TCREUR_Public/161228.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

         Wednesday, December 28, 2016, Vol. 17, No. 257



BANK OF CYPRUS: Fitch Rates EUR4-Bil. EMTN Programme 'B-'


ELIS SA: Moody's Affirms Ba2 CFR on Indusal & Lavebras Deal
LA FINANCIERE: S&P Affirms 'B+' CCR & Revises Outlook to Positive
* FRANCE: Company Insolvencies Down in 12-Mos. to October 2016


AVOCA CLO XVI: S&P Affirms B Rating on Class F Notes
HALCYON LOAN 2016: S&P Assigns B- Rating to Class F Notes


DIAPHORA 3: Jan. 19 Toscolano Maderno Property Bid Deadline Set
DIAPHORA 3: Feb. 21 Ozzano dell'Emilia Property Bid Deadline Set
MONTE DEI PASCHI: Faces Capital Shortfall of EUR8.8 Billion
MONTE DE PASCHI: Italian Government Sets Up Backstop Fund
UNICREDIT SPA: Fitch Affirms 'BB+' Upper Tier 2 Notes Rating


KAZAKHTELECOM JSC: Fitch Hikes LT Issuer Default Rating to BB+


BSN MEDICAL: S&P Puts 'B+' CCR on CreditWatch Positive
CAPSUGEL SA: S&P Puts 'B+' CCR on CreditWatch Positive




INTECHBANK PJSC: DIA Appointed as Provisional Administrator


SERBIA: State Enterprises Need Restructuring, IMF Official Says


CAR RENTALS: S&P Raises CCR to 'B+', Outlook Stable
VIESGO GENERATION: Fitch Hikes LT Issuer Default Rating to BB


DOMETIC GROUP: Moody's Hikes Corporate Family Rating to Ba3

U N I T E D   K I N G D O M

AUBURN SECURITIES 4: Fitch Affirms BB+ Rating on Class E Debt
FONTWELL SECURITIES 2016: Fitch Rates GBP5.5MM Cl. S Debt CCCsf
NEWDAY PARTNERSHIP 2015-1: S&P Hikes Rating on Cl. F Notes to BB+
SALISBURY SECURITIES 2015: Fitch Rates Cl. M-R Debt 'BB(EXP)sf'
* UK: Four in Ten SMEs Suffer Cash Flow Problems, Study Shows



BANK OF CYPRUS: Fitch Rates EUR4-Bil. EMTN Programme 'B-'
Fitch Ratings has assigned Bank of Cyprus Public Company Ltd's
(BoC) EUR4 billion euro medium-term note (EMTN) programme a 'B-'
long-term rating and a 'B' short-term rating. The Recovery Rating
is RR4, reflecting average recovery prospects.

The ratings of the programme apply only to senior unsecured
issuance. There is no assurance that notes issued under the
programme will be assigned a rating, or that the rating assigned
to a specific issue under the programme will have the same rating
as the programme.


The senior notes' ratings are driven by, and equalised with,
BoC's Long- and Short-Term Issuer Default Ratings (IDRs). In
Fitch's view, the likelihood of default on the senior unsecured
notes under the programme reflects the likelihood of default of
the bank.

BoC's ratings reflect the bank's weak asset quality, high
exposure to unreserved problem loans and modest internal capital
generation. The ratings also factor in improving investor
confidence following the completion by Cyprus of the
international bailout programme in March 2016, and Fitch's view
that the improvement in economic prospects for Cyprus and the
implementation of the new insolvency framework could help BoC
reduce its exceptionally high stock of non-performing loans.


The senior notes' ratings are sensitive to a change in BoC's
Long- and Short-Term IDRs.

Upside potential for BoC's ratings is limited in the short term.
The ratings could benefit in the longer term from accelerated
recoveries of problem loans, resulting in lower vulnerability of
the bank's capital to any further stress in asset quality.
Reduction of reliance on central bank funding could also be
positive for the ratings.


ELIS SA: Moody's Affirms Ba2 CFR on Indusal & Lavebras Deal
Moody's Investors Service has affirmed Elis S.A.'s Ba2 corporate
family rating (CFR) and Ba2-PD probability of default rating
(PDR). Concurrently, Moody's has affirmed the Ba2 instrument
rating on the EUR800 million senior unsecured notes due 2022
issued by Novalis S.A.S. The outlook on the ratings remains

On December 21, 2016, Elis announced the acquisition of Compania
Navarra de Servicios Integrales SL (Indusal) in Spain for
c.EUR170 million and Lavebras Gestao de Texteis S.A. (Lavebras)
in Brazil for c.EUR340 million. The total consideration for both
acquisitions of approximately EUR510 million will be funded by a
bridge loan totaling EUR550 million negotiated by the company in
November 2016. The bridge loan will be refinanced by
approximately EUR325 million of rights issue to be launched in H1
2017 subject to favorable market conditions and drawings under a
new syndicated loan. In December 2016, Elis received commitment
from an enlarged pool of banks for a new syndicated loan totaling
EUR1,150 million maturing in January 2022 to replace its current
syndicated loan of EUR850 million due in 2020.


"The rating action reflects the positive impact on Elis' business
profile from the acquisitions of Indusal and Lavebras due to (1)
the enlarged group's improved geographical diversification
outside of its French domestic market, (2) the good growth
prospects for the linen and workwear markets in Spain and Brazil
where the targets operate, and (3) the expected commercial and
cost synergies to be generated from the densification of Elis'
network in those two countries", says Sebastien Cieniewski,
Moody's lead analyst for Elis. Nevertheless the ratings remain
constrained by (1) the deteriorating performance of Elis in
France in 2016, where the company generates the majority of its
revenues, with uncertain growth prospects for the short-term and
(2) the weak cash flow generation due to the capital intensive
nature of the business and the growth strategy partly based on
bolt-on acquisitions.

Pro forma for the acquisitions of Indusal and Lavebras, which are
expected to generate revenues of EUR90 million and EUR103 million
(equivalent) in 2016, respectively, the proportion of revenues
generated by the group outside of France will increase to above
40% in 2016 compared with only approximately 25% in 2014. The
diversification is credit positive as it increases the exposure
of the group to Spain and Brazil, where the company experienced
significant growth at double digit rates over the last two years.
Moody's expects that these markets will continue experiencing
strong growth over the medium-term thanks to the relatively lower
penetration of flat linen and workwear rental in those markets
compared with mature countries, including France.

In addition, these acquisitions will significantly increase Elis'
scale of operations in both Spain and Brazil, where the company
will double its market share to more than 25%. The company
expects that the increased scale will generate commercial and
cost synergies estimated at EUR25 million to EUR30 million on a
run-rate basis by 2019 to reach an EBITDA margin of 30% in both
countries by the end of the period.

The Ba2 CFR remains nevertheless weakly positioned within the
rating category driven by the relatively weaker performance of
the company's operations in France, which accounted for 66% of
group revenues in the first nine months (YTD Q3) of 2016. Organic
revenue growth has been deteriorating over the last three
quarters negatively impacted by the sluggish economic environment
of the country as well as the terrorist attack in Nice in July
2016. Revenues in France grew by only 0.4% on an organic basis in
YTD Q3 2016 with a 1.2% decline recorded in Q3 2016 negatively
impacted by a 1.8% and 2.2% decrease in hospitality and industry
sales in the country in that quarter. Thanks to continued strong
performance of its international operations, Elis recorded good
organic growth of 2.5% in YTD Q3 2016 with management's target to
reach c.3% organic growth for fiscal year (FY) 2016.

Nevertheless Moody's considers that the uncertain outlook for the
French operations will weigh on the company's de-leveraging over
the short-term. Moody's estimates that adjusted leverage (as
adjusted by Moody's for operating leases and pension liabilities)
will be around 3.8x by the end of 2016 -- outside the rating
agency's 3.75x leverage guidance for a Ba2 rating. Moody's
nevertheless expects that Elis will reduce its leverage towards
3.5x over the next twelve months thanks to the contribution of
its international operations despite a sluggish growth in France.

Moody's believes that Elis benefits from a good liquidity
position, which will improve pro-forma for the acquisitions of
Indusal and Lavebras. As part of the transaction, Elis will
refinance its current EUR400 million revolving credit facility
(RCF) with a new EUR500 million RCF, of which c.EUR425 million
will be undrawn at the closing of the transaction. The company
will also raise EUR200 million capex facility, of which EUR75
million will be undrawn at the closing of the transaction. We
note that the liquidity will be also supported by Elis' pro-forma
cash balance of EUR136 million as of 30 June 2016.

The Ba2 instrument rating on Elis' EUR800 million senior
unsecured notes reflects their pari passu ranking with the new
EUR1,150 million syndicated loans and the absence of any
significant liabilities ranking above or behind. The EUR800
million senior unsecured notes and the new syndicated loans
benefit from the same guarantee package as the existing
syndicated loans, which are provided by a group of subsidiaries
that represented approximately 54% of the company's EBITDA (as
adjusted by the company) and 98% of assets as of 31 December 2014
(latest available information).

The stable outlook reflects Moody's expectations that Elis will
continue growing its EBITDA allowing for a further reduction in
its leverage. Whilst the current rating and outlook provides the
company with some flexibility as regards to its pursuit of
external growth through smaller bolt-on acquisitions, it does not
incorporate flexibility for transformational debt-funded


Positive pressure on the Ba2 rating could develop if Elis's
operating performance continues to improve, allowing for the
company's leverage, measured by Moody's adjusted debt/EBITDA, to
move towards 3x with a retained cash flow (RCF)/ Net Debt ratio
remaining above 20%. On the other hand, negative pressure could
develop if Elis's leverage moves above 3.75x for a sustained
period of time or if Moody's becomes concerned about the
company's liquidity.

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

Elis is a France-based multiservice provider of flat linen,
garment and washroom appliances, water fountains, coffee
machines, dust mats and pest control services. It has around
240,000 customers in the private and public sector and operates
throughout 10 countries. For the financial year ended 31 December
2015 it reported total revenues of EUR1.415 billion and adjusted
EBITDA (as reported by the company) of EUR446 million.

LA FINANCIERE: S&P Affirms 'B+' CCR & Revises Outlook to Positive
S&P Global Ratings said it has revised its outlook on France-
based facilities services provider La Financiere Atalian SAS to
positive from stable.

At the same time, S&P affirmed its 'B+' long-term corporate
credit rating on Atalian and S&P's 'B' issue rating on Atalian's
EUR400 million notes due January 2020.  The recovery rating on
the notes is unchanged at '5', but now indicating S&P's
expectation of recovery prospects in the higher half of the 10%-
30% range in the event of a default, rather than the lower half

The outlook revision stems from S&P's view that an increase in
EBITDA following the successful integration of acquired assets
and organic growth, especially in international activities,
should progressively improve Atalian's credit metrics.  At the
same time, S&P expects Atalian will remain disciplined in its
acquisition strategy.

For the fiscal year ending Aug. 31, 2017 (fiscal 2017), S&P
forecasts the S&P Global Ratings-adjusted debt-to-EBITDA ratio at
4.5x-5x and funds from operations (FFO) to debt at around 12%,
which are commensurate with the current rating.  However, S&P
thinks that adjusted leverage may improve toward 4.0x-4.5x, with
FFO to debt comfortably above 12% and FFO interest cover above
3x, which are in line with a higher rating.

Atalian operates in a highly competitive and fragmented sector
with limited barriers to entry, fairly low margins, and
significant exposure to wage-cost inflation.  Atalian's margins
continue to be supported by the tax credit CICE ("credit d'impot
pour la competitivite et l'emploi"), which represented about 23%
of the group's EBITDA in fiscal 2016, since S&P treats it as
operating income.  However, the CICE is part of the French
government's 2017 budget proposal and its rate will increase to
7% from 6% from Jan. 1, 2017, which provides some visibility for
the coming year.  S&P also expects Atalian's reliance on CICE to
decrease over time as the group expands its operations abroad.
The company's geographic diversification has improved over the
past two years, and S&P expects this will continue.

Still, in fiscal 2016, the group sourced roughly 65% of its
revenues from its core market, France, where it has a leading
position.  The adjusted EBITDA margin remains weak at about
5%-6%, which is below the average that S&P sees for facilities
management companies, and deteriorated slightly in 2016 to 5.4%
from 5.7% in 2015 on the integration of lower-margin
international business.

The positive outlook on Atalian indicates that S&P could raise
the long-term corporate credit rating within the next 12 months
if S&P expects the company's credit metrics will strengthen on
continued successful integration of acquired assets and slight
organic growth.

Upside scenario

S&P is likely to raise the rating on Atalian if EBITDA growth and
cash flow generation result in stronger credit metrics, such as
lower net leverage in the 4.0x-4.5x range and FFO interest cover
higher than 3x, on a sustainable basis.  This would occur if
Atalian is able to sustain a track record of moderated
acquisition activity and successful integration of acquired
assets, while continuing organic expansion.

Downside scenario

S&P could revise its outlook to stable if the company's adjusted
debt to EBITDA remained above 4.5x, or if the group failed to
improve its cash interest coverage.  This could result from
weaker-than-expected operating performance, with the adjusted
EBITDA margin reducing to less than 5%.

* FRANCE: Company Insolvencies Down in 12-Mos. to October 2016
The number of insolvencies in France continued to fall in the
twelve months to end October 2016 (-1.0%), according to Coface.
This good news should be confirmed for the whole year: Coface
anticipates a fall of 3.8% in 2016.

This positive figure is due to companies' ability to withstand
weak growth.  Thanks to a recovery in margins (32% of added value
for non-financial companies forecast in 2016), they may register
a slowdown in activity, like that observed since the second

As in 2016, company investment is expected to make little
progress in 2017, partly owing to uncertainties relating to the
presidential elections.  Saving invested capital will at least be
beneficial to companies in the short term.  They will therefore
see another year of declining insolvencies in 2017 (-1.0%).
While the results are encouraging overall, there are some
disparities.  Four sectors are considerably more loss-making than
a year ago: clothing, agrofood, transport and personal services.
Conversely, the situation is encouraging in construction, which
confirmed its downtrend in insolvencies in 2016.  At regional
level, Ile-de- France continues to generate more insolvencies
than the national average.

Several explanations for this have been put forward: the effect
of the terrorist attacks or a natural consequence of the
uberisation of the economy, which first and foremost affects this


AVOCA CLO XVI: S&P Affirms B Rating on Class F Notes
S&P Global Ratings affirmed its credit ratings on Avoca CLO XVI
DAC's class A, B, C, D, E, and F notes following the
transaction's effective date on Oct. 30 2016.

On the closing date, the issuer had purchased or committed to
purchase approximately 60% of the targeted par amount of
portfolio collateral.  At the same time, the collateral manager
covenanted to purchase the remaining collateral within the
guidelines specified in the transaction documents to reach the
target portfolio par amount by Dec. 30, 2016.  The collateral
manager declared the effective date on Oct. 30 2016, by which
date it had committed to purchase a total of EUR401.05 million of
eligible assets.  The transaction documents contain provisions
directing the trustee to request S&P Global Ratings to affirm the
ratings issued on the closing date after reviewing the effective
date portfolio (typically referred to as an "effective date
rating confirmation").

The affirmations reflect S&P's opinion that the portfolio
collateral purchased by the issuer, as reported to S&P by the
trustee and collateral manager, in combination with the
transaction's structure, provides sufficient credit support to
maintain the ratings that S&P assigned on the transaction's
closing date.  S&P's effective date report provides a summary of
certain information that it used in its analysis and the results
of S&P's review based on the information presented to S&P.

"We have performed a quantitative and qualitative analysis of the
transaction in accordance with our criteria to assess whether the
initial ratings remain commensurate with the credit enhancement
based on the effective date collateral portfolio.  Our analysis
relies on the use of CDO Evaluator to estimate a scenario default
rate at each rating level based on the effective date portfolio,
full cash flow modeling to determine the percentile break-even
default rate (BDR) at each rating level, and the application of
our supplemental tests.  The BDR represents our estimate of the
maximum level of gross defaults, based on our stress assumptions,
that a tranche can withstand and still fully pay interest and
principal to the noteholders," S&P said.

Following S&P's review of the transaction, it has affirmed its
ratings on the class A, B, C, D, E, and F notes.

After S&P issues an effective date rating affirmation, it will
periodically review whether, in its view, the current ratings on
the notes remain consistent with the credit quality of the
assets, the credit enhancement available to support the notes,
and other factors.  S&P will subsequently take rating actions as
it deems necessary.

Avoca CLO XVI is a cash flow collateralized loan obligation (CLO)
transaction securitizing a portfolio of primarily senior secured
loans granted to European and U.S. speculative-grade corporates.
KKR Credit Advisors (Ireland) manages the transaction.


EUR462.8 mil floating-rate notes (including subordinated notes)
Class            Identifier         To            From
A                XS1427876104       AAA (sf)      AAA (sf)
B                XS1427876443       AA (sf)       AA (sf)
C                XS1427877847       A (sf)        A (sf)
D                XS1427880122       BBB (sf)      BBB (sf)
E                XS1427880395       BB (sf)       BB (sf)
F                XS1427880478       B (sf)        B (sf)

HALCYON LOAN 2016: S&P Assigns B- Rating to Class F Notes
S&P Global Ratings assigned credit ratings to Halcyon Loan
Advisors European Funding 2016 DAC's (Halcyon 2016) class A-1, A-
2, B, C, D, E, and F notes.  At closing, Halcyon 2016 also issued
an unrated subordinated class of notes.

The ratings assigned to Halcyon 2016's notes reflect S&P's
assessment of:

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

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

Under the transaction documents, the rated notes pay quarterly
interest unless there is a frequency switch event.  Following
this, the notes permanently switch to semiannual payment.  The
portfolio's reinvestment period ends approximately four years
after closing.

S&P's ratings reflect its assessment of the collateral
portfolio's credit quality, which has a weighted-average 'B+'
rating.  S&P considers that the portfolio at closing is well-
diversified, primarily comprising broadly syndicated speculative-
grade senior secured term loans and senior secured bonds.
Therefore, S&P has conducted its credit and cash flow analysis by
applying its criteria for corporate cash flow collateralized debt

In S&P's cash flow analysis, it used the EUR325 million target
par amount, the covenanted weighted-average spread (4.00%), the
covenanted weighted-average coupon (5.25%) (where applicable),
and the target minimum weighted-average recovery rates at each
rating level as indicated by the manager.  S&P applied various
cash flow stress scenarios, using four different default
patterns, in conjunction with different interest rate stress
scenarios for each liability rating category.

Elavon Financial Services DAC is the bank account provider and
custodian.  At closing, the documented downgrade remedies were in
line with S&P's current counterparty criteria.

Following the application of S&P's structured finance ratings
above the sovereign criteria, it considers that the transaction's
exposure to country risk is sufficiently mitigated at the
assigned rating levels.  This is because the concentration of the
pool comprising assets in countries rated lower than 'A-' will be
limited to 10% of the aggregate collateral balance.

At closing, S&P considers that the issuer is bankruptcy remote,
in accordance with S&P's European legal criteria.

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


Ratings Assigned

Halcyon Loan Advisors European Funding 2016 DAC
EUR338 Million Senior Secured Fixed- And Floating-Rate Notes
(Including Subordinated Notes)

                      Rating           Amount
                                     (mil. EUR)

A-1                   AAA (sf)          188.20
A-2                   AAA (sf)          10.00
B                     AA (sf)           39.00
C                     A (sf)            19.30
D                     BBB (sf)          15.50
E                     BB (sf)           19.50
F                     B- (sf)           10.00
Sub                   NR                36.50

Sub--Subordinated loan.
NR--Not rated.


DIAPHORA 3: Jan. 19 Toscolano Maderno Property Bid Deadline Set
Diaphora 3 Fund, in liquidation pursuant to Art. 57 TUF, is
putting up for sale an exclusive residential and shopping center
located in the municipality of Toscolano Maderno (BS), opposite
the Brescia side of Lake Garda, comprising of five buildings,
situated around the common central pool, hosting: no. 5 stores,
no. 34 apartments, no. 30 garages, no. 11 cellars, as described
in the appraisal report dated June 1, 2016, drawn up by Geom.
Rita Stancari.

Starting price: EUR5,511,400 in addition to applicable tax.

Bid deadline: 12:00 a.m. on January 19, 2017, bids to be
submitted at the office of Notary Pietro Barziza in Piazza Duomo
17, Desenzano del Garda (BS).

Date of sale: 5:00 p.m. on January 20, 2017, at the office of the

Details, procedures and sale regulations are available on

DIAPHORA 3: Feb. 21 Ozzano dell'Emilia Property Bid Deadline Set
Diaphora 3 Fund, in liquidation pursuant to Art. 57 TUF, is
putting up for sale Ozzano dell'Emilia (BO), property complex
comprising of land for agricultural and/or commercial/office
purposes covering a total of 150,097 square meters of registered
area, of an "office" building, and of a building for school
purposes, as described in the appraisal report dated May 28,
2015, drawn up by Ing. Giuliano Ferrari.

Starting price: EUR14,040,000 in addition to applicable tax.

Bid deadline: 12:00 a.m. on February 21, 2017, bids to be
submitted at the sub-office of Notary Vincenzo Palmieri in Viale
della Lirica 61, Ravenna.

Date of sale: 3:00 p.m. on February 22, 2017, at the office of
the Notary.

Details, procedures and sale regulations are available on

MONTE DEI PASCHI: Faces Capital Shortfall of EUR8.8 Billion
BBC News reports that the European Central Bank has said Italian
lender Monte dei Paschi is facing a capital shortfall of EUR8.8
billion (GBP7.5 billion), higher than the EUR5 billion previously
estimated by the bank.

It comes after Italy approved a EUR20 billion fund to prop up its
embattled banking sector on Dec. 23, BBC relays.

Monte dei Paschi had asked for a capital injection to stay
afloat, BBC discloses.

It is carrying a mountain of bad loans made to customers who
cannot afford to repay them, BBC notes.

According to BBC, in a statement from the bank on Dec. 26, it
confirmed it had officially asked the ECB to go ahead with a
"precautionary recapitalization".

This will entail a forced conversion of the bank's junior bonds
-- many of which are held by small investors -- into shares, BBC

It also permits the government to buy shares or bonds on market
terms endorsed by EU state aid officials, BBC says.

In response, the ECB, as cited by BBC, said it had calculated the
capital it believed that the bank needed, based on an EU stress
test of large lenders earlier this year.

Monte dei Paschi (MPS) has formally requested a bailout from the
Italian government -- but it is far from a done deal, according
to BBC.

According to BBC, the government is trying to present the plan as
a "precautionary recapitalization" rather than a full-blown
rescue.  It is an important distinction under EU state aid law,
which would enable it to limit the losses suffered by investors,
BBC states.

Banca Monte dei Paschi di Siena SpA -- 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.

MONTE DE PASCHI: Italian Government Sets Up Backstop Fund
Hellenic Shipping News reports that Italy's government has set up
a backstop fund to shore up troubled banks, setting the stage for
the rescue of troubled Italian lender Banca Monte dei Paschi di
Siena SpA.

At a cabinet meeting in the early hours of Dec. 23, the
government of Prime Minister Paolo Gentiloni approved the
creation of a EUR20 billion (US$20.9 billion) fund to help
troubled banks, Hellenic Shipping News relates.  Shortly
afterward, Monte dei Paschi said it will apply to tap this fund
for fresh equity to shore up its balance sheet, Hellenic Shipping
News recounts.

Following the move, the Italian market regulator suspended
trading in Monte dei Paschi's ordinary shares, related
derivatives and 10 types of bonds for the entirety of the Dec. 23
session, Hellenic Shipping News relays.

The government's decision came just hours after the Tuscan bank
declared that a last-ditch effort to raise capital from private
investors had failed, Hellenic Shipping News notes.  The bank,
Italy's No. 3 lender, attempted to raise EUR5 billion to stay
afloat and avert a government bailout, Hellenic Shipping News

The government, as cited by Hellenic Shipping News, said that if
a bank taps the newly created fund, its outstanding junior bonds
will be forcibly converted into shares.  European rules on bank
rescues require that investors suffer at least some losses,
Hellenic Shipping News notes.

Banca Monte dei Paschi di Siena SpA -- 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.

UNICREDIT SPA: Fitch Affirms 'BB+' Upper Tier 2 Notes Rating
Fitch Ratings has affirmed Unicredit S.p.A.'s Long-Term Issuer
Default Rating (IDR) at 'BBB+' and its Viability Rating (VR) at
'bbb+'. The Outlook on the Long-Term IDR is Negative.

The affirmation follows the bank's restructuring announcement
last week. In Fitch's opinion, the planned recapitalisation, sale
of non-performing loans (NPLs) and cost-cutting measures, if
achieved, are all positive for creditors. The Negative Outlook
mirrors that on Italy's sovereign rating ('BBB+'/Negative) and
reflects Fitch's view that a downgrade of Italy would probably
lead to a downgrade of UniCredit's ratings. The Negative Outlook
also reflects Fitch's view that a further deterioration in
Italy's economic environment would make reaching the bank's
targets under its strategic plan more difficult. Fitch's
assumption is that the bank will successfully raise capital,
reduce NPLs and work towards reaching its targets. If these are
not achieved in line with the plan, the ratings will be
downgraded, probably by several notches.

UniCredit's Long-Term IDR is driven by its Viability Rating (VR).
The ratings reflect the benefits from the planned EUR13bn capital
increase and reduction in legacy NPL stock, but also remaining
problems with asset quality and earnings for the parent bank
after the restructuring. The ratings also reflect the group's
broad and diversified international franchise, measures being
taken on costs, and a good, diversified funding and liquidity

Geographical diversification, particularly in more stable and
highly rated economies such as Germany and Austria has proved key
to supporting the group's overall risk profile. However, Fitch
considers that the parent bank's risk profile remains highly
correlated with that of the Italian sovereign and with the
domestic operating environment. S&P expects Italy's GDP to grow
by 0.8% in 2016 and 0.9% in 2017, having declined in the five
years to 2016 at an average annual rate of 0.6%.

The restructuring will include notable progress in addressing
UniCredit's legacy NPL stock. The group had approximately EUR75bn
impaired exposures at end-9M16, largely generated by its Italian
corporate business during the country's protracted recession.
Management has identified a EUR56.4 billion non-core asset
portfolio to reduce through portfolio and single-name disposals
and write-offs but also through improved cure and recovery
strategies. The bank announced a EUR17.7bn gross doubtful loan
securitisation transaction, the sale of slightly over 50% of
which has already been agreed with the remaining amount to be
disposed of by end-2019, whilst an additional EUR19 billion of
impaired exposures will be worked out more traditionally. These
initiatives should lead to a reduced gross consolidated impaired
exposure of approximately EUR44bn by end-2019, equivalent to a
gross impaired loan ratio of 8.4% (as indicated by the bank).
UniCredit projects the loan impairment coverage ratio of
remaining stock will improve to above 54% by end-2019.

The EUR13 billion capital injection and sales of stakes in
Fineco, Pekao and Pioneer will substantially boost UniCredit's
capital ratios, even after raising impairment coverage levels and
booking restructuring costs. Management projects a consolidated
pro forma end-2017 phased-in CET1 ratio of 12%. It will
repatriate EUR3bn from its German subsidiary to the parent bank
in the 2017 accounts, which demonstrates that capital and funding
are gradually becoming more fungible across the group, but the
German and Austrian subsidiaries will retain high amounts of
group capital.

UniCredit's modest operating earnings should improve following
the cost restructuring measures (projected annual cost savings of
EUR1.7bn from 2019), and management is targeting an underlying
return on tangible equity of 9% on the basis of still slow EU
economic growth and lower-for-longer interest rates.

Funding is stable and well diversified and benefits from the
group's direct presence in and market access to various
countries. The group's liquidity profile is commensurate with the

The rating of the senior debt issued by UniCredit's funding
vehicles, UniCredit Bank (Ireland) plc, and UniCredit
International Bank Luxembourg SA is equalised with that of the
parent since it is unconditionally and irrevocably guaranteed by

The SR and SRF reflect Fitch's view that senior creditors cannot
rely on receiving full extraordinary support from the sovereign
in the event that a bank becomes non-viable. The EU's Bank
Recovery and Resolution Directive (BRRD) and the Single
Resolution Mechanism (SRM) for eurozone banks provide a framework
for resolving banks that require senior creditors participating
in losses, if necessary, instead of or ahead of a bank receiving
sovereign support.

Subordinated debt and other hybrid capital issued by the bank are
all notched down from its VR in accordance with Fitch's
assessment of each instrument's respective non-performance and
relative loss severity risk profiles.

Tier 2 subordinated debt is rated one notch below the VR for loss
severity to reflect below-average recovery prospects. No notching
is applied for incremental non-performance risk because writedown
of the notes will only occur once the point of non-viability is
reached and there is no coupon flexibility prior to non-

Legacy Upper Tier 2 debt reflects its higher loss severity given
its subordination to senior unsecured and subordinated Tier 2
obligations (two notches) and incremental non-performance risk
(one notch) for its cumulative coupon deferral subject to

Legacy Tier 1 notes are notched four times from the VR, two
notches for loss severity for deep subordination and another two
for non-performance risk as coupon deferral is constrained by
look-back clauses.

AT1 notes are currently rated five notches below the VR, two
notches for loss severity relative to senior unsecured creditors
and three notches for incremental non-performance risk, the
latter notching reflecting the instruments' fully discretionary
interest payment.

UniCredit's VR, IDRs and debt ratings reflect Fitch's assumption
that the EUR13bn capital raising, which according to the bank is
fully pre-underwritten, will be achieved in 1Q16. The bank's
ratings would be downgraded, probably by several notches, if the
capital increase does not go through or if the bank fails to
demonstrate notable progress in selling down and reducing the
remaining stock of impaired exposures, which include around
EUR19bn of impaired loans and the portion of the securitised NPLs
that the bank has not yet sold to third- party investors. The
ratings could also be downgraded if there is material slippage in
Unicredit's cost reduction plan.

Unicredit's ratings are also sensitive to the operating
environment in Italy, particularly as this affects asset quality
and earnings. A notable economic improvement could be beneficial
for the ratings, while a deterioration could be negative.

Because capital and funding are progressively becoming more
fungible across the group, and the German subsidiary UniCredit
Bank AG, is large in relation to the group, highly integrated
into the parent and supervised by the same regulator, the ECB, it
is possible that Fitch will at some point assign common VRs to
UniCredit S.p.A. and its German banking subsidiary to reflect the
then close integration between the two entities. After the
transfer of CEE subsidiaries to the parent, UniCredit's Bank
Austria AG's relative size fell and its business model has become
domestically focused. If and when we conclude that capital has
become essentially fungible within the group, we would equalise
the Austrian subsidiary's ratings with those of its Italian
parent because Bank Austria is highly integrated into the parent
and supervised by the same regulator.

The ratings of the senior debt issued by UniCredit's funding
vehicles, UniCredit Bank (Ireland) plc, and UniCredit
International Bank Luxembourg SA, are sensitive to the same
considerations as the senior unsecured debt issued by the parent.

The subordinated debt and hybrid securities' ratings are
primarily sensitive to changes in the VR, from which they are
notched. The ratings are also sensitive to a change in the notes'
notching, which could arise if Fitch changes its assessment of
their non-performance relative to the risk captured in the VR or
their expected loss severity.

For AT1 issues, the capital raising and business plan should
provide UniCredit with an ample buffer above its regulatory
maximum distributable amount (MDA) threshold. However, if the
capital raising fails, the bank would breach its MDA requirement
and not be permitted to pay AT1 coupons, which Fitch would
consider as non-performance and downgrade the debt ratings
accordingly, probably to 'CCC' or below, depending on our
recovery estimates.

An upgrade of the SR and upward revision of the SRF would be
contingent on a positive change in the sovereign's propensity to
support UniCredit. While not impossible, this is highly unlikely,
in Fitch's view.

The rating actions are as follows:

UniCredit S.p.A.
Long-term IDR: affirmed at 'BBB+' Outlook Negative
Short-term IDR: affirmed at 'F2'
VR: affirmed at 'bbb+'
SR: affirmed at '5'
SRF: affirmed at 'No Floor'
Senior unsecured debt: affirmed at 'BBB+'
Tier 2 notes: affirmed at 'BBB'
Legacy Upper Tier 2 notes: affirmed at 'BB+'
Preferred stock: affirmed at 'BB'
AT 1 Notes: affirmed at 'BB-'

UniCredit Bank (Ireland) p.l.c. (no issuer ratings assigned):
Senior unsecured notes: affirmed at 'BBB+'

UniCredit International Bank (Luxembourg) S.A. (no issuer ratings
Senior unsecured notes: affirmed at 'BBB+'


KAZAKHTELECOM JSC: Fitch Hikes LT Issuer Default Rating to BB+
Fitch Ratings has upgraded Kazakhtelecom JSC's (Kaztel) Long-Term
Issuer Default Rating (IDR) to 'BB+' from 'BB'. The Outlook on
the IDR is Stable.

Kaztel is a strong fixed-line incumbent, with dominant market
shares in traditional telephony and fixed-line broadband
services, operating in a benign regulatory environment. The
company created a mobile venture with Tele2 that gained an
approximately 25% subscriber market share and is on track to
improving its profitability on the back of a larger scale and
post-integration synergies.

Kaztel's funds from operations (FFO) adjusted net leverage is
low, and unlikely to spike above 2x on the expected acquisition
of Tele2's stake in the mobile joint venture in 2019.


Strong Incumbent Positions
Fitch expects Kaztel to maintain its leading position in the
fixed-line segment, helped by benign regulation and a shortage of
alternative networks. Kaztel estimated its revenue fixed-line
telephony market share at a dominant 82% at end-2015, and at an
exceptionally high 72% in the fixed-line broadband segment.

Macroeconomic challenges post sharp tenge devaluation in 2H15
discouraged alternative operators from active investments into
new networks. We believe Kaztel's control over the last-mile
infrastructure and the lack of line sharing/unbundling regulation
will continue to protect the company from excessive competition
in the broadband segment.

Broadband Growth Compensates Voice Declines
We expect broadband revenue growth to continue to compensate for
pressures in the traditional voice segment. The Kazakh broadband
market still holds significant growth potential, with broadband
fixed-line penetration estimated by the company at 8.5% of
population at end-2015 (we estimate this to correspond to
approximately 40% by household).

Fitch projects voice revenue pressure to continue to be driven by
fixed-line disconnections. However, the pace of decline has
moderated, with voice revenue expected to shed approximately 6%
yoy in 2016, compared with a 14.5% yoy decline in 2014.

Improving Mobile Performance
Kaztel's mobile joint venture with Tele2 continues to gain market
share, and we expect its financial performance to improve as the
company starts benefiting from larger scale and integration
synergies. The joint venture continues to invest heavily in 4G
coverage and capacity, but we expect it to start generating
positive free cash flow (FCF) once the active investment phase is
over and profitability improves, which is expected from 2018

The mobile joint venture increased its subscriber market share to
25% at end-1H16, a significant improvement from 18% at end-2014.
We believe this entity will continue gaining market share on the
back of its wider combined distribution network, superior 4G
network coverage and successful market positioning, with Tele2
and Altel brands catering to price sensitive and premium segments

Low Leverage, Strong Cash Flow
Kaztel's leverage is low, helped by deconsolidation of the
company's mobile operations following the setting up of the joint
venture with Tele2 at end-2015. FFO adjusted net leverage was
0.5x at end-2015, a sharp reduction from 1.2x at end-2014. We
expect Kaztel to acquire full control of the joint venture in
2019. Leverage is likely to increase by around 1.0x, but we
project FFO adjusted net leverage to be no more than 2.0x.

Kaztel is likely to demonstrate strong FCF generation in 2016-
2018, accumulating cash for the acquisition of Tele2's stake in
the joint venture in 2019. With fixed-line operations more
profitable and not requiring significant development capex, FCF
margin may approach low double-digit territory over this period.

Cash at 'BB-' and Above Banks
The company increased the amount of cash liquidity its holds with
'BB-' and higher rated banks. However, holdings at low-rated
domestic banks remain substantial. We believe access to such cash
remains uncertain Consequently, we only treat as cash placed with
banks rated 'BB-' and above as available for debt service, with
all other cash treated as restricted and excluded from net
leverage metric calculations.

Nevertheless the company has been able to utilise some of its
significant cash holdings with such low-rated banks. Further
progress with accessing this cash would be treated as positive
event risk.

Limited FX Exposure
Kaztel has limited FX exposure, which is primarily represented by
its only remaining USD-linked debt instrument, while all other
debt is in KZT. The company has successfully managed to withstand
pressures driven by sharp tenge devaluation in 2015, and we
expect management to maintain a prudent approach to FX funding
and capex commitments.

FX risks are mitigated by substantial cash and deposits held in
foreign currencies. As of end-1H16, the company had KZT27.1bn
(USD80m) of FX debt, which was by more than 60% covered by FX
cash liquidity held at banks rated 'BB-' and above. The net FX
exposure is equal to less than 0.2x of 2015 EBITDA and hence
manageable, in our view.

Weak Parent-Subsidiary Linkage
Kaztel's ratings reflect the company's standalone credit profile.
Kaztel is of only limited strategic importance for Kazakhstan,
while operating and legal ties with its controlling shareholder,
the government-controlled Samruk-Kazyna, are weak. Although
indirect government control is a positive credit factor, it does
not justify a rating uplift, in our view

Kaztel's ratings are driven by the company's strong market
positions in key fixed-line segments, robust FCF generation, low
leverage and a benign regulatory environment. The company is
rated lower than other CIS and EMEA incumbents due to its smaller
scale, lack of geographical diversification and a weak domestic
financial market resulting in a lack of liquidity


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

-- Flat to slightly positive fixed-line revenues, with broadband
    growth compensating voice weakness

-- EBITDA margin at 38%-39% in 2017-2019, and 33%-34% in 2019-
    2020 on the consolidation of the less profitable mobile joint

-- Capex intensity at 18% of revenue in 2017, 17% in 2018 and
    16% in 2019-2020

-- KZT24bn of guarantees to mobile JV are treated as Kaztel's

-- Moderate dividend payment at KZT3bn-KZT7bn per year in 2017-
    2020, in anticipation of the purchase in 2019 of the
    remaining stake in the mobile joint venture.


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

-- Successful integration with the mobile segment but his is
    unlikely before 2019 when Fitch expects Kaztel to take full
    control of its mobile joint venture with Tele2.

-- Maintaining sufficient liquidity that is diversified between
    external and internal sources;

-- Consistently strong FCF generation with pre-dividend FCF
    margin in the mid-to-high single digit range.

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

-- A protracted rise in FFO-adjusted net leverage to above 2x

-- A material increase in refinancing risk driven by
    insufficient liquidity

-- Operating underperformance and significant market share
    erosion including in the mobile segment


Sufficient Liquidity
Kaztel has sufficient cash on hand to service its debt
obligations till end-2019. Fitch estimates that cash placed with
'BB-' and above-rated banks as of end-September 2016, more than
covers scheduled debt maturities of KZT4bn in 4Q16-2018. Fitch
expects positive FCF to further support liquidity. However, the
Kazakh domestic banking system remains weak, implying the
scarcity of local funding and few committed credit facilities.


Kazakhtelecom JSC

  Long-Term Foreign and Local IDRs: upgraded to 'BB+' from 'BB',
  Outlook Stable

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

  National Long-Term Rating: upgraded to 'AA-(kaz) from
  'A+(kaz)', Outlook Stable

  Senior unsecured debt in foreign and local currency: upgraded
  to 'BB+' from 'BB'

  Senior unsecured debt in local currency: upgraded to 'AA-(kaz)'
  from 'A+(kaz)'


BSN MEDICAL: S&P Puts 'B+' CCR on CreditWatch Positive
S&P Global Ratings said that it placed on CreditWatch with
positive implications its 'B+' long-term corporate credit rating
and issue ratings on BSN Medical Luxembourg Group Holding
S.A.R.L. (BSN), the parent company of Germany-based health care
group BSN Medical.  S&P also placed its 'B+' issue ratings on
BSN's senior debt facilities on CreditWatch positive.

The CreditWatch placement follows the recent announcement that
Svenska Cellulosa Aktiebolaget (SCA) has agreed to acquire BSN
for EUR2.74 billion.  The acquisition will be fully debt-funded.

"We assume that BSN will be integrated with SCA Hygiene, which is
currently 100% controlled by SCA.  As a result of the proposed
transaction, we also lowered our preliminary long-term corporate
credit rating and preliminary issue-level ratings on SCA Hygiene
to 'BBB+' from 'A-'.  The outlook is stable.  The preliminary
'A-2' short-term credit rating and 'K-1' short-term Nordic
regional scale rating were affirmed.  The downgrade reflected our
view that the decision to finance the acquisition entirely
through debt triggers deterioration in the credit ratios.
Nevertheless, we believe the acquisition expands SCA Hygiene's
product offering in the health care segment, which enhances the
group's growth prospects for the coming years," S&P said.

In S&P's view, the health care equipment sector will continue to
benefit from favorable demographic trends.  A growing middle
class in developing economies is fostering growth, while in
developed economies, long-term demand is fueled by increased
elderly population as well as the prevalence and diagnosis of
diabetes and hypertension.

S&P expects BSN's organic revenue to grow at a low-single-digit
percent rate, driven mainly by specialty vascular and acute wound
care.  S&P forecasts BSN's EBITDA margins to be about 20%,
reflecting ongoing improvements in operating efficiency and
positive products mix effects.  S&P expects capex investment of
4%-4.5% of revenues per year.

BSN Medical is operating in a consolidating industry and will
likely continue to make bolt-on acquisitions after integration to

S&P aims to resolve the CreditWatch placement upon SCA's
successful completion of the acquisition, which is expected at
year end 2016 or in the second quarter of 2017.

S&P has placed its issue ratings on BSN's facilities on
CreditWatch positive.  The recovery rating on the senior
facilities remains at '3', signifying that S&P's recovery
expectations are in the lower half of the 50%-70% range.

S&P expects BSN's existing debt to be repaid if the acquisition
is completed, at which point S&P will withdraw the issue ratings.

CAPSUGEL SA: S&P Puts 'B+' CCR on CreditWatch Positive
S&P Global Ratings placed its 'B+' long-term corporate credit
rating on Luxembourg-based Capsugel S.A. on CreditWatch with
positive implications.  The issue-level ratings are unaffected.

The rating action follows the announcement that Lonza intends to
acquire Capsugel for $5.5 billion, including the refinancing of
Capsugel's existing debt, financed with debt and equity.  The
transaction is subject to regulatory and other customary closing

"We believe that the combined company of Lonza and Capsugel will
have a stronger credit profile than Capsugel on a stand-alone
basis," said S&P Global Ratings credit analyst Matthew Todd.  On
the business side, the combination of Lonza and Capsugel will
have greater scale and scope of capabilities.  Assuming the
transaction is completed, S&P expects Lonza's long-term debt
leverage to be well below 5x, an improvement from our forecast
for Capsugel.  S&P believes that Lonza's intent to refinance
Capsugel's debt indicates the strategic importance of Capsugel as
Lonza would, after the transaction closes, likely provide
additional liquidity, capital, or risk transfer in most
circumstances.  For these reasons, S&P sees the potential to
raise our corporate credit rating on Capsugel by one or more
notches if the acquisition is completed.

S&P intends to resolve its CreditWatch listing upon completion of
the acquisition, pending additional information on Lonza's
acquisition integration plans and the ultimate capital structure
of the combined company.


Moody's Investors Service has upgraded the Probability of Default
Rating (PDR) of Norwegian geophysical services company Petroleum
Geo-Services ASA (PGS) to Caa2-PD/LD from Caa3-PD following the
completion of the exchange offer announced on November 22, 2016,
classified as distressed exchange by Moody's. Concurrently,
Moody's has affirmed PGS' Corporate Family Rating (CFR) at Caa2
and affirmed the Caa2 ratings on the remaining senior notes due
2018 and the senior secured bank credit facilities. The rating
outlook is stable.


The action follows the completion of the exchange offer of the
7.375% USD450 million senior secured notes due 2018 with USD212
million unrated senior secured notes due 2020 carrying the same
7.375% cash coupon and cash element. The company received around
94% acceptance to its exchange offer, which is more than the 90%
threshold set for the transaction to be carried out. PGS also
raised a total of approximately NOK1.9 billion (or USD225
million) in net proceeds from an equity issuances that will be
used to fund the cash portion of the exchange offer and general
corporate purposes. PGS has following these transactions launched
a subsequent offering for an amount up to NOK 304 million
(approximately USD 35 million) with a subscription period to
close January 5, 2017.

The transaction postpones the refinancing risk by two years and
also improves the liquidity profile. As a result the PDR has been
upgraded to Caa2-PD/LD, in line with the CFR. The "/LD" indicator
reflects the fact that Moody's considers this transaction as a
distressed exchange, which is a form of default under Moody's
definition. The /LD indicator will be removed in three business
days. This is because bondholders are offered notes on 50% of
their current holding with extended maturity and will receive
cash on the remaining 50% with a discount to par, which, in
Moody's view, represents a failure to honor the promise to pay
contained within the original debt obligations.

Moody's also affirmed PGS' Caa2 CFR reflecting the company's (1)
size and scale, (2) high quality fleet, (3) leading market
position, (4) diversified geographic diversification and (4) the
support from its shareholders.

However, the CFR remains constrained by the high leverage of the
company which Moody's expects to remain above 15.0x at the end of
2016 with a Moody's-adjusted EBITDA less multi-client
amortization of around $100 million, and Moody's expectations
that market conditions in the seismic industry will remain
challenging throughout 2017 with limited visibility on the timing
of a potential market recovery.

While improving post transaction, Moody's views the company's
liquidity profile as weak. Proforma for the transaction, PGS's
liquidity would consist of cash and cash equivalents of $91
million and availabilities under the RCF of $240 million. In
addition, the company has $91.2 million of undrawn credit on the
Export Credit Financing ("ECF") facility to cover the final yard
installment on the Ramform Hyperion new build scheduled for
delivery in Q1 2017. Despite the improvement of the maturity
profile proforma for the transaction, Moody's expects liquidity
to remain constrained by negative cash flow generation of over
$150 million in 2016, improving in 2017 but remaining
nevertheless negative above $50 million in 2017.


The stable outlook reflects Moody's expectations that further
downside risk is limited and mitigated by the exchange offer and
equity raise.


Although unlikely in the short term, there could be positive
pressure if (1) Moody's-adjusted debt/EBITDA ratio is below 8x on
a sustained basis; (2) the company improves its operating
performance resulting in sustained positive reported EBITDA; (3)
free cash flow generation turns positive and (4) liquidity
profile improves with notably no pressure on covenant to access
RCF. Any potential upgrade would also include an assessment of
market conditions.


We could downgrade the ratings in the event of continued
deterioration in operating performance and/or weakening liquidity
position including negative FFO, restricted access to the RCF due
to financial covenant issues and increased refinancing risk
associated to an unsustainable capital structure.



Issuer: Petroleum Geo-Services ASA

Probability of Default Rating, Upgraded to Caa2-PD /LD from


Issuer: Petroleum Geo-Services ASA

LT Corporate Family Rating, Affirmed Caa2

Senior Secured Bank Credit Facility, Affirmed Caa2

Senior Unsecured Regular Bond/Debenture, Affirmed Caa2

Outlook Actions:

Issuer: Petroleum Geo-Services ASA

Outlook, Remains Stable

The principal methodology used in these ratings was Global
Oilfield Services Industry Rating Methodology published in
December 2014.

Headquartered in Norway, Petroleum Geo-Services ASA is a
technologically leading oilfield services company specializing in
reservoir and geophysical services, including seismic data
acquisition, processing and interpretation, and field evaluation.
PGS maintains an extensive multi-client seismic data library. For
the year ended December 31, 2015 PGS reported revenues of $962


INTECHBANK PJSC: DIA Appointed as Provisional Administrator
Due to unstable financial position of Public Joint-Stock Company
IntechBank and threat to the interests of its creditors and
depositors, the Bank of Russia has appointed the state
corporation Deposit Insurance Agency as a provisional
administrator for six months from December 23, 2016, according to
the press service of the Central Bank of Russia.

The rights of shareholders related to their stakes in the
authorized capital as well as the authority of management of PJSC
IntechBank have been suspended for a period of the provisional
administration activity.

The priority task of the provisional administration is to inspect
the bank's financial position.

At the same time, guided by Article 18938 of the Federal Law "On
Insolvency (Bankruptcy)" the Bank of Russia has imposed a three-
month moratorium on satisfying claims of creditors of PJSC
IntechBank from December 23, 2016, due to the bank's failure to
satisfy creditors' monetary claims within the timeframe exceeding
seven days from the deadline.

In accordance with the Federal Law "On Insurance of Household
Deposits with Russian Banks", the imposition of a moratorium on
satisfying bank creditors' claims is an insured event.

The state corporation Deposit Insurance Agency will determine the
procedure for paying indemnities to the bank's depositors,
including individual entrepreneurs.

Fitch Ratings has assigned Russian CJSC Transmashholding (TMH)
first-time Foreign- and Local-Currency Issuer Default Ratings
(IDRs) of 'BB-'. The Outlook is Stable.

TMH's ratings reflect a solid financial profile, which is broadly
in line with the 'BBB' category for a diversified industrial
company. This is characterised by sound operating margins and
moderate leverage, offset somewhat by weak free cash flow (FCF)
generation. The ratings are limited to the 'BB' category by TMH's
limited diversification in terms of both its customer base and
reliance on Russian entities for a large portion of its revenue.
Corporate governance is also a constraint.

Limited Business Profile
TMH has a strong position in the Russian locomotive, rail and
metro car market. The company has good long-term relationships
with key customers such as Russian Railways (RZD; BBB-/Stable)
and Moscow Metro. Its relationship with 33.3% shareholder Alstom
is a credit positive as it provides the company with strategy,
engineering and marketing support.

However, the lack of geographical diversity and the rather low
share of revenue derived from service work limits TMH's business
profile. The share of export revenue may rise in the medium term
but we assume TMH will remain reliant on the domestic market.

Moderate Financial Profile
TMH displays a financial profile which has many attributes of an
investment grade diversified industrial and capital goods
company. TMH's strong operating margins, both EBIT and funds from
operations (FFO), and leverage, are broadly in line with those of
an investment grade credit. Fitch views management's financial
policy as conservative, which combined with a reasonably flexible
operating cost structure, supports Fitch's expectation that key
ratios are likely to remain stable through the rating horizon of

Poor FCF Generation
The company's FCF is a constraint on the ratings. FCF has been
negative for the past two years and will likely be negative again
in 2016, beyond which Fitch expects it to be positive, albeit
weak, limited by high capex as well as working capital outflows.

Fitch expects capex to rise to over 6% of revenues through the
medium term, from between 4% and 5% for the past three years, as
the company extensively modernises its production sites. We
expect significant recent working capital outflows, totalling
RUB20bn in 2014-2016, to peak this year, with future working
capital cash flows expected to reverse some of the prior build-

Corporate Governance
Fitch views TMH's corporate governance as a negative for the
ratings, although this is in line with other rated privately-held
Russian corporates. TMH has no independent board members and
there is no audit committee, although a strategy committee is
committed to a conservative and consistent financial policy. TMH
also benefits from having three board members from Alstom. TMH's
related party transactions are now limited since Russian Railways
sold its stake in the company.

Volatile Market Dynamics
The Russian market for locomotives, rail and metro cars,
motorised multiple units and trams is driven by the capex
decisions of a few key operators, most of which are state- owned,
and thus tends to be volatile. The market is expected to grow at
mid-single digits in the medium- to long-term as a result of
material pent-up demand to modernise fleets.

The recent RUB depreciation has helped TMH further cement its
domestic market position, as it can offer materially lower prices
without sacrificing its margins, while foreign producers do not
have that flexibility. The share of export revenue is expected to
remain broadly stable through the short term but could rise in
the medium term.

Potential Bond Issuance
TMH's plan to issue RUB-denominated bonds would be a positive
factor, by refinancing existing debt and further extending the
maturities of the existing debt. However, existing debt at
operating subsidiaries could result in holding company debt being
structurally subordinated to operating company debt, which could
result in the rating of the bond being notched down from the IDR.

TMH's 'BB-' rating is well-positioned relative to peers. A weaker
geographical diversification compared with its global peers and
weak FCF generation are offset by a strong local market position,
long-term contracts and good relationship with key customers as
well as an overall solid capital structure. No country-ceiling or
parent / subsidiary aspects impact the ratings.


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

-- Revenue growth in 2016 and 2017 driven by unit production
    rise, while average prices remain stable

-- Operating cost structure to remain broadly stable, leading to
    limited uplift in margins

-- Capex at between 5% and 7% p.a.

-- No dividend paid in 2016 and a gradual lift in dividend
    payments from 2017, assuming profitability increases

-- Debt maintained at current levels


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

-- Improved geographic, customer and service diversity
-- Gross leverage remaining below 3x (2015: 3.2x; 2016E: 2.5x)
-- FCF margin above 2% (2015: -3.2%; 2016E: -1.4%)
-- Fixed charge cover above 4x (2015: 3x; 2016E: 3.3x)

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

-- Gross leverage above 4x
-- Negative FCF on a sustained basis
-- Fixed charge cover below 3x


Satisfactory Liquidity

Fitch views the liquidity position of TMH as satisfactory. At
end-September 2016, the group reported cash and short-term
deposits of RUB7.1bn (end-2015: RUB9bn) on its balance sheet
against short-term debt of RUB11.5bn. Almost all of the cash is
held in RUB, with only 3.5% in EUR and USD. This is broadly
matched with the currency of debt, as 100% of the debt is held in
RUB. Approximately 15% of total cash is held at the holding level
(TMH) with the remainder located at various operating entities.

TMH also had combined RUB29bn in available credit lines at end-
September 2016 (across various operating entities) from major
Russian banks. Maturities peak in 2H17, with RUB15.9bn due for
repayment. A potential local bond placement of up to RUB10bn as
well as the ongoing negotiation of the loan extensions could help
spread maturities more evenly.

Fitch forecasts that FCF will be minimal until the end of the
decade due to high capex. However, it does not expect the company
to have material problems refinancing over the medium-term due to
its good relationships with major Russian banks.


SERBIA: State Enterprises Need Restructuring, IMF Official Says
Beta reports that James Roaf, chief of the International Monetary
Fund's mission in Serbia, said it is crucial for fiscal
stabilization in the country that state enterprises be
restructured into becoming sustainable.

Beta quoted Mr. Roaf as telling the Danas daily alternatively
they should be liquidated, in order to prevent the accumulation
of losses.

"In cases like Resavica or RTB Bor they are companies located in
less developed regions, so the restructuring plans have to be
gradual and take welfare implications into consideration.
Support to these companies in the future should be secured
through transparent budget subsidies, instead of the accumulation
of debts.  The government promised to deal with the problems of
these companies," Beta quotes Mr. Roaf as saying.

He added that a proper analysis should be done to determine which
parts of the RTB were creating losses, and then close them down,
Beta relays.

"That company needs a more professional approach to management,
in order to prevent the accumulation of losses and debts, and to
find ways to reduce the excess staff," Mr. Roaf, as cited by
Beta, said.

According to Beta, commenting on the situation in Petrohemija, he
said that it was under restructuring, which should lead to it no
longer being a burden to the state.

"Azotara is a difficult case. It should not be subsidized in the
future.  We agreed that gas should only be delivered to them on
the basis of full payment in advance," Mr. Roaf stressed, adding
that Petrohemija and Azotara could generate costs which far
exceed their economic benefit.


CAR RENTALS: S&P Raises CCR to 'B+', Outlook Stable
S&P Global Ratings said it has raised its long-term corporate
credit rating on Spanish car rental company Car Rentals Parentco
S.L.U. (Goldcar) to 'B+' from 'B'.  The outlook is stable.

At the same time, S&P raised its rating on the company's senior
secured debt to 'B+' from 'B' and removed the UCO identifier S&P
applied on Dec. 14, 2016, from all the ratings.

"The rating actions follow our publication of updated criteria
for rating operating leasing companies.  The upgrade principally
reflects our more favorable assessment of Goldcar's financial
risk profile, which we now assess as significant under the new
criteria, rather than our previous assessment of aggressive.  We
continue to assess the company's business risk profile as weak.
We previously rated operating leasing companies under our "2008
Corporate Methodology: Analytical Methodology," which has been
retired.  We now apply our "Corporate Methodology," Nov. 19,
2013, as a general framework and the Key Credit Factors criteria
to incorporate the particular characteristics of operating
leasing companies," S&P said.

Goldcar is a Spanish car rental company.  It has over 80 branches
and operates in Spain, Italy, Portugal, France, Greece, and
Croatia, among others.  Its fleet size is close to 50,000
vehicles.  It was founded in 1985 by the Alcaraz family, which
today owns about 20% of the group, and is based in San Juan de

S&P's assessment of Goldcar's significant financial risk profile
is underpinned by the company's solid credit metrics.  S&P
expects EBIT interest coverage to remain above 1.5x, debt to
capital below 75%, and funds from operations (FFO) to debt in
excess of 20%.  The group is 80% owned by private equity firm
Investindustrial, and S&P believes it is committed to a level of
leverage that is consistent with a significant financial risk
profile.  S&P assess the financial policy as Financial Sponsor-4.

S&P recognizes that Goldcar benefits from the highly liquid
nature of its assets (principally its fleet), which supports
financial flexibility.  In addition, about 80% of Goldcar's fleet
is covered under repurchase agreements with auto manufacturers,
with contracts that are typically around eight months long (at-
risk vehicles have an average life of about 1.5 years).  This
helps the group mitigate some risks as well as adjust the size of
its fleet to better adapt to demand.

"Our assessment of Goldcar's business risk profile is constrained
by the group's small size and relatively low brand recognition
compared with its peers' (about 65% of revenues are via the
indirect channel).  We also see as negative factors its
concentration in Spain (about 65% of revenues) and the
significant seasonality of the business, in which more than 55%
of earnings are generated in the summer.  Still, the company is
somewhat diversified in terms of customers' country of origin,
and no nationality represents more than 20% of revenues.  We
integrate into business risk our assessment of the short asset
class nature of car rental leasing, as shown by the typical
length of lease terms (both absolutely and as a percentage of an
automobile's economic life)," S&P noted.

Although the group relies on inbound tourism, with very good
prospects in its main markets, it is less diversified both
geographically and by product, than the bigger players in the
market.  S&P also notes some sales concentration in its top 10
offices.  In addition, the on-airport segment, which generates
about 85% of Goldcar's revenue, relies heavily on airline
passengers.  Demand tends to be cyclical, influenced by global
events (such as terrorism and disease outbreaks), and is usually
fiercely price-competitive because of excess fleet capacity at
times and participants' efforts to maintain market share.

The abovementioned constraints are partly offset by Goldcar's
leading position in Spain and above-average industry operating
profitability, which S&P measures using earnings before interest
and taxes (EBIT) margins.  In addition, Goldcar's business model
differs from that of its larger competitors.  Goldcar's
operations are based on targeting the growing segment of value-
conscious customers and offering affordable rental costs.
However, the company is heavily reliant on ancillary services
such as insurance, GPS, 3G-Internet, and baby seats, among others
(which comprise about 50% of revenue rather than the usual 20%-
30% for its larger peers).  Still, the company continues to work
on innovative steps to support its revenue growth, such as
implementing new technology to enhance its customer experience by
offering products such as premium check-in, queue-management
initiatives, and further developing its mobile app and its
loyalty club.

The outlook is stable.  S&P expects Goldcar will maintain credit
measures consistent with a significant financial risk profile,
including EBIT interest cover sustainably above 1.3x, debt to
capital notably below 82%, and FFO to debt in excess of 20%.  S&P
assumes that the group will continue to post significant revenue
growth in 2017, principally because of new-location openings,
while maintaining EBIT margins above 20%.  The outlook also
reflects S&P's view that Goldcar will preserve sufficient
liquidity and ample covenant headroom to run its business
smoothly during seasonal swings in demand.

Downside scenario

S&P could consider lowering the rating if the group is not able
to ramp up its growth strategy outside Spain, experiences an
unexpected loss of market share, or suffers a considerable
revenue or profit decline, resulting in EBIT interest cover
approaching 1.3x.  S&P could also lower the rating if it
perceives weakening liquidity, or if Goldcar pursues a more rapid
pace of inorganic growth, with spending resulting in debt to
capital increasing toward 80%.

Upside scenario

S&P could consider raising the rating if its assessment of the
company's business risk improves, which would be possible if
Goldcar can continue expanding without jeopardizing its margins,
substantially increasing its market share to above 10% in each of
its operating markets, while reducing its concentration on Spain
to less than 50% of revenues.  This would entail Goldcar's EBIT
margins remaining sustainably above 20%.  The financial risk
profile is capped by the company's private equity ownership.

VIESGO GENERATION: Fitch Hikes LT Issuer Default Rating to BB
Fitch Ratings has upgraded Viesgo Generacion S.L.U. (VG)'s
Long-Term Issuer Default Rating (IDR) to 'BB' from 'BB-' and its
senior secured rating to 'BB+' from 'BB'. The Outlook on the IDR
is Stable.

The rating upgrade reflects the improved business profile
resulting from the inclusion of the supply activities in the
rating perimeter, the strengthened capital structure with
substantially lower gross debt post refinancing, and the record
of cash generation. The rating is constrained by VG's inherent
merchant exposure, small size and concentrated asset base,
mitigated by the mix of advantageously located, efficient and
responsive plants. Fitch expects funds from operations (FFO) net
adjusted leverage in the range of 1.7x-1.8x during 2017-2019. The
above-average recovery prospect under the senior secured
financing is reflected in a single-notch rating uplift of the
facilities above the company's IDR.


Recourse on Supply Activities
The rating upgrade is partly due to the full recourse of the
lenders over the supply business' cash flows under the new
financing documentation. In our view, this improves the overall
credit profile as VG now benefits from the natural hedge provided
by energy supply to end-customers. VG's supply activity includes
over 680,000 gas and electricity customers, largely in the
liberalised residential sector, which we consider the most stable
and profitable segment, with an expected average annual EBITDA of
EUR15m in our ratings case.

Strengthened Capital Structure, Low Leverage
The improvement of the group's credit profile is also backed by
the stronger capital structure due to lower gross debt post
refinancing in December 2016. The cash-flow generation of 2015-
2016 allowed debt repayment and cash accumulation which led to
the refinancing of the initial EUR275m term loan with the new
five-year EUR125m term facility. The new facility does not
include amortisation in the first three years, but supports
moderate leverage up to 2019 due to provisions that limit
distributions when net debt to EBITDA is above 2.5x. We expect
FFO adjusted net leverage of 1.0x in 2016 under the new
perimeter, increasing to 1.8x by 2019, consistent with the
upgrade. Interest cover has also improved given the lower
financing cost.

Working-Capital Monetisation
Working-capital unwinding from the cash-in of regulatory
receivables, coal inventory destocking at Puente Nuevo and a
reduction in gas prepayments have been the main drivers for the
reduction in leverage in 2015. Management expects substantial
working-capital release for the period 2016-2019, with a large
part of this amount related to 2016 and already achieved.

Hydro/Coal Support Cash Generation
The group relies on a few key plants, resulting in operational
risk associated with asset concentration. However, hydro plants
provide a good base for profitability, due to their fundamental
position in the merit order and high margins. Around half of the
group's revenue from its hydro capacity comes from pumping
(361MW), making most of its earnings on the spread between peak
and off-peak prices and on the competitive balancing market.

Fitch expects the Los Barrios coal plant, a key asset for VG, to
retain its strategic importance for the reference area,
characterised by grid technical constraints that will persist
over the plan. This feature allows the plant to achieve a
significant premium over pool prices. The selected catalytic
reduction (SCR) investment for Los Barrios is now completed and
has extended the useful life of the plant to 2030.

Market Fundamentals Remain Weak
Fitch is assuming a slight increase in electricity demand in
Spain over 2017-2019, significantly below our expectation of
moderate GDP growth, and wholesale prices in line with current
forwards at 43-44 EUR/MWh. The Spanish (Iberian) electricity
system is characterised by significant overcapacity and limited
interconnection with France, which we expect to continue over the
rating horizon. We believe that overcapacity will be reduced over
the medium term by the recovery of electricity demand and the
reduction of CCGT and coal-installed capacity.

Positive Current Trading
In 2015, VG achieved an EBITDA of EUR78 million, with a
contribution from its supply business of almost EUR15 million.
Fitch's expectation for 2016 is broadly aligned with 2015. This
corresponds to FFO of around EUR70 million, while the free cash-
flow generation has been boosted by working-capital release. FCF
amounted to EUR96 million in 2015 and we forecast it to be
broadly neutral in 2016 after factoring a shareholder loan
repayment of EUR65 million, made in the context of refinancing.

VG is a pure generation and supply operator in Spain. Its
business profile is riskier than the large integrated European
utilities, given the lack of diversification into stable
networks, the small size and asset concentration. However, the
group's business profile is partially comparable to other small
generators rated by Fitch such as Melton Renewable Energy UK Plc
(BB/Stable) and Infinis Plc (BB-/Negative). Melton has a negative
rating guideline on FFO net adjusted leverage for the same rating
at 4.0x, against 2.5x for Viesgo, reflecting the largely quasi-
regulated nature of its activities. Infinis has a one-notch lower
rating due a much higher FFO net adjusted leverage (around 4.0x),
partially offset by the quasi-regulated profile of the cash flow.
No Country Ceiling, parent/subsidiary or operating environment
constrains affect the rating.


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

-- EBITDA in the range of EUR70m to EUR80m for the period
    2016-19, assuming electricity prices of around 43 EUR/MWh, a
    dark spread of around 15 EUR/MWh, annual capacity payments of
    around EUR35m and almost flat results for supply

-- New credit facility's spread is 375bp up to December 2019,
    the company will hedge a minimum of 75% of the notional

-- Working capital has a substantial cumulative positive
    contribution across the plan, while annual capex will fall to
    EUR20m-35m in 2017-19 after the completion of the SCR
    investments for Los Barrios

-- Distributions to shareholders have been conservatively
    modelled in order to leave cash on balance at EUR10m every
    year (EUR200m in the period 2017-19). As a consequence, gross
    debt remains stable throughout the period (debt repayment
    starts in 2020).


Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action

-- An upgrade is unlikely, reflecting the company's business
    profile. However, an improvement of the business profile
    (meaningful contribution of quasi-regulated activities) or a
    negligible leverage on a sustained basis may be positive for
    the rating.

Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action

-- FFO adjusted net leverage above 2.5x and/or FFO interest
    cover below 4.5x on a sustained basis, as a consequence of
    lower working-capital release, negative market evolution
    and/or substantially lower margins than currently expected by

-- Material adverse changes to the regulatory framework,
    including the wholesale market, capacity payments or
    ancillary services, leading to a change in our view on the
    system's sustainability and on the company's operating


Sufficient Liquidity: Fitch assesses VG's post-refinancing
liquidity position as adequate. The new EUR125m term loan was
fully drawn at closing and an additional EUR49.5m revolving
credit facility for general corporate purposes was fully
available at the time of the refinancing and largely available
throughout the rating horizon. This RCF covers the potential
operational needs for the rating horizon.

There is no restricted cash, as the environmental investment in
Los Barrios has now been concluded (EUR25m restricted cash
reserve by end-2015). Moreover, the previous SFA defined a
"Target Cash Balance" of EUR40m which is no longer included in
new financing documentation. Fitch models a EUR10m cash balance
from 2017 with excess cash flow distributed to shareholders.


DOMETIC GROUP: Moody's Hikes Corporate Family Rating to Ba3
Moody's Investors Service has upgraded to Ba3 from B1 the
corporate family rating (CFR) of Dometic Group AB, a leading
global manufacturer of various products for recreation vehicles,
commercial and passenger cars, marine, retail, and lodging
markets. The rating outlook remains positive.

The upgrade of the CFR reflects the following interrelated

-- Dometic's latest leverage, as measured by Moody's-adjusted
    debt/EBITDA, of 2.7x is below the upgrade trigger of 3.0x

-- Moody's expects that Dometic's leverage will remain
    sustainably below 3.0x


"Based on results to 30 September 2016, Dometic's leverage has
notably decreased to 2.7x from 3.1x as at December 31, 2015,
thanks to good organic growth rates and continued cost savings,
which resulted in improved profit margins. We expect that Dometic
will continue reducing its leverage and as a result its rating
outlook remains positive", says Andrey Bekasov, AVP and Moody's
lead analyst for Dometic. "The class action complaints in the US
since they have emerged earlier this year have not affected
Dometic's sales to date and we anticipate that this will not
change in the immediate future", adds Mr. Andrey.

Dometic Group AB's (Dometic) Ba3 corporate family rating (CFR)
reflects: 1) the company's leading position in a niche leisure
products industry, providing products for recreational vehicles,
yachts, commercial and passenger vehicles; 2) attractive leisure
and recreation spending trends; and 3) good volume trends across
the company's major product lines in the US and EMEA.

Conversely, the rating reflects the company's: 1) exposure to
cyclical auto and marine original equipment manufacturers (OEM)
sectors; 2) moderate leverage, as measured by Moody's-adjusted
debt/EBITDA, of around 2.7x; 3) exposure to foreign currency
fluctuations; and 4) litigation risk in the US.


The positive outlook reflects Moody's expectation that Dometic's
leverage will likely decrease towards 2.0x within the next 12-18
months because of conservative financial targets post IPO,
improving aftermarket sales, cost savings and new product
launches. The positive outlook does not assume any significant
debt-financed acquisitions or large extra dividends above the 40%
net income payout, especially if they were to be debt-financed.


The rating could be upgraded if:

  Dometic's leverage, as measured by Moody's-adjusted
   debt/EBITDA, were to decrease below 2.5x; and

  The company were to meaningfully increase its exposure to the
  less cyclical aftermarket part of its business

The rating could be downgraded and/or the rating outlook may
change to stable if:

  Dometic's leverage, as measured by Moody's-adjusted
   debt/EBITDA, were to remain above 3.0x for a prolonged period;

  Its free cash flow were to turn negative;

  Liquidity or covenant headroom concerns were to emerge; or

  The company were to have a material damage from the litigation


The principal methodology used in this rating was Global
Manufacturing Companies published in July 2014.

Dometic Group AB (Dometic), headquartered in Solna, Sweden, is a
leading global manufacturer of various products recreation
vehicles, commercial and passenger cars, marine, retail, and
lodging markets in around 100 countries. Dometic manufactures
approximately 85% of its products in-house across 22
manufacturing sites in 9 countries under various brands including
Dometic (the core brand) and other supporting brands: WAECO,
Atwood, MOBICOOL, Marine Air Systems, Condaria, Cruisair and
SeaLand. Dometic's regions include North America, EMEA, and APAC.
Dometic has been listed on Nasdaq Stockholm Stock Exchange since
November 25, 2015.

U N I T E D   K I N G D O M

AUBURN SECURITIES 4: Fitch Affirms BB+ Rating on Class E Debt
Fitch Ratings has affirmed Auburn Securities 4 Plc (Auburn 4) as

Class A2 (ISIN XS0202810064): affirmed at 'AAAsf'; Outlook Stable
Class M (ISIN XS0202810734): affirmed at 'AAAsf'; Outlook Stable
Class B (ISIN XS0202811039): affirmed at 'AAAsf'; Outlook Stable
Class C (ISIN XS0202811625): affirmed at 'AAsf'; Outlook Stable
Class D (ISIN XS0202812276): affirmed at 'A-sf'; Outlook Stable
Class E (ISIN XS0202812516): affirmed at 'BB+sf'; Outlook Stable

The transaction was issued in 2004 consisting of residential and
buy-to-let mortgages originated in the UK by Capital Home Loans
(CHL). CHL is a limited company engaged in the business of
originating, purchasing and selling residential mortgages in
England, Wales and Northern Ireland.

CHL was formed as a joint venture between Credit Foncier de
France (CFF) and Societe Generale (SG). In 1992 CFF bought out
SG, and in 1996 Irish Life and Permanent (now Permanent TSB)
acquired CHL from CFF. CHL was sold to Promontoria (Landowne)
Limited (immediate parent undertaking), a company whose ultimate
parent is owned by certain investment funds managed and advised
by Cerberus Capital Management L.P on 31 July 2015.

Healthy Asset Performance
Auburn 4 has shown strong performance, with late stage arrears
(loans with more than three monthly payments overdue) decreasing
to 21bp of the current portfolio balance as of end-October 2016
from their peak of 2.8% in April 2009. This compares favourably
with the wider BTL market performance particularly post-2010.
Given the current low pipeline of late-stage arrears in the
transaction, Fitch expects possession activities and associated
losses to remain minimal in the coming 12 months, as reflected in
the Stable Outlooks across the structure.

Sufficient Credit Enhancement
Annualised gross excess spread in Auburn 4 is 40bp of the
outstanding pool balance. The fairly low level of excess spread
offers limited protection against period losses and led to
marginal reserve fund draws in the past year. As there are
currently no properties in possession, Fitch expects future
losses and reserve fund draws to remain minimal. The credit
enhancement available to the rated notes remains sufficient and
for this reason, Fitch has affirmed all outstanding tranches.

Unhedged Interest Rate Risk
The Auburn 4 pool comprises loans linked to CHL's standard
variable rate (SVR; 2.25% of the portfolio) and to the Bank of
England base rate (BBR; 97.75%). The mismatch between the
interest rates paid on the portfolio and the one-month Libor
payable on the notes is hedged through basis swaps where
Permanent TSB serves as the swap counterparty. As Permanent TSB
is not rated by Fitch, Fitch treats this transaction as unhedged
and as part of its analysis it stresses the tracker loan margins
in line with its criteria. This was achieved by haircutting the
mortgage margins in the first year by up to 200bp (depending on
rating scenario) and then 50bp each year thereafter, with the
index floored at zero. The analysis showed that the resulting
reduction in excess spread has no impact on the notes' ratings.

Significant increases in defaults and losses beyond Fitch's
expectations could lead to a further reduction of excess spread
and increase the pace at which reserve fund draws occur. This may
have a negative impact on the credit support available to the
rated notes.

No third party due diligence was provided or reviewed in relation
to this rating action.

Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset
pool and the transaction. There were no findings that were
material to this analysis.

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

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

FONTWELL SECURITIES 2016: Fitch Rates GBP5.5MM Cl. S Debt CCCsf
Fitch Ratings has assigned Fontwell Securities 2016 Limited final
ratings, as follows:

GBP1,038.0m Class A (credit enhancement (CE) of GBP346.0m):
'AAsf'; Outlook Negative
GBP27.7m Class B (CE of GBP318.3m): 'AAsf'; Outlook Negative
GBP91.3m Class C (CE of GBP227.0m): 'AAsf'; Outlook Negative
GBP9.7m Class D (CE of GBP217.3m): 'AAsf'; Outlook Negative
GBP19.4m Class E (CE of GBP197.9m): 'AA-sf'; Outlook Stable
GBP42.9m Class F (CE of GBP155.0m): 'A+sf'; Outlook Stable
GBP6.9m Class G (CE of GBP148.1m): 'Asf'; Outlook Stable
GBP8.3m Class H (CE of GBP139.8m): 'A-sf'; Outlook Stable
GBP18.7m Class I (CE of GBP121.1m): 'BBB+sf'; Outlook Stable
GBP28.4m Class J (CE of GBP92.7m): 'BBB+sf'; Outlook Stable
GBP5.5m Class K (CE of GBP87.2m): 'BBBsf'; Outlook Stable
GBP8.3m Class L (CE of GBP78.9m): 'BBB-sf'; Outlook Stable
GBP42.9m Class M (CE of GBP36.0m): 'BB+sf'; Outlook Stable
GBP4.2m Class N (CE of GBP31.8m): 'BBsf'; Outlook Stable
GBP1.4m Class O (CE of GBP30.4m): 'BB-sf'; Outlook Stable
GBP16.6m Class P (CE of GBP13.8m): 'B+sf'; Outlook Stable
GBP1.4m Class Q (CE of GBP12.5m): 'Bsf'; Outlook Stable
GBP1.4m Class R (CE of GBP11.1m): 'B-sf'; Outlook Stable
GBP5.5m Class S: (CE of GBP5.5m): 'CCCsf';
GBP5.5m Class T: unrated

The transaction is a granular synthetic securitisation of
partially funded credit default swaps (CDS) referencing a static
portfolio of secured loans granted to UK borrowers in the farming
and agriculture sector. The transaction provides protection on a
GBP1,384m reference portfolio. The loans were originated by AMC
plc (AMC), a fully owned subsidiary of Lloyds Bank plc (Lloyds,

The ratings of the notes address the likelihood of a claim being
made by the protection buyer under the CDS by the end of the
eight-year protection period in accordance with the

Low Default Risk
Fitch assigned a one-year average probability of default (PD
based on 90 days past due) of 2.0% to all the borrowers in the
portfolio, consistent with the average observed PD in the
originator's loan book since 1995. The expected PD for the
portfolio is below the expected annual average PD for the SME
sector in the UK for the next five years, reflecting Fitch's
positive view of the default behaviour of the British farming and
agricultural sector.

Single Industry Exposure
All the borrowers in the reference portfolio are exposed to the
UK farming and agriculture sector. Fitch determined that the
cumulative peak default rate for the worst six years of data
corresponds to a rating stress in the 'Bsf' category. Accordingly
the agency assumed a bespoke correlation of 10%. This is
consistent with the low volatility observed in the defaults rates
of AMC's loan book, which included the period of the foot and
mouth crisis.

Direct Subsidy Dependency
The farming and agricultural sector in Europe is highly dependent
on direct subsidies, currently provided by the European Union.
Once Brexit takes effect, the UK will be the direct subsidy
provider for British farmers. Fitch therefore assigned a subsidy
support threshold (SST) at the Long-Term Issuer Default Rating of
the UK (AA). The SST constrains the maximum achievable rating in
the capital structure.

While the UK has been an advocate of a revision of the subsidy
level, it has demonstrated willingness to preserve and support
farming as a strategic industry especially during the foot and
mouth crisis.

Limited Collateral Dilution Risk
The eligibility criteria and the originator's policies set the
maximum loan-to-value (LTV) at 60%, calculated on a borrower
basis. However, available mortgage collateral secures all Lloyds
exposure including debt outside of the transaction. Any
recoveries will be shared pro rate across the different Lloyds
debts of a borrower. While the current LTV in the portfolio is
31.6%, any additional lending could reduce the collateral share
for the securitised exposures. Fitch has stressed the LTV to 50%.

The vast majority of available collateral is over agricultural
land, which has seen an increase in value over the last 10 years
of approximately 200%. In the recovery analysis, Fitch has
applied its commercial property haircuts which at the 'AA' level
are 75% and would reverse most of the increase experienced over
the last 10 years.

Increasing the default probabilities assigned to the underlying
obligors by 25% could result in a downgrade of up to three
notches for the class F, J, M and G notes and up to two notches
for all the other classes.

Decreasing the recovery rates assigned to the underlying obligors
by 25% could result in a downgrade of up to two categories for
the class M notes and up to four notches for all the other

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

Fitch reviewed the results of a third party assessment conducted
on the asset portfolio information, and concluded that there were
no findings that affected the rating analysis.

Fitch conducted a review of a small targeted sample of AMC's
origination files and found the information contained in the
reviewed files to be adequately consistent with the originator's
policies and practices and the other information provided to the
agency about the asset portfolio.
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.

NEWDAY PARTNERSHIP 2015-1: S&P Hikes Rating on Cl. F Notes to BB+
S&P Global Ratings took various credit rating actions in NewDay
Partnership Funding 2015-1 PLC, NewDay Partnership Funding 2014-1
PLC, and NewDay Partnership Loan Note Issuer Ltd. (together the
NewDay Partnership Receivables Trust).

Specifically, S&P has:

   -- Raised its ratings on the class F notes in NewDay
      Partnership Funding 2015-1 and 2014-1;

   -- Lowered its ratings on NewDay Partnership Funding 2015-1
      and 2014-1's class B, C, and E notes; and

   -- Affirmed its ratings on NewDay Partnership Funding 2015-1
      and 2014-1's class A and D notes, and NewDay Partnership
      Loan Note Issuer's class 2014-VFN notes.

Upon publishing S&P's updated criteria for European credit card
asset-backed securities (ABS), it placed those ratings that could
potentially be affected "under criteria observation".

Following S&P's review of these transactions, its ratings that
could potentially be affected by the criteria are no longer under
criteria observation.

The rating actions follow S&P's credit and cash flow analysis of
the most recent transaction information that S&P has received as
of October 2016.  S&P's analysis reflects the application of its
relevant criteria.

In particular, S&P has revised its purchase rate assumptions to
reflect its assessment of the originator's credit quality and
S&P's ratings on the notes.  S&P has also applied ratings
specific negative excess spread levels to reflect a breach of the
excess spread trigger upon early amortization.

S&P's previous charge-off and yield assumptions at closing
adequately reflect S&P's expectations of the performance of
NewDay's securitized portfolio compared with the benchmark U.K.
credit card pool.  S&P revised its base-case payment rates to
17.0% from 16.8% and left S&P's stresses unchanged.

Operational, counterparty, legal, payment structure, and cash
flow risks continue to be adequately mitigated, in S&P's view,
and do not constrain the ratings on the notes.

Additionally, the application of S&P's structured finance ratings
above the sovereign criteria does not constrain the ratings on
the notes.

Following the application of S&P's criteria, the available credit
enhancement for the class F notes in NewDay Partnership Funding
2015-1 and 2014-1 is now commensurate with higher ratings than
those currently assigned.  S&P has therefore raised to 'BB+ (sf)'
from 'BB (sf)' its ratings on these classes of notes.

S&P's analysis also indicates that NewDay Partnership Funding
2015-1 and 2014-1's class B, C, and E notes can no longer
withstand the stresses that S&P applies at the previously
assigned ratings under our new criteria.  S&P has therefore
lowered its ratings on these classes of notes.

At the same time, S&P has affirmed its ratings on NewDay
Partnership Funding 2015-1 and 2014-1's class A and D notes, and
NewDay Partnership Loan Note Issuer's class 2014-VFN notes as
they can withstand the stresses S&P applies at their respective
rating levels.

The NewDay Partnership Receivables Trust is a master trust of
credit card and store card receivables that NewDay Ltd.
originates under retail partnership agreements.  NewDay has
active retail partnership agreements with Arcadia, Debenhams,
Laura Ashley, and House of Fraser.


Class            Rating
          To               From

NewDay Partnership Funding 2015-1 PLC
GBP244.25 Million Asset-Backed Floating-Rate Notes

Rating Raised

F         BB+ (sf)         BB (sf)

Ratings Lowered

B         A+ (sf)          AA (sf)
C         BBB+ (sf)        A+ (sf)
E         BBB (sf)         BBB+ (sf)

Ratings Affirmed

A         AAA (sf)
D         BBB+ (sf)

NewDay Partnership Funding 2014-1 PLC
GBP293.1 Million Asset-Backed Floating-Rate Notes

Rating Raised

F         BB+ (sf)         BB (sf)

Ratings Lowered

B         A+ (sf)          AA (sf)
C         BBB+ (sf)        A+ (sf)
E         BBB (sf)         BBB+ (sf)

Ratings Affirmed

A         AAA (sf)
D         BBB+ (sf)

NewDay Partnership Loan Note Issuer Ltd.
GBP437.1 Million Asset-Backed Floating-Rate Notes

Rating Affirmed

2014-VFN  BBB (sf)

SALISBURY SECURITIES 2015: Fitch Rates Cl. M-R Debt 'BB(EXP)sf'
Fitch Ratings has assigned Salisbury Securities 2015 Limited
restructured notes expected ratings, as follows:

GBP395.2 million Class A-R (credit enhancement (CE) of
GBP393.9m): 'AAA(EXP)sf'; Outlook Stable

GBP19.7 million Class B-R (CE of GBP374.2m): 'AAA(EXP)sf';
Outlook Stable

GBP63.3 million Class C-R (CE of GBP310.9m): 'AA+(EXP)sf';
Outlook Stable

GBP11.4 million Class D-R (CE of GBP299.5m): 'AA(EXP)sf';
Outlook Stable

GBP26.6 million Class E-R (CE of GBP273.0m): 'AA-(EXP)sf';
Outlook Stable

GBP37.7 million Class F-R (CE of GBP235.2m): 'A+(EXP)sf';
Outlook Stable

GBP9.7 million Class G-R (CE of GBP225.5m): 'A(EXP)sf';
Outlook Stable

GBP12.0 million Class H-R (CE of GBP213.5m): 'A-(EXP)sf';
Outlook Stable

GBP42.8 million Class I-R (CE of GBP170.8m): 'BBB+(EXP)sf';
Outlook Stable

GBP10.9 million Class J-R (CE of GBP159.9m): 'BBB(EXP)sf';
Outlook Stable

GBP16.8 million Class K-R (CE of GBP143.1m): 'BBB-(EXP)sf';
Outlook Stable

GBP45.9 million Class L-R (CE of GBP97.1m): 'BB+(EXP)sf';
Outlook Stable

GBP2.8 million Class M-R (CE of GBP94.4m): 'BB(EXP)sf';
Outlook Stable

GBP94.4 million Class Z: not rated

The transaction is a granular synthetic securitisation of
GBP789.1m unfunded credit default swap (CDS), which referenced
loans granted to small and medium-sized enterprises (SME)
investing in the UK real estate sector. The loans are secured
with real estate collateral and were originated by Lloyds Banking

Lloyds has bought protection under the CDS contract relating to
the equity risk position but has not specified the date of
execution of the contracts relating to the rest of the capital
structure. The expected ratings are based on the un-executed
documents provided to Fitch, which have the same terms as the
executed equity CDS contract. Fitch understands from Lloyds
Banking Group that it has no immediate need to buy protection on
the remaining capital structure.

Should the documents not be executed, Fitch will nevertheless
monitor the expected ratings using the applicable criteria for as
long as the CDS contract exists.

The ratings of the notes address the likelihood of a claim being
made by the protection buyer under the unfunded CDS by the end of
the remaining nine-year protection period in accordance with the

Lloyds restructured the transaction and as a result the existing
class A to N notes will be replaced by the class A-R to M-R notes
as listed above. The class Z notes are unchanged through the
restructuring. Fitch has withdrawn the ratings on the old notes
following the restructuring.


Limited Negative Selection of Portfolio
Fitch determined an annual average probability of default (PD)
for the originator's book of 3.5%, which map to a one year
expected PD of 4.8% for the originator's real estate book and
4.7% for the transaction. This implies limited negative selection
of the securitised portfolio.

Concentration Risk
At closing, the portfolio will compose of around 2,500 obligors
and is granular with the largest obligor only representing 25bps
of the portfolio. However, all borrowers are exposed to the UK
real estate sector. The application of Fitch's standard corporate
correlation assumptions resulted in rating default rate (RDR)
levels of approximately 80% at the 'AAA' level. Fitch usually
does not expect RDRs to be higher than 75%. Nevertheless the
agency assigned 'AAA(EXP)sf' due to the obligor granularity and
regional diversity.

Low Loan to Value (LTV) Ratio
Each loan in the securitised portfolio is collateralised with
property. The average LTV ratio of the portfolio is 52% and it is
capped at 60% during the replenishment period. The LTV could be
diluted after the replenishment period given new loans could be
issued outside the transaction. Based on the maximum 70% LTV
threshold in the originator's credit policy, Fitch applied an
average 70% LTV to the portfolio, which leads to a base case
71.4% recovery rate.

Replenishment Period
The transaction features a three-year replenishment period
subject to conditions aimed at limiting additional risks. The
portfolio limitations are set to be close to the actual
portfolio, reducing the scope for portfolio deterioration by
Lloyds Banking Group including weaker credits. Fitch has captured
the replenishment risk based on a stressed portfolio, taking into
account the replenishment triggers and replenishment conditions
of the transaction.

Increasing the default probabilities assigned to the underlying
obligors and reducing their assumed recovery rates by 25% each
could result in a downgrade of up to three notches to the notes.

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

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

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

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

* UK: Four in Ten SMEs Suffer Cash Flow Problems, Study Shows
Four-in-ten (38%) small and medium-sized businesses (SMEs) have
suffered cashflow problems over the past two years, according to
new research by Amicus Commercial Finance, the specialist lender
of flexible working capital to SMEs.  The figure rises to
two-thirds (65%) among medium-sized firms with between 50 and 250

According to the study conducted among 500 small businesses
owners, over the past two years one-in-seven (15%) are still
suffering liquidity problems and 12% either came close to or
became insolvent.  Small businesses recognize the threat cashflow
problems can pose; nearly three-quarters (71%) say it is the
biggest risk they face.

On a sector basis, 35% of finance and accounting firms report
that are affected by cashflow problems.  Regionally, companies in
the North East have been the worst hit by cashflow shortages.

The biggest challenge caused by cashflow shortages is paying
suppliers, cited by 41% of business owners.  This is followed by
meeting debt repayments (30%), buying inventory (29%) and paying
staff (24%).  One-in-five (18%) said they had lost contracts due
to cashflow problems.

Amicus Commercial Finance provides a revolving working capital
facility based on a proprietary invoice discounting platform
which utilizes the latest available technology and data
extraction methodology.  The firm's proposition has proved to be
very attractive to a broad range of businesses with a turnover
between GBP1 million and GBP20 million.

Its "Intelligent Cashflow" solution is user friendly, making it
straightforward for firms to access working capital.  It
integrates seamlessly with a business's accounting system,
reconciling sales in real time. The company can quickly update
each customer's availability of funds and provide quick and easy
access to additional cashflow.

John Wilde, Managing Director of Amicus Commercial Finance,
commented: "Our research shows that most small firms recognize
the damage caused by cashflow problems but that doesn't guarantee
their immunity.  The worst case scenario is insolvency but in our
experience, slow paying invoices are often to blame. As working
capital and cashflow are by their very nature dynamic, most
traditional systems have failed to keep pace over the last few

"We have taken a fresh, tech-driven approach that builds on some
of the lessons learned in the fast growing alternative finance
sector.  Here at Amicus Commercial Finance, we combine deep
sector experience with a high-touch personal service and cutting
edge technology to make the process as straightforward and
efficient as possible."


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

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

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


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

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

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

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

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

The TCR Europe subscription rate is US$775 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each.  For subscription information,
contact Peter Chapman at 215-945-7000 or Nina Novak at

                 * * * End of Transmission * * *