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/raid1/www/Hosts/bankrupt/TCREUR_Public/170308.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Wednesday, March 8, 2017, Vol. 18, No. 048 Headlines A U S T R I A VOLKSBANKEN-VERBUND: Fitch Concludes Review of Ratings VOLKSBANKEN-VERBUND: Fitch Raises Long-Term IDR From 'BB+' B O S N I A BOSNIA: Moody's B3 Rating Reflects Political Challenges F R A N C E PEUGEOT SA: Opel Acquisition No Impact on Fitch's BB+ Ratings PEUGEOT SA: Moody's Affirms Ba2 CFR & Sr. Unsecured Ratings G E R M A N Y EUROMAR COMMODITIES: Neuruppin Court Opens Insolvency Proceedings INEOS STYROLUTION: Moody's Hikes Corporate Family Rating to Ba3 PRESTIGEBIDCO GMBH: S&P Assigns 'B' CCR, Outlook Stable I R E L A N D BUS EIREANN: CIE Group May Provide Financial Support EATON VANCE: S&P Raises Ratings on Two Note Classes to BB+ IVORY CDO: S&P Raises Rating on Class B Notes to 'BB+' MINT 2015: DBRS Confirms BB Rating on Class EUR-E Notes TAURUS 2015-3 EU: DBRS Confirms BB(sf) Rating on Class F Debt L U X E M B O U R G AVOCADO BIDCO: S&P Affirms 'B' CCR, Outlook Stable COLOUROZ MIDCO: Moody's Affirms B2 Corporate Family Rating R U S S I A AEROFLOT RUSSIAN: Fitch Affirms 'B+' IDR, Outlook Stable ANKOR BANK: Put on Provisional Administration, License Revoked INTECHBANK PJSC: Put on Provisional Administration TATFONDBANK: Moody's Cuts LT Deposit & Unsec. Debt Ratings to C S P A I N SANTANDER CONSUMER2016-1: DBRS Confirms BB Rating on D Notes * Moody's: Spanish ABS SME 90-360 Day Delinquencies Remain Stable T U R K E Y AKBANK TAS: Moody's Gives (P)B1 Rating to USD Denominated Notes AKBANK TAS: Fitch Rates Tier 2 Capital Notes 'BB(EXP)' U K R A I N E DTEK ENERGY: Fitch Affirms 'RD' LT Issuer Default Ratings U N I T E D K I N G D O M BOOTS UK: Will Be Closing 220 In-store Photo Labs ECO RESOURCES: Goes Into Voluntary Liquidation FOOD RETAILER: To Close 34 Budgens Stores, 815 Jobs Affected MUST HAVE: Tax Woes Prompt Administration, 265 Jobs Affected PREMIER OIL: To Tap Oilfield Services Firms to Help Fund Projects PREMIERTEL PLC: Fitch Affirms BB Rating on GBP195.8MM Cl. B Notes ********* ============= A U S T R I A ============= VOLKSBANKEN-VERBUND: Fitch Concludes Review of Ratings ------------------------------------------------------ Fitch Ratings has concluded its periodic review of three large Austrian banks, upgrading the Long-Term Issuer Default Ratings (IDRs) and Viability Ratings (VRs) of Erste Group Bank (to A- /Stable/a- from BBB+/Stable/bbb+) and Volksbanken-Verbund (to BBB-/Positive/bbb- from BB+/Positive/bb+) and affirming the ratings of UniCredit Bank Austria at 'BBB+'/Negative/'bbb+'. The rating actions reflect primarily the strengthening of the banks' risk profiles, driven by considerable restructuring progress achieved until end-2016 amid a benign economic environment in Austria. The upgrade of Erste's ratings reflects the bank's active balance sheet clean-up at its weaker central and eastern European (CEE) operations. Fitch expects that the improved economic prospects across most of the bank's core EU CEE markets and the recovering performance of the bank's Romanian and Hungarian operations will result in higher and more balanced profit generation as profit contributions from the strong Czech and Slovakian units and lower-margin domestic operations should remain broadly stable. Volksbanken-Verbund's upgrade is driven by greatly reduced execution risk due to the group's well-executed and largely- completed restructuring programme. The resulting more robust risk infrastructure and more coherent management practices strengthen the group's risk profile and business model. Fitch expects the streamlined group structure to enable a gradual improvement of revenue generation and cost efficiency in the medium term. The affirmation of Bank Austria's ratings reflects the bank's considerably reduced risk appetite and much improved asset quality following the transfer of the CEE business to parent bank UniCredit S.p.A. (BBB+/Negative/bbb+) in 4Q16. The Negative Outlook mirrors that of UniCredit as Fitch expects that capital will become increasingly fungible within the UniCredit group. This could constrain Bank Austria's financial flexibility as the bank works to realign its business model. For the overall Austrian banking sector, Fitch expects earnings to broadly stabilise in 2017 as restructuring costs have largely been provisioned for and impairment charges are likely to remain close to their cyclical lows. In light of the recurring margin pressure in the saturated and highly competitive Austrian market, cost control and pricing discipline are key to mitigating earnings erosion from a low interest rate environment in the medium term. While the sector is generally increasing its focus on addressing its high fixed costs in its home market, the sector could benefit from pricing discipline and reduction of over- capacity. Fitch expects that Erste's and Bank Austria's capitalisation will no longer improve significantly as the banks have reached their target capitalisation, and Fitch expects that rising dividend payouts should mark the end of several years of focus on profit retention driven by profit pressure in CEE and increasing regulatory requirements. However, internal capital generation will remain a key focus at Volksbanken-Verbund in light of its commitment to accelerating the repayment of the capital injected by the Austrian government in 2009. The solid and resilient funding profiles of the three banks continue to benefit from their established domestic deposit franchises. VOLKSBANKEN-VERBUND: Fitch Raises Long-Term IDR From 'BB+' ---------------------------------------------------------- Fitch Ratings has upgraded Volksbanken-Verbund's (VB-Verbund) Viability Rating (VR) to 'bbb-' from 'bb+', Long-Term Issuer Default Rating (IDR) to 'BBB-' from 'BB+' and Short-Term IDR to 'F3' from 'B'. Fitch has also upgraded the IDRs of VB-Verbund's member banks to 'BBB-'/'F3' from 'BB+'/'B'. The Outlook on the Long-Term IDRs is Positive. The rating action was taken in conjunction with Fitch's periodic review of major Austrian banks. KEY RATING DRIVERS - IDRs AND VR The upgrade of VB-Verbund's VR and IDRs reflects the successful execution of the group's risk reduction and restructuring programme, which is now largely completed. The process has been well-controlled and -executed, in Fitch views, and the major restructuring progress achieved has greatly reduced execution risk. The overhauled group structure and increased centralisation of risk controls and monitoring at the group's central institution, Volksbank Wien AG (VBW), has also reduced complexity and strengthened the member banks' cohesion. Fitch assigns IDRs but no VR to each of VB-Verbund's individual member banks in line with its criteria for rating banking structures backed by mutual support schemes. VB-Verbund is not a legal entity but a medium-sized network of cooperative banks, whose cohesion is primarily ensured by a recently overhauled and strengthened mutual support scheme. The restructuring has considerably improved the group's asset quality and stabilised the group's performance, albeit initially at modest levels, following heavy impairment and restructuring costs in recent years. Increased centralisation and the mergers of the group's member banks into eight regional and two specialised banks according to an ambitious schedule have also strengthened the group's cohesion and risk controls. The mergers are largely completed, and the few outstanding mergers should be completed by August 2017. The Positive Outlook reflects the likely long-term benefits from the group's more robust risk infrastructure and more coherent management practices on the company profile and the risk profile of each member bank. The individual banks' asset quality remains heterogeneous, but their convergence shows that the weaker elements are already benefiting from the more sophisticated risk management practices implemented and monitored by VBW. Fitch expects that VB-Verbund's revenue generation and cost efficiency will further improve sustainably in the medium term. After restructuring costs weighed on profitability in 2016, Fitch expects the group to report a modest profit in 2017. However, performance should remain only moderate in the longer term, given the robust but saturated Austrian operating environment. VB-Verbund operates almost exclusively in the resilient Austrian market and its loan book consists predominantly of lower-risk retail and small SME clients. Its asset quality remains moderately weaker than that of large, highly rated European cooperative banks. Fitch estimates impaired loans to have accounted for around 4.5% of gross loans at end-2016 and Fitch expects that asset quality will gradually improve further and converge toward retail-focused peers' in highly-rated European countries, albeit more gradually than in the past two years. VB-Verbund's capitalisation is acceptable in light of the group's considerably improved risk profile, but will benefit from the cost savings from the primary banks' mergers. The savings should strengthen the internal capital generation of VB-Verbund before it repays the remainder of the EUR300 million state capital received in 2009 to support its former troubled central institution, which VB-Verbund divested in 2015. KEY RATING DRIVERS - SUPPORT RATINGS AND SUPPORT RATING FLOORS (SRF) VB-Verbund's Support Rating and SRF reflect Fitch's view that senior creditors can no longer rely on full extraordinary state support. This is driven by the EU's Bank Recovery and Resolution Directive (BRRD), which has been fully transposed, with its bail- in tool, into Austrian law, effective from 1 January 2015. RATING SENSITIVITIES - IDRs AND VR VB-Verbund's Positive Outlook indicates further upside for the Long-Term IDR and VR when internal capital generation recovers to adequate levels. However, the VR is unlikely to rise above the 'bbb' range in light of VB-Verbund's small market share in the generally low-margin, high-cost Austrian retail banking market. A downgrade of the VR and IDRs could result from a failure to achieve the necessary cost savings from the restructuring, which could challenge the group's inability to repay the state capital as scheduled, or from a severe downturn in Austria's economy. However, Fitch views none of these scenarios as likely. RATING SENSITIVITIES - SUPPORT RATINGS AND SRF An upgrade of VB-Verbund's Support Ratings and an upward revision of the SRF would be contingent on a positive change in the sovereign's propensity to support the bank. This is highly unlikely in light of the prevailing regulatory environment, in Fitch views. The rating actions are as follows: VB-Verbund Long-Term IDR: upgraded to 'BBB-' from 'BB+'; Outlook Positive Short-Term IDR: upgraded to 'F3' from 'B' Viability Rating: upgraded to 'bbb-' from 'bb+' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' In line with VB-Verbund's IDRs, the IDRs of VB-Verbund's members listed below have been upgraded to 'BBB-'/Positive/'F3' and are sensitive to the same drivers as VB-Verbund's IDRs: Bank fuer Aerzte und Freie Berufe AG Oesterreichische Apothekerbank eG Volksbank Wien AG Volksbank Vorarlberg e. Gen. Volksbank Tirol AG Volksbank Kaernten eG Volksbank Steiermark AG Volksbank Salzburg eG Volksbank Bad Goisern eingetragene Genossenschaft Volksbank Steirisches Salzkammergut, reg.Gen.m.b.H. Volksbank Oberoesterreich AG Volksbank Bad Hall e.Gen. Volksbank Niederoesterreich AG Waldviertler Volksbank Horn reg.Gen.m.b.H. Following SPARDA-BANK AUSTRIA eGen's decision to remain a member of VB-Verbund, Fitch has also upgraded the bank's IDRs to 'BBB-'/Positive/'F3' and removed them from Rating Watch Evolving (RWE), where they had been placed in 2016 following the bank's stated intention to leave the group. The IDRs of VB-Verbund's following members have been upgraded to 'BBB-'/Positive/'F3' and withdrawn as a result of their merger into other rated members of the group: Volksbank Enns - St. Valentin eG Volksbank Kufstein-Kitzbuhel Holding eG VOLKSBANK LANDECK Holding eG Volksbank Niederoesterreich Sued eG Volksbank Oberes Waldviertel reg.Gen.m.b.H. Volksbank Oberndorf reg.Gen.m.b.H. Volksbank Obersteiermark eGen Volksbank Oetscherland eG Volksbank Suedburgenland eG Volksbank Sued-Oststeiermark e.Gen. Volksbank Weinviertel e.Gen. The IDRs of start:bausparkasse AG and IMMO-BANK AG have been withdrawn as a result of both banks' sale and exit from VB- Verbund in December 2016. As a result, Fitch will no longer provide ratings or analytical coverage of these issuers as Fitch no longer receive sufficient information to maintain the ratings following the issuers' exit from VB-Verbund. =========== B O S N I A =========== BOSNIA: Moody's B3 Rating Reflects Political Challenges ------------------------------------------------------- Moody's Investors Service said in a new annual report that Bosnia and Herzegovina's B3 rating with a stable outlook continues to be constrained by challenges related to government effectiveness, wide external deficits and a high unemployment rate. The annual update is entitled "Government of Bosnia and Herzegovina -- B3 Stable - Annual Credit Analysis". "The political landscape is hindering the pace of reforms and the country's ability to adhere to conditions set out by international lenders," says Evan Wohlmann, a Moody's Assistant Vice President -- Analyst and co-author of the report. "Its large current account deficits and the lack of access to private external capital makes the economy heavily dependent on concessional inflows to repay the same lenders." Bosnia's credit strengths include the high affordability of its mainly concessional government debt relative to its rating peers, as well as the smooth operation of the country's currency board arrangement, which benefits from significant reserves. Additionally, the 2015 'Reform Agenda' and a new IMF agreement in 2016 provide a sound basis for further reforms to address the economy's many structural rigidities. Moody's forecasts growth to reach 3.2% in 2017 and 3.7% in 2018, stronger than in previous years but remaining below the levels reached before the global financial crisis. Recent progress on EU candidacy also demonstrates the authorities' commitment to EU integration, although more fundamental progress on EU accession faces obstacles, including from the challenging political environment. Upward pressure on the sovereign rating could stem from any strengthening of institutions through structural reforms, either independently or as part of the EU accession process. Other credit positive measures would include a streamlining of the policymaking process and continuous compliance with the new IMF agreement that leads to fundamental reforms which help ensure government debt sustainability. Conversely, downward rating pressure could occur if the country were to fail to comply with the new IMF agreement, which would increase uncertainty about the government's ability to roll over the large IMF repayments due over the coming years. =========== F R A N C E =========== PEUGEOT SA: Opel Acquisition No Impact on Fitch's BB+ Ratings ------------------------------------------------------------- Fitch said there is no immediate rating impact on Peugeot SA (PSA Group, 'BB+'/Stable) from the acquisition of General Motors Company's (GM, 'BBB-'/Positive) Opel subsidiary and GM Financial's European operations for EUR1.3bn and EUR0.9bn, respectively. The financial services business will be acquired jointly by PSA and BNP Paribas. Fitch believes that this transaction will be moderately positive for PSA in the medium term but will not fundamentally change the group's business profile in the near term. Upward pressure on the rating could come from the creation of a positive track record in restructuring Opel and boosting the group's profitability and cash generation, which could offset PSA's remaining relative weaknesses from an operating perspective. Fitch believes that the transaction is structured in such a way that it will not have a major negative impact on PSA's financial profile, notably its leverage. PSA will finance the EUR1.8 billion deal through its existing cash balance and EUR0.65 billion in warrants with a nine-year maturity and exercisable after five years. These warrants have neither governance rights nor voting rights and GM has committed to sell the shares within 35 days of exercising the warrants. In addition, Opel's European and UK large pension plans will remain with GM with the exception of plans covering active employees in Germany that will be transferred to PSA, albeit funded by GM. PSA's financial structure has strengthened substantially over the past couple of years, with funds from operations (FFO) adjusted net leverage improving to negative 0.2x at end-2016 from 0.2x at end-2015 and 1.6x at end-2014, This provides headroom within the rating and Fitch believes the group can shoulder this transaction without putting any significant strain on credit metrics. PSA reported EUR11.4 billion in gross cash and liquidity from its industrial operations at end-2016, after Fitch's adjustments for operational cash. On a pro-forma basis, Fitch estimates the net impact from the Opel transaction on PSA's FFO adjusted net leverage to be about 0.2x. The acquisition of Opel will further reinforce PSA Group's strong positions in Europe. The group will recover its position as the second-largest manufacturer in Europe behind Volkswagen and will bring PSA market leadership of the lucrative light commercial vehicles segment. The European sales of Opel and PSA are complementary and this transaction will reduce the group's exposure to France and south European markets, while gaining exposure to Germany and the UK where Opel has solid market shares. In addition, PSA acquires a production base in the UK and improves its natural hedge in case of a hard Brexit scenario. However, it will also increase PSA's geographical concentration in Europe. Fitch estimates that the group will derive more than 70% of its unit sales from Europe, compared with about 60% currently. A cyclical downturn in the region could have a larger impact on the combined group's sales in spite of the different dynamics of the various European markets. The combined group will also remain focused on the small to medium mass-market segments where competition and pricing pressure are the fiercest. Despite its gradual improvement in recent years, and similar to PSA, Opel has had limited success in the D-segment and above. On the positive side, Fitch expects PSA to gain access to Opel's electric vehicle technology in which the latter is already well advanced. From an operating standpoint, Fitch expects this acquisition to further boost the synergies already created between both entities. PSA has identified annual synergies of EUR1.7bn in the areas of purchasing, administrative costs, R&D, investment and manufacturing as well as EUR1.2 billion in working-capital optimisation. Fitch believes that PSA's experience in working with Opel lends credibility to its assumptions on integrating the different entities and increasing profitability. In particular, Opel and PSA have a solid track record in working together as the two companies are cooperating to launch three models together as well as a joint purchasing organisation. PSA's excellent record in rejuvenating its product offering and streamlining its cost structure to boost earnings and cash generation is another strongly positive factor. Nonetheless, the timeframe to successfully execute this transaction remains an area of uncertainty as restructuring Opel and extracting the expected synergies could take time and effort, notwithstanding regulatory approvals to complete the acquisition. Fitch also expects some of the most significant cost savings to be gradual and accrue when Opel's existing models reach the end of their useful lives and are integrated into PSA's common platforms. In addition, Fitch expects some restructuring costs to burden earnings in the short term. PEUGEOT SA: Moody's Affirms Ba2 CFR & Sr. Unsecured Ratings ----------------------------------------------------------- Moody's Investors Service has affirmed the Ba2 corporate family rating (CFR) and the Ba2 senior unsecured ratings of Peugeot S.A. one of Europe's largest makers of light vehicles. The outlook on the rating is stable. "The affirmation reflects Moody's confidence in the strategic rationale of the acquisition of GM's European operations (Opel). However, while the acquisition of Opel will improve PSA's business profile, it will initially dilute PSA's operating margin, weigh on the group's free cash flow generation and pose sizeable integration risks," says Falk Frey, a Senior Vice President and lead analyst for PSA. RATINGS RATIONALE The action reflects continued improvements in PSA's profitability, positive free cash flow generation and, hence, improvements in its financial metrics which positions it strongly in the Ba2 rating category. PSA increased worldwide unit sales to 3.15 million in 2016 (+5.8% YoY) resulting in an increase of automotive division's revenues of 2.7% at constant currencies and a Group revenue increase to EUR54 billion (including the full consolidation of 46%-owned auto supplier Faurecia SA (Ba2 stable, EUR18.7 billion revenue)). PSA managed to increase its reported recurring operating income margin to 6% of revenue from 5% in 2015 for the group as well as for the automotive division mainly driven by (1) efficiency gains in production and procurement as well as SG&A, following the ongoing restructuring of the group; (2) a more favourable product mix; as well as (3) price increases and product enrichments while FX impact weighted negatively on margins, which is expected to continue in 2017. The company's reported financials translate into an EBITA margin (Moody's adjusted) of 3.9%, almost EUR1 billion in free cash flow and a gross debt/EBITDA of 2.8x, all of which position the group strongly in the Ba2 rating category. The announced acquisition of General Motors Company's (GM, Baa3 stable) European operations (Opel & 50% of the financing activities) for around EUR1.1 billion cash to be paid by PSA will strengthen the company's European market position in Europe where the company continuously lost market share since 2010. The combined businesses would elevate the groups market share to around 17% in Europe, regaining its position as second-largest OEM in the region after Volkswagen Aktiengesellschaft (A3 negative). While Moody's cautions that the acquisition will increase further PSA's reliance on the European market to more than two thirds of group sales from 61% in 2016, diversification within Europe will increase as Opel is strong in markets where PSA is not (i.e., Germany and the UK). The transaction will deepen an already existing relationship between the two companies, potentially releasing synergies through sharing additional platforms, combined purchases and, more importantly, joint R&D efforts. The material investments necessary to employ PSA's electrification strategy could be spread over a larger vehicle base, while Opel's car models could leverage on PSA's recent efforts in CO2 emission reductions, having the lowest emission levels of European OEMs. Lastly, this transaction will also provide PSA with a production facility in the UK that could hedge the combined group's production position in case of a hard Brexit. Despite GM's efforts to restructure Opel for many years, the company has not been able to achieve a significant turnaround in profitability. Another attempt for a turnaround by PSA would require substantial restructuring expenses weighing on future cash flow generation. In addition, a severe restructuring would face strong resistance from both unions and politicians. Therefore, Moody's believes the largest obstacle in this transaction is PSA's ability to achieve a turnaround of Opel within a reasonable time frame. Based on the announced financing structure, the rating agency does not anticipate a substantial change in PSA's credit metrics and from the consolidation of Opel. For 2017 on a pro-forma basis, Moody's expects that PSA's debt/EBITDA will fall below 2.5x despite a negative free cash flow resulting from the Opel acquisition and a dilution in the EBITA margin to below the 3.9% in 2016 standalone. Rationale for Stable Outlook The stable outlook reflects Moody's expectation that PSA's business model has a better flexibility to contend with the long- term cyclicality within the global passenger vehicle markets than in the last cyclical downturn based on a significantly reduced break-even level of its European production network. The stable outlook also assumes that PSA will be able to weather the challenging landscape as a result of heavy investment requirements for (1) alternative propulsion technologies; (2) autonomous driving; (3) the shift of production capacities towards alternative fuel vehicles; (4) connectivity; as well as (5) regulations relating to vehicle safety, emissions and fuel economy. Furthermore, the acquisition of Opel should not lead to a significant deterioration of PSA's credit metrics based on a relatively modest debt increase and low purchase price. What Could Change the Rating Down/Up Upward pressure on PSA's rating could arise if the company demonstrates that it is on track to successfully integrate Opel into its business operations without materially deteriorating the groups operating performance. Quantitatively, positive pressure on the rating would build should (1) PSA generate positive free cash flows despite anticipated restructuring cash outflows; (2) leverage (debt/EBITDA) fall below 2.5x; (3) profitability be restored to an EBITA margin of around the mid-single-digits (in percentage terms on a Moodys adjusted basis); and (4) the company's liquidity profile remain sustainably solid. The Ba2 CFR could come under pressure should (1) PSA or the combined PSA-Opel group exhibit a sustained negative market share development in its key markets; (2) free cash flow generation become negative for a sustained period of time also impacted by sizable restructuring expenses relating to the acquisition of Opel or due to the inability to reduce Opel's cash consumption; (3) the company's EBITA margin fall to the low single-digit range (in percentage terms); (4) its leverage (debt/EBITDA) exceed 3.5x on a sustainable basis; (5) the group's liquidity profile materially weaken; or (6) if there are any emission-related issues that would lead to significant fines, or other remediation measures, which is currently not part of Moody's assumptions. Liquidity Peugeot's liquidity profile is solid supported by a cash balance of EUR11.6 billion as of 31 December 2016, internally generated cash flows and access to committed covenanted syndicated credit facilities of EUR2.0 billion maturing in 2020 and EUR1.0 billion maturing in 2018 (excluding EUR1.2 billion at Faurecia). These credit facilities were undrawn as of year-end 2016 and Peugeot was compliant with the financial covenants included in these credit agreements. These sources are deemed to be more than sufficient to cover the anticipated cash outflows for capital expenditures, maturing debt, working capital needs as well as the cash outflow for the acquisition of Opel. List of affected ratings: Affirmations: Issuer: Peugeot S.A. -- Probability of Default Rating, Affirmed Ba2-PD -- Corporate Family Rating, Affirmed Ba2 -- Backed Senior Unsecured Medium-Term Note Program, Affirmed (P)NP -- Backed Senior Unsecured Medium-Term Note Program, Affirmed (P)Ba2 -- Senior Unsecured Regular Bond/Debenture, Affirmed Ba2 -- Backed Senior Unsecured Regular Bond/Debenture, Affirmed Ba2 Issuer: GIE PSA Tresorerie -- Senior Unsecured Commercial Paper, Affirmed NP -- Backed Senior Unsecured Regular Bond/Debenture, Affirmed Ba2 Outlook Actions: Issuer: Peugeot S.A. -- Outlook, Remains Stable Issuer: GIE PSA Tresorerie -- Outlook, Remains Stable The principal methodology used in these ratings was Global Automobile Manufacturer Industry published in June 2011. Peugeot is Europe's third-largest maker of light vehicles with its three brands Peugeot, Citroen and DS. In addition Peugeot holds a 46% interest in Faurecia SA (Ba2 stable), one of Europe's leading automotive suppliers (turnover of EUR18.7 billion in 2016), and remains a 25% shareholder in Gefco, France's second- largest transportation and logistics service provider. Peugeot also provides financing to dealers and end-customers through its finance arm Banque PSA Finance in joint venture with Santander Consumer Finance S.A. In 2016, Peugeot generated revenues of EUR54 billion and reported a recurring operating income of EUR3.2 billion. ============= G E R M A N Y ============= EUROMAR COMMODITIES: Neuruppin Court Opens Insolvency Proceedings ---------------------------------------------------------------- Tino Andresen at Bloomberg News reports that the Neuruppin local court opened insolvency proceedings for Euromar Commodities on March 6. According to Bloomberg, Rolf Rattunde has been appointed insolvency administrator. The court spokeswoman declined to comment on how much Euromar owes to which creditors, Bloomberg notes. Asset sales are likely to be held, Bloomberg states. Euromar Commodities GmbH is a cocoa company. INEOS STYROLUTION: Moody's Hikes Corporate Family Rating to Ba3 --------------------------------------------------------------- Moody's Investors Service upgraded INEOS Styrolution Holding Limited's Corporate Family Rating (CFR) to Ba3 from B1 and Probability of Default Rating (PDR) to Ba3-PD from B1-PD and revised the outlook to stable from positive. Concurrently, the rating agency assigned Ba3 ratings to approximately EUR1.0 billion equivalent outstanding term loan B due March 2024, at INEOS Styrolution Group GmbH and INEOS STYROLUTION US HOLDING LLC. Moody's will subsequently withdraw the B1 ratings assigned to the term loan B due September 2021, as the maturity has been extended to March 2024. The outlook at INEOS Styrolution Group GmbH was also revised to stable from positive. RATINGS RATIONALE The upgrade reflects the continued strong performance of the company with adjusted debt/EBITDA of 1.5x and Moody's expectations that positive structural changes in the cyclical styrene market will maintain this below 2.0x for at least the next 2-3 years. Although styrene is expected to remain a cyclical commodity over the longer term, Moody's expects capacity rationalization and industry consolidation over the past decade, along with changes in the propylene oxide market will result in sustained profitability in styrene and polystyrene over the next several years. Styrolution's Ba3 CFR reflects the (1) company's exceptionally strong operating performance in 2015 and 2016, expected to remain robust in the next 2-3 years and further support positive cash flow generation; (2) recent approximately EUR300 million debt payment that contributed to the substantial decrease in Moody's adjusted leverage to 1.5x in 2016 from 4.7x in FY2014; (3) leading global market share in the styrenics market based on capacity, combined with a global operational footprint; (4) cost leadership position, improved because of cost reductions associated with the restructuring program; and (5) diversified end-market exposure across packaging, household, automotive, construction and electronics applications. The rating is tempered by (1) INEOS Styrolution's exposure to economic cycles and feedstock price volatility, with its large exposure to cyclical industries such as the automotive, construction and electronics industries; (2) a limited mandatory debt repayment schedule going forward and shareholder friendly policy with further expected cash payments to its parent; (3) lack of product diversification, focussed on the styrenics chain; and (4) heightened substitution threat for its polystyrene and ABS products. In addition to repaying a substantial portion of its outstanding debt, Styrolution reported strong results in 2016, with EBITDA generation and margins above Moody's expectations. Record reported EBITDA of EUR804 million, increased 8% despite an abnormally strong second quarter last year from substantial industry outages in styrene monomer. The favourable results were mainly driven by 14% EBITDA growth and margin expansion in the specialties division and robust styrene monomer division performance boosted by positive cost of sales adjustment (COSA) effects, countered with weakness in the ABS standard division. Group EBITDA margins increased to 18% from 15%, already top of the cycle for a commodity producer, with an increase in the specialties division to 20% from 17%, whereas polystyrene and ABS margins remained flat at ca 13%. Adjusted Funds from operations (FFO) of EUR592 million and capex of EUR140 million were up ca 10% and 20% respectively. After paying EUR255 million in dividends, free cash flow (FCF) was EUR147 million (11% of debt). Following Styrolution's EBITDA growth and ca EUR300 million repayment out of its ca EUR1.3 billion equivalent term loans, Moody's adjusted total debt/EBITDA fell to 1.5x as of 31 December 2016 from 2.2x as of FY 2015. Moody's expects Styrolution's reported EBITDA to remain above EUR675 million and adjusted leverage to remain below 2.0x for the next several years despite volatility in key feedstocks. Styrene monomer margins have spiked in Q1 2017 on supply concerns. However, this will likely be countered by recent increases in butadiene prices that will be a headwind to EBITDA growth in the polymer divisions in the first half of 2017 and likely result in lower profitability. While the company is able to pass through increases in raw material costs, albeit with a delay, the combination of raw material volatility along with the timing of customer purchases can create a significant quarter-to-quarter volatility in profitability. RATING OUTLOOK The stable outlook reflects the near-term headwinds on its polymer products from higher raw material prices mitigated by the current strong styrene monomer margins. It also reflects Moody's expectation of adjusted total debt/EBITDA remaining below 2.0x even if top of the cycle industry conditions normalise somewhat, benefitting from ca EUR300 million in cost savings already implemented compared to ca EUR800 million in reported EBITDA. Finally, it assumes that liquidity does not deteriorate. WHAT COULD CHANGE THE RATING -- UP/DOWN The ratings could be upgraded if (1) the specialties division EBITDA is sustained above EUR300 million; (2) Styrolution generates a sustained positive FCF/debt ratio in the high-teens; and (3) it maintains adjusted debt below EUR1.3 billion. Conversely, ratings could be downgraded if performance deteriorates such that (1) the company's adjusted EBITDA margin falls sustainably below 10%; (2) liquidity deteriorates; or (3) its Moody's adjusted debt/EBITDA rises above 3.0x on a sustained basis. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Global Chemical Industry Rating Methodology published in December 2013. INEOS Styrolution Holding Limited, with management based in Frankfurt, Germany, is a leading global styrenics supplier (based on revenues), especially in Europe and North America. INEOS Styrolution is focused on the production and sale of polystyrene, acrylonitrile butadiene styrene (ABS), styrene monomer, and other styrenic specialities. The group is a wholly owned subsidiary of INEOS AG (unrated). In 2016, INEOS Styrolution's revenues and Moody's-adjusted EBITDA were EUR4.5 billion and EUR846 million, respectively. PRESTIGEBIDCO GMBH: S&P Assigns 'B' CCR, Outlook Stable ------------------------------------------------------- S&P Global Ratings assigned its 'B' long-term corporate credit rating to PrestigeBidCo GmbH, the parent of Germany-based off- price apparel retailer Schustermann & Borenstein (S&B). The outlook is stable. At the same time, S&P assigned its 'B' issue rating to PrestigeBidCo's EUR260 million senior secured notes. The recovery rating on the notes is '3', reflecting S&P's expectation of meaningful (50%-70%; rounded estimate 50%) recovery in the event of default. S&P also assigned a 'BB-' issue rating to PrestigeBidCo's EUR35 million super senior secured revolving credit facility (RCF). The recovery rating on this instrument is '1', reflecting S&P's expectation of very high (90%-100%; rounded estimate 95%) recovery in the event of default. All the ratings are in line with the preliminary ratings S&P assigned on Dec. 7, 2016. The long-term rating on S&B primarily reflects the company's track record of earnings growth, its well-established customer and supplier relationships, and its robust interest cover metrics. At the same time, S&P's rating on S&B is constrained by the company's limited scale and relatively aggressive financial policy that underpins its high leverage exceeding 5x on an S&P Global Ratings' adjusted basis. S&P considers that the main supports to S&B's business risk profile are its track record of strong growth through the economic cycle and its solid market position within the niche off-price fashion market, in particular in the online segment of the German off-price market. The company's solid share in the German off-price fashion market and its loyal, affluent, and invitation-only customer base with above-average frequency of purchases, allow S&B access to an attractive stock mix. This includes the ability to offer the current season's goods at discounted prices as part of its overall product mix. S&B benefits from long-term retail supplier relationships, mainly in the European off-price market, where the company sources premium brand products. In S&P's view, S&B's offering provides an important channel for premium brand retailers to reduce their less liquid stocks with limited margin erosion. S&B's business model also benefits from significant diversity of supplier brands, and therefore lower susceptibility to earnings shortfalls resulting from poor performance of any one seasonal collection. S&P also considers that S&B's unique business model--with its relatively flexible and scalable cost structure, low customer acquisition costs, strong online presence, and diverse supplier base--will underpin growth at a higher rate than the 8% compound annual growth rate industry data providers forecast for the off- price apparel market over the medium term. S&P expects S&B's international expansion strategy, which focuses on the Swiss and Austrian market, and its planned new store openings will contribute to this growth. S&P considers that the main constraints on S&B's business risk are the company's relatively small scale compared with other companies in the retail sector, and its geographic concentration. With EUR50.7 million in adjusted EBITDA generated in 2015, even a relatively small shortfall in earnings could materially weaken credit metrics, thereby restricting headroom for any operational setbacks. In addition, the company generates 100% of its earnings in an off-price niche of the apparel market in Western Europe, of which over 85% is in Germany. This, in S&P's opinion, could limit S&B's ability to weather any unfavorable changes in the underlying market fundamentals. S&P also views S&B's business profile as limited by the high seasonality of its earnings, with about 33% of sales generated in the last quarter of the year. This is exacerbated by S&B's comparably high working capital requirements due to the inherent seasonality of off-price and off-season fashion product availability on attractive terms. S&B's debt, with S&P's adjustments, comprises the EUR260 million senior secured notes issued in December 2016 and an operating lease adjustment of EUR57.8 million, which is based on the position as of Dec. 31, 2015, and increases with sales. The RCF of EUR35 million was undrawn at closing, and S&P believes it will remain undrawn in the next 12 months. S&P excludes from its adjusted debt the EUR423 million of the preferred shares due to: -- The subordinated status of this instrument; -- Its cash-preserving nature; and -- S&P's understanding that--in line with the stated financial policy--if this instrument were to be refinanced in the medium term, it would not lead to weakening of the credit metrics from the level S&P anticipates S&B will post in 2017. If any future refinancing were to lead to weakening of the credit metrics, S&P could revise the treatment of the preferred shares. S&P forecasts that S&B will post S&P Global Ratings' adjusted EBITDA of EUR60 million-EUR62 million in 2016, compared with EUR50.7 million in 2015, including expenses related to the change in inventory allowances, which amounted to EUR1.3 million in 2015. S&P anticipates that this amount will increase with sales growth, and could affect intrayear earnings to a higher extent at the time of seasonal peak in inventory purchases. At the same time, S&P recognizes the noncash nature of this expense, and acknowledge the conservative effect that this accounting treatment has on profitability. In addition, S&P's adjustments to 2015 EBITDA include: -- EUR10.8 million added for operating leases; -- EUR3.2 million added for amortization and financing expenses related to historical acquisitions; and -- EUR3.6 million deducted on account of capitalized development costs, largely related to website development. For 2017, S&P forecasts adjusted EBITDA of EUR65 million- EUR70 million, resulting in adjusted debt to EBITDA of a little higher than 5x and funds from operations (FFO) to debt of about 10%. At the same time, S&P believes S&B will benefit from robust interest cover metrics with EBITDA interest coverage of 3x or higher over the 2017-2018 forecast period. The stable outlook reflects S&P's expectation that S&B will continue its strong growth over the next 12 months. This is due to the contribution of recently acquired Swiss Online Shopping AG and organic growth underpinned mainly by its well-established online business in both its home market and internationally. S&P considers that the headroom for the current rating is limited, with debt to EBITDA of above 5.0x and FFO to debt at about 10% in the next 12 months, allowing little cushion for any operating underperformance. At the same time, S&P believes that S&B will benefit from adequate liquidity. S&P could lower the rating if management's growth strategy faltered, resulting in overall lower earnings than S&P anticipates in its base case. This could be demonstrated by deteriorating margins or significantly lower sales, which result in prolonged weakened credit metrics that may include weakening of FFO to debt to materially lower than 10%, debt to EBITDA exceeding 5x, or FOCF turning negative. S&P could also lower the rating if S&B faced material deterioration in its customer base, if, for example, there was a significant change in customer behavior affecting either churn or total customer spending on products offered by S&B, without any offsetting measures to replenish its customer base. That said, based on the company's strong track record, S&P do not consider this likely in the next 12 months. An upgrade would likely require a successful operating track record under the new ownership, and S&P's view of the company's financial policy as supportive of stronger credit metrics over time. ============= I R E L A N D ============= BUS EIREANN: CIE Group May Provide Financial Support ---------------------------------------------------- Martin Wall at The Irish Times reports that the CIE Group has confirmed it is prepared in certain circumstances to provide financial support to assist Bus Eireann in dealing with its financial problems. Details of the move emerged as new talks between Bus Eireann and trade unions on a survival plan for the State-owned transport company commenced at the Workplace Relations Commission, The Irish Times notes. According to The Irish Times, in a statement on March 6, the CIE holding company said: "The CIE board -- subject to the existing and future CIE Group financial position and banking facilities, the regulatory environment and significant savings being generated by Bus Eireann -- would consider any Bus Eireann business plan which secures the long-term viability of the company and envisages a financial role for the CIE holding company." As reported by the Troubled Company Reporter-Europe on Jan. 30, 2017, The Irish Times related that Bus Eireann had previously warned staff it lost an estimated EUR8 million in 2016 and the threat of insolvency was very real. EATON VANCE: S&P Raises Ratings on Two Note Classes to BB+ ---------------------------------------------------------- S&P Global Ratings raised its credit ratings on Eaton Vance CDO X PLC's class C and E notes. At the same time, S&P has affirmed its ratings on the class A, B, D, and VFN notes. The rating actions follow S&P's credit and cash flow analysis of the transaction using data from the latest trustee report available -- including the most recent January 2017 payment date information -- and the application of S&P's relevant criteria. The transaction has a multicurrency structure, which is currently in its amortization phase. The reinvestment period ended on Feb. 22, 2014. Since S&P's July 2, 2015 review of the transaction, the senior notes have continued to deleverage, which has increased the level of available credit enhancement for all classes of notes. Similarly, the class E notes benefit from a turbo feature which is applied as subordinated in the transaction's waterfall of payments. Under this feature, 20% of remaining interest proceeds in respect of the due period are used to redeem the class E notes on a pro-rata basis. In S&P's view, this has contributed to the increase in credit enhancement for the class E notes. The portfolio is well diversified, in S&P's view, with about 170 performing obligors, with the average single-obligor exposure at 0.6% of the portfolio balance (excluding cash). In S&P's view, the portfolio's overall credit quality has improved since its previous review. Notably, 'BBB' rated holdings have increased since S&P's previous review, while those rated 'BB' have remained stable. Given the portfolio's improved credit quality, the scenario default rates (SDRs) have also decreased. The SDRs represent the stressed level of cumulative asset defaults commensurate, in S&P's view, with economic stresses assumed at different rating levels. The SDRs at a given rating level increase or decrease with changes in the underlying collateral characteristics of the portfolio, including changes in obligor ratings and maturity composition, issuer, industry, and country concentrations. All classes of notes continue to pass their overcollateralization tests. The portfolio also includes 3.5% of structured finance assets, for which S&P has applied its criteria for rating collateralized debt obligations (CDOs) of asset-backed securities. S&P conducted its cash flow analysis to determine the break-even default rate (BDR) for each rated class of notes 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 pay interest and repay principal to the noteholders. S&P used the portfolio balance that it considers to be performing, the reported weighted-average spread, and the weighted-average recovery rates calculated in accordance with S&P's current corporate CDO criteria. S&P applied various cash flow stress scenarios using our standard default patterns and timings for each rating category assumed for each class of notes, combined with different interest stress scenarios as outlined in S&P's criteria. S&P also applied high and low correlation and lower recovery sensitivity tests to the notes at each rating level. Considering the abovementioned factors, S&P's cash flow analysis indicates that the available credit enhancement for the class C and E notes is commensurate with higher ratings than those previously assigned. S&P has therefore raised its ratings on these classes of notes. The available credit enhancement for the class A, B, and the VFN notes can support the currently assigned ratings. S&P has therefore affirmed its 'AAA (sf)' ratings on these classes of notes. S&P's analysis shows that while the available credit enhancement for the class D notes has increased since S&P's previous review, the notes are unable to achieve higher ratings than those currently assigned. S&P has therefore affirmed its 'BBB+ (sf)' ratings on the class D notes. Eaton Vance CDO X is a cash flow CDO transaction that securitizes loans granted to primarily speculative-grade corporate firms. The transaction closed in March 2007 and Eaton Vance Management is the manager. RATINGS LIST Eaton Vance CDO X PLC EUR325 Million, US$231.51 Million Senior Secured Variable- and Floating-Rate Notes Class Ratings To From Ratings Raised C-1 AAA (sf) AA+ (sf) C-2 AAA (sf) AA+ (sf) E-1 BB+ (sf) BB- (sf) E-2 BB+ (sf) BB- (sf) Ratings Affirmed VFN AAA (sf) A-1 AAA (sf) A-2 AAA (sf) B-1 AAA (sf) B-2 AAA (sf) D-1 BBB+ (sf) D-2 BBB+ (sf) IVORY CDO: S&P Raises Rating on Class B Notes to 'BB+' ------------------------------------------------------ S&P Global Ratings raised its credit ratings on Ivory CDO Ltd.'s class A-2 and B notes. At the same time, S&P has affirmed its ratings on the class C, D, and E notes. The rating actions follow S&P's credit and cash flow analysis of the transaction, using data from the trustee report dated Feb. 1, 2017. S&P subjected the capital structure to our cash flow analysis to determine the break-even default rate for each class of notes at each rating level. In S&P's analysis, it used the reported portfolio balance that it considers to be performing, the current weighted-average spread, and the weighted-average recovery rates that S&P calculated in accordance with its criteria. S&P applied various cash flow stress scenarios, using different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. The transaction's post-reinvestment period began in December 2012. The deleveraging of the class A-1 and A-2 notes has resulted in higher available credit enhancement for the class A-2 and B notes, compared with S&P's previous review on Sept. 17, 2015. The available credit enhancement for the class C, D, and E notes has decreased because of a lower aggregate collateral balance and increased deferred interest for the class C, D, and E notes. The deferred interest is capitalized (that is, it is added to the notes' principal amount) and accrues interest. The aggregate collateral balance shrank because, as we define defaults, GBP8.4 million have occurred since our previous review. These defaults were somewhat offset by recoveries on assets that had previously defaulted and the diversion of excess interest proceeds under the transaction's diversion tests. S&P calculated that the issuer's assets had been reduced by GBP4.2 million more than the issuer's liabilities, despite the GBP8.4 million of defaults since S&P's last review in September 2015. The overcollateralization tests for all classes of notes are failing, as was the case at the previous review. The proportion of assets that S&P considers to be defaulted (rated 'CC', 'C', 'SD' [selective default], or 'D') has increased to 61.43% from 17.72% of the portfolio balance since S&P's previous review. The proportion of assets that S&P rates in the 'CCC' category ('CCC+', 'CCC', and 'CCC-') has increased to 50.55% from 20.69%, over the same period. As a result, the overall credit quality of the portfolio has deteriorated and the scenario default rates (SDRs) have increased for each rated class of notes at each rating level. The SDR is the minimum level of portfolio defaults that S&P expects each tranche to be able to withstand at a specific rating level, calculated using CDO Evaluator. Despite the losses experienced and the deterioration of the portfolio, S&P considers the amortization of the class A-1 and A- 2 notes to have significantly increased the available credit enhancement for the class A-2 and B notes. The available credit enhancement has reached a level commensurate with a higher rating than previously assigned. S&P has therefore raised to 'AA- (sf)' from 'BB+ (sf)' its rating on the class A-2 notes and to 'BB+ (sf)' from 'B+ (sf)' S&P's rating on the class B notes. S&P's cash flow analysis indicates that the available credit enhancement for the class C, D, and E notes is commensurate with the currently assigned ratings. S&P has therefore affirmed its 'CCC- (sf)', 'CC (sf)', and 'CC (sf)' ratings on the class C, D, and E notes, respectively. The portion of performing assets not rated by S&P Global Ratings is 17.5%. In this case, S&P applies its criteria "Criteria - Structured Finance - CDOs: Mapping A Third Party's Internal Credit Scoring System To Standard & Poor's Global Rating Scale," published on May 8, 2014, to map notched ratings from another ratings agency and to infer our rating input for inclusion in CDO Evaluator. In performing this mapping, S&P generally applies a three-notch downward adjustment for structured finance assets that are rated by one rating agency and a two-notch downward adjustment if the asset is rated by two rating agencies. Ivory CDO is a cash flow mezzanine collateralized debt obligation (CDO) of structured finance securities transaction, comprising a portfolio of predominantly CDO and mortgage-backed securities tranches. It is managed by Chenavari Credit Partners LLP. RATINGS LIST Ivory CDO Ltd. EUR200 Million Asset-Backed Floating-Rate Notes Class Rating To From Ratings Raised A-2 AA- (sf) BB+ (sf) B BB+ (sf) B+ (sf) Ratings Affirmed C CCC- (sf) D CC (sf) E CC (sf) MINT 2015: DBRS Confirms BB Rating on Class EUR-E Notes ------------------------------------------------------- DBRS Ratings Limited confirmed the ratings of all EUR notes issued by Mint 2015 Plc and changed the trends for the Class C, D and E Notes to Positive as follows: -- Class EUR-A at AAA (sf) with a Stable trend -- Class EUR-B at AA (high) (sf) with a Stable trend -- Class EUR-C at A (low) (sf) with a Positive trend -- Class EUR-D at BBB (low) (sf) with a Positive trend -- Class EUR-E at BB (high) (sf) with a Positive trend Following the full repayment of the Senior GBP Loan, DBRS has discontinued the ratings of all GBP notes. The rating confirmations and Positive trend changes reflect the improvement in the underlying asset's performance and the deleveraging of Mint 2015 Plc following the repayment of the GBP loans. At issuance, the transaction consisted of two loans denominated in GBP and EUR separately and secured by three hotels. BlackStone Group L.P.'s (the Sponsor) plan at issuance was to dispose of the collateral during the life of the transaction, which has been carried out recently. The Sponsor of the transaction recently sold all the London hotels included in the transaction and repaid the Senior GBP Loan accordingly. As a result, the Amsterdam hotel, DoubleTree by Hilton Amsterdam Centraal Station, securing the Senior EUR Loan, is the only remaining collateral. These property sales and repayments have positively impacted the transaction as the remaining balance of the Senior EUR Loan has been reduced to EUR 106,645,823 as a result of the release premiums (115% over the relevant property's allocated loan amount) achieved by the sales of the London hotels. Consequently, the loan-to-value (LTV) ratio of the transaction has been reduced to 36.3% based on the latest valuation (with management contract in place) dated in March 2016. DBRS has revised its net operating income (NOI) assumption of the Amsterdam hotel based on the latest performance data that has increased by 18.81% since issuance. The hotel was opened in 2011 and was rebranded in 2014. The updated DBRS NOI of the Amsterdam hotel is EUR 15.5 million, representing a 4.5% increase from the DBRS NOI at issuance. As a result, the new DBRS Value has increased to EUR 200.4 million, a 4.48% increase from issuance. All other issuance assumptions have remained unchanged in the DBRS analysis. Resulting from the increased DBRS NOI and lower LTV ratio, DBRS has changed the trends of the Class C, D and E Notes to Positive. The upcoming Dutch election and overall political environment in Europe increase the uncertainty surrounding the sponsor's disposal plan for the DoubleTree by Hilton Amsterdam Centraal Station, however given the low leverage and increasing NOI, DBRS believes the Positive trend change is supported. TAURUS 2015-3 EU: DBRS Confirms BB(sf) Rating on Class F Debt ------------------------------------------------------------- DBRS Ratings Limited confirmed the ratings on the Commercial Mortgage-Backed Floating-Rate Notes Due April 2028 issued by Taurus 2015-3 EU Designated Activity Company, as follows: - Class A at AAA (sf) - Class B at AAA (sf) - Class C at AA (sf) - Class D at A (sf) - Class E at BBB (sf) - Class F at BB (sf) All trends are Stable. DBRS has reviewed this transaction after the second-largest loan, the TEIF Loan, prepaid in full in January 2017. The rating confirmations reflect the continued stable performance of the remaining BiLux Loan since issuance. At issuance, Taurus 2015-3 Designated Activity Company was a securitisation of two floating-rate commercial real estate loans originated by Bank of America Merrill Lynch International. In December 2016, the servicer confirmed the sale of all the TEIF Loan's French assets and subsequent repayment of the loan. The loan proceeds were applied pro rata to the notes, resulting in a total collateral reduction of 44.1% since issuance. According to the January 2017 payment report, the outstanding transaction balance is EUR 81.3 million. The remaining loan, the BiLux Loan, was originated in May 2015, and served to fund the acquisition of 31 light industrial properties located in Germany and the Netherlands. At issuance, 78% of the senior loan was securitised, resulting in a whole loan balance of EUR 103.8 million and securitised balance of EUR 81.3 million. There has been no collateral reduction since issuance and the balance remains the same. The loan is sponsored by Starwood Capital Group L.P. (Starwood Capital) and M7 Real Estate Limited serves as the asset manager for the properties. As of the most recent investor report from January 2017, the BiLux portfolio continues to show tenant diversification as the properties comprise 215 tenants, 23 more than at issuance. The portfolio vacancy rate has improved to 13.9%, which is slightly lower than the 15.1% vacancy rate at issuance and well below the initial DBRS underwritten vacancy rate of 27.3%. The weighted- average lease term (inclusive of break options) for the portfolio is 3.1 years compared to the remaining loan term of approximately 3.2 years. A total of 111 leases, contributing 3.7% of the total net rental income have a lease expiration or break option during 2017. The total gross rental income of the protfolio remains stable at EUR 16.5 million as of January 2017. According to the investor report from January 2017, the projected net rental income was EUR 10.6 million, in-line with the first reported cash flow after issuance. DBRS has updated its underwriten net cash flow (NCF) to EUR 9.2 million, which incorporates a portfolio vacancy assumption of 20%. This still represents a 13.3% haircut to the most recently reported portfolio NOI. In May 2016, the portfolio was revalued at EUR 163.3 million, which reflects an increase of 10.1% since issuance. As a result, the DBRS current underwritten value of EUR 117.0 million represents a 28.3% haircut over the most recent valuation. The current whole loan- to-value ratio has decreased to 63.5%, from 70.0% at issuance. Originally, the transaction was supported by a EUR 8.2 million liquidity facility provided by Bank of America Merrill Lynch, N.A. The liquidity facility closing balance has decreased to EUR 4.6 million following the repayment of the TEIF Loan, proportional to the remaining outstanding balance. There have been no liquidity facility drawings since issuance. The final legal maturity of the Notes is in April 2028, eight years beyond the maturity date of the remaining loan, BiLux, in April 2020. If necessary, this is believed to be sufficient time to enforce the loan collateral and repay bondholders, given the security structure and jurisdiction of the underlying loans. =================== L U X E M B O U R G =================== AVOCADO BIDCO: S&P Affirms 'B' CCR, Outlook Stable -------------------------------------------------- S&P Global Ratings said it has affirmed its 'B' long-term corporate credit rating on Avocado Bidco Luxembourg S.a.r.l (Armacell), producer of flexible foam insulation products. The outlook is stable. At the same time, S&P revised down its recovery rating on Armacell's senior secured debt, including its first-lien EUR100 million RCF, the existing EUR482 million first-lien term loan, and the proposed EUR140 million first-lien upsize to '4' from '3' and affirmed S&P's 'B' issue ratings on these instruments. The recovery rating indicates S&P's revised expectation of recovery prospects of about 35% in the event of a payment default. Armacell plans to raise an additional EUR140 million first-lien debt and reprice its outstanding EUR482 million first-lien term loan. The proceeds will be used to fully repay Armacell's second-lien facility and the amounts drawn under the revolving credit facility (RCF). In S&P's view, the transaction will not have a significant impact on its projected leverage metrics for Armacell, despite somewhat stronger cash flow coverage ratios due to lower interest costs. S&P also affirmed its 'CCC+' issue rating on the group's second- lien debt, indicating S&P's expectation of negligible recovery of 0%-10% in the event of a payment default. S&P will withdraw this rating once the second-lien facility is repaid. The affirmation reflects S&P's view that the planned transaction will not materially affect Armacell's credit metrics. Following several debt-financed bolt-on acquisitions, S&P forecasts that Armacell's adjusted debt to EBITDA will remain above 6.5x in 2017, similar to 2016. The repricing of debt and lower interest costs achieved will support stronger cash flows and better coverage ratios, but overall credit metrics will remain highly leveraged and in line with S&P's 'B' long-term rating. The ratings on Armacell continue to reflect S&P's view of the company's relatively limited scale and scope of operations compared with global building materials producing peers and by its exposure to the cyclical construction industry, which accounts for more than 50% of the group's revenues. These risks are partly mitigated by the company's leading positions in the niche market of engineered foams, with strong market shares above 30% in its key regions of operation. Armacell also benefits from the geographic diversity of its business, with a balanced presence and market-leading positions in EMEA, the Americas, and Asia-Pacific. Its relatively asset-light business model and flexible cost base help it support stable profitability. The stable outlook reflects S&P's view that, over the next 12 months, Armacell's profitability will continue to gradually improve on the back of above-market-average growth in most regions, synergies achieved from recent acquisitions, and a continued focus on cost savings. At the same time, the capital structure will remain highly leveraged, with weighted-average debt to EBITDA about 6.5x. S&P could lower the ratings over the next 12 months if it saw material margin erosion due to weakening markets in Europe and Asia-Pacific, or if large debt-funded acquisitions or distributions to shareholders led to leverage metrics substantially beyond S&P's base-case scenario, with debt to EBITDA remaining above 6.5x on a sustained basis. In S&P's view, the potential for an upgrade is currently limited given the company's highly leveraged capital structure and aggressive financial policy due to its private equity ownership. A strong recurring free cash flow and adjusted debt to EBITDA improving to below 5.0x, on a consistent basis, could be positive for the ratings over the longer term. COLOUROZ MIDCO: Moody's Affirms B2 Corporate Family Rating ---------------------------------------------------------- Moody's Investors Service has affirmed the B2 Corporate Family Rating (CFR) and B2-PD probability of default rating (PDR) of ColourOz MidCo, the parent and indirect holding company of Flint group. Concurrently the rating agency has affirmed the Caa1 ratings on the Second Lien facilities outstanding and has downgraded by one notch to B2 from B1 the rating on the First Lien term loans and the revolving credit facility ('RCF' and, together with the First lien term loans issued by a group of five co-borrowers, the 'FL debt'). Moody's has also downgraded and assigned a definitive B2 from (P)B1 rating on the EUR 150m first lien term loan borrowed by FDS Holdings BV. The outlook on all ratings is stable. 'The downgrade by one notch of the First Lien debt from B1 to B2 results from the change in the debt mix, following the recent repayment of a material portion of the Second Lien with proceeds of incremental First lien term loans. As a result, the one notch uplift of the FL debt over the B2 CFR is no longer justified according to Moody's Loss Given Default methodology', says Gianmarco Migliavacca, a Vice President-Senior Credit Officer at Moody's. RATINGS RATIONALE The affirmation of the CFR at B2 reflects Moody's view that the high adjusted pro-forma gross debt/EBITDA of the company expected at the end of 2016 at c. 6x is adequately mitigated by a good liquidity position and prospects of gradual deleveraging over the next 12 to 18 months. By end of 2017 Moody's expect adjusted gross leverage to be between 5.8x and 5.9x as a result of EBITDA increase following the full integration of several small acquisitions completed during 2016 and planned debt repayments. The recent re-pricing and refinancing transactions, which resulted in a reduction of interest expenses by c. EUR 17m p.a., will support FCF generation and liquidity, however the impact on the leverage is not material. The rating is underpinned by Moody's expectation that Flint will use its excess cash only to repay the vendor notes due in 2017 and address the scheduled annual 1% amortization on the First Lien term loan, despite the existence in the First Lien agreement of a cash sweep mechanism on excess cash. That mechanism is strongly issuer-friendly, with a definition of excess cash which would leave very little left for mandatory debt prepayment. The CFR also reflects the company's (i) limited organic growth prospects due to its end market dynamics, and particularly the Print Media segment, which is in structural decline in mature markets (Europe and North America) where the segment still derives the bulk of its sales and cash flows, as well as (ii) leading market positions in its reference product segments, a broad portfolio offering, diversified customer base and geographical presence. Moody's believes that the acquisitions pursued in the last twelve months are positive for Flint's business profile, as they will support the company's growth strategy and international competitive position in its business. In particular the acquisition of Xeikon in December 2015 offered Flint the opportunity to enter the growing digital printing market with Xeikon's well established and profitable core digital printing product portfolio, which is providing a basis for additional growth options and cross selling opportunities management is currently working on. The downgrade of the FL debt ratings to B2 from B1/(P)B1 reflects the application of Moody's Loss Given Default (LGD) approach for debt instrument ratings, given the change of debt mix between First Lien and Second Lien debt following the transactions completed in February and March 2017. Following the repayment of EUR 200 million equivalent of SL facilities with equivalent amount of incremental FL term loans, the reported senior secured debt of EUR 1,846 million (excluding the EUR 150 million RCF) as of September 2016 will be split between FL and SL in a 92% to 8% ratio compared to respectively a 82% to 18% ratio previously. A much smaller amount of junior debt would no longer provide a meaningful cushion below the FL debt. In line with Moody's LGD methodology, Moody's assumes a 50% average recovery rate across Flint's debt structure. Outlook The stable outlook reflects Moody's expectation that Flint will de-lever, with an adjusted gross leverage within a 5.8x to 5.9x range by end of 2017, once all recent acquisitions fully contribute and most of the recent borrowings (RCF drawings and vendor notes) have been repaid. Moody's also assumes that Flint will reap the benefits of cost-saving measures and synergies with the new entities. The rating agency also expects that the company will continue to generate positive FCF and maintain a good liquidity position. What Could Change the Rating -- Up Upward pressure on the ratings could materialise if (1) Flint delivers its growth strategy and thus manages the print media decline whilst sustaining profitability margins and deleveraging; and/or (2) adjusted debt/EBITDA falls below 4.5x, with FCF/debt above 10%. What Could Change the Rating - Down Downward pressure on the ratings could materialise if performance weakens as a result of (1) a material deterioration of the trading environment, including an unexpected acceleration of the rate of decline of print media; (2) a change in financial policy; (3) weakening liquidity; and/or (4) the adjusted debt-to-EBITDA ratio rising above 6x on a sustained basis. The principal methodology used in these ratings was Global Chemical Industry Rating Methodology published in December 2013. Headquartered in Luxembourg, Flint is one of the largest global producers and integrated suppliers of ink and other print consumables, with a wide range of support services for the printing industry, along with leading positions in most of its key markets. In 2015 the company reported revenues of EUR 2,166 million, split 49% in EMEA, 40% in North America, 10% in Latin America and 11% in Asia Pacific. Flint is less diversified by end-markets serving the conventional printing industry through mainly two segments, namely packaging and print media, accounting for 53% and 47% of FY 2015 revenue respectively. At the end of 2015, Flint entered the digital printing sector via the acquisition of Xeikon NV (Xeikon, unrated), an established international player. On 5th September 2014, Goldman Sachs Merchant Banking Division and Koch Equity Development LLC completed their acquisition of Flint Group from CVC Partners, becoming the new shareholders with a 50% stake each. =========== R U S S I A =========== AEROFLOT RUSSIAN: Fitch Affirms 'B+' IDR, Outlook Stable -------------------------------------------------------- Fitch Ratings has affirmed Public Joint Stock Company Aeroflot - Russian Airlines' (Aeroflot) Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'B+', Outlook Stable. The affirmation reflects the improvement in Aeroflot's credit metrics and Fitch expectations that the company will maintain a robust financial profile over 2016-2019. Fitch currently anticipates FFO adjusted gross leverage to be slightly above 5x on average over 2016-2019. The rating incorporates the company's strong Russian market position, which increased to about 42% in 9M16 and its ability to adapt to challenging market conditions. The group has continued to outperform the market and it reported a 9% yoy increase in the number of passengers carried (PAX) in 9M16 against a decrease of 8% in the overall Russian air transportation market. Aeroflot's business profile is supported by the company's fairly diversified route network, favourable hub position and competitive cost structure. The 'B+' rating incorporates a one-notch uplift reflecting its links with the state. KEY RATING DRIVERS Improving Financials: Aeroflot's financial performance improved over 2015-2016 and the company reported revenue and EBITDA growth by about 20% and 30% yoy respectively in 2016. This is supported by a rise in passenger traffic, a material increase in yields in rouble terms and lower oil prices. Fitch anticipates these factors will continue to support revenue growth in 2017-2019. Fitch expects Funds from operations (FFO) adjusted gross leverage will drop to slightly above 5x on average over 2016-2019 from 5.9x at end-2015 and FFO fixed charge coverage to remain above 1.5x over the same period. Passenger Traffic Growth Expected: In 2016, Aeroflot reported an almost 15% growth in revenue-passenger-kilometres (RPK) and Fitch expects this trend to continue over 2017-2020, though at a slower pace. The anticipated average increase in the high single digits in RPK over this period will be supported by the new slots obtained from Transaero and organic capacity expansion. Fitch anticipates growth across all destinations, especially on its domestic routes. Higher Dividends Expected: Fitch considers the company's current dividend policy, which envisages a payout ratio of 25% of IFRS net income as moderate. However, there is a high risk of an increase in dividend payments, as has happened at other state- owned companies. Fitch therefore assume a 50% payout ratio for the company from 2017, which together with moderate capex would be manageable due to its strong cash-flow generation. Fitch anticipates it will remain free cash-flow positive over 2016- 2018. High FX Exposure: Aeroflot is exposed to FX fluctuations as almost all of its debt at end-9M16 (about 90%) was denominated in foreign currencies, mainly US dollars. The majority of debt is in the form of finance leases for aircraft purchases (about 89%). This is partially mitigated by revenue generated mainly in dollars or euros, or linked to euros accounting for about 60% of traffic revenue over 9M16, although about 55% of operating expenses are also denominated in foreign currencies. Strong Business Profile: Aeroflot has a solid business profile due to a fairly diversified route network, high frequency of international flights, a favourable hub position and the company's position as Russia's largest airline and flagship carrier and as a medium-sized airline among European peers. The implementation of a multi-brand strategy within Aeroflot Group provides the group with greater operational flexibility without diluting Aeroflot's brand and enables the group to target multiple customer and geographic segments, adapt more quickly to customer demands and utilise feeder traffic from regional airline subsidiaries. One-Notch Uplift: The 'B+' rating incorporates a one-notch uplift to the companies 'B' standalone rating for parental support from its ultimate majority shareholder, the Russian Federation. There has been little evidence of tangible financial support, except for royalties, but Aeroflot remains on the list of Russia's strategic enterprises and its operational and financial strategies are overseen by the state. It is seen as a means of promoting and developing Russia's aviation market. A reduction in the state's stake to below 50% coupled with evidence of diminishing state support, could lead to the withdrawal of the one-notch uplift. DERIVATION SUMMARY Aeroflot has a solid business profile due to a fairly diversified route network, high frequency of international flights, a favourable hub position and the company's position as Russia's largest airline and flagship carrier and a medium-sized airline among European peers. The rating is constrained by Aeroflot's financial profile. Parental links are reflected in a one-notch uplift in the rating. KEY ASSUMPTIONS Fitch's key assumptions within its ratings case for the issuer include: - Russian GDP growth of 1.3%-2% in Russian over 2017-2019; - Russian CPI of 5.7%-6.5% over 2017-2019; - Average USD/RUB exchange rate of 66.8 in 2016 and 62.5-65.7 over 2017-2019; - capex in line with the company's forecast; - RPK growth of about 9% CAGR over 2017-2020; - yield recovery in the low single digits. RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Positive Rating Action - Evidence of stronger state support. - Improvement in the financial profile (eg FFO adjusted gross leverage below 5.0x and FFO fixed charge cover above 1.5x on a sustained basis) due to yield recovery, successful integration of the received slots, personnel and fleet assets, moderation of investments in the fleet and/or a drop in fuel prices Future Developments That May, Individually or Collectively, Lead to Negative Rating Action - Material deterioration of the credit metrics (eg FFO adjusted gross leverage well above 6.0x and FFO fixed charge cover below 1.25x on a sustained basis) due to further rouble depreciation, a protracted downturn in the Russian economy, drop in yields or overly ambitious fleet expansion - Weakening of state support LIQUIDITY Adequate Liquidity: At end-3Q16 its cash and short-term deposits stood at RUB61 billion which together with available unused credit facilities of RUB70 billion were sufficient to cover short-term debt maturities of RUB34 billion. Moreover, Fitch expects the company to be free cash-flow positive over 2016-2018. The majority of cash at end-2015 was held with Sberbank (BBB- /Stable). FULL LIST OF RATING ACTIONS Long-Term Foreign- and Local-Currency IDRs: affirmed at 'B+', Outlook Stable Short-term foreign- and local-currency IDRs: affirmed at 'B' Foreign- and local-currency senior unsecured ratings: affirmed at 'B+/RR4' ANKOR BANK: Put on Provisional Administration, License Revoked -------------------------------------------------------------- The Bank of Russia, by its Order No. OD-550 dated March 3, 2017, revoked the banking license of Kazan-based credit institution Joint Stock Company Ankor Bank of Savings or Ankor Bank JSC from March 3, 2017, according to the press service of the Central Bank of Russia. The Bank of Russia took such an extreme measure -- revocation of the banking license -- because of the credit institution's failure to comply with federal banking laws and Bank of Russia regulations, its inability to satisfy creditors' claims, and taking into account the repeated application within a year of measures envisaged by the Federal Law 'On the Central Bank of the Russian Federation (Bank of Russia)'. ANKOR BANK JSC placed funds in low-quality assets and failed to make provisions adequate to the risks assumed. The credit institution could not fulfill its obligations to creditors on time due to the poor quality of assets, which failed to generate sufficient cash flow. The management and owners of ANKOR BANK JSC failed to take effective measures to bring the situation back to normal and recover its financial position. Under these circumstances, the Bank of Russia performed its duty on the revocation of the banking license of ANKOR BANK JSC in accordance with Article 20 of the Federal Law "On Banks and Banking Activities". The Bank of Russia, by its Order No. OD-551, dated March 3, 2017, appointed a provisional administration to ANKOR BANK JSC for the period until the appointment of a receiver pursuant to the Federal Law "On Insolvency (Bankruptcy)" or a liquidator under Article 23.1 of the Federal Law "On Banks and Banking Activities". In accordance with the federal laws, the powers of the credit institution's executive bodies have been suspended. ANKOR BANK JSC is a member of the deposit insurance system. The revocation of the banking license is an insured event as stipulated by Federal Law No. 177-FZ "On the Insurance of Household Deposits with Russian Banks" in respect of the bank's retail deposit obligations, as defined by law. The said Federal Law provides for the payment of benefits to the bank's depositors, including individual entrepreneurs, in the amount of 100% of the balance of funds but no more than RUR1.4 million per one depositor. According to reporting data, as of February 1, 2017, ANKOR BANK JSC ranked 233rd in the Russian banking system in terms of assets. INTECHBANK PJSC: Put on Provisional Administration -------------------------------------------------- The Bank of Russia, by its Order No. OD-546 dated March 3, 2017, revoked the banking license of the Kazan-based credit institution Public Joint-stock Company IntechBank or PJSC IntechBank from March 3, 2017, according to the press service of the Central Bank of Russia. The Bank of Russia took such an extreme measure -- revocation of the banking license -- because of the credit institution's failure to comply with federal banking laws and Bank of Russia regulations, because the capital adequacy ratio of this credit institution was below 2% and its equity capital dropped below the minimum authorised capital value established by the Bank of Russia as of the date of the state registration of the credit institution, and taking into account the repeated application within a year of measures envisaged by the Federal Law "On the Central Bank of the Russian Federation (Bank of Russia)". PJSC IntechBank placed funds into low-quality assets and failed to adequately assess risks assumed. The creation of required additional provisions lead to a full loss of capital by the bank. The management and owners of the bank have not taken measures required to normalize its activities. Considering the low quality of assets, it did not seem feasible to conduct the financial resolution of PJSC IntechBank with the involvement of the state corporation Deposit Insurance Agency and the bank's creditors on reasonable economic conditions. Under these circumstances, the Bank of Russia performed its duty on the revocation of the banking license of the credit institution in accordance with Article 20 of the Federal Law "On Banks and Banking Activities". Due to the revocation of the banking license, by its Order No. OD-547 dated March 3, 2017, the Bank of Russia terminated the activity of the provisional administration to manage PJSC IntechBank whose functions had been assigned to the state corporation Deposit Insurance Agency by Bank of Russia Order No. OD-4709, dated December 23, 2016. The Bank of Russia, by its Order No. OD-548 dated March 3, 2017, appointed a provisional administration to PJSC IntechBank for the period until the appointment of a receiver pursuant to the Federal Law "On the Insolvency (Bankruptcy)" or a liquidator under Article 23.1 of the Federal Law "On Banks and Banking Activities". In accordance with federal laws, the powers of the credit institution's executive bodies are suspended. PJSC IntechBank is a member of the deposit insurance system. The insured event shall deem occurred on the same date when a moratorium on the satisfaction of PJSC IntechBank creditors' claims was introduced (December 23, 2016). This date also applies for the calculation of insurance benefits on the bank's foreign currency liabilities. The revocation of the banking license prior to the expiry of the moratorium on the satisfaction of creditors' claims shall not make void the legal implication of such moratorium, including the obligation of the state corporation Deposit Insurance Agency to pay insurance benefits to depositors. The Agency shall continue to pay out insurance benefits on deposits (accounts) with PJSC IntechBank as stipulated by Clause 2 of Part 1 of Article 8 of the Federal Law "On the Insurance of Household Deposits with Russian Banks" -- the imposition by the Bank of Russia of the moratorium to meet creditors' claims until the completion of bankruptcy proceedings. According to the financial statements, as of February 1, 2017, PJSC IntechBank ranked 138th by assets in the Russian banking system. TATFONDBANK: Moody's Cuts LT Deposit & Unsec. Debt Ratings to C --------------------------------------------------------------- Moody's Investors Service has downgraded Tatfondbank's long-term global, local and foreign-currency deposit and senior unsecured debt ratings to C from Caa1. The C ratings do not carry outlooks. At the same time, Moody's downgraded the bank's baseline credit assessment (BCA) and adjusted BCA to c from caa3. The rating agency also affirmed the bank's Not-Prime short-term local and foreign currency deposit ratings. Moody's also downgraded the bank's long-term Counterparty Risk Assessment (CR Assessment) to C(cr) from B3(cr) and affirmed the bank's short-term CR Assessment of Not-Prime(cr). Moody's will then subsequently withdraw all the bank's ratings following the withdrawal of its banking license by the Central Bank of Russia (CBR). This rating action concludes the review for downgrade placed on Tatfondbank's ratings in December 2016 and follows the announcement of the CBR on March 3, 2017 that it had revoked Tatfondbank's banking license. RATINGS RATIONALE The downgrade and Moody's subsequent ratings withdrawal follow the CBR's announcement on 3 March 2017 that it had revoked Tatfondbank's banking license, as a result of the entity's inability to comply with state laws on banking activity and CBR's regulation, Tatfondbank's capital shortfall and its inability to meet creditors' claims. The downgrade of Tatfondbank's ratings reflects Moody's expectations of heavy losses that the bank's creditors are likely to incur as a result of liquidation, given (1) the bank's poor asset quality; (2) capital shortfall; and (3) historical recovery data for similar cases in Russia, when banks' licenses have been revoked. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Banks published in January 2016. Headquartered in Kazan, Russia, Tatfondbank reported total assets of RUB220.9 billion under unaudited IFRS on September 30, 2016. ========= S P A I N ========= SANTANDER CONSUMER2016-1: DBRS Confirms BB Rating on D Notes ------------------------------------------------------------ DBRS Ratings Limited has taken the following rating actions on the Notes issued by FT Santander Consumer Spain Auto 2016-1 (the Issuer): -- EUR650,200,000 Series A Notes confirmed at AA (sf) -- EUR30,600,000 Series B Notes confirmed at A (sf) -- EUR42,100,000 Series C Notes confirmed at BBB (sf) -- EUR23,000,000 Series D Notes confirmed at BB (low) (sf) The above-mentioned rating actions follow an annual review of the transaction and are based on the following analytical considerations, as described more fully below: -- The overall portfolio performance as of the January 2017 payment date, in particular with regard to low levels of cumulative net loss and delinquencies. -- The current levels of credit enhancement available to the Notes to cover expected losses assumed in line with their respective rating levels. -- The transaction has not experienced any events terminating its revolving period. -- The ability of the transaction to withstand stressed cash flow assumptions and repay investors according to the terms and conditions of the Notes. The rating of the Series A Notes address the timely payment of interest and the ultimate repayment of principal on or before the Legal Maturity Date in April 2032. The ratings of the Series B, Series C and Series D Notes address the ultimate payment of interest and repayment of principal on or before the Legal Maturity Date in April 2032. FT Santander Consumer Auto Spain 2016-1 is a securitisation consisting of Spanish auto loan receivables granted by Santander Consumer E.F.C., S.A. (SC), a subsidiary of Santander Consumer Finance, S.A. (SCF). The EUR 765.0 million portfolio, as of the January 2017 payment date, consists of loans for both the purchase of new (78.9%) and used (21.1%) vehicles, underwritten to mostly retail (95.4%) and some commercial (4.6%) clients. The transaction closed on March 16, 2016 and envisaged an initial 40-month revolving period, due to mature on the July 2019 payment date. PORTFOLIO PERFORMANCE As of the January 2017 payment date, 30-day to 60-day arrears were 0.3% of the outstanding principal balance and 60-day to 90- day delinquencies were 0.1%, while delinquencies greater than 90 days were 0.3%. No principal losses have been realised currently to the portfolio. CREDIT ENHANCEMENT Credit Enhancement (CE) is initially provided by the subordination of the respective junior obligations. Additionally, the Cash Reserve can be used in the event of Issuer default and final maturity. As of January 2017, CE for the Series A Notes has remained at 17.0% since closing, CE for the Series B Notes has remained at 13.0% since closing, CE for the Series C Notes has remained at 7.5% since closing and CE for the Series D Notes has remained at 4.5% since closing. REVOLVING PERIOD As of the January 2017 payment date, no performance triggers have been breached, causing the revolving period to mature early. To further mitigate the deterioration of the pool, the transaction permits certain concentration limits on the additional portfolios purchased on each payment date. The "worst-case" portfolio composition was considered in the cash flow analysis. The non-amortising Cash Reserve was funded from the issuance of the Series F Notes. It is primarily available to cover senior fees, expenses and the interest due on the Series A-E Notes, but can be applied to offset principal losses in the event of Issuer default or at final maturity. It has remained at its target of EUR 15.3 million since closing. To mitigate any disruptions in payments due to the replacement of the servicer or the risk that the Servicer fails to transfer the collections to the Issuer, the transaction documents envisage Liquidity and Commingling Reserves. These were unfunded at closing and will only be funded if the DBRS rating of SC's parent company (SCF) falls below specific thresholds as defined in the legal documentation. These reserves continue to be unfunded, as none of the rating triggers have been breached to date. Set-off risk is not relevant in this jurisdiction. Since both the receivables and the Notes pay a fixed rate of interest, there is a natural hedge inherent in the transaction. SCF acts as the Account Bank for the transaction. DBRS's private rating of SCF complies with the minimum institution rating given the ratings assigned to the Notes, as described in DBRS's "Legal Criteria for European Structured Finance Transactions" methodology. The ratings assigned to the Series D Notes materially deviate from the higher ratings implied by the methodology. In this case, the ratings also reflect qualitative factors such as the absence of any evidence of defaults so far, given the definition of defaulted loans and the short period since closing. * Moody's: Spanish ABS SME 90-360 Day Delinquencies Remain Stable ----------------------------------------------------------------- The 90-360 day delinquencies of the Spanish asset-backed securities backed by loans to small and medium-sized enterprises (ABS SME) decreased to 1.2% of original pool balance in December 2016 from 1.4% in September 2016 according to the latest indices published by Moody's Investors Service. The 90-360 day delinquency index decrease can be mostly explained by the termination of Catalunya Banc S.A. transactions. The 60-90 day delinquency index decreased to 0.4% in December 2016 from 0.7% in September 2016. Cumulative defaults also decreased to 3.2% from 3.8% in the same period. The cumulative default rate for transactions issued by Catalunya Banc S.A. and Banco CAM were historically the highest among originators. Banco CAM deals have the highest cumulative default rate out of the outstanding deals with 8.2% in December while Catalunya Banc S.A. deals are now fully redeemed. The annualized monthly constant prepayment rate increased to 11.3% in December 2016 from 10.8% in December 2015. This represents a 5% increase since last year. As of December 2016, Moody's rated 33 transactions in the Spanish ABS SME market, with an outstanding pool balance of EUR16.9 billion compared to EUR13.5 billion in September 2016, representing an increase of 26%. Two new transactions IM Grupo Banco Popular Empresas VII, FT and CAIXABANK PYMES 8, FONDO DE TITULIZACION have been added to the index. =========== T U R K E Y =========== AKBANK TAS: Moody's Gives (P)B1 Rating to USD Denominated Notes --------------------------------------------------------------- Moody's Investors Service has assigned a provisional (P)B1(hyb) long-term foreign-currency subordinated debt rating to Akbank TAS's (Akbank -- long term foreign currency deposit rating of Ba2 with a stable outlook, short term foreign currency deposit rating of NP and BCA of ba2) planned US dollar-denominated contractual non-viability Tier 2 bond issuance (the notes) under its global medium term note programme. RATINGS RATIONALE The provisional rating assigned to the subordinated debt obligations of Akbank is positioned two notches below the bank's adjusted baseline credit assessment (BCA) of ba2, in line with Moody's standard notching guidance for subordinated debt with loss triggered at the point of non-viability, on a contractual basis. The provisional rating does not incorporate any uplift from government support. The planned subordinated debt issuance is expected to be Basel III-compliant and eligible for Tier 2 capital treatment under Turkish law. The positioning of Akbank's provisional rating two notches below the bank's adjusted BCA reflects the potential for greater uncertainty associated with the timing of a principal write-down when compared to any "plain vanilla" subordinated debt. In this respect, Moody's highlights that - as a way for the bank to avoid a bank-wide resolution - the notes may be forced to absorb losses ahead of "plain vanilla" subordinated debt, if any. Moody's issues provisional ratings in advance of the final sale of the securities. The ratings, however, only represent Moody's preliminary credit opinion. Upon conclusive review of all transaction and associated documents, Moody's will endeavour to assign definitive ratings to the notes. A definitive rating may differ from a provisional rating if the terms and conditions of the issuance are materially different from those of the preliminary prospectus reviewed. WHAT COULD CHANGE THE RATING UP/DOWN The assigned rating is notched from the adjusted BCA of Akbank and further movements will be contingent on the changes in this reference point. PRINCIPAL METHODOLOGY The principal methodology used in this rating was Banks published in January 2016. AKBANK TAS: Fitch Rates Tier 2 Capital Notes 'BB(EXP)' ------------------------------------------------------ Fitch Ratings has assigned Akbank T.A.S.'s (BB+/Stable/bb+) planned issue of Basel III-compliant Tier 2 capital notes an expected rating of 'BB(EXP)'. The final rating is subject to the receipt of the final documentation conforming to information already received by Fitch. The notes qualify as Basel III-complaint Tier 2 instruments and contain contractual loss absorption features, which will be triggered at the point of non-viability of the bank. According to the draft terms, the notes are subject to permanent partial or full write-down upon the occurrence of a non-viability event (NVE). There are no equity conversion provisions in the terms. An NVE is defined as occurring when the bank has incurred losses and has become, or is likely to become, non-viable as determined by the local regulator, the Banking and Regulatory Supervision Authority (BRSA). The bank will be deemed non-viable when it reaches the point at which either the BRSA determines that its operating licence is to be revoked and the bank liquidated, or the rights of Akbank's shareholders (except to dividends), and the management and supervision of the bank, should be transferred to the Savings Deposit Insurance Fund on the condition that losses are deducted from the capital of existing shareholders. The notes have an expected 10-year maturity and a call option after five years. KEY RATING DRIVERS The notes are rated one notch below Akbank's Viability Rating (VR) of 'bb+' in accordance with Fitch's "Global Bank Rating Criteria". The notching includes zero notches for incremental non-performance risk relative to the VR and one notch for loss severity. Fitch has applied zero notches for incremental non-performance risk, as the agency believes that write-down of the notes will only occur once the point of non-viability is reached and there is no coupon flexibility prior to non-viability. The one notch for loss severity reflects Fitch's view of below- average recovery prospects for the notes in case of an NVE. Fitch has applied one notch, rather than two, for loss severity, as partial, and not solely full, write-down of the notes is possible. In Fitch's view, some uncertainty exists over the extent of losses the notes would face in case of an NVE, given that this would be dependent on the size of the operating losses incurred by the bank and any measures taken by the authorities to help restore the bank's viability. RATING SENSITIVITIES As the notes are notched down from Akbank's VR, their rating is sensitive to a change in this rating. The notes' rating is also sensitive to a change in notching due to a revision in Fitch's assessment of the probability of the notes' non-performance risk relative to the risk captured in Akbank's VR, or in the agency's assessment of loss severity in case of non-performance Akbank's ratings are: Long-Term Foreign Currency (FC) and Local Currency (LC) IDRs 'BB+'; Outlook Stable Short-term FC and LC IDRs 'B' Viability Rating 'bb+' Support Rating '4' Support Rating Floor 'B+' National Long-term Rating 'AA+(tur)'; Outlook Stable T2 capital notes: 'BB(EXP)' ============= U K R A I N E ============= DTEK ENERGY: Fitch Affirms 'RD' LT Issuer Default Ratings --------------------------------------------------------- Fitch Ratings has affirmed Ukraine-based DTEK Energy B.V.'s Long- Term Foreign-Currency (FC) and Local-Currency (LC) Issuer Default Ratings (IDRs) at 'RD' (Restricted Default). The agency has also assigned DTEK's newly issued US dollar Eurobond a senior unsecured rating of 'C'. The Recovery Rating is 'RR4'. The affirmation of the IDR at 'RD' reflects the fact that DTEK is finalising the restructuring of its bank loans. The company completed the restructuring of its Eurobonds at end-2016. Upon completion of its bank debt restructuring DTEK's FC and LC IDRs and the senior unsecured rating for the Eurobonds are likely to be upgraded to 'CCC' to reflect the company's post-restructuring capital structure and business risk. KEY RATING DRIVERS Post-Restructuring IDR: Fitch expects to upgrade DTEK's LT IDRs to 'CCC' from 'RD' upon completion of the restructuring of its bank loans, which is due by end-March 2017. Fitch assess the company's post-restructuring capital structure and high business risk to be commensurate with a 'CCC' rating. Currently, DTEK is at risk of disruptions in coal supply and the loss of its assets in the Donetsk and Lugansk regions. Fitch estimates this could result in a 40% drop in EBITDA in 2017. Fitch's analysis shows that DTEK's liquidity is just about sufficient for the next two years but that credit metrics will deteriorate if the loss of the operations in the Donetsk and Lugansk regions materialises. Post-Restructuring Maturities: The new Eurobond issue for USD1,275 million is split into two equally sized tranches due December 2023 and December 2024. The restructured bank debt will have small annual amortisation payments. The company can repay the 2017-2018 amortisation payments of USD102.5 million (UAH2.8 billion) from existing cash balances. The 2019-2022 annual principal repayments of USD80 million (UAH2.2 billion) are comfortable for the company. However, Fitch expects the company to be reliant on external funding from 2019. Adequate Liquidity: Fitch estimates, DTEK's liquidity at UAH7.5 billon (USD279 million) on 28 January 2017, which is comfortable to cover 2017-2018 maturities totalling UAH2.8 billion and expected negative free cash flow of almost UAH5 billion, assuming adverse political developments in eastern Ukraine (ie the loss of the operations in the areas of dispute). Exposure to Political Instability: DTEK has a number of assets located in, or near to the parts of Donetsk and Lugansk regions, where there has been armed conflict - representing 29% of total assets and 21% of revenue as of end-1H16. Moreover, electricity production at two power plants which account for 17% of DTEK's electricity volumes (as of end-2016) may be suspended due to lack of coal supplies from non-controlled territories. Fitch estimates that around 20% of DTEK's revenue is at risk if the company loses its assets in the military area. Fitch expects funds from operations (FFO) gross adjusted leverage to increase to above 10x over 2017-2020, from around 5x at end- 2016 on the back of the expected deteriorating operational performance. Adequate Recovery: Upon completion of bank debt restructuring, the senior unsecured rating of the new USD1.3bn Eurobond is likely to be upgraded to 'CCC' from 'C' in line with DTEK's expected post-restructuring FC IDR of 'CCC', reflecting average recovery prospects given default. The Eurobond was issued by DTEK Finance plc (UK) and ranks pari passu with other unsecured debt and benefits from suretyships from all holding and material operating companies, which account for the major part of the group's 2016 EBITDA and assets. Fitch recovery analysis also takes into account the potential loss of assets in Donetsk and Lugansk regions and the consequent loss of earnings. Foreign-Currency Exposure: Most of DTEK's debt is denominated in foreign currencies, ie US dollars and euros as of end-2016. This contrasts with less than 10% of the revenue in US dollars. However, in April 2016 the Ukrainian regulator introduced a new wholesale electricity price-setting methodology, which envisages linking the electricity price to FX for thermal generators in Ukraine. Fitch views this positively, as it will provide hedging for a part of DTEK's foreign-currency denominated debt. DERIVATION SUMMARY DTEK Energy B.V. is the largest private vertically integrated power generating and distribution company in Ukraine. DTEK's closest peers are CIS-based vertically integrated players such as Kazakh Joint Stock Company Central-Asian Electric-Power Corporation (CAEPCo, B+/Stable), Kazakhstan Utility Systems (KUS, BB-/Stable) and Russian Inter RAO (BBB-/Stable). In contrast to its peers, DTEK's operations are subject to high business risk due to significant political instability in Ukraine and further possible macroeconomic shocks. It has a much weaker financial profile than its peers. KEY ASSUMPTIONS Fitch's key assumptions within Fitch ratings case for the issuer include: - domestic GDP growth of 2.5% in 2017 and 3.0% in 2018-2020, and inflation of 9.5% in 2017 and to average 7% in 2018-2020; - flat exchange rate of USD/UAH 27 over the rating horizon; - debt split by FX in line with 2016 breakdown; - capital expenditure at average UAH4.5bn over 2018-2020; - no dividend payments; - completion of bank loan restructuring by end-March 2017; - loss of revenues from DTEK's assets in military areas. RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Negative Rating Action - DTEK entering into bankruptcy filings, administration, receivership, liquidation or other formal winding-up procedure Future Developments That May, Individually or Collectively, Lead to Positive Rating Action - Once restructuring is completed and sufficient information is available, the 'RD' rating will be revised to reflect the appropriate IDR for the issuer's post-restructuring capital structure, risk profile and prospects. FULL LIST OF RATING ACTIONS DTEK Energy B.V. Long-Term Foreign- and Local-Currency IDRs: affirmed at 'RD' Short- Term Foreign- and Local-Currency IDRs: affirmed at 'RD' National Long-Term Rating: affirmed at 'RD(ukr)' Foreign-currency senior unsecured rating: affirmed at 'C' DTEK Finance plc Foreign-currency senior unsecured rating for the new USD1,275 billion bonds: assigned at 'C'; Recovery Rating 'RR4'. =========================== U N I T E D K I N G D O M =========================== BOOTS UK: Will Be Closing 220 In-store Photo Labs ------------------------------------------------- Ephotozine News reports that as more people than ever are turning away from traditional photo printing, Boots UK Limited has announced that it is planning to close many of its in-store photo labs in the UK. Out of the 320 Boots photo labs in operation, 220 will be closed and staff that will be affected will be taking part in a consultation that will last until August, according to Ephotozine News. As of yet, the company hasn't disclosed which stores will be affected but they have said that customers who will no longer have access to a photo lab will still be able to print images in- stores via an automated kiosk, the report notes. The report relates that the films can also be sent away for developing at Boots head office where they also produce photo gifts, an area of the market that's actually seen growth. More people than ever are also printing photos directly from smartphones so the company turning its focus to instant kiosks is understandable, the report says. As well as photo gifts and smartphone prints, the instant film market is also seeing a revival with brands such as Fujifilm Instax not leaving Amazon's most popular lists, the report adds. About Boots Boots UK Limited, trading as Boots, is a pharmacy chain in the United Kingdom and Ireland, with outlets in most high streets, shopping centres and airport terminals. ECO RESOURCES: Goes Into Voluntary Liquidation ---------------------------------------------- Adrian Darbyshire at IOM Today reports that another fund linked to the troubled Premier Group (Isle of Man) Ltd is set to be wound up. Premier Group, which went into voluntary liquidation in November, was promoter and manager of Eco-Resources Fund, which it set up as a joint venture with EcoPlanet Bamboo Group to invest in bamboo plantations in Nicaragua and South Africa, according to IOM Today. It was billed as a 'truly green fund'. Eco Resources Fund had a total of 189 investors and a valuation of USD61 million, the report notes. But in December last year, the island's financial watchdog, the Financial Services Authority, sought a court order to appoint an inspector to investigate the affairs of the fund, the report relates. The report notes that Eco-Resources' board of directors resolved to put the fund into voluntary liquidation as they believed it was insolvent. At that point, the fund had a balance of just GBP12,545 but owed creditors GBP2.7 million, the report says. According to the report Premier Group's joint liquidators - Craig Mitchell and David Craine of Browne Craine and Co - issued a statutory demand for fees totaling GBP2.3 million which Eco- Resources's directors said they were not in a position to settle, the report discloses. But the shareholders voted against winding up the fund at an EGM held on December 16. Directors Jamie Sutton, Antony Parry and William Burgoyne saw the members' decision not to place the company into liquidation as a vote on no confidence in them and resigned with immediate effect, the report relays. The FSA's controller has assumed control of the scheme. The report notes that in January, there was a meeting called to appoint new directors Troy Douglas Wiseman, Richard Robinson and John Charles Bourbon -- the latter being a director of Premier Group and a former head of supervision at the island's Financial Supervision Commission. But on the morning of the meeting, the three proposed new directors gave notice that they were no longer prepared to stand. Now the regulator is seeking a court order to put the company into liquidation, the report discloses. The report relays Premier Group liquidator Mr. Mitchell said: 'Eco-Resources still has the FSA appointed controller in place but I understand the regulator has now petitioned the court to put the company into liquidation.' EcoPlanet Bamboo Group, founded by Troy Wiseman in 2010, has a complex corporate structure with associated companies in Delaware. EcoPlanet Bamboo (IOM) Ltd is wholly owned by ERF Ltd, which is itself wholly-owned by Eco-Resources Fund PCC plc. According to the report, the FSA had also sought for the liquidation of the Premier Group IoM to be carried out under the supervision of the court, the report relays. However, a consent order has been agreed to proceed with a creditors' voluntary liquidation, the report notes. The report says Premier Group IoM also managed the New Earth group of funds, which went into liquidation in June and an official receiver appointed following an application by the FSA. The report discloses the New Earth group of funds, comprising New Earth Recycling and Renewables (Infrastructure) plc (NERR), Premier Investment Opportunities Fund PCC plc and Eclipse Investment Fund PCC plc, had a valuation of USD292.22 million and a total of 3,249 investors, the majority of whom are unlikely to get much of their money back, the report adds. FOOD RETAILER: To Close 34 Budgens Stores, 815 Jobs Affected ------------------------------------------------------------ Sam Dean at The Telegraph reports that hundreds of supermarket workers will lose their jobs after one of the retailers behind the Budgens chain revealed it would be closing more than 30 of its stores. Food Retailer Operations Limited (FROL), which operates 34 Budgens stores in the UK, has gone into administration less than a year after it bought the stores from the Co-op, The Telegraph relates. According to The Telegraph, administrators said they had been unable to find a buyer for the stores, which employ more than 800 people across the country, from Dorset to Scotland. Nine of the stores were shut at the weekend, with the remaining 25 to be closed over the next fortnight, The Telegraph relays. In a statement, FROL, as cited by The Telegraph, said: "FROL operated 34 convenience stores across the UK, which trade under the Budgens brand and employ 815 people. "Since its acquisition of the stores from Co-op in July 2016, the company had experienced difficult trading conditions. This resulted in the company being placed into administration despite sustained efforts to make the business more commercially viable." PwC were appointed to handle FROL's administrators last month, The Telegraph recounts. According to The Telegraph, FROL added: "Following their appointment, the administrators have been assessing interest in the business. "As a result, following the closure of nine stores, the remaining 25 stores will, regrettably, cease trading over the course of the next two weeks with the loss of the remaining 611 jobs." "Unfortunately, we have been unable to find a buyer and it is not commercially viable to continue trading the stores," The Telegraph quotes Mike Denny, joint administrator, as saying. The 34 stores represent less than a third of all Budgens outlets, The Telegraph notes. About Food Retailer Operations Food Retailer Operations Limited operates 34 convenience stores across the UK, which trade under the Budgens brand and employs 872 people. It also holds the leasehold interests in a further 36 non-trading stores, two non-trading properties and the head office of the former Somerfield business. Since FROL's acquisition of the Budgens stores from the Co- operative Group in July 2016, the Company has experienced difficult trading conditions. The Company launched a Company Voluntary Arrangement (CVA) proposal, but it was voted down by creditors. This has resulted in the Company being placed into administration on February 10, 2017, and there will be a sale process to find a purchaser for all or some of the stores. Michael Denny, Robert Moran and Matthew Hammond of PricewaterhouseCoopers (PwC) were appointed as Joint Administrators of Food Retailer Operations Limited on February 10, 2017. The Troubled Company Reporter-Europe reported on Jan. 23, 2017, citing TalkingRetail, that the Budgens stores facing closure are in Gillingham (Kent), Greenwich (south-east London), Blackburn (Lancashire), Willenhall (West Midlands), Buckley (Flintshire), Wisbech (Cambridgeshire), Paisley (Renfrewshire), Aberystwyth (Ceredigion), Helston (Cornwall), Monmouth (South Wales), Totnes (Devon) and Ludlow (Shropshire). MUST HAVE: Tax Woes Prompt Administration, 265 Jobs Affected ------------------------------------------------------------ Belfast Telegraph reports that vaping firm Must Have Limited, doing business VIP Electronic Cigarette, has collapsed into administration, putting 265 jobs at risk. FRP Advisory has been appointed as administrator to Must Have Limited, which trades as VIP and has 165 retail stores across the UK, Belfast Telegraph relates. VIP, which is based in Radcliffe, Greater Manchester, will continue trading and all 265 staff will be retained while FRP seeks a buyer for the business, Belfast Telegraph discloses. According to Belfast Telegraph, its US owner, Electronic Cigarettes International Group (ECIG), said Must Have Limited was placed in administration after it was left unable to pay taxes of around US$3 million (GBP2.5 million) to HM Revenue and Customs. The group added the administration has also triggered around US$104 million (GBP85.3 million) of outstanding debt to be "immediately due and payable", Belfast Telegraph notes. About Must Have Limited Must Have Limited, doing business as VIP Electronic Cigarette, designs and manufactures electronic cigarettes. The company was incorporated in 2004 and is based in Manchester, United Kingdom. As of April 22, 2014, Must Have Limited operates as a subsidiary of Electronic Cigarettes International Group, Ltd. PREMIER OIL: To Tap Oilfield Services Firms to Help Fund Projects ----------------------------------------------------------------- Nathalie Thomas at The Financial Times reports that Premier Oil is approaching oilfield services companies about helping to fund its next major projects, including a US$1.5 billion development off the Falkland Islands, as the heavily indebted UK oil and gas producer seeks alternatives to bank finance. The company last month agreed terms with key lenders on the refinancing of its existing net debt pile, which stood at US$2.8 billion at the end of December, the FT recounts. Premier on March 9 reports results for 2016, but shareholders' focus is likely to be on the proposed refinancing, reflecting how it has yet to be approved by the required number of creditors, the FT notes. The company was hit hard by the slump in oil prices two and half years ago, reporting losses for 2014 and 2015, although it recorded a pre-tax profit of US$110 million for the first half of last year, the FT relays. Premier, the FT relates, is hoping to press ahead with two major investments over the next two years: (i) the US$600 million Tolmount project in the North Sea, the largest gas discovery in the southern part of the basin in recent years, and (2) the US$1.5 billion Sea Lion oil development off the Falkland Islands. Premier is hoping to tap into a need for new contracts in the oilfield services industry, much of which is reeling from the impact of the crude price crash, the FT discloses. Premier Oil is a London-based oil and gas explorer. PREMIERTEL PLC: Fitch Affirms BB Rating on GBP195.8MM Cl. B Notes ----------------------------------------------------------------- Fitch Ratings has affirmed Premiertel plc's CMBS notes: GBP67.2 million Class A (XS0180245515) due May 2029: affirmed at 'AAsf'; Outlook Stable GBP195.8 million Class B (XS0180245945) due May 2032: affirmed at 'BBsf'; Outlook Stable Premiertel plc is a securitisation of a loan financing long-term rental cash flows from a portfolio of five office properties located throughout the UK (two in England, two in Scotland and one in Northern Ireland) and fully let to British Telecommunications plc (BT; BBB+/Stable/F2). KEY RATING DRIVERS The affirmation of the class A notes reflects the adequacy of Fitch's stressed vacant possession value (VPV) and available liquidity in its 'AAsf' rating scenario. Both the loan and the notes (specifically the class B notes, which are capped at BT's rating) continue to accrue a shortfall against scheduled (deferrable) principal payments in line with Fitch's expectations. The source of the shortfall is an increase in transaction costs due to fees related to the liquidity facility standby drawing. Fitch does not expect this added cost to be recouped from rental cash flow, leaving a portion of the class B notes at risk of being unpaid at the expiry of the lease in 2032 (also legal maturity). This exposes class B investors to risks associated with the borrower's ability and willingness to refinance its portfolio by lease expiry (there is no tail period). Fitch assessed refinancing risk in relation to the sufficiency of the sponsor's estimated future equity in the VPV of the portfolio in the run-up to bond maturity. While any unpaid debt should be relatively minor (provided the lease performs in full) reliance on unenforceable financial incentives so far into the future, together with the lack of applicable liquidity support for the notes, precludes an investment grade rating for the class B notes. When gauging VPV in 2032 Fitch addresses a likely deterioration in asset quality over time by applying weaker property scores. Since all assets will be more than 30 years old by bond maturity, this scoring approach gives no credit to recoveries in 'AAsf' and 'AAAsf' scenarios. Fitch adopts a loan rating analysis to assess the adequacy of the borrower's equity in providing an incentive and means for full debt repayment, leading to a 'BBsf' rating (two categories below breakeven). RATING SENSITIVITIES A weakening in property market conditions could cause a downgrade of either class of notes by reducing VPV. A class A downgrade would be floored by the rating of the tenant as these notes continue to receive all scheduled amortisation proceeds. On the other hand, as long as BT performs, the notes will deleverage further, which could lead to an upgrade of the senior class. As the rating of the class B notes is capped at BT's rating, a sharp downgrade in the tenant's rating may lead to a downgrade of the class B notes. USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO RULE 17G-10 Form ABS Due Diligence-15E was not provided to, or reviewed by Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. There were no findings that were material to this analysis. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. Fitch did not undertake a review of the information provided about the underlying asset pool ahead of the transaction's initial closing. The subsequent performance of the transaction over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable. ********* 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 publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000 or Nina Novak at 202-362-8552. * * * End of Transmission * * *