TCREUR_Public/170714.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

            Friday, July 14, 2017, Vol. 18, No. 139



INT'L BANK: Gets Creditor Support for Debt Restructuring Proposal


OW BUNKER: Danish Management Cleared of Criminal Wrongdoing


KINDY SA: Court Puts Business Under Judicial Liquidation


MEDICAL CORPORATION: Fitch Publishes First-Time B+ LT IDR


ALNO AG: Files for Self-Administration in Hechingen Court


BANCA POPOLARE: Fitch Assigns BB+ Long-Term Issuer Default Rating
ICCREA BANCA: S&P Affirms 'BB/B' Counterparty Credit Ratings


KAZAKHMYS INSURANCE: Fitch Affirms B+ IFS Rating, Outlook Stable


DIAMOND BC: Moody's Assigns First-Time B3 CFR, Outlook Stable
HEMA BV: S&P Puts CCC+ Corp. Credit Rating On CreditWatch Pos.


NORSKE SKOG: Extends Debt Restructuring Talks with Creditors


P4 SP: Play Public Listing No Impact on BB- IDR, Fitch Says


ALMAZERGIENBANK: Fitch Affirms BB- Long-Term IDR, Outlook Stable
MOSCOW NATIONAL: Put on Provisional Administration

U N I T E D   K I N G D O M

SMALL BUSINESS 2016-1: S&P Raises Class D Ratings to BB-


UZBEK INDUSTRIAL: Fitch Affirms B+ Long-Term IDR, Outlook Stable


* BOOK REVIEW: The Rise and Fall of the Conglomerate Kings



INT'L BANK: Gets Creditor Support for Debt Restructuring Proposal
Natasha Doff and Luca Casiraghi at Bloomberg News reports that
International Bank of Azerbaijan, the state-owned lender that
defaulted on foreign debts, said it had enough support from
creditors to implement a US$3.3 billion debt-restructuring plan.

According to Bloomberg, the bank said in a statement on July 12
that creditors holding more than 87% of the debt affected by the
proposal have voted in favor, a day before the deadline.
Two-third support is required to make the proposal binding under
Azeri rules, Bloomberg notes.

The bank intends to write down the principal on some senior notes
by 20% and swap debt for sovereign bonds after a currency crisis
roiled lenders in the Caspian Sea nation, Bloomberg discloses.
Overseas investors including Fidelity Management & Research Co.
and Franklin Templeton Investment Management Ltd. have challenged
the plan in a U.S. court, arguing that the vote was unfair due to
the participation of Azerbaijan's state oil fund, Bloomberg

IBA defaulted on its foreign debts when it failed to repay a
US$100 million subordinated loan on May 10, Bloomberg relays.
The statement, as cited by Bloomberg, said the bank will announce
the final result in the restructuring vote after a July 18
claimants meeting.

The International Bank of Azerbaijan is Azerbaijan's biggest

                            *   *   *

The Troubled Company Reporter-Europe reported on June 1, 2017,
that Moody's Investors Service said the foreign-currency senior
unsecured debt rating of International Bank of Azerbaijan (IBA)
is unaffected at Caa3, under review for downgrade.  The rating
agency downgraded the bank's long-term foreign- and local-
currency deposit ratings to Caa2 from B1 and changed the review
to direction uncertain from review for downgrade.  IBA's baseline
credit assessment (BCA) of ca was has also been placed on review
with direction uncertain. In addition, Moody's downgraded IBA's
long-term counterparty risk assessment (CRA) to Caa1(cr) from
Ba3(cr) and changed the review to direction uncertain from review
for downgrade.  IBA's Not Prime short-term foreign- and local-
currency deposit ratings and Not Prime(cr) short-term CRA were
affirmed.  IBA's foreign-currency debt rating of Caa3 reflects
the likely loss for creditors as a result of a proposed debt
restructuring.  Based on the terms of this restructuring
announced on May 23, which proposes several options to investors
including a proposed exchange ratio of 0.8 in sovereign bonds
against existing claims, Moody's estimates the loss to be at
about 20%, which is consistent with the current Caa3 debt rating.
The rating agency maintains the review for possible downgrade on
the bank's debt ratings, which was opened on May 15. In Moody's
view, given the significant weight of Azerbaijani government-
related entities amongst the creditors, coupled with the threat
of a liquidation of the bank should the proposal be rejected,
there is little prospect for creditor losses to be less than the
agency now assumes.  However, there remains a possibility of
higher losses, should the proposal fail and the authorities
proceed to liquidate the bank.

As reported by the Troubled Company Reporter-Europe on May 29,
2017, Fitch Ratings downgraded International Bank of Azerbaijan's
(IBA) Long-Term Issuer Default Rating (IDR) to 'RD' (Restricted
Default) from 'CCC' and removed it from Rating Watch Evolving
(RWE).  The downgrade of IBA's IDRs to 'RD' follows the
announcement of the bank's restructuring plan, presented on
May 23, 2017.  The proposed restructuring will represent a
distressed debt exchange (DDE) according to Fitch's criteria as
it will impose a material reduction in terms on certain senior,
third-party creditors through a combination of write-downs, tenor
extensions and interest rate reductions.


OW BUNKER: Danish Management Cleared of Criminal Wrongdoing
Stine Jacobsen and Jacob Gronholt-Pedersen at Reuters report that
Denmark's state prosecutor charged the former manager of OW
Bunker's Singapore subsidiary with fraud on July 13 but cleared
the Danish management of the failed marine fuel oil supplier of
any criminal wrongdoing.

OW Bunker filed for bankruptcy in Denmark in November 2014 after
losses at its Singapore business Dynamic Oil Trading, a marked
change of fortunes for a firm valued at US$1 billion when it
listed in March that year, Reuters recounts.

According to Reuters, the prosecutor said the former manager, a
Danish citizen, has been charged with committing fraud of agent
by granting credit outside his mandate worth more than DKK800
million (US$123 million).

The former head of Dynamic Oil Trading was Lars Moller, Reuters
discloses.  His lawyer, Arvid Andersen, told Danish publication
Shippingwatch on July 13 that there had been no criminal
activity, reiterating what he has previously told Reuters.

The prosecutor said it had not found any legal grounds for the
criminal prosecution of other members of management within the OW
Bunker group, Reuters relates.

                      About O.W. Bunker

OW Bunker AS is a global marine fuel (bunker) company founded in

On Nov. 6, 2014, OW Bunker A/S placed OWB Trading and O.W. Bunker
Supply & Trading A/S in an in-court restructuring procedure with
the probate court in Aalborg, Denmark.  By Nov. 7, 2014, the
Danish entities (plus O.W. Bunker Supply & Trading A/S, O.W.
Cargo Denmark A/S, and Dynamic Oil Trading A/S) were placed under
formal Danish bankruptcy (liquidation) proceedings in the Aalborg
probate court.

The company declared bankruptcy following its admission that it
had lost US$275 million through a combination of fraud committed
by senior executives at its Singaporean unit.

The Danish company placed its U.S. subsidiaries -- O.W. Bunker
Holding North America Inc., O.W. Bunker North America Inc. and
O.W. Bunker USA Inc. -- in Chapter 11 bankruptcy (Bankr. D. Conn.
Case Nos. 14-51720 to 14-51722) in Bridgeport, Conn., on Nov. 13,
2014.  The U.S. cases are assigned to Judge Alan H.W. Shiff.  The
U.S. Debtors tapped Patrick M. Birney, Esq., and Michael R.
Enright, Esq., at Robinson & Cole LLP, as counsel.   McCracken,
Walker & Rhoads LLP served as co-counsel.  Alvarez & Marsal acted
as the financial advisor.

The Office of the United States Trustee formed an official
committee of unsecured creditors of the Debtors on Nov. 26, 2014.
The Committee tapped Hunton & Williams LLP as its attorneys.

On Dec. 15, 2015, the U.S. Debtors obtained confirmation of their
First Modified Liquidation Plans.  Under the plan, the Debtors
proposed to create two liquidating trusts, one for each of its
North American units, to hold the estate assets of each company
and make distributions to creditors, while parent OW Bunker
Holding North America Inc. will dissolve.

According to a Bloomberg report, under the First Modified Plan,
administrative claims of $0.94 million, U.S. Trustee Fees, non-
tax priority claims against OWB USA and NA, Priority tax claims
of $0.05 million, secured claims against OWB USA and NA and fee
claims will be paid in full in cash.  Subordinated claims against
OWB USA and NA will not receive any distribution.  Electing OWB
USA unaffiliated trade claims of $13.3 million will have a
recovery of 40% amounting to $5.31 million.  OWB NA affiliated
unsecured claims and non-electing OWB NA unaffiliated trade
claims will have a recovery of 1% in cash.  OWB USA affiliated
unsecured claims will have a recovery of 0.4% in cash.  Electing
OWB NA unaffiliated trade claims will receive pro rata payment of
$2.5 million in cash.  Non-Electing OWB USA unaffiliated trade
claims of $18.36 million will be paid $0.07 million in cash, a
recovery of 0.4%.  Equity interests in OWB USA and NA will be
cancelled and will not receive any distribution.  The plan will
be funded by cash in hand and sale of assets.


KINDY SA: Court Puts Business Under Judicial Liquidation
Reuters reports that Tribunal de Commerce de Beauvais has
converted into judicial liquidation all of the companies of
Groupe Kindy.

The company's shares will not resume trading, the report notes.

Kindy SA is a France-based company engaged primarily in the
manufacture and distribution of socks.


MEDICAL CORPORATION: Fitch Publishes First-Time B+ LT IDR
Fitch Ratings has published Georgia-based healthcare provider JSC
Medical Corporation Evex's (Evex) Long-Term Issuer Default Rating
(IDR) of 'B+' with a Positive Outlook.

The rating reflects Evex's leading market position in the
Georgian healthcare market and its defensive revenues, which
primarily come from state-funded healthcare programmes. This
payor structure leads to long-term risks being correlated with
the sovereign risk and with economic development in Georgia (BB-
/Stable). The rating, however, is constrained by execution risks
related to the company's ambitious investment strategy and its
adherence to a conservative balance-sheet policy.

The Positive Outlook reflects Fitch expectations that the
company's credit metrics will improve over 2017-2018 following
finalisation of its sizeable capex programme and ramp-up of two
newly renovated hospitals. This together with reduced execution
risks and stronger free cash flow (FCF) generation could lead to
a credit profile more consistent with a 'BB-' rating over the
next 18 months.


Largest Healthcare Provider in Georgia: The rating reflects
Evex's strong market position as the largest healthcare provider
in Georgia operating a network of hospitals and ambulatory
clinics. Its business profile benefits from an established
position with a 25% market share by number of beds as of April
2017, greater scale than its local competitors, the well-invested
healthcare facilities in the country, and a good value
proposition. This balances the company's small scale (2016
EBITDAR: USD35 million) compared with its international peers.

Government Reimbursements Key Revenue Source: More than 70% of
Evex's revenues stem from government reimbursements under state
healthcare programmes and Fitch expects no changes in payor mix
over the medium term. High dependence on government reimbursement
links Evex's revenues to state healthcare spending and ultimately
to the country's GDP. Taking into account the positive outlook
for government healthcare spending in Georgia, the ability of
healthcare providers to set their own prices and the smooth
reimbursement mechanism, Fitch views reliance on government-
funded healthcare programmes as positive for Evex's credit

Favourable Market Fundamentals: Fitch believes Evex's strong
market position places the company well to benefit not only from
market growth but also from its consolidation, as the market
remains highly fragmented. Private healthcare is a relatively
young industry in Georgia and operates under an evolving
regulatory environment. Fitch expects the sector to grow in the
low teens over the medium term due to increasing demand and
government healthcare spending.

High Capex to Fall: Evex's financial profile has been impacted by
continuing high capex as the company is renovating and upgrading
its recently acquired hospitals, developing the network of
ambulatory clinics and widening its service offer. Fitch expects
capex to be at around 30% of revenue in 2017, then falling to
below 10% in 2018-2020 as the investment cycle completes. The
rating assumes that these investments will be fully funded by
operating cash flows and a portion of proceeds from a planned
placement of a new five-year GEL90 million bond.

Deleveraging Subject to Business Expansion: Fitch expects Evex to
improve its FFO fixed charge cover to around 5x (2016: 3.6x) and
reduce FFO adjusted leverage to below 2x by 2020 (2016: 3.3x),
which is the lowest among Fitch-rated industry peers. However,
the rating incorporates execution risks as projected deleveraging
is conditional upon more than 50% growth in Evex's 2016 EBITDA by
2020 (2016: GEL80 million), driven by ramping up volume and
quality of services, something Fitch feel is achievable under
Fitch forecasts in line with positive sector trends in Georgia.

Strong EBITDA Margin: Evex has the highest EBITDA margin (2016:
33%) among Fitch-rated healthcare providers. There is a potential
for further profitability improvement due to increasing capacity
utilisation, centralisation of support functions as well as from
growing contribution from ambulatory clinics segment that enjoys
higher margins. However, Fitch conservatively assume flat EBITDA
margin at around 30% over 2017-2020, which is aligned with the
management guidance.

Reduced FX Risks: Evex has converted its US dollar loans from
development banks (43% of debt at end-June 2017) into Georgian
lari in 2017. As a result, its exposure to FX risks has fallen
substantially as now more than 70% of Evex's debt is denominated
in Georgian lari, matching the currency of its operating cash

Ring-Fenced Entity from GHG: The rating and the positive outlook
assume that Evex remains ring-fenced from its parent Georgia
Healthcare Group PLC (GHG) and sister companies as established in
the agreements on long-dated loans from development banks. Any
material loosening of the current arrangements, including any
larger-than-expected upstreaming of dividends and/ or cash
deployed for other GHG activities might be considered a negative
rating event.


Evex is smaller than its international peers, such as Fresenius
Medical Care AG & Co. KGaA (BBB-/Stable), Universal Health
Services, Inc. (BB+/Stable) and LifePoint Health, Inc.
(BB/Stable), as it operates only in Georgia, which has a small
economy. Nevertheless, the company's business profile is
supported by Evex's leading market position, wide market share
gap with its closest competitor, lack of visible threat from
international players entering the market, and good growth
opportunities. Evex's financial profile benefits from higher
profit margins and a more conservative capital structure than
industry peers.
Evex's high dependence on government reimbursements links its
revenues to state healthcare spending and ultimately to the
sovereign risks of Georgia (BB-/ Stable). The rating, however, is
constrained by execution risks related to the company's ambitious
investment strategy.
No Country Ceiling constraint or operating environment influence
was in effect for these ratings.


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

- no reduction in government healthcare spending or adverse
   change in industry regulation;
- double-digit revenue growth over 2017-2019 supported by
   ramp-up of renovated hospitals and increasing utilisation of
   other hospitals and low single-digit price increases;
- EBITDA margin around 30%;
- stable working-capital turnover;
- no dividends until 2019, 40% payout thereafter;
- no material debt-funded M&A or cash support to GHG or sister


Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
- Ramp-up of renovated hospitals and growth of existing business
   in line with business plan
- EBITDA margin around 28%-30%
- Evidence of FFO adjusted leverage decreasing towards 2x on a
   sustained basis
- Free cash flow turning and remaining positive

Future Developments That May, Individually or Collectively, Lead
to Rating Downgrade
- Reduction in government healthcare spending or regulatory
   action leading towards increasing revenue volatility or a
   reduction of profitability and cash-flow generation
- FFO adjusted leverage increasing up to 3.5x on a sustained
   basis due to, for instance, weak operating performance or a
   more aggressive financial policy
- FFO fixed charge coverage sustainably below 2.0x
- Material debt-funded M&A by Evex or its parent GHG if funded
   by Evex

Future Developments That May, Individually or Collectively, Lead
to Revision of the Outlook to Stable
- FFO adjusted leverage sustainably at 2.5x-3.0x due to slower-
   than-expected EBITDA growth or more aggressive financial
- Adverse changes in regulatory environment


New Bond to Strengthen Liquidity: At end-June 2017 available cash
of GEL12.6 million was insufficient to cover GEL25.5 million in
short-term debt and expected negative FCF. The company did not
have any undrawn committed credit lines at end-June 2017.
However, liquidity should be strengthened by issuance of local
five-year GEL90 million bond. Proceeds will be applied to
refinance certain loans from local banks and fund capex, which is
partly scalable and is the major driver behind negative FCF.


ALNO AG: Files for Self-Administration in Hechingen Court
Cabinet Maker reports that Alno AG has filed for a self-
administration through insolvency proceedings at the District
Court Hechingen.

Alno AG is a German kitchen manufacturer.


BANCA POPOLARE: Fitch Assigns BB+ Long-Term Issuer Default Rating
Fitch Ratings has assigned Banca Popolare dell'Alto Adige S.p.A.
(Volksbank) a Long-Term Issuer Default Rating (IDR) of 'BB+' with
a Stable Outlook and a Viability Rating (VR) of 'bb+'.

Volksbank is a second-tier bank in Italy, headquartered in
Bolzano, the northern province of Trentino Alto Adige. The bank
provides a range of traditional banking services to its core
clientele of individuals and SMEs. In 2015, the bank expanded in
neighbouring Veneto through the acquisition of a small
cooperative bank, Banca Popolare di Marostica (Marostica). In
late 2016 the bank transformed into a limited company from its
previous status as a cooperative.

Volksbank's Long- and Short-term IDRs are driven by standalone
intrinsic strength as captured in the VR. The VR reflects the
bank's moderate local franchise and a less diversified business
model compared with larger domestic players, as well as the
stability and experience of the bank's management. The ratings
also factor in Volksbank's acceptable risk appetite and
capitalisation. While the latter is generally maintained with
adequate buffers over regulatory minimums it may not always be
fully commensurate with the bank's risks. The VR further reflects
weakened asset quality, following the acquisition of Marostica,
and undiversified funding sources.

Volksbank has maintained an adequate capacity to attract and
retain customers, with some pricing power capabilities in its
reference territories, and particularly in its home wealthy
Province of Bolzano. However, its competitive positioning at the
national level is modest, given Volksbank's lack of size and
depth compared with higher-rated domestic banks. In more recently
entered geographies the bank generally has limited pricing power.
Fitch believes that its undiversified business model, revenue
sources and geographical presence render the bank more sensitive
to changes in the interest rates cycle.

The management of Volksbank benefits from depth, stability and
experience and its corporate culture is sound. While transparency
is solid and the bank's governance has not to date presented
significant risk to creditors, overall governance is less
developed than higher-rated peers, for example, in respect of
board oversight. The bank's strategy is adequately articulated
although this may be subject to change based on market
opportunities, as evidenced in the Marostica acquisition in 2015.
The acquisition has weakened a number of Volksbank's key
financial metrics, making execution of financial objectives more
vulnerable to changes in the economic cycle.

The bank's CET1 and total capital ratios, both at 11.7% at end-
2016, are maintained with satisfactory buffers over regulatory
minimums. However, Fitch believes that capitalisation may not be
fully commensurate with the bank's risks, in particular those
stemming from unreserved impaired loans, which accounted for over
80% of Fitch Core Capital (FCC) at end-2016. The absence of non-
core capital in its capital structure means total capital levels
and buffers over Pillar II requirements are moderate, compared
with other second-tier banks with similar capital ratios.

Asset quality is a rating weakness for Volksbank. Prior to
Marostica's acquisition, the bank's asset quality metrics
reflected generally sound underwriting standards and processes,
which helped maintain credit risk at manageable levels,
particularly in the credit exposure originated in the Province of
Bolzano. However, impaired loan levels increased significantly
after the acquisition of Marostica to around 16% of gross loans
at end-2016, bringing them more in line with domestic averages
but worse than Fitch global universe of rated banks. Fitch
expects Volksbank to achieve a gradual reduction in its impaired
loan ratio. However, since the bank's approach is biased towards
gradual workout to protect collateral values, meaningful
reductions in the stock of impaired loans will take time to

In Fitch opinion profitability is also a rating weakness, having
deteriorated since 2015 due to a significant increase in loan
impairment charges (LICs). Revenue sources and margins reflect
the bank's ability to reduce funding costs so far by accessing
cheaper ECB funding, reducing deposit costs of Marostica
customers and switching from deposits to current accounts. The
bank also has a good track record of keeping operating costs
under reasonable control. Fitch believes that the profitability
prospects of Volksbank are sensitive to interest rate cycles and
might suffer from its limited ability to re-price its liabilities
in the coming quarters. Fitch expects LICs to continue to weigh
on profitability, albeit to a lesser extent than in 2016.

Although customer funding has generally been stable so far, a
bias towards current accounts renders it potentially more
volatile during periods of market stress. Volksbank's funding
structure is heavily reliant on customer deposits, which
accounted for about 70% of total non-equity funding at end-2016.
The deposit base is rather granular and has a track record of
stability, reflecting the strength of Volksbank's relationship
with local territories. The diversification of its funding
sources is in line with other second-tier domestic peers but less
so than larger and higher-rated banks in Italy.

Volksbank's liquidity coverage and net stable funding ratios are
maintained above 100%. Overall liquidity, however, is weaker than
at higher-rated banks, which have more developed contingency
plans and broader access to funding.

The 'B' Short-Term IDR corresponds to a 'BB+' Long-Term IDR, in
line with Fitch criteria.

The bank's SR and SRF reflect Fitch's view that although external
sovereign support is possible it cannot be relied upon, given
Volksbank's small size and the adoption into Italian law of the
EU's Bank Recovery and Resolution Directive.


Volksbank's VR and thus Long-Term IDR are sensitive to a further
weakening of asset quality and deterioration of capitalisation.
The ratings would be downgraded if the bank's impaired loan ratio
proves stubbornly high or increases, especially if this weakens
the level of capital encumbrance by unreserved impaired loans.
The ratings would also be downgraded if Volksbank fails to
recover profitability to sustainable levels, after the operating
losses reported in 2016. Negative rating pressure could also
arise if the bank's funding and liquidity deteriorate or from a
change in risk appetite (eg. excessive growth not accompanied by
the necessary internal capital generation or evolution in

Volksbank's company profile, notably the bank's moderate
franchise, means upside for the VR and IDRs is limited. Over time
the ratings could be upgraded if the bank shows a consistent
record in reducing its impaired loans and the share of unreserved
impaired loans in relation to capital. Evidence of stronger and
more stable profitability and a more diversified funding profile,
for example through more regular access to secured and unsecured
institutional markets, would also benefit the ratings.

An upgrade of the SR and upward revision of the SRF would be
contingent on a positive change in the sovereign's propensity to
support Volksbank. While not impossible, Volksbank's small size
and bank resolution tools available in Italy mean a change in the
bank's SR and SRF is highly unlikely, in Fitch's view.

The rating actions are as follows:

Long-Term IDR assigned at 'BB+', Outlook Stable
Short-Term IDR assigned at 'B'
Viability Rating assigned at 'bb+'
Support Rating assigned at '5'
Support Rating Floor assigned at 'No Floor'

ICCREA BANCA: S&P Affirms 'BB/B' Counterparty Credit Ratings
S&P Global Ratings said it has affirmed its 'BB/B' long- and
short-term counterparty credit ratings on Italian bank Iccrea
Banca SpA (IB) and its core subsidiary Iccrea BancaImpresa SpA.
The outlook is stable.

S&P said, "Unlike our previous base-case scenario, the
cooperative banking sector is heading toward the creation of two
national groups. Only about half of the Banche di Credito
Cooperativo (BCC) network (166 out of more than 300 as of
December 2016) expressed their intention to group under IB to
form a more integrated institution. According to IB, its group
will represent about 60% of the entire cooperative banking
sector, holding EUR10.5 billion of total equity, EUR126 billion
of assets, and more than 2,500 branches. The group will have a
nationwide presence, without material concentration in a specific
region, and will become the fifth largest Italian banking group
by assets.

"As we base our ratings on IB on the creditworthiness of the
entire BCC network, a smaller perimeter will weigh on our rating
assessment of IB. Specifically, the new entity will have a lower
business potential and relevance to the domestic system. However,
we also understand that, under the new structure, the bank should
be able to preserve its financial strength and eventually reap
the benefits of having a more cohesive group.

"We understand that finalizing the setup of the group, which is
the result of an Italian government reform at the beginning of
2016, is still in progress. IB should be able to present its
final plan to regulators by the end of 2017, with the aim of
having the new entity operational in the second half of 2018.

"The cooperative sector reform continues to represent an
opportunity for the system because it should create more
resilient groups. For the new Iccrea group, we will need to
assess in particular the effectiveness of the joint and several
guarantee and overall risk sharing among the group's
participants, in addition to the ability of the holding entity to
coordinate BCC members' operations, implement group strategy, and
reap cost synergies.

"Our ratings continue to factor in the BCC's business stability
and strong retail customer base in Italy. It also reflects its
stable and large retail funding base and limited exposure to
short-term wholesale funding. However, weak asset quality
constrains the network's creditworthiness and modest
profitability limits organic capital generation.

"Specifically, based on our estimate of the new group's
capitalization and risk exposures, we expect that the BCC
network's risk-adjusted capital ratio (RAC) will hover at about
6% in the next 12 months, constrained by subdued profitability
with a declining net interest margin, lower contribution from the
securities portfolio, a still-weak efficiency ratio above 70%,
and high credit provisions. In our view, the BCC network's asset
quality will remain a rating weakness in the light of its above
domestic average nonperforming loan (NPL) ratio (20% as of
December 2016), higher concentration in real estate (currently
20% of total loans), and NPL coverage of 45% versus 51% for the

"The stable outlook on IB reflects our view that the BCCs
participating in the new group will be able to maintain a strong
liquidity position, limited reliance on wholesale funding, and a
RAC ratio sustainably above 5%, while preserving their solid
market position in the next 12 months.

"An upgrade could follow a strengthening of the group's combined
solvency and risk profiles. For example, this could happen if we
expect the RAC ratio to increase comfortably above 7% or the
asset quality to improve to a level more akin to the rest of the
domestic sector. In addition, as a result of the sector reform,
we would also need to observe the following in the new group:

-- Significant tightening of the relationship between individual
    banks, with effective risk-sharing system among members;
-- Better efficiency; and
-- Improved corporate governance, enabling the bank to operate
    as a single group in the market.

"We could lower the ratings on IB if the new group's
capitalization declined over the next 12 months, leading to a RAC
ratio below 5.0%, without a material improvement in asset
quality. Similarly, this could happen if the group's funding and
liquidity profile deteriorated to a level more in line with
domestic peers, or if the group failed to agree on a joint
strategy that enables strong risk governance and reaping of cost


KAZAKHMYS INSURANCE: Fitch Affirms B+ IFS Rating, Outlook Stable
Fitch Ratings has affirmed JSC Kazakhmys Insurance Company's
(Kazakhmys Ins) Insurer Financial Strength (IFS) Rating at 'B+'
and its National IFS rating at 'BBB(kaz)'. The Outlooks are

Kazakhmys Ins's capital position is strong for the rating level
and the insurer has a track record of profitability. Offsetting
factors include the low average credit quality of its investment
portfolio, aggressive growth strategy and high dependence on
outwards reinsurance.

Based on Fitch's Prism factor-based model (Prism FBM), Kazakhmys
Ins's capital score improved to "extremely strong" at end-2016,
from "strong" at end-2015. The company maintained low net premium
volumes, which together with considerable reinsurance
utilisation, led to stable target capital. In addition capital
injections from shareholders increased the available capital and
contributed to the strengthened capitalisation.

The capital injections have also created an extensive buffer in
the insurer's regulatory solvency margin, which grew to 411% at
end- 2016. However, due to subsequent considerable top-line gross
premium growth and changes in the solvency reporting calculation
basis the regulatory solvency margin decreased to, albeit a still
comfortable level of, 133% at end-5M17.

Kazakhmys Ins has a track record of positive financial results
over the last five years. In 2016 the company reported moderate
net income of KZT355 million compared with the 2015 result of
KZT994 million. Unlike 2015, the net result in 2016 was mainly
supported by a strong gross investment component of KZT907
million and by rather modest underwriting income. Adversely, a
considerable impairment loss of KZT417 million and an FX loss on
investments of KZT240 million negatively impacted earnings, and
led to a net investment result of KZT240 million. In 5M17 the
company reported a modest net income of KZT23 million based on
regulatory statutory reporting, supported by investment returns
as was the case for 2016 results.

In 2016 Kazakhmys Ins's underwriting result turned positive at
KZT153 million compared with an underwriting loss of KZT308
million in 2015, with the combined ratio improving to 96% from
115%. The loss ratio decreased to 35% in 2016 from 40% in 2015,
with compulsory motor-third party liability insurance being the
main contributor.

Fitch views Kazakhmys Ins's investment portfolio to be of weak
credit quality. Bank deposits accounted for 67% of Kazakhmys
Ins's total investments at end-2016 compared with 79% at end-
2015, before falling further to 50% at end-5M17. All deposits are
held in local banks mainly rated in 'B' category. Fitch notes the
weak average credit quality of these banks, which is mainly
attributable to the poor financial standing of the local banking

The company reported significant growth in 2016, with gross
written premiums increasing by 160% from 2015 levels. Growth on a
net premium basis was lower at 83% in 2016. Net growth was
largely driven by compulsory motor third-party liability (MTPL)
policies and, to a lesser extent, by the general third-party
liability (TPL) business. As a result, the share of MTPL in the
company's underwriting portfolio grew to 62% in 2016 from 52% in

Kazakhmys Ins's reinsurance utilisation ratio was very high and
increased to 89% in 2016 from 84% in 2015 with a five-year
average of 81%. The company uses reinsurance primarily for
fronting purposes on property, third-party liability, and health
risks for big commercial accounts, including Kazakhmys

The ratings could be upgraded if Kazakhmys Ins improves the
average asset credit quality of investments and successfully
implements its growth strategy, with sustainable underwriting
profitability and diversification of the portfolio.

The ratings could be downgraded if the regulatory solvency margin
falls below 110% on a sustained basis or if shareholders fail to
support Kazakhmys Ins's growth strategy.


DIAMOND BC: Moody's Assigns First-Time B3 CFR, Outlook Stable
Moody's Investors Service assigned first time ratings to Diamond
(BC) B.V., including a B3 corporate family rating and a B3-PD
probability of default rating. The rating outlook is stable. The
proceeds from the new facilities will be used to finance the
acquisition of Diversey by Bain Capital Investors, as well as pay
fees and expenses associated with the transaction.

The purchase price is supported by an undisclosed equity
investment by Bain Capital Investors. The equity investment is
pure common stock and not expected to have a dividend, PIK or
accrete. The transaction is expected to close in July.

Moody's took the following actions:


Issuer: Diamond (BC) B.V.

-- Probability of Default Rating, Assigned B3-PD

-- Corporate Family Rating, Assigned B3

-- Senior Secured Bank Credit Facility, Assigned B1 (LGD 3)

-- Senior Unsecured Notes, Assigned Caa2 (LGD 5)

Outlook Actions:

Issuer: Diamond (BC) B.V.

-- Outlook, Assigned Stable

The ratings are subject to the receipt and review of the final


Diversey's B3 corporate family rating reflects high pro forma
leverage, the fragmented and competitive market and exposure to
cyclical end markets. Pro forma for the carve-out from Sealed Air
Corporation, Diversey's leverage is high for the rating category
the company will need to achieve significant cost savings to
improve it materially. The industrial cleaning and hygiene
solutions industry is a fragmented and competitive market and the
majority of market share is held by many private, unrated
regional and niche competitors. The company also has exposure to
cyclical end markets with approximately 11% of sales generated in
retail end markets and 13% generated in hospitality. Diversey is
also expected to remain financially aggressive, focusing mainly
on small tuck-in acquisitions.

The rating is supported by the company's exposure to stable and
faster growing end markets, industry leading position and low
customer concentration. The rating is also supported Diversey's
long-standing customer relationships and global footprint.
Approximately 24% of sales are generated in food and beverage end
markets and 10% in healthcare. Additionally, Diversey generates
approximately one-third of its sales from emerging markets and
approximately 75% outside the US overall. The company also has
long-standing customer relationships with a low customer
concentration of sales (the top ten account for approximately 13%
of revenue and no single customer accounts for more than 3%).
Diversey is also expected to maintain adequate liquidity.

The ratings could be upgraded if the company sustainably improves
credit metrics within the context of a stable operating and
competitive environment while also maintaining adequate
liquidity. Diversey would also need to sustainably generate
meaningful free cash flow. Specifically, the ratings could be
upgraded if debt/EBITDA declines below 6.0 times, EBITDA to
interest expense increases above 3.0 times and funds from
operations to debt increases above 6.0%.

The ratings could be downgraded if credit metrics, the operating
and competitive environment, and/or liquidity deteriorates and
the company undertakes a large debt-financed acquisition. The
ratings could also be downgraded if the company fails to execute
on its operating plan. Specifically, the ratings could be
downgraded if debt/EBITDA remains above 6.0 times, EBITDA to
interest expense declines below 2.0 times and funds from
operations to debt remains below 6.0%.

The stable outlook reflects the expectation that Diversey will
benefit from productivity initiatives, cost cutting and the
dedication of free cash flow to debt reduction.

The principal methodology used in these ratings was Global
Chemical Industry Rating Methodology published in December 2013.

Headquartered in Charlotte, North Carolina, Diversey is a global
supplier of cleaning, hygiene, sanitizing products, equipment and
related services to the institutional and industrial cleaning and
sanitation markets. The business is organized into two segments,
Professional (76% of 2016 revenue) and Food & Beverage (24% of
2016 revenue). The company generated approximately $2.6 billion
of sales in 2016. Diversey will be a portfolio company of Bain
Capital Investors.

HEMA BV: S&P Puts CCC+ Corp. Credit Rating On CreditWatch Pos.
S&P Global Ratings put its 'CCC+' long-term corporate credit
rating on Netherlands-based general merchandise and food retailer
Hema B.V. on CreditWatch with positive implications.

At the same time, S&P assigned a:

-- 'B-' issue rating to the proposed EUR610 million senior
    secured notes to be issued by Netherlands-based Hema Bondco I
    B.V. The recovery rating is '4', indicating our expectation
    for average recovery (30%-50%; rounded estimate: 40%) of
    principal in the event of a payment default.
-- 'CCC' issue rating to the proposed EUR150 million senior
    unsecured notes to be issued by Netherlands-based Hema Bondco
    II B.V. The recovery rating is '6', indicating S&P
    expectations for negligible recovery of principal in the
    event of a payment default.
-- 'B+' issue rating to the EUR100 million proposed senior
    secured revolving credit facility (RCF) issued by Hema. The
    recovery rating is '1', indicating our expectation for very
    high recovery (90%-100%) of principal in the event of a
    payment default.

S&P said, "We have affirmed the issue rating of 'CCC+' on the
existing EUR250 million floating-rate and EUR315 million fixed-
rate senior secured notes issued by Hema Bondco I B.V., with a
recovery rating unchanged at '4'. We also affirmed the 'CCC-'
ratings on the existing EUR150 million unsecured senior notes
issued by Hema Bondco II B.V., with a recovery rating unchanged
at '6'. Finally, we affirmed our 'B' rating on the existing EUR80
million senior secured RCF, with a recovery rating of '1'."

The proposed ratings are subject to the successful completion of
the refinancing transaction, including receipt of the final
documentation. If the refinancing transaction does not complete
or the scope of the transaction departs materially from the
current plan, S&P said, "we reserve the right to withdraw or
revise our ratings.

"The positive CreditWatch placement reflects the likelihood that
we would raise the long-term corporate credit rating on Hema to
'B-' if the company successfully completes its plan to issue the
new notes and repay the existing notes outstanding. At that time,
we would also finalize the ratings on the proposed debt
instruments and withdraw the existing issue ratings on the
current bonds, which we expect will have been fully repaid."

This refinancing transaction follows a sharp improvement in the
group's operating performance. The 2015 financial year (FY)
ending January 2016, was very difficult for the group--the
group's reported EBITDA for the year more than halved to EUR41.8
million. By contrast, Hema reported EBITDA of EUR87.3 million for
the 12-month period ending April 2017. S&P considers that this
improvement indicates that the new management's turnaround plan
is bearing fruit. Under Hema's future operating model, it aims to
revitalize its Benelux operations by optimizing inventory levels
and improving its offering in core categories. It also aims to
increase its omnichannel capability and achieve international
expansion, especially by expanding the number of its French

Hema benefits from its strong brand recognition and niche market
positions in its core markets in the Netherlands, Belgium, and
Luxembourg. The company sells almost all its products under the
Hema brand. On the one hand, this supports the company's
bargaining power with suppliers, resulting in a high gross
margin. On the other hand, it exposes Hema to adverse trends in
currency or raw materials prices, or potential adverse brand

However, Hema operates in highly fragmented and competitive
retail markets and still has limited geographic diversification,
as it generates over 70% of EBITDA in The Netherlands, which is
showing lukewarm economic recovery. In addition, S&P said, "we
consider that the nonfood retail segment faces strong price
competition from discounters and online retailers, as well as
high seasonality and volatility based on the discretionary nature
of purchases.

"Although we forecast an improvement in the group's
profitability, management's ongoing investment plans for the
business will continue to constrain free cash generation.
Furthermore, we expect this refinancing transaction to be broadly
leverage-neutral. As a result, we expect Hema's adjusted debt-to-
EBITDA ratio to be above 7x in FY2017 and FY2018.

"We exclude from our debt adjustments the loans provided by the
private equity shareholder, Lion Capital, which have a principal
amount of EUR269.6 million (cumulative value of about EUR956
million at the end of FY2016). In our view, the overall terms and
conditions of the instruments are aligned with equity interest.
The instruments can only be transferred proportionally with
common equity and they are subordinated to the senior secured
credit facilities.

"However, we include senior payment-in-kind (PIK) notes that are
currently due 2020 and have a principal amount of EUR85 million
(cumulative value of about EUR115 million at the end of FY2016),
issued by Dutch Lion B.V., in our adjusted debt calculation. Our
view of the Hema group encompasses all the group entities up to
Dutch Lion B.V., which we view as the top holding company of the

"We recognize that some of Hema's S&P Global Ratings-adjusted
credit ratios are better than its unadjusted ratios. In
particular, our lease adjustments tend to inflate adjusted funds
from operations (FFO) to cash interest coverage, given Hema's
operating lease structure. We therefore complement our analysis
by monitoring other ratios, such as EBITDAR coverage, which
measures an issuer's cash-interest and lease-related obligations
(defined as reported EBITDA including rent cost coverage of cash
interest plus rent). That said, Hema's unadjusted EBITDAR
coverage, which is around 1.5x also indicates its high leverage."

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

-- Refinancing to go ahead as planned, extending maturities and
    improving liquidity position of the group.
-- Moderate GDP growth in both Belgium and The Netherlands, with
    S&P's forecast GDP of 2.2% in 2017 and 1.9% in 2018 for The
    Netherlands; and 1.6% in 2017 and 2018 for Belgium.
-- Continued modest recovery in the eurozone, with GDP growth of
    2% in 2017 and 1.7% in 2018. Economic growth will continue to
    be primarily driven by domestic demand. The uninterrupted
    rise in consumer confidence indicators, while energy prices
    have been starting to rebound, suggests that better
    conditions in the labor markets will continue to support
    domestic spending. The overall picture remains favorable for
    consumers, with broadly supportive macroeconomic and
    consumption factors overall for the group.
-- Top-line growth of about 4% annually over the next two years,
    driven by about 20-25 new store openings a year, as well
    like-for-like growth in the region of 2.0%-2.5%. That said,
    S&P anticipates competition in the retail segment will remain
    quite strong. Although operations will likely continue to
    improve in 2017 and 2018, it anticipates that the pace of
    turnaround could slow down somewhat.
-- Gross margin improved sharply by about 320 basis points (bps)
    in 2016, but S&P said, "we expect gross margin to broadly
    remain stable in 2017 and 2018. Combined with cost control,
    this could result in the adjusted EBITDA margin growing by
    more than 30 bps in FY2017. Despite improving profitability,
    we expect that free cash flow generation will be constrained
    by increasing capital expenditure (capex) to above EUR50
    million next year."

Based on these assumptions, S&P forecasts the following credit
metrics for 2017 and 2018:

-- An adjusted debt-to-EBITDA ratio of 7.5x in 2017, improving
    marginally to 7.1x in 2018.
-- An adjusted free operating cash flow to debt ratio of about
    4%-5% due to significant capex investment.
-- EBITDAR coverage ratio (which we use as the key supplementary
    ratio) of around 1.5x in both years.

The CreditWatch placement reflects S&P's view that Hema's
proposed refinancing will remove a significant refinancing risk
and improve its debt maturity profile.

S&P said, "We aim to review the CreditWatch placement when the
proposed refinancing has been completed and we have reviewed the
final results of the refinancing exercise and the final
documentation of Hema's notes offering and debt prepayment, and
the extended maturity of the group's RCFs.

"We will likely raise the long-term corporate credit rating on
Hema to 'B-' if it successfully completes the refinancing, repays
the existing notes, and extends the debt maturities.

Failure to implement the planned changes to the group's capital
structure or further significant delays beyond 2017 in
implementing the refinancing plan would likely prompt us to take
a negative rating action."


NORSKE SKOG: Extends Debt Restructuring Talks with Creditors
Luca Casiraghi at Bloomberg News reports that Norske
Skogindustrier ASA prolonged talks with creditors about slashing
its US$1 billion debt pile, days before the Blackstone Group LP-
backed Norwegian papermaker is due to make an interest payment.

According to Bloomberg, a statement published on July 12 said the
deadline for bondholders to accept a debt-restructuring proposal
was moved to July 31 from July 12.

Oslo-based Norske Skog, which has to make a coupon payment
on secured notes by July 15, also delayed publication of its
quarterly results, Bloomberg discloses.

This is the second time that Norske Skog has extended the
deadline as it seeks to push out debt maturities and cut
borrowing costs to help cope with a slump in sales largely caused
by a decline in newspaper readership, Bloomberg notes.  The
company has previously restructured bonds and last year got
financing from Blackstone's GSO Capital Partners, Bloomberg

Norske Skog's secured noteholders include BlueBay Asset
Management, Oceanwood Capital Management and Cyrus
Capital Partners, Bloomberg relays, citing a source familiar with
the matter, who asked not to be identified because the talks are
private.  They said Contrarian Capital Management and GLG
Partners are among the unsecured noteholders, Bloomberg notes.

                        About Norske Skog

Norske Skogindustrier ASA or Norske Skog, which translates as
Norwegian Forest Industries, is a Norwegian pulp and paper
company based in Oslo, Norway and established in 1962.

                           *   *   *

As reported by the Troubled Company Reporter-Europe on June 8,
2017, S&P Global Ratings lowered its long-term corporate credit
rating on Norwegian paper producer Norske Skogindustrier ASA
(Norske Skog) to 'CC' from 'CCC+'.  S&P affirmed its 'C' short-
term corporate credit rating on the company.

On June 7, 2017 The TCR-Europe reported that
Moody's Investors Service  downgraded the corporate family
rating (CFR) of Norske Skogindustrier ASA (Norske Skog) to Caa3
from Caa2 as well as its probability of default rating (PDR) to
Caa3-PD from Caa2-PD. Concurrently, Moody's  also downgraded
Norske Skog's senior unsecured global notes due 2026 and 2033 to
C from Caa3 and affirmed the C rating of its senior subordinated
perpetual notes due 2115. In addition, Moody's downgraded the
rating of the senior unsecured global notes due 2021 and 2023
issued by Norske Skog Holdings AS to Caa3 from Caa2 and the
rating of the senior secured notes issued by Norske Skog AS to
Caa2 from Caa1. The outlook on the ratings remains stable.
The downgrade of the CFR to Caa3 from Caa2 and of the PDR to
Caa3-PD from Caa2-PD reflects exchange offer, which if executed
successfully, would qualify as a distressed exchange under
Moody's definition as some investors' obligations would be
significantly diminished.


P4 SP: Play Public Listing No Impact on BB- IDR, Fitch Says
Fitch Ratings says the planned public listing of Play
Communications, 100% owner of mobile operator P4 sp. z.o.o (P4 or
Play) has no immediate impact on the group's ratings given that
the capital structure at the restricted group level remains
undisturbed. However, a clearly stated dividend policy and
leverage target improve transparency regarding the company's
capital structure. Play's Long-Term IDR is currently 'BB-
'/Stable. The company's National Long-Term Rating is 'BBB-

The key changes to Fitch forecasts include the planned PLN650
million 2018 dividend and Fitch expects dividends to grow in line
with a targeted payout of 65%-75% of free cash flow-to-equity
post lease payments. While this results in a lowering of Fitch
post-dividend free cash-flow forecast, Fitch believes underlying
growth in the business is sufficiently robust to ensure that
funds from operations (FFO) adjusted net leverage stays well
below the downgrade threshold of 4.5x.

Fitch expects P4 to end 2017 with FFO-adjusted net leverage at
around 3.7x and for this metric to trend gradually towards 3.5x
by 2019. FFO-adjusted net leverage at/or below 3.5x, together
with a strong operational performance, sustained profitability
and good cash-flow generation, could result in positive rating

A key benefit of a successful IPO is the clarity it will bring in
terms of P4's capital structure and the future direction of
leverage - the company is targeting a net debt / EBITDA leverage
of 2.5x. Since 2014, Play has twice recapitalised via a holdco
PIK note. The most recent example in March this year saw the
group refinance an existing EUR415 million layer of PIK debt,
regarded as outside the borrower group, into the senior debt
capital structure. The existence of PIK debt therefore, even when
outside the borrower group, typically raises expectations or risk
of a leverage spike as and when the instrument is refinanced.
Ownership questions at Play, particularly whether the existing
owners might seek to sell on to another private equity investor,
have also led to uncertainty over future leverage.

These uncertainties have in the past acted as a constraint to the
ratings of a business where underlying performance was otherwise
stronger than the ratings assigned.


ALMAZERGIENBANK: Fitch Affirms BB- Long-Term IDR, Outlook Stable
Fitch Ratings has affirmed Russia-based Almazergienbank's (AEB)
Long-Term Issuer Default Ratings (IDRs) at 'BB-' with Stable
Outlook and Viability Rating (VR) at 'b'.


The affirmation of AEB's Long-Term IDRs at 'BB-' and Support
Rating at '3' reflects the moderate probability of support the
bank could receive from the Russian Republic of Sakha (Yakutia)
(BBB-/Stable) given (i) the regional authorities' majority
ownership (80% direct stake); (ii) the region's operational and
strategic control over the bank (the local administration sits on
the bank's Supervisory Board); (iii) the track record of capital
and liquidity support to date, including RUB250 million of
equity, provided in 2016 (1% of RWAs); and (iv) AEB's moderate
size relative to Sakha's budget.

At the same time, AEB's Long-Term IDRs remain three notches below
those of Sakha, reflecting (i) the limited flexibility of the
local authorities to provide extraordinary support swiftly; (ii)
AEB's limited strategic importance for the region; and (iii) the
region's intention to attract a strategic investor to the bank,
potentially leading to a dilution of Sakha's majority stake.
However, there has been no firm interest from potential
investors, and the disposal process could be lengthy.

AEB's 'b' VR reflects the bank's limited franchise and high
reliance on the local authorities for lending business
origination, concentrated and vulnerable loan book, as well as
modest profitability and capitalisation. Positively, the VR
reflects comfortable funding and liquidity profile.

AEB's NPLs at end-1Q17 made up a moderate 5% of gross loans and
were fully covered by total reserves. However, restructured
exposures accounted for additional 14% and were weakly reserved.
In Fitch's view, most restructured loans are of moderate risk,
since these are issued to borrowers working under state contracts
and are reasonably covered by hard collateral and/or sub-
sovereign guarantees. Those loan exposures without such
mitigants, which Fitch therefore considers high risk, amount to
35% of Fitch Core Capital (FCC) based on the review of the bank's
25 largest borrowers (which made up 63% of total corporate loans
at end-1Q17).

The quality of the retail book (31% of total loans) is
reasonable, underpinned by a high share of mortgages and cash
loans to AEB's payroll clients. NPL origination ratio in the
retail segment (calculated as net increase in NPLs plus write-
offs divided by average performing loans) has been good at around
2% over the last four years. This is below the estimated break-
even rate of about 6%.

AEB's FCC was a moderate 12.8% at end-1Q17. The regulatory total
capital ratio was similar at 12% at end-5M17, allowing AEB to
increase reserves by a limited 3% of gross loans, before
breaching the regulatory minimum level of 9.25% (including the
1.25% capital conservation buffer). Beyond that, the bank's pre-
impairment profit provided an additional loss absorption cushion
of 3% of average gross loans in 2016.

AEB's internal capital generation is weak (ROAE of -0.4% in
2016), restrained by low operating efficiency and high impairment
charges. AEB therefore depends on capital contributions to
support growth. The bank expects to receive a sizeable equity
injection from Sakha in 2H17-1H18, although some of it may be
used to cover additional risks, which could potentially be
identified as a result of the ongoing review of the bank by the
Central Bank of Russia.

The bank is mainly deposit-funded (92% of liabilities at end-
1Q17), while the concentration is low, with around 80% being
granular retail accounts. The 20 largest corporate accounts make
up only 12% of total customer funding. The cushion of highly
liquid assets, net of market funding repayments within one year,
covered 14% of customer accounts at end-4M17, which is somewhat
tight, in Fitch's view, although customer funding has
historically been sticky.


Upside potential for AEB's IDRs is limited. The bank's support-
driven ratings could be downgraded if (i) Sakha is downgraded;
(ii) the propensity of the parent to provide support diminishes;
or (iii) AEB is sold to a financially weaker investor.

The bank's VR could be upgraded if the bank's capitalisation
strengthens and profitability improves. Downward pressure on
AEB's VR could stem from a marked deterioration in asset quality
leading to capital erosion, in the absence of parental support.

The rating actions are:

Long-Term Foreign- and Local-Currency IDRs affirmed at 'BB-',
Outlook Stable
Short-Term Foreign-Currency IDR affirmed at 'B'
Viability Rating affirmed at 'b'
Support Rating affirmed at '3'

MOSCOW NATIONAL: Put on Provisional Administration
The Bank of Russia, by its Order No. OD-1857, dated July 5, 2017,
effective July 5, 2017, revoked the banking license of Moscow-
based credit institution Moscow National Investment Bank Limited
Liability, further referred to as the credit institution,
according to the press service of the Central Bank of Russia.

According to the financial statements, as of June 1, 2017, the
credit institution ranked 515th by assets in the Russian banking

The credit institution was involved in dubious transit

The continued involvement of the credit institution in such
suspicious operations, despite the supervisor-imposed
restrictions meant to suppress these operations, has demonstrated
the unwillingness of the bank's management and owners to take
action aimed at normalizing its activities.

Also, the credit institution failed to comply with legislative
requirements on countering the legalization (laundering) of
criminally obtained incomes and the financing of terrorism.

The credit institution's lending strategy was high-risk and
connected with the placement of funds in low-quality assets.

Under the circumstances, the Bank of Russia took the decision to
withdraw Moscow National Investment Bank from the banking
services market.

The Bank of Russia took such an extreme measure -- revocation of
the banking license -- in connection with the credit
institution's failure to comply with federal banking laws and
Bank of Russia statutory requirements, its repeated violations,
within a year, of the Federal Law "On Countering the Legalisation
(Laundering) of Criminally Obtained Incomes and the Financing of
Terrorism", as well as Bank of Russia regulations issued in
accordance with the said law, and the application of the measures
stipulated by the Federal Law "On the Central Bank of the Russian
Federation (Bank of Russia)", taking into account a real threat
to the interests of creditors and depositors.

The Bank of Russia, by its Order No. OD-1858, dated July 5, 2017,
appointed a provisional administration to the credit institution
for the period until the appointment of a receiver pursuant to
the Federal Law "On the Insolvency (Bankruptcy)" or a liquidator
under Article 23.1 of the Federal Law "On Banks and Banking

In accordance with federal laws, the powers of the credit
institution's executive bodies have been suspended.

The credit institution is a member of the deposit insurance

The revocation of the banking license is an insured event as
stipulated by Federal Law No. 177-FZ "On the Insurance of
Household Deposits with Russian Banks" in respect of the bank's
retail deposit obligations, as defined by law.

The said Federal Law provides for the payment of indemnities to
the bank's depositors, including individual entrepreneurs, in the
amount of 100% of the balance of funds but no more than a total
of RUR1.4 million per one depositor.

U N I T E D   K I N G D O M

SMALL BUSINESS 2016-1: S&P Raises Class D Ratings to BB-
S&P Global Ratings raised its credit ratings on Small Business
Origination Loan Trust 2016-1 DAC's class C (Dfrd) and D (Dfrd)
notes. At the same time, S&P has affirmed its ratings on the
class A and B (Dfrd) notes.

S&P said, "Today's rating actions follow our full review of the
transaction's performance since closing in May 2016 (see "Ratings
Assigned To U.K. Peer-To-Peer Securitization Small Business
Origination Loan Trust 2016-1 DAC," published on May 10, 2016).

"We rated the class B (Dfrd), C (Dfrd), and D (Dfrd) notes on a
deferrable interest basis, though no interest is deferred in the
respective assigned ratings scenarios."

Delinquencies have been low since closing. As of April 2017, the
delinquency rate (more than 30 days in arrears) was 0.85% while
the cumulative gross loss rate was 3.30%.

The pool has experienced average prepayments of about 14.2% since
closing, which is within the range of our high constant payment
rate (CPR) scenario of 30% and our low CPR scenario of 0.5%.

The current weighted-average yield of the pool remains virtually
unchanged from the closing yield of 9.62%.

The transaction has a cash reserve and a liquidity reserve, both
of which were funded to the required level as of April 2017.

Available principal receipts can be applied to make up for
deficiencies in senior expenses and interest payments on the most
senior classes of notes, if required.

The transaction features separate waterfalls for interest and
principal payments. A principal deficiency ledger (PDL),
comprising six sub-ledgers (one each for the class A, B (Dfrd), C
(Dfrd), D (Dfrd), E, and Z notes) will record any defaults and/or
principal receipts redirected to make up for
shortfalls in senior interest waterfall amounts.

Legal, payment structure, and cash flow risks continue to be
adequately mitigated, in S&P's view, and do not constrain its
ratings on the notes.

S&P said, "The application of our operational risk criteria
constrains the maximum potential ratings on this transaction at
'BBB (sf)' (see "Global Framework For Assessing Operational Risk
In Structured Finance Transactions," published on Oct. 9, 2014).
Additionally, the replacement commitments under the bank account
provider and interest rate cap agreements also constrain the
maximum potential rating on this transaction at 'BBB (sf)' (see
"Counterparty Risk Framework Methodology And Assumptions,"
published on June 25, 2013)."

The pool began amortizing at closing. As of April 2017, the pool
factor decreased to 55.6%. As a result of the fast pool
amortization, the total credit enhancement available to the class
A notes has increased to 61.9% from 34.0%, with a current note
factor of 34.6%. Available credit enhancement for
the class B (Dfrd), C (Dfrd), and D (Dfrd) notes has also
increased, to 48.8%, 37.8%, and 29.0%, respectively.

Since the obligors are micro and small and midsize enterprises
(SMEs), S&P said, "we applied an interpretation of our European
consumer finance criteria to analyze the credit quality of the
assets (see "European Consumer Finance Criteria," published on
March 10, 2000).

"Our analysis indicates that the available credit enhancement for
the class A, B (Dfrd), and C (Dfrd) notes is sufficient to
withstand credit and cash flow stresses that are commensurate
with our 'BBB (sf)' rating scenario. We have therefore affirmed
our 'BBB (sf)' ratings on the class A and B (Dfrd) notes and
raised to 'BBB (sf)' from 'BB (sf)' our rating on the class C
(Dfrd) notes.

"Our analysis also indicates that the available credit
enhancement for the class D (Dfrd) notes is commensurate with the
credit and cash flow stresses that we apply at the 'BB-' rating
level. We have therefore raised to 'BB- (sf)' from 'B (sf)' our
rating on this class of notes.

"The application of our structured finance ratings above the
sovereign criteria does not constrain the ratings on the notes
(see Ratings Above The Sovereign - Structured Finance:
Methodology And Assumptions," published on Aug. 8, 2016)."

The transaction is a securitization of U.K. marketplace (peer-to-
peer) SME business loans originated on Funding Circle Ltd.'s


Small Business Origination Loan Trust 2016-1 DAC
GBP129.2 Million Peer-To-Peer Originated SME Loans Asset-Backed
Floating-Rate Notes (Including   Unrated Subordinated Notes)

  Class          Rating
                 To         From

  Ratings Raised

  C (Dfrd)       BBB (sf)   BB (sf)
  D (Dfrd)       BB- (sf)   B (sf)

  Ratings Affirmed

  A              BBB (sf)
  B (Dfrd)       BBB (sf)


UZBEK INDUSTRIAL: Fitch Affirms B+ Long-Term IDR, Outlook Stable
Fitch Ratings has affirmed the Long-Term Foreign Currency Issuer
Default Ratings (IDRs) of Uzbek Industrial and Construction Bank
Joint-Stock Commercial Bank (Uzpromstroybank; UPSB), Asaka Bank
(Asaka), OJSC Agrobank and Microcreditbank's (MCB) at 'B+'. The
Outlooks are Stable.


The affirmation of the Long-Term Foreign Currency IDRs and
Support Rating Floors (SRFs) of all four banks at 'B+' reflects
Fitch's view of a high propensity of the Uzbek authorities to
support the banks, in case of need. This view of support is based
on (i) the state's majority ownership; (ii) the banks' policy
roles (to a lesser extent for MCB) and (iii) the track record of
capital support, including from Fund for Reconstruction and
Development and Ministry of Finance, which administered
recapitalisation programmes of USD500 million and UZS1.2
trillion, respectively, for state banks (including the reviewed
ones) in 2017. These injections are made in steps, with some
amounts already disbursed and the rest by end-2017.

In Fitch's view, the state's ability to provide support is
currently solid, considering the moderate size of the banking
sector relative to the Uzbek economy (loans/GDP ratio of around
37% at end-2016) and reasonably large foreign-currency reserves.
However, it should also be viewed in the context of the banking
sector being concentrated and support-dependent and the economy's
structural weaknesses, as Uzbek exports are commodities-driven
and concentrated on a few countries, and external finances are
heavily supported by remittances.

The previous government's plan to attract new foreign investors
to all four banks through minority stake sale was abandoned in
late 2016. Fitch therefore believes that the state is likely to
retain majority stakes and operational control in the banks, and
its propensity to support them should therefore remain strong.

Viability Ratings (VRs)
The affirmation of UPSB's and Asaka's VRs at 'b' reflect the
banks' reasonable performance and asset quality metrics to date,
mostly due to exposure to higher-quality borrowers that is partly
covered by state guarantees. Agrobank's and MCB's VRs at 'b-'
reflects the banks' weaker asset quality and profitability
metrics, as the result of the banks' focus on higher-risk

At the same time, all four banks' VRs continue to reflect
Uzbekistan's difficult operating environment, the banks' limited
commercial franchises, high concentrations in their balance
sheets, and potential deficiencies in underwriting policies
leading to high credit and operational risks.

UPSB and Asaka reported low non-performing loans (NPLs) at end-
2016 (below 1% and 2% respectively, fully covered by reserves).
This is due to their focus on the export-oriented commodity and
auto industries and a high share of state-owned borrowers (UPSB -
85% of loans, Asaka - 60%), with a significant share of larger
exposures also being guaranteed by the state (54% of loans at
UPSB and 36% at Asaka).

Agrobank also has low NPLs (2.5% at end-2016), but its asset
quality remains weakened by unreserved problem receivables
(UZS261 billion or 7% of total assets), which resulted from a
2010 fraud. MCB's NPL ratio was a high 13% at end-2016, due to
financial difficulties in a number of agricultural companies. The
unreserved portion of these loans was a significant 35% of end-
2016 Fitch Core Capital (FCC), as MCB expects to recover a
significant part of them. Positively, the bank has sufficient
capital to reserve these loans and remain compliant with
regulatory capital ratios.

Loan books are more concentrated and dollarised in UPSB (78%) and
Asaka (57%), although the risks are mitigated by most borrowers,
who have taken foreign-currency loans, being either state-
owned/guaranteed or have foreign-currency revenues. Agrobank's
and MCB's loans are mostly in local currency and more granular by
borrower, albeit concentrated on the agricultural industry and
therefore prone to risk of commodity (eg cotton) price fall.

Profitability was moderate at UPSB and Asaka in 2016 (return on
average equity (ROAE) of around 11% at both banks), and weak at
Agrobank (2%) and MCB (negative 11%), reflecting the mostly
state-directed nature of banks' operations (at UPSB and Asaka)
and rather weak operating efficiency (at Agrobank and MCB).

Capitalisation was moderate at UPSB (FCC/risk-weighted assets
(RWA) of 15% at end-2016), MCB (FCC/total assets of 13%), modest
at Asaka (FCC/RWA of 11%) and weak at Agrobank (FCC/RWA of 6%,
adjusted for unreserved problem receivables). Asaka and Agro were
also in breach of the minimum regulatory capital requirements at
end-5M17 (total capital ratios of 11.6% and 7.8%, respectively,
compared with prudential minimum of 12.5%) due to lending
expansion, but this should be rectified soon, as all state banks
will be recapitalised by end-2017. Fitch expects capital
contributions from the state to equal around 6% of end-5M17 RWAs
in UPSB, 7% in Asaka, 8% in Agro and 18% in MCB.

However, the increased capital buffers are likely to be consumed,
as internal capital generation is lagging behind growth at all
four banks, and also due to potential further som depreciation
after the already high 23% in 1H17 (non-annualised).

The banks' funding is mainly sourced from customer deposits and
government and quasi-government entities. Depositor
concentrations were high at UPSB, Asaka and MCB, with 20 largest
depositors accounting for 45%, 70% and 46% of total customer
funding, respectively. Agrobank's deposits were more granular
(15%). UPSB is the only bank with meaningful borrowings from
foreign financial institutions (21% of liabilities). However,
UPSB's foreign debt repayments are small (below 5% of total
liabilities in 2H17-2018) and linked to loan repayments.

Liquidity is comfortable at UPSB and Asaka due to solid buffers
(liquid assets net of near-term repayments were about half of
customer deposits at end-4M17 at UPSB and 35% at end-5M17 at
Asaka), and somewhat tighter at Agrobank and MCB, as these two
banks have high reliance on short-term inter-bank placements. All
four banks hold large enough foreign currency liquidity buffers
to withstand a substantial reduction in foreign-currency-
denominated customer funding.


A change in UPSB's, Asaka's, Agrobank's and MCB's support-driven
IDRs could result from a strengthening/weakening of the
sovereign's credit profile. A weakening of the state's propensity
to support the banks may result in a downgrade of the ratings.

All four banks' VRs could be downgraded as a result of
deterioration in the banks' asset quality if this is not fully
offset by fresh equity injections. Upgrades of the VRs could
result from improvements in Uzbekistan's operating environment
and strengthening of the banks' commercial franchises, although
upgrades of Agrobank's and MCB's VRs would also require
improvements in the banks' asset quality and performance.

The rating actions are as follows:

Long-Term Foreign-Currency and Local-Currency IDRs affirmed at
'B+'; Outlooks Stable
Short-Term Foreign-Currency and Local-Currency IDRs affirmed at
Viability Rating affirmed at 'b'
Support Rating affirmed at '4'
Support Rating Floor affirmed at 'B+'

Long-Term Foreign-Currency and Local-Currency IDRs affirmed at
'B+'; Outlooks Stable
Short-Term Foreign-Currency and Local-Currency IDRs affirmed at
Viability Rating affirmed at 'b'
Support Rating affirmed at '4'
Support Rating Floor affirmed at 'B+'

Long-Term Foreign-Currency and Local-Currency IDRs affirmed at
'B+'; Outlooks Stable
Short-Term Foreign-Currency and Local-Currency IDRs affirmed at
Viability Rating affirmed at 'b-'
Support Rating affirmed at '4'
Support Rating Floor affirmed at 'B+'

Long-Term Foreign-Currency and Local-Currency IDRs affirmed at
'B+'; Outlooks Stable
Short-Term Foreign-Currency and Local-Currency IDRs affirmed at
Viability Rating affirmed at 'b-'
Support Rating affirmed at '4'
Support Rating Floor affirmed at 'B+'


* BOOK REVIEW: The Rise and Fall of the Conglomerate Kings
Author: Robert Sobel
Publisher: Beard Books
Softcover: 240 pages
List Price: $34.95
Review by David Henderson

Order your personal copy today at
The marvelous thing about capitalism is that you, too, can be a
Master of the Universe. If you are of a certain age, you will
recall that is the name commandeered by Wall Street bond traders
in their Glory Days. Being one is a lot like surfing: you have to
catch the crest of the wave just right or you get slammed into
the drink, and even the ride never lasts forever. There are no
Endless Summers in the market.

This book is the behind-the-scenes story of the financial wizards
and bare-knuckled businessmen who created the conglomerates, the
glamorous multi-form companies that marked the high noon of
postWorld War II American capitalism. Covering the period from
the end of the war to 1983, the author explains why and how the
conglomerate movement originated, how it mushroomed, and what
caused its startling and rapid decline. Business historian Robert
Sobel chronicles the rise and fall of the first Masters of the
Universe in the U.S. and describes how the era gave rise to a
cadre of imaginative, bold, and often ruthless entrepreneurs who
took advantage of a buoyant stock market to create giant
enterprises, often through the exchange of overvalued paper for
real assets. He covers the likes of Royal Little (Textron), Text
Thornton (Litton Industries), James Ling (Ling-Temco-Vought),
Charles Bludhorn (Gulf & Western) and Harold Geneen (ITT). This
is a good read to put the recent boom and bust in a better

While these men had vastly different personalities and processes,
they had a few things in common: ambition, the ability to seize
opportunities that others were too risk-averse to take, willing
bankers, and the expansive markets of the 1960s. There is
something about an expansive market that attracts and creates
Masters of the Universe. The Greek called it hubris.
The author tells a good joke to illustrate the successes and
failures of the period. It seems the young son of a
Conglomerateur brings home a stray mongrel dog. His father asks,
"How much do you think it's worth?" To which the boy replies, "At
least $30,000." The father gently tries to explain the market for
mongrel dogs, but the boy is undeterred and the next afternoon
proudly announces that he has sold the dog for $50,000. The
father is proudly flabbergasted, "You mean you found some fool
with that much money who paid you for that dog?" "Not exactly,"
the son replies, "I traded it for two $25,000 cats."

While it lasted, the conglomerate struggles were a great slugfest
to watch: the heads of giant corporations battling each other for
control of other corporations, and all of it free from the rubric
of "synergy." Nobody could pretend there was any synergy between
U.S. Steel and Marathon Oil. This was raw capitalist power at
work, not a bunch of fluffy dot.commies pretending to defy market

History repeats itself, endlessly, because so few people study
history. The stagflation of the 1970s devalued the stock of
conglomerates and made it useless a currency to keep the schemes
afloat. The wave crashed and waiting on the horizon for the next
big wave: the LBO Masters of the 1980s.

Robert Sobel was born in 1931 and died in 1999. He was a prolific
chronicler of American business life, writing or editing more
than 50 books and hundreds of articles and corporate profiles. He
was a professor of business history at Hofstra University for 43
years and he a Ph.D. from NYU.


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

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

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


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

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

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

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

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

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

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