TCREUR_Public/170221.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

          Tuesday, February 21, 2017, Vol. 18, No. 037


                            Headlines


F R A N C E

LION/SENECA FRANCE: S&P Affirms 'B' CCR, Outlook Stable


G R E E C E

GREECE: Bailout Talks with International Creditors Reach Impasse
PIRAEUS BANK: Fitch Assigns B- Rating to Series 3 Covered Bonds


I R E L A N D

AVOCA CLO VI: S&P Affirms 'B+' Rating on Class F def Notes
PALMERSTON PARK: Moody's Assigns (P)B2 Rating to Cl. E Sr. Notes
PALMERSTON PARK: Fitch Assigns 'B-(EXP)sf' Rating to Cl. E Notes
PETROCELTIC INVESTMENTS: Ex-Consultant to Sue Over Fees
TITAN EUROPE 2007-2: S&P Lowers Rating on Cl. A2 Notes to CCC-


I T A L Y

MONTE DEI PASCHI: Lower House Okays Debt Increase for Bank Rescue


K A Z A K H S T A N

DELTA BANK: S&P Lowers Longterm CCRs to 'D/D' on Missed Payments
KAZINVESTBANK: S&P Affirms 'D/D' Counterparty Credit Ratings


M A C E D O N I A

MACEDONIA: Fitch Affirms 'BB' Long-Term IDRs, Outlook Negative


R U S S I A

MORDOVIA REPUBLIC: Fitch Affirms 'B+' LT IDRs, Outlook Stable
NOVOSIBIRSK CITY: Fitch Affirms 'BB' LT Issuer Default Ratings
ORENBURG REGION: Fitch Affirms 'BB' LT Issuer Default Ratings
RUSSIA: Moody's Revises Outlook on Ba1 Rating to Stable
TOMSK CITY: Fitch Affirms 'BB' LT Foreign & Local Currency IDRs


S P A I N

AYT 11: S&P Affirms 'B' Rating on Class B Notes
POPULAR CAPITAL: DBRS Cuts Preferred Shared Ratings to 'BB'


U K R A I N E

LEX HOLDING: Holosiyivsky Court Seizes Shopping Mall


U N I T E D   K I N G D O M

ALLERTONS: Sold Out Of Liquidation, 11 Jobs Saved
FINSBURY SQUARE 2017-1: Moody's Gives (P)Caa3 Rating to X Notes
FOOD RETAILER: Future of Budgets Store in Nottingham at Risk


                            *********



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F R A N C E
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LION/SENECA FRANCE: S&P Affirms 'B' CCR, Outlook Stable
-------------------------------------------------------
S&P Global Ratings affirmed its 'B' long-term corporate credit
rating on France-based prescription frames and sunglasses designer
and optical retailer Lion/Seneca France 2 SAS (Alain Afflelou).
The outlook is stable.

At the same time, S&P is affirming the 'BB' issue rating on the
group's EUR30 million super senior revolving credit facility
(RCF), the 'B' issue rating on its EUR365 million senior secured
notes due 2019, and the 'CCC+' issue rating on its EUR75 million
senior subordinated notes.

The recovery ratings for the issue ratings remain unchanged.  The
recovery rating of '1+' on the super senior RCF indicates S&P's
expectation of 100% of recovery in the event of a payment default;
the '3' rating on the EUR365 million senior secured notes
indicates recovery prospects in the lower half of the 50% to 70%
range in the event of a payment default; and the '6' rating on the
EUR75 million senior subordinated notes indicates S&P's
expectation of 0% recovery in the event of a payment default.

S&P removed all ratings from CreditWatch, where it placed them
with positive implications on Nov. 15, 2016.

Following the Afflelou's recent announcement that it will stop its
IPO process, S&P has decided to affirm its ratings on the group
and its debt.  S&P considers that there is no reason to believe
that the group will be able to embark on a path toward sizable
debt reduction as the IPO will not take place in the short to
medium term.  Therefore, S&P views ratings upside as remote at
this stage.

However, Afflelou's capital structure might be reorganized in the
short to medium term, since S&P understands that the IPO was
notably contemplated as an exit strategy by the current majority
shareholder (Lion Capital), which took control of the group in May
2012.  Usually the investment horizon of such private equity firms
is close to five years.  Even if the group did not give S&P any
information, it is realistic to envisage a potential exit in the
next one to two years.  Furthermore, S&P considers that an
opportunist refinancing could take place on similar timeframe.

The franchisor business model allows the group to post resilient
revenues and demonstrated that even during economic downturn the
group's creditworthiness was ensured.  To some extent, the group's
margins were pulled down by what S&P considers a structural change
in the optical retailers' value chain following the increasing
role played by the health care networks since 2015.  The group's
limited geographic diversification and relatively modest size,
along with its decreasing S&P Global Ratings' adjusted
profitability, continue to be the main mitigating factors
constraining S&P's assessment of the group's business risk.

S&P considers that Afflelou's satisfying financial results for the
fiscal year ended July 31, 2016, reflect the group's efforts to
reduce its cost base at the directly owned store (DOS) level.
Moreover, it reflects the higher presence of its franchisees
within the health care networks, which had a positive effect on
the group's top line after a very tough fiscal 2015.  Despite a
slight erosion of its operating margins, stemming from pricing
pressure from the massive entrance within the health care
networks, the group's S&P Global Ratings' adjusted EBITDA slightly
increased to EUR83.4 million in fiscal 2016 from EUR82 million in
fiscal 2015.

S&P's current 'B' rating on the group continues to reflect S&P's
view that Afflelou's franchisor business model is still resilient,
despite a still-tough consumption environment in the France and
Spain markets where the group does the majority of its business,
translating into funds from operations (FFO) cash interest
coverage of 2.76x in fiscal 2017.

Under S&P's base case, it projects that Afflelou's adjusted debt-
to-EBITDA ratio will remain in the 11x to 12x range--or between 6x
and 7x, excluding convertible bonds and preferred equity
certificates (PECs) -- by the end of fiscal 2017.  S&P also
projects its FFO cash interest coverage will remain above 2.5x
over the next 24 months.  S&P views these ratios as well
entrenched in the highly leveraged financial risk profile
assessment.  However, S&P expects that the combined group's free
operating cash flow might turn slightly negative in fiscal 2017
due to important one-off costs linked to the IPO process but also
stemming from a catch-up effect on capital expenditures (capex) in
fiscal 2017, after a record low spending in fiscal 2016.

The stable outlook on Afflelou reflects the group's ability to
generate profitable growth despite quite challenging market
conditions stemming from gloomy economic conditions coupled with a
deflationist price environment from an aggressive pricing policy
implemented by health care networks in the group's domestic
market.

The stable outlook also reflects S&P's expectation that the
group's FFO cash interest coverage will be above 2.5x in fiscal
2017 and at 2.8x on a five-year weighted-average basis (2014-
2018), which S&P continues to view as commensurate with the 'B'
rating, and that it will maintain adequate liquidity.

Given Afflelou's high debt-to-EBITDA ratio and financial-sponsor
ownership, S&P views an upgrade as remote at this stage.  A
positive rating action would be linked to debt to EBITDA
decreasing sustainably below 5x on a fully adjusted basis.

S&P could envisage a downward if Afflelou's FFO cash interest
coverage ratio falls below the 2.5x threshold S&P considers
necessary for the current rating or if the group's cash flow
generation became more heavily affected by DOS' burdensome cost
structure.



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G R E E C E
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GREECE: Bailout Talks with International Creditors Reach Impasse
----------------------------------------------------------------
Ekathimerini.com reports that as Greece's international creditors
seem increasingly unwilling to cut the government any more slack,
the negotiations over the second review of the country's third
bailout do not appear to be heading to a conclusion any time soon,
essentially dashing the government's hopes of clinching a deal
before national elections begin in major European countries from
March onwards.

And if Prime Minister Alexis Tsipras didn't have enough on his
plate, creditors have, according to sources, also added the
reduction of the tax-free ceiling -- if not now then in January
2018 -- to their list of demands in order to conclude the review,
Ekathimerini.com notes.

For now, Mr. Tsipras is dismissing the demand on the grounds that
ruling SYRIZA's parliamentary group would not support such a
measure, Ekathimerini.com states.

Given the above constraints and the lack of progress in
negotiations, expectations at today's Eurogroup remain extremely
low, Ekathimerini.com discloses.

According to Ekathimerini.com, government aides said the only
person among the country's creditors actively pushing for a swift
conclusion is Eurogroup chief Jeroen Dijsselbloem, who wants to
present a European success at home ahead of national elections on
March 15 in The Netherlands.

However, neither Berlin nor the International Monetary Fund (IMF)
appear willing to make this easy for Mr. Tsipras, Ekathimerini.com
relays.

The outcome of the impasse in talks could be a protracted standoff
between Athens and Greece's creditors that could last until April
in the best case, and June in the worst, Ekathimerini.com states.

The government claims it has enough in state coffers to last until
then, while the next big debt repayment to international creditors
is not until July, Ekathimerini.com discloses.

With this scenario, Mr. Tsipras will seek to buy time, hoping that
Berlin and the IMF will soften their stance in the meantime,
Ekathimerini.com relates.

More specifically, Athens anticipates that the IMF will no longer
fund the Greek program and thus climb down from its demands for
more measures to be implemented now, Ekathimerini.com says.


PIRAEUS BANK: Fitch Assigns B- Rating to Series 3 Covered Bonds
---------------------------------------------------------------
Fitch Ratings has assigned Piraeus Bank S.A.'s (Piraeus, RD/RD/f)
Series 3 EUR1 billion mortgage covered bonds due 2018 issued under
the bank's covered bonds programme a 'B-' rating with Stable
Outlook.

The rating action follows the analysis of an additional
provisional portfolio of around EUR1.5 billion (as of end-January
2017) residential mortgage loans and a decrease in the committed
overcollateralisation (OC) to 25% from 63.14% (December 2016). All
the previous outstanding bonds totalling EUR5 million were fully
repaid on 9 February 2017.

KEY RATING DRIVERS

Fitch assesses the probability of default of Piraeus' covered
bonds as speculative credit risk. This qualitative assessment is
based on the dual recourse nature of the instrument and on the
availability of liquidity reserve and principal protection
mechanisms. Nonetheless, the maximum achievable rating for the
programme is 'B-', which is Greece's Country Ceiling.

Fitch also carried out a quantitative assessment of the level of
protection provided by the issuer in the form of OC and compared
it with the cover pool's credit loss in a 'B-' stress scenario.
The 25% contractual OC offsets a stressed credit loss of 12.3%.
The Stable Outlook is driven by the cushion provided by the
contractual OC against the 'B-' credit loss.

The agency maintains an Issuer Default Rating (IDR) uplift of two
notches for the programme based on covered bonds exemption from
bail-in in a resolution scenario, Fitch's assessment that
resolution of the issuer will not result in the direct enforcement
of recourse against the cover pool, the low risk of under-
collateralisation at the point of resolution and based on Piraues'
IDR not being support-driven (neither institutional nor by the
sovereign).

The Payment Continuity Uplift is eight notches, reflecting the
conditional pass-through amortisation as well as the presence of a
liquidity reserve covering at least three months of interest and
senior expenses.

VARIATION FROM CRITERIA

Piraeus' IDR and Viability Rating reflect an uncured payment
default on obligations other than the covered bonds. The recourse
against the cover pool has not been activated, a circumstance not
explicitly envisaged in Fitch covered bonds rating criteria. Fitch
rates the covered bonds based on a qualitative analysis of the
covered bonds payment interruption risk and a quantitative
analysis of the cover pool credit risk. This represents a
variation from Fitch's Covered Bonds Rating Criteria and the
impact of this variation is undetermined. As a result of this
variation, Fitch does not disclose the breakeven OC for the
programme's rating.

RATING SENSITIVITIES

Changes in Greece's Country Ceiling may affect the rating of the
covered bond programme issued by Piraeus Bank S.A.

Once the bank's Viability Rating and Issuer Default Rating (IDR)
is upgraded from 'f' and 'RD', Fitch will begin applying the IDR
uplift and the Payment Continuity Uplift, although their ratings
will still be subject to the applicable Country Ceiling. The
rating of the covered bond programme is also sensitive to changes
to the over-collateralisation and/or asset percentage that the
issuer commits to.



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I R E L A N D
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AVOCA CLO VI: S&P Affirms 'B+' Rating on Class F def Notes
----------------------------------------------------------
S&P Global Ratings affirmed its credit ratings on all classes of
notes in Avoca CLO VI PLC.

The affirmations follow S&P's assessment of the transaction's
performance using data from the November 2016 trustee report,
taking into account note repayments from the January 2017 payment
date.

Avoca CLO VI's class A1 and A2 notes have now fully amortized,
while the class B notes have also partially amortized.  Since
S&P's previous review the aggregate collateral balance has
decreased to EUR110.2 million from EUR223.29 million.

S&P subjected the capital structure to a cash flow analysis to
determine the break-even default rate (BDR) for each rated class
at each rating level.  The BDR represents S&P's estimate of the
maximum level of gross defaults, based on its stress assumptions,
that a tranche can withstand and still fully repay the
noteholders.  In S&P's analysis, it used the portfolio balance
that it considers to be performing (EUR110.4), the current
weighted-average spread (3.36%), and the weighted-average recovery
rates calculated in line with S&P's corporate collateralized debt
obligations (CDOs) criteria.  S&P applied various cash flow
stresses, using its standard default patterns, in conjunction with
different interest rate and currency stress scenarios.

The available credit enhancement has increased for all of the
rated classes of notes due to the transaction's structural
deleveraging post its re-investment period.  Alongside this, the
weighted-average spread earned on the assets has decreased to 336
basis points (bps) from 355 bps since S&P's previous review, while
the number of distinct obligors in the portfolio has reduced to 21
from 41.  The top 10 largest obligors account for 70.8% of the
portfolio, up from 46.2% at S&P's previous review, with the top
five alone accounting for 45.3%.

The proportion of assets rated in the 'CCC' category ('CCC+',
'CCC', or 'CCC-') has decreased since S&P's previous review,
although this is partially due to certain obligors defaulting.
Defaulted assets currently comprise 2.2% of the portfolio.

As part of our review, S&P applied currency stresses on non-euro
denominated assets (3.1% of the portfolio balance), because the
documented downgrade provisions in the asset swap contracts with
Credit Suisse International and JPMorgan Chase Bank N.A. do not
comply with S&P's current counterparty criteria.  However, these
stresses did not affect S&P's ratings in the transaction.

Finally, S&P has also computed its supplemental tests.  These
tests are intended to address both event risk and model risk that
may be present particularly in highly concentrated transactions,
and are used to assess sensitivity to obligor and industry
concentration in the underlying asset pools.

Based on S&P's cash flow modeling, in its opinion, the increased
available credit enhancement for the rated notes is now
commensurate with higher ratings than those previously assigned.
Despite this, the results of S&P's supplemental tests indicate
that the class C notes can only support their current rating,
while the class D to F notes cannot support their current ratings.

However, taking into account the increased credit enhancement at
all rating levels, stable to improved overall credit quality, and
the reduced time to maturity, S&P has affirmed its ratings on all
classes of notes.

Avoca CLO VI is a cash flow collateralized loan obligation (CLO)
transaction that securitizes loans granted to primarily
speculative-grade corporate firms.  The transaction closed in
November 2006 and KKR Credit Advisors is the collateral manager.
S&P's ratings on the class A1 and A2 notes address the timely
payment of interest and the ultimate payment of principal.  S&P's
ratings on the class B to E def notes and R combination notes
address the ultimate payment of principal and interest.

RATINGS LIST

Ratings Affirmed

Avoca CLO VI PLC
EUR558.3 Million Floating-Rate Notes

B def        AAA (sf)
C def        AA+ (sf)
D def        A+ (sf)
E def        BB- (sf)
F def        B+ (sf)
R Combo      BBB+ (sf)


PALMERSTON PARK: Moody's Assigns (P)B2 Rating to Cl. E Sr. Notes
----------------------------------------------------------------
Moody's Investors Service announced that it has assigned the
following provisional ratings to notes to be issued by Palmerston
Park CLO Designated Activity Company:

-- EUR233,000,000 Class A-1A Senior Secured Floating Rate Notes
    due 2030, Assigned (P)Aaa (sf)

-- EUR10,000,000 Class A-1B Senior Secured Fixed Rate Notes due
    2030, Assigned (P)Aaa (sf)

-- EUR26,000,000 Class A-2A Senior Secured Floating Rate Notes
    due 2030, Assigned (P)Aa2 (sf)

-- EUR20,000,000 Class A-2B Senior Secured Floating Rate Notes
    due 2030, Assigned (P)Aa2 (sf)

-- EUR14,000,000 Class B-1 Senior Secured Deferrable Floating
    Rate Notes due 2030, Assigned (P)A2 (sf)

-- EUR10,000,000 Class B-2 Senior Secured Deferrable Floating
    Rate Notes due 2030, Assigned (P)A2 (sf)

-- EUR21,000,000 Class C Senior Secured Deferrable Floating Rate
    Notes due 2030, Assigned (P)Baa2 (sf)

-- EUR24,500,000 Class D Senior Secured Deferrable Floating Rate
    Notes due 2030, Assigned (P)Ba2 (sf)

-- EUR11,000,000 Class E Senior Secured Deferrable Floating Rate
    Notes due 2030, Assigned (P)B2 (sf)

Moody's issues provisional ratings in advance of the final sale of
financial instruments, but these ratings only represent Moody's
preliminary credit opinions. Upon a conclusive review of a
transaction and associated documentation, Moody's will endeavour
to assign definitive ratings. A definitive rating (if any) may
differ from a provisional rating.

RATINGS RATIONALE

Moody's provisional rating of the rated notes addresses the
expected loss posed to noteholders by legal final maturity of the
notes in 2030. The provisional ratings reflect the risks due to
defaults on the underlying portfolio of loans given the
characteristics and eligibility criteria of the constituent
assets, the relevant portfolio tests and covenants as well as the
transaction's capital and legal structure. Furthermore, Moody's is
of the opinion that the collateral manager, Blackstone / GSO Debt
Funds Management Europe Limited, has sufficient experience and
operational capacity and is capable of managing this CLO.

Palmerston Park CLO Designated Activity Company is a managed cash
flow CLO. At least 90% of the portfolio must consist of secured
senior obligations and up to 10% of the portfolio may consist of
unsecured senior loans, second lien loans, mezzanine obligations,
high yield bonds and/or first lien last out loans. The portfolio
is expected to be 55% ramped up as of the closing date and to be
comprised predominantly of corporate loans to obligors domiciled
in Western Europe. This initial portfolio will be acquired by way
of participations which are required to be elevated as soon as
reasonably practicable. The remainder of the portfolio will be
acquired during the five month ramp-up period in compliance with
the portfolio guidelines.

Blackstone / GSO Debt Funds Management Europe Limited will manage
the CLO. It will direct the selection, acquisition and disposition
of collateral on behalf of the Issuer and may engage in trading
activity, including discretionary trading, during the
transaction's four-year reinvestment period. Thereafter, purchases
are permitted using principal proceeds from unscheduled principal
payments and proceeds from sales of credit impaired obligations,
and are subject to certain restrictions.

In addition to the nine classes of notes rated by Moody's, the
Issuer will issue EUR 45,500,000 of subordinated notes. Moody's
will not assign a rating to this class of notes.

The transaction incorporates interest and par coverage tests
which, if triggered, will divert interest and principal proceeds
to pay down the notes in order of seniority.

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

The rated notes' performance is subject to uncertainty. The notes'
performance is sensitive to the performance of the underlying
portfolio, which in turn depends on economic and credit conditions
that may change. Blackstone / GSO Debt Funds Management Europe
Limited's investment decisions and management of the transaction
will also affect the notes' performance.

Loss and Cash Flow Analysis:

Moody's modeled the transaction using CDOEdge, a cash flow model
based on the Binomial Expansion Technique, as described in Section
2.3 of the "Moody's Global Approach to Rating Collateralized Loan
Obligations" rating methodology published in October 2016. The
cash flow model evaluates all default scenarios that are then
weighted considering the probabilities of the binomial
distribution assumed for the portfolio default rate. In each
default scenario, the corresponding loss for each class of notes
is calculated given the incoming cash flows from the assets and
the outgoing payments to third parties and noteholders. Therefore,
the expected loss or EL for each tranche is the sum product of (i)
the probability of occurrence of each default scenario and (ii)
the loss derived from the cash flow model in each default scenario
for each tranche.

Moody's used the following base-case modeling assumptions:

Par Amount: EUR 400,000,000

Diversity Score: 36

Weighted Average Rating Factor (WARF): 2675

Weighted Average Spread (WAS): 3.7%

Weighted Average Coupon (WAC): 5.0%

Weighted Average Recovery Rate (WARR): 41.5%

Weighted Average Life (WAL): 8 years

Stress Scenarios:

Together with the set of modelling assumptions above, Moody's
conducted an additional sensitivity analysis, which was an
important component in determining the rating assigned to the
rated notes. This sensitivity analysis includes increased default
probability relative to the base case. Below is a summary of the
impact of an increase in default probability (expressed in terms
of WARF level) on each of the rated notes (shown in terms of the
number of notch difference versus the current model output,
whereby a negative difference corresponds to higher expected
losses), holding all other factors equal.

Percentage Change in WARF: WARF + 15% (to 3076 from 2675)

Ratings Impact in Rating Notches:

Class A-1A Senior Secured Floating Rate Notes: 0

Class A-1B Senior Secured Fixed Rate Notes: 0

Class A-2A Senior Secured Floating Rate Notes: -2

Class A-2B Senior Secured Floating Rate Notes: -2

Class B-1 Senior Secured Deferrable Floating Rate Notes: -2

Class B-2 Senior Secured Deferrable Floating Rate Notes: -2

Class C Senior Secured Deferrable Floating Rate Notes: -2

Class D Senior Secured Deferrable Floating Rate Notes: -1

Class E Senior Secured Deferrable Floating Rate Notes: 0

Percentage Change in WARF: WARF +30% (to 3478 from 2675)

Ratings Impact in Rating Notches:

Class A-1A Senior Secured Floating Rate Notes: -1

Class A-1B Senior Secured Fixed Rate Notes: -1

Class A-2A Senior Secured Floating Rate Notes: -3

Class A-2B Senior Secured Floating Rate Notes: -3

Class B-1 Senior Secured Deferrable Floating Rate Notes: -4

Class B-2 Senior Secured Deferrable Floating Rate Notes: -4

Class C Senior Secured Deferrable Floating Rate Notes: -3

Class D Senior Secured Deferrable Floating Rate Notes: -2

Class E Senior Secured Deferrable Floating Rate Notes: -2

Methodology Underlying the Rating Action:

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


PALMERSTON PARK: Fitch Assigns 'B-(EXP)sf' Rating to Cl. E Notes
----------------------------------------------------------------
Fitch Ratings has assigned Palmerston Park CLO D.A.C.'s notes
expected ratings, as follows:

EUR233m class A-1A: 'AAA(EXP)sf'; Outlook Stable
EUR10m class A-1B: 'AAA(EXP)sf'; Outlook Stable
EUR26m class A-2A: 'AA(EXP)sf'; Outlook Stable
EUR20m class A-2B: 'AA(EXP)sf'; Outlook Stable
EUR14m class B-1: 'A(EXP)sf'; Outlook Stable
EUR10m class B-2: 'A(EXP)sf'; Outlook Stable
EUR21m class C: 'BBB(EXP)sf'; Outlook Stable
EUR24.5m class D: 'BB(EXP)sf'; Outlook Stable
EUR11m class E: 'B-(EXP)sf'; Outlook Stable
EUR45m subordinated notes: not rated

Final ratings are contingent on the receipt of final documentation
conforming to information already received.

Palmerston Park CLO D.A.C., (the issuer) is a cash flow
collateralised loan obligation. Net proceeds from the issuance of
the notes will be used to purchase a portfolio of EUR400m of
mostly European leveraged loans and bonds. The portfolio is
actively managed by Blackstone/GSO Debt Funds Management Europe
Limited.

KEY RATING DRIVERS

B+'/'B' Portfolio Credit Quality
Fitch expects the average credit quality of obligors to be in the
'B+'/'B' range. Fitch has public ratings or credit opinions on all
60 assets in the identified portfolio. The Fitch weighted average
rating factor of the identified portfolio is 31.7, below the
maximum covenant for assigning the expected ratings of 34.

High Recovery Expectations
At least 90% of the portfolio will comprise senior secured
obligations. Fitch views the recovery prospects for these assets
as more favourable than for second-lien, unsecured and mezzanine
assets. Fitch has assigned Recovery Ratings to all 60 assets in
the identified portfolio. The Fitch weighted average recovery rate
of the identified portfolio is 66.5%, below the minimum covenant
for assigning final ratings of 67.5%, but this is expected to be
raised before the effective date.

Limited Interest Rate Exposure
Fitch modelled both a 7.5% and a 0% fixed-rate bucket in its
analysis, and the rated notes can withstand the interest rate
mismatch associated with both scenarios.

Diversified Asset Portfolio
The covenanted maximum exposure to the top 10 obligors for
assigning the expected ratings is 20% of the portfolio balance.
This covenant ensures that the asset portfolio will not be exposed
to excessive obligor concentration.

Documentation Amendments
The transaction documents may be amended subject to rating agency
confirmation or noteholder approval. Where rating agency
confirmation relates to risk factors, Fitch will 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
maturity.

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

RATING SENSITIVITIES

A 25% increase in the obligor default probability would lead to a
downgrade of up to two notches for the rated notes. A 25%
reduction in expected recovery rates would lead to a downgrade of
up to two notches for the rated notes with the exception of class
D notes, which could be downgraded up to four notches.

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

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

DATA ADEQUACY

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

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


PETROCELTIC INVESTMENTS: Ex-Consultant to Sue Over Fees
-------------------------------------------------------
Mark Paul and Charlie Taylor at The Irish Times report that
Geoffrey Stevenson, who was in charge of exploration company
Petroceltic's prime asset in the Algerian desert until the company
was bought out of examinership last year following a bitter
takeover battle, is taking on the new owners of the business in
the High Court in Dublin.

Mr. Stevenson was not an employee of Petroceltic prior to the
takeover by Swiss-Cayman Islands fund Worldview Capital, but
rather he was a consultant and also project director at
Petroceltic's Ain Tsila gas field project in Algeria, The Irish
Times discloses.

The industry veteran has in recent days filed a summary judgment
action for debt against Petroceltic Investments, one of the
entities placed in examinership last summer before Worldview took
control, The Irish Times relates.  He alleges he is owed fees for
his work at Ain Tsila, The Irish Times discloses.

Petroceltic Investments has hired top Dublin corporate law firm
Matheson to defend it in the case, The Irish Times relays.

Mr. Stevenson had previously been the target of public criticism
from Worldview, then the largest shareholder at the exploration
company, during the ill-tempered takeover battle that ensued for
18 months before Petroceltic entered insolvency and Worldview took
sole control, The Irish Times notes.

Since the Irish High Court approved the rescue, Petroceltic has
relocated its headquarters from Dublin to London, where in recent
weeks it restructured the company's corporate rules with a new set
of articles, The Irish Times states.

According to The Irish Times, on Feb. 16, just days after
Mr. Stevenson filed his proceedings in Dublin, Petroceltic issued
a statement to the press making a series of extraordinary and
unsubstantiated allegations against another foreign-based
executive who was previously connected to Petroceltic.

The statement, as cited by The Irish Times, said Petroceltic's new
owners had made a "criminal complaint" following an investigation
they commissioned into historical arrangements at the company.

Petroceltic International is a Dublin-based oil and gas explorer.


TITAN EUROPE 2007-2: S&P Lowers Rating on Cl. A2 Notes to CCC-
--------------------------------------------------------------
S&P Global Ratings lowered to 'CCC- (sf)' from 'CCC (sf)' its
credit rating on Titan Europe 2007-2 Ltd.'s class A2 notes.

The downgrade reflects the increasing risk of a payment default
due to the legal final maturity being less than three months away
in April 2017.

Titan Europe 2007-2 is a true sale transaction that closed in June
2007 and was backed by a pool of 18 loans secured against European
commercial properties.  Since closing, 15 loans have repaid and
the outstanding note balance has reduced to EUR425.37 million from
EUR1.67 billion.  All three remaining loans are in special
servicing.  The sales process is continuing for two of the loans
and for the other loan, the properties have been already been sold
but are being wound down.

                          RATING RATIONALE

S&P's ratings in Titan Europe 2007-2 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 A2
notes have become more vulnerable to nonpayment, and 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, in line with S&P's criteria for assigning
'CCC' category ratings.

RATINGS LIST

Titan Europe 2007-2 Ltd.
EUR1.669 bil commercial mortgage-backed floating-rate notes

                                    Rating
Class            Identifier         To                   From
A2               XS0302921381       CCC- (sf)            CCC (sf)



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


MONTE DEI PASCHI: Lower House Okays Debt Increase for Bank Rescue
-----------------------------------------------------------------
DPA reports that Italy's lower house of parliament on Feb. 16
approved a government bid to increase public debt by up to EUR20
billion (about US$21.3 billion) to fund a rescue package for Monte
dei Paschi di Siena (MPS) and other ailing banks.

"A step forward to guarantee more economic security to families
and businesses," DPA quotes Prime Minister Paolo Gentiloni as
saying on Twitter.

The move comes after the European Union on December 29 approved
the Italian government's move to rescue MPS, the country's third-
largest lender and the world's oldest bank, DPA notes.

The banking sector has been a drag on Italy's economy for the last
several years, DPA relays.  Lenders' main problem is a collection
of bad loans stemming from careless lending decisions and a long
recession, which forced many businesses and households into
insolvency, DPA discloses.

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



===================
K A Z A K H S T A N
===================


DELTA BANK: S&P Lowers Longterm CCRs to 'D/D' on Missed Payments
----------------------------------------------------------------
S&P Global Ratings lowered its long- and short-term counterparty
credit ratings on Delta Bank JSC to 'D/D' (default) from 'CC/C'.
S&P also lowered its ratings on the bank's senior unsecured bonds
to 'D' from 'CC'.

At the same time, S&P lowered its Kazakhstan national scale
ratings on Delta Bank to 'D' from 'kzCC'.

The rating action follows Delta Bank's nonpayment of the full
principal amount of Kazakhstan tenge (KZT) 9.8 billion on its
domestic senior unsecured bond, following the end of the grace
period on Feb. 14, 2017.  The bank also says that it has not paid
some term deposits that were at maturity.

S&P considers that these nonpayments are a general default.

The bank is still awaiting support from the National Bank of
Kazakhstan (NBK), which is dependent on a liquidity injection from
Delta's majority shareholder Nurlan Tleubayev, which had been
previously agreed with the NBK.  S&P will review the ratings on
Delta Bank in case of liquidity support from the shareholder or
the NBK, provided that Delta Bank repays the abovementioned bond.


KAZINVESTBANK: S&P Affirms 'D/D' Counterparty Credit Ratings
------------------------------------------------------------
S&P Global Ratings said that it had affirmed its 'D/D' long- and
short-term counterparty credit ratings on Kazakhstan-based
KazInvestBank.  S&P also affirmed the 'D' Kazakhstan national
scale rating on the bank as well as the 'D' ratings on
KazInvestBank's rated senior unsecured and subordinated bonds.

S&P subsequently withdrew all its ratings at the request of the
KazInvestBank's temporary administrator, which was appointed by
the National Bank of Kazakhstan to manage the bank through its
liquidation procedures.

S&P affirmed all the ratings at 'D', as it understands that
KazInvestBank's banking license was revoked by the National Bank
of Kazakhstan on Dec. 27, 2016.  In S&P's view, the regulator's
action means that KazInvestBank is currently unable to fulfill its
obligations to its counterparties according to the terms of the
respective agreements.



=================
M A C E D O N I A
=================


MACEDONIA: Fitch Affirms 'BB' Long-Term IDRs, Outlook Negative
--------------------------------------------------------------
Fitch Ratings has affirmed Macedonia's Long-Term Foreign and Local
Currency Issuer Default Ratings (IDRs) at 'BB', with Negative
Outlooks. The issue ratings on Macedonia's long-term senior
unsecured foreign and local currency bonds have also been affirmed
at 'BB'. The Country Ceiling has been affirmed at 'BB+' and the
Short-Term Foreign and Local Currency IDRs at 'B'. The senior
unsecured short-term local currency issues have also been affirmed
at 'B'.

KEY RATING DRIVERS

Macedonia's ratings are supported by a track record of credible
monetary and macro-prudential policy that has maintained
longstanding stability of its exchange rate peg. Government
finances also perform marginally better than the median of 'BB'
category peers. However, GDP per capita is below the median of
'BB' category peers, and governance is weak. The Negative Outlook
reflects continued political uncertainty, which the agency
considers an obstacle to effective economic policy making, higher
GDP growth and progress in EU accession.

Macedonia has been operating under a caretaker government since
the resignation of former Prime Minister Nikola Gruevski of the
biggest party in parliament, VMRO-DPMNE, in January 2016. Policy
disagreements between VMRO-DPMNE and ethnic Albanian party, DUI,
meant VMRO-DPMNE (with 51 out of 120 seats) failed to secure a
coalition partner after elections in December 2016. It is unclear
how long the current political hiatus will continue, and how it
will be resolved. In addition, any new government will likely be
unstable, leaving political tensions in Macedonia high.

Macedonia's governance indicators fall in line with the 'BB'
category median. However, 2015's high-level corruption scandal
revealed severe shortcomings in standards of governance on a wide
scale, which led Fitch to downgrade Macedonia's IDRs in August
2016. Official co-operation with the Special Prosecutor, tasked
independently to investigate the 2015 wiretapping scandal, has
been lacklustre after a year. Meanwhile, recent anti-foreign
sentiment by VMRO-DPMNE risks delaying EU accession and damaging
prospects of foreign investment.

Macedonia's economy is estimated by Fitch to have grown 2.6% in
2016. This is below the median 3.1% growth estimate of 'BB'
category peers, but in line with the country's five-year real GDP
average. Domestic demand proved resilient in 2016, led by
household consumption. However, investment activity was weak,
largely reflecting an under-execution of public capital spending.
For 2017, Fitch has maintained its real GDP growth forecast at
3.4%. Fitch projects a continuation in current household demand
and export trends and a strengthening of both public and private
investment. The main risk to Fitch GDP baseline remains the
political environment.

Macedonia's headline fiscal position fares marginally better than
'BB' category peers. For 2016, Fitch estimates a general
government fiscal deficit and debt ratio of 2.7% and 42.3% of GDP,
respectively, compared with the 'BB' median deficit and debt
ratios of 3.3% and 51.1%. For 2017, Fitch projects Macedonia's
fiscal deficit to widen to 3.3% of GDP, compared to the government
budget target of 3% of GDP. Government debt will remain on an
upward trajectory, rising closer to the 'BB' category median.
Fiscal vulnerabilities are also present in the form of increasing
government guarantees to state-owned enterprises, estimated at
9.5% of GDP in 2016, up from 2.5% of GDP in 2008.

Macedonia's external finances have stayed broadly in line with
'BB' category peers. Net external debt to GDP at 28.4% (estimated
2016) is higher than the 'BB' median of 20.2%, but the composition
of debt is judged sustainable, accounted for mainly by the private
sector, where approximately half is inter-company lending. Current
account deficits remain adequately financed by a stable inflow of
net FDI. Meanwhile, strong commitment by the National Bank of
Macedonia (NBRM) and a sufficient level of foreign reserves,
covering 4.2 months of imports (2016), maintain the stability of
the denar-euro peg.

Macedonia's banking sector, which experienced a run on deposits in
April 2016, remains stable and is sufficiently liquid and
capitalised (CAR 3Q16 15.7%). Banks' balance sheets have also
improved since the NBRM's regulation to write off NPLs that are
fully provisioned for more than two years, with NPLs falling to
6.6% at end 2016 from a peak of 12.0% in 2013. Importantly, level
of deposits have recovered above 2015 levels, despite the earlier
bank run, reflecting effective NBRM intervention and policy
making.

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

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

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

- Structural Features: -1 notch, to reflect Fitch's assessment
that the political risks are higher and levels of governance are
weaker than what is captured by the SRM.

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

RATING SENSITIVITIES

The main risk factors that, individually or collectively, could
trigger negative rating action are:

- An escalation in political instability, particularly if it
   leads to a breakdown in ethnic relations or adversely affects
   the economy and public finances.

- Fiscal slippage or the crystallisation of contingent
   liabilities that jeopardise the sustainability of the public
   finances or currency peg.

- A widening of external imbalances that exerts pressure on
   foreign currency reserves and the currency peg.

The main factors that could, individually or collectively, result
in a stabilisation of the Outlook include:

- A marked easing in political tension and uncertainty.

- Implementation of a credible medium-term fiscal consolidation
   programme consistent with a stabilisation of the public
   debt/GDP ratio.

KEY ASSUMPTIONS

Fitch assumes that Macedonia will continue to pursue monetary and
fiscal policy measures consistent with its currency peg to the
euro.

Fitch assumes there is no near-term resolution of the "name issue"
with Greece that could unlock the path towards NATO and EU
accession.



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


MORDOVIA REPUBLIC: Fitch Affirms 'B+' LT IDRs, Outlook Stable
-------------------------------------------------------------
Fitch Ratings has affirmed the Russian Mordovia Republic's Long-
Term Foreign and Local Currency Issuer Default Ratings (IDR) at
'B+' with Stable Outlooks and Short-Term Foreign Currency IDR at
'B'. The republic's National Long-Term Rating has been affirmed at
'A-(rus)' with Stable Outlook and withdrawn.

The republic's senior debt ratings have been affirmed at long-term
local currency 'B+'. The republic's senior debt National Long-Term
Rating has been affirmed at 'A-(rus)' and withdrawn.

The affirmation reflects Fitch's unchanged base line scenario
regarding Mordovia's high direct risk and fragile current balance
leading to weak debt payback metrics.

The National Scale ratings have been withdrawn because Fitch has
withdrawn its Russian National Scale ratings in response to a new
regulatory framework for credit rating agencies in Russia (see
'Fitch Ratings Withdraws National Scale Ratings in the Russian
Federation' dated 23 December 2016).

KEY RATING DRIVERS

The 'B+' ratings reflect Mordovia's volatile operating performance
and high direct risk, resulting from large capital expenditure
that is mitigated by significant exposure to long-term low-cost
budget loans. The ratings also consider Fitch expectations that
the republic will continue to receive support from the federal
government ahead of hosting the world football championship FIFA
2018, while its own financial flexibility will remain weak.

Fitch projects that Mordovia's direct risk will remain high at
130%-140% of current revenue (2016: 121%) as the region will
likely continue to record a deficit before debt variation over the
medium term. Further debt growth would negatively influence the
republic's credit strength.

The republic has low flexibility in expenditure, which is also
fuelled by preparations for FIFA 2018. The national presidential
election in 2018 also could put pressure on operating expenditure.
Fitch projects the deficit will be above 10% of total revenue in
2017-2018 before narrowing moderately to below 10% after 2018 due
to completion of infrastructure projects.

In 2016, Mordovia's direct risk grew to RUB38.6bn from RUB34.7bn
at end-2015 and Fitch expects it could reach RUB42.4bn by end-
2017. In mitigation, 59% of the risk (RUB22.6bn) is budget loans
that the federal government provided to the republic at a
preferential 0.1% interest rate. In addition RUB8.6bn of those
budget loans are long-term and mature between 2023-2034. Fitch
expects that Mordovia will continue to receive support from the
state over the medium term.

Immediate refinancing risk is moderate, as the republic needs to
repay RUB2.7bn (7% of direct risk) of budget loans in 2017. The
republic's refinancing risk is concentrated in 2018-2019 when
RUB22bn or 57% of direct risk will mature. To meet this obligation
Mordovia plans to issue domestic bonds in 2018 and 2019.
Additional funding could come from new loans from domestic banks.

Fitch forecasts Mordovia's operating performance will be stable
over the medium term, with an operating balance at 8%-10% of
operating revenue (pre-closing 2016: 10.7%) and low current
balance at 1%-2% of current revenue due to growing interest
payments. Fitch expects that the republic's tax capacity will
remain modest due to weak tax base and federal transfers will
constitute a significant proportion of Mordovia's budget,
averaging about one-third of revenue annually in 2017-2019.

In 2016, Mordovia's economy was estimated by the republic's
government to have grown 4.6% while the national economy
contracted 0.4% (Fitch's estimate). The growth was supported by a
developing agricultural sector and FIFA championship-related
construction. Nevertheless, Fitch expects that the republic's
wealth metrics will remain low with GRP per capita being 70%-75%
of the national median (2014: 73%).

Russia's institutional framework for sub-nationals is a
constraining factor on the region's ratings. Frequent changes in
the allocation of revenue sources and in the assignment of
expenditure responsibilities between the tiers of government
hampers the forecasting ability of local and regional governments
in Russia. The republic's budgetary performance, in particular, is
reliable on support provided by the state.

RATING SENSITIVITIES

Continuous growth of direct risk towards 150% of current revenue
(2016: 121%), or negative current balance on permanent base, would
lead to a downgrade.

Sustainable narrowing of fiscal deficit leading to debt
stabilisation and strengthening of the debt payback (direct risk
to current balance) towards 20 years (2016: 34 years), could lead
to an upgrade.

KEY ASSUMPTIONS

The republic will continue to have reasonable access to federal
budget loans to enable it to refinance maturing budget loans.


NOVOSIBIRSK CITY: Fitch Affirms 'BB' LT Issuer Default Ratings
--------------------------------------------------------------
Fitch Ratings has affirmed the Russian City of Novosibirsk's Long-
Term Foreign and Local Currency Issuer Default Ratings (IDR) at
'BB' with Stable Outlooks and Short-Term Foreign Currency IDR at
'B'. The city's National Long-Term Rating has been affirmed at
'AA-(rus)' with Stable Outlook and withdrawn.

Novosibirsk's senior debt Long-Term ratings have been affirmed at
'BB'. The city's senior debt National Long-Term Rating has been
affirmed at 'AA-(rus)' and withdrawn.

The affirmation reflects Fitch's unchanged base line scenario that
the city will continue to record a stable positive current balance
and will narrow fiscal deficit, leading to stabilisation of direct
risk over the medium term.

The National Scale ratings are being withdrawn because Fitch has
withdrawn its Russian National Scale ratings in response to a new
regulatory framework for credit rating agencies in Russia.

KEY RATING DRIVERS

The ratings reflect Novosibirsk's moderate direct risk with a
smooth maturity profile, Fitch expectations of a stable operating
margin sufficient to cover interest payment in 2017-2019 and the
city's diversified economy. The ratings also factor in Russia's
weak institutional framework and a sluggish national economic
environment.

In its base case scenario, Fitch expects the city's fiscal
performance to be stable, with an operating margin between 6%-8%
in 2017-2019, which is close to its average 6.8% in 2015-2016.
This will be backed by growth of personal income tax (PIT), which
provides about 70% of the city's tax revenue and cost-efficiency
measures to limit operating expenditure growth below inflation
(Fitch projects a 5.8% consumer price increase for 2017).

According to preliminary data, the city's operating margin
increased to 8.6% in 2016 from 5.0% in 2015. The growth was
partially due to a one-off tranche of current transfer from the
regional budget in December 2016, which was not disbursed during
the financial year. However, the operating margin stayed below a
sound average 11% during 2011-2014. The deterioration was caused
by sharp tax revenue declines due to a 10pp reallocation of PIT to
the regional budget in 2015.

Fitch notes that Novosibirsk's tax-generating capacity remains
limited and its performance is supported by regular transfers from
Novosibirsk Region (BBB-/Stable). Current transfers account for
about 35% of the city's operating revenue. However, they are
largely earmarked for certain expenditure and do not provide much
fiscal flexibility to the city.

Fitch expects the city's direct risk to be about RUB20.1bn by end-
2017 (2016: RUB19.6bn), which will marginally increase in 2018-
2019 driven by a modest fiscal deficit. In relative terms, direct
risk peaked at 59.3% of current revenue in 2016 and Fitch expects
it to decline to 55% over medium term on the back of revenue
growth exceeding nominal debt increase.

Novosibirsk demonstrates sophisticated debt management. Unlike
most Russian peers, the city does not rely on short-term funding.
The city's prime source of borrowing is amortising domestic bond
issues (51% of direct risk as of 1 January 2017) with up to 10-
year maturity followed by revolving lines of credit from local
banks with maturity of up to six years (36% of total direct risk).
This smooths the city's annual refinancing needs.

With a population of over 1.5 million inhabitants, the city is the
capital of Novosibirsk Region and is the largest metropolitan area
of Siberian Federal District. The city's economy is diversified,
with a well-developed processing industry and service sector. The
sound economic performance of local companies supports
Novosibirsk's fiscal capacity, with taxes accounting for 47.5% of
operating revenue in 2016. Fitch forecasts national GDP will start
gradual restoration by 1.3% in 2017 after 0.4% decline in 2016,
which should support the city's economic and budgetary
performance.

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

RATING SENSITIVITIES

Restoration of the operating margin sustainably above 10% and
maintaining direct risk below 60% of current revenue with a debt
maturity profile corresponding to the debt payback ratio could
lead to an upgrade.

Deterioration of the budgetary performance, leading to an
inability to cover interest expenditure with operating balance,
and direct risk increasing to above 70% of current revenue would
lead to a downgrade.


ORENBURG REGION: Fitch Affirms 'BB' LT Issuer Default Ratings
-------------------------------------------------------------
Fitch Ratings has affirmed the Russian Orenburg Region's Long-Term
Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB'
with Stable Outlooks and Short-Term Foreign Currency IDR at 'B'.
The region's National Long-Term rating has been affirmed at 'AA-
(rus)' with a Stable Outlook and withdrawn.

The region's senior debt long-term rating has been affirmed at
'BB'. The region's senior debt National long-term rating has been
affirmed at 'AA-(rus)' and withdrawn.

The affirmation and Stable Outlook reflect Fitch's unchanged base
case scenario regarding the region's stable operating performance
and debt metrics over the medium-term.

The National-scale rating is being withdrawn because Fitch has
withdrawn its Russian National-scale ratings in response to a new
regulatory framework for credit rating agencies in Russia (see
"Fitch Withdraws National Scale Ratings in the Russian Federation"
dated 23 December 2016).

KEY RATING DRIVERS

The 'BB' rating reflects the region's moderate direct risk with
limited exposure to refinancing risk, low contingent liabilities
and improved fiscal performance. The ratings also take into
account the concentration of the region's tax base in oil and gas
companies as well as a weak institutional framework for Russian
sub-nationals.

Fitch expects the region will continue to demonstrate stable
fiscal performance over the medium-term with an operating margin
of above 10%. This will be supported by continuous control over
operating spending and moderate expansion of the tax base. Fitch
projects that the administration will keep the deficit before debt
at about 3% of total revenue in 2017-2019.

In 2016, the operating margin increased to 15% from 10% in
2014-2015 as the region cut operating spending by almost 12% yoy.
The region's total tax revenue remained almost unchanged in 2014-
2016. This is because growth of most taxes was offset by declining
corporate income tax revenue, which is the largest tax contributor
to the regional budget. The latter has been negatively affected by
adverse trends on the international oil and gas markets. Deficit
before debt variation was at 0.6% of total revenue in 2016 - the
smallest since 2011, allowing Orenburg to curb debt growth.

Fitch assumes the region will maintain healthy debt metrics with
direct risk not exceeding 45% of current revenue in 2017-2019. In
2016, direct risk accounted for 39%, slightly up from 36% the year
before. The debt structure remained almost unchanged, though the
proportion of subsidised budget loans increased to 51% in 2016
from 44% in 2015. Issued debt made up 43% of direct risk while
bank loans represented 6% as of 1 January 2017.

The region's maturity profile is longer than for most Russian
peers, limiting immediate refinancing pressure. The weighted
average maturity of the region's direct risk was 5.4 years as of 1
January 2017, longer than the region's debt payback ratio (direct
risk-to-current balance) of three years.

The region managed to reduce interest spending in 2016 to RUB1.6
billion from RUB1.8 billion in 2015 by increasing the share of
subsidised budget loans in its portfolio and effectively managing
cash mismatches. To cover intra-year cash gaps the region used
short-term federal treasury loans provided at 0.1% annual interest
rate with a maturity up to 50 days.

In 2017, the region has to redeem RUB2.1 billion of amortising
domestic bonds and RUB2.7 billion of budget loans, together
representing 18% of the region's total direct risk. The
administration is planning the issue of a RUB4 billion domestic
bond in 2017 with a maturity up to 10 years and has already agreed
with the federal government for an additional RUB1.7 billion
budget loan. The region's untapped credit lines amounted to RUB3.2
billion as of 1 January 2017.

The region's contingent risk is low. On 7 February 2017 JSC
Orenburg Housing Mortgage Corporation redeemed the residual part
of its RUB1 billion domestic bond, which was guaranteed by the
region. This led to a further reduction of the region's contingent
liabilities, which now represent less than 2% of operating
revenue.

Orenburg's economy is dominated by oil and gas companies, which
provide a sustainable tax base. However, the concentration in one
particular sector exposes the region to potential changes in the
fiscal regime, business cycles or price fluctuations. According to
the administration's estimates the regional economy contracted
0.9% yoy in 2016, which is broadly in line with national
contraction of 0.4%. For the medium-term the administration
projects modest regional growth of 1%-2% per annum.

The region's credit profile is constrained by the evolving nature
of Russia's institutional framework for local and regional
governments (LRGs). It has a short track record of stable
development compared with many of its international peers. The
unstable intergovernmental set-up reduces the predictability of
LRGs' budgetary policies and hampers Orenburg's forecasting
ability.

RATING SENSITIVITIES

The ratings could be positively affected by a sustained debt
payback ratio of below four years and direct risk remaining below
40% of current revenue.

The ratings could be negatively affected by consistently weaker
budgetary performance with an operating margin below 5% and direct
risk increasing above 60% of current revenue.


RUSSIA: Moody's Revises Outlook on Ba1 Rating to Stable
-------------------------------------------------------
Moody's Investors Service has changed the outlook on Russia's Ba1
government bond rating to stable from negative. Moody's also
affirmed Russia's government bond rating and issuer rating at Ba1
and the short term rating at Not Prime (NP).

RATINGS RATIONALE

The main driver for changing the outlook on Russia's Ba1
government bond rating to stable from negative is the government's
enactment of a medium-term fiscal consolidation strategy that is
expected both to lower the government's dependence on oil and gas
revenues and to permit the gradual replenishment of its savings
buffers. In addition, the Russian economy is now recovering after
a nearly two-year-long recession. Moody's believes that, when
combined, those two factors have eased the downside risks the
rating agency had identified last year when it assigned the
negative outlook.

The rationale for affirming Russia's government rating at Ba1
balances the country's inherent credit strengths, notably the
economy's sheer scale and wealth as well as its healthy fiscal and
external positions, against limited economic growth potential. In
that regard, the government has not yet implemented a long-
promised set of structural reforms, a delay that deters investment
and subdues economic activity. Russia's high susceptibility to
geopolitical risk, with associated spillover to volatility in the
real economy and financial markets, and relatively weak
institutions also constrain its sovereign rating.

Russia's country ceilings remain unchanged at Ba1/NP (foreign
currency bonds), Ba2/NP (foreign currency bank deposits) and Baa3
(long-term local currency debt and deposits).

RATIONALE FOR CHANGING THE OUTLOOK TO STABLE FROM NEGATIVE

In April 2016, Moody's confirmed Russia's Ba1 rating but assigned
a negative outlook to reflect the risk of further erosion of the
government's fiscal savings in the context of a lower oil price
environment. While there has indeed been some erosion of buffers
in the meantime and the government's fiscal performance has fallen
short of its own expectations, Moody's now believes that the
downside risks identified in April 2016 have diminished to a level
consistent with a stable outlook. The stabilization of the rating
outlook partly reflects external events, and in particular the
increase in oil prices to a level consistent with the government's
budget assumptions. The stable outlook also reflects the plans the
government has put in place to consolidate its finances over the
medium term, and the slow recovery in the economy following almost
two years of recession.

FIRST DRIVER: NEW MULTI-YEAR FISCAL STRATEGY IS MORE LIKELY TO
CONTAIN DEBT AND PRESERVE GOVERNMENT SAVINGS

The resurrection of the three-year framework for the federal
government budget at the end of last year -- the first medium-term
fiscal plan since the oil price collapse rendered the 2015-17
program unrealistic -- reflects an ambitious fiscal consolidation
strategy incorporating conservative spending and revenue
assumptions. The deficit-to-GDP ratio is forecast to narrow by
roughly one percentage point per year between 2017 and 2019, which
would contain the growth in government debt. Whereas Moody's did
not view the 2016 budget deficit goal as realistic because of the
government's assumptions regarding oil prices relative to its own
projections at the time, Moody's believes that these new
consolidation targets are achievable in large part because the
government's oil price and revenue assumptions are sufficiently
conservative.

Importantly, the government's conservative assumptions increase
the likelihood that its fiscal buffers will be preserved going
forward, in contrast to the trend expected one year ago when the
negative outlook was assigned. The government has stated that it
will spend only what was planned in its 2017 budget even though
oil prices are higher than the $40/barrel assumed in the budget.
In February, the authorities started buying foreign exchange with
the "excess" rubles received in oil revenues above that price and
are placing the money into deposits at the central bank, which
could be used for deficit financing instead of or in addition to
its existing foreign currency deposits in the Reserve Fund at the
central bank. Should oil prices fall below $40/barrel, the
government would use the savings accumulated in this way to fill
its revenue shortfall.

SECOND DRIVER: MACRO-ECONOMIC CONDITIONS ARE STABILIZING

The heightened vulnerability to shocks associated with further
delays in economic recovery have also eased. The Russian economy
is now on the mend after emerging from a two-year recession in the
fourth quarter of 2016. The floating exchange rate has proven to
be an effective shock absorber over the last two years, cushioning
the impact of the terms of trade decline on the economy --
particularly for commodity exporters and the federal government,
which still gets roughly 36% of its revenue from oil and gas
taxes. The currency has traded within a relatively narrow range
after its initial fall in late 2014/early 2015, which together
with tight monetary policy is helping to move inflation ever
closer to the Bank of Russia's 4% target. The stability of the
strong external position looks increasingly assured because the
current account balance is smaller but remains in surplus, capital
flight is nearly nonexistent and net external debt payments are
low although international sanctions remain in place.

Despite the turnaround, Russia's growth potential remains quite
weak compared to other countries with similar income levels, a
factor that continues to weigh on the rating. Recent revisions to
the national accounts data suggest that the 2015-16 recession was
shallower than previously thought, with a contraction of 2.8% in
2015 instead of the previously estimated 3.7% and a modest 0.2%
fall in real GDP last year, against Moody's expectations of a
contraction closer to 1%. These statistics indicate that the
economy's output gap is similarly lower than previously estimated,
implying that the recovery will be mild compared to the rebound
after the global financial crisis. In the absence of structural
reforms that address high poverty levels, the declining working
age population and the multitude of factors that constrain
investment, the rating agency expects potential growth will remain
at 1.5%-2%.

RATIONALE FOR AFFIRMING RUSSIA'S Ba1 RATING

FIRST DRIVER: LARGE AND RELATIVELY WEALTHY ECONOMY WITH VERY
STRONG DEBT METRICS

Russia's fundamental credit strengths include its large size and
comparative wealth as well as its strong public and external
finances. Even after the steep depreciation of the ruble cut the
size of the economy by 40% in dollar terms, Russia is the 13th
largest economy in the world and the fifth largest in Europe. At
$25,965 in 2015, its GDP per capita in purchasing power parity
(PPP) terms, which is a proxy for the average wealth of its
citizens, came to well above the global median of $18,276 and
exceeded the median for either Ba- or even Baa-rated countries.

The Russian government's debt is low at 16.1% of GDP at the end of
2016, and its debt affordability is strong. The growth in the
debt-to-GDP ratio is expected to be contained thanks to the fiscal
consolidation plan for 2017-19, and reserve assets would be
gradually replenished if the government maintains its policy of
reducing its dependence on oil and gas receipts. The Bank of
Russia's substantial foreign currency reserves, which include the
government's remaining liquid foreign currency deposits, provide
ample cover for external payment obligations. Russia's net
international investment position (NIIP) is in surplus, a position
that improved further to about 25% of GDP in 2015 from 15% of GDP
in 2014 due primarily to the revaluation of foreign assets after
the depreciation of the ruble. Among 'Baa-Ba'-rated sovereigns,
Russia and only three other countries have positive NIIPs.

SECOND DRIVER: HIGH GEOPOLITICAL RISKS AND INSTITUTIONAL
WEAKNESSES ARE FUNDAMENTAL RATING CONSTRAINTS

Despite its fiscal and external strengths, Russia's significant
geopolitical risks continue to weigh on the country's
creditworthiness, notably the ongoing conflict and territorial
disputes in Ukraine, which suggest that a restoration of Ukraine's
territorial integrity will be very difficult to achieve and which
led to international financial sanctions, but also Russia's
heightened involvement in Middle East conflicts such as in Syria.

The strength of Russia's institutions is assessed at 'low' in
Moody's ratings methodology. The Worldwide Governance Indicators
(WGIs) for Russia show a relatively weak standing in comparison to
other Moody's-rated sovereigns, with two key indicators in the
lowest quintile of all the countries in Moody's sovereign rating
universe, i.e. for rule of law (16th percentile) -- which in
Moody's views speaks particularly to property rights -- and for
perceptions of corruption (13th percentile). The overall WGI
scores compare unfavorably even to Ba-rated peers or to countries
with the 'low' institutional strength assessment, except for
government effectiveness. Notably, 2015 data shows a deterioration
in all WGIs, which is likely explained by the consequences of the
Ukraine crisis. Business uncertainty stemming from the weak rule
of law and the high level of corruption remains a deterrent for
investment in the country.

WHAT WOULD CHANGE THE RATING -- UP/DOWN

Russia's rating would come under upward pressure if the government
were to enact reforms that would sustainably address the
underlying sources of economic and fiscal vulnerability, and
thereby raise the economy's growth potential. In this regard,
reforms discussed by policymakers include reducing the country's
dependence on the volatile oil and gas sector, lowering the
structural deficit of the pension system and improving the
investment climate through corporate tax reforms.

We would downgrade Russia's Ba1 rating if Moody's concluded that
the country's credit metrics had deteriorated to the extent that
its capacity to absorb another oil price shock or other shocks
were materially diminished. Indicators that might lead us to
anticipate such an erosion in creditworthiness would include an
exhaustion of fiscal savings or a material reduction in foreign
currency reserves, sharply rising yields on government debt or
deficits large enough to require monetization by the central bank.
Stress in the banking system would also contribute to downward
pressure on Russia's rating because the government needs a stable
source of domestic financing in order to fund its budget deficits,
especially in the context of ongoing international sanctions.
Finally, deterioration in the domestic or regional political
environment that resulted in an expansion of existing sanctions or
spurred capital flight would also be credit negative.

GDP per capita (PPP basis, US$): 25,965 (2015 Actual) (also known
as Per Capita Income)

Real GDP growth (% change): -2.8% (2015 Actual) (also known as GDP
Growth)

Inflation Rate (CPI, % change Dec/Dec): 12.9% (2015 Actual)

Gen. Gov. Financial Balance/GDP: -3.4% (2015 Actual) (also known
as Fiscal Balance)

Current Account Balance/GDP: 5.1% (2015 Actual) (also known as
External Balance)

External debt/GDP: 38.0% (2015 Actual)

Level of economic development: Moderate level of economic
resilience

Default history: At least one default event (on bonds and/or
loans) has been recorded since 1983.

On February 14, 2017, a rating committee was called to discuss the
rating of the Russia, Government of. The main points raised during
the discussion were: The issuer's economic fundamentals have
improved, reflected by the Russian economy's emergence from
recession. The issuer's fiscal or financial strength, including
its debt profile, has strengthened, following the resurrection of
the medium-term fiscal strategy and implementation of conservative
revenue assumptions.

The principal methodology used in these ratings was Sovereign Bond
Ratings published in December 2016.

The weighting of all rating factors is described in the
methodology used in this credit rating action, if applicable.


TOMSK CITY: Fitch Affirms 'BB' LT Foreign & Local Currency IDRs
---------------------------------------------------------------
Fitch Ratings has affirmed the Russian City of Tomsk's Long-Term
Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB'
with Stable Outlooks and Short-Term Foreign Currency IDR at 'B'.
The city's National Long-Term rating has been affirmed at 'AA-
(rus)' with a Stable Outlook and withdrawn.

The city's senior debt long-term rating has been affirmed at 'BB'.
The city's senior debt National long-term rating has been affirmed
at 'AA-(rus)' and withdrawn.

The affirmation reflects Fitch's unchanged base case scenario
regarding Tomsk's adequate fiscal performance and moderate debt
over the medium term.

The National-scale rating is being withdrawn because Fitch has
withdrawn its Russian National-scale ratings in response to a new
regulatory framework for credit rating agencies in Russia.

KEY RATING DRIVERS

The 'BB' ratings reflect the city's satisfactory budgetary
performance with a sustainable current balance and moderate
deficit before debt variation, which is supported by a diversified
local economy and steady transfers from the Tomsk region. The
ratings also factor in the city's moderate debt and a weak
institutional framework for Russian sub-nationals.

Fitch projects Tomsk's operating balance to stabilise at 6%-7% of
operating revenue in 2017-2019, which is close to its average
level in 2015-2016 of 7.8%. This will be supported by gradual
growth of personal income tax, which provides more than 50% of the
city's tax revenues, and higher personal property taxes resulting
from a growing tax base and ceased tax privileges for certain
categories of taxpayers.

Tomsk's tax-generating capacity, however, remains limited and
revenues are supported by regular transfers from Tomsk region.
Current transfers account for about half of the city's operating
revenue. However, they are largely earmarked for certain
expenditures and, hence, do not provide much fiscal flexibility to
the city.

Fitch projects the city will record a moderate deficit before debt
of about 3% of total revenue in 2017-2019. In 2016, the deficit
narrowed to a low RUB215 million, or 1.6% of total revenue, from
5.3% in 2015, despite capex increasing to 23% of total expenditure
(2015: 17%). The smaller deficit resulted from operating
expenditure restraint and a higher reliance on capital transfers,
which funded 65% of capex in 2016 (average in 2013-2015: 42%).
Fitch expects the city will continue this prudent policy over the
medium term.

Fitch forecasts Tomsk's direct risk to remain below 40% of current
revenue in 2017-2019 (2016: 31%) on the back of a moderate
deficit. Contingent risk is likely to remain low as the city does
not have outstanding guarantees and its public sector is small and
mostly self-sufficient. In 2016, Tomsk's debt grew by a marginal
RUB131 million to RUB3.6 billion. As of 1 February 2017 the city's
debt comprised 48% bonds and 52% bank loans.

Fitch assesses the city's refinancing risk as moderate, as its
debt repayments are spread between 2017 and 2021. At end-2016,
Tomsk issued RUB1 billion bonds with a five-year maturity, which
somewhat reduced its refinancing pressure. In 2017, the city needs
to repay RUB839 million, or 26% of its outstanding debt as of 1
February 2017. These funding needs are sufficiently covered by
RUB1.3 billion undrawn credit lines, which are available to the
city on first demand.

Tomsk has a well-diversified service-oriented economy, dominated
by academic and research educational institutions. The tax
concentration of the city's revenue is low, with the top 10
taxpayers representing less than 10% (2015: 13%) of total tax
revenue in 2016. Fitch forecasts national GDP will rebound 1.3% in
2017 after a 0.4% decline in 2016, which should support the city's
economic and budgetary performance.

The City of Tomsk's credit profile remains constrained by the weak
institutional framework for local and regional governments (LRGs)
in Russia, which has a shorter record of stable development than
many of its international peers. The predictability of budgetary
policy and forecasting ability are hampered by the frequent
changes in the allocation of revenue sources and in the assignment
of expenditure responsibilities between the tiers of government.

RATING SENSITIVITIES

Direct risk increasing to above 50% of current revenue, coupled
with growing refinancing pressure, could lead to a downgrade.

Improvement of the operating balance to 12%-14% of operating
revenue, coupled with maintenance of healthy debt metrics, could
lead to an upgrade.



=========
S P A I N
=========


AYT 11: S&P Affirms 'B' Rating on Class B Notes
-----------------------------------------------
S&P Global Ratings raised to 'AA+ (sf)' from 'A- (sf)' its credit
rating on AyT 11 Fondo de Titulizacion Hipotecaria's class A
notes.  At the same time, S&P has affirmed its 'B (sf)' rating on
the class B notes.

The ratings actions follow S&P's credit and cash flow analysis of
the most recent transaction information that S&P has received and
reflect the transaction's structural features, and the application
of S&P's relevant criteria.

S&P has also considered the Jan. 29, 2016 transaction account
provider replacement, to BNP Paribas Securities Services (Madrid
Branch) (A/Stable/A-1) from Barclays Bank PLC (Madrid Branch),
which was not reported to S&P at the time and consequently S&P had
not yet taken into account.

Long-term delinquencies (defined in this transaction as loans in
arrears for more than 90 days, excluding defaults) have decreased
to 0.93% from 1.05% since S&P's previous full review in March
2015.  However, S&P has continued to observe a continuous roll-
over of long-term delinquencies into defaults since Q1 2015, but
this is mainly due to the transaction's low pool factor.  Defaults
in this transaction are defined as assets being delinquent for
more than 18 months or classified as defaulted by the trustee.

In S&P's opinion, the outlook for the Spanish residential mortgage
and real estate market is not benign and S&P has therefore
increased its expected 'B' foreclosure frequency assumption to
3.33% from 2.00%, when S&P applies its European residential loans
criteria, to reflect this view.  S&P bases these assumptions on
its expectation that economic growth will mildly deteriorate,
unemployment will remain high, and the increase in house prices
will slow down in 2017.

S&P's credit analysis results show a decrease in both the
weighted-average foreclosure frequency (WAFF) and weighted-average
loss severity (WALS) for each rating level based on the higher
seasoning of the pool, the transaction's improved performance, and
the lower current loan-to-value (LTV) ratios.

Rating level     WAFF (%)    WALS (%)
AAA                 17.16        9.30
AA                  12.71        7.53
A                   10.21        4.27
BBB                  7.53        3.70
BB                   4.77        2.02
B                    3.92        2.00

Credit enhancement, if S&P accounts for the level of available
performing collateral and cash reserve in the transaction, has
increased to 30.41% from 23.31% since S&P's previous review for
the class A notes and to 4.98% from 4.91% for the class B notes.

In line with S&P's current counterparty criteria, it has not given
benefit to the swap counterparty in S&P's analysis at rating
levels above S&P's long-term 'BBB' issuer credit rating (ICR) on
Cecabank S.A. because it did not take remedy actions when due.
Due to the credit enhancement levels and credit quality of the
assets, the class A notes can continue to be delinked from S&P's
rating on Cecabank. However, the class B notes continue to rely on
the support of the swap.

At S&P's previous review, its rating on the class A notes was
linked to S&P's ICR on Barclays Bank (Madrid Branch), as the
transaction account provider, as it had not been substituted after
having been downgraded.  Following the Jan. 29, 2016 replacement,
our rating on this class of notes is no longer linked to the ICR
on the transaction account provider as it is now in line with
S&P's current counterparty criteria.

Under S&P's structured finance ratings above the sovereign
criteria (RAS criteria), S&P applied a hypothetical sovereign
default stress test to determine whether a tranche has sufficient
credit and structural support to withstand a sovereign default and
so repay timely interest and principal by legal final maturity.

Following the application of S&P's relevant criteria, it has
determined that its assigned rating on each class of notes in this
transaction should be the lower of (i) the rating as capped by
S&P's RAS criteria and (ii) the rating that the class of notes can
attain under S&P's European residential loans criteria.  In this
transaction, the rating on the class A notes is constrained by
S&P's RAS criteria at six notches above S&P's 'BBB+' foreign
currency long-term sovereign rating on Spain.

Taking into account the results of S&P's credit and cash flow
analysis, the application of its criteria, and the transaction
account provider substitution, S&P considers that the available
credit enhancement for the class A notes is commensurate with a
'AA+ (sf)' rating.  S&P has therefore raised to 'AA+ (sf)' from
'A- (sf)' its rating on the class A notes.

S&P's analysis also indicates that the available credit
enhancement for the class B notes is commensurate with the
currently assigned rating.  S&P has therefore affirmed its 'B
(sf)' rating on the class B notes.

AyT 11 is a Spanish residential mortgage-back securities (RMBS)
transaction, which closed in November 2002 and securitizes first-
ranking mortgage loans.  Caixa d'Estalvis de Tarragona (now
Catalunya Banc S.A.), Caja General de Ahorros de Granada (now
Banco Mare Nostrum S.A.), Caja Vital Kutxa (now Kutxabank S.A.),
and Credifimo, E.F.C., S.A.U. originated the pool, which comprises
loans granted to prime borrowers, mainly located in Andalusia.

RATINGS LIST

AyT 11 Fondo de Titulizacion Hipotecaria
EUR403 Million Mortgage-Backed Floating-Rate Notes

Class             Rating
            To               From

Rating Raised

A           AA+ (sf)         A- (sf)

Rating Affirmed

B           B (sf)


POPULAR CAPITAL: DBRS Cuts Preferred Shared Ratings to 'BB'
-----------------------------------------------------------
DBRS Ratings Limited downgraded Banco Popular Espanol, S.A.'s
(Popular or the Bank) ratings including its Senior Unsecured Long-
Term Debt & Deposit rating to BBB from BBB (high), its Short-Term
Debt & Deposits rating to R-2 (high) from R-1 (low) and its
Subordinated Debt rating to BBB (low) from BBB. The Trend on the
Senior and Short-Term Debt & Deposits has been changed to Negative
from Stable. Popular's subordinated debt remains Under review with
Negative Implications (URN) (see DBRS Places Certain Sub Debt of
27 European Banking Groups Under Review With Negative
Implications). DBRS has also downgraded the Long Term Critical
Obligations Rating (COR) to A (low) with a Negative Trend and
confirmed the Short Term COR at R-1 (low) with Stable Trend.

The downgrade of the Senior Unsecured Long-Term Debt & Deposit
ratings reflects DBRS's concerns over Popular's weakened capital
position following a higher than anticipated net loss of EUR3.5
billion in 2016, which was announced on February 3, 2017. As a
result, the Bank's fully loaded Common Equity Tier 1 (CET1) ratio
deteriorated to 8.17% at end-2016 from 10.9% at end-2015, in spite
of the EUR2.5 billion capital increase completed in April 2016.
The current level of capital is well below DBRS's expectations and
compares unfavorably with similarly rated European and domestic
peers. The downgrade also reflects the continued challenges that
the Bank is facing that were evident in the Bank's results,
particularly the Bank's struggle to materially reduce its still
elevated stock of non-performing assets (NPA) as indicated by the
slow pace of NPA reduction in 2016. At end-2016, the Bank had NPAs
of around EUR 35 billion, representing around 29% of total gross
loans and foreclosed assets.

The Negative Trend reflects DBRS's view that, given its weakened
capital position, the Bank has less flexibility to carry out its
ambitious plan to clean-up EUR 15 billion of NPAs by end-2018, as
well as its reduced capacity to cope with any potential further
weakening in asset quality. In addition, DBRS also considers that
Popular has less capacity to improve its capital position and
address adverse events through capital gains, which have supported
profits in the past. This weakness constrains the Bank's ability
to cope with the pressure on earnings arising from the very low
interest rate environment and from regulation.

DBRS, however, recognises the good progress of the Bank's
restructuring initiatives, such as the completion of an employee
restructuring involving the lay-off of around 2,900 employees in
less than three months. Translating these expense and other saves
into increased income before provision and taxes could make an
important contribution to improving the Bank's earnings. DBRS
notes that the Bank is making significant changes to its
management, with a new Chairman arriving soon, which is
anticipated to be positive for the Bank, but introduces some near
term uncertainty. The agency will continue to monitor any
potential developments at the Bank as a result of this new
appointment. Popular's ratings continued to be supported by the
Bank's SME franchise strength in Spain, where it has significant
market shares in total customer loans and retail deposits as the
sixth largest bank by assets at end-2016. The ratings also take
into account that, despite the significant weakening of its CET1
(fully loaded) capital ratio which becomes applicable in 2018,
Popular's CET1 ratio (phased-in) was 12.12% at end-2016, around
424 bps above its current minimum 2017 SREP requirement.

Popular reported a net attributable loss of EUR 3.5 billion in
2016, compared to a profit of EUR 105 million in 2015. These
results were primarily due to EUR 5.7 billion of provisions that
included EUR 4.2 billion of additional provisions to reinforce
coverage levels of NPAs to around 46% (from 39% at end-2015) and
around EUR 229 million of provisions booked in 4Q16 to cover the
cost of full retroactivity for affected customers with interest
rate floor clauses (for more information, please see: DBRS: Law on
Mortgage Floors Facilitates Customer Claims but Timing for Process
Completion not yet Certain). The decline in the fully loaded CET1
ratio was primarily due to the Bank's net losses in the year and
other items, such as the treatment of deferred tax assets (DTAs)
and the deduction of unrealised losses in its available-for-sale
portfolio.

At the same time, DBRS has discontinued the Senior Unsecured Long-
Term Debt of Popular's subsidiary BPE Finance International Ltd,
as all debt has been repaid and the entity has been liquidated.

RATING DRIVERS:

Upward pressure on the rating is unlikely in the near-to-medium-
term, as DBRS expects that it will take time for Popular to
significantly strengthen its capital position and successfully
execute the announced planned NPA reduction. A return to solid and
sustainable earnings would also be required for any upward
pressure to materialise. But a meaningful improvement in the
capital position could lead to a stabilization of the ratings at
their current level.

Negative ratings pressure would arise if DBRS sees further notable
deterioration in asset quality metrics, or if the Bank does not
demonstrate a sustain QoQ improvement of internal capital
generation. Negative rating pressure could also arise if Popular
does not achieve a gradual reduction of NPAs, especially if this
were in conjunction with any perceived weakening of the franchise.

The ratings are:

Debt Rated                Rating     Rating Trend Notes
                            Action

Issuer: Banco Popular Espanol S.A.

Senior Unsecured Long-Term
Debt & Deposit              Downgraded  BBB          Neg

Short-Term Debt & Deposit   Downgraded  R-2 (high)   Neg

Long Term Critical
Obligations Rating          Downgraded  A (low)     Neg

Short Term Critical
Obligations Rating          Confirmed   R-1 (low)    Stb

Subordinated Debt           Downgraded  BBB (low)    --

Subordinated Debt          UR-Neg.     BBB (low)    --

Issuer: Popular Capital S.A.

Preferred Shares            Downgraded  BB           Neg

Issuer: BPE Financiaciones, S.A.

Senior Unsecured Long-Term Debt Downgraded   BBB       Neg
Subordinated Debt              Downgraded   BBB(low)  --
Subordinated Debt              UR-Neg.      BBB(low)  --

Issuer: Banco Pastor, S.A.

Senior Unsecured Long-Term
Debt & Deposit              Downgraded       BBB        Neg

Short-Term Debt & Deposit   Downgraded       R-2 (high) Neg

Long Term Critical
Obligations Rating          Downgraded       A (low)    Neg

Short Term Critical
Obligations Rating          Confirmed        R-1 (low)  Stb

Issuer: Banco Popular Portugal S.A.

Senior Unsecured Long-Term
Debt & Deposit              Downgraded       BB (high)  Neg
Short-Term Debt & Deposit   Downgraded       R-3        Neg

Issuer: BPE Finance International Ltd.

Senior Unsecured Long-Term
Debt                      Disc.-W/drwn     Discontinued --



=============
U K R A I N E
=============


LEX HOLDING: Holosiyivsky Court Seizes Shopping Mall
----------------------------------------------------
UNIAN reports that Kyiv's Karavan shopping mall has been seized
for debts under a ruling of the city's Holosiyivsky district
court.

"[This order has been issued] to place a non-residential building
-- a shopping and entertainment mall located at 12 Luhova Street,
Kyiv, under arrest along with a commercial and office building
located at 12 Luhova Street, Kyiv, being owned by PJSC Lex
Holding," UNIAN quotes the court as saying in a statement.

It said that an investigator of National Police's Kyiv main
department had requested that the court seize the Karavan shopping
mall with an area of 46,700 sq. m., and a commercial and office
building whose area is 10,500 sq.m., UNIAN relates.

As the statement said, Lex Holding "by deception and abuse of
confidence" borrowed a loan from VTB Bank, UNIAN notes.  After
that Lex Holding initiated the bankruptcy procedure, attempting to
withdraw property put up as collateral and mortgage, which caused
a US$73.9 million in damage to the bank, UNIAN discloses.



===========================
U N I T E D   K I N G D O M
===========================


ALLERTONS: Sold Out Of Liquidation, 11 Jobs Saved
-------------------------------------------------
Business Desk reports Allertons, a Leeds hair and beauty salon,
has been sold to its former management team, saving all 11 jobs.

The unisex hairdressing business, which also offered beauty
treatments, massage, makeup and fragrances has been acquired by
managing director Nicholas Nicola and the rest of the management
team, according to Business Desk.

Insolvency specialists Wilson Field was appointed to Allertons,
based at The Light on the Headrow in Leeds, on January 19, 2017.

The report notes that joint liquidators Kelly Burton and Lisa Hogg
said the salon had experienced a difficult trading period after
spiraling costs and lack of space meant they had to restructure.

The report relays Kelly Burton, associate director and insolvency
practitioner at Wilson Field in Leeds, said: "The company ran into
financial difficulties initially after spiraling costs.

"The company has now moved into The Queens Arcade in Leeds with
the same team. It is always satisfying when a well-known and
established business can be saved. From what was a difficult
situation has emerged a good result."

The report notes the total value of the deal is undisclosed but
includes the business and the assets of the company which has been
operating since May 2014.

Allertons managing director Nicholas Nicola said: "This has been a
difficult period but I am pleased with the outcome.

"All staff jobs have been retained. We are now looking forward to
a bright future with the same team, the same high quality products
and continuing our high standard of service to our loyal
customers.

"Effective teamwork between all parties has turned this deal
around very quickly and it is gratifying that as an established
local business, we can continue to trade."


FINSBURY SQUARE 2017-1: Moody's Gives (P)Caa3 Rating to X Notes
---------------------------------------------------------------
Moody's Investors Service has assigned provisional long-term
credit ratings to the Notes to be issued by Finsbury Square
2017-1:

-- GBP[]M Class A Mortgage Backed Floating Rate Notes due March
    2059, Assigned (P)Aaa (sf)

-- GBP[]M Class B Mortgage Backed Floating Rate Notes due March
    2059, Assigned (P)Aa1 (sf)

-- GBP[]M Class C Mortgage Backed Floating Rate Notes due March
    2059, Assigned (P)A2 (sf)

-- GBP[]M Class D Mortgage Backed Floating Rate Notes due March
    2059, Assigned (P)Ba2 (sf)

-- GBP[]M Class X Floating Rate Notes due March 2059, Assigned
    (P)Caa3 (sf)

Moody's has not assigned ratings to the GBP[]M Class Z notes.

The portfolio backing this transaction consists of UK prime
residential loans originated by Kensington Mortgage Company
Limited ("KMC", not rated).

Approximately 83.9% of the provisional pool have been originated
between June and November 2016. Around 16.1% of the provisional
portfolio (approximately GBP 55.3 million) are loans from the pool
backing transaction Gemgarto 2012-1 Plc. These loans will be sold
to the Issuer once the Gemgarto transaction has been called, after
closing and before the first interest payment date. Approximately
23% of the final portfolio will be loans originated in December
2016 and January 2017. These loans will be also pre-funded and
sold to the Issuer after closing and before the first interest
payment date.

RATINGS RATIONALE

The ratings of the notes take into account, among other factors:
(1) the performance of the previous transactions launched by KMC;
(2) the credit quality of the underlying mortgage loan pool, (3)
legal considerations and (4) the initial credit enhancement
provided to the senior notes by the junior notes and the reserve
fund.

-- Expected Loss and MILAN CE Analysis

Moody's determined the MILAN credit enhancement (MILAN CE) and the
portfolio's expected loss (EL) based on the pool's credit quality.
The MILAN CE reflects the loss Moody's expects the portfolio to
suffer in the event of a severe recession scenario. The expected
portfolio loss of [2.2]% and the MILAN CE of [12]% serve as input
parameters for Moody's cash flow model and tranching model, which
is based on a probabilistic lognormal distribution.

Portfolio expected loss of [2.2]%: this is higher than the UK
Prime RMBS sector average of ca. 1.1% and was evaluated by
assessing the originator's limited historical performance data and
benchmarking with other UK prime RMBS transactions. It also takes
into account Moody's stable UK Prime RMBS outlook and the UK
economic environment.

MILAN CE of [12]%: this is higher than the UK Prime RMBS sector
average of ca. 8.7% and follows Moody's assessment of the loan-by-
loan information taking into account the historical performance
available and the following key drivers: (i) although Moody's have
classified the loans as prime, it believes that borrowers in the
portfolio often have characteristics which could lead to them
being declined from a high street lender; (ii) the weighted
average CLTV of [72.2]%, (iii) the very low seasoning of [1.0]
years, (iv) the proportion of interest-only loans ([16.5]%); (v)
the proportion of buy-to-let loans ([15.2]%); and (vi) the absence
of any right-to-buy, shared equity, fast track or self-certified
loans.

-- Transaction structure

At closing the mortgage pool balance will consist of GBP []
million of loans. The General Reserve Fund will be equal to 2.0%
of the principal amount outstanding of Class A to D notes. This
amount will only be available to pay senior expenses, Class A,
Class B and Class C notes interest and to cover losses. The
Reserve Fund will be not amortising as long as the Class C notes
are outstanding. After Class C has been fully amortised, the
Reserve Fund will be equal to 0%. The Reserve fund will be
released to the revenue waterfall on the final legal maturity or
after the full repayment of Class C notes. If the Reserve fund is
less than 1.5% of the principal outstanding of class A to D, a
liquidity reserve fund will be funded with principal proceeds up
to an amount equal to 2% of the Classes A and B.

An additional 1% of class A to D initial balance will be funded on
the Issue Date and will be available in the priority of payments
in the same way as the General Reserve Fund. If on the first IPD
the assets from Gemgarto 2012-1 portfolio will be substantially
sold into the transaction, then this 1% additional reserve will be
released to the certificate holders. Due to the optional nature of
this additional reserve fund, Moody's has not taken this
additional reserve fund into account when modelling the available
credit enhancement for the issued notes. Therefore, the Moody's
basis assumption is that Gemgarto 2012-1 transaction will be
called and the additional reserve fund will not be available on
the first IPD.

-- Operational risk analysis

Prior to the closing date, all loans originated between 27 June
2016 and 31 January 2017 are serviced by Acenden Limited
("Acenden", not rated) and loans originated between 2 August 2010
and 13 January 2012 are serviced by Homeloan Management Limited
("HML", not rated). KMC will be acting as servicer of the pool
from the closing date and will sub-delegate certain primary
servicing obligations to Acenden. KMC will have the option to
leave the servicing of the loans originated between 2 August 2010
and January 13, 2012 with HML. In order to mitigate the
operational risk, there will be a back-up servicer facilitator
(Intertrust Management Limited, not rated, also acting as
corporate services provider), and Wells Fargo Bank International
Unlimited Company (not rated) will be acting as a back-up cash
manager from close.

All of the payments under the loans in the securitised pool will
be paid into the collection account in the name of KMC at Barclays
Bank PLC ("Barclays", A1/P-1 and A1(cr)/P-1(cr)). There is a daily
sweep of the funds held in the collection account into the issuer
account. In the event Barclays rating falls below Baa3 the
collection account will be transferred to an entity rated at least
Baa3. There will be a declaration of trust over the collection
account held with Barclays in favour of the Issuer. The issuer
account is held in the name of the Issuer at Citibank, N.A.,
London Branch (A1/(P)P-1 and A1(cr)/P-1(cr)) with a transfer
requirement if the rating of the account bank falls below A3.

To ensure payment continuity over the transaction's lifetime the
transaction documents including the swap agreement incorporate
estimation language whereby the cash manager can use the three
most recent servicer reports to determine the cash allocation in
case no servicer report is available. The transaction also
benefits from principal to pay interest for Class A to C notes,
subject to certain conditions being met.

-- Interest rate risk analysis

[83.9]% of the loans in the provisional pool are fixed-rate
mortgage, which will revert to three-month sterling LIBOR plus
margin between November 2017 and November 2021. [16.1]% of the
loans in the provisional pool are floating-rate mortgages linked
to three-month sterling LIBOR. The note coupons are linked to
three-month sterling LIBOR, which leads to a fixed-floating rate
mismatch in the transaction. To mitigate the fixed-floating rate
mismatch the structure benefits from a fixed-floating swap. The
swap will mature the earlier of the date on which floating rating
notes have redeemed in full or the date on which the swap notional
is reduced to zero. BNP Paribas (A1/P-1 and Aa3(cr)/P-1(cr)) is
expected to act as the swap counterparty for the fixed-floating
swap in the transaction.

After the fixed rate loans revert to floating rate, there is a
basis risk mismatch in the transaction, which results from the
mismatch between the reset dates of the three-month LIBOR of the
loans in the pool and the three-month LIBOR used to calculate the
interest payments on the notes. Moody's has taken into
consideration the absence of basis swap in its cash flow
modelling.

-- Stress Scenarios

Moody's Parameter Sensitivities: At the time the ratings were
assigned, the model output indicates that the Class A Notes would
still achieve Aaa(sf), even if the portfolio expected loss was
increased from 2.2% to 6.6% and the MILAN CE was increased from
12% to 16.8%, assuming that all other factors remained the same.
The Class B Notes would have achieved Aa1(sf), even if MILAN CE
was increased to 14.4% from 12.0% and the portfolio expected loss
was increased to 6.6% from 2.2% and all other factors remained the
same. The Class C Notes would have achieved A2(sf), even if MILAN
CE was increased to 19.2% from 12.0% and the portfolio expected
loss was remained unchanged at 2.2% and all other factors remained
the same. The Class D Notes would have achieved Ba2(sf), if the
expected loss remained at 2.2% assuming MILAN CE increased to
19.2% and all other factors remained the same. The Class X Notes
would have achieved Caa3(sf) if the expected loss remained at 2.2%
assuming MILAN CE increased to 19.2% and all other factors
remained the same.

Moody's Parameter Sensitivities quantify the potential rating
impact on a structured finance security from changing certain
input parameters used in the initial rating. The analysis assumes
that the deal has not aged and is not intended to measure how the
rating of the security might change over time, but instead what
the initial rating of the security might have been under different
key rating inputs.

Moody's Parameter Sensitivities provide a quantitative/model-
indicated calculation of the number of rating notches that a
Moody's structured finance security may vary if certain input
parameters used in the initial rating process differed. The
analysis assumes that the deal has not aged and is not intended to
measure how the rating of the security might migrate over time,
but rather how the initial rating of the security might have
differed if key rating input parameters were varied. Parameter
Sensitivities for the typical EMEA RMBS transaction are calculated
by stressing key variable inputs in Moody's primary rating model.

The principal methodology used in these ratings was "Moody's
Approach to Rating RMBS Using the MILAN Framework" published in
September 2016.

The analysis undertaken by Moody's at the initial assignment of
ratings for RMBS securities may focus on aspects that become less
relevant or typically remain unchanged during the surveillance
stage.

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

Significantly different loss assumptions compared with Moody's
expectations at close due to either a change in economic
conditions from Moody's central scenario forecast or idiosyncratic
performance factors would lead to rating actions. For instance,
should economic conditions be worse than forecast, the higher
defaults and loss severities resulting from a greater
unemployment, worsening household affordability and a weaker
housing market could result in downgrade of the ratings.
Deleveraging of the capital structure or conversely a
deterioration in the notes available credit enhancement could
result in an upgrade or a downgrade of the rating, respectively.

The provisional ratings address the expected loss posed to
investors by the legal final maturity of the Notes. In Moody's
opinion, the structure allows for timely payment of interest and
ultimate payment of principal with respect to the Class A, Class B
and Class C Notes by the legal final maturity. In Moody's opinion,
the structure allows for ultimate payment of interest and
principal with respect to the Class D and Class X Notes by the
legal final maturity. Moody's ratings only address the credit risk
associated with the transaction. Other non-credit risks have not
been addressed, but may have a significant effect on yield to
investors.

Moody's issues provisional ratings in advance of the final sale of
securities, but these ratings only represent Moody's preliminary
credit opinion. Upon a conclusive review of the transaction and
associated documentation, Moody's will endeavour to assign
definitive ratings to the Notes. A definitive rating may differ
from a provisional rating. Moody's will disseminate the assignment
of any definitive ratings through its Client Service Desk. Moody's
will monitor this transaction on an ongoing basis.


FOOD RETAILER: Future of Budgets Store in Nottingham at Risk
------------------------------------------------------------
Dan Robinson at Nottingham Post reports that the future of a
Budgens store in Nottingham is in doubt after its owner went into
administration.

The Food Retailer Operations Limited, which bought the food store
chain from the Co-operative Group last year, is now looking for
buyers for some or all of its stores, Nottingham Post discloses.

There are 36 shops at risk, including the outlet in Mansfield
Road, Sherwood, which was changed from a Co-op shop into a Budgens
after the takeover, Nottingham Post states.

But the Co-op has offered to find jobs for the affected staff that
used to be under its ownership if a buyer can't be found,
Nottingham Post relays.

According to Nottingham Post, the Union of Shop, Distributive and
Allied Workers (Usdaw) said Food Retailer Operations launched a
company voluntary arrangement (CVA), an insolvency procedure
allowing a business to reach a voluntary agreement over repayments
with its creditors.

But after it was voted down by the creditors, the company -- which
is part of investor Hilco Capital -- has now placed the business
in administration, Nottingham Post relates.



                            *********

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

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

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


                            *********


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

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

Copyright 2017.  All rights reserved.  ISSN 1529-2754.

This material is copyrighted and any commercial use, resale or
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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,
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of the same firm for the term of the initial subscription or
balance thereof are US$25 each.  For subscription information,
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