TCREUR_Public/170614.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

           Thursday, June 14, 2017, Vol. 18, No. 117


                            Headlines


B U L G A R I A

POLIMERI: HUS Acquires Assets for BGN14.5 Million


G E R M A N Y

AIR BERLIN: State Loan Guarantee Process May Take Time
DECO 7 - PAN EUROPE 2: S&P Affirms 'D' Rating on 4 Note Classes
HSH NORDBANK: Fitch Affirms 'b' Viability Rating
KIRK BEAUTY: S&P Affirms 'B' CCR After Debt-Financed Acquisitions
MINIMAX VIKING: Moody's Alters Outlook to Pos. & Affirms Ba3 CFR


G R E E C E

GREECE: EU Finance Ministers, IMF May Strike Bailout Compromise


I R E L A N D

CORDATUS LOAN II: Moody's Hikes Rating on 2 Tranches to B1
EUROMAX III MBS: S&P Lowers Rating on Cl. A-1 Notes to 'B'
EUROMAX V ABS: Fitch Affirms 'Csf' Ratings on Five Note Classes


I T A L Y

POPOLARE DI VICENZA: Italy Nears Rescue Deal, FinMin Says


R U S S I A

ALTAI REGION: Fitch Affirms BB+ Long-Term IDR, Outlook Stable
CHUVASH REPUBLIC: Fitch Affirms 'BB+' IDR, Outlook Stable
CREDIT BANK: Moody's Alters Outlook to Pos. & Affirms B1 BCA
KAZAN CITY: Fitch Affirms 'BB-' Long-Term IDR, Outlook Stable
KRASNODAR REGION: Fitch Affirms 'BB' IDR, Outlook Stable

MIR JSC: Liabilities Exceed Assets, Assessment Shows
RED GATES: Liabilities Exceed Assets, Assessment Shows
RUSHYDRO PJSC: Fitch Changes Outlook to Stable, Affirms BB+ IDRs
SMOLENSK REGION: Fitch Assigns B+ Long-Term IDRs, Outlook Stable


S P A I N

BANCO SANTANDER TOTTA: S&P Affirms 'BB+/B' CCRs
BANCO SANTANDER: Fitch Affirms 'BB' Preference Shares Rating


S W I T Z E R L A N D

WERNER FINCO: Moody's Assigns First-Time B3 CFR, Outlook Stable


T U R K E Y

TURK HAVA: S&P Affirms 'BB-' Corp. Credit Rating, Outlook Neg.


U K R A I N E

CREDIT AGRICOLE: Fitch Affirms B- Long-Term Foreign Currency IDR
UKRAINE: Assets of 45 Banks Put Up for Sale, IDGF Says


U N I T E D   K I N G D O M

AI MISTRAL: S&P Assigns 'B' CCR, Outlook Stable
DECO 12 - UK 4: S&P Lowers Rating on Class C Notes to 'D'


                            *********


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B U L G A R I A
===============


POLIMERI: HUS Acquires Assets for BGN14.5 Million
-------------------------------------------------
SeeNews reports that Bulgarian metals trader and metal products
manufacturer HUS has acquired the assets of local bankrupt
chemical products maker Polimeri for a total of BGN14.5 million
(US$8.3 million/EUR7.4 million).

HUS has paid BGN8.5 million for land and buildings owned by
Polimeri and BGN6 million for equipment, SeeNews relays, citing
Capital business daily.

According to SeeNews, Capital said among Polimeri's biggest
creditors are Bulgaria's sole nuclear power plant (NPP) Kozloduy
and the National Revenue Agency, which are owed a total of BGN9.3
million.

Polimeri was declared insolvent in December 2012 over a debt to
the Electricity System Operator (ESO), SeeNews recounts.



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G E R M A N Y
=============


AIR BERLIN: State Loan Guarantee Process May Take Time
------------------------------------------------------
Andrea Shalal at Reuters reports that the German Economy Ministry
on June 12 said it would take time for the federal government and
two state governments to evaluate Air Berlin's request for state
loan guarantees.

"The process is underway.  Now the formal paperwork must be
submitted," Reuters quotes spokeswoman Beate Baron as saying at a
regular government news conference.  "The review will take several
weeks and months.  It depends on how quickly the documents are
submitted, and how comprehensive they are."

The German federal government stepped in on June 9, a day after
Air Berlin said it had asked the states of Berlin and North-Rhine
Westphalia to consider loan guarantees, Reuters recounts.  It said
any support would be contingent on a sustainable business model
for the struggling airline, Reuters relays.

Air Berlin Plc is a Germany-based airline that is registered in
the United Kingdom.


DECO 7 - PAN EUROPE 2: S&P Affirms 'D' Rating on 4 Note Classes
---------------------------------------------------------------
S&P Global Ratings affirmed its 'D (sf)' credit ratings on DECO
7 - Pan Europe 2 PLC's class E, F, G, and H notes.

DECO 7 - Pan Europe 2 is a European commercial mortgage-backed
securities (CMBS) transaction, which closed in March 2006.  The
transaction was originally backed by 10 loans secured on 499
properties in Germany, the Netherlands, and Switzerland.

There is one remaining securitized loan in the transaction.  The
Karstadt Kompakt Loan matured in October 2012 and failed to repay.
The loan is in special servicing.  It is currently secured on two
properties in Germany.  The current outstanding loan balance is
EUR96.29 million, compared with a March 2016 open market valuation
of EUR6.51 million.  The current loan-to-value ratio, based on the
March 2016 valuation, is 1,479.41%.

S&P's ratings in DECO 7 - Pan Europe 2 address the timely payment
of interest (payable quarterly in arrears) and the payment of
principal no later than the January 2018 legal final maturity
date.

The class E to H notes have experienced prior interest shortfalls
and are likely to experience principal losses.  S&P has therefore
affirmed its 'D (sf)' ratings on the class E, F, G, and H notes.


HSH NORDBANK: Fitch Affirms 'b' Viability Rating
------------------------------------------------
Fitch Ratings has affirmed HSH Nordbank's (HSH) Long-Term Issuer
Default Rating (IDR) at 'BBB-', Short-Term IDR at 'F3' and Support
Rating (SR) at '2'. The Outlook is Negative. Its Viability Rating
(VR) was affirmed at 'b'.

The affirmation follows a periodic review of the bank. The
European Commissions (EC) in May 2016 ordered the privatisation of
the bank by February 2018 in an open, transparent, non-
discriminatory tender process or, if the sale is unsuccessful and
HSH's viability not confirmed, a wind-down of the bank. HSH
initiated the sales process in January 2017 and received non-
binding bids from a range of investors with the process ongoing.

KEY RATING DRIVERS

IDRS, SENIOR DEBT AND SUPPORT RATING

The bank's IDRs, senior debt rating and SR are driven by support
from HSH's owners comprising the federal states of Schleswig-
Holstein (AAA) and Hamburg (AAA), the regional savings banks and
ultimately the Sparkassen-Finanzgruppe (SFG, A+/Stable), including
the Sparkassen (savings banks) and Landesbanken-shared
institutional protection fund (Sicherungseinrichtung).

HSH's Long-Term IDR is five notches below SFG's Long-Term IDR,
which reflects Fitch's view that the bank is strategic to its
owners, but also its weak company profile, which in Fitch's
opinion makes support less likely given the private investor test
under EU legislation.

HSH is currently in the midst of a privatisation process and Fitch
expects a clearer picture to emerge on final bidders over the
coming months. Fitch believes that the pool of potential buyers is
limited given HSH's overall weak asset quality and profitability,
but under the terms of the EU agreement HSH could also be sold in
parts. The agreement requires a positive, state aid-free sale
price and a sale will be subject to the EC's assessment of
viability of the new entity and its final approval.

If the privatisation is successful HSH's regional state owners
will no longer be majority shareholders and would only be allowed
to own a combined share of up to 25% for a period of up to four
years, and following a privatisation Fitch would likely consider
the public sector owners' stakes in HSH no longer a strategic
investment.

If a sale is unsuccessful, the bank will have to cease new
business activities and manage the assets with a view of winding
them down. In this scenario, Fitch expects that the existing
owners will have financial and reputational incentives to ensure
that the wind-down is managed in a way that senior unsecured
creditors do not incur losses.

The Negative Outlook on HSH's reflects Fitch expectations that a
sale could result in a downgrade of the IDRs if the new owners
have a lower ability or propensity to provide support than HSH's
current federal state owners.

VR

HSH's VR reflects the bank's weak stand-alone credit profile,
still burdened by legacy exposures, despite an overall risk
reduction in recent years and particularly in 2016. HSH has re-
allocated certain business segments to the non-core bank to
strengthen the core bank's business and credit profile and
profitability metrics. This included a partial carve-out of the
shipping portfolio to the non-core bank, which in turn has to bear
higher costs. Fitch believes risk reduction efforts over the last
two years and stronger impaired loan coverage had a positive
impact on the risk profile of the overall bank, because of
measures undertaken in preparation for the sales process, but the
viability of its business model remains uncertain.

Commitments to deleverage the bank's legacy portfolio have led to
a moderate improvement in assets quality, and Fitch foresee
further declines in the non-performing loan (NPL) ratio in 2017
due to committed asset sales. But HSH's NPL ratio at end-2016 was
still the weakest among peers.

A decline in risk-weighted assets resulted in an improved fully
loaded CET 1 ratio of 13.4% at end-2016, in line with higher-rated
peers and its leverage ratio is well above peers'. However, HSH's
capitalisation remains burdened by high net impaired loans. The
projected sale of a second tranche of assets in the amount of
about EUR1.6 billion as part of the EU commitment in 2H17 will
underpin an adequate capitalisation into 2018 and provide a
sufficient buffer to its current SREP regulatory requirements.
Nevertheless HSH's capitalisation will remain vulnerable to
further asset quality deterioration in the shipping portfolio and
potential negative rating migration even though charter rates
improved in 1Q17.

HSH's profitability is weak due to a decline in interest-earning
assets and high restructuring costs. However, due to a guarantee
mechanism EUR156 million of loan loss provisions were released at
end-2016, which allowed HSH to report a net profit of EUR121
million. Fitch believes that HSH's profitability is unlikely to
materially improve until the bank's future business model has been
decided in the event of a privatisation of the bank.

HSH has reached its funding targets for 2016, driven by strong
covered bond issuance and also unsecured and asset-based funding.
Its liquidity metrics remained solid and Fitch expects
uninterrupted funding through 2017 in the absence of unexpected
shocks to investor confidence during the privatisation process.

DCR AND DEPOSIT RATINGS

Fitch view HSH as a notable derivative counterparty in light of
the hedging activities inherent in its business model. Fitch has
aligned HSH's DCR and Deposit Ratings with the bank's respective
Long- and Short-term IDRs. In Fitch's opinion, debt buffers do not
afford any obvious incremental probability of default benefit over
and above the support benefit already factored into their IDRs.

STATE-GUARANTEED/GRANDFATHERED SECURITIES

The 'AAA' rating of HSH's state-guaranteed/grandfathered senior
debt, subordinated debt and market-linked securities reflect the
credit strength of the guarantor - the federal state of Schleswig
Holstein and the City of Hamburg - and Fitch views that they will
honour their guarantees.

RATING SENSITIVITIES
IDRS, SENIOR DEBT AND SUPPORT RATING

HSH's IDRs, senior debt rating and SR are primarily sensitive to
the likelihood of a successful privatisation. HSH's IDRs and
Support Rating would only be upgraded if a new owner with a high
rating and strong ability and propensity to support HSH is found.
Fitch believes that this is not impossible but view it highly
unlikely. Fitch would likely place HSH's IDRs, senior debt rating
and SR on Rating Watch Negative or downgrade the ratings if Fitch
concludes that support from a successful buyer is not sufficiently
strong to warrant an IDR of at least 'BBB-'.

If the privatisation is not successful, HSH's shareholder
structure will be unchanged and the bank will be wound down. In
this case HSH is likely to remain a member of the protection
scheme of the Landesbanken (Sicherungseinrichtung), which means
that it could continue to receive support from its owners in
combination with SFG to protect senior unsecured bondholders. This
could result in the affirmation of its IDR at 'BBB-' if Fitch
concludes that imposing losses on senior creditors during the run-
down of assets is prevented by the Sicherungseinrichtung and HSH's
owners.

VR
An upgrade of HSH's VR would be contingent on the confirmation of
the long-term sustainability of the bank's business model that
will allow the bank to generate adequate profitability. Fitch
believes that this would ultimately rely on its successful
privatisation. A disruption of the sales process or sudden
unexpected stress that would significantly undermine investor
confidence in the bank and reduce HSH's chances on a successful
privatisation could trigger a downgrade of its VR. Fitch believes
that in such a scenario HSH is most vulnerable to a stress on
liquidity and funding.

If HSH is wound-down, Fitch would likely withdraw its VR, in line
with Fitch approach for other wind-down institutions where Fitch
believes a stand-alone assessment of the bank is not meaningful.

DCR AND DEPOSIT RATING

DCR and Deposit Ratings are sensitive to changes in HSH's IDRs.

STATE-GUARANTEED/GRANDFATHERED SECURITIES

The ratings of HSH's state-guaranteed/grandfathered senior debt,
subordinated debt and market-linked securities are sensitive to
changes in Fitch's view of the creditworthiness of the guarantors.

The rating actions are:

HSH Nordbank AG Bank

Long-Term IDR: affirmed at 'BBB-', Outlook Negative
Short-Term IDR: affirmed at 'F3'
Support Rating: affirmed at '2'
Derivative Counterparty Rating: affirmed at 'BBB-(dcr)'
Viability Rating: affirmed at 'b'
Long-term senior debt, including programme ratings: affirmed at
  'BBB-'
Short-term senior debt: affirmed at 'F3'
Long-term deposits: affirmed at 'BBB-'
Short-term deposits: 'F3'
State-guaranteed/grandfathered senior and subordinated debt:
  affirmed at 'AAA'
State-guaranteed/grandfathered market-linked securities:
  affirmed at 'AAAemr'
Senior market-linked securities: affirmed at 'BBB-emr'


KIRK BEAUTY: S&P Affirms 'B' CCR After Debt-Financed Acquisitions
-----------------------------------------------------------------
S&P Global Ratings affirmed its 'B' long-term corporate credit
rating on German beauty retailer Kirk Beauty One GmbH.  The
outlook is stable.

At the same time, S&P assigned its 'B' issue level rating and '3'
recovery rating to Kirk Beauty's proposed additional
EUR300 million term loan B (TLB) facility, increasing the total
amount borrowed under the TLB to EUR1.67 billion.  The '3'
recovery rating on this facility indicates S&P's expectation of
meaningful recovery (50%-70%; rounded estimate: 50%) in the event
of payment default.

S&P also affirmed its 'B' issue ratings on Kirk Beauty's existing
senior secured debt.  The recovery rating remains unchanged at
'3', indicating S&P's expectation of meaningful recovery (50%-70%;
rounded estimate: 50%) in the event of payment default.  S&P
affirmed the issue ratings on the senior unsecured notes at and
'CCC+'.  The recovery rating remains unchanged at '6', with
expected recovery of 0%.

The affirmation reflects S&P's view that Kirk Beauty's recently
announced acquisitions and the proposed additional debt issue will
not materially weaken its credit metrics.  Leverage and cash flow
ratios are broadly in line with the previous forecast on a four-
year weighted average basis.  The new EUR300 million TLB facility
will benefit from the same collateral that supports the company's
existing secured debt and matures in 2022 in line with the
existing TLB.  Net proceeds of the issue will be used to fund the
announced acquisitions.

The company recently announced the acquisition of the Italian
beauty retailers Limoni and LaGardenia, following the announced
acquisition of the Spanish beauty retailer Bodybell in March 2017.
S&P's ratio calculations are based on its view that the planned
integration and transaction costs of EUR56 million over the next
12 months, in combination with the EUR300 million debt increase,
will only temporarily impact cash flow and leverage ratios in
fiscal 2017 (year ending Sept. 30, 2017), since additional
earnings from new acquisitions will support ratios mostly from
fiscal 2018.  From fiscal 2019, S&P expects that Kirk Beauty's
credit metrics may even benefit from the acquisitions.  This is
driven by full planned cost synergies of EUR14 million annually
and additional revenue synergies from rolling out the well-
developed Douglas online store and private-label assortment to the
new business, as well as receding restructuring costs compared
with S&P's previous base case.

S&P also sees the announced acquisition of Bodybell and
Limoni/LaGardenia as a consistent execution of Kirk Beauty's
business strategy to become No. 1 or a strong No 2. player in all
markets it operates in.  S&P thinks this will boost Kirk Beauty's
earnings diversification and scale because the company generates
more sales in less-penetrated Southern European markets.  At the
same time, S&P believes that execution and integration risks for
the newly acquired businesses, in combination with integration and
restructuring costs, will temporarily weaken the otherwise
increasing profitability in the short to medium term.

S&P's assessment of Kirk Beauty's business risk profile reflects
the company's leading market position in European perfume and
cosmetics retailing and its strong brand recognition, with a high
share of premium and exclusive products as well as a well-
developed store network in prime locations of city centers and
shopping malls.  The announced acquisition will increase the store
portfolio from over 1,500 stores to about 2,200 stores and
strengthen Kirk Beauty's market position in Italy and Spain.  This
complements the company's No. 1 position in Germany with its
Douglas brand and the No. 2 position it boasts in France with its
Nocibe brand.

Although the perfume and cosmetics segment has outperformed the
retail market average growth in recent years, S&P believes that
the segment continues to face strong price competition, reinforced
by pure online retailers with low fixed-cost structures that also
increase price transparency in the segment and limit upside for
industry margins.  In addition, high seasonality and dependence on
discretionary consumer spending limits predictability of cash
flows.

S&P considers elevated lease-adjusted leverage as the main
constraint for Kirk Beauty's financial risk profile and the
rating.  In S&P's view, the EBITDAR to cash interest plus rent
coverage ratio, which we estimate will reach 1.4x-1.6x in fiscal
2017 and 2018 (compared with 1.1x in fiscal 2016), is the most
relevant financial metric, since it is less affected by the
company's relatively short reported lease schedule.  Based on the
International Financial Reporting Standards (IFRS) disclosure of
operating leases, S&P forecasts adjusted funds from operations
(FFO) to debt of about 9.0%-11.5% in fiscal 2017 and 2018 and debt
to EBITDA at 5.5x-6.3x (5.5% and 7.0x, respectively, in fiscal
2016).  If S&P was to extend the operating lease commitments
profile to be comparable with other rated retailers, FFO to debt
and debt to EBITDA in fiscals 2017 and 2018 would weaken to 7.0%-
9.0% and 6.5x-7.5x, respectively (4.2% and 8.1x in fiscal 2016).
The resulting credit metrics are still in line with S&P's current
assessment of Kirk Beauty's financial risk profile.

At the same time, S&P believes that the company will continue to
show strong cash flows and generate more than EUR200 million of
cumulative FOCF over the next two years, including the effect of
the recent acquisitions.  That said, S&P expects Kirk Beauty to
use this FOCF, together with its strong cash balance, to fund its
growth strategy through midsize acquisitions or to distribute
occasional dividends.  S&P therefore don't expect significant
deleveraging.

The stable outlook reflects S&P's view that Kirk Beauty will post
revenue growth of up to 5% in fiscal 2017, supported by 2.5% like-
for-like growth and new store openings, mainly outside its home
market of Germany, which S&P expects will remain stable.  This
also includes a growing contribution from online sales and limited
contribution from the recent acquisitions, which will give more
support to revenue growth in fiscal 2018.  At the same time, S&P
believes that profitability will remain challenged by the
integration of lower-margin acquisitions and a short period of
restructuring and integration spending.  S&P forecasts S&P Global
Ratings-adjusted EBITDA of EUR450 million-EUR470 million in fiscal
2017, leading to a 15%-16% margin over the next 12 months.  This
should translate into sufficient operating cash flow to cover
planned capex, while S&P Global Ratings-adjusted EBITDAR coverage
ratio should approach 1.4x.

S&P could lower its rating if Kirk Beauty's profitability was
persistently lower than S&P anticipates or the company showed
inability to generate positive FOCF on a sustainable basis.  This
could occur, for example, if there was a market-driven decrease in
demand for cosmetics and perfume or if competitors in e-commerce
gained market share from the company.  The rating could also come
under pressure from deterioration in credit metrics on the back of
a large debt-financed acquisition in addition to the
Bodybell/Limoni/LaGardenia transaction, unsuccessful integration
of the announced acquisitions, or meaningful remuneration to
shareholders.  Specifically, S&P could lower the rating if FOCF
weakens materially or if its EBITDAR coverage ratio persistently
deviates from the 1.4x level S&P forecasts in the next 12 months.

S&P considers rating upside in the near term as unlikely.
However, S&P could raise the rating if management committed to a
more conservative financial policy and if Kirk Beauty's credit
metrics strengthened on a sustainable basis such that S&P Global
Ratings-adjusted FFO to debt improved to more than 12%, debt to
EBITDA fell materially below 5x, and EBITDAR coverage approached
2.2x, with a low risk of releveraging.  S&P would consider
sustainable and growing FOCF as commensurate with a higher rating.


MINIMAX VIKING: Moody's Alters Outlook to Pos. & Affirms Ba3 CFR
----------------------------------------------------------------
Moody's Investors Service has changed to positive from stable the
outlook on German active fire detection and protection solutions
provider Minimax Viking GmbH. Concurrently, Moody's affirmed
Minimax's Ba3 corporate family rating (CFR) and B1-PD probability
of default rating (PDR). Moody's also affirmed the Ba3 ratings on
the group's senior secured credit facilities.

RATINGS RATIONALE

The outlook change to positive recognises Minimax's solid
performance during 2016 and the first quarter of 2017 (Q1-17) and
good growth expectations for the next 12 to 18 months. In 2016,
group revenues increased to EUR1,516 million (+5.4%) and company-
adjusted EBITDA to EUR198.5 million (+13.7%). The highest absolute
growth was recorded in the US, where a sustained buoyant
construction sector fuelled demand for both residential and
larger-scale fire protection projects. Revenues increased by +8%
in the US Viking product business and +11% in the US system
integration and service business. In addition, Minimax's Asian
revenues grew by +25% in 2016, particularly driven by system
integration and services, which are also exported to other
regions, such as South America and South Africa. In Q1-17,
Minimax's revenues and EBITDA both increased by +9.1% yoy,
although impacted by positive currency effects (growth rates of
+6.4% and +6.1%, respectively, on a constant currency basis).

As a result of the described earnings growth, leverage as adjusted
by Moody's decreased to 3.9x debt/EBITDA in 2016 and further to
3.8x in the 12 months ended March 2017 (LTM Mar-17), in line with
Moody's expectations for Minimax's Ba3 CFR. For the next two years
Moody's forecasts annual revenue growth in the mid-single-digits
and profitability to remain at least at the current level
(Moody's-adjusted EBITA margin of 11.4% in LTM Mar-17). This will
be supported by an expected continued benign environment in the
group's mature markets (Germany and the US in particular) as well
as an ongoing tightening of safety standards and insurance norms
in key emerging markets such as Asia and the Middle East. As a
result, Moody's projects progressive growth in Minimax's EBITDA,
enabling the group to de-lever to 3.5x debt/EBITDA or below by
year-end 2018, in line with the Moody's-defined threshold for an
upgrade to Ba2.

The positive outlook further reflects Minimax's consistently
positive and increasing FCF generation with a Moody's-adjusted
FCF/debt ratio of 8.0% in 2016 and LTM Mar-17 (4.4% in 2014),
commensurate for a Ba2 rating. This ratio is projected to exceed
10% this year, driven by the expected growth in earnings and
interest savings of around EUR4 million per annum following the
group's term loan repricing in December 2016. In addition, Moody's
acknowledges Minimax's strong liquidity profile, with a further
increased cash balance of more than EUR200 million as of March 31,
2017.

LIQUIDITY

Minimax's liquidity profile is strong. As of March 31, 2017, the
group's available cash sources include a sizeable cash balance of
EUR219 million and Moody's-projected funds from operations of
around EUR140 million per annum over the next 12-18 months.
Together with EUR33.5 million commitments under its revolving
credit facility (maturing 2022), which was fully undrawn as of
March 31, 2017, these sources comfortably cover all expected
liquidity requirements of the group this and next year. Cash needs
mainly comprise capital expenditures of around EUR45 million this
year (including some expansionary capex), minor working capital
spending and debt amortization of about EUR6 million per annum.

The liquidity assessment also incorporates the assumption that the
group will remain in compliance with financial covenants, under
which it maintained significant headroom at March 31, 2017.

OUTLOOK

The positive outlook assumes that Minimax will benefit from a
sustained healthy market environment in its key regions Germany
and the US, which should support moderate organic growth in sales
and further strengthening leverage metrics, such as a Moody's-
adjusted leverage of 3.5x debt/EBITDA or below over the next 18
months. It also reflects the expectation that the group will
continue to generate solid positive FCF and maintain a
conservative financial policy, illustrated by using such FCF
primarily for debt reduction and/or potential add-on acquisitions.

WHAT COULD CHANGE THE RATING

An upgrade of Minimax's ratings would require a sustained further
improvement in credit metrics, including (1) EBITA margins
(Moody's-adjusted) of around 12%, (2) leverage (Moody's-adjusted)
of 3.5x gross debt/EBITDA or below, (3) improved free cash flow
generation and Moody's-adjusted FCF/debt ratios in the high-
single-digits, combined with (4) a conservative financial policy,
evidenced by no excessive profit distributions to shareholders
and/or larger debt-funded acquisitions. An upgrade would also
involve a re-assessment of the investment strategy of the group's
shareholders ICG and KIRKBI over the longer term and the related
event risk.

Downward pressure on Minimax's ratings would evolve, if (1)
profitability were to weaken, exemplified by Moody's-adjusted
EBITA margins reducing to 10% or lower, (2) leverage (Moody's-
adjusted) materially exceeded 4x gross debt/EBITDA, and/or (3)
free cash flows deteriorated materially with Moody's-adjusted
FCF/debt ratios of persistently below 5% (either operationally
driven or by a potential initiation of dividend payments).

List of Affected Ratings:

Affirmations:

Issuer: Minimax Viking GmbH

-- Corporate Family Rating, Affirmed Ba3

-- Probability of Default Rating, Affirmed B1-PD

-- Backed Senior Secured Bank Credit Facility, Affirmed Ba3

Issuer: Minimax GmbH & Co. KG

-- Backed Senior Secured Bank Credit Facility, Affirmed Ba3

Issuer: MX Holdings US, Inc.

-- Backed Senior Secured Bank Credit Facility, Affirmed Ba3

Outlook Actions:

Issuer: Minimax Viking GmbH

-- Outlook, Changed To Positive From Stable

Issuer: Minimax GmbH & Co. KG

-- Outlook, Changed To Positive From Stable

Issuer: MX Holdings US, Inc.

-- Outlook, Changed To Positive From Stable

PRINCIPAL METHODOLOGY

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

Minimax Viking GmbH, headquartered in Bad Oldesloe, Germany, is a
global operator in the active fire protection and detection
markets. The group serves industrial and commercial clients
through the development, manufacturing and installation of tailor-
made fire protection solutions and offers follow-up and post
system installation services. The group employs over 8,000 people
globally and generated sales of EUR1.55 billion and group-adjusted
EBITDA of about EUR203 million in the 12 months through March 31,
2017.



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G R E E C E
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GREECE: EU Finance Ministers, IMF May Strike Bailout Compromise
---------------------------------------------------------------
Jan Strupczewski at Reuters reports that euro zone finance
ministers and the International Monetary Fund are likely to strike
a compromise on Greece on Thursday, June 15, paving the way for
new loans for Athens while leaving the contentious debt relief
issue for later.

IMF head Christine Lagarde suggested a plan last week under which
the Fund would join the Greek bailout now, because Athens is
delivering on agreed reforms, but would not disburse any IMF money
until the euro zone clarifies what debt relief it can offer
Greece, Reuters relates.

Underlining the IMF's willingness to strike a deal after months of
wrangling between its European chief Poul Thomsen and the euro
zone, Lagarde will attend the ministers' meeting, Reuters
discloses.

IMF participation in the bailout, even without immediate
disbursements, would be enough for the German parliament to back
new euro zone loans to Athens, thus ensuring Greece would get
enough cash in July to repay maturing debt and avoid default,
Reuters states.

"Everyone thinks there is a high probability we will end up with
the solution Lagarde outlined," Reuters quotes an official
involved in preparations for the June 15 meeting in Luxembourg as
saying.

According to Reuters, a second official involved in the
preparations also said he expected a deal involving IMF
participation along the lines described by Ms. Lagarde.

"There would be an IMF disbursement as soon as there is more
clarity on debt, but the timing of that is to be confirmed," the
second official, as cited by Reuters, said.

Greece's parliament approved on June 9 reforms demanded by the
international lenders to conclude a long-stalled review of its
bailout progress and qualify for more loans before July, Reuters
relates.

Euro zone officials, as cited by Reuters, said that if the
expected compromise is reached, Greece could get between EUR7.4
and EUR8 billion from the euro zone bailout fund ESM to cover next
month's repayments.

The IMF has so far refused to join Greece's bailout, its third
since 2010, which it says must be the country's last, meaning that
in addition to Athens making reforms, the euro zone must offer
relief to help make Greece's debts sustainable, Reuters notes.



=============
I R E L A N D
=============


CORDATUS LOAN II: Moody's Hikes Rating on 2 Tranches to B1
----------------------------------------------------------
Moody's Investors Service has upgraded the ratings on the
following notes issued by Cordatus Loan Fund II P.L.C.:

-- EUR38.7M Class B Deferrable Secured Floating Rate Notes due
    2024, Upgraded to Aaa (sf); previously on Oct 7, 2016
    Upgraded to Aa1 (sf)

-- EUR28.35M Class C Deferrable Secured Floating Rate Notes due
    2024, Upgraded to Aa1 (sf); previously on Oct 7, 2016
    Upgraded to A2 (sf)

-- EUR27M Class D Deferrable Secured Floating Rate Notes due
    2024, Upgraded to Baa1 (sf); previously on Oct 7, 2016
    Affirmed Ba1 (sf)

-- EUR16.2M Class E Deferrable Secured Floating Rate Notes due
    2024, Upgraded to Ba2 (sf); previously on Oct 7, 2016
    Affirmed B1 (sf)

-- EUR5.5M Class F1 Deferrable Secured Floating Rate Notes due
    2024, Upgraded to B1 (sf); previously on Oct 7, 2016 Affirmed
    B2 (sf)

-- EUR1.25M Class F2 Deferrable Secured Floating Rate Notes due
    2024, Upgraded to B1 (sf); previously on Oct 7, 2016 Affirmed
    B2 (sf)

Moody's also affirmed the ratings on the following notes issued by
Cordatus Loan Fund II P.L.C.:

-- EUR97.5M (currently EUR20.6M oustanding) Euro Class A1 Senior
    Secured Floating Rate Term Notes due 2024, Affirmed Aaa (sf);
    previously on Oct 7, 2016 Affirmed Aaa (sf)

-- EUR60M (currently EUR12.7M oustanding) Euro Class A1 Senior
    Secured Floating Rate Delayed Draw Notes due 2024, Affirmed
    Aaa (sf); previously on Oct 7, 2016 Affirmed Aaa (sf)

-- GBP22.83M (currently GBP13.8M outstanding) Sterling Class A2
    Senior Secured Floating Rate Notes due 2024, Affirmed Aaa
    (sf); previously on Oct 7, 2016 Affirmed Aaa (sf)

-- EUR101.25M (currently EUR47.8M oustanding) Senior Secured
    Floating Rate Variable Funding Notes due 2024, Affirmed Aaa
    (sf); previously on Oct 7, 2016 Affirmed Aaa (sf)

Cordatus Loan Fund II P.L.C., issued in July 2007, is a
collateralised loan obligation ("CLO") backed by a portfolio of
mostly high yield European loans denominated in Euro, GBP and USD.
It is predominantly composed of senior secured loans. The
portfolio is managed by CVC Credit Partners Group Ltd. The
transaction's reinvestment period ended in July 2014.

RATINGS RATIONALE

The rating upgrades of the notes are primarily a result of the
partial redemption of the Senior Notes (Class A and Variable
Funding Notes) and subsequent increases of the
overcollateralization ratios (the "OC ratios") of all classes of
notes. Moody's notes that the Senior Notes have redeemed by
approximately EUR184.3 million (or 65% of their original balance)
including EUR79.2 million at the last payment date in January
2017. As a result of the deleveraging the OC ratios have increased
across the capital structure. According to the April 2017 trustee
report, the Senior Notes and Classes B, C, D, E and F OC ratios
are 249.32%, 178.56%, 147.83%, 127.01%, 117.11% and 113.43%
respectively compared to levels of August 2016 of 183.33%,
150.38%, 132.89%, 119.63%, 112.88% and 110.28%.

The key model inputs Moody's uses in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. In its base
case, Moody's analysed the underlying collateral pool as having
Euro performing par and principal proceeds balance of EUR 178.59
million and non-Euro performing par and principal proceeds of Eur
64.90 million equivalent, a weighted average default probability
of 20.30% (consistent with a WARF of 3211 and a weighted average
life of 3.45 years), a weighted average recovery rate upon default
of 42.39% for a Aaa liability target rating, a diversity score of
18.

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

Methodology Underlying the Rating Action:

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

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

In addition to the base-case analysis, Moody's conducted
sensitivity analyses on the key parameters for the rated notes,
for which it lowered the weighted average recovery rate by 5
percentage points; the model generated outputs that were unchanged
from the base-case results for the Senior Notes, Classes B and C
and within a notch for Classes D, E and F.

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

Additional uncertainty about performance is due to the following:

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

* Around 7.57% of the collateral pool consists of debt obligations
whose credit quality Moody's has assessed by using credit
estimates. As part of its base case, Moody's has stressed large
concentrations of single obligors bearing a credit estimate as
described in "Updated Approach to the Usage of Credit Estimates in
Rated Transactions", published in October 2009 and available at
http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_120461.

Foreign currency exposure: The deal consists of non-EUR
liabilities of GBP 44.0 million and USD 12.3 million which are
partially hedged by non-EUR denominated assets consisting of GBP
32.5 million and USD 6.5 million. Volatility in foreign exchange
rates will have a direct impact on interest and principal proceeds
available to the transaction, which can affect the expected loss
of rated tranches.

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


EUROMAX III MBS: S&P Lowers Rating on Cl. A-1 Notes to 'B'
----------------------------------------------------------
S&P Global Ratings lowered to 'B (sf)' from 'B+ (sf)' its credit
rating on EUROMAX III MBS Ltd.'s class A-1 notes.  At the same
time, S&P has affirmed its 'CCC (sf)' and 'CCC- (sf)' ratings on
the class A-2 and B notes, respectively.

The rating actions follow S&P's analysis of the transaction's
recent performance and the application of its relevant criteria.

According to the latest portfolio information that S&P has
received, two assets defaulted since its previous review.  These
two assets have an aggregate amount of EUR3.21 million.  In the
interest waterfall, the curing of the overcollateralization ratio
ranks below the payment of interest and deferred interest on the
class A and B notes.  Since S&P's previous review, interest
proceeds have not been sufficient to pay interest and deferred
interest on theclass B notes.  Therefore, no interest proceeds
have been used to amortize the notes.  As a result, there was a
net par loss, and credit enhancement decreased for all of the
rated notes.

                  Current review           As of June 2016
                    (mil. EUR)                 (mil. EUR)
Performing assets     50.97                       54.99
Defaulted assets      12.15                       10.08

                             Prev.          Prev.
                  Amount    amount      PC    PC
Class           (mil. EUR) (mil. EUR)* (%)    (%)*  Interest
A-1                29.21    31.00     42.7   43.6   6mE+0.75%
A-2                6.00      6.00     30.9   32.7   6mE+0.75%
B                 11.89     11.88      7.6   11.1   6mE+1.50%
C                 14.52     14.52      0.0    0.0      N/A
D                  1.00      1.00      0.0    0.0      N/A

*As of June 2016.
PC--Par coverage.
6mE--Six-month EURIBOR.
N/A--Not applicable.

S&P subjected the capital structure to its cash flow analysis to
determine the break-even default rate (BDR) for each class of
notes at each rating level.  The portion of performing assets that
S&P does not rate is 21%.  In this case, S&P notches ratings from
other ratings agencies to infer its rating input for the purpose
of its analysis.

Following these developments, the BDR for the class A-1 notes has
decreased to a level commensurate with a 'B (sf)' rating.  S&P has
therefore lowered to 'B (sf)' from 'B+ (sf)' its rating on the
class A-1 notes.

The class A-2 and B notes still benefit from a positive par
coverage, and these classes of notes can still be repaid if no
further defaults occur in the portfolio.  Additionally, the amount
of interest generated by the portfolio is sufficient to cover the
cost of the liabilities.  S&P has therefore affirmed its
'CCC (sf)' and 'CCC- (sf)' ratings on the class A-2 and B notes,
respectively, in line with S&P's criteria.

At closing, S&P considered the legal risks for this transaction.

No new legal or regulatory considerations have arisen for this
transaction since then.  The issuer is bankruptcy remote, in line
with S&P's legal criteria.

EUROMAX III MBS is a cash flow mezzanine structured finance
collateralized debt obligation (CDO) of a portfolio that comprises
predominantly residential mortgage-backed securities (RMBS) as
well as commercial mortgage-backed securities (CMBS), and, to a
lesser extent, CDOs of corporates and CDOs of asset-backed
securities.  The transaction closed in December 2002 and is
managed by CIBC World Markets Inc. Collineo Asset Management acts
as collateral advisor.

RATINGS LIST

EUROMAX III MBS Ltd.
EUR195.24 mil asset-backed floating-rate notes
                                   Rating
Class            Identifier        To            From
A-1              XS0158773324      B (sf)        B+ (sf)
A-2              XS0158774991      CCC (sf)      CCC (sf)
B                XS0158775022      CCC- (sf)     CCC- (sf)


EUROMAX V ABS: Fitch Affirms 'Csf' Ratings on Five Note Classes
---------------------------------------------------------------
Fitch Ratings has affirmed Euromax V ABS Limited (Euromax V) and
Euromax VI ABS Limited (Euromax VI):

Euromax V
Class A1 (XS0274615656): affirmed at 'Bsf', Outlook Stable
Class A2 (XS0274616381): affirmed at 'CCCsf'
Class A3 (XS0274616977): affirmed at 'CCsf'
Class A4 (XS0274617439): affirmed at 'Csf'
Class B1 (XS0274617603): affirmed at 'Csf'
Class B2 (XS0274617942): affirmed at 'Csf'
Class D1 combination notes (XS0274619138): affirmed at 'Csf'
Class D2 combination notes (XS0274619211): affirmed at 'Csf'

Euromax VI

Class A (XS0294719082): affirmed at 'Bsf'; Outlook revised to
  Positive from Stable
Class B (XS0294720171): affirmed at 'CCsf'
Class C (XS0294720338): affirmed at 'Csf'
Class D (XS0294720841): affirmed at 'Csf'
Class E (XS0294721146): affirmed at 'Csf'
Class G (XS0294722201): affirmed at 'CCsf'
Class H (XS0294722896): affirmed at 'Csf'

Euromax V and Euromax VI are securitisations of mainly European
structured finance securities that closed in 2006 and 2007,
respectively. The underlying securities are mostly RMBS, CMBS and
corporate CDO assets.

KEY RATING DRIVERS
EUROMAX VI

Euromax VI's Performance Grants Positive Outlook
The revision of the Outlook to Positive on Euromax VI's class A
notes reflects increased credit protection available for the notes
as a result of amortisation and recoveries from defaulted assets.
The class A notes have amortised by EUR16.0 million over the last
12 months, increasing the credit enhancement (CE) to 56.2% from
49.8%.

The below 'CCC' bucket remained significant (33% if Fitch include
also one asset that is currently rated CCC/RWN), but there have
been no new defaults in the past year and the performing pool is
of a slightly better quality overall. A further build-up in CE
from partial paydowns in the next year is likely to grant a one-
category upgrade, leading to the Positive Outlook on the class A
notes.

Portfolio Concentration
The portfolio predominantly consists of RMBS (68.8%) and CMBS
assets (22.4%).The remainder are SF CDOs (4.6%) and corporate CDO
(4.1%) assets. There are now only 23 performing tranches rated
above 'CC' and the portfolio is considerably concentrated in
peripheral countries (35%). Germany and Netherlands account for
26.8% and 25.2% of the portfolio, respectively.

Mezzanine Notes Ratings Unchanged
CE for the class B, C, D and E notes remains lower than the
proportion of assets rated below 'CCC'. Consequently Fitch has
affirmed these notes at below 'CCCsf'. The class C, D and E notes
keep deferring interest.

EUROMAX V

Improved Performance
The affirmation reflects the deleveraging of the transaction since
the last review. However, it has not been enough to put positive
pressure on the ratings, given the concentration in the portfolio.
The transaction has received several paydowns from performing
assets and the outstanding net defaults have actually decreased
due to recoveries in the past year (EUR39.4 million vs. EUR41.0
million). The credit quality of the pool has migrated from lower
rating categories (Bsf and below) to higher rating categories
(above Bsf), but they are still below investment grade. 'CCCsf'
and below assets now account for 9.6% of the pool vs. 16.2% of
last year.

High Concentration
The performing pool now comprises only 13 different issuers, with
three-quarters of the pool invested in UK and Italy RMBS. Exposure
to peripheral countries is also high at 39%.

Low Collateralisation for Mezzanine, Junior Notes
CE for the class A-2 notes of 17.7% remains low relative to the
concentration risk in the portfolio, hence the affirmation at
'CCCsf'. The class A3, A4, B1 and B2 notes are under-
collateralised and have been affirmed at 'CCsf' and below.

RATING SENSITIVITIES

Fitch tested the ratings' sensitivity to a 25% increase in the
obligor default probability and a 25% reduction in expected
recovery rates and in both cases and for both transactions found
no rating impact on the notes.



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


POPOLARE DI VICENZA: Italy Nears Rescue Deal, FinMin Says
---------------------------------------------------------
Rachel Sanderson and Martin Arnold at The Financial Times report
that Italy's finance minister has said a "solution" to rescue two
struggling banks in the north-east Veneto region -- Banca Popolare
di Vicenza and Veneto Banca -- is close and talks with EU
authorities are "encouraging".

The statement by Pier Carlo Padoan comes as Italy's largest
domestic lender Intesa Sanpaolo on June 13 held a board meeting to
discuss joining a consortium of Italian lenders -- including
UniCredit -- to provide EUR1.2 billion for the Veneto banks and
pave the way for a state-led rescue of the two lenders, the FT
relays, citing people involved in the talks.

Mr. Padoan is racing to close a deal before the end of the month
amid fears that accelerated deposit flight could push the banks
beyond revival and into resolution, potentially forcing losses on
senior bondholders and depositors under EU rules, the FT notes.
The talks are focused on demands by the Italians that the EU
authorities agree the banks will not be required to raise any
further capital once its current hole is plugged, the FT
discloses.

According to the FT, the Treasury statement said Mr. Padoan
"reiterates that the solution does not foresee any form of
bail-in and senior bondholders and deposit holders will in any
case be completely guaranteed."

"Constructive contacts are ongoing in order to reach a solution
for the two banks in line with EU rules, without the bail-in of
senior bondholders.  Depositors will in any case be fully
protected," the FT quotes a European Commission spokesperson on
June 13 as saying.

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
recapitalisation.



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


ALTAI REGION: Fitch Affirms BB+ Long-Term IDR, Outlook Stable
-------------------------------------------------------------
Fitch Ratings has affirmed Russian Altai Region's Long-Term
Foreign- and Local-Currency Issuer Default Ratings (IDRs) at
'BB+', and Short-Term Foreign-Currency IDR at 'B'. The Outlooks on
the Long-Term IDRs are Stable.

KEY RATING DRIVERS

The ratings reflect Fitch's expectation that Altai will maintain
sound budgetary performance and low indebtedness over the medium-
term. The ratings also take into account below-national average
wealth metrics of the local economy, Altai's modest fiscal
capacity and as well as a weak institutional framework for Russian
sub-nationals.

Fitch forecasts a sound operating balance of 13%-15% of operating
revenue over the medium term. Operating performance materially
improved in 2016, when the region's operating margin soared to
20.7% from a 7.6% average during 2012-2015. This was driven by the
government's tight cost control leading to a 6% decline in
operating expenditure while operating revenue grew 10%.

Revenue growth was mainly driven by exceptionally high proceeds
from corporate income tax and excises in 2016. This came on the
back of favourable changes in excise rates on oil-refinery
products and higher profits in the financial sector and processing
industry. Fitch expects tax revenue to decline in 2017 due to
changes in tax regulation and elimination of the base effect.
However, overall operating revenue should still demonstrate modest
growth due to an increase of federal transfers.

Exceptionally strong fiscal performance led to a surplus before
debt variation of 5.7% of total revenue in 2016 after a modest
deficit averaging 2.3% in 2012-2015. Based on Fitch expectations
of a lower operating balance and high capex, Fitch forecasts a
budget deficit of about 2% of total revenue in 2017. However, the
forecasted deficit will be fully covered by the region's available
cash.

Historically the region's debt has been low, with subsidised
federal budget loans being the sole debt instrument since 2007.
Altai's direct risk accounted for a low RUB2.2 billion or 2.8% of
current revenue in 2016, while cash balance was strong at RUB6.7
billion, leading to a positive net cash position. Fitch expects
Altai's direct risk to remain low by national and international
standards, corresponding to higher-rated peers.

In Fitch's view, despite a high number of public sector entities
(PSEs) the government's oversight of the regional public sector
companies is adequate, limiting Altai's exposure to material
contingent risk. The region's contingent liabilities are limited
to a single outstanding guarantee (for a negligible RUB4.7 million
at end-2016) and the moderate indebtedness of its PSEs.

Fitch assesses Altai's economy as weak by international standards
due to the region's low economic output per capita. Its 2015 gross
regional product (GRP) per capita was 63% of the national median.
This is in part due to the high proportion of agriculture and food
processing in the local economy. A modest tax base resulted in a
below-median fiscal capacity and high dependence on transfers from
the federal budget. The latter averaged 45% of operating revenue
in 2011-2016.

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

RATING SENSITIVITIES

Consolidation of the region's strong budgetary performance with a
sustained operating margin of about 15% while maintaining low
direct risk could lead to upgrade.

A downgrade could result from significant deterioration in
operating performance, coupled with a significant increase in the
region's overall risk.


CHUVASH REPUBLIC: Fitch Affirms 'BB+' IDR, Outlook Stable
---------------------------------------------------------
Fitch Ratings has revised the Outlook on the Russian Chuvash
Republic's (Chuvashia) Long-Term Foreign- and Local-Currency
Issuer Default Ratings (IDRs) to Stable from Negative and affirmed
the IDRs at 'BB+'. The agency has also affirmed the republic's
Short-Term Foreign-Currency IDR at 'B'. The republic's outstanding
senior unsecured domestic bond ratings have been affirmed at
'BB+'.

The revision of the Outlook to Stable reflects Chuvashia's
improved fiscal performance driven by tax revenue growth in 2016
and Fitch's expectation that the republic will maintain a sound
operating balance and moderate debt in the medium term. The
ratings also factor in the moderate size of republic's budget and
fiscal capacity that is below the national average, as well as a
weak institutional framework for Russian sub-nationals.

KEY RATING DRIVERS

The revision of the Outlook on the republic's IDRs reflects the
following rating drivers and their relative weights:

HIGH

Improved Budgetary Performance
Fitch projects Chuvash will continue sound budgetary performance
with operating balance at above 15% of operating revenue in the
medium term perspective. In 2016 the republic recorded a material
improvement of budgetary performance with operating margin
increasing to 18.6% from an average of 8.0% during 2014-2015. This
was driven by growth of operating revenues amid the
administration's tight control of operating expenditure, which
reduced by 2.9%.

Operating revenue increased by 9.3% in 2016, mainly driven by
exceptionally high proceeds from corporate income tax and excises
(increase by 36% each). This was due to favourable changes in
excise rates on oil-refinery products and higher profits in the
financial sector and processing industry. Fitch projects a
moderate scale back of tax revenue in 2017 due to negative changes
in tax regulation. However, overall operating revenue will
demonstrate modest growth due to increase in federal transfers.
Operating expenditure growth will likely be in line with inflation
(Fitch forecasts 5.0%-5.5% in 2017-2018).

Exceptionally good fiscal performance in 2016 led to a surplus
before debt variation of 5.1% of total revenue after notable
deficit averaging 7.9% in 2014-2015. Based on Fitch expectations
of some decline of current balance and high capex, Fitch forecasts
a budget deficit of 2%-4% of total revenue in 2017-2019. However,
the forecast deficit will be largely be covered by outstanding
cash, which will limit any increase in debt.

MEDIUM

Moderate Direct Risk
Fitch expects the republic's direct risk will grow moderately in
absolute terms to finance an expected budget deficit. However, it
will remain below 40% of current revenue in the medium term, given
expected revenue growth. Fitch also projects the debt payback
ratio (direct risk to current balance) will maintain at two to
three years after it improved to about two years in 2016 from an
average five years in 2011-2015.

The direct risk structure is biased toward low-cost budget loans,
which accounted for 63% of direct risk at end-2016. The remaining
direct risk was bank loans (31%) and a domestic bond (6%). Fitch
expects the proportion of budget loans to remain above 50% in the
medium term, limiting interest expenditure.

Like most Russian LRGs, Chuvash is exposed to ongoing refinancing
pressure as about 90% of direct risk matures during the next three
years. Near-term refinancing needs for 2017 are fully covered by
undrawn credit lines with banks totaling RUB13.3 billion at 1 May
2017. The republic plans to issue a RUB1.5 billion seven-year
domestic bond in 2017. It will substitute part of the short-term
bank loans, and contribute to lengthening the debt profile.

The ratings also consider the following rating factors:

Modest Economy
The republic's socio-economic profile is historically weaker than
that of the average Russian region. Its per capita GRP was 62% of
the national median in 2015. According to preliminary estimates,
the republic's economy marginally grew in 2016 after a 2.7%
contraction in 2015, which is in line with the national economy
trend. Fitch expects the Russian economy will demonstrate moderate
recovery in 2017, and Chuvash will likely to follow this trend.

Weak Institutional Framework
Russia's institutional framework for sub-nationals constrains the
republic's ratings. It has a shorter record of stable development
than many of its international peers. The predictability of
Russian LRGs' budgetary policy is hampered by frequent
reallocation of revenue and expenditure responsibilities within
government tiers.

Management Assessed as Neutral
The republic's budgetary policy is dependent on the decisions of
the regional and federal authorities. This leads to a steady flow
of earmarked current transfers received from the federal budget,
which averaged for 35% of operating revenue in 2012-2016.

RATING SENSITIVITIES

Consolidation of strong budgetary performance with a sustained
operating margin about 15% accompanied with maintenance of
moderate direct risk and reduced refinancing pressure could lead
to an upgrade.

Growth of direct risk, accompanied by deterioration in the
operating performance leading to debt payback (direct risk to
current balance) to above eight years on a sustained basis, would
lead to a downgrade.


CREDIT BANK: Moody's Alters Outlook to Pos. & Affirms B1 BCA
------------------------------------------------------------
Moody's Investors Service has changed to positive from stable the
outlook on B1 long-term local- and foreign-currency senior
unsecured debt and deposit ratings of Credit Bank of Moscow (CBM)
and affirmed the ratings. Concurrently, Moody's affirmed the
bank's baseline credit assessment (BCA) and adjusted BCA of b1.
CBM's Not Prime short-term local- and foreign-currency deposit
ratings were also affirmed. The overall outlook has been changed
to positive from stable.

Moody's has also affirmed CBM's long-term Counterparty Risk
Assessment (CR Assessment) of Ba3(cr) and the bank's short-term CR
Assessment of Not Prime(cr).

RATINGS RATIONALE

Moody's revision of the outlook on CBM's ratings to positive from
stable and ratings affirmation reflects the improvement of the
bank's solvency metrics over recent quarters, including resilient
asset quality, enhanced profitability and strengthened capital
adequacy. The rating agency expects that these positive trends
will persist in the next 12-18 months as operating conditions
continue to stabilize.

CBM's problem loan ratio at Q1 2017 amounted to 9.1% of gross
loans, which is below the average of about 14% for Russian banks
with BCAs of b1. Moody's believes that CBM's problem loans have
peaked and expects that they will steadily decrease in the next
12-18 months as (1) the crisis-related problem lending has already
been recognized, and (2) several large exposures will move from
impaired to performing. In addition, the rating agency considers
the provisioning coverage of 67% at Q1 2017 to be adequate.

The bank's profitability improved markedly in 2016 and Q1 2017,
with return-on-average assets (ROAA) increasing to 0.8% and 1.2%,
respectively, from 0.2% reported in 2015, largely driven by an
increase of recurring revenues following expansion of the bank's
balance sheet. Moody's expects CBM's financial performance will
remain robust this year with ROAA exceeding 1.0%, largely
bolstered by an expected decline in credit costs.

As of Q1 2017, CBM reported a Basel III Tier 1 ratio of 10.7%.
Moody's expects that the bank's capital adequacy metrics will
improve further following the recent placement of additional Tier
1 equity eligible subordinated Eurobonds of $700 million, as well
as improved internal capital generation capacity and modest
expected growth of risk-weighted assets in 2017.

Moody's considers a material share of the reverse repo
transactions on CBM's balance sheet as inhibiting rating factor,
since the sustainability of these revenues in the longer term is
unclear. The reverse repo transactions amounted to 40% of total
assets at year-end 2016 and gains from these deals remarkably
bolstered its net financial result last year.

WHAT COULD MOVE THE RATINGS UP / DOWN

The assigned positive outlook may translate into an upgrade of
CBM's ratings if the current improving trends in the bank's asset
quality and profitability continue, coupled with the robust
capital adequacy and reduction in large concentrated reverse repo
transactions.

Moody's does not anticipate any negative rating action on CBM
given the positive outlook assigned on the bank's ratings.
However, the outlook could revert to stable if the bank's
performance proves to be weaker than Moody's current expectations

PRINCIPAL METHODOLOGY

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


KAZAN CITY: Fitch Affirms 'BB-' Long-Term IDR, Outlook Stable
-------------------------------------------------------------
Fitch Ratings has affirmed the Russian City of Kazan's Long-Term
Foreign- and Local-Currency Issuer Default Ratings (IDRs) at
'BB-', with Stable Outlooks, and Short-Term Foreign-Currency IDR
at 'B'.

KEY RATING DRIVERS

The 'BB-' rating reflects the city's high direct risk, its low
operating balance and a weak institutional framework for Russian
sub-nationals. The rating also factors Kazan's diversified
economy, long-term repayment schedule of its debt, and stable
support from the Republic of Tatarstan (BBB-/Stable), of which
Kazan is the capital.

Under Fitch's base case scenario, direct risk will remain high at
about RUB30 billion in 2017-2019 (2016: RUBB29.8 billion),
declining in relative terms to 135% in 2019 from 150% in 2016.
Around 85% of direct risk comprises RUB25 billion low-cost budget
loans from Tatarstan, which were allocated to infrastructure
development in preparation for Universiade 2013, hosted by the
city.

The high debt is mitigated by the budget loans' long-term
repayment schedule with a grace period until 2023 and principal
amortisation in 10 annual instalments to 2032. In 2016, the city
had repaid RUB0.3 billion of the budget loan ahead of schedule.
Kazan also benefits from low interest rates on budget loans,
saving materially on interest payments. In 2016, Kazan's interest
expenditure declined by about 25% yoy as the city benefited from
the reduction of interest rates on budget loans to 0.1% from 0.5%
and improved its market debt management.

Fitch forecasts Kazan's operating balance will consolidate at 3%
of operating revenue (2016: 3.7%) in 2017-2019. This will be
supported by the administration's cost control measures and
allocation of additional 0.5pp of personal income tax to the
city's budget. In 2016, the operating balance moderately improved
to 3.7% from 2.4% in 2015 as the city managed to keep operating
expenditure stable amid stagnating operating revenue.

The city's tax flexibility remains weak, in Fitch's view. Kazan's
budgetary policy is dependent on the decisions of the regional and
federal authorities. Nonetheless the flow of earmarked current
transfers received from the republic's budget is stable, averaging
37% of operating revenue in 2014-2016.

Fitch projects the city's current balance will remain in low
positive figures in 2017-2019 after it restored to 1.5% of current
revenue in 2016 (2015: -0.7%; 2014: -2%). This will be supported
by lower interest payment, which will likely decline due to the
reducing cost of borrowing on the domestic capital market.

Fitch forecasts Kazan will record a small deficit before debt
variation of 1%-2% of total revenue in 2017-2019 after two years
of surplus averaging 2.2% in 2015-2016. Fitch expects Kazan will
maintain low capital expenditure at about 10% of total
expenditure, in line with its historical level in 2014-2016. The
city is committed to restricting new market borrowings (bank loans
and bonds) until the final repayment of outstanding budget loans
in 2032, which resulted from restructured loans with the republic
in 2013. Fitch therefore project the deficit, if any, will likely
be funded by the city's cash balance (end-2016: RUB 1.7 billion)
and direct debt will stabilise at RUB4.8 billion in 2017-2019,
equal to 20%-25% of current revenue.

As Tatarstan's capital, the city's economy is boosted by the
republic's diversified economic profile with a well-developed
industrial sector. The latter is dominated by petrochemicals,
machine-building and food processing. The administration estimates
the city's economy will return to marginal 1%-2% annual growth in
2017-2019 after two years of stagnation. This is in line with the
national trend. Fitch projects Russian GDP to grow by 1.4%-2.2% in
2017-2018.

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

RATING SENSITIVITIES

A material decline of direct risk below 100% of current revenue,
accompanied by higher financial flexibility and an operating
margin above 5% on sustainable basis, could lead to an upgrade.

An increase in direct debt to above 50% of current revenue or a
weakening of the operating balance towards zero could lead to a
downgrade.


KRASNODAR REGION: Fitch Affirms 'BB' IDR, Outlook Stable
--------------------------------------------------------
Fitch Ratings has affirmed Russian Krasnodar Region's Long-Term
Foreign- and Local-Currency Issuer Default Ratings (IDR) at 'BB'
with Stable Outlook and Short-Term Foreign-Currency IDR at 'B'.
The region's outstanding senior unsecured domestic debt has been
affirmed at 'BB'.

KEY RATING DRIVERS

The ratings reflect the region's satisfactory budgetary
performance with an operating balance that covers interest
expenses, and high net overall risk compared with 'BB' national
peers. The ratings also take into account the region's diversified
economic profile and the exposure from a large public sector, as
well as the weak institutional framework for Russian sub-
nationals.

Fitch expects the region's operating balance will consolidate at
around 5%-6% of operating revenue in 2017-2019, underpinned by
moderate expansion of the tax base and control of operating
spending. In 2016, the operating margin strengthened to 7.7% from
4.0% one year earlier due to strong growth of tax proceeds by
almost 15%.

Tax revenue growth in 2016 was mainly driven by exceptionally high
proceeds from corporate income tax and excises. Fitch projects a
slowdown of tax revenue growth in 2017 due to changes in tax
regulation. However, overall operating revenue will be supported
by moderate growth of current transfers.

The improved operating balance and capex limitation led the budget
to a minor surplus before debt at 0.87% of total revenue in 2016
(2015: 6.6% deficit). Fitch expects that capex will remain below
10% of total expenditure over the medium term, which will
translate into a low budget deficit at 1%-2% over the medium term.
The region invested heavily in 2011-2013 in preparation for the
Sochi Winter Olympic Games in 2014, when capex averaged 30% of
total spending.

Fitch expects direct risk will continue to decline to below 65% of
current revenue in 2017-2019 supported by lower needs for
investment. In 2016, the direct risk stood at RUB140.1 billion,
which corresponded to 71.8% of current revenue, down from 76.7% a
year before. Debt that is higher than the national 'BB' median is
mitigated by its favourable composition, in which subsidised
budget loans, which bear a negligible 0.1% annual interest rate,
constitute around half of the stock. Of this amount, around 70% is
linked to the Olympics facilities financing, and mature between
2023 and 2034. This allows a reduction in annual debt servicing
and eases refinancing pressure on the budget.

Nevertheless, like most of its national peers the region is
exposed to some refinancing pressure as 54% of its maturities are
due in 2017-2019. As of 1 June, the region has to repay RUB18.1
billion of debt by the end of 2017. Part of this will be
refinanced by new RUB3.8 billion budget loans on which there is an
agreement with the federal government. Additionally, the region
plans to issue a RUB10 billion domestic bond in 2H17. The new bond
is intended to have a seven-year maturity, which will contribute
to lengthening of the debt profile.

Krasnodar is exposed to contingent risk stemming from its large
public sector. Fitch estimates that contingent liabilities
accounted for around 10% of the region's current revenue in 2016.
Around half of the total contingent liabilities is a guarantee
issued in the favour of the Olympics developer NPJSC Centre Omega
(RUB8.9 billion at 1 May 2017). In 2016-2017 the region was forced
to repay RUB1.6 billion to Omega's creditor, and Fitch assumes
there is a possibility of further payments by the region related
to this guarantee.

Krasnodar region's economy is diversified, providing a broad tax
base. Krasnodar is among the top five Russian regions by gross
regional product (GRP) and population, and its GRP per capita is
8% above the national median (2015). According to the
administration's estimates GRP grew by 0.9% in 2016 while the
national economy contracted by 0.2%. The administration expects
GRP will grow by 1.7% in 2017 and 3.5%-4.8% in 2018-2019 supported
by developing processing industries and agricultural sector.

Fitch views Russia's weak institutional framework for local and
regional governments (LRGs) as a constraining factor on the
region's ratings. It has a short track record of stable
development compared with many of its international peers.
Unstable intergovernmental set-up leads to lower predictability of
LRGs' budgetary policies and negatively affects the region's
forecasting ability, and debt and investment management.

RATING SENSITIVITIES

A strong operating balance of about 10% of operating revenue on a
sustained basis accompanied by improvement of direct risk-to-
current balance ratio to about five years (2016: 17 years) could
lead to an upgrade.

Consistently weak operating balance insufficient to cover interest
expense or inability to maintain the net overall risk to current
revenue below 100% would lead to negative rating action.


MIR JSC: Liabilities Exceed Assets, Assessment Shows
----------------------------------------------------
Examination of the financial standing of Commercial Bank MIR (JSC)
revealed evidence of siphoning off of assets by former management,
among other things, extending intentionally bad loans to borrowers
with dubious solvency and corporate borrowers bearing the marks of
shell companies, according to the press service of the Central
Bank of Russia.

The examination was conducted by virtue of Bank of Russia Order
No. OD-4615, dated December 19, 2016, putting the credit
institution under provisional administration following the
revocation of its banking license.

The provisional administration further established that more than
RUR1.9 billion were siphoned off, disguised as cash placed on a
non-resident bank's account.

The provisional administration estimates the value of the Bank
assets to total RUR211.1 million, versus RUR1,600.4 million of its
liabilities to creditors.

On April 17, 2017, the Court of Arbitration of the City of Moscow
ruled to recognize the Bank as insolvent (bankrupt) and initiate
bankruptcy proceedings.  The State Corporation Deposit Insurance
Agency was appointed as a receiver.

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


RED GATES: Liabilities Exceed Assets, Assessment Shows
------------------------------------------------------
Examination of Commercial Bank Red Gates JSC's financial standing
revealed low quality of assets as a result of issuing loans to
companies with dubious solvency, not able to perform their
obligations, and to shell companies, according to the press
service of the Central Bank of Russia.

The examination was conducted by virtue of Bank of Russia Order
No. OD-4839, dated December 29, 2016, putting the credit
institution under provisional administration following the
revocation of its banking license.

Besides, prior to the banking license revocation, the bank's
management had executed several transactions bearing the evidence
of moving out assets by making agreements to assign receivables
and by selling the bank's liquid assets to third parties.

According to the estimate by the provisional administration, the
assets of JSCB Bank Red Gates (JSC) do not exceed RUR2.8 billion,
whereas the bank's liabilities to its creditors amount to RUR4.2
billion.

On March 28, 2017, the Court of Arbitration of the city of Moscow
ruled to recognize JSCB Bank Red Gates (JSC) insolvent (bankrupt)
and initiate bankruptcy proceedings with the state corporation
Deposit Insurance Agency appointed as a receiver.

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


RUSHYDRO PJSC: Fitch Changes Outlook to Stable, Affirms BB+ IDRs
----------------------------------------------------------------
Fitch Ratings has revised the Outlook on Russia-based utility
company PJSC RusHydro's Long-Term Foreign- and Local-Currency
Issuer Default Ratings (IDRs) to Stable from Negative, and
affirmed them at 'BB+'.

The Outlook revision reflects Fitch views that RusHydro has
improved its credit metrics and will maintain them at levels
commensurate with the current rating. Fitch forecast RusHydro's
funds from operations (FFO)-adjusted net leverage to be below 3.0x
during 2017-2021 due to strong financial and operational
performance in 2016 and within the rating horizon.

RusHydro's IDRs continue to incorporate a single-notch uplift for
state support from its standalone rating of 'BB', due to strong
strategic, operational and, to a lesser extent, legal ties between
the company and its majority shareholder, the Russian Federation
(BBB-/Stable).

KEY RATING DRIVERS

Continued State Support: RusHydro continues to receive tangible
state support. In 2012-2016 the company received support of more
than RUB173 billion, including a RUB50 billion equity injection
for the construction of four thermal power plants in the Far East
in 2012, direct subsidies of RUB68 billion as compensation for low
tariffs in the Far East and a recent RUB55 billion injection from
state-owned VTB Bank for the repayment of Far East debt.

Nevertheless, the consolidation of financially weaker RAO Energy
System of the East Group (RAO UES East) in 2011 and the
government's decision to increase dividend payments for 2016 to
50% from net income worsened the company's operating and financial
profile, underlining the negative implications of state
involvement.

Forward Contract With VTB: In March 2017, RusHydro received a
RUB55 billion cash injection from the state, via the 13% share
purchase by VTB. These proceeds were used to repay RAO UES East
debt. VTB has also signed a non-deliverable (with no obligation
for RusHydro to buy back its shares from VTB) five-year forward
contract with RusHydro. Either RusHydro or VTB must compensate for
the difference between the forward value (share price at which the
deal was made) and the value at sale of RusHydro's shares in five
years: i.e. if the value at sale is below the forward value, the
difference is paid by RusHydro to VTB, and vice versa.

The company states that sale of this stake would require state
approval. In its ratings case, Fitch treats this RUB55 billion
fully as debt before the expiry of this contract as the potential
liability under this forward contract would rank pari passu with
existing senior unsecured debt and there is no deferral option on
RusHydro's payments to VTB for the duration of the contract. Fitch
will re-classify any amount remaining with RusHydro after the
contract termination as equity, which will have a positive effect
on its credit metrics, other things being equal. However, the
rating is not constrained by Fitch current treatment of the
contract.

EBITDA Improvement: In 2016, RusHydro posted 35% yoy EBITDA
increase due to opex management and water flow conditions
normalised to historical averages in European and Siberian parts
of Russia. Fitch forecasts 2017-2021 EBITDA to remain flat at
around RUB98 billion (RUB93 billion in 2016) and the EBITDA margin
to stay at around 24%. This is based on Fitch expectations that
tariffs will be increased below CPI, whereas a large part of the
operating costs (e.g. fixed costs) will increase at the rate of
CPI. The resulting negative impact is partially offset by new
capacity coming online.

Capex Results in Negative FCF: Fitch expects RusHydro to continue
to generate negative free cash flow (FCF) of around RUB20 billion
on average, owing to its substantial capex programme of RUB344
billion (including VAT) over 2017-2020, which Fitch expects will
be partially debt funded. Around a third relates to RAO UES East.
This contrasts with positive FCF generation by RusHydro's closest
peers, PJSC Inter RAO (BBB-/Stable), PJSC Mosenergo (BBB-/Stable)
and Enel Russia PJSC (BB+/Stable), which have completed their
expansionary capex programmes.

However, RusHydro has flexibility to cut back its investment
programme if there is a lack of available funding or material
deterioration of credit metrics, especially in the context of
increased dividend payments from 2016, as demonstrated in the
past. In 2016 capex fell by more than 30% yoy.

'BB' Standalone Rating: RusHydro's standalone rating of 'BB'
continues to reflect the company's strong market position as a
leading, low-cost electricity producer in Russia due to a large
portfolio of hydro power plants with installed electric power
capacity of about 39GW. The standalone profile also reflects its
exposure to regulated tariffs via its RAO UES East division, which
will remain a drag on profitability and cash flows. The standalone
rating also factors in an uncertain regulatory framework in the
medium term and corporate governance limitations in the operating
environment in Russia.

DERIVATION SUMMARY

RusHydro is one of the largest power generation companies in
Russia and listed hydroelectric generation companies in the world
by installed capacity. It is also exposed to fossil-fuel
generation via its RAO UES East division, and compares well with
other rated generating companies such as Inter RAO, Mosenergo and
Public Joint Stock Company Territorial Generating Company No. 1
(TGC-1; BB+/Stable) by operational metrics. Peers are also subject
to regulatory uncertainties and low visibility on medium-term
tariff increases, and have large investment programmes.

RusHydro's financial profile is weaker than Inter RAO and
Mosenergo's on FFO-based net leverage, and quite similar to TGC-
1's, varying historically between 2.0x and 3.0x. Fitch assesses
the regulatory framework and general operating environment in
Russia as constraining. RusHydro's IDR incorporates a one-notch
uplift to the company's 'BB' standalone rating for parental
support from the ultimate indirect majority shareholder, the
Russian Federation.

KEY ASSUMPTIONS

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

- moderate domestic GDP growth of 1.4% and inflation increase of
   4.9% in 2017, and by 2.2% and 4.5%, respectively, in 2018;
- electricity and heat tariffs and power prices to increase
   below CPI over 2017-2021;
- dividends at 50% of net income under IFRS for 2017-2021;
- the RUB55 billion VTB cash injection 100% treated as debt;
- capex for 2017, 2018 and 2019 with 20%, 20% and 10% haircuts
   compared with management expectations respectively.

RATING SENSITIVITIES

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

- Capex and opex moderation resulting in improvement of the
   financial profile (e.g. generation of positive FCF and FFO net
   adjusted leverage below 2.0x and FFO fixed charge coverage
   above 4x on a sustained basis)

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

- The inability to maintain FFO adjusted net leverage below 3.0x
   and FFO fixed charge coverage above 3.0x, due to weaker
   financial profile and more ambitious capex programme

LIQUIDITY

Adequate Liquidity: At end-2016, RusHydro had cash and deposits of
around RUB68 billion (excluding the remaining around RUB4 billion
cash injection received from the state in December 2012 for
financing the RAO UES East projects). In addition to available
uncommitted credit lines totalling around RUB100 billion,
including from such large state-owned banks as VTB Bank,
Gazprombank (Joint-stock Company) (BB+/Stable) and Sberbank of
Russia (BBB-/Stable), this is sufficient to cover short-term debt
of RUB39 billion.

Limited FX Exposure: RusHydro has limited exposure to foreign-
currency risks; at end-2016 around 7% of RusHydro's debt was
denominated in foreign currencies, mainly euros, while almost all
its revenues are in local currency.

FULL LIST OF RATING ACTIONS

PJSC RusHydro
Long-Term Foreign and Local Currency IDRs affirmed at 'BB+',
  Outlook revised to Stable from Negative
Local-currency senior unsecured rating affirmed at 'BB+'

RusHydro Finance Ltd
Foreign-currency senior unsecured rating of 'BB+' withdrawn
  following debt repayment.


SMOLENSK REGION: Fitch Assigns B+ Long-Term IDRs, Outlook Stable
----------------------------------------------------------------
Fitch Ratings has assigned Russian Smolensk Region Long-Term
Foreign- and Local-Currency Issuer Default Ratings (IDRs) of 'B+'
with Stable Outlook and a Short-Term Foreign-Currency IDR of 'B'.
The region's outstanding senior unsecured domestic debt has been
rated at 'B+'.

The ratings reflect the region's high direct risk with
concentrated refinancing needs, a prolonged track record of a
large budget deficit, and modest economic profile, which is
translated into a small budget. The ratings also consider the
recovering operating balance, which is sufficient for interest
payments, and the weak institutional framework for the Russian
subnationals.

KEY RATING DRIVERS

The ratings reflect the following rating drivers and their
relative weights:

HIGH

Growing Direct Risk
Fitch expects that Smolensk's direct risk will remain high over
the medium term and could approach 100% of current revenue in 2019
according to Fitch base case scenario. The region's direct risk
increased sharply to 94.2% of current revenue in 2016 from 53.7%
in 2012 due to the large budget deficit, with peaks at above 20%
of total revenue in 2013 and 2015. High reliance on low-cost
budget loans helps mitigate the sizeable direct risk.

In 2016, budget loans, which bear a negligible 0.1% annual
interest rate, made up 59% of the region's direct risk, easing
pressure on the budget in terms of annual debt servicing. Bank
loans represented another 36% of the stock, while issued debt
contributed a low 5%.

Smolensk is exposed to high refinancing pressure like many of its
national peers. Its maturities are concentrated between 2017 and
2019 when the region has to refinance 92% of its total direct
risk. The region's immediate refinancing needs are modest and
limited to refinancing of RUB3.4 billion of budget loans by the
end of 2017. The region has already contracted RUB1.9 billion of
new budget loans in 1H17, and Fitch assumes the region could
receive additional budget loans until end-2017 for refinancing
purposes.

Weak, but Improving Budgetary Performance
Fitch expects the region's operating balance will be sufficient to
cover interest payments in 2017-2019. In 2016, the region's
current balance turned positive for the first time since 2008,
supported by the decline of interest payments and improved
operating performance. The latter accounted for 5.5% of operating
revenue, supported by high growth of taxes, which averaged 16.5%
in 2015-2016.

Fitch expect that limiting capex to below 10% of total spending
and continuous moderate expansion of the tax base will support the
decline of the budget deficit to 5%-7% of total revenue in 2017-
2019. In 2016 the budget deficit before debt variation narrowed to
5%, its lowest since 2012.

MEDIUM

Evolving Institutional Framework
Fitch views Russia's weak institutional framework for local and
regional governments (LRGs) as a constraining factor on the
region's ratings. It has a short track record of stable
development compared with many of its international peers.
Unstable intergovernmental set-up leads to lower predictability of
LRGs' budgetary policies and negatively affects the region's
forecasting ability, and debt and investment management.

The region's ratings also reflect the following key rating
drivers:

Modest Economic Profile
Smolensk's population is about one million and is declining. The
region's economic profile is weaker than the national average with
GRP per capita at 82% of the national median in 2015. The regional
economy contracted in 2015-2016 following the trend in national
economy. The administration forecasts recovery will have started
in 2017 and expects GRP to grow by 1%-2% supported by growth of
industrial output, particularly in the processing sector. Fitch
expects the national economy to grow 1.4% in 2017 after
contracting by 0.2% in 2016.

Management Assessed as Neutral
The region's budgetary policy is dependent on the decisions of the
regional and federal authorities. This leads to a steady flow of
earmarked current transfers received from the federal budget,
which averaged 20% of operating revenue in 2012-2016. The
administration aims to materially improve the budgetary
performance over the medium term and plans to reach a surplus
budget in 2017. Fitch assumes that this will be difficult to
achieve as regional budgetary flexibility is limited.

RATING SENSITIVITIES

Resumed deterioration of the budgetary performance leading to a
negative current balance and inability to curb the growth of
direct risk accompanied by persistent refinancing pressure could
lead to a downgrade.

Consolidation of the fiscal performance, with an operating balance
sufficient for interest payments on a sustained basis and
stabilisation of direct risk could lead to an upgrade.



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


BANCO SANTANDER TOTTA: S&P Affirms 'BB+/B' CCRs
-----------------------------------------------
S&P Global Ratings said that it revised its outlook on Spain-based
Banco Santander S.A. to stable from positive and affirmed its
'A-/A-2' long- and short-term counterparty credit ratings on the
bank.

At the same time, S&P revised to stable from positive its outlooks
on Santander's highly strategic subsidiary Santander Consumer
Finance S.A. (SCF).  The 'BBB+/A-2' long- and short-term
counterparty credit ratings were affirmed.  S&P has also affirmed
its 'BB+/B' long- and short-term counterparty credit ratings on
Banco Santander Totta S.A., a highly strategic subsidiary of
Santander.  The outlook remains stable.

The rating actions follow the Single Resolution Board (SRB)'s
announcement on June 7, 2017, that it agreed to the resolution of
Banco Popular Espanol SA, upon the ECB's conclusion that the bank
was failing or likely to fail as a result of a significant
deterioration in its liquidity position.  The resolution entailed
the sale of Popular to Banco Santander S.A. for EUR1, after
absorption of losses by Banco Popular's shareholders and holders
of Tier I and Tier II capital instruments.

S&P's decision to affirm the ratings on Santander reflects S&P's
expectation that the acquisition of Popular, despite its
meaningful size and the risks it entails, will be manageable for
the bank.  However, S&P thinks it will delay potential improvement
to Santander's credit profile over the next two years, even in a
likely more supportive economic and operating environment in
Spain.  As a result, S&P revised the outlook on its rating to
stable from positive.

S&P views the acquisition of Popular as positive for Santander
from a business perspective, since the bank's franchise in its
home market will strengthen, particularly among small and midsize
enterprises, which is an area of increasing focus by banks and
will likely reinforce Santander's pricing power and growth
prospects.  It also offers the opportunity to improve returns
through the achievement of efficiency gains.  Additionally, Banco
Popular's acquisition comes at a time when both economic and
industry risks in the Spanish market are, in S&P's view, receding.

Banco Popular's size relative to Santander's domestic operations
is, however, meaningful and, despite Santander's proven expertise
in restructuring and turning around institutions, S&P sees risks
associated with that process.  The restructuring and integration
plan implies a meaningful readjustment of Banco Popular's branch
network and staff, the migration to Santander's IT platform, and
the alignment of commercial and risk practices, among other
things.  It's therefore not unthinkable that the bank could
encounter unexpected problems that could extend the restructuring
over a longer time frame than originally expected, or result in
higher business attrition or lower-than-expected returns on
investment.

In S&P's opinion, Santander's decision to raise EUR7 billion of
fresh equity is positive.  This has already been underwritten by a
group of banks, and Santander expects to complete it by the end of
July.  The capital raising will allow the acquisition to have a
moderate, manageable impact on Santander's risk-adjusted capital
(RAC).  S&P estimates Santander's 2016 RAC ratio pro forma the
acquisition at about 30 basis points (bps) lower than S&P's actual
estimate of 7.2% for end 2016.  From there, S&P expects capital
will improve moderately, thanks to earnings retention.

S&P believes the acquisition will have only a modest impact on
Santander's capital because S&P assumes the bank has taken a
conservative approach to estimating Popular's additional
provisioning requirements, which is also what the coverage ratios
seem to suggest.  Nevertheless, S&P acknowledges that time
constraints in the acquisition process and likely limited access
to fully reliable, detailed information can introduce some
uncertainty.

S&P's expectations of capital build up at Santander are lower than
before, which -- coupled with the addition of Banco Popular to the
group -- reduces S&P's expectation of Santander accumulating over
this year and next a sufficient buffer of instruments (equivalent
to 400 bps of S&P's RWA measure) to absorb losses in a resolution
scenario.  In turn, this reduces the likelihood of a one-notch
uplift in the long-term rating based on additional loss-absorbing
capacity (ALAC).

S&P thinks Banco Popular's poor asset quality will take a toll on
Santander.  The bank's stock of domestic nonperforming assets
(NPAs) will double in net terms, requiring the implementation of
an aggressive NPA reduction plan.  Santander aims at reducing
Popular's portfolio of NPAs by 50% in 18 months, which appears to
be an ambitious target, even considering Santander's good track
record in recent years of reducing its own NPAs and the higher
coverage levels achieved, which should facilitate the sale of
NPAs.  S&P estimates that Santander's 2016 pro forma post-
acquisition gross NPAs could rise to 6% of loans from 4.2% on
Dec. 31, 2016, reaching the peak levels reported at year-end 2013,
with real estate assets adding an additional 3%.

Regarding Santander's subsidiaries, S&P's outlook revision and
affirmation on SCF reflect S&P's view of SCF as a highly strategic
group member.  As a result, S&P's long-term rating on SCF is one
notch below the 'a-' group credit profile.  In particular, S&P
continues to consider SCF to be a solidly profitable subsidiary
operating in a business line across Europe that is integral to the
Santander's overall group strategy.

S&P affirmed its ratings on Totta and maintained a stable outlook,
despite its view of the bank as a highly strategic subsidiary of
Santander, since the ratings remain capped by the sovereign credit
ratings on Portugal.

The resolution of Banco Popular does not affect S&P's views of the
positive trends S&P sees for economic and industry risks in Spain.
S&P sees Popular's financial stress as an isolated case in the
country, and note that the deterioration of Banco Popular's
liquidity position did not spread to the rest of the banking
sector.

Banco Santander

The stable outlook balances, on the one hand, the potentially more
supportive economic and operating environment in Spain with the
managerial challenges posed by the recent acquisition of Popular,
a large bank with sizeable asset-quality problems, which Santander
plans to restructure and integrate into the group.  S&P also
factors in potentially more difficult economic conditions in the
post-Brexit U.K., increased political uncertainty in Brazil, and
emerging risks in the subprime auto lending business in the U.S.
Additionally, the stable outlook takes into account S&P's view on
reduced prospects for the bank to build up a large enough buffer
over the next two years to benefit from a rating uplift based on
ALAC.

S&P could take a positive rating action if it sees a more
supportive economic and operating environment in Spain, along with
signs that external emerging risks are stabilizing, and evidence
that the integration of Popular is proceeding smoothly and as
planned.  Likewise, S&P could raise the ratings if the bank
exhibits a stronger buildup of capital and loss-absorbing
instruments than S&P currently expects.

Conversely, the ratings could come under pressure if the
integration of Banco Popular encounters meaningful setbacks or
unexpectedly undermined Santander's capital.  The lowering of the
sovereign rating on Spain could also put pressure on S&P's rating
on Santander.

SCF

The stable outlook on SCF reflects that on its parent.  As long as
S&P continues to assess SCF as highly strategic to Santander,
S&P's ratings on SCF will remain one notch below those on the
parent and move in tandem with them.

An upgrade of SCF in the next two years would be triggered by a
similar action on both the parent and the Spanish sovereign, or by
our revision of SCF's status within group to core.  Conversely,
S&P could lower the ratings on SCF following a similar action on
the parent, or if S&P believed that the parent's commitment to SCF
had weakened, leading S&P to revise downward its view of the
subsidiary's long-term strategic importance for the Santander
group.

Totta

The stable outlook on Totta mirrors that on Portugal.  An upgrade
or downgrade of the sovereign could lead to a similar action on
the ratings on Totta as the bank remains a highly strategic
subsidiary of Santander.


BANCO SANTANDER: Fitch Affirms 'BB' Preference Shares Rating
------------------------------------------------------------
Fitch Ratings has affirmed Spain-based Banco Santander, S.A.'s
(Santander) Long-Term Issuer Default Rating (IDR) at 'A-' and its
Viability Rating (VR) at 'a-'. The Outlook on the Long-Term IDR is
Stable.

At the same time, Fitch has upgraded Banco Popular Espanol, S.A.'s
(Popular) Long-Term IDR to 'A-' from 'B' with a Stable Outlook.
Fitch has also downgraded Popular's VR to 'f' from 'b' following
the European Central Bank's (ECB) decision to put Popular into
resolution and subsequently withdrawn the VR as the bank can no
longer be assessed on a standalone basis.

The rating actions follow the June 7, 2017 announcement that
Santander has acquired 100% of the shares of Popular at the price
consideration of EUR1 as part of a resolution organised by the
Single Resolution Board (SRB). Prior to the sale, the preferred
stock and perpetual Tier 1 convertible notes issued by Popular
were fully written down and subordinated debt (lower tier 2) was
converted into equity. Santander will raise EUR7 billion of
capital to fund the acquisition.

KEY RATING DRIVERS

SANTANDER
IDRS, VR, DCR AND SENIOR DEBT

The affirmation of Santander's ratings reflects Fitch's view that
the impact of this transaction on the group's financial profile is
broadly neutral. This is because the write-off of Popular's share
capital and the bail-in of tier 1 instruments and subordinated
instruments prior to the acquisition have been used to increase
the reserve coverage of its problem assets substantially.

Additionally the impact from integrating Popular's assets and
liabilities on Santander's fully loaded CET1 will be offset by the
planned EUR7 billion capital increase for which the group already
has underwriting commitments. As a result of the capital increase,
Santander expects no material impact on its fully loaded CET1
ratio, which stood at 10.7% at end-March 2017.

In Fitch views, execution risks are manageable given Popular's
relative size to Santander (around 11% of total assets at end-
2016) and the track record of the latter's management team in
acquiring and integrating banks. Fitch believes the group's plan
to turn around Popular's business is credible, especially taking
into account the positive trajectory in Spain's economy.

Asset quality at the combined bank will initially deteriorate
somewhat due to Popular's large stock of problem assets. However,
Fitch believes that the increased reserve coverage on Popular's
legacy real estate-related assets (65% for foreclosed real estate
and 75% non-performing loans (NPLs) to real estate developers)
will facilitate divestments. Santander targets to halve the
acquired stock of problem assets within 18 months and divest the
bulk of it by 2020.

Popular's acquisition strengthens Santander's competitive position
in Portugal and provides it with the largest banking franchise in
Spain, with a leading market share in SME banking. Fitch expects
the initial impact of the transaction on Santander's domestic
profitability to be mildly negative owing to the integration and
restructuring costs entailed. However, profitability should be
restored gradually due to the potential for cost synergies, which
Santander quantifies at around EUR500 million savings annually
from 2020. Also the substantial additional provisions made as part
of the resolution to write-down problem assets should alleviate
loan impairment charges going forward.

Fitch believes that the acquisition will not have a material
impact on Santander's funding and liquidity profile despite
Popular experiencing liquidity pressures from customer deposit
outflows in the weeks before its resolution. The group expects
that the additional cost of larger TLAC-eligible debt issuance
needs will be offset by Popular's cost of funding converging with
Santander's.

SUPPORT RATING AND SUPPORT RATING FLOOR

Santander's Support Ratings (SR) of '5' and Support Rating Floors
(SRF) of 'No Floor' reflect Fitch's belief that senior creditors
of the bank can no longer rely on receiving full extraordinary
support from the sovereign in the event that the bank becomes non-
viable. The EU's Bank Recovery and Resolution Directive (BRRD) and
the Single Resolution Mechanism (SRM) for eurozone banks provide a
framework for resolving banks that is likely to require senior
creditors participating in losses, instead of or ahead of a bank
receiving sovereign support.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

Subordinated debt and other hybrid capital issued by Santander are
notched down from its VR, in accordance with Fitch's assessment of
each instrument's respective non-performance and relative loss
severity risk profiles, which vary considerably.

Subordinated (lower Tier 2) debt is rated one notch below the
bank's VR to reflect above- average loss severity of this type of
debt (one notch). Upper Tier 2 debt is rated three notches below
the bank's VR to reflect above-average loss severity of this type
of debt (one notch) and high risk of non-performance (two notches)
given the option to defer coupons if the issuer reports losses in
the last audited accounts.

Preferred shares are rated five notches below the bank's VR to
reflect higher loss severity risk of these securities compared
with average recoveries (two notches from the VR), as well as high
risk of non-performance (an additional three notches) due to
profit test for legacy issues and fully discretionary coupon
payments for recent issues.

POPULAR
IDRS, SENIOR DEBT AND SUPPORT RATING

Popular's IDRs, senior debt ratings and SR have been upgraded
following Santander's acquisition. This reflects Fitch views of an
extremely high probability of support for Popular by Santander, if
needed given the plan to fully integrate Popular with the parent
bank.

Popular is 100%-owned by Santander and an integral part of the
group as it strengthens Santander's SME franchise in Spain and
overall competitive position. In Fitch assessments of support,
Fitch judge that management and corporate culture at Popular will
be highly integrated with those of its parent in a short period of
time following the appointment of Santander's CFO as the new
Chairman of Popular. In addition, within regulatory restrictions,
Santander's capital and liquidity are highly fungible within the
group, at least in the eurozone.

Popular's SRF has been affirmed and withdrawn because the primary
source of support for the bank is now Santander, rather than
Spain.

VR
The downgrade of Popular's VR to 'f' reflects the bank's failure
in the form of resolution action taken by the SRB. Loss of
confidence from investors and customers had triggered a liquidity
shortfall that urged European authorities to resolve the
institution. According to the ECB, Popular's supervisor, it was
failing or likely to fail in accordance with Article 18 (1) of the
SRM regulation. The ECB determined that the significant
deterioration of Popular's liquidity position in the past few days
would make the bank unable to pay its debts or other liabilities
as they fell due in the near future. As a result, the SRB decided
that the sale of business tool for transferring shares to a
purchaser met the resolution objectives and ensured financial
stability was maintained in Spain and Portugal.

Fitch has also withdrawn Popular's VR because the bank can no
longer be assessed as a standalone institution given the intention
to fully integrate Popular with the parent bank in a short period
of time.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

The downgrade and withdrawal of Popular's subordinated debt (lower
Tier 2) and preferred stock and perpetual Tier 1 convertible notes
ratings reflects the effective write-down to zero of these debt
instruments as part of the resolution. The SRB exercised its power
of write-down and conversion of these capital instruments prior to
the transfer, to address the shortfall in the value of the bank.

RATING SENSITIVITIES
SANTANDER
IDRS, VR, DCR AND SENIOR DEBT

The Stable Outlook reflects Fitch expectations that the group's
overall credit profile will remain stable in the foreseeable
future despite the execution risks of integrating Popular and the
immediate deterioration of asset quality caused by the
acquisition.

Santander's VR (and hence the bank's IDRs) are unlikely to be
higher than their current one notch above Spain's sovereign
rating. An upgrade of the VR would be contingent on an upgrade of
Spain's sovereign rating. This would have to be accompanied by
further improved capital metrics while the positive asset quality
trend prior to the acquisition is maintained and potentially
accelerated given the acquisition of a weaker bank. This implies a
speedy reduction of the large stock of problem assets at Popular.
Equally important will be the preservation of the group's earnings
resilience by delivering the planned cost synergies from the
integration of Popular and maintaining sound earnings performance
at major international subsidiaries.

A downgrade of Spain's sovereign rating would trigger a downgrade
of the bank's VR and hence Long-Term IDR. Downward rating pressure
could also arise from a slower improvement in asset quality than
currently anticipated in the rating, a substantial weakening of
earnings, which Fitch views as unlikely, or unexpected execution
and integration risks emerging from Popular's acquisition that
could compromise the accomplishment of the group's financial
targets for 2018.

The rating of second-ranking senior notes is primarily sensitive
to a change in the Long-Term IDR of Santander. For the preferred
senior notes and the DCR to achieve a one-notch uplift, the buffer
of qualifying junior debt and non-preferred senior debt would need
to exceed Fitch estimates of a 'recapitalisation amount'. This
amount is likely to be around or above the bank's minimum pillar 1
total capital requirement.

SUPPORT RATING AND SUPPORT RATING FLOOR

Any upgrade of the SRs and upward revision of the SRFs would be
contingent on a positive change in the sovereign's propensity to
support its banks. While not impossible, this is highly unlikely,
in Fitch's view.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

Subordinated debt and other hybrid capital issued by Santander are
primarily sensitive to a change in its VRs. Upper Tier 2 notes and
preferred shares are also sensitive to Fitch changing its
assessment of the probability of their non-performance relative to
the risk captured in the bank's VR.

POPULAR
IDRs, SENIOR DEBT AND SUPPORT

Popular's IDRs and debt ratings are sensitive to the same factors
that might drive a change in Santander's IDRs. While it is not
Fitch base case, Popular's ratings would also be sensitive to a
reduction in Santander's stake in Popular or if Popular does not
become significantly integrated into the group in the short term,
leading Fitch to conclude its strategic importance has reduced.

The rating actions are:

Santander
Long-Term IDR: affirmed at 'A-'; Outlook Stable
Short-Term IDR: affirmed at 'F2'
Viability Rating: affirmed at 'a-'
Support Rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'
Derivative Counterparty Rating: affirmed at 'A-(dcr)'
Second ranking senior notes: affirmed at 'A-'
Senior unsecured debt long-term rating and certificates of
  deposit: affirmed at 'A-'
Senior unsecured debt short-term rating, commercial paper and
  certificate of deposits: affirmed at 'F2'
Market-linked senior unsecured securities: affirmed at 'A-emr'
Subordinated debt: affirmed at 'BBB+'
Preference shares: affirmed at 'BB'

Santander International Debt, S.A. Unipersonal
Senior unsecured debt long-term rating: affirmed at 'A-'
Senior unsecured debt short-term rating: affirmed at 'F2'
Market-linked senior unsecured securities: affirmed at 'A-emr'

Santander Issuances S.A.
Subordinated debt long-term rating: affirmed at 'BBB+'

Santander International Preferred, S.A. Unipersonal
Preference shares: affirmed at 'BB'

Santander Commercial Paper, S.A. Unipersonal
Commercial paper: affirmed at 'F2'

Santander Finance Capital, S.A. Unipersonal
Preference shares: affirmed at 'BB'

Santander Finance Preferred, S.A. Unipersonal
Preference shares: affirmed at 'BB'

Santander Perpetual, S.A. Unipersonal
Upper Tier 2 debt: affirmed at 'BBB-'

Emisora Santander Espana, S.A.U.
Senior unsecured debt long-term rating programme: affirmed at
  'A-'
Senior unsecured debt short-term rating programme: affirmed at
  'F2'

Santander International Products PLC
Senior unsecured debt long-term rating: affirmed at 'A-'

Banco Popular Espanol S.A.:
Long-Term IDR: upgraded to 'A-' from 'B', Stable Outlook
Short-Term IDR: upgraded to 'F2' from 'B', removed from Rating
  Watch Negative (RWN)
Viability Rating: downgraded to 'f' from 'b' and withdrawn
Support Rating: upgraded to '1' from '5'
Support Rating Floor: affirmed at 'No Floor' and withdrawn
Long-term senior unsecured debt programme: upgraded to 'A-' from
  'B'/'RR4', removed from RWN
Short-term senior unsecured debt programme and commercial paper:
  upgraded to 'F2' from 'B', removed from RWN
Subordinated lower Tier 2 debt: downgraded to 'C'/'RR6' from
  'B-'/'RR5' and withdrawn
Perpetual Tier 1 convertible notes: downgraded to 'C'/'RR6' from
  'CC'/'RR6' and withdrawn

BPE Financiaciones S.A.:
Long-term senior unsecured debt and debt programme (guaranteed by
  Popular): upgraded to 'A-' from 'B'/'RR4', removed from RWN
Short-term senior unsecured debt programme (guaranteed by
  Popular): upgraded to 'F2' from 'B', removed from RWN

Popular Capital, S.A.:
Preferred Stocks: downgraded to 'C'/'RR6' from 'CC'/'RR6' and
  withdrawn



=====================
S W I T Z E R L A N D
=====================


WERNER FINCO: Moody's Assigns First-Time B3 CFR, Outlook Stable
---------------------------------------------------------------
Moody's Investors Service assigned a first-time B3 Corporate
Family Rating and B3-PD Probability of Default Rating to Werner
FinCo LP dba WernerCo, a global manufacturer and distributor of
mainly ladders and other construction-related materials and
equipment with preponderance of sales and resulting earnings and
cash flows derived from the U.S. construction end markets. In
related rating actions, Moody's assigned a B2 rating to the
company's proposed senior secured term loan due 2024 and Caa2 to
the proposed senior unsecured notes due 2025. Proceeds from the
new debt along with an equity contribution in the form of both
preferred and common stock from affiliates of Triton Partners will
be used to finance the leveraged buyout WernerCo. The rating
outlook is stable.

The new capital structure for WernerCo will consist of a $100
million asset-based senior secured revolving credit facility
expiring 2022 (unrated), of which there will be some borrowings at
closing, $265 million senior secured term loan maturing 2024, $265
million senior unsecured notes due 2025, and approximately $20
million in capital leases.

Willa MidCo S.a.r.l., likely issuer of audited financial
statements, is a holding company encompassing WernerCo's global
operations and provides a downstream guarantee for the revolving
credit facility, term loan and notes. Werner FinCo LP, the entity
at which ratings are assigned, is an indirect holding subsidiary
of Willa MidCo S.a.r.l., and initial borrower of the term loan and
issuer of the notes. NHWC, Inc. and WGH S.a.r.l., indirect holding
subsidiaries of Willa MidCo S.a.r.l. and joint borrowers under the
revolving credit facility, are sister companies to Werner FinCo LP
(collectively dba WernerCo) and operate through wholly-owned
operating subsidiaries, which provide upstream guarantees for the
revolving credit facility, term loan and notes.

The following ratings/assessments are affected by today's action:

Corporate Family Rating assigned B3

Probability of Default Rating assigned B3-PD;

Senior secured term loan due 2024 assigned B2 (LGD3);

Senior unsecured notes due 2025 assigned Caa2 (LGD5).

Outlook, assigned Stable

RATINGS RATIONALE

Werner FinCo LP's B3 Corporate Family Rating results from its
leveraged capital structure following the buyout by affiliates of
Triton Partners. Balance sheet debt is increasing by almost 125%,
resulting in adjusted pro forma leverage of around 6.2x at 1Q17.
Much higher debt balances and resulting cash interest payments
will result in pro forma free cash flow-to-debt barely breaking
positive for LTM 1Q17. Moody's pro forma calculations include
Moody's standard adjustments for operating leases and some add-
backs. WernerCo must contend with ongoing operating weakness in
its United Kingdom operations. Moody's believes that WernerCo will
pursue partial growth through debt-financed acquisitions in
Europe, leveraging Triton Partners' expertise and knowledge of the
European construction markets and building products companies.
Earnings and resulting cash flows from overseas companies will not
contribute directly to debt service unless WernerCo maintains tax-
efficient strategies to repatriate cash from Europe.

Offsetting its leveraged capital structure is WernerCo's ability
to generate solid operating margins, which is the company's
greatest credit strength relative to its current rating. Moody's
forecasts the company will generate high single digit EBITA
margins over the next 12 to 18 months, with interest coverage,
defined as EBITA-to-interest coverage approaching 2.0x over the
same time horizon. WernerCo has a strong market position for its
products especially Werner-branded ladders, which the company
indicated holds a dominant market position in both The Home Depot
and Lowe's and are competitive strengths. WernerCo has a very
extended maturity profile with no significant maturities until
2022 when the company's revolver expires.

Further, fundamentals for the U.S. construction end markets, from
which WernerCo derives most of its sales and resulting earnings
and cash flows, remain sound. Moody's forward view considers
domestic trends in the National Association of Home Builders
(NAHB) Remodeling Market Index - an industry survey that gauges
remodeling contractors' expectations of demand over the next three
months. The NAHB Remodeling Market Index's overall reading was 58
in March 2017, well above 50, meaning the majority of contractors
surveyed believe market conditions are in an expansion. In
addition, Moody's projects total new housing starts in the U.S.
could reach 1.25 million in 2017, representing a 7% increase from
about 1.17 million in 2016. Moody's maintains a positive outlook
for the domestic home building industry.

The stable rating outlook reflects Moody's expectations that
WernerCo's credit profile will support the B3 Corporate Family
Rating over the next 12 to 18 months.

The B2 rating assigned to Werner FinCo LP's proposed $265 million
senior secured term loan due 2024, one notch above the Corporate
Family Rating, results from its effective seniority to the
company's proposed $265 million senior unsecured notes due 2025.
The term loan is secured currently by a first lien on company's
domestic non-current assets and any domestic assets not pledged to
the revolver. It also has a second lien on the assets securing the
proposed asset-based senior secured revolving credit facility. The
term loan amortizes 1% per year with a bullet payment at maturity.

The Caa2 assigned to the proposed $265 million senior unsecured
notes due 2025, issued by Werner FinCo LP and two notches below
the Corporate Family Rating, results from their position as the
junior debt in WernerCo's debt capital structure. These notes are
effectively subordinated to almost $385 million (inclusive of
about $20 million in capital leases) of more senior debt, putting
them in a first-loss position in a recovery scenario.

Moody's does not anticipate positive rating actions over the
intermediate term due to elevated debt leverage. However, positive
ratings momentum could occur if WernerCo exceeds Moody's
expectations, uses free cash flow to reduce balance sheet debt,
and its performance results in the following credit metrics
(ratios include Moody's standard adjustments) and characteristics:

-- Debt-to-EBITDA remaining comfortably below 5.0x

-- Free cash flow-to-debt nearing 5%

-- Improvement in the company's liquidity profile

A downgrade could ensue if WernerCo's operating performance falls
below Moody's expectations, or if the company experiences a
weakening in financial performance due to a decline in its end
markets or erosion of market share, such that:

-- Adjusted debt-to-EBITDA sustained above 6.5x

-- Deterioration in the company's liquidity profile

-- Sizeable debt-financed acquisitions

-- Large shareholder distributions

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

WernerCo, with U.S. corporate headquarters in Greenville, PA and
international headquarters in Schaffhausen, Switzerland, is a
global manufacturer and distributor of ladders, climbing
equipment, fall protection products, access towers, stagings and
trestles, wheelbarrows, jobsite storage and truck and van tool
storage products and systems. U.S. operations generate the
preponderance of sales. Revenues for the 12 months through
March 31, 2017, totaled about $875 million.



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


TURK HAVA: S&P Affirms 'BB-' Corp. Credit Rating, Outlook Neg.
--------------------------------------------------------------
S&P Global Ratings affirmed its 'BB-' long-term corporate credit
rating on Turkish airline Turk Hava Yollari A.O. (THY).   The
outlook is negative.

At the same time, S&P lowered its issue ratings on THY's aircraft-
backed enhanced equipment trust certificates (EETCs) to 'BBB-'
from 'BBB'.

The affirmation reflects S&P's expectation that THY's operating
performance and credit metrics will recover in the next 12-18
months, as supported by improvements in 2017 first quarter
results, following a very challenging 2016 that was plagued by
geopolitical tensions and terrorist attacks in Turkey.  S&P
recognizes a rebound in THY's EBITDA generation and in its load
factors to around 75.9% in the period from January to May 2017,
from around 73.7% for the same period in 2016.  In first quarter
2017, THY's EBITDA margin improved by more than 2.5%, mainly
because of good cost control, and compares favorably with the same
period last year.  Given improved trading in the first quarter of
2017 (the first quarter is historically the weakest due to the
seasonal nature of THY's business), S&P anticipates a solid
operational recovery in the summer months so that THY will be able
to strengthen its financial risk profile.  S&P forecasts that S&P
Global Ratings' ratio of adjusted funds from operations (FFO) to
debt, after a temporary low-point in 2016, will improve to a
rating commensurate level of above 12% over 2017-2018.  This,
however, depends on the absence of further tragic events like
those that occurred in 2016.

S&P lowered its rating on THY's EETCs to 'BBB-' from 'BBB', due to
a combination of the notes' weaker loan-to-value ratio and S&P's
view of less legal certainty in Turkey, which could make full and
timely payment of amounts due in any bankruptcy of THY or
repossession of the aircraft in the event of a default less
certain.  While S&P continues to believe that the more likely
scenario in bankruptcy is either continued full payment or a
timely return of the aircraft to creditors, S&P's level of
confidence in such an outcome has weakened somewhat.  S&P notes
that The World Bank lowered its assessment of Turkey's rule of law
earlier this year, which is one of a variety of factors that S&P
considers in its country risk assessment.  Furthermore, the notes'
scheduled repayments were 7.3% in the past 12 months (as of
March 30, 2017) versus a projected decline in the aircraft's
appraised value of about 11% (using S&P Global Ratings' internal
sources of information) which caused the loan-to-value increase.

S&P's assessment of THY's business risk profile reflects its
participation in the cyclical and price competitive airline
industry, which is also susceptible to repercussions from wars,
terror attacks, epidemics, and oil price shocks, among other
external factors.  S&P also believes that THY's profitability
weakened and, while it shows signs of recovery, it is unlikely to
rebound to 2015's strong level.  These weaknesses are partly
offset by the company's strong market position at Ataturk airport
in Istanbul, where THY is by far the leading operator, with a
market share of close to 80%.  THY benefits from a sizable home
market in Turkey and Istanbul's geographic position, which allows
the company to connect a large proportion of Europe, the Middle
East, Central Asia, and Africa using narrow-body aircraft.
Furthermore, flying is often the only convenient method of
transportation in Turkey, since the country is mountainous and the
land-based infrastructure is not fully developed.

In the next 12 months, S&P does not believe adjusted debt will be
effected by fleet expansions, but this will be the case starting
in 2019, as THY has ordered 65 Beoing 737-8 MAX and 92 Airbus
321neo, which are currently scheduled to be delivered by 2023.
The increase in adjusted debt need to be compensated with
respective profitable growth so that the credit ratios improve and
remain at the rating commensurate level.

S&P continues to factor in one notch of support into its 'BB-'
rating on THY based on S&P's assessment of a moderately high
likelihood that the Turkish government would provide timely and
sufficient extraordinary financial support to THY in the event of
financial distress.  S&P bases this view on its assessment of
THY's:

   -- Important role in Turkey's economy, as the main gateway to
      the country's capital city; and

   -- Strong link with the government of Turkey.

Although THY is a profit-seeking enterprise, it provides Turkey
with an essential service and foreign currency.  In S&P's view, if
THY was to default, this would disrupt its important service,
since the company relies heavily on foreign funding for its
aircraft.

The negative outlook on THY reflects that on Turkey (local
currency rating BB+/Negative/B) and THY's weak credit measures for
the current rating.  S&P also considers THY's large capex
requirements in time when the airline faces geopolitical
challenges and the resulting adverse effect on traffic and yields.

S&P could lower the rating if it believes that THY will be unable
to restore S&P Global Ratings' adjusted FFO to debt ratio to above
12% by 2018.  This could occur, for example, if the EBITDA margin
reversed to the weak 2016-level, demand and load factors failed to
rebound, or significant pressure on yields remained.

S&P could also lower the rating if THY's liquidity position
deteriorated, for example, because it was unable to secure funding
for its significant upcoming capex.  Furthermore, a downgrade
would likely stem from a downgrade of Turkey.

S&P could revise the outlook to stable if THY stabilized its
adjusted FFO to debt ratio at about 15%, maintaining its
competitive position despite the difficult operating environment
for the airline, and if S&P revised the outlook on Turkey to
stable.  Also, given the inherent volatility and capital intensity
in the air transportation sector, S&P considers the company's
consistently adequate liquidity profile and uninterrupted access
to aircraft funding to be a critical and stabilizing rating
factor.



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


CREDIT AGRICOLE: Fitch Affirms B- Long-Term Foreign Currency IDR
----------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Foreign Currency Issuer
Default Ratings (IDRs) of PJSC Credit Agricole Bank (CAB),
ProCredit Bank (Ukraine) (PCBU), PJSCCB PRAVEX-BANK (Pravex), PJSC
Alfa-Bank (ABU) and Ukrsotsbank (Ukrsots) at 'B-' with Stable
Outlooks.

Fitch has also upgraded the Viability Ratings (VRs) of CAB to 'b'
from 'b-', PCBU to 'b-' from 'ccc', Pravex to 'b-' from 'cc' and
Ukrsots to 'ccc' from 'cc'. ABU's VR has been affirmed at 'ccc'.

KEY RATING DRIVERS

IDRS, NATIONAL RATINGS AND SENIOR DEBT

All five banks' IDRs and National Ratings factor in the likelihood
of support they may receive from their foreign shareholders.

The affirmations of CAB's, PCBU's and Pravex's 'B-' Long-Term
Foreign Currency IDRs reflect the constraint of Ukraine's Country
Ceiling of 'B-', which captures transfer and convertibility risks
and limits the extent to which support from the majority foreign
shareholders of these banks can be factored into the ratings. The
Stable Outlooks on the Long-Term Foreign Currency IDRs of CAB and
PCBU are in line with that on the Ukrainian sovereign. The
revision of the Outlook on Pravex's Long-Term Foreign Currency IDR
to Stable from Negative reflects Fitch's view that the rating at
this level is now also underpinned by the bank's VR, following its
upgrade to 'b-' from 'cc'.

The Long-Term Local Currency IDRs of CAB, PCBU and Pravex at 'B'
also take into account country risks. The Stable Outlooks on the
Long-Term Local Currency IDRs of CAB and PCBU reflect Fitch's view
of the likely evolution of these risks. The Negative Outlook on
Pravex's Long-Term Local Currency IDR reflects the potential for
the bank to be sold and hence for potential shareholder support to
be reduced, in which case this rating would likely be downgraded
to the level of the bank's VR.

CAB is fully owned by Credit Agricole S.A. (A+/Stable). PCBU is
controlled (94% of voting stock) by Germany's ProCredit Holding AG
& Co. KGaA (BBB/Stable). Pravex is fully owned by Intesa Sanpaolo
(BBB/Stable), but has been managed as a non-core asset from 2014
when it was put up for sale.

The affirmation of ABU's and Ukrsots' Long-Term IDRs, National
Ratings and ABU's senior debt ratings reflects Fitch's unchanged
view of the potential support both banks may receive from other
assets of Alfa Group. However, the probability of support is
limited due to the banks' indirect relationship with other group
assets and the mixed track record of support (for ABU) from the
shareholders.

ABU and Ukrsots are both ultimately owned by ABH Holdings S.A.
(ABHH), which is part of Alfa Group's financial business and is
the owner of several other banking subsidiaries, mostly in the
CIS, including Russia-based OJSC Alfa-Bank (BB+/Stable). In
October 2016, Ukrsots' former owner, UniCredit S.p.A. (UniCredit,
BBB/Stable), transferred its 99.9% share in Ukrsots to ABHH in
exchange for 9.9% of ABHH's shares.

VRs
The upgrades of CAB's, PCBU's, Pravex's and Ukrsots' VRs reflect
reduced pressures on asset quality mostly due to the more stable
Ukrainian economy, the banks' modest growth/deleveraging (except
for PCBU) and generally moderate risk appetites since the downturn
in Ukraine's economy in 2014. The VR upgrades also consider
improved loss absorption capacity following recent bank
recapitalisations (Pravex, Ukrsots, PCBU) and/or continued
resilience in operating performance (CAB, PCBU) that allowed for
stronger coverage of problem assets and more comfortable capital
cushions.

The VRs of all five banks remain constrained by the challenging
operating environment and/or still large stocks of legacy impaired
loans (in particular at Pravex, Ukrsots and ABU), which pressure
performance. Fitch does not expects material improvements in asset
quality metrics in the near term as Ukraine's economic recovery is
only moderate; Fitch expects GDP growth of 2% in 2017 and 3% in
2018.

The VRs of all five banks also reflect stabilisation of funding
profiles, driven by decreased hryvnia volatility, and comfortable
liquidity cushions accumulated in a period of low credit growth.
Non-deposit funding is limited at these banks.

CAB's 'b' VR reflects the bank's stronger standalone
creditworthiness than peers'. It is supported by the bank's more
balanced business model, benefitting from access to cheap (by
market standards) and stable client funding, and a focus on lower-
risk lending segments (multinational clients, better performing
agro producers, car loans in retail) resulting in more resilient
financial metrics.

CAB's non-performing loans (NPLs, loans more than 90 days overdue)
stood at 14.5% of loans at end-2016, and performing restructured
loans were at 10.5% (end-2015: 15% and 12%, respectively).
Impaired loans (NPLs plus restructured) were comfortably (74%)
covered by impairment reserves; however, the unreserved portion of
these amounted to a significant 50% of Fitch Core Capital (FCC).
Loss absorption capacity is underpinned by solid pre-impairment
profitability (equal to 10% of average gross loans for 2016), and
a capital buffer is also available to absorb additional credit
losses (FCC ratio of 12.7%). CAB reported a solid 36% return on
average equity (ROAE) in 2016 (2015: 27%).

PCBU's 'b-' VR factors in the risks associated with a largely
unseasoned loan book following the bank's rapid growth in the core
SME segment (by 52% in 2016 and 32% in 2015, adjusted for FX
effects). Loans, however, have been originated under reasonably
strict underwriting criteria with limited inflows of new problem
loans to date.

PCBU's NPLs and restructured (classified as standard, watch-list
and impaired) loans stood at 2.9% and 7.6%, respectively, at end-
2016, down from 5.6% and 14.4% at end-2015. Impairment reserves
provided moderate (62%) cover for NPLs and restructured loans. The
unreserved portion of these moderated to 28% of FCC at end-2016
from 129% at end-2015 following an equity injection in 2016, which
also caused the FCC ratio to increase to 14% from 7.3%. Loss
absorption capacity is underpinned by reasonable pre-impairment
profitability (equal to 6% of average loans in 2016), net of
unpaid accruals and non-core revenues. PCBU reported a solid 33%
ROAE in 2016 (2015: 18%).

Pravex's 'b-' VR reflects progress in the clean-up of the bank's
balance sheet. NPLs decreased to 25% of loans at end-1Q17 from 72%
at end-2015 after write-offs, and the remaining NPLs were fully
covered by specific reserves. Restructured loans were a moderate
6% of loans at end-2016 (or 18% of FCC) and weakly provisioned.
Apart from loans (a low 18% of the balance sheet at end-1Q17),
other assets were of moderate- to low risk, and mostly liquid
assets (cash and equivalents and short-term investments into
National Bank of Ukraine securities) which were equal to around
86% of customer deposits.

Pravex's solid capital buffer (FCC ratio of 22% at end-2016)
should be seen in the context of the bank's still weak operational
performance (annualised pre-impairment loss amounted to 18% of FCC
in 1Q17), constrained by a low share of high-earning assets and a
still sizable cost base.

ABU's and Ukrsots' 'ccc' VRs factor in both banks' high levels of
NPLs (end-2016: ABU: 35% of loans, 74%-covered by reserves;
Ukrsots: 75% and 82%, respectively) and restructured loans (ABU:
33%; Ukrsots: 15%). The unreserved portions of these problem
exposures were high at both banks (ABU: 5x FCC; Ukrsots: 2x FCC)
and the FCC ratio was low at ABU (7.9%), but stronger at Ukrsots
(25.2%) supported by the equity contribution provided by UniCredit
before the bank's sale in 2016. ABU also expects to receive
moderate capital support of USD60 million in 2017 (equal to 0.6x
FCC or 5% of risk-weighted assets at end-2016).

Both banks were deeply loss-making in 2016 (ROAE of -170% at ABU
and -131% at Ukrsots, which reported pre-impairment losses in
2015-2016), due to a large share of weakly performing assets, low
margins on the restructured portfolio (Ukrsots) and high
provisioning needs at both banks. Performance prospects will
depend on the ability to generate new healthy business (currently
less evident for Ukrsots) and avoid new credit losses.

Liquidity is comfortable at both banks and managed jointly
suggesting some fungibility between the banks' balance sheets. The
buffers of liquid assets (calculated as liquid assets net of near-
term wholesale funding repayments) were equal to 17% of customer
deposits at ABU and 33% at Ukrsots at end-4M17.

RATING SENSITIVITIES
IDRS, NATIONAL RATINGS AND SENIOR DEBT

The IDRs of CAB, PCBU and Pravex could be upgraded if Ukraine's
sovereign ratings are upgraded and the Country Ceiling revised
upwards, and downgraded in case of a sovereign downgrade. An
upgrade of ABU's and Ukrsots' IDRs and Support Ratings would
require a strengthening of the support track record for both
banks.

A significant weakening of the ability and/or propensity of
shareholders to provide support could also result in downgrades. A
sale of Pravex to a weaker investor would result in a downgrade of
its support-driven Long-Term Local Currency IDR and National Long-
Term Rating.

VRs
The VRs could be downgraded if additional loan impairment
recognition undermines capital positions without sufficient
support being made available. Upside for banks' VRs is currently
limited.

The rating actions are:

CAB:
Long-Term Foreign Currency IDR: affirmed at 'B-', Outlook Stable
Long-Term Local Currency IDR: affirmed at 'B', Outlook Stable
Short-Term Foreign Currency IDR: affirmed at 'B'
Short-Term Local Currency IDR: affirmed at 'B'
Support Rating: affirmed at '5'
Viability Rating: upgraded to 'b' from 'b-'
National Long-Term Rating: affirmed at 'AAA(ukr)'; Outlook Stable

ProCredit Bank (Ukraine):
Long-Term Foreign Currency IDR: affirmed at 'B-', Outlook Stable
Long-Term Local Currency IDR: affirmed at 'B', Outlook Stable
Short-Term Foreign Currency IDR: affirmed at 'B'
Short-Term Local Currency IDR: affirmed at 'B'
Support Rating: affirmed at '5'
Viability Rating: upgraded to 'b-' from 'ccc'
National Long-Term Rating: affirmed at 'AAA(ukr)'; Outlook Stable

Pravex:
Long-Term Foreign Currency IDR: affirmed at 'B-', Outlook revised
to Stable from Negative
Long-Term Local Currency IDR: affirmed at 'B', Outlook Negative
Short-Term Foreign Currency IDR: affirmed at 'B'
Support Rating: affirmed at '5'
Viability Rating: upgraded to 'b-' from 'cc'
National Long-Term Rating: affirmed at 'AA+(ukr)', Outlook
Negative

PJSC Alfa-Bank:
Long-Term Foreign Currency IDR: affirmed at 'B-', Outlook Stable
Long-Term Local Currency IDR: affirmed at 'B-', Outlook Stable
Senior unsecured local currency debt: affirmed at 'B-'/'RR4'/,
'AA(ukr)'
Senior unsecured local currency market linked securities: affirmed
at 'B-(emr)'/'RR4'; 'AA(ukr)(emr)'
Short-Term Foreign Currency IDR: affirmed at 'B'
Support Rating: affirmed at '5'
Viability Rating: affirmed at 'ccc'
National Long-Term Rating: affirmed at 'AA(ukr)'; Outlook Stable

Ukrsotsbank:
Long-Term Foreign Currency IDR: affirmed at 'B-', Outlook Stable
Long-Term Local Currency IDR: affirmed at 'B-', Outlook Stable
Short-Term Foreign Currency IDR: affirmed at 'B'
Support Rating: affirmed at '5'
Viability Rating: upgraded to 'ccc' from 'cc'
National Long-Term Rating: affirmed at 'AA(ukr)'; Outlook Stable


UKRAINE: Assets of 45 Banks Put Up for Sale, IDGF Says
------------------------------------------------------
Dimitri Dolaberidze at Georgia Today reports that the press
service of the Individual Deposits Guarantee Fund (IDGF) of
Ukraine on June 7 said the assets of another 45 Ukrainian banks
have been put up for sale.

Assets worth UAH5.93 billion (US$230 million) are up for sale, of
which 95.5% are claims rights on loans, the remaining share being
the main assets of the banks, Georgia Today relays, citing the
announcement.

Since 2015, nearly 100 Ukrainian banks have been eliminated,
Georgia Today discloses.

As of the end of May, 90 banks remain in the country, Georgia
Today states. The Chairman of the Fund for Guaranteeing the
Deposits of Individuals (FGVFL), Konstantin Vorushilin, said the
bankruptcy of the "super-big banks" is not expected in the
foreseeable future, the report relays.

The State's debt to banks is quite impressive, and it continues to
grow: at the time of writing, the Government of Ukraine owes
US$25.81 billion to banks, 55% of this amount belonging to the
National Bank of Ukraine, Georgia Today notes.



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


AI MISTRAL: S&P Assigns 'B' CCR, Outlook Stable
-----------------------------------------------
S&P Global Ratings said that it should have applied its criteria
"Key Credit Factors For The Business And Consumer Services
Industry," (the Business Services KCF) in assigning preliminary
ratings to AI Mistral Holdco Ltd. on Jan. 16, 2017; instead, "Key
Credit Factors For The Transportation Cyclical Industry" was used.
S&P's June 9, 2017 rating action corrects this error by using the
Business Services KCF, the effect of which is reflected in the
rating agency's industry and profitability assessment. In
particular, the lower industry risk is counterbalanced by higher
volatility of profitability amongst business services peers; as a
result, the use of the Business Services KCF has had no impact on
the ratings.

At the same time, S&P assigned its 'B' long-term corporate credit
rating to U.K.-based AI Mistral Holdco Ltd. (AI Mistral), the
parent company of integrated marine services provider V.Group, and
its finance subsidiary AI Mistral (Luxembourg) Subco S.a r.l.  The
outlook on both these entities is stable.

S&P also assigned its 'B' issue-level rating and '3' recovery
rating to AI Mistral (Luxembourg)'s secured first-lien bank term
loans and S&P's 'CCC+' issue-level rating and '6' recovery rating
to its secured second-lien term loan.  The '3' recovery rating
reflects S&P's expectation of meaningful recovery prospects in the
event of a payment default, in the lower half of the 50%-70%
range, while the '6' recovery rating indicates S&P's expectation
of negligible recovery (0%-10%) in the event of a payment default.

The ratings are in line with the preliminary ratings S&P' assigned
on Jan. 16, 2017.  The upsizing of the first-lien loan to $515
million and downsizing of the second-lien loan to $172.5 million
from S&P's preliminary expectations of $495 million and $192.5
million, respectively, did not have an impact on the rating
outcome.

S&P also withdrew the rating on Vouvray Midco Ltd. UK and related
entities.

AI Mistral is the acquisition entity for V.Group, which has
changed ownership and is now controlled by a private equity firm,
Advent International.

The rating on V.Group reflects the company's high S&P Global
Ratings-adjusted debt and S&P's expectations for no significant
deleveraging under private-equity ownership.  S&P views AI
Mistral's financial risk profile as highly leveraged, reflecting
its weak credit protection measures and high debt burden of about
7.0x debt to EBITDA and funds from operations (FFO) cash interest
coverage of 2.0x-2.5x in the next 12 months.

V.Group has a leading market position in the niche sector of
integrated marine services.  Its business is based on fees
negotiated with shipping companies, and a significant portion of
its contracts revolve annually.  Although V.Group is largely
insulated from the cyclicality of the shipping industry, the
underlying performance of the shipping companies will affect those
fees and may jeopardize the company's ability to maintain
contracts.  The company is indirectly exposed to shipping rates
and volumes transported, and any downturn in the shipping industry
will sooner or later have an impact on V.Group's cash flows, in
S&P's view.  Compared with the wider business and services sector,
S&P observes that V.Group has a somewhat more volatile track
record of profit generation.

Partly mitigating these risks are V.Group's strong strategic
relationships with recruitment sources, its broad range of marine
and technical services, and its sustained and reliable execution.
These strengths should continue to shield the group against the
cyclicality of the shipping industry, to some extent.  However,
the company's narrow business scope and scale -- it focuses solely
on the shipping industry -- constrain its business profile.  By
comparison, large global players have broader activities in the
business services industry (such as general facility management or
staffing services).

S&P anticipates that V.Group will be able to protect and gradually
expand its market share in the next two years, thanks to
increasing outsourcing of marine services and a gradually
expanding global vessel fleet management.  Furthermore, low
capital intensity and the fairly good earnings predictability of
the underlying business model underpin the company's good free
operating cash flow (FOCF) generation.

S&P forecasts steady earnings growth over the next 12 months and
expect leverage ratios to improve, but remain in the highly
leveraged range (debt to EBITDA above 5.0x).  S&P also expects the
company's EBITDA growth will lead to FFO cash interest coverage
increasing to about 2.5x in 2017.  S&P anticipates that the
company will continue to generate predictable free cash flow and
maintain adequate liquidity while balancing its growth objectives.

S&P's base-case scenario includes:

   -- Global economic expansion to slightly pick up, with GDP
      growth of 2.8% in 2017 and 2.9% in 2018, after 2.4% last
      year.  This average GDP growth rate hides wide regional
      variations. China, a key engine of shipping growth, and
      many European economies, including the eurozone economy,
      are slowing down; Brazil and Russia are emerging from
      recession and S&P expects a return to positive real GDP
      growth in 2017-2019.  Meanwhile, economic growth in the
      U.S. should rebound in 2017 after a slowdown last year.
      S&P considers general economic growth to be a high-priority
      driver for the shipping industry.

   -- Growth in the company's fleet under management of about
      3.0%-3.5% in 2017 and 2.0%-2.5% beyond that.  S&P sees the
      total number of vessels under management as one of the key
      factors affecting S&P's forecast.  Around 70% of vessels
      under management are on full technical management contracts
      and the remaining 30% are under crew management contracts.
      Both types of contracts are signed per vessel and are
      subject to annual renewal.

   -- Global fleet growth of 2%-4% in 2017 and 2018.  S&P bases
      its assumption on a Clarksons Research forecast that
      V. Group's tanker fleet (which accounts for about 55% of
      V. Group's contract base) will increase by about 3%-4%
      over the period, and the dry-bulk and container fleets --
      both of which account for the remainder of V. Group's
      contract base -- will expand by about 1% and about 3%,
      respectively.

   -- Average annual organic revenue growth for the company of
      about 5% from 2017 onward, underpinned by increases in the
      fleet under service and in annual fees.

   -- Reported EBITDA margins gradually improving to about 17% in
      2017 (from 15% in 2016) reflecting various efficiency
      measures, cost synergies, and productivity improvements.

   -- Capital expenditure (capex) of about $8 million in 2017,
      followed by annual average capex of about US$4 million-US$6
      million in 2018-2019.

   -- Loan amortization of US$5.2 million per year.

   -- No forecast acquisitions or shareholder distributions.

The stable outlook reflects S&P's view that the company will
experience fairly predictable business conditions and achieve
EBITDA growth from expanding fleet under management, productivity
gains, and cost synergies, which should support rating-
commensurate interest coverage metrics, such as FFO cash interest
coverage of above 2.0x.

S&P might lower the rating if it saw signs of a weaker business
risk profile or if FFO cash interest coverage were to fall to less
than 2.0x, which S&P considers could occur if the EBITDA margin
comes under pressure and unexpectedly drops below 13%.  S&P
anticipates that such a scenario could result from significantly
lower-than-expected contract renewals, loss of key clients, or
reputation-damaging incidents, leading to lower and more volatile
profitability than S&P currently anticipates.

S&P could also consider lowering the rating if it expected that
the company's liquidity might decline unexpectedly, such that the
ratio of liquidity sources to uses drops to below 1x.  If pressure
on liquidity were to arise from other sources currently not
included in S&P's base case -- such as large cash outflows for
acquisitions or shareholder returns -- S&P might also consider
lowering the rating.

In S&P's opinion, the possibility of an upgrade is limited in the
near term, given AI Mistral's high adjusted debt, constrained
capacity to significantly deleverage, and S&P's assessment of the
company's aggressive financial policy stemming from its private-
equity ownership.  However, S&P could considers an upgrade if the
company improves its credit measures, including sustaining
adjusted debt-to-EBITDA below 5.0x, supported by the private
equity owners committing to a financial policy commensurate with
these metrics.


DECO 12 - UK 4: S&P Lowers Rating on Class C Notes to 'D'
---------------------------------------------------------
S&P Global Ratings lowered to 'D (sf)' from 'CCC- (sf)' its credit
rating on DECO 12 - UK 4 PLC's class C notes.  At the same time,
S&P has affirmed its 'D (sf)' ratings on the class D, E, and F
notes.

S&P's ratings in DECO 12 - UK 4 address the timely payment of
interest and the repayment of principal no later than legal final
maturity in January 2020.

The last remaining loan, the Spectrum loan, repaid at the April
2017 interest payment date and the principal funds were used to
fully repay the class C notes and to partially repay the class D
notes.

On the April 2017 interest payment date, no interest was paid to
any class of notes.

The class C notes have experienced interest shortfalls and S&P do
not expect these to be repaid as there are no loans left in the
transaction and all of the proceeds have already been allocated to
the notes.  In accordance with S&P's interest shortfall criteria,
it has therefore lowered to 'D (sf)' from 'CCC- (sf)' its rating
on the class C notes.

S&P has affirmed its 'D (sf)' ratings on the class D, E, and F
notes because these classes have suffered interest shortfalls and
have non-accruing interest amounts allocated to them.

DECO 12 - UK 4 is a U.K. true sale commercial mortgage-backed
securities (CMBS) transaction, which closed in 2007 with notes
totaling GBP672.9 million.  The original 10 loans were secured on
41 predominantly retail properties.  All loans have now repaid.

RATINGS LIST

Class               Rating
             To                 From

Deco 12 - UK 4 PLC
GBP672.884 Million Commercial Mortgage-Backed Floating-Rate Notes

Rating Lowered

C            D (sf)             CCC- (sf)

Ratings Affirmed

D            D (sf)
E            D (sf)
F            D (sf)



                            *********

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

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

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


                            *********


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

Troubled Company Reporter-Europe is a daily newsletter co-
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Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez,
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Peter A. Chapman, Editors.

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

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