TCREUR_Public/160630.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

            Thursday, June 30, 2016, Vol. 17, No. 128



EXIMGARANT OF BELARUS: Fitch Affirms 'B-' IFS Rating


IMMIGON PORTFOLIOABBAU: Moody's Raises Sr. Debt Rating to B1
PHOENIX PHARMAHANDEL: S&P Affirms 'BB+' CCR, Outlook Positive


DEBENHAMS RETAIL: Parent Emerges as Preferred Bidder for Business


NORSKE SKOGINDUSTRIER: Debt Valued as Low as 12% in Swap Auctions


CB INTERCREDIT: Placed Under Provisional Administration
PRISCO CAPITAL: Placed Under Provisional Administration
URAL OPTICAL: S&P Raises CCR to 'B', Outlook Stable
VNESHPROMBANK: DIA Accumulates RUB10-Bil. to Repay Creditors


ABANCA CORPORACION: Moody's Raises CR Assessment Rating to Ba3


UKRAINE: Mulls Sale of Bankrupt Banks' Assets for UAH12-Bil.

U N I T E D   K I N G D O M

BIBBY OFFSHORE: S&P Lowers LT CCR to 'B', Outlook Negative
BRITISH AIRWAYS: S&P Affirms 'BB' CCR, Outlook Positive
STORE TWENTY ONE: Owner Proposes CVA to Avert Administration
TATA STEEL UK: EU Referendum May Impact Fate of UK Operations



EXIMGARANT OF BELARUS: Fitch Affirms 'B-' IFS Rating
Fitch Ratings has affirmed Export-Import Insurance Company of the
Republic of Belarus's (Eximgarant) Insurer Financial Strength
(IFS) rating at 'B-'. The Outlook is Stable.


The rating and Outlook mirror Belarus's 'B-'/Stable Local
Currency Long-Term Issuer Default Rating (IDR) and reflect the
insurer's 100% state ownership, presence of guarantees for
insurance liabilities under compulsory lines, fairly strong
capital position, and sustainable, albeit volatile, profit
generation. The rating also takes into account the low quality of
the insurer's investment portfolio and moderate exposure to
domestic financial risks.

The Belarusian state has established strong support for
Eximgarant through its legal framework to develop a well-
functioning export insurance system. The state's propensity to
support the company has been demonstrated by the government
guarantee on export insurance risks, significant capital
injections in previous years and the explicit inclusion of
Eximgarant's potential capital needs in Belarus's budgetary

Eximgarant is adequately capitalized for its rating, as measured
by Fitch's Prism factor-based capital model. The insurer
maintains an exceptionally strong nominal level of capital
relative to its business volumes, with a Solvency I-like
statutory ratio of 85x at end-3M16.

Eximgarant has a record of positive profitability in the last
five years, but with a sharp decrease of net income to BYR9
billion in 2014 due to a weaker underwriting result. In 2015 a
positive underwriting result, strong investment income and a
significant one-off FX effect boosted profitability to BYR160
billion. In 3M16 Eximgarant reported a net income of BYR81
billion. The company continued to benefit from the depreciation
effect of the Belarusian rouble and solid investment income,
which respectively added BYR163 billion and BYR17 billion to net
income, fully offsetting a negative underwriting result of BYR7

Eximgarant's volatile underwriting performance is a key driver
behind the profitability pattern. The improved underwriting
result in 2015 was mainly due to positive underwriting
performance on export insurance risks, amounting to BYR68 billion
(2014: BYR3 billion), with subrogation recoveries accounting for
BYR42 billion or 32% of an improved combined ratio (2014:
subrogation loss of BYR0.1 billion). This helped contribute to a
positive underwriting result on the overall portfolio of BYR37
billion, compared with a net underwriting loss of BYR30 billion
in 2014. In 3M16 Eximgarant's underwriting result on export risks
was again negative at BYR5 billion, which worsened Eximgarant's
underwriting result to BYR7 billion. The insurer's three-year
average loss ratio increased to 68% to in 2015 and to 79% in 3M16
(2015: 83%, 2014: 74%).

Eximgarant's investment portfolio is of low quality, reflecting
the credit quality of bank deposits, which is constrained by
sovereign risks and the presence of significant concentrations by
issuer. The investment profile is attributable to the narrowness
of the local investment market and strict regulation of the
insurer's investment policy.

Insurance of domestic financial risks is one of the key lines in
Eximgarant's portfolio with a 15% weighting in 2015. These risks
are typically non-core business for traditional non-life insurers
and export credit agencies, are not covered by government
guarantees, use up a significant amount of insurers' capacity and
may lead to concentrated reinsurance protection. Since 2016 a
number of regulatory initiatives have been introduced to
strengthen discipline in the domestic financial risks market.


Any change in Belarus's Local Currency Long-Term IDR is likely to
lead to a corresponding change in Eximgarant's IFS rating.


IMMIGON PORTFOLIOABBAU: Moody's Raises Sr. Debt Rating to B1
Moody's Investors Service has upgraded by three notches the long-
term deposit, senior unsecured debt and issuer ratings of immigon
portfolioabbau ag to B1 from Caa1.  The outlook on the long-term
ratings is stable.

The rating agency also upgraded the wind-down entity's standalone
baseline credit assessment (BCA) and its adjusted BCA to caa1
from caa3 and its long-term Counterparty Risk Assessment (CR
Assessment) to B1(cr) from B3(cr).

Furthermore, Moody's has upgraded immigon's senior subordinate
and subordinate ratings and Investkredit Bank AG's (Investkredit,
assumed by immigon's legal predecessor Oesterreichische
Volksbanken AG in September 2012) backed subordinated debt
ratings to Caa1 from Ca, while immigon's hybrid capital
instruments -- or other issuing entities of the group -- which
continue to be rated on an expected loss basis were affirmed at
C(hyb) reflecting an unchanged expected loss severity.  The
firm's short-term Not-Prime deposit ratings, (P)Not-Prime
programme ratings as well as its Not-Prime(cr) CR assessment were
unaffected by today's rating action.

The upgrade of immigon's long-term ratings follows the positive
impact from Moody's reassessment of the company's progress in its
wind-down process and reflects: (i) immigon's standalone
financial profile, which now operates with improved capital and
substantial liquidity buffers; and (ii) the protection offered to
creditors more senior in the creditor hierarchy, as captured by
Moody's Advanced Loss-Given-Failure (LGF) liability analysis in
light of immigon's significant deleveraging.

The stable outlook on immigon's long-term ratings reflects
Moody's expectation that immigon can achieve its target to
economically wind itself down by end-2017.



The upgrade of immigon's standalone BCA by two notches to caa1
reflects the entity's improved capital cushion and reduced tail
risks following the reduction in total assets during 2015 and
1Q2016.  Compared to its opening balance sheet as of Jan. 1,
2015, -- when immigon reported total assets of EUR7.1 billion and
a slim capital cushion of EUR25 million of shareholder's equity
(under local accounting regime) -- immigon's assets declined to
EUR3.4 billion at end-2015, while its equity capital improved to
EUR330 million.  The significant reduction in assets reflects the
disposal of subsidiaries, affiliated companies, and performing
and non-performing loans.  The company's improved capital cushion
reflects the positive effect from several buyback programs for
non-subordinated liabilities, which resulted in an extra-ordinary
profit of EUR364 million, the key driver for immigon's positive
net income of EUR305 million for 2015 (local GAAP).

In Moody's view, the likelihood has increased that immigon can
achieve its target to economically wind-down its remaining assets
by end-2017.  During 2015, immigon's liquidity position
substantially improved (as reflected by EUR1.1 billion in cash or
around 32% of assets) and Moody's believes that the entity will
proactively use its excess liquidity to offer further liability
buybacks.  This is, for example, demonstrated by a buyback
program for subordinated liabilities announced on April 12, 2016,
with an expected volume of EUR150 million.  However, immigon's
BCA remains constrained by its still considerable portion of non-
performing loans, despite some level of provisioning, and
uncertainties around the sale proceeds from its remaining
subsidiaries and affiliated entities.  Therefore, immigon's
improved capital base may prove insufficient to absorb unexpected
losses during its continued wind-down process.

After failing the ECB's Comprehensive Assessment in October 2014
by a substantial margin, immigon transferred the majority of its
performing assets to other parts of the Volksbanken sector to
prevent default or regulatory intervention, but retained its
higher risk assets and relinquished its banking license in July


The company is subject to the Federal Banking Restructuring and
Resolution Act (BaSAG), which transposes the European Union's
Bank Recovery and Resolution Directive (BRRD) into Austrian law,
and also applies to this wind-down entity.  Therefore, Moody's is
applying its Advanced LGF analysis, which has a positive effect
on immigon's debt and deposit ratings.

For immigon, the LGF analysis is based on the entity's liability
structure according to local GAAP as of year-end 2015.  The
analysis indicates an extremely low loss-given-failure for
deposits and senior unsecured debt, leading to a three notch
uplift from its caa1 Adjusted BCA.  This assessment is supported
by the wind-down entity's volume of senior unsecured debt
including promissory notes, which Moody's considers to rank pari
passu with senior unsecured instruments as well as the amount of
subordinated liabilities.

For subordinated debt issued by immigon, the LGF analysis
indicates a moderate loss-given-failure for this junior debt
class, leading Moody's to position the wind-down entity's
subordinated debt in line with its caa1 Adjusted BCA.


The stable outlook on immigon's long-term ratings reflects
Moody's expectation that immigon can achieve its target to
economically wind itself down until end-2017.


The stable outlook implies no upward rating pressure on immigon's
long-term ratings.

However, upward rating pressure on immigon's long-term ratings
could result from substantial improvement in the bank's
standalone creditworthiness that would prompt an upward
adjustment of its standalone BCA.

Upward pressure on immigon's caa1 BCA could arise from a
substantial capital increase and/or a further successful wind-
down and de-risking of its balance sheet, which would support
immigon's aim of preserving adequate liquidity.  Upward pressure
on the entity's debt and deposit ratings is unlikely to develop
under Moody's LGF analysis, because, with three notches of rating
uplift from the adjusted BCA, the deposit and debt ratings
already benefit from the highest possible LGF uplift.

Downward rating pressure on immigon's long-term ratings could
result from a deterioration in the bank's standalone
creditworthiness and/or negative effects from the LGF analysis,
for example, if material changes in the liability structure occur
during the entity's unwinding, including a significant reduction
in the volume of subordinated instruments.

Downward pressure on the BCA could develop if the proposed
restructuring proves insufficient to indicate that senior
creditors will be repaid in full and on time and/or if the
Austrian Financial Market Authority (FMA) steps in to initiate
resolution measures.


These ratings and rating inputs of immigon were upgraded:

   -- Long-term deposit, senior unsecured debt and issuer ratings
      to B1 stable from Caa1 negative

   -- Senior unsecured Medium Term Note program to (P)B1 from

   -- Subordinated and senior subordinated debt ratings to Caa1
      from Ca

   -- Subordinated Medium Term Note program to (P)Caa1 from (P)Ca

   -- Baseline Credit Assessment (BCA) and adjusted BCA to caa1
      from caa3

   -- Long-term Counterparty Risk Assessment to B1(cr) from

These ratings of immigon were affirmed:

   -- Preferred Stock Non-cumulative at C(hyb)

   -- Junior subordinated debt (Upper Tier 2) at C(hyb)

These ratings of Investkredit were upgraded:

   -- Subordinated debt ratings to Caa1 from Ca

These ratings of Investkredit were affirmed:

   -- Junior subordinated debt (Upper Tier 2) at C(hyb)

This rating of OEVAG Finance (Jersey) Limited was affirmed:

   -- BACKED Preferred Stock Non-cumulative at C(hyb)

This rating of Investkredit Funding Ltd was affirmed:

   -- Preferred Stock Non-cumulative at C(hyb)

PHOENIX PHARMAHANDEL: S&P Affirms 'BB+' CCR, Outlook Positive
S&P Global Ratings said that it revised to positive from stable
its outlook on Germany-based pharmaceutical distributor PHOENIX
Pharmahandel GmbH & Co KG.

At the same time, S&P affirmed its 'BB+' long-term corporate
credit rating on PHOENIX.  S&P also affirmed the issue rating on
PHOENIX's EUR1.25 billion credit facility and two EUR300 million
senior unsecured notes.  The recovery rating on these notes
remains '4', indicating S&P's expectation of average (30%-50%)
recovery prospects, at the low end of the range, in the event of
a payment default.

S&P views PHOENIX's business risk profile as satisfactory due to
the group's track record of profitable growth across its
portfolio of business activities, encompassing a number of links
in the pharmaceutical supply chain.  With presence in 26 European
countries, PHOENIX operates in health care logistics and
pharmaceutical wholesaling, as well as running dispensing
pharmacies.  S&P believes this diversification reduces the impact
of local regulatory changes, supporting business continuity
across the entire group.  In particular, the higher margin
dispensing pharmacy business helps moderate the disruptive
effects of price-based competition and regulatory changes in the
low-margin pharma wholesale and distribution business.

In addition, S&P believes that PHOENIX has established brand
equity in its wholesale and retail businesses.  This stems from a
track record of reliable and good-quality service offerings; such
as nationwide coverage and guaranteed delivery time for products
ordered.  Geographically, PHOENIX is well diversified in the
European region.  Following a more rational competitive
environment over the past 12 months in Germany, S&P anticipates
that PHOENIX will achieve stable and improving profitability in
this important market.

The acquisition of Dutch pharmaceutical and medical supply
company Mediq has been completed and should enable PHOENIX to
extend its business in The Netherlands.  This acquisition gives
PHOENIX a diverse footprint in the stable Dutch market, where it
will be trading through the BENU and Procacef, participating in
the wholesale and pre-wholesale business.

S&P assesses PHOENIX's financial risk profile as significant,
factoring in its pronounced deleveraging over the past four
years. However, S&P estimates an increase in S&P Global Ratings'-
adjusted debt to EBITDA to about 3.1x for the fiscal year ending
Jan. 31, 2017.  This is primarily due to additional debt to
finance the acquisition of Mediq through a fully consolidated
joint venture (55% owned by PHOENIX) with Celesio.  The company
has deleveraged over the past few years and aims to continue to
do so despite a temporary increase in leverage in fiscal 2017
primarily due to the Mediq acquisition.

Despite relatively thin operating margins of less than 3% on a
reported basis, which is typical for pharma wholesaling
operations, PHOENIX has generated substantial free operating cash
flow (FOCF) except in the fiscal year ended January 2016.  This
was mainly attributable to working capital optimizations, which
resulted in a total cash outflow of about EUR337 million.  S&P's
assessment of PHOENIX's satisfactory business risk profile and
significant financial risk profile leads to a split anchor of
'bbb-/bb+'.  S&P selects the lower anchor of 'bb+', reflecting
its view that the company is positioned at the lower end of the
business risk profile score, mainly owing to tough competitive
conditions in the mature and tightly regulated markets for
pharmaceutical product distribution in Europe.

S&P's base case assumes:

   -- Revenue growth of 4%-5% in fiscal year 2017, mainly due to
      the Mediq acquisition, as well as the recovering wholesale
      market in Germany and growth in Northern Europe.

   -- Adjusted EBITDA margins of about 2.5% in fiscal 2017 and
      2.8% in fiscal 2018.

   -- Capital expenditure (capex) of EUR200 million in the next
      two fiscal years.

   -- Growth and further optimization of working capital,
      resulting in a cash outflow of EUR150 million in 2017.

   -- Annual acquisitions of about EUR50 million.

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

   -- An adjusted debt-to-EBITDA ratio of about 3.1x in fiscal
      2017 and 2.6x in fiscal 2018.

   -- Adjusted funds from operations (FFO) to debt of about 25%
      in fiscal 2017 and 30% in fiscal 2018.

The positive outlook on PHOENIX reflects S&P's view that the
company is likely to achieve and sustain debt to EBITDA of less
than 3x on a fully adjusted basis.  This also incorporates S&P's
view that the company has capacity to maintain FOCF to debt of
above 15%.

An upgrade of PHOENIX would likely be contingent on evidence of
the stabilization of working capital movements as well as
continuous profitability growth and ongoing material FOCF

S&P could lower the rating if PHOENIX's EBITDA fell materially
outside of S&P's operating base-case assumptions, pushing
leverage above 4x and eroding FOCF.  This could happen if the
company experiences working capital mismanagement or if price-
based competition restarted in Germany.


DEBENHAMS RETAIL: Parent Emerges as Preferred Bidder for Business
Irish Independent reports that Debenhams has emerged as the
preferred bidder for its own business in Ireland, seeing off
competition from UK billionaire Mike Ashley, who emerged as the
only other serious contender for the chain's Irish arm.

Debenhams' Irish arm was placed in examinership last month under
the stewardship of Kieran Wallace of KPMG, Irish Independent

Debenhams Retail (Ireland) has blamed high rents and staff costs
for continuing losses here, Irish Independent relates.  The Irish
arm is hoping that the examinership process will allow it to
secure rent and other cost reductions that will make its business
here viable, Irish Independent says.

Debenhams Retail (Ireland) had sales of EUR166 million last year,
but has lost EUR22.6 million over the last three years, Irish
Independent discloses.


NORSKE SKOGINDUSTRIER: Debt Valued as Low as 12% in Swap Auctions
Luca Casiraghi at Bloomberg News reports that Norske
Skogindustrier ASA's debt was valued as low as 12 cents on the
euro in auctions to settle credit-default swaps.

Traders set a final value of 29.6% on debt maturing between 2 1/2
years and five years in an auction administered by Markit Group
Ltd. and Creditex Group Inc., Bloomberg relates.  According to
Bloomberg, bonds in the 7 1/2-year bucket were valued at 27% of
face value and those in a last group were set at 12%.

Swaps are being settled after the Norwegian paper maker forced
all holders of its bonds due June 2017 to exchange their notes
for longer-dated securities with lower principal and interest
payments, Bloomberg relays.  Under a so-called restructuring
credit event, buyers and sellers can choose whether to settle
contracts in a series of auctions based on their expiration
dates, Bloomberg notes.

The first two auction group results were unchanged from
preliminary values, Bloomberg says.  The final auction group,
which includes all contracts triggered by sellers of protection,
dropped from an initial result of 20.6%, Bloomberg discloses.

No auction was held for swaps contracts maturing before December
2018 because there were no outstanding notes, Bloomberg states.

                      About Norske Skog

Norske Skogindustrier ASA or Norske Skog, which translates as
Norwegian Forest Industries, is a Norwegian pulp and paper
company based in Oslo, Norway and established in 1962.

                           *   *   *

As reported by The Troubled Company Reporter-Europe on June 10,
2016, Standard & Poor's Ratings Services said that it has raised
its long- and short-term corporate credit ratings on Norwegian
paper producer Norske Skogindustrier ASA (Norske Skog) to
'CCC-/C' from 'SD' (selective default).  S&P has subsequently
placed the long-term rating on CreditWatch with developing

The rating actions follow S&P's review of Norske Skog's liquidity
position after S&P lowered the rating to 'SD' on April 13, 2016,
following the company's announcement that it had completed its
debt exchange offer.


CB INTERCREDIT: Placed Under Provisional Administration
The Bank of Russia, by its Order No. OD-2081, dated June 29,
2016, has revoked the banking license of credit institution
CB Intercredit (JSC) from June 29, 2016.

The Bank of Russia took such an extreme measure -- revocation of
the banking license -- because of the credit institution's
failure to comply with federal banking laws and Bank of Russia
regulations, due to established instances of material
unreliability of financial statements, the bank's inability to
meet monetary obligations to creditors, and taking into account
the repeated application within a year of measures envisaged by
the Federal Law "On the Central Bank of the Russian Federation
(Bank of Russia)".

As a result of losing its liquidity, CB Intercredit (JSC) failed
to meet its obligations to creditors on a timely basis.  The
credit institution also failed comply with the supervisor's
requirements to submit to the Bank of Russia reliable reporting
showing its actual financial standing.  The management and owners
of the bank did not take measures required to normalize its
activities and recover its financial status.  The Bank of Russia
performed its duty on the revocation of the banking license of
the credit institution in accordance with Article 20 of the
Federal Law "On Banks and Banking Activities".

The Bank of Russia, by its Order No. OD-2082, dated June 29,
2016, has appointed a provisional administration to CB
Intercredit (JSC) for the period until the appointment of a
receiver pursuant to the Federal Law "On the Insolvency
(Bankruptcy)' or a liquidator under Article 23.1 of the Federal
Law "On Banks and Banking Activities".  In accordance with
federal laws, the powers of the credit institution's executive
bodies are suspended.

According to the financial statements, as of June 1, 2016, CB
Intercredit (JSC) ranked 463rd by assets in the Russian banking

PRISCO CAPITAL: Placed Under Provisional Administration
The Bank of Russia, by its Order No. OD-2079, dated June 29,
2016, has revoked the banking license of Moscow-based credit
institution JSC CB PRISCO CAPITAL BANK from June 29, 2016.

The Bank of Russia took such an extreme measure -- revocation of
the banking license -- because of the credit institution's
failure to comply with federal banking laws and Bank of Russia
regulations, capital adequacy below 2%, decrease in equity
capital below the minimal amount of the authorized capital
established as of the date of the state registration of the
credit institution, and given a repeated application over the
past year of supervisory measures envisaged by the Federal Law
"On the Central Bank of the Russian Federation (Bank of Russia)".

JSC CB PRISCO CAPITAL implemented high-risk lending policy
connected with placement of funds into low-quality assets.  As a
result of creating provisions adequate to the risks assumed, the
bank lost its equity capital.  The credit institution failed to
meet the supervisor's requirements with regard to bans on certain
operations designed to protect the depositors' interests.

The management and owners of the credit institution did not take
measures to normalize its activities.  In these circumstances,
pursuant to Article 20 of the Federal Law "On Banks and Banking
Activities", the Bank of Russia revoked the banking license from
the credit institution.

The Bank of Russia, by its Order No. OD-2080, dated June 29,
2016, has appointed a provisional administration to JSC CB PRISCO
CAPITAL for the period until the appointment of a receiver
pursuant to the Federal Law "On Insolvency (Bankruptcy)" or a
liquidator under Article 23.1 of the Federal Law "On Banks and
Banking Activities".  In accordance with federal laws, the powers
of the credit institution's executive bodies are suspended.

JSC CB PRISCO CAPITAL is a member of the deposit insurance
system.  The revocation of banking license is an insured event
envisaged by Federal Law No. 177-FZ "On Insurance of Household
Deposits with Russian Banks" regarding the bank's obligations on
deposits of households determined in accordance with the
legislation.  This Federal Law provides for the payment of
insurance indemnity to the bank's depositors, including
individual entrepreneurs, in the amount of 100% of their balances
but not exceeding the total of 1.4 million rubles per depositor.

According to the financial statements, as of June 1, 2016, JSC CB
PRISCO CAPITAL ranked 354th by assets in the Russian banking

URAL OPTICAL: S&P Raises CCR to 'B', Outlook Stable
S&P Global Ratings raised its long-term corporate credit rating
on Russia-based optical systems supplier JSC Ural Optical &
Mechanical Plant (UOMZ) to 'B' from 'B-'.  The outlook is stable.

At the same time, S&P raised the Russia national scale rating on
UOMZ to 'ruA-' from 'ruBBB'.

The upgrade follows UOMZ extending its maturity profile by
refinancing its short-term debt with two new bond issues of
RUB1.5 billion and RUB2 billion, in December 2015 and June 2016
respectively.  This has made the company's capital structure and
liquidity more sustainable.  Consequently, S&P has revised its
capital structure modifier to neutral from negative, and S&P's
assessment of liquidity to adequate from less than adequate.

S&P continues to assess UOMZ's business risk profile as weak,
reflecting the small size of its operations, as well as its
limited product and geographical mix.  UOMZ focuses on optical
systems for the defense industry, mainly concentrating on the
home market, where the company derives about 67% of its sales
(including indirect exports via principal intermediaries).
Year-to-year performance can be easily affected by spending on
new programs, the level of advance payments and subsidies, and
the overall economic environment prevailing in Russia.

These factors are mitigated by UOMZ's sizable order backlog,
which amounts to RUB45.6 billion.  This covers more than five
years of sales, and predominantly includes Russia-based defense
orders. This order backlog is mainly a result of UOMZ's leading
positions in a niche industry that delivers critical components
to the main Russian military aircraft manufacturers.

"Our business risk assessment also reflects UOMZ's sound
profitability, with an EBITDA margin expected to return above
20%-22% in 2016 and 2017 from a relatively low 18% in 2015.
Profitability was affected by restructuring charges related to
Shvabe Munchen.  We don't expect it to have an impact on margins
going forward. Volatility remains high due to significant
development costs and restructuring initiatives in UOMZ's German
operations.  We also note that UOMZ's EBITDA margin depends on
the company's product mix.  In recent years, UOMZ has shifted its
sales focus more toward the domestic Russian market and defense
contracts with fixed profit margins, which usually bear lower
margins.  However, we believe that UOMZ's ruble cost base and
efficiencies achieved through the ongoing modernization of its
asset base will help the company to sustain margins that are
above average for the aerospace and defense sector in 2016 and
2017," S&P said.

S&P views UOMZ's financial risk profile as highly leveraged,
reflecting the company's high debt and S&P's expectation of
continued negative free operating cash flows (FOCF) over the
coming years.

UOMZ has consistently reported negative FOCF over the past seven
years, with high capex and high working capital outflows due to
timing of some of the contracts.  As the company completes the
final stages of its modernization program S&P expects capital
expenditure (capex) to moderate after 2016.  However, this won't
be sufficient for positive FOCF generation while working capital
remains volatile.

These constraints are mitigated by ongoing central and local
government support in the form of equity injections, direct
subsidies for capex related to UOMZ's asset modernization
program, and interest expense reimbursements.  For instance,
total capital investment of RUB4.1 billion in 2016 will be partly
offset by a targeted equity injection from the holding company,
Shvabe, of RUB3 billion and direct state funding of about RUB70

S&P's base case assumes:

   -- A 1.4% GDP contraction this year, before the economy
      returns to modest positive growth in 2017.

   -- Revenue growth of above 15%-18% for UOMZ in 2016 and 2017,
      supported by a sizable order backlog of about RUB45.6
      billion at the end of March 2016, which covers
      approximately five years of sales.

   -- Adjusted EBITDA margins of about 20%-22%, supported by
      foreign-currency-denominated export sales and cost
      efficiencies achieved through the modernization of UOMZ's
      asset base.

   -- Negative FOCF as the company completes the final stages of
      its modernization program.

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

   -- S&P Global Ratings-adjusted FFO to debt of 10%-15% in 2016-

   -- S&P Global Ratings-adjusted debt to EBITDA of 3.8x-4.4x in
      2016 and 2017.

UOMZ is part of the larger holding company, Shvabe.  S&P's view
on Shvabe's credit quality does not constrain the rating on UOMZ.

The stable outlook reflects S&P's view that UOMZ should be able
to refinance or roll over its short- and medium-term debt as it
comes due.  S&P also expects UOMZ to benefit from ongoing state
support to fund the final stages of its modernization program,
enabling the company to maintain adequate liquidity in the next
12 months.

Furthermore, S&P assumes that UOMZ will be able to maintain its
sole-supplier status for its main customers in the defense
industry in Russia.  The company should be able to successfully
execute its sizable order backlog of RUB45.6 billion (as of end-
March 2016).  This will allow the company to maintain an EBITDA
margin above 18% on an adjusted basis.

In the near term, ratings upside could result from the generation
of FOCF close to zero, leading to the stabilization of debt and
the gradual reduction in leverage ratios.  S&P would consider an
upgrade if it anticipated FFO to debt of above 20% or FOCF to
debt sustainably higher than 5%.

Ratings downside could occur in the coming 12 months, if S&P
believes that UOMZ has failed to refinance its short- and medium-
term debt maturities in a timely manner.  This could be evidenced
by a weighted average maturity for UOMZ's debt falling below 2
years from 2.6 years at year-end 2015.  Downside risks could also
stem from a material deterioration of business conditions in
Russia that may hamper UOMZ's access to sources of liquidity.
S&P could also lower the rating if it sees the company's order
backlog diminish significantly.

VNESHPROMBANK: DIA Accumulates RUB10-Bil. to Repay Creditors
RBC reports that the Deposit Insurance Agency (DIA) estimated the
amount that could be repaid to the clients of failed

In April, the DIA reported it had RUB4 billion (approx. USD62.35
million) to be paid out, RBC relates.  By May 1, the cash
balances on hand and on the Central Bank of Russia (CBR) and DIA
accounts had grown to RUB7.5 billion (approx. USD116.91 million),
while the bankruptcy estate had increased by RUB6.1 billion
(approx. USD95.09 million), RBC discloses.  Thus, current
expenses deducted, by now the Agency has accumulated
RUB10 billion (approx. USD155.88 million) to be repaid to the
Vneshprombank creditors, RBC states.

As RBC reported, the list of creditors closed on May 18, and the
aggregate volume of claims totaled RUB 214.9 billion (approx.
USD3.35 billon) as of June 2.  It is almost three times as much
as initially required by claimants, RBC notes.

The highest volume of claims was put in by the companies acting
as third-priority creditors and reached RUB133.9 billion (approx.
USD 2.09 billion), while first-priority creditors (depositors and
the DIA) filed claims worth RUB81.1 billion (approx. USD1.26
billion), RBC relays.

As one of the Vneshprombank creditors told RBC, the creditors are
helping the DIA to find assets and owners of the failed bank.

Vneshprombank was the 34th largest bank by assets and 33rd
largest by retail deposits, making it a relatively major player
in a country with around 700 active banks.


ABANCA CORPORACION: Moody's Raises CR Assessment Rating to Ba3
Moody's Investors Service has upgraded to A3 from Baa3 the rating
on the covered bonds issued by ABANCA Corporacion Bancaria, S.A.
(ABANCA or the issuer) (deposits B2 positive, adjusted baseline
credit assessment b2; counterparty risk (CR) assessment Ba3(cr)).

                      RATINGS RATIONALE

This rating action follows Moody's upgrade of ABANCA's
Counterparty Risk (CR) Assessment to Ba3(cr) from B2 (cr) on 27
June 2016.  As a result, the covered bond (CB) anchor for this
program, is now two notches higher.

The Timely Payment Indicator (TPI) of Probable now restricts the
rating of this covered bonds at A3.  The program holds sufficient
over-collateralization (OC) to achieve the new rating.


Moody's determines covered bond ratings using a two-step process:
an expected loss analysis and a TPI framework analysis.

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

The CB anchor for ABANCA covered bonds is CR assessment plus one
notch.  The CR assessment reflects an issuer's ability to avoid
defaulting on certain senior bank operating obligations and
contractual commitments, including covered bonds.

The cover pool losses for ABANCA covered bonds are 32.6%%.  This
is an estimate of the losses Moody's currently models following a
CB anchor event.  Moody's splits cover pool losses between market
risk of 18.8% and collateral risk of 13.8%.  Market risk measures
losses stemming from refinancing risk and risks related to
interest-rate and currency mismatches (these losses may also
include certain legal risks).  Collateral risk measures losses
resulting directly from cover pool assets' credit quality.
Moody's derives collateral risk from the collateral score, which
for this program is currently 20.5%.

The over-collateralization in the cover pool is 292.5% of which
ABANCA provides 25% on a "committed" basis.  The minimum OC level
consistent with the A3 rating is 23%, of which the issuer should
provide 0% in a "committed" form.  These numbers show that
Moody's is not relying on "uncommitted" OC in its expected loss

All numbers in this section are based on the most recent
Performance Overview (based on data, as of end March 2016).

TPI FRAMEWORK: Moody's assigns a "timely payment indicator"
(TPI), which measures the likelihood of timely payments to
covered bondholders following a CB anchor event.  The TPI
framework limits the covered bond rating to a certain number of
notches above the CB anchor.

For the ABANCA covered bonds, Moody's has assigned a TPI of

Factors that would lead to an upgrade or downgrade of the

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

The TPI assigned to ABANCA covered bonds is Probable.  The TPI
Leeway for this program is 0 notches.  This implies that Moody's
might downgrade the covered bonds because of a TPI cap if it
lowers the CB anchor by one notch, all other variables being

A multiple-notch downgrade of the covered bonds might occur in
certain circumstances, such as (1) a country ceiling or sovereign
downgrade capping a covered bond rating or negatively affecting
the CB Anchor and the TPI; (2) a multiple-notch downgrade of the
CB Anchor; or (3) a material reduction of the value of the cover

                         RATING METHODOLOGY

The principal methodology used in these ratings was "Moody's
Approach to Rating Covered Bonds" published in August 2015.


UKRAINE: Mulls Sale of Bankrupt Banks' Assets for UAH12-Bil.
Ukrainian News Agency reports that the National Bank of Ukraine
reckons to sell bankrupt banks' assets for UAH12 billion in 2016.

Ukrainian News learned this from a statement made by the NBU
press service referring to NBU Governor Valeriya Hontareva.

According to Ukrainian News, insolvent banks owe the regulator
UAH46.6 billion on the principal of refinancing loans and UAH7
billion of interest.

On June 24, the NBU, the Ministry of Economic Development and
Trade, the Deposit Guarantee Fund and Transparency International,
an international non-governmental organization, signed an
agreement to build a transparent and efficient system of selling
bankrupt banks' properties, Ukrainian News relates.

U N I T E D   K I N G D O M

BIBBY OFFSHORE: S&P Lowers LT CCR to 'B', Outlook Negative
S&P Global Ratings lowered its long-term corporate credit rating
on U.K.-based oilfield services company Bibby Offshore Holdings
Ltd. to 'B' from 'B+'.  The outlook is negative.

At the same time, S&P lowered its issue rating on Bibby
Offshore's super senior revolving credit facility (RCF) to 'B+'
from 'BB-'. The recovery rating is unchanged at '2', indicating
recovery prospects in the higher half of the 70%-90% range in the
event of a default.

S&P also lowered its issue rating on Bibby Offshore's GBP175
million senior secured notes to 'B' from 'B+'.  The recovery
rating is '4'.  S&P now expects recovery in the lower half of the
30%-50% range for noteholders in the event of a payment default.

S&P is removing all the ratings from CreditWatch, where it placed
them with negative implications on April 7, 2016.

The downgrades reflect S&P's gloomy view of Bibby Offshore's
prospects for recovery amid an environment of persisting low oil
prices, low demand for offshore services, and high competition
pressuring day rates to levels that do not currently allow for
profitable operations.  Consequently, S&P believes free operating
cash flow (FOCF) will be negative in 2016-2017, despite low
capital expenditures (capex), resulting in the gradual
diminishing of the company's solid cash balance, a key factor
supporting the rating.  Bibby Offshore's very limited revenue
backlog provides for poor visibility in future cash flows.

S&P has revised its base-case assumptions for Bibby Offshore,
leading to credit metrics that S&P views as highly leveraged,
following the company's first-quarter 2016 weak performance.  S&P
notes, however, that the winter season is impacted by seasonality
in the North Sea.  S&P views a recovery of offshore markets as
uncertain, both in timing and magnitude, and credit measures
could therefore remain weak over the next two years at least.
S&P forecasts EBITDA and funds from operations (FFO) contracting
sharply in 2016, potentially reaching a low point as cost
reductions continue.  S&P anticipates the negative trend will
reverse in 2017, although EBITDA and FFO will likely only
stabilize at low levels rather than materially recover.  S&P
acknowledges that Bibby Offshore has recently secured a few new
contracts, but overall visibility remains limited.  The company's
order backlog decreased to GBP37.4 million at the end of March
2016, against GBP139.5 million a year earlier, while its cash
balance stood at GBP83.6 million as of the same date compared
with GBP111.7 a year earlier.

Bibby Offshore's business risk profile continues to reflect S&P's
view of the company's exposure to the highly cyclical oilfield
services industry and its limited geographic and operating
diversity compared with that of major oilfield service providers.
This is because the bulk of its operations take place in the
U.K., and its product offering is limited to certain subsea
services with a modest asset base, with only five vessels of
which two are owned. Bibby Offshore's cash flow visibility is
decreasing as the backlog reduces and this weighs on our
assessment of its business risk.

In S&P's opinion, Bibby's highly leveraged financial risk profile
is under significant pressure, since EBITDA and FFO will continue
to be impaired by lower activity and pricing pressure, and S&P
considers that there is a very limited likelihood of recovery in
the short to medium term, given S&P's assumption of low oil
prices over 2016-2017 in particular.  S&P notes, however, that it
do not net any of the significant cash on balance sheet from debt
to compute our credit metrics due to the company's vulnerable
business risk.  This is material relative to the size of the
company and reported gross leverage on a last-12-months basis
stood at 8.4x at the end of March 2016, but at a much lower 4.7x
on a net debt-to-EBITDA basis. Positively, the company has
limited committed capex, below GBP10 million per year, and a lack
of dividends.

The 'B' rating on Bibby Offshore incorporates a one-notch
positive adjustment to reflect S&P's assessment of the company's
core status to its parent, the Bibby Line Group.  Therefore, the
rating on Bibby Offshore is at the same level as the group credit
profile (GCP).

S&P currently assesses Bibby Line Group's GCP as stronger than
Bibby Offshore's SACP, based on S&P's view of the group's
companies, which include operations in diversified unrelated
businesses such as retail, floating accommodation, logistics,
financial services, and subsea services.

Although S&P recognizes the group's business diversification, S&P
notes that Bibby Offshore is significant in size when measured in
terms of the relative share of group EBITDA.  As such, while the
group influences Bibby Offshore's credit quality, the reverse is
also true, with the current weaknesses at Bibby Offshore
affecting the GCP negatively.

The negative outlook reflects that we may further downgrade Bibby
Offshore in the coming 12 months, given the uncertain demand for
its oilfield services as oil companies continue to focus on cost
reductions, a continued weak performance in line or only slightly
better than in the first quarter of 2016 (negative EBITDA of
GBP15 million) in the remainder of 2016 might result in a
downgrade as S&P views the headroom at the current rating level
as limited.  Currently, supporting the rating is the strong cash
balance, which S&P believes provides some cushion until markets
and demand pick up.  S&P anticipates negative FOCF to be no more
than GBP30 million in 2016.

S&P could downgrade Bibby Offshore by at least one notch, if
negative FOCF amplifies such that liquidity falls below GBP50
million in 2016 on the back of operating performance remaining
very weak in the next few quarters, without tangible signs of a
swift recovery, or on the back of aggressive investments.  The
likelihood of such a scenario is difficult to determine and will
depend upon the ability to secure new profitable work.  S&P could
also downgrade Bibby Offshore if we were to negatively reassess
its group status or if the GCP weakens due to sluggish
performance at other group companies, or if the company would
engage in a distressed exchange or bond buyback.

Although unlikely in the next 12 months, S&P could revise its
outlook to stable if Bibby Offshore improves profitability and
restores meaningful positive operating cash flows thanks to new
signed contracts and a clear improvement in cash flow visibility
through an increasing backlog.

BRITISH AIRWAYS: S&P Affirms 'BB' CCR, Outlook Positive
S&P Global Ratings said it has affirmed its 'BB' long-term
corporate credit rating on U.K. airline British Airways (BA).
The outlook is positive.

S&P also affirmed its long-term issue rating on BA's enhanced
equipment trust certificates (EETC) class A and B at 'A' and
'BBB', respectively, and the 'BB' rating on its GBP250 million
unsecured bonds due 2016.  At the same time, S&P affirmed the 'B'
issue ratings on the EUR300 million notes of BA's subsidiary
British Airways Finance (Jersey) L.P.

BA delivered improved earnings and cash flow in 2015, compared
with the previous year.  The airline showed a better level of
profitability against European legacy carrier peers, realizing
the benefits from its good grip on cost control, complemented by
solid passenger volumes and reduced fuel prices.  According to
S&P's current base case, BA will likely sustain its ratio of S&P
Global Ratings-adjusted FFO to debt above 30%, supporting S&P's
assessment of BA's SACP of 'bb+'.  Nevertheless, S&P considers
BA's credit measures to be susceptible to potential adverse
implications stemming from the Brexit vote.

"Furthermore, we continue to derive our rating on BA from our GCP
for IAG (not rated), which we assess at 'bb'.  While, according
to our base case, credit metrics on IAG are similar to those on
BA, the Brexit vote has brought into question IAG's ability to
sustain its competitive position and financial metrics, including
FFO to debt above 30%.  We believe that IAG and British Airways'
business and leisure traffic, in particular, is highly exposed to
the strength of the U.K. economy and notably to London's role as
a leading international city and financial center.  It is also
correlated to the strength of the British pound, with companies
likely to be faced with higher U.S. dollar-denominated costs
(fuel, aircraft leases, maintenance, and capital expenditure),
adverse implications from the translation effects of BA's
profits, and also lower consumer confidence affecting outbound
traffic and yields.  Nevertheless, at this stage, the magnitude
and the timing of a potential adverse impact on BA's and hence
IAG's credit quality is uncertain," S&P said.

At the same time, S&P has revised its assessment of the strategic
importance of BA to IAG.  S&P now considers it a strategically
important subsidiary, rather than non-strategic, based on its
view that:

   -- It is a profitable and successful business on its own, that
      S&P views as important to IAG's long-term strategy;

   -- It is unlikely to be sold; and

   -- IAG's management would support BA if it falls into
      financial difficulty.

Under S&P's group rating methodology, it limits its long-term
ratings on strategically important subsidiaries at the level of
the GCP, which is the case for BA.

The positive outlook reflects S&P's view that BA and its parent's
strong credit metrics are commensurate with a higher rating.  S&P
could raise the rating on BA if it appeared that IAG and BA could
sustain their competitive position and FFO to debt above 30%,
despite uncertainties after Brexit.

On the other hand, S&P could revise the outlook to stable if
adjusted FFO to debt dropped below 30%.  In S&P's view, this
could happen if EBITDA declines by about 15%-20% from 2015
levels, for example due to higher-than-expected pressure on
average ticket prices, combined with lower-than-expected demand
and adverse developments in BA's cost base absent reduction to
its capital expenditure program.

STORE TWENTY ONE: Owner Proposes CVA to Avert Administration
Belfast Telegraph reports that Indian manufacturing giant Alok
Group, Store Twenty One's owner, has proposed a radical
restructure of the retailer as it scrambles to avoid

Alok Group has tabled a proposal for a company voluntary
arrangement (CVA), which is understood to involve slashing its
rent bill and potentially closing unprofitable stores, Belfast
Telegraph relates.

Restructuring experts AlixPartners have been tasked with finding
a lifeline for the firm, which continues to grapple with tough
trading on the high street, Belfast Telegraph relays.

According to Belfast Telegraph, AlixPartners have been made
nominees of a CVA for Grabal Alok (UK) Ltd, which trades as Store
Twenty One, and appointed joint administrators of property
subsidiaries Be-Wise and QS PLC within the Store Twenty One

It was revealed at the beginning of June that the Store Twenty
One would fall into administration at a court hearing on Aug. 11
if a solution could not be found for the business, Belfast
Telegraph recounts.

Store Twenty One operates 202 stores and employs more than 1,000
people across the UK, Belfast Telegraph discloses.

TATA STEEL UK: EU Referendum May Impact Fate of UK Operations
Simon Mundy and Jim Pickard at The Financial Times report that
the EU referendum result could damage the chances of Tata Steel,
Britain's biggest steel producer, maintaining its operations in
the UK, according to a person close to the company.

Tata put its UK steel business up for sale in March after heavy
losses, the FT recounts.  It is due to shortlist two bidders from
the seven that expressed interest in buying the operations, but
it has also been in talks with the government about support to
enable it to stay, the FT discloses.

According to the FT, the person said there will now be
"recalibration" after the news that the UK will leave the EU, a
major market for Tata Steel UK.  "This could change everything."

Stephen Kinnock, the local MP, had warned that "chaos and
uncertainty" unleashed by Brexit would weigh heavily on the
British steel industry, the FT relays.

The referendum result could raise questions about the political
survival of Sajid Javid, the business secretary leading the
attempt to rescue Tata Steel UK, the FT states.

Tata Steel is the UK's biggest steel company.


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

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

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


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

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

Copyright 2016.  All rights reserved.  ISSN 1529-2754.

This material is copyrighted and any commercial use, resale or
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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

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