TCREUR_Public/151016.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

            Friday, October 16, 2015, Vol. 16, No. 205

                            Headlines

A U S T R I A

HETA ASSET: Creditor Group Balks at Austria's Bail-in Plan


B E L G I U M

ETHIAS SA: Fitch Assigns BB Rating to Proposed Subordinated Notes


G E R M A N Y

HSH NORDBANK: May Reach Agreement with EU on Restructuring


I R E L A N D

PERMANENT TSB: DBRS Confirms BB(low) LT Debt & Deposits Ratings


I T A L Y

MONTE DEI PASCHI: DBRS Lowers Debt & Deposit Ratings to BB(high)


K A Z A K H S T A N

KAZAKHTELECOM JSC: Fitch Affirms 'BB' IDR, Outlook Positive


P O R T U G A L

BANCO COMERCIAL: DBRS Cuts Unsecured Debt Rating to BB(low)
CAIXA ECONOMICA MONTEPIO: DBRS Cuts Debt Ratings to BB(high)
ENERGIAS DE PORTUGAL: S&P Affirms 'BB+/B' CCR, Outlook Positive
NOVO BANCO: DBRS Cuts Senior LT Debt & Deposits Rating to 'B'
REDES ENERGETICAS: S&P Raises Corp. Credit Rating From 'BB+'


R U S S I A

INDUSTRIALNY: Bank of Russia Ends Provisional Administration
NOTA BANK: S&P Lowers Counterparty Credit Ratings From 'B'


S P A I N

FONCAIXA PYMES 6: Moody's Assigns Caa2(sf) Rating to Cl. B Notes


S W E D E N

VERISURE HOLDING: S&P Revises Outlook to Pos. & Affirms 'B' CCR


T U R K E Y

DERINDERE TURIZM: Fitch Assigns 'B' Issuer Default Ratings


U N I T E D   K I N G D O M

BRUNSWICK RAIL: Seeks Waiver Following Credit Facility Breach
CITY LINK: Three Former Directors Face Criminal Charges
MISSOURI TOPCO: S&P Lowers CCR to 'CCC+', Outlook Stable
SOUTHERN SOLAR: Enters Administration, 22 Jobs Affected


X X X X X X X X

* Business Profiles of 'B+' European Leveraged Issuers Weak
* BOOK REVIEW: EPIDEMIC OF CARE


                            *********


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A U S T R I A
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HETA ASSET: Creditor Group Balks at Austria's Bail-in Plan
----------------------------------------------------------
Boris Groendahl at Bloomberg News reports that the biggest
creditor group of Austrian "bad bank" Heta Asset Resolution AG
poured cold water over the government's plan to force bondholders
to share losses, saying it violates creditors' rights and won't
hold up in court.

Bondholders owning about a quarter of the EUR11 billion (US$12.5
billion) Heta debt that's guaranteed by the province of Carinthia
accused Austria of shirking its responsibilities in an e-mailed
statement on Oct. 14, Bloomberg relates.  The "Ad Hoc group" said
a law that was due to be discussed in Austria's parliament on Oct.
15 will be fought in Austrian and European courts, Bloomberg
relays.

"One of the world's richest countries equipped with prime ratings
by the rating agencies should not try to escape the fulfillment of
its obligations toward creditors if it clearly has the ability to
pay," the group, as cited by Bloomberg, said in the statement. "We
categorically reject Austria's attempts to eliminate creditor
rights via legislation."

Heta is managing the remnants of Hypo Alpe-Adria-Bank
International AG, one of the most damaging Austrian bank failures
after the 2008 financial crisis, Bloomberg discloses.  It has
contributed to Austria losing two AAA credit ratings and is
threatening Carinthia with insolvency as the former Hypo Alpe
owner's debt guarantees exceed four years of tax revenue,
Bloomberg notes.

Austrian Finance Minister Hans Joerg Schelling proposed a bill
under which a special purpose vehicle can make a public offer to
buy up Heta's bonds at a discount if creditors waive their rights
under Carinthia's guarantee, Bloomberg relays.  That discount will
be imposed on all debt holders if at least two-thirds of the
creditors accept the deal, according to the draft law, Bloomberg
states.

"We're working on a buyback model for Carinthia, and this buyback
will make sure we get Carinthia out of the guarantees and prevent
damage to the financial market," Bloomberg quotes Mr. Schelling as
saying at the Austrian parliament in Vienna on Oct. 14.

According to Bloomberg, Leo Plank of Kirkland & Ellis
International LLP's Munich office, the group's main lawyer, said
in a telephone interview creditors aren't getting access to
detailed information about Heta's or Carinthia's assets to help
them make up their mind about their creditworthiness.

Mr. Plank said invitations to negotiate with Austria, Carinthia
and Heta haven't been answered since an informal meeting in July,
Bloomberg relays.

"The federal government still proceeds without any involvement of
the creditors," Bloomberg quotes Mr. Plank as saying.  "The
creditors will fight this plan of action by all available means.
Hence the tender offer is doomed to failure."

The "Ad Hoc group" represents creditors holding about EUR2.5
billion of Heta's senior bonds guaranteed by Carinthia, Bloomberg
discloses.  Among them are Commerzbank AG, FMS Wertmanagement AoeR
and Pacific Investment Management Co., Bloomberg states.

Heta Assset Resolution AG is a wind-down company owned by the
Republic of Austria.  Its statutory task is to dispose of the non-
performing portion of Hypo Alpe Adria, nationalized in 2009, as
effectively as possible while preserving value.



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B E L G I U M
=============


ETHIAS SA: Fitch Assigns BB Rating to Proposed Subordinated Notes
-----------------------------------------------------------------
Fitch Ratings has assigned Ethias SA's proposed issue of dated
subordinated notes a 'BB[EXP]' rating.  At the same time, Fitch
downgraded Ethias' Insurer Financial Strength (IFS) rating to
'BBB' from 'BBB+' and Long-Term Issuer Default Rating (IDR) to
'BBB-' from 'BBB'.  The Rating Outlook is Stable.

Fitch has also downgraded Ethias's existing subordinated debt to
'BB' from 'BB+', in line with the one-notch downgrade of the IDR.

KEY RATING DRIVERS

The downgrade of Ethias's ratings reflects the expected increase
in financial leverage ratio (FLR); the company plans to issue
subordinated debt to support its capital position ahead of
Solvency 2.

According to the terms and conditions, the new bond qualifies for
Tier 2 capital recognition under Solvency 2.  Under Fitch's
methodology, this instrument is treated as 100% debt in Fitch's
financial leverage calculation.

Partially offsetting the increase in leverage, capital adequacy,
as measured by Fitch Prism FBM, is expected to improve, as the new
debt is treated as 100% capital for this purpose.  Ethias is
expected to have an 'Adequate' Prism FBM score, taking account of
the proposed debt issue.  However, Ethias's total available
capital would then consist of a significant amount of hybrid debt,
which reduces the quality of capital.

The new issue is expected to mature in 2026.  The notes will be
subordinated to senior creditors, rank pari passu with dated
subordinated securities and senior to any undated subordinated
securities issued by Ethias.  It will be mandatorily deferrable if
certain solvency conditions are met.

The subordinated debt is rated two notches below Ethias's Long-
term IDR of 'BBB-'.  This reflects a 'Below Average' recovery
assumption and 'Moderate' risk of non-performance.  The instrument
will mandatorily defer coupon payments if a regulatory deficiency
event occurs; under Solvency II, this would result if own funds
are insufficient to cover the Solvency Capital Requirement or
Minimum Capital Requirement.

RATING SENSITIVITIES

Any change to Ethias's IDR is likely to result in a corresponding
change of the subordinated debt rating.

Factors that could trigger a downgrade of Ethias's ratings
include:

   -- Failure to maintain an 'Adequate' Prism FBM Score in 2015
   -- Financial Leverage Ratio (FLR) increasing above 40%
   -- Failure to maintain a strong level of non-life technical
      profitability, as reflected in a combined ratio above 100%
      (2014: 89.2%)

Conversely, improved capitalization and leverage coupled with a
reduction in the ratio of high risk assets to equity to below 90%
(2014: 143%) could lead to an upgrade.

Ethias S.A.:

  IFS rating: downgraded to 'BBB' from 'BBB+'; Outlook Stable
  Long-term IDR: downgraded to 'BBB-' from 'BBB'; Outlook Stable
  Undated subordinated debt: downgraded to 'BB' from 'BB+'
  Dated subordinated debt: downgraded to 'BB' from 'BB+'
  Dated subordinated debt: assigned 'BB[EXP]'

Ethias Droit Commun AAM:

  IFS rating: downgraded to 'BBB' from 'BBB+'; Outlook Stable



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G E R M A N Y
=============


HSH NORDBANK: May Reach Agreement with EU on Restructuring
----------------------------------------------------------
Andreas Kroener and Jan Schwartz at Reuters report that German
regional lender HSH Nordbank could agree with the European
Commission as early as next week to offload billions of euros in
troubled assets onto its government owners and avoid the risk of
being shut down.

The ship financier, majority owned by the regional states of
Schleswig-Holstein and Hamburg, had to seek support from its
owners after being hit by the slump in global trade in the wake of
the financial crisis, Reuters discloses.

A final decision has not been taken yet, two people familiar with
the matter told Reuters on Oct. 14.  A Bloomberg report said the
EU had in principle approved the restructuring, Reuters relays.

According to Reuters, negotiators in Brussels -- from HSH, its
owners and the European Commission -- hope to restore HSH to
health and meet the Commission's demands to avoid the need for
state aid in future, sources told Reuters last month.

Negotiators hope to agree on a haircut, or value reduction, on the
assets to be offloaded and hope to shed a nominal volume of
between EUR14 billion and EUR28 billion (US$32.04 billion) from
the bank's balance sheet, which held EUR108 billion in assets in
total as of the end of June, Reuters says.

                       About HSH Nordbank

HSH Nordbank -- http://www.hsh-nordbank.com/-- is a commercial
bank in northern Europe with headquarters in Hamburg as well as
Kiel, Germany.  It is active in corporate and private banking.
HSH's main focus is on shipping, transportation, real estate and
renewable energy.



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I R E L A N D
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PERMANENT TSB: DBRS Confirms BB(low) LT Debt & Deposits Ratings
---------------------------------------------------------------
DBRS Ratings Limited confirmed the ratings of permanent tsb p.l.c.
(PTSB or the Group) including the non-guaranteed long-term debt
and deposits ratings at BB (low), and the non-guaranteed short-
term debt and deposits ratings at R-4. The trend on all ratings is
now Stable. The confirmation reflected a change in DBRS's support
assessment for PTSB to SA3, from SA2, which resulted in the
removal of one notch of uplift from the Intrinsic Assessment (IA)
for potential systemic support. However, concurrently, PTSB's
intrinsic assessment has been raised to BB (low) from B (high),
mitigating the removal of support. This commentary provides
further background to the change in the IA.

RATIONALE FOR THE CHANGE IN THE IA:

The improvement in PTSB's IA to BB (low) reflects the continued
progress of the Group in 1H15, especially with regard to restoring
profitability and improving asset quality metrics. In 1H15, PTSB
reported an underlying profit, excluding exceptional items, of
EUR1 million, marking the first profit since 2007, and reflecting
a EUR47 million year-on-year (YoY) increase in income before tax
and provisions (IBPT) and an 85% YoY reduction in impairment
charges. The improvement in IBPT was driven by a 12 basis points
(bps) YoY increase in the Group's net interest margin (NIM),
excluding ELG (Eligible Liabilities Guarantee) fees, to 1.00%, and
a 19% YoY reduction in operating costs. PTSB did, however, report
a net loss of EUR410 million in 1H15, reflecting the losses on the
repurchase of the Government held Contingent Capital Notes (EUR52
million) and on the disposal of Non-Core loans (EUR380 million).

The Group also made further progress in de-risking its balance
sheet in 1H15, with an 18% decrease in NPLs (NPLs - defined as
loans which are greater than 90 days in arrears, or impaired) from
end-2014, to EUR6.8 billion at end-1H15. Although the disposal of
the EUR1.5 billion Irish CRE portfolio was the largest factor in
this improvement, DBRS notes that the reduction in NPLs was
evident across all of the Group's loan portfolios. As a result,
whilst overall asset quality remains extremely weak, with the
Group reporting an NPL ratio of 25% at end-June 2015, DBRS is of
the view that the Group's asset quality will continue to improve,
helped both by the deleveraging process, and the ongoing recovery
in the economies of Ireland and the UK. DBRS also positively notes
that a significant proportion of NPLs have received some form of
treatment, and re-default rates are low. In addition, PTSB agreed
the sale of the residual EUR 0.5 billion Irish CRE portfolio, and
expects the deal to be completed, along with the along with the
previously announced disposal of the Capital Homes Loan Limited
(CHL) Mortgage Book and loan servicing platform, in 3Q15.

DBRS does, however, note that at end-July 2015, following an
enforcement investigation, PTSB commenced a Mortgage Redress
Programme (MRP) aimed at addressing the position of 1,372 mortgage
customer accounts, which lost a contractual right to be offered a
tracker rate mortgage as a result of failures on the part of PTSB.
At end-1H15, PTSB held EUR 119 million of provisions relating to
legal and compliance costs, such as the MRP. DBRS will continue to
closely monitor the development of these legacy issues, as
additional legal provisions could impact the Group's
profitability.

RATING DRIVERS:

The Trend on the Group's ratings is now stable. Further upward
movement in the IA would require further progress in restoring
sustainable profitability, especially in the Core Bank, whilst
also continuing to improve its asset quality metrics and executing
its restructuring plan. The inability to continue the trend
towards returning to profitability would be viewed negatively by
DBRS, as would any reversal of the current positive downward
trajectory of impaired loans. Any failure to execute the
restructuring plan in line with stated targets could also
negatively pressure the rating. The ratings on the Government
Guaranteed debt are directly linked to DBRS's rating of the
Republic of Ireland and as such, any changes in this rating would
be reflected in the rating of the guaranteed debt.

SUPPORT ASSESSMENT:

The rating action concluded the rating review initiated in May
2015, and reflected DBRS's view that developments in European
regulation and legislation mean that there is less certainty about
the likelihood of timely systemic support. Countries across Europe
continue to make progress in enacting the Bank Recovery and
Resolution Directive (BRRD) into national legislation, including
Ireland. BRRD has harmonized the approach that will be taken in
the resolution of failing banks across Europe, and has led DBRS to
conclude that there is not sufficient certainty of support to have
any uplift in the senior debt ratings of European banks.
Consequently the support assessment for PTSB was changed to SA3
(the category for banks in countries where DBRS has no expectation
of systemic support or is not confident enough that timely
systemic support would be forthcoming in times of need to add a
notch for systemic support) from SA2 (indicating the likelihood of
timely systemic support).



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I T A L Y
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MONTE DEI PASCHI: DBRS Lowers Debt & Deposit Ratings to BB(high)
----------------------------------------------------------------
DBRS Ratings Limited downgraded the ratings of Banca Monte dei
Paschi di Siena SpA (BMPS or the Bank), including the Senior Long-
Term Debt & Deposit Rating to BB (high) from BBB (low), and the
Short-Term Debt & Deposit rating to R-3 from R-2 (low). The
downgrade reflected a change in DBRS's support assessment for BMPS
to SA3, from SA2, which resulted in the removal of one notch of
uplift from the Intrinsic Assessment (IA) for potential systemic
support.

Concurrently, DBRS maintained the Bank's Intrinsic Assessment (IA)
of BB (high). This follows an updated analysis of the Bank's
credit fundamentals and formally concludes the rating review
specific to BMPS which was first announced on February 18, 2015.
This commentary provides further background on the IA being
maintained at BB (high).

RATIONALE FOR THE INTRINSIC ASSESSMENT:

In maintaining the Intrinsic Assessment (IA) at BB (high), DBRS
notes that, despite the partial deviation from the original EU
agreed restructuring targets, BMPS has made sufficient progress in
addressing the main concerns which underpinned DBRS' rating review
for the Bank. These include the completion in summer 2015 of the
further EUR3 billion rights issue and the repayment of the
outstanding EUR1.1 billion New Financial Instruments (NFIs). DBRS
further notes the Bank's success in selling down EUR1 billion in
NPLs and reaching a settlement with Nomura on the Alexandria
transaction, as well as a return to breakeven performance in 1H15.
Nonetheless, BMPS remains challenged on several fronts. The IA of
BB (high) takes into account the Bank's weak asset quality profile
and the difficulty the Bank has had in expanding revenue
generation. For 1H15, BMPS' impaired lending increased to 32.8% of
total gross loans from 31.7% in 2014 and 24.5% in 2013. This
compares unfavorably with peers and continues to burden both
earnings and capital.

RATING DRIVERS:

The Trend on the Bank's ratings remains Negative and reflects
BMPS' operating and regulatory challenges, which have delayed its
business plan targets by one year to 2018. Rating upside could
result from a longer track-record and stronger dynamic of improved
performance, a more meaningful reduction in the NPL burden, as
well as success in nearing BMPS' new targets for 2018 ("Nuovi
Obiettivi", New Targets). Underperformance relative to the updated
plan, any deterioration of the Bank's core franchise, or evidence
of a further deterioration in the Bank's asset quality and capital
could contribute to negative rating pressure.

DBRS changed the Trend for BMPS's Notes Guaranteed by the Italian
Ministry of Economy and Finance (IT0004804362) to Stable
reflecting the change in DBRS' trend on the Republic of Italy's A
(low) Long Term rating to Stable from Negative.


SUPPORT ASSESSMENT:

The rating action concluded the rating review for support
initiated in May 2015, and reflected DBRS's view that developments
in European regulation and legislation mean that there is less
certainty about the likelihood of timely systemic support.
Countries across Europe continue to make progress in enacting the
Bank Recovery and Resolution Directive (BRRD) into national
legislation, including Italy. BRRD has harmonized the approach
that will be taken in the resolution of failing banks across
Europe, and has led DBRS to conclude that there is not sufficient
certainty of support to have any uplift in the senior debt ratings
of European banks. Consequently the support assessment for Banca
Monte dei Paschi was changed to SA3 (the category for banks in
countries where DBRS has no expectation of systemic support or is
not confident enough that timely systemic support would be
forthcoming in times of need to add a notch for systemic support)
from SA2 (indicating the likelihood of timely systemic support).



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


KAZAKHTELECOM JSC: Fitch Affirms 'BB' IDR, Outlook Positive
-----------------------------------------------------------
Fitch Ratings has affirmed Kazakhtelecom JSC's (Kaztel) Long-term
Issuer Default Rating at 'BB' with a Positive Outlook.

Kaztel is a strong fixed-line incumbent, with dominant market
shares in traditional telephony and fixed-line broadband services,
operating in a benign regulatory environment.  The company re-
entered the mobile mass market with its LTE/GSM service in 2014,
providing it with a quad-play capability.

The Positive Outlook reflects our expectation of the successful
development of Kaztel's mobile operations, which would likely lead
to stronger cash flow generation enhancing financial flexibility.
The mobile network roll-out and the tenge's depreciation against
key currencies have lifted funds from operations (FFO) adjusted
gross leverage higher but we do not expect this to significantly
exceed 2x unless the tenge weakens further.

KEY RATING DRIVERS

Incumbent Fixed-Line Operations

Fitch expects Kaztel to maintain its dominant position in the
fixed-line segment, helped by benign regulation and shortage of
alternative networks.  Kaztel estimated its subscriber fixed-line
telephony market share at a near-monopoly level of 92% at end-
2014, and at a dominant 85% in the fixed-line broadband segment.

Crucially, control over the last-mile infrastructure and the lack
of line sharing protects the company from excessive competition in
the broadband segment.  Alternative operators have to rely on
their own infrastructure for provision of broadband services,
which is only commercially viable in certain large cities.  While
the traditional voice segment will remain under moderate pressure,
Fitch expects growing broadband revenues to largely offset this
weakness.

Positive Broadband Prospects

The Kazakh broadband market has strong growth potential, driven by
fairly low fixed-line broadband penetration in the country,
estimated at 11.8% of population in 2014, compared with 59.3% of
population internet usage.  Kaztel has completed its fiber
infrastructure roll-out in key cities, strengthening its
technological advantage over peers in areas with most intense
competition.  The company continues to invest in infrastructure
upgrades on other territories to protect its dominance.

Kaztel is the only Kazakh provider of LTE mobile services, capable
of managing high data volumes.  The company is well-positioned to
benefit from a wider take-up of mobile data services, even though
there is an element of technological substitution with mobile
(e.g. dongles) sometimes competing with wired broadband solutions.
Any self-cannibalization is likely to be limited, as mobile
internet tends to be more popular in areas where high-speed fixed-
line broadband service is not available.

Improving Mobile Position
Kaztel is likely to continue adding new customers, capitalizing on
its status as an exclusive 4G provider in the country.  At end-
June 2015, the company had a 7% subscriber and 13% revenue market
share since launching its 4G mobile service in December 2013 and
3G services later in 2014.

The Kazakh mobile industry may see intensified competition as
operators embark on significant strategic changes.  TeliaSonera
(A-/Stable), the owner of the controlling stake in KCell, the
largest Kazakh mobile operator, announced strategic plans to
divest of its interest in the Kazakh subsidiary which has been
losing customers -- a change of ownership may result in a new
strategy.  While Kaztel is rapidly growing the number of its data-
hungry 4G customers, other operators are exploring non-4G options
including voice price reductions and wider 3G data packages.

Consumer Demand and Leverage Challenges

Weaker consumer confidence and higher inflation expectations
following the tenge devaluation in August 2015 could sap demand
for premium services (including mobile data) and make subscribers
more cost-conscious, at least in the short-to-medium term.  The
weaker tenge will also increase leverage as a significant share of
Kaztel's debt is nominated in USD and other hard currencies (38%
at end-1H15) while nearly all of its revenues and cash flows are
domestic-based.

Fitch expects that foreign currency debt as a share of total debt
is likely to stabilize at around 40% by end-2015, down from 46% at
end-2014.  The company repaid a substantial amount of USD debt
during 1H15, but the reduction in the proportion of foreign
currency debt was partly offset by the tenge devaluation.

The weaker domestic currency can also inflate capex as nearly all
telecoms equipment is imported.  While most of Kaztel's
outstanding equipment contracts are in tenge, which would mitigate
the immediate negative impact, new contracts will likely be signed
on terms that would reflect the new FX rates.

The company's credit profile is likely to be resilient to
potential foreign currency exchange rate volatility.  By Fitch's
estimates, stressing the metrics for a further 20% tenge
devaluation would increase leverage by 0.5x total debt/EBITDA,
which can be accommodated within the current 'BB' rating.

The tenge lost approximately a third of its value against the US
dollar as of mid-October 2015 since the start of the year.

Cash Flow Generation to Improve

Fitch projects that Kaztel's free cash flow generation will turn
positive in 2016 after the bulk of the mobile network roll-out is
completed.  Fitch expects the company's 2016 capex to moderate to
below 20% of revenue from 33% on average in 2012-2014.

The company's mobile project is still in the development phase and
entails substantial one-off operating expenses that could pressure
reported EBITDA.  The absolute scale of Kaztel's mobile operations
remains small compared with the fixed line business.  It would
take substantial further growth and margin expansion before the
mobile segment becomes a stronger contributor to EBITDA
generation.

Leverage to Peak in 2015

Fitch expects Kaztel's leverage to peak at around 2x funds from
operations (FFO) adjusted gross leverage at end-2015, before
gradually declining as capex falls and free cash flow generation
improves.

Fitch projects that revenue in the highly profitable fixed-line
business will remain under modest pressure from line
disconnections and lower telephone traffic and decline by low
single-digit percentages.  The sub-scale mobile segment will be
margin-dilutive, at least over the medium term.  As a result,
Kaztel's EBITDA margin is likely to remain below 30% in both 2015
and 2016 before gradually improving.  Subdued EBITDA growth will
be a main factor in holding back leverage improvement.

In the longer run, Fitch expects that leverage will be managed in
conjunction with shareholder remuneration needs.  Although the
company does not have public targets, leverage is likely to remain
sustainably below 2x FFO adjusted gross leverage but above 1.5x,
in Fitch's view.

Sufficient Liquidity

Kaztel has a few credit lines from foreign banks and the domestic
Development Bank of Kazakhstan which are sufficient to cover its
short-term refinancing needs and fund its expansionary capex
program.  Facilities from foreign banks are in foreign currency,
which match its forthcoming foreign currency maturities.

The company also has a 10-year KZT18 billion credit line from
Development Bank of Kazakhstan (BBB/Stable), denominated in tenge.
It is available for financing mobile development but it would also
allow Kaztel to divert operating cash flow from internal capex
funding to other needs, including refinancing.  Kaztel's debt
profile is well spread with no medium-term debt redemption peaks.

Weak Domestic Banking System

The Kazakh domestic banking system is weak, implying the scarcity
of local funding, few committed credit facilities and potentially
limited access to deposits.  The company holds a significant
amount of its cash liquidity with low-rated domestic banks.
Consequently, Fitch's analysis primarily focuses on the company's
gross debt metrics. If the company manages to utilize some of its
significant cash holdings with such low-rated banks, we would
treat it as positive event risk.

Weak Parent-Subsidiary Linkage

Kaztel's ratings reflect the company's standalone credit profile.
Kaztel is of only limited strategic importance for Kazakhstan,
while operating and legal ties with its controlling shareholder,
government-controlled Samruk-Kazyna, are weak.  Although indirect
government control is a positive credit factor, it does not
justify a rating uplift, in Fitch's view.

KEY ASSUMPTIONS

Fitch's key assumptions within the rating case for Kaztel include:

   -- Low single-digit consumer revenue declines in the fixed-
      line segment;

   -- Continuing rapid mobile revenue growth, at above 20% CAGR
      in 2016-2017, reducing to high single-digit percentage
      growth afterwards;

   -- EBITDA margin below 30% in 2015-2017, gradually improving
      to just above 30% in 2018;

   -- Decline in capex to below 20% of revenue in 2016 and after;

   -- No material acquisitions and divestments;

   -- Marginally positive free cash flow (FCF) generation in 2016
      and FCF margin in the mid-single digit territory
      afterwards.

RATING SENSITIVITIES

Positive: Future developments that may, individually or
collectively, lead to a positive rating action include:

   -- A sustained decrease in FFO adjusted gross leverage to
      below 2x;

   -- Maintaining sufficient liquidity that is diversified
      between external and internal sources;

   -- Stronger FCF generation with pre-dividend FCF margin in the
      mid-single digit range, likely driven by the end of heavy
      investments into mass mobile roll-out;

   -- Successful execution of the company's mobile strategy.

Negative: Future developments that may, individually or
collectively, lead to a negative rating action include:

   -- A protracted rise in FFO-adjusted gross leverage to above
      3x (end-2014: 1.9x) and/or a material increase in
      refinancing risks, which would lead to a downgrade

   -- Operating underperformance including in the mobile segment
      with sub-scale issues persisting may cause the Outlook to
      be revised to Stable.

FULL LIST OF RATING ACTIONS

Kazakhtelecom JSC

  Long-term foreign and local IDRs: affirmed at 'BB', Outlook
   Positive

  Short-term foreign currency IDR: affirmed at 'B'

  National Long-term rating: affirmed at 'A+(kaz), Outlook
   Positive

  Senior unsecured debt in foreign and local currency: affirmed
   at 'BB'

  Senior unsecured debt in local currency: affirmed at 'A+(kaz)'



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


BANCO COMERCIAL: DBRS Cuts Unsecured Debt Rating to BB(low)
-----------------------------------------------------------
DBRS Ratings Limited downgraded the ratings of Banco Comercial
Portugues, S.A. (BCP or the Group), including the Senior Unsecured
Long-Term Debt and Deposits ratings to BB (low) and the Short-Term
Debt and Deposits rating to R-3. The trend on the all ratings is
Stable. The downgrade reflected a change in DBRS's support
assessment for BCP to SA-3, from SA-2, which resulted in the
removal of one notch of uplift from the Intrinsic Assessment (IA)
for potential systemic support. BCP's intrinsic assessment has
been maintained at BB (high) but the trend on the senior debt
ratings has now been changed to Stable. This commentary provides
further background to the change in the trend.

RATIONALE FOR THE CHANGE IN TREND:

DBRS maintained the IA of BCP at BB (high) in May 2015. The Stable
trend reflects DBRS's view that BCP's fundamentals have now
stabilized, supported in part by the improved economic environment
in the Group's domestic operating environment. In particular, the
stable trend reflects the improvement in the Group's
capitalization, which has in part been supported by gradually
improving core profitability, which was further evidenced in 1H15.

In maintaining the IA at BB (high), DBRS recognizes BCP's major
presence in Portugal, with the Group maintaining market shares of
18.9% in customer loans and deposits. DBRS also notes the Group's
diversification internationally, through both its controlling
stake in Bank Millennium in Poland, and its presence in Portuguese
affiliated markets, such as Angola and Mozambique. BCP's IA also
reflects the challenges still faced by the Group, which include
the high level of loan impairment charges, which continue to
pressure earnings, along with its relatively weak asset quality
and vulnerability to economic and sovereign developments in
Portugal and Europe, as a result of its significant exposure to
Portuguese and Polish sovereign debt.

RATING DRIVERS:

The trend on the Group's ratings is now Stable. Upward pressure to
the IA could arise from a significant reduction of non-performing
assets (NPA) (including credit at risk loans and foreclosed
assets), sustained core banking profitability generation,
particularly in Portugal, and substantial strengthening of its
capital position. Downward pressure on the IA could arise if BCP
is unable to continue to improve capital or to restore
profitability to more normalized levels, or experiences any
substantial further weakening of asset quality.

SUPPORT ASSESSMENT:

The rating action concluded the rating review initiated in May
2015 and reflected DBRS's view that developments in European
regulation and legislation mean that there is less certainty about
the likelihood of timely systemic support. Countries across Europe
continue to make progress in enacting the Bank Recovery and
Resolution Directive (BRRD) into national legislation, including
Spain. BRRD has harmonized the approach that will be taken in the
resolution of failing banks across Europe and has led DBRS to
conclude that there is not sufficient certainty of support to have
any uplift in the senior debt ratings of European banks.
Consequently the support assessment for BCP was changed to SA-3
(the category for banks in countries where DBRS has no expectation
of systemic support or is not confident enough that timely
systemic support would be forthcoming in times of need to add a
notch for systemic support) from SA-2 (indicating the likelihood
of timely systemic support).

RATIONALE FOR THE CONFIRMATION OF THE JUNIOR SECURITIES:

DBRS also confirmed the ratings of the dated subordinated debt
issued by BCP at BB. DBRS's approach is to notch junior securities
from the bank's Intrinsic Assessment (IA), and therefore as a
result of the maintenance of the IA and conclusion of the support
review, the dated subordinated debt ratings have been confirmed.


CAIXA ECONOMICA MONTEPIO: DBRS Cuts Debt Ratings to BB(high)
------------------------------------------------------------
DBRS Ratings Limited downgraded the ratings of Caixa Economica
Montepio Geral (Montepio or the Bank), including the Senior Long-
Term Debt and Deposits ratings to BB (high) and the Short-Term
Debt and Deposits rating to R-3. The trend on the all ratings is
Negative. The downgrade reflected a change in DBRS's support
assessment for Montepio to SA-3 from SA-2, which resulted in the
removal of one notch of uplift from the Intrinsic Assessment (IA)
for potential systemic support. Montepio's IA has been maintained
at BB (high) and the trend on the senior debt ratings remains
Negative, in line with the trend prior to the review that was
initiated in May 2015. This commentary provides further background
to the IA and trend.

RATIONALE FOR THE IA AND TREND:

In maintaining Montepio's IA at BB (high), DBRS recognizes the
Bank's strong, albeit relatively small, franchise in Portugal, and
its resilient fundamentals throughout the challenging economic
environment in Portugal, which the Bank has weathered without
recourse to State capital support. The IA also considers the
Bank's long track record of consistent support from its main
shareholder Montepio Geral Associacao Mutualista (MGAM) and its
large and loyal mutual customer base. The IA, however, also takes
into account the Bank's weakened capital levels, its high exposure
to real estate and construction exposures and high level of
problematic assets (credit at risk (CaR) loans and foreclosed
assets (FAs)), along with its still, albeit much reduced from the
peak, significant reliance on funds from the European Central
Bank.

The Negative trend reflects the challenges Montepio continues to
face in Portugal together with DBRS's view that it is taking
longer for Montepio to restore its fundamentals compared to larger
domestic peers which benefit from greater business and
geographical diversification. Core recurrent profitability,
although much improved from 2014, also remains weak partly driven
by the slow pace of the recovery in Portugal which is ultimately
limiting the Bank's ability to generate capital organically and
its capacity to reinforce its already weakened capital levels.

RATING DRIVERS:

Some improvements were evident in 1H15, most notably with the
decrease of loan impairment charges and some reduction in non-
performing assets (NPAs). DBRS, however, would need a longer track
record of sustained improved fundamentals, including improved
operating results to stabilize the rating trend. Montepio's
ratings are currently pressured by the macro environment and the
slow economic recovery in Portugal. Upward rating pressure, while
unlikely in the short-term, could arise from a sustained
improvement in fundamentals. In particular it will arise from
improved funding and liquidity position with significantly lower
reliance on ECB funds, consistent track record of sustained
recurrent banking revenue generation together with a substantial
reduction of NPAs and notably strengthened capital levels.

Conversely, negative pressure to the ratings could arise from
persistent operating losses in its domestic operations as a result
of weakening underlying earnings generation and higher than
expected provisioning levels, pressuring the Bank's capacity to
generate capital organically. Downward rating pressure would also
come from a slower than expected reduction of non-performing
assets.

SUPPORT ASSESSMENT:

The rating action concluded the rating review initiated in May
2015 and reflected DBRS's view that developments in European
regulation and legislation mean that there is less certainty about
the likelihood of timely systemic support. Countries across Europe
continue to make progress in enacting the Bank Recovery and
Resolution Directive (BRRD) into national legislation, including
Portugal. BRRD has harmonized the approach that will be taken in
the resolution of failing banks across Europe and has led DBRS to
conclude that there is not sufficient certainty of support to have
any uplift in the senior debt ratings of European banks.
Consequently the support assessment for Montepio was changed to
SA-3 (the category for banks in countries where DBRS has no
expectation of systemic support or is not confident enough that
timely systemic support would be forthcoming in times of need to
add a notch for systemic support) from SA-2 (indicating the
likelihood of timely systemic support).


ENERGIAS DE PORTUGAL: S&P Affirms 'BB+/B' CCR, Outlook Positive
---------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB+/B' long- and
short-term corporate credit ratings on Portuguese utility EDP -
Energias de Portugal S.A. (EDP).  The outlook is positive.

At the same time, S&P affirmed its 'BB+' issue rating on EDP's
senior unsecured debt.  The '3' recovery rating is unchanged.

"The affirmation reflects our view that country risk in Portugal
and Spain has improved for the corporate sector on the back of
steady economic recovery and gradually improving labor market
conditions in Portugal, and improving economic and capital market
conditions in Spain.  We consider that these improving economic
prospects strengthen EDP's credit fundamentals.  EDP derives about
85% of its EBITDA from regulated, quasi-regulated, and long-term
contracted activities, where its revenues are not directly
influenced by economic parameters.  Nevertheless, we anticipate
that EDP will benefit from a better macroeconomic and fiscal
environment that reduces affordability concerns and increases the
likelihood that the regulator will be able to implement customer
tariff increases to reduce the EUR5.3 billion outstanding
electricity tariff deficit in Portugal.  Until now, EDP has been
solely responsible for funding any new deficit accrual, and still
had about EUR2.1 billion in receivables on its balance sheet on
June 30, 2015," S&P said.

"We expect that the group's credit metrics will strengthen
markedly over our two-year rating horizon through 2016.  Including
the recent EUR750 million hybrid issue, our base-case forecasts
for EDP suggest that its ratios will increase to slightly over 15%
in terms of funds from operations (FFO) to debt by the end of
2016, compared with 12.1% at the end of 2014.  We anticipate that
EDP will gradually reduce its debt while slowly strengthening its
credit metrics over the next two years, thanks to additional asset
sales, tariff deficit securitizations, and cuts in capital
spending.  Downside to our forecasts could result from higher-
than-anticipated tariff deviations in Portugal, some delay in
agreeing the remaining part of the asset disposals with
shareholder CTG, or any measures to alleviate the impact of the
drought in Brazil through cuts in the local utilities'
remuneration," S&P noted.

The ratings are based on S&P's view of EDP's "strong" business
risk profile, which is underpinned by its dominant position in
Portugal's supportive regulatory environment; the overwhelming
contribution to cash flow of its regulated and long-term
contracted asset-based operations, which offer minimum market and
volume risk; and its significant degree of business and geographic
diversification.  S&P's assessment also reflects EDP's cost
discipline and solid operating performance, which translate into
average profitability with low volatility, as well as the edge
conferred by its low-carbon-intensive and modern generation fleet.
This remains partly offset by the difficult conditions in power
markets in Portugal and Spain, which hamper the profitability of
EDP's small deregulated operations.

S&P's assessment of EDP's "aggressive" financial risk profile is
based upon S&P's standard volatility table, as defined in its
criteria.  It reflects S&P's view of EDP's high debt burden and
stretched credit metrics.  It is also underpinned by S&P's
expectation of positive discretionary cash flow on the back of
falling capital expenditures and regulatory receivables.  Strong
ongoing financial support from CTG, EDP's largest shareholder, is
also a positive factor.  S&P also takes into account consistently
high shareholder returns and EDP's cash flow volatility, which is
linked to a time lag in the tariff mechanism.

The rating on Portugal does not constrain the rating on EDP.  This
is because, under S&P's criteria, a nonsovereign entity with
"high" country risk sensitivity can be rated up to two notches
above the weighted average of the sovereign ratings on countries
where the entity has material exposures, which S&P estimates at
'BBB-' for EDP, and assuming the nonsovereign entity passes S&P's
stress tests.  S&P views EDP as having high exposure to Portugal
and Spain, where it originated 48% and 21%, respectively, of its
EBITDA in 2014.  S&P's stress-testing of our long-term rating on
EDP concluded that there is a measureable likelihood that the
issuer would withstand a sovereign default in Spain or Portugal.

S&P therefore considers the utility's ability to service and repay
debt is superior to that of Portugal.

The positive outlook on EDP reflects S&P's expectation that the
group's financial risk profile will strengthen markedly over the
next two years.  S&P anticipates that EDP's debt will gradually
decrease while its credit metrics slowly strengthen over the next
two years, thanks to additional asset sales, tariff deficit
securitizations, and cuts in capital spending.

S&P could upgrade EDP if we become more confident that it could
achieve and sustain Standard & Poor's-adjusted FFO to debt of
about 16%, and assuming no unexpected material weakening of the
regulatory, fiscal, or economic environments in EDP's core
markets.

Downside to S&P's forecasts could result from any additional
unexpected market disruption, or any regulatory or fiscal effects.

S&P would likely lower the rating if it considered that EDP could
struggle to achieve Standard & Poor's-adjusted FFO to debt of
about 12%, a credit metric consistent with an "aggressive"
financial risk profile.  This could occur if CTG delayed the
fulfillment of its remaining commitments or if regulatory
receivables on EDP's balance sheet did not begin to reduce.

Any new and unexpected regulatory and fiscal effect that hurt
EDP's cash flow generation could also put the rating under
pressure.  Any prolonged financial market turbulence that
prevented EDP from issuing securitizations or bonds could also
prompt a downgrade.


NOVO BANCO: DBRS Cuts Senior LT Debt & Deposits Rating to 'B'
-------------------------------------------------------------
DBRS Ratings Limited has downgraded the Senior Long-Term Debt &
Deposits rating of Novo Banco, S.A. (NB or the Bank) to B, from BB
(low). The Short-Term Debt & Deposits rating remains at R-4. The
trend on all ratings is now Stable. The confirmation reflected a
change in DBRS's support assessment for NB to SA3, from SA2, which
resulted in the removal of two notches of uplift from the
Intrinsic Assessment (IA) for potential systemic support. This
commentary provides further background to the Stable trend.

RATIONALE FOR THE STABLE TREND:

DBRS revised the IA of NB up to B, from B (low) in July 2015.
Following the conclusion of the review of the support assessment
and the related downgrade of the Senior Long-Term Debt & Deposits
rating, the IA remains at B and the trend on the Bank's ratings is
now Stable. This reflects the progress the Bank has made in
protecting its franchise, and improving its funding and liquidity
profile. Since the creation of the Bank following the resolution
of Banco Espirito Santo, S.A. (BES), NB's franchise strength has
been supported by the appointment of new management in September
2014, who appear to have brought strategic and management guidance
to the Bank. NB is the third largest bank in Portugal, with market
shares for customer deposits and loans of around 16% at end-2014
and in the small and medium enterprises (SMEs) and corporate
segment of around 21%, and this supports DBRS's view that given
its important role in the Portuguese SME and corporate market, and
helped by its recovering franchise, the Bank will be able to
generate sustainable revenues in the medium-term to support
capitalization.

The strength of the franchise can be seen in the evolution of its
deposit base which has shown positive signs of recovery in 1H15
with total customer deposits up by EUR2.3 billion since end-2014,
and in its use of ECB funding which has reduced by EUR 2.6 billion
to EUR5.9 billion at end-1H15. At end-1H15 the net loan-to-deposit
ratio was 114%. Overall, DBRS sees the Bank's funding and
liquidity position as improving but notes that challenges remain,
particularly considering the very low level of unpledged assets
and the Bank's legacy large wholesale refinancing needs, however,
refinancing risks could be partially mitigated by further asset
deleveraging.

DBRS notes that the Bank's asset quality and capital remain weak,
and these are key factors constraining the B IA. At end-1H15 the
Bank reported an overdue loans over 90 days to gross loans ratio
of 12.1% and credit at risk to gross loans ratio of 20.2%. DBRS
does however view positively the high coverage levels (67.9% of
credit at risk). Capital is also weak in the context of the Bank's
weak risk profile and high single name concentration. At end-1H15
they reported a CET1 ratio of 9.4%, only 10 bps down from end-
2014, as the Bank's deleveraging progress helped to offset the
EUR251.9 million net loss reported in 1H15.

DBRS notes the NB's sale process has been delayed but the agency
will continue to closely monitor any announcement regarding the
sale and evaluate any potential impact on NB's ratings in due
course.

RATING DRIVERS:

Downward pressure on the IA could arise if DBRS perceives notable
franchise deterioration, particularly within NB's home market of
Portugal, which could negatively impact its funding and liquidity
position. Continued net losses in excess of expected levels could
also pressure the IA, particularly if capital levels are
significantly impacted as a result. Upward pressure on the IA
could arise from a sustained improvement in its fundamentals. In
particular, it could arise from a longer track record of sustained
funding stability and rebalance of its funding structure. It could
also arise from a significant reinforcement of capital levels
together with a substantial reduction of the Bank's credit risk
profile.

SUPPORT ASSESSMENT:

The rating action concluded the rating review initiated in May
2015, and reflected DBRS's view that developments in European
regulation and legislation mean that there is less certainty about
the likelihood of timely systemic support. Countries across Europe
continue to make progress in enacting the Bank Recovery and
Resolution Directive (BRRD) into national legislation, including
Portugal. BRRD has harmonized the approach that will be taken in
the resolution of failing banks across Europe, and has led DBRS to
conclude that there is not sufficient certainty of support to have
any uplift in the senior debt ratings of European banks.
Consequently the support assessment for NB was changed to SA3 (the
category for banks in countries where DBRS has no expectation of
systemic support or is not confident enough that timely systemic
support would be forthcoming in times of need to add a notch for
systemic support) from SA2 (indicating the likelihood of timely
systemic support).


REDES ENERGETICAS: S&P Raises Corp. Credit Rating From 'BB+'
------------------------------------------------------------
Standard & Poor's Ratings Services said that it raised to 'BBB-'
from 'BB+' the long-term corporate credit rating on Portuguese
electricity and gas transmission grid operator REN-Redes
Energeticas Nacionais, SGPS, S.A.  At the same time, S&P raised to
'A-3' from 'B' the short-term corporate credit rating on REN.  The
outlook is positive.

In addition, S&P raised to 'BBB-' from 'BB+' the issue credit
rating on REN's senior unsecured debt.

"The upgrade reflects the revision of our assessment of REN's
business risk to "excellent" from "strong," to reflect improving
country risk conditions in Portugal on the back of the country's
steady economic recovery and improving labor market conditions.
Although REN is entirely regulated, and its revenues are
consequently based on set tariffs, we believe that improved
macroeconomic conditions could help mitigate affordability
concerns and support a more sustainable energy sector in the
country.  We also take the view that REN's international expansion
strategy is moderate and limited to small-scale equity
investments.  We understand that REN's updated strategic plan over
2015-2020 includes acquiring equity stakes based on an enterprise
value of EUR900 million in similar assets abroad.  The improvement
in REN's business risk leads us to tolerate lower financial
guidelines for the rating level.  We therefore see REN's funds
from operations (FFO) to debt ratio of 11% as commensurate with
the 'BBB-' rating from the previous range of 12%-13%.  Our updated
base-case forecast for REN demonstrates that it can comfortably
meet and exceed the 11% FFO to debt metric," S&P said.

S&P's assessment of REN's business risk profile as "excellent"
reflects the stable and relatively predictable regulatory
environment in which it operates.  REN's "strong" competitive
position also underpins our assessment.  REN has a monopoly in a
well-established market, and the regulatory regime is supportive
and consistent across regulatory periods, enabling REN to generate
stable, regulated, asset-based revenues.  The company has good
earnings visibility over 2015-2017 for its electricity
transmission business, which constitutes about 70% of REN's total
regulated asset value.  S&P's assessment also reflects its cost
discipline and solid operating performance, which translate into
average profitability with low volatility.

Constraints to the business risk include regulatory reset risk,
with the next regulatory period for gas transmission starting on
July 1, 2016.  Other limitations include the fairly low level of
returns on regulated assets and some appetite for international
expansion in potentially less-supportive jurisdictions.

S&P's assessment of REN's financial risk profile as "aggressive"
is based on S&P's medial volatility table, as defined in its
criteria.  It is underpinned by S&P's expectation of positive free
operating cash flow on the back of falling capital expenditure
(capex) and our expectation of stable credit metrics, despite
eroding cash flow generation.  S&P also takes into account REN's
cash flow volatility, linked to a time lag in the tariff mechanism
and the company's stable dividend policy.  S&P's base case
indicates that over the rating horizon of two years, REN could
achieve adjusted FFO to debt above 11%, which S&P sees as
commensurate with a 'BBB-' rating.

That said, S&P believes that REN's credit metrics will weaken
slightly from 2014 levels because of the extraordinary levy on
energy companies, which adds an additional EUR25 million to REN's
tax bill.  S&P understands that REN is challenging this tax in
court but no decision has been made yet.  Some downside to S&P's
forecasts could result from REN pursuing riskier or more material
acquisitions, as part of its international expansion, than S&P
currently anticipates.

S&P applies a negative comparable rating modifier to reflect that
REN's business risk is weaker than peers at the same rating level,
due to continuing economic constraints and fiscal pressures on
energy companies in Portugal.

In S&P's base case, it assumes:

   -- Steady economic recovery in Portugal, supported by
      improving labor market conditions, underpinning its
      forecast of 1.8% average GDP growth over 2015-2017.  This
      has little impact on REN's revenues as they are based on
      approved tariffs.  Decreasing EBITDA from 2015, reflecting
      slightly decreasing sovereign yield levels (affecting REN's
      allowed returns), and mirroring developments in the
      regulatory asset base.  A fairly stable EBITDA margin,
      thanks to the company's significant ongoing efficiency
      efforts.

   -- The average cost of debt declining to 4.0% from its 5.7%
      peak at end-2012 and the rollover in 2015 (and partly into
      2016 and 2017) of the exceptional tax.

   -- Domestic capex reducing to EUR175 million per year.  In
      addition, investments factor in the acquisition of gas
      storage assets for about EUR72 million, in 2015.  Stable
      dividends.

   -- Negative working capital changes as the recovery of some
      tariff deviations is more than offset by new tariff
      accruals.

   -- S&P's estimate of international expansions of about
      EUR55 million per year, over 2015-2020, in equity stakes of
      similar risk assets.

Based on these assumptions, S&P arrives at these credit measures
for 2015-2017:

   -- Adjusted FFO to debt of 11%-12%.

   -- Positive discretionary cash flows to debt of 1%-2% annually
      after 2016, which are used to pay down debt.

   -- Adjusted FFO interest coverage of 3.5x-4.0x.

S&P continues to assess REN's exposure to Portuguese country risk
as "high," as all the company's revenues originate in the country.
Under S&P's criteria, a non-sovereign entity with "high" country
risk exposure can be rated up to two notches above a sovereign
rated 'B' or higher.  S&P believes REN has extraordinary credit
strengths that mitigate domestic risk factors, including a strong
liquidity profile.

REN's defensive business model and underlying regulatory framework
typically shield the company's earnings from adverse macroeconomic
and sovereign factors.  REN's asset-based regulated remuneration
is immune to energy-volume and price risks and it is indexed to
Portuguese government bond yields, which provides some hedge
against sovereign-driven interest rate moves.  Lower energy demand
proves countercyclical, as it implies lower infrastructure needs
and therefore lower capex, which is credit-supportive, all else
being equal.

Although REN is not immune to budgetary risk, as reflected in the
recent, purportedly one-off tax, S&P continues to deem regulation
risk for transmission activities as remote.  ERSE, the Portuguese
energy regulator, has a strong track record -- tested under
Portugal's bailout -- of resilience to sovereign, legal, and
political interference.

REN is not vulnerable to a possible sovereign-triggered disruption
in local funding access, thanks to its active management and the
material liquidity support facilitated by its majority 25%
shareholder State Grid International Development Ltd. (SGID; the
international expansion arm of State Grid Corp. of China, the
world's largest power transmission grid), which will alleviate
refinancing risk by 2017.

Based on S&P's stress-test of the long-term rating on REN, S&P
concludes that there is a measureable likelihood that the issuer
would withstand a sovereign default.  S&P therefore believes the
utility's ability to service and repay debt is superior to that of
the sovereign.

The positive outlook reflects S&P's expectation that REN's
operating environment could further improve given better
regulatory and fiscal visibility.  In addition, S&P could upgrade
REN as a result of a marked improvement in the company's credit
ratios such that FFO to debt consistently exceeds 13%.  S&P sees
this as unlikely at present.

Ratings upside is, however, limited to one notch, as long as the
rating on Portugal remains unchanged, because S&P assess REN's
exposure to Portuguese country risk as "high."  Under S&P's
criteria, a nonsovereign entity with "high" country risk exposure
can be rated up to two notches above a sovereign rated 'B' or
higher.

S&P could revise the outlook on REN to stable if it do not see any
evidence of an improvement in its operating environment.
Furthermore, S&P could lower the ratings if it expects REN's core
metrics to fall short of 11% over our two-year rating horizon.
This could occur from a more material debt-funded and riskier
international expansion than S&P anticipates at present or an
unexpected and far-reaching regulation overhaul in Portugal
significantly diluting the company's business risk profile.



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INDUSTRIALNY: Bank of Russia Ends Provisional Administration
------------------------------------------------------------
The Bank of Russia, by its Order No. OD-2719 dated October 8,
2015, terminated the activity of provisional administration of
non-governmental Pension Fund Industrialny.

The provisional administration to manage the Fund was appointed by
Bank of Russia Order No. OD-2013, dated August 6, 2014 in
compliance with Clause 3.1 of Article 7.2 of Federal Law No. 75-
FZ, dated May 7, 1998, "On Non-governmental Pension Funds".

Vitaly Sergeev, chief economist of the lending section of the
General Economic Division of the Moscow-based Bank of Russia Main
Branch for the Central Federal District, headed the Fund's
provisional administration.

Following the analysis of the Fund's financial standing the
provisional administration filed a lawsuit in the court of
arbitration seeking to recognize the Fund insolvent (bankrupt) due
to the insufficiency of pension savings to meet its obligations.
This lawsuit has been satisfied in full and the court ruling has
become effective.  The state corporation Deposit Insurance Agency
has been appointed as the Fund's receiver.


NOTA BANK: S&P Lowers Counterparty Credit Ratings From 'B'
----------------------------------------------------------
Standard & Poor's Ratings Services lowered its long- and short-
term counterparty credit ratings on Nota Bank to 'R/R' from 'B/B',
and its Russia national scale rating to 'R' from 'ruBBB+'.

S&P has removed the ratings from CreditWatch with negative
implications, where it placed them on Sept. 25, 2015.

The downgrade reflects the regulatory risk related to the Central
Bank of Russia's intervention and introduction of a moratorium on
all of Nota Bank's credit obligations.  This decision by the CBR
reflects the increasing financial stress that the bank has come
under in recent months.  S&P considers this to be evidence of Nota
Bank's inability to meet its financial obligations stemming from
liquidity outflows.  On Oct. 13, 2015, the CBR introduced
temporary administration for Nota Bank for six months to assess
the quality of the bank's assets.

In addition, S&P considers that the bank could breach the
prudential liquidity norms that the CBR has set.  In S&P's view,
the liquidity position of Nota Bank continued to deteriorate in
September 2015, with the volume of its most liquid assets (under
the national definition) dropping to less than Russian ruble
(RUB)5 billion (about US$79 million) on Oct. 1, 2015.  S&P notes
that Nota Bank honored a put option on its bonds on Oct. 6, 2015
and has another put option on its RUB1.5 billion bonds due on Oct.
19, 2015.  S&P understands that Nota Bank is unlikely to meet this
obligation.

Any further rating actions on Nota Bank will depend largely on the
future decisions of the CBR, the nature and size of the
rehabilitation procedures, and S&P's opinion of the bank's
business and financial prospects once this information is made
available.

In S&P's opinion, the various ways for the bank to re-emerge as a
viable business include:

   -- A total or partial sale to a strategic investor that is
      willing to take over the bank;

   -- A potential bail-in by the bank's creditors;

   -- Transfer of the bank for long-term management under the
      Deposit Insurance Agency's rehabilitation plan if there is
      no investor interest; and

   -- Run-off of the bank's operations if it appears that its
      business model is not viable.  If the bank's license were
      to be removed by the CBR, S&P would likely withdraw its
      ratings on the bank.

As yet, S&P does not have any information on the likelihood of any
of these scenarios.  S&P will continue to monitor CBR's actions
with regard to Nota Bank.



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S P A I N
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FONCAIXA PYMES 6: Moody's Assigns Caa2(sf) Rating to Cl. B Notes
----------------------------------------------------------------
Moody's Investors Service assigned the following provisional
ratings to the notes to be issued by FONCAIXA PYMES 6, FT (the
Issuer):

  EUR918.4 million Serie A Notes due July 2050, Provisional
  Rating Assigned (P) Aa3 (sf)

  EUR201.6 million Serie B Notes due July 2050, Provisional
  Rating Assigned (P) Caa2 (sf)

Moody's issues provisional ratings in advance of the final sale of
financial instruments, but these ratings only represent Moody's
preliminary credit opinions. Upon a conclusive review of a
transaction and associated documentation, Moody's will endeavor to
assign definitive ratings. A definitive rating (if any) may differ
from a provisional rating.

FONCAIXA PYMES 6, FT is a securitization of loans and draw-downs
under lines of credit granted by Caixabank (Baa2/P-2, Stable
Outlook) to small and medium-sized enterprises (SMEs) and self-
employed individuals.

Caixabank will act as servicer of the loans and lines of credit,
while GestiCaixa S.G.F.T., S.A. will be the management company
(Gestora) of the Fondo.

RATINGS RATIONALE

The ratings are primarily based on the credit quality of the
portfolio, its diversity, the structural features of the
transaction and its legal integrity.

The provisional pool analyzed was, as of September 2015, composed
of a portfolio of 32,613 contracts (23.3% of the total pool amount
being draw-downs from lines of credit) granted to obligors located
in Spain. Most of the assets were originated between 2000 and
2013, and have a weighted average seasoning of 6 years and a
weighted average remaining term of 8.4 years. Around 44.6% of the
portfolio is secured by mortgages (which includes around 24.8% of
second liens) over residential and commercial properties.
Geographically, the pool is located mostly in Catalonia (27.5%),
Madrid (14.3%) and Andalusia (9.9%). Delinquent assets up to 30
days in arrears represent around 3.3% of the provisional
portfolio, while assets between 30 and 60 days in arrears
represent around 0.7% of the total pool notional.

In Moody's view, the credit positive features of this deal
include, among others: (i) performance of Caixabank originated
transactions has been better than the average observed in the
Spanish market; (ii) granular and well diversified pool across
industry sectors; (iii) exposure to the construction and building
sector, at around 15.6% of the pool volume (which includes a 5.2%
exposure to real estate developers), is below the average observed
in the Spanish market; and (iv) refinanced and restructured loans
have been excluded from the pool. The transaction also shows a
number of credit weaknesses, including: (i) around half of the
exposure to mortgages consist of drawdowns under lines of credit
which may allow further drawdowns, thus creating potential
volatility on the LTV of the underlying properties securing such
mortgages (however Moody's did receive data on these potential
further drawdowns and took it into account in its analysis); (ii)
around 11.6% of the portfolio is either currently under grace
period or can allow future grace periods or payment holidays;
(iii) there is strong linkage to Caixabank as it holds several
roles in the transaction (originator, servicer and accounts bank);
(iv) no interest rate hedge mechanism in place.

In its quantitative assessment, Moody's assumed an inverse normal
default distribution for this securitized portfolio due to its
granularity. The rating agency derived the default distribution,
namely the relevant main inputs such as the mean default
probability and its related standard deviation, via the analysis
of: (i) the characteristics of the loan-by-loan portfolio
information, complemented by the available historical vintage
data; (ii) the potential fluctuations in the macroeconomic
environment during the lifetime of this transaction; and (iii) the
portfolio concentrations in terms of industry sectors and single
obligors. Moody's assumed the cumulative default probability of
the portfolio to be equal to 13% with a coefficient of variation
(i.e. the ratio of standard deviation over mean default rate) of
42.8%. The rating agency has assumed stochastic recoveries with a
mean recovery rate of 50% and a standard deviation of 20%. In
addition, Moody's has assumed the prepayments to be 5% per year.

The principal methodology used in these ratings was Moody's Global
Approach to Rating SME Balance Sheet Securitizations published in
September 2015.

For rating this transaction, Moody's used the following models:
(i) ABSROM to model the cash flows and determine the loss for each
tranche and (ii) CDOROM to determine the coefficient of variation
of the default definition applicable to this transaction.

Moody's ABSROM cash flow model evaluates all default scenarios
that are then weighted considering the probabilities of such
default scenarios as defined by the transaction-specific default
distribution. On the recovery side Moody's assumes a stochastic
(normal) recovery distribution which is correlated to the default
distribution. In each default scenario, the corresponding loss for
each class of notes is calculated given the incoming cash flows
from the assets and the outgoing payments to third parties and
noteholders. Therefore, the expected loss for each tranche is the
sum product of (i) the probability of occurrence of each default
scenario; and (ii) the loss derived from the cash flow model in
each default scenario for each tranche. As such, Moody's analysis
encompasses the assessment of stressed scenarios.

Moody's used CDOROM to determine the coefficient of variation of
the default distribution for this transaction. The Moody's
CDOROM(TM) model is a Monte Carlo simulation, which takes borrower
specific Moody's default probabilities as input. Each borrower
reference entity is modelled individually with a standard multi-
factor model incorporating intra- and inter-industry correlation.
The correlation structure is based on a Gaussian copula. In each
Monte Carlo scenario, defaults are simulated.

The ratings address the expected loss posed to investors by the
legal final maturity of the notes. In Moody's opinion, the
structure allows for timely payment of interest and ultimate
payment of principal with respect to the Notes by the legal final
maturity. Moody's ratings address only the credit risk associated
with the transaction, Other non-credit risks have not been
addressed but may have a significant effect on yield to investors.

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

Factors or circumstances that could lead to a downgrade of the
ratings affected by today's action would be (1) worse-than-
expected performance of the underlying collateral; (2) an increase
in counterparty risk, such as a downgrade of the rating of
Caixabank.

Factors or circumstances that could lead to an upgrade of the
ratings affected by today's action would be the better-than-
expected performance of the underlying assets and a decline in
counterparty risk.

Moody's also tested other set of assumptions under its Parameter
Sensitivities analysis. If the assumed default probability of 13%
used in determining the initial rating was changed to 15% and the
recovery rate of 50% was changed to 40%, the model-indicated
ratings for Serie A and Serie B of Aa3(sf) and Caa2(sf) would be
A3(sf) and Caa3(sf) respectively.

Parameter Sensitivities provide a quantitative, model-indicated
calculation of the number of notches that a Moody's-rated
structured finance security may vary if certain input parameters
used in the initial rating process differed. The analysis assumes
that the deal has not aged. It is not intended to measure how the
rating of the security might migrate over time, but rather, how
the initial rating of the security might differ as certain key
parameters vary.



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


VERISURE HOLDING: S&P Revises Outlook to Pos. & Affirms 'B' CCR
---------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Sweden-
based security services provider Verisure Holding AB to positive
from stable.  At the same time, S&P affirmed its 'B' corporate
credit rating on Verisure and S&P's 'B' and 'CCC+' issue ratings
on the company's existing debt.  The recovery ratings remain
unchanged at '3' (in the lower end of the 50%-70% range) and '6',
respectively.

"At the same time, we assigned our 'B' issue rating to Verisure's
proposed EUR1.3 billion term loan facility (including euro and
Swedish krona tranches), proposed EUR700 million senior secured
notes, and proposed EUR300 million revolving credit facility
(RCF), due 2022.  We also assigned our 'CCC+' issue rating to the
proposed EUR700 million senior unsecured notes due 2023, to be
issued by holding company Verisure Midholding AB.  The recovery
rating on the senior secured debt is '3', reflecting our
expectation of meaningful recovery prospects in the event of a
payment default, in the lower half of the 50%-70% range.  Our
recovery rating on the senior unsecured notes is '6', reflecting
our expectation of negligible (0%-10%) recovery prospects in the
event of a payment default," S&P said.

S&P's ratings on both the proposed secured and unsecured debt are
subject to its receipt and satisfactory review of all final
transaction documentation.  If Standard & Poor's does not receive
the final documentation within a reasonable time frame, or if the
final documentation departs from the materials S&P has already
reviewed, it reserves the right to withdraw or revise its ratings.
Potential changes include, but are not limited to, utilization of
loan proceeds, the maturity, size, and conditions of the loan,
financial and other covenants, security, and ranking.

The outlook revision to positive reflects S&P's expectation that
Verisure's operating performance will remain solid on the back of
our now-stronger projections for the company's organic revenue
growth and EBITDA in coming years.  S&P's revised estimates are
supported by a solid increase in new customers, higher prices over
the past quarters, and a gradual decline in the company's
cancellation rate to 6.8% in June 2015 from 9.4% in 2013.  S&P
also takes into account management's announcement to implement
cost-reduction measures in coming years.

One of Verisure's current private equity owners, Hellman &
Friedman, intends to increase its share in the company to 93% by
acquiring the 46% stake held by the other equity owner, Bain
Capital.  Verisure proposes to issue EUR2.7 billion in senior
secured debt and senior unsecured notes as part of the
transaction.  As a result, S&P expects Verisure to report gross
debt of approximately EUR2.7 billion by the end of 2015 versus
EUR1.5 billion a year earlier.  Despite this increase in debt, S&P
expects the company's credit metrics to remain broadly in line
with its previous expectations, as a result of S&P's revised
assumptions of stronger operating performance.

S&P's assessment of Verisure's business risk profile reflects its
leading market position in the highly competitive European
residential household alarm-monitoring market, as well as the
company's limited scale (relative to ADT Corp.) and geographic
concentration in Spain and Sweden.  S&P thinks scale is critical
in the alarm-monitoring industry, given the cost of adding or
replacing a customer and the high level of attrition.  Compared
with U.S.-based security companies that S&P rates -- including ADT
Corp., APX Group Holdings Inc. (Vivint), and Monitronics
International Inc. -- Verisure enjoys superior performance, in
particular, lower cancellation rates.  However, S&P thinks
Verisure's current size limits its cash flow generation after
costs associated to new subscribers.  The company is also exposed
to both technology and reputational risks over the medium term,
because it has to continually incorporate the latest technological
advancements into its product offerings to attract new customers
while maintaining its service standards.

Verisure is a leading player in its key European markets,
including Spain, Sweden, Norway, and Portugal.  In addition, S&P
sees potential for continued solid growth for monitored
residential home and small business alarms in Europe, where
penetration levels are only 6%-7% compared with 20% in the U.S.
In S&P's view, Verisure has good revenue visibility from its
portfolio of high-quality customers.  Furthermore, Verisure's
attrition rate has steadily declined over the past two years,
which S&P thinks is a result of the company's integrated business
model.  Verisure has more interaction with customers than for
instance in the U.S., where alarm companies outsource parts of the
value chain.  Mobility is higher in the U.S. than in Europe and,
consequently, the U.S. industry average attrition rate is much
higher at about 12%.

S&P's assessment of Verisure's financial risk profile remains
constrained by the high level of debt stemming from the proposed
issuances and negative free operating cash flow (FOCF), albeit it
should decline toward breakeven, after subscriber acquisition
investments over the next 12 months.  These constraints are partly
offset by Verisure's strong cash-generating business from existing
customers and solid EBITDA interest coverage of 3x.

S&P considers Verisure to be owned by a financial sponsor, as per
S&P's criteria.  This results in S&P's "financial sponsor-6"
assessment of its financial policy, supported by its view that
Verisure's adjusted debt to EBITDA will remain over 5x in 2015 and
2016.  However, the financial policy score does not affect the
rating.

The positive outlook reflects the possibility that S&P could
upgrade Verisure by one notch in the next 12 months.

S&P could raise the ratings if revenues and EBITDA continue to
improve, which it thinks could be achieved by additional price
increases and low attrition rates, reflecting an improved business
position.  Positive FOCF would also support an upgrade.

S&P could revise the outlook to stable if operating performance as
weaker than it expects or if FOCF remains negative.



===========
T U R K E Y
===========


DERINDERE TURIZM: Fitch Assigns 'B' Issuer Default Ratings
----------------------------------------------------------
Fitch Ratings has assigned Derindere Turizm Otomotiv Sanayi ve
Ticaret A.S. a Long-Term Issuer Default Ratings of 'B'.  The
Outlook on the Long-Term IDR is Stable.

KEY RATING DRIVERS

IDRS, NATIONAL RATINGS AND SENIOR DEBT

The rating drivers for Derindere's Long-Term IDR are identical to
the rating drivers for Derindere's National Long-Term rating.
They include its established and leading local franchise, sound
asset quality and improving capitalization.  Derindere's ratings
also reflect sizeable exposure to foreign exchange (FX) and debt
rollover risks.

RATING SENSITIVITIES

IDRS, NATIONAL RATINGS AND SENIOR DEBT

An extended track record of solid operating performance,
consistently well-controlled leverage and proven ability to
withstand FX shocks could lead to an upgrade of Derindere's Long-
Term IDR.

A sizeable deterioration of company's capital position or material
weakening of its franchise would trigger a downgrade.



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


BRUNSWICK RAIL: Seeks Waiver Following Credit Facility Breach
-------------------------------------------------------------
Luca Casiraghi and Lyubov Pronina at Bloomberg News report that
Brunswick Rail said it's seeking to persuade international lenders
to waive their rights to demand immediate repayment after the
company breached terms of a credit facility because railcars that
are used as collateral were operated by clients in Crimea.

According to Bloomberg, Sergey Goncharov, an analyst at Sberbank
CIB in Moscow, said that without a waiver on the RUR8 billion
(US$128 million) loan arranged by Citigroup Inc., ING Groep NV,
Raiffeisen Bank International AG and Unicredit SpA, Brunswick may
also default on US$600 million of bonds.

Lenders granted a waiver through Oct. 30 after the company
breached other covenants last month, Bloomberg recounts.

"Banks already showed they are reluctant to accelerate on the
loan," Bloomberg quotes Mr. Goncharov as saying.  "But if the loan
is accelerated for this or that reason, this would trigger cross-
default on bonds, leading to a messy restructuring process."

The company, as cited by Bloomberg, said it doesn't believe it
violated international sanctions, though the use of railcars in
the Ukrainian region annexed by Russia may have triggered a
prepayment event.

Brunswick said it discovered the breach of "representations and
warranties" contained in the lending agreement during an internal
review started last month, when it also replaced management,
Bloomberg relays.

Brunswick Rail leases railcars to corporate clients in Russia.


CITY LINK: Three Former Directors Face Criminal Charges
-------------------------------------------------------
Alan Tovey at The Daily Telegraph reports that three former
directors of City Link, the parcel delivery group, which collapsed
over Christmas leaving almost 3,000 people jobless, have been
charged with criminal offences relating to the company's failure.

David Smith, who was the managing director; Robert Peto, the
ex-financial director; and non-executive director Thomas Wright
have been charged under the Trade Union and Labour Relations Act
for failing to give enough warning before making a large number of
redundancies, The Daily Telegraph discloses.

City Link was mired in controversy on Christmas Eve after unions
leaked details of the company's troubles to the media, The Daily
Telegraph recounts.

An investigation by MPs into the failure of the firm, which was
owned by Jon Moulton's Better Capital private equity group,
revealed that administrators wanted to wait four days before
telling staff the business could not survive, to protect the
company's assets, The Daily Telegraph relays.

They also heard evidence from administrator EY that staff were
allowed to keep on working for the business even after it had been
determined to be insolvent as it would reduce the cost of winding
it up, The Daily Telegraph notes.

According to The Daily Telegraph, Hunter Kelly, administrator to
the failed business, told MPs looking into the collapse that City
Link effectively became insolvent on Dec. 22 when a restructuring
proposal from the delivery group's directors that required Better
Capital to put more money in was rejected.

City Link was bought by Better Capital from Rentokil for GBP1 in
April 2013, with the private equity firm putting almost GBP40
million into City Link through loans secured against its assets,
The Daily Telegraph relays.

However, the business was making losses of GBP2 million to GBP3
million a month and Better Capital was unable to turn it around,
The Daily Telegraph states.

The charges against the three former directors were laid in June
but have only recently become public, The Daily Telegraph notes.


MISSOURI TOPCO: S&P Lowers CCR to 'CCC+', Outlook Stable
--------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term corporate
credit rating on Missouri TopCo Ltd., a holding company for U.K.
apparel retailer Matalan, to 'CCC+' from 'B-'.  The outlook is
stable.

At the same time, S&P lowered its issue rating on the GBP342
million senior secured notes issued by Matalan Finance Ltd. to
'CCC+' from 'B-'.  The recovery rating on this debt is unchanged
at '3', indicating S&P's expectation of meaningful (50%-70%)
recovery in the event of a payment default (lower half of the
range).

S&P also lowered its issue rating on the GBP150 million second-
lien notes issued by Matalan Finance PLC to 'CCC-' from 'CCC'.
The recovery rating on these notes is '6', reflecting S&P's
expectation of negligible (0%-10%) recovery prospects in the event
of a default.

U.K. apparel retailer Matalan has announced a second profit
warning related to the operational issues it has faced at its
Knowsley warehouse, which continue to materially affect its
earnings and cash flow.

S&P now believes that Matalan's supply and distribution network
could be more severely affected than S&P had previously thought,
and that the company could fail to restore its earnings capacity
to a historical annual average of about GBP100 million, or require
longer to achieve it.

The operational issues in the Knowsley warehouse include low
capacity utilization, substantial staff turnover, its lower-than-
budgeted efficiency, and a resulting decline in operating margin
and an inability to meet online demand.

The second profit warning related to inventory and supply chain
issues heightens S&P's concerns about Matalan's operational
execution.  In S&P's opinion, Matalan might not be able to improve
profitability during the rest of financial 2016 to the extent
necessary to meet its management forecast.  S&P views its low
earnings visibility as a sign of weakened operating efficiency.
Likewise, S&P considers that Matalan's competitive position could
worsen because of prolonged discount sales and S&P foresees a
negative effect on the brand from its inability to grow the online
offering.

S&P is therefore revising its assessment of Matalan's business
risk profile to "vulnerable" from "weak" and its management and
governance practices to "weak" from "fair."

S&P's assessment of Matalan's financial risk profile remains
"highly leveraged."  Although the company's guidance for its
financial 2016 EBITDA is GBP60 million or more, if the rest of the
year's trading was affected as badly as the first half's, the
reported earnings would likely be half that amount.  This would
translate to a Standard & Poor's-adjusted EBITDA to debt ratio of
about 9x-10x by the end of financial 2016 (more than 15x on a
reported basis; that is, excluding operating lease adjustments of
GBP108 million uplift to EBITDA, and about a GBP740 million
increase in debt in the financial year to Feb. 28, 2015).  Under
such a scenario, EBITDA to interest cover would drop to 1.6x from
2.2x in financial 2015 on a Standard & Poor's-adjusted basis and
to 0.8x on a reported basis, excluding the effect of operating
leases.

S&P therefore considers that Matalan faces a risk of its capital
structure becoming unsustainable over long term if the company is
not on track to overcome the operational setbacks and restore its
earnings to historical levels in the next 12-24 months.

The stable outlook reflects S&P's expectation that over the next
12 months Matalan will be able to maintain a broadly steady
customer and revenue base, overcome its operational challenges to
improve profitability, and avoid a further weakening of its
liquidity.

S&P could lower the rating if Matalan falls short of meeting
management guidance on earnings and cash generation in financial
2016, such that its EBITDA is not high enough to cover its
interest expenses, leading to a significantly negative free
operating cash flow and material deterioration in the liquidity
position.  Although this is not our expectation at the moment, an
increased risk of a distressed exchange offer would be another
reason for a downgrade.

S&P could consider an upgrade if the company improved its
operating performance over several quarters, demonstrating that
management's strategic initiatives were turning around
performance.  Any positive rating action would be contingent on
Matalan improving profitability such that it can demonstrate an
"adequate" liquidity position, as our criteria defines the term.


SOUTHERN SOLAR: Enters Administration, 22 Jobs Affected
-------------------------------------------------------
Press Association reports that Southern Solar's 22 employees will
lose their jobs as chief executive Howard Johns blames government
cuts to feed-in tariffs.

Southern Solar, which has offices in areas including London and
south Wales, has gone into administration, Press Association
relates.

"The demise of Southern Solar is the latest example of human
misery generated by the misguided policies of the current
government," Press Association quotes Mr. Johns as saying.

"This is a direct result of the government's recent announcements
that kill off support for solar energy via the feed-in tariff
scheme."

Southern Solar, launched 13 years ago, used to employ 100 workers
but that number has been cut to 22, who will now lose their jobs,
Press Association discloses.

Southern Solar is a UK solar company.



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


* Business Profiles of 'B+' European Leveraged Issuers Weak
-----------------------------------------------------------
Fitch Ratings says European leveraged corporate issuers in the
lower speculative grade (B+ and below) differentiate themselves by
the strength of their business profiles, governance, financial
performance and liquidity.  These factors shift in relative
importance as credits move along the rating scale.

Most credits at these rating levels have fundamental weaknesses in
either their business or financial profile.  While point-in-time
leverage and debt service ratios represent useful indicators of
relative credit standing, financial metrics alone do not decide
rating outcomes.  Analysis of sector- and company-specific factors
enables clear distinctions.

Sector-specific fundamentals such as barriers to entry, capital
intensity, earnings and cash flow volatility remain key to rating
differentiation.  In this report, Fitch provides additional
granularity to its sector-specific Ratings Navigators for
understanding of key rating drivers for credits at the lower end
of the rating scale.

Company-specific considerations such as relative scale, business
strategy, financial policy and balance sheets are taken into
account in the context of sector-specific factors to determine a
credit's ability to generate operating cash flow as the principal
driver of medium-term de-leveraging.

However, factors have relative importance.  The principal
qualitative factors distinguishing 'B+'/ 'B' ratings from 'B-' are
confidence in the business model and the resilience of cash flow,
and the ability to deleverage given an aggressive capital
structure.  Conversely, high refinancing risk and weak liquidity
would inevitably shift the rating discussion towards 'B-' or 'CCC'
regardless of strength in the business model or strategy.

Factors supporting an IDR of 'B+' rather than 'B' include a
comparatively more robust business model, lower execution risk in
strategy implementation, positive free cash flow (FCF) generation
through the cycle, a clear and committed deleveraging path
suggesting limited refinancing risk even in stressed capital
market conditions, and a comfortable liquidity position.

Fitch rates according to its own independent forecasts, which
attempt to take into account reasonable assumptions on business
model, execution of strategy and competitive positioning of a
credit within its sector through the cycle.  Pre-set guidance on
specific qualitative and quantitative benchmarks indicate positive
or negative rating actions if credits outperform or underperform
Fitch's rating case.

Many banks in Europe are restricted from underwriting 'B-'
credits, while they face fewer restrictions on 'B' or above.  In
addition, collateralized loan obligation (CLO) managers and many
bond funds have limits on exposures to 'CCC' or below categories
and are therefore sensitive to credits with 'B-' ratings that may
migrate lower.

Leveraged buyouts of various sizes, defaulted and restructured
credits, dividend-related recapitalizations, asset-specific or
project-related venture financings, direct lending and highly
leveraged mid-market credits represent the principal sources of
new issuance in the rapidly evolving highly-speculative 'B+' and
below cohort of the European leveraged finance market.

Fitch rates around 400 'B+' and below European high yield bond and
loan market issuers and also provides Recovery Ratings on all
issuers with Issuer Default Ratings (IDRs) or Credit Opinions
(IDCOs) at 'B+' and below.  Recovery Ratings drive notching
differentiation on instruments for highly speculative issuers with
complex capital structures.

The report, "Differentiating Credits Rated 'B+' and Below" updates
and expands key themes previously developed in 'EMEA Corporates:
Differentiating 'B'/'B-' and 'B-'/'CCC'' dated November 2014.  It
focuses on sector-specific and issuer-specific quantitative and
qualitative factors that drive notching distinctions in public
IDRs and private (primarily loan market) IDCOs.  It also includes
detailed case studies in the European food retail, non-food retail
and telecom sectors.


* BOOK REVIEW: EPIDEMIC OF CARE
-------------------------------
Author: George C. Halvorson
George J. Isham, M.D.
Publisher: Jossey-Bass; 1st edition
Hardcover: 271 pages
List Price: $28.20
Order your personal copy today at

http://www.amazon.com/exec/obidos/ASIN/0787968889/internetbankrupt

Halvorson and Isham worked together as leaders of the Minneapolis
health-care organization HealthPartners; Halvorson as chairman and
CEO, and Isham as medical director and chief health officer. From
their positions as leaders in the health-care field, they have
gained a broad, thorough understanding of the structure, workings,
and the problems of America's health-care system. Their "Epidemic
of Care" written in a readable, lucid, jargon-free style is a
timely work for anyone interested in the pressing matter of
satisfactory health care in America. This includes government
workers, politicians, executives of HMOs and hospitals, and
critics of health care, to individuals making choices about their
own health care. It is a notable work both practical and visionary
that one hopes legislators and heads of HMOs will take in. For
Halvorson and Isham make their way through the daunting
complexities of today's health-care system to put their finger on
its core problems and offer practicable solutions to these.

The two main problematic issues of contemporary health care are
health-care costs and quality of care. These two authors offer
solutions taking into consideration both of these. They put forth
balanced proposals instead of the many one-sided ones which stress
cutting costs at the expense of care or favor care regardless of
costs, costs usually born by government from tax revenues. In the
authors' comprehensive, balanced proposals, corporations and
businesses of all sizes, government agencies, health-care
organizations of all types, state and local governments and health
organizations, and also individuals work together cooperatively
for the goal of affordable, effective, and widespread up-to-date
health care.

Before outlining their program for dealing with the problems in
health care, which are only growing worse in the present system,
the authors relate information on different parts of today's
system most readers would not be aware of. Then they analyze it to
focus in on what is causing the problems in the particular area of
health care. In some cases, misconceptions held among the public
are cleared up, paving the way toward agreement on what are the
real problems and coming up with acceptable solutions for them.
The percentage of the cost of HMO membership and insurance
premiums going for administration is one such misconception.
"People guess, in fact, that HMO and insurance administration
costs are about 30 to 40 percent of premiums and that insurer
profits add another 10 to 20 percent of the total cost." This
means that anywhere from about 40 percent to 60 percent of
payments for HMOs or insurance doesn't go for health care. The
authors clear up this misconception giving rise to much confusion
in trying to deal with the serious problems facing the health-care
field, as well as a good deal of resentment against HMOs and
insurance companies, by citing that "health plan administrative
costs, including profits and marketing, average from 5 to 30
percent of total premium, depending on the plan." This leads to
the conclusion that it is not a sudden rise in administrative
costs or the greed of health-care providers that is mainly
responsible for driving up the costs of health care and will
continue to do so for the foreseeable future without effective
change in the field. Rising costs of health care from new
technologies, consumer expectations and demands, and also misuse
of drugs and treatments making patients worse or prolonging their
medical problems are the main reason for the rising costs. The
frequent misuse of modern-day medicines and treatments cited by
the authors is an issue that is starting to receive attention in
the media.

The price of prescription drugs is one health-care issue already
receiving much attention that the authors address. In this
discussion, they note that because of committees of physicians and
pharmacologists set up by HMOs to identify which drugs were most
effective for specific medical problems and set standards for
prescribing these according to HMO policies, "all Americans
benefited from the new focus on drugs that actually work." Before
these committees, eighty-four percent of drugs developed by the
pharmaceutical companies were what were know as "class C" drugs
that were little better than placebos. As the authors note, in
those days not so long ago, drugs were being developed and
marketed more to generate sales than remedy medical conditions.
The high cost Americans pay for prescription compared to buyers in
other countries is another matter the two authors take up. In
this, they take the position of American buyers of prescription
drugs by making the point that they should not be singled out to
bear the disproportionate share of the research and marketing
costs going into the drug prices since numbers of persons in
countries around the world gain health benefits from the drugs.
The wasteful similarities between some prescription drugs, the
misuse of some, and growing concerns over costs and use of the
drugs with persons under sixty-five are other topics dealt with in
the discussion and analysis of the issue of prescription drugs.

Halvorson and Isham's fair-minded overview and critique of today's
health-care field should be read by anyone with an interest in and
concern about this field central to the quality of life of
Americans and the economy. While they recognize that the field's
dysfunctions have such deep roots and thorny complexities that
"there is no single villain responsible for our troubles and no
silver bullet to cure them," undoubtedly some and likely a number
of the two authors' approaches to resolving particular troubles or
even their solutions to certain problems will be adopted. There is
just no way out of the current health-care crisis other than the
clear-sighted, comprehensive, cooperative way Halvorson and Isham
present.

George Halvorson is currently chairman and CEO of Kaiser
Permanente, one of the U. S.'s largest health-care organizations.
Isham continues as medical director and chief health officer of
HealthPartners.


                            *********

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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