TCREUR_Public/170607.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

            Wednesday, June 7, 2017, Vol. 18, No. 112



BULGARIA: S&P Affirms 'BB+/B' Sovereign Credit Ratings


AGROKOR DD: Board Changes May Hamper Restructuring
AGROKOR DD: Moody's Lowers CFR to Ca, Outlook Remains Negative
ZVECEVO: Files Motion to Commence Pre-Bankruptcy Proceedings


WINDERMERE X: S&P Affirms 'D' Ratings on Three Note Classes


GREECE: IMF May Agree on Bailout Before Debt Relief Measures Met


ALITALIA SPA: Etihad Airways Open to Continue Strong Ties
BANCA POPOLARE: Failure to Resolve Crisis to Have Dire Impact


CENTRAS INSURANCE: A.M. Best Cuts Financial Strength Rating to C+


ARDAGH PACKAGING: S&P Raises Rating on Unsecured Debt to 'B'
SENSATA TECHNOLOGIES: Moody's Affirms Ba2 CFR, Outlook Stable


NORSKE SKOGINDUSTRIER: Moody's Cuts CFR to Caa3, Outlook Stable


FAR-EASTERN SHIPPING: Fitch Affirms 'RD' LT Issuer Default Rating
IRKUTSK OBLAST: S&P Affirms 'BB' ICR, Outlook Remains Stable
RN BANK: S&P Assigns 'BB+/B' Counterparty Credit Ratings
RUSSIAN STANDARD: S&P Withdraws ruBB- National Scale Rating
SAMARA OBLAST: S&P Assigns 'BB' Rating to Proposed RUB10BB Bonds

TRANSKAPITALBANK: Moody's Affirms B1 Rating, Outlook Negative


SUNRISE COMMUNICATIONS: S&P Affirms 'BB+' CCR, Outlook Positive
WP/AV CH: S&P Assigns Preliminary 'B' CCR, Outlook Stable



BULGARIA: S&P Affirms 'BB+/B' Sovereign Credit Ratings
S&P Global Ratings revised its outlook on the Republic of
Bulgaria to positive from stable.  At the same time, S&P affirmed
its 'BB+/B' long- and short-term foreign and local currency
sovereign credit ratings.


The outlook revision reflects S&P's expectation that Bulgaria's
fiscal and external metrics will continue to improve, and that
the authorities will take further steps to strengthen Bulgaria's
financial sector, where the gross level of nonperforming loans,
at 13% of total financial sector claims, remains considerable.
Almost one-half of total lending in Bulgaria is denominated in
foreign currency, nearly all in euros.  Although euroization is
declining, the still relatively high level of foreign currency
lending constrains the authorities' ability to fine tune monetary
policy, also reflecting the minimal policy flexibility under the
currency board arrangement, which pegs the Bulgarian lev to the

The ratings on Bulgaria remain constrained by Bulgaria's
relatively low income levels, with GDP per capita estimated at
$7,200 in 2017.  Another constraint on Bulgaria's
creditworthiness, in S&P's view, is the government's and central
bank authorities' limited policy flexibility due to the country's
currency board regime, which was introduced in 1997.  S&P
recognizes, however, that the currency board regime has been an
important stability anchor for the country.  Bulgaria's weak
institutional settings, especially in the judiciary, and
Bulgaria's long-term demographic challenges also weigh on the

Following the March 2017 snap elections, center-right GERB party
formed a coalition with the United Patriots, comprising several
rightist political parties.  Given that key figures, including
Prime Minister Boyko Borissov, have resumed their government
positions, S&P expects a high degree of policy continuity.
However, the caretaker government episode between January 2017
and May 2017 illustrates the relative instability of Bulgarian
governments in the past few years, as early elections have been a
frequent occurrence.

Although the government's priority areas in health care,
education, and defense remain largely unaltered, S&P anticipates
that general government deficits will average 0.5% of GDP over
2017-2020, higher than the government's own fiscal targets, which
foresee a slight surplus of the general government by 2019.  S&P
thinks that some spending pressures beyond the budgetary targets
could arise regarding the public sector or the social area, as in
the already decided pension increases, in order to deliver on
electoral promises.  That said, S&P projects that general
government debt net of liquid assets is set to decline further to
below 16% of GDP by 2020 from almost 17% in 2016.  S&P notes that
about 80% of total government debt is denominated in foreign
currency, mainly euros.  Bulgaria's moderate government debt
burden (net of liquid assets) grants the country fiscal space to
respond to external and domestic shocks, should they arise.  This
is all the more important given Bulgaria's currency board
arrangement, which acts as an important nominal anchor, but
affords minimal monetary policy flexibility.

Bulgaria's economic recovery will likely continue in 2017, with
an increasing contribution from domestic demand compared with
previous years, when net exports were the main growth drivers.
Furthermore, the improvements are reflected in the labor market,
thereby raising disposable incomes and private consumption.  With
the beginning of the new EU budget cycle, public investment
projects financed by EU structural and cohesion funds will also
be an important contributor to economic performance, following
the break in 2016 due to the end of the previous programming
period. S&P understands that policymakers are well prepared to
absorb the maximum possible amount from the available funds.  At
the same time, Bulgaria continues to face a structural constraint
from demographic challenges.  Net emigration, especially of
skilled parts of the labor force, and an aging society pose
challenges to economic policy and potentially social cohesion.

Bulgaria's current account posted a strong surplus in 2016 of
more than 4% of GDP, crowning a period of steady growth in real
exports in recent years.  Although S&P expects the current
account surplus to narrow gradually until 2020 as domestic demand
firms, export growth will remain sound, in S&P's opinion,
supporting Bulgaria's improving external profile.  In S&P's view,
there is substantial upside potential for wage growth without
affecting competitiveness.  That said, government policies to
raise the minimum wage would likely not weigh on the export-
oriented sector. While exports represented an estimated 64% of
GDP in 2016 (versus 50% in 2010), Bulgaria's economy is highly
open.  S&P notes, however, that not all exports are making large
net contributions to headline GDP.  This is because exports with
high import content and moderate added value from the domestic
economy -- such as refined petroleum -- represent an important
part of total exports. As in 2016, S&P expects the services
balances this year will benefit from a strong tourist season
helped by external factors, such as perceived instability or
insecurity in competing destinations.

Contingent liabilities that could materialize include those from
the energy sector, although the government has recently reduced
losses at Natsionalna Elektricheska Kompania (NEK).  The
government provided financing of 1.4% of GDP to NEK following the
arbitration court decision to compensate Russia-based
Atomstroyexport for equipment already produced for the cancelled
Belene nuclear power plant.  The new government will have to
decide what to do with the equipment: Sell to another country or
even complete the plant, as had been discussed previously.

As a result of last year's Asset Quality Review by the Bulgarian
authorities, two domestic financial institutions had to replenish
their additional capital buffers by April 2017.  Most
prominently, First Investment Bank had to increase its additional
capital buffers by Bulgarian lev 206 million (about EUR105
million) as an outcome of the stress test's adverse scenario, and
the bank delivered on this recommendation via its 2016 profits.
While the banking sector overall is adequately capitalized, non-
performing loans in the sector remain high at almost 13% of total
loans in March 2017, albeit on a decreasing trend.

As per its charter -- and according to the currency board regime
under which it operates -- the Bulgarian National Bank's (BNB's)
ability to act as a lender of last resort is limited.  BNB can
provide liquidity support to the banking system only to the
extent that its reserves exceed its monetary liabilities.  Even
then, support can occur only under certain conditions and for
short periods, against liquid collateral.

Bulgaria is currently not part of the EU's Exchange Rate
Mechanism II (ERM II), the precursor to eurozone entry.  But S&P
thinks that the country could move toward ERM II over the next
couple of years, even though the political hurdle of receiving
the invitation backed by all eurozone members is high.  Until
then, policymakers' commitment to the currency board remains
strong.  The currency board was introduced in 1997 in the wake of
a banking crisis amid hyperinflationary conditions, which were
fueled by central bank financing of budget deficits.  The board
successfully lowered price inflation and prevented further
episodes of hyperinflation. Headline inflation will be positive
in 2017 following three years of deflation.  One sign of the
currency regime's solidity is that Bulgaria's foreign currency
reserves cover the monetary base by 1.7x as of April 2017.

However, the regime restricts policy response.  Apart from
limiting the BNB's ability to act as a lender of last resort, it
restricts control over money creation.  Moreover, the board does
not allow the exchange rate to react in response to domestic or
external conditions.

With Bulgaria's adoption of the EU Banking Resolution and
Recovery Directive in 2015, the failure of a bank will
necessitate a bail-in of shareholders, creditors, and then a
resolution fund.  Only after exhausting these options would a
bank be able to resort to government support.

The banking sector could be vulnerable to external factors, for
example, if depositor confidence in Greek banks' subsidiaries
were to suffer due to developments there.  However, the BNB has
implemented measures to ensure the stability of these Greek
subsidiaries, which together account for around 10% of the
sector's assets as of March 2017.  The BNB has taken steps to
increase the liquidity of these subsidiaries, such as mandating
higher deposits with the BNB, increasing the proportion of liquid
assets held, and reducing exposure to parent banks.  Although
Bulgaria is not formally a member of the eurozone, a line of
support from the European Central Bank is available to the BNB
regarding any confidence-related losses arising at Greek bank
subsidiaries.  Details of this support, such as how it can be
obtained or whether collateral would be needed, have not been


The positive outlook reflects S&P's view that there is at least a
one-in-three likelihood of an upgrade over the next 12 months if,
alongside the continued economic recovery, and strengthening of
Bulgaria's external profile, S&P observes further reductions in
the banking sector's nonperforming loans, which S&P believes
would support an improvement in the monetary transmission
channel.  S&P might also raise the rating if Bulgaria was granted
entrance to the ECB's ERM II monetary framework, which S&P thinks
would further bolster policy credibility.  Still, S&P expects
this decision could be delayed for several more years.

S&P could revise the outlook to stable if pressures on Bulgaria's
balance of payments emerged or the domestic financial system
required substantial government support or if the declining trend
in nonperforming loans reversed.

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

The committee agreed that all key rating factors were unchanged.

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


                                        To            From
Bulgaria (Republic of)
Sovereign Credit Rating
  Foreign and Local Currency            BB+/Pos./B
Transfer & Convertibility Assessment   BBB+          BBB+
Senior Unsecured
  Foreign and Local Currency            BB+           BB+
Short-Term Debt
  Foreign and Local Currency            B             B


AGROKOR DD: Board Changes May Hamper Restructuring
According to Bloomberg News' Misha Savic and Jasmina Kuzmanovic,
Hina news agency, citing Agrokor's government-appointed
manager Ante Ramljak, Agram Invest, a minority stakeholder in
Agrokor's key unit Konzum retailer, is opposed to replacing
disgraced owner Ivica Todoric from the company's supervisory

"Unfortunately, Todoric hasn't resigned himself," Bloomberg
quotes Mr. Ramljak as saying.

Mr. Ramljak told Hina Agrokor restructuring may slow down over
planned board changes, also required for further financing,
Bloomber relates.

Agram also holds minority stakes in Agrokor units Vupil and
Belje, Bloomberg notes.

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

                            *   *   *

The Troubled Company Reporter-Europe reported on May 10, 2017
that S&P Global Ratings lowered its corporate credit rating on
Agrokor d.d. to SD/--/SD (SD: selective default) from
CC/Negative/C. S&P lowered its issue rating on the three series
of Company's senior unsecured notes to 'D' from 'CC'.

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

The TCR-Europe on April 17, 2017, reported that Moody's Investors
Service downgraded Agrokor D.D.'s corporate family rating (CFR)
to Caa2 from Caa1 and its probability of default rating (PDR) to
Ca-PD from Caa1-PD.  The outlook on the company's ratings remains
negative.  "Our decision to downgrade Agrokor's rating reflects
its filing for restructuring under Croatian law, which in Moody's
views makes a default highly likely," Vincent Gusdorf, a Vice
President -- Senior Analyst at Moody's, said. "It also takes into
account uncertainties around the restructuring process, as
creditors' ability to get their money back hinges on numerous
factors that will become apparent over time."

AGROKOR DD: Moody's Lowers CFR to Ca, Outlook Remains Negative
Moody's Investors Service has downgraded Croatian retailer and
food manufacturer Agrokor D.D.'s corporate family rating (CFR) to
Ca from Caa2 and the probability of default rating (PDR) to D-PD
from Ca-PD. The outlook on the company's ratings remains

Moody's has also downgraded the senior unsecured rating assigned
to the notes issued by Agrokor due in 2019 and 2020 to C from


The rating actions reflect Agrokor's decision not to pay the
coupon scheduled on May 1, 2017 on its EUR300 million notes due
May 2019 at the end of the 30 day grace period. It also factors
in Moody's understanding that the company is not paying interest
on any of the debt in place prior to Agrokor's decision in April
2017 to file for restructuring under Croatia's law for the
Extraordinary Administration for Companies with Systemic

Upon Agrokor's filing for restructuring a government
representative was appointed as receiver and the company started
to negotiate with its creditors. At this stage, the ultimate
outcome of these discussions remains uncertain. However, Moody's
notes that on April 27, 2017 Agrokor announced that preliminary
investigations had led to the discovery of potential errors in
its accounts.

Moody's sees a risk that certain creditors, such as local
suppliers, may be paid before international creditors.
Furthermore, the issuance of additional super senior debt on top
of the EUR80 million borrowed on April 14, 2017 would increase
the subordination of existing debt holders. In the circumstances,
Moody's considers that corporate family recovery prospects may
fall towards the lower end of the 35%-65% range associated with
the Ca CFR and that the recovery prospects for the senior
unsecured notes are likely to be less than 35%, meaning that a C
rating is appropriate for these instruments.

The previous Caa2 CFR had reflected a balance of potential
outcomes: either a more creditor-friendly outcome led by
supportive banks such as Sberbank, which could provide additional
liquidity and leverage the company's broad business profile and
substantial market share to achieve a high recovery for
creditors; or a more administrator-led process. The company's
recent reporting highlights the now prominent role of the
Extraordinary Administration, with legacy lenders still involved
but not leading the restructuring process. The reporting also
highlights the ongoing operational challenges, negotiations with
suppliers and uncertainty over financial reporting.


The negative outlook reflects the uncertainties arising from the
restructuring and allegations in respect of financial reporting,
which creates downside risk for the recovery prospects of
creditors, although their magnitude will only become apparent
over time.

Although the ratings are already low, further downward pressure
could materialize if Moody's believes that there will be a
greater loss for creditors than is currently assumed.

Upside potential is unlikely at this time, until a restructuring
is completed. In the longer term, Moody's could upgrade Agrokor's
rating if it is able to restore an adequate liquidity profile and
improve its financial structure by reducing its debt.

The principal methodology used in these ratings was Retail
Industry published in October 2015.

ZVECEVO: Files Motion to Commence Pre-Bankruptcy Proceedings
SeeNews reports that Zvecevo said on June 6 it has filed a motion
to open pre-bankruptcy proceedings with the commercial court in
Slavonski Brod.

The company gave no additional details in a filing with the
Zagreb Stock Exchange (ZSE) but said in a separate statement that
the ZSE has temporarily suspended trading in Zvecevo shares,
SeeNews relates.

Last month, Zvecevo's bank accounts were blocked for a period of
40 days due to business problems, which prevented it from paying
out salaries on time, SeeNews recounts.  It was said then that
the management was working on consolidating the company's
finances, SeeNews notes.

Zvecevo is a Croatian alcoholic drinks and confectionery


WINDERMERE X: S&P Affirms 'D' Ratings on Three Note Classes
S&P Global Ratings affirmed its 'D (sf)' credit ratings on
Windermere X CMBS Ltd.'s class D, E, and F notes.

Windermere X CMBS is a true sale commercial mortgage-backed
securities (CMBS) transaction, which closed in April 2007.  It
was initially secured on 15 loans backed by 167 commercial real
estate properties in Germany, France, the Netherlands, Italy, and

There are three remaining securitized loans in the transaction.
They are IFB & Pavia (Fortress I; 56% of the pool), Enel Tower
(Fortress II; 42%) and Built (2%).  Only the Fortress I and
Fortress II loans have collateral remaining to be sold, for which
the largest tenant (Enel) has served notice to vacate in December
2017.  The reported loan-to-value ratios for the Fortress I and
Fortress II loans are 109% and 309%, respectively, based on June
2016 valuations.

S&P's ratings in Windermere X CMBS address the timely payment of
interest (payable quarterly in arrears) and the payment of
principal no later than the October 2019 legal final maturity

Principal losses have been previously applied to the class D
notes.  Although the principal loss was subsequently reversed due
to a valuation settlement, the lost interest was not repaid and
is unlikely to be repaid.  S&P has therefore affirmed its 'D
(sf)' rating on the class D notes, in line with its criteria.

S&P has affirmed its 'D (sf)' ratings on the class E and F notes
because they have experienced principal losses.  This is in line
with S&P's criteria.


GREECE: IMF May Agree on Bailout Before Debt Relief Measures Met
Agence France-Presse reports that the International Monetary Fund
could sign on to a deal between Greece and its creditors before
debt relief measures it demands have been agreed.

According to AFP, IMF director Christine Lagarde told German
business daily Handelsblatt "There can be a program in which the
payment does not take place until debt measures have been clearly
defined by the creditors."

Her proposal to agree on the outline of a program including the
IMF, but withholding disbursement of funds until debt relief
details are nailed down, is similar to one proposed at the
Eurogroup meeting of Eurozone finance ministers last month which
ended without an agreement, AFP notes.

Talks over Greece's debt mountain -- which stands at 179% of GDP
-- have been paralysed in recent weeks by disagreements between
the IMF and European creditors led by Germany, AFP relays.

The Europeans expect Greece's economy to grow strongly and its
government to bring in large surpluses in revenue in the coming
years, allowing it to pay down its debts, AFP discloses.

But the IMF is less optimistic, arguing there must be further
debt relief for Athens before it can label its debt sustainable
and justify loaning Greece any more cash, AFP states.

Ms. Lagarde does not believe the total amount of Greece's debt
must be reduced, but calls for a "significant extension" of the
payment period and a delay on interest payments, according to

"If the creditors haven't reached a point where they can accept
and respect our forecasts, if they need more time to get there,
then we can admit that and give them a bit more time," AFP quotes
Mr. Lagarde as saying.


ALITALIA SPA: Etihad Airways Open to Continue Strong Ties
Tommaso Ebhardt, Deena Kamel Yousef, Daniele Lepido and Chiara
Albanese at Bloomberg News report that Etihad Airways, the
biggest single shareholder in Alitalia  SpA, is open to deepening
its ties with the insolvent airline after investing about EUR1
billion (US$1.1 billion) in the Italian company.

"Strong ties continue to exist between Alitalia and Etihad
Aviation Group and we remain open to exploring all options to
maintain and potentially deepen those ties for mutual benefit,"
an Etihad spokesperson told Bloomberg when asked about Alitalia's
bankruptcy sale process.

Alitalia, which was declared insolvent May 11 after losing EUR205
million in the first two months of the year, has started an
administration process aimed at finding investors willing to
invest in the carrier, Bloomberg relates.

About 30 airlines and private equity firms submitted non-binding
expressions of interest in the Alitalia sale process, Bloomberg
relays, citing financial daily Il Sole 24 Ore.  The newspaper
said the carriers may include Delta Air Lines Inc., Air France-
KLM Group and Etihad, while TPG and Cerberus are among the
private equity firms, Bloomberg notes.

The Italian airline has about EUR3 billion in debt and assets
worth EUR921 million, Bloomberg discloses.  Investors can submit
bids for the entire company, assets or propose a restructuring
plan, Bloomberg says, citing the Alitalia tender document.

Etihad, which cut off funds to the carrier after
workers rejected a restructuring plan, failed to turn around
Alitalia after buying a 49% stake in 2014, Bloomberg recounts.

Delta, as cited by Bloomberg, said it "continues to monitor
Alitalia's progress since it entered into the administration
process," without commenting on details.

Deutsche Lufthansa AG, Ryanair Holdings PLC and British
Airways owner International Consolidated Airlines Group SA have
said they have no interest in participating in Alitalia's rescue,
according to Bloomberg.

Alitalia commissioners are preparing an 18-month business plan
that will be submitted by the end of July, Bloomberg states.

                        About Alitalia

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

                      *     *     *

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

BANCA POPOLARE: Failure to Resolve Crisis to Have Dire Impact
Giulia Segreti at Reuters reports a failure to find a solution to
a crisis gripping Italy's Veneto-based banks would result in
consequences similar in impact to a default by Greece.

Banca Popolare di Vicenza and Veneto Banca have requested a state
bailout to help fill a combined capital shortfall of EUR6.4
billion (US$7.2 billion), Reuters relates.
However, sources have said the EU Commission has demanded an
additional injection of EUR1.2 billion by private investors
before taxpayer money can be used and Rome is struggling to find
any investor willing to stump up the money, Reuters notes.

"The effects of not solving the crisis at the two banks would not
be smaller than those created by a default by Greece," Reuters
quotes Banca Popolare di Vicenza CEO Fabrizio Viola as saying in
an interview with daily Corriere della Sera.

He added that the time taken to find a solution to rescue the
banks was being drawn out in an "unsustainable way", Reuters

According to Reuters, Mr. Viola added that the effects should not
be underestimated given that the two lenders have extended loans
worth EUR30 billion, mainly in the industrial north eastern
regions of the country, and "calling them back would create
tremendous chaos".

Banca Popolare di Vicenza (BPVi) is an Italian bank.  The bank
was the 13th largest retail and corporate bank of Italy by total
assets, according to Mediobanca.

                         *     *     *

As reported by the Troubled Company Reporter-Europe on Mar 21,
2017, Fitch Ratings downgraded Banca Popolare di Vicenza's
(Vicenza) Long-Term Issuer Default Rating (IDR) to 'CCC' from
'B-' and Viability Rating (VR) to 'cc' from 'b-'. The Long-Term
IDR has been placed on Rating Watch Evolving (RWE).

The downgrade of Vicenza's VR to 'cc' reflects Fitch's view that
it is probable that the bank will require fresh capital to
address a material capital shortfall, which under Fitch's
criteria would be a failure.

The downgrade of the Long-Term IDR to 'CCC' reflects Fitch's view
that there is a real possibility that losses could be imposed on
senior bondholders if a conversion or write-down of junior debt
is not sufficient to strengthen capitalisation and if the bank
does not receive fresh capital in a precautionary


CENTRAS INSURANCE: A.M. Best Cuts Financial Strength Rating to C+
A.M. Best has downgraded the Financial Strength Rating to C+
(Marginal) from C++ (Marginal) and the Long-Term Issuer Credit
Rating to "b-" from "b" of JSC Insurance Company Centras
Insurance (Centras) (Kazakhstan).  The outlook of these Credit
Ratings (ratings) is stable.

The rating downgrades reflect a material deterioration in
Centras' risk-adjusted capitalization at year-end 2016, owing to
the company's rapid growth in gross and net written premiums
(NWP) relative to its stable capital base.  The company's
regulatory solvency margin declined to 1.26 as of April 1, 2017,
(compared with a regulatory minimum solvency requirement of
1.00), down from 2.47 as of Jan. 1, 2016. A .M. Best expects
Centras' risk-adjusted capitalization to improve in 2017 and
2018, driven by positive retained earnings.  However, risk-
adjusted capitalization is not expected to improve to a level
supportive of the former ratings in this time period.

Centras has reported technical losses in each of the past six
years.  In 2016, the company's underwriting performance benefited
from a 61% increase in NWP; however, the company reported an
underwriting loss of KZT 310 million (2015: KZT 855 million), due
to a combination of a material increase in its net unearned
premium reserves and the ongoing impact of elevated expense
levels.  Underwriting performance in 2017 is expected to benefit
from a rise in net earned premiums due to the 2016 increase in
NWP.  The company's overall net profit fell to KZT 38 million in
2016 (2015: KZT 1 billion), in the absence of the material
foreign exchange gains that boosted performance in 2015.

The company grew its share of the Kazakh non-life market to 4.1%
in 2016 from 2.8% in 2015.  As of Jan. 1, 2017, the company
ranked seventh out of 25 non-life insurers in Kazakhstan, up from
thirteenth in 2015.  The company's gross written premium rose by
91% to KZT 11.2 billion in 2016, driven by a 76% increase in the
compulsory motor-third party liability business following the
withdrawal of several competitors from this line, as well as by
the addition of a number of large fronted property and third-
party liability contracts.  Despite the significant premium
growth achieved in 2016, the company's limited diversification
and relatively small size may restrict its ability to defend its
market position in challenging conditions.

A.M. Best has affirmed the Financial Strength Rating of C++
(Marginal) and the Long-Term Issuer Credit Rating of "b+" of
Kommesk-Omir Insurance Company JSC (Kommesk) (Kazakhstan).  The
outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Kommesk's adequate risk-adjusted
capitalization, volatile operating performance, marginal business
profile and exposure to country risk in Kazakhstan.

Kommesk's level of risk-adjusted capitalization reflects its
strategy of maintaining a significant buffer above its minimum
regulatory requirements and is supported by moderate underwriting
leverage. Balance sheet strength also benefits from a reinsurance
panel of good credit quality. A.M. Best expects risk-adjusted
capitalization to be maintained at an adequate level.  However,
the challenging economic environment in Kazakhstan and the
company's exposure to the vulnerable domestic banking sector
represent a material downside risk.  Kommesk's risk-adjusted
capitalization improved significantly in 2015, largely as a
result of an increase in retained earnings stemming from foreign
exchange gains.  The company's operating performance is volatile
and, due to a lack of scale, its technical results are
constrained by high operating costs.  The 2016 financial year was
the first since 2011 in which the company recorded underwriting
profit, driven by a significantly improved loss experience.
However, given challenging domestic market conditions and the
uncertain economic outlook, the company will find sustainable and
profitable growth difficult.

Kommesk delivered significant growth in 2016, increasing its
gross and net written premiums by 44% and 57%, respectively.
However, its profile remained marginal, as its market share only
increased to 1.9% from 1.6% in the prior year.  The company's
underwriting portfolio is heavily skewed toward compulsory motor
third-party liability and motor hull products, which are lines of
business characterized by declining profitability.  A.M Best
believes that Kommesk's lack of diversification and small size
limit the company's ability to defend its business in what are
currently challenging conditions.


ARDAGH PACKAGING: S&P Raises Rating on Unsecured Debt to 'B'
S&P Global Ratings raised the issue rating on Ardagh Packaging
Group Ltd.'s unsecured debt to 'B' from 'B-' and revised the
recovery rating to '5' from '6'.  The recovery rating indicates
modest recovery (10%-30%; rounded estimate, 15%) prospects in the
event of payment default.

S&P also assigned its 'B' issue rating and our '5' recovery
rating to Ardagh's new GBP400 million notes issued by Ardagh
Packaging Finance PLC and Ardagh Holdings USA Inc.

At the same time, S&P affirmed the 'BB' issue ratings and '1'
recovery rating on Ardagh's existing senior secured debt and the
'B-' issue rating and the '6' recovery rating on the company's
subordinated payment-in-kind (PIK) toggle notes issued by ARD
Finance S.A.

The recovery rating revision and upgrade of the unsecured debt
follow Ardagh's proposed refinancing.  The actions are driven by
Ardagh partly using cash from the balance sheet to repay debt,
ultimately resulting in EUR405 million less gross debt in the
structure and therefore higher recovery prospects for unsecured
bond holders, in S&P's view.  While this has no effect on the
corporate credit rating (as S&P nets surplus cash), secured debt
recovery prospects are also enhanced.  Nevertheless, the recovery
rating is capped at '1' and the issue ratings subsequently remain
two notches above the corporate credit rating, at 'BB'.

The documentation remains unchanged, and contains carve-outs,
permitted debt, and restricted payments baskets through fixed
caps. Additional debt incurrence (outside of permitted debt
baskets) and restricted payments are only constrained by a
customary minimum 2.0x interest coverage ratio, which S&P views
as structurally weak.  Permitted liens on collateral are
constrained by a pro forma 3.5x net total leverage.  The cross-
default threshold was recently increased to EUR75 million.

The documentation includes a provision within the restricted
payment covenant that prevents the repayment or refinancing (in
whole or part) of the PIK toggle notes at the restricted group
level (so-called debt push-down) unless (i) the pro forma net
total leverage is below 5.25x; and (ii) the parent guarantor,
holding company, or controlled affiliate is listed on an
international securities exchange, which is the case following
the recent listing of Ardagh Group S.A.

S&P's hypothetical payment default scenario assumes a weaker
overall operating performance and declining demand caused by
increased product substitution.  This may lead to lower capacity
utilization and squeezed margins as a result of increasing
costs -- particularly energy prices--paired with an inability to
pass these on to customers.  S&P believes that this, combined
with higher integration costs and execution risk related to
acquired businesses, would lead to a payment default in or before

S&P values Ardagh as a going concern due to its leading market
positions in global glass container and metal packaging markets,
with a strong focus on relatively stable food and beverage end-
markets and a strengthened position in Europe, North America, and

Simulated default assumptions

   -- Year of default: 2020
   -- Minimum capex (% pro forma the last two years' average
      sales): 4%
   -- Cyclicality adjustment factor: +5% (standard assumption for
      the containers and packaging sector)
   -- Emergence EBITDA after recovery adjustments:
      About EUR788 million
   -- Implied enterprise value multiple: 6.0x
   -- Jurisdiction: Luxembourg

Simplified waterfall

   -- Gross enterprise value at default: About EUR4.7 billion
   -- Administrative costs: 7%
   -- Net value available to debtors: EUR4.2 billion
   -- Priority claims: EUR165 million
   -- Secured debt claims [1] : About EUR3.3 billion
   -- Recovery expectation [2]: 90%-100% (rounded estimate 95%)
   -- Unsecured debt claims [1] : EUR5.0 billion
   -- Recovery expectation [2]: 10%-30% (rounded estimate 15%)
   -- Subordinated PIK toggle debt claims*: EUR2.2 billion
   -- Recovery expectation [2]: 0%-10% (rounded estimate 0%)

[1] All debt amounts include six months' prepetition interest.
PIK toggle notes' interests assumed PIK'ed up to the year of
default. [2] Rounded down to the nearest 5%.


                                        To                 From
Ardagh Packaging Finance PLC
Ardagh Holdings USA Inc.
Senior Unsecured                       B                  B-
   Recovery Rating                      5(15%)             6(0%)

New Rating

Ardagh Packaging Finance PLC
Ardagh Holdings USA Inc.
Senior Unsecured                       B
  Recovery Rating                       5(15%)

Ratings Affirmed

Ardagh Packaging Finance PLC
Ardagh Holdings USA Inc.
Senior Secured                          BB
  Recovery Rating                       1(95%)

ARD Finance S.A.
Subordinated                           B-
   Recovery Rating                      6(0%)

SENSATA TECHNOLOGIES: Moody's Affirms Ba2 CFR, Outlook Stable
Moody's Investors Service affirmed Sensata Technologies B.V.'s
ratings with the Corporate Family Rating (CFR) at Ba2, and
Probability of Default Rating (PDR) at Ba2-PD, senior secured at
Baa3, and senior unsecured at Ba3. The company's Speculative
Grade Liquidity (SGL) rating was upgraded to SGL-2 from SGL-3
reflecting the expectation for good liquidity. The ratings
outlook is stable.

The following rating actions were taken:

Issuer: Sensata Technologies B.V.:

CFR affirmed at Ba2

PDR affirmed at Ba2-PD

$420 million senior secured revolving credit facility due 2020
affirmed at Baa3 LGD2,

$990 million sr secured term loan B due 2021 affirmed at Baa3

$500 million Gtd Sr Global notes due 2023 affirmed at Ba3 LGD-5,

$400 million Gtd Sr Global notes due 2024 affirmed at Ba3 LGD-5,

$700 million Gtd Sr Global notes due 2025 affirmed at Ba3 LGD-5.

The Speculative Grade Liquidity rating was upgraded to SGL-2 from

The rating outlook has been changed to stable from negative.

Issuer: Sensata Technologies UK Financing Co. PLC:

$750 million Gtd Global notes due 2026 affirmed at Ba3 LGD-5.

The rating outlook has been changed to stable from negative.


The Ba2 rating reflects the history of good cash flow generation,
and the amount of deleveraging progress made since the company
took on significant debt to finance the acquisitions of Schrader
International (Schrader) in 2014 and Custom Sensors &
Technologies Ltd (CST) sensor business in 2015. The rating also
considers the company's strong margins as evidence of its good
market position and ability to integrate acquisitions
successfully. The rating also benefits from its good customer
relationships in the custom sensors market for automotive,
aerospace, and various other end markets. These factors are
weighed against the anticipated slower organic sales growth, in
part due to softness in new car sales, and recent years' history
of large debt financed acquisitions, totaling approximately $2

The change in rating outlook to stable from negative reflects the
company's strong margins and deleveraging strategy since the CST
acquisition and Moody's expectations for ongoing deleveraging
through a combination of EBITDA growth and cash flow growth.
Moody's note however that the company may choose to build its
balance sheet cash to help fund another acquisition over the next
two years. The outlook may revert to negative or the ratings
downgraded if the acquisition is debt funded and increases
leverage to over to over 4.25 times (all ratios on a Moody's
adjusted basis using gross debt). Free cash flow to debt under
10% or EBITDA to interest below 4.5 times could also pressure the

The rating is unlikely to be upgraded given the company's
willingness to make large acquisitions that add meaningful
leverage for an extended timeframe. However, further public
clarification as to its willingness to add to leverage or a
commitment to lower leverage inclusive of acquisitions could
support positive rating traction. Debt to EBITDA sustained below
3.75 times and deemed to be improving along with free cash flow
to debt above 14% would also be supportive of positive ratings

Sensata Technologies B.V. is an indirect wholly-owned subsidiary
of Sensata Technologies Holding N.V., a globally diversified
manufacturer of sensors and controls products for the automotive,
aerospace, HVAC, and general industrial markets headquartered in
the Netherlands. The company's products include sensors measuring
pressure/force/speed, thermal and magnetic-hydraulic circuit
breakers, and switches. Full year 2016 revenues totaled $3.2

The principal methodology used in these ratings was Global
Manufacturing Companies published in July 2014.


NORSKE SKOGINDUSTRIER: Moody's Cuts CFR to Caa3, Outlook Stable
Moody's Investors Service has downgraded the corporate family
rating (CFR) of Norske Skogindustrier ASA (Norske Skog) to Caa3
from Caa2 as well as its probability of default rating (PDR) to
Caa3-PD from Caa2-PD. Concurrently, Moody's has also downgraded
Norske Skog's senior unsecured global notes due 2026 and 2033 to
C from Caa3 and affirmed the C rating of its senior subordinated
perpetual notes due 2115. In addition, Moody's has downgraded the
rating of the senior unsecured global notes due 2021 and 2023
issued by Norske Skog Holdings AS to Caa3 from Caa2 and the
rating of the senior secured notes issued by Norske Skog AS to
Caa2 from Caa1. The outlook on the ratings remains stable.


The downgrade of the CFR to Caa3 from Caa2 and of the PDR to
Caa3-PD from Caa2-PD reflects exchange offer, which if executed
successfully, would qualify as a distressed exchange under
Moody's definition as some investors' obligations would be
significantly diminished. Upon successful conclusion of the
transaction, Moody's expects to assign a "/LD" indicator to the
company's PD rating. Moody's would expect to remove the "/LD"
suffix after approximately three business days following the debt
exchange, if assigned.

It also reflects the rating agency's expectation of a weakening
operating performance and liquidity through 2017 in a difficult
operating environment with material inflation of input prices,
such as recovered paper and pulp, with a risk that Norske Skog
will not be able to pass the higher costs to customers through
price increases. This may prevent Norske Skog to return to
positive free cash flow generation in 2017, further pressuring
liquidity, if the offer is not accepted.

The downgrades of the senior secured notes issued by Norske Skog
AS to Caa2 from Caa1, senior unsecured global notes issued by
Norske Skogindustrier ASA to C from Caa3 and Norske Skog Holdings
AS's senior unsecured notes to Caa3 from Caa2 mirrors the one
notch downgrade of CFR and PDR. The affirmation of the C rating
of the senior subordinated perpetual notes issued by Norske
Skogindustrier ASA reflects the very low recovery assumptions
given their most junior position in the LGD Waterfall even if the
offer is not accepted. The Caa3 of the Norske Skog Holdings AS'
notes balances the equitisation of the instrument, if the offer
is accepted, with a chance of a somewhat higher recovery than
that of all the notes issued by Norske Skogindustrier ASA's (now
rated C), if the offer is not accepted.

The proposed exchange offer consists of the following steps: (1)
the global notes issued by Norske Skogindustrier ASA (previously
rated Caa3) and Norske Skog Holdings AS (previously rated Caa2)
and perpetual notes issued by Norske Skogindustrier ASA
(previously rated C and affirmed) will be fully equitized
(including accrued PIK interest); (2) the tenor of the existing
securitization facilities due 2020 will be extended; (3) new
equity of up to EUR70 million will be raised; and (4) the terms
of the existing secured notes issued by Norske Skog AS
(previously rated Caa1) will be amended and exchanged for new
senior secured notes with a longer tenor and a lower coupon.

If the offer is accepted, the rating agency estimates that
Moody's adjusted gross debt/EBITDA (including standard
adjustments for pensions, capitalised operating leases and
securitisation) on a pro-forma basis would improve to a more
sustainable 5.7x from 9.6x in 2016, resulting also in material
interest savings. As such, Moody's would expect that if the
transaction closes as proposed, Norske Skog's Caa3 CFR and any
remaining instrument ratings could be upgraded significantly.


Upward pressure on the rating could arise should (i) Norske Skog
sustainably improve profitability at group level to aid the
deleveraging process, (ii) improve liquidity levels through
consistent and meaningful free cash flow generation through 2017-

Downward pressure over the ratings horizon could result from (i)
adverse market developments or operational problems resulting in
deteriorating financial performance, (ii) free cash flow
generation becoming negative; (iii) a weakened liquidity profile
including inability to procure liquidity resources (e.g. renewal
of securitization facilities), resulting in a heightened default

List of Affected Ratings:


Issuer: Norske Skogindustrier ASA

-- Corporate Family Rating, Downgraded to Caa3 from Caa2

-- Probability of Default Rating, Downgraded to Caa3-PD from

-- Senior Unsecured Regular Bond/Debenture, Downgraded to C from

Issuer: Norske Skog AS

-- Senior Secured Regular Bond/Debenture, Downgraded to Caa2
    from Caa1

Issuer: Norske Skog Holdings AS

-- Senior Unsecured Regular Bond/Debenture, Downgraded to Caa3
    from Caa2


Issuer: Norske Skogindustrier ASA

-- Senior Subordinated Regular Bond/Debenture, Affirmed C

Outlook Actions:

Issuer: Norske Skogindustrier ASA

-- Outlook, Remains Stable

Issuer: Norske Skog AS

-- Outlook, Remains Stable

Issuer: Norske Skog Holdings AS

-- Outlook, Remains Stable

The principal methodology used in these ratings was Global Paper
and Forest Products Industry published in October 2013.


FAR-EASTERN SHIPPING: Fitch Affirms 'RD' LT Issuer Default Rating
Fitch Ratings has affirmed Russia-based Far-Eastern Shipping
Company Plc's (FESCO) Long-Term Foreign-Currency Issuer Default
Rating (IDR) at 'RD' (Restricted Default).

The affirmation of the IDR at 'RD' reflects FESCO's continuing
negotiations with bondholders to restructure the company's
obligations. The 'RD' rating will be revised following
finalisation of negotiations with bondholders to reflect the
appropriate IDR for the issuer's post-restructuring capital
structure, risk profile and prospects in accordance with Fitch
relevant criteria.


Negotiations with Bondholders Continue: Following the failure to
pay the coupon on two Eurobonds in 2H16, FESCO entered
negotiations with bondholders to restructure its obligations
which are still in progress. The company intends to agree key
restructuring principles with Eurobonds holders in June 2017.
Once agreed the company plans to issue audited IFRS financial

In 2017, FESCO signed several novation agreements with
bondholders of local bonds due in February 2018 according to
which the defaulted payments related to the third and fourth
coupon originally due in April 2017 were deferred to October
2017. In March 2017 the company agreed full settlement of
obligation with two bondholders of local bonds due in November
2017 under which the company purchased and settled ahead of
schedule 284 bonds. FESCO continues to negotiate with the
remaining bondholders of this series.

Insufficient Liquidity: Fitch assessed FESCO's liquidity position
at end-9M16 as insufficient. The company's cash and cash
equivalents of USD43 million will not cover Fitch-projected 2017
negative free cash flows (FCF) and expected maturities of USD895
million. In 9M16 IFRS financial statements FESCO's debt of USD744
million was reclassified as short-term as the company had not
paid the coupon on May 4, 2016 under its Eurobonds and principal
payments of USD33 million due on May 31, 2016 under its local

Low Coverage, High Leverage: At end-9M16, FESCO's debt stood at
USD909 million. As per 9M16 IFRS financial statements, in May
2016, the company refinanced its obligations to an international
bank under which USD220 million bought back Eurobonds were
pledged with the new loan facility and a previously deferred gain
of USD109 million was recognised as other finance income in the
income statement. Therefore Fitch assumes that these Eurobonds
are not used as collateral under the new loan and Fitch does not
includes the USD220 million Eurobonds in Fitch adjusted debt
calculations for end-2016. This is in contrast to end-2015 when
Fitch included USD220 million of pledged Eurobonds in the
adjusted debt calculations after USD109 million was reclassified
to debt from other long-term liabilities and USD111 million was
added as off -balance sheet obligations.

Fitch expects FESCO's funds from operations (FFO) adjusted net
leverage to remain elevated at around 10x on average over 2016-
2019 on the back of continued weak operational performance. Fitch
expects FESCO to report negative FFO over 2016-2019 due to lower
operational cash flows, resulting in FFO interest coverage
falling to below 1x over 2016-2019, from slightly above 1x at

FX Risks Still High: Despite the buyback of foreign-denominated
debt in May 2015 and conversion of certain port tariffs to US
dollars from rouble at end-2014, FESCO remains exposed to foreign
currency fluctuations as about 84% of its total debt at end-
October 2016 was denominated in foreign currencies, mainly US
dollars. About 53% of revenue in 2016 was US dollar-linked or US

Earnings Pressure Continues: In 9M16 FESCO's revenue and EBITDA
dropped by about 27% in US-dollar equivalent on the back of a
decline in bunkering activities, and in general demand and cargo
throughput volumes. According to FESCO, the company managed to
slightly increase its EBITDA margin to 16.1% in 9M16 from 15.3%
in 6M16 due to cost control and optimisation measures.

Expected Negative FCF: Despite significant reduction in capex to
a maintenance level of USD19 million annually versus USD62
million on average over 2012-2014 Fitch expects FESCO to generate
negative FCF over 2016-2019. This is mainly due to weaker cash
generation from operations on the back of slowing volumes and
rates and high interest/coupon payments on debt.


FESCO has higher operational diversity compared to Fitch-rated
rolling stock companies as FESCO has operations in ports, rail,
integrated logistics and shipping. The business profile benefits
from FESCO's port division, which was responsible for about 60%
of EBITDA in 9M16. In contrast to rolling stock companies rated
by Fitch, FESCO has limited geographic diversity as the majority
of its operations are located in the Russian Far East. Among the
rated peers Fitch believes FESCO has the highest exposure to
foreign-currency risk. FESCO's credit metrics were affected by
weakened operational performance and rouble depreciation as the
majority of debt is denominated in foreign currencies. Its credit
profile and liquidity position are very weak compared to peers.
FESCO is in negotiations with bondholders to restructure its


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

   - Russian GDP growth of 1.4%-2.2% in 2017-2019; Chinese GDP
     growth of 5.7%-6.3% over 2017-2019
   - Russian CPI of 4.5%-4.9% over 2017-2019
   - No dividends payments
   - Fitch assumes capex of about USD20 million annually over
   - USD/RUB exchange rate of 61 over 2017-2019


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

   - The 'RD' rating will be revised to reflect the appropriate
     IDR for the issuer's post-restructuring capital structure,
     risk profile and prospects in accordance with relevant

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

  - FESCO entering into bankruptcy filings, administration,
    receivership, liquidation or other formal winding-up


Far-Eastern Shipping Company Plc
  - Long-Term Foreign Currency IDR affirmed at 'RD'
  - Long-Term Local Currency IDR affirmed at 'RD'
  - Local currency senior unsecured rating affirmed at 'C',
    Recovery Rating of 'RR6'

Far East Capital Limited S.A. (Luxembourg)
  - Foreign currency senior unsecured rating affirmed at 'C',
    Recovery Rating of 'RR6'.

IRKUTSK OBLAST: S&P Affirms 'BB' ICR, Outlook Remains Stable
S&P Global Ratings affirmed its 'BB' long-term issuer credit
rating on Irkutsk Oblast, a Russian region in Eastern Siberia.
The outlook remains stable.


The stable outlook reflects S&P's expectation that Irkutsk Oblast
will continue applying its cost-containment measures, thereby
keeping tax-supported debt below 30% of consolidated operating

Downside Scenario

The ratings could come under pressure if the pace of operating
spending growth offsets revenue growth, translating into negative
operating balances and a rise in tax-supported debt to above 30%
of consolidated operating revenue.

Upside Scenario

S&P could raise the rating if Irkutsk Oblast demonstrated the
sustainability of its current prudent approach to spending and
debt management.  This could happen if tax revenues continue to
grow while the region keeps spending under control.


The affirmation reflects S&P's view that Irkutsk Oblast's strong
revenues, stemming from growing tax receipts and the region's
cost-containment measures, might help to maintain structurally
positive operating margins and to stabilize the deficit after
capital accounts below 5% of total revenues.  At the same time,
S&P expects tax-supported debt will remain below 30% of
consolidated operating revenues.

Economic growth and cost-containment underpin budgetary
performance, but the institutional framework remains highly
centralized.  S&P believes that Russia's highly centralized
institutional framework continues to be the main rating
constraint.  Tax, fiscal, and administrative legislation
affecting Russian regional governments is subject to frequent
changes.  The system is dominated by what S&P views as the
federal government's unilateral, hasty decisions.

Russia's highly centralized institutional framework translates
into very weak budgetary flexibility for the oblast.  Moreover,
S&P believes that Irkutsk Oblast's spending flexibility is
further restricted by its high share of social spending and
relatively high infrastructure needs.

S&P projects that Irkutsk Oblast's economic growth will likely
surpass that of the national economy, translating into further
tax revenue growth.  Nevertheless, wealth will remain low in an
international context.  S&P estimates that gross regional product
per capita will average about US$7,500 in 2016-2018.  The mining
sector dominates the oblast's economy, and its importance is
growing, representing 26% of the gross regional product in 2016.

In S&P's view, the dependence on this sector exposes Irkutsk
Oblast's budget revenues to the volatility of world commodity
prices and to changes to the national tax regime.

S&P views positively the region's cost-containment measures in
2015 and 2016.  S&P also notes that debt and liquidity management
continues to improve; the oblast now relies on medium-term
borrowing (budget loans and bonds) and maintains sufficient
credit facilities though the year.  Still, Irkutsk Oblast lacks a
reliable long-term financial and capital plan, which constrains
S&P's assessment of its financial management.  This lack of
planning is typical of Russia's regional governments.

Modest deficit after capital accounts, low debt, and strong
liquidity coverage support the ratings.  Economic growth, coupled
with management's cost-containment measures, translated into very
solid budgetary performance in 2016, surpassing S&P's
expectations.  Under S&P's base-case scenario, it assumes that,
in 2017-2019, the operating balance will likely remain positive
compared with an operating deficit of 4% on average in 2013-2015.
In S&P's base case, it also incorporates the planned increase in
equalization grants in 2017 by Russian ruble (RUB) 2.1 billion
(US$37 million).

On the spending side, S&P assumes that Irkutsk Oblast's operating
performance will be supported by its management's prudent
spending policies, which haven't changed since the election of
the new governor in September 2015.  The positive operating
margins will help narrow the deficit after capital accounts to
about 3.2% of total revenues on average in 2017-2019 compared
with almost 6% on average in 2014-2016.

Owing to modest deficits after capital accounts, S&P expects that
tax-supported debt will remain low and won't exceed 30% of
consolidated operating revenues in the period to year-end 2019.
After a RUB5.5 billion prepayment of bank loans in the beginning
of 2017 and a RUB5 billion bond placement at the end of 2016,
Irkutsk Oblast's direct debt consists of medium-term budget loans
(63.5% of the stock) and bonds (36.5%).  S&P also includes minor
debt of the oblast-owned government-related entities (GREs) in
S&P's assessment of tax-supported debt.

S&P also notes Irkutsk Oblast's strong debt service coverage
ratios.  S&P projects free cash and committed credit facilities
will cover more than 4x debt service falling due within the next
12 months.  At the same time, S&P views Irkutsk Oblast's access
to external liquidity as limited, owing to the weaknesses of the
Russian capital market and its banking sector.

In the first four months of this year, Irkutsk Oblast repaid
RUB5.5 billion of bank loans due in December 2019 ahead of
schedule.  It was able to do this using a mix of cheap loans
provided by the central government and a surplus after capital
accounts.  Furthermore, the next 12 months' debt service is very
low and amounts to RUB2.2 billion.  To service this, the region
has RUB6 billion in undrawn credit facilities and RUB4.6 billion
of cash reserves (average of the past 12 months), net of the
projected deficit after capital accounts.

The debt maturity profile is very smooth.  Under S&P's base case,
it believes that Irkutsk Oblast's cash and committed facilities
will continue to exceed annual debt service by at least 1.2x.

S&P assesses Irkutsk Oblast's outstanding contingent liabilities
as low.  S&P estimates the GREs' payables at about 4.5% of the
oblast's operating revenues.  At the same time, S&P believes that
Irkutsk Oblast is more likely than Russian peers to have to
provide extraordinary financial support to its GREs or
municipalities.  This reflects S&P's view of Irkutsk Oblast's
extensive infrastructure development needs.

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

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 budgetary performance 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.


                                      To              From
Irkutsk Oblast
Issuer Credit Rating
  Foreign and Local Currency          BB/Stable/--   BB/Stable/--
Senior Unsecured
  Local Currency                      BB              BB

RN BANK: S&P Assigns 'BB+/B' Counterparty Credit Ratings
S&P Global Ratings assigned its 'BB+/B' long-term and short-term
counterparty credit ratings to Russia-based JSC RN Bank.  The
outlook is stable.

S&P's ratings on RN Bank reflect its stand-alone credit profile
(SACP), which S&P assess at 'b+' and the three notches of uplift
S&P includes given its expectation that it will likely receive
extraordinary support under almost all foreseeable circumstances
from its shareholders -- RCI Banque (BBB/Stable/A-2) and Nissan
Motor Co. Ltd. (A-/Positive/A-2) -- due to its strategically
important group status to both entities.

S&P believes that both RCI Banque, which is the financial arm of
Renault S.A., and Nissan Motor Co. Ltd. are committed to provide
support to RN Bank, since the bank plays an important role for
the development of Renault-Nissan Alliance business in Russia.
In 2016, RN Bank financed the sales of 33% of Renault-Nissan
Alliance's new cars to retail customers and 70% of dealers' stock
of car vehicles and spare parts.  Russia is one of the largest
markets for Renault-Nissan Alliance and both shareholders have
invested material resources to develop production facilities in
the country in recent years.  S&P highlights that its support
assessment is sensitive to the stability of Renault-Nissan
Alliance being a joint investor and acting together as a
controlling shareholder.

S&P assesses RN Bank's business position to be weak, reflecting
the bank's concentration in the car financing segment and its
relatively small size compared with larger and more diversified
peers operating in countries with similar industry risk.  With
total assets of Russian ruble (RUB) 66 billion (about $1.2
billion) as of April 1, 2017, under Russian accounting standards,
RN Bank ranked No. 78 among Russian banks.

S&P believes that RN Bank's capital and earnings are strong,
supported by the sound earnings generation capacity.  S&P's
assessment includes substantial capital injections in 2013-2014.
S&P anticipates the bank's risk-adjusted capital ratio to be
10.5%-11.0% in the next 12-18 months, assuming annual loan
portfolio growth of about 10%-15%, credit costs of about 1% of
total loans, and a maximum dividend pay-out of about one-third of
the annual profits.

S&P assesses RN Bank's risk position as adequate in comparison
with peers in Russia and other banking systems with similar
economic risk scores, under S&P's Banking Industry And Country
Risk Assessment.  S&P's assessment balances high sector
concentration in the loan portfolio, on the one hand, and the
better-than-average quality of its assets and good risk
management compared with other consumer finance banks in Russia,
on the other.  S&P also incorporates ongoing support from
shareholders with regard to risk-management tools and expertise
into its assessment.

"We assess RN Bank's funding as average, reflecting our
expectation that the bank will continue receiving funding support
from its shareholders.  The shareholder funding made up 83% of
total funding base on Dec. 31, 2016, and was provided by
shareholders approximately in proportion to their equity
participation: 40% by UniCredit, 30% by RCI Banque, and 30% by
Nissan Motor Co. Ltd.  Although part of the shareholder funding
was structured as one-year interbank deposits, we expect it to be
rolled over and remain with RN Bank.  We anticipate that the
bank's reliance on funding from capital markets will not exceed
30% of its total funding in our base-case scenario.  As of May 1,
2017, bond financing amounted to 17.5% of total liabilities under
Russian accounting standards," S&P said.

S&P considers RN Bank's liquidity to be adequate, given the
bank's access to ample liquidity lines from its shareholders.
Liquid assets amounted to 11.2% of total assets on May 1, 2017.

The stable outlook reflects S&P's view that RN Bank's
creditworthiness will likely remain balanced over the next 12-18
months.  S&P believes that the bank will continue benefiting from
the ongoing support of shareholders that provide it with
financial resources and managerial expertise.  S&P expects the
bank's capitalization to remain strong, supported by the sound
earnings generating capacity with credit costs staying at about
1% of total loans, which is below average for the Russian banking

S&P caps its ratings on RN Bank at the level of S&P's foreign
currency sovereign rating on the Russian Federation
(BB+/Positive/B).  This is because RN Bank is a commercial bank
operating exclusively in Russia and therefore is exposed to
associated country risks.  If S&P was to lower the sovereign
ratings or S&P's transfer and convertibility assessment of
Russia, S&P would likely take a similar action on RN Bank.

S&P could also downgrade RN Bank if S&P saw a diminished
commitment from RCI Banque or Nissan Motor Co. Ltd. to provide
support in terms of capital or funding, or if their strategy for
the Russian market changes such that S&P considers that the
bank's group status toward one or both shareholders had weakened.

A positive rating action is remote at this stage.  It would
likely depend on S&P revising its assessment of RN Bank's SACP
upward, and upgrading Russia.

RUSSIAN STANDARD: S&P Withdraws ruBB- National Scale Rating
S&P Global Ratings has now withdrawn its Russia national scale
ratings on 104 issuers and 48 issues.  The decision to withdraw
the ratings was taken in light of a change in Russian law that
has had the effect of making S&P Global Ratings' Russia national
scale credit ratings ineligible for regulatory purposes after
July 14, 2017.

S&P Global Ratings will, however, still maintain global scale
ratings on all issuers and issues to which it formerly assigned
Russia national scale ratings.  Withdrawal of the national scale
ratings does not affect the global scale ratings.


Not Rated Action
                                        To     From
Agency for Housing Mortgage Lending JSC
Russia National Scale                  NR     ruAA+

Alfa-Bank JSC
Russia National Scale                  NR     ruAA

Atomic Energy Power Corp. JSC
Russia National Scale                  NR     ruAA+

Russia National Scale                  NR     ruAA+

Bank Otkritie Financial Co.
Russia National Scale                  NR     ruA/Watch Neg/--

Russia National Scale                  NR     ruA-

B&N Bank
Russia National Scale                  NR     ruA-

Russia National Scale                  NR     ruAA+

Borets International Ltd.
Russia National Scale                  NR     ruAA-

CentroCredit Bank JSC
Russia National Scale                  NR     ruA-

Concern Rossium LLC
Russia National Scale                  NR     ruBBB-

Russia National Scale                  NR     ruAA-

Commercial Bank National Standard LLC
Russia National Scale                  NR     ruBBB+

Commercial Bank Renaissance Credit LLC
Russia National Scale                  NR     ruBBB-

Credit Suisse Securities (Moscow) Ltd.
Russia National Scale                  NR     ruAA+

Credit Union Payment Center
Russia National Scale                  NR     ruAA

Development Capital Bank OJSC
Russia National Scale                  NR     ruBBB-

Element Leasing LLC
Russia National Scale                  NR     ruA-

Energogarant JSIC
Russia National Scale                  NR     ruAA-

Russia National Scale                  NR     ruA

Eurasia Drilling Co.
Russia National Scale                  NR     ruAA

Eurasian Development Bank
Russia National Scale                  NR     ruAAA

EuroChem Group AG
Mineral and Chemical Co. EuroChem JSC
Russia National Scale                  NR     ruAA-

Evraz Group S.A.
Russia National Scale                  NR     ruAA-

Federal Grid Co. of the Unified Energy System
Russia National Scale                  NR     ruAA+

Federal Passenger Co. JSC
Russia National Scale                  NR     ruAA+

First Collection Bureau
Russia National Scale                  NR     ruBBB-

Gazprombank JSC
Russia National Scale                  NR     ruAA+
Senior Unsecured                       NR     ruAA+

Gazprom Neft PJSC
Russia National Scale                  NR     ruAA+
Senior Unsecured                       NR     ruAA+

GEOTECH Seismic Services JSC
Russia National Scale                  NR     ruBB

Russia National Scale                  NR     ruA

Ingosstrakh Insurance Co.
Russia National Scale                  NR     ruAA+

Insurance Company RESO-GARANTIA
Russia National Scale                  NR     ruAA

International Bank of Saint-Petersburg
Russia National Scale                  NR     ruBBB-

Investment Company Veles Capital LLC
Russia National Scale                  NR     ruAA-

Irkutsk Oblast
Russia National Scale                  NR     ruAA
Senior Unsecured                       NR     ruAA

Interregional Distribution Grid Company of Centre, Public Joint-
Stock Company
Russia National Scale                  NR     ruAA-

Russia National Scale                  NR     ruBBB+

Khanty-Mansiysk Autonomous Okrug
Russia National Scale                  NR     ruAA+

Krasnoyarsk Krai
Russia National Scale                  NR     ruAA-

Leningrad Oblast
Russia National Scale                  NR     ruAA+

LEXGARANT Insurance Co. Ltd.
Russia National Scale                  NR     ruA

LLC MK-Holding
Russia National Scale                  NR     ruBBB

Russia National Scale                  NR     ruAAA

Magadan Oblast
Russia National Scale                  NR     ruA
Senior Unsecured                       NR     ruA

MegaFon PJSC
MegaFon Finance LLC
Russia National Scale                  NR     ruAAA

Russia National Scale                  NR     ruA

MMC Norilsk Nickel PJSC
Russia National Scale                  NR     ruAAA

Moscow (City of)
Russia National Scale                  NR     ruAA+

Mosvodokanal JSC
Russia National Scale                  NR     ruAA+

Moscow United Electric Grid Co. PJSC
Russia National Scale                  NR     ruAA-

Mosenergo PJSC
Russia National Scale                  NR     ruAA+

Russia National Scale                  NR     ruAAA

National Factoring Co.
Russia National Scale                  NR     ruA-

Nizhnekamskneftekhim PAO
Russia National Scale                  NR     ruAA-

Novorossiysk Commercial Sea Port PJSC
Russia National Scale                  NR     ruAA-

Russia National Scale                  NR     ruAAA

OJSC TransFin-M
Russia National Scale                  NR     ruA-

OJSC Sogaz
Russia National Scale                  NR     ruAA+

PAO Severstal
Russia National Scale                  NR     ruAAA

PAO Sovcomflot
SCF Capital DAC
Russia National Scale                  NR     ruAA+

Russia National Scale                  NR     ruA

PhosAgro OJSC
Russia National Scale                  NR     ruAAA

Pioneer Group CJSC
Russia National Scale                  NR     ruBBB

PJSC Detsky Mir
Russia National Scale                  NR     ruA+

PJSC RusHydro
Russia National Scale                  NR     ruAA+

Promsvyazbank PJSC
Russia National Scale                  NR     ruAA-

Public Joint-Stock Company Sovcombank
Russia National Scale                  NR     ruA
Senior Unsecured                       NR     ruA

JSC VEB-leasing
Russia National Scale                  NR     ruAAA

REGION Investment Co. AO
Russia National Scale                  NR     ruBBB

Region Capital LLC
Senior Unsecured*                      NR     ruBBB
*Guaranteed by Region Investment Co. AO

Russia National Scale                  NR     ruAA-

Russia National Scale                  NR     ruAA-

Rosseti PJSC
Russia National Scale                  NR     ruAA+

RSG International Ltd.
RSG Finance LLC
Russia National Scale                  NR     ruBBB

Rusfinance Bank
Russia National Scale                  NR     ruAA+
Senior Unsecured                       NR     ruAA+

Russia National Scale                  NR     ruAA-

Russian Federation
Russia National Scale                  NR     ruAAA

Russian Railways JSC
Russia National Scale                  NR     ruAAA
Senior Unsecured                       NR     ruAAA

Russian Standard Bank JSC
Russia National Scale                  NR     ruBB-

Sakha (Republic of)
Russia National Scale                  NR     ruAA
Senior Unsecured                       NR     ruAA

Samara Oblast
Russia National Scale                  NR     ruAA
Senior Unsecured                       NR     ruAA

SPC Katren JSC
Russia National Scale                  NR     ruAA-

Russia National Scale                  NR     ruA
Senior Unsecured                       NR     ruA

State Transport Leasing Co. PJSC
Russia National Scale                  NR     ruAA-

Russia National Scale                  NR     ruAA-

Russia National Scale                  NR     ruAA

Russia National Scale                  NR     ruAA+

Ufa (City of)
Russia National Scale                  NR     ruAA-

Ural Bank for Reconstruction and Development
Russia National Scale                  NR     ruBBB-

Ural Optical & Mechanical Plant JSC
Russia National Scale                  NR     ruA-

Uralkali OJSC
Russia National Scale                  NR     ruAA-

Vodokanal St. Petersburg
Russia National Scale                  NR     ruAA

Vozrozhdenie Bank
Russia National Scale                  NR     ruAA-

Russia National Scale                  NR     ruAA+
Senior Unsecured                       NR     ruAA+

VTB Insurance Ltd.
Russia National Scale                  NR     ruAA+

Russia National Scale                  NR     ruAA+

VTB-Leasing Finance
Russia National Scale                  NR     ruAA+
Senior Unsecured*                      NR     ruAA+
*Guaranteed by VTB-Leasing.

West Siberian Commercial Bank
Russia National Scale                  NR     ruA

Yamal-Nenets Autonomous Okrug
Russia National Scale                  NR     ruAA+

NR--Not rated.

SAMARA OBLAST: S&P Assigns 'BB' Rating to Proposed RUB10BB Bonds
S&P Global Ratings said that it has assigned its 'BB' long-term
global scale issue rating to Samara Oblast's proposed Russian
ruble (RUB) 10 billion (about $178 million) seven-year senior
unsecured bond.  S&P understands that Samara Oblast
(BB/Stable/--) plans to issue the bond on June 9, 2017.

The bond will have 28 quarterly fixed-rate coupons and an
amortizing repayment schedule.  The coupon rate will be disclosed
at the time of issuance.  According to the redemption schedule,
10% of the bond is to be repaid in December 2020, 10% in
September 2021, 15% in December 2021, 15% in December 2022, 10%
in June 2023, 15% in December 2023, and the remaining 25% in May


Samara Oblast
Senior Unsecured
  RUB10 bil bnds ser RU35013SAM0 due 05/31/2024
   Local Currency                                              BB

TRANSKAPITALBANK: Moody's Affirms B1 Rating, Outlook Negative
Moody's Investors Service has affirmed the B1 long-term foreign-
currency deposit rating of Transkapitalbank (TKB). Concurrently,
the rating agency affirmed the bank's baseline credit assessment
(BCA) and adjusted BCA of b1, its long-term Counterparty Risk
Assessment (CR Assessment) of Ba3(cr), the Not Prime short-term
foreign-currency deposit rating and the Not Prime(cr) short-term
CR Assessment. Subordinated foreign-currency debt rating of B2
was also affirmed. The outlook on the bank's long-term deposit
ratings and the overall outlook on its ratings remains negative.


The affirmation of TKB's ratings reflects: (1) Recent
strengthening of the bank's capital position, as its Basel II
Tier 1 ratio reached 11.1% as of April 1, 2017, up from 7.5% a
year ago; and (2) Moody's expectations of a gradual recovery of
the bank's profitability in the next 12-18 months, as economic
growth in Russia resumes, the bank's asset quality stabilizes and
its cost base -- which is inflated following the recent
acquisition of Investment Trade Bank (ITB) -- is optimized.

However, the negative outlook on TKB's ratings reflects the risk
that the bank fails to stabilize its asset quality and recover
its profitability metrics in the next 12-18 months.

TKB's IFRS problem loans reached 24% of gross loans as of April
1, 2017, up from 13.6% as of year-end 2015, with approximately
80% of the increase attributed to problem loans reported by ITB,
net of loan loss reserves. However, the amount and proportion of
problem loans have remained approximately stable since H1 2016,
and their coverage with loan loss reserves is currently adequate:
the coverage ratio amounted to 71.7% as of year-end 2016, if
calculated based on gross problem loans and the corresponding
loan loss reserves for TKB and ITB. This coverage level is
similar to the sector average, while the predominantly secured
nature of TKB's loan book (approximately 80% of total) adds an
extra layer of protection.

TKB's historically robust profitability came under pressure in
2016: excluding the one-off accounting gain associated with state
support, the bank was just above break-even last year, and in Q1
2017 it reported a small net loss. The key factors weighing on
TKB's bottom-line performance are: (1) Elevated cost of risk
(loan loss provisions at 3.9-4.9% of gross loans in 2015-2016);
and (2) the consolidation of ITB. This consolidation contributed
a large volume of non-cash generating assets and relatively
expensive retail deposits, pressuring TKB's net interest margin
and increasing its cost base by approximately 45% in 2016.

Moody's expects TKB's profitability to gradually recover in 2H
2017 and 2018, as the bank optimizes its operating expenses and
funding costs, while its cost of risk normalizes. In Q1 2017,
annualized loan loss provisions amounted to a moderate 1.6% of
average gross loans.


A positive rating action on TKB's ratings is unlikely in the next
12-18 months, given the negative outlook. However, Moody's may
change the outlook on the long-term ratings to stable if the bank
demonstrates its ability to recover problem loans and materially
improve profitability.

TKB's ratings could be downgraded if its asset quality continues
to deteriorate, pressuring capital, and the bank fails to restore
sustainable profitable performance.


The principal methodology used in these ratings was Banks
published in January 2016.

Headquartered in Moscow, Russia, Transkapitalbank, at January 1,
2017, reported total IFRS assets of RUB249 billion and total
equity of RUB23.7 billion.


SUNRISE COMMUNICATIONS: S&P Affirms 'BB+' CCR, Outlook Positive
S&P Global Ratings said that it revised its outlook to positive
from stable on Swiss-based telecoms Sunrise Communications
Holdings S.A.  S&P affirmed the long-term corporate credit rating
at 'BB+'.

The outlook revision follows Sunrise's announcement that it has
entered into a definitive agreement with a consortium led by
Cellnex Telecom S.A. for the disposal of 2,239 telecom towers for
Swiss franc (CHF) 500 million. Sunrise intends to use CHF450
million of the proceeds to reduce its outstanding term loans.
Overall, this transaction reflects a fairly high valuation
multiple, and will therefore be relatively material to Sunrise's
capital structure given the size of the proceeds compared with
Sunrise's outstanding financial debt (about CHF1.9 billion as of
March 31, 2017).  This means the transaction will result in a
reduction of about 0.6x in Sunrise's reported net debt to EBITDA
pro forma for 2016.

At the same time, Sunrise has entered into a long-term service
agreement with Cellnex for the provision of tower infrastructure
services, which should increase its recurring operating expenses
by about CHF35 million per year.  S&P understands that the
contract with Cellnex will not be recognized as an operating
lease in Sunrise's accounts.  Nevertheless, given S&P's view of
the economic benefit to Sunrise from renting the space on the
towers, and S&P's view that the towers provide Sunrise with
critical infrastructure for the provision of wireless telecom
services, S&P will consider treating this contract as akin to an
operating lease liability and adjust S&P's metrics accordingly.

In S&P's view, however, even after adjusting for additional
operating leases, S&P forecasts improvement in Sunrise's
financial risk profile, with S&P Global Ratings-adjusted debt to
EBITDA forecast to fall to less than 3x in 2017 and to further
improve in 2018.  This is also on the back of credit metrics
improving in 2016 toward 3x.  Additionally, S&P expects this
transaction to materially improve Sunrise's ability to reduce
financial leverage with free operating cash flow (FOCF), as free
cash flow is forecast to decline by less than CHF15 million
compared with a CHF450 million reduction in financial debt.

The outlook revision also reflects S&P's expectation of continued
improvement in Sunrise's operating performance, and stabilization
of its revenues, thanks to growth in premium customers, including
customers opting for Sunrise's recent premium unlimited
convergent offer, Sunrise One.

In its base-case operating scenario for Sunrise, S&P assumes:

   -- Revenue decline of about 3%-4% year-on-year in 2017 as a
      result of continued pressure on its mobile pre-paid
      subscriber base and regulation impact, stabilizing in 2018-
      2019.  Adjusted EBITDA margin of about 36%-37% in 2017 and
      2018, due to ongoing cost-cutting and efficiency
      improvement measures.  Capital expenditures (capex) to
      sales of about 13.0% in 2017 and 2018, slightly lower than
      in previous years, as investments in long-term evolution
     (LTE) network coverage decrease.

   -- Dividend payments of about CHF180 million and 85% of free
      cash flow to equity from 2018 onward.

Based on these assumptions, S&P arrives at these credit measures
in 2017:

   -- Adjusted funds from operations (FFO) to debt of about 30%;
   -- Adjusted debt to EBITDA of 2.5x-3.0x; and
   -- FOCF to debt of more than 15%.

The positive outlook reflects the possibility of a one-notch
upgrade to 'BBB-' over the next 12 months if Sunrise's adjusted
credit metrics improve in line with S&P's base case.

Specifically, an upgrade would require continued improvement in
Sunrise's operating performance, with revenues showing signs of
stabilization and margins gradually increasing.  S&P could raise
the rating if adjusted debt to EBITDA declines to comfortably
less than 3x and FOCF to debt increases to more than 15%,
providing a cushion for additional medium-term deleveraging.

S&P could revise the outlook to stable if the Swiss market was to
experience fierce price-based competition, potentially initiated
by Salt or Swisscom, which could materially slow Sunrise's
deleveraging prospects.

WP/AV CH: S&P Assigns Preliminary 'B' CCR, Outlook Stable
S&P Global Ratings said that it assigned a preliminary 'B' long-
term corporate credit rating to WP/AV CH Holdings II B.V., a
holding company of Swiss software company Avaloq.  The outlook is

S&P also assigned a preliminary 'B' issue rating to Avaloq's
proposed Swiss franc (CHF) 350 million equivalent term loan B and
CHF60 million revolving credit facility (RCF) to be issued by its
fully owned subsidiary WP/AV CH Holdings III B.V.  The
preliminary recovery rating on the debt is '3', indicating S&P's
expectation of recovery prospects of 60% (rounded estimate) in
the event of a payment default.

Avaloq plans to issue a CHF350 million equivalent term loan as
part of the acquisition of a significant minority stake in the
company by private equity firm Warburg Pincus.  The proceeds will
be used to refinance Avaloq's outstanding debt and to fund the

S&P assumes that Warbug Pincus will own a significant minority
share in Avaloq at the completion of the transaction, and S&P
considers Avaloq to be private-equity controlled as Warburg
Pincus will be the biggest shareholder.

S&P's rating on Avaloq reflects its high debt, narrow focus,
modest profitability, some customer concentration, and
potentially some revenue volatility.  However, it also
incorporates Avaloq's leading position in the Swiss software
market, very high customer retention rates thanks to mission-
critical products, good free operating cash flow (FOCF)
generation, and strong liquidity.

S&P's assessment of Avaloq's business risk profile is constrained
by its narrow focus on software for private banking, two nascent
processing centers, and limited geographic diversity compared
with many of its competitors, including Sungard.  In S&P's view,
Avaloq has limited brand awareness in the rest of Europe and
Asia-Pacific, which are highly fragmented and where Avaloq needs
to compete with significantly larger and well-known industry
players for banks' IT outsourcing budgets.  The business risk
profile is further constrained by Avaloq's relatively low margins
for a software company.  This is primarily because of
historically negative margins for transaction processing as new
processing centers have not yet reached critical scale (and to
some extent due to previous investments in these centers), as
well as the high operating leverage embedded in Avaloq's
operating model, where recurring research and development costs
are relatively significant and fixed in order for the company to
maintain its technological competitive advantage.  Additional
constraints include relatively high customer concentration in
comparison with peers, which is a result of Avaloq's relatively
small customer base; some reliance on license sales, which could
lead to some revenue and margin volatility over the year; and
S&P's anticipation of declining revenues in 2017-2019 due to the
known loss of two large contracts.

These constraints are somewhat offset by Avaloq's solid position
in the wealthy and attractive Swiss market, which also benefits
from very low country risk and continued growth in wealth.
Additionally, S&P views Avaloq's products as mission-critical
software for banks to perform real-time operations.  Banks
therefore have very high switching costs, which creates extremely
high customer stickiness.  As a result, Avaloq has a track record
of no customer voluntarily switching to a competitor and customer
losses only due to acquisitions over a long period of time.
Avaloq further benefits from a relatively large predictable
recurring revenue stream of nearly 70% of revenues, and
relatively favorable prospects for banks' IT outsourcing trends
given increased competition and compliance costs -- all of which
require banks to become more efficient and provide further room
for growth from new customers.  Finally, S&P thinks Avaloq's
diversification in the high value-add of transaction processing
to banks is a positive, given fairly limited competition in this
space in Europe.

S&P understands that Avaloq has a joint venture with Raiffeisen
(Arizon), which is recognized as an equity associate.  S&P
currently do not factor any meaningful short-term benefit or risk
related to this asset.

S&P's assessment of Avaloq's financial risk profile is
constrained by the recapitalization and the fact that ratios will
weaken in 2018 and 2019 due to some of the group's contracts
being terminated and the related revenue attrition in the next
two years.  The proposed recapitalization reflects pro forma S&P
Global Ratings-adjusted debt to EBITDA of about 5.9x for 2016.
S&P adjusts the company's EBITDA for capitalized development
costs.  S&P also adjusts the company's figures for unfunded
pension liabilities (about CHF66 million added to debt in 2016)
and operating leases (about CHF62 million added to debt and about
CHF17 million added to EBITDA).  S&P expects meaningful
improvement in EBITDA in 2017, primarily thanks to lower
capitalized development costs and removal of a lossmaking
contract, driving adjusted debt to EBITDA to less than 5x in
2017. However, S&P anticipates that the known terminated
customers contracts will lead to an increase in adjusted leverage
to well above 5x by 2019.  This is partly offset by relatively
solid free cash flow generation, which S&P expects to remain at
5% of debt or more throughout 2019, and S&P's forecast of solid
EBITDA cash interest coverage of more than 4x.

In its base-case operating scenario for Avaloq, S&P assumes:

   -- Revenue growth of about 2% in 2017, reflecting lower
      software license sales due to a decline in the company's
      order book but more than offset by increased maintenance
      and new processing transactions.

   -- Revenue decline of about 15% in 2018, recovering to a
      decline of about 2% in 2019, mainly owing to the
      aforementioned contract terminations, only somewhat offset
      by new processing transactions.  Adjusted EBITDA margin
      improving to about 21% in 2017 from about 14% in 2016
      mainly due to the removal of a lossmaking contract and the
      end of the launch project for the German processing center,
      declining to about 18% by 2019 due to the revenue decline,
      partly offset by cost reduction.

   -- Capital expenditures (capex) of about CHF20 million,
      excluding capitalized development costs.

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

   -- Adjusted debt to EBITDA temporarily below 5x at 4.3x in
      2017 before increasing to nearly 6x in 2019;

   -- Adjusted funds from operations (FFO) to debt of about 18%
      in 2017 declining to about 10%-11% in 2019; and

   -- Adjusted FOCF to debt of about 12% in 2017 declining to
      about 6% in 2019.

The stable outlook reflects S&P's expectation that Avaloq will
grow its customer base outside of Switzerland, maintain very high
retention with the exception of the two known customer losses,
improve its adjusted EBITDA margin toward 20% thanks to cost
efficiencies, and maintain at least adequate liquidity.

S&P could raise the rating if Avaloq were to reduce adjusted debt
to EBITDA to sustainably less than 5x, coupled with revenue and
EBITDA growth.  S&P forecasts this to be the case in 2017 but S&P
currently do not see this as sustainable over the medium term,
given the expected revenue decline in 2018 following certain
contract terminations.

S&P currently sees near-term prospects of a downgrade as remote
given the company's strong liquidity and S&P's expectation of
solid free cash flow generation.  However, S&P could lower the
rating if the financial policy were to be more aggressive than
S&P expects, leading to leverage increasing sustainably to the
middle of the 6x-7x range, coupled with operational issues (for
example big customer losses), leading to the company burning cash
or having minimal cash balances.


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  Go to order any title today.


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

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

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

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

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

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

                 * * * End of Transmission * * *