---

       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

          Wednesday, December 18, 2019, Vol. 20, No. 252

                           Headlines



C Z E C H   R E P U B L I C

ENERGO-PRO AS: Fitch Downgrades LT IDR to BB-, Outlook Stable


F R A N C E

ANDROMEDA INVESTISSEMENTS: Fitch Assigns B LT IDR, Outlook Stable


G E O R G I A

ENERGO-PRO GEORGIA: Fitch Downgrades LT IDR to BB-, Outlook Stable


G E R M A N Y

ALPHA GROUP: Fitch Affirms 'B' LT IDR, Alters Outlook to Negative


I R E L A N D

ARMADA EURO IV: Fitch Assigns B-sf Rating on Class F Debt
BOSPHORUS CLO V: Fitch Assigns B-sf Rating to Class F Debt


I T A L Y

OFFICINE MACCAFERRI: Fitch Downgrades LT Issuer Default Rating to C
SIENA MORTGAGE 07-5: Fitch Affirms Bsf Rating on Cl. C Notes


N E T H E R L A N D S

EDML 2019-1: Moody's Assigns Ba1 Rating to EUR4.375MM Cl. E Notes
NEW VAC: Moody's Downgrades CFR to B3, Outlook Negative
OCI NV: S&P Alters Outlook to Negative & Affirms BB Long-Term ICR


R U S S I A

LENTA LIMITED: Moody's Affirms Ba3 CFR, Outlook Still Stable
METKOMBANK: Moody's Affirms B2 LT Deposit Ratings, Outlook Stable
NATIONAL RESERVE: Moody's Upgrades Deposit Ratings to B2
UZBEKISTAN: S&P Affirms 'BB-/B' Sovereign Credit Ratings


S E R B I A

SERBIA: S&P Raises LT Sovereign Credit Rating to 'BB+'


S W I T Z E R L A N D

FERREXPO PLC: Fitch Upgrades LT IDR to BB-, Outlook Stable


U N I T E D   K I N G D O M

ARCADIA GROUP: Secures GBP310MM Deal to Remortgage Topshop Store
ARTEMIS MIDCO: Moody's Affirms B2 CFR, Alters Outlook to Neg.
BRITISH STEEL: Rescue Talks with Jingye Making Progress
CHARLESWORTH PRESS: Completes CVA, Invests in New Technology
FIRST PRIORITY: Records GBP4.5MM Profit in Year to February 2019

FRONERI INTERNATIONAL: S&P Places 'B+' LT Rating on Watch Negative
PIZZAEXPRESS FINANCING: Moody's Affirms Caa3 CFR, Outlook Neg.
PIZZAEXPRESS FINANCING: S&P Cuts ICR to 'SD' on Debt Exchange
REGIS UK: Bought Out of Administration, 1,000 Jobs Saved
ROLA WALA: Founder Buys Business Out of Administration

TULLOW OIL: S&P Downgrades LT ICR to 'B' Following Resignations
ZEST FOOD: Creditors Back Rescue Plan, No Store Closures

                           - - - - -


===========================
C Z E C H   R E P U B L I C
===========================

ENERGO-PRO AS: Fitch Downgrades LT IDR to BB-, Outlook Stable
-------------------------------------------------------------
Fitch Ratings downgraded ENERGO-PRO a.s.'s (EPas) Long-Term Issuer
Default Rating to 'BB-' from 'BB'. The Outlook is Stable.

The downgrade reflects higher leverage compared with its previous
expectations. Fitch expects funds from operations (FFO) adjusted
net leverage (excluding connection fees and including group
guarantees) to remain above 4.5x in 2019-2020 due to weaker
financials and distributions to the shareholder in 2019.

The Stable Outlook takes into account the company's healthy
profitability and geographic diversification, which will help
support credit metrics commensurate with a 'BB-' rating.

KEY RATING DRIVERS

Weak 1H19 Results: In 1H19 EPas reported Fitch-calculated EBITDA of
EUR60 million, a yoy drop of about 15%, mainly due to: below
average hydrology in Bulgaria and Georgia, which resulted in a 40%
and 19% yoy decrease in generation volumes respectively; lower
demand and electricity distributed volumes in Georgia; postponement
of high voltage (HV) customers' liberalisation, who left the grid
in May 2019 instead of January 2019 and for which costs related to
the supply of electricity were not fully included in the supply
tariff; the reduction of electricity market prices in Georgia,
which were affected by increased share of electricity sales by
state-owned hydro power plants (HPPs) in May-June 2019 as well as
some depreciation of the Georgian lari against the euro.

These were only partially compensated by increased electricity
market prices and distribution tariffs in Bulgaria, higher
generation in Turkey and some strengthening of the US dollar
against the euro. Fitch expects 2019 EBITDA to be affected by some
improvement in hydrology in Georgia in 2H19, the absence of
expenses related to HV customers, as Energo-Pro Georgia (EPG), a
Georgian subsidiary of EPas will not have to purchase electricity
for these customers.

External Guarantees Amount Decreased: In February 2019 EPas agreed
with Akbank to limit its guarantees to USD50 million for a USD141
million loan from Akbank to BIlsev, (EPas sister company) for the
construction of the Karakut dam and related HPP. In 1H19 the amount
of the revolving credit facility which EPas guarantees was reduced
to EUR4 million from EUR8 million. EPas now guarantees 100% of it
as opposed to 50% previously. The amount was further reduced to
EUR3 million in August 2019. Fitch adds guarantees as off balance
sheet obligations in its FFO adjusted net leverage calculations.

FX Risks Remain: EPas is subject to FX risks, as all of its debt at
end-1H19, consisting of Eurobonds, was euro-denominated. This is in
contrast to its revenue, which is denominated in local operating
currencies, although tariffs in Turkey are determined in US dollars
and the Bulgarian leva is pegged to the euro. EPas does not use any
hedging instruments, other than holding some cash in foreign
currencies.

Further Distribution Subject to Covenant Testing: To date in 2019
EPas has distributed EUR35 million to shareholders. This includes
EUR25 million of the remaining amount available under the EUR100
million Turkish distribution basket, which was targeted for funding
the development projects in Turkey of DK Holding Investments
s.r.o., EPas's parent company, and EUR10 million available under
the general distribution basket. Further distributions will be
subject to covenant testing in the Eurobonds documentation. In its
base case, Fitch expects zero dividends distribution to the
shareholder in 2020 and about EUR15 million - EUR45 million in
2021-2022. EPas expects its dividend policy to remain flexible and
subject to business needs.

Regulatory Changes: Fitch views positively the approval of 6%
average distribution tariff increase from July 2019 in Bulgaria.
The regulator approved operating expenses inflation and
compensation for grid losses price. From July 2019, renewable
producers in Bulgaria with installed generating capacity above 1MW
sell electricity at IBEX. The previously applied feed-in-tariff
(FiT) has been replaced with the 'reference price plus premium'
pricing mechanism. National Electric Company (NEK) ceased to be a
single buyer and electricity is sold on IBEX or to a balancing
coordinator at market prices and the compensatory premium is paid
by the Electricity Security Fund. The contracts for premiums will
be valid for the remaining period under the original FiT contract.
According to management, the reference price plus premium equals
previously approved FiTs, therefore the impact should be neutral.

In Georgia HV customers were liberalised from May 2019 instead of
May 2018 as initially expected. The company purchased electricity
for these customers at an average price that was higher than the
consumption tariff the customers paid, as it includes a lower
purchased electricity price. According to EPas it resulted in a
total loss of about GEL25 million. Fitch expects Georgian
distribution business's 2H19 EBITDA to improve following the
liberalisation of HV customers.

Share of Regulated EBITDA Expected to Decline: The majority of
EPas's EBITDA comes from regulated activities (79% in 2018 and 70%
in 1H19, down from 89% in 2017 based on company estimates). This
includes regulatory asset based distribution business in Georgia
and Bulgaria and generation business in Georgia as well as
generation business in Bulgaria and Turkey, which are mostly under
support mechanisms like reference price plus premium and feed-in
tariffs. Fitch expects EPas's EBITDA to remain dominated by
regulated activities although the business mix will move towards
more market-based EBITDA, driven by deregulation of HPP below 40 MW
in Georgia from 2018, the gradual ending of FiT eligibility period
in Turkey over 2019-2021 and the ending of reference price plus
premium mechanism in Bulgaria over 2024-2025. The financial effect
of this process will be mixed and will vary by country.

Part of Larger Privately Owned Group: EPas is part of the larger DK
Holding, which is ultimately owned by one individual. Therefore,
Fitch assesses key person risk from a dominant shareholder as
higher than for most rated peers. DK Holding also includes two
hydro plants in the Czech Republic, hydro development and
construction projects in Turkey and a hydro equipment production
business in Slovenia. The latter two require capex, which may be
funded through dividends received from EPas, as it is the major
cash-generating subsidiary within DK Holding.

DERIVATION SUMMARY

EPas is smaller than other rated European utilities such as EP
Energy, a.s. (BBB-/Stable), Energa S.A. (BBB/Stable) or Bulgarian
Energy Holding EAD (BB/Stable), although it is one of the largest
utilities in Georgia (for example compared with Georgian Water and
Power LLC (BB-/Stable)) and Bulgaria. The company comprises almost
entirely hydro generation facilities with a close-to-zero CO2
footprint. Its EBITDA was more volatile over 2013-2018 than that of
many peers, but it benefits from mostly neutral-to-positive FCF
generation and a large portion of regulated and quasi-regulated
income. EPas's leverage is higher than EP Energy's and Energa's.

KEY ASSUMPTIONS

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

  - Bulgarian, Georgian and Turkish GDP to grow -0.3%-4.9% over
2019-2022

  - Bulgarian and Georgian CPI of 2.5%-3.8% and Turkish CPI of
10.9%-16.9% over 2019-2022

  - Electricity generation to decrease to about to 2.5 TWh in 2019
and increase to about 2.7 TWh thereafter

  - Capex of about EUR63 million annually on average over
2019-2022

  - Distributions of EUR35 million in 2019, zero distributions in
2020 and about EUR30 million annually on average in 2021-2022

  - EUR/USD1.14, USD/TRY6.53-TRY8.34 and EUR/GEL2.9-GEL3.15 over
2019-2022

  - EUR47 million guarantees included as off-balance sheet
obligations in 2019-2022

RATING SENSITIVITIES

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

  - Improved FFO adjusted net leverage (excluding connection fees
and including group guarantees) to below 4.5x and FFO fixed charge
coverage consistently above 4x.

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

- Higher distributions to the shareholder, a reduction in
profitability and cash generation, leading to FFO adjusted net
leverage (excluding connection fees and including group guarantees)
above 5.5x and FFO fixed charge coverage below 3x beyond 2019

LIQUIDITY AND DEBT STRUCTURE

Strong Liquidity: Fitch views EPas's liquidity at end-1H19 as
strong, as its next substantial debt maturity is not until 2022,
following the refinancing with Eurobonds in 2017-2018. At end-1H19,
available cash was EUR25 million.

SUMMARY OF FINANCIAL ADJUSTMENTS

  - Multiples of 8x, 7x, 6x and 5x times relevant for Czech
Republic, Bulgaria, Georgia and Turkey, respectively, were applied
to rent expenses in these countries. The blended multiple used in
the forecast period is 6.1x

  - Impairment loss for intangible assets, surplus from inventory
and property, plant and equipments (PPE) counts, income from
penalties and fines, gains from insurance claims, gains/losses on
disposal of PPE and other income, changes in inventory of products
and in work in progress, capitalised own products and own services
were also excluded from EBITDA.

  - Fitch has included guarantees of EUR81 million at end-2018
issued by EPas under loan agreements of its sister companies as
off-balance sheet obligations in the adjusted debt calculations

  - For the purpose of FFO net adjusted leverage (excluding
connection fees) and FFO fixed charge cover (excluding connection
fees) calculations Fitch reduced FFO by the amount of customer
connection fees received (about EUR11 million in 2018) as they are
set off against capex

ESG CONSIDERATIONS

Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of 3. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or to the way in which they are being
managed by the entity.

EPas has an ESG Relevance Score of 4 for Governance Structure, as
EPas is part of larger DK Holding, which is ultimately owned by one
individual. Key person risk from this dominant shareholder is a
rating constraint.

EPas has an ESG Relevance Score of 5 for Group Structure, as EP has
issued guarantees in favor of its sister companies within DK
Holding group that have a material impact on credit ratios.



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

ANDROMEDA INVESTISSEMENTS: Fitch Assigns B LT IDR, Outlook Stable
-----------------------------------------------------------------
Fitch Ratings assigned Andromeda Investissements SAS a final
Long-Term Issuer Default Rating of 'B'. The Outlook is Stable. The
senior secured debt package, consisting of a term loan B facility,
has been assigned a final rating of 'B+' with a Recovery Rating of
'RR3'.

The rating action follows the completion of the acquisition of
French wholesale broker April SA (April) by Andromeda following the
block purchase of Evolem's stake and the mandatory tender offer
that concluded with Andromeda owning about 89% of April. As a
consequence of the consortium led by CVC not reaching the initial
100% ownership requirement, the TLB drawdown on Andromeda was
adjusted proportionally to the stake eventually acquired.
Therefore, according to provisions in the financial documentation,
the granting of the revolving credit facility (RCF) has been
temporarily suspended pending the ownership threshold being met.

KEY RATING DRIVERS

Full Ownership Missed: The public mandatory tender offer for
April's shares, triggered by Andromeda's Evolem stake purchase in
December 2018, achieved 89% of acceptances, below the 100%
requirement. Consequent to the threshold not being met, according
to the financial facility documentation, Andromeda's drawdown under
the TLB was reduced proportionately to around EUR488 million and
the EUR100 million RCF grant was suspended.

Financing Conditions Relaxed: Through an amendment to the financing
agreements, the borrower in November successfully neutralised the
interest cost increase associated with the reduced TLB, while the
granting of the RCF is now subject to a 90% minority squeeze-out
threshold, requiring the minority shareholders to compulsorily sell
their shares, instead of the full ownership initially. Fitch
expects the stalemate to be resolved within the next 12 months, and
has thus factored in the EUR100 million revolver in its recovery
assumptions.

3Q19 Results within Expectations: April's brokerage business
performance for 3Q19 was in line with Fitch's expectations
formulated at the time of the expected rating. A strong performance
of the Credit Protection, and International Legal & Protection
divisions, with their last-12-month (LTM) gross margin increasing
to 24.4% and 15.5% respectively, drives the gross margin and EBITDA
LTM growth in excess of 6%. Disposal plans are in progress - the
latest being the sale of professional insurer Axeria IARD - but the
bulk of sale proceeds will be deferred to 2020, during which Fitch
expects around 85% of the cash to be realised.

Mature French Brokerage Market: April is among the largest
wholesale brokers in a mature and modestly growing French insurance
market. In particular, it benefits from a strong position in health
insurance and from the market expansion spurred by an ageing
population. Fitch expects the company to benefit from impending
market consolidation. Moreover, the industry's adoption of digital
insurtech tools may capture more parts of the insurance value
chain, in addition to the already substantial infrastructure
supporting underwriting, claims management and customer
on-boarding.

Diversified Product Offering: April has a mix of product lines in
creditor, health and protection and property and casualty. This
mix, combined with its insurance operations, providing upstream
dividends to the brokerage entity, gives April a balanced product
offering. Nevertheless, April remains predominantly exposed to the
health and protection segment both in terms of gross written
premium and EBITDA.

Growing Health Segment: Growth of the health and protection market
in France reached 3% p.a. in 2012-2018 while a 2% to 3% annual
growth is expected up to 2021 according to most sources. Health
insurance is driven by growing health expenditure, an ageing
population and manageable changes in regulations. The French
population has been ageing with the over 60-year-old cohorts
expected to grow to a 29% share by 2030. As a result, growth in
healthcare spending has been consistent and independent of macro
trends.

Supportive Regulatory Changes: New regulations, such as '100%
Sante', are expected to further increase private health insurance
coverage. In addition, reforms have spurred growth in brokers'
activity in health and protection, one example being the abolition
of the clause of designation for protection insurance, which
previously linked part of the contract base exclusively to
complementary contracts providers

Credit Protection Stable: The credit protection market in France
shows stable fundamentals and a fairly controlled risk profile. The
outstanding stock of mortgages is expected to grow 3% annually
until 2020 to reach over EUR1.1 trillion in a context where, given
the mandatory nature of the credit protection insurance, the
overall premia is directly linked to the stock of mortgages
outstanding, while new underwriting is historically correlated to
mortgage production.

Reforms Support Growth: The personal choice by customers to pursue
individual delegated premiums directly on the market is expected to
develop further, due to lower pricing and favourable changes in
laws and regulations. The adoption of recent market reforms in the
country (e.g. the Bourquin Law) provides the option to switch
contracts annually, potentially driving growth of individual
delegated policies of between 3% and 8% on a yearly basis.

Well-capitalised Core Insurers: Axeria Prevoyance will remain the
key insurance entity of Andromeda. The entity uses the brokerage
network of April to underwrite part of its premiums with a captive
approach. Its Solvency 2 ratio and profitability are very strong,
while maintaining a low level of risky assets as a proportion of
capital. This has allowed a constant dividend stream of around EUR4
million on average for the last five years. Its expectations
include an annual dividend stream of about EUR12 million from
insurance entities from 2020.

Strong Cash Flow Offsets High Leverage : Fitch forecasts April will
have funds flow from operations (FFO)- adjusted gross leverage of
6.5x for 2020, normalised for dividends paid by its insurance
subsidiaries. Fitch expects that FF- adjusted gross leverage should
gradually decline to 6.2x by end-2022 from the initial 6.7x due to
a lower drawdown of the TLB. This de-leveraging will be supported
by stabilising free cash flow (FCF) margins of around 6% as
dividends from insurance subsidiaries resume.

DERIVATION SUMMARY

April has significantly smaller scale and a less diverse product
line than multinational insurance broker peers such as Marsh &
McLennan Companies, Inc. (A-/Negative), Aon Plc (BBB+/Stable) and
Willis Towers Watson Plc (BBB/Stable), whose competitive
positioning, geographic scope and wide distribution platforms allow
for a global presence in the context of public company capital
structures.

April's expertise lies in niche, high-margin product lines and in a
leading position within the French wholesale brokerage business
proposition. In comparison with Acropole BidCo SAS (Siaci Saint
Honore; B/Negative) April is larger in size and has a more
diversified and consumer-oriented proposition, versus the B2B model
of its peer. Compared with Ardonagh Midco 3 plc (B/Negative) April
is comparable in target clientele, although the distribution model
is partially different (Ardonagh is focused on retail brands) and
slightly smaller in size.

Both Acropole and Ardonagh recently implemented moderately
aggressive acquisition strategies (including targets such as
Swindon for Ardonagh and Cambiaso Risso for Acropole) leading to
Negative Rating Outlooks. The Outlooks reflect temporary
detrimental effects on leverage, FFO and FCF generation from the
M&A agenda. April's Stable Outlook is derived from the company's
stable brokerage business scope and deleveraging, although April's
leverage is high on an FFO-adjusted gross basis at 7.5x pro-forma
for the acquisition by Andromeda in 2019.

KEY ASSUMPTIONS

  - Gross margin to grow at CAGR of 3.1% over 2019-2022

  - Brokerage EBITDA margin of 16.8% on average over 2019-2022

  - Capex constant at about EUR17 million per annum up to 2022

  - Change in operating working capital negative at around EUR3
million annually over 2019-2022

  - One-off tax fine on Maltese operations of EUR15 million for
2020 based on agreement with vendors

Key Recovery Assumptions

Fitch assesses that April will be an ongoing concern in bankruptcy
as most of its value lies in the brand, the client portfolio and
its infrastructure for managing relationships with retail brokers,
final customers and insurances. Consequently Fitch uses the going
concern approach for its recovery analysis.

Fitch uses an ongoing concern EBITDA of around EUR71 million, down
from the September 2019 LTM pro-forma brokerage EBITDA of about
EUR92 million, as this level of EBITDA would reflect a disruptive
change in regulations or a severe reputational hit to the company
leading to a large loss in clients.

Fitch applies a 5.5x multiple to reflect April's leading position
in the French corporate brokerage market as well as the company's
strong FCF generation. Fitch factors in supplementary value from
insurance subsidiaries of EUR66 million, derived from the same
multiple of 5.5x being applied to an average estimated value of
up-streamed dividends of EUR12 million.

Its debt waterfall includes an RCF of EUR100 million, in line with
the indicated target amount, as Fitch expects the current
suspension to be temporary and facility to be released over the
next six to 12 months. Fitch factors in a 10% charge for
administrative claims, resulting in a final recovery of 'RR3'/68%.

RATING SENSITIVITIES

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

  - FFO-adjusted gross leverage below 5.5x

  - FFO fixed charge coverage above 2.5x

  - Successful expansion of GWP volumes with increased adoption of
a digitalised model

  - FCF generation consistently in line with business plan

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

  - FFO -djusted gross leverage above 7.0x

  - FFO fixed charge coverage below 2.0x

  - Unsuccessful restructuring of insurance subsidiaries, including
solvency issues and decline in dividends

LIQUIDITY AND DEBT STRUCTURE

Limited capex and working capital requirements, together with cash
on balance sheet around EUR140 million (of which about EUR72
million belongs to insurance companies premia- excluding term
deposits) exclude any liquidity emergency. Fitch considers
liquidity as satisfactory despite the absence of an RCF, which is
atypical of LBOs. However, Fitch believes that the choice not to
sign for an RCF is widely circumstantial. Once the squeeze-out
shareholding percentage is achieved, Andromeda should satisfy the
condition for the RCF grant.

SUMMARY OF FINANCIAL ADJUSTMENTS

Fitch capitalised operating leases at 8x according to the Criteria
for Rating Non-Financial Corporates.

Cash and working capital have been adjusted by deducting the
insurance-related component.

Sources of Information
The sources of information used to assess this rating were
September 2019 management accounts, annual and half-year public
accounts, a company presentation for rating agencies and a Q&A
session with management.

ESG CONSIDERATIONS

Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of 3. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or to the way in which they are being
managed by the entity.



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

ENERGO-PRO GEORGIA: Fitch Downgrades LT IDR to BB-, Outlook Stable
------------------------------------------------------------------
Fitch Ratings downgraded JSC ENERGO-PRO Georgia's Long-Term Issuer
Default Rating to 'BB-' from 'BB'. The Outlook is Stable.

The downgrade mirrors the rating action on EPG's sole shareholder,
ENERGO-PRO a.s. EPG's ratings are aligned with those of EPas,
reflecting strong ties between the two, including direct funding
from the parent. Georgia is one of three key operating countries
within the group, and was responsible for about 15% of EPas's
EBITDA in 1H19.

The ratings also incorporate EPG's standalone profile; its natural
monopoly position in electricity distribution and supply, with
regulated asset-based tariffs set by the independent regulator in
Georgia; the short track record of regulation; EPG's small size
compared with other rated CIS utilities; volatile EBITDA; and FX
exposure.

KEY RATING DRIVERS

Ratings Aligned with Parent: EPG is part of ultimately
privately-owned utilities group EPas, which also owns electricity
companies in Bulgaria and Turkey. Fitch assesses the relationship
between EPG and EPas as strong, as the latter provides all funding,
following the refinancing of the subsidiary's external debt with a
shareholder loan in 2018. Historically, EPG has also provided loans
to its shareholder, interest on which was capitalised rather than
paid. EPG set off the amount refinanced by EPas with the respective
amount of issued loans to the parent following the refinancing in
2018. There is management commonality and no significant ring-fence
around EPG.

Weak 1H19 Results: EPG's 1H19 results were negatively affected by a
19% yoy decrease of generation volumes due to weaker hydrology;
lower demand and electricity distributed volumes in Georgia;
postponement of liberalisation of high voltage (HV) customers, who
left the grid in May 2019 instead of January 2019 and for which
costs related to the supply of electricity was not fully included
in the supply tariff; the reduction of electricity market prices in
Georgia, which were affected by increased share of electricity
sales by state-owned hydro power plants (HPPs) in May-June 2019 as
well as some depreciation of the Georgian lari against the euro.
Fitch expects EPG's 2H19 EBITDA to improve following the
liberalisation of HV customers and some improvement in hydrology.

FX Risks Remain: EPG is exposed to FX fluctuation risks as all its
debt at end-1H19 was euro-denominated in contrast to local
currency-denominated revenue. However, its outstanding debt is
represented by a loan from EPas.

Large Georgian Distribution Company: EPG is one of the largest
electricity distribution companies, with a market share of about
47% of the country's consumption in 1H19. It distributes
electricity to all regions of Georgia except the capital city of
Tbilisi. EPG's credit profile is supported by the company's natural
monopoly position in electricity distribution and supply, with
regulated asset-based tariffs set by the independent regulator in
Georgia.

DERIVATION SUMMARY

EPG benefits from a more robust regulatory regime than rated CIS
peers, but it is smaller than some, such as PJSC Moscow United
Electric Grid Company (BB+/Stable). EPG is bigger than Mangistau
Regional Electricity Network Company JSC (B+/Stable) and Georgian
Water and Power LLC (BB-/Stable). The company has lower forecast
funds from operations (FFO) adjusted net leverage than Georgian
Water and Power and operates under a regulatory regime with a
longer track record and it also has better asset quality.

KEY ASSUMPTIONS

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

  - Georgian GDP to grow 4.3%-4.9% per year and CPI of 3%-3.8% per
year over 2019-2022

  - Distribution tariffs in 2018-2020 as approved by the regulator

  - Capex of about GEL77 million on average over 2019-2022

RATING SENSITIVITIES

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

  - Positive rating action on the parent, EPas, provided links are
unchanged

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

  - Negative rating action on the parent, EPas, provided links are
unchanged

LIQUIDITY AND DEBT STRUCTURE

Liquidity Managed Within Group: At end-1H19 EPG's cash was GEL26
million, which is sufficient to cover short-term debt of GEL9
million. Fitch expects free cash flow to be negative in 2019, which
may need funding. All outstanding debt was represented by loans
from EPas and therefore the repayment schedule may be revised in
case of need.

SUMMARY OF FINANCIAL ADJUSTMENTS

  - A multiple of 6x was applied to operational leases to create a
debt-like obligation

  - Other income, inventory obsolescence expenses and write-offs
are excluded from EBITDA calculations

ESG CONSIDERATIONS

Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of 3. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or to the way in which they are being
managed by the entity.

EPG has an ESG Relevance Score of 4 for Governance structure, as
EPG is a part of EPas, which is ints turn is part of larger DK
Holding Investments s.r.o. (DK Holding) which is ultimately owned
by one individual. Key person risk from this dominant shareholder
is a rating constrain.

EPG has an ESG Relevance Score of 5 for Group structure, as its
ratings are aligned with EPas, which has issued guarantees in favor
of its sister companies within DK Holding group which have a
material impact on EPas' credit ratios.



=============
G E R M A N Y
=============

ALPHA GROUP: Fitch Affirms 'B' LT IDR, Alters Outlook to Negative
-----------------------------------------------------------------
Fitch Ratings revised Alpha Group Sarl's Outlook to Negative from
Stable, while affirming the lodging group's Long-Term Issuer
Default Rating at 'B'.

Alpha Group is the top entity in a restricted group that owns A&O,
the Germany-based hostel operator with a network of leased and
owned properties in major European cities catering to the need of
young travellers.

The Outlook change to Negative reflects Fitch's estimates of
volatile free cash flows (FCF) and elevated leverage in 2019 and
2020. This deviates from the deleveraging path Fitch had expected,
with the company now behind schedule in completing its facilities'
re-design, while extending its asset network outside its home
market.

The rating is constrained by A&O's limited scale of operations,
aggressive LBO-style leverage and high execution risks as the
company continues to invest heavily in renovation of its existing
properties and new locations abroad.

KEY RATING DRIVERS

Challenged but Resilient Business Model: A&O's resilient business
model comprising a network of hostels and ultra-low cost hotels,
both in Germany and in neighbouring countries, benefits from a
well-entrenched market position in less cyclical youth-value travel
and low operating costs. Recent re-branding and facilities
renovation aimed at standardising the estate and product portfolio
and attracting more customers have shown a positive traction
against 2018 but which remained below its previous expectations.

Earnings Below Expectation, FY20 Acceleration: Delays of planned
openings and higher than expected overheads and one-offs have also
impacted estimated 2019 EBITDA (EUR41 million) and margin (28%),
which although adequate for the sector, would fall below its
previously expected EUR45 million and 30%. For 2020, Fitch
anticipates a further acceleration of earnings and profitability
growth to EUR46 million (29% margin), supported by the recent
business re-branding and addition of new assets, which should help
FCF to break-even.

Negative FCF to Break Even by 2021: Since completion of the buyout
in early 2018, A&O has demonstrated deeply negative FCF burdened by
slower organic performance, business restructuring and ramp-up
costs in connection with new openings, as well as increased
investments associated with the network expansion. As the company
has nearly completed the re-design of its facilities, Fitch
forecasts a stronger underlying organic performance in 2020.
However, residual risks stemming from potential delays or cost
overruns associated with new opening scheduled for next year may
hold back EBITDA growth, while elevated capex to support the
expanding estate, would absorb nearly all internally generated
cash. Consequently, Fitch sees 2020 as the pivotal year in reaching
FCF break even.

New Openings Mature from 2021: For 2021, Fitch expects a further
consolidation of A&O's mature operations along with growing
operational contribution from next year's openings, and materially
reduced capex levels. This will coincide with projected FCF of
around EUR20 million, translating into a 10% FCF margin. This
scenario supports its medium-term view of the 'B' IDR. Failure to
accelerate performance of mature operations and activate new sites
by end-2020 to attain EBITDA in excess of EUR45 million and to
break even on FCF basis would lead to a downgrade to 'B-' within
the next 18 to 24 months.

EBITDA to Drive Deleveraging: Subdued organic performance was the
main factor behind its high post-buyout FFO-adjusted gross leverage
of 10.8x in 2018. Although it is estimated to fall markedly to 8.5x
by end-2019, it is still high for a 'B' rating. With EBITDA
normalising toward EUR45 million in 2020 and gradually growing to
EUR50 million in 2021, Fitch projects FFO-adjusted gross leverage
to decline to towards 7.5x and 7.0x, respectively. This is in line
with its initial expectations since Fitch started rating coverage
in December 2017. Demonstration of a clear deleveraging path to
these levels will be key to revising the Outlook to Stable.

Dependence on German Market: A&O's predominant exposure to Germany
offers a stable operating environment with a positive structural
growth outlook. However, it also leads to a dependence on a single
market with concentration risks. A&O has steadily grown in Germany
from its initial location in Berlin to one of the largest hostel
chains in Europe. The German market benefits from a stable, albeit
low, growth macro-economic environment, a low hotel/visitor ratio
and structural support from a large number of school groups (main
A&O's target) traveling within Germany. However, despite certain
brand awareness, A&O remains dependent on inner German travellers
and online travel agents (OTAs) to attract new clients.

Growth Entails Execution Risk: While A&O has developed a strong
German network, it may be approaching a point of saturation in the
market as demonstrated by the new openings it has made outside
Germany. Although expansion in new countries carries a higher
execution risk, the moderate pace of growth should allow management
to gauge the speed of expansion relative to that of internal cash
generation, and avoid the risk of FCF dilution as considerable
investment cash outflows outpace the operating contribution from
new locations.

Operations Backed by Adaptable Properties: A&O's property
development strategy has involved either purchasing or leasing
properties in need of renovation and locations with convenient
transportation to downtown in cities with above one million
overnight stays per annum. A&O has been able to affordably renovate
these properties through flexible use of space rather than
demolishing the building and constructing a new build like many
budget hotels. This has allowed A&O to lower costs and achieve
favourable lease terms. However, it remains at risk of not being
able to secure new affordable properties, particularly in popular
tourist destinations outside Germany, leading to both higher
operating costs and operating leverage, and making the business
model potentially less flexible in a downturn.

Strong Demand for Budget European Accommodations: Europe is
under-penetrated in value-oriented travel accommodation,
particularly for large groups. By taking a price-leadership
position while offering amenities such as en-suite showers, in-room
TV, gaming rooms, lockers or bar service that appeal to student and
non-student travellers, A&O has the potential to capitalise on
supportive market trends and grow into a Europe wide brand.
However, the discount travel accommodation market is also highly
competitive with a number of low-cost hotels as well as campsites
and sharing-economy sites (such as AirBnB) that offer alternatives.
Budget hotel operators would also remain under pressure from a
slowdown of European tourism or weaker consumer confidence in
Germany.

DERIVATION SUMMARY

A&O is one of the largest hostel chains in Europe with a strong
market position in Germany where demand is underpinned by the
national policy of annual school trips, with groups contributing to
around 50% of sales. A&O has been consistently growing over the
past 10 years on the back of a carefully selected roll-out strategy
with two new assets per year and positive underlying market trends
for affordable trips and intra-Europe youth travel. However, it
still ranks significantly behind global peers such as NH Hotels SA
(B/Stable), Radisson Hospitality AB (B+/Stable) or Whitbread PLC
(BBB/Stable) in breadth of activities and number of rooms.

Its ongoing capex programme directed towards asset expansion and
enhancement will allow A&O to consolidate its position as a
reference European hostel operator. Based on the daily rates, A&O
can be considered one of the cheapest options for travellers in
contrast to other urban operators in the economy segment (Accor and
Travelodge) or midscale (NH, Radisson, Whitbread). With a 27%
EBITDA margin (2018), A&O's profitability is above that of other
players with a similar portfolio mix, but still far from
investment-grade asset-light operators like Marriott International
Inc (BBB/Stable). Its FFO-adjusted gross leverage, which Fitch
projects will remain consistently above 7.0x, is weaker, and more
in line with a 'B-' rating, which together with a much smaller
scale justifies the difference from NH Hotels' standalone credit
profile and Radisson Hospitality's rating.

KEY ASSUMPTIONS

  - Revenue recovery as a result of new hostels (3,000 new rooms),
single-digit revenue per available bed (RevPab) growth and stable
ancillary revenues.

  - EBITDA margin towards 30%, recovering from transitory
non-recurrent expenses, accompanied by a broadly stable general
costs structure from 2019.

  - Capex forecasted at around 20% of sales in 2019 and declining
to high single digit by 2021, reflecting the roll-out strategy and
new openings.

  - Low-to-single digit negative working capital outflow for the
next four years.

  - No dividend distributions.

KEY RECOVERY ASSUMPTIONS

  - The recovery analysis assumes Alpha Group would be considered
as liquidated in bankruptcy.

  - 10% administrative claim.

  - The liquidation estimate reflects Fitch's view of the hotel
properties (valued by an external third party in 2017) and other
assets that can be realised in a reorganisation and distributed to
creditors.

  - A 75% advance rate on the value of owned properties based on
third-party valuations.

These assumptions result in a recovery rate for the senior secured
debt within the 'RR2' range to allow a two-notches uplift to the
debt rating from the IDR. The waterfall analysis output percentage
on current metrics and assumptions is 89%.

RATING SENSITIVITIES

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

  - Material increase in scale in line with 'B+' rated peers'

  - FFO-adjusted gross leverage sustainably below 6.0x (2018:
10.8x)

  - FFO fixed cover charge sustainably above 2.5x (2018: 1.4x)

FCF margin above 5% (2018: -18%)

Developments That May, Individually or Collectively, Lead to a
Stable Outlook

  - Material increase in scale with EBITDA above EUR45 million

  - FFO-adjusted gross leverage at 7.5x by 2020

  - FCF margin positive by 2020

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

  - Erosion in RevPAB or significant reduction in EBITDA margins

  - FFO-adjusted gross leverage above 8.0x and failure to
deleverage below 7.5x by 2021

  - FFO fixed charge cover below 2.0x for a sustained period

  - FCF margin below 2% on a sustained basis and not improving
towards 9%

LIQUIDITY AND DEBT STRUCTURE

Adequate Liquidity: At end-2018 Alpha Group had EUR21 million of
cash in balance sheet to continue funding extraordinary capex
related to the refurbishment of existing and new rooms. A&O's
liquidity benefits from a EUR35 million revolving credit facility
fully undrawn at end-2018. The capital structure contains no
amortising debentures and has no maturities until 2025.

ESG CONSIDERATIONS

Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of 3. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or to the way in which they are being
managed by the entity.



=============
I R E L A N D
=============

ARMADA EURO IV: Fitch Assigns B-sf Rating on Class F Debt
---------------------------------------------------------
Fitch assigned Armada Euro CLO IV DAC final ratings.

RATING ACTIONS

Armada Euro CLO IV DAC

Class A;      LT AAAsf New Rating;  previously at AAA(EXP)sf

Class B;      LT AAsf New Rating;   previously at AA(EXP)sf

Class C;      LT Asf New Rating;    previously at A(EXP)sf

Class D;      LT BBB-sf New Rating; previously at BBB-(EXP)sf

Class E;      LT BB-sf New Rating;  previously at BB-(EXP)sf

Class F;      LT B-sf New Rating;   previously at B-(EXP)sf

Subordinated; LT NRsf New Rating;   previously at NR(EXP)sf

Class X;      LT AAAsf New Rating;  previously at AAA(EXP)sf

Class Z;      LT NRsf New Rating;   previously at NR(EXP)sf

TRANSACTION SUMMARY

Armada Euro CLO IV Designated Activity Company is a cash
flow-collateralised loan obligation (CLO). Net proceeds from the
issuance of the notes are used to purchase a EUR400 million
portfolio of mostly European leveraged loans and bonds. The
portfolio is actively managed by Brigade Capital Europe Management
LLP. The CLO envisages a 4.5-year reinvestment period and an
8.5-year weighted average life (WAL).

KEY RATING DRIVERS

'B' Portfolio Credit Quality: Fitch Ratings places the average
credit quality of obligors in the 'B' range. The Fitch-weighted
average rating factor (WARF) of the indicative portfolio is 32.9.

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 indicative portfolio is 67.6%.

Diversified Asset Portfolio: The transaction contains covenants
that limit the top 10 obligors (15% and 23%), and fixed-rateassets
(0%, 5% and 10%), depending on the matrix point chosen by the asset
manager. This ensures that the asset portfolio will not be exposed
to excessive concentration.

Portfolio Management: The transaction is governed by collateral
quality and portfolio profile tests, which limit potential adverse
selection by the manager. 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.

Interest Rate Cap: The transaction includes a seven-year, EUR15
million interest-rate cap with a 2% strike rate. This partially
mitigates the mismatch between the up to 10% in fixed-rate assets
allowable and 0% fixed-rate liabilities in the transaction.

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

RATING SENSITIVITIES

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

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

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

BOSPHORUS CLO V: Fitch Assigns B-sf Rating to Class F Debt
----------------------------------------------------------
Fitch Ratings assigned Bosphorus CLO V DAC final ratings, as
follows

RATING ACTIONS

BOSPHORUS CLO V DAC

Class A-1;  LT AAAsf New Rating;  previously at AAA(EXP)sf

Class A-2;  LT AAAsf New Rating;  previously at AAA(EXP)sf

Class B-1;  LT AAsf New Rating;   previously at AA(EXP)sf

Class B-2;  LT AAsf New Rating;   previously at AA(EXP)sf

Class C;    LT A+sf New Rating;   previously at A+(EXP)sf

Class D;    LT BBB-sf New Rating; previously at BBB-(EXP)sf

Class E;    LT BB-sf New Rating;  previously at BB-(EXP)sf

Class F;    LT B-sf New Rating;   previously at B-(EXP)sf

Sub. Notes; LT NRsf New Rating;   previously at NR(EXP)sf

Class X;    LT AAAsf New Rating;  previously at AAA(EXP)sf

Class Z;    LT NRsf New Rating;

TRANSACTION SUMMARY

Bosphorus CLO V DAC is a cash flow CLO of mainly European senior
secured obligations. Net proceeds from the issuance have been used
to fund a portfolio with a target par of EUR350 million. The
portfolio will be managed by Commerzbank AG. The CLO envisages a
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' category. The weighted average
rating factor (WARF) of the identified portfolio calculated by
Fitch is 32.9, below the indicative maximum covenant of 33.5%.

High Recovery Expectations: At least 90% of the portfolio comprises
senior secured obligations. Recovery prospects for these assets are
typically more favourable than for second-lien, unsecured and
mezzanine assets. The weighted average recovery rating (WARR) of
the identified portfolio calculated by Fitch is 66.13%, above the
minimum indicative covenant of 62.8%.

Diversified Asset Portfolio: The covenanted maximum exposure to the
top 10 obligors for assigning final ratings is 20% of the portfolio
balance. The transaction will feature different matrices with
different allowances for percentage of fixed-rate assets. The
transaction also includes various concentration limits, including
the maximum exposure to the three largest (Fitch-defined)
industries in the portfolio at 40%. These covenants ensure that the
asset portfolio will not be exposed to excessive concentration.

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

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

Marginal Model Failure for Class F: The class F notes present a
marginal model failure of -2.55% when analysing the stress
portfolio. However, Fitch has assigned a 'B-sf' rating to the class
F notes given that the breakeven default rate is higher than the
'CCC' hurdle rate based on the stress portfolio and higher than the
'B-' hurdle rate based of the identified portfolio. As per Fitch's
definition, a 'B' rating category indicates that material risk is
present, but a limited margin of safety remains, while a 'CCC'
category indicates that default is a real possibility. In Fitch's
view, the class F notes can sustain a robust level of defaults
combined with low recoveries.

RATING SENSITIVITIES

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

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

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



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

OFFICINE MACCAFERRI: Fitch Downgrades LT Issuer Default Rating to C
-------------------------------------------------------------------
Fitch Ratings downgraded Officine Maccaferri's Long-Term Issuer
Default Rating to 'C' and the building products company's senior
unsecured notes to 'C'/'RR5'.

The downgrade reflects the growing risk of default by Officine
Maccaferri as it has entered into a grace period following its
failure to pay its bond's coupon due in early December 2019. Fitch
views the default risk as high in the short-term based on
accelerating deterioration of the company's liquidity position,
which has been under pressure from a weak operating performance in
2019 and a delay to the parent company SECI S.p.A.'s ongoing
restructuring process. The delay has caused difficulties for
Officine Maccaferri to access external financing in 3Q19.

KEY RATING DRIVERS

High Probability of Default: Fitch understands that Officine
Maccaferri has utilised the 30-day grace period on its outstanding
EUR190 million senior notes due in 2021, following its failure to
pay the EUR5.5 million coupon due on December 1. Although the
fourth quarter is typically the strongest seasonal quarter for the
company, Fitch believes that it will experience difficulties paying
the coupon within the 30-day limit while at the same time meeting
operational liquidity requirements.

Search for New Investor Stalled: SECI is going through a formal
restructuring with the aim of refocusing its activities on its core
businesses. Fitch understands from Officine Maccaferri management
that the process was due to be finalised in early November, but has
been delayed and is now expected to be submitted to the court in
early January. This has resulted in a standstill of the search for
a new equity investor in Officine Maccaferri, which Fitch views as
critical for its existence in the short term.

Restricted Access to External Financing: SECI's delayed
restructuring process has also affected Officine Maccaferri's
ability to access external financing as it was unable to extend its
EUR20 million of factoring and cash credit lines in 3Q19. Fitch
believes that access to external financing will remain restricted
in the current and forthcoming quarters, resulting in further
pressure on the company's already constrained liquidity.

Deteriorating Operating Performance: Officine Maccaferri's sales
decreased by mid-single digits in 9M19 and the EBITDA margin
dropped to 5.8% (3Q18: 8%) on lower volumes and an unfavourable
product mix, led by lower sales of high-margin defence products in
the US. As a result Fitch forecasts funds from operations
(FFO)-adjusted gross leverage to increase to above 10x at end-2019
from 6.6x at end-2018. Fitch views such level as unsustainable,
which increases the uncertainty over the company's ability to
refinance the bond in 2021.

Accelerating Pressure on Liquidity: At end-3Q19, Officine
Maccaferri's cash position had deteriorated to EUR28 million (from
EUR56 million at end-2018), which is not sufficient to cover
short-term debt of EUR81.5 million. During the quarter, advance
payments or shorter payment terms were required by suppliers at
some key subsidiaries outside Italy, to ensure business continuity,
which negatively impacted Officine Maccaferri's cash flow.

Adding to the already high refinancing risk was also the extension
of a EUR35 million factoring facility on an uncommitted bases,
whereas previously this was the company's only committed financing.
Officine Maccaferri has communicated that its cash position in
Italy was particularly weak due to a trade-off between maximising
performance and optimising available cash in the short term.

DERIVATION SUMMARY

Officine Maccaferri holds leading positions in double-twist mesh
products and rockfall protection structures, with strong geographic
diversification for its ratings. Despite its business profile, the
company's distressed financial position places the rating in the
'CC' category in comparison with other niche and specialised
players such as L'isolante K-Flex S.p.A. (B+/Stable) and Praesidiad
Group Limited (B-/Negative).

KEY ASSUMPTIONS

RECOVERY ANALYSIS

Fitch's recovery analysis is based on a going-concern approach
reflecting Officine Maccaferri's solid market position in a
fragmented niche market that offers opportunities for
consolidation. Also, this implies a higher value than the
liquidation approach. No discount is applied to EBITDA due to it
falling to EUR36.5 million LTM-3Q19 from EUR46.8 million at
end-2018 and this is in line with the previous post-distressed
level. Fitch has used a 5x multiple to reflect the low margin and
cash generation of the business. After a deduction of 10% for
administrative claims, these assumptions result in a recovery rate
for the senior unsecured rating within the 'RR5' range to generate
a debt rating that is in line with the IDR. The waterfall analysis
output percentage on current metrics and assumptions was 17%. Fitch
assumes a structural seniority of the local credit lines (bank
overdraft and other loans) to the senior unsecured bond.

RATING SENSITIVITIES

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

  - Success in finding a new equity investor

  - Restoration of adequate liquidity

  - Evidence of a turnaround of operating performance

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

  - Failure to meet the obligations of the senior secured notes or
of suppliers

LIQUIDITY AND DEBT STRUCTURE

Minimal Liquidity: Following the company's utilisation of the grace
period to pay the coupon of EUR5.5 million due on December 1 Fitch
expects that the already eroded cash position of EUR28 million at
end-3Q19 to have deteriorated further in 4Q to an unsustainable
level. Access to credit lines has also been limited as a result of
deteriorating operating performance in combination with the delay
of SECI's restructuring.

It is its view that Officine Maccaferri will not be able to
refinance its bond without sourcing a new shareholder in the
company.

ESG CONSIDERATIONS

Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of 3. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or to the way in which they are being
managed by the entity.

SIENA MORTGAGE 07-5: Fitch Affirms Bsf Rating on Cl. C Notes
------------------------------------------------------------
Fitch Ratings affirmed all classes of notes of the Siena Mortgages
Series and revised the Outlook on the class C notes of both Siena
Mortgages 07-5 and Siena Mortgages 07-5, Series 2008 to Negative
from Stable.

RATING ACTIONS

Siena Mortgages 07-5 S.P.A

Class A IT0004304223; LT AAsf Affirmed; perviously at AAsf

Class B IT0004304231; LT AAsf Affirmed; perviously at AAsf

Class C IT0004304249; LT Bsf Affirmed;  perviously at Bsf

Siena Mortgages 09-6 S.r.l.

Class A IT0004488794; LT AAsf Affirmed; perviously at AAsf

Class B IT0004488810; LT AAsf Affirmed; perviously at AAsf

Class C IT0004488828; LT A-sf Affirmed; perviously at A-sf

Siena Mortgages 07-5 S.P.A Series 2

Class A IT0004353808; LT AAsf Affirmed;  perviously at AAsf

Class B IT0004353816; LT AA-sf Affirmed; perviously at AA-sf

Class C IT0004353824; LT Bsf Affirmed;   perviously at Bsf

TRANSACTION SUMMARY

The three prime Italian RMBS transactions were originated by Banca
Monte dei Paschi di Siena (BMPS, B/Stable) and its subsidiaries.

KEY RATING DRIVERS

Increased Credit Enhancement

Credit enhancement (CE) for the class A and B notes of all three
transactions has continued to build up, due to repayment of the
underlying portfolios and the sequential pay-down of the notes. CE
for the senior notes is above 38% (for SM07-5 and SM07-5 Series 2)
and 57% (for SM09-6). CE of the mezzanine notes exceeds 25% for all
transactions. This supports the affirmation of the senior and
mezzanine notes across the series.

In Fitch's view, the class B notes of SM07-5 are more protected
than the SM07-5 Series 2 due to a tighter cap on their coupon (3.7%
vs. 4.7%). This is reflected in the different ratings of the two
tranches despite broadly similar CE and portfolio interest-rate
features.

The class B notes of SM09-6 have broadly similar CE as the
corresponding tranche of SM07-5 Series 2, but are rated higher to
reflect the much lower mismatch between fixed-rate assets and the
floating-rate liabilities (although with a cap), thus providing
more protection to SM09-6's class B notes.

Cash Reserves Below Target

Each transaction's cash reserve is below target, ranging from 72%
(SM07-5 Series 2) to 95% (SM09-6) of its target amount. The balance
of the cash reserves has been decreasing over the last 12 months
for SM07-5 and SM07-5 Series 2, while it remained stable for
SM09-6.

The target cash reserve balances of SM07-5 and SM07-5 Series 2 are
at the floor, implying that they cannot amortise further. Fitch
understands from BMPS that the cash reserve of SM09-6 can no longer
amortise due to the irreversible breach of the cumulative default
trigger.

Although the reserves are not at their targets and can be further
drawn down to provision for new defaults, Fitch believes that their
size, after factoring in further expected drawings, is enough to
cover at least three months' senior costs and interest payments on
the rated notes, protecting against payment interruption risk on
the notes.

Limited Resilience of Class C Notes

The lack of equity in SM07-5 and SM07-5 Series 2 and the limited CE
of their class C notes provided by the available cash reserves
leave the ratings of the junior classes vulnerable to excess spread
changes. As the transactions move into their tail period, the
weighted average (WA) cost of the notes may be higher than the
yield of the portfolios, and will be higher than the payments made
by swaps to the issuers. As a result, Fitch expects payments to
those tranches to become highly reliant on cash reserve drawings.
This view is also reflected in Fitch's revision of the Outlook of
the class C notes in SM07-5 and SM07-5 Series 2 to Negative,
implying that the recent trend on cash reserve drawings may lead to
negative rating actions on these classes.  

As it approaches its tail, SM09-6 is exposed to a similar rise in
the WA cost of notes. However, the transaction features a larger
cash reserve (11% of the rated notes' balance) with a target still
equal to its original target amount, thus providing more support to
the class C notes. This explains the higher rating of SM09-6's
class C notes and its affirmation at 'A-sf'.

Residual Set-off Risk Negligible

Fitch considers deposit set-off risk as negligible in the
transactions given their long seasoning (more than 10 years) and
the average current loan balance of below EUR65,000. This is the
maximum amount that on average can be lost on each loan and would
be fully protected by the deposit guarantee scheme (which covers
individual losses up to EUR100,000). Furthermore, bonds issued by
the originator before the deals closing dates in 2008 and 2009 are
very likely to have been fully redeemed by now.

Sovereign Cap

Italian securitisations can achieve a maximum rating of 'AAsf', six
notches above Italy's Long-Term IDR (BBB/Negative). This is the
case for the class A notes in all three transactions, as well as
and also for the class B notes of SM07-5 and SM09-6. The Negative
Outlook on these tranches mirrors that on the sovereign.

RATING SENSITIVITIES

Changes to Italy's Long-Term 'BBB' IDR and the rating cap for
Italian structured finance transactions, currently 'AAsf', could
trigger rating changes to the classes rated at this level.

Credit protection for the class C notes in SM07-5 and SM07-5 Series
2 is tight (below 3%) and solely dependent on the cash reserves.
Further drawings on the reserve funds leading to lower CE may lead
to negative rating action on these tranches.

As a consequence of the reduced cash reserve in SM07-5 and SM07-5
Series 2, liquidity protection is reduced for those transactions.
Further drawings on the cash reserve funds may cause the payment
interruption risk not to be mitigated and therefore negatively
affect the ratings of the senior and mezzanine notes.

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

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



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

EDML 2019-1: Moody's Assigns Ba1 Rating to EUR4.375MM Cl. E Notes
-----------------------------------------------------------------
Moody's Investors Service assigned definitive credit ratings to the
following classes of Notes issued by EDML 2019-1 B.V.:

EUR315.0 million Class A Mortgage-Backed Notes 2019 due January
2058, Definitive Rating Assigned Aaa (sf)

EUR8.75 million Class B Mortgage-Backed Notes 2019 due January
2058, Definitive Rating Assigned Aa2 (sf)

EUR7.0 million Class C Mortgage-Backed Notes 2019 due January 2058,
Definitive Rating Assigned A1 (sf)

EUR7.0 million Class D Mortgage-Backed Notes 2019 due January 2058,
Definitive Rating Assigned Baa1 (sf)

EUR4.375 million Class E Mortgage-Backed Notes 2019 due January
2058, Definitive Rating Assigned Ba1 (sf)

Moody's has not assigned any ratings to the EUR 7.875 million Class
F Mortgage-Backed Notes 2019 due January 2058 and to the EUR 40.0
million Class RS Notes 2019 due January 2058. The Classes A to F
are mortgage backed Notes. The proceeds of the Class RS Notes will
be partially used to fund the reserve account.

The transaction represents the fifth securitisation of Dutch prime
mortgage loans backed by residential properties located in the
Netherlands originated by Elan Woninghypotheken B.V. (not rated).
The portfolio will be serviced by Quion Services B.V. (not rated)
and Intertrust Administrative Services B.V. (not rated) will act in
the role of issuer administrator.

At the definitive pool cut-off date, the portfolio consists of 630
loans with a total principal balance of EUR 198.6 million. However,
it is envisaged that on the closing date part of the proceeds of
the Notes issuance will be deposited in a separate account, and
subsequently be used prior to the first Note payment date to
finance the purchase by the issuer of additional loans. The
additional pool consists of two different sub-pools: an unfunded
part and a prefunded part. The unfunded sub-pool consists of 267
loans with a total principal balance of EUR 98.7 million as of the
definitive pool cut-off date. For the unfunded sub-pool the seller
has extended binding offers to the prospective borrowers at the
definitive pool cut-off date, but the offers have not yet been
accepted by the borrowers. If the borrowers accept these offers,
the seller is obliged to provide the loans to the borrowers on the
terms as specified in the binding offers. The prefunded sub-pool
will ramp up to an amount of EUR 52.7 million until the first
Notes' interest payment date in July 2020 with new loans that will
adhere to the loan-level and portfolio eligibility criteria. If the
applicable additional purchase conditions are satisfied, the issuer
will purchase these loans from the seller up to the amount of EUR
151.4 million leading to a total portfolio of EUR 350 million.
Moody's analysis of this transaction is based on the sub-pool
assessments and on the portfolio covenants.

RATINGS RATIONALE

The ratings of the Notes take into account, among other factors:
(i) the historical performance of the collateral; (ii) the credit
quality of the underlying mortgage loan pool; (iii) the seasoning
of the loan pool; (iv) the eligibility criteria for the additional
portfolio still to be purchased; (v) the initial credit enhancement
provided to the senior Notes by the junior Notes and the reserve
fund; and (vi) the legal and structural features of this
transaction.

  -- Expected Loss and MILAN CE Analysis

Moody's determined the MILAN Credit Enhancement ("MILAN CE") and
the portfolio's expected loss ("EL") based on the pool's credit
quality. The expected portfolio loss of 1.3% and the MILAN CE of
12% serve as input parameters for Moody's cash flow model, which is
based on a probabilistic lognormal distribution. The MILAN CE
reflects the loss Moody's expects the portfolio to suffer in the
event of a severe recession scenario.

The key drivers for the MILAN CE number, which is higher than the
Dutch Prime RMBS sector average (7.3%), are: (i) the limited
historical performance data for the originator's portfolio; (ii)
the weighted average current loan-to-market-value (LTMV) of 89.9%;
(iii) the fact that 97.8% of the pool are loans with portability
option, which refers to the possibility of the borrower to "port"
his/her mortgage loan conditions to another property; (iv) the
weighted average seasoning of 0.4 years with the maximum vintage
concentration of 74.6% in 2019; and (v) the potential drift in
asset quality following the addition of loans during the prefunding
period.

The key drivers for the portfolio expected loss, which is higher
than the Dutch Prime RMBS sector average (0.9%) and is based on
Moody's assessment of the lifetime loss expectation, are: (i) the
limited historical performance data for the originator's portfolio;
(ii) benchmarking with comparable transactions in the Dutch RMBS
market; and (iii) the current economic conditions in the
Netherlands.

  -- Operational Risk Analysis

The servicer Quion is not rated by Moody's, which introduces
operational risk into the transaction. Operational risk is
mitigated by the appointment of a back-up servicer facilitator (BNP
Paribas Securities Services, Luxembourg Branch (part of BNP
Paribas, rated Aa3/P-1)) who will assist the Issuer in appointing a
back-up servicer on the best effort basis upon termination of
servicing agreement. The documentation also contains estimation
language if the servicer report is not available due to the
servicer disruption. In addition, Intertrust acts as cash manager.

  -- Transaction structure

The transaction has the benefit of a non-amortizing reserve account
fully funded at closing. It is sized at 0.35% of the Class A to F
Notes' balance and provides credit and liquidity support to the
floating rate Notes. In addition, Class A and B Notes liquidity is
supported by the drawings under the cash advance facility
agreement. Total liquidity facility size is of 0.5% of outstanding
balance of Class A and Class B Notes. Once the Class A and Class B
Notes are redeemed in full, the cash advance facility will no
longer be available.

  -- Interest Rate Risk Analysis

99.4% of the pool balance is comprised of fixed rate mortgage loans
with different reset frequencies. The Notes pay three-month
EURIBOR, which means there is an interest mismatch in the
transaction. To mitigate the fixed-floating mismatch, the issuer
entered into swap agreement with the swap counterparty ING Bank
N.V. (Aa3/P-1/Aa3(cr)/P-1(cr)). However, this is not a typical
Dutch swap providing guaranteed excess spread in the transaction.
The issuer will pay to the swap counterparty the swap notional
amount multiplied by the swap rate plus the prepayment penalties
for fixed rate mortgage loans. In return, the Issuer will receive
the swap notional multiplied by the three-month EURIBOR rate. The
floating-rate loans are unhedged.

Moody's has taken into consideration the interest rate swap and the
unhedged basis risk arising from the floating rate loans in its
cash flow modelling.

The principal methodology used in these ratings was "Moody's
Approach to Rating RMBS Using the MILAN Framework" published in
July 2019.

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

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

Significantly different portfolio losses compared with our
expectations at closing, due to either a change in economic
conditions from our central scenario forecast or idiosyncratic
performance factors would lead to rating actions. For instance,
should economic indicators like unemployment rate, household
affordability or house price index be worse than forecasted leading
to higher defaults and loss severities that could result in a
downgrade of the ratings. Increasing counterparty risk due to a
weakening of the credit profile of a transaction counterparty could
also cause a downgrade of the ratings. Finally, unforeseen
regulatory changes or significant changes in the legal environment
may also result in changes of the ratings.

NEW VAC: Moody's Downgrades CFR to B3, Outlook Negative
-------------------------------------------------------
Moody's Investors Service downgraded to B3 from B2 the corporate
family rating and to B3-PD from B2-PD the probability of default
rating of New VAC Intermediate Holdings BV. Concurrently Moody's
downgraded to B3 from B2 the instrument ratings of VAC Germany
Holdings GmbH. The outlook on the ratings is negative.

RATINGS RATIONALE

"Moody's decision to downgrade VAC's ratings by one notch was
triggered by a steady decline in revenues during 2019, which
accelerated in Q3 and reached 11.8% to date (January to September).
In addition to the topline decline, restructuring measures and
other one-off items weigh on profitability, cash flow generation
and other key credit metrics as adjusted by Moody's resulting in a
leverage of 9.1x Debt / EBITDA as of September 2019," said Oliver
Giani, lead analyst for VAC at Moody's. "Moody's no longer expects
VAC to meet the trigger levels previously set for the B2 rating
category over the next few quarters", Mr. Giani continues. "The
softening industrial environment, which lead us to change our
industry outlook for the global manufacturing industry to negative
from stable in September, may create additional challenges for
VAC," he added.

During 2019 VAC has been hit by an adverse market environment in
several of its end markets, most notably in automotive, which
accounted for about one quarter of revenues in that period. So far,
measures taken by management to adjust the cost base, were not
sufficient to balance the resulting negative effect on
profitability and cash flow generation.

STRUCTURAL CONSIDERATIONS

The $30 million revolver is pari passu with the $225 million
first-lien term loan. Both the revolver and the term loan are rated
B3, which reflects the credit facility comprising most of the debt
in the capital structure before giving effect to the pension. VAC
Germany Holdings GmbH (the German borrower) and New VAC US LLC (the
US borrower) hold instrument ratings that are consistent with the
CFR. Under a default scenario, we expect the recovery of the credit
facility to be in line with that represented by the CFR partly
because of the guarantee from New VAC Intermediate Holdings BV.

ESG CONSIDERATIONS

We take into account the impact of ESG factors when assessing
companies' credit quality. The main environmental and social risks
are not material in case of VAC. However, the company is controlled
by private equity company Apollo Global Management, LLC, and we
expect VAC's financial policy to favour shareholders over creditors
as evidenced by its high leverage. However, in the near-term the
company foresees no dividend distribution and targets deleveraging
instead. Our understanding is that large M&A deals are not
excluded, but unlikely in the near term.

LIQUIDITY

Concerned by EUR24 million negative free cash flow during the first
nine months of 2019 and limited visibility, Moody's considers the
company's liquidity position to be just adequate. As per end of
September 2019 VAC reported a cash balance of EUR11 million and
EUR23 million availability under its $30 million (EUR 27 million)
revolving credit facility, which is subject to a springing leverage
covenant of 5.35x, to be tested if drawings exceed 35% of the
facility. While these liquidity sources, combined with projected
FFO generation, are sufficient to accommodate working capital
swings and cover forecasted capital expenditures as well as
upcoming debt maturities in the next 12 months, VAC has still some
headroom for possible underperformance. No significant debt
repayments are due until 2025 when the company's Term Loan B
matures.

OUTLOOK

The negative outlook reflects the challenge for VAC to sustainably
restore profitability towards historical level and thus to manage
key credit metrics improving to a level commensurate with the B3
rating category. This would also require the company to strengthen
the liquidity position, which currently suffers from a negative
free cash flow generation and tightening covenant headroom. While
the pipeline of new products and the contribution from the cost
reduction measures will be supportive, further headwind is expected
to come from the development of the pension liability, which
represents 45% of VAC's Moody's adjusted debt and which Moody's
expects to increase as a result of the low interest rate
environment.

WHAT COULD CHANGE THE RATING UP/DOWN

Moody's would consider a further downgrade if the company is unable
to stop the negative trend in operating performance seen in 2019
indicated by a further decline of Moody's adjusted EBITA margin
from the current level of around 8%. Likewise, a further weakening
of liquidity, negative FCF for a prolonged period of time leading
to tightened covenant headroom or failure to swiftly reduce
leverage from the current elevated level towards 7.0x debt/EBITDA
by year-end 2020 could trigger a negative rating action.

Albeit currently unlikely, Moody's would consider an upgrade action
should VAC manage to sustainably improve its adjusted EBITA margin
towards 10% (8% per September 2019), reduce its gross adjusted
debt/EBITDA below 5.75x on a sustainable basis, generate meaningful
positive FCF and maintain an adequate liquidity profile with
sufficient covenant headroom at all times.

COMPANY PROFILE

New VAC Ultimate Holdings BV is the top holding company in the
organization structure. The B3 corporate family rating (CFR) with
negative outlook is located at the guarantor of the issued debt at
New VAC Intermediate Holdings BV. This entity lies below New VAC
Ultimate Holdings BV, which in turn is the indirect parent of the
co-borrowers VAC Germany Holdings GmbH and New VAC US LLC.

The company focuses on special magnetic materials and components,
and serves key global markets, including automotive systems,
industrial automation and the medical community. Headquartered in
Hanau, Germany, the company reports in euros. The company operates
manufacturing facilities in the Americas, Europe and Asia. We
expect its total annual revenue for 2019 to be around EUR360
million.

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

OCI NV: S&P Alters Outlook to Negative & Affirms BB Long-Term ICR
-----------------------------------------------------------------
S&P Global Ratings revised the outlook on fertilizer maker OCI N.V.
to negative and affirmed its 'BB' long-term issuer credit. S&P
affirmed the 'BB' issue ratings on OCI's senior secured notes and
maintained the recovery rating at '3', with expected recovery of
55%, down from 60% previously.

Intensive turnarounds and lower market prices resulted in
significant underperformance in 2019, with adjusted FFO to debt
weakening to below 9% for the 12 months ended Sept. 30, 2019.

OCI's fertilizer sales volumes declined by 6% in the first nine
months of 2019 compared with last year, owing to extensive planned
turnarounds and the debottlenecking program across 11 nitrogen
plants in the third quarter. In addition, demand in the first
quarter was very low due to the delayed planting season in the U.S.
and Europe, which were not fully compensated by the recovery in the
second quarter. Moreover, ammonia prices declined by about 20% in
2019, due to lower natural gas prices and oversupply in the market.
Methanol prices declined by about 25% to very low levels because of
lower crude oil prices and resulting lower methanol-to-olefins
(MTO) affordability, modest methanol demand growth, combined with
strong industry operating rates, as well as low-price export from
Asia (Iran) into Europe. Despite higher volumes in the fourth
quarter, we expect adjusted EBITDA for full year 2019 (including
one quarter contribution from Fertiglobe) will decline by more than
15% from 2018. As a result, adjusted FFO to debt will remain at a
low level of 10%-12% in 2019 compared with 12.2% in 2018. This is
much lower than our previous expectation of more than 16% for 2019,
due to lower EBITDA and higher debt resulting from higher lease
liabilities and lower free operating cash flow (FOCF) generation.

S&P expects a recovery in credit ratios in 2020, supported by
higher sales volumes and improving profitability.

S&P said, "We expect higher organic sales volumes in 2020, a year
with a much lighter program of planned turnarounds than in 2019.
Profitability is likely to improve thanks to higher capacity
utilization with the largest volume increases coming from
higher-margin plants, i.e., IFCo in the U.S. and Sorfert in
Algeria, both of which have access to low-cost feedstock. We expect
generally flat market prices across various nitrogen fertilizers in
2020, supported by steady demand and limited capacity additions.
For methanol, we think there is potential for modest price recovery
in 2020 following the very low level reached in the third quarter
of 2019." However, the supply and demand balance for methanol
remains vulnerable and the price volatility will remain high.

The full-year effect of Fertiglobe's consolidation will also
contribute to the improving trend in operating performance.

The establishment of Fertiglobe, the new JV with ADNOC Fertilizers,
was completed on Sept. 30, 2019, with a full consolidation in the
group accounts starting in the fourth quarter of 2019. This will
result in the addition of 2.1 million metric tons annual urea
capacity and is expected to generate substantial synergies from the
strategic partnership. S&P said, "We expect about $200 million
EBITDA contribution from ADNOC Fertilizers on a full year basis.
Nevertheless, we see a risk that the FFO-to-debt ratio may not
recover to above 20% in 2020. In addition, we believe OCI still
needs to establish a track record of continuous improvement in
profitability, reduction in gross debt through FOCF generation, and
the successful realization of synergies through the new JV."

S&P expects OCI to continue its positive FOCF generation.

Despite a decline in EBITDA, S&P expects OCI to generate healthy
FOCF of about EUR200 million in 2019, although much lower than the
$400 million seen in 2018. This is thanks to higher earnings
generation following a significant increase in OCI's production
capacity and revenue base following the completion of the extensive
capital spending (capex) program, along with much lower expansion
capex than in 2013-2016. In addition, FOCF generation also benefits
from OCI's healthy profitability, despite heavy turnarounds, as
evidenced by 23%-25% adjusted EBITDA margin expected for 2019 due
to its access to low-cost feedstock, as well as continuous focus on
efficient working capital management. S&P said, "We expect FOCF to
strengthen to above $400 million in 2020, in line with recovery in
sales volumes and higher profitability, strong FOCF generation at
Fertiglobe, and in combination with slightly lower capex. We expect
additional capex for ADNOC Fertilizers will be more than offset by
light turnarounds and lower expansion capex after the second line
at BioMCN was completed in 2019. As a result, we expect
discretionary cash flow after dividend payments to minority
shareholder will amount to more than $150 million in 2019 and more
than $200 million in 2020, in line with the reduction in reported
net debt."

S&P expects OCI's financial policy will continue to focus on
deleveraging.

This is illustrated by the group's clearly defined aim to use its
FOCF to reduce gross debt and reach a leverage target of reported
net debt to EBITDA at about 2.0x through the cycle. During 2018,
about 55% of OCI's internally generated cash flow was used for debt
repayment (gross debt down by nearly $100 million), 25% for growth
capex, and 15% for acquiring minority shares in OCI Partners LP
(OCI Beaumont).

The recent refinancing transaction has improved the maturity
profile and covenant headroom.

In October, OCI completed a refinancing for the equivalent of about
$1.4 billion through the issuance of senior secured notes due 2024,
splitting them into a $600 million U.S. dollar tranche and a EUR700
million euro tranche. OCI used the net proceeds to repay its
existing debt, including the term loan A at OCI N.V., term loan B
at OCI Beaumont, and the drawings under OCI's revolving credit
facility (RCF). The refinancing has no impact on the group's
leverage, but has extended the maturity profile and resulted in a
reduction in the weighted average cost of debt by 90 basis points.
Moreover, financial covenants in the senior facilities agreement
were amended, leading to improved headroom in 2019.

The business risk profile reflects OCI's advanced position on the
global cost curve.

OCI enjoys a favorable position on the global cost curve in both
nitrogen fertilizers and methanol, thanks to its access to low-cost
natural gas feedstock in the U.S. and very competitive long-term
gas supply agreements in North Africa. The group's EBITDA margin
stands above the industry average and is higher than that of
European peers such as Yara and EuroChem. In addition, S&P expects
the group's profitability will benefit from the strong margins of
Fertiglobe and synergies from the strategic partnership with ADNOC,
which provides gas feedstock supply based on a competitive pricing
formula.

OCI is vulnerable to the cyclical and commoditized nitrogen
fertilizer and methanol industry, which has high price volatility.

A main constraint for the business risk is the inherent cyclical
nature of the commoditized nitrogen fertilizer and methanol
industry, with high volatility in raw materials costs and selling
prices, although we note that fertilizer and methanol have
different economic cycles. The fertilizer business also experiences
high seasonality in earnings and cash flow generation.

S&P said, "The outlook is negative because we could lower the
rating if adjusted FFO to debt remains below 16% in the next 12
months.

"We could lower the rating if the improvement in operating
performance and the subsequent deleveraging were below our
expectations, such that adjusted FFO to debt remained below 16% in
2020. This could follow a weaker-than-expected contribution from
Fertiglobe, combined with declining market conditions, or lower
plant efficiency because of unexpected operational issues. In
addition, negative FOCF, or a less supportive financial policy than
we expected would also result in downward pressure on the rating.

"We could stabilize the outlook if OCI built a track-record of
continuous improvement in profitability, reduction in gross debt
through FOCF generation, and the realization of synergies through
the successful integration of Fertiglobe, such that adjusted FFO to
debt improved to above 20% in 2020."




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

LENTA LIMITED: Moody's Affirms Ba3 CFR, Outlook Still Stable
------------------------------------------------------------
Moody's Investors Service affirmed the Ba3 corporate family rating
and the Ba3-PD probability of default rating of Lenta Limited, the
fourth largest food retailer in Russia. The outlook remains stable.


RATINGS RATIONALE

The affirmation of the ratings reflects Lenta's healthy operating
performance and solid credit metrics despite weak consumer
environment and growing competition in Russia's food retail market.
The rating action also reflects Moody's expectation that the
company will pursue it's prudent financial policy and currently
cautious development strategy, following the change in it's
shareholder structure in 2019.

Lenta is likely to sustain its solid profitability, measured as
Moody's adjusted EBITDA margin, at 10.0% in 2019-21, compared with
10.3% in 2018 and 11.1% in 2017, due to its viable
low-price/low-cost business model and focus on operating
efficiency. Although the company's revenue doubled between 2014 and
2018, it intends to focus on retaining profitability and positive
cash generation going forward rather than maintaining the same pace
of expansion amid the challenging market conditions, especially in
the hypermarket segment. As a result, its revenue growth will slow
down to 2%-4% in 2019-21 from 13% in 2018 and 19% in 2017.

The rating action also reflects Lenta's relatively stable credit
metrics, with Moody's adjusted net debt/EBITDA of around 3.2x and
EBIT/interest expense of 2.1x over the last two years. However, the
company's gross leverage soared to 4.7x as of June 30, 2019 from
3.5x a year earlier because of a RUB62 billion increase in
borrowings over the same period, although the proceeds have so far
been held in cash on its balance sheet. Moody's expects Lenta to
use most of its accumulated cash, which amounted to RUB71 billion
as of June 30, 2019, for debt repayments over the next 12 months,
reducing its gross leverage to 4.3x by the end of 2019 and 3.3x by
the end of 2020. Net leverage is likely to fall below 3.0x over the
same period thanks to relatively stable EBITDA of around RUB43
billion-RUB44 billion and positive cash generation on the back of
reduced capital spending in 2019-20.

The affirmation takes into account Moody's expectation that Lenta's
financial policy and development strategy will remain balanced
under the new controlling shareholder Severgroup LLC, a Russian
businessman Alexey Mordashov's private investment company which
built up a 79% stake in Lenta in the second quarter of 2019.
Moody's views Severgroup as a long-term strategic investor, which
focuses on sustainable management and development of businesses in
its priority sectors, including retail. However, the lack of a
clearly articulated updated financial policy, including leverage
and shareholder distributions targets, and future strategy results
in some uncertainty over evolution of the company's credit profile.
A material change in Lenta's policies beyond the current
expectation may prompt the rating agency to reassess the company's
rating positioning.

The challenging Russian food retail market, with sluggish growth of
around 1%-2%, fierce competition in the most attractive regions and
a high share of promotional activities in grocers' sales, hinders
material improvements in the company's credit quality. In addition,
the hypermarket format has become less attractive for customers and
has underperformed to smaller formats because consumers have turned
to be more time and convenience sensitive, opting to shop at local
supermarkets and convenience stores.

Lenta's Ba3 rating also factors in its strong market position as
the number four Russian grocer, effective management team, and
healthy liquidity supported by established access to bank and
capital markets funding. At the same time, the rating reflects
Lenta's small size compared with its international and some
domestic peers, and the lack of geographical diversification, with
its sole exposure to Russia.

RATIONALE FOR THE STABLE OUTLOOK

The stable outlook reflects the company's currently comfortable
positioning in the rating category and Moody's expectations that
Lenta will continue to maintain its high operating efficiency and
solid credit metrics.

WHAT COULD CHANGE THE RATING UP/DOWN

Moody's could upgrade the rating if the company was to (1) sustain
solid operational performance, with no deterioration in
profitability, (2) improve its Moody's-adjusted gross debt/EBITDA
below 3.5x on a sustainable basis, (3) maintain strong liquidity,
and (4) pursue its prudent financial policy. The upgrade would also
require an announcement of Lenta's new strategy and financial
polices under the new controlling shareholder.

Moody's could downgrade the rating if the company's (1)
Moody's-adjusted gross debt/EBITDA was to rise above 4.5x on a
sustained basis due to weaker operating performance or a change in
its financial policies and strategy, and (2) liquidity was to
deteriorate.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) CONSIDERATIONS

Lenta's rating factors in environmental, social and governance
considerations, in particular its moderate exposure to social
risks, arising from changing consumer behaviours. To address
possible fundamental shifts in the industry, the company is
diversifying into supermarket format, developing IT and big data
capabilities and exploring online shopping options. The rating also
incorporates Lenta's concentrated ownership structure, with 79% of
its shares owned by Severgroup, which creates the risk of rapid
changes in the company's strategy and development plans, revisions
to its financial policy and an increase in shareholder payouts that
could weaken the company's credit quality. The risk is partially
mitigated by the presence of three independent members in the
company's board of directors. In addition, as a listed company
Lenta complies with standard corporate governance procedures and
information disclosure requirements.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Retail Industry
published in May 2018.

Headquartered in Saint Petersburg, Lenta Limited is Russia's
fourth-largest food retailer by revenue, operating a chain of
hypermarkets and supermarkets. As of September 30, 2019, the
company operated 375 stores (1,471,647 square metres of selling
space, including 246 hypermarkets and 129 supermarkets) in 88
Russian cities and 12 distribution centres. For the 12 months ended
June 30, 2019, the company generated sales of RUB419.6 billion
($6.4 billion) and Moody's adjusted EBITDA of RUB43.1 billion ($0.7
billion).

METKOMBANK: Moody's Affirms B2 LT Deposit Ratings, Outlook Stable
-----------------------------------------------------------------
Moody's Investors Service affirmed B2 long-term local and
foreign-currency deposit ratings of Metkombank with a stable
outlook. Concurrently, Moody's affirmed the bank's b2 Baseline
Credit Assessment and Adjusted BCA, its B1(cr) long-term
Counterparty Risk Assessment and B1 long-term local and
foreign-currency Counterparty Risk Ratings. The bank's Not Prime
short-term deposit ratings and CRRs, and its Not Prime(cr)
short-term CRA were also affirmed.

RATINGS RATIONALE

The affirmation of Metkombank's ratings reflects the bank's solid
capital adequacy, which provides a buffer for absorbing potential
losses, as well as ample liquidity cushion. These strengths are
balanced against the bank's exposure to market risk, which renders
profitability volatile, concentrated and volatile deposit base, and
narrow customer franchise reliant on the shareholders' connections,
which entail low business diversification and key-man risk.

Metkombank's net loan book comprised a relatively small 29% share
of its total assets with 14.7% problem loans fully covered by
reserves as of September 30, 2019. The bank's problem loans mainly
represent legacy portfolio of consolidated Econombank, which has
been under financial rehabilitation since 2015. At the same time,
the bank bears significant market risk with fixed income securities
and equity portfolio accounting for 37% and 7% of total assets,
respectively, as of September 30, 2019.

Given a high share of securities, Metkombank's profitability is
volatile. The bank's return on assets declined to 0.5% within three
quarters 2019 from 1.2% at end 2018, mainly driven by increased
asset base and negative results from securities trading operations
and revalutaion. While the bank's net interest margin is under
pressure from lowering interest rates, its recurring revenues are
underpinned by fees and commissions income from electronic
guarantees business.

Metkombank has strong capital adequacy with Moody's tangible common
equity to risk-weighted assets ratio of 19.2% as of September 30,
2019, providing a buffer against potential unexpected losses.
Moody's expects the bank's capital to remain strong in the next
12-18 months, however it may be negatively impacted by revaluations
due to market risk stemming from high investments in equities and
non-core banking assets, which stood at 33% and 22% of
shareholder's capital as of September 30, 2019.

Metkombank's customer deposits decreased by 10% within three
quarters 2019 mainly driven by volatility in shareholders'
deposits. This was compensated by increased market funds
represented by interbank repo transactions. As a results, market
funds to tangible assets ratio increased to 30.5% as of September
30, 2019 from 11% at end 2018. Bank's solid liquidity cushion
(excluding pledged securities) at 40% of total assets partially
mitigates risks stemming from the deposits' volatility and
concentrations.

In Moody's view, Metkombank's business is to a large extend reliant
on shareholders' connections, which renders the bank highly exposed
to key-man risk, weakening its corporate governance. In addition,
the bank's business model entails narrow customer franchise with
high single-name concentrations: top 20 borrowers comprised 56% of
gross credit exposure (including off-balance sheet guarantees) and
top 20 depositors accounted for 44% of customer deposits as of June
30, 2019, which is higher that Russian banks' average. These
factors result in Moody's two-notches downward BCA adjustments for
Corporate Behaviour and Business Diversification.

OUTLOOK

Stable outlook on Metkombank's long-term deposit ratings reflects
our expectations that the bank will maintain its financial metrics
in the next 12-18 months.

WHAT COULD MOVE THE RATINGS UP/DOWN

Metkombank's ratings could be upgraded if the bank materially
improves its business diversification away from currently narrow
customer base, decreased market risk, displays good asset quality
and robust profitability.

Negative pressure on Metkombank's ratings could arise as a result
of a material deterioration in its capital position and/or
significant deposits outflow and shortage of liquidity.

LIST OF AFFECTED RATINGS

Issuer: Metkombank

Affirmations:

Adjusted Baseline Credit Assessment, Affirmed b2

Baseline Credit Assessment, Affirmed b2

Long-term Counterparty Risk Assessment, Affirmed B1(cr)

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

Long-term Counterparty Risk Ratings, Affirmed B1

Short-term Counterparty Risk Ratings, Affirmed NP

Long-term Bank Deposit Ratings, Affirmed B2 Stable

Short-term Bank Deposit Ratings, Affirmed NP

Outlook Action:

Outlook, Remains Stable

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Banks
Methodology published in November 2019.

NATIONAL RESERVE: Moody's Upgrades Deposit Ratings to B2
--------------------------------------------------------
Moody's Investors Service upgraded long-term local and foreign
currency deposit ratings of National Reserve Bank to B2 from B3 and
changed the outlook on these ratings to positive from stable.
Concurrently, Moody's affirmed the bank's baseline credit
assessment of b3 and upgraded its Adjusted BCA to b2 from b3. The
bank's long-term local and foreign currency Counterparty Risk
Ratings were upgraded to B1 from B2, and its long-term Counterparty
Risk Assessment (CR Assessment) was upgraded to B1(cr) from B2(cr).
The bank's Not Prime short-term local and foreign currency deposit
ratings, Not Prime short-term local and foreign currency CRRs and
Not Prime(cr) short-term CR Assessment were affirmed.

The rating action follows the official disclosure made by NRB on
December 9, 2019 that State Transport Leasing Company PJSC (State
Transport Leasing Company, rated Ba1 on corporate family rating
with stable outlook) and Eurasian Development Bank (Baa1 long-term
issuer rating with stable outlook) had acquired, respectively,
78.19% and 18.68% stakes in NRB.

RATINGS RATIONALE

AFFIRMATION OF THE BCA

The affirmation of NRB's BCA at b3 reflects the bank's low business
diversification and the lack of clarity over its future business
strategy. With RUB11.2 billion total assets reported as of
September 30, 2019 under IFRS, the bank ranks 182nd in Russia. Its
business volumes are currently limited to a small number of loans
and investments, and its business expansion prospects are yet to be
determined. Moody's understands that the bank's strategy will
undergo a significant revision following the entrance of the new
shareholders, but the developing and refining the new business
model aligned with those of its new shareholders and acquiring new
expertise may prove a challenging and lengthy task.

NRB's b3 BCA is underpinned by the bank's superior capital adequacy
and liquidity metrics, largely a result of its substantial
deleveraging over the several consecutive years. These financial
strengths are offset by NRB's weak asset quality and loss-making
performance to date, which until now has been eating into the bank'
capital base. Moody's expects that the new shareholders will
implement a set of measures to clean-up NRB's balance sheet and
improve its performance through generating new business volumes.
However, this process may take 12 to 18 months for the visible
results to materialise.

UPGRADE OF THE ADJUSTED BCA AND DEPOSIT RATINGS

The upgrade of NRB's long-term deposit ratings to B2 from B3, and
the concurrent upgrade of its adjusted BCA to b2 from b3, reflects
Moody's assumption of a moderate affiliate support to NRB from its
new controlling shareholder State Transport Leasing Company. This
assumption hinges on: (1) the ownership by the State Transport
Leasing Company of a material 78.19% share of NRB's shareholder
capital; (2) the State Transport Leasing Company's oversight over
NRB's strategy and business model executed by the shareholder
through its majority vote in the bank's Board and Directors; and
(3) NRB's potential strategic fit into State Transport Leasing
Company's core business, though this factor needs to be more
clearly demonstrated over the next 12 to 18 months, as NRB's
business activities adjust to those of its new controlling
shareholder.

POSITIVE OUTLOOK

NRB's long-term deposit ratings carry a positive outlook,
reflecting Moody's expectation that the bank's asset quality and
financial performance will likely improve over time, as the new
shareholder will, over time, bring in new business volumes making
NRB's business model more diversified and sustainable.

WHAT COULD CHANGE THE RATING -- UP

An intensification of NRB's business activities and improvement of
its recurring earning generation, if coupled with prudent and
disciplined risk taking, may, over the next 12 to 18 months,
translate into an upgrade of the bank's BCA and deposit ratings.

Another factor which may lead to ratings upgrade is a greater
strategic fit of NRB to its controlling shareholder which would
enable Moody's to increase its affiliate support assumptions for
the bank.

WHAT COULD CHANGE THE RATING - DOWN

NRB's ratings may be downgraded, or the positive outlook on the
deposit ratings may be revised back to stable, if the bank's
loss-making performance protracts beyond the 12 months period,
leading to a further gradual capital erosion.

Furthermore, any signs of a diminished support from State Transport
Leasing Company to NRB, such as an announcement of a partial or
full divestment from the bank, could result in the downgrade of the
bank's deposit ratings.

LIST OF AFFECTED RATINGS

Issuer: National Reserve Bank

Upgrades:

Adjusted Baseline Credit Assessment, Upgraded to b2 from b3

Long-term Counterparty Risk Assessment, Upgraded to B1(cr) from
B2(cr)

Long-term Counterparty Risk Ratings, Upgraded to B1 from B2

Long-term Bank Deposit Ratings, Upgraded to B2 from B3, Outlook
Changed to Positive from Stable

Affirmations:

Baseline Credit Assessment, Affirmed b3

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

Short-term Counterparty Risk Ratings, Affirmed NP

Short-term Bank Deposit Ratings, Affirmed NP

Outlook Action:

Outlook Changed to Positive from Stable

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Banks
Methodology published in November 2019.

UZBEKISTAN: S&P Affirms 'BB-/B' Sovereign Credit Ratings
--------------------------------------------------------
On Dec. 13, 2019, S&P Global Ratings affirmed its 'BB-' long-term
and 'B' short-term foreign and local currency sovereign credit
ratings on Uzbekistan. The outlook is stable.

Outlook

S&P said, "The stable outlook reflects our expectation that, over
the next year, Uzbekistan's fiscal and external positions will
remain strong but decline slightly, because of current account
deficits and government borrowing.

"Although unlikely over the next year, we could raise the ratings
if Uzbekistan's increased integration with the global economy and
government reforms of state-owned enterprises (SOEs) result in
increased growth potential and resiliency for the economy. Further
diversification of the government's revenue base or the composition
of exports would also be supportive of the ratings.

"We could lower the ratings over the next year if Uzbekistan's
integration with the global economy were to result in a significant
deterioration in the fiscal and external balance sheets. This could
happen if imports remain elevated and current account deficits
continue to be funded by debt-creating flows and asset drawdowns.
We could also lower the ratings if we observed increasing weakness
in key SOEs, leading to growing contingent liabilities for the
government."

Rationale

Uzbekistan has embarked on a rapid process of economic
modernization and integration with the rest of the world, utilizing
its strong external and fiscal positions in the process. S&P
expects both positions to weaken over our forecast horizon through
2022, but to remain relatively strong in a global context.

S&P said, "Our ratings on Uzbekistan are supported by the economy's
external creditor position and the government's low debt burden.
These strengths predominately arise from the government's asset
position, which stems from the policy of transferring some revenue
from commodity sales to the Uzbekistan Fund for Reconstruction and
Development (UFRD).

"Our ratings are constrained by Uzbekistan's low economic wealth,
as measured by GDP per capita. In our view, future policy responses
may be difficult to predict, given the highly centralized
decision-making process and the relatively less developed
accountability and checks and balances between institutions. Our
ratings are also constrained by low monetary policy flexibility."

Institutional and economic profile: Broad-based policy reforms have
improved institutions and opened up the economy, although from a
low base.

-- Banking sector reform is the next major agenda item after
authorities began a process of economic reforms in 2017 aimed at
modernizing the economy, but challenges--such as SOE sector reforms
and increasing foreign direct investment--remain.

-- The authorities continue to progress with institutional reforms
and, although we expect improvements in governance, S&P thinks
decision-making will remain centralized.

-- GDP per capita remains low, at an estimated US$1,700 in 2019;
however, S&P expects real GDP growth will remain relatively strong,
averaging just over 5% during its forecast period to 2022.

The government initiated comprehensive banking sector reforms in
October 2019, with the signing of a presidential decree. The
reforms aim to help banks operate in a more commercially focused
manner. Over US$4 billion in loans originally granted by UFRD to be
lent to SOEs, are to be returned to the UFRD. In addition, about
US$1.5 billion in loans, also originally lent by the UFRD, are
expected to be granted to banks to convert into equity to improve
capitalization in the system. Along with these balance sheet
changes, the government plans to introduce regulations to reduce
subsidized lending and encourage lending in the local currency.

S&P said, "In addition, we expect credit growth to slow as the
investment needs of the economy are met. In 2018, credit to the
economy expanded by about 50%, well above nominal GDP growth.
Although we still expect elevated credit growth because of the
large investment needs of the economy, we do not expect levels
similar to those seen in 2018."

Reforms to the banking sector come after a series of broad-based
policy reforms, including attempts to increase the independence of
the judiciary, remove restrictions on free expression, and increase
the government's accountability to its citizens. Changes have also
included the implementation of an anti-corruption law, an increase
in transparency regarding economic data, and the liberalization of
trade and foreign exchange regimes. Reforms in the SOE sector are
ongoing, with the notable recent creation of the Ministry of
Energy, which will have regulatory purview over the oil, gas, and
electricity sectors.

Notwithstanding the positive trend in strengthening institutions,
in our view, Uzbekistan is starting from a low base. S&P believes
that decision-making will remain highly centralized in the hands of
the president, making future policy responses more difficult to
predict. S&P believes that checks and balances between institutions
remain weak. In addition, uncertainty over any future succession
remains, despite the relatively smooth transfer of power to
President Mirziyoyev.

Over S&P's forecast period through 2022, we expect real GDP growth
to average just over 5%, supported by growth in the services,
manufacturing, and natural resources sectors. The construction
sector is a small but growing part of GDP. The economy has been
government led for many years, and is still dependent on SOEs,
which contribute a large share of GDP.

Nevertheless, successful reforms of the SOE sectors, including
modernizing their operations and bringing them to cost recovery
levels, could lead to increased growth potential for Uzbekistan.
The country has a significant endowment of natural resources,
including large reserves of diverse commodities, the export of
which has supported past current account surpluses. Globally, the
country is one of the top 20 producers of natural gas, gold,
copper, and uranium.

Attracting foreign direct investment (FDI) is a priority for the
government. Currently, FDI inflows are low and concentrated in the
extractive industries, particularly natural gas. S&P notes that FDI
increased in the first half of 2019 to about US$1.9 billion from
about US$1 billion in the first half of 2018. If government reforms
attract more FDI, this would reduce the debt-financing of the
current account balance and help to preserve the government's large
external asset position.

Uzbekistan's population is young, with almost 90% at or below
working age, which presents an opportunity for labor supply-led
growth. However, it will remain a challenge for job growth to match
demand. Despite steady growth, GDP per capita remains low, at about
US$1,700 at year-end 2019.

Flexibility and performance profile: Banking sector reform should
reduce dollarization in the economy.

-- S&P expects dollarization to decrease below 50% by year-end
2019 and gradually decline, improving monetary policy
effectiveness, as price stability and confidence in the currency
increases.

-- S&P expect the current account to remain in deficit averaging
about 5.5% of GDP over the forecast period to meet the consumption
and investment demands of the more outward-facing economy.

-- The government's net debt burden will remain low despite
ongoing fiscal deficits, averaging about 5% of GDP over the
forecast period.

S&P said, "We now expect dollarization of loans in the banking
system to fall below 50% because of banking sector reforms. Besides
the removal of US$4 billion in dollar-denominated loans, the
conversion of US$1.5 billion to loans in local currency and
increases in retail and commercial lending in local currency should
keep dollarization on a declining trend. Deposit dollarization is
already below 50% and we expect local currency deposit growth to
outpace foreign currency deposit growth. In our view, declining
dollarization should help improve the effectiveness of monetary
policy transmission mechanisms. However, our assessment of monetary
policy is still constrained by high inflation. Positively, the
central bank is moving toward inflation targeting, but we expect
this transition will take a few years.

"Although the effects of the September 2017 currency devaluation
have mostly worked through the economy, we expect inflation to
remain above 10% over our forecast period and to average 15% over
2019. More open trade policies have allowed domestic prices to move
toward regional and international prices, putting inflationary
pressure on domestic goods. Growth in public sector wages and the
liberalization of regulated prices should also add to inflationary
pressure over the forecast period. We note that in September 2018,
in response to these inflationary pressures, the central bank
raised its refinancing rate to 16%."

One of the most significant economic reforms that Uzbekistan has
made was the liberalization of the exchange rate regime in
September 2017 to a managed float, from a crawling peg, which was
over-valued in comparison with the black market rate. Although S&P
believes the central bank initially intervened heavily in the
foreign exchange market, it now only intervenes intermittently to
smooth volatility. The relatively short track-record of the float
constrains S&P's assessment of monetary flexibility, as does its
perception of the potential for political interference in the
central bank's decision-making.

The current account deficit opened up in 2018, with a deficit of
about 7% of GDP. This was the result of increased capital goods
imports and wider statistical coverage of previously informal
sectors of the economy. S&P expects the current account balance to
average a deficit of about 5.5% of GDP over its forecast period to
fulfill the economy's need for the capital goods and high
technology goods it requires to modernize. Additionally, consumer
goods imports should remain elevated, given the increased ease of
trade.

Better trade relations with neighbors should boost Uzbekistan's
exports, especially of agricultural goods. Tourism is a growing
component of exports, as well. However, exports remain heavily
dependent on commodities, with gold, other metals, and natural gas
making up approximately 50%. Remittances and income from abroad are
an important component of Uzbekistan's current account, given the
large number of Uzbeks working abroad, particularly in Russia.

S&P said, "Current account deficits will mostly be financed with
debt, but we expect FDI to grow over our forecast period. In our
view, the economy's external balance sheet will remain strong.
Uzbekistan is in a net external asset position, even when only
considering liquid public and financial sector external assets. We
estimate our measure of external liquidity (gross external
financing needs to current account receipts, plus usable reserves)
to be relatively strong at 87%, because of the long-dated nature of
the economy's external debt and the high level of reserves.

"We include in our estimate of the central bank's reserve assets
its significant holdings of monetary gold. The central bank is the
sole purchaser of gold mined in Uzbekistan. It purchases the gold
with local currency then sells dollars in the local market to
offset the increase in reserves from the gold. We do not include
UFRD assets in the central bank's reserve assets; but instead
consider them government external assets, because we view them as
fiscal reserves.

"We expect the government's fiscal balance to remain in a deficit
of about 2% of GDP over the forecast period. We anticipate the
government will increase social spending on areas such as education
and health care, but we also expect an increase in capital
expenditure, given the economy's infrastructure needs. Currently,
wages make up the largest component of expenditure, at over 50%.
The government implemented tax reforms in 2019. The reforms
simplified the tax code and lowered some tax rates. These changes
should help expand the tax base and increase collection rates.

"We estimate the general government sector will be in a net debt
position by year-end 2020. Government assets, used for both
domestic fiscal and external purposes, declined over 2019. We
estimate government assets will average about 21% of GDP over our
forecast period. The government's assets are mostly kept in the
UFRD. Founded in 2006, and initially funded with capital injections
from the government, the UFRD has received revenue from gold,
copper, and gas sales above certain cut-off prices. We include only
the external portion of UFRD assets in our estimate of the
government's net asset position because we view the domestic
portion--which consists of loans to SOEs and capital injections to
banks--as largely illiquid."

The government issued a US$1 billion Eurobond in February 2019 and
issued its first local currency treasury bonds since 2012 in
December 2018. We estimate general government debt at US$14 billion
(25% of GDP) at year-end 2019. General government debt is almost
all external and denominated in foreign currency, making it
susceptible to exchange rate movements. Besides the Eurobond, debt
is split roughly equally between official bilateral and
multilateral creditors. S&P said, "In our estimate of general
government debt, we include external debt of SOEs guaranteed by the
government, due to the closeness of the government to the SOEs and
the ongoing support to the SOEs from the government. General
government debt service is low, due to the concessional nature. We
estimate interest payments at 2% of revenue on average over our
forecast period."

S&P said, "In addition to the SOE's external debt that we include
in our data of general government debt, the government also
guarantees about US$4.5 billion (11.5% of GDP) of foreign
currency-denominated but domestically-held debt of SOEs. These
loans are from the UFRD and we consider this government
expenditure. As reforms on SOEs begin, if it becomes apparent that
sizable government financial support will be necessary, we could
reconsider our assessment of contingent liabilities."

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

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

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

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

  Ratings List

  Ratings Affirmed

  Uzbekistan
   Sovereign Credit Rating                BB-/Stable/B
   Transfer & Convertibility Assessment   BB-
   Senior Unsecured                       BB-




===========
S E R B I A
===========

SERBIA: S&P Raises LT Sovereign Credit Rating to 'BB+'
-------------------------------------------------------
On Dec. 13, 2019, S&P Global Ratings raised its long-term foreign
and local currency sovereign credit ratings on Serbia to 'BB+' from
'BB'. At the same time, S&P affirmed the 'B' short-term foreign and
local currency sovereign credit ratings. The outlook is positive.

S&P also revised its Transfer and Convertibility (T&C) assessment
to 'BBB-' from 'BB+'.

Outlook

The positive outlook reflects strong prospects for continued
inflows of productive foreign direct investments (FDI), which could
further widen and diversify Serbia's export base, strengthening its
balance of payments' resilience to external shocks.

S&P said, "We could raise our rating on Serbia in the next 12
months if FDI continues supporting exports and GDP growth, also
boosting its foreign exchange reserves, despite the muted growth
outlook for the country's key trading partners. This scenario would
be further supported by compliance with the IMF program reform
targets, including those related to the introduction of the more
binding fiscal rules.

"Conversely, we could revise the outlook to stable if a protracted
slowdown in the eurozone markedly weakened Serbia's growth momentum
or caused external imbalances to recur. An outlook revision to
stable could also arise if fiscal performance deteriorated, putting
Serbia's public debt on an upward path."

Rationale

The upgrade reflects Serbia's resilient exports and
investment-driven economic growth in the face of the challenging
external environment. Serbia's remarkable departure from its
previous track-record of weak and volatile growth has been
accompanied by the reduction in macroeconomic imbalances: net
public debt has gone down; net FDI has exceeded current account
deficits supporting external deleveraging; and price and financial
stability has been enhanced.

Serbia's macroeconomic fundamentals have strengthened markedly over
the past three years. S&P believes that solid domestic demand,
including the benign investment outlook, should help the economy to
weather ongoing weakness in Europe. In addition, Serbia's monetary
and fiscal policy settings have improved, partly due to past and
existing arrangements with the IMF. This provides the authorities
with room for policy maneuver in case external demand deteriorates
further.

Moreover, with global and regional financial conditions likely to
remain highly accommodative this year and next, S&P believes that
imminent risks to Serbia's balance of payments from volatile
capital flows have softened, whereas the government debt profile
could further benefit from lower interest rates and longer
maturities.

S&P's ratings on Serbia are supported by its educated workforce,
the favorable prospects for FDI, the government's strong fiscal
performance, moderate public debt, and credible monetary policy
framework. The ratings are constrained by Serbia's relatively weak
institutional settings, low wealth levels, sizable net external
liability position, and the banking sector's extensive
euroization.

Institutional and economic profile: Growth likely to remain
resilient in 2020 and 2021

-- Serbia's domestic demand will mitigate external weakness,
supporting growth at about 4% in 2020.

-- Wealth levels remain low, with structural bottlenecks
constraining faster income convergence with the EU.

-- The EU accession negotiations and the policy coordination
arrangement with the IMF could help advance reforms, while locking
in macroeconomic stability.

Contrary to S&P's previous expectation, decelerating growth in the
eurozone appears not to have undermined Serbia's economic
performance. In fact, after a one-off supply-related weakness in
the first half of 2019, the economy has accelerated, with real GDP
expanding by 4.8% in the third quarter year on year. This was
driven by strong domestic demand, supported by a double-digit
growth in investments and vigorous private consumption on the back
of improving labor market conditions and real wage gains. At the
same time, quite remarkably, exports retained a strong momentum,
expanding by almost 11%.

S&P said, "Even though we still believe that external headwinds
will likely persist, we now project Serbia's GDP will expand by
3.6% in 2019 and almost 4% in 2020. This forecast factors in the
solidity of domestic demand on the back of a buoyant labor market
and continued investment activity supported by strengthening bank
credit. We believe that in 2020 and early 2021, the pipeline of
existing private investment projects as well as a modest fiscal
stimulus in the form of accelerated capital spending and planned
public wage and pension hikes should allow the economy to mitigate
the fragile growth outlook for Serbia's key trading partners,
Germany and Italy."

At the same time, Serbia's longer-term growth prospects are more
challenging. Typical of the Western Balkans region, the country's
potential output growth rates remain hampered by unfavorable
demographic trends, with the population shrinking by 0.5% per year.
A large and only modestly reformed public sector as well as
material infrastructure gaps also curb potential expansion.

Moreover, the effectiveness of Serbia's intuitional setting remains
constrained by a weak judiciary, relatively high levels of
perceived corruption, and low public governance standards
(especially if compared with the EU average). Absent faster growth,
Serbia's U.S. dollar GDP per capita (S&P's preferred income
measure) will not significantly exceed its pre-2008 crisis levels
of a modest $7,500--well below that of the country's EU neighbors.

In this context, policy action--namely toward rightsizing the
public sector, addressing the shadow economy, and improving the
independence of the court system--if taken, could soften existing
hurdles to economic development, leading to higher longer-term GDP
growth rates than S&P currently expects. From that perspective,
Serbia's policy-coordination arrangement with the IMF could help
spur growth of Serbia's private sector and accelerate income
convergence with the EU while preserving macroeconomic stability.
The program focuses on reforming public employment and wage
systems, improving governance in state-owned enterprises (SOEs) and
financial institutions, reducing informality, and raising labor
force participation, among other objectives.

Serbia's increasingly centralized public institutions have
underpinned a commitment to macroeconomic policy prudence and some
initial reform efforts. The ruling party, the Serbian Progressive
Party, currently controls the parliament, the presidency, and the
majority of local councils (including in the capital city of
Belgrade), and it benefits from relatively high public support.
However, the increasing control of and restrictive actions toward
independent mass media, as well the politicization of the civil
service, have resulted in weaker checks and balances between key
institutions, setting off a public backlash, with regular street
protests in major cities. Even though S&P expects broader political
continuity after the upcoming parliamentary elections in April
2020, further centralization of the institutional setup could, in
S&P's view, undermine longer–term policy predictability,
potentially leading to flagging investor confidence. Another
repercussion could be a brain drain--accelerated emigration of the
most educated and skilled.

S&P's anticipate, however, that Serbia's EU aspirations will likely
constrain further power consolidation, even though the accession
process might be lengthy and complex. Serbia was granted EU
candidate status in 2012, and since then has opened 18 out of 35
chapters of the Acquis Communautaire (accumulated legislation,
legal acts, and court decisions which constitute the body of EU
law), with two already temporarily closed. Meeting the conditions
of some chapters will likely require difficult political decisions.
On top of the typical areas of concern for EU candidates, such as
weaknesses with respect to the rule of law, Serbia will face unique
issues regarding its relations with Kosovo and trade agreements
with the Eurasian Economic Union, which might trigger a public
referendum and increased political volatility.

Flexibility and performance profile: Serbia's fiscal and external
imbalances continue to shrink

-- Serbia's external position has been improving, owing to
expanding export capacity.

-- Public finances are now more sustainable, with recent fiscal
adjustment locked in by the new IMF arrangement.

-- S&P expects price and financial stability will be preserved.

Serbia's external profile has improved in recent years. This is
partly a result of the country's success in deepening its
integration into European supply chains via FDI in the
export-oriented manufacturing and service sectors. Foreign
investors have been taking advantage of Serbia's productive and
relatively low-cost labor (the country's average wage is just
one-quarter of the EU average), but also its restored macroeconomic
stability. As a result, between 2010 and 2019, total exports have
more than doubled to the equivalent of about $26 billion (an
estimated 53% of 2019 GDP)--among the strongest performance in the
region. Apart from the emergence of the export-oriented automotive
cluster, we also note the solid performance of Serbia's service
sector, including the information and communication technology
(ICT) industry, business services, and transportation. ICT alone is
expected to generate around one-fifth of total services receipts
(about $1.5 billion, or about 3% of GDP) by end-2019, having
expanded annually by over 20% on average in recent years.

Although the first three-quarters of 2019 saw sustained high export
growth, S&P expects it to soften in 2020. This partly reflects
decelerating global growth and as well as uncertainty over the
production plans of the country's second-largest exporter, FIAT
Chrysler.

Against the background of strong domestic demand (including buoyant
investment growth, not least driven by acceleration of public
capital spending), S&P expects the trade deficit to remain under
pressure and the economy to run current account deficits of about
5.0% of GDP or slightly above in the medium term. At the same time,
S&P expects external deficits to continue gradually declining (as
new export capacities come on line) and to contrast markedly with
the average of 8%-9% of GDP reported in 2011-2014, when wide fiscal
deficits squeezed Serbia's current account position.

Importantly, S&P expects that FDI net inflows will continue to
fully finance the current account deficits next year, as was the
case over the past five years, including 2019. Under this
assumption, Serbia's external debt net of public and financial
sector external assets will stay at a moderate level of slightly
below one-half of current account receipts (CARs) in 2019 and
beyond--a sizable reduction compared with a relatively high 82% in
2012.

Nevertheless, Serbia remains exposed to balance of payments risks
given its large net external liability position, resulting in
particular from the substantial accumulated stock of inward FDI
(over 130% of CARs). Although FDI generally presents a much lower
risk than external debt, it still exposes the economy to potential
swings in investor confidence and disinvestment shocks, translating
into balance of payments pressure in case of accelerated
repatriation of profits and equity.

Notwithstanding long-term fiscal challenges to Serbia's public
finances from adverse demographic trends and poor public
infrastructure, including in transportation and waste and water
treatment, S&P regards Serbia's fiscal policy as a credit strength.
The recently passed 2020 budget preserves past fiscal adjustment
gains and targets a modest deficit of 0.3% of GDP. Given strong
employment and rising wages, meeting the government's target is
unlikely to be difficult. In the first 10 months of 2019, the
general government reported a headline fiscal surplus of over 1% of
GDP spurred by strong tax and non-tax revenue growth. This follows
outright headline fiscal surpluses in both 2017 and 2018, with the
general government delivering one of the highest primary fiscal
surpluses (about 3.2% of GDP on average) among all sovereigns S&P
rates.

Going forward, S&P believes that fiscal deficits should remain
within 1% of GDP or lower, even against a backdrop of moderating
growth. In its view, alongside government's proven commitment to
spending discipline, the fiscal outlook continues to be supported
by the need for budgets until 2021 to be endorsed by the IMF,
followed by the introduction of a new set of binding fiscal rules
after the IMF arrangement expires. In the longer term, however,
absent a more rules-based fiscal framework, shaping in particular
the public wage system, fiscal risks could arise again.

Improved fiscal performance, declining interest rates, and currency
appreciation have allowed the government to put public debt on a
firm downward trajectory. Between 2015 and 2019, debt net of liquid
assets to GDP dropped by 17.3 percentage points to just above 46%
of GDP.

Serbia's government remains committed to bringing debt down further
by preserving fiscal prudence and keeping fiscal risks from the
large and poorly formed public sector under control. Large
SOEs--namely Elektroprivreda Srbije and Srbijagas, in addition to
mining and petrochemical companies--suffer from weak corporate
governance and vested interests, persistent energy arrears, and
redundant employment. Progress in restructuring these SOEs has been
relatively modest, but received a boost from the sale of Serbia's
copper smelter (RTB Bor) in 2018 and the government's commitment to
resolve petrochemical enterprises in 2020 (including the
privatization of MSK and Petrohemija) after fertilizer plant
Azotara filed for bankruptcy earlier in 2019.

With over 70% of general government debt denominated in foreign
currency, principally euros and dollars, Serbia's public debt
remains sensitive to exchange rate shocks. At the same time, S&P
recognizes the government's efforts to otherwise improve its debt
profile. Between 2015 and 2019, it has stepped up local currency
borrowings, with dinar-denominated debt increasing to 28% of total
debt; reduced its interest bill as a share of budget revenues by
one-third to about 5%; and lengthened the average maturity of
commercial debt to 4.3 years from 2.8 years. Importantly, around
one-half of total debt remains concessional (bi- and multilateral),
with relatively long maturities.

The National Bank of Serbia (NBS) has proved its operational
independence, earning credibility over the past six years.
Effective actions under the inflation-targeting regime has allowed
the NBS to anchor inflation expectations--despite a historically
high euroization and past episodes of macroeconomic
instability--and deliver low-single-digit inflation since late
2013. Headline inflation declined to 2% on average over 2018 on the
high base effect and lower imported inflation. After picking up to
3.1% in April 2019 year on year, consumer price index growth eased
to 1% in October due to lower energy and food prices. Given still
low core inflation, which recently hovered just above 1%, consumer
price growth has averaged 2% through most of 2019. A high base
effect and imported disinflation will keep price growth at around
this level or slightly below in 2020. Strong domestic demand and
expected hikes in administered prices will likely spark a pick-up
in headline inflation through 2022, but S&P expects it to stay
within the NBS' target band of 3±1.5%.

Serbia's exchange rate regime is relatively flexible to allow the
economy to adjust to evolving external conditions, while
simultaneously avoiding sharp swings in the real effective exchange
rate. Due to the still-extensive euroization of the economy, the
NBS intervenes occasionally in the foreign exchange market to
smooth short-term exchange rate volatility. Appreciation pressures
led the NBS to intervene by purchasing about EUR2.35 billion (on a
net basis) in January-November 2019. Foreign exchange interventions
have helped NBS maintain both price and financial stability, as
well as boost its international reserves to a record-high EUR13.5
billion ($15 billion). Progress in Serbia's de-euroization, or
"dinarization," efforts has been relatively slow. Nevertheless, S&P
acknowledges the decline in bank deposit euroization in recent
years and gradual deepening of the local currency debt markets,
with the government extending the maturity of the dinar yield curve
to beyond 10 years. The potential inclusion of Serbia's bonds into
the leading international emerging market bond indices could also
support longer-term local-currency issuance.

The profitability of Serbia's banking system has recovered, with
accelerated bank lending since 2017. This has been supported by
sustained progress in the reduction of nonperforming loans (NPLs).
Their nominal stock is almost 74% lower than in 2015, dropping to
4.7% of total loans in September 2019 from more than 23.0% in 2015,
reflecting the government's and the NBS' concentrated regulatory
efforts and accelerated NPL write-offs. Despite notable system-wide
improvements, the asset quality of state-owned banks remains
slightly weaker (with NPL levels exceeding system-wide average
levels by a few percentage points). The forthcoming privatization
of the third-largest bank, Komercijalna Banka, could in the longer
term help address this issue. Nevertheless, S&P considers that the
banking sector, otherwise predominantly foreign-owned (about 75% of
the total assets), remains adequately capitalized, liquid, and
domestic deposit-funded.

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

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

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

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

  Ratings List

  Upgraded; Ratings Affirmed  
                                          To    From
  Serbia

   Sovereign Credit Rating    BB+/Positive/B  BB/Positive/B
   Senior Unsecured                      BB+     BB
   Transfer & Convertibility Assessment  BBB-  BB+




=====================
S W I T Z E R L A N D
=====================

FERREXPO PLC: Fitch Upgrades LT IDR to BB-, Outlook Stable
----------------------------------------------------------
Fitch Ratings upgraded Ukraine-based Ferrexpo plc's (Ferrexpo)
Long-Term Issuer Default Rating to 'BB-' from 'B+'. The Outlook is
Stable.

The upgrade follows Ukraine's Country Ceiling upgrade to 'B' from
'B-' on September 6, 2019. The IDR of Ferrexpo remains two notches
above the Country Ceiling, reflecting good operational performance
together with limited debt on its balance sheet with a smooth
maturity profile. The rating action also takes account of
incremental debt amortisation over the next four years and
flexibility for the business to reduce capex and/or dividends under
less supportive market conditions, as evidenced in 2015-2017.

Fitch assesses Ferrexpo's business and financial profile in the
'BB' category. However, the company's credit quality is constrained
by the operating environment in Ukraine and weak scores for
governance structure, group structure and financial transparency.

KEY RATING DRIVERS

Rating above Country Ceiling: Following the upgrade Ferrexpo's
Long-Term 'BB-' IDR continues to be two notches above Ukraine's
Country Ceiling of 'B'. The company has one main, external source
of funding, a USD400 million pre-export-finance (PXF) facility,
which amortises evenly through 12 quarterly instalments over
2020-2022. The smooth maturity profile and low debt should allow it
to maintain hard-currency external debt service cover at around
1.5x on an 18-month rolling basis. Fitch expects Ferrexpo to raise
additional committed funding by 2021 as part of its rating
forecast. All its earnings are in US dollars, with most of its cash
held offshore in highly-rated banks, hence enabling Ferrexpo to
service its hard-currency debt with recurring hard-currency cash
flows and cash balances.

Rising Cost Position: Fitch expects Ferrexpo's operations to move
towards a mid-ranking cost position on the pellet business cost
curve in the medium-term based on intelligence from CRU Group. Cash
costs per tonne are set to rise again in 2019, linked to local wage
inflation and a strong Ukrainian hryvnia. Over the next four years
Fitch expects inflation in Ukraine to be partly offset by hryvnia
depreciation and increases in production to 12m tonnes in 2021 to
support average costs. Longer-term the company plans to expand
production to 15m tonnes, which should facilitate further economies
of scale.

Strong Cash Flow Continued: A lot of mining companies reported peak
cash flows in 2018. After the tailings dam failure at Brumadinho,
iron ore supply from Vale's operations was materially curtailed so
that the seaborne iron ore market moved into deficit in 2019, with
supply tightness expected to remain a feature in 2020. Iron ore
prices spiked to USD119/tonne in July before moving back below
USD100/tonne in August. Equally pellet premium on average remained
healthy in 2019, albeit in a much softer market in 2H19. As a
result, Ferrexpo will report another strong year of earnings in
2019.

The Fitch base case factors in average realised prices for
Ferrexpo's pellets to gradually decline to USD78/tonne in 2021.
Nonetheless, Fitch expects the company to maintain positive free
cash flow (FCF) over the next four years, on the assumption that
capex or dividends will reflect lower earnings as and when prices
moderate.

Strong Balance Sheet: Funds from operations (FFO)-adjusted gross
leverage stood at 1.1x at end-2018, based on gross adjusted debt of
USD423 million (a reduction of USD90 million on the previous year).
Fitch expects the company to reduce gross and net debt
incrementally over the next four years and to maintain FFO-adjusted
gross leverage at or below 1.0x and net leverage below 1.0x.

Stable Customer Base: Ferrexpo has long-term contracts with steel
producers in Europe and Asia, which provide revenue visibility.
Ferrexpo is exposed to fluctuations in the price of iron ore due to
index-based pricing in long-term contracts. Pellet premiums are
negotiated in advance; for customers outside China pellet premiums
are negotiated on an annual basis.

Corporate Governance in Spotlight: This year has seen a forensic
investigation into charitable donations to Blooming Land; an audit
qualification related to Deloitte's inability to obtain
satisfactory evidence and explanations on whether these donations
were used for legitimate expenditures; resignation of three
independent directors (February through April) and the auditor
following publication of the financial results; as well as the
majority shareholder temporarily stepping down as CEO to focus on
investigations of the Ukrainian authorities of a bank he used to
own. As a result, Fitch will maintain 'Management and Corporate
Governance' score at 'b+' until there is more visibility on how
oversight and internal controls evolve over the medium-term.

DERIVATION SUMMARY

Ferrexpo is one of the top five pellet exporters globally. The
company is smaller in terms of size and scale of its mining
operations than major global peer Vale S.A. (BBB-/Stable). The
business is expected to maintain a mid-range position on the cost
curve over the medium term and offers a premium pellet product that
is in demand.

An integrated steel producer that also sells pellets in the market,
but has margins comparable to that of Ferrexpo, is AO Holding
Company METALLOINVEST (BB+/Stable) from Russia. The company is one
of the lowest-cost steel producers for long products, has bigger
scale and benefits from diversification across the mining and steel
value chain. Its FFO-adjusted gross leverage is forecast at around
2.0x.

KEY ASSUMPTIONS

  - Average realised pellet price of USD126.5/tonne in 2019,
falling to USD78/tonne over the medium-term (2018: USD120/tonne,
calculated by Fitch as total revenue from sales of iron ore pellets
and concentrate divided by pellet sales volume)

  - Pellet production of 10.4mt in 2019 increasing to 12mt in 2021

  - Capex of USD247 million in 2019, USD137 million in 2020 and
around USD100 million per annum up to 2022

  - Dividends of around USD156 million in 2019, falling to USD75
million per annum up to 2022

RATING SENSITIVITIES

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

  - Upgrade of Ukraine's Country Ceiling coupled with neutral
assessment of corporate governance and maintaining FFO-adjusted
gross leverage below 1.0x on a sustained basis

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

  - Treasury policies or refinancing activity leading to
hard-currency external debt-service cover falling below 1.5x on an
18-month rolling basis

  - FFO-adjusted gross leverage above 2.0x on a sustained basis

  - Downgrade of Ukraine's Country Ceiling

  - More progressive financial policies that allow for debt-funded
shareholder distributions

LIQUIDITY AND DEBT STRUCTURE

Satisfactory Liquidity: At end-June 2019, Ferrexpo had available
cash balances of USD91.9 million and an undrawn commitment under
its PXF facility of USD40 million. The total facility size is
USD400 million, which represents the main, external funding source
of Ferrexpo, and amortises in 12 equal, quarterly instalments over
2020, 2021 and 2022. The last outstanding Eurobond of USD173
million was redeemed in April 2019.

Fitch expects Ferrexpo to maintain positive FCF over the next four
years. As per its rating forecast the company is funded into 2021.
Fitch expects Ferrexpo to manage refinancing and future funding
requirements prudently and well in advance. Both gross and net debt
is forecast to gradually decline over the next four years.

SUMMARY OF FINANCIAL ADJUSTMENTS

  - Operating lease multiple of 5x applied as the company's assets
are located in Ukraine. Total debt at end-2018 was adjusted by
USD14.5 million lease-equivalent debt

  - Accrued interest of USD6.4 million was included in
Fitch-adjusted gross debt for 2018

  - Working capital only includes movement in current assets, ie
buildup of "lean and weathered ore" of USD41.9 million in 2018 is
reflected in "other items before FFO" in Fitch's presentation of
the cash flow statement

ESG CONSIDERATIONS

Ferrexpo plc has an ESG Relevance Score of 4 for governance
structure, group structure and financial transparency following
resignation of its auditor and resignation of three independent
non-executive directors linked to an independent review of
charitable donations to Blooming Land earlier in 2019 and the
controlling shareholder temporarily stepping down as CEO to focus
on an investigation by Ukrainian authorities into one of his former
businesses in October 2019.



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

ARCADIA GROUP: Secures GBP310MM Deal to Remortgage Topshop Store
----------------------------------------------------------------
James Warrington at City A.M. reports that Sir Philip Green has
bagged a GBP310 million deal to remortgage the flagship Topshop
store on Oxford Street, securing the future of a crucial asset in
his struggling retail empire.

Topshop parent company Arcadia Group on Dec. 13 said it had
completed a four-year refinancing deal with US investment giant
Apollo Management, City A.M. relates.

In September, it emerged that the retail group, which also owns
Dorothy Perkins and Miss Selfridge, was struggling to refinance the
loan secured against its flagship site and would need to raise new
funds, City A.M. recounts.

The loan, provided in 2014 by a consortium of banks led by RBS, had
been due to expire last June but was extended to December as part
of a rescue deal agreed earlier this year, City A.M. notes.

According to City A.M., the fresh deal will come as a huge relief
for the fashion boss, who has set out plans to shut dozens of
stores and reduce rents after avoiding collapse through a company
voluntary arrangement in June.

But Arcadia is still facing a string of challenges on the high
street as it battles rising rates and declining footfall amid
rising competition from online rivals, City A.M. states.

Arcadia reported an operating loss of GBP138 million in the year
ending September 1, 2018, its most recent financial filings, and a
4.5% drop in turnover to GBP1.8 billion, City A.M. discloses.


ARTEMIS MIDCO: Moody's Affirms B2 CFR, Alters Outlook to Neg.
-------------------------------------------------------------
Moody's Investors Service changed to negative from stable the
outlook on the ratings of Artemis Midco (UK) Limited, the parent
company of Partner in Pet Food, a manufacturer of pet food.
Concurrently, Moody's has affirmed the company's B2 corporate
family rating, its B2-PD probability of default rating and the B2
guaranteed senior secured instrument ratings of the EUR275 million
Term Loan B and the EUR62 million Revolving Credit Facility
borrowed by Artemis Acquisitions (UK) Limited. The outlook on both
entities has been changed to negative from stable.

"The negative outlook reflects the delay in leverage reduction,
because of weaker than expected EBITDA growth and cash flow
generation, as well as modestly higher debt following the upsizing
of the term loan B and the drawing under the revolver and overdraft
lines," says Lorenzo Re, a Moody's Vice President -- Senior Analyst
and lead analyst for PPF.

RATINGS RATIONALE

Moody's expects PPF's leverage to remain high, well above 7x in
2019 (from 6.9x in 2018), and to trend towards 6x only in 2020,
that is one year later than originally expected. This is because of
weak cash flow generation in 2019, resulting from flattish EBITDA
generation despite growth in revenues, and high capex.

PPF revenue growth continued to be solid at +6% in the first nine
months of 2019, driven by both volumes (+3%) and price/mix (+3%).
However, profit generation was weak, mainly because of rising raw
material and transportation costs, with reported EBITDA increasing
only by 3.3%. Moreover, the company incurred some EUR7 million
exceptional costs, mostly related to new development initiatives,
such as new brands and products launches. The decision to
accelerate its production capacity expansion plan in the pouch and
can segments will cause capex to further increase to up to EUR30
million in 2019 from the already high level of 2018 (EUR27
million). Therefore, Moody's expects the company cash generation to
be negative this year.

PPF is compensating this shortfall in cash generation with
additional debt, including higher overdraft utilization (EUR18
million as of September 2019 from EUR13 million as of end-2018) and
drawings under the RCF (EUR18.5 million as of September 2019). The
company recently increased the amount of its term-loan B by EUR10
million, with proceeds being used to paid down part of the RCF.
Moody's expects cash flow generation to be solid in the last
quarter of 2019, owing to normal business seasonality, which should
allow further reduction in the RCF drawing. However, the agency
expects that gross debt at end-2019 will be higher than originally
anticipated.

Moody's acknowledges that both the additional capex and the
development costs that are depressing this year cash generation
should support sales growth and EBITDA margin improvement in 2020.
The agency expects free cash flow to turn positive in 2020,
allowing some debt reduction. However, the deleveraging is subject
to some execution risk, depending on the company's ability to
launch its new products and increase volumes. The B2 rating is
weakly positioned in the category because of PPF's weak business
profile and high leverage, and any deviation from the expected
deleverage trajectory could lead to a rating downgrade.

Moody's has factored in the following environmental, social and
governance (ESG) considerations. The company is tightly controlled
by funds managed by Cinven which, as is often the case in highly
levered, private equity sponsored deals, has a high tolerance for
leverage and governance is comparatively less transparent. Social
risk is normally moderate for packaged good companies and Moody's
believe that PPF is less exposed to social risk compared to food
producers, because of lower sensitivity of pet food to labelling
and food security issues compared to human food. Some social
changes (ie aging population) are supporting the company's
business, owing to the increase in the number of pets and the
humanization trend (ie pets owners treating their pets as human).

PPF's B2 rating reflects (1) the company's high product
concentration and limited geographical diversification; (2) its
small scale relative to large branded pet food peers and major
retailers, who are PPF's main customers; and (3) exposure to
foreign currency and to raw material price fluctuations, which can
drive volatility in results.

The rating is supported by (1) the favorable underlying industry
trend, with growing and non-cyclical demand; (2) the group's solid
market positioning in Central European markets; and (3) its ample
and diversified customer base, with well-established relations with
major clients.

LIQUIDITY

Moody's expects PPF to maintain adequate liquidity supported by
EUR15.3 million of cash as of September 2019 and the EUR43.5
million availability under the EUR62 million RCF and positive free
cash flow generation in 2020. The company will not face any debt
maturities in the next 18 months, owing to the bullet maturity of
the term-loan B in 2025. However, Moody's expects significant
requirements for capex of up to EUR30 million in the next 18 months
and working capital swings of up to EUR15 million during the year.

The RCF is subject to a senior leverage covenant at 9.0x, tested
quarterly if more than 50% of the facility is drawn. Currently
there is good headroom under this covenant.

STRUCTURAL CONSIDERATIONS

The B2-PD probability of default rating is in line with the CFR and
incorporates a 50% family recovery rate assumption, reflecting the
covenant-lite debt structure. The capital structure includes a
shareholder loan that is eligible for a full equity treatment under
Moody's criteria and is not therefore included in the debt
calculation. The debt structure includes the EUR275 million Term
Loan B and the EUR62 million RCF, both senior secured and ranking
pari passu. The Term Loan B and RCF have a B2 rating, in line with
the CFR.

RATIONALE FOR THE NEGATIVE OUTLOOK

The negative outlook reflects the uncertainties on the company's
ability to materially improve its cash flow generation and to
reduce its financial leverage to a level commensurate with the B2
rating. Failure to demonstrate continued sales growth, operating
margin improvements, positive free cash flow generation and a
reduction in financial leverage on a Moody's adjusted gross debt to
EBITDA basis towards 6.0x in 2020 could lead to further downward
pressure on the rating.

WHAT COULD CHANGE THE RATINGS UP/DOWN

Positive pressure is unlikely, because of the negative outlook and
the company's weak business profile, but could materialize if the
company (1) improves its scale and geographic diversification; (2)
maintains a solid track record of stable operating performance and
ongoing free cash flow generation; and (3) reduces its Moody's
adjusted debt to EBITDA to below 4.5x. Restoring positive free cash
flow and improving leverage to 6.0x by 2020 could lead to a
stabilization of the rating outlook.

Conversely, negative pressure on the rating could result from (1)
negative free cash flow generation on an ongoing basis; (2) failure
to reduce a Moody's-adjusted leverage at or below 6.0x by 2020; or
(3) deterioration in the liquidity position.

LIST OF AFFECTED RATINGS

Issuer: Artemis Midco (UK) Limited

Affirmations:

Probability of Default Rating, Affirmed B2-PD

Corporate Family Rating, Affirmed B2

Outlook Action:

Outlook, Changed To Negative From Stable

Issuer: Artemis Acquisitions (UK) Limited

Affirmation:

Backed Senior Secured Bank Credit Facilities, Affirmed B2

Outlook Action:

Outlook, Changed To Negative From Stable

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Global Packaged
Goods published in January 2017.

COMPANY PROFILE

Headquartered in Hungary, Partner in Pet Food is a manufacturer of
cat and dog food, marketing its products in 38 countries across
Europe. PPF specializes in retail branded products, servicing
customers across different distribution channels, including
traditional retailers, discounters, specialty pet retailers and
on-line.

BRITISH STEEL: Rescue Talks with Jingye Making Progress
-------------------------------------------------------
BBC News reports that the firm due to take over British Steel has
said it is confident it will win approval for the deal in the new
year.

The statement by China's Jingye comes after a newspaper report
suggested the rescue bid could collapse, BBC notes.

According to BBC, Jingye said it was continuing to make progress in
securing the necessary approvals to complete the transaction,
following the signing of an agreement on Nov. 10.

"Any suggestion to the contrary is completely incorrect," BBC
quotes Jingye as saying.

Last month, Jingye agreed to buy British Steel, paying about GBP50
million to take over the collapsed business and save about 4,000
jobs, BBC recounts.

A report in the Sunday Telegraph, quoting Whitehall sources, said
the deal was threatened with collapse and that talks had been
reopened with other potential suitors, BBC relates.

However, the government denied that any such talks were taking
place, BBC notes.

When British Steel collapsed, control of the holding company passed
to the UK Insolvency Service, which is responsible for selling the
assets, BBC discloses.

A government spokesperson, as cited by BBC, said: "On Nov. 11 the
Official Receiver has ceased marketing the business and is not
talking to any other parties."

British Steel employs about 4,000 people in Scunthorpe and
Teesside, BBC states.


CHARLESWORTH PRESS: Completes CVA, Invests in New Technology
------------------------------------------------------------
Stephen Chapman at Prolific North reports that Charlesworth Press
has completed its Company Voluntary Arrangement (CVA) early and has
invested GBP3 million in new print technology.

According to Prolific North, the Wakefield-based firm credits this
new success to diversifying into personalized book technology.  It
is currently printing up to 36,000 books every day to meet
Christmas demand and has contracts with Wonderbly, Mrs Wordsmith
and Hooray Heroes, Prolific North discloses.

The company says it marks the end of a difficult period, having
entered a CVA in 2016, to pay off its debts, Prolific North states.
This led to the company's management leaving the business and Mark
Gray and Lee Hewitt taking over as Managing Director and Operations
Director, Prolific North notes.

It is now looking to expand its operations in the United States,
Prolific North relates.



FIRST PRIORITY: Records GBP4.5MM Profit in Year to February 2019
----------------------------------------------------------------
James Wilmore at Inside Housing reports that First Priority, which
provides housing to adults with learning disabilities and mental
health issues using an equity-linked business model, recorded a
profit of GBP4.5 million in the year to February 2019.

This compared with a loss of GBP5.8 million the previous year,
Inside Housing notes.

The profit includes a gain of GBP7.6 million from a CVA agreement
with creditors, completed in April this year, Inside Housing
discloses.

The profit came despite the group's turnover from rent falling 51%
to GBP6.5 million, Inside Housing relays, citing accounts filed at
Companies House.

This fall in turnover was driven by First Priority relinquishing a
number of the properties it was leasing from funders and landlords,
according to Inside Housing.  The number of units it managed has
been cut to 438, down from 1,018 in the previous financial year,
Inside Housing says.

First Priority, which was censured by the regulator last year over
its governance, said that the CVA meant the company renegotiated
lease terms with its landlords on a number of properties, and this
had put it on a "more secure financial footing", Inside Housing
recounts.


FRONERI INTERNATIONAL: S&P Places 'B+' LT Rating on Watch Negative
------------------------------------------------------------------
S&P Global Ratings placed its 'B+' long-term rating on U.K.-based
ice cream producer Froneri International Ltd. on CreditWatch with
negative implications.

Froneri has announced its acquisition of Nestle's U.S. ice cream
activities for US$4 billion.It is not yet clear how the acquisition
will be financed, or the magnitude of the expected synergies. At
this stage, therefore, S&P is assuming that the entire amount will
be debt-financed, that the acquired business will contribute to
earnings, and that margins will be slightly dilutive compared with
those in the existing Froneri group. In this scenario, the expected
S&P Global Ratings-adjusted debt-to-EBITDA ratio could rise to
8x-9x at year-end 2020 from about 5.5x forecasted at year-end
2019.

In S&P's view, the sustainability of this level of leverage depends
on the group's future growth plans.   Froneri has been acquisitive
since its creation in 2016. Its most-recent acquisitions--Tip Top
in New Zealand and Nestle's Israel ice cream business--were
announced in the first half of 2019. S&P assumes that Froneri will
focus on growing externally over time to strengthen its position as
the second-largest global ice cream player, after Unilever.

This acquisition will give Froneri access to the U.S. ice cream
market through well-established brands like Häagen-Dazs.  To date,
Froneri has been absent from the U.S. ice cream market, which is
the largest in the world. According to Euromonitor, Unilever has
19.4% of the U.S. market, making it the market leader, followed by
Nestle with 13.9%. The market is very competitive and dominated by
brands; white-label products have lower penetration than in Europe.
The turnover of the acquired business is US$1.8 billion, and
Froneri will now own brands like Häagen-Dazs (in the U.S.),
Drumstick, and Outshine. This will enlarge the proportion of its
sales that come from branded products. The acquisition will also
significantly expand the scale of the company--revenue is expected
to increase to about EUR4.5 billion in 2020, from the EUR2.7
billion forecast for 2019.

Froneri's track record in integrating businesses is positive, but
it has incurred significant restructuring costs after previous
acquisitions.  Froneri was created in 2016 from the merger of R&R,
a nonbranded ice cream producer, and Nestle's European ice cream
business. The integration process lasted more than two years and
included areas such as supply chain, production network, product
development, and distribution strategy. The group has improved its
reported operating margin and cash generation over the past three
years, but in the process has incurred significant restructuring
costs totaling about EUR350 million. S&P said, "We understand that
integrating Nestle's U.S. ice cream division will not lead to
issues related to rationalization the group's overlapping presence
in the market because Froneri was previously absent from the U.S.
That said, it could lead to other integration challenges and
additional restructuring expenses. We will take these issues into
account when assessing the potential benefits of the acquisition."

S&P said, "We aim to resolve the CreditWatch placement once we have
assessed the full impact of the announced transaction on Froneri's
credit profile. In particular, we will analyze the structure of the
financing, the impact of the acquisition on the group's business
profile, the expected cash generation, and the group's capacity to
repay debt. We will also discuss its appetite for new external
growth."


PIZZAEXPRESS FINANCING: Moody's Affirms Caa3 CFR, Outlook Neg.
--------------------------------------------------------------
Moody's Investors Service affirmed the Ca-PD probability of default
rating of PizzaExpress Financing 1 plc and appended the rating with
a "/LD" designation. Concurrently, the rating agency has affirmed
the company's Caa3 long-term corporate family rating and the Ca
rating on the GBP200 million senior unsecured notes due August
2022. The Caa1 rating on the GBP465 million senior secured notes
due August 2021 issued by PizzaExpress Financing 2 plc has also
been affirmed. The outlook remains negative.

The /LD designation indicates a limited default, reflecting Moody's
treatment of the tender offer under which an affiliate of the
company's controlling shareholder, Hony Capital, has agreed to
purchase approximately GBP71.9 million face value of the senior
unsecured notes at a deeply discounted price of 40 pence in the
pound. The /LD designation will be removed after three business
days.

RATINGS RATIONALE

As Moody's outlined when it downgraded the CFR of PizzaExpress to
Caa3 last month, the rating agency now considers that it is highly
likely that 2020 will see a restructuring of the company's capital
structure. This reflects Moody's expectations of continued weakness
in the company's profitability, which means that its current
capital structure looks unsustainable.

The company has only one director who is independent of Hony
Capital and Moody's believes in these circumstances the recently
appointed advisors are likely to be particularly focused on the
interests of shareholders, to the potential detriment of other
stakeholders. The rating agency also considers the tender offer
represents an aggressive financial policy and notes that following
its completion, Hony Capital controls ownership of close to 50% of
the senior unsecured notes (recognising that an affiliate already
owned GBP22.7 million of this tranche). Moody's believes this could
give Hony important negotiating leverage in the event of
restructuring talks.

RATIONALE FOR THE NEGATIVE OUTLOOK

The negative outlook reflects Moody's expectation that a financial
restructuring is now highly likely.

WHAT COULD CHANGE THE RATING UP/DOWN

Upward pressure on the rating is unlikely in the short term but
could arise if a sustainable capital structure is put in place.
Downward rating pressure could arise if Moody's expectations of
corporate family recovery rates deteriorate.

PRINCIPAL METHODOLOGY

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

CORPORATE PROFILE

Founded in 1965 and headquartered in London, PizzaExpress is the
leading operator in the UK casual dining market measured by number
of restaurants. As at September 2019 it operated 482 sites in the
UK and Ireland as well as around 150 international sites,
principally in China. For the 52 weeks period ending September 29,
2019, the company reported revenues of GBP551 million and EBITDA of
GBP75.6 million. PizzaExpress was acquired by Hony Capital in a
GBP895 million LBO in August 2014.

PIZZAEXPRESS FINANCING: S&P Cuts ICR to 'SD' on Debt Exchange
-------------------------------------------------------------
S&P Global Ratings lowered the long-term issuer credit rating on
PizzaExpress Financing 1 PLC to 'SD' (selective default) from
'CCC-'. S&P also lowered the issue-level ratings on the senior
unsecured notes to 'D' from 'C'.

The 'B-' issue rating on the super senior revolving credit facility
due in 2020 and the 'CCC-' issue rating on the senior secured notes
due in 2021 remain unchanged; we understand that these facilities
are unaffected by the recent tender offer.

The downgrade follows the settlement of Hony Capital's tender offer
on the senior unsecured notes on Dec. 12, 2019. S&P understands
that GBP71.9 million of senior notes have been tendered and not
withdrawn and that Hony Capital has acquired the full amount of
notes tendered, at a price of 40% of their par value (excluding the
tender offer premium).

S&P said, "We view the exchange as distressed because the value
received is less than promised when the original securities were
issued and because we see a realistic possibility that the group's
capital structure will soon be restructured.

"We expect to raise our issuer credit rating on PizzaExpress
Financing 1 PLC to 'CCC-' within the next few days, signifying that
the group is likely to continue to pursue a broader restructuring
of the current capital structure over the next few months,
following the appointment of financial and legal advisers in
November."


REGIS UK: Bought Out of Administration, 1,000 Jobs Saved
--------------------------------------------------------
BBC News reports that the owner of the Supercuts and Regis
hairdressing chains, Regis UK, has been bought out of
administration, saving 1,000 jobs.

Entrepreneur Lee Bushell has agreed to buy 140 outlets trading
under the two brands across the UK, BBC relates.

But, as first reported by Sky News, the deal will also involve the
closure of about 60 sites risking 200 jobs, BBC notes.

Regis fell into administration in October blaming a "perfect storm"
of pressures, BBC recounts.

It has been struggling with a fall in customer numbers in shopping
centres where many of its salons are located, BBC relays.  It also
said higher wage costs had worsened its "cash flow issues", BBC
discloses.

Last year, it negotiated a cut in the rent it paid through a legal
process known as a Company Voluntary Arrangement (CVA), but
landlords challenged the proposals in court, BBC relates.

Regis UK was sold by its US parent company to the private equity
firm Regent in 2017, BBC recounts.  But it has faced a challenging
retail environment since then, as people rein in their spending,
BBC states.


ROLA WALA: Founder Buys Business Out of Administration
------------------------------------------------------
Finn Scott-Delany at MCA reports that Rola Wala founder Mark Wright
has bought back the brand and assets of the Indian wrap concept
after it went into administration with liabilities of GBP511,585.


TULLOW OIL: S&P Downgrades LT ICR to 'B' Following Resignations
---------------------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit rating on
Tullow Oil PLC to 'B' from 'B+'.

S&P's rating action comes after Tullow made a series of negative
announcements that indicate that over time it could become less
robust than we envisaged earlier this year. Tullow now expects
production to drop to 70,000-80,000 bopd (barrels of oil per day)
in 2020, declining to 70,000 bopd and below in 2021 and 2022. A
year ago, it assumed oil production of more than 90,000 bopd in
2019, with a further increase in the following years.

Together with the recent production cut, the company's CEO and its
director of exploration announced their decision to resign from the
company, increasing the uncertainty regarding Tullow's strategic
direction.

These announcements are part of a flow of negative news over the
past six weeks:

-- Tullow has revised down its guidance for the company's 2019
production for a third time. Tullow now expects production as of
year-end 2019 to be about 87,000 bopd. It attributes the drop in
output to production issues in its Ghanaian fields: Jubilee and
TEN.

-- The latest indications suggest that the quality of the oil
discovered in Guyana is poorer than expected. This announcement has
no impact on Tullow's credit metrics. However, it materially
reduces the value of the project (for development or for farm
down).

-- The Uganda farm-down has been terminated. Previously, S&P had
assumed that this deal would bring in proceeds of about $250
million in 2019 and 2020.

-- Production reduction to 70,000 bopd-80,000 bopd in 2020 and
about 70,000 bopd on average over the next three years. The
reduction stems from some short-term technical issues at the TEN
field and later on its decision to optimize its operations with its
cash flows.

S&P said, "Consequently, we are revising downward our projections
for Tullow's adjusted earnings before interest, taxes, depletion,
amortization, and exploration expense (EBITDAX) to $1.3
billion-$1.4 billion in 2019 and about $1.1 billion in 2020. We
understand that Tullow plans to offset the lower EBITDAX in 2020 by
lowering its capital expenditure (capex) and not paying dividends.
According to the company, it will have free cash flow (FCF) in 2019
of about $350 million, and aims to achieve a minimum FCF of $150
million in 2020 (based on current oil prices and oil production of
75,000 bopd).

"In our view, the company's credit metrics may remain fairly
volatile over the short term. If the production projection for its
oil fields matched the lower part of the company's guided range or
if oil prices matched our medium-term working assumption of $55 per
barrel (/bbl), the adverse impact could be significant. Based on
our sensitivity calculations, if oil prices dropped by $5/bbl,
EBITDA would drop by about $125 million. A drop in production of
5,000 bopd would result in a fall in EBITDA of about $100 million.

"In our view, the company's low earnings in the coming years will
also limit its ability to execute the attractive projects in its
pipeline and achieve better diversification over time. Previously,
our business risk assessment factored in Tullow's ability to
achieve 100,000 bopd over time, through higher production in Ghana,
and new barrels coming in over the next two to five years from
Kenya and Uganda.

"Given its lower development budget and the termination of the farm
down in Uganda, Tullow will need to carefully prioritize between
short-term objectives (such as infill drills in Ghana to boost
production) and medium-term objectives (such as exploration drills
in Guyana). Based on the company's lower production profile, and to
some extent the operational issues over the past four years, we
have revised down our assessment of the company's business risk
profile to weak from fair. Coupled with the sudden changes in the
company's leadership and the uncertainty regarding the company's
strategic directions, we have also revised down our assessment of
management and governance to fair from satisfactory. We believe
that the new assessment is more in line with companies that we
regard as having a weak business risk profile, such as Ithaca
Energy (76,000 bopd and costs of $15 per barrel), rather with those
that have a fair business risk profile, such as Neptune Energy
(150,000 bopd and cost of $10 per barrel).

"Although we view the company's financial policy as supportive, it
has already used much of its financial flexibility by cutting capex
and dividends. At the same time, we don't see a material change in
the company's liquidity position. Its ability to meet its financial
objectives will be closely linked to oil prices and production.
Tullow remains committed to debt reduction and has a short-term
objective of achieving a reported net debt of $2.5 billion and
maintaining it over the cycle. Its reported net debt is expected to
be around $2.8 billion by year end. Under our revised base-case
projection, we don't expect the company to reach its $2.5 billion
target in the coming years, unless it completes its farm down of
the Uganda project.

"The negative outlook indicates that we could lower the rating on
Tullow in the coming six to 12 months if the company saw a further
deterioration in its credit metrics stemming from lower production
and/or oil prices, or if we saw a deterioration in its liquidity
position.

"Under our base-case scenario, we expect an S&P Global
Ratings-adjusted funds from operations (FFO)-to-debt ratio of about
20% in 2019, dropping to about 15% in 2020. Based on an oil price
of about $60/bbl in 2020 and production of about 75,000 bopd we
project free cash flow of slightly above $100 million."

The current rating incorporates the company's ability to maintain
an adjusted FFO to debt of 12%-15%, under the current prices or
better, together with at least break-even free operating cash flow
(FOCF).

S&P could lower the ratings if Tullow's adjusted FFO to debt fell
below 12%, without any obvious recovery. This could occur if:

-- Further production issues at the TEN or Jubilee fields cause
production levels to deteriorate toward, or in a less likely
scenario, below, 70,000 bopd (the lower end of its guided range).

-- A lasting and material decline in oil prices (for example,
below $55/bbl). In this scenario, the hedges currently in place
would provide only temporary relief.

In addition, a deterioration in the company's liquidity position (a
reduction in the company's availability under the reserve-based
lending [RBL] facility); inability to access the market and
refinance its debt as it comes due; or a change in the domestic
regulations that makes it more challenging to upstream cash in the
group.

S&P could revise the outlook to stable if:

-- Adjusted FFO-to-debt ratio climbed back to 15% or higher;

-- Reported positive free cash flow at the current oil prices;
and

-- Production of 70,000 or better in 2020, together with better
visibility on the production level in 2021 and thereafter.

Under S&P's base-case scenario, the company would already be able
to meet those three conditions in 2020. In this respect, building a
longer track record of stable production, as well as building up
some financial headroom to accommodate potential deviations, will
determine the timing for any positive rating action.

Progress in the farm down of the Uganda project may also cause us
to revise the outlook to stable.

ZEST FOOD: Creditors Back Rescue Plan, No Store Closures
--------------------------------------------------------
City A.M. reports that Tossed owner Zest Food has secured the
backing of its creditors to implement a rescue plan, which will
allow its salad bar brand to continue to trade.

According to City A.M., the healthy fast food chain, which trades
from 24 central London locations, said that no stores will need to
close immediately, but it will seek to exit onerous leases as it
restructures the firm.

The company said in a statement on Dec. 12 all viable Vital
Ingredient branches, which the company acquired two years ago, will
be converted into Tossed stores, which remain in growth, City A.M.
relates.

Zest Food, which has 24 stores in central London, acquired eight
Vital Ingredient branches in 2017, however those sites traded
"significantly below expectations", meaning a restructuring of the
entire company became "unavoidable", City A.M. notes.

Last month, the casual dining chain said it would ask landlords to
agree to a combination of zero rent and rent reduction arrangements
as part of the company voluntary arrangement (CVA), City A.M.
recounts.



                           *********


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
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.

The TCR Europe subscription rate is US$775 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each.  For subscription information,
contact Peter Chapman at 215-945-7000.


                * * * End of Transmission * * *