TCREUR_Public/170516.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

           Tuesday, May 16, 2017, Vol. 18, No. 096


                            Headlines


A Z E R B A I J A N

INT'L BANK OF AZERBAIJAN: Files for Court Protection in U.S.


F R A N C E

* French Prime RMBS 90+ Days Delinquency Improved in February


G E R M A N Y

FRESENIUS MEDICAL: Moody's Withdraws B1 Corporate Family Rating


I R E L A N D

AURIUM CLO III: S&P Assigns 'B-' Rating to Class F Notes
BACCHUS 2007-1: Moody's Affirms Ca(sf) Rating on Cl. E Notes
HARVEST CLO XVII: Moody's Assigns B2(sf) Rating to Class F Notes
LIGHTPOINT 2007-1: Moody's Raises Rating on Cl. E Notes From Ba1
MCGETTIGAN: Broadhaven Credit Partners to Refinance Debts

OCP EURO 2017-1: Moody's Assigns B2(sf) Rating to Class F Notes
POLYUS FINANCE: Moody's Affirms Ba1 Rating on $800MM Notes


I T A L Y

ITAU UNIBANCO: XP Investimento Deal No Impact on Fitch 'B' IDR


M A C E D O N I A

SKOPJE MUNICIPALITY: S&P Puts 'BB-' ICR on CreditWatch Negative


N E T H E R L A N D S

ARES EUROPEAN CLO III: Moody's Affirms B1 Rating on Class E Notes


R U S S I A

BANK TGB: Liabilities Exceed Assets, Assessment Shows
CB INFORMPROGRESS: Placed on Provisional Administration
INTERCOOPBANK JSC: Placed on Provisional Administration
M2M PRIVATE BANK: Bank of Russia Inspects Financial Standing
SVERDLOVSK REGION: Fitch Affirms 'BB+' LT Foreign-Currency IDRs

YUKOS OIL: Was Unlawfully Bankrupted by Russia, Dutch Court Rules


S L O V E N I A

NOVA LJUBLJANSKA: S&P Raises Counterparty Credit Rating to 'BB'


S P A I N

BANCO POPULAR LEASING: Moody's Rates Series B Notes (P)Caa2


U K R A I N E

UKRAINE: S&P Affirms 'B-/B' Sovereign Credit Ratings


U N I T E D   K I N G D O M

LONMIN PLC: Losses Increase, Faces Debt Covenant Breach Risk
NEWGATE FUNDING 2006-1: Moody's Affirms Caa3 Class E Notes Rating
SOLOCAL GROUP: Fitch Affirms B- IDR & Revises Outlook to Stable


                            *********


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A Z E R B A I J A N
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INT'L BANK OF AZERBAIJAN: Files for Court Protection in U.S.
------------------------------------------------------------
The foreign representative with respect to the judicial
reorganization proceeding in the Republic of Azerbaijan
concerning the International Bank of Azerbaijan sought Chapter 15
protection in the U.S. Bankruptcy Court for the Southern District
of New York to aid the restructuring of some $3.3 billion in
debt.

IBA is the largest commercial bank in Azerbaijan.  The Bank
maintains an international presence through subsidiaries in
Russia and Georgia and representative offices in London and
Frankfurt.  The Bank is also a member of World Economic Forum's
Community of Global Growth Companies and various other
international financial organizations.

IBA was established on December 30, 1992 under the laws of
Azerbaijan as an open joint stock company with the primary
purpose of commercial lending and borrowing.  The Bank is
majority-owned by the government of Azerbaijan.

Throughout 2014-2016, the Bank and its customers were negatively
impacted by adverse economic conditions that acutely affected the
economy of Azerbaijan.  These included a drop in oil prices and
the resulting devaluation of the Azerbaijani Manat (the "AZN").
Despite several capital infusions from the government of
Azerbaijan in 2014-2015 to ensure regulatory and debt-covenant
compliance, the Bank suffered substantial losses in 2016.  To
maintain the Bank's financial stability, IBA and the government
of Azerbaijan arranged for the transfer of the Bank's non-
performing assets from the Bank to an existing government-backed
non-banking credit institution -- a solution similar to the "good
bank-bad bank" model utilized in the United States following the
2007 financial crisis.  But these steps were not sufficient. In
2017, the Bank determined that it needed to restructure its
remaining indebtedness in a formal proceeding.

On April 17, 2017, IBA's Supervisory Board adopted the
Supervisory Board Resolution authorizing the Bank to petition for
the commencement of a voluntary restructuring proceeding under
the Restructuring Provisions of the Azeri Law on Banks.

On May 4, 2017, following approval of the Bank's petition by the
Azeri Financial Markets Supervisory Authority ("FMSA") (the
Bank's principal financial regulator), the Azeri Court issued an
order formally commencing the Azeri Restructuring Proceeding (the
"Azeri Commencement Order").

                          U.S. Lawsuits

Gunel Bakhshiyeva, the foreign representative, filed with the New
York Court a verified petition seeking recognition of IBA's
restructuring as "foreign main proceeding".  In addition, in
light of imminent risks to the Bank's day-to-day transactions
with certain U.S. financial institutions, the petitioner is
simultaneously seeking relief on an emergency basis in its Motion
for Provisional Relief pursuant to 11 U.S.C. Sec. 1519,
1521(a)(7), and 362

The Bank now seeks ancillary relief in this Chapter 15 Proceeding
in order to (i) safeguard from attachment or set-off four U.S.-
located "correspondent accounts" used to complete daily USD
transactions with various other financial institutions (as
further detailed below, the "U.S. Correspondent Accounts"); (ii)
guard against burdensome U.S. lawsuits by Bank of Azerbaijan
("IBA," the "Bank," or the "Debtor"), creditors during the course
of the Azeri Restructuring Proceeding; and (iii) complete the
restructuring of its USD-denominated debt by obtaining U.S.
judicial recognition of the Azeri Restructuring Proceeding and,
ultimately, the plan approved in such proceeding by vote of the
Bank's creditors and confirmation order of the Azeri Court.

Accordingly, in support of the Azeri Restructuring Proceeding and
to ensure the preservation of going-concern value through the
uninterrupted continuation of operations, the Petitioner seeks
recognition of the Azeri Restructuring Proceeding as a foreign
main proceeding.

                   Owned by Azeri Government

IBA was established under the laws of Azerbaijan as a private
entity in December 30, 1992, in the form of an open joint stock
bank, with the primary purpose of commercial lending and
borrowing.

In October 2013, the Bank's shareholders approved a capital
increase program in order to ensure compliance with
capitalization ratios under Basel I and prudential standards
(and, derivatively, covenants in certain of the Bank's debt
facilities).  Accordingly, the Bank received several tranches of
capital injections through 2014 and 2015, which increased
ownership of the Bank by the government of Azerbaijan, primarily
through holdings by the Azeri Ministry of Finance ("Azeri MoF")
and CJSC Agrarcredit ("Agrarcredit"), a State-owned non-banking
credit institution.  As of the Azeri petition date, the Azeri MoF
held 76.73% of the Bank's equity and Agracredit held 14.56%.

                       10,000 Clients

IBA is the largest commercial bank in Azerbaijan, with
approximately one-third of the domestic market share on the basis
of each of assets, total gross loans, and total customer
deposits.

IBA is a full-service commercial bank offering a range of
financial products and services via its network of 36 branches
(all located in Azerbaijan), 42 sub-branches, 3 service
outlets and 2 currency exchange points across the country, making
the Bank one of the most geographically diverse among Azerbaijani
banks and of critical importance to customers in the country's
more remote regions.  Due to its diverse geographic network, the
Bank is also one of the largest employers among banks in
Azerbaijan, having 1,780 employees as of Dec. 31, 2016.

The Bank provides services to over 10,000 corporate clients,
comprised almost entirely of companies operating in Azerbaijan.
Corporate banking includes project financing and the provision of
credit facilities denominated in both Azerbaijani Manats ("AZN")
and foreign currencies, predominantly U.S. dollars ("USD"), as
well as transactional services including trade finance, foreign
exchange and payment service loans.  The Bank is also actively
involved in trade financing through a number of different
instruments including letters of credit, guarantees and
collections. On account of its size and capabilities, the Bank
facilitates a significant portion of Azerbaijan's total business
activity, including its infrastructure projects.

IBA is also the largest retail bank in Azerbaijan, with
approximately 747,583 retail customers.  Its retail services
feature a range of products including loans, debit and credit
cards and deposit and current accounts.  The Bank has the largest
number of payment cards in Azerbaijan and is the largest provider
of money transfer services, measured by the value of transfers as
of Dec. 31, 2016.

Finally, IBA has an international presence through subsidiaries
in Russia (International Bank of Azerbaijan - Moscow) and Georgia
(International Bank of Azerbaijan - Georgia), representative
offices in London and Frankfurt, and its participation as a
member of World Economic Forum's Community of Global Growth
Companies. It is presently a member of the Azerbaijan Banks
Association (ABA), the Baku Interbank Currency Exchange (BICEX)
and the Baku Stock Exchange (BSE).  The Bank is also a member of
international organizations including the International Payment
System of American Express, Banking Association for Central and
Eastern Europe (BACEE), Global Growth Companies Community (GCC),
World Economic Forum (WEF), SWIFT, MasterCard International, VISA
International and Reuters.

                          U.S. Operations

IBA's operations include a number of connections to the United
States that render the Requested Relief critical to the
successful completion of the Azeri Restructuring Proceeding.

First, the Bank has issued USD-denominated, New York law-governed
debt, namely, USD 715 million in loan facilities with Cargill
Financial Services International, Inc. ("Cargill" and, such loan
facilities together, the "Cargill Facilities").  The Cargill
Facilities total approximately 31% of the Bank's total Financial
Indebtedness.

Second, the Bank maintains a number of U.S. bank accounts in New
York that it uses in its daily operations.  As a foreign bank,
IBA does not have an account with the U.S. Federal Reserve.  It
must therefore utilize correspondent accounts (the "U.S.
Correspondent Accounts") at the New York branches of U.S.-based
banks (the "U.S. Correspondent Banks") in order to transact in
USD.  Specifically, the Bank maintains correspondent accounts at
the Bank of New York Mellon ("BNYM") (the "BNYM Correspondent
Account"); Citibank N.A. ("Citibank") (the "Citibank
Correspondent Account"); JP Morgan Chase Bank N.A. ("JPM") (the
"JPM Correspondent Account"); Deutsche Bank Trust Company
Americas ("Deutsche Bank") (the "DB Correspondent Account").
When clients deposit USD with IBA, those dollars are
predominantly held in one of the U.S. Correspondent Accounts
through IBA's account with one of the U.S. Correspondent Banks.
IBA then utilizes the U.S. Correspondent Accounts to settle
transactions in USD with other financial institutions.

As of the Azeri petition date, IBA held a total of approximately
USD 50 million in the U.S. Correspondent Accounts, although this
amount fluctuates significantly as the Bank carries out various
USD transactions in the ordinary course of its business.  The
Bank routinely transfers funds in and out of the U.S.
Correspondent Accounts for a variety of business reasons,
including:

    (i) transfers to fulfill customer transactions in USD,

   (ii) transfers to achieve better terms of service with the
        correspondent bank,

  (iii) transfers to reduce cost and maximize returns related to
        the USD accounts, and

   (iv) various other ordinary course transfers to optimize the
        Bank's foreign currency transactions.

Importantly, when the Bank's corporate clients send USD funds or
direct their own transactional counterparties to send USD funds
to their accounts with IBA, these additional funds are held by
IBA in the U.S. Correspondent Accounts.  For this reason, at any
time, IBA's large corporate clients could effect transfers that
drastically increase or decrease the amounts in the U.S.
Correspondent Accounts.

Ms. Bakhshiyeva, the foreign representative, asserts that the
U.S. Correspondent Accounts are vital to the Bank's continuation
as a going-concern.  They allow the Bank to maintain USD deposits
for its corporate clients and process transactions for those
clients.  Critical clients whose businesses regularly require
access to the U.S. Correspondent Accounts include the State Oil
Company of the Azerbaijan Republic (SOCAR), British Petroleum
(BP), Azerbaijani Railways, Azerbaijani Airlines, and companies
involved in the Baku-Tbilisi-Ceyhan and South Gas Corridor
projects.  Such projects relate to the Trans-Anatolian Natural
Gas Pipeline and Trans-Adriatic Pipeline, which allow for
Azerbaijan gas exports to Europe and are of great importance to
the economy of Azerbaijan.

Loss of access to these accounts would stop the Bank from
transacting in USD.  This could destroy the Bank's reputation and
key client relationships and seriously call into question the
Bank's ability to continue as a going concern.  That is why the
Bank needs the Requested Relief.

                      Assets and Liabilities

As of June 30, 2016, the Bank held a total of AZN14.2 billion in
assets (USD8.34 billion), consisting of 36.2% loans and advances
to customers; 23.2% receivables from banks and other financial
institutions; 20% receivables from Agracredit; 16.1% cash and
cash equivalents; 2.7% other assets; and 1.8% real property,
equipment and intangibles.  These assets include approximately
USD50 million as of the Azeri petition date held in the U.S.
Correspondent Accounts, although as noted, this amount fluctuates
daily as the Bank uses these accounts to effect various USD
transactions.

As of June 30, 2016, the Bank's liabilities totaled AZN13.6
billion (US$7.99 billion), consisting of:

     i. 60% customer accounts

    ii. 14.6% other borrowed funds

   iii. 12.3% due to other banks

    iv. 5.8% debt securities in issue

     v. 5.7% subordinated debt

    vi. 1.6% other liabilities

In addition to its customer deposits, the Bank had financial
indebtedness at the time of the Azeri petition date of US$2.3
billion, consisting of the following substantial debt facilities
(together, the Bank's "Financial Indebtedness"):

     i. US$715 million in the Cargill Facilities;

    ii. approximately US$500 million in English Law-governed
        bonds (the "Eurobonds");

   iii. US$256 million and EUR27 million owed under English law-
        governed bilateral loans with Credit Suisse AG;

    iv. US$250 million in private placement notes issued to
        Emerald Capital Limited, with recourse limited solely to
        the proceeds of a deposit placed by Emerald Capital
        Limited with the Bank, governed by English law;

     v. a US$205 million syndicated loan, governed by English
        law, with Citibank as agent and various financial
        institutions as lenders;

    vi. a US$111 million loan owed to FBME Bank Ltd. governed by
        the law of Istanbul;

   vii. a US$100 million subordinated loan agreement governed by
        English law with Rubrika Finance Company as lender, with
        limited recourse (the "Subordinated Loan");

  viii. EUR86.8 million and US$1.9 million in trade finance
        liabilities, including letters of credit with various
        financial institutions, governed by foreign (non-U.S.)
        law; and

    ix. English law-governed bilateral loans with ABLV Bank, AS
        (US$8 million) and Sberbank of Russia (US$20 million).

In addition, the Bank acts as depositee on a USD1 billion deposit
from the State Oil Fund of Azerbaijan ("SOFAZ"), the sovereign
wealth fund of the Republic of Azerbaijan, that is also subject
to the Bank's Restructuring Proceeding (the "Affected Deposit").

                   About IBA's Chapter 15 Case

International Bank of Azerbaijan is the largest commercial bank
in Azerbaijan.  It plays a foundational role in the stability of
Azerbaijan's banking system and, by extension thereof, the
country's economic development.  IBA helps link Azerbaijan to the
global economy.

IBA filed a Chapter 15 bankruptcy petition (Bankr. S.D.N.Y. Case
No. 17-11311) on May 11, 2017.

The Hon. James L. Garrity Jr. is the case judge.

Gunel Bakhshiyeva, appointed as foreign representative, signed
the Chapter 15 petition.

Thomas MacWright, Esq., Richard Graham, Esq., Laura L. Femino,
Esq., and Jason N. Zakia, Esq., at White & Case LLP, serve as
U.S. counsel.



===========
F R A N C E
===========


* French Prime RMBS 90+ Days Delinquency Improved in February
-------------------------------------------------------------
The 90+ days delinquency over current balance of the French prime
RMBS decreased to 0.0% in February 2017 from 0.1% in November
2016, according to the latest indices published by Moody's
Investors Service. The decrease is principally driven by the
termination of CIF ASSETS 2001-1.

The cumulative defaults as of original balance remained constant
at 0.5% from November 2016 to February 2017. Moody's annualised
total redemption rate increased to 20.5% in February 2017 from
18.4% for the same period.

As of February 2017, the 8 Moody's-rated French prime RMBS
transactions had a total outstanding pool balance of EUR55.6
billion, compared with EUR65.1 billion in November 2016,
constituting a decrease of 15%. CIF ASSETS 2001-1 was redeemed in
February. Transactions Domos 2017, FCT CREDIT AGRICOLE HABITAT
2017 and FCT ELIDE Compartiment 2017-01 were added to the index.



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G E R M A N Y
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FRESENIUS MEDICAL: Moody's Withdraws B1 Corporate Family Rating
---------------------------------------------------------------
Moody's Investors Service has upgraded the ratings of Fresenius
Medical Care AG & Co. KGaA, assigning a long-term issuer rating
of Baa3. Concurrently Moody's also withdrew FMC's corporate
family rating (CFR) of Ba1 and probability of default rating
(PDR) of Ba1-PD following the assignment of an issuer rating of
Baa3 as per the rating agency's practice for corporates with
investment grade ratings. Please refer to the Moody's Investors
Service's Policy for Withdrawal of Credit Ratings, available on
its website, www.moodys.com.

In addition, Moody's has affirmed all senior secured instrument
ratings of FMC and its subsidiaries at Baa3 and has upgraded all
senior unsecured instrument ratings of FMC and its subsidiaries
to Baa3 from Ba2.

Lastly, Moody's has placed under review for upgrade the Ba2
issuer rating of Fresenius Medical Care Holdings, Inc. (FMC
Holdings), the sub-holding company of FMC's North American
operations. The outlook is stable on all the ratings apart from
Fresenius Medical Care Holdings, Inc., where the outlook is under
review. Moody's will finalise its review process on FMC Holdings
within the next few weeks.

The rating action recognizes FMC's defensive business profile,
the group's long term track record of profitable growth in a
challenging macroeconomic environment and good growth prospects
over the next 3 to 5 years, says Stanislas Duquesnoy, Moody's
lead analyst for FMC.

FMC's leveraged capital structure is mitigated by the company's
very resilient cash flow generation through the cycle and a
prolonged track record of credit metrics stability, adds Mr.
Duquesnoy.

RATINGS RATIONALE

FMC's upgrades reflect the group's defensive business profile
supported by the non- discretionary nature of the demand for its
products. Dialysis services are offered to End Stage Renal
Disease ('ESRD') patients, which need dialysis at least three
times a week in order to survive. FMC's business model is
protected by high barriers to entry and Moody's does not see any
substitution risk in the next ten years at least.

Over the last 15 years at least, FMC has built a strong track
record of profitable growth. The group's revenues have grown
every single year over the last fifteen years despite very
volatile macroeconomic conditions and this growth has been
profitable. The group's revenues and earnings have more than
tripled over this period.

In light of an ageing population and the increasing occurrence of
lifestyle diseases such as diabetes and high blood pressure in
developed economies, both favorable factors for the development
of ESRD, Moody's foresee further sound growth prospects for FMC
over the next 3 to 5 years with dialysis patients expected to
grow by low to mid-single digits over this period. FMC has also
scope to grow its exposure outside of North America and Europe,
where increased access to healthcare should support demand going
forward.

FMC has historically maintained a relatively leveraged capital
structure with a Moody's adjusted Debt/EBITDA ratio of around
3.0x to 4.0x over the last 15 years. However credit metrics of
FMC have remained remarkably stable over a prolonged period of
time and the company has proven able to delever swiftly after
debt-financed acquisitions. The resilience of its earnings and
cash flows is seen as a strong mitigant to the relatively
elevated leverage of the group.

LIQUIDITY

FMC's liquidity is adequate. FMC had approximately EUR700 million
of cash on balance sheet, around EUR1.3 billion availability
under revolving credit facilities and EUR200 million capacity
under the company's Account Receivables programme at March 31,
2017. Alongside the group's stable operating cash flow generation
pre working capital, this should be more than sufficient to cover
upcoming cash needs mainly consisting of capex, modest WC
consumption, dividends and EUR1.4 billion of debt repayments over
the next 12 months.

STRUCTURAL CONSIDERATIONS

Moody's estimates that FMC's senior secured bank debt amounts to
around 30% of its overall gross debt. As such, a portion of the
company's unsecured debt, notably the outstanding bonds, will
continue to be structurally subordinated to an extent. The
absence of any notching of the senior unsecured debt reflects
Moody's expectation that FMC will, over time, reduce the amount
of senior secured debt in its capital structure.

WHAT COULD CHANGE THE RATING UP/ DOWN

Further positive rating pressure is not anticipated in the short
term. Positive pressure would build over time if FMC were to
reduce gross debt /EBITDA to materially and sustainably below
3.0x and CFO/debt materially and sustainably above 20%. A more
prudent management of the group's liquidity profile with earlier
refinancing of upcoming maturities would also support a higher
rating.

Moody's could consider downgrading FMC if Moody's adjusted
Debt/EBITDA would increase sustainably above 3.5x and CFO/debt
would drop towards 15%. Unfavorable reimbursement changes in core
markets or changes in payor mix, affecting the group's profit
generation and / or material litigation could also put the
current rating under pressure. Lastly negative free cash flow
generation would exert negative pressure on the rating.

Assignments:

Issuer: Fresenius Medical Care AG & Co. KGaA

-- Issuer Rating, Assigned Baa3

Affirmations:

Issuer: Fresenius Medical Care AG & Co. KGaA

-- Backed Senior Secured Bank Credit Facility, Affirmed Baa3

-- Senior Secured Bank Credit Facility, Affirmed Baa3

Issuer: Fresenius Medical Care Holdings, Inc.

-- Senior Secured Bank Credit Facility, Affirmed Baa3

On Review for Upgrade:

Issuer: Fresenius Medical Care Holdings, Inc.

-- Issuer Rating, Placed on Review for Upgrade, currently Ba2

Upgrades:

Issuer: Fresenius Medical Care AG & Co. KGaA

-- Backed Senior Unsecured Conv./Exch. Bond/Debenture, Upgraded
    to Baa3 from Ba2

Issuer: FMC Finance VII S.A.

-- Backed Senior Unsecured Regular Bond/Debenture, Upgraded to
    Baa3 from Ba2

Issuer: FMC Finance VIII S.A.

-- Backed Senior Unsecured Regular Bond/Debenture, Upgraded to
    Baa3 from Ba2

Issuer: Fresenius Medical Care US Finance II, Inc

-- Backed Senior Unsecured Regular Bond/Debenture, Upgraded to
    Baa3 from Ba2

Issuer: Fresenius Medical Care US Finance, Inc.

-- Backed Senior Unsecured Regular Bond/Debenture, Upgraded to
    Baa3 from Ba2

-- Senior Unsecured Regular Bond/Debenture, Upgraded to Baa3
    from Ba2

Withdrawals:

Issuer: Fresenius Medical Care AG & Co. KGaA

-- Corporate Family Rating, Withdrawn , previously rated Ba1

-- Probability of Default Rating, Withdrawn , previously rated
    Ba1-PD

Outlook Actions:

Issuer: Fresenius Medical Care AG & Co. KGaA

-- Outlook, Remains Stable

Issuer: FMC Finance VII S.A.

-- Outlook, Remains Stable

Issuer: FMC Finance VIII S.A.

-- Outlook, Remains Stable

Issuer: Fresenius Medical Care US Finance II, Inc

-- Outlook, Remains Stable

Issuer: Fresenius Medical Care US Finance, Inc.

-- Outlook, Remains Stable

Issuer: Fresenius Medical Care Holdings, Inc.

-- Outlook, Changed To Rating Under Review From Stable

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



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AURIUM CLO III: S&P Assigns 'B-' Rating to Class F Notes
--------------------------------------------------------
S&P Global Ratings assigned credit ratings to Aurium CLO III
DAC's class A, B-1, B-2, C, D, E, and F notes.  At closing,
Aurium CLO III also issued an unrated subordinated class of
notes.

Aurium CLO III is a cash flow collateralized loan obligation
(CLO) transaction securitizing a portfolio of primarily senior
secured loans granted to speculative-grade European corporates.
Spire Partners LLP manages the transaction.

The ratings reflect S&P's assessment of:

   -- The diversified collateral pool, which comprises primarily
      broadly syndicated speculative-grade senior secured term
      loans and bonds that are governed by collateral quality
      tests.  The credit enhancement provided through the
      subordination of cash flows, excess spread, and
      overcollateralization.

   -- The collateral manager's experienced team, which can affect
      the performance of the rated notes through collateral
      selection, ongoing portfolio management, and trading.  The
      transaction's legal structure, which is bankruptcy remote.

Under the transaction documents, the rated notes pay quarterly
interest unless there is a frequency switch event.  Following
this, the notes permanently switch to semiannual payment.  The
portfolio's reinvestment period ends approximately four years
after closing.

S&P's ratings reflect its assessment of the collateral
portfolio's credit quality, which has a weighted-average 'B'
rating.  The portfolio is well-diversified, primarily comprising
broadly syndicated speculative-grade senior secured term loans
and senior secured bonds.  Therefore, S&P has conducted its
credit and cash flow analysis by applying its criteria for
corporate cash flow collateralized debt obligations.

In S&P's cash flow analysis, it considered the EUR375 million
target par amount, the covenanted weighted-average spread without
Euro Interbank Offered Rate (EURIBOR) floors (4.10%), the
covenanted weighted-average coupon (5.25%), and the target
minimum weighted-average recovery rates at each rating level as
indicated by the manager.  S&P applied various cash flow stress
scenarios, using four different default patterns, in conjunction
with different interest rate stress scenarios for each liability
rating category.

Citibank, N.A., London Branch is the bank account provider and
custodian.  The documented downgrade remedies are in line with
S&P's current counterparty criteria.

Following the application of S&P's structured finance ratings
above the sovereign criteria, it considers that the transaction's
exposure to country risk is sufficiently mitigated at the
assigned rating levels.

S&P considers the issuer to be bankruptcy remote, in accordance
with its legal criteria.

Following S&P's analysis of the credit, cash flow, counterparty,
operational, and legal risks, S&P believes its ratings are
commensurate with the available credit enhancement for each class
of notes.

RATINGS LIST

Ratings Assigned

Aurium CLO III DAC
EUR387.35 Million Senior Secured Fixed- And Floating-Rate Notes
(Including EUR39.35 Million Subordinated Notes)

Class               Rating              Amount
                                    (mil. EUR)

A                   AAA (sf)            220.00
B-1                 AA (sf)              41.50
B-2                 AA (sf)              10.00
C                   A (sf)               25.50
D                   BBB (sf)             18.00
E                   BB (sf)              22.50
F                   B- (sf)              10.50
Sub                 NR                   39.35

NR--Not rated.


BACCHUS 2007-1: Moody's Affirms Ca(sf) Rating on Cl. E Notes
------------------------------------------------------------
Moody's Investors Service has upgraded the rating of the
following notes issued by Bacchus 2007-1 PLC:

-- EUR25M (Current rated balance of EUR21.79M) Class D Senior
    Secured Deferrable Floating Rate Notes due 2023, Upgraded to
    Baa3 (sf); previously on Jul 5, 2016 Affirmed Ba3 (sf)

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

-- EUR12.2M Class E Senior Secured Deferrable Floating Rate
    Notes due 2023, Affirmed Ca (sf); previously on Jul 5, 2016
    Affirmed Ca (sf)

Bacchus 2007-1 PLC, issued in April 2007, is a Collateralised
Loan Obligation (CLO) backed by a portfolio of mostly high-yield
senior secured European loans. The portfolio is managed by IKB
Deutsche Industriebank AG. The transaction's reinvestment period
ended in April 2013.

RATINGS RATIONALE

The upgrade of the Class D Notes is primarily the result of
deleveraging since the last rating action in July 2016 based on
May 2016 data. There have been 2 payment dates since the last
rating action. On the most recent payment date, in April 2017,
the outstanding balance of EUR23.95M of Class C Notes was fully
repaid and the remaining balance of principal proceeds were used
to begin amortization of the Class D Notes. The Class D Notes
have been reduced to 87.18% of their original amount, and Class D
overcollateralization level has increased. As of the April 2017
trustee report, the Class D and Class E overcollateralization
ratios are reported at 120.54% and 96.54% compared with 118.11%
and 96.89% respectively in May 2016. The April 2017 OC ratios do
not incorporate the payments made to the notes on the April 2017
payment date; net of such payments, the recalculated Class D OC
ratio is 147.46%.

The key model inputs Moody's uses in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. In its base
case, Moody's analysed the underlying collateral pool as having a
performing par and principal proceeds balance of EUR30.40
million, defaulted par of EUR2.00 million, a weighted average
default probability of 34.54% over a 4.5 years weighted average
life (consistent with a WARF of 4792), a weighted average
recovery rate upon default of 43.89% for a Aaa liability target
rating, a diversity score of 5 and a weighted average spread of
4.58%.

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

Methodology Underlying the Rating Action:

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

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

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

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

Additional uncertainty about performance is due to the following:

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

* Around 39% of the collateral pool consists of debt obligations
whose credit quality Moody's has assessed by using credit
estimates. As part of its base case, Moody's has stressed large
concentrations of single obligors bearing a credit estimate as
described in "Updated Approach to the Usage of Credit Estimates
in Rated Transactions" published in October 2009 and available at
http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_120461.

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

* Lack of portfolio granularity: The performance of the portfolio
depends to a large extent on the credit conditions of a few large
obligors with Caa or low non-investment-grade ratings, especially
when they default. Because of the deal's lack of granularity,
Moody's substituted its typical Binomial Expansion Technique
analysis with a simulated default distribution using Moody's
CDROMTM software and an individual scenario analysis.

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


HARVEST CLO XVII: Moody's Assigns B2(sf) Rating to Class F Notes
----------------------------------------------------------------
Moody's Investors Service assigned the following definitive
ratings to notes issued by Harvest CLO XVII Designated Activity
Company:

-- EUR 242,000,000 Class A Senior Secured Floating Rate Notes
    due 2030, Definitive Rating Assigned Aaa (sf)

-- EUR 43,500,000 Class B-1 Senior Secured Floating Rate Notes
    due 2030, Definitive Rating Assigned Aa2 (sf)

-- EUR 10,000,000 Class B-2 Senior Secured Fixed Rate Notes due
    2030, Definitive Rating Assigned Aa2 (sf)

-- EUR 21,500,000 Class C Senior Secured Deferrable Floating
    Rate Notes due 2030, Definitive Rating Assigned A2 (sf)

-- EUR 20,000,000 Class D Senior Secured Deferrable Floating
    Rate Notes due 2030, Definitive Rating Assigned Baa2 (sf)

-- EUR 24,000,000 Class E Senior Secured Deferrable Floating
    Rate Notes due 2030, Definitive Rating Assigned Ba2 (sf)

-- EUR 9,750,000 Class F Senior Secured Deferrable Floating Rate
    Notes due 2030, Definitive Rating Assigned B2 (sf)

RATINGS RATIONALE

Moody's definitive ratings of the rated notes address the
expected loss posed to noteholders by the legal final maturity of
the notes in 2030. The definitive ratings reflect the risks due
to defaults on the underlying portfolio of loans given the
characteristics and eligibility criteria of the constituent
assets, the relevant portfolio tests and covenants as well as the
transaction's capital and legal structure. Furthermore, Moody's
is of the opinion that the collateral manager, Investcorp Credit
Management EU Limited ("Investcorp"), has sufficient experience
and operational capacity and is capable of managing this CLO.

Harvest CLO XVII DAC is a managed cash flow CLO. At least 90% of
the portfolio must consist of secured senior obligations and up
to 10% of the portfolio may consist of unsecured senior loans,
second lien loans, mezzanine obligations, high yield bonds and/or
partial PIK obligations. The portfolio is approximately 95%
ramped up as of the closing date and is expected to be comprised
predominantly of corporate loans to obligors domiciled in Western
Europe. The remainder of the portfolio will be acquired during
the six month ramp-up period in compliance with the portfolio
guidelines.

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

In addition to the seven classes of notes rated by Moody's, the
Issuer issued EUR 42,900,000 of subordinated notes. Moody's will
not assign a rating to this class of notes.

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

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

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

Loss and Cash Flow Analysis:

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

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

Par Amount: EUR 400,000,000

Diversity Score: 38

Weighted Average Rating Factor (WARF): 2750

Weighted Average Spread (WAS): 3.65%

Weighted Average Coupon (WAC): 6.25%

Weighted Average Recovery Rate (WARR): 43.50%

Weighted Average Life (WAL): 8 years

As part of the base case, Moody's has addressed the potential
exposure to obligors domiciled in countries with local currency
country risk ceiling (LCC) of A1 or below. As per the portfolio
constraints, exposures to countries with local currency country
risk ceiling rating of between A1 to A3 cannot exceed 10%, and
there may be no exposure to countries with a local currency
country risk ceiling below A3. Following the effective date, and
given these portfolio constraints and the current sovereign
ratings of eligible countries, the total exposure to countries
with a LCC of A1 or below may not exceed 10% of the total
portfolio, with no exposure to countries with a LCC below A3. The
remainder of the pool will be domiciled in countries which
currently have a LCC of Aa3 and above. Given this portfolio
composition, the model was run without the need to apply
portfolio haircuts as further described in the methodology.

Stress Scenarios:

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

Percentage Change in WARF: WARF + 15% (to 3163 from 2750)

Ratings Impact in Rating Notches:

Class A Senior Secured Floating Rate Notes: 0

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

Class B-2 Senior Secured Fixed Rate Notes: -2

Class C Senior Secured Deferrable Floating Rate Notes: -2

Class D Senior Secured Deferrable Floating Rate Notes: -2

Class E Senior Secured Deferrable Floating Rate Notes: -1

Class F Senior Secured Deferrable Floating Rate Notes: 0

Percentage Change in WARF: WARF +30% (to 3575 from 2750)

Ratings Impact in Rating Notches:

Class A Senior Secured Floating Rate Notes: -0

Class B-1 Senior Secured Floating Rate Notes: -3

Class B-2 Senior Secured Fixed Rate Notes: -3

Class C Senior Secured Deferrable Floating Rate Notes: -4

Class D Senior Secured Deferrable Floating Rate Notes: -2

Class E Senior Secured Deferrable Floating Rate Notes: -1

Class F Senior Secured Deferrable Floating Rate Notes: -1

Methodology Underlying the Rating Action:

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


LIGHTPOINT 2007-1: Moody's Raises Rating on Cl. E Notes From Ba1
----------------------------------------------------------------
Moody's Investors Service announced that it has taken rating
actions on the following classes of notes issued by LightPoint
Pan-European CLO 2007-1 P.L.C.:

  -- EUR19M Class C Senior Secured Deferrable Floating Rate Notes
due 2026, Upgraded to Aaa (sf); previously on Feb 10, 2016
Upgraded to Aa3 (sf)

  -- EUR12M Class D Senior Secured Deferrable Floating Rate Notes
due 2026, Upgraded to Aa3 (sf); previously on Feb 10, 2016
Upgraded to Baa1 (sf)

  -- EUR13M (Current outstanding balance of EUR10.8M) Class E
Senior Secured Deferrable Floating Rate Notes due 2026, Upgraded
to Baa3 (sf); previously on Feb 10, 2016 Upgraded to Ba1 (sf)

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

  -- EUR259M (Current outstanding balance of EUR41M) Class A
Senior Secured Floating Rate Notes due 2026, Affirmed Aaa (sf);
previously on Feb 10, 2016 Affirmed Aaa (sf)

  -- EUR10M Class B Senior Secured Deferrable Floating Rate Notes
due 2026, Affirmed Aaa (sf); previously on Feb 10, 2016 Affirmed
Aaa (sf)

LightPoint Pan-European CLO 2007-1 P.L.C., issued in November
2007, is a collateralised loan obligation (CLO) backed by a
portfolio of mostly high-yield senior secured European and US
loans. The portfolio is managed by Neuberger Berman Fixed Income
LLC. The transaction's reinvestment period ended in February
2014.

RATINGS RATIONALE

The rating actions on the notes are the result of the
deleveraging of the Class A Notes following amortisation of the
underlying portfolio since the last payment date in August 2016
and an improvement in portfolio credit quality.

Class A Notes have paid down by EUR37 million resulting in
increases in over-collateralisation (OC) ratios. As per the
trustee report dated March 2017, Class A, Class B, Class C, Class
D and Class E OC ratios are reported at 259.95%, 208.96%,
152.23%, 129.94% and 114.80% respectively, compared to August
2016 levels of 186.19%, 165.07%, 135.81%, 122.14% and 111.98%.
WARF has improved to 2089 from 2235 during the same period.

The key model inputs Moody's uses in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. In its base
case, Moody's analysed the underlying collateral pool as having a
performing par and principal proceeds of EUR106.42 million,
defaults of EUR4.24 million, a weighted average default
probability of 13.20% (consistent with a WARF of 2076 over a
weighted average life of 4.31 years), a weighted average recovery
rate upon default of 45.68% for a Aaa liability target rating, a
diversity score of 18 and a weighted average spread of 2.91%.

The default probability derives from the credit quality of the
collateral pool and Moody's expectation of the remaining life of
the collateral pool. The estimated average recovery rate on
future defaults is based primarily on the seniority of the assets
in the collateral pool. Moody's generally applies recovery rates
for CLO securities as published in "Moody's Approach to Rating SF
CDOs". In some cases, alternative recovery assumptions may be
considered based on the specifics of the analysis of the CLO
transaction. In each case, historical and market performance and
a collateral manager's latitude to trade collateral are also
relevant factors. Moody's incorporates these default and recovery
characteristics of the collateral pool into its cash flow model
analysis, subjecting them to stresses as a function of the target
rating of each CLO liability it is analyzing.

Methodology Underlying the Rating Action:

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

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

In addition to the base-case analysis, Moody's conducted
sensitivity analyses on the key parameters for the rated notes,
for which it assumed a lower weighted average recovery rate for
the portfolio. Moody's ran a model in which it reduced the
weighted average recovery rate by 5%; the model generated outputs
that were one notch lower than the base-case results for Classes
D and E. Classes A, B and C were not significantly impacted.

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

Additional uncertainty about performance is due to the following:

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

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

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


MCGETTIGAN: Broadhaven Credit Partners to Refinance Debts
---------------------------------------------------------
Gavin Daly at The Times reports that Broadhaven Credit Partners,
a non-bank lender backed by Bain Capital, is putting up almost
EUR30 million to refinance the debts of the McGettigan property
and hospitality group, whose interests include the Regency hotel
near Dublin airport.

The overhaul of the McGettigan borrowings was finalized in recent
days, in tandem with a rescue plan for two McGettigan companies
linked to the Regency, which went into examinership earlier this
year, The Times relays.  The hotel said its business has suffered
after it was the scene of a fatal gangland shooting last year,
The Times notes.

The examinership was opposed by Oaktree Capital Management, a US
fund that was owed about EUR25 million by the McGettigan
companies after buying their debts from National Asset Management
Agency, The Times discloses.  Carval, another investment group,
was owed EUR635,400 by the firms, The Times states.


OCP EURO 2017-1: Moody's Assigns B2(sf) Rating to Class F Notes
---------------------------------------------------------------
Moody's Investors Service has assigned definitive ratings to six
classes of notes issued by OCP Euro CLO 2017-1 Designated
Activity Company (the "Issuer" or " OCP Euro CLO"):

-- EUR202,250,000 Class A Senior Secured Floating Rate Notes
    due 2030, Assigned Aaa (sf)

-- EUR49,750,000 Class B Senior Secured Floating Rate Notes due
    2030, Assigned Aa2 (sf)

-- EUR21,000,000 Class C Senior Secured Deferrable Floating
    Rate Notes due 2030, Assigned A2 (sf)

-- EUR17,500,000 Class D Senior Secured Deferrable Floating
    Rate Notes due 2030, Assigned Baa2 (sf)

-- EUR22,750,000 Class E Senior Secured Deferrable Floating
    Rate Notes due 2030, Assigned Ba2 (sf)

-- EUR9,250,000 Class F Senior Secured Deferrable Floating Rate
    Notes due 2030, Assigned B2 (sf)

RATINGS RATIONALE

Moody's definitive ratings of the rated notes address the
expected loss posed to noteholders by the legal final maturity of
the notes in 2030. The definitive ratings reflect the risks due
to defaults on the underlying portfolio of loans given the
characteristics and eligibility criteria of the constituent
assets, the relevant portfolio tests and covenants as well as the
transaction's capital and legal structure. Furthermore, Moody's
is of the opinion that the collateral manager, Onex Credit
Partners, LLC, ("Onex Credit") has sufficient experience and
operational capacity and is capable of managing this CLO.

OCP Euro CLO 2017-1 Designated Activity Company is a managed cash
flow CLO. At least 90% of the portfolio must consist of senior
secured loans and senior secured bonds. The portfolio is expected
to be 80% ramped up as of the closing date and to be comprised
predominantly of corporate loans to obligors domiciled in Western
Europe.

Onex Credit Partners, LLC is the portfolio manager. Onex Credit
Partners Europe LLP is the portfolio sub-manager and will manage
the CLO. It will direct the selection, acquisition and
disposition of collateral on behalf of the Issuer and may engage
in trading activity, including discretionary trading, during the
transaction's four-year reinvestment period. Thereafter,
purchases are permitted using principal proceeds from unscheduled
principal payments and proceeds from sales of credit improved and
credit risk obligations, and are subject to certain restrictions.

In addition to the six classes of notes rated by Moody's, the
Issuer issued EUR 38.25M of subordinated notes, which will not be
rated.

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

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

The rated notes' performance is subject to uncertainty. The
notes' performance is sensitive to the performance of the
underlying portfolio, which in turn depends on economic and
credit conditions that may change. Onex Credit's investment
decisions and management of the transaction will also affect the
notes' performance.

Loss and Cash Flow Analysis:

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

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

Par Amount: EUR 350,000,000

Diversity Score: 35

Weighted Average Rating Factor (WARF): 2695

Weighted Average Spread (WAS): 3.7%

Weighted Average Coupon (WAC): 5.5%

Weighted Average Recovery Rate (WARR): 42%

Weighted Average Life (WAL): 8 years

Moody's has analysed the potential impact associated with
sovereign related risk of peripheral European countries. As part
of the base case, Moody's has addressed the potential exposure to
obligors domiciled in countries with local currency country risk
ceiling of A1 or below. For countries which are not member of the
European Union, the foreign currency country risk ceiling applies
at the same levels under this transaction. Following the
effective date, and given the portfolio constraints and the
current sovereign ratings in Europe, such exposure may not exceed
10% of the total portfolio. As a result and in conjunction with
the current foreign government bond ratings of the eligible
countries, as a worst case scenario, a maximum 5% of the pool
would be domiciled in countries with local currency country
ceiling of Baa1 or below. The remainder of the pool will be
domiciled in countries which currently have a local or foreign
currency country ceiling of Aaa or Aa1 to Aa3. Given this
portfolio composition, the model was run with different target
par amounts depending on the target rating of each class as
further described in the methodology. The portfolio haircuts are
a function of the exposure size to peripheral countries and the
target ratings of the rated notes and amount to 0.75% for the
Class A notes, 0.5% for the Class B notes, 0.375% for the Class C
and 0% for Classes D, E, and F notes.

Stress Scenarios:

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

Percentage Change in WARF: WARF + 15% (to 3099 from 2695)

Ratings Impact in Rating Notches:

Class A Senior Secured Floating Rate Notes: 0

Class B Senior Secured Floating Rate Notes: -2

Class C Senior Secured Deferrable Floating Rate Notes: -2

Class D Senior Secured Deferrable Floating Rate Notes: -2

Class E Senior Secured Deferrable Floating Rate Notes: -1

Class F Senior Secured Deferrable Floating Rate Notes: 0

Percentage Change in WARF: WARF +30% (to 3504 from 2695)

Ratings Impact in Rating Notches:

Class A Senior Secured Floating Rate Notes: -1

Class B Senior Secured Floating Rate Notes: -3

Class C Senior Secured Deferrable Floating Rate Notes: -4

Class D Senior Secured Deferrable Floating Rate Notes: -3

Class E Senior Secured Deferrable Floating Rate Notes: -2

Class F Senior Secured Deferrable Floating Rate Notes: -2

Methodology Underlying the Rating Action:

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


POLYUS FINANCE: Moody's Affirms Ba1 Rating on $800MM Notes
----------------------------------------------------------
Moody's Investors Service has affirmed the Ba1 (LGD 3) rating of
the $800 million senior unsecured notes due 2023 issued by Polyus
Finance Plc (the Notes), an indirect wholly-owned subsidiary of
Polyus Gold International Limited (Polyus Gold; Ba1 negative).
Polyus Gold's Ba1 corporate family rating, Ba1-PD probability of
default rating and the Ba1 (LGD 3) rating on Polyus Gold's $500
million senior unsecured notes due 2022 are unchanged. The
outlook is negative.

The rating action follows the substitution of the Notes issuer,
as a result of which all rights and obligations under the Notes
were transferred from Polyus Gold to Polyus Finance Plc on
April 28, 2017.

RATINGS RATIONALE

The affirmation of the Notes' rating reflects the fact that after
the issuer substitution (1) the Notes will continue to rank pari
passu with other unsecured and unsubordinated obligations of
Polyus Gold's group; and (2) the Notes' guarantee structure
continues to include the guarantee provided by Polyus Gold's key
operating subsidiary, Joint-Stock Company Gold-Mining Company
Polyus.

RATIONALE FOR NEGATIVE OUTLOOK

The negative outlook is in line with the negative outlook on
Polyus Gold's ratings.

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was Global Mining
Industry published in August 2014.

Jersey-domiciled Polyus Gold is a holder of a 93.14% effective
stake in Russia-based PJSC Polyus, which is one of the lowest-
cost gold producers globally, with six operating mines and one
development project in Russia. In 2016, the company produced 1.97
million ounces of gold, ranking as the eighth-largest producer
globally (according to the company's estimate), and generated
revenues of $2.5 billion and reported EBITDA of $1.5 billion.
Polyus Gold is beneficially controlled by Mr. Said Kerimov.
Polyus Gold owns a 91.73% stake in PJSC Polyus, while a 1.51%
stake in PJSC Polyus are treasury shares and 6.76% is in free
float on the Moscow Exchange and ADRs in the OTC market.



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


ITAU UNIBANCO: XP Investimento Deal No Impact on Fitch 'B' IDR
--------------------------------------------------------------
Fitch Ratings does not expect the acquisition of XP Investimentos
S.A. (XP, not rated by Fitch) by Itau Unibanco Holding S.A. (IUH,
'BB+'/Outlook Negative) to impact IUH's ratings. XP's size is
small relative to IUH, and Fitch anticipates that IUH will
maintain strong capital and liquidity ratios even after the
acquisition is completed.

On May 11, 2017, IUH informed the market that its subsidiary Itau
Unibanco S.A. entered into a Share Purchase Agreement for the
acquisition of 49.9% of the total share capital of XP by means of
a capital increase of BRL600 million and the acquisition of XP's
shares held by the sellers for the amount of BRL5.7 billion. The
acquisition of this minority interest in XP would not result in a
change in control as IUH has stated that Itau Unibanco S.A. shall
act as a minority shareholder and shall not have influence over
the commercial and operational policies of XP.

The acquisition, which is still subject to certain conditions
precedent including regulatory approvals, is viewed by Fitch as a
credit positive as it is in line with IUH's continued strategy of
earnings diversification by strengthening and complementing its
existing fee business franchise. The deals would also reinforce
the group's position in the growing digital segment, which is
important since Brazil's recession continues to weigh on credit
activity.

The purchase would have a minor impact on IUH's liquidity and on
its benchmark Fitch Core Capital Ratio (FCC). The FCC ratio would
only experience a potential drop of approximately 55 - 60 bps,
which Fitch believes would be quite manageable for IUH. At Dec.
31, 2016 IUH had a strong FCC of nearly 13.5%, which was the
highest of the last five fiscal years. As further evidence of
sufficient liquidity, IUH announced earlier this year that it has
implemented a new dividend net payout ratio between 35% to 45%
(vs. a historical ratio of 30% to 35%).

After the Corpbanca investment in Chile and Colombia and the
potential purchase of the retail arm of Citibank in Brazil
(currently pending regulatory approvals), there are currently
limited cost-effective investment opportunities both overseas and
in Brazil that would fit IUH's strategies.

XP was established in 2001 and is currently the largest
independent brokerage company in Brazil, with more than BRL 65
billion under custody and more than 230 thousand clients. XP is
also the third largest brokerage company in the country in stock
trading volume. In addition to its growing operations in Brazil,
it has offices in New York, Miami, London and Geneva.

Fitch currently rates IUH as follows:

-- Long-term foreign and local currency Issuer Default Ratings
    (IDRs) 'BB+', Outlook Negative;
-- Short-term foreign and local currency IDRs 'B';
-- National long-term rating 'AAA(bra)', Outlook Stable;
-- National short-term rating 'F1+(bra)';
-- Viability rating 'bb+';
-- Support rating '3';
-- Support rating floor 'BB-'.



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


SKOPJE MUNICIPALITY: S&P Puts 'BB-' ICR on CreditWatch Negative
---------------------------------------------------------------
S&P Global Ratings placed its 'BB-' issuer credit rating on the
Macedonian capital, the Municipality of Skopje, on CreditWatch
with negative implications.

                           CREDITWATCH

The CreditWatch placement reflects that S&P could lower the
rating on Skopje by multiple notches over the coming three months
if it saw continued uncertainty pertaining to Macedonia's local
governments' mandates.  This uncertainty could limit Skopje's
ability to perform key municipal tasks, and risk timely debt
payment should the municipal authorities not be endowed with the
power to perform on their responsibilities until new local
elections are held.  S&P could resolve the CreditWatch if the
central government found a solution for the current unclear
situation or S&P had reason to believe that local governments,
and in particular Skopje, could function legitimately over the
coming months despite having no electoral mandate.

                             RATIONALE

The rating on the Municipality of Skopje is constrained by a
volatile and unbalanced institutional framework under which the
municipality operates in Macedonia.  The current ambiguous
situation at the central government has increased the risks to
Skopje's operations -- as it has for all local governments across
the country.  Despite this, the rating continues to be supported
by the city's relatively low, albeit increasing, debt levels and
its steady economic growth prospects -- which are likely to be
reflected in a reasonable pace of growth in the municipality's
operational revenues.  This should allow Skopje to maintain solid
budgetary results with sustainable operating balances.  The
city's liquidity position remained strong in 2016, but as the
size and timing of future sales is hard to predict given low
visibility on unsold office space and likely sales prices, S&P
anticipates a gradual weakening of the municipality's liquidity
position over 2017-2019, alongside lower associated operating and
capital revenues.

Institutional set-up is not preventing uncertainties, but not yet
affecting economic prospects.  Following the December 2016
elections, Macedonia has, to date, failed to put in place a
functioning government.  With this, the deadline for initiating
local elections has passed without action.  The Macedonian Law on
Local Governments stipulates that local elections are to be held
every four years, with the Macedonian Electoral Code specifiying
that they should fall into the first half of May.  As the
Electoral Code does not contain any rules pertaining to the
continuation of local governments' mandates until new elections
are upheld, there now appears to be a policital vacuum.  This
puts into question the legal validity of decisions and operations
undertaken at the municipal level over the coming weeks and
potentially months.  The Macedonian parliament could in theory
call local elections and with this also change the Electoral Code
to extend municipal level council members and mayors mandates.
However, so far this has not occurred.  Similarly S&P understands
the Ministry of Local Governments is seeking a solution for the
situation but has not yet concluded upon a resolution.  S&P
believes this imposes political and operational risks to the
municipal tier overall as well as for the particular case of the
city of Skopje.  In addition, political division in the country
may weigh further on the intergovernmental relationship, in
particular should local and central government composition
differ. Going foward, S&P may reflect this by revising our
institutional framework assement for local governments in
Macedonia or implementing a qualifier for the increased risks of
rapidly rising political uncertainty.

S&P's view of Skopje's limited revenue and expenditure
flexibility is due to the central government's control over
municipalities' finances within the context of the Macedonian
municipal framework. Furthermore, the predictability of
Macedonia's institutional set-up is affected by the central
government's fiscal policy.  A high proportion of revenues
depends on central government decisions, such as setting the base
or range for most local tax rates.  S&P notes that further fiscal
decentralization to transfer more responsibility to Macedonian
municipalities for policing and health care has not progressed
markedly in recent years.  The provision of most services is
funded with transfers from the central government's budget, and
local governments have very limited autonomy in managing their
revenues and expenditures.

The transparency of medium-term plans is weak, in S&P's opinion.
The audits for Skopje's accounts are mandated by an independent
government body reporting to parliament, not by independent audit
firms.  The volatility of the real estate market further
constrains the predictability of the municipality's budgetary
performance.  Historically, about one-third of Skopje's revenues
is derived, both directly and indirectly, from real estate sales.

S&P's view of the city's financial management is weak because the
municipality lacks medium-term financial planning for the core
budget and its enterprises, and outcomes very often differ
markedly from annual budgets.  Capital revenues are often
overestimated while capital expenditures are routinely well below
the budgeted amount.  S&P understands that, to some extent, this
reflects considerations outside of the Skopje administration's
direct control, such as delays owing to lengthy public
procurement procedures.  Nevertheless, the city government has a
tight grip on operating expenditure.  Moreover, it arranges
funding from multilateral financial institutions directly and via
the state treasury in advance for capital projects.

Skopje has low income and wealth levels compared to
internationally.  S&P projects national GDP per capita to average
just US$5,500 over 2017-2019.  Nevertheless, S&P acknowledges the
relative strength of the city's economy within the country,
hosting the manufacturing units of export-oriented foreign
companies as well as national companies that tend to be
headquartered in Skopje.  S&P also expects the local economy to
gradually expand in line with the national economy, achieving
annual GDP growth of about 2.5% over 2017-2019.  S&P believes
that these steady economic developments are likely to buoy the
city's budget performance.  S&P projects the operating surplus to
gradually narrow toward 21% of operating revenues by 2019 from
exceptional 28% in 2016.

Budget execution remains strong, but possible volatility still a
concern Skopje has shown another strong budgetary year in 2016,
surpassing S&P's last review expectations on stronger revenue
intake and lower expenditure growth.  With this, the city posted
not only a sound operating surplus, but also maintained a
positive balance after capital accounts, though at decreased
levels compared with 2015 due to investments increasing.  While
tax revenues showed year-on-year growth, non-tax items
underperformed both budget and year-end 2015 results.  S&P
expects tax revenues to stabilize in 2017 and beyond and with
this overall revenue growth to slow down.  Operating expenditures
have developed in line with expectations, while some
underspending on goods and services can be observed for 2016.
S&P expects 2017 expenditures to increase at a higher pace than
last year.  Similarly, S&P believes investment expenditures will
increase, whereby capital revenues should remain volatile and are
likely to underperform the city's budget.  Overal this leads to
deficits after capital accounts under S&P's forecast through
2019, while roughly stable with its previous view.

These deficits after capital accounts average about 6% over 2017-
2019 and lead to steady debt accumulation going forward, and in
S&P's base-case scenario.  The central government has allowed
Macedonian municipalities to take on debt only in recent years,
and borrowing limits are gradually being relaxed.  S&P forecasts
that Skopje's tax-supported debt will increase to 25% of
consolidated operating revenues by year-end 2017 and over 30% by
year-end 2019 in S&P's base-case scenario.

Skopje's municipal company sector constitutes a credit weakness,
in S&P's view.  Several municipal companies have investment needs
and large payables.  Additional contingent liabilities may come
from the municipality's plans to foster infrastructure
development through public-private partnerships.

Skopje's debt service coverage ratio is high, with cash holdings-
-adjusted for the deficit after capital accounts--substantially
exceeding 200% of debt falling due over the coming 12 months.
Nonetheless, S&P believes this ratio to be volatile and inflated
by 2015 sales of office income and fees from land sales.  Going
forward, with limited visibility on the potential sales of
commercial space, S&P anticipates a gradual reversal of the
municipality's strong liquidity position to previously adequate
levels.  Nonetheless, the city's internal cash flow-generating
capability remains strong, with an operating balance before
interest exceeding annual debt service by 4x. Skopje holds its
cash in an account at the state treasury.

These positive factors are mitigated by the city's access to
external liquidity, which S&P views as limited owing to the
relatively immature local banking system and capital markets for
municipal debt.



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


ARES EUROPEAN CLO III: Moody's Affirms B1 Rating on Class E Notes
-----------------------------------------------------------------
Moody's Investors Service has upgraded the ratings on the
following notes issued by Ares European CLO III B.V.:

-- EUR21M Class C Senior Secured Deferrable Floating Rate Notes
    due 2024, Upgraded to Aaa (sf); previously on Oct 5, 2016
    Upgraded to Aa1 (sf)

-- EUR19M Class D Senior Secured Deferrable Floating Rate Notes
    due 2024, Upgraded to A1 (sf); previously on Oct 5, 2016
    Upgraded to Baa1 (sf)

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

-- EUR49.5M (Current outstanding balance of EUR29.4M) Class A3
    Senior Secured Floating Rate Notes due 2024, Affirmed Aaa
    (sf); previously on Oct 5, 2016 Affirmed Aaa (sf)

-- EUR21M Class B Senior Secured Deferrable Floating Rate Notes
    due 2024, Affirmed Aaa (sf); previously on Oct 5, 2016
    Affirmed Aaa (sf)

-- EUR22M Class E Senior Secured Deferrable Floating Rate Notes
    due 2024, Affirmed B1 (sf); previously on Oct 5, 2016
    Affirmed B1 (sf)

Ares European CLO III B.V., issued in July 2007, is a
collateralised loan obligation (CLO) backed by a portfolio of
mostly high-yield senior secured European loans. The portfolio is
managed by Ares Management Limited. The transaction's
reinvestment period ended in August 2014.

RATINGS RATIONALE

The rating actions on the notes are primarily a result of the
deleveraging of the Class A Notes following amortisation of the
underlying portfolio since the last rating action in October
2016.

The Classes A1 and A3 Notes have paid down by approximately EUR26
million (7.30% of original amount) since the last rating action
in October 2016 and EUR217.59 million (61.03% of original amount)
since closing. As a result of the deleveraging, over-
collateralisation (OC) has increased. According to the trustee
report dated April 2017 the Class A, Class B, Class C, Class D
and Class E OC ratios are reported at 395.29%, 230.62%, 162.80%,
128.59% and 103.43% compared to September 2016 levels of 264.76%,
192.00%, 150.61%, 126.03% and 106.00%, respectively.

The key model inputs Moody's uses in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. In its base
case, Moody's analysed the underlying collateral pool as having a
performing par of EUR81.04 million and USD11.15 million and
principal proceeds balance of EUR17.39 million and USD5.81
million, defaulted par of EUR3 million, a weighted average
default probability of 17.74% (consistent with a WARF of 2587), a
weighted average recovery rate upon default of 47.04% for a Aaa
liability target rating, a diversity score of 20 and a weighted
average spread of 3.59%.

Moody's notes that the 02 May 2017 trustee report was published
at the time it was completing its analysis of the April 03, 2017
data. Key portfolio metrics such as WARF, diversity scores and OC
ratios have not materially changed between these dates.

The default probability derives from the credit quality of the
collateral pool and Moody's expectation of the remaining life of
the collateral pool. The estimated average recovery rate on
future defaults is based primarily on the seniority of the assets
in the collateral pool. Moody's generally applies recovery rates
for CLO securities as published in "Moody's Approach to Rating SF
CDOs". In some cases, alternative recovery assumptions may be
considered based on the specifics of the analysis of the CLO
transaction. In each case, historical and market performance and
a collateral manager's latitude to trade collateral are also
relevant factors. Moody's incorporates these default and recovery
characteristics of the collateral pool into its cash flow model
analysis, subjecting them to stresses as a function of the target
rating of each CLO liability it is analysing.

Methodology Underlying the Rating Action:

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

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

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

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

Additional uncertainty about performance is due to the following:

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

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

* Long-dated assets: The presence of assets that mature beyond
the CLO's legal maturity date exposes the deal to liquidation
risk on those assets. Moody's assumes that, at transaction
maturity, the liquidation value of such an asset will depend on
the nature of the asset as well as the extent to which the
asset's maturity lags that of the liabilities. Liquidation values
higher than Moody's expectations would have a positive impact on
the notes' ratings.

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

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



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


BANK TGB: Liabilities Exceed Assets, Assessment Shows
-----------------------------------------------------
The provisional administration to manage JSC BANK TGB as
appointed by Bank of Russia Order No. OD-627, dated March 13,
2017, following banking license revocation, inspected the Bank
and found a shortage of cash to a total of RUR1.7 billion, USD6.7
million and EUR1 million, according to the press service of the
Central Bank of Russia.

In addition, the provisional administration found that in the
run-up to the revocation of the banking license, the Bank issued
loans to individuals in the total amount of over RUR600 million
from the funds, which had been allegedly raised from individuals
during the BoR-imposed ban to attract deposits.

The provisional administration estimates the value of the Bank
assets to total under RUR1.7 billion versus RUR7.8 billion of its
liabilities to creditors.

On March 27, 2017, the Bank of Russia lodged a legal application
to the Court of Arbitration of the city of Moscow on recognising
the Bank insolvent (bankrupt).  The hearing of this application
is scheduled on June 19, 2017.

The Bank of Russia submitted the information on the operations
performed by former management and owners of JSC BANK TGB which
bear the evidence of criminal offence to the Prosecutor General's
Office of the Russian Federation, the Ministry of Internal
Affairs of the Russian Federation and Russian Investigative
Committee for consideration and procedural decision making.


CB INFORMPROGRESS: Placed on Provisional Administration
-------------------------------------------------------
The Bank of Russia, by its Order No. OD-1236, dated May 15, 2017,
revoked the banking license of Moscow-based credit institution
Commercial Bank of Assistance for Development of Trade and Supply
Informprogress (limited liability company) or CB Informprogress
LLC from May 15, 2017.  According to the financial statements, as
of April 1, 2017, the credit institution ranked 575th by assets
in the Russian banking system.

The business model of CB Informprogress LLC was largely designed
to serve the interests of its owners.  The bank placed funds in
low-quality assets, including in construction, and inadequately
assessed the risks assumed.  Following the creation of required
loss provisions, the credit institution's equity capital fell
below the amount of its registered authorised capital.  CB
Informprogress LLC failed to timely comply with the Bank of
Russia's instruction on aligning its authorised and equity
capital.

The Bank of Russia repeatedly applied supervisory measures to the
credit institution, including restrictions on household deposit
taking.

The management and owners of CB Informprogress LLC have not taken
effective measures to bring its activities back to normal.  Under
these circumstances, the Bank of Russia performed its duty on the
revocation of the banking licence of the credit institution in
accordance with Article 20 of the Federal Law "On Banks and
Banking Activities".

The Bank of Russia's decision resulted from the credit
institution's failure to comply with federal banking laws and
Bank of Russia regulations, its failure to meet the Bank of
Russia's demand to align its authorised and equity capital within
the timeframe stipulated in paragraph 4.1 of Chapter IX of the
Federal law "On Insolvency (Bankruptcy)", and given the repeated
application over the past year of supervisory measured envisaged
by the Federal law "On the Central Bank of the Russian Federation
(Bank of Russia)".

The Bank of Russia, by its Order No. OD-1237, dated May 15, 2017,
appointed a provisional administration to CB Informprogress LLC
for the period until the appointment of a receiver pursuant to
the Federal Law "On the Insolvency (Bankruptcy)" or a liquidator
under Article 23.1 of the Federal Law "On Banks and Banking
Activities".  In accordance with federal laws, the powers of the
credit institution's executive bodies are suspended.

CB Informprogress LLC is a member of the deposit insurance
system.  The revocation of the banking license is an insured
event as stipulated by Federal Law No. 177-FZ "On the Insurance
of Household Deposits with Russian Banks" in respect of the
bank's retail deposit obligations, as defined by law.  The said
Federal Law provides for the payment of indemnities to the bank's
depositors, including individual entrepreneurs, in the amount of
100% of the balance of funds but no more than a total of RUR1.4
million per one depositor.


INTERCOOPBANK JSC: Placed on Provisional Administration
-------------------------------------------------------
The Bank of Russia, by its Order No. OD-1238, dated May 15, 2017,
revoked the banking license of Moscow-based credit institution
Joint-stock Commercial Bank INTERCOOPBANK (joint-stock company)
from May 15, 2017, according to the press service of the Central
Bank of Russia.  According to the financial statements, as of
April 1, 2017, the credit institution ranked 573rd by assets in
the Russian banking system.

JSCB INTERCOOPBANK JSC has long been in the purview of the Bank
of Russia due to the bank's transit and dubious transactions
connected with cash out transactions and overseas money diversion
under securities transactions.  The high involvement of JSCB
INTERCOOPBANK JSC in such suspicious operations despite the
supervisor's repeated measures aimed at their suppression, has
demonstrated the unwillingness on the part of the bank's
management and owners to normalise its activities.  Under the
circumstances, the Bank of Russia took a decision to withdraw
JSCB INTERCOOPBANK JSC off the banking services market.

The Bank of Russia took this decision due the credit
institution's failure to comply with federal banking laws and
Bank of Russia regulations, repeated violations within one year
of the requirements stipulated by Article 7 (except for Clause 3
of Article 7) of the Federal Law "On Countering the Legalisation
(Laundering) of Criminally Obtained Incomes and the Financing of
Terrorism", and the requirements of Bank of Russia regulations
issued in compliance with the indicated Federal Law, and taking
into account repeated applications within one year of measures
envisaged by the Federal Law "On the Central Bank of the Russian
Federation (Bank of Russia)".

The Bank of Russia, by its Order No. OD-1239, dated May 15, 2017,
appointed a provisional administration to JSCB INTERCOOPBANK JSC
for the period until the appointment of a receiver pursuant to
the Federal Law "On the Insolvency (Bankruptcy)" or a liquidator
under Article 23.1 of the Federal Law "On Banks and Banking
Activities".  In accordance with federal laws, the powers of the
credit institution's executive bodies are suspended.

JSCB INTERCOOPBANK JSC is a member of the deposit insurance
system.  The revocation of the banking license is an insured
event as stipulated by Federal Law No. 177-FZ "On the Insurance
of Household Deposits with Russian Banks" in respect of the
bank's retail deposit obligations, as defined by law.  The said
Federal Law provides for the payment of indemnities to the bank's
depositors, including individual entrepreneurs, in the amount of
100% of the balance of funds but no more than a total of RUR1.4
million per one depositor.


M2M PRIVATE BANK: Bank of Russia Inspects Financial Standing
------------------------------------------------------------
The provisional administration of PJSC M2M Private Bank appointed
by Bank of Russia Order No. OD-4399, dated December 9, 2016,
following the revocation of its banking license, held the
inspection of the bank's financial standing that revealed low
quality of the bank's loan portfolio which resulted from the
bank's lending to companies with poor financial position,
including lending to companies controlled by the bank's owners,
some of which are registered and located abroad where it is not
required to disclose and provide information when conducting
financial operations.

Moreover, the bank acquired a numismatic collection from the
beneficiary owner at an elevated price with further offsetting of
its cost through assignment of overdue debt.

On February 22, 2017, the Arbitration Court of the City of Moscow
recognised the PJSC M2M Private Bank bankrupt.  The State
Corporation Deposit Insurance Agency was appointed as a receiver.

The Bank of Russia submitted the information on financial
transactions bearing the evidence of the criminal offence
conducted by the former management and owners of PJSC M2M Private
Bank to the Prosecutor General's Office of the Russian
Federation, the Ministry of Internal Affairs of the Russian
Federation and the Investigative Committee of the Russian
Federation for consideration and procedural decision making.


SVERDLOVSK REGION: Fitch Affirms 'BB+' LT Foreign-Currency IDRs
---------------------------------------------------------------
Fitch Ratings has affirmed Russian Sverdlovsk Region's Long-Term
Foreign- and Local-Currency Issuer Default Ratings (IDRs) at
'BB+' with Stable Outlooks and Short-Term Foreign-Currency IDR at
'B'. The region's outstanding senior unsecured domestic debt has
been affirmed at BB+.

KEY RATING DRIVERS

The ratings reflect the Fitch's expectation that Sverdlovsk will
maintain a moderate debt level and satisfactory operating
performance with an operating balance sufficient for interest
payment coverage. The ratings also factor in the region's
developed industrialised economy, albeit exposed to business
cycle volatility, and weak institutional framework for Russian
sub-nationals.

Fitch forecasts Sverdlovsk's operating balance will hover at
around 6%-7% of operating revenue in 2017-2019 after a sound 8.4%
in 2016. The moderate deterioration of operating performance
reflects negative changes in national tax regulation, i.e.
reduced share allocation of corporate income tax and excises on
oil-refinery products. Operating revenue growth in 2017 will also
remain fragile due to the slow pace of the local economy
recovery.

The region managed to narrow the fiscal deficit to 3.1% of total
revenue in 2016 after a period of a high deficit, averaging 12.8%
in 2013-2015. Fitch expects the region's deficit before debt
variation will remain moderate over the medium term, in the range
of 3%-4% of total revenue due to strict control of expenditure.

However, Fitch notes that the region's expenditure flexibility is
limited, as the scope for capex reduction is almost exhausted,
with the share of capital outlays decreasing to 12% of total
spending in 2016. Fitch expects the region will maintain capex at
below 10% of total expenditure in 2017-2019, lagging its national
peers and leaving little room for expenditure flexibility.

The region's direct risk was almost unchanged in 2016 relative to
current revenue and accounted for 37.8% (2015: 38.1%). Fitch
projects Sverdlovsk's direct risk will remain below 50% of
current revenue over the medium term. The region's self-financing
capacity will remain moderate as the current balance and capital
revenue will cover 55%-60% of capex in the medium term, leading
to market funding requirements.

In its debt policy, Sverdlovsk relies on medium-term bank loans
(65% of direct risk at April 1, 2017), followed by budget loans
(27%), with the residual related to outstanding domestic bonds
(8%). About 81% of maturities are spread over 2017-2019. The
weighted average maturity of the debt is estimated at 2.7 years,
which is short compared with international peers. The region is
planning to tap the domestic bond market in 2017 and replace part
of the medium-term bank loans with long-term bonds. This will
ease annual refinancing pressure and extend the region's debt
repayment profile.

The region has a developed industrial economy weighted towards
the metallurgical and machine-building sectors. Its wealth
metrics are above the median for Russian regions with GRP per
capita 25% above the median in 2015. However, the overall
concentration on a few sectors of the processing industry exposes
the region's revenue to economic cycles. According to preliminary
estimates, regional GRP grew by 1.9% in 2016, in contrast to the
national economic decline of 0.2%.

The region's credit profile remains constrained by the weak
institutional framework for Russian local and regional
governments (LRGs), which has a shorter record of stable
development than many of its international peers. Weak
institutions lead to lower predictability of Russian LRGs'
budgetary policies, which are subject to the federal government's
continuous reallocation of revenue and expenditure
responsibilities within government tiers.

RATING SENSITIVITIES

A weak operating balance that was insufficient to cover interest
expenditure and continuous growth of direct risk toward 60% of
current revenue would lead to a downgrade.

A sound budgetary performance with operating balance at above 10%
of operating revenue, accompanied by sound debt metrics, with
direct risk-to-current balance (2016: 5.9x) below average debt
maturity could lead to an upgrade.


YUKOS OIL: Was Unlawfully Bankrupted by Russia, Dutch Court Rules
-----------------------------------------------------------------
The Yukos Foundation issued a statement noting a ruling from the
Amsterdam Court of Appeal on the Yukos Oil Company bankruptcy.
The Foundation said:

"The Amsterdam Court of Appeal [on May 9, 2017] ruled that the
Russian Federation unlawfully bankrupted Yukos Oil Company. The
court concluded that the Russian authorities 'not only violated
the Russian (tax) rules, but also that this was done with the
apparent intent to make Yukos insolvent and ultimately bankrupt
Yukos.' The Russian bankruptcy cannot be recognized in The
Netherlands, the court ruled, as that would 'violate public
order.' The Dutch Yukos Foundation that was set up to protect
Yukos foreign assets is now one step closer to distributing
additional assets to the former shareholders of Yukos Oil.

"'The Yukos Foundation applauds the ruling in this case, which
has exposed the extent to which the Russian Federation will go to
manipulate the legal process and ignore the rule of law in order
to accomplish their aims,' said Steve Theede, former Yukos CEO,
and now a member of the Foundation's board of directors.

"The Amsterdam Court of Appeal's decision is in favor of one of
the subsidiaries of Yukos Oil, the Dutch company Yukos Finance
BV, worth hundreds of millions of dollars. Russian company
Promneftstroy argued it owned Yukos Finance, which the court
ruled it bought in a rigged bankruptcy auction. Promneftstroy's
claims were all dismissed.

"'The Foundation -- which has spent over 10 years fighting
Promneftstroy's claim to ownership of the Dutch entity in order
to protect Yukos' financial assets and return them to
shareholders -- believes today's ruling should resolve the case
once and for all,' Theede added.

"The Foundation was set up to protect the assets of the Yukos
group outside Russia for the purpose of ultimately distributing
the monies to creditors and former shareholders of Yukos, who
were harmed by the unlawful expropriation. The ruling shows that
Yukos' management's strategy to seek the protection of
independent courts, outside of Russia, pays off,' said Eelco
Meerdink, who represented Yukos in the proceedings. While
Promnefstroy may appeal the court's decision to the Supreme
Court, Meerdink said 'the Foundation is confident that this
judgment will be upheld.'

"Yukos, which was once Russia's largest oil company, was
bankrupted in 2006 after Russian authorities imposed back tax
claims and fines of $24 billion in what was widely seen as a
politically motivated assault on then-Yukos CEO Mikhail
Khodorkovsky. Former Yukos assets today form the bulk of state-
controlled Rosneft, the world's biggest public oil producer."

The Yukos Foundation was formed in 2005 to ensure that the assets
of the Yukos group outside Russia can be protected and
distributed fairly to the company's former creditors and
shareholders as soon as litigation regarding the entitlement to
such assets is favorably resolved.  The Foundation is identifying
and verifying Yukos shareholders in order to return financial
assets to them when legal challenges are completed.

                         About Yukos Oil

Headquartered in Moscow, Yukos Oil -- http://yukos.com/-- was an
open joint stock company under the laws of the Russian
Federation.  Yukos was involved in energy industry substantially
through its ownership of its various subsidiaries, which own or
are otherwise entitled to enjoy certain rights to oil and gas
production, refining and marketing assets.

The Company filed for Chapter 11 protection on Dec. 14, 2004
(Bankr. S.D. Tex. Case No. 04-47742), but the case was dismissed
on Feb. 24, 2005, by the Hon. Letitia Z. Clark.  A few days
later, the Russian Government sold its main production unit
Yugansk to a little-known firm Baikalfinansgroup for US$9.35
billion, as payment for US$27.5 billion in tax arrears for 2000-
2003.  Yugansk eventually was bought by state-owned Rosneft,
which is now claiming more than US$12 billion from Yukos.

On March 10, 2006, a 14-bank consortium led by Societe Generale
filed a bankruptcy suit in the Moscow Arbitration Court in an
attempt to recover the remainder of a US$1 billion debt under
outstanding loan agreements.  The banks, however, sold the claim
to Rosneft, prompting the Court to replace them with the state-
owned oil company as plaintiff.

On April 13, 2006, court-appointed external manager Eduard Rebgun
filed a chapter 15 petition in the U.S. Bankruptcy Court for the
Southern District of New York (Bankr. S.D.N.Y. Case No. 06-0775),
in an attempt to halt the sale of Yukos' 53.7% ownership interest
in Lithuanian AB Mazeikiu Nafta.

On May 26, 2006, Yukos signed a US$1.49 billion Share Sale and
Purchase Agreement with PKN Orlen S.A., Poland's largest oil
refiner, for its Mazeikiu ownership stake.  The move was made a
day after the Manhattan Court lifted an order barring Yukos from
selling its controlling stake in the Lithuanian oil refinery.

On Aug. 1, 2006, the Hon. Pavel Markov of the Moscow Arbitration
Court upheld creditors' vote to liquidate OAO Yukos Oil Co. and
declared what was once Russia's biggest oil firm bankrupt.

On Nov. 23, 2007, the Russian Trading System and Moscow
Interbank Currency Exchange stopped trading Yukos shares after
the company formally ceased to exist.  Mr. Rebgun completed the
company's liquidation process after Russia's Federal Tax Service
has entered Yukos' liquidation on the Uniform State Register of
Legal Entities.

As reported in the Troubled Company Reporter-Europe on Nov. 14,
2007, the Moscow Arbitration Court entered an order closing the
liquidation proceedings of Yukos, 15 months after it was declared
bankrupt on Aug. 1, 2006.



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


NOVA LJUBLJANSKA: S&P Raises Counterparty Credit Rating to 'BB'
---------------------------------------------------------------
S&P Global Ratings said that it raised its long-term counterparty
credit rating to 'BB' from 'BB-' on Slovenia-based Nova
Ljubljanska Banka D.D. (NLB).  The outlook remains positive.  At
the same time, we affirmed the short-term counterparty credit
rating at 'B'.

S&P also raised the issue rating on NLB's senior unsecured debt
to 'BB' from 'BB-'.

The rating action follows S&P's review of the Slovenian banking
sector and reflects ita view of reduced economic risks and
improved operating conditions for banks domiciled in the country.
S&P has revised its Banking Industry Country Risk Assessment
(BICRA) for Slovenia to group '6' from group '7'.  S&P observes
reduced economic imbalances in the Slovenian banking system,
prompting S&P to revise its economic risk score to '6' from '7'.
S&P's assessment of industry risk remains at '6', indicating its
view of relatively high risks.  The revised BICRA group score
results in a stronger anchor, S&P's starting point in assigning
an issuer credit rating, for NLB, which is now 'bb+' versus 'bb'
previously.

Slovenia has the highest GDP per capita in Central and Eastern
Europe.  S&P estimates that the economy will grow by 2.7% in 2017
and 2.4% in 2018 thanks to increasing domestic consumption and
solid net exports.

The nonfinancial corporate sector is still going through a strong
deleveraging and derisking period after the financial crisis hit
Slovenia in 2009.  Even though some industries remain highly
leveraged, the consolidated corporate debt-to-GDP ratio has
plunged to 50% in 2016 from a peak of 85% in 2009.

On aggregate, private-sector lending continues to shrink and
underpins S&P's assessment of an ongoing correction of Slovenia's
credit cycle.  Positively, nationwide inflation-adjusted real
estate prices have bottomed out since 2015, and credit losses
reached a record low of 0.4% of systemwide domestic loans in
2016. S&P sees the correction phase nearing an end and deem the
remaining impact on Slovenia's banking sector as limited.

S&P continues to expect that macroeconomic imbalances in the
economy will keep decreasing as the correction period phases out
and new lending resumes.  Further supporting S&P's assessment are
the abating corporate indebtedness, continued decline of
nonperforming loans (NPLs), an improvement of governance
standards in some of the corporate sectors, as well as the
government's ongoing privatization efforts.

Although S&P continues to see industry risk as relatively high,
it now views positively that, since the handover of banking
regulation to the Single Supervisory Mechanism in 2014, S&P
believes that Slovenia's banking system will benefit from the
supervisor's more proactive approach to reducing looming
imbalances and system risks.

                   NOVA LJUBLJANSKA BANKA D.D.

As of year-end 2016, 45% of NLB's exposure is to foreign
countries, most of which have a similar or weaker economic
environment than Slovenia's.  The weighted economic risk score
for NLB is weaker than that of a pure domestic bank, but not to
an extent that it weighs on S&P's initial assessment.  While S&P
don't expect a material change in NLB's geographical footprint
over the next 12 months, S&P highlights that its overall
assessment of NLB's credit quality would be sensitive to
expansion in higher risk countries.

S&P continues to view NLB's business position as adequate,
reflecting its dominant domestic market position and a
strengthened presence in South Eastern Europe (SEE).  The bank's
management is implementing several restructuring measures,
including improved risk management and governance standards since
the large-scale state intervention in 2013.  In S&P's view, the
planned partial privatization of NLB within 2017-2018 via an
initial public offering is likely to bolster the bank's business
position in the long term, but S&P don't anticipate a material
impact on the bank's profile in the next two years.

S&P assess NLB's capital and earnings as adequate, indicating
S&P's assumption that its risk-adjusted capital (RAC) ratio
before adjustments for the bank will remain at 9%-10% over the
next 12-18 months.  NLB's adjusted RAC ratio reached 9.6% in 2016
from 6.9% in 2015.  This marked improvement was largely thanks to
a reduction of highly risk-weighted NPLs.  S&P's RAC projection
incorporates the bank's objective to be more aggressive with
dividend payouts and targeted growth in SEE countries, which S&P
considers to be of higher risk.

NLB's risk position remains moderate, reflecting S&P's view that
its asset quality continues to compare poorly with that of its
peers operating in countries with similar economic risks, despite
progress in the workout of legacy NPLs and noncore assets, as
well as an improvement of risk management and lending and
governance standards.  The bank's reported gross NPLs stood at
13.8% of total loans as of Dec. 31, 2016, having decreased from
19.3% a year earlier, on the back of recoveries, write-offs, and
sales of nonperforming claims.  S&P expects further reduction of
the NPL stock, reflecting the economic recovery in Slovenia,
intensive workout efforts, repayments, and active market for NPL
sales.

S&P regards NLB's funding as average, reflecting the bank's
strong domestic retail franchise, which mainly comprise a stable
and diversified retail deposit.  The funding profile is similar
to other Slovenia-based banks that experience excessive inflows
of new retail deposits.

S&P now views NLB's liquidity position as strong thanks to the
bank's reduced reliance on short-term wholesale funding and its
high liquidity buffer, which mainly consists of cash and well-
diversified liquid debt securities.  S&P's ratio of broad liquid
assets to short-term wholesale funding reached 7.5x as of end-
2016.  The ratio is stronger than the majority of banks S&P
rates, pointing to its view that NLB will withstand adverse
market shocks without access to wholesale funding in the next 12
months.  S&P believes that NLB's subsidiaries in SEE are also
well equipped with strong liquidity and preserve a self-funded
profile.

                              OUTLOOK

The positive outlook on NLB reflects S&P's continued positive
assessment of economic prospects in Slovenia that could support
further improvement of NLB's asset quality and internal capital
generation capacity over the next year, contributing to the
improvement of the bank's credit profile.  In S&P's view, there
is at least a one-in-three likelihood that it could upgrade NLB
over the next 12 months.

S&P anticipates that further derisking of the corporate sector in
Slovenia will enhance NLB's overall asset quality and income
generation for its loan business.  S&P expects a further rundown
of NLB's NPL stock and noncore assets that enables new capacities
for lending and profit generation.

S&P could take a positive rating action if economic risks in
Slovenia diminish further, supporting a healthy operating
environment, and in turn, NLB's business position. A faster-than-
expected increase of NLB's capitalization or a significant drop
in nonperforming assets, which translated into a sustainable
increase in its RAC ratio beyond 10%, could also lead to an
upgrade.

S&P notes, however, that a positive rating action would hinge on
contained risks in NLB's foreign business.

S&P could revise the outlook to stable within the next 12 months
if it saw a material deterioration of the operating environment
in Slovenia or in NLB's main foreign markets.  This would hamper
NLB's earnings performance and heighten risks of a renewed build-
up of problem loans.  S&P could also revise the outlook to stable
if NLB were to expand aggressively into riskier SEE countries.

BICRA SCORE SNAPSHOT
                               To               From
BICRA Group                    6                7
Government Support             Uncertain        Uncertain

Economic Risk                  6                7
  Economic Resilience          3                3
  Economic Imbalances          3                4
  Credit Risk In The Economy   5                5
Economic Risk Trend            Positive         Positive

Industry Risk                  6                6
  Institutional Framework      4                4
  Competitive Dynamics         4                4
  Systemwide Funding           3                3
Industry Risk Trend            Positive         Stable

RATINGS SCORE SNAPSHOT
Nova Ljubljanska Banka D.D.
                               To                 From
Issuer Credit Rating           BB/Positive/B      BB-/Positive/B

SACP                           bb                 bb-

Anchor                         bb+                bb
  Business Position            Adequate (0)       Adequate (0)
  Capital and Earnings         Adequate (0)       Adequate (0)
  Risk Position                Moderate (-1)      Moderate (-1)
  Funding and                  Average and        Average and
  Liquidity                    Strong (0)         Adequate (0)

Support                       (0)                 (0)
  ALAC Support                (0)                 (0)
  GRE Support                 (0)                 (0)
  Group Support               (0)                 (0)
  Sovereign Support           (0)                 (0)

Additional Factors            (0)                 (0)

RATINGS LIST

Upgraded
                                        To            From
Nova Ljubljanska Banka D.D.
Counterparty Credit Rating             BB/Pos./B     BB-/Pos./B
Senior Unsecured                       BB            BB-



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


BANCO POPULAR LEASING: Moody's Rates Series B Notes (P)Caa2
-----------------------------------------------------------
Moody's Investors Service has assigned the following provisional
ratings to the notes to be issued by IM GRUPO BANCO POPULAR
LEASING 3, FT:

-- EUR880M Series A Notes due August 2050, Assigned (P)A2 (sf)

-- EUR220M Series B Notes due August 2050, Assigned (P)Caa2 (sf)

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

IM GRUPO BANCO POPULAR LEASING 3, FT is a cash securitization of
lease receivables granted by Banco Popular Espanol, S.A. ("Banco
Popular", Long Term Deposit Rating Ba3 Not on Watch, Long Term
Senior Unsecured Rating (P)B1 Not on Watch, Long Term
Counterparty Risk Assessment Ba2(cr) Not on Watch) and Banco
Pastor, S.A. (NR) to corporates, small and medium-sized
enterprises (SMEs) and self-employed individuals located in
Spain.

RATINGS RATIONALE

The ratings of the notes are primarily based on the analysis of
the credit quality of the underlying portfolio, the structural
integrity of the transaction, the roles of external
counterparties and the protection provided by credit enhancement.

The provisional pool analysed was, as of April 2017, composed of
a portfolio of 37,428 lease contracts granted to obligors located
in Spain. Most of the assets were originated between 2014 and
2016, and have a weighted average seasoning of 2.3 years and a
weighted average remaining term of 5.1 years. The securitised
portfolio includes different sub-pools characterised by the
nature of the leased assets: real estate (21.4%), equipment
(32.7%), vehicles (42.4%) and other (3.5%). The top three
industry sectors in the pool, in terms of Moody's industry
classification, are Transportation Cargo (26.6%), Construction &
Building (11.4%) and Beverage, Food & Tobacco (9.4%).
Geographically, the borrowers are located mostly in the regions
of Andalusia (19.1%), Catalonia (18.4%) and Madrid (16.1%). At
closing, any leases more than 30 days in arrears will be excluded
from the final portfolio. The securitized portfolio does not
include the so-called "residual value instalment", i.e. the final
instalment amount to be paid by the lessee (if such option is
chosen) to acquire full ownership of the leased asset.

The transaction benefits from a cash reserve which is funded at
closing and is equivalent to 3% of the original balance of the
pool of assets. This reserve fund provides liquidity protection
to the notes over the life of the transaction and credit
protection on the final maturity. In addition, Series A Notes
benefit from the subordination of Series B Notes, which represent
20% of the total issue.

In Moody's view, the credit positive features of this deal
include, among others: (i) the pool granularity with an effective
number of obligors exceeding 600, (ii) the portfolio
diversification across industry sectors and geographical regions;
(iii) the low exposure to the real estate development sector,
representing 5.4% of the pool volume, (iv) the short weighted
average life of the portfolio of 2.8 years. The transaction also
shows a number of credit weaknesses, including: (i) the
historical recovery data provided by Banco Popular and the
performance observed on its previous leasing transactions show
below average recoveries compared to the Spanish market; (ii)
high degree of linkage to Banco Popular acting as key
counterparty in the transaction in its role of servicer and
treasury account holder; (iii) absence of interest rate hedge
mechanism in place while the notes pay a floating coupon and
29.6% of the pool balance are fixed rate leases.

In its quantitative assessment, Moody's assumed an inverse normal
default distribution for this securitised portfolio due to its
granularity. The rating agency derived the default distribution,
namely the relevant main inputs such as the mean default
probability and its related standard deviation, via the analysis
of: (i) the characteristics of the loan-by-loan portfolio
information, complemented by the available historical vintage
data; (ii) the potential fluctuations in the macroeconomic
environment during the lifetime of this transaction; and (iii)
the portfolio concentrations in terms of industry sectors and
single obligors. Moody's assumed the cumulative default
probability of the portfolio to be equal to 11.2% over a weighted
average life of 2.8 years (equivalent to a B1 rating proxy), with
a coefficient of variation (CoV, i.e. the ratio of standard
deviation over mean default rate) of 35.6%. The rating agency has
assumed stochastic recoveries with a mean recovery rate of 35%
and a standard deviation of 20%. Given legal uncertainties to
access recovery proceeds on defaulted leases upon insolvency of
the originator, Moody's assumed a 15% stressed mean recovery rate
upon originator default. In addition, Moody's has assumed the
prepayments to be 10% per year. These assumptions correspond to a
portfolio credit enhancement of 21%.

Counterparty risks:

Banco Popular and Banco Pastor, S.A. will act as servicers of the
leases, while InterMoney Titulizacion, S.G.F.T., S.A. will be the
management company (Gestora) of the Issuer.

All of the payments under the assets in the securitised pool are
paid into the servicer's account and swept daily into an issuer
account held at Banco Santander S.A. (Spain) ("Banco Santander",
Long Term Deposit Rating A3 Not on Watch, Short Term Deposit
Rating P-2 Not on Watch). Moody's has considered one month of
lost collections upon insolvency of the servicer due to potential
commingling risk. In addition, Banco Popular acts as paying agent
and will hold the Issuer's treasury account which, two business
days before each monthly payment date, will receive the amounts
to be paid under the waterfall. Moody's has considered this
additional exposure to Banco Popular in its analysis.

The principal methodology used in these ratings was "Moody's
Approach to Rating ABS Backed by Equipment Leases and Loans"
published in December 2015.

Please note that on March 2017, Moody's released a Request for
Comment, in which it has requested market feedback on potential
revisions to its Methodology for Counterparty Risk in Structured
Finance. If the revised Methodology is implemented as proposed,
the Credit Rating on IM GRUPO BANCO POPULAR LEASING 3, FT may be
affected. Please refer to Moody's Request for Comment, titled
"Moody's Proposes Revisions to Its Approach to Assessing
Counterparty Risks in Structured Finance" for further details
regarding the implications of the proposed Methodology revisions
on certain Credit Ratings.

The ratings address the expected loss posed to investors by the
legal final maturity of the notes. Moody's ratings address only
the credit risk associated with the transaction, Other non-credit
risks have not been addressed but may have a significant effect
on yield to investors.

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

Factors or circumstances that could lead to a downgrade of the
ratings affected by action would be (1) worse-than-expected
performance of the underlying collateral; (2) an increase in
counterparty risk; (3) an increase in country risk.

Factors or circumstances that could lead to an upgrade of the
ratings affected by action would be the better-than-expected
performance of the underlying assets, a decline in counterparty
risk or decreased country risk.

Moody's also tested other set of assumptions under its Parameter
Sensitivities analysis. If the assumed default probability of
11.2% used in determining the initial rating was changed to 14.6%
and the recovery rate of 35% was changed to 25%, the model-
indicated ratings for Serie A and Serie B of A2(sf) and Caa2(sf)
would be Baa2(sf) and Ca(sf) respectively.

Parameter Sensitivities provide a quantitative, model-indicated
calculation of the number of notches that a Moody's-rated
structured finance security may vary if certain input parameters
used in the initial rating process differed. The analysis assumes
that the deal has not aged. It is not intended to measure how the
rating of the security might migrate over time, but rather, how
the initial rating of the security might differ as certain key
parameters vary.



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


UKRAINE: S&P Affirms 'B-/B' Sovereign Credit Ratings
----------------------------------------------------
S&P Global Ratings affirmed its 'B-/B' long- and short-term
foreign and local currency sovereign credit ratings on Ukraine.
The outlooks on the long-term foreign and local currency ratings
are stable.

At the same time, S&P affirmed the 'uaBBB-' Ukraine national
scale rating.

                            RATIONALE

The affirmation balances improved macroeconomic fundamentals and
significant progress made in financial and energy sector reforms
against the risks stemming from large principal and interest
payments due over S&P's forecast horizon through 2020.  In 2016,
the Ukrainian economy saw a strengthening recovery after a
significant contraction in 2015, as well as a sharp decline in
inflation.  The government also implemented key reforms that saw
the International Monetary Fund (IMF) disburse a new financing
tranche in April 2017.  At the same time, S&P's 'B-' long-term
rating captures the significant debt repayments Ukraine faces
over the forecast horizon, political challenges that could slow
the pace of reforms, and the growth-slowing blockade in the east
of the country.

A key drag on the ratings are the large principal and interest
repayments coming due over 2017-2020 of more than US$20 billion
(about 21% of 2017 GDP).  S&P expects that Ukraine will fulfil
its short-term sovereign debt obligations in 2017 (US$2.6
billion) and 2018 (US$3.9 billion) given donor funds, existing
foreign exchange and hryvna balances held by The National Bank of
Ukraine (NBU), and the government's ability to issue in both
domestic and international markets.  However, debt repayments in
2019 (US$7.5 billion) -- mostly the principal repayment of the
sovereign Eurobond and repayments to international financial
institutions (including US$1 billion to United States Agency for
International Development) -- remain dependent on the
government's ability to pass the reforms required by the IMF and
its ability to refinance some debt on the international market.
This year, S&P expects the Ukrainian government will issue a
Eurobond to test the market.  The effective interest rate on the
entire outstanding stock of general government debt has increased
with the increase in debt, although so has the weighted average
maturity of Ukraine's debt stock.

Large contingent liabilities, including two court cases relating
to a US$3 billion Eurobond issued to Russia and a $31.8 billion
litigation case filed by Gazprom against Naftogaz (for nonpayment
in a potential take-or-pay contract), threaten the fiscal outlook
(although Naftogaz has countersued Gazprom for a similarly large
amount) and debt sustainability.  The Naftogaz arbitration ruling
is due on June 30, 2017, while the conflict over the Russia-
bought Eurobond may drag on for longer.  However, S&P understands
that even an unfavorable ruling for Ukraine regarding the bond
would not impair its ability to service its restructured and
newly-issued bonds because a court-ordered freeze on these
payments is not legally possible.

Positively, Ukraine's economy registered a moderate recovery in
2016, after a significant contraction in 2015.  Real GDP grew by
2.3%, driven by a strong recovery in investments and a bumper
grain harvest in the fourth quarter.  S&P forecasts growth of
1.9% in 2017, despite challenging conditions in light of the
recent blockade in the east of the country.  S&P expects
consumption will strengthen over the forecast horizon on the back
of higher minimum wages, decelerating inflation, and gradual
labor market improvements.  S&P expects continuing growth as
reforms boost investment in key sectors such as agriculture and
construction, likely leading to GDP growth averaging 2.7% per
year in 2017-2020. In addition, the Deep Comprehensive Free Trade
Agreement with the EU, which came into force in 2016 and has
partly compensated for the declining exports to Russia, could
support export growth in the medium term.

S&P thinks the government will attempt pension and land reforms
(upon which further IMF disbursements hinge) despite the
politically sensitive nature of such reforms.  S&P also believes
Ukraine's western partners will remain engaged.  However, S&P
notes uncertainty around the adoption of land reform given strong
vested interests and the degree to which some opposition parties
are not in favor of the reforms.

At the same time, the one-year shield protecting Prime Minister
Volodymyr Groysman from a vote of no confidence expired in April,
giving rise to the risk of early elections or a potential cabinet
reshuffle.  S&P notes risks to reform progress and possible
delays in IMF disbursements if the current coalition government
of the Petro Poroshenko Bloc and the People's Front falters or
early elections are called.  Moreover, corruption in Ukraine
remains pervasive and progress in the fight against it is only
gradual.  In addition, tensions with Russia and the quasi-
separatist areas in the east remain and have deteriorated since
S&P's last review. The resultant trade blockade in the Donbass
region will drag on growth this year.

In 2016, Ukraine's current account deficit widened to US$3.8
billion (4.1% of GDP), from US$189 million (0.2% of GDP) in 2015.
This sharp increase stemmed from accelerating imports as
investments recovered, and imports, particularly of machinery and
equipment, subsequently increased.  However, S&P forecasts that
the current account will consolidate gradually over the forecast
horizon owing to increasing exports in both nominal and real
terms.  At the same time, a potential slowdown in key steel
export markets introduces an element of volatility.

As the economy continues its recovery and exports pick up, S&P
forecasts the current account deficit will average 3.3% of GDP in
2017-2020, financed by a mix of foreign direct investment, donor
funds, and foreign borrowings.  Still, S&P forecasts external
debt net of liquid assets to average 131% of current account
receipts in 2017-2020, while gross external financing needs as a
percentage of current account receipts and usable reserves, our
key external liquidity measure, will also stand at 137%.  Both
ratios will likely start declining, however, because the growth
of current account receipts will remain supported by sound export
performance.

Ukraine's Extended Fund Facility (EFF) with the IMF officially
ends in March 2019, but disbursements are already behind
schedule. The IMF has so far disbursed over US$8.32 billion of
the $17.5 billion available.  S&P's ratings on Ukraine assume
that the government will remain broadly on course with the IMF
program and engaged with development partners, albeit with some
continued lags.  The next tranche of IMF funds, along with the
associated external donor funds, is likely to be disbursed in the
second half of 2017 if Ukraine progresses with key land and
pension reforms. While the bulk of IMF funds are lent to the NBU
to boost foreign exchange reserves, continuation of the program
requires fiscal prudence and fulfilling IMF requirements to
unlock funds from the EU and other donors.

Ukraine has achieved a strong fiscal adjustment over the last two
years with the general government deficit declining to 2.2% of
GDP in 2016 from almost 10% in 2014.  The increase in energy
tariffs has helped government finances as it resulted in Naftogaz
(a state owned enterprise) recording its first profit (on a cash
basis) in 2016 and has led us to equalize the central and general
government balances.  S&P notes ongoing risks to public finances,
however, including the conflict in the east, which has seen
defense spending double in 2016 (to at least 5% of GDP) compared
with 2014.  Additionally, there is a risk of fiscal slippage in
the run-up to the presidential elections in 2019.  S&P expects a
budget deficit of 3.3% in 2017, averaging 3.0% over the forecast
horizon.  Budget deficit numbers do not include the debt-
increasing effects of bank recapitalization (which S&P considers
a one-off) and currency depreciation.

As a result, change in government debt will be significantly
above the budget deficit recorded during 2014-2017.

The fiscal outlook remains critically dependent on reforms and
the EFF.  Politically sensitive reforms are still needed,
especially in the public sector, where the pension deficit is
estimated at 6% of GDP (one of the highest in Europe).  The
government has prioritized the privatization of state-owned
enterprises (SOEs), and may reattempt to privatize the Odessa
portside plant this year (after being unsuccessful in 2016).  S&P
should see a boost to revenues from mid-2017 as smaller SOEs are
privatized using the government's Prozorro platform (online
auction platform) and measures to improve tax collection bear
fruit.  The government expects that the decision todouble the
minimum wage at the beginning of the year will increase tax and
social security revenues as more workers are lifted out of the
shadow economy.

Moreover, S&P understands that the government has committed to
use any surplus fiscal revenues to prepay corporate tax receipts,
increase investment, or for saving.

Ukraine's net general government debt now includes the City of
Kyiv's debt that the central government has taken on outright.
Initially, this debt amounted to US$449 million but was reduced
in a restructuring effort to US$351 million, which is now
included in state debt.  Net general government debt remains high
for a low-income economy, although S&P forecasts it will decline
to 72.6% by 2020 after peaking at 88.7% in 2017.  In S&P's view,
the high level of debt means that targeting continued fiscal
consolidation while retaining access to relatively cheap official
financing via the IMF and other donors is critical to timely debt
service.

Since the February 2015 lows, official reserve assets increased
by $10.7 billion to $15.5 billion as of end-December 2016,
reflecting IMF foreign currency loan inflows, reduced external
debt payments, and continued but easing use of capital controls.
Rising reserve assets have bolstered the NBU's credibility and
promoted hryvnia stability, notwithstanding a further weakening
over 2016.  Since the start of 2017 the hryvnia has appreciated
against the U.S. dollar, although S&P expects a slight
depreciation by the end of the year.  Recent currency
appreciation reflects buoyant steel prices abroad, as well as a
more stable macroeconomic picture domestically.

Some capital controls remain, although the NBU has begun a
partial liberalization.  S&P expects foreign exchange
liberalization will progress slowly throughout the year as the
NBU weighs the burden these controls have on investment flows
against the risks that lifting them poses to the exchange rate.
The NBU has effectively tempered the high inflation levels of
2015, and its target of 12% plus/minus 3% in 2016.  This
symbolized an important step toward inflation targeting, which
further aided monetary policy credibility and indicated an
improving but still weak monetary transmission mechanism.
However, the recent resignation of the central bank governor has
increased uncertainty about the NBU's course while the search for
a successor continues.

Conditions in the financial sector have improved, but further
recovery will be slow due to high levels of nonperforming loans
in the system.  Of the country's180 banks, 87 have closed because
of weak asset quality (due to prevalent related-party lending).
The nationalization and subsequent recapitalization of Ukraine's
largest bank, PrivatBank, which accounts for 36% of all domestic
deposits, was key to avoiding a financial sector crisis.

However, the capitalization has added to the government's balance
sheet at an initial cost of around 7% of GDP in 2016, and a
subsequent recapitalization is expected in the coming months,
albeit smaller than the first.  S&P classifies Ukraine's banking
sector in group '10' ('1' being the lowest risk, and '10' the
highest) under S&P's Banking Industry Country Risk Assessment
(BICRA) methodology.  S&P notes that a new corporate governance
framework and more prudent NBU stress tests are being implemented
and that liquidity in the banking sector has largely improved.
Public confidence and economic growth will hinge on the
authorities ensuring that banks operating in Ukraine meet capital
and regulatory requirements.

                             OUTLOOK

The stable outlook reflects S&P's view that over the next 12
months the Ukrainian government will maintain access to its
official creditor support by pursuing required reforms on the
fiscal, financial, and economic fronts; specifically, that the
Rada (parliament) is able to broadly pass key pension and land
reforms as set out by donors, thereby maintaining reform momentum
this year.

Downside risk to the ratings could build if Ukraine fails to
effectively implement further reforms required by the IMF for
further funding, if sizable contingent liabilities crystalize on
the general government balance sheet, if the central bank's
independence is called into question, or if S&P concludes that a
further debt exchange is likely.

S&P could consider a positive rating action if economic growth
significantly outperforms our expectations, alongside falling
fiscal and external deficits, and there is no further
deterioration in the situation in the east of the country.

In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable.  At the onset of the committee, the chair
confirmed that the information provided to the Rating Committee
by the primary analyst had been distributed in a timely manner
and was sufficient for Committee members to make an informed
decision.

After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.

The committee agreed that the economic assessment had improved.
All other key rating factors were unchanged.

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

RATINGS LIST

                                        Rating
                                        To            From
Ukraine
Sovereign Credit Rating
  Foreign and Local Currency            B-/Stable/B   B-/Stable/B
  Ukraine National Scale               uaBBB-/--/-- uaBBB-/--/--
Transfer & Convertibility Assessment   B-            B-
Senior Unsecured
  Foreign Currency[1]                   B-            B-
  Foreign Currency                      D             D
  Foreign Currency                      B-            B-

[1] Dependent Participant(s): Ukraine



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


LONMIN PLC: Losses Increase, Faces Debt Covenant Breach Risk
------------------------------------------------------------
Henry Sanderson and Nicholas Megaw at The Financial Times report
that losses increased at Lonmin, the South Africa-focused
platinum mining company that is battling labor unrest and weak
prices, because of falling production and negative currency
movements.

The company on May 15 reported an operating loss of US$181
million for the six months to the end of March, compared with a
loss of US$15 million during the same period one year earlier,
the FT relates.

Lonmin also highlighted the risk of it breaching a condition on
its bank loans, the FT notes.

Lonmin's loan agreements include a condition that the company's
consolidated tangible net worth cannot fall below US$1.1 billion,
the FT discloses.

According to the FT, this declined to US$1.4 billion at March 31,
following the latest impairment, and Lonmin highlighted the risk
that a further writedown could result in the company breaching
the covenant.

The London-listed company has been restructuring its operations,
cutting more than 5,000 jobs last year after it launched a rescue
rights issue in 2015 to reduce its debt amid a collapse in
platinum prices, the FT relays.

Lonmin Plc -- http://www.lonmin.com-- is a United Kingdom-based
producer of Platinum Group Metals. Lonmin mines, refines and
markets platinum group metals (PGMS) -- platinum, palladium,
rhodium, iridium, ruthenium and gold.  The Company has productive
operations in South Africa and Canada.  The Company's resources
and operations include: Marikana operations, the Company's
flagship operation; Pandora operations, a joint venture in which
it has a 42.5% interest; Marikana Smelters and Base Metal
Refinery and Brakpan Precious Metal Refinery which has capacity
to process and refine production, offering the potential to smelt
and refine third party and recycling material; Limpopo project,
formerly an operational mine; Akanani project; Canadian projects,
joint ventures with Vale and Wallbridge exploring PGM
mineralisation in the Sudbury Basin in Ontario, and Northern
Ireland project which is an early stage exploration opportunity.


NEWGATE FUNDING 2006-1: Moody's Affirms Caa3 Class E Notes Rating
-----------------------------------------------------------------
Moody's Investors Service has upgraded tranches Ba and Bb in the
transaction Newgate Funding PLC: Series 2006-1, to Aaa (sf) from
Aa1 (sf), and affirmed the other rated tranches in this
transaction. The rating action reflects the increased levels of
credit enhancement for the affected notes and stable collateral
performance.

RATINGS RATIONALE

The rating action is prompted by deal deleveraging resulting in
an increase in credit enhancement for the affected tranches.

Sequential amortization in 2008-2016 and non-amortizing reserve
fund led to the increase in the credit enhancement available in
this transaction. The credit enhancement available to the
tranches Ba and Bb, affected by credit rating, stands at 35.58%.

Moody's affirmed the ratings of the remaining tranches that had
sufficient credit enhancement to maintain the current rating on
the affected notes.

The performance of the transactions has continued to be stable.
90+ delinquencies have decreased in the past year, with 90 days
plus arrears currently standing at 17.50% of current pool
balance, compared to 21.62% a year ago. Cumulative losses
currently stand at 2.13% of original pool balance up from 2.11% a
year earlier.

As a part of the review, Moody's reassessed the transaction's
lifetime loss expectation, based on the collateral performance to
date. Moody's maintained the Expected Loss and MILAN CE
assumption unchanged for this transaction, due to its stable
performance.

As a result of lower delinquencies, the transaction switched back
to the pro-rata amortization in September 2016, for the first
time since 2008.

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

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

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

Factors or circumstances that could lead to an upgrade of the
ratings include (1) performance of the underlying collateral that
is better than Moody's expected, (2) improvement in the notes'
available credit enhancement and (3) improvement in the credit
quality of the transaction counterparties.

Factors or circumstances that could lead to a downgrade of the
ratings include (1) an increase in sovereign risk (2) performance
of the underlying collateral that is worse than Moody's expected,
(3) deterioration in the notes' available credit enhancement and
(4) deterioration in the credit quality of the transaction
counterparties.

Issuer: Newgate Funding PLC: Series 2006-1

-- GBP20M Class Ba Notes, Upgraded to Aaa (sf); previously on
    Oct 14, 2015 Upgraded to Aa1 (sf)

-- EUR20M Class Bb Notes, Upgraded to Aaa (sf); previously on
    Oct 14, 2015 Upgraded to Aa1 (sf)

-- GBP135M Class A4 Notes, Affirmed Aaa (sf); previously on Jun
    13, 2014 Affirmed Aaa (sf)

-- GBP7.5M Class Ma Notes, Affirmed Aaa (sf); previously on Jun
    13, 2014 Upgraded to Aaa (sf)

-- EUR10M Class Mb Notes, Affirmed Aaa (sf); previously on Jun
    13, 2014 Upgraded to Aaa (sf)

-- GBP10M Class Ca Notes, Affirmed A1 (sf); previously on Oct
    14, 2015 Upgraded to A1 (sf)

-- EUR10.1M Class Cb Notes, Affirmed A1 (sf); previously on Oct
    14, 2015 Upgraded to A1 (sf)

-- EUR23.4M Class D Notes, Affirmed B2 (sf); previously on Oct
    14, 2015 Upgraded to B2 (sf)

-- GBP2.6M Class E Notes, Affirmed Caa3 (sf); previously on Oct
    14, 2015 Upgraded to Caa3 (sf)


SOLOCAL GROUP: Fitch Affirms B- IDR & Revises Outlook to Stable
---------------------------------------------------------------
Fitch Ratings has affirmed Solocal Group's Long-Term Issuer
Default Rating (IDR) at 'B-' and the senior secured bond rating
at 'B'/'RR3'. The Outlook is revised to Stable from Negative.

The Long-Term IDR of 'B-' reflects the evolving business profile
of the group with some competitive advantages, low monetisation,
robust growth prospects in digital advertising and high operating
leverage of the business. The rating case firmly assumes that
management will achieve growth in terms of customer numbers and
recurring EBITDA in the internet business. The group remains
vulnerable to technical innovation across the web, competitive
pressures in the industry and a turn in the cycle.

KEY RATING DRIVERS

Some Competitive Advantages: Solocal is able to update customers'
data and content across the web in real time. Through its own
media (59% audience reach) and mobile apps (47 million installed
on handsets), Solocal can use cookies on desktops and broader
functionality embedded into the apps to gather big data that
provides a competitive edge to its online marketing business.
Also, a lot of smaller businesses may not want to employ an
advertising agency but are happy to discuss cheaper, local
choices of digital advertising with their internet support
provider. These are the products that cannot be easily replicated
by competitors.

Low Audience Monetisation: The value to customers is less obvious
than for a market-leading online classified business. Therefore,
the product offering requires more explaining and a bigger sales
effort. Also, the average product value marketed by Solocal's
clients is much lower than real estate in the case of rightmove
or cars in the case of AutoTrader. Hence, the group's customers
are more price-sensitive. While average revenue per advertiser
(ARPA) is not calculated on a fully comparable basis (EUR84 for
Solocal, GBP842 for rightmove, GBP1,526 for AutoTrader; all
quoted per month), looking at revenues and cash flow generation
of the three players reveals that Solocal has substantially lower
monetisation.

Robust Growth Prospects for Digital Advertising: Currently, 24%
of Solocal's customers make use of the digital marketing
products. Management is keen to increase penetration and
capitalise on this cross-selling opportunity, where the group has
proprietary data that allows it to profile internet users and, as
a result, better target advertising to the right audience. Market
commentators forecast growth for this market in France of around
10% per annum to 2020. This business is expected to deliver solid
earnings growth (from a relatively small base). One should bear
in mind that advertising revenues are cyclical and have high
correlation with GDP.

High Operating Leverage: Solocal reported headcount of 4,386 and
staff expenses of EUR368.5 million (representing 45% of turnover)
for 2016. The sales force alone comprises around 2,000 people.
For an internet company, this represents a very high fixed-cost
base. As a result, there is a concern that earnings could weaken
quickly if: i) any product areas were affected by technological
innovation across the web; ii) Solocal saw mounting competitive
pressures due to new entrants or consolidation moves; or iii)
economic conditions weakened (not expected in the near term). In
order to make the business more resilient, management would have
to evolve the business model to be more scalable (not only
towards growth but also towards possible contraction).

Prospect of Industry Consolidation: The internet business is very
fragmented. In most cases, growth is key to develop meaningful
earnings. Currently, there are too many players in a lot of the
segments in which Solocal is active, limiting income for
everyone. Consolidation would make a lot of sense to improve
economies of scale and gain pricing power. The market
participants that do not manage to participate in this process
could be left behind and become less relevant. Fitch note that
there are internet companies out there that are better
capitalised than Solocal.

Validation of Business Plan Required: Assessing the business
plan, Fitch has concluded that management has the means at its
disposal to manage future refinancing risk, particularly if the
group amortises part of the debt ahead of the maturity in 2022.
As a result, a Long-Term IDR of 'B-' with a Stable Outlook is
warranted. Fitch ratings case reflects growth in terms of
customer numbers and recurring EBITDA from the internet business.
If management fails to deliver on these points, the business may
become less relevant and Fitch may question the business model.

DERIVATION SUMMARY

Solocal Group offers a broad range of services to enhance
customers' visibility on the web. This starts with creating and
maintaining websites and their content, achieving better rankings
on search engines (increasingly with a geographical focus),
placing advertising links with the target audience, and offering
transactional tools to complete bookings and payments. The group
generates traffic from its own media platforms, including
PagesJaunes and Mappy, as well as through partnerships with
international players, including Google and Apple.

Solocal's operations demonstrate weaker monetisation of audience
reach and structurally higher costs than market-leading online
classified businesses such as rightmove and AutoTrader. Fitch
considers that the current business profile limits Solocal Group
to a 'B' category rating, while the online classified businesses
with number-one or -two positions in their local markets can
achieve 'BB' category ratings, assuming in both cases very little
debt funding.

KEY ASSUMPTIONS

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

- 2017 EBITDA in the range of EUR210 million-215 million and
   mid-single digit growth in 2018;

- an effective tax rate of 45% for purposes of the income
   statement, of which 85% is assumed to translate into cash
   tax;

- restructuring cost that may be qualified as recurring
   and utilisation of provisions of around EUR15 million
   per annum;

- these items are included in "Other Items Before FFO" in
   Fitch's presentation of the cash flow statement;

- working-capital outflows of on average EUR5 million per annum;

- EUR75 million of capital expenditure per annum over the medium
   term -- note that this is a Fitch assumption; the company's
   guidance is for EUR60 million of capital expenditure per
   annum;

- EUR37 million of non-operating/non-recurring cash-flow
   expenditure in 2017 (including costs related to the financial
   restructuring of EUR28 million), reflecting the group's
   communication regarding pro forma net debt as at end-December
   2016 of EUR344 million, implying a reduction of cash balances
   of EUR37 million;

- use of free cash flow to build up a cash balance that is under
   all circumstances sufficient to safeguard liquidity and pursue
   additional capital expenditure/growth opportunities (mostly of
   an organic nature);

- no dividends over the rating horizon.

RATING SENSITIVITIES

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

- Above-market growth in the local search business with a
   visibly improving market position;

- FFO adjusted gross leverage below 1.5x (forecast for FY17:
   3.3x);

- Material reduction in operating leverage.

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

- Further declines in customer number and recurring EBITDA from
   the internet business;

- Lack of growth momentum in the digital business over the next
   24 months;

- Free cash flow margin falling below 5% on a sustained basis;

- Failure to maintain cost discipline across the organisation;

- Weakening liquidity due to either operational issues or
   corporate activity;

- Failure to make voluntary debt repayments over the five-year
   tenor of the reinstated bonds.

LIQUIDITY

Adequate Liquidity: Following completion of the debt
restructuring, the group holds around EUR60 million of cash and
is expected to generate positive free cash flow on an ongoing
basis.

                        *********

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

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

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