TCREUR_Public/170511.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, May 11, 2017, Vol. 18, No. 93


                            Headlines


C R O A T I A

AGROKOR DD: Croatia Wants All Small Suppliers to Get Full Payment


G E R M A N Y

BAYERNLB CAPITAL I: Fitch Affirms BB- Hybrid Capital Debt Rating
LANDESBANK SAAR: Fitch Affirms bb+ Viability Rating


G R E E C E

NAVIOS MARITIME: Moody's Affirms Caa3 CFR, Outlook Positive


I R E L A N D

PHOSAGRO BOND: Fitch Assigns BB+ Rating to US$500MM LPNs


I T A L Y

ALITALIA SPA: Set to Hire Investment Bankers to Manage Sale
TELECOM ITALIA: Moody's Affirms Ba1 CFR, Outlook Stable


L U X E M B O U R G

PACIFIC DRILLING: Will Hold Annual General Meeting on May 23


N E T H E R L A N D S

EA PARTNERS I: Fitch Affirms Rating on US$700MM Notes at 'CCC'
HARBOURMASTER CLO 6: Fitch Withdraws 'D' Ratings on Three Notes
MEDIARENA ACQUISITION: Moody's Cuts CFR to Caa1, Outlook Stable
STORM 2013-II: Fitch Raises Rating on Class D Notes to 'BB+sf'


P O R T U G A L

* PORTUGAL: Number of Insolvent Companies Down 25.6% in Jan-Apr


S L O V E N I A

ABANKA DD: Fitch Raises Long-Term Issuer Default Rating to 'BB+'


T U R K E Y

FIBABANKA AS: Fitch Assigns Final B+ Rating to Tier 2 Notes


U N I T E D   K I N G D O M

COVENTRY BUILDING: Fitch Affirms BB+ Tier 1 Securities Rating
DIAMONDCORP PLC: Appoints Joint Administrators
LEEDS BUILDING: Fitch Affirms 'BB+' PIBS Rating
PRINCIPALITY BUILDING: Fitch Affirms PIBS Rating at 'BB'
YORKSHIRE BUILDING: Fitch Affirms 'BB+' PIBS Rating

* Lacey to Join Kirkland & Ellis' Restructuring Group in London


                            *********



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C R O A T I A
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AGROKOR DD: Croatia Wants All Small Suppliers to Get Full Payment
-----------------------------------------------------------------
Jasmina Kuzmanovic and Luca Casiraghi at Bloomberg News report
that Croatia's government wants small suppliers to receive
repayment for all their claims against troubled food and retail
company Agrokor d.d., even at the risk of a backlash from bigger
creditors who may miss out.

According to Bloomberg, Agriculture Minister Tomislav Tolusic on
May 10 said small suppliers "will be paid in full" with the
proceeds of new financing that the company is negotiating with
creditors.

Ante Ramljak, the government-appointed commissioner in charge of
the company's overhaul, said some lawsuits from investors may be
expected, Bloomberg relates.

"We have agreed that small suppliers should have priority in
being paid from the loan tranche that is being negotiated,"
Bloomberg quotes Mato Brlosic, who represents small suppliers at
a council of creditors set up under Lex Agrokor, as saying. "It
seems we have the banks' support."

Mr. Brlosic said repayment should cover arrears and debt incurred
by Agrokor after the company passed into government
administration on April 10, Bloomberg relays.

The council of creditors must approve the payments, Bloomberg
notes.  Currently, it has five members, including two
representatives for suppliers and one for banks that also lent to
them, Bloomberg discloses.  Under the terms of Lex Agrokor --
Croatia's new law that restricts Agrokor from making any interest
or principal payments on its debt over the next 12 months -- the
commissioner and the council members can decide to award
precedence to suppliers in repaying debt, Bloomberg says.

According to Bloomberg, Goranko Fizulic, a former Croatian
economy minister, said the state may end up footing the bill for
the legal challenges that will probably ensue.

"An unequal treatment of creditors without clear criteria and a
base in the law, and payment of old debt to just one category of
creditors, open a possibility of lawsuits," Mr. Fizulic, as cited
by Bloomberg, said.

Zagreb-based Agrokor is the biggest food producer and retailer in
the Balkans, employing almost 60,000 people across the region
with annual revenue of some HRK50 billion (US$7 billion).

                            *   *   *

The Troubled Company Reporter-Europe reported on May 10, 2017
that S&P Global Ratings lowered its corporate credit rating on
Croatian retailer Agrokor d.d. to SD/--/SD (SD: selective
default) from CC/Negative/C.

At the same time, S&P lowered its issue rating on the three
series of senior unsecured notes to 'D' from 'CC'.

S&P understands that, on May 1, 2017, Agrokor missed a coupon
payment on its EUR300 million senior secured notes due 2019.  On
April 6, 2017, Croatia enacted a law -- "Law on Procedures for
Extraordinary Management in Companies of Systematic
Significance" -- that restricts Agrokor from making any interest
or principal payments on its debt over the next 12 months.  Under
the standstill agreement Agrokor signed with its main lenders,
its bank debt payments are currently frozen.  Under S&P's
criteria, it considers all the above to be tantamount to a
default, because S&P do not expect Agrokor to be able to make a
payment within the grace period of 30 days.

The TCR-Europe on April 17, 2017, reported that Moody's Investors
Service has downgraded Croatian retailer and food manufacturer
Agrokor D.D.'s corporate family rating (CFR) to Caa2 from Caa1
and its probability of default rating (PDR) to Ca-PD from Caa1-
PD. The outlook on the company's ratings remains negative.

"Our decision to downgrade Agrokor's rating reflects its filing
for restructuring under Croatian law, which in Moody's views
makes a default highly likely," Vincent Gusdorf, a Vice
President -- Senior Analyst at Moody's, said. "It also takes into
account uncertainties around the restructuring process, as
creditors' ability to get their money back hinges on numerous
factors that will become apparent over time."



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G E R M A N Y
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BAYERNLB CAPITAL I: Fitch Affirms BB- Hybrid Capital Debt Rating
----------------------------------------------------------------
Fitch Ratings has affirmed Bayerische Landesbank's (BayernLB)
Long-Term Issuer Default Rating (IDR) at 'A-' with a Stable
Outlook and its Viability Rating (VR) at 'bbb'. The Short-Term
IDR has been affirmed at 'F1' and the Support Rating (SR) at '1'.

The affirmation of the IDRs and SR reflects Fitch's view that
institutional support from the bank's owners is very strong. The
affirmation of the VR reflects the bank's improving asset quality
and capitalisation, which Fitch expects to strengthen its company
profile. The VR also reflects continued challenges on earnings
driven by low interest rates and strong competition in the German
banking sector.

The rating action was taken in conjunction with Fitch's periodic
review of three Landesbanken based in southern Germany.

KEY RATING DRIVERS

IDRS, SR AND SENIOR DEBT

BayernLB's IDRs, SR and senior debt ratings are driven by strong
institutional support from its owners, the regional state of
Bavaria (AAA/Stable), Bavaria's savings banks and ultimately
Germany's savings banks group, Sparkassen Finanzgruppe (SFG,
A+/Stable).

Fitch's institutional support assumptions are underpinned by
provisions contained in the statutes of SFG's and the
Landesbanken's institutional protection fund. Fitch's support
considerations are also based on the view that the owners
consider their investment in BayernLB to be long-term and
strategic. This is underpinned by BayernLB's focus on its
statutory roles, which include supporting the Bavarian economy as
well as acting as the central institution for Bavaria's savings
banks and as house bank for the state of Bavaria.

Fitch uses the lower Long-Term IDR of BayernLB's owners, SFG's
Long-Term IDR, as anchor for determining the bank's support-
driven ratings. Fitch's believes support would need to be
forthcoming from both SFG and the state of Bavaria to avoid
triggering state-aid considerations and resolution under the
German Recovery and Resolution Act if BayernLB fails. Fitch's
assessment of Bavaria's creditworthiness is underpinned by the
stability of Germany's solidarity and financial equalisation
system, which links Bavaria's creditworthiness to that of the
German sovereign (AAA/Stable). SFG's support ability is strong,
but not as strong as that of Bavaria.

Fitch said, "We notch down BayernLB's Long-Term IDR twice from
SFG's 'A+' because we consider BayernLB's role for its owners to
be strategic, but not key and integral, and because of potential
legal and regulatory barriers related to state-aid considerations
and provisions of German resolution legislation. The Stable
Outlook reflects steady support assumptions and the Stable
Outlook on SFG's Long-Term IDR."

The bank's Short-Term IDR is at the higher of the two Short-Term
IDRs that map to an 'A-' on Fitch's rating scale. This reflects
BayernLB's strong links to SFG and privileged access to SFG's
ample excess liquidity and funding resources.

The ratings of BayernLB's senior unsecured obligations are
equalised with the bank's IDRs.

VR
The affirmation of the VR reflects BayernLB's improved asset
quality and capitalisation, which has been driven by further
reduction of legacy assets. The bank's modest underlying
profitability constrains the VR, even though the stable
performance achieved in 2016 has put the bank in a favourable
position to repay its outstanding state aid of EUR1 billion to
Bavaria within the next two years.

Asset quality strengthened in 2016, supported by Germany's benign
economic environment and sound corporate sector. The significant
winding down of its non-core unit (NCU) and de-recognition of
part of its impaired exposure to the Austrian wind-down
institution HETA Asset Resolution AG also contributed to a
further decline of BayernLB's non-performing loan ratio to a low
level. Similar to its Landesbank peers, BayernLB's business model
will continue to entail significant sector and single-name loan
concentration.

Declining risk-weighted assets boosted BayernLB's fully loaded
common equity Tier 1 (CET1) ratio to 13.2% at end-2016 from 12%
at end-2015. This compares favourably with peers and, in light of
BayernLB's improved risk profile, provides adequate buffer above
the bank's 2017 transitional CET1 SREP requirement of 8%.
However, its fully loaded leverage ratio remains tight because a
high share of the bank's assets benefits from very low regulatory
risk weights.

BayernLB's 10% pre-tax profit increase in 2016 was largely
attributable to the NCU, which reduced its annual loss by 97%
yoy, driven by low loan impairments. The core segments'
performance benefited from one-off gains but will continue to
suffer from the low-interest-rate environment and cost pressure
in 2017.

BayernLB has ample liquidity and a diversified funding mix by
funding sources and customers. It includes material wholesale
funding and additionally benefits from access to the savings
banks' large excess liquidity and retail deposits of DKB, its
online banking arm, which has strengthened its funding profile.

GRANDFATHERED STATE-GUARANTEED SECURITIES
The ratings of the grandfathered state-guaranteed senior
unsecured, Tier 2 subordinated and market-linked notes are
equalised with the regional state of Bavaria's Long-Term IDR as
we believe that Bavaria's ability and propensity to honour its
guarantee is very strong.

TIER 2 SUBORDINATED DEBT AND HYBRID SECURITIES
BayernLB's Tier 2 subordinated notes are notched down once from
the VR to reflect Fitch's assessment of the notes' relative loss
severity.

The rating of the performing hybrid securities issued by BayernLB
Capital Trust I is notched down four times from the VR, two
notches for loss severity relative to average recoveries and two
notches for incremental non-performance risk.

DERIVATIVE COUNTERPARTY RATING AND DEPOSIT RATINGS
BayernLB's Derivative Counterparty Rating (DCR) and Deposit
Ratings are equalised with its IDRs. We believe the bank's
buffers of junior and vanilla senior debt do not afford any
obvious incremental probability of default benefit over and above
the multi-notch support benefit already factored into its IDRs.
We do not apply any uplift for above-average recovery prospects
in the event of default because of the limited visibility into
recovery levels in such circumstances. In the highly unlikely
event that BayernLB failed and was not supported by its savings
banks and state owners, its balance sheets would most likely
differ substantially from the current one.

RATING SENSITIVITIES

IDRS, SR AND SENIOR DEBT
The IDRs, SR and senior unsecured debt ratings are sensitive to
changes in Fitch's assumptions around the propensity or ability
of BayernLB's owners to provide timely support. This could result
from a change to SFG's IDRs or changes to the owners' strategic
commitment to BayernLB or to the bank's importance for its home
region or for the savings bank sector.

A change to Fitch's assessment of the risks of triggering a
resolution process ahead of support for a Landesbank more
generally could also affect the bank's IDRs, SR and senior
unsecured debt ratings.

VR
BayernLB's VR could be upgraded upon a further strengthening of
its company profile if BayernLB could demonstrate sustainable
profit growth while maintaining a conservative risk appetite. A
potential repayment of the remaining EUR1 billion of capital
received from Bavaria in 2017 would conclude its state-aid
procedure and open opportunities to broaden its franchise and
diversify its revenue streams backed by its improved
capitalisation.

BayernLB's performance is highly dependent on Germany's economic
environment. A significant weakening of the latter would likely
put downward pressure on the VR because the bank's asset quality,
earnings and capitalisation would be likely to weaken at the same
time.

GRANDFATHERED STATE-GUARANTEED SECURITIES
The ratings of the grandfathered state-guaranteed senior
unsecured, Tier 2 subordinated and market-linked notes are
sensitive to changes in Fitch's view of the creditworthiness of
Bavaria, which is closely linked to that of Germany.

TIER 2 SUBORDINATED DEBT AND HYBRID SECURITIES
The ratings of the Tier 2 subordinated notes and hybrid notes
issued by BayernLB Capital Trust I are broadly sensitive to the
same considerations that may affect the bank's VR. On April 12,
2017, the bank announced its intention to redeem the hybrid notes
on May 31, 2017. "We expect to withdraw the rating of the notes
upon redemption," said Fitch.

DERIVATIVE COUNTERPARTY RATING AND DEPOSIT RATINGS
The DCR and Deposit Ratings are primarily sensitive to changes in
the bank's IDRs.

The rating actions are as follows:

Bayerische Landesbank
Long-Term IDR: affirmed at 'A-'; Outlook Stable
Short-Term IDR: affirmed at 'F1'
Support Rating: affirmed at '1'
Viability Rating: affirmed at 'bbb'
Derivative Counterparty Rating: affirmed at 'A-'(dcr)
Deposit Ratings: affirmed at 'A-'/'F1'
Senior unsecured debt and debt issuance programme: affirmed at
'A-'/'F1'
Commercial paper programme: affirmed at 'F1'
Grandfathered state-guaranteed senior unsecured and Tier 2
subordinated debt: affirmed at 'AAA'
Grandfathered state-guaranteed market-linked securities: affirmed
at 'AAAemr'
Senior unsecured market-linked securities: affirmed at 'A-emr'
Tier 2 Subordinated debt: affirmed at 'BBB-'

Hybrid capital instruments issued by BayernLB Capital Trust I:
affirmed at 'BB-'


LANDESBANK SAAR: Fitch Affirms bb+ Viability Rating
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Fitch Ratings has concluded its periodic review of three southern
German Landesbanken, affirming the Long-Term Issuer Default
Ratings (IDRs) of Bayerische Landesbank (BayernLB), Landesbank
Baden-Wuerttemberg (LBBW) and Landesbank Saar (SaarLB) at 'A-'
and their Viability Ratings (VRs) at 'bbb','bbb+' and 'bb+',
respectively.

The three banks' IDRs are driven by strong institutional support
from their owners, which are the respective German regional
states, the regional savings banks and ultimately the German
savings bank organisation, Sparkassen-Finanzgruppe (SFG). Fitch's
institutional support considerations are underpinned by the
statutes of SFG and the Landebanken's institutional protection
fund, and by Fitch's view that the owners consider their
investment in their Landesbanken long term and strategic. This
reflects the banks' focus on their statutory roles, which include
supporting their regional economies, acting as central
institutions for the savings banks in their regions and as house
banks for their regional states.

Fitch uses the lower Long-Term IDR of the Landesbanken owners',
ie SFG's, as anchor for determining the three banks' IDRs. In
Fitch's view, support to a failing Landesbank would have to be
provided by SFG as well as the respective regional states to
avoid triggering state aid considerations and resolution under
the German Recovery and Resolution Act. The stability of
Germany's solidarity and financial equalisation system underpins
the regional states' IDRs, which are equalised with those of the
German sovereign (AAA/Stable). SFG's support ability, as
expressed by its Long-Term IDR of 'A+', is strong, but not as
strong as that of the regional states.

Fitch notches down the three banks' Long-Term IDRs twice from
SFG's 'A+' because it considers their roles for their owners
strategic, but not key and integral. The notching also reflects
potential legal and regulatory barriers related to state aid
considerations and provisions of German resolution legislation.
The Stable Outlook reflects Fitch's stable support assumptions
and the Stable Outlook on SFG's Long-Term IDR.

The three banks' VRs reflect their broad stability in 2016 but
also profitability challenges in the German banking sector,
specifically persistent low interest rates, narrow margins and
high competition that are a drag on all Landesbanken's business
models. The three banks' resulting moderate profitability and
material concentration on large borrowers and industrial sectors
limit their VRs to the 'bbb' range at best.

BayernLB's 'bbb' VR primarily reflects its improved asset quality
and capitalisation, driven by further reduction of legacy assets.
The VR remains constrained by the bank's modest profitability,
even though its stable earnings in 2016 have created favourable
conditions to repay its EUR1 billion outstanding state aid to
Bavaria and conclude its state aid procedure. This should open
opportunities to diversify its franchise.

LBBW's 'bbb+' VR primarily reflects its strong franchise in
Baden-Wuerttemberg, solid position in German corporate lending,
sound asset quality and strong capitalisation. However, the
transformation of its poorly performing retail subsidiary into to
a multi-channel bank drives IT and restructuring costs, which put
pressure on LBBW's modest profitability.

SaarLB's 'bb+' VR primarily reflects its improved but still
modest capitalisation. The limited ability of its small capital
base to absorb potential losses from the bank's concentrated loan
book is a constraining factor. The VR also reflects a company
profile constrained by SaarLB's concentration on the small and
moderately prosperous region of Saarland and its niche financing
businesses in the commercial real estate and renewables sectors
in France.


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NAVIOS MARITIME: Moody's Affirms Caa3 CFR, Outlook Positive
-----------------------------------------------------------
Moody's Investors Service affirmed the Caa3 corporate family
rating of Navios Maritime Holdings, Inc., its probability of
default rating of Caa3-PD, as well as the Caa2 rating on Navios
Holdings' $650 million senior secured first preferred ship
mortgage notes and the Ca rating on its $350 million senior
unsecured notes. Moody's has also changed the outlook for all
ratings to positive from negative.

RATINGS RATIONALE

"This rating action reflects improvements in the dry bulk market
where a large portion of Navios Holdings' fleet operates, as well
as the resolution of its dispute with Vale regarding a 20-year
contract with Navios Logistics, a majority-owned South American
subsidiary," says Maria Maslovsky, Vice President-Senior Analyst
at Moody's and the lead analyst for Navios. "The market
improvements and the contract affirmation lead us to expect a
neutral to positive free cash flow in the next twelve to 24
months and improved liquidity," adds Ms. Maslovsky. "Also
positively, Moody's views the risk of large-scale bond buybacks
by Navios as diminished following the recovery in the bond price.
Such buybacks at distressed price levels aimed at avoiding future
defaults can be seen by Moody's as distressed exchanges, or
defaults."

The rating action to revise the outlook to positive reflects the
strengthening in the dry bulk market as compared to the
conditions a year ago, although still modest by historical
standards. The Baltic Dry Index (BDI) has reached 1,400 in March,
almost five times the multi-year low of 290 it posted in February
2016. Accordingly, the time charter rates as cited by Drewry
Maritime Research have improved, with time charter rates for
Capesizes reaching $15,400/day in March 2017 from $5,300/day in
March 2016. Time charter rates are a key underpinning of Navios
Holdings' dry bulk business, and Moody's expects the company's
performance in 2017 to improve such that it generates neutral to
positive free cash flow following negative $114 million free cash
flow in 2016. Moody's free cash flow definition includes capital
expenditures and dividends.

Another positive development for Navios Holding is the
affirmation by a London arbitration tribunal of its subsidiary,
Navios South American Logistics Inc.'s (Navios Logistics, B3
negative), 20-year contract with Vale S.A. (Ba2 positive) related
to an iron ore port facility pursuant to which Navios Logistics
is expected to generate approximately $35 million per annum
minimum EBITDA. The contract is expected to generate over $1.0
billion EBITDA over its life and contributes significantly to
Navios Logistics' performance. Navios Holdings owns approximately
64% of Navios Logistics and consolidates this entity for
financial reporting purposes.

In 2016 Navios Holdings repurchased approximately $60 million of
face value of its 8.125% senior unsecured notes due 2019 for
approximately $30 million in cash. While accretive to the
company's earnings, Moody's views material debt buybacks at
distressed prices as distressed exchanges or defaults. With the
improvement in the dry bulk market and the company's performance,
the risk of a distressed exchange has reduced.

Despite improvements in the dry bulk market and the resulting
strengthening of Navios Holdings' operations, the company remains
highly leveraged at 10.2x debt/EBITDA for 2016 as adjusted by
Moody's. Although Moody's expects this figure to decline closer
to 9.1x in 2017, the leverage remains material for a company
operating in a volatile industry, such as shipping.

In addition, Navios Holding is facing re-chartering of the
majority of both its owned and chartered-in fleet in 2017-2018.
While it may be advantageous in an improving market environment,
the large market exposure is a risk. Also, the BDI remains
volatile and the dry bulk market may soften again.

Navios Holdings' liquidity is adequate with year-end 2016 cash of
approximately $73 mm (excluding Navios Logistics) and Moody's
expected FFO of $42 mm in 2017, as well as $20 million
availability on the Navios Acquisition facility. Still, the
company faces meaningful debt maturities in November 2018 and
especially in 2019.

The positive outlook reflects Moody's expectations that the
company's financial profile will improve from its current levels
in the next 12-18 months; in particular, Moody's anticipates
Navios to maintain adequate liquidity and not increase leverage
beyond its current level of 10.2x at year-end 2016.

Positive rating movement would require Navios to address its
upcoming 2018 and 2019 maturities successfully in a de-leveraging
fashion supported by EBITDA growth while maintaining stable
liquidity.

Negative rating pressure could arise from any liquidity
challenges or material debt buybacks at distressed prices leading
to a distressed exchange.

The principal methodology used in these ratings was Global
Shipping Industry published in February 2014.

Navios Holdings, which is listed on the New York Stock Exchange,
is a global shipping and logistics company. In addition to its
own operations in the transport of dry bulk commodities, Navios
Holdings owns a 63.8% stake in the logistics company NSAL and
various minority stakes, including (1) a 20.9% stake in the dry
bulk and container shipping company Navios Partners; (2) a 46.1%
economic interest in the tanker company Navios Acquisition and
(3) an indirect economic interest of 27.6% in Navios Maritime
Midstream Partners LP. In 2016, Navios Holdings generated
revenues of $420 million as reported by the company.



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PHOSAGRO BOND: Fitch Assigns BB+ Rating to US$500MM LPNs
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Fitch Ratings has assigned PhosAgro Bond Funding Designated
Activity Company's USD500 million issue of loan participation
notes (LPNs) a final senior unsecured rating of 'BB+'. The
assignment of the final rating follows a review of the final
documentation, which conforms to the draft documentation
previously received. The final rating is the same as the expected
rating assigned on April 18, 2017.

The 3.95% LPNs which mature in November 2021 have major terms and
conditions identical to the outstanding USD500 million LPNs due
2018 (BB+). Both new and outstanding issues are structured in the
form of a loan from the issuer, PhosAgro Bond Funding Designated
Activity Company, an Ireland-based private limited liability
company, to the borrower, PJSC PhosAgro (PhosAgro)
(BB+/Positive), pursuant to the terms of a loan agreement.
Operating companies, JSC Apatit and JSC PhosAgro-Cherepovets,
provide irrevocable and unconditional guarantees for the
obligations of PJSC PhosAgro under the loan.

KEY RATING DRIVERS

Key Terms of Notes: The notes are being used to refinance the
existing floating-rate debt of PhosAgro as well as for general
corporate purposes. They contain covenants similar to the
outstanding notes, including negative pledge, pari passu, cross
default, a covenant fall-away clause under investment-grade
status, and no financial covenants.

Positive Outlook: The Positive Outlook reflects Fitch's
expectation of PhosAgro reaching its positive FFO net adjusted
leverage guideline of 1.5x by 2019 following the completion of
its expansion capex programme. This is underpinned by PhosAgro's
strong market position and market-leading cost competitiveness,
which continues to support its strong cash generation capacity
and allows it to reduce leverage at a time of low fertiliser
prices and moderate capex.

Phosphate Pricing Bottoming Out: Phosphate fertiliser prices
dropped by 25%-30% during 2016. Fitch Ratings expects diammonium
phosphate (DAP) pricing to have bottomed out, as additional
capacity from Office Cherifien des Phosphates (OCP, BBB-
/Negative) and Ma'aden (not rated) is offset by capacity
reduction in China, and because of feedstock (ammonia) price
increases and robust demand. We however see the longer-term DAP
price increase being limited ,despite feedstock price increases.
This is due to low global operating rates higher up the cost
curve as well as due to the flattening of the global cost curve
driven by the new capacity.

Urea Pricing Modest Recovery: Urea pricing reached a trough in
mid-2016 and has been increasing since 4Q16 into 2017. An
increase in coal prices is driving up Chinese urea producers'
costs, and as a result there is a tightening in the regional
supply/demand balance, reinforced by a build-up of inventory
ahead of the spring application season. In addition, tighter
domestic pricing and low operating rates in China leading to
China exporting less urea suggest an increase in urea prices,
aided by a moderation in post-2017 global urea capacity
additions.

Strong Performance Despite Pressure: PhosAgro's credit profile
has remained strong during the ongoing broad market pressure if
compared to those of its peers like Mosaic (BBB-/Stable) due to
the rouble depreciation having pushed it to the first position on
the DAP cash cost curve since 2015, as the majority of its costs
are rouble-denominated. PhosAgro also has a smaller capex
programme than peers such as OCP, which peaked in 2016 and which
will be reduced after 2016 as it completes its 760kt ammonia and
500kt urea plants, as well as mining and beneficiation capex.

Capex Moderate After 2018: PhosAgro's capex will remain
significant over 2017 and 2018 as it aims to further secure its
raw material supply and attain full vertical integration through
the construction of new low-cost ammonia and urea plants in
Cherepovets, expansion at the Kirovsk phosphate mining site and
further efficiencies in its production lines. Most projects are
close to completion, with expectations that capex will normalise
at a level considerably below the company's target of 50% capex
to EBITDA after 2018.

Commitment to Reduce Leverage: Management has a publicly
announced target to de-lever to 1x net debt/EBITDA, which it came
close to reaching in 2015 after paying back debt and posting
record earnings. The company deviated from the target in 2016 due
to the fertiliser price fall combined with the temporary capex
peak and a dividend payout that was linked to the previous year's
strong performance. Large capex projects will come to an end in
2017 and with prices expected to bottom out at current levels,
Fitch forecasts PhosAgro will be able to achieve its positive
guideline after 2018 and foresees a general reduction in leverage
over the rating horizon.

A combination of dividend policy (up to 50% of net income) and
capex policy (up to 50% of EBITDA) would translate into neutral
free cash-flow generation and an ability to stay at a targeted
leverage level given broadly stable fertiliser and FX markets.
However, significant market volatility, similar to that in 2015-
2016, may translate into a deviation from the company's
commitment to reduce leverage. Remedial measures such as a
temporary dividend and/or a capex cut would become critical to
the company's ability to revert to the targeted leverage level
within a reasonable period.

DERIVATION SUMMARY

PhosAgro's 'BB+' rating corresponds to a 'BBB' standalone rating
excluding the two-notch corporate governance discount, which is
the highest rating amongst all Fitch-rated fertiliser companies.
This reflects PhosAgro's strong operational cash-flow generation,
which largely covers its capex and dividends, as well as
operations being in the first quartile of the global phosphate
fertilisers cost curve. Its phosphate peers include OCP (BBB-
/Negative) and Mosaic (BBB-/Stable). Both leveraged at over 4x on
low fertiliser pricing and are expected by Fitch to deleverage
towards 3x over the rating horizon as OCP completes its capex
programme and Mosaic deleverages after its acquisition of Vale's
fertiliser assets.

PhosAgro's Russian peers include EuroChem (BB/Negative) and
Uralkali (BB-/Negative), both on Negative Outlook. EuroChem is
facing low fertiliser prices and is expected to reduce leverage
after its 2017 capex peak as its potash projects come online.
Uralkali's 2015-2016 share buybacks, amidst low fertiliser
pricing, are driving its Negative Outlook. The ability to reduce
leverage in a depressed price environment is key in current
market circumstances.

No Country Ceiling, parent/subsidiary or operating environment
aspects impact the rating.

KEY ASSUMPTIONS

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

- DAP/MAP FOB Tampa to average at USD330/t in 2017-2018 before
   moving up to USD350/t by 2020;
- USD/RUB forecast to move from 61 in 2017 towards 57 in 2020;
- dividend payout assumed to moderate at 40% in 2017 before
   increasing towards 50% in 2019-2020;
- post 2017 positive FCF leading to debt reduction and FFO
   adjusted net leverage at or below 1.5x.

RATING SENSITIVITIES

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

- Post-2017 positive FCF leading to debt reduction and FFO
   adjusted net leverage at or below 1.5x
- Evidence of moving towards management's leverage target of net
   debt-to-EBITDA of 1x

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

- FFO adjusted net leverage sustainably at or above 2.5x
- EBITDAR margin sustainably below 20%

LIQUIDITY

Liquidity Healthy: PhosAgro maintained strong liquidity
throughout 2016 as its end-2016 short-term debt of RUB14 billion
is comfortably covered by cash cushion (RUB7 billion) and undrawn
committed banking facilities (RUB96 billion) while Fitch's
expectations of positive free cash-flow generation in 2017 add
comfort to the issuer's liquidity level.



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


ALITALIA SPA: Set to Hire Investment Bankers to Manage Sale
-----------------------------------------------------------
James Politi at The Financial Times reports that Alitalia is set
to hire investment bankers to manage a possible sale out of
administration, as the government-appointed commissioners of
Italy's flag carrier set a quick timeline of roughly two months
for potential offers.

Luigi Gubitosi, one of the three commissioners, said Alitalia was
conducting a "beauty contest" for investment banks this week and
would make a choice shortly after, the FT relates.

"Within a few days we will have identified our advisers," the FT
quotes Mr. Gubitosi as saying at a press conference at Rome's
Fiumicino airport.

Next week, Alitalia will formally launch the sale process, with
plans to open its data room in June and receive non-binding bids
in July, the FT discloses.

The carrier is racing against the clock: if it does not secure a
buyer by the end of October it could face liquidation, sealing
the end of one of Europe's most well-known airlines, the FT
relays.

Alitalia collapsed into administration on May 2 after its own
employees voted to reject a restructuring plan involving salary
reductions and lay-offs -- as well as other cost cuts -- that had
been negotiated by management and the unions, the FT recounts.

The referendum caused Alitalia's main investors, including
Etihad, the UAE-based carrier, and UniCredit and Intesa Sanpaolo,
the banks, to remove their support for a EUR2 billion financing
package that was keeping the airline in operation, the FT states.

Alitalia, which has rarely made a profit despite flying for
decades, has been ravaged by low-cost competition in the European
market, its weakness on profitable long-haul routes and a high
cost base, according to the FT.

                      About Alitalia

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

                      *     *     *

Alitalia was the subject of a bail-out in 2014 by means of a
significant capital injection from Etihad Airways, with goals of
achieving profitability during 2017.  However, increased
competition on routes operated by U.K.-based carriers and
significantly higher labor costs led to the ultimate failure of
Etihad Airways' profitability goals for Alitalia.  During late
April 2017, labor unions representing Alitalia workers rejected a
plan that called for job reductions and pay cuts for workers.
Following the failure of these negotiations, Etihad Airways
signaled an unwillingness to invest additional capital into the
company and shareholders ultimately agreed to file for
extraordinary administration proceedings on May 2, 2017.


TELECOM ITALIA: Moody's Affirms Ba1 CFR, Outlook Stable
-------------------------------------------------------
Moody's Investors Service has changed to stable from negative the
outlook on leading Italian integrated telecommunications provider
Telecom Italia S.p.A.'s Ba1 corporate family rating (CFR), the
ratings of all debts issued (or guaranteed) by the company, and
all supported debts within its family of issuers, including the
Ba1 senior unsecured ratings and (P)Ba1 MTN program ratings.
Concurrently, Moody's has affirmed all these ratings as well as
the company's Ba1-PD probability of default rating (PDR).

"The stabilisation of the outlook on Telecom Italia's ratings
reflects Moody's expectations that the company's management team
will continue to build on recent financial and operating
performance improvements to strengthen cash flows and boost
creditworthiness into 2018," says Carlos Winzer, a Moody's Senior
Vice President and lead analyst for Telecom Italia. "That said,
the company's high cash needs and rising competition could slow
the speed with which it reduces leverage."

RATINGS RATIONALE

The stabilisation of the outlook on Telecom Italia's ratings and
parallel affirmations reflect Moody's expectation that following
the improved financial and operating performance in 2016 and Q1
2017, management will continue to take decisive measures to
improve cash flow and to strengthen the company's financial
ratios through 2017 and 2018. As a result, the rating agency
expects that Telecom Italia will achieve a Moody's-adjusted net
debt/EBITDA ratio in the 3.1x-3.3x range by 2018 compared with
3.4x achieved in 2016. This is consistent with the rating
agency's guidance for the current rating.

Moody's stated that there are clear signs of operating
improvements in most segments, such as domestic mobile, while
cost efficiencies continue to be implemented to improve EBITDA.
The agency added that the past declining revenue trend at group
level has bottomed out and it expects revenue stability through
2019. Moody's also said that the pace of debt reduction remains a
challenge for management as capex and spectrum needs remain high
in 2017.

Moody's also expressed concern in relation to the competitive
challenges in Italy and the impact on Telecom Italia resulting
from the possible aggressive commercial offer from France's Iliad
Group (Iliad, unrated), which is expected to enter the market
towards the end of this year or early next year. Although Telecom
Italia is implementing a number of strategic initiatives such as
the creation of a second brand in Italy, it remains to be seen
how disruptive the new entrant will be and what effect Iliad's
commercial offer will have.

Moody's expects that operating conditions in Italy will remain
challenging for some time, and recognises the limited options
that Telecom Italia has to strengthen its balance sheet other
than organically. Telecom Italia plans to de-lever organically
through a combination of an effective restructuring of its
domestic and Brazilian operations and a more efficient capex
plan. Some of these measures have already been implemented and
its results show in the company's cash flow.

Moody's considers that Telecom Italia's Ba1 CFR is supported by
the company's (1) scale and position as the incumbent service
provider in Italy; (2) integrated telecoms business model, with
strong market positions in both the fixed and mobile segments;
(3) geographical diversification in Brazil; (4) continued
commitment to deleveraging towards 2.7x Net debt/EBITDA by 2018
(as reported by the company, which is equivalent to Moody's net
adjusted leverage of approximately 3.1x); (5) best in class
operating margins and ongoing opex reductions; and (6) strong
liquidity. However, uncertainties remain regarding (1) the pace
of execution of the company's strategy; (2) ENEL S.p.A.'s (Baa2
stable) fibre investment initiatives, which aim to create a
nationwide alternative infrastructure-based competitor and could
dent Telecom Italia's revenues in the long-term; and (3) the
entry of Iliad in the Italian telecom market.

RATIONALE FOR STABLE OUTLOOK

The stable outlook reflects Moody's expectation that Telecom
Italia has reversed a declining trend in revenues at group level
and will report stable revenues in coming years, despite the
operating challenges both in Italy and Brazil. Moody's takes into
account the new CEO's determination and ability to execute a very
demanding strategy pursuing greater operating efficiencies, as
already delivered in 2016 and Q1 2017, to underpin future EBITDA
growth.

Moody's expects that domestic mobile revenues will continue to
grow, although not fully offsetting fixed voice revenue
pressures. The rating agency also expects that Telecom Italia
will achieve a Moody's-adjusted net debt/EBITDA ratio in the
3.1x-3.3x range by 2018.

WHAT COULD CHANGE THE RATING UP/DOWN

Moody's could consider a rating upgrade if Telecom Italia's
operating performance were to materially improve compared to
Moody's expectations, such that the company's net adjusted
debt/EBITDA falls comfortably below 3.0x on a sustainable basis.

Negative pressure could be exerted on Telecom Italia's ratings in
the case of: (1) a material decline in operating performance
relative to FY2016 levels and expectations, and (2) a failure to
continue along a deleveraging trajectory particularly if the
company's net adjusted debt/EBITDA ratio were to increase above
3.5x on a sustainable basis with no prospect of improvement.

LIST OF AFFECTED RATINGS

Affirmations:

Issuer: Telecom Italia S.p.A.

-- LT Corporate Family Rating, Affirmed Ba1

-- Probability of Default Rating, Affirmed Ba1-PD

-- Senior Unsecured Medium-Term Note Program, Affirmed (P)Ba1

-- Backed Senior Unsecured Medium-Term Note Program, Affirmed
    (P)Ba1

-- Senior Unsecured Bank Credit Facility, Affirmed Ba1

-- Senior Unsecured Conv./Exch. Bond/Debenture, Affirmed Ba1

-- Senior Unsecured Regular Bond/Debenture, Affirmed Ba1

Issuer: Olivetti Finance N.V.

-- Backed Senior Unsecured Regular Bond/Debenture, Affirmed Ba1

Issuer: Telecom Italia Capital S.A.

-- Backed Senior Unsecured Regular Bond/Debenture, Affirmed Ba1

Issuer: Telecom Italia Finance, S.A.

-- Backed Senior Unsecured Medium-Term Note Program, Affirmed
    (P)Ba1

-- Backed Senior Unsecured Regular Bond/Debenture, Affirmed Ba1

Outlook Actions:

Issuer: Telecom Italia S.p.A.

-- Outlook, Changed To Stable From Negative

Issuer: Olivetti Finance N.V.

-- Outlook, Changed To Stable From Negative

Issuer: Telecom Italia Capital S.A.

-- Outlook, Changed To Stable From Negative

Issuer: Telecom Italia Finance, S.A.

-- Outlook, Changed To Stable From Negative

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was
Telecommunications Service Providers published in January 2017.

Telecom Italia Group (consisting of Telecom Italia S.p.A. and its
subsidiaries) is the leading integrated telecommunications
provider in Italy, delivering a full range of services and
products, including telephony, data exchange, interactive content
and information and communications technology solutions. In
addition, the group is one of the telecoms players in the
Brazilian mobile market, operating through its subsidiary Telecom
Italia Mobile (TIM) Brazil. Vivendi SA (Baa2 stable) is the main
shareholder with a 23.9% share (direct and indirect shareholding)
in Telecom Italia. For 2016, Telecom Italia reported EUR19.0
billion in revenue and EUR8.0 billion in organic EBITDA.


===================
L U X E M B O U R G
===================


PACIFIC DRILLING: Will Hold Annual General Meeting on May 23
------------------------------------------------------------
The Board of Directors of Pacific Drilling S.A. notified
shareholders that an annual general meeting will be held on
May 23, 2017, at 10:00 a.m. Central European Time at the
registered office of the Company in Luxembourg with the following
agenda:
   1. Approval of the stand alone audited and unconsolidated
      annual accounts of the Company for the financial period
      from Jan. 1, 2016, to Dec. 31, 2016, prepared in accordance
      with Luxembourg Generally Accepted Accounting Principles
      and the laws and regulations of the Grand-Duchy of
      Luxembourg (the Annual Accounts);

   2. Approval of the consolidated financial statements of the
      Company for the financial period from Jan. 1, 2016, to
      Dec. 31, 2016, prepared in accordance with United States
      Generally Accepted Accounting Principles (the Consolidated
      Financial Statements);

   3. Allocation of the net result shown in the Annual Accounts
      for the financial period from Jan. 1, 2016, to Dec. 31,
      2016;

   4. Discharge to the directors of the Company in relation to
      the financial period from Jan. 1, 2016, to Dec. 31, 2016;

   5. Re-appointment of the following members of the Board for a
      term ending at the annual general meeting of the Company to
      be held in 2018: Jeremy Asher, Christian J. Beckett,
      Antoine Bonnier, Laurence N. Charney, Cyril Ducau, N. Scott
      Fine, Sami Iskander, Ron Moskovitz, Matthew Samuels, Robert
      A. Schwed, and Paul Wolff;

   6. Approval of compensation of the members of the Board; and
   7. Re-appointment of KPMG Luxembourg, Reviseur d'entreprises
      agree, as independent auditor of the Company until the
      annual general meeting of the shareholders of the Company
      to be held in 2018.

                   About Pacific Drilling

Based in Luxembourg, Pacific Drilling S.A. (NYSE:PACD) is an
international offshore drilling contractor.  The Company's
primary business is to contract its high-specification rigs,
related equipment and work crews, primarily on a day rate basis,
to drill wells for its clients.  The Company's contract
drillships operate in the deepwater regions of the United States,
Gulf of Mexico and Nigeria.

Pacific Drilling reported a net loss of $37.15 million on $769.5
million of revenues for the year ended Dec. 31, 2016, as compared
with net income of $126.2 million on $1.08 billion of revenues
for the year ended Dec. 31, 2015.  As of Dec. 31, 2016, Pacific
Drilling had $5.99 billion in total assets, $3.33 billion in
total liabilities and $2.66 billion in total shareholders'
equity.

The Company's independent auditors KPMG LLP, in Houston, Texas,
expressed substantial doubt about the Company's ability to
continue as a going concern in their report on the consolidated
financial statements for the year ended Dec. 31, 2016.  KPMG
noted that the Company expects to be in violation of certain of
its financial covenants in the next 12 months.

                         *     *     *

In October 2016, Moody's Investors Service downgraded Pacific
Drilling's Corporate Family Rating to 'Caa3' from 'Caa2' and
Probability of Default Rating (PDR) to 'Caa3-PD' from 'Caa2-PD'.
"PacDrilling's ratings downgrade reflects our extremely negative
view of the offshore drilling sector with no near term signs of
improvement.  Depressed prices for the offshore drillships offers
weak asset coverage for PacDrilling's overall debt.  With no
material signs of improving contract coverage or utilization for
PacDrilling's drillships, cashflow through 2017 will be severely
impacted resulting in an unsustainable capital structure," said
Sreedhar Kona, Moody's senior analyst.

In November 2016, S&P Global Ratings lowered its corporate credit
rating on Pacific Drilling S.A. to 'CCC-' from 'CCC+'.  "The
downgrade reflects our expectation of limited activity in deep-
water offshore drilling due to continued low oil prices, and the
negative impact on Pacific Drilling's expected cash flows to
support high debt levels and upcoming maturities," said S&P
Global Ratings credit analyst Michael Tsai.


=====================
N E T H E R L A N D S
=====================


EA PARTNERS I: Fitch Affirms Rating on US$700MM Notes at 'CCC'
--------------------------------------------------------------
Fitch Ratings has affirmed the senior secured ratings of
EA Partners I B.V.'s USD700 million 6.875% notes due 2020 and EA
Partners II B.V.'s senior secured USD500 million 6.75% notes due
2021 at 'CCC'. The Recovery Ratings are 'RR1'.

The rating actions reflect the formal administration by Alitalia,
one of the obligors under the transactions. This follows the
issuance of decree by the Ministry of Economic Development on the
admission of Alitalia into extraordinary administration and
appointment of administrators.

Given the transactions' recourse to each obligor on a several
basis, the senior secured ratings are constrained at the level of
obligors of the weakest credit quality. Fitch acknowledge certain
transaction characteristics (eg liquidity pool and the internal
debt assumption by Etihad Investment Holding Company LLC, an
affiliate of Etihad Airways PJSC (A/Stable), with respect to the
principal amount of Alitalia's debt under EA Partners I and II
B.V.'s transactions) can provide additional default risk
protection for the notes, but their mechanism is complicated and
is subject to bondholder choices.

KEY RATING DRIVERS

Alitalia's Debt Assumption by Etihad: According to the internal
debt assumption agreement between Alitalia and Etihad Investment
Holding Company LLC, Etihad Investment Holding Company has agreed
that it would assume Alitalia's repayment of principal on
maturity for EA Partners I B.V. and EA Partners II B.V. of USD132
million and USD99.5 million, respectively. This means that in
case of Alitalia's default, Etihad will fund Alitalia's principal
repayment only if bondholders choose to wait until the bonds
mature. Therefore, the debt assumption agreement may incentivise
the bondholders to wait until maturity rather than accept the
unsuccessful outcome of the debt obligation remarketing, thus
providing additional source of default risk protection for EA
Partners I and II B.V.'s notes.

Liquidity Pool: The transactions contain a liquidity pool, their
only cross-collateralised feature (excluding ratchet account
component, which is not cross-collateralised), which is available
to service the interest or principal on the notes, if an obligor
fails to pay an interest or principal on its respective debt
obligation when due. Contractually, the liquidity pool does not
have to be replenished if it is used to service the notes.

Remarketing Trigger: If the liquidity pool is drawn to cure a
default of an obligor to pay interest on its debt obligation and
falls below 75% of the initial deposits, which account for most
of the liquidity pool, this will trigger the remarketing of the
respective debt obligation. Based on the current amount of the
liquidity pool it is sufficient to cover seven quarters of
Alitalia's coupon payments in case of its default under EA
Partners I B.V. (notes due in September 2020) and five quarters
under EA Partners II B.V. (notes due in June 2021) before the
first remarketing event is triggered. Assuming that all other
obligors will remain performing, the liquidity pool will cover
Alitalia's coupon payments until March 2020 under EA Partners I
B.V. and until June 2019 under EA Partners II B.V. before the
first remarketing event is triggered.

The current amount of the total liquidity pool covers Alitalia's
coupon payment through the whole duration of the notes under EA
Partners I B.V. but not EA Partners II B.V. However, the
application of 100% of the liquidity pool is challenging due to a
75% threshold that triggers a remarketing and it is also subject
to bondholders' choices.

Weakest Obligor Credit: The rating of the notes reflects Fitch
views of the creditworthiness, and the senior unsecured ranking,
of the obligors including Fitch assessment of their links with
their respective parents.

Given the transactions' recourse to each obligor on a several
basis, the ratings for the notes are constrained at the 'CCC'
level by obligors of the weakest credit quality. This is due to
the sole cash flow for the service and repayment of the notes
being the individual cash flow streams from the obligors under
their respective loans. Failure of any obligor to make interest
or principal payments under its respective debt obligation, which
remains uncured following the remarketing of the respective debt
obligation and/or through the liquidity pool, may lead to an
event of default under the notes. These transactions' noteholders
are thus exposed to the underlying creditworthiness of each
individual obligor.

Cross Default: The notes do not have a cross-default provision.
This means that a default by one obligor does not constitute an
event of default under other debt obligations incurred under this
transaction by other obligors. However, events of default under
each debt obligation include a customary cross-default provision,
which states that a failure by the respective 'obligor or any of
its material subsidiaries to pay any of its own financial
indebtedness when due' will lead to an event of default under the
debt obligations of this obligor but not of any other obligor
other than in the case of Etihad Airways and Etihad Airport
Services.

Recovery Prospect: Fitch currently assess the recovery (given
default) prospect of the notes as outstanding (91%-100%, 'RR1')
based on Alitalia's entry into administration, the internal debt
assumption by Etihad Investment Holding Company and other
features of the transactions.

DERIVATION SUMMARY

The notes' rating reflects Fitch views of the credit profiles and
recovery assumptions for the obligors and is constrained at 'CCC'
by the obligor of the weakest credit quality for the notes under
EA Partners I B.V. and EA Partners II B.V. The credit quality of
the obligors varies substantially depending on their business
profiles and financial profiles that Fitch generally see as weak
compared with peers. Shareholder support, where relevant,
improves Fitch assessment of the obligors.

KEY ASSUMPTIONS

Fitch's key assumptions within Fitch ratings case for the issuer
include:

- The proceeds from the notes' issue will be on-lent to
obligors.

- These transactions' notes are secured over assets that
represent senior unsecured claims to respective obligors.

- The notes do not have a cross-default provision.

- Etihad Airways or any other non-defaulting obligor may provide
support to other obligors by purchasing their debt obligations
through the 'remarketing event', if it takes place upon default
of another obligor on its payments under the debt obligation.
However, this can be exercised at Etihad Airways' or any other
non-defaulting obligor's discretion and is not an obligation
under these transactions.

RATING SENSITIVITIES

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

- Fitch believes positive rating action is highly unlikely given
the entry into administration by Alitalia. Nevertheless, the
improvement of the credit quality of the obligors with the
weakest credit profiles may be positive for the notes' ratings.

- Sustained improvement of the recovery prospects for the senior
unsecured creditors of the obligors of the weakest credit
quality, unless there are limitations due to country-specific
treatment of Recovery Ratings, could also be positive for the
notes' ratings.

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

- Worsening of the recovery prospects for the senior unsecured
creditors of the obligors of the weakest credit quality.

- The deterioration of the credit quality of the obligors.


HARBOURMASTER CLO 6: Fitch Withdraws 'D' Ratings on Three Notes
---------------------------------------------------------------
Fitch Ratings has downgraded and withdrawn Harbourmaster CLO 6
B.V.'s ratings:

Class B2 (XS0233877603): downgraded to 'Dsf' from 'CCsf' and
withdrawn
Class S4 combo (XS0234648375): downgraded to 'Dsf' from 'CCsf'
and withdrawn
Class S6 combo (XS0234649852): downgraded to 'Dsf' from 'CCsf'
and withdrawn

Harbourmaster CLO 6 B.V was a 2005 vintage CLO securitisation of
mainly European senior secured and unsecured loans. The portfolio
was managed by Blackstone/GSO Debt Funds Management Europe
Limited.

KEY RATING DRIVERS
The transaction has liquidated the portfolio and repaid the class
B1 notes in full. All senior notes have previously repaid in
full. There is currently no portfolio outstanding and the
transaction has distributed the remaining cash as of the most
recent payment date on 25 April 2017. The junior class B-2 notes
received EUR11.8 million of principal proceeds but EUR2.2 million
remains outstanding. The class S-4 notes received EUR8.3 million
and the class S-6 notes received EUR2.9 million. However, both
notes relied on the principal payment of the class B2 note, and
therefore remain with outstanding principal amounts unpaid.

The class B2 notes were originally rated 'BBsf' by Fitch.
However, with an outstanding principal balance and no collateral
Fitch has downgraded the notes to 'Dsf' and withdrawn the
ratings. At issuance the class B2 notes had 5.2% credit
enhancement, which when compared with current CLO 2.0
transactions, is below the average for 'Bsf' rated tranches.
Fitch downgraded the notes to 'Bsf' in February 2009 and then
further to 'B-sf' in March 2012, 'CCCsf' in January 2014 and
'CCsf' in December 2015.

The class S4 notes were originally rated 'BBBsf' by Fitch and
relied on the principal repayment of the class B1 and B2 notes.
Fitch downgraded the notes to 'BBsf' in February 2009 and then
further to 'B+sf' in January 2010, 'B-sf' in March 2012, 'CCCsf'
in January 2014 and 'CCsf' in December 2015.

The class S6 notes were originally rated 'BBsf' by Fitch and
relied on the principal repayment of the class B2 notes. Fitch
downgraded the notes to 'Bsf' in February 2009 and then further
to 'B-sf' in March 2012, 'CCCsf' in January 2014 and 'CCsf' in
December 2015.

RATING SENSITIVITIES

The transaction has terminated. No sensitivities were applied.

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

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

DATA ADEQUACY

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

The majority of the underlying assets had 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 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.

  - Transaction reporting, provided by the collateral
administrator as at 25 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 typically do not include RW&Es that
are available to investors and that relate to the asset pool
underlying the CLO. Therefore, Fitch's credit reports for EMEA
leveraged finance CLO offerings 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.


MEDIARENA ACQUISITION: Moody's Cuts CFR to Caa1, Outlook Stable
---------------------------------------------------------------
Moody's Investors Service has downgraded to Caa1 from B3 the
corporate family rating (CFR) and to Caa1-PD from B3-PD the
probability of default rating (PDR) of MediArena Acquisition
B.V., the owner of Endemol Shine Group ("ESG"), a Dutch-based TV
production company whose formats include Big Brother, Broadchurch
and MasterChef.

Concurrently, Moody's downgraded the ratings on the company's
2019 and 2021 first lien senior secured facilities to B3 from B2
and the rating on the 2022 second lien senior secured facility to
Caa3 from Caa2.

The outlook on all ratings has changed to stable from negative.

"Our decision to downgrade ESG follows a significant uptick in
the company's leverage on the back of weaker-than-expected
performance in 2016. EndemolShine also has limited scope to
reduce its debt and weak cash flow as it forges ahead with
restructuring plans and continues to invest in scripted
programming, which requires substantial investment in working
capital," says Colin Vittery, a Moody's Vice President -- Senior
Credit Officer and lead analyst for ESG.

RATINGS RATIONALE

The downgrade of the CFR to Caa1 reflects (1) ESG's very high
Moody's adjusted leverage at year-end 2016 of 9.1x (excluding
bank cashpool overdrafts) and the rating agency's expectations
that leverage will remain above 8x in 2017; (2) weak cash flow
expectations and interest cover ratios for 2017; (3) limited
visibility on revenues as broadcasters adjust their programming
schedule during the year; (4) the company's industry-typical
challenge to refresh continuously its formats to match viewers'
changing tastes; and (5) ESG's weak liquidity profile, with
reliance on continued access to its revolving credit facility
owing to sustained negative free cash flow generation, and which
is subject to maintenance covenants.

ESG is reshaping its business profile to increase the proportion
of earnings generated from scripted programming and this has
funding implications as the payback period for scripted tends to
be beyond one year (compared for 6 months in unscripted). Given
the high leverage at the outset of this strategic change, the
increased working capital requirement has been met with drawing
on the revolving credit facility, a new USD100 million
receivables securitization facility and a short term USD30
million shareholder loan. Moody's considers that ESG has limited
flexibility at the Caa1 rating for deviation from budget as it
seeks to deliver this strategy.

The Caa1 rating also reflects (1) the company's established
position as the largest independent television production company
by size and geography, which allows it to export formats in a
streamlined and margin-efficient way; (2) the improved demand
fundamentals for content as broadcasting develops; (3) ESG's
well-diversified revenue streams, with no single contract
representing more than 1% of 2016 revenues and no single format
representing more than 11%; and (4) the high proportion and long
tenure of recurring shows the company produces.

RATIONALE FOR THE STABLE OUTLOOK

The stable outlook reflects Moody's expectation that ESG will
demonstrate a stabilization in trends in the coming 12-18 months
owing to increasing returns on scripted investments, the benefits
of integration in France and operational restructuring in the US,
leading to an improvement in EBITDA and free cash flow generation
and credit metrics more suitable for the rating category.

WHAT COULD CHANGE THE RATING UP / DOWN

Given the high leverage and relatively low retained cash flow
(RCF) generation, there is limited upward pressure on the ratings
in the next 12 to 18 months. However, ESG's rating could be
upgraded if the company delivers on its transition, with Moody's
adjusted leverage reducing to below 7.0x (excluding pooling
overdraft) on a sustained basis, RCF/Net Debt above 7.5% and
improved liquidity with reduced drawing under the revolver.

Negative pressure could be exerted if Moody's adjusted leverage
does not fall towards 8.5x (excluding pooling overdraft), ESG
reports sustained negative free cash flow, pressure increases on
covenant headroom or liquidity worsens.

LIST OF AFFECTED RATINGS

Downgrades:

Issuer: MediArena Acquisition B.V.

-- LT Corporate Family Rating, Downgraded to Caa1 from B3

-- Probability of Default Rating, Downgraded to Caa1-PD from B3-
    PD

-- Senior Secured Bank Credit Facility, Downgraded to B3 from B2

-- Senior Secured Bank Credit Facility, Downgraded to Caa3 from
    Caa2

Outlook Actions:

Issuer: MediArena Acquisition B.V.

-- Outlook, Changed To Stable From Negative

PRINCIPAL METHODOLOGY

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

ESG is one of the largest multi-platform content providers with a
worldwide network of more than 120 companies in over 28 countries
and a diversified library of over 3,000 formats and 37,000 hours
of finished programming. The company integrates former Endemol
and Shine companies, to establish the world's largest independent
creator, producer and distributor of entertainment content across
scripted and non-scripted genres. The company produces output in
over 50 languages for both traditional and digital platforms
around the world and has a global portfolio of over 550 revenue
generating titles, including Big Brother, Broadchurch, The
Bridge, Humans, MasterChef, The Voice and The Biggest Loser. In
the year ended December 31, 2016, ESG reported revenue of
EUR1.862 billion and pre-exceptional adjusted EBITDA (as
calculated by the company) of EUR209 million. MediArena is
ultimately owned by a joint-venture controlled by Twenty-First
Century Fox, Inc. and funds managed by affiliates of Apollo
Global Management, LLC.


STORM 2013-II: Fitch Raises Rating on Class D Notes to 'BB+sf'
--------------------------------------------------------------
Fitch Ratings has upgraded three tranches of Storm 2013-II B.V.,
Storm 2013-III B.V. and Storm 2013-IV B.V. and affirmed nine
others:

2013-II
Class A2 (ISIN: XS0910948511) affirmed at 'AAAsf'; Outlook Stable
Class B (ISIN: XS0910948784) affirmed at 'AAsf'; Outlook revised
to Stable from Positive
Class C (ISIN: XS0910948867) affirmed at 'A-sf'; Outlook Stable
Class D (ISIN: XS0910949089) upgraded to 'BB+sf' from 'BBsf';
Outlook Stable

2013-III
Class A (ISIN: XS0930213987) affirmed at 'AAAsf'; Outlook Stable
Class B (ISIN: XS0930215099) affirmed at 'AA-sf'; Outlook revised
to Stable from Positive
Class C (ISIN: XS0930215842) affirmed at 'A-sf'; Outlook Stable
Class D (ISIN: XS0930216576) affirmed at 'BBsf'; Outlook Stable

2013-IV
Class A2 (ISIN: XS0958507740) affirmed at 'AAAsf'; Outlook Stable
Class B (ISIN: XS0958508045) upgraded to 'AAsf' from 'AA-sf';
Outlook Stable
Class C (ISIN: XS0958508128) affirmed at 'A-sf'; Outlook Stable
Class D (ISIN: XS0958508391) upgraded to 'BB+sf' from 'BB-sf';
Outlook Stable

KEY RATING DRIVERS

Stable Performance
The Storm transactions (issued since 2012) have generally
outperformed the market, with late-stage arrears (loans in
arrears by more than three months) at 47bp (Storm 2013-II), 35bp
(Storm 2013-III) and 20bp (Storm 2013-IV) of the current
portfolio balance compared with Fitch's index of 29bp. It is only
in recent periods as market conditions have improved, that the
deals have become more in line with the index.

Foreclosures as a proportion of the original portfolio balance
remain low, at 108bp in Storm 2013-II, 78bp in Storm 2013-III and
61bp in Storm 2013-IV, which is below the 116bp of the market
index.

No NHG Foreclosure Frequency Credit
The portfolios comprise portions of NHG loans (32.47% in 2013-II,
32.29% in 2013-III and 32.24% in 2013-IV). Based on historical
NHG loan performance information made available to Fitch, for
loans originated between 2007 and 2010 NHG loan defaults were
higher than non-NHG loan defaults. Therefore, in this analysis no
credit was given to NHG loans in the derivation of the
foreclosure frequency of the portfolios.

Data on recoveries received from WEW has resulted in Fitch
applying a compliance ratio of 85% across all rating scenarios,
in line with criteria.

Interest-only (IO) concentration
All three transactions contain significant portions of IO loans
(between 62.9% and 65.0% of the current portfolio balance), with
32.6% (Storm 2013-II), 34.35% (Storm 2013-III) and 30.01% (Storm
2013-IV) maturing between 2034 and 2037.

To assess the risk of more than 20% of the IO loans maturing over
a three-year period, Fitch applied stressed WAFFs to the IO
concentration, as described in its criteria. For Storm 2013-III,
the model implied ratings using such stressed WAFFs were more
than three notches lower than WAFFs derived using standard
assumptions. Therefore, the ratings on the notes issued in these
deals were derived using stressed WAFFs.

Front-loaded Default Distribution for PAF Calculation
Fitch has received historical foreclosure data for Obvion's total
book. The data suggests that most of the defaults occur in the
first three to seven years after loan origination, which is in
line with Fitch's front-loaded default distribution. As a result,
in its calculation of the performance adjustment factor (PAF),
Fitch used the front-loaded default distribution.

Guaranteed Excess Spread
The transactions feature swap agreements with Obvion that
effectively guarantees 50bp excess spread. Given the low levels
of arrears and defaults, this has led to the rapid pay-down of
the uncollateralised notes across the transactions.

Insurance Set-Off Risk
8.6% of 2013-II, 8.8% of 2013-III and 7.7% of 2013-IV comprise
loans with life insurance payment vehicles attached. Upon
insolvency of the insurance provider there is a risk that the
borrowers may try to set-off their insurance claim against the
lender. Fitch accounts for this risk by assuming a capital build-
up over 30 years and then analysing the effect of a combined
default of the insurance providers, factoring in the affiliation
of the insurance provider to the original lender.

The most stressful scenarios were assessed and the maximum
exposure resulting from this calculation is then applied against
the net loss rate for the various rating levels in Fitch's
surveillance model. The insurance set-off exposure was found to
have a minimal effect on the rating outcome.

Credit Enhancement Build Up
All three transactions are fully sequential. With average
prepayments at 10% across the three transactions, the portfolios
currently stand at between 75.1% and 78.8% of their original
balance. This has led to a build-up in the credit enhancement
available to the rated tranches, which in combination with the
sound performance of the deals, led to the upgrade of the class B
note of 2013-IV and the class D for both 2013-I and 2013-IV.

RATING SENSITIVITIES

Adverse macroeconomic factors may affect asset performance. An
increase in foreclosures and losses beyond Fitch's stresses may
erode credit enhancement, leading to negative rating actions.

High prepayments may lead to changes in the volume of IO loans
and the concentrations of such loans maturing within a three year
period. This will have an effect on the WAFF derived for these
pools, which may ultimately lead to rating changes.

Fitch rates to legal final maturity. At the call option date, as
per transaction documentation, the class B to D notes can be
called net of the PDL. The occurrence of material principal
shortfalls in Fitch's cash flow analysis over the life of the
transactions may trigger rating actions.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO RULE 17G-10
No third-party due diligence was provided or reviewed in relation
to this rating action.

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

Prior to closing, Fitch reviewed the results of a third-party
assessment conducted on the asset portfolio information, which
indicated no adverse findings material to the rating analysis.

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

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

SOURCES OF INFORMATION

The information below was used in the analysis.

  - Loan-by-loan data provided by the European Data Warehouse as
  at January 31, 2017 and February 28, 2017.

  - Transaction reporting provided by Intertrust Administrative
  Services B.V. as at February 22, 2017 and January 22, 2017.

MODELS

The models below were used in the analysis. Click on the link for
a description of the model


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


* PORTUGAL: Number of Insolvent Companies Down 25.6% in Jan-Apr
---------------------------------------------------------------
Xinhua reports that the number of insolvent companies in Portugal
dropped by 25.6% in the first four months of 2017 compared to the
same period last year.

Between January and April, 14,771 companies were created while
4,668 were forced to close, Xinhua relays, citing Informa D&B.

According to Xinhua, the sectors which saw most companies created
were services (4,791), retail (1,951), accommodation and
restaurants (1,752), construction (1,324) and real estate
(1,207).

Sectors which saw the most bankruptcies were manufacturing
industries (177), services (157), and retail (154), Xinhua
discloses.

Portugal had to sign a EUR78 billion bailout program in 2011 when
it was on the verge of bankruptcy, leading to harsh spending cuts
and tax hikes, Xinhua recounts.



===============
S L O V E N I A
===============


ABANKA DD: Fitch Raises Long-Term Issuer Default Rating to 'BB+'
----------------------------------------------------------------
Fitch Ratings has upgraded the Long-Term Issuer Default Rating
(IDR) of Slovenia-based Abanka d.d. to 'BB+' from 'BB', and those
of Nova Kreditna Banka Maribor (NKBM) and Nova Ljubljanska Banka
d.d. (NLB) to 'BB' from 'BB-'. At the same time, the agency has
downgraded Banka Intesa Sanpaolo d.d.'s (Banka Intesa) Long-Term
IDR to 'BBB-' from 'BBB'. The Outlooks on all four banks are
Stable.

KEY RATING DRIVERS

IDRS AND SENIOR DEBT
The IDRs of Abanka, NLB and NKBM are driven by their standalone
financial strength, as expressed by their Viability Ratings
(VRs). NLB's senior unsecured debt rating is in line with its
Long-Term IDR.

The upgrades of the VRs and IDRs of Abanka, NLB and NKBM reflect:
an improvement in Slovenian economic environment coupled with
ongoing restructuring of the corporate sector; reduced downside
asset quality risks given the banks' extended track record of
gradual recoveries of substantial legacy non-performing loans
(NPLs, loans 90 days overdue plus otherwise impaired loans) and
only modest new NPL generation; considerable capital buffers
further supported by de-leveraging and very modest growth; and
banks' robust funding and liquidity profiles.

However, the VRs of all four banks including Banka Intesa reflect
still high stocks of legacy NPLs (more limited at Banka Intesa)
and only moderate profitability given low interest rates and
limited loan growth potential.

The downgrade of Banka Intesa's Long- and Short-Term IDRs follows
a similar rating action on its parent, Intesa Sanpaolo S.p.A.
(ISP; BBB/Stable/bbb), as Banka Intesa's IDRs are driven by
support from ISP.

Banka Intesa's IDRs and Support Rating of '2' reflect Fitch's
view that ISP will continue to have a strong propensity to
support its subsidiaries in central and eastern Europe (CEE),
given its majority ownership, strategic commitment to CEE markets
and high level of integration, notwithstanding ISP's primary
focus on the Italian market. The Stable Outlook on Banka Intesa
mirrors that on the parent.

The affirmation of Banka Intesa's VR reflects the absence of
major changes in its financial profile over the last 12 months.

VRs
Abanka's VR is one notch higher than those of the other three
banks, mainly due to a significantly stronger capital buffer,
comfortably covering unreserved NPLs. The other reviewed banks'
capital positions (if adjusted for unreserved NPLs) are largely
similar to each other, justifying the same rating level for the
VRs.

The banks' stocks of legacy NPLs are significant, at around 10%
of end-2016 gross loans for Banka Intesa, around 16% for NLB and
Abanka, and a substantial 30% for NKBM, but these seem reasonably
covered by impairment reserves, with Abanka at 76%, NLB 70%, NKBM
at 66% and Banka Intesa 60% (all figures rounded). In Fitch's
view, any additional credit losses related to legacy NPLs should
be moderate.

Asset quality risks are also mitigated by banks' reduced risk
appetite and an extended track record of limited origination of
new NPLs (the difference between NPLs plus write-offs divided by
average gross loans), which was only marginal for Abanka and
negative for the other three banks in 2016.

Capitalisation is solid at all four banks, as expressed by high
Fitch Core Capital (FCC) ratios of around 32% at Abanka, 26% at
NKBM and 19% at Banka Intesa and NLB. We estimate that all four
banks now have sufficient loss-absorption capacity to fully
reserve their legacy NPLs and still maintain strong FCC ratios of
29% at Abanka, 18% at NKBM and 15% at Banka Intesa and NLB (all
figures rounded).

Internal capital generation remains only moderate (single digits
for all four banks) due to modest core profitability resulting
from low interest rates large pools of low-yielding liquid
assets. However, capitalisation is supported by divestments of
non-core assets and limited organic loan growth in the low single
digits for Banka Intesa and Abanka, and negative for NLB and
NKBM. The latter may pick up in the next few years but Fitch
expects it to stay in low single digits.

Robust liquidity buffers and healthy funding structures are a
rating strength for all four banks. The banking sector continues
to receive a steady inflow of granular and cheap retail deposits,
and funding profiles remain dominated by customer funding (around
90% of total liabilities at each of the banks). The banks also
managed to accumulate large liquidity cushions due to limited new
lending opportunities. At end-2016 liquidity buffers were robust
at Abanka and NKBM (over 50% of total liabilities), followed by
NLB (40%) and Banka Intesa (27%).

SUPPORT RATING AND SUPPORT RATING FLOORS -ABANKA, NLB and NKBM

The Support Rating Floors of 'No Floor' and the Support Ratings
of '5' for Abanka, NLB and NKBM express Fitch's opinion that
potential sovereign support for the banks cannot be relied on.
This is underpinned by the EU's Bank Recovery and Resolution
Directive, which provides a framework for resolving banks that is
likely to require senior creditors participating in losses, if
necessary, instead of or ahead of a bank receiving sovereign
support.

Fitch does not incorporate any potential support available to
NKBM from its new majority owner Apollo Global Management LLC
based on the view that extraordinary support from private equity
investors in all circumstances usually cannot be relied on.

RATING SENSITIVITIES

IDRS AND SENIOR DEBT
Abanka, NKBM and NLB's IDRs and NLB's senior unsecured debt long-
term rating are sensitive to changes in their VRs.

Banka Intesa's IDRs would be likely to move in tandem with those
of ISP. Banka Intesa's IDR could also be downgraded if there is
evidence of a reduced commitment by the group to support its
subsidiary banks in CEE, which Fitch views as unlikely.

VRs
Further upside potential for the VRs of all four banks may emerge
if they manage to: improve performance, achieve substantial
additional progress in NPL workouts, and maintain solid capital
and liquidity buffers. The upside potential for Abanka's VR is
more limited than for the other three banks because it is already
one notch higher and will probably require further improvements
in the operating environment, a gradual pick-up in loan growth
and increased scale.

Negative rating pressure for all four banks' VRs could stem from
renewed capital pressure driven by additional credit losses on
legacy problem exposures or high NPL generation in new lending.
However, in Fitch's view this scenario is unlikely in the near
term.

The rating actions are as follows:

Banka Intesa Sanpaolo d.d.:
Long-Term IDR: downgraded to 'BBB-' from 'BBB', Outlook Stable
Short-Term IDR: downgraded to 'F3' from 'F2'
Support Rating: affirmed at '2'
Viability Rating: affirmed at 'bb'

Abanka d.d.:
Long-Term IDR: upgraded to 'BB+' from 'BB', Outlook Stable
Short-Term IDR: affirmed at 'B'
Viability Rating upgraded to 'bb+' from 'bb'
Support Rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'

Nova Kreditna Banka Maribor
Long-Term IDR: upgraded to 'BB' from 'BB-', Outlook Stable
Short-Term IDR: affirmed at 'B'
Viability Rating upgraded to 'bb' from 'bb-'
Support Rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'

Nova Ljubljanska Banka d.d.
Long-Term IDR: upgraded to 'BB' from 'BB-', Outlook Stable
Short-Term IDR: affirmed at 'B'
Viability Rating upgraded to 'bb' from 'bb-'
Support Rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'
Senior unsecured debt Long-Term rating: upgraded to 'BB' from
'BB-'


===========
T U R K E Y
===========


FIBABANKA AS: Fitch Assigns Final B+ Rating to Tier 2 Notes
-----------------------------------------------------------
Fitch Ratings has assigned Fibabanka A.S.'s (BB-/Stable/bb-)
USD300 million Basel III-compliant Tier 2 capital notes due 2027
a final rating of 'B+'.

The final rating is in line with the expected rating which Fitch
assigned to the notes on 24 April 2017.

The notes qualify as Basel III-compliant Tier 2 instruments and
contain contractual loss absorption features, which will be
triggered at the point of non-viability of the bank. According to
the terms, the notes are subject to permanent partial or full
write-down upon the occurrence of a non-viability event (NVE).
There are no equity conversion provisions in the terms.

An NVE is defined as occurring when the bank has incurred losses
and has become, or is likely to become, non-viable as determined
by the local regulator, the Banking and Regulatory Supervision
Authority (BRSA). The bank will be deemed non-viable when it
reaches the point at which either the BRSA determines that its
operating licence is to be revoked and the bank liquidated, or
the rights of Fibabanka's shareholders (except to dividends), and
the management and supervision of the bank, should be transferred
to the Savings Deposit Insurance Fund on the condition that
losses are deducted from the capital of existing shareholders.

The notes have an expected 10-year maturity (November 2027) and a
call option after five years.

KEY RATING DRIVERS

The notes are rated one notch below Fibabanka's Viability Rating
(VR) of 'bb-' in accordance with Fitch's "Global Bank Rating
Criteria". The notching includes zero notches for incremental
non-performance risk relative to the VR and one notch for loss
severity.

Fitch has applied zero notches for incremental non-performance
risk, as the agency believes that write-down of the notes will
only occur once the point of non-viability is reached and there
is no coupon flexibility prior to non-viability.

The one notch for loss severity reflects Fitch's view of below-
average recovery prospects for the notes in case of an NVE. Fitch
has applied one notch, rather than two, for loss severity, as
partial, and not solely full, write-down of the notes is
possible. In Fitch's view, there is some uncertainty about the
extent of losses the notes would face in case of an NVE, given
that this would be dependent on the size of the operating losses
incurred by the bank and any measures taken by the authorities to
help restore the bank's viability.

RATING SENSITIVITIES

As the notes are notched down from Fibabanka's VR, their rating
is sensitive to a change in this rating. The notes' rating is
also sensitive to a change in notching due to a revision in
Fitch's assessment of the probability of the notes' non-
performance risk relative to the risk captured in Fibabanka's VR,
or in its assessment of loss severity in case of non-performance.

The following ratings are unaffected by the action:

Long-Term Foreign- and Local-Currency IDRs: 'BB-'; Stable
Outlook
Short-Term Foreign- and Local-Currency IDRs: 'B'
National Long-Term Rating: 'A+(tur)'; Stable Outlook
Viability Rating: 'bb-'
Support Rating: '5'
Support Rating Floor: 'No Floor'



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


COVENTRY BUILDING: Fitch Affirms BB+ Tier 1 Securities Rating
-------------------------------------------------------------
Fitch Ratings has affirmed Coventry Building Society's (CBS)
Long- and Short-Term Issuer Default Ratings (IDRs) at 'A'/'F1'
and Viability Rating (VR) at 'a'. The Outlook on the Long-Term
IDR is Stable.

Fitch has assigned a 'A(dcr)' Derivative Counterparty Rating
(DCR) to CBS as part of its roll-out of DCRs in western Europe
and the US. DCRs are issuer ratings and express Fitch's view of
banks' relative vulnerability to default under derivative
contracts with third-party, non-government counterparties.

The rating actions are part of Fitch's periodic review of the UK
Building Societies.

KEY RATING DRIVERS
IDRs, VR, DCR AND SENIOR DEBT RATINGS

The IDRs, DCR, VR and senior debt ratings reflect the society's
conservative risk appetite, driven by its focus on low-risk, low
loan-to-value (LTV) prime residential and buy-to-let (BTL)
mortgage loans. They also reflect the society's limited franchise
and concentration of its business on the UK housing market.

CBS's strategy is focussed on achieving stable and consistent
profitability through a high growth, low-margin, low-cost and
ultimately low impairment charges business model. The society's
low risk appetite has resulted in consistently strong asset
quality through the economic cycle. Fitch does not believes the
society's small portfolio of legacy commercial and specialist
residential loans is a material risk to asset quality. While
reserve coverage of impaired loans is low by sector standards,
Fitch believes this is offset by the low average LTV of its loan
book. Consequently, write-offs have been minimal to date.

CBS has maintained its profitability despite low interest rates
and its undiversified income sources. Fitch expects competitive
pressures in the mortgage market to continue in 2017 which,
coupled with limited scope to reduce funding costs, is likely to
result in a decline in the society's net interest margin. In
light of this trend, the society's continuing ability to control
costs, e.g. through a limited branch network, will remain key to
sustaining sound profitability.

CBS's capitalisation is sound because of the low-risk nature of
its loan book and sound internal capital generation. The society
reported a common equity Tier one (CET1) ratio of 32.2% at end-
2016, calculated on an internal ratings-based approach. The
society's CET1 ratio benefits from the low risk weights of its
loan book, but CBS's sound capitalisation is also demonstrated by
its 4.1% regulatory leverage ratio at end-2016.

Liquidity is strong. Liquidity buffers consist of cash at the
Bank of England and UK government bonds. CBS also benefits from
access to contingent liquidity from the Bank of England. The
society is mainly deposit-funded, but it also has good access to
wholesale funding, with covered bonds, senior unsecured and
subordinated debt outstanding. The society has also accessed
funding through the government's Funding for Lending Scheme and
intends to use Term Funding Scheme.

CBS's Long-Term IDR is not rated above its VR despite significant
layers of subordinated debt, mostly in the form of AT1
instruments. This is because, in Fitch's opinion, the Long-Term
IDR would not achieve a higher level than the current 'A' if
CBS's junior debt buffer was in the form of Fitch Core Capital
(FCC) rather than debt. This is primarily because of the
society's business model that is concentrated on mortgage
lending.

We have assigned a DCR to CBS because it is a counterparty to
Fitch-rated transactions. The DCR is at the same level as the
Long-Term IDR because under UK legislation, derivative
counterparties have no preferential status over other senior
obligations in a resolution scenario.

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

CBS's SR and SRF reflect Fitch's view that senior creditors
cannot rely on extraordinary support from the UK authorities in
the event the society becomes non-viable given UK legislation and
regulations that provide a framework that is likely to require
senior creditors to participate in losses after a failure and
because of the society's low systemic importance.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

CBS's AT1 securities are rated five notches below its VR: two
notches for loss severity to reflect the conversion into core
capital deferred shares (CCDS) on breach of a 7% CRD IV CET1
ratio, and three notches for non-performance risk, reflecting the
instruments' fully discretionary interest payments.

RATING SENSITIVITIES
IDRs, VR, DCRs AND SENIOR DEBT

CBS's IDRs, VR and senior debt ratings are primarily sensitive to
structural deterioration in profitability, through tighter
margins and higher loan impairment charges, as well as weaker
asset quality. This could be caused by a material weakening of
the operating environment in the UK if the economic environment
deteriorates substantially following the UK's decision to leave
the EU.

The VR and IDRs are also sensitive to an increase in the
society's risk appetite, which could give rise to higher LICs, or
through an increase in its cost base, either of which could lead
to a material weakening in operating profitability.

The society's ratings could also come under pressure if higher
regulatory capital requirements, which could include a potential
capital floor on BTL risk-weighting based on the revised
standardized approach, put pressure on its low-risk business
model. A weakening of the prospects for BTL lending could also
put CBS's ratings under pressure given the society's exposure to
this segment.

An upgrade of the VR is unlikely because Fitch views the
society's business model, which is concentrated on the UK
residential mortgage lending and the savings market, as less
diversified than that of its more highly rated UK peers.

The Long-Term IDR could be affirmed after a downgrade of the VR
if the qualifying junior debt buffer is sufficiently high to
warrant an uplift at that rating level.

The DCR is sensitive to changes in CBS's Long-Term IDRs.

SUPPORT RATING AND SUPPORT RATING FLOOR

Fitch does not expect any changes to the SR and the SRF given the
low systemic importance of the building society as well as the
legislation in place that is likely to require senior creditors
to participate in losses for resolving CBS.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

The AT1 rating is primarily sensitive to changes in the VR from
which it is notched. The rating is also sensitive to a change in
its notching, which could arise if Fitch changes its assessment
of the probability of its non-performance relative to the risk
captured in the VR. The rating is also sensitive to a change in
Fitch's assessment of the instrument's loss severity, which could
reflect a change in the expected treatment of liability classes
during a resolution.


The rating actions are:
Long-Term IDR: affirmed at 'A'; Outlook Stable
Short-Term IDR: affirmed at 'F1'
Viability Rating: affirmed at 'a'
Support Rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'
Derivative Counterparty Rating: assigned at 'A(dcr)'
Senior unsecured EMTN programme and notes: affirmed at 'A'/'F1'
Additional Tier 1 securities: affirmed at 'BB+'


DIAMONDCORP PLC: Appoints Joint Administrators
----------------------------------------------
Further to the announcement on April 28, 2017, DiamondCorp plc,
announced that the appointment of Stephen Cork --
stephencork@corkgully.com -- and Jo Milner --
jomilner@corkgully.com -- of Cork Gully LLP as joint
administrators to DiamondCorp plc became effective on May 9,
2017.

The business address of Cork Gully LLP is 52 Brook Street,
London, W1K 5DS.

The Directors intend to continue to work with both the joint
administrators of DiamondCorp plc and the joint Business Rescue
Practitioners of the Company's operating subsidiary Lace Diamond
Mines (Pty) Ltd in order to try and preserve any remaining
stakeholder value.

As a result of the appointment of administrators, and with mutual
agreement by the Board, Panmure Gordon (UK) Limited has
concurrently resigned as Nominated Adviser and Broker to the
Company with immediate effect.  Pursuant to AIM Rule 1, and in
addition to Rule 41 described below, if a replacement Nominated
Adviser is not appointed within one month, the admission of the
Company's securities will be cancelled on AIM.  The Company has
no current intention of appointing a replacement Nominated
Adviser.

The suspension to trading in the Company's shares on AIM and
AltX, as announced on November 14, 2016, remains effective.
Pursuant to Rule 41 of the AIM Rules for Companies, the Company's
admission to trading on AIM is therefore currently due to be
cancelled on 15 May 2017, being in advance of the anticipated
cancellation pursuant to Rule 1 as described above.  The status
of the admission to trading on AltX will be advised as soon as
possible.

Further announcements will be made by the Company as appropriate.
This announcement contains inside information for the purposes of
Article 7 of the Market Abuse Regulation (EU) No 596/2014.

DiamondCorp plc -- http://www.diamondcorp.plc.uk/-- is an
emerging diamond producer focused on maximizing shareholder value
through the development of high margin diamond production.


LEEDS BUILDING: Fitch Affirms 'BB+' PIBS Rating
-----------------------------------------------
Fitch Ratings has affirmed Leeds Building Society's (LBS) Long-
and Short-Term Issuer Default Ratings (IDRs) at 'A-'/'F1' and
Viability Rating (VR) at 'a-'. The Outlook on the Long-Term IDR
is Stable.

Fitch has assigned a 'A-(dcr)' Derivative Counterparty Rating
(DCR) to LBS as part of its roll-out of DCRs in western Europe
and the US. DCRs are issuer ratings and express Fitch's view of
banks' relative vulnerability to default under derivative
contracts with third-party, non-government counterparties.

The rating actions are part of Fitch's periodic review of the UK
Building Societies.

KEY RATING DRIVERS
IDRs, VR, DCR AND SENIOR DEBT RATINGS

LBS's IDRs, VR, DCR and senior debt ratings reflect the society's
sound, albeit weakening, profitability, adequate asset quality,
solid capitalisation, and sound funding and liquidity. They also
reflect an appetite for higher-risk segments, the society's
limited franchise and the concentration of its business on the UK
housing market.

LBS's profitability weakened in 2016 as competition in the
mortgage market intensified, resulting in lower retention rates
and pressure on the society's reported net interest margin, which
fell from 162bps in 2015 to 137bps in 2016. Fitch expects further
margin erosion in 2017 due to persistent low interest rates and
limited scope to reduce funding costs further. Nonetheless, the
society's profitability remains sound driven by good cost
efficiency and the composition of the loan book, which includes
an above-average exposure to higher-yielding, higher-risk
specialist segments, such as shared ownership. The profitability
is also supported by strong levels of mortgage retention and
strong back book profitability due to a higher-than-average
administered rate.

LBS's underwriting standards are generally in line with the
sector, but with a higher appetite for specialist mortgage
lending. Net loan growth was very high, at 17% in 2016, well in
excess of peers and significantly outpacing internal capital
generation. Fitch does not believes that loan growth was driven
by a relaxation of underwriting standards and expect loan growth
to slow. Continued growth at current levels could put pressure on
capital ratios and lead to less favourable risk-adjusted returns
given strong competition in the mortgage market.

Asset quality is sound and compares well with its UK peers.
However, Fitch believes that LBS's loan book is higher risk than
that of similarly-rated building societies peers, due to an
above-average appetite for lending to sectors Fitch views as more
vulnerable in an economic downturn. LBS's gross impaired loans
ratio was slightly above average of Fitch-rated societies at end-
2016 (1.3% of gross loans), reflecting the society's legacy
exposures, which include commercial lending in the UK and
mortgages extended in Spain and Ireland. The society's shared
ownership and buy-to-let portfolios continue to perform well,
supported by a so far benign operating environment and the low
LTVs of these loans.

Capital ratios weakened slightly in 2016 because of fast loan
growth, but they remain solid and comfortably above minimum
regulatory requirements. The society's fully-loaded common equity
tier 1 (CET1) ratio was 15.2% at end-2016, calculated under the
standardised approach, while its regulatory leverage ratio was
5.2%, at the same date. Both ratios compare well with its peer
group. Fitch expects capital ratios to decline moderately in 2017
because of further planned business growth, but the society plans
to maintain sound capitalisation, in line with regulatory
requirements.

On-balance sheet liquidity is strong and is supported by
contingent liquidity, if required, through central bank
facilities at the Bank of England and the European Central Bank
(via the society's Irish operations). Lending is mostly funded
through a stable customer deposit base supplemented by good
access to wholesale markets, both secured and unsecured. LBS's
strong liquidity drives the society's 'F1' Short-Term IDR, which
is the higher of the two Short-Term IDRs that map to the
society's Long-Term IDR.

Fitch has assigned a DCR to LBS because it is a counterparty o
Fitch-rated covered bonds transactions. The DCR is at the same
level as the Long-Term IDR because, under UK legislation,
derivative counterparties have no preferential status over other
senior obligations in a resolution scenario.

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

LBS's SR and SRF reflect Fitch's view that senior creditors
cannot rely on extraordinary support from the UK authorities in
the event the society becomes non-viable given UK legislation and
regulations that provide a framework that is likely to require
senior creditors to participate in losses after a failure and
because of the society's low systemic importance.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

LBS's subordinated debt is notched down from the VR, reflecting
Fitch's assessment of their incremental non-performance risk
relative to the VR and loss severity. The permanent interest-
bearing shares (PIBS) are rated four notches below the VR: two
notches for their deep subordination and two notches for
incremental non-performance risk in the form of potential non-
payment of coupon.


RATING SENSITIVITIES
IDRS, VR, DERIVATIVE COUNTERPARTY AND SENIOR DEBT RATINGS

LBS's IDRs, VR, DCR and senior debt ratings would come under
pressure if further sharp loan growth indicates an increased risk
appetite, or if lending to higher-risk segments, including
commercial real estate, or higher loan-to-value lending increases
materially.

The ratings are also sensitive to structural deterioration in
profitability, through tighter margins, higher loan impairment
charges and lower cost efficiency, and weaker asset quality and
capitalisation. This could be caused by continued rapid loan
growth or by a material weakening of the operating environment in
the UK if the economic environment deteriorates substantially
following the UK's decision to leave the EU.

An upgrade of the VR is unlikely because Fitch views the
society's business model, which is concentrated on the UK
residential mortgage lending and savings market, as less
diversified than that of its more highly rated UK peers.

The DCR is sensitive to changes in LBS's Long-Term IDRs.

SUPPORT RATING AND SUPPORT RATING FLOOR

Fitch does not expect any changes to the SR and the SRF given the
low systemic importance of the building society, as well as the
legislation in place that is likely to require senior creditors
to participate in losses for resolving LBS.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

The ratings are primarily sensitive to changes in the VR from
which they are notched. The ratings are also sensitive to a
change in their notching, which could arise if Fitch changes its
assessment of the probability of their non-performance relative
to the risk captured in the VR. The ratings are also sensitive to
a change in Fitch's assessment of each instrument's loss
severity, which could reflect a change in the expected treatment
of liability classes during a resolution.


The rating actions are:

Long-Term IDR: affirmed at 'A-'; Outlook Stable
Short-Term IDR: affirmed at 'F1'
Viability Rating: affirmed at 'a-'
Support Rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'
Derivative Counterparty Rating: assigned at 'A-(dcr)'
Senior unsecured debt and programme rating: affirmed at 'A-'/'F1'
Permanent Interest-Bearing Shares: affirmed at 'BB+'


PRINCIPALITY BUILDING: Fitch Affirms PIBS Rating at 'BB'
--------------------------------------------------------
Fitch Ratings has affirmed Principality Building Society's (PBS)
Long- and Short-Term Issuer Default Ratings (IDRs) at
'BBB+'/'F2'. The Outlook is Stable.

The rating actions are part of Fitch's periodic review of the UK
building societies.

KEY RATING DRIVERS
IDRS, VRS AND SENIOR DEBT

PBS's IDRs, VR and senior debt ratings reflect the society's
overall moderate risk profile, improved asset quality, solid
capitalisation and sound funding and liquidity. The ratings also
reflect the society's limited franchise and the concentration of
its business on the UK housing market.

Our assessment of risk appetite takes into account the society's
strong focus on core residential mortgage loans and savings
business but also reflects PBS's exposure to commercial real
estate (CRE) loans. Exposure to second-charge mortgages remains
material at just under 5% of total assets, although the book is
in run-off. This raises PBS's overall risk profile given the size
of these exposures compared with its capital. Nonetheless, the
risk-return of these loans has been strong in the case of second-
charge mortgages and is improving in commercial loans.

The commercial lending division has been profitable since 2014,
after a number of loss-making years. The society has been
reducing the proportion of this business to the overall loan
book, as core business expands. The second-charge lending
portfolio, which was previously a material earnings contributor,
is being run off and the society plans to compensate for this
business by growing the residential mortgage book, which includes
lending to first-time buyers at higher LTVs.

Asset quality has improved, with falling arrears across all
books. CRE includes loans to the Welsh housing association
sector, reflecting PBS's role in providing finance for housing in
Wales. These loans are performing well but are low-yielding.
Concentrations in the commercial loan book are moderate.

PBS's profitability is in line with the industry average,
reflecting a presence in higher-yielding sectors combined with
low returns of both low-risk mortgages and lending to housing
associations. In line with its building society peers, PBS's
revenues are strongly driven by net interest income, making
earnings sensitive to the low interest rate environment. The
society is working to improve cost efficiency and reduce funding
costs (including via the planned drawdown of Bank of England Term
Funding Scheme (TFS) facilities) to offset the impact of low
rates, as well as the run-off of the society's higher-margin
second charge mortgage book. Combined with increased mortgage
competition and Fitch expectations that loan impairment charges
are at cyclical lows, Fitch expects operating profitability to
have reached maximum levels.

Fitch views capital as adequate for the risks the society
assumes, with solid ratios on both a risk-weighted and non-risk
weighted basis. The CET1 ratio was 23.5% at end-2016, calculated
largely using the internal ratings-based approach, and the
leverage ratio was a sound 5.5%. Capitalisation will benefit from
the run-down of the higher risk-weighted second-charge mortgage
portfolio, which will allow the society to grow its lower-risk
retail mortgage book without the need for additional capital.
Fitch expects capital ratios to be maintained with solid buffers
over minimum requirements, given the society's limited access to
external capital.

Funding and liquidity are sound. Funding is obtained largely from
customers as the society has a large and stable customer base in
Wales, although some diversification is also provided by
accessing the wholesale markets, mostly secured (RMBS and Funding
for Lending Scheme (FLS)/TFS facilities). Asset encumbrance
remains modest at 19% of total assets at end-2016. Fitch expects
some additional debt issuance in the medium term to replace FLS
and TFS maturities, which may take the form of unsecured debt.

Liquidity is healthy and good quality and benefits from strong
access to contingent sources.

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

PBS's SR and SRF reflect Fitch's view that senior creditors
cannot rely on extraordinary support from the UK authorities in
the event the society becomes non-viable given UK legislation and
regulations that provide a framework that is likely to require
senior creditors to participate in losses after a failure and
because of the society's low systemic importance.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

The permanent interest-bearing shares (PIBS) are rated four
notches below the VR, reflecting two notches for loss severity
and two notches for incremental non-performance risk.

RATING SENSITIVITIES
IDRS, VRS AND SENIOR DEBT

PBS's IDRs, VR and senior debt ratings are primarily sensitive to
structural deterioration in profitability, through tighter
margins and higher loan impairment charges, and weaker asset
quality. This could be caused by a material weakening of the
operating environment in the UK if the economic environment
deteriorates substantially following the UK's decision to leave
the EU. In particular, weaker prospects for CRE would put PBS's
ratings under pressure given the society's exposure to this
segment.

The VR and IDRs could also come under pressure if the society
increases its risk appetite, for example, through a sharp
increase in lending to higher-risk segments, including commercial
real estate, or higher loan-to-value lending, or if its
capitalisation weakens materially, none of which Fitch currently
expects.

An upgrade of the VR is unlikely because Fitch views the
society's business model, which is concentrated on the UK
residential mortgage lending and savings market, as less
diversified than that of its more highly rated UK peers.

SUPPORT RATING AND SUPPORT RATING FLOOR

Fitch does not expect any changes to the SR and the SRF given the
low systemic importance of the building society as well as the
legislation in place which is likely to require senior creditors
to participate in losses for resolving PBS.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

The rating assigned to PBS's PIBS is primarily sensitive to
changes in the VR from which the rating is notched. The rating is
also sensitive to a change in notching, which could arise if
Fitch changes its assessment of the probability of non-
performance relative to the risk captured in the VR. The rating
is also sensitive to a change in Fitch's assessment of the
instrument's loss severity, which could reflect a change in the
expected treatment of liability classes during a resolution.

The rating actions are:

Long-Term IDR affirmed at 'BBB+'; Outlook Stable
Short-Term IDR affirmed at 'F2'
Viability Rating affirmed at 'bbb+'
Support Rating affirmed at '5'
Support Rating Floor affirmed at 'No Floor'
Senior unsecured debt and programme rating affirmed at
'BBB+'/'F2'
PIBS affirmed at 'BB'


YORKSHIRE BUILDING: Fitch Affirms 'BB+' PIBS Rating
---------------------------------------------------
Fitch Ratings has affirmed Yorkshire Building Society's (YBS)
Long- and Short-Term Issuer Default Ratings (IDRs) at 'A-'/'F1'
and Viability Rating (VR) at 'a-'. The Outlook on the Long-Term
IDR is stable.

Fitch has assigned a 'A-(dcr)' Derivative Counterparty Rating
(DCR) to YBS as part of its roll-out of DCRs in western Europe
and the US. DCRs are issuer ratings and express Fitch's view of
an issuer's relative vulnerability to default under derivative
contracts with third-party, non-government counterparties.

The rating actions are part of Fitch's periodic review of the UK
Building Societies.

KEY RATING DRIVERS
IDRS, DCR, VR AND SENIOR DEBT RATINGS

YBS's ratings reflect the society's low risk profile, healthy
asset quality, and adequate liquidity and capitalisation in
relation to its risk profile. The ratings also reflect Fitch's
view that the society's business model is constrained by its
limited franchise compared to larger UK retail peers and the
society's concentration on UK mortgage assets.

The society's risk appetite remains conservative, and its
mortgage book consists of low-risk, owner-occupied and buy-to-let
loans. Lending is generally at moderate loan-to-value (LTV)
ratios although the society has shown a greater appetite for
higher-LTV loans than some of its higher rated peers through its
lending to first-time buyers. Higher-LTV lending represents a
small proportion of total loans, however, and is manageable for
the society given stringent underwriting standards and sound risk
limits. Commercial lending remains low as a proportion of total
assets and are fragmented and diversified across the UK.

Asset quality benefits from the benign UK economic environment
and low interest rates, and the society reported a low end-2016
impaired loans ratio of 0.69%. Sector concentration arises from
YBS's focus on UK residential lending, with asset quality
sensitive to developments in domestic economic conditions. This
risk is mitigated by the society's conservative underwriting
standards.

YBS has an adequate performance track record but operating
revenue relies on net interest income, which remains under
pressure given low interest rates and heightened competition in
the mortgage market. The society is working to reduce its cost
base and, following associated restructuring costs in the next
years, Fitch expects cost efficiency to improve in the medium
term, which will support performance.

Fitch considers the society's funding and liquidity profile as
solid and stable. YBS is mainly deposit-funded but has also
issued wholesale funding in the form of unsecured and secured
senior debt, and subordinated debt, and has accessed the
government's Funding for Lending Scheme and intends to access the
Term Funding Scheme. YBS's strong liquidity drives the society's
'F1' Short-Term IDR, which is the higher of the two Short-Term
IDRs that map to the society's Long-Term IDR. Liquidity buffers
are high-quality and mostly composed of cash at the Bank of
England, UK government bonds and treasury bills, and YBS also
benefits from access to contingent sources from the Bank of
England.

Fitch considers capital adequate for the society's ratings, with
sound levels above regulatory minimum requirements on both a
risk-weighted and a non-risk weighted basis. The reported CET1
ratio and leverage ratio stood at 14.9% and 5.1% respectively at
end-2016 (2015: 14.5% and 5%) and the reported CET1 ratio is set
to improve further as a result of the society's planned adoption
of the internal ratings based approach by end-2018. Capital is
generated through retained earnings and, in Fitch views, should
be maintained higher than minimum requirements given the
society's limited access to external capital.

A DCR has been assigned to YBS because the society acts as
derivative counterparty to Fitch-rated transactions. The DCR is
at the same level as the Long-Term IDR because derivative
counterparties have no definitive preferential status over other
senior obligations in a resolution scenario.

SUPPORT RATING AND SUPPORT RATING FLOOR

YBS's SR and SRF reflect Fitch's view that senior creditors
cannot rely on extraordinary support from the UK authorities in
the event the society becomes non-viable given UK legislation and
regulations that provide a framework that is likely to require
senior creditors to participate in losses after a failure and
because of the society's low systemic importance.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

YBS's subordinated debt is notched down from the VR reflecting
Fitch's assessment of their incremental non-performance risk
relative to the VR and loss severity. Legacy Lower Tier 2
subordinated debt is notched down once from the VR for loss
severity. The permanent interest- bearing shares (PIBS) are rated
four notches below the VR, reflecting two notches for their deep
subordination and two notches for incremental non-performance
risk in the form of potential non-payment of coupon.

The society's convertible Tier 2 debt is notched down twice from
the VR: once for loss severity to reflect the conversion into
profit participating deferred shares on breach of the trigger,
and once for incremental non-performance risk.

RATING SENSITIVITIES
IDRS, DCRs, VR AND SENIOR DEBT RATINGS

YBS's IDRs, VR and senior debt ratings are primarily sensitive to
structural deterioration in profitability, through tighter
margins and higher loan impairment charges, and weaker asset
quality. This could be caused by a material weakening of the
operating environment in the UK if the economic environment
deteriorates substantially following the UK's decision to leave
the EU.

The VR and IDRs could also come under pressure if the society
increases its risk appetite, for example, through a sharp
increase in lending to higher-risk segments, including commercial
real estate, or higher loan-to-value lending, or if its
capitalisation weakens materially, none of which Fitch currently
expects.

An upgrade of the VR is unlikely because Fitch views the
society's business model, which is concentrated on the UK
residential mortgage lending and savings market, as less
diversified than that of its more highly rated UK peers.

The DCR is primarily sensitive to changes in YBS's Long-Term IDR.

SUPPORT RATING AND SUPPORT RATING FLOOR
Fitch does not expect any changes to the SR and the SRF given the
low systemic importance of the building society as well as the
legislation in place that is likely to require senior creditors
to participate in losses for resolving YBS.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

The ratings are primarily sensitive to changes in the VR from
which they are notched. The ratings are also sensitive to a
change in their notching, which could arise if Fitch changes its
assessment of the probability of their non-performance relative
to the risk captured in the VR. The ratings are also sensitive to
a change in Fitch's assessment of each instrument's loss
severity, which could reflect a change in the expected treatment
of liability classes during a resolution.

The rating actions are:

Long-Term IDR: affirmed at 'A-'; Outlook Stable
Short-Term IDR: affirmed at 'F1'
Viability Rating: affirmed at 'a-'
Support Rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'
Derivative Counterparty Rating: assigned at 'A-(dcr)'
Senior unsecured debt and programme rating: affirmed at 'A-'/'F1'
Subordinated dated debt: affirmed at 'BBB+'
Permanent Interest-Bearing Shares: affirmed at 'BB+'
Convertible notes: affirmed at 'BBB'


* Lacey to Join Kirkland & Ellis' Restructuring Group in London
---------------------------------------------------------------
Kirkland & Ellis International LLP on May 10 disclosed that Sean
Lacey will join the Firm's London office as a partner in the
Restructuring Practice Group.  Mr. Lacey focuses his practice on
financial restructurings and specialised lending transactions at
all levels of the capital structure.

"Sean has earned a reputation as one of the leading restructuring
and finance lawyers in the London market," said Jeffrey C.
Hammes, Chairman of Kirkland's Global Management Executive
Committee.  "His extensive experience advising clients on complex
transactions across a range of credit products will further
enhance our European restructuring offering.  He is an exciting
new addition to our market-leading, global restructuring
practice."

Mr. Lacey will join Kirkland from the London office of
Freshfields Bruckhaus Deringer LLP, where he was co-leader of the
firm's alternative capital group within the global financial
institutions group.  He has advised a wide range of clients
including investment funds, financial institutions and corporate
borrowers.  During his career, he has spent periods working in
legal and commercial teams at two top-tier, global investment
banks.

Mr. Lacey holds a degree in modern history and modern languages
from Christ Church, Oxford University.  He is recommended as a
leading restructuring and finance lawyer in both Chambers UK and
Legal 500 UK, with the former describing him as "extremely clever
and very commercial."

             About the Restructuring Practice Group

Kirkland & Ellis' Restructuring Practice Group utilizes the
Firm's offices in Europe, the United States and Asia to provide
integrated services to clients worldwide.  Kirkland's
restructuring lawyers have advised on some of the most complex,
multijurisdictional restructurings in recent history and have a
broad range of business advisory and crisis management skills to
navigate clients through situations involving financially
troubled companies.  Kirkland lawyers have handled matters across
industries including media, entertainment, transportation,
manufacturing, energy and real estate.

                      About Kirkland & Ellis

Kirkland & Ellis is a 1,900-attorney law firm representing global
clients in restructuring, private equity, M&A and other complex
corporate transactions, litigation and dispute
resolution/arbitration and intellectual property matters.  The
Firm has offices in London, Beijing, Chicago, Hong Kong, Houston,
Los Angeles, Munich, New York, Palo Alto, San Francisco, Shanghai
and Washington, D.C.



                            *********

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

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

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


                            *********


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

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

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

This material is copyrighted and any commercial use, resale or
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re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

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

The TCR Europe subscription rate is US$775 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each.  For subscription information,
contact Peter Chapman at 215-945-7000 or Joseph Cardillo at
856-381-8268.


                 * * * End of Transmission * * *