TCREUR_Public/150520.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

            Wednesday, May 20, 2015, Vol. 16, No. 98



AREVA SA: EDF Chief Defends Full Takeover Proposal


GEORGIA: S&P Affirms 'BB-/B' Sovereign Credit Ratings


GREECE: Juncker No Involvement in Compromise Bail-Out Deal


OT BANK: S&P Affirms 'BB/B' Counterparty Ratings, Outlook Stable


AVANGARD POLIS: Placed Under Provisional Administration
CB AKADEMRUSBANK: Bank of Russia Submits Evidence to Prosecutors
KUPECHESKOE IC: Bank of Russia Revokes Insurance License
METALLOINVEST JSC: Fitch Affirms 'BB' IDR, Outlook Stable


BANCAJA 3: Fitch Affirms 'CCsf' Rating on Class C Notes


TURK HAVA: S&P Lowers CCR to 'BB' Following Turkey Downgrade

U N I T E D   K I N G D O M

AUSTIN REED: Obtains Financial Backing From Alteri


* TLAC Rule to Build Trust Among Regulators in Bank Wind-Down



AREVA SA: EDF Chief Defends Full Takeover Proposal
Michael Stothard at The Financial Times reports that Jean-Bernard
Levy, the chief executive of French state-controlled utility EDF,
has defended the "industrial logic" of a full takeover of Areva's
nuclear reactor business, saying that an offer would be made
within days.

In his first public comments on the issue, Mr. Levy spoke out in
favor of a more radical deal to save the state-controlled nuclear
supplier, which reported a EUR4.8 billion loss last year, the FT

Areva has fallen victim to the sharp slump in global demand for
new reactors that followed the 2011 Fukushima disaster in Japan,
the FT discloses.  It is also grappling with fierce competition
from US, Russian and South Korean companies, the FT states.  The
group has not sold a new nuclear reactor since 2007, the FT notes.

According to the FT, Mr. Levy told French daily Le Figaro that an
offer would be made for a complete takeover of Areva NP, the
division that designs, manufactures and maintains nuclear reactors
and also employs about 17,000 people worldwide.

He confirmed that a second, more limited offer, said to be
preferred by the Areva management, would also be made to bring
1,200 Areva engineers who specialize in nuclear safety into EDF,
the FT relays.

The state, which owns 87% of Areva and 85% of EDF, would be able
to choose between the two, the FT says.

"It is up to the state, which is the majority shareholder of EDF,
and Areva to decide," Mr. Levy, as cited by the FT, said.

As reported by the Troubled Company Reporter-Europe on May 8,
2015, The Financial Times related that Areva will be cutting 6,000
jobs or 14% of its global workforce in over three years as options
for a government-backed rescue package begin to narrow.  Areva,
which reported a EUR4.8 billion loss last year, said it was also
lowering wages for surviving staff in an attempt to deliver the
bulk of a EUR1 billion cost reduction target, the FT disclosed.

Areva SA is a France-based company that offers technological
solutions for nuclear power generation.  The Company operates
five business divisions, Mining engaged in uranium mines
exploration and operation activities; Front End, which converts
and enriches the uranium and designs the fuel for the nuclear
reactors; Reactors and Services, which includes activities of
design, construction, propulsion and research of reactors, as
well as maintenance of nuclear power plant; Back-End, which
recycles used fuel and provides transport, clean-up and
dismantling services and Renewable Energy, specialized in
development of wind energy, bioenergy, solar power and hydrogen
power solutions.  The Company is present in France, Asia-Pacific
Region, Americas, Africa and Middle East Region through its
subsidiaries, including Areva Mines and KATCO, among others.  The
major shareholder of the Company is Commissariat a l'Energie


GEORGIA: S&P Affirms 'BB-/B' Sovereign Credit Ratings
Standard & Poor's Ratings Services affirmed its 'BB-/B' long-and
short-term foreign and local currency sovereign credit ratings on
the Government of Georgia.  The outlook remains stable.


Georgia has grown at an average of nearly 6% per year for the past
decade, which illustrates resilience, particularly given the 2008
conflict with Russia, one of its main economic partners.  S&P
believes Georgia's longer-term growth prospects are positive and
the country will continue to pull in significant amounts of
foreign direct investment (FDI), which supports the ratings.  A
still moderate government debt burden and controlled public
finances also underpin the ratings.

That said, since S&P's last review, Georgia has faced a set of
intensifying external pressures and, in S&P's view, a continuation
of heightened domestic political disruption.  These factors have
exacerbated existing external weaknesses and caused an increase in
the government's stock of debt.  S&P expects that the significant
depreciation of the Georgian lari against the U.S. dollar will
worsen the banking sector's asset quality (because 60% of system
assets are denominated in foreign currency and the majority of
borrowers earn in local currency) and lead to lower credit growth.
As a result, S&P has significantly lowered its growth assumptions
for 2015 and 2016 by about 2.3% less each year.

One of Georgia's main weaknesses is its external position, as
illustrated by persistently high current account deficits that
have averaged 12% of GDP between 2008 and 2014, and the large
stock of external debt to narrow net external debt has averaged
more than 70% of current account receipts over the same period.
Georgia has faced external pressure since the war in Ukraine
erupted, which was followed by a sharp fall in oil prices.  The
resulting contraction in Russian growth has lowered trade demand
throughout the Commonwealth of Independent States (CIS; Georgia's
main export market, accounting for an average of 45% of total
exports between 2008 and 2014).  Although S&P anticipates that FDI
will hold, the growing external imbalance will probably create a
need for financing with increased debt.  This, in turn, is likely
to weaken Georgia's net external debt position as a proportion of
now much lower current account receipts.  S&P consequently expects
that Georgia's current account deficit will widen to about 12% of
GDP during 2015, with further downside potential if import growth
doesn't reduce faster than the 4% drop in the first quarter of
2015.  Data from the first quarter of 2015 shows an average
decline of 27% per month in export growth, and S&P assumes a 20%
contraction over the full year.  Another key source of foreign
currency earnings comes from remittances --mainly from Russia, but
also Greece and Ukraine -- which we expect will decrease and
remain between 1% and 2% of GDP, below the past five-year average
(9% of GDP).

However, S&P projects that regional growth will improve during
2016, alongside an increase in oil prices.  Therefore, S&P views
the likely marked contraction in export growth over 2015 to be
temporary and that the denominator effect on narrow net external
debt from temporarily lower current account receipts will subside
as import demand increases alongside regional growth.  S&P notes
that about 40% of gross external debt belongs to the public
sector, which is at concessional rates and with a long average
maturity (22 years).  S&P also believes that the current
International Monetary Fund (IMF) program would be expanded to
provide extra external support if needed.

The lari has depreciated by about 30% versus the U.S. dollar since
August 2014, as lower oil prices led to a weakening of the ruble,
which consequently fed through to smaller regional currencies,
including the lari.  This has happened through trade channels, but
also through lower remittance flows and fewer tourists, all of
which are key drivers of foreign exchange for Georgia.  The high
proportion of foreign currency-denominated debt to borrowers who
earn in local currency will cause repayment pressures, which could
also hamper private sector consumption.  S&P expects that the
banking sector's asset quality will deteriorate as a result and
that credit growth will slow.  Domestically driven growth is
sensitive to political instability, which S&P believes has
remained high over the past few years and has been highlighted by
the departure of over one-third of cabinet ministers since
November 2014.  Looking toward 2016, S&P expects accelerated
growth, aided by an improvement in the Russian economy, but S&P
notes the cyclical slowdown of investment and consumption in
election years (next election is scheduled for October 2016).

S&P has lowered its growth expectations (see table 1) for 2015 and
2016, mainly as a result of lari depreciation and much weaker
external demand from key regional trading partners Russia,
Ukraine, Azerbaijan, and Turkey.  S&P also expects that confidence
factors, together with cyclically weaker domestic consumption and
investment linked to the electoral cycle, will hamper growth.  S&P
anticipates that the public sector's capital expenditures will
remain at budgeted levels and that investments will continue to
rise, albeit at a much lower pace than in 2014.  S&P also notes
that the impact of currency depreciation against the U.S. dollar
is not being fully passed through into the real economy, partly
because the lari remained relatively constant compared with the
currencies of regional trade partners.  S&P also understands that
investments from the privately funded Co-Financing Fund will start
to disburse during 2015, after numerous delays in the past.  S&P
expects that this dip in growth will be only temporary and that
Georgia's long-term potential remains strong, as demonstrated by
increasing FDI figures.  Substantial potential lies in the
country's hydroelectricity generating capacity, vast and
unexploited agricultural land, as an increasingly popular tourist
destination, and as a strategic point as a trade route from China
to Europe, which could include the construction of a new deep
water port.

Over 2015, S&P expects that the fiscal deficit will widen, but
only moderately (under 4% of GDP), as revenues will likely be
squeezed.  This is in line with lower growth as well as with the
government's pledge to stick to its budgeted capital expenditures
and incremental increases in social expenditures.  S&P expects
that the government will implement measures to stimulate revenues,
if needed, such as the sale of 4G licenses and assets from its
real estate portfolio.  S&P expects that deficits will mainly be
narrowed by domestic debt issuance.

Still, given that 80% of the government's debt stock is in foreign
currency -- mainly U.S. dollars -- the impact of exchange rate
depreciation, in S&P's opinion, will cause an increase of 5% of
GDP in government debt.  Also, S&P anticipates that the stock, on
a net basis, could increase to 40% of GDP over 2015 and 2016.  S&P
does not expect such a significant depreciation to be repeated.

S&P views Georgia's banking system as well capitalized and liquid.
However, S&P anticipates that asset quality will deteriorate,
linked to repayment difficulties for those borrowers who earn in
local currency but hold U.S. dollar-denominated debt.
Dollarization is high in Georgia, and 60% of loans are in foreign
currency.  Of this stock, the IMF estimates that 90% of borrowers
will be unhedged.  Despite the major currency depreciation, S&P
understands that banks have received few requests for
restructuring arrangements, although S&P expects this will
increase throughout the year.  S&P don't anticipate that this
deterioration will result in bank recapitalization needs to be
provided for by the government.  S&P notes that nonresident
deposits are subject to high liquidity requirements and that they
have continued to increase over 2015 and account for 15% of

The National Bank of Georgia has countered lari depreciation with
US$160 million over 2015 (representing 7% of usable reserves at
the end of 2014), selling dollars to smoothen spikes in the
exchange rate.  However, the significant depreciation shows that
the authorities are allowing an adjustment to take place, which
should help Georgia to maintain its regional competitiveness.  S&P
expects that inflation will increase throughout the year as higher
debt service costs are passed through to customers.

Since November 2014, seven cabinet members have left their posts
in the ruling Georgian Dream coalition, illustrating internal
disagreements and political instability.  As per the Georgian
constitution, the resignation of one-third of the ministers
triggers a vote of no confidence.  At the time of publication,
however, S&P understands that no changes had been made to the
coalition, as it has the majority of the 150 seats in Parliament.
S&P views these events as disruptive and expect that political
instability will likely remain elevated.  This is a contrast
against a backdrop of relative stability since 2007, particularly
given that the 2012 parliamentary elections saw a peaceful
transfer of power and respect for democracy.


The stable outlook reflects S&P's expectation that the current
external pressures will dissipate and that Georgia's relatively
healthy fiscal position and strong long-term growth potential will
provide space for the authorities to manage slower growth.

S&P could lower the ratings if Georgia's external financing needs
increase markedly more than we currently expect, thereby
increasing external debt, particularly if prospects for FDI
deteriorate at the same time.

S&P could also consider lowering the ratings if domestic political
instability materially reduces the predictability and coherence of
policy-making and long-term growth prospects, or if the regional
slowdown is prolonged.

S&P could raise the ratings if external pressures subside and
support a recovery in exports, leading to growth levels stronger
than S&P's current base-case estimates.  At the same time,
improved prospects for investment and FDI, while maintaining
fiscal discipline and policy continuity, could also support a
positive rating action.

In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable.  At the onset of the committee, the chair
confirmed that the information provided to the Rating Committee by
the primary analyst had been distributed in a timely manner and
was sufficient for Committee members to make an informed decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.

The committee agreed that all key rating factors were unchanged.

The chair ensured every voting member was given the opportunity to
articulate his/her opinion.  The chair or designee reviewed the
draft report to ensure consistency with the Committee decision.


                                     Rating         Rating
                                     To             From
Georgia (Government of)
Sovereign credit rating
  Foreign and Local Currency         BB-/Stable/B   BB-/Stable/B
Transfer & Convertibility Assessment
  T&C Assessment                     BB             BB
Senior Unsecured
  Foreign Currency                   BB-            BB-
Commercial Paper
  Local Currency                     B              B


GREECE: Juncker No Involvement in Compromise Bail-Out Deal
According to The Telegraph's Mehreen Khan, Jean-Claude Juncker,
the president of the European Commission, has moved to deny
reports he has intervened in Greece's bail-out negotiations, and
stressed EU leaders would not agree a bail-out deal at a summit at
the end of this week.

Mr. Juncker had proposed a reduction in Troika-imposed budget
targets and a release of emergency cash to prevent Greece going
bankrupt in the summer, The Telegraph says, citing a leaked
document in Greek media on May 18.

The reported "plan" to break Greece's deadlock included a
relaxation of Athens' primary budget surplus target to 0.75% this
year -- half that previously sought by Greece's paymasters, The
Telegraph notes.

According to The Telegraph, the proposals, which provided more
leeway to the Greek government than tough conditions demanded by
its creditors over the last 110 days, also included releasing EUR5
billion to the government in June, and delaying a number of fiscal
austerity measures until October.

Despite being more "personally involved" in Greece's talks,
Mr. Juncker denied he had put forward the compromise deal, The
Telegraph relays.

He also dismissed Greek hopes that bail-out cash could be released
following a summit of EU leaders in Riga on May 14, adding that
"the end of May, start of June" provided a more realistic horizon,
The Telegraph notes.

Speaking in Athens on May 18, Greek prime minister Alexis Tsipras,
as cited by The Telegraph, said negotiations with creditors were
reaching their "final stages".

He maintained the government would not agree to any plans to cut
pensions and wages but said his government was willing to "accept
compromises" to reach a deal should some form of bridging finance
be agreed, according to The Telegraph.

Mr. Tsipras also repeated calls for debt restructuring as part of
any agreement with Greece's lenders, The Telegraph notes.

Indicating a potential split among official creditors, the leaked
memo also noted objections to the plan from the International
Monetary Fund, raising concerns the Fund was willing to withdraw
its support for Greece, The Telegraph discloses.


OT BANK: S&P Affirms 'BB/B' Counterparty Ratings, Outlook Stable
Standard & Poor's Ratings Services said that it had revised its
outlooks on Hungary-based OTP Bank PLC, OTP Mortgage Bank, and
Magyar Takarekszovetkezeti Bank ZRt. (Takarekbank) to positive
from stable.  At the same time, S&P affirmed its 'BB' long-term
and 'B' short-term counterparty credit ratings on OTP Bank and OTP
Mortgage Bank, and S&P's 'BB-' long-term and 'B' short-term
counterparty credit ratings on Takarekbank.

S&P's rating actions on these banks follow S&P's review of
economic and industry risks for Hungarian banks and S&P's upgrade
of Hungary on March 20, 2015.

S&P thinks that domestic real estate prices and the ensuing asset
quality problems for banks have largely bottomed out in Hungary.
Conversion of housing loans in foreign currency to the Hungarian
forint, and the government's upcoming setup of an asset management
company could unlock pent-up credit demand and help decrease
nonperforming loan numbers.  In addition, S&P thinks households'
appetite for credit will rise in the absence of any further debt
relief programs.

At the same time, S&P expects a more benign economic operating
environment for Hungary's banks, underpinned by low-single-digit
GDP growth and a stabilizing economy in the next couple of years.

"We have therefore revised our assessment of economic risk for
Hungarian banks to '8' from '9' under our Banking Industry Country
Risk Assessment (BICRA) methodology.  We now view the trend for
economic risks in Hungary as positive.  At the same time, we have
maintained our assessment of industry risk at '7', but now regard
the trend as stable versus negative previously.  We expect the
Hungarian government will pursue a more market friendly policy
toward domestic and foreign-owned banks following its commitments
-- albeit nonbinding -- included in a memorandum of understanding
signed with the European Bank for Reconstruction and Development
early this year.  One of these is the promise to decrease the
heavy bank tax levy to a level in line with EU norms through 2016-
2019.  We expect this to alleviate pressure on banks' earnings and
improve foreign investors' sentiment.  We continue to classify
Hungary in our BICRA group '8'," S&P said.

"We affirmed our ratings on OTP Bank because our revised economic
risk assessment has no immediate impact on our anchor (the
starting point for assigning an issuer credit rating to a bank) or
our 'bb' stand-alone credit profile (SACP) on the bank, given that
its domestic loans account for only 45% of its total loans.  About
15% of OTP Bank's cross-border operations are in Russia and
Ukraine, which we view as very high risk economies.  We think OTP
Bank's operations in these countries will remain loss-making and
weigh on its bottom-line earnings in 2015, owing to our
anticipation of high credit costs and an absence of new lending.
We think the risks of operating in Russia and Ukraine will
counterbalance the benefits of subsiding economic risks in
Hungary," S&P added.

S&P equalizes the ratings on OTP Mortgage Bank with those on OTP
Bank because of its status as a "core" subsidiary.  S&P's view of
its status is based on its full ownership by and very close
organizational and operational integration with OTP Bank.

S&P affirmed its ratings on Takarekbank because, despite the
reduced economic risk in Hungary and the bank's strong funding and
liquidity, it has diminished its capitalization because it will be
managed within Hungary's savings bank cooperatives after it
completes its closer integration within the group.  S&P's
assessment of capital and earnings as "very weak" reflects S&P's
view of Takarekbank's limited capitalization and capacity to build
up capital internally, owing to weak earnings.  S&P recognizes
that the gradual strengthening of solidarity mechanisms between
the savings banks and Takarekbank ultimately reduces solvency
risks for the central organization.  Nevertheless, Takarekbank's
stand-alone capital position remains very weak and is unlikely to
improve over the next few quarters.  S&P's long-term rating on the
bank includes three notches of uplift to reflect its
"strategically important" status to the savings cooperatives
group, which directly and indirectly owns most of Takarekbank.

"The positive outlook on OTP Bank and OTP Mortgage Bank takes into
account our expectation of a more benign operating environment in
Hungary, and to a certain extent, in the rest of Central and
Eastern Europe.  We could raise our ratings on the two banks by
one notch, if in the next 12 months, we concluded that conditions
in the domestic real estate market and the purchasing power of
households had improved, while credit demand picked up, leading to
less credit risks and better earnings for Hungarian banks.
Conversely, if economic risks for Hungarian banks don't decrease
as we currently anticipate over our outlook horizon, we could
revise the outlook on OTP Bank to stable.  An outlook change to
stable could also result from a scenario in which credit risks in
Russia and Ukraine remain exceptionally elevated and are
accompanied by slower economic recovery or credit growth in
Hungary than we currently expect.  Trends in Russia and Ukraine
remain a key rating component, and depending on how conditions
evolve, we could consider either a positive or negative rating
action on OTP Bank," S&P noted.

The positive outlook on Takarekbank reflects the improving
economic environment in Hungary, and its expected tighter
integration into the group of Hungarian savings bank cooperatives.
Such integration would result in the bank operating in a more
integral business within the savings cooperatives' group's
strategy.  S&P also thinks it would create stronger risk
management, and harmonized marketing, products, and information
technology systems, as well as joint and several liability, across
the savings cooperatives group.

Hungary                          To                 From

BICRA Group                      8                  8
Economic risk                   8                  9
   Economic resilience           5                  5
   Economic imbalances           4                  5
   Credit risk in the economy    5                  5
  Trend                          Positive           Stable

Industry risk                   7                  7
   Institutional framework       5                  5
   Competitive dynamics          3                  3
   Systemwide funding            5                  5
  Trend                          Stable           Negative
*Banking Industry Country Risk Assessment.

Outlook Action; Ratings Affirmed
                                To              From
Counterparty Credit Rating
  Foreign and Local Currency    BB/Pos./B       BB/Stable/B
Senior Unsecured
  Foreign and Local Currency    BB              BB
Short-Term Debt
  Foreign and Local Currency    B               B

OTP Mortgage Bank
Counterparty Credit Rating
  Foreign and Local Currency    BB/Pos./B      BB/Stable/B

Magyar Takarekszovetkezeti Bank ZRt.
Counterparty Credit Rating
  Foreign and Local Currency    BB-/Pos./B      BB-/Stable/B


AVANGARD POLIS: Placed Under Provisional Administration
By its Order No. OD-1090, dated May 18, 2015, the Bank of Russia
took a decision to appoint from May 18, 2015 a provisional
administration to the closed joint-stock company Insurance Company
Avangard Polis.

The decision to appoint a provisional administration was taken due
to the improper execution of solvency recovery plan by the

The powers of the executive bodies of the Company are suspended.

Natalia Biryukova, receiver, member of non-profit partnership
Managers and Receivers Association, has been appointed as a head
of the provisional administration of the Company.

CB AKADEMRUSBANK: Bank of Russia Submits Evidence to Prosecutors
The provisional administration of CB AkademRusBank LLC appointed
by Bank of Russia Order No. OD-190, dated January 29, 2015, due to
the revocation of its banking license, encountered a considerable
obstruction to its activity starting the first day of performing
its functions.

The management of CB AkademRusBank failed to submit title
documents for loans totaling more than RUR1 billion, which
indicates an attempt to conceal documented evidence of the bank
assets' diversion.  Besides, the provisional administration
established facts of loans totaling RUR590 million issued by the
bank while it experienced solvency problems.  Those loans were
used to repay other earlier issued loans, which may prove the
concealment of operations aimed at diverting assets.

As a result of the inspection held, the provisional administration
established that the value of the bank's property did not exceed
RUR179.4 million with the value of its liabilities reaching
RUR767.7 million.  Therefore, on March 20, 2015, the Arbitration
Court of Moscow made a ruling to recognize CB AkademRusBank as
insolvent (bankrupt) and initiate bankruptcy proceedings.  The
state corporation Deposit Insurance Agency was approved as a

The Bank of Russia submitted the information on the financial
operations of the former managers and owners of CB AkademRusBank
bearing the evidence of the criminal offense to the Prosecutor
General's Office of the Russian Federation, the Ministry of
Internal Affairs of the Russian Federation and the Investigative
Committee of the Russian Federation for consideration and
procedural decision making.

KUPECHESKOE IC: Bank of Russia Revokes Insurance License
The Bank of Russia on May 14 revoked the insurance and reinsurance
license from Insurance Company Kupecheskoe, limited liability

The decision is taken due to failure committed by Kupecheskoe,
limited liability company, to eliminate violations of the
insurance legislation in due time, which served as a ground for
the suspension of the insurance and reinsurance licenses, i.e.
failure to properly implement Bank of Russia directions concerning
financial stability and solvency.  The decision becomes effective
as of the day of its publication in the Bank of Russia Bulletin.

Due to the license revocation, Kupecheskoe, limited liability
company, shall be obliged:

   -- to take a decision on terminating insurance activity
      according to the legislation of the Russian Federation;

   -- to fulfill obligations arising out of insurance
      (reinsurance) contracts, and also to pay insurance benefits
      due for occurred insured events;

   -- to transfer obligations assumed under insurance
      (reinsurance) contracts and (or) to terminate such

Within a month's period from the effective date of the decision on
license revocation, Kupecheskoe, limited liability company, shall
notify insured persons on the license revocation, early
termination of insurance (reinsurance) contracts and (or) transfer
of obligations assumed under insurance (reinsurance) contracts to
another insurer.

METALLOINVEST JSC: Fitch Affirms 'BB' IDR, Outlook Stable
Fitch Ratings has affirmed Russia-based JSC Holding Company
Metalloinvest's Long-term Issuer Default Rating (IDR) at 'BB'. The
Outlook is Stable.

The affirmation reflects the expected deleveraging despite a weak
price environment in iron ore and steel products. The company's
strong business profile and low production costs provide healthy
positive free cash flow (FCF) generation and resilience to market
price volatility. The company's liquidity position was comfortable
at end-2014, and Fitch understands that the company is actively
addressing its USD1.3 billion maturities in 2016, which include
USD0.7 billion of Eurobonds.


Continued Deleveraging

The company reduced its total debt in 2014 by USD1.2 billion to
USD4.7 billion and is committed to continue deleveraging. The
company generated positive FCF of USD1 billion in 2014 despite the
weak price environment. Fitch expects the company to remain FCF
positive during 2015-2018 although the absolute amount of cash
flow is expected to decline due to a decline in profitability.
Fitch expects the company's funds from operations (FFO) adjusted
leverage to slightly rise to around 3.0x at end-2016 but to reduce
to 2.2x at end-2018.

Fitch expects further iron ore price softening, but the company's
profitability to remain strong (32% EBITDA margin in 2015 and
27.9% in 2016), partly due to domestic currency weakness.

Steel Segment Improvement

As Fitch expected, Metalloinvest's steel segment demonstrated a
material improvement after the restructuring program at the Ural
Steel plant (closing an inefficient open hearth furnace) in 2013.
Despite the weak price environment, the steel segment posted
EBITDA of USD424 million vs negative EBITDA of USD24 million in
2013. Fitch expects the performance of the steel segment to
decline in 2015 as a result of weak prices for steel products and
pig iron in both export and domestic markets. The negative effect
of softer prices will be compensated to some extent by the weaker
domestic currency and low iron ore prices.

Key Investment Projects

Fitch expects Metalloinvest's annual capital spending to be around
USD400 million-USD500 million during 2015-2017 as two major
investment projects will be realised: the construction of a 5mtpy
pellet plant number 3 at MGOK (total capex of USD450 million); and
the construction of a 1.8mtpy HBI-3 plant at LGOK (total capex of
USD650 million). In case of prolonged weakness in iron ore prices,
the company retains the flexibility to delay the implementation of
some of the projects, although given they are near completion, the
opportunity costs of doing so are rising.

Norilsk Nickel Stake a Source of Liquidity

In 2011 Metalloinvest acquired 4% in Norilsk Nickel for USD2.2
billion. In late 2012, Norilsk Nickel shareholders agreed a new
dividend policy that covers the debt raised for the stake
acquisition. Norilsk Nickel's share buyback in 2013 automatically
increased Metalloinvest's share to 5% from 4%. Norilsk Nickel's
dividends brought in USD150 million in 2013 and USD121 million in
2014 to Metalloinvest. In late 2014, Metalloinvest disposed of
1.8% of its 5% stake using USD588 million proceeds to repay RUB25
billion bonds due in 1Q15. The remaining 3.2% stake is expected to
bring in USD100 million in 2015-2016 and USD80 million in 2017+ as

Udokan Project Not the Base Case

Fitch does not expect Metalloinvest to participate in the
development of the Udokan copper project. If Udokan was developed
by Metalloinvest, it could threaten its deleveraging path and
worsen its financial profile.

Corporate Governance

Metallonvest is a private company with corporate governance
broadly in line with other Russian corporates. The country's
overall weak standards of governance and lack of legal safeguards
are constraints on the ratings. As a result, Fitch continues to
notch down the company's ratings by two notches.

The absence of a stated dividend policy, and the use of
intercompany loans between Metalloinvest and its owner as an
alternative means of temporarily up-streaming cash to the USM
group are risks. These are balanced by the group's track record of
responsible financial management and commitment to, and history
of, deleveraging.


Metalloinvest's end-2014 liquidity position was strong with USD0.5
billion of cash in hand and USD0.6bn of undrawn committed bank
facilities compared with USD643m of short-term borrowings.
However, 2016 will see a spike in maturities of USD1.3 billion,
including the USD0.7 billion Eurobond repayment in 3Q16. This may
require partial refinancing, although we understand the company is
already addressing this.

In need, the company's 3.2% stake in Norilsk Nickel, worth USD0.9
billion, represents a potential source of liquidity.


Fitch's key assumptions within our rating case for the issuer

  - Iron ore price assumptions are in line with Fitch price deck:
    USD50/t in 2015 and 2016, USD60/t in 2017 and USD70/t in

- 20% YoY price decline in steel products in 2015 with 2% annual
   recovery afterwards.

- Average RUR/USD exchange rate of 57.9 in 2015 and 55


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

  - Further deleverage resulting in FFO adjusted gross leverage
    sustainably below 2.0x and FFO fixed charge cover ratio
    sustainably above 8.0x.

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

  - EBITDAR margin below 25% on a sustained basis.

  - Related-party transactions with a major shareholder that are
    detrimental to the company's liquidity.

  - FFO adjusted gross leverage sustainably above 3.0x and FFO
    fixed charge cover sustainably below 6.0x

  - Failure to take action to address 2016 maturities by end-2015


JSC Holding Company Metalloinvest

Foreign currency long-term IDR: affirmed at 'BB'; Outlook Stable
Senior unsecured rating: affirmed at 'BB'
Local currency long-term IDR: affirmed at 'BB'; Outlook Stable
National long-term rating: affirmed at 'AA-(rus)'; Outlook Stable

Metalloinvest Finance Limited

Senior unsecured rating affirmed at 'BB'


BANCAJA 3: Fitch Affirms 'CCsf' Rating on Class C Notes
Fitch Ratings has revised the Outlook on FTPYME Bancaja 3, FTA to
Stable and affirmed the ratings, as follows:

  Class C (ISIN ES0304501044): affirmed at 'Bsf'; Outlook Revised
  to Stable from Negative

  Class D (ISIN ES0304501051): affirmed at 'CCsf'; Recovery
  Estimate 0%

FTPYME Bancaja 3, FTA, is a granular cash flow securitization of a
static portfolio of secured and unsecured loans granted to Spanish
small- and medium-sized enterprises by Bancaja.


The affirmation and the Outlook revision on the notes reflect the
stable performance of the transaction over the past one year. The
class B notes paid in full on December 2014 and the class C notes
have since amortized by EUR1.7 million. This has increased credit
enhancement on the class C notes to 28.5% from 15.9%.

The reserve fund is fully depleted and there is a principal
deficiency ledger (PDL) balance of EUR949,000 (down from EUR2.6
million 12 months ago). There are no funds which could be used to
mitigate the interruption of payments to the noteholders caused by
a default of the servicer Bankia (BBB-/Negative/F3).

The portfolio is highly concentrated with top 10 obligors
accounting for 30.6% of the portfolio and the largest industry,
real estate, comprising 39.2% of the portfolio. It is also
unlikely that the interest deferral trigger, which defers interest
on the class D notes once the PDL reaches a certain level, will be
triggered. This means that the class C notes will have to carry
the interest on the uncollateralized portion of the class D notes.

The class D notes are under collateralized and the rating
indicates it is highly probable that the notes will default due to
the concentrated portfolio and the fairly high PDL level.

Delinquencies have decreased over the last 12 months with 90+
arrears decreasing to 1.5% from 1.9% and 180+ arrears decreasing
to 1.3% from 1.5%. This decrease is in part due to loans rolling
over into default, with total defaults increasing to EUR20.3
million from EUR20 million. Recoveries have slowed over the past
12 months and the current recovery rate is low at 42.8%.


Increasing the default rate of the assets in the portfolio by
1.25x or reducing the recovery rate of the assets in the portfolio
by 0.75x would not result in a downgrade to the notes.

The class D notes' rating is unaffected by either of the above


TURK HAVA: S&P Lowers CCR to 'BB' Following Turkey Downgrade
Standard & Poor's Ratings Services lowered its long-term corporate
credit rating on Turkish airline Turk Hava Yollari (THY) to 'BB'
from 'BB+'.  The outlook is stable.

At the same time, S&P lowered the issue ratings on THY aircraft-
backed enhanced-equipment trust certificates to 'BBB+'.

The rating action on THY follows that on Turkey on May 8, 2015.
In accordance with S&P's criteria for government-related entities
(GREs), a downgrade of Turkey by one notch results in a similar
action on THY.  S&P's downgrade of THY is triggered solely by
S&P's rating action on the sovereign; S&P has not adjusted its
view of THY's SACP or our base-case scenario.

S&P's 'BB' long-term rating on THY reflects S&P's assessment of
its stand-alone credit profile (SACP) at 'bb' as well as S&P's
view that there is "moderately high" likelihood that the Turkish
government would provide timely and sufficient extraordinary
financial support to THY in the event of financial distress.  S&P
bases this view on its assessment of THY's:

   -- "Important" role in Turkey's economy, as the main gateway
      to the country's capital city; and

   -- "Strong" link with the government of Turkey.

Although THY is a profit-seeking enterprise, it provides Turkey
with an essential service and foreign currency.  In S&P's view, if
THY were to default this would disrupt its activities.  This is
because THY relies heavily on foreign funding for its aircraft,
which could be repossessed in the event of a default.  The
government is an important shareholder for THY and it has a policy
of supporting THY in certain circumstances.

The stable outlook on THY reflects S&P's view that the company
will be able to maintain its competitive position, despite the
competitive environment in the airline industry, and maintain FFO
to debt at around 22% over the next 12 months after investing
significantly in its fleet.  The stable outlook also reflects that
the rating would be unaffected if S&P was to lower the sovereign
local or foreign currency ratings by one notch.

S&P could lower the rating if THY were not able to maintain its
weighted-average FFO to debt above 20%.  This could occur, for
example, if the Turkish lira or euro weakened or if domestic
demand and average ticket prices for international flights were
lower than S&P forecasts, causing THY's 2015 revenues to grow by
less than 7% and its EBITDA margin to fall below 13%.  S&P could
also consider a downgrade if oil prices increased to above $90 per
barrel, but ticket prices remained weak, because this could lead
to adjusted FFO to debt dipping below 20% especially given THY's
sizable capex plans.  S&P could also lower the rating if THY's
liquidity position deteriorated, for example, because it was
unable to secure funding for its upcoming capex.

S&P could take a positive rating action on THY if its adjusted FFO
to debt was sustainably over 30% or if S&P upgraded Turkey.  S&P
could also consider an upgrade if it saw significant growth in
THY's revenues, above our base-case scenario, and improvement in
its EBITDA margin.

U N I T E D   K I N G D O M

AUSTIN REED: Obtains Financial Backing From Alteri
Ashley Armstrong at The Telegraph reports that Austin Reed, the
114-year-old British tailor whose famous clients include
International Monetary Fund chief Christine Lagarde, has received
financial backing from Alteri, a specialist retail vehicle.

The loan agreement -- which does not disclose details of how much
money is being loaned to Austin Reed -- comes four months after
the retailer closed 31 shops under a restructuring plan that
allowed the retailer to cut its debts, The Telegraph relays.

Austin Reed's company voluntary arrangement, which was approved by
creditors in February, meant that 166 stores have survived and saw
existing shareholders inject GBP3 million into the business, The
Telegraph discloses.

According to The Telegraph, the group's three-year secured loan
from Alteri is expected to provide the business with fresh
liquidity and help to fund the purchase of stock and an investment
in its online operations.

In the group's last available accounts the group said that an
existing GBP7 million bank facility with Icelandic bank Landsbanki
was sufficient, but that has proved to not be the case, The
Telegraph notes.

Austin Reed is a Thirsk-based fashion retailer.


* TLAC Rule to Build Trust Among Regulators in Bank Wind-Down
Jim Brunsden and Ben Moshinsky at Bloomberg News report that the
Financial Stability Board's proposed internal total loss-absorbing
capacity rule applies to cases where a bank and its supervisors
agree to handle any wind-down centrally, with the lead role given
to authorities in the nation where the firm has its headquarters.

According to Bloomberg, the alternative to this so-called single-
point-of-entry strategy is a multiple-point-of-entry approach,
whereby local regulators are responsible for planning how to
handle a crisis at a unit of the bank based on their territory,
and to take the necessary preemptive measures.

The FSB has said that the internal TLAC rule provides "comfort" to
local supervisors that resources will be available in a crisis to
recapitalize and, if necessary, safely wind down the units, while
preserving stability, Bloomberg relates.

This in turn, it has said, should mitigate the temptation for
local regulators to demand more far-reaching measures, Bloomberg

"Without such confidence, host authorities could demand extra
resources to be ring-fenced in their own jurisdictions either ex-
ante or ex-post in a resolution," Bloomberg quotes the FSB as
saying in its blueprint for TLAC published in November.

"The adverse consequences of such actions, including global
fragmentation of the financial system, and disorderly resolutions
of failed cross-border firms, should be avoided."

The events of the 2008 financial crisis shattered trust between
national regulators of global banks, Bloomberg notes.

The U.K. and the Netherlands were forced to compensate depositors
of failed Icelandic bank Landsbanki Islands hf, and bankruptcy
lawyers clashed over cash transfers Lehman Brothers Holdings Inc.
made from its European units in the period leading up to its
collapse, Bloomberg recounts.  Since then, disputes over the
prerogatives of a bank's home supervisor and local host
authorities have been a common theme in talks on post-crisis
financial oversight, Bloomberg states.


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  Go to 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

                 * * * End of Transmission * * *