TCREUR_Public/170413.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

          Thursday, April 13, 2017, Vol. 18, No. 74


                            Headlines


F R A N C E

BURGER KING: Moody's Assigns First Time B3 CFR, Outlook Stable
BURGER KING: S&P Assigns 'B-' CCR, Outlook Stable
SPCM SA: Moody's Rates Proposed $450MM Sr. Unsecured Notes Ba2


G E R M A N Y

AEG POWER: Creditors Approve Restructuring Plan


I R E L A N D

EUROPEAN RESIDENTIAL 2017-NPL1: DBRS Rates Class C Notes BB (sf)
HARVEST CLO III: Moody's Hikes Rating on Class E-1 Notes from Ba1
OAK HILL II: Moody's Hikes Rating on Class E Notes from Ba2(sf)
PALMERSTON PARK: Fitch Assigns B- Rating to Class E Notes
PRECISE MORTGAGE 2017-1B: Fitch Rates Class E Notes 'BB+ (EXP)'


I T A L Y

BANCA CARIGE: Fitch Puts B- IDR on Rating Watch Negative
CREDITO VALTELLINESE: Fitch Rates EUR150MM Tier 2 Notes BB-
UNIPOL BANCA: Fitch Affirms BB Long Term IDR, Outlook Stable


M O N T E N E G R O

MONTENEGRO REPUBLIC: S&P Affirms 'B+/B' Sovereign Credit Ratings


P O R T U G A L

* Portugal Makes Progress in Addressing Legacy Banking Problems


S P A I N

BANCO POPULAR: DBRS Cuts Subordinated Debt Rating to BB (high)
FTA EMPRESAS 2: Fitch Affirms Csf Rating on Class F Notes
SRF 2017-1 FONDO: DBRS Finalises BB(sf) Rating on Class D Notes


U K R A I N E

VOLYNVUHILLIA: PM Supports Temporary Moratorium on Bankruptcy


U N I T E D   K I N G D O M

BRIGHTHOUSE GROUP: S&P Cuts ICR to 'CCC' on Likely Restructuring
CO-OPERATIVE BANK: Warns Rescue Plans May Impact Bondholders
DECO 8 - UK CONDUIT: DBRS Cuts Remaining Swap Rating to B(sf)
KAYBOO: MP Calls for Investigation Into Collapse
MOY PARK: S&P Raises CCR to 'BB' on Stronger Credit Metrics

NOMAD FOODS: S&P Assigns 'BB-' CCR, Outlook Stable
PAVETESTING LTD: Averts Collapse With Eight-Month Rescue Plan
PRECISE 2017-1B: Moody's Assigns (P)Ba2 Rating to Class E Notes
TULLOW OIL: Moody's Affirms B2 CFR on Solid Business Profile


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F R A N C E
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BURGER KING: Moody's Assigns First Time B3 CFR, Outlook Stable
--------------------------------------------------------------
Moody's Investors Service assigned a first time corporate family
rating (CFR) of B3 and a probability of default rating (PDR) of
B3-PD to Burger King France S.A.S. ("BK France").

Concurrently, Moody's has assigned a B3 rating to the new EUR555
million fixed rate and floating rate Senior Secured Notes (SSN)
due 2022, to be issued by BK France. The outlook on all ratings
is stable.

Proceeds from the notes will be used to refinance existing debt
totaling EUR538 million, in addition to transaction fees and
other costs of EUR17 million.

The refinancing will include the full repayment of EUR505 million
debt facilities issued at Financiere Quick S.A.S. level
(Financiere Quick), which is fully owned by BK France and will
become part of the enlarged restricted group. As a result, all
ratings assigned to Financiere Quick S.A.S., including the B3
Corporate Family Rating, B2-PD Probability of Default Rating,
stable outlook, and the ratings on the existing notes, and the
RCF issued by Quick Restaurants S.A. will be withdrawn upon
repayment.

RATINGS RATIONALE

The B3 CFR reflects BK France's (1) attractive portfolio of
restaurants in good locations and lease terms, with significant
sales' upside potential from the future conversion of Quick's
restaurants into Burger King (BK), (2) long international track
record and global awareness of the BK brand, for which the
company owns exclusive rights in France, (3) positive preliminary
results of the Quick restaurants converted in 2016 which achieved
significant sales growth, and improved LFL sales of Quick
restaurants in the second half of 2016.

The rating is constrained by (1) the current high leverage (7.8x
Moody's adjusted Debt/EBITDA at year-end 2016, pro-forma the
transaction), (2) the uncertainty over the sustainability of
significant sales increases achieved for recently converted
restaurant, as well as the success of future conversions and new
openings, (3) the execution risk of the ambitious BK restaurants
roll out and high level of capex needed in the next two years,
which is however mitigated by a comfortable liquidity position at
closing.

Following the acquisition in December 2015 of Financiere Quick by
BK France, a majority owned subsidiary of Groupe Bertrand, in
2016 the company has started an extensive 4 year plan to convert
the Quick restaurants into BK restaurants, in addition to opening
new BK restaurants. The conversion plan is on track with 36
conversions in 2016, while most of the remaining Quick
restaurants will be converted in the next four years. Early
results on the recently converted BK sites show a strong
performance with average store sale exceeding EUR3.9 million
compared to EUR1.9 million for a typical Quick's site. Moody's
believes that the BK brand provides significant upside potential
for the Quick restaurants, which benefit from good locations and
attractive lease terms. However, Moody's also note that initial
performance may not be representative due to the uplift provided
by the new opening effect. Execution risks include the timing and
success of future conversions and openings, as the company will
need to maximize cash flow generation during a period of high
capex activity. In addition, while Moody's anticipates the
contribution from BK restaurants to quickly increase over time,
the Quick brand will continue to play a key role in the overall
group performance in the next two years. The Quick brand
experienced a negative sales trend in recent years, although with
some signs of improvement in the second half of 2016 and 2017
year-to-date. Moody's note positively that the company will
benefit from the expertise and track record of its main
shareholder Groupe Bertrand and an experienced management team.

The Moody's adjusted debt-to-EBITDA of 7.8x at year-end 2016 pro-
forma for the refinancing is high for the rating category.
Moody's expects this ratio to fall towards 7.0x in the next 12-18
months supported by EBITDA growth resulting from the conversion
plan and new openings.

BK France has an adequate liquidity profile, supported by a
substantial EUR161 million cash balance pro-forma for the
transaction and a new fully undrawn EUR60 million Super Senior
Revolving Credit Facility (SSRCF) due 2021. Moody's expects that
the company's free cash flow will be significantly negative in
the next three years due to the capex needed for restaurant
conversions and new openings. However, Moody's expects the
accumulated cash balance to be sufficient to cover liquidity
needs for the next 12-18 months. Moody's note that cash can be
preserved if needed by delaying, for a limited time only, the
conversion plan.

STRUCTURAL CONSIDERATIONS

BK France is the top entity within the restricted group and the
reporting entity for the consolidated group. The SSN share the
same security package and guarantees, with the SSRCF benefits
from priority on enforcement proceeds. As of year-end 2016, the
issuer and operating entities providing upstream guarantees
represented 70.5% of consolidated EBITDA and 77.7% of
consolidated total assets. The B3 ratings of the fixed rate and
floating rate SSN are in line with the B3 CFR given that both
notes rank pari passu amongst each other and constitute the vast
majority of the debt capital structure.

Outlook

The company is weakly positioned in the B3 rating category. The
stable outlook assumes that BK France will maintain stable
revenues on the Quick restaurants until conversion, a successful
execution of the business plan, adequate liquidity and that
adjusted debt/EBITDA will decrease from the current year-end 2016
pro-forma level of 7.8x.

What Could Change the Rating Up

Upward pressure on the rating could materialise if the Moody's-
adjusted debt/EBITDA decreases below 6.5x, with Moody's-adjusted
EBIT coverage of interest expenses moving sustainably above 1.5x.

What Could Change the Rating Down

Conversely, downward pressure on the rating could arise if
Moody's-adjusted debt/EBITDA does not decrease below 7.5x in the
next 12 months or if liquidity concerns emerge. Moody's could
also consider downgrading the ratings in case of Quick
restaurants achieving negative LFL sales or BK restaurants
performing below expectations for a sustainable period of time.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Restaurant
Industry published in September 2015.

BK France is the second largest fast-food restaurant chain in
France with 462 restaurants at year-end 2016, including 108 BK
restaurants and 354 Quick restaurants. For the last twelve months
ended 31 December 2016, the company reported system-wide sales of
EUR982 million, revenues of EUR578 million and EBITDA of EUR62.4
million. Headquartered in Paris, Groupe Bertrand is a leading
restaurant operator with activities also in the hotel sector. As
a majority shareholder of BK France, a BK master franchise joint
venture partner, Groupe Bertrand owns the exclusive rights to
operate restaurants under the BK brand in France.


BURGER KING: S&P Assigns 'B-' CCR, Outlook Stable
-------------------------------------------------
S&P Global Ratings assigned its 'B-' long-term corporate credit
rating to French fast food chain BURGER KING France SAS.  The
outlook is stable.

S&P also assigned its 'B-' issue rating to BURGER KING France's
proposed EUR555 million senior secured notes.  The recovery
rating is '4', reflecting S&P's expectation of average (30%-50%;
rounded estimate: 30%) recovery prospects in the event of payment
default.

At the same time, S&P revised its outlook on subsidiary
Financiere Quick S.A.S. to stable from negative, and affirmed
S&P's 'B-' long-term corporate credit rating on the company.

S&P also affirmed its issue ratings on Quick's senior secured,
senior unsecured, and junior subordinated debt.  S&P will
withdraw its recovery and issue ratings on Quick's existing debt
once the refinancing is complete and the facilities have been
repaid.

BURGER KING France, the parent company of Quick, has launched a
transaction by which it will raise EUR555 million in senior
secured notes and a EUR60 million super senior revolving credit
facility (RCF) to fully refinance Quick's existing debt.

Quick was acquired by BURGER KING France, an operating subsidiary
owned by Groupe Bertrand, in December 2015.  BURGER KING France
owns the exclusive franchise to develop the Burger King brand in
France and has opened about 70 Burger King restaurants in France
since 2013.  As part of Groupe Bertrand's strategic development,
it plans to convert most Quick restaurants to Burger King
restaurants between 2016 and 2020.  The four-year business
transition would enable the Burger King brand to rapidly expand
its presence in France.

The EBITDA of the combined group was EUR62 million in 2016
(excluding pre-conversion and pre-opening costs).  Although this
is EUR8 million higher than that of Quick alone, the transaction
will increase drawn debt by EUR50 million compared with Quick's
existing debt package, resulting in only modest deleveraging.
However, S&P believes that the extended debt maturities and reset
covenants will give BURGER KING France additional room to execute
its growth strategy and its plan to rebrand Quick restaurants as
Burger King restaurants.

If the rebranding is successful, S&P expects its adjusted debt to
EBITDA could gradually deleverage to 7.0x in 2018 (or to 6.4x
when excluding the euro mezzanine payment-in-kind instrument
issued by parent NewCo GB), from 9.5x at the end of 2016, pro
forma for the transaction (or 8.8x when excluding the euro
mezzanine).  S&P sees these credit metrics as commensurate with a
highly leveraged financial risk profile.

At the same time, Quick's business transition requires
significant capital expenditure (capex) upfront.  Therefore, S&P
forecasts that the group's reported free operating cash flow
(FOCF) will remain negative over the next three years.  The
business transition will be largely funded by cash proceeds from
the disposal of Quick's Belgium and Luxembourg operations last
year, allowing the group to maintain adequate liquidity, in S&P's
view.

The rating also reflects S&P's view that BURGER KING France's
recently launched program to convert Quick restaurants into
Burger King restaurants is starting to get traction with
customers.  The 36 restaurants that were converted in 2016 have
reported a 2.6x sales uplift on average.  Including the 72 Burger
King restaurants that BURGER KING France opened since 2013, the
Burger King restaurants have generated average sales per store of
EUR3.9 million in 2016, compared with EUR1.9 million for Quick
restaurants, essentially due to better brand perception and
renovated stores.

The vast majority of the group's restaurants continue to operate
under the Quick brand, although the proportion of Quick branded
restaurants will progressively reduce over the four-year
conversion plan.  S&P views positively the new management team's
marketing efforts and strategy to focus on Quick's legacy
products, which are starting to show results as like-for-like
sales of the Quick restaurants are more in line with market
trends since the second half of 2016.

In spite of these promising results, S&P remains mindful that
BURGER KING France is in an early stage of transformation.  It is
therefore exposed to high execution risk, exacerbated by the
highly competitive and cyclical industry in which it operates.
This supports S&P's assessment of its business risk profile as
weak.

S&P views Quick as a core subsidiary of BURGER KING France, since
it plays a key role in the group's strategy to develop the Burger
King franchise in France.  Therefore S&P aligns its rating on
Quick with that of BURGER KING France.

The stable outlook reflects S&P's expectation that over the next
12 months BURGER KING France's adjusted debt to EBITDA will
remain high, at about to 8.0x (or 7.5x when excluding the euro
mezzanine issued by parent NewCo GB).  This, however,
incorporates S&P's anticipation that the group's transformation
and growth strategy will translate into nominal EBITDA growth.

Importantly, the stable outlook hinges on S&P's expectation that
the group will maintain adequate liquidity in spite of sizable
capex to execute its transformation and growth strategy.

S&P could lower the ratings on BURGER KING France if it
experiences any setbacks or difficulties in its restaurant
conversion program, resulting in sustained EBITDA decline and
increases in leverage.  Considering already elevated leverage,
this would likely lead S&P to view BURGER KING France's capital
structure as unsustainable in the long term.

Rating pressure could also arise if BURGER KING France's
liquidity weakened, including a tightening of its covenant
headroom.

S&P views a positive rating action as remote over the next 12
months given the high leverage and execution risk related to the
four-year transformation plan.


SPCM SA: Moody's Rates Proposed $450MM Sr. Unsecured Notes Ba2
--------------------------------------------------------------
Moody's Investors Service assigned a Ba2 rating to the proposed
issuance of $450 million of senior unsecured notes due 2025 by
the holding company for SNF group, SPCM SA (SPCM). SPCM's Ba2
Corporate Family Rating (CFR), Ba2-PD probability of default
rating (PDR), the Ba2 instrument rating on the existing senior
unsecured notes due 2022 and stable outlook remain unchanged.

RATINGS RATIONALE

SPCM expects to issue $450 million of senior unsecured notes due
2025. The net proceeds of this offering will be used to refinance
$250 million of outstanding notes due 2022 (rated Ba2), drawn
amounts under the revolving credit facility and for general
corporate purposes. It will have no material impact on SPCM's
leverage (calculated as Moody's adjusted debt/EBITDA) of 3.3x as
of 31 December 2016. The new notes will rank in-line with the
current notes due 2022 and with the EUR550 million of senior
unsecured notes due 2023 (unrated).

SPCM's Ba2 CFR primarily reflects SPCM's (1) global market
leading position as a specialty chemicals producer in the
polyacrylamide (PAM) industry with a diverse customer base across
several markets; (2) resilient business model with a proven
ability to generate robust revenue and EBITDA, while maintaining
low leverage of ca 3.0x, through economic cycles and recent oil
price weakness; and (3) ability to pass on material and
production costs while simultaneously improving volumes, despite
the high degree of competition in the US markets and the
challenging trading environment in Europe.

However, the CFR also reflects: (1) SPCM's product concentration,
which limits the company's ability to handle challenges to its
business plan, such as raw material supply limitations, or the
substitution of other products for PAM; (2) potential competition
from the PAM divisions of substantially larger and more
financially flexible companies such as BASF (SE) (A1 stable) and
Ecolab Inc. (Baa1 stable); (3) exposure to the oil and gas
industry, which continues to be under stress due to the low oil
price environment; and (4) muted free cash flow generation due to
high capital expenditure.

SPCM reported sales of EUR2.1 billion in 2016, a 4% decline
compared to 2015. This was driven by 11% lower selling prices on
the back of falls in raw materials such as acrylonitrile that is
itself derived from propylene. These declines were partially
countered by a 7% increase in volumes that was weighted towards
the second half as a result of positive developments in China and
North American Oil & Gas, where the US rig count nearly doubled
after reaching a bottom in May 2016. This drove fourth quarter
2016 volumes, which rose 18% compared to the same period in 2015.
2016 full year reported EBITDA of EUR361 million declined 4%, but
was in line with Moody's expectations. The EBITDA margin of 17%
in 2016 was unchanged from 2015, although fourth quarter margins
did fall to 16% as propylene prices rose.

Moody's adjusted funds from operations (FFO) of EUR267 million in
full year 2016 were 4% lower. Adjusted capex was reduced by 10%
to EUR274 million but the company continued to build new capacity
to increase its leading market share in PAM resulting in negative
adjusted free cash flow (FCF) of EUR20 million after a minimal
EUR7 million dividend payment, both consistent with 2015. Moody's
adjusted debt was EUR1.1 billion, similar to the amount at
December 2015. However, Moody's adjusted debt/EBITDA for the
twelve months to December 2016 rose to 3.3x from 3.1x in 2015 as
EBITDA declined.

Going forward, the company expects the volume growth of the
second half 2016 to continue into the first half of 2017,
resulting in double digit volume gains for the full year 2017. It
has put through price increases across the world in the first
quarter of 2017 and intends to do so again in the second quarter
and so expects its EBITDA margin for the full year 2017 to remain
at the 16% level of the fourth quarter. Moody's expects lower
volume growth and slightly greater margin deterioration than the
company, leading to reported EBITDA of EUR360-370 million in 2017
and adjusted debt/EBITDA of between 3.2-3.5x. This is still
within the financial metrics Moody's expects for the Ba2 CFR,
including adjusted debt/EBITDA not exceeding 3.5x for an extended
period of time.

RATING OUTLOOK

The stable outlook reflects Moody's expectations that SPCM will
continue to exhibit a resilient business, despite continued low
oil and gas prices, maintaining adjusted debt/EBITDA around 3.0x
and Moody's adjusted EBITDA margins at or above 15%. It also
assumes the company maintains good liquidity.

WHAT COULD CHANGE THE RATING -- UP/DOWN

The ratings could be upgraded if (1) SPCM reduces adjusted
debt/EBITDA from 3.3x for the twelve months to December 2016,
towards 2.5x and retained cash flow/debt is maintained around
20%, consistent with 23% as of December 2016. Conversely, ratings
could be downgraded if adjusted debt/EBITDA exceeds 3.5x for an
extended period of time, retained cash flow/debt falls to the low
teens in percentage terms, the company pursues a more aggressive
financial policy, or liquidity deteriorates.

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was Global Chemical
Industry Rating Methodology published in December 2013.

SPCM SA is the parent holding company of the SNF Group (SNF). SNF
is one of the world's leading producers of polyacrylamide, which
is a water-soluble specialty chemical used in water treatment,
oil and gas applications, mineral extraction, and pulp and paper
manufacturing. The company is family-owned and was formed as a
result of a buy-out of the flocculants business of WR Grace in
1978. SNF, headquartered in Saint-Etienne, France, reported
revenues and EBITDA of approximately EUR2.1 billion and EUR361
million respectively for FY2016.


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G E R M A N Y
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AEG POWER: Creditors Approve Restructuring Plan
-----------------------------------------------
3W Power S.A., the holding of AEG Power Solutions Group, on
April 7 disclosed that the restructuring plan for its German
subsidiary AEG Power Solutions GmbH was unanimously approved by
the subsidiary's creditor meeting held on April 6 in Arnsberg,
Germany.  The local court of Arnsberg also confirmed the plan on
April 6.  The confirmation of the court repealing the debtor-in-
possession proceeding over AEG Power Solutions GmbH l is expected
to take effect at the end of April 2017.

The restructuring plan for AEG Power Solutions GmbH comprises a
financial and operational restructuring and is part of a broader
reorganization of AEG Power Solutions group as a global company.
The goal of the reorganization is to focus the group on its core
industrial business, grow service and develop a customer centric
structure which is essential to achieve sustainable
profitability.

Jeffrey Casper, CEO of 3W Power S.A., said: "We have come a long
way in the restructuring of our Germany subsidiary and are now
nearing its completion.  I'm conscious of the efforts that have
been made and that we still need to make to implement our new
processes internally but this step represents a crucial milestone
in our group-wide transformation.  We are building a more agile,
customer-oriented structure to serve our core markets sustainably
and profitably.  Since the initiation of the proceeding in
Germany in November 2016, we have been focused on serving our
customers and the execution of existing orders has remained on
schedule.  This was accomplished thanks to the dedication of our
teams and to the trust and loyalty of our customers, business
partners and creditors.  Speaking for the whole management team
and the employees of AEG Power Solutions, I would like to
expressly thank our stakeholders for their contributions."


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I R E L A N D
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EUROPEAN RESIDENTIAL 2017-NPL1: DBRS Rates Class C Notes BB (sf)
----------------------------------------------------------------
DBRS Ratings Limited on April 6 assigned provisional ratings to
the following classes of Notes issued by European Residential
Loan Securitisation 2017-NPL1 DAC (the Issuer):

-- Class A at A (sf)
-- Class B at BBB (sf)
-- Class C at BB (sf)

The rating on the Class A Notes addresses timely payment of
interest and ultimate payment of principal. The ratings on the
Class B and Class C Notes address ultimate payment of interest
and ultimate payment of principal. The Class P and Class D Notes
are unrated and will be retained by LSF IX Paris Investments DAC
(the Seller). The transaction benefits from two reserve funds:
the Class A Reserve Fund and the Class B Reserve Fund. The Class
A Reserve Fund will have an initial balance equal to 4.5% of the
Class A Notes and can amortise to 4.5% of the outstanding balance
of the Class A Notes. The Class B Reserve Fund will be funded to
an initial balance of 10.0% of the Class B Notes and does not
have a target balance. Credits to the Class B reserve will be
made outside of the waterfall based on the proceeds of the
interest rate cap allocated proportionately to the size of the
Class B Notes relative to the cap notional. Liquidity support to
the Class C Notes is provided by the cap proceeds allocated
proportionately to the size of the Class C Notes relative to the
cap notional. These Class C interest payments are made outside of
the waterfall as long as the Class C Notes are outstanding. Any
unpaid accrued interest amount in the Class C Notes is reduced by
the Class C Interest payments funded via the cap proceeds.

The underlying collateral primarily consists of Irish non-
performing residential mortgages. There is a small percentage
(2.35%) of performing residential mortgages. The portfolio is
granular, as the largest borrower accounts for 1.01% of the
analysed portfolio. All mortgages are concentrated in Ireland and
33.14% are located in Dublin. The mortgage loans were originated
by Bank of Scotland (Ireland) Limited (BoSI) and are secured by
Irish residential properties. Lone Star Funds (Lone Star) through
the respective seller acquired the mortgage loans in February
2015. Servicing of the mortgage loans is conducted by Start
Mortgages DAC (Start), which are also expected to continue as
Administrators of the assets for the transaction. As of the
closing date, primary servicing activities have been delegated to
Homeloan Management Limited (HML) under a subservicing agreement.
There is no obligation on Start to continue to delegate to HML.
Also, HML is not a party to the transaction documents. Hudson
Advisors Ireland DAC (Hudson) will be appointed as the Issuer
Administration Consultant and, as such, will act in an oversight
and monitoring capacity.

Following the step-up date in May 2021, the margin above one-
month Euribor payable on the Class A, Class B and Class C Notes
increases. The issuer will enter into an Interest Rate Cap
agreement with Barclays Bank Plc. The cap agreement will end on
the payment date falling in May 2022, on which date the coupon
cap on the notes becomes applicable. The issuer will pay the
interest rate cap fees in full on the closing date and in return
will receive payments to the extent one-month Euribor is above 0%
for the first two years and 0.5% for the remaining three years.
The Issuer can unwind or sell part of the Interest Rate Cap at
the marked-to-market position provided the notional of the
Interest Rate Cap notional does not fall below the outstanding
balance of the Class A, Class B and Class C Notes.

The coupon payable on the Rated Notes becomes subject to a capped
rate on the payment date falling in May 2022. The coupon caps on
the Class A, Class B and Class C Notes are equal to 5.00%, 6.00%
and 6.00%, respectively.

The issuer may sell part of the portfolio subject to sale
covenants. The sale price must be at least 70% of the aggregate
current balance of the mortgage loans which are subject to a
sale. Portfolio Sale Proceeds up to 70% of the outstanding
principal balance, net of costs, will be part of the Available
Funds.

The Class P Notes may receive excess amounts from any portfolio
sale as repayments of principal. Excess amounts are calculated as
the sale proceeds which are greater than 70% the current balance
of the relevant mortgage loans net of portfolio sale costs. The
Class P Notes can also receive amounts arising from the unwinding
or sale of the Interest Rate Cap. As a consequence, the Class P
Notes may amortise before the Rated Notes. Payments received to
the Class P Notes are capped at initial balance of the Class P
Notes. Following repayment in full of the Class P Notes, any
amount otherwise due to be paid to the Class P Notes will be
applied as available funds.

Elavon Financial Services DAC, U.K. Branch (Elavon), is the
Issuer Transaction Account Bank. DBRS privately rates Elavon with
a Stable trend. DBRS has concluded Elavon meets DBRS's criteria
to act in such capacity. The transaction documents contain
downgrade provisions relating to the Transaction Account bank
where, if downgraded below BBB (low), the Issuer will replace the
account bank. The downgrade provision is consistent with DBRS's
criteria for the initial rating of A (sf) assigned to the Class A
Notes. The interest rate received on cash held in the account
bank is not subject to a floor of 0%, which can create a
potential liability for the issuer. DBRS has assessed potential
negative interest rates on the account bank in the cash flow
analysis.


HARVEST CLO III: Moody's Hikes Rating on Class E-1 Notes from Ba1
-----------------------------------------------------------------
Moody's Investors Service has upgraded the ratings of the
following notes issued by Harvest CLO III plc:

-- EUR 16,750,000 Class D-1 Senior Subordinated Deferrable
    Floating Rate Notes due 2021, Upgraded to Aaa (sf);
    previously on Sep 13, 2016 Upgraded to Aa3 (sf)

-- EUR 9,250,000 Class D-2 Senior Subordinated Deferrable Fixed
    Rate Notes due 2021, Upgraded to Aaa (sf); previously on Sep
    13, 2016 Upgraded to Aa3 (sf)

-- EUR 15,750,000 Class E-1 Senior Subordinated Deferrable
    Floating Rate Notes due 2021, Upgraded to A1 (sf); previously
    on Sep 13, 2016 Upgraded to Ba1 (sf)

-- EUR 3,000,000 Class E-2 Senior Subordinated Deferrable Fixed
    Rate Notes due 2021, Upgraded to A1 (sf); previously on Sep
    13, 2016 Upgraded to Ba1 (sf)

Moody's has also affirmed the ratings on the following notes:

-- EUR 30,750,000 (current outstanding balance of EUR 21.28M)
    Class C-1 Senior Subordinated Deferrable Floating Rate Notes
    due 2021, Affirmed Aaa (sf); previously on Sep 13, 2016
    Affirmed Aaa (sf)

-- EUR 12,000,000 (current outstanding balance of EUR 8.30M)
    Class C-2 Senior Subordinated Deferrable Fixed Rate Notes due
    2021, Affirmed Aaa (sf); previously on Sep 13, 2016 Affirmed
    Aaa (sf)

Harvest CLO III plc, issued in April 2006, is a collateralised
loan obligation (CLO) backed by a portfolio of mostly high-yield
senior secured European loans. The portfolio is managed by 3i
Debt Management Investments Limited. The transaction's
reinvestment period ended in June 2013. The collateral assets
that are not denominated in Euro are hedged by perfect asset
swaps or a macro swap.

RATINGS RATIONALE

The upgrades of the notes are primarily the result of
deleveraging since the last rating action in September 2016. On
the most recent payment date, in December 2016, the Class B Notes
were fully repaid and the remaining balance of principal proceeds
was used to begin amortisation of the Class C Notes. The Class C
Notes have been reduced to 69.19% of their original amount, and
note overcollateralisation levels have increased. As of the
February 2017 trustee report, the Class C, Class D and Class E
overcollateralisation ratios are reported at 324.8%, 172.9% and
129.3% respectively compared with 192.7%, 139.8% and 116.7% in
July 2016. Following recent repayments and sales of portfolio
collateral, a substantial part of this overcollateralisation
arises from cash, which is sufficient to entirely repay the Class
C Notes on the next note repayment date.

The key model inputs Moody's uses in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. In its base
case, Moody's analysed the underlying collateral pool as having a
performing par and principal proceeds balance of EUR 93.68
million and GBP 0.8 million, defaulted par of EUR 6.183 million,
a weighted average default probability of 16.40% over a 3.42
years weighted average life (consistent with a WARF of 2691), a
weighted average recovery rate upon default of 48.88% for a Aaa
liability target rating, a diversity score of 10 and a weighted
average spread of 3.50%.

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

Methodology Underlying the Rating Action:

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

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

In addition to the base-case analysis, Moody's conducted
sensitivity analyses on the key parameters for the rated notes,
for which it assumed lower weighted average recovery rates for
the portfolio. Moody's ran a model in which it reduced the
weighted average recovery rate by 5%; the model generated outputs
were unchanged for Classes C and D and within one notch of the
base-case results for Class E.

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

Additional uncertainty about performance is due to the following:

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

* Around 13.35% of the collateral pool consists of debt
obligations whose credit quality Moody's has assessed by using
credit estimates. As part of its base case, Moody's has stressed
large concentrations of single obligors bearing a credit estimate
as described in "Updated Approach to the Usage of Credit
Estimates in Rated Transactions" published in October 2009 and
available at
http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_120461.

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

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


OAK HILL II: Moody's Hikes Rating on Class E Notes from Ba2(sf)
---------------------------------------------------------------
Moody's Investors Service announced that it has taken rating
actions on the following classes of notes issued by Oak Hill
European Credit Partners II P.L.C.:

-- EUR70M (currently approximately EUR8.3M outstanding) Senior
    Secured Floating Rate Variable Funding Notes due 2023,
    Affirmed Aaa (sf); previously on Jun 15, 2007 Assigned Aaa
    (sf)

-- GBP14M (currently GBP2.3M outstanding) Class A-2 Senior
    Secured Floating Rate Notes due 2023, Affirmed Aaa (sf);
    previously on Jun 15, 2007 Assigned Aaa (sf)

-- EUR40M (currently EUR9.3M outstanding) Class A-3 Senior
    Secured Floating Rate Notes due 2023, Affirmed Aaa (sf);
    previously on Jun 15, 2007 Assigned Aaa (sf)

-- EUR140.9M (currently EUR30.0M outstanding) Class A-4 Senior
    Secured Floating Rate Notes due 2023, Affirmed Aaa (sf);
    previously on Jun 15, 2007 Assigned Aaa (sf)

-- EUR20M (currently EUR8.4M outstanding) Class A-5 Senior
    Secured Floating Rate Notes due 2023, Affirmed Aaa (sf);
    previously on Jun 28, 2011 Upgraded to Aaa (sf)

-- EUR37M (currently EUR15.5M outstanding) Class B Senior
    Secured Deferrable Floating Rate Notes due 2023, Upgraded to
    Aaa (sf); previously on Jun 28, 2011 Upgraded to Aa1 (sf)

-- EUR19.5M (currently EUR8.1M outstanding) Class C-1 Senior
    Secured Deferrable Floating Rate Notes due 2023, Upgraded to
    Aa1 (sf); previously on Jun 28, 2011 Upgraded to A1 (sf)

-- EUR10M (currently EUR4.2M outstanding) Class C-2 Senior
    Secured Deferrable Fixed Rate Notes due 2023-1, Upgraded to
    Aa1 (sf); previously on Jun 28, 2011 Upgraded to A1 (sf)

-- EUR27M (currently EUR11.3M outstanding) Class D Senior
    Secured Deferrable Floating Rate Notes due 2023, Upgraded to
    A2 (sf); previously on Jun 28, 2011 Upgraded to Baa2 (sf)

-- EUR24.5M (currently EUR10.2M outstanding) Class E Senior
    Secured Deferrable Floating Rate Notes due 2023, Upgraded to
    Baa3 (sf); previously on Jun 28, 2011 Upgraded to Ba2 (sf)

Oak Hill European Credit Partners II P.L.C., issued in June 2007,
is a collateralised loan obligation (CLO) backed by a portfolio
of mostly high-yield senior secured European and US loans managed
by Oak Hill Advisors (Europe), L.L.P. The transaction's
reinvestment period ended in August 2013.

The transaction allowed for pro rata amortisation of the rated
notes subject to the Pro Rata Test being satisfied. Since the end
of the reinvestment period and up to and including the August
2016 payment date the rated notes were repaid on a pro rata
basis. The Pro Rata Test is no longer satisfied following the
Aggregate Collateral Balance falling below the required threshold
of 50% of the Target Par Amount. As per the February 2017 payment
date, and going forwards, the rated notes will be repaid
sequentially.

RATINGS RATIONALE

The rating actions taken on the notes are the result of
deleveraging of the Senior Notes following amortisation of the
portfolio over the last two payment dates.

The Senior Notes paid down in aggregate by EUR 101.86 million (or
34.9% of the Senior Notes' original balance) on the August 2016
and February 2017 payment dates. As a result of the deleveraging,
over-collateralisation (OC) ratios have increased across the
capital structure. According to the trustee report dated February
2017, Senior Notes, Class B, Class C, Class D and Class E OC
ratios are reported at 166.19%, 146.46%, 133.80%, 123.99% and
116.25% respectively, compared to August 2016 levels of 162.93%,
143.61%, 131.20%, 121.59% and 114.01% respectively. The OC levels
reported as per the February 2017 trustee report do not reflect
the February 2017 payment date.

The key model inputs Moody's uses in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. In its base
case, Moody's analysed the underlying collateral pool as having a
performing par of EUR 127.2 million and GBP 8.19 million,
defaulted par of EUR 1.25 million, a weighted average default
probability of 18.01% (consistent with a WARF of 2718 over a
weighted average life of 3.96 years), a weighted average recovery
rate upon default of 47.09% for a Aaa liability target rating, a
diversity score of 19 and a weighted average spread of 3.60%.

Moody's notes that the March 2017 trustee report was published at
the time it was completing its analysis based on the 01 February
2017 data. Key portfolio metrics such as WARF, diversity scores
and OC ratios (after taking into account the February 2017
payment date) have not materially changed between these dates.
Moody's has taken into account the March 2017 trustee report into
its analysis.

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

Methodology Underlying the Rating Action:

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

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

In addition to the base-case analysis, Moody's conducted
sensitivity analyses on the key parameters for the rated notes,
for which it assumed a lower weighted average recovery rate for
the portfolio. Moody's ran a model in which it reduced the
weighted average recovery rate by 5%; the model generated outputs
that were unchanged for the Senior Notes and Classes B and C-1,
within one notch for Classes C-2 and D and within two notches for
Class E of the base-case model outputs.

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

Additional uncertainty about performance is due to the following:

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

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

3) Weighted average life: The post reinvestment period
reinvestment conditions are currently satisfied so the manager
has the ability to reinvest unscheduled principal proceeds or
principal proceeds resulting from sales of credit improved or
credit impaired obligations into substitute collateral debt
obligations. Moody's tested for a possible extension of the
actual weighted average life in its analysis.

4) Long-dated assets: The presence of assets that mature beyond
the CLO's legal maturity date exposes the deal to liquidation
risk on those assets. Based on the trustee's February 2017
report, securities that mature after the maturity of the notes
currently make up approximately 8.75% of the portfolio. Moody's
assumes that, at transaction maturity, the liquidation value of
such asset swill depend on the nature of the assets as well as
the extent to which the assets' maturity lags that of the
liabilities. Liquidation values higher than Moody's expectations
would have a positive impact on the notes' ratings.

5) Foreign currency exposure: The deal has exposures to non-EUR
denominated assets. Volatility in foreign exchange rates will
have a direct impact on interest and principal proceeds available
to the transaction, which can affect the expected loss of rated
tranches.

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


PALMERSTON PARK: Fitch Assigns B- Rating to Class E Notes
---------------------------------------------------------
Fitch Ratings has assigned Palmerston Park CLO D.A.C.'s notes
final ratings, as follows:

EUR233 million class A-1A: 'AAAsf'; Outlook Stable
EUR10 million class A-1B: 'AAAsf'; Outlook Stable
EUR26 million class A-2A: 'AAsf'; Outlook Stable
EUR20 million class A-2B: 'AAsf'; Outlook Stable
EUR14 million class B-1: 'Asf'; Outlook Stable
EUR10 million class B-2: 'Asf'; Outlook Stable
EUR21 million class C: 'BBBsf'; Outlook Stable
EUR24.5 million class D: 'BBsf'; Outlook Stable
EUR11 million class E: 'B-sf'; Outlook Stable
EUR45 million subordinated notes: not rated

Palmerston Park CLO D.A.C., (the issuer) is a cash flow
collateralised loan obligation. Net proceeds from the issuance of
the notes are being used to purchase a portfolio of EUR400
million of mostly European leveraged loans and bonds. The
portfolio is actively managed by Blackstone/GSO Debt Funds
Management Europe Limited.

KEY RATING DRIVERS

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

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

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

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

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

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

RATING SENSITIVITIES

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

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

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

DATA ADEQUACY

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

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

SOURCES OF INFORMATION

The information below was used in the analysis.

- Loan-by-loan data provided by the arranger as at January 10,
   2017
- Final offering circular dated 6 April 2017

REPRESENTATIONS AND WARRANTIES

A description of the transaction's representations, warranties
and enforcement mechanisms (RW&Es) that are disclosed in the
offering document and which relate to the underlying asset pool
was not prepared for this transaction. Offering documents for
EMEA leveraged finance CLOs transactions do not typically include
RW&Es that are available to investors and that relate to the
asset pool underlying the security. Therefore, Fitch credit
reports for EMEA leveraged finance CLOs transactions will not
typically include descriptions of RW&Es. For further information,
see Fitch's Special Report titled "Representations, Warranties
and Enforcement Mechanisms in Global Structured Finance
Transactions," dated 31 May 2016.


PRECISE MORTGAGE 2017-1B: Fitch Rates Class E Notes 'BB+ (EXP)'
---------------------------------------------------------------
Fitch Ratings has assigned Precise Mortgage Funding 2017-1B Plc's
notes expected ratings as follows:

Class A: 'AAA(EXP)sf'; Outlook Stable
Class B: 'AA(EXP)sf'; Outlook Stable
Class C: 'A(EXP)sf'; Outlook Stable
Class D: 'BBB+(EXP)sf'; Outlook Stable
Class E: 'BB+(EXP)sf'; Outlook Stable
Class Z: Not rated

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

This transaction is a securitisation of buy-to-let (BTL)
mortgages that were originated by Charter Court Financial
Services (CCFS), trading as Precise Mortgages (Precise or the
originator), in England and Wales.

KEY RATING DRIVERS
BTL Loans
The portfolio consists exclusively of BTL loans originated by
CCFS. Fitch considers loans on BTL properties to be inherently
more susceptible to default than those secured on an owner-
occupied property. As a result, Fitch applies a 25% increase to
the foreclosure frequency for these loans.

Prime Underwriting
Fitch deemed the loans constituting the mortgage pool to be
consistent with its prime classification. These loans have been
granted to borrowers with no adverse credit, full rental income
verification, full property valuations and with a clear lending
policy in place. The available data shows robust performance,
which would be expected of prime loans. Fitch treated these loans
as prime but with an upward underwriting adjustment of 10%, to
account for certain features in CCFS's underwriting standards.

Fixed Hedging Schedule
The issuer will enter into a swap at closing to mitigate the
interest rate risk arising from the fixed rate mortgages in the
pool. The swap will be based on a defined schedule, rather than
the balance of fixed rate loans in the pool; in the event that
loans prepay or default, the issuer will be over hedged. The
excess hedging is beneficial to the issuer in a high interest
rate scenario and detrimental in a declining interest rate
scenario.

Unrated Originator and Seller
The originator and seller are not rated entities and as such may
have limited resources available to repurchase any mortgages in
the event of a breach of the representations and warranties (RW)
given to the issuer. This is a weakness, but there are a number
of mitigating factors that make the likelihood of a RW breach
remote, such as the clean Agreed Upon Procedures report provided.

RATING SENSITIVITIES

Material increases in the frequency of defaults and loss severity
on defaulted receivables producing losses greater than Fitch's
base case expectations may result in negative rating action on
the notes. Fitch's analysis revealed that a 30% increase in the
weighted average (WA) foreclosure frequency, along with a 30%
decrease in the WA recovery rate, would imply a downgrade of the
class A notes to 'A+sf' from 'AAAsf'.

More detailed model implied ratings sensitivity can be found in
the presale report, which is available at www.fitchratings.com.


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


BANCA CARIGE: Fitch Puts B- IDR on Rating Watch Negative
--------------------------------------------------------
Fitch Ratings has placed Banca Carige's 'B-' Long-Term Issuer
Default Rating (IDR) on Rating Watch Negative (RWN) and
downgraded the bank's Viability Rating (VR) to 'cc' from 'b-'.

The downgrade of Carige's VR to 'cc' reflects Fitch's view that
it is probable that the bank will require fresh capital to
address what Fitch considers a material capital shortfall, which
under Fitch criteria would be a failure. Carige plans to transfer
almost all its doubtful loans (sofferenze) to a special purpose
vehicle (SPV). The aim of this transaction is to meet the gross
NPL and coverage targets required by the European Central Bank
(ECB) in December 2016. Carige will have to increase capital to
address the impact of the transaction, which the bank estimates
at up to EUR450 million, arising from transferring the loans to
the SPV at their current gross book value, which is higher than
their likely market valuation.

The downgrade of the VR also reflects that as part of its plans
the bank intends to convert part of its outstanding junior and
subordinated debt held by institutional investors into equity.
Fitch considers it likely that the debt conversion will represent
a material reduction in terms and therefore be treated as a
distressed debt exchange (DDE) under Fitch criteria.

The RWN reflects Fitch's view that execution risk for the bank's
plans is high and that failure to complete the NPL
deconsolidation and capital increase will increase the risk of
losses being imposed also on senior creditors, for example in a
resolution, and could lead to a downgrade of the Long-Term IDR
and senior debt ratings.

KEY RATING DRIVERS

IDRS, VR AND SENIOR DEBT

Carige's VR primarily reflects Fitch's view that capitalisation
has clear deficiencies. The bank requires an extraordinary
capital intervention to align impaired loan coverage levels to
current market valuations to dispose of a significant portion of
its doubtful exposures and to restore its viability. Carige's net
impaired loans represented over 200% of its Fitch Core Capital at
end-2016, after the bank posted a net loss of about EUR300
million in 2016.

Carige's VR also reflects its weak asset quality, with gross
impaired loans at a high 33% of gross loans at end-2016, the
bank's loss-making business model, a funding franchise that in
Fitch opinion remains vulnerable to creditors' sentiment and a
liquidity profile that is weaker than most rated Italian peers.

Carige's Long-Term IDR is rated above the VR to reflect Fitch's
view that the probability that senior creditors will have to bear
losses is lower than the probability of the bank's failure. This
is primarily because Fitch expects that the bank will receive
capital through a new share issue and the conversion of a portion
of its junior and subordinated debt. If the bank raises capital
successfully, senior creditors will not suffer losses. Some of
the bank's core shareholders have expressed their willingness to
participate pro quota in the EUR450 million capital increase, and
the bank is in contact with at least some investors in its
instruments to explore a conversion of these instruments into
equity.

Carige's senior unsecured bonds are rated in line with the bank's
IDRs. The Recovery Rating of '4' (RR4) reflects Fitch's
expectation of average recovery prospects in the event of a
default of these instruments.

Fitch have placed the Short-Term IDR on RWN because it is mapped
from the Long-Term IDR.

SUPPORT RATING (SR) AND SUPPORT RATING FLOOR (SRF)

The SR and SRF reflect Fitch's view that although external
support is possible it cannot be relied upon. Senior creditors
can no longer expect to receive full extraordinary support from
the sovereign in the event that the bank becomes non-viable. The
EU's Bank Recovery and Resolution Directive (BRRD) and the Single
Resolution Mechanism (SRM) for eurozone banks provide a framework
for the resolution of banks that requires senior creditors to
participate in losses, if necessary, instead of or ahead of a
bank receiving sovereign support.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

The downgrade of the subordinated Tier 2 debt to 'CC' reflects
Fitch views that these instruments have become vulnerable to
conversion into equity as the bank is considering a liability
management exercise, which could also involve these instruments,
as part of its recapitalisation plans. Fitch considers them also
to be vulnerable to write down or conversion in more remote
precautionary recapitalisation or resolution scenarios. Their
Recovery Rating of '5' (RR5) reflects below average recovery
prospects for subordinated bondholders.

RATING SENSITIVITIES
IDRS, VR AND SENIOR DEBT

Fitch would likely downgrade the VR to 'f' after the capital is
raised through the new share issue or a debt conversion and
completion of the demerger, before being upgraded to a level
commensurate with the bank's subsequent risk profile and
capitalisation. Fitch would also downgrade the VR in the event of
a precautionary recapitalisation with public funds or a
resolution if the planned transactions were to fail. However,
Fitch considers this less probable at this stage.

Fitch expects to resolve the RWN when there is further visibility
on the execution of Carige's capital increase, subordinated debt
conversion and doubtful loan demerger. Fitch considers there are
execution risks related to the demerger of doubtful loans given
the complexity of the operation, and to the full completion of
the capital increase, despite Fitch's opinion that roughly one-
third of shareholders are likely to support the bank's plans. The
resolution of the RWN could take longer than the typical six
months if the bank's plans and regulatory authorisations are
delayed.

If the transactions go ahead, the bank's still weak
capitalisation and asset quality after the transaction, its loss-
making business model and franchise and limited earnings
potential will likely constrain its VR at 'b-' immediately
following the completion of the transactions.

If the bank fails to complete the transactions, then Fitch
considers that the bank might require a precautionary
recapitalisation or, alternatively if the bank is not eligible
for it, would be at risk of a resolution. In this latter scenario
the Long-Term IDR and senior debt ratings could be downgraded to
a level commensurate with Fitch views of heightened risk of
senior creditors bearing losses in a resolution of the bank.

SR AND SRF

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

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

The ratings of the subordinated securities could be downgraded
further if recovery prospects for bondholders deteriorate, which
would also be reflected in a lower recovery rating.

The rating actions are as follows:

Long-Term IDR: 'B-', placed on RWN
Short-Term IDR: 'B', placed on RWN
Viability Rating: downgraded to 'cc' from 'b-'
Support Rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'
Senior unsecured notes (including EMTN): Long-term rating of 'B-
'/'RR4' placed on RWN, Short-term rating of 'B' placed on RWN
Subordinated notes (XS0372143296): downgraded to 'CC'/'RR5' from
'CCC'/'RR5'


CREDITO VALTELLINESE: Fitch Rates EUR150MM Tier 2 Notes BB-
-----------------------------------------------------------
Fitch Ratings has assigned Credito Valtellinese's (Creval,
BB/bb/RWN) EUR150m callable subordinated Tier 2 issue (ISIN:
XS1590496987) a long-term rating of 'BB-'/Rating Watch Negative
(RWN).

The notes are issued under Creval's EUR5 billion EMTN program and
qualify as Basel III-compliant Tier 2 debt. They contain
contractual loss absorption features that will be triggered only
at the point of non-viability of the bank and no equity
conversion feature. The terms of the notes include a reference to
noteholders consenting to be bound by subordination provisions
established by Italian law.

The notes have an original maturity in 2027 with an issuer option
to redeem, in whole or in part, in 2022 or at any time upon a
regulatory event or a withholding tax event, subject to
regulatory approval and the conditions to redemption. They pay
annual coupons at 8.25% fixed annual rate until 2022 and will
reset to a new fixed rate based on the underlying five-year swap
rate plus the initial margin thereafter.

The notes are listed on the Luxembourg Stock Exchange.

KEY RATING DRIVERS
SUBORDINATED DEBT

The notes are rated one notch below Creval's Viability Rating
(VR) of 'bb'/RWN, in accordance with Fitch's criteria. Fitch
apply zero notches for non-performance risk since the securities
qualify as gone-concern instruments and the write-down of the
notes will only occur once the point of non-viability is reached
while there is no coupon flexibility prior to non-viability.
Fitch also apply one notch for loss severity to reflect the
below-average recovery prospects for the notes in the event of
the bank becoming non-viable given their subordination status.

The RWN is in line with that on Creval's VR, which primarily
reflects pressure on the bank's capitalisation from the material
gap between the book value of impaired loans and their reserve
coverage.

RATING SENSITIVITIES
SUBORDINATED DEBT

The notes' rating is sensitive to the same factors that may
affect the bank's VR.

Fitch expects to resolve the RWN in the next three months once
Fitch assess the impact of the bank's strategy and how it plans
to address the impact of this strategy on its capital base.
Should the VR be downgraded, this would also result in a
downgrade of the subordinated debt's rating.

The notes' rating is also sensitive to a change in notching
should Fitch change its assessment of loss severity or non-
performance risk.


UNIPOL BANCA: Fitch Affirms BB Long Term IDR, Outlook Stable
------------------------------------------------------------
Fitch Ratings has affirmed Unipol Banca S.p.A.'s Long-Term Issuer
Default Rating (IDR) at 'BB' and Viability Rating (VR) at 'ccc'.
The Outlook on the Long-Term IDR is Stable.

KEY RATING DRIVERS
IDRS, SUPPORT RATING

Unipol Banca's IDRs and Support Rating (SR) reflect institutional
support from its ultimate sole shareholder, Unipol Gruppo
Finanziario (UGF, BBB-/Stable). Unipol Banca's Long-Term IDR is
rated two notches below UGF's to reflect Fitch's view that
potential for disposal is high given the limited strategic
importance for the group and the bank's weak performance track
record. Fitch believes that despite these factors, there is a
moderate probability that the parent will provide support to the
bank given regulatory requirements and Fitch views that a default
of Unipol Banca would constitute a high reputational risk for UGF
as both operate in the same jurisdiction and share the same
brand.

To date, UGF has provided support in the form of capital
injections into Unipol Banca. In Fitch's opinion, support has
only been moderate in volume relative to the bank's needs, given
the bank's weak asset quality. The bank benefits from technical
support from its parent, and from a contractual agreement to
cover the bank's losses on a number of impaired exposures. Fitch
expects this ordinary support to continue.

UGF recently announced its intention to spin off most of Unipol
Banca's doubtful loans into a separate company and evaluate
potential strategic options for the restructured Unipol Banca.

Unipol Banca's Stable Outlook is in line with that on UGF.

VR

Unipol Banca's VR reflects its extremely weak asset quality,
which weighs on its capitalisation. The VR also reflects its weak
operating performance, burdened by a high cost base, high loan
impairment charges and the bank's business model, which is highly
sensitive to the weak operating environment in Italy and low
interest rates.

Asset quality remains weak. The inflow of new non-performing
exposures has stabilised, in line with the trends in the Italian
banking sector. The bank's high exposure to single names and
concentration in the construction and real estate sectors
compared with peers render it more vulnerable to further
deterioration in its loan book. Unipol Banca's new lending is
more selective and the bank has strengthened its approach to
resolving its asset quality problems. Coverage of impaired loans
is low as the bank relies on collateral, predominantly in the
form of real estate, whose value cannot be entirely relied upon
since enforcement of creditors' rights in Italy is less effective
than in other countries. Under an agreement with its parent, UGF
provides full coverage of a number of riskier impaired exposures.
However, underlying credit risk at the bank remains high.

Unipol Banca's capital base is small and at risk of sudden shocks
in asset performance. Capital encumbrance by unreserved impaired
loans is high at above 200% of Fitch Core Capital (FCC) at end-
June 2016, including UGF's indemnities, which in Fitch's opinion
is unsustainable and puts the bank at risk of a capital
shortfall. Fitch believes that UGF will likely continue to
provide capital if the need arises, but the bank's regulatory
capital ratios remain weak and with tight buffers above minimum
regulatory requirement.

Unipol Banca's operating profitability is structurally weak,
driven by weak revenue generation from its core businesses, high
operating costs and material pressure from loan impairments.
Unipol Banca returned to profitability in 2015 after being loss-
making for several years; but Fitch believes that reported
profitability benefits from the bank's low coverage of impaired
loans, which reduces loan impairment charges. Fitch believes that
it will be difficult for the bank to generate sustainable profit
as its franchise and pricing power are weak and because it has
been unable to generate significant synergies from its parent.

Unipol Banca's funding and liquidity reflect its business model
and mainly depends on its customer base, which has been less
stable than other regional Italian banks. Customer deposits have
been increasing in recent years and accounted for about 70% of
total non-equity funding. However, churn rate is relatively high,
which means that these customers do not regularly bank with
Unipol Banca and make its funding vulnerable to depositors'
sentiment. The bank has regularly placed bonds to retail
investors, but Fitch expects that these will be reducing as bail-
in legislation has come into force. The bank's standalone
liquidity profile is moderately improving, but UGF's ability to
provide liquidity remains important for the bank.

RATING SENSITIVITIES
IDRS, SR

Unipol Banca's IDRs and SR are sensitive to a change in UGF's
ability and propensity to support its subsidiary. This means that
the bank's ratings and Outlook are primarily sensitive to changes
in UGF's ratings. The ratings would also be affected by any
change in Fitch assessment of UGF's propensity to support Unipol
Banca. A sale of the bank or a reduction in UGF's stake in it
would likely diminish the parent's propensity to provide support.

VR

A material deterioration of asset quality and capitalisation
would likely result in a downgrade of Unipol Banca's VR. The
rating is also sensitive to liquidity pressures. An upgrade would
require a material improvement in asset quality, a stronger
capitalisation of the bank and a sustainable improvement of its
structural profitability.

The rating actions are as follows:

Long-Term IDR affirmed at 'BB'; Outlook Stable
Short-Term IDR affirmed at 'B'
Viability Rating affirmed at 'ccc'
Support Rating affirmed at '3'


===================
M O N T E N E G R O
===================


MONTENEGRO REPUBLIC: S&P Affirms 'B+/B' Sovereign Credit Ratings
----------------------------------------------------------------
S&P Global Ratings affirmed its 'B+/B' long- and short-term
foreign and local currency sovereign credit ratings on the
Republic of Montenegro.  The outlook is negative.

                             RATIONALE

The ratings are constrained by Montenegro's weak fiscal and debt
metrics, since highway construction outlays will continue to push
up debt until 2019, as well as by external vulnerabilities due to
a persistently high current account deficit and lack of monetary
flexibility given the country's adoption of the euro as its
currency.  S&P also considers Montenegro's moderate GDP per
capita and long-term economic growth potential.

"We maintain our base-line assumption that investment growth will
be the main driver of real GDP, which we expect will increase by
3.3% in 2017 compared with 2.4% in 2016.  At the same time,
fiscal consolidation will likely weigh on growth in the coming
years because the government has implemented sizable fiscal
consolidation measures in 2017, including a higher mineral oil
excise duty and a cut to public-sector salaries.  Austerity
measures became necessary after a rise in current expenditure
ahead of the October 2016 parliamentary elections, when public-
sector wages and social transfers increased.  The government has
explicitly affirmed its commitment to put public finances back on
a sustainable path, and we understand that it is preparing a set
of comprehensive fiscal measures in addition to those
enacted in late 2016, including initiatives to broaden the tax-
revenue base and improve compliance.  In that regard, S&P notes
that the reduction of certain benefits has already triggered
protests in 2017, so further cost containment could be
politically sensitive.

Government deficits will remain high until the projected
completion of the first section of the Bar-Boljare highway in
2019, averaging 6% of GDP over 2017-2020.  S&P forecasts that the
government will be able to reduce its budget deficit (excluding
highway-related spending) until 2019.  Nonetheless, highway-
related expenditures will increase general government debt to 77%
of GDP by 2020 from 69% in 2016.  This underlines the constraints
to the government's fiscal flexibility over the coming years and
hence the need to limit the increase of public debt to contain
vulnerabilities to external shocks, especially given the
country's limited monetary flexibility due to its unilateral
adoption of the euro.

Montenegro's external position remains vulnerable over 2017-2020,
with sizable external financing needs totaling about 140% of
current account receipts and usable reserves, on average, and
high external debt with external debt net of liquid assets
averaging 190% of current account receipts.  Current account
deficits exceeding 20% of GDP over that period reflect an even
higher trade deficit, which is partly mitigated by a surplus in
the services balance due tothe country's coastal tourism
destinations.  S&P notes that, for the time being, the
geopolitical concerns afflicting tourist destinations such as
Turkey, Egypt, and Tunisia, among others, are benefitting tourism
in Montenegro. However, an important source of Montenegro's
external financing -- net foreign direct investment (FDI) --
decreased substantially in 2016 to 10% of GDP from 17% the year
before.  While mainly reflecting one-time events, the decrease is
also likely linked to lower inflows in the construction and real
estate sector, and highlights Montenegro's vulnerability to
external developments.  However, S&P projects that net FDI
inflows will recover to average 13.5% in 2017-2020, which will
cover most of the current account deficit as investments, for
example in the tourism and energy sectors, proceed.

Montenegro's accounts show large, persistent, and positive errors
and omissions, which -- following recent data revisions--average
5% of GDP over the past five years.  These may reflect unrecorded
tourism export revenues and the underestimation of remittances,
among other factors. This could mean that the current account
deficit may be lower than the reported data indicate.  Also, S&P
has very limited information on Montenegro's external assets;
therefore external ratios are likely to indicate higher net
leverage than is actually the case.

Although imports related to foreign-funded investment projects
contribute to the persistently negative trade balance, S&P
anticipates that projects in the energy, agriculture, and
especially the tourism sector will strengthen the potential for
export-led growth after their completion.  The same is true for
the Bar-Boljare highway project, which could ultimately benefit
the country's role as a tourist destination. At the current
stage, while contributing to economic growth, the project's
interlinkage with Montenegro's economy remains constrained due to
the limited domestic content of the project.

The construction of the first phase of the Bar-Boljare highway,
currently in progress, commenced in 2015.  Eighty-five percent of
the financing for this phase will be met through a $1.1 billion
(25% of GDP) loan from the Export-Import Bank of China (Chinese
Eximbank) and the remainder via market issuance.  S&P anticipates
that the government would not rely on further borrowings to
finance the other sections of the highway but could consider
other avenues, such as public-private partnerships or
concessions.

S&P notes, nonetheless, remaining risks from the highway
construction, for example related to cost overruns or currency
risk, since Montenegro must service its loan from the Chinese
Eximbank in U.S. dollars.  S&P understands that the government is
contemplating ways to hedge its exchange rate risk.

S&P do not consider the bilateral loan from the Chinese Eximbank
to be commercial debt. However, by potentially receiving
preferential treatment, the liability could, in S&P's opinion,
weaken Montenegro's capacity to pay its commercial debt, which
S&P estimates at over 50% of total government debt.

Montenegro's unilateral adoption of the euro prevents the Central
Bank of Montenegro from setting interest rates and controlling
the money supply, and restricts its ability to act as a lender of
last resort.  It also makes the country's economy highly
sensitive to cross-border capital movements.  Despite efforts to
reduce the level of nonperforming loans (NPLs), the NPL ratio
remains high at 10% in February 2017.  S&P expects that the pace
of credit growth, particularly to the corporate sector, is likely
to remain slow, although it will accelerate from low levels in
2017.

Following Montenegro's parliamentary elections in October 2016,
the Democratic Party of Socialists (DPS) continues to dominate
the domestic political landscape, albeit with lower margins than
in previous years.  Montenegro's institutional and governance
effectiveness continues to be constrained by several structural
problems, including for example in the judicial system.
Montenegro is making strong progress toward accession to NATO
(North Atlantic Treaty Organization) and could become a member of
the alliance in the near term, once ratification from all member
countries is received.  In particular, because Montenego's EU
integration is likely to proceed slowly over the coming years,
NATO accession could be a signal of stability for investment in
the country and support structural reform momentum.  There is a
risk, however, that NATO accession could increase divisions
within the country and burden international relationships,
particularly with Russia, a key investor and trading
partner.  This is underlined by events that took place during
last year's parliamentary elections, which authorities branded an
attempted coup linked to Russian nationals.

                              OUTLOOK

The negative outlook reflects S&P's view that risks to the
sustainability of Montenegro's fiscal and debt metrics remain
elevated because highway construction outlays will result in debt
increases until 2019, while the reduction in politically
sensitive current expenditure and revenue-raising measures will
require steadfast political commitment over the coming months.
At the same time, external financing of Montenegro's high current
account deficit could become increasingly difficult if net FDI
inflows remain significantly subdued after declining in 2016.

S&P could lower the ratings over the next six months if the
government fails to implement its consolidation strategy,
resulting in fiscal slippages, or if S&P sees increasing
pressures on the balance of payments that translate into weaker
growth and higher interest rates.

S&P could revise the outlook to stable if economic growth in
Montenegro picked up faster than S&P anticipates, net FDI inflows
recovered, the government implemented effective measures to
achieve consolidation of public finances, and government and
external debt start decreasing.

In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable.  At the onset of the committee, the chair
confirmed that the information provided to the Rating Committee
by the primary analyst had been distributed in a timely manner
and was sufficient for Committee members to make an informed
decision. After the primary analyst gave opening remarks and
explained the recommendation, the Committee discussed key rating
factors and critical issues in accordance with the relevant
criteria. Qualitative and quantitative risk factors were
considered and discussed, looking at track-record and forecasts.

The committee agreed that all key rating factors were unchanged.

The chair ensured every voting member was given the opportunity
to articulate his/her opinion.  The chair or designee reviewed
the draft report to ensure consistency with the Committee
decision.  The views and the decision of the rating committee are
summarized in the above rationale and outlook.  The weighting of
all rating factors is described in the methodology used in this
rating action.

RATINGS LIST

                                           Rating
                                           To           From
Montenegro (Republic of)
Sovereign Credit Rating
  Foreign and Local Currency               B+/Neg./B    B+/Neg./B
Transfer & Convertibility Assessment      AAA          AAA
Senior Unsecured
  Local Currency                           B+           B+


===============
P O R T U G A L
===============


* Portugal Makes Progress in Addressing Legacy Banking Problems
---------------------------------------------------------------
Portugal's efforts to address the legacy problems in the
country's banking sector continue to make gradual progress, Fitch
Ratings says. The sale of Novo Banco would help clarify sovereign
exposure to the sector if it is completed as planned, and follows
the recapitalisation of Caixa Geral de Depositos (CGD).

But the outcome of current initiatives to address high non-
performing loans remains unclear, and further costs to the
sovereign or the banking sector cannot be ruled out.

State-owned CGD issued EUR500 million of additional Tier 1
capital notes last month, allowing for a planned EUR2.5 billion
capital increase by the state. This restored capital buffers as
outlined in the bank's 2017-2020 strategic plan and was factored
into Fitch affirmations of CGD's ratings on 16 March.

The government raised funds for the recapitalisation of CGD last
year and this is reflected in Fitch debt figures for 2016. Fitch
2017 deficit forecast of 2.9% of GDP includes 1.1% of GDP from
the CGD transaction. Fitch rates Portugal 'BB+'/Stable.

The Portuguese government also announced an agreement with US
private equity firm Lone Star regarding Novo Banco, the bridge
bank that took over some assets and liabilities from the
collapsed Banco Espirito Santo in 2014. Lone Star will inject
EUR1 billion of capital in return for a 75% stake. Portugal's
Resolution Fund will retain 25%. The Fund injected EUR4.9 billion
capital into Novo Banco, of which EUR3.9 billion was covered by
government loans and the remainder mostly by loans from
Portuguese banks.

The Lone Star deal means that sale proceeds will not be enough
for the Resolution Fund to repay these loans. This is confirmed
by the government's decision to extend the maturities on its
loans to the Resolution Fund to 2046. Fitch already anticipated
that the gap between the capital injected and the sale price will
be covered by Portuguese banks' contributions and that these
would be spread over many years to avoid damaging their
profitability further.

Fitch did not include possible positive stock-flow adjustments
from planned disposals of bank assets in Fitch sovereign debt
forecasts due to uncertainty over their size and timing.

The latest developments are broadly positive. CGD is in a better
position to improve profitability, and a successful sale of Novo
Banco could improve investor sentiment toward the banking sector.
However, the Novo Banco agreement is subject to execution risk.
It requires approval by the EU authorities and the raising of
EUR500 million of common equity tier 1 from a voluntary liability
management exercise, the details of which are still being
discussed.

Moreover, the Portuguese government has said that the Resolution
Fund may need to provide additional capital if Novo Banco's
capital levels drop below regulatory minimums due to the
performance of designated assets held in a "side bank". The
Resolution Fund's contribution would be capped at EUR850 million
annually. If the Fund did not have access to sufficient funds,
the government might provide it with liquidity via a new loan or
guarantee, which would potentially would have an impact on fiscal
accounts.


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


BANCO POPULAR: DBRS Cuts Subordinated Debt Rating to BB (high)
--------------------------------------------------------------
DBRS Ratings Limited on April 6 downgraded Banco Popular Espanol,
S.A.'s (Popular or the Bank) ratings, including its Issuer Rating
and Senior Unsecured Long-Term Debt & Deposit rating to BBB (low)
from BBB, its Short-Term Debt & Deposit rating to R-2 (middle)
from R-2 (high) and its Subordinated Debt rating to BB (high)
from BBB (low). The Trend on the Issuer, Senior and Short-Term
Debt & Deposits ratings remains Negative. Popular's subordinated
debt remains Under Review with Negative Implications (URN) (see:
"DBRS Places Certain Sub Debt of 27 European Banking Groups Under
Review With Negative Implications"). DBRS has also downgraded the
Bank's Long Term Critical Obligations Rating (COR) to BBB (high)
and confirmed the Short Term COR at R-1 (low). The Trend on the
COR ratings is now Negative. Please see a full list of ratings
at https://is.gd/YhL50P

The downgrade of the Issuer Rating and the Senior Unsecured Long-
Term Debt & Deposit ratings reflects DBRS's increasing concerns
over Popular's weakened capital position following the
announcement of further negative adjustments to the Bank's
capital position on April 3, 2017. The pressure on capital had
been a key driver for the downgrade and negative trend placed on
Popular's senior ratings in February following the announcement
of a sizeable loss in 2016 (see "DBRS Downgrades Popular's Senior
Ratings to BBB, Negative Trend" on February 10, 2017). As a
result of the most recent announcements, Popular's capital
position will materially weaken to levels that are approaching
its regulatory minimums. According to the Bank, its pro-forma
phased-in total capital ratio would be around 11.8% at end-March
2017, which DBRS considers leaves the Bank with limited
flexibility and very low capital buffers over the minimum
regulatory requirements. In DBRS's view the Bank is vulnerable to
the impact from any further adverse events and this makes it more
challenging to significantly reduce its high stock of NPAs. The
new management seems to be willing to make considerable changes
to the Bank, however the benefit of some of those changes may
take time to materialise, and DBRS considers the immediate
priority is for the Bank to restore its capital position. The
Negative trend reflects the fact that should capital levels not
be restored in the short term, there could be additional downward
pressure on the ratings.

On April 3, 2017, Popular announced that the recent internal
audit had identified a shortfall of provisions associated with
specific exposures. The internal audit also raised certain issues
related to loans granted to customers that may have been used to
participate in the capital increase completed by Popular at end-
June 2016. In accordance with regulations, financing relating to
the acquisition of a bank's shares has to be deducted from
capital. Popular has announced that as a result, the Bank's
regulatory capital could be negatively impacted by around EUR 549
million to EUR 770 million. Consequently, according to the Bank,
the total capital (phased-in) ratio is expected to fall to
between 11.7% and 11.85%, leaving the Bank with only a small
buffer over the minimum 11.375% overall capital requirements
(OCR) total capital ratio required for Popular under the SREP
(Supervisory Review and Evaluation Process).

DBRS notes that Popular's ratings continue to be supported by the
Bank's SME franchise strength in Spain, where it has significant
market shares in total customer loans and retail deposits as the
sixth largest bank by assets at end-2016.

RATING DRIVERS:

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

Negative ratings pressure would arise if the Bank was unable to
restore capital levels in the short term. Moreover, it could
arise if the Bank does not demonstrate an ability to reduce NPAs,
especially if this were in conjunction with any perceived
weakening of the franchise.


FTA EMPRESAS 2: Fitch Affirms Csf Rating on Class F Notes
---------------------------------------------------------
Fitch Ratings has upgraded FTA, Santander Empresas 2's class D
and E notes and affirmed the others, as follows:

EUR0.2 million Class C (ISIN ES0338058037): affirmed at 'AA+sf';
Outlook Stable
EUR59.5 million Class D (ISIN ES0338058045): upgraded to 'Asf'
from 'BBBsf'; Outlook Stable
EUR29 million Class E (ISIN ES0338058052): upgraded to 'BBB+sf'
from 'BBsf'; Outlook Stable
EUR53.7 million Class F (ISIN ES0338058060): affirmed at 'Csf';
RE (Recovery Estimate) 0%

FTA, Santander Empresas 2 is a granular cash flow securitisation
of a static portfolio of secured and unsecured loans granted to
Spanish small- and medium-sized enterprises by Banco Santander
S.A. (A-/Stable/F2).

KEY RATING DRIVERS

End of Life
The transaction is close to the end of its life as outstanding
assets only represent 3% of the initial balance, resulting in
high obligor concentration. The largest obligor and top 10
obligors currently represent 9.4% and 25.3% of the outstanding
portfolio, respectively.

Excessive Counterparty Exposure
A large portion of the credit enhancement for the class D and E
notes comes from the reserve fund deposited in the account bank,
Santander UK (A/Stable/F1). This implies that a sudden default of
the counterparty, which also holds quarterly collections, would
have a major impact on the notes. Consequently the ratings are
capped at the level of the counterparty.

Sovereign Cap
The class C notes' rating is the highest possible for Spanish
structured finance transactions, as it is six notches above the
Kingdom of Spain's Issuer Default Rating (BBB+/Stable/F2).

Increased Credit Enhancement
The upgrade of the class D and E notes reflects the increased
credit enhancement due to the amortisation of the underlying pool
and increase of the reserve fund to EUR35.7 million from EUR34.1
million last year. Credit enhancement for the class D notes has
increased to 73% from 52% over the last 12 months and to 41% from
28% for the class E notes.

Robust Portfolio Performance
Ninety day-plus delinquencies have remained low since 2013,
currently representing around 0.8% of the outstanding portfolio
balance. Furthermore, cumulative defaults since the transaction
closed in December 2016 amount to EUR53.7 million, only 1.9% of
the initial balance.

RATING SENSITIVITIES

Fitch tested the ratings' sensitivity to a 25% increase in the
obligor default probability, a 25% reduction in expected recovery
rates and a combined sensitivity of the two, and in all cases
except for the class E notes found that there would be no rating
impact on the notes.

A combined 25% increase in the default rate and decrease in the
recovery rate would produce a downgrade of up to three notches
for the class E notes.


SRF 2017-1 FONDO: DBRS Finalises BB(sf) Rating on Class D Notes
---------------------------------------------------------------
DBRS Ratings Limited on April 5 finalised its provisional ratings
of AAA (sf) on the EUR 248 million Class A Notes, A (sf) on the
EUR 40 million Class B Notes, BBB (sf) on the EUR 16 million
Class C Notes and BB (sf) on the EUR 12 million Class D Notes on
SRF 2017-1 Fondo de Titulizacion. The EUR 84 million Class E
Notes are unrated. The rating on the Class A Notes addresses the
timely payment of interest and ultimate payment of principal. The
ratings on the Class B Notes, Class C Notes and Class D Notes
address the ultimate payment of interest and ultimate payment of
principal. Credit enhancement is provided in the form of
subordination. The Class A Notes also benefit from an amortising
Reserve Fund that provides liquidity support. The initial balance
of the reserve fund is equal to 2.5% of the Class A Notes. The
Reserve Fund is amortising and is subject to a floor of 1.75% of
the initial Class A Notes balance. The Reserve Fund also provides
liquidity and credit support to all notes on the earliest of (1)
the payment date on which the Class A Notes fully amortise down
or (2) the legal final maturity.

On any interest payment date from closing, the rated notes may be
redeemed in full. The rated notes will be redeemed in full
following a seller portfolio purchase. The rated notes may only
be redeemed provided the Issuer has the necessary funds to pay
all outstanding amounts of the notes and amounts ranking prior.
If the rated notes are redeemed within two years from the closing
date, the repurchase price of the portfolio will include Class A,
Class B, Class C and Class D make-whole amounts. As of the
payment date in April 2022, the interest on the rated notes
increases.

Proceeds from the issuance of the Class A to E Notes will be used
to purchase Spanish residential mortgage loans. The mortgage
loans were originated by Catalunya Banc, S.A. (CX), Caixa
d'Estalvis de Catalunya, Caixa d'Estalvis de Tarragona and Caixa
d'Estalvis de Manresa. The latter three entities were merged into
Caixa d'Estalvis de Catalunya, Tarragona i Manresa, which was
subsequently transferred to Catalunya Banc, S.A. by virtue of a
spin-off on 27 September 2011. During 2011 and 2012, CX received
capital investment from the Fund for Orderly Bank Restructuring
(FROB), effectively nationalising the bank.

As part of its divestment in CX, the FROB sold a portfolio of
loans that were transferred to a securitisation fund, FTA 2015,
Fondo de Titulizacion de Activos (the 2015 Fund) via the issuance
of mortgage participation and mortgage transfer certificates,
which represent the legal and economic interest in the mortgage
loans. Following the sale of the mortgage loans in 2015, Banco
Bilbao Vizcaya Argentaria S.A. (BBVA) acquired CX on 24 April
2015. Subsequently, CX was absorbed and merged with BBVA. BBVA
will act as Collection Account Bank and Master Servicer, with
servicing operations delegated to Anticipa Real Estate, S.L.U.
(Anticipa or Servicer) in its role as Servicer.

The 2015 Fund sold the mortgage loans to SRF Intermediate 2017-1
S.A.R.L. (the Seller), which subsequently sold and transferred
the mortgage certificates and participations to the Issuer. The
Seller is a private limited company incorporated under the laws
of Luxembourg and is a wholly owned subsidiary of the retention
holder, Spain Residential Finance S.A.R.L. The retention holder
subscribed to the Class E Notes and guarantees the obligation of
the Seller to repurchase ineligible mortgage certificates
resulting from a breach of representation and warranties.
Titulizacion de Activos, S.G.F.T., S.A. (TDA) has been appointed
as the Management Company and back-up servicer facilitator.

The current balance of the mortgage portfolio (as of 27 February
2017) is equal to EUR 400,000,000. The Weighted-Average Current
Loan-to-Value (WACLTV) of the mortgage portfolio is 60.8%, with
the Indexed WACLTV calculated by DBRS at 84.4%, (INE, TINSA Q4
2015). The seasoning of the portfolio is 9.3 years, with the
origination vintages concentrated in 2006 to 2009 (63.9%). Junior
liens represent 4.3% of the portfolio. All prior liens are
included in the securitsation. DBRS has factored subordinated
ranking of second liens into the loss analysis.

The portfolio is largely concentrated in the autonomous region of
Catalonia (75.7%). CX as originator was headquartered in
Barcelona and focused its lending strategy in Catalonia. The
concentration in a particular region leaves the transaction
exposed to house price fluctuations, economic performance and
changes in regional laws. Although the peak-to-trough house price
decline observed in Catalonia was higher than the national
average at 46.63%, prices have recovered 14.8% (Q4 2016). GDP and
unemployment have also shown improvement, with estimated GDP
figures for 2015 demonstrating an increase of 3.9% compared with
a growth rate of 1.4% at the end of 2014. Unemployment has fallen
to 14.8% as of Q4 2016 from 24.5% in Q1 2013.

Multi-credit loans represent 52.1% of the pool and permit the
borrower to make additional drawdowns. The borrower may not draw
down in excess of the amounts stated in the mortgage agreement.
Borrower eligibility for additional drawdowns is subject to key
conditions. Generally, a borrower must not be in default, and
restrictions are also placed on the debt-to-income ratios. Once
eligibility has been established, drawdown is subject to
additional criteria such as caps on the maximum drawdown amounts,
maturity restrictions and LTV caps. Further drawdowns under the
multi-credit agreement will be funded by the 2015 Fund. The
various drawdowns among the multi-credit rank pari passu. Upon
enforcement of a property securing multi-credit loans, the
proceeds applied would first repay the fund for any expenses
incurred, with the remainder distributed between the Issuer and
the 2015 Fund on a pro rata basis.

The majority of the pool (79.3%) consists of loans that have been
restructured or have benefitted from a grace period in the past.
DBRS has assessed the historical performance of the mortgage
loans and factored restructuring arrangements into its default
analysis. As of the closing date, the pool does not contain
borrowers who have gone into arrears of more than 35 days over
the previous 24 months. As of the closing pool cut-off date, 0%
of the pool is more than 30 days in arrears.

The transaction is exposed to unhedged basis risk with the assets
linked to 12-month Euribor (83.5%), Mibor (0.2%) and IRPH
(15.8%). The remaining portion (0.5%) pays a fixed rate of
interest. The notes are linked to three-month Euribor. The
weighted interest rate of the portfolio is calculated at 1.5%,
with the weighted-average margin equal to 1.3%. Moreover, 60.1%
of the mortgage portfolio is eligible to receive reductions on
the margin dependent on the additional products a borrower has
with BBVA. The margin can potentially reduce to 1.2% after
reduction.

Approximately 25.9% of the pool was subject to interest rate
floors in the past. As of 1 July 2016, interest rate floors are
no longer applied. An Interest Rate Floor Clause (IRFC) reserve
fund will be established to mitigate the potential risk of
remediation payments to the borrowers as a consequence of the
ruling by Spanish courts declaring floor clauses abusive. The
IRFC reserve will be funded by the 2015 Fund for potential
remediation of amounts accrued between 31 March 2014 and 1 July
2016. Amounts payable by the 2015 Fund are guaranteed by the
Retention Holder via the retention holder guarantee. Spain
Residential Finance S.a.r.l. provides a guarantee on the
obligation of the seller to pay the repurchase price of an
ineligible mortgage certificate and the obligation to compensate
the fund in respect of compensation payments due to the issuer,
by the 2015 Fund, with respect to interest rate floors.

On 21 December 2016, the European Court of Justice ruled that
Spanish banks whose interest rate floor clauses in mortgage
contracts are declared to be null and void by a domestic court
must repay the corresponding revenues received since activation
of the floor clause to customers. Procedural guidelines for
customer protection were set out in a Royal Decree law passed on
20 January 2017 allowing lenders one month to inform customers of
their right to compensation and a further three months to reach a
settlement after receiving a claim.

An indirect impact on the transaction may come from retroactive
compensation arrangements starting from the date the interest
rate floor clauses were activated. In DBRS's view, the impact on
securitisations of Spanish mortgages is likely to depend
primarily on the form of compensation implemented by the banking
sector.

Compensating the customer by adjusting the payment schedule of
the loan, either by reducing the interest instalments due or by
writing down the outstanding principal, will have the largest
potential impact on the transaction. In the former case, DBRS
expects the special-purpose vehicle (SPV) to be protected by
representations and warranties and, failing that, through the
implementation of minimum interest rate provisions on the
portfolio. Margin reductions, while having a negative impact on
excess spread, may also have the side effect of improving a
borrower's capacity to repay their mortgage, reducing delinquency
levels and potentially translating into decreased portfolio loss
rates. In the latter case, DBRS's baseline scenario is that the
bank would be unable to unilaterally write down the principal of
an asset that has been transferred to an SPV in a "true sale." As
a result, the bank would be obliged to either repurchase the loan
from the pool or to reimburse the SPV for the lost principal.

BBVA is in place as the Master Servicer and Collection Account
Bank. Anticipa, as the servicer of the mortgage loans, will act
in the name of BBVA on behalf of the fund. BBVA will deposit
amounts received that arise from the mortgage loans with the
Issuer Account Bank within two business days. The servicer is
able to renegotiate terms of the loans with borrowers subject to
certain conditions being met. Permitted variations are limited to
5% of the initial pool balance and are limited to margin
reduction and maturity extension.

BNP Paribas Securities Services, Spanish Branch (BNP) is the
Issuer Account Bank and Paying Agent for the transaction. DBRS
privately rates BNP with a Stable trend. DBRS has concluded that
BNP meets DBRS's minimum criteria to act in such capacity. The
transaction contains downgrade provisions relating to the account
bank where, if downgraded below "A," the Issuer will replace the
account bank or find a guarantor with the minimum DBRS rating of
"A" who will guarantee unconditionally and irrevocably the
obligations of the treasury account agreement. The downgrade
provision is consistent with DBRS's criteria for the initial
rating of AAA (sf) assigned to the Class A Notes.

The interest received on the Issuer Account Bank is equal to
EONIA minus ten basis points (bps) if EONIA is less than or equal
to 0%, and EONIA minus 20 bps if EONIA is positive. As it is
possible for negative interest rates to accrue, there is a risk
the Issuer will have to pay BNP for depositing cash. To account
for potential negative interest rates, DBRS stressed the cash
flows in the down interest rate scenario.

The ratings are based upon a review by DBRS of the following
analytical considerations:
-- Transaction capital structure and form and sufficiency of
    available credit enhancement. Credit enhancement to the Class
    A Notes (38.00%) is provided by subordination of the Class B
    (10.00%), Class C (4.00%), Class D (3.00%) and the Class E
    Notes (21.00%). Credit Enhancement to the Class B Notes
    (28.00%) is provided by subordination of the Class C (4.00%),
    Class D (3.00%) and the Class E Notes (21.00%). Credit
    Enhancement to the Class C Notes (24.00%) is provided by
    subordination of the Class D (3.00%) and the Class E Notes
    (21.00%). Credit Enhancement to the Class D Notes (21.00%) is
    provided by subordination of the Class E Notes (21.00%).
-- The credit quality of the mortgage loan portfolio and the
    ability of the servicer to perform collection activities.
    DBRS calculated probability of default, loss given default
    and expected loss outputs on the mortgage loan portfolio.
-- The ability of the transaction to withstand stressed cash
    flow assumptions and repay the Class A, Class B, Class C and
    Class D Notes according to the terms of the transaction
    documents.  The transaction cash flows were modelled using
    portfolio default rates and loss given default outputs
    provided by the European RMBS Insight Model. The portfolio
    was grouped into two sub-portfolios based on historic
    performance. The sub-portfolios were assigned a Spanish
    Underwriting Score of 3 and Spanish Underwriting score of 6,
    respectively. Transaction cash flows were modelled using
    Intex. DBRS considered additional sensitivity scenario of 0%
    CPR stress. The Class C Notes and Class D Notes did not pass
    0% CPR stress in the down interest rate front loaded default
    scenario. DBRS will continue to monitor prepayment rates as
    part its surveillance process.
-- The sovereign rating of the Kingdom of Spain rated A
    (low)/Stable and R-1 (low)/Stable (as of the date of this
    report).
-- The legal structure and presence of legal opinions addressing
    the assignment of the assets to the issuer and the
    consistency with DBRS's "Legal Criteria for European
    Structured Finance Transactions" methodology.


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


VOLYNVUHILLIA: PM Supports Temporary Moratorium on Bankruptcy
-------------------------------------------------------------
Interfax-Ukraine reports that Prime Minister of Ukraine Volodymyr
Groysman has supported the introduction of a temporary moratorium
on the bankruptcy of coal mining enterprises.

"The norm on the moratorium on bankruptcy should be temporary to
conduct restructuring, because I believe that some people
dishonestly exploit Ukrainian legislation to block the work of
Ukrainian mines . . . I support, and I think the ministers will
support a temporary moratorium for the period of restructuring,"
Interfax-Ukraine quotes the prime minister as saying at a cabinet
meeting.

The Economic Court of Volyn region on Feb. 21 decided to initiate
a case on the bankruptcy state enterprise Volynvuhillia,
Interfax-Ukraine relates.


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


BRIGHTHOUSE GROUP: S&P Cuts ICR to 'CCC' on Likely Restructuring
----------------------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit rating on
U.K.-based rent-to-own provider BrightHouse Group Ltd. to 'CCC'
from 'CCC+'.  The outlook is negative.

As a consequence, S&P also lowered its issue rating on
BrightHouse's GBP220 million senior secured notes due 2018 to
'CCC' from 'CCC+'.  S&P's '4' recovery rating on the senior
secured notes indicates its expectation of average recovery (30%-
50%; rounded estimate: 35%) in the event of a default.

On April 6, 2017, BrightHouse announced that it had received
notification that the FCA intends to provide the group with
authorization to continue operating as a U.K. consumer credit
firm.  The authorization is subject to a number of conditions,
one of which is the restructuring of BrightHouse's GBP220 million
senior secured notes before the maturity date on May 15, 2018.
While S&P views the FCA's intent as a positive step in terms of
the group's long-term business prospects, S&P considers the
likelihood of a restructuring in the form of a distressed
exchange to be increasingly likely.  This reflects S&P's view
that the FCA's concerns in relation to customer affordability
assessments, arrears handling, and price transparency will
continue to impact the group's operations materially over the
medium term.  The recent material decline in EBITDA, reflecting a
fall in revenue and the high fixed-cost base, means that S&P
expects year-end 2017 credit metrics of:

   -- Debt to EBITDA in excess of 10x; and
   -- EBITDA to interest expense below 1x.

The downgrade therefore stems from S&P's opinion that
BrightHouse's current capital structure is unsustainable when
considered alongside its vulnerable business operations and weak
credit metrics.  Although the group's cash flow from operations
was strong in the past quarter, this primarily reflects a
material fall in the purchasing of new rental assets (because
business volumes have declined), combined with continual
collections on its existing contract portfolio.  While this is
supportive for liquidity and the group's debt-servicing over the
next 12 months, S&P considers the fall in customer sign-ups to be
unsustainable in light of the group's current debt burden.  S&P
notes that BrightHouse does not yet have firm plans in place to
restructure its existing debt.  However, given S&P's view of the
group's creditworthiness and the trading price of the senior
secured notes, S&P sees an increasing likelihood of a
restructuring that it would consider as distressed.

S&P generally considers exchange offers or similar restructurings
conducted below par by a company rated 'B-' or below as being
distressed and therefore tantamount to a default at issuer level.
Given the 'CCC+' long-term rating on BrightHouse prior to the
announcement, and the current market price of its debt
instruments in the secondary market, a debt restructuring would
likely result in investors receiving less value than the promise
of the original security.  As a result, S&P could view the likely
restructuring as a default under its criteria.

The outlook is negative, reflecting S&P's view that there is an
increasing likelihood that the company will restructure its
outstanding debt within the next 12 months.  Given BrightHouse's
current vulnerable business operations, weak credit metrics, and
the current weak trading price of senior secured notes, S&P
considers it likely that it would deem a restructuring as
distressed and tantamount to a default.

S&P could lower the long-term issuer credit rating to 'CCC-' if
it views the likelihood of a distressed debt restructuring as
drawing closer, for example being likely to occur within the
following six months.

Alternatively, S&P could lower the rating if the company were to
announce a broad restructuring of its capital structure, which
S&P considered to be consistent with a distressed exchange.  At
this stage, the issuer credit rating would likely be lowered to
'CC'. Subsequent completion of a distressed exchange would lead
to an issuer credit rating of 'D'.

S&P could revise the outlook to stable or raise the ratings if it
no longer viewed the prospect of a distressed restructuring as
probable.  This would likely require clear guidance from
management on refinancing plans, alongside a credible long-term
plan for the group's business operations.

Any positive rating action would also hinge on near-term
improvements in BrightHouse's operating performance, credit
metrics, and liquidity prospects, which S&P currently views as
unlikely.


CO-OPERATIVE BANK: Warns Rescue Plans May Impact Bondholders
------------------------------------------------------------
Emma Dunkley and Javier Espinoza at The Financial Times report
that the Co-operative Bank is advancing talks with a number of
bidders over a potential sale but has warned that bondholders
would take a hit from its rescue plans.

The lossmaking lender revealed on April 7 that it had received a
number of "non-binding proposals" and had "selected several
parties to enter a further phase" after putting itself up for
sale at the start of the year, the FT relates.

A number of private equity firms including US companies JC
Flowers and Cerberus are potentially interested in some of the
Co-op Bank's portfolios, while UK challenger bank Virgin Money is
also eyeing parts of the lender, the FT relays, citing bankers
briefed on the plans.
The sales process is part of a broader plan by the Co-op Bank to
avoid being placed into resolution by the Bank of England's
Prudential Regulation Authority, after the lender revealed it
would miss its minimum capital targets over the next few years,
the FT states.

However, the bank warned on April 7 that "each of the preliminary
offers" from the interested parties "includes some form of
liability management exercise", which could involve a debt-for-
equity swap or a deal that results in bondholders taking losses.

The announcement will come as a blow to bondholders, which
include a number of US hedge funds, the FT says.

The Co-operative Bank is a retail and commercial bank in the
United Kingdom, with its headquarters in Balloon Street,
Manchester.  The bank has around four million customers and 105
branches.


DECO 8 - UK CONDUIT: DBRS Cuts Remaining Swap Rating to B(sf)
-------------------------------------------------------------
DBRS Ratings Limited on April 7 downgraded the rating of the
potential interest rate swap (IRS) termination amount that may be
owed by the commercial mortgage-backed securities (CMBS) issuer
to Deutsche Bank AG (Deutsche Bank or the Swap Counterparty) in
relation to the Deco 8 - UK Conduit 2 P.L.C. (the Transaction or
Deco 8) as follows:

-- Potential Interest Rate Swap Termination Payment - Swap ref
    1475920L (initial GBP 71.6 million notional, referencing the
    Fairhold loan) (the Fairhold Swap) downgraded to B
    (low) (sf), Negative trend from BB (low) (sf), Negative
    trend.

The downgrade of the Fairhold Swap reflects the increasing
default risk of the Transaction caused by the limited workout
progress of the Fairhold and the other securitised loans.
Specifically, the likelihood of class A2 to default at maturity,
which is one year away, has increased given the current special
serviced loans' workout progress. Upon the occurrence of a note
event of default (EOD) and a note acceleration notice, the
payment priorty would switch to post-enforcement priority of
payment, in which the Fairhold Swap will rank pro rata and pari
passu with class A2 principle and interests. This could result in
a swap EOD and likely incur an ultimate loss to the swap
counterparty.

The Fairhold Swap is set to expire in 2036 and is estimated to
have GBP 8 million mark-to-market (MTM) value for the swap
Counterparty on April 2018. Its referenced Fairhold loan has one
senior and one junior piece and was originated to refinance a
portfolio of residential ground leases. The cut-off balance of
the senior Fairhold loan on 19 October 2005 was GBP 72 million
secured by 92,464 ground leases; however, in 2013, the loan did
not repay at maturity and was transferred to special servicing.
The balance of the senior tranche in October 2013 was GBP 63
million secured by 82,975 ground leases and the current balance
is GBP 56 million backed by 82,170 ground leases per DBRS's
calculations. There have been very limited ground lease disposals
since 2013 and the current whole loan's loan to value (LTV) is
over 100%. Nevertheless, given its relative low MTM, its senior
ranking at loan level and its shortening time to maturity over
time, the Fairhold Swap would likely be repaid in full as long as
the Fairhold loan works out.

Regarding the Mapeley II loan, the special servicer had informed
the market that the refinancing of the loan was close to
completion in May 2016. However, following U.K.'s EU referendum
vote, the interested lenders have put the refinancing proposal on
hold. Currently the special servicer is still committed to
pursuing its strategy of refinancing or selling the portfolio on
completion of the remaining asset management initiatives, which
will maximise value and recoveries under the loan. A value
estimation was also established by the special servicer following
the referendum and a broker has given a gross value opinion in
the range of GBP 176-184 million. Per RIS Notification published
on 30 December 2016, the special servicer has expressed that they
can accept a valuation as low as GBP 167.2 million during the
Second Additional Standstill Date until 20 January 2018. The
current balance for Mapeley II loan is GBP 189 million.

On the note level, the outstanding balance of class A2 as of
January 2017 was GBP 235.5 million with an additional liquidity
facility drawing of GBP 1.7 million. The current recoverable
value, which is the lower of the market value (MV) or the loan
balance of all securitised loans is GBP 234.8 million. Therefore,
even if all the loans were to be disposed in the next 12 months
at the lower of the respective loan balance and market value,
there would be a deficiency of GBP 2.4 million (excluding the
Fairhold Swap MTM and senior issuer costs) for the issuer to
avoid a principal shortfall on class A2.

DBRS believes that it is still possible to work out the Fairhold
loan before April 2018. DBRS also notes that the Swap
Counterparty has an incentive to facilitate a loan workout before
April 2018. However, to reflect the increased risk of a tighter
workout deadline since last review, DBRS has today downgraded the
Fairhold Swap to B (low) (sf) and kept a Negative trend. The
Negative trend reflects that over time the risk of the swap's
defaulting at or shortly after April 2018 will increase.

The IRS in the CMBS are issuer-level swaps that provide for a
fixed-rate payment to Deutsche Bank in exchange for a floating-
rate (LIBOR) payment by Deutsche Bank to the bond. The swaps were
intended to protect the individual loans and the capital
structure in the CMBS against rises in interest rates. As part of
its rating analysis, DBRS considers the adequacy of the
collateral backing the respective loan and the CMBS to cover the
swap termination payments, the performance of the collateral and
the quality of the legal and financial structure. When rating
swap termination payments, DBRS is assessing the ability of the
securities to make the swap termination payments to the
counterparty by the legal final maturity date of the transaction.
DBRS also takes into account the position of swap payment in the
pre- and post-enforcement priorities of payment. DBRS uses its
European CMBS Rating and Surveillance Methodology to assess the
recoverability of the value of the swap termination fees to
determine if there is sufficient coverage to make these
termination payments by the legal final maturity of the CMBS. To
calculate the swap termination payments, DBRS first derives the
net swap cash flow for each period by comparing (1) the fixed
stream of payments from the notes to the swap counterparty
against (2) the LIBOR payments that the counterparty would expect
to pay to the notes. Next, DBRS aggregates the net swap cash flow
for all future periods to derive the total potential swap
termination payments. A rating is only assigned when, under such
rating scenario, there is sufficient coverage of collateral to
ultimately pay the swap termination payments should the notes
default on swap payment obligations on any distribution date. The
rating does not address (1) the likelihood that a swap
termination event occurs on or before the swap termination date,
(2) the payment of any swap termination payment owed by Deutsche
Bank to the bond and (3) termination payments owed by the bond to
Deutsche Bank if it is the defaulting party.


KAYBOO: MP Calls for Investigation Into Collapse
------------------------------------------------
Gareth Bryer at BBC News reports that MP Simon Hart has said the
collapse of two firms behind a luxury Carmarthenshire hotel
should be looked into.

The Corran Resort and Spa in Laugharne was bought by one of its
directors after it went into administration with millions of
pounds of debt, BBC relates.

Mr. Hart wants the failed plan, which attracted GBP19 million
from 425 investors worldwide, to be examined, BBC discloses.

The hotel was owned by Kayboo and operated by East Marsh
Operational but both went into administration in October 2016
after they stopped paying the investors the returns they had
promised, BBC recounts.

Despite the value of the hotel and its assets, administrators
decided the debts made it almost worthless and sold it to
Glendore Real Estate, run by Mr. Stiles, in order to protect the
60 to 70 jobs there, BBC notes.  Mr. Hart, as cited by BBC, said
there were questions about whether investors knew there was a
good chance planning permission may not be granted, as the site
was on a floodplain and is a Site of Special Scientific Interest
(SSSI).

The MP for Carmarthen West and South Pembrokeshire has written to
the UK government's Department for Business, Energy and
Industrial Strategy asking it to look into what happened, BBC
relays.

The project's investors have said they do not expect to get much
of their investment back and nearby companies have also lost
money, according to BBC.


MOY PARK: S&P Raises CCR to 'BB' on Stronger Credit Metrics
-----------------------------------------------------------
S&P Global Ratings said that it has raised the long-term
corporate credit rating on U.K. poultry producer Moy Park
Holdings Europe to 'BB' from 'BB-'.  The outlook is stable.

At the same time, S&P raised the issue ratings on the existing
GBP300 million senior unsecured notes due 2021 to 'BB'.  The '3'
recovery rating on these notes remains unchanged, reflecting
S&P's expectation of meaningful recovery (50%-70%; rounded
estimate 65%) in the event of a payment default.

Moy Park has recorded substantial improvement in profitability
metrics in 2016 following its acquisition by Brazil-based meat
processor JBS, in September 2015.  The company reported an
increase of more than 100 basis points (bps) in gross and EBITDA
margins in 2016 to approximately 16.4% and 8.8%, respectively,
from approximately 15.1% and 7.5% in 2015.  S&P understands that
these improved metrics have been based on a combination of
factors, including procurement savings, reduction in waste, and
increased productivity as a result of enhanced revamped operating
processes.  Following recent capital expenditure (capex)
investment in new machinery and production facilities, including
Ashbourne in the U.K., S&P expects earnings to strengthen further
in 2017 and 2018, further supporting the deleveraging profile.
Another significant contributor to the stronger leverage metrics
in S&P's forecasts is the change in the management strategy of
working capital requirements.  The company has previously used a
receivables factoring line to support its cash conversion cycle.
However, Moy Park took the decision in 2016 to discontinue its
use to reduce the associated interest costs.  Although this has
resulted in a one-off working capital outflow in 2016, S&P no
longer captures the drawn amounts in our debt computation, and as
a result the S&P Global Ratings' adjusted debt to EBITDA fell to
2.7x as of December 2016.  S&P sees this level of leverage as
sustainable for Moy Park given its investments in productive
capacity and continued focus on operating efficiency, and as such
S&P is revising its financial risk profile assessment to
intermediate.

S&P continues to view Moy Park, which is fully consolidated into
JBS' operations and financial reporting, as strategically
important to the group under S&P's criteria definitions.  This
assessment is supported by our understanding that JBS S.A. is
unlikely to sell Moy Park, because it is a part of the long-term
strategy for the group.  The assessment is also based on S&P's
view Moy Park is reasonably successful at what it does.  In S&P's
view, the potential IPO transaction doesn't change this
assessment at this time because S&P expects JBS to maintain a
majority interest in the company.  Given Moy Park's stronger
financial risk profile and 'bb' stand-alone credit profile
(SACP), the final issuer credit rating is no longer constrained
to one-notch below the group credit profile (GCP).

S&P's business risk profile assessment remains unchanged,
reflecting Moy Park's geographic concentration in the U.K.,
Ireland and France; limited product diversity, with over 75% of
revenue derived from poultry products; and significant exposure
to private-label retailers that tend to enjoy lower margins than
branded products.  However, Moy Park is the second-largest
poultry producer in the U.K., with strong market positions in the
"chilled" and "ready-to-eat" segments, offsetting these
weaknesses.  S&P also views positively the supporting market
conditions; market demand for poultry remains steady in the U.K.,
and management enjoys a track record of managing volatile raw
material prices and avoiding disease outbreaks in its operations.
Moy Park's strategy of continuously improving operating
efficiency and capacity, engaging with retailers on an customized
level, and innovating products support increased earnings going
forward, in S&P's view.  S&P expects Moy Park will continue to
record competitive profitability metrics compared with industry
averages. However, S&P sees the product concentration and
deflationary retail environment as significant challenges that
limit the potential for a stronger business risk assessment at
this time.

The revision of S&P's financial risk profile assessment reflects
its forecast core leverage metrics of adjusted debt to EBITDA and
funds from operations to debt of below 3.0x and above 30%,
respectively, in 2017 and 2018.  S&P's estimates of debt stood at
GBP375 million as of Dec. 31, 2016, with the total including the
GBP300 million unsecured notes due 2021, while finance leases,
operating leases, and unamortized borrowing costs accounting for
the majority of the remainder.  S&P do not net reported cash
balances because of its weak business risk assessment.  Moy
Park's reported revenue stood at GBP1.44 billion in 2016, with
S&P Global Ratings-adjusted EBITDA of GBP137 million, compared
with a similar level of revenues in 2015, but with adjusted
EBITDA of GBP117 million.  S&P expects earnings to continue to
increase modestly in its forecasts, mainly because of volume
growth, continued efficiency gains, and product innovation in
poultry production.  S&P expects Moy Park's free operating cash
flow base (after interest costs) to be at least GBP45 million,
because S&P expects working capital movements to be largely
neutral and capex to be between 4%-5% annually.  S&P expects the
EBITDA interest coverage metric to remain strong at above 6x, and
as such S&P expects Moy Park will be able to comfortably meet the
interest payments on its GBP300 million senior notes due 2021.

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

   -- Low-to-mid single-digit revenue growth in 2017 and 2018,
      reflecting increased volumes following recent investment in
      production capacity and S&P's expectation of new contracts.
      S&P also expects some inflationary pressure on feed costs
      to be passed through to the final consumer and support top-
      line growth.

   -- Modest improvement in profitability, thanks to management's
      continued efficiency programs, procurement savings, and
      optimization of the company's product mix, resulting in
      adjusted EBITDA margins of 9.0%-10.0% in 2017 and 2018.

   -- Annual capex of approximately 4.5%-5.5% of revenues.
      Negligible movement in working capital requirements and no
      acquisitions.

   -- Dividend distribution up to the maximum allowed at 50% of
      reported net income.

   -- No changes in the capital structure or tax obligations

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

   -- Adjusted debt to EBITDA of 2.2x-2.7x in 2017 and 2018.

   -- Adjusted EBITDA interest coverage of above 6.0x in 2017 and
      2018.

   -- Adjusted free operating cash flow above GBP50 million in
      S&P's forecasts

The stable outlook reflects S&P's view that Moy Park will
steadily increase its revenue and earnings base such that
adjusted debt to EBITDA will fall in the 2.2x-2.7x range, with
EBITDA interest coverage above 6.0x over the next 12 months.  S&P
expects management's focus on operating efficiency and
productivity to boost operating performance.  Increased
production scale following recent capex investments should also
contribute to improved operating performance.  S&P maintains its
view that Moy Park's leverage will not increase as a result of a
more aggressive financial policy, such that debt-protection
metrics weaken considerably to a level not commensurate with an
intermediate financial risk profile assessment.  This is
supported by the restriction on payments in the bond indenture
that limit dividends to the parent, and as such S&P expects the
group to generate modest free operating cash flow in its
forecasts.

S&P could downgrade Moy Park if S&P lowers the rating on its
parent JBS S.A., all other things being equal.  S&P's view of Moy
Park's long-term credit quality is constrained by the rating on
its ultimate parent, and as such S&P would not rate Moy Park
above its parent.  The weakening of Moy Park's financial risk
profile -- such that debt to EBITDA is above 3.0x on a
sustainable basis -- could also result in the lowering of the
rating, all things being equal.  This would most likely be the
result of significant underperformance in Moy Park's operations
if the company were unable to successfully pass on increases in
input costs or were to suffer a significant disruption to
operating activity as a result of a widespread disease outbreak
such as avian flu.

S&P could raise the ratings on Moy Park if there is a sustainable
improvement in its stand-alone credit profile, provided that at
the same time there is a similar improvement in the corporate
credit rating on its parent, JBS S.A.  This is because the rating
on Moy Park is constrained by, and cannot be higher than, the
rating on its parent.  Alternatively, a two-notch uplift in the
rating on JBS, with no change in the stand-alone credit profile
of Moy Park, could also result in an upgrade, as the rating would
then benefit from S&P's assessment of group support.


NOMAD FOODS: S&P Assigns 'BB-' CCR, Outlook Stable
--------------------------------------------------
S&P Global Ratings said it has assigned its 'BB-' long-term
corporate credit rating to U.K.-headquartered frozen food
manufacturer Nomad Foods Ltd.  The outlook is stable.

At the same time, S&P assigned its 'BB-' issue rating to the
proposed EUR500 million and $510 million senior secured term
loans due 2024 and the EUR80 million secured revolving credit
facility (RCF) due 2023.  The recovery rating on the proposed
loans is '3', indicating S&P's expectation of meaningful (50%-
70%; rounded estimate: 50%) recovery in the event of a payment
default.

Nomad Foods reported revenues of EUR1.9 billion and S&P Global
Ratings-adjusted EBITDA of EUR274 million in 2016.  The company
produces frozen food products (mostly fish and vegetables) which
are sold in Western European markets such as the U.K., Italy,
Germany, and France.

Nomad Foods is a guarantor under the senior facilities agreement
hence S&P assigned its 'BB-' corporate credit rating.  S&P
understands that the transaction will serve to refinance the
existing credit facilities, while the RCF will be extended to
2023 under the terms of the new senior facilities agreement.

The stable outlook reflects S&P's view that, over the next 12
months, Nomad Foods should continue generating positive free cash
flows and gradually reduce debt leverage, despite business
headwinds in the U.K., Italy, and Germany.  To maintain the
current 'BB-' rating, S&P would need to see an improvement in the
company's operating performance by restoring positive like-for-
like revenue growth and a gradually improving EBITDA margin.  S&P
also needs to see adjusted debt-to-EBITDA decreasing to below 5x
and free operating cash flows to debt remaining above 5% over the
next 12 months.

A continued decline in like-for-like revenues, with a 100 basis
point drop in the EBITDA margin compared to S&P's base-case
projections, could lead S&P to lower the rating on Nomad Foods.
This could arise from a combination of pricing pressures from
retailers in main markets, an inability to pass on rising raw
materials costs to customers (notably in the U.K., which is being
negatively affected by the weak sterling), and further
restructuring costs to reduce overcapacities.  S&P could also
consider a downgrade if adjusted debt to EBITDA remained above
5x, along with a continued decline in free cash flow generation.

S&P could take a positive rating action on Nomad Foods if debt
leverage reduced significantly to close to 4x adjusted debt to
EBITDA.  This could occur if there was a sustained rebound in
sales in its main markets such as the U.K., Italy, and Germany,
as well as market share gains in France.  S&P would also view
positively a leaner operating cost base after the full
integration of Findus' European operations.  However, although
Nomad Foods has shown consistent financial discipline and
generates sufficient free cash flow to reduce debt, S&P notes
that it plans to expand its presence in the industry, which
limits S&P's view of potential improvements to its credit
metrics.


PAVETESTING LTD: Averts Collapse With Eight-Month Rescue Plan
-------------------------------------------------------------
The Construction Index reports that PaveTesting Ltd. has been
saved from collapse by an eight-month rescue plan.

Administrators were appointed to the company, based in Letchworth
Garden City, last year, The Construction Index relates.  It has
now come out the other side with a company voluntary arrangement,
The Construction Index discloses.

In August 2016 Simon Bonney and Andrew Hosking, partners of
insolvency specialist Quantuma, were appointed joint
administrators, The Construction Index relates.

According to The Construction Index, Simon Bonney said the
business hit problems in 2016 following challenging market
conditions.

By August 2016, the company had no cash to meet the next wage
bill, and the board set about working with Quantuma to establish
the viability of the business, The Construction Index relays.  To
provide short term protection, PaveTesting was placed into
administration, The Construction Index recounts.

Quantuma negotiated funding to meet the ongoing business costs,
while discussions took place with directors and shareholders to
enable a rescue plan to be delivered, The Construction Index
states.

PaveTesting Ltd. makes pavement testing equipment for civil
engineering contractors.


PRECISE 2017-1B: Moody's Assigns (P)Ba2 Rating to Class E Notes
---------------------------------------------------------------
Moody's Investor Service has assigned provisional long-term
credit ratings to Notes to be issued by Precise Mortgage Funding
2017-1B PLC:

-- GBP[*]M Class A Mortgage Backed Floating Rate Notes due March
    2054, Assigned (P)Aaa (sf)

-- GBP[*]M Class B Mortgage Backed Floating Rate Notes due March
    2054, Assigned (P)Aa1 (sf)

-- GBP[*]M Class C Mortgage Backed Floating Rate Notes due March
    2054, Assigned (P)A1 (sf)

-- GBP[*]M Class D Mortgage Backed Floating Rate Notes due March
    2054, Assigned (P)Baa1 (sf)

-- GBP[*]M Class E Mortgage Backed Floating Rate Notes due March
    2054, Assigned (P)Ba2 (sf)

Moody's has not assigned ratings to the GBP[*]M Class Z Mortgage
Backed Fixed Rate Notes due March 2054 and the Residual
Certificates.

The portfolio backing this transaction consists of first ranking
buy-to-let mortgage loans advanced to semi-professional landlords
with small portfolios secured by properties located in England
and Wales.

On the closing date Charter Court Financial Services Ltd (not
rated) will sell the portfolio to Precise Mortgage Funding 2017-
1B PLC.

Please note that on 21 March 2017, Moody's released a Request for
Comment, in which it has requested market feedback on potential
revisions to its Approach to Assessing Counterparty Risks in
Structured Finance. If the revised Methodology is implemented as
proposed, the Credit Rating on Precise Mortgage Funding 2017-1B
may be affected. Please refer to Moody's Request for Comment,
titled "Moody's Proposes Revisions to Its Approach to Assessing
Counterparty Risks in Structured Finance," for further details
regarding the implications of the proposed Methodology revisions
on certain Credit Ratings.

RATINGS RATIONALE

The rating takes into account the credit quality of the
underlying mortgage loan pool, from which Moody's determined the
MILAN Credit Enhancement and the portfolio expected loss, as well
as the transaction structure and legal considerations. The
expected portfolio loss of [2]% and the MILAN required credit
enhancement of [13]% serve as input parameters for Moody's cash
flow model and tranching model, which is based on a probabilistic
lognormal distribution.

The portfolio expected loss is [2.0]%: which is marginally higher
than other comparable buy-to-let transactions in the UK mainly
due to: (i) the originators' limited historical performance, (ii)
the current macroeconomic environment in the UK, (iii) the low
weighted-average seasoning of the collateral of [0.4] years; and
(iv) benchmarking with similar UK buy-to-let transactions.

The portfolio MILAN CE is [13.0]%: which is marginally higher
than other comparable buy-to-let transactions in the UK mainly
due to: (i) a weighted average current LTV of [72.0]%; (ii)
around [95.5]% of the pool being interest-only loans; (iii) the
originators' limited historical performance and (iv) benchmarking
with other UK buy-to-let transactions.

At closing the mortgage pool balance will consist of GBP [484.5]
million of loans. An amortizing reserve fund will be funded to
[2.0]% of the aggregate principal amount outstanding of the rated
notes as of the closing date. Within the reserve fund an amount
equal to [2.0] of Class A and Class B notes outstanding principal
amount will be dedicated to provide liquidity to Class A and
Class B notes. Moreover, the Class A and B notes benefit from
principal to pay interest mechanism.

Operational Risk Analysis: Charter Court Financial Services Ltd
("CCFS", not rated) will be acting as servicer. In order to
mitigate the operational risk, there will be a back-up servicer
facilitator, Intertrust Management Limited (not rated), and
Elavon Financial Services DAC, (Aa2/P-1) acting through its UK
Branch will be acting as an independent cash manager from close.
To ensure payment continuity over the transaction's lifetime the
transaction documents incorporate estimation language whereby the
cash manager can use the three most recent servicer reports to
determine the cash allocation in case no servicer report is
available.

Interest Rate Risk Analysis: The transaction will benefit from a
swap provided by Lloyds Bank Plc (Aa3(cr)/P-1(cr)). Under the
swap agreement during the term of the life of the fixed rate
loans the issuer will pay a fixed swap rate of [0.9]% and on the
other side the swap counterparty will pay three-month sterling
Libor.

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

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

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

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

Moody's Parameter Sensitivities: If the portfolio expected loss
was increased from [2.0]% to [6.0]% of current balance, and the
MILAN CE was increased from [13.0]% to [15.6]%, the model output
indicates that the Class A notes would still achieve Aaa(sf)
assuming that all other factors remained equal. Moody's Parameter
Sensitivities provide a quantitative/model-indicated calculation
of the number of rating notches that a Moody's structured finance
security may vary if certain input parameters used in the initial
rating process differed. The analysis assumes that the deal has
not aged and is not intended to measure how the rating of the
security might migrate over time, but rather how the initial
rating of the security might have differed if key rating input
parameters were varied. Parameter Sensitivities for the typical
EMEA RMBS transaction are calculated by stressing key variable
inputs in Moody's primary rating model.

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

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


TULLOW OIL: Moody's Affirms B2 CFR on Solid Business Profile
------------------------------------------------------------
Moody's Investors Service has affirmed B2 Corporate Family Rating
(CFR) and B2-PD probability of default rating (PDR) of Tullow Oil
plc. Concurrently, the ratings on its USD650 million 2020 and
USD650 million 2022 senior unsecured global notes were affirmed
at Caa1. The outlook on all Tullow's ratings was changed to
positive from negative.

RATINGS RATIONALE

The change of outlook to positive from negative reflects the
successful rights issue raising net proceeds of $724 million
which will allow the company to reduce debt. Moody's expects
Tullow's adjusted debt/EBITDA to fall to around 4.3x in 2017
after peaking at 5.5x in 2016. This should provide the company
with greater financial and operational flexibility to grow the
business and consider the acceleration of investment in projects
and selective growth opportunities. The transaction will also
improve the company's liquidity and give it more time to
refinance its debt maturities in 2018, materially reducing the
need to draw debt to fund repayments.

The affirmation of the B2 rating reflects (a) its solid business
profile with sizeable oil and gas resource base (b) its growing
low cost production offshore Ghana, with TEN fields ramping-up in
2017 (c) successful exploration programme and strong execution
track-record, with significant oil discoveries in Uganda and
Kenya, that underpin the company's long-term production growth
trajectory, and (d) proactive steps taken by the company to
manage its liquidity position in 2016 and 2017 and a prudent
hedging programme which covers approximately 50%-60% of its oil
sales each year. However, Tullow's rating demonstrates a linkage
to the sovereign rating of Ghana (B3, stable) given its sizable
country exposure expected to account for around 68% of production
in 2017.

TEN produced first oil in August 2016 with production ramp-up
expected in 2017. Production issues at the Jubilee field due to
the Turret issue were mitigated as insurance proceeds were
received in 2016. The company is expected to receive further
insurance proceeds in 2017 as production losses and additional
costs are incurred. Moody's expects the company to increase
production volumes in 2017 to around 82,000-88,000 BOE/day,
including insurance compensation, from 71,700 BOE/day in 2016 due
to TEN ramp-up. Assuming an oil price in the middle of the range
of $40-60/bbl, coupled with increased production and lower capex
should improve the cash flow generation resulting into
deleveraging which will be further accelerated due to the rights
issue proceeds. Low operating costs continue to underpin strong
profitability of the business with unleveraged cash margin
expected to remain above $30/bbl in 2017-18. The company also
retains sufficient operating diversity and flexibility to divest
or reduce stakes in production assets, if necessary, as evident
by the recent farm-down of its assets in Uganda to Total S.A.
(Aa3, stable) for $900 million, out of which $100 million as
upfront cash at closing, $50 million at both FID and first oil
and $700 million as deferred consideration.

Tullow's liquidity profile is considered as good supported by
reported cash balance of $282 million at the end of 2016. Free
cash flow (FCF) is expected to be around $300 million in 2017 and
$50-100 million in 2018, assuming TEN ramp-up is in line with
expectations. The Reserve Based Lending (RBL) facility, maturing
in October 2019, started to amortize in October 2016 with around
$600 million maturing in 2017 and $900 million in 2018. Moody's
expects the company should be able to fund its needs in 2017 from
its internal sources and proceeds of the rights issue and should
be able to refinance its RBL during the year to manage the
repayments in 2018. The company has availabilities of $255
million of RBL facility and $620 million of RCF as of December
2016. In February 2017, the company successfully extended the
maturity of its Revolving Credit Facility (RCF) by one year to
April 2019.

Structural Considerations

The Caa1 ratings on $650 million 2020 and $650 million 2022
senior unsecured notes reflect the fact that the guarantees
supporting the notes are senior subordinated obligations of the
respective guarantors and are subordinated in right of payment to
all existing and future senior obligations of those guarantors,
including their obligations under the RBL and Corporate secured
revolving bank facilities.

Positive outlook

The positive outlook reflects the company's ability to improve
its financial profile and delever to around 4.0x with positive
FCF generation expected in 2017-18. The outlook also reflects
expectations that the company should be able to maintain its
adequate liquidity profile and manage its debt maturities in
2018-19.

What Could Take the Rating Up

A strong sustained liquidity position with refinancing risk
addressed for the debt maturities in 2018-19, return to positive
FCF generation and deleveraging with adjusted Debt/EBITDA at
around 4.0x and adjusted RCF/Debt around 20%, will put positive
pressure on the B2 rating. An upgrade of the rating will also
remain linked to the rating of Ghana (B3, stable) given Tullow's
sizable country exposure and is unlikely to exceed two notches.

What Could Take the Rating Down

The B2 ratings could come under pressure should Tullow suffer
significant delays in progressing with the ramp up of its TEN
project in 2017 resulting in continued negative FCF generation
and delayed deleveraging with adjusted debt/EBITDA sustained
above 5.0x and adjusted RCF/debt below 10%. Pressure on liquidity
could also result in a downgrade of the ratings. The rating may
also be downgraded if Moody's lowers Moody's ratings of Ghana (B3
stable).

The principal methodology used in these ratings was Global
Independent Exploration and Production Industry published in
December 2011.

Tullow Oil plc is a leading UK based exploration and production
oil and gas company. Its main production assets are located in
West Africa (Ghana, Gabon, Equatorial Guinea, C├Čte d'Ivoire,
Congo and Mauritania) and its gas assets are in the UK and the
Netherlands. The company holds 102 licences across 18 countries.
In 2016, the company reported an average production (on a working
interest basis) of 71,700 barrels of oil equivalent per day,
revenues of $1.27 billion and 2P proved plus probable (2P)
reserves of 304 million barrels of oil equivalent. Tullow is
listed on the London, Irish and Ghana Stock Exchanges.



                            *********

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-
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Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez,
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Peter A. Chapman, Editors.

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

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