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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, December 26, 2014, Vol. 15, No. 254

                            Headlines

A U S T R I A

HYPO ALPE-ADRIA: Advent Int'l, EBRD Agree to Acquire Business


I R E L A N D

BANK OF IRELAND: Moody's Raises Deposit Ratings to 'Ba2'
KILLORGLIN CREDIT: To Merge with TCU Following Financial Woes
* IRELAND: Examinership Saves 1,250 SME Jobs in 2014


I T A L Y

MONTE DEI PASCHI: Prepares to Tap Investors for Second Time
TAURUS CMBS NO. 2: Fitch Lowers Rating on Class F Notes to 'CCsf'


L U X E M B O U R G

ORCO PROPERTY: Creditors Okay New Suncani Hvar Restructuring Plan
OXEA SARL: Moody's Lowers CFR to 'B3'; Outlook Stable


N E T H E R L A N D S

FORNAX BV: S&P Lowers Rating on Class F Notes to 'D (sf)'
GRESHAM CAPITAL: Fitch Cuts Rating on Class E Notes to 'B-sf'
WOOD STREET V: Fitch Cuts Ratings on Two Note Classes to 'B-sf'


R U S S I A

IRKUTSK OBLAST: S&P Lowers ICR to 'BB'; Outlook Stable
LSR GROUP: Fitch Revises Outlook to Negative & Affirms 'B' IDR
MAGADAN OBLAST: S&P Assigns 'BB-' Issuer Default Rating
MOSCOW RE: S&P Affirms 'BB' Counterparty Rating; Outlook Stable
PROBUSINESSBANK: Fitch Withdraws 'B-' Issuer Default Rating

RUSSIA: Moody's Lowers Foreign Currency Deposit Ceiling to Ba1
SUKHOI CIVIL: Fitch Affirms 'BB' Long-Term Currency IDR
URAL FEDERAL: Fitch Assigns 'BB+' IDR; Outlook Negative


U K R A I N E

UKRAINE: S&P Lowers Sovereign Rating to 'CCC-'; Outlook Negative


U N I T E D   K I N G D O M

DRACO PLC: Moody's Lowers Rating on GBP12.1MM E Notes to Caa2
LONDON & REGIONAL: S&P Affirms 'BB' Rating on Class B Notes
NEWDAY PARTNERSHIP 2014-1: S&P Assigns BB Rating to Class F Notes
RANGERS FOOTBALL: Shareholders Reject Rights Issue


                            *********


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


HYPO ALPE-ADRIA: Advent Int'l, EBRD Agree to Acquire Business
-------------------------------------------------------------
Boris Groendahl at Bloomberg News reports that Advent
International Corp., the Boston-based private equity firm, and
the European Bank for Reconstruction and Development agreed to
buy Austria's Hypo Group Alpe Adria, one of the largest banks in
the former Yugoslavia.

According to Bloomberg, Advent, which will own 80% of the bank,
and the EBRD agreed to pay at least EUR50 million (US$61 million)
for the company.  Advent, as cited by Bloomberg, said the price
may rise to as much as EUR200 million if certain targets are met.
The deal should close by June pending regulatory and European
Union approval, Bloomberg notes.

Advent and the EBRD are taking over the businesses that emerged
from an Austrian bank failure and cost taxpayers in the Alpine
republic billions of euros, Bloomberg says.  Hypo Alpe, which
expanded rapidly in the Balkans in the 2000s with the backing of
Austria's Carinthia province, was nationalized in 2009 to avert
its collapse after loans to fund investments from Croatian hotels
to Serbian shopping malls turned sour, Bloomberg recounts.

Austria spent EUR5.5 billion to support the lender and more will
probably be needed to fund the wind-down of its bad bank, Heta
Asset Resolution AG, Bloomberg relays.  The sale of its operating
businesses was required by the EU in return for the state aid,
Bloomberg states.

                      About Hypo Alpe-Adria

Hypo Alpe-Adria International AG is a subsidiary of BayernLB.  It
is active in banking and leasing.  In banking, HGAA serves both
corporate and retail customers and offers services ranging from
traditional lending through savings and deposits to complex
investment products and asset management services.

Hypo Alpe received EUR1.75 billion in aid in emergency
capital from the Austrian government.  European Union Competition
Commissioner Joaquin Almunia said in March 2013 that Hypo Alpe
faced possible closure for failing to adequately restructure.
The European Commission approved Hypo's recapitalization in
December 2013, but made it conditional on the management
presenting a thorough plan to overhaul the group.  The Austrian
finance ministry, which effectively runs Hypo Alpe, submitted a
restructuring plan to the Commission on Feb. 5, 2013.  On Sept.
3, 2013, the Commission cleared Hypo Alpe's restructuring plan,
which includes the sale of the bank's Austrian unit and Balkans
banking network and the winding-down of non-viable parts.  It
also approved additional aid to wind down the bank.



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


BANK OF IRELAND: Moody's Raises Deposit Ratings to 'Ba2'
--------------------------------------------------------
Moody's Investors Service has upgraded the deposit ratings of
Bank of Ireland (UK) Plc (BoI UK) to Ba2 from B1 following the
change in the bank's baseline credit assessment (BCA) to ba2 from
b1 (D from E+ BFSR). Short-term deposit ratings have been
affirmed at Not-Prime. The action follows the change of its
parent, Bank of Ireland's (BoI) BCA to ba2 from b1 (D from E+
BFSR).

Moody's has maintained the alignment of the BCAs of both entities
given the high level of integration between BoI and BoI UK.

The outlook on the long-term deposit ratings remains stable
underpinned by the bank's stabilizing asset quality, sound
funding profile, adequate capital levels and improving
profitability trend.

Ratings Rationale

The upgrading of the BCA of BoI UK in line with the BCA of its
parent BoI reflects the high level of integration between the
subsidiary, a standalone legal entity with relatively short
history (the bank was incorporated in November 2010), and its
parent. Since its creation, the balance sheet of BoI UK has
changed due to intra-group transfers of UK based assets from the
group to its UK subsidiary. Going forward, Moody's expects these
transfers to decline. As a result, future changes in BoI UK's
balance sheet should be mainly driven by organic growth.

The stable outlook on the deposit ratings of BoI UK reflects the
bank's (1) sound funding profile, supported by a broad deposit
base sourced largely through its relationship with the Post
Office in addition to deposits from Northern Ireland and GB
Business banking; (2) stabilizing asset quality ratios, albeit
relatively weak compared to other UK banks, a result of high
level of problem loans in the commercial lending book (3) good
performance of the mortgage retail portfolio although the
portfolio is exposed to some downside risk given its relatively
high average loan-to-value ratios; (4) sufficient capital levels;
and (5) improving profitability, which will provide shock
absorbers against downside risk.

What Could Change the Rating -- UP

Positive pressure on BoI UK's ratings could develop if the bank
establishes a longer track record of independence from its parent
in terms of its balance sheet, funding and capital profile along
with sustainable profitability metrics and continuing
improvements in asset quality.

What Could Change the Rating -- DOWN

The BCA could be lowered if BoI UK's capitalization was to
materially decline -- either through higher than expected losses
or through dividend payments to its parent. A material increase
in the bank's risk profile could also lead to negative rating
pressure. Given the level of integration with BOI, a downgrade of
the parent could also have negative rating implications.

The principal methodology used in these ratings was Global Banks
published in July 2014.


KILLORGLIN CREDIT: To Merge with TCU Following Financial Woes
-------------------------------------------------------------
Mark Paul at The Irish Times reports that Killorglin Credit Union
has been subsumed into Tralee Credit Union following a High Court
application on Dec. 18 by the Central Bank.

The move follows a secret four-year engagement with regulators to
repair KCU's balance failed, The Irish Times relays.  It needed a
EUR3.1 million injection just to meet regulatory reserves,
according to the report.

According to The Irish Times, a report prepared by the special
resolution unit of the Central Bank for the governor,
Patrick Honohan, blamed KCU's woes on poor corporate governance,
a decision to invest EUR5.4 million in a new premises that is now
worth EUR450,000, and potential losses on a series of "bullet
loans" with delayed repayments, including several to directors
and staff at KCU.

The SRU's report, prepared prior to the Dec. 18 application,
warned of the possibility of a run on KCU if members, whom it
said were "unaware" of the credit union's true position, found
out what was going on, The Irish Times relates.

The report, as cited by The Irish Times, said KCU is located in a
prominent part of the town and could only accommodate 15 or 20
people queuing before it would be noticed by others, and
recommended immediate amalgamation with TCU.

The SRU report said KCU has been in a "distressed financial
position" since 2010, The Irish Times notes.

Throughout 2011 and 2012, it received substantial support to keep
it afloat from the Irish League of Credit Unions' savings
protection scheme, The Irish Times recounts.

On Oct. 22, the regulator directed it to boost its reserves,
which it said it was unable to do, sparking the merger with TCU,
according to The Irish Times.

Killorglin Credit Union is based in Kerry.


* IRELAND: Examinership Saves 1,250 SME Jobs in 2014
----------------------------------------------------
Charlie Taylor at The Irish Times, citing new figures, reports
that close to 1,250 jobs were saved in SMEs through the
examinership corporate recovery process this year.

According to The Irish Times, a study from chartered accountants
Hughes Blake indicates that 1,243 jobs were retained as a result
of the process, up 49% on last year.

The research shows that a total of 154 jobs were saved during the
final quarter of 2014 alone, The Irish Times discloses.

Examinership is a corporate rescue mechanism that allows
insolvent companies that have a reasonable prospect of survival
to seek court protection from creditors.

The success rate of examinerships -- where the company moves
through the process and emerges on the other side to continue to
trade -- stands high at 90% for 2014, The Irish Times says.



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


MONTE DEI PASCHI: Prepares to Tap Investors for Second Time
-----------------------------------------------------------
Sonia Sirletti at Bloomberg News reports that Banca Monte dei
Paschi di Siena SpA extended a five-day losing streak in Milan
trading as the lender prepares to tap investors for a second time
in a year after Italy's bailed out bank failed stress tests.

Monte dei Paschi, Italy's third largest bank, fell as much as
6.6% to 46.55 cents, the lowest since shares began trading in
1999.  The lender dropped 5.9% to 46.91 cents as of 12:45 p.m. on
Dec. 22.

"The stock is perceived too risky with the bank still far from
the expected turnaround," Bloomberg quotes Vincenzo Longo, a
Milan-based strategist at IG Markets, as saying.  "There are
concerns that the share sale may not be fully subscribed by the
market and underwriters will have to take the remainder: not a
good signal for the bank's future."

Chief Executive Officer Fabrizio Viola is seeking to return to
profit by 2015 by eliminating jobs and selling assets, Bloomberg
discloses.  The bank, engulfed in legal probes of alleged
misconduct by former managers, emerged with the biggest capital
shortfall -- EUR2.1 billion -- among 25 banks that failed the
European Central Bank's tests of 130 lenders, Bloomberg notes.
The company, based in Siena, Italy, will raise EUR2.5 billion
from investors to fill the gap, Bloomberg says.

                     About Monte dei Paschi

Banca Monte dei Paschi di Siena SpA -- http://www.mps.it/-- is
an Italy-based company engaged in the banking sector.  It
provides traditional banking services, asset management and
private banking, including life insurance, pension funds and
investment trusts.  In addition, it offers investment banking,
including project finance, merchant banking and financial
advisory services.  The Company comprises more than 3,000
branches, and a structure of channels of distribution.  Banca
Monte dei Paschi di Siena Group has subsidiaries located
throughout Italy, Europe, America, Asia and North Africa.  It has
numerous subsidiaries, including Mps Sim SpA, MPS Capital
Services Banca per le Imprese SpA, MPS Banca Personale SpA, Banca
Toscana SpA, Monte Paschi Ireland Ltd. and Banca MP Belgio SpA.


TAURUS CMBS NO. 2: Fitch Lowers Rating on Class F Notes to 'CCsf'
-----------------------------------------------------------------
Fitch Ratings has affirmed Taurus CMBS No. 2 S.r.l.'s class E and
G notes due 2019 and downgraded the class F notes:

EUR11.1 million class E (IT0003957047) affirmed at 'BBsf';
Outlook revised to Negative from Stable

EUR9.5 million class F (IT0003957054) downgraded to 'CCsf' from
'CCCsf'; Recovery Estimate RE100%

EUR14.1 million class G (IT0003957062) affirmed at 'BBsf';
Outlook revised to Negative from Stable

The transaction closed in 2005 and was originally the
securitization of four commercial loans backed by Italian
collateral.  Following the redemption of three loans within the
first two years, only the Berenice loan remains.  Originally
secured by 54 assets, the loan is a 33% participation in a larger
facility, granted by five originators.  The securitized balance
was reported at EUR34.7 million and included a EUR8.8 million
undrawn capital expenditure facility.

KEY RATING DRIVERS

The affirmation reflects the significant redemption (by 50%) of
the remaining loan, Berenice, since the last rating action in
January 2014, its low leverage and the increased subordination
available to the class E notes.  The class F notes did not
receive any interest in October 2014 and are now likely to suffer
an ultimate interest loss, driving the downgrade to 'CCsf'.  The
Negative Outlooks reflect the possibility of a loan maturity
default, rising costs in a special servicing scenario and the
possibility of an issuer default, should the class E notes suffer
sustained interest deferral.

Following the sale of eight properties between June and September
2014, the remaining EUR34.7 million loan is now backed by 21
assets (predominantly office properties located in Italy).  While
Fitch believes that the effective loan-to-value (LTV) ratio is
significantly above the reported 45% (in July 2014), the borrower
continues to meet its redemption targets, improving the
likelihood of a full redemption by maturity in July 2015.

In the event of a maturity default, Fitch expects no principal
losses as there is still equity in the loan.  Recent sales
performance shows that there are interested buyers for the
collateral, which includes assets fully let to Telecom Italia
(BBB-/Negative) and Pirelli.

However, the ongoing redemption of Berenice (combined with
sequential principal allocation) continues to increase the
weighted average margin of the notes.  While any unpaid interest
on the class G notes is written off due to the existence of an
available funds cap (AFC), class F does not feature an AFC and
did not receive any interest in October 2014.  The class E notes,
now the most senior tranche, suffered a minor interest deferral
of EUR8,552.

Barring an unexpected surge in senior costs, Fitch expects a full
interest payment of the class E notes in January and a redemption
of the deferred amount.  In addition, any upcoming sales will
redeem the class E notes ahead of the others.  The tranche has
therefore been affirmed.

RATING SENSITIVITIES

The class F notes are expected to be downgraded to 'Dsf' upon
redemption if the expected ultimate interest loss materializes.
All notes will be downgraded in the event of an issuer event of
default.

Fitch expects a full loan redemption (EUR34.7 million) in a 'Bsf'
scenario.



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L U X E M B O U R G
===================


ORCO PROPERTY: Creditors Okay New Suncani Hvar Restructuring Plan
-----------------------------------------------------------------
Further to its press release of December 19, 2014, Orco Property
Group disclosed that the creditors meeting held on Dec. 22 in
Zagreb approved the new plan of financial restructuring of
Suncani Hvar.

The acceptance of this new plan is a result of long-term
negotiations among Suncani Hvar's biggest creditors and
shareholders, and provides a route for approval of the new plan
by Suncani Hvar's shareholders general meeting scheduled for
January 14, 2015 and the confirmation of the pre-bankruptcy
settlement by the Split Commercial Court.

At this occasion, Mr. Jiri Dedera, CEO of the Company stated: "We
are very glad that our efforts and knowledge invested in finding
the best solution to financial problems of Suncani Hvar paid off
and that other creditors and shareholders recognized the
potential of the Company itself, but also our intentions as a
strategic investor.  Since the Company's arrival in Suncani Hvar
in 2005, we have had a vision of Hvar as an exclusive destination
that attracts high demand guests.  With our know-how, management
policy, investments in hotel refurbishment and promotion
campaigns, we didn't only increase the profits of Suncani Hvar,
we also brought the whole tourism industry in the Town of Hvar to
a completely new level and positioned Hvar on the international
map of exclusive touristic destinations."


OXEA SARL: Moody's Lowers CFR to 'B3'; Outlook Stable
-----------------------------------------------------
Moody's Investors Service has downgraded to B3 from B2 the
Corporate Family Rating (CFR) and to B3-PD from B2-PD the
Probability of Default Rating (PDR) of Oxea S.a r.l. ("Oxea"),
the ultimate holding company of the subsidiary guarantors to the
group's senior secured credit facilities. In addition, Moody's
has downgraded to B2 from B1 the rating on the first-lien senior
secured credit facility and to Caa2 from Caa1 the rating on the
second-lien senior secured credit facility due 2020 at Oxea's
subsidiary Oxea Finance & Cy S.C.A. ("OF"). The outlook on all
ratings is now stable.

Ratings Rationale

Downgrade of CFR to B3 From B2

The downgrade of Oxea's CFR to B3 reflects Oxea's continued weak
operating performance since the completion of Oman Oil Company's
(OOC unrated) acquisition of Oxea from private-equity firm Advent
International Corporation. Credit metrics are extremely weak for
the current rating and significantly worse than Moody's
expectations, with Moody's adjusted debt/EBITDA increasing to
approximately 8.0x for the last-twelve-months (LTM) ended
September 2014. Performance has suffered as a result of a
difficult economic environment in Europe, declines in exports to
Asia, as well as the turnaround of Oxea's Bay City plant and
subsequent unplanned outage, competitive pressures, and a severe
winter in the US.

However, more positively, the B3 CFR also reflects Moody's view
that (1) Oxea is a leading pure-play merchant producer of oxo
chemicals for the global chemicals market with a track record of
maintaining and growing market share positions across a diverse
product line; (2) had a proven ability to generate solid cash
flows through global and European economic cycles and currently
has adequate liquidity; (3) the company is expected to benefit
from the decreasing price of propylene, which accounts for nearly
60% of Oxea's total raw material costs; (4) OOC is pursuing
investments in the wider energy sector that are consistent with
the long-term strategy of its owner, the Government of Oman (A1
stable). Moody's views OOC as a more strategic owner than Advent,
with the acquisition in line with its downstream strategy to
become an integrated player in the chemical industry with the
production of higher margin specialty chemicals. Moody's also
expects that the new owner will adopt a more conservative
financial policy than Advent. However, at this stage no
announcement has been made regarding intentions with respect to
Oxea's capital structure.

Rating Outlook

The stable outlook assumes that Oxea maintains adequate liquidity
and that operational performance does not deteriorate any
further.

What Could Change the Rating Up/Down

Positive pressure on the rating could materialize if Oxea were to
sustainably achieve a Moody's-adjusted debt/EBITDA ratio below
5.5x and operational performance improves.

Conversely, Moody's would consider downgrading Oxea's ratings if
(1) the company sustains debt/EBITDA above 6.5x; (2) if its free-
cash flow turns negative; or (3) liquidity deteriorates.

Principal Methodologies

The principal methodology used in these ratings was Global
Chemical Industry Rating Methodology published in December 2013.
Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.

Incorporated in Luxembourg, Oxea S.a.r.l. (Oxea) is a leading
global producer of oxo intermediates and derivatives with a key
product portfolio of oxo chemical products and well-established
market positions in Europe, North America, Asia-Pacific, and
South America. Oxo chemicals are critical to the production of
other chemicals used in a variety of industries such as
automotive, construction, industrial goods, consumer and retail,
pharmaceuticals, cosmetics, agriculture and packaging. As of
financial year-end (FYE) December 2013, Oxea reported revenues
and EBITDA of EUR1.4 billion and EUR191 million, respectively and
on a Moody's-adjusted basis.



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


FORNAX BV: S&P Lowers Rating on Class F Notes to 'D (sf)'
---------------------------------------------------------
Standard & Poor's Ratings Services lowered its credit ratings on
FORNAX (ECLIPSE 2006-2) B.V.'s class E and F notes.  At the same
time, S&P has affirmed its ratings on the class C, X, D, and G
notes.

The rating actions follow S&P's review of the transaction after
the November 2014 note payment date, on which the class F and G
notes experienced an interest shortfall.

The transaction is now backed by four loans secured by commercial
properties located in Germany, Austria, and Italy.  S&P has
reviewed their credit quality according to its criteria for
rating European commercial mortgage-backed securities (CMBS)
transactions.

CASSINA PLAZA LOAN (46% OF THE POOL)

The loan, which is the largest loan in the pool, matured on
Nov. 10, 2013 and as an outstanding current balance of EUR39.9
million.

The loan is secured on Cassina Plaza, which constitutes four
office properties that form part of a larger office park located
10 kilometers northeast of Milan.  On Aug. 8, 2014, the special
servicer entered into a consensual sale framework agreement to
facilitate the consensual sale of the business park.

The most recent valuation of the property (April 2012) reported a
market value of EUR55,590,000.  Based on this information, the
loan exhibits a loan-to-value (LTV) ratio of 72%.

The properties are multitenanted and the largest tenant accounts
for 54% of the total rental income.  The top five tenants account
for 94% of the total rental income.  The weighted-average lease
term to first break is four years and occupancy levels were last
reported in November 2013 at 67.08%.

S&P has assumed losses under a 'B' rating stress scenario.

BIELEFELD/BERLIN PORTFOLIO LOAN (28% OF THE POOL)

This is an amortizing fixed rate loan due to mature on Jan. 25,
2016.  The loan has a current outstanding principal balance of
EUR23.9 million.

The loan is secured on a mixed retail and office property in
Berlin and residential properties in Bielfeld.  The properties
within the portfolio are currently let to multiple tenants with a
current vacancy level of 2.2% and a weighted-average unexpired
lease term of 5.3 years.  The top five tenants account for 76.3%
of the income with the largest tenant (residential tenants)
accounting for 57.5% of the income.

The most recent valuation of the properties (July 2012) reported
a market value of EUR36.52 million.  Based on this information,
the loan has an LTV ratio of 63%.  The loan remains on the
servicer's watchlist due to a prior debt service coverage ratio
covenant breach.

S&P has assumed losses under a 'B' rating stress scenario.

KINGBU PORTFOLIO LOAN (15% OF THE POOL)

This loan, which was fully securitized at closing, has an
outstanding principal balance of EUR12.58 million.

The loan matured on Oct. 25, 2012.  The loan failed to repay on
the maturity date and subsequently entered special servicing.
Since then, standstill agreements have been in place, with the
current standstill due to expire on the January 2015 interest
payment date (IPD).

The loan is currently secured on a portfolio of 10 German mixed-
use assets (down from 12 assets at closing).  The properties
within the portfolio are currently let to a number of tenants
with a current vacancy level of 0.21% and a weighted-average
unexpired lease term of eight years.  In June 2014, the largest
tenant accounted for 31.55% of the income, and the top five
tenants accounted for 66.38% of the total income.

The most recent valuation of the remaining properties (March
2014) reported a market value of EUR16,650,000.  Based on this
information, the loan exhibits a reported LTV ratio of 76%.

S&P has assumed that the loan will fully repay under a 'B' rating
stress scenario.

ATU AUSTRIA LOAN (12% OF THE POOL)

This loan, which is 100% securitized, has a current outstanding
balance of EUR10.15 million.

The loan failed to repay at maturity on Jan. 25, 2013 and
subsequently entered special servicing.  Standstill agreements
have been in place, with the current standstill due to expire at
the January 2015 IPD.

The loan is secured by eight properties used as automotive retail
stores and repair workshops, located throughout Germany.  The
properties are currently 100% let to the sole tenant Auto Terile
Unger and the lease on the properties was renegotiated in
November 2013.  The portfolio now has a weighted-average
unexpired lease term of 15.8 years.

The most recent valuation of the properties (November 2012)
reported a market value of EUR14.03 million.  Based on this
information, the loan exhibits an LTV ratio of 72%.  A full cash
transfer is currently taking place and is being used by the cash
manager to partially prepay the loan.

S&P has assumed losses under a 'B' rating stress scenario.

CASH FLOW ANALYSIS

On the November 2014 note payment date, the class F and G notes
experienced an interest shortfall.  S&P's analysis indicates that
the transaction is experiencing cash flow disruptions due to a
combination of spread compression between the loan and the notes.
The transaction has also incurred high prior ranking transaction
costs, which have resulted in insufficient interest cash flow
available to meet all interest payments due on the notes.

S&P believes that the transaction will remain vulnerable to
future interest shortfalls if it accumulates higher prior ranking
senior costs related to the on-going work out of the loans.  In
addition, future principal repayments may create further spread
compression between the margin paid on the loans and the margin
paid on the notes.

RATING RATIONALE

S&P's ratings in FORNAX (ECLIPSE 2006-2) address the timely
payment of interest and the repayment of principal no later than
legal final maturity in February 2019.

The available credit enhancement for the class C notes is
commensurate with S&P's currently assigned rating.  S&P has
therefore affirmed its 'AA (sf)' rating on the class C notes.

The class X notes are interest-only notes and rank between the
class C and D notes.  S&P has therefore affirmed its 'AA (sf)'
rating on the class X notes.

S&P considers the available credit enhancement for the class D
notes to be sufficient to mitigate the risk of losses from the
underlying loans in a 'A+' rating stress scenario.  S&P has
therefore affirmed its 'A+ (sf)' rating on the class D notes.
S&P's analysis takes into account the cash flow disruptions
experienced on the lower classes of notes.

S&P considers the available credit enhancement for the class E
notes to be sufficient to mitigate the risk of losses from the
underlying loans in a 'B+' rating stress scenario.  S&P has
therefore lowered to 'B+ (sf)' from 'BB- (sf)' its rating on the
class B notes.

S&P has lowered to 'D (sf)' from 'CCC- (sf)' its rating on the
class F notes as these classes of notes have experienced interest
shortfalls and will likely experience principal losses, in S&P's
opinion.

S&P has affirmed its 'D (sf)' rating on the class G notes as they
have experienced both principal losses and continued interest
shortfalls.

RATINGS LIST

FORNAX (ECLIPSE 2006-2) B.V.
EUR545.134 mil commercial mortgage-backed variable- and floating-
rate notes
                              Rating
Class      Identifier         To           From
C          XS0267554508       AA (sf)      AA (sf)
X          XS0267557196       AA (sf)      AA (sf)
D          XS0267554920       A+ (sf)      A+ (sf)
E          XS0267555570       B+ (sf)      BB- (sf)
F          XS0267555737       D (sf)       CCC- (sf)
G          XS0267556032       D (sf)       D (sf)


GRESHAM CAPITAL: Fitch Cuts Rating on Class E Notes to 'B-sf'
-------------------------------------------------------------
Fitch Ratings has downgraded Gresham Capital CLO IV B.V.'s class
C, D, and E notes and affirmed the remaining notes as follows:

Class A1A (no ISIN): affirmed at 'AAAsf'; Outlook Stable

Class A1B (ISIN XS0300109146): affirmed at 'AAAsf'; Outlook
Stable

Class A2 (ISIN XS0300109658): affirmed at 'AAAsf'; Outlook Stable

Class B (ISIN XS0300110078): affirmed at 'AAsf'; Outlook Stable

Class C (ISIN XS0300111639): downgraded to 'BBBsf' from 'Asf';
Outlook Negative

Class D (ISIN XS0300112017): downgraded to 'B+sf' from 'BBsf';
Outlook Negative

Class E (ISIN XS0300112363): downgraded to 'B-sf' from 'Bsf';
Outlook Negative

Gresham Capital CLO IV B.V. is a securitization of mainly senior
secured loans, senior unsecured loans, second-lien loans,
mezzanine loans (including revolvers) and CLOs.  At closing,
total note issuance of EUR310.4m was used to invest in a target
portfolio of EUR300m. The portfolio is actively managed by
Investec Bank plc.

Key Rating Drivers

The downgrade of the class C, D, and E notes reflects their
exposure to currency risk. The portfolio currently contains
sterling-denominated assets totaling GBP25.2 million (22.6% of
performing assets at current exchange rate) while sterling
liabilities account for GBP10.9 million. If sterling depreciates
versus euro, then the value of sterling-denominated assets will
fall in euro terms. Because sterling-denominated liabilities are
significantly less than sterling-denominated assets, the
transaction is exposed to currency losses in this scenario. Fitch
expects the class A1A and A1B notes to be completely repaid at
the next payment date in January 2015 using euro proceeds,
increasing the mismatch and completely removing the currency
hedge.

The transaction uses the multi-currency class A1A variable
funding notes to hedge GBP exposure. The hedging strategy
following the end of the reinvestment period involves matching
senior note redemptions by currency so that sterling principal
proceeds are used to redeem sterling-denominated class A1A
drawings while euro principal proceeds are used to redeem euro-
denominated senior liabilities, thus keeping the balance of
sterling-denominated assets and liabilities aligned. However,
once all senior euro liabilities are redeemed, any additional
euro principal proceeds are converted to sterling and used to
redeem sterling liabilities, creating a currency mismatch. Since
November 2013, receipts of euro-denominated funds have
significantly exceeded sterling-denominated proceeds.

The affirmation of the class A1A, A1B, A2, and B notes reflects
levels of credit enhancement commensurate with the notes'
ratings. The credit enhancement available to these notes
increased significantly since November 2013. Over the past 12
months, EUR51.8 million and GBP28.8 million was used to redeem
the class A1A and A1B notes.

The credit quality of the performing portfolio has remained
stable since November 2013. The reported weighted average rating
factor decreased to 30.0 from 30.7 in November 2013. However, two
obligors defaulted during the period.

All overcollateralization (OC) tests are currently passing while
the reinvestment OC test is failing. Since November 2013 OC test
buffers for the class A2, B, and C OC tests have been steadily
rising due to the deleveraging of the structure. Test buffers for
the more junior class D and E OC tests have been more volatile
due to defaults in the portfolio. The interest coverage test
continues to be met with a significant buffer.

The Negative Outlook on the class C, D, and E notes reflects
their sensitivity to differing repayment speeds of the sterling
and euro subpools. A higher prepayment rate of euro-denominated
assets would increase the relative weight of the sterling-
denominated subpool in the overall portfolio and thus increase
the currency mismatch between assets and liabilities.

RATING SENSITIVITIES
A 25% increase in the obligor default probability would lead to a
downgrade of zero to two notches for the rated notes.

A 25% reduction in expected recovery rates would lead to a
downgrade of zero to three notches for the rated notes.


WOOD STREET V: Fitch Cuts Ratings on Two Note Classes to 'B-sf'
---------------------------------------------------------------
Fitch Ratings has downgraded Wood Street CLO V B.V.'s class E-1
and E-2 notes and affirmed the others, as follows:

Class A-D (ISIN XS0305963588): affirmed at 'AAAsf'; Outlook
Stable

Class A-R (no ISIN): affirmed at 'AAAsf'; Outlook Stable

Class A-T (ISIN US978639AM42): affirmed at 'AAAsf'; Outlook
Stable

Class A-2 (ISIN XS0305963745): affirmed at 'AAsf'; Outlook Stable

Class B (ISIN XS0305963828): affirmed at 'Asf'; Outlook Stable

Class C-1 (ISIN XS0305964123): affirmed at 'BBBsf'; Outlook
Stable

Class C-2 (ISIN XS0305964396): affirmed at 'BBBsf'; Outlook
Stable

Class D (ISIN XS0305964800): affirmed at 'BBsf'; Outlook Stable

Class E-1 (ISIN XS0305965286): downgraded to 'B-sf' from 'Bsf';
Outlook revised from Stable to Negative

Class E-2 (ISIN XS0305965799): downgraded to 'B-sf' from 'Bsf';
Outlook revised from Stable to Negative

Wood Street CLO V is a securitization of mainly European senior
secured loans with a total note issuance of EUR500m invested in a
target portfolio of EUR480 million. The portfolio is actively
managed by Alcentra Limited.

KEY RATING DRIVERS

The downgrade of the class E notes reflects the deterioration in
the portfolio's credit quality during the period since the last
review in February 2014 and the reduction in credit enhancement
as a result of defaults in the underlying portfolio. The Negative
Outlook highlights the vulnerability of the notes to further
downgrades should the weighted average life of the portfolio fail
to reduce.

While the credit enhancement available to the class A to D notes
also deteriorated during 2014, the notes maintain sufficient
protection to absorb Fitch's loss expectations at the current
ratings. Additionally the transaction has now exited its
reinvestment period, which is expected to result in increasing
levels of credit enhancement as the senior note begins to
amortize.

The Stable Outlook on the mezzanine notes reflects limited
refinancing and default clustering risks over the next 18 months
as only a small proportion of the current portfolio is scheduled
to mature over this time horizon.

Credit quality in the underlying portfolio has marginally reduced
since the last review. The Fitch weighted average rating factor
rose to 28.9 from 28.3 while the Fitch weighted average recovery
rate fell to 63.3% from 65.0%. In the same period the weighted
average spread (WAS) of the portfolio fell from 4.66% to 4.14%.
While all of these key statistics deteriorated since the last
review, they continue to maintain a significant cushion against
the covenanted levels.

In Fitch's view, a key risk for this transaction is the weighted
average life (WAL) of the portfolio which extended again in the
period since last reviewed to 4.8 years from 4.5 years. To date
the transaction has had an inefficient weighted average maturity
(WAM) test, which would only breach if the WAL of the portfolio
grew above 11 years. In September 2014, the calculation of the
WAM test was amended, such that the test calculation became more
market standard, resulting in a failure of the WAM test. Given
the amendment of the WAM test and the transaction's exit from the
reinvestment period, Fitch would expect the WAL of the portfolio
to begin reducing and should this not occur, it may have a
negative impact on the rated notes. There are currently no long-
dated assets in the portfolio and the coverage tests do not incur
any penalty on such assets.

There are currently no defaulted assets in the portfolio as the
two assets that defaulted during the year and the asset which sat
in the defaulted bucket at the beginning of the year have been
worked out or sold. The transaction is passing its coverage tests
although the buffers have decreased in the year as a result of
the defaults.

The transaction has the ability to invest up to 30% of the
portfolio in sterling-denominated assets. Currency risk from
sterling assets is naturally hedged through matching sterling
liabilities or perfect asset swaps. The key risk arises when a
sterling asset defaults, leaving the remaining sterling assets
unable to cover sterling note repayments and in turn causing the
structure to convert euro proceeds into sterling to pay off
sterling liabilities. In this scenario, currency risk is
exacerbated if sterling is appreciating against the euro while a
simultaneous rise in GBP Libor may compound the cost of sterling
liabilities.

These risks are managed in the structure via several tools,
including the use of a liquidity facility, out-of-the money
currency options and an interest rate cap to repay any sterling
liability mismatch. The residual currency risk is absorbed by the
structure through excess spread, which is currently significant
given the high WAS and low cost of funding on the liabilities.

Fitch has found that the transactions can withstand the various
combinations of interest rate and currency stresses overlaid with
default skews between sterling and euro assets at proposed rating
stress levels.

RATING SENSITIVITIES

Fitch ran rating sensitivity scenarios on the transaction to
assess the impact on the notes' ratings if default rates and
recovery rates are stressed.

A 25% increase in the expected obligor default probability would
lead to a downgrade of two to four notches for the rated notes.

A 25% reduction in the expected recovery rates would lead to a
downgrade of two to three notches for the rated notes.



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


IRKUTSK OBLAST: S&P Lowers ICR to 'BB'; Outlook Stable
------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term issuer
credit rating on Irkutsk Oblast, a Russian region in Eastern
Siberia, to 'BB' from 'BB+'.  The outlook is stable.

At the same time, S&P lowered its Russia national scale rating on
the oblast to 'ruAA' from 'ruAA+'.

RATIONALE

The downgrade reflects S&P's view that our previous negative
rating triggers have materialized.  S&P believes that Irkutsk
Oblast's budgetary performance structurally deteriorated in 2013
and 2014 and will be weak over the next three years.  In S&P's
view, the decline stemmed from federal decisions regarding the
national tax legislation, presidential decrees in 2012 requiring
regions to significantly increase social expenditure, and the
lack of timely and sufficient austerity measures from the
oblast's financial management.  Moreover, S&P now forecasts a
larger deficit after capital accounts in 2015 and expect
Irkutsk's free cash, net of the deficit after capital accounts,
to cover only about 60% of debt service falling due in the next
12 months.  This has led S&P to revise its view of the oblast's
liquidity to adequate from strong.

The ratings reflect S&P's view of Russia's volatile and
unbalanced institutional framework, and Irkutsk's weak economy
and financial management compared with international peers'.
Very weak budgetary flexibility and weak budgetary performance
also constrain the ratings.  The ratings are supported by S&P's
view of the oblast's very low debt burden and adequate liquidity.
S&P has revised its assessment of the oblast's contingent
liabilities to low from moderate under its revised criteria,
which is also positive for the ratings.  The long-term rating on
Irkutsk is at the same level as S&P's 'bb' assessment of the
oblast's stand-alone credit profile.

S&P views Irkutsk's economy as weak in an international
comparison, and forecast its gross regional product per capita
will not exceed US$10,000 until 2017.  S&P also thinks the
economy will depend on the mining industry, especially on oil,
gas, and coal extraction, over the long term.  This modest
concentration exposes the oblast's budgetary performance to the
volatility of global commodity prices and the performance of a
few large taxpayers.

Under Russia's volatile and unbalanced institutional framework,
regional budget revenues and expenditures largely depend on the
federal government's decisions, including the regulation of the
national tax regime, tax rates, and the distribution of
transfers. The federal government regulates more than 90% of
Irkutsk's budget revenues, and has recently taken decisions that
might restrict the oblast's budget revenues over the next few
years.  This translates into what S&P views as very weak
budgetary flexibility for Irkutsk.  In S&P's view, the oblast's
spending flexibility is further restricted by several years of
underfinancing of infrastructure development in this vast and
scarcely populated region.

"In our base-case scenario, we assume that in 2014-2017 Irkutsk's
budgetary performance will be weak. The operating balances will
likely remain negative on average, and deficits after capital
accounts will equal about 7% of total revenues.  In 2014, the
operating deficit will likely narrow to about 1.6% of operating
revenues from almost 5% in 2013, following a strong recovery of
tax revenues from the leading taxpayers, oil producer Rosneft and
its subsidiaries and oil transporter Transneft.  Nevertheless,
the operating balance will likely decline again in 2015.  We
expect corporate profit tax to stay flat and overall tax revenues
to contract modestly in real terms, due to the drop in oil prices
and zero economic growth that we forecast in other sectors.  The
oblast will also lose an estimated 1% of operating revenues from
lower excise receipts, following federal decisions regarding
duties on alcohol and fuel.  The oblast plans to start reining in
operating spending growth in 2015, but in our view this is
unlikely to offset the weak revenue performance and the negative
effects of rapid spending growth in 2012-2013," S&P said.

The deficit after capital accounts will also likely improve
temporarily in 2014 to about 7% of total revenues, compared with
16% in 2013, and stay broadly at this level in 2015-2017.  S&P's
base-case scenario assumptions are slightly more positive than
those in the oblast's currently proposed draft budget for 2015-
2017, which projects deficits after capital accounts higher than
10% of total revenues.  This is because S&P forecasts higher tax
revenues and think the oblast won't fully implement its planned
capital expenditure program, due to lengthy procurement
procedures.

The oblast will accumulate direct debt over the next three to
four years, but S&P anticipates that tax-supported debt will
remain very low and won't exceed 30% of consolidated operating
revenues until year-end 2017.  S&P includes modest debt of the
oblast's government-related entities (GREs) and guarantees the
oblast plans to issue in 2015-2017 into S&P's assessment of tax-
supported debt.

Following the revision of S&P's criteria, it has changed its
assessment of Irkutsk's outstanding contingent liabilities to low
from moderate.  S&P estimates that the GREs' debt and payables
represent only about 7% of the oblast's operating revenues.  At
the same time, S&P sees a higher probability that the oblast
would have to provide extraordinary financial support to its GREs
or municipalities than for other Russian peers.  This is due to
S&P's view of Irkutsk's large infrastructure development needs.

S&P views Irkutsk's financial management as weak in an
international context, as it do that of most Russian local and
regional governments.  This is mainly due to the lack of reliable
long-term financial and capital planning and S&P's view of the
oblast's constrained ability to control spending growth and cut
costs.

Liquidity

"We have revised our view of Irkutsk's liquidity to adequate from
strong, as defined in our criteria, because in our view in 2015
the oblast's average free cash on accounts will no longer exceed
debt service, and the oblast will rely on committed credit
facilities for refinancing.  We expect the oblast's debt-service
coverage to be strong, with free cash and committed credit
facilities covering more than 300% of debt service falling due
within the next 12 months.  At the same time, we view the
oblast's access to external liquidity as limited, due to the
weaknesses of Russia's capital market and banking sector," S&P
noted.

In 2014, the oblast had about Russian ruble (RUB) 5 billion
(about $95 million) on average on its accounts.  S&P expects that
until the end of 2014 and throughout 2015 free cash net of the
deficit after capital accounts will equal less than RUB2 billion.
This will cover only about 60% of debt service falling due in the
next 12 months.  S&P therefore expects that the oblast will
increasingly rely on committed bank lines, which it has used
regularly since 2013.  As of Dec. 1, 2014, Irkutsk had RUB6.5
billion in undrawn three-year bank lines, which together with
free cash cover debt service falling due in the next 12 months by
3x.

"In our base case, we assume that in 2015 Irkutsk's debt service
will remain low at only 2% of operating revenues, despite
gradually increasing interest costs.  We have excluded the
repayment of RUB1.2 billion in budget loans from this calculation
because we expect the federal government will extend these loans
beyond 2025.  Debt service might increase to about 9% of
operating revenues in 2016-2017 because bank loans the oblast
contracted in 2014 will be due, and interest expenses will
gradually increase alongside debt accumulation," S&P noted.

OUTLOOK

The stable outlook reflects S&P's view that Irkutsk's debt burden
will remain very low in 2014-2017, despite its weak budgetary
performance and gradual accumulation of direct debt.  S&P also
assumes that the oblast will maintain adequate liquidity by
relying on new medium-term borrowing and keeping sufficient
undrawn funds on committed bank lines.

S&P could take a negative rating action within the next 12 months
if the oblast's liquidity deteriorated due to weakening debt-
service coverage, and tax-supported debt exceeded 30% of
consolidated revenues in 2015-2016 as a result of weaker revenue
performance and constrained capacity to control spending growth.
This would lead S&P to revise its assessment of the oblast's
liquidity down to weak and that of the debt burden to low.

S&P could take a positive rating action if the oblast's budgetary
performance were set to structurally improve, operating margins
turned positive, and the deficit after capital accounts narrowed
to less than 5% of total revenues on average, thanks to a more
prudent approach to expenditure.  However, in S&P's view, such a
scenario is unlikely within the next 12 months.

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

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

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

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

RATINGS LIST

Downgraded
                             To                 From
Irkutsk Oblast
Issuer Credit Rating        BB/Stable/--       BB+/Negative/--
Russia National Scale       ruAA/--/--         ruAA+/--/--


LSR GROUP: Fitch Revises Outlook to Negative & Affirms 'B' IDR
--------------------------------------------------------------
Fitch Ratings has revised the Outlook on OJSC LSR Group's (LSR)
Long-term foreign currency Issuer Default Rating (IDR) to
Negative from Stable and affirmed the IDR at 'B'.  Fitch
simultaneously affirmed the senior unsecured rating of the
outstanding bond issues at 'B'.

The Negative Outlook reflects the significantly reduced
visibility on the Russian real estate market direction in 2015
driven by sharp interest rate increase since mid-December.  Fitch
acknowledges LSR's potential to de-lever from moderating capex
and the expected cement plant sale transaction in December 2014.
However, the extent of the market uncertainty adds downside risk
into 2015 for LSR's leverage metrics and is the key rating driver
over the next 6-12 months.

LSR's ratings incorporate its high geographical concentration in
north-western Russia, inherent industry cyclicality and capital
intensity, and higher than average risks associated with the
Russian business and jurisdictional environment.

KEY RATING DRIVERS

Russian Realty Market Deceleration

Fitch expects the Russian real estate market to enter negative
growth in 2015 on rebased mortgage rates and revised real GDP
dynamics, taking into account the sector's particularly high
sensitivity to the interest rate environment.  Fitch expects a
double-digit sales volume decline coupled with high single-digit
price drop to result in FFO shrinking by at least 40%.

These risks are somewhat mitigated by LSR's ability to moderate
working capital and flexibility to cut dividend outflows,
providing more comfort compared with the 2008/09 crisis given its
moderate debt level and minimal capex requirements.  However, the
extent of the negative market pressure remains highly uncertain.
Should visibility on the short-term direction of Russian real
estate market improve, Fitch will review the rating case.

Plant Sale Reducing Capex

LSR is following its plan to cut capex in building materials
after the completion of USD800 million new cement and brick
plants.  Fitch expects LSR to keep capex below RUB2 billion but
increase dividends given improved net profits generation.
Assuming moderate investments in new land bank starting from 4Q14
and a successful cement plant sale in December 2014 leading to
the deconsolidation of the cement segment's debt (end-1H14:
RUB13bn), Fitch expects FFO gross adjusted leverage to be well
below 3x in 2014 (FY13: 3.1x).

One-Off Project Acquisition in Moscow

In April 2014, LSR won the tender for the development of ZiL
industrial area in Moscow for RUB28 billion payable in several
installments.  LSR will pay RUB10 billion of the RUB28 billion
land cost in 2014-2016, and estimates overall investments will
reach RUB125 billion against RUB180 billion of expected revenues
stream until 2022.  The project has an impact on LSR's working
capital outflow peaking in 2014-2015 until first presales
commence in late 2015 and partly balances further projects' cash
outflows.

Top-Five Developer in Russia

LSR retains its position as one of the top-five real estate
developers in the highly fragmented Russian residential
construction market.  The company is the leading elite real
estate player and is also one of the leading mass market real
estate players in St. Petersburg.  LSR is also the leading
building materials producer in north-western Russia.

Limited Geographical Diversification

LSR generates over 70% of revenues in its domestic market of St.
Petersburg and the surrounding Leningrad region.  LSR's
acquisition of the ZiL and Vzlyot projects with 2.6 million sq.
m. of gross buildable area in Moscow in mid-2014 is another
positive step in LSR's strategy to diversify towards Moscow
region.  The projects will significantly reduce LSR's high
regional concentration over the medium term.

Robust Land Bank

Over the past years, LSR has kept a steadily high land bank of
around 8 million sq. m., which is concentrated in north-western
Russia (over 70% of total).  The land bank is sufficient to cover
over 10 years of construction at the current levels, and is
balanced with under-construction and finished portfolio covering
twice the FY13 sales in the development segment.

Integrated Business Model

LSR is vertically integrated into building materials, which
contribute above 30% to sales and EBITDA.  Vertical integration
supports the ratings due to the issuer's better input cost
control and its exposure to the less volatile infrastructure
construction segment, which in turn is supported by the
government.  Ramping up new brick plant and the modernized
reinforced concrete plant will additionally contribute to EBITDA
in 2014 from the FY13 level.

Corporate Governance Discount

Similar to most Russian corporates, Fitch applies a two-notch
corporate governance discount for the company's weak systemic and
individual corporate governance standards and its exposure to
Russia's weak legal and regulatory environment.

RATING SENSITIVITIES

Positive: Future developments that could lead to a revision of
the Outlook to Stable include:

   -- Improved visibility on the short-term direction of the
      Russian real estate market environment over the next 12
      months.

   -- Closure of the cement plant disposal transaction resulting
      in the LSR's deleveraging.

   -- Successful refinancing of the 2015 debt maturities.

   -- FFO adjusted gross leverage sustainably below 4x.

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

   -- LSR's inability to dispose of its cement plant and de-
      lever.

   -- Meaningful deterioration of the current liquidity headroom.

   -- Market deterioration leading to EBIT margin below 10%
      and/or worsened liquidity.

   -- Leveraging with FFO adjusted gross leverage sustainably
      above 4x.

FULL LIST OF RATING ACTIONS

   -- Long-term foreign currency IDR affirmed at 'B'; Outlook
      revised to Negative from Stable

   -- Local currency senior unsecured rating affirmed at 'B' for
      the RUB3.0bn (series 03), RUB2.8bn (series 04) and RUB3bn
      (BO-04 series) bond issues, Recovery Rating 'RR4'


MAGADAN OBLAST: S&P Assigns 'BB-' Issuer Default Rating
-------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' long-term
issuer credit rating and 'ruAA-' Russia national scale rating to
Magadan Oblast, a region in Russia's Far Eastern Federal
District. The outlook is stable.

Rationale

The ratings on Magadan are constrained by S&P's view of Russia's
volatile and unbalanced institutional framework, which
contributes to Magadan's very weak budgetary flexibility.  Owing
to these system constraints, S&P views Magadan's financial
management as weak in an international context, mirroring S&P's
view for most Russian local and regional governments (LRGs).

Despite its wealth above the Russian average, Magadan's economy
is weak, in S&P's view, because of its heavy concentration on
mining precious metals.  The oblast's weak budgetary performance
also constrains the ratings.

The ratings are supported by S&P's view of the oblast's adequate
liquidity, low debt, and low contingent liabilities.

The rating on Magadan is equivalent to S&P's 'bb-' assessment of
the region's stand-alone credit profile.

Located in Russia's Far East, Magadan has more than 15% of the
country's total gold reserves and 50% of its silver reserves.
For this reason, the oblast's relatively wealthy economy by
Russian standards is highly concentrated on gold and silver
mining, which together provide about 20% of the oblast's gross
regional product and approximately 45% of the region's tax
revenues.  S&P estimates the oblast's GDP per capita at US$19,000
in 2013.

In S&P's view, Magadan's budgetary flexibility is very weak owing
to federal government control over key tax rates and bases, as
well as to the allocation criteria for federal grants that
account for roughly 50% of Magadan's operating revenues on
average.  Apart from the formula-based equalization grants, 15%
of the oblast's revenues stem from ad-hoc grants that reduce the
predictability of its financial results.  S&P also thinks that
the oblast's high share of social expenditures -- exceeding 50%
of total spending -- and high infrastructure needs limit its
spending flexibility.

Under its constrained fiscal flexibility, Magadan's budgetary
performance will continue to be weak in the next few years, in
S&P's opinion.  S&P anticipates high operating spending needs
linked to pressure from the federal government, and only sluggish
revenue growth.  After a period of budget surpluses, the drop in
precious metals prices in 2013 led to a sharp fall in both
corporate profit tax revenues and mineral extraction tax
revenues. Together with the need to raise public salaries
mandated by the federal government, this has translated into
markedly weaker financial results for the oblast, with an
operating deficit of 10% of operating revenues and a deficit
after capital accounts of 10.3% of total revenues in 2013.
Although in S&P's base-case scenario it assumes some cost
containment and recovery of revenues on the back of new gold
producing facilities and continued support from the federal
budget, high pressure on spending will likely prevent Magadan
from posting operating surpluses until 2017.  At the same time,
deficits after capital accounts will likely stay below 7% of
total revenues on average in 2014-2017.

Because of its persistent budget deficits, Magadan's tax-
supported debt is likely to increase, but S&P thinks it will
still remain low in an international context.  S&P expects tax-
supported debt at slightly more than 30% of consolidated
operating revenues until the end of 2017.  As of Jan. 1, 2015,
the oblast's direct debt will consist of medium-term bank loans
(90% of stock) and small foreign currency-denominated budget
loans (10%).

S&P assess Magadan's contingent liabilities as low.  S&P believes
that its contingent liabilities are somewhat higher than the
average for Russian regions given the oblast's remote location
and severe subarctic climate conditions.  However, S&P notes that
the related higher costs are already factored into and financed
directly from the budget (including for example travel expenses,
a subsidized utility, and possible emergency costs).  Also,
Magadan has only one self-supporting government-owned entity, a
gold refining plant that has so far not required support from the
oblast's budget.  The plant's debt and payables account for less
than 1% of the oblast's budget revenues.

S&P views Magadan's financial management as weak in an
international comparison, as S&P do for most Russian LRGs, mainly
owing to the lack of reliable budgeting and long-term financial
planning.  Still, S&P acknowledges the oblast's relatively
prudent management of government-owned entities.

Liquidity

In S&P's view Magadan's liquidity is adequate, as defined in its
criteria.  S&P expects the oblast's debt service coverage to be
strong, meaning that net average cash will likely cover debt
service falling due within the next 12 months by more than 100%.
At the same time, S&P expects some volatility in the debt service
coverage ratio, which is likely to weaken in 2016-2017 when a
significant part of the oblast's current outstanding direct debt
is due.  Moreover, like for other Russian LRGs, S&P views the
region's access to external liquidity as limited, given the
narrow and shallow domestic capital market.

S&P expects that in 2014 and the first half of 2015, Magadan's
free cash, net of the deficit after capital accounts, will equal
about Russian ruble (RUB) 800 million (about $16 million) on
average.  This will likely exceed the low debt service of about
RUB700 million that is due to be repaid in the next 12 months.

Under S&P's base-case scenario, it assumes that in 2015 Magadan's
debt service will increase only marginally, to about 3% of
operating revenues, owing to slightly higher interest payments on
its increasing direct debt.  S&P also expects that the oblast
will secure refinancing of bank loans that mature in 2016-2017,
ahead of the repayment date, while relying on medium-term
borrowing over the next two years.

OUTLOOK

The stable outlook reflects S&P's view that in 2014-2017,
Magadan's budgetary performance will remain weak, but its debt
burden will increase only gradually and stay low.  Moreover, S&P
thinks the oblast's liquidity will remain adequate, owing to the
reliance on medium-term committed bank facilities.

S&P could take a negative rating action if the oblast posted
higher deficits after capital accounts than it currently envisage
in its base case, leading the debt service coverage ratio to fall
below 80%.  This might lead S&P to revise its assessments of
Magadan's budgetary performance and liquidity downward within the
next 12 months.

S&P could take a positive rating action if a stronger rebound in
revenues enabled Magadan to restore budgetary performance, with
positive operating margins that might translate into lower
borrowings and lower debt.  However, ratings upside is unlikely
in the next 12 months, in S&P's view.

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

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

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

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

RATINGS LIST

New Rating

Magadan Oblast
Issuer Credit Rating                  BB-/Stable/--
Russia National Scale                 ruAA-/--/-


MOSCOW RE: S&P Affirms 'BB' Counterparty Rating; Outlook Stable
---------------------------------------------------------------
Standard & Poor's Ratings Services said that it affirmed its 'BB'
counterparty credit and insurer financial strength ratings and
'ruAA' national scale ratings on Russia-based reinsurer Moscow Re
OJSIRC.  The outlook is stable.

"Contrary to our previous base-case expectations, Moscow Re has
discontinued writing new business and is effectively running off
its liabilities.  The affirmation reflects our view that despite
this development, Moscow Re maintains adequate reserves and has
considerable excess capital to comfortably service its
policyholder obligations over the next 12-18 months and beyond.
The parent, VTB Insurance Ltd., now writes Moscow Re's former new
business on its own paper.  We consider that it is unlikely that
VTB Insurance will transfer Moscow Re's liabilities onto its own
balance sheet, and we expect the Moscow Re entity to be preserved
at least throughout our 12-18-month ratings horizon, and to
gradually run down its liabilities.  We do not expect any
material capital repatriation to its parent until the run-off is
substantially complete.  Our base-case scenario is an orderly
run-off of the liabilities," S&P said.

"The ratings reflect our view of Moscow Re's vulnerable business
risk and lower adequate financial risk profiles.  We base our
view of the business risk profile on our assessment of Moscow
Re's competitive position as less than adequate, combined with
our view of the moderate level of insurance industry and country
risk in Russia, where Moscow Re has most of its liabilities.  We
base our assessment of the insurer's financial risk profile on
our view of its moderately strong capital, high risk position,
and adequate financial flexibility.  We have revised our anchor
on Moscow Re to 'bb' from 'bb+' to reflect the impact of the
company's somewhat diminished competitive position and
franchise," S&P said.

Moscow Re's decision to discontinue writing new business means
that there is an absence of premium charges in S&P's capital
model.  This improves Moscow Re's significant capital redundancy
at the 'AAA' level threshold. Eliminating new business means less
risk exposure prospectively.  S&P expects the risk exposure to
gradually run off as Moscow Re settles its claims.  As of Dec.
31, 2013, Moscow Re had Russian ruble (RUB) 883 million of
shareholders' equity, compared to RUB485 million of net loss
reserves, on its balance sheet.

With no new business, the importance of enterprise risk
management (ERM) has also diminished; therefore S&P now considers
ERM and management and governance to be neutral factors to the
rating, rather than negative.

The stable outlook reflects S&P's expectation that Moscow Re will
maintain adequate reserves and sufficient excess capital adequacy
to comfortably service its obligations in run-off over the next
12-18 months.

S&P could lower the ratings if the adequacy of Moscow Re's loss
reserves sustained material deterioration.  This could happen if
the company sustained unforeseen substantial losses on its prior-
year business.  An increase in exposure to higher-risk assets
could also lead S&P to lower the ratings, although this is not
part of its base-case scenario.

S&P considers the likelihood of raising the ratings to be remote.


PROBUSINESSBANK: Fitch Withdraws 'B-' Issuer Default Rating
-----------------------------------------------------------
Fitch Ratings has withdrawn Russia-based Probusinessbank's (PBB)
ratings without affirmation, as the agency believes it no longer
has sufficient information to maintain them.  Accordingly, Fitch
will no longer provide ratings or analytical coverage for PBB.

Fitch placed PBB's ratings on Rating Watch Negative (RWN) on
October 22, 2014.  The rating action reflected Fitch's concerns
about the liquidity of the bank's securities book, as well as
uncertainty concerning the recent review of the bank by the
Central Bank of Russia.

These ratings have been withdrawn without affirmation:

Long-term foreign currency IDR: B/RWN
Long-term local currency IDR: B/RWN
Short-term IDR: 'B'/RWN
Viability Rating: 'b'/RWN'
Support Rating: 5
Support Rating Floor: No Floor
National Long-term rating: 'BBB(rus)'/RWN
Senior unsecured Long-term Rating: 'B-'/RR4;/RWN
Senior unsecured Short-term Rating: 'B';/RWN
Senior unsecured National Rating: 'BBB(rus)';/RWN


RUSSIA: Moody's Lowers Foreign Currency Deposit Ceiling to Ba1
--------------------------------------------------------------
Moody's Investors Service has lowered Russia's foreign currency
bond ceiling to Baa2 from A3; the foreign currency deposit
ceiling to Ba1 from Baa2 and the short-term foreign currency
deposit ceiling to Not Prime (NP) from P-2; and the local
currency bond and deposit ceilings to Baa1 from A3. The short-
term foreign currency bond ceiling remains P-2.

The decision does not constitute a rating action. It has no
implications for the Russian sovereign's rating (Baa2, with a
negative outlook).

Ratings Rationale

Moody's country risk ceilings determine the maximum credit rating
achievable for debt issuers domiciled in a particular country or
for a securitization whose cash flows are generated from domestic
assets or residents. Foreign currency ceilings determine the
highest rating possible for debt instruments denominated in
foreign currency issued by domestic borrowers other than the
national government. The foreign currency bond ceiling reflects
the probability that a government would, in the event of a
default, impose a moratorium on the foreign currency payments of
domestic issuers. The foreign currency deposit ceiling reflects
the risk that a government would restrict the repayment of
foreign currency deposits.

Moody's decision to lower the foreign currency bond and deposit
ceilings reflects the rating agency's view of the rising, though
still very low, risk that domestic Russian entities will be
unable to access foreign currency to service their foreign
currency bond- and deposit-related obligations, given recent and
prospective pressure on Russia's foreign currency reserves.
Russia's reserves remain very substantial, but have fallen over
the past year and Moody's expects this negative trajectory to
continue in 2015.

The decision to place the foreign currency bond ceiling at the
same level as the government bond rating reflects Moody's
assessment of the very high likelihood that foreign exchange
controls preventing non-sovereign issuers from servicing their
foreign currency debt obligations would be imposed by the
government in the event that it defaulted on its own debt.
Moody's also notes that the risk of the government imposing
moratorium restrictions even in the absence of its own default
has risen, in the context of the significant currency
depreciation and given its ability to control access to foreign
exchange reserves. Therefore, the risk of domestic issuers not
being able to service their foreign currency debt may be higher
than indicated by the foreign currency bond ceiling and the risk
of government default. Only the very strongest issuers which are
very closely integrated with the government and which have ready
access to foreign currency revenues could be rated at the level
of the foreign currency bond ceiling.

The decision to lower the foreign currency deposit ceiling two
notches below the government bond rating reflects Moody's view of
the higher risk that the government may place formal or informal
limits on the ready availability of foreign currency deposits
than that it would default on its own debt.

The decision to lower the local currency bond and deposit
ceilings in Russia to Baa1 reflects the rating agency's view that
the coexistence of geopolitical tension and weakening economic
growth outlook implies that the impact on all local currency
obligations including structured finance instruments of any
political, economic or financial dislocation accompanying a
material deterioration in Russia's credit environment would
likely be greater than previously assumed.

These decisions reflect a worsening in the operating environment
facing all non-sovereign issuers in Russia, with deteriorating
domestic conditions and pressures on external revenue flows.
Concurrently, the government's willingness and ability to provide
non-sovereign issuers with support may be diminishing. Moody's
will assess the implications for non-sovereign ratings over the
coming days.

Russia's sovereign rating is Baa2 with a negative outlook.
Moody's downgrade of the sovereign rating to Baa2 in October, and
the assignment of a negative outlook, was driven by Russia's
increasingly subdued medium-term growth prospects, and by the
ongoing erosion of the country's foreign-exchange buffers, in
part because of low oil prices. We noted that the rating level
balanced the sovereign's strong balance sheet, with low debt and
a substantial foreign-exchange reserve cushion, against economic,
fiscal and current account volatility related to commodity price
swings and, more broadly, a weakening economic growth outlook.

Moody's also noted that factors that could put pressure on
Russia's sovereign rating included the further deterioration of
the domestic growth outlook, particularly should lower growth
further undermine fiscal and external accounts, and a material
deterioration of the government's net worth through the erosion
of its foreign currency reserves. Moody's is monitoring current
market events closely and will update markets as appropriate to
reflect any changes in the rating agency's medium term view of
risk.


SUKHOI CIVIL: Fitch Affirms 'BB' Long-Term Currency IDR
-------------------------------------------------------
Fitch Ratings has affirmed Russia-based Sukhoi Civil Aircraft
JSC's (SCAC) Long-Term Issuer Default Ratings (IDR) at 'BB' with
a Negative Outlook.

KEY RATING DRIVERS

State Support
In line with Fitch's parent subsidiary linkage methodology,
SCAC's ratings are notched down three levels from the ratings of
its ultimate majority shareholder, the Russian government
(BBB/Negative). The three-notch differential reflects the
company's strong links to the state but also the lack of explicit
state guarantee for SCAC's debt. However, a high proportion of
SCAC's debt comes from state-owned banks while state-owned
intermediate holding companies, including United Aircraft
Corporation and Sukhoi Aviation Holding, provide guarantees in
support of a material proportion of SCAC's debt. The Outlook
reflects that of the Russian government.

Due to the government's shareholding, Fitch expects SCAC to
continue to receive support from the Russian state via further
equity injections over and above what has already been
contributed. Any waning, or perceived waning, of that support, is
likely to lead to SCAC's ratings being further notched down from
those of the sovereign.

Super Jet 100
The relationship between SCAC and the Russian government is
underpinned by the strategic importance of the Super Jet 100 (SSJ
100) aircraft to the state, which is likely to be the entry point
for other Russian commercial aircraft programs such as the MS21.
In 2014, the SSJ 100 has been complemented by a business jet
version as SCAC's only products to date. A stretch version of the
SSJ 100 is likely to be delivered around 2018.

Expected CIS and Emerging Market Demand
Other factors influencing the ratings are strong domestic demand
for the SSJ 100 (152 orders taken to date plus 53 options/soft
orders), the presence of French-based engine manufacturer SNECMA
as a risk-sharing partner on the SSJ 100 program, and the long-
term potential for cash flow generation. On a standalone basis,
however, SCAC is unlikely to be profitable in the next two years.

RATING SENSITIVITIES

Future developments that could lead to positive or negative
rating actions include:

-- Changes to the sovereign ratings, which could prompt a review
    of the company's IDRs, National Ratings and Outlook.

-- Any strengthening of state support, such as a provision of
    written guarantees of SCAC's debt from the Russian Ministry
    of Finance, would likely lead to a closer rating linkage
    between SCAC and the government. A weakening of support, such
    as a reduction in the state's shareholding in SCAC, or a
    waning commitment to the company's programs, could lead to a
    widening of the rating gap between Russia and SCAC.

Fitch's rating actions are as follows:

-- Long-term foreign and local currency IDRs affirmed at 'BB';
    Outlook Negative;

-- Short-term foreign and local currency IDRs affirmed at 'B';

-- Foreign and local currency senior unsecured ratings affirmed
    at 'BB';

-- National Long-term rating affirmed at 'AA-(rus)'; Outlook
    Stable;

-- National Short-term rating affirmed at 'F1+(rus)'.

For the sovereign ratings of the Russian Federation, Fitch has
the following rating sensitivities as of the rating action
commentary dated 25 July 2014:

Future developments that could individually or collectively,
result in negative rating action include:

-- An intensification of sanctions, resulting in further
    restrictions in access to financing for the private and/or
    public sectors or reduced export market access, or large-
    scale capital flight.

-- A further deterioration in growth prospects, with an impact
    on the financial system.

-- Large-scale stimulus measures that would endanger
    macroeconomic stability or the sustainability of public
    finances.

The Outlook is Negative. Consequently, Fitch's sensitivity
analysis does not currently anticipate developments with a high
likelihood of leading to a positive rating change.

Future developments that could individually or collectively,
result in a stabilization of the Outlook include:

-- A reduction in tensions with the international community,
    resulting in a reduced risk of wide-ranging sanctions being
    imposed.


URAL FEDERAL: Fitch Assigns 'BB+' IDR; Outlook Negative
-------------------------------------------------------
Fitch Ratings has assigned Russian Ural Federal University (UrFU)
a Long-term foreign and local currency Issuer Default Ratings
(IDRs) of 'BB+', a National Long-Term rating of 'AA(rus)' and a
Short-term foreign currency IDR of 'B'.  The Rating Outlooks on
the Long-term ratings are Negative.

KEY RATING DRIVERS

Fitch has classified UrFU as a dependent public sector entity
(PSE) under its public-sector entities criteria.  This is
attributable to a strong link with a sponsor (the Russian
Federation, BBB/Negative) derived from UrFU's legal status and
its strong reliance on public funding.  The Negative Outlook
reflects that on the sovereign's ratings.

The ratings of UrFU are two notches lower than the sponsor's
ratings due to its moderate integration into the federal budget
and because its debt is not consolidated into general government
debt.  Fitch also considers strategic importance as moderately
supportive factor for UrFU's credit quality given that higher
education is a discretionary responsibility of the Russian
federal government.

UrFU has a legal status of state-owned autonomous establishment
founded by the federal government.  UrFU is one of the 10 federal
universities in Russia and was created through the decree of the
federal government.  The federal government controls UrFU's
activities and property management, closely monitors the use of
public funding and approves the large-scale transactions of the
university through supervisory board.

UrFU strongly relies on public funding, and its financial
performance is largely supported by the state grants.  University
is not-for-profit organization and therefore performs at
breakeven.  Operating balance after contributions from the state
hovered around zero in 2012-2013.  Fitch expects the scale of
state support to remain unchanged in 2014-2016.

Public funding comprises more than half of UrFU's operating
revenue in 2013.  The majority of current grants from the state
(70%) is earmarked for rendering education services.  Overall
around half of almost 40,000 students receive support from the
state.  The remainder 30% of state grants finances research
activity and social events.  State grants are the main source for
financing UrFU's investment needs as well.  UrFU's own revenue
mostly comprises tuition fees and income from research activity.

UrFU has no commercial debt as of end-2014, and according to
Fitch base case scenario the university will not incur commercial
debt in the medium term.  UrFU has outstanding RUB38m non-market
budget loan (less that 1% of total revenue) provided by
Sverdlovsk regional government through the regional PSE JSC Ural
Universuty Complex.  The loan was due in 2011, but the creditor
has never claimed the loan to be repaid and has never filed a
suit.  Fitch treats this loan as non-market internal transaction
and does not consider this event as failure to meet debt
obligation.  According to the management the loan will likely to
be settled in 2015 in accordance to local regulation.

RATING SENSITIVITIES

A downgrade of the sovereign's ratings would lead to URFU's
downgrade.  Weakening links with the sponsor visible primarily in
material rise of commercial debt not guaranteed by the government
or decline of state support as a result of legal status change,
which is unlikely, could also lead to a downgrade.



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


UKRAINE: S&P Lowers Sovereign Rating to 'CCC-'; Outlook Negative
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term foreign
currency sovereign credit rating on Ukraine to 'CCC-' from 'CCC',
and its long- and short-term local currency ratings to 'CCC+/C'
from 'B-/B'.  At the same time, S&P affirmed the foreign currency
short-term sovereign credit rating at 'C'.  The outlook is
negative.

S&P also lowered the Ukraine national scale rating to 'uaB+.

RATIONALE

S&P had previously anticipated that IMF disbursements would be
paid to Ukraine in 2014, but these have been delayed.  In S&P's
view, this delay, coupled with significantly reduced foreign
currency official reserves, increases the risk that the Ukrainian
government might not be able to meet its obligations.  A default
could become inevitable in the next few months if circumstances
do not change, for instance if additional international financial
support is not forthcoming.

Full disbursement of the IMF program and related multilateral
lending, which is meant to enable the government to meet its
foreign currency obligations over the next year, has not been
running to schedule.  The second and third tranches of the
program were not disbursed as expected in 2014.  The timing of
the next disbursement -- a combined $2.7 billion disbursement of
the second and third tranches -- remains unclear, at this point.
While the formation of a new pro-reform government, following the
October parliamentary elections, supports a continuation of the
IMF program, S&P considers that the program itself remains at
risk of not going ahead: Ukraine's macroeconomic outlook has
deteriorated and, as a result, external financing needs are
greater than S&P previously expected.  There have been
significant deviations from the program's base-case assumptions.

S&P estimates the government's foreign currency debt repayment
obligations in 2015 -- including foreign currency domestic
issuance, external official and commercial debt obligations, and
the servicing of government guaranteed debt -- will amount to $11
billion.  The government expects to meet its debt repayment
obligations next year with IMF sources, some of which it hopes to
use for budgetary rather than balance-of-payments support.  Other
funding sources include potential concessional loans from other
multilateral lending institutions and the European Commission
(EC), and the issuance of an additional U.S.-guaranteed Eurobond.

There is $10.7 billion available in 2015 under the April 2014 IMF
program, if the second through seventh tranches are all disbursed
next year.  While this money could cover the government's foreign
currency debt payments, S&P sees significant risks to this
scenario; there could be further delays with the disbursements.
In S&P's view, all of the program's funds would have to be used
for budgetary purposes.  S&P also notes that the $10.7 billion
would not be enough to cover Naftogaz payments to Gazprom should
the government have to service those.  Therefore, S&P thinks it
is highly likely that Ukraine will need additional funding
support.

The government will have less than $1 billion in its account with
the National Bank of Ukraine (NBU) at the start of 2015.  Its
debt payment burden increases toward the end of the year, when a
$3 billion Eurobond due to Russia (specifically to Russia's
sovereign wealth fund) matures.  In the first quarter of 2015,
$1.6 billion, including interest payments, is due.  This could be
met if the next two tranches of the IMF program are disbursed
beforehand, and if they are used for fiscal support.  S&P notes a
risk that if the government does not receive IMF money in the
first quarter it may use central bank reserves to cover
government obligations, thereby further pressuring reserve
levels.

In S&P's view, the currently available IMF funding (under the
April 2014 program) and other committed multilateral funding
would not be sufficient to boost the NBU's foreign currency
reserve levels during 2015.  S&P believes the central bank will
only be able to maintain a very low level of reserves, next year,
of just over one month of imports.  If all the program funding
comes through it will support the economy's gross external
financing needs, assuming some--but less than 100%--roll-over of
private-sector debt and continued net debt outflows on the
financial account.

Foreign currency reserves have dropped from $16.3 billion in May
2014 (the start of the IMF program) to just over $9 billion at
end-November, including gold reserves decreasing to less than $1
billion, from $1.6 billion.  Over the past two months alone,
reserves have dropped by nearly 40% ($5.7 billion) due to
Naftogaz paying off debt for natural gas deliveries owed to
Gazprom; the servicing of other public sector debt; and the NBU's
interventions in the foreign exchange market.  In October, the
bank sold nearly $1 billion, which helped it maintain a stable
exchange rate at that time.  S&P notes this occurred in the lead-
up to the parliamentary elections. Following the elections, the
exchange rate depreciated by 12% to the dollar in November.  S&P
expects reserves will deplete further because of an additional
$1.65 billion payment Naftogaz has to make to Gazprom by year
end.  This is part of the October agreement in which the two
sides, under EU-mediation, agreed to settle $3.1 billion in debt
by the end of 2014.  The agreement also includes a set price for
Russian gas, in place until March 2015, with Naftogaz pre-paying
for gas deliveries each month.

Due to a sharp depreciation in the exchange rate -- by almost 50%
since the beginning of the year -- and a contraction in domestic
demand, imports have significantly contracted.  The current
account deficit has narrowed to an estimated 4% of GDP in 2014.
Despite the smaller current account deficit, dollarization and
capital outflows -- including cut-backs in trade credit and
reduced demand for foreign currency deposits and private debt
outflows--have led to outflows on the financial account.  This
has placed pressure on the exchange rate and reserves, despite
foreign currency controls being in place since February 2014.

In 2015, S&P expects the current account deficit to narrow
slightly due to recession, depreciation, and inflation putting
pressure on imports, as well as a narrowing income deficit.
However, S&P believes that capital outflows, stemming from the
ongoing reduction of private sector external liabilities and
deposit outflows, will continue.  This leaves the country
extremely vulnerable to any shock, including further significant
exchange rate depreciation, an escalation in fighting, worsening
of trade relations with Russia, and higher than expected gas
payments.  Any such shock would leave Ukraine with little ability
to keep servicing its debt and import goods and services from
abroad.

S&P believes the fiscal deficit (including support for Naftogaz
and bank recapitalization costs) will reach 8.5% of GDP next
year, given large bank losses due to recession and hryvnia
depreciation. That said, S&P expects the new government will make
a considerable effort at fiscal consolidation.  S&P anticipates
the local currency financing of the general government deficit
will likely continue to come largely from the NBU and state-
controlled banks. Indeed, the NBU holds around 60% of local
currency debt, with banks holding more than 30%.

The situation in the financial sector is precarious.  Standard &
Poor's classifies the banking sector of Ukraine in group '10'
('1' being the lowest risk, and '10' the highest) under its
Banking Industry Country Risk Assessment (BICRA) criteria.
Deposit withdrawals continue across the country, especially in
eastern Ukraine.  The system as a whole has seen a nearly 30%
outflow of household deposits in the year to date.  More than 30
banks have been declared insolvent or put under temporary
administration.  As part of the IMF program, independent asset
quality reviews were conducted for the 35 largest banks.  The NBU
estimates recapitalization costs of Ukrainian hryvnia 66 billion
(4% of GDP).  In S&P's opinion, government participation in the
recapitalization may have to be more substantial than planned if
private shareholders do not invest the amounts expected following
the viability studies.

On Dec. 2, the parliament approved a new cabinet of ministers,
proposed by a new coalition of five pro-European political
parties elected in October.  The new government, led by Prime
Minister Arseniy Yatseynuk (who served as interim prime
minister), has strong support.  A number of key positions,
including the Minister of Finance and Economy, are held by
technocrats who are not politically affiliated.  The composition,
in S&P's view, indicates a strong commitment to implement reforms
and maintain good relations with donors.  That said, S&P notes
that the delay in forming the coalition may signal that the
ongoing weaknesses affecting Ukraine's governance and
institutional capacity could limit any positive effects of the
government's economic reform.

The conflict in eastern Ukraine remains relatively contained in
the areas of Donetsk and Luhansk, regions whose economies and
infrastructure have been severely damaged by the fighting.
Tensions remain high despite a September ceasefire, which has
been being frequently violated, with over 1,000 killed since
September according to the UN (more than 5,000 have been killed
since fighting began in April).  The self-proclaimed People's
Republics of Donetsk and Luhansk held local elections in
November, after which Kyiv abolished the "special status law" as
agreed in the September ceasefire, and shut down state
institutions in the territories.  A new ceasefire was agreed on
Dec. 9.  In S&P's view, the conflict is becoming increasingly
"frozen."  S&P expects it will remain localized to the areas that
are already out of government control.

OUTLOOK

The negative outlook on the ratings reflects S&P's view that
there are significant risks of Ukraine defaulting if additional
financial support is not forthcoming.  Any further substantial
delay in IMF disbursements would make it extremely difficult for
the government to meet its debt obligations in the short term.
S&P notes that, even with continued disbursements, the program
only buys Ukraine a limited amount of time.  Further significant
depreciation of the exchange rate, a more severe recession, and
larger-than-expected deterioration of the fiscal and external
balances, would place a lot of pressure on Ukraine's ability to
meet its gross financing needs without additional international
financial support.

The ratings could improve if additional financing was provided,
sufficient to enable Ukraine to meet its external financing needs
over the next year.

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

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

The committee agreed that economic structure and growth, and
fiscal flexibility and performance had deteriorated.  All other
key rating factors are unchanged.

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

RATINGS LIST

Downgraded; CreditWatch/Outlook Action; Ratings Affirmed

                                To                 From
Ukraine
Sovereign Credit Rating
  Foreign Currency              CCC-/Negative/C    CCC/Stable/C
  Local Currency                CCC+/Negative/C    B-/Stable/B
Transfer & Convertibility
  Assessment                    CCC              CCC
Ukraine National Scale         uaB+/--/--         uaBBB-/--/--
Senior Unsecured               CCC-               CCC



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


DRACO PLC: Moody's Lowers Rating on GBP12.1MM E Notes to Caa2
-------------------------------------------------------------
Moody's Investors Service has downgraded the rating of the
following class of Notes issued by Draco (Eclipse 2005-4) plc
(amounts reflect initial outstanding):

GBP12.1 million E Notes, Downgraded to Caa2 (sf); previously on
Jan 21, 2013 Downgraded to B1 (sf)

Moody's does not rate the Class F Notes issued by Draco (Eclipse
2005-4) plc.

Ratings Rationale

The downgrade action reflects Moody's increased loss expectation
for the remaining Herbert House Loan. The loss expectation is
driven by a combination of factors, in particular (i) the single
tenant's notice to exercise its break option and terminate its
lease as of July 2015, (ii) the rather poor state of repair, age
and the large size of the property as key obstacles in re-letting
the asset, (iii) the uncertainty around sales and/or re-letting
timing, which if delayed can negatively impact recoveries and
(iv) the potential surplus of similar or better quality offices
on the market in Birmingham.

Loss and Cash Flow Analysis

Moody's downgrade of the Class E Notes reflects a base expected
loss in the range of 10%-20% of the current note balance. Moody's
has derived this loss expectation based on its value assessment
of the property securing the Herbert House Loan.

Stress Scenarios

The expected loss assessment is sensitive to the ultimate
recovery value of the property. Moody's loss assessment is based
on its vacant possession value estimate, which is sensitive to
the assumptions of void period, re-letting costs and rental
levels of a new lease.

Methodology Underlying the Rating Action:

The principal methodology used in this rating was Moody's
Approach to Rating EMEA CMBS Transactions published in December
2013.

Other factors used in this rating are described in European CMBS:
2014-16 Central Scenarios published in March 2014.

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

Main factors or circumstances that could lead to a downgrade of
the rating are (i) a lower sales price of the property than
anticipated and (ii) a longer than anticipated work-out period,
particularly beyond the vacation date of the single tenant.
Ongoing fixed property expenses as well as interest expenses are
likely to further reduce recoveries once the property stops
generating rental income, particularly if the interest on the
loan has to be covered by senior ranking liquidity draws.

Main factors or circumstances that could lead to an upgrade of
the rating are (i) a higher sales price of the property than
anticipated and (ii) a work-out timing which does not generate
additional costs to further lower actual recoveries.

Moody's Loan Analysis

Draco (Eclipse 2005-4) plc closed in December 2005 and represents
the securitisation of initially five mortgage loans originated by
Barclays Bank PLC and secured by first-ranking legal mortgages
over initially 36 commercial properties located across the UK.
The properties were predominantly offices (92%) and located in
Greater London (81%). Currently, only one loan is remaining, the
Herbert House Loan which is secured by one office property in
Birmingham. The legal final maturity date of the notes is in
October 2017.

The expected loss for the Class E Notes is dependent on the
achievable sales price and timing of the work-out of the loan.
Any principal losses on the loan will be allocated first to the
most junior class of notes (Class F).

The GBP 7.84 million Herbert House Loan is secured by an office
property in the central business district of Birmingham.
Currently, the property is let to a single tenant (rated Ba2) who
has surrendered its lease effective on its break date in July
2015. The loan defaulted on its maturity date in January 2014 and
was transferred to Special Servicing. In October 2014, the
Special Servicer appointed fixed charge receivers to work-out the
loan with the aim to maximize recoveries for the noteholders.

The Herbert House property is an early 1900s office building
situated in the prime office district of Birmingham and is
extending to a total size of 52,150 sq ft. (4,845 sqm). The
property was reportedly last refurbished in 2007. Based on the
valuation as of 2012, the property's market value (MV) was GBP
5.1 million and its vacant possession value (VPV) was GBP 3.2
million. According to the valuation, the property is in a tired
state of repair and requires significant capital expenditures to
improve the specification of the building. Despite a general
positive outlook for the office market in Birmingham,
particularly driven by the lack of supply for prime office stock,
Moody's view is that a property of this size, age and state of
repair requires significant capital investment and time to be re-
let in order to achieve a higher market value.

Moody's has based its updated assessment on a vacant possession
value (VPV) in the range of GBP2.0 to GBP2.5 million and
therefore expects the principal loss on the loan at the upper end
of the 50% to 75% range.


LONDON & REGIONAL: S&P Affirms 'BB' Rating on Class B Notes
-----------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB+ (sf)' and
'BB (sf)' credit ratings on London & Regional Debt Securitisation
No. 1 PLC's class A and B notes, respectively.

The affirmations follow S&P's review of the transaction's
performance, including the partial loan repayment of GBP31.5
million in October 2015.

London & Regional Debt Securitisation No. 1 is a secured loan
U.K. commercial mortgage-backed securities (CMBS) transaction
backed by three U.K. office properties.  The transaction closed
in 2005 and has a legal final maturity date in October 2017.  The
securitized loan balance is GBP99.9 million.  There is a fully
subordinated loan outside of the securitization.

The whole loan maturity date was initially scheduled for October
2012.  However, the noteholders agreed to extend this to October
2015, subject to certain conditions.

In October 2014, the issuer reported a securitized loan-to-value
ratio of 46.6% (including swap breakage costs) and a securitized
loan interest coverage ratio (ICR) of 1.60x.

S&P has assumed no losses in its 'B' rating level scenario.

S&P's ratings in this transaction address the timely payment of
interest, payable quarterly in arrears, and the payment of
principal no later than the October 2017 legal final maturity
date.

Although S&P considers the available credit enhancement for the
class A and B notes to be adequate to mitigate the risk of losses
from the underlying loan in higher stress scenarios, S&P's
ratings on these classes of notes remain constrained at their
current levels because of the approaching legal final maturity
date.

If there is no borrower repayment or refinance at loan maturity
in October 2015, S&P believes that the transaction faces an
increased risk of default given its approaching legal maturity
date in October 2017.  Taking the above factor into account and
in accordance with S&P's credit stability criteria, it has
affirmed its 'BB+ (sf)' and 'BB (sf) 'ratings on the class A and
B notes, respectively.  S&P's analysis also reflects the
declining securitized loan ICR (when compared with before the
restructuring) as a result of earlier property sales and the
greater concentration on assets requiring lease renewals in the
medium term.

RATINGS LIST

London & Regional Debt Securitisation No. 1 PLC
GBP234.2 mil commercial mortgage-backed floating-rate notes

                               Rating         Rating
Class       Identifier         To             From
A           XS0235319331       BB+ (sf)       BB+ (sf)
B           XS0235319687       BB (sf)        BB (sf)


NEWDAY PARTNERSHIP 2014-1: S&P Assigns BB Rating to Class F Notes
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned credit ratings to
NewDay Partnership Funding 2014-1 PLC's series 2014-1 class A, B,
C, D, E, and F notes.  At the same time, S&P has withdrawn its
preliminary ratings in NewDay Partnership Funding 2014-2 PLC's
series 2014-2 class A, B, C, D, E, and F notes.  At closing,
NewDay Partnership Loan Note Issuer Ltd. issued an unrated
originator variable funding (VFN) note to the transferor, NewDay
Partnership Transferor PLC.

S&P rated the class E and F notes on the basis of deferrable
interest.

The unrated originator VFN provides proportionate series-specific
subordination to the rated tranches.  The transferor holds the
excess of the originator VFN balance above the total required
subordination amount as transferor interest.  The transferor uses
this to meet its minimum transferor interest and risk retention
obligations.

The NewDay Partnership Receivables Trust is a master trust of
credit card, store card, and installment credit (sales finance
loan) receivables that NewDay Ltd. originates under retail
partnership agreements.  NewDay has active retail partnership
agreements with Arcadia, Debenhams, Laura Ashley, and House of
Fraser.

RATING RATIONALE

Sector Outlook

The U.K. macroeconomic outlook has continued to improve, which
has been confirmed by recent economic indicators and S&P's own
revisions to its GDP and unemployment forecasts.  S&P expects
annual GDP growth to recover to 3.1% in 2014, with further growth
of 2.5% in 2015, and 2.2% in 2016.  S&P forecasts an annual
unemployment rate of 6.4% in 2014, before falling to 6.1% in
2015, and 5.9% in 2016.

Overall, U.K. credit card trust performance has been resilient to
date.  S&P expects GDP to continue to increase, while
unemployment continues to decrease from its cyclical peak of 8.5%
in late 2011. Consequently, S&P anticipates that U.K. collateral
performance will benefit from macroeconomic and monetary
conditions.  In summary, S&P's outlook for the U.K. credit card
sector is strong

Operational Risk

S&P attended a corporate overview meeting in August 2014 where it
discussed NewDay's origination and underwriting policies,
servicing, account risk management, collections, and recovery
strategies.  S&P considers them to be in line with general market
practice and commensurate with S&P's ratings.  NewDay has sub-
delegated certain aspects of servicing, settlements, and payment
processing to Santander U.K. PLC and First Data Global Services
Ltd.  Based on the portfolio's performance to date, S&P considers
these entities to be capable of carrying out their respective
tasks.

S&P took into account the depth of the U.K. credit market in
assessing operational risk.  Replacement servicers are readily
available and the transaction servicing fee is relatively high.
A liquidity reserve is available to bridge any servicer
transition period.  In light of these factors, S&P considers the
servicer's severity and portability risk to be low under its
operational risk criteria.  Consequently, these criteria do not
constrain S&P's ratings in any of the transactions.

Credit Risk

S&P considered the portfolio's historical payment, purchase,
charge-off, and yield rates in S&P's analysis.  S&P sets its
base-case assumptions in line with its European consumer finance
criteria, taking into account macroeconomic conditions and
industry trends.  S&P has historical performance data for the
portfolio since 2009.  In setting S&P's base-case assumptions, it
considered the effect of the termination of the House of Fraser
retail partnership agreement.  In S&P's view, this is the best
performing partnership book.  S&P also factored in the
performance of the closed partnership books, which are in run-off
mode (run-off account cards cannot be used to make any new
purchases).

Cash Flow Analysis

S&P ran two cash flow scenarios of rapid amortization, under both
rising and falling interest rates for the rated notes.  The
available credit enhancement for the rated tranches is sufficient
to absorb the credit losses under the respective rating
scenarios.

Counterparty Risk

The transactions are exposed to counterparty risk through
Citibank N.A., London branch and Santander U.K. PLC as bank
account providers.  Citibank, London branch provides the
transferor collections account, the various trust accounts, the
loan note issuer account, and the issuer account.  Santander U.K.
provides the servicer collections account into which borrowers'
repayments are made.  The documented downgrade and replacement
language is in line with S&P's current counterparty criteria.

Legal Risk

The receivables trustee, the loan note issuer, and the issuer are
bankruptcy-remote, in line with S&P's European legal criteria.
S&P has received an external legal opinion, which indicates that
the sale of the receivables would survive if the originator were
to become insolvent.  S&P has reviewed legal opinions for the
master trust and for the rated issuances.

Credit Stability

S&P analyzed the effect of a moderate stress on the credit
variables, and its ultimate effect on S&P's ratings on the notes.
S&P ran two scenarios, modeling rapid amortization with rising
and falling interest rates for the notes.  The results are in
line with S&P's credit stability criteria.

RATINGS LIST

Class                  Rating            Amount
                                       (mil. GBP)

NewDay Partnership Funding 2014-1 PLC
GBP300 Million Asset-Backed Floating-Rate Notes Series 2014-1

A                      AAA (sf)          222.30
B                      AA (sf)            27.00
C                      A+ (sf)            16.80
D                      BBB+ (sf)          12.60
E                      BBB+ (sf)           7.80
F                      BB (sf)             6.60

NewDay Partnership Loan Note Issuer Ltd.
Asset-Backed Floating Rate Notes

Originator VFN         NR                  6.90

Ratings Withdrawn

                                 Rating
Class                    To                  From

NewDay Partnership Funding 2014-2 PLC
Asset-Backed Floating-Rate Notes Series 2014-2

A                      NR                AAA (sf)
B                      NR                AA (sf)
C                      NR                A+ (sf)
D                      NR                BBB+ (sf)
E                      NR                BBB+ (sf)
F                      NR                BB (sf)

NR--Not rated.


RANGERS FOOTBALL: Shareholders Reject Rights Issue
--------------------------------------------------
Roger Blitz at The Financial Times reports that Rangers'
financial woes deepened when the board failed to persuade
shareholders to back a rights issue, leaving it to confront a
bleak funding gap into the new year.

According to the FT, the vote to defeat the board resolution
capped a tumultuous annual meeting at the Scottish football club
on Dec. 22 during which chairman David Somers and other board
members were heckled and booed by fans and shareholders.

The board needed 75% of the votes in favor of a resolution to
launch the rights issue, but did not even manage a straight
majority, the FT relays.  The resolution was rejected by 55.2%,
the FT discloses.

Shortage of funds is just one of a number of problems to afflict
the club, the FT states.  Low attendances, a search for a new
manager and disciplinary hearings launched by the Scottish
Football Association against Rangers and shareholder Mike Ashley,
the Sports Direct retailer, are contributing to another difficult
season, the FT notes.

                 About Rangers Football Club

Rangers Football Club PLC -- http://www.rangers.premiumtv.co.uk/
-- is a United Kingdom-based company engaged in the operation of
a professional football club.  The Company has launched its own
Internet television station, RANGERSTV.tv.  The station combines
the use of Internet television programming alongside traditional
Web-based services.  Services offered include the streaming of
home matches and on-demand streaming of domestic and European
games, which include dedicated pre-match, half-time and post-
match commentary.  The Company will produce dedicated news
magazine and feature programs, while the fans can also access a
library of classic European, Old Firm and Scottish Premier League
(SPL) action.  Its own dedicated television studio at Ibrox
provides onsite production, editing and encoding facilities to
produce content for distribution on all media platforms.


                            *********

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.


                            *********


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,
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members of the same firm for the term of the initial subscription
or balance thereof are US$25 each.  For subscription information,
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202-362-8552.


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