TCREUR_Public/170202.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

          Thursday, February 2, 2017, Vol. 18, No. 24



JIC FIRMIANA: Fitch Withdraws 'B' Issuer Default Rating
VIVARTE SAS: To Convert EUR800MM of Old Debt Into Equity

* FRANCE: Number of Business Failures Down 8.3% in 2016


STABILITY CMBS 2007-1: Fitch Cuts Rating on Cl. E Notes to 'Csf'


ST. PAUL CLO VII: Fitch Assigns 'B-' Rating to Class F Notes
TALISMAN-7 FINANCE: S&P Lowers Rating on Class D Notes to D


ALITALIA SPA: Etihad Executives to Meet with Italian Ministers
MARCOLIN SPA: S&P Raises CCR to 'B' on Improved Cash Flow
MONTE DEI PASCHI: Germany Expresses Concerns Over State Rescue


MUNDA CLO I: S&P Affirms 'CCC+' Rating on Class E Notes


PERESVET BANK: To Issue Subordinated Bonds to Creditors


TURKIYE IS: S&P Revises Outlook to Neg; Affirms 'BB' LT CCR

U N I T E D   K I N G D O M

ROAD MANAGEMENT: S&P Revises Outlook to Pos. & Affirms B+ Rating

* UK: Corporate Insolvency Numbers Up in 2016, R3 Says


IPAK YULI: Fitch Hikes Long Term Issuer Default Rating to 'B'


* Downward Trend in Global Insolvencies Coming to an End



JIC FIRMIANA: Fitch Withdraws 'B' Issuer Default Rating
Fitch Ratings has withdrawn JIC Firmiana SAS's Issuer Default
Rating of 'B'/Stable.

Fitch has withdrawn the ratings for commercial reasons and due to
lack of information. Accordingly, Fitch will no longer provide
ratings or analytical coverage for JIC Firmiana.

VIVARTE SAS: To Convert EUR800MM of Old Debt Into Equity
David Whitehouse at Bloomberg News reports that Vivarte CEO
Patrick Puy told Le Figaro in an interview that EUR800 million of
old debt will be converted into equity, and EU572 million of debt
taken on in 2014 will have its maturity extended by two years to

According to Bloomberg, Mr. Puy said the board will be almost
completely overhauled as part of the agreement.

As reported by the Troubled Company Reporter-Europe on Feb. 19,
2016, Bloomberg News related that Vivarte won a waiver to
terms of a EUR535 million (US$596 million) loan after terror
attacks in Paris and warm winter weather hurt the company's
earnings late last year.  The company in 2014 was taken over by
creditors who agreed to restructure EUR2.8 billion of loans after
France's sluggish economy and high unemployment took its toll on
earnings, Bloomberg disclosed.

Vivarte SAS is a French fashion retailer.  It owns brands
including Kookai and Naf Naf.

* FRANCE: Number of Business Failures Down 8.3% in 2016
Rudy Ruitenberg at Bloomberg News reports that fewer French
businesses failed last year than at any time since the 2008
financial crisis, the latest sign that the euro area's second-
largest economy is strengthening.

A total of 57,844 French companies filed for protection for
creditors, entered receivership or went bankrupt in 2016,
Bloomberg relays, citing Altares, which analysis corporate data.
That's down 8.3% from 2015, Bloomberg notes.  The number of jobs
threatened by insolvencies fell 15% to 200,000, Bloomberg

Thierry Millon, director of studies at Altares, said the pace of
business failures should decline again this year, falling to
around 54,000, Bloomberg relates.

In the construction industry, failures fell 13%, Bloomberg
states.  For trading companies, a 9.5% drop was led by a recovery
for vendors of machinery, construction equipment and home-
improvement goods, Bloomberg notes.

According to Bloomberg, in manufacturing and processing,
insolvencies declined 8.3%, with a better performance for
suppliers of wood and construction materials, metallurgy and
mechanical materials, and textile, clothes and leather.

Not all areas of the economy did better, with insolvencies for
people-transport companies jumping 31%, mainly in the taxi
business, according to Altares, Bloomberg says.  In agriculture,
the number of insolvent livestock farmers increased 7.8%,
according to Bloomberg.


STABILITY CMBS 2007-1: Fitch Cuts Rating on Cl. E Notes to 'Csf'
Fitch Ratings has downgraded Stability CMBS 2007-1 GmbH's class E
notes due 2022 to 'Csf' from 'CCsf' and revised the Recovery
Estimate (RE) to 40% from 80%.

The transaction is a synthetic securitisation of commercial
mortgage loans originated by IKB Deutsche Industriebank AG.
Kreditanstalt fuer Wiederaufbau (AAA/Stable/F1+) acts as
intermediary, providing credit protection under a CDS with IKB
while transferring the credit risk to the issuer and ultimately
the noteholders.

The transaction has EUR16.9 million of outstanding loans to five
borrower groups, of which EUR8.6 million appears to provide over-
collateralisation for the class E notes. However, EUR12 million
is unsecured with limited recovery prospects. Fitch believes that
the servicer is still seeking to claw back funds from 'borrower
48' that had reportedly been paid to shareholders prior to debt
repayment. However, the agency believes that even a successful
clawback, alongside full repayment of the other loans, would
still leave the class E notes facing inevitable loss, which is
reflected in downgrade.

To date a loss of EUR6 million has been absorbed by the non-rated
class F notes. Since the last rating action in February 2016 six
loans were resolved, incurring a EUR1.2 million loss. The
associated principal repayment of EUR27.4 million has amortised
the balance of the class E notes and reduced potential further
recoveries. This is reflected in the lower RE, which are based on
the quality of the seven other loans.

Four loans are heavily or fully amortising, with another expected
to be redeemed via fixed instalments by its maturity in June. A
fifth loan scheduled to repay in March is reportedly in the
process of being refinanced. These five loans should be repaid in
full (repaying EUR0.5 million).

The other two are to 'borrower 24', secured on a single office
building located in Germany, which has been 60% vacant for over a
year. Applying a yield of 11% to reported income would result in
a sizeable loss - compounded by the appreciation of CHF, in which
around half the securitised loan is denominated. Fitch assumes
that 10% of the loan balance will be lost solely on converting
CHF back into EUR.

Fitch estimates 'Bsf' recoveries of EUR3.4 million.

Successful recourse to 'borrower 48' for the leaked payments
should increase ultimate recoveries. Improved recovery prospects
could also follow successful re-letting of the 'borrower 24'
collateral. The class E notes will be downgraded to 'Dsf' once a
loss is incurred and the rating will then be withdrawn within 11

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

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

The information below was used in the analysis.
  - Investor reporting provided by IKB Deutsche Industriebank AG
as at end-January 2017


ST. PAUL CLO VII: Fitch Assigns 'B-' Rating to Class F Notes
Fitch Ratings has assigned St. Paul's CLO VII Designated Activity
Company notes expected ratings:

EUR229.4 million class A-1 notes due 2030: 'AAA(EXP)sf'; Outlook
EUR10.6 million class A-2 notes due 2030: 'AAA(EXP)sf'; Outlook
EUR23.15 million class B-1 notes due 2030: 'AA(EXP)sf'; Outlook
EUR9.5 million class B-2 notes due 2030: 'AA(EXP)sf'; Outlook
EUR21.1 million class B-3 notes due 2030: 'AA(EXP)sf'; Outlook
EUR5 million class C-1 notes due 2030: 'A(EXP)sf'; Outlook Stable
EUR15 million class C-2 notes due 2030: 'A(EXP)sf'; Outlook
EUR21 million class D notes due 2030: 'BBB(EXP)sf'; Outlook
EUR25.25 million class E notes due 2030: 'BB(EXP)sf'; Outlook
EUR10 million class F notes due 2030: 'B-(EXP)sf'; Outlook Stable
EUR44 million subordinated notes: not rated

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

St. Paul's CLO VII Designated Activity Company is a cash flow
collateralised loan obligation (CLO).

'B'/'B-' Portfolio Credit Quality
Fitch expects the average credit quality of obligors to be in the
'B'/'B-' category. The agency has public ratings or credit
opinions on all the obligors in the identified portfolio. The
weighted average rating factor (WARF) of the identified
portfolio, which represents 72.3% of the target par amount, is
32.2, below the covenanted maximum WARF for assigning the
expected ratings of 33.

High Recovery Expectations
At least 90% of the portfolio will comprise senior secured
obligations. Recovery prospects for these assets are typically
more favourable than for second-lien, unsecured, and mezzanine
assets. Fitch has assigned Recovery Ratings to all obligations in
the identified portfolio. The average recovery rate (WARR) of the
identified portfolio is 68.4%, above the covenanted minimum for
assigning the expected ratings of 66.75%.

Diversified Asset Portfolio
The transaction contains a covenant that limits the top 10
obligors in the portfolio to 20% of the portfolio balance. This
ensures that the asset portfolio will not be exposed to excessive
obligor concentration.

Limited Interest Rate Risk
Unhedged fixed-rate assets cannot exceed 15% of the portfolio
while fixed-rate liabilities represent 5% of the target par
amount. The transaction is therefore partially hedged against
rising interest rates.

Unhedged Non-Euro Assets Exposure
The transaction is allowed to invest up to 2.5% of the portfolio
in non-euro-denominated primary market assets without entering
into an asset swap on settlement, subject to principal haircuts.
Unhedged assets may only be purchased if after the applicable
haircuts the aggregate balance of the assets is above the
reinvestment target par balance. Additionally, no credit in the
overcollateralisation (OC) tests is given to assets left unhedged
for more than 180 days after settlement.

Net proceeds from the notes will be used to purchase a EUR400m
portfolio of mainly euro-denominated leveraged loans and bonds.
The transaction has a four-year reinvestment period. The
underlying portfolio of assets will be managed by Intermediate
Capital Managers Limited.

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

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

The class B-3 and C-2 notes are not subject to 0% Euribor floor
during the non-call period, which ends in April 2019 and the
spreads on the notes will be 0.3% higher than the spreads on
class B-1 and C-1 notes. After the non-call period, the class B-3
and C-2 notes will have a 0% Euribor floor and the spreads will
step down to the same level as class B-1 and C-1 respectively.

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

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

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

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

The information below was used in the analysis.
   - Loan-by-loan data provided by the arranger as at 12 January
   - Offering circular provided by the arranger as at 30 January

TALISMAN-7 FINANCE: S&P Lowers Rating on Class D Notes to D
S&P Global Ratings lowered its credit ratings on Talisman-7
Finance Ltd.'s class C and D notes.  At the same time, S&P has
affirmed its 'D (sf)' ratings on all other classes of notes.

The rating actions reflect interest shortfalls on the class D to
J notes that occurred on the January 2017 interest payment date
(IPD) and the increasing risk of a payment default due to the
legal final maturity being less than three months away in April

Talisman-7 Finance closed in June 2007, with notes totaling
EUR1.8 billion.  The original 10 loans were secured on commercial
properties in Germany.  Since closing, five loans have repaid.
The notes have a current outstanding balance of EUR254.1 million
and their legal final maturity date is in April 2017.  All five
remaining loans are in special servicing.  The sales process is
continuing for three of the loans, and the properties securing
the other two loans have already been sold, but are being wound

This was the first quarter that the class D notes have
experienced interest shortfalls.

                         RATING RATIONALE

S&P's ratings in Talisman-7 Finance address the timely payment of
interest (payable quarterly in arrears) and the payment of
principal no later than the April 2017 legal final maturity date.

Due to the approaching legal final maturity date, the class C
notes have become more vulnerable to nonpayment, and are
dependent upon favorable business, financial, and economic
conditions for the obligor to meet its financial commitment on
the obligation.  S&P believes there is at least a one-in-three
likelihood of default.  S&P has therefore lowered to 'CCC- (sf)'
from 'CCC (sf)' its rating on this class of notes.  This is in
line with S&P's criteria for assigning 'CCC' category ratings.

Interest shortfalls have occurred on the class D notes for the
first time at the January 2017 interest payment date.  The
interest shortfalls represent a failure of the notes to pay
timely interest, which S&P believes is unlikely to be repaid.
S&P has therefore lowered to 'D (sf)' from 'CCC (sf)' its rating
on these notes, in line with its criteria.

In line with these criteria, S&P has affirmed its 'D (sf)'
ratings on all other classes of notes.  These classes continue to
experience interest shortfalls and for the class H, I, and J
notes, principal losses have also been applied.


Talisman-7 Finance Ltd.
EUR1.826 bil commercial mortgage-backed floating-rate notes
Class            Identifier         To            From
C                XS0304911224       CCC- (sf)     CCC (sf)
D                XS0304911901       D (sf)        CCC (sf)
E                XS0304912388       D (sf)        D (sf)
F                XS0304912891       D (sf)        D (sf)
G                XS0304912974       D (sf)        D (sf)
H                XS0304913352       D (sf)        D (sf)
I                XS0304913436       D (sf)        D (sf)
J                XS0304913949       D (sf)        D (sf)


ALITALIA SPA: Etihad Executives to Meet with Italian Ministers
Transport Weekly reports that executives from key investor Etihad
Airways and Alitalia, which went bankrupt in 2008 and again was
on the edge of collapsing in 2014, will meet with Italian

According to Transport Weekly, three people familiar with the
discussions said talks will be centered on new restructuring
measures with development and transportation ministers in Rome.
The plan could include as many as 1,600 job cuts, according to
two of the people, who asked not to be identified before an
official announcement, Transport Weekly relays, citing Bloomberg.

Less than three years after Etihad bought a 49% stake as part of
a plan to revive the Italian airline, Alitalia was notified in
December by investors and creditors that it had 60 days to come
up with a viable cost-cutting plan, Transport Weekly recounts.

Alitalia has also authorized Etihad to pump in an additional
US$231 million in funding via "semi-equity" financial instruments
that lack voting rights, according to minutes of an extraordinary
shareholders' meeting for the Italian carrier held on Dec. 22,
Transport Weekly discloses.

The Rome-based carrier said Dec. 22 that after reaching an
agreement with shareholders, which include short-term financing
deals with Italy's two biggest banks, Intesa Sanpaolo SpA and
UniCredit SpA, Alitalia plans talks with labour unions,
suppliers, aircraft leasing companies and other partners on
potential spending reductions, including a road map for job cuts,
Transport Weekly relays.

Two people, as cited by Transport Weekly, said after losing
EUR200 million (US$211 million) in 2015, Alitalia's deficit for
last year could be near EUR400 million.

                          About Alitalia

Alitalia-Compagnia Aerea Italiana has navigated its way through
a successful restructuring.  After filing for bankruptcy
protection in 2008, Alitalia found additional investors, acquired
rival airline Air One, and re-emerged as Italy's leading airline
in early 2009.  Operating a fleet of about 150 aircraft, the
airline now serves more than 75 national and international
destinations from hubs in Fiumicino (Rome), Milan, Turin, Venice,
Naples, and Catania.  Alitalia extends its network as a member of
the SkyTeam code-sharing and marketing alliance, which also
includes Air France, Delta Air Lines, and KLM.  An Italian
investor group owns a majority of the company, while Air France-
KLM owns 25%.

MARCOLIN SPA: S&P Raises CCR to 'B' on Improved Cash Flow
S&P Global Ratings said that it raised to 'B' from 'B-' its long-
term corporate credit rating on Italy-based eyewear manufacturer
Marcolin SpA.  The outlook is stable.

At the same time, S&P upgraded to 'B+' from 'B' the issue rating
on the existing EUR30 million revolving credit facility.  The
'2H' recovery rating on the debt is unchanged.  S&P also upgraded
to 'B' from 'B-' the issue rating on Marcolin's existing EUR200
million senior secured notes, with the '4H' recovery rating

At the same time, S&P assigned its 'B' issue rating to Marcolin's
proposed EUR250 million senior secured floating rate notes
maturing in 2023, with a recovery rating of '4L' indicating S&P's
expectation of recovery prospects of around 35%.

The upgrade reflects S&P's view that the company is improving its
market position in the global eyewear industry, and that --
thanks to good operating performance -- it will generate positive
cash flow from the 2016 full-year results.  Additionally, S&P
believes that the newly announced joint venture (JV) agreement
with LVMH Group is supportive from a business standpoint.
Finally, the proposed refinancing transaction (with EUR250
million senior secured notes and a EUR40 million of super senior
revolving credit facility [RCF]) will allow the company to extend
its debt maturity profile and to reduce the cost of debt,
improving the EBITDA interest coverage ratio.

The newly announced JV will be dedicated to the design,
manufacture, and distribution of certain LVMH eyewear brands.
Initially, from January 2018, the JV will manage the license of
Celine and the production agreement with Louis Vuitton.  S&P
expects that additional opportunities from LVMH's luxury brand
portfolio could materialize in the near future, given the JV's
aim to become the preferred partner of LVMH in the eyewear
business. As a result, S&P expects that the JV will start to have
a critical mass in terms of size from 2020.

Total equity contributions to the JV from Marcolin are expected
to be about EUR20 million-EUR25 million over the next four years.
Remaining funding to the JV is expected to come from debt raised
at the JV level and a LVMH equity contribution.  S&P notes that
debt funding for the JV will have no recourse to Marcolin.

Marcolin will have a 49% stake in the JV's equity, accounting for
the minority investment in the JV with the equity method, whereas
LVMH Group will maintain the control with 51%.  In 2028-2029,
Marcolin could exercise a put option over its JV's ownership
stake, whereas LVMH has been granted a call option.

In addition to the partnership under the JV, LVMH Group will
inject about EUR22 million of cash equity into Marcolin's
capital. Post-transaction, LVMH Group will hold 10% of Marcolin's
equity, becoming the second-largest shareholder after the
controlling stake (about 72%) owned by PAI Partners, the private
equity sponsor.  This transaction reinforces the strategic sense
and support to the JV potentially coming from LVMH Group.

S&P's rating action is also supported by Marcolin's improved cash
conversion driven mainly by the underlying growth in its top-line
and EBITDA, and optimization of its working capital management.
Under S&P's base case, it assumes the company will be able to
generate positive cash flow from 2016 (about EUR10 million-
EUR20 million per year).

The company has a clear long-term license maturity schedule, with
the licenses for its two key brands, Tom Ford and Guess, ending
in 2029 and 2025, respectively.  Marcolin's brand portfolio also
seems to be well balanced between diffusionand luxury segments.

However, the Tom Ford and Guess brands represent high revenue
concentration as they account for more than 50% of sales, and the
contribution of the property brand is very limited.  The company
has also experienced a certain degree of volatility in its
profitability metrics in past years, and we highlight how the
U.S. market (about 40% of the company's sales) is currently
experiencing some negative trends, offset by positive dynamics in

Finally, S&P notes that the new proposed refinancing (with
repayment of EUR200 million senior secured notes and outstanding
amount under the current RCF) will extend Marcolin's maturity
debt profile and improve its EBITDA interest coverage ratio due
to lower expected average cost of debt.

S&P continues to assess Marcolin's financial risk profile as
highly leveraged, reflecting fully S&P Global Ratings-adjusted
debt to EBITDA of above 5.0x and Marcolin's ownership by PAI

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

   -- Mid-single-digit growth in sales for 2016 and 2017, mainly
      thanks to the new license agreements and good performance
      of the luxury segment.  Adjusted EBITDA margin of about 12%
      over the next two years.

   -- About EUR20 million of annual capital expenditure (capex)
      at year-end 2016, down from the peak of EUR25 million in

   -- Total cash-out for the new JV with LVMH Group for about
      EUR24 million to be paid over 2017-2020.

   -- No dividend payments or acquisitions.

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

   -- Adjusted debt to EBITDA of around 5.5x over the next two
   -- Adjusted EBITDA interest coverage above 2.5x over

The stable outlook on Marcolin reflects S&P's view that the
company will be able to post positive cash flow generation and to
moderately improve its top-line base and profitability supported
by the long-term maturity schedule of its brand licenses.  In
S&P's base-case scenario, it projects that Marcolin will maintain
an adjusted debt-to-EBITDA ratio above 5.0x and that the EBITDA
interest coverage will be in the upper end of the 2.0x-3.0x

S&P could consider a negative rating action if the company did
not meet S&P's expectation of positive discretionary cash flow
generation over 2017-2018.  This could occur from deterioration
in its profitability, for example, if Marcolin faced continued
difficulties in emerging markets due to higher competition, as
well as a sharp slowdown in European markets where the company
generates about 35% of its sales.  S&P could also take a negative
rating action if it saw deterioration in Marcolin's liquidity or
a material reduction in its EBITDA interest coverage ratio below

A positive rating action appears remote at this stage.  S&P could
consider such an action if the company deleveraged significantly
so that its adjusted debt-to-EBITDA fell sustainably below 5.0x
driven, for example, by a material improvement in its EBITDA.  In
addition, for S&P to consider an upgrade, the company should be
able to increase its revenue diversification by main brands.

MONTE DEI PASCHI: Germany Expresses Concerns Over State Rescue
Boris Groendahl at Bloomberg News reports that German officials
and lawmakers are concerned the state rescue of Banca Monte dei
Paschi di Siena SpA is stretching the credibility of the European
Union's new regime for too-big-to-fail banks.

Wolfgang Schaeuble's Finance Ministry remains skeptical about
Italy's plan to protect individual investors and would prefer
them to seek individual compensation through the courts rather
than en masse as Italy plans, Bloomberg relays, citing officials
familiar with internal discussions, who asked not to be
identified because the talks are private.  Lawmakers from the
ruling coalition urged the European Commission to fully enforce
the rules for failing banks, Bloomberg relates.

"Italy's plans are a provocation," Bloomberg quotes
Carsten Schneider, the deputy head of the Social Democrat caucus
in the Bundestag, Germany's lower house of parliament, as saying.
"For the European Commission and the European Central Bank, this
is the litmus test for whether the new European rules for bank
resolution are enforced."

In a bailout that is slated to cost EUR8.8 billion (US$9.5
billion), Italy is using a provision that allows state support
for solvent banks in exceptional circumstances, Bloomberg
discloses.  To avoid misuse of that clause for old-style
bail-outs, the law states that such support mustn't cover "losses
that the institution has incurred or is likely to incur in the
near future" and instead seeks to protect a sound bank against a
shock from external influences out of its control, Bloomberg

According to Bloomberg, the officials said a key element that
irks the Germans is Italy's plan for 40,000 individual investors
who own Monte Paschi's Tier 2 subordinated bonds to receive EUR2
billion of senior notes in a transaction effectively funded by
the Italian government.  Italy justifies the deal by claiming
that Monte Paschi mis-sold the securities, understating their
risk, Bloomberg states.  Other subordinated creditors will be
forced to convert into equity, Bloomberg says.

In a closed meeting with lawmakers, Mr. Schaeuble acknowledged
that there is an option for state aid in the BRRD, saying that it
was up to the commission to make sure the rules governing aid are
observed, according to participants, who asked not to be named
because the meeting was private, Bloomberg relates.  According to
Bloomberg, while Mr. Schaeuble stopped short of explicitly
questioning the legality of Rome's plan, he said retail investors
should seek redress individually.

"The owners and the creditors must be the ones who cover the
bank's losses," Bloomberg quotes Klaus Peter Willsch, a lawmaker
for Mr. Schaeuble's and Chancellor Angela Merkel's Christian
Democratic Union, as saying.  "The bail-in regime mustn't be
hollowed out.  You can't create one exception after the other to
limit the bail-in principle."

The Germans' concern centers on the likelihood that the Monte
Paschi bailout will set a bad example, opening a door for other
nations to pass through, Bloomberg discloses.

A second element of the Monte Paschi bailout that Germany
dislikes comes from the fact that the bank's main problem is the
towering pile of bad debt that accounts for about a third of its
loan book, Bloomberg relays, citing one of the officials familiar
with the discussions.  The ECB has told the Italian lender to
shrink the stack of soured loans by selling them, crystallizing
further losses, according to Bloomberg.

The official said Germany argues those losses have already been
incurred, making them exactly the kind that's ineligible for
state aid, Bloomberg relates.  The same could be said about the
program to compensate individual bondholders, which Berlin also
considers a legacy loss that can't be offset using government
cash, Bloomberg notes.

The official, as cited by Bloomberg, said if taxpayer bailouts
become the norm again, the link between sovereigns and banks that
the EU has sought to sever would be reinforced, which goes
against the idea behind the creation of a banking union.

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.


MUNDA CLO I: S&P Affirms 'CCC+' Rating on Class E Notes
S&P Global Ratings raised its credit ratings on Munda CLO I
B.V.'s class A-1 and A-2 notes.  At the same time, S&P has
affirmed its ratings on the class B, C, D, and E notes.

The rating actions follow S&P's review of the transaction's
performance.  S&P performed a credit and cash flow analysis and
assessed the support that each participant provides to the
transaction by applying S&P's current counterparty criteria.  In
S&P's analysis, it used data from the November 2016 performance

From S&P's analysis, it has observed that the available credit
enhancement has increased for all of the rated classes of notes
(except the most junior rated class E notes), driven by the
deleveraging of the senior notes after the end of the
reinvestment period in January 2014.  The weighted-average spread
earned on Munda CLO I's collateral pool has also decreased to
2.7% from 2.8% at S&P's previous full review.

Since S&P's previous review, the class A notes have further
deleveraged.  All classes of notes (including the deferrable
class C to E notes) are paying timely interest, as they were at
S&P's previous review.

The class E notes include a turbo feature, which amortizes the
principal amount outstanding of the notes if the class E par
value test fails.  Since closing, EUR4.16 million of class E
notes have been redeemed due to the failure of the class E turbo
par value test.  The class E notes have redeemed by EUR2.93
million since S&P's previous review. All coverage tests are
passing except for the class E notes, which is unchanged since
S&P's previous review. At the same time, the transaction's
weighted-average life has slightly increased to 4.8 years from
4.3 years and, the weighted-average recovery rates have decreased
by about 100 to 300 basis points across the rating levels.

The non-euro-denominated loans in the portfolio (0.1% of the
performing balance) are hedged under cross-currency swap
agreements.  In S&P's opinion, the downgrade remedies for these
cross-currency swaps do not fully comply with S&P's current
counterparty criteria.  Consequently, S&P has assumed for cash
flow scenarios above 'AA-' rating stresses that the currency swap
counterparty does not perform and where, as a result, the
transaction is exposed to changes in currency rates.  The cross-
currency swap provider is JP Morgan Chase Bank N.A. (A+/Stable/A-

In S&P's previous analysis, it applied its (now superseded)
nonsovereign ratings criteria.  S&P gave no credit to the excess
exposure of assets from the Kingdom of Spain and the Republic of
Italy at the 'AAA' rating level.  These criteria were replaced by
S&P's structured finance ratings above the sovereign (RAS)
criteria.  Upon publishing S&P's RAS criteria, it placed those
ratings that could potentially be affected under criteria

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

Under S&P's RAS criteria, exposure to all of the sovereigns is
within the allowable thresholds, except for the exposure to
Spain. The current exposure to assets from Spain is more than 26%
of the pool, which is higher than the threshold of 15%.  In S&P's
analysis, it has stressed this exposure using its CDO Evaluator

"We subjected the capital structure to a cash flow analysis to
determine the break-even default rates (BDRs) for each rated
class of notes.  In our analysis, we used the reported portfolio
balance that we considered to be performing, the current
weighted-average spread of the asset portfolio, and the weighted-
average recovery rates for the performing portfolio.  We applied
various cash flow stress scenarios, using four different default
patterns, in conjunction with different interest rate stress
scenarios for each liability rating category," S&P said.

With the same weighted-average rating, the deleveraging of the
portfolio, and the slightly longer weighted-average life, the
scenario default rates (SDRs) have increased at senior rating
levels.  At the same time, with further deleveraging of both the
class A and E notes, the timely payment of interest, the
application of S&P's RAS criteria, and the lower exposure to non-
euro-denominated assets have benefitted the BDRs.  The SDRs
represent expected default levels for the portfolio under the
different stress scenarios associated with each rating level.
The BDR represents the maximum amount of defaults that a tranche
can withstand, while still being able to pay timely interest and
ultimate principal to the noteholders.  For a tranche to achieve
a particular rating, S&P looks for the tranche to withstand the
level of defaults projected by CDO Evaluator (i.e., the BDR
should be higher than the SDR).

S&P's analysis indicates that the available credit enhancement
for the class A-1 and A-2 notes is commensurate with higher
ratings than those currently assigned.  S&P has therefore raised
its ratings on these classes of notes.

At the same time, S&P has affirmed its ratings on the class B, C,
D, and E notes because its credit and cash flow analysis
indicates that the available credit enhancement for these classes
of notes is commensurate with S&P's currently assigned ratings.

Munda CLO I is a managed cash flow collateralized loan obligation
(CLO) transaction that securitizes loans to primarily European
speculative-grade corporate firms.  The transaction closed in
December 2007 and is managed by Cohen & Co. Financial Ltd.


Class           Rating
          To              From

Munda CLO I B.V.
EUR650 Million Senior Secured Floating-Rate And Deferrable Notes

Ratings Raised

A-1       AAA (sf)        AA+ (sf)
A-2       AAA (sf)        AA+ (sf)

Ratings Affirmed

B         AA+ (sf)
C         A+ (sf)
D         BB+ (sf)
E         CCC+ (sf)


PERESVET BANK: To Issue Subordinated Bonds to Creditors
Anna Baraulina at Bloomberg News reports that Russia's central
bank deputy governor, Vasily Pozdyshev, said Peresvet will issue
subordinated bonds so that creditors can convert their debt.

According to Bloomberg, the Bank of Russia will assess if
Peresvet has need for central bank funding after the subordinated
debt issue is completed.

                           *   *   *

As reported by the Troubled Company Reporter-Europe on Jan. 2,
2017, S&P Global Ratings lowered its issue ratings on all bonds
issued by Russia-based JSCB Peresvet Bank to 'D' from 'CC'.  S&P
also lowered its Russia national scale issue ratings on the bonds
to 'D' from 'ruCC'. S&P affirmed its 'D' long-term counterparty
credit and Russia national scale ratings on the bank.

The Central Bank of Russia imposed temporary administration and a
six-month payment moratorium on Peresvet Bank on Oct. 22, 2016.
The bank's official disclosures state that as of Dec. 1, 2016,
its negative equity dropped to more than RUB35.1 billion (about
US$542 million), indicating a major gap between the value of its
liabilities and assets.  Consequently, the bank failed to pay the
Dec. 21, 2016, coupons on its bonds, including the senior
unsecured bond we rate (ISIN: RU000A0JUP97) due June 22, 2017.

On Oct. 27, 2016, the Troubled Company Reporter-Europe reported
that Fitch Ratings downgraded Russia-based CJSC Peresvet Bank's
Long-Term Issuer Default Ratings (IDRs) to 'D' from 'B+' and
removed them from Rating Watch Negative (RWN).

Jan. 26

Peresvet Creditors to Convert Debt Into Subordinated Bonds
By Anna Baraulina
(Bloomberg) -- Peresvet will issue subordinated bonds so that
creditors can convert their debt, central bank deputy governor
Vasily Pozdyshev tells reporters in Moscow.
Bank of Russia to assess if Peresvet has need for central bank
funding after subordinated debt issue is completed
NOTE: Bank of Russia Extends Peresvet Moratorium by 3 Months

jan. 27


TURKIYE IS: S&P Revises Outlook to Neg; Affirms 'BB' LT CCR
S&P Global Ratings said that it revised its outlook to negative
from stable on these five Turkish financial institutions:

   -- Turkiye Is Bankasi A.S. (Isbank);
   -- Turkiye Garanti Bankasi A.S. (Garanti);
   -- Garanti Finansal Kiralama A.S. (Garanti Leasing);
   -- Yapi ve Kredi Bankasi A.S. (YapiKredi); and
   -- Turkiye Vakiflar Bankasi TAO (VakifBank).

At the same time, S&P affirmed the 'BB' long-term counterparty
credit ratings on all five financial institutions and the 'B'
short-term ratings on Isbank, Garanti Leasing, YapiKredi, and
VakifBank.  S&P also lowered its long-term Turkey national scale
ratings on Isbank, VakifBank, and YapiKredi to 'trAA-' from
'trAA'.  S&P affirmed its 'trA-1' short-term Turkey national
scale ratings on these entities.

The outlook revision follows that on the Republic of Turkey.  The
outlook revision on Turkey reflects the risk that sustained
inflationary and currency pressures could weaken the financial
strength of Turkey's companies and banks, undermining growth and
fiscal outcomes during a period of rising global interest rates.
The stand-alone credit profiles (SACPs) of Garanti, Isbank,
VakifBank, and YapiKredi remain unchanged at 'bb+'.

Ongoing currency depreciation is increasing indirect credit risks
for Turkish banks, in S&P's view.  Although banks don't carry
material open foreign currency positions, they have a substantial
amount of loans denominated in foreign currency.  It helps that
this is almost entirely lent to nonfinancial private-sector
corporates, but these carry an open position in foreign currency
that is close to 27% of Turkey's GDP.  S&P understands that only
a small portion of this foreign currency debt is short term and
most of it is owed by large blue-chip corporates and
multinationals, mitigating risks.

However, since S&P's last review of its ratings on Turkey on
Nov. 4, 2016, the Turkish lira has depreciated by 18% against the
U.S. dollar.  This means that the indebtedness of the entities
with foreign currency loans is growing at an unprecedented pace,
in an environment of decreasing economic growth, geopolitical
instability in key neighboring markets, and rising interest
rates. S&P therefore has concerns around the asset quality of
banks, despite the only modest deterioration of asset quality so
far and from a strong base in the last two years.  The system's
ratio of nonperforming loans (NPLs; loans over 90 days
delinquent) stood at 3.3% as of year-end 2016.  However, when
adjusted for NPLs sales and restructured loans that are closely
monitored by the regulator (classified as group II loans); S&P
estimates the ratio of problem assets to be slightly above 5% of
systemwide loans.

The ongoing slide of the lira versus hard currencies is also
taking its toll on the regulatory capital ratio (CAR) of banks.
According to S&P's estimate, a 10% depreciation of the lira would
consume about 50-60 basis points (bps) of the systemwide CAR.

Turkish banks also remain vulnerable to potential shifts in
global debt and capital markets, notably in terms of the rollover
and cost of their external debt, which still funds a higher share
of assets than most peers.  Positively, the pace of loan growth
is now more in line with that of deposits.  While the demand for
new credit from both retail and corporate sectors remains
subdued, S&P understands that systemwide loan growth in 2016
reached 16%, mostly because of weak performance of the lira
inflating foreign-currency-denominated loans.

S&P still believes that Turkish banks will remain resilient to
the country's signs of economic weakness.  Although Turkish banks
operate in a relatively high-risk operating environment, their
sound asset quality, earnings, and capitalization provide a good
buffer to absorb any potential moderate volatility without
dramatically damaging the banks' financial profiles.

The negative outlooks on these entities reflect the negative
outlook on Turkey.  In S&P's opinion, Turkish banks' financial
profiles and performance will remain highly correlated with the
sovereign's creditworthiness, owing to their significant holdings
of government securities and exposure to the domestic
environment. Bank-specific factors that might lead S&P to revise
its ratings on these five financial institutions are therefore
limited, and future rating actions on these entities would be
mainly contingent on S&P's rating actions on Turkey.  Although
S&P's SACPs on Garanti, Isbank, VakifBank, and YapiKredi are at
'bb+', S&P do not rate any Turkish bank above our foreign
currency sovereign credit ratings on Turkey.  Therefore, a
lowering of the foreign currency rating on the sovereign would
trigger a lowering of the ratings on these five financial

S&P would revise the outlooks on these entities to stable if it
revised its outlook on the sovereign to stable.

U N I T E D   K I N G D O M

ROAD MANAGEMENT: S&P Revises Outlook to Pos. & Affirms B+ Rating
S&P Global Ratings said that it had revised its outlook to
positive from stable on the issue rating of the GBP165 million
fixed-rate bonds due 2021 issued by U.K.-based limited purpose
entity Road Management Consolidated PLC (RMC).  S&P affirmed the
issue rating at 'B+'.  The recovery rating remains at '1'.

The outlook revision reflects strong traffic performance in 2016
in which total traffic volumes across the two roads rose by over
3% in 2016, outperforming the U.K.'s economic performance
indicators for a third consecutive year and above our 2% 2016
growth forecast.  The project continues to retain sizable trapped
cash reserves, including GBP13.8 million (as of Dec. 31, 2016,)
in the special reserve account (SRA), that have built up over
time as a result of historical contractual lock-up and can be
used to support senior debt service.  Under S&P's base case, it
forecasts that the percentage of total trapped cash in the senior
debt service reserve account (DSRA) and the SRA -- currently
around 30% of the GBP106 million outstanding senior debt as of
Dec. 31, 2016 -- will continue to strengthen as the senior debt
is repaid to more than 60% ahead of full senior debt repayment in
2021. Additional protection is provided by a six-month DSR letter
of credit from Barclays Bank.  Therefore, in S&P's opinion, the
likelihood of the notes being fully repaid at maturity has

S&P's 'B+' rating continues to reflect the project's weak
financial performance that results from low traffic volumes, with
annual consolidated debt service coverage ratios (DSCRs) forecast
to remain marginally below 1x, per S&P's base case.  However, the
risk of weak cash flow ratios is partially mitigated by the
strength of the project under S&P's downside sensitivity stress
case, thanks to the support provided by the cash balances in the
DSRA and the SRA, which enables the project to withstand an
extended period of stress.

RMC issued the fixed-rate bonds to fund the construction of two
shadow toll roads: the A1(M) between Alconbury and Peterborough;
and the A419/A417 between Swindon and Gloucester.  Construction
of both roads was completed in 1998.  The two road projects are

The project's revenues are derived from traffic volumes via a
shadow toll mechanism.  The project's ordinary vehicle volumes
were significantly below the original expectations at financial
close in 1996, and S&P forecasts that they will remain in the
lowest payment band for both roads for the remainder of the
concession.  S&P continues to maintain its 1% base-case estimates
for traffic growth, but could revise this upward if traffic
growth remains in line with recent historical performance in

The SRA must hold the equivalent to the next 12 months of debt
service costs for a period of two to four years, depending on the
level of the backward contractual ratios: A contractual ratio of
less than 1.35x means that the SRA must hold a balance equal to
the debt service costs for 24 months; and for 48 months for a
ratio of less than 1.25x.  The contractual ratio calculation
differs materially from S&P Global Ratings' cash flow-based ratio
definition.  However, S&P anticipates that the project will
retain the SRA in place until the senior debt has been fully
repaid in June 2021.

The bonds retain an unconditional and irrevocable guarantee
provided by Ambac Assurance Corp. (Ambac) of payment of scheduled
interest and principal.  According to S&P's criteria, the rating
on a monoline-insured debt issue reflects the higher of either
the rating on the monoline or the Standard & Poor's underlying
rating (SPUR).  Therefore, the long-term rating on the bonds
reflects the SPUR, as S&P Global Ratings no longer rates Ambac.
The SPUR is driven by the operations phase stand-alone credit
profile, given that the project is not exposed to construction

The positive outlook reflects S&P's opinion of RMC's
strengthening credit quality and our expectations of a higher
likelihood of the notes being repaid in full by maturity in June
2021.  S&P forecasts that the percentage of total trapped cash in
the SRA and DSRA relative to the balance of senior debt will
continue to increase over the next five years as the senior debt
principal is fully repaid.  Senior debt principal repayment will
average 20% per year.

An upgrade of at least one notch is dependent upon the project
continuing to exhibit robust traffic growth on the two roads and
retaining sizable trapped cash reserves, over and above the 12-
month DSR amount, which provides material protection to lenders.

S&P could revise the outlook to stable or lower the rating if
traffic volumes are materially below S&P's base-case assumptions,
leading to a reduction in trapped cash below its base-case
expectations.  An increase in lifecycle expenditures or
deteriorated liquidity due to a release of funds from the SRA
could also negatively affect the rating, as it would remove the
protection currently afforded to lenders.

* UK: Corporate Insolvency Numbers Up in 2016, R3 Says
Commenting on the rising personal and corporate insolvency
statistics in 2016, announced by the government on Jan. 27,
Andrew Tate, president of insolvency and restructuring trade body
R3, says:

Corporate insolvencies

"The corporate insolvency numbers have been skewed by a wave of
personal service companies being closed in the last quarter.  It
may have been just the closure of a handful of companies run by
an umbrella provider which led to the spike.  When you look
beyond that though, 2016 had more or less the same number of
insolvencies as last year."

"Despite a number of challenges for businesses in 2016 -- the
fall in the value of the pound since June's EU referendum and the
introduction of the National Living Wage among them -- there is
still a lot of downward pressure on corporate insolvency numbers
to balance these out."

"Businesses are enjoying a significant safety net: compared to
the pre-financial crisis economy, creditors -- particularly banks
-- are much more patient with their borrowers, businesses are
benefiting from record low borrowing costs, and an increased
focus by the insolvency and restructuring profession on early
intervention has helped businesses avoid formal insolvency

"Businesses are in a position where they can sit on cash or take
on new borrowing.  R3's regular surveys of business distress have
found that key signs of business distress are near their record
lows, and that almost one-in-ten (8%) businesses are paying off
only the interest on their debts."

"The fall in the value of the pound since the summer will
undoubtedly have been a shock to some smaller businesses though
-- almost half our members have said Brexit has come up in
discussion with struggling businesses since June."

"After half a decade of falling insolvencies, insolvency levels
are lower now than they were even before the financial crisis.
However, the decline now seems to have stalled and we've had a
very small increase instead -- that's the first increase in
insolvencies since 2011."

"2017 will be an important test: many larger firms will have been
protected from the pound's fall by currency hedges or long-term
fixed-price contracts, but these will unwind or end this year.
Businesses have been buoyed by resilient consumer spending since
the EU referendum but much of this is on the back of increased
borrowing -- it's not clear how sustainable this will be.  Firms
in the South East and London will also have to adjust to new,
higher business rates from April."

Personal insolvencies

"Increasing access to statutory personal insolvency procedures
has been the story behind 2016's rising personal insolvency
numbers.  It's not necessarily that more people have needed a
personal insolvency procedure, but that more people are able to
enter a debt solution appropriate to their situation."

"There are still some significant downward pressures on personal
insolvency numbers though, which have helped reduce insolvencies
since the last quarter."

"Despite a recent acceleration in consumer borrowing, personal
finances are not too bad at the moment.  R3's last survey of
British adults' personal finances found that 38% of British
adults were at least fairly worried about their current level of
debt -- a proportion that has fallen steadily from the 46% in the
same position in March 2015.  And while businesses have some
pressing Brexit concerns, any financial impact of the EU
referendum result, such as higher inflation, will take a little
while to filter through to wallets and purses."

"Compared to last year, however, insolvency numbers are much
higher.  This is mostly thanks to changes in the way insolvency
procedures work."

"Access to Debt Relief Orders (DROs) was widened at the end of
2015 -- as campaigned for by R3 -- allowing more people on low
incomes and with few assets to deal with small, but problem
debts.  DRO numbers have been correspondingly higher throughout
2016 as a result."

"Similarly, bankruptcy applications moved online in April 2016,
improving accessibility, slightly reducing the application cost,
and removing some of the stigma involved in the bankruptcy
process.  The fall in bankruptcy numbers is lower than it has
been recently."

"IVAs leapt during 2016, but with real wage growth continuing and
inflation still historically low, albeit rising, it is more
likely the increase is down to changes in the debt management
plan market than wider economic factors.  Non-statutory debt
management plans have come under increased scrutiny from the FCA
and elsewhere, which has seen those in long-term versions of
these plans switching to more appropriate statutory debt
solutions, typically IVAs.  IVAs must be overseen by a licensed
insolvency practitioner."

"It's important to remember that the government's personal
insolvency statistics do not include the thousands of people who
are still in non-statutory debt management plans.  These are now
regulated by the FCA, but no numbers are published which would
help us understand their usage."

"And while a debt management plan may be suitable for some users,
others may be better suited to a formal insolvency procedure that
they cannot access.  To enter bankruptcy, for example, costs รบ680
in up-front government fees.  Making these fees payable by
instalments over the course of a bankruptcy would help those who
need to access a formal insolvency procedure more suited to their

R3 is the trade body for Insolvency Professionals, and represents
the UK's Insolvency Practitioners.


IPAK YULI: Fitch Hikes Long Term Issuer Default Rating to 'B'
Fitch Ratings has upgraded the Long-Term Issuer Default Ratings
(IDR) of Ipak Yuli Bank (IY) and PJSB Trustbank (TB) to 'B' from
'B-' and Universalbank (UB) to 'B-' from 'CCC'. The Outlooks are

The upgrades of the banks' ratings mainly reflect their extended
records of reasonable performance and asset quality, partly owing
to Uzbekistan's stable economic environment, which has been
resilient amid the regional downturn. However, the ratings still
factor in structural weaknesses in the economy, the country's
tightly regulated FX market and the banks' modest and fairly
concentrated franchises in the state-dominated banking sector.
Franchise limitations are more acute for UB, which is rated one
notch lower than its peers given its very small scale,
concentrated balance sheet and somewhat higher risk-appetite.

The Stable Outlooks reflect Fitch's view that the banks' credit
profiles are unlikely to deteriorate significantly in the near
term, supported by continued economic growth in Uzbekistan (Fitch
forecasts 7% in 2017) and generally reasonable capital or pre-
impairment profitability buffers.

Asset quality remains adequate in all three banks, with non-
performing loans (NPLs, 90 days overdue) staying in low single
digits at end-3Q16 (IY: 1.3% of loans; TB: nil; UB: 3%). However,
this should be viewed in light of rapid loan book growth (33%-55%
for 2016) and limitations in local GAAP disclosure in the case of
UB (whose latest IFRS accounts are for 2015). NPL reserve
coverage was strong in IY (3x by total reserves, 30% by specific
reserves) and moderate in UB (50% both by total and specific
reserves), while TB's reserves were 4% of gross loans. Beyond
that, comfortable additional loss absorption capacity is
available from the banks' capital cushions and pre-impairment
operating profits (IY: 9% of average loans, TB: 15%, and UB: 9%
based on annualised 9M16 results).

Borrower concentration levels are moderate in IY (the top 25
borrowers accounted for 21% of loans at end-3Q16), but high in TB
(50%) and UB (57%). Fitch assesses IY's and TB's largest
exposures as moderate risk working-capital loans to manufacturing
companies, while UB's are somewhat higher-risk due to weaker
underwriting and limited access to higher-quality borrowers.

Foreign-currency (FC) lending is moderate at IY (21% of loans)
and low at TB and UB (1% and 0% of loans). Additional risk stems
from FC letters of credit covered by local-currency deposits (11%
of Fitch Core Capital (FCC) at IY and 8% of FCC at TB), although
according to management most FC loans and letters of credit were
issued to exporters who have access to FC. Banks keep moderate
long FC positions (below 15% of equity), which mitigates FC
risks. Official exchange-rate depreciation has been moderate
recently (13% in 2016, 14% in 2015), but the potential shift to a
more flexible FX regime may trigger a sharper devaluation.

Capital buffers were moderate relative to the banks' risk
profiles. FCC ratios were 13% at IY at end-3Q16, 17% at TB at
end-1H16, and 25% at UB at end-2015. The end-2016 regulatory
total capital ratio was rather tight at IY (12.9%; regulatory
minimum 12.5% from January 2017), but should improve by about 0.4
pps after planned subordinated debt injections. Ratios were more
adequate at TB (15.5%) and UB (19.1%).

The banks' funding was sourced mainly from customer deposits (79%
of total liabilities at IY, 98% at TB and UB), which are short
term, but have been broadly stable at all three banks. Depositor
concentrations are high at TB (the largest 20 deposits accounting
for 67% of total customer funding at end-3Q16) while IY's and
UB's deposits are more granular (31 and 43% respectively). IY is
the only bank with meaningful borrowings from international
financial institutions (16% of liabilities), but foreign debt
repayments are manageable (3% of total liabilities in 2017) and
linked to loan repayments.

Liquidity profiles were reasonable at all banks due to solid
buffers (at end-2016 liquid assets, net of near-term repayments,
were in the range of 30%-50% of customer deposits at all three
banks). All three banks hold large FC liquidity buffers
sufficient to withstand substantial (above 50%) reductions in FC-
denominated customer funding.

The banks' Support Rating Floors of 'No Floor' and their '5'
Support Ratings reflect thei banks' limited systemic importance
and Fitch's view that extraordinary support from the Uzbek
authorities is therefore unlikely. The ability of the banks'
shareholders to provide support cannot be reliably assessed and
therefore this support is not factored into the ratings.

Upside for the banks' ratings is currently limited, but could
arise in case of an overall improvement in the operating
environment. UB's ratings may be also upgraded if the bank
diversifies its franchise significantly along with a tightening
of risk policies.

The banks' ratings could be downgraded in case of significant
deterioration in the operating environment or a weakening of
asset quality and capital metrics.

Fitch does not anticipate changes to the Support Ratings and SRFs
given the banks' limited systemic importance.

The rating actions are:

Ipak Yuli Bank
Long-Term Foreign and Local Currency IDRs upgraded to 'B' from
'B-'; Outlook Stable
Short-Term Foreign and Local Currency IDRs affirmed at 'B'
Viability Rating upgraded to 'b' from 'b-'
Support Rating affirmed at '5'
Support Rating Floor affirmed at 'No Floor'

Long-Term Foreign and Local Currency IDRs upgraded to 'B' from
'B-'; Outlook Stable
Short-Term Foreign and Local Currency IDRs affirmed at 'B'
Viability Rating upgraded to 'b' from 'b-'
Support Rating affirmed at '5'
Support Rating Floor affirmed at 'No Floor'

Long-Term Foreign and Local Currency IDRs upgraded to 'B-' from
'CCC'; Outlook Stable
Short-Term Foreign and Local Currency IDRs upgraded to 'B' from
Viability Rating upgraded to 'b-' from 'ccc'
Support Rating affirmed at '5'
Support Rating Floor affirmed at 'No Floor'


* Downward Trend in Global Insolvencies Coming to an End
In 2016, companies struggled to stay resilient despite robust
support from policymakers, according to Euler Hermes, the
worldwide leader in trade credit insurance.  Strong deflationary
pressure and subdued global demand made life harder for
businesses.  After two years of substantial declines in
insolvencies, the Euler Hermes 2016 Global Insolvency Index --
which weighs countries based on their GDP and represents 84% of
world GDP -- should record a limited decrease of -2%.

"The downward trend in global insolvencies is coming to an end,"
said Ludovic Subran, chief economist at Euler Hermes.  "This is
happening because global growth is not accelerating and will
linger below +3% in the coming years.  Companies are therefore
more vulnerable to external shocks."

At a global level, the contained return of inflation should
provide only limited relief to corporate revenues, while
companies will face higher input costs, upward wage pressure and
tighter financing conditions.  Businesses absorbed the 2008-2009
shock, but remain vulnerable to the lack of a solid macroeconomic
and financial environment.  In 2016 they faced major global

   -- A sluggish global economy (real GDP growth +2.5% in 2016
vs. +2.7% in 2015)

   -- A sharp slowdown in global trade (+1.9%)

   -- Fierce price competition

   -- Volatile exchange rates and international financial flows.

"Bankruptcies are on the rise in Asia Pacific and the Americas,
and Europe's improvement is fading.  We expect global
insolvencies to rise by +1% in 2017," continued Mr. Subran.

Europe appeared immune to the gloom in the rest of the world in
2016, with insolvencies decreasing by -5%.  Meanwhile, Latin
America should post its fifth consecutive increase in
insolvencies (+18%), impacted by recession in Argentina, Brazil
and Venezuela, low commodity prices and currency depreciations.
In Asia Pacific, the Chinese slowdown and a rebound in
insolvencies and protectionism will impact companies.  In North
America, the steady decline in insolvencies has come to an end.
The +45% surge in the number of major bankruptcies (over EUR 50
mn) registered in the first three quarters of 2016, compared to
the same period in 2015, is a source of second-round turbulence.
Large bankruptcies will have a domino effect, with adverse
implications for fragile suppliers, particularly for energy
companies. Europe is the most at risk in terms of number of
cases, while North America reported the largest number in terms
of cumulative turnover.

Furthermore, state-owned enterprises (SOEs) -- i.e. companies in
which the state directly owns 50%+ of share capital -- are not
immune to bankruptcy.  Their relative weight in the economy,
their level of indebtedness, their inefficiencies and the
existence of an exit strategy constitute their major risk

"More than 160 out of the 2,000 largest companies in the world
can be defined as SOEs," added Mr. Subran.  "Overall, SOEs in
China present the highest risk profile, followed by Brazil and


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 2017.  All rights reserved.  ISSN 1529-2754.

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

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

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

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