower seed crusher and
grain trader Kernel Holding S.A. (B+/ Stable) due to similarity of
operations and vertically-integrated models, which include sizeable
logistics and infrastructure assets. The main difference in
business models being that Kernel is already integrated into crop
growing, while Trans-Oil may consider developing these operations
in future. The one notch differential between the companies'
ratings is explained by Kernel's greater business scale and larger
sourcing market, which provides greater protection from weather
risks. On the other hand, Trans-Oil's competition risks are lower
than Kernel's due to the former's stronger market position and
absence of competition from global commodity traders and processors
in Moldova. Fiitch's leverage projections for both companies are
similar.    

Trans-Oil is considerably smaller in business size and has a weaker
ranking on a global scale than international agricultural commodity
traders and processors, such as Cargill Incorporated (A/Stable),
Archer Daniels Midland Company (A/Stable) and Bunge Limited
(BBB-/Stable).

No Country Ceiling, parent/subsidiary or operating environment
aspects impact the ratings.

KEY ASSUMPTIONS

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

- Crops prices normalising after an increase in FY19

- Gradual growth in crushing volumes at Floarea Soarelui
   following capacity expansion to 1,100-1,200 tonnes per day

- Acquisition of crushing plant in Romania, with capacity of 650
   tonnes per day, for EUR10 million in FY19. No M&A over FY20-
   FY22

- Construction of a high-oleic and organic seeds crushing plant
   with capacity coming on stream in FY21

- Start of internal crops production from FY20

- Maintaining the ability to preserve profit margins in the
   origination and crushing segments

- EBITDA at approximately EUR90 million by FY22 in the absence of

   commodity market shocks

- Capex at around 2% of revenue

- Outflows under working capital driven by working capital needs
   of new facilities and expansion of partnerships with farmers

KEY RECOVERY RATING ASSUMPTIONS

Adequate Recovery for Secured Bondholders: The proposed senior
secured Eurobond is rated in line with Trans-Oil's expected IDR of
'B(EXP)', reflecting average recovery prospects given default. The
Eurobond will be secured by pledges over substantially all assets
of key Moldovan entities. It will also benefit from guarantees from
operating companies, which together account for no less than 85% of
the group's EBITDA and assets at the issue date.

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

The going-concern EBITDA estimate reflects Fitch's view of a
sustainable, post-reorganisation EBITDA level upon which Fitch
bases the valuation of the company. Trans-Oil's going-concern
EBITDA is based on FY19 expected EBITDA of USD70 million,
discounted by 35%. The discount reflects the company's limited
diversification and the inherent volatility of agricultural
commodity markets. An enterprise value (EV) multiple of 4x is used
to calculate a post-reorganisation valuation. The multiple is in
line with that used by Fitch for recovery analysis of Ukrainian
agricultural companies, such as Kernel Holding S.A. (B+/ Stable)
and MHP SE (B/ Stable).

The debt waterfall results in a 41% recovery, corresponding to
Recovery Rating of 'RR4' for senior secured creditors (including
the holders of Eurobond). Therefore, the planned Eurobond is rated
in line with Trans-Oil's IDR of 'B(EXP)'.

RATING SENSITIVITIES

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

A positive rating action is currently not envisaged. Nevertheless,
factors that Fitch considers relevant for potential positive rating
action include steady growth in Trans-Oil's operational scale (as
measured by FFO), improvement of diversification by commodity and
sourcing market, and maintaining a conservative capital structure.


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

- Weakening of liquidity position or risk of insufficient
   availability of trade finance lines to fund trading and
   processing operations; and

- RMI-adjusted FFO adjusted net leverage above 4.5x and RMI-
   adjusted FFO fixed charge cover below 2.0x (FY18: 2.6x) for
   more than two consecutive years.

LIQUIDITY AND DEBT STRUCTURE

Liquidity to Strengthen after Refinancing: On a pro-forma basis,
following the issue of the prospective Eurobond, Fitch expects a
significant reduction in Trans-Oil's short-term debt and an
improvement of the internal liquidity ratio to above 1x (0.5x at
end-December 2018). Proceeds from the Eurobond are expected to be
used to repay a large portion of the outstanding PXF and other bank
debt.


ARAGVI HOLDING: S&P Assigns Prelim B- Ratings, Outlook Stable
-------------------------------------------------------------
S&P Global Ratings assigned its preliminary 'B-' ratings to
Moldova-based trader and processor of sunflower seeds and grains
Aragvi Holding International (TransOil) and its proposed U.S.
dollar-denominated senior secured Eurobond issued by Aragvi Finance
International DAC.

TransOil group has high exposure to a small geographic area for the
sourcing of agriculture commodities, which the industry's strong
barriers to entry and the group's unique asset base somewhat
mitigate.

TransOil is the biggest originator of Moldovan grains and, over the
years, it has strengthened its dominant position mainly through a
nationwide infrastructure network spread across the country. The
group enjoys a large network of 13 silos controlling 85% of
Moldova's total storage capacity and two seed-crushing facilities
representing 95% of the country vegetable oil production. It has
its own fleet of railcars (75 owned and up to 300 leased). It
operates through two port terminals on the Danube River, one in
Moldova (Giurgiuletsi), which is the only port with access to
international waters in the country, and the other in Ukraine
(Reni). This network enables the group to run its origination
operations efficiently. The group is the only sizable sunflower
seed crusher in Moldova, complementing its trading operations and
its infrastructure and logistics operations.

S&P said, "TransOil is largely exposed to one single country, with
80% of total grains and oil seeds originated from Moldova, which we
view as having a highly risky corporate environment, as well as
only limited arable land compared with large agricultural regions
in Europe. Moreover, we consider that the group's current
creditworthiness is constrained somewhat by its sourcing
capabilities, which are only in Moldova, a small country that is
more exposed to volatility of volumes harvested than its neighbors,
Ukraine and Romania. We take into account, however, TransOil's
nationwide infrastructure network, which clearly acts as a natural
barrier to entry, preventing the entrance of new players into
Moldova. Also, this efficient infrastructure network constitutes
the arm of its trading operation."

TransOil's trading model differs from those of the largest global
agricultural trading firms (ADM, Bunge, Cargill, and
Louis-Dreyfus), because it mainly involves few physical
commodities, on a very small scale and sourced predominantly within
one country--Moldova--representing more than 85%. Therefore, the
concentration of its agricultural footprint is much more important,
and is the main, clear constraint to our business assessment under
S&P's trading criteria.

S&P said, "The group's trading business model allows it to quickly
lock up margin (maximum three days of open position), and we
consider that the group's value at risk is not substantial. We
consider TransOil's operating model as less risky than strategies
sometimes developed by larger traders, notably because TransOil
trades only physical commodities, which are much less volatile than
non-physical ones." Complex trading operations would usually imply
building large trading positions and monitoring them on a daily
basis through quite sophisticated tools, backed by a dedicated team
and a strong know-how in derivatives and financial markets.

S&P said, "Nevertheless, we consider that the progress Moldovan
farmers have made through pre-crop financing somewhat exposes the
group to significant counterparty risk. These advances granted to
Moldova's farmers to start planting their crops could translate
into material losses, in our view, if the country were to face a
very poor harvest.

"We understand that the purpose of the bond issuance is to replace
the majority of the pre-export financing facilities and other
secured credit lines, allowing the group to strengthen and lengthen
its debt portfolio and to reduce its dependence on short-term debt
financing. In addition to a new financing line granted by the
International Investment Bank (IIB) for $10 million, we understand
the group intends to use some of the proceeds to purchase inventory
to load up new capacity in its Romanian seed-crushing plant, which
it plans to put into operation in the second half of 2019,
following the secured notes' issuance. Our preliminary issue rating
is currently contingent on the successful placement of this
long-term debt instrument, without which, in our view, TransOil may
not be able to successfully ramp up its Romanian seed-crushing
operation or continue to increase the utilization rate of its
Moldovan plants."

As of June 30, 2018 (end of fiscal 2018), the group has posted
robust operational performance enabling it to deleverage to 2.7x in
2018 from more than 4x in 2017. This strong performance stems from
a 30% increase of total sales in 2018, thanks to a very good
harvest, coupled with additional efficiency of its transshipment
platform. This high level of harvest and a higher amount of
pre-export financing lines enable the group's merchandising and
infrastructure operations and its seed-crushing and refining
activities to grow by 25% and more than 50% year on year.

The merchandising margin remains stable, despite an enhanced gross
profit margin for wheat, partially mitigated by lower margins on
corn and sunflower seeds. The increase in seed-crushing margins is
largely explained by better operating leverage at Moldovan
subsidiary Floarea Soarelui, thanks to a larger volume of sunflower
seeds, translating into the seed-crushing margin (EBITDA per metric
ton of sunflower seeds crushed) from this facility rising to 62%
from 54%. The relatively low debt-to-EBITDA ratio below 3x in 2018,
along with limited but still positive free cash flow generation for
2018, supports S&P's preliminary 'B-' ratings on the group and its
debt instrument. In addition, TransOil enjoys supportive interest
coverage ratios for the current rating level, with EBITDA interest
coverage standing at 2.4x at the end of fiscal 2018, up from only
2x a year prior.

The group's financial metrics take into account specific
adjustments on readily marketable inventory, thanks to our spectrum
of analysis (trading company criteria), which allows us to net them
against gross debt to a certain extent. Despite positive free cash
flow in 2018, it might turn negative in 2019 because of the
increasing interest burden following the proposed bond issuance and
the higher amount of operating lease engagements, but mainly due to
the large working capital outflow stemming from the sizable
inventory buildup for the group's seed-crushing operations and the
ambitious capital expenditure (capex) program to start farming
operations.

Again, the debt service coverage ratio (EBITDA interest coverage)
is in line with the current preliminary rating, at more than 2.5x
following the transaction. That said, TransOil's annual cash flow
generation is affected by very high intrayear working capital
requirements, historically covered by short-term pre-export
facility lines. S&P considers that, following the issuance of the
Eurobond, the group will rely substantially less on short-term
debt. Moreover, S&P views positively that TransOil captures more
than 95% of its cash flow in hard currency, enabling it to cover
debt-servicing with limited risk of currency mismatch.

S&P said, "The final ratings will depend on our receipt and
satisfactory review of all final transaction documentation.
Accordingly, the preliminary ratings should not be construed as
evidence of final ratings. If S&P Global Ratings does not receive
final documentation within a reasonable timeframe, or if final
documentation departs from materials reviewed, we reserve the right
to withdraw or revise our ratings.

"The stable outlook on TransOil primarily reflects our view that
the group will post solid operating performance, enabling it to
start its deleveraging process after the proposed Eurobond
issuance. We assume that the group will maintain its EBITDA
interest coverage sustainably above 2x while avoiding liquidity
pressure in the next 12 months.

"We could downgrade TransOil in the event of a very poor harvest in
Moldova, which would reduce volume throughput at its facilities or
result in large decrease in volumes originated throughout its
efficient infrastructure network, translating into pronounced
liquidity deterioration.

"A positive rating action would be contingent on TransOil
displaying solid organic growth above than in our current base
case. This would likely come from a successful ramp-up of the new
Romanian facility, spurring significant free operating cash flow
generation and in turn, enhancing its liquidity position. A more
diversified sourcing beyond the group's domestic boarders could
also strengthen TransOil's business risk profile."




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

ALROSA PJSC: Fitch Hikes LongTerm IDR From BB+, Outlook Stable
--------------------------------------------------------------
Fitch Ratings has upgraded the Russian diamond producer PJSC
ALROSA's Long-Term Issuer Default Ratings (IDRs) to 'BBB-' from
'BB+'. The Outlook is Stable. The Short-Term IDR has been upgraded
to 'F3' from 'B'. ALROSA Finance SA's senior unsecured rating has
also been upgraded to 'BBB-' from 'BB+'.

The upgrade reflects Fitch's view that ALROSA's new dividend
policy, coupled with the deleveraging achieved over the past few
years, will underpin greater cash flow resilience in a downtrun.
Dividend payments are now based on free cash flow (FCF) with a
leverage ratchet, which increases financial flexibility and will
support neutral to positive FCF generation through the cycle. The
upgrade also reflects management's public commitment to retain
conservative financial metrics, which have been sustained at a very
low level compared with other mining peers over the last three
years. Funds from operations (FFO) adjusted net leverage was 0.6x
at end-2018 and is forecast to remain below 1.0x under Fitch's base
case, despite higher shareholder distributions. ALROSA's rating is
also underpinned by its leading position on the global rough
diamond market, low cash costs and moderate capex.

ALROSA's rating is constrained by its single-commodity profile and
concentration of mining operations in Russia as well as exposure to
a single cyclical end-market (retail jewellery). Following the
upgrade, the group's standalone credit profile is the same as that
of its shareholder, the Russian state (BBB-/Positive) and ALROSA's
IDR does not incorporate any notching under Ficth's
Government-Related Entities (GRE) criteria.

KEY RATING DRIVERS

Strong Operating Profile: ALROSA is the leading rough diamond
producer globally with a market share of over 25% . In 2018, the
company produced 36.7 million carats (mct) and sold 38.1mct. ALROSA
benefits from high profit margins, low cost operations, and a
strong reserve base. The company's mining assets are concentrated
in the Yakutia and Arkhangelsk regions of Russia, although more
than 80% of revenue is generated outside Russia.

Conservative Financial Metrics: FFO adjusted gross leverage has
been constant at 0.9x over 2016-2018 and Fitch forecasts the ratio
will remain within Fitch's 1.5x negative sensitivity over
2019-2022. Since 2015, ALROSA has reduced its gross adjusted debt
by half to RUB110 billion at end-2018 on the back of robust sales
volumes and diamond prices, improvement in the sales mix and rouble
depreciation, which resulted in robust FCF generation. In 2018,
EBITDA was RUB155 billion with a 52.9% margin. Management has
publicly committed to target net debt/EBITDA within 0.5x-1.0x on a
sustained basis and views 1.5x as a stress-case level.

More Flexible Dividend Policy: The company's new dividend policy
introduced in August 2018 envisages higher, but more flexible and
predictable dividend distributions, which will result in
neutral-to-positive post-dividend FCF in Fitch's forecast. The
dividend is now based on FCF with a leverage ratchet instead of 50%
of IFRS net income previously. At positive net debt/EBITDA below
1x, which corresponds to Fitch's forecast, the company will pay out
70% to 100% of FCF. If net debt/EBITDA increases towards 1.5x, the
payout will decline to 50%-70%. At the same time, ALROSA, as a
state-controlled company, is still subject to a minimum dividend
payment of 50% of net income. Since ALROSA's net income and
pre-dividend FCF have historically been at similar levels, and as
net profit is likely to decrease in a market downturn, Fitch
believes this clause will not compromise the company's financial
profile.

Stable Outlook for Rough Diamonds: The diamond industry is about to
enter a phase when existing diamond mines such as Rio Tinto's
(A/Stable) largest diamond mine Argyle and Diavik (JV between Rio
Tinto and Dominion Diamond Corp) start being depleted after 2020.
Mid-term rough diamond production is predictable, since a new
project requires four to seven years of capital-intensive
development, indicating that diamond output is likely to decrease
slightly in the medium term. In the longer term, supply will depend
on new capacity coming on stream and is projected to remain at or
below current levels. Demand for diamonds (retail jewellery) is
expected to remain in positive territory due to projected GDP
growth in the US and the expansion of the middle class in China and
India.

Diamond Price and Volume Risk: The diamond industry is concentrated
and the top three producers control over 60% of the market. Their
price-over-volume strategy amplifies volume risk and leads to
volatility in working capital in case of a downturn, while price
risk is below that of most other commodities. ALROSA's exposure to
diamond market shocks is mitigated by the company's medium-term
ability to reduce capex, flexibility afforded by its new cash-flow
based dividend policy, low cost operations and high share of
long-term contracts. The group's expansionary capex is estimated at
around 30%-40% of total capex, and maintenance capex can be partly
delayed for one to two years.

GRE Criteria Application: Fitch views the linkage of ALROSA to the
sovereign as moderate to strong according to Fitch's GRE Rating
Criteria (overall support score of 20-25). Since the group's
standalone credit profile is the same as the IDR of Russia,
ALROSA's IDR does not incorporate any notching for government
support, in line with the methodology.ALROSA's main shareholders,
Russia (33%) and the Republic of Sakha (BBB-/Stable; 25%) control
the company's board of directors and top management. There was
tangible financial support from the state in 2008-2009 when the
Russian State Depository for Precious Metals and Stones purchased
around 40% of 2009 diamond sales, and state-owned Bank VTB
refinanced ALROSA's short-term debt. Fitch's view is that ALROSA is
likely to receive exceptional support from the state should its
creditworthiness deteriorate materially.

Synthetic Diamond Risk Manageable: Expansion of lower-value lab
grown diamonds into the jewellery industry is a longer-term demand
risk and it should be properly addressed by diamond producers
through differentiation of natural diamonds from synthetic diamonds
or other jewellery and luxury goods. Prices for lab grown diamonds
follow production costs. As costs have materially declined in
recent years, so have prices and now artificial diamonds are priced
at a 40%-80% discount to natural stones. Synthetic diamonds are
currently mainly of low size and used for industrial purposes.

Limited Investments in Africa: ALROSA's foreign investments are
limited to Angola's state-owned Catoca diamond miner and some
exploration activities in Angola and Zimbabwe. ALROSA is receiving
dividends from Catoca, but its role there is strategic as it plans
to bring its expertise for the prospective Luaxe mine, the largest
diamond pipe discovered since 1960s with a potential of eight
million to  12 million carats annual capacity. Fitch does not
incorporate Luaxe's capex into ALROSA's forecasts as investment
plans remain unclear.

DERIVATION SUMMARY

ALROSA's peers include mining company PJSC MMC Norils Nickel (NN;
BBB-/Stable) and steel company PAO Severstal (BBB-/Stable). ALROSA
has demonstrated lower cash flow volatility (measured as operating
cash flow per unit processed) over the past nine years than NN. NN
has comparable profitability with ALROSA, but greater scale and
product diversification, with nickel, copper and palladium
contributing 25% or more to turnover each. NN has globally leading
market positions for nickel and palladium. ALROSA is the market
leader for diamonds, a pure play without diversification. Both
companies are focused on international distribution of their
products. NN has a stronger business profile and can sustain higher
leverage, which is reflected in the ratio guidelines. The negative
sensitivity for ALROSA and NN is FFO adjusted gross leverage of
1.5x and 2.5x, respectively.

Severstal has incrementally lower cash flow volatility (again
measured as operating cash flow per unit processed), with working
capital inflows in weaker markets as value tied up in inventory and
receivables reduces. Severstal has leading cost positions and
exceptional margins for an integrated steel company, similarly to
ALROSA in the mining sector. ALROSA sells a large proportion of its
production internationally, while Severstal is focused on the
domestic market with around 65% of sales in CIS. Both companies
have very conservative financial policies and focus on higher
shareholder distributions in the current environment. Both
companies have the same negative sensitivity of FFO adjusted gross
leverage of 1.5x.

KEY ASSUMPTIONS

  -- Reduction in gem-quality diamonds sales prices by 15% in 2019

     and flat afterwards.

  -- USD/RUB exchange rate at 67.5 in 2019 and thereafter

  -- Diamond production of around 38 million carats in 2019 and
     onwards

  -- EBITDA margin to average at 42% in 2019-2022

  -- Capex-to-sales at 10% in 2019 and onwards;

  -- Dividend payout around 90%-100% of FCF, in line with the new
     dividend policy.

RATING SENSITIVITIES

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

  -- Fitch does not expect a further upgrade given ALROSA's
     single-commodity exposure and end-market concentration
     (retail jewellery).

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

-- Negative rating action on Russia

-- FFO adjusted gross leverage sustained above 1.5x

-- FFO adjusted net leverage sustained above 1.0x

-- Sustained negative FCF after dividend

-- Prolonged diamond market weakness leading to EBITDA margin
    below 30% on a sustained basis

-- The proportion of sales under long-term contracts reducing to
    less than 50%.

LIQUIDITY AND DEBT STRUCTURE

Adequate Liquidity Position: ALROSA had cash and cash equivalents
of RUB39.2 billion at end-2018 and is forecast to generate FCF
before dividends in excess of RUB50 billion per year over the
rating horizon under Fitch's base case. This compares with
short-term maturities of RUB41.7 billion in 2019. Management does
12 months rolling liquidity forecasts each month and will put in
place funding arrangements before deciding on dividend
distributions. The company's policy is to maintain cash on the
balance sheet of a minimum RUB25 billion at all times. ALROSA is
funded into 2020. Fitch expects the group's access to the bank and
debt capital markets  to support the refinancing of the bond
maturing in November 2020.


BANK PERVOMAISKY: Recognized as Bankrupt by Krasnodar Court
-----------------------------------------------------------
The provisional administration to manage the credit institution
BANK PERVOMAISKY (PJSC) (hereinafter, the Bank) appointed by Bank
of Russia by virtue of Order No. OD-3036, dated November 23, 2018,
following the banking license revocation, in the course of its
inspection of the Bank's financial standing, established that the
Bank's executives had conducted operations which suggest the
intention to divert assets through lending to a borrower with
dubious creditworthiness and replacing liquid assets with
low-quality ones.

The provisional administration estimates the Bank's assets to total
RUR7.6 billion and being insufficient to cover its liabilities in
the amount of RUR7.9 billion.

On January 28, 2019, the Arbitration Court of the Krasnodar
Territory recognized the Bank as insolvent (bankrupt).  The State
Corporation Deposit Insurance Agency was appointed as a receiver.

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

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


CB AGROSOYUZ: Recognized as Bankrupt by Moscow Court
----------------------------------------------------
The provisional administration to manage LLC CB Agrosoyuz (the
Bank) appointed by virtue of Bank of Russia Order No. OD-2901,
dated November 7, 2018, following banking license revocation, in
the course of the inspection of the credit institution established
that the Bank's management conducted operations to divert funds
through the sale of real estate and motor vehicles.

The provisional administration estimates the value of the Bank's
assets to be no more than RUR1.3 billion, vs RUR16 billion of its
liabilities to creditors.

On February 4, 2019, the Arbitration Court of the city of Moscow
recognized the Bank as insolvent (bankrupt).  The State Corporation
Deposit Insurance Agency was appointed as receiver.

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

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


DELOPORTS LLC: Fitch Affirms BB- Longterm Issuer Default Rating
---------------------------------------------------------------
Fitch Ratings has affirmed LLC DeloPorts' Long-Term Issuer Default
Rating at 'BB-' and RUB3 billion unsecured bond rating at 'BB-'.
The Outlooks are Stable.

The ratings reflect the business profile of a secondary port of
call exposed to cargo concentration and competition. The business
profile risk is balanced by relatively low leverage. Fitch
considers DeloPorts' consolidated profile to be in line with a 'BB'
rating. The rating aligns well with peers and criteria. The IDR and
bond rating are notched down by one notch from the consolidated
profile to reflect the structural subordination of the company's
debt. The consolidated profile includes the debt of DeloPorts'
parent company.

KEY RATING DRIVERS

Concentrated Exposure to Commodity Cargo: Volume Risk - Weaker
DeloPorts is a secondary port of a call with business segment
concentration. The container segment remains mostly import-oriented
but with a growing export component and throughput is diversified,
while the grain segment is fully export-oriented.

Grain volumes may be affected by weather conditions and exports
could be subject to Russian policy decisions. Maersk accounted for
40% of container throughput in 2017. Grain export destinations are
diversified. Over 40% of grain transhipments are handled by US
agribusiness company Cargill, a minority shareholder in the grain
terminal. DeloPorts operates in a dynamic and competitive
environment in both container and grain segments. There are similar
competing container and grain terminals in the port of
Novorossiysk. DeloPorts also competes indirectly with other
container terminals in the Baltic Sea region and the Far East, and
with other deepwater grain ports in the Black Sea.

Competition Dampens Price Flexibility: Price Risk - Midrange
DeloPorts' contracts are short-term with no take-or-pay or minimum
volume guarantees. Tariffs are unregulated and charged in US
dollars for containers and roubles for grain. Competition dampens
price flexibility.

Mainly Debt-Funded Major Expansion: Infrastructure Development and
Renewal - Midrange
Deloports' facilities operate close to estimated capacity and the
company is undertaking a major expansion programme. The NUTEP
container terminal expansion aims to increase capacity to 700,000
20-foot equivalent units (TEUs) and to enable it to receive larger
vessels. The project, known as Berth No. 38, will improve the
port's competitive advantage but the incremental volumes are still
subject to uncertainty. Investments in KSK, the grain terminal, aim
to increase its throughput by to 6.5 million tonnes and modernise
the associated infrastructure.

Commissioning of the new NUTEP facilities is scheduled for
mid-2019. DeloPorts is funding the NUTEP capex through additional
external debt and KSK capex through a combination of internally
generated funds and external debt. Fitch does not expect
significant maintenance capex over the medium term.

Structurally Subordinated, Refinancing Risk Exposure: Debt
Structure - Midrange
Debt at DeloPorts is unsecured, fixed rate and structurally
subordinated to partially floating rate bank debt at the operating
companies' level. The company's debt is non-amortising with
maturity concentration, while the operating companies' debt is
mainly amortising and secured on operating assets. Container
tariffs linked to US dollars partially lower the group's
foreign-exchange risk. The rated bonds are effectively uncovenanted
but DeloPorts' other bonds are subject to financial covenants.
There are no liquidity reserve provisions.

Financial Profile
Under Fitch's base and rating cases, Fitch expects projected
five-year average Fitch-adjusted net debt/EBITDAR for the
consolidated profile to reach 2.3x and 2.7x, respectively. Leverage
peaks at 3.5x in 2019 under the rating case as the company reaches
the peak of its investment cycle.

PEER GROUP
Russian port operator Global Ports Investments Plc (GPI; BB/Stable)
is DeloPorts' closest peer. GPI is materially larger than
DeloPorts, has a dominant position in the Russian container market
and more transparent corporate governance, as it is listed on the
LSE. It can sustain higher leverage under the Fitch rating case.

Turkish ports Global Liman Isletmeleri A.S. (BB-/Stable) and Mersin
Uluslararasi Liman Isletmeciligi A.S. (BB+/Negative) are also
comparable peers. Mersin Uluslararasi Liman is a larger port that
benefits from a more diversified revenue stream with 'Midrange'
volume risk assessment. Mersin's rating is capped at Turkey's
Country Ceiling. Global Liman has a 'Weaker' volume risk
assessment, with similar leverage to DeloPorts' forecast.

RATING SENSITIVITIES

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

  -- Projected five-year average Fitch-adjusted net debt/EBITDAR
     for the consolidated profile exceeding 3.5x in Fitch's rating

     case

  -- Adverse policy decisions related to tariff regulation, grain
     exports or geopolitical events affecting the port sector

  -- A failure to manage refinancing and foreign currency risk in
     a timely manner

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

  -- Projected five-year average Fitch-adjusted net debt/EBITDAR
     for the consolidated profile below 2.5x in Fitch's rating
     case

CREDIT UPDATE

Performance Update
Container volumes in 2018 were up 10% to 333,754 TEUs following 30%
growth the previous year. Growth in container volumes was a result
of further stabilisation of the Russian economy, stronger consumer
demand and increased containerisation of Russian exports. Capacity
utilisation of the container terminals in the Azov-Black Sea basin
remains high. NUTEP is the largest container terminal in
Novorossiysk. Containerisation of the Russian market is low but the
market is volatile.

Grain volumes grew by 14% in 2018 to 4.8 million tonnes. The
weakening of the rouble in 2014-2015 stimulated production and
exports of grain. However, Fitch expects grain shipments to slow
down in 2019 due to lower supply.

DeloPorts' overall financial performance in 2018 was well above
Fitch's base case expectations. Based on management estimates,
DeloPorts' consolidated 2018 EBITDA increased by 35% to USD140
million. Net debt/EBITDA was 2.0x at end-2018.

Government Levies or Quotas Could Impact Volumes

The exported grain volumes could be affected by the introduction of
restrictions on exports in a form of levies or quotas if production
was extremely low. There have been several rumours in the Russian
press about the introduction of informal grain export quotas
(through stricter quality controls) but Fitch understands that
these have been dismissed by the Russian Agriculture Ministry.

Change in Denomination of Tariffs

A new law introduced in August 2018 obliges stevedores to transfer
tariffs from US dollars into roubles. However, the law provides for
a transition period and postponement of the change in denomination
of tariffs to roubles until 2025 for stevedores that have taken
foreign-currency denominated debt to fund the development of
seaport infrastructure.

The law would likely reduce the partial natural hedge of DeloPort's
foreign currency-denominated debt if the debt is not repaid or
refinanced into local currency by 2025. DeloPorts is mainly
export-oriented and any rouble depreciation is likely to support
volumes and probably also tariff development in the medium term,
partially mitigating the FX risk of any foreign-currency
denominated debt.

Acquisition of a Stake in Global Ports

In April 2018, the parent company of LLC DeloPorts, Management
Company Delo LLC (MC Delo) completed an acquisition of a 30.75%
stake in GPI. The purchase price was significant and fully debt
funded. The acquisition structure raised bond financing at
DeloPorts in addition to a bank loan at MC Delo. The debt service
depends on the cash flow generation of DeloPorts' operating asset.

Fitch Cases

Fitch's rating case assumes 5% growth of container volume and flat
average revenues per TEU at USD187 for the next five years. Fitch
assumes a one-year delay to the completion of Berth No.38 and a
slow ramp-up. Fitch expects grain volumes to oscillate around 4.1
million tonnes a year. As a result of the assumptions, EBITDA will
effectively remain flat, with a temporary decline in 2019 under the
rating case.

Asset Description

DeloPorts is a privately held Russian holding company that owns and
operates several stevedoring assets in the Russian port of
Novorossiysk. Its two main subsidiaries are the container terminal
NUTEP (in which DeloPorts holds 100%) and the grain terminal KSK
(in which Deloports holds 75% - 1 share).


MEGAFON: S&P Alters Outlook to Negative , Affirms BB+ Ratings
-------------------------------------------------------------
S&P Global Ratings revised its outlook on Russia-based
telecommunications operator MegaFon to negative from stable and
affirmed its 'BB+' ratings.

S&P said, "The outlook revision reflects that there is limited
ratings headroom under our current thresholds. Failure to
deleverage to about or below 3x might lead us to consider a
downgrade. However, we have affirmed the rating because we think
management remains committed to its financial policy of targeting
reported net debt to EBITDA below 2x. MegaFon might take steps to
reduce leverage, but at this point we do not factor any such steps
into our base case due to lack of certainty.

"We forecast that MegaFon's leverage will materially increase due
to the transaction, with S&P Global Ratings-adjusted debt to EBITDA
(main adjustments relate to operating leases) peaking at slightly
higher than 3x at end-2019, compared with our previous expectation
of 2.5x for the year-end and 2.6x as of September 2018. We also
expect MegaFon's FOCF to adjusted debt to decline to around 5% at
year-end 2019, compared with our previous expectation of 8%. Both
credit metrics are close to our maximum threshold for the current
rating level."

This follows MegaFon's purchase of RUB83 billion in ordinary
shares, representing 20.4% of its issued and outstanding shares--a
transaction that is mostly debt-financed. This legally mandatory
share repurchase was triggered by the increase in ownership stake
in MegaFon by MegaFon itself--via its wholly owned subsidiary
MegaFon Finance together with its controlling shareholder USM
Group--to 78.8% of ordinary shares. This resulted from the previous
ordinary share and global depositary receipts repurchase concluded
in September 2018 and the subsequent cancellation of these receipts
on Dec. 10, 2018. As a result of the second share repurchase, USM
Group's stake in MegaFon increased to 99.2%.

MegaFon's operating performance remained sound in the first nine
months of 2018. Its reported revenues increased by 4% supported by
9% growth in average revenue per data user (ARPDU) for the same
period. 4G traffic usage increased by 67% year-on-year in
third-quarter 2018, supported by a 37% increase in 4G-enabled
devices registered in the MegaFon network, up to 26.7 million.

S&P said, "The negative outlook on MegaFon reflects that we could
lower the rating if the company fails to strengthen its credit
ratios toward the levels indicated by its financial policy.

"We could revise the outlook to stable if S&P Global Ratings'
adjusted debt to EBITDA declined to about or below 3x and FOCF to
debt at or above 5%. This would be supported by a continued
commitment to adhere to its financial policy target and, at worse,
stable revenues and an adjusted EBITDA margin of about 42%.

"We could lower the rating if MegaFon's adjusted debt to EBITDA
materially exceeded 3.0x or if its FOCF to adjusted debt was below
5% also on a protracted basis as a result of more relaxed financial
policy decisions, or if we observed a pronounced weakening in
operating performance. We could also downgrade MegaFon if there was
a significant increase in Russian regulatory risk, for example
related to data storage laws."

RUSSIAN MORTGAGE: Bank of Russia Submits Bankruptcy Claim
---------------------------------------------------------
The provisional administration to manage CB Russian Mortgage Bank
LLC (hereinafter, the Bank) as appointed by virtue of Bank of
Russia Order No. OD-3034, dated November 23, 2018, following the
banking license revocation, conducted an investigation of the
Bank's financial standing and identified operations aimed at
siphoning off assets by purchasing illiquid securities.

According to preliminary estimates, the value of the Bank's assets
is no more than RUR7.8 billion whereas its liabilities to creditors
stand at RUR9.6 billion.

The Bank of Russia submitted a claim to the Moscow Court of
Arbitration to declare the Bank insolvent (bankrupt).  The hearing
was scheduled for March 20 2019.

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

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



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

PERSTORP: S&P Upgrades Long-Term ICR to 'B' on Debt Reduction
-------------------------------------------------------------
S&P Global Ratings raised its long-term issuer credit rating on
Perstorp to 'B' from 'B-' and assigns a 'B' issue rating and a '3'
recovery rating to the proposed senior secured term loan.

Perstorp received EUR579 million in net cash proceeds for its
caprolactone business, Capa, which along with a EUR850 million
(SEK8.7 billion) facility, were used to redeem all of its senior
and subordinate notes. The company is currently working on
refinancing its capital structure with a new seven-year senior
secured term loan B and a new six-and-a-half-year senior secured
revolving credit facility (RCF). S&P notes that the company has
also streamlined its corporate structure by removing an orphan
special-purpose vehicle and multiple layers of debt.

S&P said, "We expect that Perstorp will significantly reduce its
gross debt to about SER8.7 billion, from SEK13.7 billion reported
year-end 2018. This reduction of close to SEK5 billion will more
than offset the EBITDA contraction linked to the disposal of Capa,
which accounted for SEK495 million of EBITDA in 2018. Hence, we
foresee significant deleveraging, with adjusted debt to EBITDA set
to decline to about 5.8x in 2019, further improving to about 5.6x
in 2020.

"As a result of the refinancing and debt reduction, we anticipate
that Perstorp's interest payments will sharply decline, to about
SEK470 million in 2020-2021, from about SEK1.1 billion cash
interest reported for 2018. Therefore, EBITDA interest coverage
will strengthen to about 3.5x in 2020-2021, compared with around 1x
over the past five years. This is a notable improvement, which we
think will also support stronger funds from operations (FFO) and
free operating cash flow (FOCF).

"In light of higher investments, we expect that Perstorp will
generate negative adjusted FOCF of about SEK100 million in 2020,
following positive SEK100 million–SEK150 million that we forecast
for 2019. We note that, over the past six years, Perstorp's average
negative FOCF amounted to about SEK400 million per year, materially
hampered by high interest payments and growth capital expenditure
(capex). After 2021, we expect that Perstorp will sustainably
deliver positive FOCF."

Perstorp invests the majority of its cash flows into existing
production sites to expand their scale, since they already run at
close to full capacity. S&P said, "In addition, we model
significant investments in new facilities, such as a new Penta
plant in India. This plant will start operations in late 2021 and
ramp-up in subsequent years to a run-rate EBITDA of SEK400 million,
according to the company. Having a local production site in India
will enable it to avoid import duties, reducing costs, and to
export to neighboring regions. We factor in about SEK0.8 billion in
capex in 2019, rising to a high SEK1.3 billion in 2020, but expect
it to decline in the following years."

Perstorp reported sustained revenue growth in 2018, amid somewhat
weaker profitability due to some exceptional items. As such,
revenue grew by 12% year on year (excluding disposals), benefitting
from higher sales prices and favorable foreign exchange rates.
Volumes declined by 2%, affected by the maintenance of its Swedish
plant, Stenungsund (excluding that impact, volume growth was 1%).
EBITDA amounted to SEK1,696 million, lagging behind revenue growth
, because of the maintenance on Stenungsund (SEK80 million impact)
and some operational issues (SEK43 million).

In September 2018, the company's private equity owner for the
previous 13 years, PAI Partners, sold its participation to a new
fund. Landmark Partners are the key investors, along with other
co-investors. S&P said, "We note that the new investors have
committed a EUR130 million equity line to be used for acquisitions
and to fund capex. We think that this equity line provides an
important safety cushion to the company and enables it to capture
external growth opportunities without materially undermining its
credit ratios. We continue to assess the group's financial policy
as financial sponsor-6, based on its highly leveraged capital
structure. Therefore, we don't net cash from gross debt balances
for our leverage calculation."

S&P's view of Perstorp's business risk profile remains unchanged at
weak, although it notes that the disposals of BioProduct and
high-margin Capa limit the size and scope of Perstorp. In
particular, S&P notes a reduced scale of the operations, since the
divested units accounted for about SEK2.4 billion of revenues, as
well as reduced product diversification, with the exit from
production of biodiesel, glycerine, and caprolactone. The company
remains focused on oxo chemicals, polyols, and animal nutrition,
which has been organized in three business divisions since the
start of 2019.

While BioProducts was a loss-making business that was margin
dilutive for the group overall, Capa was highly profitable. Our
forecast adjusted EBITDA margin stands at about 14%-15% in
2020-2021, notably lower than the 16%-17% levels achieved in
2016-2017. Importantly though, management has steadily improved
profitability over the past six years and targets a 17% EBITDA
margin by 2023. S&P anticipates that Perstorp will gradually
improve its profitability on the back of a better product mix,
economies of scale, and cost savings.

S&P said, "We see the specialty chemical industry's capital
intensity, cyclicality, and competitive nature as key risk factors
for the company, along with high volatility of raw materials
(mostly oil- and gas-related) and exposure to cyclical end markets
(construction: 26% of sales; transportation: 20%). We also note
Perstorp's high reliance on Borealis' cracker for its biggest plant
Stenungsund, although there have been no negative consequences so
far. We also underline the group's exposure to foreign exchange
fluctuations, since results are reported in Swedish krone, while
more than half of revenue is generated in euros and another 31% in
U.S. dollars. On the positive side, we factor in Perstorp's leading
market positions as a top-three player for products covering about
80% of sales, its diverse customer base, and presence in some
fast-growing niche markets, such as animal nutrition, powder and UV
cured coating, safety glass film, and synthetic lubricants.

"The stable outlook reflects our view that Perstorp's credit
metrics will strengthen following sizable debt and interest burden
reduction, with adjusted EBITDA interest coverage set to reach
about 3.5x in 2020. Furthermore, we expect adjusted debt to EBITDA
to be about 5.8x in 2019 and 5.6x in 2020. We also think that
steady growth of earnings and interest expense reduction will
support positive FOCF generation, with the exception of 2020 when
the company is planning to invest heavily in a new plant.

"Rating downside could be triggered by lingering negative FOCF,
which we think could stem from weaker earnings, unexpected working
capital movements, or a capex program that was not timely adjusted
to a changing operational environment. Also, adjusted debt to
EBITDA increasing above 6.0x and interest coverage declining below
3.0x without near term prospects for recovery would be negative for
the rating.

"We don't foresee rating upside over the next two years due to a
sizable capex program that the company plans to execute." Further
rating improvement relies on continued steady operating
performance, profitability improvement, and deleveraging to levels
that would be commensurate with an aggressive financial risk
profile, including adjusted debt to EBITDA below 5x and adjusted
FFO to debt above 12%. Commitment from management and the private
equity sponsor to maintaining leverage at this level would be
important in any upgrade considerations.

Perstorp is a specialty chemicals company headquartered in Sweden
and owned by private equity investors, including Landmark Partners.
Perstorp employs 1,350 people and operates seven production sites
in six countries. In 2018, it generated 55% of its sales in Europe,
23% in the Americas, and 21% in Asia Pacific (APAC), and its
revenue amounted to SEK12.4 billion, with SEK1.7 billion in EBITDA.



===========
T U R K E Y
===========

DOGUS HOLDING: Disposes Assets to Help Restructure Debt Pile
------------------------------------------------------------
Ercan Ersoy at Bloomberg News reports that the financial woes of
Dogus Holding AS are only getting worse even as the Turkish owner
of the Salt Bae steakhouse chain goes on a selling spree to help
restructure debt.

The Istanbul-based investment-holding group, controlled by Turkish
billionaire Ferit Sahenk, has been disposing mainly of hotels over
the past year as part of a December agreement with lenders to
renegotiate the terms on US$2.5 billion of debt, Bloomberg
discloses.  The pact doesn't cover half of Dogus' liabilities,
which soared 17% in 2018 to TRY28.6 billion  (US$5.2 billion),
Bloomberg relays, citing financial statements published on its
website.  Almost half of those are loans due this year, Bloomberg
notes.

Like many other Turkish companies, the owner of the Nusr-Et
steakhouse, popularly known by its founder chef's meme Salt Bae, is
struggling to repay foreign-exchange loans after the lira plunged
in value, Bloomberg states.

Dogus, Bloomberg says, has pledged TRY23.4 billion of assets as
collateral against its liabilities as of end-2018, compared with
TRY19.6 billion a year earlier.  The group's loss widened to TRY2.9
billion from TRY2.3 billion in 2017, according to Bloomberg.  Dogus
also said its hydropower plant unit, Boyabat, defaulted on its debt
on Dec. 31, and that restructuring talks for its US$900 million
loan is expected to be completed this year, Bloomberg discloses.




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

OSPREY ACQUISITIONS: Fitch Affirms BB Issuer Default Rating
-----------------------------------------------------------
Fitch Ratings has affirmed Anglian Water Services Financing Plc's
(AWF) senior secured class A (both wrapped and unwrapped) and class
B debt at 'A' and 'BBB+', respectively. The Outlooks for both
classes of debt are Stable.

Fitch also has affirmed Osprey Acquisitions Limited's (Osprey)
Long-Term Issuer Default Rating (IDR) at 'BB' and senior secured
rating at 'BB+'. The Outlook on the Long-Term IDR is Negative.

The affirmations and Stable Outlooks on the class A and B debt of
AWF reflect Fitch's expectation that Anglian Water Services
Limited's (AWS) financial profile will remain commensurate with the
current ratings during the next price control from April 2021 to
March 2025 (AMP7), based on an assumption of meaningful operational
outperformance.

The ratings also take into account AWS's leading operational and
regulatory performance, and the secured nature of the group's
financing structure. The latter benefits from structural
enhancements, including robust ring-fencing provisions, additional
liquidity facilities and a standstill period preceding an
enforcement action.

The affirmation of Osprey's rating with a Negative Outlook reflects
Fitch's expectation of weak dividend cover capacity and an
uncertainty over the financial profile of the underlying operating
company, AWS. The level and timeliness of shareholder support in
the form of additional capital injection in Osprey also remain
uncertain. Osprey's cash flows and debt service rely significantly
on dividends from AWS, as well as on shareholder support. Fitch
expects to have more clarity and review the ratings and Outlook
after the regulator publishes its AMP7 price determinations.

AWF is the debt-raising vehicle of AWS. AWS is one of 10 appointed
water and sewerage companies in England and Wales.

KEY RATING DRIVERS

Weaker Returns After 2020: In December 2017, the UK water industry
regulator, Ofwat, announced a significant step down of the allowed
return on capital for AMP7. The real RPI-linked weighted average
cost of capital (WACC excluding retail margin) is set to decline to
2.3% in AMP7 from 3.6% in AMP6. This will create a significant
decline in AWS's EBITDA and post- maintenance cash flow
pre-outperformance. The regulator also plans to introduce more
challenging cost and performance targets, with higher penalties for
inefficiency. Additionally, pressure on the gearing ratio will come
from a midnight inflation correction adjustment to regulatory
capital value (RCV; GBP133 million in 2017/18 prices), which could
add around 2.2% to net debt/RCV at the beginning of AMP7.

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

Forecast Financial Profile Supports Ratings: Fitch's preliminary
analysis of AWS's business plan submitted to Ofwat in September
2018 suggests that the company could maintain both gearing and
PMICR in line with Fitch's revised rating sensitivities during the
next price control. Under Fitch's rating case, the rating agency
expects class A and total senior net debt/RCV to be in line with
the negative rating sensitivities of 67% and 77% by the financial
year to March 31, 2022. Fitch also forecasts average PMICRs broadly
at Fitch's negative rating sensitivities of 1.6x and 1.3x. These
outcomes are based on Fitch's assumptions of an estimated total
expenditure (totex) outperformance in the mid-single digits in
percentage terms and GBP40 million of outcome delivery incentives
(ODI) rewards (in nominal terms) in AMP7.

Strong Regulatory Performance: AWS continues to be one of the
top-ranking performers in the industry, with particularly strong
results in leakage reduction, service incentive mechanism (SIM)
scores and interruptions of supply, although it expects to fall
behind its target of reducing per property water consumption. In
FY18, the company earned a net outcome delivery incentive (ODI)
reward of GBP15 million (in 17/18 prices) and achieved the highest
SIM score in the sector of 88, reflecting strong customer
satisfaction. In its rating case Fitch assumes that in AMP6 the
company achieves a total net ODI reward of GBP60 million, plus a
SIM reward of GBP26 million (in 17/18 prices), as well as totex
outperformance net of reinvestment in mid-to-high single-digits in
percentage terms.

Ofwat's Cost Efficiency Challenge: In January 2019, Ofwat published
its initial assessment of water companies' business plans, which
categorised AWS's plan as 'slow track', indicating that substantial
changes to it were required. Major comment from the regulator
relates to the company's proposed totex, which is around 20% above
what Ofwat views as efficient costs. This is further split into 17%
efficiency challenge for base costs and 24% efficiency challenge
for enhancement costs. While enhancement costs are more debateable,
Fitch sees less flexibility in the base costs determination. The
company however argues that it already embedded an estimated GBP600
million of cost efficiencies in its totex proposals and intends to
challenge Ofwat's early view.

Outperformance Potential Uncertain: Given the company's top-ranking
regulatory performance in AMP6, the total wholesale cost challenge
recently announced by Ofwat and more demanding cost and incentive
targets for AMP7, the extent of potential outperformance is highly
uncertain at this point in the regulatory price-setting process.

Step-up in Capex: AWS announced reinvestment of GBP165 million in
enhancing asset resilience in AMP6, and its AMP7's proposed capex
is 80% higher than AMP6's allowance (in nominal terms, without
outperformance). The increase is predominantly due to a more
ambitious environmental programme and also record investment
related to water resource management plan. A large part of
environmental programme involves phosphate removal to improve river
water quality, while water resource management plan addresses the
medium-term risk of security of supply. Higher investment in AMP7
will drive RCV growth, but will also contribute to negative free
cash flow (FCF) generation.

Dividend Cuts Aid Deleveraging: In March 2018 AWS announced its
plans to reduce dividends to its ultimate shareholders until 2025
to reduce gearing at the operating company. As a result of this
dividend reduction, Fitch expects the consolidated gearing at
Osprey to also go down. The company has significantly cut the FY18
net dividend, and forecasts much lower distributions in FY19-FY20,
just sufficient to cover the finance and operating costs at Osprey,
its holding company. These reductions would help AWS reduce gearing
to 77% by FYE20 under Fitch's rating case.

In the business plan submitted to Ofwat in September 2018, AWS
forecast a net equity injection of GBP33 million over AMP7 as a
whole. This implies that Osprey would service its debt from sources
other than AWS's dividends. Contrary to this, Fitch's rating case
for both Osprey and AWS assumes that AWS distributes sufficient
dividend to cover Osprey's debt service and head office costs.
Fitch also assumes a modest GBP52 million capital injection in
Osprey. Zero external dividends in AMP7 support AWS's gearing
reduction to 75% under Fitch's rating case by FYE25.

Weak Dividend Cover at Osprey: Based on Fitch's rating case, Fitch
estimates Osprey's average dividend cover capacity of 2.3x in
FY18-FY25, which is significantly below Fitch's negative rating
sensitivity of 3.0x. Osprey forecasts its total debt to remain at
GBP450 million throughout AMP7, which is credit-positive as it will
allow gradual gearing reduction on the back of RCV growth.
Additionally, in January 2018 Osprey refinanced its 7% GBP240
million bond at 4% and its onerous swaps matured in May 2017,
leading to a combined reduction of finance charge of 50% to around
GBP22 million p.a.. Ultimately, Osprey's dividend cover capacity
depends on the scale of AWS's outperformance and shareholder
capital injections.

Dividend Cover Capacity Ratio: As AWS plans to reduce its gearing
in AMP7, Fitch's forecast dividend distributions would only just
cover the debt service requirements of Osprey, but at the same time
AWS's de-leveraging would be credit-positive for Osprey as it would
reduce the amount of structurally superior debt. To address these
changing dynamics, Fitch has introduced dividend cover capacity
ratio, which takes into account the capacity of de-leveraging at
AWS to distribute dividends to Osprey. Under Fitch's rating case,
AWS's additional dividend distribution capacity is measured as the
difference between the forecast FYE25 gearing of 75% and its
current negative rating sensitivity of 77%, multiplied by FYE25
forecast RCV.

DERIVATION SUMMARY

AWS
The company's senior secured ratings and credit metrics reflect the
highly geared nature of the company's secured covenanted structure
versus peers such as United Utilities Water Limited (LT IDR:
BBB+/Stable, senior unsecured A-) and Wessex Water Services Limited
(LT IDR: BBB+/Negative, senior unsecured A-), which have lower
leverage and are not covenanted secured structures. The company's
higher ratings than similar peers with covenanted structures such
as Southern Water Services (Finance) (senior unsecured class A debt
BBB+/Stable) reflects stronger credit metrics and more robust
financial and regulatory performance.

No Country Ceiling constraints affect the ratings.
Parent/Subsidiary Linkage is applicable but given the regulatory,
structural and contractual ring-fenced structure of the group it
does not impact the ratings.

Osprey
Osprey's higher rating than peers such as Greensands UK Limited
(B+/Negative) and Kemble Water Finance Limited (BB-/Negative)
reflects the more robust financial profile of Osprey and AWS's
stronger regulatory performance.

No Country Ceiling constraints affect the rating. Parent/subsidiary
Linkage is applicable but given the structural and contractual
ring-fence structure of the group it does not impact the ratings.

KEY ASSUMPTIONS

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

  -- AMP6's revenue largely in line with price determinations; 7%
    totex outperformance (net of announced re-investment of GBP165

    million), around GBP60 million ODI rewards in 17/18 prices, of

    which GBP50 million will flow through into AMP7's cash flow

  -- Opening FY21 RCV after midnight adjustments of GBP8,030
     million

  -- Long-term RPI of 3% and long-term consumer price inflation
     including housing costs (CPIH) approximates 2% in AMP7

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

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

  -- 6 month Libor of 1% in FY21-FY25

  -- Average pay-as-you-go rate of 47%, average run-off rate of
     4.8% in FY21-FY25

  -- AMP7 totex of GBP6.7 billion (net of grants and contributions

     and pension deficit repair)

  -- 6% totex outperformance and around GBP40 million ODI-related

     rewards in AMP7 (nominal)

  -- Retail EBITDA of GBP18 million p.a. and non-appointed EBITDA
     GBP13 million p.a. on average during AMP7

  -- AWS's average cash cost of debt decreases to 3.2% in FY25
     from 3.8% in FY19

  -- Around 60% of total debt is index-linked at all times, all
     new index-linked debt raised from FY20 is CPI-linked

  -- AWS's average total cost of debt decreases to 5% in FY25 from

     5.9% in FY19

  -- Pension deficit recovery payments of around GBP14 million
     p.a. in AMP7 (nominal)
  -- AWS's total AMP7 dividend of GBP121 million (sufficient to
     cover debt service and head office costs at Osprey) and
     significantly reduced dividend in FY19-FY20

In addition, for Osprey Acquisitions, Fitch assumes:

  -- Incremental debt at holding company level to remain at GBP450

     million throughout AMP7

  -- Osprey's average total cost of debt is 4.7% in FY19-FY23,
     rising to 5.2% in FY24-FY25

  -- Average head office and pension deficit repair cost at Osprey

     of around GBP13 million p.a. in FY19-FY25

  -- Cash injection from shareholders of GBP52 million, evenly
     spread across FY21-FY25

RATING SENSITIVITIES

AWS:

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

-- Positive rating action is unlikely for both classes of debt,
    given the financial profile pressure from the upcoming price
    control

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

-- For class A debt forecast gearing sustainably above 67% or
    PMICR below 1.6x

-- For class B debt forecast gearing sustainably above 77% or
    PMICR below 1.3x

-- Marked deterioration in operational or regulatory performance

Osprey:

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

-- Upside is limited given the Negative Outlook. Fitch may revise

    the Outlook to Stable if AWS and Osprey materially reduce
    regulatory gearing and dividend cover capacity is sustained
    above 3.0x throughout AMP6 and AMP7

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

  -- A sustained drop of expected dividend cover capacity below
     3x, for example due to lower than assumed outperformance at
     AWS

  -- Forecast group gearing above 82% for a sustained period

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

LIQUIDITY

AWS:
As of September 30, 2018, the company had GBP207.1 million in cash,
excluding GBP40 million restricted cash, GBP40 million in
short-term investments and GBP600 million of undrawn working
capital and capex facilities maturing through to 2022. Over the
next 18 months, Fitch expects negative FCF of GBP69.5 million and
debt maturities of GBP223.3 million. Overall, liquidity is
sufficient to support debt maturities and FCF for at least the next
18 months. The company is a frequent issuer and since September
2018 tapped debt markets with a GBP585 million of debt, some of
which has been swapped to CPI.

Osprey:
As of September 30, 2018, the holding company had GBP17.6 million
in unrestricted cash and a GBP125 million undrawn committed
revolving credit facility due March 2020. The next debt maturity is
a GBP210 million 5% fixed-rate bond maturing in 2023. Fitch expects
the company's debt service and head office needs to be covered by
dividends from AWS. Overall, liquidity is sufficient to support
debt maturities and FCF for at least the next 18 months.

FULL LIST OF RATING ACTIONS

Anglian Water Services Financing Plc

-- Senior secured class A debt (wrapped and unwrapped) rating
    affirmed at 'A', Stable Outlook

-- Senior secured class B debt rating affirmed at 'BBB+', Stable
    Outlook

Osprey Acquisitions Limited

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

-- Senior secured rating affirmed at 'BB+';

Anglian Water (Osprey) Financing Plc (AWOF)

  -- Senior secured bonds issued by AWOF affirmed at 'BB+'. The
     bonds are guaranteed by Osprey, and are thus rated in line
     with Osprey's senior secured rating.

PARKDEAN RESORTS: S&P Alters Outlook to Negative & Affirms B- ICR
-----------------------------------------------------------------
S&P Global Ratings revised to negative from stable the outlook on
U.K.-Based Parkdean Resorts holding company Richmond UK Holdco Ltd.
S&P affirms the 'B-' long-term issuer credit rating on Richmond
Holdco. At the same time, S&P affirms its 'B' issue rating and '2'
recovery rating on the company's GBP638.5 million senior secured
debt.

The outlook revision reflects Parkdean's weak operating performance
in 2018 after an already weak 2017. The HHS segment (which
generated 28% of the group 2018 turnover) reported a revenue
decline of 10% in 2018. S&P understands that half of the drop
reflected industry weakness, as uncertainties around Brexit pushed
consumers to postpone purchasing leisure products such as holiday
home lodges and caravans that cost on average about
GBP20,000-GBP30,000 per unit.

Parkdean's holiday sales and on-park spending (which together
represent about 50% of the group's turnover) grew by 8% each in
2018, reflecting continued demand for short-term breaks from the
customer base, which primarily comprises price-conscious families.
Despite the revenue increase in these two segments, the margin
contribution from these segments did not improve because of
inflationary cost pressures, sub-optimal pricing of the food menu
in some parks, and incorrect preseason rostering of staff. The
inflation of overhead costs (including minimum wage increases,
utilities, and rates) has exacerbated the issue. Overall,
Parkdean's reported EBITDA of GBP96.6 million in 2018 represents a
decline of about 18% from GBP117.4 million in 2016. Given that the
actual earnings of the group for the last two years are materially
lower than the assumptions used by the private equity owner Onex at
the time of its acquisition, Parkdean has recognized a goodwill
impairment of about GBP172.5 million over that period. If the
underlying weak operating performance fails to improve, there is a
risk of the current capital structure being unsustainable.

The group recently appointed a new CEO (starting in June 2019),
having appointed a new CFO in June 2018. The new team's key areas
of focus will include plans to automate numerous processes, improve
service standards, and optimize the holiday season in individual
parks. S&P understands that Parkdean is unlikely to realize any
material benefits from these measures before 2020. That said, the
group doesn't have any near-term liquidity or covenant pressure and
therefore has sufficient time to take such corrective steps.
Parkdean also benefits from its ownership of the bulk of the land
and property on which its holiday parks sits, which provides some
additional possibilities to reduce leverage. During 2018, Parkdean
sold five noncore holiday parks for GBP24 million and used GBP20
million of the proceeds to repay first-lien debt in February 2019.
The book value of Parkdean's land and buildings was GBP752 million
as of Dec. 31, 2018 (excluding the assets held under the ground
rent transactions).

S&P said, "Our assessment of Parkdean's business risk profile
reflects our view of the company's limited geographic diversity,
being solely based in the U.K., and restricted offering relative to
the broader competitive tourism market. This is because holiday
parks such as Parkdean are typically used only for holidays and
weekend retreats, and by a niche customer base. We also take into
account the company's exposure to cyclical consumer discretionary
spending, which could be further threatened by Brexit concerns. In
addition, there is a moderately seasonal aspect to the group's
revenues, which peak during school holiday periods; Parkdean
generates about 60% of its EBITDA between June and August. Also, in
our view, Parkdean has relatively low brand recognition compared
with other companies in the broader leisure accommodation industry.
Still, we note that the company enjoys solid brand recognition
within its niche customer market since it generates about 80% of
bookings directly via its websites. Moreover, we view the relative
predictability of revenues, particularly annual income paid by
caravan owners (representing about 20% of revenues but 36% of its
contribution), and high occupancy rates during peak periods, as
supporting our assessment. Moreover, Parkdean's profitability is in
line with the average of its lodging peers, with adjusted EBITDA
margins at about 23%.

"We view Parkdean's capital structure and ultimate ownership by
Onex, which we regard as having an aggressive financial policy, as
a further constraint to the company's creditworthiness. Our debt
calculation includes about GBP914.2 million of financial debt
(including GBP221.4 million in relation to the ground rent
transactions), adjusted by about GBP40 million of operating leases.
We don't expect substantial deleveraging over the next two years,
due to the bullet nature of Parkdean's capital structure maturing
in 2024 and our forecast of broadly neutral free operating cash
flow (FOCF) generation, since we assume most of the cash flows will
be used for growth investments and maintenance of facilities.   

"The negative outlook reflects our view that any further material
decline in the HHS segment or failure to improve overall
profitability could render Parkdean's capital structure
unsustainable. It also reflects the event risk to which its
operations are exposed, such as adverse weather conditions or
terror attacks, and the impact of general uncertainty about Brexit
on the U.K. consumer confidence.

"We could lower the ratings if Parkdean's FOCF remained negative
for a prolonged period, EBITDA interest coverage deteriorated from
the current 1.7x level, and leverage remained above 9.0x with no
clear deleveraging trend. This could happen if Parkdean raised
further debt to finance capital expenditure (capex) or if EBITDA
underperformed our base case. The latter could occur if the
company's cost-cutting initiatives don't prove successful, if
inflationary overhead pressures prevent our forecast improvement in
Parkdean's earnings, or if there is a sharp drop in demand for
vacation home offers."

Rating pressure could also arise if the headroom under Parkdean's
financial covenants tightened, such that it posed liquidity stress
and rendered the company unable to fund capex needs and other
expenses from the existing facilities.  

S&P could revise the outlook back to stable if the group
deleveraged, with adjusted debt to EBITDA falling below 8.5x, and
established a track record of positive free operating cash flow
generation and adequate liquidity. This could occur if operations
in the HHS segment stabilize and holiday sales and on-park spending
maintain profitable growth.



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

[*] BOOK REVIEW: Macy's for Sale
--------------------------------
Author: Isadore Barmash
Paperback: 180 pages
List price: $34.95
Review by Henry Berry
Order your personal copy today at
http://www.beardbooks.com/beardbooks/macys_for_sale.html

Isadore Barmash writes in his Prologue, "This book tells the story
of Macy's managers and their leveraged buyout, the newest and most
controversial device in the modern financial armament" when it took
place in the 1980s. At the center of Barmash's story is Edward S.
Finkelstein, Macy's chairman of the board and chief executive
office. Sixty years old at the time, Finkelstein had worked for
Macy's for 35 years. Looking back over his long career dedicated to
the department store as he neared retirement, Finkelstein was
dismayed when he realized that even with his generous stock
options, he owned less than one percent of Macy's stock. In the 185
years leading up to his unexpected, bold takeover, Finkelstein had
made over Macy's from a run-of-the-mill clothing retailer into a
highly profitable business in the lead of the lucrative and growing
fashion and "lifestyle" field.

To aid him in accomplishing the takeover and share the rewards with
him, Finkelstein had brought together more than three hundred of
Macy's top executives. To gain his support for his planned
takeover, Finkelstein told them, "The ones who have done the job at
Macy's are the ones who ought to own Macy's." Opposing Finkelstein
and his group were the Straus family who owned the lion's share of
Macy's and employees and shareholders who had an emotional
attachment to Macy's as it had been for generations, "Mother
Macy's" as it was known. But the opponents were no match for
Finkelstein's carefully laid plans and carefully cultivated
alliances with the executives. At the 1985 meeting, the
shareholders voted in favor of the takeover by roughly eighty
percent, with less than two percent opposing it.

The takeover is dealt with largely in the opening chapter. For the
most part, Barmash follows the decision making by Finkelstein, the
reorganization of the national company with a number of branches,
the activities of key individuals besides Finkelstein, Macy's moves
in the competitive field of clothing retailing, and attempts by the
new Macy's owners led by Finkelstein to build on their successful
takeover by making other acquisitions. Barmash allows at the
beginning that it is an "unauthorized book, written without the
cooperation of the buying group." But as he quickly adds, his
coverage of Macy's as a business journalist and his independent
research for over a year gave him enough knowledge to write a
relevant and substantive book. The reader will have no doubt of
this. Barmash's narrative, profiles of individuals, and analysis of
events, intentions, and consequences ring true, and have not been
contradicted by individuals he writes about, subsequent events, or
exposure of material not public at the time the book was written.

First published in 1989, the author places the Macy's buyout in the
context of the business environment at the time: the aggressive,
largely laissez-faire, Reagan era. Without being judgmental, the
author describes how numerous corporations were awakened from their
longtime inertia, while many individuals were feeling betrayed,
losing jobs, and facing uncertain futures. Isadore Barmash, a
veteran business journalist and author, was associated with the New
York Times for more than a quarter-century as business-financial
writer and editor. He also contributed many articles for national
media, Reuters America, and the Nihon Kenzai Shimbun of Japan. He
has published 13 books, including a novel and is listed in the 57th
edition of Who's Who in America.



                           *********


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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