TCREUR_Public/170706.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

           Thursday, July 6, 2017, Vol. 18, No. 133


                            Headlines


F R A N C E

ANTALIS INTERNATIONAL: Moody's Assigns B3 CFR, Outlook Stable
AVENIR TELECOM: Presents Continuation Plan to Marseille Court
CMA CGM: Moody's Rates EUR500MM Senior Unsecured Notes B3
TECHNICOLOR SA: Moody's Affirms Ba3 CFR, Alters Outlook to Stable


I R E L A N D

ARBOUR CLO IV: Fitch Confirms 'B-sf' Rating on Class F Notes
OAK HILL III: Fitch Assigns 'B-(EXP)sf' Rating to Cl. F-R Notes
TWIN BRIDGES 2017-1: Fitch Rates Class X2 Notes 'B(EXP)sf'
TWIN BRIDGES 2017-1: Moody's Assigns (P)B3 Rating to Cl. X2 Notes


I T A L Y
COOPERATIVA MURATORI: Moody's Rates New EUR250MM Senior Notes B2
MONTE DEI PASCHI: EU Commission Approves Restructuring Plan


K A Z A K H S T A N

DAMU ENTREPRENEURSHIP: S&P Cuts Issuer Credit Ratings to 'BB+/B'
DEVELOPMENT BANK: S&P Lowers Issuer Credit Ratings to 'BB+/B'
KAZAGRO NATIONAL: S&P Cuts Long-Term Issuer Credit Rating to BB-
KAZAKH AGRARIAN: S&P Lowers Issuer Credit Rating to 'BB'


L U X E M B O U R G

DECO 2015 CHARLEMANGE: S&P Cuts Rating on Class E Notes to 'BB'
QGOG CONSTELLATION: Fitch to Rate Proposed Sr. Secured Notes 'B'


P O L A N D

PETROLINVEST SA: Gdansk Court Rejects Zaklad's Bankruptcy Motion


R U S S I A

CB ROSENERGOBANK: Bank of Russia Provides Update on Investigation
ER-TELECOM: S&P Lowers CCR to 'B' From 'B+', Outlook Stable


S P A I N

BANCO POPULAR: Banco Santander Unveils Details of Capital Raising
BANKIA SA: S&P Assigns B+ LT Issue Rating to New Tier 1 Notes
ISOLUX CORSAN: Files for Bankruptcy, Receives Acquisition Offers


S W I T Z E R L A N D

GATEGROUP HOLDING: S&P Affirms 'B+' CCR on Solid Performance
INEOS GROUP: S&P Affirms BB- Long-Term CCR, Outlook Stable


U N I T E D   K I N G D O M

AUBURN SECURITIES 4: S&P Affirms B- Rating on Class E Notes
GREAT HALL 2007-2: Fitch Affirms 'Bsf' Rating on Cl. Eb Notes
INOVYN LTD: S&P Upgrades CCR to B+ on Operational Improvements
RESIDENTIAL MORTGAGE 30: S&P Puts Prelim. CCC Rating to X1-Dfrd


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F R A N C E
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ANTALIS INTERNATIONAL: Moody's Assigns B3 CFR, Outlook Stable
-------------------------------------------------------------
Moody's Investors Service has assigned a first-time B3 corporate
family rating (CFR) and B3-PD probability of default rating (PDR)
to Antalis International S.A. (Antalis), one of the leading
distributors of paper, packaging and visual communication
solutions primarily in Europe. Concurrently, Moody's has assigned
a B3 instrument rating to the EUR325 million senior secured notes
raised by Antalis, with upstream guarantees from certain
operating subsidiaries. The outlook on the ratings is stable. The
ratings are solidly positioned.

"The assignment of B3 CFR balances Antalis' market leadership
position in Europe in paper distribution and increasingly also in
growing and more profitable distribution of packaging and visual
communication solutions, with a high leverage and low
profitability reflecting challenging demand characteristics for
paper", explains Martin Fujerik, Moody's lead analyst for
Antalis.

RATINGS RATIONALE

RATIONALE FOR CFR

The B3 CFR is primarily constrained by the company's (1) sizeable
exposure to graphic and office paper, demand for which is in
structural decline and which requires Antalis to incur ongoing
restructuring costs; (2) low profitability with Moody's adjusted
operating margin of 1.8% in 2016 (2.7% excluding restructuring),
which is among the strongest in the industry, but below average
in a broader rated universe of distribution companies, reflecting
weak underlying demand for paper and intense price competition;
(3) fairly high leverage, with Moody's-adjusted gross debt/EBITDA
estimated at around 6.0x (based on debt as of end-May 2017 pro-
forma for the transaction and 2016 EBITDA including
restructuring), yet expected to decline towards 5.5x in the next
12-18 months, with some M&A risk primarily to further support
packaging and visual communication operations; (4) limited free
cash flow generation capabilities in the next 12-18 months due to
still elevated restructuring charges, despite fairly low capex
needs and modest dividends; and (5) relatively modest scale of
operations in a broader rated distribution universe, with sales
of EUR2.5 billion and Moody's adjusted EBITA of EUR55 million
(including restructuring costs) in 2016.

Antalis' B3 CFR is mainly supported by its (1) European market
leadership in paper distribution, supported by pan-european
presence and wide distribution network enabling competitive
delivery times; (2) already strong and further improving position
in packaging and visual communication distribution that benefit
from structurally growing demand and higher profitability than
paper; (3) well developed information systems that provide
interface between all group's functions, as well as its
omnichannel sales and marketing organization that also include
sizeable and further growing e-commerce platform; and (4)
shareholder structure generally supportive of deleveraging, with
a limited risk of aggressive shareholder-friendly measures.

Even though Moody's-adjusted gross debt/EBITDA estimated at
around 6.0x (based on debt as of end-May 2017 pro-forma for the
transaction and 2016 EBITDA including restructuring) looks fairly
high, the rating agency recognizes that end-May is one of the
seasonally weakest quarters in terms of drawings under recourse
factoring facility, which typically reduce by year-end. Moody's
thus see Antalis B3 rating as solidly positioned, with an upwards
potential, and currently with headroom for some debt-funded
growth.

RATIONALE FOR BOND RATING AND PDR

The proposed EUR325 million senior secured notes issued by
Antalis International S.A. are rated B3, in line with the CFR,
which reflects the fact it is essentially the only debt
instrument in Moody's loss given default waterfall. The rating
agency generally does not include factoring programmes into the
waterfall, because they have separate collateral pool which is
typically designed to allow for full recovery in a default event.
However, Moody's notes that even though the bond is secured, the
security package consists only of ownership interests in certain
material subsidiaries, material bank accounts and intercompany
loan receivables, with guarantors generating just 61.1% of EBITDA
and 32.7% of capital employed. The PDR of B3-PD, which is also in
line with CFR, reflects Moody's standard assumption of 50% family
recovery, reflecting the existence of syndicated factoring
programme with covenants.

RATIONALE FOR OUTLOOK

The stable outlook on the ratings reflects Moody's expectations
that in the next 12-18 months Antalis will manage to reduce its
Moody's-adjusted debt/EBITDA towards around 5.5x, further
benefitting from more favorable business mix towards more
profitable packaging and visual communication solutions.

WHAT COULD CHANGE THE RATINGS UP/DOWN

Moody's could upgrade Antalis ratings if the company built a
track record of Moody's adjusted gross debt/EBITDA (including
restructuring) sustainably below 5.5x, and not only at a
seasonally strongest year-end. It would also require a track
record of sustained positive free cash flow generation and
maintenance of ample liquidity with sufficient high quality
sources to weather intra-years swings of working capital.

Moody's could downgrade Antalis ratings if the company failed to
keep Moody's adjusted gross sustainably below 6.5x. Downgrade
could be also triggered by sustained negative free cash flow and
deterioration in liquidity.

The principal methodology used in these ratings was Distribution
& Supply Chain Services Industry published in December 2015.

Headquartered in Greater Paris, France, Antalis is one of the
leading distributors of paper, packaging solutions and visual
communications products primarily in Europe. In 2016, the company
generated revenues of EUR2.5 billion and reported EBITDA of EUR88
million, as defined by Antalis (i.e. without restructuring).
Through its almost 120 distribution centers, the company executes
around 14,000 deliveries per day in 43 countries and serves
130,000 customers.


AVENIR TELECOM: Presents Continuation Plan to Marseille Court
-------------------------------------------------------------
Reuters reports that Avenir Telecom SA said it presented its
continuation plan to the Tribunal de Commerce de Marseille.

According to Reuters, the Tribunal de Commerce de Marseille will
deliver its judgment on the plan in the coming days.

Avenir Telecom SA is a telecommunication products' distributor
and related services' provider based in France.


CMA CGM: Moody's Rates EUR500MM Senior Unsecured Notes B3
---------------------------------------------------------
Moody's Investors Service assigned B3 rating to the proposed
EUR500 million senior unsecured notes due 2022 issued by CMA CGM
S.A. (CMA CGM). CMA CGM's corporate family rating (CFR) of B1 and
Probability of Default Rating (PDR) of B1-PD are unchanged. The
outlook is stable.

RATINGS RATIONALE

The assignment of a B3 rating to CMA CGM's proposed senior
unsecured notes due 2022, which is two notches lower than the
company's B1 CFR, reflects not only their pari passu ranking with
all other unsecured indebtedness issued by CMA CGM, but also
their contractual subordination to the secured debt existing
within the group (primarily vessel and container financing).

The proceeds of the offering will be applied to pre-funding debt
maturities in particular the EUR300 million bond due 2018, as
well as reducing outstanding balances on the revolving credit
facilities (unrated).

CMA CGM's B1 CFR also continues to reflect (1) CMA CGM's (in
combination with recently acquired Neptune Orient Lines (NOL))
leading market position with a top three market share; (2)
diverse, modern and flexible fleet as a result of significant
proportion of chartered vessels; (3) operational efficiency aided
by the integration of NOL and anticipated synergies of $500
million in 2018. These strengths are counterbalanced by (4)
highly competitive operating environment in the largely
commoditized container liner industry; (5) dominance of short-
term contracts limiting revenue visibility; (6) significantly
elevated leverage following the acquisition of NOL (7.2x for last
twelve months ending 31 March 2017 including standard Moody's
adjustments), although it is expected to be reduced toward the
end of calendar year 2017; (7) tight liquidity relying on asset
sales and refinancing existing debt obligations with the banks
and in the capital markets, although recently helped by the
announcement of the San Pedro sale.

On June 30, 2017, CMA CGM announced a stock purchase agreement to
sell 90% interest in APL Ltd., the entity which ultimately owns
the San Pedro container terminal at the port of Los Angeles, for
approximately $800 million and an earn-out opportunity. The
transaction is contingent only on anti-trust approval and is
expected to be closed in the second half of 2017. The proceeds of
the asset sale will be applied to debt reduction as previously
indicated by CMA CGM which is a strong credit positive.

In September 2016, CMA CGM completed its acquisition of NOL after
acquiring the controlling stake in the Singaporean carrier in
June that year. The transaction strengthened CMA CGM's position
as the third largest container liner with a capacity of 2.2
million TEU and an 11% market share. In addition to solidifying
CMA CGM's market position, the acquisition of NOL also
strengthened CMA CGM's presence on certain routes, particularly
Transpacific and intra-Asia routes, increasing its geographic
diversification. Additionally, CMA CGM realized $1 billion in
cost savings in 2016 and expects to deliver on $500 million in
synergies with NOL in 2018.

Along with its strategic advantages, the acquisition of NOL
involved certain execution risks such as regulatory approvals and
refinancing the acquisition facility, which CMA CGM has already
addressed successfully. In addition, CMA CGM integrated NOL into
the new Ocean alliance which commenced operations on April 1,
2017. NOL has been a weak performer in recent years with negative
net result since 2011. In the first quarter of 2017, the combined
entity generated a core EBIT of $252.0 million, among the highest
in the competitive set owing to both CMA CGM's operational
strength and the progress of integration efforts.

Also positively, the market environment for container shipping
has improved in 2017 after a very weak 2016. The supply demand
balance shifted away from the dramatic oversupply witnessed in
2016 which led to a measure of strengthening in freight rates.
Although still weak by historical standards, container freight
rates rebounded by 37% from the trough in Q2'16 as measured by
China Containerized Freight Index (CCFI). In line with the
industry developments, Moody's has recently revised its outlook
for the shipping industry, and for the container liner segment,
to stable from negative.

CMA CGM acquired 100% of NOL for $2.5 billion and assumed NOL's
financial net debt of approximately $2.6 billion. The acquisition
was funded with a mix of cash and bank financing and materially
increased CMA CGM's leverage to 8.2x at December 31, 2016 from
4.2x the year prior including Moody's standard adjustments This
ratio is very high for the B1 category although Moody's expects
it to reduce over time through synergies and asset sales, the
largest of which is the announced sale of the San Pedro terminal.
Positively, for the twelve months ending 31 March 2017, CMA CGM's
leverage declined to 7.2x reflecting the improvement in EBIT
driven by strengthening freight rates in the first quarter.

Moody's notes that CMA CGM's liquidity relies on a mix of
available cash and undrawn lines, committed capex financing, as
well as refinancing or extending its existing debt instruments.
Moody's acknowledges that the company has a strong record of
successful refinancing as evidenced most recently by its prompt
retirement of the acquisition facility in December 2016. At 31
March 2017, CMA CGM had approximately $1.2 billion of cash and
$442 million of available credit facilities. The company also had
approximately $1.7 billion of current maturities of which $260
million were comprised of bonds and $600 million of bank debt.
The most recent announcements of the San Pedro terminal sale and
the proposed bond refinancing will further support CMA CGM's
liquidity.

RATIONALE FOR THE STABLE OUTLOOK

The stable outlook reflects Moody's expectations that CMA CGM's
financial profile will return to a profile in line with the B1
rating within 18 months after the closing of the NOL acquisition.
It also assumes that CMA CGM will maintain an adequate liquidity
profile and refinance the acquisition credit facility well in
advance of its maturity.

WHAT COULD CHANGE THE RATING UP/DOWN

Upward rating pressure could materialise if Moody's has evidence
that CMA CGM can sustain its solid operating performance and
report the following metrics over an extended period of time: (1)
leverage (debt/EBITDA) moving towards 4x; and (2) funds from
operations interest expense coverage above 4x (ratios include
Moody's adjustments). At the same time, the company should
maintain an adequate liquidity profile.

Downward rating pressure could develop if challenging market
conditions lead to (1) leverage above 5x for an extended period
of time; (2) funds from operations interest expense coverage
below 3x (ratios include Moody's adjustments); or (3) a material
weakening of the company's liquidity profile.

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was Global Shipping
Industry published in February 2014.

Headquartered in Marseille, France, CMA CGM is the third-largest
container shipping company in the world measured in TEU. CMA CGM
generated revenues of $16.0 billion in 2016.


TECHNICOLOR SA: Moody's Affirms Ba3 CFR, Alters Outlook to Stable
-----------------------------------------------------------------
Moody's Investors Service has affirmed Technicolor S.A.'s
Corporate Family rating at Ba3 and its Probability of Default
rating at Ba3-PD. Concurrently the agency has affirmed the Ba3
instrument ratings assigned to the three senior secured term
loans maturing in 2023. The outlook on all ratings has been
changed to stable from positive.

RATINGS RATIONALE

The revision of the outlook was prompted by Technicolor's revised
guidance for its full year 2017 adjusted EBITDA. The company has
revised its guidance to EUR420 million - EUR480 million from
previously EUR460 million - EUR520 million as a result of surging
DRAM and flash memory prices driven by market shortages due to
very strong demand for memories from smartphone producers.
According to Technicolor, DRAM memory prices have increased 45%
at the end of Q1 2017 on a sequential basis and by another 15% at
the end of Q2 also on a sequential basis, and are expected to
keep increasing, although at a slower pace for the rest of the
year. Flash memory prices were flat in Q1 but increased 5% in Q2
on a sequential basis. Flash memory prices are expected to
continue to increase in Q3 and Q4 2017.

Technicolor has started implementing mitigating actions on
different cost levers of the group and has entered into
discussions with its customers with a view to pass on part of
these higher memory costs. Technicolor, however, is constrained
by the typical 12 months fixed price clauses included in a
majority of its contracts and by the fact that its competitors
have not been aggressively seeking sales price increases from
customers to mitigate their margin squeeze. Consequently Moody's
believes it might prove challenging to recoup in full and
especially in a short time frame (less than 12 months) the lost
EBITDA margin from higher memory costs (negative EBITDA impact
estimated at EUR80 million for the full year by Technicolor).

As a result of the lower expected profitability of Technicolor in
2017 and possibly well into 2018 compared to Moody's expectations
underpinning Moody's positive outlook, Moody's believes that the
probability of Technicolor reaching Moody's upgrade triggers over
the next 6 to 12 months is remote hence the revision of the
outlook to stable. After the earnings revision, Moody's believes
that leverage as measured by Moody's adjusted debt/EBITDA will
increase to around 4.0x or above at year-end 2017 versus 3.4x at
year-end 2016. This is well above Moody's upgrade triggers of
debt/EBITDA below 3.0x.

Nonetheless, Technicolor's Ba3 rating remains underpinned by
Moody's expectations that leverage will drop below 4.0x over the
next 12 to 18 months and by the company's healthy and sustainable
free cash flow generation. In this regard Moody's gain comfort
from the confirmed free cash flow guidance of EUR150 million for
2017 (before the EUR82 million impact from the cash impact from
the cathode ray tube cartel settlement) and the group's solid
liquidity profile.

LIQUIDITY

The liquidity position of Technicolor is strong. The group's
liquidity is supported by a healthy cash position of EUR371
million and EUR369 million availability under revolving credit
facilities at December 31, 2016. Alongside the group's healthy
operating cash flow generation this should be more than
sufficient to cover the group's main cash uses over the next 12
to 18 months consisting of modest dividends, capex and debt
repayments from contractual cash sweeps.

WHAT COULD CHANGE THE RATING UP / DOWN

Technicolor's rating could be upgraded if the company is able to
maintain overall levels of profitability and free cash flow and
delivers further deleveraging. Leverage (as measured by Moodys
adjusted debt / EBITDA) below 3x would lead to positive rating
pressure.

Conversely, leverage above 4x, a deterioration in liquidity
strength or a loosening of the group's financial policy could put
negative pressure on the ratings.

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

Technicolor S.A. (Technicolor), headquartered in Issy-les-
Moulineaux, France, is a leading provider of solutions and
services for the Media & Entertainment industries, deploying and
monetizing next-generation video and audio technologies and
experiences. The group operates in three business segments:
Technology, Entertainment Services and Connected Home.
Technicolor generated revenues of around EUR4.9 billion in 2016.


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ARBOUR CLO IV: Fitch Confirms 'B-sf' Rating on Class F Notes
-----------------------------------------------------------
Fitch Ratings has confirmed Arbour CLO IV Designated Activity
Company's ratings as follows:

Class A-1 senior secured fixed-rate notes due 2030: 'AAAsf';
Outlook Stable
Class A-2 senior secured floating-rate notes due 2030: 'AAAsf';
Outlook Stable
Class B senior secured floating-rate notes due 2030: 'AAsf';
Outlook Stable
Class C senior secured deferrable floating-rate notes due 2030:
'Asf'; Outlook Stable
Class D senior secured deferrable floating-rate notes due 2030:
'BBBsf'; Outlook Stable
Class E senior secured deferrable floating-rate notes due 2030:
'BBsf'; Outlook Stable
Class F senior secured deferrable floating-rate notes due 2030:
'B-sf'; Outlook Stable

The collateral manager has amended the Fitch Test Matrix in line
with the documentation. In Fitch's view, the amendment to the
Fitch Test Matrix does not impact the notes' ratings.

Arbour CLO IV closed in November 2016 and so the maximum weighted
average life of the portfolio assumed at closing has fallen. As a
result Fitch's default assumptions, at each rating stress, have
fallen leading to lower weighted average recovery rates in the
Fitch Test Matrix. The agency has confirmed the ratings despite
recovery shortfalls within the speculative-grade tranches, as the
best pass ratings were sensitive to the back-loaded default
timing scenario. Fitch viewed the shortfalls as immaterial and
confirmed the ratings as the notes passed at the current ratings
in all other scenarios. The investment-grade notes passed the
cashflow model analysis without shortfalls in every scenario
tested by the agency.

Fitch has confirmed the ratings based on the strong credit
profile of the pool compared with similar European CLOs. The
portfolio has performed well since closing with zero defaults
during the period. The weighted average rating factor of 30.3 and
weighted average recovery rate of 70.9 are above market
standards.


OAK HILL III: Fitch Assigns 'B-(EXP)sf' Rating to Cl. F-R Notes
---------------------------------------------------------------
Fitch Ratings has assigned Oak Hill European Credit Partners III
Designated Activity Company refinancing notes expected ratings,
as follows:

Class X: 'AAA(EXP)sf'; Outlook Stable
Class A-1R: 'AAA(EXP)sf'; Outlook Stable
Class A-2R: 'AAA(EXP)sf'; Outlook Stable
Class B-1R: 'AA(EXP)sf'; Outlook Stable
Class B-2R: 'AA(EXP)sf'; Outlook Stable
Class B-3R: 'AA(EXP)sf'; Outlook Stable
Class C-R: 'A(EXP)sf'; Outlook Stable
Class D-R: 'BBB(EXP)sf'; Outlook Stable
Class E-R: 'BB(EXP)sf'; Outlook Stable
Class F-R: 'B-(EXP)sf'; Outlook Stable

Oak Hill European Credit Partners III Designated Activity Company
is a cash flow collateralised loan obligation (CLO) securitising
a portfolio of mainly European leveraged loans and bonds. Net
proceeds from the issue of the notes will be used to refinance
the current outstanding notes. The portfolio is managed by Oak
Hill Advisors (Europe), LLP.

The assignment of final ratings is contingent on the receipt of
final documents conforming to information already reviewed.

KEY RATING DRIVERS

'B'/'RR3' Average Credit Quality: The average credit quality of
the current portfolio is in the 'B' category, as based on Fitch
ratings and credit opinions on the obligors currently in the
pool. The Fitch weighted average rating factor of the current
portfolio is 32.7, below the maximum covenant for assigning the
final ratings of 35. The Fitch weighted average recovery rate of
the current portfolio is 68.45, which is in line with an average
'RR3' recovery rating. This is above the minimum covenant of 67.

No Top 10 Obligor Limit: The transaction does not include a limit
to top 10 obligor concentration. However it does include limits
to the largest industry exposure (17.5%) and top 3 largest
industry exposure (40%), which is in line with the market
standard.

Partial Interest Rate Hedge: Between 0% and 12.5% of the
portfolio can be invested in fixed-rate assets, while fixed-rate
liabilities account for 7.9% of target par at closing. Two years
after closing, the class A-2R notes will start paying a floating
rate of interest, reducing the share of fixed-rate liabilities to
4% of target par. The transaction is thus partially hedged
against rising interest rates.

Unhedged Non-Euro Assets Exposure: The transaction is allowed to
invest up to 2.5% of the portfolio in unhedged non-euro-
denominated assets, subject to principal haircuts. The manager
can only invest in unhedged assets if, after the applicable
haircuts, the aggregate balance of the assets is above the
reinvestments target par balance. The manager is also allowed to
invest up to 30% of the portfolio in non-euro-denominated assets
but only if hedged with perfect asset swaps.

TRANSACTION SUMMARY

The issuer has amended the capital structure and introduced the
new class X notes, ranking pari passu and pro-rata to the class
A-R notes. Principal on these notes is scheduled to amortise in
equal instalments during the first four payment dates. Class X
notional is excluded from the over-collateralisation tests
calculation, but a breach of these tests will divert interest and
principal proceeds to the repayment of the class X notes.

The transaction features a four-year reinvestment period, which
is scheduled to end in July 2021. The legal final maturity is
July 2030.

RATING SENSITIVITIES

A 25% increase in the obligor default probability could lead to a
downgrade of up to two notches for the rated notes. A 25%
reduction in expected recovery rates could lead to a downgrade of
up to two notches for the rated notes.


TWIN BRIDGES 2017-1: Fitch Rates Class X2 Notes 'B(EXP)sf'
----------------------------------------------------------
Fitch Ratings has assigned Twin Bridges 2017-1 Plc notes expected
ratings as follows:

Class A: 'AAA(EXP)sf'; Outlook Stable
Class B: 'AA(EXP)sf'; Outlook Stable
Class C: 'A(EXP)sf'; Outlook Stable
Class D: 'A-(EXP)sf'; Outlook Stable
Class Z1: Not rated
Class Z2: Not rated
Class X1: 'BB(EXP)sf'; Outlook Stable
Class X2: 'B(EXP)sf'; Outlook Stable

The transaction is the first securitisation from the Twin Bridges
shelf programme. This series is secured by residential mortgages
originated and serviced by Paratus AMC Limited (Paratus), an
experienced mortgage servicer that started originating buy-to-let
(BTL) mortgages in 2015. The loans are exclusively BTL and
secured against properties located in England and Wales.

The assignment of final ratings is contingent on the receipt of
final documents conforming to information already received.

KEY RATING DRIVERS

Prime Assets; Limited History
The loans within the pool all have characteristics in line with
Fitch's expectations for a prime BTL mortgage pool. This includes
limited previous adverse credit behaviour, full income
verification with formal checks, full property valuation and a
clear lending policy that has stringent controls and quality
assurance checking.

Fitch considers that while there is limited history of
origination and subsequent performance data, this is sufficiently
mitigated through available proxy data, an experienced management
team and adjustments made to the foreclosure frequency in its
analysis.

Prefunded Portfolio
The transaction includes a prefunding mechanism for which
proceeds from the sale of the notes will be used to purchase a
portfolio of additional mortgage loans to be originated between
June and July 2017 (prefunded portfolio), in addition to the
static portfolio. In order to model a prefunded portfolio, Fitch
selected a sample of loans from an additional pool containing
further loans identified for sale.

Unrated Originator and Seller
Paratus is expected to have sufficient resources available to
repurchase any mortgages in the event of a breach of the
representations and warranties (RW). In addition to this, there
are a number of mitigating factors that make the likelihood of an
RW breach sufficiently remote.

Excess Spread Notes
Available excess spread will be used to pay pro-rata interest and
sequential principal on the class X1 and X2 notes, up to the step
up date. Interest and principal on these notes is paid junior to
the subordinated swap termination payments. Fitch analysed the
available excess spread in combination with the likelihood that
termination payments will be triggered and concluded that the
notes can achieve a maximum rating of 'BBsf'.

RATING SENSITIVITIES

Material increases in the frequency of defaults and loss severity
on defaulted receivables producing losses greater than Fitch's
base case expectations may result in negative rating actions on
the notes. Fitch's analysis revealed that a 30% increase in the
weighted average foreclosure frequency, along with a 30% decrease
in the weighted average recovery rate, would imply following
downgrades of the class A notes to 'AAsf', class B notes to
'Asf', class C notes to 'BBBsf' and class D notes to 'BBB-sf'.

More detailed model implied ratings sensitivity can be found in
the presale report, which is available at www.fitchratings.com


TWIN BRIDGES 2017-1: Moody's Assigns (P)B3 Rating to Cl. X2 Notes
-----------------------------------------------------------------
Moody's Investors Service has assigned provisional long-term
credit ratings to the following classes of notes to be issued by
Twin Bridges 2017-1 Plc:

-- Class A Mortgage Backed Floating Rate Notes due September
2044, Assigned (P)Aaa (sf)

-- Class B Mortgage Backed Floating Rate Notes due September
2044, Assigned (P)Aa1 (sf)

-- Class C Mortgage Backed Floating Rate Notes due September
2044, Assigned (P)A1 (sf)

-- Class D Mortgage Backed Floating Rate Notes due September
2044, Assigned (P)Baa1 (sf)

-- Class X1 Mortgage Backed Fixed Rate Notes due September 2044,
Assigned (P)B1 (sf)

-- Class X2 Mortgage Backed Fixed Rate Notes due September 2044,
Assigned (P)B3 (sf)

Moody's has not assigned ratings to the Class Z1 fixed rate notes
due September 2044 and the Class Z2 fixed rate notes due
September 2044

This transaction represents the first securitisation transaction
rated by us that is backed by buy-to-let mortgage loans
originated by Paratus AMC Limited ("Paratus", not rated). The
portfolio consists of loans secured by mortgages on properties
located in the UK extended to [965] prime borrowers and the
current pool balance is approximately equal to GBP [243] million
as of May 2017.

RATINGS RATIONALE

The ratings take into account the credit quality of the
underlying mortgage loan pool, from which Moody's determined the
MILAN Credit Enhancement and the portfolio expected loss, as well
as the transaction structure and legal considerations. The
expected portfolio loss of [2.5]% and the MILAN required credit
enhancement of [14]% serve as input parameters for Moody's cash
flow model and tranching model.

The expected loss is [2.5]%, which is in line with other UK BTL
RMBS transactions owing to: (i) the weighted average (WA) LTV of
around [70.36]%; (ii) the performance of comparable originators,
(iii) the current macroeconomic environment in the UK, (iv) the
lack of historical information and (v) benchmarking with similar
UK buy-to-let transactions.

MILAN CE for this pool is [14.0]%, which is in line with other UK
BTL RMBS transactions, owing to: (i) the weighted average current
LTV for the pool of [70.36]%, which is in line with comparable
transactions, (ii) the percentage of self-employed borrowers in
the pool of [65.45]%, which is in line with the average of the
sector, (iii) limited number of borrowers with bad credit history
present in the pool (0.6%), (iv) the lack of historical
information and (v) benchmarking with similar UK buy-to-let
transactions.

The structure allows for additional loans to be added to the pool
between the closing date and on or before December 12, 2017.
Prefunding in the deal may equal up to [16.37]% of the principal
amount of the notes to be issued. The risk of pool deterioration
is mitigated by the limit of [74]% to the average LTV on the
additional mortgage loans, the limit of 0.5% to the loans with
CCJs and geographical concentration limits. Additionally, the
purchase by the issuer of such prefunded loans is conditional
upon Moody's providing a rating agency confirmation. Should the
prefunding not take place, any funds in the prefunding reserve
not used by December 12, 2017 will be released to the redemption
waterfall.

At closing the general reserve fund will be equal to [2.0]% of
the closing principal balance of mortgage loans in the pool
(including retained commitment), i.e. GBP[5.8] million. The
general reserve fund will be replenished after the PDL cure of
the Class D notes and can be used to pay senior fees and costs
and interest on the Class A - D notes and clear Class A - D PDL.
The liquidity reserve fund will be equal to the maximum of 1.5%
of the outstanding Class A and B notes and 1.1% of the
outstanding classes A, B, C, D and Z1 and will be funded at
closing. The liquidity reserve fund will be available to cover
senior fees and cost and Class A and B interest.

Operational Risk Analysis: Paratus is the servicer in the
transaction while Elavon Financial Services DAC, UK Branch will
be acting as a cash manager. In order to mitigate the operational
risk, Intertrust Management Limited (Not rated) will act as back-
up servicer facilitator. To ensure payment continuity over the
transaction's lifetime the transaction documents incorporate
estimation language whereby the cash manager can use the three
most recent servicer reports to determine the cash allocation in
case no servicer report is available. The transaction also
benefits from the equivalent of [4.23] months liquidity.

Interest Rate Risk Analysis: [94.73%] of the loans in the pool
are fixed rate loans reverting to three months Libor with the
remaining proportion linked to three months Libor. To mitigate
the fixed floating mismatch there will be a fixed floating
schedule swap provided by Natixis (A2/P-1 & A1(cr)/P-1(cr)).

The provisional ratings address the expected loss posed to
investors by the legal final maturity of the Notes. Moody's
issues provisional ratings in advance of the final sale of
securities, but these ratings represent only Moody's preliminary
credit opinions. Upon a conclusive review of the transaction and
associated documentation, Moody's will endeavour to assign
definitive ratings to the Notes. A definitive rating may differ
from a provisional rating. Other non-credit risks have not been
addressed, but may have a significant effect on yield to
investors.

Stress Scenarios:

Moody's Parameter Sensitivities: If the portfolio expected loss
was increased from [2.5]% to [3.75]% of current balance, and the
MILAN CE was increased from [14]% to [16.8]%, the model output
indicates that the class A notes would still achieve Aaa(sf)
assuming that all other factors remained equal. Moody's Parameter
Sensitivities quantify the potential rating impact on a
structured finance security from changing certain input
parameters used in the initial rating. The analysis assumes that
the deal has not aged and is not intended to measure how the
rating of the security might change over time, but instead what
the initial rating of the security might have been under
different key rating inputs.

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

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

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

Significantly different loss assumptions compared with Moody's
expectations at close due to either a change in economic
conditions from Moody's central scenario forecast or
idiosyncratic performance factors would lead to rating actions.
For instance, should economic conditions be worse than forecast,
the higher defaults and loss severities resulting from a greater
unemployment, worsening household affordability and a weaker
housing market could result in a downgrade of the ratings.
Deleveraging of the capital structure or conversely a
deterioration in the notes available credit enhancement could
result in an upgrade or a downgrade of the rating, respectively.

The provisional ratings address the expected loss posed to
investors by the legal final maturity of the Notes. In Moody's
opinion, the structure allows for timely payment of interest and
ultimate payment of principal with respect to the Class A, Class
B, Class C and Class D Notes by the legal final maturity. In
Moody's opinion, the structure allows for ultimate payment of
interest and principal with respect to the Class X1 and Class X2
Notes by the legal final maturity. Moody's ratings only address
the credit risk associated with the transaction. Other non-credit
risks have not been addressed, but may have a significant effect
on yield to investors.

Please note that on March 22, 2017, Moody's released a Request
for Comment, in which it has requested market feedback on
potential revisions to its Approach to Assessing Counterparty
Risks in Structured Finance. If the revised Methodology is
implemented as proposed, the credit ratings of the notes issued
by Twin Bridges 2017-1 Plc are not expected to be affected.


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


COOPERATIVA MURATORI: Moody's Rates New EUR250MM Senior Notes B2
-----------------------------------------------------------------
Moody's Investors Service has assigned a B2 rating with a loss
given default (LGD) assessment of LGD4 to Cooperativa Muratori &
Cementisti C.M.C. di Ravenna's new issued EUR250 million senior
unsecured notes maturing 2023. All other ratings on C.M.C.,
including the B2 corporate family rating (CFR) and the stable
outlook, remain unchanged.

RATINGS RATIONALE

RATIONALE FOR THE INSTRUMENT RATING

The new EUR250 million senior unsecured notes rank pari passu
with the existing EUR300 million notes due 2021 and the EUR165
million senior unsecured revolving credit facility (RCF) due 2019
which are both issued by the same entity. The instrument rating
of the new notes is in line with C.M.C.'s B2 corporate family
rating (CFR) and the probability of default rating (PDR) at B2-PD
reflects an average family recovery rate of 50%.

The proceeds from the new notes will be used to refinance a
material portion of the group's short term debt. C.M.C.'s B2 CFR
remains unchanged as the transaction will not result in any gross
debt reduction. C.M.C. will use the proceeds to refinance the
existing drawn portion of around EUR80 million under its RCF and
other short term financial debt of around EUR165 million, while
the remaining portion of EUR5 million are transaction costs. As a
result of the refinancing, C.M.C.'s liquidity profile will
improve to adequate from previously weak levels and with this,
Moody's no longer consider the company's ratings to be weakly
positioned at B2.

RATING OUTLOOK

The stable outlook reflects Moody's expectations that C.M.C.'s
credit metrics will remain relatively stable in 2017 and 2018,
with moderate growth in revenues, sustaining profit margins and
positive free cash flow generation but only very modest reduction
in debt. Moody's projects (Moody's adjusted) debt/EBITDA between
4.2-4.8x, EBITA/Interest of around 1.3-1.6x and positive free
flow over the next 12-18 months. The stable outlook also reflects
the improved liquidity situation and the expectation to maintain
a buffer under the covenant of the RCF and the remaining loans in
the coming 12-18 months.

WHAT COULD CHANGE THE RATING UP/ DOWN

C.M.C.'s ratings could be upgraded if its debt metrics improved
beyond expectations, as evidenced by leverage (Moody's adjusted
debt/EBITDA) sustained around 4.0x and an interest cover
(EBITA/Interest expense) sustained above 2.0x. An improved
liquidity buffer including a more substantial headroom under the
covenants of the RCF and other loans would also be expected for
an upgrade.

C.M.C.'s ratings could be downgraded if its debt metrics as
evidenced by leverage (Moody's adjusted debt/EBITDA) do not
improve to below 5.0x, or if interest coverage (EBITA/Interest
expense) failed to improve towards 1.5x, or if free cash flow
remained negative or if the company's liquidity cushion
deteriorated with decreasing headroom under financial covenants.
Negative rating pressure could also develop if the company's
order backlog deteriorated or if its project concentration
increased again.

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was Construction
Industry published in March 2017.

C.M.C., headquartered in Ravenna, Italy, is a cooperative
construction company with consolidated revenues of approximately
EUR1.2 billion in 2016. Projects include highways, railways,
water dams, tunnels, subways, ports, commercial as well as mining
and industrial facilities. C.M.C. is the fourth largest
construction company in Italy by revenue and has long developed
an international presence. Established in 1901, C.M.C. is a
mutually-owned entity with around 470 current members.


MONTE DEI PASCHI: EU Commission Approves Restructuring Plan
-----------------------------------------------------------
Rachel Sanderson at The Financial Times reports that
Banca Monte dei Paschi di Siena has confirmed the European
Commission has given formal approval for its five-year
restructuring plan, a move paving the way for the Italian state
to take over the lender.

The backing by the EU starts a precautionary recapitalization of
up to EUR8.8 billion, removing a significant weight from the
Italian financial system, the FT says.

Pier Carlo Padoan, Italy's finance minister, said this week, at
the end of the restructuring the Italian state would own 70% of
the bank, the FT relates.

According to the FT, Monte Paschi chief executive Marco Morelli
said in a presentation to investors on July 5 that the plan would
involve the closure of 600 branches bringing the total to about
1,400 branches and 5,500 job cuts, taking the bank's headcount to
about 20,000 by 2021.

It also includes the disposal of EUR28.6 billion of bad loans
priced at about 21% of their gross value to government sponsored,
privately funded back-up fund Atlante, the FT states.

They said the overall cost for taxpayers is likely to be limited
to about 1% to 2% of gross domestic product, relatively lower
than other state bailouts of banks in Europe, but it will push
Italian debt up from 132.5% of GDP, the FT notes.

The commission allowed Italy to inject EUR5.4 billion into Monte
Paschi after shareholders and junior creditors contributed a
EUR4.3 billion rescue via burden sharing as required under EU
rules, according to the FT.  Mr. Morelli, as cited by the FT,
said in total Monte Paschi will receive EUR8.1 billion of fresh
equity and may need to spend as much as EUR1.5 billion
reimbursing investors for mis-sold bonds.


===================
K A Z A K H S T A N
===================


DAMU ENTREPRENEURSHIP: S&P Cuts Issuer Credit Ratings to 'BB+/B'
----------------------------------------------------------------
On June 30, 2017, S&P Global Ratings lowered its long- and short-
term foreign and local currency issuer credit ratings on
Kazakhstan's DAMU Entrepreneurship Development Fund (DAMU) to
'BB+/B' from 'BBB-/A-3'. At the same time, S&P lowered the
Kazakhstan national scale rating to 'kzAA-' from 'kzAA'. The
outlook is negative.

S&P said, "The downgrade primarily reflects our view of the
gradual decline in the Kazakhstani government's willingness to
provide resources for timely debt service to the government-
related entity (GRE) sector in case of need. This isevidenced by
the authorities' comparatively limited involvement in ensuring a
timely payment on the obligations of several GREs in Kazakhstan
over the past 18 months.

"Nevertheless, we still believe that the Baiterek group remains an
essential government tool, and the likelihood of the group
receiving extraordinary support from the government remains
almost certain. DAMU remains a core institution within the
Baiterek group. Correspondingly, the ratings on DAMU incorporate
several notches of support, being higher than what its intrinsic,
stand-alone creditworthiness would warrant. We assess at 'b'
DAMU's creditworthiness on an autonomous basis, that is, without
factoring in the potential for extraordinary government support.

"Under our approach, by extraordinary support we typically mean
support to ensure the full and timely servicing of an
organization's debt in a stress scenario. Government transfers
that sustain or expand the activities of an institution, such as
government programs aimed at development of specific projects or
supporting certain economic sectors, form part of our assessment
of ongoing support. The latter is incorporated into our analysis
of stand-alone creditworthiness.

"Over the past 18 months, there have been several instances
whereby timely extraordinary government support was weaker than
we would have expected. The cases involved two 100%-government
owned GREs: the railway company Kazakhstan Temir Zholy (KTZ) and
the energy company Samruk-Energy, both of which are key
subsidiaries of the Samruk-Kazyna holding company.

"We have observed that in the case of KTZ, the administrative
procedures for receiving extraordinary support were complex and
time consuming. Last year KTZ still did not have financing
secured for its $350 million notes three weeks before the
maturity on May 11, 2016. Later, the government did not intervene
in a timely manner to prevent late payment of more than five
business days by Vostokmashzavod, a relatively small subsidiary
of KTZ, on its payments to Halyk Bank on its loan of $31.9
million, which is partially guaranteed by KTZ. The event came
close to triggering the cross-default clauses on KTZ's bonds. We
subsequently lowered our ratings on KTZ in October 2016
("Research Update: Railway Operator Kazakhstan Temir Zholy
Downgraded To 'BB-' On Weaker Assessment Of Government Support;
Outlook Negative," Oct. 19, 2016).

Currently, Samruk-Energy, another portfolio company of Samruk-
Kazyna, is facing the upcoming maturity of $500 million in
Eurobonds in December 2017. We understand that within about half
a year before the repayment, the available cash and equivalents
and committed lines covered only about one-half of the annual
liquidity needed for 2017. We have therefore lowered our ratings
on Samruk-Energy by a cumulative two notches over the last six
months and they currently remain on CreditWatch negative.

"In our opinion, these precedents indicate declining willingness
of the government to provide extraordinary support to the GRE
sector. Against this background, we also note that, in general,
the government provides no explicitguarantees on the liabilities
of the GRE sector, although we understand that DAMU has sovereign
guarantees on its loans from the Asian Development Bank, which
accounted for close to 50% of its borrowings as of end-2016.

"Although we continue to assess the likelihood of extraordinary
government support to the consolidated Baiterek group as almost
certain, we no longer equalize the group credit profile (GCP)--
which reflects the creditworthiness of the consolidated
operations group, taking into account extraordinary government
support -- with the 'BBB-' sovereign credit ratings of
Kazakhstan. Our assessment of the GCP is now one notch lower, at
'bb+', which balances the aforementioned negative trends against
the still sizable risks for the government emanating from not
bailing out the entities within Baiterek Group if they were under
stress.

"We view DAMU as playing a core role within the Baiterek group. It
accounted for about 10% of the group's consolidated assets as of
end-2016. DAMU's general mandate to contribute to the development
of Kazakhstan's entrepreneurship and the SME sector closely
aligns with the overall Baiterek group strategy. We also consider
it highly unlikely that DAMU would be sold. As we now assess the
Baiterek's GCP at 'bb+', and given DAMU's core status within the
Baiterek group, our ratings on DAMU are four notches higher than
its 'b' stand-alone credit profile (SACP)."

S&P also believes there is an extremely high likelihood that the
government would provide timely extraordinary support to DAMU if
needed, based on:

-- DAMU's integral link with the government of Kazakhstan, which
    fully owns DAMU through National Management Holding Baiterek.
    DAMU was established in1997 by presidential decree. The
    status of DAMU is reflected in the law "On Private
    Entrepreneurship," which refers to the fund as an institution
    contributing to entrepreneurship development on behalf of the
    government. S&P does not expect DAMU to be privatized in the
    foreseeable future.

-- DAMU's very important role for the government as the
    institution supporting the SME sector in Kazakhstan. The
    government has set out the expansion of the sector as a
    priority for the development and diversification of the
    Kazakh economy. DAMU contributes to implementing several
    government development programs including the SME support
    program Business Roadmap 2020, the infrastructure program
    Nurly Zhol, as well as two new programs adopted in the
    beginning of 2017 focused on development of productive
    employment and entrepreneurship and housing.

DAMU supports Kazakhstan's SME sector through several
instruments. These include extending guarantees and subsidizing
interest payments on bank loans as well as financing
entrepreneurs at favorable interest rates through commercial
banks. Although DAMU used to lend directly to the sector, it no
longer does. It now extends funding via commercial banks by
placing long-term deposits. The fund is currently also involved
in several entrepreneur education programs, although S&P
understands that these will be gradually phased out.

S&P said, "We expect DAMU will continue supporting the SME sector
and will implement various government programs. We understand,
however, that the funding will predominantly come from
nongovernment sources, including the Asian Development Bank and
EIB, and through potential tenge bond issuance from 2019. DAMU
has also started implementing some programs by deploying its own
resources, such as the guarantee provision program DAMU-Optima.
The institution does not receive compensation from the government
for extending these guarantees.

"We note that DAMU's capital has not been increased since 2012,
when the institution was still owned by Samruk-Kazyna. At
present, there are no equity injections planned over 2017-2019
but capital could be increased in 2020-2021."

DAMU's SACP remains 'b', reflecting the anchor of 'bb-' for a
financial institution operating in Kazakhstan, as well as its
moderate business position, strong capital and earnings, moderate
risk position, below average funding, and adequate liquidity.

S&P said, "Our assessment of DAMU's business position reflects its
medium size, its well-established business model, and its
concentration in financing the inherently more risky SME sector
in Kazakhstan. With assets of KZT347 billion ($1.0 billion) and a
network of 16 branches, DAMU compares with mid-sized commercial
banks in Kazakhstan. DAMU was created in 1997 as a government-
owned institution with a public policy role to support the
development of SMEs and microfinance organizations in the
country.

"Our assessment of DAMU's capital and earnings reflects its
conservative capitalization policy and good capacity to absorb
potential losses. We forecast that our risk-adjusted capital
(RAC) ratio for DAMU will decline to about 14.5%-15.0% at year-
end 2018. Contrary to our expectation a year ago that the
negative trend in DAMU's RAC ratio would continue, it increased
to 18.4% at year-end 2016 from 17.5% at year-end 2015. This
reflected much lower asset growth than had been planned. DAMU
does not have to comply with minimum regulatory capital adequacy
ratios. Its debt-to-equity was about 2.5x at year-end 2016.
DAMU's earnings are modest due to its public policy role. We
expect net income in 2017-2018 to translate into ROA of about
0.7%-1.2% and ROE of about 2.5%-5.5%, lower than the average of
the past five years.

"Our assessment of DAMU's risk position reflects its concentrated
exposure to Kazakhstan's commercial banks, NPLs to Kazinvestbank
(KIB) and Delta Bank, itsgrowing exposure to SMEs through
provision of guarantees, as well as sound risk management
practices."

DAMU lends to about 20 large and mid-sized commercial banks in
Kazakhstan as well as leasing companies. Therefore its main
credit risk reflects the creditworthiness of the Kazakh banking
sector because the banks bear the risk of ultimate SME borrowers.
Nonperforming loans (NPLs; loans over 90 days overdue) for loans
to banks were 14.6% as of March 31, 2017, and related mainly to
KIB and Delta Bank. DAMU created KZT14.2 billion provisions for
loans to KIB and Delta as of March 31, 2017, translating to about
46% coverageof NPLs. As of 2007, DAMU stopped lending to SMEs
directly. Remaining direct gross loans to SMEs account for only
KZT2.5 billion ($7.5 million), and are mostly classified as NPLs
and fully provisioned. DAMU bears SME risk through the increasing
provision of guarantees. At year-end 2016, guarantees for SMEs
increased to KZT23 billion from KZT10 billion at year-end 2014.
In our view, DAMU's underwriting of guarantees is adequate; it
analyzes each SME for which it provides a guarantee.

S&P said, "In our opinion, DAMU's funding is below average,
reflecting concentrated wholesale funding. Government funding
accounted for 50% of total funding as year-end 2016, while the
rest was provided by the Asian Development Bank and guaranteed by
the government of Kazakhstan. In line with other Baiterek
subsidiaries, DAMU's aim is to decrease the share of government-
related funding in the next few years and increase the share of
market funding. For example, DAMU considers issuing bonds from
2019.

"We assess DAMU's liquidity as adequate, supported by long-term
maturity of its liability base. Broad liquid assets (cash and
cash equivalents, placements with banks and liquid securities)
accounted for 32% of total assets as of year-end 2016. They
covered short-term wholesale funding by about 5.6x at the same
date due to limited short-term wholesale funding.

"The negative outlook on DAMU mirrors our outlook on the sovereign
ratings on Kazakhstan. We would likely revise the outlook or
change the ratings on DAMU if we took similar rating actions on
the sovereign.

"We could lower the ratings on DAMU if we saw signs of waning
government support to the group or, more broadly, to other
government-related entities over the next 12 months. We could
also lower the ratings if we perceived the role of DAMU for the
government as reducing in contrast to the role of the overall
group."

RATINGS LIST

                                 Rating
                                 To                 From
  DAMU Entrepreneurship Development Fund JSC
   Issuer Credit Rating
    Foreign and Local Currency   BB+/Negative/B     BBB-
                                                    /Negative/A-3
  Kazakhstan National Scale      kzAA-/--/--        kzAA/--/--


DEVELOPMENT BANK: S&P Lowers Issuer Credit Ratings to 'BB+/B'
-------------------------------------------------------------
S&P Global Ratings lowered its long- and short-term foreign
and local currency issuer credit ratings on Development Bank of
Kazakhstan (DBK) to 'BB+/B' from 'BBB-/A-3'. At the same time,
S&P lowered the Kazakhstan national scale rating to 'kzAA-' from
'kzAA'. The outlook is negative.

S&P said, "The downgrade primarily reflects our view of the
gradual decline in the Kazakhstani government's willingness to
provide resources for timely debt service to the government-
related entity (GRE) sector in case of need. This is evidenced by
the authorities' comparatively limited involvement in ensuring a
timely payment on the obligations of several GREs in Kazakhstan
over the past 18 months.

"Nevertheless, we still believe that the Baiterek group remains an
essential government tool, and the likelihood of the group
receiving extraordinary support from the government remains
almost certain. DBK remains a core institution within the
Baiterek group. Correspondingly, the ratings on DBK incorporate
several notches of support, being higher than what its intrinsic,
stand-alone creditworthiness would warrant. We assess at 'b'
DBK's creditworthiness on an autonomous basis, that is, without
factoring in the potential for extraordinary government support.

"Under our approach, by extraordinary support we typically mean
support to ensure the full and timely servicing of an
organization's debt in a stress scenario. Government transfers
that sustain or expand the activities of an institution, such as
government programs aimed at development of specific projects or
supporting certain economic sectors, form part of our assessment
of ongoing support. The latter is incorporated into our analysis
of stand-alone creditworthiness.

"Over the past 18 months, there have been several instances
whereby timely extraordinary government support was weaker than
we would have expected. The cases involved two 100% government-
owned GREs: the railway company Kazakhstan Temir Zholy (KTZ) and
the energy company Samruk-Energy, both of which are key
subsidiaries of the Samruk-Kazyna holding company.

"We have observed that in the case of KTZ, the administrative
procedures for receiving extraordinary support were complex and
time consuming. Last year KTZ still did not have financing
secured for its $350 million notes three weeks before the
maturity on May 11, 2016. Later, the government did not intervene
in a timely manner to prevent late payment of more than five
business days by Vostokmashzavod, a relatively small subsidiary
of KTZ, on its payments to Halyk Bank on its loan of $31.9
million, which is partially guaranteed by KTZ. The event came
close to triggering the cross-default clauses on KTZ's bonds. We
subsequently lowered our ratings on KTZ in October 2016."

Currently, Samruk-Energy, another portfolio company of Samruk-
Kazyna, is facing the upcoming maturity of $500 million in
Eurobonds in December 2017. S&P said, "We understand that within
about half a year before the repayment, the available cash and
equivalents and committed lines covered only about one-half of
the annual liquidity needed for 2017. We have therefore lowered
our ratings on Samruk-Energy by a cumulative two notches over the
last six months and they currently remain on CreditWatch
negative.

"In our opinion, these precedents indicate declining willingness
of the government to provide extraordinary support to the GRE
sector. Against this background, we also note that, in general,
the government provides no explicit guarantees on the liabilities
of the GRE sector.

"Although we continue to assess the likelihood of extraordinary
government support to the consolidated Baiterek group as almost
certain, we no longer equalize the group credit profile (GCP) --
which reflects the creditworthiness of the consolidated
operations group, taking into account extraordinary government
support -- with the 'BBB-' sovereign credit ratings on
Kazakhstan. Our assessment of the GCP is now one notch lower, at
'bb+', which balances the aforementioned negative trends against
the still sizable risks for the government emanating from not
bailing out the entities within Baiterek Group if they were under
stress.

"We view DBK as playing a core role within the Baiterek group. It
accounted for close to 60% of the group's consolidated assets as
of end-2016. DBK's general mandate to contribute to the
development of Kazakhstan's economy through investments in
priority sectors closely aligns with the overall Baiterek group
strategy. We also consider it highly unlikely that DBK would be
sold. As we now assess the Baiterek group's credit profile at
'bb+' and, owing to DBK's core status within the Baiterek group,
our ratings on DBK are four notches higher than its 'b' stand-
alone credit profile (SACP).

"Our 'BB+' long-term ratings on DBK factor in the negative trends
in government support in Kazakhstan, but we still expect the
institution to benefit from a considerable degree of government
backing. Specifically, we assess the likelihood of extraordinary
government support as almost certain based on: "

-- DBK's integral link with the government of Kazakhstan, which
    fully owns and monitors DBK through National Management
    Holding Baiterek. DBK was established in 2001 by a
    Presidential Decree, and it has special public status as a
    national development institution under the Law On Development
    Bank of Kazakhstan. For instance, DBK is not required to have
    a banking license or to comply with prudential regulations
    applicable to commercial banks. The government has injected
    additional capital into DBK in the past via Baiterek Holding.
    For instance, the share capital was increased by
    Kazakhstanitenge (KZT) 40 billion in 2015 and by a further
    KZT20 billion in 2016.

-- DBK's critical role as the primary institution mandated to
    develop Kazakhstan's production infrastructure and the
    processing industry. It generally provides long-term funding
    to large and capital-intensive investment projects that have
    strategic significance for the government of Kazakhstan for
    economic or social reasons. DBK plays a key role in
    implementing several government programs including the five-
    year State Program of Industrial and Innovative Development
    (SPIID) 2015-2019 and the Nurly-Zhol State Program for
    Infrastructure Development.

In March 2017, Baiterek Holding amended its development strategy
through 2023. S&P said, "We understand that DBK aims to follow in
the third quarter of 2017. According to management, the amended
strategy will include an increasing focus on attracting
nongovernment funds, as well as a closer focus on financing the
non-commodity-related sectors of Kazakhstan's economy. We also
understand that the rules governing DBK's financials have been
amended, with the bank now allowed to achieve a higher maximum
leverage of 7 to 1 instead of 6 to 1 previously."

DBK's stand-alone credit profile (SACP) remains 'b', reflecting
the anchor of 'bb-' for a financial institution operating in
Kazakhstan, as well as its adequate business position, adequate
capital and earnings, moderate risk position, below average
funding, and adequate liquidity.

S&P said, "Our assessment of DBK's business position balances its
public-policy role as a specialized development institution
financing infrastructure and industrial projects in the private
and public sectors, against the government-directed nature of its
lending, which impedes its business stability. DBK is Baiterek's
largest subsidiary and accounted for 60% of Baiterek's
consolidated assets at year-end 2016. That said, DBK had assets
of KZT2.3 trillion ($7 billion) as of March 31, 2017, making it
somewhat smaller than the largest two commercial banks--
Kazkommertsbank JSC (KKB) and Halyk Savings Bank of Kazakhstan
(Halyk), both of which have assets of about KZT4.7 trillion, but
comparable in size to the third largest bank, Tsesnabank.

"Our assessment of DBK's capital and earnings reflects our view of
the bank's adequate capitalization and moderate loan growth
plans. We forecast that our risk-adjusted capital (RAC) ratio
will reduce to about 9.5%-10.0% by year-end 2018 from 10.3% as of
year-end 2016. During 2016, the bank received an unexpected KZT20
billion capital increase from the government, which was not
included in our original forecast." DBK does not have to comply
with minimum regulatory capital requirements; however, its
regulatory Tier 1 and total capital adequacy ratios were 16.3%
and 19.7% as of March 31, 2017 with a leverage ratio of 5.2x.

As a state development bank, DBK's business strategy is not
primarily profit-driven but is, rather, policy-role focused.
Nevertheless, the bank seeks to ensure that earnings are
sufficient to cover its operating and borrowing costs. DBK's
income has been volatile and core profitability low over the past
six years. Its ROA was 0.27% in 2016 and 2015.

S&P's assessment of DBK's risk position mainly reflects weaker
loss experience than Kazakh commercial banks that have not been
restructured during the past financial crisis; a high share of
loans in foreign currencies; and high industry concentrations.
The loan portfolio is concentrated in the manufacturing and
carbon & petrochemicals sectors. The share of top-20 loans
reduced to about 2.6x of total adjusted capital (TAC) as of March
31, 2017 from 3.4x a year earlier, which compares well with large
Kazakh banks but is high when compared globally.

DBK's loss track record compares poorly with the nonrestructured
commercial Kazakh banks due to its mandate of government-directed
lending, which has invariably been advanced to weaker quality
borrowers. Nonperforming loans (NPLs), as a percentage of total
loans, peaked at 41% at year-end 2012. In 2013-2015, however, DBK
transferred all its NPLs to Investment Fund of Kazakhstan, which
is a sister company within the Baiterek group. New NPLs have
been significantly lower in 2016, at about 1% of loans and mainly
relate to a few small leasing projects and loans to
Kazinvestbank, which is a small Kazakh bank that defaulted in
late December 2016. On the other hand, restructured loans are
fairly high, accounting for about 19.5% of total loans as of
March 31, 2017, and reflect mainly loans in foreign currency that
were converted into tenge. We expect NPLs to increase over the
next two years when DBK's loans season and the grace period on
some loans ends. The maturity profile of the loan portfolio is
fairly long term with 76% of total loans having a remaining
maturity of more than five years.

S&P said, "In our opinion, DBK's funding is below average
reflecting a high refinancing risk due to its concentrated
wholesale funding profile. This is despite our stable funding
ratio being consistently above 100% over the past five years,
albeit on a clear declining trend." Since 2017, DBK's aim is to
increase the share of nongovernment funding by replacing maturing
government funding with market sources.

Of loans from financial institutions, about 90% was accounted for
by Export-Import Bank of China and China Development Bank, to
which DBK repaid ahead of term $200 million in January 2017. Debt
securities are comprised of Eurobonds (67% of total as year-end
2016), tenge bonds (31%), and Islamic bonds (2%). In 2016 DBK
issued KZT212.5 billion of local bonds.

S&P said, "We assess liquidity as adequate, reflecting adequate
holdings of liquid assets and moderate wholesale debt repayments.
Cash, cash equivalents, and placements with banks accounted for
12% of total assets as of March 31, 2017. Investments in
available-for-sale securities accounted for an additional 12%.

"The negative outlook on DBK mirrors our outlook on the sovereign
ratings on Kazakhstan. We would likely revise the outlook or
change the ratings on DBK if we took similar rating actions on
Kazakhstan.

"We could lower the ratings on DBK if we saw signs of waning
government support to the group or, more broadly, to other
government-related entities over the next 12 months. We could
also lower the ratings if we perceived the role of  DBK for the
government as reducing in contrast to the role of the overall
group."


RATINGS LIST

                                   Rating
                                   To                From
Development Bank of Kazakhstan
  Issuer Credit Rating
   Foreign and Local Currency      BB+/Negative/B    BBB-
                                                     Negative/A-3
   Kazakhstan National Scale       kzAA-/--/--       kzAA/--/--
  Senior Unsecured
   Foreign and Local Currency      BB+               BBB-
   Foreign Currency                BB+               BBB-


KAZAGRO NATIONAL: S&P Cuts Long-Term Issuer Credit Rating to BB-
----------------------------------------------------------------
S&P Global Ratings lowered its long-term foreign and local
currency issuer credit ratings on Kazakhstan's KazAgro National
Management Holding (KazAgro) to 'BB-' from 'BB+'. The outlook is
negative. S&P affirmed the short-term foreign and local currency
issuer credit ratings at 'B'.

S&P said, "At the same time, we lowered the Kazakhstan national
scale rating to 'kzBBB+' from 'kzAA-'.

"The downgrade primarily reflects our view of the gradual decline
in the Kazakhstani government's willingness to provide resources
for timely debt service to the government-related entity (GRE)
sector in case of need. This is evidenced by the authorities'
comparatively limited involvement in ensuring a timely payment on
the obligations of several GREs in Kazakhstan over the past
18 months.

"Nevertheless, we still believe that the KazAgro group remains an
essential government tool, and the likelihood of the group
receiving extraordinary support from the government remains
almost certain. The ratings on KazAgro Holding incorporate
several notches of support, being higher than what its intrinsic,
stand-alone creditworthiness would warrant. We now assess at 'b-'
the consolidated group's creditworthiness on an autonomous basis,
that is without factoring in the potential for extraordinary
government support.

"Under our approach, by extraordinary support we typically mean
support to ensure the full and timely servicing of an
organization's debt in a stress scenario. Government transfers
that sustain or expand the activities of an institution, such as
government programs aimed at development of specific projects or
supporting certain economic sectors, form part of our assessment
of ongoing support. The latter is incorporated into our analysis
of stand-alone creditworthiness."

Over the past 18 months, there have been several instances
whereby timely extraordinary government support was weaker than
we would have expected. The cases involved two 100%-government
owned GREs: the railway company Kazakhstan Temir Zholy (KTZ) and
the energy company Samruk-Energy, both of which are key
subsidiaries of the Samruk-Kazyna holding company.

S&P said, "We have observed that in the case of KTZ, the
administrative procedures for receiving extraordinary support
were complex and time consuming. Last year KTZ still did not have
financing secured for its $350 million notes three weeks before
the maturity on May 11, 2016."

Later, the government did not intervene in a timely manner to
prevent late payment of more than five business days by
Vostokmashzavod, a relatively small subsidiary of KTZ, on its
payments to Halyk Bank on its loan of $31.9 million, which is
partially guaranteed by KTZ. The event came close to triggering
the cross-default clauses on KTZ's bonds. S&P subsequently
lowered its ratings on KTZ in October 2016.

Currently, Samruk-Energy, another portfolio company of Samruk-
Kazyna, is facing the upcoming maturity of $500 million in
Eurobonds in December 2017. S&P said, "We understand that within
about half a year before the repayment, the available cash and
equivalents and committed lines cover only about one-half of the
annual liquidity needed for 2017. We have therefore lowered our
ratings on Samruk-Energy by a cumulative two notches over the
last six months and they currently remain on CreditWatch
negative.

"In our opinion, these precedents indicate declining willingness
of the government to provide extraordinary support to the GRE
sector. Against this background, we also note that, in general,
the government provides no explicit guarantees on the liabilities
of the GRE sector.

"Although we continue to assess the likelihood of extraordinary
government support to the consolidated KazAgro group as almost
certain, we no longer equalize the group credit profile (GCP),
which reflects the creditworthiness of the consolidated group,
taking into account extraordinary government support, with the
'BBB-' sovereign credit ratings on Kazakhstan. Our assessment of
the GCP is now one notch lower, at 'bb+', which balances the
aforementioned negative trends against the still sizable risks
for the government if it does not bail out the entities within
the KazAgro group if they are under stress."

The group and its parent company KazAgro Holding were established
in 2007 by presidential decree. The shares of seven 100%
government-owned development institutions operating in the
agricultural sector were transferred to the holding company
shortly after its creation. The subsidiaries broadly focus on
implementing several government programs by providing lending and
financial support to the socially important agricultural sector
(which employs close to half of the population of Kazakhstan).

Our 'bb+' assessment of the consolidated group's creditworthiness
is based on our view of the group's:

Integral link with the government. The state owns 100% of the
holding company, which in turn fully owns its subsidiaries. The
government has injected capital to the group on several occasions
in the past. For instance, the government made a Kazakhstani
tenge (KZT) 20 billion (approximately US$60 million) equity
injection into the holding company following the tenge
devaluation in February 2014. In 2015, the government also
decided to prolong the maturity of the loan granted to the
holding company from the National Oil Fund to 2041 from 2023. The
latter allowed the holding company to  recognize approximately
KZT60 billion as additionalequity. More recently, at the end of
2016, the holding company's capital was increased by about KZT77
billion, which will be primarily deployed to support the
agricultural sector via the subsidiary Kazakh Agrarian Credit
Corporation. We believe the government closely monitors the
activities of the holding company, given that the deputy prime
minister heads the holding company's board of directors. We also
note that the board of directors has recently been strengthened
with several government ministers now represented on it.

Critical public policy role as the government's primary vehicle
for providing financial support to, and developing, the
agricultural sector and rural areas. KazAgro's subsidiaries
support the agricultural sector through a number of instruments
including leasing, providing short- and long-term lending,
extending micro-financing, and others. The group participates in
implementing several government strategies, including the
new program for the development of the agricultural sector in
2017-2021, adopted in February 2017. According to management
estimates, the group's current share in total lending to the
agricultural sector is about 45%.

Our ratings on KazAgro Holding are two notches lower than the
GCP, reflecting the higher credit risks characteristic of a
nonoperating holding company compared with its operating
subsidiaries. These include the holding's reliance on
distributions from operating companies to meet its obligations,
as well as structural subordination of some holding company
obligations to those at the operating company level.

The holding company's role involves overseeing the implementation
of government programs, managing the subsidiaries, in particular
improving their financial performance, and removing any
duplication of functions. However, while we view this function as
important for the government -- as it improves the operational
efficiency of dealing with several development institutions -- we
do not view it as critical from a credit standing point of view.

"We have revised our assessment of KazAgro group's risk position
to moderate from adequate, and thereby have revised down its
unsupported GCP to 'b-' from 'b'. The unsupported GCP reflects
the creditworthiness of the consolidated group without taking
into account the potential for extraordinary government support.
The revision of the unsupported GCP reflects our view that
KazAgro's sustainably high balance sheet foreign currency
mismatch, amid the unpredictable operating environment in
Kazakhstan, exposes it to potentially high losses in case of an
unexpected sharp epreciation of the local currency (although it
is not our base case). In particular, KazAgro's short open
currency position amounts to around 60% of its total equity,
which compares poorly with peers. Our view of the KazAgro group's
moderate risk position also balances slightly better asset
quality than peers' (the KazAgro group's problem loans comprise
18% of total nonbank lending versus around 30% in the Kazakh
banking sector) and lower single-name concentrations than other
financial institutions in Kazakhstan (the top 20 borrowers
accounted for about 12% of loans to nonbank customers as of Dec.
31, 2016), against the structural risks inherent in the cyclical
agricultural sector.

"All other factors contributing to the unsupported GCP remained
unchanged, including the anchor of 'b' for finance companies
operating in Kazakhstan, as well as a one-notch entity-specific
anchor adjustment; the adequate business; capital, leverage, and
earnings positions; moderate funding; and adequate liquidity.

"We adjust our 'b' anchor for a financial company operating in
Kazakhstan up by one notch to reflect the ongoing benefits of the
KazAgro group's government funding and the group's dominant
position in its agricultural niches. The KazAgro group's function
and mission of supporting the agricultural sector is important in
Kazakhstan, as a large part of the population works in rural
agricultural areas. The volumes and capacity of Kazakhstan's
agricultural sector is high, while KazAgro group's borrowers are
currently of a relatively low interest for banks in Kazakhstan,
which often lack sufficient experience to work with small and
medium size agricultural producers.

"We assess the KazAgro group's business position as adequate. The
group is the key provider of financial services in Kazakhstan's
agricultural sector. Its market share in total lending to the
agricultural sector is about 50% as of year-end 2016, according
to management's estimates. Although the group lacks revenue and
business diversity, we positively view its operations in
different subsegments of the agricultural sector, which somewhat
lowers revenue concentration. At the same time, we note that
stability of operations might be negatively influenced by a huge
foreign currency mismatch on the balance sheet and the unstable
banking sector in Kazakhstan. In particular, we understand that
KazAgro has unprovisioned exposure to the failed Delta Bank (D/--
/D) amounting to KZT43.6 billion.

"We understand that in the long run, the KazAgro group plans to
focus more on lending to the agricultural sector via other
commercial financial institutions, primarily banks. Despite
potentially problematic exposure to Delta Bank, in general this
approach could help to improve the risk profile and therefore the
stability of KazAgro's operations, if the group lends to the
most creditworthy institutions rather than just to the general
agricultural sector."

Positively for the group's capital, leverage, and earnings, the
government decided to provide KZT76.7 billion additional paid-in
capital in 2016, which partly compensated KazAgro's high
devaluation losses that occurred in 2015. It also supported
improvement in the KazAgro group's leverage ratio to 2.4x as of
year-end 2016 from 2.9x a year ago. Our base-case expectations
imply this ratio would be in the 2.5x-3.5x range over the next 18
months, which is based on the following assumptions:

-- 15%-20% asset growth in 2017 and flat (0%-5%) annual growth
    in 2018;

-- KZT45 billion capital injection in 2017 (of which about KZT30
    billion is the value of grain to be injected as equity);

-- Annual credit losses of about 3% of average nonbank gross
    loans and leases;

-- Additional KZT43.6 billion provisions to be created to cover
    the Delta Bank exposure;

Given KazAgro's large short open currency position and expected
strengthening of local currency in our base case, we do not
expect losses from foreign currency revaluation, although we note
high sensitivity of profits to unforeseen weakening of the tenge;
and

Losses on average assets of about 0.5%-1.0% in 2017 and return on
average assets of about 0.5%-1.0% in 2018 (including 20% dividend
payout).

Although the group's stable funding ratio of 124% as of year-end
2016 is relatively high, our assessment of the KazAgro group's
funding is limited to moderate due to the high portion of
liabilities issued in hard currency, which is not adequately
matched with foreign currency assets. As of year-end 2016,
KZT531 billion of the group's liabilities were denominated in
foreign currency (around 60% of the total funding base).
Positively, we understand that KazAgro is working to minimize its
foreign currency gap via numerous mechanisms and the group won't
attract any additional net foreign currency funds in the
future. It is negotiating with several international financial
institutions regarding additional financing. The expected capital
injection in 2017 is also intended to help reduce the open
currency position as a percent of equity.

In our view, KazAgro group can manage its liquidity requirements
on an ongoing basis and in periods of stress in 2017-2018. Our
view is based on the liquidity coverage metric of 6.8x as of
year-end 2016, ongoing support from the government, and that
there are no significant debt repayments until 2019.

The negative outlook on KazAgro mirrors our outlook on the
sovereign ratings on Kazakhstan. We would likely revise the
outlook or change our ratings on KazAgro if we took similar
rating actions on Kazakhstan.

"We could lower the ratings on KazAgro Holding if we saw signs of
waning government support to the group or, more broadly, to other
GREs over the next 12 months. We could also lower the ratings if
we perceived the role of KazAgro Holding for the government as
reducing in contrast to the role of the overall group."

RATINGS LIST

                                 Rating
                                 To               From
KazAgro National Management Holding JSC
  Issuer Credit Rating
   Foreign and Local Currency    BB-/Negative/B   BB+/Negative/B
   Kazakhstan National Scale     kzBBB+/--/--     kzAA-/--/--
  Senior Unsecured
   Foreign Currency              BB-               BB+


KAZAKH AGRARIAN: S&P Lowers Issuer Credit Rating to 'BB'
--------------------------------------------------------
On June 30, 2017, S&P Global Ratings lowered its long-term
foreign and local currency issuer credit ratings on Kazakh
Agrarian Credit Corp. to 'BB' from 'BB+'. At the same time, we
lowered the Kazakhstan national scale rating to 'kzA' from 'kzAA-
'. S&P affirmed the short-term ratings at 'B'. The outlook is
negative.

S&P said, "The downgrade primarily reflects our view of the
gradual decline in the Kazakhstani government's willingness to
provide resources for timely debt service to the government-
related entity (GRE) sector in case of need. This is evidenced by
the authorities' comparatively limited involvement in ensuring a
timely payment on the obligations of several GREs in Kazakhstan
over the past 18 months.

"Nevertheless, we still believe that the KazAgro group remains an
essential government tool, and the likelihood of the group
receiving extraordinary support from the government remains
almost certain. KACC remains a strategically important
institution within the KazAgro group. Correspondingly, the
ratings on KACC incorporate several notches of support, being
higher than what its intrinsic, stand-alone creditworthiness
would warrant. We now assess at 'b' KACC's creditworthiness on an
autonomous basis, that is without factoring in the potential for
extraordinary government support.

"Under our approach, by extraordinary support we typically mean
support to ensure the full and timely servicing of an
organization's debt in a stress scenario. Government transfers
that sustain or expand the activities of an institution, such as
government programs aimed at development of specific projects or
supporting certain economic sectors, form part of our assessment
of ongoing support. The latter is incorporated into our analysis
of stand-alone creditworthiness."

Over the past 18 months, there have been several instances
whereby timely extraordinary government support was weaker than
we would have expected. The cases involved two 100%-government
owned GREs: the railway company Kazakhstan Temir Zholy (KTZ) and
the energy company Samruk-Energy, both of which are key
subsidiaries of the Samruk-Kazyna holding company.

S&P said, "We have observed that in the case of KTZ, the
administrative procedures for receiving extraordinary support
were complex and time consuming. Last year KTZ still did not have
financing secured for its $350 million notes three weeks before
the maturity on May 11, 2016. Later, the government did not
intervene in a timely manner to prevent late payment of more than
five business days by Vostokmashzavod, a relatively small
subsidiary of KTZ, on its payments to Halyk Bank on its loan of
$31.9 million, which is partially guaranteed by KTZ. The event
came close to triggering the cross-default clauses on KTZ's
bonds. We subsequently lowered our ratings on KTZ in October
2016."

Currently, Samruk-Energy, another portfolio company of Samruk-
Kazyna, is facing the upcoming maturity of $500 million in
Eurobonds in December 2017. S&P said, "We understand that within
about half a year before the repayment, the available cash and
equivalents and committed lines covered only about one-half of
the annual liquidity needed for 2017. We have therefore lowered
our ratings on Samruk-Energy by a cumulative two notches over the
last six months and they currently remain on CreditWatch
negative.

"In our opinion, these precedents indicate declining willingness
of the government to provide extraordinary support to the GRE
sector. Against this background, we also note that, in general,
the government provides no explicit guarantees on the liabilities
of the GRE sector.

"Although we continue to assess the likelihood of extraordinary
government support to the consolidated KazAgro group as almost
certain, we no longer equalize the group credit profile (GCP) --
which reflects the creditworthiness of the consolidated
operations group, taking into account extraordinary government
support -- with the 'BBB-' sovereign credit ratings on
Kazakhstan. Our assessment of the GCP is now one notch lower, at
'bb+', which balances the aforementioned negative trends against
the still sizable risks for the government emanating from not
bailing out the entities within KazAgro Group if they were under
stress.

"We view KACC as playing a strategically important role within the
KazAgro group. Our assessment balances the key role KACC
currently plays for the agricultural sector against the long-term
goal of increasing private sector involvement in the agricultural
sphere. As we now assess KazAgro group's GCP at 'bb+', and
reflecting KACC's strategically important status within the
KazAgro group, our ratings on KACC are three notches higher than
its 'b' stand-alone credit profile (SACP)."

KACC was established in 2001 by government decree. The
institution implements several government programs and aims to
develop Kazakhstan's agricultural sector by extending loans at
favorable rates. Development goals include, among others,
increasing the sector's productivity and improving its export
potential. Since 2007, KACC has operated as part of the KazAgro
group, which includes several other companies contributing to the
development of the sector. The corporation is fully owned by the
parent company of the group, KazAgro National Management Holding.
The holding company, in turn, is fully owned by the government.

S&P said, "In our view, KACC remains among the key institutions
within the KazAgro group. It is one of the largest in the group
(with assets amounting to about 20% of the group's consolidated
assets at end-2016) and its primary mandate of extending
government support to the agricultural sector and rural areas
remains important to the group's long-term strategy. As before,
KACC continues to participate in various government programs
aimed at developing Kazakhstan's agricultural sector. For
example, the institution will play a role in implementing the
government's new Agricultural Sector Development Program for
2017-2021, adopted in February 2017.

"We expect that in the coming years KACC's operations will remain
broadly similar to recent years, with an increasing focus on
financing the agricultural sector via financial institutions.
However, we understand there are also a number of changes
planned."

Specifically:

-- KACC has now received the status of financial agency and
    taken the financing of the spring harvest works from KazAgro
    Holding, which will remain the case in the future.

-- Given the plans to privatize KazAgroFinance -- a leasing
    company within KazAgro Group -- KACC will increasingly extend
    financing to the privately owned leasing companies to broaden
    the availability of financing for the agricultural sector and
     develop competition.

-- While the government is expected to continue channelling
    funds to KACC, a broader focus on market funding is
    envisioned, whereby government funds will be mixed with other
    resources. To that end, S&P understands that KACC is in
    discussions about attracting loans from international
    financial institutions.

-- Over the longer run, the institution will increasingly shift
    to funding the agricultural sector via commercial banks.

S&P also believes that there is a high likelihood of timely
extraordinary government support for KACC in the event of
financial distress. S&P's view is based on the entity's:

-- Important role for the government. In addition to the
    aforementioned functions, KACC provides cheap loans to non-
    agricultural businesses in rural areas throughout Kazakhstan.
    Moreover, its wide presence across Kazakhstan and accumulated
    expertise in the sector means another entity would not easily
    be able to replicate its functions; and

-- Very strong link with the government of Kazakhstan, which
    wholly owns KACC through KazAgro Holding. Privatization is
    not currently on the agenda and the government closely
    monitors KACC's activities through KazAgro Holding. In 2016
    the government made an equity injection into KazAgro Holding
    of Kazakhstan tenge (KZT) 77 billion with the holding company
    consequently capitalizing KACC for about KZT65 billion.

S&P said, "We have revised KACC's SACP -- which reflects the
institution's creditworthiness without factoring in potential
extraordinary government support -- to 'b' from 'b+' because we
have revised our assessment of the company's business position to
weak from moderate. This reflects our view that the deterioration
in the Kazakh economy has rendered the entity's business model
more vulnerable and less stable given that it is focused on the
structurally risky and cyclical agricultural sector. Our weak
assessment also reflects KACC's relatively small size, with
KZT280 billion (around US$0.9 billion) in assets as of March 31,
2017. This is comparable to Kazakh banks in the second tier of
the domestic system. At the same time, we understand that KACC
plays an important public policy role given that a sizable
proportion of the Kazakh population is employed in the
agricultural sector. Specifically, the institution is the key
lender to small agricultural producers as well as to certain
subsectors that are currently less attractive for commercial
banks. KACC's overall share of lending to the agricultural sector
is estimated at about 15% (including indirect lending through
banks).

"Other factors influencing our SACP are the 'bb-' anchor that we
apply to banks and bank-like institutions operating only in
Kazakhstan, as well as KACC's very strong capital and earnings
position, moderate risk position, below average funding, and
moderate liquidity.

"Our very strong capital and earnings assessment reflects S&P
Global Ratings' risk-adjusted capital (RAC) ratio for KACC of 39%
at the end of 2016. Historically the RAC has not been lower than
25%. This reflects a robust capitalization policy, but in our
view is required given the risky operating environment and
business concentration in the agriculture industry. The main
source of equity is capital injections from the government, which
has so far been supportive (it injected a total of about KZT46
billion of new equity during 2011-2015 and an additional KZT65
billion in 2016). Being a development institution, KACC is not
targeting profit maximization."

S&P expects the RAC ratio to remain above 18.5% in 2017-2018,
based on the following assumptions: "

-- Loan growth of 60% in 2017 and 40% in 2018 under the state
    development programs;

-- No new capital injections in our forecast for 2017-2018
    (although S&P doesn't exclude the possibility that additional
    injections might take place in 2017-2018);

-- Dividend payouts equal to 50% of net income in 2017-2018;

-- Credit costs at around 3.5%-4.3% in 2017-2018, in line with
    4.3% as of end-2016 (which is higher compared to prior
    periods due to methodological changes) and slightly higher
    than banking sector expectations; and

-- Return on average equity at around 2.6% in 2017-2018.

S&P said, "Our risk position assessment balances KACC's lending
concentration in the cyclical and weather-dependent agricultural
sector with low single-name concentrations and immaterial foreign
currency lending. Asset quality is broadly in line with peers and
we do not expect sharp improvements in the quality of the loan
book (KACC's loans overdue by more than 90 days formed 12.5% of
total lending and restructured loans were 13.5% as of March 31,
2017) in 2017-2018 due to the difficult economic environment.
Provision coverage of problem loans (more than 90 days overdue
and restructured) is historically low (similar to banks in
Kazakhstan) but we note an improvement to 57% as of March 31,
2017 from 50% at end-2015. Collateral typically covers that
exposure by more than 100% for KACC. Single-name concentrations
are low compared with Kazakh banks, with the 20 largest borrowers
representing 34% of KACC's total adjusted capital on March 31,
2017. Foreign exchange risks are minimal as the company's loan
portfolio and liabilities are predominantly in tenge.

"We assess KACC's funding as below average given the concentration
of funding sources, which depend on the government's willingness
to provide financing at short notice. Although KACC does not have
access to central bank liquidity, we note its other available
sources of quick liquidity in case of need, specifically the
estimated KZT52 billion available cushion from the parent
holding. KACC has direct lending through its parent company
KazAgro (10% of the funding base as of March 31, 2017) and debt
securities mature in 2021-2023 (40% of the funding base as of
March 31, 2017). We also note positive developments in diversity
and availability of funding as KACC was included in the list of
agents that can directly receive budgetary funding from the
state, and is negotiating with several international financial
institutions for additional financing.

"We assess liquidity as moderate due to the cyclical nature of
cash flows. A substantial portion of loans have bullet
redemptions in the fourth quarter of each year, coinciding with
the repayment of budget loans. Cash and money market instruments
have grown to 25% from 9.3% for the first quarter of 2017 due to
seasonal loans from the Kazakhstan government.

"The negative outlook on KACC mirrors our outlook on the sovereign
ratings on Kazakhstan. We would likely lower our ratings on KACC
if we took a similar rating action on the sovereign. We could
also lower the ratings on KACC if we saw signs of waning
government support to the group or, more broadly, to other
government-related entities over the next 12 months.

"We would likely revise the outlook to stable or if we took a
similar rating action on Kazakhstan."


RATINGS LIST

                                  Rating
                                  To               From
Kazakh Agrarian Credit Corp.
  Issuer Credit Rating
   Foreign and Local Currency     BB/Negative/B    BB+/Negative/B
   Kazakhstan National Scale      kzA/--/--        kzAA-/--/--
  Senior Unsecured
   Local Currency                 BB               BB+
   Kazakhstan National Scale      kzA              kzAA-


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


DECO 2015 CHARLEMANGE: S&P Cuts Rating on Class E Notes to 'BB'
---------------------------------------------------------------
S&P Global Ratings lowered to 'BBB (sf)' from 'BBB+ (sf)' and to
'BB (sf)' from 'BBB- (sf)' its credit ratings on DECO 2015-
Charlemagne S.A.'s class D and E notes, respectively. At the same
time, we have affirmed our ratings on the class A, B, and C
notes.

S&P said, "The rating actions follow our review of the credit
quality of the three loans backing the transaction.

"Upon publishing our updated S&P Cap Rates for various
jurisdictions and property types, we placed those ratings that
could potentially be affected "under criteria observation".
Following our review of this transaction, our ratings that could
potentially be affected are no longer under criteria observation."

DECO 2015-Charlemagne is an European commercial mortgage-backed
securities (CMBS) transaction secured by three European
commercial mortgage loans that closed in 2015, with notes
totalling EUR316.19 million. The original three loans were
secured on 37 properties located across the Netherlands, Belgium,
and Germany. Three loans remain, with a current securitized loan
balance of 282.5 million.

WINDMILL LOAN (51.8% OF THE POOL)

The outstanding securitized loan balance is EUR146.3 million and
the loan matures in April 2020.

The loan is secured on mortgages over a portfolio of nine
commercial properties located across the Netherlands. The
portfolio comprises eight office properties and one out-of-town
retail shopping center. Since closing in August 2015, one office
building in the portfolio was sold.

The portfolio was valued at EUR246.0 million in March 2015. This
reflects a loan-to-value (LTV) ratio of 59.5%.

S&P has assumed a full loan repayment in our 'B' rating stress
scenario.

MSTAR LOAN (29.2% OF THE POOL)

The outstanding securitized loan balance is EUR82.6 million and
the loan matures in October 2019.

The loan is secured by a mortgage over a portfolio of 19 light
industrial assets located across Germany and the Netherlands. The
portfolio has remained the same since closing.

The portfolio was valued at EUR130.1 million in June 2014. This
reflects an LTV ratio of 63.5%.

S&P has assumed a full loan repayment in its 'B' rating stress
scenario.

PEGASUS LOAN (19.0% OF THE POOL)

The outstanding securitized loan balance is EUR53.7 million and
the loan matures in October 2019.

The loan is secured by a mortgage over eight office buildings in
a business park (Pegasus Park) located in Diegem, Brussels. The
portfolio has remained the same since closing.

The portfolio was valued at EUR90.1 million in November 2014.
This reflects an LTV ratio of 59.6%.

S&P has assumed a full loan repayment in its 'B' rating stress
scenario.

CREDIT ANALYSIS

S&P said, "Our rating on DECO 2015-Charlemagne's notes addresses
the timely payment of interest and the repayment of principal not
later than the April 2025 legal final maturity date.

"Following our review of the underlying properties, the
transaction's characteristics, and the application of stress
scenarios under our European CMBS criteria, we do not consider
the available credit enhancement for the class D and E notes to
be sufficient to absorb the amount of losses that the underlying
properties would suffer at the currently assigned ratings (see "
European CMBS Methodology And Assumptions," published Nov. 7,
2012). We have therefore lowered to 'BBB (sf)' from 'BBB+ (sf)'
and to 'BB (sf)' from 'BBB- (sf)' our ratings on the class D and
E notes, respectively.

"We consider that the class A, B, and C notes' credit
characteristics continue to be commensurate with their current
ratings. We have therefore affirmed our ratings on the class A,
B, and C notes."

RATINGS LIST

DECO 2015-Charlemagne S.A.
EUR316.19 Million Commercial Mortgage-Backed Floating-Rate Notes

  Class                 Rating
               To                   From

  Ratings Lowered

  D            BBB (sf)             BBB+ (sf)
  E            BB (sf)              BBB- (sf)

  Ratings Affirmed

  A            AAA (sf)
  B            AA (sf)
  C            A+ (sf)


QGOG CONSTELLATION: Fitch to Rate Proposed Sr. Secured Notes 'B'
----------------------------------------------------------------
Fitch Ratings expects to assign a long-term rating of 'B/RR4' to
QGOG Constellation S.A.'s proposed senior secured notes due 2024.
QGOG Constellation is offering the notes in exchange for the
USD700 million senior unsecured notes due 2019. Concurrently,
Fitch withdraws the previous expected rating of 'B(EXP)/RR4'
assigned to QGOG Constellation's senior unsecured notes. Fitch
expects QGOG Constellation's Issuer Default Ratings (IDRs) of
'B'/Outlook Negative, to be unaffected by the announced debt
exchange. Fitch does not consider the proposed transaction as a
distressed debt exchange as it is not considered to be done in
order to avoid a default.

Under the terms of the proposed debt exchange, QGOG Constellation
will issue up to USD700 million of new senior secured notes with
a sculpted partial amortization beginning in 2019 and with a
final maturity of 2024. The notes will carry a coupon composed of
a 9.0% cash payment and a 0.5% payment-in-kind (PIK) and are
being offered under a voluntary exchange for the currently
outstanding USD700 million, 6.25% senior unsecured bond due in
2019. The debt exchange aims at improving the company's
amortization schedule as it faces approximately USD1.1 billion of
principal payments in 2017 and 2018 and USD747 million in 2019.

Although the extension of maturity in the new notes and
elimination of covenants on the existing notes after the exchange
are a reduction in terms compared with the original contractual
term, bondholders are being compensated with an approximately 50%
increase in the coupon rate, 2% cash fee (for tenders submitted
by the early tender deadline) and the addition of collateral and
guarantors on the proposed 2024 senior secured notes. The new
exchange notes will benefit from more restrictive covenants and
events of default as the predecessor 2019 notes and will be
collateralized by Lone Star, Gold Star and Olinda Star drilling
rigs. Fitch does not consider the transaction to be a distressed
debt exchange as it is not being executed to avoid bankruptcy or
payment default given the existing notes mature two years from
now, the company has adequate liquidity to cover its upcoming
maturities over the next 12 months, and cash flow generation is
expected to be strong in 2017, although below that reported in
2016.

KEY RATING DRIVERS

QGOG Constellation's ratings reflect the deep downturn in the
offshore drilling services industry as well as the increased
uncertainty about the company's medium-term cash flow generation
created by the contract roll-over or procurement of new contracts
with off-takers other than Petrobras, its current main
contractor. QGOG Constellation's business risk has been
negatively impacted by the downturn in the oil and gas industry
as well as Petrobras' efforts to reduce capex and expenses by
downsizing its drilling rig fleet.

Offshore drillers continue to face depressed market conditions
due to lower demand and a significant oversupply of rigs. Fitch
expects QGOG Constellation to face a very competitive market to
re-contract its drilling units with Petrobras or for it to find
new off-takers for its drilling units, which could affect QGOG
Constellation's future cash flow generation and potentially
deteriorate its currently robust liquidity position. This risk is
heightened by the short- to medium-term need to renew some of
QGOG Constellation's contracts as they expire by the end of 2018.

On April, 2017, the company announced that Olinda Star had been
awarded a three- year contract with Oil and Natural Gas
Corporation (ONGC) for operations located offshore India.
Operations under this new contract are expected to commence by
October 2017.

DERIVATION SUMMARY

QGOG Constellation's business risk compare favorably with other
Latin American peers, namely Offshore Drilling Holdings ('CCC'
IDR) as a result of the companies larger asset base and more
favorable contractual position. QGOG Constellation credit quality
compares somewhat unfavorably to Transocean ('B+' IDR), which is
one of the largest global offshore drillers with a strong
backlog.

KEY ASSUMPTIONS

Fitch's key assumptions within our rating case for the issuer
include:
-- WTI and Brent oil price trend up to a longer-term price of
    USD62.5/barrel and USD65/barrel respectively;
-- The majority of QGOG Constellation's off-shore rigs are re-
    contracted at expiration at market day rates of USD275,000;
-- Operating expenditures are assumed to remain in line with
    recently reported levels.

RATING SENSITIVITIES

Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
-- Positive rating actions are not contemplated over the near
    term given the weak offshore oilfield service outlook.

Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action
-- Contracts that are not rolled over at expiration or are
    unilaterally terminated by the off-taker before the
    expiration date; Alpha Star is the next material contract
    expiration for the company in July 2017. Failure to re-
    contract this unit could result in negative rating actions.
-- Through-the-cycle consolidated debt/EBITDA of 5.0x or above
    on a sustained basis.

LIQUIDITY

Liquidity is projected to weaken as QGOG Constellation's cash
flow generation will likely deteriorate over the short- to
medium-term as its contracts expire and the company faces a
competitive global drilling rig industry for re-contracting its
units. As of March 31, 2017, QGOG Constellation's credit metrics
had improved with reported EBITDA generation of approximately
USD761 million and total consolidated debt of USD2.1 billion,
which equates to a leverage ratio of 2.8x. Fitch projects that
leverage will range between 4.0x and 5.0x in the medium term as
contracts expire, assuming they are promptly re-contracted at day
rates of USD275,000.

Although the company's liquidity position is currently adequate,
QGOG Constellation paid approximately USD94 million of dividends
in 2016. QGOG Constellation reported available liquidity of
USD430 million and restricted cash at the operating companies'
(OpCos) level amounting to approximately USD33 million as of
March 31, 2017. The restricted cash can be used to service OpCos'
level debt service. This liquidity position compares with
company's short-term debt of USD544 million mainly comprised by
USD154 million related to Alpha Star's scheduled amortization and
approximately USD390 million of recently extended working capital
credit lines and other scheduled repayments under the OpCos'
project debt facilities.

FULL LIST OF RATING ACTIONS

Fitch expects to assign the following rating to QGOG
Constellation S.A.:

-- Senior secured notes due 2024 'B(EXP)/RR4'.

Fitch currently rates QGOG Constellation S.A. as follows:

-- Long-Term Foreign Currency Issuer Default Rating (IDR) 'B';
    Outlook Negative;
-- Long-Term Local Currency IDR 'B'; Outlook Negative;
-- Senior unsecured notes due 2019 'B/RR4'.


===========
P O L A N D
===========


PETROLINVEST SA: Gdansk Court Rejects Zaklad's Bankruptcy Motion
----------------------------------------------------------------
Reuters reports that that the Court in Gdansk rejected the motion
for Petrolinvest SA's bankruptcy filed by Zaklad Ubezpieczen
Spolecznych in May 2016.

According to Reuters, the court considered that the company does
not have enough property from which the costs of insolvency
proceedings could be covered.

Petrolinvest SA is a Poland-based company engaged in the
distribution of liquid gas and crude oil.


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


CB ROSENERGOBANK: Bank of Russia Provides Update on Investigation
-----------------------------------------------------------------
The provisional administration to manage Commercial Bank
ROSENERGOBANK Joint-stock Company, appointed by Bank of Russia by
virtue of Order No. OD-943, dated April 10, 2017, following the
revocation of its banking license, in the course of examination
of the bank's financial standing has found transactions concluded
by its former management and owners to be indicative of the
intention to siphon off assets by purchasing credit claims with
unidentified claimants and by making real estate transactions,
according to the press service of the Central Bank of Russia.

Also, the former bank management has failed to submit to the
provisional administration copies of loan agreements the bank
executed with borrowers to a total of about RUR9.8 billion.

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


ER-TELECOM: S&P Lowers CCR to 'B' From 'B+', Outlook Stable
-----------------------------------------------------------
S&P Global Ratings lowered its long-term corporate credit rating
on Russia-based cable operator Er-Telecom to 'B' from 'B+'. The
outlook is stable.

S&P said, "We removed the ratings from CreditWatch, where we had
placed them with negative implications on May 4, 2017.

"The downgrade primarily reflects our view that Er-Telecom's
leverage is likely to remain at or above 3.5x in 2017-2018 as a
result of further debt-financed acquisitions, such as Novotelecom
(a cable operator in Western Siberia) in early 2017, to further
increase its footprint in the Russian fixed broadband market. In
2016, Er-Telecom's reported gross financial debt nearly doubled
from RUB15.6 billion to RUB30.4 billion, primarily on
acquisitions. As a result, adjusted leverage increased from 2.9x
at end-2015 to over 4.0x at end-2016 versus our expectation of
below 3.5x previously. On a reported basis, net debt to EBITDA
increased from 2.07x to 3.75x, respectively but has declined to
3.45x in Q1 2017 and management estimates that it will remain at
this level in 1H 2017. Furthermore, our liquidity assessment
remains constrained because the availability of its main credit
facility (VTB) expires at year-end 2017. Nevertheless, we
understand that the company is making good progress to increase
and extend the facility.

"Our rating on Er-Telecom factors in its position as Russia's
second-largest broadband operator after the incumbent Rostelecom.
Er-Telecom has demonstrated a steady growth of subscribers,
supported both by the increasing penetration in the cities of
presence and by M&A activity and we expect further mid-single-
digit organic subscriber growth in 2017-2018.

"We also take into account the company's entrance into the Moscow
business-to-business (B2B) market and strengthening of its
footprint in other Russian cities after the equity-swap-based
acquisition of OOO Prestige-Internet (operating under the Enforta
brand) completed in late May 2016. Enforta is a Russian national
cable operator with offices in 69 Russian regions. It has a
strong value proposition in B2B and business-to-government
segments. Post-acquisition of Enforta, Er-Telecom's market share
in the broadband B2B market became stronger; that said,
Rostelecom remains the market leader."

Er-Telecom's offering includes internet, Pay-TV, and fixed
telephony services under the DOM.RU brand. In 2016 Er-Telecom
also launched the MVNO project on the infrastructure of Megafon,
and the number of its subscribers has already reached 120,000.
S&P said, "We assume that the quadplay offer should help Er-
Telecom increase its customer loyalty and reduce the churn rate
in the competitive broadband market.

"Our assessment of Er-Telecom's business risk profile is also
supported by the availability of its own backbone fiber network
(currently 40% of traffic goes through its own network) and by
its presence in 56 Russian cities with a total population
exceeding 30 million people and 12 million households."

These factors are balanced by the relatively small scale of the
company compared to peers and by the high country risk of
operating in Russia, where 100% of Er-Telecom's assets are
concentrated. S&P said, "We also factor in the saturated and very
competitive broadband market, dominated by the incumbent
Rostelecom. In our view, fierce competition will continue to put
pressure on Er-Telecom's margins. Er-Telecom's reported EBITDA
margin fell to 28.8% in 2016 from 33.6% in 2015, partially
diluted by Enforta's lower margins. We expect margins of around
30% in 2017-2019 slightly improving after the integration of the
companies acquired in 2016 and early 2017, supported by overhead
savings and lower network costs."

S&P's base case assumes:

-- After strong revenue growth in 2016 (27.2% year-on-year)
    driven by strong organic growth (6.9% year-on-year) and M&A
    activity, S&P expects this trend to continue. S&P factors in
    high-single-digit organic growth supported by some moderate
    indexation of ARPU, increasing bundle sales and mid-single-
    digit increase in number of subscribers given that Er-Telecom
    is increasing penetration in the cities it is present in.
-- Around 30% reported EBITDA margin supported by cost structure
    turnaround of the existing assets.
-- Capital expenditure (capex) of around 24.7% in 2017 (compared
    to 24% in 2016), declining to around 19% in subsequent years
    as the investment in the backbone infrastructure has been
    finalized.
-- No material acquisitions in 2017-2018 other than the purchase
    of Novotelecom in first-quarter 2017.
-- Repayment of a liability to the shareholder in 2017 and 2018.

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

-- An S&P Global Ratings-adjusted debt-to-EBITDA ratio between
    3.5x-4.0x in 2017-2018, compared with around 4.3x at year-end
    2016, gradually improving to 3.5x on the back of cost
    synergies from acquired assets and organic revenue growth.
-- Continued negative reported FOCF in 2017-2018 (negative
    RUB1.1 billion in 2016), but mildly positive FOCF in 2019.

S&P said, "Our stable outlook reflects our expectation that
Er-Telecom's adjusted leverage will remain below 4.0x, and that
it will extend its VTB facility in the coming three months and
materially improve its currently negative FOCF generation in
2018.

"We would downgrade Er-Telecom if its average adjusted leverage
exceeds 4.0x, combined with continued materially negative FOCF.
We will also consider a downgrade if ER-Telecom's liquidity
deteriorates, for example, if ER-Telecom is unable to extend and
increase its VTB facility in the next three months.

"We may take a positive rating action if ER-Telecom sustains its
adjusted leverage ratio below 3.5x, supported by organic revenue
growth and higher margins, coupled with positive FOCF generation
and a solid liquidity position."


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


BANCO POPULAR: Banco Santander Unveils Details of Capital Raising
-----------------------------------------------------------------
Ian Mount at The Financial Times reports that Spain's Banco
Santander has announced the details of a EUR7.1 billion capital
raise it will use to aid its acquisition of Banco Popular.

Santander announced that it would buy the troubled Popular in
early June for the symbolic price of EUR1 after EU authorities
declared the Madrid-based lender "failing or likely to fail", the
FT relates.  At the time, it said it would raise approximately
EUR7 billion in capital to rebuild Popular's balance sheet, which
at the time was saddled with EUR37 billion in toxic real estate
and loans, the FT notes.

During the capital raise, current Santander shareholders will be
able to purchase one share for every 10 they own at a price of
EUR4.85/share, a discount of 17.75% to the theoretical ex-rights
price (TERP) based on the closing price of July 3, the FT
discloses.

According to the FT, the subscription period for the capital
raise will run from July 6 to July 20; the new shares are
expected to begin trading July 31.

Banco Popular Espanol SA is a Spain-based commercial bank.  The
Bank divides its business into four segments: Commercial Banking,
Corporate and Markets; Insurance Activity, and Asset Management.
The Bank's services and products include saving and current
accounts, fixed-term deposits, investment funds, commercial and
consumer loans, mortgages, cash management, financial assessment
and other banking operations aimed at individuals and small and
medium enterprises (SMEs).  The Bank is a parent company of Grupo
Banco Popular, a group which comprises a number of controlled
entities, such as Targobank SA, GAT FTGENCAT 2005 FTA, Inverlur
Aguilas I SL, Platja Amplaries SL, and Targoinmuebles SA, among
others.  In January 2014, the Company sold its entire 4.6% stake
in Inmobiliaria Colonial SA during a restructuring of the
property firm's capital.


BANKIA SA: S&P Assigns B+ LT Issue Rating to New Tier 1 Notes
-------------------------------------------------------------
S&P Global Ratings said that it has assigned its 'B+' long-term
issue rating to the proposed perpetual additional Tier 1 (AT1)
capital notes to be issued by Bankia S.A. (BBB-/Positive/A-3).

S&P ssaid, "We understand from the proposed AT1 notes' terms and
conditions that the instrument will comply with the EU's latest
capital requirements directive (CRD IV), which is the EU's
implementation of Basel III. We also understand that the notes
will rank senior to ordinary shares, but will be subordinated to
more senior debt, including Bankia's Tier 2 debt.

"In accordance with our hybrid capital methodology ("Bank Hybrid
Capital And Nondeferrable Subordinated Debt Methodology And
Assumptions," published on Jan. 29, 2015, on RatingsDirect), we
are assigning our 'B+' rating to the AT1 notes, four notches
below our 'bbb-' assessment of Bankia's stand-alone credit
profile.

S&P calculates the four-notch difference as follows:

-- One notch to reflect subordination risk.
-- Two additional notches to take into account the risk of
    nonpayment at the full discretion of the issuer and the
    hybrid's expected inclusion in Tier 1 regulatory capital.
-- One further notch reflecting the proposed issue's mandatory
    contingent capital clause leading to equity conversion.

According to this clause, the conversion would occur if Bankia's
common equity Tier 1 (CET1) ratio fell below 5.125%, which S&P
does not consider as a going concern trigger.

Compliance with the minimum regulatory capital requirements is
necessary to avoid the risk of potential restrictions in the
payment of coupons on AT1 notes. S&P said, "We view this risk as
limited for Bankia at this stage because the bank's CET1 ratio of
14.91% (phased-in) as of March 2017 is well above the 7.875%
minimum level set by the regulator under the Supervisory Review
and Evaluation Process.

"We intend to assign intermediate equity content to the notes,
once the regulator approves them, for inclusion in the bank's
regulatory Tier 1 capital. The instruments meet the conditions
for intermediate equity content, in our opinion, because they are
perpetual, with a call date expected to be at least five years
from issuance. In addition, they do not contain a coupon step-up
and have loss-absorption features on a going-concern basis due to
the bank's flexibility to suspend the coupon at any time.


ISOLUX CORSAN: Files for Bankruptcy, Receives Acquisition Offers
----------------------------------------------------------------
Construction Index reports that the directors of Spanish
construction and engineering business Isolux Corsan have agreed
to apply for bankruptcy proceedings for seven companies with a
total of 1,992 employees.

According to Construction Index, six offers of acquisition have
already been received for parts of the business.

The president and the six board members have now submitted their
resignations, in order to facilitate the administration of the
company, Construction Index relates.  A shareholders meeting,
held immediately after the board meeting, has approved the
appointment of new directors, Construction Index notes.

The bankruptcy proceedings affect: Isolux Corsan Group, Corsan-
Corviam Construccion, Isolux IngenierĀ°a, GIC Concesiones, Isolux
Corsan Servicios, Isolux Corsan Inmobiliaria and Isolux Energy
Investments, Construction Index discloses.  These companies have
a workforce of 1,992, of which 1,108 are based in Spain,
including 160 expatriates, Construction Index states.

These companies have accumulated a debt with suppliers of EUR405
million (GBP355 million), Construction Index says.  The total
financial debt on balance sheet of the group -- including those
companies not included under the Spanish Insolvency Act filing --
at the end of April was EUR1.27 billion (GBP1.11 billion), of
which EUR557 million (GBP489 million) are associated with project
financing, Construction Index relays.

The group management has been working on three approaches since
filing the communication under the Spanish Insolvency Act at the
end of March: the design of a viability plan, the search for an
investor for the engineering and construction business and the
implementation of solutions to facilitate the continuity of most
of the ongoing projects, Construction Index recounts.

In recent days, six offers of acquisition of diverse units have
been received, according to Construction Index.

It will be up to the new directors, the bankruptcy administrator
and a judge to evaluate the offers, Construction Index notes.

Isolux Corsan SA is a Spanish construction company.


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


GATEGROUP HOLDING: S&P Affirms 'B+' CCR on Solid Performance
------------------------------------------------------------
S&P Global Ratings said it has affirmed its 'B+' long-term
corporate credit rating on Switzerland-based gategroup Holding
AG. The outlook is stable.

At the same time, S&P Global Ratings said that it should have
applied its criteria "Key Credit Factors For The Business And
Consumer Services Industry," (the Business Services KCF) on May
16, 2014. Instead, "Key Credit Factors For The Transportation
Cyclical Industry" was used. The rating action corrects
this error by using the Business Services KCF, the effect of
which is reflected in our industry, competition, and
profitability assessment. S&P said, "In correcting this error, we
have revised our industry and competitive position assessment.
However, the revision of industry risk to intermediate from high
is counterbalanced by the weaker competitive position and higher
volatility of profitability among business services peers; as a
result, the use of the Business Services KCF has had no impact on
the ratings.

"Our rating on gategroup remains constrained by our view of the
weaker credit quality of controlling owner HNA Group. We assess
the creditworthiness of the combined, diversified, but highly
leveraged, HNA Group to be commensurate with a 'b+' group credit
profile (GCP). gategroup's 'bb-' stand-alone credit profile
(SACP), is one notch higher than our GCP assessment on HNA Group.
The rating cap at the parent's level is mainly because, in our
view, the weaker parent could divert assets from its subsidiary
or burden it with liabilities during periods of financial stress.
At the same time, we consider that there are not enough elements
to insulate the rating, given HNA Group's control over
gategroup's business strategies and financial policies. We
consider gategroup to be a moderately strategic subsidiary of the
HNA Group because it provides backward integration to its airline
businesses and complements its other at-airport services
subsidiaries. We also factor in the potentially increased focus
on external growth via acquisitions under HNA Group ownership, of
which the magnitude and timing is currently uncertain and
therefore not built into our forecast. Furthermore, we
incorporate the reduced visibility of credit ratios and the fact
that the company's future financial policy has yet to be
finalized by HNA Group and management.

"Our assessment of gategroup's business risk profile reflects our
view of the company's track record of solid organic growth, high
customer retention rates at about 96% (compared to 90% in 2015),
and achieved cost savings--notably salary expenses--through
increased efficiency of operations. Moreover, we think the recent
accelerated pace of mergers and acquisitions complementing
gategroup's current business, as well as its diversification into
emerging markets, will support growth through a cycle. While the
airline catering market is very fragmented and competition is
increasing, gategroup has been able to gradually improve its
profitability, supported by contract renewals and its geographic
diversity, which helps it to withstand exposure to specific
regional downturns. That said, the business risk profile is
constrained by gategroup's lower profitability than peers in the
broad business services sector, such as Compass, Elior, and
Sodexo.

"Under our base-case scenario, we expect gategroup will benefit
from its acquisitions, improving its geographic diversity in
emerging markets with the acquisition of Servair, where growth
and margins are generally higher than in mature markets. We
forecast that funds from operations (FFO) to debt will be close
to 20% at year-end 2017 (compared to 17% in 2016 and 13% in 2015)
and improve thereafter. The improvement stems from enhanced
perational
performance driven by cost-saving initiatives, synergies, and
reduced interest costs."

S&P's base-case scenario includes:

-- Revenue growth of about 25%-27% in 2017, well in excess of
    GDP growth in the main countries where gategroup operates,
    mainly due to the full-year impact of the recent acquisitions
   (mainly  Servair).
-- For 2018-2019, we assume stable growth, mainly linked to our
    weighted-average GDP growth forecast for each country where
    the company generates its revenue.
-- Reported EBITDA margin to improve to about 5.0%-6.0% in 2017
    and 2018 from 4.3% in 2016, on the back of direct cost
    savings, synergies from IFS and Servair, and a stricter
    contract renewal process.
-- Capital expenditure (capex) of about Swiss franc (CHF) 75
    million-CHF85 million in 2017 and 2018.
-- Dividend payments of about CHF20 million-CHF25 million to the
    minority shareholder.
-- No forecast acquisitions.

Based on these assumptions, S&P arrives at the following credit
measures for the next two years:

-- Adjusted FFO to debt of close to 20% in 2017 (from 17% in
2016), improving to nearer 20%-25% in 2018 based on our
assumption of gradual top-line growth and no material debt
increases.
-- Adjusted debt to EBITDA of about 3.5x in 2017, improving to
about 3.0x in 2018.

"The stable outlook reflects our expectation that HNA Group's GCP
will remain unchanged in the next 12 months and that it will not
materially increase gategroup's financial leverage.

"Our rating on gategroup is currently capped at HNA Group's GCP of
'b+'. Any downgrade is, therefore, likely to be based on changes
to the credit quality of HNA Group, rather than at gategroup. In
our view, gategroup has stronger credit metrics, on a stand-alone
basis, than its parent. Based on gategroup's current debt levels,
the company has significant headroom for operational
underperformance before our 'B+' rating would be affected.

"We could raise the rating on gategroup if it appears likely that
HNA Group will materially reduce its financial leverage and that
gategroup will maintain and commit to an FFO-to-debt ratio of
20%."


INEOS GROUP: S&P Affirms BB- Long-Term CCR, Outlook Stable
----------------------------------------------------------
S&P Global Ratings affirmed its 'BB-' long-term corporate credit
ratings on Ineos Group Holdings S.A. (Ineos) and its subsidiary,
Ineos Holdings Ltd. The outlook on both entities remains stable.

S&P also affirmed its issue and recovery ratings on Ineos' debt.

S&P said, "We revised our assessment of Ineos' liquidity to
adequate from strong previously, because we now expect that the
company's sources of liquidity will cover its uses by more than
1.2x but less than 1.5x over the next 12 months. This means that
the liquidity ratio is no longer in line with the threshold for a
strong assessment. The adequate assessment also reflects that we
expect sources of liquidity to exceed uses in the year-ending
March 31, 2018, even if EBITDA declines by 15%. The company's
solid relationship with banks and generally prudent risk
management also support the adequate liquidity assessment. This
revision has no impact on our ratings on the company or its
debt."

S&P estimatee that the Ineos' principal liquidity sources for the
12 months from March 31, 2017, include:

-- EUR1.0 billion of surplus cash available at March 31, 2017;
    and
-- EUR1.2 billion funds from operations.

For the same period, S&P estimates that Ineos' principal
liquidity uses include:

-- Debt maturities of EUR0.1 billion;
-- EUR0.9 billion of capital expenditures;
-- Working capital outflow of EUR100 million;
-- Modest dividends of EUR80 million; and
-- A EUR0.6 billion loan granted to a sister company to acquire
    oil and gas assets from DONG Energy.


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


AUBURN SECURITIES 4: S&P Affirms B- Rating on Class E Notes
-----------------------------------------------------------
S&P Global Ratings took various credit rating actions in Auburn
Securities 4 PLC (Auburn 4) and Auburn Securities 9 PLC (Auburn
9).

Specifically, S&P has:

-- Raised its ratings on Auburn 4's class D notes and Auburn 9's
class B, C, D, E, and F notes; and
-- Affirmed its ratings on Auburn 4's class A2, M, B, C, and E
notes, and Auburn 9's class A notes (see list below).

S&P said, "Today's rating actions follow our credit and cash flow
analysis of the transactions and the application of our European
residential loans criteria (see "Methodology And Assumptions:
Assessing Pools Of European Residential Loans," published on Dec.
23, 2016).

"Auburn 4 and Auburn 9 are U.K. buy-to-let transactions,
originated by Capital Home Loans Ltd. Both of the transactions
have performed well, in our opinion, with arrears of over 30 days
representing 0.86% of the pool in Auburn 4 and 1.04% of the pool
in Auburn 9. The transactions' reserve funds are at their
required levels and have not been drawn. Principal redemption in
both transactions is sequential.

"The weighted-average foreclosure frequency (WAFF) has decreased
in both transactions since our previous review of Auburn 4 and
since closing for Auburn 9 (see "Various Rating Actions Taken In
U.K. RMBS Transactions Auburn Securities 4 And 5," published on
May 7, 2015, and "Ratings Assigned To U.K. RMBS Transaction
Auburn Securities 9's Class A To F Notes," published on July 31,
2015). The decreases are primarily due to the transactions'
increased seasoning. Since our previous reviews, the loans'
weighted-average seasoning has increased to 157 months from 137
months in Auburn 4 and to 124 months from 105 months in Auburn 9.

"Our weighted-average loss severity (WALS) calculations have
increased at the 'AAA', 'AA', and 'A' levels in Auburn 4 and at
the 'AAA' and 'AA' levels in Auburn 9. Although the transactions
have benefitted from the decreases in the weighted-average
current loan-to-value (LTV) ratios, this has been offset by an
increase in our repossession market value decline assumptions,
which are greatest at the 'AAA' level."

  Auburn 4

  Rating        WAFF     WALS
  level          (%)      (%)
  AAA          20.66    40.83
  AA           13.93    29.35
  A            10.52    12.81
  BBB           7.13     4.53
  BB            3.75     2.00
  B             2.89     2.00

  Auburn 9

  Rating        WAFF     WALS
  level          (%)      (%)
  AAA          24.39    50.16
  AA           16.98    39.93
  A            12.67    25.16
  BBB           8.80    16.25
  BB            4.89    10.35
  B             3.78     5.97

Both transactions have deleveraged, increasing the available
credit enhancement for all classes of notes.

S&P said, "We consider the available credit enhancement for
Auburn 4's class A2, M, B, and C notes, and Auburn 9's class A
notes to be commensurate with our currently assigned ratings. We
have therefore affirmed our ratings on these classes of notes.

"The class E notes in Auburn 4 do not pass our 'B' stressed
rating level scenario based on our cash flow assumptions under
our European residential loans criteria. However, credit
enhancement continues to increase and currently stands at 5.36%.
This compares favorably with our expected losses of 0.06% at the
'B' rating level. The reserve fund is also fully funded. The
asset performance is stable with a benign economic environment
including low interest rates, affordable mortgage payments, and
low unemployment. Therefore, we have affirmed our 'B- (sf)'
rating on Auburn 4's class E notes. We have not lowered our
rating on these notes to a 'CCC' rating level given our
expectation of future stable performance and ongoing timely
payment of interest.

"The available credit enhancement for Auburn 4's class D notes
and Auburn 9's class B, C, D, E, and F notes is sufficient, under
our cash flow stress scenarios, to support higher ratings than
those currently assigned. We have therefore raised our ratings on
these classes of notes.

"For both transactions, our credit stability analysis indicates
that the maximum projected deterioration that we would expect at
each rating level for one- and three-year horizons, under
moderate stress conditions, is in line with our credit stability
criteria (see "Methodology: Credit Stability Criteria," published
on May 3, 2010)."

Auburn Securities 4 and 9 are U.K. residential mortgage-backed
securities (RMBS) transactions backed by first-ranking mortgages
in the U.K originated by Capital Home Loans Ltd.

RATINGS LIST

  Class             Rating
              To              From

  Auburn Securities 4 PLC
  GBP1 Billion Mortgage-Backed Floating-Rate Notes

  Rating Raised

  D           A+ (sf)         A- (sf)

  Ratings Affirmed

  A2          AAA (sf)
  M           AAA (sf)
  B           AAA (sf)
  C           AA+ (sf)
  E           B- (sf)

  Auburn Securities 9 PLC
  GBP540.923 Million Mortgage-Backed Floating-Rate And Zero
Coupon
  Notes
  (Including GBP36.9 million Mortgage-Backed Unrated Notes)

  Ratings Raised

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

  Rating Affirmed

  A           AAA (sf)


GREAT HALL 2007-2: Fitch Affirms 'Bsf' Rating on Cl. Eb Notes
-------------------------------------------------------------
Fitch Ratings has affirmed Great Hall Mortgages No. 1 plc (Series
2007-2) notes as follows:

Class Aa (ISIN XS0308354504): affirmed at 'AAAsf', Outlook Stable
Class Ab (ISIN XS0308354843): affirmed at 'AAAsf', Outlook Stable
Class Ac (ISIN XS0308462141): affirmed at 'AAAsf', Outlook Stable
Class Ba (ISIN XS0308356970): affirmed at 'Asf', Outlook Stable
Class Ca (ISIN XS0308357358): affirmed at 'BBBsf', Outlook Stable
Class Cb (ISIN XS0308355733): affirmed at 'BBBsf', Outlook Stable
Class Da (ISIN XS0308357788): affirmed at 'BBsf', Outlook Stable
Class Db (ISIN XS0308356111): affirmed at 'BBsf', Outlook Stable
Class Ea (ISIN XS0308357861): affirmed at 'Bsf', Outlook Stable
Class Eb (ISIN XS0308356467): affirmed at 'Bsf', Outlook Stable

This transaction comprises mortgage loans that were originated by
Platform Homeloans Limited and purchased by JPMorgan Chase Bank.

KEY RATING DRIVERS

Liquidity Facility Withdrawn
Fitch received information that a renewal request for the
liquidity facility, with Danske Bank as liquidity facility
provider, was not made within the applicable timeframe and the
liquidity facility was therefore withdrawn. Fitch tests for
timely interest payments for notes rated 'AA' and above in all
its rating scenarios and found the non-amortising reserve fund
balance to be sufficient for the 'AAA' rated notes to withstand a
payment interruption event given the current servicing set-up.

RATING SENSITIVITIES

Fitch will, as part of its surveillance reviews, continue to
monitor the reserve fund size in relation to any notes within the
series rated 'AA' or above. Since the reserve fund is available
to cover interest shortfalls and principal deficiency ledger
entries for all the rated notes, there is a risk that the reserve
fund gets depleted over time and is not available to cover
interest payments on the notes rated 'AA' and above in case of a
payment interruption event. In this event Fitch would cap the
rating of those notes at the 'A' rating category.


INOVYN LTD: S&P Upgrades CCR to B+ on Operational Improvements
--------------------------------------------------------------
S&P Global Ratings raised its long-term corporate credit rating
on U.K.-based chlorvinyl producer Inovyn Ltd. to 'B+' from 'B'.
The outlook is stable.

S&P said, "At the same time we assigned our 'B+' long-term
corporate credit rating to finance subsidiary Inovyn Finance PLC.
The outlook is stable.

"We also raised the issue ratings to 'B+' from 'B' on the senior
secured term loans co-issued by Inovyn Ltd. and Inovyn Finance
PLC, including the EUR115 million term loan A due 2021 and the
EUR690 million term loan B due 2024, and on the EUR240 million
senior secured notes due 2021 issued by Inovyn Finance PLC.

"The upgrade reflects our view that Inovyn's profitability has
been improving on the back of realized and expected cost
efficiencies and synergies. Combined with favorable PVC industry
conditions, this should translate into about 3x or below adjusted
debt to EBITDA in 2017. This also reflects our forecast for
modest net debt reduction this year, since we believe free cash
flow should rise materially compared to 2016, reflecting our
EBITDA forecast of about EUR550 million-EUR600 million, together
with benefits from Inovyn's repricing transactions in late 2016
and early 2017. These repricing agreements should result in an
estimated EUR17 million total annual interest savings. Lastly, we
factor in moderate support from its parent Ineos AG, as we
consider Inovyn being moderately strategic to the group.

"Our EBITDA forecast for 2017 of about EUR550 million-EUR600
million has materially improved from the EUR460 million we
previously projected and the EUR420 million realized in 2016
(after restructuring costs). We view current European PVC
industry conditions as favorable, supported by capacity
rationalizations and subsequent positive effects on PVC-ethylene
spreads. We believe a more disciplined market environment, as
demonstrated via capacity cuts, and lower imports in Europe
should support a stable spread level in the coming periods.

"We also expect Inovyn to maintain high capacity utilization and
efficient production levels on the back of stable demand, and
after major turnarounds in 2016. We anticipate the company will
continue to focus on de-bottlenecking the specialty PVC business,
which has better growth prospects than commodity PVC and much
higher margins although currently represents only about 18%-19%
of
EBITDA. Our updated base case notably also captures synergy
realizations since the forming of Inovyn as a combination of
Solvay's and Kerling's PVC assets, for a total of EUR115 million
at end-Q1 2017, and a recurring increase in the total synergy
targets. We understand these were essentially realized in
production and procurement cost savings, and that these are
progressively translating into structural improvements in the
company's cost position. We see this as having helped assuage
EBITDA downside risks and therefore leading to more resilient
credit measures."

The company remains exposed to commoditized PVC products,
however, with 46% of revenues derived from general purpose PVC
and 25% from caustic soda and potash. Although this means leading
market shares -- about 30% in European PVC -- S&P believes the
business is highly exposed to volatile raw materials and selling
prices, while a material portion of revenues are derived from
cyclical end-markets, mainly construction (about 30% of 2016
revenues) and chemicals and industrial applications (16%). For
these reasons S&P thinks EBITDA is subject to significant top-to-
bottom-of-cycle swings, and therefore it continues to view
Inovyn's business risk profile as relatively weak.

S&P said, "Our adjusted debt to EBITDA for 2017 of about 3x
supports Inovyn's financial risk profile, which we now assess as
aggressive (highly leveraged previously). We believe a 2x-4x
range is commensurate with the 'b+' stand-alone credit profile.
This compares with 4.3x at end-2016, reflecting restructuring
charges weighing on our adjusted EBITDA, and the interest rate
environment resulting in a larger pension deficit than initially
anticipated. We continue to factor in potentially high credit
volatility over the cycle. We believe, however, that operational
improvements should translate into significant free cash flow
generation in 2017, allowing for further deleveraging. We expect
unadjusted net debt of about EUR850 million at the end of this
year, compared with EUR1.1 billion at end-2016. We do not
forecast the pension deficit to increase any significantly in
2017, and we do not net cash from our debt calculation as per our
assessment of the business risk profile as weak. We view the
company's financial policy, which aims to improve the balance
sheet such that bottom of cycle unadjusted net leverage would not
exceed 3x, as fairly supportive for the rating.

"We continue to view Inovyn as a moderately strategic subsidiary
of Ineos AG, reflecting Inovyn's contribution of about 12% of the
group's total EBITDA, and our understanding that Ineos' policy is
to fund the entities of the group on a stand-alone basis.
Therefore the rating currently incorporates no adjustment for
group support. Ineos AG's group credit profile is 'bb-'. "

S&P's base case assumes:

-- Broadly stable PVC and caustic soda volumes, assuming about
    1% growth in European demand for PVC in 2017 and 2018
    year-on-year.
-- Adjusted EBITDA margin of 17.5%-18.0% in 2017 and 2018,
    reflecting a solid spread level and internal efficiency
    gains.
-- Relatively high capital expenditure (capex), including about
    EUR70 million on cell-room conversion, EUR50 million on
    maintenance and minor turnarounds, and EUR30 million on
    growth projects.

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

-- Strong positive free cash flows.
-- Adjusted debt to EBITDA of about 3x in 2017 and 2018.

S&P said, "The stable outlook reflects our view that Inovyn
should be able to maintain 2x-4x adjusted debt to EBITDA in the
next few years, depending on cycle conditions. We anticipate that
current favorable industry conditions, supported by capacity
rationalizations, will help maintain that range in 2017 and 2018,
helped by management's focus on realizing the announced synergies
and targeted cost savings.

"Further upside is constrained at this stage by the volatile
underlying nature of the industry, for which we factor in a
degree of headroom under the current rating. Further deleveraging
such that debt to EBITDA would remain below 3x at all points of
the cycle could nevertheless help the rating, together with
strict financial policies. "

Pressure on the stand-alone credit profile may arise from rapidly
deteriorating EBITDA, on the back of continued--though lessened--
market overcapacities, from lagging demand especially in Europe,
or from a narrowing spread in PVC-Ethylene in the coming
quarters. A ratio of adjusted debt to EBITDA exceeding 4x for a
prolonged period would likely put pressure on the financial risk
profile. Nevertheless S&P takes into account that potential
support from the Ineos group provides leeway at the current
rating level.


RESIDENTIAL MORTGAGE 30: S&P Puts Prelim. CCC Rating to X1-Dfrd
---------------------------------------------------------------
S&P Global Ratings assigned its preliminary credit ratings to
Residential Mortgage Securities 30 PLC's (RMS 30) class A,
B- Dfrd, C- Dfrd, D- Dfrd, E- Dfrd, F1- Dfrd, and X1- Dfrd notes.
S&P's preliminary ratings address the timely receipt of interest
and the ultimate repayment of principal on the class A notes, and
the ultimate payment of interest and principal on the other rated
classes of notes. At closing, RMS 30 will also issue unrated
class F2, F3, X2, and Z notes.

RMS 30 is a securitization of a pool of buy-to-let and owner-
occupied residential mortgage loans, to nonconforming borrowers,
secured on properties in England, Scotland, and Wales.

Of the collateral pool, Kensington Mortgage Co. Ltd. (KMC) and
affiliates originated 76.23% and Money Partners Ltd. originated
23.77%. The remainder is made up of an acquired loan originated
by Infinity Mortgages Ltd. At closing, the issuer will purchase
the portfolio from the seller (Kayl PL S.a.r.l) and will obtain
the beneficial title to the mortgage loans. The majority (99.85%)
of the initial pool was previously securitized in earlier
Kensington transactions: Residential Mortgage Securities 21 PLC
(29.81%), Residential Mortgage Securities PLC 22 (37.58%), and
Money Partners Securities 4 PLC (32.47%). These transactions are
to be called in the coming months, but the beneficial interest in
the mortgage loans will transfer, on the closing date, to the
issuer.

At closing, the issuer will use the proceeds from the class Z
notes and part of the class X2 notes to fund the initial general
reserve fund at 2.0% of the class A to F3 notes' balance. The
target general reserve fund after closing will be 3.0% of the
class A to F3 notes' closing balance until the class A to F2
notes are fully redeemed. Thereafter, the general reserve fund
target amount will be zero.

There will also be a liquidity reserve, which will be funded from
principal receipts if the general reserve fund amounts fall below
1.5% of the outstanding balance of the class A to F3 notes. The
required balance of the liquidity reserve will be 2% of the class
A notes and will amortize in line with the class A notes. Funding
the liquidity reserve will not be a debit on the principal
deficiency ledger (PDL). However, using the liquidity reserve to
pay senior fees or the class A notes' interest will cause a debit
to the PDL.

At closing, the issuer will purchase the pool as of the May 31,
2017 pool cut-off date. All amounts of interest accruing and paid
for the period between the pool cut-off date and the expected
closing date will form part of the issuer's available revenue
funds. In addition, the servicing costs of the pool between the
pool cut-off date and the expected closing date will be the
liability of the issuer. S&P said, "In our analysis, we have
projected the estimated additional revenue funds and servicing
costs that will be generated by the pool in the period between
the pool cut-off date and the expected closing date.
Consequently, on the first interest payment date (IPD) beginning
in December 2017, the issuer will benefit from an additional two
months' worth of asset interest payments and will have to pay an
additional two months' worth of servicing fees.

"During our analysis, we were made aware of loans that have the
potential for setoff arising from capitalization redress
payments, in line with the Oct. 19, 2016 Financial Conduct
Authority (FCA) consultation paper (GC16/6 - The fair treatment
of mortgage customers in payment shortfall: Impact of automatic
capitalisations). The scale of the potential setoff risk has been
estimated by the mortgage administrator, KMC, using the FCA's
finalised guidance (FG17/4 - The fair treatment of mortgage
customers in payment shortfall: impact of automatic
capitalisations) which was published in April 2017. Despite the
seller agreeing to make a redress payment to the issuer in line
with the amount to be setoff, or repurchasing the relevant loan,
in our analysis we have modelled setoff losses in line with the
finalised FCA guidance. We expect this issue to be resolved and
all compensation to be made to borrowers by June 2018, in line
with the FCA guidance."

The notes' interest rate will be based on an index of three-month
LIBOR. Within the mortgage pool, the loans are linked to either
the Money Partners variable rate, the Kensington variable rate,
or three-month LIBOR. There will be no swap in the transaction to
cover the interest rate mismatches between the assets and
liabilities.

KMC will act as mortgage administrator for all of the loans in
the transaction. However, it has delegated its functions to
Homeloan Management Ltd. There is also the intention under the
transaction documents for KMC, in its role as mortgage
administrator, to delegate the servicing function to Acenden
Ltd., which S&P has considered in its analysis.

The class X1- Dfrd notes will not be supported by any
subordination or the general reserve fund. S&P said, "In our
analysis, the class X1- Dfrd notes are unable to withstand the
stresses we apply at our 'B' rating level. Consequently, we
consider that there is a one-in-two chance of a default on the
class X1- Dfrd notes and that these notes are reliant upon
favorable business conditions to redeem.

"Our preliminary ratings reflect our assessment of the
transaction's payment structure, cash flow mechanics, and the
results of our cash flow analysis to assess whether the rated
notes would be repaid under stress test scenarios. Subordination
and the reserve fund provide credit enhancement to the notes.
Taking these factors into account, we consider the available
credit enhancement for the rated notes to be commensurate with
the preliminary ratings that we have assigned."

RATINGS LIST

Preliminary Ratings Assigned

Residential Mortgage Securities 30 PLC
Mortgage-Backed Floating-Rate And Unrated Notes

  Class         Prelim.          Prelim.
                rating            amount
                                (mil. GBP)

  A             AAA (sf)             TBD
  B- Dfrd       AA+ (sf)             TBD
  C- Dfrd       AA (sf)              TBD
  D- Dfrd       A (sf)               TBD
  E- Dfrd       A- (sf)              TBD
  F1- Dfrd      BB- (sf)             TBD
  X1- Dfrd      CCC (sf)             TBD
  F2            NR                   TBD
  F3            NR                   TBD
  X2            NR                   TBD
  Z             NR                   TBD

  NR--Not rated.
  TBD--To be determined.



                            *********

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
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public debt and equity securities about which we report.

Each Tuesday edition of the TCR contains a list of companies with
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share in public markets.  At first glance, this list may look
like the definitive compilation of stocks that are ideal to sell
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balance sheet for liabilities that may never materialize.  The
prices at which equity securities trade in public market are
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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
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                            *********


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

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

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

This material is copyrighted and any commercial use, resale or
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Information contained herein is obtained from sources believed to
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                 * * * End of Transmission * * *