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

                          E U R O P E

          Tuesday, September 29, 2020, Vol. 21, No. 195

                           Headlines



C R O A T I A

CITY OF ZAGREB: S&P Lowers ICR to 'BB-' on Reconstruction Costs


F R A N C E

TECHNICOLOR SA: S&P Ups ICR to 'CCC+' on Restructuring Completion


I R E L A N D

AIB GROUP: Fitch Rates EUR1BB Tier-2 Subordinated Notes 'BB+'
AVOCA CLO XX: Moody's Confirms B2 Rating on Class F Notes
FLY LEASING: Moody's Lowers Corp. Family Rating to B1
HARVEST CLO XX: Moody's Confirms B2 Rating on Class F Notes
SMURFIT KAPPA: Moody's Affirms 'Ba1' CFR, Outlook Stable



I T A L Y

BANCA POPOLARE DI SONDRIO: Fitch Affirms 'BB+' LongTerm IDR


N E T H E R L A N D S

DRYDEN 44 EURO: Moody's Confirms B2 Rating on Class F-R Notes


N O R W A Y

NORWEGIAN AIR: Norwegian Government May Nationalize Airline


R U S S I A

O1 PROPERTIES: S&P Withdraws 'D' LongTerm Issuer Credit Rating
PROMSVYAZBANK PJSC: S&P Raises ICR to 'BB', Outlook Stable


S E R B I A

SERBIA: Fitch Affirms 'BB+' Foreign Currency Issuer Default Rating


S W E D E N

RADISSON HOSPITALITY: Fitch Withdraws 'B' Issuer Default Rating


U N I T E D   K I N G D O M

GUINNESS MAHON: FSCS Receives More Than 1,000 Claims
NMC HEALTH: Placed Into Administration in UAE, Secures Funding
POLPO: Files Notice of Administration
REGUS PLC: IWG May Place Business Into Insolvency
ROLLS-ROYCE PLC: Moody's Lowers CFR to Ba3, Outlook Negative

SHARROW BAY HOTEL: To Be Placed in Liquidation, Oct. 2 Hearing Set

                           - - - - -


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C R O A T I A
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CITY OF ZAGREB: S&P Lowers ICR to 'BB-' on Reconstruction Costs
---------------------------------------------------------------
On Sept. 25, 2020, S&P Global Ratings lowered its long-term issuer
credit rating on the Croatian capital city of Zagreb to 'BB-' from
'BB'. The outlook is negative.

Outlook

The negative outlook reflects S&P's view that Zagreb might
accumulate payables, squeezing its already tight liquidity. As
reconstruction of the areas devastated by the March earthquakes is
about to begin, it notes that it is unclear where the city will get
funding for its share of the costs.

Downside scenario

S&P said, "We could downgrade Zagreb if the city's financial
profile worsened over the next 12 months, with the accumulation of
payables or larger budgetary deficits than we forecast in our
base-case scenario, while the financing of upcoming capital
expenditure remains vague."

Upside scenario

S&P would revise the outlook to stable over the next 12 months if
Zagreb secures funding from the central government or the EU for
upcoming costs without increasing its already high debt.

Rationale

S&P said, "We have lowered our long-term rating on Zagreb, given
our view that its contingent liabilities will increase
substantially in light of a newly passed law under which the city
will have to cover 20% of repair costs from the March earthquakes.
According to current estimates, the cost to Zagreb may exceed the
city's annual budget by more 2x, although it would be spread over
more than a decade.

"We also expect that the city's budgetary performance will
deteriorate in 2020 and 2021, due to COVID-19-related shortfalls in
tax revenue and additional expenditure. That said, we believe that
the central government will compensate Croatian municipalities,
including the city of Zagreb, for tax shortfalls following the
upcoming tax reform in 2021, which should also mitigate the drop in
tax revenue from the pandemic. We believe that the city will
increase its borrowings to pay off part of the deficit accrued from
2017-2019, but keep overall debt well below 90% of operating
revenue. The rating also reflects Zagreb's very weak liquidity,
volatile policy environment, and unpredictable institutional
framework that is subject to relatively frequent changes."

Central government support to offset some tax revenue shortfalls,
but revenue uncertainty remains

In view of COVID-19, the central government announced tax holidays
of up to three months for some groups of taxpayers. The cost of
these measures to Croatian municipalities was covered by
interest-free liquidity support up to the amount of deferred taxes;
Zagreb received over Croatian kuna (HRK) 350 million (about EUR46
million), which we understand it does not need to pay back. The
central government also announced as part of its economic support
package that taxpayers' personal income tax will be lowered from
2021, and that it will compensate municipalities for their share of
lower revenue. However, the amount of these additional transfers is
still unclear. In addition, the central government intends to
abolish the property transfer tax, which is a major revenue source
for Zagreb, adding to the uncertainties about the city's future
revenue.

In S&P's view, Zagreb's creditworthiness remains constrained by the
institutional setup under which Croatian municipalities operate.
The framework changes frequently, and the distribution of resources
is unbalanced and not sufficiently aligned to tasks delegated to
municipalities. This is highlighted by Zagreb's increased accrued
deficit, which reflects the funds the city expects to receive from
the central government in compensation for delegated tasks. In
addition, multiple changes to the tax system make financial
planning difficult.

The unpredictability of the central government's actions constrains
policy effectiveness at the city level, limiting Zagreb's ability
to effectively plan. The three major expenditure items for the city
are education, health care, and maintenance of public space. S&P
said, "We view Zagreb's unreliable long-term planning and lack of
minimum cash holding targets as key management weaknesses. In
addition, the use of unconventional debt instruments, such as
factoring deals, and the sometimes-difficult relationship between
the government and city assembly further limits our management
assessment. We assess Zagreb's oversight and control over municipal
companies as weak, since municipal companies, including but not
limited to Zagrebacki Holding d.o.o., appear to lack clear
decision-making frameworks and continue to depend on the city for
support."

Zagreb benefits from its role as Croatia's economic center. The
city contributes about one-third of total Croatian GDP, and
unemployment has been steadily decreasing and was well below the
national level of 9.2% in 2020, although levels might rise
following a recession in 2020. GDP per capita is comparable with
that of similarly rated international peers, while about 70% higher
than the national average. S&P said, "We forecast national and
local GDP per capita will develop similarly, with a contraction of
about 8% forecast for 2020 due to restricted tourism and quarantine
measures to fight the pandemic. We expect an economic rebound with
GDP growth rates exceeding 5% in 2021, with Zagreb participating
equally in the rebound." The pull Zagreb exerts on the country has
resulted in a growing population, in contrast to the national
trend. This supports the city's economic and tax base to some
degree.

Zagreb required to cover 20% of costs from earthquake damage

In early September 2020, the national parliament passed a law that
states local governments will need to cover 20% of the
reconstruction cost for two earthquakes that took place in March.
Under the law, the central government will cover 60%, and private
owners 20% (so-called "Rule 60-20-20"). S&P said, "We note that
current estimates for the costs are about HRK86 billion for the
25,000 buildings that were damaged by two earthquakes on March 22,
2020, in Zagreb, and nearly 1,000 buildings in the neigboring
counties. This leaves the city with costs of about HRK17 billion,
which is more than twice its annual budget. We acknowledge that the
reconstruction efforts will be spread over at least a decade, and
Zagreb's corresponding share in the funding might be subject to
support from the central government and the EU."

S&P said, "We are convinced that rising needs to fund capital
expenditure will lead to deficits after capital accounts over the
next few years. We expect that the tax shortfalls following the
economic recession will be covered by transfers from the central
government, leaving the operating balance between 6%-13% of
operating revenue in our 2020-2022 base case. Zagreb's budgetary
flexibility is limited because most revenue items depend on the
central government's decisions, and expenditure items like salaries
tends to be rigid. The city cannot change its main revenue source,
personal income taxes, except for the surtax charged. Expenditure
flexibility is constrained also by large inflexible subsidies
granted to the municipal holding company, and the now stand-alone
Zagrebacki Elektricni Tramvaj (ZET), which both support the city in
the supply of essential public services. Asset sales have proven
difficult in recent years and add no flexibility. We assume that
the outsourced entities will debt-finance revenue shortfalls due to
fee freezes and fewer ticket sales following quarantine measures.

"We assume Zagreb will accumulate debt in addition to financing
needs over the coming years to help pay off the deficit accumulated
over past years. We therefore forecast rising net new borrowing,
both at the city level and at Zagrebacki Holding. In our base-case
scenario, we assume that the city's tax-supported debt, which
includes debt of Zagrebacki Holding and other municipal companies,
will peak at about 85% of consolidated operating revenue in 2021
and decline slowly thereafter. In our view, this is high compared
with that of peers in the region, but somewhat mitigated by
Zagreb's relatively high operating margins. Direct debt is less
than half the tax-supported debt, reflecting the large outsourcing
of debt.

"Zagreb's largest contingent liability is its share of the
earthquake damage, which we calculate at about HRK17 billion,
equivalent to 220% of the city's operating revenue expected for
2020. In addition to this challenge, the city's other contingent
liabilities contribute to our assesment of Zagreb's liability
situation as a rating weakness. We include in this assessment
Zagrebacki Holding's and ZET's payables, as well as the long- and
short-term debt of related entities not already included in
tax-supported debt. In addition, high exposure to litigation is a
potential threat to the city's financial situation, with potential
costs totaling HRK1.3 billion at year-end 2019. We consider it
likely that the city will not be liable for the full amount, since
litigation includes disputes with the Croatian Ministry of Finance,
however the size of contingencies is extraordinary.

"Zagreb's liquidity situation remains a key credit weakness.
Available liquidity is still limited, with Zagreb's cash holdings
at year-end 2019 at HRK21 million, which we expect to remain
broadly constant and will not be remotely sufficient to cover the
next 12 months of debt service or upcoming deficits. Also, we view
access to external liquidity as limited, because Croatia's domestic
banking sector is relatively weak, as reflected in our assessment
of the banking sector."

Environmental, social, and governance (ESG) credit factors for this
credit rating change:

-- Health and safety

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

  Downgraded  
                                To              From
  Zagreb (City of)
   Issuer Credit Rating   BB-/Negative/--  BB/Negative/--




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TECHNICOLOR SA: S&P Ups ICR to 'CCC+' on Restructuring Completion
-----------------------------------------------------------------
S&P Global Ratings raised its long- and short-term ratings on
Technicolor S.A. to 'CCC+/C' from 'SD/D' (selective default and
default).

S&P is also raising its issue-level ratings on the group's EUR457
million bullet facility issued by Tech 6 and Technicolor USA Inc.
to 'B' from 'CCC', and its rating on Technicolor S.A.'s EUR572
million reinstated term loan to 'CCC' from 'D'.

Following its financial restructuring, Technicolor's liquidity
metrics have significantly improved and its debt is lower.
Technicolor now benefits from a favorable liquidity position, with
sources of cash exceeding uses by significantly more than 1.5x in
the next 12 months. Projected liquidity as of Sept. 30, 2020, now
includes about EUR200 million of cash, the undrawn Wells Fargo
facility of about EUR110 million, and positive cash funds from
operations (FFO) of about EUR80 million.

S&P thinks Technicolor's liquidity will be sufficient to operate in
the current challenging environment, including in the case of
moderate setbacks, and to complete the organizational restructuring
plan. Liquidity sources should also cover the negative FOCF it
expects in 2020 and in 2021.

At the same time, Technicolor's recent restructuring, including the
conversion of EUR660 million of debt to equity and the issuance of
EUR457 million of new debt, allows the group to have a healthier
capital structure. S&P expects Technicolor's adjusted debt will
amount to EUR1,415 million at year-end 2020, compared with EUR1,574
million in 2019 and even higher levels just before the
transaction.

COVID-19 will likely continue to weigh on Technicolor's revenue in
the near term.  S&P siad, "We forecast Technicolor's revenue will
decrease by 15%-20% in 2020. This is mainly due to the pandemic
resulting in the shutdown of filming studios and delay of film
releases, which has seriously hit revenue in the Production
Services and DVD Services segments. As a result, we forecast at
least a 30% revenue decline in Production Services (24% of 2019
total revenue) and at least a 20% decline in DVD Services (23% of
total revenue). Technicolor's Connected Home segment (52% of total
revenue) has been relatively more resilient to the pandemic, due to
sustained demand for TV and internet set-top boxes, but we also
expect a revenue decline in 2020, albeit of a less pronounced
10%."

Technicolor's operating performance could rebound in 2021 and
beyond.  S&P said, "Despite low visibility on potential recovery in
the next quarters, we forecast 5%-10% revenue growth in 2021,
assuming a quick rebound for production as filming resumes. This is
supported by 5%-10% growth in DVD Services in 2021, due to the
release of delayed movies, and flat revenue in Connected Home.
Furthermore, Technicolor plans to reduce its annual operational
expenses by EUR300 million by 2022, through savings in real estate,
personnel, and travel, which will support EBITDA. Finally, FOCF
could also benefit from improvement in its working-capital
management and lower stable capital expenditure (capex) of about
EUR110 million annually compared to EUR169 million in 2019. As a
result, we forecast FOCF will approach negative 5% in 2021 before
potentially turning positive in 2022."

However, Technicolor's rebound remains dependent on the evolution
of the pandemic. Another round of lockdowns or other restrictions
to contain the virus could prevent studio filming and movie
releases again, and imperil the company's recovery.

The stable outlook mainly reflects Technicolor's solid liquidity
metrics that compensate for our expectation of negative FOCF in the
next 12 months. In S&P's base case, it also incorporate revenue and
EBITDA margin recovery in 2021.

S&P said, "Although unlikely in the next 12 months, we could lower
the ratings on Technicolor if we lowered our liquidity assessment,
for instance if the sources-to-uses liquidity ratio weakened below
1x. This could be the case if the pandemic and related lockdowns
prevented Technicolor's expected recovery, putting further pressure
on the group's revenue and margins, resulting in materially more
negative FOCF than in our base case.

"Although unlikely in the next 12 months, we could raise the rating
if we observe successful execution of the company's turnaround
strategy, with EBITDA improving toward pre-crisis levels (EUR239
million on an adjusted basis in 2019), resulting in leverage
approaching 5x and at least breakeven FOCF."




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AIB GROUP: Fitch Rates EUR1BB Tier-2 Subordinated Notes 'BB+'
-------------------------------------------------------------
Fitch Ratings has assigned to AIB Group Public Limited Company's
(AIBG, BBB/Negative) EUR1 billion Tier-2 callable resettable
subordinated notes due 2031 (XS2230399441) a 'BB+' rating.

The securities have been issued under AIBG's EUR10 billion Euro
Medium Term Note Programme and are direct, unsecured and
subordinated obligations. The notes have a maturity of 10.5 years
and are callable after 5.5 years. The net proceeds from the issue
of the green bond will be allocated to an eligible green project
portfolio under the group's Green Bond Framework.

KEY RATING DRIVERS

The notes are rated two notches below AIBG's 'bbb' Viability Rating
(VR) to reflect poor recovery prospects for the notes arising from
subordination in case of a non-viability event.

Fitch does not apply further notches for non-performance risk
because the terms of the notes do not provide for loss absorption
on a "going concern" basis.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to negative
rating action/downgrade:

The notes could be downgraded if the bank's VR is downgraded.
AIBG's ratings would likely be downgraded if a recovery in the
Irish economy for 2021 becomes less likely or turns out to be
materially weaker than Fitch currently expects, either because of
the pandemic or the effects of the post-Brexit relationship between
the EU and the UK. A delay to this recovery would likely result in
sustained pressure on the bank's earnings and more permanent damage
to asset quality, which would be difficult to restore within a
short period of time. AIBG's ratings would also be downgraded on a
material increase in the holding company's double leverage, which
Fitch does not expect.

Factors that could, individually or collectively, lead to positive
rating action/upgrade:

The notes could be upgraded if the bank's VR is upgraded. Given
AIBG's focus on the fairly small and volatile Irish market rating
upside is limited. Nonetheless, in the event the group is able to
withstand rating pressure arising from the pandemic, an upgrade
would depend on its ability to strengthen its company profile and
profitability significantly and operate with a much lower risk
appetite.

The notes' rating is also sensitive to a change in notching should
Fitch change its assessment of loss severity or relative
non-performance risk.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING

The principal sources of information used in the analysis are
described in the Applicable Criteria.


AVOCA CLO XX: Moody's Confirms B2 Rating on Class F Notes
---------------------------------------------------------
Moody's Investors Service confirmed the ratings on the following
notes issued by Avoca CLO XX Designated Activity Company:

EUR18,875,000 Class D-1 Deferrable Mezzanine Floating Rate Notes
due 2032, Confirmed at Baa3 (sf); previously on Jun 3, 2020 Baa3
(sf) Placed Under Review for Possible Downgrade

EUR7,000,000 Class D-2 Deferrable Mezzanine Floating Rate Notes due
2032, Confirmed at Baa3 (sf); previously on Jun 3, 2020 Baa3 (sf)
Placed Under Review for Possible Downgrade

EUR24,750,000 Class E Deferrable Junior Floating Rate Notes due
2032, Confirmed at Ba2 (sf); previously on Jun 3, 2020 Ba2 (sf)
Placed Under Review for Possible Downgrade

EUR13,500,000 Class F Deferrable Junior Floating Rate Notes due
2032, Confirmed at B2 (sf); previously on Jun 3, 2020 B2 (sf)
Placed Under Review for Possible Downgrade

Moody's has also affirmed the ratings on the following notes:

EUR2,000,000 (current outstanding amount EUR 1.3 M) Class X Senior
Secured Floating Rate Notes due 2032, Affirmed Aaa (sf); previously
on May 15, 2019 Definitive Rating Assigned Aaa (sf)

EUR267,750,000 Class A-1 Senior Secured Floating Rate Notes due
2032, Affirmed Aaa (sf); previously on May 15, 2019 Definitive
Rating Assigned Aaa (sf)

EUR11,250,000 Class A-2 Senior Secured Floating Rate Notes due
2032, Affirmed Aaa (sf); previously on May 15, 2019 Definitive
Rating Assigned Aaa (sf)

EUR33,375,000 Class B-1 Senior Secured Floating Rate Notes due
2032, Affirmed Aa2 (sf); previously on May 15, 2019 Definitive
Rating Assigned Aa2 (sf)

EUR15,000,000 Class B-2 Senior Secured Fixed Rate Notes due 2032,
Affirmed Aa2 (sf); previously on May 15, 2019 Definitive Rating
Assigned Aa2 (sf)

EUR17,000,000 Class C-1 Deferrable Mezzanine Floating Rate Notes
due 2032, Affirmed A2 (sf); previously on May 15, 2019 Definitive
Rating Assigned A2 (sf)

EUR10,000,000 Class C-2 Deferrable Mezzanine Floating Rate Notes
due 2032, Affirmed A2 (sf); previously on May 15, 2019 Assigned A2
(sf)

Avoca CLO XX Designated Activity Company, issued in May 2019, is a
collateralised loan obligation (CLO) backed by a portfolio of
mostly high-yield senior secured European loans. The portfolio is
managed by KKR Credit Advisors (Ireland) Unlimited Co. The
transaction's reinvestment period will end in January 2024.

The actions conclude the rating review on the Class D-1, D-2, E and
F notes initiated on June 3, 2020.

RATINGS RATIONALE

The rating confirmations on the Class D-1, D-2, E and F notes and
the rating affirmations on the Class X, A-1, A-2, B-1, B-2, C-1 and
C-2 notes reflect the expected losses of the notes continuing to
remain consistent with their current ratings despite the risks
posed by credit deterioration. Moody's analysed the CLO's latest
portfolio and took into account the recent trading activities as
well as the full set of structural features.

Since the coronavirus outbreak widened in March, the decline in
corporate credit has resulted in a significant number of
downgrades, other negative rating actions, or defaults on the
assets collateralising the CLO.

The deterioration in credit quality of the portfolio is reflected
in an increase in Weighted Average Rating Factor (WARF) and of the
proportion of securities from issuers with ratings of Caa1 or
lower. According to the trustee report dated August 2020 [1], the
WARF was 3387, compared to value of 2995 in February 2020 [2].
Securities with ratings of Caa1 or lower currently make up
approximately 7.8% of the underlying portfolio. In addition, the
over-collateralisation (OC) levels have weakened across the capital
structure. According to the trustee report of August 2020 [1] the
Class A/B, Class C, Class D, Class E and Class F OC ratios are
reported at 137.1%, 126.7%, 118.1%, 110.8% and 107.3% compared to
February 2020 [2] levels of 137.5%, 127.0%, 118.4%, 111.1% and
107.5% respectively. Moody's notes that none of the OC tests are
currently in breach and the transaction remains in compliance with
the following collateral quality tests: Diversity Score, Weighted
Average Recovery Rate (WARR), Weighted Average Spread (WAS) and
Weighted Average Life (WAL).

The key model inputs Moody's uses in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. In its base case,
Moody's analysed the underlying collateral pool as having a
performing par and principal proceeds balance of EUR 449.5 million
after considering a negative cash exposure of around EUR 0.4
million, a weighted average default probability of 28.6%
(consistent with a WARF of 3399 over a weighted average life of 6.1
years), a weighted average recovery rate upon default of 46.1% for
a Aaa liability target rating, a diversity score of 56 and a
weighted average spread of 3.7%.

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

In consideration of the current high uncertainties around the
global economy and the ultimate performance of the CLO portfolio,
Moody's conducted a number of additional sensitivity analyses
representing a range of outcomes that could diverge, both to the
downside and the upside, from its base case. Some of the additional
scenarios that Moody's considered in its analysis of the
transaction include, among others: additional near-term defaults of
companies facing liquidity pressure; additional OC par haircuts to
account for potential future downgrades and defaults resulting in
an increased likelihood of cash flow diversion to senior notes; and
some improvement in WARF as the global economy gradually recovers
in the second half of the year and future corporate credit
conditions generally stabilize.

The coronavirus outbreak, the government measures put in place to
contain it, and the weak global economic outlook continue to
disrupt economies and credit markets across sectors and regions.
Its analysis has considered the effect on the performance of
corporate assets from the current weak global economic activity and
a gradual recovery for the coming months. Although an economic
recovery is underway, it is tenuous and its continuation will be
closely tied to containment of the virus. As a result, the degree
of uncertainty around its forecasts is unusually high.

Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety.

Methodology Underlying the Rating Action:

The principal methodology used in these ratings was "Moody's Global
Approach to Rating Collateralized Loan Obligations" published in
August 2020.

Counterparty Exposure:

The rating action took into consideration the notes' exposure to
relevant counterparties, such as account bank, using the
methodology "Moody's Approach to Assessing Counterparty Risks in
Structured Finance" published in June 2020. Moody's concluded the
ratings of the notes are not constrained by these risks.

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

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

Additional uncertainty about performance is due to the following:

  -- Weighted average life: The notes' ratings are sensitive to the
weighted average life assumption of the portfolio, which could
lengthen as a result of the manager's decision to reinvest in new
issue loans or other loans with longer maturities, or participate
in amend-to-extend offerings. The effect on the ratings of
extending the portfolio's weighted average life can be positive or
negative depending on the notes' seniority.

  -- Recovery of defaulted assets: Market value fluctuations in
trustee-reported defaulted assets and those Moody's assumes have
defaulted can result in volatility in the deal's
over-collateralisation levels. Further, the timing of recoveries
and the manager's decision whether to work out or sell defaulted
assets can also result in additional uncertainty. Recoveries higher
than Moody's expectations would have a positive impact on the
notes' ratings.

  -- Other collateral quality metrics: Because the deal can
reinvest, the manager can erode the collateral quality metrics'
buffers against the covenant levels.

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


FLY LEASING: Moody's Lowers Corp. Family Rating to B1
-----------------------------------------------------
Moody's Investors Service downgraded its ratings for Fly Leasing
Limited and its subsidiaries, including the company's Corporate
Family Rating to B1 from Ba3 and its long-term senior unsecured
rating to B3 from B1. The senior secured bank credit facility
rating for Fly Funding II S.a.r.l. were also downgraded to Ba3 from
Ba2. These rating actions conclude the review for downgrade
initiated on June 4, 2020 to evaluate the impact of the global
downturn in air travel on the company's credit profile. The outlook
is negative.

The disruption in air travel globally is related to the coronavirus
pandemic, which Moody's regards as a social risk under its
environmental, social and governance (ESG) framework, given the
substantial implications for public health and safety.

"FLY does have substantial unencumbered assets and cash to address
its $325 million senior unsecured notes maturing in October of next
year but anticipated decline in earnings and cash flow will further
pressure its already levered financial risk profile" said Inna
Bodeck, a vice president at Moody's Investors Service.

Downgrades:

Issuer: Fly Leasing Limited

LT Corporate Family Rating, Downgraded to B1 from Ba3

Senior Unsecured Regular Bond/Debenture (Foreign Currency),
Downgraded to B3 from B1

Issuer: Fly Funding II S.a.r.l.

Backed Senior Secured Bank Credit Facility (Foreign Currency),
Downgraded to Ba3 from Ba2

Outlook Actions:

Issuer: Fly Leasing Limited

Outlook, Changed to Negative from Rating Under Review

Issuer: Fly Funding II S.a.r.l.

Outlook, Changed to Negative from Rating Under Review

RATINGS RATIONALE

Moody's downgraded FLY's corporate family rating to B1 from Ba3 due
to the pressure on the company's current liquidity position
associated with the need to address its upcoming notes maturity in
October 2021. FLY's rating continues to reflect its improved fleet
composition, benefiting from the company's sale of older aircraft
and acquisition of newer models, resulting in reduced aircraft
remarketing and residual risks. Additionally, the majority of FLY's
fleet is comprised of narrow-body aircraft used primarily in
domestic travel, which, Moody's believes, has better prospects of
improved utilization rate overtime as the domestic travel recovers.
Moody's currently expects that air passenger demand will recover
strongly toward 2019 levels during 2023. Nonetheless, the company
does have a fair amount of aircraft (approximately 26% of the
entire fleet as at June 30, 2020) coming up for renewal by the end
of 2021, creating uncertainty around the company's ability to
re-lease some of its older aircraft. This, in turn, increases the
downside risks for FLY's revenues, earnings and cash flow.

As such, Moody's anticipates that FLY's debt-to-EBITDA leverage
(6.8x for the last 12 months ending June 30, 2020 incorporating
Moody's standard adjustments) will remain high as the earnings
slightly decline with the shrinking aircraft fleet. FLY's
experienced external manager BBAM Limited Partnership (BBAM)
remains a source of operational and remarketing strength for FLY,
although its management relationships with Incline Aviation Fund
and Nomura Babcock and Brown Co., Ltd. (Nomura Babcock & Brown)
create conflict of interest concerns.

FLY's ratings also reflect its high airline lessee concentrations
and greater reliance than previously anticipated on confidence
sensitive secured funding that encumbers its assets. At June 30,
2020, FLY's top ten airline customers comprised approximately 62%
of the carrying value of its fleet, whereas its larger competitors'
customer concentration ranged more favorably from 30% to 45%, as at
the same reporting date.

FLY has a good liquidity position supported by existing cash ($289
million as of June 30, 2020) and Moody's anticipates free cash flow
of approximately $220 million over the next 12 months. These cash
sources provide good coverage of the $170 million required annual
term loan amortization and other expenses, including $23 million
cash collateral potentially required to be posted under its
residual value guarantee agreements. Moody's expects FLY's upcoming
October 2021 unsecured notes maturity, along with term loan's and
Magellan facility's capital calls will put the company's liquidity
position under pressure. This in turn will create greater reliance
on the repayment of rent deferrals in the amount of approximately
$50 million by the end of 2021 as anticipated by FLY. The company
does not currently have any external committed revolving
facilities.

Aircraft lessors have accommodated airlines by agreeing to
short-term deferrals of a portion of lease payments in exchange for
repayment with interest on an agreed schedule. FLY had agreed with
airline customers to temporarily defer rental collections totaling
$83 million at June 30, 2020, which represented about 20% of FLY's
rental revenues for the previous 12 months. Moody's expects that
many weakened airlines will press for extensions of existing rent
deferral agreements and repayment schedules, extending the
temporary weakening of FLY's operating cash flow. Revenue declines
associated with defaulted leases and the increased difficulty of
redeploying aircraft into alternate lease arrangements given the
weak demand environment will further weaken operating cash flows
until leased aircraft demand strengthens as air travel volumes
recover.

A credit challenge for FLY and other aircraft leasing companies is
navigating the unprecedented decline in the aviation sector that
has accompanied the global coronavirus pandemic. Moody's expects
that air passenger demand will recover strongly toward 2019 levels
during 2023, but during the interim weak airline performance will
result in higher lease defaults and lower leased aircraft
utilization and lease rates, negatively affecting lessors' rental
revenues, earnings and cash flows through 2022. As a result of
these credit challenges, Moody's has lowered its assessment of
aircraft lessors' operating environment to Ba1 from Baa2 to reflect
lower expected industry stability.

Moody's does expect that leasing will remain an important source of
aircraft acquisition capital for the airline industry and that
recovery will provide new leasing opportunities that will help to
revive cash flows and earnings. Airlines focused on capital
efficiency will likely see value in leasing lower-cost mid-life
narrow-body aircraft as air travel demand recovers, particularly if
fuel costs remain low, which should benefit demand for FLY's fleet
and strengthen its earnings and cash flow prospects, once the
recovery in air travel is more established.

Moody's downgraded senior unsecured notes by two notches to B3 from
B1, and the CFR by one notch to B1 from Ba3, recognizing weakened
asset coverage.

The negative outlook reflects Moody's expectation that FLY's
earnings and liquidity could weaken more than anticipated in a
challenging near-term operating environment. It also incorporates
the assumption that FLY will refinance over the next three months
its senior unsecured notes maturing in October 2021 and that the
company will collect the majority of its deferral payments by the
end of 2021.

Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety. The rating action reflect the negative effects on FLY
of the breadth and severity of the shock, and the deterioration in
credit quality, profitability, capital and liquidity it has
triggered.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

The ratings could be downgraded if the company: 1) experiences
higher than expected deterioration in its topline and earnings; 2)
reduces its liquidity cushion through higher than expected loans'
capital calls, further payment deferrals or other cash needs; 3) is
unable to refinance its senior unsecured notes over the next three
months; or 3) experiences deterioration in other key metrics,
including tangible equity / tangible assets decline to less than
20%, stemming from challenging economic conditions.

The ratings could be upgraded if the company is able to exhibit
sustainability of its earnings structure by consistently renewing
its upcoming leases and maintaining its current scale, and is able
to maintain good liquidity profile.

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


HARVEST CLO XX: Moody's Confirms B2 Rating on Class F Notes
-----------------------------------------------------------
Moody's Investors Service confirmed the ratings on the following
notes issued by HARVEST CLO XX DAC:

EUR20,900,000 Class D Senior Secured Deferrable Floating Rate Notes
due 2031, Confirmed at Baa3 (sf); previously on Jun 3, 2020 Baa3
(sf) Placed Under Review for Possible Downgrade

EUR24,000,000 Class E Senior Secured Deferrable Floating Rate Notes
due 2031, Confirmed at Ba2 (sf); previously on Jun 3, 2020 Ba2 (sf)
Placed Under Review for Possible Downgrade

EUR12,000,000 Class F Senior Secured Deferrable Floating Rate Notes
due 2031, Confirmed at B2 (sf); previously on Jun 3, 2020 B2 (sf)
Placed Under Review for Possible Downgrade

Moody's has also affirmed the ratings on the following notes:

EUR1,500,000 (Current Outstanding amount EUR 250,000) Class X
Senior Secured Floating Rate Notes due 2031, Affirmed Aaa (sf);
previously on Nov 29, 2018 Definitive Rating Assigned Aaa (sf)

EUR246,000,000 Class A Senior Secured Floating Rate Notes due 2031,
Affirmed Aaa (sf); previously on Nov 29, 2018 Definitive Rating
Assigned Aaa (sf)

EUR12,000,000 Class B-1 Senior Secured Floating Rate Notes due
2031, Affirmed Aa2 (sf); previously on Nov 29, 2018 Definitive
Rating Assigned Aa2 (sf)

EUR30,000,000 Class B-2 Senior Secured Fixed Rate Notes due 2031,
Affirmed Aa2 (sf); previously on Nov 29, 2018 Definitive Rating
Assigned Aa2 (sf)

EUR27,500,000 Class C Senior Secured Deferrable Floating Rate Notes
due 2031, Affirmed A2 (sf); previously on Nov 29, 2018 Definitive
Rating Assigned A2 (sf)

HARVEST CLO XX DAC, issued in November 2018, is a collateralised
loan obligation (CLO) backed by a portfolio of mostly high-yield
senior secured European loans. The portfolio is managed by
Investcorp Credit Management EU Limited. The transaction's
reinvestment period will end in April 2023.

The action concludes the rating review on the Class D, E and F
notes initiated on June 3, 2020.

RATINGS RATIONALE

The rating confirmations on the Class D, E and F notes and rating
affirmations on the Class X, A, B-1, B-2 and C notes reflects the
expected losses of the notes continuing to remain consistent with
their current ratings despite the risks posed by credit
deterioration and loss of collateral coverage observed in the
underlying CLO portfolio, which have been primarily prompted by
economic shocks stemming from the coronavirus outbreak. Moody's
analysed the CLO's latest portfolio and took into account the
recent trading activities as well as the full set of structural
features.

Since the coronavirus outbreak widened in March, the decline in
corporate credit has resulted in a significant number of
downgrades, other negative rating actions, or defaults on the
assets collateralising the CLO.

The deterioration in credit quality of the portfolio is reflected
in an increase in Weighted Average Rating Factor (WARF) and of the
proportion of securities from issuers with ratings of Caa1 or
lower. According to the trustee report dated July 2020 the WARF was
3372 [1], compared to value of 2971 [2] as of February 2020.
Securities with ratings of Caa1 or lower currently make up
approximately 6.9% [1] of the underlying portfolio. In addition the
over-collateralisation (OC) levels have weakened across the capital
structure. According to the trustee report of July 2020 [1] the
Class A/B, Class C, Class D, Class E and Class F OC ratios are
reported at 138.2%, 126.1%, 118.3%, 110.4% and 106.9% compared to
February 2020 [2] levels of 139.0%, 126.9%, 119.0%, 111.1% and
107.5% respectively.

Moody's notes that none of the OC tests are currently in breach and
the transaction remains in compliance with the following collateral
quality tests: Diversity Score, Weighted Average Recovery Rate
(WARR), Weighted Average Spread (WAS) and Weighted Average Life
(WAL). However, the WARF test is not passing as per the July
trustee report [1].

The key model inputs Moody's uses in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. In its base case,
Moody's analysed the underlying collateral pool as having a
performing par and principal proceeds balance of EUR 397.9 million,
a weighted average default probability of 28.5% (consistent with a
WARF of 3398 over a weighted average life of 6.1 years), a weighted
average recovery rate upon default of 45.7% for a Aaa liability
target rating, a diversity score of 52 and a weighted average
spread of 3.6%.

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

Moody's notes that the August 2020 trustee report was published at
the time it was completing its analysis of the July 2020 data. Key
portfolio metrics such as WARF, diversity score, weighted average
spread and life, and OC ratios exhibit little or no change between
these dates.

In consideration of the current high uncertainties around the
global economy and the ultimate performance of the CLO portfolio,
Moody's conducted a number of additional sensitivity analyses
representing a range of outcomes that could diverge, both to the
downside and the upside, from its base case. Some of the additional
scenarios that Moody's considered in its analysis of the
transaction include, among others: additional near-term defaults of
companies facing liquidity pressure; additional OC par haircuts to
account for potential future downgrades and defaults resulting in
an increased likelihood of cash flow diversion to senior notes; and
some improvement in WARF as the global economy gradually recovers
in the second half of the year and future corporate credit
conditions generally stabilize.

The coronavirus outbreak, the government measures put in place to
contain it, and the weak global economic outlook continue to
disrupt economies and credit markets across sectors and regions.
Its analysis has considered the effect on the performance of
corporate assets from the current weak global economic activity and
a gradual recovery for the coming months. Although an economic
recovery is underway, it is tenuous and its continuation will be
closely tied to containment of the virus. As a result, the degree
of uncertainty around its forecasts is unusually high.

Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety.

Methodology Underlying the Rating Action:

The principal methodology used in these ratings was "Moody's Global
Approach to Rating Collateralized Loan Obligations" published in
August 2020.

Counterparty Exposure:

The rating action took into consideration the notes' exposure to
relevant counterparties, such as account bank and swap provider(s),
using the methodology "Moody's Approach to Assessing Counterparty
Risks in Structured Finance" published in June 2020. Moody's
concluded the ratings of the notes are not constrained by these
risks.

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

This transaction is subject to a high level of macroeconomic
uncertainty, which could negatively affect the ratings on the
notes, in light of uncertainty about credit conditions in the
general economy. In particular, the length and severity of the
economic and credit shock precipitated by the global coronavirus
pandemic will have a significant impact on the performance of the
securities. CLO notes' performance may also be impacted either
positively or negatively by: (1) the manager's investment strategy
and behaviour; and (2) divergence in the legal interpretation of
CDO documentation by different transactional parties because of
embedded ambiguities.

Additional uncertainty about performance is due to the following:

  -- Weighted average life: The notes' ratings are sensitive to the
weighted average life assumption of the portfolio, which could
lengthen as a result of the manager's decision to reinvest in new
issue loans or other loans with longer maturities, or participate
in amend-to-extend offerings. The effect on the ratings of
extending the portfolio's weighted average life can be positive or
negative depending on the notes' seniority.

  -- Other collateral quality metrics: Because the deal can
reinvest, the manager can erode the collateral quality metrics'
buffers against the covenant levels. However, as part of the base
case, Moody's considered spread and coupon levels higher than the
covenant levels because of the large difference between the
reported and covenant levels.

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


SMURFIT KAPPA: Moody's Affirms 'Ba1' CFR, Outlook Stable
--------------------------------------------------------
Moody's Investors Service affirmed the Ba1 corporate family rating
of Europe's leading manufacturer of paper-based packaging, Smurfit
Kappa Group plc. Concurrently, the rating agency has affirmed the
issuer's probability of default rating at Ba1-PD and the instrument
ratings of the senior notes issued by SKG's subsidiaries at Ba1.
The outlook on the ratings is stable.

"Today's rating action reflects the company's good track record of
maintaining appropriate credit metrics for the existing rating and
its sustainably positive free cash flow generation. While the
outbreak of global pandemic creates a challenging macroeconomic
environment, we are confident that SKG is able to continue
maintaining strong credit metrics commensurate with the Ba1
rating", says Vitali Morgovski, a Moody's Assistant Vice President
-- Analyst and lead analyst for SKG.

RATINGS RATIONALE

SKG's rating is supported by the group's large scale, regionally
diversified business profile with a leading market position in
paper-based packaging. While SKG's product portfolio is more
concentrated compared with some of its investment grade rated
peers, with sustainable, 100% recyclable paper-packaging solutions
it is focused on a structurally growing part of the forest products
industry. The company continues to innovate and to increase the
penetration of corrugated packaging solutions by substituting
plastic-based packaging.

However, the paper-packaging industry is cyclical and competitive
with little room for differentiation. It is also subject to
volatile input costs and selling prices, partly due to
overcapacity. This is mitigated by SKG's vertically integrated
business model with a large manufacturing footprint with mills and
plants to produce a full line of containerboard that is converted
into corrugated containers. The company's vertical integration
reduces its exposure to the volatility in containerboard prices and
secures supply during periods of market fluctuations.

SKG's profitability has been on an improving trend over the past
decade and its Moody's adjusted EBITDA margin averaged around the
mid-teens in percentage terms since 2010. The margin reached 17.8%
in 2019 in a fairly benign operating environment. But also in H1
'20, when the macroeconomic environment became extremely challenged
by the outbreak of the global pandemic and the subsequent lockdowns
implemented across many countries worldwide, SKG's profitability
deteriorated by merely 50 basis points to 17.3%. Moody's expects
that the company will be able to keep its profitability around the
mid-teens level in a more difficult operating environment in the
coming 12-18 months partly due the strength of its integrated
business profile, but also because around 70% of its sales are
generated from non-cyclical fast-moving consumer goods end-markets
(food and beverage in particular) with a growing exposure to
e-commerce and consumer awareness for sustainable packaging.

The outbreak of the global pandemic in H1 '20 had only a minor
impact on SKG's key credit metrics. Its Moody's adjusted gross
leverage was 3.2x at the end of June '20 (2.9x in 2019) compared to
3x-4x range Moody's views as appropriate for the current rating
whereas retained cash flow to debt (RCF/debt) ratio was 23% (22% in
2019), above the 15%-20% guidance range for the Ba1 rating. On a
net leverage basis, the ratio of 2.8x remained unchanged over the
first half-year 2020 as SKG prudently accumulated cash from its
strong free cash flow (FCF) generation and its decision to postpone
dividends distribution. However, the dividend payment of EUR193
million in September this year will reduce FCF for the full year
2020 and also lead to some softening in RCF/ debt ratio by the
year-end. Nevertheless, Moody's expects that SKG will continue to
build on its strong track record of sustainably positive FCF
generation, including the 2008-09 global economic downturn, also in
the coming 12-18 months.

SKG's financial policy follows a balanced approach towards
investments, acquisitions and shareholder distributions while
preserving the companies publicly stated net leverage target range
of 1.75x -- 2.5x (2.1x at H1 '20 and year-end 2019), which Moody's
views as largely commensurate with a crossover type of rating.

RATIONALE FOR STABLE OUTLOOK

The stable rating outlook reflects Moody's expectation that SKG
will continue operating with Moody's-adjusted EBITDA margin around
the mid-teens in percentage terms and generating sustainably
positive free cash flow. Moreover, Moody's expects SKG to balance
shareholder distributions and future acquisitions with its own
stated net leverage targets.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

Positive rating pressure could arise if:

  -- Moody's adjusted gross leverage was to decline below 3.0x on a
sustained basis;

  -- Moody's adjusted retained cash flow/ net debt ratio was to
improve above 20% on a sustained basis;

Conversely, negative rating pressure could arise if:

  -- Moody's adjusted gross leverage was to increase above 4.0x on
a sustained basis;

  -- Moody's adjusted retained cash flow/ net debt ratio was to
decline below 15% on a sustained basis;

  -- Failure to generate positive FCF due to weak operating
performance or a material increase in shareholder distribution

LIQUIDITY

Moody's considers SKG's liquidity to be good. At the end of June
2020, SKG reported EUR646 million of cash and cash equivalents,
which were further supplemented by EUR1.1 billion available under
its committed facilities, including EUR931 million under its
revolving credit facility (RCF) and EUR156 million in committed
securitisation facilities.

In addition, Moody's expects internally generated cash flow to
largely cover SKG's dividends and capital spending needs over the
next 12-18 months. SKG's debt maturity is generally well spread,
with around EUR174 million of short-term debt as of Q2 2020.

ESG CONSIDERATIONS

Despite the fact that the paper and paper-packaging industry is a
fairly large consumer of energy and water in the production
processes, with occasional environmental incidents, Moody's scores
it as "moderate risk" in its environmental heat map. This score
means that Moody's believes the industry's exposure to
environmental risk is broadly manageable, or it could be material
to credit quality in the medium to long term (five or more years).

SKG is among the leaders in the environmental sustainability
transition in Europe with a vision that is harmonised with the UN's
2030 Agenda and Paris Climate Accord. By year-end 2018, SKG reduced
fossil CO2 emissions per produced tonne of paper by 29%, compared
with the target of 40% set for 2030 in comparison with the 2005
baseline. In the field of forest management, 88% of packaging sold
in 2018 was sourced from certified forests, while the continuous
target is 90%. The company has also managed to reduce chemical
oxygen demand from its paper mills by 33%, aiming at a 60%
reduction by 2025 in the water discharged per produced tonne of
paper from the 2005 base level by returning clean water from
production back to nature. With regard to waste management, SKG has
reduced waste sent to landfill from its paper mills by 7.3% since
2013 against its target of 30% by 2025.

Social considerations for SKG are predominantly related to safety,
employee development and inclusion. Specifically, the company hosts
health and safety days across all countries and plants with a
continuous focus on reducing lost time accidents, along with
providing ongoing training that promotes a safe and respectful work
environment.

Corporate governance at SKG is centred around a well-established
governance structure, which is state of the art for a publicly
listed company of its size and consists of an audit committee, a
compensation committee and a nominations committee, supplemented by
a series of codes of conducts and policies covering a number of
areas relating to operational and managerial practices. SKG's
governance also balances its financial policies of low leverage and
strong liquidity while continuing to appropriately invest in its
business.

LIST OF AFFECTED RATINGS:

Issuer: Smurfit Kappa Acquisitions

Affirmations:

BACKED Senior Unsecured Regular Bond/Debenture, Affirmed Ba1

Senior Unsecured Regular Bond/Debenture, Affirmed Ba1

Outlook Actions:

Outlook, Remains Stable

Issuer: Smurfit Kappa Group plc

Affirmations:

LT Corporate Family Rating, Affirmed Ba1

Probability of Default Rating, Affirmed Ba1-PD

Outlook Actions:

Outlook, Remains Stable

Issuer: Smurfit Kappa Treasury Funding Limited

Affirmations:

BACKED Senior Secured Regular Bond/Debenture, Affirmed Ba1

Outlook Actions:

Outlook, Remains Stable

Issuer: Smurfit Kappa Treasury Unlimited Company

Affirmations:

BACKED Senior Unsecured Regular Bond/Debenture, Affirmed Ba1

Outlook Actions:

Outlook, Remains Stable

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Paper and
Forest Products Industry published in October 2018.

COMPANY PROFILE

Headquartered in Dublin, Ireland, Smurfit Kappa Group plc is
Europe's leading manufacturer of containerboard and corrugated
containers as well as specialty packaging, such as bag-in-box
packaging of liquids like water or wine. The group operates in 23
European countries and 12 countries in the Americas. In the 12
months ended June 2020, SKG generated EUR8.6 billion in revenue.
The group employs around 46 thousand people and has a primary
listing on the London Stock Exchange and a secondary listing on the
Irish Stock Exchange with a market capitalization of around EUR7.5
billion currently.




=========
I T A L Y
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BANCA POPOLARE DI SONDRIO: Fitch Affirms 'BB+' LongTerm IDR
-----------------------------------------------------------
Fitch Ratings has affirmed Banca Popolare di Sondrio's (Sondrio)
Long-Term Issuer Default Rating (IDR) at 'BB+' and removed it from
Rating Watch Negative. The Outlook is Negative.

The affirmation of the ratings primarily reflects Sondrio's
progress in improving asset quality following the deconsolidation
of EUR1 billion of legacy impaired loans in 1H20, which Fitch
believes has reduced near-term pressure on the bank's ratings. The
affirmation also acknowledges the relative strength of Sondrio's
capitalisation and funding, which are supported by satisfactory
capital buffers and a stable deposit base.

The Negative Outlook reflects downside risks to its assessment of
asset quality and profitability, which could face a sharper or more
sustained weakening than Fitch currently expects, particularly in
case of a more severe or protracted economic deterioration than in
its base case. This could eventually put pressure on capitalisation
through significantly increased capital encumbrance by unreserved
impaired loans, despite the currently high regulatory common equity
Tier 1 (CET1) ratio of 15.7%.

Under Fitch's forecasts, Italy's GDP is likely to contract by 10%
in 2020 before seeing a partial recovery in 2021. Italy has been
one of the worst-hit countries globally but has managed to contain
the coronavirus outbreak owing to its stringent quarantine rules.
Similar to other eurozone countries, Italy is experiencing a
resurgence in new cases but the government has been quick to act to
stem the contagion while insisting that no new country-wide
restrictions will be imposed.

KEY RATING DRIVERS

IDRS, VR AND SENIOR PREFERRED DEBT

The ratings of Sondrio reflect its weak asset quality and pressures
on operating profitability. The ratings also reflect the bank's
adequate franchise in its regions of operations, which results in
stable deposits underpinning a sound funding and liquidity profile.
The bank's Viability Rating (VR) also reflects the relative
strength of its regulatory capitalisation with ample buffers over
requirements.

In June 2020, Sondrio completed a EUR1 billion gross doubtful loans
securitization, which improved the impaired loans ratio to 9.4% at
end-1H20 from 12.9% at end-1Q20. Fitch expects asset quality to
deteriorate in the coming quarters as a result of the economic
downturn, although, in its base case, Fitch expects asset quality
to be supported by further EUR400 million gross doubtful loans
disposal by year-end. The bank's strengthened work-out process and
continuous focus on internal workout activities, together with
government support measures, should also allow the bank to
compensate for rising credit risk and to continue working through
its impaired loan stock.

The bank's impaired loans coverage ratio of about 60% at end-1H20
is one of the highest among direct domestic peers. Fitch believes
this is adequate as the residual impaired loans exposure, after the
recent and pro-forma for planned disposals, includes a large
portion of unlikely-to-pay exposures, which the bank has the
potential to cure.

Capitalisation (15.7% CET1 ratio at end-1H20) has ample buffers
over regulatory requirements and capacity to withstand some degree
of deterioration. The bank's capital encumbrance by unreserved
impaired loans has improved to 40% at end-1H20 from its peak of 74%
at end-2016, and in its base case Fitch expects it to remain under
control as new NPL inflows in 2H20 should be compensated for by
planned loan disposals. Its assessment also factors that Sondrio's
capitalisation remains at risk from its large exposure to Italian
government bond holdings at about 200% of CET1 capital at
end-1H20.

Sondrio's operating profitability is modest both by international
standards and compared with stronger domestic rated banks, although
so far aided by good cost efficiency. The bank reported an
operating loss in 1H20 largely on the back of the EUR48 million
loss from the sale of the junior and mezzanine tranches issued in
the doubtful loan securitisation, while net interest income
remained broadly stable year-on-year thanks to higher loan volumes
(partly the result of payment suspensions). Net commission income
suffered from reduced transaction volumes during lockdown but
started to recover from May and should support revenue in the
remainder of 2020. Fitch maintains a negative view on profitability
as Fitch expects it remain weak in the near-to-medium term as a
result of high loan impairment charges. The bank's expectation of
growing loan volumes and the benefit of TLTRO utilisation should
mitigate the effect of low interest rates. The bank is also
concentrating on its wealth management activities to sustain net
commission income.

The bank's funding and liquidity profile is sound. Customer
deposits have been stable, benefiting from the bank's adequate
franchise in its regions of operations and strong client
relationships. Funding sources are increasingly diversified due to
its access to both secured and unsecured wholesale funding.
Liquidity remains sound also thanks to adequate buffers of
unencumbered eligible assets and access to ECB financing, which
increased due to Sondrio's participation in the June 2020 ECB
T-LTRO3 auction.

Sondrio's Short-Term IDR of 'B' is the only option mapping to a
'BB+' Long-Term IDR.

Sondrio's long-term senior preferred notes are rated in line with
the bank's Long-Term IDR. Fitch expects the bank to use senior
preferred debt to meet its minimum requirement for own funds and
eligible liabilities. Fitch also does not expect the bank to build
up buffers of subordinated and senior non-preferred debt in excess
of 10% of risk-weighted assets (RWAs), which is required under its
criteria to rate senior preferred debt above the Long-Term IDR.

SUPPORT RATING AND SUPPORT RATING FLOOR

The Support Rating (SR) of '5' and Support Rating Floor (SRF) of
'No Floor' reflect Fitch's view that, although external support is
possible, it cannot be relied upon. Senior creditors can no longer
expect to receive full extraordinary support from the sovereign in
the event that the bank becomes non-viable.

The EU's Bank Recovery and Resolution Directive and the Single
Resolution Mechanism for eurozone banks provide a framework for the
resolution of banks that requires senior creditors to participate
in losses, if necessary, instead of or ahead of a bank receiving
sovereign support.

SUBORDINATED DEBT

Tier 2 subordinated debt of Sondrio is notched down twice from its
VR for loss severity to reflect poor recovery prospects. No
notching is applied for incremental non-performance risk because
write-down of the notes will only occur once the point of
non-viability is reached and there is no coupon flexibility before
non-viability.

DEPOSIT RATINGS

Sondrio's long-term deposit rating of 'BBB-' is one-notch above the
bank's Long-Term IDR to reflect the protection offered by
lower-ranking senior preferred and Tier 2 debt. The one-notch
uplift also reflects its expectation that the bank will maintain
sufficient buffers, given the need to comply with minimum
requirement for own funds and eligible liabilities.

Its short-term deposit rating of 'F3' is in line with its rating
correspondence table for banks with 'BBB-' long-term deposit
ratings.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to a
positive rating action/upgrade:

Sondrio's Outlook could be revised to Stable in case of a
lower-than-expected shock to the bank's asset quality and earnings
and if downside risks to its forecasts reduce. The Outlook could
also be revised to Stable if following the initial moderate
deterioration in asset quality and profitability, the bank's
impaired loans and operating profit return over the medium term to
the more normalised levels observed pre-crisis.

While rating upside is currently limited given the Negative
Outlook, Sondrio's ratings could be upgraded on evidence of easing
pressures on asset quality and earnings that have arisen from the
economic fallout from the coronavirus pandemic. This would need to
be accompanied by a further significant impaired loans reduction,
reduced capital encumbrance by unreserved impaired loans and
improved operating profitability.

Fitch would upgrade the long-term senior preferred debt by one
notch if resolution buffers were to be met with senior
non-preferred debt and more junior instruments or if, at some point
in the future, the size of the combined buffer of junior and senior
non-preferred debt is expected to sustainably exceed 10% of RWAs.

An upgrade of the SR and upward revision of the SRF of Sondrio
would be contingent on a positive change in the sovereign's
propensity to support the bank. In Fitch's view, this is highly
unlikely, although not impossible.

Factors that could, individually or collectively, lead to a
negative rating action/downgrade:

Sondrio's IDRs, VR and senior preferred debt ratings are sensitive
to the depth and duration of the economic crisis caused by the
pandemic and its impact on its financial profile. If the economic
fallout from the pandemic results in a more prolonged and
substantial damage to the bank's asset quality and earnings causing
significant capital erosion, including from higher-than-expected
capital encumbrance from unreserved impaired loans, the bank's
ratings could be downgraded. Sondrio's ratings are also sensitive
to a lower operating environment assessment by Fitch for Italian
banks.

The deposit ratings would likely be downgraded if the banks'
Long-Term IDR was downgraded. The deposit ratings are also
sensitive to a reduction in the size of the senior and junior debt
buffers to below 10% of RWAs.

The subordinated debt's rating is primarily sensitive to changes in
the VR, from which it is notched. The rating is also sensitive to a
change in the notes' notching, which could arise if Fitch changes
its assessment of their non-performance relative to the risk
captured in the VR.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING

The principal sources of information used in the analysis are
described in the Applicable Criteria.

ESG CONSIDERATIONS

The highest level of ESG credit relevance, if present, is a score
of '3'. This means ESG issues are credit-neutral or have only a
minimal credit impact on the entity(ies), either due to their
nature or to the way in which they are being managed by the
entity(ies).




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

DRYDEN 44 EURO: Moody's Confirms B2 Rating on Class F-R Notes
-------------------------------------------------------------
Moody's Investors Service has confirmed the ratings on the
following notes issued by Dryden 44 Euro CLO 2015 B.V.:

EUR18,700,000 Class D-R Mezzanine Secured Deferrable Floating Rate
Notes due 2030, Confirmed at Baa2 (sf); previously on Jun 3, 2020
Baa2 (sf) Placed Under Review for Possible Downgrade

EUR28,100,000 Class E-R Mezzanine Secured Deferrable Floating Rate
Notes due 2030, Confirmed at Ba2 (sf); previously on Jun 3, 2020
Ba2 (sf) Placed Under Review for Possible Downgrade

EUR11,800,000 Class F-R Mezzanine Secured Deferrable Floating Rate
Notes due 2030, Confirmed at B2 (sf); previously on Jun 3, 2020 B2
(sf) Placed Under Review for Possible Downgrade

Moody's has also affirmed the ratings on the following notes:

EUR232,400,000 (current outstanding amount EUR 229.1m) Class A-1-R
Senior Secured Floating Rate Notes due 2030, Affirmed Aaa (sf);
previously on Jul 16, 2018 Assigned Aaa (sf)

EUR12,300,000 Class A-2-R Senior Secured Fixed Rate Notes due 2030,
Affirmed Aaa (sf); previously on Jul 16, 2018 Assigned Aaa (sf)

EUR17,200,000 Class B-1-R Senior Secured Floating Rate Notes due
2030, Affirmed Aa2 (sf); previously on Jul 16, 2018 Assigned Aa2
(sf)

EUR26,000,000 Class B-2-R Senior Secured Fixed Rate Notes due 2030,
Affirmed Aa2 (sf); previously on Jul 16, 2018 Assigned Aa2 (sf)

EUR23,000,000 Class C-R Mezzanine Secured Deferrable Floating Rate
Notes due 2030, Affirmed A2 (sf); previously on Jul 16, 2018
Assigned A2 (sf)

Dryden 44 Euro CLO 2015 B.V. issued in June 2016, is a
collateralised loan obligation (CLO) backed by a portfolio of
mostly high-yield senior secured European loans. The portfolio is
managed by PGIM Limited. The transaction's reinvestment period
ended in June 2020.

The action concludes the rating review on the Classes D-R, E-R and
F-R notes initiated on June 2020.

RATINGS RATIONALE

The rating confirmations on the Classes D-R,E-R and F-R notes and
rating affirmations on the Classes A-1-R, A-2-R,B-1-R,B-2-R and C-R
notes reflect the expected losses of the notes continuing to remain
consistent with their current ratings despite the risks posed by
credit deterioration, which have been primarily prompted by
economic shocks stemming from the coronavirus outbreak. Moody's
analysed the CLO's latest portfolio and took into account the
recent trading activities as well as the full set of structural
features.

Since the coronavirus outbreak widened in March, the decline in
corporate credit has resulted in a significant number of
downgrades, other negative rating actions, or defaults on the
assets collateralising the CLO.

The deterioration in credit quality of the portfolio is reflected
in an increase in Weighted Average Rating Factor (WARF) and of the
proportion of securities from issuers with ratings of Caa1 or
lower. According to the trustee report dated August 2020 [1], the
WARF was 3498, compared to a value of 2999 in January 2020 [2].
Securities with ratings of Caa1 or lower currently make up
approximately 7.60% of the underlying portfolio. In addition, the
over-collateralisation (OC) levels have weakened across the capital
structure. According to the trustee report of August 2020 [1] the
Class A/B, Class C-R, Class D-R, Class E-R and Class F-R OC ratios
are reported at 138.2%, 127.9%, 120.5%, 110.9% and 107.4% compared
to January 2020 [2] levels of 139.3%, 128.9%, 121.7%, 112.1% and
108.5% respectively.

The key model inputs Moody's uses in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. In its base case,
Moody's analysed the underlying collateral pool as having a
performing par and principal proceeds balance of EUR394.5 million,
a defaulted par of EUR4.1 million, a weighted average default
probability of 27.9% (consistent with a WARF of 3575 over a
weighted average life of 5.1 years), a weighted average recovery
rate upon default of 43.02% for a Aaa liability target rating, a
diversity score of 51 and a weighted average spread of 3.95%.

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

In consideration of the current high uncertainties around the
global economy and the ultimate performance of the CLO portfolio,
Moody's conducted a number of additional sensitivity analyses
representing a range of outcomes that could diverge, both to the
downside and the upside, from its base case. Some of the additional
scenarios that Moody's considered in its analysis of the
transaction include, among others: additional near-term defaults of
companies facing liquidity pressure; additional OC par haircuts to
account for potential future downgrades and defaults resulting in
an increased likelihood of cash flow diversion to senior notes; and
some improvement in WARF as the global economy gradually recovers
in the second half of the year and future corporate credit
conditions generally stabilize.

The coronavirus outbreak, the government measures put in place to
contain it, and the weak global economic outlook continue to
disrupt economies and credit markets across sectors and regions.
Its analysis has considered the effect on the performance of
corporate assets from the current weak global economic activity and
a gradual recovery for the coming months. Although an economic
recovery is underway, it is tenuous and its continuation will be
closely tied to containment of the virus. As a result, the degree
of uncertainty around its forecasts is unusually high.

Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety.

Methodology Underlying the Rating Action:

The principal methodology used in these ratings was "Moody's Global
Approach to Rating Collateralized Loan Obligations" published in
August 2020.

Counterparty Exposure:

The rating action took into consideration the notes' exposure to
relevant counterparties, such as account bank and swap providers,
using the methodology "Moody's Approach to Assessing Counterparty
Risks in Structured Finance" published in June 2020. Moody's
concluded the ratings of the notes are not constrained by these
risks.

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

This transaction is subject to a high level of macroeconomic
uncertainty, which could negatively affect the ratings on the
notes, in light of uncertainty about credit conditions in the
general economy. In particular, the length and severity of the
economic and credit shock precipitated by the global coronavirus
pandemic will have a significant impact on the performance of the
securities. CLO notes' performance may also be impacted either
positively or negatively by 1) the manager's investment strategy
and behaviour and 2) divergence in the legal interpretation of CDO
documentation by different transactional parties because of
embedded ambiguities.

Additional uncertainty about performance is due to the following:

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

Recovery of defaulted assets: Market value fluctuations in
trustee-reported defaulted assets and those Moody's assumes have
defaulted can result in volatility in the deal's
over-collateralisation levels. Further, the timing of recoveries
and the manager's decision whether to work out or sell defaulted
assets can also result in additional uncertainty. Recoveries higher
than Moody's expectations would have a positive impact on the
notes' ratings.

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




===========
N O R W A Y
===========

NORWEGIAN AIR: Norwegian Government May Nationalize Airline
-----------------------------------------------------------
Oliver Gill at The Telegraph reports that Norwegian Air could be
nationalized under radical plans being considered by government
officials in Oslo.

Political leaders in Norway's ruling coalition have indicated that
they favor bailing out the struggling budget carrier rather than
the older flag carrier SAS, The Telegraph notes.

Local media reported that airline bosses have held talks with the
government last week, The Telegraph recounts.

According to The Telegraph, Jon Gunnes, transport policy spokesman
for the Liberal Party, said supporting Norwegian Air was "very
important".

Before the pandemic struck, Norwegian Air was one of the biggest
airlines operating from Gatwick airport behind easyJet and British
Airways, The Telegraph states.

It had been offering cut-price flights to several cities in North
America as well as more distant destinations including Rio and
Buenos Aires, The Telegraph relays.

Norwegian Air landed a GBP250 million government bailout in March
that wiped out shareholders and required creditors such as banks
and aircraft leasing companies to agree to a GBP1.2 billion
debt-for-equity swap, The Telegraph discloses.  

However, faced with a prolonged period of uncertainty, boss Jacob
Schram admitted last month that the injection was "not enough to
get through this prolonged crisis", The Telegraph notes.

Options on the table are understood to include Oslo taking a major
stake in the airline for a temporary period of time, The Telegraph
relays, citing industry sources.

Shareholders would be forced to inject fresh capital or have their
stakes diluted, according to The Telegraph.




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

O1 PROPERTIES: S&P Withdraws 'D' LongTerm Issuer Credit Rating
--------------------------------------------------------------
On Sept. 25, 2020, S&P Global Ratings withdrew its 'D' (default)
long-term issuer and issue credit ratings on Russian real estate
company O1 Properties Ltd. at the issuer's request.

S&P said, "At the time of the withdrawal, our 'D' rating reflected
the nonpayment of the coupon on the $350 million Eurobond in April
2020 followed by a nonpayment of its mezzanine loan. Furthermore,
weak liquidity supports our view of O1 Properties's general
default. We expect the company will not be able to pay most of its
obligations as they come due, unless a major debt restructuring it
is working on allows it to extend major debt maturities, including
the $350 million Eurobond repayment due in September 2021."


PROMSVYAZBANK PJSC: S&P Raises ICR to 'BB', Outlook Stable
----------------------------------------------------------
S&P Global Ratings raised its long-term issuer credit rating on
Promsvyazbank PJSC to 'BB' from 'BB-'. The outlook is stable.

Simultaneously, S&P affirmed its 'B' short-term issuer credit
rating on the bank.

S&P said, "We raised our ratings because we now see a higher
likelihood that the government will provide Promsvyazbank with
financial support if needed, taking into account the bank's
increased role as a dedicated bank servicing the country's
strategically important defense sector. We believe this enhances
the bank's credit quality. Therefore, to reflect this, we now add
three notches to Promsvyazbank's 'b' stand-alone credit profile
(SACP).

"We estimate that Promsvyazbank's share in servicing the state
defense sector has increased to about 60% by the number of
contracts, and we expect this will increase further in the next two
years. The law governing Promsvyazbank's special status as a
dedicated bank for defense sector enterprises was enacted at the
end of 2019. Under this law, the bank receives some preferential
treatment. Notably, it is the bank of the first choice for state
defense procurement contractors; selecting another eligible bank
would require approval from government bodies.

"We still regard Promsvyazbank's link with the government as very
strong because it is owned directly by the Russian government
through the Federal Agency for State Property Management
(Rosimuschestvo). The law governing Promsvyazbank stipulates that
the bank's ownership should stay fully with the government. The
bank's management team consists of high-profile executives with
extensive experience working at government-related institutions. We
also note that the bank has received significant government support
over the past two years. We expect that capital injections from the
state will take place at the end of 2020 and in 2021.

"Our SACP assessment reflects the bank's high and increasing
concentration in the defense sector, strong growth rate
significantly exceeding the average for the Russian banking sector
over the last two years that was influenced, among other factors,
by the merger with Sviazbank PJSC. We cannot exclude the
possibility that the bank may engage in other mergers or
acquisitions in the next two years. These aspects restrain our
assessment of the bank's business position, although we note
positively that the bank has accumulated significant expertise in
working with the defense sector and is gradually improving its
profitability.

"We forecast that Promsvyazbank's risk-adjusted capital (RAC) ratio
will decrease to 5.7%-5.8% by the end of 2022 from about 6.3% at
year-end 2019. This is because we expect the bank's expansion of
risk-weighted assets will be not compensated in full by a capital
increase. We expect that Promsvyazbank will demonstrate rapid loan
book growth, by about 45%, in 2020 despite the challenging economic
environment. However, we anticipate growth will slow to 5%-15% in
the next two years as the bank gradually forms its target loan
book.

"We expect the bank's credit losses will be about 2.1% in 2020 and
1.7%-1.8% in the next two years, lower than the Russian banking
system average. This is because we believe the bank's legacy
problem assets have been amply reserved and new loans are backed by
proceeds from government defense contracts, which enhances their
quality, in our view. Our forecast takes into account Russian ruble
20 billion (about $262 million) of capital injections from the
government in 2020, further capital injections in 2021 in line with
the bank's strategy, and capital inflow from banks that transfer
their defense-sector loans to Promsvyazbank. We don't expect
Promsvyazbank will pay dividends until 2023.

"We expect that Promsvyazbank will continue benefitting from a
stable client base, which now includes defense sector enterprises
and contains a large portion of current accounts in its total
liabilities. This should lead to lower funding costs than the
average for other commercial banks in Russia. We also expect that
the bank will maintain an ample liquidity cushion. Its liquid
assets calculated under International Financial Reporting Standards
accounted for about 35% of total assets on Sept. 1, 2020.

"The stable outlook on Promsvyazbank reflects our expectation that
the bank's creditworthiness will remain resilient despite the
challenging operating environment in Russia, supported by its
important role for and very strong link with the government.

"We could lower our ratings on Promsvyazbank in the next 12 months
if we observed pressure on the bank's stand-alone credit profile
due to increased credit costs or other unexpected losses caused by
the challenging operating environment. This could result in the
bank's RAC ratio falling below 5%, leading us to revise our
assessment of capital and earnings downward. We could also take a
negative rating action if the bank's public policy role were to
weaken, which we do not anticipate in our base-case scenario,
however."

A positive rating action appears unlikely in the next 12 months
because it would require an SACP that is at least two notches
stronger or further enlargement of the bank's role for the
government.




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

SERBIA: Fitch Affirms 'BB+' Foreign Currency Issuer Default Rating
------------------------------------------------------------------
Fitch Ratings has affirmed Serbia's Long-Term Foreign-Currency
Issuer Default Rating (IDR) at 'BB+' with a Stable Outlook.

KEY RATING DRIVERS

Serbia's ratings are supported by its relatively good economic
performance compared with rating peers, and a policy response that
Fitch expects to help generate a firm recovery from the pandemic
shock. Macroeconomic policy credibility built up over recent years,
anchored by the IMF Policy Coordination Instrument (PCI), has
resulted in low inflation, and higher FX buffers, and enhances
confidence in a post-crisis fiscal adjustment. Resilience to the
coronavirus shock is also supported by Serbia's minimal exposure to
tourism and the positive impact of lower energy prices. Governance,
human development indicators, and GDP per capita compare favourably
with the 'BB' medians. Set against these factors are Serbia's
higher public debt, greater share of foreign-currency denominated
debt, and higher net external debt. The current account deficit is
also wider than the 'BB' median although it has been fully covered
by strong FDI flows in recent years.

Fitch forecasts GDP will contract by 2.2% in 2020, following growth
of 4.2% last year and less than the projected 'BB' median
contraction of 4.8%. The economy grew 5.1% yoy in 1Q20 and a large
fiscal stimulus, a relatively short lockdown, and resilient FDI
helped limit the contraction in 2Q20 to 6.4%. Support measures have
kept employment broadly stable, and the fall in the unemployment
rate to 7.3% in 2Q20 from 9.7% in 1Q20 was driven by a 2.3pp
increase in the inactivity rate. The National Bank of Serbia (NBS)
has cut the main policy rate by 100bp since March and Fitch
forecasts a further 25bp cut to 1% by year-end, then unchanged
through 2021. Inflation, which has remained low and stable,
averaging 1.5% in the year to August, is projected to gradually
increase to an average 2.3% in 2021-2022.

A second wave of coronavirus infections in July had a much less
pronounced impact on economic activity than in April, and the
infection rate has since fallen back from around 400 new cases per
day to below 100, although a further spike represents a key risk to
the outlook. GDP is projected to grow 5.2% in 2021, driven by
recovering external demand, investment catch-up, and a partial
rebound in private consumption, partly offset by the unwinding of
fiscal measures. Fitch forecasts growth will remain above trend in
2022, at 4.8%, partly due to a still sizeable negative output gap.
Serbia's GDP growth averaged 3.1% in 2015-2019, and unfavourable
demographics and weak total factor productivity growth weigh on
longer-term growth potential.

The government's fiscal response to the shock totals close to 8% of
GDP this year (taking into account revenue and spending measures
but excluding guarantees of bank loans), and Fitch forecasts the
general government deficit increases to 8.1% of GDP in 2020, from
0.2% in 2019. The large majority comprises deferred employment tax,
wage subsidies, additional healthcare spending, and a universal
cash transfer, all of which expire in 2020 (with the exception of
healthcare pay rises totalling 0.4% of GDP). Fitch assumes only
very targeted extension of fiscal measures, and forecast the
general government deficit narrows to 2.8% of GDP in 2021 and 1.7%
in 2022, below the projected 'BB' medians of 4.7% and 3.6%. The
government's fiscal targets, for a deficit of 2.0% of GDP in 2020
and then a steady return to a medium-term deficit of 0.5%, are
expected to remain key anchors of its macroeconomic strategy.

There has been a moderate increase in contingent liability risk,
including from state guarantees of bank loans extended this year,
which are not expected to be called before 2022 and are capped at
EUR480 million (1% of GDP). There is also discussion of support to
Air Serbia ahead of a loan falling due over the next month
totalling 0.3% of GDP, and Fitch considers other contingent
liability risks from state-owned enterprises have increased
somewhat.

The government has executed almost 95% of its planned debt issuance
for 2020, including a EUR2 billion (4.4% of GDP) seven-year
Eurobond in May, at a yield of 3.4%. Domestic issuance, totalling
RSD277 billion (5.2% of GDP) in the year to mid-September, was
helped by the additional capacity created by EUR825 million of
outright purchases by NBS of government securities from banks. IMF
Rapid Financing Instrument funds of close to EUR850 million are
also available to Serbia, further mitigating funding risks. The
average maturity of central government debt has lengthened to 6.5
years from 5.1 years at end-2016 but the foreign-currency share of
public debt at 71% remains well above the current 'BB' median of
59%.

Fitch forecasts general government debt, which had fallen to 52.9%
of GDP at end-2019 from 68.8% at end-2016, increases to 59.0% of
GDP at end-2020. Fitch then projects a fall to 54.9% of GDP by
end-2022. These incorporate a debt reducing adjustment for the sale
of the government's 83% stake in Komercijalna Banka of 0.8% of GDP,
which is expected at the end of this year, offset by
crystallisation of SOE contingent liabilities totalling 1.0% of GDP
in 2021-2022. The potential for further government support
represents a risk to its forecasts. Under its longer-term debt
projections, which assume average GDP growth of 3.9% and a 0.4pp
improvement in the primary surplus in 2023-2024, general government
debt declines to 51.0% of GDP at end-2024.

Serbia's balance of payments position has been resilient to the
coronavirus shock. Fitch forecasts the current account deficit
narrows to 5.8% of GDP, from 6.9% of GDP in 2019 helped by lower
oil prices and by the high capital and export-oriented content of
imports. Serbia also has a near-balanced net tourism position. Net
FDI moderated in 7M20 to EUR1.6 billion (from EUR3.6 billion for
2019 as a whole) but still covered 107% of the current account
deficit, and Fitch projects a pick-up to average 6.1% of GDP in
2021-2022. Fitch forecasts the current account deficit will
steadily narrow, to 5.5% of GDP in 2022 (but still well above the
projected 'BB' median of 2.1%) partly due to the sharper recovery
in the eurozone (which accounts for 40% of Serbia's exports).

Foreign exchange reserves have been broadly stable at EUR13.4
billion in August, from EUR13.1 billion in March and a peak of
EUR14.3 billion in May. There have been limited capital outflows
and the exchange rate has remained between EUR/RSD117.5 and
RSD118.0, with net FX sales by NBS totalling EUR1.5 billion this
year. Fitch forecasts FX reserves increase to 5.5 months of current
external payments at end-2022 from 5.1 months at end-2019, above
the projected 'BB' median of 4.4 months. Net external debt/GDP is
projected to widen 4.1pp in 2020 to 36.8% and then narrow to 33.3%
in 2022, still above the peer group median of 24.5%.

Fitch anticipates that economic policy and the relatively slow pace
of structural reform will remain largely unchanged, following the
strengthened position of President Vucic's SNS party from June's
election. The composition of the new government is set to be
announced over the next month and Fitch expects there will be a
renewal of the previous coalition agreement with SPS. The main
opposition parties boycotted the election, citing concerns over
media freedom and electoral processes and have announced they will
not participate in the presidential elections due by April 2022 but
anti-government protests have not resulted in widespread disorder.

The coronavirus shock and absence of a full government since May
has set back the already limited reform momentum, and there have
been delays to the introduction of a new public sector wage system
and fiscal rules. Measures have been advanced in strengthening tax
administration and public financial management, and the remainder
of the IMF PCI, which expires in January, is expected to include a
focus on improving risk management and weak governance in
state-owned enterprises. Fitch considers it likely there will be
renewed Fund engagement following the expiration of the PCI, the
nature of which is currently unclear, helping to anchor macro and
fiscal policy.

EU accession progress has remained slow, with no new chapters
opened over the last year. The most problematic areas continue to
relate to the rule of law, and Fitch expects a long delay to the
2025 target date. Relations with Kosovo have improved over the last
six months, and the 100% tariffs applied on Serbian exports were
lifted in April. A recent US-brokered agreement is a further step
to normalising relationships with Kosovo and includes plans to
undertake joint infrastructure projects although there is
considerable implementation risk.

Banks' sound credit metrics have helped the sector absorb the
coronavirus shock. The sector is well capitalised, with a CET1
ratio of 21.8% at end-June, and 76% of the sector (by assets) is
foreign-owned which also reduces contingent liability risk. The NPL
ratio fell further to 3.6% in July, from 4.1% at end-2019 (and
17.0% at end-2016), although a weakening in asset quality from next
year is likely, as support measures fall away. A lower net interest
margin contributed to the return on equity falling 2pp since
end-2018 to 8.3% in June and Fitch expects a further reduction in
profitability this year. The share of local currency deposits in
total deposits increased to 38.5% in June from 35.6% in March but
well below the 'BB' median of 75.5%. NBS liquidity measures have
helped lift the liquidity ratio to 210% from 200% at end-2019, and
the state loan guarantees also supported strong credit growth, of
13.6% yoy in July.

ESG - Governance: Serbia has an ESG Relevance Score of 5 for both
Political Stability and Rights and for the Rule of Law,
Institutional and Regulatory Quality and Control of Corruption, as
is the case for all sovereigns. These scores reflect the high
weight that the World Bank Governance Indicators (WBGI) have in its
proprietary Sovereign Rating Model. Serbia has a medium WBGI
ranking, at the 50th percentile, reflecting a moderate level of
rights for participation in the political process, moderate
institutional capacity, established rule of law and a moderate
level of corruption.

RATING SENSITIVITIES

The main factors that could, individually or collectively, lead to
positive rating action/upgrade are:

Public Finances: General government debt/GDP returning to a firm
downward path over the medium term, for example due to a
post-coronavirus-shock fiscal consolidation.

Macro: Greater convergence in GDP per capita with higher rated
peers, for example due to structural reforms improving medium-term
growth prospects.

External Finances: Reduction in external vulnerabilities, for
example from a smaller share of foreign currency external
government debt, and a fall in overall net external debt/GDP.

The main factors that could, individually or collectively, lead to
negative rating action/downgrade:

External and Public Finances: Acute external financing pressures
leading to a fall in reserves and a sharp rise in debt levels and
interest burden, a high share of which is foreign-currency
denominated.

Public Finances: A sustained increase in general government
debt/GDP over the medium term, for example due to a structural
fiscal loosening and/or weaker GDP growth prospects.

External Finances: Worsening of external imbalances leading to
increased external liabilities.

SOVEREIGN RATING MODEL (SRM) AND QUALITATIVE OVERLAY (QO)

Fitch's proprietary SRM assigns Serbia a score equivalent to a
rating of 'BB+' on the Long-Term FC IDR scale.

Fitch's sovereign rating committee did not adjust the output from
the SRM to arrive at the final Long-Term Foreign-Currency IDR.

Fitch's SRM is the agency's proprietary multiple regression rating
model that employs 18 variables based on three year centred
averages, including one year of forecasts, to produce a score
equivalent to a LT FC IDR. Fitch's QO is a forward-looking
qualitative framework designed to allow for adjustment to the SRM
output to assign the final rating, reflecting factors within its
criteria that are not fully quantifiable and/or not fully reflected
in the SRM.

KEY ASSUMPTIONS

Fitch assumes that EU accession talks will remain an important
policy anchor.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING

The principal sources of information used in the analysis are
described in the Applicable Criteria.

ESG CONSIDERATIONS

Serbia has an ESG Relevance Score of 5 for Political Stability and
Rights as World Bank Governance Indicators have the highest weight
in Fitch's SRM and are highly relevant to the rating and a key
rating driver with a high weight.

Serbia has an ESG Relevance Score of 5 for Rule of Law,
Institutional & Regulatory Quality and Control of Corruption as
World Bank Governance Indicators have the highest weight in Fitch's
SRM and are therefore highly relevant to the rating and are a key
rating driver with a high weight.

Serbia has an ESG Relevance Score of 4 for Human Rights and
Political Freedoms as strong social stability and voice and
accountability are reflected in the World Bank Governance
Indicators that have the highest weight in the SRM. They are
relevant to the rating and a rating driver.

Serbia has an ESG Relevance Score of 4 for Creditor Rights as
willingness to service and repay debt is relevant to the rating and
is a rating driver for Serbia, as for all sovereigns.

Except for the matters discussed, the highest level of ESG credit
relevance, if present, 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.




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

RADISSON HOSPITALITY: Fitch Withdraws 'B' Issuer Default Rating
---------------------------------------------------------------
Fitch Ratings has affirmed Radisson Hospitality AB's (Radisson)
Issuer Default Rating (IDR) at 'B' with Negative Outlook. Fitch has
simultaneously withdrawn the rating for commercial reasons.

The 'B' IDR reflects Radisson's solid market position in the
upscale hotel segment in EMEA, with a balanced portfolio structure
shifting to an asset-light model, and a continued deleveraging
capacity, which Fitch expects to resume from 2021. It also reflects
tangible support from its shareholder - a consortium led by
Jinjiang International Holdings Co, Ltd. (Jinjiang; BBB+/Stable) -
including up to EUR200 million of cash in the form of shareholder
subordinated loans, to face the coronavirus-related disruption.

However, the company's free cash flow (FCF) volatility is high and
may further increase from potential dividend distributions, and its
leverage is sizeable.

The Negative Outlook signals high uncertainty around the pace of
recovery to pre-crisis trading conditions in a sector where
business travel remains low, and around the deleveraging path.
Radisson redeemed its EUR250 million 6.875% senior secured notes
due 2023 and no longer has any bonds outstanding.

The ratings were withdrawn for commercial purposes.

KEY RATING DRIVERS

High Exposure to Coronavirus Disruption: The Negative Outlook
reflects the material impact of the economic disruption caused by
the pandemic on the lodging sector. As a result of lockdowns
imposed by governments to limit the pandemic spread, and despite
exceptional measures to offset sharp declining demand, Fitch
expects worldwide occupancies to sharply fall during 2020, before
gradually recovering from 2021, albeit at a slow pace.

Bond Redemption Might Increase Leverage: The early redemption of
the EUR250 million senior notes evidences the shareholder's growing
involvement in Radisson's financial policy. Assuming the notes have
been replaced by private debt, Fitch projects funds from operations
(FFO) adjusted net leverage to peak in 2020 and to remain around
5.0x in 2021-2023 (2019: 4.2x).

This is due partly to the pandemic disruption and to its assumption
that Jinjiang could upstream dividends funded by debt (more likely
once the pandemic abates) as current restrictions on dividends and
indebtedness have now ended. This could slow the deleveraging
trajectory, albeit with no impact on medium-term deleveraging
capacity.

Shareholder Support Reinforces Liquidity: Radisson's shareholder
has provided Radisson with a shareholder loan of EUR100 million
that receives 100% of equity credit under Fitch's criteria. The
cash injection will ease cash burn during 2020, cover potential
operating losses and capex needs until operations resume. An
unrestricted cash balance of EUR116 million as of June 2020 and a
potential additional EUR100 million shareholder contribution
reinforces liquidity headroom over the next few months.

Parent-Subsidiary Linkage: The 94% takeover of Radisson by the
Jinjiang-led consortium has led Fitch to apply its
Parent-Subsidiary Rating Linkage Criteria. Fitch believes that the
support that Jinjiang as a government-related entity could receive
from the Shanghai government is unlikely to flow to Radisson. Fitch
therefore uses Jinjiang's 'b' Standalone Credit Profile (SCP)
rather than its 'BBB+' IDR as a starting point, which is equal to
Radisson's 'B' IDR.

The links between the entities are strong and could strengthen
given that the inclusion of Radisson in Jinjiang's financial
management is now permitted. Fitch deems the operational and
strategic links moderate to strong.

Flexibility in Cost Base: Fitch projects a sharp decline in
Radisson's revenues of close to 60% in 2020, leading to a negative
EBITDA margin, despite a reasonably flexible cost base. However,
costs are above industry peers' as a result of expensive staff
costs, leases and fees paid to sister Radisson Hospitality Inc.
Cost flexibility is supported by an efficient cap mechanism on
rentals, as 68% of all leases comprise a variability component
acting as downside protection. The strategy of the group also
incorporates an optimisation plan to gain organisational
efficiency, which is successfully implemented so far.

Upscale Positioning Currently Tested: Radisson is well-positioned
as an upscale operator in 79 countries, reinforced by an ambitious
repositioning plan started in 2018. It covers differentiated target
customers (54% business clients with a generally upscale profile),
which is a challenging positioning in the current environment where
international business travel is at its lowest level. Radisson has
a balanced portfolio structure with an asset-light model (only 17%
of the rooms are leased) with recurring, albeit flexible, fees
partly mitigating FCF volatility, given the low capex it entails.

DERIVATION SUMMARY

Radisson is the third-largest hotel chain in Europe, but its scale
and diversification are limited in a hospitality industry dominated
by leaders with a significant presence such as Marriott
International, Inc., Accor SA (BBB-/Negative) and Melia. Radisson
is comparable with NH Hotel Group S.A. (NHH, B-/Negative) in urban
positioning, although Radisson is present in a greater number of
cities. Being part of a global group and focused on the attractive
upscale segment provides brand awareness worldwide. This market
recognition and the capability to grow under an asset-light model
acts as a competitive advantage compared with more local and
asset-heavy peers, such as Whitbread PLC (BBB/Negative) or Alpha
Group SARL (B-/Negative).

Radisson operates with lower EBITDA margins than peers, due to
above-average rent expenses, fees derived from the master franchise
agreement with Radisson Hotel Group, high salaries in Nordic and
western Europe countries and a sub-optimal pricing strategy.
However, a variability mechanism deployed in its lease contracts
establishes a loss limit in a downturn such as the current
pandemic. Funds from operations (FFO) adjusted net leverage of 4.2x
at end-2019 is lower than close peers.

KEY ASSUMPTIONS

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

  - Revenue decreasing by more than 55% in 2020, driven by RevPAR
(revenue per available room) decline across all regions.

  - Sharp EBITDA deterioration in 2020 as a result of limited
flexibility of the cost base and sudden reduction of trading
activity. EBITDA margin recovering towards 15% by 2022.

  - EUR400 million of capex for 2020-2023, including maintenance
capex and repositioning spending.

  - Up to EUR175 million of extraordinary dividend distributions
for 2021-2023 (this is Fitch's own assumption).

  - No disposal of Prizehotel during 2020-2023.

RATING SENSITIVITIES

Not applicable.

LIQUIDITY AND DEBT STRUCTURE

Adequate Liquidity: Radisson had an unrestricted cash position of
EUR116 million at end-June 2020. Fitch expects this to be consumed
by the pandemic disruption, partly offset by the recent EUR100
million subordinated shareholder loan that Radisson Hospitality AB
received on June 4, 2020. The EUR20 million revolving credit
facility was fully reimbursed in September 2020.

Liquidity has also been supported by the capacity to shore up
liquidity with further cash-preservation measures. This includes
flexibility on both capex and the cost base and a potential
additional cash injection up to EUR100 million in the form of
subordinated shareholder funding. All this should cover the cash
needs required for the group's ongoing operations during the
COVID-19 crisis.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING

The principal sources of information used in the analysis are
described in the Applicable Criteria.

PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS

Radisson's IDR is directly linked to the SCP of Jinjiang.

ESG CONSIDERATIONS

The highest level of ESG credit relevance, if present, is a score
of 3. This means ESG issues are credit-neutral or have only a
minimal credit impact on the entity(ies), either due to their
nature or to the way in which they are being managed by the
entity(ies). Following the withdrawal of ratings for Radisson,
Fitch will no longer be providing the associated ESG Relevance
Scores.




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

GUINNESS MAHON: FSCS Receives More Than 1,000 Claims
----------------------------------------------------
Amy Austin at FTAdviser reports that the Financial Services
Compensation Scheme has received more than 1,000 claims against
embattled self-invested personal pension provider Guinness Mahon.

According to FTAdviser, the claims are waiting to be passed to the
claims processing teams for assessment as the lifeboat scheme still
needs to determine whether they are valid.

The FSCS said it has received documents from Guinness Mahon's
administrators, which should help it determine if the provider owes
a civil liability to its clients, FTAdviser relates.  It can then
begin to pay out on any valid claims, FTAdviser states.

Eligible clients can bring claims to the FSCS up to the limit of
GBP85,000, FTAdviser discloses.

Adam Stephens and Nick Myers of Smith & Williamson were appointed
as joint administrators of Guinness Mahon Trust Corporation Limited
in February but immediately sold the Sipp business and certain
assets to Hartley Pensions for an undisclosed sum, FTAdviser
recounts.

The sale of Guinness Mahon included around 4,000 Sipps and certain
other assets but did not include the legal entity Guinness Mahon
Trust Corporation Limited which remains in administration,
FTAdviser notes.

The Sipp provider entered administration following a raft of
complaints about historic high-risk non-standard investments and
the alleged lack of due diligence that the provider carried out
before accepting these investments into its Sipps, FTAdviser
relays.


NMC HEALTH: Placed Into Administration in UAE, Secures Funding
--------------------------------------------------------------
Simeon Kerr at The Financial Times reports that NMC Health has been
placed into administration in the United Arab Emirates, allowing
the troubled hospital group to meet September salaries by securing
an additional US$325 million in funding.

During online hearings at the courts of Abu Dhabi's international
financial centre on Sept. 27, NMC Healthcare and related companies
successfully applied for protection against enforcement of debt
claims, in an emergency bid to sustain operations amid a second
spike in coronavirus cases in the Gulf state, the FT relates.

NMC, the largest private healthcare provider in the UAE, and its
founder BR Shetty have been confronted by legal challenges since
the group reported US$4 billion-US$5 billion in undisclosed debt
and reported evidence of alleged fraud, the FT notes.

The company, once a star on the London Stock Exchange, imploded
this year as the accounting scandal engulfed it and other
businesses founded by Indian entrepreneur Mr. Shetty, who has
blamed members of former management for the crisis, the FT
recounts.

According to the FT, Tom Smith, a lawyer representing the
companies, said NMC was a "viable and profitable" company damaged
by the alleged fraud, adding that some or all of the undisclosed
debt had been misappropriated.

NMC, the UK-listed holding company that was placed into
administration in April, also won judge Sir Andrew Smith's approval
in Abu Dhabi for new finance from creditors, the FT states.  The
court heard despite the successful application on Sept. 27, staff
would be paid a day late, the FT says.

The court heard NMC's overall debt load is US$6.8 billion, of which
US$6.5 billion is secured, the FT discloses.  According to the FT,
a co-ordinating committee of 10 lenders, that have claims totalling
US$2.8 billion on the company, have also been liaising with other
creditors over US$2.2 billion in outstanding debts.

The lawyers, as cited by the FT, said entering administration in
the UAE would bring the company a period of stability after months
of turmoil, paving the way for a restructuring process seeking to
maximize returns for creditors by avoiding rushed asset sales that
would be triggered by liquidation.


POLPO: Files Notice of Administration
-------------------------------------
BigHospitality, citing the Times, reports that Polpo, the
Venetian-style small plates restaurant group, which was launched on
Soho's Beak Street by Russell Norman and Richard Beatty in 2009,
has filed a notice of administration.

The group currently operates restaurants in Soho, the home of its
first venue, and in Chelsea, BigHospitality discloses.

Last year, Polpo underwent a company voluntary agreement (CVA) that
saw it exit two loss-making venues, which Mr. Beatty said would
allow the group to avoid entering into administration or
liquidation, BigHospitality relates.


REGUS PLC: IWG May Place Business Into Insolvency
-------------------------------------------------
Oliver Gill and Hannah Boland at The Telegraph report that shared
offices provider IWG will this week test the mettle of landlords
with the threat of putting a subsidiary that guarantees rent
payments into bankruptcy protection.

According to The Telegraph, Jersey-based Regus plc, the name best
associated with IWG, could be placed into insolvency within days,
meaning it will not be on the hook for lease guarantees worth
almost GBP800 million.

IWG runs serviced offices but does not typically own the buildings,
The Telegraph notes.  Office tenants are responsible for paying
rent to landlords, but Regus plc usually provides guarantees to
protect the property owners against non-payment of rent, The
Telegraph states.

Putting Regus plc into bankruptcy protection could render these
guarantees worthless while leaving IWG, run by Monaco-based
millionaire Mark Dixon, comparatively financially unscathed, The
Telegraph discloses.

The move, first reported by trade title CoStar last week, sparked
anger among landlords this weekend, The Telegraph relays.  "This
was not about Covid, this was clearly pre-determined," one property
owner told the Sunday Times.  "It is immoral at best."

A spokesman for IWG, as cited by The Telegraph, said: "The Covid-19
pandemic is a black swan event and it has severely impacted our
business and presented us with unforeseen challenges.  Regus plc
does not operate any of our centres.

"It supplies rental guarantees to only 15pc of IWG's global
network.  In any restructuring of a guarantor, none of our
operations are affected.  As the business has expanded in recent
years to meet the increased global demand for distributed working,
so has the value of the guarantees."


ROLLS-ROYCE PLC: Moody's Lowers CFR to Ba3, Outlook Negative
------------------------------------------------------------
Moody's Investors Service downgraded the corporate family rating of
Rolls-Royce plc to Ba3 from Ba2. Concurrently Moody's has
downgraded the company's long-term senior unsecured rating to Ba3
from Ba2. The outlook remains negative.

The rating action reflects:

  -- A worsening outlook for recovery of flight hours and
deliveries in the company's large commercial engine division over
the remainder of 2020 and in 2021

  -- Expectations for cash outflows in 2020 and 2021 at the higher
end of Moody's estimates, which could put pressure on liquidity and
balance sheet metrics in the absence of further finance raising

  -- Whilst the company is evaluating potential equity and debt
issuance, which would be credit positive, concerns that this would
not be sufficient to maintain a balance sheet commensurate with a
Ba2 rating

Moody's has also downgraded the rating on the company's senior
unsecured Euro Medium Term Notes (EMTN) programme to (P)Ba3 from
(P)Ba2, downgraded the notes issued under the EMTN programme to Ba3
from Ba2, and downgraded the company's probability of default
rating to Ba3-PD from Ba2-PD.

RATINGS RATIONALE

The company's Ba3 corporate family rating reflects: 1) high
barriers to entry given the critical technological content of the
company's engines; 2) the solid performance of the company's
defence division and its diverse revenues across different end
markets; 3) the strong to date performance of the company's Trent
XWB and Trent 7000 engine programmes which represent the majority
of future orders and installed engine base; 4) the strategic
importance of the company to UK defence capabilities and to the
aerospace supply chain, resulting in a high likelihood of
government support if required as a result of the coronavirus
outbreak; and 5) the company's commitment to a conservative
financial profile.

The rating also reflects: 1) a weakening environment for commercial
aerospace in view of a slow recovery of engine flight hours
pressured by travel restrictions, quarantine measures and broader
coronavirus outbreaks across several regions; 2) Moody's
expectations for substantial free cash outflows in 2020 and 2021
and possibly beyond, leading to increases in leverage which the
company faces challenges to recover over the next 2-3 years; 3)
high uncertainties over the progression of the coronavirus pandemic
which could lead to further material cash outflows; 4) execution
risks in implementing a material restructuring programme whilst
maintaining operational effectiveness and competitive position; 5)
ongoing execution risks in concluding fixes relating to the Trent
1000 engine programme; and 6) a degree of concentration risk with
reliance on a small number of commercial aerospace engines for
widebody aircraft.

The outlook for the recovery of global air passenger volumes has
deteriorated in recent weeks as European countries have
reintroduced quarantine measures and travel restrictions remain in
place globally particularly on long haul routes that are critical
to Rolls-Royce's engine fleet. This is expected to drive a weak
recovery in the fourth quarter of 2020 and during 2021, and may put
further pressure on demand and production rates for large
commercial aircraft. As a result, Moody's expects the sector
recovery to be at the lower end of its expectations. This is
partially mitigated by the company's relatively young aircraft
engine fleet and broad geographic mix of markets served.
Rolls-Royce assumes in its "severe but plausible downside scenario"
outlined its half-year results, that engine flight hours will
reduce by 64% in 2020 compared to 2019 and recover by 28% in 2021,
i.e. remaining 55% below 2019 levels. Given the current outlook
there is a high probability that flight hours are in line with or
worse than this scenario.

At its half year results the company's auditors emphasized going
concern issues in the event that the severe but plausible downside
scenario occurs, which would require additional funding in order to
maintain sufficient liquidity. This would include the replacement
of the company's GBP1.9 billion revolving credit facility maturing
in October 2021, and further funding over and above. Cash outflows
in a weaker recovery scenario would be driven by engine shop visit
costs, which Moody's does not expect to reduce in line with flight
hours, and potential costs of over-hedging of foreign exchange.

The company has stated that it is evaluating potential fund raising
including up to a GBP2.5 billion equity rights issue, and
additional debt issuance. Whilst this would be credit positive
Moody's expects these transactions primarily to address liquidity
concerns rather than materially repair the balance sheet. There
remain risks that additional financing would still be required
depending on amounts raised and the evolution of trading, which if
not addressed could lead to further pressure on ratings.

The company has also reported its intentions to dispose of certain
trading assets, including ITP Aero, with target proceeds in excess
of GBP2 billion. Moody's does not include any disposals in its
credit assessment at this stage in view of uncertainties over
execution.

In August Rolls-Royce reported that blade deterioration in the
intermediate pressure turbine had been detected on around 20% of
its XWB-84 engines of 4-5 years' service. The company is replacing
the blades as a precaution at existing shop visits and does not
expect material additional costs. The XWB has been a successful
programme with strong performance to date. Rolls-Royce does not yet
know the cause of the problem and therefore cannot give absolute
certainty over fix costs, although the costs of the interim
solution should be relatively predictable. Moody's considers there
remains a low risk of a material issue arising, but it is an
unwelcome development and takes the company one step closer to a
larger problem, however low risk at this stage.

Moody's considers that the potential for support from the UK
Government (Aa2, negative) remains high, as evidenced by the recent
guarantee from UK Export Finance in support of the company's GBP2
billion term loan. The UK Government retains a "golden share" in
Rolls-Royce which limits individual share ownership and indicates
the company's strategic importance.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS

Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety.

Governance considerations that Moody's includes in its credit
assessment of Rolls-Royce include: (1) the company is listed on the
London Stock Exchange and reported that during 2019 it was
compliant with the UK 2018 Corporate Governance Code, other than in
relation to the appointment of the Chairman of the Remuneration
Committee; and (2) Rolls-Royce's complex business model and
financial reporting is a significant challenge in understanding
financial performance, particularly in relation to profitability on
long-term aftermarket contracts, quality of cash flows, and
adjustments to normalised profits.

LIQUIDITY

Rolls-Royce maintains substantial levels of liquidity, although
this needs to be considered in the context of material cash
outflows and downside recovery risks. As at June 30, 2020 the
company's total pro forma liquidity amounted to GBP8.1 billion,
comprising a gross cash balance of GBP4.2 billion, an undrawn
revolving credit facility of GBP1.9 billion due in October 2021 and
pro forma for a new GBP2.0 billion five-year term loan partially
guaranteed by UK Export Finance. The company also has a fully drawn
GBP2.5 billion revolving credit facility due in 2025, and in
addition to the GBP1.9 billion revolving credit facility has around
GBP1.3 billion of debt maturities across the second half of 2020
and in 2021.

Moody's forecasts cash outflows over the next 18 months in the
range of GBP2-3 billion, and also needs to meet working capital and
seasonal liquidity requirements. There remains uncertainty and
downside risks over liquidity headroom in the context of execution
of restructuring and cost savings and the evolution of the recovery
in demand.

STRUCTURAL CONSIDERATIONS

The company's EMTN programme is rated (P)Ba3, and its senior
unsecured notes issued under this programme are rated Ba3, in line
with the corporate family rating. This reflects their pari passu
ranking with the rest of the company's debt facilities.

OUTLOOK

The negative outlook reflects Moody's expectations that the
commercial aerospace market will remain significantly reduced over
the next 12-18 months and beyond. It also reflects the highly
uncertain operating environment with risks to the pace of recovery
in passenger demand, potential for further travel restrictions and
execution risks in the implementation of the company's
restructuring programme.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

The ratings are unlikely to be upgraded in the short term. Positive
rating pressure, including a stabilisation of the outlook, would
not arise until the coronavirus outbreak is brought under control,
travel restrictions are lifted, airline passenger traffic resumes
and the market for commercial aircraft stabilises. At this point
Moody's would evaluate the balance sheet and liquidity strength of
the company and positive rating pressure would require evidence
that the company is capable of substantially improving its
financial metrics and liquidity headroom within around a 2-3-year
time horizon. Quantitively an upgrade would require:

  -- Moody's-adjusted leverage to reduce below 5.5x, and
maintaining material cash on balance sheet

  -- Moody's-adjusted free cash flow to become materially positive

In addition, positive rating pressure would require that the
company resolves its Trent 1000 engine issues as anticipated in
2021, generates a track record of performance in line with
guidance, and maintains a conservative financial policy.

The ratings could be downgraded if:

  -- the effects of the coronavirus outbreak increase in severity
leading to liquidity concerns for which government support is not
readily available

  -- there are clear expectations that the company will not be able
to improve financial metrics to a level compatible with a Ba3
rating following the coronavirus outbreak, in particular if:

  - Moody's-adjusted debt / EBITDA is not reduced sustainably below
6.5x, especially if not sufficiently balanced by cash on balance
sheet

  - Moody's-adjusted FCF / debt does not turn positive

  - EBIT / interest cover is sustained materially below 2x

  -- there are signs of a weaker business profile, including a
weakening in the company's market positions, or lower than expected
aftermarket profitability, including as a result of further
challenges in remediating Trent 1000 issues

  -- the company adopts more aggressive shareholder return
initiatives and financial policies

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Aerospace and
Defense Methodology published in July 2020.

COMPANY PROFILE

Headquartered in London, England, Rolls-Royce is a leading global
manufacturer of aero-engines, gas turbines and reciprocating
engines with operations in three principal business segments --
Civil Aerospace, Defence and Power Systems. In 2019 the company
reported revenue of GBP16.6 billion and Moody's-adjusted EBITDA of
GBP1.45 billion.


SHARROW BAY HOTEL: To Be Placed in Liquidation, Oct. 2 Hearing Set
------------------------------------------------------------------
Cumberland & Westmorland Herald reports that the world famous
Sharrow Bay Country House Hotel, on the shores of Ullswater, is set
to be placed into liquidation.

According to Cumberland & Westmorland Herald, a resolution to
consider the winding up of the iconic hotel is due to be considered
on Oct. 2.

Papers sent out to creditors by email on Sept. 23 reveal that the
administrators -- Portland, who are based at Fareham, Hampshire --
were first contacted by the director of Sharrow Bay Hotel Ltd,
Andrew Davis, on July 3, Cumberland & Westmorland Herald  relates.

A statement of finance shows that the estimated total assets
available for preferential creditors is GBP83,898, Cumberland &
Westmorland Herald discloses.  The estimated deficiency to
creditors is more than GBP2.3 million, Cumberland & Westmorland
Herald states.

In December, 2003, the hotel was sold to the Von Essen hotel chain
for GBP5 million Cumberland & Westmorland Herald relays.  The chain
later went into administration with debts of nearly GBP300 million,
Cumberland & Westmorland Herald recounts.

The Sharrow Bay was snapped up by a private equity company,
London-based Hamilton Bradshaw, run by entrepreneur and former
Dragons' Den investor James Caan, for a knock down GBP1.5 million
in 2012, Cumberland & Westmorland Herald notes.

In 2013, Andrew Davis, the founder of the Von Essen group, took it
on again and invested heavily in the hotel, Cumberland &
Westmorland Herald states.



                           *********


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,
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Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante,
Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman,
Editors.

Copyright 2020.  All rights reserved.  ISSN 1529-2754.

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