TCREUR_Public/170623.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

            Friday, June 23, 2017, Vol. 18, No. 124


                            Headlines


B U L G A R I A

UNITED BULGARIAN: S&P Raises Counterparty Credit Rating to BB+


C Z E C H   R E P U B L I C

EP ENERGY: Fitch Affirms BB+ Long-Term Issuer Default Rating


G R E E C E

GREECE: Needs Significant Help from Creditors, HSBC Says
PARAGON SHIPPING: Three Proposals Approved at Annual Meeting


I T A L Y

CMF SPA: Moody's Rates Proposed EUR420MM Senior Sec. Notes (P)B2
CREDITO VALTELLINESE: DBRS Downgrades Issuer Rating to BB (high)
MANUTENCOOP FACILITY: S&P Affirms 'B' CCR, Outlook Stable
MODA 2014 S.R.L.: DBRS Confirms BB(sf) Rating on Class E Debt
N&W GLOBAL: S&P Revises Outlook to Negative & Affirms 'B' CCR

POPOLARE DI VICENZA: Intesa Sanpaolo Agrees to Buy Parts of Bank
VENETO BANCA: S&P Lowers Rating on Subordinated Debt to 'D'


L U X E M B O U R G

AXIUS EUROPEAN: S&P Raises Rating on Class E Notes to 'B+'
LSF9 BALTA: Moody's Hikes CFR to B1, Outlook Stable


M O L D O V A

BANCA DE ECONOMII: Court Sentences Main Bank Fraud Suspect


P O R T U G A L

BANCO COMERCIAL: DBRS Confirms BB (high) Senior Debt Ratings


R U S S I A

GAZPROM PJSC: S&P Affirms 'BB+/B' CCRs, Outlook Positive
MOSENERGO PJSC: S&P Affirms 'BB+' CCR & Revises Outlook to Pos.
O1 PROPERTIES: S&P Affirms 'B+' CCR & Revises Outlook to Stable
TRANSTELECOM JSC: Fitch Affirms B+ Long-Term IDRs
WEST SIBERIAN: S&P Affirms 'B+/B' Ratings, Outlook Stable


S L O V E N I A

NOVA LJUBLJANSKA: Moody's Raises Long-Term Deposit Rating to Ba1


S P A I N

BANCO POPULAR: DBRS Downgrades Issuer Rating to BB (low)


U N I T E D   K I N G D O M

AEGATE LTD: Files for Insolvency, June 23 Creditor Meeting Set
DONCASTERS GROUP: Moody's Cuts CFR to B3, Outlook Negative

* UK: Brexit May Lead to Increase in Business Insolvencies


X X X X X X X X

* DBRS Concludes Review of European Banking Groups' Sub. Debt
* BOOK REVIEW: Lost Prophets -- An Insider's History


                            *********



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


UNITED BULGARIAN: S&P Raises Counterparty Credit Rating to BB+
--------------------------------------------------------------
S&P Global Ratings said it has raised its long-term counterparty
credit rating on United Bulgarian Bank AD (UBB) to 'BB+' from 'B'
and removed the rating from CreditWatch positive where S&P placed
it on Jan. 5, 2017.  The outlook is positive.

At the same time, S&P affirmed its short-term counterparty credit
rating on UBB at 'B'.

The upgrade follows the completion of the acquisition of UBB by
the KBC group after all regulatory approvals were obtained.

Following the acquisition, S&P no longer views UBB as being
exposed to contagion risk from its former shareholder National
Bank of Greece.  S&P also considers that UBB is now a
strategically important subsidiary of the KBC group, a more
creditworthy group with a long-standing focus on Central and
Eastern European markets.

Bulgaria is a very important market for KBC and S&P expects the
group to be strongly committed to UBB given its intention to grow
significantly in the Bulgarian banking sector.  International
business growth is one of the pillars of KBC's strategy as the
group plans to be among the top three banks and the top four
insurers in its core markets--which include Belgium, Bulgaria,
Hungary, the Czech Republic, and Slovakia--by 2020.

KBC group has announced its intention to merge UBB with its
Bulgarian subsidiary CIBANK (not rated), creating the third
largest player in the Bulgarian banking sector, with a prominent
market share of about 12% in loans, 10% in deposits, and 22% in
life insurance.  S&P thinks this deal makes sense from a
strategic point of view and is in line with the Belgian bank's
objective to grow bank and insurance businesses.

UBB and KBC share the same business focus on commercial banking
and bancassurance and S&P expects UBB to leverage on cooperation
with KBC to expand its bancassurance activity and explore cross-
selling opportunities in commercial banking in Bulgaria.  S&P
expects the bank to become progressively integrated within the
KBC group, to align risk management practices and benefit from
its parent's liquidity support.  S&P acknowledges that this
integration will involve some operational and alignment costs,
which in S&P's view are manageable for the group.  Importantly,
S&P believes the ambitions of the KBC group in Bulgaria should
gradually strengthen the competitive position of its local
operations, with higher growth and higher profitability over
time.

S&P also expects KBC to help its subsidiary to work out, more
actively than in the past, the very high amount of nonperforming
loans (NPLs) it accumulated during the financial crisis in 2008-
2009, amounting to 27.7% of its gross loans book.  The management
of the large amount of NPLs will represent the main challenge for
the group, but S&P expects the work out to be facilitated by the
positive economic momentum in Bulgaria and expertise acquired in
managing a similar NPL stock in Ireland.

UBB's liquid assets accounted for 44% of total customer deposits
as of March 31, 2017 and S&P expects the bank to continue to hold
significant liquidity buffers, in line with regulatory
requirements and with the system average.  S&P also anticipates
that the KBC group will maintain adequate liquidity at UBB.  S&P
views the reduction on contagion risk with the former parent as
the most important improvement for the bank's financial profile
in the short term.

The positive outlook on UBB reflects our view that S&P could
raise the ratings on the bank over the next 12 months if S&P
raises the sovereign credit ratings on Bulgaria and S&P sees an
improvement in the bank's business profile, in particular, a more
focused growth strategy and the successful integration of UBB
into KBC's banking operations in Bulgaria.  This could happen if
S&P saw evidence that the bank was regaining competitiveness in
the Bulgarian banking sector through a successful alignment with
KBC group strategy and acceleration of the workout of the NPLs it
accumulated during the crisis.  As UBB is a domestic bank
operating in Bulgaria only, S&P would not rate the bank higher
than the sovereign.

S&P could also raise the ratings if it sees UBB's importance
within KBC group increasing.  This could happen if the bank
became more integrated within the group.

S&P could revise the outlook to stable if it revised the outlook
on Bulgaria to stable or we anticipate that the bank's NPL ratio
will remain materially above the system average in the long term,
therefore increasing the risk of higher losses and draining
managerial and financial resources.


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C Z E C H   R E P U B L I C
===========================


EP ENERGY: Fitch Affirms BB+ Long-Term Issuer Default Rating
------------------------------------------------------------
Fitch Ratings has affirmed Czech Republic-based EP Energy a.s.'s
Long-Term Issuer Default Rating (IDR) at 'BB+' with a Stable
Outlook, and its EUR1.1 billion senior secured notes at 'BBB-'.

The affirmation reflects EPE's business profile with over two-
thirds of cash flows coming from district heating and electricity
distribution. EPE maintains some exposure to power prices through
its power generation division but at a lower scale. EPE has been
reshaping its business frequently and operates at higher leverage
than most CEE peers, constraining the rating.

KEY RATING DRIVERS

Group Reorganisation: Fitch rate EPE on a standalone basis,
reflecting its strategy and track record so far as well as the
covenants in the existing 2018 and 2019 secured bonds, which
among other restrictions limit dividend distributions if net debt
to EBITDA is above 3.0x. However, the shares in EPE are being
contributed together with other gas transmission, distribution
and storage assets into EP Infrastructure (EPIF). EPIF is 69%
owned by Energeticky a prumyslovy Holding, a.s. (EPH), previously
the sole shareholder of EPE, and 31% by a consortium led by
Macquarie.

Fitch understand that on its maturity EPE's debt may be
refinanced at the EPIF level and thus EPE's rating may over time
reflect EPIF's larger group profile. Just under half of EPIF's
EBITDA will be generated by eustream, a.s. (A-/Stable), a third
by electricity and gas distribution including SPP - distribucia,
a.s. (A-/Stable) and the remaining contributions will be equally
split between power, heat infrastructure (EPE) and gas storage.
Fitch views on EPIF will depend in part on the long-term
financial policies agreed between the shareholders and how they
are reflected in any debt covenants.

Stable Business Model: EPE's credit profile is supported by low-
cost heat supplies, cogeneration power sales as well as by its
position as a regulated regional distribution monopoly. These
core divisions represent about 70% of EPE's cash flows, with the
rest derived from power generation and supply, making its
earnings and cash flows fairly predictable.

Deconsolidation of SSE: EPE has management control over the 49%-
owned Slovak electricity distributor Stredoslovenska Energetika,
a.s. (SSE). However, a shareholder agreement may limit dividends
from SSE and Fitch therefore considers it more prudent to assess
EPE's leverage by deconsolidating SSE (which has negligible debt)
and only including the dividends received from the company. EPE's
deconsolidated leverage is very sensitive to minority dividends
from SSE, which may vary due to overdue regulatory receivables.
Fitch estimate that deconsolidated leverage is on average over
0.5x higher than the consolidated ratio.

SSE's Overdue Regulatory Receivables: Similarly to some
electricity networks in the EU (for example in Belgium), the
distributors in Slovakia, including SSE, have incurred
significant working-capital outflow over the last few years. This
is due to the time difference between regulated fees paid by them
to renewables producers in their distribution areas and the
related compensation recouped from the customers (OKTE gap).
Currently, SSE's OKTE gap amounts to 56% of the country's total
of EUR 380 million. Fitch assumes that the OKTE gap will be
recovered as working-capital inflow over the next five years at
about EUR40 million per year.

Conservative Dividend Policy: Fitch assumes no dividends to be
paid to EPIF between 2018 and 2020. This is based on management's
guidance due to the upcoming bond refinancing, Fitch forecasts on
OKTE recovery and EPE's limited headroom under its covenant in
Fitch ratings case. Should the OKTE gap be fully recovered by the
end of 2018, EPE will have some flexibility on its dividend
policy.

DERIVATION SUMMARY

EPE is a medium-sized utility, diversified into heat and power
generation and electricity distribution mainly in the Czech
Republic and Slovakia. At an average of 4.0x FFO adjusted net
leverage (post deconsolidation of SSE) EPE operates at higher
leverage than most of its CEE peers. On the other hand, following
the sale of its German assets, the remaining business is largely
quasi-regulated and regulated (heat and electricity
distribution). Fitch evaluates EPE as riskier than its peers due
to frequent group restructuring and higher leverage.

KEY ASSUMPTIONS

Fitch's key assumptions within Fitch ratings case for the issuer
include:
- average achieved power prices of about EUR 27/MWh, broadly in
   line with market expectations;
- a stable EUR/CZK exchange rate of about 26.5;
- a moderate increase in heat prices
- capex of about EUR 100 million/year
- no dividend payments to EPIF between 2018-2020.

RATING SENSITIVITIES

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

- Once fully established, EPIF's creditworthiness may impact on
EPE's rating in both directions, particularly following the
maturity of the existing secured bonds, after which EPE could
potentially be seen as fully integrated within the larger EPIF
group (ie no longer insulated by the covenants)

- Reduction of target leverage to, and Fitch-expected leverage
remaining at a level comparable with regional peers' (FFO
adjusted net leverage below 3.5x) on a sustained basis

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

- A more aggressive financial policy (including opportunistic
M&A or higher dividends) that would increase Fitch-expected FFO
adjusted net leverage above 4.0x on a sustained basis (this level
would likely be in breach of EPE's bond covenants)

- A significant deterioration in business fundamentals due to
structural regulatory shifts or structural decline in heat demand

LIQUIDITY

At end-December 2016, cash and cash equivalents were EUR464
million. Some EUR75 million of EPE's cash was pledged as security
for bond holders, but it is not restricted and remains readily
available for EPE. Fitch expects EPE's free cash flow to be
positive during 2017-2018, assuming no dividends will be paid in
2018.


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G R E E C E
===========


GREECE: Needs Significant Help from Creditors, HSBC Says
--------------------------------------------------------
Mehreen Khan at The Financial Times reports that in a research
note to clients, HSBC has warned Athens needs significant help
from its creditors if it is to finally get off the doses of
rescue cash and tap the debt markets.

To recap: Greece will receive an EUR8.5 billion tranche of
bailout cash to pay its creditors in July after a Eurogroup
agreement last week, the FT notes.  The International Monetary
Fund, which has long been at odds over the EU's unwillingness to
grant major debt relief, has said it will recommend up to a EUR2
billion contribution, should it get more assurances that a
serious restructuring is on the cards after 2018, the FT relates.

"Further progress on debt relief seems unlikely in the coming
weeks", the FT quotes Fabio Balboni at HSBC, who detects little
"urgency" among EU officials to come up with creative ways to
bring down Greece's 180% debt pile until next summer, as saying.

The other main hope for Greece is an inclusion into the ECB's
bond-buying program, as a vote of confidence in the country and
positive sign for investors, the FT discloses.  But, the ECB has
said it also needs more assurances about Greece's debt
sustainability before any QE can kick in, the FT relays.

According to the FT, with the options narrowing, Mr. Balboni
warns:

"Without any support from the ECB QE or the ESM, then by the end
of the bailout program the Eurogroup might finally provide more
clarity on debt relief, but it will most likely be too late for a
clean exit or even a light-touch precautionary program.

"So Greece might need a new bailout program, with fully-fledged
conditionality."

A fourth bailout would be the worst case scenario for the Greece,
its creditors, and investors after the economy has struggled to
gain any momentum after losing 27% of its output since the
financial crisis, the FT states.

Creative solutions could still be on the cards, adds Mr. Balboni
who notes that Greece may not get a "clean" bailout exit and
could instead be given a "precautionary credit line" from
creditors to keep it solvent after August 2018, the FT notes.


PARAGON SHIPPING: Three Proposals Approved at Annual Meeting
------------------------------------------------------------
Paragon Shipping Inc. reconvened its 2017 annual meeting of
shareholders in Voula, Greece, on June 15, 2017, pursuant to a
Notice of Annual Meeting of Shareholders dated April 19, 2017,
which Annual Meeting was called to order on May 31, 2017, and
adjourned in order to permit additional time to solicit
stockholder votes.

At the Annual Meeting, the following proposals, which are set
forth in more detail in the Notice of Annual Meeting of
Shareholders and the Company's Proxy Statement sent to
shareholders on or around April 21, 2017, were approved and
adopted:

   1. To elect two Class A Directors and one Class B Director of
      the Company to serve until the 2020 Annual Meeting of
      Shareholders;

   2. To consider and vote upon a proposal to ratify the
      appointment of Ernst & Young (Hellas) Certified Auditors-
      Accountants S.A., as the Company's independent registered
      public accounting firm for the fiscal year ending Dec. 31,
      2017; and

   3. To grant discretionary authority to the Company's board of
      directors to (A) amend the Amended and Restated Articles of
      Incorporation of the Company to effect one or more
      consolidations of the issued and outstanding shares of
      common stock, pursuant to which the shares of common stock
      would be combined and reclassified into one share of common
      stock ratios within the range from 1-for-2 up to 1-for-
      1,000 and (B) determine whether to arrange for the
      disposition of fractional interests by shareholder entitled
      thereto, to pay in cash the fair value of fractions of a
      share of common stock as of the time when those entitled to
      receive such fractions are determined, or to entitle
      shareholder to receive from the Company's transfer agent,
      in lieu of any fractional share, the number of shares of
      common stock rounded up to the next whole number, provided
      that, (X) that the Company will not effect Reverse Stock
      Splits that, in the aggregate, exceeds 1-for-1,000, and (Y)
      any Reverse Stock Split is completed no later than the
      first anniversary of the date of the Annual Meeting.

                    About Paragon Shipping Inc.

Paragon Shipping -- http://www.paragonship.com/-- is an
international shipping company incorporated under the laws of the
Republic of the Marshall Islands with executive offices in
Athens, Greece, specializing in the transportation of drybulk
cargoes. Paragon Shipping's current newbuilding program consists
of three Kamsarmax drybulk carriers that are scheduled to be
delivered in the third and fourth quarters of 2016.  The
Company's common shares trade on the OTC Markets' OTCQB Venture
Market under the symbol "PRGNF", and FINRA has designated its
Senior Unsecured Notes as corporate bonds that are TRACE eligible
under the symbol "PRGN4153414".

Paragon Shipping reported net income of $23.79 million on $1.98
million of net revenue for the year ended Dec. 31, 2016, compared
to a net loss of $268.7 million on $33.71 million of net revenue
for the year ended in 2015.

The Company's balance sheet at Dec. 31, 2016, showed total assets
of $715,900, total liabilities of $19.30 million, and a
stockholders' deficit of $18.58 million.

Ernst & Young (Hellas) Certified Auditors-Accountants S.A. in
Athens, Greece, notes that the Company disclosed that as of
Dec. 31, 2016 it was not current with certain payments due in
respect with the unsecured senior notes and it is probable that
will be unable to meet scheduled interest payments.  These
conditions raise substantial doubt about its ability to continue
as a going concern.


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


CMF SPA: Moody's Rates Proposed EUR420MM Senior Sec. Notes (P)B2
----------------------------------------------------------------
Moody's Investors Service has assigned a provisional (P)B2
instrument rating to the proposed EUR420 million Senior Secured
Notes, due 2022, which are expected to be issued by CMF S.p.A., a
newly incorporated entity to support the company's planned
refinancing. The outlook on all ratings is stable. The net
proceeds from the transaction, together with EUR167 million of
cash on balance sheet, will be used to repay the existing Senior
Secured Notes, fund the EUR205 million equity purchase price to
buy out minority shareholders, repay EUR48 million of other drawn
debt and fund transaction costs.

At the same time, Moody's has affirmed Manutencoop Facility
Management S.p.A.'s corporate family rating (CFR) of B2 and
probability of default rating (PDR) of B2-PD. Should the
contemplated refinancing conclude as envisaged, Moody's would
expect to move the CFR from Manutencoop Facility Management
S.p.A. to CMF S.p.A. Upon full repayment, Moody's will withdraw
the B2 instrument ratings on the existing Senior Secured Notes
due 2020 issued by Manutencoop Facility Management S.p.A.

Moody's issues provisional ratings in advance of the final sale
of securities. Upon closing of the transaction and a conclusive
review of the final documentation, Moody's will endeavour to
assign definitive ratings. A definitive rating may differ from a
provisional rating.

RATINGS RATIONALE

Manutencoop's B2 CFR reflects the company's (1) leading position
in the fragmented Italian public segment facilities management
sector; (2) sizeable order book with approximately 69% of
expected FY2017 revenues already contracted; (3) liquidity
profile supported by the new EUR50 million Revolving Credit
Facility and up to EUR100 million committed factoring facility;
and (4) expected stable facility management market as non-
discretionary and non-cyclical activity.

However, the rating also reflects the company's (1) expected
Moody's adjusted gross leverage of around 5.4x at the end of
2017, pro forma for the refinancing; (2) sole geographic exposure
to the Italian economy; (3) strong reliance on the public sector
segment and Italian public authorities' payment discipline.

Importantly, the rating also reflects risk of credit negative
consequences of ongoing legal proceedings. The company is exposed
to the regulated and litigious Italian public sector tender
environment, with a history of legal investigations ultimately
leading to the resignation of senior management and board members
in February 2016 and a EUR14.7 million fine.

Moody's considers Manutencoop's liquidity profile as adequate.
Pro forma for the refinancing, the company expects to have EUR19
million cash on balance sheet, based on the EUR178 million cash
at the end of the first quarter 2017, net off EUR167 million cash
used for the refinancing, EUR25 million dividend paid in May 2017
and EUR33 million new factoring drawn. Although this cash
position is considered to be weak in light of its annual working
capital requirements of approximately EUR30 million (cash out in
Q1 and Q3), the company's liquidity profile is supported by the
new EUR50 million Revolving Credit Facility and up to EUR100
million committed receivables factoring facility.

Rating Outlook

The stable outlook reflects Moody's view that Manutencoop will
maintain an adequate liquidity profile and revenue visibility,
supported by stable backlog and operational margins.

Factors that Could Lead to an Upgrade

Positive pressure on the ratings could materialise if Manutencoop
continues to win new contracts, improve its operational cash flow
performance and maintains an adequate liquidity profile.
Quantitatively, positive pressure could materialise if the
company (1) maintains its current operating performance in
relation to EBITDA margins; (2) generates sustained positive free
cash flow; and (3) maintains leverage profile such that its
Moody's-adjusted Debt/EBITDA ratio sustainably falls below 4.0x.

Positive rating pressure would also require sufficient comfort
that the ongoing investigations will not have any material credit
negative impact.

Factors that Could Lead to a Downgrade

Conversely, negative pressure could be exerted on the ratings if
Manutencoop's liquidity profile and credit metrics deteriorate as
a result of (1) weakening operational performance or loss of
material contracts; (2) additional penalty payments or
significant legal costs; or (3) an aggressive change in its
financial policy. Quantitatively, Moody's would also consider
downgrading Manutencoop's ratings if its adjusted Debt/EBITDA
sustainably increases above 6.0x; or if the company reports
negative free cash flow on a sustained basis.

Furthermore, any negative consequences resulting from the
investigations ranging from management distraction to reputation
risk or financial damage would create negative pressure on the
company's rating position.

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

Profile

Founded in 1938 and headquartered in Bologna, Italy, Manutencoop
is a leading provider of facilities management (FM) services and
laundry & sterilisation services in Italy. Its FM segment (85% of
year-end 2015 revenues) includes technical, cleaning and
landscaping services. The Laundry & Sterilisation segment (15%)
covers sterilisation and rental of surgical clothing/instruments,
and laundering of linen and mattresses, primarily to the
healthcare sector. The group reported 2016 revenue and adjusted
EBITDA of EUR927 million and EUR96 million, respectively. The
company serves over 1,600 customers and employs approximately
16,000 people in 58 offices/branches throughout Italy. Almost all
revenues are generated in Italy, with 75% of 2016 revenues
derived from the public sector and 25% from the private sector.

Following the June refinancing, the company is fully owned by
Manutencoop Societa Cooperativa, a cooperative of around 600
member shareholders, all of which are employees of the firm.


CREDITO VALTELLINESE: DBRS Downgrades Issuer Rating to BB (high)
----------------------------------------------------------------
DBRS Ratings Limited lowered Credito Valtellinese SpA's (Creval
or the Bank) Issuer and Senior Long-Term Debt and Deposits
ratings to BB (high) from BBB (low), while the Bank's Short-Term
Debt and Deposits rating was downgraded to R-3, from R-2 (low).
Concurrently the Bank's Intrinsic Assessment (IA) was also
lowered to BB (high), from BBB (low), whilst the support
designation was maintained at SA3. The Bank's mandatory pay
subordinated debt was downgraded to BB (low). The trend on all
ratings is now Stable.


The lowering of Creval's IA takes into consideration the Bank's
weak asset quality. Despite the planned de-risking, which
envisages a reduction of approximately EUR 2 billion in non-
performing loans (NPLs) by year-end 2018, Creval's total stock of
NPLs remains large. In DBRS' opinion this will likely continue to
affect the Bank's future performance and capital position. The
stable trend reflects DBRS' expectation that Creval will continue
to make progress towards its targets for efficiency and asset
quality set out in the Bank's business plan for 2017-2018, as
well as maintain its adequate funding and liquidity profile.

In DBRS' view, Creval maintains a stable market position,
especially in its home province of Sondrio (Lombardy). The Bank
continues to take steps to restructure its business model as well
as improve its risk profile. As part of the new business plan for
2017-2018, the Bank targets: (1) a rationalisation of its branch
distribution network while also strengthening its online
presence, (2) an improvement in the revenue mix by increasing the
commercial focus on bancassurance and factoring, (3) a reduction
in NPLs with a combination of disposals and workout measures. The
Bank is also considering merger options.

Creval's profitability remains weak. In 2016, the Bank reported a
net loss of EUR 333 million, mainly due to high loan loss
provisions, as well as weak revenues and one-off restructuring
costs. In 1Q17, the Bank reported a net profit of EUR 2 million,
down from EUR 5 million in 1Q16. The large stock of NPLs and
related high provisioning levels are likely to continue to
pressure the Bank's future performance, in DBRS' view.

In 1Q17 the Bank's stock of NPLs reduced slightly to EUR 5.3
billion gross (or EUR 3.1 billion net of provisions)
corresponding to 27.2% of the total gross loans (or 18% on a net
basis), from EUR 5.4 billion at end-2016 (or EUR 3.2 billion net
of provisions). The reduction was supported by EUR 557 million in
NPL disposals as well as higher provisioning levels, with the
total NPL cash coverage ratio increasing to 42% (44% including
write-offs), from 41% at end-2016 and 37% at end-1Q16. According
to the business plan for 2017-2018, Creval is targeting a EUR 2
billion reduction in gross NPLs by 2018, mainly through disposals
planned in 2017 which could reach approximately EUR 1.5 billion.
As a result, the Bank's NPL ratios are expected to improve to
around 18% gross and 11.5% net of provisions in 2018. Despite
that, DBRS continues to view the Bank's remaining stock of NPLs
as large.

Creval maintains an adequate funding profile, which is
underpinned by its stable retail funding base and limited
reliance on wholesale funds. With EUR 3.5 billion in unencumbered
assets at March 2017, the Group has a sizeable buffer for future
bond maturities.

Creval's capital buffer deteriorated due to the significant loss
reported in 2016. In particular the Bank's CET1 ratio decreased
to 11.6% at March 2017, from 13.2% a year earlier, whilst the
Total capital ratio deteriorated to 12.7%, from 14.9% at March
2016. However the Bank's Total capital ratio improved in April
2017 following the issuance of EUR 150 million in Tier 2
subordinated bonds. Nevertheless, in DBRS' view, Creval's capital
buffers remain vulnerable given the large stock of unreserved
NPLs. In the short term, capital pressure might arise from the
planned disposal of NPLs. This pressure might be alleviated by
the sale of some real estate assets as well as the planned
adoption of the advanced internal ratings based models (A-IRB).

RATING DRIVERS

Although DBRS views positive rating pressure as limited in the
short term, a significant improvement in the Bank's asset
quality, profitability and capital position could contribute to
positive rating pressure in the medium term. Conversely, negative
rating implications could result from any material deterioration
in the Bank's capital and liquidity profile, or should the Bank
face challenges in reducing its NPL stock in line with the 2017-
2018 business plan.


MANUTENCOOP FACILITY: S&P Affirms 'B' CCR, Outlook Stable
---------------------------------------------------------
S&P Global Ratings affirmed its 'B' long-term corporate credit
rating on Italy-based facility management firm Manutencoop
Facility Management SpA (MFM).  The outlook is stable.

At the same time, S&P assigned its 'B' long-term corporate credit
rating to CMF SpA, the new intermediary holding company for MFM.
The outlook is stable.  S&P also assigned its 'B' issue rating to
the EUR420 million proposed bond to be issued by CMF.  The
recovery rating of '4' reflects S&P's expectations of average
recovery (30%-50%; rounded estimate 45%) in the event of payment
default.  S&P expects to withdraw the issue rating on the
existing EUR425 million bonds (EUR300 million outstanding) at the
close of this transaction.

The affirmation follows the proposed plan to recapitalize MFM's
balance sheet as Manutencoop Societa Cooperativa (MSC; the
largest shareholder in MFM) intends to buy out the minority
interest in MFM, which is currently held by numerous private
equity companies. MFM, through intermediate holding company, CMF,
intends to issue EUR420 million of new debt.  Proceeds from this
debt, along with EUR160 million of the cash balance, will be used
to repay an outstanding bond of about EUR319 million (including
accrued interests and early redemption costs) and to acquire the
outstanding minority interests in MFM, with no remaining
shareholdings from private equity companies expected after the
transaction.  S&P calculates the group's leverage at the close of
this transaction to be above 5x compared with 3.9x for the
financial year ending Dec. 31, 2016, which was strong for the
rating.  S&P is therefore revising the group's financial risk
profile assessment to highly leveraged from aggressive.

The rating affirmation incorporates the group's previous
deleveraging track record and MSC's conservative financial
policy, and S&P's view that the credit risk due to increased
leverage is fully incorporated within its 'B' corporate credit
rating.  S&P is therefore discontinuing the use of negative
comparable rating adjustment, which S&P previously incorporated
within its 'B' rating.

Currently, MFM's substantial cash balance (about EUR186 million
ahead of the proposed transaction) is an important liquidity
buffer and supports its adequate liquidity assessment.  After the
transaction, the cash balance is expected to be about
EUR25 million.  Therefore, the new EUR50 million revolving credit
facility (RCF) will be the key liquidity buffer as the group's
working capital swings tend to be about EUR35 million-EUR40
million.  S&P understands that the documentation for the new RCF
is to be finalized within the coming days.  Given the high
likelihood of this new facility being available, S&P currently
includes this facility within our liquidity calculation.
However, if it is not available, then S&P would revise down its
liquidity assessment, which could result in a negative rating
action.

S&P's assessment of the group's business risk profile is
supported by its leading position in Italian facility management
services and its contract backlog of about EUR2.8 billion.  The
assessment is constrained by MFM's geographical concentration to
Italy, the very competitive nature of the facility management
segment, and the reputational impact of the recent legal
proceedings against the group.

MFM is currently engaged in litigation proceedings with the
Italian Competition Authority (ICA)regarding Consip School Tender
Litigation and the FM4 Tender.  The final decision on these
pending litigation cases could become a key rating driver; the
group's future revenue growth potential could be hit if Consip
decides to exclude MFM from future tenders within the specific
work stream.  So far, Consip has specifically excluded MFM from
barrack and public hospital cleaning tenders.  These did not
generate revenue for the group and were not included in the
contract backlog and therefore are not a material risk for the
group's future earnings.  Consequently, a negative result in
these proceedings could weaken MFM's liquidity (because of
payment of potential fines and performance bonds) and hinder its
revenue growth potential.

Assumptions:

   -- Italy's GDP will increase by 0.9% in 2017.
   -- MFM's forecast revenue will be flat or modestly decline in
      2017.  S&P estimates the boost of new contract wins
      (including Consip contracts) will be negated by lower
      volumes in existing contracts and the potential hit from
      the termination of the CONSIP School Framework Agreement in
      November 2016.
   -- Management estimates that if all of the CONSIP School
      Contracts were to be terminated by each relevant school on
      Aug. 31, 2017, MFM's 2017 total revenue and EBITDA would be
      reduced by EUR14.2 million and EUR1.4 million,
      respectively.

      Forecast reported EBITDA of about EUR100 million (after
      deducting EUR5 million provision for risks and non-
      recurring expenses).  S&P understands that management's
      forecast for revenue and EBITDA are somewhat higher than
      its base case.

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

   -- Adjusted ratio of funds from operations (FFO) to debt of
      about 10% for 2017.
   -- FFO interest cover of more than 3x.

S&P continues to assess liquidity as adequate as it considers
execution risk regarding the new EUR50 million RCF to be low.
S&P will reassess the group's liquidity if the proposed RCF is
not available as anticipated.  Subsequent to the proposed
transaction, S&P calculates that sources of liquidity will exceed
uses by 1.3x.

Principal liquidity sources over the next 12 months include:

   -- Available cash balance of about EUR25 million at the close
      of the proposed transaction;
   -- Committed RCF of about EUR50 million, maturing in 2022;
   -- Forecast unadjusted FFO of about EUR40 million; and
   -- Working capital inflows of about EUR15million-EUR20
      million.

Principal liquidity uses over the next 12 months include:

   -- Estimated annual capital expenditure (capex) of about
      EUR24 million;
   -- Payment of the ICA fine and performance bond totaling about
      EUR25 million; and
   -- Seasonal working capital swing of about EUR40 million.

While S&P do not quantitatively include the group's committed
EUR100 million factoring facility in S&P's liquidity analysis, it
recognizes that this facility does provide some additional
flexibility.  This facility matures in 2019.  S&P includes
payment of performance bonds of EUR17.5 million in its liquidity
calculation, but there is uncertainty as to whether it will be
paid out within the next 12 months.

There are no financial maintenance covenants under the group's
existing senior secured notes.  S&P understands that there will
also be no financial maintenance covenants under the proposed
bond issuance.

However, the proposed RCF will have a net leverage covenant that
is to be tested when the facility is drawn up to 35% of the
facility size.  S&P also understands that the covenant levels
will be set at about 35% headroom to the leverage at the close of
this transaction.

The stable outlook reflects the group's leading position in the
Italian facility management sector and its good revenue
visibility on account of an order backlog of about EUR2.8
million, which should enable it to maintain FFO to debt at about
10% over the next 12 months and reported free operating cash flow
of about EUR20 million (excluding exceptional payments).

S&P could lower the rating if the group's liquidity weakened,
notably if the proposed RCF were not finalized as anticipated or
due to sudden large unanticipated cash needs that could put the
group liquidity under stress.  Additional rating triggers could
arise if Consip decided to exclude MFM from the contract stream,
which currently contributes more than 10% of the overall group
revenue or backlog.  This could result in revenue declines
continuing and credit metrics deteriorating for a sustained
period, resulting in FFO cash interest coverage materially below
3x.

S&P considers the upside rating potential as limited as it is
seeking additional updates on the group's litigation cases and
the effect they may have on the group's contract backlog and
ability to sign new contracts.  S&P could consider a positive
rating action if the group demonstrated improving credit metrics
commensurate with an aggressive financial risk profile, namely
FFO to debt above 17%.


MODA 2014 S.R.L.: DBRS Confirms BB(sf) Rating on Class E Debt
-------------------------------------------------------------
DBRS Ratings Limited confirmed the ratings on the following
classes of Commercial Mortgage-Backed Floating-Rate Notes Due
August 2026 issued by Moda 2014 S.r.l.:

- Class A at A (high) (sf)
- Class B at A (sf)
- Class C at BBB (sf)
- Class D at BBB (sf)
- Class E at BB (sf)

The Class X1 and Class X2 Notes are not rated by DBRS. All trends
are Stable.

The rating confirmation reflects the stable performance of the
sole remaining loan in the transaction, the Vanguard Loan. Moda
2014 S.r.l. was initially a securitisation of two floating-rate
loans: the Franciacorta and the Vanguard Loan. At issuance, the
two loans had an aggregated balance of EUR 198.2 million. As of
the most recent investor report of May 2017, the outstanding
transaction balance was EUR 116.8 million, representing a 41.1%
collateral reduction since issuance. The reduction is due to the
prepayment of the Franciacorta Loan (39.3% of the initial
securitised balance) in May 2016 and the Vanguard Loan's 2.7%
scheduled amortisation (1.0% per annum) since issuance. The
prepayment proceeds of the Franciacorta loan were allocated
modified pro rata to the CMBS notes.

The purpose of the Vanguard Loan was to provide financing for the
acquisition of one outlet village and to refinance the existing
debt of the borrowers. The sponsor of the loan are funds managed
by Blackstone Real Estate Partners. The collateral consists of
one outlet village and three shopping centres located across
Italy. While the Vanguard Loan does have exposure to economically
weaker Southern Italy, which has a lower gross domestic product
per capita and higher unemployment rates than Italy as a whole,
approximately 87.1% of the total gross income of the loan lies in
the economically stronger regions of Northern and Central Italy.

Since issuance, the Vanguard Loan has been characterised by a
mixed performance with increasing vacancy rates, increasing
expenses and lower net operating income across the three largest
properties. Despite that weaker performance, the Vanguard Loan
performance has been in line with DBRS's expectations and
stabilised metrics. However, during the last 12 months, the
Vanguard Loan has experienced a recovery based on a broadly
improved performance with lower irrecoverable costs and higher
net operating cash flows since the last review in June 2016. The
latest Investor Report of May 2017 shows a total loan physical
vacancy rate of 7.8%, lower than the 13.4% reported in May 2016.
The total loan vacancy is mainly driven by the largest property,
the Valdichiana Outlet Village; the three other properties are
close to fully let. The current aggregated net operating income
(NOI) of all four properties securing the Vanguard Loan is EUR
14.6 million, which represents a 9.5% increase from the EUR 13.4
million reported in the first Investor Report of February 2015.
The main driver of the increase in NOI has been the reduction of
irrecoverable expenses during the last year, followed by a lower
vacancy rate. According to the Investor Report of May 2017,
weighted-average lease length ranges between 3.1 to 7.2 years
across the four properties with a loan remaining term of 2.3
years. Based on the rent roll provided by the servicer, 25.7% of
total gross income has lease expiry or break options within the
next 12 months. At issuance, DBRS estimated a stabilised net cash
flow (NCF) of EUR 12.3 million, which represents a 16.6% haircut
to the most recent NOI. Per the Investor Report of May 2017, the
most recent reported interest coverage ratio (ICR) and debt
service coverage ratio (DSCR) are 3.1x and 2.9x respectively. In
June 2016, Cushman & Wakefield (C&W) revalued the portfolio and
estimated a portfolio valuation of EUR 210.1 million, which
represents a 12.4% increase from the original EUR 186.9 million
in March 2014. DBRS's stabilised value of EUR 149.3 million
currently presents a 19.3% haircut to the most recent C&W
valuation. As of the May 2017 Investor Report, the loan-to-value
ratio is 55.6% compared to 64.3% at issuance.

The largest of the four properties securing the Vanguard Loan,
the Valdichiana Outlet Village, accounts for 57.3% of the total
gross revenue of the loan. As of the May 2017 Investor Report,
the physical vacancy of this property marginally increased to
7.1% from the 7.0% reported in May 2016. The most recent reported
net operating income (NOI) is EUR 8.7 million, which shows an
8.0% uplift from the EUR 8.0 million a year ago but still 4.2%
below the initial NOI of EUR 9.1 million. Higher vacancy rates
and expense amounts have mainly driven the NOI at this property.
Per the rent roll provided by the servicer, 12.3% of the entire
gross revenue at the property (6.9% of the entire loan) has lease
expirations within the next 12 months); tenants contributing 4.8%
to the rental income have already given notice of their intention
to leave and eight units are under negotiations with new tenants.
According to the servicer's investor report commentary, the last
12 months' sales increased by 4.1% compared with the previous
year.

Le Colonne Shopping Gallery, accounting for 17.3% of the total
gross revenue of the loan, is the second-largest property. The
property is located in Brindisi, in the province of Apulia
(Puglia) and is the only property located in Southern Italy. As
of the latest investor report of May 2017, the property is now
fully let compared with the 1.0% vacancy rate at issuance. The
most recent reported NOI of EUR 2.4 million is higher than the
EUR 2.0 million at last review in June 2016; however, it is still
lower than EUR 2.8 million at issuance. Per the rent roll
provided by the servicer, there is an elevated lease rollover
exposure, with 40.7% of the total annual rent at the property
(7.0% of the entire loan revenue) having break options or lease
maturities within the next 12 months. According to the servicer,
footfall and sales increased by 4.7% and 7.3%, respectively, in
the last 12 months. Additionally, 13 tenants paid a turnover rent
in 2016 for an amount corresponding to about 13.4% of the total
gross rent.

The remaining two shopping centres, Il Borgogioioso and La
Scaglia, account for 12.9% and 11.9% of the total loan revenue,
respectively, based on the Investor Report of May 2017. The
first, Il Borgogioioso, reported an NOI of EUR 1.7 million, which
is higher than the EUR 1.3 million at last review but lower than
the EUR 2.2 million at issuance. Both properties have reduced
their vacancies to near 0-1.0% from rates of 7.8% in Il
Borgogioioso and 9.3% in La Scaglia since issuance. As of the
Investor Report of May 2017, La Scaglia's NOI increased to EUR
1.7 million or 24.6% up from issuance. A lower irrecoverable
expenses figure during the last 12 months has been the main
driver of the increase in NOI.

Per the loan documents, every quarter the Vanguard Loan is
subject to covenant tests. These covenants require to maintain a
minimum ICR of 1.40x and a 2.00x ICR Cash Trap. Additionally, the
loan has a loan-to-value covenant test of a maximum of 82.5%
loan-to-value (LTV) and a 77.5% LTV Cash Trap trigger. As of this
review, all the ratios were within the expected range at issuance
and DBRS estimates a currently low risk of the covenant's
triggers being breached during the remaining loan term.

At issuance, there was a 364-day revolving liquidity facility of
EUR 16.5 million provided by Goldman Sachs International Bank.
Per the latest Investor Report of May 2017, the closing liquidity
balance available is EUR 8.9 million, which represents a decrease
of 45.9% from the initial balance and is in accordance with the
proportional cancellations following the prepayment of the
Franciacorta Loan and the loan's 1.0% amortisation per annum. In
May 2017, a notice to Noteholders was reviewed indicating the
extension of the Liquidity Facility for a further period until
July 2018.

The final legal maturity date of the transaction is in August
2026, seven years beyond the maturity of the sole remaining loan
in August 2019. In DBRS's view, this would allow for sufficient
time to enforce and repay bondholders, if needed.

At issuance, DBRS took the sovereign stress into consideration by
adjusting the sizing parameters used in its ratings. On 13
January 2017, DBRS downgraded the Republic of Italy to BBB
(high), and consequently, an additional stress was applied to the
sizing parameters used in this transaction.


N&W GLOBAL: S&P Revises Outlook to Negative & Affirms 'B' CCR
-------------------------------------------------------------
S&P Global Ratings revised its outlook on Italy-based vending and
coffee machines manufacturer N&W Global Vending SpA (N&W) to
negative from stable.  At the same time, S&P affirmed its 'B'
long-term corporate credit rating on the company.

S&P also affirmed its 'B+' issue rating on N&W's super senior
EUR40 million revolving credit facility (RCF).  The recovery
rating is unchanged at '2' indicating S&P's expectation of
substantial (70%-90%; rounded estimate: 85%) recovery in the
event of payment default.

S&P affirmed its 'B' issue rating and revised to '4' from '3' the
recovery rating on N&W's EUR410 million senior secured notes,
including the EUR40 million proposed tap issuance.  This
indicates our expectation of average (30%-50%; rounded estimate:
45%, down from 50%) recovery.

Finally, S&P affirmed its 'CCC+' issue rating on the EUR100
million second-lien notes with the recovery rating unchanged at
'6'.

The negative outlook reflects S&P's view that N&W could face some
execution risks through the several acquisitions it is planning
to finalize in a relatively short time.  S&P also notes that the
company is demonstrating an increasing appetite for growth
through external debt-funded acquisitions than S&P previously
anticipated, and this could limit N&W's ability to reduce its
leverage position.

In March 2017, N&W acquired Saeco Vending SpA in a fully debt-
funded transaction for EUR55 million.  To fund the Saeco
transaction the company raised EUR70 million with a tap issuance.

The company acquired Ducale (in June 2016) and it is now
considering acquiring Cafection, with deal close expected by the
end of July.

Indicative sources and uses of the planned transaction assume a
total acquisition consideration of about EUR47 million (cash-out
to be paid in 2017) funded partly by the proposed EUR40 million
tap issuance, with the remainder plugged by cash available on the
company's balance sheet.  The transaction includes an additional
EUR3.9 million to be paid in 2019 as a deferred acquisition cost.

N&W is looking to acquire 67% of Cafection, a Canada-based
company with reported pro-forma annual revenues of C$28.8 million
as of December 2016. The company's main focus is the U.S. market
(about 90% of company sales) and it is a specialist in the
manufacture of "bean-to-cup" coffee machines within the office
coffee service (OCS) segment.

The remaining 33% stake will be owned by the current shareholder.
The transaction includes a put/call option arrangement on the
33%; N&W could exercise the call option while the current
shareholder could exercise the put.  In line with S&P's
methodology, it adjusts the company's financial debt by the
estimated amount of this call/put option (by an estimated EUR15
million).

The second acquisition regards 100% of Ducale.  Through this, the
company plans to enlarge its product portfolio covering the
premium segment within the vending H&C (hot and cold) machine
segment.  Ducale is an Italian family-owned company with a strong
focus on the domestic market and with high exposure to IVS Group,
its main client accounting for about 69% of the company's sales.
Ducale reported annual net sales of EUR11.7 million and EBITDA of
EUR2.8 million as of December 2016.

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

   -- Low-single-digit growth in sales of 2017 on an organic
      basis.  S&P then expects a contribution on revenues coming
      from external growth of EUR95 million on an annualized pro-
      forma basis (including Saeco Vending, Cafection, and
      Ducale).  Adjusted EBITDA margin of about 21%-22% over the
      next two years.

   -- About EUR18 million of annual capital expenditure (capex)
      at year-end 2017.

   -- Total cash-out for the new planned acquisition of about
      EUR47 million to be paid in 2017 and EUR3.9 million as
      deferred acquisition cost in 2019.

   -- No dividend payments or further acquisitions.

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

   -- Adjusted debt to EBITDA slightly above 10.0x over the next
      two years, including non-common equity financing issued at
      top of the group structure, which does not pay cash
      interests.

   -- Adjusted funds from operations (FFO) cash interest coverage
      close to 2.0x over 2017-2018.

The negative outlook reflects S&P's view that the group could
face some execution risks from the integration process of
recently acquired entities.  Additionally, headroom for this
rating category now appears to be more limited considering the
new debt that the company is planning to issue and a consequent
slight deterioration of interest coverage ratios over the short
term. Compared with the initial assessment, N&W has demonstrated
more willingness to expand through external opportunities, and
this could ultimately reduce the company's deleveraging ability.

S&P could lower the rating if N&W were unable to efficiently
integrate the recently-acquired entities, resulting, for example,
in continued negative discretionary cash flow generation or FFO
cash interest coverage below 2.0x on a recurring basis.
Furthermore, S&P could consider lowering the rating if the
company's liquidity came under pressure, or if it made additional
fully-debt funded acquisitions.

S&P would likely revise the outlook back to stable if N&W proved
able to successfully integrate the recently acquired entities
while reporting stable and healthy cash flow generation, and with
no material disruption to profitability.  For a positive rating
action S&P would also require the company's FFO cash interest
coverage to remain sustainably close to or above 2.0x.


POPOLARE DI VICENZA: Intesa Sanpaolo Agrees to Buy Parts of Bank
----------------------------------------------------------------
Rachel Sanderson and Martin Arnold at The Financial Times report
that the board of Intesa Sanpaolo has said it conditionally
agreed to buy parts of troubled Italian banks Banca Popolare di
Vicenza and Veneto Banca in a move that should help stave off
fears about the stability of the country's banking system.

In a statement on June 21, Intesa -- which is considered one of
Italy's healthiest banks -- said it would approve a deal to buy
the "good" assets of its troubled smaller rivals on the condition
it have no impact on its core capital ratio or dividend policy.
the FT relates.

"The availability of Intesa Sanpaolo excludes any capital hike,"
the FT quotes the bank as saying.

The move comes amid rising concerns that failure to find a
solution for the Veneto banks could revive market fears about the
solidity of the financial system in the eurozone's third largest
economy, the FT notes.

According to the FT, Intesa said any deal would have to carve out
the Veneto banks "bad" assets -- including defaulted sofferenze
loans -- as well as subordinated debt and legal risks.

But hurdles remain, the FT notes.  EU regulators are expected to
make a decision on the acquisition by the end of this week, the
FT discloses.  Italy's government would then need to pass a legal
decree effectively agreeing that the state take on the burden of
the non-performing assets and responsibility for at least 4,000
job losses, the FT says.

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.


VENETO BANCA: S&P Lowers Rating on Subordinated Debt to 'D'
-----------------------------------------------------------
S&P Global Ratings said that it has lowered its issue rating on
Veneto Banca SpA's nondeferrable subordinated debt (ISIN:
IT0004241078) to 'D' from 'C'.

The lowering of the rating follows the extension of the
instrument's maturity up to Sept. 17, 2017.  S&P considers the
change in maturity to be a default according to its criteria as
the payment on June 21, 2017--the original due date--was missed
and S&P do not expect it to be made within the next five business
days.

This rating action does not affect S&P's counterparty credit
ratings on Veneto Banca or any other issue ratings.



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


AXIUS EUROPEAN: S&P Raises Rating on Class E Notes to 'B+'
----------------------------------------------------------
S&P Global Ratings raised its credit ratings on Axius European
CLO S.A.'s class B1, B2, C, D, and E notes.  At the same time,
S&P has affirmed its 'AAA (sf)' rating on the class A notes.

The rating actions follow S&P's assessment of the transaction's
performance using data from the May 3, 2017 trustee report and
the application of S&P's relevant criteria.

S&P subjected the capital structure to a cash flow analysis to
determine the break-even default rate (BDR) for each rated class
at each rating level.  The BDR represents S&P's estimate of the
maximum level of gross defaults, based on its stress assumptions,
that a tranche can withstand and still fully repay the
noteholders.  In S&P's analysis, it used the portfolio balance
that it considers to be performing (EUR95,172,365) the current
weighted-average spread (3.71%), and the weighted-average
recovery rates calculated in line with S&P's corporate cash flow
collateralized debt obligation (CDO) criteria.  S&P applied
various cash flow stresses, using its standard default patterns,
in conjunction with different interest rate stress scenarios.

Since S&P's Dec. 23, 2015 review, the aggregate collateral
balance has decreased by 41.45% to EUR95.17 million from
EUR162.54 million.

The class A notes have amortized by EUR62.35 million since S&P's
previous review, which has increased the available credit
enhancement for all rated classes of notes.  While the
transaction's weighted-average spread has reduced to 3.71% from
3.92% at S&P's last review, its coverage tests have improved and
the weighted-average life has decreased to 4.1 years from 4.5
over the same period.

Taking into account the results of our credit and cash flow
analysis, S&P considers that the available credit enhancement for
the class B1, B2, C, D, and E notes is commensurate with higher
ratings than those currently assigned.  S&P has therefore raised
its ratings on these classes of notes.  The ratings on the class
D and E notes are constrained by the application of S&P's
supplemental tests, which typically limit upgrades for classes of
notes that are reliant on a concentrated asset portfolio.

S&P's credit and cash flow analysis results indicate that the
available credit enhancement for the class A notes is
commensurate with the currently assigned rating.  S&P has
therefore affirmed its 'AAA (sf)' rating on the class A notes.

Axius European CLO is a cash flow collateralized loan obligation
(CLO) transaction that securitizes loans to primarily
speculative-grade corporate firms.  The transaction closed in
October 2007 and its reinvestment period ended in November 2013.
Investcorp Credit Management EU Ltd. is the transaction manager.

RATINGS LIST

Class             Rating
            To                 From

Axius European CLO S.A.
EUR350 Million Floating-Rate Notes

Ratings Raised

B1          AAA (sf)           AA+ (sf)
B2          AAA (sf)           AA+ (sf)
C           AA+ (sf)           A+ (sf)
D           BBB+ (sf)          BB+ (sf)
E           B+ (sf)            B (sf)

Rating Affirmed

A           AAA (sf)


LSF9 BALTA: Moody's Hikes CFR to B1, Outlook Stable
---------------------------------------------------
Moody's Investors Service upgraded the Corporate Family Rating
(CFR) of LSF9 Balta Issuer S.A. to B1 from B2 and the Probability
of Default Rating (PDR) to B1-PD from B2-PD. Concurrently Moody's
upgraded the senior secured rating assigned to the senior secured
notes issued by Balta to B1 from B2. The outlook on all ratings
remains stable.

RATINGS RATIONALE

The upgrade reflects the successful completion of the Initial
Public Offering (IPO) with net proceeds of EUR137.6 million which
are expected to be used to reduce gross debt and improve Moody's
adjusted pro forma leverage to 3.6x debt / EBITDA as of Dec. 2016
from 5.0x pro forma for the Bentley acquisition closed in March
2017.

The debt to be repaid consists of USD44.1 million of debt at
Bentley, of the senior term loan of EUR75.0 million issued to
finance Bentley's acquisition in March 2017 and a partial
repayment of EUR21.2 million of Balta's senior secured notes due
in 2022.

Moody's expects Balta to keep its leverage between 3.5x and 4.0x
in the next 12-18 months on the back of a good operating
performance. However, the rating agency notes that the company
will continue to explore further debt-funded bold-on acquisitions
which might temporarily negatively affect its leverage.

Beyond the positive effect on leverage, Moody's expects that
Balta's increased transparency as a listed company will likely
strengthen its governance arrangements. Also, the transaction
will enhance Balta's access to the equity capital markets.
Nonetheless, the private equity owners (Lone Star) still hold
around 50% of the company shares post-IPO.

RATIONALE FOR INSTRUMENT RATING

The senior secured notes issued by Balta are rated B1, in line
with the CFR, despite the fact that they rank behind the EUR45
million super senior secured Revolving Credit Facility (RCF) that
benefits from the same guarantor and collateral package. However,
the size of the RCF is too small to cause the notching down of
the senior notes below the CFR.

RATING OUTLOOK

The stable outlook reflects Moody's expectation that in the next
12-18 months, Balta will maintain a healthy profitability of
around 8-10% Moody's adjusted EBIT margin and a leverage in a
range between 3.5x and 4.0x debt/EBITDA as adjusted by Moody's.

WHAT COULD CHANGE THE RATING UP/DOWN

The rating could be upgraded if the company (i) improved its
operating performance as indicated by an EBIT margin as adjusted
by Moody's sustainably above 10%, even in an adverse economic
environment, (ii) showed a track record of meaningful positive
free cash flow generation and (iii) sustainably improved Moody's-
adjusted debt/EBITDA to below 3.5x.

The rating could be downgraded if (i) the company's operating
performance would deteriorate as indicated by an EBIT margin as
adjusted by Moody's sustainably below 8%, (ii) free cash flow
would turn negative for a prolonged period or (iii) its Moody's-
adjusted debt/EBITDA would sustainably exceed 4.5x.

The principal methodology used in these ratings was Consumer
Durables Industry published in April 2017.


=============
M O L D O V A
=============


BANCA DE ECONOMII: Court Sentences Main Bank Fraud Suspect
----------------------------------------------------------
Iulian Ernst at BNE Intellinews reports that a Moldovan court has
sentenced Ilan Shor, the main suspect in the US$1 billion bank
frauds that surfaced in 2014, to seven and a half years in
prison.

According to BNE Intellinews, in his capacity as head of the
management board of Banca de Economii (BEM), Mr. Shor was found
guilty of siphoning off MDL5 billion (US$360 million) from the
bank in November 2014.

During the trial, Mr. Shor's lawyer Denis Ulanov claimed that BEM
incurred only MDL2.6 billion losses related to the loans
mentioned by the prosecutors, BNE Intellinews relates.  He also
claimed that the final beneficiary of the fraud was reputed
corporate raider Veaceslav Platon, who was convicted in April,
BNE Intellinews notes.

While the Buiucani court in Moldova's capital city Chisinau
issued the sentence on June 21, a final decision in Mr. Shor's
case is expected on July 17, as both the businessman and
prosecutors appealed the sentence, BNE Intellinews states.

The report commissioned by the Moldovan government from
consultancy Kroll identified Mr. Shor as the visible beneficiary
of the frauds, which saw around US$1 billion siphoned off from
three local banks, although it stopped short of indicating who
the ultimate beneficiaries were, BNE Intellinews discloses.

The Kroll report revealed that Banca Sociala extended MDL13.7
billlion worth of loans to several Moldovan companies within the
so-called Shor Group (firms identified by Kroll as being related
to Shor) on November 25-26, 2014, BNE Intellinews relays.  The
loans were extended mainly from money borrowed from the other two
banks involved in the scheme, BEM and Unibank, according to BNE
Intellinews.  The money borrowed by the Moldovan firms was then
converted to foreign currency (EUR545 million and US$232 million)
and immediately transferred to offshore firms, BNE Intellinews
notes.

Eventually, the bad loans extended by BEM were covered by
emergency aid extended by the central bank with government
guarantees, BNE Intellinews relays.  The government then issued
bonds to repay the central bank, meaning the thefts will be
repaid with taxpayers' money, BNE Intellinews states.



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


BANCO COMERCIAL: DBRS Confirms BB (high) Senior Debt Ratings
------------------------------------------------------------
DBRS Ratings Limited confirmed Banco Comercial Portugues, S.A.'s
(BCP or the Bank) ratings, including the Issuer Rating and Senior
Long-Term Debt & Deposit Rating at BB (high) and the Short Term
Debt & Deposit rating at R-3, the subordinated debt rating of BB
(low) and the BBB / R-2 (high) Critical Obligations Ratings
(COR). All ratings have a Stable Trend. See the full list of
ratings in the table at the end of this press release.

The Bank's ratings reflect the challenges presented by its still
high stock of non-performing loans (NPLs), as well as some
improvements achieved by BCP in the last year, particularly in
its domestic profitability, asset quality and capital. In
particular, the Bank has made some progress in reducing NPLs and
has strengthened its capital position, following the capital
increase completed in February 2017 and the subsequent repayment
of the state Cocos. However while DBRS recognises the progress
achieved by the Bank with regards to asset quality, the stock of
NPLs remains very elevated and the NPL ratio, as defined by the
European Banking Authority (EBA), remained at a very high 17.5%
at end-March 2017, above most European peers. The current rating
level incorporates the expectation that there will be further
progress in reducing the level of NPLs. The Bank's ratings
continue to reflect its strong franchise in Portugal where the
Bank has meaningful market shares of around 17% for deposits and
18% for loans. The ratings also reflects the Bank's satisfactory
funding and liquidity position with a net loan to deposit ratio
of around 97%, as calculated by DBRS at end-March 2017.

BCP has made significant efforts to reinforce capital levels in
the last year and this was a key factor in the confirmation of
the ratings, given DBRS's view that further capital was required
in the context of the high stock of NPLs. During 2016, BCP
completed a EUR 175 million private placement of shares allowing
a new shareholder, Fosun Industrial Holdings Limited to become a
shareholder of the Bank. Following this, in February 2017, BCP
completed a EUR 1.3 billion rights issue, part of these proceeds
were used to reimburse the outstanding EUR 700 million of State
CoCos. As a result, BCP's fully loaded CET1 ratio improved to
11.2% at end-March 2017, from 9.6% at end-2016. At end-March
2017, BCP reported a CET1 (phased-in) ratio of 13.0% and a total
capital ratio (phased-in) of 14.2%. Both ratios are well above
the minimum regulatory requirements set under the Supervisory
Review and Evaluation Process (SREP).

Asset quality remains a significant challenge for the Bank but
DBRS notes the reduction in the high stock of non-performing
loans (NPLs) in the last year. At end-March 2017, BCP had EUR 8.3
billion of NPLs in Portugal, as defined by the European Banking
Authority (EBA). The reduction of NPLs has been accelerated since
end-2015 and since then the level of NPLs has fallen by EUR 1.5
billion, driven by the Bank's active management of the portfolio,
but also benefitting from some improvement in the Portuguese
economy. In addition net new entries of NPLs have continued to
reduce QoQ. DBRS also notes that the coverage levels for the
Group were reinforced to 40.5% at end-March 2017 from 32.3% at
end-2015, which remains weak.

Profitability continued to improve in 2016 and 1Q17. BCP's net
income remains supported by strong contributions from its
international operations, and in particular from its Polish
subsidiary which recorded a profit of EUR 160 million in 2016 and
EUR 32.6 million in 1Q17. The Bank's domestic profitability
remains weak with net income of EUR 9 million in 1Q17, albeit
slightly up from EUR 1.9 million in 1Q16. Impairment charges
(including loan loss provisions and other financial assets
provisions) were lower in 1Q17, although DBRS notes that they
still absorbed around 57% of Income before Provisions and Taxes
(IBPT), but improved from 105% in 2016 (as calculated by DBRS).

RATING DRIVERS:
Positive rating pressure is unlikely in the medium-term, however
if the Bank is able to demonstrate a longer-track record of
sustained core profitability in Portugal together with a material
reduction of NPL ratio would be viewed positively.
Negative rating pressure could arise if BCP fails to continue to
reduce its level of NPLs or if domestic profitability does not
improve.


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


GAZPROM PJSC: S&P Affirms 'BB+/B' CCRs, Outlook Positive
--------------------------------------------------------
S&P Global Ratings affirmed its 'BB+/B' foreign currency long-
and short-term corporate credit ratings and 'BBB-/A-3' local
currency long- and short-term corporate credit ratings on Russian
gas champion Gazprom PJSC.  The outlook on both long-term ratings
is positive.

The affirmation reflects S&P's expectation that, despite large
investments in several strategic projects and continuing pressure
on dividends, Gazprom's financial policy would limit any increase
in leverage, so that the company's S&P Global Ratings-adjusted
debt to EBITDA will remain below 2x, and funds from operations
(FFO) to debt at about 40%-45%.  The affirmation also reflects
that S&P continues to expect an extremely high likelihood of
government support to Gazprom if needed.

S&P projects that Gazprom's leverage will increase due to heavy
investments, which limits the leeway under S&P's current 'bbb-'
assessment of the company's stand-alone credit profile (SACP).
Gazprom has several sizable projects, including gas pipelines
Nord Stream 2 and Power of Siberia, and is committed to
commission them in 2019-2020.  If and when completed, Nord Stream
2 and Turkish Stream would enable Gazprom to completely change
its export routes to Europe by switching from Ukrainian transit
to supplies via the Baltic and Black Seas.  After regulatory
pressures led Gazprom's partners to withdraw from Nord Stream 2,
Gazprom became the sole shareholder.  The Power of Siberia would
enable Gazprom to export gas to China, and S&P understands that
Gazprom plans to start exporting 5 billion cubic meters (bcm) of
a total capacity of 38 bcm in 2019.  However, this project's
profitability is unknown at this stage.

Meanwhile, S&P expects Gazprom's EBITDA and FFO to be broadly
stable or increase only slightly in Russian ruble (RUB) terms
compared with 2016, reflecting the new price level on the
European gas market, the stronger ruble in the first half of
2017, and S&P's expectation of a potential weakening in the ruble
later in 2017.  S&P believes that heavy capital expenditure
(capex) will lead to negative free operating cash flow (FOCF) and
higher leverage, with FFO to debt declining to 40%-45% by end-
2017 from 54% at end-2016.

S&P notes that Gazprom has a track record of adjusting its capex
program in line with its operating cash flow, to limit build-up
in debt.  S&P understands that Gazprom's capex program may have
some built-in flexibility because of large underutilized capacity
in the exploration and production segment.  S&P also notes that,
as stipulated in the contract, commissioning the largest part of
Power of Siberia's capacity can be postponed to 2021.  In
addition, S&P understands that Gazprom's capex may be subject to
geopolitical and regulatory uncertainties, as demonstrated by
delays and rescheduling of Turkish Stream and its predecessor
project South Stream in the past, and by continuing regulatory
uncertainties for the utilization of European pipelines that
would take the gas from Nord Stream 2.  Furthermore, S&P notes
that Gazprom managed to keep its 2016 dividend payout broadly
flat in ruble terms, despite pressure from the Russian government
on the key government-related entities to increase their payouts
to 50% of net income.

Gazprom continues to enjoy massive reserves, large-scale
production, and adequate conditions for its core production
assets.  S&P believes that after significant contract
renegotiations, the prices under Gazprom's long-term contracts
have broadly stabilized and neared hub prices.  Gazprom's low-
cost reserve base allows it to retain adequate profitability in
the global context even at the new price level, with a 2016
EBITDA margin of 25%.  S&P expects Gazprom will keep a solid
market share in Europe (33% in 2016), because, in S&P's view, gas
remains a relatively stable balancing fuel, which results in
lower carbon emissions than coal and relies less on weather
conditions than renewables.

Gazprom is vertically integrated into transportation and has a
monopoly over profitable gas exports, in line with the Russian
law on gas supplies.  This increases operational reliability,
helps to offset still very low domestic regulated gas prices, and
underpins Gazprom's critical importance for the Russian economy.
Gazprom has very strong links with the Russian government, which
approves its capex, regulates domestic tariffs, and actively
participates in strategic decision-making.

The positive outlook mirrors that on Russia.  S&P also
incorporates its expectation that our 'bbb-' assessment of
Gazprom's SACP will remain unchanged and that the likelihood of
state support to Gazprom remains extremely high.  On a stand-
alone basis, S&P expects Gazprom's credit metrics, particularly
FFO to debt and debt to EBITDA, to weaken somewhat due to heavy
capex in several large projects, European gas prices stabilizing
at a new level, and a stronger ruble in the first half of 2017.
Furthermore, we take into account that Gazprom continues to have
access to the international capital markets, which should support
its liquidity.

S&P would likely raise its local currency rating on Gazprom to
'BBB' and S&P's foreign currency rating 'BBB-' if S&P upgraded
the sovereign.  Because S&P views Gazprom as a government-related
entity with a very strong link to and critical role for the
government, S&P do not expect to rate Gazprom above the
sovereign, which would constrain any rating upside in the absence
of a sovereign upgrade.

S&P could revise the outlook on Gazprom to stable if S&P took a
similar action on the sovereign.  If Gazprom's SACP were to
weaken to 'bb+', S&P would maintain the positive outlook on the
'BB+' foreign currency rating and revise the outlook on the local
currency rating to stable.  This could happen if FFO to debt
declines to about 30% due to materially lower gas prices, or
larger-than-expected investments and contingent liabilities,
which S&P do not factor in its base case.


MOSENERGO PJSC: S&P Affirms 'BB+' CCR & Revises Outlook to Pos.
---------------------------------------------------------------
S&P Global Ratings revised its outlook on Russian energy company
Mosenergo PJSC to positive from stable.  At the same time, S&P
affirmed its 'BB+' long-term corporate credit rating on the
company.

The outlook revision reflects S&P's view that, on the back of
strengthened stand-alone credit metrics, it could raise the
rating on Mosenergo by one notch if we took a similar action on
its ultimate parent, Gazprom PJSC.

Under the capacity supply agreements (CSA) framework, Mosenergo
was eligible to receive extra cash flows from the surcharge to
the capacity tariff starting 2014 regarding Thermal Power Plant
(TPP) 21 and TPP 27.  But the regulator delayed the
implementation of the surcharge till 2016.  As such, the
surcharge took effect mid-2016. It boosted Mosenergo's cash flow
generation and enabled the company to repay a Russian ruble (RUB)
20 billion loan (about US$0.35 billion) to Sberbank in April
2017, thereby reducing leverage further from an already low 0.8x
at year-end 2016.  S&P expects capacity revenues under CSA to
peak at RUB30 billion-RUB32 billion in 2017, before declining to
RUB26 billion-RUB29 billion in 2018, RUB14 billion-RUB16 billion
in 2019, and gradually to nil in 2024 when all capacity built
under CSA will be supplied at a regular tariff through the
auction process.

The company recently finished construction of large investment
projects, and S&P expects moderate capital expenditure (capex)
needs of about RUB12 billion-RUB14 billion from 2017 (compared
with RUB18 billion-RUB30 billion in 2012-2015) to be funded by
cash flows from operations. In the absence of large capex or
dividend plans, in S&P's opinion, Mosenergo will maintain
relatively low leverage even after the temporary boost in
capacity revenues is over.  These improvements in the company's
performance metrics lead S&P to positively revise the company's
stand-alone credit profile (SACP) to 'bb+' from 'bb' previously.

S&P continues to factor in support from Mosenergo's parent,
Gazprom.  The Gazprom group owns a 53% stake in the company
through its fully owned subsidiary, Gazprom Energoholding.  S&P
thinks that Mosenergo is a strategic investment for the Gazprom
group, in line with the group's investments into other Russian
electricity and heat generators such as MIPC, OGC-2, and TGC-1,
and that it's unlikely that Gazprom will sell Mosenergo in the
near term.  That said, S&P thinks that Mosenergo is less
important for the Gazprom group's long-term strategy than its
core gas and oil assets.  Therefore, S&P views Mosenergo as a
moderately strategic subsidiary of the Gazprom group.  This leads
S&P to align its rating on Mosenergo with S&P's foreign currency
rating on Gazprom, and it indicates that S&P would raise the
rating on the company following an upgrade of the parent, which
would result in the rating on Mosenegro being one-notch above
S&P's assessment of its SACP.

S&P believes that Mosenergo's business risk profile continues to
reflect inherent volatility in the spot electricity market, the
company's exposure to an opaque and developing heating tariff
regime, and a track record of state interventions into the
industry (including changes in the CSA terms, i.e. the delays in
surcharge introduction).  Other constraints include exposure to
high country risk in Russia and relatively weak quality of heat
generating assets acquired from the sibling company MIPC. Still,
S&P understands these assets and respective customers will be
integrated into Mosenergo's existing cogeneration capacities
network, supporting capacity utilization and efficiency.

Positively, the company has a solid competitive position in the
lucrative service area of Moscow city and Moscow oblast (region),
and the operational benefits of its affiliation with and support
from Gazprom.  The competitive position is further underpinned by
significant investments into modernization of its generating
capacities and into the construction of new more efficient
combined cycle gas turbines, which improves the company's
competitiveness and operating efficiency.

S&P continues to consider that Mosenergo's financial policy
framework allows the company to take a more leveraged position
than S&P currently factors into its base-case scenario, for
example, in case of acquisitions, new large-scale investment
projects, or a higher dividend payout.  As such, S&P deducts one-
notch from the anchor of 'bbb-' that we apply to Mosenergo.

The positive outlook reflects that on its ultimate parent
Gazprom. S&P believes that, given Mosenergo's strengthened SACP,
S&P would raise the rating on the company by one notch if S&P
upgrades Gazprom.  S&P don't believe Mosenergo's creditworthiness
can be stronger than its ultimate parent, given majority
ownership and Gazprom's ability to control the company's strategy
and financial policy.  The positive outlook also indirectly
points to the positive outlook on Russia, based on Gazprom's very
strong links with and critical importance for the Russian
government.

S&P would take a positive rating action if it raised both the
local and foreign currency ratings on Gazprom, because it would
signal that Gazprom had a stronger ability to support the
company, and provided that Mosenergo's leverage remained minimal,
with debt to EBITDA below 2.0x and FFO to comfortably above 60%.

S&P would revise the outlook to stable in case of a similar
action on Gazprom.

Although less likely at this point given headroom in the rating,
S&P could also revise the outlook to stable in these cases:

   -- A significant deterioration of Mosenergo's stand-alone
      credit quality, for example in case of substantial
      acquisitions, with debt to EBITDA exceeding 3x and FFO to
      debt falling below 30%, which is far from S&P's base-case
      scenario; or

   -- A weaker parental support for Mosenergo than S&P currently
      expects.


O1 PROPERTIES: S&P Affirms 'B+' CCR & Revises Outlook to Stable
---------------------------------------------------------------
S&P Global Ratings revised its outlook on Russia-based real
estate investment company O1 Properties Ltd. to stable from
negative.  At the same time, S&P affirmed its 'B+' long-term
corporate credit rating on O1 Properties, and our 'B+' issue
ratings on the notes issued by O1 Properties Finance plc and O1
Properties Finance JSC.

The rating actions stem from S&P's view that O1 Properties'
operating performance is stabilizing.  The company has maintained
good access to capital markets and enjoys better funding
conditions from its partner banks.  Portfolio performance should
be supported by declining vacancies in Moscow's office market and
steady market rent rates.  The company's S&P Global Ratings-
adjusted EBITDA interest coverage ratio is expected to improve to
about 1.4x in the coming years from 1.2x in 2016.  In S&P's view,
this will come from a more favorable effective interest rate
after renegotiating bank loans and recent issuance.  O1
Properties issued a $350 million bond in September 2016, a $335
million bond in February 2017, and a $150 million bond in May
2017 and used the proceeds to partly repay outstanding bank loans
and ruble bonds.

S&P also believes that most of the potential rent declines in the
company's portfolio have already occurred and the average rent is
now close to the prevailing market rate, which S&P estimates at
$450-$550 per square meter per annum for class office A space in
Moscow.  O1 Properties' occupancy level is likely to start
improving toward 90% in the coming years from 86% in the first
quarter of 2017.

S&P still expects the company's ratio of debt to debt plus equity
will remain higher than 70%, excluding yield compression.  But
S&P considers that the company's credit standing is in line with
that of peers S&P rates 'B+', due to the quality of its asset
portfolio.

O1 Properties has managed to keep most of its rent contracts in
dollars, reflecting the good quality of its assets.  S&P expects
the share of ruble-denominated leases will increase because the
company will be filling vacancies outside the central business
districts.  S&P understands that new rental agreements are linked
to the Russian inflation index, and S&P expects this will offset
potential ruble devaluation in the medium term.

Most of O1 Properties' offices are in the center of Moscow and
the company's portfolio value has remained at about $3.7 billion
of income-producing assets with an average lease term of four
years. Large multinational companies contribute more than 70% of
total net operating income.  The tenant base is well diversified
across industries.  The company's share of developments is low,
at about 4% of the portfolio value.

O1 Properties benefits from a long-dated debt maturity profile
and only a small amount of debt amortizing in 2017.  Its U.S.
dollar-denominated debt matches U.S. dollar-linked rental income.

The rating remains constrained, in S&P's view, by high country
risk in Russia, which suffers from structural weaknesses such as
the economy's strong dependence on hydrocarbons and other
commodities.  This was particularly evident in the volatility of
the Russian ruble; the currency's 50% depreciation in 2014-2015
put pressure on real estate investment trusts' tenants, whose
revenues depend on the local economy, but whose rent contracts
are linked to U.S. dollars.  As a result, market rents declined
by more than 40% in dollar terms.  The share of new rent
contracts in the market denominated in rubles has increased
substantially.

The stable outlook reflects S&P's opinion that O1 Properties
should be able to maintain a ratio of EBITDA to interest of about
1.3x-1.4x in the next 12 months and refinance or repay upcoming
debt maturities using its cash balances and free cash flow.  S&P
believes the company's debt-to-debt-plus-equity ratio should
stabilize close to 70%.

S&P could lower the rating if there were pressure on liquidity,
which could happen if the company is unable to refinance its
upcoming debt maturities on time.  S&P could also consider a
downgrade if O1 Properties' interest coverage ratio fell to about
1.0x or debt leverage increased unexpectedly, which might result
from higher-than-expected rent declines.

S&P could take a positive rating action if O1 Properties' debt-
to-debt-plus-equity ratio improved and remained sustainably below
65%, and if EBITDA interest coverage ratio stayed materially
higher than 1.3x.  This might happen if the company increased its
deleveraging efforts, for example through participation in
additional joint ventures and use of issuance proceeds to reduce
debt.  A positive rating action would be contingent on the
company maintaining adequate liquidity.


TRANSTELECOM JSC: Fitch Affirms B+ Long-Term IDRs
-------------------------------------------------
Fitch Ratings has affirmed JSC Transtelecom Company's (TTK)
Foreign- and Local-Currency Long-Term Issuer Default Ratings
(IDRs) at 'B+'. The Outlook on both is Stable. TTK's senior
unsecured debt has been affirmed at 'B+'/ 'RR4'. The Short-Term
IDR is affirmed at 'B'.

TTK runs a large-capacity fibre backbone network laid along
Russian railways. It operates under an asset-light business model
and leases its core fibre network from its 100% shareholder
Russian Railways (RZD) (BBB-/Stable). TTK holds established
positions in the inter-operator segment, and has developed a
sufficiently large end-user broadband franchise, holding
approximately 5% of the all-Russia subscriber market share. The
company is likely to manage its leverage at slightly below 3x net
debt/EBITDA, corresponding to below 4x FFO adjusted net leverage,
in line with the leverage policy of its controlling shareholder
RZD.

KEY RATING DRIVERS

Large and Underutilised Network; The company benefits from
running a large backbone network laid along the railways
throughout Russia. Control over this extensive infrastructure
positions TTK as a strong wholesale operator, but also allows it
to offer a competitive broadband service in its covered
territories. The network remains underutilised which allows it to
keep capex at a relatively low level, at below 15% of revenues,
but also to seek new monetisation opportunities.

Focus on Monetisation: The company's strategy is focused on a
more efficient use of its existing asset base and a search for
new growth areas. Fitch understand that TTK is likely to refrain
from committing itself to large-scale investment projects without
clear payback. The entry into new markets entails substantial
execution risks, but the chosen strategy, in Fitch views,
protects against overinvestment and spikes in leverage. It may
also help mitigate the impact of shrinking revenues in the over-
competitive wholesale segment and rapidly slowing retail
broadband segment.

The management is keen to explore entry into new segments such as
the internet of things, MVNO operations, captive projects with
shareholder RZD, and new end-to-end wholesale services for
smaller operators on the existing telecoms infrastructure. Fitch
believes that opening TTK's infrastructure to other telecom
players may be value-accretive, and that it will not be
cannibalistic in view of the company's relatively small retail
franchise. However, with the likely exception of synergistic
projects with RZD, business models in the new segments remain
unproven while the visibility on their financial performance is
low.

Traditional Wholesale Under Pressure: TTK's traditional wholesale
segment will remain the core cash-generating unit for the
company, supported by sizeable indefeasible rights of use (IRU)
contributions. However, the segment is in long-term decline, as a
result of falling voice traffic and the continuing build-out of
own infrastructure by large telecoms operators. The company's
long network with connections to Russia's European and Asian
neighbouring countries provides opportunities for recurring IRU
proceeds from international operators, at least in the short to
medium term.

Stagnating Broadband: Fitch believes TTK's growth in its retail
broadband segment is likely to stagnate, due to significant
average revenue per user (ARPU) and revenue pressures on the back
of promotions in 2016. The subscriber take-up of broadband
service in its covered territories remains lower than for peers,
in the low 20% territory, suggesting modest opportunities for
further subscriber and revenue growth, but also margin
improvement in the medium term. Growth will be supported by the
launch of pay-TV in March 2017.

Stable Leverage: Fitch believes TTK is likely to manage its
leverage at slightly below 3x net debt/EBITDA and 4x FFO adjusted
net leverage. This is in line with the targeted leverage of its
shareholder RZD, which is comfortable with leverage of 2.5x net
debt/EBITDA under Russian Accounting Standards (RAS) both at the
group level, but also for key operating subsidiaries. Differences
under RAS and IFRS reporting (including due to early recognition
of IRU revenues under RAS) result in leverage under IFRS being
approximately 0.4x higher than under RAS.

Fitch expect TTK to remain FCF positive on a pre-dividend basis,
with free cash either spent on new projects as capex or returned
to the shareholder, instead of further significant debt
reduction.

Relationship With Shareholder: Fitch rates TTK on a standalone
basis. Legal ties are weak between TTK and its parent RZD as the
latter does not guarantee TTK's debt. Owning a telecoms company
is not strategic for a railway operator. However, operating ties
are strong and RZD is likely to retain control over TTK in the
medium term at least. Fitch therefore assume that TTK should be
able to continue leasing dark fibre from its shareholder on non-
discriminatory terms.

DERIVATION SUMMARY

The company ratings' benefit from the established positions in
the inter-operator segment and an improved position in the
broadband segment as the fifth-largest operator in Russia with an
approximately 5% subscriber market share. Compared to Russian
mobile operators and Rostelecom, the company has smaller scale
and a weaker competitive position in the residential segment. Its
wholesale segment is intrinsically more volatile than retail
revenues. TTK operates under an asset-light model business model
which is a constraining factor for the ratings.

KEY ASSUMPTIONS

Fitch's key assumptions within Fitch ratings case for the issuer
include:
- low single-digit revenue decline in 2017 and largely flat
   revenue in 2018-2020;
- EBITDA margin at above 21% in 2017 and gradually improving in
   2018-2020;
- capex at below 12% of revenue in 2017 growing to 14% in 2018-
   2020;
- progressively increasing dividends in 2018-2020;
- around RUB0.4 billion of recurring cash proceeds from IRUs per
   year included in FFO in 2017-2020;
- buyout of some minority interests in 2017;
- given Fitch understanding of the business and its peers, Fitch
   recovery analysis assumes a post-restructuring EBITDA of
   RUB4.45 billion and a distressed EV/EBITDA multiple of 4.0x.
   Recovery prospects for the RUB16.2 billion senior unsecured
  debt are good, but the Recovery Rating of 'RR4' is limited by a
  soft cap due to country considerations.

RATING SENSITIVITIES

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

  - Stable broadband performance and less volatility in the
interoperator segment coupled with sustainably positive FCF
generation and leverage at below 3x FFO adjusted net leverage
(broadly corresponding to 2x net Debt/EBITDA) may lead to an
upgrade.

  - A pre-requisite for a positive rating action is a comfortable
liquidity position with a short-term liquidity score of at least
above 1x.

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

  - Pressures in the interoperator segment, but also broadband
underperformance and weak financial results of new projects
leading to a sustained rise in leverage to above 4.0x FFO
adjusted net leverage (broadly corresponding to above 3x net
debt/EBITDA) without a clear path for deleveraging will likely
lead to a downgrade.

  - Liquidity and refinancing pressures may also be negative.

LIQUIDITY

Adequate Liquidity: TTK's liquidity is comfortable with RUB9
billion of credit lines with Russian banks covering RUB6.3
billion of short-term debt maturities at end-2016.


WEST SIBERIAN: S&P Affirms 'B+/B' Ratings, Outlook Stable
---------------------------------------------------------
S&P Global Ratings revised its outlook on Russian West Siberian
Commercial Bank (WSCB) to stable from negative and affirmed its
'B+/B' long- and short-term counterparty credit ratings on the
bank.

"The outlook revision reflects that we believe that WSCB will
continue to perform better than most Russian midsize regional
banks in the next 12-18 months, given the bank's strong
performance and the gradual stabilization of the economic
conditions in Russia.  Since the 2014 interest rate shock, the
bank restored its net interest margin to about 5.25% in 2016 and
first-quarter 2017 -- a figure we expect it will maintain, given
the improved stability of the Russian banking sector.  We expect
this will be supported by a high share of mortgage loans on the
balance sheet, since those will somewhat offset the effect of the
still-ongoing reduction of interest rates in Russia.  The
recovery of margins and contained credit costs will allow the
bank to keep its return on equity above 10%, in our view," S&P
said.

S&P also notes that WSCB's management has been fairly cautious
over the past few years, keeping the growth of the loan book at
bay (cumulative growth rate of the loan book in 2014-2016 was
only 3%) despite a steady inflow of customer deposits that
expanded by 30% over the same period.  Consequently, the bank
accumulated a material liquidity cushion that covered over 50% of
its short-term deposits, improving the resilience of the bank.
S&P expects that WSCB's management will maintain its cautious
strategy over the next 12-18 months with growth of the loan book
contained within 10% per year, which will allow it to maintain
its capitalization at about 8.2%--well above the level of most of
its domestic peers.

The stable outlook on WSCB reflects S&P's view that the bank will
be able to maintain adequate capitalization over the next 12-18
months, while demonstrating better-than-average operational
performance and maintaining is franchise in West Siberia.

S&P could raise the ratings in the next 12-18 months if it sees
improvements in earnings capacity and asset quality that could
support a positive combined view of the bank's capital and risk
position.  In particular, S&P would expect recovery of
profitability and asset quality closer to pre-2014 levels and
better diversification of its earnings structure with higher
share of commission income.

Though unlikely in the short term, S&P could lower the ratings if
there is a material increase in WSCB's risk appetite, with the
bank expanding aggressively outside its home region or its
traditional mix of lending products.  In addition, the bank's
involvement in a merger or acquisition deal could affect S&P's
view of its business stability, especially if undertaken with a
weaker counterparty.


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


NOVA LJUBLJANSKA: Moody's Raises Long-Term Deposit Rating to Ba1
----------------------------------------------------------------
Moody's Investors Service has upgraded the ratings of three
Slovenian banks. This concludes the review for upgrade initiated
on May 3, 2017.  The review was prompted by the rating agency's
change of its Macro Profile for Slovenia to "Moderate" from
"Moderate-", as well as the continued improvement in the banks'
credit fundamentals. The strengthening of the Macro Profile
reflects Moody's assessment that the Slovenian banks' operating
environment has benefited from a significant reduction in
systemic risks underscored by the start of the privatisation
process of the largest banks in 2016 as well as gradual
improvements in the banks' risk management practices in the past
few years. Moody's expects continued recovery in credit demand to
support banks' lending growth and revenues, after several years
of loan book contraction.

The following banks are affected by rating actions:

- Nova Ljubljanska banka d.d.'s long-term local and foreign-
currency deposit ratings were upgraded to Ba1 from Ba3, the long-
term and short-term Counterparty Risk Assessment (CRA) were
upgraded to Baa3(cr)/Prime-3(cr) from Ba2(cr)/Not Prime(cr), the
baseline credit assessment (BCA) and adjusted BCA were upgraded
to b1 from b3; the outlook on the long-term deposit ratings is
stable.

- Nova Kreditna banka Maribor d.d.'s long-term local and
foreign-currency deposit ratings were upgraded to Ba2 from B2,
the long-term and short-term CRA were upgraded to Baa3(cr)/Prime-
3(cr) from Ba3(cr)/Not Prime(cr), the BCA and adjusted BCA were
upgraded to ba3 from b3; the outlook on the long-term deposit
ratings is stable.

- Abanka d.d.'s long-term local and foreign-currency deposit
ratings were upgraded to Ba1 from Ba3, the long-term and short-
term CRA were upgraded to Baa3(cr)/Prime-3(cr) from Ba2(cr)/Not
Prime(cr), the BCA and adjusted BCA were upgraded to ba3 from b2;
the outlook on the long-term deposit ratings is stable.

The Not Prime short-term deposit ratings of banks captured by
rating actions were unaffected.

RATINGS RATIONALE

(1) CHANGED MACRO PROFILE REFLECTS IMPROVING OPERATING
ENVIRONEMENT IN SLOVENIA

The change of Slovenia's Macro Profile to "Moderate" from
"Moderate-" positively affects the rated Slovenian banks' BCAs
and as a result their long-term deposit ratings and CRAs. The
Macro Profile constitutes an assessment of the macroeconomic
environment in which a bank operates.

The change of the Macro Profile illustrates Moody's assessment of
the improvement in Slovenian banks' operating environment, in
particular a significant reduction in systemic risks in the
banking sector. The privatisation process of the largest banks,
started in 2016 coupled with gradual improvements in banks' risk
management practices underscore reduced levels of risk to the
sector after the 2013 banking crisis, which ultimately resulted
in the insolvency of the largest banks and their subsequent
nationalization and re-capitalisation by the Slovenian
government.

The improving operating environment will benefit Slovenian banks'
credit profiles by helping to further reduce the high level of
problem loans and restore their recurring profitability. A
gradual recovery in credit demand should support banks' lending
growth and revenues after several years of loan book contraction.

Consequently, Moody's assessment of more favourable operating
conditions for banks in Slovenia in combination with ongoing
reductions of problem loans and further improved financial
performance of the banks during 2016 has resulted in two to three
notches of upgrades of the affected banks' ratings.

2) BANK-SPECIFIC CONSIDERATIONS

Nova Ljubljanska banka d.d. (NLB)

According to Moody's, the two-notch upgrade of NLB's long-term
deposit ratings to Ba1 from Ba3, was driven by: (1) the upgrade
of the bank's BCA and adjusted BCA to b1 from b3; (2) maintaining
the current two-notches rating uplift for deposit ratings from
Moody's Advanced LGF analysis; and (3) unchanged moderate
government support assumption for NLB, as Slovenia's (Baa3
positive) largest bank, which provides one notch of rating
uplift.

The upgrade of NLB's BCA to b1 from b3 reflects the improved
Moderate Macro Profile combined with improvements in the bank's
asset quality and profitability, as well as maintaining of strong
capital adequacy. In 2016 NLB reported a 21% year-on-year
increase in net income, which translates to a return on assets
(RoA) of 0.96%. The bank's reported problem loans ratio declined
significantly to 15.0% as of year-end 2016, from 22.5% as of
year-end 2015, owing mainly to the sale and write-off of some of
the problem loans. Limited lending growth and moderate
profitability will underpin NLB's good capital adequacy with its
Tier 1 ratio at 17% as of year-end 2016. NLB is largely deposit-
funded with a strong buffer of liquid assets that accounted for
41% of the bank's average total assets as of year-end 2016.

The stable outlook on NLB's long-term deposit ratings reflects
Moody's expectation of no material changes in the bank's credit
profile over the next 12-18 months.

Nova Kreditna banka Maribor d.d. (NKBM)

The three-notch upgrade of NKBM's long-term deposit ratings to
Ba2 from B2 was driven by: (1) the upgrade of the bank's BCA and
adjusted BCA to ba3 from b3; (2) maintaining the current one-
notch rating uplift for deposit ratings from Moody's Advanced LGF
analysis; and (3) no rating uplift from government support.

The upgrade of NKBM's BCA to ba3 from b3 reflects the improved
Moderate Macro Profile combined with improvements in asset
quality and capital adequacy. The bank's problem loans ratio
declined significantly to 28.2% as of year-end 2016 from 36.3% as
of year-end 2015. While solvency risks from such a high level of
problem loans are considerable, maintaining a good level of
problem loans coverage with loan loss reserves at 70% and strong
capital adequacy with a Tier 1 ratio of 24% as of year-end 2016
are important risk mitigants. NKBM is predominantly deposit-
funded, with a gross loan-to-deposit ratio of 68% as of year-end
2016.

The stable outlook on NKBM's long-term deposit ratings reflects
Moody's expectation of no material changes in the bank's credit
profile over the next 12-18 months.

Abanka d.d. (Abanka)

The two-notch upgrade of Abanka's long-term deposit ratings to
Ba1 from Ba3 was driven by: (1) the upgrade of the bank's BCA and
adjusted BCA to ba3 from b2; (2) maintaining the current two-
notches rating uplift for deposit ratings from Moody's Advanced
LGF analysis; and (3) no rating uplift from government support.

The upgrade of Abanka's BCA to ba3 from b2 reflects the improved
Moderate Macro Profile combined with improvements in
profitability and capital adequacy. As of year-end 2016 Abanka
reported a net income of EUR77.5 million, up from EUR41.7 million
as of year-end 2015, owing to stabilisation in revenues and
reversal of loan loss provisions. Consequently, the bank's RoA
rose to 2.1% as of year-end 2016 from 1.1% as of year-end 2015.
Abanka's strong profitability further strengthened its capital
with Tier 1 ratio increasing to 26.5% as of year-end 2016 from
23% as of year-end 2015. The bank's reported problem loans ratio
was little changed at year-end 2016 at 15.9%, while the problem
loans coverage with loan loss reserves declined to 76% from 89%
as of year-end 2015.

The stable outlook on Abanka's long-term deposit ratings reflects
Moody's expectation of no material changes in the bank's credit
profile over the next 12-18 months.

  -- WHAT COULD MOVE THE RATINGS UP/DOWN

A further improvement in the operating environment for Slovenian
banks leading to a considerable reduction in problem loans and
maintaining strong capital ratios, could have positive rating
implications.

A deterioration in the country's Macro Profile and/or in
individual banks' standalone financial metrics may have negative
rating implications.

A change in the banks' liability structures may change the uplift
provided by Moody's Advanced LGF analysis and lead to a higher or
lower notching from the banks' adjusted BCAs, thereby affecting
deposit ratings.

LIST OF AFFECTED RATINGS

Upgrades:

Issuer: Nova Ljubljanska banka d.d.

-- LT Bank Deposits (Local), Upgraded to Ba1 Stable from Ba3
    Rating Under Review

-- LT Bank Deposits (Foreign), Upgraded to Ba1 Stable from Ba3
    Rating Under Review

-- Adjusted Baseline Credit Assessment, Upgraded to b1 from b3

-- Baseline Credit Assessment, Upgraded to b1 from b3

-- LT Counterparty Risk Assessment, Upgraded to Baa3(cr) from
    Ba2(cr)

-- ST Counterparty Risk Assessment, Upgraded to Prime-3(cr) from
    Not Prime(cr)

Issuer: Nova Kreditna banka Maribor d.d.

-- LT Bank Deposits (Local), Upgraded to Ba2 Stable from B2
    Rating Under Review

-- LT Bank Deposits (Foreign), Upgraded to Ba2 Stable from B2
    Rating Under Review

-- Adjusted Baseline Credit Assessment, Upgraded to ba3 from b3

-- Baseline Credit Assessment, Upgraded to ba3 from b3

-- LT Counterparty Risk Assessment, Upgraded to Baa3(cr) from
    Ba3(cr)

-- ST Counterparty Risk Assessment, Upgraded to Prime-3(cr) from
    Not Prime(cr)

Issuer: Abanka d.d.

-- LT Bank Deposits (Local), Upgraded to Ba1 Stable from Ba3
    Rating Under Review

-- LT Bank Deposits (Foreign), Upgraded to Ba1 Stable from Ba3
    Rating Under Review

-- Adjusted Baseline Credit Assessment, Upgraded to ba3 from b2

-- Baseline Credit Assessment, Upgraded to ba3 from b2

-- LT Counterparty Risk Assessment, Upgraded to Baa3(cr) from
    Ba2(cr)

-- ST Counterparty Risk Assessment, Upgraded to Prime-3(cr) from
    Not Prime(cr)

Outlook Actions:

Issuer: Nova Ljubljanska banka d.d.

-- Outlook changed to Stable from Rating Under Review

Issuer: Nova Kreditna banka Maribor d.d.

-- Outlook changed to Stable from Rating Under Review

Issuer: Abanka d.d.

-- Outlook changed to Stable from Rating Under Review

PRINCIPAL METHODOLOGY

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


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


BANCO POPULAR: DBRS Downgrades Issuer Rating to BB (low)
-------------------------------------------------------
DBRS Ratings Limited downgraded Banco Popular Espanol, S.A.'s
(Popular or the Bank) ratings, including its Issuer Rating and
Senior Unsecured Long-Term Debt & Deposit rating to BB (low) from
BBB (low), its Short-Term Debt & Deposit rating to R-4 from R-2
(middle) and its Subordinated Debt rating to B (low) from BB
(high). Additionally, Preferred Shares issued by Popular Capital
S.A. have been downgraded to B (low) from B (high). The Bank's
Long Term Critical Obligations Rating (COR) has been lowered by
two notches to BBB (low), and its Short Term COR has been
downgraded to R-2 (middle) from R-1 (low). A full list of ratings
actions is included at the end of this document.

All ratings have been placed Under Review with Negative
Implications (URN). Popular's Subordinated Debt was previously
placed URN on January 13, 2017, as part of a wider review of
European bank's subordinated debt. With the action, Popular's
Subordinated Debt remains URN, in line with the other ratings of
the Bank.

Today's rating actions follow the lowering of Popular's Intrinsic
Assessment (IA) to BB (low) from BBB (low). This reflects DBRS's
increasing concerns over the Bank's ability to restore its very
weak capital levels following a significant deterioration of
investor and customer confidence in recent days. This has been
driven by the impact of various events that have led to a
significant decline in the Bank's market capitalisation. As a
result, DBRS considers that management's ability to successfully
reinforce capital through either a rights issue or corporate
acquisition has become more challenging. The downgrade also
reflects DBRS's concerns about the Bank's credit fundamentals,
which have the potential to deteriorate quickly as a result of
the weakened investor and customer confidence.

In downgrading the Subordinated Debt and Preferred Shares, DBRS
is reflecting the increased risk of loss absorption being imposed
on these instruments as one of the means to support Popular and
protect senior debt holders. This could potentially occur if the
Bank fails to reinforce its capital position through either a
rights issue or corporate acquisition. The downgrade of the
Subordinated Debt to B (low) has resulted in a widening of the
notching from the IA to three notches, from one notch.

The Bank's Long Term Critical Obligations Rating (COR) has been
lowered by two notches to BBB (low), and its Short Term COR has
been downgraded to R-2 (middle) from R-1 (low). These ratings
have also been placed URN. The BBB (low) / R-2 (middle) ratings
reflect DBRS' expectation that, in the event of a resolution of
the Bank, certain liabilities (such as payment and collection
services, obligations under covered bond programmes, payment and
collection services, etc.) have a greater probability of avoiding
being bailed-in and being included in a going-concern entity.

DBRS has taken a number of rating actions on Popular over the
past few months, as the Bank has made announcements regarding
losses and capital adjustments beyond DBRS's expectations. The
current weakened capital position has severely constrained the
Bank's ability to respond to current pressures, despite the
Bank's strong SME franchise in Spain, its resilient performance
throughout the recent financial and real estate crisis in Spain
and previous success in maintaining shareholder support, as
illustrated in 2016, when Popular raised EUR 2.5 billion of
capital.

DBRS downgraded the senior ratings of Popular to BBB, Negative
trend, on February 10, 2017 as a result of higher than expected
net losses in 2016 and increased concerns about the Bank's
capital position. Further, on April 6, 2017, the senior ratings
of Popular were downgraded to BBB (low), Negative trend,
following the announcement of further negative adjustments to the
Bank's capital. The Negative Trend incorporated DBRS's concerns
over the Bank's low buffer above minimum regulatory capital
requirements, and thus, limited flexibility to react to any
adverse events. Popular's total regulatory capital ratio weakened
to 11.91% at end-1Q17, only 53 bps above the minimum total
capital requirement under the SREP (Supervisory Review and
Evaluation Process) of 11.375%.

RATING DRIVERS

The Issuer Rating and the Bank's Debt & Deposit ratings are
currently Under Review with Negative Implications. Any upside
pressure is unlikely in the short term. However, a meaningful
improvement in the Bank's capital position together with a
material reduction of non-performing assets could lead to a
positive rating pressure. During the review period DBRS will
focus on the capital, funding and liquidity position of the Bank
which could come under pressure, especially if negative headlines
persist. Any further weakening in the Bank's fundamentals could
also lead to further negative rating pressure. The ratings of
Popular's subordinated debt and preference shares could be
downgraded if DBRS sees any signs of increased risk of these
holders to absorb losses as a result of a failure to reinforce
capital levels through a corporate operation or further support
from shareholders.


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


AEGATE LTD: Files for Insolvency, June 23 Creditor Meeting Set
--------------------------------------------------------------
SecuringIndustry.com, citing a notice in The Gazette, reports
that after 13 years of operations, Aegate Ltd. has filed an
application for insolvency, with a creditor meeting scheduled for
June 23.

According to SecuringIndustry.com, the company, one of the three
contract partners nominated by the European Medicines
Verification Organization (EMVO) to provide the IT platforms for
the verification of drugs in accordance with the requirements of
the Falsified Medicines Directive/Delegated Regulation on safety
feature, filed for insolvency on June 5.

It seems that Aegate was unable to win any contracts with the
national medicine verification organizations (NMVOs) tasked with
setting up the national systems that will link to the central EU
hub, with all the contracts agreed to date going to rival
providers Arvato and SolidSoft Reply, SecuringIndustry.com
relays.

Aegate Ltd. is based in Cambridge.


DONCASTERS GROUP: Moody's Cuts CFR to B3, Outlook Negative
----------------------------------------------------------
Moody's Investors Service downgraded the corporate family rating
(CFR) of Doncasters Group Ltd to B3 from B2 and the probability
of default rating (PDR) to B3-PD from B2-PD. Concurrently Moody's
downgraded the senior secured ratings assigned to the first and
second lien facilities of Doncasters Finance US LLC to B3 from B2
and to Caa2 from Caa1 respectively. The outlook on all ratings
remains negative.

RATINGS RATIONALE

"Moody's decision to downgrade the rating of Doncasters to B3
takes into account that the company's actual performance in 2016
fell behind Moody's expectations and resulted in very high
financial leverage of 10.6x debt/EBITDA as of March 2017 with
limited visibility as to the pace and extent of the turnaround,"
said Oliver Giani, a Moody's Vice President -- Senior Analyst and
lead analyst for Doncasters. Mr. Giani added that "the decision
to downgrade was also driven by a weakening liquidity profile due
to increased reliance on the groups revolving credit facility and
Moody's expectations of negative free cash flow for 2017."

Adjusted for the impact of currency movements, Doncasters'
revenues declined by 3.7% during 2016 as a result of lower volume
and reduced metal prices. Moody's adjusted EBITDA fell by GBP28
million to GBP84 million. Key drivers were (i) lower volume and
mix (GBP11 million), (ii) costs associated with the transition to
next generation platforms (GBP10 million) and (iii) GBP13 million
costs of new product introduction, partly balanced by a positive
foreign currency effect of GBP8 million. At the same time total
debt grew by GBP150 million driven by currency effects (GBP105
million) and negative free cash flow (GBP44 million). As a result
leverage exceeded 10.0x Debt / EBITDA (Moody's adjusted).

Moody's believes the bulk of the underlying weakness resides in
the company's Power Systems segment, which serves customers in
the aerospace and power generation end markets. Impacted by
manufacturing issues related to the transition to next generation
platforms and new product introduction cost, Doncasters EBITDA
margin compressed to lowest levels in the last several years,
from 21% to 12.9% in 2016 (Moody's adjusted). In 2017, Moody's
forecasts Doncasters to deliver 10% organic revenue growth driven
almost entirely by its Power Systems division. Moody's expects
that EBITDA margin will rise to around 14%, reflecting primarily
fixed cost absorption. On this basis, while Moody's still expects
leverage to remain elevated, Moody's anticipates a material
improvement by year-end 2017.

Moody's considers Doncasters' near-term liquidity position to be
weak given the upcoming maturity of its GBP110 million ABL
revolving facility (unrated) in April 2018. According to the
latest reporting, discussions are continuing with the ABL lenders
and management is confident to reach an agreement to increase and
extend the credit facility within the next few weeks. The
company's liquidity profile is supported by cash reserves of
GBP11 million as of March 2017 and approximately GBP35.5 million
available under its GBP110 million ABL revolving facility. Cash
flow generation of Doncasters has been recently weakened by the
declining operating performance. Over the next twelve months
Doncasters expects to generate around GBP50 million funds from
operations, keep working capital under control and to spend
approximately GBP50 million of capex. Debt maturities until March
2018 amount to GBP16 million. Moody's notes that an extension of
GBP8 million thereof, becoming due to former management, is
currently being discussed. The credit facilities feature a cash
sweep mechanism while the ABL revolving facility benefits from
one maintenance covenant (fixed charge coverage ratio), for which
Moody's expects that Doncasters will maintain a satisfactory
headroom.

In that respect Moody's notes the modified audit opinion,
relating to uncertainty regarding the group's ability to extend
its revolving credit facility beyond April 2018, although Moody's
understand that management is in negotiations with banks with
regards to an extension and an uplifted value. Management expects
the extension to be resolved by end of June. Also, auditors point
to uncertainty with regards to the group's future perimeter and
shareholder arrangements with majority shareholder Dubai
International Capital LLC (DIC), which has pledged its shares in
Doncasters as collateral for certain of its own debt facilities.
Moody's assumes that DIC's main lenders remain supportive and
will extend DIC's own debt facilities which matured in December
2016 and extension being discussed.

RATING OUTLOOK

The negative outlook mirrors the group's high financial leverage
in combination with a weak liquidity profile which hinges on its
success in extending the ABL facility beyond April 2018.

WHAT COULD CHANGE THE RATING UP / DOWN

Moody's could further downgrade the ratings in case of
indications that the company may not be able to reduce leverage
to a level below 8.0x debt / EBITDA (Moody's adjusted) by year-
end 2017 or if the liquidity profile deteriorated further
evidenced by continued negative FCF and weakened access to
external liquidity sources. Conversely, an upgrade of Doncasters'
ratings may be considered in case of a strengthened credit
profile as reflected by leverage improving to sustainably below
6.0x Debt / EBITDA, free cash flow generation turning positive
and clarity around future shareholder and business parameters. A
positive rating action would also require an improved liquidity
profile to at least adequate levels.

The principal methodology used in these ratings was Global
Manufacturing Companies published in June 2017.

Doncasters Group Ltd is a vertically integrated manufacturer of
fastener systems and superalloy-based precision components for
aero engines, industrial gas turbines, and turbochargers. It
serves as a tier 1 and 2 supplier to a diversified industry base
including the aerospace, energy, commercial vehicle, industrial,
construction and petrochemical markets. Doncasters has been owned
by Dubai International Capital since 2006.


* UK: Brexit May Lead to Increase in Business Insolvencies
----------------------------------------------------------
John Mulgrew at Belfast Telegraph reports that Nigel Birney, head
of trade credit and political risk for NI with the Trade Credit
Brokers, issued the warning at a Chartered Institute of Credit
Management event.

"Business in the UK is likely to see an increased level of
insolvency, losses and projects put on hold as trade credit risks
are exacerbated by Brexit," Belfast Telegraph quotes Mr. Birney
as saying.

"Getting paid on time and getting paid what you expect to get
paid when you enter into a contract can be difficult at the best
of times, however, with the added complexity of our future
relationship with the EU still unknown, a plan needs to be put in
place.

"Brexit negotiations have now kicked off and we should expect to
see increased apprehension as businesses try to stay ahead of the
game and ensure that there is as little risk to their day to day
trading as possible.

"A key component of that plan should be trade credit, which
provides an opportunity for continued growth in uncertain times."


===============
X X X X X X X X
===============


* DBRS Concludes Review of European Banking Groups' Sub. Debt
-------------------------------------------------------------
DBRS Ratings Limited downgraded by one notch the ratings of
certain subordinated debt of 27 European banking groups. In
addition, the subordinated debt ratings of one bank, whose
subordinated debt was Under Review with Positive Implications,
were confirmed. The rating action affects only the higher rated
subordinated debt in European banks' capital structure, and
reflects the increasing likelihood that holders of this debt are
now likely to bear losses at the same time as lower rated
subordinated debt of banks that come under financial stress.

The ratings were placed under review on January 13 and the review
was extended on March 29 following the publication of the Request
for Comment on the Global Banking Methodology. The updated Global
Banking Methodology was published on May 24, 2017. Today's action
concludes the review.

DBRS previously rated dated subordinated debt and cumulative
junior subordinated debt of European banks one notch below the
Intrinsic Assessment (IA), while non-cumulative junior
subordinated debt was rated two notches below the IA. However,
given the increasing likelihood that all subordinated debt will
be used to absorb losses alongside equity in Europe (under the
European Union's Bank Recovery and Resolution Directive (BRRD) or
similar provisions in non-EU countries), DBRS has downgraded the
subordinated debt that was rated only 1 notch below the IA to the
same level as existing non-cumulative junior debt (i.e. 2 notches
below the IA).

The rating action is in line with the Debt Obligations Framework
set out in DBRS's updated Global Banking Methodology (May 2017).
There has been no rating action taken on rated subordinated debt
in the USA, Canada or Asia-Pacific, given the different
regulatory regimes in these countries.

The confirmation of the BBB ratings on The Governor and Company
of the Bank of Ireland's Dated Subordinated Debt reflects that
following the recent upgrade of the IA to A (low) the Dated
Subordinated Debt is already rated two notches below the IA.

RATING DRIVERS

The ratings of subordinated debt will now move in line with the
Intrinsic Assessments of the individual banks.


A full text copy of the ratings is available free at:

                       https://is.gd/LzaMeH


* BOOK REVIEW: Lost Prophets -- An Insider's History
----------------------------------------------------
Author: Alfred L. Malabre, Jr.
Publisher: Beard Books
Softcover: 256 pages
List Price: $34.95
Review by Henry Berry

Order your personal copy today at http://is.gd/KNTLyr

Alfred Malabre's personal perspective on the U.S. economy over
the past four decades is firmly grounded in his experience and
knowledge. Economics Editor of The Wall Street Journal from 1969
to 1993 and author of its weekly "Outlook" column, Malabre was in
a singular position to follow the U.S. economy in recent decades,
have access to the major academic and political figures
responsible for economic affairs, and get behind the crucial
economic stories of the day. He brings to this critical overview
of the economy both a lively, often provocative, commentary on
the picture of the turns of the economy. To this he adds sharp
analysis and cogent explanation.

In general, Malabre does not put much stock in economists. "In
sum, the profession's record in the half century since Keynes and
White sat down at Bretton Woods [after World War II] provokes
dismay." Following this sour note, he refers to the belief of a
noted fellow economist that the Nobel Prize in this field should
be discontinued. In doing so, he also points out that the Nobel
for economics was not one originally endowed by Alfred Nobel, but
was one added at a later date funded by the central bank of
Sweden apparently in an effort to give the profession of
economists the prestige and notice of medicine, science,
literature and other Nobel categories.

Malabre's view of economists is widespread, although rarely
expressed in economic circles. It derives from the plain fact
that modern economists, even hugely influential ones such as John
Meynard Keynes, are wrong as many times as they are right. Their
economic theories have proved incomplete or shortsighted, if not
basically wrong-headed. For example, Malabre thinks of the
leading economist Milton Friedman and his "monetarist colleagues"
as "super salespeople, successfully merchandising.an economic
medicine that promised far more than it could deliver" from about
the 1960s through the Reagan years of the 1980s. But the author
not only cites how the economy has again and again disproved the
theories and exposed the irrelevance of wrong-headedness of the
policy recommendations of the most influential economists of the
day. Malabre also lays out abundant economic data and describes
contemporary marketplace and social activities to show how the
economy performs almost independently of the best analyses and
ideas of economists.

Malabre does not engage in his critiques of noted economists and
prevailing economic ideas of recent decades as an end in itself.
What emerges in all of his consistent, clear-eyed, unideological
analysis and commentary is his own broad, seasoned view of
economics-namely, the predominance of the business cycle. He
compares this with human nature, which is after all the substance
of economics often overlooked by professional and academic
economists with their focus on monetary policy, exchange rates,
inflation, and such. "The business cycle, like human nature, is
here to stay" is the lesson Malabre aims to impart to readers
interested in understanding the fundamental, abiding nature of
economics. In Lost Prophets, in language that is accessible and
jargon-free, this author, who has observed, written about, and
explained economics from all angles for several decades,
persuasively makes this point.

In addition to holding a top position at The Wall Street Journal,
Malabre is also the author of the books, Understanding the New
Economy and Beyond Our Means, which received the George S. Eccles
Prize from the Columbia Business School as the best economics
book of 1987.


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

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

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


                            *********


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

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

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

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

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

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


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