TCREUR_Public/160728.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, July 28, 2016, Vol. 17, No. 148


                            Headlines


A Z E R B A I J A N

AZERBAIJAN: Fitch Affirms 'BB+/B' Issuer Default Ratings


B E L A R U S

BELARUS: Fitch Affirms 'B-/B' Issuer Default Ratings
DEVELOPMENT BANK: S&P Affirms 'B-/B' ICRs, Outlook Stable


C R O A T I A

CROATIA: Fitch Cuts Local Currency Issuer Default Rating to 'BB'


C Y P R U S

CYPRUS: Fitch Affirms 'B+' Local Currency Issuer Default Rating


C Z E C H   R E P U B L I C

OKD: Czech Corruption Police Probe Financial Operation


F R A N C E

ALLIANCE AUTOMOTIVE: S&P Affirms 'B+' CCR, Outlook Stable
AVENIR TELECOM: Shuts More Shops, Insolvency Process Extended
HOLDIKKS SAS: S&P Lowers CCR to 'B-', Outlook Negative


G E O R G I A

GEORGIA: Fitch Affirms 'BB-' Local Currency Issuer Default Rating


G E R M A N Y

SCHAEFFLER FINANCE: S&P Affirms 'BB' Ratings on Sr. Sec. Debts
UNISTER: Administrators Hire Macquarie to Find Buyer for Business


G R E E C E

FAGE INTERNATIONAL: Moody's Raises CFR to B1, Outlook Stable
FAGE INTERNATIONAL: S&P Raises CCR to 'BB-', Outlook Stable
SINEPIA DAC: S&P Assigns Prelim. BB Rating to 4 Note Classes


H U N G A R Y

ZSOLNAY: Court Rejects Registration of Ledina Keramia


I C E L A N D

ICELAND FOODS: S&P Lowers CCR to 'B', Outlook Stable


I T A L Y

BANCA CARIGE: Fitch Affirms 'BB+' Rating on OBG Program
MONTE DEI PASCHI: Pension Funds to Support New Bank Fund Plan


M A C E D O N I A

MACEDONIA: Fitch Affirms 'BB+' LC Issuer Default Rating


P O R T U G A L

PORTUGAL: Fitch Affirms BB+ Local Currency Issuer Default Rating


R U S S I A

INTERREGIONAL DISTRIBUTION: S&P Affirms BB- Long-Term CCR


S E R B I A

SERBIA: Fitch Affirms 'BB-' Local Currency Issuer Default Rating


S L O V E N I A

ANTENNA TV: Ljubljana Court Launches Insolvency Procedure


S W I T Z E R L A N D

SELECTA GROUP: S&P Affirms 'B' CCR, Outlook Negative


U K R A I N E

STATE LAND: Declared Insolvent by National Bank of Ukraine


U N I T E D   K I N G D O M

BHS GROUP: Chappell Denies Blame for Retailer's Collapse
ENTERPRISE INSURANCE: Hopelessly Insolvent, Has GBP18MM Shortfall
ITHACA ENERGY: S&P Affirms 'B-' CCR, Outlook Stable
TURNSTONE MIDCO 2: Moody's Affirms B2 CFR, Outlook Stable
VEDANTA RESOURCES: Moody's Says Merger Terms No Impact on B2 CFR


U Z B E K I S T A N

UZBEK INDUSTRIAL: Fitch Hikes LT Foreign-Currency IDRs to 'B'


                            *********


===================
A Z E R B A I J A N
===================


AZERBAIJAN: Fitch Affirms 'BB+/B' Issuer Default Ratings
--------------------------------------------------------
Fitch Ratings has affirmed Azerbaijan's Long-Term Local Currency
(LTLC) IDR at 'BB+' with a Negative Outlook. The Short-Term
Foreign Currency (STFC) IDR has been affirmed at 'B' and a new
Short-Term Local Currency (STLC) IDR of 'B' has been assigned.

Fitch said, "Under EU credit rating agency (CRA) regulation, the
publication of sovereign reviews is subject to restrictions and
must take place according to a published schedule, except where
it is necessary for CRAs to deviate from this in order to comply
with their legal obligations. Fitch interprets this provision as
allowing us to publish a rating review in situations where there
is a change in our criteria that we believe makes it
inappropriate for us to wait until the next scheduled review date
to update the rating or Outlook/Watch status. The next scheduled
review date for Fitch's sovereign rating on Azerbaijan is 26
August 2016, but Fitch believes that a portfolio review is now
warranted based on recent changes to our criteria.

"The rating committee that assigned the ratings included within
this Rating Action Commentary was a portfolio review following
recent changes to our criteria, and focused on three areas,
namely the assignment of STLC IDRs, the review of existing STFC
IDRs and the review of the notching relationship between existing
LTLC IDRs and Long-Term Foreign Currency (LTFC) IDRs. The
committee approved a variation from criteria on the basis that
the review applied all relevant sections of our criteria related
to the above rating types but did not apply the sections of the
criteria related to LTFC IDRs, as the latter were not included in
the scope of this review."

KEY RATING DRIVERS
The affirmation of Azerbaijan's LTLC IDR at 'BB+' reflects the
following key rating driver:

-- In line with the updated guidance contained in Fitch's
    revised Sovereign Rating Criteria dated July 18, 2016,
    Azerbaijan's credit profile does not support a notching up of
    the LTLC IDR above the LTFC IDR. This reflects Fitch's view
    that neither of the two key factors cited in the criteria
    that support upward notching of the LTLC IDR are present for
    Azerbaijan. Those two key factors are: (i) strong public
    finance fundamentals relative to external finance
    fundamentals; and (ii) previous preferential treatment of LC
    creditors relative to FC creditors.

The affirmation of Azerbaijan's STFC IDR at 'B' reflects the
following key rating driver:

-- In line with the updated guidance contained in Fitch's
    revised Sovereign Rating Criteria dated July 18, 2016,
    Azerbaijan's STFC IDR is derived from the mapping to the
    sovereign's LTFC IDR of 'BB+'.

The assignment of a STLC IDR of 'B' to Azerbaijan reflects the
following key rating driver and its weight:

HIGH
The assignment of the STLC IDR is consistent with Fitch's
approach to assigning ST ratings by using its Long-Term/Short-
Term Rating Correspondence table to map the STLC IDR from the
LTLC rating scale. According to Fitch's Rating Definitions, the
Fitch Rating Correspondence Table is "a guide only and variations
from this correspondence will occur". However, variations to this
approach are rare in the case of sovereign ratings.

Azerbaijan's STLC IDR is derived from the mapping to the
sovereign's LTLC IDR of 'BB+'.

RATING SENSITIVITIES
The main factors that could lead to a change in the LTLC IDR are
as follows:

-- A change in the LTFC IDR
-- A change in the key factors or supporting factors for
    notching up of the LTLC IDR from the LTFC IDR

The main factors that could lead to a change in the STFC IDR or
the STLC IDR are as follows:

-- A change in the LTFC IDR (for the STFC IDR)
-- A change in the LTLC IDR (for the STLC IDR)

The rating sensitivities outlined in the previous Rating Action
Commentary dated February 26, 2016, are unchanged in respect of
the LTFC IDR. Consistent with the criteria variation referred to
above, a review of the LTFC IDR and associated rating
sensitivities was not included as part of this review.

ASSUMPTIONS
The assumptions outlined in the previous Rating Action Commentary
dated February 26, 2016, are unchanged in respect of the LTFC
IDR. Consistent with the criteria variation referred to above, a
review of the LTFC IDR and associated assumptions was not
included as part of this review.


=============
B E L A R U S
=============


BELARUS: Fitch Affirms 'B-/B' Issuer Default Ratings
----------------------------------------------------
Fitch Ratings has affirmed Belarus's Long-Term Local Currency
(LTLC) IDR at 'B-' with a Stable Outlook. The Short-Term Foreign
Currency (STFC) IDR has been affirmed at 'B' and a new Short-Term
Local Currency (STLC) IDR of 'B' has been assigned.

Fitch said, "Under EU credit rating agency (CRA) regulation, the
publication of sovereign reviews is subject to restrictions and
must take place according to a published schedule, except where
it is necessary for CRAs to deviate from this in order to comply
with their legal obligations. Fitch interprets this provision as
allowing us to publish a rating review in situations where there
is a change in our criteria that we believe makes it
inappropriate for us to wait until the next scheduled review date
to update the rating or Outlook/Watch status. The next scheduled
review date for Fitch's sovereign rating on Belarus is 5 August
2016, but Fitch believes that a portfolio review is now warranted
based on recent changes to our criteria.

"The rating committee that assigned the ratings included within
this Rating Action Commentary was a portfolio review following
recent changes to our criteria, and focused on three areas,
namely the assignment of STLC IDRs, the review of existing STFC
IDRs and the review of the notching relationship between existing
LTLC IDRs and Long-Term Foreign Currency (LTFC) IDRs. The
committee approved a variation from criteria on the basis that
the review applied all relevant sections of our criteria related
to the above rating types but did not apply the sections of the
criteria related to LTFC IDRs, as the latter were not included in
the scope of this review."

KEY RATING DRIVERS
The affirmation of Belarus's LTLC IDR at 'B-' reflects the
following key rating driver:

-- In line with the updated guidance contained in Fitch's
    revised Sovereign Rating Criteria dated July 18, 2016,
    Belarus's credit profile does not support a notching up of
    the LTLC IDR above the LTFC IDR. This reflects Fitch's view
    that neither of the two key factors cited in the criteria
    that support upward notching of the LTLC IDR are present for
    Belarus. Those two key factors are: (i) strong public finance
    fundamentals relative to external finance fundamentals; and
   (ii) previous preferential treatment of LC creditors relative
    to FC creditors.

The affirmation of Belarus's STFC IDR at 'B' reflects the
following key rating driver:

-- In line with the updated guidance contained in Fitch's
    revised Sovereign Rating Criteria dated July 18, 2016,
    Belarus's STFC IDR is derived from the mapping to the
    sovereign's LTFC IDR of 'B-'.

The assignment of a STLC IDR of 'B' to Belarus reflects the
following key rating driver and its weight:

HIGH
The assignment of the STLC IDR is consistent with Fitch's
approach to assigning ST ratings by using its Long-Term/Short-
Term Rating Correspondence table to map the STLC IDR from the
LTLC rating scale. According to Fitch's Rating Definitions, the
Fitch Rating Correspondence Table is "a guide only and variations
from this correspondence will occur". However, variations to this
approach are rare in the case of sovereign ratings.

Belarus's STLC IDR is derived from the mapping to the sovereign's
LTLC IDR of 'B-'.

RATING SENSITIVITIES
The main factors that could lead to a change in the LTLC IDR are
as follows:

-- A change in the LTFC IDR
-- A change in the key factors or supporting factors for
    notching up of the LTLC IDR from the LTFC IDR

The main factors that could lead to a change in the STFC IDR or
the STLC IDR are as follows:

-- A change in the LTFC IDR (for the STFC IDR)
-- A change in the LTLC IDR (for the STLC IDR)

The rating sensitivities outlined in the previous Rating Action
Commentary dated February 26, 2016, are unchanged in respect of
the LTFC IDR. Consistent with the criteria variation referred to
above, a review of the LTFC IDR and associated rating
sensitivities was not included as part of this review.

ASSUMPTIONS
The assumptions outlined in the previous Rating Action Commentary
dated February 26, 2016, are unchanged in respect of the LTFC
IDR. Consistent with the criteria variation referred to above, a
review of the LTFC IDR and associated assumptions was not
included as part of this review.


DEVELOPMENT BANK: S&P Affirms 'B-/B' ICRs, Outlook Stable
---------------------------------------------------------
S&P Global Ratings said it has affirmed its 'B-/B' long- and
short-term issuer credit ratings on JSC Development Bank of the
Republic of Belarus (DBRB).  The outlook is stable.

S&P rates DBRB under our criteria for government-related entities
(GREs).  S&P continues to believe that there is an almost certain
likelihood that Belarus' government would provide timely and
extraordinary support sufficient to service the bank's financial
obligations, if needed.  S&P's assessment of the likelihood of
extraordinary support is based on S&P's view of DBRB's:

   -- Integral link with the Belarus government, demonstrated by
      the state's 100% ultimate ownership, capital injections
      provided in the past, and the government's legal
      responsibility for all of the bank's bonds-although S&P
      classifies the Belarus government's general propensity to
      support the GRE sector as doubtful.  Key government
      figures, including the prime minister, are members of
      DBRB's supervisory board, allowing the state to maintain
      close oversight of the bank's activities.  The bank enjoys
      special legal status.  From August 2016, the bank will be
      subject to oversight from the National Bank of the Republic
      of Belarus (NBRB; the central bank), however, regulations
      applied to the bank will be unique and different from those
      for commercial banks.  Given the very small size of the
      bank's commercial debt (0.3% of GDP) relative to the GRE
      sector's debt (over 10% of GDP), S&P believes the
      government would prioritize extraordinary support to the
      bank ahead of other GREs.

   -- Critical public policy role as the main institution
      providing long-term capital-intensive loans under
      government programs in Belarus, which cannot otherwise be
      undertaken by banks on commercial terms.  Accounting for
      over 5.5% of GDP, over 7% of total banking system assets,
      and some 50% of total corporate lending under state
      programs, DBRB is the key agent in the selected sectors
      that the government deems essential for Belarus' economy,
      such as transport infrastructure and some sub-sectors of
      the agricultural sector.  According to government
      regulation, in 2016, DBRB became the sole provider of new
      corporate subsidized lending in Belarus .

S&P's adequate view of capitalization, supported by a capital
injection from the government totaling Belarusian ruble 2
trillion (US$130 million approximate equivalent) in 2015,
together with S&P's continued view of the bank's adequate
business position, moderate risk position, average funding, and
adequate liquidity, underpin our assessment of DBRB's stand-alone
credit profile (SACP)at 'b-'.

The stable outlook on DBRB mirrors S&P's outlook on Belarus.

S&P could raise the ratings on DBRB if S&P was to take a positive
rating actionon Belarus.

S&P could lower the ratings on the bank following a negative
rating action on the sovereign.  Even if the sovereign rating is
unchanged, S&P would take a negative action on DBRB if its link
to or role for the government weakened and S&P lowered its
assessment of its SACP.


=============
C R O A T I A
=============


CROATIA: Fitch Cuts Local Currency Issuer Default Rating to 'BB'
----------------------------------------------------------------
Fitch Ratings has downgraded Croatia's Long-Term Local Currency
(LTLC) IDR to 'BB' from 'BB+'. The Outlook is Negative. The issue
ratings on Croatia's long-term senior unsecured local currency
bonds have also been downgraded to 'BB' from 'BB+'. The Short-
Term Foreign Currency (STFC) IDR has been affirmed at 'B' and a
new Short-Term Local Currency (STLC) IDR of 'B' has been
assigned.

Fitch said, "Under EU credit rating agency (CRA) regulation, the
publication of sovereign reviews is subject to restrictions and
must take place according to a published schedule, except where
it is necessary for CRAs to deviate from this in order to comply
with their legal obligations. Fitch interprets this provision as
allowing us to publish a rating review in situations where there
is a change in our criteria that we believe makes it
inappropriate for us to wait until the next scheduled review date
to update the rating or Outlook/Watch status. The next scheduled
review date for Fitch's sovereign rating on Croatia is 29 July
2016, but Fitch believes that a portfolio review is now warranted
based on recent changes to our criteria."

Fitch will make public a more detailed country-specific report
outlining its rationale for these rating actions within 10
working days of this Rating Action Commentary.

Fitch said, "The rating committee that assigned the ratings
included within this Rating Action Commentary was a portfolio
review following recent changes to our criteria, and focused on
three areas, namely the assignment of STLC IDRs, the review of
existing STFC IDRs and the review of the notching relationship
between existing LTLC IDRs and Long-Term Foreign Currency (LTFC)
IDRs. The committee approved a variation from criteria on the
basis that the review applied all relevant sections of our
criteria related to the above rating types but did not apply the
sections of the criteria related to LTFC IDRs, as the latter were
not included in the scope of this review."

KEY RATING DRIVERS
The downgrade of Croatia's LTLC IDR to 'BB' reflects the
following key rating driver and its relative weight:

HIGH
-- In line with the updated guidance contained in Fitch's
    revised Sovereign Rating Criteria dated July 18, 2016,
    Croatia's credit profile does not support a notching up of
    the LTLC IDR above the LTFC IDR. This reflects Fitch's view
    that neither of the two key factors cited in the criteria
    that support upward notching of the LTLC IDR are present for
    Croatia. Those two key factors are: (i) strong public finance
    fundamentals relative to external finance fundamentals; and
    (ii) previous preferential treatment of LC creditors relative
    to FC creditors.

The affirmation of Croatia's STFC IDR at 'B' reflects the
following key rating driver:

-- In line with the updated guidance contained in Fitch's
    revised Sovereign Rating Criteria dated July 18, 2016,
    Croatia's STFC IDR is derived from the mapping to the
    sovereign's LTFC IDR of 'BB'.

The assignment of a STLC IDR of 'B' to Croatia reflects the
following key rating driver and its weight:

HIGH
-- The assignment of the STLC IDR is consistent with Fitch's
    approach to assigning ST ratings by using its Long-
    Term/Short-Term Rating Correspondence table to map the STLC
    IDR from the LTLC rating scale. According to Fitch's Rating
    Definitions, the Fitch Rating Correspondence Table is "a
    guide only and variations from this correspondence will
    occur". However, variations to this approach are rare in the
    case of sovereign ratings.

Croatia's STLC IDR is derived from the mapping to the sovereign's
revised LTLC IDR of 'BB'.

RATING SENSITIVITIES
The main factors that could lead to a change in the LTLC IDR are
as follows:

-- A change in the LTFC IDR
-- A change in the key factors or supporting factors for
    notching up of the LTLC IDR from the LTFC IDR

The main factors that could lead to a change in the STFC IDR or
the STLC IDR are as follows:

-- A change in the LTFC IDR (for the STFC IDR)
-- A change in the LTLC IDR (for the STLC IDR)

The rating sensitivities outlined in the previous Rating Action
Commentary dated January 29, 2016, are unchanged in respect of
the LTFC IDR. Consistent with the criteria variation referred to
above, a review of the LTFC IDR and associated rating
sensitivities was not included as part of this review.

ASSUMPTIONS
The assumptions outlined in the previous Rating Action Commentary
dated January 29, 2016, are unchanged in respect of the LTFC IDR.
Consistent with the criteria variation referred to above, a
review of the LTFC IDR and associated assumptions was not
included as part of this review.


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


CYPRUS: Fitch Affirms 'B+' Local Currency Issuer Default Rating
---------------------------------------------------------------
Fitch Ratings has affirmed Cyprus's Long-Term Local Currency
(LTLC) IDR at 'B+' with a Positive Outlook. The issue ratings on
Cyprus's long-term senior unsecured local currency bonds have
also been affirmed at 'B+'. The Short-Term Foreign Currency
(STFC) IDR has been affirmed at 'B' and a new Short-Term Local
Currency (STLC) IDR of 'B' has been assigned.

Fitch said, "Under EU credit rating agency (CRA) regulation, the
publication of sovereign reviews is subject to restrictions and
must take place according to a published schedule, except where
it is necessary for CRAs to deviate from this in order to comply
with their legal obligations. Fitch interprets this provision as
allowing us to publish a rating review in situations where there
is a change in our criteria that we believe makes it
inappropriate for us to wait until the next scheduled review date
to update the rating or Outlook/Watch status. The next scheduled
review date for Fitch's sovereign rating on Cyprus is 21 October
2016, but Fitch believes that a portfolio review is now warranted
based on recent changes to our criteria."

Fitch will make public a more detailed country-specific report
outlining its rationale for these rating actions within 10
working days of this Rating Action Commentary.

Fitch said, "The rating committee that assigned the ratings
included within this Rating Action Commentary was a portfolio
review following recent changes to our criteria, and focused on
three areas, namely the assignment of STLC IDRs, the review of
existing STFC IDRs and the review of the notching relationship
between existing LTLC IDRs and Long-Term Foreign Currency (LTFC)
IDRs. The committee approved a variation from criteria on the
basis that the review applied all relevant sections of our
criteria related to the above rating types but did not apply the
sections of the criteria related to LTFC IDRs, as the latter were
not included in the scope of this review."

KEY RATING DRIVERS

The affirmation of Cyprus's LTLC IDR at 'B+' reflects the
following key rating driver:

-- In line with the updated guidance contained in Fitch's
    revised Sovereign Rating Criteria dated July 18, 2016,
    Cyprus's credit profile does not support a notching up of the
    LTLC IDR above the LTFC IDR. This reflects Fitch's view that
    neither of the two key factors cited in the criteria that
    support upward notching of the LTLC IDR are present for
    Cyprus. Those two key factors are: (i) strong public finance
    fundamentals relative to external finance fundamentals; and
   (ii) previous preferential treatment of LC creditors relative
    to FC creditors. Additionally, Cyprus is a member of the
    eurozone currency union, which constrains the LTLC IDR at the
    same level as the LTFC IDR.

The affirmation of Cyprus's STFC IDR at 'B' reflects the
following key rating driver:

-- In line with the updated guidance contained in Fitch's
    revised Sovereign Rating Criteria dated July 18, 2016,
    Cyprus's STFC IDR is derived from the mapping to the
    sovereign's LTFC IDR of 'B+'.

The assignment of a STLC IDR of 'B' to Cyprus reflects the
following key rating driver and its weight:

HIGH
The assignment of the STLC IDR is consistent with Fitch's
approach to assigning ST ratings by using its Long-Term/Short-
Term Rating Correspondence table to map the STLC IDR from the
LTLC rating scale. According to Fitch's Rating Definitions, the
Fitch Rating Correspondence Table is "a guide only and variations
from this correspondence will occur". However, variations to this
approach are rare in the case of sovereign ratings.

Cyprus's STLC IDR is derived from the mapping to the sovereign's
LTLC IDR of 'B+'.

RATING SENSITIVITIES
The main factors that could lead to a change in the LTLC IDR are
as follows:

-- A change in the LTFC IDR
-- A change in the key factors or supporting factors for
notching
    up of the LTLC IDR from the LTFC IDR

The main factors that could lead to a change in the STFC IDR or
the STLC IDR are as follows:

-- A change in the LTFC IDR (for the STFC IDR)
-- A change in the LTLC IDR (for the STLC IDR)

The rating sensitivities outlined in the previous Rating Action
Commentary dated April 22, 2016, are unchanged in respect of the
LTFC IDR. Consistent with the criteria variation referred to
above, a review of the LTFC IDR and associated rating
sensitivities was not included as part of this review.

ASSUMPTIONS
The assumptions outlined in the previous Rating Action Commentary
dated April 22, 2016, are unchanged in respect of the LTFC IDR.
Consistent with the criteria variation referred to above, a
review of the LTFC IDR and associated assumptions was not
included as part of this review.


===========================
C Z E C H   R E P U B L I C
===========================


OKD: Czech Corruption Police Probe Financial Operation
------------------------------------------------------
CTK reports that the Czech corruption police investigate the
financial management of the OKD black-coal mining company, which
was declared insolvent in May and has debts worth billions of
crowns, according to the insolvency register.

Detectives from the Squad for Uncovering Organised Crime (UOOZ)
are looking into suspicious transactions of OKD and the owner of
the NWR Holdings B.V., which owns OKD, CTK says.

OKD, for instance, vouched for billions-crown bonds and some of
its property was transferred to other firms, relates CTK.

"The police (UOOZ) has launched criminal proceedings on suspicion
of breach of trust and abuse of information and position in
business, which unspecified persons acting as bodies of OKD and
NWR N.V. (owner of the NWR Holdings B.V.) may have committed,"
CTK reports citing a resolution of the Olomouc High Court, which
rejected an appeal of NWR Holdings B.V. against a preliminary
measure imposed on OKD and confirmed the measure on July 15.

OKD insolvency administrator Leo Louda said the police have asked
for documentation on OKD financial management.  The Olomouc High
State Attorney's Office is supervising the investigation, CTK
notes.

CTK relates that Mr. Louda pointed to the OKD's statements that
NWR group forced it to couch for its issued bonds worth
CZK10.5 billion. Then NWR did not prevent OKD from ending up in
insolvency.

OKD lawyers told Mr. Louda that a forensic investigation had
started.  According to CTK, OKD said in a report sent to the
court that the flats and real estate that originally belonged to
OKD are now administered by RPG Byty firm controlled by an
unknown firm from Luxembourg. The OKD energy management was taken
over by Veolia Prumyslove sluzby last year and some land crucial
for mining is owned by Asental Land firm with a Dutch owner, CTK
states.

CTK says the OKD management also reports that in 2010, the
company used a part of its internal credit framework of CZK11.8
billion for the payment of dividends and other obligations to its
share-holders. However, the sum should have been used for
repaying the previous loan.

CTK notes that OKD, which operates in north Moravia, is
struggling for survival because of the decreasing coal prices.
Mining is loss-making in spite of the austerity measures taken.

According to the insolvency petition from May, the OKD's debts
total more than CZK17 billion. The firm has at least 650
creditors. Its property is worth less than seven billion. Over
500 creditors have already turned to court, the report notes.

CTK says the OKD company has roughly 9,800 regular employees,
2,500 employees at supplier companies and 200 agency workers.
Jobs of thousands of people in related professions are
endangered, too.

The report relates that the government is dealing with the OKD
problems to decide whether and how much the state could lend to
the firm for its operational costs since OKD does not have enough
cash.

Its creditors will meet in August to make a decision on OKD's
future, adds CTK.

OKD is the only producer of hard coal (bituminous coal) in the
Czech Republic. Its coal is mined in the southern part of the
Upper-Silesian Coal Basin -- in the Ostrava-Karvina coal
district.


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


ALLIANCE AUTOMOTIVE: S&P Affirms 'B+' CCR, Outlook Stable
---------------------------------------------------------
S&P Global Ratings said that it had revised its outlook on French
auto parts distributor Alliance Automotive Holding to stable from
negative.  At the same time, S&P affirmed its long-term corporate
credit rating on Alliance Automotive at 'B+'.

In addition, S&P affirmed its 'B+' issue rating on Alliance
Automotive Finance Plc's EUR360 million of fixed-rate notes and
EUR100 million of floating-rate notes.  The recovery rating
remains at '4', indicating S&P's expectation of recovery in the
lower half of the 30%-50% range in the event of a payment
default.

S&P also affirmed its 'BB' issue rating on the EUR50 million
super senior revolving credit facility (RCF) issued by Alliance
Automotive Investment Ltd.  The recovery rating on this facility
remains at '1', indicating S&P's expectation of 90%-100% recovery
in the event of a payment default.

The outlook revision follows Alliance Automotive's strong
performance in 2015 and S&P's updated expectation that robust
EBITDA growth in 2016-2017 should offset a recent increase in
gross debt.  The stable outlook also factors in S&P's assumption
that the company will prudently manage future external growth.
S&P believes that Alliance Automotive will make accretive
acquisitions, at historic multiples of about 4.0x-5.0x, that will
generate significant purchasing synergies, immediately bolstering
EBITDA.

As of the end of first-quarter 2016, Alliance Automotive had
EUR525 million of gross debt.  This represents a EUR156 million
increase from EUR369 million reported at year-end 2014.
Following its EUR225 fixed-rate note and EUR100 million floating-
rate note issue in December 2014, the company made two bond taps
for a total of EUR135 million, with the intention to use the
proceeds to fund its sizable acquisitions pipeline.  Also, some
debt was assumed as part of its acquisitions.

Alliance Automotive simultaneously saw an increase in its
reported EBITDA, jumping from EUR68.6 million at year-end 2014 to
EUR90 million for the 12 months ended March 31, 2016, thereby
offsetting leverage build up.  The company enjoyed solid 6.0%
organic growth in 2015, combined with 4.2% external growth and a
positive 3% foreign-exchange impact.

As a result, S&P expects that the adjusted debt-to-EBITDA ratio,
as measured by S&P Global Ratings, will recede from the peak of
5.0x in 2015 to about 4.3x-4.7x in 2016-2017.  S&P's base case
factors in no further gross debt increase in 2016 and a
significant EBITDA improvement to about EUR120 million on an
adjusted basis.  The company estimates about EUR10 million of
full-year EBITDA contribution from auto spare parts distributor
Coler, which it acquired in 2015.  S&P thinks there is moderate
upside potential for the EBITDA margin from 7.5% on an adjusted
basis in 2015, thanks to rising volumes and purchasing synergies.
S&P notes, however, that the reported EBITDA may vary, depending
on the closing dates of acquisitions and their pro-rated
consolidation.

Alliance Automotive demonstrates a strong appetite for external
growth.  It spent about EUR90 million on acquisitions in 2015,
and S&P expects the company will allocate EUR100 million per year
over the next two years for additional acquisitions.  The company
generally achieves meaningful purchasing synergies from
acquisitions that have spurred its EBITDA generation.

S&P's debt calculation for Alliance Automotive includes an
adjustment of roughly EUR25 million for operating leases and
EUR5 million for pension deficits.  Given the private equity
ownership by Blackstone, S&P don't deduct cash in its adjusted
leverage calculation.  However, S&P notes that as of end-March
2016, the company had material cash balances of EUR149 million,
including proceeds from its EUR70 million bond tap.  S&P
understands that the company will use these cash balances to fund
acquisitions and does not intend to distribute dividends.

S&P's view of the company's business risk profile reflects the
highly competitive and fragmented nature of the automotive
aftermarket, where the company competes not only against other
independent auto spare parts suppliers, but also original auto
suppliers.  S&P also factors in Alliance Automotive's limited
size and limited geographic diversity.  The company is one of two
leaders on the French independent auto spare parts market, along
with Autodistribution, but its operations remain of limited scope
globally.  S&P notes that the company has maintained a stable
market position in France.  The company recently entered the
German market through the Coler acquisition, and S&P expects the
company will continue to strengthen its presence in Germany
through additional acquisitions.

S&P views positively the group's sound customer base and wide
product offering, with more than 28,000 customers and 150,000
stock-keeping units.  Also, the company demonstrated rather
stable profitability during the financial crisis in 2008-2009.

S&P continues to apply a one-notch negative adjustment to the
anchor because, based on S&P's comparable ratings analysis,
Alliance Automotive has a less favorable market position than its
peer Rhiag, which enjoys a dominant share of its domestic Italian
market, where it sells mainly to wholesalers.

The stable outlook reflects S&P's expectation that Alliance
Automotive will continue to demonstrate strong growth and
improving margins on the back of increasing purchasing synergies
and higher volumes over the next 12 months.  As a result, S&P
anticipates that the company will be able to contain its leverage
below 5.0x in 2016-2017.  This is based on S&P's assumption that
new acquisitions will be completed at average historical 4.0x-
5.0x multiples (including synergies) and would not further
increase the leverage, which will benefit immediately from EBITDA
growth.

S&P could lower the rating if the company's adjusted debt to
EBITDA increased beyond 5.0x.  This could occur if acquisition
spending outpaced FOCF generation and led to higher gross debt,
and the uptick in leverage were not entirely offset by EBITDA
growth.  S&P would also consider a more aggressive financial
policy, possibly including dividend distribution, to be negative
for the rating.

Rating upside would hinge on continued deleveraging, on the back
of steady EBITDA growth and gross debt reduction.  However, S&P
currently thinks that rating upside is limited given the private
equity ownership of the company.


AVENIR TELECOM: Shuts More Shops, Insolvency Process Extended
-------------------------------------------------------------
Telecompaper reports that Avenir Telecom said that since
September 2015 it has closed the majority of its surviving stores
and cut 40% of staff.

Telecompaper relates that the company also announced that the
court handling its insolvency proceedings has ordered a fresh,
six-month observation period.

In January 2016, Avenir Telecom entered a creditor protection
programme and announced plans to shut down its Internity store
network, blaming a loss of contract with telecom operators since
2013, the report notes.

France-based Avenir Telecom distributes and retails phone and
accessories.


HOLDIKKS SAS: S&P Lowers CCR to 'B-', Outlook Negative
------------------------------------------------------
S&P Global Ratings lowered its long-term corporate credit rating
on HoldIKKS SAS, the parent company of French premium fashion
retailer IKKS Group SAS (collectively, IKKS), to 'B-' from 'B'.
The outlook is negative.

In addition, S&P lowered its long-term issue rating on IKKS'
EUR33 million super senior revolving credit facility (RCF) to
'BB-' from 'BB'.  The recovery rating is '1+', reflecting S&P's
expectation of full recovery, in the event of a payment default.

S&P also lowered its issue ratings on the group's senior secured
notes to 'B-' from 'B'.  The recovery rating remains '4',
reflecting S&P's expectation of average (30%-50%) recovery in the
higher half of the range.

The downgrade reflects S&P's view of IKKS' weakened business risk
profile, which S&P has revised to weak from fair.  This is
underpinned by S&P's view of the vulnerability of IKKS' operating
model to changes in market conditions.  In S&P's opinion, IKKS'
cost structure is less flexible than S&P previously anticipated,
resulting in weak top-line growth and higher stress on
profitability and cash flow generation than S&P believed was the
case historically.  This has culminated in material
underperformance in the first quarter 2016, which S&P anticipates
will lead to weak 2016 results that are below its expectations
for a 'B' rating.

S&P's assessment of business risk primarily incorporates its view
of the retailer's exposure to the apparel industry -- which S&P
assess as cyclical and competitive, with limited barriers to
entry -- and to fashion risk.  It further reflects the company's
relatively limited size and geographic exposure to France, where
it generates about 80% of its revenues.  Additionally, S&P sees
some execution risks in both IKKS' domestic and international
expansion strategy, although S&P understands that part of this
expansion will be in countries where IKKS is already present.

These weaknesses are partially offset by IKKS' diversification in
terms of distribution channels, brands, and target customers.
S&P understands that the company's positioning in premium urban
casual wear somewhat reduces fashion risk.  The company's retail
strategy is partially based on an "affiliate" business model.
S&P views this favorably, since it reduces operating leverage by
transferring some fixed costs, such as staff and rent, to
partners.

"We anticipate that 2016 earnings and free operating cash flow
(FOCF) generation will be significantly lower than we initially
estimated, given the company's poor operating performance in the
first quarter of this year.  Based on our forecast of weaker-
than-expected results, we continue to assess IKKS as having
highly leveraged financial risk.  We anticipate the S&P Global
Ratings' adjusted debt will be EUR554 million in 2016, comprising
EUR147 million of payment-in-kind (PIK) debt-like instruments,
EUR330 million related to the senior secured notes, and other
short-term liabilities and a EUR77 million operating lease
adjustment.  We expect that debt to EBITDA will increase to 8.2x
on a S&P Global Ratings' adjusted basis (6x excluding PIK debt
instruments), and that the company's EBITDA coverage ratio will
tighten to 2x (2.5x excluding PIK debt instruments).  We expect
that IKKS' weaker financial performance and lower cash generation
will put pressure on liquidity, which we consider to be less than
adequate," S&P said.

Mitigating factors that support the near-term sustainability of
the company's capital structure include the cash-preserving
characteristics of the vendor loan and shareholder instruments.
This supports a positive funds from operations (FFO)-to-cash
interest coverage ratio above 3x, under S&P's base-case scenario
for the next 12 months.  S&P also understands the group can rely
on EUR17 million other uncommitted short-term sources of funding.
Moreover, the group has managed to structurally improve its tax
rate, which will help preserve the cash flow generation, in S&P's
view.

The negative outlook reflects S&P's expectation that IKKS' 2016
earnings and FOCF generation will be significantly lower than S&P
initially estimated, based on the company's poor operating
performance in the first quarter of this year.  S&P expects weak
performance will weigh significantly on the company's less-than-
adequate liquidity, and result in tight covenant headroom under
the company's RCF.

S&P could lower the rating if IKKS is unable to restore earnings
growth and material FOCF generation in the next few quarters, in
the context of its high financial leverage.  A downgrade could
also be precipitated by further deterioration in the company's
liquidity position or a breach of its covenants.  If the company
breaches its senior secured RCF covenant and fails to rectify the
breach, this could also put downward pressure on the rating.

S&P could revise the outlook to stable if it anticipated a return
to sustainably positive like-for-like revenue growth, stable or
widening EBITDA margins, a sustainable trend of deleveraging,
material FOCF generation, and adequate liquidity, including
covenant headroom of at least 15%.


=============
G E O R G I A
=============


GEORGIA: Fitch Affirms 'BB-' Local Currency Issuer Default Rating
-----------------------------------------------------------------
Fitch Ratings has affirmed Georgia's Long-Term Local Currency
(LTLC) IDR at 'BB-' with a Stable Outlook. The issue ratings on
Georgia's long-term senior unsecured local currency bonds have
also been affirmed at 'BB-'. The Short-Term Foreign Currency
(STFC) IDR has been affirmed at 'B'. A new Short-Term Local
Currency (STLC) IDR of 'B' has been assigned.

Fitch said, "Under EU credit rating agency (CRA) regulation, the
publication of sovereign reviews is subject to restrictions and
must take place according to a published schedule, except where
it is necessary for CRAs to deviate from this in order to comply
with their legal obligations. Fitch interprets this provision as
allowing us to publish a rating review in situations where there
is a material change in the creditworthiness of the issuer that
we believe makes it inappropriate for us to wait until the next
scheduled review date to update the rating or Outlook/Watch
status. The next scheduled review date for Fitch's sovereign
rating on Georgia is September 30, 2016, but Fitch believes that
changes to our criteria warrant such a deviation from the
calendar and our rationale for this is laid out below.

"The rating committee that assigned the ratings included within
this Rating Action Commentary was a portfolio review, and focused
on three areas, namely the assignment of STLC IDRs, the review of
existing STFC IDRs and the review of the notching relationship
between existing LTLC IDRs and Long-Term Foreign Currency (LTFC)
IDRs. The committee approved a variation from criteria on the
basis that the review applied all relevant sections of our
criteria related to the above rating types but did not apply the
sections of the criteria related to LTFC IDRs, as the latter were
not included in the scope of this review."

KEY RATING DRIVERS

The affirmation of Georgia's LTLC IDR at 'BB-' reflects the
following key rating driver:-

In line with the updated guidance contained in Fitch's revised
Sovereign Rating Criteria dated 18 July 2016, the credit profile
of Georgia does not support a notching up of the LTLC IDR above
the LTFC IDR. This reflects Fitch's view that neither of the two
key factors cited in the criteria that support upward notching of
the LTLC IDR are present for Georgia. Those two key factors are:
(i) strong public finance fundamentals relative to external
finance fundamentals, and (ii) previous preferential treatment of
LC creditors relative to FC creditors.

The affirmation of Georgia's STFC IDR at 'B' reflects the
following key rating driver:-

In line with the updated guidance contained in Fitch's revised
Sovereign Rating Criteria dated 18 July 2016, Georgia's STFC IDR
is derived from the mapping to the sovereign's LTFC IDR of 'BB-'.

The assignment of a STLC IDR of 'B' to Georgia reflects the
following key rating driver and its weight:-

HIGH
The assignment of the STLC IDR is consistent with Fitch's
approach to assigning ST ratings by using its LT/ST Rating
Correspondence table to map the STLC IDR from the LTLC rating
scale. According to Fitch's Rating Definitions, the Fitch Rating
Correspondence Table is "a guide only and variations from this
correspondence will occur". However, variations to this approach
are rare in the case of sovereign ratings.

Georgia's STLC is derived from the mapping to the sovereign's
LTLC IDR of 'BB-'.

RATING SENSITIVITIES
The main factors that could lead to a change in the LTLC IDR are
as follows:

-- A change in the LTFC IDR
-- A change in the key factors or supporting factors for
    notching up of the LTLC IDR from the LTFC IDR

The main factors that could lead to a change in the STFC IDR or
the STLC IDR are as follows:

-- A change in the LTFC IDR (for the STFC IDR)
-- A change in the LTLC IDR (for the STLC IDR)

The rating sensitivities outlined in the previous Rating Action
Commentary dated April 1, 2016, are unchanged in respect of the
LTFC IDR. Consistent with the criteria variation referred to
above, a review of the LTFC IDR and associated rating
sensitivities was not included as part of this review.

ASSUMPTIONS
The assumptions outlined in the previous Rating Action Commentary
dated April 1, 2016, are unchanged in respect of the LTFC IDR.
Consistent with the criteria variation referred to above, a
review of the LTFC IDR and associated assumptions was not
included as part of this review.


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


SCHAEFFLER FINANCE: S&P Affirms 'BB' Ratings on Sr. Sec. Debts
--------------------------------------------------------------
S&P Global Ratings affirmed its 'BB' issue ratings on the senior
secured debt instruments issued by Schaeffler Finance B.V., a
fully-owned finance subsidiary of Schaeffler AG.  The recovery
rating on these debt instruments remains unchanged at '3',
indicating that S&P expects recovery prospects to be in the lower
half of the 50%-70% range.

At the same time, S&P affirmed its 'B+' issue ratings on
Schaeffler Finance B.V.'s EUR500 million senior unsecured notes
due 2019 and on all Schaeffler Holding Finance B.V.'s junior pay-
in-kind (PIK) debt instruments.  The '6' recovery rating reflects
S&P's expectation of negligible (0%-10%) recovery in the event of
a payment default.

S&P also affirmed its 'BB' issue ratings on the group's
EUR1.0 billion senior secured revolving credit facility (RCF) due
in 2019, two term loans B due 2020 -- originally for EUR750
million and for $1.3 billion -- and the EUR600 million 4.25%
senior secured notes due 2018.  S&P will withdraw the ratings on
these debt instruments once they have been effectively repaid in
full.

The affirmations follow Schaeffler AG's announcement that it will
use a new EUR1.0 billion five-year senior secured term loan
facility to refinance the remaining amount outstanding under the
senior secured loan facilities maturing in 2020 and the early
redemption of the EUR600 million 4.25% senior secured notes due
2018.  An upsized EUR1.3 billion RCF is also part of the new loan
agreement.

Following the signing of the new loan agreement, Schaeffler AG
will release a material part of the existing transaction
security, including share pledges as well as security assignments
over hedging, insurance, and trade receivables.  The new
transaction security will only consist of share pledges over the
share capital of Schaeffler Technologies and Schaeffler Finance
B.V., and assignment of Schaeffler Finance B.V.'s proceeds loans,
and will be shared with senior secured bondholders.

Furthermore, the new loan agreement will enable Schaeffler to
release a significant number of guarantors, and to keep only a
reduced guarantor group for the benefit of the new loan
facilities.  S&P also expects that the same guarantors will be
available to the existing senior secured and senior unsecured
bonds at Schaeffler Finance B.V.  Nevertheless, S&P understands
that the reduced guarantor group represents a substantial
contribution to the group's unconsolidated EBITDA, i.e. in excess
of 65%.

Moreover, the new loan agreement provides for more operational
flexibility by reducing restrictions.  For instance there will
only be one maintenance financial covenant.  The group will have
to comply with a target net leverage ratio and the interest cover
ratio will no longer be tested.

In addition, S&P understands that Schaeffler Finance B.V. has
launched a consent solicitation to senior secured and senior
unsecured bondholders to align the terms and conditions of the
bonds issued in 2013 and 2014 with the bonds most recently issued
in 2015.  S&P do not expect this to have a material impact on its
recovery analysis.

"We therefore reassessed our recovery expectations for senior
secured bondholders under the amended debt structure and amended
security and guarantee package, and we now expect recovery
prospects to be in the lower half of the 50%-70% range.  Despite
the aforementioned amendments to the security and guarantee
package, we believe that senior secured bondholders -- alongside
the new senior facilities lenders who share the same security and
guarantee package -- will continue to benefit from substantially
all the enterprise value through the minimal security package and
the reduced guarantor group.  However, recovery prospects are
marginally affected by the increased size of the senior secured
RCF and the increase in prior-ranking pension liabilities as of
March 31, 2016," S&P said.

The aforementioned transaction does not affect the junior PIK
debt instruments issued by Schaeffler Holding Finance B.V.  These
instruments include the EUR800 million and $1,000 million PIK
junior notes due 2018, the EUR350 million PIK toggle notes due
2021, the $475 million PIK toggle notes due 2019, and the $675
million PIK toggle notes due 2022 (all amounts as per the
original issuance/ documentation).  S&P's recovery rating of '6'
on these debt instruments continues to reflect their structural
subordination to a significant amount of debt at Schaeffler AG.

S&P do not include in our recovery analysis Schaeffler's 46%
equity interest in Continental.  This is because S&P regards the
value of this investment as volatile.

The 'BB' corporate credit rating on Schaeffler AG is based on
S&P's assessment of the group's satisfactory business risk
profile and aggressive financial risk profile.  The outlook is
stable.

                          RECOVERY ANALYSIS

SIMULATED DEFAULT ASSUMPTIONS
   -- Year of default: 2021
   -- EBITDA at emergence: EUR838 million
   -- Implied enterprise value multiple: 6.0x
   -- Jurisdiction: Germany

SIMPLIFIED WATERFALL
   -- Gross enterprise value at default: EUR5.03 billion
   -- Administrative costs: EUR352 million
   -- Net value available to creditors: EUR4.7 billion
   -- Priority claims: EUR1.1 billion
   -- Secured debt claims: EUR6.2 billion*
      -- Recovery expectations: 50%-70% (lower half of range)
   -- Senior unsecured debt claims: EUR508 million*
     -- Recovery expectation: 0%-10%
   -- Subordinated debt claims: EUR3.2 billion*
      -- Recovery expectations: 0%-10%

*All debt amounts include six months of prepetition interest.


UNISTER: Administrators Hire Macquarie to Find Buyer for Business
-----------------------------------------------------------------
Alexander Huebner at Reuters reports that the administrator of
Unister has hired Macquarie to find a buyer for the insolvent
company operating popular sites such as flight booking platform
fluege.de and package travel site ab-in-den-urlaub.de.

Groups such as broadcaster ProSieben and private equity firm EQT
have shown interest in Unister in two earlier sale attempts, the
most recent of which collapsed in spring 2015 over valuation
issues, Reuters relates.

According to Reuters, Unister had hoped to reap as much as EUR900
million (US$990 million) from 2015's attempted sale, but recent
reports in German media have suggested that it may now fetch only
about EUR100 million.

The administrator, as cited by Reuters, said the insolvency
proceedings and negative headlines had hit Unister's trading.

Unister, which has 1,100 staff, filed for insolvency after its
founder Thomas Wagner died in a crash on a private plane on a
trip back from Venice, where he had unsuccessfully tried to
secure a private loan to shore up the company's finances, Reuters
recounts.

Unister is a German online travel group.


===========
G R E E C E
===========


FAGE INTERNATIONAL: Moody's Raises CFR to B1, Outlook Stable
------------------------------------------------------------
Moody's Investors Service has upgraded the corporate family
rating of FAGE International S.A. to B1 from B2 and the
Probability of Default Rating (PDR) to B1-PD from B2-PD.
Concurrently, Moody's has assigned (P)B1 rating to the proposed
USD420 million unsecured notes due 2026 to be jointly issued by
FAGE International S.A. and FAGE USA Dairy Industry, Inc., a
subsidiary of FAGE.  The outlook on all ratings is stable.

The proceeds from the proposed notes will be applied to refinance
the existing USD400 million senior notes due 2020 (in tranches of
USD250 million and USD150 million), pay redemption premium and
transaction fees.  Upon closing of the refinancing transaction
Moody's will withdraw the rating of the existing notes.

The rating action reflects:

   -- Continued strong performance of FAGE supported by growth in
      its markets outside of Greece leading to Moody's adjusted
      debt / EBITDA ratio of 2.4x LTM March 2016

   -- Improvement in financing structure via expected lower debt
      servicing costs and extended maturity profile

   -- An expectation that FAGE's financial metrics will remain
      strong for its rating category, despite the remaining
      exposure to the economic situation in Greece and a
      potential increase in milk prices.

Moody's issues provisional ratings in advance of the final sale
of securities and these ratings reflect Moody's preliminary
credit opinion regarding the transaction only.  Upon a conclusive
review of the final documentation, Moody's will endeavor to
assign definitive ratings to the new notes.  Definitive ratings
may differ from provisional ratings.

                         RATINGS RATIONALE

FAGE's ratings primarily reflect its (1) small size relative to
Moody's rated universe of packaged goods issuers and narrow focus
on branded yogurt production; (2) continued exposure to the Greek
economy, although reduced to the lowest ever level; (3) exposure
to volatile milk prices and USD FX rate; and (4) pricing and
competitive pressures, including in the US, as the market
matures.

More positively, the rating reflects (1) FAGE's strong growth in
its core US market, as well as in the rest of Europe, supported
by favorable market trends, which has strongly offset the revenue
decline in Greece; (2) ability to increase prices to offset milk
costs; (3) strength of FAGE's product brands; and (4)
strengthening of key adjusted credit metrics, mainly driven by
the company's US expansion.

During quarter ended March 2016 sales grew by 6.5% mostly
attributable to the increase in sales volume in the US, the UK
and Italy offsetting the decline in volume of 6.9% in Greece.
The decrease in Greece volume was partially due to FAGE's
announcement of its intention to withdraw from its unprofitable
milk business. Q1 2016 gross margin reached 50% from 48% in Q1
2015 primarily as a result of further decline in milk prices.  Q1
2016 reported EBITDA margin increased to 23% from 22.4% in Q1
2015 due to stable yoy SG&A expenses.

FAGE has a limited exposure to Greek economic and banking system
due to its international diversification and proactive management
of credit exposure.  FAGE's contribution of sales in Greece
reduced further to c. 17% of total 2015 sales (or 14% post milk
business disposal).  Greek yogurt facility contributes a further
c. 20% of sales from exports, mainly to the UK and Italy, while
the company's main country of operation is the US, generating c.
63% of sales.  The company's exposure to Greece is expected to
reduce further as FAGE announced its plan to build a new yogurt
facility in Europe to support further growth in demand outside of
Greece, to be completed by the end of 2018.  The new European
facility is also expected to bring margin improvement,
significantly reducing transportation costs.

FAGE achieved a significant deleveraging to 2.4x LTM March 2016
from 4.0x at the end of FY14 and 6.4x in FY13 (gross Moody's
adjusted) primarily through EBITDA growth outside of Greece.

Moody's recognizes that the company's profitability benefited
from low milk prices during FY15 which, if reversed, will result
in reduced EBITDA and hence an increase in leverage.  However,
Moody's believes that the company can partially mitigate the
impact through price increases, product and milk sourcing mix and
operational efficiencies.

FAGE's cash flow generation has strongly improved, both due to
growth and a significant reduction in Capex following the
completion of the expansion of its US facility in 2015.  The
company has spent USD34.6 million capex LTM March 2016 (versus
USD101 million LTM March 2015).  As a result free cash flow (as
defined by Moody's) generated in 2015 turned positive at USD36
million.  Despite dividend payments resuming in 2015 at USD10
million per annum Moody's expects free cash flow to remain
positive during the next 12 months, supported by normalized level
of capex spending and expected lower interest cost of debt.  In
2018, Moody's expect free cash flow to turn again negative driven
primarily by the increased capex required for the building a new
European facility.

Moody's considers the company's liquidity to be adequate,
expected to consist as of transaction closing of approximately
USD75 million cash on balance sheet and USD35 million
availability under USD46 million credit lines.  The credit lines
consist of (i) USD35 million revolving credit facility (RCF) with
Citibank, N.A. in the US, secured by inventories and accounts
receivable of FAGE USA Dairy Industry, Inc. and (ii) EUR10
million bilateral line of credit with Alpha Bank AE in Greece.
The RCF maturity was extended to April 2021 from October 2016.
The company has a springing covenant which is required to be
tested if, subject to certain borrowing availability conditions,
RCF is at least 85% drawn.  Moody's also assumes a prudent policy
of the company in relation to its shareholder compensation which
excludes a significant increase in dividends.

                  RATIONALE FOR STABLE OUTLOOK

The stable rating outlook reflects the rating agency's
expectation that FAGE's growth in operations outside of Greece
will continue to offset the negative trends in its domestic
market and potential increase in milk prices.

               WHAT COULD CHANGE THE RATINGS UP/DOWN

Current business profile limits upwards pressure on the ratings.
Positive pressure on the ratings is unlikely unless the company
improves its business profile through increased scale and product
portfolio diversity while demonstrating adjusted debt / EBITDA
decline towards 2.0x on a sustainable basis, i.e. through the
cycle of milk price volatility.

Negative pressure on the ratings could occur if (i) adjusted EBIT
margin declines below 15%; (ii) free cash flow turns negative
leading to liquidity concerns; or (iii) adjusted debt/EBITDA
trends towards 3.5x on a sustainable basis.

The principal methodology used in these ratings was Global
Packaged Goods published in June 2013.

FAGE International S.A. manufactures and markets dairy products
in North America, Greece, the UK, Italy and Germany.  While the
business was founded in Greece in 1926, it has significantly
diversified its revenues into other geographies (notably the US)
over the past 10 years.  In Greece, FAGE is the market leader for
branded yoghurts and in the US, the company is the fourth-largest
branded yoghurt company, by sales value.  The Filippou family,
which founded the company, still retains full control.  FAGE
reported USD648 million in revenues for the year ended December
2015.


FAGE INTERNATIONAL: S&P Raises CCR to 'BB-', Outlook Stable
-----------------------------------------------------------
S&P Global Ratings said it has raised its long-term corporate
credit rating on Luxembourg-incorporated yogurt producer Fage
International S.A. to 'BB-' from 'B+'.  The outlook is stable.

S&P also raised the issue rating on Fage's $400 million senior
unsecured notes to 'BB-' from 'B+'.  The recovery rating remains
unchanged at '3'.

At the same time, S&P assigned its 'BB-' issue rating and '3'
recovery rating to Fage's proposed $420 million senior unsecured
notes due in 2026.

"The upgrade reflects our view that Fage's cash flow generation
and credit metrics will strengthen after refinancing.  This is
mainly because we think that the coupon on the $420 million notes
will be significantly lower than the interest of the existing
$400 million notes.  We think that Fage's EBITDA and cash flow
generation will continue to improve over 2016 and 2017, thanks to
relatively solid prices across the U.S. and Europe (outside
Greece), efficient cost controls, and lower raw material costs.
Together with significantly lower interest expenses, we expect
that Fage's cash flow generation and credit metrics will
strengthen and become commensurate with a 'BB-' rating," S&P
said.

When assessing Fage's financial risk profile S&P considers that
the group's adjusted debt to EBITDA strengthened to just less
than 3x in 2015, from 4.4x in 2014, and that the EBITDA interest
coverage increased to 3.5x from 2.3x.  The improvement was
largely due to higher EBITDA, with the group's debt mainly
comprising $400 million 9.875% notes due in 2020.

Fage is planning to use the proceeds from the proposed
$420 million notes to refinance the $400 million notes and, in
S&P's view, the coupon on the new notes is likely to be
significantly lower than 9.875%.  S&P has assumed 6% in its base-
case scenario.  While S&P thinks that adjusted debt to EBITDA
might remain at about 3x over the next 12-18 months because the
debt amount is higher than previously expected, S&P forecasts
that Fage's EBITDA interest coverage will improve to about 6x.
Both ratios support a higher rating in S&P's view.

S&P notes that the operating performance in Fage's main selling
regions has held up well during the first half of 2016.  Together
with lower interest expenses after the proposed refinancing,
S&P's view is that Fage's FOCF will strengthen substantially
compared with S&P's previous assumptions.  Fage's FOCF was about
$50 million in 2015.  Given that the U.S. expansion project is
yet to be completed, and that several references were made in
Fage's annual report with regards to plans for additional
investments in the U.S. and internationally, S&P thinks that
Fage's capital expenditure (capex) spend could continue to weigh
on the group's FOCF generation.  However, S&P thinks that Fage's
FOCF in 2016 will be in line with 2015.

S&P's assessment of Fage's business risk remains constrained by
it narrow product focus on yogurt and similar dairy products in
the U.S. (75% of EBITDA in 2015) and Western Europe (35%).  In
this respect, the company competes with much larger peers such as
Danone and General Mills, who not only have a broader product
portfolio and wider spread of sales geographically, but in S&P's
view also have a stronger financial capacity to fund marketing
campaigns and promotion initiatives.  S&P also takes into account
Fage's exposure to milk as its main commodity, and factor in the
volatility of the price of milk and the impact this could have on
revenues and EBITDA.

These weaknesses are mitigated by Fage's steadily increasing
EBITDA and stronger profitability.  The group's adjusted EBITDA
exceeded $150 million and its adjusted EBITDA margin was more
than 20% in 2015, compared with adjusted EBITDA of less than
$100 million in previous years, and an adjusted EBITDA margin of
about 15% through 2010-2014.

The improvement in EBITDA comes mainly from the U.S. where Fage
has invested in a manufacturing facility to support increasing
demand for Greek yogurt, but margins are also strengthening in
Europe (outside Greece), where Fage has expanded strongly over
the last two years.

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

   -- Benign consumer confidence in the U.S. and Western Europe,
      and continuing preference for health and wellness products.

   -- Revenue decline in Greece in 2016, mainly due to the exit
      from the unprofitable Greek milk business, although more
      than offset by growth in the rest of Europe and in the U.S.

   -- Solid profitability, with Fage's adjusted EBITDA margin
      exceeding 20%, supported by milk prices and operating
      efficiency.  Capex spend in line with investment levels in
      2015, given final steps in capacity expansion in the U.S.

   -- Dividend payment in line with 2015.

   -- Refinancing of $400 million 9.875% notes due 2020 with new
      $420 million 6% notes due 2026.

Based on these assumptions, S&P arrives at these credit measures
in 2016:

   -- Adjusted debt to EBITDA of about 2.8x-3.0x, compared with
      2.8x in 2015.
   -- EBITDA interest coverage of about 5.0x-6.0x, compared with
      3.5x in 2015.
   -- FOCF to debt of about 11%, compared with 12% in 2015.

The stable outlook reflects S&P's view that Fage's adjusted debt
to EBITDA and EBITDA interest cover ratios are likely to be about
2.8x-3.0x and 5.0x-6.0x, respectively, over the next 12-18
months, compared with 2.8x and 3.5x in 2015.  S&P thinks that
continuous investments in production facilities and distribution
could absorb FOCF, but that FOCF should remain solid at about $50
million in 2016.

S&P could raise the ratings on Fage if the group's operating
performance continues to improve and profitability remained
strong, providing for solid positive free cash flow generation on
a sustainable basis.  S&P considers adjusted debt to EBITDA of
2x-3x and EBITDA interest coverage of 6x-10x, all else being
equal, as commensurate with a higher rating.

A negative rating action could stem from a weakness in Fage's
operating performance if the group was unable to mitigate the
impact of volatile milk prices.  S&P could also consider lowering
the ratings if debt-funded investments or acquisitions resulted
in materially weaker credit metrics.  In particular, S&P would
likely lower the rating if adjusted debt to EBITDA increased to
more than 4.0x and EBITDA interest coverage declined to less than
3.0 on a permanent basis.


SINEPIA DAC: S&P Assigns Prelim. BB Rating to 4 Note Classes
------------------------------------------------------------
S&P Global Ratings assigned its preliminary credit ratings to
Sinepia DAC's class A1, A2, A3, and A4 notes.  At closing, the
issuer also issued unrated class M and Z notes.

Sinepia is the first cash flow small and midsize enterprise (SME)
collateralized loan obligation (CLO) transaction originated by
National Bank of Greece S.A. (NBG) since the 2007-2008 financial
crisis.  The portfolio will comprise secured and unsecured Greek
law-governed loans, originally advanced by NBG to borrowers
comprising SMEs and individual professionals in Greece.

S&P's preliminary ratings on the class A notes address the timely
payment of interest and ultimate payment of principal.  The
issuer will use the net proceeds from the issuance of the notes
to purchase the portfolio at closing.

The issuer will also establish a commingling reserve account and
setoff reserve account to hold the commingling reserve fund and
setoff reserve fund, respectively.

At closing, the portfolio will comprise assets purchased by the
issuer from the originator in its capacity as the seller.

As of July 7, 2016, the initial portfolio size is
EUR647.77 million.  During the transaction's life, the issuer can
either substitute further SME loans up to a maximum limit of 20%
of the aggregate collateral balance or repurchase assets from the
issuer at the principal amount outstanding of such loans, plus
any accrued and unpaid interest due on the assets.  In respect of
substitution of new assets (in exchange for the assets from the
portfolio); the substitution criteria must be satisfied for
substitute receivables to be included in the portfolio.  The
substitution is allowed only for non-defaulted assets that are
subject to any material amendment.

At closing, the issuer will also establish a cash reserve account
with the accounts bank.  The cash reserve fund will not be funded
at closing, but will instead be funded out of available funds on
each interest payment date (IPD) until the balance standing to
the credit of the cash reserve fund reaches the cash reserve
fund's required amount.  The cash reserve fund will be used to
pay any shortfall in amounts available to it on any IPD to pay
interest due on the class A notes and payments of certain senior
expenses.

The transaction also benefits from a combined interest and
principal waterfall.  All interest payments due on the class A
notes will rank in priority to all interest payments due on the
class M and Z notes.  All interest payments due on the class M
notes will rank in priority to all interest payments due on the
class Z notes.

"Our preliminary ratings on the class A notes reflect our
assessment of the transaction's credit and cash flow
characteristics.  We assessed the originator's quality, which we
based on the historical performance of loans, a qualitative
review of the originator's process and guidelines for loan
origination and underwriting process, and other information
provided to us.  We also took into account the Banking Industry
Country Risk Assessment (BICRA) score of Greece and compared the
securitized pool against the overall loan book of the originator
to determine the scenario default rates (SDR) at each rating
level from 'AAA' to 'B'.  We then analyzed recovery parameters by
adopting the relevant aspects of our corporate collateralized
debt obligation (CDO) criteria as the starting point and
observing historical recoveries provided by the originator in
determining the recovery rate at each rating level," S&P said.

The calculation of the SDRs and recovery rates indicated the
minimum level of credit enhancement required at each rating level
for the portfolio.  At a 'B' rating level, the minimum credit
enhancement required was 31.3%, increasing to 59% at the most
senior rating levels.  At the 'BBB' level, this minimum required
credit enhancement was determined at about 43%.

S&P then applied its standard stresses outlined in its European
SME CLO criteria to determine the minimum required credit
enhancement at each rating level.  S&P also applied stresses
related to default timing and patterns, interest rate and basis
risk, recovery timing, the reinvestment rate, servicing fees and
other expenses, yield compression, and a commingling liquidity
stress.

S&P's analysis indicates that the available credit enhancement of
50.01% for the class A notes is sufficient to withstand the
credit and cash flow stresses that S&P applies at the assigned
preliminary rating levels.  They also reflect S&P's assessment of
the transaction's exposure to counterparty, legal, and
operational risks.

As S&P's preliminary ratings on the notes exceed its long-term
rating on the sovereign, S&P has also applied its rating above
the sovereign criteria.  As of the preliminary ratings date, S&P
determined that the maximum rating for a Greek SME CLO
transaction under these criteria is 'BB (sf)'.  The ratings on
the notes may be affected if the ratings on the sovereign were to
change.

RATINGS LIST

SINEPIA D.A.C.
EUR647.771 mil secured floating-rate notes

                                                  Prelim Amount
Class     Prelim Rating                           (mil, EUR)
A1        BB (sf)                                  150.000
A2        BB (sf)                                  35.000
A3        BB (sf)                                  50.000
A4        BB (sf)                                  88.800
M         NR                                       259.100
Z         NR                                       64.871

NR--Not rated


=============
H U N G A R Y
=============


ZSOLNAY: Court Rejects Registration of Ledina Keramia
-----------------------------------------------------
MTI-Econews reports that a court has rejected the registration of
a company established by the local council of Pecs(SW Hungary)
to take over the operation of Zsolnay if it goes under
liquidation.

Gertrud Matusik, a spokesperson for the company, called Ledina
Keramia, on July 11 said the court rejected the registration at
the request of Zsolnay, which argued that two of its supervisory
board members had ties to the company, presenting a conflict of
interest, MTI relates.  She said the board members have resigned,
but Zsolnay "refuses to let them go", MTI notes.

According to MTI, Ms. Matusik said the local council will appeal
the decision.

Officials of the local council of Pecs, which owns a minority
stake in Zsolnay, have said the business is on the verge of
bankruptcy and have already set up a company to take over its
operation, MTI recounts.

Zsolnay is a Hungarian porcelain maker.



=============
I C E L A N D
=============


ICELAND FOODS: S&P Lowers CCR to 'B', Outlook Stable
----------------------------------------------------
S&P Global Ratings said that it lowered its long-term corporate
credit rating on Iceland Topco Ltd. (Iceland Foods) to 'B' from
'B+'.  The outlook is stable.

At the same time, S&P lowered its issue rating on the group's
GBP950 million senior secured notes (about GBP876 million
outstanding after buybacks) to 'B' from 'B+'.  The recovery
rating on the notes remains unchanged at '3', indicating S&P's
expectation of meaningful (50%-70%) recovery prospects in the
event of a payment default.

S&P also lowered its issue rating on the group's GBP30 million
super senior revolving credit facility (RCF) to 'BB' from 'BB+'.
The recovery rating on the RCF remains unchanged at '1+',
indicating S&P's expectation of full recovery prospects in the
event of a payment default.

The downgrade reflects S&P's view that intensified price
competition among U.K. grocers has led Iceland Foods to
experience a prolonged period of negative like-for-like sales
growth. Combined with increased capex and our expectation of
rising food costs due to the weakened pound sterling, S&P
anticipates that the group's free operating cash flow (FOCF)
generation will remain low over the medium term.

Intensified price competition in the U.K. grocery market has been
negatively affecting Iceland Foods' operating performance.
Although the group has managed to defend its overall grocery
market share at about 2.1%, its like-for-like sales growth has
been negative for the past eight consecutive quarters, albeit
slowly recovering.

"Iceland Foods maintains its niche position as the U.K.'s second-
largest frozen food retailer.  It also offers compelling value
propositions for those who prefer branded grocery products at
discounted prices.  However, with the average price ranges
typically situated between those of the big four supermarkets and
German discounters in the U.K., we anticipate that Iceland Foods
will continue to face strong pressure on pricing over the medium
term.  Combined with the weakened pound sterling, we foresee a
risk that the group may not be able to pass on all of its rising
food costs to customers swiftly, leading to our expectation of
S&P Global Ratings-adjusted EBITDA margin declining to 8.5%-9.0%
for the financial year (FY) ended March 31, 2017, and FY2018,"
S&P said.

Iceland Foods' low capex and sound working capital management
enabled the group to generate strong reported FOCF of about
GBP113 million in FY2015.  However, this dropped to GBP15 million
in FY2016 when the group accelerated its expansion and
refurbishment plan.  In FY2017, we anticipate the group's working
capital changes to normalize and capex to remain elevated at
about GBP67 million.  S&P therefore expects low reported FOCF of
about GBP15 million-GBP25 million over the medium term.

Nevertheless, S&P takes a positive view of Iceland Foods' track
record of debt reduction through periodic bond buybacks.  S&P
expects this to help the group maintain, to some extent, its
adjusted debt to EBITDA at about 5.7x for FY2017 and FY2018.
However, further deleveraging prospects would likely require the
group to outperform in the highly competitive U.K. grocery
market, or to reduce debt materially.

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

   -- On the account of the U.K.'s Brexit vote, S&P forecasts
      U.K. real GDP growth falling to 1.5% in 2016 and 0.9% in
      2017.

   -- Increased consumer price index (CPI) growth of 0.9% in 2016
      and 2.2% in 2017.

   -- Revenue growth of about 2.4% for FY2017 and 3.7% in FY2018,
      primarily reflecting planned new store expansions and a
      nominal level of food inflation.

   -- Adjusted EBITDA margin of about 8.9% for FY2017 and 8.6% in
      FY2018.  As price competition remains intense, S&P believes
      that Iceland Foods may not be able to pass on all of its
      raising food costs to customers swiftly.

   -- Capex of about GBP67 million in FY2017, primarily used for
      new store openings and refurbishments.

   -- No cash dividends.

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

   -- Adjusted debt to EBITDA stalling at 5.7x in FY2017 and
      FY2018.

   -- EBITDAR cash interest coverage (defined as reported EBITDA
      before deducting rent over cash interest plus rent)
      remaining at about 1.5x in FY2017 and FY2018.

The stable outlook reflects S&P's view that, despite tough
trading conditions, Iceland Foods will maintain its niche market
position in the U.K.'s food retail market and continue to grow on
new store openings, with slightly weaker margins leading to
adjusted debt to EBITDA of about 5.5x-6.0x and EBITDAR cash
interest coverage to remain around 1.5x over 2016 and 2017.

S&P could lower the ratings if competition in the U.K. grocery
market further intensifies, resulting in Iceland Foods' reported
EBITDA falling below S&P's expectations, reported FOCF turning
negative, or S&P's EBITDAR cash interest coverage weakening
toward 1.2x.

S&P could also lower its business risk profile assessment on
Iceland Foods if the group's competitiveness in the U.K. grocery
market weakens, triggering a progressive decline in profitability
or market share.  This would further constrain the rating.

Owing to high competition in the U.K. grocery market, S&P do not
envisage an upgrade in the near term.  However, S&P could raise
the ratings if the group outperforms competitors in the
increasingly price competitive environment, or reduces debt
materially, resulting in adjusted debt to EBITDA improving to
below 5x and EBITDAR cash interest coverage improving toward 2x
on a sustainable basis.  This would be accompanied by positive
like-for-like sale growth, a stable EBITDA margin, and strong
reported FOCF generation on a sustainable basis.


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


BANCA CARIGE: Fitch Affirms 'BB+' Rating on OBG Program
-------------------------------------------------------
Fitch Ratings has affirmed the Italian mortgage covered bond
(Obbligazioni Bancarie Garantite, OBG) programs issued by Banca
Carige S.p.A. - Cassa di Risparmio di Genova e Imperia (Carige,
B-/Stable/B) and guaranteed by Carige Covered Bonds S.r.l.;
Credito Emiliano S.p.A. (Credem, BBB+/Stable/F2) and guaranteed
by Credem CB S.r.l.; and Banca Popolare di Sondrio - Societa
Cooperativa per Azioni (BPS, BBB/Stable/F3). The Outlooks are
Stable.

At the same time the agency is maintaining the 'BBB+' rating of
the OBG issued by Banca Popolare di Milano (BPM, BB+/RWN/B) and
guaranteed by BPM Covered Bond S.r.l., on Rating Watch Negative
(RWN).

The rating actions follow the programs' periodic review.

The Stable Outlooks and the RWN mirror that of the respective
banks' Issuer Default Ratings (IDR). Fitch will resolve the RWN
on BPM's covered bonds following the resolution of the RWN on the
bank's IDR.

A full list of rating actions, breakeven (BE) asset percentage
(AP) and overcollateralization (OC) components is available at
the end of this rating action commentary.

KEY RATING DRIVERS
All the above-mentioned programs have a soft-bullet amortization
profile with a principal maturity extension of 12 months (BPM,
BPS and Credem OBG) and 15 months (Carige OBG) and benefit from a
three-month rolling reserve, which covers interests due on the
OBG as well as senior expenses.

This has led Fitch to assess the discontinuity risk as 'high',
resulting in a Discontinuity Cap (D-Cap) of two notches for each
program, driven by the liquidity gap and systemic risk component.
Fitch views a contractual principal maturity extension up to 15
months adequate to successfully refinance the cover pool at a
rating scenario up to two notches above the banks' IDR, as
adjusted by the IDR uplift.

Although the programs are eligible for an IDR uplift, reflecting
the bail-in exemption for fully collateralized covered bonds, the
IDR uplift for these programs continues to be of 0 notches as
none of the factors that Fitch considers in assigning a IDR
uplift higher than 0 are satisfied for these programs.

The greatest contributor to the breakeven OC of the OBG issued by
Carige, BPS and Credem is asset disposal loss, which accounts for
10.9%, 13.9% and 15.2% of OC respectively, and represents the
cost of bridging maturity mismatches between assets and
liabilities. The magnitude of this component is driven by large
maturity mismatches (3, 4 and 4.1 years respectively) and the
rating spread levels assumed for Italian residential mortgage
loans and for mortgage loans granted to small and medium
enterprises (SMEs) that Fitch uses to determine the stressed
asset sale price (in a 'B' scenario 325bp and 425bp
respectively).

The cash flow valuation component is the major contributor to the
breakeven OC for the OBG issued by BPM, which absorbs 10.5% of
OC. This is followed by the asset disposal loss at 9.3%,
reflecting the stressed valuation of the entire cover pool after
an assumed covered bonds default in a 'BBB+' scenario. Credem's
OBG also show a fairly high cash flow valuation component at
10.7%. For both Credem and BPM, the cash flow valuation component
is driven by interest rate mismatches between assets and
liabilities and the interest type composition of the cover pools:
optional loans represent 24.8% of the cover pool for BPM and
44.1% for Credem and floating-rate loans with a cap are 35.4% of
BPM's cover pool and 2.2% of Credem's. In its cash flow analysis,
Fitch has considered these loan types as fixed-rate loans in a
rising interest rate scenario, which is the scenario that drives
the rating of these programs.

The negative cash flow valuation of Carige's (-2.7%) and BPS's (-
5.0%) OBG reflects the presence of hedging structures as well as
limited open interest rate positions (5.6% for Carige and 8.9%
for BPS) and excess spread available over the life of the program
(2.9% and 9.2% respectively).

Credit Suisse International (A-/Stable/F1) acts as swap
counterparty on the asset (71% of the cover pool) and on
liability side (69% of the outstanding OBG) in Carige's program.
BILLIONP Paribas (A+/Stable/F1) hedges 65% of the OBG issued by
BPS whereas UBS Limited (A/Positive/F1) and Societe Generale (SG)
(A/Stable/F1) provide hedging on BPM's fixed-rate covered bonds
(25.8% of the liabilities). Credem is internal swap counterparty
for 92.9% of Credem's OBG. The swap providers are eligible
counterparties as per Fitch's criteria and in its analysis the
agency considered post-swaps cash flows for the hedged assets or
liabilities.

The cover pools of BPM, BPS and Credem comprise residential
mortgage loans, while Carige's includes a limited portion of SMEs
(6.3% as of February 2016). The 'B' portfolio loss rate reflects
the cover pools' composition: 1% for Credem, 1.3% for BPS, 1.6%
for BPM and 3% for Carige. These portfolio loss assumptions
result in a 'BBB+' credit loss of 3.7% for BPM OBG, 'A+' credit
loss of 6.4% for BPS OBG, 'A+' credit loss of 4.9% for Credem OBG
and 'BB+' credit loss of 5.2% for Carige OBG.

In its analysis Fitch relied upon the AP publicly disclosed in
the programs' investor report for Carige's, BPM's and BPS's OBG.
The highest nominal AP recorded in the last 12 months is
considered for Credem's OBG, as the issuer has a Short-Term IDR
of 'F2' and the program is actively managed by the issuer.

Carige
The rating is based on Carige's Long-Term IDR of 'B-', an
unchanged IDR uplift of 0 notches, an unchanged D-Cap of two
notches and the 81.97% publicly disclosed AP (from the April 2016
investor report) that Fitch takes into account in its analysis,
which provides more protection than the unchanged 89.5% 'BB+'
breakeven AP (11.7% OC).

The breakeven AP considers whether timely payments are made in a
'B+' scenario (tested rating on a probability of default (PD)
basis) and tests for recoveries given default of at least 91% in
a 'BB+' scenario.

BPM
The rating is based on BPM's Long-Term IDR of 'BB+', an unchanged
IDR uplift of 0 notches, an unchanged D-Cap of two notches and
the 89% publicly disclosed AP (from the April 2016 investor
report) that Fitch takes into account in its analysis, which is
in line with the 89% 'BBB+' breakeven AP (12.4% OC).

The 89% publicly disclosed AP allows the OBG to achieve a three-
notch recovery uplift from the 'BB+' tested rating on a PD basis,
which is also the rating floor for the covered bonds. This level
of AP provides for recoveries given default of at least 91% in a
'BBB+' scenario but it is not adequate to sustain timely payments
in a 'BBB' scenario, given by the IDR adjusted by the IDR uplift
and by the D-Cap.

Fitch has revised its assessment of the cover-pool specific
alternative management to 'moderate' from 'moderate high' to
factor in the improved quality and regularity of data delivery,
which is now in line with peers; in Fitch's view this would
translate into a smoother transition to an alternative manager
once the bondholders' source of payment switches from the issuer
to the cover pool.

BPS
The rating is based on BPS's Long-Term IDR of 'BBB', an unchanged
IDR uplift of 0 notches, an unchanged D-Cap of two notches and
the 78.74% publicly disclosed AP (from the April 2016 investor
report) that Fitch takes into account in its analysis, which
provides more protection than the revised 88.5% 'A+' breakeven AP
(13.0% OC).

The change in the breakeven AP to 88.5% (from 83%) factors in the
impact of the two new asset transfers occurred in December 2015
and January 2016, which reduced the open interest rate positions
(to 8.9% from the previous 14% in a rising interest rate
scenario), and of the new EUR500m series of OBG issued in April
2016, which reduced maturity mismatches between assets and
liabilities (to 4 from 5.9 years). The breakeven AP considers
whether timely payments are met in a 'A-' scenario (tested rating
on a PD basis) and tests for recoveries given default of at least
91% in a 'A+' scenario.

Fitch's analysis of BPS's cover pool varied from the "Criteria
Addendum: Italy - Residential Mortgage Assumptions". The agency
applied a PD adjustment of 1.3 instead of 1.5 to the 39% portion
of loans granted to SAE 614/615 borrowers (artisans and family
run businesses as coded by the Bank of Italy) based on the
observed levels of default rates which, in Fitch's view, warrant
an adjustment smaller in magnitude than the one envisaged by the
criteria. The application of the above variation has no impact on
the OBG program's rating.

Credem
The rating is based on Credem's Long-Term IDR of 'BBB+', an
unchanged IDR uplift of 0 notches, an unchanged D-Cap of 2
notches and the 75.4% nominal AP that Fitch takes into account in
its analysis, which provides more protection than the revised
78.5% 'A+' breakeven AP (27.4% OC).

The revision of the breakeven AP to 78.5% (from 80.5% at the last
program review) is mainly driven by an increase in open interest
rate positions (to 54% from around 50% in a rising interest rate
scenario) following a EUR700 million asset transfer in April
2016.

The 75.4% AP (highest nominal AP of the last 12 months, as of
October 2015) would theoretically allow the OBG to reach the
maximum achievable rating of 'AA-'. However, replacement
provisions relating to the account bank limit the OBG rating at
the 'A' category as per Fitch's current counterparty criteria.
The program AP provides for at least 91% recoveries on the
covered bonds assumed to be in default in a 'A+' scenario and
allows a two-notch recovery uplift from the 'A-' tested rating on
a PD basis.

RATING SENSITIVITIES
Banca Popolare di Milano (BPM)
The 'BBB+' rating of the covered bonds issued by BPM and
guaranteed by BPM Covered Bond S.r.l. would be vulnerable to
downgrade if any of the following occurs: (i) BPM's IDR is
downgraded by one or more notches to 'BB' or below; or (ii) the
AP that Fitch considers in its analysis increases above Fitch's
'BBB+' breakeven level of 89%.

Banca Carige S.p.A. - Cassa di Risparmio di Genova e Imperia
(Carige)
The 'BB+' rating of the covered bonds issued by Carige and
guaranteed by Carige Covered Bonds S.r.l. would be vulnerable to
downgrade if any of the following occurs: (i) Carige's Issuer
Default Rating (IDR) is downgraded by one or more notches to
'CCC' or below; or (ii) the number of notches represented by the
IDR uplift and the Discontinuity Cap (D-Cap) is reduced to one or
lower; or (iii) the asset percentage (AP) that Fitch considers in
its analysis increases above Fitch's 'BB+' breakeven level of
89.5%.

Banca Popolare di Sondrio - Societa Cooperativa per Azioni (BPS)
The 'A+' rating of the covered bonds issued by BPS would be
vulnerable to downgrade if any of the following occurs: (i) BPS's
IDR is downgraded by one or more notches to 'BBB-' or below; or
(ii) the number of notches represented by the IDR uplift and the
D-Cap is reduced to one or lower; or (iii) the AP that Fitch
considers in its analysis increases above Fitch's 'A+' breakeven
level of 88.5%.

Credito Emiliano S.p.A. (Credem)
The 'A+' rating of the covered bonds issued by Credem and
guaranteed by CREDEM CB S.rl. would be vulnerable to downgrade if
any of the following occurs: (i) Credem's IDR is downgraded by
two or more notches to 'BBB-' or below; or (ii) the number of
notches represented by the IDR uplift and the D-Cap is reduced to
zero; or (iii) the AP that Fitch considers in its analysis
increases above Fitch's 'A+' breakeven level of 78.5%.

If the AP that Fitch considers in its analysis drops to the
contractual limit of 93%, it would not be sufficient to allow for
timely payment of the covered bonds following an issuer default.
As a result, the rating of the OBG issued by Credem would likely
be downgraded to 'A-', because this level of OC would limit the
covered bond rating to one-notch recovery uplift above the IDR as
adjusted by the IDR uplift.

The Fitch breakeven AP for the covered bond ratings will be
affected, among others, by the profile of the cover assets
relative to outstanding covered bonds, which can change over
time, even in the absence of new issuance. Therefore the
breakeven AP to maintain the covered bond rating cannot be
assumed to remain stable over time.

The rating actions are as follows:

Carige OBG affirmed at 'BB+'; Outlook Stable with a breakeven AP
of 89.5%
BE OC components: -2.7% cash flow valuation, 5.2% credit loss,
10.9% asset disposal loss

BPM OBG 'BBB+' rating maintained on RWN; breakeven AP of 89.0%
BE OC components: 10.5% cash flow valuation, 3.7% credit loss,
9.3% asset disposal loss

BPS OBG affirmed at 'A+'; Outlook Stable with a breakeven AP of
88.5%
BE OC components: -5.0% cash flow valuation, 6.4% credit loss,
13.9% asset disposal loss

Credem OBG affirmed at 'A+'; Outlook Stable with a breakeven AP
of 78.5%
BE OC components: 10.7% cash flow valuation, 4.9% credit loss,
15.2% asset disposal loss


MONTE DEI PASCHI: Pension Funds to Support New Bank Fund Plan
-------------------------------------------------------------
Stefano Bernabei and Francesca Landini at Reuters report that
specialist Italian pension funds have agreed to a government call
to invest in bad bank loans, as Rome works to build a safety-net
around Italy's No. 3 lender Monte dei Paschi ahead of European
bank stress test.

According to Reuters, the Tuscan bank, which has one of the
heaviest bad loan burdens in Italy, is likely to be found short
of capital under an adverse scenario when results of the latest
Europe-wide banking check-up are released on Friday night.

In a bid to reassure the market, Italy is looking for ways to
support its banks without breaking European Union state aid rules
that would require investors to take a hit first, Reuters
discloses.

AdEPP, the association of sector-specific pension funds, said on
July 25 a decision had been taken to support a new bank fund
called Atlante 2, Reuters relates.  Each fund will need to
approve the investment, Reuters notes.

AdEPP chairman told Reuters the government had asked its members
to invest in Atlante, which is working with Monte dei Paschi on
the sale of bad debts worth a net EUR10 billion (US$11 billion).

According to Reuters, a source familiar with the matter said Rome
had asked for a EUR500 million investment.

Atlante, hastily set up in recent months to help Italy's weakest
banks, has used more than half of its initial EUR4.25 billion
endowment to take over two failing regional banks, Reuters
relays.

The source, as cited by Reuters, said the new fund would only
invest in bad loans and not bank equity.

Problem loans totalling EUR360 billion after a three-year
recession have become the focus of investor concerns over Italian
banks, weighing heavily on their shares, Reuters notes.

To comply with a request from European Central Bank supervisors
to clean up its balance sheet, Monte dei Paschi last week
submitted to the ECB a plan to sell its bad loans and is hoping
for a green light by Friday, July 29, Reuters recounts.

According to Reuters, sources have said under the plan, Atlante
would buy the bank's loans to borrowers deemed insolvent in a
complex scheme that aims to leverage fivefold the fund's residual
resources of EUR1.75 billion.

Another source with knowledge of talks between Italy and the
European Commission on state support for weak Italian lenders
said Rome now saw the possibility of state intervention as a last
resort, Reuters relays.

                    About Monte dei Paschi

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



=================
M A C E D O N I A
=================


MACEDONIA: Fitch Affirms 'BB+' LC Issuer Default Rating
-------------------------------------------------------
Fitch Ratings has affirmed Macedonia's Long-Term Local Currency
(LTLC) IDR at 'BB+' with a Negative Outlook. The issue ratings on
Macedonia's long-term senior unsecured local currency bonds have
also been affirmed at 'BB+'. The Short-Term Foreign Currency
(STFC) IDR has been affirmed at 'B' and a new Short-Term Local
Currency (STLC) IDR of 'B' has been assigned.

Fitch said, "Under EU credit rating agency (CRA) regulation, the
publication of sovereign reviews is subject to restrictions and
must take place according to a published schedule, except where
it is necessary for CRAs to deviate from this in order to comply
with their legal obligations. Fitch interprets this provision as
allowing us to publish a rating review in situations where there
is a change in our criteria that we believe makes it
inappropriate for us to wait until the next scheduled review date
to update the rating or Outlook/Watch status. The next scheduled
review date for Fitch's sovereign rating on Macedonia is 19
August 2016, but Fitch believes that a portfolio review is now
warranted based on recent changes to our criteria.

"The rating committee that assigned the ratings included within
this Rating Action Commentary was a portfolio review following
recent changes to our criteria, and focused on three areas,
namely the assignment of STLC IDRs, the review of existing STFC
IDRs and the review of the notching relationship between existing
LTLC IDRs and Long-Term Foreign Currency (LTFC) IDRs. The
committee approved a variation from criteria on the basis that
the review applied all relevant sections of our criteria related
to the above rating types but did not apply the sections of the
criteria related to LTFC IDRs, as the latter were not included in
the scope of this review."

KEY RATING DRIVERS
The affirmation of Macedonia's LTLC IDR at 'BB+' reflects the
following key rating driver:

-- In line with the updated guidance contained in Fitch's
    revised Sovereign Rating Criteria dated July 18, 2016,
    Macedonia's credit profile does not support a notching up of
    the LTLC IDR above the LTFC IDR. This reflects Fitch's view
    that neither of the two key factors cited in the criteria
    that support upward notching of the LTLC IDR are present for
    Macedonia. Those two key factors are: (i) strong public
    finance fundamentals relative to external finance
    fundamentals; and (ii) previous preferential treatment of LC
    creditors relative to FC creditors.

The affirmation of Macedonia's STFC IDR at 'B' reflects the
following key rating driver:

-- In line with the updated guidance contained in Fitch's
    revised Sovereign Rating Criteria dated July 18, 2016,
    Macedonia's STFC IDR is derived from the mapping to the
    sovereign's LTFC IDR of 'BB+'.

The assignment of a STLC IDR of 'B' to Macedonia reflects the
following key rating driver and its weight:

HIGH
The assignment of the STLC IDR is consistent with Fitch's
approach to assigning ST ratings by using its Long-Term/Short-
Term Rating Correspondence table to map the STLC IDR from the
LTLC rating scale. According to Fitch's Rating Definitions, the
Fitch Rating Correspondence Table is "a guide only and variations
from this correspondence will occur". However, variations to this
approach are rare in the case of sovereign ratings.

Macedonia's STLC IDR is derived from the mapping to the
sovereign's LTLC IDR of 'BB+'.

RATING SENSITIVITIES
The main factors that could lead to a change in the LTLC IDR are
as follows:

-- A change in the LTFC IDR
-- A change in the key factors or supporting factors for
    notching up of the LTLC IDR from the LTFC IDR

The main factors that could lead to a change in the STFC IDR or
the STLC IDR are as follows:

-- A change in the LTFC IDR (for the STFC IDR)
-- A change in the LTLC IDR (for the STLC IDR)

The rating sensitivities outlined in the previous Rating Action
Commentary dated February 19, 2016, are unchanged in respect of
the LTFC IDR. Consistent with the criteria variation referred to
above, a review of the LTFC IDR and associated rating
sensitivities was not included as part of this review.

ASSUMPTIONS
The assumptions outlined in the previous Rating Action Commentary
dated February 19, 2016, are unchanged in respect of the LTFC
IDR. Consistent with the criteria variation referred to above, a
review of the LTFC IDR and associated assumptions was not
included as part of this review.


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


PORTUGAL: Fitch Affirms BB+ Local Currency Issuer Default Rating
----------------------------------------------------------------
Fitch Ratings has affirmed Portugal's Long-Term Local Currency
(LTLC) IDR at 'BB+' with a Stable Outlook. The issue ratings on
Portugal's long-term senior unsecured local currency bonds have
also been affirmed at 'BB+'. The Short-Term Foreign Currency
(STFC) IDR has been affirmed at 'B' and a new Short-Term Local
Currency (STLC) IDR of 'B' has been assigned.

Fitch said, "Under EU credit rating agency (CRA) regulation, the
publication of sovereign reviews is subject to restrictions and
must take place according to a published schedule, except where
it is necessary for CRAs to deviate from this in order to comply
with their legal obligations. Fitch interprets this provision as
allowing us to publish a rating review in situations where there
is a change in our criteria that we believe makes it
inappropriate for us to wait until the next scheduled review date
to update the rating or Outlook/Watch status. The next scheduled
review date for Fitch's sovereign rating on Portugal is
August 19, 2016, but Fitch believes that a portfolio review is
now warranted based on recent changes to our criteria."

Fitch will make public a more detailed country-specific report
outlining its rationale for these rating actions within 10
working days of this Rating Action Commentary.

Fitch said, "The rating committee that assigned the ratings
included within this Rating Action Commentary was a portfolio
review following recent changes to our criteria, and focused on
three areas, namely the assignment of STLC IDRs, the review of
existing STFC IDRs and the review of the notching relationship
between existing LTLC IDRs and Long-Term Foreign Currency (LTFC)
IDRs. The committee approved a variation from criteria on the
basis that the review applied all relevant sections of our
criteria related to the above rating types but did not apply the
sections of the criteria related to LTFC IDRs, as the latter were
not included in the scope of this review."

KEY RATING DRIVERS
The affirmation of Portugal's LTLC IDR at 'BB+' reflects the
following key rating driver:

-- In line with the updated guidance contained in Fitch's
    revised Sovereign Rating Criteria dated July 18, 2016,
    Portugal's credit profile does not support a notching up of
    the LTLC IDR above the LTFC IDR. This reflects Fitch's view
    that neither of the two key factors cited in the criteria
    that support upward notching of the LTLC IDR are present for
    Portugal. Those two key factors are: (i) strong public
    finance fundamentals relative to external finance
    fundamentals; and (ii) previous preferential treatment of LC
    creditors relative to FC creditors. Additionally, Portugal is
    a member of the eurozone currency union, which constrains the
    LTLC IDR at the same level as the LTFC IDR.

The affirmation of Portugal's STFC IDR at 'B' reflects the
following key rating driver:

-- In line with the updated guidance contained in Fitch's
    revised Sovereign Rating Criteria dated July 18, 2016,
    Portugal's STFC IDR is derived from the mapping to the
    sovereign's LTFC IDR of 'BB+'.

The assignment of a STLC IDR of 'B' to Portugal reflects the
following key rating driver and its weight:

HIGH
The assignment of the STLC IDR is consistent with Fitch's
approach to assigning ST ratings by using its Long-Term/Short-
Term Rating Correspondence table to map the STLC IDR from the
LTLC rating scale. According to Fitch's Rating Definitions, the
Fitch Rating Correspondence Table is "a guide only and variations
from this correspondence will occur". However, variations to this
approach are rare in the case of sovereign ratings.

Portugal's STLC IDR is derived from the mapping to the
sovereign's LTLC IDR of 'BB+'.

RATING SENSITIVITIES
The main factors that could lead to a change in the LTLC IDR are
as follows:

-- A change in the LTFC IDR
-- A change in the key factors or supporting factors for
    notching up of the LTLC IDR from the LTFC IDR

The main factors that could lead to a change in the STFC IDR or
the STLC IDR are as follows:

-- A change in the LTFC IDR (for the STFC IDR)
-- A change in the LTLC IDR (for the STLC IDR)

The rating sensitivities outlined in the previous Rating Action
Commentary dated March 4, 2016, are unchanged in respect of the
LTFC IDR. Consistent with the criteria variation referred to
above, a review of the LTFC IDR and associated rating
sensitivities was not included as part of this review.

ASSUMPTIONS
The assumptions outlined in the previous Rating Action Commentary
dated March 4, 2016, are unchanged in respect of the LTFC IDR.
Consistent with the criteria variation referred to above, a
review of the LTFC IDR and associated assumptions was not
included as part of this review.


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


INTERREGIONAL DISTRIBUTION: S&P Affirms BB- Long-Term CCR
---------------------------------------------------------
S&P Global Ratings affirmed its 'BB-/B' long- and short-term
corporate credit ratings and the 'ruAA-' Russia national scale
rating on Russian electricity company Interregional Distribution
Grid Company of Centre, Public Joint-Stock Company (IDGC of
Center).  The outlook is stable.

The affirmation reflects S&P's expectation of IDGC of Center's
resilient operating performance in the coming years.  S&P thinks
the company's expected performance will partly offset the recent
increase in dividend distributions and still-high capital
expenditures (capex).

S&P factors in its assumption that IDGC of Center will maintain
an EBITDA margin above 20% in 2016-2017, on the back of tariff
increases broadly in line with inflation and despite somewhat
lower electricity transmission volumes that suffer from the weak
economic backdrop in Russia.

S&P notes, however, that the negative discretionary cash flow
will likely lead to a decline in IDGC of Center's S&P Global
Ratings' adjusted ratio of funds from operations (FFO) to debt to
just above 20%, which S&P sees as commensurate with the current
rating. S&P anticipates this decrease unless the company reduces
its still-high capex or its dividends, which it raised to 50% of
net income under International Financial Reporting Standards
(IFRS) for 2015, following the government's decision to raise
them to this level under IFRS.  This was applicable to most
government-owned companies, including IDGC of Center.  S&P notes
that the share of revenues from connection fees that depends on
economic growth is relatively low (6% of EBITDA in 2015), so S&P
don't expect this will lead to material cash flow volatility.

IDGC of Center's fair business risk profile, in S&P's view,
remains constrained by a tariff regime that lacks protection from
political interventions, a track record of government attempts to
manually control electricity tariffs, a somewhat concentrated
customer base, and an above-industry-average level of losses in
grids.

These constraints are mitigated by IDGC of Center's dominant
market position as the major transmission grid operator in 11
regions of the Russian Federation, and its relatively stable
earnings base derived from regulated power distribution.

"We continue to see a moderate likelihood that the Russian
government (Russian Federation; foreign currency BB+/Negative/B,
local currency BBB-/Negative/A-3), the company's ultimate owner,
would provide timely and sufficient extraordinary support to IDGC
of Center in the event of financial distress.  We view the
company's role for and link with the government as important and
limited, respectively.  In particular, we think that
privatization risk is low in the next 12 months, given the
current economic environment, but it might again increase when
economic conditions stabilize," S&P noted.

"The stable outlook reflects our opinion that IDGC of Center will
manage its capex and dividends to maintain its ratio of adjusted
FFO to debt above 20% (excluding connection fees from EBITDA).
In addition, we anticipate that it will continue to proactively
manage its liquidity, which would result in debt to EBITDA below
3x.  However, we view the headroom within the current metrics as
narrow.  Our outlook, in particular, factors in continued tariff
increases in line with inflation and no substantial decline in
collection of receivables.  The outlook also takes into account
that if we lower our local currency long-term sovereign rating on
Russia by one notch, all else remaining equal, we are unlikely to
take a similar rating action on IDGC of Center," S&P said.

S&P might consider a negative rating action if the FFO-to-debt
ratio fell below 20% (excluding connection fees from EBITDA), if,
for example, capex and dividends remain high and are not
compensated by steady tariff increases.  This could happen as a
result of further weakening in the economy and problems with
collecting of receivables.  Alternatively, downward pressure
might arise if the company starts to rely excessively on short-
term financing.

S&P don't foresee rating upside in the next 12 months, given its
view of IDGC of Center's currently limited leeway at the current
rating level.  In the long run, S&P may see upside following
stabilization of the Russian economy and FFO to debt above 30% on
a consistent basis.  Moreover, S&P would raise its rating on IDGC
of Center if S&P raises the local currency sovereign rating on
Russia, since S&P would then incorporate a notch for
extraordinary government support in its rating on IDGC of Center
to reflect the government's increased ability to intervene.  S&P
views an upgrade of Russia as unlikely at this stage, however,
giver S&P's negative outlook on the long-term rating.


===========
S E R B I A
===========


SERBIA: Fitch Affirms 'BB-' Local Currency Issuer Default Rating
----------------------------------------------------------------
Fitch Ratings has affirmed Serbia's Long-Term Local Currency
(LTLC) IDR at 'BB-' with a Stable Outlook. The issue ratings on
Serbia's long-term senior unsecured local currency bonds have
also been affirmed at 'BB-'. The Short-Term Foreign Currency
(STFC) IDR has been affirmed at 'B' and a new Short-Term Local
Currency (STLC) IDR of 'B' has been assigned.

Fitch said, "Under EU credit rating agency (CRA) regulation, the
publication of sovereign reviews is subject to restrictions and
must take place according to a published schedule, except where
it is necessary for CRAs to deviate from this in order to comply
with their legal obligations. Fitch interprets this provision as
allowing us to publish a rating review in situations where there
is a change in our criteria that we believe makes it
inappropriate for us to wait until the next scheduled review date
to update the rating or Outlook/Watch status. The next scheduled
review date for Fitch's sovereign rating on Serbia is 16 December
2016, but Fitch believes that a portfolio review is now warranted
based on recent changes to our criteria.

"The rating committee that assigned the ratings included within
this Rating Action Commentary was a portfolio review following
recent changes to our criteria, and focused on three areas,
namely the assignment of STLC IDRs, the review of existing STFC
IDRs and the review of the notching relationship between existing
LTLC IDRs and Long-Term Foreign Currency (LTFC) IDRs. The
committee approved a variation from criteria on the basis that
the review applied all relevant sections of our criteria related
to the above rating types but did not apply the sections of the
criteria related to LTFC IDRs, as the latter were not included in
the scope of this review."

KEY RATING DRIVERS
The affirmation of Serbia's LTLC IDR at 'BB-' reflects the
following key rating driver:

-- In line with the updated guidance contained in Fitch's
    revised Sovereign Rating Criteria dated July 18, 2016,
    Serbia's credit profile does not support a notching up of the
    LTLC IDR above the LTFC IDR. This reflects Fitch's view that
    neither of the two key factors cited in the criteria that
    support upward notching of the LTLC IDR are present for
    Serbia. Those two key factors are: (i) strong public finance
    fundamentals relative to external finance fundamentals; and
    (ii) previous preferential treatment of LC creditors relative
    to FC creditors.

The affirmation of Serbia's STFC IDR at 'B' reflects the
following key rating driver:

-- In line with the updated guidance contained in Fitch's
    revised Sovereign Rating Criteria dated July 18, 2016,
    Serbia's STFC IDR is derived from the mapping to the
    sovereign's LTFC IDR of 'BB-'.

The assignment of a STLC IDR of 'B' to Serbia reflects the
following key rating driver and its weight:

HIGH
The assignment of the STLC IDR is consistent with Fitch's
approach to assigning ST ratings by using its Long-Term/Short-
Term Rating Correspondence table to map the STLC IDR from the
LTLC rating scale. According to Fitch's Rating Definitions, the
Fitch Rating Correspondence Table is "a guide only and variations
from this correspondence will occur". However, variations to this
approach are rare in the case of sovereign ratings.

Serbia's STLC IDR is derived from the mapping to the sovereign's
LTLC IDR of 'BB-'.

RATING SENSITIVITIES
The main factors that could lead to a change in the LTLC IDR are
as follows:

-- A change in the LTFC IDR
-- A change in the key factors or supporting factors for
notching
    up of the LTLC IDR from the LTFC IDR

The main factors that could lead to a change in the STFC IDR or
the STLC IDR are as follows:

-- A change in the LTFC IDR (for the STFC IDR)
-- A change in the LTLC IDR (for the STLC IDR)

The rating sensitivities outlined in the previous Rating Action
Commentary dated June 17, 2016 are unchanged in respect of the
LTFC IDR. Consistent with the criteria variation referred to
above, a review of the LTFC IDR and associated rating
sensitivities was not included as part of this review.

ASSUMPTIONS
The assumptions outlined in the previous Rating Action Commentary
dated June 17, 2016 are unchanged in respect of the LTFC IDR.
Consistent with the criteria variation referred to above, a
review of the LTFC IDR and associated assumptions was not
included as part of this review.


===============
S L O V E N I A
===============


ANTENNA TV: Ljubljana Court Launches Insolvency Procedure
---------------------------------------------------------
Slovenska Tiskovna Agencija(STA) reports that the Ljubljana
District Court has launched a debt settlement procedure against
Antenna TV SL, the company broadcasting Planet TV, at the
initiative of its part owner Telekom Slovenije.


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


SELECTA GROUP: S&P Affirms 'B' CCR, Outlook Negative
----------------------------------------------------
S&P Global Ratings said that it affirmed its long-term corporate
credit rating on Switzerland-based Selecta Group B.V. at 'B'.
S&P removed the rating from CreditWatch with negative
implications, where S&P placed it on June 22, 2016.  The outlook
is negative.

At the same time, S&P affirmed the 'BB-' issue rating on
Selecta's super senior revolving credit facility (RCF) due in
2019 and removed the rating from CreditWatch negative.  The
recovery rating on this facility is unchanged at '1', indicating
S&P's expectations of very high (90%-100%) recovery prospects in
the event of a payment default.

S&P also affirmed the 'B' issue ratings on the EUR350 million and
Swiss franc (CHF) 245 million senior secured notes due June 2020
and removed the ratings from CreditWatch negative.  The recovery
rating on the notes is unchanged at '3', indicating S&P's
expectation of meaningful recovery prospects in the lower half of
the 50%-70% range.

The affirmation reflects the commitment from Selecta's new
management team to better manage capital expenditures following
the poor performance in 2015.  Selecta's financial sponsor owner
KKR has also demonstrated its own commitment by injecting
EUR16.7 million into the company.

The company has embarked on strategic initiatives to reduce its
cost structure, improve operating efficiency, and boost same-
machine sales, including by expanding the use of telemetry for
remote measurement and data transmission.  S&P considers that
these initiatives will improve results, but it continues to
forecast that free operating cash flow (FOCF) will be negative in
the financial year ending Sept. 30, 2016, albeit by half as much
as in financial year 2015.  S&P forecasts that FOCF will be
breakeven in financial year 2017.

While S&P forecasts declining costs and therefore improving
EBITDA generation, it views the costs incurred by strategic
initiatives as operational in nature and S&P includes them in its
EBITDA calculation.  For this reason, the benefits of cost
reduction will be more visible in financial year 2017 than in the
current financial year.

With more effective control over capital expenditures and
stabilizing EBITDA margins, S&P is now forecasting that liquidity
sources for next 12 months will be sufficient to cover uses by
more than 1.2x.

In S&P's revised base case for financial year 2016, it assumes:

   -- No revenue growth in France, with operating margins
      decreasing to around 8% from above 9.5% in financial year
      2015.  Revenue growth of just over 5% in the Western
      European segment as the contract with Starbucks takes
      effect.  S&P anticipates that margins will be flat.

   -- Flat revenues in the Central European region, with
      operating margins still high at 24%.

   -- Revenues growing at 5% in the Northern European region with
      a small dip in operating margins to around 22.5%.

   -- Overall, S&P anticipates revenue growth will be nearly 2%
      on a like-for-like basis, with an operating profit margin
      of nearly 16%.

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

   -- S&P Global Ratings-adjusted debt to EBITDA worsening to
      nearly 9.5x in financial year 2016 with a five-year
      weighted average of just under 9x.

   -- Adjusted funds from operations (FFO) to debt falling below
      2.7% with a five-year weighted average of around 3.5%.

   -- FOCF of negative EUR10 million.

   -- FFO cash interest coverage of 2.6x with a five-year
      weighted average of 3.0x.

The negative outlook reflects S&P's view that free operating cash
flow will continue to be negative in financial year 2016 and will
reach breakeven in financial year 2017 as a result of lower
capital expenditures and better cost control.  S&P anticipates
that these actions will ease liquidity and reduce cash burn over
the near-to-medium term.

S&P could take a negative rating action if Selecta were not able
to turn around the negative free operating cash flow and improve
same machine sales and margins.  Additionally, if FFO cash
interest coverage were to fall below 2x, S&P could lower the
rating.

S&P could revise the outlook to stable if Selecta were able to
improve operating performance to the extent that same-machine
sales increase, revenue growth exceeds 2%, and adjusted EBITDA
margins return to around 15%.  Additionally, S&P considers that
for debt repayment to occur, the company would need to generate
FOCF of above 3% of debt.


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


STATE LAND: Declared Insolvent by National Bank of Ukraine
----------------------------------------------------------
Interfax-Ukraine reports that the National Bank of Ukraine has
placed State Land Bank to the list of insolvent banks.

Decision No. 165-sh was made by the NBU Board on July 26, 2016,
Interfax-Ukraine discloses.

The NBU said that the bank was placed to the list of troubled
banks in March 2016, as a conflict of interests was registered at
the bank, Interfax-Ukraine relates.

"The bank did not observe the NBU's requirements to remove
legislation infringements.  The situation has started worsening,"
Interfax-Ukraine quotes the central bank as saying.

The central bank said that the bank did not have deposits of
individuals, and there is no burden on the Deposit Guarantee
Fund, Interfax-Ukraine notes.

The government at the end of 2015 proposed to parliament to take
measures to reorganize or privatize the bank via the State
Property Fund, Interfax-Ukraine relays.  The bank was in the
state of liquidation, Interfax-Ukraine discloses.

Ukraine's Verkhovna Rada decided to liquidate State Land Bank on
June 17, 2014, Interfax-Ukraine recounts.


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


BHS GROUP: Chappell Denies Blame for Retailer's Collapse
--------------------------------------------------------
The Week reports that retailer BHS's final owner, Dominic
Chappell, has said he is not to blame for the retailer's demise.
But the twice-bankrupt former racing driver did admit he took "a
lot" of money out of the business, confirming reports that he
took GBP2.6 million in fees and wages, the report says.

"We live in a risk reward society, that's the way companies are
built and fail. Did I take a lot of money out? Yes I did. But did
the business fail because of the amount of money I took out? No
it didn't," he told the BBC's Newsnight, the Week relays. "This
was just a drip in the ocean compared to the money that was
needed to turn around BHS."

The Week relates that Mr. Chappell also admitted using company
funds to provide a GBP1.5 million loan to his parents, but said
this "had no impact whatsoever on BHS". He added: "I needed to
help my parents, which I did".

The Week notes that Mr. Chappell's Retail Acquisitions consortium
bought BHS from Sir Philip Green's Arcadia Group, which had owned
the business for 15 years, in March 2015 for a nominal GBP1.

The company was placed into administration this April, after a
failed rescue attempt at a managed insolvency process that would
have cut rental bills, the report discloses. It is now being
liquidated after no suitable buyer for the whole company came
forward.

According to the report, Mr. Chappell lays responsibility for the
collapse of the company firmly at Mr. Green's door, arguing the
tycoon took out hundreds of millions of pounds during the first
years of his ownership without re-investing in the business.

"You only need to go and look at some of the stores that were in
terrible condition," the report quotes Mr. Chappell as saying.
"Some of them didn't have air-conditioning or heating. Some had
water pouring through the roof, some had two or three floors . .
. closed for two or three years because they were hazardous,
asbestos, God knows what else."

The Week says Mr. Green has been accused of taking as much as
GBP480 million out of BHS, although he said this was dwarfed by
the GBP600 million Arcadia pumped into the business. He denies
blame for the collapse but has pledged to bring forward plans to
rescue the pension fund, which has a deficit of as much as GBP600
million, the report relates.

BHS Group is a department store chain.  The company employs
10,000 people and has 164 shops.


ENTERPRISE INSURANCE: Hopelessly Insolvent, Has GBP18MM Shortfall
-----------------------------------------------------------------
The Irish Times reports that Enterprise Insurance, a
Gibraltar-based firm whose collapse last week has hit 14,000
Irish motor customers, has been described in court as "hopelessly
insolvent".

It has as an asset shortfall of up to GBP18 million (EUR21.5
million), The Irish Times discloses.

The Gibraltar Financial Services Authority said this week that
Frederick David John White of Grant Thornton has been appointed
as provisional liquidator of the insurance company, The Irish
Times relates.

According to The Irish Times, Anthony Dudley, the Chief Justice
of the Gibraltar Supreme Court, described an estimated GBP11
million to GBP18 million (EUR13 million to EUR21.5 million)
shortfall between Enterprise's assets and liabilities as a "a
huge deficiency" as he heard the application.

The GFSA, as cited by The Irish Times, said the provisional
liquidator would "focus all efforts into dealing with claims and
will work alongside the relevant compensation schemes with the
view of achieving the best possible outcome for policy holders."


ITHACA ENERGY: S&P Affirms 'B-' CCR, Outlook Stable
---------------------------------------------------
S&P Global Ratings said that it affirmed its 'B-' long-term
corporate credit rating on U.K.-based oil and gas development and
production company Ithaca Energy Inc.  The outlook is stable.

At the same time, S&P affirmed its 'CCC' issue rating on Ithaca's
$300 million senior unsecured notes due 2019.  The recovery
rating on the notes is unchanged at '6', reflecting S&P's
expectation of negligible recovery in the event of a payment
default.

"The affirmation balances our expectations of Ithaca's reduced
operating expenditures and likely increase in its production with
diminishing execution risks as the company nears the startup of
the Greater Stella Area (GSA).  We anticipate improvements to
Ithaca's current production output with the GSA startup, late in
the third quarter or early fourth-quarter 2016.  The company's
production averaged 9.8 thousand barrels of oil equivalent per
day (kboepd) in the second quarter.  Depending on the exact
timing of the startup, we estimate 2016 annual production in the
12-15 kboepd range.  GSA is a highly positive step for the
company, in our view, but we acknowledge that its current
producing assets place it among the smallest companies within its
peer group. Ithaca had 2015 adjusted EBITDA of US$263 million.
We note, however, that cash flow visibility has been relatively
good thanks to the company's hedging strategy, which will
continue to provide material protection against potential lower
oil and gas prices over the next 12 months.  Nevertheless, the
company remains very sensitive to oil-price variations in the
medium-to-long term, given its lack of diversification.  Ithaca
therefore depends highly on GSA's timely and successful startup,
and would face a key risk in the event of adverse developments,"
S&P said.

Ithaca's business risk reflects S&P's view of the company's
limited, albeit soon-to-expand, scale of production and its low
diversity of operations.  It operates exclusively on the U.K.
Continental Shelf, with relatively limited diversification of
production fields.  Ithaca's business model focuses on production
and development, rather than riskier exploration activities.  S&P
notes that the anticipated growth in production and lower
operating costs will -- after GSA's start -- positively affect
the company's business risk.  Still, its scale will continue to
compare unfavorably with peers.

"Ithaca's aggressive financial risk profile reflects our forecast
that the company's S&P Global Ratings-adjusted debt to EBITDA
will remain in a peak range of 4.4x-4.8x in 2016, although we
note that the company has already reversed the trend and its
deleveraging efforts are currently supported by material capital
expenditures (capex).  We note that adjusted leverage was about
4x at year-end 2015, compared to above 7x at year-end 2014, and
we anticipate it to fall below 4x over the course of 2017.
Overall, the improved production in the near-to-medium term,
combined with this drop in capex should continue to enhance
credit measures over the next 12-24 months, and result in
positive free operating cash flow generation that will likely
enable further deleveraging and a reduction in absolute debt,"
S&P noted.

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

   -- A Brent oil price of $40 per barrel (/bbl) in 2016, $45/bbl
      in 2017, and $50/bbl in 2018;
   -- GSA's first production of oil in the third or fourth
      quarter of 2016, at an initial rate of 16 kboepd;
   -- A pronounced uptick in production, toward 24 kboepd by
      2017;
   -- No other hedging in addition to what is currently in place;
   -- Capex of about $50 million in 2016;
   -- Operating expenditures of about $25/bbl in 2016, and then
      trending down toward $20/bbl in 2017; and
   -- No dividend payments.

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

   -- Adjusted debt to EBITDA of about 4.4x-4.8x in 2016,
      decreasing to below 4x on a sustainable basis from 2017;
   -- Funds from operations (FFO) to debt of about 15% in 2016
      and above 20% in 2017; and
   -- Positive free operating cash flow in 2016-2017.

The stable outlook reflects S&P's anticipation of Ithaca's
increased production in the coming months, positive free
operating cash flows, and gradually improving credit metrics.
S&P forecasts that Ithaca's adjusted debt to EBITDA will peak at
4.4x-4.8x in 2016, albeit already diminishing as deleveraging
continues, leading to 4x adjusted debt to EBITDA in 2017.  S&P
anticipates FFO to debt at around 15% in 2016 and above 20% in
2017.  S&P thinks liquidity will remain adequate over the next 12
months.

S&P could upgrade Ithaca when S&P has certainty on the timing and
successful startup of the GSA development, assuming no change in
Ithaca's financial policy.  Lower operating costs than S&P
currently anticipates, combined with continued efforts to
maintain cash outflows at limited levels and reduce debt could
also support an upgrade.  S&P sees adjusted debt to EBITDA of
3.0x-3.5x and FFO to debt above 20%, with a clear upward trend to
25%, as commensurate with a one-notch upgrade.

S&P could lower the rating if Ithaca doesn't meet its forecast
substantial step-up in production or if the anticipated
deleveraging toward 4x adjusted debt to EBITDA doesn't
materialize rapidly.  This could occur as a result of unexpected
operational issues or if the GSA is subject to further material
production delays or startup issues.  Pressure could also result
from large debt-funded acquisitions or liquidity issues, although
S&P do not currently anticipate either of these.


TURNSTONE MIDCO 2: Moody's Affirms B2 CFR, Outlook Stable
---------------------------------------------------------
Moody's Investors Service has affirmed the B2 Corporate Family
Rating and B2-PD probability of default rating of Turnstone Midco
2 Limited, the UK's largest provider of NHS (UK National Health
Service) dental services.  The outlook on all ratings is stable.

The rating affirmation primarily reflects these drivers:

  IDH's high financial leverage and related aggressive, largely
   debt funded, acquisition strategy; offset by
  The Company's growing scale, good revenue visibility and stable
   cash generation.

Concurrently, Moody's has assigned (P)B2 (LGD4) ratings to the
new GBP275 million Senior Secured Fixed Rate Notes and GBP150
million Senior Secured Floating Rate Notes (together the 'Senior
Secured Notes'), due 2022, and a (P)Caa1 (LGD6) rating to the new
GBP130 million Second Lien Notes, due 2023, all of which are to
be issued by IDH Finance plc and are intended to refinance
existing indebtedness.

The B2 ratings of the existing GBP200 million Senior Secured
Fixed Rate Notes and GBP225 million Senior Secured Floating Rate
Notes, both due 2018, and the Caa1 rating of the GBP75 million
Second Lien Notes, due 2019, all of which are issued by IDH
Finance plc are unchanged.  Upon a successful conclusion to the
refinancing contemplated the existing instrument ratings will be
withdrawn. The rating outlook on all ratings is stable.

Moody's issues provisional ratings in advance of the completion
of the transaction and these ratings reflect Moody's preliminary
credit opinion regarding the transaction only.  Upon a conclusive
review of the final documentation, Moody's will endeavor to
assign a definitive rating to the Senior Secured and Second Lien
Notes.  A definitive rating may differ from a provisional rating.

                         RATINGS RATIONALE

The rating action was prompted by the announcement of a
refinancing process by the Group.  IDH proposes to raise new
Senior Secured Notes of GBP425 million and Second Lien Notes of
GBP130 million.  The proceeds of the new issues will be applied
primarily to pre-pay the existing GBP425 million of Senior
Secured Notes, GBP75 million of Second Lien Notes and repay
drawings of GBP39 million made under the existing Super Senior
Revolving Credit Facility ('RCF').  The existing RCF will be
replaced by a new Super Senior RCF of GBP100 million, due 2022,
which will be unrated.  The refinancing is primarily designed to
extend the maturities of existing facilities and rebase
availability under the RCF.  No dividends will be paid to the
shareholders as a result of the transaction.  Moody's estimates
that these actions will be broadly leverage neutral, with
adjusted leverage of 6.6x based on audited financial statements
for the year ending March 2016 ('FY2016').

IDH's B2 CFR is constrained by: 1) its small, albeit leading
position in the fragmented UK dental healthcare market, with
FY2016 revenues of GBP565.9 million; 2) a contraction in UDA
delivery rates in FY2015 and FY2016, albeit that Moody's
recognizes this feature as an industry wide trend; 3) its high
financial leverage; and 4) the Company's aggressive and largely
debt funded acquisition growth strategy.  This is expected to
continue and will constrain any meaningful deleveraging after
taking into account acquisition related capital expenditure.  The
CFR nevertheless recognizes the discretionary nature of IDH's
acquisition strategy, which could be scaled back to preserve
financial flexibility and liquidity if needed.  Additional risk
factors include the risk of personnel expenses, which comprise
the bulk of IDH's overall costs, rising more strongly than
adjustments in NHS fees, or budget cuts within the NHS itself.

Conversely, the rating is supported by: 1) IDH's growing scale
and good revenue visibility, with around 93% of NHS revenues
generated through 'evergreen' contracts (c.59% of consolidated
revenues in FY2016); 2) the Company's recent track record of
reported and pro-forma earnings growth, primarily driven by
practice acquisitions and the successful expansion of private
revenues; 3) the Company's stable cash flows and limited working
capital requirements, as one twelfth of NHS funding is received
at the beginning of each month; and 4) the likelihood that NHS
revenues will show stable long term growth, albeit at a very
modest pace, supported by the NHS's stated intention to increase
access to dental care in the UK.  At the same time, Moody's
believes that as the Company continues to target a higher share
of private sector funding it will be exposed to greater growth
potential, but also increased exposure to economic cycles.

Moody's expects that IDH will maintain adequate liquidity over
the next 12 to 18 months.  In addition to stable, largely non-
seasonal, cash flow with minimal working capital requirements,
the Company's liquidity profile is supported by GBP98.2 million
of availability under its GBP100 million RCF maturing in 2022.
The Company's only debt obligations are the GBP555 million Notes
maturing in 2022 and 2023 such that it reports no short term
debt, albeit that at the end of a contract year NHS England may
seek to reclaim UDAs paid for but not performed (at FYE2016
GBP33.0 million was held within accruals and deferred income on
the balance sheet in respect of UDA receipts which were not
delivered during FY2016).  IDH tends to hold modest levels of
cash on its balance sheet (estimated at GBP12.0 million at
closing of the refinancing) and Moody's expects that it will use
its free cash flow and draw-downs under the RCF to fund
acquisitions.  In this regard, and noting that Moody's expects
limited alternative sources of liquidity to be available, the
discretionary nature of the Group's acquisition capex is
significant.  The RCF contains one financial covenant for total
drawings under the RCF not to exceed 2.3x EBITDA.  Moody's
expects headroom under this covenant to remain strong.

                 RATIONALE FOR THE STABLE OUTLOOK

The stable outlook reflects Moody's view that IDH has a generally
good track record of delivering pro-forma earnings growth
(notwithstanding recent UDA performance) and its expectation that
a near term reduction in the adjusted leverage metric will
therefore be delivered.  However, with leverage currently in the
range of 6.6x, the Company is weakly positioned in its rating
category currently.

               WHAT COULD CHANGE THE RATING UP/DOWN

Positive ratings pressure is unlikely currently due to the
Company's aggressive growth strategy, which in Moody's view will
constrain free cash flow and any significant improvement in
metrics.  However, positive rating pressure could occur if there
is a sustained reduction in leverage to below 5.5x at the same
time as positive free cash flow generation becomes sufficient to
fund acquisitions.

Conversely, given the fairly stable operating environment,
negative pressure on the ratings or outlook would likely occur if
the current aggressive financial policy results in Moody's
adjusted debt/EBITDA being sustained at above 6.5x for a
prolonged period of time or if there is either negative free cash
flow, or concerns surrounding liquidity.

The principal methodology used in these ratings was Business and
Consumer Service Industry published in December 2014.

Turnstone Midco 2 Limited, the parent company for IDH is the
largest provider of NHS (UK National Health Service) dental
services in the fragmented UK dental market, operating around 674
dental practices in this jurisdiction.  For the year ending
March 31, 2016, IDH generated GBP565.9 million of revenues.  As
of March 2016, the Company estimated its UK market share at
around 5% in terms of dental practices and 7% in terms of
revenues, while the majority of revenues (68.3%) were derived
from the NHS (15.3% private pay).

Following the acquisition of DBG in April 2013, the Dental
Directory in April 2014, and Med-FX, PDS Dental Laboratories and
Dolby Medical, all in FY2016, 83.6% of revenues were derived from
dental practices and the remainder (16.4%) were from practice
services, in which the Company now has an estimated market share
of 25% (excluding laboratories).  Also, following these
acquisitions, the Company is now organized into two distinct
business units.  The patient services division offers a wide
range of NHS and private dentistry services to patients and the
practice services division provides a range of products and
services to the dental and wider healthcare sectors, including to
the patient services division.  IDH, in its current form, is the
result of a merger of its predecessor Pearl Topco Limited with
Associated Dental Practices, which was completed in May 2011.
The Group is majority owned by private equity firms The Carlyle
Group and Palamon Capital Partners.


VEDANTA RESOURCES: Moody's Says Merger Terms No Impact on B2 CFR
----------------------------------------------------------------
Moody's Investors Service says that Vedanta Ltd.'s (unrated)
revised merger terms with Cairn India Ltd. (unrated) have no
immediate impact on Vedanta Resources plc's B2 corporate family
rating, Caa1 senior unsecured notes rating and negative outlook.

While the revised terms entail a rise in debt/cash out flow of an
estimated $447 million -- compared to $120 million under the
original terms -- they will give Vedanta Ltd. complete access to
Cairn India's large cash holdings, as well as provide the
flexibility to reduce debt, thereby lowering leverage and
reducing subordination within the group.

As such, the successful execution of the merger, to the extent
that it leads to de-leveraging, will be credit positive.
Positive rating implications could emerge if adjusted leverage
improved to less than 4.5x on a sustained basis.

Should the merger proceed as announced -- subject to approval, in
a cashless all-stock transaction -- minority shareholders would
receive one equity share and four 7.5% preference shares in
Vedanta Ltd. for every share held in Cairn India.  Shareholders
will have the option of redeeming the preference shares within 30
days, or holding until maturity for 18 months.

Following completion of the transaction, Vedanta Resources'
shareholding in its subsidiary Vedanta Ltd. will fall to 50.1%
from 62.9%.  At end-June 2016, Cairn India had $3.5 billion in
cash and no external debt outstanding.

"Although delayed from the initial announcement in June 2015, the
revised terms are a step forward in the merger proceedings -- the
merger will provide Vedanta Ltd. better access to Cairn India's
large cash balances of $3.5 billion, as previous access was only
possible through the up-streaming of dividends," says
Kaustubh Chaubal a Moody's Vice President and Senior Analyst.

"We also view the proposed Cairn India merger as a major step in
the simplification of Vedanta Resources' complex structure and,
in particular, in addressing some of the risks associated with
the group's thinly capitalized, but highly leveraged parent
company," adds Chaubal who is also Moody's Lead Analyst on
Vedanta.

Moody's expects capacity ramp-ups, continuing cost
rationalization initiatives, reductions in absolute debt levels
and increases in commodity prices from the troughs in January
2016 to drive the improvement in adjusted leverage of 4.3x - 4.8x
by March 2017 from 5.5x at March 2016.  Furthermore, while debt
will potentially rise by ~$447 million, with preference shares
issued as per the revised merger terms, access to Cairn India's
$3.5 billion in cash and future cash flow will enable the group
to repay part of its debt, further improving consolidated
leverage.

Moreover, the structural subordination of the senior unsecured
debt at Vedanta Resources remains.  Although the merger will
remove one layer between Vedanta Resources' senior unsecured debt
and Cairn India's cash, Vedanta Resources will remain without
operating assets and dependent on the up-streaming of dividends
from the operating and intermediate companies.  In addition, with
its shareholding in Vedanta Ltd. falling to 50.1% from 62.9%,
cash leakage to minority shareholders will reduce Vedanta
Resources' access to Vedanta Ltd.'s profits.

To narrow the notching between the B2 CFR and the Caa1 senior
unsecured debt rating, Moody's would look for total priority debt
to fall below 35%-40% of total consolidated debt, and for total
priority debt to fall to less than 15%-20% of total group assets.
As of March 31, 2016, the ratios stood at 54.7% and 29.3%,
respectively.  These ratios apart, we will also look at holding
company liquidity and coverage metrics to consider narrowing the
notching.

Debt reduction following the merger will reduce rating pressure,
although the merger increases the risk that Vedanta Ltd. will
ultimately be held accountable for Cairn India's $3.2 billion
disputed tax liability.

Vedanta Resources' ratings have been under pressure as weak
commodity prices have affected group earnings.  This led to
Moody's downgrade of Vedanta Resources' CFR to B2 negative in
March this year.

The principal methodology used in these ratings was Global Mining
Industry published in August 2014.

Headquartered in London, Vedanta Resources plc is a diversified
resources company with interests mainly in India.  Its main
operations are held by Vedanta Limited, a 62.9%-owned subsidiary
which produces zinc, lead, silver, aluminum, iron ore and power.
In December 2011, Vedanta Resources acquired control, of Cairn
India Limited ("CIL"), an independent oil exploration and
production company in India, which is a 59.9%-owned subsidiary of
Vedanta Ltd.  On July 22 2016, Vedanta Ltd. announced revised
terms for its merger of Cairn India with itself, in a cashless
all stock transaction, subject to approvals.  If the merger goes
through as announced, Vedanta Resources' shareholding in Vedanta
Ltd. will fall to 50.1%.  Listed on the London Stock Exchange,
Vedanta Resources is 69.9% owned by Volcan Investments Ltd.  For
the year ended March 2016, Vedanta Resources reported revenues of
US$10.7 billion and EBITDA of US$2.3 billion.


===================
U Z B E K I S T A N
===================


UZBEK INDUSTRIAL: Fitch Hikes LT Foreign-Currency IDRs to 'B'
-------------------------------------------------------------
Fitch Ratings has upgraded the Long-Term Foreign-Currency Issuer
Default Ratings (IDRs) of Uzbek Industrial and Construction Bank
Joint-Stock Commercial Bank (Uzpromstroybank; UPSB), Asaka Bank,
OJSC Agrobank and Microcreditbank's (MCB) to 'B' from 'B-'. The
Outlooks are Stable. The agency has also upgraded the Viability
Ratings (VRs) of UPSB and Asaka to 'b' from 'b-', and of Agrobank
to 'b-' from 'ccc', and affirmed MCB's VR at 'b-'.

KEY RATING DRIVERS
IDRS, SUPPORT RATINGS, SUPPORT RATING FLOORS
The upgrades of the four banks' Long-Term Foreign-Currency IDRs
and upward revision of their Support Rating Floors (SRFs) to 'B',
and the level of their Local-Currency IDRs, reflect Fitch's
revised view that the state's propensity to provide support in
foreign and local currencies would be broadly similar. This view
is based on: 1) the banks' extended record of sufficient access
to foreign currency to service their obligations; 2) the moderate
potential cost of any future foreign-currency support -- given
only limited foreign-currency debt in the cases of Asaka,
Agrobank and MCB, and state guarantees already covering a
significant part of UPSB's external funding; and (3) the state's
ongoing solid ability to provide support in foreign currency,
with sovereign foreign-currency reserves of around US$24 billion
at end-2015 equal to about 2x the banking sector's total foreign-
currency liabilities or 11x its external debt.

Fitch said, "We previously capped the four banks' foreign-
currency IDRs at 'B-' because we feel that FX market regulation
in Uzbekistan could have constrained the banks' ability to always
access foreign currency in a timely manner to service their
obligations. Regulation of the FX market in Uzbekistan has not
changed significantly since the last rating review. However, for
the reasons stated above, Fitch no longer believes that this
represents a sufficient impediment to the banks accessing foreign
currency to warrant a differentiation in their local- and
foreign-currency ratings."

The four banks' IDRs, Support Ratings and SRFs continue to be
underpinned by potential support from the Uzbek authorities. In
Fitch's view, the authorities would have a high propensity to
provide support, if needed, because of the state's majority
ownership; the banks' systemic importance (to a lesser extent in
the case of MCB); tight supervision of their activities; and
their policy roles. However, the likelihood of support is
constrained by weaknesses in the sovereign credit profile, which
are in turn driven by the economy's structural weaknesses -
including the difficult business environment and vulnerability to
external shocks.

The upgrade of Agrobank's Long-Term Local-Currency IDR to 'B'
from 'B-' reflects the record of capital support provided by
government to replenish the bank's capitalization after alleged
fraud-related losses in 2010.

Fitch said, "Government plans to attract new foreign investors
for all four banks through sales of minority stakes, which will
result in the state's ownership declining by a moderate extent.
However, we feel the state is likely to retain majority stakes
and operational control in the banks, and its propensity to
support them should therefore remain strong."

VIABILITY RATINGS
The upgrades of UPSB's and Asaka's VRs to 'b' from 'b-' reflect
their extended record of reasonable performance and asset
quality. This also reflects access to higher-quality borrowers,
with some exposures also being covered by state guarantees, and
their stable funding -- of which a significant part is provided
by the state or state-related entities. The upgrade of Agrobank's
VR to 'b-' from 'ccc' reflects improvements in its solvency
resulting from the recapitalization program executed by
government.

However, all four banks' VRs continue to reflect Uzbekistan's
difficult operating environment, the banks' limited commercial
franchises, high concentrations in their balance sheets, and
potential deficiencies in underwriting policies leading to high
credit and operational risks.

UPSB and Asaka had low NPLs of below 2% (fully covered by
reserves) at end-2015, thanks to their focus on the export-
oriented energy and auto industries and a high share of state-
owned borrowers (UPSB - 87% of loans, Asaka - 37%) with some
larger exposures also being guaranteed by the state. Agrobank
also has low NPLs, but its asset quality remains weakened by
unreserved problematic receivables (8% of total assets), which
resulted from 2010 fraud, and significant non-core/foreclosed
assets. MCB's NPL ratio was a high 10% at end-2015 due to
financial difficulties in a number of agricultural companies.
These loans are not reserved, as MCB expects to recover most of
them, but the auditors challenged management's recovery
assumptions and issued a qualified opinion. A mitigating factor
is that the bank has sufficient capital to reserve these loans
and remain compliant with regulatory capital ratios.

Concentration risks are high, particularly at UPSB and Asaka,
although some relief is provided by state guarantees for larger
exposures. Agrobank and MCB have more granular books but high
industry and sector concentrations, which are prone to risks such
as commodity (eg cotton) price deterioration. Uzbekistan's
structural weaknesses, and the banks' high loan dollarisation in
the case of UPSB and Asaka (79% and 49%, respectively), pose
additional downside risks for asset-quality metrics. A positive
factor is that most of UPSB's and Asaka's borrowers, who have
taken foreign-currency loans, are either state-owned/guaranteed
or have foreign-currency revenues.

Capitalization is strong at UPSB (Fitch Core Capital (FCC)/risk-
weighted assets ratio of 16.8% at end-2015), moderate at Asaka
(FCC/total assets of 10.3%) and MCB (FCC/ risk-weighted assets
ratio of 13.6%, adjusted for unreserved NPLs), and weak at
Agrobank (5.1%, adjusted for unreserved problematic receivable).
Agrobank received UZS50billion in fresh capital injection (equal
to 2% of end-2015 risk-weighted assets (RWAs)) from government in
1H16, which should improve the bank's FCC ratio to a more
adequate 6.3% at end-2016 -- given only moderate expected growth
of 13%. Internal capital generation is moderate at UPSB and Asaka
(ROAE of 10% and 12%, respectively), and weak at Agrobank (2%)
and MCB (1%), reflecting the mostly state-directed nature of
banks' operations and rather weak operating efficiency
(particularly at Agrobank and MCB).

The banks' funding is sourced mainly from customer deposits, and
government and quasi-government entities. Depositor
concentrations were high at UPSB and Asaka. Agrobank's and MCB's
deposits were more granular. Fitch expects them to have limited
volatility -- in light of steady previous growth -- in spite of
the deposits being mostly short term. UPSB is the only bank with
meaningful borrowings from international financial institutions
(19% of liabilities). However, UPSB's foreign debt repayments are
small (below 2% of total liabilities in 2H16-2017) and linked to
loan repayments.

Liquidity is comfortable at UPSB and Asaka due to solid buffers
(at end-1H16 liquid assets net of near-term repayments were about
30% and 36% of customer deposits at UPSB and Asaka,
respectively), and somewhat tighter at Agrobank and MCB, as these
two banks have high reliance on short-term inter-bank placements.
All four banks hold high FX liquidity buffers sufficient to
withstand a substantial reduction in foreign-currency-denominated
customer funding.

RATING SENSITIVITIES
IDRS, SUPPORT RATINGS, SUPPORT RATING FLOORS
A change in UPSB's, Asaka's, Agrobank's and MCB's support-driven
IDRs could result from a strengthening/weakening of the
sovereign's credit profile.

VR
Downward pressure on the VRs could arise from deterioration in
the banks' asset quality if this is not offset by equity
injections. Upgrades of the VRs could result from improvements in
Uzbekistan's operating environment. Upgrades of Agrobank and
MCB's VRs could also result from improvements in their
performance and a strengthening of their franchises.

The rating actions are as follows:

UPSB
Long-Term Foreign-Currency IDR upgraded to 'B' from 'B-'; Outlook
Stable
Short-Term Foreign-Currency IDR affirmed at 'B'
Long-Term Local-Currency IDR affirmed at 'B'; Outlook Stable
Short-Term Local-Currency IDR affirmed at 'B'
Viability Rating upgraded to 'b' from 'b-'
Support Rating upgraded to '4' from '5'
Support Rating Floor revised to 'B' from 'B-'

Asaka
Long-Term Foreign-Currency IDR upgraded to 'B' from 'B-'; Outlook
Stable
Short-Term Foreign-Currency IDR affirmed at 'B'
Long-Term Local-Currency IDR affirmed at 'B'; Outlook Stable
Short-Term Local-Currency IDR affirmed at 'B'
Viability Rating upgraded to 'b' from 'b-'
Support Rating upgraded to '4' from '5'
Support Rating Floor revised to 'B' from 'B-'

Agrobank
Long-Term Foreign-Currency IDR upgraded to 'B' from 'B-'; Outlook
Stable
Short-Term Foreign-Currency IDR affirmed at 'B'
Long-Term Local-Currency IDR upgraded to 'B' from 'B-'; Outlook
Stable
Short-Term Local-Currency IDR affirmed at 'B'
Viability Rating upgraded to 'b-' from 'ccc'
Support Rating upgraded to '4' from '5'
Support Rating Floor revised to 'B' from 'B-'

MCB
Long-Term Foreign-Currency IDR upgraded to 'B' from 'B-'; Outlook
Stable
Short-Term Foreign-Currency IDR affirmed at 'B'
Long-Term Local-Currency IDR affirmed at 'B'; Outlook Stable
Short-Term Local-Currency IDR affirmed at 'B'
Viability Rating affirmed at 'b-'
Support Rating upgraded to '4' from '5'
Support Rating Floor revised to 'B' from 'B-'


                            *********

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 2016.  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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