TCREUR_Public/161004.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

           Tuesday, October 4, 2016, Vol. 17, No. 196



GEORGIA: Fitch Affirms 'BB-' LT Foreign & Local Currency IDRs


DEUTSCHE BANK: Financial Shock Fears Arise Following Woes


GREECE: Own Government to Blame for Asset Sale, Bailout Delay


ARBOUR CLO IV: Fitch Assigns 'B-(EXP)' Rating to Class F Notes


MONTE DEI PASCHI: DBRS Cuts Senior LT Debt & Deposit Rating to B
CREDITO VALTELLINESE: Fitch Rates Sub. Tier 2 Debt 'BB-(EXP)'


VTB BANK: S&P Affirms 'BB+' Rating on 6.25% US$-Denominated LPNs


RADET: Engie Expresses Concern on Insolvency Process


EUROCHEM GROUP: S&P Affirms 'BB-' CCR, Outlook Stable
KOMI: Fitch Affirms 'B' National Long-Term Rating, Outlook Neg.
ROSEVROBANK: Fitch Affirms 'BB-' LT Issuer Default Ratings
TAMBOV: Fitch Affirms 'BB+' LT Currency Issuer Default Ratings
URALKALI PJSC: Fitch Affirms 'BB-' Long-Term IDR, Outlook Neg.

YAROSLAVL: Fitch Affirms 'BB' LT Currency Issuer Default Ratings


ALMIRALL SA: S&P Raises CCR to 'BB', Outlook Stable
NH HOTEL: Fitch Hikes Long-Term Issuer Default Rating to 'B'


UKRAINE: Deposit Fund to Sell Assets of 40 Insolvent Banks

U N I T E D   K I N G D O M

COVPRESS: Goes Into Administration, 800 Jobs at Risk
ELLI INVESTMENTS: Fitch Cuts LT Issuer Default Rating to 'CC'
EQUITY RELEASE NO. 5: Fitch Cuts Class C Notes Rating to 'BB+sf'
HBOS PLC: Had to Write Off GBP266MM Loans Sanctioned by Manager
INFINIS PLC: Fitch Affirms 'BB-' Long-Term IDR, Outlook Negative

RAME ENERGY: Devon Power Steps in to Rescue UK-based Unit
SOUTHERN PACIFIC 06-A: S&P Affirms B- Rating on Class E Notes
TATA STEEL UK: Fitch Maintains Watch Evolving on 'BB' IDR
WILD PHEASANT: Bought Out of Administration for Second Time
* UK: 193 Financial Services Firms Enter Insolvency



GEORGIA: Fitch Affirms 'BB-' LT Foreign & Local Currency IDRs
Fitch Ratings has affirmed Georgia's Long-Term Foreign and Local
Currency Issuer Default Ratings (IDR) at 'BB-' with Stable
Outlooks. The issue ratings on Georgia's senior unsecured Foreign-
and Local-Currency bonds have also been affirmed at 'BB-'. The
Country Ceiling has been affirmed at 'BB' and the Short-Term
Foreign and Local Currency IDRs at 'B'.


The ratings balance Georgia's large current account deficit, high
level of external debt, low external liquidity and subdued per
capita income levels with economic resilience and favorable
governance indicators.

A flexible exchange rate, strong growth in tourism and recovering
remittances are contributing to the adjustment of the external
sector to a shock stemming from the collapse in oil prices and its
impact on trade with and remittance flows from CIS countries.
Foreign exchange reserves are projected to end 2016 at equivalent
to 3.3 months of current external payments, up from 2.9 months at
end-2015, but below the 'BB' median of 4.4 months.

Georgia runs a persistently large current account deficit,
forecast at 11.9% of GDP in 2016 compared with a peer median of
2.4% of GDP, although net FDI inflows (9.8% of GDP in 2016) are
also well in excess of peers (a median of 1.6% of GDP). The
current account is forecast to narrow throughout the forecast
period, as remittances and tourism pick up, but will still be
close to 10% of GDP by 2018. FDI inflows generally have a heavy
import requirement.

Current account financing will push up net external debt, which is
forecast at 66.9% of GDP at end-2016 compared with a peer median
of 15.7%. The debt structure provides some mitigants, as 89% of
government debt (which constitutes 28% of gross external debt) is
on a concessional basis and around 40% of corporate debt (52% of
gross external debt) is inter-company lending. Nonetheless, debt
service and liquidity ratios are weaker than the 'BB' median.

The fiscal deficit is forecast to widen to 4.4% of GDP, the
largest since 2010, primarily due to higher social payments.
Significant corporate tax reform is scheduled for 2017, which
should stimulate growth in the medium term, but will cause a
revenue shortfall estimated by the government at 1.2% of GDP in
2017. Compensatory measures are planned, but have not been
publically announced and their full implementation could prove
challenging. Fitch therefore expects the deficit to widen to 4.9%,
before narrowing to 4.1% in 2018 due to fuller implementation of
consolidation measures and stronger growth. Deficit financing will
push up general government debt, forecast at 44.4% of GDP at end-
2016, although it will remain below the peer median. At a
projected 76.6% at end-2016, the foreign currency share of
government debt is above the peer median of 51.2%.

Relations went off-track with the IMF with no reviews of the
Stand-By Arrangement approved since 2014. The authorities are re-
engaging with the Fund and aim to have a new agreement in place in

The outcome of parliamentary elections scheduled for October 8 is
uncertain. Political parties are fragmented and another coalition
government appears inevitable. Political parties tend to agree on
key elements of economic policy, particularly the commitment to an
open and business-friendly economy, and most are pro-EU. Georgia
continues to enjoy very strong governance indicators by regional
and rated peer standards.

Growth has held up fairly well in the face of the external shock.
On a five-year average basis at 4.1%, it is above the peer median
of 3.6%. Fitch forecasts growth of 3.2% in 2016, driven by
reviving confidence, higher government spending, tourism and the
start of work on a gas pipeline project. Fitch said, "We expect
growth to strengthen as the external environment improves and
infrastructure projects support construction, although the import
dependence of these projects will dull their impact on headline
growth. Corporate tax reform will bolster medium-term growth, but
offsetting fiscal measures may dampen output in the near term."

Banks have continued to weather the fall in the currency and
weaker economic conditions. Non-performing loans rose to 3.9% at
end-July from 3.2% one year earlier. A moderate devaluation buffer
is built into foreign currency loans and only small open currency
positions have underpinned the resilience of the sector to the
lower lari. Banks are well capitalized, with capital adequacy at
17.5% at end-June, so are well positioned to absorb a moderate
deterioration in their loan portfolios.

Georgia scores well above the peer median in the World Bank's
Doing Business rankings, with Portugal the only sub-investment
grade sovereign ranking higher. Human Development indicators are
also above the 'BB' median, and per capita income is in line.


Fitch's proprietary SRM assigns Georgia a score equivalent to a
rating of 'BB' on the Long-Term FC IDR scale.

Fitch's sovereign rating committee adjusted the output from the
SRM to arrive at the final LT FC IDR by applying its QO, relative
to rated peers, as follows:

   -- External finances: -1 notch, to reflect high net external

Fitch's SRM is the agency's proprietary multiple regression rating
model that employs 18 variables based on three year centered
averages, including one year of forecasts, to produce a score
equivalent to a LT FC IDR. Fitch's QO is a forward-looking
qualitative framework designed to allow for adjustment to the SRM
output to assign the final rating, reflecting factors within our
criteria that are not fully quantifiable and/or not fully
reflected in the SRM.


The Stable Outlook reflects Fitch's assessment that upside and
downside risks to the rating are currently balanced. The main risk
factors that could, individually or collectively, trigger negative
rating action are:

   -- A widening in the budget deficit leading to a rise in
      public debt/GDP.

   -- A decline in foreign exchange reserves, for example by a
      widening in the current account deficit not financed by

   -- Deterioration in either the domestic or regional political
      environment that affects economic policymaking or regional
      growth and stability.

The main factors that could, individually or collectively, lead to
positive rating action are:

   -- A revival of strong and sustainable GDP growth accompanied
      by fiscal discipline.

   -- Smaller current account deficits that contribute to lower
      net external indebtedness.


Fitch expects the Russian economy to contract 0.5% this year,
before growing by 1.3% in 2017 and 2.0% in 2018. Economic growth
in other key regional trading partners is also expected to improve
in 2017 and 2018.


DEUTSCHE BANK: Financial Shock Fears Arise Following Woes
Peter Goodman at The New York Times reports that Deutsche Bank,
Germany's largest bank appears in danger, sending stock markets
worldwide on a wild ride.  Yet the biggest source of worry is less
about its finances than a vast tangle of unknowns -- not least,
whether Europe can muster the will to mount a rescue in the event
of an emergency, The Times says.

In short, fears that Europe lacks the cohesion to avoid a
financial crisis may be enhancing the threat of one, The Times

According to The Times, the immediate source of alarm is the
health of Deutsche Bank, whose vast and sprawling operations are
entangled with the fates of investment houses from Tokyo to London
to New York.

Deutsche is staring at a multibillion-dollar fine from the Justice
Department for its enthusiastic participation in Wall Street's
festival of toxic mortgage products in the years leading up to
financial crisis of 2008, The Times discloses.  Given Deutsche's
myriad other troubles -- a role in the manipulation of a financial
benchmark, claims of trades that violated Russian sanctions and a
generalized sense of confusion about its mission -- the American
pursuit of a stiff penalty comes at an inopportune time, The Times

It heightens the sense that Deutsche -- whose shares have lost
more than half their value this year -- needs to secure additional
investment, lest it leave itself vulnerable to some new crisis,
The Times notes.

According to The Times, the biggest worries center on what happens
if Deutsche falls apart to the point that it threatens the globe
with a financial shock -- and whether new rules and buffers put in
place since the last crisis will keep the pain from spreading.

Regulations that took effect this year in the European Union
standardize how member countries are supposed to handle the
potential implosion of a large financial institution, The Times
discloses.  Banks, too, have put aside more money to deal with
potential losses, according to The Times.

Deutsche, The Times says, could pose the first test of the new

Deutsche Bank AG is a global investment bank. The Bank is engaged
in providing commercial and investment banking, retail banking,
transaction banking and asset and wealth management products and
services to corporations, governments, institutional investors,
small and medium-sized businesses, and private individuals. It
operates through four business divisions: Global Markets (GM);
Corporate & Investment Banking (CIB); Deutsche Asset Management;
Private, Wealth & Commercial Clients (PW&CC).


GREECE: Own Government to Blame for Asset Sale, Bailout Delay
Nektaria Stamouli at The Wall Street Journal reports that the
Greek government is at war with itself, and that is threatening to
derail a key plank of Greece's bailout, which consists of selling
state assets to pay down debt and bring in foreign investment.

Leaders in the ruling left-wing Syriza party are touring the
world, from New York to Shanghai, lobbying investors to come to
Greece and help kick-start its depressed economy, the Journal
relays.  But Syriza's roots in the Marxist, anti-globalization
left make privatization a bitter pill, the Journal notes.

Privatization revenues are necessary to make Greece's latest,
EUR86 billion bailout plan add up, the Journal says.  Without
billions penciled in from asset sales, Greece would need to tap
more loans and eventually would need more debt relief, according
to the Journal.  Prime Minister Alexis Tsipras says privatizations
are also vital for overcoming investors' years long aversion to
Greece and bringing down a 23% unemployment rate, the Journal

His government's for-it-but-against-it actions have angered many
involved, from foreign companies who thought they had deals, to
unions who thought Syriza would be different, the Journal states.

Germany and other creditors, fed up with foot-dragging over
preparations to sell water utilities, transport companies and the
electricity grid, froze the latest EUR2.8 billion slice of bailout
aid for Athens, the Journal relays.  Late last month, the Greek
Parliament voted to move the water utilities and other assets into
the privatization fund to persuade creditors to release the aid,
which is now expected this month, the Journal recounts.

Europe and the International Monetary Fund first made Greece
commit itself to the EUR50 billion privatization target in 2011,
before Syriza was in power, the Journal discloses.  Bidders
steered clear of the slumping economy, and Greece raised only EUR3
billion up to 2015, the Journal notes.  Syriza won elections that
year on an anti-bailout ticket and vowed to stop the selloff, the
Journal relays.

According to the Journal, Syriza has said Greece can instead earn
funds by selling minority stakes to investors and retaining

When international creditors later forced Mr. Tsipras to sign a
new bailout in July 2015 or quit the euro, they insisted his
government commit itself firmly to the EUR50 billion goal over
coming decades and set up a special privatization fund to manage
the assets, the Journal discloses.

This year, Athens has signed deals worth more than EUR2 billion,
the busiest year for privatizations so far, the Journal notes.


ARBOUR CLO IV: Fitch Assigns 'B-(EXP)' Rating to Class F Notes
Fitch Ratings has assigned Arbour CLO IV Designated Activity
Company's notes expected ratings, as follows:

EUR30.00m class A-1 notes due 2030: 'AAA(EXP)sf'; Outlook Stable
EUR214.00m class A-2 notes due 2030: 'AAA(EXP)sf'; Outlook Stable
EUR42.20m class B notes due 2030: 'AA(EXP)sf'; Outlook Stable
EUR25.00m class C notes due 2030: 'A(EXP)sf'; Outlook Stable
EUR21.50m class D notes due 2030: 'BBB(EXP)sf'; Outlook Stable
EUR26.75m class E notes due 2030: 'BB(EXP)sf'; Outlook Stable
EUR11.00m class F notes due 2030: 'B-(EXP)sf'; Outlook Stable
EUR43.00m subordinated notes due 2030: 'NR(EXP)'

The assignment of final ratings is contingent on the receipt of
final documents conforming to information already reviewed.

Arbour CLO IV Designated Activity Company is an arbitrage cash
flow collateralized loan obligation. Net proceeds from the
issuance of the notes will be used to purchase a portfolio of
EUR400m of mostly European leveraged loans and bonds. The
portfolio is actively managed by Oaktree Capital Management (UK)


'B'/'B-' Portfolio Credit Quality

Fitch places the average credit quality of obligors in the 'B/B-'
range. The agency has public ratings or credit opinions on all
obligors in the identified portfolio. The WARF of the identified
portfolio is 30.85.

High Recovery Expectations

At least 90% of the portfolio comprises senior secured
obligations. Fitch has assigned Recovery Ratings (RR) to all
assets in the identified portfolio. The covenanted minimum Fitch
weighted average recovery rate (WARR) for assigning the final
ratings is 69.5%. The WARR of the indicative portfolio is 73.20%.

Above-Average Concentration

Portfolio profile tests limit exposure to the top one Fitch
industry to 20% and the top three Fitch industries to 40%.
Furthermore, obligors can represent up to 3% each of the current
portfolio. Senior secured obligors in the portfolio can represent
2.5%, and the top three may represent up to 3%. The limit on non-
senior secured obligations is 1.5% per obligor.

Partial Interest Rate Hedge

Between 5% and 15% of the portfolio may be invested in fixed rate
assets, while fixed rate liabilities account for 7.5% of the
target par amount. However, the collateral manager is allowed to
reinvest into additional obligations, subject to the minimum and
maximum limit to be improved if failing.

Limited FX Risk

The transaction is allowed to invest in non-euro-denominated
assets, provided these are hedged with perfect asset swaps within
six months of purchase. Unhedged non-euro assets may not exceed
2.5% of the portfolio at any time and can only be included if at
their trade date the portfolio balance is above the target par
amount when their principal balance converted into euros at spot
rate is haircut by 50%.

Documentation Amendments

The transaction documents may be amended subject to rating agency
confirmation or noteholder approval. Where rating agency
confirmation relates to risk factors, Fitch will analyze the
proposed change and may provide a rating action commentary if the
change has a negative impact on the ratings. Such amendments may
delay the repayment of the notes as long as Fitch's analysis
confirms the expected repayment of principal at the legal final

If in the agency's opinion the amendment is risk-neutral from a
rating perspective Fitch may decline to comment. Noteholders
should be aware that the structure considers the confirmation to
be given if Fitch declines to comment.


A 25% increase in the obligor default probability would lead to a
downgrade of up to two notches for the rated notes. A 25%
reduction in expected recovery rates would lead to a downgrade of
up to two notches for the rated notes.


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


The majority of the underlying assets have ratings or credit
opinions from Fitch and/or other Nationally Recognized Statistical
Rating Organizations 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 asset pool information relied
upon for the agency's rating analysis according to its applicable
rating methodologies indicates that it is adequately reliable.


MONTE DEI PASCHI: DBRS Cuts Senior LT Debt & Deposit Rating to B
DBRS Ratings Limited has lowered Banca Monte dei Paschi di Siena
SpA's (BMPS or the Bank) Senior Long-Term Debt & Deposit rating to
B (high) from BB. The Bank's Intrinsic Assessment (IA) was also
changed to B (high). The Bank's Short-Term Debt and Deposit rating
remains at R-4, and the long / short term Critical Obligations
Ratings remain at BBB (low) / R-2 (middle), but all ratings are
still Under Review with Negative Implications (URN). DBRS does not
rate the Bank's Subordinated Debt.

The downgrade reflects DBRS' view that the risk for the Bank's
bondholders has notably increased, due to the higher execution
risk for the Bank's capital plan announced on July 29, 2016.
Following a further deterioration in market conditions and
sluggish investor appetite, the feasibility of the Bank's planned
EUR5 billion rights issue has become increasingly challenging.
BMPS' share price has fallen by 85% since the beginning of the
year and 39% since the announcement of the rights issue. As of
September 29, 2016, the Bank had a market capitalization of
EUR552 million which is almost a tenth of the planned capital

Taking into consideration the difficult market conditions and
modest investor appetite, on September 26, 2016, BMPS announced
that, as part of its capital raising plan, it plans to carry out a
liability management exercise. This would likely be a voluntary
conversion of BMPS' debt instruments into equity. BMPS' board of
directors is expected to approve the Bank's business plan on
October 24, while the shareholders' meeting will be called by the
end of November.

In DBRS' view, the potential conversion is likely to involve BMPS'
Tier 1 and Tier 2 instruments, which are held by institutional and
retail investors for a total consideration of approximately EUR 5
billion. The successes of a voluntary conversion, in the form of
an offer to a fragmented investor base, will largely depend on the
terms of the offer, including any potential incentive mechanism
and/or thresholds, as well as market conditions. Although DBRS
does not rate the Bank's subordinated debt, it would likely view
any liability management exercise as a distressed exchange if the
terms of the exchange are disadvantageous to bondholders.

If successful, the conversion could facilitate BMPS'
recapitalization by partially reducing the size of the capital
increase, but BMPS' capital deficit could remain still sizeable
after the conversion. Furthermore, equity capital market
conditions remain challenging and uncertain. In DBRS' view, the
outcome of the Italian Constitutional referendum set for
December 4, 2016, will be critical for investor confidence and
market appetite for BMPS' capital. Additional execution risk is
posed by the timing of the Bank's capital increase, which is
taking place at a time of increasing uncertainty in the European
banking sector.

During the review period, DBRS will evaluate BMPS' business plan,
including any update on the progress of the planned NPL sale, as
well as the Banks' revised capital plan. In parallel, market
conditions and investors' appetite will also be monitored. In
addition, DBRS will review BMPS' 3Q 2016 results, including any
potential negative implications for the Bank's funding and
liquidity positions linked to ongoing uncertainty for the Bank's

The Critical Obligations Ratings was not lowered along with the
senior debt and deposit rating and remains at BBB (low) / R-2
(middle) URN. This reflects DBRS' expectation that, in the event
of a resolution of the Bank, certain liabilities (such as payment
and collection services, obligations under covered bond program,
payment and collection services, etc.) have a greater probability
of avoiding being bailed-in and being included in a going-concern


The ratings are currently Under Review with Negative implications.
Any upside pressure is highly unlikely in the short term.

CREDITO VALTELLINESE: Fitch Rates Sub. Tier 2 Debt 'BB-(EXP)'
Fitch Ratings has assigned Credito Valtellinese's (Creval,
BB/Stable/bb) planned issue of subordinated Tier 2 debt an
expected 'BB-(EXP)' rating.

The final rating is contingent upon the receipt of final documents
conforming to information already received.

The amount and the maturity structure of the issue will be subject
to market conditions. The notes will be gone-concern securities,
qualifying as Tier 2 capital under Basel III, contain contractual
loss absorption features, which will be triggered only at the
point of non-viability of the bank, and do not have an equity
conversion feature.

The notes can be redeemed in whole but not in part, at their
principal amount together with interest accrued upon the
occurrence of a change in the regulatory classification of the
notes that would be likely to result in their exclusion, in whole
or in part, as Creval's Tier 2 capital.

The notes will be listed on the Luxemburg Stock Exchange.


The notes are rated one notch below Creval's Viability Rating (VR)
of 'bb', in accordance with Fitch's criteria. Fitch said, "We
apply one notch for loss severity to reflect the below-average
recovery prospects for the notes in case of non-viability event
given their subordination status. We apply zero notches for non-
performance risk since the securities qualify as gone-concern
instruments and the write-down of the notes will only occur once
the point of non-viability is reached while there is no coupon
flexibility prior to non-viability."


The subordinated debt's rating is sensitive to the same factors
that may affect the bank's VR.

The notes' rating is also sensitive to a change in notching should
Fitch change its assessment of loss severity.


VTB BANK: S&P Affirms 'BB+' Rating on 6.25% US$-Denominated LPNs
S&P Global Ratings said that it has affirmed its 'BB+' issue
ratings on the 6.25% U.S. dollar-denominated loan participation
notes (LPNs) due in 2035 issued by VTB Capital S.A. on behalf of

The affirmation follows the update to S&P's "Group Rating
Methodology," published Aug. 9, 2016, which clarifies how S&P
rates LPNs issued by special purpose vehicles (SPVs) on behalf of
a corporate entity, financial institution, or insurance company
(including their holding companies).  S&P rates LPNs issued by an
SPV at the same level as S&P would rate an equivalent-ranking debt
of the underlying borrower (the sponsor) and treat the contractual
obligations of the SPV as financial obligations of the sponsor if
these conditions are met:

   -- All of the SPV's debt obligations are backed by equivalent-
      ranking obligations with equivalent payment terms issued by
      the sponsor;

   -- The SPV is a strategic financing entity for the sponsor set
      up solely to raise debt on behalf of the sponsor's group;

   -- S&P believes the sponsor is willing and able to support the
      SPV to ensure full and timely payment of interest and
      principal when due on the debt issued by the SPV, including
      payment of any of the SPV's expenses.

Following S&P's review, it has concluded that VTB Bank's 6.25%
LPNs due 2035 meet all these conditions and have therefore
affirmed our ratings on the notes.

The transaction structure includes VTB Capital S.A. as an issuing
entity, a fiduciary deposit agreement between VTB Capital S.A. and
Deutsche Bank Luxembourg S.A. to fund the loan to VTB Bank, and a
loan agreement between Deutsche Bank Luxembourg S.A. and VTB Bank.
S&P believes that the functions of the fiduciary in this
transaction are similar to those of a paying agent, since the
terms and conditions of the fiduciary deposit agreement and the
loan agreement match.

S&P also notes that the fiduciary deposit agreement includes
provisions that enable VTB Bank to assign or transfer any and all
of the fiduciary's rights against VTB Bank under the relevant loan
agreement if the fiduciary fails to pay the principal or interest
under the fiduciary deposit agreement when due.  In addition, S&P
notes that the fiduciary, Deutsche Bank Luxembourg S.A., is
currently rated 'BBB+', three notches above VTB Bank.


RADET: Engie Expresses Concern on Insolvency Process
Georgeta Gheorghe at Business Review reports that Engie Romania
energy group, owner of Distrigaz Sud Networks, the gas distributor
of Elcen (Electrocentrale Bucharest), expressed concern at the
decision of the Elcen Board of Directors to initiate insolvency

"The decision, taken without consulting all parties involved will
have a negative impact on the financial situation of Distrigaz Sud
Networks, jeopardizing the investments necessary to the safe
exploitation of the Natural gas distribution network, not only in
the Bucharest municipality, but also in the entire area operated
by the company," the press release reads.

According to the report, Engie Romania representatives said the
total value of outstanding debts owed by Elcen are totaling RON155
million and will grow significantly over the winter. Moreover,
company representatives argue, the only sustainable solution to
avoid the bankruptcy of Elcen and Radet, and to guarantee, over
the long term, the supplying with heat and hot water of Bucharest
inhabitants is represented by the immediate mobilization of
significant financial resources, both by the Romanian state and
the Bucharest City Hall.

Business Review says the Elcen Board of Directors decided on
September 22 to initiate the insolvency proceedings for Radet by
submitting a request to this respect to the Bucharest Court. Radet
owes Elcen, a company administered by the Ministry of Energy, over
RON3.5 billion. In its turn, Elcen has accumulated debts and owes
approximately RON1.6 billion to gas distributor Romgaz and Elcen.
The receivables recorded by Radet are totaling approximately
RON3.6 billion, Business Review discloses.

Energy Minister welcomed the start of Radet's insolvency
proceedings. "I welcome the decision of the General Council of the
Bucharest Municipality and I hope that Radet's entering insolvency
will allow it to reform, and to better manage the money and to pay
its outstanding bills," Business Review  quotes Victor Grigorescu
as saying.

RADET is a Romanian state-owned autonomous company, with special
operating permits, that supplies thermal energy in Bucharest,


EUROCHEM GROUP: S&P Affirms 'BB-' CCR, Outlook Stable
S&P Global Ratings affirmed its 'BB-' long-term corporate credit
rating on Russian, Switzerland-headquartered agrochemicals
producer EuroChem Group AG.  The outlook is stable.

S&P also affirmed its 'ruAA-' Russia national scale rating on the

S&P assigned a 'BB-' issue rating to the up to US$750 million
proposed senior unsecured notes issued by EuroChem Global
Investments DAC and guaranteed by EuroChem Group AG.

The affirmation reflects S&P's expectation that EuroChem's lower-
than-forecast EBITDA of around US$1.1 billion due to lower
fertilizer prices (S&P had previously estimated US$1.3 billion)
will be balanced by eliminating dividends, slightly reduced capex,
and the availability of a US$1 billion perpetual shareholder loan
that S&P expects will be put in place very shortly.

EuroChem will continue to invest about US$1 billion-US$1.1 billion
annually in capex including in its two large greenfield potash
projects and the Kingisepp ammonia project.  S&P expects that
EuroChem's adjusted debt, including project finance nonrecourse
debt, will remain close to US$3.5 billion in 2016 and will
increase slightly in 2017 on EuroChem generating negative free
operating cash flow (FOCF).  S&P estimates EuroChem's adjusted
debt to EBITDA at slightly above 3.0x and FFO to debt around 20%
in 2016, then moderately weakening in 2017.

The rating affirmation reflects S&P's opinion that EuroChem is
proactively managing its refinancing risks, having put in place a
US$800 million pre-export finance facility in September 2016 and
issuing the up to US$750 million proposed senior unsecured notes.
S&P also factors in that EuroChem's expansionary capex remains
largely prefunded with about US$290 million available as of end-
June 2016 under the project finance facility for the Usolsky
potash project, and a EUR557 million project finance facility for
the ammonia project in Kingisepp.

The rating remains supported by EuroChem's strong cost position on
the back of the weaker ruble.  S&P notes that in first-half 2016,
83% of the group's sales were in U.S. dollars and euros and the
majority of its costs were in rubles.  S&P also factors in its
vertically integrated business model including raw materials
assets, production facilities (four in Russia, one in Lithuania,
and one in Belgium), and its logistics and distribution networks.
In addition, S&P notes the diversity of EuroChem's operations in
that it focuses on nitrogen and phosphate-based fertilizers, and
derives sizable iron ore revenue as a by-product of its apatite
mining operations.  In first-half 2016, EuroChem's nitrogen and
phosphates business contributed 55% and 34% of its reported EBITDA
of US$586 million (down 25% year on year).  The diversity of
EuroChem's operations will improve further from 2018 when it
expects to launch the production of potash fertilizers at its two
massive greenfield projects in Russia.

S&P's assessment of EuroChem's business risk profile is
constrained by the high country risk Russia presents.  S&P also
takes into consideration high cyclicality pressure in the
fertilizer industry and the fragmented nature of the nitrogen
fertilizer industry, to which EuroChem has the largest exposure.

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

   -- Global nitrogen/phosphate fertilizer prices remaining close
      to current spot price levels, which are 25%-30% below 2015

   -- Overall largely stable volumes in 2016-2017, with lower
      sales in the nitrogen segment on the back of significant
      capacity additions in low-cost-gas regions but slightly
      higher sales in the phosphate segment, supported by
      improving demand particularly in South America.  S&P
      factors in that EuroChem is improving its geographic
      footprint via acquisition of distribution assets.

   -- Iron ore prices amounting to US$50 per metric ton for the
      rest of 2016 and US$45 in 2017.

   -- The dollar to ruble exchange rate averaging of around 1:68
      in 2016-2017.

   -- Large capex requirements of about $1.0 billion-$1.1 billion
      per year, most of it tied to expansion (including two
      potash mines and a new ammonia project).  S&P understands
      that the capex in the existing operations is minimal
     (around US$250 million annually).

   -- No material working capital outflows.

   -- Shareholder funds injection of US$230 million in 2016 and
      US$170 million in 2017.

   -- No dividends in 2016-2017.

Based on these assumptions, S&P expects:

   -- Adjusted EBITDA of around US$1.1 billion in 2016-2017.
   -- FFO to debt of close to 20%.
   -- Moderately negative operating cash flow.

The stable outlook reflects S&P's expectation that EuroChem will
likely maintain a ratio of adjusted FFO to debt close to 20% on
average in the coming years and that management will continue its
proactive refinancing strategy.

Downside rating pressure could build if there was a material
decline in nitrogen and phosphate fertilizer prices, coupled with
the group's continued active investment phase, which would lead to
FFO to debt falling below 20% on a prolonged basis.  A negative
rating action could occur if the group sought a sizable debt-
financed acquisition, although S&P sees this as less likely than
in the past because the group is focused on developing its two
major potash greenfield projects.

S&P could raise the rating if the company reduced leverage, with
FFO to debt rising above 30% on the back of more supportive
industry conditions, for example.  Rating upside could also be
driven by the progress of EuroChem's potash projects supporting
profits and FOCF.  S&P believes that, at this stage, rating upside
is remote.

KOMI: Fitch Affirms 'B' National Long-Term Rating, Outlook Neg.
Fitch Ratings has affirmed Russian Republic of Komi's Long-Term
Foreign and Local Currency Issuer Default Ratings (IDRs) 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 republic's outstanding senior unsecured debt ratings have been
affirmed at 'BB' and 'AA-(rus)'.

The Negative Outlook reflects Komi's large persistent budget
deficits leading to growing debt burden as well as the republic's
weakened fiscal capacity with low prospects of its restoration
over the medium-term. The continuing negative trend in the local
economy will likely to hinder recovery of the fiscal performance.


The 'BB' rating reflects the region's sound economic fundamentals
and moderate but growing debt. This partly offsets the republic's
weak operating performance and elevated refinancing pressure due
to extensive use of bank loans to service its growing debt.

Fitch projects Komi's operating balance will likely remain
negative over the medium term (2015: - 2.6%) due to the rigidity
of social-oriented spending and requirements to maintain public
sector salaries in line with the fairly high average salary in the
region. The deficit before debt variation could account for about
10% of total revenue in 2016-2018, which is below the average
17.8% in 2013-2015, but still material. Fitch assesses the
republic's fiscal flexibility as low and its ability to reduce
capital spending as limited due to already low capex (below 10% of
total expenditure in 2015).

Fitch forecasts direct risk to exceed 70% of current revenue in
2016-2017 (2015: 61%), which would put further pressure on the
ratings; and the debt is likely to reach 80% in 2018 driven by the
persistent deficit. In 7M16, direct risk further increased to
RUB39bn, up from RUB33.1bn at end-2015.

This is mitigated by increased use of low-cost federal budget
loans and treasury lines, which amounted to RUB12.8 billion, or
33% of the risk (end-2015: 24%) at August 1, 2016. Of this, RUB4.7
billion are short-term treasury lines, which the region will have
to replace with bank loans by end-2016.

Komi is exposed to high refinancing risk, which stems from the
region's high dependence on capital market to service its debt.
Direct debt servicing exceeded 20% of current revenue in
2014-2015 while the weighted average maturity of its debt is two
years and 10 months, which is relatively short in the
international context.

By end-2016, Komi needs to refinance RUB11.4bn, or 30% of its
direct risk. The republic is likely to cover its funding needs
with bank loans as its cash balance remains very low (2015:
RUB218m). At September 1, 2016, the region had RUB11.5bn of
undrawn credit lines, available at first demand.

The republic's credit profile remains constrained by the weak
institutional framework for Russian local and regional governments
(LRGs), which has a shorter record of stable development than many
of its international peers. Weak institutions lead to lower
predictability of Russian LRGs' budgetary policies, which are
subject to the federal government's continuous reallocation of
revenue and expenditure responsibilities within government tiers.

Komi has a sound economy and its gross regional product (GRP) per
capita was almost twice as high as the national median in 2014 and
average salary was about 60% above the national median in December
2015. However, the economy is concentrated in the natural
resources sector, which exposes the region to commodity price
fluctuations and potential changes in fiscal regulation. The top
10 taxpayers contributed about 50% of the republic's consolidated
budget tax revenue in 2015.

Komi's government estimates the republic's GRP to further decrease
by 1.7% yoy in 2016 (2015: fall 3.5%) due to contracting oil
refining, construction and trade output and might return to
marginal growth in 2017-2019. The republic's economy follows the
national economic trend, which Fitch forecasts to fall 0.5% in
2016 (2015: 3.7%) and will moderately recover by 1.3%-2.0% yoy in


Growth in direct risk to above 70% of current revenue, coupled
with negative operating balances on a sustained basis and a
reduced capacity to obtain affordable funding for its debt
refinancing needs, will lead to a downgrade.

ROSEVROBANK: Fitch Affirms 'BB-' LT Issuer Default Ratings
Fitch Ratings has affirmed the Long-term Issuer Default Ratings
(IDR) of Banca Intesa (BIR) at 'BBB-', Rosevrobank (REB) at
'BB-', and Peresvet Bank (Peresvet) at 'B+'. The Outlook on BIR is
Negative, while those on REB and Peresvet are Stable.



The affirmation of BIR's IDRs reflects Fitch's view that BIR would
likely be supported, in case of need, by its ultimate parent,
Intesa Sanpaolo S.p.A. (ISP, BBB+/Stable). This view is based on
the strategic role of BIR for further development of the Russian
franchise of the group, the low cost of the potential support that
might be required, common branding and potential reputational and
contagion risks for the group in case of a subsidiary default.

BIR's Long-Term Foreign Currency IDR is constrained by Russia's
'BBB-' Country Ceiling, and the Long-Term Local Currency IDR also
takes into account country risks. The Negative Outlook on BIR's
ratings reflects the Negative Outlook on Russia's sovereign

The IDRs and National Ratings of REB and Peresvet are driven by
their intrinsic strength, as expressed by their Viability Ratings


The affirmation of all three banks' VRs (REB at 'bb-', RIB and
Peresvet at 'b+') reflects their generally stable financial
metrics and only limited asset quality deterioration (more
significant at BIR) amid the weak economic environment, and
reasonable capital buffers. Negatively, the VRs reflect the banks'
limited and fairly concentrated franchises and balance sheets. The
one-notch higher VR of REB relative to the other two banks
reflects its stronger and more resilient performance through the


REB's asset quality remains resilient as expressed by a
consistently low non-performing loans (NPLs, 90 days overdue)
ratio (3.9% at end-1H16; 3.4% at end-2015) and moderate share of
restructured loans (2.2%). These exposures in total were 1.5x
covered by loan impairment reserves (LIRs). REB's 25-largest
corporate exposures (equal to 1.3x Fitch Core Capital (FCC)) were
mostly of limited risk because these are either (i) working-
capital loans to cash- generative clients with long operational
track records; or (ii) low-risk loans to government-related
companies (about 20% of gross loans).

REB's FCC ratio was a high 16% at end-1H16, up from 14% at end-
2015, due to only limited lending growth and robust profitability
(annualized ROAE of 32% in 1H16). Fitch estimates that at end-1H16
the bank's capital cushion was to sufficient to increase loan
impairment reserves up to 24% of the portfolio without breaching
minimum capital requirements. Loss absorption capacity is also
strengthened by solid pre-impairment profit, which was equal to a
large 13% of average loans in 1H16 (annualized).

REB's funding is a strength due to a high share (38% of
liabilities at end-1H16) of sticky and granular interest-free
current accounts. The funding structure translates into REB's
fairly low funding cost (4.4% in 1H16), providing the bank with a
significant competitive edge for lending to better quality
corporates while maintaining healthy margins.

Funding concentration is low (the 20-largest clients accounted for
a moderate 23% of end-1H16 total accounts) and proved to be rather
stable through the past crises. Liquidity risk is also mitigated
by REB's significant liquidity cushion, which covered more than
45% of total customer accounts at end-8M16.


BIR's NPLs ratio increased to 16.3% of gross loans at end-1H16
from 13.9% at end-2015 and 8.4% at end-2014. Restructured
exposures made up a further 9% of loans at end-1H16. The
deterioration occurred mainly due to further credit losses in the
SME portfolio and several defaults among the largest borrowers.

Provisioning is prudent, with NPLs being fully covered by
reserves. The combined coverage of NPLs and restructured loans was
a weaker 0.7x, but is still reasonable as most restructured
exposures are performing well under renegotiated terms.
Positively, the NPL origination ratio (calculated as the net
increase in NPLs plus write-offs during the period, annualized)
decreased to 2% in 1H16 from 7% in 2015, indicating improvement in
asset quality following the strengthening of underwriting in 2H15
and the stabilization of the Russian economy.

Profitability is weak. Although the net interest margin remained a
solid 7% in 1H16, BIR was close to break-even on a pre-impairment
basis due to its cost-income ratio jumping to 79% in 1H16 (62% in
2015) as it deleveraged by 15%. Loan impairment charges decreased
to 3% of gross loans in 1H16 (8% in 2015), but this still led to a
negative ROAE of 7%.

The FCC ratio remained reasonable, at 13.6% at end-1H16 (13.3% at
end-2015), as the bottom line loss was offset by a decrease of
risk-weighted assets. Regulatory capital ratios were also stable:
at end-8M16 the Tier 1 ratio was 13.8% (6% required minimum) and
total capital ratio was 18% (required minimum of 8%), potentially
allowing the bank to reserve an extra 13% of gross loans (up to
34% totally) without breaching regulatory limits.

As it has deleveraged, the bank has repaid a significant share of
its parent funding (decreased to 25% of liabilities at end-1H16
from 44% at end-2014). BIR can tap RUB26bn of unused credit lines
from the group (equal to 75% of BIR's deposits), if needed, which
significantly mitigates liquidity risks.


Peresvet's reported NPLs were a low 0.6% at end-1H16, but real
asset quality is potentially weaker. This is based on Fitch's
review of the top 100 exposures, which revealed that many
borrowers have some signs of affiliation among themselves or with
the bank's shareholders or management, although not to the extent
that these could formally be considered related parties for the
purposes of IFRS or regulatory reporting. In Fitch's view the
origination of these exposures raises some concerns about
corporate governance in Peresvet. Fitch also believes that the
actual concentration and related-party lending levels are higher
than reported.

As a moderate mitigating factor, according to management, most
such borrowers are typically working under contracts with regional
authorities or state-related companies, reducing credit risks.
However, the longer-term sustainability of this business is
questionable to Fitch.

Fitch estimates that around RUB12 billion (0.5x of end-1H16 FCC)
of these loans are particularly high-risk, as the borrowers are
mostly booking entities without any real assets, while the bank is
the sole creditor. Around RUB2 billion of these loans were
reportedly cash-covered, which somewhat reduces the risk.

Another area of risk is a RUB4 billion (18% of FCC) fiduciary bank
placement, which in reality represents a corporate exposure of the
same nature as above.

The bank's capital ratios remained reasonable (12.9% FCC ratio and
regulatory Tier 1 ratio of 9.6% at end-1H16). Fitch estimates that
Peresvet had the capacity to reserve an additional 5% of gross
loans at end-1H16 before breaching regulatory capital adequacy
requirements. Additional impairment losses could be absorbed
through pre-impairment profit, which made up 5.5% (annualized) of
end-1H16 gross loans. However, capitalization should be considered
together with the concentrated and potentially high-risk loan

Peresvet is funded mainly by customer accounts, which are
predominantly relationship-based and highly concentrated, making
liquidity sensitive to the behavior of few large depositors.
Refinancing risks are moderate at present, but may increase as the
bank has been actively attracting wholesale funding (at 22% of
liabilities at end-1H16, up from 9% at end-2014). Peresvet's
liquidity buffer was rather tight, at 13% total liabilities at


The '5' Support Ratings (SRs) of REB and Peresvet reflect Fitch's
view that support from the banks' private shareholders cannot be
relied upon. The SRs and Support Rating Floors of 'No Floor' also
reflect that support from the Russian authorities cannot be relied
upon due to the banks' narrow franchises and lack of systemic


The senior unsecured debt (RUB-denominated local bonds) of these
two banks is rated in line with their respective Long-Term IDRs,
in line with Fitch's criteria for rating these instruments.



The Negative Outlook on BIR's ratings reflects the Negative
Outlook on Russia's sovereign rating, and BIR will likely be
downgraded if Russia's ratings are downgraded. BIR could also be
downgraded if there is a sharp reduction in ISP's commitment to
the subsidiary.

VR upside is currently limited due to the recent deterioration in
BIR's performance and asset quality metrics. Negative pressure
could stem from further asset quality deterioration and a
weakening of the capital position, if this is not rectified by
fresh equity injections from the parent.


REB's and Peresvet's ratings could be downgraded if their asset
quality deteriorates significantly and erodes the banks'
profitability and capital positions. Further corporate governance
weaknesses or risks arising from regulatory reviews in Peresevet
may also lead to a downgrade.

Upside for the banks' ratings is limited at present given their
limited franchises and a weak outlook on the broader economy, but
is more likely for REB should it manage to expand its franchise
and demonstrate an extended track record of solid financial


Fitch believes that any changes in the banks' SRs and SRFs are
unlikely in the near term, although if any of the banks is sold to
a higher-rated investor, it may result in an upgrade of its SR.


Senior unsecured debt ratings are sensitive to changes in the
respective banks' IDRs.

The rating actions are as follows:

   Banca Intesa

   -- Long-Term Foreign and Local Currency IDRs: affirmed at
      'BBB-'; Outlook Negative

   -- Short-Term Foreign and Local Currency IDRs: affirmed at

   -- National Long-term Rating: affirmed at 'AAA(rus)'; Outlook

   -- Support Rating: affirmed at '2'

   -- Viability Rating: affirmed at 'b+'

   -- Senior debt long term rating: affirmed at 'BBB-'


   -- Long-Term Foreign and Local Currency IDRs: affirmed at 'BB-
      '; Outlooks Stable

   -- Short-Term Foreign Currency IDR: affirmed at 'B'

   -- Viability Rating: affirmed at 'bb-'

   -- Support Rating: affirmed at '5'

   -- Support Rating Floor: affirmed at 'No Floor'

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

   Peresvet Bank

   -- Long-Term Foreign and Local Currency IDRs: affirmed at
      'B+'; Outlooks Stable

   -- Short-Term Foreign Currnecy IDR: affirmed at 'B'

   -- National Long-Term Rating: affirmed at 'A-(rus)'; Outlook

   -- Viability Rating: affirmed at 'b+'

   -- Support Rating: affirmed at '5'

   -- Support Rating Floor: affirmed at 'No Floor'

   -- Senior unsecured debt: affirmed at 'B+'/'A-(rus)'; Recovery
      Rating 'RR4'

TAMBOV: Fitch Affirms 'BB+' LT Currency Issuer Default Ratings
Fitch Ratings has affirmed Russian Tambov Region's Long-Term
Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB+'
with Stable Outlooks and Short-Term Foreign Currency IDR at 'B'.
The agency has also affirmed the region's National Long-Term
Rating at 'AA(rus)' with a Stable Outlook.

Fitch has also assigned the region's senior unsecured domestic
bonds (ISIN RU000A0JWT75) 'BB+' and 'AA(rus)' ratings.

The affirmation reflects Fitch's unchanged base-case scenario
regarding the region's stable budgetary performance and moderate
direct risk over the medium term.


The 'BB+' rating reflects the region's moderate debt burden with
manageable refinancing risk and satisfactory current balance,
which provides a debt payback ratio in line with the average debt
maturity. The ratings also factor in the weak institutional
framework for Russian sub-nationals and the modest size of Tambov
region's economy, resulting in its material reliance on transfers
from the federal budget.

Fitch forecasts Tambov will record a good operating balance at
about 10% of operating revenue over the medium term supported by
the developing local tax base and stable current transfers from
the federal government. The region's reliance on transfers has
moderately reduced in 2014-2015 due to growing tax revenues,
although they contributed a still material 40% of operating
revenue (2011-2013: 50%). Fitch expects tax revenue growth to
decelerate from a high 21% in 2015 and projects it will be 1%-5%
per year in 2016-2018.

Fitch projects Tambov will record a deficit of about 6% of total
revenue in 2016-2018 (2015: 7.7%) as the region continues to
invest in the local economy and maintains sound capex at above 20%
(2010-2015: average 30%) of total expenditure. Tambov's self-
financing capacity is likely to remain strong, comfortably
covering up to about 75% of capex (2010-2015: average 87%) from
the current balance and capital transfers from the federal
government. The remaining 25% of capex will be financed with a
combination of cash balance and new borrowings that will fuel
modest growth of direct risk over the medium term.

Fitch forecasts Tambov's direct risk to remain moderate, close to
50% of current revenue (2015: 33.7%) in 2016-2018. In 8M16, direct
risk stabilized at about RUB12bn (end-2015: RUB12.2bn) and low-
cost budget loans amounted to about 30% of the outstanding debt.
At end-September, Tambov issued RUB1.6bn seven-year bonds, which
diversified its debt portfolio and moderately reduced its
refinancing risk over the medium term.

Tambov has a smooth debt maturity profile and its refinancing
needs are concentrated in 2017-2018, when 80% of direct risk comes
due. By end-2016, the region needs to repay RUB1.8bn, which was
fully covered by issued bonds and RUB2.3bn cash balance at 1
September 2016. Additional funding may come from RUB2.1bn of
undrawn credit lines.

The region's credit profile remains constrained by the weak
institutional framework for Russian local and regional governments
(LRGs), which has a shorter record of stable development than many
of its international peers. Weak institutions lead to lower
predictability of Russian LRGs' budgetary policies, which are
subject to continuous reallocation of revenue and expenditure
responsibilities within government tiers.

Tambov's economy has been growing, counter to the national one,
supported by a growing agricultural sector and processing
industries. Tambov's administration estimated that GRP has
increased 3.3% yoy in 2015 while Russia's economy contracted by
3.7% (Fitch's estimate). Nevertheless, Tambov's wealth metrics
remain modest and its GRP per capita was 11% below the national
median in 2014.


A continuous budget deficit leading to growth of direct risk above
50% of current revenue, accompanied by high refinancing pressure,
would lead to negative rating action.

An upgrade is unlikely given the pressure on the sovereign's IDRs
(BBB-/Negative). However, direct risk declining towards 20% of
current revenue and an operating margin at above 15% on a
sustained basis accompanied by a Russian economic recovery, could
lead to an upgrade.

URALKALI PJSC: Fitch Affirms 'BB-' Long-Term IDR, Outlook Neg.
Fitch Ratings has revised the Outlook on PJSC Uralkali's
Long-Term Issuer Default Rating (IDR) to Negative from Stable and
affirmed the IDR at 'BB-'. Fitch has also affirmed the foreign
currency senior unsecured rating on Uralkali Finance DAC's notes
at 'BB-'.

The Negative Outlook reflects Uralkali's higher than expected
leverage. This will exceed our previous negative rating guideline
of 4x over 2016-2017 on share buyback-driven accumulated debt and
weak potash pricing environment. Fitch said, "In particular, we
expect Uralkali's funds from operations (FFO) net adjusted
leverage to peak at 4.4x in 2016 before gradual reduction
thereafter. This is based on our expectations of USD0.5bn share
buyback in 2016, zero shareholder distributions in 2017, and flat
potash pricing in 2H16-2017. Share buybacks or other distributions
above those assumed which jeopardise Uralkali's ability to
deleverage towards 4x by 2018 could trigger a downgrade."

The Negative Outlook also reflects Uralkali's reduced headroom
under the financial indebtedness covenants including net debt-to-
EBITDA. Fitch said, "We note Uralkali's significant discretion and
flexibility in capex and shareholder distributions, which mitigate
but do not completely remove this risk. We believe that Uralkali
should be able to renegotiate these covenants if it anticipates a
period of non-compliance, although this cannot be guaranteed."

The 'BB-' rating reflects Uralkali's strong operational profile,
weak financial profile, and a two-notch discount for corporate
governance that we typically apply to Russia-based corporates with
concentrated ownership. The strong operational profile is
underpinned by Uralkali's significant scale as a leading global
potash producer and its sustained global cost leadership that
translates into EBITDA profitability at above 50% through the


Buybacks End in 2016

"We expect Uralkali to finalise buybacks from the free float in
2016, as evidenced by year-to-date 2016 actual level of around
USD0.5 billion (2015: USD3.4 billion) and underpinned by
Uralkali's shrinking free float which fell below 6% in September
2016," Fitch said. Further shareholder distribution risks might
arise from Uralkali's balance sheet-funded share buyback from the
new shareholder Mr. Lobyak, or re-establishing a regular
aggressive dividend policy.

Markets and Buybacks to Drive Performance

Fitch rating case assumes Uralkali will cease share buybacks in
2016 as the free float shrinks. Fitch said, "In 2016-2017, we
conservatively expect potash pricing flat at 2H16 lows of around
USD230/t, capex-to-sales at around 12%-13% at a given price
scenario, and zero dividends." Coupled with moderate rouble
inflation, this translates to gradually shrinking margins and
moderately positive post-buyback free cash flow, and FFO net
leverage exceeding 4.0x.

An earlier or faster than expected market recovery could
favourably impact Uralkali's 2016-2017 leverage. However, this
might be offset by higher than expected shareholder distributions
or long-term expansion investments.

Covenant Headroom Limited

Uralkali's discretion in its expansion capex and shareholder
distributions is not sufficient to completely eliminate the risk
of covenant breaches arising from significant pricing pressure,
rouble revaluation or operational disruptions. This risk is
reflected in the Negative Outlook. Uralkali's leverage proximity
to the 4.0x net debt-to-EBITDA level (which stands close to 4.5x
in terms FFO net adjusted leverage) over the next three years
remains a risk.

Pricing Conservatively Flat

Fertiliser pricing pressure continued into 2016 from 2015. The
potash players' recent progress in signing the supply contracts
with China and India following the 1H16 destocking incorporated
the double-digit pricing pressure observed on potash spot markets
but set a price floor and added confidence to potash markets in
2H16 and 2017. "We conservatively revised our potash pricing
expectations down to the levels of around USD230/t during 2H16-
2018 as currently suspended and newly arriving capacities limit
potential price growth." Fitch said.

Country and Industry Risks

Rating constraints include Uralkali's full exposure to the potash
demand cycle. In Fitch's view, combined with the high contribution
of developing regions to revenues (above 60% in 2014 and 2015,
excluding Russia), this implies higher earnings volatility than
for more diversified peers. These markets present strong growth
potential, but they also tend to exhibit more erratic demand
patterns than mature agricultural regions.

Operational risks are also higher in potash mining than other
fertilisers as water-soluble salt deposits are susceptible to
flooding. Finally, the ratings are constrained by the higher-than-
average legal, business and regulatory risks associated with
Russia (BBB-/Negative/F3).


Fitch's key assumptions within the rating case for Uralkali

   -- Potash pricing further down by 20%-25% in 2016 with no
      recovery over the next two years

   -- Potash sales volumes to bottom at under 11mt in 2016 before
      single-digit growth

   -- RUB/USD to continue gradual strengthening towards 57 in

   -- Capex-to-sales at around 12%-13% over the next two years

   -- Share buybacks around USD0.5bn in 2016 and zero thereafter

   -- Dividend payout ratio of 50% from 2018 onwards


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

   -- Further market pressure or an aggressive financial policy
      resulting in sustained leverage pressure with FFO adjusted
      net leverage expected to be significantly above 4x.

   -- Continued limited headroom under the financial covenants.

   -- Aggressive shareholder actions (e.g. further share
      buybacks) detrimental to the Uralkali's credit profile and
      indicating a weaker corporate governance discount.

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

   -- Revision of the Outlook to Stable

Neutral-to-positive post-share buyback free cash flow resulting in
FFO adjusted net leverage declining towards 4x or below in FY18,
and ensuring sustainably comfortable headroom under the financial


Stable and transparent shareholder structure translating into re-
established predictable financial policies, coupled with market
improvement, resulting in FFO adjusted net leverage sustainably
below 2.5x.


Liquidity Improved on Covenant Amendment

Uralkali's liquidity improved in 1H16 with USD1.2bn short-term
debt sitting against USD1.5bn reported cash and equivalents. This
improvement follows the reclassification of USD1.5bn back to long-
term debt from short-term debt at end-2015 as Uralkali amended the
net debt-to-net worth covenant calculation thereby eliminating FX-
driven covenant breach risk.

YAROSLAVL: Fitch Affirms 'BB' LT Currency Issuer Default Ratings
Fitch Ratings has affirmed the Russian Yaroslavl 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 with Negative Outlook reflects Fitch's unchanged
view regarding the region's weak budgetary performance and our
expectation that the region's direct risk will continue to grow on
the back of a continuing fiscal deficit.


The ratings reflect the region's increasing direct risk, which is
partly mitigated by an increasing proportion of low-cost loans
from the federal budget, and a weakened operating balance, which
has been insufficient for debt interest coverage over the past
three years. Nevertheless, direct risk remains moderate by
international standards and this is further mitigated by the
diversified economy of the region. The ratings also factor in a
weak institutional framework for local and regional governments
(LRGs) in Russia and a weakened macroeconomic environment.

Fitch expects the region to record a low operating margin at 1%-2%
and the current balance will remain negative for 2016, which is
weak compared with national 'BB' peers. Over January-August 2016
the region has accumulated a RUB3.7bn fiscal deficit. Fitch
projects a RUB3.3bn deficit before debt variation at end-2016,
which is equivalent to 6.3% of projected full-year revenue (2015:

Weak budgetary performance reflects continuous growth of operating
spending and sluggish operating revenue growth, despite some
recovery of income taxes. Fitch expects the region's operating
revenue to grow slowly in 2017-18 and not exceeding operating
expenditure growth.

Fitch expects the region's direct risk to reach 67% of current
revenue by end-2016 (2015:62%). "We expect the figure to rise in
2017-2018 to above 70% of current revenue." Fitch said.
Positively, the region's debt structure is shifting towards a
higher proportion of subsidized federal budget loans, which
reduces refinancing pressure. The region has already received
RUB10.3bn of federal budget loans so far in 2016 to replace part
of its market debt. The budget loans bear 0.1% interest rates and
have a three-year maturity. The proportion of budget loans in the
region's debt portfolio increased to 43% as of 1 September 2016,
from 15% at the beginning of 2015.

As with most Russian regions, Yaroslavl is exposed to refinancing
risk in the medium term as it needs to repay 77% of its direct
risk in 2017-2019, while immediate refinancing needs are offset by
stand-by credit lines with banks. The region is an active
participant on the domestic bond market and issued RUB4.5bn seven-
year domestic bonds in May 2016. The region plans to issue RUB5bn
and RUB3bn domestic bonds in 2017 and 2018 respectively, which
will extend its debt repayment profile.

Yaroslavl has a diversified industrialized economy with wealth
metrics in line with the national median. The economy mostly
relies on various sectors of the processing industry, which
provides a broad tax base. Tax accounted for 85% of operating
revenue in 2015. The region is following the national negative
economic trend and according to preliminary data gross regional
product declined 3.2% yoy in 2015, close to the national decline
of 3.7%. Fitch projects the national economy will continue to
contract 0.5% in 2016, before returning to marginal growth in

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 the region's
international peers. The predictability of Russian LRGs' budgetary
policy is hampered by frequent reallocation of revenue and
expenditure responsibilities between government tiers.


Inability to restore the current balance to positive territory or
an increase of direct risk to above 70% of current revenue, driven
by short-term debt increase, could lead to a downgrade.


ALMIRALL SA: S&P Raises CCR to 'BB', Outlook Stable
S&P Global Ratings raised its corporate credit rating on Spain-
based pharmaceutical company Almirall S.A. to 'BB' from 'BB-'.
The outlook is stable.

In addition, S&P raised its issue rating on Almirall's
EUR325 million senior unsecured notes to 'BB' from 'BB-'.  The
recovery rating on the notes remains at '3', indicating S&P's
expectation of meaningful recovery in the event of payment
default, in the higher half of the 50%-70% range.

The upgrade reflects S&P's view that Almirall has made good
progress in the past year in transforming into a specialty pharma
company, and that the pace of acquisitions will likely remain
steady, allowing the company to maintain an adjusted debt to
EBITDA below 3.0x.

S&P continues to view Almirall's business risk profile as
constrained by its lack of critical mass even though it has
significantly improved in the past year, with the implementation
of its strategic shift toward a derma specialty model.

Additionally, Almirall's competitive position is still constrained
by these features, in its view:

   -- A small scale of operations compared with big pharma
      competitors.  S&P believes that Almirall's lack of critical
      mass and modest research and development (R&D) capabilities
      impairs its ability to bring new products to market.

   -- A relatively small product pipeline in its core therapeutic
      focus, dermatology; compensated by limited exposure to
      further patent expirations in the coming years.

   -- High concentration in Spain and the European region, both
      accounting for 29% and 41%, respectively of the group's
      core sales as of half-year 2016; while the operations in
      U.S. are expected to contribute about 27% of the group's
      sales in 2016 pro-forma perimeter changes.  The relative
      importance of the legacy portfolio in the non-derma
      therapeutic areas -- including gastrointestinal and
      respiratory -- with a high skew toward Spain, still
      representing a significant portion of the group's

Nevertheless, S&P considers Almirall has progressed soundly over
the past year in transforming into a specialty pharma, and S&P
views the recent acquisitions and licensing agreements as positive
moves with full benefits yet to be reaped, reinforcing the group's
dermatology platform.

The acquisition of Poli, consolidated as of February 2016,
enriches the company's current derma branded product portfolio and
pipeline, with three promising late-stage products to be
registered if regulatory approvals are cleared between 2019 and
2021.  Furthermore, the recently acquired Thermigen enables a
first step in the aesthetics market, with the group aiming for
this category to contribute 10% to 15% of its core portfolio by

Finally, in Europe, the recent license agreement with Sun Pharma
on the development and commercialization of Tildra dedicated to
psoriasis treatment constitutes another relevant strategic move in
building up its derma pipeline, although the potential launch is
not expected before mid-2018 and the group expects competition to
be strong.

The U.S. derma franchise will also be reinforced with the launch
of Veltin & Altabax, incorporated in its portfolio after an
agreement with GlaxoSmithKline.  This move underpins Almirall's
efforts to diversify its U.S. derma franchise Aqua and offset the
decline in the sales of its major U.S. drug, Acticlate, due to
price-competitive pressure.

"We believe these aggregated initiatives should increase the
contribution of derma to about 50% of the group's sales by the end
of 2016, while bolstering profitability thanks to an improved
product mix and leverage of its European distribution platform.
Nevertheless, we expect the group's R&D expenses will be raised to
support the growing pipeline and sales and marketing costs to be
sustained in the U.S. market given the challenging conditions.
The resilience of the U.S. derma franchise, which we will monitor
closely through price pressure and discounts, will be key in
allowing reported margins to settle sustainably above 27%," S&P

Lastly, the royalties' income stream from AstraZeneca, which is
still in the process of registering three respiratory products,
should support revenues in our forecast horizon, although there is
still some uncertainty as to its timing.

"After incorporating our projections on future acquisitions, we
believe that the group will maintain credit metrics consistent
with an intermediate financial risk category.  In particular, we
estimate debt to EBITDA of less than 3x on a sustainable basis,
factoring into our base-case assumptions EUR700 million of debt in
2016 and an additional spending of EUR500 million in 2017.  We
also take into account the group's strong free cash flow
generation, which reflects its improved profitability and shift
toward the derma specialty model.  We expect the EBITDA margin
expansion to translate into annual free operating cash flow (FOCF)
of above EUR110 million in 2016 and EUR120 million in 2017, with a
revised forecast annual capital expenditure (capex) of about EUR35
million to be more consistent with management's guidance," S&P

Finally, S&P views positively Almirall's conservative family
ownership and the relative headroom of the forecast financial
metrics under S&P's intermediate financial risk profile
assessment.  S&P understands the company's acquisition mode is not
over, but expects the pace will remain steady in its base-case

The stable outlook reflects S&P's view that Almirall will pursue
its transformation into a specialty derma company in the next 12-
18 months, focusing on bolt-on acquisitions to enrich its derma
branded portfolio and increase its presence in the U.S. aesthetics
field.  However, S&P expects the pace and magnitude of these
acquisitions will remain steady and that the company's adjusted
leverage ratio will be contained below 3.0x.

S&P also expects Almirall to successfully integrate its recent
acquisitions and subsequently increase its adjusted EBITDA above
25% in 2016.

However, there is still a certain level of execution risk in the
current transition period, and S&P expects profitability to fully
benefit from the recent deals only once the acquisitions are fully

S&P could take a negative rating action if the company embarked on
large debt-financed acquisitions, above S&P's base-case
expectations, exceeding an S&P Global Ratings' adjusted debt-to-
EBITDA ratio of 3.0x.  Alternatively, the group's credit metrics
could suffer from sudden sales attrition in one of its major
product, although such as risk looks remote at this point and is
not part of S&P's central operating scenario.

S&P could take a positive rating action if the company
successfully transitioned toward EBITDA margins comfortably within
the 25%-30% range.  This could be achieved thanks to an enhanced
operating leverage of its European distribution platform or by the
successful integration of the acquired assets and in-licensing
agreements.  This would also be contingent on the U.S. derma
franchise exhibiting resilience in a competitive operating

NH HOTEL: Fitch Hikes Long-Term Issuer Default Rating to 'B'
Fitch Ratings has upgraded NH Hotel Group SA's (NH) Long-Term
Issuer Default Rating to 'B' from 'B-' and the group's 2019 senior
secured notes to 'BB-'/'RR2' from 'B+'/'RR2'. Fitch has also
assigned a 'BB-'/RR2' rating to the group's new EUR285m 2023
senior secured notes. The Outlook is Stable.

The upgrade reflects both the improved liquidity of NH, due to the
signing of a new EUR250m three-year plus two revolving credit
facility (RCF), and better structural and cyclical operating
performance so far in 2016. The substantial increase in committed
undrawn RCF facilities to EUR250m is a significant credit positive
in terms of liquidity for a hotel group, which remains asset-heavy
by way of hotel ownership.

The reinforcement of the group's liquidity profile is accompanied
by continued strong operational performance so far in 2016 in the
group's main market Spain and, to a lesser extent, Italy and
central Europe, due to strong demand. NH's structural performance
has also been enhanced by the heavy capex program launched between
2014 and 2016 to upgrade and segment the hotel portfolio to
reflect customers' higher requirements, changing demographics and
differing tastes.

Following issuance of the new EUR285 million senior secured notes,
NH also displays a more solid capital structure, with an extended
and smoother debt maturity profile.


Enhanced Liquidity Profile

The new EUR250 million RCF (which Fitch expects should remain
largely undrawn), together with the EUR285 million 2023 senior
secured notes, will significantly enhance the group's liquidity
profile, by repaying the outstanding syndicated credit, club loans
and small outstanding individual mortgages. Fitch said, "We view
this enhanced liquidity as a particularly important source of
financial flexibility for an asset-heavy hotel group that, due to
its still high fixed cost base, remains exposed to performance
volatility in a downturn." The new RCF will also be available to
repay, if necessary, the EUR250 million convertible bonds in 2018
should they not convert at that time.

Operating Performance Improving

"We believe the improving trend in performance delivered since
2014 should be maintained in 2016 as refurbishments should allow
healthy increases in average room rates, albeit slower than in
2015," Fitch said. 1H16 results showed a firm EBITDA margin
increase, as revenue per available room (RevPar) reported
reasonably good growth (up 6.7% yoy). Encouragingly, average room
rate increases (2015 prices up 8.3%) were well above those derived
from increased occupancy (+0.6%), confirming the gradual move away
from lower-margin tour operator bookings.

Refinancing Improves Capital Structure

The new EUR285 million 2023 senior secured notes extend and
simplify the existing debt maturity profile of the group.
Following completion of the refinancing the group has a simple
capital structure comprising essentially senior secured bonds, a
senior secured RCF facility and a convertible bond issue.

Growing Upscale Presence

NH's expansion and development plan includes the development of a
further 23 NH Collection four-star plus hotels, which should
increase the portfolio to a total of around 73 hotels and 11,500
rooms by end-2017 (or a little under 20% of all rooms). Overall NH
Collection hotels deliver an average daily rate (ADR) of around
40% more than a normal NH Hotel. This upscale hotel format
underpins our estimate of EBITDA growth from 2016 to 2018.

Attractive Hotel Portfolio

The majority of NH's properties are in or around major European
and Latin American cities (88% urban, 12% resort hotels). As a
result, the portfolio's valuation (EUR1.8 billion at end-2015) has
proven resilient and become a primary source of liquidity in
recent years. The properties further benefit the group by serving
as collateral for its secured debt.

Evolving Lease Liabilities

During 2015, the group terminated leases and renegotiated lease
contracts, resulting in an annual net saving (before new leases of
EUR5m on new hotels) of around EUR7m p.a. This process should
continue for the rest of 2016, ensuring leases remain stable as a
percentage of revenues at around 20%, but still high compared with
peers (Accor 15% in 2014).

Improving Leverage

Leverage is compatible with levels in the 'B' category and we
expect some deleveraging in 2016. Fitch said, "We expect Fitch FFO
lease-adjusted net leverage to reduce to around 7.1x by end-2016
and 6.6x by end-2017, although this remains high compared with
peers such as Accor and Whitbread." The high capex of recent years
should, however, reduce and allow free cash flow (FCF) to turn
positive in 2017. This is despite the group's plan to start paying
a dividend from 2017 onwards, which will limit the scope for

Gradual Shift to Online

At end-2015, around 50% of bookings were through direct channel
(i.e. own website and mobile applications) against third-party
website bookings. Given that the percentage split between direct
and indirect sales is unlikely to change in the next couple of
years, NH's strategy is to both reinforce direct distribution
channels and optimize indirect channels and focus on the net
average daily rate achieved.

Strong Expected Recoveries

The 'RR2' on NH's existing and new senior secured notes reflects
Fitch's expectations that the valuation of the company -- and the
resulting recovery rate for its creditors -- will be maximized in
a liquidation due to the significant value of the company's owned
and unencumbered real-estate portfolio (estimated at EUR965m at
end-June 2016). Fitch said, "We also assume a fairly conservative
7x multiple in a distressed scenario."

The 2019 and 2023 notes benefit from security over assets and
share pledges, as well as a pari-passu clause with other secured
debt, including the new RCF.

Successful Asset Disposals

NH sold the Sotogrande estate for EUR178m in 2H14, EUR33m of
assets in 2015 and a further EUR76m of assets in 1H16. This has
improved financial flexibility, allowing for further debt
repayment or funding of capex. NH plans to sell a total of EUR140m
of hotel assets in 2016, reflecting NH's continued push to get rid
of underperforming or non-core assets. In this respect NH is
exploring various scenarios for its NH New York Jolly Madison

Moving towards Asset-Light

The asset sales demonstrate NH's move to increase the portion of
the overall portfolio under a "managed" format against the "owned"
structure currently in place. NH has increased the properties
under management to 24% of total portfolio at end-2015 from 13% in
2008. This changed business model combines the benefits of lower
capex needs with a reduction in the volatility of profits.
Nevertheless the group remains an asset-heavy/leased business
model, rather than the asset-light hotel business profile common
in the US.

Improving Cash Generation from Operations

NH's Fitch-estimated unrestricted cash was EUR43m at end-2015 and
EUR51m at end-June 2016, down from EUR165m at end-2014, as a
result of the higher capex and the acquisition of the Colombian
hotel group, Hoteles Royal, for a net EUR66m during 2015.

Capex to reposition the group's hotels and upgrade the IT network
in 2016 will remain high at around 11% of revenues p.a. and will
drain operating cash, but should mostly be covered by asset
disposals. "However, with lower capex requirements in 2017 we
expect FCF to turn positive and, combined with the new RCF, should
materially improve group liquidity and financial flexibility."
Fitch said.

Shareholder Dispute

In June 2016, the board of NH voted off four board representatives
from major shareholder (29.5%) Chinese group HNA, citing possible
conflicts of interest due to HNA's acquisition of competitor
Carlson Hotels Inc. HNA has now sued NH and is asking for the
suspension of these resolutions, but a Spanish Court has recently
ruled that the interim measure requested by HNA has been rejected.
Fitch said, "We have not factored into our rating any risk of
adverse consequences on NH's strategy from this dispute but will
treat it as an event risk."


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

   -- Occupancy and ADR growth lower than management's forecasts,
      particularly from 2017 onwards. We expect 2016 and 2017
      RevPar increases to be more moderate than in 2015.

   -- Under our rating case management efforts to limit cost
      increases will be partly offset by rising salaries as
      economic conditions in Spain and Italy slowly improve.

   -- Operating lease costs from 2016 to 2018 of between EUR299m
      and EUR334m p.a..

   -- Capex is modelled in line with management's projections (ie
      for 2017 and 2018 between EUR80m and EUR90m p.a.),
      reflecting that around 60% of repositioning spending would
      have been completed by end-2015 and around 100% by end-

   -- Hoteles Royal's revenue and operating profits are included
      from 2016 onwards.

   -- Deferred payment for Hoteles Royal hotels of EUR20m in

   -- Dividends to restart at a modest level from 2017.


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

   -- Improved trading performance leading to group EBITDA margin
      (excluding one-off gains) of 12% or above on a sustained

   -- FFO lease-adjusted net leverage below 6.5x on a sustained

   -- EBITDAR/(gross interest +rent) above 1.8x or FFO fixed
      charge cover above 1.5x (2015: 1.2x) on a sustained basis

   -- Sustained positive FCF.

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

   -- Weakening trading performance leading to group EBITDA
      margin (excluding one-off gains) of 10% or below on a
      sustained basis

   -- FFO lease-adjusted net leverage at 7.0x to 7.5x (2015:
      7.7x) on a sustained basis in 2017 and thereafter.

   -- EBITDAR/(gross interest +rent) sustainably below 1.3x or
      FFO fixed charge cover below 1.1x.

   -- Sustained negative FCF.


With the signing of the EUR250m RCF NH has significantly enhanced
its liquidity profile, allowing this asset-heavy group some
reasonable operational and financial flexibility. The new RCF is
expected to be undrawn at closing and will provide a healthy
liquidity buffer. The capital structure will be simplified further
to comprise the new EUR285m 2023 bond, with the repayment of
smaller club deals, individual mortgages and other small amount


UKRAINE: Deposit Fund to Sell Assets of 40 Insolvent Banks
Ukrainian News Agency reports that the Deposit Guarantee Fund was
planning to sell assets of 40 insolvent commercial banks estimated
at UAH4.02 billion on September 26-30.

According to Ukrainian News, the Fund is planning to raise over
UAH3.587 billion from selling receivables on loans and UAH392.34
million from selling fixed assets of commercial banks undergoing

The Deposit Guarantee Fund sold assets of 29 insolvent commercial
banks undergoing liquidation for UAH 143.69 million on
September 19-23, Ukrainian News relates.

U N I T E D   K I N G D O M

COVPRESS: Goes Into Administration, 800 Jobs at Risk
Morning Star reports that a Midlands car parts manufacturer
employing 800 workers has gone into administration.

But union Unite said it hopes the jobs will be saved if a buyer is
found for the company, according to Morning Star.

The report notes that Covpress, which was taken over by Chinese
firm Yongtai in 2013, is one of Coventry's largest employers.

The company makes parts for motor manufacturers General Motors,
Honda, JLR, and Renault, the report relates.

Unite regional officer Adrian Ross said: "It is a worrying
development for the 800 employees involved and also, more
generally, for the West Midlands economy, the report relays.

"We understand that the administrators have reassured the
workforce that there will be no redundancies and there is optimism
that a buyer will be found. Order books are full," the report
quoted Mr. Ross as saying.

"Unite will be supporting its members to the maximum during this
period of uncertainty.  We will have a clearer picture of what is
happening, once talks with the company have concluded," Mr. Ross

ELLI INVESTMENTS: Fitch Cuts LT Issuer Default Rating to 'CC'
Fitch Ratings has downgraded Elli Investments Ltd.'s (Elli)
Long-Term Issuer Default Rating (IDR) to 'CC' from 'CCC'. Elli is
a leading UK-based care home provider trading under the following
names: Four Seasons Health Care, The Huntercombe Group and

The downgrade reflects uncertainty over the sustainability of
Elli's capital structure in light of structural deterioration in
the business's profitability and cash flow performance, despite an
improving operating performance so far in 2016. As a result, Elli
is required to supplement internal cash generation with non-core
asset disposals to support liquidity, offering limited visibility
on liquidity beyond December 2016 as the company approaches
refinancing from 2017. Elli's parent company has entered into
negotiations with its lenders with the aim of establishing a
sustainable capital structure, which also drives today's


Operational Challenges, Stabilizing Performance

Elli's business model is challenged by constraints affecting
profitability and cash flow generation. This is due to pressures
on its cost base associated with an increase in the national
living wage and shortage of nurses in the UK, leading to a
reliance on agency workers.

While in addition to the significant increase in funded nursing
care, the 'social care' levy introduced by the UK treasury to
increase funding for care has been adopted by the majority of
local authorities and has led to a moderate increase in fee rates
during 2016, all these measures have so far been insufficient to
fully restore profitability.

Against this backdrop, Elli has increased its focus on a clear
segmentation of its care homes across the three brands, disposed
of under-performing assets, increased the focus on the quality of
care, as well as actively managing staffing and costs. As a
result, the group's embargo rate is currently the lowest since
2014 and reliance on agency workers has been managed down, while
occupancy rates have been steadily increasing.

Unsustainable Capital Structure

"We believe that the decline in Elli's profitability is
structural, leading also to impaired operational cash flow, and in
turn an unsustainable capital structure based on current debt
levels. We estimate Elli's EBITDAR margin at 14% in 2016, compared
with 20% in 2013. As a result, Fitch calculates funds from
operations (FFO)-adjusted net leverage to remain at just below 10x
for 2016, and FFO fixed charge cover at less than 1.0x." Fitch

Without cash generation from asset disposals, operational cash
generation remains insufficient to cover the annual interest
payments of GBP55 million, leading to limited liquidity visibility
post 2016.

Lender Negotiations Key

Fitch would expect a restructuring of the group's capital
structure, as currently discussed with its lenders, as well as
improving liquidity and debt maturity profiles, and debt service
coverage as prerequisite for a positive rating action.

Recovery Prospects

In its recovery analysis, Fitch has adopted the liquidation value
approach as the resultant enterprise value is higher than the
going concern enterprise value, underpinned by the group's
freehold and long-leasehold properties. Fitch believes that a 35%
discount on the assets' current market value provided by an
independent valuer in April 2016 is deemed fair in a distress

Recovery expectation for the 'CCC+' senior secured loan is still
high at 100%, yielding a Recovery Rating of 'RR1'. Recovery
expectations on the senior secured notes and the senior unsecured
notes have respectively remained unchanged at 85%/'RR2 and


Fitch's expectations are based on the agency's internally
produced, conservative rating case forecasts. They do not
represent the forecasts of rated issuers individually or in
aggregate. Fitch's key assumptions within the rating case for 2016

   -- EBITDA of GBP50 million

   -- Capex at GBP48 million

   -- Disposals of uneconomic care homes for GBP42 million

   -- Exceptional cash flows amounting to GBP15 million


Negative: Future developments that could, individually or
collectively, lead to negative rating actions include:

   -- Announcement of a default or distressed debt exchange

Positive: Positive rating action is contingent on a restructuring
of the group's capital structure, leading to improving liquidity
and maturity profiles, and debt service coverage ratios.


Fitch expects Elli to rely on additional liquidity by end-2016 to
avoid a liquidity shortfall, with permitted property disposals
being the most obvious source. At end-June 2016, the group's cash
balance was GBP38 million. The group currently has no other
available or committed liquidity buffers.


Elli Investments Limited

   -- Long-Term IDR: downgraded to 'CC' from 'CCC'

   -- Senior unsecured notes: downgraded to 'C'/RR6/0% from

Elli Finance (UK) plc

   -- Super senior term loan: downgraded to 'CCC+'/'RR1'/100%
      from 'B'/'RR1'/100%

   -- Senior secured notes: downgraded to 'CCC'/'RR2'/85% from
      'B-'/'RR2' /85%

EQUITY RELEASE NO. 5: Fitch Cuts Class C Notes Rating to 'BB+sf'
Fitch Ratings has taken the following rating actions on Equity
Release Funding No. 5 Plc (ERF5):

   -- Class A (ISIN XS0225883387): downgraded to 'AA-sf' from
      'AAAsf'; off Rating Watch Evolving (RWE); Outlook Stable

   -- Class B (ISIN XS0225883973): affirmed at 'Asf'; off RWE;
      Outlook Stable

   -- Class C (ISIN XS0225884278): downgraded to 'BB+sf' from
      'BBBsf'; off RWE; Outlook Stable

The transaction is a securitization of UK equity release mortgages
originated by Norwich Union Equity Release Limited.

The ratings above does not address the payment of any step-up
amounts due on the notes.


Criteria and Model Update

The rating actions reflect an update to the models used and
revised criteria applied to ERF5.

In order to reflect the product-specific features of equity
release Fitch has supplemented its EMEA RMBS Rating Criteria and
Criteria Addendum: UK Residential Mortgage Assumptions with
bespoke assumptions. The key assumptions underpinning the asset
cash flows include the borrowers' mortality and morbidity (long-
term care) rates (instead of foreclosure frequency rates),
voluntary prepayment rates, property price stresses and property
price growth.

The loan-by-loan data provided (including loan balance, interest
rate, property valuation, borrower age and gender) has been used
to produce asset cash flows for each payment date. The asset cash
flows are then input into Fitch's proprietary cash flow model to
determine whether the notes can withstand various combinations of
stresses of the key assumptions. The cash flow model has been
customized to reflect the particular features of this transaction

The bespoke assumptions have been applied in the analysis of ERF5
as follows:

Mortality Assumptions: A probability of death is estimated for
each borrower per period, taking into account the borrower age and
gender and based upon mortality tables published by the Institute
and Faculty of Actuaries.

Mortality Improvement: Because the underlying loans accrue
interest, increased life expectancy results in increased loan-to-
value (LTV) ratios at loan maturity (assuming the interest accrual
rate exceeds the house price growth). Therefore Fitch has applied
mortality improvement assumptions to the mortality tables. The
mortality improvement assumption reduces the periodic mortality
rates by a factor ranging from 10% at 'Bsf' to 30% at 'AAAsf'.

Morbidity: The probability of a borrower moving into long-term
care in a given period is assumed to be linked to the mortality
probability. The morbidity factor measured as a percentage of
mortality is 35% and has been derived using ERF5's performance

Redemption Lag: Fitch has assumed a period of 12 months to loan
redemption from death or move to long-term care.

Voluntary Prepayment: A high prepayment rate of 10% at 'Bsf' to
16% at 'AAAsf' per year and a low prepayment rate of 2.5% (in all
scenarios) per year have been assumed.

Property Price Declines: Borrower exits due to death and moving
into long-term care are believed to be much less correlated with
the economic cycle than defaults for regular mortgage borrowers.
At each rating level Fitch has applied 75% of the corresponding
sustainable house price discounts and scenario stress below
sustainable price specified in Figures 10 and 11 of the Criteria
Addendum: UK Residential Mortgage Assumptions.

Quick-Sale Adjustment: A quick-sale adjustment has only been
applied to loans where after application of the house price
stresses the expected LTV at maturity is above 100%. A quick-sale
adjustment of 8.5% has been applied for these properties.

Property Price Growth: Fitch has applied an annual house price
growth assumption of 2% per annum until the expected maturity date
of each loan.

Idiosyncratic Risk: To account for idiosyncratic risks, a 100%
loss is assumed for the largest 10 loans in the pool.

Inflation Swap: 14.5% of the loans in the pool are index-linked to
the limited price indexation (LPI) (i.e. the retail price index
capped at 5%). There is a swap in place with Morgan Stanley
(A/Stable/F1) to hedge the inflation risk whereby the issuer pays
the counterparty the compounded loan coupon plus the LPI and the
counterparty pays the issuer the compounded loan coupon plus a
fixed rate. As the notional amount of the swap is capped, there is
the possibility that some of the loans may be under-hedged under
certain low prepayment scenarios (wherein the actual notional of
index-linked loans exceeds the cap). In its cash flow model Fitch
has applied a 0% inflation rate for any future under-hedged

Interest Deferral

According to 'Criteria for Rating Caps and Limitations in Global
Structured Finance Transactions'(16 June 2016), Fitch will only
apply 'Asf' or 'BBBsf' ratings for bonds that are expected to
incur interest deferrals if certain conditions are met. Interest
on the class C notes is likely to continue being deferred (as it
has been since October 2012) and hence the class C note rating has
been capped at 'BB+sf'.

Criteria Variation

Interest on the class B note was deferred from October 2012 until
October 2015. This was due to a breach of the House Price Index
(HPI) trigger (set at 2% p.a. since closing). Since October 2015
interest payments have been made on time; however, previously
deferred interest will remain deferred.

In a variation to the criteria 'Criteria for Rating Caps and
Limitations in Global Structured Finance Transactions' Fitch has
decided to cap the ratings of the class B note at 'A' as opposed
to speculative grade. This is because Fitch does not expect the
class B house price trigger to be breached and consequently the
class B interest to be deferred for an excessive amount of time.

Resolution of RWE

On June 13, 2016, Fitch placed the ratings of ERF5 on RWE
following the discovery of model inputs and calculations used in
the analysis of the transaction that were potentially inconsistent
with the way the transaction actually operated. The model used was
initially provided by a third party, and was subsequently modified
by Fitch. Fitch also commented that it was reviewing the criteria
and that the resolution of the RWE will take into account the
effects of both the potential inconsistencies and any revisions of
the criteria assumptions.

With reference to the previous model used for analysis in this
transaction, Fitch has not ascertained whether (a) potential input
errors and inconsistencies in the model that were suspected can be
confirmed; or (b) there are other additional errors in the model
that may have otherwise been detected through further review.

Fitch has completed this rating review using its new proprietary
equity release asset and cash flow models to determine whether the
notes can withstand various combinations of stresses of the key
assumptions specified above, resulting in the actions.


Reduced prepayments would delay the maturity of loans leading to
increased LTV ratios at loan maturity. Fitch's analysis revealed
that a constant prepayment rate assumption of 1.5% instead of 2.5%
would imply a downgrade of the class A notes to 'Asf' and class B
notes to 'BBB+sf'. The class C notes will remain at 'BB+sf' due to
the rating cap in place.

House price declines increase the risk that proceeds from the sale
of the property are insufficient to cover the loan balance
including accrued interest. Fitch's analysis revealed that
assuming 100% of the corresponding sustainable house price
discounts and scenario stress below sustainable price specified in
the Criteria Addendum: UK Residential Mortgage Assumptions would
imply a downgrade of the class A notes to 'BBB+sf', the class B
notes to 'BBB-sf'. The class C notes will remain at 'BB+sf due to
the rating cap in place.

Future deferral of class B interest may result in the application
of a lower rating cap to the class B notes.


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 transaction. 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 monitoring.
Fitch did not undertake a review of the information provided about
the underlying asset pool ahead of the transaction's initial
closing. The subsequent performance of the transaction over the
years is consistent with the agency's expectations given the
operating environment and Fitch is therefore satisfied that the
asset pool information relied upon for its initial rating analysis
was adequately reliable.

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.

HBOS PLC: Had to Write Off GBP266MM Loans Sanctioned by Manager
Jane Croft at The Financial Times reports that a London trial has
heard HBOS had to write off nearly GBP266 million of loans
sanctioned by a senior bank manager who was showered with
expensive gifts, cash, luxurious foreign travel and sexual
encounters with escorts.

According to the FT, Lynden Scourfield, the lead director of
HBOS's impaired assets division, formed a "corrupt relationship"
with business consultant David Mills between 2003 and 2007 in
return for "huge rewards" it has been alleged in a trial at
Southwark Crown Court.

Mr. Mills used his firm QCS to take over struggling businesses in
HBOS's impaired assets division, the FT discloses.  The jury has
heard such companies were then lent more money by HBOS and charged
"huge fees" by QCS, the FT relays.

Tom Angus, a senior HBOS manager who started to investigate
Mr. Scourfield's activities in 2006, told the trial on Oct. 1 that
the bank had to write off close to GBP266 million as a result of
the losses incurred and its total risk exposure to the loans was
GBP375 million, the FT relates.  HBOS was rescued by Lloyds
Banking Group in 2008, the FT recounts.

The trial has heard that Mr. Mills provided Mr. Scourfield with
gifts, travel and his own American Express card for personal
spending, the FT discloses.  According to the FT, he also paid for
Mr. Scourfield and his wife to fly business class to Barbados
where they stayed in a villa for a week to celebrate the 40th
birthday of Mr. Mills' wife Alison.

Mr. Mills, 59, denies six counts including four of fraudulent
trading, the FT states.  Mr. Scourfield is not on trial, the FT

HBOS plc is a banking and insurance company in the United
Kingdom, a wholly owned subsidiary of the Lloyds Banking Group
having been taken over in January 2009.  It is the holding
company for Bank of Scotland plc, which operates the Bank of
Scotland and Halifax brands in the UK, as well as HBOS Australia
and HBOS Insurance & Investment Group Limited, the group's
insurance division.  The group became part of Lloyds Banking
Group through a takeover by Lloyds TSB January 19, 2009.

INFINIS PLC: Fitch Affirms 'BB-' Long-Term IDR, Outlook Negative
Fitch Ratings has affirmed Infinis plc's Long-Term IDR at 'BB-',
but lowered the Outlook to Negative from Stable. Fitch has
affirmed the rating of the senior secured notes at 'BB-'.

The company's 'BB-' rating reflects free cash-flow generation
underpinned by the contracted position until 1H18. However, price
volatility lowers visibility longer term and the prospect of a new
shareholder and possible early refinancing may modify the capital
structure. Fitch said, "We expect FFO adjusted net leverage to
breach rating guidelines in the financial year to March 2017
(FY17) and FY18, while the uncertainty from FY19 also implies a
shift in Outlook to Negative from Stable.'


UK Regulation

Around 40% of Infinis' revenues benefit from the renewables
obligation (RO) incentive scheme. The UK government has confirmed
its commitment to grandfathering existing incentive schemes and we
assume the RO will continue to receive the same level of support
until 2027. The bulk of the RO, renewables obligation certificates
(ROC) buy-out are indexed to inflation. The smaller element, ROC
recycle, should increase as long as the UK's renewable obligation
increases at a faster rate than the increase in volume of
renewable electricity generated. Infinis has appealed the
government's decision to discontinue the Climate Change Levy (CCL)
exemption in July 2015. A hearing is due in late autumn 2016.

Power Price Exposure

Around 50% of Infinis' revenues are exposed to wholesale price
risk under the RO scheme, which could lead to price volatility and
have a substantial impact on cash flows and the rating. Weak gas
prices and the prospect of a generation capacity market have meant
further weakness in UK wholesale baseload electricity prices.
Latest forwards indicate GBP42/MWh for FY18 and GBP39 from FY19
compared with GBP42 previously. Although Infinis typically hedges
ahead for six to 12 months, the long-term impact is negative. The
latest contracted position covers more than 50% of 1H18 volumes
sold forward at GBP36/MWh.

Declining Output

Fitch expects landfill gas (LFG) output to show a gradual
continuous decline of 4%-6% per year. However, with a half-life of
around 11 years, output can continue until 2047. While reliance on
a single technology is a weakness, the portfolio is well
diversified by region, with the top 10 sites accounting for around
40% of total capacity of 301MW. Exported generation in the three
months to June 2016 was 405GWh, a fall of 6.9% due to a
combination of the natural decline in landfill gas, drier weather
conditions and outages at Calvert & Poplars sites. This is
comparable with management's forecast for FY17 of -6.5%.

Refinancing Risk

Fitch expects Infinis to refinance the GBP350m bond maturing in
2019 with debt issuance sized at 3.5x EBITDA. There is no partial
redemption facility to pay down debt earlier and reduce
refinancing risk. Repayment will depend on retaining adequate cash
levels as EBITDA is estimated to be lower than previously
estimated, with FY19 of GBP69m against GBP75.5m previously, as a
result of lower wholesale prices, offset by dividend lock-up
covenants, implying a theoretical debt quantum of around GBP240m.
However, refinancing will almost certainly be a decision taken by
the new owners once the sale process is complete.

The sale of wind assets by Infinis Energy Holdings Ltd (IEHL) is
the most likely, but not the only, trigger for repayment of the
GBP20m intercompany loan which Infinis plc provided to its parent
company IEHL.

Sale Process

IEHL is looking to sell its shares in Infinis plc, which would
also allow the repayment of the GBP20m intercompany loan.

Other UK industry players after Infinis plc, with a 40% landfill
market share, include Viridor, Biffa, EDL, CDP, Viridis, Suez-
Sita, Veolia Environnement S.A. (BBB/Stable) and Ener- G. As it is
in natural decline, the long-term appeal to buyers of the LFG
business is grid access, a flexible, valuable asset in a power
market moving away from a centralized dispatching structure
towards distributed energy. Fitch said, 'We assume that the sale
closes early next year. We believe that refinancing of the 2019
bond issue depends on the sale process and will reflect the views
of the new owners. However, there is no mandatory redemption on
change of control if net debt to EBITDA is below 3.5x, otherwise
there is a standard put option at 101."


Fitch's key assumptions within the rating case for Infinis

   -- Power prices reflect contracted volumes and prices as at
      July 2016, with current UK forwards for uncontracted
      volumes beyond Summer 2017 (FY18), GBP42/ MWh for FY18 and
      GBP39/ MWh from FY19. We use Fitch Sovereigns' updated CPI
      forecasts from August 2016 as a basis for RPI FY18-19 used
      to roll forward the ROC component (GBP44.77/MWh in FY17) of
      the total achieved price.

   -- Bond refinance assumed in FY19 at 3.5x EBITDA, implying a
      refinancing quantum of GBP240m (or GBP220m if the GBP20m
      intercompany is not repaid).

   -- No repayment of GBP20m intercompany loan, as this depends
      on the sale of wind or LFG for repayment. However, assuming
      repayment in FY18 would lower estimated FFO adjusted net
      leverage from 4.6x to 4.2x and lower the average for the
      rating horizon from 4.2x to 3.9x.


Positive: The Outlook is Negative and a positive rating action
thus is unlikely, future developments that could nevertheless lead
to positive rating action include:

   -- An increase in wholesale electricity prices or LFG recovery
      above Fitch expectations leading to FFO net adjusted
      leverage sustainably below 3x and FFO interest cover
      sustainably above 4x.

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

   -- Recoverable LFG depletion faster than we currently assume
      or wholesale electricity prices substantially lower than
      the forward curve so that FFO net adjusted leverage is
      sustainably above 4x and FFO interest cover sustainably
      below 2.5x.

   -- Slower deleveraging, based on FFO net adjusted leverage, as
      the refinancing deadlines approaches could also lead to
      negative rating action.


"Based on solid FCF generation, we expect the company's liquidity
position to be healthy," Fitch said. Available liquidity consists
only of cash on the balance sheet in the absence of a revolving
credit facility in the restricted group. As of June 2016, readily
available cash stood at GBP64.4 million, before the latest
dividend payment of GBP4.5 million. There is no uplift from the
IDR for the senior notes, in view of average expected recoveries.
Limited retail hedges and asset concentration are reflected in
greater than average volatility in LFG valuations, although this
is offset by potentially valuable grid access.

RAME ENERGY: Devon Power Steps in to Rescue UK-based Unit
Solar Power Portal reports that renewables developer Devon Power
has stepped in to rescue Beco Energy Solutions after its parent
company Rame entered administration.

Rame, which held renewables interest in both the UK and South
America (particularly Chile), entered administration on August 5
after it failed to raise GBP2.8 million in fundraising, which it
blamed upon the Brexit referendum, according to Solar Power

The report relates that the appointed administrator - Leonard
Curtis Recovery Limited - on Sept. 26 confirmed that it had
disposed of various Chile-based assets and on Sept. 27 Devon Power
revealed that it would be stepping in to acquire a controlling
stake in its UK-based Beco Energy Solutions division.

Devon Power is to acquire 51% of Beco Energy Solutions, while the
remaining 49% has been purchased by the three directors of Beco,
including David Inscoe and Nigel Brunton, the report notes.

Solar Power Portal says the deal will combine the two firms under
the Devon Power banner with a statement claiming that it would
allow both companies to "offer more services" to existing
customers and collaborate on new business development.

Rame Energy is a Plymouth-based renewable energy company.

SOUTHERN PACIFIC 06-A: S&P Affirms B- Rating on Class E Notes
S&P Global Ratings raised to 'BBB+ (sf)' from 'BBB- (sf)' its
credit rating on Southern Pacific Financing 06-A PLC's class C
notes.  At the same time, S&P has affirmed its ratings on the
class A, B, D1, and E notes.

The rating actions follow S&P's credit and cash flow analysis of
the most recent information that it has received for this
transaction (dated June 2016).  S&P's analysis reflects the
application of its U.K. residential mortgage-backed securities
(RMBS) criteria and our current counterparty criteria.

In the December 2012 investor report, the servicer (Acenden Ltd.)
updated how it reports arrears to include amounts outstanding,
delinquencies, and other amounts owed.  The servicer's definition
of other amounts owed includes (among other items), arrears of
fees, charges, costs, ground rent, and insurance.  Delinquencies
include principal and interest arrears on the mortgages, based on
the borrowers' monthly installments.  Amounts outstanding are
principal and interest arrears, after payments by borrowers are
first allocated to other amounts owed.

In this transaction, the servicer first allocates any arrears
payments to other amounts owed, then to interest amounts, and
subsequently to principal.  From a borrowers' perspective, the
servicer first allocates any arrears payments to interest and
principal amounts, and then to other amounts owed.  This
difference in the servicer's allocation of payments for the
transaction and the borrower results in amounts outstanding being
greater than delinquencies.

Amounts outstanding have increased to 7.1% as of Q2 2016 from 4.0%
at S&P's Jan. 27, 2014 review.  In October 2014, the liquidity
facility was restructured.  It is now undrawn at GBP9.3 million
(previously GBP23.1 million) while the drawing and commitment fees
have doubled.

The notes in this transaction are currently amortizing
sequentially because the pro rata 90+ days arrears trigger remains
breached.  As the amounts outstanding continue to increase, S&P
considers that the transaction will likely continue paying
principal sequentially.  S&P has incorporated this assumption in
its cash flow analysis.  Available credit enhancement has
continued to increase.  This is a result of the reserve fund not
amortizing as well as sequential note amortization.

S&P has decreased its weighted-average foreclosure frequency
(WAFF) assumptions.  This is primarily due to an increase in
seasoning and lower arrears.  S&P has increased its weighted-
average loss severity (WALS) assumptions because S&P expects
potential losses to be higher, given that the servicer first
allocates any arrears payments to other amounts owed.

Rating        WAFF       WALS
level          (%)        (%)
AAA          39.28      59.71
AA           33.72      50.01
A            28.48      37.38
BBB          24.03      30.30
BB           19.22      25.19
B            17.06      22.30

The credit enhancement increase has offset the pool's increased
credit risk, in S&P's view.  As a result, S&P's analysis indicates
that the class C notes can withstand the stresses that S&P applies
at a higher rating than that currently assigned.  S&P has
therefore raised to 'BBB+ (sf)' from 'BBB- (sf)' its rating on the
class C notes.

S&P has affirmed its ratings on the class A, B, D1, and E notes as
it considers the ratings to be commensurate with S&P's current
rating stresses.

S&P's credit stability analysis indicates that the maximum
projected deterioration that it would expect at each rating level
over one- and three-year periods, under moderate stress
conditions, are in line with S&P's credit stability criteria.

This transaction is backed by nonconforming U.K. residential
mortgages originated by Southern Pacific Mortgage Ltd.


Class              Rating
            To                From

Southern Pacific Financing 06-A PLC
GBP423.36 Million Mortgage-Backed Floating-Rate Notes Plus An
Overissuance of Mortgage-Backed Floating-Rate Notes

Rating Raised

C           BBB+ (sf)         BBB- (sf)

Ratings Affirmed

A           A- (sf)
B           A- (sf)
D1          B (sf)
E           B- (sf)

TATA STEEL UK: Fitch Maintains Watch Evolving on 'BB' IDR
Fitch Ratings has maintained the Rating Watch Evolving on the 'BB'
Long-Term Issuer Default Rating (IDR) of Tata Steel Limited (TSL)
and 'B' Long-Term IDR of Tata Steel UK Holdings Limited (TSUKH).

The steel producers' ratings were placed on Rating Watch Evolving
on April 1, 2016, after TSL's announced on March 29, 2016, that it
is exploring options for portfolio restructuring in Europe,
including the potential divestment of its UK operations. TSL
managed to sell a key loss-making asset in May 2016, but the final
structure of the group and its debt remains unclear and will
affect TSL's ratings.


Uncertainty for European Operations: TSL announced the completion
of the sale of its unprofitable Long Products Europe business
centered in Scunthorpe, UK, on 31 May 2016. However, uncertainty
remains around the company's plans to restructure its remaining
key assets in Port Talbot, UK, and IJmuiden, Netherlands, with
issues, including UK pension liabilities, remaining unresolved.
TSL is in discussions with strategic players, including
thyssenkrupp AG (BB+/Stable), to explore the feasibility of a
joint venture for its remaining European business. Fitch said, "We
assume the status quo remains, and hence, a further restructuring
of assets presents a risk to our estimates."

Indian Operations Remain Under Pressure: The profitability of
TSL's Indian operations declined by around 35% yoy to INR7,560 per
tonne (t) in the financial year ending-March 2016 (FY16), due to
weak steel prices and competition from imports. TSL's 1QFY17
EBITDA/t remains significantly less than the FY15 average,
although profitability has improved following an upswing in
realisations after the government imposed protectionist minimum
import prices in February 2016. Domestic demand growth has been
anaemic so far in FY17, with consumption over April to August 2016
increasing at just 1.3% (FY16: 5.9%). Meanwhile, producers,
including TSL, are looking to increase sales volume following
recent capacity expansion.

TSL's profitability could also come under pressure from the sharp
increase in international coking coal prices since August 2016.
There is also uncertainty on how long regulatory protection from
imports will be sustained. The government lowered the number of
products under MIP from 173 to 66 in August 2016 and extended the
duration until 4 October 2016. Anti-dumping duties have been
imposed on the remaining products; however, the duration is six

High Leverage: TSL's FFO-adjusted net leverage jumped to 10.9x in
FY16, from 6.2x in FY15, due to poor profitability. Fitch said,
"We estimate leverage will decline over FY17-FY18, but remain
relatively high at above 5x. Our forecast factors in improved
realisations and better profitability at TSL's overseas operations
post-sale of its Long Products Europe business. However, a decline
in steel prices and a large rise in input costs are risks to our

Greenfield Plant Starts Operations: TSL has started commercial
operations for the first phase of its greenfield plant at
Kalinganagar in Odisha, India, with a capacity of 3 million tonnes
per annum (mtpa). TSL expects to ramp up output gradually and is
targeting volume of 1 mtpa in FY17. Apart from higher sales, the
new plant will improve TSL's product-mix, as it specialises in
producing high-grade flat products. It is also one of India's
leanest steel plants. Capex is likely to moderate from FY17 with
the plant's commencement.

TSL Support for TSUKH: TSUKH has high debt and modest
profitability, leading to a weak standalone credit profile. The
business also faces weak local demand and high costs. However,
TSUKH benefits from strategic ties with its parent, TSL. This
provides its IDR with a two-notch uplift in line with Fitch's
Parent and Subsidiary Linkage methodology.

Tata Group Support for TSL: TSL's ratings benefit from a
one-notch uplift due to potential support from the Tata Group
based on TSL's strategic importance to the group.


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

   -- Sales volume to decline 10% in FY17 due to lower steel
      production in the UK. Thereafter, volume to grow by around
      6% annually as a result of higher production in India.

   -- Average sales realisation to improve 5% in FY17 and by 3%
      each year thereafter.

   -- Consolidated operating EBITDA margin to improve to 10% in
      FY17 then to 14% in FY18 (FY16: 6%).

   -- Average annual capex of around INR70bn from FY17.



The Rating Watch Evolving will be resolved following a review of
TSL's credit profile once Fitch has more clarity around the
portfolio restructuring exercise in Europe. An upgrade is probable
if the proceeds of potential asset sales are used to repay debt,
reducing leverage.

However, if leverage increases due to significant closure costs
for the UK operations, Fitch will downgrade the rating.


The Rating Watch Evolving will be resolved following a review of
TSUKH's credit profile as well as the linkages between TSUKH and
TSL once Fitch has more clarity around the portfolio restructuring
exercise in Europe. An upgrade is probable if Fitch concludes that
linkage is enhanced or if TSUKH's standalone profile improves. A
downgrade is probable if Fitch deems that linkage has weakened.


Fitch has maintained the Rating Watch Evolving for the following


   -- Long-Term Foreign-Currency IDR is 'BB'

   -- Senior unsecured rating is 'BB'

   -- USD500m 4.85% senior unsecured guaranteed notes due 2020
      and USD1bn 5.95% senior

   -- unsecured guaranteed notes due 2024 issued by ABJA
      Investments Co Pte Ltd, a wholly owned subsidiary of TSL,
      is 'BB'


   -- Long-Term Foreign-Currency IDR is 'B'

WILD PHEASANT: Bought Out of Administration for Second Time
Katherine Price at The Caterer reports that Llangollen's Wild
Pheasant hotel has been bought out of administration for the
second time, this time by expanding hotel group Everbright Lodge
off an asking price of GBP2.25 million.

The 46-bedroom hotel first went into administration in 2011 after
Llangollen Hotels, run by recently deceased former hotelier
Stephanie Booth, accumulated substantial debts, The Caterer
recounts.  It was bought for GBP2.1 million out of administration
by O&S Hotels in 2012, however went back into administration in
August due to "health and safety concerns" and all staff were made
redundant, The Caterer discloses.

Ryan Lynn of Christie & Co acted as agent for the sale of the
property, while Bermans provided legal advice to the buyer, The
Caterer relays.

* UK: 193 Financial Services Firms Enter Insolvency
Bridging & Commercial, citing figures released by the Insolvency
Service, reports that 193 financial services firms, excluding
insurance and pension funding, were made insolvent between
April 2015 and March 2016.

Bridging & Commercial relates that the most common cause of
compulsory liquidation was non-surrender to the Insolvency
Service, while failure to deal with tax affairs and a loss of
customers were also significant factors.

Of the 193 firms, only two businesses were monetary
intermediaries, an improvement on the seven that were made
insolvent for the same period the previous year, Bridging &
Commercial discloses.

A further 61 businesses were engaged in holding company

Meanwhile, eight were trusts, funds and other similar financial
entities, Bridging & Commercial says.

Bridging & Commercial relates that the remaining 122 were
unspecified financial services institutions.

In August, research from Direct Line found that unpaid debts had
caused nearly 7,000 businesses to enter liquidation in H1 2016,
according to Bridging & Commercial.

Earlier this month, Bridging & Commercial's sister publication
Development Finance Today revealed that 672 construction firms
were found to have become insolvent during the first quarter of
2016, Bridging & Commercial reports.


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
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re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.

The TCR Europe subscription rate is US$775 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for members
of the same firm for the term of the initial subscription or
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                 * * * End of Transmission * * *