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        T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

          Wednesday, October 26, 2016, Vol. 17, No. 212


                            Headlines


B E L A R U S

BELARUSBANK JSC: S&P Affirms 'B-/C' Counterparty Credit Ratings


C Y P R U S

CYPRUS: Fitch Hikes Long Term Issuer Default Ratings to 'BB-'


F R A N C E

DECOMEUBLES PARTNERS: Moody's Affirms B2 CFR, Outlook Stable
HOMEVI: S&P Affirms 'B' Long-Term CCR, Outlook Stable
HOMEVI SAS: Moody's Affirms B1 CFR, Outlook Stable
LION/SENECA: Moody's Puts B3 CFR Under Review for Upgrade
MOBILUX 2: S&P Assigns Preliminary 'B' CCR, Outlook Stable


G E R M A N Y

HP PELZER: S&P Revises Outlook to Stable & Affirms 'B+' CCR
TAKKO FASHION: S&P Affirms 'CCC+' CCR, Outlook Stable


I R E L A N D

CALYPSO CAPITAL II: S&P Raises Rating on Class A Notes to 'BB'
CARLYLE GMS 2013-2: Fitch Hikes Class E Notes Rating to 'B+sf'
CELF LOAN II: Moody's Affirms B3 Rating on Class D Notes
SETANTA SPORTS: High Court Hears Appeal Over Potential Liability
SILENUS LIMITED: Moody's Lowers Rating on Cl. X Notes to B1


I T A L Y

MONTE DEI PASCHI: Survival Plan Includes Job Cuts, Asset Sale
SNAI SPA: Moody's Raises CFR to B2 & Revises Outlook to Stable
SNAI SPA: S&P Raises CCR to 'B', Outlook Stable


L U X E M B O U R G

INTRALOT CAPITAL: Fitch Assigns 'BB-' Rating to EUR250MM Bond
RIVIERA MIDCO: Moody's Assigns Ba2 Corporate Family Rating


N O R W A Y

NORDIC PACKAGING: Moody's Assigns B1 CFR, Outlook Stable
SPAREBANK 1: Fitch Affirms 'BB+' Support Rating Floor


R U S S I A

ERB BANK: Czech Central Bank Withdraws License
FINPROMBANK: Declared Bankrupt by Moscow Court, Owes RUR39.48BB
KEMEROVO REGION: Fitch Affirms 'BB-' LT Issuer Default Ratings
KHAKASSIA: Fitch Affirms 'BB-' Long Term Issuer Default Ratings
KOKS JSC: Moody's Confirms B3 CFR, Outlook Negative

MARI EL: Fitch Affirms 'BB' Long Term Issuer Default Ratings
PERESVET JSCB: S&P Lowers Counterparty Credit Ratings to 'D/D'
RUSSIA: Fitch Takes Rating Actions on Cos. Over Sovereign Outlook
RUSSIA: Fitch Takes Rating Actions on 26 Financial Institutions
RUSSIA: Fitch Revises Three PSEs' Outlook to Stable

SINEK: Fitch Affirms 'BB+' LT Currency Issuer Default Ratings
SOVCOMBANK: Fitch Hikes LT Issuer Default Ratings to 'BB-'
UDMURTIA: Fitch Affirms 'BB-' Long Term Issuer Default Ratings


S P A I N

ABENGOA SA: Nears Debt Restructuring Deal with Creditors
CODERE SA: Moody's Raises CFR to B2, Outlook Stable
FERROVIAL SA: Projects Lack Transparency, UNITE HERE Report Shows


U N I T E D   K I N G D O M

ENTERPRISE INNS: S&P Affirms 'B' CCR & Rates Proposed Bonds 'BB-'


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B E L A R U S
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BELARUSBANK JSC: S&P Affirms 'B-/C' Counterparty Credit Ratings
---------------------------------------------------------------
Standard & Poor's Ratings Services said that it has affirmed its
'B-/C' long- and short-term counterparty credit ratings on JSC
Savings Bank Belarusbank.  The outlook is stable.

The affirmation reflects S&P's view that Belarusbank can
withstand the deterioration of the market environment and that it
demonstrates better performance than peers', due to its market-
leading business position and ongoing support from the Belarusian
government.

S&P has changed its assessment of Belarusbank's capital and
earnings to weak from moderate because increased credit costs are
weighing on the bank's profitability and capitalization.
However, this is neutral to our assessment of the bank's stand-
alone credit profile (SACP), since S&P's Banking Industry Country
Risk Assessment places Belarus' banking sector in group '10',
among the riskiest banking sectors.

As a result, Belarusbank's SACP remains at 'b'.  S&P's long-term
rating on the bank remains at 'B-' because it is capped by S&P's
sovereign rating on Belarus.  The bank's state ownership makes it
strongly dependent on the Belarusian government's fiscal
position, which is currently vulnerable.  Also, the bank operates
exclusively in Belarus and remains highly exposed to country
risk.

The government's capital injection in the nominal amount of
BYR10 trillion (about $597 million) in August 2015 increased
Belarusbank's capital by BYR1.2 trillion under International
Financial Reporting Standards.  However, it was lower than S&P
expected and didn't provide a sufficient capital cushion for the
bank to withstand additional credit losses, in S&P's view.
Belarusbank's credit costs rose to 1.2% in 2015 from 0.44% as of
year-end 2014.  S&P expects this ratio to increase further to
2.0%-2.5% in 2016, in line with the gradual deterioration of
asset quality observed in the Belarusian banking system since
2015. However, Belarusbank's credit costs are likely to be lower
than the sector average because the majority of its loan
portfolio comprises the financing of state-sponsored development
programs or state-directed lending to large government-owned
producers.  The higher credit costs will weigh markedly on the
bank's profitability, and we project that our risk-adjusted
capital (RAC) ratio for the bank will fall below 5% as a result,
leading to S&P's view of capital and earnings as weak.

S&P still regards Belarusbank's risk position as adequate, taking
into account the government guarantees provided for most of the
corporate loan book.  In addition, the quality of the loan
portfolio has been supported by the transfer of some
nonperforming loans (NPLs) to the Development Bank of the
Republic of Belarus. S&P expects Belarusbank's NPLs will increase
to 4.5%-5% in 2016 but remain lower than the projected 6% average
for the banking sector.

In S&P's view, Belarusbank's funding remains above average and
its liquidity adequate.  Belarusbank remains the leading retail
bank in Belarus, with a 47% market share in retail deposits and
72% in retail loans.  It has a stable and well-diversified
funding base, with retail funds representing 45% of liabilities,
and sufficient liquid assets on the balance sheet.

S&P's view of Belarusbank as a government-related entity (GRE) is
unchanged.  S&P continues to believe that the bank plays a very
important role for the Belarusian government, being among the key
financial players implementing government development programs
and providing funding to strategically important economic
sectors.  At the same time, S&P notes that large contingent
liabilities continue to affect the Belarusian government's
capacity to provide extraordinary support to GREs.  Therefore,
S&P regards the bank's link with the government as limited.  As a
result, the likelihood of Belarusbank receiving extraordinary
support from the government remains moderately high, in S&P's
view.

The stable outlook reflects S&P's view that, despite the
difficult market conditions, Belarusbank can continue generating
positive net income and preserve its current capitalization over
the next 12 months, thanks to its dominant market position,
strategic importance to Belarus' economy, and regular government
support.

S&P would downgrade Belarusbank if S&P was to downgrade Belarus
or if it believed that Belarusbank meets the definition of a
'CCC+' or lower rated entity in accordance with S&P's criteria
and rating definitions, which is not the case currently.

Although not part of S&P's base case for the next 12 months, it
could lower its ratings on Belarusbank if the loan portfolio's
quality deteriorated more than S&P currently expects, pushing up
credit costs further and reducing S&P's RAC ratio forecast below
3%, and S&P believed that the government would not be able or
willing to provide support to the bank.

If S&P raised its long-term sovereign credit rating on Belarus,
other factors remaining unchanged, S&P could consider a positive
rating action on Belarusbank.


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C Y P R U S
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CYPRUS: Fitch Hikes Long Term Issuer Default Ratings to 'BB-'
-------------------------------------------------------------
Fitch Ratings has upgraded Cyprus's Long-term foreign and local
currency Issue Default Ratings (IDRs) by one notch to 'BB-' from
'B+'. The issue ratings on Cyprus's senior unsecured foreign and
local-currency bonds have also been upgraded to 'BB-' from 'B+'.
The Outlooks on the long-term IDRs are Positive. The Country
Ceiling has been upgraded to 'BBB-' from 'BB+' and the short-term
foreign and local currency IDRs have been affirmed at 'B'.

KEY RATING DRIVERS

The upgrade of Cyprus's IDRs reflects the following key rating
drivers and their relative weights:

Medium

Cyprus is continuing to make strong progress in its adjustment
following the 2013 banking crisis. Its exit from the EU and IMF
programme in March took place in a context of outperformance of
fiscal and economic programme targets, success at lifting capital
controls, and steps taken to restructure the banking sector.

The economic recovery, now into its second year, is supporting
employment, bank asset quality adjustment, and public finances.
Fitch is projecting GDP growth of 2.9% in 2016 (from 1.9%
projected a year earlier). A strong 1H16 outturn was supported by
private consumption and investment, and reflected broad based
growth across industries, most notably in tourism. Unemployment
reached 12.1% in 2Q16, from 14.9% in 2015. For 2017-2018, GDP
growth of around 2.5% will benefit from an expected increase in
foreign direct investment. Downside risks to the outlook stem
from banking sector deleveraging and the weak external
environment.

The banking sector is gradually strengthening, evident in the
pick-up in deposits and stable capitalisation. Deleveraging is
ongoing, with overall sector assets down to 3.7x GDP in June 2016
from almost 6x in 2009. The Bank of Cyprus (placed into
resolution in 2013 and recapitalised partly through a bail-in of
depositors) has reduced its reliance on emergency liquidity
assistance, to EUR1.5bn by August 2016 from over EUR11bn in April
2013. The property sector remains illiquid but prices seem to be
stabilising at around 30% below their 2008 peak.

Strengthened supervision, management and regulations are helping
to slowly reduce the exceptionally large stock of non-performing
exposures (NPEs) at 48% of total loans. The new foreclosure
framework is in the initial phases of implementation. The stock
of NPEs has declined slightly to EUR25bn as of August 2016 from
EUR28.4bn a year earlier. The volume of new restructurings is
also increasing, albeit from a low level. In April 2016, Fitch
upgraded the IDRs of Bank of Cyprus (48% share of gross lending)
to 'B-' from 'CCC' and Hellenic Bank to 'B' from 'B-', with
stable outlooks for the two banks.

A strong track record of fiscal policy management provides
confidence that authorities will remain committed to government
debt reduction in line with fiscal targets. The budget is close
to balance, although the 2017 budget includes tax relief measures
that will widen the deficit, based on government projections, to
0.6% of GDP in 2017 from 0.3% in 2016 (vs. modest surpluses
previously projected). Fitch projects government debt to decline
to just over 100% of GDP by 2018 (still more than twice the
projected 'BB' peer median) from a peak of 108.9% in 2015.

The financing position and outlook are favourable. Debt financing
operations have contributed to the government's cash position,
expected by authorities at end 2016 to exceed financing needs
until 2017. Cyprus's first post-programme market issuance in July
(representing the fourth issuance since entering the bailout
programme in 2013) was priced at the lowest coupon rate achieved
by Cyprus for a euro benchmark bond. The seven-year 3.75% EUR1bn
bond was realised without support from the European Central
Bank's bond-buying scheme.

Cyprus's 'BB-' IDRs also reflect the following key rating
drivers:

Banks remain fundamentally weak and pose an ongoing risk to
economic stability. Despite a fall in the stock of NPEs, the
ratio of NPEs to total loans stood at 48% in August 2016, still
the highest of all Fitch-rated sovereigns and up from 45% at end-
2015. Excluding overseas branches and subsidiaries, the ratio is
even higher, at 57%. With provisioning coverage of NPEs at 38.5%,
unreserved problem loans, represented by gross NPEs minus system-
wide reserves, stood at EUR15.4bn (87% of GDP) from EUR16.8bn
(97% of GDP) at end 2015.

Net external debt (NXD) is exceptionally high at 139% of GDP at
end-2015 compared with the 'BB' range median of 16%, reflecting a
highly indebted private as well as public sector. The NXD figure
has been revised up by over 70 percentage points of GDP following
the shift of external statistics compilation to the BPM6
framework in June 2014, owing to the inclusion of capital-
intensive ship-owners as Cypriot economic units irrespective of
the location of their activities.

Cyprus is still running a sizeable current account deficit, which
implies that further economic rebalancing may be required over
the medium term. It was 3.7% of GDP in 2015, albeit down from
over 15% in 2008. Fitch has revised up its current account
deficit projections to around 4.3% of GDP for the period of 2016-
2018, reflecting an increase in consumption led imports
registered in 1H16 and expected to continue in the forecast
period.

Negotiations for a deal between Greek and Turkish Cypriots to
reunify the island are underway. The likelihood of success and
the terms of a potential deal remain uncertain. A deal would
benefit both sides in the long term by boosting the economy, but
would entail short-term costs and uncertainties.

Focus on reaching an agreement could divert political capital
away from structural reform implementation, where progress to-
date has been mixed. The improved economy and exit from bailout
programme could reduce the urgency for reform. Additionally,
municipal elections in December, and presidential elections in
2018, could further delay progress in politically sensitive
areas, including public administration reform and the telecom
company privatisation.

Fitch judges the impact of Brexit on Cyprus, which is most
directly exposed to the UK through tourism (39% share of
arrivals), to be moderated by positive developments in the sector
including diversification into other markets and the extension of
the tourism season. Advance bookings from the UK suggest no
slowdown for 2017.

Cyprus's rating is supported by a high level of GDP per capita,
strong governance indicators and a favourable business climate
relative to BB range peers.

SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO)

Fitch's proprietary SRM assigns a score equivalent to a rating of
BBB+ on the Long-term FC IDR scale.

In accordance with its rating criteria, Fitch's sovereign rating
committee decided to adjust the rating indicated by the SRM by
more than the usual maximum range of +/-3 notches because of
Cyprus's experience of financial crisis.

Consequently, the overall adjustment of five notches reflects the
following:

   -- Public Finances: -1 notch, to reflect very high government
      debt levels. The SRM is estimated on the basis of a linear
      approach to government debt/GDP and does not fully capture
      the higher risk at higher debt levels.

   -- External Finances: -2 notches, to reflect Cyprus's
      vulnerability to external shocks as a small open economy,
      its high net external debt relative to peers (not captured
      in the model), and the fact that benefits of euro reserve
      currency (included in the model) as part of the Eurozone
      were not fully passed on to Cyprus as evident in its loss
      of market access during the crisis.

   -- Structural Features: -2 notches, to reflect the risks posed
      by the large and weak banking sector on public finances (as
      a potential contingent liability), the economic recovery,
      and macro stability.

Fitch's SRM is the agency's proprietary multiple regression
rating model that employs 18 variables based on three year
centred 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.


RATING SENSITIVITIES

Future developments that may, individually or collectively, lead
to an upgrade include:

   -- Marked improvement in overall asset quality of the banking
      sector

   -- Further track record of economic recovery and reduction in
      private sector indebtedness

   -- Decline in the government debt to GDP ratio

   -- Narrowing of the current account deficit and reduction in
      external indebtedness

   -- A sustained track record of capital market access at
      affordable rates

The Outlook is Positive. Consequently, Fitch does not currently
anticipate developments with a high likelihood of leading to a
downgrade. However, future developments that may, individually or
collectively, lead to a negative rating action include:

   -- Failure to improve asset quality in the banking sector

   -- Deterioration of budget balances or materialisation of
      contingent liabilities resulting in a stalling in the
      decline in government debt to GDP

   -- A return to recession or deflation

   -- A loss of capital market access.

KEY ASSUMPTIONS

In its debt sensitivity analysis, Fitch assumes a primary surplus
averaging 2% of GDP, trend real GDP growth averaging 2%, an
average effective interest rate of 3.4% and GDP deflator
inflation of 1.2%. On the basis of these assumptions, the debt-
to-GDP ratio would have peaked at almost 109% in 2015, and will
edge down slowly to around 90% by 2025.

Gross debt-reducing operations such as future privatisations are
not considered in the Fitch debt dynamics. Our projections also
do not include the impact on growth of potential future gas
reserves off the southern shores of Cyprus, the benefits from
which are several years into the future, although now less
speculative.


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F R A N C E
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DECOMEUBLES PARTNERS: Moody's Affirms B2 CFR, Outlook Stable
------------------------------------------------------------
Moody's Investors Service has affirmed the B2 corporate family
rating and B2-PD probability of default rating of Decomeubles
Partners SAS, a holding company owning 100% of French furniture
retailer BUT SAS.  At the same time, the agency has assigned a B3
(LGD 4) rating to the proposed EUR380 million worth of senior
secured notes due 2024 to be issued by Mobilux Finance SAS.  The
outlook on all ratings is stable.

Mobilux Finance SAS is a new holding company established in
connection with the proposed acquisition of French furniture
retailer BUT SAS by an investment consortium.  Mobilux Finance
SAS will be fully owned by Mobilux 2 SAS, which is the top entity
of the new restricted group.  Upon the successful closing of the
bond transaction and the change of control of BUT, Moody's
expects to move the CFR from Decomeubles Partners SAS to Mobilux
2 SAS. Moody's will also withdraw the B3 instrument rating
assigned to BUT SAS' existing senior secured notes when these are
redeemed.

The rating action follows the announcement on June 29, 2016, that
BUT's shareholders -- Colony Capital, Goldman Sachs European
Special Situations Group and OpCapita -- have entered into
exclusive negotiation with an investment consortium for the
disposal of BUT, based on a binding and irrevocable offer.  The
consortium comprises private equity firm Clayton, Dubilier & Rice
(CD&R) and WM Holding, an investment company associated with the
XXXLutz group, an Austrian furniture retailer.

The proceeds from the proposed issuance will be used to (1) repay
existing notes previously issued by BUT SAS, (2) partly pay the
equity value and current net debt of the company, and (3) pay
related refinancing fees and expenses.

                         RATINGS RATIONALE

   --B2 CFR--

Decomeubles Partners SAS' ("BUT" or "the company") B2 CFR
reflects (1) its extensive store network, (2) its good brand
recognition, (3) growing market share in the fragmented French
home equipment market, and (4) good free cash flow generation
compared to peers. Moody's positively notes that the transaction
is occurring at a time when the company has delivered a solid
trading performance, with net revenues up 13.9% in the fiscal
year 2016 (ending June 30, 2016) and EBITDA (as adjusted by the
company) up 30% during the same period, mainly reflecting organic
growth, network expansion and recovery of the French furniture
market.

BUT has continuously increased its share of the market in the
past two years, mostly on the back of store openings and positive
like-for-like growth.  BUT continued to display positive like-
for-like sales growth for the eighth consecutive quarter in the
final quarter of its last financial year (ended 30 June 2016),
driven by a further sales recovery in the French furniture
market, stronger in-store execution, additional footfall driven
notably by a greater portion of decorative products and increased
commercial communication.  Moody's expects BUT's profits will
continue to improve over the next 12 to 18 months on the back of
store openings and positive like-for-like growth though at a more
moderate pace than in recent quarters.

Balancing these elements are (1) BUT's modest size and
concentration on the French market, (2) exposure to discretionary
spending and to a structurally competitive furniture segment, (3)
its weak profitability levels compared to peers and (4) its
highly leveraged capital structure.  The proposed transaction
involves an incremental debt of around EUR134 million which will
translate into a pro-forma leverage (defined as gross
debt/EBITDA) of around 5.5x (as adjusted by Moody's) on the basis
of the 2016 results (ended June 30, 2016,) and excluding the
integration of Yvrai's stores.  Nevertheless, the rating also
incorporates BUT's modest deleveraging prospects, as illustrated
by Moody's expectations that leverage will trend towards 5.0x in
the next 12 to 18 months, reflecting the contribution from Yvrai
as well as further moderate profitability improvement.  For its
calculations of leverage, the rating agency considers the
shareholder loan issued between Mobilux 2 SAS and Mobilux 1 SAS
to meet the criteria for full equity credit as set by the rating
agency's methodology published in March 2015.

Pro forma for the proposed transaction, BUT's liquidity profile
is adequate.  The proposed refinancing will leave the company
with a modest opening cash balance of around EUR31 million.
However BUT has also access to a covenanted EUR100 million
revolving credit facility ("RCF", maturing in 2022, unrated)
fully available at closing of the transaction.  This mitigates
the company's large working capital requirements, due to the
seasonality of BUT's operations, notably in the run up to
Christmas sales and promotional periods.

Moody's expects the company will maintain a positive free cash
flow generation going forward, as seen in recent quarters, thanks
to further moderate EBITDA growth and continued efforts to lower
working capital requirements (but not to the same extent as in
the last financial year).  However, capex spending are expected
to further increase on the back of continued store refurbishments
and store network expansion in areas where the company is under-
represented.

   --B3 RATING ON SENIOR SECURED NOTES/B2-PD PDR--

The B3 rating (LGD4) assigned to the company's proposed senior
secured notes due 2024 reflects their position behind a committed
EUR100 million super senior revolving credit facility (RCF) and a
significant amount of trade payables, which both rank ahead of
the senior secured notes in the debt waterfall.  The proposed
notes and the super senior RCF will ultimately benefit from a
similar maintenance guarantor package, including upstream
guarantees from guarantor subsidiaries representing approximately
88% of BUT's consolidated EBITDA.  Both instruments will also be
secured, on a first-priority basis, by certain share pledges,
intercompany receivables and bank accounts of BUT International
S.A.S.  However, the notes will be contractually subordinated to
the super senior RCF with respect to the collateral enforcement
proceeds. Moreover, Moody's cautions that there are significant
limitations on the enforcement of the guarantees and collateral
under Luxembourg and French laws.

The PDR of B2-PD reflects the use of a 50% family recovery
assumption, consistent with a capital structure including a mix
of bond and bank debt.  The capital structure has limited
covenants overall with the lenders relying only on incurrence
covenants contained in the senior secured notes indentures as
well as one maintenance covenant defined as net leverage, with
ample headroom at the time of issuance of the bond.  This
covenant will only be tested if outstanding borrowings under the
super senior RCF are equal to or greater than 35% of the overall
commitment.

                 RATIONALE FOR THE STABLE OUTLOOK

The stable outlook reflects Moody's expectation that BUT's
operating profit will continue to improve supported by (1)
positive like-for-like growth helped by a recovery in the French
furniture market, (2) further market share gains on the back of
network expansion, (3) successful execution of the commercial
strategy and (4) ongoing focus on cost efficiency in particular
in the areas of procurement.

                WHAT COULD CHANGE THE RATING UP/DOWN

Moody's would consider upgrading BUT's rating if the company (1)
demonstrates its ability to sustainably enhance its
profitability, (2) while maintaining its market shares, (3)
sustains its positive free cash flow generation and (4)
demonstrates a balanced financial policy between creditors and
shareholders. Quantitatively, stronger credit metrics, such as a
Moody's-adjusted (gross) debt/EBITDA ratio well below 4.5x and a
Moody's-adjusted EBIT/interest expense comfortably above 1.75x
could trigger an upgrade.

Conversely, the rating could be downgraded if (1) BUT's free cash
flow generation was negative for a prolonged period of time as a
result of a weakened operating performance or higher-than-
expected capital expenditures; or (2) the company demonstrates a
more shareholder-friendly financial policy.  Quantitatively, a
Moody's-adjusted (gross) debt/EBITDA ratio in excess of 5.5x and
a Moody's-adjusted EBIT/interest expense trending below 1.25x
could trigger a downgrade.  Any weakening of the liquidity
profile would also exert downward pressure on the rating.

                       PRINCIPAL METHODOLOGY

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

Headquartered in France (Emerainville), BUT is one of France's
largest home equipment retailers, with revenues and EBITDA (as
adjusted by the company) of respectively EUR1.4 billion and EUR95
million in the 12 months to June 30, 2016.  BUT's business model
is based on a one-stop shop concept, offering its customers
furniture, electrical/home appliances and home decoration
products.


HOMEVI: S&P Affirms 'B' Long-Term CCR, Outlook Stable
-----------------------------------------------------
S&P Global Ratings affirmed its 'B' long-term corporate credit
rating on HomeVi, the holding company of France-based private
elderly care home operator DomusVi.  The outlook is stable.

In addition, S&P affirmed the 'B' issue rating on DomusVi's
EUR802 million of senior secured notes, issued by HomeVi,
including the proposed tap of EUR322 million.  The recovery
rating on these notes is unchanged at '4', indicating S&P's
expectation of average recovery, in the lower half of the 30%-50%
range.

At the same time, S&P raised to 'BB' from 'BB-' the issue rating
on the super senior revolving credit facility (RCF) maturing in
2021.  The recovery rating on this RCF is now '1+', reflecting
the RCF's seniority in the capital structure.

The rating actions follow DomusVi's agreement to acquire the
largest Spanish nursing home operator SARquavitae (SAR).
Following the acquisition, DomusVi will become a clear market
leader in Spanish market.

DomusVi is financing the transaction with a EUR322 million tap on
the existing senior secured notes due 2021 and by issuing EUR94
million of additional equity.

S&P believes that the transaction will increase the group's
leverage by year-end 2016; however, S&P expects to see the
adjusted debt-to-EBITDA ratio return to 6.5x by year-end 2017 and
to 6x by 2018.  S&P anticipates that this quick turnaround in
adjusted leverage metrics will be driven by improving
profitability, which, in S&P's view, will bolster the group's
future earnings levels.

S&P understands that SAR benefits from well-invested facilities,
however a large portion of SAR's assets is secured on a leasehold
basis.  Due to the high portion of rents in the group servicing
structure, S&P focuses on the fixed-charge cover (FCC) ratio
(adjusted EBITDAR over rents and cash interest), which S&P
estimates to be about 1.3x in its base case.  This reflects,
under S&P's base case, EBITDA of about EUR157 million, rent
expense of EUR160 million, and interest expense of EUR60 million
in 2017. However, if the company delivers its business plan, the
FCC will be 1.5x.

S&P's debt calculation includes about EUR909 million in financial
debt and about EUR550 million in obligations under operating
leases, but excludes the EUR255 million preferred equity
certificates that we view as non-debt-like.  S&P do not deduct
cash on balance sheet from its debt calculation as S&P believes
it will likely be used to support growth.

The financial risk profile benefits from good cash flow
generation, which S&P expects to be above EUR45 million in 2017,
reflecting low working capital requirements and maintenance
capital expenditure (capex) of about 1.5% of revenues, although
S&P assumes nearly EUR40 million of investments in new capacity.
In 2018, capex is likely to return to normal levels and free
operating cash flow is set to improve to about EUR70 million.

In S&P's opinion, the acquisition strengthens HomeVi's business
risk profile because it increases its scale and offers better
revenue diversification both geographically and payer-wise.  SAR
is a clear market leader and is present mainly in high growth
regions such as Madrid, Barcelona, Valencia, and Catalunia.
Furthermore, it benefits from a good split of private and public
payers, enabling it to balance its ability to increase revenues
with the relative predictability and stability of public
contracts.  The SAR acquisition represents an opportunity for
synergies within HomeVi's existing business in Spain (Geriatros),
mainly from procurement, and for growth in private beds.  In
addition, because SAR generates lower margin than Geriatros,
there is the potential for SAR to draw on Geriatros' experience
to improve its underlying margin.

In S&P's view, as a result of the acquisition, HomeVi's reduced
exposure to France decreases its revenue predictability and
stability.  This is because the French nursing home market
benefits from cost-pass-through mechanisms.

From a historical performance perspective, the French and Spanish
elderly care home markets have proven resilient, unlike in the
U.K. where there is severe margin pressure in the public payer
segment.  There has been a slight decrease in the public
concession contract fees in Spain as these are linked to consumer
price index changes, but Geriatros has mitigated the impact by
increasing volumes and fees in private beds.  S&P sees the
Spanish market as highly fragmented and consider that it offers
opportunities for growth, owing to its aging population and long
waiting lists for publicly funded beds.

However, S&P considers the Spanish market to be riskier than the
French market.  The Spanish preference for publicly funded beds
limits incremental rates for private beds.  Also, only a limited
part of the population can fund themselves privately and Spain
lacks the pass-through contracts that are typical in the French
nursing home market.

S&P projects that, in 2017, SAR and Geriatros will account for
about 40% of the combined group's EBITDA of about EUR160 million.
The French division continues to generate the majority of the
group's revenues and profits.  In S&P's view, DomusVi's operating
environment is stable and provides relatively good visibility,
thanks to an aging population and high barriers to entry.
Furthermore, the government's well-defined reimbursement regime,
mainly via pass-through contracts, should continue to mitigate
risk.  The French government covers the majority of dependence
and medical care costs, reducing the effect of potential policy
changes on DomusVi's profitability.

S&P notes that DomusVi's revenue mix benefits from the large
contribution of private revenues.  Private funding mainly covers
the accommodation fee that each nursing home sets for new
residents, and allows operators to defend their margins.  S&P
expects DomusVi's revenues to rise at least in line with the
market, mainly on the back of increasing average daily rates for
accommodation and associated services, given that occupancy is
already near maximum.

DomusVi leases a large portion of its real estate.  HomeVi's
French business is mainly leasehold while Geriatros operates
predominantly free-hold and concession models with no rental
expenses, and SAR leases 29 properties.  The SAR acquisition adds
about EUR20 million of annualized rents to the group's existing
EUR135 million-EUR140 million, further increasing the group's
fixed cost-burden.  S&P views this type of cost structure
negatively because rents represent additional fixed costs.

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

   -- Revenue growth at DomusVi will increase substantially in
      2016 and 2017 following recent acquisitions.  From 2017 S&P
      expects growth rates to outpace GDP, but stay in the low
      single digits, helped by improving occupancy rates, focus
      on private payers and capacity expansion.

   -- Gradual improvement in EBITDA margin as a result of cost
      savings, planned synergies and focus on higher margin
      services.  Maintenance capex of 1%-2% of revenues per year.

   -- No dividends or acquisitions besides add-on transactions,
      which will be financed through capex.

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

   -- Adjusted debt-to-EBITDA of 6.5x in 2017, falling to 6x in
      2018; and

   -- An average fixed-charge coverage ratio of 1.3x over the
      next three years.

The stable outlook reflects S&P's expectation that DomusVi will
successfully integrate SAR into the group, continue to operate in
a stable and predictable operating environment, and maintain its
track record of adjusting its fees and successfully rolling out
new services.

By doing so, S&P believes that DomusVi will be able to improve
its profitability, despite the restricted potential for organic
volume growth in France, as it will benefit from higher growth
rates in Spain.  The outlook also reflects S&P's view that
DomusVi should be able to continue covering its capex and
maintain an adjusted fixed-charge coverage ratio of about 1.3x,
thereby enabling it to comfortably make its interest and rent
payments.

S&P could lower the rating on HomeVi if the combined entity
experienced significantly weaker adjusted EBITDA margins owing to
the competitive environment and an inability to optimize pricing
for its services.  If the company were unable to maintain strong
profitability metrics, S&P could revise down its business risk
assessment, which would lead to a downgrade.

S&P could also consider a downgrade if DomusVi is unable to
generate positive free cash flow of about EUR50 million from
2017, or faces potential liquidity and structural operational
problems. These could include an increasing mismatch between
reimbursement receipts, projected volume growth, and operating
costs, given DomusVi's high fixed-cost base, which could lead to
a sustained deterioration of the adjusted fixed-charge coverage
ratio to below 1.3x.

S&P considers a positive rating action unlikely over the next 12
months because it projects that DomusVi's core debt-protection
metrics are likely to remain commensurate with a highly leveraged
financial risk profile.  This is underpinned by the company's
substantial debt levels in the capital structure and significant
lease obligations required to carry out its core daily
operations. However, S&P could take a positive rating action if
DomusVi improved and maintained its fixed-charge coverage ratio
higher than 2.2x.


HOMEVI SAS: Moody's Affirms B1 CFR, Outlook Stable
--------------------------------------------------
Moody's Investors Service has affirmed the B1 corporate family
rating of HomeVi S.a.S. (DomusVi), a private nursing homes
operator in France and Spain. Concurrently, the rating agency has
affirmed the B1-PD probability of default rating (PDR) and the B2
rating of the EUR480 million senior secured notes due Aug. 15,
2021.  The outlook on all ratings is stable.

The affirmation of DomusVi's ratings reflects these drivers:

   -- High opening leverage of 5.2x, but expected to decrease
      below 5.0x by the end of 2017
   -- Improved geographic diversification and scale based on the
      proposed acquisition

                         RATINGS RATIONALE

Moody's estimates that DomusVi's leverage, as measured by
Moody's-adjusted debt/EBITDA, will be high at 5.2x pro forma for
the recently announced acquisition of SARquavitae Servicios a la
Dependencia, S.L. (SARquavitae), a leading Spanish nursing homes
operator.  DomusVi intends to finance the acquisition by
additional senior secured notes of EUR322 million (nominal value)
and by equity and equity-like instruments of EUR94 million.
Moody's expects that DomusVi's leverage will decrease below 5.0x
by the end of 2017 based on modest organic revenue growth of 3%
and certain cost synergies from the proposed acquisition.

The acquisition of SARquavitae will improve DomusVi's
geographical diversification and scale in terms of revenue and
will therefore enhance its business profile.  Moody's estimates
that DomusVi's increased exposure to the faster growing, less
mature Spanish nursing homes market (pro forma Spain will account
for around 40% of group EBITDA vs. around 20% for the current
group), will improve DomusVi's overall organic revenue growth.
DomusVi will also increase its scale in terms of total revenue to
around EUR1.2 billion from around EUR0.9 billion and it will
become the leading private nursing home operator in Spain with a
market share more than twice as large as its largest competitor
in a highly fragmented private nursing homes market.  The
acquisition of SARquavitae will improve DomusVi's regional
diversification in Spain and will provide increased access to
relatively affluent areas including Greater Madrid and Catalonia.
DomusVi's operations in Spain are currently highly concentrated
in Galicia. SARquavitae is present in all 17 autonomous
communities in Spain.

Moody's expects that DomusVi's liquidity will remain good pro
forma for the proposed acquisition, supported by approximately
EUR34 million of cash (before any premium at which the tap
issuance may be placed), by the EUR90.1 million undrawn super
senior revolving credit facility (RCF), and by free cash flow of
around EUR43 million (for 2017, before debt repayments on
operating subsidiaries' debts).  The RCF has a widely-set net
leverage maintenance covenant, which acts only as a draw-stop and
only when the RCF is drawn by at least 25% (a "springing"
covenant).  DomusVi is responsible for capital expenditures to
maintain leased facilities.  These expenditures typically include
refurbishments and furniture/equipment updates, although the
level of these expenditures is relatively low at around 2.0% of
sales. In terms of working capital requirements, DomusVi may have
negative swings of up to EUR12 million per quarter.  However, on
a year-on-year basis Moody's expects that DomusVi will have a
minimal cash impact from net working capital changes.

The B2 rating of the EUR480 million senior secured notes (to be
increased to EUR802 million following the EUR322 million tap
issuance) one notch below the B1 CFR reflects their structural
subordination to operating companies' liabilities including
significant operating leases (EUR161.2 million of lease payments
pro forma for the acquisition) given the limited guarantor
coverage, combined with their contractual ranking behind the
EUR90 million super senior RCF (unrated) and other liabilities at
operating companies.  The B1-PD probability of default rating
(PDR) in line with the B1 CFR reflects Moody's 50% corporate
family recovery rate assumption.  Moody's notes the equity-like
instruments (convertible bonds), which satisfy Moody's criteria
for equity treatment.  Separately, Moody's notes the EUR45
million payment-in-kind (PIK) notes outside the senior secured
notes restricted group, which are excluded from Moody's debt
calculations because they are not guaranteed by DomusVi and they
do not have creditor claims on the senior secured notes
restricted group's assets.

                  RATIONALE FOR THE STABLE OUTLOOK

The stable rating outlook incorporates Moody's expectation that
DomusVi will decrease leverage below 5.0x by the end of 2017
based on modest organic growth, while maintaining a good
liquidity.  The stable rating outlook does not factor in any
material debt-financed acquisitions, dividends, nor any material
increase in capital expenditures.

                WHAT COULD CHANGE THE RATING UP/DOWN

Positive rating pressure could be if:

  Leverage, as measured by Moody's-adjusted debt/EBITDA, were to
   fall below 4.0x
  And free cash flow generation were to remain positive
  And EBITA/interest expense ratio were to remain above 2.5x

Negative rating pressure could be if:

  Leverage, as measured by Moody's-adjusted debt/EBITDA, were to
   remain above 5.0x for a prolonged period
  Or increasing margin pressure were to result in an
   EBITA/interest expense ratio falling below 1.5x
  Or liquidity were to weaken
  Or financial policy becomes more aggressive with regard to
   debt-financed acquisitions or distributions to shareholders

LIST OF AFFECTED RATINGS

Affirmations:

Issuer: HomeVi S.a.S.
  LT Corporate Family Rating, Affirmed B1
  Probability of Default Rating, Affirmed B1-PD
  Senior Secured Regular Bond/Debenture, Affirmed B2

Outlook Actions:

Issuer: HomeVi S.a.S.
  Outlook, Remains Stable

                       PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.

HomeVi S.a.S. (DomusVi), headquartered in Suresnes, France, is
the third largest operator of private nursing homes in France,
primarily in Greater Paris, Bordeaux, Toulouse, Greater Lyon and
the French Riviera regions.  DomusVi is the leading operator of
nursing homes in Spain (pro forma for the acquisition of
SARquavitae).  The company is majority-owned by private-equity
funds managed and advised by PAI Partners (acquired on July 1,
2014).


LION/SENECA: Moody's Puts B3 CFR Under Review for Upgrade
---------------------------------------------------------
Moody's Investors Service has placed all ratings of Lion/Seneca
France 2 SAS (Afflelou) under review for upgrade, including the
B3 corporate family rating and B3-PD probability of default
rating. Concurrently, Moody's has also placed under review for
upgrade the Caa2 rating on the EUR75 million worth of Senior
Unsecured Notes due 2019 issued by Lion / Seneca France 2 SAS and
the B2 rating on the EUR365 million worth of Senior Secured Notes
due 2019 (together the old Notes) issued by 3AB Optique
Developpement.

"The decision to place the ratings on review for upgrade follows
Afflelou's plans to use proceeds from a potential initial public
offering to reduce its outstanding debt" says Guillaume Leglise,
a Moody's Analyst and lead analyst for Afflelou.  "Under the
proposed terms, a successful IPO will significantly de-leverage
the capital structure as well as materially improve the company's
interest coverage" adds Mr Leglise.

                         RATINGS RATIONALE

Moody's decision to place the ratings under review for upgrade
follows Afflelou's filling of document in preparation for its
Initial Public Offering (IPO) on the regulated market of Euronext
Paris.  As part of the IPO, Afflelou expects to raise gross
proceeds of EUR200 million.  Together with new banking facilities
that the company has put in place, the proceeds from the IPO
would be applied towards the early redemption of the old senior
secured and senior unsecured notes as well as the funding of
transaction fees.

The execution of the IPO as proposed will lead to a material
reduction in Afflelou's net debt and a strengthening of the
company's free cash flow as a result of the reduction in interest
expense.  Afflelou anticipates its net (reported) leverage to
reduce to or less than 3.0x by year-end 2017 (ending July 31,
2017,) -- down from around 5.7x at FY2016 -- should the
transaction be successful.

Moody's expects to conclude the review process at the time the
IPO closes, before the end of the calendar year 2016 subject to
market conditions.  Moody's review will also evaluate the
company's new ownership structure, financial policy (including
dividend policy expected in a range between 35% and 50% of net
income to be paid from 2018) and strategic objectives.  At this
stage, Moody's anticipates that the CFR could potentially be
upgraded by one to two notches if the IPO is executed as
expected.

Moody's considers that the IPO and debt refinancing will result
in a material de-leveraging with pro-forma adjusted debt-to-
EBITDA (as adjusted by Moody's, mainly for operating leases)
decreasing to below 4.5x from around 6.3x prior to the
transaction as of 31 July 2016.  The transaction will also lead
to a significant improvement in interest coverage.  Moody's
expects a significant reduction in interest costs thanks to the
reduction in the aggregate amount of outstanding debt following
the refinancing of the old Notes and by a new EUR270 million term
loan with a significantly lower margin compared with the old
Notes.  Pro-forma for the lower interest costs, Moody's estimates
that EBIT-to-interest (as adjusted by Moody's) will improve
materially to above 4.5x from 1.8x prior to the transaction as of
July 31, 2016.

               WHAT COULD CHANGE THE RATING UP/DOWN

Before placing the ratings on review for upgrade, Moody's had
indicated that positive pressure could arise if (1) Afflelou were
to demonstrate a sustainable improvement in its earnings trend;
(2) its adjusted ratio of debt/EBITDA (as adjusted by Moody's)
were to fall materially below 6.0x on a sustainable basis; and
(3) its adjusted ratio of RCF/net debt (as adjusted by Moody's)
were to approach 15%.

On the other hand, Moody's had indicated that downward pressure
could arise if (1) Afflelou's free cash flow were to turn
negative; or (2) its debt/EBITDA (as adjusted by Moody's) were to
approach 7.0x.  Also any weakening of the liquidity profile would
also exert immediate downward pressure on the rating.

                       PRINCIPAL METHODOLOGY

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

Lion / Seneca France 2 SAS is the ultimate parent holding company
of Alain Afflelou Company.  Headquartered in Paris, France,
Afflelou is the third largest optical retailer in the French
market by total sales volume and number two in Spain by number of
stores/sales.  The company also has smaller operations in nine
other countries, notably Portugal.  The company mainly operates a
franchise model mainly under the commercial names "Alain
Afflelou" and "Optical Discount" and at the end of July 2016, the
company had 1,395 stores, of which 1,207 were franchisees and 188
were directly-owned; 15 of the total were "Claro" stores.  In the
twelve months to July 31, 2016, (FY16), the company's revenues
amounted to approximately EUR345 million (against EUR692 million
of total sales for the whole store network).


MOBILUX 2: S&P Assigns Preliminary 'B' CCR, Outlook Stable
----------------------------------------------------------
S&P Global Ratings said it has assigned its preliminary 'B'
long-term corporate credit rating to Mobilux 2 S.A.S., parent of
France-based furniture and electrical goods retailer, BUT S.A.S.
The outlook is stable.

At the same time, S&P assigned its preliminary 'B' issue rating
to the proposed EUR380 million senior secured notes -- to be
issued by its wholly-owned financing vehicle, Mobilux Finance
S.A.S. -- and S&P's preliminary 'BB-' issue rating to its
proposed EUR100 million super senior revolving credit facility
(RCF), which will be issued out of a wholly-owned borrowing
entity, Mobilux Acquisition S.A.S.

The recovery rating on the proposed EUR380 million senior secured
notes is '4', indicating S&P's expectation of average recovery
prospects in the lower half of the 30%-50% range.  The recovery
rating on the proposed EUR100 million super senior RCF is '1',
indicating S&P's expectation of very high (90%-100%) recovery in
the event of default.

In addition, S&P affirmed its 'B' long-term corporate credit
rating on BUT and S&P's 'B' issue rating on the company's
existing EUR246 million senior secured notes due 2019.  The
recovery rating on the notes is '3', reflecting S&P's expectation
of meaningful recovery prospects in the lower half of the 50%-70%
range.  S&P also affirmed its 'BB' issue rating on BUT's existing
super senior RCF due 2018.  The recovery rating is '1+',
indicating S&P's expectation of full recovery.  S&P expects to
withdraw its current ratings on BUT, including S&P's recovery and
issue ratings on the existing debt, once the refinancing is
complete and the facilities have been repaid.

The preliminary rating is subject to the successful issuance of
the senior notes and the RCF, as well as S&P's review of the
final documentation.  If S&P Global Ratings does not receive the
final documentation within a reasonable time frame, or if the
final documentation departs from the materials S&P has already
reviewed, it reserves the right to withdraw or revise its
ratings.

S&P's rating actions follow BUT's announcement that it plans to
issue EUR380 million of senior secured notes to replace its
current debt structure.  Although S&P expects the S&P Global
Ratings-adjusted debt-to-EBITDA ratio to increase to about 4.5x
for fiscal 2017 (ending June 30, 2017), S&P forecasts BUT's
credit metrics will remain within our expectations for the
current 'B' rating.  The affirmation also reflects S&P's view
that the proposed change of ownership will be neutral from a
credit perspective and that the company's financial policy will
continue to support the current rating over the next few years.

In June 2016, BUT announced the signing of a binding and
irrevocable offer for the sale of 100% of the BUT Group to an
investment consortium comprising investment fund Clayton,
Dubilier & Rice (CD&R) and WM Holding, an investment company
associated with the European furniture retailer XXXLutz Group.
Recently created holding company Mobilux 2 will be used as the
investment vehicle that will acquire BUT.  The transaction is
currently on track for completion and is expected to close later
this year.

Despite WM Holding GmbH being a company related to the XXXLutz
Group, S&P views the incoming ownership consortium as akin to
ownership by a financial sponsor.  This is because of WM
Holding's status as an investment company with no direct
corporate entity linkages to the XXXLutz Group and, in S&P's
view, the transaction is more akin to an investment partnership
between CD&R and WM Holding, rather than BUT becoming an
operational subsidiary of the XXXLutz Group, at this stage.

In the proposed transaction, BUT plans to issue EUR380 million of
senior secured notes out of Mobilux Finance, whereby proceeds
will be used to repay BUT's EUR246 million existing notes, as
well as to partially fund the acquisition of BUT.  A new super
senior RCF of EUR100 million will also be put in place to support
liquidity.

S&P continues to classify BUT's business risk profile as weak,
reflecting the company's subpar profitability and its exposure to
the furniture retail business' vulnerability to disposable income
squeezes and real estate transaction volumes.  Furthermore, the
company operates exclusively in France, a fragmented market where
intense competition exacerbates structural pricing pressures.
BUT's product mix is fairly diverse, but its exposure to the
decoration segment does not offset the negative contribution from
its lower-margin and highly-competitive brown goods (small
appliances) and white goods business segments.

Nonetheless, BUT maintains a sound position in the French
furniture market, with an extensive network comprising over 300
stores in France. Recent management initiatives--consisting of a
flexible pricing policy, cost control, and a focus on logistics--
have enabled the company to restore a more supportive operating
momentum, which has translated into robust like-for-like growth
of 6.6% and improved gross margins of about 80 basis points in
fiscal 2016.

S&P's long-term corporate credit rating on BUT incorporates a
one-notch downward adjustment reflecting the company's relatively
weaker cash conversion, subpar profitability, and weaker
unadjusted EBITDAR interest plus rent coverage compared with that
of peers. It also reflects the ongoing transition and execution
risks, including some level of integration risk from the
additional Yvrai franchises.

S&P's base case assumes:

   -- A slow but gradually growing French economy, with S&P's
      forecast of GDP growth of 1.3% in 2016 and 1.2% in 2017;

   -- Continued execution of the store expansion strategy, which
      will be supported by the acquisition of the Yvrai store
      network;

   -- Positive like-for-like sales, together with store network
      expansion, enabling the company to achieve sales growth in
      the high single digits in 2017 and mid-to-low single digits
      in 2018;

   -- Capital expenditure (capex) of EUR25 million-EUR35 million
      per year; and

   -- Continued cost control supporting the sustainability of
      EBITDA margins at about 11% on an adjusted basis.

Based on these assumptions, and following the expected completion
of the transaction, S&P arrives at these credit measures for 2017
and 2018:

   -- Funds from operations (FFO) to debt of about 15%-20%;

   -- Adjusted debt to EBITDA of about 4.5x in 2017, improving to
      about 4.0x in 2018;

   -- Adjusted EBITDA-to-interest ratio of greater than 3.0x;

   -- Unadjusted EBITDAR cash interest plus rent coverage of
      about 1.5x; and

   -- Free operating cash flow (FOCF) to debt of between 10%-15%.

The stable outlook reflects S&P's view that BUT will derive
incremental earnings from the integration of the Yvrai
franchises, while at the same time continuing to achieve 2%-3%
positive like-for-like growth in its existing portfolio.  S&P
expects this to support a modest level of margin uplift that will
be derived from improved operating leverage and favorable
purchasing conditions. S&P anticipates that this will enable the
company to maintain its adjusted debt-to-EBITDA ratio of about
4.5x and adjusted EBITDA to interest cover of more than 3x.  S&P
also expects the company to generate positive FOCF in the coming
years.

S&P could lower the ratings if management's expansion strategy
and the integration of franchises were to falter, resulting in an
overall underperformance in BUT's store portfolio.  This could be
evidenced by earnings growth below our expectations and weakening
credit metrics that may include adjusted EBITDA to interest
approaching 2x, an inability to sustain positive FOCF, or a
deterioration in the company's liquidity position.

S&P could also consider a negative rating action if the company
were to adopt a more aggressive financial policy that resulted in
materially weaker credit metrics, which could be evidenced by
adjusted debt to EBITDA of materially greater than 5x.

S&P views the potential for an upgrade as limited in the near
term.  S&P could consider a positive rating action if it thinks
that credit metrics have improved in line with S&P's significant
financial risk profile, which could be demonstrated by debt to
EBITDA sustained below 4x, FFO to debt approaching 20%, and
EBITDAR cover approaching 2x.  Such a scenario could occur on the
back of robust earnings growth and strengthening margins,
translating into a track record of sustained improvement in cash
flow generation.  Any upgrade would depend on S&P's assessment of
the sustainability of the company's financial risk profile and
management's commitment to maintaining stronger metrics.


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


HP PELZER: S&P Revises Outlook to Stable & Affirms 'B+' CCR
-----------------------------------------------------------
S&P Global Ratings said that it has revised its outlook on German
auto supplier HP Pelzer Holding GmbH, the 100%-owned subsidiary
of the Italian Adler Plastic group, to stable from negative.

At the same time, S&P affirmed its 'B+' long-term corporate
credit rating on the company.

S&P simultaneously affirmed its 'B+' issue rating on HP Pelzer's
EUR280 million senior secured notes.  The recovery rating is '3',
indicating S&P's expectation of recovery in the lower half of the
50%-70% range in the event of a payment default.

The outlook revision reflects the strengthening of Adler
Plastic's credit metrics to a level S&P sees as commensurate with
the 'B+' rating on HP Pelzer.  At the end of 2015, the company
reported adjusted funds from operations (FFO) to debt of 15.6%
and adjusted debt to EBITDA of 4.2x, thereby exceeding S&P's
previous forecast.

The improvement in credit metrics from a adjusted FFO to debt of
8.5% in 2014 was chiefly supported by the restructuring and
turnaround of some entities outside HP Pelzer's scope, as well as
continued growth and improving profitability at HP Pelzer.  S&P
notes that Adler Plastic is now the full owner of HP Pelzer,
after it acquired the remaining 39% stake from Simest, a
subsidiary of the Cassa Depositi e Prestiti in Italy.

For the full year 2015, Adler Plastic reported EUR107 million of
EBITDA, of which about EUR7 million came from entities other than
HP Pelzer.  This compares with negative EUR10 million reported
for 2014.  These entities' debt totaled about EUR45 million,
compared with EUR88 million a year ago.  S&P notes that Adler
Evo, an auto subsidiary of Adler Plastic, was transferred to HP
Pelzer at the end of 2015.  As a result, about EUR16.6 million of
additional debt was consolidated in HP Pelzer's accounts.  Also,
S&P views HP Pelzer as a core subsidiary of Adler Plastic since
it generates about 80% of its revenues and nearly all its EBITDA.
Following the transfer of Adler Evo to HP Pelzer, S&P calculates
that the company will account for roughly 90% of the group's
revenue.

S&P expects that other entities of the Adler Plastic group will
demonstrate low single-digit growth in the coming years,
benefitting from significant investments completed over the past
two years.  At the same time, S&P expects that capital
expenditure (capex) will reduce to maintenance levels of about
EUR3.5 million.

"As for HP Pelzer, we expect that the company will report about
10% revenue growth in 2016 that will exceed EUR1.2 billion, and
that its reported EBITDA will be close to EUR110 million.  We
note that in the first half of 2016, HP Pelzer reported solid
top-line growth of 8%, chiefly supported by the integration of
Adler EVO, which accounted for EUR68 million of the EUR84 million
revenue increase in Europe.  At the same time, the company has
seen revenue declines in other regions: -1.7% in Asia, -18% in
the North American Free Trade Area, and -9.2% in South America.
Importantly, we note that sales in these regions were negatively
impacted by foreign exchange and timing effects that we expect
will partly reverse in the second half of the year.  For 2017, we
foresee continued top-line growth at about 3% and stabilization
of the reported EBITDA margin at close to 9," S&P said%.

S&P thinks that the ratings on HP Pelzer depend on the broader
Adler Plastic group.  Although HP Pelzer's credit quality
benefits from the payment restrictions defined by the
documentation for its senior secured notes, S&P believes that
this protection is not sufficient to delink the ratings from
those on its parent.

The stable outlook reflects S&P's expectation that over the next
year HP Pelzer will successfully integrate Adler Evo, demonstrate
marginal profitability improvement on increasing volumes and cost
reduction, and sustain adequate liquidity.  S&P also anticipates
that other Adler Plastic's entities will continue to report
higher earnings and manage their liquidity proactively.  S&P
expects that Adler Plastic's adjusted FFO to debt will remain in
the 17%-18% range in 2016-2017.

S&P could upgrade HP Pelzer if the Adler Plastic group posted, on
a sustainable basis, FFO to debt of more than 20%, debt to EBITDA
of less than 4x, and higher-than-expected free operating cash
flow (FOCF).  This would imply that the group's adjusted EBITDA
margin had risen substantially above current levels and the group
had established a track record of double-digit EBITDA margins for
several years.

S&P may downgrade HP Pelzer if the group's adjusted FFO to debt
remained close to 12% or if adjusted FOCF was materially lower
than S&P's expectations.  S&P could also lower the ratings if
entities outside HP Pelzer's scope failed to address their
refinancing needs on a stand-alone basis and strengthen their
liquidity, and if they were to draw on HP Pelzer's cash balances.
Rising leverage at these entities would also weigh on the rating.


TAKKO FASHION: S&P Affirms 'CCC+' CCR, Outlook Stable
-----------------------------------------------------
S&P Global Ratings affirmed its 'CCC+' long-term corporate credit
rating on German apparel retailer Takko Fashion S.a.r.l.  The
outlook is stable.

S&P also affirmed its 'CCC+' issue rating on Takko Luxembourg 2
S.C.A.'s EUR525 million senior secured notes.  The recovery
rating on the notes is '4', indicating S&P's expectation of
average recovery in the higher half of the 30%-50% range in the
event of a payment default.

In the second quarter of the current fiscal year started Feb. 1,
2016, Takko Fashion generated a 4.1% rise in its like-for-like
sales, compared with the same period one year earlier.  Apart
from the first quarter of this fiscal year, the group has
steadily improved like-for-like sales performance over the past
six quarters.

As a result of Takko Fashion's strengthened sales performance,
combined with disciplined operating- and capital-expenditure
management, cash on the balance sheet, plus availability of
amounts under the revolving credit facility (RCF) rose to EUR107
million on July 31, 2016, from EUR80 million on July 31, 2015.
S&P also observes continuing improvement in the company's
liquidity.  In addition, S&P estimates headroom under Takko
Fashion's financial covenants at 20% to 25% over the coming 12
months, leading S&P to confirm its view of its liquidity
assessment as adequate.

Although S&P recognizes Takko Fashion's improved operating
performance in recent quarters, S&P has concerns that the soft
trading environment and inherently high volatility of earnings
typical for value fashion retailers could stall future growth in
earnings and cash flows.  S&P therefore has affirmed its 'CCC+'
rating on Takko Fashion, based on S&P's view that the company has
not yet resolved the long-term sustainability of its capital
structure, exacerbated by the relatively short timeframe for
refinancing of its debt.  For example, the RCF comes due in April
2018, while the rest of the senior secured debt instruments
mature in April 2019.  S&P considers successful refinancing of
the RCF as critical for Takko Fashion's liquidity and the
sustainability of its capital structure.

On the back of its recent earnings growth, Takko Fashion has
materially improved its headroom under the miminum EBITDA
covenant.  EBITDA of EUR125 million over the 12 months to July
31, 2016, enabled covenant headroom of 28%.  Under S&P's base
case, it estimates covenant headroom will stay at about 20% over
the next 12 months.  However, this headroom could shrink
significantly due to the company's highly volatile revenues and
profitability, and increasing level of the tested covenant.

Furthermore, Takko Fashion faces cash interest expenses that
still consume about 50% of its reported EBITDA.  Consequently,
S&P forecasts limited free operating cash flow (FOCF) over the
coming two years, albeit with some improvement in the period.
S&P considers that any unexpected shortfall in cash flows will
need to be covered by either existing cash or availability under
the RCF. These two sources combined amounted to EUR107 million on
July 31, 2016, which S&P regards as low for a company with annual
revenues exceeding EUR1 billion.

S&P's view of Takko Fashion's business risk profile reflects the
company's reliance on discretionary spending from mid- to lower-
income families and its positioning in the price-competitive
value retail clothing market.  In addition, weather conditions
have a strong effect on Takko Fashion's sales, adding to the
group's volatile profitability.  The company is exposed to
changes in fashion trends, leading to a frequent risk of
inventory write-downs.

On the positive side, fashion trends are slightly less important
in the value segment than in higher-price segments of the apparel
industry.  Also, S&P regards competition from online retailing as
less severe in the discount and value segment, as there is
generally less room to optimize costs.

S&P factors in Takko Fashion's private equity ownership and its
weak credit metrics into S&P's assessment of its financial risk.
Both of S&P's core leverage ratios--debt to EBITDA and funds from
operations (FFO) to debt--strongly indicate an assessment in the
highest financial risk category.  S&P estimates that Takko
Fashion's adjusted FFO to debt will average 5% to 6% and its
adjusted debt to EBITDA should reach 7.0x-8.0x.  On a fully S&P
Global Ratings-adjusted basis, EBITDA interest coverage is
approximately 1.7-1.8x, which is consistent with S&P's assessment
of Takko Fashion's financial risk profile.  Likewise, S&P's
forecast of EBITDAR on cash interest plus rent coverage ratio of
1.3x is relatively weak compared with other companies with the
same level of business risk and financial risk profile
assessments.

The stable outlook reflects S&P's view that Takko Fashion will
maintain its market position and grow its sales on a like-for-
like basis.  This, combined with continued strict operating- and
capital-expenditure management, will lead to a company-adjusted
covenant relevant EBITDA of around EUR115 million and to slightly
positive and improving reported FOCF, in our view.

S&P would consider an upgrade if Takko Fashion were to secure in
the coming year the refinancing of its RCF with its lenders,
alongside with continued improvement in its credit metrics.  A
positive rating action would hinge on sustainably growing FOCF,
and S&P Global Ratings' ratio of EBITDAR to cash interest plus
rent cover of about 1.5x on a sustainable basis.  Any upgrade
would also depend on S&P's view that Takko Fashion would
refinance its senior secured debt in an orderly and timely
fashion.

S&P could lower its ratings if Takko Fashion's operating
performance deteriorates, resulting in the company's inability to
refinance its debt maturities, and namely the RCF due in April
2018, at least 12 months in advance.  S&P could also consider a
downgrade if Takko Fashion experiences an unexpected earnings or
cash flow shortfall, resulting in weakening liquidity, including
tightening of headroom under the financial covenants.

Although S&P understands it is not Takko Fashion's current
intention, if it were to buy back its outstanding debt
instruments at below par, this could lead to a negative rating
action. Depending on the conditions, S&P could consider such
transaction as tantamount to a default.


=============
I R E L A N D
=============


CALYPSO CAPITAL II: S&P Raises Rating on Class A Notes to 'BB'
--------------------------------------------------------------
S&P Global Ratings said that it raised its issue credit ratings
on Calypso Capital II DAC's class A principal-at-risk variable
notes to 'BB (sf)' from 'BB-(sf)' and on the class B principal-
at-risk variable notes to 'BB- (sf)' from 'B+ (sf)'.

The rating action follows S&P's review of the reset reports for
the current risk period, the rating on the ceding company, and
the rating on the assets in the collateral account.

The transaction included a variable reset feature that permitted
the probability of attachment to be reset within a certain range.
Pursuant to S&P's criteria, it uses the maximum possible
probability of attachment as the starting point for determining
the nat-cat risk factor.  Because the class A notes are in their
final risk period and the class B notes are entering their final
risk period, the variable reset is no longer applicable and S&P
bases the nat-cat risk factor on the results from the most recent
reset report.

Due to an error, S&P did not raise the rating on the class A
notes during its review cycle last year to account for the
expiration of the variable reset option.  The one-year
probability of attachment was reset to 1.73%, which became
effective on Jan. 1, 2016.  The notes' risk period ends on Dec.
31, 2016, and they are expected to mature on Jan. 9, 2017.

The class B notes are resetting one final time.  Based on the
latest reset report, the updated one-year probability of
attachment for the class B notes will be 2.21%, which will become
effective on Jan. 1, 2017.  The updated interest spread for the
upcoming risk period will equal 3.66%.  The one-year attachment
probability for the current risk period is 2.61%.  The latest
reset report confirms that S&P do not need to use the maximum
possible probability of attachment as the base case for S&P's
analysis.  S&P is therefore able to raise the rating for the
remaining risk period as well.


CARLYLE GMS 2013-2: Fitch Hikes Class E Notes Rating to 'B+sf'
--------------------------------------------------------------
Fitch Ratings has upgraded Carlyle GMS Euro CLO 2013-2 D.A.C.
junior notes, as follows:

   -- EUR179m Class A-1-R: affirmed at 'AAAsf'; Outlook Stable

   -- EUR31.5m Class A-2A-R: affirmed at 'AA+sf'; Outlook Stable

   -- EUR19.9m Class A-2B-R: affirmed at 'AA+sf'; Outlook Stable

   -- EUR19.4m Class B-R: affirmed at 'A+sf'; Outlook Stable

   -- EUR18.8m Class C-R: affirmed at 'BBB+sf'; Outlook Stable

   -- EUR19.9m Class D: upgraded to 'BB+sf' from 'BBsf', Outlook
      Stable

   -- EUR7.8m Class E: upgraded to 'B+sf' from 'B-sf', Outlook
      Stable

Carlyle GMS Euro CLO 2013-2 is a cash flow collateralised loan
obligation managed by CELF Advisors LLP (part of The Carlyle
Group LP).

KEY RATING DRIVERS

The upgrades of the class D and E notes reflect the overall
reduction in the cost of funding of the transaction following the
refinancing of the senior and mezzanines (class A to C) notes on
October 17, 2016. In addition, the transaction has performed well
and credit enhancement has increased for all rated notes since
closing in 2013.

The collateral portfolio continues to see stable performance
since the last rating action on July 1, 2016. The portfolio's
credit quality is broadly unchanged at 'B'/'B-' during the same
period and Fitch-rated 'CCC' assets represent 4.21%.

The collateral principal amount is EUR2.15m above target par. The
transaction continues to pass all of its coverage tests with
ample cushion and all of its concentration limitation and
collateral quality tests. There are currently 94 obligors in the
portfolio and no reported defaults.

The reinvestment period is scheduled to end on the payment in
October 2017. The transaction's weighted average life (WAL) is
4.88 years and the maximum WAL covenant is 5.05 years. The
shorter risk horizon than other CLO transactions means the
transaction is less vulnerable to changes to underlying prices
and economic and asset performance.

RATING SENSITIVITIES

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

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO RULE 17G-10

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

DATA ADEQUACY

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.

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

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

SOURCES OF INFORMATION

The information below was used in the analysis:

   -- Investor report provided by State Street as at 12 September
      2016

   -- Loan-by-loan data provided by State Street as at 12
      September 2016


CELF LOAN II: Moody's Affirms B3 Rating on Class D Notes
--------------------------------------------------------
Moody's Investors Service has taken rating actions on these notes
issued by CELF Loan Partners II plc:

  EUR50 mil. (current outstanding balance of EUR9,937,632) Class
   B-1 Senior Secured Floating Rate Notes due 2021, Affirmed
   Aaa (sf); previously on Feb. 19, 2016, Affirmed Aaa (sf)

  EUR7 mil. (current outstanding balance of EUR1,391,268) Class
   B-2 Senior Secured Fixed Rate Notes due 2021, Affirmed
   Aaa (sf); previously on Feb. 19, 2016, Affirmed Aaa (sf)

  EUR42.5 mil. Class C Senior Secured Deferrable Floating Rate
   Notes due 2021, Upgraded to Aa3 (sf); previously on Feb. 19,
   2016, Upgraded to A2 (sf)

  EUR19.5 mil. Class D Senior Secured Deferrable Floating Rate
   Notes due 2021, Affirmed B3 (sf); previously on Feb. 19, 2016,
   Downgraded to B3 (sf)

CELF Loan Partners II plc, issued in November 2005, is a
collateralised loan obligation (CLO) backed by a portfolio of
mostly high-yield senior secured European loans.  The portfolio
is managed by CELF Advisors LLP.  The transaction's reinvestment
period ended in December 2011.

                         RATINGS RATIONALE

The rating action on the note is primarily a result of the
deleveraging of the Class B notes following amortisation of the
underlying portfolio since the payment date in June 2016.

As a result, the Class B-1 and Class B-2 notes have collectively
paid down approximately EUR22.5 mil. resulting in increases in
over-collateralisation levels.  As of the September 2016 trustee
report, the Class B, C and D overcollateralisation ratios are
reported at 675.80%, 142.23% and 104.41% respectively compared
with 297.43%, 131.79% and 104.97% in June 2016.

The key model inputs Moody's uses in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers.  In its base
case, Moody's analyzed the underlying collateral pool as having
performing par and principal proceeds balance of EUR70.1 million,
a defaulted par of EUR13.1 million, a weighted average default
probability of 22.39% (consistent with a WARF of 3292 over a
weighted average life of 3.96 years), a weighted average recovery
rate upon default of 43.95% for a Aaa liability target rating, a
diversity score of 7 and a weighted average spread of 4.00%.

The default probability derives from the credit quality of the
collateral pool and Moody's expectation of the remaining life of
the collateral pool.  The estimated average recovery rate on
future defaults is based primarily on the seniority of the assets
in the collateral pool.  In some cases, alternative recovery
assumptions may be considered based on the specifics of the
analysis of the CLO transaction.  In each case, historical and
market performance and a collateral manager's latitude to trade
collateral are also relevant factors.  Moody's incorporates these
default and recovery characteristics of the collateral pool into
its cash flow model analysis, subjecting them to stresses as a
function of the target rating of each CLO liability it is
analyzing.

Methodology Underlying the Rating Action:

The principal methodology used in these ratings was "Moody's
Global Approach to Rating Collateralized Loan Obligations"
published in October 2016.

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

In addition to the base-case analysis, Moody's conducted
sensitivity analysis on key parameters for the rated notes, for
which it assumed a default to the largest obligor in the
portfolio (currently rated Caa) with a recovery rate of 15%
(commensurate with the debt's low seniority).  The model
generated outputs that were five notches lower than the base-case
results for class D and one notch lower than the base-case for
class C.  Class B was not significantly impacted.

This transaction is subject to a high level of macroeconomic
uncertainty, which could negatively affect the ratings on the
notes, in light of uncertainty about credit conditions in the
general economy.  CLO notes' performance may also be impacted
either positively or negatively by 1) the manager's investment
strategy and behaviour and 2) divergence in the legal
interpretation of CDO documentation by different transactional
parties due to embedded ambiguities.

Additional uncertainty about performance is due to these:

  1) Portfolio amortization: The main source of uncertainty in
     this transaction is the pace of amortization of the
     underlying portfolio, which can vary significantly depending
     on market conditions and have a significant impact on the
     notes' ratings.  Amortization could accelerate as a
     consequence of high loan prepayment levels or collateral
     sales the collateral manager or be delayed by an increase in
     loan amend-and-extend restructurings.  Fast amortization
     would usually benefit the ratings of the notes beginning
     with the notes having the highest prepayment priority.

  2) Recoveries on defaulted assets: Market value fluctuations in
     trustee-reported defaulted assets and those Moody's assumes
     have defaulted can result in volatility in the deal's over-
     collateralisation levels.  Further, the timing of recoveries
     and the manager's decision whether to work out or sell
     defaulted assets can also result in additional uncertainty.
     Moody's analyzed defaulted recoveries assuming the lower of
     the market price or the recovery rate to account for
     potential volatility in market prices.  Recoveries higher
     than Moody's expectations would have a positive impact on
     the notes' ratings.

  3) Lack of portfolio granularity: The performance of the
     portfolio depends to a large extent on the credit conditions
     of a few large obligors with non-investment-grade ratings,
     especially when they default.  Because of the deal's low
     diversity score and lack of granularity, Moody's
     supplemented its typical Binomial Expansion Technique
     analysis with a simulated default distribution using Moody's
     CDOROM software.

In addition to the quantitative factors that Moody's explicitly
modeled, qualitative factors are part of the rating committee's
considerations.  These qualitative factors include the structural
protections in the transaction, its recent performance given the
market environment, the legal environment, specific documentation
features, the collateral manager's track record and the potential
for selection bias in the portfolio.  All information available
to rating committees, including macroeconomic forecasts, input
from other Moody's analytical groups, market factors, and
judgments regarding the nature and severity of credit stress on
the transactions, can influence the final rating decision.


SETANTA SPORTS: High Court Hears Appeal Over Potential Liability
----------------------------------------------------------------
Mary Carolan at The Irish Times reports that a seven-judge
Supreme Court is hearing the Motor Insurers Bureau of Ireland's
appeal against decisions that it is potentially liable for claims
brought against collapsed insurer Setanta.

Because all motor insurers operating in Ireland must be members
of the MIBI, the decisions by the High Court and Court of Appeal
effectively mean that all insurers entering the Irish market must
undertake an "enormous potential liability", Paul Gallagher SC,
for the MIBI, as cited by The Irish Times, said.  "That cannot be
correct."

Mr. Gallagher said as a result of the court decisions, the MIBI
has been "left captive" and its members obliged to give
guarantees even concerning insurers whom they believe will not
last, The Irish Times notes.

A priority hearing of the appeal was granted by the Supreme Court
due to the implications of last May's decision by the Court of
Appeal rejecting the MIBI's arguments that it should not be held
liable, The Irish Times relates.

The MIBI argues that the State-backed Insurance Compensation Fund
should pick up the Setanta bill, as happened in the cases of PMPA
and Quinn Insurance, The Irish Times states.

The liquidator of Maltese-registered Setanta, which sold
insurance policies exclusively in Ireland before it collapsed in
2014, has determined the cost of claims could be about EUR90
million, according to The Irish Times.  The number of claimants
is estimated at 1,750, The Irish Times says.  Last March the
Court of Appeal upheld a High Court finding that the MIBI, which
has 40 insurers as members, was potentially liable for the cost
of these claims, The Irish Times recounts.

The MIBI is operated under the terms of a 2009 agreement between
the Government and companies underwriting motor insurance in
Ireland to deal with claims related to uninsured drivers, The
Irish Times notes.

The core issue in the appeal is the interpretation of that
agreement, The Irish Times states.

According to The Irish Times, if the court finds the MIBI is
liable, it will consider how that impacts on the power of the
High Court to approve payments out of the Insurance Compensation
Fund if the High Court believes that is the only way of meeting
such claims.

Mr. Gallagher said the MIBI's case was that the wording of the
agreement did not create an obligation on it to indemnify where
an insurer became insolvent, The Irish Times relays.

The appeal continues, The Irish Times discloses.

Setanta Sports -- http://www.setanta.com/-- is an international
sports broadcaster with operations in Great Britain, Ireland,
Luxembourg, USA, Canada and Australia.  It owns and operates
premium sports TV channels that are made available on a
subscription basis to residential and commercial customers
through satellite, cable, digital terrestrial, broadband and
mobile distribution.


SILENUS LIMITED: Moody's Lowers Rating on Cl. X Notes to B1
-----------------------------------------------------------
Moody's Investors Service has downgraded the class X Notes issued
by Silenus (European Loan Conduit No. 25) Limited (ELoC 25).

Moody's rating action is:

  EUR0.05 mil. X Notes, Downgraded to B1 (sf); previously on
   Oct. 13, 2016, Upgraded to Ba3 (sf)

                         RATINGS RATIONALE

The rating downgrade reflects the correction of an input into the
modeling approach of the interest only Class X in this
transaction.

In our last rating action on Oct. 13, 2016, when assessing the
credit quality of the pool by looking at the weighted average
expected loss associated with the notes, the class F and G Notes
were not grossed up by their respective Non-Accruing Interest
balances to reflect the credit losses of these tranches.  The
action reflects the corrected modelling for the Class X Notes.

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

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

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

Due to the losses already incurred on the most junior notes,
coupled with the sequential pay down it is unlikely that the
class X will be upgraded.

Factors or circumstances that could lead to a downgrade of the
ratings include the performance of the underlying collateral
being materially worse than Moody's expected.


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


MONTE DEI PASCHI: Survival Plan Includes Job Cuts, Asset Sale
-------------------------------------------------------------
Rachel Sanderson and Martin Arnold at The Financial Times report
that Italy's Monte dei Paschi di Siena, widely viewed as Europe's
most stressed big bank, announced plans to cut jobs, close
branches and sell assets on Oct. 25 in its latest attempt to
boost profits ahead of a critical EUR5 billion recapitalization
effort.

According to the FT, the world's oldest surviving lender, the
worst failure of Europe's stress tests in July, said it would
slash 2,500 jobs, reduce staff costs by about 10 per cent and
close 500 of its 2,000 branches over the next three years.

The Siena-based lender is also disposing of its payment
processing business and its platform to recover bad debts, the FT
discloses.

Monte Paschi's latest turnround plan, which includes the sales of
about EUR30bn in bad loans, is the first under new chief
executive Marco Morelli, 54, who took over six weeks ago, the FT
notes.  The former Bank of America executive has the tough task
of drumming up new investors for the lender that has racked up
more than EUR15 billion in total losses and asked the market for
EUR8 billion in new equity over the past five years, the FT
states.

Mr. Morelli confirmed the bank would undertake a voluntary debt
to equity swap as the first step of its recapitalization, the FT
relays.  He said this would apply to all institutional and retail
investors who hold its EUR5 billion outstanding of subordinated
debt, according to the FT. Senior bankers expect Monte Paschi
will raise EUR1 billion to EUR2 billion from the swap, the FT
states.

Mr. Morelli, as cited by the FT, said he would start negotiating
with "potential anchor investors" on Oct. 25.  Mr. Morelli and
advisers JPMorgan, want to close the debt-for-equity swap by the
start of December, according to the FT.  The bank ideally wants
to launch a rights issue to raise up to EUR5 billion in new
capital around Dec. 7 or Dec. 8, the FT says.

Mr. Morelli also confirmed he would consider an alternative
recapitalization plan presented by veteran banker Corrado
Passera, which sees the bank undertaking a smaller rights issue
of up to EUR2 billion, the FT notes.

                     About Monte dei Paschi

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


SNAI SPA: Moody's Raises CFR to B2 & Revises Outlook to Stable
--------------------------------------------------------------
Moody's Investors Service has upgraded Italian betting and gaming
company SNAI S.p.A.'s corporate family rating to B2 from B3 and
probability of default rating (PDR) to B2-PD from B3-PD.  The
outlook on all ratings has been revised to stable from negative.

Concurrently, Moody's has assigned a provisional (P)B2 rating to
SNAI's proposed EUR570 million dual tranche senior secured notes
split between fixed and floating rate due 2021 to be issued by
SNAI.  The proceeds from the 2021 notes together with
approximately EUR52 million of balance sheet cash will be used to
refinance the existing senior and subordinated notes and to pay
transaction fees.

"Our decision to upgrade SNAI's rating to B2 reflects
improvements to its liquidity profile as planned refinancing will
extend debt maturities to 2021, robust earnings growth in the
first half of fiscal 2016 and our expectations that this uptrend
will continue into 2018 driven by synergies, as well as a
stabilization of the Italian regulatory environment," says
Donatella Maso, a Moody's Vice President -- Senior Analyst.

The B2 ratings of the outstanding EUR320 million and EUR110
senior secured notes due June 2018 and the Caa2 rating of the
EUR160 million senior subordinated notes due December 2018 remain
unchanged and will be withdrawn upon completion of the proposed
refinancing.

                         RATINGS RATIONALE

   -- UPGRADE OF CFR TO B2

The upgrade largely reflects (1) SNAI's improved liquidity
profile with the proposed refinancing; (2) robust EBITDA growth
(on a pro-forma basis) for the first six month of fiscal year
2016 and Moody's expectation that such trend will be sustained
over the next 12 to 18 months primarily aided by the synergies to
be achieved with the integration of Cogemat; and (3) a more
stable regulatory environment following 2016 budget law.

The proposed transaction will extend the debt maturity to 2021
postponing the refinancing risk by three years and it will
decrease the blended interest rate on the debt reducing future
interest expense by approximately EUR15 million per annum.  The
capital structure also includes an upsized super senior revolving
credit facility of EUR85 million from the existing EUR55 million
revolver, maturing in 2021, which together with approximately
EUR87 million of cash at close are deemed sufficient to cover
near term operational requirements, including the cost to renew
the licences for the betting shops and corners.

SNAI delivered a 18% EBITDA increase in the first half 2016, as
reported by the company and pro forma for Cogemat, despite
softening of the revenues from increased amusement with prize
machines (AWPs) taxes.  Moody's expects that such growth,
primarily driven by positive trends in wagers, particularly
sports betting, and cost synergies, can be sustained over the
next 12 to 18 months as the company will complete (1) the
reduction of the pay-out ratio to 70% across its AWP estate; (2)
the process of integrating Cogemat, and (3) the outsource of SIS
and Finscom's distribution network.  Moody's notes that SNAI
already largely implemented EUR17 million of synergies as part of
the integration process.

As a result of this refinancing transaction and the improved
operating trading, Moody's adjusted leverage is expected to be
around 5x at the end of FY2016 and to gradually decrease
thereafter.

Furthermore, while the company continues to be exposed to the
regulatory risk inherent to the gambling industry, the Italian
regulatory environment seems more stable after the comprehensive
set of provisions included in the 2016 budget law aiming at
reforming the sector.  More recently, the Italian Government made
no reference to gaming when it outlined the main contents of the
2017 budget law.

SNAI's CFR continues to reflect (1) the fact that the company
primarily operates in mature and/or declining segments of the
Italian gambling market which could limit organic growth
perspectives; (2) the lack of geographic diversification exposing
SNAI to a sluggish Italian economy and weak consumer
discretionary spending; (3) its exposure to volatile sports
results as the sports betting businesses (excluding horse races
and virtual events) contributed to c.8% of the wagers and 23% of
the contribution margin in the last twelve months to 30 June
2016; (4) a highly competitive trading environment; and (5) the
risk of not having the licences renewed when due.

Conversely, SNAI's CFR is positively supported by (1) the
company's leading market positions in the Italian betting and
machines segments, which have further strengthened with the
acquisition of Cogemat; (2) its moderately diversified portfolio
of gaming activities protected by non-exclusive multi-year
concessions; and (3) a relatively flexible cost base which partly
mitigate the revenue volatility.

  -- ASSIGNMENT OF (P)B2 RATING TO THE NEW SENIOR SECURED NOTES
     DUE 2021

The issuer of the senior secured notes is SNAI, the top entity
within the restricted group and the reporting entity for the
consolidated group.  The (P)B2 rating on the new notes is aligned
with the CFR, reflecting Moody's assumption of a 50% family
recovery rate, as is customary for capital structures with both
bonds and bank debt.

The notes are not guaranteed but are issued by the company where
the majority of the operating assets sits, after the anticipated
merger with Cogemat.  The notes are secured by (1) a pledge over
50% plus one share of the share capital of SNAI; (2) a pledge
over 100% of the quotas of one of the subsidiaries, Teleippica
S.r.l.; and (3) a pledge over certain intellectual property
rights of the issuer.  The capital structure also includes a
EUR85 million super senior RCF, undrawn at close, which shares
same security, viewed as limited, with the new notes, but ranks
ahead upon enforcement.

                             LIQUIDITY

SNAI's liquidity profile is viewed adequate for its requirements
over the next 12 to 18 months including intra month working
capital swings, maintenance capex and potential small bolt-
acquisitions, restructuring costs associated with the integration
of Cogemat and the renewal of the licences for betting shops and
corners.

Liquidity is underpinned by (1) EUR87 million of cash on balance
sheet pro forma for this refinancing; (2) a EUR85 million super
senior RCF, undrawn at close; and (3) the lack of amortising
debt. The super senior RCF does not have any maintenance
financial covenant.

                    RATIONALE FOR STABLE OUTLOOK

The stable rating outlook reflects Moody's expectation that the
company will continue to deliver moderate growth, improve its
EBITDA margin and gradually reduce the leverage.  The outlook
assumes that the company will be able to maintain and renew its
licences upon maturity and will not embark on any transforming
acquisitions or make debt-funded shareholder distributions.

               WHAT COULD CHANGE THE RATINGS UP/DOWN

Positive pressure on the ratings could materialise if SNAI (1)
improves its profitability, particularly its EBITDA margin; (2)
increases its FCF/debt to exceed 10%; and (3) reduces its
Moody's-adjusted debt/EBITDA ratio well below 4.5x.

Conversely, downward pressure would be exerted on the ratings if
SNAI's liquidity profile and credit metrics weaken as a result of
(1) deterioration of the operating performance; (2) adverse
changes in Italian gaming regulation, or negative outcomes of
outstanding litigations; (3) aggressive changes in financial
policy; and quantitatively; (4) if Moody's-adjusted debt/EBITDA
ratio increases sustainably towards 5.5x.

LIST OF AFFECTED RATINGS

Upgrades:

Issuer: SNAI S.p.A.
  Corporate Family Rating, Upgraded to B2 from B3
  Probability of Default Rating, Upgraded to B2-PD from B3-PD

Assignments:

Issuer: SNAI S.p.A.
  Senior Secured Regular Bond/Debenture, Assigned (P)B2

Outlook Actions:

Issuer: SNAI S.p.A.
  Outlook, Changed To Stable From Negative

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Global Gaming
Industry published in June 2014.

SNAI is a market leader in sports and horse race betting in Italy
and one of the largest authorized concession holders of betting
and gaming entertainment.  SNAI generated revenues of EUR918
million (excluding Barcrest litigation and pro forma for Cogemat)
and EBITDA of EUR125 million in the last twelve month ended
June 30, 2016.  It is listed on the Milan stock exchange, with
about 55.5% of its shares held by Global Games S.p.A., indirectly
and equally controlled by Investindustrial and Palladio
Finanziaria, 15% held by OI Games S.A. and OI Games 2 S.A. and 9%
held by Cogemat's former shareholders.


SNAI SPA: S&P Raises CCR to 'B', Outlook Stable
-----------------------------------------------
S&P Global Ratings said that it raised its long-term corporate
credit rating on SNAI SpA, one of Italy's leading gaming
companies, to 'B' from 'B-'.  The outlook is stable.

At the same time, S&P raised its issue rating on SNAI's senior
secured notes to 'B' from 'B-', and S&P's issue rating on the
company's subordinated notes to 'CCC+' from 'CCC'.

S&P also assigned its 'B' issue and '3' recovery ratings to
SNAI's proposed EUR570 million senior secured notes, reflecting
S&P's expectation of recovery prospects at the higher end of the
50%-70% range.

The upgrade reflects S&P's view that SNAI's operating performance
has materially improved following a weak 2015, with reported
EBITDA in the six months to June 30, 2016 (like-for-like
including Cogemat) rising by 17.5% to EUR68 million as a result
of a recovery in the sports betting segment, a net positive
impact from the 2016 Stability Law, and the reopening of
previously closed stores.  S&P believes that this improvement can
be sustained, supported by the realization of merger synergies,
and assuming no unexpected volatility from adverse sporting
results or new taxation on the gaming sector.

As a result of higher EBITDA due to SNAI's operational recovery
and first full-year consolidation of Cogemat, and a EUR20 million
debt reduction as part of the upcoming refinancing, S&P sees
adjusted debt-to-EBITDA falling below 5x and adjusted EBITDA
interest cover rising above 2x from 2016.  S&P views this as
consistent with a 'B' rating.

S&P continues to assess SNAI's business risk profile as weak,
reflecting SNAI's lack of geographic diversity outside of Italy,
its concentration in the gaming and sports betting segments that
we continue to view as having high regulatory risks, and its
below-average profitability.  Partly offsetting these factors is
SNAI's position as the second-largest authorized concession
holder of gaming and betting products in Italy following its
merger in late 2015 with Cogemat.

"Our assessment of SNAI's financial risk profile as highly
leveraged reflects our opinion that while a number of ratios have
improved to the aggressive category, we see a continued risk of
cash flow volatility that could arise from unexpected sporting
results, taxation on gaming machines, and the expected renewal of
the sports betting concession in 2017 that will erode any free
operating cash flow (FOCF) in that year, assuming it is
successful.  If the concession is unexpectedly not renewed, this
would also have an adverse effect on metrics since a large
portion of consolidated EBITDA from sports betting would
disappear.  This said, we view the likelihood of no renewal as
low," S&P noted.

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

   -- An approximate 44% jump in revenues in 2016 as a result of
      the first full-year consolidation of Cogemat, followed by
      moderate increases of 1%-2% in 2017 and 2018 as a result of
      growth mainly in the gaming machine segment.

   -- Improved EBITDA margins of about 14% in 2016 and 2017 due
      to a more supportive regulatory tax system and turnaround
      in the sports betting segment.

   -- Capital expenditure (capex) of about EUR24 million in 2016
      and about EUR80 million in 2017, which includes about
      EUR60 million for the renewal of sports betting concession
      expected in mid-2017.  S&P assumes a normalization of capex
      to about EUR21 million in 2018.  No dividends to
      shareholders.

   -- S&P also assumes that the proposed refinancing is
      successful, resulting in a reduction of interest costs of
      about EUR10 million a year.

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

   -- Adjusted debt-to-EBITDA of about 4.6x in 2016, about 4.4x
      in 2017, and about 4.0 in 2018.
   -- Adjusted EBITDA interest cover of about 2.8x in 2016 and
      3.4x in 2017 and 2018.
   -- Adjusted FOCF-to-debt of about 8% in 2016, falling to zero
      in 2017 due to the concession payment, and recovering to
      about 13% in 2018.

The stable outlook reflects S&P's expectation that SNAI's
improved operating performance in the first half of 2016 will
continue without unexpected volatility from sporting results or
new taxation, and that the planned refinancing completes in the
near term.  The outlook also assumes that SNAI's betting
concession is renewed in 2017.  S&P sees an adjusted EBITDA
interest cover of clearly and sustainably above 2x as consistent
with the rating.

S&P could lower the rating if SNAI's credit metrics deviated
materially from S&P's base case, such that adjusted debt-to-
EBITDA fell below 2x, or FOCF turned negative, for a sustained
period. This could occur, for example, due to adverse sporting
results, detrimental regulatory developments, or higher-than-
expected concession payments.  S&P could also lower the rating if
the proposed refinancing does not take place in the near term,
resulting in weakened liquidity since the existing senior secured
notes mature in June 2018, or if the concession renewal due in
2017 is not renewed, thereby reducing SNAI's earnings base from
sports betting.

S&P considers an upgrade as unlikely, given the ratio
expectations in S&P's updated base case for the next 12 months.
Any upgrade would require materially stronger metrics than S&P
currently forecasts, over an extended period, and for there to be
no concession risk.


===================
L U X E M B O U R G
===================


INTRALOT CAPITAL: Fitch Assigns 'BB-' Rating to EUR250MM Bond
-------------------------------------------------------------
Fitch Ratings has assigned Intralot Capital Luxembourg S.A's
recently issued EUR250m bond a senior unsecured rating
of 'BB-'/'RR3'.

The bond is rated one notch above Intralot's Long-Term Issuer
Default Rating of 'B+'/Negative. The new bond's terms and
conditions are materially the same as the EUR325m unsecured bond
which was repaid and cancelled in October 2016.

Despite Intralot's improving recent operating performance
suggesting a stabilisation of margin erosion mainly through
operational improvements and, to a lesser extent, from better
trading, the Negative Outlook reflects Intralot's high leverage
(on both a gross and net of cash basis) and the risk of a
slower-than-expected deleveraging path. This is reflected by weak
fixed charge cover and negative free cash flow (FCF) generation,
following significant cash outflows in FY15, a situation that
will likely start to reverse in FY16. In addition, the business
model remains challenged by competition, pressure on margins and
regulation.

"For its IDR to stabilise at 'B+', we would expect management to
deliver on planned asset rebalancing transactions during the
year, with continuation of a deleveraging policy by way of gross
debt reduction, coupled with sustained improvement in the
operating performance. We expect to review the rating and Outlook
at the end of 4Q16 when we assume the disposal of the Peru and
Oceania businesses would be completed or well progressed." Fitch
said.

KEY RATING DRIVERS

Recurring Contracted EBITDA

"We acknowledge that more than 95% of EBITDA is recurring. While
we recognise Intralot's operational improvement during 1H16,
profit margins have been structurally falling in recent years as
the group takes on lower margin licensed operations activities in
response to available opportunities in the market," Fitch said.
Balancing this, in 2015, 50% of EBITDA was derived from contracts
with a duration of four to five years. The remainder is derived
from licenses that do not expire. Due to the high switching costs
from changing supplier, many of these should be renewed although
Fitch believes they could be on lower margins and may require a
renewal fee.

"For the Outlook to stabilise we expect EBIT margins (calculated
on a gross revenue basis) to improve, due to a better margin mix,
following the Gamenet transaction and expected disposals, to 9.5%
by FY18. If achieved, this will be above the minimum threshold of
7% consistent with a 'B+' IDR," Fitch said.

Weak Cash Flows

Cash flow has weakened due to high pay out on minority dividends,
taxes, working capital and bond-buybacks in 2015. The FFO margin
had fallen to 3% at FY15, from around 8% at FY12, which is weak
relative to other sector peers in the 'B' rating category.
"However, in our rating case we expect this to improve to around
5% by FY18. A stabilisation of the Outlook would be contingent on
Intralot's FFO margin trending above 7% driven by improvements in
its organic operating performance, or as a result of changes in
the business mix from the contemplated asset transactions. We
also expect FCF margin to be negative in the mid-single digits at
FY16 then to improve to around 1% by FY18," Fitch said.

Still Weak Credit Metrics

"Fitch expects FFO adjusted gross leverage to be around 6.0x
(around 4.0x net of cash) over the rating horizon, although we
could see an acceleration in deleveraging, and FFO fixed charge
cover trending toward 2.0x by 2017 helped by planned asset
rebalancing." Fitch said. If achieved on a forward-looking basis,
these metrics along with enhanced profitability would remain
compatible with the rating. However, any meaningful delays in
achieving these targets, or if management allocated proceeds to a
different purpose than permanent debt reduction, it will likely
be negative for the ratings.

Management has taken more decisive action towards the weakening
leverage profile, which Fitch views positively. This follows
significant cash outflows in 2015 of around EUR150m primarily
related to increased working capital linked to regulation in
Italy, higher-than-usual minority dividends and other one-off
items, such as suppliers' payment normalisation.

Reputable Gaming Operator and Technology Supplier

Intralot has established itself in the international gaming
sector as a reputable provider of, among other products, systems
to manage lotteries through software platforms and hardware
terminals and in betting, a large algorithm-based sportsbook.
This has enabled it to win important contracts for the supply of
technology and the management of lotteries in the US and Greece
and for sports-betting in Turkey and Germany.

Scope for Growth

The gradual liberalisation of gaming markets, governments'
keenness on finding ways to raise tax proceeds and the increasing
supply of new games, should all provide increasing opportunities
for Intralot. The company should be able to leverage on its
experience and reputation and also benefit from the limited
number of reputable suppliers in the industry, allowing the group
to expand into new geographies, such as Africa.

Limited Linkage with Greece

Intralot generates only 2% of its revenues and less than 5% of
its EBITDA in Greece (CCC). We view Greece's low sovereign rating
as neutral for Intralot's ratings given its contractual
requirement to maintain large portions of its cash outside Greek
banks. In the eventuality of a sovereign default, including
Greece's exit from the euro, the company has contingency plans in
place that they could complete within three months. Intralot's
wide geographic diversification of its business and lack of
meaningful reliance on Greek banks for funding, allows us to
maintain a rating that is currently two notches above Greece's
Country Ceiling of 'B-'.

Above-average Recovery Expectations

The existing and new notes are guaranteed by Intralot S.A.,
Intralot Global Securities B.V., Intralot Global Holdings BV and
certain material subsidiaries. As of June 2016, the issuer and
guarantors that contributed positive EBITDA to the Intralot Group
together represented 32.5% of consolidated EBITDA and the issuer
and the guarantors together represented 66.6% of the group's
consolidated total assets.

"Despite the weak guarantor coverage related to profits, in our
going concern recovery analysis we already deduct minority
dividends from consolidated EBITDA and this is further discounted
to arrive at an estimated post-restructuring EBITDA available to
creditors of around EUR103m. We apply a distressed EV/EBITDA
multiple of 4.5x. In terms of distribution of value, after
consideration of a small amount of capital leases as priority
ranking debt, all other unsecured debt would recover 57% in the
event of default consistent with an 'RR3' and an instrument
rating of 'BB-', one notch above the IDR," Fitch said.

KEY ASSUMPTIONS

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. Our assumptions for Intralot include:

   -- Completion of Gamenet, Peru and Oceania transactions by
      FYE16.

   -- Underlying group revenue increasing by around 1%-2%
      annually from FY17.

   -- EBITDA margins (calculated on a gross margin basis)
      improving towards 14.8% by FY18.

   -- Minority dividends fully paid out and increasing annually
      in line with profits, of around EUR44m in FY16 and EUR47m
      in FY17.

   -- Capex of around EUR80m in FY16, and remaining between 4%
      and 5% as a percentage of sales going forward.

   -- No common dividend payments or other shareholder
      distributions.

   -- Debt reduction of around EUR160m from corrective actions
      including albeit not limited to, asset rebalancing by
      FYE16.

RATING SENSITIVITIES

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

   -- Evidence that new contracts or renewals are occurring at
      materially less favourable conditions for Intralot,
      resulting in continuing weak FFO and EBIT margins of under
      7%, large upfront concession fees or capex outlays (FY15:
      3.3% and 4.1% respectively).

   -- FFO adjusted net leverage sustainably above 4.5x (or FFO
      adjusted gross leverage above 5.5x) (FY15: 4.8x and 7.0x
      respectively).

   -- FFO fixed charge cover below 2.0x (FY15: 1.7x).

   -- Material reduction in liquidity without a commensurate
      reduction in gross leverage.

Future developments that may, individually or collectively, lead
to a revision of the Outlook to Stable include:

   -- Positive profit growth derived from a stronger return on
      capital on existing and future contracts with limited capex
      outlays resulting in FFO/EBIT margins above 7% and enhanced
      FCF generation around break-even.

   -- FFO adjusted net leverage reducing sustainably below 4.5x
      (or FFO adjusted gross leverage below 5.5x) with available
      unrestricted cash deposited predominantly at investment
      grade-rated counterparties.

   -- FFO fixed charge cover above 2.0x on a sustained basis.

LIQUIDITY

In response to the Greek debt crisis and to protect its liquidity
position, Intralot fully drew on its syndicated revolving credit
facility (RCF; EUR120m of EUR200m facility) maturing May 2017.
This has now been replaced by a new syndicated facility maturing
in 2019 (RCF EUR90m, TL EUR 90m and standby RCF EUR40m) following
the successful placement of the EUR250m unsecured notes.

At 1H16, Intralot had EUR213m of cash on balance sheet, and
around EUR55m of undrawn availability under bilateral facilities,
which was sufficient for liquidity purposes with no significant
debt maturity until 2021, when the two bonds (totalling EUR500m)
mature.


RIVIERA MIDCO: Moody's Assigns Ba2 Corporate Family Rating
----------------------------------------------------------
Moody's Investors Service has assigned a definitive Ba2 corporate
family rating and a first-time Ba2-PD probability of default
rating (PDR) to Riviera Midco SA ('Froneri'), a joint-venture
between R&R Ice Cream plc and Nestle S.A.'s (Aa2 stable) ice
cream (and selective chilled and frozen food) business in Europe,
Egypt, the Philippines, Brazil and Argentina.

Concurrently, Moody's has assigned a definitive Ba2 instrument
rating to the EUR800 million 7-year senior term loan B and EUR220
million 6-year senior revolving credit facility (RCF) issued by
R&R Ice Cream plc.  The outlook on the ratings is stable.

                         RATINGS RATIONALE

The rating action follows the successful consummation of the JV
closing on Sept. 30, 2016.  The final terms of the notes are in
line with the draft documentation reviewed for the assignment of
provisional ratings on Sept. 12, 2016.

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

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

The Ba2-PD PDR and Ba2 rating on senior credit facilities, in
line with the CFR, are based on a 50% recovery rate used under
Moody's Loss Given Default (LGD) methodology.

                   RATIONALE FOR STABLE OUTLOOK

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

                WHAT COULD CHANGE THE RATINGS UP/DOWN

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

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

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



===========
N O R W A Y
===========


NORDIC PACKAGING: Moody's Assigns B1 CFR, Outlook Stable
--------------------------------------------------------
Moody's Investors Service has assigned a B1 Corporate Family
Rating and B1-PD probability of default rating to Nordic
Packaging and Container (UK) Intermediate Holdings Ltd (NPCH),
the holding company of Nordic Packaging and Container (Finland)
Holdings Oy (Bidco), which recently announced a recommended offer
to acquire Powerflute Oyj (Powerflute).

Moody's has also assigned provisional (P)B1 ratings to the first
lien senior secured EUR240 million term loan due in 2023, and the
EUR40 million revolving credit facility due in 2022, as well as
(P)B3 to the second lien senior secured EUR35 million term loan
due in 2024, to be issued by Bidco to finance the acquisition.

Equity financing for the transaction is being provided by funds
affiliated with Madison Dearborn Partners, LLP (MDP).

The outlook on the ratings is stable.  This is the first time
Moody's has assigned ratings to NPCH.

"The B1 CFR of NPCH reflects the healthy profitability of the
acquisition target Powerflute which has strong positions in two
attractive niches of the paper packaging market, together with
the elevated financial leverage that will exist following
completion of the acquisition", says Matthias Heck, a Moody's
Vice President -- Senior Analyst and Lead analyst for Powerflute.

Moody's issues provisional ratings for debt instruments in
advance of the final sale of securities or conclusion of credit
agreements.  Upon the successful closing of the transaction and a
conclusive review of the final documentation, Moody's will
endeavor to assign a definitive rating to the different capital
instruments.  A definitive rating may differ from a provisional
rating.

                         RATINGS RATIONALE

NPCH is a UK-based holding company established by funds
affiliated with MDP for the purpose of acquiring Powerflute.
Powerflute is one of the three producers of Nordic semi-chemical
fluting (NSCF) used in the manufacturing of corrugated board for
multiple packaging applications; and a manufacturer of coreboard
and cores from recycled materials for industrial packaging.  The
B1 CFR is supported by Powerflute's (1) strong position in two
attractive niche markets of the packaging and paper market,
especially in NSCF where it is one of only three producers, (2)
its good diversification of products, regions and customers that
should support modest future growth, (3) healthy EBITDA margins,
expected to be around 15% and (4) solid free cash flow
generation.  The ratings are also supported by good liquidity,
and the expectation that the company will be able to deliver
gradual deleveraging from its post-transaction leverage.

The ratings are constrained by (1) the company's relatively small
scale as reflected in the revenues of approx.  EUR 360 million,
which is in particular relevant as it competes against much
larger peers and as its NSCF business is reliant on one mill in
Finland, resulting in above average operational risk (2) the
relatively high starting leverage of just over 5x, as adjusted by
Moody's, and no scheduled amortization, leaving some uncertainty
as to the deleveraging path and (3) a highly competitive market,
in particular in the European coreboard segment, which suffers
from relatively weak pricing and periods of oversupply.

                     STRUCTURAL CONSIDERATIONS

In Moody's assessment of the priority of claims in a default
scenario for NPCH, Moody's distinguishes between three layers of
debt within the capital structure.  The (P)B1 instrument rating
on the EUR40 million senior secured RCF and the first lien senior
secured EUR240 million term loan considers that these instruments
rank parri passu with the EUR65 million trade payables,
positioning them at the same level as the CFR.

The second lien term loan of EUR35 million ranks behind these
debt instruments, and is therefore rated two notches below CFR at
(P)B3.  Lowest in the capital structure are pension and lease
obligations of EU 1 million and EUR5 million, respectively.

                           RATING OUTLOOK

The stable outlook underpins Moody's expectations that NPCH's end
markets will remain stable, and leverage/coverage metrics will
benefit from improved productivity and modest debt reduction.

                  WHAT COULD CHANGE THE RATING - UP

NPCH's ratings may be upgraded if (i) financial leverage,
measured as gross debt / EBITDA (Moody's adjusted) falls below
4.0x, (ii) the company further improves EBITDA margins (Moody's
adjusted) to above 16%, and (iii) is able and improve cash flow
generation, exhibited by (RCF-capex)/debt of over 8%.  An upgrade
would also require the company to maintain a good liquidity
profile and improve its operational flexibility relatively to the
current concentration on only a few large production sites.

                WHAT COULD CHANGE THE RATING - DOWN

On the contrary, the ratings may be downgraded, in the event of
deterioration in the operating performance, reflected in (i)
financial leverage failing to decline towards 5.0x (Moody's
adjusted), or (ii) (RCF-capex)/debt declining to below 4%.  The
ratings could also be downgraded if the company recorded negative
free cash flow and if liquidity weakened.

                       PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Global Paper
and Forest Products Industry published in October 2013.

Headquartered in Kuopio, Finland, Powerflute is a paper and
packaging group, which operates in two relatively independent
business divisions, Packaging Papers and Coreboard & Cores, which
both account for around half of the group's EBITDA.  In Packaging
Papers, the company produces Nordic Semi-Chemical Fluting (NSCF)
and is one of the three major players in this market.  In
Coreboard & Cores, the company produces coreboards, which are
partly sold to external clients, and partly used to manufacture
cores.

Powerflute was established in 2005 and became a listed company in
2007.  In 2015, the company generated revenues of approximately
EUR356 million.

In September 2016, Bidco and Powerflute announced the terms of a
recommended cash offer to be made by Bidco for the entire issued
and to be issued share capital of Powerflute (including all
outstanding Powerflute options).  Completion of the transaction
remains conditional upon amongst other things acceptance by
Powerflute's shareholders holding at least 90% of the issued and
outstanding Powerflute shares (assuming exercise of all
Powerflute options).  However, Bidco has already secured
irrevocable commitments and acceptances covering 51% of the
issued and outstanding shares, and the transaction is currently
expected to be completed during November.


SPAREBANK 1: Fitch Affirms 'BB+' Support Rating Floor
-----------------------------------------------------
Fitch Ratings has affirmed SpareBank 1 Nord-Norge's (SNN) Long-
Term Issuer Default Rating (IDR) at 'A', SpareBank 1 SMN's (SMN),
SpareBank 1 SR-Bank's (SR) and Sparebanken Vest's (SV) Long-Term
IDRs at 'A-', and Sandnes Sparebank's (Sandnes) Long-Term IDRs at
'BBB'. The Outlooks on all Long-Term IDRs are Stable.

Fitch has also affirmed SpareBank 1 Boligkreditt's (S1B) Long-
Term IDR at 'A-' with Stable Outlook.

The rating actions were part of Fitch's periodic review of
Norwegian savings banks.

KEY RATING DRIVERS

IDRS, VIABILITY RATINGS AND SENIOR DEBT

The affirmations of SNN, SMN, SR and SV's (collectively
Sparebanken) ratings are based on their strong regional
franchises, healthy profitability, resilient asset quality, and
sound capital ratios. The ratings also factor in risks arising
from low oil prices and significant rises in property prices in
recent years, geographically concentrated lending, and liquidity
management in the context of the banks' wholesale funding
reliance.

SNN's ratings are one notch higher than those of its Sparebanken
peers, reflecting stronger capitalisation and a more retail-
orientated business model.

Sandnes's ratings reflect good pre-impairment profitability,
adequate asset quality and good capitalisation, and its
entrenched regional presence in south-west Norway. Its ratings
are constrained by the bank's smaller franchise relative to
domestic peers, and by still significant geographical and obligor
loan concentration.

Fitch expects the Sparebanken's asset quality to remain strong,
despite a recent oil-related increase in impaired loans for some
banks, driven by a relatively stable operating environment and
conservative underwriting standards. Concentration risk relating
to large exposures is reducing, and Fitch expects the banks to
continue to implement solid strategies based on low-risk business
models focused on retail and SME customers. Impaired loans for
the Sparebanken represented between 0.9% and 1.5% of gross loans
at end-June 2016.

The sharp fall in oil prices, and the consequent slowdown of
economic growth in the country, is translating into some asset
quality pressure in certain portfolios, particularly in lending
to the offshore service vessels (OSV) segment. "We do not expect
this specific asset quality pressure to spread more widely, and
recent signs point to an increase in economic activity and
improved consumer confidence," Fitch said. Fitch expects mainland
GDP (excluding oil and gas extraction and shipping) to grow by
0.8% in 2016 and 1.6% in 2017.

SR and SMN have the highest exposures to oil and gas lending
among the Sparebanken, representing 7.6% and 5.5% of gross
lending at end-June 2016 (excluding loans transferred to S1B -
see below). "We understand that OSV companies are particularly
under pressure due to a combination of high fixed costs and
reduced demand for vessels, and we expect higher loan impairment
charges (LICs) in 2016 and 2017 as more vessels' contracts come
up for renewal," Fitch said.

Both banks have been restructuring a material part of these
portfolios in recent years. SMN's oil and gas lending is made up
almost entirely of OSVs, compared to around 60% for SR. "We
expect LICs to be largely contained to the OSV segment, but the
risk is somewhat heightened in SR's entire oil & gas portfolio."
Fitch said. SR and Sandnes's lending is concentrated in south-
west Norway, where the oil industry is concentrated, and the
banks are therefore also sensitive to more widespread contagion
effects from lower oil activity.

A significant house price correction is a key sensitivity for the
banks. Fitch does not expect such a scenario to lead to a
significant deterioration of the quality of the banks' retail
lending, although reduced consumption would be likely to
negatively affect their SME portfolios. SNN is less exposed to
this risk, due to the lower house prices in north Norway than
elsewhere in the country and the large public sector presence.

Sandnes's impaired loans increased to 3.8% of gross loans at
end-June 2016 (end-2015: 2.5%). A significant share of the
impaired loans relate to legacy commercial real estate (CRE)
loans, which in our assessment includes building and
construction, and property management lending, and although
management has made progress in reducing concentration in this
segment since its peak in 2008, it remains a key risk. The bank's
efforts to shorten maturities and reduce high loan-to-value CRE
lending are positive for the rating. Net direct lending to the
oil and gas sector is minimal.

Sparebanken and Sandnes have good pre-impairment profitability,
and the regional franchises support stable revenue generation.
Net interest income is the main source of revenue, but the banks
are also gradually strengthening fee income from ancillary
products such as insurance, wealth management and real estate
brokerage. Cost efficiency is acceptable, with cost-to-income
ratios in 1H16 between 47% and 52%.

LICs for the Sparebanken have averaged below 20% of pre-
impairment profitability in recent years. Fitch expects SR and
SMN to report higher LICs in 2016, in line with what was reported
in 1H16 (34% and 25% of pre-impairment profit), but these remain
easily absorbable for the banks. Sandnes reported a net loss in
2015 due to some specific large LICs relating to certain large
exposures, which we do not expect to be repeated. However, they
highlight the risks of its material obligor concentration.

The Sparebanken's capital adequacy ratios compare well with those
of international peers. "We expect the banks to keep dividend
payouts low to reach their CET1 targets of 14%-14.5% by 2016-
2017. Leverage is low in a European context," Fitch said. SNN has
a stronger capital position than its Sparebanken peers, and in
particular benefits from lower leverage.

Sandnes uses the standardised approach to calculate its capital
requirements for both retail and corporate exposures, which leads
to higher risk weights than peers and slightly lower reported
capital ratios. Leverage is low in a European context, in line
with its Norwegian peers. Nonetheless, the small absolute volume
of equity makes it vulnerable to shocks.

Like most of their Nordic peers, the Sparebanken and Sandnes rely
on wholesale funding to varying degrees. The Sparebanken have
maintained access to domestic and international funding markets,
particularly for covered bonds through S1B, a joint covered bonds
funding vehicle for member banks of the Alliance group (SR, SMN
and SNN) and Sparebanken Vest Boligkreditt. Fitch believes the
banks will retain large liquidity portfolios to mitigate this
risk.

SR set up its own wholly owned covered bond vehicle in 2015,
while SMN and SNN are in the process of doing so. The primary
reason for this is to avoid any restrictions on large exposures
in times of stress, although SR is also using this as an
alternative funding source to S1B.

The 'F2' Short-Term IDRs of SR, SMN and Vest, and the 'F3' Short-
Term IDR for Sandnes map to the lower of the two options for the
'A-'/'BBB' Long-Term IDRs. Fitch believes the banks have good
funding and liquidity, but their liquidity is not notably better
than their rating levels would suggest.

SUPPORT RATING AND SUPPORT RATING FLOOR

The Sparebanken's Support Ratings of '3' and Support Rating
Floors of 'BB+' reflect Fitch's view that there is a moderate
probability of support, if required, from the Norwegian
authorities, due to their strong regional franchises, Norway's
exceptionally strong financial flexibility and little progress to
date with implementing any bank resolution legislation.

There is also a possibility of institutional support for members
of the Alliance from its other members. However, Fitch
understands that no obligation to support member banks arises
from membership of the Alliance and therefore does not factor
this into the ratings.

Sandnes's Support Rating reflects Fitch's view of an only low
extraordinary support probability from the Norwegian authorities,
given the bank's very limited market shares in Norway. Its
Support Rating Floor is therefore 'No Floor'.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

SNN, SMN and SR's subordinated debt instruments are notched down
once from the banks' Viability Ratings (VRs) to reflect higher
expected loss severity relative to senior unsecured creditors.

SUBSIDIARY AND AFFILIATED COMPANY

S1B's IDRs are aligned with those of the largest Alliance
members, SR and SMN, as together with SNN (rated one notch
higher), these are the most likely source of support. At end-June
2016, the combined ownership of SR, SMN and SNN in S1B was 50.2%.
The ownership reflects the amount of loans sold to S1B and is
updated at least annually. S1B's IDRs reflect its key role as a
covered bond funding vehicle for its shareholder banks by
securing competitively priced funding and access to a diversified
investor base.

The Alliance banks are contractually obliged to buy covered bonds
from S1B if an expected shortfall is identified 60 days before
the maturity of the bond. The obligation from the shareholder
banks is pro rata to the ownership, and if one or more banks are
unable to fulfil their requirements, the other banks must meet
the shortfall up to 2x their original shares. These bonds are
eligible as collateral for repo with the Norwegian central bank.

The Alliance banks are also contractually required to maintain a
minimum Tier 1 capital ratio of 9% at S1B. The obligation is also
pro rata based on each bank's shareholding and is capped at 2x
the original allocation. The three Fitch-rated Alliance banks'
combined obligation would exceed any liquidity or capital
shortfall identified by S1B as their combined ownership exceeds
50%. "We believe the Fitch-rated Alliance banks have the
financial resources and the propensity to jointly support S1B, if
necessary." Fitch said.

No VR is assigned because of S1B's close integration in the
Alliance, including operational support and servicing of the
mortgage assets.

RATING SENSITIVITIES

IDRS, VRS AND SENIOR DEBT

The Sparebanken's ratings are primarily sensitive to
deteriorating asset quality, particularly if prolonged low oil
prices led to higher unemployment, a deterioration in CRE
exposure or a significant house price correction, if the banks
are unable to absorb losses via earnings. This scenario would
probably be followed by difficulties in obtaining competitively
priced funding.

The Stable Outlooks on the Sparebanken's ratings reflect Fitch's
expectation that the operating environment in Norway will remain
strong, with LICs contained largely to the OSV segment. "We
expect the banks to further reduce their single-name
concentration, and that they will continue to strengthen capital
ratios and maintain healthy liquidity buffers." Fitch said.

An upgrade is unlikely due to the already high ratings in the
context of their company profiles and geographical and lending
concentration. The banks' structural reliance on wholesale
funding means any unmitigated weakening of access to capital
markets would also be negative for their ratings.

Sandnes's Stable Outlook also reflects Fitch's expectation the
bank will continue to work out its impaired legacy CRE exposures
and maintain access to market funding. An upgrade is unlikely
because the bank's small size makes it relatively sensitive to
shocks, particularly in the context of its narrow geographical
operating market and CRE exposures.

Sandnes's ratings are also sensitive to reduced activity in the
region should it lead to a significant house price correction or
increased losses in the corporate sector. A dislocation in debt
capital markets making Sandnes unable to obtain competitively
priced funding is also a sensitivity.

SUPPORT RATING AND SUPPORT RATING FLOOR

The Sparbanken's Support Ratings and Support Rating Floors (SRFs)
are sensitive to changes in Fitch's assumptions about the ability
or willingness of the Norwegian state to provide timely support
to the banking system, if required.

The EU's Bank Recovery and Resolution Directive and the Single
Resolution Mechanism for eurozone banks provide a framework for
resolving banks that is likely to require senior creditors
participating in losses, if necessary, instead of or ahead of a
bank receiving sovereign support.

Norway is not an EU member country and has done little so far to
update its bank resolution framework; although as a member of the
European Economic Area it will have to implement the Bank
Recovery and Resolution Directive. Fitch's base case is that it
will look to adopt a flexible approach to bank support and
resolution decisions for its largest banks.

All the Sparebanken have Support Ratings of '3' and SRFs of
'BB+', and these are unlikely to be affected unless Norway adopts
a much less flexible approach to resolution than Fitch
anticipates. An upward revision of Sandnes's SRF of 'No Floor'
would be contingent on a positive change in Fitch's view of the
systemic importance of the bank, which is unlikely.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

Subordinated debt issued by the Sparebanken are notched down from
the banks' VRs, and are therefore sensitive to any change in the
VRs. The securities' ratings are also sensitive to changes in
Fitch's assessment of loss severity or non-performance risk
relative to that captured in the banks' VRs, although these are
unlikely.

SUBSIDIARY AND AFFILIATED COMPANIES

S1B's ratings are sensitive to the same factors that might drive
a change in the parent banks' ratings. The Stable Outlook is in
line with that on the ratings of S1B's rated parents. As S1B's
ratings are driven by expected support, downside risk to the
ratings could arise if one or more of the largest owners were
downgraded, or if Fitch believed their willingness or ability to
support had diminished.

S1B's IDRs could also be downgraded if SR, SMN and SNN's combined
ownership in S1B reduced materially, as their combined obligation
to provide support would then be insufficient to cover any
liquidity or capital shortfall identified at S1B.

These rating actions have no impact on the ratings of the covered
bonds issued by S1B.

The rating actions are as follows:

SpareBank 1 Nord-Norge:

   -- Long-Term IDR affirmed at 'A'; Outlook Stable

   -- Short-Term IDR affirmed at 'F1'

   -- Viability Rating affirmed at 'a'

   -- Support Rating affirmed at '3'

   -- Support Rating Floor affirmed at 'BB+'

   -- Senior unsecured debt affirmed at 'A'/'F1'

   -- Subordinated debt affirmed at 'A-'

SpareBank 1 SMN:

   -- Long-Term IDR affirmed at 'A-'; Outlook Stable

   -- Short-Term IDR affirmed at 'F2'

   -- Viability Rating affirmed at 'a-'

   -- Support Rating affirmed at '3'

   -- Support Rating Floor affirmed at 'BB+'

   -- Senior unsecured debt affirmed at 'A-'/'F2'

   -- Subordinated debt affirmed at 'BBB+'

SpareBank 1 SR-Bank:

   -- Long-Term IDR affirmed at 'A-'; Outlook Stable

   -- Short-Term IDR affirmed at 'F2'

   -- Viability Rating affirmed at 'a-'

   -- Support Rating affirmed at '3'

   -- Support Rating Floor affirmed at 'BB+'

   -- Senior unsecured debt affirmed at 'A-'/'F2'

   -- Subordinated debt affirmed at 'BBB+'

SpareBank 1 Boligkreditt:

   -- Long-Term IDR affirmed at 'A-'; Outlook Stable

   -- Short-Term IDR affirmed at 'F2'

   -- Support Rating affirmed at '1'

Sparebanken Vest:

   -- Long-Term IDR affirmed at 'A-'; Outlook Stable

   -- Short-Term IDR affirmed at 'F2'

   -- Viability Rating affirmed at 'a-'

   -- Support Rating affirmed at '3'

   -- Support Rating Floor affirmed at 'BB+'

   -- Senior unsecured debt affirmed at 'A-'/'F2'

Sandnes Sparebank:

   -- Long-Term IDR affirmed at 'BBB'; Outlook Stable

   -- Short-Term IDR affirmed at 'F3'

   -- Viability Rating affirmed at 'bbb'

   -- Support Rating affirmed at '5'

   -- Support Rating affirmed at 'No Floor'


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


ERB BANK: Czech Central Bank Withdraws License
----------------------------------------------
Dan Alexe at New Europe reports that the Czech central bank
authorities have withdrawn the license of the Russian ERB Bank,
citing violations of exposure rules relating to bond investments,
poor risk management and lack of controls.

The central bank submits a court proposal for naming a liquidator
of ERB, New Europe discloses.

According to New Europe, authorities said that failings by ERB
had threatened the bank's stability, adding that it did not have
systems in place to prevent money laundering and the financing of
terrorism or to ensure observance of international sanctions.

The central bank's decision follows its announcement on Oct. 11
that ERB had failed to meet obligations to depositors and that
customers could claim compensation from the national deposit
insurance scheme, New Europe notes.  Clients were unable to
access funds, New Europe relates.  The state deposit guarantee
system began distributing client refunds on Oct. 20, New Europe
discloses.  Under the EUR100,000 limit, all clients should be
repaid, New Europe states.

Regulatory filings showed that ERB had total loans of CZK1.78
billion at the end of the second quarter, of which CZK940 million
were in some type of default, New Europe relays.

ERB is 93 % owned by Russian businessman Roman Popov.


FINPROMBANK: Declared Bankrupt by Moscow Court, Owes RUR39.48BB
---------------------------------------------------------------
PRIME reports that the Moscow Arbitration Court declared
Finprombank, or FPB Bank, ranked 94th by assets as of
Sept. 1, bankrupt on Oct. 24.

The bank lost the license in September, PRIME recounts.

According to PRIME, a central bank representative said during the
court hearings that liabilities of the bank amounted to RUR39.483
billion and assets stood at RUR15.98 billion.


KEMEROVO REGION: Fitch Affirms 'BB-' LT Issuer Default Ratings
--------------------------------------------------------------
Fitch Ratings has affirmed the Russian Kemerovo Region's Long-
Term Foreign and Local Currency Issuer Default Ratings (IDRs) at
'BB-' and Short-Term Foreign Currency IDR at 'B'. The agency has
also affirmed the region's National Long-Term Rating at
'A+(rus)'. The Outlooks on the Long-term ratings are Stable.

The region's outstanding senior unsecured domestic bonds have
been affirmed at 'BB-' and 'A+(rus)'.

The affirmation with Stable Outlook reflects Fitch's expectations
that budget performance, and direct risk relative to current
revenue, will stabilise over the medium term.

KEY RATING DRIVERS

The ratings reflect Kemerovo's volatile revenue proceeds,
stemming from the region's structural tax concentration, as well
as still moderate direct risk. The ratings also factor in the
region's concentrated economy with a developed tax base that is
exposed to economic cycles, a weak institutional framework and a
recessionary economic environment in Russia.

Fitch expects the region's operating margin to consolidate at 5%-
6% during 2016-2018, close to 2015's 5.7%. This will be
sufficient to cover interest expenses, such that the current
margin will remain in small positive territory (2015: 3%). Budget
performance will be underpinned by strict control on operating
expenditure and improved tax proceeds following earnings recovery
at mining and metallurgical companies, which are the region's
largest taxpayers.

Fitch expects the region to shrink its budget deficit to 3%-4% of
total revenue over the medium-term, from a high average of 11.8%
in 2013-2015, as required by Russia's Ministry of Finance in
return for financial support from the federal budget. For 8M16
the administration collected 64% of its full-year budgeted
revenue and expenditure, respectively, and recorded a RUB2.9bn
deficit, which is in line with our expectations of a RUB3.9bn
full-year deficit.

Gradual narrowing of the budget deficit will limit debt growth,
which we forecast will reach 63% of current revenue by end-2016
and will stabilise at this level in 2017-2018. Direct risk is
moderate compared with international peers and comprises a large
proportion of budget loans from the federation (classified as
other Fitch-classified debt). They bear low interest rates and
are likely to be rolled over by the state.

As of 1 September 2016 loans from the federal budget accounted
for 45% of total direct risk, up from 40% at the beginning of the
year as the region borrowed a further RUB4.75bn from the federal
budget in January-August 2016.

Additionally the region received some relief in 2015 when a long-
term bank loan from Vnesheconombank (VEB: BBB-/Negative/F3),
initially in US dollars, was re-denominated in roubles at a
favourable exchange rate.

As with most other Russian regions, Kemerovo is exposed to
refinancing pressure with 81% of direct risk maturing in 2017-
2019. Immediate refinancing risk is low at RUB1.8bn (3% of direct
risk) for 2016, comprised maturing budget loans and an amortising
VEB loan, which will be met by RUB2.3bn stand-by credit lines
from local banks.

The region has a concentrated economy weighted towards coal
mining and ferrous metallurgy, which provides broad tax base: 80%
of the region's operating revenue. However, this also means a
large portion of the region's tax revenues depends on companies'
profits, resulting in high revenue volatility through the
economic cycle. Kemerovo saw marginal real GRP growth in 2015,
outperforming the national economy's 3.7% contraction. Fitch
expects the local economy to stagnate in the medium term.

Russia's institutional framework for subnationals is a constraint
on the region's ratings. Frequent changes in the allocation of
revenue sources and the assignment of expenditure
responsibilities between the tiers of government limit Kemerovo's
forecasting ability and negatively affect the region's fiscal
capacity and financial flexibility.

RATING SENSITIVITIES

An improvement in the operating balance to 6%-8% of operating
revenue and maintaining a debt payback ratio (direct risk-to-
current balance) at below 10 years (2015: 20.7 years) on a
sustained base could lead to an upgrade.

An inability to maintain a positive operating balance on a
sustained basis, along with an increase in direct risk above 90%
of current revenue, could lead to a downgrade.


KHAKASSIA: Fitch Affirms 'BB-' Long Term Issuer Default Ratings
---------------------------------------------------------------
Fitch Ratings has affirmed Russian Republic of Khakassia'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 'A+(rus)'. The Outlooks on the
Long-Term ratings are Stable.

The republic's outstanding senior unsecured domestic bonds have
been affirmed at 'BB-' and 'A+(rus)'.

The affirmation reflects Fitch's unchanged base case scenario
regarding the republic's satisfactory operating performance and
weak but stabilised current balance over the medium-term. It also
reflects our expectation that Khakassia will narrow its high
deficit, in turn leading to decelerated growth of direct risk.

KEY RATING DRIVERS

The ratings reflect Khakassia's satisfactory operating balance,
which however remains insufficient to cover increased interest
payments due to the high direct risk accumulated on the back of a
significant budget deficit. The ratings also take into account a
concentrated local economy, which is declining in line with the
national economic downturn and a weak institutional framework for
Russian sub-nationals.

Fitch expects the operating margin will be close to the
republic's historical average of 5%-6% over the medium term.
However, it will not be sufficient to cover increasing interest
payments, leading to a negative current balance (2015: 0.6%). In
1H16, Khakassia reported a 50% outflow of corporate income tax
revenue due to tax returns to coal and aluminium producers, which
resulted in a RUB4.9bn intra-year budget deficit. "We expect a
moderate restoration of tax revenue in 2H16 as the coal sector
benefits from higher prices on international markets, which
should shrink the full-year deficit to RUB2.3bn." Fitch said.

Fitch projects the republic will shrink its budget deficit to 8%-
10% of total revenue in 2016-2018 from a high 21% in 2015. This
will be driven by a fall in capex to about 15% (2015: 30%) of
total expenditure as the administration completes social
infrastructure projects and housing construction for victims of
large fires that occurred in the spring of 2015.

Fitch forecasts the on-going deficit to result in direct risk
further increasing towards 100% of current revenue by end-2018
(2015: 84%). This will lead to higher interest expenditure at
more than 6% of operating revenue (average 4.5% in 2013-2015).
The region is also exposed to market interest rate volatility
given its reliance on market debt (bond placements and bank
loans) as 78% of outstanding debt was in the form of bank loans
and bond issues as at 1 September 2016.

Khakassia is exposed to sizable refinancing pressure with 71% of
direct risk maturing in 2016-2018. As of 1 September 2016 debt
maturities this year totalled RUB3.7bn (17% of direct risk),
which the republic will mostly fund with new bank loans. The
republic also plans to issue a five-year domestic bond before
end-2016 to refinance expensive bank loans maturing in 2017
(RUB2.4bn) and 2019 (RUB1.6bn), which should reduce its
refinancing risk over the medium term.

Khakassia's wealth metrics are in line with the national median.
However, the republic's economy is concentrated in the hydro-
power generation, mining and non-ferrous metallurgy sectors. The
top 10 taxpayers contributed 49.5% to the republic's tax revenue
in 2015 (2014: 44.5%). Taxes accounted for 71% of operating
revenue in 2015, which makes the region's budget prone to
volatility. Fitch forecasts Russia's national economy to contract
0.5% in 2016, which in turn will spill over to Khakassia's
economy and tax base.

Russia's institutional framework for sub-nationals is a
constraint on Khakassia's ratings. It has a shorter record of
stable development than many of its international peers. The
predictability of Russian local and regional governments'
budgetary policy is hampered by the frequent reallocation of
revenue and expenditure responsibilities within government tiers.

RATING SENSITIVITIES

An upgrade may result from direct risk decreasing below 60% of
current revenue, coupled with a positive current balance on a
sustained basis.

A downgrade may result from the republic's inability to curb
direct risk growth towards 100% of current revenue, accompanied
by growing refinancing pressure.


KOKS JSC: Moody's Confirms B3 CFR, Outlook Negative
---------------------------------------------------
Moody's Investors Service has confirmed JSC KOKS's corporate
family rating at B3 and its probability of default rating at B3-
PD.  Moody's has also confirmed the B3 (LGD4) senior unsecured
rating assigned to loan participation notes issued by KOKS
Finance Limited.  The outlook on all these ratings is negative.
This concludes the ratings review initiated by Moody's on
July 13, 2016, (CFR and PDR) and Dec. 22, 2015, (senior unsecured
rating).

                        RATINGS RATIONALE

The rating action reflects KOKS's improved liquidity and the
reduced refinancing risk related to its significant short-term
debt maturities.

As of Sept. 30, 2016, KOKS's liquidity comprised $16 million in
cash and equivalents, $104 million in available committed credit
facilities maturing beyond the following 12 months, and around
$140 million in operating cash flow, which Moody's expects the
company to generate over the following 12 months.  This liquidity
is weak as should be sufficient to cover the company's short-term
debt maturities and capex only until Q2 2017.  Moody's
understands that KOKS is close to procuring new bank loans which
would cover its obligations until year-end 2017.  The company
also considers placing domestic rouble bonds.

KOKS's B3 CFR factors in the company's (1) weak liquidity, on-
going refinancing risk and aggressive liquidity management; (2)
small scale and limited operational and product diversification;
(3) exposure to the weak global steel market environment; (4)
deteriorated leverage and interest coverage metrics, with its
Moody's-adjusted debt/EBITDA rising to 5.4x and EBIT interest
coverage declining to 0.9x at June 30, 2016 from 4.4x and 1.6x,
respectively, at year-end 2015; (5) debt-financed expansionary
capex programme; and (6) concentrated ownership-related risks,
with significant loans given to related parties.

More positively, the rating takes into account (1) the company's
status as one of the leading merchant pig iron producers
globally, with a diversified customer base and geography of
sales; (2) its low-cost position, owing to the weak rouble and
operational enhancements; (3) Moody's expectation that the
company's financial metrics will improve over the next 12-18
months, owing to the recent rise in coking coal prices and also
anticipated commissioning of Tikhova and Butovskaya mines which
the company estimates to increase its consolidated EBITDA by more
than 60% after ramp-up; (4) the improved product mix, with higher
sales of premium grades of coke and pig iron; (5) KOKS's
significant degree of vertical integration, with a 50% and 71%
self-sufficiency in coking coal and iron ore, respectively; and
(6) its large coking coal and iron ore reserves.

KOKS Finance's loan participation notes' senior unsecured rating
is confirmed at B3, which reflects Moody's estimation that less
than 20% of KOKS's consolidated debt is secured with assets,
which results in KOKS Finance's loan participation notes rating
being at the level of KOKS's CFR.  If the share of secured debt
were to be materially higher, the unsecured notes could be rated
below the CFR because of their subordination to substantial
secured debt.

                   RATIONALE FOR NEGATIVE OUTLOOK

The negative outlook reflects the uncertainty over KOKS's ability
to maintain the necessary liquidity to meet its short-term debt
maturities over at least the next 12 months on a sustainable
basis, resulting from the company's continuing aggressive
liquidity management.

                WHAT COULD CHANGE THE RATINGS UP/DOWN

There is no upward pressure on the rating at this point.  Moody's
can stabilize the outlook if the company improves its liquidity
management, so that it maintains adequate liquidity on a
sustainable basis, and subject to no deterioration in the
company's operating performance and financial metrics.  Over
time, a positive pressure on the rating can build up if KOKS
increases the share of longer-term debt in its debt portfolio,
adopting practices of funding long-term investments with
corresponding maturities, along with general improvements in
leverage and other financial metrics.

The rating could be downgraded if KOKS's liquidity deteriorates
and liquidity management practices are not improved, elevating a
default risk on its short-term debt obligations.  Downward
pressure could also be exerted on the rating as a result of an
unanticipated significant increase in leverage, decline in
interest coverage, or a sharp weakening in global demand or
prices for pig iron and coke.

LIST OF AFFECTED RATINGS

Confirmations:

Issuer: JSC KOKS
  Corporate Family Rating, Confirmed at B3
  Probability of Default Rating, Confirmed at B3-PD

Issuer: KOKS Finance Limited
  Backed Senior Unsecured Regular Bond/Debenture, Confirmed at B3
   (LGD4)

Outlook Actions:

Issuer: JSC KOKS
  Outlook, Changed To Negative From Rating Under Review

Issuer: KOKS Finance Limited
  Outlook, Changed To Negative From Rating Under Review

                       PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was "Global Steel
Industry" published in October 2012.

KOKS is a small Russia-based producer of coking coal, coke, iron
ore and pig iron.  In 2015, the company produced 1.9 million
tonnes of coking coal, 2.7 million tonnes of coke, 2.2 million
tonnes of iron ore concentrate and 2.1 million tonnes of pig
iron. In 2015, the company generated revenues of RUB53.6 billion
(2014: RUB47.2 billion) and Moody's-adjusted EBITDA of RUB12.7
billion (2014: RUB12.5 billion).  KOKS is majority-owned by the
Zubitsky family, which holds an 86% stake in the company.


MARI EL: Fitch Affirms 'BB' Long Term Issuer Default Ratings
------------------------------------------------------------
Fitch Ratings has affirmed the Russian Mari El Republic'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 republic's National Long-Term
Rating at 'AA-(rus)' with Stable Outlook. Mari El's outstanding
senior debt ratings have been affirmed at 'BB' and 'AA-(rus)'.

The affirmation reflects our largely unchanged base case scenario
regarding the republic's stable fiscal performance and moderately
increasing direct risk, which are commensurate with the ratings.

KEY RATING DRIVERS

Fitch expects Mari El to record stable fiscal performance in
2016-2018, with an operating margin of 8%-10% (2015: 11.2%). This
will be driven by prudent management aimed at cost control and an
expected steady increase in operating revenue of 5% per year over
the medium term. Revenue will be driven by modest growth of tax
revenue in line with expected economic growth and stable
transfers from the federal government.

The republic recorded a deficit before debt variation at 10% of
total revenue in 2014-2015, while its interim deficit as of end-
July 2016 was 11% of total revenue. The 2015 deficit was driven
by financing needs for capex, which represented 20% of total
spending, in line with the republic's five-year average. "We
project the region will slightly narrow its deficit before debt
to about 8% of total revenue by end-2018, driven by lower capex
averaging 16% of total spending over the medium term," Fitch
said.

Fitch projects continued growth of Mari El's direct risk to
RUB20bn by end-2018, or about 80% of current revenue (2015: 60%).
Direct risk in 2015 increased to RUB13bn (2014: RUB10.7bn). The
increase was primarily driven by RUB2.5bn new low-cost budget
loans from the federal government to fund the region's budget
deficit and partly replace maturing bank loans and bonds.

"We do not expect Mari El's direct debt (bank loans and bonds) to
exceed 60% of current revenue over the medium term." Fitch said.
Mari El's immediate refinancing risk on direct debt is manageable
with RUB1.7bn bank loans maturing by end-2016. Mari El's interim
liquidity position was satisfactory with RUB314m held on accounts
as of 1 October 2016.

Russia's institutional framework for subnationals is a constraint
on the republic's ratings. Frequent changes in both the
allocation of revenue sources and the assignment of expenditure
responsibilities between the tiers of government limit Mari El's
forecasting ability and negatively affect the republic's
strategic planning, and debt and investment management.

Mari El's socio-economic profile is historically weaker than the
average Russian region. Its per capita gross regional product
(GRP) was 30% lower than the national median in 2012-2015 but
performed better than the national economy in 2015. Mari El's GRP
increased 3.8% yoy in 2015, in contrast to Russia's 3.7% decline
in GDP. The republic projects 2.5%-3.5% economic growth over the
medium term.

RATING SENSITIVITIES

The ratings could be positively affected by improved budgetary
performance leading to deficit before debt shrinking to below 5%
of total revenue, coupled with an extension of the debt maturity
profile.

Conversely, a downgrade or revision of the Outlook to Negative
could result from sustained deterioration of operating
performance, with an operating margin below 5%, along with
increased direct debt to above 60% of current revenue over the
medium term.


PERESVET JSCB: S&P Lowers Counterparty Credit Ratings to 'D/D'
--------------------------------------------------------------
S&P Global Ratings lowered its long- and short-term counterparty
credit ratings on Russia-based JSCB Peresvet Bank to 'D/D' from
'CCC-/C'.  S&P also lowered its Russia national scale rating on
the bank to 'D' from 'ruCCC-'.

At the same time, S&P lowered its issue ratings on the bank's
outstanding bonds to 'CC' from 'CCC-'.  The ratings on the bonds
remain on CreditWatch with negative implications, where S&P
placed them on Oct. 20, 2016.

The downgrade reflects the regulatory action taken by the Central
Bank of Russia (CBR) in regards to its intervention and
appointment of a temporary administration at Peresvet Bank on
Oct. 21, 2016.  According to the CBR, the bank failed to meet its
creditors' claims for more than seven days.  At the same time,
the CBR suspended the authority of the bank's management team.
S&P considers this to be evidence of Peresvet Bank's failure to
meet its financial obligations, as a result of the liquidity
crisis that the bank has been facing following a series of media
publications.

Further rating actions on Peresvet Bank will depend on the CBR's
next steps and what financial rehabilitation procedures will take
place in the coming weeks.  S&P currently has no information on
the probability or scope of such procedures.

S&P lowered the ratings on the bank's outstanding bonds, with
maturities on June 22, 2017, and Sept. 2, 2020, to reflect the
virtual certainty of a default on the next coupon payments, in
the absence of financial rehabilitation procedures.

The CreditWatch negative on Peresvet Bank's rated bond issues
reflects, in S&P's view, the high likelihood of non-payment of
further coupons in the absence of financial rehabilitation.  S&P
expects to resolve the CreditWatch within one month, after it has
a better understanding of the likelihood of the bank's financial
rehabilitation and its form.


RUSSIA: Fitch Takes Rating Actions on Cos. Over Sovereign Outlook
-----------------------------------------------------------------
This rating action commentary replaces the version published on
October 20, 2016 to correct certain ratings for JSC Russian
Railways.

Fitch Ratings has taken rating actions on Russian companies,
following our revision of the Outlook of the Russian sovereign
ratings.

On October 14, 2016, Fitch revised the Outlook on Russia's
Foreign and Local Currency Issuer Default Ratings (IDR) to Stable
from Negative and affirmed them at 'BBB-'.

The rating actions are as follows:

   JSC Atomic Energy Power Corporation (Atomenergoprom)

   -- Long-Term Foreign Currency IDR affirmed at 'BBB-'; The
      Outlook is revised to Stable from Negative

The ratings of Atomenergoprom continue to be aligned with the
Russian sovereign's reflecting sole indirect state ownership, its
strategic importance to the implementation of the state's
programme for civil nuclear development, record of tangible
financial support, a centralised treasury at Rosatom level and
full representation of Rosatom's management on Atomenergoprom's
board of directors. We currently assess Atomenergoprom's
standalone profile to be commensurate with the low 'BBB' rating
category.

   PJSC Gazprom

   -- Long-Term Foreign Currency IDR affirmed at 'BBB-'; Outlook
      revised to Stable from Negative.

Gazprom's ratings and outlook are constrained by those of the
sovereign, in view of the influence Russia exerts on the company
as a key shareholder and through taxation.

   PJSC Gazprom Neft

   -- Long-Term Foreign Currency IDR affirmed at 'BBB-'; Outlook
      revised to Stable from Negative.

Gazprom Neft's rating and Outlook are capped by those of PJSC
Gazprom, its immediate parent, and Russia, due to the company's
asset concentration in the country and the influence the state
exercises on the oil and gas sector through taxes and regulation.

   JSC LUKOIL

   -- Long-Term Foreign Currency IDR affirmed at 'BBB-'; Outlook
      revised to Stable from Negative.

"We cap LUKOIL's ratings at those of the Russian sovereign."
Fitch said. This reflects the influence that the sovereign
exercises over Russian O&G companies' operations and
profitability through regulation and taxation.

   OAO Novatek

   -- Long-Term Foreign Currency IDR: affirmed at BBB-; Outlook
      revised to Stable from Negative.

Novatek's ratings are capped by Russia's rating and Outlook, due
to the company's asset concentration in the country and the
influence the state exercises on the oil and gas sector through
taxes and regulation.

   JSC Russian Railways (RZD)

   -- Long-Term Foreign Currency IDR: affirmed at BBB-; Outlook
      revised to Stable from Negative.

The ratings of RZD continue to be aligned with those of the
Russian Federation, reflecting its 100% state ownership,
strategic importance to the Russian economy, strong operational
links to the State, including tariff and capex approval by the
government, and track record of state support. "We view RZD's
standalone profile as commensurate with a low 'BBB' rating
category." Fitch said.

   JSC Federal Passenger Company (FPC)

   -- Long-Term Foreign Currency IDR: affirmed at BB+; Outlook
      revised to Stable from Negative.

FPC continues to be rated one notch below RZD's IDR reflecting
strong operational, strategic and, to a lesser extent, legal ties
with RZD given the latter's 100% direct ownership, control over
FPC's strategy, and inter-dependency of operations. Fitch has not
aligned FPC's ratings with that of RZD's owing to the absence of
explicit guarantees and also because FPC's revenue is just around
the 10% threshold, as stipulated in RZD's Eurobonds
documentation, for the company to qualify as a principal
subsidiary. Therefore FPC may not always be captured within RZD's
cross default provision.

   PJSC Federal Grid Company of Unified Energy System (FedGrid)

   -- Long-Term Foreign currency IDR: affirmed at BBB-; Outlook
      revised to Stable from Negative.

FedGrid's 'BBB-' rating continues to incorporate a one-notch
uplift for state support from its standalone rating of 'BB+'.
"The uplift is currently limited to one notch by Russia's IDR,
although we continue to assess state support as commensurate with
a two-notch uplift, reflecting ultimate majority indirect state
ownership, its strategic importance as the national electricity
transmission grid operator, strong operational ties including
tariffs and capex approval and track record of state support."
Fitch said.

   Rostelecom PJSC

   -- Long-Term Foreign Currency IDR: affirmed at 'BBB-'; Outlook
      revised to Stable from Negative.

Rostelecom's ratings are based on its standalone profile.

   Sukhoi Civil Aircraft JSC (SCAC)

   -- Long-Term Foreign Currency IDR affirmed at 'BB-'; Outlook
      revised to Stable from Negative.

SCAC's ratings are notched down three levels from the ratings of
its ultimate majority shareholder, the Russian sovereign. The
three-notch differential reflects the company's strong links to
the state but also the lack of explicit state guarantee for
SCAC's debt.

   PJSC Tatneft

   -- Long-Term Foreign Currency IDR: affirmed at 'BBB-'; Outlook
      revised to Stable from Negative.

Tatneft's ratings are based on its standalone profile.

   PJSC Inter RAO

   -- Long-Term Foreign Currency IDR: affirmed at BBB-; Outlook
      revised to Stable from Negative.

"Inter RAO's 'BBB-' rating continues to incorporate a one-notch
uplift for state support as we continue to assess the relatively
strong operational and strategic and to a lesser extent legal
ties between the company and its ultimate majority indirect
shareholder, Russian Federation." Fitch said. This is due to the
strategic importance of Inter RAO to the country's electricity
production and supply as well as the track record of tangible
state support, provided largely in kind.

   PAO Severstal

   -- Long-Term Foreign Currency IDR: affirmed at BBB-; Outlook
      revised to Stable from Negative.

Severstal's ratings are based on its standalone profile.

   PJSC Novolipetsk Steel (NLMK)

   -- Long-Term Foreign Currency IDR: affirmed at BBB-; Outlook
      revised to Stable from Negative.

NLMK's ratings are based on its standalone profile.

KEY RATING DRIVERS

'Fitch Affirms Atomenergoprom at 'BBB-'; Outlook Negative', dated
01 September 2016

'Fitch Affirms Gazprom at 'BBB-'; Outlook Negative', dated 17
August 2016

'Fitch Affirms Russia's Gazprom Neft at 'BBB-'; Outlook
Negative', dated 13 November 2015

'Fitch Affirms Russia's LUKOIL at 'BBB-'; Outlook Negative',
dated 14 June 2016

'Fitch Affirms Russia's Novatek at 'BBB-', Outlook Negative',
dated 28 September 2016

'Fitch Affirms JSC Russian Railways at 'BBB-'/Negative', dated 20
May 2016

'Fitch Affirms Federal Passenger Company at 'BB+'; Outlook
Negative', dated 23 June 2016

'Fitch Affirms PJSC Federal Grid Company UES at 'BBB-'; Outlook
Negative', dated 13 July 2016

'Fitch Affirms Rostelecom at 'BBB-'; Outlook Negative', dated 3
December 2015

'Fitch Affirms Sukhoi Civil Aircraft at 'BB-'; Outlook Negative',
dated 23 May 2016

'Fitch Affirms Tatneft at 'BBB-'; Outlook Negative', dated 11
July 2016

'Fitch Affirms Inter RAO at 'BBB-'; Outlook Negative', dated 9
June 2016

'Fitch Upgrades Severstal to 'BBB-'; Outlook Negative', dated 23
May 2016.

'Fitch Affirms NLMK at 'BBB-'; Outlook Negative', dated 23 May
2016

DERIVATION SUMMARY

These rating actions followed an outlook revision for the Russian
sovereign ratings. As a result of the application of Fitch's
Parent and Subsidiary Rating Linkage criteria the outlooks of
issuer's whose ratings were constrained by the Russian sovereign
have been changed.

KEY ASSUMPTIONS

See the relevant RAC referenced for each issuer.

RATING SENSITIVITIES

See the relevant RAC referenced for each issuer.

LIQUIDITY

[ See the relevant RAC referenced for each issuer.]

FULL LIST OF RATING ACTIONS

JSC Atomic Energy Power Corporation (Atomenergoprom)

   -- Long-Term Local Currency IDR: affirmed at 'BBB-'; Outlook
      revised to Stable from Negative

   -- Short-Term Local Currency IDR affirmed at 'F3'

   -- Long-Term Foreign Currency IDR affirmed at 'BBB-'; Outlook
      revised to Stable from Negative

   -- Short-Term Foreign Currency IDR; affirmed at 'F3'

   -- Local Currency Senior Unsecured Rating affirmed at 'BBB-'

   -- Long-Term National Rating affirmed at 'AAA(rus)'; Outlook
      Stable

PJSC Gazprom

   -- Long-Term Local Currency IDR: affirmed at 'BBB-'; Outlook
      revised to Stable from Negative

   -- Short-Term IDR: affirmed at 'F3'

   -- Long-Term Foreign Currency IDR affirmed at 'BBB-'; Outlook
      revised to Stable from Negative

   -- Foreign Currency senior unsecured rating affirmed at 'BBB-'

   -- Long-Term National Rating affirmed at AAA(rus); Outlook
      Stable
   -- Local Currency Senior Unsecured Rating for OOO Gazprom
      Capital: affirmed at 'BBB-'

   -- National Senior Unsecured Rating for OOO Gazprom Capital:
      affirmed at 'AAA(rus)'

   -- Short-Term Commercial Paper Rating for Gazprom ECP SA:
      affirmed at F3.

   -- Foreign Currency Senior Unsecured Rating for Gaz Capital
      SA: affirmed at 'BBB-'

PJSC Gazprom Neft

   -- Long-Term Local Currency IDR: affirmed at 'BBB-'; Outlook
      revised to Stable from Negative

   -- Long-Term Foreign Currency IDR: affirmed at 'BBB-'; Outlook
      revised to Stable from Negative

   -- National Long-Term Rating affirmed at 'AA+(rus)'; Outlook
      Stable

   -- Senior Unsecured Rating: affirmed at 'BBB-'

   -- Short-Term IDR affirmed at 'F3'

   -- Senior Unsecured Rating for GPN Capital SA: affirmed at
      'BBB-'

The rating actions on Gazprom Neft and GPN Capital SA applies to
all debt issued prior to 1 August 2014.

PJSC LUKOIL

   -- Long-Term Local Currency IDR: affirmed at 'BBB-'; Outlook
      revised to Stable from Negative

   -- Long-Term Foreign Currency IDR: affirmed at 'BBB-'; Outlook
      revised to Stable from Negative

   -- Senior Unsecured Rating: affirmed at 'BBB-'

   -- Short-Term IDR affirmed at 'F3'

   -- Senior Unsecured Rating for LUKOIL International Finance
      BV: affirmed at 'BBB-'

OAO Novatek

   -- Long-Term Local Currency IDR: affirmed at BBB-; Outlook
      revised to Stable from Negative

   -- Long-Term Foreign Currency IDR: affirmed at BBB-; Outlook
      revised to Stable from Negative

   -- Senior Unsecured Rating: affirmed at 'BBB-'

   -- Senior Unsecured Rating for Novatek Finance Limited:
      affirmed at 'BBB-'

   -- Long-Term National Rating affirmed at AA+(rus); The Outlook
      is Stable

The affirmation of OAO Novatek and Novatek Finance applies to all
debt issued prior to 1 August 2014.

JSC Russian Railways (RZD)

   -- Long-Term Local Currency IDR affirmed at 'BBB-'; Outlook
      revised to Stable from Negative

   -- Long-Term Foreign Currency IDR: affirmed at 'BBB-'; Outlook
      revised to Stable from Negative

   -- Local-Currency Senior Unsecured rating affirmed at 'BBB-'

   -- Short-Term Foreign Currency IDR affirmed at 'F3'

   -- Short-Term Local Currency IDR affirmed at 'F3'

   -- Long-Term National Rating affirmed at 'AAA(rus)'; Outlook
      Stable

   -- National Senior Unsecured Rating affirmed at 'AAA(rus)'

   -- RZD Capital PLC Foreign Currency Senior Unsecured Rating
      affirmed at 'BBB-'

JSC Federal Passenger Company (FPC)

   -- Long-Term Local Currency IDR: affirmed at 'BB+'; The
      Outlook is revised to Stable from Negative

   -- Long-Term Foreign Currency IDR: affirmed at 'BB+'; The
      Outlook is revised to Stable from Negative

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

   -- Short-Term local currency IDR affirmed at 'B'

   -- Local Currency Senior Unsecured rating affirmed at 'BB+'

   -- Long-Term National Rating affirmed at 'AA+(rus)'; Outlook
      Stable

PJSC Federal Grid Company of Unified Energy System (FedGrid)

   -- Long-Term Local Currency IDR: affirmed at 'BBB-'; The
      Outlook is revised to Stable from Negative

   -- Long-Term Foreign Currency IDR: affirmed at 'BBB-'; The
      Outlook is revised to Stable from Negative

   -- Local Currency Senior Unsecured Rating: affirmed at 'BBB-';

   -- Short-Term Foreign Currency IDR affirmed at 'F3'

   -- Long-Term National Rating affirmed at 'AAA(rus)'; Outlook
      Stable

   -- Federal Grid Finance Limited Local Currency Senior
      Unsecured Rating affirmed at 'BBB-';

Rostelecom PJSC

   -- Long-Term Foreign Currency IDR: affirmed at 'BBB-'; Outlook
      revised to Stable from Negative

   -- Senior Unsecured Rating: affirmed at 'BBB-'

   -- Long-Term National Rating affirmed at 'AA+(rus)'; The
      Outlook is Stable

   -- Long-Term National Senior Unsecured Rating affirmed at
      'AA+(rus)';

Sukhoi Civil Aircraft (SCAC)

   -- Long-Term Local Currency IDR: affirmed at 'BB-'; Outlook
      revised to Stable from Negative

   -- Long-Term Foreign Currency IDR affirmed at 'BB-'; Outlook
      revised to Stable from Negative

   -- Foreign and Local Currency Senior Unsecured Ratings
      affirmed at 'BB-'

   -- Short-Term IDR: affirmed at 'B'

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

   -- Long-Term National Rating affirmed at 'A+(rus)'; Outlook
      revised to Stable from Negative

   -- Short-Term National Rating affirmed at 'F1(rus)'

The rating action on SCAC applies to all debt issued prior to 1
August 2014

PJSC Tatneft

   -- Long-Term Foreign Currency IDR: affirmed at 'BBB-'; Outlook
      revised to Stable from Negative

   -- Short-Term IDR affirmed at 'F3'

PJSC Inter RAO

   -- Long-Term Local Currency IDR: affirmed at 'BBB-'; Outlook
      revised to Stable from Negative

   -- Long-Term Foreign Currency IDR: affirmed at' BBB-'; Outlook
      revised to Stable from Negative

   -- Short-Term Foreign Currency IDR affirmed at 'F3'

   -- Short-Term Local Currency IDR affirmed at 'F3'

   -- Long-Term National Rating affirmed at AA+(rus); The Outlook
      is Stable

PAO Severstal

   -- Long-Term Local Currency IDR: affirmed at 'BBB-'; Outlook
      revised to Stable from Negative

   -- Long-Term Foreign Currency IDR: affirmed at 'BBB-'; Outlook
      revised to Stable from Negative

   -- Short-Term Foreign Currency IDR affirmed at 'F3'

   -- Long-Term National Rating affirmed at 'AA+(rus)'; Outlook
      revised to Stable from Negative

   -- Abigrove Limited senior unsecured rating affirmed at 'BBB-'

   -- Senior Unsecured Loan Participation Notes Issued by Steel
      Capital SA affirmed at 'BBB-'

PJSC Novolipetsk Steel (NLMK)

   -- Long-Term foreign currency IDR: affirmed at 'BBB-'; Outlook
      revised to Stable from Negative

   -- Short-Term foreign currency IDR affirmed at 'F3'

   -- Long-Term National Rating affirmed at 'AA+(rus)'; Outlook
      revised to Stable from Negative

   -- Senior Unsecured Foreign Currency Rating affirmed at 'BBB-'
      Steel Funding Limited Senior Unsecured Rating affirmed at
      'BBB-';


RUSSIA: Fitch Takes Rating Actions on 26 Financial Institutions
---------------------------------------------------------------
Fitch Ratings has affirmed the Issuer Default Ratings (IDRs) and
debt ratings of four Russian state-owned banks, six of their
subsidiaries, two state-owned leasing companies, 14 foreign-owned
banks and National Clearing Centre, and revised the Outlooks on
all of these entities to Stable. The rating actions follow the
revision of the Outlook on Russia's sovereign rating.

KEY RATING DRIVERS - OUTLOOK REVISIONS

The Long-Term IDRs of Sberbank of Russia (Sberbank),
Vnesheconombank (VEB), Russian Agricultural Bank (RusAg),
Gazprombank (GPB), Rosagroleasing (RAL) and State Transport
Leasing Company (STLC) are underpinned by potential government
support. The revision of the Outlooks on these entities reflects
the reduced risk of a deterioration in the authorities' ability
to provide support.

The revision of the Outlook on National Clearing Centre (NCC)
reflects reduced pressure on its Viability Rating (VR), which is
closely linked to the Russian operating environment, Russia's
sovereign debt rating and counterparty ratings of Russian banks.

The revised Outlooks on the Long-Term IDRs of AO Citibank, JSC
Nordea Bank, Danske Bank (Russia), SEB Bank JSC, HSBC Bank (RR)
LLC, ING Bank (Eurasia) JSC, Rosbank, DeltaCredit Bank,
Rusfinance Bank, China Construction Bank (Limited) Russia, Bank
of China (RUSSIA), Banca Intesa (Russia), AO UniCredit Bank and
Credit Agricole CIB AO reflect the stabilisation of Russia's
Country Ceiling of 'BBB-' following the change in the sovereign
Outlook.

Russia's Country Ceiling captures transfer and convertibility
risks, and limits the extent to which support from the foreign
shareholders of these banks can be factored into their Long-Term
foreign-currency IDRs. The banks' Long-Term local-currency IDRs,
where assigned, also take into account Russian country risks.

The change in Outlooks on the Long-Term IDRs of Sberbank Leasing,
Sberbank Switzerland, JSC Subsidiary Bank Sberbank of Russia
(Kazakhstan), Sberbank Europe AG, Gazprombank Switzerland and VEB
Leasing reflects the reduced risk of a deterioration in their
parents' ability to support them. The ratings of these entities
reflect their relative strategic importance to their parents and
the track records of support.

KEY RATING DRIVERS - RATING LEVELS

The affirmation of the Long-Term IDRs and Support Rating Floors
(SRFs) of Sberbank and VEB at the sovereign level of 'BBB-', and
those of GPB and RusAg at 'BB+', reflects Fitch's view of a high
propensity of the Russian authorities to support the banks in
case of need, due to:

   -- majority state ownership (50% + one share in Sberbank; 100%
      of VEB and RusAg) or a high degree of state control and
      supervision by quasi-sovereign entities (GPB, most
      significantly by the bank's founder and shareholder PJSC
      Gazprom);

   -- the exceptionally high systemic importance of Sberbank, as
      expressed by its dominant market shares, and VEB's status
      as a development bank, RusAg's important policy role of
      supporting the agricultural sector and GPB's high systemic
      importance for the banking sector;

   -- the track record of support to the banks, including the
      large recapitalisations of GPB, RusAg and VEB; and

   -- high reputational risks for the Russian authorities/state-
      controlled shareholders of a potential default by any of
      these banks.

The ratings of GPB and RusAg are one notch lower than those of
Sberbank and VEB as the banks do not have the exceptional
systemic importance of the former or the development bank status
of the latter. The notching from the sovereign also reflects (i)
previous delays in provision of significant equity support by the
state to RusAg, and potential remaining capital needs of the
bank; and (ii) that GPB is not directly majority-owned by the
state.

The affirmation of the IDRs of Sberbank-Leasing, VEB Leasing,
Sberbank Switzerland (SBS) and Gazprombank Switzerland in line
with those of their parents reflects Fitch's view that they are
highly integrated, core subsidiaries.

The affirmation of Sberbank Europe AG and SB Sberbank of Russia
(Kazakhstan) at 'BB+' reflects Fitch's view of the high
probability of support from Sberbank. This is based on: (i) the
strategic commitment of Sberbank to support its foreign
subsidiaries in line with its external expansion strategy (ii)
the record of capital and funding support, (iii) full ownership
and common branding, (iv) high reputational risks for Sberbank in
case of the subsidiaries' default and (v) the subsidiaries' small
size relative to the parent, limiting the cost of any potential
support. The one-notch difference between parent and subsidiary
ratings reflects the greater operational independence of these
entities.

The affirmation of RAL at 'BB' and STLC at 'BB-' reflects the
moderate probability of support, in case of need, from the
sovereign. In assessing potential support to both companies,
Fitch views positively: (i) their 100% state ownership; (ii) the
companies' roles (albeit limited) in execution of state
programmes to support the agricultural sector (RAL) and the
public transport and domestic aircraft manufacturing sectors
(STLC); and (iii) the track record of past support and low cost
of potential support. STLC's Long-Term IDR is one -notch below
RAL's as it is more leveraged, while notching between the
companies' IDRs and that of the Russian sovereign reflects their
lower systemic importance and more limited policy roles compared
with bigger state banks.

FOREIGN-OWNED BANKS

The affirmations of the IDRs of the 14 foreign-owned banks
reflect Fitch's view that they are likely to be supported by
their shareholders, in case of need. Fitch's view on support is
based on the parent banks' full or majority ownership of their
subsidiaries, the high level of integration between parents and
subsidiaries, reputational risks in case of subsidiary defaults
and the limited size of the subsidiary banks, implying a small
cost of any potential support required.

The banks' foreign-currency IDRs are capped by Russia's Country
Ceiling (BBB-), and the local-currency IDRs, where assigned, also
take into account Russian country risks. The Country Ceiling
captures transfer and convertibility risks, and reflects the risk
that the subsidiary banks may not be able to utilise parent
support to service their foreign currency obligations.

NATIONAL CLEARING CENTRE

The affirmation of NCC's ratings reflects its exceptionally
strong credit profile in the context of the local market, based
on its intrinsic strength, as reflected in its 'bbb' Viability
Rating (VR). The latter is driven by NCC's high resilience to
potential losses due to strong risk management and controls, the
largely short-term nature of its risk exposures, and robust
solvency, which is further protected by extra buffers and a loss
cap (with any excess loss to be shared among market
participants). The VR also reflects strong liquidity, its
countercyclical and very cheap funding base and continued robust
performance.

NCC's Long-Term foreign-currency IDR of 'BBB-' is constrained by
Russia's Country Ceiling. The foreign-currency IDR is driven by
the VR, but also underpinned at this level by potential sovereign
support. Fitch views the propensity of the sovereign to provide
support to NCC as high given its important role in ensuring the
proper functioning of local financial markets and its unique
infrastructure. A failure of NCC to perform its functions could
lead to serious confidence-related issues and have a material
negative impact on the whole Russian financial system.

NATIONAL RATINGS

The affirmation of the entities' National Ratings reflects
Fitch's view that they remain among the strongest credits in
Russia.

DEBT RATINGS

The senior unsecured debt ratings (including the debt issues
issued by special purpose vehicles) are aligned with the
respective institutions' IDRs. The ratings of 'old-style'
subordinated debt issues are notched down once from the Long-Term
IDRs.

The ratings of debt issued by Sberbank, VEB, RusAg, GPB and their
subsidiaries apply to debt issued prior to 1 August 2014.

RATING SENSITIVITIES

The IDRs and Outlooks of the entities covered in this commentary
are sensitive primarily to a change in Russia's sovereign rating.
A significant weakening of the propensity of the state (in the
case of state-owned banks and leasing companies) or of parent
banks (in the case of foreign-owned banks and the subsidiaries of
state-owned banks) to provide support could also result in a
downgrade.

NCC's VR could be downgraded in case of substantial operating
losses from mismanagement and/or operating environment
deterioration, repetitive or prolonged IT-system outages,
frequent/substantial utilisation of CBR liquidity facilities or a
significant decrease in capitalisation.

The rating actions are as follows:

   Sberbank of Russia

   -- Long-Term foreign- and local-currency IDRs: affirmed at
      'BBB-'; Outlooks revised to Stable from Negative

   -- Short-Term foreign- and local-currency IDRs: affirmed at
      'F3'

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

   -- Viability Rating: 'bbb-', unaffected

   -- Support Rating: affirmed at '2'

   -- Support Rating Floor: affirmed at 'BBB-'

   SB Capital S.A.

   -- Senior unsecured debt rating: affirmed at 'BBB-'

   -- Subordinated debt rating for "old-style" issue (ISIN
      XS0848530977): affirmed at 'BB+'

   -- Subordinated debt rating for "new-style" issues (ISIN
      XS1032750165, ISIN XS0935311240): 'BB+', unaffected

   Vnesheconombank

   -- Long-Term foreign- and local-currency IDRs: affirmed at
      'BBB-'; Outlooks revised to Stable from Negative

   -- Short-Term foreign currency IDR: affirmed at 'F3'

   -- National Long-Term rating: affirmed at 'AAA(rus)'; Outlook
      Stable

   -- Support Rating: affirmed at '2'

   -- Support Rating Floor: affirmed at 'BBB-'

   -- Senior unsecured debt: affirmed at 'BBB-'

   -- Senior unsecured debt of VEB Finance PLC: affirmed at 'BBB-
'

   Gazprombank

   -- Long-Term foreign- and local-currency IDRs: affirmed 'BB+';
      Outlooks revised to Stable from Negative

   -- Short-Term foreign-currency IDR: affirmed at 'B';

   -- National Long-Term rating: affirmed at 'AA+(rus)'; Outlook
      Stable

   -- Viability Rating: 'bb-', unaffected

   -- Support Rating: affirmed at '3'

   -- Support Rating Floor: affirmed at 'BB+'

   -- Senior unsecured debt: affirmed at 'BB+'/ 'AA+(rus)'

   -- Senior unsecured debt of GPB Eurobond Finance PLC: affirmed
      at 'BB+'

   -- 'Old-style' subordinated debt of GPB Eurobond Finance PLC:
      affirmed at 'BB'

   -- 'New-style' subordinated debt of GPB Eurobond Finance PLC:
      'B+', unaffected

   RusAg

   -- Long-Term foreign- and local-currency IDRs: affirmed at
      'BB+'; Outlooks revised to Stable from Negative

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

   -- Viability Rating: 'b-', unaffected

   -- National Long-Term rating: affirmed at 'AA+(rus)'; Outlook
      Stable

   -- Support Rating: affirmed at '3'

   -- Support Rating Floor: affirmed at 'BB+'

   -- Senior unsecured debt: affirmed at 'BB+'/ 'AA+(rus)'

   -- Senior unsecured debt of RSHB Capital S.A.: affirmed at
      'BB+'/ 'AA+(rus)'

   Gazprombank (Switzerland) Ltd

   -- Long-Term foreign-currency IDR: affirmed at 'BB+'; Outlook
      revised to Stable from Negative

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

   -- Support Rating: affirmed at '3'

   -- Senior unsecured debt: affirmed at 'BB+'

   OJSC VEB-Leasing

   -- Long-Term foreign- and local-currency IDRs: affirmed at
      'BBB-'; Outlooks revised to Stable from Negative

   -- Short-Term foreign-currency IDR: affirmed at 'F3'

   -- National Long-Term rating: affirmed at 'AAA(rus)'; Outlook
      Stable

   -- Support Rating: affirmed at '2'

   -- Senior unsecured debt: affirmed at 'BBB- '/ 'AAA(rus)'

   -- Senior unsecured debt of VEB Leasing Investment Ltd:
      affirmed at 'BBB-'

   Sberbank Leasing

   -- Long-Term foreign- and local-currency IDRs: affirmed at
      'BBB-'; Outlook revised to Stable from Negative

   -- Short-Term foreign-currency IDR: affirmed at 'F3'

   -- National Long-Term rating: affirmed at 'AAA(rus)'; Outlook
      Stable

   -- Support Rating: affirmed at '2'

   Rosagroleasing

   -- Long-Term foreign-currency IDR: affirmed at 'BB'; Outlook
      revised to Stable from Negative

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

   -- National Long-Term rating: affirmed at 'AA(rus)'; Outlook
      Stable

   -- Support Rating: affirmed at '3'

   -- Support Rating Floor: affirmed at 'BB'

   State Transport Leasing Company

   -- Long-Term foreign- and local-currency IDRs: affirmed at
      'BB-', Outlooks revised to Stable from Negative

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

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

   -- Support Rating: affirmed at '3'

   -- Support Rating Floor: affirmed at 'BB-'

   -- Senior unsecured debt rating: affirmed at 'BB-'/'A+(rus)'

   GTLK Europe Limited

   -- Guaranteed Notes Long-Term Rating: affirmed at 'BB-'

   Subsidiary Bank Sberbank of Russia

   -- Long-Term foreign- and local-currency IDRs: affirmed at
      'BB+'; Outlooks revised to Stable from Negative

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

   -- Support Rating: affirmed at '3'

   -- Viability Rating: 'b+', unaffected

   -- National Long-Term Rating affirmed at 'AA-(kaz)'; Outlook
      revised to Stable from Negative

   -- Senior unsecured debt rating: affirmed at 'BB+'

   -- National senior unsecured debt rating: affirmed at 'AA-
      (kaz)'

   -- Subordinated debt rating: affirmed at 'BB'

   -- National subordinated debt rating: affirmed at 'A+(kaz)'

   Sberbank Europe

   -- Long-Term IDR: affirmed at 'BB+'; Outlook revised to Stable
      from Negative

   -- Short-Term IDR: affirmed at 'B'

   -- Support Rating: affirmed at '3'

   -- Viability Rating: 'b+', unaffected

   Sberbank Switzerland

   -- Long-Term IDR: affirmed at 'BBB-'; Outlook revised to
Stable from Negative

   -- Short-Term IDR: affirmed at 'F3'

   -- Support Rating: affirmed at '2'

   Rosbank

   -- Long-Term foreign- and local-currency IDRs: affirmed at
      'BBB-'; Outlooks revised to Stable from Negative

   -- Short-Term foreign-currency IDR: affirmed at 'F3'

   -- National Long-Term rating: affirmed at 'AAA(rus)'; Outlook
      Stable

   -- Viability Rating: 'bb+', unaffected

   -- Support Rating: affirmed at '2'

   -- Senior unsecured market linked securities: affirmed at
      'BBB- (emr)'

   -- Senior unsecured debt Long-Term Rating: affirmed at 'BBB-
      '/'AAA(rus)'

   -- Senior unsecured debt Short-Term Ratings: affirmed at 'F3'

   Rusfinance Bank

   -- Long-Term foreign- and local-currency IDRs: affirmed at
      'BBB-'; Outlooks revised to Stable from Negative

   -- Short-Term foreign-currency IDR: affirmed at 'F3'

   -- National Long-Term rating: affirmed at 'AAA(rus)'; Outlook
      Stable

   -- Viability Rating: 'bb+', unaffected

   -- Support Rating: affirmed at '2'

   -- Senior unsecured debt: affirmed at 'BBB-'/'AAA(rus)'

   DeltaCredit Bank

   -- Long-Term foreign- and local-currency IDRs: affirmed at
      'BBB-'; Outlooks revised to Stable from Negative

   -- Short-Term foreign-currency IDR: affirmed at 'F3'

   -- National Long-Term rating: affirmed at 'AAA(rus)'; Outlook
      Stable

   -- Viability Rating: 'bb+', unaffected

   -- Support Rating: affirmed at '2'

   -- Senior unsecured debt: affirmed at 'BBB-'/'AAA(rus)'

   AO Citibank

   -- Long-Term foreign- and local-currency IDRs: affirmed at
      'BBB-'; Outlooks revised to Stable from Negative

   -- Short-Term foreign-currency IDR: affirmed at 'F3'

   -- National Long-Term rating: affirmed at 'AAA(rus)'; Outlook
      Stable

   -- Viability Rating: 'bbb-', unaffected

   -- Support Rating: affirmed at '2'

   AO UniCredit Bank

   -- Long-Term foreign- and local-currency IDRs: affirmed at
      'BBB-'; Outlooks revised to Stable from Negative

   -- Short-Term foreign- and local-currency IDRs: affirmed at
      'F3'

   -- National Long-Term rating: affirmed at 'AAA(rus)'; Outlook
      Stable

   -- Support Rating: affirmed at '2'

   -- Viability Rating: 'bbb-', unaffected

   Banca Intesa

   -- Long-Term foreign- and local-currency IDRs: affirmed at
      'BBB-'; Outlooks revised to Stable from Negative

   -- Short-Term foreign- and local-currency IDRs: affirmed at
      'F3'

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

   -- Support Rating: affirmed at '2'

   -- Viability Rating: 'b+', unaffected

   -- Senior debt Long-Term rating: affirmed at 'BBB-'

   Bank of China (RUSSIA), China Construction Bank (Russia), HSBC
   Bank (RR) LLC

   -- Long-Term foreign-currency IDR: affirmed at 'BBB-'; Outlook
      revised to Stable from Negative

   -- Short-Term foreign-currency IDR: affirmed at 'F3'

   -- Long-Term local-currency IDR: affirmed at 'BBB-', Outlook
      revised to Stable from Negative

   -- National Long-Term rating: affirmed at 'AAA'(rus); Outlook
      Stable

   -- Support Rating: affirmed at '2'

   Credit Agricole CIB AO

   -- Long-Term foreign- and local-currency IDRs: affirmed at
      'BBB-'; Outlooks revised to Stable from Negative

   -- Short-Term foreign- and local-currency IDRs: affirmed at
      'F3'

   -- National Long-Term rating: affirmed at 'AAA'(rus); Outlook
      Stable

   -- Support Rating: affirmed at '2'

   Danske Bank (Russia), JSC Nordea Bank and SEB Bank JSC

   -- Long-Term foreign-currency IDR: affirmed at 'BBB-'; Outlook
      revised to Stable from Negative

   -- Short-Term foreign-currency IDR: affirmed at 'F3'

   -- National Long-Term rating: affirmed at 'AAA'(rus); Outlook
      Stable

   -- Support Rating: affirmed at '2'

   ING Bank (Eurasia) JSC

   -- Long-Term foreign- and local-currency IDRs: affirmed at
      'BBB-'; Outlooks revised to Stable from Negative

   -- Short-Term foreign-currency IDR: affirmed at 'F3'

   -- National Long-Term rating: affirmed at 'AAA'(rus); Outlook
      Stable

   -- Support Rating: affirmed at '2'

   -- Senior unsecured debt: affirmed at 'BBB-'/'AAA'(rus)

   National Clearing Centre

   -- Long-Term foreign-currency IDR: affirmed at 'BBB-'; Outlook
      revised to Stable from Negative

   -- Long-Term local-currency IDR: affirmed at 'BBB'; Outlook
      revised to Stable from Negative

   -- Short-Term IDR: affirmed at 'F3'

   -- Support Rating: affirmed at '2'

   -- Support Rating Floor affirmed at 'BBB-'

   -- Viability Rating: affirmed at 'bbb'

   -- National Long-Term rating: affirmed at 'AAA(rus)'; Outlook
      Stable


RUSSIA: Fitch Revises Three PSEs' Outlook to Stable
---------------------------------------------------
Fitch Ratings has revised three Russian public sector entities'
(PSEs) Outlook to Stable from Negative, following the agency's
rating action on the Russian sovereign. The affected PSEs are
Russian Highways State Company - AVTODOR, Post of Russia and
Russia's Ural Federal University (UrFU).

KEY RATING DRIVERS

Fitch uses its PSE rating criteria and views AVTODOR, Post of
Russia and UrFU as credit-linked to the sovereign. The ratings of
AVTODOR and Post of Russia are equalised with those of their
sponsor, The Russian Federation while UrFU's ratings are notched
down twice from the Russian Federation's.

"Following the recent Outlook revision on Russia's Long-Term
Issuer Default Ratings (IDRs) we have taken similar rating
actions on the Long-Term IDRs of these issuers as they are credit
linked to the sovereign's ratings." Fitch said. The change in
Outlook to Stable on UrFU's National Long-Term Rating mirrors the
Outlook on the PSE's Long-Term IDRs.

The rating drivers for the Long-Term Foreign and Local Currency
IDRs, National Long-Term Ratings and Short-Term Foreign Currency
IDRs of the PSEs under consideration are unaffected, leading to
the affirmation.

RATING SENSITIVITIES

Rating changes to The Russian Federation will be mirrored in the
ratings of the three PSEs. Weakening links with the sponsor or
decline of state support as a result of legal status change could
also lead to a downgrade.

The rating actions are as follows:

AVTODOR

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

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

   -- Short-Term Foreign Currency IDR: affirmed at 'F3'

   -- Senior unsecured debt: affirmed at 'BBB-'/'AAA(rus)'

Post of Russia

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

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

   -- Short-Term Foreign Currency IDR: affirmed at 'F3'

   -- Senior unsecured debt: affirmed at 'BBB-'/'AAA(rus)'

UrFU

   -- Long-Term Foreign and Local Currency IDRs: affirmed at
      'BB'; Outlook revised to Stable from Negative

   -- National Long-Term Rating: affirmed at 'AA-(rus)'; Outlook
      revised to Stable from Negative

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


SINEK: Fitch Affirms 'BB+' LT Currency Issuer Default Ratings
-------------------------------------------------------------
Fitch Ratings has revised Tatarstan government-owned investment
holding company OAO Svyazinvestneftekhim's (SINEK) Outlook to
Stable from Negative, while affirming the Long-Term Foreign and
Local Currency Issuer Default Ratings (IDRs) of at 'BB+'. The
Short-Term Foreign Currency IDR has been affirmed at 'B'.

Following the recent Outlook revision on Tatarstan (BBB-/Stable)
we have taken similar rating actions on the Long-Term IDRs of
SINEK as it is credit-linked to Tatarstan's ratings.

KEY RATING DRIVERS

Credit-Linked PSE: Fitch classifies SINEK as a credit-linked
entity to its 100% owner, the Republic of Tatarstan, under its
Rating of Public-Sector Entities criteria and judges that
extraordinary support on a timely basis in case of financial
stress is highly probable.

"SINEK holds stakes in the largest corporations in Tatarstan, and
we view its strategic importance, control and oversight by the
government as strong." Fitch said. However, the entity's legal
status and midrange integration with the public finances,
particularly a lack of Tatarstan's guarantees on the company's
liabilities, leads to a one-notch differential of SINEK's ratings
from Tatarstan's IDRs.

High Strategic Importance: Fitch assesses SINEK's strategic
importance as strong as the company is Tatarstan's only
specialised public sector entity (PSE), acting as the republic's
policy arm in the republic's shareholdings management and local
economic development. In addition to its major role as investment
holding company, SINEK acts as the republic's vehicle for raising
funds in financial markets, including international capital
markets, and contributes to the stability and development of the
regional financial sector.

Tight Control: SINEK operates under strict control and oversight
from Tatarstan, with President of republic heading its Board of
Directors. SINEK's strategic plans and borrowing decisions are
subject to the government's approval. The republic appoints
SINEK's top management, audit committee and external auditor.

Midrange Integration with Public Finances: Fitch views SINEK's
budgetary and financial integration with Tatarstan as moderate.
The company has a separate balance sheet and the republic is not
legally responsible for SINEK's obligations. Historically, SINEK
has never received direct financial aid from Tatarstan, but
dividends from the republic's portfolio companies are retained
within SINEK. The bulk of these funds are further allocated to
local economic agents at the republic's discretion in the form of
charitable donations or financial assets (deposits, subsidised
loans).

Speculative-Grade Standalone Profile: SINEK's standalone profile
is supported by stable, albeit concentrated, dividends from
investment-grade-rated PJSC Tatneft (BBB-/Stable; approximately
70% of total dividend income). The credit profile of SINEK is
constrained by weaker companies in the company's portfolio,
exposure to AK BARS Bank (ABB, BB-/Negative/ccc), which has
received support from SINEK in the past, and by its cash being
mainly held at ABB.

RATING SENSITIVITIES

Rating direction for SINEK will depend on the rating of
Tatarstan, as SINEK's rating and Outlook are credit-linked to the
republic's. In addition, changes to SINEK's policy role that
would lead to a dilution of control by, or diminished likelihood
of support from, Tatarstan could result in widening of the
notching from Tatarstan's ratings.

Given the policy role of the entity, Fitch is now applying its
Public Sector Entities Criteria in its analysis of SINEK.


SOVCOMBANK: Fitch Hikes LT Issuer Default Ratings to 'BB-'
----------------------------------------------------------
Fitch Ratings has upgraded Sovcombank's (SCB) and SDM Bank's
(SDM) Long-Term Issuer Default Ratings (IDRs) to 'BB-' from 'B+'.
The Outlooks on both banks' ratings are Stable.

Fitch has also affirmed the IDRs of Locko-Bank (Locko), Absolut
Bank (Absolut), Expobank (EB) at 'B+', and Russian Universal Bank
(Rusuniversal) at 'B'. The Outlook on Locko has been revised to
Stable from Negative. The Outlook on Absolut remains Negative and
those on EB and Rusuniversal remain Stable.

The rating actions reflect the banks' fairly stable financial
performance through the credit downcycle, in particular (i)
limited asset quality deterioration (somewhat higher in Absolut,
partly due to the acquisition of a small failed bank), (ii)
generally healthy performance (especially robust in SCB, but weak
in Absolut), and (iii) reasonable capital buffers (stronger in
SDM and EB).

Negatively, the ratings continue to reflect the banks' fairly
narrow franchises resulting in, among other things, significant
balance sheet concentrations and some uncertainty regarding the
future growth strategy in a still challenging environment.

The upgrade of SDM and SCB and their one-notch higher ratings
than Locko, Absolut and EB reflect their stronger financial
metrics relative to peers and an extended track record of more
resilient asset quality and earnings through the credit cycle.
The one-notch lower rating of Rusuniversal compared with Locko,
Absolut and EB reflects its limited franchise, which effectively
caps the rating at 'B'.

The Negative Outlook on Absolut reflects (i) considerable
downside asset quality risks mostly stemming from reportedly
performing but potentially vulnerable credit exposures and
investment properties, (ii) and modest pre-impairment
profitability, which may be insufficient to absorb impairment
losses related to the above-mentioned exposures.

The Stable Outlooks on the other five banks reflect Fitch's view
that their pre-impairment profitability should be sufficient to
cover potential loan impairments and avoid losses hitting
capital.

KEY RATING DRIVERS

IDRS, VRS AND NATIONAL RATINGS

SCB

At end-1H16, SCB's reported NPLs were at low 4.2% of gross loans
and were mainly attributable to the bank's retail book (37% of
total loans). Corporate book was mainly represented by granular,
low-risk exposures to Russian sub-sovereigns and municipalities
or top tier companies, which are predominantly state-owned or
rated at' BB' or higher. The quality of bond portfolio (around
60% of total assets) is also strong as 85% of bonds are also
rated 'BB' or higher. Downside asset quality risks stem from
sizable exposure to a failed Russian bank (15% of end-1H16 Fitch
Core Capital (FCC)). Subsequently this exposure was 50%
provisioned and reduced to 6-7% of FCC at end-3Q16.

Fitch views SCB core performance as robust despite around 60% of
operating profit in 1H16 being derived from positive mark-to-
market (MTM) revaluation of the bond portfolio, which is a
volatile income source. But even net of these MTN gains
annualised return on average equity (ROAE) for 1H16 and 2015 was
solid at 37% and 28%, respectively.

Material interest rate risk exists given the size of the bond
book, but this is mitigated by the high issuer diversification
and solid capital buffer relative to potential MTM losses and the
bank's track record of managing this risk (in the worst case
there is an option to classify bonds into held to maturity
category to avoid MTM losses).

SCB has predominantly been funded by fairly granular retail
deposits (43% of total liabilities at end-1H16) and secured repo
borrowings from the Central Bank of Russia (CBR) and large
Russian banks (a further 45% of liabilities). Liquidity is
supported by a sizable liquidity cushion, including cash and
unpledged securities (29% of end-1H16 total liabilities), and a
high-quality loan book (11% of liabilities), which also, at least
partially, could be pledged with the CBR.

SDM

SDM's NPLs remained a low 1.3% of end-1H16 gross loans with
restructured loans accounting for an additional 2.3%, compared
with 5.6% loan impairment reserves. Despite high concentrations
(top 25 borrowers accounted for 58% of end-1H16 corporate loans
or 1.8x FCC), Fitch views the quality of SDM's largest exposures
as generally adequate. The higher-risk part is exposure to
construction and property rental businesses (48% of FCC), but
these are well covered by hard collateral.

SDM's capital position improved in 1H16, as expressed by a 17.2%
FCC ratio (compared with14.6% at end-2015), due to a 16.5% return
on equity for 2015. Current regulatory capitalisation allows
absorption of about 12% of loan losses, which is a solid buffer.
Fitch does not expect capital ratios to materially decrease in
the near-term due to limited loan growth.

Pre-impairment profit (annualised 9% of average loans in 1H16)
benefits from fairly low funding costs (5% in 1H16), reflecting
SDM's high share of interest-free customer accounts (37% of end-
1H16 liabilities). Liquidity risks are mitigated by a
considerable liquidity cushion, which was sufficient to withstand
a substantial 65% reduction in customer funding at end-9M16.

LOCKO

NPLs accounted for a moderate 7% of gross loans at end-1H16 (5%
at end-2015), while restructured loans made up an additional 7%
(4.3% at end-2015). NPLs were 0.8x covered by reserves at same
date, which is adequate in Fitch's view, because the bank has
sound recovery prospects for few largest NPLs.

Single borrower concentration is moderate: top 25 borrowers
accounted for 1x FCC and most of them were exposed to real estate
and construction (total 0.6x FCC). Fitch views half of these
loans as of adequate risk since they are amortising and
underlying projects are performing, while the other half (0.3x
FCC) is of higher risk, as the collateral is fairly illiquid real
estate objects, although loan-to-value (LTV) is reasonable in
most cases. Restructured loans perform adequately under
renegotiated terms.

The bank's FCC ratio was a sound 18.3% at end-1H16 (20.3% at end-
2015), regulatory Tier 1 ratio was lower 10.3% (6% required
minimum) at end-9M16 and total ratio was 11.6% (8% required
minimum), due to more conservative risk weighting in regulatory
accounts. The bank would have been able to book additional
impairment reserves equal to 8% (up to 14% total) of gross loans
without breaching the regulatory minimum. Annualised pre-
impairment profit equalled 7% (largely due to high securities
gains, while net of that it would be 5%) of gross loans also
underpins adequate loss absorption capacity.

Funding concentration is low (20-largest clients accounted for a
moderate 20% of end-1H16 total customer accounts). Locko had a
large cushion of liquid assets as of end-8M16: net of potential
money market repayments maturing within the next 12 months,
liquidity buffer covers customer accounts by 39%.

EB

EB's asset quality has slightly deteriorated over the last 12
months as NPLs increased to 3.6% of gross loans at end-1H16 (1.3x
reserved) from a negligible 0.6% at end-2015 (2.3x reserved), due
to the default of two of its largest borrowers, which had been
fully reserved. The bank's loan book is highly concentrated by
name (25-largest borrowers made up 78% of total loans, or 1.5x
FCC). The potentially more volatile real estate and construction
sector represented 43% of gross loans; however, in many cases the
collateral is completed projects with reasonable LTVs.

The bank's FCC ratio was a comfortable 18.5% at end-1H16. The
regulatory Tier 1 ratio was a lower 10.5% (6% required minimum)
at end-9M16 due to more conservative risk-weighted assets
calculation in regulatory accounts and current year earnings of
around 2% of RWAs, which were not audited and therefore accounted
as Tier 2 capital. Fitch estimates that the bank's regulatory
capital buffer is sufficient to increase impairment reserves up
to a considerable 23%, from the current 7%.

EB demonstrates reasonable execution of M&A deals, including the
recent (in 1H16) acquisition of Royal Bank of Scotland Russia
(RBSR) with a substantial discount resulting in a RUB1.8bn gain.
This also supported the overall profitability (annualised ROAE of
54% in 1H16), while net of that gain, ROAE would have been 18%,
although also largely due to MTM gains on securities. The
profitability of the core banking business is modest.
The bank's liquidity cushion covered customer accounts by a high
80% at end-1H16, while market refinancing needs are limited. EB
is likely to repay at least a part of corporate accounts
inherited from RBSR although these made up only 15% of total
customer accounts at end-9M16.

Absolut

Absolut's credit profile benefits from a strong commitment of the
majority shareholder, Non-State Pension Fund Blagosostoyanie
(NPFB), ultimately controlled by JSC Russian Railways (BBB-
/Negative), in assisting the bank in its development. The fund
has a track record of providing considerable funding and equity
capital to the bank and Absolut's significant involvement in
servicing companies related to NPFB and Russian Railways.

At end-1H16, the bank's reported FCC ratio was at 9.4%, which
improved to 11.3% after a new RUB5bn equity injection by NPFB in
September 2016. Regulatory core tier 1 capital ratio at end-9M16
was also reasonable at 7.9% (minimum 6%). However, Fitch views
Absolut's capital in the context of bank's vulnerable asset
quality and modest core performance (the bank's ROAE of 8% in
1H16 was solely due to a gain from the recognition of negative
goodwill on the acquisition of failed BaltInvestBank).

Absolut's NPLs were at 7.8% of gross loans at end-1H16, up from
3% at end-1H15, due to failure of two fairly large borrowers.
Restructured loans made up a further 17% (14% at end-2015) due to
the acquisition of BaltInvestBank. Additional downside asset
quality risks stem from considerable exposure to potentially low
liquid, high risk unrated domestic bonds (32% of post-recap FCC),
and sizable non-core investment properties (69% of post-
recapitalisaion FCC).

The bank's liquidity is moderate with a buffer covering 21% of
customer accounts at end-1H16. Absolut faces only moderate
refinancing risk as wholesale funding maturing within 12 months
(RUB19bn, or 7% of end-1H16 liabilities) was significantly below
the bank's liquid assets, which equalled RUB43bn (16% of end-1H16
liabilities).

Rusuniversal

Rusuniversal's IDRs are constrained by the bank's narrow
franchise, highly concentrated mostly relationship-based
concentrated business and tighter regulation on banking services
to defence industry enterprises that may adversely affect
Rusuniversal's business. Positively, the ratings acknowledge
Rusuniversal's strong financial metrics.

Rusuniversal focuses mainly on defence sector companies with whom
the bank's management and shareholders have long-standing
relations. Both loans and deposits are extremely concentrated.
The bank had only 13 corporate loans (while retail lending is
negligible), while the top 10 depositors represented 86% of total
customer accounts at end-1H16. Regulatory risk stems from some
overlap between depositors and borrowers.

Fitch also believes that tighter regulation may result in about
25% of Rusuniversal's customer accounts moving to other banks.
Although this would be manageable for the bank given full
coverage of customer accounts by liquid assets, this could
negatively affect Rusuniversal's business and performance.

Rusuniversal's metrics remain robust. The bank has zero NPLs and
very high regulatory capitalisation (total capital ratio was
above 100% at end-9M16).

SUPPORT RATINGS AND SUPPORT RATING FLOORS

The '5' Support Ratings (SRs) for all six banks reflect Fitch's
view that support from the banks' shareholders, although
possible, cannot be relied upon. The Support Ratings and Support
Rating Floors (SRFs) of 'No Floor' also reflect that support from
the Russian authorities, cannot be relied upon due to the banks'
small size and lack of overall systemic importance. Accordingly,
the IDRs of all six banks are based on their intrinsic financial
strengths, as reflected by their VRs.

SENIOR UNSECURED DEBT RATINGS

The banks' senior unsecured debt, where rated, is affirmed at the
same level as their Long-Term IDRs and National Ratings,
reflecting Fitch's view of average recovery prospects, in case of
default.

SUBORDINATED DEBT RATINGS

Absolut's 'new-style' Tier 2 subordinated debt rating is affirmed
and is one notch below the bank's VR, in accordance with Fitch's
criteria for rating such instruments. This includes (i) zero
notches for additional non-performance risk relative to the VR,
as Fitch believes these instruments should only absorb losses
once a bank reaches, or is very close to, the point of non-
viability; (ii) one notch for loss severity, reflecting below-
average recoveries in case of default.

RATING SENSITIVITIES

IDRS, VRS, NATIONAL RATINGS

Downside pressure on all six banks' IDRs stems from potential
asset quality deterioration if it erodes any of the banks'
profitability and capital. These risks are higher for Absolut
bank as expressed by the Negative Outlook on its ratings. A
significant liquidity squeeze would also be credit-negative.

Upside for SCB and SDM is limited by their small franchises.
Upside for Locko's and EB's ratings would be contingent on
improvement in asset quality, an extended track record of
reasonable financial metrics and adaptation of business models to
more traditional banking (EB) and a low interest rate
environment.

Franchise limitations also constrain any upside for
Rusuniversal's ratings. The rating could be downgraded if the
bank's franchise narrows as a result of tightening regulation.

SUPPORT RATINGS AND SUPPORT RATING FLOORS

Positive rating action is unlikely in the foreseeable future,
although acquisition by a stronger owner could lead to an upgrade
of the Support Ratings.

SENIOR UNSECURED DEBT AND SUBORDINATED DEBT

Senior unsecured debt ratings are sensitive to changes in banks'
IDRs. Absolut's subordinated debt rating will move in tandem with
the bank's VR.

The rating actions are as follows:

   SCB

   -- Long-Term Foreign and Local Currency IDRs: upgraded to BB-
      from 'B+'; Outlooks Stable

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

   -- National Long-Term Rating: upgraded to 'A+(rus)'from
      'A(rus)'; Outlook Stable

   -- Viability Rating: affirmed at 'b+'

   -- Support Rating: affirmed at '5'

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

   -- Senior unsecured debt: assigned at 'BB-'/Recovery Rating
      'RR4'

   SDM

   -- Long-Term Foreign and Local Currency IDRs: upgraded to
      'BB-' from 'B+'; Outlooks Stable

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

   -- Viability Rating: upgraded to 'bb-' from 'b+'

   -- Support Rating: affirmed at '5'

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

   -- National Long-Term Rating: upgraded to 'A+(rus)' from 'A-
      (rus)'; Outlook Stable

   Locko

   -- Long-Term Foreign and Local Currency IDRs: affirmed at
      'B+', Outlooks revised to Stable from Negative

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

   -- Viability Rating: affirmed at 'b+'

   -- Support Rating: affirmed at '5'

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

   -- National Long-Term Rating: affirmed at 'A-(rus)', Outlook
      revised to Stable from Negative

   -- Senior unsecured debt: affirmed at 'B+'/Recovery Rating
      'RR4' and 'B+(EXP)'/Recovery Rating 'RR4(EXP)'

   -- Senior unsecured debt National long-term rating: affirmed
      at  'A-(rus)'and 'A- (rus)(EXP)'

   Expobank LLC:

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

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

   -- Support Rating affirmed at '5'

   -- Viability Rating affirmed at 'b+'

   -- Support Rating Floor affirmed at 'No Floor'

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

   -- Senior unsecured debt affirmed at 'B+'/Recovery Rating
      'RR4'

   -- Senior unsecured debt National long-term rating affirmed at
      'A-(rus)'

   Absolut Bank

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

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

   -- Viability Rating affirmed at 'b+'

   -- Support Rating affirmed at '5'

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

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

   -- Senior unsecured debt: affirmed at 'B+'/Recovery Rating
      'RR4'

   -- Senior unsecured debt National long-term rating: affirmed
      at 'A-(rus)'

   -- Subordinated debt: affirmed at 'B'/Recovery Rating 'RR5'

   -- Subordinated debt National long-term rating: affirmed at
      'BBB+(rus)'

   Russian Universal Bank:

   -- Long-Term Foreign and Local Currency IDRs affirmed at 'B',
      Outlook Stable

   -- National Long-Term Rating affirmed at 'BBB-(rus)', Outlook
      Stable

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

   -- Viability Rating affirmed at 'b'

   -- Support Rating affirmed at '5'

   -- Support Rating Floor affirmed at 'No Floor'


UDMURTIA: Fitch Affirms 'BB-' Long Term Issuer Default Ratings
--------------------------------------------------------------
Fitch Ratings has affirmed Russian Republic of Udmurtia'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 'A+(rus)'. The Outlooks on the
Long-Term ratings are Negative. The republic's outstanding senior
unsecured domestic bonds have been affirmed at 'BB-' and
'A+(rus)'.

The affirmation reflects Fitch's unchanged baseline scenario
regarding the weak budgetary performance of Udmurtia. The
Negative Outlook reflects growing risks of failure to restore the
region's current balance to positive territory over the medium-
term. It also reflects our expectation that Udmurtia's direct
risk will continue to increase on the back of a persistent fiscal
deficit.

KEY RATING DRIVERS

The ratings reflect Udmurtia's negative current balance and high
direct risk. The ratings also take into account a diversified
local economy, which however has been slowing down since 2014, in
line with the national economic downturn, and a weak
institutional framework for Russian sub-nationals.

Fitch forecasts Udmurtia's operating margin will remain weak, but
positive at around 2% in 2016-2018, reflecting a sluggish local
economy and rigid operating spending. The agency estimates the
current margin will still be a negative 2-3% during the same
period, weighed down by high interest expenses, in turn putting
pressure on the republic's creditworthiness.

Fitch expects the republic to shrink its budget deficit to 9%-10%
of total revenue over the medium-term, from an average of 14.6%
in 2012-2015, as required by Russia's Ministry of Finance in
return for federal financial support. For 1H16 Udmurtia reported
a 21% rise in corporate income tax proceeds the from the oil and
gas sector due to a one-off technical effect from tax collection
procedures, but the increase was matched by a rise in spending.
For 7M16 the administration recorded a RUB3bn budget deficit,
which is within our expectations.

"We expect the budget deficit to result in direct risk further
increasing towards 100% of current revenue by end-2018." Fitch
said. In 2015 direct risk increased to 79.4% of current revenue,
up slightly from 75.4% in 2014, as Udmurtia used its cash
reserves to finance part of its budget deficit. Despite growing
debt, interest expenditure should stabilise at 5%-6% of operating
revenue, due to an increased share of low-cost federal loans in
the debt structure.

As with most other Russian regions, Udmurtia is exposed to
refinancing pressure with 65% of its direct risk maturing in
2016-2018. As of October 1, 2016 maturities for this year
accounted for RUB3.9bn (9% of direct risk).

During 1Q16 the republic received RUB5.9bn of three-year federal
budget loan at near-zero interest to replace part of its
commercial debt, which helped ease refinancing pressure.
Immediate refinancing needs are offset by RUB4.2bn stand-by
credit lines from the Treasury of Russia. The republic is an
active participant on the domestic bond market and in September
2016 issued a 10-year RUB5bn domestic bond, which positively
extended its debt repayment profile.

The republic has a diversified industrial economy with a focus on
the oil extraction, metallurgy, machine-building and military
sectors. This helps to smooth the impact of business cycles on
tax revenues and keeps Udmurtia's wealth metrics in line with the
national median. In 2015 the republic's GRP contracted 2.9%,
which was better than the wider Russian economy (down 3.7%) due
to the healthy performance of the military sector as national
defence spending rose. Fitch expects national GDP to shrink 0.5%
in 2016, which will weigh on the republic's tax base.

Russia's institutional framework for sub-nationals is a
constraint on Udmurtia's ratings. It has a shorter record of
stable development than many of its international peers. The
predictability of Russian local and regional governments' (LRGs)
budgetary policy is hampered by the frequent reallocation of
revenue and expenditure responsibilities within government tiers.

RATING SENSITIVITIES

An inability to restore the current balance to positive territory
and to ease high refinancing pressure, with direct risk edging
towards 100% of current revenue, could lead to a downgrade.


=========
S P A I N
=========


ABENGOA SA: Nears Debt Restructuring Deal with Creditors
--------------------------------------------------------
Jose Elias Rodriguez at Reuters reports that Abengoa SA is on
track for the 75% creditor approval needed for its restructuring
plan and avoid filing for Spain's biggest ever bankruptcy.

The Seville-based company borrowed too heavily over the past 10
years to fund an expansion into clean energy and has been
negotiating with lenders since November to cut debts of more than
EUR9 billion (US$10 billion), Reuters relates.

According to Reuters, a source with knowledge of the deal said
Abengoa is unlikely to be able to confirm the acceptance levels
until much later on Oct.25, the deadline it set for creditors to
agree to the plan.

"According to the initial count of support, the company is on the
right path (to win 75% approval)" Reuters quotes the source as
saying.

Abengoa set Oct. 25 as a deadline for approval, but it has until
Friday, Oct. 28, to gain the necessary creditor support under a
court decision earlier this year, Reuters notes.

Under Spanish law, the company needed backing from at least three
quarters of all its creditors to go ahead with the restructuring
plan, which it presented in August, Reuters states.

The deal offers lenders the option to convert 70% of outstanding
debt to equity and refinance the remaining debt over six years in
return for 40 percent of the restructured company, Reuters
discloses.

                       About Abengoa S.A.

Spanish energy giant Abengoa S.A. is an engineering and
clean technology company with operations in more than 50
countries worldwide that provides innovative solutions for a
diverse range of customers in the energy and environmental
sectors.  Abengoa is one of the world's top builders of power
lines transporting energy across Latin America and a top
engineering and construction business, making massive renewable-
energy power plants worldwide.

As of the end of 2015, Abengoa, S.A. was the parent company of
687 other companies around the world, including 577 subsidiaries,
78 associates, 31 joint ventures, and 211 Spanish partnerships.
Additionally, the Abengoa Group held a number of other interests
of less than 20% in other entities.

On Nov. 25, 2015 in Spain, Abengoa S.A. announced its intention
to seek protection under Article 5bis of Spanish insolvency law,
a pre-insolvency statute that permits a company to enter into
negotiations with certain creditors for restricting of its
financial affairs.  The Spanish company is facing a March 28,
2016, deadline to agree on a viability plan or restructuring plan
with its banks and bondholders, without which it could be forced
to declare bankruptcy.

On March 16, 2016, Abengoa presented its Business Plan and
Financial Restructuring Plan in Madrid to all of its
stakeholders.

                        U.S. Bankruptcies

Abengoa, S.A., and 24 of its subsidiaries filed Chapter 15
petitions (Bankr. D. Del. Case Nos. 16-10754 to 16-10778) on
March 28, 2016, to seek U.S. recognition of its restructuring
proceedings in Spain.  Christopher Morris signed the petitions as
foreign representative.  DLA Piper LLP (US) represents the
Debtors as counsel.

Gavilon Grain, LLC, et al., on Feb. 1, 2016, filed an involuntary
Chapter 7 petition for Abengoa Bioenergy of Nebraska, LLC
("ABNE") and on Feb. 11, 2016, filed an involuntary Chapter 7
petition for Abengoa Bioenergy Company, LLC ("ABC").  ABC's
involuntary Chapter 7 case is Bankr. D. Kan. Case No. 16-20178.
ABNE's involuntary case is Bankr. D. Neb. Case No. 16-80141.  An
order for relief has not been entered, and no interim Chapter 7
trustee has been appointed in the Involuntary Cases.  The
petitioning creditors are represented by McGrath, North, Mullin &
Kratz, P.C.

On Feb. 24, 2016, Abengoa Bioenergy US Holding, LLC and 5 five
other U.S. units of Abengoa S.A., which collectively own,
operate, and/or service four ethanol plants in Ravenna, York,
Colwich, and Portales, each filed a voluntary petition for relief
under Chapter 11 of the United States Bankruptcy Code in the
United States Bankruptcy Court for the Eastern District of
Missouri.  The cases are pending before the Honorable Kathy A.
Surratt-States and are jointly administered under Case No. 16-
41161.

Abeinsa Holding Inc., and 12 other affiliates, which are energy,
engineering and environmental companies and indirect subsidiaries
of Abengoa, filed Chapter 11 bankruptcy petitions (Bankr. D. Del.
Proposed Lead Case No. 16-10790) on March 29, 2016.


CODERE SA: Moody's Raises CFR to B2, Outlook Stable
---------------------------------------------------
Moody's Investors Service has upgraded leading Spanish gaming
company Codere S.A.'s corporate family rating to B2 from Caa3 (on
review for upgrade) and its probability of default rating (PDR)
to B2-PD, from Ca-PD (on review for upgrade).  The outlook on all
ratings is stable.

Concurrently, Moody's has assigned a provisional (P)B2 rating to
Codere's proposed up to EUR775 million equivalent senior secured
notes due 2021 (split between EUR and USD), to be issued by
Codere Finance 2 (Luxembourg) S.A.  The proceeds from the 2021
notes together with approximately EUR123 million of balance sheet
cash will be used to refinance the existing debt in place since
April 2016 in conjunction with the completion of the balance
sheet restructuring and to pay transaction fees.

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

                         RATINGS RATIONALE

   -- UPGRADE OF CFR TO B2

The upgrade of Codere's CFR to B2 primarily reflects the improved
capital structure and liquidity position in conjunction with the
April 2016 financial restructuring and the proposed refinancing,
as well as the completion of the operational turnaround, which
will enable the company to focus and invest in growth going
forward.  However, Moody's views the B2 CFR as weakly positioned
in its category as it expects the near-term growth (as reported)
to derive mainly from the acquisition of minorities or expansion
of gaming halls rather than organically, given the volatility of
Latin American currencies versus the euro and the high
inflationary environment in Argentina.

With the April 2016 financial restructuring Codere reduced its
gross debt by 37% to EUR954 million with Moody's adjusted
leverage, albeit moderately high, decreasing to 4.5x for the last
twelve months ending June 30, 2016, from 5.2x at the end of
fiscal year (FY) 2015.  However, it also improved its liquidity
due to lower cash interest expense and higher cash balances from
cash injected by the scheme creditors.

With the proposed refinancing, the debt will further reduce,
taking the leverage down to 4.2x.  The interest expense, albeit
higher in cash terms, will not contain a PIK element therefore
the debt will not increase over time.  Liquidity will further
improve with a EUR95 million super senior multi-currency
revolving credit facility (RCF), expected to be undrawn at close.

At the same time as its financial restructuring, Codere
implemented an operational turnaround with approximately
EUR68 million of cost savings achieved via laying off employees
and other optimization initiatives.  In Moody's opinion, the
company is now better positioned to focus and invest in growth
due to a strengthened financial profile and a leaner
organisation. This is despite ongoing challenges deriving from
currency volatility, which has negatively impacted the results in
Euro terms over recent quarters, adverse macro conditions and
potential changes in regulation.

Codere's CFR continues to remain constrained by (1) the company's
significant presence in certain emerging markets and therefore
exposure to high operational risk as well as currency
fluctuations; (2) the regulatory risk inherent to the gaming
industry; and (3) the reliance on its ability to access cash from
Latin American operations to support debt servicing at the parent
level.  Moody's also notes that the existence of minority
interests results in pro-rata leverage being higher than reported
(fully consolidated) leverage and cash leakage through dividend
outflows to minorities.

Conversely, the CFR is supported by (1) the company's position as
one of the leading gaming operators in Spain and Latin America,
with a moderate diversification in terms of gaming assets and
geographies; (2) stable or improving macro trends in Codere's
countries of operations; and (3) Moody's expectation that the
company will steadily grow from 2017 onwards deleveraging over
time.

   -- ASSIGNMENT OF (P)B2 RATING TO THE PROPOSED SENIOR SECURED
    NOTES DUE 2021

The instrument rating (P)B2 for the new senior secured notes is
aligned with the CFR, reflecting Moody's assumption of a 50%
family recovery rate, as is customary for capital structures with
both bonds and bank debt.  The notes are secured by pledges over
shares and benefit from upstream guarantees representing 74% of
the company's consolidated EBITDA as at June 30, 2016.

The capital structure also includes a EUR95 million super senior
RCF, which shares same collateral with the new notes but ranks
ahead of the notes upon enforcement.

                             LIQUIDITY

Codere's liquidity profile is viewed as good and is underpinned
by (1) approximately EUR200 million of cash on balance sheet pro
forma with this refinancing, majority of it held in Spanish or
Italian bank accounts; (2) a EUR95 million super senior revolving
credit facility, undrawn at close; and (3) no imminent large debt
maturities.

Although Codere has substantial cash balances, approximately
EUR45 million of this is needed to run the operations.
Additionally, increased capex due to recent under-investments
during the financial restructuring, potential small bolt-on
acquisitions and acquisition of minorities such as Uruguay (HRU)
and ICELA in Mexico, licence renewals, dividends to minorities
and short-term debt repayments, are likely to erode such buffers
over the next 12 to 18 months.  Given its presence in certain
emerging markets, the liquidity profile is also contingent on it
being able to access cash and cash flow successfully on an
ongoing basis from these jurisdictions.

The super senior RCF has a springing 4.1x net leverage covenant,
which will be tested only when the facility is drawn by more than
40%.

                    RATIONALE FOR STABLE OUTLOOK

The stable outlook on Codere' ratings reflects Moody's
expectation that the company will be able to restore its growth
trajectory from FY2017 onwards albeit primarily from acquisitions
and gaming hall expansion as well as generate positive free cash
flow.  The stable outlook also incorporates the rating agency's
assumption that there will be no further materially adverse
regulations, taxation changes, capital controls and outcomes from
outstanding litigations, there will be no deterioration in the
liquidity and all expiring licences will be successfully renewed.

                 WHAT COULD CHANGE THE RATING UP/DOWN

Upward pressure could develop on the ratings if Codere's strong
operating performance enabled the company to improve its
debt/EBITDA ratio (as adjusted by Moody's) below 3.5x on a
sustainable basis and generated meaningful free cash flow while
maintaining good liquidity.

Conversely, downward pressure could be exerted on the ratings if
Codere's adjusted leverage were to sustainably increase above
4.5x, as a result of a change in financial policy or a
deterioration in operating performance.  The ratings could also
come under pressure if Moody's were to consider Codere's
liquidity to have become inadequate to support the company's
operations or debt servicing or if criteria set for the stable
outlook were not met.

LIST OF AFFECTED RATINGS

Upgrades:

Issuer: Codere S.A.
  LT Corporate Family Rating, Upgraded to B2 from Caa3 rating
   under review for upgrade
  Probability of Default Rating, Upgraded to B2-PD from Ca-PD
   rating under review for upgrade

Assignments:

Issuer: Codere Finance 2 (Luxembourg) S.A.
  Backed Senior Secured Regular Bond/Debenture, Assigned (P)B2

Outlook Actions:

Issuer: Codere S.A.
  Outlook, Changed To Stable From Rating Under Review

Issuer: Codere Finance 2 (Luxembourg) S.A.
  Outlook, Assigned Stable

The principal methodology used in these ratings was Global Gaming
Industry published in June 2014.

Headquartered in Madrid, Spain, Codere is a multinational gaming
operator that manages gaming machines, machine halls, bingo
halls, casinos, sports betting locations and horse racing tracks
in Latin America, Italy and Spain.  As of June 2016, Codere
managed 55,000 slot machines, 30,000 bingo seats and 3,500 sports
betting terminals in Latin America, Spain and Italy, across
various gaming venues, including 145 gaming halls, 600 arcades,
10,000 bars, 150 sports betting shops and 4 horse racetracks.

For the twelve months ended June 2016, Codere generated operating
revenue of EUR1.5 billion and EBITDA of EUR265 million (as
adjusted by the company).


FERROVIAL SA: Projects Lack Transparency, UNITE HERE Report Shows
-----------------------------------------------------------------
A new report released on Oct. 24 from UNITE HERE details
bankruptcies, a lack of transparency and other controversies
surrounding projects led by Spanish firm Ferrovial and its
affiliates.

Ferrovial is a key member of I-66 Express Mobility Partners, a
company the Virginia Department of Transportation (VDOT) selected
for its short list of eligible bidders for the I-66 Outside the
Beltway toll road project. VDOT could decide to partner with
Ferrovial's company on the $2.1 billion project.

The new report details the recent performance of Ferrovial and
its affiliates.  The report identifies the following concerns:

   -- Bankruptcy: Of Ferrovial's four completed U.S. projects,
two have filed for bankruptcy.

   -- Public Controversy: After a Ferrovial affiliate signed a
contract to expand toll roads in North Carolina, the state House
of Representatives voted by a three-to-one margin to cancel the
agreement, and the project has become a focal point of the
governor's race.

   -- Lack of Transparency: Ferrovial affiliates and the public
entities with which they contracted have refused to release basic
information, such as traffic projections, about their public-
private partnerships.

   -- Toll Increases: Tolls on an Ontario highway managed by a
Ferrovial company rose to as high as 62 cents per mile this year.

   -- Missed Projections: Moody's reported that in fiscal year
2014, traffic on Texas State Highway 130, then operated by a
Ferrovial company, would be 70 percent below the initial
forecast.

The $2.1 billion I-66 Outside the Beltway project will shape
Virginia's transportation infrastructure for decades to come.
This new report aims to warn decision makers, elected officials
and the public about the potential risks of partnering with
Ferrovial's I-66 Express Mobility Partners.

Ferrovial SA is a Spain-based company engaged in the
transportation infrastructure sector.  The Company's activities
are structured in four business lines: Services, Toll Roads,
Construction and Airports.


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


ENTERPRISE INNS: S&P Affirms 'B' CCR & Rates Proposed Bonds 'BB-'
-----------------------------------------------------------------
S&P Global Ratings said that it affirmed its 'B' long-term
corporate credit rating on U.K.-based pub operator Enterprise
Inns PLC.  The outlook is stable.

At the same time, S&P assigned its 'BB-' issue rating to
Enterprise Inns' proposed senior secured bonds maturing in 2022
(expected to be GBP200 million).  The recovery rating is '1',
indicating S&P's expectation of very high recovery (90%-100%) in
the event of a payment default.

S&P also affirmed the 'BB-' issue rating on the group's existing
senior secured bonds.  The recovery rating is unchanged at '1'.

S&P also affirmed its 'B' issue ratings on the GBP97 million
unsecured convertible bond due 2020, issued by Enterprise Funding
Ltd. (incorporated in Jersey).  The recovery rating is unchanged
at '3', indicating our expectation of meaningful recovery in the
higher half of the 50%-70% range in the event of a payment
default.

The affirmation follows U.K.-based tenanted pub operator
Enterprise Inns PLC (ETI) announcing a GBP150 million-GBP250
million senior secured bond offering maturing in 2022.  It plans
to use the proceeds to repay part of its outstanding senior
secured bonds due in 2018.  In S&P's view, the refinancing will
help the group to term out part of its 2018 maturities on its
senior secured bonds, supporting a healthy maturity profile and
reducing refinancing risk.

S&P considers that the refinancing will have minimal impact on
its assessment of ETI's highly leveraged financial risk profile.
S&P forecasts the group's S&P Global Ratings-adjusted debt to
EBITDA to marginally improve to 7.7x in the financial year (FY)
ending September 2017 from 8.0x in FY 2016 on the back of
scheduled debt amortization and debt prepayment.

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

   -- U.K. real GDP growth of around 1.8% in 2016 and 1.0% in
      2017.
   -- U.K. consumer price index inflation of 0.7% in 2016 and
      2.0% in 2017.
   -- Market conditions remaining challenging for the U.K. pubs
      sector, as beer consumption has been declining for several
      years as consumers focus more on healthier lifestyles.
   -- Revenue growth turning slightly positive at about 0%-1% in
      FY 2016, slowly improving to 1%-3% in FY 2017 as S&P
      anticipates the revenue uplift from the gradual business
      transition, with certain tenanted pubs turning into managed
      pubs, should be sufficient to cover the revenue reduction
      from asset disposals.
   -- Adjusted EBITDA margin of around 49%-50% in FY 2016,
      inching down to around 48%-49% in FY 2017, reflecting the
      gradual impact of the business transition.
   -- Capital expenditure (capex) of about GBP75 million-GBP80
      million in FY 2016 and about GBP70 million in FY 2017.
   -- Asset disposals of about 200-230 sites per year.
   -- Scheduled debt amortization of about GBP74 million in FY
      2016 and GBP77 million in FY 2017, followed by ETI using
      excess cash flow for moderate debt prepayment and
      discretionary share repurchases.

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

   -- Adjusted debt to EBITDA of about 8.0x in FY 2016 and 7.7x
      in FY 2017, followed by somewhat faster deleveraging over a
      longer period due to gradually strengthening EBITDA growth
      and rising debt amortization.
   -- S&P's measure of EBITDAR cash interest coverage (defined as
      reported EBITDA before deducting rent covering cash
      interest plus rent costs) at about 1.8x in FY 2016 and FY
      2017.
   -- Reported free operating cash flow (FOCF) of about
      GBP30 million-GBP40 million in FY 2016, improving to about
      GBP40 million-GBP50 million in FY 2017.

S&P's stable outlook reflects its view that ETI will effectively
execute its strategy to adapt the business to recent changes in
legislation.  Despite its high debt, S&P expects ETI will
generate sufficient reported operating cash flow to support its
capex for the gradual business transition.

S&P also considers that ETI is likely to maintain adequate
covenant headroom over the next 12 months, and has the financial
flexibility to service increasing debt amortization and moderate
debt prepayment on the back of improving reported FOCF and some
asset disposals.

S&P' could lower the ratings if the group's operating performance
deteriorates, leading to adjusted debt to EBITDA rising
progressively and EBITDAR cash interest coverage falling below
1.5x, with weakening liquidity and tightening covenant headroom.
S&P could also consider lowering the ratings if the group pursues
an aggressive financial policy that materially increases leverage
or shareholder returns.

S&P could raise the ratings if ETI soundly executes its business
transition and prepays debt, such that adjusted debt to EBITDA
improves to toward 5x and EBITDAR cash interest coverage rises
toward 2.2x on a sustainable basis.  Any upgrade would also be
contingent on ETI maintaining adequate liquidity and covenant
headroom, as well as a relatively conservative financial policy
on shareholder returns.



                            *********

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

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

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


                            *********


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

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

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

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

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

The TCR Europe subscription rate is US$775 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each.  For subscription information,
contact Peter Chapman at 215-945-7000 or Nina Novak at
202-362-8552.


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