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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

           Thursday, January 22, 2015, Vol. 16, No. 15

                            Headlines

B U L G A R I A

CORPORATE COMMERCIAL: Bulgaria Dismisses Bank Chief T. Gounev


C Y P R U S

* CYPRUS: Cabinet Approves Fourth Insolvency Bill


F R A N C E

NOVARTEX SAS: Moody's Assigns 'Caa2' CFR; Outlook Negative
NOVARTEX SAS: S&P Assigns 'CCC+' CCR; Outlook Stable
NOVARTEX SAS: Fitch Publishes 'CCC' Issuer Default Rating


I R E L A N D

ENDO INT'L: S&P Lowers Corporate Credit Rating to 'B+'
WESLIN CONSTRUCTION: Ardale Completes Acquisition of Business


L U X E M B O U R G

AEOLOS SA: Fitch Revises Outlook to Neg. & Affirms 'B' Rating
AIR NEWCO 5: S&P Assigns Preliminary 'B' CCR; Outlook Stable
ENDO FINANCE: Moody's Rates New Sr. Unsecured Notes 'B1'


N E T H E R L A N D S

HARBOURMASTER CLO 7: Fitch Lowers Rating on Class B2 Notes to B-
HYDRA DUTCH: S&P Affirms 'B' CCR & Rates EUR160MM Notes 'B'


R U S S I A

EUROPLAN CJSC: Fitch Affirms 'BB' LT Issuer Default Ratings
FGC UES: Moody's Lowers Issuer Rating to 'Ba1'
IRKUT CORP: Moody's Lowers Corporate Family Rating to 'B3'
SB BANK: Moody's Lowers Long-Term Deposit Ratings to 'Caa1'
SSMO LENSPETSSMU: S&P Puts 'B+' CCR on CreditWatch Negative

VOLGOGRAD CITY: Moody's Lowers Issuer Rating to 'B1'


S W E D E N

PA RESOURCES: To Write Down Assets; May Face Liquidation


S W I T Z E R L A N D

SUNRISE COMMUNICATIONS: S&P Puts 'B+' CCR on CreditWatch Positive


U K R A I N E

UKRAINE: Rules Out Debt Restructuring; Bailout Talks Ongoing


U N I T E D   K I N G D O M

DIXON SECURITY: Goes Into Administration
MARUSSIA F1: Hopes Boosted After Auction Cancelled
REX HOTEL: Falls Into Administration Due to Spiralling Debts
TEN SQUARE: Business as Usual as Hotel Enters Administration


                            *********



===============
B U L G A R I A
===============


CORPORATE COMMERCIAL: Bulgaria Dismisses Bank Chief T. Gounev
-------------------------------------------------------------
Slav Okov at Bloomberg News reports that the Bulgarian parliament
dismissed Tsvetan Gounev, the central bank deputy governor in
charge of bank supervision, over the failure of Corporate
Commercial Bank AD, Bulgaria's fourth largest lender.

According to Bloomberg, Speaker Dimitar Glavchev said in Sofia on
Jan. 21 that all present 108 lawmakers voted to back the motion,
introduced by the ruling Gerb party, with no votes against, nor
abstentions.  The Bulgarian Prosecution started a pre-trial
investigation against Mr. Gounev in June, which forced him to
take a leave of absence, Bloomberg recounts.  Corpbank ran out of
liquidity and was placed under central bank supervision on June
20, causing the worst banking crisis in Bulgaria in 17 years
forcing the Socialist cabinet to resign, Bloomberg relays.

Mr. Gounev "did not impose the required supervision measures on
the bank and didn't establish violations in its operation," the
motion, as cited by Bloomberg, said.  He "had relations with the
bank's owners, which didn't correspond to his supervisory
position."

The central bank revoked Corpbank's license two months ago saying
it has negative equity of BGN3.7 billion (US$2.2 billion),
Bloomberg relates.  Mr. Gerb's minority cabinet, which took
office on Nov. 7, took a EUR1.5 billion (US$1.7 billion)
international loan to help repay deposits in Corporate
Commercial, Bloomberg discloses.

               About Corporate Commercial Bank AD

Corporate Commercial Bank AD is the fourth largest bank in
Bulgaria in terms of assets, third in terms of net profit, and
first in terms of deposit growth.

Bulgaria's central bank placed Corpbank under its administration
and suspended shareholders' rights in June 2014 after a run
drained the bank of cash to meet client demands.



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C Y P R U S
===========


* CYPRUS: Cabinet Approves Fourth Insolvency Bill
-------------------------------------------------
Elias Hazou at Cyprus Mail reports that the Cabinet on Jan. 14
gave the nod to the fourth of five government bills comprising a
package of bankruptcy-related legislation.

According to Cyprus Mail, collectively known as the insolvency
framework, the bills are designed to update and amend personal
and corporate bankruptcy laws to help borrowers restructure their
debt.  Enactment of the new legislation, designed primarily to
reduce banks' exposure to bad loans, is an obligation stemming
from Cyprus' bailout agreement with international lenders, Cyprus
Mail notes.

Three other bills have already been submitted to the House,
Cyprus Mail states.  One introduces and regulates the profession
of insolvency practitioners, another deals with debt
restructuring of viable businesses (examinership) and the third
amends current liquidation laws, Cyprus Mail relates.

The fourth bill approved on Jan. 13 concerns personal repayment
schemes and debt forgiveness, and will now be forwarded to
parliament, Cyprus Mail says.  The fifth and final bill,
concerning the insolvency of natural persons, has been completed
but is currently being reviewed by the troika of lenders, Cyprus
Mail relays.



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


NOVARTEX SAS: Moody's Assigns 'Caa2' CFR; Outlook Negative
----------------------------------------------------------
Moody's Investors Service has assigned a first-time corporate
family rating (CFR) of Caa2 and probability of default rating
(PDR) of Caa2-PD to Novartex. Concurrently, Moody's has assigned
a B3 rating to the EUR500 million Senior Bonds maturing in
October 2019 (the New Money Bond) issued by Vivarte and a Caa3
rating to the EUR780 million reinstated debt maturing in October
2020 (the Reinstated Debt) issued by Novarte, both subsidiaries
of Novartex. The outlook is negative.

On March 2014, Novartex entered into a financial restructuring
after having defaulted on the debt backing Charterhouse's
leveraged buy-out in 2007. The restructuring, which closed in
October 2014, resulted in a EUR2 billion debt write-off leaving
EUR780 million of Reinstated Debt. In addition, lenders injected
EUR500 million of cash into Vivarte through the New Money Bond
whose proceeds will be mainly used to fund the company's material
capex requirements.

Ratings Rationale

"Novartex's Caa2 CFR reflects the company's (i) continued loss of
revenues and profitability over the last four years, resulting in
the company's weak positioning within the rating category (ii),
high execution risk related to its turnaround strategy, (iii)
exposure to the increasingly competitive French footwear and
apparel markets, with a weak position in the online market, (iv)
negative free cash flow projected over the next three years owing
to substantial capex spending and (v) its very high adjusted
leverage ratio with limited deleveraging potential over the
rating horizon", says Sebastien Cieniewski, Moody's lead analyst
for Novartex. More positively, the rating also reflects the
company's (i) leading position within the French footwear and
apparel markets, (ii) its sizeable store and distribution
networks, and (iii) its available cash position at the closing of
the restructuring.

Novartex's rating will remain constrained by the company's high
geographical concentration in France (representing 89% of fiscal
year (FY) 2014 revenues) where the value of the apparel and the
footwear markets has contracted and competition intensified as a
result of the entry of large international player and an
increased penetration of the online distribution channel where
Novartex suffered delays in developing a competitive offer.

In a context of intensifying competition, a series of decisions
affecting primarily La Halle banner (approximately 40% of
revenues) and involving above competitor price increases and
desertion of entry price territory led to a depositioning of the
brand from its initial anchor in the mass market segment. This
contributed to a decrease of Novartex's revenues at a 6% compound
annual growth rate (CAGR) over the period FY2011 to FY2014 with
like-for-like (LfL) sales consistently behind total revenue
growth.

Despite the negative operating performance, Moody's recognizes
that Novartex still enjoys leading positions in the French
footwear and apparel markets with shares of 16% and 4.5%,
respectively. The company benefits from a large retail network of
over 4,310 points of sales well distributed across the French
territory.

Novartex turnaround strategy lies in a vast store refurbishment
and store reshuffling plan towards higher traffic areas. While
the company has historically channelled capital expenditure
towards the expansion of its retail network, a large portion of
existing network has been neglected leading to close to 60% of
its stores not having received substantial maintenance capex over
the last 5 years as of FY2013. Budgeted at over EUR600 million
over the next three years, this ambitious capex plan will put
significant pressure on the company's free cash flow which
Moody's expect to remain negative over this period and will be
largely financed by the funds raised with the New Money Bond.

Moody's estimates Novartex's adjusted gross Debt-to-EBITDA ratio
at 13.8x (adjusted mainly for operating lease commitments and
impacted by other non-recurring charges) as of 30 November 2014.
In its ratio calculation, Moody's treats the company's EUR800
million bonds redeemable into preferred B shares (non reinstated
debt) and EUR2.5 million shareholder loan issued by Novartex as
debt as they do not meet the rating agency's published criteria
to assign equity treatment to shareholder's funding. The non-
reinstated debt and the shareholder loan have an impact of 2.3
turns on leverage as of November 2014. Moody's expects limited
de-leveraging over the next three years based on the gradual
roll-out of the capex plan over the period, the restructuring
charges related to this plan, and the prospects of continued
challenging macro-economic and competitive environments.

Moody's considers that Novartex benefits from sufficient
liquidity for the execution of its plan over the next 18 months.
Liquidity is supported by EUR578 million of cash as of end of
November 2014. Moody's expects that this cash balance should be
sufficient to withstand seasonal fluctuations in working capital
and fund the company's ambitious capex plan which is scalable at
the discretion of the company. Under the terms and conditions of
the New Money Bond, Novartex is subject to financial covenants in
the form of (1) a maximum annual capital expenditures test, (2) a
minimum EBITDA test starting on 28 February 2016, and (3) a
minimum liquidity test to be tested quarterly. Under the terms of
the Reinstated Debt Facility Agreement, Vivarte will benefit from
a covenant holiday up until November 2016.

Novartex's Caa2-PD PDR, reflects the company's mix of senior and
subordinated debt instruments. It reflects a moderate risk of
default in the near term owing to the cash position and the
covenant holiday but a high risk of debt restructuring in the
medium term if the management is not fully successful in the
turn-around. The EUR780 reinstated debt, rated Caa3, one notch
below the CFR, is ranking above the non reinstated debt and
shareholder loan, but is structurally and contractually
subordinated to the EUR500 million New Money Bond, rated B3.
Neither the New Money Bond nor the Reinstated Debt are guaranteed
by the operating subsidiaries, however, the New Money Bond
benefits from a pledge over receivables related to inter-company
loans down-streamed to the operating subsidiaries. At the
operating companies level, these intercompany loans rank pari
passu with the other operating liabilities, except for EUR150
million of trade payable, which are guaranteed by letters of
credit, ranking ahead.

The negative outlook on the ratings reflects (1) the distraction
of Novartex's management from the operating execution due to the
focus on the financial restructuring, which has resulted in
delays in the implementation of the turnaround plan; (2) the
significant challenge for the company to regain market shares in
a very competitive environment; and (3) Moody's view that the
turnaround plan will take time to bear fruit due to the scale of
capex to be deployed and will encompass significant execution
risk. It also reflects the risk that EBITDA might not grow to the
level required to comply with covenants at the end of the holiday
period.

What Could Change The Rating UP/DOWN

While unlikely in the short-term, the negative outlook on
Novartex's ratings could be stabilised if (1) the company shows a
track record of positive reported and like-for-like sales growth
leading to EBITDA (as reported by the company) generation above
covenant requirements, and (2) maintains an adequate liquidity
position. Negative pressure could arise if Novartex fails to grow
its sales over the next 12 months. Moody's also notes that the
non-cash interests will contribute to an increase in debt which
will constrain any deleveraging over the next few years.

Principal Methodologies

The principal methodology used in these ratings was Global Retail
Industry published in June 2011. Other methodologies used include
Loss Given Default for Speculative-Grade Non-Financial Companies
in the U.S., Canada and EMEA published in June 2009.

Vivarte is a France-based footwear and apparel retailer focusing
on the "branded" and "mass market" segments. Vivarte operates a
portfolio of sixteen names including La Halle aux Chaussures,
Andr‚, Minelli and San Marina in the footwear division and La
Halle aux Vˆtements, Caroll, Naf-Naf, Kooka‹ and Chevignon in the
apparel division. In fiscal year 2014, the company generated
revenues of 2,685 million and EBITDA of EUR170 million
(corresponding to EUR445 on a Moody's adjusted basis, primarily
after capitalisation of operating leases).


NOVARTEX SAS: S&P Assigns 'CCC+' CCR; Outlook Stable
----------------------------------------------------
Standard & Poor's Ratings Services assigned its 'CCC+' long-term
corporate credit rating to Novartex S.A.S., the parent company of
France-based mass-market apparel and footwear retailer Vivarte
Group.  The outlook is stable.

At the same time, S&P assigned its 'CCC+' issue rating to the
EUR500 million super senior bonds issued by subsidiary Vivarte.
The recovery rating on these notes is '3', reflecting S&P's
expectation of meaningful (50%-70%) recovery for creditors in the
event of a default.

S&P also assigned its 'CCC-' issue rating to the EUR780 million
senior reinstated debt issued by Novarte, another Novartex
subsidiary.  The recovery rating on these notes is '6',
reflecting S&P's expectation of negligible (0%-10%) recovery for
creditors in the event of a default.

The rating primarily reflects S&P's view that Vivarte Group's
capital structure may be unsustainable over the next few years,
based on S&P's opinion of a lack of visibility on a turnaround of
operations in the short term.  However, S&P do not expect a
default over the next 12 months, as reflected by its assessment
of the group's liquidity as "adequate."  The rating also reflects
S&P's assessment of Vivarte Group's financial risk profile as
"highly leveraged," and its business risk profile as "weak."

The stable outlook reflects S&P's view that, despite its
expectation of declining like-for-like sales and a continued weak
EBITDA margin over the next 12 months, Vivarte Group's negative
free operating cash flow (FOCF) will remain under control and its
liquidity will remain "adequate."  That said, S&P believes that
the group's capital structure may be unsustainable in the long
term without a successful turnaround of its operations.

S&P could raise its ratings if the group's operating performance
stabilized and improved over the next 12 months, demonstrating
that management's strategic initiatives are successful and
resulting in nominal EBITDA growth and a sustainable reduction in
negative FOCF generation.

S&P could consider a downgrade if market circumstances or
unsuccessful execution of the turnaround strategy led to a
further deterioration in revenues, EBITDA and cash flows, as a
result of which Vivarte Group would face higher short-term risk
of a liquidity crisis (including a breach of the group's minimum
liquidity covenant) or debt restructuring, which S&P would likely
view as tantamount to default, according to its criteria.


NOVARTEX SAS: Fitch Publishes 'CCC' Issuer Default Rating
---------------------------------------------------------
Fitch Ratings has published Novartex SAS's (Vivarte) Long-term
Issuer Default Rating (IDR) of 'CCC'.  Fitch has also published a
'B-'/'RR2' rating on Vivarte SAS's EUR500 million super senior
debt (New Money) due 2019 and a 'CC'/'RR6' rating on Novarte
SAS's EUR780 million reinstated debt due 2020.

The 'CCC' IDR reflects Vivarte's currently compromised business
model in several divisions -- in particular the mass-market
apparel division, which is mainly composed of the La Halle
brand -- and the high execution risk associated with its
strategic turnaround plan. We view the company's positioning in
the mass-market apparel segment as uncompetitive in a fast-
changing market.  The evolution of Vivarte's business model
requires significant investments and also careful prioritization
of them to avoid further brand erosion and customer loss.  Fitch
acknowledges the size and the diversification of the group's
operations, which offer some strategic flexibility to restructure
Vivarte's cost base. Operational levers include the realization
of synergies in sourcing and supply chain, brand and store
portfolio optimization and the rationalization of its customer
proposition.

The rating also reflects the company's significant leverage post
debt exchange, exacerbated by our expectation of continuing
negative free cash flow (FCF) suggesting a weak/partly funded
liquidity profile.

KEY RATING DRIVERS

Evolving Business Model

Fitch views the repair of the business model as a key
prerequisite for the rating.  In the mass market apparel segment
in particular, Fitch views the uncertainty around the
repositioning of the 'La Halle' brand and restoring a sustainable
business model characterized by positive like for like sales
trend and profitability as key for Vivarte's weak credit profile.
Fitch's assessment, together with the inherent execution risks
associated with any turnaround plan, currently constrains the
rating to the 'CCC' category.

French Non-Food Retail Environment Subdued

Fitch views Vivarte's concentration in the French market as a key
constraint to the rating.  Fitch expects the French non-food
retail market will remain subdued, constrained by low consumer
confidence, high unemployment and projected GDP growth below key
European peers.

The French apparel market has been declining since 2007 due to
the economic environment but also as a result of changing
consumer preferences leading to strong growth of the fast fashion
value segment.  The footwear market has also experienced pressure
on prices and value, albeit to a lesser extent.  Fitch views the
structural and competitive market pressures as additional
headwinds for Vivarte's turnaround strategy, increasing execution
risks.  Critical success factors in the sector include store
network optimization, a cost-efficient supply chain, clear brand
communication and an established multi-channel offering.
Management will need to demonstrate progress on all these
critical business issues before Fitch recognizes any improvement
in the perception of credit quality.

High Financial Leverage Post Debt Restructuring

Fitch views the group's financial profile as aggressive and
difficult to sustain in the absence of material progress in its
strategic turnaround.  The large fall in EBITDA in recent months
leaves Vivarte in a weakened financial position to invest in the
business and to address the more fundamental business model
issues despite a large amount of debt being written off (72% of
the outstanding notional value) and EUR500 million of new
liquidity being introduced along with the October 2014 debt
restructuring.

Weak Credit Metrics

Fitch projects key financial credit metrics to remain weak under
the current strategy, with funds from operations (FFO) fixed
charge cover at or below 1.2x and FFO adjusted net leverage above
9.0x over the four-year rating horizon (credit metrics include
adjustments for operating leases and cash considered not readily
available for debt repayments).  In the absence of any debt
amortization, Fitch views improving EBITDA as key driver for
potential deleveraging.  Uncertainty about EBITDA recovery leads
to weak financial flexibility and high refinancing risk.

In its ratio computation, Fitch assumes that EUR120 million of
cash is not readily available for debt service.  This amount
reflects Fitch's estimate of minimum liquidity requirement to run
the company on a going concern basis, notably to fund working
capital seasonality intra year.

Negative FCF to Reduce Liquidity

Fitch views the additional liquidity provided as potentially
insufficient to execute the current business plan, subject to any
adjustments expected to be delivered under the new management.
Fitch expects Vivarte's FCF to remain significantly negative over
the four-year rating horizon in the absence of material progress
in an operational turnaround.  Even assuming a successful
turnaround, improved EBITDA will likely be counterbalanced in the
mid-term by working capital outflows as the group reviews supply
chain arrangements, and by investments related to necessary store
refurbishments and technological improvements.

Mixed Debt Recovery Prospects

The 'B-'/'RR2' rating assigned to the EUR500 million super senior
secured debt reflects our view of above-average recovery
prospects for its holders in the event of default.  The recovery
expectations are driven by a post-restructuring EBITDA
approximately 27% below the group's FY14 (financial year ending
August 2014) EBITDA of EUR170 million, combined with an estimated
distressed EV/EBITDA multiple of 5.0x.  As such, recoveries would
be maximized in a going-concern scenario rather than in a
liquidation scenario.  This reflects the asset-light nature of
Vivarte's business, where Fitch views the underlying brand value
and established retail network as key assets.

Super senior secured New Money lenders could expect a recovery
rate in the high end of 91%-100% range.  However, the Recovery
Rating is capped at 'RR2' (71%-90%) due to the French insolvency
regime, leading to a two-notch uplift from the IDR to 'B-'.
Accordingly Fitch has assigned the Reinstated Debt a Recovery
Rating at 'CC'/'RR6' reflecting weak recovery prospects in case
of default.

RATING SENSITIVITIES

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

   -- Evidence of repairing the business model and successful
      execution of the turnaround strategy particularly in the
      mass market channel evidenced by defending its market share
      and positive like-for-like sales, as well as improving
      profitability.  This is a pre-condition to consider any
      upgrade.

   -- Reducing financial risks, evidenced by positive FFO
      generation and a FFO fixed charge cover sustainably above
      1.0x driving a steady reduction in financial leverage.

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

   -- Inability to repair the business model leading to continued
      negative FCF generation increasing leverage and eroding
      liquidity.

   -- Breach of maintenance covenants resulting in further
      distressed debt restructuring and/or seriously impaired
      liquidity.



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I R E L A N D
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ENDO INT'L: S&P Lowers Corporate Credit Rating to 'B+'
------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Dublin-based pharmaceutical company Endo International
PLC (Endo) to 'B+' from 'BB-'.  At the same time, S&P removed the
ratings from CreditWatch, where it placed them with negative
implications on Sept. 17, 2014.  The outlook is stable.

S&P also lowered its rating on subsidiary Endo Luxembourg Finance
Co. I S.a.r.l.'s senior secured debt to 'BB' from 'BB+'.  The '1'
recovery rating on the secured debt is unchanged, indicating
S&P's expectation for very high (90% to 100%) recovery of
principal in the event of payment default.

At the same time, S&P revised its recovery rating on senior
unsecured debt co-issued by Endo Finance LLC and Endo Finco Inc.,
subsidiaries of Endo, to '4' from '5' and affirmed the 'B+'
senior unsecured debt rating.  S&P assigned a 'B+' senior
unsecured debt rating and a '4' recovery to Endo Ltd., Endo
Finance LLC, and Endo Finco Inc.'s announced offering of $1
billion of senior unsecured notes.

The ratings on specialty pharmaceutical company Endo reflect
S&P's assessment of a "fair" business risk profile, highlighted
by a sizable and diverse high-margin pharmaceutical portfolio
offset by increased generic competition to lead product Lidoderm,
and S&P's assessment of a "highly leveraged" financial risk
profile, given our expectations that leverage will remain over 5x
over the next two years and that funds from operations (FFO) to
adjusted debt will be below 12%.

Endo competes in the specialty branded and generic drug business,
and has a growing international presence in select markets.  The
company's business continues to be in transition.  The company's
long-standing top products -- the branded patented pain
medication patch Lidoderm as well as a number of other key
branded products -- have lost market exclusivity in recent years,
and sales and earnings have significantly declined.  To offset
the lost EBITDA and cash flows, the company has been aggressive
on the acquisition front, acquiring or planning to acquire a
number of companies in the past year, such as generic drug makers
Boca Pharmacal LLC and Dava and specialty pharmaceutical
companies, Paladin Labs and Auxilium.

S&P's stable outlook incorporates its expectations that the
company will effectively and efficiently integrate its acquired
businesses, especially Auxilium, and quickly realize synergies.
Margins should remain steady to improving.  However, S&P also
expects that the company will likely remain acquisitive, though
not to the pace seen in 2014, and that leverage will likely
remain in the 5x area.

S&P believes the chance of a further downgrade is limited at this
time.  S&P's 'B+' corporate credit rating includes a peer
comparison comparability modifier of positive one notch.  Despite
the loss of Lidoderm, S&P feels the company still has a superior
competitive position, product diversity, and cash flow generation
over 'B' rated peers.  However, should recent debt-financed
acquisitions underperform or growth in its generic drug franchise
falters, a downgrade would be contemplated.

For an upgrade, S&P believes that once the company can sustain
its leverage level at under 5x, even with a moderate level of
debt-financed acquisitions, and its product portfolio remains
diversified, S&P can considers a higher rating.  This will likely
be a multi-year development, as the company executes on its
Auxilium acquisition, realizes planned synergies, and is further
along on its settlement payments on the mesh litigation, freeing
cash flows for funding future acquisitions or debt reduction.


WESLIN CONSTRUCTION: Ardale Completes Acquisition of Business
-------------------------------------------------------------
Fiona Reddan at The Irish Times reports that Ardale Property has
completed its acquisition of Weslin Construction, which was in
examinership.

The EUR500,000 deal will save 15 jobs and position Ardale across
a number of sectors, The Irish Times says.

Weslin, which was founded in 2000, had been in examinership since
March 3, The Irish Times notes.

According to The Irish Times, Weslin's core management team will
remain in place after the investment and upcoming work secured
will see an increase in employees to 25 over the coming months.

Weslin Construction has experience in residential, retail,
commercial new build and fit out, industrial and civil
engineering.



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


AEOLOS SA: Fitch Revises Outlook to Neg. & Affirms 'B' Rating
-------------------------------------------------------------
Fitch Ratings has revised the Outlook on Aeolos S.A.'s EUR137
million floating-rate notes to Negative from Stable, while
affirming the rating at 'B'.

The notes are backed by receivables due from route charges levied
on airlines for the use of the Greek airspace.

KEY RATING DRIVERS

Credit Linked to Greek Sovereign

The revision of the Outlook to Negative reflects a similar action
taken on the Greek sovereign's Long-term Issuer Default Rating
(IDR).

Political uncertainty in Greece has increased the risks to
sovereign creditworthiness as official financing, and any
potential reopening of market access, could be delayed for
months. Early elections to be held on January 25 have made the
direction of Greek policymaking more uncertain.  Prolonged
political deadlock until the summer is not Fitch's expectation,
but would increase the risk of financing difficulties and a
return to recession, which would in turn adversely affect the
receivables from airline levies.

Strong Cashflow

Although seasonal, the performance of the receivable flows has
been strong and stable over the years and comfortably covered
payments according to the scheduled amortization.  The terms of
the notes include a provision for noteholders to call an event of
default if the sovereign defaults.  This option was not exercised
when the Greek sovereign defaulted in 2012.  Fitch believes the
generated cashflows would be strong enough to ultimately repay
all principal and interest; however, all cash flows through Greek
bank accounts and the call guarantee will keep the rating closely
linked to the sovereign's.

The transaction pays interest semi-annually (March/ September),
but amortizes principal only at the March date.  At the interest
payment date in September 2013 and September 2014 collections
were not sufficient to fully top up the principal reserve account
due for amortization in March 2013 and March 2014.  This was the
second time such a shortfall had occurred and although the
shortfall was subsequently cleared using collections at the March
2014 interest payment date, this would be expected to continue
and grow as amortization increases.

RATING SENSITIVITIES

As the rating is supported at the floor by the Greek sovereign
IDR, movements of the Greek sovereign IDR may cause the agency to
take further action.


AIR NEWCO 5: S&P Assigns Preliminary 'B' CCR; Outlook Stable
------------------------------------------------------------
Standard & Poor's Ratings Services said that it had assigned its
preliminary 'B' long-term corporate credit rating to Luxembourg-
based holding company Air Newco 5 S.a.R.l. (ACS).  The outlook is
stable.

At the same time, S&P assigned its preliminary 'B' issue rating
to Air Newco LLC's first-lien loan and RCF.  The preliminary
recovery rating is '3', indicating S&P's expectation of
meaningful recovery (50%-70%) in the event of a default.

S&P also assigned a preliminary 'CCC+' issue rating to Air Newco
LLC's second-lien loan, with a preliminary recovery rating of '6'
indicating S&P's expectation of negligible recovery (0-10%) in
the event of a default.

S&P's preliminary rating on ACS reflects its assessment of its
business risk profile as "weak" and its financial risk profile as
"highly leveraged."

In S&P's view, the group's business risk profile is primarily
constrained by its limited geographic diversity and small scale.
ACS focuses on providing accounting and health care software and
back-office solutions to small and midsize enterprises.  It
operates in a highly competitive and fragmented market, and in
S&P's view its small size could limit its competitiveness against
large international players, including Oracle and SAP.  Other
weaknesses include intense competition with larger, better-
capitalized players, limited barriers to entry, and average
profitability despite S&P's expectation of significant cost
reductions from the successful integration of recent
acquisitions.

These weaknesses are partly offset by ACS' market leadership in
niche segments; health care solutions and back-office enterprise
resource planning solutions for legal services and advanced
learning; its position as the No. 4 software provider in the
U.K.'s financial management software market, with a 10% market
share; and strong growth prospects in the health care market.
ACS benefits from a high customer retention rate (about 95%) and
a relatively high proportion of recurring revenues (more than
60%), which S&P expects to rise as the company migrates business
to its managed-services platform, increasing its share of
revenues from its software-as-a-service model.  Other strengths
include a large and diversified customer base, and a broad
product range with opportunities to cross sell.

S&P's financial risk profile assessment reflects ACS' high
leverage and loose incurrence covenants.  S&P expects a pro forma
gross adjusted debt-to-EBITDA ratio of 8x as of the fiscal year
ending Feb. 28, 2015 (fiscal 2015), and funds from operations
(FFO) to debt of 9%.  S&P's EBITDA measure is after capitalized
development costs, in line with our methodology.  S&P's adjusted
debt measure excludes financial sponsor Vista Partners' preferred
equity certificates (PECs) of about GBP358 million.  In S&P's
view, the PECs' terms are favorable for third-party creditors and
sufficiently restricted from transfer.  S&P believes this creates
an economic incentive for Vista to not enforce its creditor
rights under the PECs because doing so could jeopardize its
control of the company.

These weaknesses are partly offset by S&P's anticipation of
short-term deleveraging to well below 7x, in line with its
forecast of revenue growth and meaningful efficiencies resulting
in 10% EBITDA growth in fiscal 2016 after restructuring costs.
Furthermore, S&P projects modest amortization through an excess
cash flow sweep, strong cash conversion, EBITDA cash interest
coverage exceeding 2x, and positive free operating cash flow
(FOCF), resulting in FOCF to debt of about 7%.

The stable outlook reflects S&P's anticipation of mid-single-
digit revenue growth, adjusted EBITDA margins rising above 25%,
adequate liquidity, and positive FOCF for ACS in fiscal 2016.

S&P could lower the rating if it expects adjusted leverage to
remain higher than 6x beyond fiscal 2016, if FOCF to debt were
lower than 5% or EBITDA cash interest coverage fell below 2x for
a prolonged period, or if ACS' liquidity weakened to "less than
adequate."  These downside factors could materialize if the
company is unable to realize planned cost efficiencies, if
restructuring costs are higher than expected, if increased
competition hampers revenue or profitability, or if the company
takes advantage of EBITDA growth to recapitalize or fund
acquisitions.

S&P thinks rating upside is limited over the next 12 months,
given the company's sizable debt.  However, S&P could raise its
rating if it expects the leverage ratio to decline below 5x on a
sustainable basis.  This could occur if the company's adjusted
EBITDA margins (after restructuring costs) strengthened above
30%, and if organic growth led to continuous top-line revenue
gains approaching 10%.


ENDO FINANCE: Moody's Rates New Sr. Unsecured Notes 'B1'
--------------------------------------------------------
Moody's Investors Service assigned a rating of B1 (LGD5) to the
new senior unsecured note offering of Endo Finance LLC, a
subsidiary of Endo International plc. The notes are being co-
issued by Endo Limited and Endo Finco Inc. There are no changes
to Endo's existing ratings including the Ba3 Corporate Family
Rating of Endo Luxembourg Finance I Company S.a.r.l.. Proceeds of
the offering, together with cash on hand and new equity, are to
be used to fund the pending acquisition of Auxilium
Pharmaceuticals, Inc. The rating outlook is stable.

Rating assigned:

Issuer: Endo Finance LLC

   Senior Unsecured Regular Bond/Debenture (Local Currency),
   Assigned B1, LGD5

Ratings Rationale

Endo's Ba3 Corporate Family Rating reflects its modest size and
scale relative to larger pharmaceutical peers, partially offset
by the company's solid market positioning as a niche player in
the pain and urology markets and by its revenue diversity across
branded drugs, generic drugs and medical devices. Endo's
expertise in pain drugs and its good compliance with US Drug
Enforcement Agency (DEA) regulations act as high barriers to
entry, also a credit strength. The company's organic growth rates
are constrained by competition and other pressures facing core
pharmaceutical products like Lidoderm and Opana ER, and softness
in medical procedure volumes. Further, Endo faces large cash
outflows related to product safety lawsuits involving its
surgical mesh products. Amidst these pressures, Endo is
undergoing cost reduction initiatives and an acquisition strategy
focused on specialty pharmaceutical companies, most recently
including Auxilium Pharmaceuticals, Inc. Although this
transaction temporarily increases financial leverage, Moody's
anticipate that Endo will sustain debt/EBITDA within a range of
3.0 to 4.0 times consistent with its publicly articulated
financial policies.

The rating outlook is stable reflecting Moody's expectations that
Endo will sustain gross debt/EBITDA below 4.0 times while funding
mesh litigation outflows and business development. Although not
expected in the near term, Moody's could upgrade Endo's ratings
if the company substantially increases its size, scale and
diversification and significantly resolves its mesh litigation
while sustaining debt/EBITDA below 3.5 times. Conversely, Moody's
could downgrade Endo's ratings if gross debt/EBITDA is sustained
above 4.0 times. This scenario could occur if Endo performs debt-
financed acquisitions, faces higher-than-expected litigation cash
outflows, or divests businesses without a commensurate reduction
in debt levels.

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

Headquartered in Luxembourg, Endo Luxembourg Finance I Company
S.a.r.l. ("Endo") is a subsidiary of Endo International plc,
which is headquartered in Dublin, Ireland (collectively "Endo").
Endo is a specialty healthcare company offering branded and
generic pharmaceuticals and medical devices. Including the
predecessor company Endo Health Solutions, Inc., net revenues for
the 12 months ended September 30, 2014 were approximately $2.7
billion.



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


HARBOURMASTER CLO 7: Fitch Lowers Rating on Class B2 Notes to B-
----------------------------------------------------------------
Fitch Ratings has taken various rating actions on Harbourmaster
CLO 7 B.V., as:

  EUR44 million Class A1 (ISIN XS0273833516): affirmed at
  'AAAsf'; Outlook Stable

  EUR149 million Class A2 (ISIN XS0273887363): upgraded to
  'AAAsf' from 'AAsf'; Outlook Stable

  EUR41 million Class A3 (ISIN XS0273889228): upgraded to 'A+sf'
  from 'Asf'; Outlook Stable

  EUR38 million Class A4 (ISIN XS0273890664): affirmed at
  'BBBsf'; Outlook revised to Stable from Negative

  EUR38 million Class B1 (ISIN XS0273891639): affirmed at 'BBsf';
  Outlook Negative

  EUR16.2 million Class B2 (ISIN XS0273894732): downgraded to 'B-
  sf' from 'Bsf'; Outlook Negative

  EUR3 million Class S2 combo (XS0273896273): upgraded to 'A+sf'
  from 'Asf'; Outlook Stable

  EUR4.8 million Class S4 combo (XS0273897917): affirmed at
  'BBBsf' and withdrawn

  EUR1.9 million Class S5 combo (XS0273900992): affirmed at
  'BBBsf'; Outlook revised to Stable from Negative

Harbourmaster CLO 7 B.V. is a securitization of mainly European
senior secured loans, senior unsecured loans, second-lien loans,
mezzanine obligations and high-yield bonds.  At closing a total
note issuance of EUR925 million was used to invest in a target
portfolio of EUR900 million.  The portfolio is actively managed
by GSO / Blackstone Debt Funds Management Europe Limited.

KEY RATING DRIVERS

The upgrade of the class A2 and A3 notes, the affirmation of the
class A1 notes and the Outlook revision on the class A4 notes,
reflect the notes' increased credit enhancement as a result of
substantial amortization of the class A1 notes.  Over the last 12
months, the class A1's outstanding note balance decreased by just
over EUR100 milion, increasing the notes' credit enhancement to
87% from 54%.  Credit enhancement on the class A2 and class A3
notes increased to 45% from 28% and to 33% from 21%,
respectively.

The downgrade of the class B2 notes reflects our view that the
increase in credit enhancement is insufficient to protect the
notes from increased vulnerability to portfolio credit quality
deterioration or to further defaults.  Over the last 12 months,
one additional obligor defaulted with an outstanding balance of
around EUR4.5 million, adding to the remaining outstanding
default of EUR1.3 million. Overall, recoveries on the defaulted
assets are being haircut to around 5% of their par value.
Considering the high portfolio concentration additional defaults
could lead to losses on the class B2 notes.  The top 10 obligors
currently represent 53% of the portfolio, compared with 38% a
year ago.  The largest obligor now makes up for 6.4%, compared
with 4.7% previously.

The ratings of the combination notes S2 and S5 are linked to the
ratings of their respective components, the class A3 and A4
notes. The rating of the class S4 notes was withdrawn, as the
notes were decoupled in November 2014.

Overall, the portfolio's credit quality has remained stable.  The
'CCC' and below bucket decreased to 3.71% from 4.54% over the
past 12 months and the weighted average rating factor increased
to 30.1 from 28.7, remaining within the 'B'/'B-' category.  The
weighted average life of the portfolio increased marginally to
4.1 years from 3.96 years, indicating maturity extensions of
underlying assets.

The largest country included in the portfolio is the UK with 21%,
up from 15%, followed by the U.S. and France each at 19%,
compared with 13% and 21%, respectively.  There have been some
significant changes in industry distribution.  As such,
healthcare is the largest industry with 19%, up from 12% and
cable is now only 2%, down from 9%.

Rating Sensitivities

Fitch rating sensitivity analysis showed that stressing the
probability of default and recoveries each by 25% would result in
negative rating migration on all notes, except for the class A1
and A3 notes.


HYDRA DUTCH: S&P Affirms 'B' CCR & Rates EUR160MM Notes 'B'
-----------------------------------------------------------
Standard & Poor's Ratings Services said that it has affirmed its
'B' long-term corporate credit rating on The Netherlands-based
Hydra Dutch Holdings 2 B.V. (Hydra 2), part of Eden Springs, the
water and coffee solutions group. The outlook is stable.

S&P also assigned its 'B' issue rating to the group's proposed
EUR160 million senior secured fixed-rate notes due 2019.  The
recovery rating on these new notes is '4', indicating S&P's
expectation of average recovery (30%-50%) in the event of a
payment default.

At the same time, S&P affirmed its 'B' issue rating on the
group's existing senior secured floating-rate notes due 2019,
likely to be reduced to EUR175 million following an exchange
offer to holders. The recovery rating remains at '4', indicating
S&P's expectation of average recovery (30%-50%) in the event of a
payment default.

The rating affirmations follow Hydra 2's announcement of its
acquisition of Poland-based Nestle Waters Direct.  In S&P's view,
the transaction is unlikely to significantly affect the
creditworthiness of the Eden Springs group.  The group already
completed and funded the first stage of the EUR105 million
acquisition through a EUR53 million drawdown on the bridge
facility.  The group has indicated that it has already received
approvals for the Russian operations.  S&P understands that the
remaining steps, subject to regulatory review, will potentially
be finalized during the first half of 2015.  In the meantime, the
group intends to raise about EUR160 million senior secured notes
and place a portion of the funds into escrow.  S&P understands
the group's majority shareholder, Rhone Capital, will inject
EUR15 million of equity.

S&P anticipates that, by December 2015, the group's capital
structure will include:

   -- EUR335 million of senior secured notes due 2019;

   -- A shareholder loan of approximately EUR90 million, assuming
      that out of the EUR35 million in cash held outside the
      rated group, EUR25 million was upstreamed for partial
      repayment of the existing shareholder loan;

   -- Operating leases of approximately EUR30 million; and

   -- A modest amount of postretirement benefits.

S&P forecasts Hydra 2's pro forma 2014 EBITDA at about EUR70
million, up from slightly more than EUR50 million in 2013.  At
this stage, S&P do not consider the EUR10 million of synergies
the company expects to achieve from acquiring NWD.  From S&P's
EBITDA projection, it calculates a debt-to-EBITDA ratio close to
6.7x, which remains in line with S&P's current assessment of the
group's financial risk profile as "highly leveraged."  Assuming
that the outstanding EUR10 million in cash held outside the rated
group will go toward repaying existing shareholder loans, as
planned in the May 2014 refinancing, this ratio falls to about
6.6x.  This cash amount excludes the EUR15 million to be used for
the contemplated acquisition.

The acquisition is likely to increase the group's cash flow
generation only marginally over the next 12 months.  However, S&P
thinks it will strengthen the group's position in its market
segment, particularly in Poland where it could become the top
player.  Further potential benefits include a more diverse
customer base, higher operating efficiency with the creation of
hubs, and a broader scope of operations with access to the
Russian, German, and Portuguese markets.

Yet, S&P thinks the group's business risk profile remains
constrained by its small absolute size, operation in a fragmented
and highly competitive market, and the risk of water
contamination and inaccessibility to its water sources, since
access contracts and use permits are for short periods.  Also,
S&P considers that litigation the group has faced over the past
few years, mounting risk of a longer downturn in Russia, and
gloomy economic prospects for key European markets represent
additional constraints.

The stable outlook reflects S&P's view that Hydra 2 will
successfully integrate NWD within the next 12 to 18 months.  In
S&P's base-case scenario, it assumes challenging market
conditions in Russia and erosion of the EBITDA margin, given
costs inherent to the consolidation process.  S&P also thinks the
Eden Springs group will maintain at least positive free operating
cash flow and adequate liquidity over that period.

Given the recent increase in the group's leverage, S&P sees the
likelihood of an upgrade as remote.  Still, S&P may consider a
positive rating action if the group's financial policy and credit
metrics improved within S&P's "aggressive" category, including
adjusted debt to EBITDA of less than 5x.  Also, if the Eden
Springs group showed consistently stronger operating performance,
including a steady increase in EBITDA margins and successful
integration of NWD and other bolt-on acquisitions, S&P could
consider a positive rating action.

S&P could lower the rating if the group's EBITDA margin decreases
more than it expects or poorer cash flows lead to weaker credit
metrics.  This could come, for example, from the group's
unsuccessful integration of NWD, lack of access to key water
sources, worse market conditions in Russia than anticipated, or a
situation related to water quality that damaged the group's
image. Litigation issues leading to loss of market share could
also trigger a negative rating action.  Moreover, if further
debt-financed acquisitions or shareholder distributions weakened
the group's credit metrics, or cash interest coverage fell to
less than 2.5x, S&P could consider lowering the rating.



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


EUROPLAN CJSC: Fitch Affirms 'BB' LT Issuer Default Ratings
-----------------------------------------------------------
Fitch Ratings has revised the Outlooks on the Long-term Issuer
Default Ratings (IDRs) of Russian leasing companies Europlan CJSC
(BB), Carcade LLC (BB-) and Baltic Leasing OJSC (BaltLease; B+)
to Negative from Stable.  The companies' ratings have been
affirmed.

The rating actions reflect Fitch's expectation that the sharp
deterioration in the Russian operating environment will
negatively impact the companies' credit profiles in 2015.

KEY RATING DRIVERS - IDRS AND NATIONAL RATINGS

The revision of the Outlooks reflects Fitch's expectation that
economic recession, significantly increased funding costs,
declining car sales and rising inflation will weigh on the
companies' credit profiles.  At the same time, the affirmation of
the companies' ratings reflects their moderate resilience to the
weaker operating environment, as financial metrics are currently
reasonable.

The companies are the leading private leasing companies in
Russia. Europlan and Carcade are pure retail, predominantly
autoleasing companies (passenger cars, trucks and light
commercial vehicles (LCV) made up 79% to 92% of their lease books
at end-1H14), while BaltLease has a more diversified, albeit less
liquid lease book (passenger cars, trucks and LCV made up only
45% of the lease book at end-1H14, with the remainder represented
by special-purpose equipment).

Asset quality metrics have been reasonable to date, with credit
losses after collateral foreclosures not exceeding 1% for each of
the companies in 1H14.  The companies mainly target the SME
segment, which in Fitch's view is likely to be more vulnerable to
an economic downturn.  Default rates (probability of default on
leases) at Europlan and Carcade reached 24% and 18% during the
2008-2009 crisis, but robust collateral coverage (all companies
require a down-payment of around 25%) underpins the recovery
process, resulting in moderate final losses at 3.8% and 5.7%,
respectively.

The companies are predominantly bank funded.  Refinancing risk
arises due to the current stress and greater risk aversion in the
Russian banking system.  However, this is mitigated by the short
tenors of lease books, which largely match funding maturities.
Nonetheless, a sharp deleveraging scenario could significantly
undermine company franchises and weaken performance.  Europlan
and Carcade have diversified bank loan portfolios, but are more
dependent on market funding than BaltLease, which at end-1H14
raised 56% of its liabilities from banks affiliated to Otkrytie
group.

The historically high profitability of the leasing sector
contracted in 2014 due to competitive pressure from state-owned
companies and large banks.  Net income divided by average earning
assets softened at Europlan and Carcade to a still reasonable
3.2% and 2.4% in 1H14 from 3.9% and 4% in 2013.  BaltLease's
ratio was a still solid 4.3% in 1H14.  However, Fitch expects
some further deterioration in performance due to (i) the adverse
economic environment in Russia, which will probably result in
higher default rates; (ii) declining car sales, which will likely
restrict volumes in the high-yielding retail business; and (iii)
more expensive funding.

Capitalization is generally satisfactory, albeit somewhat
stronger at Europlan and Carcade (debt-to-equity ratios of 4.6x
and 5.2x, respectively, at end-1H14) compared with BaltLease
(6.5x).  Leasing companies' capital adequacy is not regulated in
Russia, but funding covenants set maximum debt-to-equity ratios
at 6x for Europlan and Carcade and 9x for BaltLease.  Each of the
companies can sustain moderate losses without breaching these
covenants, in particular in light of potential deleveraging.

KEY RATING SENSITIVITIES - IDRS AND NATIONAL RATINGS

The companies could be downgraded if (i) the weaker operating
environment translates into significant deterioration of their
financial metrics; or (ii) prospects for Russia's economy and
macroeconomic stability weaken further beyond Fitch's current
expectations.  The ratings could stabilize at current levels if
the Russian economy performs better than currently anticipated
and the companies' performance remains sound.

KEY RATING DRIVERS AND SENSITIVITIES: SENIOR UNSECURED DEBT
RATINGS

Senior debt ratings are currently aligned with the companies'
IDRs and National ratings.  The ratings could be downgraded in
case of a lowering of the IDRs/National ratings, or a marked
increase in the proportion of pledged assets, potentially
resulting in lower recoveries for the unsecured senior creditors
in a default scenario.  At end-1H14, Europlan and BaltLease had
pledged around 60% of net investments in leases, compared with
32% at Carcade.

The rating actions are:

Europlan

Long-term foreign and local currency Issuer Default Ratings
  (IDRs): affirmed at 'BB'; Outlooks revised to Negative from
  Stable
Short-term foreign-currency IDR: affirmed at 'B'
National Long-term Rating: affirmed at 'AA-(rus)'; Outlook
  revised to Negative from Stable
Senior unsecured debt: affirmed at 'BB'/'AA-(rus)'

Carcade

Long-term foreign and local currency IDRs: affirmed at 'BB-';
  Outlooks revised to Negative from Stable
Short-term foreign-currency IDR: affirmed at 'B'
National Long-term Rating: affirmed at 'A+(rus)'; Outlook revised
  to Negative from Stable
Senior unsecured debt: affirmed at 'BB-'/'A+(rus)'

BaltLease

Long-term foreign and local currency IDRs: affirmed at 'B+';
  Outlooks revised to Negative from Stable
Short-term foreign-currency IDR: affirmed at 'B';
National Long-term Rating: affirmed at 'A-(rus)'; Outlook revised
  to Negative from Stable

Baltic Leasing LLC

Senior unsecured debt: affirmed at 'B+'/'A-(rus)'; Recovery
Rating 'RR4'


FGC UES: Moody's Lowers Issuer Rating to 'Ba1'
----------------------------------------------
Moody's Investors Service has downgraded OAO AK Transneft's
(Transneft) issuer rating and the senior unsecured rating of the
outstanding $1.05 billion loan participation notes issued by
TransCapitalInvest Limited, Transneft's special purpose vehicle
(SPV), to Baa3 from Baa2. Moody's has also downgraded FGC UES,
JSC's (FGC) issuer rating to Ba1 from Baa3. Concurrently, Moody's
downgraded to (P)Ba1 from (P)Baa3 the senior unsecured rating of
FGC's RUB100 billion (around $1.5 billion) loan participation
note program, and to Ba1 from Baa3 the rating of the first series
of RUB17.5 billion's (around $270 million) worth of notes issued
by Federal Grid Finance Limited, an FGC special purpose vehicle.
All of the affected ratings remain on review for downgrade.

The action follows the weakening of Russia's credit profile, as
reflected by Moody's downgrade of Russia's government bond rating
to Baa3/Prime 3 (P-3) from Baa2/Prime 2 (P-2) on Friday 16
January and its placement of the rating on review for further
downgrade. Concurrently, Moody's lowered the foreign-currency
bond ceiling to Baa3/P-3 from Baa2/P-2 and local-currency
bond/deposit ceilings to Baa2 from Baa1. Russia's foreign-
currency deposit ceiling remains unchanged at Ba1/NP.

The ratings of Transneft and FGC affected by the announcement
remain on review for downgrade, because of (1) the current review
for downgrade of the sovereign debt rating; and (2) the
companies' resilience to increased risk arising from the
prevailing negative operating conditions, as described in Moody's
earlier rating action on 45 Russian non-financial corporates
(including infrastructure and utility companies).

Ratings Rationale

The weakening of Russia's credit profile, as captured by Moody's
downgrade of the sovereign to Baa3 from Baa2, has prompted the
rating actions on Transneft and FGC as they face an increasingly
challenging operating environment.

The key drivers behind the downgrade of Russia's sovereign rating
are Moody's (1) expectation that the substantial oil price and
exchange rate shock will further undermine the country's already
subdued growth prospects over the medium term; and 2) nearer-term
concerns over the negative impact of the erosion in official
foreign-exchange buffers and fiscal revenues on the government's
financial strength. Both these factors are also leading to
heightened systemic risks for Russia's infrastructure and utility
companies.

According to Moody's, the severe -- and likely to be sustained --
oil price shock, coupled with Russian borrowers' highly
restricted access to the international market due to ongoing
sanctions, is undermining economic fundamentals and increasing
financial stresses on both the public and private sectors,
contributing to the challenges for Russian infrastructure and
utility companies. Moody's expects real GDP contractions of
around 5.5% in 2015 and 3% in 2016, bringing real growth over the
10 years through 2018 to virtually zero.

Factors to be Considered in the Rating Review

With the ratings of Transneft and FGC remaining on review for
downgrade, Moody's will continue its review of Russian
infrastructure and utilities companies, including those not
affected by this action but placed on review for downgrade on 23
December 2014, to assess their resilience to the increased risk
arising from prevailing negative operating conditions in the
domestic market.

In addition, Moody's will consider adjusting its assumptions
regarding the Russian government's willingness to provide support
to infrastructure and utilities companies corporates in the event
of need. This consideration reflects the risk that the
government's supportive stance towards a particular company may
weaken if it faces requests for support from many entities and
sectors. It also reflects the rising, albeit still low, risk that
domestic Russian entities will be unable to access foreign
currency to service their foreign-currency debt obligations,
given recent and prospective pressure on Russia's foreign-
currency reserves.

While Russia's foreign-currency reserves remain substantial, if
they continue to diminish rapidly, the Russian government may
consider rationing the provision of foreign currency to the
economy, including the financing of certain non-financial
corporates, in an adverse scenario.

What Could Change The Ratings Up/Down

Moody's believes there is little likelihood of any upward rating
pressure on Transneft's and FGC's ratings, unless sovereign
creditworthiness improve materially. The rating agency may
consider confirming the ratings of Transneft and FGC in the event
that sovereign credit quality stabilizes and the companies show
sufficient resilience to the deterioration of the macroeconomic
environment.

Negative pressure on Transneft's rating will develop if Moody's
downgrades the sovereign rating. The rating agency could also
downgrade Transneft's ratings if the deterioration in the
operating environment in Russia were to lead to (1) a
significantly weaker financial profile (i.e., retained cash flow
(RCF)/net debt below 15%, funds from operations (FFO) net
interest coverage below 4.0x and FFO/net debt below 25%); and (2)
increasing constraints on liquidity.

Moody's could downgrade FGC's ratings in the event that the
sovereign rating is downgraded or the rating agency revises
downwards its assessment of the probability of the government
providing extraordinary support to FGC in the event of financial
distress.

Negative pressure on FGC's rating could also result from (1) a
sustainable negative shift in the developing regulatory regime
and significantly deteriorating margins; (2) a failure of the
company to manage its investment program in line with the tariff
regulation and contain a deterioration of its financial profile,
with FFO interest coverage and FFO/net debt falling materially
and persistently below 3.5x and 25%, respectively; and (3)
pressured liquidity.

Principal Methodologies

The methodologies used in these ratings were Regulated Electric
and Gas Networks published in November 2014, and Government-
Related Issuers published in October 2014.


IRKUT CORP: Moody's Lowers Corporate Family Rating to 'B3'
----------------------------------------------------------
Moody's Investors Service has downgraded the ratings of seven
Russian non-financial corporates and their supported subsidiaries
to Baa3 from Baa2, and one additional non-financial corporate to
Ba3 from Ba2. These ratings remain on review for downgrade.

The action follows the weakening of Russia's credit profile, as
reflected by Moody's downgrade of Russia's government bond rating
to Baa3/Prime-3 (P-3) from Baa2/Prime-2 (P-2) on Friday 16
January and its placement of the rating on review for further
downgrade. Concurrently, Moody's downgraded the foreign-currency
bond ceiling to Baa3/P-3 from Baa2/P-2 and local-currency
bond/deposit ceilings to Baa2 from Baa1.

The ratings of the non-financial corporates affected by the
announcement remain on review for downgrade because of (1) the
current review for downgrade of the sovereign debt rating; and
(2) the companies' resilience to increased risk arising from the
prevailing negative operating conditions, as described in Moody's
earlier rating action on 45 Russian non-financial corporates.

Ratings Rationale

The weakening of Russia's credit profile, as captured by Moody's
downgrade of the sovereign to Baa3 from Baa2 has prompted the
rating actions on these eight non-financial corporates as they
face an increasingly challenging domestic operating environment.

The key drivers behind the downgrade of Russia's sovereign rating
are Moody's (1) expectation that the substantial oil price and
exchange rate shock will further undermine the country's already
subdued growth prospects over the medium term; and (2) nearer-
term concerns over the negative impact of the erosion in official
foreign-exchange buffers and fiscal revenues on the government's
financial strength. Both these factors are also leading to
heightened systemic risks for Russia's corporates.

According to Moody's, the severe -- and likely to be sustained --
oil price shock, coupled with Russian borrowers' highly
restricted access to the international market due to ongoing
sanctions, is undermining economic fundamentals and increasing
financial stresses on both the public and private sectors,
contributing to the challenges for Russian corporates. Moody's
expects real GDP contractions of around 5.5% in 2015 and 3% in
2016, bringing real growth over the 10 years through 2018 to
virtually zero. Moody's believes that even for corporates without
foreign-currency refinancing needs, the likely continued severe
deterioration of the operating environment might lead to a
substantial weakening in their credit profiles.

Factors To Be Considered In The Rating Review

Moody's will continue its review of Russian corporates, including
those not affected by this action but placed on review for
downgrade on 23 December 2014, for their resilience to the
increased risk arising from the prevailing negative operating
conditions in the domestic market.

In addition, Moody's will also consider adjusting its assumptions
regarding the Russian government's willingness to provide support
to Russian corporates in the event of need. This consideration
reflects the risk that the government's supportive stance towards
a particular corporate may weaken if it faces requests for
support from many entities and sectors. It also reflects the
rising, albeit still low, risk that domestic Russian entities
will be unable to access foreign currency to service their
foreign-currency debt obligations, given recent and prospective
pressure on Russia's foreign-currency reserves.

While Russia's foreign-currency reserves remain substantial, if
they continue to diminish rapidly, the government may consider
rationing the provision of foreign currency to the economy,
including the financing of non-financial corporates, in an
adverse scenario.

What Could Change Ratings Up/Down

Moody's believes there is little likelihood of any upward rating
pressure for the corporates affected by the announcement, unless
operating conditions improve materially. The rating agency may
consider confirming the ratings of the affected companies in the
event that the economic environment stabilizes or the companies
show sufficient resilience to potential further deterioration of
the macroeconomic environment.

The rating agency may take negative rating actions on the
affected corporates in the event of (1) continued deterioration
of the operating environment; (2) a deeper and more protracted
decline in economic activity in Russia than previously
anticipated; and (3) an increase in the likelihood that the
Russian government is forced to consider rationing the provision
of foreign currency to the economy.

List of Affected Ratings

Downgrades:

Issuer: Federal Passenger Company OJSC

  Issuer Rating (Foreign Currency), Downgraded to Baa3 from Baa2;
  Placed Under Review for further Possible Downgrade

  Issuer Rating (Local Currency), Downgraded to Baa3 from Baa2;
  Placed Under Review for further Possible Downgrade

Issuer: Gazprom Neft JSC

  Issuer Rating (Foreign Currency), Downgraded to Baa3 from Baa2;
  Placed Under Review for further Possible Downgrade

Issuer: GPN Capital S.A.

  BACKED Senior Unsecured Medium-Term Note Program, Downgraded to
  (P)Baa3 from (P)Baa2; Placed Under Review for further Possible
  Downgrade

  BACKED Senior Unsecured Regular Bond/Debenture, Downgraded to
  Baa3 from Baa2; Placed Under Review for further Possible
  Downgrade

Issuer: IRKUT Corporation, JSC

  Probability of Default Rating, Downgraded to Ba3-PD from Ba2-
  PD; Placed Under Review for further Possible Downgrade

  Corporate Family Rating (Foreign Currency), Downgraded to Ba3
  from Ba2; Placed Under Review for further Possible Downgrade

  Corporate Family Rating (Local Currency), Downgraded to Ba3
  from Ba2; Placed Under Review for further Possible Downgrade

Issuer: LUKOIL International Finance B.V.

  BACKED Senior Unsecured Regular Bond/Debenture, Downgraded to
  Baa3 from Baa2; Placed Under Review for further Possible
  Downgrade

Issuer: MMC Finance Limited

  BACKED Senior Unsecured Regular Bond/Debenture, Downgraded to
  Baa3 from Baa2; Placed Under Review for further Possible
  Downgrade

Issuer: OAO LUKOIL

  Issuer Rating (Foreign Currency), Downgraded to Baa3 from Baa2;
  Placed Under Review for further Possible Downgrade

  Corporate Family Rating (Foreign Currency), Downgraded to Baa3
  from Baa2; Placed Under Review for further Possible Downgrade

Issuer: OJSC MMC Norilsk Nickel

  Issuer Rating (Foreign Currency), Downgraded to Baa3 from Baa2;
  Placed Under Review for further Possible Downgrade

  Issuer Rating (Local Currency), Downgraded to Baa3 from Baa2;
  Placed Under Review for further Possible Downgrade

Issuer: OJSC Oil Company Rosneft

  Issuer Rating (Local Currency), Downgraded to Baa3 from Baa2;
  Placed Under Review for further Possible Downgrade

Issuer: Rosneft Finance S.A.

  BACKED Senior Unsecured Medium-Term Note Program (Foreign
  Currency), Downgraded to (P)Baa3 from (P)Baa2; Placed Under
  Review for further Possible Downgrade

  BACKED Senior Unsecured Regular Bond/Debenture, Downgraded to
  Baa3 from Baa2; Placed Under Review for further Possible
  Downgrade

Issuer: Rosneft International Finance Limited

  BACKED Senior Unsecured Medium-Term Note Program (Foreign
  Currency), Downgraded to (P)Baa3 from (P)Baa2; Placed Under
  Review for further Possible Downgrade

  BACKED Senior Unsecured Regular Bond/Debenture, Downgraded to
  Baa3 from Baa2; Placed Under Review for further Possible
  Downgrade

Issuer: Rosneft International Holdings Limited

  Issuer Rating (Foreign Currency), Downgraded to Baa3 from Baa2;
  Placed Under Review for further Possible Downgrade

  Issuer Rating (Local Currency), Downgraded to Baa3 from Baa2;
  Placed Under Review for further Possible Downgrade

Issuer: Russian Railways Joint Stock Company

  Issuer Rating (Foreign Currency), Downgraded to Baa3 from Baa2;
  Placed Under Review for further Possible Downgrade

  Issuer Rating (Local Currency), Downgraded to Baa3 from Baa2;
  Placed Under Review for further Possible Downgrade

  Senior Unsecured Regular Bond/Debenture, Downgraded to Baa3
  from Baa2; Placed Under Review for further Possible Downgrade

Issuer: RZD Capital PLC

  BACKED Senior Unsecured Regular Bond/Debenture, Downgraded to
  Baa3 from Baa2; Placed Under Review for further Possible
  Downgrade

Outlook Actions:

Issuer: Federal Passenger Company OJSC

  Outlook, Remains as Rating Under Review

Issuer: Gazprom Neft JSC

  Outlook, Remains as Rating Under Review

Issuer: GPN Capital S.A.

  Outlook, Remains as Rating Under Review

Issuer: IRKUT Corporation, JSC

  Outlook, Remains as Rating Under Review

Issuer: LUKOIL International Finance B.V.

  Outlook, Remains as Rating Under Review

Issuer: MMC Finance Limited

  Outlook, Remains as Rating Under Review

Issuer: OAO LUKOIL

  Outlook, Remains as Rating Under Review

Issuer: OJSC MMC Norilsk Nickel

  Outlook, Remains as Rating Under Review

Issuer: OJSC Oil Company Rosneft

  Outlook, Remains as Rating Under Review

Issuer: Rosneft Finance S.A.

  Outlook, Remains as Rating Under Review

Issuer: Rosneft International Finance Limited

  Outlook, Remains as Rating Under Review

Issuer: Rosneft International Holdings Limited

  Outlook, Remains as Rating Under Review

Issuer: Russian Railways Joint Stock Company

  Outlook, Remains as Rating Under Review

Issuer: RZD Capital PLC

  Outlook, Remains as Rating Under Review

The principal methodology used in rating IRKUT Corporation, JSC
was Global Aerospace and Defense Industry published in April
2014. Other methodologies used include the Government-Related
Issuers published in October 2014.

The principal methodology used in rating OJSC Oil Company Rosneft
and Rosneft International Finance Limited was Global Integrated
Oil & Gas Industry published in April 2014. Other methodologies
used include the Government-Related Issuers published in October
2014.

The principal methodology used in rating OAO LUKOIL, LUKOIL
International Finance B.V., Gazprom Neft JSC, GPN Capital S.A.,
Rosneft International Holdings Limited and Rosneft Finance S.A.
was Global Integrated Oil & Gas Industry published in April 2014.

The principal methodology used in rating OJSC MMC Norilsk Nickel
and MMC Finance Limited was Global Mining Industry published in
August 2014.

The principal methodology used in rating Federal Passenger
Company OJSC was Global Passenger Railway Companies published in
March 2013.

The principal methodology used in rating Russian Railways Joint
Stock Company and RZD Capital PLC was Global Surface
Transportation and Logistics Companies published in April 2013.
Other methodologies used include the Government-Related Issuers
published in October 2014.


SB BANK: Moody's Lowers Long-Term Deposit Ratings to 'Caa1'
-----------------------------------------------------------
Moody's Investors Service has downgraded the long-term local and
foreign-currency deposit ratings of SB Bank (formerly
Sudostroitelny Bank, Russia) to Caa1 from B3 primarily because of
substantial liquidity pressure that the bank is experiencing. The
ratings are under review for further downgrade.

The rating action also reflects persistent weaknesses in SB
Bank's financial fundamentals, such as (1) modest capitalization;
(2) weak and volatile profitability; and (3) the limited
diversification and scale of its business model.

Concurrently, Moody's downgraded SB Bank's standalone bank
financial strength rating (BFSR) to E/STA from E+/STA, now
equivalent to a baseline credit assessment (BCA) of caa1
(formerly b3). The bank's Not Prime short-term foreign and local-
currency ratings were affirmed.

The rating action is based on SB Bank's audited IFRS accounts for
2013, 2012 and 2011, statutory accounts as at end-November 2014,
and information provided by the bank.

Ratings Rationale

--- Liquidity Pressures

The key driver of the rating action is substantial liquidity
pressure experienced by SB Bank, reflected, among other factors,
in the bank's recent decision to significantly limit all cash
withdrawals. The aforementioned liquidity strain arose from the
bank's overstretched security repo operations with the Central
Bank of Russia (CBR). These repo transactions led to material
erosion of the bank's liquidity profile following turbulence in
Russia's financial markets in December 2014, against the
background of rapid rouble depreciation and a concurrent slump in
securities prices. Moody's notes that, according to regulatory
statements, the SB Bank's liquid assets (minus repo operations
and investments to mutual funds and subsidiaries) accounted for
only around 8% of its total assets as of end-November 2014 (15%
as at year-end 2013).

Moody's adds that SB Bank could also face additional liquidity
pressure as a result of a potential decline in customer funding,
caused, in turn, by the negative publicity associated with the
cash withdrawal restrictions and media publicity highlighting the
bank's recent delays in customer transactions.

--- Persistent Weaknesses in Financial Metrics

Moody's notes that SB Bank's capitalization has remained at
modest levels, with the regulatory capital ratio (N1) of 11.9%
(only 190 basis points above the regulatory minimum) at end-
November 2014. This positioning is the result of low recurring
internal capital generation which has lagged significantly behind
the pace of growth in risk-weighted assets. In turn, SB Bank's
profitability has been weak and volatile, with return on average
assets (ROAA) of 0.6% in 2013, mainly because of low yields on a
large securities portfolio and a large share of low-yielding cash
equivalents.

The SB Bank's limited sector diversification is reflected in its
focus on lending to second-tier companies and small and medium-
sized companies (SMEs), and its modest retail operations.

The aforementioned pressures are only partially mitigated by the
bank's moderate borrower concentration and its adequate asset
quality. According to SB Bank, its top 20 exposures accounted for
1.4 times regulatory capital as at H1 2014 which is lower than
many of its peers in Russia. In turn, the bank's non-performing
loans (NPLs, defined as 90+ days overdue) accounted for 3.5% of
gross loans as at H1 2014, which was also superior to the metrics
reported by the bank's B3-rated peers.

What Could Move The Ratings Up/Down

Given that SB Bank's ratings are under review for further
downgrade, upward pressure on the ratings is unlikely in the next
12 months. Moody's review will focus on the bank's capacity to
manage current liquidity pressures over next two-three weeks.

Any further evidence of deterioration in SB Bank's liquidity
profile would put significant pressure on the Bank's ratings and
could result in the review being concluded with a downgrade of
the bank's ratings. The bank's ratings could also be downgraded
as a result of a significant decline in capital adequacy metrics,
a material increase in borrower concentration, or deterioration
in its asset quality.

Principal Methodology

The principal methodology used in this rating was Global Banks
published in July 2014.

Headquartered in Moscow, Russia, SB Bank reported total assets of
RUB68 billion (around US$2 billion) under IFRS (unaudited) as of
end-June 2014. The bank recorded a net profit of RUB206 million
(US$6 million) in the first six months of 2014.


SSMO LENSPETSSMU: S&P Puts 'B+' CCR on CreditWatch Negative
-----------------------------------------------------------
Standard & Poor's Ratings Services said that it had taken these
rating actions on six Russian real estate developers and
investment companies:

   -- S&P placed its 'B+' long-term and 'B' short-term corporate
      credit ratings and 'ruA+' Russia national scale rating on
      on CJSC SSMO LenSpetsSMU on CreditWatch with negative
      implications.

   -- S&P placed its 'B+' long-term corporate credit rating on O1
      Properties Ltd. on CreditWatch with negative implications.

   -- S&P placed its 'B' long-term corporate credit rating and
      its 'ruA-' Russia national scale rating on JSC PIK Group on
      CreditWatch with negative implications.

   -- S&P placed its 'B-' long-term and 'B' short-term corporate
      credit ratings and its 'ruBBB' Russia national scale rating
      on RSG International Ltd. on CreditWatch with negative
      implications.

   -- S&P lowered its long-term corporate credit rating on
      Breboro Holdings Co. Ltd. to 'CCC+' from 'B-' and its
      Russia national scale rating to 'ruBB-' from 'ruBBB-' and
      placed them on CreditWatch with negative implications.

   -- S&P lowered its long-term corporate credit rating on
      Pioneer Group CJSC to 'CCC' from 'B-' and its Russia
      national scale rating to 'ruB+' from 'ruBBB-' and placed
      them on CreditWatch with developing implications.

The CreditWatch placements reflect S&P's view that Russian real
estate developers and investment companies' cash flow generation,
asset revaluations, and liquidity will be negatively affected by
the higher interest rate environment amid weakening demand and
pressures created by sharp ruble depreciation.

Key elements of the deteriorating environment are the ruble's 50%
depreciation in 2014, and the central bank's substantial increase
of the interest rate to 17%.

S&P lowered the ratings on Russian real estate developers Breboro
Holdings and Pioneer Group CJSC because of S&P's assessment of
their liquidity and its view that they have insufficient
committed liquidity sources to cover maturities within the next
12 months. Breboro's maturities are stretched throughout the
year, while Pioneer faces a put option on its ruble bond at the
end of April 2015.

S&P understands that the companies' managements expect to
generate funds from sales of real estate within the coming months
to have sufficient funds for debt repayment.  However, S&P
believes that weakened industry conditions might put their plans
at risk.

S&P will be analyzing RSG International's liquidity position in
more detail, but as it understands, the company had materially
reduced its debt by Dec. 31, 2014.

S&P is factoring lower demand for new real estate, negative asset
revaluations, higher interest rates, and a higher exchange rate
into S&P's forecasts for all six companies, and see the potential
that it would lower its ratings on Russian real estate developers
and real estate investment companies.

S&P will likely resolve the CreditWatches in the first quarter of
2015, when it has more clarity regarding the impact of the
worsened economic environment on the industry and in particular
on the companies, including their operating performance, credit
metrics, and liquidity positions.

The negative implications mean S&P might lower the ratings upon
resolution of the CreditWatch, while developing implications mean
that S&P might affirm, lower, or raise the ratings upon
resolution of the CreditWatch.


VOLGOGRAD CITY: Moody's Lowers Issuer Rating to 'B1'
----------------------------------------------------
Moody's Investors Service has downgraded the ratings of seventeen
Russian regions and cities and three government-related issuers
and placed them on review for further downgrade.

Concurrently, Moody's placed the ratings of Moscow Oblast and
Mordovia Republic on review for downgrade, reflecting potential
deterioration of their credit profiles in an environment of
increased systemic risk.

These rating actions follow the weakening of Russia's credit
profile as captured by the downgrade of the sovereign government
bond rating to Baa3 (review for downgrade) from Baa2 (negative)
on January 16, 2015.

Specifically, Moody's has downgraded by one notch the ratings of
the cities of Moscow and St. Petersburg, SUE Vodokanal of St.
Petersburg and OOO Vodokanal Finance, OJSC "Western High-Speed
Diameter", Republic of Bashkortostan, Republic of Tatarstan,
Autonomous-Okrug (region) of Khanty-Mansiysk, Samara Oblast,
Chuvashia Republic, Krasnoyarsk Krai, Komi Republic, Oblast of
Omsk, Oblast of Nizhniy Novgorod, City of Krasnodar, City of
Omsk, City of Volgograd, Belgorod Oblast and Vologda Oblast. The
rating of Krasnodar Krai was downgraded by two notches. These
ratings are on review for further downgrade.

Ratings Rationale

-- Rationale For Downgrades On Ratings Of The City Of Moscow,
    City Of St. Petersburg, Sue Vodokanal Of St. Petersburg,
    Vodokanal Finance And Western High-Speed Diameter

The downgrades of the ratings on the cities of Moscow and St.
Petersburg reflect their strong institutional links with the
federal government and their lack of special status, which
prevents them from being rated above the sovereign. In addition,
both cities are exposed to market risks and ongoing deterioration
in the operating environment.

The downgrades of the issuer ratings of SUE Vodokanal of St.
Petersburg, the senior unsecured rating of OOO Vodokanal Finance,
and senior unsecured rating of OJSC Western High-Speed Diameter
reflect their status as government-related issuers that are fully
owned by the St. Petersburg government.

The downgrade of OJSC Western High-Speed Diameter's bond rating
reflects its link with the City of St. Petersburg and the
guarantee that the Russian government provides on its bond
principal payments. This guarantee covers overall principal
payments (including put options) and principal acceleration.

-- Rationale For Review For Downgrade On Ratings Of The City Of
    Moscow, City Of St. Petersburg, Sue Vodokanal Of St.
    Petersburg, Vodokanal Finance And Western High-Speed Diameter

The review for downgrade on the ratings of the cities of Moscow
and St. Petersburg reflects the cities' institutional and
macroeconomic linkages with the federal government and mirrors
the review for downgrade on the sovereign bond rating.

The review for downgrade on the ratings of SUE Vodokanal of St.
Petersburg reflects its strong institutional, financial and
operational linkages with the city of St. Petersburg.

The review for downgrade on the rating of OJSC Western High-Speed
Diameter mirrors the review for downgrade on the City of St.
Petersburg and the sovereign government bond rating.

-- Rationale For Downgrade On The Remaining 15 Regional And
    Local Governments' (RLGs') Ratings

The downgrade reflects the increase in systemic risks following
the weakening of Russia's credit profile, as captured in the
downgrade of the government bond rating. The higher systemic risk
is reflected in the deteriorating operating environment in Russia
as Moody's expects Russian GDP to contract by 5.5% in 2015 and 3%
in 2016. As a result, these 15 Russian RLGs will face increasing
pressure on their revenue base, as their corporate income tax
proceeds are expected to decline significantly in 2015, while
personal income tax will also likely reduce. In addition, higher
borrowing costs could potentially heighten refinancing and
liquidity risks, and negative pressure on federal government
finances will likely limit federal subsidies to RLGs.

Moody's downgrade of the ratings of the Republic of
Bashkortostan, the Republic of Tatarstan, and the Autonomous-
Okrug Khanty-Mansiysk reflects their exposure to increased
systemic pressures. In addition, these issuers have weaker
intrinsic strength relative to the cities of Moscow and St.
Petersburg.

The downgrade of the ratings of another 12 RLGs (Samara Oblast,
Krasnodar Krai, Krasnoyarsk Krai, Komi Republic, Chuvashia
Republic, Oblast of Belgorod, Oblast of Omsk, Oblast of Nizhniy
Novgorod, Oblast of Vologda, City of Krasnodar, City of Omsk, and
City of Volgograd) takes into account the inherent weaknesses in
their financial performances, which undermine their ability to
cope with a deterioration in the macroeconomic environment. Each
of the 12 regions is vulnerable to this systemic deterioration
through one or a combination of the following factors: (1)
moderate or low operating balances, translating into moderate or
weak flexibility of financial performance; (2) refinancing risk
and/or usually a high or rapidly growing debt burden; (3) modest
liquidity; and 4) in many cases, vulnerability of local economies
to domestic cycles, which implies earnings volatility.

The downgrades of Krasnodar Krai and Oblast of Belgorod also
reflect the significant deterioration of their performances
during the last several years, which will make them increasingly
vulnerable to the growing systemic risk. Such weaknesses are
reflected in the regions' poor budgetary performances and high
debt levels.

-- Rationale For Review For Downgrade On These Entities' Ratings

The decision to place these ratings on review for downgrade
reflects the growing systemic risks.

For the Republic of Tatarstan, Moody's also continues its review
initiated on December 22, 2014 following increased uncertainty
surrounding the ability of the Tatarstan government to address
the covenant breach of SINEK's US$250 million bond, for which it
has provided a guarantee. Moody's understands that some progress
has been made by the Republic as it recently provided a letter of
notice to the issuer stating its intention to increase the
guarantee on the bond. At the same time, the review continues to
focus on further implementation of Tatarstan's and SINEK
management's action plan to increase the guarantee. Any future
sharp FX rate dynamics will also be taken into consideration
during the review.

-- Rationale For Review For Downgrade On Ratings Of Moscow
Oblast And Mordovia Republic

The decision to place these ratings on review for downgrade
reflects the potential deterioration of these issuers' credit
profiles in an environment of increased systemic risk (in the
short term) which will likely outweigh the relative strength of
financial fundamentals of the Moscow Oblast and exhaust the
tolerance buffer against the sovereign downgrade of Russia for
Mordovia.

Both have been placed on review for downgrade, rather than
downgraded, as Moscow Oblast's rating includes (1) solid
financial fundamentals; and (2) a moderate probability of support
from the Russian government, while the rating positioning of the
Mordovia Republic demonstrates significant detachment from the
sovereign.

--Focus of the Review For Downgrade For All 17 RLGs And 3 GRIs

The review will focus on the impact of growing systemic risks and
deteriorating operating environment for Russian regions, as
reflected by the downgrade of the sovereign rating and its
placement on review for further downgrade. The conclusion of the
review would likely follow the conclusion of the review at the
sovereign level.

The review for downgrade on Tatarstan's rating will also focus on
the successful implementation of Tatarstan's and SINEK
management's action plan to increase the guarantee.

What Could Change The Ratings Up/Down

Given the review for downgrade of the sovereign rating, an
upgrade of regions' ratings is unlikely. If systemic pressures
abate, the ratings are likely to be confirmed, provided there is
no deterioration in RLGs' budget performances. Further
deterioration in the sovereign's credit quality could exert
downward pressure on Russian regions.

RATINGS AFFECTED

-- The Ratings Of The Following Twenty Issuers Were Downgraded
    And Placed On Review For Further Downgrade

Moscow, City of: the issuer ratings and backed senior unsecured
rating downgraded to Baa3 from Baa2 and placed on review for
downgrade.

St. Petersburg, City of: the issuer ratings and senior unsecured
rating downgraded to Baa3 from Baa2 and placed on review for
downgrade.

SUE Vodokanal of St. Petersburg: the issuer ratings downgraded to
Ba1 from Baa3 and placed on review for downgrade.

OOO Vodokanal Finance: the backed senior unsecured rating
downgraded to Ba1 from Baa3 and placed on review for downgrade.

OJSC Western High-Speed Diameter: the backed senior unsecured
rating downgraded to Ba2 from Ba1 and placed on review for
downgrade.

Bashkortostan, Republic of: issuer rating downgraded to Ba1 from
Baa3 and placed on review for downgrade.

Tatarstan, Republic of: issuer rating downgraded to Ba1 from Baa3
and remain on review for downgrade.

Khanty-Mansiysk AO: issuer rating downgraded to Ba1 from Baa3 and
placed on review for downgrade.

Samara, Oblast of: issuer rating downgraded to Ba2 from Ba1 and
placed on review for downgrade.

Krasnodar, Krai of: issuer and debt ratings downgraded to Ba3
from Ba1 and placed on review for downgrade.

Komi, Republic of: issuer rating downgraded to Ba3 from Ba2 and
placed on review for downgrade.

Krasnoyarsk, Krai of: issuer rating downgraded to Ba3 from Ba2
and placed on review for downgrade.

Chuvashia, Republic of: issuer and debt ratings downgraded to Ba3
from Ba2 and placed on review for downgrade.

Omsk, Oblast of: issuer rating downgraded to Ba3 from Ba2 and
placed on review for downgrade.

Nizhniy Novgorod, Oblast of: issuer rating downgraded to Ba3 from
Ba2 and placed on review for downgrade.

Belgorod, Oblast of: issuer and debt ratings downgraded to Ba3
from Ba2 and placed on review for downgrade.

Krasnodar, City of: issuer rating downgraded to Ba3 from Ba2 and
placed on review for downgrade.

Vologda, Oblast of: issuer rating downgraded to B1 from Ba3 and
placed on review for downgrade.

Omsk, City of: issuer rating downgraded to B1 from Ba3 and placed
on review for downgrade.

Volgograd, City of: issuer rating downgraded to B1 from Ba3 and
placed on review for downgrade.

-- The Ratings Of The Following 2 Issuers Were Placed On Review
For Downgrade

Moscow, Oblast of: issuer rating of Ba2 placed on review for
downgrade.

Mordovia, Republic of: issuer and debt ratings of B1 placed on
review for downgrade.

Specific economic indicators as required by EU regulation are not
applicable for these entities.

On January 16, 2015, a rating committee was called to discuss the
ratings of the Russian sub-sovereign entities. The main points
raised during the discussion were: The systemic risk in which the
issuers operate has materially increased.

The principal methodology used in rating Russia RLGs was Regional
and Local Governments published in January 2013. The principal
methodology used in rating Russia GRIs was Government-Related
Issuers published in October 2014.

The weighting of all rating factors is described in the
methodology used in this rating action, if applicable.



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


PA RESOURCES: To Write Down Assets; May Face Liquidation
--------------------------------------------------------
Oskar von Bahr at Reuters reports that PA Resources on Jan. 20
said the company will write down the value of its assets by
SEK2.1 billion (US$258.6 million) due to the plunge in oil prices
and may be forced to go into liquidation.

"The loss arising from the impairment charge will most likely
result in the company's shareholders' equity being less than one-
half of the registered share capital.  As a consequence, the
company's board of directors has resolved to prepare a balance
sheet for liquidation purposes," Reuters quotes PA as saying.

As a result of the writedowns, PA Resources is also in breach of
its bond covenants and said it will probably convene a
shareholder meeting to decide whether or not to raise capital to
continue its operations, Reuters relates.

PA Resources, as cited by Reuters, said it would try to defer
bond interest payments beyond February 2015 after breaching the
covenants for loans in Swedish and Norwegian crowns.

PA Resources is a Swedish oil and gas firm.  The company operates
in Tunisia, Republic of Congo (Brazzaville), Equatorial Guinea,
Britain, Denmark, the Netherlands and Germany.  It is producing
oil in West Africa and North Africa.



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


SUNRISE COMMUNICATIONS: S&P Puts 'B+' CCR on CreditWatch Positive
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B+' corporate
credit rating and issue ratings on Switzerland-based
telecommunications company Sunrise Communications Holdings S.A.
on CreditWatch with positive implications.

The CreditWatch placement follows the announcement by Sunrise on
Jan. 14 that it is planning an IPO on SIX Swiss Exchange.
According to Sunrise's announcement, the expected gross proceeds
from the primary offering are CHF1.35 billion, which Sunrise will
use to deleverage its balance sheet and materially reduce the
cost of debt.  Sunrise's plans to refinance all of its existing
debt with new bank loans and notes by Feb. 18, 2015, should also
help to materially reduce Sunrise's cost of debt.

The announced IPO could significantly strengthen S&P's assessment
of Sunrise's financial risk profile, which S&P currently assess
as "highly leveraged."  This will be the result of both a
meaningful initial improvement in Sunrise's credit metrics post-
IPO and the expected reduction in CVC's stake in Sunrise to well
below 80%.

"We currently forecast that Sunrise's leverage will decline to
slightly more than 3x in 2015, if the transaction is successfully
executed as planned.  We also anticipate that the transaction
will result in a meaningful improvement in Sunrise's interest
coverage, with cash interest coverage increasing to 9x-10x, pro
forma the annual reduction in the interest payment.  If we
consider these ratios to be sustainable, we estimate this will
result in a revision of Sunrise's financial risk profile to
"significant."  We anticipate that Sunrise's financial risk
profile will remain constrained by relatively low free cash flow
generation, due to the meaningful working capital required to
fund handset installments.  That said, we forecast an improvement
in free cash flow generation from 2015 (excluding delayed
spectrum payments) as capital expenditure (capex) is expected to
trend down due to meaningful coverage in Sunrise's 4G network,"
S&P said.

Sunrise's performance in 2014 has been in line with S&P's base-
case forecast.  Notably, revenues have recovered in the mobile
unit, as the effects of customer migration have diminished and
the mobile post-paid subscriber base continues to increase, in
part thanks to its new "freedom" offers.

S&P continues to view Sunrise's business risk profile as
"satisfactory."  This is primarily supported by its operations in
the wealthy and resilient service area of Switzerland, with
limited price sensitivity, and relatively attractive competitive
and regulatory landscape.  S&P sees Sunrise's well-invested
mobile network as a further key strength to its competitive
advantage.

S&P's base-case operating scenario for Sunrise assumes:

   -- Flat revenue growth in 2015, as it assumes growth in mobile
      service revenues will be offset by a significant decline in
      handset sales.  Margin increase of about 2% in 2015 due to
      a decline in the cost of handset sales.

   -- Capex to sales of 13% in 2015 (excluding the payment of
      postponed license liabilities) as investments in long-term
      evolution (LTE) network coverage decrease.

Based on these assumptions, S&P arrives at these credit measures:

   -- Funds from operations (FFO) to debt of about 10% in 2014
      and 2015, up from about 9% at year-end 2013;

   -- Debt to EBITDA of about 5.8x in 2014, declining to about
      5.5x in 2015 from 5.9x in 2013;

   -- An improvement in the above-mentioned core leverage ratios
      to about 25% and 3.2x, respectively, if the expected
      CHF1.35 billion is applied toward debt reduction and the
      remaining debt is refinanced.

S&P aims to resolve the CreditWatch in the first quarter of 2015,
on successful completion of the IPO and debt refinancing.

S&P will likely raise its long-term rating on Sunrise by a
maximum of three notches depending primarily on:

   -- The debt reduction and terms achieved at the completion of
      the transaction, and the consequent impact on Sunrise's
      credit metrics.

   -- S&P's assessment of Sunrise's financial policy after
      listing, and the medium term intention of its controlling
      shareholders, CVC.

Assuming that Sunrise successfully raises CHF1.35 billion to use
toward debt reduction, S&P expects to raise the final corporate
rating to 'BB' or 'BB+'.

The CreditWatch positive placement on the issue ratings
highlights S&P's expectation that it would raise the issue
ratings on the group's debt facilities, as a result of an upgrade
of the issuer. The extent of the upgrade will depend on the
capital structure post the transaction, in particular the amount
of secured and unsecured debt as well as S&P's revised recovery
assumptions.



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


UKRAINE: Rules Out Debt Restructuring; Bailout Talks Ongoing
------------------------------------------------------------
Agnes Lovasz and Daryna Krasnolutska at Bloomberg News report
that Ukraine isn't planning to restructure its debt and is
working with the International Monetary Fund on a "sustainable
program" to fight a recession and sinking foreign reserves.

"We are a good a borrower and we want to follow the credit
history of Ukraine and therefore this discussion on restructuring
is not on the table now," Bloomberg quotes Vladyslav Rashkovan as
saying on Jan. 19 in an interview in Vienna.  Debt restructuring
is "absolutely".

Ukraine is grappling with sagging reserves and the worst economic
contraction since 2009 after nine months of battling pro-Russian
insurgents in the easternmost Donetsk and Luhansk regions,
Bloomberg relates.  The unrest left the hryvnia down 48% against
the dollar last year and prompted the government to seek
financial help on the top of a US$17 billion loan from the IMF,
Bloomberg states.

The government is seeking to unlock the next tranche of the IMF
loan, with a mission from the Washington-based lender in Kiev
since Jan. 8, Bloomberg relays.

"We expect there will be a positive decision" from the IMF's
board in February, Mr. Rashkovan, as cited by Bloomberg, said.

According to Bloomberg, Goldman Sachs Group Inc. said a Ukrainian
debt writedown may erase 70 percent of its bonds' value, while
Barclays Plc said Ukrainian restructuring is probably
"unavoidable."



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


DIXON SECURITY: Goes Into Administration
----------------------------------------
Insider Media Limited reports that a Bristol-based security
company has gone into administration with all 17 members of staff
losing their jobs.

Gilbert Lemon and Paul Wood of accountancy and investment
management group Smith & Williamson were appointed joint
administrators of Dixon Security Ltd on January 9, 2015,
according to Insider Media Limited.

The report notes that the business has ceased trading after
experiencing severe cash flow difficulties.

The report relates that in a statement, the administrators at
Smith and Williamson said: "As a result of the administration,
all staff members have very unfortunately been made redundant.
Smith & Williamson is supporting the staff in making their claims
for financial support from the Redundancy Payment Service."

The assets of the business, which include more than 30 thermal
imaging mobile sentry tower cameras, are available to purchase,
the report notes.

The company had supplied both static guards and mobile security
and covered areas including events and retail, the report adds.


MARUSSIA F1: Hopes Boosted After Auction Cancelled
--------------------------------------------------
Associated Press reports that Marussia Formula One Team's hopes
of competing in this year's Formula One championship have been
boosted after a planned auction to sell the team's remaining
assets was cancelled.

Marussia missed the final three races of last year's campaign
after heavy debts forced it into administration in October, along
with Caterham, as spiraling costs hit small teams hard in F1,
according to Associated Press.

Marussia was provisionally entered for the 2015 season by motor
sport's governing body, the FIA, under the name of Manor ahead of
Wednesday's deadline for official entries, the report notes.

British-based GA European Valuations (GAEV), which conducted an
auction in mid-December when items such as steering wheels and
racing suits were sold, cancelled another auction planned for
Wednesday, and it has not rescheduled, the report relates.

Marussia Formula One Team is based in Banbury.


REX HOTEL: Falls Into Administration Due to Spiralling Debts
------------------------------------------------------------
The Journal reports that a landmark North Tyneside hotel has
fallen into administration, just weeks after facing a winding up
petition from the local authority.

The Rex Hotel in Whitley Bay entered into administration due to
"spiralling debts and difficult trading conditions," according to
The Journal.

Administrators Steven Ross and Ian Kings were appointed to the
business on January 6, the report notes.

The report relates that their appointment follows a winding up
petition against the business, submitted to Newcastle upon Tyne
County Court by North Tyneside Council.

The council declined to comment on the reasons behind the winding
up petition which was issued at the beginning of December.

Baker Tilly confirmed the property asset was sold pre-
appointment, and that the administrators have entered into a
licence agreement with the purchaser of the building to allow
trading to continue under the hotel's new ownership, the report
notes.  All staff have retained their jobs following the move.

Popular Whitley Bay night spot Deep is also part of the hotel.


TEN SQUARE: Business as Usual as Hotel Enters Administration
------------------------------------------------------------
belfasttelegraph.co.uk reports that a Belfast hotel based in a
historic city center building has been placed in administration
it has been confirmed.

Ten Square on the corner of Linenhall Street behind City Hall
will remain open while administrators from business advisors EY
review its financial affairs, according to
belfasttelegraph.co.uk.

"The hotel will continue to operate business as usual," said a
statement from the firm.  All events booked with the hotel will
go ahead and deposits paid will be honored," the hotel said.

The 23-bedroom boutique hotel, which bears a blue plaque in
honour of former Lord Mayor and philanthropist Sir Otto Jaffe
whose linen business was based in the building, opened in 2,000
and is presently owned by property developer John Miskelly.


                            *********

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 2015.  All rights reserved.  ISSN 1529-2754.

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

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

The TCR Europe subscription rate is US$775 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each.  For subscription information,
contact Peter Chapman at 215-945-7000 or Nina Novak at
202-362-8552.


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