TCREUR_Public/160914.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

         Wednesday, September 14, 2016, Vol. 17, No. 182



ETHIAS SA: Fitch Places 'BB' Sub. Debt Rating on Watch Positive


BOSNIA & HERZEGOVINA: S&P Affirms 'B/B' Ratings, Outlook Stable


FINANCIERE IKKS: Fitch Affirms 'B-' IDR, Outlook Negative
KERNEOS HOLDING: Moody's Raises CFR to B1, Outlook Stable
THOM EUROPE: Moody's Assigns B2 Rating to EUR190MM Sr. Sec. Notes


CIDRON GLORIA: Moody's Affirms B2 CFR, Outlook Stable
DEA DEUTSCHE: Fitch Assigns BB Long-Term FC Issuer Default Rating
DEUTSCHE ERDOEL: S&P Assigns 'BB-' CCR, Outlook Stable
INEOS STYROLUTION: S&P Assigns 'B+' Long-Term CCR, Outlook Stable


DUNCANNON CRE: Fitch Hikes Class D-1 Notes Rating to 'CCsf'
MAYO RENEWABLE: High Court Confirms Appointment of Examiner


RIVIERA MIDCO: Moody's Assigns (P)Ba2 CFR, Outlook Stable


DRYDEN 46 EURO: S&P Assigns Preliminary B- Rating to Cl. F Notes
FORNAX BV: Moody's Lowers Rating on Class D Notes to B1
HERTZ HOLDINGS: S&P Assigns 'B' Rating to Sr. Notes Due 2022
TELEFONICA EUROPE: S&P Assigns 'BB+' Rating to Hybrid Notes


PORTO: Fitch Affirms 'BB+' Long-Term Issuer Default Ratings


GLOBAL PORTS: Fitch Cuts LT Issuer Default Ratings to 'BB-'
NIZHNIY NOVGOROD: Fitch Affirms 'BB/B' IDRs, Outlook Negative
PENZA REGION: Fitch Affirms 'BB' Long-Term Issuer Default Ratings
UFA CITY: S&P Affirms 'BB-' Issuer Credit Rating, Outlook Stable

U N I T E D   K I N G D O M

AEI CABLES: Mulls Restructuring Following Financial Losses
BEALES: Expects to Return to Profitability Following CVA Deal
HIBU MIDCO: S&P Assigns 'B-' Long-Term CCR, Outlook Stable
PARAGON GROUP: Fitch Rates GBP150MM Sub. Tier 2 Notes 'BB+'
TATA STEEL: Liberty Frontrunner for Speciality, Pipe Businesses

TATA STEEL: Government's Plan to Resolve Pension Issues Shelved
* Global Corporate Defaults Increase to 118 in 2016, S&P Says



ETHIAS SA: Fitch Places 'BB' Sub. Debt Rating on Watch Positive
Fitch Ratings has placed Ethias S.A.'s Insurer Financial Strength
(IFS) rating and Long-Term Issuer Default Rating (IDR) on Rating
Watch Positive (RWP). The debt issued by Ethias has also been
placed on RWP.

The rating actions follow Ethias's announcement that it is
considering a plan aimed at strengthening its Solvency II
position and reducing the sensitivity of its Solvency II coverage
ratio to changes in interest rates. Resolution of the RWP will be
dependent on the successful completion of the plan.


Fitch understands that the National Bank of Belgium (NBB) has
asked Ethias to implement a plan to strengthen the company's
capital position and reduce the volatility of its Solvency II
coverage ratio and its sensitivity to lower interest rates. The
plan may include measures to reduce Ethias's exposure to
interest-rate risk associated with the capital intensive "First
A" products, under which guarantees are paid until the
policyholder reaches the age of 99.

Ethias has an adequate but volatile capital position, reflecting
its exposure to interest-rate risk due to the relatively high
level of minimum guaranteed returns in its life insurance
business and the duration gap between the corresponding assets
and liabilities.

At end-2015, Ethias's group regulatory Solvency II ratio was
132%, excluding transitional arrangements. When transitional
arrangements on technical provisions are included, the ratio
improves to 179%. However, the group Solvency II margin is
sensitive to interest rate changes. It fell to 125% (excluding
transitional arrangements) in 1H16, driven by the decline in
interest rates.

Ethias is exposed to interest-rate risk as life technical
liabilities are subject to high minimum guaranteed returns and
there is a duration gap between assets and liabilities in the
life accounts. However, the gap shrank significantly to 3.2 years
in 2015 from 8.7 years in 2014, following the Switch IV operation
and the purchase of hedging derivatives.

Ethias is the main operating entity of the Ethias group. Fitch
said, "We also consider Ethias Droit Commun AAM to be a 'Core'
entity of the group under our group rating methodology. It is 95%
reinsured by Ethias through a quota-share agreement, and has a
25% share in Ethias's holding company, Vitrufin. Ethias Droit
Commun AAM has the same IFS rating as Ethias, based on Fitch's
evaluation of the strength of the group as a whole."


The ratings could be upgraded on completion of the plan if there
is a material improvement in Ethias's capital position under both
Solvency II and Fitch's Prism factor-based capital model (Prism
FBM), together with evidence of significantly reduced exposure to
interest-rate risk.

The ratings are likely to be affirmed if Ethias does not
implement the plan, fails to materially strengthen its capital
position under Solvency II or Prism FBM, or does not
significantly reduce its exposure to interest-rate risk.


   Ethias S.A.:

   -- IFS rating 'BBB' placed on RWP

   -- Long-Term IDR 'BBB-' placed on RWP

   -- Undated subordinated debt 'BB' placed on RWP

   -- Dated subordinated debt 'BB' placed on RWP

   Ethias Droit Commun AAM:

   -- IFS rating 'BBB' placed on RWP


BOSNIA & HERZEGOVINA: S&P Affirms 'B/B' Ratings, Outlook Stable
S&P Global Ratings affirmed its 'B/B' long- and short-term
foreign and local currency sovereign credit ratings on Bosnia and
Herzegovina (BiH).  The outlook is stable.


The ratings on BiH are supported by the finalization of BiH's
arrangement with the International Monetary Fund (IMF), in the
form of a three-year EUR550 million extended fund facility (EFF).
In S&P's view, BiH's institutional set-up and persisting
divisions between the different entities' governments complicate
policymaking.  Although S&P continues to consider the fragility
of the multilayered institutional structure as a rating
constraint, S&P anticipates that the need and preference to
access international concessional funding should provide for a
status of minimal consent to meet loan conditionality.

Beyond its support for BiH's balance of payments, with persistent
current account deficits, the EFF arrangement bears the potential
to strengthen reform implementation efforts, especially regarding
the business environment, which could help to attract foreign
direct investment (FDI), thereby strengthening growth prospects.
The program will also unlock sizable additional EU and World Bank
funding and technical assistance.  S&P expects World Bank funds
will become available in late 2016 and anticipate EU budget
support from 2017 onward.

Although the authorities made progress on their reform agenda--
for example both entities adopted new labor laws last year-- S&P
thinks implementation risk remains high.  Progress on structural
reforms would be a main condition for improving the business
environment and boosting economic growth.  In the absence of
larger foreign investment inflows, S&P expects growth to be
driven by the absorption of foreign funds, with investment mainly
financed by multilateral institutions.  Exports and remittance-
driven consumption will also support GDP growth, which S&P now
projects at 3% on average in 2016-2019.

"We expect the import content of foreign-financed investment
projects will also lead to a gradual widening of the current
account deficit to 7% of GDP in 2018 from 6.2% of GDP in 2016.
In 2016, we estimate debt-creating inflows (net of amortization)
and net FDI will finance US$530 million and US$250 million,
respectively, with inflows to the capital account making up the
rest.  The public sector will contract the bulk of the borrowing,
in our view.  FDI in the private sector will likely be in the
field of energy production over our forecast horizon through to
2019.  Having said that, risks related to program implementation
could delay disbursements under the EFF, which could in turn
challenge the external financing of BiH's structurally large
current account deficit," S&P noted.

Perceived political risk remains a deterrent to FDI.  Standoffs
along party lines and between the country's constituent entities
remain frequent and the political climate is confrontational
ahead of the local elections in October 2016.  Several political
issues have been resolved in the past few months, however,
including those that were causing the delay of the IMF agreement.
BiH's two entity governments have also adopted a coordination
mechanism for EUmatters.  Reform progress and institutional
stability would also be crucial to any meaningful progress toward
being granted European Union candidate status, following BiH's
membership application earlier this year.

The IMF arrangement will also provide the fiscal space for needed
reforms and infrastructure investments.  S&P expects that it will
anchor fiscal discipline for the authorities and aim to improve
revenue collection and the efficiency of government spending.
However, given S&P's view of remaining implementation risk, it
projects the consolidated general government fiscal deficit will
narrow to 2.0% of GDP in 2019, compared with slightly above 2% in
2016.  General government debt will stabilize at 46% of GDP by
2019.  S&P expects that the majority of government debt will
continue to be denominated in foreign currency over S&P's
forecast horizon.

The banking system appears relatively well-capitalized and
represents a limited contingent liability for the government, in
S&P's view.  Nonperforming loans (NPLs; overdue 90 days or more),
although on a slightly decreasing trend over the past 12 months,
remain at 8.9% of total loans as of June 30, 2016.  S&P
understands that while BiH's banking system is stable, some banks
are undercapitalized.  Vulnerabilities at smaller domestic banks
with weaker corporate governance practices have surfaced over the
past two years, for example Bobar Banka in late 2014 and Banka
Srpske (owned by the Republika Srpska government) in late 2015.
For the new IMF agreement, an important pre-condition was the
resolution of Banka Srpske.

BiH has a currency board regime and the konvertibilna marka is
pegged to the euro.  While the currency board provides stability,
it restricts monetary flexibility.  S&P also views the high share
of loans denominated in or indexed to foreign currency (more than
50% of total system loans) as constraining the Central Bank of
Bosnia and Herzegovina's monetary flexibility.  Although reserves
covered monetary liabilities by 1.07x as of December 2015, the
central bank cannot act as a lender of last resort under BiH law.
S&P understands that BiH is committed to maintaining the
independence of the central bank and preserving the stability of
the currency board, which entails adequate coverage of the
monetary base by the central bank's foreign currency reserves.


The stable outlook on BiH reflects S&P's assessment of the
balance of risks between BiH's complex institutional set-up and
policy-making on the one hand, and S&P's expectation of ongoing
international support on the other.

S&P could lower its ratings if the availability of external
financing for BiH's twin fiscal and current account deficits was
called into question and subsequent government financing
constraints emerged.  This could be coupled with a failure to
comply with loan conditionality.  Although the state's external
debt repayments are funded by indirect tax receipts, under such a
scenario the debt servicing risks could rise.  If S&P sees delays
in payments to official creditors, it could lower the ratings by
more than one notch.

An easing of tensions between BiH's two entities, improved
relations with state institutions, and increased effectiveness of
policymaking would, in S&P's view, gradually enable reform
implementation, reduce dependence on foreign financing, and
ultimately benefit the business environment.  If such
developments were to translate into more sustainable growth, S&P
could in turn consider raising its ratings on BiH.  Significant
progress on fiscal consolidation beyond S&P's forecast
assumptions, alongside better external performance, could also be
positive for the ratings.

In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable.  At the onset of the committee, the chair
confirmed that the information provided to the Rating Committee
by the primary analyst had been distributed in a timely manner
and was sufficient for Committee members to make an informed

After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.

The committee agreed that all key rating factors were unchanged.

The chair ensured every voting member was given the opportunity
to articulate his/her opinion.  The chair or designee reviewed
the draft report to ensure consistency with the Committee
decision. The views and the decision of the rating committee are
summarized in the above rationale and outlook.  The weighting of
all rating factors is described in the methodology used in this
rating action.


                                        To            From
Bosnia and Herzegovina
Sovereign Credit Rating
  Foreign and Local Currency            B/Stable/B    B/Stable/B
Transfer & Convertibility Assessment   BB-           BB-


FINANCIERE IKKS: Fitch Affirms 'B-' IDR, Outlook Negative
Fitch Ratings has revised the Outlook on Financiere IKKS S.A.S.'s
(IKKS) Issuer Default Rating (IDR) to Negative from Stable and
affirmed the IDR at 'B-'. Fitch has also affirmed HoldIKKS
S.A.S.'s senior secured notes at 'B' with a Recovery Rating of
'RR3' and IKKS Group S.A.S.'s super senior revolving credit
facility (RCF) at 'B+' with a Recovery Rating of 'RR2' as
constrained by the French soft cap due to the legal jurisdiction.

The revision of the Outlook reflects the weak 2016 interim
performance, which is likely to affect the annual results. It
also challenges our view of the sustained level of operating
profitability at IKKS, and ultimately, the degree of the
execution risks embedded in its operations. Fitch said, "We also
highlight the largely utilized liquidity reserve under the
committed facilities, and the exhausted leverage headroom of 8.0x
calculated on a funds from operations (FFO) adjusted leverage
basis. Fitch views negatively IKKS' recently announced intention
to approach its RCF creditors to reset the covenant levels
following a review of the EBITDA calculation by reclassifying
certain collection development costs from operating expenses into

Fitch considers that a slow start to 2016 does not necessarily
signal a fundamental weakening of the commercial profile.
However, the combination of adverse factors creates a degree of
uncertainty over the near-term credit performance, which could
translate into an increasingly unsustainable leverage profile.
"We note the scalability of capex as a means to support cash flow
generation.' Fitch said.

The 'B-' IDR reflects IKKS's small business scale with heavy
geographic concentration, exposure to cyclicality and shifting
seasonality patterns. The company is confronted with
unpredictability on the demand side and the need to reinforce its
brand to retain its commercial viability. At the same time, IKKS
benefits from an established position in the premium market
segment, and generally relatively high profit margins in the
industrial context, even after the release of record low EBITDA
margin for 1H16.


Muted Network Performance

After a slow start in 2016 with two consecutive quarters of
negative like-for-like (LfL) growth, which will materially impact
the annual performance, Fitch has cut its sales growth
expectations for FY16 to 1% from 7% in our previous rating case
forecasts, followed by 2%-4% thereafter as new shops opened in
2015/2016 begin generating revenues. Each collection carries
individual commercial/fashion risks, but a repeat subdued
seasonal sale would quickly jeopardize the company's sales
profile, its profit margin progression and cash flow and

Profitability Breakdown in 2016

After a record low 1H16 EBITDA margin of 12.5% (including
creation costs) Fitch projects the annual EBITDA margin will
reach 16%, as the gap between this year's interim trading and
last year's results would be difficult to bridge in 2H16. This
low profitability contrasts with our previous view of its
relative stability. As our understanding of the sustainable
through-the-cycle profitability for the business evolves, Fitch
considers there is some upside potential for the margin to
recover in the medium term, albeit possibly not to the high
levels of 19%-20% previously reported, as the company plans to
step up its marketing/communications efforts. Fitch therefore
projects a gradual steady margin recovery to 17% by FY19.

Reclassification of Creation Costs

Fitch sees no economic rationale behind the recent
reclassification of creation costs from operating into capital
expenditures amortizable over 12 months. In our view,
capitalization of certain development costs is warranted if the
economic benefit ensures sustained viability of the business
model over multiple business cycles. The economic benefit from
the creation costs incurred to design a new collection is
effectively fully consumed with the release of the collection,
and therefore may not contribute to the strength of the business
model over the longer term, particularly if a collection does not
sell as expected. Consequently, Fitch adds back the annual
creation costs of approximately EUR5m as operating costs and
decreases the capex figure by the same amount.

Tightening Liquidity Reserves

Fitch expects an inventory led slowdown of the cash conversion
cycle in 2016 leading to permanent use of RCF and/or ancillary
facilities of EUR30 million during the rest of the year, and
likely increasing further by EUR5 million-EUR10 million in 3Q
when inventories tend to peak. In FY16 organic liquidity is
projected to be negative at around EUR5 million, fully relying on
debt drawdowns. Thereafter Fitch anticipates gradually recovering
internal cash generation building up towards EUR13 million per
year in FY19. However, in our view this will be insufficient to
fund working capital without permanent use of short-term debt.
The extensive perpetual use of short-term funding sustainably
reduces the amount of external liquidity reserves available to
the business.

Covenant Breach, Leverage Headroom Exhausted in 2016
The EBITDA contraction is likely to result in a covenant breach
under the RCF during 2016. IKKS has recently announced its
intention to amend the covenant threshold to allow for wider
headroom. Fitch sees little risk in the creditors rejecting the
amendment, but loosening covenant levels signals anticipated
lower earnings. Fitch said, "Moreover, we project weak trading
results to push FFO adjusted leverage at the end of 2016 to the
edge of the negative sensitivity guidance of 8.0x calculated on
FFO adjusted leverage basis. Thereafter, Fitch anticipates a
gradual de-leveraging towards 7.0x at the end of 2019. We
consider this residual leverage less than two years prior to bond
maturity as very aggressive for a business such as IKKS."

Sustainably Positive Free Cash Flows

"With the exception of 2016, where Fitch anticipates a sizeable
working capital outflow of EUR11 million leading to negative free
cash flow (FCF), we project IKKS to generate stable FCF at 2%-3%
of sales from 2017. Tighter working capital control is expected
to result in only moderate cash outflows of around EUR2 million
between 2017 and 2019. With a scalable capex estimated by Fitch
of EUR15 million per year matching the pace of sales development,
the affirmation is supported by our expectation of sustainably
positive FCF generation to mitigate high leverage given the
commercial risks involved in the business." Fitch said.

Above-Average Recoveries for Debt Instruments

Recovery rates for the debt instruments are based on Fitch's
post-restructuring going concern estimate. Fitch applied a
discount of 10% to the 2016E EBITDA of EUR56 million (including
creation costs). After applying a distressed EV/EBITDA multiple
of 5.0x and customary restructuring charges, the rating for the
super senior RCF is 'B+' with a Recovery Rating 'RR2' reflecting
a cap of 90% recovery rate by the French jurisdiction. "We expect
IKKS to frequently draw on an uncommitted ancillary facility
separately provided, which currently amounts to EUR17 million. We
treat this debt as a de-facto committed line and have included it
as a super senior claim in the debt waterfall. The EUR320 million
senior secured notes, which are secured by certain share pledges,
bank accounts and intercompany receivables, are rated 'B', one
notch higher than the IDR, with a Recovery Rating of 'RR3' (55%
recovery rate)." Fitch said.


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

   -- Sales growth ranging between 1-4% p.a.

   -- EBITDA margins (incl. creation costs) range 16-17%

   -- Inventory-led working capital outflow of EUR11m in 2016
      followed by ca EUR2m outflow thereafter

   -- Capex assumed at EUR15m per year throughout (excluding
      creation costs)

   -- Need to draw under the RCF of EUR30m during 2016-2019.


Negative: Future developments that may, individually or
collectively, lead to the IDR being downgraded, include:

   -- FFO adjusted gross leverage at or above 8.0x.

   -- FFO fixed charge coverage at or below 1.2x.

   -- Sustained negative FCF combined with the need to
      continuously draw on the RCF to top up liquidity.

   -- Sustained negative like-for-like sales growth and EBITDA
      margin dilution towards 15%, implying an impaired business
      model and inability to respond to operating challenges and
      absorb market risks.

Positive: Future developments that may, individually or
collectively, lead to the stabilization of the Outlook to Stable

   -- Reset of the RCF maintenance covenants removing the risk of
      a covenant breach.

   -- Evidence of improved operating cash generation and working
      capital management in 2016 leading to greater self-funding
      and more comfortable liquidity headroom under the RCF of at
      least EUR15 million.

   -- Positive FCF for 2016.

   -- Reversal of the negative LfL trend in the 2H16 and
      stabilization of the EBITDA margin (incl. creation costs)
      at around 18% with prospects of further margin improvement
      towards 20% thereafter.

   -- 2016 FFO adjusted gross leverage below 8.0x.


To support operations, most notably, to finance working capital
needs, Fitch projects IKKS will consistently use in 2H16 the RCF
and/or ancillary facilities of at least EUR30 million, or higher
in 3Q, when inventory investments tend to be the highest during
the year. Without external funding, Fitch projects IKKS will face
a funding gap of EUR4 million at the end of FY16. Fitch said, "In
our liquidity assessment, we deduct EUR15 million per year as not
readily available cash, which Fitch deems necessary to partly
self-fund working capital."

KERNEOS HOLDING: Moody's Raises CFR to B1, Outlook Stable
Moody's Investors Service has upgraded to B1 from B2 the
corporate family rating (CFR) of French calcium aluminate cements
(CAC) manufacturer Kerneos Holding Group SAS.  Concurrently,
Moody's upgraded to B1 (LGD4) from B2 (LGD4) the rating on the
senior secured notes (due 2021), issued by the group's direct
subsidiary Kerneos Corporate SAS, and affirmed the B1-PD
probability of default rating (PDR) of Kerneos.  The outlook on
all ratings has been changed to stable from positive.

                         RATINGS RATIONALE

"The rating action recognizes Kerneos' sound operating
performance in the first half of 2016, resulting in strong growth
in profits and significantly improved Moody's-adjusted leverage
and cash flow metrics.  With reported EBITDA increasing to EUR51
million in the first six months of 2016 from EUR43 million in the
prior year, Kerneos' leverage as adjusted by Moody's reduced to
4.3x debt/EBITDA from 4.7x in fiscal year 2015, which clearly
meets our leverage guidance of 4.5x for an upgrade", says Goetz
Grossmann, Moody's lead analyst for Kerneos.  "Together with
improved free cash flow generation of EUR11 million in the 12
months through June 2016, which we expect to remain positive over
the next two years, this positions the group solidly in the B1
rating category", adds Mr. Grossmann.

Kerneos' robust results for the first half of 2016 (H1-16) showed
particularly strong growth in group earnings, despite a weak
topline growth (-0.6%) which was impacted by lower selling prices
and adverse currency movements.  Reported (recurring) EBITDA in
H1-16 surged 20.6% year-over-year (yoy), thanks to sustained low
raw material and energy costs, corporate efficiency measures and
a positive EUR4 million scope effect (including synergies)
related to the group's acquisition of European Bauxites in
February 2015. Likewise, EBITDA as adjusted by Moody's rose to
EUR98 million in the 12 months ended June 30, 2016, from EUR91
million in fiscal year 2015, implying margins widening to a
record 23.5% from 21.9% in 2015.  As a result, Kerneos' leverage
as adjusted by Moody's declined notably to 4.3x debt/EBITDA as of
30 June 2016 from 4.7x at year-end 2015, which comfortably meets
Moody's guidance (4.5x) for a B1 rating.

Acknowledging continued strong demand for the group's performance
binders for building chemistry (c.49% of group sales), leading to
H1-16 segment sales climbing 7% yoy, Moody's notes that volumes
in the refractory business have stabilized during Q2-16, albeit
at a low level, after material volume losses following a
significant decrease in worldwide steel production since Q2-15.
As crude steel production will likely decline further during 2016
and 2017, Moody's sees very limited potential for recovering
refractory sales over the next few quarters.  However, assuming
sustained growth in Kerneos' building chemistry business (in
particular in the US and Germany), Moody's anticipates overall
flattish sales this year and low-single-digit growth for 2017 and
group margins to remain constant around current levels.  Further
reduction in leverage will therefore be limited but which Moody's
expects to progressively decline towards 4x debt/EBITDA over the
next 18 months.

The upgrade was further prompted by Kerneos's improved free cash
flow generation which has been negative in the last two years and
increased to EUR11 million in the 12 months ended June 2016.
Although constrained by substantial interest costs and rising
capital expenditures (including the expansion of a facility in
the US and construction of a new sintering unit in India) Moody's
expects FCF to remain modestly positive over the next two years.


Kerneos' liquidity is adequate.  As of June 30, 2016, the group
had EUR17 million of cash on balance sheet and access to
EUR52 million under its EUR60 million revolving credit facility
(maturing 2020, unrated).  Together with operating cash flows
before working capital movements of EUR50-60 million per annum,
Kerneos' cash sources are sufficient to cover all basic cash
requirements over the next 12-18 months.  Besides minor working
capital consumption with estimated intra-year swings of around
EUR15-20 million, the group's cash uses mainly comprise capital
expenditures of approximately EUR45 million this year (including
for a facility expansion in Norfolk/USA) and in 2017.

The liquidity assessment further incorporates Moody's expectation
that Kerneos will remain in compliance with its financial
covenant (drawn super senior leverage ratio), under which it
maintained ample headroom as of June 30, 2016.


The stable outlook assumes that Kerneos will maintain its strong
profitability, while returning to organic sales growth in the
upcoming quarters in view of stabilizing volumes in the
refractory segment and sustained healthy demand in the building
chemistry segment.  Moreover, the stable outlook incorporates
Moody's expectation of Kerneos to protect its positive free cash
flow generation and to maintain a balanced financial policy, as
reflected in no excessive dividend payments or other material
shareholder distributions.


An upgrade would require Kerneos to (1) reduce leverage to well
below 4x debt/EBITDA on a sustained basis, (2) strengthen
interest coverage to at least 2.5x EBIT/interest expense, and (3)
further improve free cash flow generation, exemplified by
FCF/debt ratios in the mid- to high-single-digit percentage

Moody's might downgrade Kerneos if (1) leverage were to
materially exceed 4.5x debt/EBITDA, (2) interest coverage
weakened to below 1.5x EBIT/interest expense, (3) free cash flow
turned negative, and (4) liquidity were to deteriorate.

                        PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Building
Materials Industry published in September 2014.

Kerneos Holding Group SAS, headquartered in Paris La Defense, is
the world's leader in the Calcium Aluminates Cement (CAC) market
by a wide margin in an otherwise very fragmented niche industry.
The group provides performance binders to monolithic refractory
manufacturers (primarily for the steel, glass and cement
industries) and to dry-mix mortar producers which use CAC as
performance binders in mortars to achieve certain end-product
properties.  Kerneos generated revenues of EUR415 million and
reported EBITDA (before non-recurring items) of almost
EUR99 million (23.8% margin) in the 12 months through June 30,
2016.  Kerneos is owned by private equity firm Astorg Partners
since 2014.

THOM EUROPE: Moody's Assigns B2 Rating to EUR190MM Sr. Sec. Notes
Moody's Investors Service has assigned a B2 (LGD 5) rating to the
additional EUR190 million Senior Secured Notes (due 2019) issued
by French jewelry retailer Thom Europe S.A.S., which will be used
to fund the acquisition of Stroili Oro, an Italian jewelry
retailer.  At the same time, the agency has affirmed the B2
corporate family rating (CFR) and the B1-PD probability of
default rating (PDR) as well as the B2 senior secured rating of
the existing EUR346 million worth of Senior Secured Notes (due
July 2019) previously issued by Thom Europe.  The outlook for all
ratings is stable.

The B2 rating for the new Senior Secured Notes is in line with
the B2 rating assigned to the EUR346 million existing senior
secured Notes, as the tap is issued under the same indenture.
The majority of proceeds will be principally used to fund the
recently agreed acquisition of Stroili for around EUR147 million.
The rest, together with an equity contribution from shareholders
of EUR67 million and existing cash on balance sheet, will be used
to pay the related financing fees and expenses, and to repay
Stroili existing debt.

                        RATINGS RATIONALE

The affirmation of Thom Europe's CFR at B2 reflects Moody's view
that the company's leverage will only increase marginally as a
result of the tap issuance though leverage will remain high.
Proforma for the Stroili acquisition, Moody's estimates that the
company's leverage ratio (defined as gross Debt/EBITDA with
Moody's adjustments) will stand at around 5.2x at fiscal year-end
2016 (ending Sept. 30, 2016,), compared to 5.0x in as at June 30,
2016.  Moody's expects that Thom Europe's leverage ratio will
reduce over the next 12 to 18 months notably through continued
profitability improvement on the back of top line growth
supported by both store openings and positive like-for-like
growth, as seen in recent quarters.  Moody's notes that the
transaction occurs at a time when both Stroili and Thom Europe
have recorded solid recent trading performance, supporting the
initial leverage of the combined entity.

Based in Italy, Stroili is a leading jewelry retailer in the very
fragmented Italian market.  Through a network of 374 directly
operated stores as of June 2016, mainly located in shopping
centers, Stroili operates under the affordable banner Stroili Oro
(310 stores) and also through the complementary generalist banner
Franco Gioielli (52 stores).  In the 12 months to June 30, 2016,
Stroili reported sales of EUR265 million and EBITDA (as adjusted
by the company) of EUR36.4 million which compared to
EUR401 million and EUR77.9 million for Thom Europe.

In addition to increasing its scale and enhancing its geographic
diversity, the Stroili acquisition will generate some synergies
according to the company, mostly in the purchasing and supply
chain areas.  Moody's however cautions that the planned synergies
will only contribute marginally to EBITDA growth in the first
year and that most of the costs synergies will only be effective
in the longer run.

Moody's believes the acquisition of Stroili is credit positive,
as it would reduce Thom Europe's high reliance on the French
market and strengthen significantly its competitive position in
Italy where it operates only 24 stores, compared to 374 for
Stroili. While this large transaction entails some execution
risks, Moody's expects that the experience gained from the past
integration of Marc Orian and Thom Europe's knowledge of the
Italian market alleviate somewhat these concerns.

Thom Europe's B2 CFR further reflects (1) its small scale in a
fragmented and moderately competitive industry, (2) its exposure
to the cyclical jewelry industry, and (3) its high dependence on
the Christmas season.  More positively, the rating also factors
in Thom Europe's (1) well-known brand names, (2) its position as
a market leader, albeit with a modest market share, (3) its large
product range covering gold, silver and costume jewelry as well
as watches, and a moderate exposure to fashion risk, (4) its
higher profitability compared to other rated specialty retailers,
and (5) its good cash flow generation.

Proforma for the proposed transaction, Thom Europe's liquidity
profile is adequate but exhibits limited room of maneuver
initially, reflecting the high working capital consumption at
this time of the year.  The proposed refinancing will leave the
company with around EUR27 million of cash (pro-forma as at June
2016).  The company will retain access to a EUR60 revolving
credit facility (RCF) maturing in January 2019 (undrawn as at
June 30, 2016).  This mitigates the company's large working
capital requirements, due to the high seasonality of Thom
Europe's and Stroili's operations, notably due to Christmas sales
and promotional periods.  The peak drawing under the RCF tends to
occur in September-November each year, reflecting the inventory
build-up ahead of the holiday season.

However, our assessment of Thom Europe's liquidity factors in
expected positive free cash flow in the next 12 to 18 months and
unimpeded access to the covenanted EUR60 million RCF.  The RCF
only contains one broad maintenance covenant of minimum EBITDA of
EUR42 million, corresponding to a 45% headroom as at end June
2016, and that is only be tested if the RCF outstanding is equal
to or greater than EUR15 million (25% of overall commitment).


The stable rating outlook reflects our expectation that Thom
Europe will maintain its currently high operating margins and a
positive free cash flow generation supported by gradually
improving macroeconomic conditions in France.  Moody's also
anticipates a smooth integration of Stroili and that the planned
moderate synergies will materalise over time as expected.  To
maintain the current ratings with a stable outlook, Moody's
expects Thom Europe's Moody's adjusted (gross) debt/EBITDA to
remain at around 5x in the next 12 to 18 months.  In addition,
the B2 CFR factors in the maintenance of an adequate liquidity


Upward rating pressure could develop if Thom Europe (1) continues
to grow and record above-peer profitability on the back of more
favorable economic conditions and high quality execution of its
store network expansion and (2) increases substantially its free
cash flow generation.  Quantitatively, stronger credit metrics
such as Moody's-adjusted (gross) debt/EBITDA trending sustainably
towards 4.5x could trigger an upgrade.

Conversely, negative rating pressure could develop if Thom
Europe's free cash flow generation was negative for a prolonged
period of time as a result of a weakened operating performance or
higher-than-expected capital expenditures.  Quantitatively, a
Moody's-adjusted (gross) debt/EBITDA ratio close to 6.0x could
exert pressure on the rating.

                       PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Retail
Industry published in October 2015.

Headquartered in France (Paris), Thom Europe is one of the
leading jewelry and watches retail chains in Europe with in-store
revenues of EUR391 million and adjusted EBITDA (as defined by the
group) of around EUR78 million in the 12 months ended June 2016.
Thom Europe's business model is based on directly operated stores
mostly located in shopping malls, in particular in large
catchment areas.  Thom Europe's main banners, Histoire d'Or and
Marc Orian, have a long established history in France as
generalist jewelry retailers.


CIDRON GLORIA: Moody's Affirms B2 CFR, Outlook Stable
Moody's Investors Service has affirmed the B2 corporate family
rating and the B2-PD probability of default rating (PDR) of
Cidron Gloria Holding GmbH (GHD), the largest provider of
homecare services for a broad range of therapeutic areas in
Germany.  The rating outlook on all ratings is stable.

Today's affirmation of the B2 CFR reflects this driver:

   -- Moody's expectation that GHD's leverage will remain below
      6.0x after the proposed EUR50 million add-on to the senior
      secured term loan

Concurrently, Moody's has affirmed the B2 (LGD3) rating of the
EUR310 million senior secured term loan due 28 Aug 2021 (to be
increased to EUR360 million) and the B2 (LGD3) rating of the
EUR45 million revolving credit facility (RCF) due 28 Aug 2020,
both borrowed by GHD Verwaltung GesundHeits GmbH Deutschland.

                           RATINGS RATIONALE

The affirmation of GHD's B2 CFR reflects Moody's view that GHD's
leverage will stay below 6.0x after increasing to 5.9x from 5.5x
following it decision to raise additional debt of EUR50 million
in September 2016.  GHD's leverage will then likely decline to
5.2x in 2017 based on mid-single-digit organic growth and small
bolt-on acquisitions.  Adjusted EBITDA margin will be around
10.5% over the next 12-18 months as a result of the mix shift
towards higher-margin nutritional therapies and purchasing
savings from shifts to generic cytostatic drugs.  Capital
expenditures will be higher than historical levels over the next
three years, at 2% of sales. Free cash flow/debt will be around
3.5% over the next 12-18 months.

GHD's liquidity is good, supported by cash of around EUR25
million at closing of the TLB add-on and by the undrawn EUR45
million revolving credit facility (RCF).  The RCF has one
widely-set net senior secured leverage covenant that is tested
only when the RCF is drawn by or more than 30% (a "springing
covenant").  Should this covenant be tested Moody's expects that
GHD will have good headroom.  The business model requires low-
single-digit levels of maintenance capital expenditures, although
working capital requirements could increase if GHD achieves a
significant uplift in sales volume.  Moody's expects that GHD
will generate free cash flows of around EUR11.5 million in 2016
and EUR14.6 million in 2017.

The B2 (LGD3) rating of the EUR310 million senior secured term
loan, the B2 (LGD3) rating of the EUR45 million RCF, and the B2-
PD probability of default rating (PDR) are in line with the B2
CFR, which reflects Moody's typical assumption of a 50% corporate
family recovery rate for a bank-debt structure with one
maintenance covenant.


The stable outlook assumes that GHD will retain its leading
positions in the homecare and oncology markets and not be subject
to any material changes in reimbursement policies.

The outlook also incorporates the rating agency's expectation
that GHD's leverage, as measured by Moody's-adjusted debt/EBITDA,
will likely be around 5.2x in 2017 and that GHD will not embark
on any transforming acquisitions or make debt-funded shareholder


Upward pressure could arise if:

  GHD's leverage, as measured by Moody's-adjusted debt/EBITDA,
   were to decrease sustainably below 5.0x, and
  Moody's-adjusted EBITA/interest expense were to remain above

Downward pressure on the rating could arise if:

  GHD's leverage, as measured by Moody's-adjusted debt/EBITDA,
   were to remain above 6.0x for a prolonged period, or
  Moody's-adjusted EBITA/interest expense were to decrease
   towards 2.0x, and/or
  Liquidity concerns were to emerge

Moody's could also consider downgrading the ratings in the event
of any material acquisitions or changes in the financial policy.

                       PRINCIPAL METHODOLOGY

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

Cidron Gloria Holding GmbH (GHD), headquartered in Ahrensburg
(Germany), is the largest provider of homecare services for a
broad range of therapeutic areas, including oncology and
antibiosis, in Germany.  GHD provides medical products and
outpatient services for patients that require long and continuous
care.  Andreas Rudolph, the current CEO, founded GHD's
predecessor company, GHD Verwaltung GesundHeits GmbH Deutschland,
in 1992.  In 2016, GHD generated sales of EUR545.8 million, had
over 2,500 employees throughout Germany, over 15,000
institutional customers and more than 250,000 patients.  GHD has
been majority owned by private-equity funds managed and advised
by Nordic Capital since Aug. 28, 2014.

DEA DEUTSCHE: Fitch Assigns BB Long-Term FC Issuer Default Rating
Fitch Ratings has assigned DEA Deutsche Erdoel AG (DEA) a
Long-Term Foreign Currency Issuer Default Rating (IDR) of 'BB'
with Stable Outlook.

DEA is a medium size oil and gas exploration and production
company based in Germany. The company's pro-forma hydrocarbon
output totalled 144 thousand barrels of oil equivalent per day
(mboepd) in 2015 (on a net entitlement basis and accounting for
acquisitions and disposals completed in 2015). DEA's key oil and
gas fields are located in Germany, Norway and Egypt. The share of
gas in total production is around 50%, which is expected to
increase to 80% when new assets in Norway and Egypt add to

The rating is supported by a diversified asset base in 'AAA'
rated countries (mainly Germany and Norway), low cost of
production and a clearly stated financial policy with net debt to
EBITDAX capped at around 2.0x-2.5x. DEA's credit profile is
constrained by mature assets in Europe, where production decline
is yet to be arrested, and size of production. Fitch said, "We
deconsolidate oil and gas output from the West Nile Delta (WND)
reservoir in Egypt from DEA's financial profile because the
company plans to project finance its stake."

DEA is a wholly owned subsidiary of L1E Acquisitions GmbH (owned
by LetterOne Holdings S.A.) following the acquisition of the
company from RWE AG (BBB/RWN) in March 2015. LetterOne was
founded in 2013 by Mikhail Fridman, German Khan and several other


Oil and Gas Production Profile

"We expect DEA's production of 144mboepd in 2015 (excluding
production from the UK assets sold to INEOS Offshore BCS Limited
and including full year production from assets in the North Sea
acquired from E.ON SE (BBB+/Stable)) to decrease to 107mboepd in
2016 (excluding the output from WND) due to lower output from
Skarv and Njord fields in Norway and disposal of assets. We
further forecast total liftings to fall to 87 mboepd in 2019
because of declining production in Germany and Norway before
recovering to 106mboepd in 2021 following the development of the
Zidane gas field and higher output from the Skarv Area. In
addition, the company is developing the WND project in Egypt,
which will lead to its output increasing to 39mboepd in 2021 from
1mboepd in 2015." Fitch said.

DEA Compared With Peers

DEA's geographical and asset diversification compares well with
peers such as Kosmos Energy Ltd (B/RWN), which usually have a
concentrated asset base located in more politically challenging
countries and is more representative of Newfield Exploration
Company (BB+/Stable) with 2015 output of 139mboepd. This factor,
coupled with leverage and the size of production is commensurate
with the mid 'BB' rating category.

German and Norwegian Assets Credit-Positive

Around 85% of total production in 2015 came from oil and gas
fields located in Germany, Norway and Denmark (GDN), mainly
Volkersen, Mittelplate, Skarv, Gjoa and Snorre. This represented
almost the entire EBITDAX in 2015. Fitch said, "We view assets
located in 'AAA' rated countries as positive for DEA's credit
profile. At the same time, these are mature reservoirs with
declining production. The production volume from GDN increased in
2015 on acquisition of assets in the Norwegian North Sea from
E.ON for USD1.6 billion, but we expect volumes to decrease by 44%
to 69mboepd by 2019 due to natural decline before recovering
substantially to 88mboepd in 2021 on the back of higher
production from the Zidane and the Skarv Area."

Zidane is a large gas field in Norway with 1P gas reserves of
432Bscf operated by DEA, which holds a 40% stake. The submission
of plan for operation and development has been delayed and is
expected to take place in September 2016 after the negotiations
with project partners are completed. DEA plans to tie back the
field to the Statoil operated infrastructure at Heidrun platform
with a 15km production flowline. Production in the Skarv Area
started in 2013 (Skarv and Idun fields) and is expected to
naturally decline from the peak in 2015 until 2020 when
production is expected to improve mainly from development of the
Snadd field.

Prospective Assets in North Africa

The company expects production in Egypt and Algeria to increase
to 46mboepd in 2019 from 22mboepd in 2015 including 25mboepd from
WND. DEA started commercial production from the Disouq concession
(100% working interest (WI)) in Egypt (B/Stable) in 2013. In
March 2015, BP plc (A/Stable) and DEA signed the final agreements
for WND (WI 17.25%), where the companies expect to develop 5
trillion cubic feet of gas and 55mmboe of condensates. Another
significant prospect is the Reggane Nord gas field in Algeria
(19.5% WI). Production in Reggane and WND is expected to start in

"We view the company's track record in developing new reservoirs
as strong, which supports its ratings. Additionally, WND and
Reggane are operated by experienced partners -- BP plc and Repsol
(BBB/Negative), respectively -- with the former project currently
one of the core development assets for BP. The output from these
assets will help improve DEA's operational profile before
production decline in Germany and Norway is halted, which is
positive for the credit profile. At the same time, a higher
contribution from lower rated and less politically stable regions
constrains the ratings. Increasing production in Egypt and
Algeria will also require significant capex. DEA plans to project
finance its stake in WND, which will decrease its share of
spending by USD500m-USD600m from the expected USD850m to develop
the field. We therefore deconsolidate WND from our forecasts."
Fitch said.

WND Consolidation Rating Neutral

The project finance loan is currently being negotiated. Our base
case assumption is that that ring-fencing of DEA from the loans
will be strong enough and WND funding and production will be
deconsolidated. An alternative scenario would have a neutral
impact on DEA's credit profile. Our forecasts including WND show
that leverage metrics are still commensurate with the 'BB'
rating, while higher oil and gas production would offset the
negative impact on DEA's business profile of higher production
from lower rated countries. The neutral impact of potential WND
consolidation should also be viewed in conjunction with our
expectation of the majority of oil and gas production coming from
politically stable regions such as Germany or Norway following
the acquisition of assets in Norway from E.ON.

Production costs and Reserve Life

Production costs totalled USD7/boe in 2015 down from USD13/boe in
2014 due to cost-cutting measures and the substitution of higher
cost production in the UK with more profitable assets in Norway
acquired from E.ON. Costs are expected to remain broadly stable
at USD5/boe over the rating horizon when Egyptian production is
counted in. Low production costs support DEA's credit profile.

1P reserves totalled 400 million boe (mmboe) in 2015 (including
WND), which translates into 8 years reserve life and compares
well with peers such as Kosmos Energy (nine years), Unit
Corporation (B+/Negative, seven years), Newfield Exploration
Company (10 years). Excluding WND and Njord fields, 1P reserves
total 317mmboe and reserve life six years at the 2015 production

Financial Profile and Funding

"We expect EBITDA to bottom out in 2016 at EUR641 million due to
lower production in Norway and Egypt vs 2015 and lower hedging
income (EUR120 million in 2015) followed by a gradual price
driven increase, in line with our oil price deck of USD42/bbl in
2016, USD45/bbl in 2017, USD55/bbl in 2018 and USD65/bbl long
term. We expect funds from operations (FFO) adjusted net leverage
to peak at 3.3x in 2016, on the back of a challenging macro
environment and high capex in Egypt and Algeria, and then
decrease to 2.9x in 2019." Fitch said.

The financing structure comprises a USD2.3 billion (USD2,050
million drawn) senior secured reserve based lending (RBL)
facility with a comfortable maturity profile. Shareholder loans
(EUR.1.1 billion at end-2015) were excluded from the debt amount,
as they have equity-like characteristics.

DEA plans to maintain net debt to EBITDAX at around 2.0x, going
temporarily up to 2.5x in case of inorganic growth. The company
is also obliged to keep net debt to EBITDAX below 3.0x under its
RBL facility. Our forecasts show net debt to EBITDAX will remain
below 2.5x until 2019.

New Acquisitions Likely

DEA plans to remodel its portfolio and to further grow through
acquisitions. The headroom for debt-financed inorganic growth is
currently limited. Fitch said, "We therefore assume that a
potential transaction would be largely financed with shareholder
funds if the expected contribution to EBITDA from acquired assets
would not allow the maintenance of the target net debt to EBTDAX

Corporate Governance

DEA was acquired by LetterOne Holdings S.A. in March 2015. The
latter entity is owned by an investment holding of Messrs Mikhail
Fridman and German Khan. DEA is domiciled in Germany. LetterOne
received all required consents from European authorities to
acquire DEA, but the UK authorities obliged LetterOne to dispose
of DEA's UK assets, which took place in 2015. Fitch said, "We do
not consider corporate governance to be a rating constraint."

"DEA is ring-fenced and we consider its parent to be rating
neutral as is also the case for DEA's private equity owned peers.
We understand that LetterOne has ample resources following
cashing in its stake in TNK-BP and also provided shareholder
funding to DEA. Although future support is likely, especially for
DEA's inorganic growth, we do not include any rating uplift."
Fitch said.

German Investment Guarantees

Most of DEA's investments in North Africa are covered by
investment guarantees of Germany. The guarantee covers risk
related to expropriation, nationalization of assets, war or other
armed conflicts and cash transfer restrictions. The ability to
recover lost investment in case of major problems with operations
in Africa is positive for the company's credit profile.


   -- Oil prices of USD42/bbl in 2016, USD45/bbl in 2017,
      USD55/bbl in 2018 and USD65/bbl in the long term

   -- Gas prices (NBP) of USD5/mcf in 2016, USD5.5/mcf in 2017,
      USD6/mcf in 2018 and USD6.5/mcf in the long term

   -- EURUSD exchange rate 1.1

   -- Oil and gas output around 5% below management's assumptions

   -- Non-core cash inflows plus divestments of USD274m in 2016,
      USD155 in 2017 and USD60 in 2018

   -- No dividend pay-outs except for partial payback for loan
      from shareholders in 2016

   -- Capex in line with management forecasts


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

   -- Increase in oil and gas output to above 150mboepd
     (excluding WND)

   -- Majority of oil and gas production in politically stable

   -- FFO adjusted net leverage below 3.0x on a sustained basis

   -- Longer track record of operations in the current
      group/financial structure

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

   -- Large debt financed acquisition

   -- FFO net leverage consistently above 4.0x

   -- Reserve life falling below five years


DEA's liquidity is adequate. The group's policy is to ensure a
fully funded status for 12 months. DEA does not have any
immediate debt maturities. The first maturity is in 2019, when
the RBL amortization schedule begins. As at June 30, 2016, the
group had USD250 million under the RBL, USD50 million working
capital facility from Unicredit and USD141 million cash at hand
(we assume USD75 million is the minimum cash needs of the company
in line with our rating methodology and this balance is excluded
from DEA's reported cash balance).

DEUTSCHE ERDOEL: S&P Assigns 'BB-' CCR, Outlook Stable
S&P Global Ratings said it has assigned its 'BB-' long-term
corporate credit rating to Germany-based oil and gas company
Deutsche Erdoel AG (DEA).  The outlook is stable.

The rating on DEA reflects S&P's view of the company's fair
business risk profile and aggressive financial risk profile.

In S&P's view, the main drivers for DEA's business risk are its
midsize production and reserves that are spread across fields in
countries with low and higher risk assessments.  At present, the
majority of production and earnings before interest, taxes,
depreciation, amortization, and exploration (EBITDAX) is derived
from very low risk countries: Germany and Norway.  However, from
2018, S&P expects an increased contribution from Egypt and
Algeria, which S&P views as very high risk countries of
operation. S&P also notes that in 2015, DEA sold its assets in
the U.K. and purchased assets in Norway.  This resulted in a 20%
increase in 2P (proved and probable) reserves to 575 million
barrels of oil equivalent (mmboe) from 476 mmboe in 2014.  On a
pro forma basis (excluding U.K. assets and including Norway), DEA
produced 140,000 boepd in 2015, achieving EBITDAX of about
EUR1.36 billion.  S&P understands that this production rate is
likely to reduce to about 126,000 boepd in 2016.  This decrease
is primarily explained by the natural decline of mature
production in Germany -- where DEA is typically the field
operator -- and Norway, as well as the sale of interests in

S&P's assessment of DEA's business also reflects S&P's view of
generally average profitability compared with its global peer
group, in terms of return on capital and unit operating cash
generation.  However, S&P sees some indicators of improving
operating efficiency; for example, finding and development (F&D)
costs had been higher than average, but were more in line with
peers in 2015.  DEA's three-year average F&D costs during 2012-
2014 were assessed at about $35/boe, but improved to below
$15/boe in 2015.

DEA's future production profile will depend on its ability to
access and develop new fields.  The company is planning to offset
depleting production in Germany and Norway by investing in these
countries, as well as through production from new fields in Egypt
and Algeria that are expected to come on stream in 2017.  The
successful start-up of these fields, in S&P's view, will be
crucial for achieving organic growth in 2017-2020.  Another
potential area of growth is acquisitions, likely focused on
current core regions such as Norway and Germany.  DEA's
management plans to achieve 200 mmboepd by 2020 and S&P
understands this target may be reached through the purchase of
typically producing assets.  Although LetterOne Holdings S.A. --
the sole owner of DEA--may again provide some equity financing
for acquisitions, S&P do not exclude that they may also be partly
funded with debt.

In the next year or so, the combination of modestly declining
production and the current period of low oil and gas prices will
continue to weigh on the financial profile of the company.  S&P
forecasts FFO to debt of slightly higher than 20% on a three-year
weighted-average basis over 2016-2018.  S&P anticipates declining
production in 2016 and 2017; total annual production in 2016 is
forecast at 126,000 boepd, decreasing to 110,000 boepd in 2017.
As North African projects under development start producing, S&P
sees potential for growth in 2018 and project production to
improve to above 112,000 boepd.  S&P do not incorporate any
acquisitions in its base-case forecast that would help DEA
achieve its public target of production at 200,000 boepd in 2020.
S&P understands the company will manage acquisitions within the
framework of its financial policy -- namely reported net debt to
EBITDA typically less than 2.5x.  However, major debt-funded
acquisitions may lead to an increase in financial leverage beyond
S&P's assumptions, which could result in a downward adjustment of
its financial risk profile assessment.

S&P's base case assumes:

   -- Brent price at $40/boe in 2016, $45/boe in 2017, and
      $50/boe in 2018 onward.  S&P also assumes a Henry Hub price
      of $2.5/million British thermal units (Btu) in 2016,
      $2.75/million Btu in 2018, and $3.0/million Btu from 2018.

   -- Euro/U.S. dollar rate at about EUR0.9 per dollar for 2016-

   -- A slight decrease in total production from 144,000 boepd in
      2015 (on pro forma basis) to 126,000 boepd in 2016, and
      then to 110,000 boepd in 2017 due to a natural decline in
      Germany and Norway and a farm-down agreement in Egypt,
      under which a third party acquired an interest in DEA's
      license.  S&P anticipates production growth in 2018, after
      assets in start-up operations in Egypt, resulting in
      projected production of about 112,000 boepd.

   -- Adjusted returns on capital and EBITDA margins are forecast
      to improve over 2016-2018 with operating efficiencies from
      new assets and a cost-cutting program.  EBITDAX margin is
      forecast at 55% in 2016, strengthening to 60% in 2018.

   -- Estimated capital expenditure (capex) of about
      EUR750 million in 2016, EUR660 million in 2017, and
      EUR700 million in 2018.

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

   -- Adjusted EBITDAX of above EUR800 million in 2016 and 2017
      and about EUR900 million in 2018.
   -- FFO to adjusted debt of about 19% in 2016, increasing to
      23% in 2018.
   -- Breakeven to modestly positive free operating cash flow
      (FOCF) and DCF resulting in weak corresponding debt ratios
      on a three-year weighted-average basis for 2016-2018.

The stable outlook reflects S&P's forecast of broadly breakeven
FOCF in the next year or so and moderating net leverage -- with
S&P Global Ratings-adjusted three-year average debt to EBITDA
comfortably below 4x and FFO to debt at 20% or above -- as oil
prices increase modestly in line with S&P's price assumptions and
new production begins.

S&P sees some risk that DEA's expansion strategy could result in
aggressively funded acquisitions.  Such purchases and leveraging
could result in a downgrade, especially if FFO to debt were well
below 20% or debt to EBITDA were over 4x for a protracted period.
Further sustained reductions in oil prices below our assumptions
of $40/bbl for the remainder of 2016 and $45/bbl in 2017 could
also increase the risk of a downgrade unless sufficiently offset
by cost reductions or lower capital investment.

Over the longer term, capex reductions could result in a
meaningfully declining production profile, which could negatively
affect S&P's assessment of the business assets and also lead S&P
to lower the ratings.

S&P sees limited likelihood of an upgrade over the next year or
so unless DEA sustainably reduces leverage to below 3x with FFO
to debt above 30%.  Over time, a material increase in the scale
and diversification of the reserves and producing assets,
combined with moderate leverage, could lead to an upgrade.

INEOS STYROLUTION: S&P Assigns 'B+' Long-Term CCR, Outlook Stable
S&P Global Ratings said that it assigned its 'B+' long-term
corporate credit rating to INEOS Styrolution Holding Ltd, a
holding company of Germany-headquartered styrenics producer INEOS
Styrolution Group GmbH. The outlook is stable.

S&P also assigned its 'BB-' issue rating to Styrolution Group's
proposed EUR1.1 billion first-lien senior secured term loan.  The
recovery rating on these facilities is '2', indicating S&P's
expectation of recovery prospects for creditors in the lower half
of the 70%-90% range in the event of payment default.

At the same time, S&P affirmed its 'B+' long-term corporate
credit rating on Styrolution Group.  The outlook is stable.

S&P also affirmed its existing 'BB-' issue ratings on Styrolution
Group's first-lien term loan due 2019, which is split between a
EUR517.12 million tranche and a $652.61 million tranche.

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

S&P's ratings on the INEOS Styrolution companies reflect S&P's
opinion that the credit ratios have materially improved.  Under
S&P's base case, it forecasts S&P Global Ratings-adjusted (gross)
debt to EBITDA of 1.7x at year-end 2016, and about 2.0x in 2017.
This is a strong improvement from 4.9x in 2014 and comparable
with the peak of 2.1x in 2015.  However, notwithstanding the
contemplated debt reduction by EUR200 million, S&P believes that
the company could use cash flows to support growth initiatives
and, potentially, debt-financed dividends in the future.

Considering that S&P calculates Styrolution's pro forma leverage
on an adjusted gross basis, the key driver (in addition to the
contemplated PIK repayment) behind the meaningful reduction in
leverage is its EBITDA growth.  This reflects a top-of-the-cycle
industry environment in 2015 and 2016, with styrene benzene
spreads of $280 per metric ton on average in the year to date,
and over $330 per metric ton in 2015 (partly due exceptional
cracker outages in the second quarter).  Styrolution's
profitability is additionally supported by cost-saving
initiatives and synergies with INEOS.

S&P anticipates that strong industry conditions will continue in
2016 and well into 2017 on the back of ongoing robust demand for
styrenics from the packaging, leisure, automotive, and household
sectors in Europe and North America, which form about 80% of
Styrolution's end-markets.  S&P's forecast is notwithstanding
weakening in Asia (notably China) affecting the polymer business,
especially ABS (acrylonitrile butadiene styrene).

Under S&P's base-case scenario, it forecasts Styrolution to
report high mid-cycle EBITDA after special items of about EUR740
million-EUR750 million in 2016 and EUR600 million-EUR620 million
in 2017.

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

   -- Reported EBITDA margin of about 17% in 2016, reflecting
      high mid-cycle conditions during the year, trending down to
      14%-15% in 2017;

   -- Capital expenditure (capex) of about EUR140 million in both
      years; and

   -- Dividends at about 50% of net income of the previous year.

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

   -- Adjusted debt-to-EBITDA ratio of about 1.7x in 2016, and
      about 2.0x in 2017 (based on adjusted gross debt of
      EUR1.3 billion).

   -- Strong free operating cash flow (FOCF) in both years.

S&P continues to view Styrolution's business risk profile as
constrained by the commodity-intensive nature of its products and
its limited diversification as a pure-play styrenics producer.
This implies high cyclicality of earnings and cash flows during
periods of lower demand in the company's more cyclical end-
markets -- including consumer durables, packaging, automotive,
and construction.  In addition, volatility in raw material prices
(such as benzene) could erode profitability.

Styrolution benefits from a large-scale, integrated, and cost-
competitive asset base, as 75% of its production assets are
positioned in the first and second quartile of the industry cost
curve.  In addition, S&P factors in the company's successful
track record and focus on costs and efficiencies.

As an indirectly and fully-owned subsidiary of INEOS AG, S&P
assess Styrolution's management and governance as fair, as S&P do
for sister companies Inovyn and INEOS Group Holdings S.A.  This
reflects S&P's view of the concentrated ownership of INEOS --
100% of shares are held by only three individuals -- and is
partly offset by S&P's opinion of management's entrepreneurial
cost focus and industry knowledge.

S&P thinks Styrolution's future credit metrics could be weaker
than S&P's base case suggests because certain potential
management actions -- such as higher capex to support capacity
expansions or debt-financed dividends -- could contribute to
higher leverage than S&P currently forecasts.

At the same time, S&P views Styrolution as a moderately strategic
subsidiary of INEOS AG, reflecting S&P's understanding that
INEOS' policy is to fund the group on a stand-alone basis.
Therefore, the rating currently incorporates no adjustment for
group support, and would likely remain at or below the 'b+' group
credit profile of INEOS AG.

S&P views Styrolution's liquidity as adequate because S&P expects
sources to comfortably exceed uses by at least 1.2x over the next
12 months.  This factors in the fairly long-dated maturity
profile; the proposed first-lien term loan is due 2021 and the
securitization facility in 2019.

The securitization facility has no financial covenants, and
remaining instruments have only incurrence-based covenants, while
the company increased its capacity to raise about EUR175 million
(up from EUR140 million before) in additional debt if the need

Principal liquidity sources pro forma the transaction:

   -- About EUR320 million cash;
   -- EUR480 million-EUR500 million of cash funds from
      operations; and
   -- About EUR400 million available under the securitization

Principal liquidity uses include:

   -- Undemanding debt amortization profile;
   -- Peak intra-year working capital needs of up to
      EUR140 million (as seen in the second quarter of 2016); and
   -- About EUR140 million in capex.

The stable outlook reflects S&P's view that Styrolution will be
able to maintain a strong operating performance in the coming
years, with EBITDA of about EUR740 million-EUR750 million in 2016
and EUR600 million-EUR620 million in 2017.  This assumes a drop
in styrene-to-benzene spreads to more normalized levels from top-
of-the-cycle profits in 2015 and 2016.  S&P forecasts an adjusted
ratio of (gross) debt to EBITDA of about 1.7x in 2016 and about
2.0x in 2017.  This provides considerable headroom with the
rating, which assumes leverage of between 2.5x-3.0x in top-of-
the-cycle conditions, and between 4.0x-4.5x at the bottom of the

Rating pressure could develop due to a deteriorated market
environment combined with releveraging through unexpected
dividends or acquisitions, such that the ratio of adjusted
(gross) debt-to-EBITDA rises to about 4x-5x.

S&P sees a limited near-term likelihood of an upgrade given the
volatility of the styrenics industry and Styrolution's relatively
material gross debt.  S&P also expects the company to remain
ambitious and S&P thinks it may finance an expansion of the
business partly with debt.  A higher rating would therefore
depend on Styrolution and its parent making a commitment to keep
leverage sustainably below 3x, in combination with a wider
improvement in the credit quality of the INEOS AG group.


DUNCANNON CRE: Fitch Hikes Class D-1 Notes Rating to 'CCsf'
Fitch Ratings has upgraded Duncannon CRE CDO I plc's class D-1
notes and affirmed the rest as follows:

   -- Class D-1 (XS0311204464): upgraded to 'CCsf' from 'Csf'

   -- Class D-2 (XS0311204621): affirmed at 'Csf'

   -- Class D-3 (XS0311204977): affirmed at 'Csf'

   -- Class E-1 (XS0311206329): affirmed at 'Csf'

   -- Class E-2 (XS0311206592): affirmed at 'Csf'

Duncannon CRE CDO I is a managed cash securitization of
commercial real estate assets, consisting primarily of CMBS,
commercial mortgage B notes and mezzanine mortgage loans.


The upgrade reflects an increase in credit enhancement for the
class D-1 notes to 34% from -98%, following the full payment of
the class C-2 notes' principal and the receipt of EUR30 million
of principal proceeds from several defaulted assets. Class D-1 is
currently over-collateralized since the performing portfolio
stands at EUR20 million, compared with approximately EUR22
million at end-2015.

Nevertheless, the class D-1 notes remain at risk of default. The
remaining portfolio contains only six performing assets,
indicating substantial obligor concentration risk. The top
obligor represents 46.6% of the portfolio and the top three
obligors account for 88.2%. The ratings, therefore, remain
sensitive to the repayment by these obligors.

The credit quality of the portfolio has deteriorated over the
last 12 months following the negative rating migration of the
largest asset to 'CCCsf', taking the share of assets rated 'CCC'
or lower of the portfolio to 59.6% from 54.8%.

The transaction is suffering from negative excess spread due to
the quarterly payment on the hedging agreement and insufficient
interest received on the performing portfolio. The cost of the
hedging agreement, while following an amortizing schedule and
will decrease linearly from EUR260,000 to zero in September 2017,
puts further pressure on the transaction.

The non-payment of interest on the class D-1 notes will trigger
an event of default to the transaction unless enough principal
proceeds are available to repay the interest due. This leaves the
class D-1 notes reliant on principal proceeds to help cover
quarterly interest shortfall and provide support in the event of
further defaults.

The remaining classes are deeply under-collateralized, are
deferring interest and rely solely on the recovery of defaulted
assets. Thus, the ratings have been affirmed at 'Csf'.


The notes are already at distressed rating levels and as such are
unlikely to be affected by any further deterioration in the
respective underlying assets.


Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.


Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset
pool and the transactions. There were no findings that affected
the rating analysis. Fitch has not reviewed the results of any
third party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing

The majority of the underlying assets have ratings or credit
opinions from Fitch and/or other Nationally Recognised
Statistical Rating Organisations and/or European Securities and
Markets Authority registered rating agencies. Fitch has relied on
the practices of the relevant groups within Fitch and/or other
rating agencies to assess the asset portfolio information.

Overall, Fitch's assessment of the information relied upon for
the agency's rating analysis according to its applicable rating
methodologies indicates that it is adequately reliable.


The information below was used in the analysis.

   -- Loan-by-loan data provided by US Bank as at 29 July 2016

   -- Transaction reporting provided by US Bank as at 29 July

MAYO RENEWABLE: High Court Confirms Appointment of Examiner
Aodhan O'Faolain at The Irish Times reports that the High Court
has confirmed the appointment of an examiner to Mayo Renewable
Power Ltd., the company building a biomass-fuelled power plant in
Co Mayo.

The plant located in Killala will generate electricity from
woodchips, The Irish Times discloses.  It was due to become
operational in 2017 but work stopped on the site in July due to a
funding shortage, The Irish Times notes.  The developer, MRP, is
now insolvent and sought the protection of the courts, The Irish
Times relays.

Last month the High Court appointed insolvency practitioner
Michael McAteer of Grant Thornton as interim examiner to MRP, The
Irish Times recounts.  On Sept. 12 the matter returned before Mr
Justice Anthony Barr, who confirmed Mr McAteer as examiner to the
company, The Irish Times relates.

The move gives the company the protection of the court and will
allow the examiner to take steps including securing additional
investment so the plant can be completed, The Irish Times states.

According to The Irish Times, Barrister Kelley Smith, for the
examiner, told the court that Mr. McAteer had already held
discussions with a number of interested parties and that the
talks have been "positive".

During the currency of the examinership process Mr. McAteer will
attempt to put together a scheme of arrangement with creditors,
which if approved by the High Court would allow the company to
continue to trade as a going concern, The Irish Times says.


RIVIERA MIDCO: Moody's Assigns (P)Ba2 CFR, Outlook Stable
Moody's Investors Service has assigned a provisional (P)Ba2
corporate family rating (CFR) to Riviera Midco SA ('Froneri' or
'the company').  Concurrently, Moody's has assigned a provisional
(P)Ba2 rating to the proposed EUR800 million 7-year senior term
loan B and EUR220 million 6-year senior revolving credit facility
(RCF) to be issued by R&R Ice Cream plc.  The outlook on all
ratings is stable.

The rating action follows the company's plan to complete the
formation of the JV between PAI Partners, owner of R&R Ice Cream
plc ('R&R') (B2 stable) and Nestle S.A. (Aa2 stable) ('Nestle').
The JV will be formed by the combination of the R&R Ice Cream plc
business in its entirety and Nestle's ice cream business in
Europe, Egypt, the Philippines, Brazil and Argentina.  Nestle
will also contribute its European frozen food business (excluding
pizza and retail frozen food in Italy) and its chilled dairy
business in the Philippines.  The JV is expected to be effective
on Sept. 30, 2016, upon which PAI Partners and Nestle will share
equal ownership and board representation.

The proceeds from the new facilities, together with a new EUR800
million shareholder loan to be provided by Nestle, will be used
to refinance the indebtedness of R&R (including R&R Ice Cream
plc's GBP315 million senior secured notes due 2020 (rated B2),
Euro and Australian Dollar denominated EUR255 million equivalent
senior secured notes due 2020 (rated B2) and EUR253 million
senior PIK Toggle notes due 2018 raised by R&R PIK plc (rated
Caa1)), to ensure ownership equalization between the JV parties
to pay related fees and expenses.  Riviera Midco SA is the top
company within the restricted group in relation to the proposed
new senior secured financing and a direct subsidiary of Froneri
Limited, the top entity of the Froneri JV.  Moody's anticipates
that Nestle's shareholder loan will be issued outside of the
restricted group, at Froneri Limited, although around EUR200
million of the proceeds will be downstreamed into the restricted

Moody's will withdraw the existing ratings of R&R Ice Cream plc
upon consummation of the JV formation and repayment of the
existing debt.

The ratings have been assigned on the basis of Moody's
expectations that the transaction will close as expected.
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 endeavour to
assign a definitive CFR and definitive ratings to the senior
credit facilities.  Definitive ratings may differ from
provisional ratings.

                        RATINGS RATIONALE

The (P)Ba2 CFR primarily reflects Froneri's (i) strong market
position in European ice cream in both branded and private label
sectors; (ii) increased scale and geographic diversification
combined with synergy opportunities; (iii) modest Moody's
adjusted leverage of 3.5x proforma for the transaction; and (iv)
support from Nestle's equal ownership with PAI in the proposed

The CFR also negatively reflects (i) the group's singular product
focus on ice cream (86% of total revenue) compared to more
diversified packaged goods peers; (ii) execution risk related to
separation of ice cream business from Nestle and combination with
R&R; and (iii) seasonality and input costs volatility inherent to
the ice cream business leading to fluctuations in quarterly
cashflows and liquidity.

Upon completion of the JV Froneri will combine R&R's and Nestle's
complementary leading positions in the take-home and out of home
channels in ice cream and maintain Nestle's position of second
largest ice cream business in Europe and R&R's leading private
label ice cream position.  The JV will enlarge the size and scale
(versus R&R's existing business) via a presence in both developed
(80% of total JV sales) and developing markets (20%), especially
in South America and Southeast Asia.

Nestle's ice cream and frozen food business, despite its branded
focus, carriers lower EBITDA profitability compared to R&R's
standalone operations due to different route to market and cost
structure in Nestle's impulse and catering ice cream products.
This leads to margin dilution at a combined JV level compared to
R&R's standalone margins (to c. 12% EBITDA margin from around 18%
level (before exceptionals and synergies)).  Management expects
significant potential to enhance margins through cost reduction
and rationalization initiatives, such as corporate overhead
savings, procurement initiatives and consolidation of
manufacturing footprint.  The combination is expected to bring
cost synergies of EUR195 million by 2021.

Moody's acknowledges the potential, however highlights the
execution risk related to the carve-out of ice cream business
from Nestle and combining it with R&R given the scale and
complexity of the integration initiatives.  These include the
near-term need to implement new IT systems, procurement and
efficiency improvements to longer-term manufacturing, logistics
and R&D changes, which may be more challenging to achieve.  This
is somewhat mitigated by the long-standing licensing relationship
between R&R and Nestle and previous experience of the R&R
management team with business acquisitions, although on a smaller

Moody's expects to see gradual deleveraging of the business
towards 3.0x (Moody's adjusted) over the next two years primarily
due to margin enhancement as well as modest top level growth.
Moody's adjusted leverage includes the portion of the shareholder
loans expected to be downstreamed into the restricted group.

The company's liquidity is adequate, comprising of cash balance
estimated to be around EUR100 million pro forma for the
transaction and a EUR220 million RCF expected to be undrawn at
closing.  Liquidity can fluctuate significantly from quarter to
quarter due to operating cashflow, including working capital,
fluctuations and involves reliance on its RCF in some of the
quarters.  The company has local factoring facilities in place in
a number of key countries which are not included in Moody's
liquidity analysis.  Despite Moody's expectation of limited free
cash flow generation in the near term due to one-off costs to
achieve synergies Moody's expect to see some significant
improvement in the later years as longer-term manufacturing
initiatives start to bring benefits.  The cash outflows also
include the interest payment (4.5% p.a.) to service EUR800
million shareholder loan.  The company is expected to maintain a
good headroom under its single net leverage springing covenant,
only applicable when the RCF is drawn above a certain threshold.

Using Moody's Loss Given Default (LGD) methodology with a 50%
recovery rate, as is typical for transactions with covenant-loose
all-loan structure, the RCF due 2022 and term loan B due 2023 are
rated (P)Ba2, in line with the CFR.

The stable outlook reflects Moody's expectation of gradual
deleveraging through EBITDA growth due to cost savings and
synergies.  This also assumes no change to the current financial
policy with respect to dividends payments, no significant debt
financed acquisitions and no change in ownership with regards to
Nestle's stake.

Positive rating pressure could develop if Froneri reduces its
Moody's adjusted debt/ EBITDA ratio towards 2.5x and improves
free cash flow to debt ratio towards 10% while delivering versus
its cost savings and synergies plan.  Downward rating pressure
could develop if the company's leverage rises significantly above
3.5x on a sustainable basis, free cash flow reduces to zero, or
if liquidity concerns arise.

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

Headquartered in the UK, Froneri is the JV to be formed between
R&R Ice Cream (owned by PAI Partners) and Nestle ice cream and
selected frozen food business mainly in Europe and North Africa.
The JV will operate primarily in Europe, the Middle East
(excluding Israel), Argentina, Australia, Brazil, the Philippines
and South Africa.  Froneri will operate in more than 20 countries
generating combined revenues of EUR2.6 bil. and adjusted EBITDA
of EUR300 million pro-forma 2015.  It will employ around 15,000
people in 28 factories.


DRYDEN 46 EURO: S&P Assigns Preliminary B- Rating to Cl. F Notes
S&P Global Ratings has assigned its preliminary credit ratings to
Dryden 46 Euro CLO 2016 B.V.'s class A-1, A-2, B-1, B-2, C, D, E,
and F notes.  At closing, Dryden 46 Euro CLO 2016 will also issue
an unrated subordinated class of notes.

The preliminary ratings assigned to Dryden 46 Euro CLO 2016's
notes reflect S&P's assessment of:

   -- The diversified collateral pool, which consists primarily
      of broadly syndicated speculative-grade senior secured term
      loans and bonds that are governed by collateral quality
      tests.  The credit enhancement provided through the
      subordination of cash flows, excess spread, and

   -- The collateral manager's experienced team, which can affect
      the performance of the rated notes through collateral
      selection, ongoing portfolio management, and trading.  The
      transaction's legal structure, which is expected to be
      bankruptcy remote.

S&P considers that the transaction's documented counterparty
replacement and remedy mechanisms adequately mitigate its
exposure to counterparty risk under S&P's current counterparty

Following the application of S&P's structured finance ratings
above the sovereign criteria, it considers the transaction's
exposure to country risk to be limited at the assigned
preliminary rating levels, as the exposure to individual
sovereigns does not exceed the diversification thresholds
outlined in S&P's criteria.

At closing, S&P considers that the transaction's legal structure
will be bankruptcy remote, in line with its European legal

Following S&P's analysis of the credit, cash flow, counterparty,
operational, and legal risks, S&P believes its preliminary
ratings are commensurate with the available credit enhancement
for each class of notes.

Dryden 46 Euro CLO 2016 is a broadly syndicated collateralized
loan obligation (CLO) managed by PGIM Ltd., which is the
principal asset management business of Prudential Financial, Inc.
This is PGIM's second CLO to date in 2016, following Dryden 44
Euro CLO 2015 B.V., which closed in June 2016.


Preliminary Ratings Assigned

Dryden 46 Euro CLO 2016 B.V.
Floating- And Fixed-Rate Notes (Including Subordinated Notes)

Class              Prelim.        Prelim.
                   rating          amount
                                 (mil. EUR)

A-1                AAA (sf)          TBD
A-2                AAA (sf)          TBD
B-1                AA (sf)           TBD
B-2                AA (sf)           TBD
C                  A (sf)            TBD
D                  BBB (sf)          TBD
E                  BB (sf)           TBD
F                  B- (sf)           TBD
Sub                NR                TBD

NR--Not rated.
TBD--To be determined.

FORNAX BV: Moody's Lowers Rating on Class D Notes to B1
Moody's Investors Service has downgraded the rating of Class D
and affirmed the rating of Class X Notes issued by Fornax
(Eclipse 2006-2) B.V.

Issuer: Fornax (Eclipse 2006-2) B.V.

  EUR36.05 mil. Class D Notes, Downgraded to B1 (sf); previously
   on May 13, 2015, Downgraded to Ba1 (sf)
  EUR0.1 mil. Class X Notes, Affirmed B2 (sf); previously on
   May 13, 2015m Affirmed B2 (sf)

Moody's does not rate the Class E, F and G Notes.

                          RATINGS RATIONALE

The downgrade action results from the increased uncertainty about
the timing of recoveries from the last three loans currently
securing the notes of Fornax (Eclipse 2006-2) B.V. (the Issuer).
Moody's assessment of the underlying portfolio of loans remains
largely unchanged compared to the 2015 downgrade action.
Therefore, based on the underlying collateral value, Moody's
still expects full recovery on the Class D Notes despite the
recent note event of default (NEoD).

Non-payment of interest, subject to a grace period, on the most
senior class of notes, currently Class D, is a NEoD.  Drawdowns
on the liquidity facility were only permitted if there was a
shortfall in the amount due from a borrower.  The three remaining
loans currently pay low floating interest rates, which are
insufficient to cover the Issuer's senior costs, resulting in a
negative spread and deferral of interest on the notes that will
continue for Class D until it is fully repaid.

All three remaining loans are in special servicing since 2012/13
and are secured by either specialist or secondary quality assets.
The increased uncertainty around the timing of the work out of
the loans and the allocation of recoveries suggests that the
transaction could defer interest on the Class D note for longer
than Moody's initially expected.

The Class X Notes reference the underlying loan pool.  As such,
the key rating parameters that influence the expected loss on the
referenced loan pool also influence the rating on the Class X
Notes.  The rating of the Class X Notes was based on the
methodology described in Moody's Approach to Rating Structured
Finance Interest-Only Securities published in October 2015.

Methodology Underlying the Rating Action:

The principal methodology used in these ratings was Moody's
Approach to Rating EMEA CMBS Transactions published in July 2015.

Factors that would lead to an upgrade or downgrade of the

Main factors or circumstances that could lead to a downgrade of
the Class D rating are a decline in the property values backing
the underlying loans that is worse than Moody's expectation,
leading to lower recoveries on the loans.

Regarding an upgrade of the ratings, Moody's expects continued
interest deferrals on Class D Notes and therefore an upgrade is

HERTZ HOLDINGS: S&P Assigns 'B' Rating to Sr. Notes Due 2022
S&P Global Ratings assigned its 'B' issue-level rating and '5'
recovery rating to Hertz Holdings Netherlands BV's senior notes
due 2022.  The notes will be guaranteed by Estero, Fla.-based car
renter Hertz Corp.  The '5' recovery rating indicates S&P's
expectation that lenders would receive modest recovery (10%-30%,
upper half of the range) of their principal in the event of a
payment default.  Hertz Holdings Netherlands BV and Hertz Corp.
are subsidiaries of Hertz Global Holdings Inc.

S&P's ratings on Hertz incorporate its position as one of the
largest global car rental companies, and the cyclical and price-
competitive nature of on-airport car rentals.  They also
incorporate significant debt leverage and substantial ongoing
fleet funding needs resulting from its capital-intensive
operations.  These risks are partly offset by Hertz's ability to
significantly reduce capital spending if demand declines; its
ability to generate strong cash flow, even in periods of weak
earnings; and its ability to maintain access to liquidity using
secured borrowing and asset-backed securitizations.  S&P assess
the company's business risk profile as fair and its financial
risk profile as aggressive.

The outlook is stable.  S&P expects credit metrics to be little
changed by the June 30, 2016, separation of its equipment rental
business and to gradually improve based on expected rising
earnings and cash flow.  S&P could raise the ratings over the
next year if better than expected earnings, due to stronger
volumes or pricing, result in funds from operations (FFO) to debt
increasing to the low-20% area on a sustained basis.  Although
unlikely over the next year, S&P could lower the ratings if
operating performance weakens, which could be caused by weak
pricing or weak used car prices, resulting in FFO to debt
declining to the low to mid-teens percent area.


Ratings Assigned
Hertz Holdings Netherlands BV
Senior unsecured notes due 2022        B
  Recovery rating                       5H

TELEFONICA EUROPE: S&P Assigns 'BB+' Rating to Hybrid Notes
S&P Global Ratings said that it assigned its 'BB+' long-term
issue rating to the proposed hybrid notes to be issued by
Telefonica Europe B.V., the Dutch finance subsidiary of Spain-
based telecommunications group Telefonica S.A. (BBB/Stable/A-2),
which is also the guarantor of the notes.

The timing and size of the issue will be subject to market
conditions.  S&P anticipates the targeted benchmark deal size
will be well within 15% of the issuer's capitalization--the limit
mentioned in S&P's hybrid criteria.  Based on the group's
EUR5.1 billion already issued hybrids (excluding the
EUR1.5 billion mandatory convertible securities), S&P projects
the ratio of outstanding hybrids to adjusted capitalization to be
in the higher half of the 5%-10% range.

S&P classifies the proposed hybrids as having intermediate equity
content until their first call date (the latter being at least
five years after issuance), because they meet S&P's criteria in
terms of their subordination, permanence, and optional
deferability during this period.

Consequently, in S&P's calculation of the group's credit ratios,
it will treat 50% of the principal outstanding and accrued
interest under the proposed hybrids as equity rather than as
debt, and 50% of the related payments on these securities as
equivalent to a common dividend, in line with S&P's hybrid
capital criteria. The two-notch difference between S&P's 'BB+'
rating on the proposed hybrid notes and our 'BBB' corporate
credit rating (CCR) on Telefonica S.A. reflects these downward
adjustments from the CCR:

   -- One notch for the proposed notes' subordination because the
      CCR on Telefonica S.A. is investment grade; and

   -- An additional notch for the optional deferability of

The notching of the proposed securities takes into account S&P's
view that there is a relatively low likelihood that Telefonica
Europe B.V. will defer interest payments.  Should S&P's view
change, it may significantly increase the number of downward
notches that it applies to the issue rating, and this would be
sooner than S&P might take a rating action on the CCR.

The interest to be paid on the proposed securities will increase
by 25 basis points (bps) no earlier than year 10, and a further
75 bps 20 years after the first call date.  S&P views the
cumulative 100 bps as a moderate step-up, which provides
Telefonica Europe B.V. incentive to redeem the instruments at
that point.

Consequently, S&P will no longer recognize the proposed
instrument as having intermediate equity content after the first
call date at the latest, because the remaining period until its
economic maturity would, by then, likely be less than 20 years.


Although the proposed securities are perpetual, Telefonica Europe
B.V. can redeem them as of the first call date, and every year
thereafter.  If any of these events occur, the company intends to
replace the proposed instruments, although it is not obliged to
do so.


The proposed securities will be deeply subordinated obligations
of Telefonica Europe B.V., and will rank pari passu with the
hybrids issued in 2013 and 2014.


In S&P's view, the issuer's option to defer payment of interest
on the proposed securities is discretionary.  It may therefore
elect not to pay accrued interest on an interest payment date
because it has no obligation to do so.  However, any outstanding
deferred interest payment would have to be settled in cash if an
equity dividend or interest on equal-ranking securities is paid,
or if common shares or equal-ranking securities are repurchased.
That said, this condition remains acceptable under S&P's rating
methodology because, once the issuer has settled the deferred
amount, it can choose to defer payment on the next interest
payment date.

The issuer retains the option to defer coupons throughout the
instrument's life.  The deferred interest on the proposed
securities is cash cumulative and compounding.


PORTO: Fitch Affirms 'BB+' Long-Term Issuer Default Ratings
Fitch Ratings has affirmed the City of Porto's Long-Term Foreign
and Local Currency Issuer Default Ratings (IDR) at 'BB+'. The
Outlooks are Stable. The Short-Term Foreign Currency IDR has been
affirmed at 'B'.

The affirmation reflects no changes to Fitch's base case scenario
of stable budgetary performance and declining debt. The Stable
Outlook reflects that on Portugal (BB+/Stable).


Rating Constraint

Porto's ratings remain constrained by the Portuguese sovereign,
in accordance with Fitch's criteria. Porto's intrinsic credit
profile is stronger than the ratings indicate, due to the city's
healthy budgetary performance, low debt, as well as sound
liquidity. Prudent management and Porto's role as service centre
in north Portugal are also credit-positive.

As with other Portuguese cities, the accounts and budgets of
Porto are overseen by the central government and its financial
liabilities are approved by the National Court of Accounts. The
limited role of the intermediate tiers of government (province
and region) in Portugal strengthens the link between the central
government and cities.

Solid Budgetary Performance

Porto has maintained high operating margins through cycles, at
above 17% since 2009. Coupled with flexibility on capital
expenditure, this has allowed the city to report a surplus before
debt variation every year over the same period. The 2015 accounts
confirmed the city's consistent performance with an expected
operating margin exceeding 15%, as a result of stable,
predictable revenues and expenditure restraint.

The 2016 budget is based on prudent operating revenue forecasts,
and discipline in managing spending, with an intention to further
reduce debt. It includes extraordinary financial revenues from
concessions contracts, as well as high allocated EU capital
transfers following the city's active application for such funds
in 2015, aimed mostly at refurbishing projects. Porto's budget
indicates a current balance of EUR25 million, but the city has
broadly outperformed its budgets since 2010 and Fitch expects a
current margin close to 20% in 2016.

Decreasing Debt, No Contingent Risk

Porto reduced its outstanding debt to EUR80.1 million in 2015, or
51.97% of current revenue, from EUR87.3 million in 2014. Fitch
said, "We expect debt to decrease to close to EUR45 million at
end-2016 as the city will use extraordinary revenue from an
expropriation settlement to redeem EUR28.7 million debt ahead of
schedule, in addition to budgeted debt repayment. The city
started deleveraging in 2009, when debt peaked at EUR121.5
million and as a key infrastructure development phase, including
the enlargement of the metropolitan transport and the renewal of
the airport, came to a close."

The administration expects no new debt in view of the city's
adequate financial performance and liquidity, aside of the
building refurbishing program for which EUR0.9 million has been
allocated in the 2016 budget. Porto has no contingent liabilities
and retains control over the public sector, which posted a
surplus in 2015.

Prudent Management, Economy Recovering

Porto has a prudent financial policy and is constantly looking to
improve its efficiency, having contained its operating
expenditure after operating revenue fell 15.8% during the
economic downturn over 2008-2013. Disclosure of information is
satisfactory and precise, including the annual financial results
of all public bodies within its scope. The current administration
does not envisage further leverage except for projects of solid
economic return, with a focus on real estate rehabilitation and
infrastructure enhancement.

With an estimated population of 237,000 in 2014, the City of
Porto is the second-largest cultural, administrative and economic
Portuguese centre, providing services to a greater metropolitan
area of 14 municipalities with 1.2 million inhabitants. GDP
resumed growth in 2014, and is expected grow around 1.5%-2% over
the next two years, driven by the healthy performance of the
external and hospitality sectors.


Porto's intrinsic credit profile is well above the sovereign's
and could benefit from a continued decline in debt. However,
Porto's IDR ratings are constrained by the sovereign IDRs and are
therefore sensitive to changes of the sovereign rating


GLOBAL PORTS: Fitch Cuts LT Issuer Default Ratings to 'BB-'
Fitch Ratings has downgraded Russian group port operator, Global
Ports Investments Plc's (GPI) Long-term Foreign and Local
Currency Issuer Default Ratings (IDRs) to 'BB-' from 'BB'. The
Rating Outlook has been revised to Negative from Stable.

The downgrade reflects the greater than expected decline in
traffic in H1 2016 of 22% versus Fitch's forecast of an 8%
decline for 2016 in the agency's previous rating case and a 2%
contraction of the Russian container market. Fitch believes GPI's
price-over-volume strategy resulted in the traffic loss of both
large and smaller shipping companies to cheaper terminals.
Consequently, Fitch expects YE 2016 leverage to rise to 4.5x from
the agency's 3.5x rating case expectation and significantly above
Fitch's downgrade sensitivity of 3.0x. The Negative Outlook
considers the potential increase in competition in the Russian
container market as well as the growing uncertainties on the
tariff framework in the Russian port sector.

Fitch's revised rating case forecast anticipates a 20% decline in
2016 container volume followed by a further 5% decline in both
2017 and 2018. Other business lines are assumed to grow at 0%.
Fitch also assumes a 2% and 5% decline in prices (revenue per
TEU) as GPI may need to reassess its pricing strategy to protect
market share. This results in a three-year average leverage to
rise to 5.1x from the previous 2.9x rating case.

In contrast Fitch's base case assumes container volume growth of
2% from 2018 onward and 2% bulk cargo handling in 2017 and 2018.
Other assumptions remain substantially the same as the rating
case. Base case three-year average leverage rises to 4.4x from
2.3x. Fitch recognizes that the agency's rating case expectations
are conservative and potentially reflective of a greater than one
notch downgrade. Fitch's rating action takes this into
consideration and also factors in GPI's different view on revenue

Fitch assesses the group consolidated credit profile at 'BB'.
GPI's rating, the holdco, is notched down one level to 'BB-' to
reflect the ring-fencing features included in some subsidiaries'
bank financing. These ring-fencing features, namely financial
covenants at single borrower level, prevent GPI's rating from
being aligned with Fitch's assessment of the consolidated profile
of the group.


Fitch has also downgraded to 'BB-' from 'BB', the senior
unsecured rating of RUB15 billion notes issued by First Container
Terminal (FCT), a fully-owned subsidiary of GPI. The Rating
Outlook is Negative. The rating of these notes is aligned with
GPI's Long-Term IDR, which provides a public irrevocable offer to
repurchase the notes in case of non-payment of interest or

Fitch has also downgraded to 'BB' from 'BB+', USD350 million
notes issued by Global Ports (Finance) PLC. The Rating Outlook is
negative. The rating of these notes reflects the agency's
assessment of GPI's consolidated credit profile as the
unconditional and irrevocable guarantee from the three major
opcos give bondholders full and unconditional access to group
cash flow generation.


Volume Risk: Midrange -- Primary Port of Call in a Competitive

Despite the harsh volume contraction of 1H16, GPI still remains
the largest player and primary port of call in the Baltic basin
(50% market share) and in the overall Russian container market
(35% market share). Nonetheless, Group price-over-volume strategy
is reducing GPI's competitive position, especially in the current
economic environment where port operators have high spare
capacity and flexible tariff policies. The competitiveness of the
Group may be jeopardized further if the newly built terminal,
Bronka, implements an aggressive pricing strategy to gain market
share. Bronka's volumes were modest in 1H16 (13k TEU in 1H16) but
should grow over the near/medium term as the port can accommodate
large modern ships.

Price Risk: Midrange -- Price Flexibility but Regulatory

Tariffs are currently market-based and have steadily increased
over 2010-2015. Almost all of GPI's tariffs and revenues are in
USD and collected directly in USD or at an equivalent amount in
roubles. The rouble share of revenue is used to pay costs
denominated in local currency with the remainder converted into

Over the summer, the Russian Federal Antimonopoly Service (FAS)
developed a draft methodology in respect to tariffs to be charged
for stevedoring and storage services. The methodology
contemplates the introduction of maximum allowed tariffs,
calculated in Russian roubles and applicable from 1 January 2017,
if approved by government. There is limited visibility on whether
tariff caps will apply ultimately and what form they will take.
Should caps on tariff be re-introduced, Fitch may reassess the
Price risk attribute.

Infrastructure Development & Renewal: Stronger -- Low Capacity

GPI invested heavily in terminal upgrades between 2008 - 2013.
These investments brought group capacity to more than 4 million
TEU, a level sufficient to accommodate increasing volumes in the
future. On-site connecting infrastructure is well developed and
does not require upgrades. The company envisages spending around
USD25 million per year in 2016-20 on maintenance out of operating
cash flows. The presence of APM Terminals, one of the world's
largest terminal operators, as a shareholder brings operational
expertise and mitigates the risk of cost overruns on capital

Debt Structure: Midrange -- Hold-Co/OpCo Structure With full USD-
Denominated Debt

The hold co (GPI) is currently free of debt. Bank debt is raised
at the Russian opcos. The overall group debt structure is largely
fixed rate, fully USD-denominated post swap, largely covenanted
with cross default and change-of-control clauses. Financial
covenants set both at the opcos and consolidated levels. Foreign
currency risk on overall debt is naturally hedged as tariffs are
set in USD. Lack of committed liquidity lines is a weakness,
which the cash buffer held on balance sheet only partly
mitigates. According to Fitch's liquidity analysis, under the
rating case, group debt maturities are covered until end-2019.

Fitch believes the presence of APM Terminals, a well-reputed
sponsor with a strong but informal commitment to GPI, is a
supporting factor in GPI's refinancing process. A potential
change in GPI's ownership may affect Fitch's assessment of the
refinancing risk. The agency also view's GPI's listing on the
London Stock Exchange is a positive factor that gives GPI
additional financial flexibility.

Debt Service -- Rising Leverage on Underperformance

Under the revised Fitch rating case, the agency expects GPI's
leverage to reach 4.5x at YE16. Fitch's rating case uses more
conservative assumptions than management on volumes, tariffs and
capital spending, interest rates and dividends received from
joint ventures. As a result, Fitch expects leverage to remain
above the 5x mark over 2017-2019 period. The rating case does not
factor in any shareholder distributions, in line with GPI's
stated zero dividend policy. A sensitivity stress on a
hypothetical 30% rouble appreciation shows that, under this
scenario, projected leverage will increase further by ca. 1x each


GPI and Deloports have the same rating ('BB' Cons/IDR 'BB-'). GPI
is much larger than Deloports, has a dominant position in the
Russian container market and more transparent corporate
governance (GPI is Listed on LSE). Deloports, however, has much
lower leverage (ca. 1.5x) than GPI (4.5x exp) and has a more
balanced export/Import mix with grain exports partially
offsetting the import oriented container business. Mersin ('BBB-
'/Stable Outlook) is similar in size than GPI and, like GPI,
plays a dominant role in its home market. Mersin's cargo import
and export mix is more balanced than GPI, which is more exposed
to the Russian recessionary environment. Mersin's current lower
leverage supports its higher rating.


Future development that could lead to negative rating actions on
both GPI, FCT and the GPI Finance notes include:

   -- Fitch-adjusted GPI's consolidated debt/EBITDA remaining
      above 5x over 2017-2019 period in the Fitch rating case.

   -- Adverse policy decisions - such as the introduction of a
      tariff cap - or geopolitical events affecting the port

   -- A change in shareholder structure with the co-controlling
      shareholder APMT disposing partly or entirely its stake in
      GPI, which may affect our analysis of some rating factors
      such as refinancing risk and potentially GPI's ratings

The Outlook could be revised to Stable if GPI's leverage is
firmly on a downward path with Fitch-adjusted net debt-to-EBITDA
falling below 4x over a three-year horizon


Fitch has downgraded the following:

   Global Ports (Finance) PLC

   -- USD350m senior unsecured notes due January 2022 to 'BB'
      from 'BB+'; Outlook Negative.

   Global Ports Investments PLC

   -- Long-Term Foreign and Local Currency IDR to 'BB-' from
      'BB'; Outlook Negative.

   JSC First Container Terminal

   -- RUB5 billion senior unsecured notes due December 2020 to
      'BB-' from 'BB'; Outlook Negative;

   -- RUB5 billion senior unsecured notes due February 2021 to
      'BB-' from 'BB'; Outlook Negative;

   -- RUB5 billion senior unsecured notes due March 2021 to 'BB-'
      from 'BB'; Outlook Negative.

NIZHNIY NOVGOROD: Fitch Affirms 'BB/B' IDRs, Outlook Negative
Fitch Ratings has affirmed Russian Nizhniy Novgorod Region's
Long-Term Foreign and Local Currency Issuer Default Ratings (IDR)
at 'BB', Short-Term Foreign Currency IDR at 'B' and National
Long-Term Rating at 'AA-(rus)'. The Outlooks on the Long-Term
IDRs and National Long-Term Rating are Negative.

The region's outstanding senior unsecured domestic bonds have
been affirmed at Long-term local currency 'BB' and National Long-
term 'AA-(rus)'.

The affirmation reflects Fitch's unchanged baseline scenario
regarding Nizhniy Novgorod Region's satisfactory budgetary
performance. The Negative Outlook reflects growing direct risk
accompanied by high refinancing pressure amid deteriorating
operating performance.


The 'BB' ratings reflect the satisfactory budgetary performance
of Nizhniy Novgorod Region with a small positive operating
balance, but also its ongoing budget deficit leading to debt
increase. The ratings further take into account a large and
diversified local economy, albeit suffering from a nationwide
economic slowdown.

Fitch expects Nizhniy Novgorod Region's operating balance will
stabilize at low 5%-6% of operating revenue over the medium-term,
down from an average 8.8% in 2011-2015, due to sluggish tax
proceeds amid the national economic slowdown. The agency expects
a current balance at around 1% per year in 2016-2018, weighed
down by growing interest payments. This will place the region's
creditworthiness under pressure.

According to Fitch's baseline scenario, the region's direct risk
will increase towards 70% of current revenue in 2016-2017 and
stabilize at this level due to likely cuts in capex after the
commissioning of major projects for Football World Cup 2018. The
agency estimates that the region's deficit before debt will
narrow to 3%-4% by 2018, from 7.5% in 2015.

In 2015 direct risk grew 12% to RUB73.2 billion or 63.5% of
current revenue. In June 2016 the region placed RUB10 billion
seven-year domestic bonds, after placement of RUB12 billion
five-year bonds in 2015. This shifted the debt structure
favorably towards a higher proportion of medium-term debt
instruments. As a result, weighted average maturity improved to
3.2 years at end-1H16 from 1.9 years in 2014.

Despite the above-mentioned improvement, the region remains
exposed to refinancing pressure over the medium-term as 69% of
its direct risk will mature in 2016-2018. As of July 1, 2016 the
region's refinancing needs for this year stood at RUB16.4 billion
(24% of outstanding debt), but this is mitigated by RUB50 billion
undrawn bank credit facilities. Furthermore in August 2016 the
administration contracted a budget loan of RUB6.3 billion to
refinance market debt.

Nizhniy Novgorod Region has a diversified economy with a fairly
well-developed industrialized sector and a broad tax base,
supporting wealth metrics that are slightly above the national
median. The region is among the top 15 Russian regions in gross
regional product (GRP) volume and has a population of 3.3 million
people (1.7% of Russia's). GRP stagnated in 2015, albeit better
than the wider Russian economy (-3.7%) due to firm performance of
the steel sector. Additionally, the region benefits from
increased military spending as it hosts the sector's production

The region's credit profile remains constrained by the weak
institutional framework for local and regional governments (LRGs)
in Russia. Russia's institutional framework for LRGs has a
shorter record of stable development than many international
peers. The predictability of Russian LRGs' budgetary policy is
hampered by the frequent reallocation of revenue and expenditure
responsibilities among government tiers.


An increase in direct risk to above 70% of current revenue,
accompanied by ongoing refinancing pressure or an inability to
maintain a sustainable positive current balance, could lead to a

PENZA REGION: Fitch Affirms 'BB' Long-Term Issuer Default Ratings
Fitch Ratings has affirmed Russian Penza Region's Long-Term
Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB'
with Stable Outlooks, Short-Term Foreign Currency IDR at 'B' and
its National Long-Term rating at 'AA-(rus)' with a Stable

The affirmation reflects Fitch's expectation that the region will
maintain a sustainably positive current balance and moderate
direct risk, whose growth will be limited by a narrowing fiscal


The 'BB' rating reflects the modest size of the region's economy
and budget, a weak institutional framework for local and regional
governments (LRGs) in Russia and a deteriorated macroeconomic
environment. The ratings also factor in the region's moderate
direct risk, with limited exposure to immediate refinancing risk
and satisfactory fiscal performance with a sufficient operating
balance to cover interest payments.

Fitch expects the operating balance to be 7%-8% of operating
revenue in 2016-2018, while the current margin will remain
positive at 5%-6%. Penza demonstrated a moderate recovery of
budgetary performance during 1H16 with the surplus before debt
variation driven by faster than expected corporate income tax
(CIT) recovery. Fitch said, "We already incorporated a moderate
recovery of CIT proceeds in our previous projection, so our base
case scenario remained unchanged. Fitch projects the region's
overall tax revenue growth of 8% in 2016 (2015: -1.4%), close to
our projections of annual inflation of 7.5%."

Fitch assumes the deficit before debt will be moderate over the
medium term at about 1%-2% of total revenue in 2016-2018 (2015:
3.6%). This will be supported by the region's intention to limit
operating expenditure growth below inflation and cut capital

Fitch expects direct risk will remain close to moderate 50% of
current revenue in 2016-2018 (2015: 54%). As of August 1, 2016,
the region's direct risk was composed of bank loans and federal
budget loans amounting to RUB21.2 billion, little changed since
the beginning of 2015. Subsidized budget loans constitute 50% of
total direct risk, and their 0.1% annual interest rates allow the
region to save on interest payments.

Fitch views positively the smooth amortization profile of the
region's direct risk with bank loans concentrated in 2017-2019
and budget loans stretched until 2034. This puts Penza in a more
favorable position than national peers in terms of refinancing
pressure. However, as with most Russian regions, Penza's weighted
average debt maturity is shorter than its international peers. As
of August 1, 2016, Penza had to repay RUB1.6 billion of budget
loans for this year, which partially should be refinanced by the
new budget loans and covered by RUB1 billion outstanding cash.

Penza's economy is historically weaker than the average Russian
region with a GRP per capita at 76% of the national median in
2014. This has led to a weaker tax capacity than its regional
peers. Federal transfers constitute a significant proportion of
finances, averaging 40% of operating revenue annually in 2011-
2015, which limits the region's revenue flexibility. Fitch
forecasts a 0.5% decline of national GDP in 2016, which will
weigh on the region's economic and budgetary performance.

The region's credit profile remains constrained by the weak
institutional framework for Russian LRGs, which has a shorter
record of stable development than many of its international
peers. The predictability of Russian LRGs' budgetary policy is
hampered by frequent reallocation of revenue and expenditure
responsibilities between tiers of government.


A sharp deterioration of budgetary performance leading to an
operating margin below 5%, coupled with an increase in direct
risk to above 60% of current revenue, could lead to a downgrade.

A sustainable operating balance at 15% of operating revenue and
stabilization of direct risk at around 50% of current revenue
accompanied by a Russian economic recovery could lead to an

UFA CITY: S&P Affirms 'BB-' Issuer Credit Rating, Outlook Stable
S&P Global Ratings affirmed its 'BB-' long-term issuer credit
rating and 'ruAA-' Russia national scale rating on the City of
Ufa.  The outlook is stable.


The ratings on Ufa, the administrative and economic center of the
Russian Republic of Bashkortostan, reflect S&P's view of Russia's
volatile and unbalanced institutional framework, which results in
Ufa's weak budgetary flexibility.  Due to these system
constraints, and a lack of reliable long-term financial planning
compared with international peers', S&P views Ufa's financial
management as weak in a global context, as we do for most Russian
local and regional governments (LRGs).  The city's weak economy
in an international context, weak budgetary performance, and
less-than-adequate liquidity also constrain the ratings.

S&P's view of Ufa's low debt burden and low contingent
liabilities support the ratings.  The issuer credit rating on the
city is equal to S&P's assessment of its 'bb-' stand-alone credit

Ufa's wealth is low in an international context, although it
exceeds Bashkortostan's average.  Ufa's gross regional product
per capita was about $8,500 in 2015, which is in line with the
national average.  S&P expects that Ufa's wealth will increase in
line with the national rate.

"We revised our assessment of Ufa's budgetary flexibility to weak
from very weak because we see potential additional flexibility
for the city on the expenditure side.  We base our view on the
continuous budgetary support from Bashkortostan and the quality
of the city's local infrastructure, which is of higher quality
than the Russian average.  We note that in recent years, the city
has benefited from increasing operating and capital support from
Bashkortostan, and we expect this trend will continue in the
medium term.  We continue to consider, however, that the city's
ability to adjust revenues is limited because it remains exposed
to federal and regional government decisions regarding tax
shares, the allocation of transfers, and the redistribution of
spending responsibilities.  We estimate that, in 2016-2018,
transfers from higher government tiers and personal income tax,
which are regulated by the federal and regional governments, will
provide about 50% of the city's revenues," S&P said.

In S&P's base-case scenario for 2016-2018, it expects Ufa's
budgetary performance will continue to gradually improve, but
remain weak over a five-year average.  S&P anticipates that the
city's collections from its key revenue source -- personal income
tax -- may decline in the near term following a 3% decrease in
the tax redistribution share from the republic.  This reduction
will, however, be compensated over the medium term by the
increase in operating grants to the city as well as expected wage
increases in the region.

The reduction in personal income tax will also be associated with
a commensurate transfer of expenditure responsibilities from Ufa
to Bashkortostan, resulting in an only moderate operating deficit
of about 1% on average in the coming three years.

Under S&P's base-case scenario, it also assumes that capital
grants from Bashkortostan will continue to alleviate pressure on
the city's budget over the next few years.  In S&P's view, this
co-financing should allow Ufa to maintain its capital-expenditure
program at about 30% of total expenditures, while its deficits
after capital accounts will likely stay at a modest 2% of total
revenues on average in 2016-2018.

Consequently, S&P expects Ufa's direct debt will increase only
modestly and tax-supported debt will remain low compared with
levels of international peers.  S&P forecasts in its base-case
scenario that Ufa's tax-supported debt will remain contained
below 50% of consolidated operating revenues through end-2018.
Tax-supported debt includes the city's direct debt, budget
guarantees issued to networks, transport, and water companies
that might require some financial support from the city.  The
city continues to provide ongoing support to its government-
related entities (GREs).

S&P regards Ufa's financial management as weak in an
international comparison, mirroring S&P's view of most Russian
LRGs, mainly due to the lack of reliable budgeting and long-term
financial planning.  Furthermore, S&P considers the city's policy
for its GREs to be unclear.


S&P considers Ufa's liquidity to be less than adequate.  The
city's average cash reserves net of the deficit after capital
accounts, together with available committed credit facilities,
will cover debt service falling due within the next 12 months by
more than 80%.  Along with confirmed access to low-interest
budget loans from Bashkortostan, Ufa will have to rely on access
to market borrowing to refinance its maturing debt in 2016-2018.
In line with other Russian LRGs, S&P applies a negative
adjustment for what it views as Ufa's limited access to external
liquidity, given the weaknesses of the domestic capital markets.

In S&P's base-case scenario, it assumes that in the next 12
months, Ufa's cash net of the deficit after capital accounts,
will equal Russian ruble (RUB) 55 million (about $846,000 at the
time of publication).  This will cover only about 4% of debt
service falling due within the next 12 months.

However, S&P expects Ufa will support its liquidity at less than
adequate levels by keeping a sufficient amount of unused
committed credit facilities.  Ufa has indicated it expects to
receive at least RUB500 million in low-interest budget loans from
Bashkortostan in 2016.  S&P also assumes that the city will
continue to maintain available bank facilities equal to about
RUB800 million over the next 12 months.


The stable outlook reflects S&P's expectation that Ufa's slightly
improving -- albeit still weak -- budgetary performance, notably
supported by transfers from higher government tiers, together
with the city's access to budget loans, undrawn committed bank
lines, and sufficient free cash will enable it to maintain a debt
service coverage ratio above 80% and a low debt burden in the
next 12-24 months.

S&P could take a negative rating action within the next 12 months
if the city were no longer in a position to sustain an 80% debt
service coverage ratio, possibly as a result of slower tax
revenue growth and/or weaker support from higher government tiers
than S&P currently expects.  Such deterioration could cause S&P
to revise downward its assessment of the city's liquidity.

S&P could raise the ratings on Ufa within the next 12 months if
additional budget revenues and a cautious approach to expenditure
resulted in positive operating margins and a debt service
coverage ratio exceeding 120%.  However, S&P views this scenario
as unlikely.

In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable.  At the onset of the committee, the chair
confirmed that the information provided to the Rating Committee
by the primary analyst had been distributed in a timely manner
and was sufficient for Committee members to make an informed

After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.

The committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.

The chair ensured every voting member was given the opportunity
to articulate his/her opinion.  The chair or designee reviewed
the draft report to ensure consistency with the Committee
decision. The views and the decision of the rating committee are
summarized in the above rationale and outlook.  The weighting of
all rating factors is described in the methodology used in this
rating action.


                               To                    From
Ufa (City of)
Issuer Credit Rating
  Foreign and Local Currency   BB-/Stable/--        BB-/Stable/--
  Russia National Scale        ruAA-/--/--          ruAA-/--/--

U N I T E D   K I N G D O M

AEI CABLES: Mulls Restructuring Following Financial Losses
MEM reports that a number of jobs are at risk at AEI Cables after
the company outlined its plans for a "fundamental restructure" in
an attempt to offset its significant financial losses.

AEI Cables employs a 240 strong workforce and company chiefs said
that they had met with representative from the GMB Union and all
employees to inform them that the business will now enter a
period of consultation to discuss possible redundancies, MEM

According to MEM, a spokesman for AEI, based in Birtley, said
that it had been making "significant financial losses for a long
period of time" and added that it "only continues to function
with the financial support and guarantees of its parent company".

"The company believes that profitability is possible only with a
fundamental restructuring and a marked improvement in
productivity," MEM quotes the company as saying.

AEI, as cited by MEM, said that it was unable to put a number on
how many redundancies would be necessary, adding that in the
worst case scenario the site could close down.

This week, the manufacturer will start formal consultation for at
least 45 days, while in the meantime AEI is reassuring its
customers that business will carry on as normal and that all
orders will be fulfilled for the present and foreseeable future,
MEM discloses.

AEI Cables is a North East cable manufacturer.

BEALES: Expects to Return to Profitability Following CVA Deal
Tara Hounslea at Drapers Online reports that Beales' directors
expect the department store group to return to profit "shortly"
after its completed company voluntary arrangement (CVA).

The CVA allowed the company to exit 10 loss-making stores,
Drapers Online relates.

Beales is a Bournemouth-based department store chain.

HIBU MIDCO: S&P Assigns 'B-' Long-Term CCR, Outlook Stable
S&P Global Ratings assigned its 'B-' long-term corporate credit
rating to directory publisher & digital services provider Hibu
Midco Ltd., a subsidiary of Hibu Group 2013 Ltd.  The outlook is

At the same time, S&P raised its long-term corporate credit
rating on Hibu Group Ltd. to 'B-' from 'CCC+' and then withdrew
it.  The outlook was stable at the time of withdrawal.

S&P also assigned its 'B-' issue rating to the new multicurrency
GBP300 million senior secured term notes due 2021.  The recovery
rating on these notes is '4', reflecting S&P's expectation of
recovery prospects in the lower half of the 30-50% range.

In addition, S&P assigned its 'CCC' issue rating to the
multicurrency subordinated payment-in-kind (PIK) term notes due
2065.  The recovery rating on these notes is '6', reflecting
S&P's expectation of negligible (0%-10%) recovery in the event of
a payment default.  Both instruments are issued by OWL Finance
Plc and guarantee by Hibu Group.

Following the transaction, S&P is also withdrawing its issue and
recovery ratings on the existing GBP500 million (now amortized
down to GBP150 million) senior secured term notes and
GBP920 million subordinated PIK term notes.

The rating on Hibu Group primarily reflects S&P's view it no
longer sees the group's capital structure as unsustainable.  The
current shareholders have converted a large portion of the PIK
loan into common equity, which S&P estimates will reduce the
group's S&P Global Ratings' adjusted debt to EBITDA (leverage) to
3.0x-3.5x expected in fiscal year ending March 31, 2017, from
6.5x the previous year.  S&P do not see the capital restructuring
as tantamount to a default given that the shareholders own the
common equity, PIK loan, and the cash pay debt.  The new capital
structure comprises a new multicurrency PIK loan equivalent to
GBP250 million, and a new cash pay debt equivalent to
GBP300 million.

S&P assess, Hibu Group's financial risk profile as highly
leveraged, despite the relatively low level of adjusted leverage
of between 3.0x and 3.5x that S&P estimates over the next two
years, along with solid free operating cash flow (FOCF)
generation.  S&P's assessment is tempered by its view of the
directory publishing industry as highly volatile, reflecting the
risk that Hibu Group's capital structure could quickly become
unsustainable if negative business trends accelerate, leading to
quick deterioration in earnings, cash flow, and credit metrics.

S&P's assessment of Hibu Group's business risk profile as
vulnerable reflects the significant risk of a continued
structural decline in the print and digital directories sector,
as well as increased competition within the online marketing
industry where the group is now focusing and expanding.  However,
S&P recognizes the group's fair geographic diversification, with
56% of the EBITDA coming from the U.S. and 37% from the U.K.

The company is a publisher of print classified directories in the
U.K. (Yellow Pages), in the U.S. (Yellow Book), and in Spain
(Paginas Amarillas), with an online presence as well.  Printing
and digital directories activities create more than 65% of
revenues, which is, in S&P's view, a declining business model.
Indeed, people finding, and gathering and sorting information has
radically evolved in the past few years, with the emergence of
many online players.  The remaining 35% of the group's sales come
from its digital solution offering to small and midsize
enterprises, which S&P views as positive but still subject to
high online competition.  The ongoing cost-saving program allowed
the company to increase its profitability in the last two years,
and we think management will be able to maintain a stable EBITDA
margin in the short to medium term.  However, in the long term,
S&P believes margins will remain under pressure due to Hibu
Group's transition to the highly fragmented, intensely
competitive, and rapidly evolving online market.  S&P believes
that in its online business, Hibu Group will have significantly
less pricing power compared with its former leading or incumbent
positions in the traditional classified directories business.

The stable outlook on Hibu Group reflects S&P's expectation that
the company will maintain adequate liquidity over the next 12
months thanks to positive and stable FOCF, an absence of short-
term maturities, and adequate covenant headroom.

S&P could lower the rating if it sees a prolonged deterioration
in the group's EBITDA beyond S&P's expectation, resulting in
downward pressure on FOCF and leading to an unsustainable capital
structure.  S&P would also view liquidity deterioration and
increasing risk of debt restructuring that it would view as
tantamount to default as drivers for a downgrade.

S&P considers an upgrade as remote, and believe that any positive
rating action will hinge on strengthening of the group's business
risk profile and sustainable improvement in earnings and credit

PARAGON GROUP: Fitch Rates GBP150MM Sub. Tier 2 Notes 'BB+'
Fitch Ratings has assigned The Paragon Group of Companies PLC's
(Paragon; BBB-/Stable) GBP150 million 7.25% fixed rate reset
callable subordinated tier 2 notes due 2026 a final rating of

The rating is in line with the expected rating assigned to the
notes on August 24, 2016.


The notes are rated one notch below Paragon's Long-Term Issuer
Default Rating (IDR) of 'BBB-', reflecting their higher loss
severity due to below-average recovery prospects for the
subordinated obligations in case of a winding-up event of
Paragon. Fitch has applied one notch, rather than two, for loss
severity, because the notes do not include a full write-down
provision and a partial, and not solely full, write-down of the
notes is, in our view, possible.

Fitch has not applied any notches for incremental non-performance
risk because non-payment of either principal or interest is
defined as an event of default of Paragon and there is no coupon
flexibility in a going concern scenario.

Paragon is rated under Fitch's "Global Non-Bank Financial
Institutions Rating Criteria". As the consolidated group is
subject to Prudential Regulation Authority (PRA) capital
supervision, the notes themselves have been rated in accordance
with Fitch's "Global Bank Rating Criteria", as required by the
Global Non-Bank Financial Institutions Rating Criteria in respect
of subordinated instruments issued by prudentially regulated non-
bank financial institutions.


The notes' rating is primarily sensitive to a change in the Long-
Term IDR of Paragon.

The notes' rating is also sensitive to a change in notching due
to a revision in Fitch's assessment of the probability of the
notes' non-performance risk relative to the risk captured in
Paragon's Long-Term IDR, or in its assessment of loss severity in
case of non-performance.

TATA STEEL: Liberty Frontrunner for Speciality, Pipe Businesses
Alan Tovey at The Daily Telegraph reports that industrial and
commodities group Liberty House is in pole position to buy Tata's
speciality and pipe businesses in a deal that could save close to
2,000 jobs.

The Daily Telegraph understands that Liberty House is the
frontrunner for the businesses.  An agreement to buy Tata's units
based in Rotherham, Stocksbridge and Hartlepool could come as
early as this week, The Daily Telegraph discloses.

Negotiations on Sept. 11 were described by sources as being at a
"critical and delicate" stage, The Daily Telegraph notes.
Liberty is understood to have secured financial backing for the
deal from investment bank Macquarie, The Daily Telegraph states.

Tata on Sept. 11 released quarterly results which showed the
company's loss had hugely widened, with it running up a INR31.8
billion (GBP358 million) net loss in the months to the end of
June, having taken a huge hit on the sale of its Scunthorpe
plant, The Daily Telegraph relays.

The sales process for the speciality and pipe businesses began in
March this year when Tata announced it was selling its entire UK
operation as the global crisis in the steel industry meant its UK
business was losing as much as GBP1 million a day, The Daily
Telegraph recounts.

However, bidders baulked at taking on the near-GBP15 billion
pension scheme linked to the business and Tata performed a
partial u-turn, halting the sale, The Daily Telegraph relays.
Instead it said it was exploring a tie-up with rival Thyssenkrupp
for its European operations, while still selling its UK pipe and
speciality units, The Daily Telegraph notes.

"Liberty is a rescue bidder because Tata will close them if it
can't sell them," The Daily Telegraph quotes one source close to
negotiations for the speciality and pipe operations as saying.

The latest deal is understood to have a "realistic" price
attached of less than GBP100 million, rather than a nominal sum
as was the case with the Scunthorpe sale, The Daily Telegraph

Liberty, run by entrepreneur Sanjeev Gupta, is understood to
believe Tata's businesses have a number of synergies with its
current operations, according to The Daily Telegraph.

Tata Steel is the UK's biggest steel company.

TATA STEEL: Government's Plan to Resolve Pension Issues Shelved
Michael Pooler, Jim Pickard and Josephine Cumbo at The Financial
Times report that a government plan to save Tata Steel's UK
business by changing pensions law has been shelved, according to
industry figures briefed on the matter, dealing a blow to efforts
to support the troubled sector.

According to the FT, failure to resolve the pensions question --
the GBP15 billion British Steel scheme is in deficit -- could
complicate Tata's talks with German rival ThyssenKrupp over a
potential tie-up of their European steel operations.

Tata put its operations in the country up for sale in March,
sparking an industrial crisis, but the pensions scheme -- which
Tata inherited when it bought the business -- emerged as an
obstacle to finding a buyer, the FT recounts.

To help facilitate a deal, or even persuade Tata to keep the
business, ministers wanted to detach it from the company and make
it financially self-sufficient, the FT discloses.  But nearly
three months after a public consultation closed the proposal is
now in effect off the table, the FT relays, citing three people
briefed on the matter.

The plan has been dropped for several reasons: Sajid Javid,
former business secretary, has moved to a different cabinet post;
new ThyssenKrupp proposals have emerged; and ministers feared the
plan was likely to be blocked in the House of Commons, the FT

The plan involved changing the annual uplift in pensions -- for
existing pensioners -- to a lower measure of inflation, plus
other cuts to benefits, the FT states.  These changes would have
reduced the scheme's long-term liabilities by about GBP2.5
billion but would have required a change to the 1995 Pensions
Act, the FT notes.

Tata Steel is the UK's biggest steel company.

* Global Corporate Defaults Increase to 118 in 2016, S&P Says
Charles Daly at Bloomberg News, citing Standard & Poor's, reports
that global corporate defaults in 2016 rose to 118.

According to Bloomberg, energy and natural resources sector has
the highest concentration of defaulters this year, with 67

Bloomberg notes that 79 of the defaulters are based in the U.S.,
21 in emerging markets, 9 in "other developed nations" and 9 in

Default tally has surpassed the total number of defaults recorded
in the entire year 2015 (113), Bloomberg discloses.

"The default tally is 51% higher than the count at this time in
2015," Bloomberg quotes Diane Vazza, head of S&P Global Fixed
Income Research, as saying.


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

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

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


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

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

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