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

                           E U R O P E

            Friday, June 27, 2014, Vol. 15, No. 126

                            Headlines

C Z E C H   R E P U B L I C

J & T BANKA: Moody's Withdraws 'E+' Financial Strength Rating


I C E L A N D

* ICELAND: Corporate Insolvencies Down 17% Over Last 12 Months


I R E L A N D

ENDO FINANCE: Moody's Assigns 'B1' Rating to Sr. Unsecured Notes
ENDO LUXEMBOURG: Moody's Affirms 'B3' Corporate Family Rating
KILKENNY CLINIC: In Liquidation; Patients May Not Recover Money
TALISMAN-6 FINANCE: Fitch Lowers Rating on Class C Notes to 'C'


I T A L Y

ANDROMEDA FINANCE: Fitch Puts BB-Rated Cl. A2 Notes on Watch Neg.
PARMALAT SPA: Court Reinstates Audit Suit v. Grant Thornton
SAF SRL: Economic Development Ministry Authorizes Asset Sale


K A Z A K H S T A N

CENTRAL-ASIAN ELECTRIC-POWER: Fitch Affirms 'BB-' IDR


N E T H E R L A N D S

CAIRN CLO I: S&P Lowers Rating on Class E Notes to 'CCC+'
FAB CBO 2003-1: S&P Affirms 'CCC' Ratings on 2 Note Classes
PDM CLO I: Moody's Raises Rating on Class D Notes to 'Ba1'
WOOD STREET IV: Moody's Hikes Rating on Class D Notes to 'Ba1'


P O L A N D

POLIMEX: To Sign Final Debt Deal with Creditors by July 3


P O R T U G A L

PORTUGAL TELECOM: S&P Raises Corporate Credit Ratings From 'BB/B'


R U S S I A

MECHEL OAO: Russia to Support Bond Issue, Not Bankruptcy
OTKRITIE BANK: Fitch Withdraws 'B' Issuer Default Ratings
TATFONDBANK: Moody's Raises Deposit & Debt Ratings to 'B2'


S P A I N

CATALUNYA BANC: Moody's Puts 'B3' Rating on Review for Downgrade


U K R A I N E

PROMINVESTBANK PJSC: Fitch Affirms 'CCC' Issuer Default Rating


U N I T E D   K I N G D O M

COVENTRY'S PERPETUAL: Fitch Rates Tier 1 Capital Securities 'BB+'
OLCI CONSTRUCTION: Sold in Prepack Deal


X X X X X X X X

* BOOK REVIEW: Risk, Uncertainty and Profit


                            *********


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


J & T BANKA: Moody's Withdraws 'E+' Financial Strength Rating
-------------------------------------------------------------
Moody's Investors Service announced that it withdrew all ratings
of J & T Banka, a.s. for business reasons.

At the time of withdrawal, J & T Banka's ratings are as follows:

  Bank financial strength rating of E+ with a negative outlook

  Baseline Credit Assessment of b3

  Adjusted Baseline Credit Assessment of b3

  National Scale Long-term bank deposit rating (domestic) of
  Ba1.cz

  National Scale Short-term bank deposit rating (domestic) of
  CZ-4

Moody's has withdrawn the rating for its own business reasons.

Headquartered in Prague, Czech Republic, J & T Banka a.s reported
total consolidated assets of CZK 110,237 million at year-end
2013.



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I C E L A N D
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* ICELAND: Corporate Insolvencies Down 17% Over Last 12 Months
--------------------------------------------------------------
Statistics Iceland reports that corporate insolvencies in Iceland
over the last 12 months, from May 2013 to April 2014, decreased
by 17% compared to the prior 12 months.

According to Statistics Iceland, there were 879 corporate
insolvencies in that period.  The largest number of insolvencies
was in the construction sector, 167 in total, Statistics Iceland
discloses.



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I R E L A N D
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ENDO FINANCE: Moody's Assigns 'B1' Rating to Sr. Unsecured Notes
----------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to the senior
unsecured notes issued by Endo Finance LLC, a subsidiary of Endo
International plc and Endo Luxembourg Finance I Company S.a.r.l.
(collectively "Endo"). There are no changes to Endo's existing
ratings including the Ba3 Corporate Family Rating, Ba3-PD
Probability of Default Rating, Ba1 senior secured rating, B1
senior unsecured rating and SGL-2 Speculative Grade Liquidity
Rating. The rating outlook remains negative.

Proceeds of the offering are expected to be used for general
corporate purposes including acquisitions and litigation-related
payments.

Ratings assigned:

Endo Finance LLC

B1 (LGD5) senior unsecured notes

Ratings Rationale

Endo's Ba3 Corporate Family Rating reflects its modest size and
scale relative to larger pharmaceutical peers, partially offset
by the company's solid market positioning as a niche player in
the pain and urology markets and by its revenue diversity across
branded drugs, generic drugs and medical devices. Endo's
expertise in pain drugs and its good compliance with US Drug
Enforcement Agency (DEA) regulations act as high barriers to
entry, also a credit strength. The company faces a significant
challenge reviving top-line growth because of generic pressures
affecting two branded franchises (Lidoderm and Opana ER) and
softness in medical procedure volumes. Amidst these pressures,
Endo is undergoing cost reduction initiatives and an acquisition
strategy focused on specialty pharmaceutical companies. The Ba3
Corporate Family Rating reflects Moody's expectations that
debt/EBITDA will be sustained within a range of 3.0 to 4.0 times.
Moody's estimates that the Dava acquisition and other cash
outlays will increases Endo's debt/EBITDA to approximately 4.2
times from 3.6 times on a last-12-month basis. Moody's estimates
that pro forma debt/EBITDA is approximately 0.25 to 0.50 times
higher on a basis that considers declining Lidoderm EBITDA (not
fully reflected in the last-12-month basis), but offset by EBITDA
from recent and pending acquisitions. EBITDA growth from
acquisitions and cost reductions will help improve leverage to
below 4.0 times.

Moody's has utilized a one-notch override of Moody's Loss Given
Default (LGD) methodology in determining the ratings on the
senior secured credit facilities, due to the potential for future
changes in the capital structure over the next few years.

The rating outlook is negative. Mesh-related litigation outflows
will constrain Endo's cash flow at a time when Lidoderm sales are
declining and debt may rise in support of business development.
Further, mesh litigation costs could exceed those that Endo is
estimating in its accruals. Greater clarity on the ultimate cost
of the litigation would help stabilize Endo's credit profile.

Although not expected in the near term, Moody's could upgrade
Endo's ratings if the company substantially increases its size,
scale and diversification and makes further progress resolving
litigation while sustaining conservative credit metrics including
gross debt/EBITDA below 3.0 times. Conversely, Moody's could
downgrade the ratings if gross debt/EBITDA is sustained above 4.0
times. This scenario could occur if Endo performs debt-financed
acquisitions, faces higher-than-expected litigation cash
outflows, or suffers operating setbacks on products like Lidoderm
or Opana ER.

The principal methodology used in this rating was the Global
Pharmaceutical Industry published in December 2012. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.

Headquartered in Dublin, Ireland, Endo Luxembourg Finance I
Company S.a.r.l. ("Endo") is a subsidiary of Endo International
plc (collectively "Endo"). Endo is a specialty healthcare company
offering branded and generic pharmaceuticals and medical devices.
Including the predecessor company Endo Health Solutions, Inc.,
net revenues for the 12 months ended March 31, 2014 were
approximately US$2.5 billion.


ENDO LUXEMBOURG: Moody's Affirms 'B3' Corporate Family Rating
-------------------------------------------------------------
Moody's Investors Service affirmed the ratings of Endo Luxembourg
Finance I Company S.a.r.l., and other entities that are
subsidiaries of Endo International plc. The affirmed ratings
include Endo's Ba3 Corporate Family Rating, Ba3-PD Probability of
Default Rating, Ba1 senior secured rating, B1 senior unsecured
rating and SGL-2 Speculative Grade Liquidity Rating. The rating
outlook remains negative.

The rating affirmation follows the announcement that Endo will
acquire privately-held Dava Pharmaceuticals, Inc (unrated) for
US$575 million up-front and up to US$25 million in milestone-
based payments.

Ratings affirmed:

Endo Luxembourg Finance I Company S.a.r.l.:

Ba3 Corporate Family Rating

Ba3-PD Probability of Default Rating

Ba1 (LGD2) senior secured Term Loan A, Term Loan B and Revolving
Credit Facility

SGL-2 Speculative Grade Liquidity Rating

Endo Finance LLC:

B1 (LGD5) senior unsecured notes

Endo Finance Co:

B1 (LGD5) senior unsecured notes

"The Dava acquisition will increase Endo's financial leverage,
but not enough to trigger a downgrade," stated Michael Levesque,
Moody's Senior Vice President. "Dava and other recent
acquisitions will expand Endo's cash flow and EBITDA, helping to
offset declining profits from Lidoderm," continued Levesque.

Rating Rationale

Endo's Ba3 Corporate Family Rating reflects its modest size and
scale relative to larger pharmaceutical peers, partially offset
by the company's solid market positioning as a niche player in
the pain and urology markets and by its revenue diversity across
branded drugs, generic drugs and medical devices. Endo's
expertise in pain drugs and its good compliance with US Drug
Enforcement Agency (DEA) regulations act as high barriers to
entry, also a credit strength. The company faces a significant
challenge reviving top-line growth because of generic pressures
affecting two branded franchises (Lidoderm and Opana ER) and
softness in medical procedure volumes. Amidst these pressures,
Endo is undergoing cost reduction initiatives and an acquisition
strategy focused on specialty pharmaceutical companies. The Ba3
Corporate Family Rating reflects Moody's expectations that
debt/EBITDA will be sustained within a range of 3.0 to 4.0 times.
Moody's estimates that the Dava acquisition and other cash
outlays will increases Endo's debt/EBITDA to approximately 4.2
times from 3.6 times on a last-12-month basis. Moody's estimates
that pro forma debt/EBITDA is approximately 0.25 to 0.50 times
higher on a basis that considers declining Lidoderm EBITDA (not
fully reflected in the last-12-month basis), but offset by EBITDA
from recent and pending acquisitions. EBITDA growth from
acquisitions and cost reductions will help improve leverage to
below 4.0 times.

The rating outlook is negative. Mesh-related litigation outflows
will constrain Endo's cash flow at a time when Lidoderm sales are
declining and debt may rise in support of business development.
Further, mesh litigation costs could exceed those that Endo is
estimating in its accruals. Greater clarity on the ultimate cost
of the litigation would help stabilize Endo's credit profile.

Although not expected in the near term, Moody's could upgrade
Endo's ratings if the company substantially increases its size,
scale and diversification and makes further progress resolving
litigation while sustaining conservative credit metrics including
gross debt/EBITDA below 3.0 times. Conversely, Moody's could
downgrade the ratings if gross debt/EBITDA is sustained above 4.0
times. This scenario could occur if Endo performs debt-financed
acquisitions, faces higher-than-expected litigation cash
outflows, or suffers operating setbacks on products like Lidoderm
or Opana ER.

Headquartered in Dublin, Ireland, Endo Luxembourg Finance I
Company S.a.r.l. ("Endo") is a subsidiary of Endo International
plc (collectively "Endo"). Endo is a specialty healthcare company
offering branded and generic pharmaceuticals and medical devices.
Including the predecessor company Endo Health Solutions, Inc.,
net revenues for the 12 months ended March 31, 2014 were
approximately US$2.5 billion.

The principal methodology used in this rating was the Global
Pharmaceutical Industry published in December 2012. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.


KILKENNY CLINIC: In Liquidation; Patients May Not Recover Money
---------------------------------------------------------------
Caroline O'Doherty at Irish Examiner reports that patients of The
Kilkenny Clinic that has gone into liquidation have been left out
of pocket after being told they are unlikely to get back the
thousands of euro they paid in advance for tests and treatments.

The clinic closed suddenly in January, leaving debts of more than
EUR461,000 following the illness of its owner and medical
director, Dr. Martine Millett-Johnston, Irish Examiner recounts.
She has now confirmed to patients that the business is being
liquidated and while she hopes to get back into practice when her
own health improves, the clinic will not be re-opening, Irish
Examiner relays.

According to Irish Examiner, a spokesperson for the Companies
Office confirmed that a liquidator had been appointed to the
Kilkenny Clinic and that the company was in the process of being
wound up.

Some EUR461,579 is owed to unsecured creditors, among them a
local building contractors, a bank and numerous medical supplies
companies, Irish Examiner discloses.  Patients are owed a total
of EUR17,315, Irish Examiner notes.

The Kilkenny Clinic is a fertility clinic.


TALISMAN-6 FINANCE: Fitch Lowers Rating on Class C Notes to 'C'
---------------------------------------------------------------
Fitch Ratings has downgraded Talisman-6 Finance plc's class A to
C notes and affirmed its class D to F as follows:

  EUR528.7m class A (XS0294187306) downgraded to 'CCCsf' from
  'Bsf'; Recovery Estimate (RE) 80%

  EUR79.9m class B (XS0294187991) downgraded to 'CCsf' from
  'CCCsf'; RE 0%

  EUR83.3m class C (XS0294188882) downgraded to 'Csf' from
  'CCsf'; RE 0%

  EUR59.9m class D (XS0294189005) affirmed at 'Csf'; RE 0%

  EUR12.5m class E (XS0294189427) affirmed at 'Csf'; RE 0%

  EUR15.5m class F (XS0294189690) affirmed at 'Csf'; RE 0%

The transaction is the securitization of nine commercial mortgage
loans originated by ABN AMRO Bank NV.  Since closing, two loans
repaid in full (Kiwi and Strawberry loans).  All the remaining
seven loans defaulted and are currently specially serviced by
Hatfield Philips International.  The seven loans have a
cumulative balance of EUR779.1.3 million and are secured on a
portfolio valued at EUR734.9 million.

KEY RATING DRIVERS:

The downgrade of the classes A to C notes reflects lower expected
recoveries from the underlying loans, all of which have been in
default for at least 18 months.  Unless the pace of disposals
increases, the class A notes face default from insufficient
proceeds.  The amount of recoveries is also highly uncertain,
given weak conditions in the German secondary real estate market
and the likelihood of a block sale for the largest loan (Orange,
EUR345.1 million or 44% the loan pool).

Orange defaulted in 2012 due to a whole loan-to-value (LTV)
covenant breach.  The special servicer had initially focused on
disposing the 154 mixed-use retail properties individually.
However, as only 15 sales have been or are in the process of
being achieved, and with the approach of bond maturity in October
2016 the servicer is now pursuing a block sale of the entire
portfolio.

The Orange portfolio is under-performing, with vacancy at 28.2%
and a reported LTV of 96.4%.  Fitch would expect a discount to be
offered to attract private equity purchasers, and depending on
its size, ultimate losses could reach as high as the class A
notes.  On a positive note, since Fitch's last rating action all
the claims of "equitable subordination" brought against the
issuer by rival creditors have been dismissed, which should pave
the way for a sale of the portfolio.

On the rest of the loan pool, some sales progress has been made
by the special servicer.  Most important are the 10 asset sales
(completed or in train) in relation to the EUR126m Coconut loan,
the second largest in the pool.  Significant principal payments
should materialize after lags between signing of the sale and
purchase agreement, notarization of the sale, and disbursement of
principal to the notes; these lags are expected to lapse in
coming payment periods.

The D, E and F notes will suffer losses once write-offs of
EUR40.2 million from the resolved Cherry loan are formally
allocated to noteholders.  Fitch expects further losses to be
realised from the loan pool, and these may be borne as high as
the class A notes.

RATING SENSITIVITIES

Further evidence of sales will be the main driver of rating
action until bond maturity.



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I T A L Y
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ANDROMEDA FINANCE: Fitch Puts BB-Rated Cl. A2 Notes on Watch Neg.
-----------------------------------------------------------------
Fitch Ratings has placed Andromeda Finance S.r.l. class A2 notes,
which are rated 'BB', and the underlying rating of class A1 notes
(without the benefit of SACE SpA guarantee), on Rating Watch
Negative.

The wrapped rating on the class A1 notes (with the SACE
guarantee), which is at 'A-' with Negative Outlook, is unaffected
due to the presence of SACE's guarantee.  The rating action
reflects changes to the incentive framework that are expected to
negatively affect the solar photovoltaic (PV) project's
cashflows.

KEY RATING DRIVERS

The rating action follows the introduction of changes to the
incentive framework applicable to operating PV plants pursuant to
law decree n. 91 of June 24, 2014.  The changes are part of the
government's stated objective of reducing by 10% the electricity
bills payable by Italian small and medium enterprises.

The newly enacted law decree, which will need to be approved by
the Italian parliament within the next 60 days in order to come
into permanent effect, alters the terms of the payments of the
Feed-in-Tariff (FiT) to PV plants.  Among other things, the
decree foresees that plants larger than 200kW are required to
choose between two options:

   -- accepting an 8% reduction of the FiT payable for 20 years
      (the original FIT remuneration term); or

   -- accepting a harsher FiT reduction in exchange for an
      extension of the remuneration period to 24 years.  The
      extent of FiT reduction depends on the residual term of the
      incentive period.  Fitch understands from the decree that
      it will be equal to 21% in the case of Andromeda.

The decree foresees that in the latter option, Cassa Depositi e
Prestiti (CdP S.p.a) (BBB+/Stable) a public savings' management
company 80% owned by the Italian government, may provide a
guarantee on bank financings granted to PV projects in an amount
equal to the difference between the original and revised FiT.

Fitch's view is that both options would be credit-negative for
Andromeda PV S.r.l as they would result (all else being equal) in
lower annual cash flows and therefore lower debt service metrics.
CdP- guaranteed funding in case of the second option could, to
some extent, alleviate the negative impact of reduced annual
cashflows by providing liquidity support if required.  Fitch will
assess the effect of such a structure when resolving the RWN.

The rating action is not a result of performance review and only
reflects the announcement of the planned incentive framework
changes.  Fitch last affirmed its ratings on Andromeda Finance
S.r.l on April 30, 2014, with a Negative Outlook.  At the time
Fitch noted that "additional changes to operational requirements,
tax charges or incentive payment could eventually depress free
cash flow to a level no longer in line with the current rating
level".

RATING SENSITIVITIES

Fitch expects to resolve the RWN when the details of the various
decree provisions and the mechanics of the possible CdP-
guaranteed support structure become available, and once Andromeda
PV S.r.l has informed Fitch of the chosen option.

TRANSACTION SUMMARY

The transaction is a securitization of two project loans
(Facility A1 and Facility A2) under law 130/99 (the Italian
securitization law).  The loan facilities were extended by BNP
Paribas and Societe Generale to Andromeda PV S.r.l. to build and
operate two PV plants of 45.1MW and 6.1 MW (a total 51.2MW) in
Montalto di Castro, Italy.  The terms of the loans effectively
mirror those of the rated notes, with payments under Facility A1
and Facility A2 servicing the class A1 notes and class A2 notes,
respectively.  The class A1 notes' rating and Outlook reflect the
first-demand, irrevocable and unconditional guarantee provided by
SACE.  The guarantee provided by SACE to the issuer is in respect
of the project company's obligations under Facility A1 and not on
the class A1 notes directly.


PARMALAT SPA: Court Reinstates Audit Suit v. Grant Thornton
-----------------------------------------------------------
Andrew Harris at Bloomberg News reports that Parmalat SpA's U.S.
representatives won the reinstatement of decade-old litigation
accusing accounting firm Grant Thornton International of
contributing to the Italian dairy giant's bankruptcy.

The U.S. Court of Appeals in Chicago said on Wednesday that a
lower-court judge exceeded his authority when he threw out the
cases last year, Bloomberg relates.

According to Bloomberg, the Chicago appellate panel said the
judge had been told by an appeals court in New York to return the
cases to Illinois state court, where they were filed, and
shouldn't have dismissed them.

The dairy company, based in Collecchio, Italy, disclosed more
than EUR14 billion (US$20 billion) of debt when it filed for
bankruptcy in December 2003, about eight times the amount
reported by its former management, Bloomberg recounts.

In the U.S., Parmalat's representative sued Grant Thornton in
Illinois state court, saying the accounting firm contributed to
the collapse of the company by conducting fraudulent audits,
Bloomberg relays.

                     About Parmalat S.p.A.

Headquartered in Milan, Italy, Parmalat S.p.A. --
http://www.parmalat.net/-- sells nameplate milk products that
can be stored at room temperature for months.  It also has about
40 brand product lines, which include yogurt, cheese, butter,
cakes and cookies, breads, pizza, snack foods and vegetable
sauces, soups and juices.

Parmalat S.p.A. and its Italian affiliates filed separate
petitions for Extraordinary Administration before the Italian
Ministry of Productive Activities and the Civil and Criminal
District Court of the City of Parma, Italy on Dec. 24, 2003.  Dr.
Enrico Bondi was appointed Extraordinary Commissioner in each of
the cases.  The Parma Court declared the units insolvent.

On June 22, 2004, Dr. Bondi, on behalf of the Italian entities,
sought protection from U.S. creditors by filing a petition under
Sec. 304 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No.
04-14268).

Parmalat's U.S. operations filed for Chapter 11 protection on
Feb. 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139).  Gary Holtzer,
Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges
LLP, represented the U.S. Debtors.  When the U.S. Debtors filed
for bankruptcy protection, they reported more than US$200 million
in assets and debts.  The U.S. Debtors emerged from bankruptcy on
April 13, 2005.

Three special-purpose vehicles established by Parmalat S.p.A. --
Dairy Holdings Ltd., Parmalat Capital Finance Ltd., and Food
Holdings Ltd. -- commenced separate winding up proceedings before
the Grand Court of the Cayman Islands.  Gordon I. MacRae and
James Cleaver of Kroll (Cayman) Ltd. were appointed liquidators
in the cases.  On Jan. 20, 2004, the Liquidators filed a Sec. 304
petition (Bankr. S.D.N.Y. Case No. 04-10362).  Gregory M.
Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, and Richard
I. Janvey, Esq., at Janvey, Gordon, Herlands Randolph,
represented the Finance Companies in the Sec. 304 case.

The Honorable Robert D. Drain presided over the Parmalat Debtors'
U.S. cases and Sec. 304 cases.  In 2007, Parmalat obtained a
permanent injunction in the Sec. 304 cases.



SAF SRL: Economic Development Ministry Authorizes Asset Sale
------------------------------------------------------------
Daniela Saitta, the Extraordinary Commissioner of SAF S.r.l.,
which is in receivership, disclosed that on June 18, 2014, the
Ministry of Economic Development authorized the beginning of the
procedure to sell SAF S.r.l. in receivership's assets only for
the share held in the Consortium Infrav and in the Consortium
Infrasud of the sub-complex named "Lioni Grottaminarda".

Therefore, the participants in the procedure to sell Impresa
S.p.A.'s assets have the opportunity to participate in the
ongoing due diligence for the purchase of the sub-complex "Lioni
Grottaminarda".



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K A Z A K H S T A N
===================


CENTRAL-ASIAN ELECTRIC-POWER: Fitch Affirms 'BB-' IDR
-----------------------------------------------------
Fitch Ratings has affirmed Joint Stock Company Central-Asian
Electric-Power Corporation's (CAEPCo) Long-term foreign currency
Issuer Default Rating (IDR) at 'BB-'.  The Outlook is Stable.

The rating reflects CAEPCo's vertical integration, benign
regulatory regime and stable regional market position (despite
overall small size) with access to cheap regulated coal supplies.
However, CAEPCo's ageing assets require significant renewal and
the planned investment program will likely result in negative
free cash flow (FCF) and elevated funds from operations (FFO)
gross adjusted leverage of about 2.8x on average over 2014-2016
based on Fitch's conservative assumption.

KEY RATING DRIVERS

Generation Dominates Despite Integration

CAEPCo is one of the largest privately owned electricity
generators in Kazakhstan.  It is integrated across the
electricity value chain with the exception of fuel production and
transmission, which gives the company access to markets for its
energy output and limits customer concentration.  CAEPCo's
revenue and EBITDA are dominated by generation services, which
accounted for about 46% and 91%, respectively, in 2013.
Electricity and heat distribution represents about 18% of revenue
and 6% EBITDA, while low marginal sales makes 36% of revenue and
only 3% of EBITDA in 2013.

Loss Making Heat Business

The heat distribution business is loss-making due to high heat
loss and regulated end user tariffs, which Fitch assumes are kept
low for social reasons (heat generation is reported within
overall generation and cash flow accretive), a situation that we
assume will persist but with gradual improvement.

Solid CFO, Negative FCF Expected

Fitch expects CAEPCo to continue generating solid cash flow from
operations (CFO) of around KZT18 billion on average over 2014-
2016 following volumes and tariff increase.  However, FCF is
likely to remain negative at around KZT8 billion on average over
2014-2016 but may turn positive in 2017.  The negative FCF will
be mainly driven by the ambitious investment plans of about
KZT82 billion over 2014-2016 as well as dividend payments of
about 30%-50% of net profit in the medium term.  Fitch expects
CAEPCo to rely on new borrowings to finance cash shortfalls.

Elevated Leverage Expected

Fitch expects CAEPCo's intensive investment program over 2014-
2016 to be partially debt funded, therefore we anticipate FFO
gross adjusted leverage will slightly increase to about 2.8x on
average over the same period from 2.5x at end-2013.  The capex
program is aimed at modernizing over 60% of CAEPCo's ageing 1960s
and 1970s generation capacity by 2018, as well as upgrading its
distribution network.  Capacity expansion will be moderate at
around 13% in total to 2018 but additional benefits will be
reduced losses in production and distribution of heat and
electricity.

Cheap Fuel Supports EBITDA

Kazakh coal prices are significantly below international market
rates, reflecting their regulated nature, low calorific content
and high ash content of coal used domestically as well as low
transport costs.  Additionally, to protect energy affordability,
the coal price charged to utilities is regulated annually and
reflected in power tariff caps.  An unexpected and significant
increase in the price of coal above Fitch's current inflationary
estimates of 6.5%-9.0% annually would have a negative impact on
EBITDA, although this is considered unlikely and is expected to
be reflected in higher tariffs.

Supportive Tariffs At Present

Fitch views positively the switch to medium-term distribution
tariffs approval.  Since 2013, CAEPCo's distribution segment
companies have been operating under three-year tariffs that were
approved until 2016 and are determined based on a benchmarking
mechanism.  Fitch believes that longer-term tariffs establish a
foundation for clearer rules and a more stable operating
environment and the introduction of a benchmarking mechanism
should motivate companies to increase efficiency, supporting
operational performance.  Fitch notes that generation tariffs are
currently approved until 2015.  The post-2015 electricity
generation tariff regime is uncertain, particularly for existing
capacities.  However, Fitch assumes that fuel and other cost
inflation will continue to be reflected in energy prices.  A
shift to the competitive, de-regulated market for generating
companies is unlikely to happen before 2016.  The Kazakh
authorities expect to implement an electricity capacity market,
which should ensure economically sound returns on investments and
provide incentives for the construction of new generation assets
or for expanding current capacity.

No Parent Uplift or Constraint

Unlike most Fitch-rated utilities in CIS, CAEPCo is privately
owned and therefore not affected by sovereign linkage.  The
company is run as a standalone enterprise with two foreign
institutional shareholders and as such we do not assume any
impact on the ratings based on the credit profile of the
controlling parent, Central-Asian Power-Energy Company JSC
(CAPEC).  The ratings therefore reflect CAEPCo's standalone
credit profile.

Dividends to Delay Debt Reduction

CAEPCo's financial policy is to pay dividends and this could
delay de-leveraging in the long term.  However, Fitch believes
that should tariffs and volumes underperform, CAEPCo retains the
flexibility to lower dividends to preserve cash, as demonstrated
in 2011 when the dividend payout ratio was decreased to 15% upon
the 2011 results due to the decision of shareholders to
accelerate implementation of the investment program.  CAEPCo's
dividend policy provides for a 30%-50% dividend payout ratio.
For 2013 CAEPCo declared dividends of KZT2.3 billion that will be
paid in 2H14.

Further Potential Acquisitions

CAEPCo is likely to continue consolidating the Kazakh electricity
market.  At end-2013 CAPEC agreed to contribute its 51.59% stake
in AEDC to CAEPCo as an equity and the company expects to acquire
another 48.41% in 2H14 for KZT8.9 billion (USD40 million) through
a mixture of equity and debt.  CAEPCo expects to consolidate AEDC
from 2014, an electricity distribution network that previously
distributed electricity largely supplied to CAEPCO's subsidiary,
Astanaenergosbyt (AESbyt).  AEDC has an EBITDA margin of about
25% compared with AESbyt's EBITDA margin of about 2%.  Fitch
views positively the consolidation of EBITDA margin enhancing
assets that will likely result in a revenue and EBITDA increase
of about 8% and 29%, respectively.  However, Fitch notes that
certain investments of about KZT19.6bn over 2014-2018 will be
required that are currently included in CAEPCo's investment
program.  Non-completion, or completion with higher debt and
capital expenditure requirement than our forecasts could push
CAEPCo towards guidance for negative rating action.

RATING SENSITIVITIES

Positive: Future developments that could lead to positive rating
action include:

   -- A stronger financial profile than forecast by Fitch due to,
      among other things, higher than expected growth in electric
      and heat tariffs and/or generation electricity supporting
      FFO gross adjusted leverage below 2x and FFO interest
      coverage above 7x on a sustained basis would be positive
      for the ratings.

   -- Increased certainty regarding the post-2015 regulatory
      framework could also be supportive of the ratings.

Negative: Future developments that could lead to negative rating
action include:

   -- A substantially above inflation increase in coal price
      and/or tariffs materially lower than our forecasts, leading
      to FFO gross adjusted leverage persistently higher than 3x
      and FFO interest coverage below 4.5x would be negative for
      the ratings.

   -- Committing to capex without sufficient available funding,
      worsening overall liquidity position may also be rating
      negative.

LIQUIDITY AND DEBT STRUCTURE

   -- Adequate Liquidity

Fitch views CAEPCo's liquidity as adequate.  At end-2013 cash and
cash equivalents stood at KZT2.3 billion, which together with
short-term bank deposits with a maturity up to one year of KZT9.3
billion are sufficient to cover short-term debt maturities of
KZT9.3 billion. However, negative FCF over 2014-2016 driven by
the ambitious investment program and continued dividend payments
continue to add to funding requirements and Fitch believes that
CAEPCo will need to rely on new borrowings to finance cash
shortfalls.  CAEPCo has proven access to domestic and some
international lenders. Fitch notes that CAEPCo has some
flexibility in capex implementation as well as in dividend
payments.  CAEPCo's committed capex amounted to about KZT38
billion to be spent over 2014-2016 and management anticipates
maintenance capex of about KZT8bn on average over 2014-2016.

At end-2013 the majority of CAEPCo's debt was secured bank loans
(KZT26.6 billion or about 62%) and three unsecured local bonds
maturing in 2017, 2020 and 2023 (KZT14.7 billion in total or
34%).  All current debt facilities (both secured and unsecured)
are largely at the operating company level.  Fitch rates KZT1
billion notes a one notch below CAEPCo's local currency IDR of
'BB-' as the notes are issued by CAEPCo and do not benefit from
upstream guarantees from the operating subsidiaries, and also
because the notes have no security over operating assets and no
cross defaults with other facilities.

   -- Foreign Currency Exposure

The recent tenge devaluation of about 20% affects CAEPCo's credit
metrics given about 30% of CAEPCO's debt at end-2013 was
denominated in US dollars.  The proportion of foreign
currency-denominated debt is likely to increase over the coming
years. CAEPCo does not have any specific hedging policies in
place.  Fitch believes that a lack of hedging could increase
leverage by about 0.1x-0.2x in 2014-2015.  Additionally the
majority of US dollar denominated debt is raised under variable
interest rates exposing the company to interest rate fluctuations
risks.

Full List of Rating Actions

   Long-term foreign currency Issuer Default Rating (IDR)
   affirmed at 'BB-', Outlook Stable

   Long-term local currency IDR affirmed at 'BB-', Outlook Stable

   National Long-term Rating affirmed at 'BBB+(kaz)', Outlook
   Stable

   Short Term foreign currency IDR affirmed at 'B'

   Local currency senior unsecured rating affirmed at 'B+'

   National senior unsecured rating affirmed at 'BBB-(kaz)'



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


CAIRN CLO I: S&P Lowers Rating on Class E Notes to 'CCC+'
---------------------------------------------------------
Standard & Poor's Ratings Services raised its credit ratings on
Cairn CLO I B.V.'s class A-1 variable funding notes (VFN), A-2,
A-3, A-4, B, and C notes.  At the same time, S&P has lowered its
ratings on the class D and E notes.

The rating actions follow S&P's credit and cash flow analysis of
the transaction using data from the trustee report dated April
22, 2014, and the application of its relevant criteria.

"We conducted our cash flow analysis to determine the break-even
default rate (BDR) for each rated class of notes.  The BDR
represents our estimate of the maximum level of gross defaults,
based on our stress assumptions, that a tranche can withstand and
still fully repay the noteholders.  We used the portfolio balance
that we consider to be performing, the reported weighted-average
spread, and the weighted-average recovery rates that we
considered to be appropriate.  We incorporated various cash flow
stress scenarios using our standard default patterns, levels, and
timings for each rating category assumed for each class of notes,
combined with different interest stress scenarios as outlined in
our 2009 corporate collateralized debt obligation (CDO)
criteria," S&P said.

The transaction's reinvestment period ended in January 2013.
Since S&P's March 7, 2012 review, the class A-1 VFN, A-2, and A-3
notes have amortized in aggregate by nearly EUR62 million --
converting any non-euro payments at the foreign exchange rate
given in the trustee report.  As a result, these classes of notes
now benefit from higher available credit enhancement.
Consequently, S&P has raised to 'AAA (sf)' from 'AA+ (sf)' its
ratings on the class A-1 VFN, A-2, and A-3 notes.

The transaction structure's sequential deleveraging has increased
the available credit enhancement for the class A-4, B, and C
notes.  According to S&P's credit and cash flow analysis, the
available credit enhancement for the class A-4 and B notes is now
commensurate with higher ratings than previously assigned.  S&P
has therefore raised to 'AAA (sf)' from 'AA+ (sf)' its rating on
the class A-4 notes and to 'AA (sf)' from 'A+ (sf)' its rating on
the class B notes.

S&P's credit and cash flow results indicate that the BDRs for the
class C notes exceed the scenario default rates (SDRs) at ratings
as high as the 'A' rating category.  The SDRs represent the level
of defaults that S&P can expect at each rating level in question.
However, the results of S&P's largest obligor supplemental test
constrain its rating on the class C notes at 'BBB+ (sf)'.  The
supplemental test measures the risk of several of the largest
obligors within the portfolio defaulting simultaneously.
Consequently, S&P has raised to 'BBB+ (sf)' from 'BBB- (sf)' its
rating on the class C notes.

Since S&P's previous review, the par value tests for the class D
and E notes have decreased.  S&P also notes from its analysis
that the available credit enhancement for both classes of notes
has declined since its previous review.  Taking this into
account, and based on the results of S&P's credit and cash flow
analysis and its supplemental tests, S&P has lowered to 'B+ (sf)'
and 'CCC+ (sf)' from 'BB- (sf)' and 'B- (sf)' its ratings on the
class D and E notes, respectively.

Cairn CLO I is a cash flow collateralized loan obligation (CLO)
transaction that securitizes loans to primarily speculative-grade
corporate firms.  The transaction closed in December 2006.

RATINGS LIST

Class        Rating         Rating
             To             From

Cairn CLO I B.V.
EUR333.45 Million and GBP11.45 Million
Secured Variable Funding and Floating-Rate Notes

Ratings Raised

A-1 VFN     AAA (sf)       AA+ (sf)
A-2         AAA (sf)       AA+ (sf)
A-3         AAA (sf)       AA+ (sf)
A-4         AAA (sf)       AA+ (sf)
B           AA (sf)        A+ (sf)
C           BBB+ (sf)      BBB- (sf)

Ratings Lowered

D           B+ (sf)        BB- (sf)
E           CCC+ (sf)      B- (sf)


FAB CBO 2003-1: S&P Affirms 'CCC' Ratings on 2 Note Classes
-----------------------------------------------------------
Standard & Poor's Ratings Services raised its credit ratings on
FAB CBO 2003-1 B.V.'s class A-1E, A-1F, A-2F, A-2aE, and A-2bE
notes.  At the same time, S&P has affirmed its ratings on the
class A-3E and A-3F notes.

The rating actions follow S&P's credit and cash flow analysis of
the transaction using data from the trustee report dated April
30, 2014, and the application of its relevant criteria.

S&P conducted its cash flow analysis to determine the break-even
default rate (BDR) for each rated class of notes.  The BDR
represents S&P's estimate of the maximum level of gross defaults,
based on its stress assumptions, that a tranche can withstand and
still fully repay the noteholders.  S&P used the portfolio
balance that it considers to be performing, the reported
weighted-average spread, and the weighted-average recovery rates
that S&P considered to be appropriate.  S&P incorporated various
cash flow stress scenarios using its shortened and additional
default patterns and levels for each rating category assumed for
each class of notes, combined with different interest stress
scenarios as outlined in S&P's criteria.

The transaction's reinvestment period ended in August 2008.
Since S&P's Aug. 9, 2012 review, the class A-1E and A-1F notes
have amortized by approximately EUR40 million.  Just over 29% of
all of the class A-1 notes' original principal balance remains
outstanding.

According to S&P's cash flow results, the available credit
enhancement for the class A-1E, A-1F, A-2F, A-2aE, and A-2bE
notes has more than doubled since S&P's 2012 review.  In S&P's
view, the significant deleveraging of the class A-1 notes has
caused this increase.  S&P has therefore raised to 'A+ (sf)' from
'A- (sf)' its ratings on the class A-1E and A-1F notes and to
'BBB (sf)' from 'BB+ (sf)' its ratings on the class A-2F, A-2aE,
and A-2bE notes.

The available credit enhancement for the class A-3E and A-3F
notes has also increased since S&P's previous review.  However,
S&P's credit and cash flow results indicate that the BDRs are
unable to surpass the scenario default rates (SDRs) -- the level
of defaults that S&P expects the transaction to incur at the
respective rating levels -- at a rating level higher than the
currently assigned rating.  As a result, S&P has affirmed its
'CCC (sf)' ratings on the class A-3E and A-3F notes.

FAB CBO 2003-1 is a collateralized debt obligation (CDO)
transaction backed by pools of structured finance assets, which
closed in March 2003.  The reinvestment period ended in August
2007.

RATINGS LIST

Class        Rating            Rating
             To                From

FAB CBO 2003-1 B.V.
EUR308.8 Million Asset-Backed Floating, Fixed,
And Zero Coupon Notes

Ratings Raised

A-1E          A+ (sf)           A- (sf)
A-1F          A+ (sf)           A- (sf)
A-2F          BBB (sf)          BB+ (sf)
A-2aE         BBB (sf)          BB+ (sf)
A-2bE         BBB (sf)          BB+ (sf)

Ratings Affirmed

A-3E          CCC (sf)
A-3F          CCC (sf)


PDM CLO I: Moody's Raises Rating on Class D Notes to 'Ba1'
----------------------------------------------------------
Moody's Investors Service has announced that it has taken the
following rating actions on the following notes issued by PDM CLO
I B.V.:

  EUR208,500,000 (current outstanding balance of
  EUR202,553,708.67) Class A Senior Secured Floating Rate Notes
  due 2023 Notes, Upgraded to Aaa (sf); previously on Oct 4, 2011
  Confirmed at Aa2 (sf)

  EUR11,250,000 Class B Deferrable Secured Floating Rate Notes
  due 2023 Notes, Upgraded to A1 (sf); previously on Oct 4, 2011
  Upgraded to A3 (sf)

  EUR17,250,000 Class C Deferrable Secured Floating Rate Notes
  due 2023 Notes, Upgraded to Baa1 (sf); previously on Oct 4,
  2011 Upgraded to Baa3 (sf)

  EUR16,500,000 Class D Deferrable Secured Floating Rate Notes
  due 2023 Notes, Upgraded to Ba1 (sf); previously on Oct 4, 2011
  Upgraded to Ba2 (sf)

  EUR13,500,000 Class E Deferrable Secured Floating Rate Notes
  due 2023 Notes, Affirmed B1 (sf); previously on Oct 4, 2011
  Upgraded to B1 (sf)

PDM CLO I B.V. issued in December 2007, is a collateralized loan
obligation (CLO) backed by a portfolio of mostly senior secured
European loans. The portfolio is managed by Permira Debt Managers
Limited. The transaction's reinvestment period will end in
February 2015.

Ratings Rationale

The rating actions on the notes are primarily a result of the
benefit of the shorter period of time remaining before the end of
the reinvestment period in February 2015 and the improvement of
certain credit metrics of the underlying pool since a year ago.

In light of reinvestment restrictions during the amortization
period, and therefore the limited ability to effect significant
changes to the current collateral pool, Moody's analyzed the deal
assuming a higher likelihood that the collateral pool
characteristics would maintain an adequate buffer relative to
certain covenant requirements. In particular, Moody's assumed
that the deal will benefit from a shorter amortization profile
and higher spread levels than it had assumed at the last rating
action in October 2011.

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 analyzed the underlying collateral pool as having a
performing par and principal proceeds balance of EUR276.4
million, defaulted par of EUR6.9 million, a weighted average
default probability of 21.74% (consistent with a WARF of 3010 and
a weighted average life of 4.51 years), a weighted average
recovery rate upon default of 44.86% for a Aaa liability target
rating, a diversity score of 32 and a weighted average spread of
3.49%.

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. For a Aaa liability target rating,
Moody's assumed a recovery of 50% of the 84.28% of the portfolio
exposed to first-lien senior secured corporate assets upon
default and of 15% of the remaining non-first-lien loan corporate
assets upon default. In each case, historical and market
performance and a collateral manager's latitude to trade
collateral are also relevant factors. Moody's incorporates these
default and recovery characteristics of the collateral pool into
its cash flow model analysis, subjecting them to stresses as a
function of the target rating of each CLO liability it is
analyzing.

Because the deal can reinvest, the manager can erode the
collateral quality metrics' existing buffer against covenant
levels. However, given the limited time remaining in the deal's
reinvestment period, Moody's analyzed the impact by assuming a
weighted average spread and diversity score consistent with the
midpoint between reported and covenanted values. However, as part
of its sensitivity analysis, Moody's also considered current
spread because of the large difference between the reported and
covenant levels.

Methodology Underlying the Rating Action:

The principal methodology used in this rating was "Moody's Global
Approach to Rating Collateralized Loan Obligations" published in
February 2014.

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

In addition to the base-case analysis, Moody's conducted
sensitivity analyses on the key parameters for the rated notes,
for which it assumed lower credit quality in the portfolio to
address refinancing risk. Loans to European corporates rated B3
or lower and maturing between 2014 and 2015 make up approximately
1.5% of the portfolio, which could make refinancing difficult.
Moody's ran a model in which it raised the base case WARF to 3073
by forcing ratings on 50% of the refinancing exposures to Ca; the
model generated outputs that were in line with the base-case
results.

This transaction is subject to a high level of macroeconomic
uncertainty, which could negatively affect the ratings on the
note, in light of 1) uncertainty about credit conditions in the
general economy and 2) the concentration of lowly-rated debt
maturing between 2014 and 2015, which may create challenges for
issuers to refinance. CLO notes' performance may also be impacted
either positively or negatively by 1) the manager's investment
strategy and behavior 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:

1) 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.

2) Around 30.92% of the collateral pool consists of debt
obligations whose credit quality Moody's has assessed by using
credit estimates.
3) 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-
collateralization 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. Moody's
analyzed defaulted recoveries assuming the lower of the market
price or the recovery rate to account for potential volatility in
market prices. 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.


WOOD STREET IV: Moody's Hikes Rating on Class D Notes to 'Ba1'
--------------------------------------------------------------
Moody's Investors Service announced that it has taken rating
actions on the following classes of notes issued by Wood Street
CLO IV B.V.:

  EUR302.5M (current oustanding balance of EUR191.9M) Class A-1
  Senior Secured Floating Rate Notes due 2022, Affirmed Aaa (sf);
  previously on Mar 14, 2007 Definitive Rating Assigned Aaa (sf)

  EUR55M Class A-2 Senior Secured Floating Rate Notes due 2022,
  Upgraded to Aaa (sf); previously on Nov 3, 2011 Upgraded to Aa1
  (sf)

  EUR46.75M Class B Senior Secured Floating Rate Notes due 2022,
  Upgraded to Aa1 (sf); previously on Nov 3, 2011 Upgraded to A2
  (sf)

  EUR44M Class C Senior Secured Deferrable Floating Rate Notes
  due 2022, Upgraded to A3 (sf); previously on Nov 3, 2011
  Upgraded to Baa2 (sf)

  EUR24.75M Class D Senior Secured Deferrable Floating Rate Notes
  due 2022, Upgraded to Ba1 (sf); previously on Nov 3, 2011
  Upgraded to Ba2 (sf)

  EUR19.25M (current oustanding balance of EUR16.2M) Class E
  Senior Secured Deferrable Floating Rate Notes due 2022,
  Affirmed Ba3 (sf); previously on Nov 3, 2011 Upgraded to
  Ba3 (sf)

  EUR7M Class X Combination Notes due 2022, Upgraded to A2 (sf);
  previously on Nov 3, 2011 Upgraded to Ba1 (sf)

Wood Street CLO IV B.V., issued in January 2007, is a single
currency Collateralised Loan Obligation ("CLO") backed by a
portfolio of mostly high yield European loans. It is
predominantly composed of senior secured loans. The portfolio is
managed by Alcentra Limited, and this transaction ended its
reinvestment period on 25 March 2013.

Ratings Rationale

According to Moody's, the upgrades of the notes result from (i)
the significant deleveraging of the Class A-1 notes and the
subsequent increase in the overcollateralization ratios ("OC
ratios") of the rated notes, and (ii) the benefit of modelling
actual credit metrics following the expiry of the reinvestment
period. Class A-1 has paid down by EUR 110.2 million (36.4% of
its closing balance) since September 2013.

As a result, the OC ratios for all classes of notes have
increased in the last six months. As per the latest trustee
report dated May 2014, the Class A/B, the Class C, the Class D
and the Class E overcollateralization ratios are reported at
139.64%, 121.44%, 113.14% and 108.32%, respectively, compared to
127.15%, 114.66%, 108.66% and 105.06% in September 2013.

In consideration of the reinvestment restrictions applicable
during the amortization period, and therefore the limited ability
to effect significant changes to the current collateral pool,
Moody's analyzed the deal assuming a higher likelihood that the
collateral pool characteristics will continue to maintain a
positive buffer relative to certain covenant requirements. In
particular, the deal is assumed to benefit from a shorter
amortization profile and higher spread levels compared to the
levels assumed prior to the end of the reinvestment period.

The rating on the combination notes address the repayment of the
rated balance on or before the legal final maturity. For the
Class X, the rated balance at any time is equal to the principal
amount of the combination note on the issue date minus the sum of
all payments made from the issue date to such date, of either
interest or principal. The rated balance will not necessarily
correspond to the outstanding notional amount reported by the
trustee. The rated balance of the Class X note is currently
overcollateralized by the Class C notes.

The credit quality of the collateral pool has remained steady as
reflected in the average credit rating of the portfolio (measured
by the weighted average rating factor, or WARF). As of the
trustee's May 2014 report, the WARF was 2975, compared with 2962
in September 2013. The reported diversity score reduced to 29 in
May 2014 from 31 in September 2013.

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 analyzed the underlying collateral pool as having a
pool with performing par and principal proceeds balance of
EUR398.98 million, and defaulted par of EUR20.67 million, a
weighted average default probability of 21.8% (consistent with a
10 years WARF of 3,091 and a weighted average life of 4.3 years),
a weighted average recovery rate upon default of 47.67% for a Aaa
liability target rating, a diversity score of 26 and a weighted
average spread of 4.16%.

In its base case, Moody's addresses the exposure to obligors
domiciled in countries with local currency country risk bond
ceilings (LCCs) of A1 or lower. Given that the portfolio has
exposures to 3.27% of obligors in Italy whose LCC is A2 and 9.62%
Spain whose LCC is A1, Moody's ran the model with different par
amounts depending on the target rating of each class of notes, in
accordance with Section 4.2.11 and Appendix 14 of the
methodology. The portfolio haircuts are a function of the
exposure to peripheral countries and the target ratings of the
rated notes, and amount to 1.16% for the Class A notes, 0.72% for
the Class B notes, 0.29% for the Class C notes.

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. For a Aaa liability target rating,
Moody's assumed that 93.3% of the portfolio exposed to senior
secured corporate assets would recover 50% upon default, while
the non first-lien loan corporate assets would recover 15%. In
each case, historical and market performance and a collateral
manager's latitude to trade collateral are also relevant factors.
Moody's incorporates these default and recovery characteristics
of the collateral pool into its cash flow model analysis,
subjecting them to stresses as a function of the target rating of
each CLO liability it is analyzing.

Methodology Underlying the Rating Action:

The principal methodology used in this rating was "Moody's Global
Approach to Rating Collateralized Loan Obligations" published in
February 2014.

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

In addition to the base-case analysis, Moody's conducted
sensitivity analyses on the key parameters for the rated notes.
Moody's ran a model in which it diminished the base case WAS to
3.86%; the model generated outputs that were within one notch of
the base-case results.

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. CLO notes' performance may also be impacted
either positively or negatively by 1) the manager's investment
strategy and behavior and 2) divergence in the legal
interpretation of CDO documentation by different transactional
parties due to because of embedded ambiguities.

Additional uncertainty about performance is due to the following:

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

2) Around 23.8% of the collateral pool consists of debt
obligations whose credit quality Moody's has assessed by using
credit estimates.

3) Recoveries on 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-
collateralization 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. Moody's
analyzed defaulted recoveries assuming the lower of the market
price or the recovery rate to account for potential volatility in
market prices. 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.



===========
P O L A N D
===========


POLIMEX: To Sign Final Debt Deal with Creditors by July 3
---------------------------------------------------------
Maciej Martewicz at Bloomberg News reports that Polimex agrees to
sign a final deal with its bank creditors and bondholders by
July 3.

According to Bloomberg, the company plans to exchange PLN470
million of debt for new shares at an average issue price of
PLN0.175 per share.

The company will sell PLN140 million of new 5-yr bonds, including
convertible bonds, Bloomberg discloses.  The company, Bloomberg
says, will pay the first interest on bond in 2017.

Creditors will extend payment of the remaining debt until 2019,
Bloomberg notes.

Polimex-Mostostal is a Polish engineering and construction
company that has been on the market since 1945.  The Company is
distinguished by a wide range of services provided on general
contractorship basis for the chemical as well as refinery and
petrochemical industries, power engineering, environmental
protection, industrial and general construction.  The Company
also operates in the field of road and railway construction as
well as municipal infrastructure.  Polimex-Mostostal is a large
manufacturer and exporter of steel products, including platform
gratings, in Poland.



===============
P O R T U G A L
===============


PORTUGAL TELECOM: S&P Raises Corporate Credit Ratings From 'BB/B'
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that it had raised the
long- and short-term corporate credit ratings on Portugal Telecom
SGPS S.A. (PT) and its finance subsidiary Portugal Telecom
International Finance B.V. (PTIF) to 'BBB-/A-3' from 'BB/B'.

At the same time, S&P raised the ratings on PTIF's outstanding
euro medium-term notes and its exchangeable bond to 'BBB-' from
'BB', and withdrew all the recovery ratings on these notes,
because after the upgrade S&P no longer consider them speculative
grade.

All the ratings were removed from CreditWatch with developing
implications, where they had been placed on Oct. 4, 2013,
following the announced merger of PT with Oi.

S&P subsequently withdrew the corporate credit ratings on PT and
PTIF.  The outlook on the corporate credit ratings at the time of
withdrawal was negative.

The equalization of the issue ratings on PTIF with the long-term
rating on Oi reflects the fact that PTIF's creditors now benefit
from the exposure to the enlarged and stronger Oi group by virtue
of the senior unconditional guarantee extended by Oi.  They now
rank pari passu with Oi's outstanding senior unsecured debt
creditors.

The withdrawal of the corporate credit ratings reflects the
merger of PT with Oi.



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


MECHEL OAO: Russia to Support Bond Issue, Not Bankruptcy
--------------------------------------------------------
PRIME reports that Industry and Trade Minister Denis Manturov
said in a news conference on Thursday the Russian government does
not plan to declare Mechel bankrupt, but intends to support the
company with a bond issue for its creditors.

According to PRIME, the final version of Mechel's support program
will be developed by all relevant parties and presented to Prime
Minister Dmitry Medvedev next week.

Mechel's total debt amounts to U.S. US$8.3 billion, PRIME
discloses.

Mechel OAO is a Russian steel and coking coal producer.

As reported by the Troubled Company Reporter-Europe on April 2,
2014, Moody's Investors Service downgraded Mechel OAO's corporate
family rating (CFR) and probability of default rating (PDR) to
Caa1 and Caa1-PD, respectively.  Moody's said the outlook remains
negative.


OTKRITIE BANK: Fitch Withdraws 'B' Issuer Default Ratings
---------------------------------------------------------
Fitch Ratings has withdrawn Open Joint-Stock Company Bank
'Financial Corporation Otkritie's (FCOB, formerly Nomos bank) and
OTKRITIE Bank JSC's (OB) ratings as the banks have chosen to stop
participating in the rating process.  The ratings have been
withdrawn without affirmation because the banks have not provided
Fitch with sufficient information to enable it to decide on
appropriate rating levels.  Fitch will no longer provide ratings
or analytical coverage of FCOB and OB.

Fitch notes that the key areas of concern in respect to the
banks' credit profiles remain (i) contagion risk from the large
debt and high double leverage at the parent Otkritie Holding and
other holding companies, as the banks may be forced to upstream
capital and/or funding to help service or refinance holdco debt;
and (ii) high related-party and relationship exposures at both
banks.  The agency also notes risks in OB's challenging strategy
of developing unsecured retail lending in a market already
showing signs of overheating.

The following ratings have been withdrawn without affirmation:

Open Joint-Stock Company Bank 'Financial Corporation Otkritie'
(formerly Nomos bank)

Long-term foreign currency IDR: 'BB-'; Outlook Negative
Short-term foreign currency IDR: 'B'
Local currency Long-term IDR: 'BB-'; Outlook Negative
Viability Rating: 'bb-'
Support Rating: '4';
Support Rating Floor: 'B'
National Long-term rating: 'A+(rus)'; Outlook Negative
Senior unsecured debt: 'BB-'
Senior unsecured debt of Nomos Capital plc: 'BB-'
Senior unsecured local debt: 'A+(rus)'
Subordinated debt: 'B+'

OB

Long-term Issuer Default Rating: 'B'; Outlook Stable
Short-term Issuer Default Rating: 'B'
Long-term local currency Issuer Default Rating: 'B'; Outlook
  Stable
Viability Rating: 'b'
Support Rating: '4'
Support Rating Floor: 'NF'


TATFONDBANK: Moody's Raises Deposit & Debt Ratings to 'B2'
----------------------------------------------------------
Moody's Investors Service has upgraded Tatfondbank's long-term
local- and foreign-currency deposit and debt ratings to B2 from
B3. Concurrently, Tatfondbank's standalone bank financial
strength rating (BFSR) was upgraded to E+, equivalent to a
baseline credit assessment (BCA) of b3, from E (formerly
equivalent to caa1). The bank's Not Prime short-term ratings were
affirmed. The outlook on the bank's BFSR and its long-term
ratings is stable.

Ratings Rationale

The upgrade of Tatfondbank's ratings is driven by the substantial
decrease in non-core banking assets, as well as a reduction in
loans concentrations, supported by shareholder's capital
injection.

Tatfondbank has reduced investments in non-core banking assets
and has conducted the RUB4 billion capital injection in December
2013, which improved the bank's capital buffer. Under Basel II,
Tatfondbank's Tier 1 capital adequacy ratio (CAR) amounted to
10.7% and total CAR - 12.7% as of year-end 2013 (2012: 8.3% and
12.8%, respectively), according to bank's audited IFRS statement.

Tatfondbank's investments in risky non-core banking assets
(investment property and investments in associates) decreased to
RUB5.8 billion (representing 49% of shareholder equity) as of
year-end 2013, from RUB15.2 billion (200% of equity) as of year-
end 2012 as a result of the disposal of land and real estate
mutual fund, thus reducing pressure on capital.

Moody's also observes a declining trend in Tatfondbank's
borrowers concentrations driven by development of retail lending,
which comprised 27% of total loans at year-end 2013 vs 22% in
2012. The bank's top 20 borrowers decreased to 29% of total loans
(215% of equity) at year-end 2013 from 40% of total loans (382%
of equity) in 2012 compared to similarly rated peers' average of
264%. Tatfondbank's related-parties loan exposure also declined
to 45% of equity as of year-end 2013 vs 76% in 2012, mainly aided
by a conducted capital injection.

Moody's believes that the above-mentioned measures have somewhat
eased pressure on the bank's capital. However, Tatfondbank's
capitalization remains vulnerable to weak core earnings
generation, sustained exposure to related parties and non-core
banking assets, and risks of worsening asset quality amid a
deteriorating operating environment.

Tatfondbank's profitability is largely underpinned by one-off
transactions: gain on disposal of mutual funds amounted to RUB1.4
billion as of year-end 2013, and property revaluation gain
amounted to RUB8.2 billion in 2012, which Moody's regard as non-
recurrent. At the same time, the bank's core recurring
profitability remained low, with net interest margin of 1.8%,
which is below the sector average. Core recurrent revenues (net
interest income and fees and commissions) do not fully cover
operating expenses, thus making the bank reliant on future
capital injections from its shareholders.

Supported Ratings

Tatfondbank's B2 debt and deposit ratings incorporate Moody's
assessment of a low probability of parental support from the
government of the Republic of Tatarstan and its related
companies, resulting in a one-notch uplift from the bank's BCA of
b3. Moody's bases its support assumptions on Tatfondbank's more
than 26% indirect ownership by Republic of Tatarstan, a track
record of support and the bank's material market share in the
Republic of Tatarstan (around 11% market share in deposits).

What Could Move The Ratings Up/Down

Further ratings upside is limited for the next 12-18 months.
Moody's would consider positive rating action in case of
significant improvement in Tatfondbank's recurrent profitability,
further disposal of non-core banking assets and reduction in
related-party exposures, coupled with maintenance of good capital
buffer and sound asset quality.

Moody's would consider a negative rating action in case of
material erosion of bank's capital base by reported losses,
significant worsening of bank's asset quality and/or shortage of
liquidity. Signs of weaker ties between the bank and the local
government of Tatarstan would also be negative for supported
ratings.

Principal Methodologies

The principal methodology used in this rating was Global Banks,
published in May 2013.

Domiciled in Kazan, Russia, Tatfondbank reported total assets of
RUB122 billion and shareholder equity of RUB11.9 billion as of
year-end 2013, under audited IFRS.



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


CATALUNYA BANC: Moody's Puts 'B3' Rating on Review for Downgrade
----------------------------------------------------------------
Moody's Investors Service has placed on review for downgrade the
mortgage and public sector covered bonds issued by Catalunya Banc
SA (Catalunya Banc; deposits B3 on review for downgrade, bank
financial strength rating (BFSR) E /baseline credit assessment
(BCA) caa2), following the rating agency's decision to place the
issuer's respective bank ratings on review for downgrade.

Ratings Rationale

The rating action is prompted by Moody's decision to place
Catalunya Banc's B3 long-term debt and deposit ratings on review
for downgrade, which has been triggered by the weak performance
of the institution, chiefly in terms of asset quality and
profitability.

Key Rating Assumptions/Factors

Moody's determines covered bond ratings using a two-step process;
an expected loss analysis and a TPI (timely payment indicator)
framework analysis.

EXPECTED LOSS: Moody's uses its Covered Bond Model (COBOL) to
determine a rating based on the expected loss on the bond. COBOL
determines expected loss as (1) a function of the probability
that the issuer will cease making payments under the covered
bonds (a CB anchor event); and (2) the stressed losses on the
cover pool assets following a CB anchor event.

For the two covered bond programs, the cover pool losses are an
estimate of the losses Moody's currently models if a CB anchor
event occurs. Moody's splits cover pool losses between market
risks and collateral risks. Market risks measure losses stemming
from refinancing risks and risks related to interest rate and
currency mismatches (these losses may also include certain legal
risks). Collateral risks measure losses resulting directly from
cover pool assets' credit quality. Moody's derives the collateral
risk from the collateral score.

The CB anchor for these programs is the senior unsecured/deposit
rating (SUR) plus 0 notches given that the debt ratio is below
5%.

(1) Catalunya Banc's Mortgage Covered Bonds

The cover pool losses for this program stand at 34.3%, with
market risk of 16.8% and collateral risk of 17.5%. The collateral
score is 26.1%. The over-collateralization (OC) in the cover pool
is 153.3%, of which 25% is on a committed basis. The minimum OC
level that is consistent with the Ba1 rating target is 16%. These
numbers demonstrate that Moody's is not relying on uncommitted OC
in its expected loss analysis.

(2) Catalunya Banc's Public Sector Covered Bonds

The cover pool losses for this program stand at 33.2%, with
market risk of 12% and collateral risk of 21.2%. The collateral
score is 42.4%. The over-collateralization (OC) in the cover pool
is 492.5%, of which 42.9% is on a committed basis. The minimum OC
level that is consistent with the Ba1 rating target is 15.5%.
These numbers demonstrate that Moody's is not relying on
uncommitted OC in its expected loss analysis.

For further details on cover pool losses, collateral risk, market
risk, collateral score and TPI Leeway across covered bond
programs rated by Moody's please refer to "Moody's Global Covered
Bonds Monitoring Overview", published quarterly. All numbers in
this section are based on the most recent Performance Overview
(based on data, as of Q1 2014).

TPI FRAMEWORK: Moody's assigns a TPI, which indicates the
likelihood that the issuer will make timely payments to covered
bondholders in the event of an issuer default. The TPI framework
limits the covered bond rating to a certain number of notches
above the CB anchor.

For these programs, Moody's has assigned a TPI of "Probable".

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

The CB anchor is the main determinant of a covered bond program's
rating robustness. A change in the level of the CB anchor could
lead to an upgrade or downgrade of the covered bonds. The TPI
Leeway measures the number of notches by which Moody's might
lower the CB anchor before the rating agency downgrades the
covered bonds because of TPI framework constraints.

The TPI assigned for both Catalunya Banc's programs is Probable.
The TPI Leeway for these programs is limited, and thus any
reduction of the CB anchor may lead to a downgrade of the covered
bonds.

A multiple-notch downgrade of the covered bonds might occur in
certain limited circumstances, such as (1) a sovereign downgrade
negatively affecting both the issuer's senior unsecured rating
and the TPI; (2) a multiple-notch downgrade of the issuer; or (3)
a material reduction of the value of the cover pool.

Rating Methodology

The principal methodology used in these ratings was "Moody's
Approach to Rating Covered Bonds", published in March 2014.



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


PROMINVESTBANK PJSC: Fitch Affirms 'CCC' Issuer Default Rating
--------------------------------------------------------------
Fitch Ratings has affirmed eight Ukrainian foreign-owned banks'
Long-term foreign currency Issuer Default Ratings (IDRs) at
'CCC'.

The banks are Joint Stock Commercial Industrial & Investment Bank
(PJSC Prominvestbank, PIB), Public Joint Stock Company
UkrSibbank, Ukrsotsbank (Ukrsots), PJSC VTB Bank (VTBU),
ProCredit Bank (Ukraine) (PCBU), PJSCCB Pravex-Bank (Pravex),
PJSC Credit Agricole Bank (CAB) and PJSC Alfa-Bank (ABU).

KEY RATING DRIVERS - IDRS, NATIONAL RATINGS, SENIOR DEBT AND
SUPPORT RATINGS

The affirmation of these banks' Long-term foreign-currency IDRs
at 'CCC' reflects the constraint of Ukraine's Country Ceiling
(CCC'), which limits the extent to which support from the
majority foreign shareholders of these banks can be factored into
the ratings. Ukraine's Country Ceiling reflects the heightened
risk of capital and/or exchange controls being tightened, to the
extent that these would materially constrain or impede the
private sector's ability to repay foreign-currency obligations.
The limited capital controls introduced in February 2014 are
currently in force, although these measures do not prevent
external debt service.

The affirmation of the banks' Long-term local currency IDRs at
'B-' with Negative Outlooks also takes account of country risks,
and in particular the risk, in extreme scenarios, of restrictions
being placed on banks' ability to service their local currency
obligations.

The IDRs, Support and senior debt ratings of all the eight
foreign-owned banks factor in the likelihood of support the banks
may receive from their majority shareholders.  PIB is 98.6%-owned
by Russian state-owned Vnesheconombank (VEB, BBB/Negative);
UkrSibbank is 85%-owned by BNP Paribas (A+/Stable); VTBU is more
than 99%-owned by Russia's JSC Bank VTB; PCBU is controlled (60%
of voting stock) by Germany's ProCredit Holding AG & Co. KGaA.
(BBB/Stable); and CAB is fully owned by Credit Agricole S.A.
(A/Stable).

Ukrsots is 98.64%-owned by UniCredit S.p.A. (UniCredit,
BBB+/Negative) through its Vienna subsidiary UniCredit Bank
Austria AG (A/Negative), although its potential sale has recently
been announced.  UniCredit targets Ukrsots' sale as soon as the
opportunity arises, although it may take time given the currently
difficult operating environment in Ukraine.  Fitch believes that
UniCredit will likely have a high propensity to provide support
to Ukrsots prior to any sale.  Ukrsots's senior unsecured local
currency debt ratings for upcoming issues have been withdrawn as
the transactions are no longer expected to proceed.

Pravex is currently fully owned by Intesa Sanpaolo S.p.A.
(Intesa, BBB+/Negative), although its sale to CentraGas Holding,
a company controlled by Ukrainian shareholders, was announced in
early 2014 and is expected by the parties to be completed,
subject to receiving necessary regulatory approvals.  Fitch
believes that Intesa will provide necessary support up until the
completion of the bank's sale.

The Rating Watch Negative (RWN) on Ukrsots' and Pravex's local
currency IDRs and National Ratings reflects Fitch's view that
shareholder support will probably become less reliable if the
banks are sold, in particular, to local shareholders.

ABU's IDRs and senior debt ratings are driven by Fitch's view on
potential support the bank may receive from other assets
controlled by its main shareholders, including from its sister
bank, Russia-based OJSC Alfa-Bank (AB; BBB-/Negative).  However,
the probability of support is limited due to the indirect
relationship with other group assets and the mixed track record
of support.

KEY RATING DRIVERS - VIABILITY RATINGS

The banks' Viability Ratings (VRs) take into account the large
volumes of unresolved problem exposures on the banks' balance
sheets (with the exceptions of CAB and PCBU) accumulated prior to
the recent escalation of the political and economic crisis in
Ukraine.  These problem assets include both non-performing loans
(NPLs, loans more than 90 days overdue) and restructured/rolled
over exposures; at end-2013, they represented on average 17% and
27% of loans, respectively, for Fitch-rated Ukrainian banks.
These largely include legacy exposures generated in the aftermath
of the 2008 crisis.  Currently recognized NPLs are in most cases
reasonably provisioned and/or collateralized.  However,
substantial downside risks stem from restructured/rolled over
portfolios, creating potential further increases in loan
impairments.

The large depreciation of the Ukrainian hryvnia (UAH) (official
exchange rate UAH11.88: USD or down by 49% year-to-date), the
economic downturn and remaining geopolitical uncertainty will all
likely have affected borrower debt servicing capacity and payment
discipline, in Fitch's view.

Pressure on capital remains considerable due to asset inflation
following the devaluation, foreign currency revaluation losses
(particularly sizeable at a few banks given large open currency
positions) and increased provisioning requirements, all hitting
bottom line performance.  Loan loss absorption capacity will
remain limited, likely requiring further capital support from
shareholders at most of the banks.

Recent deposit outflows have generally been manageable for each
of the banks, helped by previously accumulated cash cushions,
regulatory restrictions on cash withdrawals and support received
from parent banks.  Liquidity cushions (comprising cash and
equivalents, short-term interbank placements and unencumbered
securities eligible for refinancing with the National Bank of
Ukraine) remained at a comfortable level, in the range of 18%-36%
of customer accounts in recent weeks for each of the eight banks.
In addition, undrawn parent bank facilities are also available to
withstand potential further volatility in client funding.

UkrSibbank's lower VR of 'cc' also reflects the bank's very weak
capital position (Fitch Core Capital was marginally negative at
end-2013) and poor financial performance (pre-impairment losses
in 2012-2013), while asset quality metrics were largely
comparable to peers.

PCBU's and CAB's higher VRs of 'b-' reflect the banks' materially
lower levels of NPLs (below 3% of gross loans at end-1Q14 in each
case), smaller volumes of restructured loans compared with peers,
manageable exposure to FX risks and better financial performance.

RATING SENSITIVITIES - IDRS, NATIONAL RATINGS, SENIOR DEBT AND
SUPPORT RATINGS

The IDRs and debt ratings of all eight banks remain highly
correlated with the sovereign credit profile.  The ratings could
be downgraded in case of a further downgrade of the sovereign, or
stabilize at their current levels if downward pressure on the
sovereign ratings abates.  The banks' IDRs and debt ratings could
also be downgraded in case of restrictions being imposed on their
ability to service their obligations.

Fitch expects to resolve the RWN on Ukrsots' and Pravex's local
currency IDRs and National Long-term ratings once the sales,
should they take place, are completed.  If, in Fitch's view,
support from new shareholders cannot be factored into the
ratings, then the Long-term local currency IDRs of these two
banks are likely to be downgraded to the level of their VRs
(currently 'ccc').

Aside of Ukrots and Pravex, the affirmation of the banks'
National Ratings with Stable Outlooks reflects Fitch's view that
the creditworthiness of the banks relative to each other and to
other Ukrainian issuers is not expected to change significantly
in the near term.

RATING SENSITIVITIES - VIABILITY RATINGS

Upside potential for VRs is limited but could arise from a
strengthening of banks' capital positions and significant
progress with workouts of problem loan exposures.  Stabilization
of the sovereign's credit profile and the country's economic
prospects would reduce downward pressure on the VRs.  The VRs
could be downgraded if additional loan impairment recognition
undermines capital positions without sufficient support being
made available.

The rating actions are as follows:

PJSC Prominvestbank:

Long-term foreign currency IDR: affirmed at 'CCC'
Long-term local currency IDR: affirmed at 'B-', Outlook Negative
Senior unsecured local currency debt rating: affirmed at
  'B-'/Recovery Rating 'RR4' and 'AAA(ukr)'
Short-term foreign currency IDR: affirmed at 'C'
Support Rating: affirmed at '5'
Viability Rating: affirmed at 'ccc'
National Long-term Rating: affirmed at 'AAA(ukr)'; Outlook
  Stable

PJSC UkrSibbank:

Long-term foreign currency IDR: affirmed at 'CCC'
Long-term local currency IDR: affirmed at 'B-', Outlook Negative
Senior unsecured local currency debt: affirmed at 'B-'/Recovery
  Rating 'RR4' and 'AAA(ukr)'
Short-term foreign currency IDR: affirmed at 'C'
Support Rating: affirmed at '5'
Viability Rating: affirmed at 'cc'
National Long-Term rating: affirmed at 'AAA(ukr)', Outlook
  Stable

Ukrsotsbank:

Long-term foreign currency IDR: affirmed at 'CCC'
Long-term local currency IDR: 'B-', maintained on RWN
Senior unsecured local currency debt: 'B-'/Recovery Rating 'RR4'
  and 'AAA(ukr)', maintained on RWN
Upcoming senior unsecured local currency debt: 'B-
  (EXP)'/Recovery Rating 'RR4' and 'AAA(EXP)(ukr)', on RWN;
  withdrawn
Short-term foreign currency IDR: affirmed at 'C'
Support Rating: affirmed at '5'
Viability Rating: affirmed at 'ccc'
National Long-term rating: 'AAA(ukr)'; maintained on RWN

PJSC VTB Bank:

Long-term foreign currency IDR: affirmed at 'CCC'
Long-term local currency IDR: affirmed at 'B-', Outlook Negative
Senior unsecured local currency debt: affirmed at 'B-'/Recovery
  Rating 'RR4' and 'AAA(ukr)'
Short-term foreign currency IDR: affirmed at 'C'
Support Rating: affirmed at '5'
Viability Rating: affirmed at 'ccc'
National Long-term rating: affirmed at 'AAA(ukr)'; Outlook
  Stable

ProCredit Bank (Ukraine):

Long-Term foreign currency IDR: affirmed at 'CCC'
Long-term local currency IDR: affirmed at 'B-', Outlook Negative
Senior unsecured local currency debt: affirmed at 'B-'/Recovery
  Rating 'RR4' and 'AAA(ukr)'
Short-term foreign currency IDR: affirmed at 'C'
Short-term local currency IDR: affirmed at 'B'
Support Rating: affirmed at '5'
Viability Rating: affirmed at 'b-'
National Long-Term rating affirmed at 'AAA(ukr)', Outlook Stable

Pravex:

Long-term foreign currency IDR: affirmed at 'CCC'
Long-term local currency IDR: 'B-', maintained on RWN
Short-term foreign currency IDR: affirmed at 'C'
Support Rating: affirmed at '5'
Viability Rating: affirmed at 'ccc'
National Long-term rating: 'AAA(ukr)'; maintained on RWN

CAB:

Long-term foreign currency IDR: affirmed at 'CCC'
Long-term local currency IDR: affirmed at 'B-', Outlook Negative
Short-term foreign currency IDR: affirmed at 'C'
Short-term local currency IDR: affirmed at 'B'
Support Rating: affirmed at '5'
Viability Rating: affirmed at 'b-'
National Long-term Rating: affirmed at 'AAA(ukr)', Outlook
  Stable

PJSC Alfa-Bank:

Long-term foreign currency IDR: affirmed at 'CCC'
Long-term local currency IDR: affirmed at 'B-', Outlook Negative
Senior unsecured local currency debt: affirmed at 'B-'/'RR4' and
  'BBB-(ukr)'
Upcoming senior unsecured local currency debt: affirmed at 'B-
  (EXP)'/'RR4' and 'BBB-(EXP)(ukr)'
Senior unsecured debt of Alfa Ukrfinance LLC: affirmed at 'CCC'/
  Recovery Rating 'RR4'
Short-term foreign currency IDR: affirmed at 'C'
Support Rating: affirmed at '5'
Viability Rating: affirmed at 'ccc'
National Long-term rating: affirmed at 'BBB-(ukr)', Outlook
  Stable



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


COVENTRY'S PERPETUAL: Fitch Rates Tier 1 Capital Securities 'BB+'
-----------------------------------------------------------------
Fitch Ratings has assigned Coventry Building Society's
(A/Stable/F1/a) GBP400 million resetting perpetual contingent
convertible additional Tier 1 capital securities a 'BB+' final
rating.  The rating is in line with the expected rating assigned
on June 17, 2014.

KEY RATING DRIVERS

The notes are additional Tier 1 (AT1) instruments with fully
discretionary interest payments and are subject to conversion
into core capital deferred shares (CCDS) on breach of a 7% CRD IV
common equity Tier 1 (CET1) ratio.  Although Coventry does not
yet have any CCDS in issuance, it has received members' approval
to issue these at any time.

The securities are notched five levels below Coventry's 'a'
Viability Rating (VR), in accordance with Fitch's criteria for
"Assessing and Rating Bank Subordinated and Hybrid Securities".
The notes are notched twice for loss severity to reflect the
conversion into CCDS on breach of the trigger, and three times
for non-performance risk.

The notching for non-performance risk reflects the instruments'
fully discretionary interest payment, which Fitch considers the
most easily activated form of loss absorption.  The issuer will
not make an interest payment if it has insufficient distributable
items or if it is insolvent.  The issuer will also be subject to
restrictions on interest payments if it fails to meet the
combined buffer capital requirements that will be gradually
phased in from 2016.

Fitch has assigned 100% equity credit to the securities.  This
reflects their full coupon flexibility, the ability to be
converted into CCDS before the society becomes non-viable, their
permanent nature and their subordination to all senior creditors.

RATING SENSITIVITIES

As the securities are notched down from Coventry's VR, their
rating is mostly sensitive to any change in this rating.  The
securities' ratings are also sensitive to any change in their
notching, which could arise if Fitch changes its assessment of
the probability of their non-performance relative to the risk
captured in Coventry's VR.  This could reflect a change in
capital management or flexibility or an unexpected shift in
regulatory buffers, for example.


OLCI CONSTRUCTION: Sold in Prepack Deal
---------------------------------------
Aaron Morby at Construction Enquirer reports that one of the
United Kingdon's leading independent construction training
businesses OLCI has been sold in a pre-pack deal after falling
into administration.

But the failure of the Green Deal to deliver left OLCI
Construction Training running at a financial loss and in April,
the firm was hit with a winding up petition, according to
Construction Enquirer.

The report notes that senior managers at OLCI were forced to call
in Allan Graham from KPMG Restructuring who was appointed
administrator on Tuesday, May 6.

Immediately on appointment, the administrators sold the business
to a group that includes Wolverhampton building services training
firm, Engineering Real Results, the report relates.

All 77 employees transferred to the purchaser as part of the
deal, which will also ensure that studies are not disrupted for
over 3,000 current students enrolled on courses, the report
discloses.

"After suffering an extended period of financial losses, OLCI was
unable to meet its commitments to creditors and in early April
had a winding-up petition presented against it.  The directors
took the decision that insolvency was unavoidable and consulted
KPMG to help find a solution that would best protect the
interests of students, creditors and employees," the report
quoted Allan Graham as saying.

"KPMG conducted an accelerated sales and marketing campaign and
the pre-pack sale secured ensures the best outcome for all
parties," Mr. Graham said, the report notes.

The business specialised in providing plumbing, electrical, gas
and green energy training.  It operated out of 13 centres in
Birmingham, Bristol, Cardiff, Devon, Essex, Leeds, Livingston,
Central London, Manchester, Merseyside, Newcastle, Nottingham.



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


* BOOK REVIEW: Risk, Uncertainty and Profit
-------------------------------------------
Author: Frank H. Knight
Publisher: Beard Books
Softcover: 381 pages
List Price: $34.95
Review by Gail Owens Hoelscher
134Order your personal copy today at
http://www.beardbooks.com/beardbooks/risk_uncertainty_and_profit.
html

The tenets Frank H. Knight sets out in this, his first book,
have become an integral part of modern economic theory. Still
readable today, it was included as a classic in the 1998 Forbes
reading list. The book grew out of Knight's 1917 Cornell
University doctoral thesis, which took second prize in an essay
contest that year sponsored by Hart, Schaffner and Marx. In it,
he examined the relationship between knowledge on the part of
entrepreneurs and changes in the economy. He, quite famously,
distinguished between two types of change, risk and uncertainty,
defining risk as randomness with knowable probabilities and
uncertainty as randomness with unknowable probabilities. Risk,
he said, arises from repeated changes for which probabilities
can be calculated and insured against, such as the risk of fire.
Uncertainty arises from unpredictable changes in an economy,
such as resources, preferences, and knowledge, changes that
cannot be insured against. Uncertainty, he said "is one of the
fundamental facts of life."

One of the larger issues of Knight's time was how the
entrepreneur, the central figure in a free enterprise system,
earns profits in the face of competition. It was thought that
competition would reduce profits to zero across a sector because
any profits would attract more entrepreneurs into the sector and
increase supply, which would drive prices down, resulting in
competitive equilibrium and zero profit.

Knight argued that uncertainty itself may allow some
entrepreneurs to earn profits despite this equilibrium.
Entrepreneurs, he said, are forced to guess at their expected
total receipts. They cannot foresee the number of products they
will sell because of the unpredictability of consumer
preferences. Still, they must purchase product inputs, so they
base these purchases on the number of products they guess they
will sell. Finally, they have to guess the price at which their
products will sell. These factors are all uncertain and
impossible to know. Profits are earned when uncertainty yields
higher total receipts than forecasted total receipts. Thus,
Knight postulated, profits are merely due to luck. Such
entrepreneurs who "get lucky" will try to reproduce their
success, but will be unable to because their luck will
eventually turn.

At the time, some theorists were saying that when this luck runs
out, entrepreneurs will then rely on and substitute improved
decision making and management for their original
entrepreneurship, and the profits will return. Knight saw
entrepreneurs as poor managers, however, who will in time fail
against new and lucky entrepreneurs. He concluded that economic
change is a result of this constant interplay between new
entrepreneurial action and existing businesses hedging against
uncertainty by improving their internal organization.

Frank H. Knight has been called "among the most broad-ranging
and influential economists of the twentieth century" and "one of
the most eclectic economists and perhaps the deepest thinker and
135scholar American economics has produced." He stands among the
giants of American economists that include Schumpeter and Viner.
His students included Nobel Laureates Milton Friedman, George
Stigler and James Buchanan, as well as Paul Samuelson. At the
University of Chicago, Knight specialized in the history of
economic thought. He revolutionized the economics department
there, becoming one the leaders of what has become known as the
Chicago School of Economics. Under his tutelage and guidance,
the University of Chicago became the bulwark against the more
interventionist and anti-market approaches followed elsewhere in
American economic thought. He died in 1972.


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Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par.  Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable.  Those sources may not,
however, be complete or accurate.  The Monday Bond Pricing table
is compiled on the Friday prior to publication.  Prices reported
are not intended to reflect actual trades.  Prices for actual
trades are probably different.  Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind.  It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.

Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than US$3 per
share in public markets.  At first glance, this list may look
like the definitive compilation of stocks that are ideal to sell
short.  Don't be fooled.  Assets, for example, reported at
historical cost net of depreciation may understate the true value
of a firm's assets.  A company may establish reserves on its
balance sheet for liabilities that may never materialize.  The
prices at which equity securities trade in public market are
determined by more than a balance sheet solvency test.

Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals.  All titles are
available at your local bookstore or through Amazon.com.  Go to
http://www.bankrupt.com/booksto order any title today.


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

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

Copyright 2014.  All rights reserved.  ISSN 1529-2754.

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

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

The TCR Europe subscription rate is US$775 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each.  For subscription information,
contact Peter Chapman at 215-945-7000 or Nina Novak at
202-241-8200.


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