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        T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

           Friday, July 7, 2017, Vol. 18, No. 134


                            Headlines


A Z E R B A I J A N

ATABANK OJSC: Merger with Caspian No Impact on Fitch B- Rating


B E L A R U S

BPS-SBERBANK: Fitch Affirms B- Long-Term IDR, Outlook Stable


B U L G A R I A

FIRST INVESTMENT: Moody's Assigns B1 Long-Term Deposit Rating
VIVACOM: S&P Puts 'B+' CCR on Watch Developing


C R O A T I A

CROATIA: Competitive Economy Underpin Higher Creditworthiness


F R A N C E

ANTALIS INTERNATIONAL: Fitch Assigns First-Time 'B(EXP)' IDR


G E R M A N Y

BLUECELL GMBH: Shuts Down Solar Cell Production in Germany
PHOENIX PHARMAHANDEL: S&P Affirms BB+ CCR, Outlook Stable


I R E L A N D

OAK HILL III: Moody's Assigns (P)B2 Rating to Class F-R Notes


I T A L Y

MECA LEAD: July 26 Bid Submission Deadline Set


K A Z A K H S T A N

BAITEREK HOLDING: S&P Lowers LT Issuer Credit Ratings to BB-
NOSTRUM OIL: S&P Affirms 'B' CCR Amid Proposed Debt Refinancing
SAMRUK-KAZYNA: S&P Lowers Issuer Credit Rating to 'BB+/B'


L U X E M B O U R G

SWISSPORT GROUP: S&P Keeps 'B' CCR on CreditWatch Negative


R O M A N I A

RADET: Buys Thermal Power Producer for EUR155 Million


R U S S I A

B&N BANK: S&P Affirms 'B/B' Counterparty Credit Ratings
NOVATSIA JSC: Liabilities Exceed Assets, Assessment Shows
TEMPBANK PJSC: Moratorium on Meeting Claims Extended
URALKALI JSC: S&P Affirms BB- CCR, Outlook Negative


S L O V A K   R E P U B L I C

SLOVAKIA STEEL: Bankruptcy Trustee Announces Int'l Public Tender


S P A I N

SPAIN: Need to Explore Debt Relief Options for Insolvent Regions
* Spanish RMBS 90+ Day Delinquencies Remained Constant


S W E D E N

STENA AB: Moody's Affirms B1 CFR & Revises Outlook to Negative


T A J I K I S T A N

BANK ESKHATA: Moody's Hikes LT Global Deposit Rating to Caa1


U K R A I N E

PRIVATBANK: PGO to Open Criminal Probe Against Ex-Management


U N I T E D   K I N G D O M

CAPARO INDUSTRIES: Sanjeev Gupta Deal to Shore Up Pensions
COVENTRY & RUGBY: S&P Puts BB+ Debt Rating on Watch Positive
EXTERION MEDIA: S&P Affirms B CCR & Alters Outlook to Negative
KELDA FINANCE: Fitch Affirms BB Long-Term IDR, Outlook Stable
PREMIER OIL PLC: July 18 Sanction of Scheme Hearing Set

PREMIER OIL UK: July 18 Sanction of Scheme Hearing Set
SCOTIA AID: Declares Bankruptcy; Owes More than GBP1 Million
YORKSHIRE WATER: Moody's Affirms (P)Ba1 Rating on Sub. Reg Bond


X X X X X X X X

* BOOK REVIEW: The Sorcerer's Apprentice - Medical Miracles


                            *********



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A Z E R B A I J A N
===================


ATABANK OJSC: Merger with Caspian No Impact on Fitch B- Rating
--------------------------------------------------------------
Fitch Ratings says that the recently completed merger of
Azerbaijan's Atabank OJSC (AB; B-/Negative/b-) with Caspian
Development Bank (CDB) has no immediate impact on AB's ratings.
This reflects Fitch's base case view, based on public disclosure,
that the positive impact from the higher capital ratios of the
merged bank is counterbalanced by recent loan deterioration,
meaning the post-merger credit profile is likely to be still
commensurate with the 'B-' rating level.

Fitch will conduct a further detailed analysis (including with
reference to non-public disclosure) in the course of an upcoming
rating review to take a more definitive view on the bank's post-
merger credit profile and consider potential rating implications.

The transaction was completed in May 2017, as a result of which
CDB was merged into AB and ceased to exist as a separate legal
entity. Before the merger, AB was owned by OJSC "Ata Holding"
(AH), and CDB by Synergy Group OJSC (SG), with AH and SG both
owned by the same group of people close to the Azerbaijani
authorities. After the merger, control over the merged bank was
transferred to SG, which subsequently injected AZN20 million of
equity into AB.

Fitch takes a positive view of the increased capitalisation of
the merged bank. AB's regulatory tier 1 and total capital ratios
increased to 21.4% and 22.9%, respectively (regulatory minimums
are 5% and 10%) at end-5M17 from 12.8% and 14.2% at end-4M17. The
improvement was mainly due to the merger with CDB, whose assets
were a quarter of AB's while capital ratios were much higher
(above 40%), as well as the additional capital contribution from
SG.

Negatively Fitch views the significant weakening of asset
quality, mainly attributable to the pre-merger AB, whose non-
performing loans (NPLs, 90+ days overdue) increased to around 30%
of gross loans at end-2016 (based on IFRS accounts) from 13% at
end-2015, while CDB reported negligible NPLs at end-2016. Fitch
estimates that the combined NPL ratio for the merged bank should
be around 23%, while reserve coverage (based on end-2016 IFRS
accounts) would have been about 55%.

However, asset quality may be somewhat worse than reported, as
based on a combined income statement for 2016 over 30% of accrued
income was not received in cash. The unreserved NPLs equaled
around 51% of combined equity at end-2016, although the combined
equity/asset ratio would still have been a reasonable (for the B-
rating level) 10.9% if NPLs had been fully reserved.


=============
B E L A R U S
=============


BPS-SBERBANK: Fitch Affirms B- Long-Term IDR, Outlook Stable
------------------------------------------------------------
Fitch Ratings has affirmed BPS-Sberbank's (BPS), Bank BelVEB's
and Belgazprombank's (BGPB) Long-Term Issuer Default Ratings
(IDRs) 'B-' with Stable Outlooks.

KEY RATING DRIVERS
IDRS, SUPPORT RATINGS

The IDRs and Support Ratings factor in the likelihood of support
the three banks may receive from their Russian shareholders. BPS
is 98.4%-owned by Sberbank of Russia (Sberbank; BBB-/Stable),
BelVEB 97.5%-owned by Vnesheconombank, (VEB; BBB-/Stable), and
BGPB is jointly owned by PJSC Gazprom (BBB-/Stable) and JSC
Gazprombank (BB+/Stable), with a 49.7% stake each.

Fitch's view of potential support is based on the majority
ownership, continued strong commitment of the Russian owners to
the Belarus market, common branding (implying high reputational
risks in case of a subsidiary default), parent-subsidiary
integration (including board representation and operational
controls), the track record of support to date and the low cost
of any support required (given that each subsidiary accounts for
a small part of parent entities' consolidated assets).

BPS's and BGPB's regulatory capitalisation was supported in 2015-
1Q16 by the provision of subordinated debt, while BPS also
benefitted from risk-sharing arrangements with the parent group
since 2014, resulting in significant capital relief (transferred
risky exposures were equal to 2.8x of the bank's end-1Q17 Fitch
Core Capital (FCC)). While there are no plans for equity
injections in the near term, Fitch believes that parental capital
support will be available for all three banks, in case of need.
Funding support, mostly in foreign currency, is available for the
banks, with the parents contributing 33%-38% of subsidiary
liabilities at end-2016.

The banks' 'B-' Long-Term IDRs reflect the constraint of
Belarus's 'B-' Country Ceiling, which captures transfer and
convertibility risks and limits the extent to which support from
the foreign shareholders of these banks can be factored into the
ratings. The Stable Outlooks on the banks' Long-Term IDRs are in
line with that on Belarus's.

Viability Ratings (VRs)
The banks' VRs of 'b-' factor in risks from a challenging
operating environment, and the linkage between the banks' credit
profiles and that of the Belarusian sovereign due to the large
direct exposure of the banks to the authorities and, more
generally, the public sector. This makes the banks' asset quality
dependent on the state of government finances and the ability of
the authorities to support macroeconomic stability and the public
sector.

At end-2016, direct exposure to the sovereign (including claims
on the government and the central bank) relative to FCC was 2.4x
at BPS, 1.5x at BGPB and 2.1x at BelVEB. Loans issued to public
sector corporates contributed a further 0.8x at BPS, 1x at BGPB
and 2.8x at BelVEB. In contrast with Belarusian state-owned
banks, these banks are not involved in new government programme
lending, although BPS has a residual exposure at below 10% of
gross loans.

More broadly credit risks remain high as the economy is sluggish
and borrower performance remains constrained by generally
significant leverage in the corporate sector and high loan
dollarisation (BPS: 70%; BGPB: 75%; BelVEB: 84% of loans), while
the share of hedged borrowers is limited. Asset quality metrics
have weakened across the board during 2015-2016. Fitch expects
this trend to continue through 2017 as operating conditions
remain challenging.

BPS's asset quality is somewhat worse than peers'. Its
individually impaired loans (as per IFRS accounts) grew to a high
57% of end-1Q17 loans (36% at end-2015), reflecting deterioration
in borrowers' financial performance and/or collateral value. The
bank's own assessment suggests that about 38% of loans are of
higher-risk, on top of non-performing loans (NPLs, loans over 90
days overdue) of 21% of loans at end-1Q17 (end-2015: 10%), of
which many are in the construction and real estate segment (CRE).
BPS's asset quality ratios were helped by the transfer of high-
risk loans in 2Q17 (5% of total loans at end-1Q17) to the parent
bank, which also guaranteed some of the high-risk exposures (a
further 40% of loans at end-1Q17).

BGPB's and BelVEB's individually impaired loans were also high at
respectively, 51% and 32% of gross loans at end-2016 (end-2015:
49% and 34%). At the same time, reported NPLs were small at 1.6%
at BGPB and 0.3% at BelVEB, helped by loan
restructuring/rollovers and also reflecting both banks' more
limited exposure to the troubled CRE segment. However, judging by
the high volume of impaired loans, Fitch believes, that asset
quality is vulnerable.

Fitch views capitalisation as modest given the banks' risk
profiles and high levels of individually impaired loans, which
net of reserves, stood at 1.7x FCC at BPS, 2x at BGPB and 1.5x at
BelVEB. At end-5M17, all three banks' regulatory Tier 1 and Total
capital adequacy ratios were above the required minimums of 7.25%
and 11.25% (including buffers): BPS at 12.8% and 21%, BGPB at
9.7% and 17.4%, and BelVEB at 8.3% and 15.5%. These capital
cushions allowed only limited loss absorption capacity equal to
6% of loans at BPS, 5% at BGPB and 1.7% at BelVEB, without
breaching regulatory minimum levels (including buffers).

Pre-impairment profitability (net of accrued interest not
received in cash) was solid at 6.8% of average gross loans at
BPS, 7.9% at BGPB and more moderate at 4.9% at BelVEB in 2016.
However, in Fitch's view there is some uncertainty about the
ability of some borrowers to service loans out of their own cash
flows rather than through receipt of new credit. Provisioning
requirements remained high at all three banks in 1Q17, wiping out
61%-79% of their annualised pre-impairment profits.

The majority of funding is from domestic customers, but is highly
dollarised (over 65% of customer accounts at the three banks).
Deposits have been stable recently, limiting immediate liquidity
pressure and banks' liquidity is also supported by limited third-
party wholesale repayments and availability of undrawn committed
liquidity lines from the parent institutions. At end-5M17,
liquidity cushions (cash and equivalents, net of short third-
party interbank exposures, securities eligible for refinancing
with the central bank and unused credit lines from parents)
accounted for over 100% of customer funding at BPS, 62% at BGPB
and 20% at BelVEB.

RATING SENSITIVITIES
IDRS AND SUPPORT RATINGS

The IDRs could be upgraded or downgraded if a change in Belarus's
sovereign ratings results in a change in the Country Ceiling,
although this is currently unlikely given the Stable Outlook on
the sovereign rating.

VRs
Downgrades of VRs could result from capital erosion due to
further marked deterioration in asset quality without sufficient
and timely support being made available by parents. Upgrades of
VRs above the sovereign rating are extremely unlikely given the
high sovereign exposure/dependence of many borrowers on some form
of sovereign support.


The rating actions are:

BPS, BGPB, BelVEB

Long-Term IDR affirmed at 'B-'; Outlook Stable
Short-Term IDR affirmed at 'B'
Viability Rating affirmed at 'b-'
Support Rating affirmed at '5'


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


FIRST INVESTMENT: Moody's Assigns B1 Long-Term Deposit Rating
-------------------------------------------------------------
Moody's Investors Service has assigned first time B1 long-term
local and foreign currency deposit ratings to First Investment
Bank AD in Bulgaria. The deposit ratings reflect the bank's b2
standalone Baseline Credit Assessment (BCA) and one notch of
uplift reflecting Moody's expectation of a Moderate likelihood of
support from the government of Bulgaria (Baa2, stable) in case of
need. The moderate support assumption reflects FiBank's systemic
significance as the third largest bank in Bulgaria. The outlook
on the long-term deposit ratings is stable.

RATINGS RATIONALE

The b2 BCA is driven by the bank's strong pre-provision earning
power, its deposit-based funding structure and its large
liquidity buffers balanced against the bank's high stock of
problem loans and moderate capital buffers, as well as the bank's
evolving corporate governance and key man risk.

-- Strong earnings power and high net interest margins

FiBank has strong income generation as indicated by its 3.6%
ratio of pre-provision income to risk weighted assets as of
December 2016 and 0.8% return on assets. Income streams are
relatively diversified and Moody's expects the bank's efficiency
to remain broadly in line with peers. The rating agency also
expects the bank's credit costs to stabilise at around 1.5%.

-- Large liquidity buffers and a broad deposit-based funding
structure

The rating agency expects FiBank to maintain its deposit-based
funding structure and sizeable liquidity buffers. FiBank is
funded by, predominantly retail, deposits as indicated by its
ratio of average due to customers' to average funding which was
96% as of December 2016. The bank's ratio of liquid assets to
tangible banking assets was a sizeable 28% as of December 2016.

-- High levels of problem loans and significant real estate
exposure

Moody's expects that the bank's asset quality will improve
gradually driven by write offs and the improving operating
environment which supports the bank's restructuring efforts.
Nevertheless, FiBank has a high level of problem loans, with the
ratio of NPE's to gross loans at 24.4% as of December 2016 and
the ratio of 90 days or more past due loans at 17.5%. The bank
also has a large portfolio of foreclosed properties accounting
for around 12% of total assets which exposes it to the risk of
facing a loss when it sells this real estate.

-- Moderate Capital buffers

FiBank maintains moderate capital buffers, with a Common Equity
Tier 1 ratio of 12.0% as of December 2016 and Tier 1 ratio of
15.1%, above the 11.5% regulatory minimum. However, the rating
agency highlights the vulnerability of the bank's capital buffers
owing to its high stock of non-performing assets.

-- Evolving corporate governance and concentrated ownership

In Moody's view, despite significant improvement with the
additional independent director elected on its board in 2015 and
the strengthening of the risk, audit and compliance functions,
FiBank's corporate governance practices are in some areas still
evolving and weaker than global best practice. Given the long-
standing relationship of the majority of the independent board
directors with the bank, the rating agency believes that the
supervisory board's decisions may continue to be influenced by
the interests of the bank's two major shareholders with 42.5%
stake each. Additionally, in Moody's opinion, the concentration
of ownership of the bank in the hands of two individuals gives
rise to some key-man risk issues.

-- Loss Given Failure Analysis

FiBank's deposit ratings do not benefit from a rating uplift as a
result of the application of Moody's Loss Given Failure Analysis,
reflecting the bank's relatively small proportion of loss-
absorbing junior depositors.

FiBank operates in Bulgaria, which is an EU-member country. As
such, under the EU Bank Resolution and Recovery Directive it is
subject to an Operation Resolution Regime, similar to other EU
countries. As a result, and in accordance with Moody's Banks'
methodology, the rating agency has applied its advanced LGF
analysis, to assess the risks faced by the different debt and
deposit classes across the liability structure should the bank
enter resolution.

The rating agency's analysis assumes residual tangible common
equity of 3% and losses post-failure of 8% of tangible banking
assets, 10% junior deposits and a 25% run-off in "junior"
wholesale deposits, and a 5% run-off in preferred deposits. These
are in line with Moody's standard assumptions.

The rating agency takes into consideration full 'depositor
preference', whereby junior deposits are preferred over senior
debt creditors, in accordance with a law decree introducing full
depositor preference in Bulgaria that became enforceable in
August 2015.

MOODY'S VIEW OF MODERATE LIKELIHOOD OF SUPPORT FROM THE
GOVERNMENT IN CASE OF NEED

FiBank's B1 deposit ratings benefit from one notch of uplift
owing to the rating agency's assumption of a Moderate likelihood
of support from the government in case of need.

The moderate likelihood of support assumption is in line with
Moody's approach of assigning government support to European
banks with systemic importance despite the introduction of the
Bank Recovery and Resolution Directive which limits governments'
ability to support banks. FiBank is the third largest bank with a
market share of 13% of domestic retail deposits. Furthermore
Moody's assumption is further supported by the track record of
support for FiBank which received liquidity support from the
authorities in 2014.

OUTLOOK

The stable outlook assigned to FiBank's deposit ratings reflects
Moody's expectation that despite improvement in asset quality,
the bank's solvency over the next 12 to 18 months will continue
to be threatened by its large stock of non-performing assets on
its balance sheet limiting upside pressure.

WHAT WOULD MOVE THE RATINGS UP/DOWN

FiBank's deposit ratings could be upgraded following improvements
in its financial fundamentals, mainly a significant reduction of
asset risk through the exit of real estate exposure and decline
in non-performing loans without compromising its profitability
and capital.

A change in the bank's liability structure, through the issuance
of senior/subordinated debt, could lead to changes in Moody's LGF
analysis resulting in uplift to the deposit ratings.

A deterioration in the operating environment and/or a
deterioration in the bank's financial fundamentals mainly asset
quality, profitability and capital could lead to a downgrade.
Changes in the bank's liability structure, mainly an increased
reliance in market funding could also result in a downgrade.
Finally, a lower likelihood or capacity by the Bulgarian
government to support FiBank in case of need may prompt Moody's
to downgrade the deposit ratings.

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

List of affected ratings

Assignments:

-- LT Bank Deposits, Assigned B1 Stable

-- ST Bank Deposits, Assigned NP

-- Baseline Credit Assessment, Assigned b2

-- Adjusted Baseline Credit Assessment, Assigned b2

-- Counterparty Risk Assessment, Assigned Ba1(cr)

-- Counterparty Risk Assessment, Assigned NP(cr)

Outlook Actions:

-- Stable Outlook Assigned


VIVACOM: S&P Puts 'B+' CCR on Watch Developing
----------------------------------------------
S&P Global Ratings said it has placed its 'B+' long-term
corporate credit rating on integrated telecom operator Bulgarian
Telecommunications Company EAD (Vivacom) on CreditWatch with
developing implications.

S&P said, "We also placed our 'B+' issue rating on Vivacom's
senior secured notes on CreditWatch with developing
implications."

S&P related, "Our CreditWatch placement reflects the refinancing
risk linked to upcoming debt maturities in 2018. We understand
that Vivacom is working on refinancing its EUR400 million senior
secured notes. After the refinancing, the remaining term of
Vivacom's debt could be materially extended; as of March 31,
2017, Vivacom reported total debt of Bulgarian lev (BGN) 802.9
million (around EUR400 million). That said, if the refinancing
does not go ahead before the end of this year, we could revise
our liquidity assessment according to our criteria and lower the
ratings.

"We continue to see Vivacom as an insulated group entity, which
allows for a two-notch difference between its stand-alone credit
profile and the group credit profile. Our assessment is supported
by several key restrictions in the notes' indenture, including,
but not limited to:

- No cross default between Vivacom's EUR400 million senior
secured notes and the parent company's debt;

- Restrictions on payments from Vivacom to the parent company;
   and

- Vivacom's operations as a separate entity from its parent,
   with separate funds, books, and liabilities; S&P views Vivacom
   as a severable entity.

In addition, S&P views it as very unlikely that all of Vivacom's
assets and liabilities would be consolidated into those of the
parent company in a hypothetical scenario of the parent declaring
bankruptcy. Moreover, S&P considers that the current shareholders
have no economic incentive to draw the subsidiary into any
bankruptcy proceedings, since the noteholders have a first-lien
charge over Vivacom's shares. S&P also considers that there is an
independent director with effective influence on decision-making.

- The previous delay in refinancing the parent company's EUR150
million equity bridge loan did not affect Vivacom's performance.
S&P expects that the new financing Vivacom expects to put in
place will have the same senior status and similar cash
upstreaming restrictions as the current notes.

S&P's assessment of Vivacom's business risk is constrained by the
group's exposure to a single country, Bulgaria, and by its
relatively smaller size than industry peers. Furthermore, Vivacom
has significant exposure in the fixed-voice segment (15% of
revenues in first-quarter 2017), which is under pressure due to
fixed-to-mobile substitution. In addition, Vivacom's EBITDA
margin remains subdued by competitive pressure from the other two
large telecom operators in the Bulgarian market, which are the
subsidiaries of global players Telekom Austria and Telenor.

These weaknesses are partly offset by Vivacom's solid market
position as the largest telecom operator in Bulgaria by total
revenues. In the three-player Bulgarian mobile market, Vivacom
remains the No.3 player after MTel (Telekom Austria) and Telenor
Bulgaria, with a 29% market share (by number of subscribers) in
first-quarter 2017 compared with 28.8% a year ago, and a 28.0%
market share in terms of revenues (up by 0.1 basis points year on
year). Revenues from mobile remain the key contributor to
Vivacom's revenues, accounting for 57% (flat year on year).

S&P said, "We also consider that Vivacom holds a leading 82%
market share in fixed voice and is the No. 1 provider in fixed-
line broadband Internet, with a 26% market share. Revenues from
the fixed segment comprised 41% of the total in first-quarter
2017, compared with 40% a year before. Vivacom's market position
is further supported by its vast and good quality mobile GSM/MTS
network covering close to 100% of the country's territory, and
LTE coverage of 94% of the country's population. We also factor
in Vivacom's multiproduct offers, including land-line telephony,
broadband Internet, pay-TV, and mobile telephony.

"We continue to rate Vivacom's senior secured notes at the same
level as the corporate credit rating. This is because the share
of priority liabilities is very low. We also take into account
that all debt at the parent company is subordinated to the senior
secured notes.

"The developing implications of the CreditWatch indicate that we
could lower or raise the ratings depending on the success of the
group's debt refinancing. We expect to resolve the CreditWatch by
the end of 2017."

If the group successfully refinances its EUR400 million notes and
the parent also refinances its debt, S&P will likely raise its
ratings on Vivacom by one or two notches. For an upgrade, S&P
would assume no liquidity pressure either at Vivacom or the
parent.

However, if the refinancing does not go ahead and S&P sees signs
that any proceedings at the holding company will likely impinge
on Vivacom's liquidity, S&P could lower the ratings.


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C R O A T I A
=============


CROATIA: Competitive Economy Underpin Higher Creditworthiness
-------------------------------------------------------------
Croatia's (Ba2 stable) larger, more competitive economy and its
stronger institutions stemming from accession to the European
Union (EU) underpin its higher creditworthiness compared to
Serbia (Ba3 stable), Moody's Investors Service said in a peer
comparison report. However, structural reforms in Serbia and its
strong shift towards the export sector will bolster its economic
performance in the coming years.

The report, "Governments of Croatia and Serbia - Croatia's more
developed economy and institutions justify stronger credit
profile", is now available on www.moodys.com. The research is an
update to the markets and does not constitute a rating action.

"Croatia's economy is approximately a third larger than Serbia's,
and EU membership facilitated a comprehensive overhaul of its
institutions" said Evan Wohlmann, a Moody's Vice President --
Senior Analyst and co-author of the report. "On the other hand,
the greater reform momentum in Serbia in recent years will
support income convergence, and investment is likely to benefit
from recent improvements in the country's business environment."

Both sovereigns carry large debt burdens, but fiscal
consolidation will lead to gradual improvements, Mr Wohlmann
added.

Debt levels for both countries are markedly higher than the
median of similarly rated peers. Croatia's debt-to-GDP ratio
amounted to 84.2% of GDP in 2016, while Serbia's debt burden was
74.0% of GDP in the same year - compared to an average of 47.6%
of GDP for Ba-rated peers.

Despite progress in improving the fiscal position since the
financial crisis, the state-owned enterprise (SOE) sector
continues to represent a larger fiscal risk in Serbia. Reforms to
reduce the risk of future demands from SOEs on the budget are
underway, including the restructuring of loss-making public
enterprises. Yet unlike Croatia, Serbia is not subject to EU
state aid rules which limit the chances of direct government
support and provide a degree of external oversight.

Unemployment rates have fallen in both countries, and legislative
reforms carried out in Serbia in 2014 have led to higher labour
participation rates and strong employment growth driven by the
private sector.

However, declining unemployment also reflects reductions in the
labour force tied to ageing populations and high emigration,
adding uncertainty to longer-term growth outlooks. Continued
integration with the EU and sustained efforts to improve the
investment climate are crucial to an acceleration in both
countries' growth potential.


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


ANTALIS INTERNATIONAL: Fitch Assigns First-Time 'B(EXP)' IDR
------------------------------------------------------------
Fitch Ratings has assigned the French business-to-business (B2B)
distributor, Antalis International SA, a first-time expected
Long-Term Issuer Default Rating (IDR) of 'B(EXP)' with Stable
Outlook. Fitch has also assigned an expected instrument rating of
'B+(EXP)'/'RR3' (Recovery Rating) to the group's proposed new
senior secured bonds. The final IDR and debt instrument ratings
are contingent upon the completion of the proposed refinancing
and the receipt of the final bond documentation conforming
materially to information provided to Fitch.

Antalis's IDR reflects the group's limited financial flexibility
due to the group's low EBITDA margins and a highly leveraged
financial profile. Antalis remains highly weighted towards the
paper sector, which continues to be in structural decline,
particularly in western Europe where the group is focused. The
rating also reflects the group's strong European position in the
B2B paper, packaging and visual communication sector, which is
supported by a wider international presence. Antalis has a clear
strategy to consolidate its market position and increase its
exposure to higher-growth and higher-margin product categories
and has delivered stable EBITDA for the past five years.

KEY RATING DRIVERS

Structurally Declining Paper Market Exposure: The group continues
to generate a significant majority of sales (71% of 2016 sales)
and profitability from its paper distribution division. This
sector continues to face structural decline with digitalisation
negatively impacting paper usage; this is exacerbated by the
group's western Europe exposure. This has reduced Antalis' sales
for the past five years and Fitch expects this trend to continue
for the next four years. While Antalis has successfully
consolidated its leading B2B paper distribution market position,
the decline in the sector will continually demand restructuring
efforts as capacity outstrips falling demand.

Rebalance towards Growth Sectors: Antalis seeks to somewhat
offset the paper sector's decline by shifting product exposure
towards the growing packaging and visual communications markets..
These growth sectors are the group's major focus for future
growth; revenue and profitability generation will rebalance
towards these sectors through organic growth and acquisitions.

Implementation Risk: While Antalis has successfully managed this
transition so far (growth products now represent around 30% of
revenue, up from 22% in 2014), Fitch views as uncertainwhether
the growing earnings and cash flow from packaging and visual
communications can compensate the decline in paper. Fitch also
assumes that part of the rebalancing will be achieved through
continuing M&A, which will further introduce
implementation/integration risks, although management has
successfully managed M&A in the past.

Limited Financial Flexibility: Fitch believes the group's
transitional nature as a result of rebalancing, together with low
margins, leaves Antalis with little scope to absorb significant
shocks without severely impacting leverage metrics. Antalis has
low margins compared with its peers (within the broader B2B
distribution sector)which results in high operating leverage
leading to weak leverage and coverage metrics, limiting financial
flexibility. While its proposed refinancing will improve the debt
structure and maturities, Antalis still remains highly leveraged
with limited deleveraging potential, in Fitch's opinion. Its
small scale further indicates limited flexibility in a down-
cycle.

Weak forecast coverage metrics of less than 2.0x (FY17: 2.0x;
FY18E: 1.8x) also provide limited headroom for the group to cope
with decreases in profitability or funds from operations (FFO).

Limited Geographic Diversification Outside Europe: Antalis has a
better developed international presence than its direct
competitors with a leading European position in its core paper,
packaging and visual communication distribution market. Antalis'
operations in Asia Pacific, Latin America and southern Africa
provide an international reach that Antalis' direct B2B paper and
packaging competitors do not have. However, Fitch believes that
Antalis remains significantly weighted towards western Europe,
which continues to be negatively impacted by the paper sector
decline although this is partly mitigated by packaging and visual
communications growth in the same region.

Diversified Customer Base: Antalis benefits from the large size
of its customer base covering a number of different customer
types. This diversification is counterbalanced by the short-term
nature of the customer contract, with papers largely bought as
required (with customers often using various suppliers) while
longer-term contracts with some packaging clients are limited in
numbers.

Antalis has a proven B2B distribution model that allows it to
meet clients' just-in-time requirements and bespoke orders with a
longer timeframe. The ability to match customers' needs with
suppliers' offering (together with an ability to customise this
with a design service as needed), plus an effective distribution
channel, provides Antalis with a key and defensible market
position.

IPO and Planned Refinancing Improves Capital Access: The recent
listing of Antalis on Euronext is viewed positively through
increased transparency and improved corporate governance. The
listing, together with the proposed financing (utilising bonds to
replace terms loans and RCF facilities), improves the group's
capital market access and extends the group's debt maturity
profile.

Above Average Recoveries for Senior Secured Noteholders: The
proposed senior secured notes are rated 'B+(EXP)', one notch
above the IDR, reflecting Fitch's expectation of above average
recoveries for noteholders in a going concern restructuring
scenario, following a hypothetical default. The expected
'RR3(EXP)' reflects recovery prospects between 51% and 70%, as
per Fitch's criteria.

In its recovery assessment, Fitch estimated post-restructuring
EBITDA at EUR62 million (compared with an LTM EBITDA of EUR83
million) to reflect the impact of a recession and accelerated
decline of the paper distribution segment causing the default,
offset by some restructuring measures. Fitch conservatively
values Antalis on the basis of a 5.5x distressed multiple, which
reflects average acquisition multiples paid by Antalis for small
companies operating in its segments. As per its criteria, Fitch
has deducted 10% of administrative claims off the enterprise
value and assumed the factoring facility being replaced by a
super senior facility, ranking in priority to the senior secured
notes.

DERIVATION SUMMARY

Antalis occupies a top three market position in the B2B
distribution sector (paper, packaging and visual communication)
for the majority of its core operating regions, which positions
the group well against smaller regional players. Its solid market
position is supported by strong distribution and supply chain
capabilities. Antalis has a large and diversified customer base
and has a well-positioned e-business proposition in both the
paper market and the higher-growth markets such as packaging and
visual communications. The rating is negatively impacted by
limited geographic diversification, significant exposure to the
structurally declining European paper market and, relative to its
peers (within the broader B2B distribution sector), low margins
and high leverage, which limits financial flexibility.

KEY ASSUMPTIONS

Fitch's key assumptions within Fitch ratings case for the issuer
include:
- Average sales decline of 2% p.a.;
- EBITDA margin improving towards 3.8% in 2020 from 3.3% in
   2017;
- Capex intensity decreasing to 0.7% of sales in 2020 from 0.9%
   in 2017
- Positive free cash flow (FCF) from 2018 onwards, with average
   bolt-on acquisition totalling EUR10 million p.a.;
- Restricted cash of EUR18 million reflecting working capital
   funding requirement in excess of factoring facility headroom.

RATING SENSITIVITIES

Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
- Successful continued rebalancing of product portfolio with
   growth products (packaging + visual communications) generating
   in excess of 40% of group sales.
- Sustained/increasing absolute EBITDA levels together with
   EBITDA margins approaching 4%.
- FFO adjusted net leverage below 5.5x on a sustained basis.

Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action
- Decline in EBITDA margins to 3%.
- FFO adjusted net leverage above 6.5x on a sustained basis.
- Consistently negative FCF.

LIQUIDITY

Strong Liquidity: At end-2016 Antalis had EUR74 million of
unrestricted cash as well as EUR36 million available under the
factoring facility. The group is expected to generate negative
FCF of EUR15 million in 2017 (due to high one-off expenses), but
has sufficient funding to cover short-term debt of EUR10 million
(short-term maturities exclude the EUR143 million that is
utilised under the factoring facility which is reported as short-
term debt, as Fitch assumes this to be rolled forward every
year).

Pro-forma (updated for 31 May 2017 balances) for the financing
Antalis will have EUR71 million of readily available cash on
balance sheet and usage of factoring facilities will be reduced
by EUR50 million, increasing headroom on both committed and
uncommitted facilities. FCF should turn positive beyond 2017.


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


BLUECELL GMBH: Shuts Down Solar Cell Production in Germany
----------------------------------------------------------
PV-Magazine.com reports that exactly three years after rescuing
the solar cell production of insolvent German producer Sunways,
Bluecell GmbH announced it will shut down this production.

Several local media report that the company has halted
manufacturing activities at the facility in late May. A few weeks
earlier, the 84 employees at the factory were informed of the
closure, the report relates citing the Thuringer Allgemeine. Part
of the production equipment is already to be auctioned off
online, the report says.

Offers for the equipment, which was provided by Centrotherm,
Jonas & Redmann and Baccini can be submitted by the end of
August, according to PV-Magazine.com.

PV-Magazine.com relates that the Swiss investor acquired the 100
MW cell production in Arnstadt from insolvent Sunways in June
2014. Still in 2016, the company's CEO Thomas Wiemers had said to
local TV station MDR Thuringen that Bluecell was innovating the
production equipment in order to secure the business.

The company has decided to close the production due to the strong
pressure on prices and in order to avoid the opening of
insolvency proceedings, adds PV-Magazine.com.


PHOENIX PHARMAHANDEL: S&P Affirms BB+ CCR, Outlook Stable
---------------------------------------------------------
S&P Global Ratings revised to stable from positive its outlook on
Germany-based pharmaceutical distributor PHOENIX Pharmahandel
GmbH & Co KG (Phoenix).

S&P said, "At the same time, we affirmed our 'BB+' long-term
corporate credit rating on Phoenix. We also affirmed the issue
rating on Phoenix's EUR1.25 billion credit facility and two
EUR300 million senior unsecured notes. The recovery rating on
these notes remains '4', indicating our expectation of average
(35%) recovery prospects in the event of a payment default."

Phoenix is the largest European wholesale distributor of
pharmaceuticals; it reported revenues of about EUR24.4 billion in
the year ending Jan. 31, 2017. It also operates more than 2,000
pharmacies in 13 countries -- of which 1,200 are in the
Netherlands, U.K., and Norway -- and ranks among the leading
pharmacy chains.

The wholesale and distribution market in Europe remains
difficult. Aggressive competition in Germany means that pricing
pressure is unlikely to ease. Meanwhile in the U.K., the
regulatory authorities have implemented pharmacy funding cuts.

S&P said, "We expect that 2017/2018 revenues and margins will
benefit from the full impact of consolidating the Mediq Pharma NL
pharmacies in the Netherlands. We believe that organic growth
will continue to benefit from positive dynamics in Eastern Europe
(mainly Czech Republic and Hungary) and in Northern Europe
(mainly Norway and Finland).

"Although we continue to forecast a gradual improvement in the
overall group profitability, which should stem from the higher
proportion of sales coming from the relatively higher-margin
retail business, partial recovery in Germany, and continued
efficiency gains as a result of increased centralization and
automation, we expect that the market conditions will
remain difficult, limiting more pronounced improvement. In
Germany, we anticipate that competitors will continue to offer
rebates to pharmacy customers to gain market share, even though
in our view this is not sustainable in the long term, given the
already low margins in the drugs distribution business. In the
U.K., margins will come under pressure as a result of the full-
year impact of regulatory change.

"We project S&P Global Ratings-adjusted EBITDA of about EUR600
million-EUR630 million over the next two years, reflecting a
margin of about 2.5%, which is a slight improvement on last year.
EBITDA in 2016/2017 was eroded by EUR40 million nonrecurring
items, including EUR18 million of integration costs.

"We expect the company will cautiously monitor its working
capital
requirements, which should remain limited while capital
expenditure (capex) increases to EUR200 million, reflecting
capacity and productivity investments. We forecast free operating
cash flow (FOCF) of at least EUR80 million in 2017/2018. We
continue to view Phoenix's financial policy as conservative,
based on its family ownership and minimal dividend payments. We
forecast only bolt-on acquisitions, but the company could make
larger acquisitions. As such, we project only gradual reduction
in leverage and expect debt to EBITDA to remain at the upper end
of the 3x-4x range over the next 12 months."

S&P added, "In our view, Phoenix's competitive position is
sustained by its resilient business model, which is supported by
noncyclical and long-term growth drivers; high barriers to entry,
which include regulation and the significant investments required
to enter the market; and its strong positioning in the resilient
pharmaceutical market. It is the leader in 12 countries and among
the top three in 20 countries. Phoenix's competitive position is
also supported by its large network in the wholesale markets--it
has 152 wholesale and pre-wholesale distribution centers across
26 countries. These factors are somewhat constrained by
relatively low margins, especially in the wholesale segment and
the potential high swings in working capital.

"Our assessment of Phoenix's satisfactory business risk profile
and significant financial risk profile leads to an anchor of
either 'bbb-' or 'bb+'. We select the lower of these anchors
because a large proportion of Phoenix's revenue stems from the
drug wholesale business, which is stable but low-margin."

The following assumptions underpin S&P's base-case scenario:

- Revenue growth of 3%, reflecting 12 months' integration of
   Mediq Pharma NL (versus eight months in 2016/2017), and
   continued positive momentum in Eastern and Northern Europe.

- S&P expects increasing EBITDA margins, reflecting the higher
   proportion of revenue stemming from retail through the
   acquisition of Mediq Pharma NL and the release of synergies.
   S&P also expects to see a partial recovery in Germany.

- Limited working capital outflow of EUR30 million in 2017/2018
   and EUR40 million in 2018/2019.

- EUR200 million of capex in 2017/2018 and EUR190 million in
   2018/2019, reflecting larger investments in capacity and
   productivity in several new and to-be-modernized distribution
   centers.

- Bolt-on acquisitions of EUR50 million.

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

- An adjusted debt-to-EBITDA ratio of 3.8x-4.0x.
- Adjusted funds from operations to debt of 17%-20%.
- Adjusted free operating cash flow to debt of 8%-10%.

The stable outlook reflects S&P's view that Phoenix will be able
to gradually improve its profitability, benefiting from the full-
year contribution of the pharmacies acquired from Mediq, partial
recovery in Germany, and initiatives to increase automation and
increase efficiencies. Despite the difficult market environment
in Germany and regulatory pressure in the U.K., Phoenix's other
markets such as Norway should support revenue and EBITDA growth.
S&P also expects that the company will manage its working
capital, capex, and returns to shareholders in a way that will
not materially increase its leverage. This should enable the
company to maintain its adjusted debt to EBITDA below 4x.

S&P said, "We could lower the rating if a surge in competition or
adverse regulatory changes are likely to cut into revenue and
profitability and push the adjusted debt to EBITDA above 4x. A
significant increase in working capital outflow leading to free
operating cash flow below EUR70 million could also trigger a
downgrade.

"We would consider raising the ratings if we saw Phoenix's
business risk profile reinforced by increasing the proportion of
revenue that came from the retail business, resulting in
materially higher profitability. If adjusted leverage fell below
3x while FOCF to debt rose above 10%, we could also consider an
upgrade."


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


OAK HILL III: Moody's Assigns (P)B2 Rating to Class F-R Notes
-------------------------------------------------------------
Moody's Investors Service announced that it has assigned the
following provisional ratings to notes to be issued by Oak Hill
European Credit Partners III Designated Activity Company:

-- EUR1,500,000 Class X Senior Secured Floating Rate Notes due
    2030, Assigned (P)Aaa (sf)

-- EUR222,200,000 Class A-1R Senior Secured Floating Rate Notes
    due 2030, Assigned (P)Aaa (sf)

-- EUR15,800,000 Class A-2R Senior Secured Fixed/Floating Rate
    Notes due 2030, Assigned (P)Aaa (sf)

-- EUR25,500,000 Class B-1R Senior Secured Floating Rate Notes
    due 2030, Assigned (P)Aa2 (sf)

-- EUR15,800,000 Class B-2R Senior Secured Fixed Rate Notes due
    2030, Assigned (P)Aa2 (sf)

-- EUR8,700,000 Class B-3R Senior Secured Floating Rate Notes
    due 2030, Assigned (P)Aa2 (sf)

-- EUR22,500,000 Class C-R Senior Secured Deferrable Floating
    Rate Notes due 2030, Assigned (P)A2 (sf)

-- EUR20,000,000 Class D-R Senior Secured Deferrable Floating
    Rate Notes due 2030, Assigned (P)Baa2 (sf)

-- EUR28,000,000 Class E-R Senior Secured Deferrable Floating
    Rate Notes due 2030, Assigned (P)Ba2 (sf)

-- EUR12,000,000 Class F-R Senior Secured Deferrable Floating
    Rate Notes due 2030, Assigned (P)B2 (sf)

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

RATINGS RATIONALE

Moody's provisional ratings of the rated notes address the
expected loss posed to noteholders by the legal final maturity of
the notes in 2030. The provisional ratings reflect the risks due
to defaults on the underlying portfolio of loans given the
characteristics and eligibility criteria of the constituent
assets, the relevant portfolio tests and covenants as well as the
transaction's capital and legal structure. Furthermore, Moody's
is of the opinion that the Collateral Manager, Oak Hill Advisors
(Europe), LLP, has sufficient experience and operational capacity
and is capable of managing this CLO.

The Issuer has issued the Refinancing Notes in connection with
the refinancing of the following classes of notes: Class A Notes,
Class B Notes, Class C Notes, Class D Notes, Class E Notes and
Class F Notes due 2028 (the "Original Notes"), previously issued
on June 18, 2015 (the "Original Closing Date"). On the
Refinancing Date, the Issuer will use the proceeds from the
issuance of the Refinancing Notes to redeem in full its
respective Original Notes. On the Original Closing Date, the
Issuer also issued one class of subordinated notes, which will
remain outstanding.

Oak Hill III is a managed cash flow CLO. At least 90% of the
portfolio must consist of senior secured loans and senior secured
bonds. The portfolio is expected to be fully ramped up as of the
Issue Date and to be comprised predominantly of corporate loans
to obligors domiciled in Western Europe.

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

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

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

Loss and Cash Flow Analysis:

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

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

Par Amount: EUR400,000,000

Diversity Score: 35

Weighted Average Rating Factor (WARF): 2750

Weighted Average Spread (WAS): 4.10%

Weighted Average Recovery Rate (WARR): 40.6%

Weighted Average Life (WAL): 8 years

As part of the base case, Moody's has looked at the potential
exposure to obligors domiciled in countries with local currency
country risk ceiling (LCC) of A1 or below. As per the portfolio
constraints, exposures to countries with a LCC of A1 or below
cannot exceed 10%, with exposures to countries with LCCs of Baa1
to Baa3 further limited to 0%. Given these portfolio constraints
and the current sovereign ratings of eligible countries, no
additional stress runs were performed as further described in the
methodology

Stress Scenarios:

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

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

Ratings Impact in Rating Notches:

Class X-R Senior Secured Floating Rate Notes: 0

Class A-1R Senior Secured Floating Rate Notes: 0

Class A-2R Senior Secured Fixed/Floating Rate Notes: 0

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

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

Class B-3R Senior Secured Floating Rate Notes: -2

Class C-R Senior Secured Deferrable Floating Rate Notes: -2

Class D-R Senior Secured Deferrable Floating Rate Notes: -2

Class E-R Senior Secured Deferrable Floating Rate Notes: -1

Class F-R Senior Secured Deferrable Floating Rate Notes: -1

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

Ratings Impact in Rating Notches:

Class X-R Senior Secured Floating Rate Notes: 0

Class A-1R Senior Secured Floating Rate Notes: -1

Class A-2R Senior Secured Fixed/Floating Rate Notes: -1

Class B-1R Senior Secured Floating Rate Notes: -4

Class B-2R Senior Secured Fixed Rate Notes: -4

Class B-3R Senior Secured Floating Rate Notes: -4

Class C-R Senior Secured Deferrable Floating Rate Notes: -4

Class D-R Senior Secured Deferrable Floating Rate Notes: -3

Class E-R Senior Secured Deferrable Floating Rate Notes: -2

Class F-R Senior Secured Deferrable Floating Rate Notes: -4

Further details regarding Moody's analysis of this transaction
may be found in the upcoming pre-sale report, available soon on
Moodys.com.

Methodology Underlying the Rating Action:

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


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


MECA LEAD: July 26 Bid Submission Deadline Set
----------------------------------------------
Dr. Paolo Cosentino, the official receiver of Meca Lead
Recycling S.p.A., in liquidation, located in L.ta San Pietro
Lamentino, Lamezia Terme, disclosed that at 10:00 a.m. on
July 27, 2017, a selection will be made of the bids for purchase
of the company.

The starting price is EUR4,000,000.00.  Bid submission deadline
is at 12:00 a.m. on July 26, 2017.

Alternatively, should no purchase bids be received, at 12:00 a.m.
on July 27, 2017, bids for the rental of the same business unit
will be considered.

The starting price is EUR15,000.00 plus VAT per month.  Duration
of contract is 30 months.  Total rent is EUR450,000.00 plus vAT.
Bid submission deadline is at 12:00 a.m. on July 26, 2017.

The two calls for bids, and the relevant documents, are available
on the following websites www.doauction.com, www.asteannunci.it,
www.rivistaastegudiziare.it, www.canaleaste.it,
www.astetribunali24.com, www.asteavvisi.it,
www.fallimentomecaleadrecylcingspa.it.

Interested parties may contact the Official Receiver either by
phone: 0968/448823 or 348 7358129, or by e-mail:
cosentinopaolo@tiscali.it; certified e-mail:
f8.2017lameziaterme@pecfallimenti.it

The judge overseeing the bankruptcy process is Dr. Adele Foresta.

Meca Lead Recycling S.p.A. is active in the recovery of lead
waste from batteries and scrap.


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


BAITEREK HOLDING: S&P Lowers LT Issuer Credit Ratings to BB-
------------------------------------------------------------
S&P Global Ratings lowered its long-term foreign and local
currency issuer credit ratings on Kazakhstan's JSC National
Management Holding Baiterek (Baiterek Holding) to 'BB-' from
'BB+'. S&P affirmed the 'B' short-term foreign and local currency
issuer credit ratings.

At the same time, S&P lowered the Kazakhstan national scale
rating to 'kzBBB+' 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. The ratings on Baiterek Holding incorporate
several notches of support, being higher than what its intrinsic,
stand-alone creditworthiness would warrant. We 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.

"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 (see "Research Update: Railway Operator
Kazakhstan Temir Zholy And Subsidiary Kaztemirtrans 'BB' Ratings
On CreditWatch Negative," published April 20, 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 itspayments 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. 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
("Research Update: Kazakh ElectricityGroup Samruk-Energy Cut To
'B+' And 'kzBBB-' On Increasing Refinancing Risk; Still On
CreditWatch Neg," April 12, 2017).

"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. We note, however, that one of the subsidiaries
of the Holding, DAMU, has sovereign guarantees on some of its
borrowings.

"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 long-term '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 Baiterek group if they are under
stress."

The Baiterek group and its parent company Baiterek Holding were
established in 2013 by presidential decree. The group is
controlled by the government, which fully owns the holding
company. At present, there are 11 subsidiaries under the holding
company, which can be broadly characterized as development
institutions implementing several strategic government programs.
Specifically, the government mandates the group to:


-- Foster the development and diversification of the Kazakhstan
    economy;

-- Support small and midsize enterprises (SMEs); and

-- Resolve some of the state's socially oriented tasks, in
    particular in the housing segment.

S&P's 'bb+' assessment of the consolidated group's
creditworthiness (the GCP) is based on our view of the group's:

-- Integral link with the government. The state owns 100% of
    Baiterek Holding, which in turn fully owns its subsidiaries
    (with the exception of one subsidiary, of which Baiterek
    Holding owns 97.7%). Being one of the three national
    management holdings in the country, Baiterek Holding has a
    special public status. A number of senior government
    officials are on the Baiterek board of directors, including
    the prime minister, first deputy prime minister, minister of
    investments and development, minister of finance, and the
    minister of the economy, among others. The government closely
    oversees the activities of the group.

-- Critical public policy role as a vehicle for implementing a
    number of strategic government programs. The subsidiaries of
    Baiterek Holding are involved in implementing several key
    national policies, including the Business Road Map 2020, the
    infrastructure program Nurly Zhol, and the new housing
    construction program Nurly Zher. Baiterek is also a financial
    operator for the State Program for Industrial and Innovative
    Development for 2015-2019 and plays a role in implementing
    the Program for Development of Productive Employment.

S&P said, "Our ratings on Baiterek Holding are two notches lower
than the 'bb+' 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. It
also reflects our perception of the group's importance for the
government as primarily stemming from the operating companies
that are directly involved in implementing government programs.
In our view, in a hypothetical scenario of the group being under
stress, the government may have incentives to support
subsidiaries ahead of the holding company."

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 S&P views 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.

In March 2017, Baiterek Holding adopted a new development
strategy through 2023. According to the document, Baiterek
Holding will continue to participate in the implementation of
many government programs. At the same time, the strategy
explicitly states that the holding needs to be optimized with a
transfer of functions that could be commercially fulfilled to the
private sector, reflecting the demands of President Nursultan
Nazarbayev in his speech in January 2017. The strategy also calls
for a reduction of state financing and increasing focus on
borrowing from other sources. That said, S&P expects the latter
to be a gradual process. The holding company has received both
capital contributions and loans on concessional terms in recent
years and S&p expects this will continue in the near future.

S&P said, "Our unsupported group credit profile (unsupported GCP)-
-which reflects the creditworthiness of the consolidated group
without taking into account the potential for extraordinary
government support--of the Baiterek group is 'b'. The unsupported
GCP reflects 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.

"Our assessment of the Baiterek group's business position reflects
its relatively short operational track record of about four years
since its creation as a nonoperating holding company in 2013 and
the difficulties it could face implementing a cohesive management
approach across its operating subsidiaries. The subsidiaries'
different business profiles, corporate cultures, and client bases
present barriers to Baiterek Holding articulating a strategy with
a holistic approach to risks, systems, and synergies. However,
the Baiterek group consolidates well-established entities, such
as Development Bank of Kazakhstan (DBK) and DAMU Entrepreneurship
Development Fund, which have a proven functioning business model
and have been operating for a long time. Baiterek Holding's
largest subsidiaries by asset size are DBK (60% of consolidated
group assets as of year-end 2016), Zhilstroysberbank (around
15%), and DAMU (close to 10%).

"Still, we recognize that with Kazakhstani tenge (KZT) 4.0
trillion ($12.1 billion) in assets as of March 31, 2017, the
Baiterek group is sizable and accounted for 9% of Kazakhstan's
GDP in 2016."

The Baiterek group's business strategy is not driven by profit-
making but, rather, by its public policy role. Its main strategic
tasks are:

-- Support of large projects;

-- Development of SMEs;

-- Provision of affordable housing;

-- Increasing exports of Kazakh companies; and

-- Transfer and adoption of innovations.

S&P said, "Our assessment of the Baiterek group's capital and
earnings reflects moderate growth plans and capital injections of
KZT122 billion in 2017-2018. Therefore, we expect our risk-
adjusted capital ratio to remain in the 14.8%-15.1% range in
2017-2018. It reduced to 14.9% at year-end 2016 from 16.1% a year
earlier, in line with our expectations. There are no minimum
regulatory capital requirements for Baiterek Holding.

Given its public policy role, Baiterek does not have a profit-
maximizing objective. Nevertheless, it seeks to ensure a level of
earnings sufficient to cover the cost of its ongoing activities
and investment projects. S&P said, "We expect its return on assets
to be below 1% and return on equity about 3.5%-4.0% in 2017-2018.
We expect net income to be volatile and largely affected by net
interest margin, loan loss provisioning expenses, and funding
costs. Therefore, regular capital injections are critical to
maintain capital buffers and limit leverage.

"Our assessment of the Baiterek group's risk position mainly
reflects its weaker loss experience than Kazakh commercial
banks', excluding restructured banks; rapid loan growth in 2013-
2015; the directed-lending nature of its loans; and still high
although reduced share of loans in foreign currencies."

The Baiterek group's nonperforming loans (NPLs) decreased to 7.2%
at year-end 2016 from 9.3% as of year-end 2015, while
restructured loans increased to 13.5% from 2.7% in the same
period, mainly relating to conversion of loans at DBK to tenge
from foreign currency. DBK transferred its NPLs in 2013-2015 to
the Investment Fund of Kazakhstan, another Baiterek subsidiary.
DBK's new NPLs (emerging in 2016) are below 1% of total loans.
S&P does not expect a notable improvement in asset quality in the
next two years unless write-offs take place. S&P acknowledges
that provisions fully covered NPLs at year-end 2016, but they did
not cover restructured loans.

The Baiterek group's corporate loan portfolio is dominated by oil
and gas (28% of total loans) and mining, metallurgy, and mineral
resources (29% of total loans), with other industries accounting
for less than 10% of total loans at year-end 2016. Residential
mortgage loans through Zhilstroysberbank accounted for 20% of
total loans. The top 20 borrowing exposures represent 100% of
total adjusted capital as of March 31, 2017, which compares well
with Kazakh commercial banks and other banks in countries with a
similar economic risk.

S&P said, "In our opinion, the Baiterek group's consolidated
funding is below average, reflecting high refinancing risk
because of its concentrated funding profile with clustered large
debt repayments. This is despite our average stable funding ratio
of 161% over the past five years. Its lack of bank status
prevents access to the central bank's discount window. The main
funding sources at year-end 2016 were: loans from financial
institutions (38% of total funding); Eurobonds (17%); retail
deposits (15%); tenge bonds 19%); and government and Samruk-
Kazyna loans (7%). Export-Import Bank of China accounted for 49%
of loans from banks as of year-end 2016. We note that Baiterek's
government funding is provided on preferential terms--low
interest rates and long maturities."

Debt repayments are spread over the long term. The highest debt
repayments are concentrated in 2019 (about $1.3 billion) and in
2022 (about $1.6 billion) and are covered by cash and securities.

S&P assesses liquidity as adequate. Cash and money market
instruments accounted for 11% of total assets at year-end 2016,
interbank deposits for 16%, and available-for-sale securities for
an additional 14%, which together form a high level of liquid
assets at the consolidated level. However, the lack of
fungibility of liquid assets, due to the existence of various
legally independent entities, tempers S&P's assessment of the
group's liquidity.

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

S&P said, "We could lower the ratings on Baiterek 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 Baiterek Holding
for the government as reducing in contrast to the role of the
overall group."

RATINGS LIST

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


NOSTRUM OIL: S&P Affirms 'B' CCR Amid Proposed Debt Refinancing
---------------------------------------------------------------
S&P Global Ratings affirmed its 'B' long-term corporate credit
rating on Netherlands-registered hydrocarbons exploration and
production company Nostrum Oil and Gas PLC, which operates in
Kazakhstan. The outlook is stable.

S&P said, "We affirmed our 'B' long-term issue rating on the
company's senior unsecured notes, which were issued by Nostrum's
subsidiary Zhaikmunai LLP and are guaranteed by all the group's
entities.

"We also have assigned our 'B' long-term debt rating to the
proposed senior unsecured guaranteed notes, which will be issued
by Nostrum Oil & Gas Finance B.V., a financing subsidiary of
Nostrum Oil and Gas PLC."

S&P relates, "The affirmation reflects our view that the
financial transaction Nostrum has announced will enable it to
refinance a significant portion of its 2019 debt maturities (two
bond issues, which represent the group's entire debt) and
complete its major investment project -- the construction of the
GTU3 gas treatment facility -- later in 2017, without raising
additional funds or facing liquidity pressure.

"The rating on the proposed senior unsecured notes mirrors the
long-term corporate credit rating on Nostrum. We expect the
proposed issue to be jointly, severally, fully, and
unconditionally guaranteed by all the group's entities, including
the major operating subsidiary -- Zhaikmunai LLP. This entity
holds almost all of the group's assets and cash flows, which
should help to mitigate the potential structural subordination
risk. The company intends to use the proceeds from these notes to
refinance a portion of the existing two bonds issued by
Zhaikmunai LLP and maturing in 2019. We do not consider the
proposed tender offer to be a distressed restructuring because it
is made at close to par with a slight premium to the current
market price and 21 months in advance of the maturity date of the
first of the existing bonds."

Following the average oil price rebound, Nostrum's financial
results for the first quarter of 2017 improved -- its S&P Global
Ratings-adjusted quarterly EBITDA reached $71 million (compared
with $35 million for the same period of 2016). As a result, the
company's credit metrics improved in line with S&P's
expectations: as of March 31, 2017, adjusted debt/EBITDA for the
past 12 months was 4.7x, down from 5.7x on Dec. 31, 2016. Funds
from operations (FFO) to debt was 11% in March, compared with 9%
in December.

Nostrum is currently undertaking a large-scale investment
project, the GTU3 construction scheme, into which it has invested
$498 million. The project is scheduled to be completed in the
second half of 2017. Once online, the GTU3 facility could help
Nostrum expand production to more than 80,000 barrels of oil
equivalent per day (boepd) by 2019, from 40,000 boepd on average
in 2016. That said, this project is subject to execution and cost
overrun risks.

S&P said, "We anticipate that these heavy investments will weigh
on free operating cash flow, which will remain negative this
year, but may turn positive as early as 2018 if the facility
comes online and production volumes therefore increase. The
affirmation also incorporates our view that the company will have
adequate credit metrics for the rating in 2017-2018, with FFO to
debt of 12%-20% and debt to EBITDA of about 4.0x-4.5x.

"Our assessment of Nostrum's business risk profile as weak
reflects our view of the company's fairly concentrated asset base
and its dependence on one pipeline for dry gas -- the company
uses another pipeline for crude oil and stabilized condensate,
and it could also use trucks as an alternative for oil
transportation. We also take into account that its operations are
its relatively small in scale by international standards and the
inherent risks relating to the oil industry and operating in
Kazakhstan, where we assess the country risk to be high."

These factors are mitigated by good profitability -- S&P
continues to assume that S&P Global Ratings-adjusted EBITDA
margin will be about 50%-55% in the next two years -- and a
favorable cost structure based on a modern asset base, low cash
lifting costs, and a supportive tax regime. In S&P's view,
Nostrum's relatively low break-even costs and our expectation
that its production profile will improve materially from the end
of 2017, are important advantages compared with peers. This is
reflected in S&P's positive comparable rating analysis score.

In its base case, S&P assumes:

- An average Brent oil price of $50 per barrel (/bbl) for 2017-
   2018, $55/bbl afterward.

- Annual production of about 44,000 boepd in 2017 (about a 10%
   increase from the 2016 level), once new production from the
   planned facility materializes. S&P expects gas will continue
   to account for approximately 50% of Nostrum's total
   production.

- About 20% revenue growth in 2017 and additional 30% growth in
   2018, assuming startup of the GTU3 facility in the second half
   of this year and also assuming stronger oil prices in 2017-
   2018 compared with the 2016 average.

- Generally strong EBITDA margins of about 50%-55% in 2017-2018,
   thanks to low operating costs.

- No dividends in 2017 as the company focuses on completing the
   GTU3 project; $50 million per year afterward, in line with
   historical payouts at the company).

- Capital expenditure (capex) of about $200 million per year,
   including $120 million in 2017 to complete the GTU3 project
   and some drilling activities, which S&P understands are
   largely discretionary.

- Long-term debt profile has no maturities before 2019, when the
   senior unsecured notes are due.

Based on these assumptions, S&P arrives at the following credit
measures in 2017-2018:

- FFO to debt of 12%-20%; and
- Debt to EBITDA of 4.0x-4.5x.

The stable outlook on the company reflects S&P's view that
Nostrum will maintain credit measures that are commensurate with
the rating over 2017-2018, that is, FFO to debt of 12%-20% and
debt to EBITDA of 4.0x-4.5x. The company has low operating costs,
anticipates a material production increase from the second
half of 2017 when the GTU3 facility is launched, and maintains
prudent financial policies. S&P also expects it to successfully
refinance its 2019 maturities.

S&P might lower the ratings if:

- Nostrum experiences delays in completing the GTU3 plant or
   suffers from project cost overruns that cause it to raise debt
   not aimed at refinancing;

- The company's cash position deteriorates below $50 million,
   resulting in squeezed liquidity (and also potentially
   indicating higher-than-expected costs to complete the GTU3);

- There are operating or macroeconomic issues or heightened
   investments or dividend payments, resulting in sustainably
   weakened credit metrics, notably FFO to debt remaining below
   10% or debt to EBITDA exceeding 5x; or

- Nostrum fails to refinance the 2019 maturities in full in the
   next 12 months.

S&P said, "We might consider raising the ratings if we foresaw an
improvement in credit measures, such that Nostrum's FFO to debt
remained comfortably above 20% for a sustained period. This could
occur if oil prices rose to a supportive level or the GTU3
production ramp-up was quicker than expected. An upgrade would
also depend on a lack of liquidity issues and successful
refinancing of the 2019 maturities."


SAMRUK-KAZYNA: S&P Lowers Issuer Credit Rating to 'BB+/B'
---------------------------------------------------------
S&P Global Ratings lowered its long- and short-term foreign- and
local currency issuer credit ratings on the government holding
company Samruk-Kazyna to 'BB+/B' from 'BBB-/A-3'. The outlook is
negative.

At the same time, S&P lowered the Kazakhstan national scale
rating to 'kzAA-' from 'kzAA'.

S&P said, "We also lowered our issue ratings on Samruk-Kazyna's
senior unsecured debt to 'BB+' from 'BBB-'.

"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 Samruk-Kazyna remains an
essential government tool, and the likelihood of it receiving
extraordinary support from the government remains almost certain.
The ratings on Samruk-Kazyna incorporate several notches of
support, being higher than what its intrinsic, stand-alone
creditworthiness would warrant. We estimate the underlying credit
quality, absent extraordinary government support, in the 'b'
category for Samruk-Kazyna.

"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 (see "Research Update: Railway Operator
Kazakhstan Temir Zholy And Subsidiary Kaztemirtrans 'BB' Ratings
On CreditWatch Negative," published April 20, 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. 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
("Research Update: Kazakh Electricity Group Samruk-Energy Cut To
'B+' And 'kzBBB-' On Increasing Refinancing Risk; Still On
CreditWatch Neg," April 12, 2017).

"In our opinion, these precedents indicate gradually declining
willingness of the government to provide extraordinary support to
the GRE sector.

"Although we continue to assess the likelihood of extraordinary
government support to Samruk-Kazyna as almost certain, the long-
term ratings are one notch lower, at 'BB+' which balances our
view of a gradual transition in government willingness to support
the GRE sector against our view that Samruk-Kazyna' role is still
critical and its link with the government is integral.

"The almost certain likelihood of extraordinary government support
for Samruk-Kazyna in case of need is based on our view of its
critical role for and integral link with the government."

Specifically:


-- Samruk-Kazyna has an integral link with the government, which
    fully owns the fund. Samruk-Kazyna enjoys special public
    status as a national management holding. S&P does not expect
    the government to reduce its stake inor control of the
    company in the foreseeable future. This is despite
    privatization plans regarding of some subsidiaries controlled
    by Samruk-Kazyna that the government announced in 2015.
    Kazakhstan's prime minister heads Samruk-Kazyna's board and
    the government is closely involved in determining Samruk-
    Kazyna's strategic decisions.

-- Samruk-Kazyna plays a critical role as the government's main
    vehicle for implementing its agenda for strategic
    industrialization and long-term economic sustainability and
    diversification. Samruk-Kazyna controls essentially all
    strategic corporate assets in Kazakhstan, with the total
    consolidated group assets estimated at over 40% of GDP,
    including those in the oil and gas sector. Samruk-Kazyna is a
    key government tool in the implementation of a privatization
    program announced in 2015. Samruk-Kazyna's strategic role is
    set out in several key government documents and policy
    statements.

Samruk-Kazyna has been implementing key national policies since
it was established by presidential decree in 2008. It
consolidates almost all of Kazakhstan's state-owned corporate
assets, including those in such key sectors as oil and gas, power
generation, transport, and mining, and manages them on behalf of
the government, playing a central role in meeting key economic,
political, and social objectives.

By law, all Samruk-Kazyna's board members are heads of central
executive bodies, and Kazakhstan's prime minister is the
chairman. Through regular board meetings, the government plays a
decisive role in Samruk-Kazyna's operations. As the holding
company, Samruk-Kazyna must be 100% owned by the government by
law. In 2015 the government announced plans to privatize some of
SK's assets, including those in the energy, mining, and transport
sectors, to attract foreign direct investment and stimulate
economic growth. The privatization list features some 215
entities owned and operated by Samruk. The largest of Samruk-
Kazyna's subsidiaries are targeted for IPO: AirAstana,
Kazatomprom, Kazakhtelecom, KazMunayGas, KTZ, Samruk-Energy, and
Kazpost. According to plans, a 15%-25% share of those companies
is to be floated on the Astana stock exchange by 2020.

S&P said, "In our view, Samruk-Kazyna still benefits from
adequate, ongoing support from the government through several
channels such as concessional budget loans and regular capital
injections from the budget and purchases of Samruk-Kazyna's bonds
by the state's pension fund.

"We would likely revise the outlook or change the ratings on
Samruk-Kazyna if we took similar rating actions on the sovereign.

"We could also lower the ratings on Samruk-Kazyna if we saw signs
of waning government support to the group or, more broadly, to
other government-related entities over the next 12 months."


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


SWISSPORT GROUP: S&P Keeps 'B' CCR on CreditWatch Negative
----------------------------------------------------------
S&P Global Ratings said that it maintained its 'B' long-term
corporate credit rating on Luxembourg-based airport services
provider Swissport Group S.a.r.l (Swissport) and the group's
related entities on CreditWatch with negative implications, where
it was placed on May 9, 2017.

S&P said, "Our ratings on the group's debt also remain on
CreditWatch negative.

"Furthermore, our '3' recovery rating on the group's senior
secured debt is unchanged, but our expectation of recovery has
fallen slightly, to 50% from 60% previously."

On May 9, 2017, S&P Global Ratings indicated that it had used the
criteria "Key Credit Factors For The Transportation Cyclical
Industry," dated Feb. 12, 2014, to assess Swissport, given its
high dependence on the airline industry. However, S&P should have
applied the criteria "Key Credit Factors For The Business And
Consumer Services Industry" (Business Services KCF) dated Nov.
19, 2013, which are used for companies whose primary function is
to provide general support services for businesses that typically
have the option to insource the services. Today's rating action
corrects this error by using the Business Services KCF, the
effect of which is reflected in our industry, competitive
position, and profitability assessments.

The negative CreditWatch placement on May 9, 2017, followed
Swissport's announcement of a technical breach of certain
nonfinancial covenants in its credit facility agreement and its
intention to find a solution with its banks and investors.

The covenant breach occurred when shares of three holding
companies within Swissport's restricted group were used as
security for a debt facility for Swissport's indirect parent, HNA
Group Co. Ltd. In concrete terms, the securities were pledged for
a subsidiary of HNA Group before the acquisition of Swissport was
finalized.

S&P said, "We continue to assess Swissport's business risk
profile as fair, reflecting our view of the company's focus on
the cyclical airline industry as a sole end-market as well as
concentration on ground handling and, to a lesser extent, on
cargo handling, which we generally view as more susceptible to
general economic fluctuations. We view favorably Swissport's
international
footprint in the ground handling market with more than 800
customers at more than 230 airports around the globe.

"We aim to resolve the CreditWatch on completion of Swissport's
actions to cure the technical breach, which we expect will happen
by the beginning of August."



=============
R O M A N I A
=============


RADET: Buys Thermal Power Producer for EUR155 Million
-----------------------------------------------------
Romania-Insider.com reports that Bucharest's heat distributor
RADET, which went into insolvency at the end of last year, will
buy thermal power producer ELCEN, which is also in insolvency.

The transaction was approved by Bucharest's General Council,
RADET's owner, on June 29, Romania-Insider.com relates. ELCEN is
controlled by the Energy Ministry.

Romania-Insider.com, citing the municipality's decision, says
RADET will pay EUR155 million for the majority stake in ELCEN and
plans to merge the two companies. The Bucharest City Hall will
pay this sum in five years, according to mayor Gabriela Firea,
who said the decision was historic, the report says. The
transaction also needs to be approved by the Government.

According to the report, Ms. Firea said that the new entity that
will result from the RADET-ELCEN merger will put an end to a bad
and expensive service.

RADET operates Bucharest's public heating system and ELCEN is its
main supplier. The power plant produces both electricity and
heat. Both companies have had financial problems in recent years
and the heat supply to Bucharest residents has been in doubt at
the beginning of each winter season, Romania-Insider.com notes.


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


B&N BANK: S&P Affirms 'B/B' Counterparty Credit Ratings
-------------------------------------------------------
S&P Global Ratings affirmed its 'B/B' long- and short-term
counterparty credit ratings on Russia-based B&N Bank. The outlook
is stable.

S&P said, "The affirmation reflects our view that B&N Bank will
likely be able to maintain its franchise (following the November
2016 merger with MDM Bank) and financial profile over the next 12
months, with stabilized credit costs and gradually improving
profitability."

S&P related "Our assessment of B&N Bank's business position
balances an increased market share, thanks to the MDM Bank merger
(1.6% of total assets and 2.6% of retail deposits as of June 1,
2017), with still-volatile earnings as well as substantial risks
stemming from the interbank loan to ROST Bank being under
rehabilitation and the integration of the merged banks. We think
that B&N Bank's management team will continue their efforts to
transform the bank into a stronger player with a sustainable
long-term business model, improving its efficiency to a level
comparable with peers', and strengthening its earnings capacity.

"We expect the bank's loan portfolio growth for 2017-2018 will be
about 5%, in line with the 5%-7% average annual lending growth
rate we expect for the Russian banking sector. We anticipate that
B&N Bank's risk-adjusted capital (RAC) ratio will stay in the
range of 4.0%-4.5% over the next two years, with no additional
capital injections. However, we understand that in case of need
the bank's shareholders are ready to provide capital support.

"We forecast that credit costs are likely to be at 3.7%-4.0% in
2017 and reduce toward 3.3% by year-end 2018, due to our
expectation of stabilization of asset quality with B&N Bank's
nonperforming loans (NPLs) at about 10% and an adequate level of
loan-loss provisions. In our view, internal capital generation
remains a significant constraint to the bank's stand-alone credit
quality while we expect earnings buffers to become marginally
positive (at a marginal 5 basis points) only in 2018.

"Our assessment of B&N Bank's risk position factors in the risks
related to the bank's aggressive expansion over recent years; the
bank's own asset quality, which is at best on par with the
average levels in the sector; and its substantial exposure to
ROST Bank, which is under financial rehabilitation with
substantially higher levels of problem loans. Therefore, exposure
to ROST Bank remains one of the key risks for B&N Bank, in our
view. According to our estimates, ROST Bank's NPLs accounted for
9.5% of total loans as of end-March 2017. B&N Bank remains
directly exposed to the risks of ROST Bank through an interbank
loan to ROST Bank of Russian ruble (RUB) 563 billion (about $10
billion), or 6.8x total adjusted capital (TAC) of the bank as of
end-March 2017. However, we think that this risk is partly
mitigated by shareholders' commitment to support B&N Bank in case
of potential substantial deviations from the currently envisioned
rehabilitation plan for ROST Bank. We expect ROST Bank to start
gradually repaying the B&N Bank loan in 2018, along with its own
loans, and therefore the rate at which B&N Bank's exposure to
ROST Bank decreases will depend on the efficiency of management
in recovering problem loans at ROST Bank. Further evolution of
this exposure will depend on the performance of ROST Bank's loan
portfolio. We also note that B&N Bank's exposure to the
construction and real estate sector (18.4% of gross loan book as
of end-2016), in our view, represents significant concentration
risk to a high-risk sector. Therefore, we consider the loan-loss
provision coverage ratio of 171% as of March 31, 2017, to be
adequate, but not ample."

S&P added, "Due to the bank's notable share in the Russian
banking sector's total assets (1.6%) and retail deposits (2.6%),
we consider B&N Bank to have moderate systemic importance. We
therefore think the bank would likely receive support, if
required, from the Russian government, which we classify as
supportive toward systemically important private-sector
commercial banks. Our 'B' counterparty credit rating on B&N Bank
is therefore one notch above our assessment of the bank's stand-
alone credit profile, which we assess at 'b-'.

"The stable outlook on B&N Bank reflects our view that over the
next 12-18 months the bank will likely maintain its
creditworthiness and preserve its capital buffers. We believe
this is supported by the bank's gradually improving profitability
and stabilizing credit costs, despite still-challenging operating
conditions for banks in Russia and the ongoing integration of MDM
Bank and B&N Bank. Nevertheless, we acknowledge that the merger
and integration risks are important as the bank still has to
demonstrate that the merged entity is a sustainable business that
is stronger than the individual banks of which it is formed. B&N
Bank's exposure to ROST Bank and the latter's performance remains
another key risk for the bank.

"We could take a negative rating action if the bank's loss-
absorption capacity materially weakened over the next 12-18
months, due to significant additional provisions created, or
other one-time losses that weigh on profitability and
capitalization, resulting in our RAC ratio falling close to or
below 3%. We could lower the ratings if we saw a significant
deterioration of the bank's asset quality, contrary to our
current expectations of asset quality stabilization. We could
also lower our ratings on B&N Bank if we see substantial delays
in or material deviations from the implementation of ROST Bank's
financial rehabilitation plan that could negatively affect B&N
Bank's creditworthiness.

"We consider ratings upside to be remote at this stage. An
upgrade would require a substantial reduction in B&N Bank's
exposure to ROST Bank as well as evidence that the bank's
business model is sustainable and that its earnings generation
capacity had sustainably improved. The absence of additional
integration risks and sufficient internal capital generation
would be other important factors for us to consider a positive
rating action."


NOVATSIA JSC: Liabilities Exceed Assets, Assessment Shows
---------------------------------------------------------
During the examination of financial standing of the credit
institution Novatsia Joint-stock Commercial Bank (Public Joint-
stock Company), further referred to as the credit institution,
the provisional administration, acting from January 23, 2017 and
appointed by Bank of Russia Order No. OD-112, dated January 23,
2017, due to the revocation of the banking license, revealed
operations, conducted by the credit institution's former
management, which bear the evidence of siphoning off of assets
by, among other things, extending intentionally bad loans to
borrowers with dubious solvency who are unable to meet their
liabilities, as well as to corporate borrowers bearing the marks
of shell companies.  The resulting damage totalled in excess of
430 million rubles, according to the press service of the Central
Bank of Russia.

The provisional administration estimates the value of the Bank
assets to total RUR1.1 billion, vers. RUR1.8 billion of its
liabilities to creditors.

On March 15, 2017, the Court of Arbitration of the Republic of
Adygera ruled to recognize the Bank as insolvent (bankrupt) and
initiate bankruptcy proceedings.  The State Corporation Deposit
Insurance Agency was appointed as a receiver.

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


TEMPBANK PJSC: Moratorium on Meeting Claims Extended
----------------------------------------------------
The Bank of Russia, guided by Article 189.38 of Federal Law No.
127-FZ, dated 26 October 2012, "On Insolvency (Bankruptcy)", has
decided to extend the moratorium on meeting claims of creditors
of Moscow Joint-stock Bank Tempbank (PPJSC MJSB Tempbank, Reg.
No. 55) for a period of three months but no longer than the
period of activity of the provisional administration to manage
PJSC MJSB Tempbank, according to the press service of the Central
Bank of Russia.

PJSC MJSB Tempbank is a member of the deposit insurance system.
An insured event shall be deemed as occurring starting from the
date the moratorium on meeting the creditor claims of PJSC MJSB
Tempbank (April 5, 2017), which shall also be the date for
calculation of insurance indemnity for the bank's liabilities in
foreign currency.

The extension of the moratorium on meeting creditor claims,
effective July 5, 2017, not being an insured event, shall not
cancel the obligation of the Deposit Insurance Agency State
Corporation to pay out insurance indemnity, which arose in
connection with the moratorium imposed by Bank of Russia Order
No. OD-871, dated April 5, 2017.

The Agency will continue to pay out insurance indemnity for
deposits (deposit accounts) with PJSC MJSB Tempbank in accordance
with Clause 2 Part 1 Article 8 of Federal Law No. 177-FZ, dated
23 December 2003, "On the Insurance of Household Deposits with
Russian Banks" -- imposition by the Bank of Russia of the
moratorium on meeting creditor claims.

Information on the authorised agent banks to pay an insurance
indemnity can be found on the official website of the state
corporation Deposit Insurance Agency (www.asv.org.ru).


URALKALI JSC: S&P Affirms BB- CCR, Outlook Negative
---------------------------------------------------
S&P Global Ratings said that it affirmed its 'BB-' long-term
corporate credit rating on Russian agrochemicals producer
Uralkali JSC. The outlook is negative.

S&P said, "The affirmation reflects our expectation that
Uralkali's funds from operations (FFO) to debt will remain at
17%-20%, on average, in 2017-2019 supported by low capital
expenditure (capex) and in the absence of shareholder
distribution (except for moderate shareholder loans in 2017).
This should allow the company to reduce leverage from a very
significant debt of around US$5.9 billion on an S&P Global
Ratings-adjusted basis (which is 12.1% of FFO or 4.9x EBITDA as
of Dec. 31, 2016). This debt level was the result of previous
aggressive share buybacks (totaling around US$3.9 billion in
2015-2016 and resulting in buying back 41.78% of shares) and
amplified by the protracted price downturn. In particular, the
price of potash, Uralkali's key product, decreased by around 30%
in 2016.

"We expect that negative pressure on the rating will be sustained
in 2017-2018 resulting primarily from industry conditions. In our
view, some demand growth driven by better affordability of potash
is expected to be offset by the launch of significant greenfield
projects, in particular, by Eurochem and K+S.

"That said, we take into view the strong cost advantage of
Uralkali on the back of scale, rich reserves, and devalued ruble,
which supports its favorable position in the first quartile of
the global potash cost curve. We also factor in its diversified
sales structure, with only around 20% of revenues generated in
Russia with the rest well-spread through Europe, Asia, the
Americas, and
other continents.

"At the same time, we note Uralkali's high sensitivity to ruble
exchange rate volatility. Our assessment of the company's
business risk profile is also constrained by the high country
risk that Russia presents, and by the high cyclicality in the
fertilizer industry."

Under its base case, S&P assumes:

- A flat potash cost and freight price of about $230 per metric
   ton (/mt) in 2017-2018, against $280-$290/mt in 2015, $307/mt
   in 2014, and $350/mt in 2013. It does not expect potash price
   improvement as it expects that the launch of greenfield
   projects in the industry should balance the moderate
   increase of demand witnessed recently.

- A discount applied to domestic sales, given that the potash
   price for the Russian offtakers is calculated based on a
   minimum export price (the weighted average price on the export
   market with the lowest price before transport and logistics
   cost) similar to 2016 when domestic NPK producers were
   provided an additional discount of US$27/mt.

- Sales volume slightly rebounding from 11 million mt in 2016 to
   around 12-12.5 million mt in 2017-2018 supported by strong
   export sales volumes. "We understand that the launch of new
   potash capacity by EuroChem in 2017-2018, which currently
   purchases potash from Uralkali, would not dramatically affect
   Uralkali's domestic shipping volume, as these volumes are not
   significant and the company would be able to sell this potash
   to export markets, in management's view. We factor in that in
   first quarter 2017, Uralkali produced 3 million mt of potash,
   which was 15% up year-on-year. That said, we are mindful of
   uncertainty about the volumes of Chinese and Indian contracts,
   which are usually signed mid-year and serve as a price
   benchmark. We note that a decline in imports by China and
   India led to a 2% decrease of Uralkali's sales volumes to 11.0
   million mt in 2016 from 11.2 million mt in 2015," S&P said.

- A dollar to ruble exchange rate of 1:63 in the remainder of
   2017 and 1:65 by year-end 2018, versus our previous assumption
   of 1:68.

- Very moderate capex in 2017-2018 at close to US$300 million,
   on average, (compared with US$343 million in 2015 and US$323
   million in 2016), including around US$120 million of
   maintenance capex. S&P said, "We expect that Uralkali has some
   discretion over its capex in 2019 when it plans to invest
   around US$800 million, including expansionary capex on
   greenfield projects. When finalized, these greenfields would
   increase Uralkali's capacity by around 5 million mt, but we
   assume that would not happen earlier than 2020. Around US$120
   million negative working capital (WC) movement in 2017 and
   more moderate WC outflow in 2018, in line with management
   assumptions.

- Only limited shareholder loans in 2017 (within the US$500
   million carve-out in the bank covenant) and no shareholder
   distributions in 2018-2019, either in the form of share
   buybacks, dividends, or loans, after sizable share repurchases
   of around $3.9 billion completed in 2016 and US$187 million
   distributed to shareholders in the form of loans in 2016.

- No material mergers or acquisitions.

Based on these assumptions, S&P expects:

- Adjusted EBITDA of around $1.3 billion in 2017 (compared with
   around $1.2 billion in 2016) and around $1.4 billion in 2018-
   2019.

- FFO to debt of 17%-20% in 2017-2019.

- Discretionary flow of around US$500 million-US$600 million in
   2017-2018 materially decreasing in 2019 on the back of higher
   expansionary capex.

S&P said, "We understand that after the refinancing of part of
short-term debt with the new US$750 million Sberbank loan
Uralkali's remaining maturities until the year-end 2017 are
materially lower. That said, we are mindful that in 2018
Uralkali will need to repay around US$2.4 billion of debt,
including US$650 million Eurobond due in April 2018. We
understand that for this Uralkali intends to use its US$3.9
billion committed lines from Sberbank, secured by Uralkali's
shares. We also understand that Uralkali is currently considering
different financing options, including working with relationship
banks on a new financing, which should allow it manage
refinancing risk.

"According to our calculations, Uralkali remains compliant with
its maintenance covenants, including net debt to EBITDA of 5.0x
in 2016. That said, we note that in 2018, covenants on part of
the bank loans will tighten to 4.0x net debt to EBITDA.

"The negative outlook on Uralkali reflects the possibility that
we could downgrade the company over the next six-12 months if the
average adjusted FFO to debt for 2017-2019 does not recover to
above 17% -- as a result of weaker potash prices or stronger
ruble -- without near-term recovery potential.

"We may downgrade Uralkali if a material weakening of the potash
market or stronger ruble cause FFO to debt to remain below 17%.

"We could revise the outlook on Uralkali to stable if we saw an
improvement in the market environment combined with a
conservative financial policy. For this we would need to see
average FFO to debt remaining around 20%."


=============================
S L O V A K   R E P U B L I C
=============================


SLOVAKIA STEEL: Bankruptcy Trustee Announces Int'l Public Tender
----------------------------------------------------------------
Slovenska spravcovska a restrukturalizacna, k.s., (the
"Bankruptcy Trustee"), as the Bankruptcy Trustee of the bankrupt
SLOVAKIA STEEL MILLS, a.s. v konkurze, registered office at
Priemyselna 720, 072 22 Strazske, the Slovak Republic (the
"SSM"), announces the invitation to the international public
tender for the selection of the applicants interested in the
acquisition of the part of the SSM (the "Tender").

The SSM facility is located in Eatern Slovakia, a region with an
imbedded chemical and steel-industry culture supported by a
developed road and rail infrastructure and a skilled workforce.
The total investment in SSM was more than EUR220 million.  SSM
was designed a "top notch" mini-mill with the most modern
technology and a yearly production capacity of 600,000 tonnes
(steel billets/long steel products).  The key supplier of the
technology was Germany's SMS Group, one of the steel-world's most
significant and renowned players.  All of the steel-making and
steel-rolling equipment was mothballed when the insolvency
process began.

The subject of the sale is comprised of (i) the key equipment,
(ii) buildings and (iii) other operating assets related to the
mini-mill and rolling mill production.  The conditions, timelines
and guidelines for participation in the Tender are described in
the binding conditions (the "Binding Conditions").  The Binding
Conditions, other related documents and any additional
information is available on http://ssm.ssr.sk.

Any additional questions or requests related to participation in
the Tender should be directed to ssm@ssr.sk.


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


SPAIN: Need to Explore Debt Relief Options for Insolvent Regions
----------------------------------------------------------------
Esteban Duarte and Maria Tadeo at Bloomberg News report that
Spain's government, having provided more than EUR223 billion
(US$252 billion) of financial assistance to regional
administrations led by Catalonia, may have to consider ways of
debt relief.

Debt borrowed by the Spanish regions almost doubled to EUR279.3
billion at the end of the first quarter compared with EUR145.9
billion at the end 2011, before Prime Minister Mariano Rajoy's
government created rescue facilities for regional governments,
Bloomberg relays, citing Bank of Spain data.

According to Bloomberg, Valencia, Castilla La Mancha and
Catalonia have the highest debt levels as proportion of their
yearly output, at 41.5%, 36.5% and 35.2%, respectively.

"Some of the debt stock is insolvent, some regions are going to
have to reset the clock," Jose Luis Escriva, head of the Spanish
fiscal watchdog known as Airef, as cited by Bloomberg, said at a
presentation in Madrid on July 5.  "Some regions have a
structural deficit.  You can't force them to comply with spending
rules if they don't have funds."

Catalonia, with EUR68.5 billion of debt, is the largest user of
the central government financing facilities, according Budget
Ministry data, and is followed by Valencia, with EUR51.5 billion,
and Andalusia, with EUR33.7 billion, Bloomberg discloses.


* Spanish RMBS 90+ Day Delinquencies Remained Constant
------------------------------------------------------
The 90+ day delinquencies remained constant at 0.87% in the
Spanish residential mortgage-backed securities (RMBS) market in
April 2017, according to the latest indices published by Moody's
Investors Service. Whilst, the 60+ day delinquencies decreased to
1.30% of the current pool balance in April 2017 from 1.36% in
January 2017.

The cumulative defaults represented 4.39% of the original balance
in April 2017, decreasing from 4.69% in January 2017.

The annualised constant prepayment rate decreased to 3.18% in
April 2017 from 4.07% in April 2016.

As of April 2017, the reserve funds of 47 transactions were
partially below their target levels and 22 were fully drawn,
compared with 44 partially drawn transactions and 21 fully drawn
in January 2017.

As of April 2017 Moody's rated 169 transactions in the Spanish
RMBS market, with a total outstanding pool balance of EUR97.19
billion, a 0.45% increase from EUR96.75 billion in January 2017.


===========
S W E D E N
===========


STENA AB: Moody's Affirms B1 CFR & Revises Outlook to Negative
--------------------------------------------------------------
Moody's Investors Service has affirmed the corporate family
rating (CFR) of Swedish diversified group Stena AB, with a focus
on shipping, drilling and property management, at B1, its
probability of default rating at B1-PD and its senior unsecured
notes rating at B3. Concurrently, Moody's affirmed the backed
senior secured notes rating of subsidiary Stena International
S.A. at Ba3 and its backed senior secured bank credit facility
rating at Ba3. The outlook on all of Stena's and Stena
International S.A.'s ratings was revised to negative from stable.

"We have revised the rating outlook on Stena's ratings to
negative to reflect Moody's expectations that the company's
financial profile will be materially affected when its offshore
drilling contracts expire in 2017 and may weaken beyond the
bounds of its B1 rating for some time. Moody's views considers
the ongoing challenging environment facing the offshore drilling
sector such that contracts are signed on a short-term basis at
day rates close to operating expense levels. Moody's expects that
market conditions will remain under considerable pressure through
2017 and at least a part of 2018 when Stena's contract coverage
is significantly reduced ", says Maria Maslovsky, a Vice
President-Senior Analyst at Moody's and lead analyst for Stena.
"Despite challenges in the offshore drilling sector, Stena has a
diversified business profile that includes more stable
activities, such as ferries and real estate, which will mitigate
the negative effects on the drilling business. Therefore, Stena's
ratings remain appropriately positioned at B1", adds Ms
Maslovsky.

RATINGS RATIONALE

CHANGE OF OUTLOOK ON STENA'S B1 RATING TO NEGATIVE

The change of outlook to negative reflects Moody's expectation
that the offshore drilling sector will remain under considerable
pressure through 2018 with no long-term contracts signed year-to-
date and day rates approximately at the level of operating
expenses. Moody's expects that this will result in Stena's
financial profile weakening materially for a prolonged period of
time and potentially beyond the level commensurate with a B1
rating. Moody's does not anticipates a meaningful recovery in the
offshore drilling sector until 2019 at the earliest. Stena's
offshore drilling division was the largest contributor to group
EBITDA with SEK3.6 billion and represented 40% of group
consolidated EBITDA from operations in the 12-month period
through March 2017.

Stena, which owns seven rigs and has five rigs under contracts
currently, will see all of its remaining contracts expire in
2017. Most recently, Stena was able to sign short-term contracts
with Cairn Energy, Repsol, Summit E&P and Providence Resources at
significantly lower day rates than previously achieved for the
same rigs. Stena has launched a cost-cutting programme at its
drilling division, which has delivered more than $150 million of
savings in 2016-2017 and is expected to produce significant
additional savings in 2017. However, Moody's still expects that
Stena's drilling profits will reduce in 2017, and that group
consolidated leverage (i.e. gross debt/EBITDA, including Moody's
adjustments), which stood at 5.6x at year-end 2016, will
substantially increase to around 7.5x in 2017 and possibly higher
in 2018.

Since the end of 2014, the offshore drilling sector has been
affected by sharp declines in day rates paid by customers. This
resulted from (1) lower oil prices, which drove oil companies to
reduce their investments in exploration and production; and (2)
large oversupply in the drilling sector, which could take several
years to dissipate. Moody's current outlook for oilfield services
suggests that recovery in offshore drilling would be more likely
once the oil price is stabilized above $60/barrel. At the same
time, Moody's forecast for oil prices suggests $40-$60/barrel
range in the medium term; therefore, an improvement in the
offshore drilling industry may take time to materialise.

AFFIRMATION OF STENA'S B1 RATING

Despite the challenges in offshore drilling, the affirmation of
Stena's B1 rating recognises Stena's diversified business
profile, which includes more stable activities such as (1) Stena
Line, which has been steadily growing its EBITDA in recent years;
and (2) real estate and investments. This will help mitigate the
pressures on the drilling division.

Stena Line is the largest ferry operator in Northern Europe and,
after the drilling segment, is the largest contributor to the
group's EBITDA. Its business is stable and grows in line with the
relevant countries' (primarily Sweden, Germany, The Netherlands,
Ireland and the UK) GDP. Stena Line's EBITDA reached SEK2.8
billion in 2016 and Moody's views Stena Line as well positioned
to continue growing consistently.

The stability of Stena Property's performance is a result of its
primary focus on Swedish residential assets particularly in the
country's three largest cities: Stockholm, Gothenburg and Malmî.
Owing to a current housing shortage in Sweden as well as highly
regulated process for determining rental rates, Moody's expects
this business to remain stable and continue generating solid cash
flows. Importantly, Stena Property also contributes significant
and growing asset value (SEK35.5 billion at December 31, 2016) to
the overall company portfolio.

Moody's also considers the company's strong liquidity profile to
be credit positive. Stena's liquidity is underpinned by (1) a
cash balance amounting to SEK2.2 billion as at March 31, 2017;
(2) several available revolving credit facilities, the main one
totaling $800 million and maturing in March 2020; and (3) a
portfolio of short-term investments and marketable securities,
exceeding SEK7.0 billion as at March 31, 2017, which could be
monetised if needed. Stena's main liquidity needs relate to
capex, which Moody's projects to total around SEK1.1 billion over
the next 12 months which reflects a significant reduction from
historical levels. Stena also had debt repayments over the next
12 months amounting to SEK2.0 billion. Positively, the company
does not anticipate dividend payments in the near term. However,
should the offshore drilling market fail to begin a turnaround,
the company could generate negative free cash flow after capex
owing to the costs of warm stacking its rigs.

RATIONALE FOR THE NEGATIVE OUTLOOK

The negative outlook reflects Moody's expectations that Stena's
financial profile will weaken over the next 12-18 months,
possibly breaching the boundaries set for the B1 rating until the
offshore drilling sector begins to recover. Still, the group will
continue to benefit from its ample liquidity sources.

WHAT COULD CHANGE THE RATING UP/DOWN

Upward pressure on Stena's ratings could develop beyond 2018
following (1) a sustainable recovery in internal cash flow
generation, with consolidated retained cash flow/net debt
approaching the mid-teens in percentage terms (12.3% at March 31,
2017); and (2) progressive deleveraging of the group's balance
sheet, with total consolidated debt/EBITDA below 6.0x.

Moody's could consider downgrading Stena's ratings if no
turnaround occurs in its two weakest segments: drilling and
tankers and the company's consolidated debt/EBITDA remains above
7.0x for a prolonged period of time (for drilling Moody's does
not anticipates a meaningful turnaround until 2019 at the
earliest) and its consolidated (funds from operations +
interest)/interest ratio declines below 2.5x when its rig
contracts expire. A debt/EBITDA ratio above 6.0x (4.6x in 2016)
and a retained cash flow/net debt ratio below 10% at the
restricted group level might also result in a rating downgrade if
sustained for an extended time period. The restricted group
incorporates shipping businesses (ferries, drilling, tankers,
RoRo and LNG) and excludes real estate and Adactum. Downward
rating pressure could also result from (1) any significant
deterioration in the group's liquidity profile; (2) Stena
increasing its appetite for risk in its trading and investment
activities; (3) Stena's inability to re-contract some of its rigs
upon contract maturity at day rates that would cover operating
expenses.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Global
Shipping Industry published in February 2014.

Headquartered in Gothenburg, Sweden, Stena AB is one of the
largest entities within the Stena Sphere of companies, fully
controlled by the Olsson Family. Stena AB is a holding company
engaged in various business divisions, including ferry
operations, shipping, offshore drilling, real estate and other
investment/trading activities. In 2016, the group generated
consolidated turnover of SEK32.8 billion ($3.8 billion) and
operating profit of SEK4.0 billion ($0.5 billion).



===================
T A J I K I S T A N
===================


BANK ESKHATA: Moody's Hikes LT Global Deposit Rating to Caa1
------------------------------------------------------------
Moody's Investors Service has upgraded Tajikistan-based OJSC Bank
Eskhata's long-term global foreign-currency deposit ratings to
Caa1 from Caa2. The outlook on the rating is negative.

RATINGS RATIONALE

The upgrade of Eskhata's foreign currency deposit rating reflects
the bank's improved ability to service its foreign currency
deposits as stabilisation in the country's operating environment
improved the bank's ability to obtain foreign currency to service
its foreign currency obligations. Moody's also notes that the
probability of the national government imposing a foreign
currency deposit freeze in response to a run on banking system
deposits has decreased.

The bank's access to foreign currency will benefit from a more
stable foreign currency market. The operating environment in the
country has stabilised as higher external remittances support
foreign currently inflow into the country. In addition, National
Bank of Tajikistan's (NBT) measures also contributed to a more
predictable foreign currency market and greater foreign currency
availability. The NBT introduced tighter monetary policy, unified
official and market exchange rate and increased its gross
international reserves.

The likelihood of liquidity pressure stemming from deposit
instability has also considerably fallen (diminishing the
probability of a mandatory foreign currency deposit freeze) as
the banking crisis is gradually abating and the volatility of the
foreign currency rate reduced.

WHAT COULD MOVE THE RATINGS UP/DOWN

Increased instability of the operating environment pressuring the
bank's liquidity position and weakening its ability to obtain
foreign currency to service foreign currency obligations could
lead to the rating downgrade. Upward pressure could stem from
improvements to the bank's financial fundamentals as well as
improved stability in the operating environment.

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was Banks published
in January 2016.


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


PRIVATBANK: PGO to Open Criminal Probe Against Ex-Management
------------------------------------------------------------
bne IntelliNews reports that the Ukrainian Prosecutor General's
Office (PGO) has opened a criminal probe against the former
management of PrivatBank over its taking the lender into
insolvency.

According to bne IntelliNews, the bank's board chairman Oleksandr
Shlapak, as cited by Interfax news agency, said the investigation
concerns loans for a total of UAH133 billion (EUR4.5 billion)
provided to borrowers that did not conduct economic activities
and had a negative financial state.

The statement followed the expiry of the July 1 deadline for
voluntary restructuring of loans of PrivatBank's former oligarch
owners Ihor Kolomoisky and Hennady Boholyubov, bne IntelliNews
notes.  The National Bank of Ukraine (NBU) said in a statement on
July 3 the businessmen had failed to fulfill their obligations,
bne IntelliNews relates.

The businessmen had committed to carrying out a restructuring
program by mid-2017, bne IntelliNews discloses. If they
successfully restructured 75% of the portfolio, the NBU said it
would consider extending the restructuring of the remaining 25%
to late 2017, according to bne IntelliNews.

According to bne IntelliNews, the regulator said the state and
PrivatBank have already taken steps for applying an appropriate
legal strategy, but details were not disclosed.  The NBU said the
banking procedure will be close to the usual procedure for
repossession in case of overdue debts, so it is "more about
foreclosure", bne IntelliNews notes.

Mr. Shlapak added that talks had begun with the former owners of
PrivatBank about restructuring the portfolio of loans to related
parties.  "No results yet, but they are ongoing," bne IntelliNews
quotes Mr. Shlapak as saying.

In separate comment, Prime Minister Volodymyr Groysman said
criminal responsibility for non-compliance with the law will
follow for Privatbank's former owners, bne IntelliNews notes.

According to bne IntelliNews, Mr. Groysman told the ICTV
television channel on July 3 "If the obligations are fulfilled,
there will be corresponding decisions on them, [and] if they are
not fulfilled, and the NBU witnesses this, then criminal
responsibility for non-observance of the law will follow."

The government nationalized the country's largest lender last
December after it failed to fulfill a three-year recapitalisation
plan, bne IntelliNews recounts.  The bank was found to have a
UAH148 billion (EUR5.1 billion) hole in its balance sheet, which
at the time was said to be almost entirely due to related-party
financing, bne IntelliNews notes.

To cover the capital shortfall, the government injected UAH117bn
(EUR4.1 billion) and bailed-in PrivatBank's non-deposit unsecured
creditors for UAH29.4bn (US$1.1 billion), including bondholders
for the amount of US$595 million, bne IntelliNews states.  On
June 23, the Ukrainian authorities said they will inject UAH38.5
billion (EUR1.3 billion) of additional capitalization, bne
IntelliNews relays.


                        About PrivatBank

PrivatBank is the largest commercial bank in Ukraine, in terms of
the number of clients, assets value, loan portfolio and taxes
paid to the national budget.  PrivatBank has its headquarters in
Dnipropetrovsk, in central Ukraine.

                          *   *   *


The Troubled Company Reporter-Europe reported on April 12, 2017,
that Moody's Investors Service downgraded the long-term foreign-
currency senior unsecured debt rating of Privatbank to C from Ca.
The bank's baseline credit assessment ("BCA"), adjusted BCA, long
and short-term local and foreign currency deposit ratings, and
its long and short-term Counterparty Risk Assessments were
unaffected by rating action.

The downgrade of Privatbank ' senior unsecured debt rating to C
from Ca primarily reflects Moody's expectation that senior debt
holders will sustain material losses as a result of bail-in and
conversion into equity.

The C senior unsecured debt rating does not carry outlooks.
Moody's will then withdraw the C foreign currency senior
unsecured debt rating of Privatbank.

As reported by the Troubled Company Reporter-Europe on Jan. 16,
2017, S&P Global Ratings revised its counterparty credit ratings
on Ukraine-based PrivatBank to 'SD' (selective default) from 'R'.
The rating action follows the Deposit Guarantee Fund's
announcement that PrivatBank's three outstanding loan
participation notes have been bailed in following the placing of
the bank under temporary administration in late December 2016.


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


CAPARO INDUSTRIES: Sanjeev Gupta Deal to Shore Up Pensions
----------------------------------------------------------
Daily Mail reports that steelworkers whose pensions were in peril
after Caparo Industries fell into administration could be getting
a lifeline from industry magnate Sanjeev Gupta.

His growing Liberty House steelmaker has been hammering out a
better deal for 1,700 members of the Caparo Industries pension
scheme, Daily Mail discloses.

Many are at risk of falling into the pensions lifeboat after
Caparo Industries fell into administration in 2015, Daily Mail
notes.

But Mr. Gupta on July 2 bought Caparo's subsidiary Caparo
Merchant Bar (CMB), which remained solvent and employs 145
workers at two automated rolling mills in Scunthorpe, and is
trying to sort out the group pension scheme alongside the deal,
Daily Mail relates.

Details are not yet clear, Daily Mail states.


COVENTRY & RUGBY: S&P Puts BB+ Debt Rating on Watch Positive
-----------------------------------------------------------
S&P Global Ratings placed its 'BB+' issue rating on the senior
secured debt issued by U.K.-based special-purpose vehicle
Coventry & Rugby Hospital Co. PLC (CRH or ProjectCo) on
CreditWatch with positive implications.

S&P said, "At the same time, we affirmed our 'BB+' underlying
rating (SPUR) on the debt, which comprises GBP407.2 million of
senior secured bonds due June 2040. The outlook on the SPUR
remains stable. The recovery rating on the debt remains at
'3', indicating our expectation of meaningful recovery (50%-70%;
rounded estimate 60%) in the event of a payment default."

S&P related, "We put the rating on CreditWatch positive to
reflect the CreditWatch positive on the guarantee provider,
Assured Guaranty (London) (AG London)."

"AG London is in the process of being acquired by Assured
Guaranty Ltd. (AGL) and after this is completed we expect that AG
London will be integrated into AGL's affiliated European
insurance companies, and its insured obligations will carry the
same rating as those European entities (currently 'AA')," said
S&P Global Ratings credit analyst Beata Sperling-Tyler. "At that
time, the rating on the project's monoline insurer is expected to
be higher than the SPUR; hence we will raise the issue rating up
to the level of the rating on the monoline insurer," Ms.
Sperling-Tyler added.


EXTERION MEDIA: S&P Affirms B CCR & Alters Outlook to Negative
--------------------------------------------------------------
S&P Global Ratings revised its outlook to negative from stable on
Doubleplay I Ltd., the holding company of U.K.-based out-of-home
(OOH) advertising group Exterion Media (Exterion Media
hereinafter). At the same time, S&P affirmed its 'B' long-term
corporate credit rating on the group.

S&P said, "We also affirmed our 'B' issue rating on the group's
GBP150 million six-year term loan B and the GBP40 million
multicurrency, five-year revolving credit facility (RCF) taken on
by Exterion Media Holdings Ltd. The recovery rating on these
instruments is '3', indicating our expectation of meaningful
(50%-70%; rounded estimate 65%) recovery prospects in the event
of a payment default."

The outlook revision reflects S&P's view that Exterion Media's
operating performance -- and, in turn, debt protection metrics --
could feel the weight of mounting uncertainties in the British
economy in the wake of Brexit. "We anticipate that the first
repercussions on U.K.-based companies will materialize over the
next 12-18 months, and we believe that Exterion Media's
performance metrics are likely to weaken if the group cannot
increase revenues over this period. As such, we anticipate that
revenues for 2017 will be about GBP370 million-GBP380 million
compared with our initial assumptions of GBP415 million-GBP420
million," S&P said.

The U.K. is Exterion Media's main market of operations,
contributing revenues of GBP219 million in 2016. Given the
group's relatively small scale of operations and limited
geographic diversification, Exterion Media's overall performance
is exposed to any negative developments in the British economy.
Exterion Media operates in outdoor advertising -- in S&P's view,
a market that tends to exaggerate the variations in GDP and
business cycles.

Because the aftermath of Brexit has brought dulled economic
growth prospects in the U.K., S&P anticipates low-single-digit
growth in advertising spending over 2017-2018 that could
consequently muffle Exterion Media's revenues and earnings. S&P
also notes that the group's concentration in low-margin OOH
advertising segments (billboards and transit) constrains S&P's
view of its operating model.

S&P said, "We believe that Exterion Media may be able to
partially absorb the volatility linked to Brexit. This is thanks
to the group's long-term contracts, namely the London Underground
contract with Transport for London, and its positions in niche
segments internationally, notably in Ireland and The Netherlands.

"The negative outlook reflects a rising likelihood that we could
lower the rating on Exterion Media over the next 12 months. We
believe that the growth prospects in the advertising market in
the U.K. are more uncertain, consequently challenging Exterion
Media's operating performance and possibly weakening the group's
operating efficiency, competitive standing, and ultimately its
credit metrics. Under our base case, we estimate that Exterion
Media's S&P Global Ratings-adjusted FFO to debt will be around
10%-12%, while adjusted leverage will stand within the 4.5x-5.0x
range at end-March 2018. We also anticipate the company will post
positive but limited FOCF, and an EBITDA interest coverage ratio
comfortably above 2x.

"We could lower the ratings on Exterion Media if a protracted and
pronounced decline in revenues and profitability caused us to
view Exterion Media's operating efficiency less favorably. This
could result from reduced advertising spending due to increasing
economic uncertainties in the U.K., or from losses of historical
contracts or failure to win new tenders. The group's inability to
cut costs fast enough to absorb a negative revenue trend could
also affect our view. Furthermore, we could lower the rating if
we saw FOCF turn negative or credit metrics worsen, such as
EBITDA interest coverage decreasing to below 2x for an extended
period of time.

"We could revise the outlook to stable if Exterion Media wins new
tenders, resulting in top-line performance in line with or better
than the market, while profitability remains robust, such that
EBITDA generation is at least aligned with our base case at about
GBP40 million-GBP45 million in 2017-2018. This should enable the
company to sustain debt to EBITDA below 4.5x over the next
12 months and to improve its FOCF buffer."


KELDA FINANCE: Fitch Affirms BB Long-Term IDR, Outlook Stable
--------------------------------------------------------------
Fitch Ratings has affirmed Kelda Finance (No.2) Limited's (Kelda;
HoldCo) Long-term Issuer Default Rating (IDR) at 'BB' and senior
secured rating at 'BB+'. The Outlook on the Long-term IDR is
Stable.

The affirmation reflects Fitch expectations for Kelda group's
weak dividend cover, which is mitigated by reduced structural
subordination of Kelda's debt as a result of the deleveraging of
its operating company Yorkshire Water Services Limited (Yorkshire
Water; OpCo), the continued availability of the committed
liquidity facilities, and adequate credit metrics in terms of
leverage and post-maintenance and post-tax interest cover ratio.

The ratings also take into account the solid operational and
regulatory performance of Yorkshire Water, the main operating
subsidiary of the group, as well as the structurally and
contractually subordinated nature of the holding company
financing at the Kelda level.

KEY RATING DRIVERS

Deleveraging Weakens Dividend Cover
Fitch expects weaker dividend cover at the Kelda group as a
result of the financial restructuring implemented by management
at OpCo. Fitch believes this will allow the company to retain
more flexibility in its capital structure by reducing leverage
and decrease financing costs, and should place the company in a
better position to confront challenges rising from the price
control starting in April 2020 (AMP7). In Fitch views, the
restriction on dividends upstreamed by OpCo is due to
management's prudent approach to reducing leverage, as opposed to
contractual or operational constraints; curtailed dividends from
Kelda also mitigate increased debt service.

The forecast reduced leverage at OpCo is initially achieved
through a cash injection comprising GBP195 million of proceeds
from bank loans raised in May 2017 by the Kelda group, and by
restricting dividend distributions from OpCo to the Kelda group.
Unless the price review (PR19) outcome is anticipated to be
sufficiently favourable, OpCo expects to upstream dividends to
cover only Kelda group's debt service and inter-company loan
payments to OpCo. In that case, no dividend distributions will be
made from Kelda to its shareholders post-debt service.

Reliance Upon OpCo's Dividends
OpCo is the sole cash flow source for Kelda; therefore, Kelda and
FinCo's debt service relies upon dividends from Yorkshire Water.
OpCo's dividends could be constrained by higher-than-covenanted
OpCo leverage, which is now a decreasing risk, low annual RPI
used to index revenue, and the regulated asset value (thereby
constraining debt capacity to pay dividends) and general cash
flow demands such as capex. However, Fitch does not currently
envisage any of these factors will lead to constrain dividends.

Largely Adequate Credit Metrics
We forecast dividend cover to be below the agency's rating
guidelines of 2.5x from 2018 to 2020. Although the incremental
debt increases the consolidated leverage of the Kelda group,
Fitch expects it to reduce to below 85% by 2020 given the
expected deleveraging at OpCo, which is in line with Fitch
ratings guidelines. Fitch forecasts average post-maintenance and
post-tax interest cover (PMICR) at around 1.2x for AMP6, which is
slightly above Fitch ratings guidelines.

Reduced Subordination
In Fitch opinions, the expected weak dividend cover is mitigated
by the reduction in subordination of Kelda's bondholders' and
shareholders' commitment to the restructuring. As Yorkshire Water
leverage reduces, the subordination of Kelda's bondholders also
reduces, as OpCo is further away from lock-up covenant levels.
Kelda's bank debt and FinCo's guaranteed bondholders are
subordinate to the rights of Yorkshire Water's bondholders.
Additionally, OpCo's covenanted financing structure could limit
the dividends it upstreams and there is a statutory (and
contractual) limitation on the pledging of its assets to any
creditors.

Incremental Debt at HoldCo
The GBP460 million of debt at the holding level represents less
than 8% of RAV and incurs an annual finance charge of around
GBP23 million. The reduced dividend stream from OpCo expected for
the remainder of the price control will still allow servicing of
the debt. Kelda group also has in place GBP30 million of
committed undrawn liquidity facilities. Fitch see modest
refinancing risk presented by the maturity of the GBP200 million
bond in February 2020 due to management's prudent approach in
managing liquidity. Fitch expects refinancing plans to be in
place well in advance of the bond's maturity.

DERIVATION SUMMARY

Kelda is a holding company of Yorkshire Water Services Limited
(Yorkshire Water; class A debt (A/Stable); class B debt
(BBB+/Stable)), one of the regulated, monopoly provider for water
and wastewater services in England and Wales. The higher rating
compared to peers such as Greensands UK Limited (B+/Stable) and
Kemble Water Finance Limited (BB-/Stable) reflects Yorkshire
Water's better financial and regulatory performance. No Country
Ceiling, constraints affect the rating. Parent/subsidiary Linkage
is applicable but given the structural and contractual ring-fence
structure of the group it does not impact the ratings.

KEY ASSUMPTIONS

Fitch's key assumptions within Fitch ratings case for Yorkshire
Water include:
- Regulated revenues in line with the final determination of
   tariffs for April 2015 to March 2020, ie assuming no material
   over- or under-recoveries
- Cumulative operating expenditure outperformance of GBP56
   million in nominal terms over the five-year period
- Retail costs in line with allowances
- Non-regulated EBITDA of around GBP2.5 million per annum
- Retail price inflation of 3.1% for FY17, and 3% thereafter up
   to 2020
- Capex and Infrastructure renewal expenditure outperformance of
   GBP140 million in nominal terms over the five-year period.
- Around GBP2 million of EBITDA reduction per annum from FY18 as
   a result of the sale of the non-household retail business
- No outperformance related to Outcome Delivery Incentives as
   the company has deferred them to AMP7.

In addition, for Kelda Finance Fitch assumes:
- Incremental debt at holding company level to remain at GBP460
   million.
- An annual finance charge at the holding company level of
   between GBP23 million-GBP25 million.

RATING SENSITIVITIES

Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
- Upside is limited unless Yorkshire Water and Kelda materially
   reduce regulatory gearing and dividend cover improves
   materially.

Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action
- A material decline of dividend cover below 2.5x on a sustained
   basis due to operational underperformance while Yorkshire
   Water is continuing to retain dividends upstreamed to HoldCo
   to aid reduction of leverage at Yorkshire Water.
- Group gearing above 85% and PMICR below 1.1x on a sustained
   basis.
- A marked reduction in RPI on a sustained basis that may
   further reduced the dividend upstream from Yorkshire Water.
- Marked deterioration in operating and regulatory performance
   of Yorkshire Water or a material change in business risk of
   the UK water sector.
- Unavailability of the GBP30 million committed revolving credit
   facility.

LIQUIDITY

As of March 31, 2017, the holding company had available a GBP30
million undrawn, committed revolving credit facility with
maturity in October 2022. The next debt maturity is GBP200
million in February 2020.

FULL LIST OF RATING ACTIONS

Kelda Finance (No.2) Limited
-- Long-term IDR affirmed at 'BB', Stable Outlook
-- Senior secured rating affirmed at 'BB+'

Kelda Finance (No.3) PLC
-- GBP200 million bonds, 5.75%, February 2020, guaranteed by
    Kelda Finance (No. 2) Limited, senior secured rating affirmed
    at 'BB+'

Kelda Finance (No.3) PLC (FinCo) is the financing vehicle for
Kelda, which guarantees the issued bonds together with its
parent, Kelda Finance (No.1) Limited.


PREMIER OIL PLC: July 18 Sanction of Scheme Hearing Set
-------------------------------------------------------
On May 29, 2017, a petition was presented to the Court of Session
("the Court") by Premier Oil plc, a public company incorporated
under the Companies Acts (Company No. SC234781) and with its
registered office at Saltire Court, 20 Castle Terrace, EH1 2EN
for, inter alia, Sanction of a Scheme Arrangement.

By order dated June 27, 2017, the Court ordered notice of the
petition to be advertised once in each of The Edinburgh Gazette,
The Scotsman and the Financial Times (including the international
editions) and allowed all persons claiming an interest to lodge
answers thereto, if so advised, at the Office of Court, Court of
Session, 2 Parliament Square, Edinburgh EH1 1RQ, within 14 daysof
the last of those advertisements.  As the last of those
advertisements is expected to be published on June 30, 2017, the
deadline for lodging answers to the petition is expected to be
July 14, 2017.

In accordance with its practice, the Court is also likely to
consider any other objections which are made to it, in writing or
in person, at the hearing of the petition for Sanction of the
Scheme.  That hearing is expected to take place at the Court on
July 18, 2017.

For more information, please visit www.lucid-is.com/premieroil

          CMS Cameron McKenna Nabarro Olswang LLP
          Saltire Court
          20 Castle Terrace
          Edinburgh
          EH1 2EN
          Solicitors for Premier Oil plc


PREMIER OIL UK: July 18 Sanction of Scheme Hearing Set
------------------------------------------------------
On May 29, 2017, a petition was presented to the Court of Session
("the Court") by Premier Oil UK Limited, a company incorporated
under the Companies Acts (Company No. SC048705) and with its
registered office at Saltire Court, 20 Castle Terrace, EH1 2EN
for, inter alia, Sanction of a Scheme Arrangement.

By order dated June 27, 2017, the Court ordered notice of the
petition to be advertised once in each of The Edinburgh Gazette,
The Scotsman and the Financial Times (including the international
editions) and allowed all persons claiming an interest to lodge
answers thereto, if so advised, at the Office of Court, Court of
Session, 2 Parliament Square, Edinburgh EH1 1RQ, within 14 days
of the last of those advertisements.  As the last of those
advertisements is expected to be published on June 30, 2017, the
deadline for lodging answers to the petition is expected to be
July 14, 2017.

In accordance with its practice, the Court is also likely to
consider any other objections which are made to it, in writing or
in person, at the hearing of the petition for Sanction of the
Scheme.  That hearing is expected to take place at the Court on
July 18, 2017.

For more information, please visit www.lucid-is.com/premieroil

         CMS Cameron McKenna Nabarro Olswang LLP
         Saltire Court
         20 Castle Terrace
         Edinburgh
         EH1 2EN
         Solicitors for Premier Oil UK Limited



SCOTIA AID: Declares Bankruptcy; Owes More than GBP1 Million
------------------------------------------------------------
Stephen Naysmith at The Herald reports that a scandal-hit
Scottish charity that claimed to help impoverished African
children has gone bust with debts of more than GBP1 million.

Scotia Aid Sierra Leone became mired in allegations of serious
financial misconduct after it emerged that only 13p of every GBP1
it raised went to good causes, The Herald says.

It had its assets frozen by the Office of the Scottish Charity
Regulator (OSCR) last July amid claims its premises were being
used to enter into lucrative property deals and two of its
trustees, Kieran Kelly and Alan Johnston were barred from running
any charity for life, according to The Herald.

According to The Herald, regulators acted after accounts showed
more than GBP1million in donations were brought in but only
GBP137,000 was donated to the needy, while the lion's share of
cash was paid in consultancy fees to a small number of staff.

Now it has emerged the charity applied for bankruptcy earlier
this month after running up debts of GBP1,107,800, says The
Herald. Scotia Aid declared that its total assets are worth just
GBP2,348. The application was approved by the Accountant in
Bankruptcy, Scotland's insolvency service, the report discloses.

The Herald notes that the move came after OSCR won a court order
to have Emma Porter, of Aver chartered accountants, put in charge
of the charity while investigations continue. She has been
appointed as the charity's bankruptcy trustee and will attempt to
recover money for creditors.

The watchdog began its investigation after numerous Scottish and
English local authorities raised concerns over the charity's
operations, the report relates.

According to the report, the charity regulator said it had
determined Scotia Aid had sought charitable rates relief on
properties it had leased that were left empty.

These premises were then allegedly leased back to the firms in
return for donations, saving the companies that originally owned
them huge sums in business rates, and leaving local councils out
of pocket, the report says.

An interim report accused Scotia Aid trustees of 'misconduct' and
raised further fears over payments to senior management at the
organisation, with companies controlled by leading figures
apparently paid large sums, The Herald discloses.


YORKSHIRE WATER: Moody's Affirms (P)Ba1 Rating on Sub. Reg Bond
---------------------------------------------------------------
Moody's Investors Service has affirmed the Baa2 corporate family
rating of the fifth-largest UK water company, Yorkshire Water
Services Limited (Yorkshire Water). The rating agency also
affirmed the backed Baa1 senior secured and backed Ba1
subordinated debt ratings of the Class A and Class B notes,
respectively, issued by Yorkshire Water Services Bradford Finance
Ltd, the backed Baa1 senior secured debt ratings of Yorkshire
Water Services Finance Limited, and the backed Baa1 senior
secured debt ratings of Yorkshire Water Services Odsal Finance
Ltd (all issuance guaranteed by Yorkshire Water). At the same
time, Moody's changed the outlook for the ratings to stable from
negative.

The outlook change reflects measures that the company has taken
to reduce gearing and improve its long term interest rate
exposure. These measures, together with a continued balanced
approach to external shareholder distributions, will create
additional financial flexibility to mitigate against risks
associated with a potentially continuing low-yield environment,
which could significantly curtail future allowed regulatory
returns and create particular challenges for companies, such as
Yorkshire Water, with expensive, longer-term debt profiles.

RATINGS RATIONALE

RATIONALE FOR OUTLOOK CHANGE

The rating action reflects Moody's view that Yorkshire Water's
exposure to a persistently low interest rate environment has
reduced in light of the measures that management and shareholders
have been taking and will continue to work on through the current
regulatory period. The reduction of gearing at Yorkshire Water
through repayment of an intercompany loan by an intermediate
holding company in the wider group as well as ongoing reduction
in distributions to external shareholders will provide additional
financial flexibility within the capital structure. This, coupled
with a re-couponing exercise that will see cash interest payments
reduce as the company enters the next price review in 2019, will
provide headroom against a significant reduction in allowed
returns for the UK water sector from 2020, in the context of a
'lower-for-longer' interest rate scenario.

Yorkshire Water's net debt was close to 80% of its regulatory
capital value (RCV) as at March 31, 2016, and is expected to be
slightly lower for the year ended March 31, 2017. Given the
measures taken by the company, the rating agency expects leverage
to reduce to closer to 70% by the end of the current regulatory
period, which would bring it roughly in line with the sector
average gearing.

In addition to its outright borrowings, Yorkshire Water holds a
portfolio of inflation-linked derivatives with a notional amount
of approximately GBP1.3 billion, which had a negative mark-to-
market (MTM) value of around GBP2.6 billion, equivalent to
approximately 40% of the RCV, as at March 2016. This sizeable MTM
loss reflects the company's locked-in funding costs, which are
significantly above current market rates over the long term.
Overall, taking into account debt and derivatives, Yorkshire
Water reported effective average interest rates of 2.4% and 6.0%
for index-linked and nominal fixed-rate debt, respectively, in
the year to March 2016.

Yorkshire Water's comparably expensive embedded debt with
relatively long tenors represented a particular risk in a lower
interest rate environment, which in the rating agency's view
could see allowed wholesale returns to fall from currently 3.6%
by at least 100 basis points from April 2020.

However, considering the re-couponing exercise in relation to the
company's derivative portfolio, Moody's expects average interest
rates to reduce towards 1.7% for index-linked debt (nominal fixed
rates will decline more gradually over the current and next
regulatory period) as well as MTM values to decline slightly.
This will create some headroom in a low return scenario, and
Moody's believes that Yorkshire Water can now accommodate the
associated risk at current rating levels.

RATIONALE FOR RATING AFFIRMATION

In affirming Yorkshire Water's Baa2 rating, Moody's reflects that
the company has visibility over allowed revenues for the
remainder of the regulatory period to 2020, which supports a
financial profile well in line with current ratings. Furthermore,
as discussed above, the financial strategy towards further
strengthening the capital structure in the run-up to the 2019
price review should allow the company to sustain credit metrics
in line with current guidance in a low return scenario.

The rating agency also takes into account that (1) future
interest rates are uncertain; and (2) the regulator has a duty to
ensure that an efficient company is financeable, albeit noting
that this duty may be of lesser value to companies with a
financing structure that is not aligned with the sector average
or that of the regulator's notional company. In that context,
particularly the ongoing de-gearing over the current regulatory
period will help bring Yorkshire Water's leverage more in line
with the sector average, albeit still above the 62.5% notional
gearing that the regulator determined at the 2014 price review.

More broadly, Yorkshire Water's Baa2 CFR reflects, as positives
(1) the company's low business risk profile as the monopoly
provider of essential water and sewerage services; and (2) the
stable cash flows generated under a transparent and well-
established regulatory regime. The rating remains constrained by
the overall gearing level, coupled with the risk embedded within
the company's derivative portfolio, and the associated leverage
on a debt fair value basis. Taking into account the fair market
value of existing borrowings and derivatives, Yorkshire Water had
gearing (as calculated by Moody's) of around 130% as at March
2016. A visible erosion of the equity value could weaken
incentives for shareholders to provide further funding. In
addition, while Yorkshire Water has enjoyed ready access to the
capital markets, lenders may in future be less supportive of
companies with high embedded debt costs and potentially limited
equity value. However, the rating agency also notes that
Yorkshire Water's operational performance remains well in line
with regulatory assumptions, which may provide a key incentive
for ongoing investor support.

Finally, the Baa1 rating of the Class A Bonds reflects the
strength of the debt protection measures for this class of bonds
and other pari passu indebtedness, the senior position in the
cash waterfall and post any enforcement of security. The Ba1
rating of the Class B Bonds reflects the same default probability
as factored into the Baa2 CFR but also Moody's expectation of a
heightened loss severity for the Class B Debt following any
default, given its subordinated position within the financing
structure.

WHAT COULD CHANGE THE RATING UP/DOWN

There is currently limited upgrade potential, reflecting the
ongoing low interest rate environment and the material fall in
allowed returns from April 2020 that this could imply. Upward
rating pressure could develop, if the 2019 price review turns out
to be relatively benign in terms of allowed returns or other
regulatory cost allowances and efficiency measures. Any potential
rating upgrade would also take into account the then prevalent
risk exposure in relation to the company's sizeable derivative
portfolio as well as management's and shareholders' financial and
dividend policies.

The rating could be downgraded if the 2019 regulatory price
review resulted in a very challenging determination for Yorkshire
Water or the industry as a whole, beyond Moody's current
expectations, such that the risk mitigating measures undertaken
by the company are insufficient to fully offset material
weakening in the financial risk profile.

Furthermore, negative rating pressure could derive from (1)
unexpected, severe deterioration in operating performance that
results in the company remaining persistently in breach of its
distribution lock-up triggers; (2) a material change in the
regulatory or governing framework for the UK water sector leading
to a significant increase in business risk; or (3) unforeseen
funding difficulties.

The principal methodology used in these ratings was Regulated
Water Utilities published in December 2015.

Affirmations:

Issuer: Yorkshire Water Services Bradford Finance Ltd

-- Backed Subordinate MTN Program, Affirmed (P)Ba1

-- Backed Subordinate Regular Bond/Debenture, Affirmed (P)Ba1

-- Backed Subordinate Regular Bond/Debenture, Affirmed Ba1

-- Backed Senior Secured MTN Program, Affirmed (P)Baa1

-- Backed Senior Secured Regular Bond/Debenture, Affirmed Baa1

Issuer: Yorkshire Water Services Finance Limited

-- Backed Senior Secured Regular Bond/Debenture, Affirmed A2

-- Backed Senior Secured Regular Bond/Debenture, Affirmed Baa1

-- Senior Secured -- Underlying, Affirmed Baa1

Issuer: Yorkshire Water Services Odsal Finance Ltd

-- Backed Senior Secured MTN Program, Affirmed (P)Baa1

-- Backed Senior Secured Regular Bond/Debenture, Affirmed Baa1

Issuer: Yorkshire Water Services Limited

-- LT Corporate Family Rating (Foreign Currency), Affirmed Baa2

Outlook Actions:

Issuer: Yorkshire Water Services Bradford Finance Ltd

-- Outlook, Changed To Stable From Negative

Issuer: Yorkshire Water Services Finance Limited

-- Outlook, Changed To Stable From Negative

Issuer: Yorkshire Water Services Odsal Finance Ltd

-- Outlook, Changed To Stable From Negative

Issuer: Yorkshire Water Services Limited

-- Outlook, Changed To Stable From Negative

Yorkshire Water Services Limited is the fifth largest of the 10
water and sewerage companies in England and Wales by both RCV and
number of customers served. Yorkshire Water provides drinking
water to around 5 million people and around 130,000 local
businesses over an area of approximately 14,700 square kilometres
encompassing the former county of Yorkshire and part of North
Derbyshire in Northern England.


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


* BOOK REVIEW: The Sorcerer's Apprentice - Medical Miracles
-----------------------------------------------------------
Author: Sallie Tisdale
Publisher: BeardBooks
Softcover: 270 pages
List Price: $34.95
Review by Henry Berry
Order your own personal copy at http://is.gd/9SAfJR
An earlier edition of "The Sorcerer's Apprentice" won an American
Health Book Award in 1986. The book has been recognized as an
outstanding book on popular science. Tisdale brings to her
subject of the wide nd engrossing field of health and illness the
perspective, as well as the special sympathies and sensitivities,
of a registered nurse. She is an exceptionally skilled writer.
Again and again, her descriptions of ill individuals and images
of illnesses such as cancer and meningitis make a lasting
impression.

Tisdale accomplishes the tricky business of bringing the reader
to an understanding of what persons experience when they are ill;
and in doing this, to understand more about the nature of illness
as well. Her style and aim as a writer are like that of a medical
or science journalist for leading major newspaper, say the "New
York Times" or "Los Angeles Times." To this informative, readable
style is added the probing interest and concern of the
philosopher trying to shed some light on one of the central and
most unsettling aspects of human existence. In this insightful,
illuminating, probing exploration of the mystery of illness,
Tisdale also outlines the limits of the effectiveness of
treatments and cures, even with modern medicine's store of
technology and drugs. These are often called "miracles" of modern
medicine. But from this author's perspective, with the most
serious, life-threatening, illnesses, doctors and other
healthcare professionals are like sorcerer's trying to work magic
on them. They hope to bring improvement, but can never be sure
what they do will bring it about. Tisdale's intent is not to
debunk modern medicine, belittle its resources and ways, or
suggest that the medical profession holds out false hopes. Her
intent is do report on the mystery of serious illness as she has
witnessed it and from this, imagined what it is like in her
varied work as a registered nurse. She also writes from her own
experiences in being chronically ill when she was younger and the
pain and surgery going with this.
She writes, "I want to get at the reasons for the strange state
of amnesia we in the health professions find ourselves in. I want
to find clues to my weird experiences, try to sense the nature of
being sick." The amnesia of health professionals is their state
of mind from the demands placed on them all the time by patients,
employers, and society, as well as themselves, to cure illness,
to save lives, to make sick people feel better. Doctors,
surgeons, nurses, and other health-care professionals become
primarily technicians applying the wonders of modern medicine.
Because of the volume of patients, they do not get to spend much
time with any one or a few of them. It's all they can do to apply
the prescribed treatment, apply more of it if it doesn't work the
first time, and try something else if this treatment doesn't seem
to be effective. Added to this is keeping up with the new medical
studies and treatments. But Tisdale stepped out of this
problemsolving outlook, can-do, perfectionist mentality by opting
to spend most of her time in nursing homes, where she would be
among old persons she would see regularly, away from the high-
charged atmosphere of a hospital with its "many medical students,
technicians, administrators, and insurance review artists." To
stay on her "medical toes," she balanced this with working
occasional shifts in a nearby hospital. In her hospital work, she
worked in a neonatal intensive care unit (NICU), intensive care
unit (ICU), a burn center, and in a surgery room. From this
combination of work with the infirm, ill, and the latest medical
technology and procedures among highly-skilled professionals,
Tisdale learned that "being sick is the strangest of states."
This is not the lesson nearly all other health-care workers come
away with. For them, sick persons are like something that has to
be "fixed." They're focused on the practical, physical matter of
treating a malady. Unlike this author, they're not focused
consciously on the nature of pain and what the patient is
experiencing. The pragmatic, results-oriented medical profession
is focused on the effects of treatment. Tisdale brings into the
picture of health care and seriously-ill patients all of what the
medical profession in its amnesia, as she called it, overlooks.
Simply in describing what she observes, Tisdale leads those in
the medical profession as well as other interested readers to see
what they normally overlook, what they normally do not see in the
business and pressures of their work. She describes the beginning
of a hip-replacement operation, the surgeon "takes the scalpel
and cuts -- the top of the hip to a third of the way down the
thigh -- and cuts again through the globular yellow fat, and
deeper. The resident follows with a cautery, holding tiny
spraying blood vessels and burning them shut with an electric
current. One small, throbbing arteriole escapes, and his glasses
and cheek are splattered." One learns more about what is actually
going on in an operation from this and following passages than
from seeing one of those glimpses of operations commonly shown on
TV. The author explains the illness of meningitis, "The brain
becomes swollen with blood and tissue fluid, its entire surface
layered with pus . . . The pressure in the skull increases until
the winding convolutions of the brain are flattened out...The
spreading infection and pressure from the growing turbulent ocean
sitting on top of the brain cause permanent weakness and
paralysis, blindness, deafness . . . ." This dramatic depiction
of meningitis brings together medical facts, symptoms, and
effects on the patient. Tisdale does this repeatedly to present
illness and the persons whose lives revolve around it from
patients and relatives to doctors and nurses in a light readers
could never imagine, even those who are immersed in this world.
Tisdale's main point is that the miracles of modern medicine do
not unquestionably end the miseries of illness, or even
unquestionably alleviate them. As much as they bring some relief
to ill individuals and sometimes cure illness, in many cases they
bring on other kinds of pains and sorrows. Tisdale reminds
readers that the mystery of illness does, and always will, elude
the miracle of medical technology, drugs, and practices. Part of
the mystery of the paradoxes of treatment and the elusiveness of
restored health for ill persons she focuses on is "simply the
mystery of illness. Erosion, obviously, is natural. Our bodies
are essentially entropic." This is what many persons, both among
the public and medical professionals, tend to forget. "The
Sorcerer's Apprentice" serves as a reminder that the faith and
hope placed in modern medicine need to be balanced with an
awareness of the mystery of illness which will always be a part
of human life.



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

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

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


                            *********


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

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

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

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

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

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


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